F ILE COPY DOCUMENT OF INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT INTERNATIONAL FINANCE CORPORATION INTERNATIONAL DEVELOPMENT ASSOCIATION Not For Public Use Report No. 56-a-AF APPRAISAL OF A LIVESTOCK DEVELOPMENT PROJECT AFGHANISTAN March 8, 1973 Agriculture Division ProJects Department Europe, Middle East and North Africa Regional Office This report was prepared for official use only by the Bank Group. It may not be published, quoted or cited without Bank Group authorization. The Bank Group does not accept responsibility for the accuracy or completeness of the report. CURRENCY EQUIVALTS US$1 - Afghani Rials (Af) 85.0 Af 1 - US$0.01176 Af 1 million = US$11,760 WEIGHTS AND MEASURES 1 kilogram (k-) = 2.20 pounds 1 kilogram U 0.14 seer 1 seer - 7 kilograms 1 metric ton - 1,000 kg 1 metric ton 0 0.9b long ton 1 meter (m) 1.09 yards 1 kilometer (km) - 0.62 miles 1 hectare (ha) - 2.47 acres 1 hectare a 5 jeribs 1 jerib 0 0.20 hectares ABBREVIATICNS DANIDA - Danish Government Financing Agency ERIC = Experimental Range Improvement Center HLDC = Herat Livestock Development Corporation MAI = Ministry of Agriculture and Irrigation MIS = Minor Irrigation Section of MAI NLDC = NationaL Livestock Development Commission PACCA = Programs for Agricultural Cooperatives and Credit in Afgnanistan PDA = Paktia Development AutnorLty Convention TIR = Transport International Routier Convention TSU = Technical Services Unit 6f the Herat Livestock Development Corporation FISCAL YEAR April 1 - Mrch 31 AFGHANISTAN LIVESTOCK DEVELOPMENT PROJECT TABLE OF CONTENTS Page No. SUMIARY AND CONCLUSIONS ............................... - ii I. INTRODUCTION ......................................... 1 II. BACKGROUND .........................................* 1 A . General .*a.....*.a O............................. 1 B. The Agricultural Sector .......................... 2 C. The Livestock Subsector 3.................,...... 3 III. THE PROJECT .................. .................. 4 A. Definition ..... ................................ 4 B, Detailed Features ........................... S.... 6 C. Cost Estimates and Financing *...........,........ 8 D. Procurement ..................... ,12 E. Disbursements and Savings ....................... 13 IV. ORGANIZATION AND MANAGEMENT *.......................... 14 A. Project Administration . 14 B. Lending Operations .............................. 16 V. PRODUCTION, MARKET PROSPECTS, PRICES AND PRODUCER BENEFITS ............. 18 A. Production ......... .... 18 B. tMarket Prospects .....................*... ...... . 19 C* Prices ................... 21 D. Producer Benefits ................ ................ 22 VI. ECONOMIC BENEFITS AND JUSTIFICATION ................... 23 VII. RECOMtENDATIONS ............. ......... 25 This report is based on the findings of an appraisal mission to Afghanistan in June 1972, consisting of Messrs. H. von Oppenfeld and G. Luhman (IDA), and K. Anderson, V. Ashworth and C. Wolffelt (consultants). Mr. Noon (IDA) assisted in analyzing export markets for mutton from Afghanistan and addi- tional contributions to the report were made by Mr. Merghoub (IDA). Table of Contents (Cont'd) Schedule A: Tentative Implementation Schedule for Experts' Services ANNEXES 1. Livestock Subsector 2. Groundwater Development 3. Farm Model 1: Sheep Fattening and Breeding on 65-Jerib (13 ha) Farm 4. Farm Model 2: Sheep Fattening on 65-Jerib (13 ha) Farm 5. Farm Model 3: Slaughterhouse Farm (174 ha) 6. The Slaughterhouse of the Herat Livestock Development Corporation 7. Marketing 8. Technical Services Unit 9. The Experimental Range Improvement Center 10. Cost Details: Management Services and Training 11. Disbursement Projections 12. The Agricultural Development Bank 13. Economic Rate of Return Crop Calendars (Chart 6995) Suggested Layout - HLDC (Chart 6996) Dnplementation Schedule (Chart 7070 R) Organigram (Chart 7071 R) Map (IBRD 10109) AFGHANISTAN LIVESTOCK DEVELOPMENT PROJECT SUMMARY AND CONCLUSIONS i. This report appraises a Livestock Development Project in the Herat region of western Afghanistan for which an IDA credit of US$9 million is proposed. It would support a four-year lending program for financing investments on about 1,200 farms involving groundwater development and establishment of alfalfa for fattening and breeding sheep on a feed-lot basis. It would assist in financing a slaughterhouse to process sheep from Project farms and from traditional flock owners for sale in export markets, primarily Iran. It would also assist in financing a fattening/demonstration farm, an Experimental Range Improvement Center (ERIC), technical services and infrastructure. ii. Livestock contributes about 10% of GDP and 24% of exports, and employs approximately two-thirds of the population. As is the case with agriculture in general, its development has been hindered by rugged topo- graphy, harsh continental climate, low rainfall, scarcity of improved in- puts, inadequate support services, and shortage of established market out- lets. In recent years, Government has tried to combat some of these problems through the reorganization and strengthening of extension and credit services, increased distribution of fertilizer and encouragement of groundwater devel- opment. The allocation for agricultural development has been increased by 12% for the Fourth Plan (1972/73 - 1975/76) as compared to the Third Plan, and the activities of sheep fattening, slaughterhouse construction, and establish- ment of export markets for mutton rank among the Plan's highest priorities. iii. This would be the third agricultural project to be financed in Afghanistan by the Bank Group. The earlier projects involved IDA credits for agricultural credit and irrigation. iv. The Project would involve investments in farm development (US$2.7 million), a slaughterhouse (US$5.5 million), an Experimental Range Improve- ment Center (ERIC) (US$0.4 million), technical services aLnd road improvement (US$0.9 million), and management services and training (US$1.5 million). The foreign exchange component is estimated at US$6.7 million equivalent or 61% of total Project cost. The IDA credit would finance US$9 million equiv- alent, or 82% of total Project cost, including US$2.3 million equivalent of local cost. The remainder would be financed by Governmernt (8%), the Agricultural Development Bank of Afghanistan (AgBank) (5%'), and participating farmers (5%). Farmers' contributions would be 20% of farm development in- vestment costs. - ii - v. Government would transfer an amount of US$2.4 million equivalent, US$0.7 million from its own resources and US$1.7 million from the IDA credit, to the Herat Livestock Development Corporation (HLDC) as equity. The loan portion of slaughterhouse financing, amounting to US$4 million equivalent from the IDA credit, together with US$1.6 million from the credit relating to farm development, would be on-lent by Government to AgBank with a maturity of 15 years, including five years of grace, at 4-1/2% interest. AgBank in turn would on-lend the funds to farmers with a maximum maturity of seven years (including up to two years of grace), and to HLDC for the construction of the slaughterhouse, with a maturity of 15 years (including five years of grace), at 8% interest. Government would make available on a grant basis to HLDC the remainder of the IDA funds - about US$1.7 million plus about US$300,000 of its own funds for road improvement, ERIC and technical services. vi. HLDC would be established as a joint Government and private stock company under the Project and would serve as the primary executing agency under the policies formulated by the National Livestock Development Commis- sion (NLDC). HLDC's principal functions would be to provide technical as- sistance to farmers through its Technical Services Unit (TSU) and to operate the slaughterhouse, but it would also operate the slaughterhouse farm and ERIC. Agricultural and groundwater extension staff of TSU would assist participating farmers in preparing and implementing their development plans, while AgBank would be responsible for loan appraisal. A veterinarian from the Ministry of Agriculture and Irrigation (MAI) would advise TSU on veterinary services and establish a meat inspection unit for the slaughterhouse. vii. Procurement of the slaughl:erhouse would be made on the basis of international competitive bidding under turnkey contract. The slaughterhouse would involve a) preparation of broad specifications for tendering and con- struction supervision, b) construction under turnkey contract, c) transport equipment, and d) management and expert services. Items b) and c) would be subject to international competitive bidding while the firms providing the services under a) and d) would be selected in accordance with IDA's Guidelines. Farm development would be carried out by family or hired labor or local con- tractors, and none of the items would be suitable for international competitive bidding. Afghanistan imports pumpsets from at least four Bank/IDA countries, and competition among dealers is satisfactory. viii. HLDC would be established with a sound financial basis and com- petent management. It would be given essential support by AgBank, which is being reorganized and managed by a team of consultants, and by MIS (Minor Irrigation Section of the Ministry ofgriculture and Irrigation), which also is being assisted by consultants under IDA Credit 202-AF. These en- tities would provide a sound framework for Project implementation. Estimated financial rates of return range from 15% to 38% for the Project components. The rates of return to the economy are estimated at 18% to 37%. Provided the necessary assurances are obtained, the Project would be suitable for an IDA credit of US$9 million equivalent. AFGHANISTAN LIVESTOCK DEVELOPMENT PROJECT I. INTRODUCTION 1.01 The Royal Government of Afghanistan (Government) has requested an IDA credit to help finance on-farm development for sheep production and slaughterhouse construction in Herat Province, with the twofold objective of stabilizing the nomadic sheep flocks in the area and facilitating the export of chilled mutton. Institutional credit, partly financed by IDA, would enable farmers to invest in groundwater developmenit and sheep breeding and fattening. 1.02 Bank Group lending for agricultural development in Afghanistan consists of two IDA credits: US$5 million (Credit 202-AF) in 1970 for an Agricultural Credit Project, which after initial delays is progressing satisfactorily, and US$5 million signed in 1971 for the Khanabad Irriga- tion Project, which became effective after a delay in tlhe parliamentary approval of the credit. 1.03 Three FAO/IBRD preparation missions (1969, 1970 and 1971) assisted Government in identifying and preparing the proposed Project. This report is based on the findings of an appraisal mission to Afghanistan in June 1972, consisting of Messrs. H. von Oppenfeld and G. Luhman (IDA), and K. Anderson, V. Ashworth and C. Wolffelt (consultants). Mr. Noon (IDA) assisted in analyz- ing export markets for mutton from Afghanistan and additional contributions to this report were made by Mr. Merghoub (IDA). II. BACKGROUND A. General 2.01 Afghanistan (see map), a landlocked country b,ounded by Iran, USSR, China and Pakistan, comprises 635,000 km2, of which about 22% (14 million ha) are classified as arable and 8% (5.1 million ha) are actually cropped. Of its estimated 14 million population (1970), growing at 2% annually, some 14% are nomadic and only 12% are urban. Annual growth of GDP averaged 3% during 1967-70, and economic growth over the last decade has barely kept pace with the rate of growth of the pop,ulation and labor force. - 2 - 2.02 Afghanistan's rugged topography and extreme temperatures provide a harsh environment for economic development. A dominant physical feature is the central Hindu Kush mountain range, rising to over 6,000 m, which divides the country into four major regions based on the four principal river systems. In the north, the high pastures of Mazar-i-Sharif slope down to the valley of the Amu Darya River. In the west is the Hari Rod River, while in the southwest are the Helmand and Arghandab Rivers and, in the east, the Kabul River. B. The Agricultural Sector 2.03 Afghanistan is not well endowed with natural resources and its economy is largely dependent on the production and export of agricultural and livestock products. In 1970/71, agriculture, including livestock, sup- ported at least 80% of the population, accounted for 51% of GDP and contrib- uted 73% of the country's export earnings. Of total agricultural exports, dried fruits and nuts accounted for 34%, and wool and skins (including karakul pelts) for another 32% (Annex 1). Major crops are food grains (3,120,000 tons), seed cotton (60,000 tons), sugar beets (55,000 tons) and oilseeds (30,000 tons). Production has not significantly increased during the last decade. Food grain imports, which have averaged between 100,000 and 200,000 tons, increased to some 600,000 tons in 1971/72, fol- lowing two consecutive droughts. The relatively slow growth of the economy is due largely to the slow pace of agricultural development, which is due partly to physical constraints and partly to inadequacies in the administra- tive structure affecting agricultural development. 2.04 Physical constraints are: unfavorable topography (vast mountainous areas), harsh continental climate (cold winters and hot, dry summers) and in- adequate rainfall averaging 200 to 300 mm per annum and concentrated during the winter months (Annexes 1 and 2). Southwestern Afghanistan is mostly desert, averaging less than 100 mm rainfall per annum. Irrigation is thus especially important. Though about half (2.6 million ha) of the cropped area is classified as irrigated, most of this land suffers from water shortage and inadequate irrigation systems resulting in a high proportion of crop failures and fallow land. Government, with external financing, has concentrated on a few large-scale irrigation and infrastructure projects which are slow-maturing and just beginning to yield significant benefits. 2.05 Institutional constraints have been: inadequacies in the extension services, combined with a failure to communicate effectively with farmers; in- adequate supply and distribution of farm requisites, especially seeds and fertilizer; the limited availability of institutional credit; and Government pricing systems that discourage higher production, especially for cotton, wool and karakul pelts. Until recently, the development strategy did not aim at quick-yielding results; and inadequate support has been extended by Government to the development of the livestock subsector. Furthermore, the land tenure system has impeded investment and innovation. While the aver- age holding is about 3.5 ha of cultivated land, the distribution is highly skewed. In the Herat area, for example, about 75% of all owner-occupied holdings are less than 2.0 ha and over 30% are less than 0.5 ha. About 55% of holdings in the area are farmed by owner-operators, 272% by tenants and 18% by laborers. 2.06 Since 1971 Government has tried to minimize and overcome some of these constraints. The extension and credit services have been reorganized and strengthened. About 60,000 tons of fertilizer, more t:han twice the vol- ume of any previous year, were distributed by Government in 1971, in combina- tion with an effort to introduce seasonal credit. Government has established a fertilizer corporation that would procure fertilizer andl distribute it through private channels. The US Government has recently approved a loan of US$30 million equivalent to cover fertilizer imports for about three years. Groundwater development has been encouraged through 340 medium-term loans for pumpsets in 1971/72 and additional pumpsets (about 500) are being pro- cured under IDA Credit 202-AF. Buying prices for cotton were raised by 14% in 1972 and, to increase marketing incentives for flock owners, Government, in August 1971, suspended the export ban on live sheep. Moreover, it ranks sheep fattening, slaughterhouse construction, and the development of mutton exports, as envisaged under the proposed Project, among ilts highest priority programs. Although overall planned expenditures for the Fourth Five-Year Plan (which was to begin in 1972 but has been postponed to 1973) remain almost equal to those of the Third Plan period, agricultural development strategy is being reoriented towards more quick-yielding projects. Large numbers of foreign technicians have assisted Government in planning and executing its development programs, and there are many foreign technicians from bilateral and multilateral sources presently working in the country. 2.07 Institutional credit for agriculture began in Afghanistan with the establishment of the Agricultural Development Bank's (AgBank) predecessor in 1954. The few commercial banks have not been active in agriculture except for some short-term financing of processing and marketing, particularly for export. Even AgBank has been unable to achieve a significant impact on agri- cultural credit because of problems of organization and loan security. The former is being overcome with the assistance of a consultant team (para 4.11), but the appropriate legal framework for an effective security system may take some time to develop. As a consequence, the great majority of farmers must rely on private moneylenders who charge interest rates of 30% or more. C. The Livestock Subsector 2.08 Livestock accounts for about 10% of GDP and contributes 24% of the country's export revenue (1970/71). About two-thirds of the popula- tion are engaged in livestock-keeping and major export commodities are karakul pelts and other skins, wool, and casings. Prior to the recent - 4 - losses (para 4.16), the composition of the national herd was estimated at 22 million sheep, 3.2 million goats, and 3.7 million cattle, aside from donkeys, horses and camels. The sheep and goat population exists in a precarious balance between overgrazed pastures, inadequate watering facil- ities, and a difficult climate. When this balance is upset by drought or severe winters resulting in malnutrition and low disease resistance, losses of 20 to 30% are not uncommon and are especially high during the lambing season. Research and extension, through a program of development in breed- ing, feeding, animal health and range management, have not yet received the support they deserve from Government, although they are being assisted by a UNDP project for which FAO is executing agency. There has been no significant increase in livestock productivity during the last decade and there is little basis for predicting improvements. 2.09 Low productivity is due partly to the complexities of ecological problems in the vast and inaccessible regions and partly to inherent diffi- culties with understanding and motivating the transhumants 1/ and nomads who control most of the national herd. Presently the shepherds take their flocks to the mountain pastures in the spring and return with them to the valleys in the fall. There is now an increasing awareness in official circles that the livestock subsector requires special attention if it is to make greater contributions to national growth; that production must be increased by re- ducing losses from malnutrition and disease; that livestock production must be integrated with cropping in such a way as to reduce the grazing pressure on the range and to allow the finishing on forage crops of all animals sur- plus to the breeding herd; that slaughterhouses, chilling, transport, and by-product handling facilities are required to channel livestock products into foreign markets; and that the fixed exchange surrender rates for wool and pelts, which are lower than the Da Afghanistan Bank free exchange rate used to convert export earnings for all other commodities except cotton, should be eliminated. 2. 10 The Herat region, with a slheep population of perhaps five million prior to the recent losses, is typical of the conditions found in Afghanistan. Sheep flocks migrate substantial distances - hundreds of kilometers in some cases - to the mountain grazing areas in spring and then return in the fall to winter around Herat. By tapping the export market in Iran and other neigh- boring countries, the Project would provide a stable market outlet with at- tractive prices for the classes of sheep most likely to succumb to the hard- ships of travel and winter - lambs and older sheep - and thus enable the shepherds to obtain a higher income while maintaining their flocks in better condition, III. THE PROJECT A. Definition 3.01 The Project would be part of Government's long-term livestock de- velopment program and would be located in Herat Province in western Afghanistan. 1/ Nomads who maintain a winter residence in villages. It would provide market outlets for the traditional flock owners and facil- itate the export of chilled mutton through the construction of slaughterhouse facilities and establishment of export markets. The Herat Livestock Develop- ment Corporation (HLDC), a joint stock company to be established, would be the primary executing agency under the Project. The Project would be de- veloped over a four-year period and would consist of the following: (a) On-farm Development, which would involve about 1,200 farmers and be carried out by the Agricultural Development Bank (AgBank). It would include investments in: (i) groundwater development (dugwells, pumpsets, water distribution system); (ii) breeding stock, draft oxen, donkeys; (iii) alfalfa establishment. (b) Construction of the HLDC Slaughterhouse, which would include: (i) preparation of broad specifications for bidding documents, and supervision during constru,ction, by engineering consultants; (ii) detailed design and specifications, civil con- struction, utilities, machinery and equipment, all under a turnkey contract; (iii) transport equipment. (c) HLDC Experimental Range Improvement Center, which would develop management practices that could be applied on large areas of Afghanistan's rangeland. (d) Technical Services and Infrastructure, to be provided by HLDC's Technical Services Unit (TSU) and its pump center in cooperation with AgBank. Investments would include: (i) training and local extension services; (ii) equipment and facilities; (iii) road improvement. (e) Expert and Management Services as required for (b), (c) and (d). 3.02 Typical farm size, phasing of loans, average investment per farm, and total investment cost for on-farm development would be as follows: -6- Farm Investment Cost Size Number of Loans by Year Unit Total Category (ha) 1 2 3 4 Total (Af '000) Fattening and Breeding 13 100 150 175 175 600 195 117,000 Fattening 13 100 150 175 175 600 163 97,800 Total 200 300 350 350 1 200 214 800 _ a . Investment in a 174-ha slaughterhouse farm for alfalfa production and sheep fattening would take place in year 1 (Annexes 3, 4 and 5). B. Detailed Features On-Farm Development and Slaughterhouse Farm 3.03 Development would be located in the Herat Province of the Hari Rod Valley. The Project area extends east from Herat City about 60 km to larwa and west about 80 km to beyond Ghoriyan and varies in width from 2 to 14 km. It encompasses the land on both sides of the Hari Rod River where the water table lies within approximately 10 m of the surface and covers a total of about 1,200 km2. The U.K. Overseas Development Administration has agreed to carry out a study of groundwater resources and soils in the Proj- ect area to help provide additional information for siting wells and select- ing cropping patterns. It is expected that about half of some 1,200 farmers would engage in sheep fattening and breeding, while the others would engage in fattening operations only. A representative holding would be about 13 ha. While these types of operations are already being carried out in the Herat region by a few farmers, the Project would introduce them to a substantial number of farmers on a commercial basis (Annexes 3 and 4). 3.04 Each farm investment plan would cover a period of two years and would lead to full development in year four. The investment would involve the installation of a dugwell and pumpset, purchase of draft and pack animals and implements, and establishment of some alfalfa in the first year and ad- ditional alfalfa plus purchase of breeding animals (in the case of the breed- ing farms) in the second. For fattening operations, farmers would purchase sheep from the traditional shepherds, fatten them on a feed-lot basis, and sell them to the slaughterhouse for processing. AgBank would provide long- term loans, averaging about Af 195,000 (US$2,300) for fattening and breeding and Af 163,000 (US$1,900) for fattening, on terms of up to seven years at 8% interest, including a grace period of up to two years. It would also provide complementary short-term financing in support of the farm plans. 3.05 About 174 ha of the 192-ha slaughterhouse tract would be devoted to a farm for sheep fattening, the provision of alfalfa requirements for slaughter sheep, and demonstration of alfalfa production to Project farmers. The farm would be partly mechanized and would be irrigated by three tubewells (see Annex 5). -7- HLDC Slaughterhouse 3.06 The slaughterhouse would be constructed within about two years (para 4.06 and Annex 6) and would be located on a 192-ha tract in an indus- trial-zoned area about 9 km south of Herat City where it would have ready access to the labor market, good transportation facilities, plentiful ground- water supplies, and easy effluient disposal. The proposed layout is shown in Chart 6996. Government has initiated proceedings to acquire this land. A condition of effectiveness of the credit is that Covernment had acquired title to the IILDC slaughterhouse site and had transferred it as a contri- bution to HLDC share capital. The plant would operate its own fleet of trucks, some refrigerated and some to carry live sheep, thus having the capability to control its main product from place of purchase to place of sale. About eight sheep-buying stations would be constructed to give farmers marketing points within easy reach of their farms and tc provide outlets for sheep from the traditional flock. 3.07 The slaughterhouse would process for export the livestock from all Project farms (Annex 7). To ensure sufficient util:Lzation of the plant during the early development stage, sheep would also be purchased from the traditional flock. Provisions would also be made for the slaughtering of cattle and goats for the local market. In addition, the slaughterhouse would process inedible by-products for export and domesitic markets. This would be the first modern meat processing plant in Afghanistan. Commencing with a single shift (up to 2,000 head/day), slaughtering operations would gradually expand (under a second shift processing up to 3,000 head/day at full capacity), as required by the expected increase in the supply of sheep. Buildings and basic equipment would be designed to operate at full capacity from the beginning, but the purchase of expansion equipment would be deferred for about two years, until justified by the increasing throughput. Technical Services and Infrastructure 3.08 The Project would provide management and expert services of nine expatriates - five for operating the slaughterhouse (para 4.06); three for extending-livestock, crop and farm management technology to Project farmers through the Technical Services Unit (TSU) of HLDC; and one range management expert under the Experimental Range Improvement Center (ERIC) (see Schedule A). Assurances were obtained during negotiations that the management serv- ices of nine experts under contract with a firm would be procured for the Project, on terms and conditions satisfactory to IDA and in accordance with a timetable (Schedule A) satisfactory to IDA. With financial assistance available to it from bilateral or multilateral sources, Government would provide the services of a veterinarian specialist. He would collaborate on both farm development and meat inspection. To facilitate replacement of experts provided under the Project, fellowships for training abroad for periods of a few months to two years would be included as a supplement to on-the-job training. (See Annexes 8, 9 and 10 for details of expatriate experts.) - 8 - 3.09 In order to ensure effective implementation of the Project, various infrastructure investments would be required. The principal east-west roads in the Project area would be improved as part of Government's highway main- tenance program, but the upgrading of access roads, totaling about 68 km, would be provided for under the Project (Appendix 8-2). The road work would be carried out by the Ministry of Public Works which is being assisted by consultants (Kampsax) under a UNDP project for which the Bank is executing agency. TSU, to be established within HLDC, would, in conjunction with its pump center and AgBank, develop and appraise farm plans and assist farmers in their implementation. Three farm service centers, one for each of the outlying districts, would be constructed to provide office, meeting and storage space for the TSU staff and associated village agents. Seed cleaning equipment (Appendix 8-2) would be purchased under the Project and would be operated by the HLDC farm, enabling farmers to submit field seed and receive clean seed in return. HLDC Experimental Range Improvement Center 3.10 With a view to defining management practices for range improvement, the Project would include provision for an Experimental Range Improvement Center (ERIC) to be established and managed on behalf of Government by HLDC. It would involve provision of expert services, watering points, limited fencing, production of supplemental winter feed, provision of health and shearing services, facilities for buying and holding sheep, and testing of techniques for pasture improvement and range management. The objective would be to develop range management practices that could be applied on large areas of Afghanistan's rangeland. Specific location of ERIC would be determined by the range management expert in consultation with Afghan authorities after an analysis of the local situation. Further details on concept, layout and staffing of ERIC are in Annex 9. C. Cost Estimates and Financing Cost Estimates 3.11 Estimated Project costs, together with foreignr exchange requirements, are detailed in Annexes 3-6 and 8-10 and summarized below. Estimates are based on present prices and, in the case of the HLDC slaughterhouse, a 5% physical contingency is provided plus an allowance for cost increases amount- ing to 4% per annum. -9- Af Million US$ Thousand Foreign Category Local Foreign Total Local Foreign Total Exchange 1. Farm Development a. Farmers 123 92 215 1442 1087 2529 43 b. HLDC Slaughterhouse Farm 8 5 13 90 63 153 41 Subtotal 131 97 228 1532 1150 2682 42 2. HLDC Slaughterhouse a. Engineering & Supervision 1 9 10 18 100 118 85 b. Civil Construction, Utilities, Machinery & Equipment 119 151 270 1397 1779 3176 56 c. Transport Equipment 5 92 97 57 1084 1141 95 d. Permanent Working Capital 7 3 10 83 35 118 30 Subtotal 132 255 387 1555 2998 4553 65 3. HLDC Experimental Range Improvement Center 18 17 35 210 202 412 49 4. HLDC Technical Services Unit & Road Improvement 45 28 73 524 335 859 39 5. Expert & Management Serv- vices Including Training 13 119 132 155 1398 1553 90 6. Contingencies for HLDC Slaughterhouse a. Physical 5% 7 13 20 78 150 228 67 b. Price 4% p.a. 19 43 62 226 503 729 69 Subtotal 26 56 82 304 653 957 69 Total 365 572 937 4280 6736 11016 61 - 10 - Financial Plan 3.12 The Project would be financed as follows (details in Annex 11): Farmers AgBank Government IDA Total Category ---- -------Af (million) ------------) 1. Farm Development a. Farmers 41 43 - 131 215 b. HLDC Slaughterhouse Farm _ 8 - 5 13 Subtotal 41 51 - 136 228 2. HLDC Slaughterhouse a. Engineering and Supervision - - - 10 10 b. Civil Construction, Utilities, Machinery and Equipment - - 26 244 270 c. Transport Equipment - - 10 87 97 d. Permanent Working Capital _ _ 10 - 10 Subtotal _ _ 46 341 387 3. HLDC Experimental Range Improvement Center _ - 6 29 35 4. Technical Services Unit and Road Improvement - _ 13 60 73 5. Expert and Management S-ervices Including Training _ _ 13 119 132 6. Contingencies for HLDC Slaughterhouse - - 1 81 82 Total Af Million 41 51 79 766 937 US$ Million 0.5 0.5 1.0 9.0 11.0 Percent (5) (S) 8) (82) (100) - 1 1 - 3.13 The IDA credit would finance US$9 million, or about 82% of total Project cost (US$11 million equivalent), including the foreign exchange (61%) and about US$2.3 million of local cost. Government would be the borrower and would bear the exchange risk. It would onlend Af 136 million (US$1.60 million equivalent) of the credit proceeds to AgBank at 4-1/2% interest with a repayment period of 15 years including five years' grace. Assurances to this effect were obtained during negotiations. AgBank would onlend these funds plus Af 51 million of its own funds to farmers and to HLDC for the slaughterhouse farm at 8% interest with repayment periods up to seven years including grace periods up to two years. The spread of 3-1/2 percentage points thus provided to AgBank would be sufficient to cover its provisions and administrative costs and would allow for some slippage in loan repayments (Appendix 12-5); it is also considered reasonable in view of the costs involved in reorganizing AgBank and in introducing the credit concept to Afghan farmers. 3.14 Government would also onlend Af 340 million ('US$4 million) of the credit to AgBank at 4-1/2% interest with a repayment period of 15 years including five years' grace. Assurances to this effect were obtained during negotiations. AgBank would onlend these funds to HLDC for a period of 15 years including five years' grace at an interest rate of 8% for the financing of the slaughterhouse construction and technical services. 3.15 In addition to its lending activities, AgBank would be the admin- istrative channel for a Government contribution to HLDC equity of Af 200 million, Af 145 million (US$1.7 million) of which would be provided by the IDA credit; AgBank would also be the administrative channel for a Government grant of Af 174 million, of which Af 145 million (US$1.7 million) would come from IDA, to HLDC for TSU, ERIC and road improvement. Assurances to this effect were obtained during negotiations. AgBank would charge no commission or fees on these equity and grant components. 3.16 The form of financing for principal investment items would be as follows: - 12 - Government Funds Channeled Through AgBank As AgBank & Loans to Contribution Farmers' Farmers to HLDC Contribution or HLDC Equity Grant Total --------------------Af (million)-------------------…- Farm Development 92 136 - 228 Slaughterhouse - 196 191 - 387 Range Improvement - - 35 35 Technical Services and Roads - - 73 73 Expert and Management Services Including Training 63 8 61 132 Contingencies _ 81 1 - 82 TOTAL 92 476 200 169 937 D. Procurement 3.17 Groundwater development (well construction, pumpsets, and water distribution system) accounts for the major share of investment on Project farms (57% and 69% for models 1 and 2, respectively) (Annexes 3 and 4), while breeding stock, draft oxen, donkeys, and alfalfa establishment would make up the balance. Livestock would be purchased from nomadic farmers and consttuc- tion of wells and the water system would be carried out by farm laborers or local contractors, as would alfalfa establishment. None of these items would be suitable for international competitive bidding. Pumpsets would either be imported by local dealers or assembled from locally made pumps and imported engines. Pumpsets can be imported without restriction from at least four Bank/IDA countries. Competition among dealers is satisfactory and farmers would choose pumpsets suitable for operation under their particular situations. 3.18 The slaughterhouse would involve procurement of four major items: (a) Engineering, including preparation of broad specifications for the slaughterhouse and supervision during construction, by engineering consultants; Government will attempt to engage such consultants by March 1, 1973; (b) Slaughterhouse construction (including detailed design, civil works, utilities and processing equipment), to be procured under turnkey contract, subject to international competitive bidding; - 13 - (c) Transport equipment to be procured under international com- petitive bidding; (d) An integrated contract for management and expert services of nine expatriate experts - five for the slaughterhouse and four for technical services for farm and range development - to be awarded on the basis of proposals from prequalified firms. During negotiations, assurances were obtained that Government would cause HLDC to award the slaughterhouse turnkey contract and provide the transport equipment, subject to international competitive bidding, in ac- cordance with IDA's Guidelines for Procurement. Consultants financed by proceeds of the IDA credit would be selected in accordance with IDA's Guide- lines. E. Disbursements and Savings 3.19 IDA disbursements are expected to extend over about 4-1/2 years (Annex 11) and would be made as follows: (a) 75% of loan disbursements made by AgBank to Project farmers and for the slaughterhouse farm; (b) 100% of foreign exchange expenditures for imported transport equipment, for expert and management services and training fellowships; (c) 85% of HLDC's expenditures for the turnkey contract including contingencies for the slaughterhouse; expenditures from March 1, 1973 onwards of up to US$130,000 equivalent, for the services of engineering consultants who would prepare broad specifications for slaughterhouse construction, would be eligible for reimbursement; (d) 85% of expenditures for facilities and operating expenses of ERIC and TSU and road improvements. Disbursements under (a) and (d) would be made against certificate of expend- iture (or force account). The documentation would be retained by the borrower for review by IDA during Project supervision. For all other expenditures appropriate supporting documentation would be required. Any savings under (b), (c) and (d) above would be used for on-farm development in Herat Province. - 14 - IV. ORGANIZATION AND MANAGEMENT A. Project: Administration 4.01 Each of the main Project components, the farms and the slaughter- house, involves technology and methods new to those expected to implement them, making expert and technical guidance indispensible to achievement of Project objectives. Overall coordination of various interdependent Project components would be ensured through HLDC's board of directors and/or manage- ment, in which the agencies concerned with livestock development in the Herat region would be represented (Chart 7071(R)). Herat Livestock Development Corporation 4.02 HLDC would be established as a joint stock company under the commercial code and serve as primary executing agency for the Project. Government and IDA have agreed on the main provisions to be included in HLDC's Articles of Incorporation. Authorized capital would be Af 250 million, with shares priced at Af 1,000. Paid-up capital, which could be less initially (Af 40 million) to facilitate establishment of the company, would reach at least Af 200 million four years after effectiveness of the credit, with Af 55 million being contributed by Government and Af 145 million deriving from the proceeds of the IDA credit. Shares would also be offered to private investors. When the initial sale to the public would reach Af 50 million, this would bring total paid-in capital to Af 250 million, the upper limit of authorized capital. Thereafter, Government would either offer its own shares for sale, until its holdings were reduced to 51%, or facilitate additional share sales to the public by increasing HLDC's authorized capital. Assurances on the above were obtained during negotiations. 4.03 HLDC would be governed by a general assembly, representing the shareholders; a board of directors, representing the various agencies co- operating in the Project; and a management board, composed of the chief executive officers of the company. The management board would be respon- sible for carrying out the day-to-day operations of HLDC. HLDC would pro- vide technical assistance to participating farmers, in close cooperation with AgBank and MIS, and would operate the slaughterhouse, the slaughter- house farm and ERIC. To assist AgBank in loan collection, HLDC would deduct amounts owed from payments to farmers and remit them directly to AgBank. HLDC would be authorized to deduct an agreed service fee from fully repaid loans. National Livestock Development Commission 4.04 Government intends to establish a National Livestock Development Commission (NLDC), which would be responsible for establishing and administer- ing national policies on production, processing, and marketing of livestock - 15 - and livestock products, and for preparing proposals for further livestock development. NLDC would be located in Kabul and would consist of several cabinet ministers plus the President of the Afghan Air Akuthority. It is expected that NLDC would be represented on HLDC's Board of Directors. Technical Services Unit 4.05 The Technical Services Unit (TSU; Annex 8) of HLDC would be respon- sible for providing technical assistance to Project farners. It would be headed by a Technical Director, who would report to the President and the General Manager and would be assisted by two international experts experienced in crops, livestock and farm management. The Technical Director and the two experts would each work with two Afghan counterparts anid would be responsible for the training and gradual transfer of authority to these counterparts. In addition to his duties regarding farm development, the Technical Director would hold overall responsibility for the slaughterhouse farm and ERIC, although primary responsibility for the operation of these units would rest with the slaughterhouse farm manager and the range management expert, re- spectively. Terms of reference for the Technical Director and the three experts are in Appendix 8-1. Slaughterhouse 4.06 Since a slaughterhouse of the type envisaged under the Project (Annex 6 and Schedule A) would represent a new activity in Afghanistan, in- ternational experts would be provided through a consultant firm to fill the posts of General Manager, Chief Engineer, Factory Manager, Accounts and Mar- keting Manager, and Automotive Engineer. These experts would be responsible for all aspects of slaughterhouse operation, from purchase of sheep to sale of chilled mutton and from plant design through transfer of authority to Afghan counterparts. While the General Manager would also have general re- sponsibility for technical services to farmers, the slaughterhouse farm, and ERIC, he would rely on the Technical Director of TSU and, through him, the manager of the farm and the expert for ERIC, to carry the primary burden for these activities. Experimental Range Improvement Center 4.07 HLDC would establish on behalf of Government an Experimental Range Improvement Center (ERIC; Annex 9), which would be operated by an international expert (terms of reference in Appendix 8-1), assisted by two Afghan counter- parts and an experienced farm manager. The farm manager would be in charge of operating ERIC's farm near Herat, while the expert and his counterpart would be responsible for general supervision of farm operations, development and operation of out-station services, and preparation and implementation of applied research programs. Research proposals would be subject to the approval of NLDC, which would also review semi-annual progress reports. / - 16 - Slaughterhouse Farm 4.08 HLDC would establish and operate a slaughterhouse farm to ensure a steady supply of animals for the slaughterhouse and to serve as a demon- stration of a commercial fattening operation. The slaughterhouse farm (Annex 5) would be managed by an experienced Afghan farmer under the overall direc- tion of the General Manager and the Technical Director. He would be respon- sible for operating and maintaining the irrigation system and farm machinery and for establishing alfalfa and fattening sheep on a feed-lot basis. Tech- nical assistance would be provided by TSU and some applied research would be carried out under its supervision with a view to developing suitable crop production and sheep fattening patterns. TSU Pump Center 4.09 The Minor Irrigation Section (MIS), which was established within the Ministry of Agriculture and Irrigation under Credit 202-AF to provide technical assistance for minor irrigation, is in the process of establishing a pump center (Annex 2) in Herat. The center, which would become part of TSU, will be staffed by three geologists, six technicians, and up to 20 pump mechanics who would assist farmers in dewatering their wells during excavation. The center would participate in the appraisal and supervision of farm devel- opment plans, and would provide well de-watering services to Project farmers. Assurances were obtained during negotiations that staff would be assigned to the pump center as required for Project implementation. The initial cadre of two geologists, three technicians, and six dewatering pump mechanics would be assigned not later than two months after credit signing. Veterinary Services 4.10 A veterinarian of international capability and experience would be attached to HLDC by the Ministry of Agriculture and Irrigation. In addition to having overall responsibility for animal health and regulatory responsibilities in Herat Province, this person would advise and assist TSU staff in all aspects of preventive and curative veterinary services and in training and supervising a meat inspector at the HLDC slaughterhouse. B. Lending Operations The Agricultural Development Bank of Afghanistan 4.11 AgBank (Annex 12) would be the lending channel for the Project. AgBank is a mixed corporation with predominantly Government ownership (the official Da Afghanistan Bank and Government together own 98% of the stock). As of March 20, 1972, its paid-in capital was Af 215 million (US$2.5 mil- lion) and it had total assets of Af 362 million (US$4.2 million). Author- ized capital has recently been raised from Af 500 million to Af 1 billion. The bank currently is being reorganized and managed by a team of consultants - 17 - (Hendrickson Associates) under UNDP Project 27 (extending to September 1976, and for which the Bank is executing agency). In the past three years, it has made significant progress toward becoming a viable credit institution. 4.12 General policy of AgBank is established by the Supreme Council, composed of four cabinet ministers, the Governor of the Da Afghanistan Bank, the President and General Manager (a consultant) of AgBank, and four members elected by the General Assembly. Management is undertaken by the seven- member Executive Board, consisting of the President, the two Vice-Presidents, and the four principal members of the consultant team, urLder authority delegated to it by the Supreme Council. 4.13 A major effort is underway to upgrade the professional staff of 161 and to recruit and train additional capable personnel. Five employees have now completed the basic training program, 23 are currently enrolled, and an additional 15 trainees are to be recruited during 1972/73. Another 17 are currently undergoing specialized training as field inspectors. In order to provide effective support for the Project, the Herat branch of AgBank is being strengthened through a phased program involving the assign- ment of trained field inspectors, a loan appraiser, and a branch manager. 4.14 Under the guidance of the consultant team, AgBank's disbursements rose from a low of Af 2.6 million in 1969/70 to Af 34.4 million in 1971/72, the major portion being for medium-and long-term loans for on-farm development. Out of 400 such loans, totaling Af 31.1 million disbursed in 1971/72, 54% (by amount) were for pumpsets and 40% were for tractors and implements. Since 1970, AgBank's medium- and long-term lending program has been financed in part by IDA Credit 202-AF, which provides funds for farm equipment, pump- sets, and minor irrigation rehabilitation schemes. AgBank's portfolio at the end of 1971/72 amounted to Af 82.3 million. 4.15 The major source of AgBank's funds has been equity contributions. Part of the equity derives from the provision in IDA Credit 202-AF that pro- ceeds utilized by AgBank in its lending program are transferred to it by Government as share capital. The long-term debt of Af 28 million amounted to only 8% of total liabilities and equity. 4.16 AgBank's financial position at the end of 1971/72 remained satis- factory in spite of a substantial loss of Af 9.3 million sustained during the year. Liquidity was adequate, with liquid assets about equal to current liabilities. The loss for 1971/72 followed modest profits of Af 1.2 million for 1970/71 and Af 1.8 million for 1969/70. It was caused primarily by suc- cessive droughts in 1969/70 and 1970/71 which led to increases in provisions for doubtful debts and in cost-of-living bonuses paid to staff, and also by increases in staff as part of the upgrading process and in preparation for expansion of the lending program. Principal in arrears at the end of 1971/72 amounted to 39% of loans outstanding, but over half the arrears were taken over from AgBank's predecessors. The percentage of arrears was some- what higher than in the two previous years as a result of the droughts, but provisions amounted to 80% of total arrears and are adetquate. - 18 - Lending Procedures 4.17 A new lending program for financing farm plans based on dugwell development would be introduced undezr the Project. A comprehensive package of investment items and current inputs necessary to develop and operate a farm would be formulated for each participant by AgBank staff in coordination with TSU and its pump center. Included in the investment package could be a well (including the cost of dewatering), pumpset (including installa- tion charge), ditching, draft and pack animals, implements, alfalfa estab- lishment, and breeding sheep (Annexes 3 and 4). Long-term loans of seven years, including two years of grace, would be provided to cover 80% of total investment cost. The farmers' contribution of 20% of investment cost would include the value of family labor. Short-term loans from AgBank's own re- sources would be granted to cover 100% of current input cost. Interest rates would be AgBank's normal rates of 10% for short-term loans and 8% for long- term loans. Interest rates were raised to these levels from 4% and 6% re- spectively, under provisions of IDA Credit 202-AF. Assurances on these matters were obtained during negotiations. Accounts and Auditing 4.18 AgBank's accounting system has been revised and staff are now being trained to operate it. The ac:counts would provide for the separate identification of operations under IDA Credit 202-AF and the proposed credit, and would continue to be audited annually by an independent auditor accept- able to IDA. Separate accounts would be kept for the HLDC slaughterhouse, slaughterhouse farm, TSU and ERIC so as to provide a clear indication of the sources and uses of funds for each of these organizational units. HLDC's accounts would be audited by independent auditors acceptable to IDA and would be submitted to IDA within four months of the end of the respective financial years. Assurances on these matters were obtained during negotiations. V. PRODUCTION, MARKET PROSPECTS, PRICES AND PRODUCER BENEFITS A. Production 5.01 The annual incremental output of sheep at full development, live and carcass weight equivalents, from Project farms is estimated as follows: - 19 - Total Incremental Output Carcass Sheep Liveweight Carcass Weight Weight Numbers Equivalent Equivalent Equivalent ---Tons-- ----Tons----- --Tons- Project Farms Fat-of-the-Mother Lambs 14,300 358 165 165 Lambs 366,417 4,233 2,062 5,278 Hoggets 42,075 926 518 943 Mature Sheep 2,880 32 18 78 Ewes 6,500 - - 164 Rams 175 1 1 5 Subtotal 432,347 5,550 2,764 6,633 Traditional Flock Processed for Export 27,653 - - 482 Total 460 000/1 5550 2 764 7,115 /1 Excludes sheep slaughtered by local butchers. 5.02 Slaughter and meat export would also generate new markets for sheep purchased directly from traditional flock owners. Although most of these sheep would not constitute incremental output (they would also be produced without the Project), their off-take for commercial and export markets would in the long run relieve the overstocking of rangelands and thus contribute to improved nutrition and productivity of the remaining flock (Annex 1). 5.03 Before development, nearly half of the land on Project farms was kept in fallow, due to lack of irrigation water. Groundwater development on Project farms would facilitate an increase in land use intensity from 55% to about 140%. Though over half the land would produce alfalfa, the incremental crop output is estimated at 2,300 tons of wheat, 3,600 tons of seed cotton, and 1,600 tons of mung beans, aside from small quantities of fruit (melons and grapes). B. Market Prospects 5.04 The Project would establish export markets for the entire output of the fattening and breeding farms as well as for a portion of the tradi- tional herd. In 1975/76, the first year of slaughterhouse operations, HLDC would export 2,700 tons of fresh chilled mutton and lamb to the nearby Iranian market. HLDC would also develop markets in Kuwait and other Gulf - 20 - States and, by 1980, the Project is expected to export 7,200 tons of meat annually. Full production on the fattening and breeding farms would le achieved in 1981, at which time the proportions of meat from the farms and the traditional herd would be approximately 93% and 7%, respectively. By-products such as pelts and casings, for which there are well established export markets, would be processed by HLDC before shipment to European markets; several other by-products would be sold in Afghanistan until ex- port markets could be established. In order to provide sufficient incentive for farmers to begin fattening and breeding operations, a limited number of live sheep from pre-Project farms would be sold to Iran until the slaughterhouse began operating in 1975. If live sheep exports would not be permitted, HLDC would purchase the sheep produced or fattened by farmers under the Project at such prices as would encourage the production of fattened sheep, until the slaughterhouse became operational. Assurances were obtained during negotiations that Government would reimburse HLDC for any losses suffered by it as a result of the purchase, sale or disposal of such sheep. 5.05 Iran is expected to provide the primary market for meat fron the Project, and most exports to Iran would be sold in the rapidly growing Tehran market. Consumption of mutton and lamb in Iran for 1971 is estimated to have been 275,000 tons, and demand for mutton is expected to increase by at least 5% annually over the next two decades. Domestic production has lagged behind consumption and Iran has relied increasingly on imports of live sheep as well as fresh and frozen mutton to make up the difference. Officially recorded imports of red meat (largely mutton), including that from live animals, reached 22,300 tons in 1970/71 and, in addition, there is an illegal border trade of live sheep into Iran from Afghanistan and Turkey, which accounts for 10,000 or more tons of meat in most years. Iran is expected to continue to rely on mutton imports for the foreseeable future. Most of the meat to be exported to Iran would be sold in Tehran through the Government Meat Organization, the monopoly buyer of mutton imports for the Tehran market. Current consumption of mutton and lamb in Tehran is esti- mated at 50,000 tons a year and demand for mutton in the Tehran market is expected to grow at between 5.7% and 8.7% annually. Even if the Tehran mar- ket were to grow at the slower 5.7% rate, the Project would need only a 4.3% share of this market for its 1975 exports and only 8.7% for its entire 1980 volume. 5.06 HLDC would also attempt to develop alternative export markets in Kuwait and other Gulf States. Buyers for these markets have approached Gov- ernment with offers to purchase as much as 4,000 tons of mutton at US$790 per ton fob Kandahar, with the intdntion of airfreighting it to Kuwait. Red meat imports into Kuwait increased at 6% annually between 1965 and 1970, and Kuwait is an attractive prospect for buying up to half of Project output at full production. 5.07 The Project would be able to compete effectively in both the Iranian and Gulf markets, although additional transport costs to the Gulf markets would make the trade somewhat less profitable there than in Tehran. Mutton and lamb from the "fat-tailed" sheep to be raised under the Project are preferred over that currently imported from other parts of the world, and consumers in both - ;1 - markets prefer fresh over frozen meat. The Project wouldl be able to deliver fresh chilled carcasses to Tehran over 1,250 km of improved road three days after slaughtering. Moslem slaughter rites would be observed, and meat from the Project would be comparable in all major respects to the best domestic and imported mutton and lamb available in the markets. While offering a preferred product, the Project would have relatively low production costs, which would make it fully competitive with other suppliers. However, in order to promote effective competition in these markets, assurances were obtained during negotiations that Government would take all possible steps to ensure that HLDC would be (a) free from restrictions on the quantity of meat which might be exported (Annex 1, para 21), and (b) able to convert foreign currency at the Da Afghanistan free market rate of exchange. In addition, Government should explore the possibility of exempting HLDC from export and other taxes, in the spirit of the Foreign and Domestic Private Investment Law. Also, before HLDC can deliver meat to either market, its trucks must be assured rights of transit beyond Mashad where Afghan trucks have traditionally off-loaded into Iranian carriers. A solution to this problem is now possible under the provisions of the Transport International Routier (TIR) Convention, which was recently ratified by, both Afghanistan and Iran. During negotiations, assurances were obtained that Government would take the steps within its power to reach agreement with Iran on the provisions of the TIR Convention which affect the Project. (See Annex 7 for marketing details.) 5.08 The annual meat supply of llerat City comes from about 40,000 animals (sheep, goats and cattle). These are bought by local butchers and slaughtered under unsanitary conditions, though under municipal control. Since the present low cost of slaughter, consumer preference for "warm meat," and other factors will tend to perpetuate traditional slaughtering practices, local butchers would be encouraged to have animals killed in the slaughterhouse, through compensation for by-products utilized by the plant and for transport cost to and from the plant. Response to this pro- gram is likely to be limited initially, but if it is eventually successful, it could demonstrate to consumers in Herat and other Afghan cities the ad- vantages of modern slaughtering and wholesome meat. (See Annex 7 for marketing details.) C. Prices 5.09 Recent contract prices for fresh chilled mutton delivered in Tehran which reflect the current international supply and demaLnd situation, range from US$850 to US$1,000 per ton and it is expected that the Project would receive the lower figure during the first two or three years of slaughter- house operations. Because previous attempts by Iran to import mutton from Afghanistan were not successful, the Project would probably make some price concessions initially to establish itself in the market. Once the quality of meat becomes known, HLDC could probably obtain prices of about US$900 per ton on the basis of (a) its record for reliable deLivery, (b) an in- creasing proportion of meat from fattened lambs, and (c) the competitive - 22 - strength of having established alternative markets in the Gulf States. Prices for meat to be exported under the Project were assumed to range between US$850/ton in year 2 and US$900/ton from year 5 onwards. Prices for meat from the Project delivered in Kuwait are expected to be between US$950 and US$1,000 per ton, reflecting the additional transport costs. D. Producer Benefits 5.10 Based on assumptions detailed in three illustrative farm models (Annexes 3, 4, and 5), the financial results of Project investments are estimated as follows: Slaughterhouse Sheep Fattening Sheep Farm-Sheep Slaughterhouse and Breeding Fattening Fattening Daily Throu put Unit Size 13 ha 13 ha 174 ha 3000 sheep ---- ----------Af '000 ------------------ -Af million,- Capital Investment 195 163 13,333 534 Equity - - - 213 Loan 155 130 10,351 321 Gross Income at Full Development /1 424 439 10,616 678 Production Cost 329 322 7,265 549 Net Income Before Debt Service 95 117 3,351 129 Debt Service 39 33 29588 41 /1 After Debt Service 56 84 763 88 Taxes: Land 1 1 13 - Export - 5 Income - 398 19 /1 Financial Rate of Return ---------------------- Before Taxes 29 38 20 17 After Taxes - - 17 15 /1 Year 6 for the farm models and year 10 for the slaughtering plant. 5.11 Farm models show financial rates of return ranging from 17% to 38%. Various sensitivity tests were applied to each model, assuming lower net bene- fit streams due to less favorable performance in investment costs and income from crops and/or sheep. Financial rates of return remained satisfactory in all cases, even if slaughterhouse meat were exported to Iran using Iranian trucks (see Annex 6, para 25 and Annex 7, para 9). - 23 - 5.12 For the slaughterhouse, financial rates of return were 15% (17% before taxes), allowing a daily throughput of 3,000 sheep, and assuming that the annual throughput would increase from 150,000 head in Year 2 to 500,000 head in Year 7 (Appendix 6-2). These rates, of course, would increase if the slaughterhouse could buy sheep at lower prices from Project farms or sell at higher prices in the export markets, but neither possibility appears realistic. The price paid to farmers must be high enough to motivate them to invest in groundwater development and sheep production or the plant would not be fully utilized and returns would be lower. On the other hand, prices for meat exports would need to be kept down, especially in the early years of export market development, in order to be attractive. Additionally, all expert services for the slaughterhouse were fully costed (para 3.03). In view of these conservative assumptions, the rates of return for the slaughter- house would be adequate. Sensitivity tests assuming 10% higher investment costs or 30% and 40% lower slaughter volume showed satisfactory returns. However, when operating costs were raised by 10%, the rate of return declined to 5%. This sensitivity is not surprising since the operating costs consist mainly of livestock purchases (81%) and direct costs (15%). In computing these rates it has been assumed that: (a) present rates of export duties would apply to export of pelts and casings, but there would be no export tax on meat; and (b) HLDC could convert foreign currencies received for its exports at the Da Afghanistan free market rate of ex- change. 5.13 Land taxes at full development would be approximately Af 936 per farm (models 1 and 2) and Af 12,500 for the slaughterhouse farm. Net income from that farm would also be subject to a 20% income tax, estimated to increase from about Af 300,000 in year 3 to about Af 500,000 by year 9. By year 10, the slaughterhouse would generate approximately Af 24 mLllion in export and income taxes. VI. ECONOMIC BENEFITS AND JUSTIFICATION 6.01 The Project would extend financial support to about 1,200 farmers and enable them to carry out their investment plans. Groundwater development and alfalfa production for fattening of sheep purchased from traditional flock owners would integrate crop and livestock productLon. This would be an innovative feature, as would AgBank's lending for livestock-oriented on- farm development. New market outlets would be developed through the slaughter- house. 6.02 The Project would generate considerable incremental employment in the Herat region. At full development, each Project farm would provide addi- tional jobs for the equivalent of about eight man-years (at 280 days per annum) - 24 - for underemployed farmers, share tenants, and farm workers; the slaughterhouse farm and ERIC would employ about 40 laborers each; and the slaughterhouse would generate about 360 jobs (at 250 man-days per annum). An indication of the incremental employment that would result from the Project in years 1, 4, and 8 is shown below. No indirect effect on employment, through use of locally made construction materials, salt, and coal from domestic sources, was taken into account. Investment Development Full Phase Phase Devielopment Year 1 Year 4 Year 8 -----------…man-year equivalent…----- Farm Development 1,200 Project farms 1,000 6,100 9,700 Slaughterhouse farm 28 40 40 Experimental Range Improvement Center 50 80 40 Slaughterhouse 470 400 360 Total Incremental Employment 1,548 6,620 10,140 6.03 As a result of meat and by-product exports, the Project would, at full development (year 8 and onwards), generate gross export earnings of about US$7.7 million annually. Meat would account for about 83%, while peli.s (12%) and casings (5%) would account for the balance of the export value. Net ex- port earnings after adjustment for imports of fertilizers and materials for the slaughterhouse would be of the order of US$7 million equivalent. 6.04 Under present export tax rates, Government revenue would increase substantially as a result of taxes generated by Project investments. Export tax on hides, skins and casings at full development would be of the order of Af 24 million (US$0.28 million), while the fuel tax would add Af 3 million (US$0.04 million) to tax revenues. Incremental tax benefits as a result of on-farm investments would not be significant (about Af 1 million). 6,05 The rate of return to the economy would be 37% for the farm devel- opment component. Sensitivity tests applied, assuming variations in crops and sheep sales, investment, and operating costs, gave satisfactory rates of return (Annex 13). For the slaughterhouse component, the rate of return is 18%, while the combined rate for farm development and slaughterhouse in- vestment is 22%. In view of the conservatively estimated export sales prices and the high cost of expert and management services which are essential (Afghan staff with experience in these fields is not available), these rates are satisfactory. 6.06 While slaughterhouse and export activities can readily be judged by their financial results, special efforts are required to evaluate the im- pact of Project investments on farms and ERIC. Assurances were obtained - 25 - during negotiations that HLDC wqould establish a mechanism for monitoring and evaluating the financial and economic benefits resulting from these investments. VII. RECOMMENDATIONS 7.01 During negotiations, assurances were obtained from Government that: (a) AgBank would require Project farmers to contribute 20% of their investment cost, but would accept the value of family labor as part of that contribution (para 4.17); (b) Government would take all possible steps to: ensure that HLDC could export meat without quantity restrictions; convert foreign currencies received for its exports at the Da Afghanistan free market rate of exchange; and implement the provisions of the TIR Convention in order for HLDC to have transit rights beyond Mashad (para 4.07). 7.02 Conditions of effectiveness of the proposed credit are that Gov- ernment had acquired title to the HLDC slaughterhouse site and had trans- ferred it as a contribution to HLDC's share capital (para 3.06); and that a contract for providing management services had been signed with a con- sultant firm (para 3.08). 7.03 With the indicated assurances, the Project constitutes a suitable basis for an IDA credit of US$9 million under normal IDA terms. S'CHEDULE A AFGHANISTAN LIVESTOCK DEVELOPMENT PROJECT Tentative Implementation Schedule for Experts' Services Approximate Appointing Source.of Date to Be Expert Agency Financing on Site Slaughterhouse General Manager HLDC IDA/ two months Goverinment after signing Factory Manager HID5 IDA/ 12 months Government after signing Chief Engineer HLDC IDA/ 12 months Government after signing Accounts and Marketing HLDC IDA/ 15 months Manager Gover:nment after signing Automotive Engineer HLDC IDA/ 18 months Government after signing Farm and Range Development Technical Director HLDC IDA/ two months Government after signing Livestock Expert HLDC IDA,/ four months Government after signing Agriculturist HLDC IDA,/ four months Government after signing Range Management Expert HLDC IDA,/ 12 months Government after signing Veterinarian]2 Government Government 12 months HLDC after signing I/ With financial assistance available to it from bilateral or multilateral sources, Government would provide the services of a veterinarian. The cost of the veterinarian is not included under the Project becausei although the veterinarian would be essential for project operations, he would perform regulatory functions on behalf of Government. ANNEX 1 Page 1 AFGHANISTAN LIVESTOCK DEVELOPHENT PROJECT Livestock Subsector Importance of Livestock in the Economy 1. The 22 million sheep, 3.7 million cattle, 3.2 million goats, and 2.0 million horses, donkeys, and camels making up Afghanistan's total live- stock population account for approximately 10% of GDP and contribute 24% (1970/71) of the nation's foreign exchange earnings in the form of karakul pelts, hides and skins, casing, and wool. The inclusion of carpets and rugs made of wool, goat, and camel hair, increases the percentage of export earn- ings to 30%. Livestock are also an important source of milk (sheep, goats, cattle, and camels) and a major factor in transportation and draft power. 2. The contribution which livestock could make to improving export earnings appears to have been greatly underestimated in the past by those responsible for priority allocation of resources and only now, when the live- stock industry has been severely ravaged by the effects of prolonged drought is there a growing awareness in Government circles of the potential of this sector and its importance to the nation. The People 3. The Afghan farmer is Moslem, independent, and conservative and he is considerably influenced by his village head (Maliks) and priest (Mullas) and a strong patriarchal family society. A harsh environment, the constant struggle to support self and family, and the subsistence nature of the farm economy, tend to make him slow to adopt new technology and innovations, but he is hardworking and skilled. That he is responsive to good extension and communication has been clearly demonstrated by the E'aktia Development Authority and the PACCA Project. Farmers in the Project: area (the Hari Rod Valley) are recognized as being among the best in Afghanistan. The Land 4. The area of natural grassland, exclusive of forest, cultivated land, towns, and snow fields, is estimated at 54.7 milliLon ha. It is largely mountainous, with annual precipitation ranging from 0 to 350 mm, and it has generally cold winters (below 0°C) and hot dry summers (in Herat Province, approximately 150 summer days with no precipitation and a temperature aver- age of 29.6C in July). 5. The natural grasslands are badly overgrazed and severely depleted of productive species. In a short growing season, they produce an estimated average of 500 to 750 kg per ha of dry matter equivalent: per annum of poor ANNEX 1 Page 2 quality feed. The rangeland is owned by the Kingdom and utilized by the flock owners on the basis of right of usage established over the centuries. 6. In Afghanistan, water means life and the immediate future will de- pend on the efficiency with which this limited resource is mobilized and used. Although a total of 5.3 million ha is said to be irrigated, approximately 50% lies fallow each year because of water shortage. Many irrigation systems are inefficient or in need of rehabilitation, while on-farm water management could be improved. In the Project area, the water shortage becomes increasingly acute west or downstream of Herat. Land Tenure 7. The system of land tenure also tends to impede change in some areas. The average size of holdings is said to be 3.5 ha of cultivated land, but in some villages, land ownership is said to be concentrated in one or two hands. Many farms are tenanted by sharecroppers under tenancy agreements that vary considerably according to local custom. In general, the tenant's crop share is directly related to his inputs. Where he provides labor only, his share will, in general, be 25%, but if he also provides oxen, seed, fertilizer, and such, his share could increase to 75%. Other systems involve "main" tenants who, in town, sublet to sharecoppers. There are no obvious indications that landowners are generally oppressive, but probably too few are progressive. 8. The distribution of owner-occupied agricultural holdings by size in the Project area is given in the following table: Ownership Total Size Class Distribution No. of Farms Area /1 (ha) (%) ('000) ('000 ha) Less than 0.5 31 6.4 1.6 More than 0.5, less than 1 26 5.3 4.0 More than 1, less than 2 17 3.5 5.3 More than 2, less than 5 14 2.9 10.1 More than 5, less than 10 6 1.2 9.0 More than 10, less than 50 4) 0.8 24.0 More than 50 2) 0.4 35.0 /2 100 20.5 89.0 /1 Based on mid-point of each class. /2 By difference. Source: UNDP/SF Project AFG 10. Hari Rod Basin: Land Tenure, Rome 1970. ANNEX 1 Page 3 9. The different categories of holdings include: '000 Owmer-occupied 21 Tenant-occupied 10 Occupied by laborer on daily wage 7 Total agricultural 38 Non-agricultural 10 Total 43 Sheep 10. All of the sheep are either fat-tailed or fat-rumped, with major breeds including the karakul (found exclusively in the Ncirth and Northwest), Arabi, Turki, and Giljai. Except among the karakul flocks, no selective breeding is practiced, but farmers do swap rams between flocks, thus avoid- ing in-breeding problems. Centuries of natural selection have produced re- markably hardy sheep with good productive potential. 11. The great majority of the flocks (at least 80%) are transhumant in nature. Transhumant flocks are those which follow the seasonal grass produc- tion in a migration from lowland winter areas to high mountain summer pastures and return. The owners, except for true nomads, normally have a fixed re- sidence and in many cases cultivate farms. It is estimalted that approximately 16% of the national flock is owned by the true nomads or "Kuchi." 12. The migratory system, because of problems of access and mobile location, greatly increases the difficulties of implementing improvement programs with the flocks. The most .effective way would appear to be to provide services during the winter and spring seasons when the flocks remain in a relatively fixed area for five to six months. 13. A combination of severe winter and spring weather, undernutrition, and disease and parasite problems causes low production and high mortality, although losses and productivity are also closely related to seasonal precip- itation. Average annual mortality is 20 to 30%; lambing rates, 70 to 75%; and production of coarse, multicolored poor quality wool, 1.5 kg per annum per mature sheep. All animals usually take four or five years to reach maturity at liveweights below potential. Losses in young sheep during the first winter average as high as 30 to 40%. 14. Winter and spring supplementary feeding is seldom practiced to any extent and the sheep and goats exist in precarious balance with the difficult environment. When this balance is upset, losses are usually very high. The droughts of 1971/72 greatly depleted an already low feed supply so that, in contrast to more normal seasons, sheep entered the winter of 1971/72 in low condition. The spring of 1972 then brought heavy snowfalls with accompany- ing cold winds, and with no body reserves to draw upon and no supplements ANNEX 1 Page 4 available (attemps at distribution of relief supplies were frustrated by difficulty of access caused by snow and bad roads), sheep and goats died in great numbers. Losses in the immediate Project area appear to have been exceptionally high. 15. Most known diseases and parasites of sheep are widespread (anthrax, clostridial diseases, foot and mouth disease, lice, keds, ticks, mange, liver fluke, and lungworm), but, except for a few isolated areas, virtually no con- trol measures are practiced by farmers. 16. Offtake from the present national flock is estimated as being as low as 10 to 15% per annum. As a form of insurance against droughts and hard winters, and because no reliable market exists for young and old un- finished sheep, farmers keep most lambs and old ewes, which results in still more intensive overgrazing of the rangeland (para 5) and very high losses (30 to 40%) in these classes of sheep. Present Marketing 17. Per capita consumption of meat (largely sheep and goat) is esti- mated at 8 kg per annum. Sheep are sold in local town markets where they are purchased by both butchers and consumers. Price fluctuates according to seasonal supply, with peak prices in spring (March-April) and lowest prices in autumn (October-November). Heavy selling by breeders in time of drought greatly reduces prices. Apart from Kabul (less than 1 million people), no large urban market exists and no premium is paid for quality. The effect is an apparent static demand and little or no price incentive for producers. Trends in National Production and Exports 18. Because levels of total domestic production of various livestock products are unknown, the volume of exports (Appendices 1-1 and 1-2) is used as a guide to possible domestic production trends. The percentage changes in recorded exports of livestock products from 1956-59 to 1967-70 are as follows: Livestock Products Percent Change Cowhides, sheep, and goat skins +32 Karakul pelts -38 Casings - 8 Wool -26 Carpets and rugs +78 19. A study of the recorded figures indicates a relationship between export of carpets and wool, and a similarity in trends between the export of wool, hides and skins, and casings. The influences upon volume of exports are diverse and all are probably interrelated to some degree. These factors ANNEX 1 Page 5 do, however, cause variations in total production. Exchange surrender rates, in relation to export prices and free-market exchange rates, no doubt affect the level of illegal trade in karakul and wool. As previously mentioned (para 13), seasonal climatic conditions affect the supply of feed and conse- quently the losses of livestock. Disease outbreaks may also coincide with periods of more feed shortage and thus affect the level of losses. Clearly, domestic meat prices received by farmers in relation to those received for karakul pelts would affect the numbers of pelts available for export. Of all the factors involved, however, seasonal rainfall would be the most important. 20. Considering the figures presented and taking into account the level of feed available, the incidence of disease, and the low productivity of the livestock, there is little evidence to suggest an increase in live- stock productivity during the last 13 years. Furthermore, in the absence of a specific and well-directed improvement program, there is little basis for predicting improvements. Sheep Exports 21. Until 1971, the export of meat and live sheep was prohibited but it has been estimated that up to 1 million head of sheep and goats "disappear" annually. This illegal trade is largely with Iran and Pakistan and reflects a response by farmers and traders to the relative market incentives available in these countries, particularly in Iran. An agreement for limited exports of sheep and mutton to Iran was concluded in 1971, but duet to heavy losses during the last winter and the likely export of relatively, large numbers of breeding ewes, the contract was recently suspended by the Senate although the action still requires confirmation by the lower house. It will be im- portant to the success of the Project that exports of live sheep again be permitted in 1974/75. Constraints to Increasing Productivity 22. Major constraints to increasing production in the livestock sub- sector are summarized as follows: (a) Broad Constraints (i) the absence of real Government support in terms of priority resource allocation, coupled with cumbersome administrative procedures; (ii) the lack of market incentives, with reference to the absence of organized export markets for meat. Since a farmer can get a relatively good price for wheat and other cash crops, he does not favor livestock in allocat- ing his resources. Furthermore, the Exchange Surrender Tax on wool and karakul, which requires that the foreign exchange earnings from these products be handed over to ANNEX 1 Page 6 the Government at an Af exchange rate substantially below the free market rate (Af 55 and 65, respectively (1970) per US$1, compared to Af 85 per US$1), acts as a produc- tion disincentive; (iii) lack of organized and reasonably priced credit facil- ities and the absence of a legalized system of livestock, crop, and chattel mortgages, including legal identifica- tion of livestock, as a basis for loan security; (iv) absence of properly trained personnel at all levels but particularly in on-farm extension services and farmer communication; (v) common ownership and right-of-usage of the natural grass- lands, which prevents any meaningful attempt at improve- ment and management; (vi) cultural and social restrictions imposed by a conserva- tive, largely illiterate society in which tribal influ- ence and allegiance remain a focal point; and (vii) lack of access to remote areas and to those closer to larger urban centers because roads or tracks are often impassable to vehicular traffic during winter. (b) Technical and Physical Constraints (i) water shortage for irrigation of cropland in summer; (ii) lack of stock water facilities and winter shelter on the natural rangelands; (iii) severe undernutrition of sheep during winter and spring; (iv) low production of fodder crops on irrigated land and the non-use of crop by-products (cottonseed cake, molasses, and beet pulp) for feeding; (v) virtual absence of animal health and disease control; (vi) absence of selective breeding and unavailability of improved sires, particularly for wool improvement; (vii) inadequate supply and distribution of farm inputs such as fertilizer, improved seed, and veterinary medicines; and (viii) the migratory system used in sheep raising, which imposes difficulties in implementing improvement programs. ANNEX 1 Page 7 Likely Benefits of Project Offtake on Traditional Flock 23. The possible effect of a reliable and profitable market outlet for lambs and old sheep on flock composition, mortality, and earnings from a typical transhumant flock is shown in Appendix 1-3. As a result of Proj- ect activities, the off-take is estimated to increase from 15% at present (it may be even lower) to about 20%. The number of deaths (especially of young sheep during their first winter) would decline, due to the reduced number of sheep (from 162 to 128) that would compete for scarce winter feed. If owners would not again increase the size of their flocks, the reduction in grazing pressure alone (without animal health control and supplementary feed) would have a marked effect on the flock's productivity and the shepherd's sheep sales would increase by 29%. AFGHANISTAN LIVESTOCK DEVELOPMENT PROJECT Livestock Subsector 1/ Quantity and Index of Recorded Exports of Livestock Products from Afghanistan. 1956-57 through 1969-70 (1335-48) Exports 1956-57 1957-58 1958-59 1959-60 1960-61 1961-62 1962-63 1963-64 1964-65 1965-66 1966-67 1967-68 1968-69 1969-70 (1335) (1336) (1337) (1338) (1339) (1340) (1341) (1342) (1343) (1344) (1345) (1346) (1347) (1348) 2/ Quantity Casings (1 ,000 coils) 2,199 1,983.6 1,494 1,732 1,443 1,724 2,121 2,770 2,548 2,074 2,472 2,104 1,874 1,467 Hides and Skins (1,000) 1,943 1,547.0 1,264 1,515 1,085 1,020 1,452 2,231 1,939 1,299 1,859 1,853 1,902 2,375 Karakul (1,000)3/ 2,220 2,357.0 2,027 2,738 2,125 2,627 2,230 2,949 1,995 1,504 1,373 1,534 1,134 1,693 Wool (m tons, 7,115 4,501.0 5,415 7,589 5,384 5,394 6,364 5,720 4,573 4,517 4,578 3,716 5,437 5,225 Carpets (1,00 On) 178 185.0 138 281 372 444 440 396 532 547 426 303 299 383 Index (Base: Average quantity, 1335-37 = 100) Casings 112 112 76 88 73 88 108 141 129 105 126 107 95 75 Hides and Skins 126 93 82 98 70 66 94 144 125 84 120 120 123 154 Karakul 94 120 86 116 91 111 95 125 85 64 58 65 8 72 Wool 109 107 83 117 83 83 98 88 70 69 70 57 84 80 Carpets 96 129 75 152 201 240 238 214 288 296 230 164 162 207 g a 1/ Official figures; no allowance for smuggling. 2/ Preliminary estimate. 3/ Does not include Dobar Baghana pelts. Numbers of pelts listed for 1956-57 to 1964-65 and 1967-68 are adjusted totals. September 13, 1972 AFGHANISTAN LIVESTOCK DEVELOPMENT PROJECT iZivestock Subo-ector "'oririodity Joposition of Exports (US,7 mIiion) 1964/65 1965/66 1966/67 1967/68 1968/69 1969/70 1970/71 TRADITIONAL EXPORTS 70.7 70.0 69.6 63.7 68.7 69.8 69.9 Agriculture 38.8 39.9 39.0 35.3 38.7 38.7 41.0 of which: Dried fruits and nuts 13.5 17.9 15.9 18.C 19.0 19.5 21.0 Fresh fruits 5.7 6.1 6.6 8.1 8.0 8.9 8.3 Raw cotton 14.° 11.1 14.3 7.9 5.9 5.6 8.9 Oil seeds 3.5 4.5 1.0 0.9 2.8 2.6 1.0 Herbs, fresh and dried vegetables 1.2 0.3 1.2 0.L 3.0 2.1 1.8 Livestock 22.6 20.8 22.2 22.7 24.6 23.8 2013 of which: Karakul 12.5 16.1 11.8 14.1 14.3 13.1 10.6 Hides, skins and furs 2.3 1.5 2.Lj 2.4 2.2 3.0 2.2 Wool and cashmere 6.2 2.0 6.5 4.9 7.0 6.7 7.0 Casings 1.6 1.2 1.5 1.3 1.1 1.0 0.5 Handicrafts and Other 9.3 9.3 8.4 5.7 5.4 7.3 8.6 of which: Carpets and rugs 8.7 8.9 8.2 5.2 4.5 6.2 5.7 NON-TRADITIONAL EXPORTS - - 2.9 9.0 12.1 14.0 Natural gas - - - 2.9 9.0 12.1 14.0i. TOTAL EXPORTS 70.7 70.0 69.6 66.6 77.7 81.9 83.9 Source: Ministry of Commerce ANNEX 1 LIVESTOCK DEVELOPMENT PROJECT ADpendiX x- Livestoci: Sunsector ŹEf ctcxof - Oftar~ on cog-osition. o.t?Traditiori&i._2ropdcLn_ ,c c~ No. of Sheep Present As a Result of Composition 2 Project Offtake Flock to Commence Year Mixed age breeding ewes 100 100 One-year replacement ewes 26 26 One-year males 23 - Two-year males 11 Breeding rams 2 2 Natural Increase with 75% Lambing Rates Ram lambs 38 38 Ewe lambs 37 37 Breeding rams, transfer through exchange 1 1 Total a2 0 Flock to Finish Year Mixed age breeding ewes 100 100 One-year replacement ewes 26 26 One-year males 23 - Two-year males 11 - Breeding rams 2 2 162 127 Sales Breeding ewes 2 2 Male lambs 5 38 One-year males 8 - Two-year males 10 - Breeding rams 1 1 Deaths Breeding ewes - 20% 20 20 Ewe lambs - weaning to one year 30% 11 11 Ewes 1-2 years - 20% 4 4 Male lambs - weaning to one year 30% 10 - One-year males - 20% 4 Two-year males - 10% 1 _ Total 238 204 Offtake as percentage of total flock 16% 32% Deaths as percentage of total flock 31% 17% Breeding ewes as percentage of total flock 62% 78% Stock numbers reduced 14 Income Increased 32 INCOME EFFECTS Sales without Project With Project AF 1/ AF Breeding ewes - 2 @ 700 - 1,400 2 @ 1,000 - 2,000 Male lambs - 5 @ 250 -I, 250 38 @ 350 - 12,160 One year males- 8 X 1,000-8,000 One ram 1,200-1,200 1 - 1,500 1,500 Total Income AF 11. AF 1560 1/ Approx. pr n ipurchase prices rrom 5ifeedbg_=ocVs. 2/ These prices are below those used forProject costs on model farms. September 13, 1972 ANNEX 2 Page 1 AFGHANISTAN LIVESTOCK DEVELOPMENT PROJECr Groundwater Development A. Geology and Hydrology Geology and Topography 1. The Hari Rod basin, created by a major fault system, is a broad east-west valley at an average elevation of 1,000 m. Most of the valley is filled with alluvial and unconsolidated sedimentary deposits of Pliocene and quarternary age to depths of at least 100 m and probably to greater depth in places. The deposits are chiefly clay, silt, sand, and gravel, and the more permeable zones comprise the basin's aquifers. Numerous alluvial fans border the basin at the mouths of intermittent and perennial streams. 2. The Project area within the basin extends from Herat upstream (eastward) about 60 km to Marwa and downstream (westward) about 80 km to beyond Ghoriyan and comprises those lands on either side of the river where the water table lies within approximately 10 m of the surface. The width of the Project area ranges from 2 to 14 kIn, with an area of approximately 120,000 ha (or about 40% of the total basin area). 3. The river bed is generally from 1 to 2 km wide and there are low banks and meandering flow channels. East of Herat, the gradient of the river is about 0.004, flattening westward to about 0.0015 near Ghoriyan. Project lands adjacent to the river are quite flat, with slopes of from 1/2 to 1%. Climate 4. The climate of the area is continental--hot (28%C average), dry summers and relatively cold winters (4°C average). Most rainfall occurs between December and April (89%), with maximum monthly precipitation in March and April (39%). The frost-free growing period typically extends from mid- March to early November, averaging 228 days. Strong winds blow steadily for about 120 days in the dry summer months. Representative climatic data from the meteorological station at Herat are given in Appendix 2-1. Soils 5. A semi-detailed soil and land classification survey of the basin was prepared at 1:100,000 scale from data recorded on 1:16,000 aerial photo- graphs. About 85,000 ha (gross), or 70% of the Project area, are class II ANNEX 2 Page 2 and III lands (modified USBR classification) suitable for irrigation from groundwater. Of this, only about 17,000 ha would be irrigated under the Project. The soils in the Project area include upper river terrace soils originating from loess loam and flood and first terrace soils formed from young alluvial deposits. Most soils are light to medium texture, non-saline, with satisfactory infiltration rates and internal drainage. A small area west of Ghoriyan, at the extreme western end of the Project, has highly saline soils resulting from a permanent shallow water table. A summary of the areas of class II and III soils within the Project, by district, is given in Appendix 2-1. Surface Water Hydrology 1/ 6. The headwaters of Hari Rod are in the mountains of central Afghanistan at elevations of 3,000 to 4,000 m. The river flows westward, past Herat, to the Iranian border and thence northward along the boundary between the two countries and eventually dissipates in sandy areas of Turkmenistan, USSR. Gauging stations established about 10 years ago indicate an average annual runoff of 1,420 Mm3 at Rabot-i-Achund near Marwa and 1,000 Mm3 at Herat. 7. Approximately 85,000 ha could be irrigated each year from the Hari Rod in and adjacent to the Project area but for the insufficient water supply from the river, which permits cultivration of only about one-half of this area in any one year, with the remainder in rotational fallow. There are 21 prin- cipal canals diverting from the Hari Rod, with lengths ranging from 2 to 40 km and capacities of up to 12 m3/sec. In late May-early June 1966, the measured diversion into 16 of these canals wqas 25.6 m3/sec, divided about equally be- tween the right and left bank diversions. Details on availability of surface water supplies are in Appendix 2-2. Groundwater Hydrology 8. The permeable sands and gravels underlying the Hari Rod basin are good aquifers for the development of additional groundwater for irrigation. Pumping tests indicate generally high coefficients of transmissivity (400 to 1,000 m3/day/m), with a storage coefficient of 0.01 to 0.10. The total ground- water storage available for development is conservatively estimated at 4,500 Mm3 based upon a saturated thickness of only 75 m and a specific yield of 2%. 9. Annual recharge to the groundwater reservoir occurs rapidly by seepage from the river bed during periods of low flow or from the flood plain during high flow. Considerable recharge also comes from seepage from irri- gation canals, deep percolation on irrigated lands, and high infiltration rates of tributary surface streams as they cross gravelly alluvial fans. The avail- able annual recharge is conservatively estimated at 350 Mm3. The annual net depletion of groundwater by the Project (crop water requirements and non- recoverable losses) would be 130 Mm3, or only slightly more than one-third the available recharge. The minor lowering of the mean water table resulting 1/ The water resources of the Hari Rod valley were surveyed by a UNDP/FAO team in 1970. ANNEX 2 Page 3 from pumping during full Project development (estimated at less than 1 m) would be rapidly replaced during the annual flood season--even in years of low runoff. Water Quality 10. Samples collected from representative wells throughout the Project area show that total dissolved solids generally range from 600 to 1,400 parts per million, with an average of less than 1,000 parts per million. Complete chemical analyses available from several wells show a typical U.S.Department of Agriculture classification of C2S1 with no residual sodium carbonate. The quality of groundwater to be developed is considered to be suitable for irri- gation. Water Requirements 11. Water requirements have been calculated for the cropping patterns by the modified Blaney-Criddle method, using the climatological data in Appendices 2-3 and 2-4. In determining peak requirements (12.1 mm/day in late July), pump capacity needed, and area irrigated per well, it has been assumed that in some years there would be no surface water supply available. In estimating the average annual water requirement, hours of pumping, and pumping cost, it has been assumed that existing surface water supplies are available to only 55% of the area, with full supply to June 15 and an 80% supply thereafter. 12. For the 13-ha model farm unit, with an irrigation efficiency of 65%, the total annual irrigation requirement is 203,000 m3. Deducting 47,000 m3 available from surface water, the net annual requirement to be pumped from the farm well is 156,000 m3, or about 12,000 m3/ha. Total average annual pumping of a 20 liter/sec well would require 2,167 hours, with a maximum of about 17 hours per day during peak periods. In years when no surface water was avail- able, peak periods would require between 19 and 20 hours per day pumping. 13. For the slaughterhouse farm, with 174 ha irrigated forage crops and an irrigation efficiency of 65%, the total annual requirement is 3,093 Mm3, or about 18,000 m3/ha. With a total installed pumping capacity of 300 liters/sec, peak periods of use would require slightly more than 20 hours pumping per day and a total pumping of 2,865 hours each year. 14. With 1,300 13-ha Project farms with wells (including 100 installed in pre-Project years), the total annual pumping requirement would be 202.8 Mm3 to irrigate 16,900 ha. Of the total pumpage, 130.2 Mm3 would be consumptively used and the balance of 70.6 Mm3 would recharge the groundwater reservoir or reach the river as return flow. ANNEX 2 Page 4 B. Present Groundwater Development 15. Because of the inadequacies in the surface water irrigation systems and the unavailability of sufficient late-season water supply, farmers are installing shallow dug wells and pumps. The wells, with diameters of 3 to 5 in and depths up to 20 m, are dug by local labor. Typical wells are 10 m or less in depth, with concrete or brick lining below the water table and a sloping access ramp to a pump platform situated 1 to 2 m above the static water level. Small (10 to 40 liters/sec) centrifugal pumps are driven by diesel engines-- either directly connected or with belt drive. There are some 100 dug wells for irrigation and many more for drinking water supply within the basin. 16. In areas where the water table is too deep for dug wells or for muni- cipal or industrial supplies, tubewells with deep-well turbine pumps driven by diesel engines have been installe(l. Most have been drilled by the ground- water department of the Ministry of Agriculture and Irrigation (MAI) or under a bilateral aid contract. Such wells are typically 50 to 100 m deep, 30 cm in diameter, and have yields of from 30 to 100 or more liters/sec. There are probably no more than 20 tubewells presently operating within the basin. C. Proposed Groundwater Development Type of Well 17. Selection. Shallow dug wells have been selected for the Project as the Project area is limited to zones where the water table is generally within 10 m of land surface. Tubewells would be installed only on the slaughterhouse farm or at a Range Improvement Center where the water table would be lower. Technical details supporting the assumptions on investment and operating cost are set out in Appendices 2-5 and 2-6. 18. Dug wells were selected because: (a) a shallow well to irrigate 13 ha would cost about Af 40,000 (Af 3,000/ha), while a tubewell to irrigate 58 ha would cost about Af 595,000 (Af 10,000/ha); (b) pumping equipment for a shallow well (20 liters/sec) at Af 60,000 (Af 4,600/ha) is less expensive than for a tuhewell (100 liters/sec) at Af 382,500 (Af 6,600/ha); (c) unit operation and maintenance costs for shallow well pumps are lower than for tubewell pumps; (d) shallow wells can be constructed easily with locally available labor; ANNEX 2 Page 5 (e) shallow wells serving 13 ha can be integrated more easily into the existing irrigation system--where they would supply only one or a few farmers--than a larger capacity tubewell that would have to serve a larger group of farmers; (f) the downpayment requirement for a shallow well and pump is within the payment capacity of a small-to medium-size farm; and (g) there is more than enough irrigable land in the Project area, with depth to water table of 10 m cr less, where conditions are suitable for installation of shallow dug wells. 19. Dug Wells. A typical dug well would be 10 m dleep, 4-1/2 m in dia- meter to a depth of 6 m and 2-1/2 m diameter with brick lining frotn 6 to 10 m. Static water level is assumed to be 7 m below ground, with a pumping level of 9 m at 20 liters/sec discharge. A pump chamber 3x3x6 m at a depth of 6 m would be reached by a 2-m-wide access ramp with a 2-1/2 to 1 slope. Water would be pumped by a 20-liter/sec 10-m head centrifugal pump direct connected (or belt-driven) to a 4.8- to 5-hp slow-speed diesel engine and discharging through a 4-inch galvanized steel pipe from the pump to ground surface. Minor improvements would be required on the existing farm irrigation system to ef- fectively utilize the new groundwater supplies in coordination with existing water supplies. 20. Minimum well spacing would be about 400 m in the most dense areas of project development, which shouldl not result in any significant problem of local well interference. Most groundwater pumping wDuld take place after mid-June when river diversions had essentially ceased. It is anticipated that most of the Project wells would be installed in areas west (downstream) of principal canal diversion points. These factors would prevent, or minimize, any possible reduction in river flows available at canal diversion points that might result from Project groundwater pumping. 21. It is anticipated that the construction schedule for Project wells and pumps would be: Project Year Number of Wells Pre-Project 100 1 200 2 300 3 350 4 350 Sub-total 1,200 Total 1., 300 ANNEX 2 Page 6 22. Investment costs for groundwater supply per farm are estimated at Af 113,000, of which Af 40,000 would be for the well, Af 60,000 for the pump and engine, and Af 13,000 for minor structures and ditches (Appendix 2-5). Well costs are based on current costs of materials and labor and include a 10% allowance for technical contingencies. Pump and engine costs are based on results of current international competitive bidding prices obtained by the Agricultural Development Bank of Afghanistan on comparable units. 23. Annual costs of operation, maintenance, and repairs are estimated at Af 33,700 per farm (Af 2,600/ha), including fuel oil, lubricants, mainte- nance and repair of well and pump, and labor cost for pump attendant. 24. Tubewells. Three tubewells would be installed at the slaughterhouse farm to provide irrigation water for 174 ha of forage crops. One would also provide emergency standby service for the slaughterhouse plant water supply system. Each tubewell would be an estimated 85 m deep and 30 cm in diameter and have 50 m of steel casing and 35 m of well screen. Static water level is estimated at 10 m, with a pumping level of 20 m at a discharge rate of 100 liters/sec. Each well would be equipped with a water-lubricated deep-well turbine pump, 100 liters/sec at a 30-m head, driven by a 30-hp vertical hollow shaft electric motor. Electricity for the pumps would be supplied by the slaughterhouse plant generating facility. The irrigation system would have concrete-lined supply ditches and unlined surface drains to irrigate 174 ha. A sketch of the suggested layout of the slaughterhouse farm appears as Chart 6996. 25. A small (20 liters/sec) low-head centrifugal pump with a 1-hp motor would be installed at the plant effluent treatment point to supplement the tubewell irrigation supply. Approximately 0.2 Mm3 of effluent could be uti- lized during the irrigation season, reducing the tubewells' annual operating time by 188 hours. 26. The investment cost of tubewells, pumnps, and their installation is estinmated at Af 3.2 million (Appendix 2-6). The small effluent pump and piping would cost approximately Af 595,000. Half of this cost would be al- located to the slaughterhouse and the other half to the farm operation. Cost estimates are based on current MAI charges for well drilling (increased to permit better well screen and well development) and on current manufacturers' quotations for pumping equipment in Afghanistan. The construction cost of the irrigation system, including excavation, lining structures, and land pre- paration (diking), is estimated at Af 1.9 million, including a 107 allowance for technical contingencies. Annual operation, maintenance, and repair of the tubewells and pumps is estimated at Af 225,000. Sheep Buying Points 27. Sheep buying points, to be operated in conjunction with the plant, would be located both within and outside the Project area. Each would be provided with a dug well without pump for drinking water supply at an esti- mated cost of Af 25,500. ANNEX 2 Page 7 28. A tubewell would provide the water supply necessary at a Range Improvement Center for watering livestock and for drinking wiater supply. The well would be equipped with a windmill and stock-watering tank for storage. Technical Assistance 29. Minor Irrigation Section. Continuing technical assistance would be provided to the Project by the Minor Irrigation Section (MIS) of the Ministry of Agriculture and Irrigation. The regional pump center, now being established in Herat by the Technical Services Unit (TSU) with MIS assistance, would provide pre-Project technical assistance to farmers and technical appraisal services to the Agricultural Development Bank of Afghanistan on loans to farmers for wells and pumps. These same services would continue to be provided through- out the four Project years. In addition, MIS would continue to provide the necessary dewatering pump and pump operators for Project farmers to facilitate digging of wells below the water table. The cost of such dewatering service would be paid by the farmer and is Included in the investment cost for well and pump. The proposed MIS staff requirements for the Herat regional center to accomplish the Project construction schedule are showm in Appendix 2-7. 30. British Overseas Development Agency. The British Overseas Develop- ment Agency is selecting a consulting firm to conduct a hydrogeological study in the Hari Rod basin. The study, to commence in late 1972, would have a three-month initial stage of investigations to be carried out by a small specialist team (hydrologist, hydrogeologist, soils expert, and agronomist) during which it would define and prepare a 15-month second stage. The cost of the overall program is covered by a -rant from the British Government. 31. The second stage of the study would be designed specifically to assist planning and implementation of the proposed Livestock Credit Project as well as to define the additional quantities of groundwater available for future development within or adjacent to the basin. The study would place emphasis on such matters as selection of smaller areas where the best quality soils could be developed from shallow wells or tubewells and the definition of areas where the aquifers are most productive. The study would also further ex- plore the agronomic and extension aspects and needs of the Project. ANNEX 2 Appendix 2-1 AFGHANISTAN LIVESTOCK DEVELOPMENT PROJECT Groundwater Development Climatological Data and Land Classification Climatological Data Month Average Temp(°C) Average Rainfall (mm) Mean Wind Velocity (m/s ec) April 16.1 2 2.5 May 21.7 12 2.6 June 27'.2 0 3.3 July 30.0 0 .1 August 27.8 0 3.7 September 22.2 0 3.1 October 16.1 0 1.9 November 8.3 12 2.0 December 3.3 34 1.7 January 2.F 36 2.0 February 6.1 40 2.1 March 10.6 44 2.4 Year - 220 - Station: Herat (34011'N, 62013'E); elevation: 964 m Source: UNDP/FAO AGL, SF/AFG 9 and. 10; Surface Water Resource Investigations Plan for Afghanistan, US Geological Survey, June 1966; Kabul Times Annual 1970. Land Classification !/ of Project Area District Class II Class III Total G.horiyan 14,830 3,180 18,010 Zind.erjan 11,44o 3,470 14,910 Injil 12,040 18,680 30,720 Guzara 8,410 4,360 12,770 Pushtun Zerghun 4,680 4,320 9,000 Total 85,400 34,010 85,410 1/ Mod.ified IJSTR classification. fiPl'EX 2 I.ppe;ndix 2-2 AFGHAJISTAN LIVESTOCK DEVELOPMENT PROJECT Groundwater Development Hy7rologic Data Estimated Nonnal Annual Runoff in the Har Rud.: CJatchment Tormnal Arnnual Vormal Annual Discharge Area Discharge Runoff in Station (Im2) (m3/sec) 1/ (M ) (l/secL kM2) Rabot-i-Achund 22,300 45.o 1,420 2.1 Herat 26,100 35.0 1,100 1.3 Estimated Probable Mean Annual Discharge: Discharge in m3/sec for Given Probability .1'7 3, 5e 110r 20' 50T 75_ 9Oy 97Th 9 Rabot-i-Achund F09.6 7F.9 73.E o6.1 57.4 43.1 33.5 22.7 20.4 16.6 Hlerat. 00.9 7h.6 67.0 5('; h&.3 32.2 22.2 12.0 10.1 7.2 Seasonal Distribution of Flow in the Hari Rud at Rabot-i-Achund: Oct ?Nov Dec Jarn 1eb Mar Apr M aj Jun Jul Aug Sep T1ormal armual discharge (') 1.3 2.1 2.2 2.0 3.2 10.7 29.9 34.2 9.6 2.3 1.3 1.2 Monthly dis- charge (ma/sec) 7.3 11.3 11.9 10.e 17.5 56,o 162.0 185.0 52.3 12.4 7.0 o.5 Groundwater Storage and Recharge: Esti!mated Storage 4Area of aouifer 3,0C0 km2 Assumed thickness of aoo.ifer 75 m Storape coefficient 0.02 Volume of storage b,3: i Mm3 s:r eati e .iIe r.rge \ nrual) Non-pererntial . ource -'ar± 7u1 Xorr;kr. Tributaries Total Annu- T C ( ] *~4' -cJ Ir. r r-. io ; 2C0 30: 22 le.^Ll;rie ( +- ^7C 3(.: 5v 35C Source: UiDF/;Pi leprort AGL, .,' 12 1/ .lrell 7es V ow iAri.Jte I 'or -.rŹ'i o s.u relo o-ic-a Fe--prJect YesrI Year 2 3e5r-3 Teach Yar neIrs..20 FYcPrjet nr har her lec 4 sa Yearslc eves 1,d35 … … … … … … …~~~~~~~~~~~~~~~~~~~~~~~10 13,950 10 13,950 15 13,hsn 10 13,950 OrOogOec7 Lesod -a fT Mother 775- - - - - 1> t>,4o 22 1 07,hT 2> t7,h50 2> 11,0>00 Bc to train - - 2> cc - Istt - Ocohe Mod 111 95,9!52 201 i174:4 F06 10,6> >2 1( , _120 197,96d Porclhsed dotoder 2 4 12 32 12 12 Thanle - ere,cber/scuarcc .054 - > 18,972 39 4005 7( 4953 h 495> I 49,536 Mortality - 2 0 n fle- 1,674 - ----- 0 1,674 - - h- .dedcf pesr - .,22 dotU> … …… … … 9y 42 2>9 25hc7h0 B3 321_255 2 3B_ic932 323 Yhlch5 locO - Pac off nlr7 - -1- - 22 12 Praed 7,09 3 232 225 hh 24 2 4 240 Foae-Model 1 (hcec g acd dre..dlcs) Mtnrtt>t / 10 11 12 12 17 PurrIeee halac ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~I- drderi- 1 2>1 25 >22, 270 desdT do AT Od. O o. i.Of On. AT do. If H., At' lno _____ ~~~~~~~~~L- - - - -- -F>-rccaed r,Acgtt - 0 4 0 50 5> Breeding ease i,~~~130 - - - - 24 31,220' 32 15,6>7 0 >5 12 i 15,10> 12 15,6W2 M-rtelty I/-- 3 3- eT-bd - JaeJcni 3>0 I 2st56 5 8,560 190 42,24o 227 7o,hnc 2do 76,4o0 c40 76,605 24o 00,332cO rece/acr 19 33 45 40 47 =eh - Acocct 320h…n" 2 CnG 5 1 24~ h ,5001 25 iRis> 50 10,000, 50 l,dO0 Ficgon t - ootote ITh 4 1.457 1 1, I0"> 7,d 37 15,500 30 >0.50 30 >cc,7h0 30 -253 >gdettsc ceo. i~~~~~~~~, 5> I 1,300 I - -I 1-,50 - - C. hedtto be-i - - 44 2h 0> 24 - - rcrc~~~~~~~~~~~~~ ~ ~~ ~ ~~~~ ~~ ~~~~~~h-,rd-nctotb- 4 27 30 30 32 30 Total 45 3,960~~~~ ~~~~~~~ 1 396 60L 030 2. 109,300 332 > 90.00 232 120,40 052 00500 crtality /-- ___ ___ foneosendonfare 4 4 ~~ ~~ ~~ ~ ~ ~~~~~~~~~~~~~~~~~~~~~~~4 4 4 4 4 helen - oprii/s>ey 2! - - - >~~~~~ ~~~ ~~4 >4 24 04 >0Yad -od of year i4 44 25 >4 ~~~h-td - - -t--9I -caMedoTfs y-- 1 0 1 B ~~ 9] hear cnnreonea le j- - It doril. t lanhiag rate -32 of once porohace>year>; >ternarheh95$ of enejondtinle (24). Mortaity - 6taO000;ceaf. 59. Tharase Fc,ctaeh a crchaet PIce Tri- ser kc. Por -ne at Bale Pric linoni gs- Liorseaal Too-eioeh 3ain of T.D.N./ carcane Ar LIdr kinght k____ .20...... AT G-sc/pao kg .. 1,> -ight Mator he 4-7 Yin 9' a-1toi 33.5 700 13.6 6s day lon-dod. 45.5 1,503 31 153 11 78 56 Mahar ntcee 4-» Or-> Acsgcst 05.5 700 15.6 15 daYs Oct.-Stop. 43.5 i,503 31 169 11 73 56 Breing ere 6-7 >r- Ontote 4, ,d00 30 ih -athe Joc-Johy 4> 2j 1,395 31 - - 337 56 h,-seh -03 - cn-Fr - - 0208 Otos Jcco--jciy 31 -W22 Ianhon 4ecee on-Jfy 1s 325 iS 70-Mode, .ct.-ONo. 2 W6 31 "I e >52/ tool 5 -nths dAsg-ct 15 320 >5 150 Sya Jsc-Feh. 34 1,2354 31 1062 i6 >3d 50 onggetae 7-9 ,athelO~to- 16 3552 19 2>20 dae Apo -32 4>0 1,20o 31 100 9/ 20 2456 Be-c >>ac ,htnher It i,95 31 hyea- ho-e 5 4 1,674 3> - 6 3,00 56 2/Asse an= or -tl in ð. Sol nccdael fe eaning htne iaeeeaghc -eO -nro1» ha >00 On oration, if Teed i, anslaflr Tecoe - ep ad Tattto for Fnrin 20-todc. Aee,a ~bieieealc or s 0kg. 9/crcthrtee estee as. folln1e spraro - iTO 2-se/hap; 0A>o, - 100 greo/day; Winter - 55 greoedy. 2 fThienae. fatear 0th) 00 elhttteh..e.er. f- -ohascd ..rficoshed ntocr eheep, co nctief-tcs.~ for killk,g. A5d2ieaeIm -1 a' athI. -Tooselsb 61 TiDN.- dots> ageecible lio0tdar.e deed noylp/ OneB 0 otorano sd irediagi) ad Motel 0 >coa>aEcaog Ford Oe-i--cts - lode> I (fttetag- en ,edi BA-nl Feed droop Yield Fr-Fr-jet Year I her -ha 3 hoar 4 Yea- 5 he-r 6-iS Olas eaiecec Pr-Pasde- Year I nea YIea 3 Onr4 Yrrceee-2 -YonIlder Lsa ofzdpePer- AlfalF - eI Bco 9-4 Y.1 - i3,7505 11,055 9,545 3,245 9,16 ocn4gcM 12 enacts ~ 3307 4,044 4,o44 4,c44 4.544 Al falf - cak3b-ete-n iree 1 d062/ 1.353 Si 1,3s6 1,356 20,106 26,5so o6,55c 26,550 dree.dian ee- Porh-e icc. 1I4 - 3,936 1,965 > 967 >9E5 i,968 tinner POT ]> 39 2 050 2,750 0,405 ,755 .,5.reic ws-aId Jo2 dn- -s 14,3d0 1,30 1.3 1,0 Ornen deolar 315 >7 - - 1,~~~~~~~~~~~~~~~I26s0 3,780 3,155 3,155 3,150 -, totpcrhaod- oli 65 SId 55 5,s5o 1435 0,6-o a 15,63 Berlay deat - 2 676 570 - - - tosbh p-rl-c cigost 133 - - 2,660 5,3>0 6,6» t,tso5 6,655 Woest sad Parla aces 14-iho 2/ 4,26,4 >s,64 5,248 3,608 3,132 5,960 9,060 Sngroe hocoisc onob- i178 712 012 3.0 ,34 ,0 535 534 Satcbiee, s-gelesod, Been Sters 7. 6- 6.00 72/ 3,032 6.03 6.320 6,000 63296 doggetne e.Id April/May Ba- - 644 1,104, I1 ,104i,s R-., loo~~300 - 150 332 300 300. 300 Ttota 12. 633 t>,5 ~32.33 13,.7404 50.621 50,750 50,750 _____6 oan.13.. ,0 3.30n 4,kho 4,400 4,40 o,44so 4,:406 Cno i,300 2! 3,20 3,90 3,050 3,900 3,900~ 3, ~9003,d Socang Cattle 0302/ 2,920 2,05t 5/2,920' 0,900 0,050 2,920 2,900 2/ 231 fed eorreeed Se 3 f TON (Ttesa Oo-eIbdle O-i-teae. oaes730 1.1.4 6 .460 2.090 2,32 2.92920 20 2,320 /Aeor 59 ntii-etinn nT Erl Matter Pr-6a-d; 509 ned gree at 5>8 PhN aT 0.; 509 ced he5 at >69 Tno or tot. dtigt ctitaanaacod be--e oT cnq-s,eTTtcitr OTghst harreettog aettode -,c sifrty Tossa Fred qs1ard _l02 0.3 222 47,> _50,44 .46 2/8QI A.-..wee 859 ot"iiaatn oT Dey Matter P5r -das All fel 65sa n 33 Te of D.M,. iT.l Peed vABilaSce 12.631 12.631 2" ~474104 50,0 5,70 5.5 A.-denne s -toilie.tac of 1ry Mootte Prddc.ed. Al)' ted er e 4% TOe of DP.. _ A,,-e,ne 32 IT of top Matter yrcad. 2 ieA-ee 399 I0 f r Mactsr Prtce- hdi "BeeJo Rtee -tai~tMioe f-r fandi.g periods sad grrtrae,sa al "Ploncdook aasi for ieter.- 2/ Fertod ago-ct adroaga Oeoteenee. 7/ 32 a Fr> Matter basie reed alionsanee For eheep Tnr nafetpWtt- b..iergiaaaf1sf- l.,pee t-eny>5gisOoI..rshoirs5eetb. 3/ eed an goat0 ke g enarM 678 ae TDNecs-ib, 1senee itesha, ,I, 300 kg. 9 2/Aeneeineea Onsa kdg. OSp-cb-e 13. 1972 34 -3 L3~~~~~~~~~~~~~~~~~~~~~~~~~3113 - 00000012,0 ~ ~ ~ ~ ~ ~ ~~~171 1000 31 Ł21 Lblb 3)0103 320131000 ., - 16 311 113~~~~~~~~~~~~~~~~~~~~~71 11 1:11 11 I-- 3,3000,5 0101100013)130 - -~~~~~~~~~~~~~~~~~~~~~. - 4, -, 8.13 1 21133113.01~ ~ ~ ~ ~ ~ ~~~~~~~~1 - 15 33103 330113300 130 13113. .1333) 2, ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~~~~"30 8 ,, 1 boboo Ag 22 __~~~~~~~~~~~~~~~~~~~~~~~~- L2-L 8001341100 10331 -- 1 - j-oo bol bo: 10?oo1 02 11 2 0.7 _____ yol2 131111 < .3 13 033 13 3171 1311,- 3,021~~~~~~~~~~~~~~~~~~~~~~~~~~~~1411 1 5 o o 3 3 o 2 [3 333 ,3 3 1 13 ,1 3 1 1 3 1 3 1 3 3,8 1 1o333oo 23 1,3 0 1,1 3 3111, 11T.- il.sl 31031 33 9,3.......... I AFGHANISlAT LIVESTOCK DEVELOPMENT PROJECT Fa Model 1I Sheep Fattening and Breeding o- 65-Jerib (13 ha) Fa-n Incremental Value Pro letio.s and Loan Cash Flow Iocrnemntot Value and rin.nci.l Rate of Return Year 1 Year 2 Year 3 Year 4 Year 5 Years 6-7 Year 8 Year 9 Year II Ye-r 11 Year 12 Year 13 Year 14 Year 15 Year Iu Yeor 17 Year. 13-20 ............ ......................... . ................ .Af 00. Gross Production Value 61 266 374 418 421 424 424 426 424 424 424 426 424 424 424 426 424 Coat Invearesc and Replace.net 151 44 54 3 54 Operating Eapenditure 85 223 303 323 326 329 329 331 329 329 329 331 329 329 329 331 329 Net Inco-e w/O Pro-et 12 12 12 12 12 12 12 12 12 12 12 12 12 12 12 12 12 Incra stal Value Generated by Invest ent (187) (13) 59 83 83 83 29 83 83 80 63 83 83 29 83 83 145 Financial Rate of Return Bear letOmate 29i Sheep Incore DIon 107 177 Crop Income Dune 107 26% hue.p and Crop Income Do-n 104 157 -lsventne Coen Up 104 267. 1/ In year 2", ic Seclude. reaidual alu. of eh.ep on hand - Af 62.000 Loan Ca3h Flow Pre Project Year 1 Year 2 Year 3 Year 4 Teoc S Years 6-7 Year 8 Year 9 Year 10 Year 11 Year 12 fear 1 Year 14 r ear 15 _er Iit Year 17 Yearald-l5 Year 20 . . . . . ................... ............... ..................... ..... - f g o......I.................................. ....... ... .................I............... a oo Cash Inflov Annual Salen 61 61 266 374 418 421 424 424 426 424 424 424 426 474 424 424 i26 424 486 i/ OGnera COetributioc 30 9 Long-Term Loan 121 35 Short-Ter Loan 40 20 Tonal Epeacted Inflov 61 252 330 37m 418 421 424 424 426 424 424 424 426 424 424 424 4 22 424 486 Ceeh Outflow Investment and Replacaut Breeding ewes 31 Rea 2 Oamn 10 Donkey 3 Equipamnt 2/ 1 3 3 Well 3/ 40 P,gap end Motor 3/ 60 54 54 Ditching and Canals 13 Alfalfa 4/ 14 4 Co.ting.n.y 3/ 13 1 Sub-Total 151 44 54 3 54 Operating Coats 6/ 49 SS 223 303 323 326 329 329 331 329 329 329 329 329 330 329 329 Debt SermIce Long-Tern 7/ 5 12 39 39 39 39 Short-Tene 2 41 20 Total resneted 0,,tflov 49 243 320 362 362 365 368 383 331 329 332 329 331 329 383 329 331 329 329 Cash Surplu 12 9 10 12 56 56 56 41 95 95 92 95 95 95 41 95 95 95 157V Incremental Cash SalBnce (3) 7 19 75 131 213 284 379 474 566 661 756 851 892 987 1,082 1,272 1,429 Includes v-lue of nhnop n hand Af 62,000 K/ 1bIh (plow) Af 200; Oun-h Gu-if 1,000; Hnd Sp,uyer.Af 3,000. 3/ Includes 107. Techi-cal Co-tingency. i 4/Seed, fertilieer, _uLti_"tIo and iloi.il irrixnt ion 5/ApptoninaCe 107. price cotnenyo all lnnuntne oc-uptlietC. 6/ Includej Solily labor, fully costed. 7/Lon8-tero i.t.r..t,87 p...i *hrt-t-r,107. p-a September 13, 1972 ANNEX 4 AFGIIANISTAN LIVESTOCK DEVELOPMENT PROJECr Farm Model 2: Sheep Fattening on 65-Jerib (13twha) Farm 1. It is expected that approximately 50% of Projecl: farmers would undertake limited sheep breeding, aside from fattening. The cropping pattern and on-farm development program of model 2 would be the same as that of model 1, the exception being the absence of a breeding flock. Sheep management would concentrate on fattening, with emphasis on winter (November-April) production (52%). Total production at full development (year 4) would be 327 head, yield- ing 4,820 kg of carcass meat. Although prices assumed do not provide for a winter and spring premium, it is anticipated that the slaughterhouse would actually obtain a premium for chilled meat sold in Iran during the winter months. Part of this premium would then be passed to farmers as an incentive for sale of finished sheep during the winter months. This model illustrates the production pattern that is expected to develop. 2. On-farm investment in year 1 would be Af 151,000 and Af 12,000 in year 2, for a total of Af 163,000 (US$1,900). Short-term credit requirements in years 1 and 2 would be Af 40,000 and Af 20,000 respectively. As with model 1, sheep production would commence in year 2 of the development program. Crop input-output data for model 2 are shown in Appendix 3-1 and input-output assumptions for sheep are in Appendix 4-1. Total feed production is the same as that for model 1. Incremental production and cash flow data are given in Appendix 4-2. AFS1RANISTANI LIVESTOCK DEVEWOPI4KT PROJECT CFca Model 2: Sheep Patteing on 65-J.rib (13-ha.yarm Input nod Sotpt Aeeontlooo for Sheep Nice Af C2 per Seer _Pe-pro-t Year 1 Year 2 Zeor3 ye-r'. X±Lj . - er 6-20 I-oo-/HeCd NE-Pra5ct Year 1 Year 2 year 3T Yea ea. 2 = fpmb')- ------No.-----No.-A----------- .f8f 1Af.NA A Sheep- - - 103 266 317 317 317 Lambs - Otober 868 - - - 72 62,496 152 131,936 193 164,920 190 1861.320 ccc - - - - - - - Laaebn-De...- Je. i,o54 3 8 40,052 97 102,238 97 102,238 97 102,238 Wheat 45 4i 41 78 56 53 59 59 Hoggetta - April-May 1,340… - 26 32.240 40 49,600 40 49.6600 Cotton 73 10 ID 42 39 42 42 42 Ba ley - 5 5 - - - - - Total - - O- U - 0.48 27 266.414 316.L&=758 I"36758 tielOt 23 - - 9 6 8 5 5 Bare 45 - 1.2 7 6 4 9oPchae FroSt 30 1 1 1 1 1 1 1 Po-e...c Grpe 50 4 __ 6 6 6 Pri-e/Head Ne-project Year 1 Year 2 Yea I ea 4 Tee52 Tetal Oncome 6o 6t 250 jA4 44 439 AC No. AS' Cc. dl No. AC 0878! i327Xr So.fNo. Al'.-Af F -.Af . . .Y A Tot1 T - i 9 ~ L - -3 4 mba - .Thy 320 - 0 25,600 160 51,230 200 64,000 200 64,oco tampa - Aug-t 320 8 2,560 V 2,560 50 16,0o0 100 32. 000 100 32!,O00 000 32,000 Hoggetta - Octohbr 350 4 140 4 1,400 26 9.100 40 14.000 40 14.000 40 14oos Octal 50~~~~~~~~~~~~2,700 U 0 1 0 Clock D-eeln.et Croj-ti-n Feed Reoui-tanA-ott. Year 1 Year 2 Year 3 Year 4 Yeees 5-20 Tine, Pcgclreeeot 3' Ne-project Year 1 Year 2 Year- 3 Y.- 2Ye.- 4 Year Y 5- Sears-6-so P-h_. _- Somber per POOac0 Kg of TDN P- Peed ------------- - K o'0f TDN pr- Fac- -: ------------ Corolne- -~,N jo2 0 lo 20 200 Lanhe p-rha-d JcIjg-t - 5,200 10,400 1,00 1,00 1,0 MortalIty 2/ - - 8 10 10 In~~~~~~~~~~~~~~~~~~~~~~9teRn Porchated Vogot 13106-.6 6,650 13,300o 13,300 13,300 13.300 Sen L OtNV - -12 19 9 Sget prled coe 178 712 712 4,628 2,120 7,120 7,120 7.120 Hoggette acid April-May 46-- - ,3 164 160 180 Samba:Oaec 1100 3'2,200 3,300) 4,400 4,400 4,40c 4,400 4,0 cortelity V - - - 5 5 ~ ~~~~~~~~~~~~~~ 5 Dcog cttl 730 5' 2,320 2,920 2,0 230 230 290 P,0 Conatned co.-tan V V VOok 730 140,460 21920 2,920 2,320 2,0 Salee - Dec-Jan. - - '8 ~~~ ~~~ ~~~87 87 87 1 16 ,9 ,2 ,2 ft b-d t. b.gi. 26 4o 40 U.U~~~~~otl FedVeoird n an 46.156 49 400 49 400 49 400 P-Vcgge tbtta: 1 4 6 6Tt1F- -i~i 32,322 h7,lg04 50,601 50,750 50,750 Mortalltylj/ -- - 3 3 0 C.n mdcntgdt 4 4, 4 4 4 4 Sales - April-May - - - 26 40 40 2 See Appendie 3-2 for feadiag periods ad groth r-tee On hand red of year - y 40 40G 40 3' g TotaIl dgeriblb Ootrlel--t o drY meter, beolo antod_rd Fo aheeP p-oIde enhalat- l safelymagn - Aee-s Sela-jght of 360 hk, 0/ Loehe po-hee..d Jniy, enPP-n SO he li-ioeShn; saidS Sntohec after 60-day felte-kog 11 sseesi=evght~ e.f 21713 k. 2/Period, 28 kg ltie-ight; -cerag gr-th rate, 120-12 gremada.y 2/Mortality - n% lee pee; therefrer, 5%. 3 Lambs P-rhees.d Ango-t, at 58 he iJje_jSgt; acid Dccebe-J--yr eft-t 150-day Leading, 34 Kg li-sigbt; averge growh l0b grme/day. 4/ Koggtta, porha...d Ortoh-, 5 8 kgSi-eaeght; sold April efter 220 days - 40 kg li-seiaht; g.-nae gtowth 100 S-aa/Ay, gprlanCe coLti lee Vene-nor Co-t r-PoetYea I Yea 2 Year 3 Year 4 Per - Ver 6-20 A-cI Ya C rc-projec Y.- I Yea 2 Year 3 Yea 4 Deere 5-20 --- ------- CAf66 per CeF -rr-------------pr heed Af Cc A! Co. AS No T-ALf o. 4 No..L N. AC She.p P-h.- 4 4 51 7 110 110 lio L~~h-bochne .JS.- 42 - - - - 05 3,360 168 6'?!0 250 8,405 200 8,400 Cheep Cotohanco 4 ,~~~~ ~ ~ 57 97 hO 10 50teh-oo 42 0 - 8 55 2,108 iOS 4,200 100 4,200 750 4,200 VeterinaY end Cotto Pesticcd, - - 7 13 iS iS 5 Sogeta- O c.cho 54 4 - 4 - 26 1l404 40 2 l1S 40 2.160 40 2.160 Seed 1/ 4 4 13 12 55 55 15 F-rili-e 1/ - 23 34 43 43 41 42 cT-1: 6841 8 4701.6 Re paJta ncdtMi-n...... 1/ 3 3 3 3 3 3 3 6_864_____13___0____47__0 Peep Opa-ing ad 14ei-nr...c-V - 13 23 00 34 34 34 Laho- 38 38 63 04 108 50-5 107 1/ oE ..pt fc- ehrr corhonee and cet-rinar, all other- e cea for Mcdnl 1. See Appandie 3-1 to 3h4 Tote: 49 05 256 28~0 316 316 3222 M/Senc irabdI I - --nroco e-a..redig.g Sapteaha- 14, 1972 CC-i CC Cl CC CCC .0 ANNEX4 4 - APPENDIX 4 2 C C" 0 :g -4 Cl SOC '"-C 4 4 Cl 4141 CC C C. 0 CC C 4 CC 44 C4 C, CC-C CCC C 44144 4 CC 4- 4 4 C -C O 4 4 4 C 0241 C 402. C - gt  -i 0 3 000CC-C 0 $ C C 4 4' CCC C C - 0 C C CC-CC 0 CC-Cfi -C C - CC 4' C C -COO CE C -C CC -C. CC 4.CCCC0 0 CC-CO C. C C C. 410 Cl C 4CC-CO-CO CflC CC CC41 C 0 C C 41 CC CCC C 00 CC 4 COO 41 4144 C..C C. C C C oP C CC CC C41C 41 C 0 0CC CC 0 C 0 C -4CC. C 00CC C C o 0 414141041 41 C C4C"C00 MaCC 41CC3 CC C.C C 4CC 0 C C 41CC-C 41 CC C C C C C C C.) -C jCtOCCCC C 24' CCC C -CDW 00CC C COCOCCCI C C" C CCCE 00 CC C *OaCCCC C CCCC CC 4 CC C 0-CCCCCC ! CC.j CCCCCCCCCCC C 2CCECCCCCOC0 CCC C-C CCC 0 *CCCCCC 2 C CC 3 p. 4104CC-C C.CCCC C C 44CC C 0CC4' 04 00CC-CC 3CC C CC 0 2 00. 4CC-CO... 2C0C041 CCCCC2C4' 4 N-CC lCCCCI -CCC 00.0.2e C 044' C CCCCCCCCflCCCC2 C C CC CC -C CCC "CO C 4 C C 2CC CC CC 4C C CC CC 40. 0.40 4 C 4 CCC CC4' 414CC 41 CCCC to CCCCCC -C CCCCC C 4' ..C4 C 4  * o 32040000CC 0 C) CCC CC COOCCCC,5 24' C C C 00 &CCJ OCC0C 0.0 COg 2 4 4C -- C C 4 C (CI C-C1CCC1Cl1414141 ANNEX 5 Page 1 AFGHANISTAN LIVESTOCK DEVELOPMENT PROJECT Farm Model 3: Slaughterhouse Farm (174 ha) The Concept 1. The 870-jerib (174 ha) slaughterhouse farm woulid be established to accomplish the following objectives: (a) provide a practical, commercially oriented, training and demonstration center for farmers, extension workers, and sheep buyers; (b) provide a continuous and timely supply of sheep to the plant, particularly in the early Project stages; (c) provide the Corporation with an additional source of profit and utilize resources readily available, namely land, water, labor, and unfinished sheep; and (d) demonstrate the use of by-products of the cotton industry for commercial sheep fattening. On-Farm Development 2. Three tubewells would provide water for border dike irrigation of the 870 jeribs, which are all flat. Effluent from the adjacent plant would also be utilized for irrigating crop land. The land would be progressively sown to alfalfa until, at full development (year 4), a rotation, involving alfalfa (five years), barley grain (one year), and clover and green barley (one year), is established. A full range of modern cultivating and harvest- ing equipment, implements, storage sheds, and other buildings is provided. Forage 3. Forage would be produced from alfalfa, red clover, green barley, and barley grain. Additional forage would be purchased Erom the adjacent cotton ginnery in the form of cottonseed-cake and hulls. Approximately 30% of the alfalfa would be made into hay. The balance, together with clover and grain barley, would be fed green. Sheep would be fed on a feed-lot basis, with all forage cut and carried. Approximately half would be cut by machine, the balance by hand. ANNEX 5 Page 2 Sheep Fattening Operation 4. Sheep fattening would be similar to that proposed in model 2. No breeding would be undertaken. Emphasis would be on summer production (54%), with 9,672 head yielding 198 tons of carcass meat at full development. An additional class of fattener would be introduced in the form of unfinished mature sheep (mainly males). These would be purchased from flocks throughout the year, with production concentrated in spring and summer, fed approximately 65 days to yield an additional 11 kg liveweight. These are sheep for which the flock owner, using ranges, has a limited market and it is anticipated that such a market would assist with eventually increasing offtake and reduc- ing losses. Appendix 3-2 gives details of purchasing dates, fattening period, feeding requirements, liveweights, ages, and prices; Appendix 5-1 gives in- formation for flock development projections, purchases, and sales. Details of labor inputs are shown in Appendix 5-2 while Appendix 5-3 gives incremental production and cash flow projections. Labor 5. In addition to machinery inputs, employment for approximately 11,000 man-days per annum of labor would be generated by the slaughterhouse farm. This does not include the Technical Services component. Organization and Management 6. Though under the control of the slaughterhouse, the farm would be managed by the Project Technical Director and his counterpart. A Farm Manager, reporting to the Technical Director, would be in charge of day-to- day farm management and organization. Technical Services, including veterinary, would be provided by the Technical Services Unit. Opportunity would be pro- vided for farmers (and farmers' sons) to work and train on the farm, while applied research would also be conducted by the professional staff of the Technical Services Unit (see Annex 8 for Technical Services description). AFGHAIIISTAN L .IVESTOCK DEVED3PMENTPREC Far,v Pqdel 3: Sla,ghterhouse Fart (174 h.) Input-Output As suPtions for SheaeD SHEEP SALES SHEEP PLRCHASES Liv-eight Af Year 2 YT.r 3 Year 4.20 Af Year 2 Year 3 Year 4-20 Kg Prite/Head Year I No. Total Af _o. Total Af No. Total Af Coat/Head Year I No* Total Af No. Total Af No. Total Af Mature Sheep 48.5 1,504 - 1,880 2,827,520 2,880 4,331,520 2,880 4,331,520 Mature Sheep 800 - 2,000 1,600,000 3,000 2,400,000 3,000 2,400,000 La-bs Oct 28 868 - 2,355 2,044,140 4,660 4,044.d80 5,177 4,493,636 Lambe 320 - 3,160 1,011,200 6,110 1,955,200 6,650 2,128,000 Lambs D../Jan 34 1,054 - 552 581,808 1.140 1,201.560 1,140 1,201,560 Hoggetts 350 - 400 140,000 500 175,000 500 175,000 Huggett. April/May 40 1,240 - 368 456,320 475 589.000 Total Coot: 2.751.200 4,530,200 4.703.000 Total: 4.78 5.453.468 904;8 1 4 9.672 10.61716 FLOCK DEVELOPMENT PROJECTIOCS FEED REQUIREIHENTS Year 1 Year 2 Year 3 Year 4-20 All Weighto in Anenal Year 2 Year 3 Year 4 Year 5-20 ------------- Nher of Sheep ---------------- kg total Reqoite.1 t Total Total Total Total Digestible Notrieots K TItHeed HNo./Head KR TDN No /Head Kg TDN No./HNed Kg TDli No/Head Kg TDN Matore Sheep Por.hase May-August _ 2,000 3,000 3,000 Mature Sheep 78 2,000 156,000 3,000 234,000 3,000 234,000 3,000 234,000 Mortality 120 120 120 Leabs July-Ott 65 2,560 166,400 4.910 319,150 5.450 354,250 5,450 354,250 Sales 1,080 2,880 2,880 Lambo Aug-Dec 133 600 79,800 1,200 159.600 1.200 159,600 1,200 159,600 H.ggetts Oct-March 18 400 71,200 5300 8,000 500 89,000 500 89,000 Lbs- Hglgetto April-May 46 - 368 16.928 475 21.850 475 21.850 Porchase July - 2,560 4,910 5,450 Martal ty 2/ 205 250 273 Total Feed Required: 4 818 678 858 700 858 700 Sales opt/Nov 2.355 4.660 5,177 L abs Total Feed Available: 473_944 8152 9_238 Purchase August 600 1,200 1,200 Mnrtality 48 60 60 Sales Den/Jan 552 1,140 1,140 1/ Total Digestible Nutri-nts H.ggett. On hand to begin - 368 475 Pornhaoe Ott 400 500 500 MortalIty _/ 32 25 25 Sales April-May - 368 475 Os head e.d of year 368 475 475 / Mortality let year, 67; thereattar 47. per se.um. 2/ Mortality lst year,8; thereafter 57 per a.ue.. Septba-hr 14, 1972 AFONANISGAN ANNEX S LIVESTOCK DSEVELCPNENT PROJECT Anpodi 5-2 Pam Model 2: Slaughterhouse Pan (171. h.) Opertinc Emnen.e. and SonPartiAc Asaetiac- OPERATING EXPENSES VEHICLE, PLANT7 AND MACHINERY OPERATING AND MAINRTENANCE COSTS year 5 Yea 2 Yea 3 Sear 4 Yearn 3-20 Labor 90 456 510 570 570 Truck - 20,000 km Af 7A., ilc. driver 140000 Vehicle, pl.ot and macbinary 0 und H1 95 504 630 630 630 Tractore - 1,200 bet AG 80A-r -Say 100,000 At. ..ob 300,000 IrriRation (in,. pumping) Repaira 6 maneaneo .ii $ant -.mhoi.. 5% of operating & alcnao 37 101 223 225 225 ..oat - 2,975,000 AS. 149,000 vrtri-uny - 191 365 393 393 Socdry tnoree, Seine, oPio, .. 41.000 FontHierr 37 17i 345 404 572 Saued 23 20 78 7N IN Total: 630.000 St-ck iced 1/ - 89 89 RN 09 Sheep purcic- - 2.751 4.530 A4703 4 703 Total Opert.ing Conic: 2021 4_420 6.8352 7.092 7.265 I/ 20 Ions coton...nd sake, Af 64,000, 50-no ctrn.n..ed hb1lla At 25,000. LASSO COSTS IRRIGATION AND PU0PIN0 COSTS VETERINARY0 COSTS AI1..tYa er234 Ttl5 2 I Farm -..agnr 40,000 C-oslo - 27, of -ot -22,000 tnr bead-At Eu., Total 40 No. tocu At No. Tota At No. Totl Atf M Ienhen 24,0008,0 ,0 700 300 8,0 3 tragp_oert-c 66,000 Draine - 5. of coa t - 7,000 Mature aboep 29 Nil 2,000 58,000 3,0000,00 OG 0700 300 700 3 Irrlcatort 43,000 Lambs - ~~~~~~~~~ ~~~~~~~~J.o-noe 42 - 2.560 107.520 4.910 206,220 5,450 228,900 5,450 228,900 93 Ttc-tor drivero 60,000 Puapiug - TubeonI muctoa Labs -Adg.-Ja...ary 42 - 600 25,200 1,300 30,400 t,202 50,400 1,200 55,400 O For Sborn, 1235,00 4, 2%1 of to Hougneta - April-Kay 54 - - - 400 21.600 500 27,000 500 27.000 I Ohnop tede 14,000 -pop-encite uuiotena.cco1 10 2 Olneko 45,000 & 152 nO coat Total: 190_720.2G 933121,2 3 Coordo 36,000 eftlont pumping, 30 H.....t.. (120 days) 105.200 tobemeli poping 11,0 T-tl: Af50.0 Yotul/aunuu: ~~~At 225,000 FERTILIZER COSTS Sopor- Dap I/ Urea phoephoce Coat Y-a 1 Year 2 ya 3 Yer4 Ynr - 20 At 7,0Ac 2/ Af 7.51b At 4.5Ato At Jarib Area Clott Area Coat Area Coat Area Cost1 urea Cet Alflfa' eeabibuo 100 7O 143 101,500 Al aSaelonone100 450 435 193,750 50 230,000 40 36,0 Cioror ~~~~~~~60 420 145 60,900 145 60,900 145 60,9001 145 60,900 Sorloy cr020 3/ ~~~ ~~~~~10 40 255 145 36,925 515 36,975 145 36,9073 143 34,975 145 36,975 Ocrlny green 50 ~~~~~~~10 9 145 71.775 145 71.775 145 71_725 145 71_775 Yrto1: 403316 6022,,0522Ž0 577.~150 J/ Di A-oclu Phoephate. Fertil Scerront- to kg. 2/ For baic r.cta-an nodal Farm I ,Appeodia 3-3. 7! After Altolta. 11200 C-OSTS Seed Rein 1/ 2/ Unto. Yea I Yea 2 Year 3 _car 4 Yor5-20 Sners/Jeib Af/S... Coat/Jeri Area Coot Araa Cos Anna Cuet Araa Coat Area Coat Jerib Af Jorib Af Jerib At Jerib At Sarib At Alfulif 3 0.4 250 100 145 Clover ~~~~~~~1.0 200 200 145 29,000 145 29,000 145 29,000 145 29,000 Sarley grain 3/ ~~~4.0 40 160 145 23,200 145 23,200 145 23,200 145 23,200 143 23,200 Satiny orear 3/ 4.0 40 InC~~~~ ~~~~~ ___ 145 26.100 145 26,1.20 145 26.100 145 26 100 Tots1> 23_200 78,39 78 30078.300 78 300 I/ 1 Scan r 7g60 2/ 1 Jerib- 0.2 ha, 4:Pr-i... yesea iet laded in innet-ne cat. S.pte-ier 14. 1972 LIVOSTOCK DIVNLKOPHS? PROZACT Far,m Mol 3t Blmaotenbame Farm (174 ha) Incrmetal Vaue Proletifoes ad Ls a Cah Flow ------------------ --Ye----ar ------ Ye - ------- -- ------------------- - - --------------________________________________________-- --- 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 ____________________________._________________._____----------____----__.------ - ---------000 Af -----------....................................... . -_:-------_---__-_-__----_-_----------_----_---------_--___--_.----__--------.----_ aro.s Production VeI - 5,453 10,034 10,616 io,616 lo,616 io,616 lo,6i6 10,616 io,616 10,616 lo,616 10,616 10,616 io,616 10,616 10,616 10,616 10,616 13,943 2 Inzts at nd Rpleoent 10,508 2,428 198 199 306 - - 1,9132 306 - 76)3/ - 1,071k1 - 1,913 - 306 - - - Operating 282 4r42o 6,652 T,092 7,265 7,265 T,265 7,265 7,265 7,265 7,265 7,265 7,265 7,265 7,265 7,265 7,265 7,265 7,265 7,265 Tuatton (20 Profit eSter Depreciation) -. _...74 367 . . 3 4.0 .3 tO.,3 tO3 ..3 S03 S03 tO23 to3 S0.3 66O3 . 3 - 62 Total Coete 10.795 684 I T,933 8,072 7,768 7,768 8.837 7,768 76 7,768 8,074 7.768 " 7,927 Incruientol aSee SneDeated by Invtent (10,790) (1,395) 2,686 2,951 2,678 2,953 2,921 99D 2,542 1,848 2,083 2,643 1,777 2,848 035 2,848 2,42 2,848 2,848 6,01o 1/ Machinery re-lceSot - 340 1e.. 10% . 306 2 Pachinery replacesent - 1,105 leee 10% - 995+ PuePS-1,020 less 10/% 918 Financial Rate of Raturn $ 0cbhioery raplace.ent - 850 iess 10% . 765 hfe Ter Macht,mny replec_esnt - 306 + 850 1 co 106 765 B Reeidual Value But Eitst 20 17 Buildig - 20% cost * 782 Sheep Soe Dors 10X - Irrigatioan ntet - 20% cost a 300 Operatin Cost up IOX - 1I W.ter ocsplY--s - 20% cnet * 391 Imveatsnt Cost Up lOt - 16 puops-2/7 the ro-t . 632 achinery - 4 Yr N lil - 7 yr. - 1/7 th cost-158 - 10 Y-s-i/10 th cost-llO - 12 yrs 5/2 th coot-285 steep 589 Totnl, CASH 102wW A Sales - 5,453 10,034 10,616 io,616 10,616 10,616 10,616 10,616 10,616 10,616 10,616 10,616 10,616 10,616 10,616 10,616 10,616 io,61i6 8 ,205L Lrn -tom Loon 8,408 1,943 1,300 1,500 - - - - - 1,6-- Oeners Cnc6it6lhtion 2.100 45 -2 _ - _.. _ .… … 4_5 Total Epected ISftn,: 1188 _ 12,034 1 0 616 10_616 12,416 iO.616 10.616 10.616 10_616 16 16 10,616 10.616 10616 11.205 CASE O'JlTLOW Invtebnt ad Repleoo.t Bu1 Idstf 0n-d T.roeote 3,315 595 Irriat on Syst_ 1,300 600 - - - - - - - - - - - - - - - - - - Water Suppb Wells 1,955 _ _ - - - - - _ - - - - - - - - - - ppo 935 43 - - - - - 918 - - - - - - 918 _ - - - _ osee nd ISt1ll.tton 255 170 Eqoipant ond Hhcebilry 2,550 435 306 - - 995 - - 765 1,071 - 995 36 Alfalfa 1 - - - -3 Sub-total: W f598 - - 1.071 ; _ - _ _ operatin Costa 282 4,420 6,852 7,092 7,265 7,265 7,265 7,265 7,265 7,265 7,265 7,265 7,265 7,265 7,265 7,265 7,265 7,265 7,265 7,265 Debt Service Loen-te- -interest- 8% 337 751 828 828 687 - - - - - - - S,nrt-terin-ittereot - 10 _ _ 1.760 1,901 2,053 2,216 2,3-- sh.rt-t.- -interest - 1t 65 75 _ - -princip.t 1,300 1,800 - - - 1,-CO Incose Tea - - 298 374 367 398 430 448 503 503 503 503 503 503 503 503 503 503 503 622 Total 13r1pected each 0.n tt1cc,n 8.974 9,676 10,253 l O& 1S,Ž51 10,283 9,568 ~ 7,768 8Ž7g2 7,760 9,_81 776 8_074 "7, 769 CASH SURPLUS 6i6 407 358 363 90 365 333 112 1,048 2,848 2,083 2,848 1,777 2,W4 9335 2,843 2542 2,848 2,848 3,318 I7CRRtETAI CASUH SuPe'S 616 1,023 1,381 1,74. 1,834 2,199 2,532 2,644 3,692 6,540 8,623 11,471 13,24G 16,096 17,031 19,879 22,421 25,269 28,117 31,435 - 1/ lociodee ro-idcl -nio of *hnep,Af 589. Septebttr 14, 1972 ANNEX 6 Page 1 AFGHAINISTAN LIVESTOCKF DEVELOPMENT PROJECT The Slaughterhouse of the Herat Livestock Development Corporation- Introduction 1. The proposed slaughterhouse would process for export the livestock turn-out from all Project farms. The slaughterhouse would be designed for processing 2,000 head per day in one shift and 3,000 head per day in two shifts. Livestock Ava_lability 2. Afghanistan suffered severe sheep losses (variously estimated in some regions at 40 to 70% of the flock) as a result of the droughts of 1971/ 72 and the heavy snowfall in the spring of 1972. Since the decimated tradi- tional flock would be the source of slaughterhouse suppLy, output would be limited during the early years of the Project. Additionally, export mnarkets must be developed. Afghanistan's most likely buyer, Iran, has indicated that, at first, it would consider a trade agreement for the meat equivalent of only 150,000 sheep. These considerations have influenced projections for first- year slaughtering at 150,000 head, which would gradually increase to 500,000 head at full development. The sheep and goat population of the four western provinces, Herat, Farah, Badghis, and Ghor, has been estimated at 5 million, based on a 1967 livestock census. Assuming an off-take of 10 to 15%, sheep (excluding goats) for local consumption and exports wouLd range from 500,000 to 700,000 head. Allowing for local consumption in the region, the upper limit of slaughterhouse capacity has therefore been set at 500,000 head. In consideration of the above factors, therefore, development of the slaughterhouse would be phased as follows: Capacity: 3,000 hd/day in two shifts Volume year 2: 150,000 hld Volume year 3: 250,000 hd Volume year 4: 325,000 hd Volume year 5: 400,000 hd Volume year 6: 450,000 hd Volume year 7-20: 500,000 hd Slaughterhouse Operations 3. At full development, Project farms would be able to deliver up to 46% of their livestock production during the November-April period when sup- ply from the traditional flock is restricted. This would enable the slaughter- house to operate on a 250-day year-round basis with comparatively small volume ANNEX 6 Page 2 fluctuation except during the initial years when livestock is mainly drawn from the traditional sector. Detailed projections of volumes, sales, operat- ing costs, cash flow, income and balance sheets are in Appendices 6-2 through 6-6, while relevant assumptions for computing sales and operating costs are given in Appendices 6-7 and 6-8. Livestock Buying 4. Livestock buying would be done at specific points or stations where a loading ramp, scale, and sheep-pen would be available. These fa- cilities would be under the care of an attendant who would be furnished with a small house so that he could live on the premises. All livestock would be purchased on a liveweight basis by actual weighing at the station. As Proj- ect farms evolved toward full development, livestock buying for the slaughter- house would shift from the traditional flock to the farms. However, the buy- ing stations would still be used to provide the growing purchases of lambs for the farms. To reduce transit losses, except where short distances are in- volved, livestock would be transported by 7- or 8-ton trucks capable of carrying 200 sheep each trip. Tentatively, eight stations would be scat- tered over the whole region to allow access to the traditional flock and assure as great an off take as possible. As distances are in some cases con- siderable, and certain stations could not be visited daily, arrangements would be made for them to operate on fixed days as frequently as practical. Buying would also take place at the slaughterhouse. Farmers and flock owners would be paid cash for their stock and deductions would be made for loan re- payments. Livestock Price 5. The livestock price should generally be allowed to find its own level. However, to assure a reasonable distribution of income between slaugh- terhouse and farmers and to avoid illegal export, prices would be reviewed and adjusted if necessary at fixed intervals by a committee composed of re- presentatives from the Corporation, the Herat provincial government, and the farmers. Buying contracts for lambs and sheep would be offered to farmers, especially in the initial period, to provide adequate incentive. Floor price for livestock could also be establishied. Slaughterhouse Specifications 6. Location and Site. The slaughterhouse would be located near the city of Herat, which is approximately in the center of the Project area. This would reduce transportation distances of livestock from farms to the slaughterhouse and also serve effectively as a base for the technical ser- vices responsible for the farm development. It is also a strategic location for livestock procurement from the traditional flock, which would be con- siderable in the initial years and would remain as a complementary source of supply during the entire Project life. The location also satisfies other basic criteria for slaughterhouse siting suchl as proximity to source of labor (Herat), availability of adequate water supplies, availability of good market communications, and ease of effluent disposal. ANNEX 6 Page 3 7. The site is south of the Hari Rod Bridge, about 9 km from Herat and on the main highway in an area already zoned for industrial development. It has a gradient of 1/2% and presents no apparent development problems. However, the land is privately owned and, to insure a reasonable price, Government purchase should be effected immediately. Its total area is 200 ha of which 10 ha would be required by the plant and the balance would be used for the slaughterhouse farm (Chart 6996). The slaughterhouse's daily water requirements of about 300,000 gallons at full development would be met from tubewells pumping from the same acquifer supplying Project farms. A nearby cotton ginnery uses groundwater, and available hydrological data indicate adequate water supply at 80 meters. 8. Buildings, Sanitary Standards. The plant would be designed, built, and equipped to meet international sanitary standards, mainly those of the US, UK, and EEC. This applies particularly to the layout and product flow which determines shapes and relative locations of processing areas. These, in turn, serve to establish the features of the buildings and relawtive placement. Ac- cordingly, inedible products would be processed in a completely separate build- ing from the main slaughtering building (para 11). Loading of edible products would take place at the end oppositet to the corrals and the loading spot for inedible by-products. In this respect, prevailing winds, which are strong during six months in the region, would be taken into account. 9. All slaughtering and edible product handling would be carried out in a single-story structure having a flat concrete ceiling and brick walls, finished on the outside to give an impervious, washable surface. Floors would be of concrete, pitched with standard drains, and furnished with abrasion- and impact-resistant surface. All openings would be screened and mechanical ventilation would be provided. Inspection and work areas would be furnished with a standard level of illumination. 10. Chill rooms would be built inside, or adjacent to the main con- struction, and would be designed to chill beef as well as mutton carcasses. Consequently, cooler rails would be placed 11 feet above the floor and mutton carcasses would be chilled on umbrellas carrying eight carcasses each. The refrigerating equipment would be of the forced draft type, floor-mounted for easy access for maintenance. Chillers would have the capacity to bring down carcass temperature quickly so that the cooler could be vacated for the next day's kill. 11. The processing of inedible by-products would be carried out in a shed-type building, having concrete floor with drains and brick walls. The roof could be of corrugated transite with supporting struacture of a flat concrete slab. Only natural ventilation would be considered. The buildings required to house utilities and provide storage for hides and skins would be of similar construction, as would the laundry, storeroom, maintenance and garage sheds. Offices, cafeteria, laboratory, and infirmary would be the same type, but with flat concrete cooling slabs and adequate inside finishes. ANNEX 6 Page 4 12. Shaded livestock pens would be provided only for one day's kill. Pens would have pitched concrete floors, individual drains, sanitary curbs and water troughs. A standard suspect pen (for animals suspected to be diseased) and a race leading to the killing floor would also be provided. Other necessary facilities for handling up to 20 head of cattle a day are also to be included. Storage space for by-products and skins and hides would be furnished for two weeks' production. The investment projections in Appendix 6-1 indicate the major components of construction. 13. Processing Capacity and Equipment. Buildings would be designed for slaughtering 2,000 head of sheep in an eight-hour shift, but would allow room to install processing equipment to handle a total of 3,000 head per day in two shifts. Equipment would be provided for the initial capacity of 2,000 head per day, including the 20 head of cattle per day, with provisions for installing the additional equipment required for processing up to 3,000 head per day in the third year of plant operation. 14. All equipment that would come in contact with edible products would be of stainless steel. Sheep and cattle would be slaughtered according to Moslem rites and dressed on-the-rail, which for sheep would be conveyorized. Provision would be made for identification of viscera, head, and carcass until final inspection. No wood would be used for any purpose within produc- tion areas for either edible or inedible products. Washbasins and sterilizers would be carefully located and access to the processing area would be confined to controlled points, using a strict hygiene routine. An autopsy room, emer- gency slaughter room, and a crematory digester for rendering dead and condemned beasts would also be included. 15. Complementary facilities would be furnished for saving kidneys, livers, tongues, tripe, brains, and hearts, as well as equipment for saving sheep trotters and a casing de-fatting and de-skinning unit to process cas- ings for export. The latter would remove the need for subsequent re-process- ing abroad as is now required with present casing exports from Afghanistan. Carcass meat would be shrouded with a stockinette mesh after chilling and prior to shipment. 16. Processing equipment for by-products would include conventional mechanized rendering equipment, hasher-washer for soft material, water- driers, percolating pans, curb-press, grinder, mill, and meat bagging hopper. Fat and tallow tanks would also be furnished. Blood would be dried. Pelts would be slated and air-dried inside a shed and baled for export. A baling press would be included for this operation. Hides would be salt-cured. 17. Utilities. Two package-type steam generators, each of sufficient capacity to meet the total demand and suitable for burning the local coal on a grate, would be installed. All auxiliaries, including feedwater treatment, would be included. ANNEX 6 Page 5 18. Since power supply from the city would not be available, two diesel- driven generators would be provided, each of sufficient capacity to meet the total demand. A third set with smaller capacity, to be used during weekends and period of low volume, would also be supplied. Switchboard start-up equip- ment would also be included. 19. Water would be supplied from a tubewell 50 to 100 meters deep, capable of delivering 300,000 gallons per day. So that a stand-by well would not be needed, the system would interconnect with a similar well installed for irrigation of the adjacent slaughterhouse farm. The water would require only filtering and chlorinating. A water storage tank and heaters would be furnished. 20. The refrigerating plant would be as simple as possible without un- due sophistication. The reciprocating compressors and an ammonia system would be involved and each compressor would be of sufficient capacity to carry the entire load. 21. Effluent treatment involving primary separation of fat and solid material would be provided. The availability of land permits the use of an anaerobic lagoon for secondary treatment and treated effluent would be chan- neled to the slaughterhouse farm for irrigation. 22. Complementary Facilities. Those would include offices, cafeteria, laboratory, storeroom, maintenance shed, laundry, and dressing rooms. All expatriates and respective counterparts would live in individual homes, which would constitute a small community within the plant area. Homes for the expatriates would meet western standards, while the houses for the local counterparts would be more than adequate to avoid an undesirable contrast. Transportation of Chilled Carcass Meat 23. Until other export markets are developed, Iran would be the sole buyer of the entire chilled carcass meat production of the slaughterhouse, so transportation requirements have beeti determined on the basis of effecting all deliveries to the city of Tehran (Annex 7). The Herat-Tehran road is approximately 1,250 km long and all paved except for 40 km, inside Iran which offers no serious transit problem. The appropriate transport unit would be a refrigerated, insulated 20-ton semi-trailer truck powered by a diesel engine. Such a unit would effect the round trip in four days. The total cost of a 20-ton trailer truck, CIF Afghanistan, is estimated at US$50,000. 24. As carcasses would be hung, except one or two layers stowed on the floor of the semi-trailer, the pay load would not exceed 10 tons. Consider- ing seasonal volume fluctuations, 14 trucks including two spare units would initially be required. An additional six units would be required in the third year of plant operation, with no increase in the reserve units. Each truck would travel an estimated 100,000 km per year and would be written off in 12-1/2 years. Both Iran and Afghanistan have recently subscribed to the TIR Convention under which right of transit is granted without need to trans- fer to an Iranian carrier at Mashad as was customary in the past, but this provision would have to be confirmed before acquiring the trucks. ANNEX 6 Page 6 25. There is no carrier in Afghanistan that could undertake this opera- tion, and, although a transport company in Iran, which operates 23 refriger- ated trucks carrying similar cargo on the Erzerum (Turkey)-Tehran route, could furnish the services on a contract basis, Governiment does not favor this al- ternative. With trucks assuried to return empty, except for minor supply pur- chases in Iran, the total freight cost per ton of meat amounts to US$70, which is the same as that incurred bv the Iranian finrm on the 1,200 km Erzerum-Tehran nrn. Design and Construction 26. If the plant is to be ready for processing the early turn-out from Project farms, construction must commence promptly. To make this possible, IDA would authorize retroactive financing from March 1, 1973 onwards of up to US$130,000 equivalent, for all preparatory steps (i.e. engineering and specifications as required for tendering and assistance in evaluation bids for plant construction). Thus, by the time of credit effectiveness this preliminary work would be well underway, if not completed. 27. Following international competitive bidding, a turn-key contract would then be awarded for constructing the slaughterhouse. It would include detailed engineering, civil construction, equipment, utilities and ancillary facilities. The engineering firm responsible for the preliminary steps in close cooperation with the General Manager, would be entrusted with supervi- sion during plant construction. Organization and Management 28. Management of the slaughterhouse up to year 4, inclusive, would be on contract with management consultants and would involve five expatriates: General Manager, Chief Engineer, Accountant-Marketing Manager, Factory Man- ager, and Automotive Engineer. The Factory Manager and Automotive Engineer are scheduled to leave after year 4 and be replaced by trained local counter- parts. The General Manager, Chief Engineer, and Accountant-Marketing Manager will probably be needed for a longer period because of the complicated nature of their work. See Appendix 6-8 for details on proposed management salaries and Appendix 6-9 for terms of reference. ANNEX 6 Page 7 Employment Generated 29. The slaughterhouse would generate the following employment, com- puted on a man-year basis (250 days per year). Direct man-years would cor- respond to persons physically employed, while indirect man-years would cor- respond to incremental local labor for the production of supplies and mate- rials used in construction or for regular production in the plant. ----------Years…---------…-___ Pre-Project 1 2 3 4 8 - 20 Direct Man-Years Investment 100 470 100 10 160 - Plant - - 189 215 241 358 Indirect Man-Years Investment 40 190 40 - 60 - Plant - - - 10 20 60 Foreign Exchange Generated 30. The Project would allow Afghanistan to develop an entirely new source of hard currency with the export of chilled carcass meat and by- products. Based on the volume and sales projections (Appendix 6-2) and operating cost projections (Appendix 6-3), the net foreign exchange earn- ings wbuld be as follows: During Development Full Development Year 4 Years 8-20 …US $ p000 ----- . Export sales 3,960 7,670 Foreign component of operating cost 460 660 Net foreign exchange generated yearly 3,500 7,010 Rate of Return 31. The internal financial return before and after income tax is 17% and 15% respectively. Sensitivity tests were applied to costs and benefits and show the following results: ANNEX 6 Page 8 Before Income After Income Tax Tax (%) (%) Investment costs + 10% 15 13 Operating Costs + 10% 9 5 Sales - 5% 12 9 Livestock throughput - 30% 15 13 Livestock throughput - 40% 13 12 ANNEX 6 ppendix 6-1 AFGHANISTAN LIVESTOCK DEVELOPMENT PROJECT HLDC SLAUGHTERHOUSE IN''ESTMENT PROJECTIONS - CAPACITY 3000 HEAD/DAY C"'9CITf COST PER UNIT PRE-PROJECT Ailk. FOREIGN EXCHANGE INVESTMENT ITEMS OR YEAR YEAR 1 YEAR 2 YEAR 3 YEAR 4 roST' COMPONENT TOTAL UNITS US$ ___________-----_--------------------------------in Af '000_-__------------------------ (% LAND AND INFRASTRUCTURE Land Government owned 10 ha. - - - - - Site Preparation, Access Roads, Buying stations, Dips. - - - 6000 .4000 - - 10000 30 SUB-TOTAL - -mm 4000- -: -lOr 3° CIVIL CONSTRUCTION Sheep and Ceattle Pens, Plant Yards, Infrastructure 6500,2 50 4.25 - 17850 16150 - - 34000 5 Main Processing Building (Slaughtering, Edible Offal, Mea Cutting,Holding, Loading Dock) 600m2 200 17.00 _ 8160 2040 - - 10200 25 Chill, Holding Rooms, Froezer, Tnsulation i2Cfln2 250 21.25 - 17850 7650 - - 25500 30 Inedible by-products Processing Building 300m2 150 12.75 - 3060 770 - - 3830 20 Cattle Slaughtering Floor lOOm2 200 17 00 - - 1700 - - 1700 25 Dressing Rooms, Cafeteria, Lab, Adm, Etc. 8002 180 15.30 - 9790 2450 - - 1224o 20 Staff Housing: Expatriates 5xl60m2 150 12. 75 - 12240 3060 - - 15300 30 Local Counterparts 5110.m2 120 10.20 - Skin Shed, Store ROom, Garage, Utilities, Buildings 1400n2 ao 6.8o - 7§62 - _ _ i 10 SlUB-TOTAL - 76570 35720 - _ 11gu1 UTILITIES Package Stesm Ge,erators & Auxiliaries 3>5000kg/hr 1500fob 1275.00 - 6380 - 2200 8580 90 Package Power " " 3x450hw 50000fob 4250.00 - - 14880 - 6000 20880 90 Seep Water Well, Pump, Lines, Storage Tank lxlO-20Hssec. - - - 1490 1490 - - 2980 So Effluent Treatment 300000 g/d - - - - 2130 - - 2130 20 Refrigerating Eqoinoent Complete 3x75tons _ - - _ 11480 - 3400 14880 90 Service Lines, Firefighting, Maiot. Equip. - - - - - 7230 - 1300 8S30 75 S5 B-TOTAL 14 9 0 4 3590 - 9 579508 MACHINERY AND EUJIPMENT Sheep Slaughtering & Dressing Equ'p.complete300ohd/l6hr. - - - - 12780 120 1270 15300 85 Cattle " ". " -minitems 2Ohd/8 hr. - - - - - 6380 - 6380 8S Edible Product Handling Equp. & Auxiliaries3000hd/16hr. - _ - 3400 - 850 4250 95 Inedible by-product Processing Equip. 3000hd/16hr. - - - - 10200 - 3400 136o0 85 Chill Ronm, Frezser, Refrigerating Units&Lines - - - - - 10630 3400 - 14030 90 Chill Room Railage, etc. 3 coolers 2100OOfob 178 50 - - 5100 2550 - 7650 95 Plate or Blast Freener Unit Comnlete - - - - - 1700 - - 1700 90 Railing Press & Misc. Equip. - - - - - 1700 - - 1700 90 SUB-TOTAL - 1R3fr 5520 6461 j TRANSPORTATION EqUIPMENT Bus fur Workers 3 12000Cif 1020.00 - 1020 1020 - 102 3060 95 Plant Vehicles - 4-Wheel Drive 4 4o00cir 340.00 - 680 680 - - 1360 95 Sheeo Trucks 6 x 200hd/esa.1500Cif 1275.00 - - 5100 - 2550 7650 9- Refrigerated Semitrailer Trucks 2Ox2otnns/ea 50000Cif 4250.00 - - 41650 17850 25500 85000 95 SUB-TOrAL mmoo 4 -75 *9B5 77 95 ADMINISTRATION, SERNICES, E-'C Office Equip, Lab, Cafeteria, Laundry Infismary, Facilites. - - - - - 4250 - 850 5100 So cWISHC'RINH, I y'l d - d 5000 8410 13300 136o 1930 30000 85 Sub-Total Fixed Investment _ _ _ 5000 94170 194790 32820 50270 377050 67 PHYSICAL C'NTINGENCIES: 5 - - - 250 4710 9740 1640 2510 ;-0'O 67 lTotal Fixed Investment - - - 5250 98880 204530 34460 52780 395900 67 CONTRACTED MANAGEMENT leneral Manager 56800 4629 Factory " 4686o 3983 Engineer 46800 3983 - 4828 16294 19795 19795 60712 90 Marketing Act. 46800 3983 Mechanic 35500 3019 LOCAL SALARIED STAFF - - - 269 663 - - 932 - WORKING CAPITAL - - - - - - 8762 - 8762 30 Sub-Total Investment. - - 5250 1'1977 221187 63Oi7 72575 466306 69 PRICE CONTINGENCIES: at 4% composite inflation yerly. 210 8318 ?6578 10715 15967 61786 69 TRAINING 9 MONTH FELLOWSHIPS 10 fOOO 510 - iSl1 1530 2040 - 5100 100 TOTAL InvTMmr 546o 113825 249595 75770 88542 533192 69 NOTES: All equipment and machinery items include crating, freight nd installation. Estimate provides for a slant designed to meet international sanitary standards f,r exn,rt. All civil construction designed and built for a total capacity of 300O head/daily u', 'w. shifts and, allowing for seasonal fl-ctuat-ons, a yearly through- put of 500,000 head; equipment and trucks phased for years 1 and 2 allow an init aI capacity of 2000 head/daily, acquisition of additional eqoipment and trucks shased for years 3 nd 4 to reach 3000 head/day would be subject to livestock availability. Februsry 23, 1973 APGHANISTAN LIVESTOCK DEVELOPMENT PROJECT l.DC Sleushterbouse Voiwe 6 Saleas Proiections Average t/ Average If Liveveight Dressed Weight Vlrum- 2 3 4 5 6 7 9 Par Rd -Kg Per Hd -Ks Head Purchased from Fattening Farms -- 5,500 24,750 60,350 109,550 165,480 203,450 212,550 31.2 15.6 Head Purchased from Breeding Farms -- 6,600 27,150 63,850 113,450 168,930 202,750 210,130 30.1 14.9 Head Purchased from Slaughterhouse Farm -- 4,790 9,040 9.680 9,670 9,670 9.680 9,670 35.4 18.4 Head Slaughtered fro Project Farms 16,890 60,940 133,880 232,670 344,080 415,80o 432,350 30.8 15.3 Head Purchased from Traditional Flock for Export -- 133,110 169,060 151,120 127,330 65,920 44,120 27,650 34.8 18.0 Total Head Slauahtered for Eroort Market - 150000 230.000 285.000 360.000 410.000 46000 460.000 31.0 15.5 % Slaughtered: Nay-Oct. (Sumer) -- 68 66 62 59 56 56 55 % Slaughtered: Nov-Apr. (Winter) -- 32 34 38 41 44 44 45 Total Head Slauahtered for Local market -- -- 20. 40000 40000 40.000 40.000 40,000 34.8 18.0 Total lead Slaughtered _ 150.000 250.000 325.00 400000 450.000 500.000 500.000 31.3 15,7 1/ fro. year 8 oward Seles - - - - - - - - - - - - - - - - - - - AF MILLION - - - - - - - - - - - - - - - - - - - Carcass Meat Exported! Tons -- 2,658.9 3,974.6 4,750.4 5,822.4 6,417.9 7,165.6 7,114.6 Carcass Heat -- 192.0 287.0 353.3 433.1 491.0 548.2 544.3 Pelts -- 23.9 37.8 47.7 59.6 67,5 75,5 75.5 Casings -- 9.7 16.2 21.0 25.8 29.1 32.3 32.3 TOTAL REVENUES FROM EXPORT SALES -- 225.6 341.0 422.0 518.5 5876 656.0 652.1 Edible Offal -- 2.4 3.3 3.9 5.1 5.9 6.6 6.6 Inedible Processed By-Products -- 5.6 9.8 12.9 15.7 17.6 19.5 19.5 TOTAL REVENUES FROM LOCAL SALES -- 8.0 13.1 16.8 20.8 23.5 26.1 26.1 TOTAL SAIUES *. 233 6 354.1 438.8 539,3 611.1 682.1 678.2 1l Based on assurnptions ir.dcated in ^perdix 6-'. iI| Note: 'ino- d screpancies due to rounding. - ° December 19, 1972 AFGHANISTAN LIVESTOCK DEVELOPMENT PROJECT HLDC SLAUGHTERHOUSE - CAPACITY 3000 HEAD/DAY OPERATING COST PROJECTIONS 1/ Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9-20 ---------------------------------------------Af million----------------------------------- Direct Cost Livestock costs - - 163.0 243.8 293.7 362.4 402.0 449.3 447.5 Direct labor - - 2.9 3.8 4.4 5.1 5.6 6.1 6.1 Utilities - - 4.0 6.0 7.6 8.9 9.8 10.7 10.7 Materials, freight,taxes - - 10.4 15.2 18.5 23.1 26.1 29.1 29.1 Chilled meat transportation - - 12.9 18.9 23.0 28.1 32.4 36.1 36.1 Total Direct Cost - - 193.2 287.7 347.2 427.6 475.9 531.3 529.5 Overhead Cost Maintenance - - 2.4 3.2 3.8 4.7 5.2 5.6 5.6 Engineers' salaries - - 0.3 0.3 0.3 0.3 0.4 0.4 0.4 Factory salaries - - 0.6 0.6 0.6 0.6 0.7 0.7 0.7 Administration salaries - - 0.4 0.4 0.4 0.4 0.5 0.5 0.5 Administration expenses - - 1.8 2.1 2.4 2.6 2.8 2.9 2.9 Contracted management 3/ - - - - 9.1 9.1 9.1 9.1 9.1 Total Overhead Cost 5.5 6.6 16.6 17.7 18 7 19.2 19.2 Total Operating Cost 198.7 294.3 363.8 445.3 494.6 550.5 548.7 Incremental Working Capital 4/ 33.1 16.0 11.5 13.6 8.2 9.4 (0.3) 1/ Based on assumptions indicated in Appendix 6. 2/ Includes buyers and trucking and buying station attendants. a 3/ Contracted management Years 1 thru 4 included in investment, expatriates reduced from 5 to 3 in Year 5 and onwards. 4/ Based on 60 days turnover. February 23, 1973 AFGNANISTAN LIVESTOCK DEVEIPMENT PROJECT HLDC SLAUGHETEPSOUSE - CAPACITY 3,000 HEAD/DAY CASH FLOW PROJECTIONS (Af Million) Pre-P,oect --------------------------------------------- Y E A R S - -------------------------------------------------------------- --- Residual Year 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18-20 Va1u- e / CASH INFOWW Total Sales Value of Production - - - 233.6 345.1 438.8 539.3 611.1 682.1 678.2 678.2 678.2 678.2 678.2 678.2 678.2 678.2 678.2 678.2 Total Sales as Collected 2/ - - - 194.7 334.0 424.7 522.5 599.1 670.3 678.9 678.2 678.2 678.2 678.2 678.2 678.2 678.2 678.2 678.2 Investmests: a) Equity Excludi.g Price Contingencies a) Equity 40% 2.1 41.6 88.6 25.2 29.0 - - - - - - - - - - - - - - b) Long Tem LOan 60t 3.1 62.4 132.9 37.8 43.6 - _ _ _ - _ _ _ - - - _ _ - Previous Year's Cash Balance 3/ - - 1.2 1.2 6.o - Short Taem Losn - 1.4 6.7 26.i 4.6 - TOTAL EXPECTED CASH INFLOW 5.2 105.4 229.2 285.0 417.2 424.7 522.5 599.1 670.3 678.9 678.2 678.2 678.2 678.2 678.2 678.2 678.2 678.2 678.2 CASH OUTFLOW 0.7 Bldgt: 22.5 Investments: a) Fixed Assets #/ 5.2 104.0 221.5 57.0 72.6 - 0.7 0.7 - - - 0.7 0.7 1.0 33.2 2/ 33.2 33.2 0.7 - Trucks: 61.2 b4 Working Capitalf - _ - 33.1 1/ i6.o 11.5 13.6 8.2 9.4 ( 0.3) _ - - - - - - - - Work Cap:_15 Operating Erpenses 71 i _ - i65.6 278.3 352.3 431.7 486.4 541.1 548.7 548.7 548.7 548.7 548.7 548.7 548.7 548.7 548.7 548.7 Debt Service: a) Short-Term LOan Interest 10% - - 0.1 0.7 2.6 0.5 - - - - - - - - - - - - - b) Short-Term Repaymnt - - 1.4 6.7 26.i 4.6 - c) Lng-Term Loan Interest 8% - 0.2 5.2 15.9 18.9 22.4 22.4 20.1 17.9 15.7 13.4 11.2 8.9 6.7 4.5 2.2 d) Long-Term Loan Repayant 4/ - - _ - - - 28.0 28.0 28.0 28.0 28.0 28.0 28.0 28.0 28.0 27.8 Corporation Income Tax 20% - - - - 1.5 5.6 9.4 14.2 17.9 18.6 18.9 19.3 19.8 20.2 20.7 21.1 21.6 21.6 21.6 TOTAL EXPECTED CASH OUTFLOW 5.2 104.2 228.0 279.0 416.0 396.9 505.8 557.6 614.3 610.7 6o9.o 607.9 606.1 604.6 635.1 633.0 604.2 571.0 570.3 CASH SURPLUS AT YEAR'S END - 1.2 1.2 6.0 1.2 29.0 45.7 87.2 143.2 211.4 280.6 350.9 423.0 496.6 539.7 584.9 658.9 766.1 1,089.8 2' Computed for rate of return calculation. 2/ Iran effects pay ents 45 dys after receipt of shipment, so a lag of 60 days has bess allowed for sales collection. / The previous Yeaw's casi bafance is only shown. he. it is used for financing to avoid or reduce short-tem borrowing. Includes contracted management for Year 1 through 4. Fixed assets for Year 3 include 2.8 mDllion Af. for start up contingencies. 5/ Vehicles replaced in Yearn 6-7, 11-12 and 16-17. Truckn and buses replaced iS Year 13-14-15-16 - No sales value credited. 7/ Initial work capital: 33.1 includes livestock purchases and based on 60 day turnover - 33.1 less (8.8 - 2.8) from long-term loan, less 1.0 available from previous years' cash balance equals 26.1 required to borrow short-term to start up operations in Year 3. 7/ Salaries or expatriates included in operating cost from Year 5 onwards. Loan repaid in 10 years cossnencing in Year 6. December ?2. 197? AFGHANISTAN LIVESTOCK DEVELOPMENT PROJECT HIDC SLAUGHTERHOUSE - CAPACITY 3,000 HEAD/DAY INCOME PROECTIONS (Ar Million) Pre-Project ----------_ ---------------_----------------_ __------------_------------ Y E A R S------------------------------------------------_---------------_____________ Year 1 2 3 4 6 7 8 9 10 11 12 13 14 15 16-20 INCOME Total SWles Value of Production - - - 233.6 345.1 438.8 539.3 611.1 632.1 678.2 678.2 678.2 678.2 678.2 678.2 678.2 678.2 Total Sales as Collected _- - 194.7 334.o 424.7 522.5 599.1 670.3 678.9 678.2 678.2 678.2 678.2 678.2 678.2 678.2 EXPENSES Dperating Including Overhead / - - - 165.6 278.3 352.3 431.7 486.4 541.1 548.7 548.7 548.7 548.7 548.7 548.7 548.7 548.7 Interest: a) Short-Tenm Loan 10% - 0.1 0.7 2.6 0.5 - - - - - - - - b) Long-Term Loan 8% - 0.2 5.2 15.9 18.9 22.4 22.4 20.1 17.9 15.7 13.4 11.2 8.9 6.7 4.5 2.2 - Depreciation - - - 15.7 18.0 21.6 21.6 21.6 21.6 21.6 21.6 21.6 21.6 21.6 21.6 21.6 21.6 TOTAL EXPENSES - 0.2 5.3 197.9 317.8 396.8 475.7 528.1 580.6 586.o 583.7 581.5 579.2 577.0 574.8 572.5 570.3 OPERATING INCOME - ( 0.2) ( 5.3) ( 3.2) 16.2 27.9 46.8 71.0 89.7 92.9 94.5 96.7 99.0 101.2 103.4 105.7 107.9 Provision for Income TaI 20% J - - - - 1.5 5.6 9.4 14.2 17.9 18.6 18.9 19.3 19.8 20.2 20.7 21.1 21.6 Adjustment to Profit and Loss - (0.2) (5.3) (3.2) 14.7 22.3 37.4 56.8 71.8 74.3 75.6 77.4 79.2 81.0 82.7 84.6 86.3 NET INCOME INCLUDING DEPRECIATION _ (0.2) (5-3) 12.5 32.7 43.9 59.0 78.4 93.4 95.9 97.2 99.0 100.8 102.6 104.3 106.2 107.9 1/ Incremental working capital has been deducted as it is regarded as investment. I De Losses carried for1rd for incom tax reduction December 19, 1972 AFOHANISTAN LIVESTOCa DEVELOPg5NT PROJECT hMDC SLAUOhTERHOUSE - CAPACITY : 3,000 hED/tDAY BAIANCE SHEET PROJECTIONS 3/ (Af Yillion) Pr-ProJect ----------------------------------------------------------------------------------- Y E A R S --------------------------------------------------------------------------------------------------- Year 1 2 3 4 6 7 8 9 10 11 12 13 14 i5 16 17 18 19 20 ASSETS Cash and Banns (C-mulative) - 1.2 1.2 6.o 1.2 29.0 45.7 87.2 143.2 211.4 28o.6 350.9 423.0 496.6 539.7 584.9 658.9 766.1 874.0 981.9 1,089.8 Accuts Rece.ivable n norentoriss J3/2 - - - 5.8 10.0 12.5 15.7 19.4 21.9 21.6 21.6 21.6 21.6 21.6 21.6 21.6 21.6 21.6 21.6 21.6 21.6 Fixed Assets (Less Depreciation) 5.2 109 2 330.7 372.0 426.6 405.0 384.1 363 .2 341.6 3200 298.4 277 256.6 236.0 247.6 2592 271.5 250.6 229.0 207.4 185.8 TOTAL ASSESS 5.2 110.4 331.9 416.9 436.9 507.1 519.7 552.2 598.5 644.5 692.1 741.5 792.7 845.7 9004 957.2 1,043.5 1.129.8 1,216.1 1,302.4 1.388.7 LTABILITIES ASD EqUITY Accounts Payable - - - 5.8 10.0 12.5 15.7 19.4 21.9 21.6 21.6 21.6 21.6 2i.6 21.6 21.6 21.6 21.6 21.6 21.6 21.6 Short-Tenc Sewn - 1.4 6.7 26.i 4.6 - - - - - - - - - - - - - - - Long-Tern Loan 3.1 65.5 198.4 236.2 279.8 279.8 251.8 223.8 195.8 167.8 139.8 111.8 83.8 55.8 27.8 Equity Paid Up Capital 2.1 43.7 132.3 157.5 186.5 186.5 186.5 186.5 186.5 i86.5 i86.5 186.5 186.5 i86.5 186.5 186.5 186.5 i86.5 186.5 186.5 136.5 Retained Earnings (Cusiatie after rn e) 0g) ( 5.5) (8.7) 6.o 28.3 65.7 122.5 194.3 268.6 344.2 421.6 500.8 581.8 664.5 749.1 835.4 921.7 1,008.0 1,094.3 1,130.6 TOTAL LIABILITIES 5.2 110.4 3319 416.9 46 507.1 251.7 552.2 598.5 644 9.1 741.5 727 8445.7 04 957.2 1,043.5 1,9.8 12161 1,302.4 1,33.7 -Jectis re in constant terms. / Represents gross operting margin on sales for the 60 day turnover period. Represents the vorsing capital required to finance full coot of production during th p t.o er p-iod of 60 days - 3/ bad j/ represent thus sccounts r.c:i,ble for .I.. -de .not collected "ad cost of i-cectories nd materials-in-process still in the plaont. D-ecenber 19, 1972 ANNEX 6) Appendix 6-7 AFGHANiISTAN LIVESTOCK DEVELOPMENT PROJECT LDC Sl.ughterhouse Assumptions for Computing Sales Revenues Item reAverage Yield 1/ Price 3/ Export Sales Chilled Carcass Meat: Years 2-3 2/ Af 72.25/kg c.i.f. Tehre Years 4-5 2/ Af 74.31/kg c.i.f. Tehra Year 5 onward 7/ Af 76.50/kg c.i.f. Tehrc Casings, (5% Condemnation Rate) Unit7Head Af 68.00/unit c.i.f. Cleaned, Sal4ted German-y, F. R. Pelts, Salted, and Dried Unit/Head Ah 159/unit c.i.f. Germany, F. R. Local Sales Kidneys (5,9 Condemnation Rate) 0.25 kg/HIead Af 25/kg f.o.b. Plant Brains 0.20 kg/Head Af 20/kg f.o.b. Plant Tongues 0.25 kg/Head Af 25/kg f.o.b. Plant Tallow-Fat 1.00 kg/Head Af 20/kg c.i.f. Kabul BIone/Meat -Meal 1.50 kg/Head Af 10/kg c.i.f. Kabul Dry Blood 0.25 kg/Head Af 10/k c.i.f. Kabul 1/ Transit dead and weight losses of livestock purchased for slaughter assumed negligible. 2/ See Appendix 6-2 for yearly carcass meat production. 3/ Following credits are granted for pelts and offal retained by Plant from the volume slaughtered for butclier s account for local c onsumption. To Municipality: Af 50/relt To 3utchers : Af 10/head for thoraci-c viscera: lung, heart, liver : Af 15/head for: head, feet, and tripe : Kidney withdrawn by butcher with carcass Af 50/pelt Plant will not charge slaughteringi fees. Municipal tax of Af 5/head will continue to be for butcher's account. AFGHANISTAN ANNEX 6 LIVESTOCK DEVELOPMENT PROJECT Appendix 6-8 HLDC Slaughterhouse Assu3mptions for Computing Operating Costs No. of Units Price or Cost or Rates per Unit DIRECT COSTS LIVESTOCK Cost of Livestock kg live Af 31/kg Veterinary Inspection Fees Head Af 2/Head Livestock Transportation: Drivers 10 1/ 16 2/ Af 30,000/Yr Mileage 60,000 km& r Af 8/ka Buying Stations Attendants 8 1/ 8 2/ Af 20,000/Yr )l 1/ 1 2/ Af 80,000/Yr Buyers )3 1/ 52/ Af 60,000/Yr DIRECT LABOR Corrals and Plant Yards 10 1/ 15 2/ Af 30,000/Yr Slaughtering and Edible Offal 49 1/ 78 2/ Af 40,000/Yr Chilling and Loading 20 1/ 31 2/ Af 30,000/Yr By Products, Incl Pelts and Hides 20 1/ 31 2/ Af 30,000/Yr General Labor 15 1/ 23 2/ Af 30,000/Yr UTILITIES Labor 30 1/ 40 2/ Af 30,000/Yr Fuel, Lubricants, Water Treatment, Supplies Coal: 7 kg/Head Coal: Af 0.6/kg Diesel Oil:, 2 kg/Head Diesel Oil: Af 5.5/kg + 40% Supplies MATERIALS. FREIGHT, TAXES Salt 1 kg/Head Af 1.45/kg Stockinette 1/Head Af 10/Unit Cleaning and General Materials Af 5/Head Freight Pelts to Germany, F. R. Unit Af 9.6/Unit Freight Casings to Germany, F. R. Unit Af 9/Unit Freight by Products and Materials: Herat-Kabul-Herat 5.75 kg/Head Af 1.80/Head Export Tax on Pelts Unit Af 3.48/Unit Export Tax on Casings Unit Af 6.56/Unit Miscellaneous Af 5/Head CHILLED MEAT TRANSPORTATION COST Drivers 36 1/ 56 2/ Af 50,000/Yr Mileage 100,000 km/Yr Af 12/km OVERHEAD COSTS Maintenance Labor 17 1/ 27 2/ Af 30,000/Yr Maintenance Materials 27, of Total Cost 2 Staff Af 50,000/Yr Engineers Salaries 3 Counterparts Af 75,000/Yr 5 Staff Af 50,000/Yr Factory Salaries 5 Counterparts Af 75,000/Yr 5 Staff Af 50,000/Yr Administration Salaries 2 Counterparts Af 75,000/Yr Administration Expenses 2% of Total Cost 1 President Af 100,000/Yr Contracted Management (Incl Local President) 1 Gen. Manager US$40,000/Yr 1 Engineer tlS$33,000/Yr 1 Factory Manager US$33,000/Yr 1 Marketing-Accountant US$33,000/Yr 1 Automotive Mechanic IIS$25,OOO/Yr 1/ Corresponds to Year 4 (Stage One) i/ Corresponds to Year q (Full Development). September 14, 1972 ANNEX 6 Appendiix 6-9 Page 1 AFGHANISTAN LIVESTOCK DEVELOPMENT PROJECT HLDC Slaughterhouse Terms of Reference of Management Team General Manager 1. Oualifications. University graduate in Business Administration, Economics, Accountancy or Industrial Engineering, or have equivalent train- ing, with at least 10 years' experience in positions of responsibility with- in the meat industry or the marketing of meat and meat products. Candidate must have adequate knowledge of livestock procurement and slaughtering and marketing of meat. He/she must also be familiar with modern international sanitary standards, as well as with costing and accounting procedures in the meat business. Knowledge or experience in farm management would be desirable, but expertise in that field alone would not be considered suf- ficient. Prior experience in a developing country woulcl be advantageous. 2. Duties and Responsibilities. The General Manager would be fully responsible for the operations and success of HLDC as a whole, including the technical services, the slaughterhouse farm, the Experimental Range Improvement Center, and the slaughterhouse with its related activities: livestock procurement, slaughterhouse operations, and marketing of produce as well as freighting to buying countries. He/she would be closely involved in the day-to-day operations of the slaughterhouse and would oversee the other activities in a general way, relying on the persons directly in charge of those activities to assume primary responsibility for them. Factory Manger 3. Qualifications. University graduate in Business Administration, Production Management, Chemical or Industrial Engineering, or have equiva- lent training, with at least 10 years experience in meal: packing plant op- erations, mostly in a supervisory or managerial capacity. He/she should be well acquainted with livestock handling, slaughtering and related opera- tions, refrigeration and its application to meat, by-products rendering, and skin and hide handling. He/she should be equally exper:Lenced in training and handling personnel and familiar with production platning and costing procedures. He/she must be well versed in meat inspect:Lon techniques and international sanitarv practices. Prior experience in a developing country would be advantageous. ANNEX 6 Appendix 6-9 Page 2 4. Duties and Responsibilities. The Factory Manager would report directly to the President and General Manager and be responsible for the entire range of slaughterhouse operations, including corrales, slaughtering, processing of edible offal and by-products, and functioning of plant auxiliary services such as laundry, laboratory, and infirmary. He/she would also be responsible for meeting production plans and budgeted costs, producing standard yields, and maintaining product quality withf:n sanitary requirements. 5. He/she would train a team of local counterparts and supervisors to take over the function after year 4. During the Project period. the Factory Manager would be responsible for ensuring that the contractor installed all plant processing equipment according to specifications. Chief Enpineer 6. Cqualifications. Universitv graduate in Mechanical, Chemical or Refrigeration Engineering, or have equivalent training, with at least 10 years' experience in slaughterhouse engineering, with emphasis on power and steam generation, refrigeration, and maintenance of processing equipment. He/she must have held a responsible position in a meat packing or food proc- essing plant and should be acquainted with international sanitary codes and sanitary designs for equipment and installation. Prior experience in a de- veloping country is preferred and some knowledge of diesel-powered tractor- trucks and their maintenance is desirable. 7. Duties and Responsibilities. The Chief Engineer would report directly to the President and General Manager and be responsible for the entire slaughter- house engineering function, including generation of utilities services and main- tenance of all buildings, equipment, and machinery to assure compliance with production schedules. He/she would be assisted by an expatriate automotive engineer who would assume direct responsibility for the automotive fleet. He/she would also train local counterparts in refrigeration, power geniera- tion, and maintenance. 8. During the Project period, the Chief Engineer would be responsible. to the Ceneral Manager for ensuring that the contractor complied with speci- fications in all engineering aspects. Accountant-Larketing -anager 9. Qualifications. University gradute in Economics, Accountancy or Business Administration, or have equivalent training, with at least 10 years' experience as a controller in a meat or food processing business and preferably also in the marketing of meat or food products. Prior experience in a meat pack- ing plant is practically essential as candidate must be familiar with meat plant yields, their effect on costs, and how costs are determined for the various meat products and different operations of the business. Prior experience in a developing country is desirable. ANNEX 6 Appendix 6-9 Page 3 10. Duties and Responsibilities. The Accountant-M[arketing Manager would report directly to the President and General Manager and would serve as controller and treasurer of the Corporation. He/she would also be responsible for the mar- keting function, involving primarily export of carcass meat. He/she would train local counterparts and clerks to perform routine accounting functions so that he/she could devote time to development of more and better export markets for the slaughterhouse produce. Automotive Engineer 11. Qualifications. College-trained in AutomotivE! Engineering and Main- tenance or have equivalent experience in the field of operating and maintain- ing a fleet of refrigerated trailer trucks. Candidate rnust be fully con- versant with diesel truck engines, as well as truck refrigeration equip- ment, besides all other mechanical features of the vehicles. He/she must have ability in training counterparts and some knowledge of English is es- sential. 12. Duties and Responsibilities. The Automotive Engineer and his Afghan counterpart would report directly to the Chief Engineer and be responsible for keeping the Corporation automotive fleet, including 20 meat trucks, six sheep trucks, three buses, and four-wheel drive vehicles, in sound operating condition. He/she would also train a team of local counterparts and mechanics to take over the function after year 4. ANNEX 7 Page 1 AFGHANISTAN LIVESTOCK DEVELOPMENT PROJECT Marketing Export Markets 1. The Project would export fresh chilled lamb and mutton to Iran and the Gulf States, beginning with 2,700 m tons in 1975 and increasing to 7,200 m tons when the HLDC slaughterhouse reaches full production in 1980. The quality of exported meat would increase steadily until 1981 when Project farms reach full production, and from that time onward mutton from the tra- ditional herd would account for only 7% of exports. Buyers from both the Iranian and Gulf States markets have expressed strong interest in obtaining meat from Afghanisitan as part of their continuing import requirements, and some by-products, including pelts and casings, would also be exported. A limited number of live sheep would be sold to Iran until the slaughterhouse becomes operational in 1975. Iranian Market for Mutton and Lamb 2. A major portion of the meat from the Project iwould be sold in Iran where consumption of mutton and lamb in 1971/72 (1,350) is estimated to have been about 275,000 tons. Mutton comprises about three-fourths of all red meat consumed in Iran, reflecting strong regional preference. With rising incomes and relatively high income elasticity of demand for mutton and lamb in Iran, consumption of mutton and lamb is expected to grow at an overall annual rate of at least 5% per annum during the Project period. At this rate, demand for mutton would increase to at least 427,000 m tons in 1980, to 544,000 m tons in 1985, and to 804,000 m tons by the end of the Project period in 1993. 3. In recent years, Iran's domestic production of mutton and lamb has failed to keep pace with demand, and the country has relied on imports and limited consumption to make up the difference. Domestic producers are not expected to supply more than 335,000 m tons of mutton and lamb compared with an anticipated demand of 427,000 m tons. If consumption is not to be con- strained by insufficient supplies leading to dramatic rises in prices, Iran will have to increase its mutton imports substantially. Appendix 7-1 sum- marizes demand and production forecasts for Iran and the figures presented there indicate the order of magnitude of the Iranian supply problem. Iranian Meat Imports 4. Officially recorded imports of red meat (largely mutton and lamb) increased from 700 m tons in 1976/68 to 22,300 m tons in 1970/71 (Appendix 7-2). In addition to official imports, there is a significant "traditional" ANNEX 7 Page 2 trade in live sheep that involves driving the animals into Iran across its borders with Afghanistan and Turkey without passing through customs. In some years, this trade adds more than 10,000 m tons of meat to total imports. Preliminary nine-month figures for 1971/72 indicate a reduction in the volume of official imports to an annual rate of between 13,000 and 16,000 m tons; however, the preliminary figures are incomplete and the exact annual rate is difficult to determine. This reduction in official imports can probably be attributed to a relatively high rate of domestic slaughtering as a result of insufficient feed during the recent drought, which would have tended to reduce the need for imports in 1971/72. The reduction, however, almost certainly reflected temporary conditions rather than any long-term decline in Iran's import requirements. Tehran Market 5. Most Iranian meat imports are retailed in the Tehran market, while other centers are usually supplied from domestic production. In 1971/72 (1350), Tehran consumed about 50,000 tons of mutton and lamb, and the rate of consumption is expected to increase between 5.7% and 8.7% annually (Appen- dix 7-1). If the market grows at the lower figure, the HLDC would have to capture 4.3% of the market in 1975 and 8.7% in 1980 in order to sell the en- tire export production there. If, however, the market grows at the higher and more probable rate, only a 3.9% share of the market would be necessary in 1975 and 6.8% in 1980. To the extent that HLDC is successful in developing other export markets, even smaller shares of the Tehran market would support the Project. 6. The Tehran market experiences seasonal shortages of supply in the winter months, from November through April. During this period, the amount of mutton produced by the Tehran slaughterhouse drops from a sunmer volume of 140 to 150 m tons per day to as low as 70 m tons, and many consumers use increased quantities of more readily available domestic beef. A system of mutton price controls, which ignores seasonal conditions, obscures the impact of winter shortages in the market, but the Tehran slaughterhouse pays as much as 30 to 40% above summer low prices for live sheep during parts of the winter. Once full production is achieved on the Project farms in 1981, the HLDC will sell about 40% of its annual production during the winter. It is likely, however, that at some time in the future the Iranians will be willing to pay a premium for lamb and mutton delivered during the winter, and, at this point, HLDC could increase its winter deliveries, provided that the prices paid in Tehran would allow for sufficient increases in live sheep selling prices to induce farmers to assume the additional costs of winter fattening operations. 7. There is some prospect of establishing markets in other urban centers such as Isfahan and Mashad, which are currently unable to obtain all of their mutton from surrounding regions. The region around Mashad has until recently been a net exporter of sheep and mutton, but the current meat shortage there is probably the result of high flock losses during the severe winter of 1971/ 72. In the longer run, however, the regional centers are expected to need ANNEX 7 Page 3 imported mutton and lamb, and while Tehran itself would be able to absorb the entire output of the Project, other Iranian cities could serve as useful alternative markets. Meat Organization 8. Mutton, lamb, and live sheep imported for sale in the Tehran market are purchased by or for the Government Meat Organization, which (a) serves as the monopoly buyer of imports for the Tehran market, (b) operates the Tehran slaughterhouse, (c) acts as wholesaler to 2,500 retail butchers in Tehran, and (d) administers the price control system for mutton in Tehran. Meat from the Project to be retailed in the Tehran market would be sold to the Meat Organization, either directly or through an intermediary. The Organization has expressed a preference for purchasing from Afghanistan if it can be assured of quality meat and timely delivery. In 1971, an Iranian transport firm concluded contracts with the Meat Organization and the Afghan Air Authority to supply meat and live sheep for the Tehran market from the Project region. Unfortunately, however, the Afghans were unable to make deliveries because of flock losses which followed the drought and the severe winter of 1971/72. Experience with this contract and that gained in earlier attempts by Iran to import mutton from Afghanistan has therefore led to some skepticism in Iran about Afghanistan as a source of supply. This problem, however, could be overcome by good performance during the initial years of slaughterhouse operations, but the Corporation will probably have to accept somewhat lower prices than its competitors during the first two or three years of the Project in order to establish itself. The Meat Organization has also indicated a reluctance to enter into a contract for more than 3,000 m tons of meat during the first year of slaughterhouse operations (1975) but it would be interested in a larger contract once HLDC had proved itself a reliable supplier. Prices for Iranian Imports 9. During the first two to three years of operation, HLDC could expect to receive a contract price of US$850 (1972 prices) per ton delivered in Tehran for fresh chilled meat. Prices presently paid in Tehran for such meat vary from US$850 to US$1,000 per m ton. The US$850 figure for meat from the Project is based upon a selling price of US$750 per ton fob Herat plus transport costs to Tehran, which are expected to approach US$100 per m ton. Current contract prices for live sheep imports range from US$425 to US$465 per m ton. Prices paid for meat and live sheep imports in recent years are presented in Appendix 7-3. 10. By 1977 or 1978, the Project should have established the quality of its meat and HLDC could expect to receive US$900 per m ton (1972 prices) for meat delivered in Tehran. The higher price would be justified on the basis of (a) a record of reliable delivery, (b) an established and improving quality of meat as a higher proportion of fattened lambs are included in shipments, and (c) the competitive option of selling to other countries ANNEX 7 Page 4 as alternative markets are developed. The prices used for appraisal are considered realistic and, if anything, slightly conservative. However, they do recognize HLDC's initial competitive weaknesses and underscore the necessity for selling at attractive prices in order to establish Afghan meat in the Iranian market. Alternative Export Markets 11. While increases in Iran's import requirements are expected to be more than sufficient to absorb the entire output of the Project, HLDC would develop alternative markets to improve its competitive position. The Gulf States, especially Kuwait, present the most attractive prospects, and buyers supplying the Gulf and other Middle Eastern markets have been interested for some time in negotiating contracts to purchase substantial quantities of mutton from Afghanistan. 12. Red meat imports by Kuwait have been increasing at about 6% per annum and reached about 15,500 tons in 1970 (Appendix 7-4). In recent years, Kuwait has also become the center of a significant re-export trade with smaller Gulf States, and annual re-exports of all red meats amounted to 1,000 tons in 1970. Although a substantial amount of meat for Kuwait arrives live for local slaughtering, the growth in imports has been in fresh chilled and frozen meats. The continuing trade in live animals, however, attests to a preference for fresh meat. Consumers in Kuwait also prefer mutton from the "fat-tailed" sheep, particularly uncastrated males. The Project would be able to cater to all of these preferences. 13. Buyers intending to airfreight fresh chilled mutton to Kuwait have offered US$790 per ton fob Kandahar for mutton supplied on annual contracts of 4,000 tons or more. Although an initial contract at US$790 would be profitable to HLDC, the Afghans should be able to command higher prices in this trade once the quality of their product is established. Also, if surface transit arrangements could be made with Iran and Iraq, HLDC could avoid costly air shipments and deliver directly with its refrigerated trucks. Prices for meat delivered in Kuwait are expected to be between US$950 and US$1,000 per m ton and development of a market there for roughly half of the meat from the Project would improve the competitive position of IILDC. 14. The Russian market also appears to be a possible outlet for meat from the Project, but the probable requirement for costly freezing facilities makes it less attractive than those in Iran and the Gulf States. Furthermore, HLDC would prefer to deal with convertible currency areas rather than one that would require it to become involved in unfavorable barter arrangements in which goods are valued at only Af 65 per US dollar. Live Sheep Export 15. During 1974 and until the slaughterhouse begins operations in 1975, HLDC would purchase about 15,000 fattened sheep from pre-Project farms for ANNEX 7 Page 5 export to Iran. This trade would demonstrate to local farmers that breeding and fattening of sheep is profitable to them, and the prices offered by HLDC should be set at sufficiently high levels to encourage future production for the slaughterhouse. The relatively small number of' sheep involved would not merit an export contract and the animals could probably be sold at prevailing prices in Mashad. The profitability of this trade, however, is far less important than encouraging a reliable long-term source of supply from farmers in the Herat region. The Domestic Market 16. Annual domestic consumption of mutton is estLmated at 90,000 m tons, with a substantial portion attributed to home slaughtering by farmers and other flock owners. The commercial trade in mutton is dominated by a large number of small retail butchers, and there is little if any wholesaling. Retail butchers buy live sheep at local markets and either have them slaughtered on cement slabs under municipal control or do their own slaughter- ing behind their shops. Prices are also much lower in Afghanistan than in potential export markets; price series information for Kabul and Herat are presented in Appendices 7-5 and 7-6. The weighted averaged retail price for mutton in Herat during 1971-72 was Af 28.2 or US$0.34 per kg, compared with US$0.64 for mutton negotiated with the Iranian transport firm (para 8) during the same period. Low incomes and insufficient effective demand account in part for the low prices in Afghanistan, and no substantial local market can be expected for the higher quality fattened meat on which the Project would base its export trade. 17. While the Project would not sell to the Afgh,an market generally, HLDC would make a slaughtering service available to Herat butchers, free of charge, in order to improve sanitary conditions. HLDC would also provide transport to and from the slaughterhouse, and would finance the service by processing and selling those by-products that are now wasted in the slaughtering yard. By-Product Utilization 18. HLDC would export pelts and casings to established markets in the Federal Republic of Germany and other European countries and both products would be fully processed instead of leaving some of it to be done by buying countries, as is the present practice. Other edible by-products, such as kidneys, tongues, and trotters, and inedible products, such as meat meal, tallow, and dried blood, would be sold domestically until export markets could be established. ANIiEX 7 AFGHANISTAN Appendix 7-1 LIVESTOCK DEVELOPMENT PROJECT Marketing Market for Yttton andLamab in Iran and Tehrani! Iran _ Tehran 2/ 3/ IV 5/ 6 Consumption and Production Imports and Most Minimurn Demand Forecasts Anticipated Likely Demand Production Demand Deficits ___--------------------------- ('O00mtons) --------------------------------- 1968 9 " -30 29 __ __ 1969 26'5 235 30 __ __ 1970 272 239 33 -- -- 1971 275 2,55 20 50.0 50.0 1972 2&9 253 36 5144 52.9 1973 303 262 41 59.1 55.9 197.L 318 271 1t7 64.2 59.0 r!7!' 282 53 69.8 62.L 197fi 351 291 60 75.9 66.0 1977 3'9 302 67 P2.5 "9.7 1978 387 313 7L 8.9.7 73.7 1979 L.06 32): 82 97.5 77.9 1980 427 335 92 1'5.9 82.3 1981 Y 't8 3h18 100 115.2 87.0 1982 1h70 3Y50 110 125.2 92.0 1983 h9L 373 121 13 .1 97.2 108L 519 38F 133 1l7.9 102.8- 1985 544 '100 1L;L 160.8 108.6 1986 572 1!jL5 157 17b .7 1)!.8 1987 600 )!30 170 190.0 121.1, 1988 630 LWL5 1P5 206.5 128.3 19P9 662 !61 201 22)b.5 135.6 1 990 693 1§78 217 214L.0 145.3 1991 730 !'95 235 265.2 151.5 1992 766 513 253 288.3 160.2 1993 804 531 271 313.3 169.3 1/ Includes goat meat. 2/ Mission estimates for 1968-71 hased upon official and unof'ficial imports and on production estimates. Demand forecast at 5% thereafter. 3/ Mission estimates for 1959-70, vAth production increasina at 25g. A hi--h slaughter- in7 rate durin- the 1971 drouwr4. leads to htigher estimate of production duri.n that year. Production forecasts from 1972 are based upon the 1970 fi3ure, *it.h 2% ;-rorTth in 1971 and 3.2"'I thereafter. R' Based upon of'fioially r7corded irportq (Appendix 7-2) and mission estimates of ille"',al border x r'aCde in live animal1s. 5/ Growth in demand at 8.7," per onnurm is .,ased upon 'he follovin- mission estimates: (a) increase in the Teh'rian porpula.n.ioll. %; (b) arowth in real per capita income in Tehran, 750;and ( i) Inconc .ln .r tieit.v of demand, 0.560. Consumption in 1971 esstimated by tne appradl sal mis f.sion. b yowti in denand at, msi .l n in 1.7 e 9',' ' - by the ap raisal MUSSIon. September 12, 1972 LIVESTOCK DEVELOPMENT PROJECT ANNEX 7 Appendix 7-2 i'irketinrb Iranian Market. Net Official IiDorts of Red Meat. 1967/68-1971/72 - Imports---------------------- Live Sheep Total Eports of Meat 1/ Red Meat Red Meat Meat and Net Ihports Head Equivalent Fresh and Frozen Imports Live Animls of Red Meat (t000) (m tons) (m tons) (m tons) (a tons) (m tons) 1967/68 Australia -- -- 416.6 416.6 Other 44.2 245.3 289.5 Tota' 5.0 44.2 661.9 706.1 348.4 357.7 1968/69 Argentina -- -- 645.1 645.1 Australia 9.1 274.2 14.2 288.4 Ethiopia -- -- 150.3 150.3 United States -- -- 161.9 161.9 Other 2 32. 202.8 235.7 --- Total 1T1.1 30?.1 1,174.3 1,14811.4 100.2 1,381.2 Argentina 21.1 523.0 17.8 540.8 Australia 72.4 2,052.4 3,722.6 5,775.0 Bra'fl 17.0 403.6 -- 403.6 Bulgaria -- -- 182.0 152.0 Denmark 6.o 1140.8 L?.1 189.9 Turkey 51.2 1,092.6 1,897.0 2,989.6 Other 0.1 5.- 44R 50.2 Total Ti7'5 4,217.e 5,913.3 10,131.1 310.7 9,820.l 970/7L Argentina 32.8 701.2 1,002.? 1,703.4 Australia 207.8 5,494.5 8,245.8 13,740.3 Rumania -- -- 127.8 127.8 Turkey 28.8 721.9 1,936.8 2,658.7 Uruguay -- -- 4,079.14 4,079.14 ether --1.14 5.53.7 53_7 Total 7 6,919.0 15,44 3.3 237.° 21,775.h 19 71/72 9 months nreli- minary figures Argentina 12.6 253.1 0.7 253.9 AustralRAa 113.3 3,3w0.8 1,1S61.9 6,462.6 Brazil 8.7 209.c -- 209.5 Germany, F.R. -- 1,073.0 1,073.0 Turkey ?.0 52.1t 1,1460.4 1,51?.8 Uruguay -- -- 2,096.6 2,096.6 Other 0.1 0.1 29.1 29.2 Total T'?7 3T159, 721. 9,637.5 379.3 9,258.2 1/ Assumes car-iss wei'hts -Por ])ve animals of 50% of woeorded liveweights. 2/ Excludes t4ve cattle exports. Source: Foretgr. Tracde S,atist4:s nf' Iran, Mtnistry of Finance, Tehran. Auigust 18, 1?72 ANNEX 7 Appendix 7-3 AFGHANISTAN LIVESTOCK DEVELOPMENT PROJECT Mvrk eti Iranian Narket, Import Prices for Yi'eat and Live Sheep (US$ per vl ton Current 1971/721/ 1970/711/ Meat Imports Contracts (135o) (132). Turkish mutton and lamb (chilled), 2/ delivered in Tehran 1,000- - _ Turkish mutton and lamb, c.i.f. border - 850 935 Bulgarian mutton and lamb, delivered in Tehran 970-/ - - Afghan lamb, f.o.b. Herat 75QW / - Afghan mutton, f.o.b. Herat 6402/ - - Australian red meat (largely frozen mutton),c.i.f. Khorramshahr - 690 750 Uruguayan red meat (frozen mutton and beef), c.i.f. Khorramshahr - 840 705 Argentine red meat (frozen mutton and beef) - - 620 Live Sheep Imports Afghanistan ("fat-tailed"), f.o.b. border 4652 - - Australian (merinos), I c.i.f. Khbrranmshahr 426 1455 385 Argentine, c.i.f. Khorramshahr - 435 440 Turkish ("fat-tailed"), c.i.f. Tehran - 450 1/ Average prices for red meat derived from Foreign Trade Statistics of Iran, Ministry of Finance, Tehran. 2/ Meat Organization, Tehran. 3/ Afghan Air Authority, Kabul. li/ Australian Meat Board, Tehran. AFGHANISTAN LIVESTOCK DEVELOPMENT PROJECT Marketing Kuwait Market, Net Official Imports of Red Meet, 1966-1970 ---------- -------- -------------- -- -- --- ----------- Im-ports -- - ---- ---------- --------------- Live Sheep Live Cattle 1/ 1/ Red Meat Imports, Total Red Meat Exports of Meat Net Exports Head Meat Equivalent Head Meat Equivalent Fresh and Frozen Imports and Live Animals of Red Meat ('000) (M tons) (°000) (m tons) (m tons) (m tons) (m tons) (m tons) 1965 All countries 411.4 7,094.0 29.2 2,142.0 2,263.6 11,499.6 10.6 11,489.0 1966 Australia 137.8 3,516.1 1,763.1 5,279.2 Den ark -- -- 267.3 267.3 China 114.7 114.7 Iran 329.8 5.203.0 9.3 769.6 -- 5,972.6 New Zealand 4.5 117.4 117.4 Rouania 6.6 144.8 -- 144.8 Syria 15.8 373.4 -- 373.4 Turkey 2.6 58.6 -- 58.6 Other 2.2 42.0 1.0 149.6 188.9 380.5 Total 499.3 9,455.3 10.3 919.2 2,334.0 12,708.5 9.4 12,699.1 1967 Australia 152.3 4.126.2 0.1 18.1 1,884.8 6,029.1 Argentinsa 8.5 212.5 -- 212.5 China -- -. 282.3 282.3 Deraark -- -- 181.0 181.0 Iran 93.1 1,379.3 13.4 1,135.4 -- 2,514.7 Rouiania 8.1 187.6 -- 187.6 Soualiland 7.4 159.1 -- 159.1 Syria 43.0 1,046.8 0.6 65.8 -- 1,112.6 Turkey 34.1 731.5 -- 731.5 Other 2.6 51.0 0.6 98.8 369.9 519,7 Total 349.E 7,894.0 14.7 1,318.1 2,718.0 11,930.1 101.7 11,828.4 1968 Data not available 1969 Data not available 1970 Australia 223.7 6,176.2 1,045.6 7,221.8 Argentina 18.9 435.3 127.6 562.9 Deimrk -- - - 434.7 434.7 China -- -- 2,445.6 2,445.6 India 8.5 137.9 16.7 154.6 Rou tania -- -- 2,116.2 2,116.2 Soalia -- -- 1.9 284.1 -- 284.1 Sudan -- -- 0.8 125.7 __ 125.7 Syria 20.2 289.5 -- 289.5 Tanzania -- -- 2.1 298.5 -- 298.5 Turkey 1.6 30.5 1,051.5 1,082.O Other -- 20.0 0.4 72.2 378.2 470.4 Total 272.9 7,089.4 5.2 780.5 7,616.1 15,486.0 1,010.5 14.475,5 1/ As.e-s carcass weighte of live anmLal impprt. at 50% of rco.rded liemeightL. Note: Average prices paid to major suppliers for red meat during 1970 were as follows: Turkey, US$965 per m ton; Australia, US$810 per m ton; and Roumania, US$1,100 per m ton. Source: Yearly Rulletio. of Foreign Trade St.tistic., PisnoinS Board, State of Kouait. August 18, 1972 Ar,ITs'TA LIVESTOCK DEVELOPMENT PROJECT Marketing lMutton Retail Price Ser;sabul (Af/Kg) 1965/66 1266/67 1967/68 1968/69 1969/70 1970/71 1971/72 1972/73 March/April 34.3 43.4 45.6 41.2 4&3.4 45.6 45.6 45.6 April/May 28.6 41.2 48.o 36.6 488.1 45.6 41.2 45.6 May/June 34.3 41.2 38.7 36.6 36.6 41.2 34.3 45.6 June/July 34.3 41.2 36.6 32.0 36.6 36.6 34.3 July/August 34.3 38.7 35.5 29.7 34.3 36.6 31.l4 August/September 32.0 41.2 34.3 29.7 34.3 36.6 32.9 September/October 32.0 41.2 34.3 32.0 34.3 36.6 34.3 October/November 34.3 36.6 32.0 32.0 34.3 36.6 32.0 November/December 34.3 36.6 32.0 32.0 34.3 36.6 34.3 December/January 34.3 41.2 34.3 32.0 36.6 41.2 38-7 January/February 34.3 43.4 41.2 36.6 36.6 43.4 41.2 February/March 34.3 45.6 41.2 38.7 41.2 41i.4 45.6 1/ Mutton with bone. Source: Da Afghanistan Bank. CD K AFGHANISTAN LIVESTOCK DEVELOPMENT PROJECT Marketing Nutton Retail Price Series4"Herat 1965/66 1966/67 1967/68 1968/69 1969/70 1970/71 1971 /72 1972/73 March/April 37.1 31.4 57.1 34.3 40.0 40.0 43.3 71.4 April/May 34.3 28.6 37.1 28.6 40.0 - 27.7 34.3 May/June 28.6 25.7 28.6 25.7 34.3 28.6 22.9 June/July 28.6 22.9 22.9 24.3 31.4 28.6 20.7 July/August 28.6 28.6 22.9 22.9 31.4 28.6 20.0 August/September 34.3 28.6 22.9 22.1 31.4 31.4 22.9 September/October 34.3 28.6 22.9 22.9 31.4 32.9 25.7 October/Novenber 37.1 34.3 22.9 22.9 32.9 34.3 29.3 November/December 34.3 34.3 28.6 34.3 37.1 34.3 32.1 Decenber/January 40.0 40.0 28.6 35.7 40.0 40.0 38.5 January/February 37.1 42.9 34.3 45.7 51.3 47.1 39.3 February/March 110.0 57.1 34.3 28.6 48.5 44.3 57.1 1/ Mutton with bone. Source: Da Afghanistan Bank ANNEX 8 Page 1 AFGHANISTAN LIVESTOCK DEVELOPMENT PROJECT Technical Services Unit 1. The Technical Services Unit (TSU) would integrate credit, water development, on-farm extension, farmer and professional training, marketing (both on-farm and export of sheep before completion of the slaughterhouse), and supply and distribution of farm inputs. These services would be pro- vided by the technical staff of the Project under the guidance of the Minor Irrigation Section (MIS) of the Ministry of Agriculture and Irrigation (MAI) and by an expanded and strengthened Herat branch of the Agricultural Develop- ment Bank (AgBank). Staff 2. Commencing as soon as possible after the date of signing, staff would be progressively increased over a five-year period to provide a stable position as follows: Headquarters Level 1 Technical Director (Expatriate) 1 Livestock Expert (Afghan) 1 Crop Agronomist (Afghan) 1 Veterinarian Field Level 2 Farm Management Experts (Expatriate) 2 Livestock Experts (Afghan, University level) 2 Crop Agronomists (Afghan, University level) District Level - Farm Service Centers 5 Livestock Extension Officers 5 Crop Agronomist Extension Officers 30 Village Extension Workers Groundwater Section Provincial Level: 3 Geologists District Level: 6 Technicians 20 Pump Mechanics ANNEX 8 Page 2 Agricultural Development Bank 1 Branch Manager 1 Loan Appraiser 3 Field Inspectors 1 Clerk Accountant 3. Terms of reference for the Headquarters staff are in Appendix 8-1. The expected ratio of extension workers to Project farms is set out below: Year Year Year Year Year Pre-Project 1 2 3 4 New Farms 100 200 300 350 350 Cumulative 100 300 600 950 1,300 Staff 10 20 30 30 30 Ratio of Staff to Project Farms 1:10 1:15 1:20 1:32 1:43 Present Extension Services 4. In general, extension services throughout Afghanistan are not well developed. Programs in agricultural research and extension are of recent origin (since 1968) and, in varying degree, have been understaffed, under- trained, under-equipped, under-financed, and poorly administered. Since 1966, however, the programs have gained momentum, mostly as a result of the national effort to increase wheat production, which has revolved about "package" demonstration of fertilizer, improved seeds, insecticides, and better husbandry. The programs conducted under the Programs for Agricultural Cooperatives and Credit in Afghanistan (PACCA), the Paktia Development Authority (PDA), and the Helmand Arghandab Valley Authority (HAVA) also include important extension components. In the case of PACCA, which is currently worklng with over 600 families in the Koh-i-Daman Development Center, emphasis is on a package approach, with main attention directed at extension advice, supervised credit, marketing, cooperatives, input supplies, and adult literacy. The farmers reached by this project have had outstanding success. 5. In livestock, some disease prevention and pest control programs and artificial breeding services have been undertaken, but a great deal needs to be done to improve on-farm veterinary animal health control services. The UNDP/FAO project has strengthened the Animal Health and Production Institute in Kabul from which twelfth-grade graduates are now becoming ANNEX 8 Page 3 available, and production of vaccines, under UNDP/FAO staff guidance, is also undertaken in Kabul. In the Project region, on-farm veterinary ser- vices are weak, but a recent improvement is the establishment of a regional diagnostic center in Herat, under USSR bilateral assistance and with foreign and local staff. 6. In 1971, as part of an emergency fertilizer and wheat distribution program, extension services were greatly expanded at the village level by the recruitment of village workers. In general these are better educated young farmers, who work directly with other farmers undier the guidance of official extension officers (para 14). 7. Research in the Herat region is centered on the Urdu Khan Research Station situated on the outskirts of the town. Work has 'been confined almost exclusively to studies on wheat, although, more recertly, cotton and alfalfa trials have been introduced, but no research on range improvement is being done. Applied research in the fields of crop and forage production, feed types and rates, animal husbandlry, and range improvement would be part of the proposed Project. Technical Services for Project Implementation 8. Sheep Identification. The principle of livestock identification would be introduced on Project farms. Each farmer would be allocated an earmark that would be registered by the AgBank and the farmer would be required to identify his sheep accordingly. This practice would lay the foundation for future legal registration of stock securities and assist AgBank officers in loan supervision. 9. Extension Service. Personnel would be expected to work closely with existing staff of the MAI, although the Technical Services Unit would be established as separate from and independent of the MA][. Under the Technical Director, it would be directly responsible to HLDC. Emphasis would be on the integrated approach to farm development and management, and, in particular, on farmer communication and innovation. In the early stages of development, farmers would be visited weekly, with fewer visits as confidence and skills develop. Extension personnel would be required to workc closely with credit and loan supervisors and to deal with water management, crop husbandry, livestock feeding and management, and animal health. They would also co- ordinate marketing and facilitate timely and adequate supply of fertilizer, improved seed, pesticides, and medicines. 10. Veterinary Services. Veterinary services would be supervised by a Government veterinarian. He would be responsible for the overall sanitary conditions of the plant and for the training of Afghan meat inspectors. On the farm development side, he would supervise the animal health aspects of the sheep fattening program, including the training and instruction of Afghan extension workers in the field. ANNEX 8 Page 4 11. Professional Training. A prime responsibility of expatriate experts would be to ensure that their Afghan counterparts were properly trained. Project success is important but the paramount objective is to ensure success and future expansion without the continued assistance of foreign personnel. Headquarters and Provincial counterpart staff would be university graduates and provision is made for a period of training abroad for each. Those at District level would be at least twelfth-grade graduates, those in livestock would come from the Animal Health and Produc- tion Institute, and those in agronomiy would be largely PACCA-trained. 12. Constant in-service training would be given to all professional staff, with regular meetings, joint visits to farms (both successful and unsuccessful), discussion groups, and instruction at the slaughterhouse farm. The Technical Director and his counterparts would be required to coordinate both staff and farmer training, and, as far as possible, set standards for recruitment of Project staff. The TSU would be expected to expand adaptive research, using both Project farms and the slaughterhouse farm. In this regard, work should initially be focussed on improving alfalfa production (water, fertilizer, varieties, and management) and perfecting techniques for direct grazing by fattening sheep. This practice, common in advanced countries but new to Afghanistan, could substantially increase efficiency of conversion and growth rates and ultimately reduce on-farm labor. 13. Farmer Training. The building of farmer confidence would be a priority objective. In addition to providing on-farm instruction, extension staff would be required to carry out a broad range of training activities. Group lectures and visits to best farmers, research stations, demonstration plots, and the slaughterhouse farm, would be undertaken and Project farmers would be given the opportunity of working and training at the slaughterhouse farm. 14. Basic Training of Village Workers (VW). The practice of using Afghan farmers to teach other farmers was implemented by the Paktia Development Authority, which recognized that an essential prerequisite to success was through pre-service and continuous in-service training. VW's would therefore be carefully selected and trained at least six months before they went into the field. Basic qualifications would be an ability to read and write and an above-average farming skill. Intensive pre-service training in basic extension theory and practice would be given at the District Farm Service Centers, where students would undergo a series of elementary examinations. A complete pass and a satisfactory period of probationary service would be necessary before final acceptance into the permanent field staff. This training would be supervised by farm management experts and their counterparts. 15. VW's In-Service Training. VW's would be required to visit the District Farm Service Centers one day each week to report on numbers of farm visits made, receive instruction on special problems encountered, and present a work plan for the following week. During the first year, VW's would spend considerable time in the field with official extension staff, ANNEX 8 Page 5 including the farm management experts and counterparts. An intensive advanced level refresher course would be provided each winter. 16. Field Operations. Visits to Project farmers would be ma,de once a week during the first year of farm development. The more receptive and better skilled farmers would be selected as model farmers who would then be used for demonstration and training of extension workers and other farmers. VW's would be responsible for coordinating farmers' requirements for fertilizer, seed, medicines, and pesticides and assisting with the purchase and sale of sheep and communicating information to the Farm Service Centers. Under supervision, they would install and operate village sheep dips. The incentive system operated by PDA by which VW's receive a small bonus for each bag of fertilizer sold could also be introduced. 17. Water Development. Specialist water developmient services would be provided by the Pump Center, to be established in close cooperation with the MIS of the MAI in Herat, as outlined in Annex 2. Advice and supervision would be available to farmers on well siting and construction, pump installation, operation and maintenance, canal siting and construction, and water management. It is expected that pump repair and emergency replacement services would be provided by private enterprise. 18. Staff Housing. Housing to European standards would be provided for the expatriates, including the veterinarian and sorne of their Afghan counterparts. The houses would be constructed adjaceni: to the plant and provided free. 19. Equipment and Transportation. A characteristic of present Afghan extension and veterinary services is the almost complete absence of effective transportation, a feature which does not encourage worlcers to get out to farms or develop the essential farmer communication skills. The Project would, therefore, equip all senior staff at Headquarters and District level with a motor vehicle. Other official staff would each have a motorcycle, and the VW's bicycles. More successful VW's would be allocated a motorcycle as a reward for good service. 20. Farm Service Centers. Centers would be estalblished as extension Headquarters and supply distribution points in each of the five districts of Ghoryan, Zinderjan, Injil, Guzara, and Pushtoon Zerghun. Injil and Guzara would have a combined center in Herat on the site of the slaughter- house farm. In addition to providing a base for extension and training, centers would handle supply and distribution of fertilizers and veterinary supplies. ANNEX 8 Appendix 8-1 Page 1 AFGHANISTAN LIVESTOCK DEVELOPMENT PROJECT Technical Services Unit Terms of Reference of Management Team Technical Director--Farm Management Specialist 1. Qualifications. A university degree in Agricultural Science, preferably with an animal husbandry and/or farm management bias. Candidate must have a broad professional experience of at least 10 years in the use of credit for farm development and ability and experience to appraise tech- nically sound and financially viable investment plans f or farm development. He must also have the ability to prepare and carry out training programs for livestock and crop husbandry technicians and counterparts and have wide experience in on-farm extension, with particular emphasis on proven ability to communicate with farmers. Direct experience with the growing and management of alfalfa for sheep feeding and fattening in a low rainfall climate would be required, as would experience in the "start up" of a project in a developing country. 2. Duties and Responsibilities. The Technical Director would act as head of the Technical Services Unit established as part: of the Herat Livestock Corporation. He would be responsible to the President and General Manager of HLDC. Minimum duties and responsibilities would require him, or those he would assign, to: (a) Assist in the execution of the Project in accordance with policies and procedures agreed to with adminiLstrative officials of HLDC and Government and cooperate fully with the Project Director and heads and staff of coordinating agencies--namely, AgBank, MIS, and MAI; (b) Recommend to the head of HLDC, the qualifications necessary for the employment of extension and technicaL staff and advice on the selection thereof; (c) Advise the head of HLDC on the selection and recruitment of expatriate personnel and their counterpar1ts; (d) Coordinate the work of the District Directors and that of the AgBank and the MIS unit within the Project; (e) Prescribe the duties and responsibilities of the extension staff and supervise their training in extensiLon, technical and economic aspects of crop and animal husbandry, farm management, and preparation and supervision of on-farm investment programs; ANNEX 8 Appendix 8-1 Page 2 (f) Recommend on-farm investment projects to AgBank and advise the bank head on the preparation of on-farm appraisal reports and the training of AgBank appraisal staff; (g) Assist in establishing a farm accounting and recording system, with particular attention to maintaining an adequate sample of farm records as needed for Project evaluation; (h) Ensure the proper training, including training abroad, of Afghan counterparts with a view to their definite assumption of Project management and direction; (i) Assist in coordinating procurement and marketing of sheep; (j) Ensure, through the respective and responsible agencies, the adequate and timely supply of farm requisites, including fertilizer, improved seed, pesticides, insecticides, and veterinary medicines; (k) Devise and direct a development program related to im- proving the productivity and profitability of, and the implementation of, efficient farm management systems; (1) Direct the development and management of the slaughterhouse farm, including advice on the employment of a suitably qualified farm manager and subsidiary staff; and (m) In conjunction with the President and General Manager of HLDC and in cooperation with Afghan agencies, ensure the prompt and timely procurement of materials required for the implementation of the technical aspects of the Project and including the slaughterhouse farm. Crop-Husbandry--Farm Management Specialist Livestock--Farm Management Specialist 3. Qualifications. Each of the expatriate specialists would have previous experience and training in his field. The livestock expert would be particularly qualified and experienced in sheep production and the crop- husbandry expert would have a strong background with temperate crop raising under irrigated conditions. ANNEX 8 Appendix 8-1 Page 3 4. Duties and Responsibilities. They would assist the Technical Director in the execution of the Project. Minimum duties and responsibilities would require them to: (a) Advise the Technical Director on, and implement the livestock/agronomic aspects of, the on-farm development program; (b) Ensure the proper training of their Afghan counterparts and other technicians in the technical and economic aspects of livestock/crop husbandry farm management systems and in the need for on-farm extension and good farmer communication; (c) Recommend the employment and assist in the selection of extension technicians; (d) In consultation with the Technical Director, prescribe the duties and responsibilities of the technicians and counterparts; (e) Recommend farm investment projects to the Technical Director and assist with their appraisal and implementation; (f) Provide, inter alia, advice to extension personnel and farmers on farm management techniques related to the profitable implementation of systems involvin,g the integration of sheep husbandry and fattening, crop husbandry, and irrigation and including breeding and animal identification, use of drenches, vaccines and other medicines, feeding techniques, forage conservation, feeding rates, seeding rates, fertilizer use, weed and pest control, improved seeds, cropping rotations, and sowing dates and timely and proper use of water; (g) Assist in establishing a farm accounting system for sub-loan beneficiaries, with particular attention to the maintenance of adequate farm records for Project evaluation; (h) Initiate, in consultation with the Technical Director, the extension and education aspects of the Project, and in particular, the Village Worker training program, field days, group discussions, demonstration farms, and lecture programs; (i) Ensure the adequate and timely supply of farm requisites at the Farm Service Centers; (j) Cooperate with staff of participating agencies, namely MAI, MIS and AgBank, and integrate services at the farm level; ANNEX 8 Appendix 8-1 Page 4 (k) Assist the President and General Manager and farmers in coordinating the procurement and marketing of sheep; and (1) Assist the Technical Director in the formulation of a development program as it affects Project implementa- tion and improvement of farm profitability. Range Management Specialist 5. Qualifications. A university degree in Agricultural Science, with bias in animal husbandry/and or agronomy. Candidate must have at least 10 years professional experience in applied research, farm management extension, or land development, in a low rainfall temperate climate. He must also have experience in and understanding of the pasture/sheep management complex as it relates to rangeland improvement, as well as in all facets of sheep husbandry, management, and breeding. 6. Duties and Responsibilities. The Range Improvement Specialist would be responsible to the Technical Director of the Technical Services Unit for the establishment and operation of the Range Improvement Center. He would be appointed for a period of not less than four years and given, in conjunction with his counterpart, and in consultation with the Technical Director, complete freedom of management of the center and the sheep. Minimum duties and responsibilities would require him to: (a) Advise the Technical Director on and implement operations of the Range Improvement Center of the Technical Services Unit; (b) Ensure the proper training and instruction of his Afghan counterparts in the technical and economic aspects of range improvement, sheep breeding and husbandry, and related adaptive research; (c) Cooperate with the staff of Project participating agencies, namely MAI, MIS, and AgBank, and assist, where and when necessary, in the implementation of the wider Project; (d) Devise and implement, in conjunction with the Technical Director, a program of applied research involving, inter alia, techniques of range improvement, including the introduction of suitable grasses and legumes, method and times of sowing, and effects of spelling for various periods on range production; a study of the management and husbandry characteristics of a flock shepherded in the traditional manner, and a study of effects of improved husbandry, animal health control, and feeding on wool growth and quality, lambing rates, growth rates, mortality, seasonal body weights, and such; ANNEX 8 Appendix 8-1 Page 5 (e) Study and record the management and husbandry practices of the migratory flocks, including, inter alia, migration routes, times involved, watering problems, feed supply both winter and summer, and the integrated social problems and their effects on devising an improvement program; (f) In accordance with findings in (e) above, install suitable watering points and sheep dips as prescribed Ln the Project; (g) Produce at the end of each year a report covering work undertaken and results of surveys and observations; and (h) In year 4 of the Project, complete, after due consultation with the Technical Director and Government ofEicials, a draft plan for the economic and technically f,easible develop- ment of the sheep industry in the Western Development Zone of Afghanistan which would form the basis for a range improvement component under a second-stage livestock development project. Animal Health Director 7. The Animal Health Director would direct the supervision and implementation of Animal Health and sanitary aspects of the whole Project. He would be responsible to the President and General Manager of the slaughter- house and act in full consultation with the Technical Director to whom he would be responsible for on-farm animal health control. His duties and responsibilities would require him to: (a) Assist the President and General Manager of the slaughterhouse in preparing and implementing procedures and standards for plant sanitation and meat inspection, including pret-entry livestock inspection, slaughtering facilities, storage, transportation, and offal disposal; (b) Advice on the selection and direct the training (both at home and abroad) of Afghan meat inspectors; (c) In consultation with the Technical Director, devise programs for the in-service training of Afghan counterparts and technicians in all aspects of animal health control; (d) Supervise the on-farm inspection and treatmernt of livestock on Project farms; and (e) Cooperate with technical staff of the Project, including MAI and, where necessary, MIS and AgBank, in dev:Lsing programs for animal health improvement in the Project area, with special reference to Project farms. ANNtEX 8 Appendix 8-2 AFGHAINISTAN LIVESTOCK DEVELOPMENT PROJECT Cost Details - Technical Services Unit and Roal Improvement Pr"Ject Year Total Foreign No. Unit Cost 1 2 3 4 C Exchange (AAf '000) (US$) (- - - - - Af '000 - - - - -) (Af million) Technical Services Unit Expatriate staff: Technical director 1 4,590 53,960 4,590 4,590 4,59C 4,590 18.4 90 Livestock technician 1 3,983 46,860 3,983 3,983 3,983 3,983 15.9 90 Agriculturist 1 3,983 46,860 3,983 3,983 3,983 3,983 15.9 90 Total 12,55 0 12,55. 12,556 2PI : 90 Local staff: Livestock technicians 1 55 647 55 55 55 55 0.2 0 2 45 529 90 90 gO 90 0.3 0 5 30 353 150 150 150 150 o.6 0 Agriculturists 1 55 647 55 55 55 55 0.2 0 2 45 529 90 90 9C 90 0.4 0 5 30 353 150 1 150 15C 150 o.6 0 Village workers 30 25 294 500l1 750 750 750 2.8 0 Total 1,9 °2 1,34C 1,340 r T O Training (9-month fellowships) 6 510 6,ooo 1,020 1,020 1,02C - 3.1 100 Equipment: Vehicles Jeeps 6 298 3,500 1,788 - - - 1.8 90 Motorcycles 18 34 400 612 - - - 0.6 90 Bicycles 30 3 30 600 150 15C - O.9 90 Sub-total 2,798 150 15C - 3.3 90 Seed cleaning equipment 1 85 10,000 85 - - - 0.1 90 Miscellaneous - - - 340 - - - 0.3 Total Facilities: Farm service centers 4 2,338 27,500 5,610 3,740 - - 9.4 20 Houses 6 1,530 18,000 9,180 - 9.2 30 Sheep dips 40 26 300 510 255 255 - 1.0 10 Total M 39 mI Administrative costs: Equipment operation Vehicles Jeeps (30,000 km/yr) 6 210 2,470 1,260 1,260 1,26C 1,260 5.0 75 Motorcycles (30,000 km/yr)18 60 706 1,o80 1,o80 1,o8c 1,080 4.3 75 Seed equipment - - - 9 0.1 75 Sub-total 2,349 2,349 2, 349 2,349 9 75 Facility maintenance - - - 709 918 1,118 1,130 3.9 0 Travel - - - 100 100 1OC 100 0.4 10 Miscellaneous - - - 1 000 1 000 1 OOC 1,000 4.0 10 Total 4'3 7 rr77 - 2 Total 37,439 23,428 19,888 18,475 24 64 Groundwater Section Local Staff: Geologists 3 45 529 135 135 135 135 0.5 0 Technicians 6 30 353 120 150 18C 180 o.6 0 Pump mechanics 20 25 294 275 425 50C 500 1.7 0 Total 530 7 81iC 810 U Equipment: Vehicles 5 298 3,5°0 596 596 298 - 1.5 90 Field Equipment - - - 85 85 - - 0.2 90 Dewatering pumps 15 255 3,000 1 530 1 530 765 - 3.8 go Total tIr 6Ir - TO Administrative costs: Vehicle operation - - - 1,600 1,900 2,10C 2,100 7.7 75 Miscellaneous - - - 800 950 1 05 1 050 3 9 10 Total 2,400 2150T 3 II5 4 Total 5,141 5,771 5,023 3,960 19.9 57 Road Improvement (km) 68 100 1,176 6 - - - 6.8 30 Grand Total 49,380 22,435 126.1 61 ,/ 20 in year 1, 30 in years 2, 3 and 4 December 19, 1972 ANNEX 8 Appendix 8-3 AFGHANISTAN LIVESTOCK DEVELOPMENT PROJECT Road Improvements 1. Improvement to existing roads within the Project area will be needed to facilitate transport of livestock, supplies and personnel. Government Program 2. Government intends to carry out road improvements to commence in 1974, as a part of Stage II of the Highway Maintenance Program, which would bring up to engineered gravel road standards the principal east-west routes through the Project area on each side of the river. These are the routes west from Herat to Dupushta and Herat to Ghoriyan, and the routes east from Herat to Marwa and Rowdza Bagh to Marwa. Project Program 3. In addition to Government's program, it will be necessary to im- prove to one-lane gravel standards (grading, minor drainage and structures for 20 trucks/day use) approximately 68 km or shorter access routes between the larger villages and the main Project roads. 4. This access road improvement work for the Project would be per- formed by the District Highway Maintenance staff in Herat. One unit (30 pieces of equipment and 400 laborers) could perform the required work in less than one year. The estimated cost of the work is Af 6.8 million (US$80,000), based on current estimated costs from Kampsax, consultants on the Highway Maintenance Program. ANNEX 9 Page 1 AFGHANISTAN LIVESTOCK DEVELOPMENT PROJECT The Experimental Range Improvement Center Concept 1. Development of the sheep sub-sector requires that attention be given to improving the productivity (lambing rates, mortality, growth rates, wool, and such) of the breeding flocks, which depend almost entirely on the sparse rangelands for feed and have little or no health care. The harsh environment (200 mm annual precipitation), migratory system of grazing, rights of land usage, and the deeply conservative shepherds anrd flock owners, however, present formidable problems for the design and implementation of improvement programs. Furthermore, little is known of the likely response of transhumant flock owners and nomads to any attempt to provide such services, but if mean- ingful improvements in this sector are to be made, now is the time to assemble the information that can serve as a basis for formulating an effective approach. 2. Any program must essentially be of a long-term nature, but the sheep fattening project provides an opportunity for testing the concept of an integrated "package" of crop production improvement, crop diversification into forage, sheep fattening for export, and breeding flock husbandry improvement. The establishment of new markets at good prices under the Project is also likely to provide the proper motivation for farmers and increase the chances of a favorable reception. An Experimental Range Improvement Center (ERIC) would, therefore, be established to conduct investi- gations and research on matters that could have important bearings on future development patterns. Location and Layout 3. An area of approximately 100 ha of Government land close to Herat in the Hari Rod Valley would be used as a base for the Center. About 60 ha would be irrigated by tubewell and sown to alfalfa, while the remaining area, apart from that required for buildings, would be used for dry land research. More land could be made available if required. Staffing 4. Staffing, investment costs and budgetary requirements for ERIC are set out in Annex 10. The Center would be established and operated under the guidance of an experienced range management expert (Terms of Reference in Appendix 8-1). He wvould be assisted by qualified Afghan staff (two counter- parts, one farm manager and other supporting staff). ANNEX 9 Page 2 On-station Operations 5. Hay would be made largely by mechanical means, and sold to flock owners during the late winter and early spring. It is at this time that feed for sheep is critically low and losses highest. It is estimated that 60 ha of alfalfa would provide a maintenance diet for 6,000 mature sheep for 75 days or for 9,000 for 50 days. Hay would be carried to wintering grounds by trucks and sold initially at a price of about Af 1 per kg of dry matter, or Af 20 per bale. The technical staff would measure responses to varying prices in different areas. The supplying of hay could also be in- tegrated with slaughterhouse buying operations since it could be transported to the buying points established outside the immediate Project area for sale to flock owners. Off-station Services 6. Water. To assist with better utilization of waterless ranges, about 10 points would be selected by the technical staff, after observation and study of the area, for the installation of drinking water facilities. The windmill would be introduced to Afghanistan at these locations and there would be a small reservoir. Low dams in selected runoff channels would also be built. 7. Dips and Animal Health. A number of small dips would be constructed in wintering areas and possibly on selected migration routes. Technical staff would encourage farmers to undertake animal health control and disease preven- tion measures in the form of vaccines and drenches. Fees would be charged for these services and they would be increased over time to cover the cost of all inputs. 8. Shearing. An attempt would be made to introduce new shearing techniques using blade shears, which would be a substantial improvement over the present method with primitive tools. Applied Research 9. A small flock of 500 ewes and replacements would be attached to the Center, not so much to demonstrate improvement through breeding and supplying of improved sires, although this could be undertaken, but to measure responses of sheep handled in the traditional manner and of those handled under the improved system recommended to flock owners. This would provide accurate and necessary information on seasonal bodyweight changes, grazing habits, migration routes and time taken, watering problems, summer ranges, feed programs and the effects of changing lambing dates. The flock would also be used for demonstration to farmers whose sheep graze and winter in the Herat area. 10. Applied research on possible means of improving the depleted natural grasslands would be undertaken. Species of legumes and grasses both local ANNEX 9 Page 3 and imported would be used in seeding trials, the effects of spelling for various periods would be observed and measured, and a study of the whole migratory system, including both the animal and the human aspects, would be made. 11. Investigations of this kind could take some years to produce conclusive results and there is danger that some proposals would constitute research for its own sake. To prevent unnecessary expenditures of time and effort, proposals with their respective staff and budgetary requirements would therefore he screened in the light of one principal objective: the probability that results would lead to formulation of a range development component tthat could be part of a second-stage livestoc:k development roject. All proposed studies would also be subject to final approval by the National Livestock Development Commission (NLDC), which would also be responsible for reviewing semi-annual progress reports and for continued monitoring of progress in line with agreed objectives. ANNEX 9 Appendix 9-1 AFGHANISTAN LIVESTOCK DEVELOPMENT PROJECT Cost Details: Experimental Range Improvement Center Project Year Foreign 1 2 3 4 Total Cost Exchange (-- ---Af '000 ----) (Af Million) Equipment: Vehicles (3) 892 1,190 - - 2.1 90 Tractors (2) 765 _ - - 0.8 90 Impleements 969 476 - - 1 .4 90 Miscellaneous 935 - - 0.9 90 Total 3,561 1,666 5.2 90 Facilities: Headquarters Water Supply 1,531 194 97 - 1.8 24 Buildings 6,715 425 - _ 7.1 114 Sheep 1147 - - - 0.2 0 Subtotal 8,393 619 97 9.1 15 Outstations 468 4 649 6,400 382 11.9 44 Total 8,861 5,268 6,497 382 21.0 32 Expatriate Specialist (1) - 4,225 4,225 4,225 12.7 90 Local Staff Livestock Specialist (2) 90 90 90 90 0.4 0 Technicians (14) 120 120 120 120 0.5 0 Other (-) 100 248 468 468 1 0 Total 310 494 678 678 2.2 0 Administrative Costs Vehicle Operation 360 830 1,020 1 ,020 3.2 75 Farm Operation 81 283 436 470 1 .3 75 Facility Maintenance - 414 568 767 1.8 10 Miscellaneous 31 31 31 31 0.1 10 Total 472 1,558 2,055 2,288 6.14 57 Total 13,204 13,211 13,455 71573 147.5 54 AFGHANISTAN LIVESTOCK DEVELOPMENT PROJECT Cost Details:Management Services and Training Number of Units Cost per Year T T A L or Years Salary Social and Other Consultant Fee Total (us$) (Af '000) (US$) Charges (US$) (US$) (US$) Management Services Technical Service Unit Technical Director 4 24,700 13,300 16,000 54,000 216,000 18,360 Livestock Technician 4 21,500 11,360 14,000 46,860 187,440 15,932 Agriculturalist 4 21,500 11,360 14,000 46,860 187,440 15,932 HLDC Slaughterhouse General Manager 4 26,000 14,000 16,800 56,800 227,200 19,312 Factory Manager 3 21,500 11,360 14,000 46,860 140,580 11,949 Engineer 3 21,500 11,360 14,000 46,860 140,580 11,949 Marketing/Accountant 24 21,500 11,360 14,000 46,860 140,580 11,949 Mechanist 24 16,250 8,750 10,500 35,500 88,750 7,544 Range Improvement Center Range Specialise 3 22,750 12,250 700 700 149,100 12,673 Sub-total 1,454.240 123,694 Training 9-month Fellowships Technical Service Unit 6 @ US$6,000 36,000 3,060 HLDC Slaughterhouse 10 @ US$6,000 60,000 5,100 2 Sub-total 96.000 8,160 x Total 1.550,240 1 o December 19, 1972 AFGHANISTAN LIVESTOCK DEVELOPMENT PROJECT Disbursement Projections IDA Fiscal Year Disbursement Cumulative Disbursement and Quarter during Quarter at End of Quarter ---US$ million------------------ 1973/741/ Yjrch 31, 1974/ 0.15 0.15 June 30, 1974 0.25 U.40 1974/75 September 30, 1974 0.0 0.80 December 31, 1974 040 1.20 March 31, 1975 0.35 1.55 June 30, 1975 0.50 2.05 1975/76 September 30, 1975 0.65 2.70 December 31, 1975 o.60 3.30 March 31, 1976 0.60 3.90 June 30, 1976 0.60 4.50 1976/77 September 30, 1976 0.60 5.10 December 31, 1976 0.60 5.70 March 31, 1977 0.50 6.20 June 30, 1977 0.50 6.70 1977/78 September 30, 1977 0.50 7.20 December 31, 1977 0.60 7.80 March 31, 1978 0.60 d.40 June 30, 1978k' 0.40 8.80 1978/79 September 30, 1978 O,20 9.00 1/ Estimated date of effectiveness: February 1, 1974 2 Retroactive financing of up to US$130,000 from Mrch 1, 1973 authorized by IDA / Estimated closing date: September 30, 1978 ANNEX 12 Page 1 AFGHANISTAN LIVESTOCK DEVELOPMENT PROJECT The Agricultural Development Bank A. The Banking System 1. The banking system in Afghanistan consists of four major banks: one acts as both a central and commercial bank, two serve as commercial banks, and one operates exclusively in the agricultural sector. They are as follows: (a) the Da Afghanistan Bank, which carries out central banking functions but also engages in commercial banking ativities; (b) the Bank Milli, which is a commercial bank and the only private bank in the country; (c) the Pashtany Sejirati Bank, a commercial bank; and (d) the Agricultural Development Bank (AgBank). Bank Milli and Pashtany Sejirati Bank finance only privaLte commercial enter- prises, and activities of the Da Afghanistan Bank in the private sector are also directed toward commercial organizations. AgBank, therefore, is the only institution of importance which provides credit for agriculture. B. AgBank Introduction 2. AgBank is a mixed corporation with predominant: Government ownership (the official Da Afghanistan Bank and the Government together own 98% of the stock). It has a paid-in capital of Af 215 million (US$4.3 million). After operating under serious handicaps in the past, the bank now is being assisted by a team of consultants and shows signs of becoming a viable credit institution. Organization and Management 3. General. AgBank was established in 1954 as the Agricultural and Cottage Industries Bank and, after several years of difficult operations, UNDP Project 27 (for which the Bank is executing agency) was initiate(d in September 1969. Under that Project, a team of consu:Ltants (Hendrikson ANNEX 12 Page 2 Associates) was provided to reorganize and manage the bank. The team's original contract expires in September 1972 but it has been renewed for another three years. Shortly after the team's arrival in January 1970, the bank adopted a new charter and changed its name to Agricultural Development Bank. Four bodies govern its activities: (a) The General Assembly of Shareholders; (b) the Supreme Council; (c) the Executive Board; and (d) the Board of Auditors. Overall policy is established by the Supreme Council, which consists of 11 members: the Minister of Finance (chairman), Minister of Agriculture and Irrigation, Minister of Planning, Minister of Commerce, Governor of the Da Afghanistan Bank, President of AgBank, General Manager of AgBank, and 4 members elected by the General Assembly. The seven-member Executive Board, composed of the President, two Vice Presidents, and four principal members of the consultant team, manages the bank under authority delegated to it by the Supreme Council. 4. The consultant team consists of a credit specialist, who, as a leader of the team and General Manager, works closely with the President; an agricultural economist, who functions as Credit Manager and works in association with the Vice President in charge of credit; an accountant as accounts manager who cooperates closely with the Vice President in charge of administration; and a supply specialist as Supply Manager. It also includes a credit instructor who trains the field inspectors. 5. Personnel. AgBank has a professional staff of 161 and a general service staff of 119 (March 1972). About 80% of the professional staff are located at the head office in Kabul while the remainder are situated in 10 branch offices scattered around the country. Two of the major draw- backs are the lack of training and the dearth of useful banking experience. Although 42 staff members have completed the twelfth grade, an additional 12 are university graduates, and a further two have done post-graduate study outside of Afghanistan, major portions of the first two categories consist of trainees who have not yet had a significant impact on the work of the bank. 6. As of June 1972, five employees, all graduates of Kabul University, had successfully completed AgBank's basic training program of 1-1/2 years. There were 23 trainees still enrolled in the program and AgBafnk planned to recruit an additional 10 to 15 trainees during 1972/73, particularly those with a background in agriculture. The expatriate credit instructor has been on post since January 1972 and is working with another group of 17 who are undergoing specialized training as field inspectors. Two additional Afghan ANNEX 12 Page 3 instructors have been employed, for accounting and supply operations, to train staff in these areas on a continuing basis. AgBanic also is in the process of upgrading higher level staff and has availablte 18 two-year fellow- ships (three for agricultural economists, six for credit supervisors, and nine for accountants) under IDA Credit 202-AF. 7. AgBank has prepared new personnel regulations which were approved in September 1972 by its Supreme Council. They should enable the bank to recruit and retain additional qualified staff as well as provide AgBank the flexibility it needs to carry out its operations on a basis geared to performance. 8. Upgrading of Herat Branch. The Herat Branch has been relatively inactive for several years, having disbursed about 19 loans in 1971/72, four in 1970/71, and none at all in 1969/70 and 1968/69. A new manager has been responsible for the recent revival in lending but neither he nor his meager staff have the training necessary to implement a lending program of the magnitude contemplated under the Project. Therefore, the Herat branch would need to be strengthened, and this program would be phased to the execution of the Project. 9. For the immediate future, applications from farmers who might qualify for participation in the Project would be collected and development plans would be prepared and appraised on a group basis by a team from the Kandahar branch, which already has a nucleus of trained staff. In November, a group of field inspectors would complete their training, and about three could be assigned to the permanent staff at Herat. AddiLtional field inspectors, a loan appraiser, and, eventually, a fully l-rained manager would be assigned to the branch as demand grows under the Project and as capable staff finish training programs. 10. AgBank's intention is to introduce a system of regional managers and assign increasing degrees of lending authority to the branch manager, regional manager, and general manager. For the present, however, applica- tions will continue to be sent to Kabul for approval. While some time is required for this, the farmer is not delayed since he must make arrangements for his land security - a rather lengthy process. The application procedure for loans of this nature cannot be expedited substantially until an appro- priate legal framework for security has been created. Lending Policies and Procedures 11. Under AgBank's present policies and procedures, lending terms and conditions are related to the particular item being financed. One hundred percent financing is provided for current inputs, 50% for dugwells, and 75% for pumps, tractors, and other investment items except wells. Loan maturities range from five years for a tractor to nine years for minor irrigation schemes. However, AgBank intends to introduce a new program of "'farm development" lending for farm plans based on dugwell development, bcith in the Project ANNEX 12 Page 4 area and in other branches, as they reach the level of capability necessary to implement such a program. Included would be a complete package of investment items and current inputs necessary to develop and operate the farm. Short-term financing would be provided to cover 100% of current input cost, as at present, and long-term financing would be provided to cover 80% of the total investment cost. Maturity of the long-term loan would be seven years, including two years of grace. 12. Under the Project, the investment plan would contain various items related to the installation of a dugwell and the establishment oE alfalfa for sheep fattening/breeding operations (including the cost of dewatering), pumpsets (including installation charge), ditching for water distribution, draft and pack animals, implements, alfalfa establishment costs, and breeding sheep. The farmer's contribution of 20% of total investment cost would include an imputed cost for family labor provided. 13. In view of the fact that the major portion of the investment would occur in the first year of the two-year farm development plan, and consider- ing the desirability of ensuring that the entire plan would be implemented, farmers would be required to deposit with AgBank an amount equal to the dif- ference between their 20% contribution and the family labor element of that contribution prior to the start of farm development. All cash costs of the development plans then would be met by AgBank, and disbursements would be made directly to suppliers wherever possible. 14. The lack of an adequate security system in Afghanistan has been a major obstacle to the expansion of AgBank's lending program. There is no chattel mortgage law and no comprehensive system of land registration, even though a cadastral survey has been started in one or two areas. Coopera- tives could form a vehicle for lending to farmers, but the law on cooperatives is still under consideration by Parliament. A system whereby groups of farmers are jointly and severally liable for repayment of short-term loans was instituted under the Government's emergency fertilizer and improved seed program of 1971. The agreements signed are directly prosecutable and do not require court action. AgBank is considering adopting a similar approach for its short-term operations if the experiment is successful 1/. For the Project, however, the traditional land security would be required. The Project thus would have to contend with the difficulties and delays which accompany the present registration procedures. 15. Preparation of farm plans would be undertaken by teams composed of representatives of the Ilerat Livestock Development Corporation's Technical Services Unit, and AgBank, with the technical aspects of Alfalfa establishment, fattening/breeding operations, and dugwell installation being handled by the 1/ AFA, AgBank's wholly-owned subsidiary in the Helmand Valley, is already experimenting with group loan operations of this type. ANNEX 12 Page 5 Technical Services Unit and its Groundwater Section, and the crop prcduction component and financial analysis being investigated by AgBank. These teams would also supervise implementation of the plans. HIDC wuuld deduct interest and amottization payments from the amounts paid to farmers for sheep purchases and would transfer the funds directly to AgBank. 16. Interest rates under the Project would be AgBank's normal rates of 10% for short-term loans and 8% for medium- and long-term loans. These rates were established in conjunction with the Agricultural Development Bank Project, partly financed by Credit 202-AF, and compare favorably with prevailing commercial rates of about & to 12%' per annum. Channelling of Funds 17. l~nancing of farm development plans under the Project would be shared 20% ,y the farmer, 20% by AgBank, and 60% by IDA. IDA would lend to the Government on the usual terms, and Government would on-lend the funds relating to farm development to AgBank at a maturity of 15 years, including a grace period of five years, at an interest rate of 4-1/2%. 18. AgBank also would act as the channel for debt: and equity funds to be provided to HLDC. The debt funds, which would come partly from IDA and partly from the Government's Development Budget, would be lent to the AgBank by Government at an interest rate of 4-1/2% for a period of 15 years, includ- ing five years' grace. AgBank would on-lend the funds to HLDC at its normal rate of 8% and on repayment terms corresponding to those of the Government loan. The spread of 3-1/2% thus provided AgBank is considered reasonable and would cover provisions for bad and doubtful debts and administrative costs. Operations 19. While statistics for the period prior to 1969/70 are unreliable, the records indicate that AgBank disbursed a total of Af 225 million during the period 1954/55 through 1968/69, or an average of about Af 16 million per year. Disbursements declined steadily after 1963 and reached a low of Af 2.6 million in 1969/70. Subsequent to the arrival of the consultant team in 1969, disbursements began to increase and reached a level of Af 34.3 million in 1971/ 72. An additional amount of Af 12.1 million was disbursed in 1971/72 by Agri- cultural Finance Agency (AFA), AgBank's wholly-owned subsidiary in the Helmand Valley, during the first year of its operation. 20. AgBank has madle few short-term loans in recent years, having disbursed three loans for Af 2.9 million in 1971/72. In contrast, the major part of AFA's effort is in short-term lending, with disbursements of 1,925 loans in 1921/72 amounting to Af 7.8 million. Of the 400 medium- and long- term loans for Af 31.1 million disbursed by AgBank in 1971/72, 54% (by amount) were for pumpsets and 40% were for tractors and implements (AgBank's medium- and long-term lending program since 1970 has been financed in part by IDA Credit 202-AF which provides funds for farm equipment, pumpsets, and ANNEX 12 Page 6 minor irrigation rehabilitation). AFA disbursed 26 medium- and long-term loans for Af 4.4 million in 1971/72, over 90% of which were for tractors and implements. AgBank's portfolio (net of provisions for doubtful debts) at the end of 1971/72 amounted to Af 82.3 million while that for AFA was Af 8.2 million. 21. f:`,ank has made equity investments in agriculture-related enter- prises totaling Af 29.3 million, of which about 90% is held in three firms: Spinzar Cotton Co., Af 19.0 million; Pashtani Rejerati Bank, Af 5.0 million; and Wood Co., Af 2.1 million. This activity was not very successful, how- ever, and the present charter requires IDA's agreement for equity partici- pations. 22. AgBank has been active as a distributor of agricultural inputs, largely tractors and water pumps, but also of items such as pesticides and veterinary medicines. Total turnover increased substantially over the last three years, from Af 9.0 million in 1969/70 to Af 54.9 million in 1971/72. Inventory at the end of 1971/72 amounted to Af 63.1 million. The objective is to transfer this distribution function, eventually, to another public entity or to private enterprise. Resources 23. Of total liabilities and equity of Af 363 million, Af 214 million 1/ consists of paid-up capital and Af 28 million of long-term liabilities. The total debt to equity ratio is 1:1.4 and the long-term debt/equity ratio is 1:9, indicating a strong equity position. 24. The paid-up capital is owned 93% by the official Da Afghanistan Bank and Government, and the remaining 2% by private entities. It has increased substantially from a level of Af 86 million in September 1969, mainlv on the basis of Government contributions from the Development Budget. However, Af 23 million of the increase resulted from the provision in IDA Credit 202-AF that proceeds of the credit utilized by AgBank in its lending pro2ram are transferred to it by Government as share capital. 25. Lang-term debt consists of supplier's credit from the USSR (Af 12.0 million), employee benefit funds (Af 10.1 million), and a loan from Government for the purchase of vehicles and equipment under IDA Credit 202-AF (Af 6.3 million). Since the prospects for additional long- term borrowings other than the proposed IDA Credit are limited, AgBank is relying on Government equity contributions, partly as a result of lending under Credit 202-AF and partly from the Development Budget, to provide the major portion of funds that it will require to carry out its lending program over the next five years. 1/ Paid-up capital is nominally Af 215 million, but losses for 1971/72 have eroded it to the extent of about Af 1 million. ANNEX 12 Page 7 Operating Results and Financial Position 26. AgBank's financial position at the end of 1971/72 remained satisfactory in spite of the substantial loss sustained during the year. Liquidity was adequate, with a ratio of liquid assets to current liabilities of 1.0 and a ratio of current assets to current liabilities of 1.9. As mentioned in paragraph 23, the ratio of total debt to equity of 0.7 indicates a heavy equity position. The increase in paid-up caipital during the year of Af 31 million (Af 23 million as a result of payments under the IDA Credit and Af 8 million from the Government Development Budget) was more than sufficient to offset the loss of Af 9.3 million. 27. The loss for 1971/72 compares with modest profits of Af 1.2 million for 1970/71 and Af 1.8 million for 1969/70. It was caused primarily by the successive droughts in 1969/70 and 1970/71 and partly by increases in staff. The portfolio provisions for doubtful debts are determined on 'the basis of collection experience, and the droughtsi led to substantial increases in these provisions (Af 10.6 million) reflecting low recent collections and anticipating future defaults. The inflationary effect of the droughts also led to a sharp increase (about Af 2.2 million over the previous year) in cost-of-living bonuses paid to staff. AgBank also has increased the size of its staff, in conjunction with its level of lending as well as in terms of trainees for future development. The resulting increase in expenses over the past year was about AM 1.6 million. 28. At the end of 1971/72, pri.ncipal in arrears amounted to 39% of loans outstanding, as compared to 38% at the end of 1970/71 and 34% at the end of 1969/70 1/. Included in the total principal in arrears of Af 41 million, however, is Af 24 million, whichi was taken over from the Agricultural and Cottage Industries Bank. Furthermore, the deterioration in the arrears position over the last two years was caused by the droughts of 1970 and 1971. Provisions for doubtful debts were increased to Af 52 million at the end of 1971/72 and now amount to about 80% of total arrears (principal and interest). They are considered entirely adequate to cover possiLble losses. 29. Apart from the general lack of repayment discipline among borrowers, the primary difficulty facing AgBank with respect to collections is the lack of trained staff and transpertation fac:Llities in the branches. In most cases, AgBank, therefore, must wait for the borrower to come to it. As branches are upgraded, however, it will develop the capability to contact borrowers in the field on a regular basis and collection performance should improve substantially. 1/ AgBank only. ANNEX 12 Page 8 Accounts and Auditing 30. The reorganization of AgBank's accounting system has shown substantial progress and the major effort now is to train staff to operate it. The accounts are audited annually by an independent auditor accept- able to IDA, currently Coopers and Lybrand. The present arrangements are satisfactory. AFGHANISTAN LIVESTOCK DEVELOPMENT PROJECT The Agricultural Development Bank - Condensed Income Statements (Amount in Af Million) 1969/701/ 1970/71 1971/72 Amount % of Total Amount % of Total Amount % of Total I N C O M E Interest 8.8 69 11.7 52 14.2 62 Net Sales 2.0 16 7.6 34 6.6 29 Other 1.9 15 3.0 14 2.1 9 Total: 12.7 100 22.3 100 22.9 100 E X P E N S E S Interest 1.8 14 2.9 13 3.8 16 Administration 5.8 46 8.8 39 14.6 64 Provision for Losses - - 2.2 10 11.5 50 Other 3.1 24 6.6 30 1.1 5 Total: 10.7 84 20.5 92 31.0 135 Net Income (Loss) berore Taxes 2.0 16 i.8 8 (8.1) 35 Taxes 0.2 2 0.6 3 1.2 5 Net Income (Loss) after Taxes 1.8 14 1.2 5 (9.3) 40 P> (D m F MM 1/ Financial year runs March 21 - March 20. AFGHANISTAN LIVESTOCK DEVELOPMENT PROJECT The Agricultural Development Bank - Condensed Projected Income Statements (Amount in Af Million) 1972/73.1/ 1973/74 1974/75 1975/76 1976/77 1977/78 % of % of % of % of %of 7.of Amount Total Amount Total Amount Total Amount Total Amount Total Amount Total I N C O M E Interest: IDA Livestock Credit - . 2.6 7 16.4 28 23.1 33 27.5 35 35.2 41 IDA 202-AF 3.6 11 11.6 32 19.6 34 22.8 32 19.2 25 15.2 18 Other 11.4 36 3.4 10 3.5 6 5.4 8 12.3 16 16.7 19 Sub-total: 15.0 47 17.6 49 39.5 68 51.3 73 59.0 76 67.1 78 Net Sales 14.2 45 15.4 43 15.4 27 15.4 22 15.4 20 15.4 18 Other 2.4 8 2.7 8 3.0 5 3.3 5 3.6 4 3.9 4 Total: 31.6 100 35.7 100 57.9 100 70.0 100 78.0 100 86.4 100 E X P E N S E S Interest: IDA Livestock Credit - - - - 1.5 3 3.7 5 5.0 6 7.7 9 DANIDA - - 1.0 3 4.4 7 4.4 7 4.4 6 4.4 5 Other 2.5 8 2.6 7 2.7 5 2.8 4 2.9 4 3.0 4 Sub-total: 2.5 8 3.6 10 8.6 15 10.9 16 12.3 16 15.1 18 Administration 16.5 52 19.7 55 24.7 43 27.5 39 29.7 38 30.3 35 Provision for Losses 7.6 24 6.2 17 13.8 24 18.0 26 20.6 27 23.5 27 Other 1.3 4 1.6 5 1.9 3 2.2 3 2.5 3 2.8 3 Total: 27.9 88 31.1 87 49.0 85 58.6 84 65.1 84 71.7 83 Net Income (Loss) before Taxes 3.7 12 4.6 13 8.9 15 11.4 16 12.9 16 14.7 17 Taxes 1.7 6 2.1 6 4.1 7 5.2 7 5.8 7 6.6 8 Net Income (Loss) after Taxes 2.0 6 2.5 7 4.8 8 6.2 9 7.1 9 8.1 9 1/ Financial year runs March 21 - March 20. r September 25. 1972 AFGHANISTAN L NESTOCK DEVELOPMENT PROJECT The ARricultural Development Bank - Condensed Balance Sheets End of Year (Amount in Af Million) 1969/7QV 1970/71 1971/72 Aount % of Total Amount % of Total Amount I or Total A S S I T S Cash and Banks 86.2 47 130.9 43 U7.5 33 Loans 59.7 33 70.8 23 82.3 23 Invest ents: AFA - - 50.0 16 50.0 1 Other 15.4 8 16.2 5 16.2 4 Total: M 7.2 96 Advsnces to Supply Department 15.9 9 28.4 9 87.3 24 Other 4.9 1.8 14 8.14 2 Total - 182.1 100 308.1 100 361.7 100 LIABILITIES AND EQUITt Liabilities: Deposits 3.3 2 57.0 18 67.1 19 Borro-Angs Suppliers' Credit 30.0 17 36.2 12 55.9 15 Otbur 6.1 3 3.0 1 6.3 2 Total: 3.1 3.2 i6 r.2 17 Other 7.4 14 17.0 18.6 c Total: a 117 3 3li67 Z E3quity: Paid-in Capital 128.2 70 183.7 60 214.8 59 Reserves and Net Income 7.1 4 11.2 14 j1.0) 0 Total: 71i7 19_1.9 w 2_1_. 9 Total: 182.1 100 308.1 100 361.7 100 1/ Financial year runs March 21 - March 20. AFYGRIIISTM( LIVESTOCK DEVELOPMENT PROJECT The Agricultural Development Bank - Condensed Projected Balance Sheets End of Year (Amount in Af Million) 1972/ 3/ 1973/74 1974/75 1975/76 1976/77 1977/78 Amount Total Anoant Total Amount Total Amonnt Total aacmnt Total Amomnt Total A S S E T S Cash anxd Baiks 101.7 28 10.4 3 23.2 3 30.2 4 34.7 4 39.5 4 Loans Project - - 32.6 8 204.4 31 288.7 35 343.6 38 439.7 44 IDA 202-A? 45.0 12 145.0 37 245.0 37 285.0 34 240.0 26 190.0 19 Other 60.0 17 30.0 8 15.0 2 30.0 4 82.7 9 127.9 12 Total: 105. s 5 7 4 75 7 77 tb7 75 7§7 75 Investments: AFA 50.0 14 50.0 13 60.0 9 60.0 7 70.0 8 70.0 7 Other 16.2 4 16.2 4 16.2 2 16.2 2 16.2 2 16.2 2 Total: 66. ig 17 7; T 97 0 o6. 17 Advances to Supply Departmat 80.0 22 90.0 23 90.0 13 90.0 11 90.0 10 90.0 9 Other 11.9 3 15.8 4 19.7 3 23.6 3 27.5 3 31.4 3 Total: 364.8 100 390.0ZL.5 823.7 100 904.7 100 1,004.7 100 LIABILITIES MD 3WI7I Li abilities: Deposi ts 42.0 12 30.0 8 30.0 5 30.0 4 30.0 3 30.0 3 Borrowings IDA Livestock Credit - - - - 49.9 7 123.5 15 167.4 19 255.7 25 DAUNID_L _ 32.6 8 146.3 22 146.3 18 146.3 16 146.3 15 Other 12.0 9.0 2 6.o 1 3.0 0 - - Total: 12T .0 Ij 202.2 30 33 MU37 7 1 Other 26.8 7 22.6 6 28.5 4 32.4 4 36.7 4 40.3 4 Total: T(-9 22 94.2 S1 207 i335.2 Wiz 1r r r27 Equity: Paid-in Capital 283.0 78 292.3 75 404.5 60 474.0 57 502.7 56 502.7 50 Reserves and Net Income 1.0 0 3.5 1 8.3 1 14.5 2 21.6 2 29.7 3 Total: 384.0 7 29 _1 it7l 3f 524.3 3 ___ --0-742. 937. - -27 Total: A 100 390.0 100 673.5 ioo 237 100 904-7 100 .7 100 / Financial year runs March 21 - March 20. September 25, 1972 AklhA"suiAN LIVESTOCK DEVEIDPMENT PROJECT The Agricultural Developeet Bank _ Project Cash Flow Projections Agr ~~~~(AT Millions) Pre-PoJ-t _--_____ -------________ -----__-____ -_____-_________________ Y E A R S ----__-----------------_---.----------__-__-- _____________________----------- Year 1 2 4 6 7 8 9 10 11 12 13 I_ 15 Total CASH TNW"S I. Origit of Fued. Tevected, 1- IDA 5.2 153.2 269.8 125.1 204.9 6.8 - 765.0 Sovern=ant - 25 2 33.5 16.9 -.4 _ - _ _ - - - - - 0 Al-Bark 1.4LI 3O.B 12.2 12.5 2.1 - - - - - - - - - - 46.o Sun-total: 5.2 18T -314.1 154.2 22. 22. - - - - - - - - _ _ o92.0 II. Repaynent of -nn by Sub-borrowers - Principal _.d :.tcrest: 2/ Hr.1 Siautterto.e - 0.2 6.7 23.3 47.6 27.5 50.4 48.1 45.9 43.7 41.4 39.2 36.9 34.7 32.5 30.0 508.1 F!LLC Slia4terxo-se-Frlce Contingency - - - - - 3.0 5.5 5.5 5.5 5.5 5.5 5.5 5.5. 5.5 5.5 5.5 S8.o HLDC Slaugs.ertouse 7sra - o.4 2.1 2.3 2.6 2.6 2.6 2.6 2.7 1.8 - - - - - - 19.7 Model C sa - 0.7 6.4 15.6 23.2 29.3 26.9 22.9 19.5 13.7 6.8 - _ _ _ 165.o Model 'I Fs - 0.7 6.6 14.8 22.1 27.0 23.3 19.8 19.8 16.5 11.6 5.8 - _ - - 168.o S-ub-total: 2.0 21.8 56.0 95.5 ~ 1~i T88Th ThS7§ 3.4 BEW 65.3 50.5 42.4h U5Z9 353 910.8.5 -'.: -'ASH -X7YF^~: 5.2 188.8 335.9 210.2 318.3 98 3 108.7 98.9 93 4 81 2 65.3 50.5 42.4 40.2 38.0 35.5 1810.8 CASH OUTFLOW I. Equity and Nratts - Not to be Repayed: Slaughterouse Equity 2.1 41.6 88.6 25.2 29.0 - - - - _ - - _ - _ _ 186.5 Slaughterhouse Price Contingency - - - - 25.0 - - - - - - _ - - - - 25.0 Range Improveeni Center - 5.9 18,0 11.8 11.8 - - - - - - - - - - - 47.5 Technical Service 4 Infrastructre - 43.3 31.3 30.2 26.3 - - - - _ _ - - _ - - 131.1 Sob-to-al: 2.1 90.8 137.9 77.2 92.1 _ - - _ _ _ _ - _ _ - 390.1 S1. Long-Tern oans: Slaughter-lone 3.1 62.4 132.9 37.8 43.6 _ _ _ _ _ - - _ _ _ _ 279.8 Price Contingency Slsugnterhoose - - - - 37.0 - - - - - - - - - - - 37.0 Slaughterh.ouse Farn - 9.5 2.5 - - - _ _ - - - - - _ _ - 12.0 Model I Farrs 12.1 21.7 26.5 27.2 6.i - - - - - - - - - - 93.6 Model I! Fas - 12.1 19.1 22.5 22.7 1.6 - - _ - - - - - - - 78.o Sub-totasl 3.1 1762 5 135.5 7.7 - - - - - - - - -50 III. Short-O.e Lior.: Slaughterho.se 1.4 6.7 26.1 4.6 - - _ _ _ _ _ _ _ _ - 36.8 Slaughterhouse Farma - 1.3 1.5 - - - _ _ 1.8 - - - - - - - 4.6 FrsM Mdelendmd ._ 8.o 16.o 20.0 21.0 7.0 - - _ - - _ - - - - 72.0 Sub-to-al: _70flT 24.2 5 - - 7.0 _ _ IV. Repayeent of ' ars (Interest and Principal1 3/ ToZ_ek B r.' - 0.1 4.5 12.4 i6.3 22.2 63.3 63.3 63.3 63.3 63.2 o3.2 63.2 63.2 63.2 63.2 687.9 AG-Bank Sun Funds 41 - - 15.0 15.0 16.o - -------46.o Shb-total: -_i 7. W7T_ Th'F9 WF ! e r e . 3-2 tz o/ V. Other Charges: Provision for Sad Zebt. 5/ _ 0.1 0.7 1.5 2.3 2.8 2.5 2 1 2.0 1.6 0.9 0.3 - - - - i6.8 4G_Rank Operating3 llpeoses 6' 0.5 o.8 8 0 . .d 8 . o.8 o.8 o.8 o.8 o 8 o.8 o.8 o.8 o.8 0.8 0.8 12.5 Sub-tot-l 0.5 0.9 1.5 2.3 3.1 3.6 3.3 2.9 92T.8h 9 1T7 1.1 h ' o. 29. 770TA ^ASH OUYFtId: 5.7 198.6 344.3 214.8 267.6 85.5 6.6 82.2 67.9 65.7 64.9 64.3 64.o 64.o 64.o 64.o 17.1 A. YEARLY CASH SUFPvSi 'r5FFI=) ( 0.5) ( 9.8) ( 8.4) ( 4.6) 55.7 42.8 27.1 06.7 25.5 15.5 0.4 (13.85 (21.6) (3.8) (26.0) (28.5) 41.7 B. CUMULATYnE CAS5 3'.PPLUS 'DEFICIT) 0o5) (10.3) (18.7) (23.3) 27.4 70.2 97.3 114.0 139.5 155.0 155.4 141.6 120.0 96.2 70.2 41.7 I B IDA fund. represe.t 827 of the Tutel Pr-Jent Cost. Goversaunt fndsreprenent 8 % of the Total Project CYot. AG-Sn fk d represent 5t of the Total Project Cost. The last 5% of the project cost will be contributed by tbh farmers. This contributi-n does not appear above. 2/ The projection is baued botb on the aodeln and on the disborsesent rchedule. Interest chargco are 10% os short-term lsans .d 8% cn long-te- loans. ' - J/ The Agric-ltoral Sank would pay 4.5t on all funds received as loans fron the Goversuent. Mu Interest oharges or spportonity cost of own funds has bees incluued. E .Stiastsc an 5% loss o. yearly debt nervOusf Yodel I and I frs. J Esti-ated it 2d of total loans dtnborped during project period. De.eeber 22, 1972 AFGHANISTAN LIVESTOCK DEVELOPIIENT PROJECT Eoonail Rate of Retur Farm Models 1, 2, eod 3, Range Improvement Center snd Technical Services Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Year 11 Year 12 Year 13 Year 14 Year 15 Years 16-18 Ye.rl19-20 '''' ---------' ~~~~~~~-------------------~--------------------------- Af million ---------------___--_-___________________ INFLOW 1. Innremeotal Sales - Crops: Models I And 2 5 25 55 81 88 88 88 88 88 88 Range Imro-ent Fars - 1 2 2 2 2 2 2 2 2 - Sheep: FMde1 1 6 24 52 83 105 ill ll ill ill ill Model 2 5 25 55 81 88 a8 88 88 8a 88 Model3 3 5 6 6 6 6 _ 6 _ 6 Seb-tortl: 19 80 170 253 289 295 295 295 295 295 295 295 295 295 295 295 295 2. Ta Revesue - FUel tax: Models l, 2, 3 - I 10 18 18 18 18 18 18 18 - Land ta: Modek 1, 2, 3) - - - 1 1 1 1 - osootmx,5Mdel3 ) _ _ _ - _ _ _ _ - - _ - _ _ _ _ _ Sub-total: - I 10 19 19 19 19 19 19 19 19 19 19 19 19 19 19 TOTAL: L9 81 180 272 308 314 314 314 314 314 314 31 34 314 314 314 314 OUTFLOW 1. Investment nd Replaceaent Costs - Model I 15 27 33 34 8 - - 5 8 9 10 _ I 1 5 9 - Model 2 15 24 28 28 2 - - 5 8 9 10 - I 1 5 8 - - Model 3 11 2 - - - - - 2 - - I - I - 2 - - - Rnge lmprove_tr Crner 12 8 6 - - I 1 2 2 1 1 I - I - Technical Service Unit 6 7 1 - 7 2 1 7 2 _ - - - - - _ Sub-total: 59 68 68 62 17 3 1 20 20 20 21 1 4 3 12 18 - 2. OperatinS Costs -Model 1 4 17 38 64 86 93 97 98 98 98 98 98 98 98 98 98 98 -Model 2 4 17 38 63 83 93 97 98 98 98 98 98 98 98 98 98 98 -Mdel 3 2 2 2 3 3 3 3 3 3 3 3 3 3 3 3 3 -Rnge. mpr.va.enc Center 3 5 5 6 3 3 3 3 3 3 - - - - - - - - Technical Services 12 18 18 18 8 8 8 8 8 8 - B - - - - - Sub-total: 23 59 10 153 193 200 208 210 210 210 199 199 199 199 199 199 199 3. Fertili-er Subsidy 4 8 14 21 17 15 11 8 4 - __z - - - - TOrAL: 86 135 183 236 217 218 220 238 234 230 220 200 203 202 211 217 199 NET FLOW (675 1545 (3) 36 91 96 94 76 80 84 94 114 111 112 103 97 115 - - - - - - a - a~~~~~~~_6 L ECONOM8IC RATE OF RETURN8 Seat Estimate: 37% Ij Sheep Sales Sown 10% 297. 5lo-p Sales Sown 207% 20% Crop Sales Down 10% 337. Crop Salee Sown 20% 30% Operating coot Up 10% 27% OperatinE Coat up 207/. 217. Sheep and Crop Sales fown 10% 257% 1/veot ...nt Costs up 10r n 34bi Inv-t-ts Costs Up 20%. 31% 11 Economic rare of return baco,oen 43%. by hbdowiog hired u.ekilled labor at 70%. AFca AII AI LIrnTOC DEgVELODW?T P*DJECT E0ona00 Pat1. of F1t00 HLDC S_us3ht-hots (Af Milli.o-) _s~ 1 2 3.L. _ 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 lNFIA 1. 1.. - - - 195 333 425 523 599 67V 679 678 678 678 678 678 678 678 678 678 678 678 2. Is 9vra 2 w ,: - - - 2 6 9 14 18 19 19 19 20 20 21 21 22 22 22 22 22 2.po-t . - - - Z 3 3 4 4 5 5 5 5 5 5 5 5 5 5 5 5 5 '.ul TU5 _ _ 1 1 2 2 2 __3 3 . 3 3 3 3 3 3 3 3 3 3 S.b-ot.l. 3__ _ _ 6 11 L5 20 26 27 27 27 28 28 29 29 30 37 30 30 30 =3AL _ = 19 436 23 1 706 705 7 L 706 706 707 707 708 708 708 708 708 1. Iov.st-ts nd 9eplc--nt 5 106 223 92 89 12 14 9 9 - - 1 1 1 33 33 34 1 - ( 185) 2. Op.-.t1. Cost _ . 166 278 352 432 486 541 549 549 549 549 549 549 549 549 549 549 549 549 3. 3. Iso_- T - - - - 2 6 9 14 18 19 19 19 20 20 21 21 22 22 22 22 22 4. Sh2d.o Psi.e on u.killd Ib-or _ _ _ ) 1) 2) 2) (2) 2) ( 2) (2) 2) 2) 2) 2) 2) 2 2) ( 2) ( 2) L 2) 0T A0 5 106 073 257 367 368 453 507 6 566 566 567 _ 568 601 601 602 570 569 569 384 KM FLOW10 5 (106) ( 223) ( 59) (28) 68 85 112 130 140 319 138 138 138 106 106 126 138 139 139 324 YCONJIIC RATE OF 1tET0 8*10 Ooti,.te 18% I,ves.t.t Cost op 1D6 16% Opevotig Cost op 10% 96 Exo-t I*.t 25r.. doos 5% 13% 11-ouahput dow to 70% 15% Th-o9hp.t dosn to 608 13% 4e-_S0 22. 1972 AFGHANISTAN LIVESTOCK CREDIT PROJECT GROUNDWATER DEVELOPMENT Crop Calendars Project Farm f13 ha = 65 jeribs) Crop Area Jan Feb Mar Apr MaV Jun Jul Aug Sep Oct Nov Dec (leribs) WH EAT 18 is === = Illt__ CLOVER 10 _ MUNG BEANS 4 = - MELONS 4 COTTON 10 - - II_ GREEN BARLEY 10 25 jeribs 35 jeribs -25 jeribs ALFALFA 25-35 - V I N ES 11/2 - FRUIT T M _ _ _ - Slaughterhouse Farm (174 Ha) Crop Area Jan Feb Mar Apr May Jun Jul Aug Sep Oct NoDec (ha)De ALFALFA ~~~~~~~~~~~116 Ha o .1. 4 aH ALFALFA ~~~~116-145 - BARLEY (grain) 29 CLOVER 29 GREEN BARLEY 29 World Bank-6995 AFGHANISTAN LIVESTOCK CREDIT PROJECT GROUNDWATER DEVELOPMENT Suggested Layout-HLDC 1200 m , C Farm Site 174 ha Cotton Plant Plant & Residences Farm 10 ha Headquarters Wheat Silosi 8 ha To Kandahar - - . > To Herat Suggested Property Layout Borlder DOe,. each area _._ I IgI 0 Tubevvell +15x200 m l ] l l l - Irrigation ditch @ tg 2) ~~~~~~~~~~~~~~~~~~~~~(linedl - _ Drain (unlined) Suggested Farm Layout VVr1rd Bank-6996 AFGHAN ISTAN LIVESTOCK CREDIT PROJECT Implementation Schedule PRE-PROJECT YEAR 1 YEAR 2 YEAR 3 *YEAR 4 YEAR 5 YEAR 6 YEAR 7 YEAR 8 SLAUGHTERHOUSE CONSTRUCTION "g" ,,|,,*|,STA9GE, ONE STAGE|Z"" TWO*"sZ||" ENG. & OVERHEAD (DANIDA) ENG. & OVERHOD. (IDA) B3L0GS. (DANIDA)_ BLOGS. (IDA) BLDGS. (IDAI PROCESS EQUIP. (DANIDA) PROCESS. (IDA) EQUIP. PR CESS EQUIP. (IDA) IER EQ ANDII Re:FFRlG .EQUIP, (DANIDA) R FRIG EQUIP. (IDA) UTILITIES (IDA) UTILITIES (IDA) ADM. SERVICES (IDA) SERVICES (IDA) TRANSP. EQUIP. (IDA) TRANSP (IDA) EOUIP. VVCRKING (IDA) CAPITAL FARM DEVELOPMENT PHYSICAL INPUTS 100 FARMS EVELOPr4ENT PHSICAL IN PUTS 200 FARMS DEVELOPMENT *.|fiutIu***IIII 6Igs^...IIaIIIaum.asammmuhmhummmpEhuEhEumEI,m.E PHYSICAL PINPUTS 300 FARMS DEVELOPMENT PHYSICAL INPUtS 350 FAFRMS CDEVELOPMENT PHYSICAL INPUTS 3SO FARMS| DEVELOPMENT EXPATRIATE PERS NNEL G GENERAL MANAGER ASSUMES DUTIES * TECHNICAL DIRECTOR * CHIEF ENG1NEER * AGRICULTURAL EXPERT * LIVESTOCK EXPERT FACTORY MANAGER I | * ACCOIUNTANT-MARKETING MANAGER * AUTOMOTIVE ENGINEER * RANGE MANAGEMENT EXPERT VETERINARIAN World Bank-7070(R( AFGHANISTAN LIVESTOCK CREDIT PROJECT Organigram MINISTRY OF NATIONAL AGBANK1 l AGRIULUR LIVESTOCK Aa 11 DFELPMENT LIVESTOCK DEVELOPMENT IRRIGATION - CORPORATION ~~iii,uimmTCHNCA HERAT VETERINARY SERVICE SLAUGHTER-~~~~~~~~~~~~~~~HE A BRANCH SERVICES UNIT HOUSE~~~~~~~~~~~~~~~LIESOC EVELOPMENT RANGDVELOMEN SECTION IMP~~~~~~~COPOATO HERAT VETERINARY T~~~~c ETERLEECNAL BRANCH SERVICES ~~~~~~~~~~u, SEN-FRVICEGHER SLUGT R- EIGLVSTC LN L X~~~~~~~~~~~~Im.lmmuiIiEm.m -' I~ ~ ~ ~DEEOMN HOS AN BUIN NPDODUCTIO'N mlii's.~~~~~ ~ ~ ~ ~ i iIii* Ps Ru Oim'mm' Vmm mu NmmC'' II Aii LE. |f mu.. mIs M* Pp EME GROUND FARM ACCOUNTING WATER2 ~ON-FARM DEVELOPMENTRAG PRVINCIALGENE B..rlcul urnl DevelOpmen snk of Afgh-ni,lCT. LEVEL 2A.ssi-d bY Mlnor 1Irri-ei S.,vi.. (M.l.S.I F.bru-rY 20. 1973 .VWorld Bnnk-7071(2R) IBRD 10109 64- . _ S. R~ LIVESTOCK CREDIT PROJECT . \ wo v. sts n-~~~~~~~~~~~5- HIN IESTERN PROVINCES A ndlhC -f I ND A < . _ _. / 1t 4re21er 5e X .~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~SI 2 AFG HAN STAN IRAN LIVESTOCK CREDIT PROJECT . WESTERN PROVINCES 6t f F ARF l(A B / ,ASos-a-Pul C sv 36~iA\_ _' 36 \ \-o U. S. S. JR.ecerg onGcr 2 MAIMANA* .1 *~~~~~~~~~~P. To S.I.,o osgend sjo u - g ' G h orito n;<- ( PoD( / 7~~~~~~~ fJ~~~~~~~~K ki LA-1-Nhvi*AW/tAH AR N~~~ Sh,ndond rtX A D C /~~~~~~~~~E ------------HAR H F EA 8 R \A H h .hU RU Z GA N KILOMETERS I25 50 75 100 32- ' tpz / ' ~ _ \ / \7/ {_-_5\ 32'- ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~d4. ~/r 1' id f fr r( -d 1 1 i ,ill LASHKARGA ~ ~ ~ ~ ~ RZGN®MIE - 'ba 1\ --------- / ,orlSrlt : >\z oo g LASHKAEGAH I NO _ _ |PROJECT AREA ANG k ~~~~~~~~~~~~~~~~~~~~~~~~~SLAUGHTERHOUSE SITE H E L M AND I h A N U AH AR POTENTIAL SHEEP BUYING POINTS ALTERNATIVE SITES FOR THE RANGE } \ Sp,,, BOldOi