Audit of AID/Belize"s commercialization of alternative crops project no. 505-0008

Audit covers the period 9/85-9/89. Although the Belize Agri-Business Company (BABCO) had introduced alternative crops to the Belizean sugarcane farmer through research and testing efforts, commercial production of alternative crops was far below original targets. After 80% of the project"s life had passed, farmers had not planted the anticipated 13,000 acres originally targeted. As a result, in 1988, the A.I.D. Representative approved revisions to the project paper that reduced anticipated commercial production to 3,200 acres. However, A.I.D./B recently estimated that only about 1,600 acres -- or approximately 50% of the revised targets -- could be planted by June 1990. A.I.D./B attributed the lower production to a sharp increase in sugar prices and an overall increase in the U.S. sugar quota for Belize which made alternative crops unattractive to Belize"s sugarcane farmers. In addition, the audit disclosed that project resources were not economically and efficiently used. First, BABCO"s accounting and internal controls were unacceptable, and as a result, it was not always possible to determine how resources were used. Second, because of inadequate inventory practices, farm equipment could not be located or valued. Third, $3,310 in project funds were used to pay unallowable entertainment and subsistence costs. Finally, the contractor (Chemonics) made two dubious procurement decisions: a 17,000 refrigerated railcare was purchased for its "mobility," even though Belize has no rail system, and a $22,000 washer-waxer was purchased, but never used. (Author abstract, modified)