Report No. 1715a-BD

Bangladesh FILE COPYSecond Foodgrain Storage ProjectFebruary 15, 1978

South Asia Projects Department

FOR OFFICIAL USE ONLY

Document of the World Bank

This document has a restricted distribution and may be used by recipientsonly in the performance of their official duties. Its contents may nototherwise be disclosed without World Bank authorization.

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CURRENCY EQUIVALENTS

The Bangladesh Taka is officially valued at 26.70 tothe Pound Sterling. The Pound now floats relative to the USDollar and consequently the Taka, US Dollar rate is subject tochange. The rate below has been used throughout this report.

US$1 = Tk 15.5

Tk 1 US$0.0645

Tk 1 million US$64,500

WEIGHTS AND MEASURES

1 acre (ac) = 0.405 hectare (ha)I mile (mi) = 1.509 kilometers (km)I square mile (sq mi) = 640 ac (259 ha)I maund (md) = 82.27 lbs (37.3 kg)1 metric ton (ton) = 26.8 md1 cubic foot per second

(cusec) = 0.0283 cu meters per second

ABBREVIATIONS

CSD - Central Storage DepotDGF - Director General of FoodGOB - Government of BangladeshHYV - High Yielding VarietiesIRDP - Integrated Rural Development ProgramLSD - Local Storage DepotM - Million

MF - Ministry of Food

PECU - Project Engineering and Construction UnitPIU - Project Implementation UnitPSC - Project Steering CommitteeTCCA - Thana Central Cooperative AssociationTN - Twin-Nissen type storage unitTPC - Temporary Purchase Centers

References to "foodgrain" throughout the report refer to paddy and wheat,with volumes and weights measured in rice equivalents.

FOR OFFICIAL USE ONLYBANGLADESH

SECOND FOODGRAIN STORAGE PROJECT

Table of Contents

Page No.

SUMMARY AND CONCLUSIONS ....... -........ ..... i-iv

I. INTRODUCTION ................... 1

II. THE FOODGRAIN SECTOR 1.... 1

A. General ..... ................... ............... VB. Government Production Strategy ...................... 3C. Foodgrain Marketing .. ..... ..... ........ 3

III. PROCUREMENT CONSTRAINTS ................ ... . ......... 5

A. Storage Facilities .... ... ........ ............... 6B. Storage Conditions ........ . . . 7C. Purchase Payments ..... . ......... ........ 8D. Staffing and Organization ..... 9

LV. THE PROJECT AREA .........--........ oo.... oo 9

V. THE PROJECT ....V..................... . o. 10

A. Summary Description ........ ................. 10B. Detailed Features ...-. ............... ..... .. 11C. Project Costs ................... ---.... .... 14D. Project Financing .......... ... 16E. Procurement *o. . .................. . 16F. Disbursements ......... .... ............. . 17G. Accounts & Audit ......... .......... 17

VI. ORGANIZATION AND MANAGEMENT o ......... o.... ...... ......... 18

A. General * .. ........... ..... ... .... ..... 18B. Physical Implementation o-o-o .............. o..... 18C. Grain Procurement ..... .............. 20D. Planning, Monitoring and Evaluation............ 22

VI:L. BENEFITS AND JUSTIFICATION too ................ o.oo ...... 23

VIII. RECOMMENDATIONS ............. *..................... 0.00. 24

This report is based on the findings and recommendations of an appraisalmission consisting of Messrs. A. Seth, I. Harvey, P. Davies (IDA) andF. Adams, E. Brooks, M. Faulkner (Consultants), which visited Bangladesh

in April/May 1977.

Trhis document has a restricted distribution and may be used by recipients only in the performanceof their official duties, Its contents may not otherwise be disclosed without World Bank authorization.

Table of Contents (Cont'd)

ANNEXES

1. The Foodgrain SectorTable 1 - Rice and Wheat: Production, Area, YieldTable 2 - District-wise Production of Rice and WheatTable 3 - Foodgrains Available for ConsumptionTable 4 - Procurement by DistrictTable 5 - Projections of Foodgrain Production 1980/81 and

1985/86Table 6 - Estimates of Net Foodgrain Surpluses/Deficits

by District 1985/86Table 7 - 1985/86 Projections of Maximum Procurement

Potential

Chart 1 - Seasonal Price Fluctuations

2. Storage Resources and RequirementsTable I - MF Storage CapacityTable 2 - Rice Mills and CapacityTable 3 - Capacity UtilizationTable 4 - Minimum Buffer Stock Potential (1977/78)Table 5 - 1985 Grainflow Model: DinajpurTable 6 - Procurement Warehouse Space RequirementTable 7 - Details of New Storage Locations Agreed

3. Project Engineering and ConstructionTable 1 - Typical Construction CostsTable 2 - Construction and Rehabilitation CostsTable 3 - Equipment and Vehicle RequirementsTable 4 - Manpower RequirementsTable 5 - Project Costs

Chart I - Project Engineering and Construction Unit -

Organization Chart

Appendix I - Design and Construction MethodsAppendix 2 - Draft TORs for Engineering ConsultantAppendix 3 - Prequalification of Contractors

4. Paddy Marketing and ProcurementTable 1 - Lending Limits and Actual Advances of Commercial

Banks for Internal ProcurementTable 2 - Project Cost - Godown Equipment and Procurement SystemTable 3 - Data on Potential TCCA for Pilot Project

Table of Contents (Cont'd)

5. Control of Storage LossesTable 1 - Squads and Equipment for LSDsTable 2 - Project Costs

Appendix 1- TORs of Pest Control Field Training Assistance

6. Paddy DryingTable 1 - Major Boro Procurement Points 1975Table 2 - Estimated Drying CostTable 3 - Dryer EquipmentTable 4 - Project Cost

Appendix 1- TORs for Paddy Drying and Procurement Consultant

7. Organization and ManagementTable I - Monitoring, Organizational & Evaluation Studies:

Project Cost

Chart 1 - Directorate of Food Organization Chart

Appendix 1- Monitoring CellAppendix 2- Outline of Annual Report of MF

8. Project Costs & Implementation ScheduleTable 1 - Cost by ComponentTable 2 - Cost by CategoryTable 3 - Disbursement ScheduleTable 4 - Critical ActivitiesChart I - Implementation Schedule

9. Economic AnalysisTable 1 - Estimated Storage Losses

Table 2 - Operating Cost (Economic)Table 3 - Economic Cost and Benefit ScheduleTable 4 - Economic Price for Paddy

MAP

BANGLADESH

SECOND FOODGRAIN STORAGE PROJECT

SUMMARY AND CONCLUSIONS

i. Foodgrains are dominant in the economy of Bangladesh. They provide85% of national caloric intake and 70% of protein and their production coversabout 83% of the total cropped area. Production increases in recent yearshave been erratic and domestic production has provided only 75% to 85% of thetotal foodgrains requirement of the country. Annual imports, mainly aid wheat,have ranged from 1.4 M tons to 2.7 M tons. An IDA supported grain storageproject (381-BD) substantially completed by 1971, provided bulk handling andstorage facilities critically needed by Bangladesh to facilitate grain importsand to ensure adequate grain deliveries through the public distribution system.

ii. GOB's agriculture and foodgrain development strategy aims at increas-ing domestic production through: (a) increasing irrigated and multiple croppedareas; (b) delivering to producers a package of key inputs such as HYV seeds,fertilizers and pesticides; (c) strengthening the extension, credit servicesand other farmer support services; and (d) operating a domestic procurementand marketing system to ensure incentive and stable prices to producers.

iii. Almost 55% of total production is comprised by the monsoon (Aman)crop and small production fluctuations caused by flood, drought or cyclonescreate large swings in farmgate and retail prices. Primitive farm to markettransport, inadequate transport between major production and consumption areas,poor grain storage facilities especially in the private sector, and an in-hospitable storage environment make primary marketing costly. Private traderspossess a strong bargaining position and the entrenched traditional foodgrainmarketing system creates serious annual, seasonal and geographical variationsin foodgrain prices.

iv. GOB's domestic procurement operations became significant onlyrecently, but their impact on maintaining post-harvest farmgate prices remainsminimal because of major operating and resource constraints. Low farmgatepaddy prices represent a significant disincentive to farmers. An effectivefarmgate price support program is a necessary condition for achieving anaccelerated growth of domestic production through investments in yield-increasing technology.

v. The Ministry of Food (MF) owns storage facilities nominally ratedat 1.13 M tons, with a maximum loading capacity of about 1.5 M tons. Themajor constraints that prevent its effective utilization are: the geographicalseparation of procurement and deficit areas, the sharp seasonality of procure-ment, inadequate farm to market and inter-regional transportation, significantnon-foodgrain storage needs, and most importantly, the uneven distribution ofstorage and rice milling facilities. Location of MF storage capacity isrelated primarily to the public distribution needs of various areas, and isinappropriately located for procurement. The MF storage system has a capacityto hold 1.0 M tons of buffer stocks and procure domestically 400,000 tons offoodgrains.

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vi. Most domestic procurement comes from the six northern districts andPatuakhali, which have production surpluses, whereas public distribution isconcentrated in the Dacca and Chittagong areas. About 80% of procurementoccurs in the winter season placing a heavy burden on a poor, already strained,transport system. Major procurement areas and areas under Boro paddy andwheat, the crops with maximum growth potential, do not have adequate storagefacilities. Thus, MF is forced to use about 100,000 tons of mostly hired,dilapidated and substandard facilities in which grain losses are conservativelyestimated at about 5% for a six month storage period.

vii. MF's procurement system is being streamlined to cope with higherlevels of procurement, and to eliminate major constraints preventing farmersfrom benefitting from the official purchase prices. These constraints are:(i) poor access by farmers to purchase points; (ii) inefficient operation ofpurchase points leading to long waiting periods; (iii) subjective and multiplequality discounts; (iv) slow payment; and (v) late start of procurement opera-tions. In addition, Boro paddy because of the difficulty of post harvestdrying and thus storage, are procured reluctantly.

viii. The project would assist GOB in improving the capacity and effi-ciency of its domestic foodgrain procurement program, through provision ofappropriately located storage facilities and essential equipment, necessarypest control equipment and vehicles, mechanical drying facilities and tech-nical assistance.

ix. Whereas the first IDA financed storage project was geared to hand-ling imported grain, this project would be concentrate in a core project areacomprising the six northern districts, which have the greatest potential forincreased foodgrain production. This area is already the focus of major GOBdevelopment program and projects (many of which IDA supported) and affordsthe greatest scope for streamlining the procurement system. Small amounts ofadditional storage would be provided in other districts to enable GOB toprovide timely relief supplies to certain emergency prone areas.

x. Present MF storage capacity of 250,000 tons in the project areawould be increased by 145,000 tons at about 150 strategic locations. About25,000 tons of dilapidated corrugated iron sheds would also be rehabilitated.MF would then be able to procure and store under good condition up to 400,000tons in the project area. Location selection criteria, although based onpresent constraints, would be compatible with an improving transportationsystem. All godowns would be of a standard design already used extensivelyin Bangladesh. Essential ancillaries like electric power and approach roadswould be provided.

xi. Domestic foodgrain procurement operations would be made moreefficient by improving farmer access to purchase points at new stores and byopening new temporary purchase points. MF purchases would be opened to allsellers, procurement would start immediately post harvest with prices announcedwell in advance, excessively rigid purchase standards would be relaxed andobjective testing procedures introduced. Supervision of procurement opera-tions would be strengthened by improved mobility of MF staff. Post procure-ment mechanical drying of the Boro crop, which is harvested in the rainyseason, would take place at 15 locations.

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xii. Pest control operations would be strengthened by fully equipping25 existing squads. A new zonal foodgrain testing laboratory would be estab-lished to strengthen stock inspection. Field training of pest control opera-tors, godown managers and purchase staff would be organized through MF'sexisting Training Center, which would be strengthened.

xiii. A pilot program with 10 selected Thana Central Cooperative Associa-tions, would be initiated under the project to develop their foodgrain market-ing potential.

xiv. The project would provide 10 man years of technical assistance atan average man/month cost of US$7,000 to assist GOB in carrying out an effec-tive construction, domestic procurement and paddy drying, and pest controltraining programs; studies would be conducted to evaluate project benefits.A Project Implementation Unit and a monitoring cell would be establishedwithin MF, and an existing planning cell would be strengthened.

xv. The four year project would have a total cost of US$40 M includingcontingencies, taxes and duties. The proposed IDA credit of $25 M wouldfinance the foreign exchange cost ($11.7 M) and 46% of local costs ($28.3 M)or about 75% of project costs excluding duties and taxes ($7.2 M). The mainitems to be financed would be civil works, vehicles, equipment, technicalassistance and training. Because project civil works would be constructed bylabor intensive methods, scattered at about 200 sites, many in remote areas,and because each contract would be below $150,000, civil works ($27.0 M) wouldbe unsuitable for international competitive bidding. And contracts would belet following local bidding procedures satisfactory to IDA. Project use ofGOB's stock of imported construction materials ($2.5 M) would be spread over4 years and individual requirements would be too small to justify separateproject tenders. Materials would be replenished from central GOB imports,using procedures satisfactory to IDA. Vehicles ($1.25 M) and drying, pestcontrol and weighing equipment ($5.0 M) would be procured after internationalcompetitive bidding. Procurement of off-the-shelf imported items costing lessthan $10,000 would be by prudent shopping. Technical assistance and services($1.1 M) would be recruited in Bangladesh and abroad. The balance of projectcosts would consist of local training ($0.5 M), PIU monitoring and planningcells ($0.1 M), land acquisition ($0.25 M) and engineering ($2.3 M).

xvi. Responsibility for project implementation would rest with a new MFProject Implementation Unit (PIU), under the broad guidelines of a ProjectSteering Committee (PSC). Design, sub-contracting and supervision of con-struction work would be carried out by a Project Engineering and ConstructionUnit (PECU) within GOB's Public Works Department, which would be responsibleto the PIU. Review of the MF field organization and the payment system forfoodgrain purchases would be undertaken. The new Monitoring Cell would con-tinuously study and make recommendations to improve the overall operationsof the MF.

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xvii. The project would reduce losses in 100,000 tons of marginal facili-ties used currently by MF. In addition) increased MF procurement of 100,000tons at full development would be stored in the improved project facilitiesand thus reduce storage losses that would otherwise have taken place. About19,000 tons of foodgrain valued at $5.9 M, would be saved annually. Theeconomic rate of return is estimated to be about 21Z. Project godowns wouldbe available for food distribution and buffer stocks, but benefits from theseare not quantified. Similarly, benefits due to the higher level and reducedrisk of a sharp fall of post harvest farmgate prices are difficult to quantify.

xviii. The major risk facing the project would be that increases in thesupply of grain in the project area would be insufficient to permit economicuse of the facilities provided. However, as about 60% of project construc-tion would replace existing unsatisfactory and hired facilities, this wouldonly happen of procurement failed to increase by 35% over the next fiveyears. The probability of this occurring is considered slight. Recent GOBefforts to shift the emphasis of MF efforts from distribution to procurementhave shown encouraging results and exposed constraints which the project nowaims to eliminate however there is also a risk that improvement in farmeraccess to the MF procurement system may be delayed. A sensitivity analysisshows that a delay of four years in reaching full development procurementlevels would reduce the rate of return to 17%.

xix. With assurances discussed in Chapter VIII, the project would besuitable for an IDA credit of $25 M to GOB on standard terms.

BANGLADESH

SECOND FOODGRAIN STORAGE PROJECT

I. INTRODUCTION

1.01 An IDA credit agreement of $19.2 M to provide storage and transship-ment facilities for imported foodgrains was signed in February 1966 (83-PAK),and reactivated at $19.7 M in May 1973 (381-BD). The reactivated projectconsisted of financing four grain silos for imported grain with a totalcapacity of 232,000 tons with supporting facilities; completion of the Chitta-gong Jetty serving one of the silos, technical assistance for training ofstaff for silo operation, and hiring of consultants to study the future food-grain storage needs of Bangladesh.

1.02 Apart from some ancillary facilities, silo construction was virtuallycomplete by 1971 and these facilities played an important role in the foodgrainemergency of 1971/72. The silos thereafter deteriorated due to weak managementand lack of maintenance. IDA supervision efforts were stepped up and in 1974Government of Bangladesh (GOB) embarked on an action program designed with IDAassistance to improve silo operations. Under TA Credit 409-BD, consultantswere recruited to help with management and training. Significant improvementshave occurred and the project was satisfactorily completed on June 30, 1977.

1.03 The study of future storage needs was completed in December 1975.It brought out a number of policy issues that have influenced design of theproject appraised in the report. These issues were addressed by a pre-appraisalMission in November 1976, followed by an IDA Food Price Policy Mission inFebruary 1977. This report is based on the findings of the above missions, andof an appraisal mission, comprising of Messrs. A. Seth, I. Harvey, P. Davies(IDA) and F. Adams, E. Brooks and M. Faulkner (consultants) which visitedBangladesh in April/May 1977.

II. THE FOODGRAIN SECTOR

A. General

2.01 Bangladesh has a gross area of 35 M ac of which about 22.5 M acare under cultivation at a cropping intensity of about 135%. With a popula-tion estimated at 81 M, it has a population density among the world's highest,about 1,470 per sq. mile. Ninety five percent of the population lives in ruralareas. Foodgrains play a dominant role in the economy of Bangladesh, makingup roughly 30-35% of GDP in recent years. In 1975/76 about 83% of the totalcropped area was under foodgrain crops, however Bangladesh is not self suf-ficient in foodgrains and foodgrain imports, 1974 through 1976, representedabout 30-40% of total imports. Foodgrain consumption is the major element inthe national diet with rice and wheat together providing almost 85% of thecalorific intake and 70% of the protein.

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2.02 During the 19Os, agricultural production grew at an annual rateof about 2.5% and foodgrain production, at a rate of about 2.4%. However,both lagged behind the estimated population growth rate of 2.8%. A severedrought combined with the disruptions caused by the 1971 civil strife resultedin sharply reduced production in 1972/73 -- some 15% below the 1969/70 level.In 1975/76 however, due to favorable weather conditions, improved availabilityof fertilizers and high foodgrain prices in 1974/75, there was a record food-grain production of 12.8 M tons, which exceeded the 1969/70 level by some 10%.Nevertheless, per capita production still remains below 1969 levels (Annex 1).

2.03 Rice accounts for 98% of domestically produced foodgrain. There arethree rice crops in Bangladesh; Aus, Aman and Boro. Aus is both broadcast andtransplanted, the broadcast being sown mid-March through mid-May with trans-planting taking place March through mid-April. Harvesting is in July andAugust. It is predominantly rainfed, and is the crop most vulnerable todisasters as it relies on the timely arrival of the monsoon and must be har-vested during the period of most likely flooding. In 1975/76, it accounted for25% of production and 35% of acreage. Aman, the major crop, is also rainfedand both broadcast and transplanted. Broadcast aman is a deepwater floatingrice. Broadcast is sown in March and April, transplanting is between July andSeptember. Harvesting takes place mainly in November and December. Aman,in 1975/76 utilized 55% of the rice area to produce 55% of the production.Boro is an irrigated transplanted crop. Transplanting takes place betweenNovember and February and harvesting between April and June during the rains.In 1975/76 Boro produced 18% of the rice output from 11% of the area. Al-though now growing in importance wheat has not been a major crop in Bangladesh,representing only 1.7% of total foodgrain production in 1975/76. Wheat com-petes with Boro for land availability and is harvested in April, 250,000 tonswere harvested in 1976/77.

2.04 Neither Aman nor Aus have exhibited any significant growth trendin the last decade although there is some evidence that production of both maynow be turning upwards (Annex 1). However, because of the expansion of thearea under assured irrigation in the dry season, and the associated increasein the use of HYVs and inputs, the Boro crop has been increasing steadily:the 1975/76 output of 2.25 M tons was over six times the size of that in1965/66.

2.05 Roughly 85% of the foodgrain requirements of the country in recentyears has come from domestic production, though in bad crop years this pro-portion has been as low as 73%. Imports have ranged from 1.4 M tons in 1975/76to as high as 2.7 M tons in 1972/73, and handling facilities constructed underthe first foodgrain storage project have assisted in maintaining a timely flowof foodgrains into the country to meet calamities or poor harvests. All im-ports are by Government, with an increasing proportion being on aid terms;commercial purchases by Government declined from 42% in 1972/73 to 10% in1975/76 and 18% in 1976/77. Despite consumer preference for rice, wheatdominates food imports because of its lower price and greater availabilityon concessionary terms.

B. Government Foodgrain Production Strategy

2.06 Bangladesh has large areas of highly fertile deltaic soils, a climatesuitable for year-round cropping, and abundant groundwater potential for dryseason irrigation. In recent years, the development of HYV of rice and wheat,suitable for cultivation in large areas of Bangladesh both under irrigated andrainfed conditions, has opened up the prospects of substantial increases inproduction which could lead to greater self sufficiency. Thus GOB agriculturaland foodgrain development strategy aims at (i) increasing the area under irri-gation; (ii) delivering a package of key inputs such as HYV seeds, fertilizersand pesticides; (iii) strengthening extension credit and other farmer supportservices; and (iv) operating a domestic procurement and marketing system forfoodgrain that would ensure incentive prices to producers. Recent IDA agri-culture sector projects support these objectives.

2.07 An adequate supply of inputs and irrigation, and improved servicessuch as extension and credit, will have no impact on production unless theprice received by the farmer is an adequate incentive for him to use them.The project appraised in this report project aims to assist GOB in ensuringincentive prices by providing storage and other facilities that are essentialfor an effective GOB domestic foodgrain procurement program.

C. Foodgrain Marketing

2.08 Private and Cooperative Sector. The marketing system in Bangladesh(Annex 4) is largely traditional. Most growers part with significant propor-tions of their crop before or immediately upon harvest because of: (i) needfor cash; (ii) inability to hold grain in storage; and (iii) obligation torepay crop production loans. They often have to buy grain later at higherprices for family consumption. However, only 2-3 M tons of foodgrain, about20-30% of the production actually enters the commercial market, and privatetraders handle about 80% of it. They buy at about 6,500 primary markets andabout 2,000 "haats" (markets held on specific days of the week). The privatetraders' storage facilities are inadequate and storage losses high. GOB ispresently conducting a study of the investment needs and the operationalconstraints of the private sector marketing system.

2.09 Farmer cooperatives have been officially encouraged to market paddyand engage in rice milling. In 1976, however, 16 Thana Central CooperativeAssociation (TCCA) marketed only about 50 tons of paddy. For successful largescale involvement TCCA would need to overcome the problems of lacks of tech-nical and financial knowhow, and adequate physical facilities.

2.10 Government Procurement and Distribution. Since the Bengal Famineof 1943, public marketing has been a major role of Government mainly to(i) provide low-priced foodgrains to those in need; (ii) supply subsidizedfoodgrains to Government employees, in effect, as a form of payment in kind;and (iii) ensure the supply of foodgrains at reasonable prices to urban areasespecially in times of bad crops and high prices.

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2.11 Government distribution of foodgrain averaged 1.8 M tons during1972-76, 90% imported. All residents (approximately 4.5 M) of the six majorcities (Dacca, Naryanganj, Chittagong, Khulna, Rajshahi and Rangamati), aswell as all employees of Government or large establishments, are entitled toa weekly ration of foodstuffs at prices fixed by GOB. Needy residents(generally the lower 50% income group) of other areas are covered duringperiods of scarcity. During natural calamities, free rice and wheat areprovided to those affected.

2.12 In the past domestic foodgrain procurement has often been compulsory.However, compulsory procurement causes widespread bitterness among farmersespecially as procurement prices at such time have been well below the freemarket level. Since the last such procurement in 1974/75 GOB policy emphasishas changed towards:

(a) providing an incentive price to producers to increasedomestic production more rapidly;

(b) managing the supply and distribution to promote food pricestability; 1/ and

(c) reducing food subsidies to free resources for economicdevelopment.

2.13 Government procurement of domestic grain was quite small until1975/76 when a bumper crop enabled GOB to procure 415,000 tons of rice outof a crop of 12.8 M tons (Annex 1); GOB procurement resources were fullystrained to handle the volume (Annex 2). For 1976/77, GOB set a procurementtarget of 500,000 tons of rice, but because of the late start to Aman pro-curement, more strict grain moisture requirements for Boro and Aus procure-ment and high market prices during April to July, total procurement was only315,000 tons 2/.

2.14 The Aman crop presently provides over 80% of the domestic procure-ment, Boro 6% and Aus 10%. Although procurement centers operate in everydistrict, the greatest success has been in areas where there is surplus ofproduction over consumption in particular the districts of Dinajpur, Rangpur,Bogra, Rajshahi, Patakhali, Mymensingh and Sylhet.

2.15 Foodgrain Prices. Farmgate and consumer prices for foodgrains varysignificantly annually, seasonally and geographically. In a "good" year, forexample, when there is a surplus, the relatively thin market provided by

1/ Desirable changes in the public distribution system, involving main-tenance of buffer stocks and open market sales, are discussed in thereport of the IDA food price policy mission which visited Bangladeshin February 1976: Report dated December 12, 1977.

2/ Aman procurement however was relatively high at 86% of 1975/76 levels.

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non-farm dwellers is quickly saturated and prices fall preciptiously. Forexample, the bumper 12.8 M tons crop-of 1975/76 saw prices averaging Tk 154/md.Consequently in 1974/75, when domestic production was reduced by severe floodsto 11.2 M tons, the average retail price of medium quality rice was Tk 252/md.

2.16 Large margins exist between farm gate and consumer prices. Privatetraders possess a strong bargaining position in the market. Unlike GOB pro-curement agents they pay cash, and in many cases advance credit to producersand rent land out to sharecroppers. GOB has operated a farmgate price supportprogram since 1974, offering to buy paddy at Tk 74/md plus Tk 4/md transportbonus. Recently GOB increased the procurement price by about 8%, to Tk 80/md.However, despite competitive prices the program's impact has been limited.Annual average farmgate prices are estimated to have been about Tk 10/md belowofficial procurement prices for Aman paddy and up to Tk 15/md below these forBoro paddy. Regional and seasonal discounts are marked. 1/ Farmgate pricesimmediately post harvest in major surplus areas are estimated to range fromTk 35-50/md. At current input prices, farmgate paddy prices as low asTk 50/md offer some incentive to invest in modern technology, but the risksof crop failure in Bangladesh are high, especially in the main croppingseasons of Aus and Aman they represent significant deterrents to smallfarmers to shift into any large scale adoption of modern yield increasingtechnologies.

2.17 Ration prices during 1971-75 were less than one-third of marketprices, but the gap has been considerably reduced and now they are almost 70%of market prices. Nevertheless domestic procurement involves significantbudgetary support for food subsidies. Estimated cost to GOB of procuring anddistributing is about Tk 1,200/ton and Tk 550/ton for local rice and wheat,respectively; however, on imports MF "earns" about Tk 65/ton and Tk 400/tonrespectively, because of the large proportion of the imported grain which isreceived as grants (para 2.05). Overall, the distribution program is estimatedto have involved a budgetary support of about Tk 110 M in 1975/76 (Annex 1).GOB is aware that greater domestic procurement would involve greater budgetarysupport unless subsidies are reduced and is committed to a program of reducingsuch subsidies (para 2.12).

III. PROCUREMENT CONSTRAINTS.

3.01 The efficiency of GOBs domestic foodgrain procurement program aswell as of its potential capacity to control farmgate prices at incentivelevels is constrained by a number of factors. Important are (i) inadequate,poorly located storage of limited access to farmers, (ii) poor storage con-ditions, (iii) slow purchase and payments, and (iv) staffing and organiza-tional problems.

1/ For example in 1976 the wholesale price for Boro paddy in Dinajpurwas only Tk 50/md compared to official average annual farmgate priceestimate of Tk 58/md for 1976.

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A. Storage Facilities

JO2 OL Ministry of Food (MF) is responsible for GOBs domestic procure-ment operations. Its storage facilities comprise three categories of depots:12 "large" depots called Central Storage Depots (CSD), located around majorconsumption centers; 320 "small" depots called Local Storage Depots (LSD),located at smaller towns and; four silo complexes to handle imports (Annex 2).By June 1978, MF is expected to have a total storage capacity of 1,135,000tons of rice, 35% at CSDs, 45% at LSDs and 20% in Silos. Most LSDs lack basicancillaries such as power, satisfactory approach roads, security walls andhousing for security staff. Most godowns are of a standard design rated at500 ton nominal 1/ capacity, but these can be loaded up to 850 tons of paddy(560 tons rice equivalent), for total storage duration of less than 3-4 monthsand 650 tons of paddy (435 tons rice equivalent) for longer durations (Annex 2).

3.03 The average capacity utilization of the MF storage system rangesfrom 55-70%. Within major procurement areas, the average capacity utilizationis 95% at LSDs with most showing 110-125% loading for four to six months afterthe peak procurement season. The theoretical maximum loading capacity of theMF storage system is 1.5 M tons, but the MF storage system, as of June 1978,is estimated to be capable of handling 400-500,000 2/ tons of domesticallyprocured grain and about 1.0 M tons of imported grain held by buffer stockbecause of the locational, transport and farmer access constraints discussedbelow (Annex 2). Inadequate storage space in the major production areas hasforced MF to use 25,000 tons capacity of dilapidated sheds, unfit for food-grain storage; and in addition to hire about 75,000 tons of marginal storagefacilities.

3.04 Location and Transport. Location of MF storage facilities clearlyreflects past GOB emphasis on distribution rather than domestic procurement.Six major food procurement districts (Bogra, Dinajpur, Mymensingh, Rajshahi,Rangpur, and Sylhet), which provide almost 65% of the total procurement, haveonly 28% of MF storage capacity, while the six other districts (Dacca, Barisal,Chittagong, Khulna, Comilla, Pabna) which account for only 17% of the procure-ment (and 59% of distribution) have about 53% of the existing storage capacity.Except for a few remote and emergency prone areas, storage needs for bufferstocks and distribution are adequately covered. Even within procurement areas,storage facilities tend to be concentrated in major urban centers, and areasgrowing Boro and wheat, crops with maximum growth potential, have very littlestorage. Uneven distribution of milling capacity which is concentrated inthe procurement/production areas (Dinajpur alone has 40%), forces domesticallyprocured stocks to be held in procurement areas till milling, to avoid multipleshipping.

1/ Nominal Capacity: A loading capacity of paddy which provides idealstorage conditions but which can be safely and economically exceededfor short periods. See Annex 2 para 4.

2/ The upper limit involves the use of all marginal facilities as well.

3.05 The highly peaked nature of procurement, places a heavy burden onBangladesh's already strained transport system (Annex 2). This is furthercomplicated by unfavorable weather which makes it difficult to keep the graindry while in transit. Procurement point to storage transport involves mul-tiple modes (head-load, bullock-cart and truck) and MF depends on contractorsfor movement services, who often have difficulty in moving stocks quickly bythe rural transport system, the basis of which is the 5-20 bullock carts thatcan be hired in the average village during the harvest season. Inter-regionalmovement is by railways which themselves are weak and relatively inefficient.Shipping delays of up to several weeks are common during the peak procurementseason. The foregoing indicate that provision of storage in procurement areasclose to primary markets is a pre-requisite for any expansion of the procure-ment program.

3.06 Farmer Access. MF procurement operates through all 330 LSD/CSD aswell as 150-200 Temporary Purchase Centers (TPC) which are established duringpeak procurement period. Typically, about 200-300 villages are served by anLSD/TPC, while a primary market serves about 10 villages. Farmers have totravel about 10-12 miles to reach LSD/TPC and this involves a travel time ofI day at least although expenses (0.50 to 1.0 Tk/md/mile) would be mostlycovered by the transport bonus (para 2.16). Nevertheless, TPCs, by improvingaccess, have contributed significantly to improving procurement.

B. Storage Conditions

3.07 In Bangladesh, temperature/humidity conditions favorable for rapidgrowth of foodgrain insects and fungi exist for 8 months in a year (Annex 5).This poses a massive storage management problem, which is further aggravatedby the substandard nature of many godowns. The pest control burden has greatlymultiplied during the last three years, since for the first time, domesticallyprocured paddy is being stored at dispersed locations whereas previously itwas confined to dry imported grain stored at major silos or CSDs. MF operates62 pest control squads - one for each CSD and six LSDs. An adequate stock ofchemicals is a key requirement and bilateral assistance has recently beenmade available for this.

3.08 Lack of squad mobility is a serious constraint on MF ability torespond adequately to the fumigation needs of LSDs. Equipment and toxic che-micals cannot be carried by public transportation even when available. Mostpest control equipment needs urgent replacement, and use of various modelsmakes maintenance and operator training difficult. A central testing laboratoryat Dacca conducts physical and chemical testing for the entire country, butbecause it has limited facilities, considerable time elapses between samplingand actual disposal of any deteriorated stocks causing further damage includ-ing cross-infestation.

3.09 To assist MF develop staff fully trained in foodgrain quality con-trol in storage, bilateral assistance for overseas fellowships is presentlyavailable to MF. UNDP is also assisting GOB in establishing a warehouse

training center to serve the public as well as the private sector. UK-ODMare providing 2-1/2 man years of training expertise during 1977-78 to trainnine chief operators. However, a major effort in field training of MF's 500operators, inspectors and godown managers is still required.

3.10 Many estimates of storage losses in Bangladesh have been made rang-ing from 10-25% per year. Losses in good storage facilities, with reasonablydry (14% moisture) paddy when effective pest control is available, are proba-bly about 1% for a six month storage period. However, losses in the marginaland dilapidated facilities, especially during the hot and humid rainy season,are at least 5% over a similar period (Annex 9, Table 1). The Boro crop,harvested in the rains with 16%-17Z moisture, suffers at least 10% loss onaccount of bad storage conditions alone.

C. Purchase and Payments

3.11 Individual purchases are restricted to a minimum of 1.75 md paddy(1 standard bag). Officially all can sell to MF. About 50-100 selected tradersin a district are appointed as Authorized Grain Dealers (AGD) by MF. AGDs arerequired by their contract to pay farmers the stipulated procurement priceless a specified commission, and to sell all grain procured to MF. Becauseof the limited number of traders who have been granted AGD status, the com-petition at the primary markets is effectively limited and this limits theimpact of the price support program.

3.12 Typically, TPC capacity is small (100-200 md), while daily arrivalsrange from 500-2,000 md. Purchase operations are frequently interruptedbecause of inability to clear stocks quickly. In addition, actual purchaseoperations, handled by a lone purchasing officer, are slow and a three daywait is common for the farmers.

3.13 Boro paddy, which is increasingly of HYV varieties, is harvested inthe rainy period. Sun drying at this time to 15% grain moisture as requiredby MF is difficult and subsequent storage poses a serious problem. For thisreason MF procurement of Boro paddy has been low. Mechanical drying whichis the only answer is virtually unknown but considerable experience has beengained recently from a pilot drying project (Annex 6).

3.14 MF quality standards are complicated and rigid. They are designedto reduce losses after purchasing in view of the poor storage and pest controlfacilities presently available to MF. Aman procurement starts only in January,when most arriving paddy meets these rigid standards. However, by then mostgrowers have sold their surplus to meet immediate cash needs. At least fourprice discounts apply but without testing devices, quality assessment is sub-jective. Payment is made through a four copy certificate changeable for cashat a designated bank and although bank payment booths have been opened at mostLSD's, ensuring adequate cash at these booths has been a problem, because ofdifficulties in providing police escort and guard.

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3.15 MF working capital needs for the procurement program are met throughdesignated commercial banks by the Bangladesh Bank which fixes quarterly limitson their lending for foodgrain procurement and provides 100% refinance for thepurpose. Commercial banks together have never exceeded the overall limit, butin January 1976, two banks exceeded them, resulting in a temporary stoppage ofprocurement operations. Since then, commercial banks have established limitson the procurement lending of their individual branches which also sometimesresults in delays in payments.

D. Staffing and Organization

3.16 Although MF activities have begun to show a clear shift towardsinternal procurement, MF organizational structure and the relative strengthof various directorates, still reflects its historical role in public distri-bution. Thus, the Directorate of Distribution and Rationing has the mostextensive staff, while the newly established Directorate of Procurement hasonly a quarter of the former's staff strength, mostly recruited on a temporarybasis. Similar anomalies exist in other areas (Annex 7). Field coordinationbetween various MF directorates and with other ministries has scope forimprovement. This is complicated by the low grading of the post of dis-trict controller of food in relation to similar staff of other ministries.Seasonality of MF's distribution and domestic procurement functions offerscope for more effective use of field manpower.

3.17 The project would assist GOB to improve the effectiveness of itsdomestic procurement program through the provision of storage facilities andtesting, pest control and drying equipment, as well as through the streamlin-ing of its grain procurement operations.

IV. THE PROJECT AREA

4.01 The proposed project would be carried out mainly in the six northerndistricts of Bogra, Dinajpur, Rajshahi, Rangpur, Mymensingh and Sylhet.They have a combined area of about 14 M ac and a population of 32 M (40%).

4.02 Climate is monsoonal with heavy summer rains interrupted by a drywinter period of about 4-5 months. Mean annual rainfall varies locally from50-90 inches with about 90% occuring between May and October. Mean monthlytemperature varies from the mid-sixties to mid-nineties, and relative humidityis high for the most of the year. Maintenance of foodgrains in storage isdifficult particularly in the rainy months. The project area is generallyfree from cyclone or tidal wave activity.

4.03 Production and Marketing Facilities. The project area produces 45%of the total domestic foodgrain production, and about I M tons currently aresurplus to area needs and exported to the rest of the country. Of this be-tween 200-275,000 tons annually has been procured by GOB in recent years.

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The four northwestern districts were identified in the IDA Land and WaterResources sector survey (1972) as having the maximum growth potential. Thesehave recently become the focus of a major GOB development effort. The IDAsupported tubewells projects (341-BD and 724-BD) and extension and researchproject (729-BD) also focus on these districts. The project area has a pro-duction growth potential much above average for Bangladesh and 1985-86 pro-curement potential could reach 700,000 tons if current GOB agriculturedevelopment efforts continue and a more efficient procurement system isintroduced (Annex 1).

4.04 Most major towns are accessible by a 850 mile network of all weatherroads. The area is also serviced by 300 miles of broad gauge and 600 miles ofmeter gauge railroads. The north-west area is poorly served by waterways, butMymensingh and Sylhet rely heavily upon water transport. Most farm to markettransport is by bullock carts on dirt tracks or by country boats. Scale ofmovement is small (20 mds) slow (8-15 miles/day) and costly (0.5-1 Tk/md/mile).

4.05 Only 28% of MF storage facilities are located in the project areaalthough it provides 65% of domestic procurement (para 3.04). Almost 65% ofthe country's large scale rice mills capacity (2,700 ton/day) are located inthe project area, which also has almost 6,700 tons/day of smaller facilities.The number of small-mills with parboiling facilities and sun drying yardshas increased significantly in recent years.

V. THE PROJECT

A. Summary Description

5.01 The objective of the project would be to provide additional safegrain storage and procurement facilities in the project area and through thesemeasures to permit improvements, in terms of volume and efficiency, in GOB'sdomestic foodgrain procurement program. The project would be carried overfor years and would comprise:

(a) construction of 145,000 ton (nominal) new storage capa-city, including necessary ancillaries, at about 150existing or new sites chosen for the availability ofsuitable Temporary Purchase Centers (TPCs) sites intheir vicinity and rehabilitation of 25,000 tonsof "Twin-Nissen" and similar godowns (para 5.03);

(b) provision of weighing and testing equipment and mechanicaldrying facilities (paras 5.07 and 5.08);

(c) strengthening of the grain inspection and pest controloperations of MF through provision of equipment andvehicles including motor launches, and the establishmentof a new foodgrain testing laboratory (paras 5.09-5. 12);

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(d) implementation of a pilot project to develop the grain marketingpotential of selected Thana Central Cooperative Associations(para 5.13);

(e) provision of technical assistance (10 man years) in engi-neering, pest control training, paddy drying and procurementsystems (para 5.14); and studies for the evaluation of projectbenefits (para 6.18); and

(f) establishment of a Project Implementation Unit and a MonitoringCell and strengthening of the Planning Cell, within MF (para5.17).

5.02 Additionally, in selected flood or cyclone prone districts outsidethe project area, the project would provide for the construction of 20,000tons oE storage godowns to facilitate GOB relief response to emergencies.

B. Detailed Features

5.03 Storage Construction and Rehabilitation. MF nominal storage capa-city in the project area would be increased by 145,000 tons to 395,000 tonsby construction of new godowns at about 150 sites. In addition, about 25,000tons cif dilapidated Twin Nissen (TN) and similar storage facilities would berehabilitated. Distribution between districts would be:

AdditionalDistrict Capacity Rehabilitation /a Locations Agreed /b

…-------------Nominal Tons----------------------

Bogra 5,000 10,000 5,000Dinajpur 45,000 4,750 21,000Mymensingh 30,000 1,750 16,000Rajshahi 10,000 6,500 9,000Rangpur 30,000 - 13,000Sylhet 25,000 2,000 5,000

145,000 25,000 69,000

/a Other than of the "Dacca" type, the rehabilitation of which is beingfinanced by UK.

/b See para 6.04.

5.04 With the storage constructed under the project, MF would have thecapacity to procure a total of 400-500,000 tons in the project area, comparedto an estimated procurement potential of 700,000 tons by 1985/86 (para 4.03).While it seems clear that more storage will be required by the mid 80's(Annex 2) it is considered prudent to limit new construction to that plannedunder the project until improvements in the procurement system are made and

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grower response is proven. There is adequate time to build any additionalcapacity required for 1985/86 since project construction would be completeby 1981. Assurances were obtained from GOB that it would inform IDA of anyproposed construction of foodgrain storage in addition to that provided bythe project, in the six project districts and it would undertake such con-struction only if its does not adversely affect the utilization of project

facilities.

5.05 All project godowns would be of the basic "Dacca" and "Twin Dacca"design 1/ of proven local suitability. Ancillary facilities such as power,approach roads, drainage, housing for essential resident staff and sheds forgunny bag storage would be provided. Minor design modifications would bemade and some cost reducing modifications in construction would be introduced.Design and construction details, have been finalized with Project ConstructionManager (para 6.03), are given in Annex 3. The engineering consultant (para5.15) would assist in any further improvements. Details of the location andsilte selection criteria for new godowns are in Annex 2. The most importantcriterion for building a new procurement godown would be the prior successfuloperation of a TPC at that location. Assurances were obtained during nego-tiations that storage constructed under the project would conform to designs,and be sited at locations agreed with IDA.

5.06 About 3 vehicles and 25 motorcycles required for construction sitesupervision, and engineering equipment would be financed under the project.

5.07 Weighing Testing and Drying Equipment. Equipment and facilitiesneeded by new TPCs and godowns, would consist of weigh scales, moisture metersand testing sieves (Annex 4). Close supervision of grain procurement opera-tions would be essential and procurement Chief Inspectors would be givenmotorcycles (40) to visit each procurement point fortnightly. Other MF fieldofficers would spend at least 10 days each month supervising procurement andother operations, and about 35 vehicles (including about 3 motor launches)would be provided for their use.

5.08 MF procurement of Boro and Aus paddy, would be facilitated throughthe provision of mechanical drying facilities at 15 LSD under a pilot paddydrying scheme. Forty-one major locations are being considered, and the de-tailed criteria to be applied in final selection are in Annex 6. Two sitesare expected to handle 5,000 tons per season, the rest between 1,000-3,000tons. In-bin dryers (4-6 bins) would appear the most appropriate for theirsimplicity, throughput range and low drying temperatures. Installation, ini-tial operator training and preparation of operating instructions would be theresponsibility of the supplier. Operator selection would be by the dryingsystem consultant (para 5.15) assisted by his local counterpart. Dryer-ivil works would be executed as part of the godown construction contracts.

5.0,9 Inspection and Quality Control. Twenty-five pest control squadswOu:Ld be needed to serve storage facilities in the project area. They wouldbe fully equipped and provided with vehicles (Annex 5). With increasedmobility, each squad would cover about 30-40 godowns. Inspection squads

1/ Concrete floor, brick walls and concrete roofs.

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would be provided with sampling and physical measurement equipment, and go-down inspection frequency would be-raised to once a month. Assurances wereobtained from GOB that existing usable pest control equipment in the projectcore area would be transferred to MF units in other areas once the projectequipment is in operation. This would permit standardization in the coreprocurement area which would be essential for effective operator training andmaintenance.

5.10 The project would provide equipment and facilities for the estab-lishment of a foodgrain testing laboratory in the Project Area, which wouldoperate under technical supervision of the existing Dacca laboratory.Appointment of the laboratory's Chemist, who would be responsible for itsestablishment, would be a condition of disbursement against expendituresfor the laboratory.

5.11 A field training program would be set up for operators, spraymen,godown managers and inspectors. The project would provide two man years ofquality control expertise, three equipped training vans and cover the costsof about 600 man weeks of field training and demonstration sessions to whichprivate sector and TCCA participants would also be invited. The projecttraining program would be complementary to an MF training program initiatedrecently with UK-ODM assistance (para 3.09), but would focus on field trainingin the project area. MF would coordinate both programs.

5.12 Training of pest control operators would emphasize safe handlingof pesticides, and project technical assistance would ensure that pesticideselection is based on minimizing the environmental effect.

5.13 Cooperative Marketing Pilot Program. The project would initiatea pilot program through GOB's Integrated Rural Development Program (IRDP)organization to develop the marketing potential of ten selected Thana CentralCooperatives Association (TCCA). Selection criteria and data on 18 potentialTCCA are in Annex 4, along with the methods of operation. Since selected TCCAwould already have storage facilities, investment needs would be small con-sisting of moisture meters, analysis equipment, weigh scales and 10 motor-cyles for supervising project officers. Assurances would be obtained thata day of the week would be fixed for purchase from TCCA members participatingin the pilot project and for those subsequently adopting the model developed.Alternatives to be studied and future phases of the program (Annex 4) wouldbe monitored by the (drying and) procurement system consultant during theAman season.

5.14 Technical Assistance. The project would provide 10 man years oftechnical assistance, costing on average about US$7,000 per man-month.Specific areas of assistance would include:

(a) an engineering consultant for four years (TOR Appendix 2,Annex 3) to assist with contractor prequalification, tenderevaluation and work supervision, and offer advice to theproject construction manager on design and constructionmethods;

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(b) two man-years of pest control expertise (TORs in Appendix1, Annex 5) to assist with training of field staff;

(c) four man-years of consultancy in procurement and dryingsystems (TORs in Appendix 1, Annex 6) to assist withstreamlining of the MF/TCCA procurement system, operationand evaluation of mechanical dryers, and training of dryeroperators and procurement officers.

5.15 Consultants would be provided with vehicles and would be assistedby qualified counterparts. All consultants would have qualifications andexperience, and be employed under terms and conditions satisfactory to IDA.Recruitment of the recruitment of the engineering specialist and the procure-ment and drying system specialist would be a condition of disbursementagainst expenditures on civil work.

5.16 Studies. The proposed project evaluation study is discussed inpara 6.18.

5.17 Project Implementation Unit, Planning and Monitoring Cell. Theproject would finance the cost of a Project Implementation Unit, a newMonitoring Cell and the strenghtening of an existing Planning cell in MF(para 6.17).

5.18 Outside the project area, 20,000 tons of storage capacity wouldbe constructed at strategic locations in disaster prone areas (Annex 2).

C. Project Costs

5.19 Detailed cost estimates for the project are in Annex 8, and aresummarized below:

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ForeignLocal Foreign Total Local Foreign Total Exchange---- Thousand Takas----- ----Thousand US$----

GodownsConstruction

Land 2,890 - 2,890 185 - 185 -New Godowns 214,050 71,350 285,400 13,810 4,605 18,415 25Ancillaries andPower 42,690 14,230 56,920 2,755 915 3,670 25

Rehabilitation 5,525 2,975 8,500 355 190 545 35Engineering &Construction 29,365 4,365 33,730 1,895 280 2,175 12

Sub-Total 294,520 92,920 387,440 19,000 5,990 24,990 24

ProcurementSystem

Testing &ReceptionEquipment 27,460 16,100 43,560 1,770 1,040 2,810 37

Vehicles 4,500 4,500 9,000 290 290 580 50Training 160 - 160 10 - 10 -TCCA PilotProject 3,255 2,265 5,520 210 145 355 41

Sub-Total 35,375 22,865 58,240 2,280 1,475 3,755 39

Paddy DryingCivil Works 1,635 545 2,180 105 35 140 25Dryer Equipment 2,910 8,730 11,640 185 565 750 75

Sub-Total 4,545 9,275 13,820 290 600 890 69

Pest ControlEquipment andVehicles 5,055 4,665 9,720 325 300 625 48

Training 230 - 230 15 - 15 -Sub-Total 5,285 4,665 9,950 340 300 640 47

Management andTechnicalAssistance

Engineering 1,420 7,460 8,880 95 480 575 84Procurement &Drying 795 7,165 7,960 50 465 515 90

Pest Control 200 1,820 2,020 15 115 130 90PIU, Planning andMonitoring Cell 810 980 1,790 50 65 115 12

Sub-Total 3,225 17,425 20,650 210 1,125 1,335 80

Base CostEstimates 342,950 147,150 490,100 22,120 9,490 31,610 30

PhysicalContingencies 13,690 4,010 17,700 880 260 1,140 23

PriceContingencies 82,780 30,020 112,800 5,340 1,940 7,280 27

Total ProjectCosts 439,420 181,180 620,600 28,340 11,690 40,030 29

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5.20 Estimates are based on mid-1977 prices for construction and rehabil-itation and allow for 12% of the godowns that would be located at remote sites.A physical contingency of 5% has been applied to godown construction and dryercivil works costs to allow for variations at different sites. Physicalcontingencies are not needed for other items. Price contingencies have beenapplied to all items as follows: civil works, 9% till 1979 and 8% thereafter;equipment and vehicles, 7.5% till 1979 and 7% thereafter. Duties and taxesare estimated at US$7.2 M. Contingencies average 20% of total project costs.

D. Prolect Financing

5.21 The proposed IDA Credit of US$25 M would finance about 75% ofproject cost, net of duties and taxes. It would cover all foreign exchangecosts of Tk 180 M (US$11.7 M), and about 46% of local costs of Tk 440 M(US$28.3 M). GOB would provide the remaining US$15.0 M.

E. Procurement

5.22 The Project Implementation Unit (para 6.02) would be responsiblefor procurement of all project items, with the special Project Engineering andConstruction Unit (para 6.03) handling the subcontracting of constructionwork.

5.23 Project civil works would be located at about 200 sites. Designswould be simple and construction techniques, labor intensive. Civil workscontracts, about 12% in remote areas, would amount to about US$29.5 M, dis-persed over at least 10 districts, and also spread over 4 years. Each contractwould be small (under US$150,000). Such contracts would not be suitable forinternational competitive bidding and would be advertised through local com-petitive bidding. Although PWD's contracting procedures are generallysatisfactory, specific changes in performance bonding, warranties and annualprequalification of contractors would be required (details in Annex 3).Project requirements of imported construction materials would be too smallto justify a separate tender for the project. Bidders would have the optionto bid based on self-procured materials or materials made available to con-tractors by PWD from its stocks. Project use of PWD's imported stocks ofconstruction materials, mainly cement, would be replenished by normal com-mercial imports, not otherwise financed, using international shopping underprocedures satisfactory to IDA.

5.24 About 70 four wheel drive vehicles, motor launches, and about 80motorcycles with a total cost of about US$1.25 M, pest control, drying, andweighing and construction equipment costing about US$5.0 M, would be procuredafter international competitive bidding in accordance with IDA guidelines. Apreference limited to 15% of the CIF price of imported goods, or customs duty,which ever is less, would be extended to local manufacturers. Procurementof off-the-shelf imported items costing less than US$10,000 CIF would be byprudent shopping based on prices from at least three suppliers. Such

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purchases would be limited to a total of US$500,000. The balance of projectcosts would consist of technical assistance (US$1.1 M), local training(US$0.5 M), evaluation studies and PIU, monitoring and planning cell expen-ditures (US$0.1 M), land acquisition (US$0.25 M) and engineering (US$2.3 M).

5.25 To ensure prompt availability of local currency financing, a condi-tion of effectiveness would be the establishment, and initial funding of twoproject funds one for the PIU, (para 6.02) and the other for the PECU (para6.03) for making local currency payment to suppliers and consultants as wellas local training. Assurances were also obtained that the project funds wouldbe replenished quarterly to at least Tk 2 M and Tk 5 M respectively, or suchhigher level as the PIU and PECU would recommend as necessary. In addition,approval of the project by the GOB's National Economic Council would be acondition of effectiveness.

F. Disbursements

5.26 Disbursement under the credit would extend over four years for:

(a) 100% of foreign expenditures for imported vehicles, equipmentand spares, 100% of local expenditures ex-factory for locallymanufactured goods or 60% of local expenditures for otherlocally procured goods;

(b) 100% of foreign expenditures for imported constructionmaterials used by the project, and 65% of local expendituresfor all civil works, including ancillaries, power and engi-neering;

(c) 100% of the cost of technical assistance, studies andtraining; and

(d) 80% of the PIU, monitoring cell and planning cell expendi-tures.

All disbursements would be fully documented, except for contracts belowUS$10,000, subject to a maximum of US$500,000, for which details, includingtenders and bid evaluations, would be retained by PIU for inspection by IDAsupervision missions. Claims against civil works would be substantiated by acopy of the work completion certificate approved by the project constructionmanagers, co-signed by the engineering consultant. Disbursements againstimported construction materials would require a certificate that the purchaseswere not financed from other sources.

G. Accounts and Audit

5.27 Assurances were obtained during negotiations that PIU and PECUwould maintain detailed accounts of expenditures made under the project

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and auditors satisfactory to IDA would be appointed. Assurances were also ob-tained that GOB would obtain IDA approval for any change of auditors, and thataudited accounts would be sent to IDA within 6 months of the close of eachfiscal year.

VI. ORGANIZATION AND MANAGEMENT

A. General

6.01 The Ministry of Food (MF) is responsible for grain procurement,domestic and foreign, and for food distribution programs, except for emer-gency relief food which is the responsibility of the Ministry of Relief. Thestaff of the Ministry is headed by the Secretary of Food and the staff func-tions are vested with two Joint Secretaries (Administration and Distribution,Procurement and Development). The Directorate of Food which is headed bythe Director General of Food (DGF) is the operating arm of the Ministry,responsible for day-to-day operational matters with broad policy and programdetermined by the ministry. The DGF would be the de facto project managerfor both (a) physical implementation of the project, and (b) the improvementsin its foodgrain procurement activities that are essential for increaseddomestic procurement. He would report to the Secretary of Food, who wouldbe assisted by a Project Steering Committee (PSC) comprising representativesof other ministries and agencies whose cooperation and support would be essen-tial for the successful implementation of the project. The PSC would comprise:the Joint Secretaries of MF, Agriculture, and Finance; the Director Generalof Food; Chief Engineer, Public Works; the Project Construction Manager; arepresentative from the Bangladesh Bank; Director of IRDP. Administrativesupport to the PSC would be provided by Joint Secretary (procurement), whowould devote one section of his establishment exclusively for this purpose.The PSC would meet at least quarterly. Establishment of the PSC, whose com-position and functions were agreed at negotiations, would be a condition ofeffectiveness.

B. Physical Implementation

6.02 Project Implementation Unit. To carry out the project the DGFwould head a project implementation unit which would be established withinMF. The PIU would be administratively self contained to carry out thefollowing functions:

(a) Manage the project fund (para 5.25) and prepare annualconstruction plans by February of each year;

(b) handle all project financed procurement (except godownconstruction - para 6.03);

(c) handle recruitment of pest control and paddy drying/procurement consultants;

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(d) prepare progress reports, including reports fromthe project consultants, for PSC discussion.

The st:affing plan and functions of the PIU were agreed at negotiations.Establishment of the PIU would be a condition of effectiveness.

6.03 Project Engineering and Construction Unit. Responsibility forgodown construction and rehabilitation would be entrusted to a Project Engi-neering and Construction Unit (PECU) to be established within the Public WorksDepartment (PWD). PWD has built almost all the existing MF godowns. PECUwould be headed by a project construction manager of the rank of Additionalor Deputy Chief Engineer, who would work closely with the PIU in establish-ing annual construction plans for PSC and IDA approval. PECU would have thenecessary complement of engineering and supervisory staff at Headquartersin Dacca (see staffing plan - Annex 3) while working in the field througha strengthened PWD field organization. The appointment of the ProjectConstruction Manager, and the establishment of PECU, would be a conditionof effectiveness. Full staffing of PECU, according to a plan satisfactoryto IDA, the basis for which was agreed during negotiations, would be a con-dition of disbursement against expenditures for all civil works items.

6.04 Implementation Schedule. The first year's detailed implementationplan and a more general long range plan is included in Annex 8. Seventylocations proposed by GOB which meet the agreed criteria (Annex 2) have beenagreed to enable construction to start without delay. It would be a conditionof effectiveness that for 20 of these suitable sites, land acquisition wascompleted. For subsequent construction, annual plans with list of sites andjustification would be submitted to IDA by February each year. Suitableassurances were obtained. Project engineering and foodgrain procurementconsultants along with Joint Secretary, PIU, MF Director General Food and MFDirector of Procurement would form the location selection committee. PECUWould inspect and select actual sites.

6.05 Maintenance. One serious operational deficiency is in the area ofstorage maintenance. Most godowns are dilapidated because, although MF retainsthe responsibility for maintenance, it has no engineering expertise. MF hasto submit work requests, including very minor ones, on a job-by-job basis tothe Ministry of Works, which prepares bid documents and gets the work donemainly through private contractors. GOB buildings are maintained by the PublicWorks Department (PWD) through annual contractual arrangements. PWD has notaccepted similar responsibility for godowns in need of major repair under thisarrangement, only those that are new or rehabilitated. This situation has ledto the extensive disrepair found at most depots. Assurances were obtainedthat project godowns would be transferred to the PWD maintenance roster imme-diately upon completion or rehabilitation.

6.06 Due to seasonality of use of motorcycles and group use of othervehicles, private ownership by GOB staff would not be feasible. Consequentlyproject financed vehicles would be owned by GOB, and maintained by existingdepartmental workshops.

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C. Grain Procurement

6.07 Field Administration. The Directorate of Food which is headed bythe Director General of Food, is the operating arm of MF. Its field adminis-tration can be improved by initiating a closer integration of the variousfunctions, (rationing, distribution, procurement, movement, pest control),in the field under one senior MF staff member at the sub-division, districtand regional level. Inspection staff would however, remain independent atsub-division and district level (Chart 1). In view of the increased respon-sibilities and greater experience required of individuals filling the keypositions of Regional, District and Sub-division Controller of Food andalso to ensure their ability to deal effectively with field staff of otherMinistries, these positions would need to be reclassified. Assurances wereobtained that GOB would by October 31, 1978, conduct a review of the fieldadministration focusing on the proposed modifications to the administrativestructure, detailed in Annex 7, and subsequently implement the findings ofsuch review.

6.08 Effective coordination between MF and other GOB field organizationswould be crucial for the success of the enlarged domestic procurement effort.The existing district food committee which is headed by the Deputy Commis-sioner would undertake this role with the addition of representatives fromthe PWD, the district managers of commercial banks, the district agricultureofficer and the IRDP project director (in the TCCA pilot project area). Thecommittee meets at least every quarter, for which the DCF would prepare aquarterly report and an action plan. A similar sub-division committee wouldmeet once every month during the peak procurement season of November to Mlarch.

6.09 Methods. The administrative improvements outlined above would re-quire improved methods of operation of the procurement program to reap fullbenefits of the project's investments. For the 1977/78 procurement MF hasinitiated many changes to streamline the system. Further improvements wouldbe facilitated by additional strategically located storage to be providedunder the project would enable grain procurement to continue uninterrupted bystock movement difficulties and farmer access to procurement centers wouldimprove considerably. In addition, new TPCs would be introduced close toprimary markets, as the banking service expands. The fixed-days-of-the-weekbanking service which some Commercial banks are presently experimenting withwould also be utilized. Procurement staff would follow the existing patternof operating two days a week at purchase centers, dispatching the procuredstock to the nearest LSD by contractor and shifting to another location inthse same general area along with the bank staff.

1;-o MF would continue to use transport contractors selected throughzpetitive bidding to move foodgrain stock. However on routes where the

-,lume of movement justifies only one contractor, a back up contractor;-!ould also be selected to avoid delays due to rebidding, should the first

contractor fail.

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6.11 In order to increase the competition among foodgrain traders pur-chasing grain at primary markets, the numbers of authorized grain dealers forprocurement would be substantially increased. Grain procurement activitieswould start immediately post harvest. Procurement prices would be announcedat least-4 month before planting time.

6.12 The waiting period at points where purchases are heavy often exceedsone day and this would be reduced by establishing two purchase lines. Thiswould be possible by reorganization of MF field staff (para 6.07) which wouldpermit distribution staff to assist in the grain procurement operations.

6.13 Objective determination of quality would be possible using the test-ing equipment for moisture and foreign matter placed at each LSD/TPC. A setof standard moisture meters would be maintained at the new Testing Laboratoryfor calibration purposes. Detailed sampling and testing guidelines alreadyincluded in the MF procurement manual would be revised accordingly. Trainingin new methods would be organized by MF assisted by the project consultant.

6.14 Purchase quality standards would be simplified with reduced emphasison admixture and immature grain (Annex 4), making it possible to replace thepresent system of price discounts for grain below fair average quality by asystem of premia for grain above minimum acceptable quality. At locationswith dryers, the maximum moisture permissible would be relaxed to 20%; highermoisture would not be accepted to encourage farmers to sun dry when possible.Discounts required to recover drying costs (Tk 1.2/md per 1% moisture) wouldbe reasonable and the discounted price for 20% wet paddy would still beattractive.

6.15 Payment booths would be established at all purchase points andsignatures of two offcials would be authorized for signing payment certifi-cates, enabling sellers to receive quick payment. GOB would ensure thatadequate security support is available to commercial banks to deliver cashto and operate the booths.

6.16 In addition to the specific measures above, procurement procedureswould need to be continually reviewed; and assurances were obtained that GOBwould take all necessary measures to (a) minimize congestion at procurementpoints; (b) ensure expeditions payment (c) simplify purchase quality standards(d) provide appropriate alternatives in case of failure of normal transportarrangements. Assurances were also obtained that procurement prices wouldbe maintained at levels which ensure adequate incentives for growers toincrease production through use of new seed, fertilizer and irrigation.

6.17 Over the past three years considerable experience has been gainedin the operation of the payment system starting from the issuance of a weigh-quality- stock- certificate (WQSC) at the purchase point to the MF repaymentout of its budget, for the commercial banks advances for domestic procurement.In order to learn from this experience and to strengthen the payment systemfurther to cope with increased procurement, GOB would constitute a suitableteam to review not later than 31 October 1978, the entire payment system.The terms of reference for this review, which were agreed during negotiations,would include:

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(a) evaluation of the trade off between the increased admini-strative burden due to a large number of banks involvedin making payments in a sub-division, and the advanatagesof competition between Nationalized banks;

(b) the alternatives to the WQSC system of making payments;

(c) a detailed study of the instances when a bank was not ableto make prompt payment, after a WQSC was issued; investiga-tion of the reasons for such failure, including bank hours,security problems, availability of cash, administrativedisbursement limits imposed by commercial banks or theBangladesh Bank, and recommendation of suitable remedies;and

(d) recommendations for suitable mechanisms for timely correctionof problems at the field level between commercial banks andthe Directorate General of Food.

C. Planning, Monitoring and Evaluation

6.18 MF has recently established a Planning Cell, under the JointSecretary (Procurement) to focus on the formulation of long term plans andpolicy in the food grain sector. The analytical capability of this cellneeds strengthening. A research officer and an economist would be recruitedunder the project by 31 October 1978 to focus specifically on the determinationof procurement prices that offer adequate incentive to producers to use yieldincreasing technology (para 6.16).

6.19 Monitoring Cell. MF's operational planning suffers from a lackof relevant information. In addition, with a significantly greater stock ofpaddy at dispersed locations, as a consequence of the project, MF would needto devote greater attention to developing cost effective alternatives inmovement planning, milling schedules and stock management, as well as to themonitoring of their implementation (Annex 7). A Monitoring Cell would beestablished to assist DGF in continually improving the Directorate of Food'sperformance. The cell would:

(a) collect and review all appropriate operating and costinformation;

(b) establish internal reporting and review systems;

(c) analyze data, and make specific recommendations to theDirector General for increasing cost effectiveness; and

(d) prepare the Annual Operating Report of the Directorate ofFood (which would include an Annual Operating Plan for thecountry wide operations of the Directorate of Food).

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Terms of reference and a staffing plan which would be satisfactory to IDA arein Annex 7, which also includes on outline of the Annual Report. Assuranceswere obtained that the Chief of the cell would report directly to the DirectorGeneral and that cell, whose staffing and functions were agreed at negotia-tions would be established at the latest by October 31, 1978.

6.20 The evaluation of the project would focus on determination of theimpact on (i) farmgate prices; and (ii) MF operating efficiency includingstorage utilization and losses. Consultants would be recruited to designand assist in the implementation of a suitable continuous farmgate pricemonitoring system (TORs are in Annex 7). Assurance would be obtained thata suitable consultant would be recruited before October 31, 1978. The eva-luation of the project's impact on MF operating efficiency would involve adesk review of the work of the Monitoring Cell at the conclusion of theproject.

VII. BENEFITS AND JUSTIFICATION

7.01 The principal economic benefit of the project would be the savingsin foodgrains resulting from: reduced losses in godowns that are rehabili-tated under the project; the losses that would be prevented by the safestorage provided by new godowns constructed under the project; and the lossesthat would be prevented by improvements in MF storage pest control operationsand by operation of the pilot paddy drying scheme.

7.02 It is estimated that in rehabilitated and new godowns subject toplanned improved MF pest control methods losses would be about 0.2% per monthfor a six month storage period, compared with present levels of 0.8% per monthin dilapidated MF owned godowns and the type of marginal facilities now hiredby MF (Annex 9); and about 1% per month in facilities owned and operated byprivate traders.

7.03 Details of the calculation of the projects economic rate of returnare in Annex 9. Through implementation of the project, about 19,000 tons offoodgrains valued at nearly US$6.0 M would be saved annually. Of this about11,000 tons would be saved in rehabilitated and new godowns, 7,000 tons inother storage facilities and 1,000 tons from operation of the paddy dryingscheme. The overall economic rate of return is calculated at 21%, which issatisfactory, with individual rates of return of 15% for godowns, over 50% forthe pest control program and 24% for the paddy drying scheme. The rate ofreturn for the component involving improvement of MF pest control operationsis particularly high because of the substantial costs sunk in storage facili-ties in which the relatively cheap pesticide treatments would be made. Grainsavings are valued at farmgate paddy prices derived from the Bank's estimateof future rice prices up to full development. In the calculation, all costsand benefits are based on border prices except unskilled labor which is valuedat 75% of its financial cost on the grounds that this better represents itseconomic opportunity cost.

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7.04 The major risk to the success of the project is that increases inthe supply of grain in the project area -would be inadequate to permit economicemployment of facilities constructed under the project and which would con-stitute a net increase in storage space available to MF. However, about 60%of the project constructed storage would replace marginal facilities currentlyhired by MF and which are basically unsuitable for grain storage, such a situa-tion, would occur only if MF failed to increase its domestic foodgrain procure-ment in the project area over the next five years by 35% above 1975/76 levels.The probability of this occurring, either because of inefficiency on the partof MF or because of poor performance in grain production, is considered slight.Government has consistently reiterated its intentions of achieving foodgrainself sufficiency and of ensuring incentive prices to farmers and the projectarea enjoys the focus of GOB's agricultural development activities. The latterare aimed at improving the package of services and inputs such as improvedseeds, irrigation and extension required by producers. IDA is also financingprojects in the project areas with these objectives (para 4.03). In Annex 1an estimate is made of likely 1985/86 procurement in the project area assumingGOB continues its incentive pricing policy and strengthens its procurementadministration. Project facilities would increase MF procurement storagecapacity in the project area to only 60% of this estimated potential by 1981.A sensitivity analysis shows that a delay of four years in reaching targetusage levels (85% full for six months in a year) would reduce the overallreturn to 17%, assuming that surplus facilities would remain idle duringthis period of delay. An increase of 15% in operating costs would reducethe overall return to 20%.

7.05 An indirect and unquantifiable benefit stemming from the projectwould be that by enabling MF to increase its levels of grain procurement atguaranteed incentive prices, the project would encourage farmers to increaseproduction of foodgrains. Other benefits due to the project would be theexperience gained in paddy drying and in the development of cooperative grainmarketing. In addition, improvements in response to disaster relief would bepossible due to the commitments of storage in the flood or cyclone prone areasof Bangladesh which would benefit about 150,000 households.

VIII. RECOMMENDATIONS

8.01 At negotiations, assurances were obtained that:

(a) GOB would inform IDA of any proposed construction of food-grain storage, in addition to that provided by the project,and it would undertake such construction only if it doesnot adversely affect the utilization of project facilities(para 5.04);

(b) godowns would be built using designs, construction methods,and contracting procedures satisfactory to IDA and thatconstruction of a godown at a new location in the corearea would only be undertaken after testing its potential

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through the operation of a TPC (para 5.05); annual con-struction plans with relevant justification data wouldbe sent to IDA by February of each year (para 6.04);project godowns would be transferred to the PWD main-tenance roster as soon as completed or rehabilitatedto be maintained by PWD (para 6.05);

(c) all usable existing pest control equipment in the projectarea would be transferred to MF units in the other areas(para 5.09);

(d) GOB would fix a day of the week in each sub-divisionwhere project TCCA were operating, for purchase fromTCCA (para 5.11);.

(e) auditors satisfactory to IDA would be appointed to auditthe separate project accounts of PIU and PECU, whichwould be sent to IDA within 6 months of the close of thefiscal year (para 5.27);

(f) GOB would take measures to increase competition amongfoodgrain traders at the farmgate level (para 6.11);make such purchase and transport arrangements requiredto (a) minimize congestion at procurement points;(b) ensure expeditions payments; (c) simplify purchasequality standards; and (d) provide appropriate alterna-tives in case of failure of normal transport arrangements(para 6.16); and set procurement prices at levels thatprovide sufficient incentive for growers to increaseproduction through a greater use of new seed varieties,fertilizer and irrigation (para 6.16);

(g) by October 31, 1978, the proposed reviews of the fieldadministration of the Directorate of Food, (para 6.07),and of the current system of payments and financingused to purchase foodgrains domestically, (para 6.17),would be completed;

(h) by October 31, 1978, the MF Planning Cell would bestrengthened and Monitoring cell would be established,with staffing and terms of reference agreed with IDA(para 6.18 and 6.19); and

(i) by October 31, 1978 consultants to design the farmgateprice monitoring system would be recruited (para 6.21).

8.02 Proposed conditions of effectiveness would be that:

(a) GOB project proformas had been approved by the NationalEconomic Council (para 5.25);

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(b) the PIU and PECU project funds had been established withan initial GOB contribution of Tk 2 M and Tk 5 M respec-tively (para 5.25);

(c) GOB had established PSC, PIU, PECU with organization,functions and responsibilities agreed with IDA (para6.03); and

(d) for at least 20 sites out of 35 locations inspected byPECU, suitable land had been acquired (para 6.04).

8.03 Proposed conditions of disbursement would be:

(a) against expenditures for the new testing laboratory,that the Chemist for the laboratory had been appointed(para 5.10);

(b) against expenditure for civil works that PECU had beenstaffed according to a plan satisfactory to IDA and theproject consultants in engineering and paddy drying andprocurement appointed (paras 5.26 and 6.03).

8.04 Given above assurances and conditions, the project would be suit-able for an IDA credit of US$25 M to GOB on standard terms.

ANNEX IPage 1

BANGLADESII

SECOND FOODGRAIN STORAGE PROJECT

The Foodgrain Sector

1. Foodgrains play a dominant role in the economy of Bangladesh;foodgrain production accounts for 30-35% of GDP; foodgrain imports accountfor 39% and 29% of total imports; and foodgrain consumption provides for82% of calori intake and 70% of protein.

Production

2. Rice accounts for 98% of the foodgrain production (Table 1). Thereare 3 rice crops in Bangladesh; Aus, Aman and Boro. Aus is both broadcast andtransplanted, the broadcast being sown mid-March through mid-May with trans-planting taking place March 1st through mid-April. Harvesting is in July andAugust. It is predominantly rainfed, and is the crop most vulnerable todisasters as it relies on the timely arrival of the monsoon and must be har-vested during the period of most likely flooding. In 1975/76, it accountedfor 25% of production and 35% of acreage exhibiting the lowest average yield.Aman, the major crop, is also rainfed and both broadcast and transplanted.Broadcast aman is a deepwater floating rice which elongates with rising waterlevels in the flood season. Broadcast is sown in March and April, transplant-ing is between July and September. Harvesting takes place mainly in Novemberand December (dry season). Aman, in 1975/76 utilized 55% of the rice area toproduce 55% of the production. Boro is an irrigated transplanted crop whichhas been increasing in importance despite the problems of drying during therainy harvest season. Transplanting takes place between November and Februar-:and harvesting between April and June. In 1975/76 Boro produced 18% of therice output from 11% of the area.

W. Wheat has not been a major crop in Bangladesh although growing int1portance it represents only 1.7% of total foodgrain production in 1975/76.Wheat competes with Boro for land availability and is harvested in April.

4. Foodgrain production has experienced severe problems. The war forindependence and its aftermath, drought, floods and an explosion in themajor urea factory have all exacerbated the problem of weak administi:ation,poor distribution of inputs and inefficiency of the extension service withthe result that the level of production in 1969/70 was not attained untilthe bumper crops of 1975/76.

5. Neither Aus nor Aman have exhibited any significant growth trendin the last decade although there is some evidence that production of bothis now turning upwards. The Aus crop of 1975/76 was 3.23 M tons, the highest

ANNEX 1Page 2

ever and the 1976/77 crop was 3.01 M tons, which is 400,000 tons greater thanthe average of the previous five years, despite adverse weather conditions.Similarly the Aman crop was also at a record level in 1975/76, 7.05 M tons andpreliminary estimates for 1976/77 indicate a crop of approximately 7 M tons,also significantly above previous levels despite normal weather conditions.TChe Boro crop has been increasing steadily despite a stagnation in earlyseventies. 1975/76 output of 2.29 M tons was over six times the crop of1965/66. The growth has occurred mainly because of an increase in avail-ability of irrigation (in particular low lift pumps) and by increased utili-zation of fertilizer and High Yielding Varieties (HYV), inputs which can beused to maximum advantage on the irrigated Boro crop.

6. Wheat production had been stagnant between the levels of 90-115,000tons a year from 300,000 ac between 1969/70 and 1974/75. Then in 1975/76farmers began to adopt HYVs on a large scale and production and acreage bothincreased with a crop of 215,000 tons from 370,000 ac. Since wheat uses muchless water per acre than rice it is a more profitable crop for farmers to growespecially in the North-West with its more porous soil. Given the recentdramatic increases in wheat production in West Bengal in India, it is believedthat if the Government provides good seed, extension advice and guarantees afair price, wheat production could continue to grow by 80-100,000 tons a yearfor at least the next five years.

7. Yields of paddy in Bangladesh are low in absolute terms, indicatinga potential for increase, but in terms of international comparisons Bangladeshis at a par with many of her neighbors:

Comparative Average Yields (1975)(kg/ha)

…--------------Paddy----------------------- -------Wheat--------

Bangladesh 1,825 Indonesia 2,686 Bangladesh 926India 1,826 Malaysia 3,009 India 1,338Burma 1,827 S. Korea 5,324 Burma 745Sri Lanka 1,933 U.S.A. 5,105 Pakistan 1,323Thailand 1,771 Japan 6,185 U.S.A. 2,060Philippines 1,760 U.K. 4,382

Source: FAO Production Yearbook (1975).

The cause of these low yields is mainly insufficient use of fertilizers andHYV's. Indications are that only about 15% of foodgrain acreage (1-1.5 M ac)is planted with HYVs. Similarly, an average of less than 20 pounds of fertil-izer was applied per acre in 1975/76, less than one-fifth the recommendedamount for local varieties and one-tenth of HYV's. It is estimated that6 M acres of land is suitable for rainfed HYV in Aus and another 6.6 M acresfor HYV in Aman. One major factor for the low utilization of fertilizer andHYV's is that low farmgate prices received immediately post-harvest havediscouraged farmers from such expenditures 1/.

I/ See Bangladesh: Current Economic Situation and Development PolicyIssues. IDA Report No. 1469-BD, May 1977.

ANNEX 1Page 3

Imports

8. Imports have for many years provided a significant proportion ofthe foodgrains available for consumption especially in years of crop failureor other disaster. In 1972/3 the percentage reached a peak of about 25% whentotal imports were 2.74 M tons. The lowest post independence level was in1975/76, the year of the record crop, when only 1.42 M tons (or 11% of totalconsumption) were imported (Table 3). Imports have been necessary becauseof the low per capita domestic level of production, a position that has hardlyimproved since independence as population growth has grown faster than food-grain production. Per capita consumption is estimated to have declinedcontinuously since 1969, except for a slight increase in 1975/76.

9. All imports are by government with an increasing proportion beingon aid terms. It is estimated that Bangladesh purchased 42% of imports in1972/73, 37% in 1973/74, 30% in 1974/75 and only 10% in 1975/76. As a resultof the greater availability of wheat on concessionary terms the proportionof wheat in total imports has been increasing despite consumer preference forrice. In 1971/72 rice made up 40% of total imports, in 1974/75, 12% and in1975/76, 27%. At present, all imports enter Bangladesh by sea, through Chitta-gong, where one of the silos built under the First Foodgrain Storage Project(381-BD) is located, and through Chalna which handles 30-40% of the foodgrainimports.

Prices

10. Foodgrain prices in Bangladesh vary significantly both annually,seasonally and geographically. The annual fluctuations result mainly from thelarge production fluctuations that occur in Bangladesh, usually due to climaticconditions. Thus, the floods of 1974/75 (domestic production 11.2 M tons) ledto an average retail price of medium quality rice of 252 Tk/md while the bumpercrop of 1975/76 (production 12.8 M tons) saw prices averaging 154 Tk/md, despitebeginning the year at a high level as a result of the previous year's disaster.These fluctuations are magnified as only an estimated 10-33% of the crop iscommercially marketed and relatively minor production swings can cause verylarge changes in the amounts marketed.

11. Despite three rice crops, significant seasonal fluctuations alsooccur with the price dropping severely after the Aman harvest. Chart I showsthe seasonal price fluctuations. The lowest prices are found after the har-vest of the Aman crop, between December and January. Prices then rise stead-ily, the other harvests making little impact, with the peak arriving inSeptember/October. GOB has attempted to moderate these fluctuations throughthe ration and procurement system (see below) but, to date, has been marginallysuccessful. These fluctuations tend to harm the small farmer who is forced tosell immediately post harvest at low prices, often to repay consumption loans,and later in the year has to purchase foodgrains, often on credit, at highprices. This cycle leaves the farmer in debt and under such a financialconstraint that expenditures upon extra inputs are impossible.

ANNEX 1Page 4

12. Geographical price disparities are also significant. Due to poorfarm to market, and inter-regional transportation facilities and an imperfectmarketing system post harvest prices tend to be lower in the surplus districtsthan in the deficit areas 1/. There is also an excessively large gap betweenthe wholesale price of paddy and the procurement price 2/ indicating thelimited impact of the Government's price support program with a guaranteedminimum price. Such average national data, however, conceals the large fallLn post harvest prices particularly in surplus areas. For example, the whole-sale price of Boro paddy in Dinajpur was Tk 51/md in 1976, IRRI paddy wasTk 46/md, and Aus paddy is estimated to have been Tk 42-44/md. These priceswere Tk 10-20 less than average national wholesale prices and Tk 20-30 lessthan the official procurement prices.

C;OB Foodgrain Operations

13. Since the Bengal Famine of 1943, public marketing has been a majorrole of Government, with the following basic objectives:

(i) to maintain low, stable and uniform foodgrain prices;

(ii) to provide low-priced foodgrains to those in need,especially at time of emergency;

(iii) to supply subsidized foodgrains to Government employeesat subsidized prices, in effect, as a form of payment inkind; and

(iv) to ensure the supply of foodgrains to urban areasespecially in times of bad crops and high prices.

14. GOB has resorted to two methods of obtaining foodgrains to supply theration system: imports, and domestic procurement. Most imports, being on aidterms were of wheat. Domestic procurement had low priority, being undertaken,often compulsorily, to reduce smuggling or to fill distribution gaps. During

1/ For example in March 1976 when the country wide average minimum retailprice was Tk 105.9/md, in the surplus districts it was Tk 99.9/md andin deficit districts Tk 110.1/md. (The surplus districts being definedby Government as Dinajpur, Bogra, Rajshahi, Khulna, Patuakhali, Barisal,Mymensingh and Sylhet and the deficit as Pabna, Faridpur, Dacca, Tangail,Comilla, Noakhali and Chittagong).

2/ In 1976, the procurement price was greater than the average wholesaleprice. (Report of Foodgrain Price Policy Review Mission):

Crop Price (Tk/md)Aman 7.10Boro 11.50Aus 12.28IRRI 11.24Wheat 5.21

ANNEX 1Page 5

the compulsory procurement scheme of 1974/75, which was introduced nationwide,districts were cordoned, and compulsory assessments were made against farmersaccording to their farm and family size. Although 138,000 tons were procured,it caused great bitterness among many of the farmers especially as the procure-ment price was well below the then high free market level.

15. The emphasis of GOB policy has changed towards: 1/

(a) providing an incentive price to producers to increasedomestic production more rapidly;

(b) providing food needs of the most disadvantaged;

(c) managing the supply and distribution to promote foodprice stability; and

(d) reducing food subsidies to free up resources for economicdevelopment.

GOB has consequently returned to voluntary procurement stating its willing-ness to purchase an unlimited quantity at set prices. In a good harvestvery Large quantities will need to be purchased if the price is to be main-tained. A poor crop will require a running down of stocks and resort togreater imports. Open market sales by Government will be required to stabilizeprices 2/. The procurement price would be set at what is intended to be anincentive level (Tk 74/md for paddy in 1976/77 and Tk 80/md has already beenset as the price for the 1977/78 season). Such a price is sufficiently high,if actually available to farmers (given present input prices) to encourage thefarmer to adopt modern yield increasing technologies required to expand domes-tic production. However, due to poor procurement facilities (Annex 2), imple-mentation efforts and other constraints (Annex 3) farmers have received postharvest prices in surplus areas of only 35-50 Tk/md, or up to 50Z of price(para 13).

Procurement

'16. In 1975/76, under voluntary methods, procurements reached 415,000tons (Table 4). The large volume was due to the bumper harvest in all cropswhich led to the extremely low farmgate prices, much below the official pro-curement price. Wheat was procured for the first time with 6,700 tons beingpurchased out of a total crop of 215,000 tons. The return to more normal crops

1/ Report of the IDA Food Price Policy mission, December 12, 1977.

2/ The Government began open market sales in Dacca area on a small scalein March 1977 when prices were rising fast. In the following two monthsof sales 2,000 tons of rice were sold through private retailers at aretail price of 100 Tk/md and a permitted quota of 3 seers per head.The average retail price on the free market in March 1977 was Tk 127/md.

ANNEX 1Page 6

and some other constraints (Annex 3) has seen a lower level of procurementin 1976/77, a total of approximately 310,000 tons which is neverthelessnearly 3 times the previous highest procurement total (excluding 1975/76).

Post Independence Procurement

Procurement Price Ratio of(In Terms of Rice) Quantity Procured Procurement Price

Years (Medium Quality) (In Term of Rice) Type to Wholesale Price(Tk/md.) (long tons)

1971/72 37.85 10,015 Voluntary .6721972/73 54.00 52 Voluntary .5631973/74 72.63 70,863 Mostly .643

Voluntary1974/75 120.0 137,911 Compulsory .5221075/76 120.0 414,954 Voluntary .8491976/77 120.0 303,611 Voluntary

Source: Ministry of Food.

17. The procurement drive has tended to center on Aman. In 1975/7682.5% of procurement was from the Aman crop (Table 4), 10.2% from Aus, 5.7%from Boro and 1.6% was wheat. Apart from the increased cost of purchasingsmall amounts of paddy in the Aus and Boro, GOB has run into serious storageproblems with these crops because traditional sun drying is difficult(Annex 5). Most farmers are unable to meet GOB purchase standards and soprocurement of these crops has remained low although the Boro crop has beenidentified as the crop with the maximum growth potential (para 5).

18. Public distribution has varied from 2.6 M tons in 1972/73 to 1.7 Mton1s in 1975/76. It would undoubtedly have been higher during the floods andfamine of 1974/75 if distribution had been physically possible. The statutoryratlion has varied from 16% to 28% of total public distribution and tends todepend upon the ratio of the ration price to the retail price 1/. The modifiedration is more variable, fluctuating from 1.6 M tons in 1972/73 (61%) to 0.5 MtolIs in 1975/76 (30%). The amounts depend as much upon availability as need.The relief category has been increasing in importance due to the expansion ofthe Food for Work Program. In 1975/76, it reached 226,000 tons, 13.5% of totaloff'take. Similarly, the "other" category has increased as a result of a steadyexpansion of the number and categories of people entitled to such a ration.

1/ As the ration is usually poor quality rice, or less desired wheat, con-sumers will still purchase non-ration rice even when they still have aration allowance despite the higher price. As the price ratio of non-ration to ration rice rises, the demand for ration rice tends to rise.

ANNEX 1Page 7

19. The peak levels of distribution occur in September and Octoberimmediately prior to the harvesting of the Aman crop. The trough occurs inDecember, post Aman harvest, with amounts distributed then rising consistentlythroughout the year with the boro, wheat and aus harvests appearing to havelittle impact. There are large annual variations in offtake by district.Bulk of the distribution occurs in the major urban districts, viz Dacca andChittagong, and also Khulna; primarily as a result of the statutory ration.Given the consumer preference for rice, GOB allocates wheat as evenly as pos-sible between all districts. Relief rations tend to be predominantly wheat.

The Food Subsid-

20. Public distribution prices were less than one-third of open marketprices during 1971-75 but are now almost 70% of these. GOB sells rice in theration shops at Tk 90/md and wheat at Tk 70/md. Including cost of millingand handling, these imply a financial subsidy of 57% and 31% for domesticallyprocured rice and wheat. However, on imported foodgrains, because of thelarge element of grants, GOB achieves a net profit margin of 7% and 30% forrice and wheat, as seen below.

Avg. Price Received Avg. Cost Subsidy

Rice Local 83.6 134.5 57%Import 83.6 81 - 7%

Wheat Local 64.6 86.5 31%Import 64.6 49 -30%

21. Estimated total financial subsidy in 1975/76 was Tk 108 M asfollows:

Tk M

Cost0.39 M tons of imported rice 8601.03 M tons of imported wheat 1,3740.41 M tons of procured rice 1,5010.007 M tons of procured wheat 16

Total Cost 3,751

Revenue1.037 M tons of wheat 1,8230.80 M tons of rice 1,820

3,643

Net financial subsidy 108

Source: MissioiD Estimates

ANNEX 1Page 8

Projections for the Foodgrain Sector

22. There is a substantial potential for an increased foodgrain produc-tion mainly through investments in fertilizers, improved seeds and irrigation.Bank estimates 1/ are that present GOB strategy, could lead to annual increasesin foodgrain production of approximately 3.5% about 0.7% more than the presentpopulation growth rate, an increase of roughly 500,000 tons per annum. Govern-ment policies are emphasizing an expansion of the acreage under irrigation(mainly tubewells and low lift pumps), the reorganizing and strengthening ofthe extension service, an increase in the availability of fertilizers andimproving the availability of agricultural credit.

23. The greatest potential increases in production are, seen in wheatand Boro, wheat being expected to grow at an average rate of 16.8% p.a. andBoro at 5.7% p.a. These high rates reflect the previous low output levels ofboth crops. Aman is also projected to increase rapidly, at a rate of 2.4% p.a.,mainly as a result of the introduction of HYV's. Aus is considered to havethe least potential in both absolute and growth terms with an estimated in-crease of 2.1% p.a. The major area of expansion is expected to be the North-West region with Mymensingh, Sylhet and Noakhali also exhibiting growth ratesabove the average. Least potential is seen in the Chittagong Hill Tracts,Tangail and Faridpur (Table 5).

Consumption and Import Requirement

24. Per capita consumption of foodgrains in 1975/76 was 15.5 oz. perdiem, the average for the complete 1969/70 - 1975/76 period. This figure iscustomarily considered to be the lowest acceptable level despite being belowthe minimum recommended nutritional intake. A range of production, consump-tion, and import estimates based on different assumptions regarding per-capitaconsumption is shown below.

I/ See Bangladesh: Current Economic Situations and Development PolicyIssues, Chapter 6, IDA Report No. 1469-BD, May 1977.

ANNEX 1Page 9

MISSION ESTIMATES OF FOODGRAIN CONSUMPTIONAND NET DEFICITS - 1980/81, 1985/86

NetProduc- Net Deficit/Import

Population /a tion /b Consumption Requirements(million) A /c B /d C /e A B C

1980/8:L 92.5 13.6 14.6 14.85 15.25 1.0 1.25 1.65

1985/86 104.6 16.1 16.5 17.55 17.95 0.4 1.45 1.85

/a Growth of 2.8% to 1980/81, 2.5% 1980/81 - 1985/86.

/b Gross production less 10% seed feed and waste.

/c 15.5 oz. per capita per diem.

/d Starting at base of 15.5 oz. p.c. per diem in 1975/86 (13.05 M tons),increase in consumption was estimated to equal increase in demandwhere:Increase in demand = Population increase + income elasticity of

demand (0.5) x growth in p.a. income (5% p.a.).

/e As /d but in addition allowing for a 10% rise in the relative priceof foodgrains, 1/ thus adding a term to above equation of [price elas-ticity of demand (-0.3) x price change (+10%)].

The import requirement in 1980/1 is projected to be 1.0 - 1.7 M tons and in1985/86, 0.4 - 1.8 M tons.

Domestic Procurement

25. These projections were extended to the district level for 1985/86in order to obtain production surpluses and deficits in a more disaggregatedform (Table 6). Surpluses are expected in Dinajpur, Rangpur, Bogra, Patuak-hali, Mymensingh, Sylhet and Noakhali with Rajshahi and Barisal being onaverage self sufficient. All other districts are expected to be in deficit.The project area is expected to provide a net annual surplus of 1.25 M tons by1985/86, based on the conservative estimates (C).

26. If various constraints on the procurement system (Annex 4) aregradually removed, the level of procurement achieved in a normal crop yearshould increase rapidly. Estimated procurement potential by district and bycrop in 1985/86 based on past procurement history, district surpluses, thecrop projections and specific physical problems in each area, are shown in

1/ IDA Commodity Price Forecasts of May 1977 project a 43% increasein the price of wheat and a 44% increase in the price of rice, interms of constant 1977 dollars by 1980.

ANNEX 1Page 10

Table 12. I/ The major procurement centers are likely to be Dinajpur,Mymensingh, Rangpur, Sylhet, Rajshahi, and Bogra (725,000 tons) and Patuakhali(70,000 tons). Aman is expected to remain the major procurement crop althoughits share is expected to drop to about 65% in 1985/6 from 82.5% in 1975/6.Boro and wheat are estimated to rise rapidly in line with the projected pro-duction increases. Parallel increases in Aus are not foreseen. Table 7projects the procurement possibilities.

1/ These estimates do not assume that the price support system is neces-sarily 100% effective in raising the farmgate price to the procurementprice less transportation costs. Rather it is an assessment of what isfeasible in Bangladesh taking into account the physical difficulties ofimplementation in the country. It presumes that the Government willconcentrate the bulk of its efforts in areas where it feels it can bemost successful in procuring, that is in grain surplus areas with rea-sonable communications. The projections assume that the storage con-straint will not be binding in any normal year.

BANGLADESH

SECOND FOODGRAIN STORAGE PROJECT

Rice and Wheat: Production, Area, Yield

Production in Million Long Tons Area in Million Acres 1Y Average Yield Per Acre in MaundsMilledRice Rice Rice

Aus Aman Boro Total Wheat Aus Aman Boro Total Wheat Aus Aman Boro Average Wheat

1965/66 2.92 6.80 0.62 10.33 .035 7.32 14.67 1.14 23.13 .14 10.8 12.6 14.8 12.1 6.81966167 2.67 5.92 0.83 9.42 .058 6.96 14.06 1.39 22.41 .18 10.4 11.5 16.2 11.4 8.71967/68 3.07 6.81 1.11 10.99 .058 *8.22 14.68 1.53 24.43 .19 10.2 12.6 19.7 12.2 8.31868/69 2.68 6.87 1.61 11.16 .072 7.66 14.40 2.01 24.07 .27 9.5 13.0 21.8 12.6 8.61969/70 2.96 6.95 1.90 11.81 .03 8.46 14.84 2.18 25.48 .30 9.5 12.7 23.7 12.6 9.3

5-Year Average 2.86 6.67 1.21 10.74 .069 7.72 14.53 1.65 23.90 .22 10.1 12.5 19.9 12.2 8.3

1970/71 2.86 5.91 2.19 10.96 .110 7.88 14.18 2.42 24.48 .31 9.9 11.3 24.6 12.2 9.61971/72 2.34 5.70 1.74 9.78 .113 7.42 13.37 2.19 22.98 .31 8.6 11.9 22.6 11.6 9.91972/73 2.27 5.59 2.07 9.93 .090 7.24 14.12 2.43 23.79 .30 8.5 10.8 23.2 11.4 8.21973/74 2.80 6.70 2.20 11.70 .090 7.68 14.13 2.60 24.41 .30 9.9 12.9 23.3 13.1 9.71974/75 2.86 6.00 2.25 11.11 .115 7.86 13.47 2.87 24.20 .31 9.9 12.1 21.3 12.5 10.0

5-Year Average 2.63 5.98 2.09 10.70 .104 7.62 13.85 2.50 23.97 .31 9.4 11.8 23.0 12.2 9.5

1975/76 3.23 7.05 2.29 12.56 .215 8.45 14.24 2.84 25.53 .37 10.4 13.5 21.9 13.5 15.81976/77 3.01 7.95 10.3

1/ For 1975/76, 81.6% of the total area was under rice, (27% Aus, 45.5% Aman and 9.1% Boro) and 1.2% under wheat.

Source: Bureau of Agricultural Statistics, Ministry of Agriculture.

August 1, 1977

BANGIADESH

BECOID FOODGRAIN STORAGE PROJECT

District-Wise Production of Rice and Wheat(in '000 tons)

1974-75 1975-76 1976-77Sub-total Sub-total Sub-total

Districts Aus Aman Boro Rice Wheat Aus Aman Boro Rice Wheat Aus Amnan Boro Rice Wheat

Raishahi Division 813.5 2,060.7 270.9 3,145.1 50.8 871.9 2,087.2 248.9 3,208.0 84.5 929.8Dinajpur 167.4 441.2 20.5 629.1 3.1 178.2 420.8 10.2 609.2 15.5 198.5Rangpur 293.6 692.5 49.7 1,035.8 5.6 327.6 702.8 41.0 1,071.4 7.0 334.8bogra 111.9 330.0 38.9 480.8 3.9 97.2 292.4 38.8 428.4 9.8 105.6Rajshahi 154.1 449.7 104.1 707.9 14.7 163.5 454.8 101.6 719.9 25.1 177.8Pabna 86.5 147.3 57.7 291.5 23.5 105.4 216.4 57.3 379.1 27.1 113.1

Khulna Division 611.9 1,279.1 215.5 2,106.5 23.7 681.7 1,513.7 212.3 2,407.7 56.1 684.6Kushtia 146.9 70.5 5.8 223.2 19.4 126.0 62.1 3.9 192.0 39.0 112.5Jessore 263.9 272.1 35.8 571.8 4.1 275.9 291.5 21.2 588.5 16.0 253.4Khulna 53.1 403.0 35.1 491.2 0.2 45.6 481.8 28.7 556.1 0.9 47.2Patuakhali 29.3 232.5 31.1 292.9 - 36.5 299.1 43.4 379.0 - 49.7Barisal 118.7 301.0 107.7 527.4 - 197.7 379.2 115.2 692.1 0.2 221.8

Dacca Division 844.2 1,340.3 769.9 2,954.4 20.9 884.0 1,674.0 814.6 3,372.6 31.4 847.0Faridpur 174.3 184.5 67.7 426.5 13.0 171.9 244.1 60.7 476.7 11.8 143.7Dacca 154.4 252.4 191.9 598.7 4.1 152.1 357.9 216.2 726.2 5.4 154.1Tangail 100.9 173.2 80.1 354.2 1.9 93.6 161.2 78.8 333.6 5.9 108.2Mymensingh 414.6 730.2 430.2 1,575.0 1.9 466.4 910.8 458.9 1,836.1 8.3 441.0

Chittagong Division 585.4 1,319.8 993.3 2,898.5 19.4 792.5 1,770.4 1,009.9 3,572.8 42.4 550.3Sylhet 201.0 443.2 220.0 864.2 0.2 251.6 544.5 417.9 1,214.0 0.7 61.3Comilla 93.9 240.6 406.1 740.6 19.1 193.0 481.9 218.9 893.8 38.6 182.8Noakhali 93.5 259.5 143.9 496.9 0.1 166.3 320.8 170.1 657.2 3.2 208.8Chittagong 159.1 343.4 201.4 703.9 - 137.9 383.4 188.0 709.3 - 64.5Chittagong Hill Tracts 37.9 33.1 21.9 92.9 - 43.7 39.8 15.0 98.5 - 32.9

Total 2,855.0 6,000.0 2,249.7 11,104.7 114.9 3,230.1 7,045.3 2,285.6 12,561.1 214.7 3,011.8

Bpurce: GOB Bureau of Agricultural Statistics.

August 1, 1977

ANNEX 1Table 3

BANGLADESH

SECOND FOODGRAIN STORAGE PROJECT

Foodgrains Available for Consumption(million of long tons)

1967/70 1970/71 1971/72 1972/73 1973/74 1974/75 1975/76

Production1. Rice 11.81 10.96 9.78 9.93 11.70 11.11 12.56

a. Aus 2.96 2.86 2.34 2.27 2.80 2.86 2.23b. Aman 6.95 5.91 5.70 5.59 6.70 6.00 7.04c. Boro 1.90 2.19 1.74 2.07 2.20 2.25 2.29

2. Wheat 0.10 0.11 0.11 0.09 0.09 0.12 0.22Gross Production 11.91 11.07 9.89 10.02 11.79 11.23 12.78Less 10% for seed,Feed and Wastage 1.19 1.11 .99 1.00 1.18 1.12 1.28

Net Production 10.72 9.96 8.90 9.02 10.61 10.11 11.50

Imports1. Rice 0.50 0.38 0.67 0.37 0.08 0.26 0.392. Wheat 1.04 0.88 1.02 2.37 1.56 2.00 1.03

Total Imports 1.55 1.26 1.69 2.74 1.64 2.26 1.42

Offtake from Stocks n.a n.a .14 .06 .08 -.47 -,15

Total Availability forConsumption 12.27 11.22 10.73 11.82 12.33 11.90 12.77

Imports as % Availablefor Consumption 12.6 11.2 15.8 23.2 12.7 19.0 11.1

Population (millions;mid-year) 70.8 72.3 72.4 74.0. 76.2 78.6 80.7

Per Capita Consumption 1/(oz. per diem) 17.0 15.2 14.5 15.7 15.9 14.9 15.5

1/ Availability inclusive of changes in private stocks.

Source: Ministry of Agriculture, Ministry of Food, Planning Commission, BangladeshBureau of Statistics.

August 1, 1977

BANGLADESH

SECOND FOODGRAIN STORAGE PROJECT

1975/76 1976/77Rice Rice

Rice Equivalent 1/ Rice Equivalent %Aus Aman Boro Sub-total Wheat Total % Aus Aman Boro Sub-total Wheat Total

Raishahi Division 23,655 165,578 5,071 194,304 2,509 196,813 47.4 1.902 1694778 171,680 1,658 17R1 ,l8 57.0

Dinajpur 13,953 63,914 - 77,867 1,365 79,232 19.1 1,800 72,980 74,780 75 74,855 24.7Rangpur 2,087 38,823 1,069 41,979 12 41,991 10.1 11 32,245 32,256 18 32,274 10.6Bogra 4,554 18,248 - 22,802 946 23,748 5.7 91 19,319 19,410 476 19,886 6.5Rajshahi 3,054 37,694 3,097 43,845 153 43,998 10.6 - 41,335 41,335 317 41,652 13.7Pabna 7 6,899 905 7,811 33 7,844 1.9 - 3,899 3,899 572 4,471 1.5

Khulna Division 9,387 76,844 590 86,821 711 87,532 21.1 5 43.746 43.751 644 44,395 14.6

Kushtia 2,586 5,627 - 8,213 665 8,878 2.1 5 2,542 2,547 245 2,792 0.9Jessore 5,926 8,385 470 14,781 46 14,827 3.6 - 2,639 2,639 399 3,038 1.0Khulna 445 21,331 - 21,776 - 21,776 5.2 - 10,732 10,732 - 10,732 3.5Patuakhali 287 25,987 - 26,274 - 26,274 6.3 - 14,051 14,051 - 14,051 4.6Barisal 143 15,514 120 15,777 - 15,777 3.8 - 13,782 13,782 - 13,782 4.5

Dacca Division 41 54,729 8,109 62,879 253 63,132 15.2 124 36 90R 36R77 cn7Q 36,417 12.0

Faridpur 35 3,252 25 3,312 229 3,541 0.9 - 1,085 1,085 32 1,117 0.4

Dacca - 4,304 181 4,485 - 4,485 1.1 - 1,287 1,287 - 1,287 0.4Tangail - 2,534 17 2,551 - 2,551 0.6 - 314 314 37 351 0.1Mymnensingh 6 44,639 7,886 52,531 24 52,555 12.7 124 33,517 33,641 21 33,662 11.1

Chittagong Division 9,101 45,352 9,836 64,289 3,189 67,478 16.3 - 49,2R7 44,287 374 49 661 16.4

Sylhet 9,012 16,346 8,017 33,375 - 33,375 8.0 - 27,447 27,447 4 27,451 9.0Comilla 12 8,786 1,340 10,138 3,189 13,327 3.2 - 6,492 5,492 370 8,862 1.9Noakhali - 11,297 290 11,587 - 11,587 2.8 - 9,794 9,794 - 9,794 3.2Chittagong 77 8,019 174 8,270 - 8,270 2.0 - 5,523 5,523 _ 5,523 1.8Chittagong Hill Tracts - 904 15 919 - 919 0.2 - 1.031 1,Q31 - 1 nm1 0.3

2/Total 42,183 342,506 23,607 408,295 6,662 414,954 100.0 2,031 299,014 301,045 2 566 103 611 - 100.0

1/ Not known.2/ As of April 1972, boro procurement had not started. Pi

August 2, 1977

,~~~~~~~~~~~~~~~~~~e -.

BANGLADESH

SECOND FOODGRAIN STORAGE PROJECT

Projections of Foodgrain Production 1980/1 and 1985/6 Y

(in 000 tons rice equivalent)

1980-81 1985-86Sub-Total Sub-Total

District Aus Anan Boro Rice Wheat Aus Aman Boro Rice Wheat

Rajshahi Division 921.9 2,357.6 442.9 3,722.4 262.7 974.9 2,657.6 776.9 4,409.5 439.7Dinajpur 187.9 473.0 47.7 708.6 49.9 197.9 530.2 111.4 839.7 85.0Rangpur 345.2 797.6 109.1 1,251.9 69.5 364.0 904.1 227.7 1,495.2 132.0Bogra 104.0 328.9 65.0 497.9 33.0 111.2 369.9 110.7 591.6 57.0Rajshahi 174.9 517.1 145.7 837.7 65.6 187.2 587.0 223.6 997.2 105.6Pabna 109.9 241.0 75.0 425.9 43.3 114.6 267.6 104.7 486.8 59.1

Khulna Division 731.7 1,702.7 315.3 2,749.8 153.5 780.7 1,912.7 478.3 3,171.9 250.0Kushtia 130.0 67,1 7.1 204.2 61.8 132.1 76.1 14.1 222.4 85.0Jessore 287.9 327,5 36.0 651.4 59.9 297.3 367.8 67.3 732.4 104.0Rhulna 56.4 527.6 55.9 639.9 12.0 68.2 578.4 95.3 741.2 22.0Patuakhali 43.9 332.0 63.6 439.5 4.5 52.0 366.8 90.6 509.3 10.0Barisal 213.4 448.5 152.5 814.4 16.0 231.3 525.1 213.0 968.6 27.0

Dacca Division 1,004.0 1,890.0 1,014.1 3,908.1 83.1 1,148.4 2,130.0 1,264.1 4,546.6 136.1Faridpur 183.6 265.1 80.1 528.8 26.0 198.0 288.4 104.4 590.4 41.0Dacca 174.3 397.9 253.2 825.4 14.1 201.2 ;41.5 298.6 941.3 23.0Tangail 101.4 175.3 91.9 368.6 16.2 110.9 190.7 108.0 409.5 25.1Mymensingh 544.4 1,051.3 588.9 2,184.6 26.8 642.5 1,210.4 754.6 2,607.4 45.0

Chittagong Division 916.5 1,995.3 1,212.9 4,124.7 115.1 1,074.5 2,245.3 1,465.9 4,785.5 189.1Sylhet 303.7 639,1 503.2 1,446.0 10.7 370.6 745.0 610.5 1,726.1 20.7Comila 213.4 519,0 252.4 984.8 85.2 240.4 561.7 295.6 1,097.7 131.2Noakhali 191.5 366.5 211.8 769.3 15.1 223.8 417.6 263.0 904.3 27.1Chittagong 162.2 427.4 227.7 817.3 5. 192.3 475.1 275.9 943.2 10.0Chittagong Hill Tracts 45.4 42.9 17.8 106.1 -- 47.3 45.9 20.9 114.3 --

Total 3,574.1 7,945.3 2,985.7 14,505.0 614.4 3,978.5 8,946.6 3,985.2 16,916.0 1,012.4

1/ Based on following % average annual rates of growth: (Ministry of Agriculture)

Dinajpur 4.0 Faridpur 2.6Rangpur 4.2 Dacca 2.8Bogra 4.0 Tangail 2.5Rajshahi 4.0 Mymensingh 3.7Pabna 3.0 Sylhet 3.7Kushtia 2.9 Comilla 2.8Jessore 3.3 "oakhali 3.5Khulna 3.2 Chittagong 3.0Patuakhali 3.2 Chittagong Hill Tracts 1.5Barisal 3.7 1

August 1, 1977

Average 3.5

ANNEX 1

BANGLADESII Table 6

SECOND FOODGRAIN STORAGE PROJECT

Estimates of Net Foodgrain Surpluses/Deficits

Bv District 1985f6

(000 tons rice equivalent)

Net Population Consumption Surplus/ Consumption Surplus!

Production (millions) 'A' Deficit 'C' Deficit'A' 'C'

I/ 2/ 3/ 4/ S/ 6/

Rajshahi DivisionDinajpur 832.2 3.78 596.7 + 235.5 649.9 + 182.3Rangpur 1;464.5 7.92 1,250.2 + 214.3 1,361.6 + 102.9Bogra 583.7 3.27 516.2 + 67.5 562.2 + 21.5

Rajshahi 992.5 6.17 974.0 + 18.5 1,060.8 + 68.3

Pabria 491.3 4.10 647.2 - 155.9 704.9 - 213.6

Khulna DivisionKushtia 276.7 2.79 >440.4 - 163.7 479.6 - 202.9Jessore 752.8 4.86 767.2 - T4.4 835.6 - 82.8Khulna 686.9 5.18 817.7 - 130.8 890.6 - 203.7Patuaklhali 467.4 2.14 337.8 + 129.6 367.9 + 99.5

Barisal 896.0 5.61 885.6 + 10.4 964.5 - 68.5

Dacca DivisionFaridpur 568.3 5.78 912.4 - 344.1 993.7 - 425.4

Dacca 867.9 11.85 1,870.6 -1002.7 2,037.3 -1169.4Tangail 391.1 3.00 473.6 - 82.5 515.8 - 124.7

Mymensingh 2,387.2 10.92 1,723.8 + 663.4 1,877.4 + 509.8

Chittagong DivisionSylhet 1,512.1 6.87 1,084.5 + 487.6 1,181.1 + 391.0

Comilla 1,106.0 8.36 1,319.7 - 213.7 1,437.3 - 331.3

Noaklali 838.3 4.64 732.4 +105.9 797.7 + 40.6

Chittagong 857.9 6.58 1,038.7 - 180.8 1,131.2 - 273.3

Chittagong H. T. 102.9 0.73 115.2 - 12.3 125.2 - 22.6

Total 16,135.6 104.56 16,505.3 - 369.7 17,976.2 -1840.6

1/ - Gross Production less 10% seed, feed and waste.

2/ - Estimated at a national rate of increase of 2.8% 1975/6 - 1980/1 and 2.5% 1980/1 - 1985/-6,an average annual rate of 2.65%. Dacca was estimated to grow at an annual average rate

of 3.2%, Chittagong, 3.0%, and all other districts at 2.55%.3/ - 15.5 oz. of rice per capita per diem.4/ - Net production less consumption 'A'.

5/' - Estimated starting from a base of 15.5 oz. p.c. p.d. in 1975/6 (13.05m tons) and then

estimating increase in demand:

Increase in demand - population growth + income elasticity of demand x growth

in per capita income. Assuming GDP increase of 5% a year and income elasticity

of demand of 0.5. Assuming an infinite elasticity of supply, demand

comsumption. This is an upper estimate for consumption.

- Net production less consumptioni 'C'.

Augtist 1, 1977

BANGALDESN

SEol F0ooDGItAN STORAGE PROJECT

1985/86 Proections of Nkaxiw, Procurenwnt Potential -

(000 tons rice equivanlet)

NDB2tAL YEUR GOCD IF4

Keximum Increase 2/ )(axiwan Ratio of

ever nsrmal Total maximum to

Aue Aman Boor Wheat Total expected Procureeent Normal expected

Rajshahi Division 43 308 44 69 464 181 645

Dinalpur 18 130 5 32 185 35 220 1.19

Rangpur a10 85 21 19 135 61 196 1.5

Ranxgpur 528 2469 1.53

Bogra 5 27 8 5 45 24 69 2.22

Rajehahi 9 60 9 12 90 41 1322

Pahna 1 6 1 1 9 20 29 3.22

Xhula Division 17 110 17 32 176 128 .3041

25 19Kusbtia 1 2 - 10 13 12 66 1.86

Jessore 5 11 1 1 35 31 64 1.83

Rhulna 4 26 4 1 35 29 89 1.27

Patuakhali 5 54 9 2 70 19 60 2.61

Barisal 2 17 3 1 23 37

Dacca Division 18 113 25 5 161 W5 836

Paridpur - 5 - 1 6 24 30 5.0

Dacca ~ 7 1 _ 8 36 44 5.50

Tangail 5 I 1 7 16 23 3,29

Mymensingh 18 96 23 3 140 99 239 1.71

Chittagong Division 28 106 41 24 199 186 385

Sylhet 27 70 33 - 130 65 195 1528

Comilla - 10 4 22 36 46 82 2.

Noakhali 19 2 1 22 35 57 5250

Chittagong 1 5 1 1 8 36 44 2.

Chittagong Hill Tracts - 2 1 1 3 4 2.33

Total 106 637 127 130 1,000 670 1,670 1.67

1/ Assuming tha t sa jwr c ore trai rnt s on pro cu.rem ent syst an (Annex 3) are gradis fly relaxed, and procuiremlent

price maintained at current levels in real terms.

Z/ 75% of the exceas of mximum production over normal here maximm prodaction is 5% greater tban nonnal.

August 1, 1977

ANNEX 1Chart .

BANGLADESHSECOND FOODGRAIN STORAGE PROJECT

SEASONAL PRICE FLUCTUATIONS

130

125 \

AVERAGE 2 1 \s ' < ~~* I

120

76~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~7/

115 0

* 8~~~~~~~~~~~~~~~~~~~~~~~~61

JL~~~~~~* LY 75/6 C NV DC JN E A PR MY JN

Wol B73

** $ OF%OF~~~~~~~~~~~~~~~~~~~~~~~~~~ AVERAGE~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

83.3~~~~~

80.0~~~~

76~~~~~~~~~9 ~ ~ ~ - I

AVERAGESE OC NV DC JN FB MR AR MY JN

95.2~~~~~~~~~~~~~~~~~~~~~~~~~~~~ordBn 79

ANNEX 2Page 1

BANGLADESH

SECOND FOODGRAIN STORAGE PROJECT

Foodgrain Storage Resources and Requirements

A. General

1. The location and capacity of storage facilities in Bangladesh aredetermined by the objective to be served. These are:

(a) procurement related storage, aimed at increasing thepresence of government grain purchases in the marketplace to stimulate farmgate prices;

(b) trans-shipment storage to facilitate intermodal transferand to even out demand for transport and milling services;

(c) distribution storage, to have ample stocks to feed normaland extraordinary demands from major consumption points,partly to regulate consumer price behavior; and

(d) emergency or relief storage, geared to ensuring safe captivestocks adequate to meet emergency needs of areas prone tototal transport disruption.

All foodgrain storage space in Bangladesh does not contribute equally to eachseparate element of the GOB foodgrain sector policies, i.e. procurement,distribution, buffer stock and relief. Because of distinct demarcation ofsurplus and deficit areas, the difficulties of inter-regional transportation,the fact that most "surplus" areas are only surplus during a part of the year,and the skewed distribution of rice milling capacity between production anddistribution areas, storage space is effectively dedicated to a specificpurpose; viz procurement, distribution, or relief; although nominally avail-able for all.

B. Storage Capacity and Condition

2. GOB's Ministry of Food (MF) owns and operates a vast network of grainstorage facilities scattered across the country (see Map). They comprise threecategories of depots: 12 "large" depots called Central Storage Depots (CSD),318 "small" depots called Local Storage Depots (LSD), and 4 silo complexes.In addition it utilizes 125,000 tons of space leased from private sources.

ANNEX 2Page 2

3. The sack grain storage is made up of two broad categories ofgodowns: "pucca" type denoting all godowns with concerete floors and brickor concrete walls, and "non-pucca" type representing the godowns made mainlyof iron sheet which are generally considered to be not suitable for foodgrainstorage. The Dacca type godown, which is the most common, and its variants,Twin Dacca and Calcutta type, belong to the pucca category, and the LahoreShed, the Twin Nissen and the Shell type belong to the "non-pucca" or "Tinhuts" category. About 85% of all godowns are pucca, and over 95% of puccagodowns are Dacca type godowns.

Loading Capacity

4. Actual storage capacity of a godown is a function of size, com-modity being stored, its condition going into storage, duration, and climaticcondition during storage. The standard 100' x 40' Dacca godown, 18' high israted at a nominal capacity of 500 tons, based on 14 layer stacks. Stacks ashigh as 18 have been built successfully in Bangladesh and ample room existsabove the stack for pest control operations. For short term storage, especiallyduring the dry season, when demand for pest control operations is low, aislesbetween and around the stacks can also be used for temporary storage, awaitingshipment. Rice and wheat have greater bulk densities, and well built floors ofthese pucca godowns could carry the extra weight without any damage.

5. However, with increased loading over extended periods losses tendto increase because of impaired ability to inspect and undertake pest controltreatment due to lack of space between and above stacks. Additional handlingcosts are also incurred. It is estimated that 14% moisture paddy in a standardDacca godown overloaded to 850 tons will have an increased loss of 2 percentover a 12 month period. On the other hand, savings in capital cost can beachieved from overloading. Based on cost savings, the recommended loadingcapacity for a standard Dacca type godown would be:

Short-Term Medium-Term3-4 months 6 months---------- Tons -------------

Paddy 750 /a 650

Rice/Wheat 950 850

/a In procurement areas, it is recommended thatgodowns be loaded to 850 tons while awaitingtranshipment.

It should be noted that the loading capacity of 750 tons of paddy correspondsto a rice equivalent capacity of about 500 tons, which is almost identical tothe GOB nominal rating for the standard godown.

ANNEX 2Page 3

MF Storage Facilities

6. As of June 30, 1978, MF is expected to have the following storagefacilities (Table 1):

Central Storage Local Storage SiloDepots Depots Depots Total

Number of Depots 12 318 4 334

Number of Storage Units 452 956 4 1,412

-- tons…- …

Nominal Capacity (tons) 396,000 514,000 225,000 1,135,000 /a

a/ Recently, GOB has agreed with Danida for assistance to finance the con-struction of 50 prefabricated godowns (about 25,000 tons) and with Go-vernment of Japan for 15 godowns at 4 major CSD. These are not included.

The theoretically maximum loading capacity, assuming a paddy to rice/wheatratio of 1:1 (rice equivalent weight), is estimated to be 1.5 M tons, noallowance being made for non-foodgrains, transit storage or underutilizationof capacity, which together reduce the MF storage system potential to muchlower levels (para 20).

Conditions

7. Many godowns are dilapidated and require substantial repair. Somehave outlived their useful life and warrant demolition. MF estimates that 64%of its godowns are dilapidated (730 pucca and 165 non-pucca godowns), and mostof these (45 in the project area and 77 units at the Khulna CSD, 18 at TejgaonCSD) should be demolished at once. Countrywide rehabilitation of Dacca typegodowns in being financed by a recently agreed UK-ODM program. Once rehabili-fated most of the pucca godowns would be useful for safe foodgrain storage for& number of years. The dilapidated non-pucca godowns are only consideredsuitable for short term foodgrain storage, but after rehabiliation, most ofthem would be usable for medium-term "peak-chopping" storage needs or fornon-foodgrains storage (salt, sugar edible oil etc), which currently take upalmost 10% of the available storage space.

C. Transport, Location and Capacity Utilization

Transport

8. The transport system in Bangladesh is extremely strained, whichmakes it impossible to move large volumes from procurement areas to distri-bution areas at the peak of the harvest season. There is a general shortage

ANNEX 2Page 4

of roads, trucks, rail equipment and river barges in Bangladesh. All of thisis further complicated by the highly peaked nature of procurement operationsand by inclement weather which makes it difficult to keep the grain dry whilein transit. Over 50% of the country is less than 25 feet above mean sea leveland up to two thirds of the country is subject to severe flooding. This makesthe transport system quite ineffective at the local level for prolongedperiods, particularly during the monsoon season.

9. Inventory of broad gauge locomotives in 1976 was about 250, and metergauge, about 100 to service about 1,800 miles of track. Further, 55% of themeter gauge and 50% of the broad gauge locomotives were out of service. Wagonsare scarce, and there is a high percentage of bad order cars. At a CSD visitedby the mission, 17 out of 22 cars had been (rightly) rejected as being totallyunsuitable for hauling grain. Shipping delays of several weeks undoubtedlyoccur in the outlying areas because of lack of motive power and wagons. Railmovement is considerably slowed and wagon/locomotive turn around is extremelypoor, because of absence of railway bridges, and dependence on ferrys forcrossing the major rivers, as well as change of gauge requirements. In thepeak procurement period which coincides with the major harvest, the problem oflarge scale foodgrain movement is much more severe, because the system isalready over burdened. GOB is undertaking a major Railway RehabilitationProgram with assistance of ADB, but the unsatisfied demand for transportation,the future increased needs and the investment requirements are such that majorimprovement in transportation available to move increased domestically procuredfoodgrain stocks without major shipping delays, is not expected in the nearfuture.

10. Roadways situation is not much better either, though in recent yearsBangladesh has embarked on a major road building program. Bangladesh has atotal of only 2,600 miles of paved roads, 70% of which are less than 12 feetwide. In addition, there are 1,450 miles of fair weather roads. There arefew bridges and crossing of the extensive river network is delayed because ofthe need to depend on river ferrys. The entire vehicles fleet of Bangladeshconsists of 8,250 trucks with an average carrying capacity of less than 5 tons.It-is concentrated around Dacca and Chittagong. MF owned fleet of about 500trucks, many extremely old, is 60% inoperative; and often contractors, who areused extensively by MF, have difficulties in fulfilling contractual obligationsbecause of the run-down condition of the national trucking fleet.

11. The inland water transport system consists of approximately 1,000powered craft of which 60% are passenger vessels operating on 3,000 mileswaterways which expands to 4,000 miles in the monsoon season. In the inlandareas, country boats (approximately 65,000) provide the bulk of the trans-port service, most carrying less than 5 tons, and the aggregate capacity isonly around 180,000 tons. Given slow movement, total movement capacity islow.

Milling Capacity Location

12. Paddy has to be milled into rice before consumption. Most millingis done in small lots by the farmers household, mostly by women in wooden

ANNEX 2Page 5

manual hLuskers. The larger farmers use small husking machines - either elec-trical or diesel driven - of which there are about 7,500 in Bangladesh (totalcapacity 16,000 tons/8 hr day). Milling for government is done by 100 majorrice mills (total capacity 2,700 ton/8 hr day). Nearly 65% of this capacity issituated in the six districts comprising the project core area (Table 2) thebalance in Dacca (14%) and Chittagong (17%). Thus, procured stocks need to beheld in procurement areas till milled to avoid having to bring them back formilling. Only Dacca and Chittagong CSD are usable for storage of procuredpaddy stocks, and in fact, only CSDs in Chittagong district, show any signifi-cant stocks of paddy in the January-April procurement period.

13. However, even after conversion to rice, it would not be desirableto send all procured stocks to major distribution CSD's because even theso-called "surplus" areas have significant ration distribution needs in thelean season - July - October. This is partly because of the nature of thedistribution program, but also because of Boro and Aus crops together con-stitute only 45% of production.

Storage Location

14. Location of MF storage facilities clearly reflects past GOB emphasison distribution (Table 1). Six major food procurement districts (Bogra,Dinajpur, Mymensingh, Rajshahi, Rangpur, and Sylhet), which provide almost 65%of the total procurement (and 25% of the distribution) have only 28% of MFstorage capacity, while the six other districts (Dacca, Barisal, Chittagong,Khulna, Comilla, Pabna) which account for only 17% of the procurement (and59% of distribution) have about 53% of the existing storage capacity.

15. Within the major procurement districts, MF storage facilities tendto be concentrated in major urban centers but areas growing Boro, and wheatthe two crops with the maximum growth potential, are seriously neglected.The major difficulty remains one of adequate storage space to continue pro-curement operations uninterrupted, as well as one of inadequate access togrowers (Annex 4).

16. Thus, lack of storage capacity in the major production areasresults in:

(a) difficulties in procurement and farmgate price supportoperations (Annex 4);

(b) excessive losses because of storage in marginalfacilities or in the open air (Annex 9); and

(c) excessive burden on the transport system due toconsiderable double shipping to bring paddy back formilling or local consumption in the lean season.

ANNEX 2Page 6

Capacity Utilization

17. As a result of these factors, capacity utilization of the entireMF storage system averaged 55% in 1976, but was 68% in 1975 mainly because ofthe much higher level of imported stocks on hand (Table 4). Disparitiesbetween capacity utilization at CSDs and LSDs also exist because of the highlypeaked demand for local transport. For example, in Mymensingh district (Table4) LSDs were loaded to 110-125% nominal capacity during February-July 1976,but the large CSD (25,000 tons) had only 45-50% of its capacity utilized.Only, at the peak of the distribution season in October did the CSD show amore reasonable 79% utilization. However, procurement area godowns showedan average utilization of 95% at LSD.

18. Throughput or turnover at individual CSDs and LSDs, is on the otherhand remarkably high. CSDs average a turnover of stocks of about 2.5 andLSDs range from 1.5 in the procurement points to possibly 15 at some majorurban centers. However, the total storage system achieves a turnover of onlyslightly above 1.25, reflecting the extent of multiple handling and intergodown movement involved in the system. Turnover of procurement area godownsis bound to be low because of peaked procurement arrivals and the even dis-tribution load. As Boro procurement builds up, turnover should improve.

D. System Potential

Procurement

19. The maximum procurement potential of the MF storage system is muchbelow its theoretical loading capacity, given location, transport constraints,need to store paddy in procurement areas till milling capacity is available andavoidance of multiple shipping. Allowing for recent additions and increasedproportion of Boro and Aus in the future, the estimated procurement capacity ofthe system is:

Procurement Capacity('000 tons)

National Project Area

1977/78 450-550 /a 225-3251981/82 /b 700-800 450-550

/a Maximum of the range implies the use of all marginal andhired facilities for short-term use during bumper crops.

Lb By 1985/86, improvements in the transport system could addabout 50-100,000 tons to procurement capacity.

ANNEX 2Page 7

Buffer Stocks

20. To cover unforseen events like crop damage from floods, cyclonesor below normal production, GOB maintains buffer stocks. Buffer stock capa-city is affected by:

(a) space to be left free to enable procurement to beundertaken unconstrained;

(b) rice milling capacity, which forces stocks to beheld as paddy, taking up greater storage space; and

(c) need to keep the silos part empty to meet importunloading requirements, non-foodgrain storageneeds, and overall capacity utilization level.

21. Mission estimates (Table 5) show that in October 1978, about 750,000tons of buffer stocks could be held; while in July 1978, since space reservedfor procurement would be lower, and commodity mix would have changed in favorof rice/wheat, about 1.0 M tons can be held with the additional godowns underthe project, this would increase to 1.3 M tons by (July) 1982.

E. Project Proposals

22. Mission estimates of likely procurement levels in various districtsare discussed in Annex 1. A grain flow model for Dinajpur in 1985/86 when anormal year procurement level of 185,000 tons is likely to be reached is pre-sented in Table 5. Assumptions are that:

(a) ration offtake would remain at 1976 levels,with population growth offset by reduceddistribution;

(b) ration would consist of 50% wheat and 50% rice;

(c) a 90 day shipping lag would continue to apply betweenprocurement centers and shipment out of the region; and

(d) procurement seasonality would be as in footnote 1.

23. Warehouse space required in Dinajpur is highly seasonal varying from126,000 tons in January to as little as 7,000 tons in April. Only during 3months of the year does the space requirement exceed 55% of the peak. Thus themarginal economic cost of providing extra capacity increases rapidly. Betweennormal and good crop year, peak capacity requirement increases by about 25%,

ANNEX 2Page 8

but since only 1 in 2 or 3 years is likely to be a good procurement year,building new pucca storage capacity for peak good year requirement would notbe justified, without first utilizing the full short term overloading potentialof the standard godown.

24. Under the project, additional storage capacity would be providedin the six major foodgrain production and procurement districts of Bogra,Dinajpur, Mymensingh, Rajshahi, Rangpur and Sylhet. Peak storage demand for 1/the mid 80's would be provided for in the following way:

(a) 60% of the good year peak storage requirement would bemet by "good practice" storage capacity (standard Daccagodown loaded to 650 tons of paddy);

(b) 15Z would be met by overloading to 750 tons of paddyof the standard Dacca godown for up to 4 months;

(c) 15% would be met by further overloading to 850 tons ofpaddy for upto 3 months during the peak procurementseason in the good year;

(d) about 10% would be obtained from improved transport systemwhich would enable CSDs to improve capacity-utilizationduring December-April period by 10% to receive procurementspillover during the peak season; and

(e) till the transport system improves, the gap (d) would be metby hired facilities.

25. Table 6 summarizes the estimation of procurement warehousespace needed and relates the project proposals to these. The project area'speak procurement storage requirement for mid 80's is estimated to be for470,000 tons and 690,000 tons (rice equivalent) respectively in the normaland the good year. Allowing for major part of the peak needs to be met byshort-term overloading (para 5), the estimated shortage is about 350,000 tonsnationally, of which 285,000 ton (nominal) is in the project core area. Underthe project, 145,000 nominal tons of capacity 1/ would be distributed betweenthe 6 core districts as follows:

1/ This would meet 50% of the estimated storage gap for mid 80's and re-presents the entire additional storage that is prudent to build now,until improvements in the procurement system, and actual grower responseare actually tested. Should this be good, there would be adequate timeto build additional capacity required.

ANNEX 2Page 9

Dinajpur 45,000 tons (nominal)Rangpur 30,000 tonsBogra 5,000 tonsRajshahi 10,000 tonsMymensingh 30,000 tonsSylhet 25,000 tons

In addition, some 25,000 tons of dilapidated godowns would be rehabilitated.

26. The project construction program would be completed by 1980/81.It is estimated that further investments in storage in the core area wouldnot be required at least till 1981. It is likely, especially at LSDs havingmore than 1 godown, that storage space is underutilized during the lean season -May to October. However, demand for storage space by other sectors would beyear-rcund. GOB could offer to hire out at reasonable rates to any user allgodowns that are expected to be idle for at least 2 months for storage ofnon-corrosive commodities like jute, oils, and sugar.

27. Most of the districts in the non-core areas are oversupplied as faras procurement needs are concerned. However, distribution, transhipment andrelief needs are also important and GOB has requested that about 77 non-puccasheds at Khulna CSD and 17 at Tejgaon CSD, be replaced by Dacca type facilities.CSDs serve as primary distribution points and also store of non-grain fooditems like salt, sugar and edible oil. The types of storage required for thesecommodities differ, with edible oil in drums not even needing shelter, exceptfor security purposes. The replacement decision would thus depend upon thefuture role of Khulna CSD and the likely amount of non-foodgrain storage.

28. Currently, consumers are required to collect rations from the nearestLSD in the local markets, but when LSDs are 20-40 miles away ration distribu-tion Ls done from small hired facilities and depends critically on regularshipments which are not always possible. In addition, many parts of thenon-core area are regularly hit by cyclones, where loss of life, propertyand all but the most securely stored grain, occurs. Flash floods often wipeout entire food stocks, and areas may be cut off for anywhere from 2 to 30days. During these periods, non availability of relief supplies can lead toextreme hardship, sometimes even death. Strategically located storage, evenof 100-300 ton capacity, could offer substantive relief, and provide GOB withjust enough leadtime to react effectively. The project would provide 20,000tons (nominal) storage in the non-core areas to meet these urgent needs atcarefully selected locations.

Location Selection

29. Tentative locations have been agreed for about 70,000 tons of addi-tional storage capacity in the core areas. These would be sufficient forthe first two seasons construction program. These are listed in Table 9,along with relevant information on their justification for their inclusion.These sites, except for a few, are aimed to improve the access to growers

ANNEX 2Page 10

of the MF procurement operations. Invariably, TPC operation has alreadydemonstrated the procurement potential of the location, and the seriousstorage space constraints that are faced. Some locations, notably Ishwargunjand Bharab Bazar in Mymensingh have been selected as transhipment points toother districts, or for storage prior to milling. Most locations have bankbranches, but special arrangements would be required at some. It would benecessary that suitable sites for at least 35 of these agreed locationsshould be identified for PECU to inspect; and for at least 20 location sitesto have been acquired after approval of the site by PECU, to allow timelystart of project construction.

30. Selection of the remainder of the locations would be done by aspecial location selection committee (Annex 7). The transport situation inthe specific area, and in the region as a whole would be a critical input.Detailed justification for the sites selected for the year's constructionprogram (starting in November) should be available to IDA by February of eachyear, and IDA agreement should be required before construction. However,godowns would not be built at a new site in the core area without a priortrial using a TPC at that location. Justification would involve considera-tion of the following criteria:

(a) Distances from road/rail/waterways, other LSDs, and transportlags faced in the procurement (distribution) season, includingdevelopment plans for the transport system;

(b) TPC demonstrated procurement potential (or actual monthlydistribution need) indicating condition, capacity, andcost of alternatives now being used;

(c) Nearest point of assured shipping (in or out) and storage/shipment capacity available there;

(d) Production/consumption/population/distribution statisticsof the thana;

(e) For transhipment points, availability of rice milling capa-city quick intermodal transfer facilities, throughput andturnover history.

31. For distribution related storage an annual turnover of at least 4would be essential 1/ to justify a new godown at a new location. Travel ofup to 5-10 miles to obtain ration distribution would not be considered ex-cessive. For proposed replacement of the sheds at Khulna & Tejgaon, it shouldbe noted that while these sheds are undoubtedly unfit for foodgrain storage,they may with marginal improvements be usable for non-foodgrain storage. Future

1/ For procurement related godowns 1.2-1.4 would be reasonable.

ANNEX 2Page 11

role of Kiulna CSD to handle imports or incoming supplies would need to beexamined (especially in relation to the proposal to put up silo facilities atKhulna/ Chalna) before any specific construction program can be undertaken atthese CSDs.

32. For relief related storage construction, specific factors to beconsidered are:

(a) historical demand for relief stocks in the area includingfrequency, peak daily demand, experienced people served, etc.

(b) duration and extent of transport disruptions and alternativesavailable;

(c) distance in time from the nearest point of assured transportduring emergencies;

(d) availability of high ground adjacent to transportation; and

(e) possibility of rotation through normal procurement and dis-tribution, since separate warehouses only for relief stockswould not be awarded.

Selection of godown location in the non-core areas would also be done by thelocation selection committee, after coopting a representative of Ministryof Relief for relief related storage.

BAOLALDECSH

SSGOND FOODGR4IN STOdRAGE PRJECT

1/lF Storage Ca ity (as likely of June 197 I

7noinal, tonts)

------------------- -CSD----------------- Total------------------ LSD ------------------- ~ ~~~~~~~Storage 7. of 7. ofDistrict No. of LSD Oscra Type Other Total LSD 1 of Total Daces Type Others Total CSD Capacity 7. of Total Procurement Distribution

Bogra 12 16,750 11,200 27,950 5.4 20,000 20,000 47,950 5.3 5.7 1.7Dinajpur 20 43,125 4,200 47,325 9.2 47,325 5.2 19.1 2.2Rajshahi 21 32,250 7,200 39,450 7.7 39.450 4.3 10.6 4.8Rangpur 21 24,500 3,000 27,500 5.4 27,500 I.O 10.Mymensingh2- 25 41,875 41870 8.1 25,O00 25,000 66,870 7.3 12.7 6.6Sylhet 22 20.500 4,000 24,500 4.7 24,500 2 .7 8.0 3.9Sub-total Core Area 121 179,000 29,600 3/ 208,600 40.5 45,000 - 45,000 253,600 27.8 66.2 24.5Pabna 7 20,500 600 21,070 4.1 35,000 35,000 56,070 6.2 3.8 3.5Kuabhtia 9 17.375 8g0 18,175 3.5 1,040 2.3 3 3.2Jessore 17 19,750 1,290 21,040 4.1 21,040 2.3 3.5 3.2R.los 17 20,000 4,600 24,600 4.7 54,500 61,600 116.100 140,700 15.5 6.1 6.7Patuakhali 17 22,500 22,500 4.4 22,500 2.5 6. 1.Barisal 22 31,250 31,250 6.2 24,000 24,000 55,250 6.1 37 3.7Faridpur 22 28,500 28,500 5.6 28,500 3.1 0.8 4.1Dacca 21 35,000 35.000 6.8 42,800 25,050 67,850 102,850 13.7 1.0 26.0Tangail 6 12,750 12,750 2.5 0.5 2.0Comilla 19 33,000 1,800 34,805 6.8 9,500 600 121,180 46,985 4.9 3.0 6.4Noakhali 17 25,250 25,250 4.9 23,250 2.8 2.7 3.7Chittagong 14 22,000 22,000 4,3 97,700 800 98,500 120,500 13.2 1.1 12.0Chittagong Hill Tracts. 12 7,500 l 600 8,100 1,9 5 ___6 56,6100 7.2 O.82 0.7Sub-total non-coca area 201 295,375 9,690 305,060 59.5 263,500 88,050 351.550 656,610 72.2 338. 75.5Total Fl-t Storage 322 474,375 39,290 513,660 - 308,500 88,050 396,550 910,210 100.0 100.0 l.00Silos (4) 2235,000Total Storage Capacity 1,135,2101/ Assuoiog a standard loose type godown capacity of 500 tons (nominal capacity).2/ Occluding recently agreed Danish program for 10,000 tons prefabri-ated godown in Mysenstgh 2,000 tons in Sylhet, nand sboot 13,000 tons in Chittagong, Doors and Comille.31 Of theee about 24,50o tons in prozec

tarea require majGr rehabilitation.

Augost 1, 1977

ANNEX 2Table 2

BANGLADESH

SECOND FOODGRAIN STORAGE PROJECT

Rice Mills and Capacity

District No of Milling & % of % of riceMajor Capacity Milling productionRice Mills per 8 hr.day Capacity 1975/76

(Tons)

Rajshahi Division 77 1,463 53.8 25.5

Dinajpur 50 1,043 38.3 4.8Rangpur 8 140 5.1 8.5Bogra 12 208 7.6 3.4Rajshahi 7 72 2.6 5.7Pabna - - - 3.0

Khulna 13 176 6.5 19.2

Kushtia - - - 1.5Jessore _- - 4.7Khulna 10 125 4.6 4.4Patuakhah 1 18 0.7 3.0Barisel 2 33 1.2 5.5

Dacca 33 533 19.6 26.8

Faridpur 1 12 0.4 3.8Dacca 25 372 13.7 5.8Tangail - - - 2.7Mymensingh 7 149 5.5 14.6

Chittagong 39 548 20.1 28.4

Sylhet 9 61 2.2 9.7Comilla 1 11 0.4 7.1Noakhall 1 26 1.0 5.2Chittagong 28 450 16.5 5.6Chittagong H.T. - - - 0.8

Total 162 2,720 100.0 100.0

Source: Food Directorate.

August 2, 1977

BANGLADESH

SECOND FOODGRAIN STORAGE PROJECT

Capacity Utilization (%)

CSD Stock of: Project Area Other All Mymensingh-

Imported Locally 2/ CSDs CSDs LSD- CSDGrains 1/ Procured CSDs --

Grains1976 (000 Tons)

January 236 2.5 73 72 70 92 40

February 261.9 9.2 73 84 82 110 44

March 262.0 14.1 70 89 85 128 44

April 232.5 11.9 68 79 77 110 49

May 193.5 23.3 64 75 73 117 51

June 182.4 19.0 56 72 69 106 51

July 174.5 24.0 55 71 68 115 52

August 180.4 31.3 76 71 71 104 56

September 192.1 29.4 76 72 73 102 77

October 169.4 35.3 81 67 70 96 79

November 133.5 34.2 74 54 58 95 66

December 101.3 42.0 73 46 51 83 53

1977

January 93.5 52.8 74 44 50

February 60.2 75.0 68 39 45

March 47.2 99.4 64 40 45

April 23.7 69.6 49 25 30 M

May 23.4 59.7 44 24 28

l/ Non foodgrain stocks takes up 5-10% of capacity.2/ Mymensingh, Santhar (Bogra) and Moladuli ( Rajshahi).3/ LSDs = 45,0003T;CSD= 25,000 T.

August 2, 1977

ANNEX 2

Table 4

BANGLADESH

SECOTD FOODGRAIN STORAGE PROJECT

Minimum Buffer Stock Potential (1977/78)

MEF storage space 1,130,000

Hired space 120,000

Total available space 1,250,000 Nominal tons

Less:

(i) Reserved procurement space -/ 275,000

(ii) Non-foodgrain storage (10%) 125,000

(iii) Silo (port) transit needs 100,000

Space available for buffer stock 750,000 t

Storage capacity 4-(in rice equivalent tons)

Paddy Rice/Wheat Total

CSDs _1 120,000 240,000 360,000

LSDs 2 95,000 195,000 290,000

Silos 20,000 95,000 115,000

Buffer stockPotential 5/ 235,000 530,000 765,000

(October 1978) -

1/ For all procurement of 500,000 tons (400,000 tons Aman),allowing forspace released during the season.

2/ All LSD are loaded to medium-term capacity; 650 t paddy, 850 t rice/wheat.3/ All CSDs are loaded to short-term capacity; 750 t paddy, 950 t rice/wheat.4/ Assuming 80% capacity utilization for CSD/LSDs. October commodity mix

paddy: Wheat & Rice = 1:2 by rice equivalent weight.5/ For July 1978, reserved procurement space would be much lower

(at 50,000 ton maximum) but the procurement areas would have greaterpaddy. The buffer stock potential for July 1978 would be about 1.0million tons. With the project godowns this would be about 1.3 M tons,

August 2, 1977

ANNEX 2BANGLADESH Table 5

SECOND FOODGRAIN STORAGE PROJECT

19tl5~~~~~~11%65 Grainf low Model; Dinalpur -/

(With 90 Day Shipping Lag)

Rice Equivalent(Tons)

1985/86 District OverflowStorage Rice Wheat

Rice Wheat Total Demand (90 Day Shipping Lag)

JulyProcurement 500 500Offtake 2,135 2,135 4,270 -4,140Ending

Inventory 0 14,735 14,735 14,735August

Procurement 11,700 11,700Offtake 2,135 2,135 4,270Ending

Inventory 9,565 12,600 22,165 22,165September

Procurement 6,300 6,300Offtake 2,135 2,135 4,270Ending

Inventory 13,730 10,465 24,195 24,195October

ProcurementOfftake 2,135 2,135 4,270Ending

Inventory 11,595 8,330 19,925 19,925November

Procurement 13,000 13,000Offtake 2,135 2,135 4,270 -9,565Ending

Inventory 12,895 6,195 19,090 19,090December

Procurement 74,100 74,100Offtake 1,710 1,710 3,420 -2,030Ending

Inventory 83,255 4,485 87,740 87,740January

Procurement 41,600 41,600Offtake 1,495 1,495 2,990Ending

Inventory 123,360 2,990 126,350 126,350February

Procurement 1,300 1,300Offtake 1,495 1,495 2,990 -10,865Ending

Inventory 112,300 1,495 113,795 113,795March

ProcurementOfftake 1,495 1,495 2,990 -72,390Ending

Inventory 38,415 0 38,415 38,415

April?roc_emmnt 8,000 8,000Offtf 1,4* 1,495 2,990 -36,425

Inventory 495 6,505 7,000 7,000May

Procurement 1,000 16,000 17,000Offtake 1,495 1,495 2,990Ending

Inventory 21,010 21,010 21,010June

Procurement 3,500 8,000 11,500Offtake 1,495 1,495 2,990 -370 -6,505Ending

Inventory 1,635 21,010 22,645 22,645

TotalProcured 153,000 32,000 185,000Offtake 21,355 21,355 42,700 -131,645 -10,645

1/ Seasonality being: Wheat - April 25%, May 50%, June 25%; Boro - June 25%,July 70%, August 10%; Aus - Septenber 65%, October 35%; andAman - Novenber 10%, December 57%, January 33%.

Augu st 2. 1 977

BANIGLAODESH

SECOND FOODGRMAN STORAGE PROJECT

Procureent Warehoupe Space Requirement

1985/86 Current 1985/86 1985/86

Overall Annual Procure*nt 1985/86 Estimated Minimum 2/ Current MF 3 Estimated Minimum Proposed Additional

District Surplus/Deficit 1975/76 Peak Storage Demand Warehouse Space Required Cao city Storase Gan C0aacity (1981)

(tons) (Rice Equivalent,ta)(Rice Equivalent, tons) (nominal, tons) (nominal, tons) (nominal, tons) (no-mial, tos)

Normel Year Good Year

Dinajpur +274 79.2 130 155 135 47 88 45

Rangpur +211 42.0 85 123 90 28 62 30

Bogra +54 23.8 27 42 40 281/ :12 5

Rajohahi -7 44.0 60 87 60 39 21 10

Mym ingh +620 52.6 96 163 100 42 57 30

Sylhet 3460334 70 105 70 25 -16 -A

Core Area +1,612 275.0 468 675 495 209 285 145

Pabna -175 7.8 6 19 15- 21 -

Kushtia -175 8.9 10 19 15 18 -

Jessere -37 14.8 18 33 25 21 4

Ebulua -152 21.8 26 46 40 24 16

Patuakhali +120 26.2 54 68 60 22 38

Barisal -12 15.8 17 44 33 31 2

Faridpur -370 3.5 5 30 23 28 -

Dacca -940 4.5 7 35 25 35 -

Tasil -95 2.5 5 16 le 13 -

Comilla -250 13.3 22 33 25 35 -

Noa.hali +85 11.6 19 43 30 25 5

Chittagong -250 8.2 5 27 20 22 -

Chittagong Hill Tracts -7 0.9 2 5 5 8 -

Non-Core Area -2,258 140.0 196 418 325 305 68 20

Total -646 415.0 664 1,093 o20 514 348 165

1/ About 40Z consists of TN sheds in extremely poor condition.2/ Allowing for overloading potential, non-foodgrain and improved CSD utilization in the procurement season (para. ),

and assuming 85% space availabllity for procurement purposo.

3/ As of June 1978, excluding CSDs which presently do not contribute to procurement storage, but would contribute about 40-50,000 tons

by 1985, because of imProved transportation, vwhich is allwo1d for in estimating mnirmm space required (footnote 2).

4/ The calculation is based on the major assumption that storage demand pattern is similar to that of the Dinejpur grain flow model,

which is not totally applicable to non core areas.5/ To be located in non-core areas, but need in specific location may be related to location specific distribution problems. I

August 2, 1977

8 ooftoooft.o~ S A & Siz888 O I

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ANNEX 3Page 1

BANGLADESH

SECOND FOODGRAIN STORAGE PROJECT

Project Engineering and Construction

1. Project construction would involve about 320 godowns at geographic-ally scattered sites, with an average of one 1,000 ton or two 500 ton godownsper site and rehabilitation of about 25,000 tons of Twin Nissen (TN) typegodowns in the core area. The expertise necessary to construct the storagefacilities exists in the GOB's Public Works Department (PWD) and is suitablygeographically dispersed. The Project Construction Program would be imple-mented by a Project Engineering and Construction Unit (PECU) wholly withinthe PubLic Works Department (PWD). PECU would be headed by a full time Proj-ect Construction Manager (PCM), with the rank of Additional or Deputy ChiefEngineer. PECU would provide godown designs, sub-contract construction tolocal contractors, supervise construction and act as consulting engineers toMF. PECU would be responsible to the Project Implementation Unit (Annex 7).

Godown Design and Construction

2. The basic design of the standard Dacca type godown of proven suit-ability would be used. Improvements should be made in minor details to rodent-proof doors, to improve drainage, to improve ventilator and canopy design, toeliminate the loading dock. Godowns should be built using improved labor in-tensive techniques to reduce both cost and construction time where supervisionenables new techniques to be properly developed. Simple mild steel shutter-ing would replace the present single use wooden shuttering. Roof planks couldbe cast on the godown floor and hand hoisted into place. PECU should producedetailed designs, site plans and vicinity maps for all project sites. Con-struction should start only upon approval of the package by the project engi-neering consultant (para 7). Details are in Appendix 1. At all sites, theproject would provide for drainage, essential accommodation, power and light-ing, driveways, bank payment booths, safes and boundary walls. Rehabilitationof existing Dacca Type godowns, being financed by UK-ODM, would be excludedfrom the project. Cost estimates are in Table 1 and 2.

Rehabilitation of Twin Nissen Godowns

3. Rehabilitation of Twin-Nissen (TN) type godowns in could be done atabout 25% of the cost of a new Dacca godown (Table 1). Their cladding andfloors which are in poor condition, should be removed and the floor recast tothe same specifications as for the Dacca godowns. The structural frames aregenerally sound and should be cleaned and repainted. Doors, ventilators andguttering should be replaced and the godown reclad in new galvanized corrugatediron sheeting. A levee should be built around the godowns where the site issusceptible to flooding.

ANNEX 3Page 2

Sub Contracting

4. All civil works at a site should be bulked; but when more than 2godown are being built at one site, all works related to 1 godown should bebulked. Contracts should be let through local competitive bidding with bid-ding conducted simultaneously for all godowns in a sub-division, but biddershaving the option to bid for each site individually. Construction completionperiods should be specified with penalties for delays. Prequalification ofcontractors should be required (Appendix II). Bid evaluation would be doneby PECU, and proposed awards would be approved by the project consultant.Contractors should have the choice of providing imported materials (cementand steel) through normal commercial channels or of purchasing from PWD, atstandard prices. The 10% security deposit or a Performance Bond should beeffective for six months, after which MF should release it in writing providedno defects had occured and the Contractor had given a written warranty forstructural integrity valid for two years after acceptance. Final acceptanceof the godowns should require a complete final joint inspection by PECU andMF. The joint inspection report would enable the MF representative to showconcurrence or report his views. Final payment to contractor (and IDA dis-bursements) should require a valid certificate of completion, approved bythe project construction manager, and co-signed by the project engineeringconsultant.

Construction Supervision

5. PECU, with the assistance of strengthened PWD field units, wouldbe responsible for site surveying, preparation of site plans and supervisionof construction. A locally appointed construction advisor could assist eachArea Superintendent for one year in the practical details of construction,particularly concrete work. All sites would be subject to unannounced inspec-tions by PECU executive staff and the consultant. Any unsound work would bedemolished and rebuilt. Each site would be visited daily by a Sub-AssistantEngineer; while an Executive Engineer would inspect a construction site atleast 8 times during its construction. Particular attention should be paidto the quality of brickwork and of concrete pouring. The job superintendentwould be present when concrete pouring was taking place.

PECU Staffing and Equipment

6. PECU would be staffed full time by PWD personnel (a recommendedstaffing pattern is in Table 4). For the post of the project constructionmanager (PCM), the Chief Engineer (PWD) should propose two candidates to theSecretary, MF and the individual should have qualifications and experiencesatisfactory to IDA. Other PECU technical posts should be filled similarly.Additional staff would be appointed for field offices of PWD where necessary;but where construction volume will not support full time staff, existing PWDstaff will supervise construction. PECU office space could be provided by PWD,but where adequate office space was not available PECU should rent suitablespace. Office, surveying and testing equipment and special construction

ANNEX 3Page 3

equipment (Table 4) unavailable at present with PWD, would be provided to PWDfor PECIJ under the project. Four-wheel drive vehicles and motorcycles to beprovidecl would be maintained by PWD.

Engineering Consultant

7. The consultant should be chosen by the Project Steering Committeefrom an internationally recognized firm of consulting engineers. The firmwould be required to furnish the services of one engineer. The use of afirm would permit continuity, since then the firm would automatically providea replacement should the originally assigned engineer have to leave for anyreason. Furthermore, if other short-term supporting personel were requiredin related areas, the consulting firm could furnish these quickly. DetailedTORs and qualifications are in Appendix 2. The consultant would be respon-sible to PECU.

Godown Maintenance

8. One serious operational deficiency is in the area of storage main-tenance. Most godowns become dilapidated because, although MF retains theresponsibility for maintenance, it has no engineering expertise. MF has tosubmit work requests, including very minor ones, on a job-by-job basis to theMinistry of Works, which prepares bid documents and gets the work done mainlythrough private contractors. GOB buildings are maintained by the Public WorksDepartment (PWD) through annual contractual arrangements. PWD has not acceptedsimilar responsibility for godowns in need of major repair under this arrange-ment, only those that are new or rehabilitated. This situation and a short-age of funds has led to the extensive disrepair found at most depots. Projectgodowns should be transferred to PWD maintenance roster immediately upon com-pletion or rehabilitation for maintenance by PWD. However, EF should alsocreate a small regional godown maintenance cell headed by an superintendingengineer, to coordinate with PWD to ensure effective godown maintenanceprogram by PWD.

ANNEX 3

BANGLADESH Table 1

SECOND FOODGRAIN STORAGE PROJECT

Project Engineering and Construction

Typical Construction Costs

7/Unit Cost Total Units Total Cost Foreign Duties/-(Tk) (Taka '000) Exch. % Taxes %

1000/Ton Dacca Type Godown

Land Acquisition 25,000/ac$' 0.7 17.5 - -Construction Costs (Ma-terial, labor) 2/ 1,730/ton 1,000 1,730 25% 15%Ancilliaries 6/ 220/ton4/ 2,000 5/ 295 20% 10%Power (30 kw) & Lighting- 75,000/site 1 50 50% 20%

TOTAL 2,092.5 25%

Twin Nissen Hut Rehabilitation

Rehabilitation (Per 1000 ton 42/ft. 9/ 8,000/ft.2 336 35% 30%capacity) 8/

TOTAL 336 35%

1/ 25,000 Taka/ac. based on (i) Average land costs in probable site locations and(ii) 70% of sites to be acquired, 30% on existing sites.

2/ Excluding engineering charges. Labor content 40%, materials (Local and Imported)60% of total construction cost.

3/ Taka 1,730/ton of storage based on: (a) existing PWD rates for godown and otherconstruction inflated to June 1977 prices and revised for increased standards ofworkmanship under the project. Base cost for construction is Taka 1,630/ton (US$105/ton) and (b) about 12% of godowns will be built in remote areas with costs50% greater than base cost.

4/ (i) Ancilliary costs based on average requirements per ton of total site storage;(ii) Taka 220/ton based on average project site of 2 existing 500 ton godowns plus

one new 1000 ton twin Dacca type godown; and (iii) Ancilliaries for average siteinclude: (a) office 20'x40' (b) brick driveways to front and rear godown doors(c) site drainage guard house (e) boundary wall around total site.

5/ Average site as in note 4/ (ii) containing 2000 tons total storage capacity forall new sites and 50% of existing sites.

6/ Estimated average cost for bringing power to site, installing lighting fixtures for all new sites and 60% of

7/ Duties and taxes based on June 30, 1977 rates. existing sites.

8/ Rehabilitation includes (i) breaking up and recasting floor (ii) replacing galvanizedcorrugated iron sheeting, doors, gutters and ventilators.

9/ Taka 42/ft based on actual rehabilitation of TN sheds by PWD, and June 30, 1977 prices.

August 2, 1977

BANGLADESH

SECOND FOODGRAIN STORAGE PROJECT

Godown Construction and Rehabilitation Project Costs(Tk,000)

ForeignYear 1 Year 2 Year 3 Year 4 Total Exchange

Godown Construction

(a) Constructionl/Land acquisition 700 1,050 1,140 - 2,890Godown construction 46,130 92,260 109,560 37,480 285,430Ancilliaries 7,860 15,720 18,670 6,380 48,630Power 1,340 2,680 3,180 1,090 8,290

Base Cost Sub-total 56,030 111,710 132,550 44,950 345,240

ContingenciesPhysical (5%) 2,770 5,580 6,630 2.250 19,230Price 2/ 5,290 22,050 40,500 18,600 86,440

Total Godown Construction 64,090 139,340 179,680 65,800 448,910 25%

(b) RehabilitationRehabilitation of non-Dacca - 2,830 4,250 1,420 8,500

type godowns

Base Cost Sub-total - 2,830 4,250 1,420 8,500

ContingenciesPhysical (5%) - 140 210 70 420Price - 560 1,300 590 2,450

Sub-total - 700 1,510 660 2,870

Total Rehabilitation - 3,530 5,760 2,080 11,370 35%

(c) Total Base Cost 56,030 114,540 136,800 46,370 353,740

ContingenciesPhysical 2,770 5,720 6,840 2,320 17,650Price 5,290 22,610 41,800 19,190 88,890

Sub-total 8,060 28,330 48,640 21,510 106,540

Total Construction and 3/Rehabilitation Cost 64,090 142,870 185,440 67,880 460,280 25,2%

1/ See Table 1 for detailed cost basis. X X

2/ Price contingencies at 9% p.a. for civil works, till 1979, 8% thereafter.

3/ Duties and taxes are estimated to be 14.4% of total. August 2, 1977

BANGLADESH

SECOND FOODGRAIN STORAGE PROJECT

Project Engineering and Construction

Equipment and Vehicle Requirements

Unit Total Years Total Cost ForeignCost- (Units) 1 2 3 4 (Tk t000) Exchange(Tk)

Equipment

Vibratory Roller Compactors 148,800 15 (20) 2,230 (-) - - - 2,980Concrete Vibrators 7,080 30 (40) 210 (-) - 280(gasoline engine)

Hand Tampers 7,440 15 (20) 115 (-) - - - 150Sub-total 2,555 2,555

Office Equipment

300,000 - (-) 300 (-) - - - 300Total Equipment 2,855 2,855 75%

Vehicles 2/

Car/Jeep and Spares 220,000 3 (3) 1,660 - - - - 660Motorcycles and Spares 26,345 26 (26) 685 360

Total Vehicles 30 1,345 1,345 50%

TOTAL 4,200 4,200

1/ Unit Costs include taxes and duties as of June 30, 1977.2/ Cars/Jeeps for PCM, 2 Superintending Engineers; motorcycles for 6 Executive Engineers, and 20 Section Officers.

ID X

January 12, 1978.

ANNEX 3Table 4

BANGLADESH

Second Foodgrain Storage Project

Project Engineering and Construction

Manpower Requirements-/

PECU Headquarters - Dacca

Rank Number Responsibilities

AdditionaL/Deputy Chief Engineer 1 Project Construction Manager

Supintending Engineer (SE) 1 Project Engineer: Constracts,Design, Estimation, Progress,Spot Inspection

2/Executive Engineers-t (EE) 3 (i) Design, Layout and Estimation

(ii) Contracts and Evaluation(iii) Field Supervisors, Purchase

and Accounts

Assistant Engineers-/ (AE) 6Sub-Assistant Engineers (SAE) 8Surveyors, Draftsmen and Tracers 2 each

PWD Field Strengthening 3Executive! Engineers (EE) 4 For strengthening the Mymensingh,

Dinajpur, Rangpur and SylhetCircle and PWD;

Assistant: Engineers (AE) 14 4 each for Mymensingh, Dinajpur,Sylhet and Rangpur; 1 each forBogra and Rajshahi

Sub-Divisional Engineers (SDE) 18 4 each for Mymensingh, Dinajpur,Sylhet and Ranjpur; 1 each forBogra and Rajshahi

Sub-Assistant Engineers - One at each work site

1/ Cost of PECU and field strengthening is covered by the 8% PWD's engineering charge.2/ GOB proposed 2EE and 4AE at negotiations.3 PWD field strengthening depends upon the level of project construction and on-

going PWD work program in the district; based on the assessment of the ProjectConstruction Manager, upto one additional EE would be required in Mymensingh,Dinajpur, Sylhet and possibly Ranjpur; but Bogra and Rajshahi would only needadditional AE, and SDE; each site would have a SAE for site supervision, whosecost is in the work charge.

January :12, 1978

BANGLADESH

SECOND FOODGRAIN STORAGE PROJECT

Project Cost: Engineering and Construction(Tk '000)

Year 1 Year 2 Year 3 Year 4 Total % Foreign Exchange

(a) Engineering and Construction Equipment-/ 2,855 - - - 2,855Supervision Vehicles 1,340 - 1345

Base-cost Sub-total 4,200 - - - 4,200 68%

(b) PECU and PWD Engineering2/ 4,500 9,600 11,500 3,900 29,500E n g i n e r i n g _ _ _ _ _ _ _ __ _ _ _ _ _ _

Base-cost Sub-total 4,500 9,600 11,500 3,900 29,500

(c) Technical Assistance

Engineering Consultant (PECU) 1,860 1,860 1,860 1,860 7,440Local Construction Experts 360 360 360 360 1,440

Base-cost Sub-total 2,220 2,220 2,220 2,220 8,880 84%

Totals - Base Cost-/ 10,930 11,820 13,720 6,120 42,600Price Contingencies 850 1,800 3,800 2,150 8,600

Total Engineering and Construction Unit Costs 11,770 13,620 17,520 8,270 51,200 51%

1/ See Annex 3, Table 3 for cost details.2/ Annex 3, Table 4 for details of engineering executive staff; cost at 8% of civil works,3/ Contingencies @ 75% till 1979 and 7% p.a. thereafter.4/ Duties and Taxes estimated to be 3% of total cost.

January 12, 1978.

I-. t1X>C

e_n W

BANGLADESHSECOND FOOD GRAIN STORAGE PROJECT

Project Engineering and Construction UnitHQ Organization Chartll

CHIEF MEMBER ! | PROJECT l

ENGINEER-PWD STEERING.1 ~~~~~~~~COMMITTEE

PROJECT2/ MEMBER PROJECTCONSTRUCTION l IMPLEMENTA-

MANAGER TION UNIT

CONSULTANT |SUPERIPNTEN- ENGINEERSi

DESIGN PROJECT & AREAPWFIL ENGINEER CONRACTS ENGINEER PWD FIELD

(EE) ENGINER(EE) (EE)

ENGINEERS ||ENGINEERS AGEN ENGINEERS | ACCOUNTANT

0 . l l TRAC~AERS | |ENGiNEERS |PVVD MINISTRY OF FOOD i|F 1

/j Field Strengthening of Selected PWD Circles in the Project Area is in Table 4. SE: Superintending Engineer

Z/ Rank of Additional/Deputy Chief Engineer EE: Executing EngineerWorld Bank-1854ti

ANNEX 3APPENDIX IPage 1

BANGLADESH

SECOND FOODGRAIN STORAGE PROJECT

Design and Construction Methods

A. Design

1. Following design details should be carefully studied for incor-

poration: 1/

(a) Canopies - slope top of slab to edges and incorporate a drip1-1/2" from the edge on the underside of the slab on the out-side parimeter.

(b) Ventilators - simplify the canopy by the use of pipe placedas the wall is built.

(c) Drainage - where site permits eliminate the ditch that isbuilt around the godown by paving (brick), with slope awayfrom building.

(d) Doors - clear height to be set at 8' - 0" and width not lessthan 9' - 6", preferably 10' - 0". Bottom of doors shouldbe below interior floor level, top should be at least 2" belowlintel, sides should close against an angle anchored to thewall to eliminate gap between door and wall.

(e) Floor Slabs - joint material should be used between slabjoints and wall. Slab at wall should not rest on wall ledge.Mechanical or hydraulic compaction under slab should be used.Vapor barrier, such as 6 Mill Visqueen (plastic sheet), shouldbe specified under slab. Specific finishing procedures shouldbe outlined in the drawings.

(f) Dock - it should be eliminated. Note that ledge is notnecessary if padlock is placed at 4' - 6" above grade.

1/ Sketches are available in the project supervision black book; PWD haveaccepted a, b, c, d and e; others would be pursued by the consultantand would be tried on an experimental basis.

ANNEX 3APPENDIX IPage 2

(g) Expansion Joints - since beams under the slab (T's) are easierto build, they should not be turned up and an elaborate coverbuilt over them; small curbs should be used, these may be placedwith the expansion joint at the slab between beams, thereby eli-minating the side by side beams. Slabs at this bay would canti-lever from adjoining beams.

B. Site Information

2. A vicinity map indicating all roads, railroads and rivers (especiallyif a river loading or unloading point is being considered) should be provided.The site plan should show the following:

(a) the boundary lines with the existing fence and gates;

(b) the location of all structures within the site;

(c) nearest and best location for coming into the site with power,water and telephone lines;

(d) drainage of site with important elevations (this may requiretypical sections where troughs exist);

(e) indication of materials in present driveways within the siteand railroads with the gauge and location of boat loadingfacility if any; and

(f) if rerouting of outside roads is contemplated or suggested byeither ME or PWD, a plan should be included giving all pertinentinformation.

C. Recommended Change in Construction Methods

3. Present methods are satisfactory but possible savings could accrueby small modifications in the construction methods. PECU should investigatecosts and technical suitability with the help of the engineering consultant,the following:

(a) the use of prefabricated steel forms (shuttering) andadjustable shores for the beams.

(b) the use of concrete planks cast on the ground, perhaps on thefinished floor.

ANNEX 3APPENDIX 1Page 3

(c) the use of hand winches or chain hoists to raise the precastroof slabs to be placed on the previously cast-in-place beams.

(d) the method to use in finishing the roof once the planks arein place.

4. These changes are likely to have the following advantages:

(a) savings in framework (shuttering) and time.

(b) better finish and appearance of concrete thereby eliminatinghaving to point (whitewash and plaster) all the ceiling.

(c) slight movement of foundation would not be reflected on thestructure since it is more flexible.

(d) no heavy equipment is needed if roof planks are kept to asmall size.

(e) work could be done simultaneously for various phasesdiminishing time of completion.

ANNEX 3APPENDIX 2Page 1

BANGLADESH

SECOND FOODGRAIN STORAGE PROJECT

Draft Terms of Reference for Engineering Consultant

1. Consultant would monitor the progress of the project, assist andadvise both the Project Implementation Unit (PIU) and the Project ConstructionManager. The appointment would be for up to four years.

2. Qualifications of the firm. The firm should have available ade-quate personnel with the required qualifications. The firm should haveprevious experience in the supervision of construction and contractor selec-tion preferably in developing countries. Previous design and constructionexperience in the grains industry would be an added qualification.

3. Qualifications of the individual. The individual should be a quali-fied Civil Engineer with contract administration, design and constructionexperience. Specifically:

(i) He should have not less than three years experience inorganizing, managing and establishing policy and pro-cedures, and supervising contract administration for anengineering construction firm;

(ii) He should have not less than ten years experience in allaspects of structural, surveying and general engineeringpertaining to (grain) storage;

(iii) He should have not less than ten years construction ex-perience, and should be familiar with the practicalaspects of construction methods used in developing countries,particularly the craftsmanship techniques proposed to beutilized in this project.

4. Job Description. The consultant would:

(a) assist PECU in review of contract documents, speci-fications and bid evaluations;

(b) assist in the prequalification of contractors;

(c) inspect construction sites and advise PECU offindings; and

(d) recommend standards of supervision for the projectand train personnel in supervision methods.

ANNEX 3APPENDIX 2Page 2

(e) serve as advisor in the design, engineering andconstruction requirements of the project andco-sign certificates of work completion approvedby the PCM;

5. Consultant would be expected to divide time between Dacca and thefield at least spend 50% of his time in the field. He would be expected tomake unannounced spot site inspections during construction to check thequality and progress of work.

ANNEX 3APPENDIX 3

BANGLADESH

SECOND FOODGRAIN STORAGE PROJECT

Prequalification of Contractors

1. Construction under the project would be done by prequalifiedcontractors. Annual invitation for prequalification would be published inat least 3 widely circulated newspapers and also posted in all PWD offices.Prequalification documents would include a brief description of works, timeschedule, broad conditions of contract, sources of material from PWD, aquestionnaire of information required and proposed method of evaluation ofinformation received.

2. The following information would be necessary:

(a) What is the volume and location of construction business hehas done in the past five years.

(b) Name and address of the four largest customers in the lastthree years and evidence of satisfactory performance.

(c) Contracts to which he is presently committed.

(d) List of equipment and vehicles available to him.

(e) List of key personnel available with information on experienceand who would be placed in charge of the construction withbio-data.

(f) A letter from bank where he does business, indicating hiscredit line.

(g) Statement of financial position and Income Tax Returncertificate.

ANNEX 4Page 1

BANGLADESH

SECOND FOODGRAIN STORAGE PROJECT

Paddy Marketing and Domestic Procurement

1. Paddy constitutes 90% of the foodgrain production, mostly grownon about 10 million small, fragmented and largely subsistence operations.Most growers sell significant portions of their crop immediately upon har-vest because of (i), the need for cash; (ii), the inability to dry or holdin storage for long periods or (iii), need to repay crop production or otherloans. They often have to buy back later for consumption at higher prices.However, only 20-30% of the production actually enters the market, the balancebeing retained in production areas. Growers have three marketing channels toconsumers: a) private middlemen; b) government procurement; c) cooperatives(Chart I).

A. Private Sector

2. The most significant channel by far is the private sector, handlingabout 80% of the total 2-3 M tons of domestic production that enters themarket. There are about 6,000 primary markets or bazaars, and about 2,000"haats" which are markets assembling on specific days of the week. There areabout 450 secondary markets, dominated by "Aratdars" who handle the entireoperation of buying, bagging, weighing, and transportation and, who alsoprovide credit to the "Beparis" (small dealers) who bring in the produce. Thecrop is sold without grading although price adjustments are applied for subjec-tive assessment of foreign matter, moisture, and other factors.

3. Post harvest farm gate prices are invariably depressed (Annex 1).Significant margin exists between the farmgate price and the consumer pricein the private sector channel because of the following factors:

(a) Poor transportation system which increases marketingcosts and reduces competition at the primary market level;

(b) Spoilage and loss, because of poor storage facilitiesand high risk of infestation and mold growth, especiallyduring March to October;

(c) The interest charge on funds tied up;

(d) Drying service rendered, especially in the Boro and Ausseason; and

ANNEX 4Page 2

(e) considerable bargaining power of the private traders whooften also provide production and other credit as wellas rent out land, combined with the growers need forimmediate cash.

4. The bulk of movement of paddy and rice is by waterways, which expandfrom 3,000 miles to 4,500 miles during the monsoon months. The road networkis poor; movement is slow and the scale of movement (20-30 maunds per bullockcart or 200 maunds per country boat) is inefficient. Moisture pick up duringslow river transportation creates a subsequent storage problem. A UNDP studyto prepare an inventory of storage facilities in the private sector is nowunderway. However, it is well known that private dealers do not have thephyscial facilities or the technical manpower or knowhow for efficient storage,essential in Bangladesh climatic conditions. Although reliable estimates ofexisting losses in the private-channel are not available, every agent involvedin the chain would admit to losing 2-5% under his custody. Cumulatively thisloss is estimated to be in the range of 10-20% of the throughput. Significantlosses must also be taking place in the stocks retained in the rural areas(by the grower or the large farmer/trader) a major portion of which must becarried over 8-12 months since almost 60% of the area is monocropped. How-ever, designing a specific program for improving private sector storagefacilities requires a more detailed examination. GOB should undertake astudy to prepare a suitable project for this important marketing channeland for improving on-farm storage.

B. Public Sector

5. Ministry of Food (MF) handles all the imported food grains, and alsoundertakes a program of domestic procurement. Most procurement is voluntary,with or without cordoning whereby shipment outside defined surplus districtsis banned. The purpose of the procurement program is to raise and maintainfarmgate prices at incentive levels, especially in the period immediately postharvest, in order to stimulate production. However, procurement has not alwaysbeen Eor the above purpose; it has often been undertaken to enable GOB to ful-fill its food distribution committments (in the urban areas) sometimes by com-pulsory assessment whereby producers having more than 10 acres are asked todeliver to Government or its notified agents, specific quantities of theirsurplus, computed in a specific manner. GOB future procurement policy whichwould emphasize the price support aspects of procurement and the potentialbenefits from its implementation are discussed in Annex 1 and Annex 9.

6. Government procurement operates through all 330 LSDs and CSDs, and150-200 special Temporary Purchase Centers (TPC) specifically opened for thepurpose. Purchases are restricted to a minimum of I standard bag (1 md 30seers of paddy or 2 mds of rice). The TPCs operate for a few months duringthe peak procurement season. Each LSD or TPC is operated by a lone purchasingofficer, and is assisted by a handling agent who furnishes the labor required

ANNEX 4Page 3

for weighing, bagging and stocking. Anyone wishing to sell to Government cando so and nominally preference is given to growers over traders; though thisrarely operates in practice. About 50-100 selected traders in a district whoare specifically appointed as Authorized Grain Dealers (AGD) by MF obstensiblyto improve the reach of the procurement effort into the primary markets,invariably obtain undue preference at procurement points effectively limitingthe competition at the primary market level, and thus reducing the impact ofthe price support program. They are required to pay the farmer stipulatedprocurement price less specific commission; and they are also required to sellall the grain they procure to Government. However, their compliance with theabove requirements is doubtful.

7. Government efforts to use the procurement program as a price sup-port mechanism suffers from the following constraints:

(a) farmer attitudes;

(b) limited access to growers and timing of procurement activities;

(c) inefficient handling at purchase points; and

(e) payment difficulties.

8. The past practice of compulsory procurement and fixing assessmenthas led to a reluctance to deliver to GOB in case such deliveries are usedto raise future assessments. As a result, farmer attitude to selling to MFis typically one of suspicion and it is not likely that all farmers would bewilling to sell to MF. Nevertheless, present policy of the willingness topurchase at an incentive price, especially immediately post harvest and theabandonment of compulsory procurement, are expected to gradually improvefarmers attitudes.

9. On an average about 250 villages are served by an LSD/TPC, whilea "haat" or a "bazar" serves on an average about 11 villages. This high-lights the magnitude of the access problem. The transportation system isalso difficult. Even in the dry areas of North Bengal where road transpor-tation is the best, not all thana headquarters are accessible by truck-able roads let alone union headquarters and villages. Normal means of trans-portation would be by bullock cart, and a 5-8 mile round trip could take awhole day. The current 8-10 miles procurement center range is undoubtedlyprohibitive in time as well as in expense (since a hired bullock cart wouldcost at least 0.50 Tk/Md/mile). TPCs, by improving access, have naturallybeen most successful. However, TPC facilities are poor and also small (200mds). With peak arrivals of 1000-3000 mds/day, their ability to continueprocurement uninterrupted depends on their ability to ship out quickly. Thisis severely limited by the few bullock carts (8-15) that are available and bytheir limited carrying capacity (20 md). At the same time, however, indis-criminate expansion of TPC to increase access would not be feasible untilpayment difficulties (para. 12) are overcome.

ANNEX 4Page 4

10. Inefficient handling of a seller at a purchase point contributessignificantly to their unwillingness to sell to MF. Chart II depicts a sel-ler's typical experience through the arrival and purchase transaction. Thelone purchase officer has to personally supervise all operations, test, re-cord and issue payment certificate. Roughly 90 minutes are spent per 50 bagtransaction, and since transactions are sequential, a three day wait iscommon. In addition, Aman procurement starts only in January, when mostarriving paddy meets the rigid moisture standards. However, by then mostgrowers have already sold their surplus to meet immediate cash needs and MFthus loses an apportunity to support prices.

11. MF Purchase standards are prescribed mainly with a view to reducingrisk of subsequent losses given the poor storage facilities and ineffectivepest control, are too complicated and rigid to stimulate procurement. Atleast four quality discounts apply to the official paddy price. Withouttesting devices assessment is naturally subjective. Fear of arbitrary dis-counting exists. Although the testing methods are similar in the traditionalmarket, the fact that the seller can go to another dealer without great dif-ficulty, offers some protection. Also, MF has been reluctant to purchasehigh yielding varieties (HYV), mainly grown in the Boro season, because theyare difficult to store if moisture exceeds 12%. Even Aman HYVs are procuredreluctantly. Procurement of the Boro crop began in 1975, but was restrictedin 1976, since drying to even 15% moisture is difficult given the temperature/relative humidity combination prevailing at harvest (Annex 5). Mission esti-mates that 10% losses take place in the Boro and Aus procurement because ofpoor facilities and improper drying.

12. Payment mechanism is another major deterrent to growers. Thefour copy "weight quality stock certificate" (WQSC) issued to the seller isexchangeable for cash at a designated bank, but the process is often ineffec-tive because (i) bank operating hours are restricted; (ii) the bank's copy ofWQSC is not received in time; (iii) the bank branch has exhausted its creditceiling (para 13); or (iv) has no liquid funds; (v) the officer whose signa-tures are recognized at the bank is not available to sign the WQSC in time.Recently, banks have been operating payment booths at LSDs to help MF expeditepayments, and their cost is recovered by a special charge of 0.75% for paymentsmade at these booths. However, ensuring availability of adequate cash at thesebooths has been a problem, mainly for security reasons. MF undertakes toarrange for an armed escort and an armed guard from the police, but is notalways successful.

13. Working capital needed by MF for procurement operations is providedthrough designated commercial banks by the Bangladesh Bank which fixes quar-terly limits on the total commercial bank lending for MF procurement opera-tions. The speed of MF repayment of commercial banks for food procurementadvances determines the magnitude and duration of commercial banks advances.Commercial bank receive a small margin (about 1/4%), but 100% refinance fromthe Bangladesh Bank. Table 1 gives the overall limits set, their distribution

ANNEX 4Page 5

between banks and the actual advances outstanding for 1975-1977. The bankstogether have never exceeded the overall limit, reaching only 77% of it atpeak. However, individual banks routinely operate to within 95% of theirlimit; and in January 1976, two banks did in fact exceed their sanctionedlimits and this resulted in a country wide stoppage of procurement operations.Since then, commercial banks have established limits on the procurement lend-ing of their individual branches, but this had led to problems of its own,though in limited geographical areas.

14. Project Proposals

The project would seek to streamline the procurement system toencourage more growers to benefit from the GOB support price by:

(a) improving access to the procurement system;

(b) improving handling system and procurement operationsand simplifying of purchase standards;

(c) providing drying facilities to MF;

(d) streamlining payment arrangements.

15. All existing TPC's with high procurement records in the past butwith inadequate storage facilities would be converted to "pucca" facilitiesproviding minimum of 2 week holding capacity. Detailed criteria are in Annex2. This would enable procurement to continue uninterrupted by the consider-able difficulties in movement of procured stocks.

16. Turnaround at purchase points would be improved by establisingat least two parallel purchase lines. Re-organization of all MF field staff(Annex 7) would permit those inspectors normally responsible for rationing toassist in the procurement operations since distribution work during these postharvest months would be litle.

17. Minor equipment and facilities would be added to reduce the 90 min-ute transaction time by speeding up weighing and rebagging - which togethertake almost 50% of the total time. The procurement (and drying) systemconsultant (TOR in Annex 5) would undertake a time and motion study of theworking of a purchase point to recommend time reducing changes in the systemoperation, with addition of minor hoppers or bagging machines, if necessary.First attempt would be to streamline the existing system, but all aspectsof the present procedures would be questioned for their relevance. Specif-ically, the usefulness of standard bags, and inspection of the entire lotrather than using probes for sampling, would be investigated. Testing equip-ment for moisture and foreign matter would be placed at each LSD/TPC, withsuitable back up. A set of standard moisture meters would be maintained atthe proposed Zonal Testing Laboratory (Annex 5) and sent around to various LSDfor calibration. MF Inspectors would also be responsible for checking the

ANNEX 4Page 6

accuracy of the moisture meters. Sellers would be allowed to witness sampletesting; calibration charts would be boldy displayed. Detailed sampling andtesting guidelines aready included in the MF procurement manual would berevised, accordingly. Training in new methods would be organized by theconsultant.

18. The present four discount pricing could be replaced by a 2 factorsystem (for moisture and foreign matter) with the other two factors havingonly maximum cutoff points, but no discounts within acceptable range. Thiswould expedite handling without serious risk of receiving unwanted stocks.Present system of discounts for less than fair average quality (FAO) would bereplaced by a price for minimum acceptable quality plus premia for betterquality. The minimum acceptable quality (MAQ) could be defined as:

Subdivisions SubdivisionsWithout Dryers With Dryers

Moisture 14% 20%FM 5% 5%Admixture 50% (no limit) 50%Immature Grain 3% 3%

and suitable premia, offered. MAQ base price would be about 70 Tk if FAQbase is at 80 Tk as now defined (however for same quality, price paid would besame). At locations with dryers, the maximum moisture permissible would berelaxed to 20% and MAQ base price would be about 59 Tk.

19. Procurement staff would be trained to detect unacceptable levels byeye examination, but objective test procedures would also be specified. Acomplaint book with numbered pages, and a prepaid postcard would be availableat each purchase point for effective feedback from sellers. Procurementchief inspectors would be provided with vehicles to enable them to superviseeach procurement point at least once a fortnight. Details of the fortnightlysupervision report of the procurement chief inspector, and its subsequentconsolidation and analysis would be provided. Drying facilities to be providedunder the project are discussed in Annex 5. These would be available for bothAman and Boro procurement, and also enable Aman procurement to start in December.

20. Payment procedures through commercial banks would be improved. Atnew godowns being built under the project, safes would be provided. Gov-ernment would also ensure that adequate security support is available tocommercial banks to deliver cash to and operate payment booths. The numberof banks for procurement payments in a sub-division would be restricted to oneto simplify escort problems and make field coordination more effective (Annex7). MF would also ensure that signatures of at least two officers are recog-nized at the bank for signing WQSC. The procurement lending ceilings onindividual branches, which are recognized to be purely administrative, couldbe eliminated by expediting repayments to banks for procurement advances andcreating a mechanism for prompt repayment should the commercial bank exceedthe ceilings prescribed by BB. MF should consider the creation of a separate

ANNEX 4Page 7

category in its account with the Bangladesh Bank (BB) to enable the latterto make automatic and prompt repayments on behalf of MF to the commercialbanks when ever necessary to enable them to keep their (internal) procurementlending within the limits. The necessary size,of this new internal procure-ment account would vary over the year since procurement is most active inJanuary-March. Its minimum size should be at least equal to the value ofmaximum quantity procured in any month in that quarter in the preceding threeyears. During the busy January-March quarter of a year, its size is estimatedto be about Tk 70 million.

21. Commercial banks are currently experimenting with establishingfixed-days-of the-week banking services in currently unbanked Union head-quarters and if successful this operation is likely to be expanded. Suchavailability of banking service in remote areas would help in overcoming theone major difficulty over timely payments that hinders the establishment ofmore TPC in the interior (para 9). However, the likely procurement level atthose points would not warrant a full time TPC. Instead, procurement staffcould follow the same pattern of operating 2 day a week purchase center,despatching the procured stock to the nearest LSD by contractor and shiftingto another location in the same general area with the bank offices. This wouldenable the procurement program to influence the market price closer to thefarmgate.

22. Project costs (Table 2) for this component cover equipment (weighscales, moisture meters and sampling devices); vehicles (for procurement staffincluding motorcycles and motor launches); the consultant's local counter-part; and training of about 400 MF procurement staff (1 basic I week coursefollowed by 3 refresher courses of 2 days each over the four year period).

C. Cooperative Marketing

23. To benefit from economies of scale, and to retain some of themiddleman's margin, farmers, under official encouragement, have formed coop-eratives to market paddy for member growers. About 4,000 multipurposesocieties and about 200 Thana Central Cooperative Associations (TCCA) areentitled to market paddy, and at various times some 1,000 multipurpose socie-ties, and about 50 TCCA, have attempted to do so. Successful experience isscanty, main drawbacks being:

(a) small volume, typically only a few larger farmers ina village participate;

(b) lack of technical knowledge or trained personnel tooperate any sophisticated marketing system;

(c) lack of physical facilities like storage godowns;

ANNEX 4Page 8

(d) lack of a well though out system of procurement,transport, storage and marketing;

(e) absence of an apex national federation to guide andcoordinate.

Thana Central Cooperatives

24. In 1975-76, about 50 TCCA tried to operate as Authorized GrainDealers (AGD) for MF, but only 16 were given recognition, almost half inthe project area. They marketed about 10,000 maunds of paddy through ME.Some TCCA also attempted open market sales, but had little success becauseof poor marketing expertise. Modern rice mills, owned by some TCCA (Comillaand Rangunia) are not operational partly because of spare parts, and engi-neering difficulties, but mainly due to difficulties in entering into amiddlemen dominated marketing channel. Marketing to consumers directlyrequires an expertise the TCCA has not been able to command in the absenceof an apex marketing organization. Cooperative marketing could assist inthe implementation of GOB program of raising farmgate prices by making theprocurement system more accessible to the farmers collectively.

Project Proposals

25. The project would initiate a pilot project, through the IntegratedRural Development Project (IRDP) organization, to develop the marketing expert-ise of selected TCCA. Ten TCCA would be selected in the project area. Keydata on 18 TCCA which meet certain minimum criteria 1/ is in Table 3. Thedevelopment would be in three phases.

26. Phase I would involve the development of a system of collection,sampling, testing, bulking, record keeping, transporting and payments whichwould be perfected, with TCCA marketing through MF. Assurances would beobtained from GOB that all project TCCA (those participating in the initialpilot project, and those subsequently adopting the procurement model devel-oped) would be given the option to sell to LSD's, and that a day of the weekwould be fixed for procurement from TCCA alone. Details of the system wouldbe TCCA specific, but broad features would include:

(a) Fixed collection days and times at Agriculture CooperativeSociety (KSS). Each farmer's lot would be sampled, weighed,sealed and marked, then all lots bulked and taken to TCCAas KSS lot. Record keeping register that enables quickverification of operations would be developed. Sample

1/ These were: previous paddy marketing experience, possession of a stor-age godown, good production area, above average savings, good creditrecovery and effective management.

ANNEX 4Page 9

testing would be done during the day, and samples re-tained for subsequent confirmation if necessary;

(b) arrival at TCCA office, sampling, re-weighing (if necessary),testing and record keeping;

(c) transportation to LSD, ensuring arrival at fixed timeand day;

(d) payment to KSS and farmers, keeping in mind farmers' needfor (part) cash, difficulties in en-cashing checks atvillage and union HQ, and that fact that most farmersvisit Thana headquarters once in a week;

(e) training of 200 KSS/TCA staff in the system operation;

(f) continuous monitoring and improvement of the system;

(g) a system of supervision of KSS work by TCCA officers.

27. TCA project officers at Godagari, and Bogra are presently involvedin developing the details of the initial pilot system for discussion with IDAin September. The target is to initiate project marketing activities of atleast 2 TCCA (out of Table 3) by November 1978.

28. Under Phase II TCCA would experiment with holding a members' paddyin storage for selling in the open market when prices improve. This phasewould require storage facilities, pest control training and equipment, andadequate working capital. Selection of TCCA who already have some storagefacilities, would assist in the shift from Phase I to Phase II, but the shiftwould not be before year 3 of the project. Pest control training would beavailable through the project (Annex 5).

29. Phase III: would be a development of the future, and involve TCCAin million for itself and selling rice to consumers. Here, again selectionof TCCA would already have some milling facilities would help. Previousexperience at Rangunia and Comilla have established that this phase shouldbe entered into with great caution, only after the Phase I and II have beenperfected, and an assured marketing outlet has been established, possibly bythe creation of an apex marketing institution marketing through consumercooperatives.

30. Project Costs for this component are in Table 2. By selection ofTCCA that already have storage, initial investments need have been kept to aminimum. Equipment needs are for:

(a) Weighing and testing at 200 KSS likely to participate;

(b) motorcycles for 10 IRDP project officers for supervision;

ANNEX 4Page 10

(c) technical assistance, a counterpart specialist, and trainingof KSS/TCCA staff.

31. Implementation Steps

(a) Select TCCA/KSS based on criteria, in project area(Nov 77).

(b) Write up initial system for each TCCA/Map/ ActivitySchedule (Jan 78).

(c) List of equipment/purchase (Mar 78).

(d) Record books, charts, posters (May 78).

(e) Training, etc. in testing, sampling, weighing,etc. (Sept-Oct 78).

(f) Fix days (Oct 78).

(g) Start in 2 neighboring TCCA (Nov 78).

ANNEX 4Table I

BANGLADESH

SECOND FOODGRAIN STORAGE PROJECT

Lending Limits and Actual Advances of

Commercial Banks for Internal Procurement(TK Million)

197'6 1977

--- lQ-- … Q----2Q-4Q--------- -1Q--- 2Q-4Q

Bank No of Branches Limit Max.Advance Limit Max Advance L M L MIn Project Area

Sonali 134 90 - 70 26 150 95 135 N/A

Rupali 80 40 52 20 2 35 24 35

Agrani 93 40 94 1/ 40 1.5 70 76 80

Janata 130 50 112 1/ 40 3 90 84 90 "

Uttara 61 40. - 15 0.2 20 11 20

Pubali 31 40 20 15 8.5 25 26 30

530 300.0 278 1/ 200 41 390 316 390 "

1/ Exceeded individual bank's limit, but overall banking system limitwas not exceeded. Food procurement had to be stopped for a 1 week periodin January 1976.

August 2, 1977

BANGLADESH

SECOND FOODGR4J1N STORPGE PROJECT

Pro1 ct Coat - Godown Equipment & Procuremant Systoms

Unit Cost Total Year 1 Year 2 Year 3 Year 4 Total X of Foreign(Tk) Unita (Units) Tabe '000 Cost Exchanse

LBSD TPCA. Equipment

Weigh scales- 72,800 500 (500) 36,400 - - 36,400Moisture Meters (Inc 22,400 225 - (225) 5,040 - - 5,040spares) 2/

Sieves, sample pans, probes, 9,400 225 _ (225) 2,120 - - 2,120thermometers, agnifyingglass, etc.

Base Cost Sub-total1 43,5600 43.560

Price Contingencies 6.800 6,800 37

Componen, Sub-total - 50,360 - - 50,360

B. VehiclesProcurement Staff: 4x4 & 220,000 35 - (35) 7,700 - - 7,700Launches 3/

Procurement Staff: Motor- 27,000 40 - (40) 1,080 - - 1,100cycles 4/

Consultants: Local 4x4 220,000 1 - (1l 220 - - 200

Base Cost Sub-total - 9,000 9 g 000Price Contingencies - 1,400 - - 1.400

Componec.t Sub-total - 10,400 - - 10,400 50

C. Training

Procurement Staff 5/ 200/.a k. 800/n k. (200) 40 (200) 40 (200) 40 (200) 40 160

Base Cost S.b-total 40 40 40 40 160Price Contingencies 3 6 10 13 30

Component Sub-total 45 45 50 55 190 0

TCCA PILOT PROJECT-

D. EquiptentWeigh Scales- (200 Roman, 10 7,940 210 - (210) 1,670 - - 1,670

Platform)Moisture Meters (Quick Test) 8,160 200 - (200) 1,630 - _ 1,630Moisture Meters (Box Type) 22,420 15 _ (15) 340 - - 340Sieves 6 Minor Equipment 8,000 200 - (200) 1,600 - - 1,600

Base Cost Sub-total - 5,240 - - 5,240

Price Contingencies _820 = _ 820

Compono:st Sub-total - 6,060 - - 6,060 41

E. Vehicles

TCCA Project Officer Motorcycles 27,050 10 - (7) 270 - - 270

Base Cost Sub-total - 270 - - 270Price Contingencies - (30) 42 - - 42

component Sub-total - 312 - _ 312 50

F. Training

KSS/TCCA Staff 8/ 150/D k. 500/n wk. - 40 40 - 80

Base Co,st Sub-total _ 40 40 - 80Price Contiageacies - 6 10 - 16

Compoment Sub-total - 46 50 - 0

TECHNICAL ASSISTANCEInternatiomal ExpartLocal IExprt 4,000/mo 48 _ (12) 48 (12) 48 _ 100Local Trawl 2,000/mo 48 _ (12) 24 (12) 24 - 50Pilot Study Materials - - - (-) 260 (-) 260 (-) 260 780Private Sector Storage Study 78,000/mo 36 _ (12) 940 (12)940 (12) 940 2,820Local rravel 2,500/mo 36 _ (123 30 (12) 30 (12) 30 90

Base Coat Sub-total - 1,300 1,300 1,230 3,840

Price Contingencies - 205 315 405 925

Component Sub-total - 1,505 1,615 1,635 4,765 88

Base Cost Sub-total 40 59,450 1,380 1,270 62,140Physical Contingencies - - - -Price Contingencies 3 9,277 335 420 10,035

9/PROCURPMENT SYSTEM TOTAL COST - 45 68,727 1.700 1, 700 72,175 40

1/ one at each godoun.2! 2 at each LSD plus another 100 for future TPC; one quick test and one box-type.3/ For: DCF, ADCF, SCF, RCF, DRCF; any existing vehicles in service would be moved

to other districts outside project area.4/ FPr: Chief Inspectors working on procurement operations.5/ 1 Basic and 3 refresher courses (Total 2 webks) for 400 staff.6/ Por 20RCC per TCCA and 10 TCCA in pilot project.7/ Roman for KSS (200) and Platform for TCCA (10).8/ 200 XBB staff for 1 basic (1 week) and refresher course.9/ Duties and taxes are estianted at 54% of total, mainly om equipment and vehicles.

Asiust 2, 1977

BANGLADESH

SECOND FOODGRAIN STORAGE PROJECT

Data on Potential TCCA for Pilot Project 1,

Date of Area Population No.of Godow 2/ 1975/76Date of Area Population No.of Godown -/ Marketing Savings Share

District Name of TCCA Registration Sq.Mi. (000) KSS Members (tons) (TK'000) (TK'000) Capital

Bogra Gabtali 1971 132 260 134 6,160 65 2 70 64Dhunat 1971 95 170 207 5,650 65 - 55 80Shariakandi 1971 181 200 120 3,250 240 - 81 61Sherpur 1977 115 135 152 4,360 65 - 105 60Kotwali 1973 157 340 124 3,880 65 58 76 46

Dinajfiur Biral 1973 138 130 95 2,195 65 7 43 30Panchagar 1974 103 90 38 1,175 None 100 55 25

Rajshahi Raninagar 1972 95 103 103 3,690 65 1,531 76 65Atrai 1972 106 112 141 2,830 65 104 49 49Naogaon 1972 106 215 144 4,650 240 587 88 66

Mymensingh Muktagacha 1973 121 219 175 5,350 65 34 79 68Trishal 3/ 1974 N/A N/A 142 4,930 65 65 54 69Gaffargaon - 1973 154 269 267 9,820 None 48 119 159

Rangpur Utipur 3/ 1977 209 291 74 1,680 None - 34 19Gobindgonj 1974 176 272 74 1,800 240 36 46 21Pirgonj 1974 160 201 78 1,780 None - 59 30

Sylhet Balagonj 3/ 1973 151 168 65 1,530 65 5 44 58Habigonj - 1973 95 151 77 1,220 65 10 74 69

1/ To assist in selection of two for the first year and 10 altogether; others maybe considered by consultant.2/ Recently built with help of CARE.3/ Reported higher than average overdues; overdues and lending activity would be considered in selection.

August 2, 1977

m >4

ANNEX 5Page 1

BANGLADESH

SECOND FOODGRAIN STORAGE PROJECT

Control of Storage Losses

MF Pest Control Operations

1. In Bangladesh, conditions favorable for rapid growth of insectsand fungi, exist for 7-8 months in a year (Annex 6, Table 1). This poses amassive pest control problem, which is further aggravated by the sub-standardnature of the storage facilities used in many locations.

2. MF inspection and control operations have become particularlysignificant during the last three years, since for the first time, locallyprocured paddy stocks in Bangladesh are being held in storage at dispersedlocations for several months, as a result of greatly increased procurement;while previously most stocks consisted of dry imported rice at few large CSDs.As procurement effort builds up, inspection and control requirements atdispersed LSD's would become much greater.

3. The Directorate of Inspection, Control and Training (DICT) spear-heads the function of detection, fumigation and disposal of deterioratedstock through 62 pest control squads and inspection squads, under 4 regionaloffices. All CSD's have a permanent squad, while on an average 15-25 godowns,or 3-8 LSDs are covered by one squad (Table 1). A central testing laboratoryat Dacca has facilities for both physical and chemical analysis for foodgrainsand services the entire country. Improving the ability of DICT to respondto routine and emergency fumigation requirements would be critical to thesuccess of the project.

4. Constraints on the DICT ability to provide adequate project sup-port are: a) supply of chemicals; b) mobility and equipment; c) staff training.Adequate stock of chemicals is a key requirement. Reported delays or absenceof fumigation in the 1975-76 was due to lack of chemicals. Present stockposition for malathion appeared satisfactory; but phostoxin and methyl bromidestocks are likely to run out by end 1977. Bilateral assistance has recentlybeen available for chemicals, and commercial imports are also undertaken fromtime to time. However, delays in availability of chemicals can cause gravelosses.

5. DICT squads are unable to respond adequately to the fumigationneeds of LSDs because of a total lack of mobility. Toxic chemicals withpungent odors can not always be carried on public transportation, if avail-able. The need to move equipment with each squad further slows response.Norms 'specified for frequency of fumigation are adequate, 72 hours beingthe maximum response time, 2 months the norm for fumigation and fumigation

ANNEX 5Page 2

of gunnies a standard practice. However, only 1.5 M tons of actual stockscould be fumigated in 1976-77 giving a fumigation frequency only once in7 months. This was mainly because of squad time lost in transportation(Table 1). Pest control squads also need wide variety of equipment in goodworking conditions ranging from gas proof sheets, sprayers and dusters toprotective gloves and gas masks. Most equipment for application of chemicalsis in the need for replacement; no gas masks are in working order. Equipmentof various makes are used in the same subdivision, making operator trainingand maintenance difficult.

6. Inspection squads too are in need of simple sampling and physicalmeasurement equipment to facilitate work. Frequency of inspection has to beincreased from the present once in three months to once in a month. Fastissuance of diposal instructions (based on inspection samples from doubtfulstocks), is critical to reduce cross-infestation as well as release storagespace for fresh stocks. DICT is seriously constrained in this field becausea) all disposal instructions must originate in the Dacca Central Laboratory;which has limited testing facilities, and, b) slow communication of testresults. An interval of 1 month between sampling and actual disposal in-struction. is not unknown. Considerable further damage and possibly crossinfestation occurs in this time, and deteriorated stocks use up valuablestorage space.

7. MF suffers from a lack of staff fully trained in monitoring qualityand pest control operations. Bilateral assistance for overseas fellowshipsis presently available to MF. UNDP/FAO (under Project BGD72/017) is assistingGOB in establishing a Warehousing Training Center (WTC) to serve the publicas well as the private sector, starting initially with short term trainingof high and middle management level officers. The atttendance capacity ofthe Center is 50-60 trainees and the Center would train 700-1,000 officersover twenty months. However, the UNDP/FAO Project has its limitations asregards to supply of equipment, teaching staff and hence its ability toexpand field training simultaneously to all the project areas. UK-ODM arealso providing 2-1/2 man years of training expertise during 1977-78 to train9 chief operators in the field pest control operations, who would train theoperators under them.

Project Proposals

8. Table 2 summarizes the proposed project investments in equipmentand vehicles for: (a) pest control squads and inspection; (b) equipment forCentral Testing Laboratory-Dacca and New Zonal Testing Laboratory-Rajshahi;and, (c) staff training. The project would fully equip the 25 pest controlsquads (each squad - one operator and 2 spraymen) that would be operating inthe project "core" area. Any usable equipment presently available in theproject area would be transferred to DICT units in other parts of the country.This standardization would facilitate the training of operators and spraymen,and also simplify the maintenance requirements. Each chief operator, and twopest control squads would be provided with one vehicle (in the "haor" areas

ANNEX 5Page 3

of Mymensingh and Sylhet, a motor launch) and trailer for carrying chemicalsand equipment. Two squads would generally travel together. Chief inspectorswould be provided with motorcycles.

9. The project would provide equipment and facilities for the estab-lishment of a Zonal Testing Laboratory, under the Regional Controller of Food,Rajshahi. The disposal instruction function would be delegated to this lab-oratory. The Dacca laboratory would supervise the Zonal laboratory. Reducedwork load at Dacca would enable MF to improve the service to other areas,including Mymensingh and Sylhet. Present procedures and forms for initiatingand issuance of disposal instructions would be simplified.

Training

10. The project would also provide 2 man years of technical assistanceto carry the UK-ODM initiated program for intensive field training into thefield in the "core" project area. It would include:

(i) 2 man years of quality control specialist(s);

(ii) one truck/van equipped for practical teaching (withprojection and audio-visual equipment) per 2 districts;

(iii) local travel costs for consultant;

(iv) training (travel, boarding and lodging) costs for trainees.

11. About 600 man-weeks of field training would be provided to MF andTCCA staffqas well as to private sector observers. TORS for the consultantand outline of the training program are in Appendix 1. Project assistancewould be channelled through the Warehouse Training Center to permit bettercoordination of training activities of various donor agencies and also enablethe project to benefit directly from WTC activities in other areas and assistin the development of the WTC training programs. However, the projectfinanced consultant would be first and primarily responsible for MF projectneeds, be a member of the Project Implementation Unit and the Project SteeringCommittee. All project equipment and vehicles would be placed with the WTCwith the right of first usage for the project implementation unit during theproject implementation period. Director WTC would meet monthly and coordinateclosely with the DICT in planning and conducting project field training.

Staffing

12. Additional posts would be created for staffing the new Zonal Testinglaboratory. Early appointment of the senior analyst (ZTL) would be essentialto enable him to plan for the establishment of the laboratory.

BANGLADESH

SECOND FOODGRAIN STORAGE PROJECT

Control of Storage Losses

Squads and Equipment for LSD's

Recommended AdditionalNo. of ---- Per Squadl/-- Godowns per Additional Squads for

District LSD 's Godowns PC Squads dodowns Vehicles 2/ Squad / Godowns LSD' s

Bogra 13 5 2 23 - 30 13

Dinajpur 14 66 3 29 - 40 do 1

Mymensingh 27 94 4 25 - 30 bO 1

Rajshahi 22 64 3 21 - 30 30 -

Rangpur 14 52 4 13 - 30 6O 0

Sylhet 22 46 3 15 - 25 50, 1

19

1/ A squad consists of 1 operator and 2 spray men (staffing is satisfactory)2/ Only Sylhet and Mymenshingh district have one vehicle for Chief Operator, but none for squads o,3/ Based on godowns per site, access problems and improved mobility with proposed vehicles/launches. mX

,- nJ

BANGLADESH -

SECOND FOODGFAIN STORAGE PROJECT

Control of Storage Losses: Ftcject Cost.s

(Tk,000)

Unit Coost Total u1nits Year 1 Year 2 Year 3 Year 4 Total Cast Foreign Exc.(Take) ( gnita) Taka '000 (Taka '000) (Taka'000)

A. BQUSPMEN'

() Pest Control Squads (per sq.)

CoS Proof Sheets (75'o75') 6,390 6 _ (6) 38 _ - 38Mower Sprayers (12 gal.) 13,500 2 _ (2) 27 _ _ 27Hand Sprayers (3 gal.) 2,570 2 - (2) 5 - - 5Dusters (Power & Hand) 4,370 4 - (4) 17 . _ 17Fost Poop 1,030 1 - (1) 1 I -

Gas saSks, spare resisters,glooes 4,370 4 - (4) 17 _ _ 17

Accessories and spares 20,930 1 - (1) 21 - - 21

Sob-total per squad - 126 - - 126Slb-total for 25 squads 126,000 - - - - 3,150

Base Cost Sub-total 126,000 - 3,150 - 3,150

Cooponent Cost Sob-total - 3,640 - - 3,640 50%

(ii) inspection

Sampler and Siereo 1,090 15 _ (15) 16 - - 16Physical - atance 7,090 15 _ (15) 105 - _ 105

B.so Cost Sub-total - 120 - - 120

Pri, Contingenties - 20 - - 20

C-oponent Cost Sub-total - - - - 140 50%

(iii) Testing Laboratory: Dacan

Brokes Separator 2,700 5 - (5) 14 - - 14Lab Type Floor Mill & Grinder 15,970 7 - (7) 110 - - 110Evaporators 27,000 - _ (-) 27 - 27Accessories for Chromato-

graph 40,000 - - (-) 40 - - 40Spores for nsw and eoioting

equip-ent 45,000 - - (- 45 45

Base Cost Sob-total 236 - - 240

Prior Contingencies - 40 - - 40

Coaponent Cost Sob-total - - - - 280 466%

(iv) NLb Z:oal Testing Let:

2 2L,aboratory Space (50'x50') 150/ft 2,500/ft - (2500) 375 - - 375Moisture Meters 2/ 20,500 10 _ - (10) 205 - 205Precision balances 8,180 3 - - (3) 24 - 24Shellers(Abr-sive(NcGill) &

Polishers 8,400 8 _ _ (8) 67 _ 67Brokens Separator 3,000 3 - - (3) 9 _ 9Lividers (Rotary & Mechan-

ical) 6,300 5 - - (5) 32 _ 32Pinor EqtoLpomet - - - () 75 75

Ba-t oot Slb-total 380 412 - 785

Physical Co-tingencies 20 - - 20

Prior ontingencies 75 65 - 140

Contingencies Sob-total 95 65 - 160

Component Sob-total - 475 480 - 955 27%

B. VEHICLESPeat Control Squads (Jeep &

Launches) 1/ 220,000 13 - (13) 2,860 - - 2,860Chief Operators (Pest

Control) 4x4 220,000 5 - (5) 1,100 _ _ 1,110Training Va.s (112 per

district) 440,000 3 - (3) 1,320 - - 1,320Chief Inspectors (sotor-

cycles) 27,050 5 - (5) 135 - - 135

Base Cost Sob-total 5,415 - - 5,415

Price Contingencies 845 - - 845

Cosponent Cost Sob-total - 6,260 - - 6,260 50%

C. TECHNICAL ASSISTANCE: PEST CONTROL

Conoultant for Field Training 930,000 2 (1) 930 (1) 930 - - 1,860Training Aids & Equipsent 2/ 40 - (-) 80 (-) 80 - - 160Local Travel & Training Va.

Operation 35 - (-) 70 (-5 70 - - 140Pest Control Training Cost 150/an wks. 600/x o,ks. (300) 45 (300) 45 - - 90

Base Cost Sob-total 1,125 1,125 - - 2,250

Price Contingencies 85 175 - - 260

Component Cost Sob-total 1,210 1,300 - - 2,510 90%

D. BASE COST SUB-TOTAL 3/ 1,125 10,400 412 - 11,900Physical Contingencico - 20 - - 20Price Contingencies 85 1,650 65 - 1,800Contingencies Sub-total 55 1,670 65 - 1,800

Pest Control Total Costs 1,210 12,100 480 - 13,700 55%

1/Including (a) 5% Headling and Cosaislcor tCP vs(b) Taxes and duties at rates applying on Jose 30, 1977.

2/ Including distillation type.3/ Duties and Tates ore estimated at 40% of totol cost.

ANNEX 5APPENDIX 1Page 1

BANGLADESH

SECOND FOODGRAIN STORAGE PROJECT

Draft Terms of Reference for Pest Control Field Training

1. Intensive training in the field, with major emphasis on demonstra-tion, would be carried out under the project. Trainees would include allMF personnel in the six core districts, starting with pest control operators,spraymen and godown managers. In addition, participants from the privatesector and cooperatives would also be invited.

Qualifications

2. The individual should have at least 5 years experience in foodgrainpest control operations in tropical countries. Individuals with actual fieldoperating experience with sack storage of paddy would be preferred. Theassignment would be for upto 2 years and would involve significant field work.

Outline of Training Effort

3. The expert would be assigned to the MF training center, but be pri-marily responsible for the project's pest control training needs. Trainingprograms and methods would be finalized by the consultant in conjunction withthe Director, MF. They would include:

(a) Principles of fumigation, i.e. dosage, effect oftemperature, safe practice, sealing requirements,useful life of fumigants and stacking hygiene;

(b) Practical suitability of different fumigants,economics, exposure period and frequency;fumigant mixtures;

(c) Risk of contamination, assessment of effectiveness;

(d) Use of equipment and its maintenance;

(e) Recognition of pests; and

(f) Environmental effect.

(g) Storage management, cleaning of cracks and cavities,disposal of deteriorated stock and sweepings.

ANNEX 5APPENDIX 1Page 2

Work Methods

4. Mobile teams, one for two districts, would be operated under threeselected chief operators who would have already been trained under the UK-ODMprogram. Training equipment would be carried with the training vans. Maximumof thirty trainees would be accommodated at one time. They would come fromneighboring LSD, and private sector operators (traders) would also be invited.Duration would be about one week; boarding and lodging would be arranged fortrainees for which a daily allowance would be paid. The consultant would havefunds to import or make relevant films, slides or posters. Refresher courseswould also be arranged in the 2nd and 3rd year. Lessons learned from theproposed special investigations of the UK-ODM technical assistance would befollowed up.

ANNEX 6Page 1

BANGLADESH

SECOND FOODGRAIN STORAGE PROJECT

Paddy Drying

1. During field ripening, grain moisture content begins to reduce, andwhen it reaches 25-30%, the kernel is fully mature. If harvesting, the idealmoisture content is about 22-26% if done mechanically, but harvesting by handis possible at lower moisture levels (16-18%). At these levels, the possi-bility of grain damage and field losses is minimized. However for postharvest storage of paddy, ideal moisture content is 12%. Reduction ofmoisture to this level can be achieved in different ways.

Sun drying

2. Sun drying is the most common means of reducing grain moisture,either pre- or post-harvest. Pre-harvest drying on the stalk is only possiblein the dry winter season. However, if paddy is dried below 16%, shatteringlosses increase. These losses, which can occur at the slightest wind orvibration during harvest and shoulder transportaion to the thresher floor,are estimated at 2-6% for the Aman crop. Scarcity of adequate drying floorspace or labor are prime reasons for pre-harvest field drying.

3. Post harvest sun drying is done by spreading a layer a few inchesthick, sometimes on a mat, but often directly on the floor. Frequent stirringby feet is done. Cracking results during high temperature periods in contactwith the hot road surface. Foreign materials get mixed in, and loss from birds,animals, and cars/bullock cart driving over is estimated at 2%. Drying timesfor 16% paddy varies from 4 hours on a hot road surface to 8 hours on a mudpath, but if sunshine is intermittant 2 days may be required. In the Amanseason the relative humidity/temperature combination is such that it is fea-sible to dry to 12-13% grain moisture.

4. Boro and Aus crops are harvested during the high rainfall period(Annex 1) and traditional sun drying is difficult because sunshine avail-ability goes down to 40% and the paddy invariably gets wet before it can bemoved away. In the low lying "haor" areas, where Boro is the only crop crop,there is an acute scarcity of suitable high grounds for sun drying. Inaddition, with relative ambient humidity about 75%, the equilibrium moistureis about 15-16%, sun drying beyond which is not possible. Thus, consequentprolonged storage in bulk poses grave problems. The Boro crop has been high-lighted as the crop with the highest growth potential (Annex 1). The newerIRRI high yielding varieties are also harvested during the rainy season andbecause of their higher yields, create further pressures on the limiteddrying floor space available.

ANNEX 6Page 2

5. IF procurement of these Boro varieties has been at best reluctant(Annex 3). Nevertheless, despite limited procurement effort and cautiouspurchasing standards because of previous years storage difficulties. In1975/76 about 23,000 tons of the Boro crop were still procured, about 80% fromthe three districts of Mymensingh, Sylhet and Rajshahi. Recently procurementhas been reinitiated with greater caution regarding moisture content, and withplans to ensure quick disposal. Major Boro procurement centers in the pastare given in Table 2.

Role of Parboiling

6. Parboiling is a much practiced process in which paddy is soaked incold water followed by boiling for 15-30 minutes. Its main advantages are:a) yield of head rice during milling increases by about 10-15%; b) keepingquality of milled rice improves; c) nutrition loss during washing and cookingis minimized. Parboiling is sometimes used to tide over inclement weather,when sun drying is not possible, since soaked paddy can be carried overfor 7 days. However, subsequent demand for drying is much greater becausemoisture reduction requirement is increased six times. Parboiling has ahigh fuel requirement, normally obtained by burning husk, and for handlingthe increased Boro and Aus production, large scale dependence on thisprocess would not be justified.

Mechanical Drying

7. In Japan, because of high yields and difficult drying conditionsabout 2 million mechanical dryers are used, mostly by farmers with only 2-3acres under cultivation. About 50% of the total paddy drying is done mechan-ically. However, in Bangladesh the need for mechnical drying has not beenseriously felt because:

(a) almost 55% of the crop is harvested in the season whensun drying is easy;

(b) production per farm is small, for which sun drying spacecan be found;

(c) surplus per farm is small so that most storage is on-farmin small lots which can be periodically areated and dried;

(d) traditional parboiling practices reduces urgency ofdrying, but make subsequent mechanical drying diffi-cult because of high moisture reduction load;

(e) low farm gate prices, which reduce the incentive toprevent losses.

8. Future production increases, especially in Boro and Aus throughirrigation and use of HYV, would increase yield and surpluses, and resultin greater difficulty in sun drying. MF failure to offer price support for

ANNEX 6Page 3

the Boro, IRRI varieties and Aus crops through its procurement program(Annex 3) is creating marketing difficulties. To assist in overcoming thisproblem, the Danish International Development Agency (Danida) in 1973 in-stalled pilot drying facilities in Comilla and conducted trials on differentdesigns and systems. Eight TCCA in the North West are now installing locallyfabricated small sack dryers for offering drying services to farmers. TheBangladesh Rice Research Institute has also experimented with dryers of dif-ferent designs. The cumulative experience with alternative designs and systemsof delivering drying services experimented so far in Bangladesh is that:

(a) drying has to be a part of an integrated marketingsystem;

(b) farmers would spend money for drying only when facedwith total loss;

(c) a joint farming situation, where the whole produce ismixed and dried (no lot identity) would be the mostappropriate; but farmers, on own account would notmix paddy, even to reduce losses;

(d) mechanical drying would not be desirable for thesituation where sun drying is possible (Aman)except when grain is going into long termstorage (12 months);

(e) dryers could be successful if pre-drying mixingand bulking is possible, entering paddy is below20% moisture, the farmers do not have option totake away half dried paddy, and explicit paymentsor labor input on part of farmer is not required;

(f) a batch type deep bed dryer would be well suitedto the situation in (e).

Project Proposals

9. A modified procurement system would be introduced at selectedLSDs in the project area. The system would include:

(a) Purchase of paddy up to 20% moisture (wet basis);

(b) suitable testing and pricing procedures (Annex 3) todetermine moisture, discount for moisture and recoverdrying cost;

(c) suitably located mechanical facilities for drying inbulk after lot-identity is lost and paddy is boughtby MF;

(d) operator training and system supervision;

ANNEX 6Page 4

(e) evaluation and recommendations for replication;

(f) technical assistance.

10. Drying costs (Table 2) vary with the size of the drying facilityand range from 12 Tk/md for a 500 ton seasonal throughput facility to 3 Tk/mdfor a 3,000 ton seasonal throughput facility. Price discounts would be appliedfor both the weight loss on drying and the drying cost. For 20% wet paddy, anestimated total discount would be 9.5 Tk (2.3 Tk for drying and 7.2 Tk forweight loss) using a 3,000 MT facility; and 10.2 Tk for a 1,000 ton facility.A single discount or premium factor of 1.2 Tk per 1% moisture would be usedbetween 12% and 20%. Paddy above 20% would not be accepted, to reduce burdenon the drying system and to encourage farmers to sun-dry as much as possible.

11. Prime areas in four districts where such dryers would be consideredis in Table 1. Other criteria to be applied to narrow down the selectionwould be, a) availability of electricity at site; b) availability of work-shop facilities; c) access and transportation for effective supervision;d) potential for increased boro procurement; e) availability of an operatorfrom the local area. Although it is possible that MF willingness to buy paddywith 20% moisture, will increase the purchases, initial design capacities wouldbe based on past procurement levels. Only 2 sites are expected to handle5,000 tons in a 60 day Boro season, with most in the range of 1,000 - 3,000tons. About 15 locations would be finalized, based on above criteria.

12. Driers with in-bin drying are recommended as the most appropriatetype of units to be used as a part of the MF procurement system. They aresimple to operate, can accommodate wide variability in daily arrivals, use lowdrying temperatures, and the larger bulk would reduce drying cost to reason-able levels. Appropriate systems in the 1,000 - 5,000 ton per season range foreach site would be chosen (Table 3). Total estimated costs are in Table 4.In the 1,000 ton system, since the bins are fewer than four, layer drying wouldbe necessary, but in other systems batch-in-bin drying with 3 -4' depth of paddywould be done. In-layer-drying would permit drying to begin with the firstlayer and layers of grain would be added periodically so that a depth of wetgrain exists beyond the drying zone. Eventually the bin would be filled anddrying continued till the drying zone has passed through the entire bed.Caution would have to be taken to ensure that retention time of any layer atthe likely temperatures and moistures is not too long to permit mold growth oroverheating. Batch in-bin drying would involve single layers (3-4 ), high airflow rates (8-15 CFM per bushel), and higher temperatures to achieve rapiddrying. Two batches would be done in a day. A moisture gradient would exist,but subsequent cooling and mixing would help reduce this gradient. Carefulloading would be required to avoid uneven layer height. Selection of dryingair temperature would be critical, adequate (1-2 hours) cool air areationwould be required prior to unloading to offset the effects of inadequatemixing. Given the mould growth-temperature-time relationships full bin dry-ing would not be recommended.

ANNEX 6Page 5

13. In order to simplify management, manufacturers of equipment wouldhe asked to provide instructions (given local conditions) that include asuggested filling schedule, maximum depth of wet grain above drying zone,measurement (or computation) of the depth of drying zone. Initial operatortraining would be the responsibility of the supplier; operator selectionwould be done by the drying system consultant who would also prepare suitablenomographs and charts to assist the operator in dryer management.

14. Terms of reference of the drying (and procurement) consultant(4 man-years) are in Appendix 1. During the Aman season, the consultantwould assist with detailed study of the MF & TCCA procurement procedures;and in the Boro season concentrate on the dryer operation and operatortraining. Two counterpart local consultants would be employed to assist theinternational consultant in drying and in procurement systems (Annex 4).Vehicles would be provided to ensure effective supervision. The consultantwould be able to test alternative system components (different heating fuels,indirect fired heating systems), operating methods (full-bin, cold air area-tion), should this appear warranted after the first year's operation.

Procurement and Installation

15. Design would be suitable for international tendering for equipmentwith local civil works executed by local contractors, through PWD, to sup-plier designs. Suppliers would be required to provide drawings for necessaryfoundation and civil works, and install and start-up the equipment once civilworks are complete at initial 5 sites. The counterpart local engineer wouldbe trained to handle subsequent installation under supervision of the dryingconsultant. MF would be responsible for shipment of the suppliers equipmentfrom the port of arrival to the site. Delivery of imported equipment wouldproceed independently of civil works completion. Erection of the last 10units would start after the evaluation of the operation of the first five.

ANNEM 6TAble 1

BANGLADESH

SECOND FOODGRAIN STORAGE PROJECT

Paddy Drying

Major Boro Procurement Points 1975 -

Procurement (Tons)District Sub-division LSD/TPC Boro (75) Aman (76)

Bogra Jaipurhat Jaipurhat 1,500 2,500Panchbibi 3,700 5,200Akkelpur 800 1,700Kalai 500 2,400Jamalgang 500 1,500

Sadar Mirzapur 600 2,000

Mymensigh Netrakona Thakurakona 3,000 1,400Mohanganj 2,100 900Jaria 400 4,000Kalmakanda 450 2,200Madan 2,300 500Khaliajuri 1,400 -Krishnapur 1,100 -Lepsia 1,600 -

Kishoreoanj Bhairab 1,600 -Bangalpara (TPC) 5,000 -Itna (TPC) 2,200 -Nikli (TPC) 2,600 -

2/Raishahi - Naogaon Naogaon n/a n/a

Mataj rhat " "Atrai ifMohisbathan "Raninagar "Niamatpur " Patnitola "

Sylhet Sadar Sadar 500 500Fenchuganj 500 600Kaligang 1,500 500

HabiganJ Amiriganj 3,600Bangiacheng 1,100 100Markuli 500

Sunamganj Sunamganj 1,500 600Derai 2,500Sachna 4,400 800Dharmapasa 2,600 800Tahirpur (TPCO 2,200Jagannathpur (TPC) 600 -Ghungirgaon 700 -Modhyanagar 800 -Joyosree 1,000 -

1/ No data for 1977 since Boro procurement had not started; no procurement of Boro in 1976.2/ Info. not available, but these locations are prime Boro procurement centers.

Am16

Table o

BANGLADESH

SECOND FOODGRAIN STORAGE PROJECT

Paddy Drying

Estimted Drying Cost

UNIT CAPACITY-TONS PER YEAR

500 1,000 2,000 3,000

Total Cost per Year (TK)

I. VARIABLE

a. Labor 1/

1. Seasonal 4,320 4,320 9,980 14,4002. Permanent2. Operators and

Mechanics 19,800 19,800 25,200 25,200

b. Fuel Burners 2/ 12,650 25,300 50,600 75,900

c. Electricity3/ 3,200 6,400 12,800 19,200

d. Miscellaneous - 3,200 4,500 8,000 11,000

TOTAL VARIABLE 43,170 60,320 106,580 145,700

Ir.FIXED

a. Depreciation / 23,000 23,000 35,000 35,000

b. Interest - 28,600 28,600 40,000 42,000

TOTAL FTXFD 65,900 65,900 95,000 98,000

III. TOTAL COST ANNUAL 95,400 111,900 181,580 222,700

IV. UNIT COST TK/MD. 6.67 4.17 3.39 2.76

17 Labor @ Tk 8/day; seasonal 9 per day for 500T to 30 per day for 3,OOOT unit; 3 operatorsand mechanic per unit @ 400 Tk/month year round;2/ Cost 10 Tk/gallon; 75% effeciency; calorific value 135,000 BTU/gall and 342,000 gallonper MT for 10% reduction;3/ Electricity Tk 0.6/Kw-hr; 10.656 Kw-hr /ton.4/ Miscellaneous e 8%, including maintenance.5/ Depreciation 8% for bins; 5% for others;6/ Interest @ 10% on total capital investment, on reducing balance basis.

BANGLADESH

SECOND FOODGRAIN STORAGE PROJECT

Paddy Drying

Dryer Equipment

Procurement (Tons) Drying Bins Fans Sweeps Elevators Pit Bin Auger Bin to Elevator

Seasonal Max Daily

1000 T 20 3 x 6 1/2 T 3 3 1 1 1 1

2000 T 35 5 x 7 T 5 5 1 1 1 1

3000 T 55 5 x ll T 5 5 1 1 1 1

5000 T 90 6 x 15 T 6 6 1 1 1 1

BINS Corrugated metal; (20 gauge) smooth punched floor over plenum; topcover with vents, man-hole, inside/outside ladders.

HEATERS Oil/Kerosene fired indirect/direct capable of raising air temperaturefrom 5-20°F.

FAN 7.5 hp (to deliver 2.5 cfm/ft at 8 foot grain depth of paddy) withtransitions to bins and a bypassable thermostat/humidistat, 220 v, 50 cycles/single phase motor.

(4os

ANNEX 6Table

ANGILAESH

SECOND FOODGRAIN STORAGE PROJECT

Paddy Drying: Project Cost(Tk,ooo)

ForeignUnit Cost Total Units Year I Year 2 Year 3 Year 4 Total Cost Exchange

(Units) Cost X

I. Equipmfentr1000 T Dryers 460 5 - (5) 2,300 - - 2,3002000 T Dryers 650 4 - (4) 2,600 - - 2,6003000 T Dryers 680 4 - (4) 2,720 - - 2,2705000 T Dryers 715 2 - (2) 1,430 - - 1,43025kw Generators2/ 225 5 - (5) 1,130 - - 1,130107, Spares - - - (-5 1,020 - - 1,020

Base Cost Sub-total - 11,200 - - 11,200

Physical Contingencies - -Price Contingencies - 1,747 - - 1,750

Contingencies Sub-total - 1,747 - - 1,750

Component Sub-total - 1,747 - - 12,950 76

3/II. Civil Works & Installation

1000 T Dryers 112 5 - (3) 336 (2) 224 - 5602000 T Dryers 156 4 - (3) 468 (1) 156 - 6243000 T Dryers 162 4 - (3) 486 (1) 162 - 6485000 T Dryers 175 2 - (1) 175 (1) 175 - 350

Base Cost Sub-total - 1,465 717 - 2,180

Physical Contingencies - 73 36 - 109Price Contingencies - 290 220 - 510

Contingencies Sub-total - 363 256 - 620

Component Sub-total - - - - 2,800 23

III. Vehicles For Experts-

Vehicles (4 WD) 220 2 (2) 440 - - - 440

Base Cost Sub-total 440 - - - 440

Physical Contingencies -Price Contingencies 33 _ _ _ 33

Contingencies Sub-total 33 _ _ _ 33

Component Sub-total = - - - 473 50

IV. Technical Assistance45/

International Expert 78 48 mos. (12) 940 (12) 940 (12) 940 (12) 940 3,750

Local Expert 5 48 ios. (12) 60 (12) 60 (12) 60 (12) 60 250Local Transport 2.5 mos. 48 mon. (12) 30 (12) 30 (12) 30 (12) 30 120

Base Cost Sub-total 1,030 1,030 1,030 1,030 4,120

Physical Contingencies - -Price Contingencies 77 161 248 338 824

Contingencies Sub-total 77 161 248 338 824

Component Sub-total - - - - 4,944 92

Total Base Cost 1,470 13,695 1,745 1,030 17,940

Contingencies:Physical - 73 36 - 110Price 110 2,200 470 340 3,120Sub-total 110 2,270 510 340 3,230

TOTAL COST-6/ 1580 15,965 2,255 1,370 21 170 70

1/ Including installation engineer from equipment supplier for six months toinstall the first 1l and train operator.

2/ For 5 sites where hook up to national electric supply grid may not be possible.

3/ Includes (i) 5°S handling and commission on CIF costs and duties prevailing on- June 30, 1977.4/ Vechicles would be included in technical assistance, but are shown separately here.

5/ International expert to assist with procurement system also (Annex 4 , Table 2 ).

6/ Total taxes and duties are estimated to be 15.5%.

ANNEX 6APPENDIX 1Page 1

BANGLADESH

SECOND FOODGRAIN STORAGE PROJECT

Draft Terms of Reference for Paddy

Drying and Procurement Consultant

1. Objective

To provide expert consultant services to the Government of Bangla-desh (GOB) for developing a phased program to improve food grain procurement,handling, conditioning (drying) prior to storage.

II. Qualification and Experience

The consultant must:

(a) Have been trained in sciences related to grain handlingand drying systems, especially for paddy/rice.

(b) Have specific expertise in grain (preferably paddy)collection, primary evaluation, mechanical dryingand storage, preferably in developing countries inthe humid tropics.

(c) Have experience in operator and technician training.

(d) preferably have worked with farmer marketing cooper-atives in developing countries.

(e) be available for a period of at least three years.

III. Specific Tasks

1. Advise GOB on selection and assist with procurement and installa-tion of the equipment for:

(a) Zonal Testing Laboratory

(b) Procurement centers

(c) Paddy drying

2. Advise GOB on site selection for location of 5 paddy dryers inthe initial stage, for the remaining 10 after evaluation of thefirst five and on numbers and types of facilities, location, andcapacities of future paddy drying and procurement centers.

ANNEX 6APPENDIX IPage 2

3. Evaluate various drying systems for technical and economicalsuitability.

4. Develop a training program to qualify GOB personnel onprimary (grain) quality evaluation.

5. Assist GOB in selection of operators to operate thedrying facilities, and develop a training program forthem.

6. With the help of a local counterpart engineer, closelysupervise the installation, start-up and maintenanceof the dryers.

7. Assess current and proposed procurement center proceduresincluding payments, testing, weighing, record keeping,and recommend objective and subjective procedures toincrease rate of take over at this point (Annex 4).

8. Assist GOB to develop a collection, testing and marketingsystem through the Thana Central Cooperative Associations(Annex 4).

ANNEX 7Page 1

BANGLADESH

SECOND FOODGRAIN STORAGE PROJECT

Organization and Management

A. Background

1. The Ministry of Food, which is at present headed by the Chief of AirStaff and Deputy Chief Martial Law Administrator, is responsible for govern-ment grain procurement, domestic and foreign, and for food distribution pro-grams, except for emergency relief food which is the responsibility of theMinistry of Relief. The staff of the Ministry is headed by the Secretary ofFood and the staff functions are vested with two Joint Secretaries (Adminis-tration and Distribution, Procurement and Development) who supervise civilservants with functional responsibilities under their respective jurisdiction.The Directorate of Food is the operating arm of the Ministry, responsible forday-to-day operational matters with broad policy and program determined by theministry.

Directorate of Food

2. The Directorate of Food is headed by the Director-General (Chart 1)who reports directly to the Secretary of Food, and its business is conductedby the following six Directorates:

Directorate of Supply, Distribution and RationingDirectorate of Movement and StorageDirectorate of ProcurementDirectorate of SilosDirectorate of Inspection, Control and TrainingDirectorate of Accounts

3. The Directorate of Supply, Distribution and Rationing (DSDR) isresponsible for public distribution and manages the 318 LSDs. The Directorateof Movement and Storage is responsible for import handling and for inter-regional shipment of MF food supplies and manages all the 12 CSDs. The 4 silodepots are operated by the Directorate of Silos. In the recent past, DSDR hasbeen the core of the entire food operation. The Silo Directorate was createdto administer the first grain storage project (Cr 381-BD). The Directorate ofProcurement was created in January 1977, prior to which domestic grain pro-curement was part of the responsibility of the then Directorate of Procurement,Distribution, and Supply. In view of the importance GOB of late has attachedto domestic grain procurement as a major instrument for accelerating agricul-tural development, the Directorate of Procurement is expected to play an

ANNEX 7Page 2

increasingly important role in the future. The role of the Directorate ofInspection, Control and Training (Annex 5), is to provide pest control andfoocgrain inspection and testing services. The Directorate of Accounts, witha large staff of Superintendents and Auditors, carries out audit of accountsof all the field operations.

Organization Structure

4. The structure and the relative strength of various directorates(Chart I) is a natural consequence of MF's historical role, having been con-cerned mainly with distribution of imported foodgrain which generally arrivedin good condition and were held in storage at CSDs for relatively shortperiods for use in chronically deficit areas. Areas with production surpluseshad sometimes to be used to feed the government distribution system, butotherwise did not require attention. Procurement efforts were not concernedwith impact on farmgate prices and production. DSDR has the most extensivestaff, under four Regional Controllers of Food (RCF) with each district andsub-division and having a district (DCF) and a sub-divisional controller offood (SCF). Generally 1 chief inspector, 10 inspectors and 8-10 store keeperswork in a sub-division. The recently established Directorate of Procurementin the major procurement areas operates through an Additional District Control-ler of Food and has a staff strength of about one quarter of DSDR, most of whomare recruited on a temporary basis. Similarly, the Directorate of InspectionControl and Training (DICT) operates in the project area without chief opera-tors in Dinajpur and Bogra, without chief inspectors in Sylhet, Rangpur andBorga, but with extensive staff at the ports and CSDs which have been thehistorical centers of activity. Regional, district or subdivisional staff ofthe various directorates are managed directly from Dacca, except for DSDR,where the District Controller exercises control over the SCF. Seasonality ofMF's distribution and domestic procurement functions are complementary, andoffer scope for more effective use of manpower than is possible with theexisting split of field responsibilities. Flow of communication betweenvarious field directorates, which is through the Directorate Headquarters inDacca, also leaves room for improvement. Field coordination between variousdirectorates and with other ministries could also be improved.

6. One serious operational deficiency is in the area of storage main-tenance. MF has to submit work requests, including very minor ones, on a jobby job basis to the Ministry of Works, which prepares bid documents and getsthe work done mainly through private contractors. The entire process is timeconsuming and involves excessively frustrating paper work, especially sinceMF has no engineering expertise whatsoever. This has also led to MF havingto accept from contractors, godowns which were not fully satisfactory. MostGOB civil works facilities are maintained by the Public Works Department(PWD) through annual contractual arrangements. However, PWD naturally doesnot accept godowns in need of major repair under this arrangement, onlyaccepting new godowns immediately upon completion of construction or rehabil-itation. This situation has led to the extensive disrepair found at mostdepots.

ANNEX 7Page 3

Future Needs

7. As a result of GOB's decision to operate an effective system ofdomestic procurement in order to raise and maintain farmgate prices at anincentive level (Annex 1), MF procurement (domestic and external) and distri-bution activities are most important to the overall national objectives ofstimulating foodgrain production. As GOB increases market intervention tokeep farmgate and consumer prices under some control, formulation of foodsector policies would require close policy and program coordination betweenMF and other ministries like agriculture, jute, finance, relief, planningcommission, Bangladesh Bank, commercial banks and national economic council.Following the recent IDA Food Price Policy Mission, GOB has established aninter-ministral coordination and policy formulation body for foodgrain sector.

8. To assist MF in its distribution related responsibilities a largebulk of information currently arrives daily at a central control room. How-ever, use of this information could be made more effective, and additionalrelevant information including data on procurement related activities wouldbe necessary and feedback on storage conditions, losses, condition of physicalvehicles and godowns etc., would be essential for effective decision making.Table 1 analyses the future information needs for various decision purposesof the different Directorates.

9. As a result of GOB's new emphasis, MF's activities have begun toshow a clear shift. Since internal procurement has built up and stocks arebeing held at dispersed locations, movement and milling planning has becomecritical, and pest control become more significant because of longer durationin storage of paddy which rarely comes in below 14-15% moisture. GOB hasrightly decided to actively procure Boro and Aus, but this would requiremuch more effective field coordination between directorates because of theremcite locations involved and the difficulty of drying these crops. Underthe project, these shifts would be further emphasized; and streamlining ofthe MF organizational structure and administrative arrangements would benecessary to enable GOB to cope effectively with the new situation.

10. Need for effective MF interaction with other ministries especiallyat the field level where impediments are many, would increase with increaseddomestic procurement. The lower grades of the District Controller of Foodin relation to the other district level officers of the Ministries with whomhe has to interact regularly (Agriculture, PWD, Commercial Banks) pose amajor constraint to the effective field management of the procurement pro-gram (para 3). Also, the number of banks providing procurement lending in adistrict (often 3 or 4) further complicate this problem. Coordinationwith field GOB security staff to arrange police escorts for cash carryingvehicles and payment booths of the many banks involved (Annex 4) also requiresattention.

ANNEX 7Page 4

B. Project Proposals

Project Steering Committee

11. A Project Steering Committee (PSC) would be established under theSecretary of Food and would meet as necessary, but at least quarterly, toreview progress of project implementation in conjunction with other ministriesand institutions involved in project execution.

The PSC would include: (a) Joint Secretary (Procurement);(b) Director General Food; (c) Joint Secretary - Finance; (d) Joint Secretary- Ministry of Agriculture; (e) Chief Engineer - PWD; (f) Bangladesh Bankrepresentative; (g) Project Construction Manager; (h) Director - IRDP.

A quarterly project progress report prepared by the Project ImplementationUnit and the Annual Report prepared by the Planning/Monitoring Cells (para14) would form the basis for the PSC discussion. A section under the JointSecretary (procurement) working exclusively on the project would providethe secretariat for PSC. Project consultants would also prepare quarterlyreports to the Chairman, PSC, outlining programs, problems, and plans of thespecific components for which they are responsible. PSC would also be respon-sible for reviewing the Annual Report of the Food Ministry (para 14) to besent to IDA within three months of the close of the fiscal year. Outline ofthe Annual MF Report, which would include an Annual Plan and focus on theoverall operations of MF, is in Appendix 4.

Project Implementation Unit

12. A Project Implementation Unit (PIU) would be set up under theproject in MF. It would be headed by the Director General of Food. PECU'sproject construction manager (Annex 3) would participate in the monthly meet-ing of the PIU, and would also be available for all construction deliberations.Director of Procurement, Chief of monitoring cell (para 14) would attend allmeetings of the PIU. PIU would be self-contained and have adequate staff to:

(a) Prepare quarterly progress reports based on fieldreports from RCF and deal with IDA; outline of thequarterly progress report is in Appendix 2);

(b) manage the project construction fund, maintain projectaccounts and prepare disbursement requests;

(c) handle project procurement including tender documentsfor the import of equipment and vehicles and assistanceto the Project Tender Committee in bid documentation,evaluation, ordering, etc.;

(d) handle recruitment of paddy drying/procurement and pestcontrol consultants and assist in their work, and coordinateexecution of project studies;

ANNEX 7Page 5

(e) propose to IDA location and annual construction planby February of each year.

A staffing plan for PIU, agreed with GOB during negotiations, is in Table 1.

Planning Cell

13. MF has recently established a Planning Cell, under the JointSecretary (Procurement) to focus on the formulation of long term plans andpolicy in the food grain sector. The analytical capability of this cellneeds strengthening a research officer and economist would be recruited underthe project to focus specifically on the determination of procurement pricesthat offer adequate incentive to producers to use yield increasing technology.

Monitoring Cell (HF)

14. With a significantly greater stock of local paddy at dispersedlocations MF would need to devote greater attention to planning, developingcost effective alternatives in stock movement, milling schedules, stockmanagement and disposal and monitoring their implementation. A Monitoringcell would be established to assist DGF in continually improving theDirectorate's performance. The cell would:

(i) review all information currently flowing into the MFcontrol room, and start collection of other operationaland cost information;

(ii) analyse data, and make specific recommendations to DGFfor increasing cost effectiveness;

(iLi) prepare the Annual Operational Report of the Directorateof Food which would include its Annual Operating Plan.

15. Terms of references and staffing plan are in Appendix 1. Theproject would finance the cost of the cell (Table 2). Chief of the cellwould report directly to DGF.

DGF Administration

16. To enable MF to cope effectively with the changed emphasis in itsresponsibilities under the project, administrative arrangements both at head-quarters, but especially in the field, need to be streamlined by establishingnew lines of operational command, and creation of key coordination pointsbetween MF and other agencies. Details of changes being considered by GOBand endorsed by the mission are shown on Chart 1 with dotted lines and in-volve a closer integration of the various functions of DGF (rationing, dis-tribution, procurement, movement, pest control) in the field under a seniorMF officer at the subdivision, district and regional level. Inspection staff

ANNEX 7Page 6

should however, remain independent at subdivision and district level, report-ing directly to the regional controller through their Assistant Director.Specfically, DGF should:

(a) place all staff of DP and DSDR in the subdivisionplaced under the SCF; this would enable procure-ment and distribution staff to assist each otheras the relative work load varies through the year;

(b) place all MF staff in the district, except the chiefinspectors and inspectors of the DICT, placed underthe administrative charge of DCF and the ADCF; thiswould enable more effective integration of pestcontrol operations with stock management, whileleaving the inspection staff independent.

(c) place regional staff of all directorates; i.e. assistantdirector DICT, account officers and storage and movementofficers at CSD, under the administrative control of RCF;

(d) have the performance of the RCF appraised by DP andDICT in addition to DSDR; of DCF by RCF and AssistantDirector DICT, and of SCF by Additional DistrictController of Food.

(e) ask the RCF to report to him for resolving issues thateffect more than 1 Directorate;

(f) create a godown maintenance cell under RCF to coor-dinate godown maintenance work with PWD to ensureeffective godown maintenance program;

(g) establish a Regional Testing Laboratory under theAssistant Director, DICT to assist him in issuingfaster stock disposal instruction.

17. In view of increased responsibilities and greater experiencerequired of individuals filling the modified RCF, DCF and SCF positions,and also to ensure their ability to deal effectively with field staff ofother Ministries, their positions need to be reclassified.

18. MF would undertake a review of the delegation of responsibilitybetween HQ and field with a view to transferring greater responsibility tothe strengthened field officers. However monthly distribution requirementswould continue to originate with DSDR in Dacca. Once the Zonal TestingLaboratory (Annex 5) is estblished, stock disposal instructions for N. Bengalwould be issued from there. Similarly, recommendations to the Director,Movement and Storage for intra-regional stock movements would originate withRCF. Areas for greater delegation would be identified by a management studywhich would also study the overall organization structure, and managementinformation systems. The study would be undertaken in 1978.

ANNEX 7Page 7

19. Distribution of staff between various districts should need tomatch the procurement and pest control work load rather than follow astandard pattern for staffing per district or subdivision. Dinajpur,which is the district with the highest procurement, suffers the most on thisaccount because it has only 2 subdivisions. Similarly, pest control staffingis biased towards CSD's. Additional pest control squads, chief inspectors(Annex 5) and procurement staff would be required. In addition, temporaryprocurement inspectors should be formally confirmed (Annex 4). New staffshould receive appropriate training in procurement or pest control beforebeing assigned to a job.

Field Coordination

20. Effective coordination between MF and field organizations of PWD,Ministry of Agriculture, IRDP, commerical banks would be crucial for thesuccess of the domestic procurement effort and the project. To ensure this:

(a) The existing district food coordination committee, wouldprovide this co-ordination with addition of representationfrom PWD, commercial banks, District Agriculture Officerand IRDP project director (in the TCCA pilot project area).The sub-committee should meet at least every quarter within2 weeks of the close of the quarter to review the quarterlyreport and the operational plan for the following quarterprepared by the DCF. (During the January-March periodit would meet every month);

(b) The existing subdivision food committee, similar in struc-ture and operations, would meet within 1 week of the closeof every quarter to consider the quarterly report and actionplan of the SCF.

Monitoring

21. Monitoring would consist of two components. First, project execu-tion would be monitored against the schedules and expectations defined atthe start (see implementation schedule) and revised as necessary. Secondly,there would be a continual review of the overall operations of the FoodMinistry. Monitoring of project implementation will be undertaken by theProject Implementation Unit in the form of a quarterly progress report tobe submitted to PSC and to IDA. Parallel internal reporting systems wouldbe established. SCF would prepare quarterly reports within one week ofthe close of the quarter for DCF, who would review these with ADCF and chiefoperators and each SCF within two weeks of the close of the quarter. SimilarRCF reviews with Assistant Director DICT, each DCF, executive engineer (main-tenance cell) would be held within three weeks of the close of the quarter.Routine PSC meetings would be held six weeks after the close of the quarterto discuss the quarter to discuss the quarterly report 1/ of DGF which would

1/ All reports would include an operational plan for the following quarter.

ANNEX 7Page 8

be prepared on the basis of a review of the quarterly report 1/ from theRegional Office by DGF with various DCF, RCF and Directors. Project con-sultants' quarterly reports to the Chairman PSC and a report 1/ from IRDPon the TCCA pilot project would also be prepared for PSC. The progress reportwill concern itself with disbursements under the project, physical implemen-tation, progress of contracts and orders and the filing of notes establishedunder the project, as well as detail current problems (details in AppendixII).

22. The monitoring of the overall operations of the Directorate of Foodwill be done by the Monitoring Cell (para 14) and would cover the operationsof each of the six Directorates. Details of the operation of the monitoringcell are in Appendix I, and the outline of the Annual Report (which wouldinclude an Annual Plan) is in Appendix II.

Evaluation of Benefits

23. An evaluation of the impact of the project upon production willbe attempted and it would be possible to measure the impact upon farmgateprices and incomes of foodgrain producers (para 24). Also project impacton the efficiency of the operations of the Food Ministry would be evaluated(para 25).

24. The impact of the project upon farmgate prices would be assessedby means of a continuous farmgate price monitoring system, which would alsoprovide a key input to the interministerial policy formulation committee. Asuitable consultant should be recruited - Bangladesh Institute of DevelopmentStudies (BIDS) would be competent to design this monitoring system whichshould address itself to:

(a) the actual level of farmgate prices, seasonal andgeographical fluctuations, and relation to whole-sale and procurement prices for both paddy andwheat;

(b) the cost of inputs (fertilizer, seeds, irrigation,etc.) in relation to the price received by theproducer;

(c) variation in marketing system and prices receivedbetween small and large farmers;

(d) the process of farmers selling post harvest for lowprices and buying later at higher prices should beexamined. The study should place a primary emphasisupon the six project districts.

1/ All reports would include an operational plan for the following quarter.

ANNEX 7Page 9

25. The impact of the project upon farmgate prices would be assessedby means of a continuous farmgate price monitoring system, which would alsoprovide a key input to the interministerial policy formulation committee. Asuitable consultant should be recruited - Bangladesh Institute of DevelopmentStudies (BIDS) would be competent to design this monitoring system whichshould address itself to:

(a) the actual level of farmgate prices, seasonal andgeographical fluctuations, and relation to whole-sale and procurement prices for both paddy andwheat;

(b) the cost of inputs (fertilizer, seeds, irrigation,etc.) in relation to the price received by theproducer;

(c) variation in marketing system and prices receivedbetween small and large farmers;

(d) the process of farmers selling post harvest for lowprices and buying later at higher prices should beexamined. The study should place a primary emphasisupon the six project districts.

26. The cost effectiveness exercise would be an ongoing internalexercise carried out by the Monitoring Cell. The Cell should pay attentionto the estimation of and changes in such factors as:

(a) handling costs during trans-shipment and incidenceof double shipping;

(b) losses in storage and handling;

(c) turnover of stock and capacity utilization;

(d) age of stocks; and

(e) costs of operation of godowns and silos.

BANGLADESH

SECOND FOODGRAIN STORAGE PROJECT

Monitoring, Organizational and Evaluation Studies: Project Cost(Tk '000)

Unit Cost 1/ Total Units Total Costs % ForeignPer Man lears Man Years Year 1 Year 2 Year 3 Year 4 (Tk '000) Exchanee

YearsA. Monitoring Cell (4 Years)

Chief Deputy Director (1) 22.5 4 22.5 ) 90Transport Analyst/System

Analyst (1) 17.25 4 17.25 ) 69Account/Financial Analyst (1) 17.25 4 17.25 ) 69Statisticians (1) 9.7 4 9.70 ) Constant 39Support Staff (6) 7.0 24 42.0 168Jeep, Calculator and

Other Equipment 250.0 250.0 250 50Base Cost Sub-total 358.7 108.7 108.7 108.7 685

B. Project Implementation UnitChief: Deputy Director (1) 22.5 4 22.5 ) 90Accounts Officer (1) 17.25 4 17.25 ) 69Procurement Officer (1) 17.25 4 17.25 ) Constant 69Support Staff (8) 7.0 32 56.0 ) 224Jeep, Calculator and

Other Equipment 250.0 1 250.0 250 50Base Cost Sub-total 363.0 113 113 113 702

C. Planning CellResearch Officer (1) 22.5 4 22.5 ) 90Economist (1) 22.5 4 22.5 ) Constant 90Essential CalculatingEquipment 25.0 1 25.0 25 50

Base Cost Sub-total 70.0 45 45 45 205

D. Project EvaluationLocal Expert 3.0 M./Mo. 40 M./Mo. 60.0 - - 60 120Transport and Other Expenses 2.5 M./Mo. 40 M./Mo. 50.0 - - 50 100

Base Cost Sub-total 110.0 - - 110 220

Component Base Cost Sub-total 902.0 267 267 376 1,812

Price Contingencies 70 41 63 124 298 12

E. Total Cost 2/ 972.0 308 330 500 2,110

1/ Including overheads.2/ Duties and Taxes are estimated to be 5% of total.

January 12, 1978. X

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BANGLADESHSECOND FOODGRAIN STORAGE PROJECT

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ANNEX 7APPENDIX IPage 1

BANGLADESH

SECOND FOODGRAIN STORAGE PROJECT

DGF's Monitoring Cell

1. The Cell will have three major functions;

(a) the establishment of a data framework suitable for theassessment of the cost effectiveness and efficiency ofthe Food Directorate's operations;

(b) preparation of the Directorate of Food's Annual OperatingPlan 1/, the monitoring of the implementation of theplan and the level and changes in cost and operationalefficiency and reporting on such to the DGF, togetherwith any recommendations for consequent improvementstherein; and

(c) the compilation of the Annual Operational Report ofthe Directorate of Food (Appendix 2).

2. Planning at present is limited to ensuring that sufficient stocksare available in each sub-division for the coming month(s). A plan with abroader framework and a longer time horizon is required in order to improvestock movement, milling schedules, and stock management and thus lead togreater operational efficiency.

3. An essential requirement for improved planning is adequate database. MF currently operates a Control Room at Dacca, which needs to diver-sify its data base to include cost information, age of stocks, losses, andphysical condition of facilities. The present practice of daily reportingleads to excessive information which can not be fully analyzed.

4. The planning process would commence with the national policyguidelines and estimates for the coming year of procurement, distributionand imports. These would need to be disaggregated to the sub-division levelby month and estimate made of requirements for hired storage capacity, trans-portation, rice milling, etc. A recommended milling and month a transporta-tion schedule for the year by sub-division would be prepared.

1/ Not for the project activities, but for the overall operations of theDirectorate of Food.

ANNEX 7APPENDIX 1Page 2

5. A study of the management system, information flow and decisionmaking should be undertaken by the cell, for which technical assistancewould be provided.

Cost Effectiveness

6. The cell would focus attention on operational costs and efficiency,paying primary attention to:

(a) utilization of warehouse space and grain flows;

(b) the makeup, location and age of stocks;

(c) the regularity and effectiveness of pest control;

(d) the level of grain losses at each level of operation;

(e) transportation costs; and

(f) handling costs both during trans-shipment and instorage.

The cell would make regular recommendation to the DGF regarding proposedimprovements in operations, and assist in their implementation.

Staffing of Cell

(a) Chief - at Dy. Director level. He should have expe-rience on the practical problems of grain handling

(b) Transportation/Systems Analyst

(c) Financial Analyst

(d) Statistician

(e) Necessary support staff

The cost of the cell will be financed under the project for the first 4years. Technical assistance could be provided to the cell if necessary.Cost estimates are given in Table 1.

ANNEX 7APPENDIX 2Page 1

BANGLADESH

SECOND FOODGRAIN STORAGE PROJECT

Outline of Annual Report of the Food Ministry

1. An Annual Report of the Food Ministry is prepared by the MF Plan-ning Cell. It would be based on a draft Operational report prepared by theDGF's Monitoring Cell. The Director Generals' Operational Report would coverthe year's operation of the six Directorates, and also the major policyrecommendation of GOB. It would contain the following information on therespective Directorates:

A. Directorate of Supply Distribution and Rationing

(i) Director's comments on year's operation

(ii) Organization and staffing

(iii) Amounts of food products purchased by source,type, and prices paid

(iv) Distribution of food by:

(a) Statutory ration

(b) Modified ration

(c) Relief

(d) Other ration

(e) Open Market sales

(f) Any other methods

by type of food, district, and prices received

(v) Changes in ration system in term of size of ration,prices or eligibility

(vi) LSD capacity by thana, type and conditionand details of changes from previous year

(vii) Capacity utilization per month per LSD percommodity

ANNEX 7APPENDIX 2Page 2

(viii) LSD throughput per month by district andcommodity

(ix) Amount of grain milled, by district includingcost and recovery ratio

(x) Costs of operation--administrative, labor,maintenance, equipment, etc.

(xi) Budget: actual vs provision

(xii) Operational Plans:

(a) Budget for coming year

(b) New activities and special projects

(c) Future needs

B. Directorate of Procurement

(i) Director's comments on year's operation

(ii) Organization and staffing

(iii) Procurement by crop by LSD/TPC and by districtby month

(iv) Procurement prices and discounts and changes fromprevious year

(v) Costs of operation--administrative, labor, equipment,etc.

(vi) Procurement procedures, constraints and problems

(vii) Commercial bank activity; number of bank branches atLSD's and total lending for procurement.

(viii) Budget: actual vs provision

(ix) Plans:

(a) Budget for coming year

(b) New activities and special projects

(c) Future needs

ANNEX 7APPENDIX 2Page 3

C. Directorate of Movement and Storage

(i) Director's comments on year's operation

(ii) Organization and staffing

(iii) CSD capacity by location, type and conditionand changes from previous year

(iv) Capacity utilization and throughput by CSD, bymonth and commodity

(v) Amount of foodstuff moved by tons and ton/milesand by type of transport

(vi) Movement patterns

(vii) Transportation constraints and problems

(viii) Costs of operation--administrative, labor, equipment,etc.

(ix) Budget: actual vs. provision

(x) Plans

(a) Budget for coming year

(b) New activities and special projects

(c) Future needs

D. Directorate of Inspection. Control and Training

(i) Director's comments on year's operation

(ii) Organization and staffing

(iii) Fumigation, inspection, treatment frequency bygodown/silo, stocks treated and response time

(iv) Stocks of chemicals and age of stock

(v) Costs of chemicals and source

(vi) List of equipment and condition

(vii) Testing laboratory activities, testingundertaken, disposal instructions andstocks affected

ANNEX 7APPENDIX 2Page 4

(viii) Training programs undertaken

(ix) Budget: actual vs provision

(x) Plans:

(a) Budget for coming year

(b) New activities and special activities

(c) Future needs

E. Directorate of Silos

(i) Director's comments on year's operation

(ii) Organization and staffing

(iii) Silo capacity and utilization by month

(iv) Silo throughput by silo, commodity and month

(v) Budget: actual vs provision

(vi) Plans:

(a) Budget for coming year

(b) New activities and special activities

(c) Future needs

F. Directorate of Accounts

(i) Director's comments on year's operation

(ii) Organization and staffing

(iii) Consolidated Ministerial Accounts

(iv) Auditor's Report

2. Policy aspects to be drafted by the Planning Cell would coverthe following:

(i) The levels of production, consumption and imports andprojections for the future; government policy on eachitem.

ANNEX 7APPENDIX 2Page 5

(ii) Policy experience and projections for procurement anddistribution.

(iii) Food prices, and the impact of open market sales.

(iv) Costs of production and adequacy of procurement prices.

(v) Availability of inputs.

(vi) Activities in the non-government sector.

ANNEX 8Table 1

BANGLADESH

SECOND FOODGRAIN STORAGE PROJECT

Project Costs by Component

Year 1 Year 2 Year 3 Year 4 Total Cost Foreign Exc.- - - - - - -(Taka Million) %

I. Godown Construction-/

(a) Land acquisition 0,7 1.1 1.1 - 2.9 25(b) Godown construction 46.1 92.2 109.6 37.4 285.4 25(c) Ancilliaries & Power 9.2 18.4 21.8 7.5 56.9 25

(d) Rehabilitation of non- - 2.8 4.3 1.4 8.5 35Dacca godowns

Base Cost 56.0 114.6 136.8 46.3 353.7Physical Contingencies 2.8 5.7 6.8 2.3 17.6Price Contingencies 5.3 22.6 41.8 19.2 88.9

Sub-total 64.1 142.9 185.4 67.8 460.2 25.2

11. Engineering and Construction Uni2/

(a) PECU Equipment and Vehicles 4.2 - - - 4.2 68(b) PECU & PWD Engineering (8%) 4.5 9.6 11.5 3.9 29.5 -(c) Technical assistance 2.2 2.2 2.2 2.3 8.9 84

Base Cost 10.9 11.8 13.7 6.2 42.6Price Contingencies 0.9 1.8 3.8 2.1 8.6

Sub-total 11.8 13.6 17.5 8.3 51.2 25

3,III. Procurement System-

LSD & TPC: Base Cost - 54.0 1.2 1.3 56.5 40

Physical Contingencies - - - - -Price Contingencies - 8.3 0.4 0.4 9.1

Sub-total - 62.3 1.6 1.7 65.6 40

IV. Paddy Drying-4

Base Cost 1.5 13.7 1.7 1.0 17.9 70Physical Contingencies - 0.1 - - 0.1

Price Contingencies 0.1 2.2 0.5 0.4 3.2

Sub-total 1.6 16.0 2.2 1.4 21.2 70

5/V. TCCA Pilot Project-

Base Cost - 5.5 0.04 - 5.54 40Price Contingencies - 0.9 0.01 - 0.91

Sub-total - 6.4 0.05 - 6.45 40

VI. Pest Contro6/

Base Cost 1.1 10.4 0.4 - 11.9 55Physical Contingencies - - - - -Price Contingencies 0.1 1.6 0.1 - 1.8

Sub-total 1.2 12.0 0.5 - 13.7 55

VII. Monitoring, Organization & Eval-Z1

uation

Base Cost 0.9 0.2 0.3 0.4 1.8 55Price Contingencies 0.1 - 0.1 0.1 0.3

Sub-total 1.0 0.2 0.4 0.5 2.1 55

VIII. Total Without Contingencies 70.4 210.2 154.14 55.2 489.94 30

Physical Contingencies 2.8 5.8 6.8 2.3 17.7 23Price Contingencies 6.5 37.4 46.71 22.2 112.81 27

TOTAL PROJECT COST 91.7 252.4 198.15 78.2 620.45 29

1/ Annex 3 Table 2.2/ Annex 3 Table 5.3/ Annex 4 Table 2. including technical assistance4/ Annex 6 Table 5.5/ Annex 4 Table 2.6/ Annex 5 Table 2. including technical assistance7/ Annex 7 Table 2,

ANNEX 8Table 2

BANGLADESH

SECOND FOODGRAIN STORAGE PROJECT

Project Cost bY Category

Local Foreign Total Foreign Exc. 1DA- - - -Take Million - - - - % Disbursement

I. Land Acquisition 2.89 - 2.89

Contingencies 0.77 - 0.77

Total Land 3.66 - 3.66

II. Civil Works

(a) Godown & Ancilliary 256.7 85.6 342.3 25 100% CIF forConstruction imported

(b) Godown Rehabilitation 5.52 2.98 8.50 35 material and(c) Paddy Drying - 1 64 0.54 2.18 25 6S%1for othera

Sub-total 263 16 89.Ia 352.98Contingencies 79.54 26.73 106.29

Total Civil Works 343. 115.52 459.20 25

III. PECU & PWD Engineering Services 28.0 1.5 29.5

Contingencies 5.7 0.40 6.1

Total Engineering 33.7 1.90 35.6 313.8

IV. Equipment

(a) Construction Equipment 0.70 2.15 2.85 77 100% CIF or(b) Procurement Centers 27.46 16.10 43.56 37 100% exfactory,(c) TCCA Pilot Program 3.10 2.14 5.24 41 if local (or %)(d) Pest Control 2.52 1.78 4.30 45(e) Paddy drying 2.66 8.54 11.20 76

Sub-total 36.44 30.71 67.15Contingencies 5.5 5.10 10.6

Total Equipment 41.94 35.81 77.75 50 38.9

V. Vehicles

(A) Construction Staff 0.65 0.7 1.35 50 100% CIF or(b) Procurement - LSD/TPC 4.54 4.46 9.00 50 100% exfactory,(c) Procurement - TCCA Pilot .14 0.13 0.27 50 if local(d) Pest Control 2.71 2.71 5.42 50(e) Paddy Drying 0.22 0.22 0.44 50

Sub-total 8.26 8.22 16.48Contingencies 1.31 1.31 2.62

Total Vehicles 9.57 9.53 19.10 50 9.5

VI. Management & Technical Assistance

(a) Engineering 1.44 7.44 8.88 84(b) Procurement & Paddy Systm .78 7.18 7.96 90(c) Pest Control .08 1.94 2.02 55 1007, except PIl,

Ed) Yonitoring, Planning & .82 0.98 1.80 9g and monitoring CellEvaluation __ _ _ __ _ _ __ _ _ __ _ _ __ _ _ __ _ _

9 80%Sub-total 3.12 17.54 20.66Contingencies .61 3.46 4.07

Total Technical Assistance 3.72 21.00 24.73 85 24.72

VII. Training

(a) Procurement - LSD/TPC 0.16 - 0.16(b) Procurement - TCCA Pilot 0.08 - 0.08(c) Pest Control Field Train- 0.23 - 0.23 100Z

ing

Sub-total 0.47 - 0.47Contingencies 0.07 - 0.07

Total Training 0.54 - 0.54 0.54

VIII. Base Project Cost 343.0 147.1 490.1 32

IX. Contingencies

'Physical 13.7 4.0 17.7Price 82.8 30.o 112.8

Sub-total Contingencies , _ 113.5

X. TOTAL PROJECT COST 439.5 181.J1 620.6 32 Tk 32.5

$ 25 Mfia estieated to be-TX 129Mt, About 61% on imported cement and 65X on others so average alout r3?.

January 12, 1978.

ANNEX 8Table 3

BANGLADESH

SECOND FOODGRAIN STORAGE PROJECT

Estimated Disbursement Schedule

IDA Fiscal Year Accumulated Disbursementsand Semester US$M

1978

Ist

2nd-/

1979

Ist

2nd 0.3

1980

lst 3.8

2nd 7.8

1981

Ist 13.2

2nd 16.6

1982

lst 22.8

2nd 25.0

1/ Estimated effectiveness date 1st July 1978.

2/ Estimated completion date 30th June 1982.

January 17, 1978

ANNEX 8Table 4Page 1

BANGLADESH

SECOND FOODGRAIN STORAGE PROJECT

Critical Activities: First Year

Activity Completion By Responsibility

1. Project Implementation

Relief storage data to IDA Negotiations GOB/MFAppoint head of PIU Negotiations GOB/MFAppoint head of PECU Negotiations GOB/MFSelect 35 sites for PECU Board Presentation*Establish PSC/PIU Board PresentationForward '78 Construction program to IDA February 1978 PIU/PECU*Approval of PEP June 1978 MF/PECU*Select 20 and acquire 20 SitesPWD field staff proposals to IDA March 1978 MF/PWD

2. PECU

Appoint HQ staff April 1978 PECU*Appoint Engineering Consultant MF/PECUAppoint PWD field staff July 1978 PECUProcure vehicles /construction 1978 PECUequipment

Finalize godwon design May 1978 PECUSurvey 1978 sites & Site maps June 1978 PECUPrequalify contractors July 1978 PECUAdvertise contracts/Select contractors Aug-October 78 PECUStart construction November 1978 PECU

3. Procurement

(a) LSD:Specify procurement equipment/ 1978 MF/PIUVehicles

Procure equipment/vehicles July-October 78 MF/PIU

(b) TCCA:Select TCCA/KSS in Project Area March 1978 IRDPWrite up operating system April TCCA/IRDP*Drying and Proc. consultant July 1978 PIUSpecify equipment May 1978 TCCA/IRDPProcure equipment October 1978 PIU

* Condition of Effectiveness

ANNEX 8Table 4Page 2

ACTIVITY COMPLETION BY RESPONSIBILITY

Prepare record books, charts, May 1978 TCCA/IRDPSelect local expert September 1978 IRDP/PIU/ConsultantTraining: testing, sampling Sep/Oct. 1978 TCCA/IRDPSet procurement days 2 start October 1978 MF/PIUprocurement

4. Paddy drying

Select Consultant May 1978 PIUSelect counterpart engineer June 1978 PIUPrepare equipment specifications andtenders August 1978 PIU

Procure Equipment vehicles September 1978 PIUSelect Sites 1/ March 1978 PIU/PECUFinalize civil works designs 1/ August 1978 PIU/PECUShip equipment November 1978 PIUStart Construction 1/ October 1978 1/ PECUSelect operators December 1978 PIUEquipment installation March-May 79 FIU/PECUOperator training Feb-March 79 PIUOperation in Boro crop May 1979 PIUEvaluation and revise system Sep/October 79 PIU

5. Pest Control

Appoint Chemist, ZTL May 1978 PIUSpecify equipment for ZTL March 1978 PIUSpecify pest control equipment May 1978 PIUProcure Equipment/vehicles August 1978 PIUPlan field training program November 1978 PIUStart field training November 1978 PIURecruit Additional DICT staff 1979 PIU

6. Organization and Management

Strengthen Planning Cell October 1978 MFSet up Monitoring Cell October 1978 MFAppoint Chief of Cell and Staff October 1978Data base completion June 1978Implement MF Management Study 1978 MF/PIUImplement Payment System Study 1978 MF/PSU

1/ Dryer site must be included in the first 35 sites selected by PECU as a condition ofBoard Presentation.

BANGLADESHSECOND FOODGRAIN STORAGE PROJECT

Implementation Schedule

Yevr I - 1978 Year 2-1979 Year 3- 1980 Year 4 - 1981

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PROCUREMENT SYSTEMLSD and TPC Equipment. Specification to Delivery/////TCCA/KSS Selection of TCCA/KSS

Eqaipment, Specification thsru Delivery

MONITORING, ORGANIZATION ANP EVALUATION /|

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ANNEX 9Page 1

BANGLADESH

SECOND FOODGRAIN STORAGE PROJECT

Economic Analysis and Justification

General

1. The project will assist GOB in improving the procurement capacityand storage efficiency of MF. The project would enable GOB to reduce highstorage losses incurred in dilapidated and marginal private sector facilities.The project godowns would also be available for the distribution of food.In addition, higher levels and reduced risk of past harvest fall in farm-gate prices is expected to stimulate domestic production.

2. The economic analysis mainly considers benefits from reduced storagelosses analysing the project in three components (godowns, pest control andpaddy drying). The other benefit due to the production incentive effect ofhigher farmgate prices is difficult to assess in the absence of economic data.

Important Assumptions

3. The prime assumptions made in the economic analysis are:

(a) drastic improvements in the transport system, rice millinglocation and private sector storage are not expected till1985/86;

(b) unskilled labor is costed at 75% of the financial wage rate,skilled labor at 100%, and foreign exchange at US$1 = TK 15.5;paddy is valued at farmgate and ex-godown prices derived fromCIF prices (Table 4);

(c) reduction in storage losses in the alternative use of storagefacilities released by the project is valued at the current hirecharges (Tk 8/ton month), for 10 months (alternatively, if de-rived from the loss estimates of Table 1, its value is imputedto be about 11 Tk/ton month, assuming rice storage);

(d) storage losses in various types of facilities are in Table 1;estimates are based on available data and on the consideredopinions of experts with extensive field experience in storageunder Bangladesh conditions.

(e) average storage utilization is assumed to be 85% for 6 months,and godowns are assumed idle for the remaining 6 months;

ANNEX 9Page 2

(f) economic life of project constructed godowns is taken tobe 30 years, rehabilitated godowns 15 years; pest controlequipment 5 years, paddy drying equipment 10 years;

(g) a turnover of 1.2 is assumed for the procurement storagesystem, which is the best that can be achieved given thehigh seasonality of procurement, poor transportation andan even distribution pattern.

(h) costs of technical assistance and various studies are includedin the cost stream.

(i) reduction in handling and transport costs and benefits fromtimely availability of relief supplies are not quantified.

The Godown Component

4. In the six major procurement districts, the project will: (i) re-place 75,000 tons of hired capacity, (ii) rehabilitate 25,000 tons of TNsheds; and (iii) add 70,000 tons of storage capacity. All new godowns wouldhave essential ancilliary and procurement facilities and full pest controlservice. They would be able to store foodgrains at low loss levels (Table 1)and thus eliminate high storage losses incurred in the marginal facilitiesnow used. They would also improve farmer access to the MF procurement cen-ters, reduce handling and transportation of procured stocks. As a result ofthe 70,000 tons additional MF capacity MF would be able to store under goodconditions increased annual procurement in the project area of 100,000 tonsrice equivalent 1/ which otherwise would have been stored under poor condi-tions by private traders. For investment in the godown component includingan appropriate portion of the cost of pest control services but excludingpaddy drying, maintenance and additional staff, the economic rate of returnis estimated to be 14.6% (Table 3). The ROR for this basic component, whichis essential for paddy drying and production incentive benefits, is lowbecause benefits from reduced handling, transport and from use of projectgodowns for distribution during 6 months they are not required for procurementhas not been quantified in the absence of reliable data.

Pest Control

5. The pest control component of the project will provide fumigationand testing services to existing MF godowns in the project area and all thenew godowns built under the project. Pest control cost for new godowns iscovered in the godown component. Because of improved mobility, equipment andtraining, storage losses in existing godowns would also be reduced by about0.3% per month for 6 month storage period (Table 1). The economic rate of

1/ 70,000 tons nominal capacity has a loading capacity of 120,000 tons ofpaddy for short-term storage (850 tons per godown). Allowing for addi-tional 20% Boro and wheat procurement because of improved location,additional procurement capacity is 100,000 tons (rice equivalent); thisis equivalent to a turn over of 1.2, which is the best that can beachieved.

ANNEX 9Page 3

return on the relatively small (TK 10 M) pest control component is greaterthan 50%, because of the high sunk costs in existing godowns, without whichit is not very effective.

Drying Component

6. The introduction of 15 dryers mainly for the Boro crop would reducelosses that are likely to occur if 17% grain moisture boro paddy were putinto good storage (Annex 6). Estimated savings in losses will be 1.15% permonth on a Boro throughput of 35,000 tons of paddy for an average storageperiod of 4 months. On average, Boro paddy is expected to require dryingfrom, 17% to 12% moisture. The economic rate of return on the component is24% (Table 3). Benefits from drying the Aman procurement are not quantified.Although this component is analysed separately, paddy drying is ineffectivewithout good storage.

Full Project

7. The economic rate of return for the project as a whole, assumingno increase in procurement estimated to be 21%: 1/

Estimated Rates of Return

Overall return 21%Godown Component 15%Drying Component 24%Pest Control Component over 50%

Risk of Delay

8. The most significant risk facing the project is delay in increasingprocurement and improving farmer access to the MF procurement system. RecentGOB efforts to shift the emphasis of MF efforts from distribution to procure-ment have shown encouraging results and exposed constraints which the projectaims to eliminate. A sensitivity analysis to study the impact of slowerincrease in procurement has been done. A delay of four years in reachingfull development procurement levels would reduce the rate of return of para 7to 17%, assuming that storage facilities temporarily surplus during thisperiod of delay would remain idle.

9. The other important benefit of the project would be to stimulatefarmgate prices and thus foodgrain production. This benefit is difficult toquantify since it represents a transfer payment between dealers and farmersand involves a 'benefit' only when the changed distribution leads to eitheradditional or more optimal investment. The project evaluation exercise wouldattempt to quantify this aspect.

1/ The rate has the following sensitivity:

Fixed Costs +15% rate of return = 18% - 15% rate of return = 25%Operating Costs +15% rate of return = 20% - 15% rate of return = 22%Benefits +15% rate of return = 25% - 15% rate of return = 17%

BANGLADESH

SECOND FOODGRAIN STORAGE PROJECT

Estimated Storage Losses I/

(%)

A. For 13% Moisture Aman Paddy

Facility Storage Period Weighted Average Loss % Per Month

Dec. - May June - Oct.2/ (6 months)

Private Sector "Storage" 4.5 9.0 6.0 1.0

MF Hired/dilapidated TN Sheds -/ 4 6.5 4.8 0.8

Dacca Godowns 5/ 2.5 4 3.0 0.55/

Dacca Godowns with -Effective Management 1 1.5 1.15 0.2

B. For 17% Boro Paddy

Dacca Godowns withEffective Management N/A 8.0 1.35

Dacca Godowns With Sffective N/A 1.0 0.15Management and with Boro Paddy Driedto 12% Mechanically

1/ For large scale commercial storage, estimate based on available data and considered estimates ofexperts with extensive field experience in storage under Bangladesh conditions.

2/ Known to be in exttemely poor condition with leaking roofs, groundlevel floors and "Kutcha" floors.3/ Storage environment in Bangladesh, particularly during April to October, is particularly

inhospitable for foodgrain storage

4/ Dec.-May period having 2/3 weight and June - Oct. having 1/3 weight because of procurement5/ Good storage is built to enable effective pest control; the Dacca Godowns without effective a,

management is only presented to indicate benefit from improved pest control in existing godowns. X X

ANEX 9Table 2

BANGLADESH

SECOND FOODGRAIN STORAGE PROJECT

Operating Costs (Economic)('000 taka)

Year 1 Year 2 Year 3 Year 4-30

GODOWNS 1/Staffing - 2/ 480 1,015 1,500

*l4ntenance - 400 1,150 1,900880 2,165 3,400

PEST CONTROLLabor 3/ _ 50 110 175

Chemicals: - 30 7,040 8,250Vehicles - 175 425 . 645

Total 20 255 7,575 9,070

i|!~G - 857 857DRYtG -

I/ Unskilled labor, therefore shadow priced at 0.75.

2/ TklO per ton pqmAna4 cApAcity por yegr,

3/ Skilled labor.4/ Cost of chemicals estimated at Tk1l,500 per godown per year -

for 150 lb Malathion, 2 cases Phostoxin, 200 lb Methyl Bromide

for 717 godowns.5/ For details see Annex 6 Table 2; adjusted for unskilled labor and

duties and taxes on fuel; average moisture reduction load is 5X,

BANNAEs

SECOND FOwDO9N STORAGE P)JECT

lZconcuic Cost and Benefit Schedule

Godown Ocaponent Peat Conta,oti P ddt Drfg 5/ Total Prject /Investment Oerating Investmnt Uperating Imetimt Operating InVeatamt Operatrng

Year Cost )3/ Cost 2/ Benefits 3/ Cost Costs Benefits Coet Costs Benefits Cost Cost Benefite

1 59,430 - - 707 - - 1,276 - - 63,645 2 _2 117,284 965 f,500 4,123 170 - 11,296 - - 146,393 894 11,5003 124,588 4,600 32,800 118 5,240 31,200 1,659 857 4,800 123,392 10,720 68,004 48,460 6,200 52,$00 0 6,080 31,200 1,024 857 4,800 45,261 13,795 88,83o5 -2,965 6,200 57,100 0 6,080 31,200 0 857 4,800 -2,965 13,795 93,1006 0 6,200 57,100 0 6,080 31,200 0 857 4,800 0 13,795 93,1007 2,965 6,200 57,100 3,288 6,080 31,200 0 857 4,800 9,732 13,795 93,100

8-11 0 6,200 57,100 0 6,080 31,200 0 857 4,800 0 13,795 93,10012 15,484 6,200 57,100 3,288 6,080 31,200 10,272 857 4,800 37,064 13,795 93,10013 0 6,200 57,100 0 6,080 31,200 635 857 4,800 635 13,795 93,10D14-16 0 6,200 57,100 0 6,080 31,200 0 857 4,800 0 13,795 93,10017 24,963 6,200 57,100 3,535 6,080 31,200 0 857 4,800 12,578 13,795 93,10018 3,968 6,200 57,100 0 6,080 31,200 0 857 4,800 3,669 13,795 93,10019 1,492 6,200 57,100 0 6,080 31,200 0 857 4,800 1,492 13,795 93,100

20-21 0 6,200 57,100 0 6,080 31,200 0 857 4,800 0 13,795 93,10022 15,484 6,200 57,100 3,288 6,080 31,200 10,272 857 4,800 37,064 13,795 93,10023 0 6,200 57,100 0 6,080 31,200 635 857 4,800 635 13,795 93, 1.

24-26 0 6,200 57,100 0 6,080 31,200 0 857 4,800 0 13,79593,1o27 2,564 6,200 57,100 3,288 6,080 31,200 0 857 4,800 9,732 13,795 93,100

28-30 0 6,200 57,100 0 6,080 31,200 0 857 4,800 0 13,795 93,100

MOR -- 1 14.5 / BDR - 100% lDR -2 4% MR - 21% W

J/ All godowns plus portion of pest oDntrol and godown and pzocurenent eqdipJent related to new godowns, engineez±ng and conatruction equipment,but excluding technical assistance; unskilled labor valued at 75% of flnancial wages, the unskilled wage being 80% of total wage bill. Economiclife of rehabilitation godowns is 15 years, new godowns is 30 years.

/ See Table 2 for details.

3/ 25,000 ton of rehabilitated godowns are used for 8 months for procurement storage, at 85% utilization and leftidle for 4 months; while new godowns are used for 6 months at 85% utilization for HF foodgrain storage. and left idle 6 months; 70 o00tons, which increases procurement by 100,000 wruld redice losses that would otherwise have occurred in private storage for six aonits. Hired spacereleased by HF for use b other aectcrs is valued at current hire charges. (8 Dk/ton month).

F *or post cmtrol equipment mBed on existing Doomna ROR ia high becauee of auz* costs in godowmne which are essential for effective patcontrol. Se Table 2 for econcmic coats; equipwAnt life is ammed to be 5 years; see Table 1 for impact on storage losses.

i/ Although anslyaed separately, paddy drying would be ineffective witbout good storage godowns. See Table 1 for impact on Boro crop storagelosses; equipment life is assumed to be 10 years.

6/ For entire project, including technical assistance, procurement equipment and TCCA pilot project for which no benefits are qnantfted in thisAnalysis; excluding any benefits frcm improved handling.

7/ This basic component is essential foF other benefits like paddy drying and production incentive (Table 7).

rf increase in procurement is delayed by four years compared to Table 7, and surplus storage is assumed idle during this period of delay, ethe ROR becomes 17%. °

ANNEX 9Tb Ie 4

BANGLADESH

SECOND FOODGRAIN STORAGE PROJECT

Economic Price for Paddy

US$/metric ton

Price 1985 Milled 5% broken, fob Bangkok1/ 390.1less 30% for quality differential - 117.0plus transportation to Chittagong 25.0

Price cif Chittagong 298.1plus handling & distribution to urban markets(16%) 47.7

Price in urban markets 345.8

less costs of handling & transportationfrom godown and milling costs (16%) 55.3

processing ratio 65% 290,5

Price of paddy at godown 188.8(109.2 Tk/md)

less 5% transport and handling from farmgate 9.4

Price of paddy at farmgate 179.4(103.8 Tk/md)

Price of paddy of godown (per long ton) US$ 191.8 3/Price of paddy at farmgate (per long ton) US$ 182.3

1/ IDA Commodity Price Forecasts, May 1977.2/ 25-35% broken

3/ Similarly calculated, wheat is $200.8/ton and190.7/ton respectively.

IBRD 12656R

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