Project assistance completion report : agricultural commodities and equipment program (391-0468)

The CIP was a success. Its first component provided imported equipment and machinery to 6 USAID projects. (1) A total of $12.9 million worth of equipment enhanced the ability of target organizations of the Irrigation System Management Project. The equipment provided valuable, timely assistance during the heavy floods of 1990 and 1992 and helped in restoring extensively damaged irrigation infrastructure. (2) The $1.5 million in farm equipment provided to the Forestry Planning and Development Project strengthened the capacity of forest agencies to carry out their activities extensively and efficiently. (3) For the Transformation and Integration of the Provincial Agricultural Network Project, the CIP financed $3.2 million in research and instructional equipment for the agricultural university in the Northwest Frontier Province. The upgrading of laboratories has improved the standard of research both on campus and at 13 provincial research stations. CIP equipment has also been useful in agricultural demonstrations and outreach efforts. (4) The Management of Agricultural Research and Technology Project received $5.7 million worth of research, educational, and computer equipment. Improved research facilities resulted in the development of several crop varieties, improved breeds of animals, and products to boost agricultural production. The private sector is marketing 14 products developed by the National Agricultural Center, a CIP recipient, and CIP-financed computers were used to automate 17 agricultural libraries. (5) The CIP financed $4.2 million in construction and engineering equipment for the Balochistan Area Development Project. Benefits have included construction of the Ketch River Bridge, improvement and maintenance of 1,575 km of road, and construction of 59 drainage structures. (6) For the Food Security Management project, CIP financing of 52 computers greatly improved the research and training capability of the Ministry of Food and Agriculture and the Pakistan Institute of Statistical Training and Research. The CIP also financed $9 million in equipment and commodities for public entities, including the Federal Bureau of Statistics, the agricultural universities of Faisalabad and Tando Jam, the Pakistan Agricultural Research Council, and the Center for Advanced Molecular Biology. Pesticides and equipment for locust control were also procured. In the commodities component, fertilizer imports of 695,000 MTs of DAP and 10.4 MTs of TSP have boosted wheat production and generated significant local currency proceeds which have been used to finance development activities in agriculture, social sectors, water, and power. In addition, 1.225 million MTs of wheat were imported at a cost of $232.4 million, the sale of which has generated Rs. 1.3 billion in budgetary support for Government of Pakistan (GOP) development plans. In response to a severe shortfall in cotton production, 56,600 bales of cotton were also imported; sales proceeds were used on development activities. Private sector imports of $67.1 million worth of harvesters, juice concentrate equipment, generators for textiles, vegetable seeds, and organic fertilizer plants, and other commodities helped to alleviate foreign exchange problems facing the agribusiness sector. Studies were carried out on fertilizer policy, the edible oilseed industry, agricultural mechanization, privatization of fertilizer marketing, and agricultural policy. As a result of policy dialogue based on these and other studies: (1) the distribution share of the imported fertilizers was increased from 34% to 60% over a period of 3 years; (2) allowable marketing costs for imported fertilizers were made uniform for public and private sector distributors; (3) the private sector is allowed to obtain deliveries of imported fertilizers directly from the importing agency; and (4) the GOP agreed to take into account the requirements of the private sector distributors before finalizing its procurement plans. Lesson learned are as follows. (1) Projects focused on policy changes generally take longer to mature and achieve results. (2) Project design should permit flexibility to divert resources to meet unexpected demand. (3) Early agreement on the specification of CIP commodities (in the present case, DAP fertilizer) is necessary when USAID has its own standards. USAID should be willing to accommodate changes on technical grounds, but all issues should be settled at the design stage. (4) Procurement of equipment is a long process. On the one hand, the objective of rapid disbursements for balance of payment support can be better achieved through procurement of commodities. On the other, the long-run development effects of machinery and equipment cannot be ignored. Perhaps it is best to procure equipment under individual projects. (5) Effective implementation of a CIP for the private sector requires knowledge of development, international banking, alternative competitive foreign exchange resources, the competitiveness of U.S. products, domestic markets, and USAID's CIP regulations. (6) The success of the CIP in linking fertilizer imports with fertilizer policy reform shows that, to the extent possible, policy reforms should be in the same area where assistance is provided.