BASIC CROPS PRODUCTION (INCOMING AIRGRAM)

EVALUATION COVERS THE PERIOD THROUGH 11/11/74 AND IS BASED PRIMARILY ON A REVIEW OF EVALUATIONS AND REPORTS BY THE GOVERNMENT OF NICARAGUA'S (G0N) EXECUTING AGENCY, THE NATIONAL BANK OF NICARAGUA (BNN). IN A 3/27/73 AMENDMENT TO THE LOAN AGREEMENT, THE PROJECT PURPOSE WAS ALTERED TO FOCUS ON EXPANDING THE AVAILABILITY TO SMALL FARMERS OF PRODUCTION CREDIT FOR BASIC GRAINS. THIS REVISED PURPOSE HAS SUBSTANTIALLY BEEN MET. IN 1973/74, BNN, USING NEARLY ONE-THIRD OF THE TOTAL AGRO-CHEMICAL LOAN FUNDS, MORE THAN DOUBLED THE AREA FINANCED IN BASIC CROPS IN 1972/73 (119,198 TO 50,747 MANZANAS). DURING THE SAME PERIOD, THE NUMBER OF CLIENTS MORE THAN TRIPLED, INCREASING FROM 3,831 TO 12,528; AND THE AMOUNT LOANED NEARLY DOUBLED, RISING FROM 30,650 TO 58,128 CORDOBAS. OF 12,528 SMALL FARMERS FINANCED, 12,008 WERE FINANCED FOR BASIC CROPS. THE PRODUCTIVITY OF BNN-FINANCED FARMERS WAS GREATER THAN THAT OF FARMERS NOT SO FINANCED. UTILIZATION OF LOAN FUNDS WAS GREATLY FACILITATED BY A LOAN AGREEMENT REVISION WHICH REMOVED INHIBITING PROVISIONS OVER WHICH BNN HAD NO CONTROL, E.G., THE LEVEL OF TAX TARGETS. ALL COVENANTS HAVE BEEN MET. IN PARTICULAR, BNN HAS RECEIVED FROM GON CAPITALIZATION FUNDS OF $8,694,000, ROUGHLY THE EQUIVALENT OF THE AMOUNT SPENT BY BNN TO PROCURE AGRO-CHEMICALS ($8,870,000). PERIODIC AND ANNUAL REPORT REQUIREMENTS HAVE BEEN OR WILL BE MET. BNN'S LOAN EVALUATION REPORT, SUBMITTED TO USAID 6/25/74, SATISFIED THE REQUIREMENT OF A FINAL PROJECT REPORT. IN ORDER TO DETERMINE COMPLIANCE WITH THE COVENANT CONTAINED IN SECTION 5.1 OF THE AMENDED LOAN AGREEMENT, IT IS RECOMMENDED THAT BNN CONTINUE TO PROVIDE AID WITH AN ANNUAL FINANCIAL REPORT; A PLAN FOR EACH CROP YEAR, INCLUDING ESTIMATES BY CROPS FOR AREAS, QUANTITIES OF AGRO-CHEMICALS, CLIENTS, AND AMOUNTS OF CREDIT TO BE MADE AVAILABLE FOR BASIC CROP LOANS; AND AN ANNUAL SUMMARY OF LOANS MADE FOR ELIGIBLE BASIC CROPS AS DEFINED IN LOAN DOCUMENTS. RESIDUAL MONITORING WILL REMAIN THE RESPONSIBILITY OF THE RURAL DEVELOPMENT OFFICER.