Thailand sericulture project

Audit report covers the period 9/8/76-3/3l/8l and is based on review of financial documents, site visits, and interviews with farmers and project personnel. With almost half of the $2.6 million loan expended, the project has generally failed to achieve its objectives. Less than half the target number of farmers (1,200 by the fourth year) are participating; silkworm production fell from 10,000 kg in 1980 to 7,000 kg in 1981; and only 48% of farmers are repaying their loans on schedule. The Bank for Agriculture and Agricultural Cooperatives (BAAC) contributed none of its stipulated 50% share to the loan fund during the first 3 years, and its eventual contribution of $95,283 has been more than refunded by farmers" loan repayments. The two main reasons for this lack of success were the careless selection of participating farmers (stressing numerical rather than qualitative goals) and the failure to provide, in this essentially high-risk endeavor, the planned technical assistance (TA) to project managers and farmers. Other problems included deficiencies in BAAC and Department of Public Works (DPW) reports and DPW"s failure to complete construction of cooling rooms on schedule, leading to a waste of project funds. Procurement charges for a cocoon drying facility seemed unwarranted and excessive; because USAID/T disagrees on this point, the auditors will follow up the question separately. Indications of potential success in certain settlement areas suggest that a 1-year unfunded extension to 9/82 be granted, especially to support farm families who have gone further into debt through the project. Prior to issuance of the audit, USAID/T had implemented recommendations to deobligate the remaining $750,000 in A.I.D. funds for BAAC, enforce the 50-50 contribution agreement, and have DPW use remaining A.I.D. funds to assist current participants rather than to expand the project. Among other recommendations are to establish an adequate TA program; improve Thai ministry reports and disbursement requests; better enforce farmer selection criteria; and stipulate further funding on resolution of project design and implementation issues.