Report No. 521a-Pti FILE Copy Philippines RLASEQ FL COpy Appraisal of the Tarlac Irrigation Systems Improvement Project December 3, 1974 East Asia and Pacific Projects Department Irrigation and Area DevelopmentDivision Not for Public Use Document of the International Bank for Reconstruction and Development International DevelopmentAssociation This report wasprepared for official use only by the Bank Group. it maynol be published, quoted or citedwithout Bank Group authorization The Bank Group does not accept responsibilityfor the accuracyor completeness of the report. Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized
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Report No. 521a-Pti FILE CopyPhilippines RLASEQ FL COpyAppraisal of the Tarlac IrrigationSystems Improvement ProjectDecember 3, 1974
East Asia and Pacific Projects DepartmentIrrigation and Area Development Division
Not for Public Use
Document of the International Bank for Reconstruction and DevelopmentInternational Development Association
This report was prepared for official use only by the Bank Group. it may nolbe published, quoted or cited without Bank Group authorization The Bank Group doesnot accept responsibility for the accuracy or completeness of the report.
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CURRENCY EQUIVALENTS
US$1.00 = Pesos (t) 6.721 1.00 = US$0.149
WEIGHTS AND MEASURES - METRIC SYSTEM
1 hectare (ha) = 2.47 acres1 kilometer (km) = 0.62 miles1 square kilometer (km2) 0.3886 square miles1 meter (m) = 39.37 inches1 square meter (m2 ) = 10.76 square feet1 cubic meter (m3 ) 35.31 cubic feet1 million cubic meters (Mm3) = 810.7 acre feet1 millimeter (mm) = 0.039 inches1 kilogram (kg) = 2.2 pounds1 cavan (paddy) = 50 kg20 cavans = 1 metric ton
INITIALS AND ACRONYMS
APIP Aurora Penaranda Irrigation ProjectBAE Bureau of Agricultural ExtensionBPI = Bureau of Plant IndustryCRIS = Camiling River Irrigation SystemDAR = Department of Agrarian ReformNIA = National Irrigation AdministrationNISIS = National Irrigation Systems Improvement StudyPDD Project Development DivisionSM-ORIS San Mfiguel-O'Donnell River Irrigation SystemTRIS = Tarlac River Irrigation SystemUPRP = Upper Pampanga River Project
PHILIPPINES
APPRAISAL OF THE TARLAC IRRIGATION SYSTEMS IMPROVEMENT PROJECT
Table of Contents
Page No.
SUMMARY AND CONCLUSIONS .....................- i
I. INTRODUCTION... .... 1
II. BACKGROUND.. 1
General . ....................... , 1The Agricultural Sector.. . 2The Critical Role of Water Development ....... P.... 2Project Formulation . .e*...... 3
III. THE PROJECT AREA .................... . . 4
General ..................... 4'.limate ........ ,. ...... 4Topography, Drainage and Soils .... 5Land Tenure and Farm Size . . . 5Existing Irrigation Facilities . ......... 7Agricultural Production .......................... 7Transportation 7
IV. THE PROJECT ...................................... . 8
Project Works . .... ........ ... 8Water Supply, Demand and Quality . . . 9Status of Engineering ...................... ..., 10Groundwater Pilot Project ....... 11Water Management Training ... 12National Irrigation Systems Improvement Study .... 12Cost Estimates ... 13Financing ... 14Procurement ................ . ,.... . .,. 14Disbursements . .................. . 15Accounts and Audit ... 15Environmental Effects .. .................... 15
This report is based on the findings of an appraisal mission composed ofMessrs. E.G. Giglioli, R.L.P. Harris (Bank), S.J. Baker and H.R. MacDonald(Consultants).
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V. ORGANIZATION AND MANAGEMENT ........................... 15
Project Management .............. . ........ 15
Supporting Agricultural Services ... ....... 17
Recovery of Cost ............... .. ........ 18P-
VI. PRODUCTION, MARKET PROSPECTS, PRICES AND FARMINCONES ................................................. 19
Production .... ................................... 19
VII. BENEFITS AND JUSTIFICATION ...... ..................... 21
VIII. AGREEMENTS REACHED AND RECOMMENDATION .. .............. 22
ANNEXES
1. Central Luzon Irrigation Development2. Climatological Data3. Land Tenure and Reform4. Project Works5. Water Supply, Demand and Quality6. Groundwater Pilot Project7. Water Management Training8. National Irrigation Systems Improvement Study9. Cost Estimates
10. Equipment List11. Schedule of Expenditure and Disbursements12. Organization and Management13. Supporting Agricultural Services14. Present and Projected Cropping Patterns and Production15. Marketing and Prices16. Crop and Farm Budgets17. Farm Labor Analysis18. Economic Analysis
CHARTS
Implementation Schedule No. 8923Proposed Organization for Project Construction No. 8921Proposed Organization for Operation and Maintenance No. 8920Proposed Organization for Loan Projects Coordination No. 8922Proposed Cropping Calendars No. 8919
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MAPS
Central Luzon Basin No. 10769RProject Area: SM-ORIS and TRIS No. 11137Project Area: CRIS No. 11138
PHILIPPINES
APPRAISAL OF THE TARLAC IRRIGATION SYSTEMS IMPROVEMENT PROJECI
SUMMARY
i. The Government of the Philippines has requested Bank Groupassistance to carry out the Tarlac Irrigation Systems Improvement E'rojectlocated in Central Luzon. The project consists of the rehabilitation ofthree existing irrigation systems now serving a total area of 21,000 haand the construction of new systems on some 13,000 ha. The project: alsoprovides for a groundwater pilot project to assess the technical andeconomic feasibility of supplementing surface irrigation with groundwater- and a training program for water management staff. In addition theproject includes provision for carrying out a study of the nationaL irriga-tion systems to prepare a pipeline of system improvement projects.
ii. According to the Bank's Agriculture Sector Survey, an annualtotal of 50,000 ha of newly constructed or rehabilitated irrigation de-velopment on rice lands would have to be carried out over the remaiLnderof the decade to allow the country to achieve foodgrains self-suff:iciency.The modern high yielding rice varieties demand improved water control foroptimum results. The proposed project would be the third in a ser:Lesof Bank-assisted projects aimed at improving irrigation for rice croppingin Central Luzon, the largest rice producing region in the Philipp:Lnes.The first was the Upper Pampanga River Project (Loan 637-PH) and the secondthe Aurora-Penaranda Irrigation Project (Loan/Credit 984/472-PH). To dateall Bank assisted irrigation projects in the Philippines have been aimedat providing greater water supplies for dry season irrigation by buildingstorage dams. The proposed project would be the first Bank-assisted projectto improve and expand existing run-of-the-river systems without providingadditional water from storage.
iii. Total project cost, including the groundwater and training elementstogether with the systems improvement study, is estimated at iP 228.5 million(US$ 34.0 million) of which US$12.7 million, or approximately 37%, wouldbe in foreign exchange. The Bank would finance the foreign exchange com-ponent as well as US$4.3 million of local currency requirements. Civilworks costing US$ 16.2 million would be carried out by contract. Becauseof their nature the works would not be suitable for international competi-tive bidding. The total cost of equipment to be put to internationalcompetitive bidding would be US$3.5 million. The Government's executingagency, the National Irrigation Administration (NIA), would employ consult-ants to provide general guidance and expertise and to assist with thetraining required for the groundwater pilot project, the systems improvementstudy and the water management training program. The project would takefour years to execute.
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iv. The Government of the Philippines would be the borrower and NIAwould be the executing agency for the project. All elements of the projectwould be implemented by the Upper Pampanga River Project (UPRP) office.The UPRP is well staffed with competent personnel and with the employmentof consultants would be able to implement the project successfully. AnAgricultural Development Coordinating Council (ADCC) would be establishedin the project area to ensure coordination of the Government agencies pro-viding agricultural supporting services to the farmers.
v. At full development, nine years after project commencement, annualpaddy production from the project area is expected to reach 155,000 tonscompared with a current level of production of 94,000 tons. The increasedproduction would make a contribution to the national campaign for self-sufficiency by providing enough rice to feed a third of a million peopleper year.
vi. Under the Government's agrarian reform program share cropping hasbeen declared illegal and title to land in holdings of 24 ha or more is nowbeing transferred to the cultivators. When the transfer is completed, ten-tatively the end of 1974, two thirds of the project area lands will be farmedby owner-operators and the rest by leasehold tenants of small landlords. Theproject area is cultivated by some 17,700 farm families working an averageunit of 1.9 ha. The project would result in rises in annual per capita in-come on an average farm size from about US$95 at present to US$135 at fullagricultural development in 1983. These levels of income would still below in comparison with the national average.
vii. The project would require a tighter cropping timetable to allowfor irrigation over a larger area and would not provide for any significantincrease in cropping intensity or labor requirements. The economic rateof return of the project is expected to be about 15%. The rate of returnis sensitive to increases in cost and delays in benefits. However, evenunder extremely adverse conditions, the rate of return would not fall below11%.
viii. The proposed project is suitable for a Bank Loan of US$17.0 millionfor a period of 25 years, including a 7-year grace period. The borrowerwould be the Republic of the Philippines.
PHILIPPINES
APPRAISAL OF THE TARLAC IRRIGATION SYSTEMS IMPROVEMENT PROJEC'T
I. INTRODUCTION
1.01 The Government of the Philippines has requested Bank assLstancein financing the Tarlac Irrigation Systems Improvement Project in CentralLuzon. The project would provide a dependable water supply to irr:Lgateabout 34,000 ha of rice in the wet season and 6,200 ha in the dry season.
1.02 The National Irrigation Administration (NIA) prepared thefeasibility study for the project. This report is based on the findingsof an appraisal mission which visited the Philippines in April/May 1974,composed of Messrs. E.G. Giglioli, R.L.P. Harris (Bank), S.J. Baker andH.R. MacDonald (Consultants).
II. BACKGROUND
General
2.01 The Philippines covers about 298,000 km2 scattered over more than7,000 islands between the Pacific Ocean and the China Sea. The 45 largestislands account for 98% of the area. The population is around 40 million(1973), growing at 3% per year. Real GNP grew at 5 to 6% during the lastdecade. Economic performance improved dramatically in 1973 when real GNPgrew by 10% led by booming exports, strong recovery in agriculture afterthe 1972 floods and an improved investment climate. 1974 shows similarbuoyancy despite the adverse effects of the energy crisis. Major remainingeconomic problems are inflation, unemployment and unequal income distribution.Per capita GNP in 1972 was about US$220. 1/
2.02 Out of a total land area of some 30 million ha, more than half isin forests and about one-third under cultivation or in plantations. About2.0 to 2.5 million ha of fairly level land is still available for growingcrops, though some 1.0 million ha of this is cogon grassland which wouldbe hard to reclaim. Bringing this additional land under cultivation wouldbe insufficient by itself to meet increasing food needs or to improverural incomes significantly. These goals call for increasing productionfrom currently cultivated areas through yield improvements and increasedcropping intensity where water is available.
1/ World Bank Atlas, 1974.
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The Agricultural Sector
2.03 Agriculture accounts for about one-third of net domestic product,one-half of total employment and 70% of commodity export earnings. Duringthe 1960s the rate of growth of agricultural output accelerated graduallyand averaged 4.7% per year for the 1965-70 period, stimulated by the spreadof improved rice varieties. Employment in agriculture, on the other hand,leveled off toward the end of the decade. Most of the increase in the laborforce between 1965 and 1970 was in non-agricultural employment, and theunemployment rate in rural areas has remained high.
2.04 With the growth of agricultural output and little change in employ-ment, productivity per worker in agriculture increased between 1965 and 1970,while non-agricultural labor productivity remained much the same. The resulthas been to narrow the gap in incomes between workers in agriculture and inother sectors, although agricultural incomes are still substantially lower.Farmers using improved technology, such as the new rice varieties, haveshared in the higher incomes, but those continuing in traditional ways havebeen largely unaffected.
2.05 There is considerable pressure of people on land in the Philippines,where the population density is 131 people/km 2 compared with the Asianaverage of 86. Lowland areas best suited for rice have been fully occupiedfor over a decade. Migration is heavy from the overcrowded regions ofCentral Luzon and the Visayas to the Cagayan Valley in northeastern Luzonand Mindanao in the south.
2.06 Agricultural sector performance will be crucial in determiningwhether the drive towards a more rapid but more equitable income expansionsucceeds. The major goals are self-sufficiency in cereals, particularlyrice and corn; expansion of agricultural exports; intensification ofagrarian reform; better conservation of natural resources; and strengtheningof institutional support. Self-sufficiency in cereals is important not onlyto strengthen the balance of payments, but also to raise incomes for muchof the rural population.
The Critical Role of Water Development
2.07 The Philippines cannot reach self-sufficiency in rice withoutsubstantial investment in irrigation expansion and improvement. Performanceof irrigation systems in the country falls far short of their potential.The Sector Survey 1/ estimates that, out of a total of 960,000 ha whichcould be served by existing irrigation systems, only 630,000 ha are servedin the rainy season and 254,000 ha in the dry season. Almost all of theirrigated area is devoted to rice. The NIA's gravity systems are the maincomponent. In addition, NIA has constructed or rehabilitated a substantial
part of the small privately operated communal systems, averaging 250-300ha. The Irrigation Services Unit, now under NIA's administrative super-vision, is responsible for pump irrigation schemes. The 104 NIA gravitysystems, varying in size from 130 ha to 83,000 ha, are usually run-of-the-river schemes with insufficient control structures in the canals, inade-quate drainage and little provision for access. Even when the systems arenew, water distribution is uneven during the wet season and limited duringthe dry season. Maintenance has been minimal due to shortages of staffand funds and the lack of access roads for maintenance machinery. A viciouscircle has developed by which lack of maintenance discourages farmers frompaying operation and maintenance charges, which in turn precludes f-urthermaintenance.
2.08 This unsatisfactory situation began to change in the late 1960s.The NIA was reorganized, more advanced irrigation designs were introducedand much higher levels of water management aimed at. SimultaneousLy theneed for intensified agricultural supporting services on irrigation projectswas realized. The Bank-assisted Upper Pampanga River Irrigation Project(Loan 637-PH) (UPRP) and the Angat-Magat Integrated Agricultural DevelopmentProject, assisted by the Asian Development Bank, typify the new approach.The pattern of rehabilitation, new construction and operation exemplifiedby these projects is essential for large-scale rice production. Indeed,to meet domestic rice demand in the 1970s, a program of rehabilitation andnew construction in the rice lands of 50,000 ha per year will be needed forthe remainder of the decade. The proposed Tarlac Irrigation Systems Improve-ment Project would thus fit in well with Government objectives for waterresources development.
Project Formulation
2.09 This would be the first Bank-assisted irrigation project in thePhilippines to improve existing run-of-the-river systems without providingadditional water to expand dry season cropping. As such it would be aprototype for future projects to be prepared under the proposed NationalIrrigation Systems Improvement Study (NISIS) (paras 4.18-4.19). Suchprojects are low-cost, quick-yielding, reach large numbers of small farmersand are therefore of widespread relevance for all regions of the Philippines.Although the Central Luzon Irrigation Development Study (Loan/Credit 984/472-PH) will establish investment priorities for irrigation development inthe entire Central Luzon basin, it is reasonable to proceed with the Tarlacproject at this time for the following reasons:
(a) the improved Tarlac systems would be able to handleadditional dry season flows from either storage orgroundwater sources. The proposed project would there-fore be the logical next step towards intensifying riceproduction in the Tarlac area. Besides being tech-nically and economically justified in its own right,it would shorten the time to full development of futureprojects identified by the Central Luzon Study and/orthe proposed groundwater pilot project (paras 4.12-4.15);
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(b) in terms of soils, land use, farm size and existinglevel of irrigation facilities, the project area ishighly suitable for modernization of rice cultivation,being similar to the various systems being rehabili-tated and expanded under the UPRP;
(c) as an extension of an ongoing project, it would takefull advantage of the organization and facilities setup to construct and operate the UPRP. In particular,it would benefit from economies of scale in operationand maintenance and development of coordinated agri-cultural supporting services.
III. THE PROJECT AREA
General
3.01 The project is located in Central Luzon, the largest rice producingregion in the Philippines, which contains about 20% of the area planted torice annually and accounts for 27% of total national production. The meanrice yield in the region is about 30% above the national average. This isdue to the existence of irrigation systems in the area and the rapid adop-tion of high yielding varieties developed by the International Rice Re-search Institute (IRRI) and the College of Agriculture of the Universityof the Philippines at Los Banos. Irrigation development in Central Luzonand the role of the proposed project in that development are described inAnnex 1.
3.02 The proposed project covers some 34,000 ha located mainly in theprovince of Tarlac with small portions in Nueva Ecija and Pangasinan, about120 km northwest of Manila. The project area includes 21,000 ha of riceland in the existing Tarlac River Irrigation System (TRIS), the San Miguel-O'Donnell River Irrigation System (SM-ORIS) and the Camiling River Irri-gation System (CRIS). In addition, the systems would be expanded to includea further 13,000 ha of currently rainfed rice land (see Map 10769R).
3.03 There are a number of small towns scattered throughout the areawith populations between 5,000 and 10,000. The larger towns, includingthe provincial capital of Tarlac, provide banking, storage and processingfacilities as well as supplies of inputs to the surrounding agriculturalareas. A good highway network and a railroad connecting the project areawith Manila ensure an easy inflow of supplies and outflow of produce.
Climate
3.04 The climate in the project area is tropical and monsoonal. Warmtemperatures throughout the year allow a twelve-month growing season withirrigation. About 80% of the average annual rainfall of 2,000 mm falls in
the wet season from May through October, during which heavy rains occur,and typhoonal storms may pass through the area causing floods and somedamage to crops and engineering works. The rainfall, together with riverflows in the wet season, is generally adequate for a single rice crop.Dry season cropping, however, entails considerably more risk and suipple-mental irrigation supply is essential for an assured crop. Furtherclimatic details are presented in Annex 2.
Topography, Drainage and Soils
3.05 Lands in the TRIS and SM-ORIS portions of the project area aregently sloping to relatively flat. The general slope of the land is fromwest to east. The whole area is dissected by small creeks or channelsserving as natural drainage ways, and, in some instances, as localizedirrigation sources. Drainage is mainly to the Chico river forming theeastern boundary of the project. The Chico ultimately drains into thePampanga basin. Areas adjacent to the O'Donnell and Tarlac rivers aresubject to flooding during periods of heavy precipitation and high streamrunoff. Lands in the CRIS portion of the project area are more undulating.Mountains flank the western side of the service area and there are severalhilly areas within the CRIS boundaries. The flat irrigable area isdissected by a large number of creeks and channels draining to the northand northeast into the Agno basin.
3.06 Soils in the SM-ORIS and TRIS areas are light colored, structure-less, medium to fine textured with slightly acidic reactions and slowinternal drainage. Soils in the CRIS area are dark brown to black, compact,fine textured, with neutral to alkaline reactions, and slow internal drainage.All soils in the project area have good cation holding capacity and canretain appreciable amounts of nutrients for plant growth. The soils arewell suited for rice, which has been grown for many years without problemsin the project area.
Land Tenure and Farm Size
3.07 Since the beginning of the century successive governmenls in thePhilippines have introduced a series of laws to improve the lot o.E tenantfarmers. Until 1963 the main objectives were to define and regulate share-cropping, to restrict grounds for eviction and to encourage a change fromsharecropping to cash tenancy. While these measures produced some improve-ments, inequitable sharecropping remained the main form of land tenture.Since 1963 under the Agricultural Reform Code, the aim has been to graduallytransfer ownership of rice and corn lands to the tenant cultivators. Theprogression was to be from sharecropper to leaseholder, to amortizingowner 1/ to full owner-operator. Progress through 1971 was modest, withonly about 5% of all sharecroppers affected by the land reform.
1/ An ex-tenant during the period of purchase of his holding under theAgricultural Reform Code.
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3.08 Since the declaration of martial law in 1972, the Government haspursued a vigorous program of agrarian reform aimed at the rapid transferof land ownership to tenant farmers on rice and corn lands. PresidentialD,ecree No. 27, the basic legislation of the new program, provides for theimmediate transfer to the tenant, whether sharecropper or leaseholder, oft1he land he tills up to 3 ha in an irrigated area and 5 ha in a rainfedarea. The landlord may retain up to 7 ha if he tills the land himself.Since there are some 2 million rice and corn farmers on about 4 million ha,of which less than 1 million ha are irrigated, there is little prospectof achieving the 5 ha rainfed and 3 ha irrigated family farms nationwide.Furthermore, some 80% of the landlords have holdings of less than the 7 haretention limit. The Government does not want to antagonize these smalllandowners and is looking for an equitable solution. The Department ofAgrarian Reform (DAR) plans to complete the transfer to tenants of all landin holdings over 24 ha by December 31, 1974. The next category will mostlikely be the entire 7 to 24 ha range. In the meantime, to prevent abusespending the issue of implementing legislation, evictions are forbiddenand sharecropping has been declared illegal and is being replaced by cashtenancy.
3.09 DAR surveys show that some 17,700 farm families, averaging sixmembers for a total of 1062,000 people, live in the project area. Theaverage farm unit is 1.9 ha with about 60% of the farms, covering 64% ofthe area, falling between 1 and 3 ha. The farm size distribution is asfollows:
As of December 1973 the land in the project area was owned by some 11,500people, 95% of whom held less than 7 ha. However, this group accounted foronly 40% of the area. Two percent of the landowners with 24 ha and aboveaccounted for 13,000 ha or 38% of the land. Under the current phase of theagrarian reform this land is being transferred to some 6,000 tenant culti-vators. When this phase is complete, 62% of the project area will becultivated by about 9,700 owner operators, or 55% of the farmers. Untilthe Government reaches a decision on what to do with small landlords, itis not possible to determine the ultimate tenure picture. The most likelycoutcome would be a further increase in owner operators, the total dis-appearance of sharecropping and its replacement by a better controlled
and more equitable form of leaseholding. It is unlikely that there wouldbe any significant change in farm size distribution (Annex 3).
Existing Irrigation Facilities
3.10 Approximately 21,000 ha of land in the project area fall withinthe existing CRIS, SM-ORIS, and TRIS operated by NIA. The three systems,portions of which were completed between 1913 and 1959, suffer from insuf-ficient maintenance and an inadequate number of control structures, leadingto wasteful use of water in the higher reaches of canals and shortages inthe lower reaches. Only some 5,000 ha can be irrigated during the dryseason because of low flows in the Camiling, O'Donnell and Tarlac rivers.Outside the three systems there are small areas served by privately ownedpumps and communal irrigation systems built by groups of farmers usingtheir own funds, with or without financial assistance from the Government.These systems account for only a few hundred hectares and also suffer fromwater shortage in the dry season.
Agricultural Production
3.11 Rice grown by transplanting is by far the most important: crop inthe area. There is some smallholder sugarcane grown in rainfed areas, butfarmers switch to rice as soon as there is an assured water supply. In theirrigated areas most farmers have adopted high yielding rice varieties,while in the rainfed areas there is a much greater use of lower yieldingbut hardier traditional varieties. Fertilizer and agrochemical use isgenerally low, particularly in the rainfed areas. In the irrigated areasthe average yield is 2.5 ton/ha of paddy for both the wet and dry seasons.The yield of rainfed paddy averages 2.3 ton/ha. The low yields are duepartly to bad water management and partly to poor farming practices, suchas inadequate weeding and insufficient use of inputs.
3.12 Most farmers rely entirely on animal power for land preparation,but a few employ a combination of animal drawn and mechanical equipment.Small power tillers are just being introduced. Use of machinery is morefrequent in land preparation for the dry season crop where timing is im-portant. Approximately three-fourths of the present crop is threshedmechanically. Nearly all mechanical equipment is operated by contractors.
Transportation
3.13 The project area is traversed by National Highway 3 from Manilato northern Luzon via the west coast and the national railroad from Manilato La Union. National Highway 13 runs northwest from Tarlac City throughCamiling towards the Lingayen Gulf. An all-weather gravel road runningparallel to and east of Highway 3 serves the low-lying rice producing areaof TRIS. This road was severely damaged by the 1972 floods but has sincebeen upgraded, and the former wooden bridges have been replaced with per-manent concrete structures. There is a good network of provincial, munici-pal and feeder roads connecting the barrios to the municipal towns and
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neighboring provinces. Under the project feeder roads would be rehabilitatedand new roads constructed to handle the increased production.
IV. THE PROJECT
4.01 The project would upgrade to standards adopted in the UPRP theexisting TRIS, SN-ORIS and CRIS and would extend these systems to includean additional 13,000 ha of currently rainfed rice land. It would include:
(a) Rehabilitation of three existing irrigation and drainagesystems now serving a total area of about 21,000 ha;
(b) Extension of these systems to serve an additional area ofabout 13,000 ha;
(c) Upgrading of about 55 km of existing project roads andconstruction of 370 km of additional roads; and
(d) Procurement of vehicles and equipment.
The project would also provide for a groundwater irrigation pilot project,a National Irrigation Systems Improvement Study (NISIS) and a water manage-ment training program. Consultants would be engaged to assist the NIA withthe groundwater pilot project, the NISIS and the water management trainingprogram. A detailed description of the project works is given in Annex 4.
Project Works
4.02 The TRIS, SM-ORIS and CRIS, now delivering water to about 21,000ha, would be rehabilitated and upgraded by repairing existing canals andstructures and providing additional control structures and turnouts tomanage water deliveries more effectively. New irrigation works would beconstructed to serve about 13,000 ha of rainfed lands adjacent to theexisting service areas. Adequate control structures and turnouts wouldbe provided on the canal systems for efficient water control and delivery.
4.03 The project would be brought to the same standards of on-farmwater distribution and drainage as the UPRP, which are the highest in thecountry. Rice has been grown in the project area for many years and the landis reasonably level and well laid out with little fragmentation of land hold-ings. Therefore, no land leveling, boundary realignment or land consolidationwould be provided. The canal systems would have a turnout for each 10 hafrom which farm ditches built as part of the project would provide directdelivery to about 80% of all holdings. Each 10 ha block would also be servedby a collector drain. With minor exceptions where bank erosion now occursannually, all canals would be unlined. Small buildings would be providedfor Water Management Technologists operating 500 ha of irrigated land Apiece(para 5.04). Some roads would be improved and, where needed, new ones would
be built. Road$ for operation and maintenance would be built along themajor canals,
Water S1Ply. Demand and Quality
4.04 lach of the three Tarlac irrigation system gets its water froma separate river source using its own diversion and conveyance system.There is no regulatory storage azd only 182 of the project area wouldhave water during the dry seaon. Rowever, additional dry season watersupplies my be identified by the Central Luzon Irrigation DevelopmentStudy end/or the proposed groundwater pilot project (para 4.12-4.15).
4.05 The CRI gets its water supply from the Camiling river. Reliablestream flow records are available for a nine year period. These wereextended to 23 years by correlation with the discharge record of the nearbyPila river. The IN-OR gets Its water supply from the O'Donnell river.A discharge record also available for nine years was extended to 23 yearsby correlation with the Agno river. The Bulsa river is the main watersoure for the TRZI. Disaharge records for 13 years were extended to 23years by correlation with the Camiling river. In estimating the runoff atthe TB divtersion da the eatimated flow at the SM-ORIS divorsion damupstroam on the O'onnell river wee excluded. The records of dischargeof the three riven are long enough to enoure that reliable syntheisiedflows at the river diversions were obtained.
4.06 Water requirements for the project were b"ad on two rice cropsPer yeaft Taking into acunt the higher fan irrigation officionciesmP meted after project development, anticipated conveyance and operationallosses ad 1 fetitv fatnfall, annual diversion requirements are estimatedto total 1.75 a, of Which nearly 1.5 a would be required in the dry season.The poposed erepptag calendar would maximise the use of rainfall for bothWet nd drY season eps without exceeding local anpower constraints.
4,0? The atis of the project area was determined from simulatedPeration stUiAes UiIng the 23 year period of synthesimed discharge recordsal ash diversion and the esttmated seasonal water requirements for rice.The itwigable reas seleeed for the project and the currently irrigatedareas are as lelloWnI
J3uGt lBkSSu IR _15 TOTAL9eleeted Irtrlable Area (ha)
In sizing the project area, no account was taken of any diversions upstream
of the system diversion dams. Such diversions are known to exist along theTarlac, O'Donnell and Camiling rivers, but only a few of these have approvedwater rights. These rights do not pose a problem since most of them are
applicable only during the rainy season when stream flows far exceed irri-gation water requirements, and such rights are normally granted by the
Government on condition that they may be canceled if the Government needsthe water for water resources development projects. The only issue in-volving water rights concerns the SM-ORIS. The San Miguel main canal runsthrough the Hacienda Luisita sugar estate. Under I Contract signed in 1926and amended in 1947, the estate has a right to 2 m /sec of water during thedry season for irrigation and the general needs of the sugar mill. For manyyears the water has been used only for operation of the sugar mill, and hasbeen returned to the system for use by farmers downstream, outside the estate.Assurances were obtained that the Government would take the necessary actionto ensure that irrigation water in the San Miguel irrigation system abstractedby the sugar estate would continue to be returned to the system for use byfarmers downstream of Hacienda Luisita.
4.08 Tests of water samples from the Camiling, O'Donnell and Tarlacrivers and from the main canals of each system indicate good water qualitywith total dissolved solids under 200 ppm. The waters are of low salinity,slightly alkaline and are free of toxic elements. The O'Donnell riversince 1913 and the Camiling and Tarlac rivers since the late 1950s havebeen used for irrigation in the project area without evidence of any harm-ful effects, and no difficulties are expected from their continued use.Further details on water supply, demand and quality are presented in Annex 5.
Status of Engineering
4.09 Project planning studies and designs and estimates of the irriga-tion and drainage systems and associated works were carried out by NIA.Surveys were made of existing canals and laterals, and cross sections weretaken at 20 to 100 m intervals to determine excavation quantities. Surveysof the proposed main canals in the extension areas were made to determineconstruction quantities and existing maps were used for lateral locationsand cost estimates. A sample area of drainage requirements was preparedfor each irrigation system to determine unit drainage costs and these whereapplied to the total area. Farm ditch and drain requirements within therotational areas were also prepared by the sample area method. Canalstructure requirements in the rehabilitation areas were determined in thefield by NIA inspectors and costs were estimated for repair, replacementor additions. Structure requirements in the extension areas were determinedaccording to basic irrigation design practices. Operation and maintenanceroads were based on canal capacity and needs within the service area, andwere checked in the field to ensure that adequate access to project workswould be provided. Needed work on river diversion structures was determinedfrom field inspection of each structure. Sufficient investigations have
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been made to assure that suitable materials are available for constructionof canal embankments and maintenance roadways.
4.10 Detailed mapping of the project area is currently underway.Aerial photography was completed in December 1973 and establishment ofhorizontal and vertical controls was nearing completion in mid-1974. De-tailed topographic maps at a scale of 1 to 5000 and with a 1/2-m contourinterval are being prepared. The topographic maps of CRIS are scheduledfor completion by January 1975 and those for TRIS and SM-ORIS by August1975. Final designs and cost estimates for the irrigation and drainagesystems will be prepared using the topographic maps and from field surveysand investigations. Final designs are scheduled to begin in August 1975as the topographic maps are released.
4.11 The proposed construction schedule is described in chart: No. 8923.Work on the TRIS and CRIS service areas would begin in 1975 and on the SM-ORIS service area in 1976. The groundwater pilot project would be carriedout in 3-1/2 years and the NISIS in three years. All project works areexpected to be completed by June 1978. Water management training wouldcontinue through 1979.
Groundwater Pilot Project
4.12 The main problem facing agriculture in Tarlac province and inCentral Luzon generally is the lack of a dependable water supply for yearround irrigation. A series of investigations has been carried out in theCentral Luzon basin to assess the possibilities of increasing the area underirrigation in both the wet and dry season. Although the main emphasis hasbeen on potential surface water storage projects, some work has also beendone on groundwater. The geology of the Philippines is generally favorableto the occurrence of groundwater and exploratory work has been going onboth with assistance from the United Nations Development Program (UNDP)and as part of the Bank-assisted Central Luzon Irrigation Development Study.
4.13 The proposed groundwater pilot project would follow from andsupplement these two ongoing efforts. Its main objectives would be toinvestigate the aquifer system in each of the three Tarlac irrigation areasto evaluate recharge, discharge and storage capabilities as well as groundwatermovement; to evaluate the technical and economic feasibility of dry seasonirrigation by groundwater pumping; to assess the potential for conjunctiveuse of surface and groundwater resources in the project area and prepare apreliminary development plan if such potential exists; and to provide trainingfor NIA staff in groundwater hydrology and well drilling techniques.
4.14 There would be a 300 ha pilot area for each of the three irriga-tion systems, with about six production wells per pilot area serving about50 ha each. Project works would include the construction of about 18 wellsequipped with deep well turbine pumps and diesel motors, the necessarylaterals and farm ditches to connect up with the gravity system, as wellas specialized equipment for operating, monitoring and evaluating the pilot
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project. Preliminary investigations in the project area indicate that enoughgroundwater of suitable quality is available to justify the proposed pilotinvestigation. NIA has sufficient drilling rigs to undertake the proposeddrilling program. The wells would be constructed by NIA personnel and equip-ment under control of the UPRP organization.
4.15 The Project Development Division (PDD), which is also responsiblefor the Central Luzon Study, would evaluate results of the pilot project.Consultants would be employed to provide general guidance and expertiseas needed to reinforce UPRP staff, and to assist in training selected NIAtechnical staff in groundwater resource exploration, use, management andevaluation. After operating the pilot areas for two years, NIA, assistedby consultants, would prepare an evaluation report. Should the results ofthe pilot project warrant, the report would include a framework plan andpreliminary cost estimate for the conjunctive use of surface and ground-water in the project area. Further details on the proposed groundwaterpilot project are provided in Annex 6.
Water Mlanagement Training,
4.16 Irrigation efficiencies on NIA gravity systems are low due to lackof terminal facilities, poor maintenance and inadequate staff. NIA hasrecognized the need for more and better water management staff and is puttirga Water Management Technologist (WMT) in charge of every 500 ha of irrigatedland. The WMTs are all agricultural graduates. The newly recruited staff,including the graduates, is not well versed in water management, cropproduction aspects of irrigation or in methods of communication withfarmers. The proposed water management training program would providetraining facilities in each of the five UPRP operational districts (para5.04) to teach water management methods, rice production techniques andfarmer organization, over a five year period, to about 300 WMTs requiredby the UPRP, Penaranda and Tarlac Projects.
4.17 The training program would be based on pilot water management unitsof 500 ha which would be established in each of the five operational dis-tricts. Theoretical training would be reinforced by putting every trainteethrough a range of field situations on the pilot units where he could applyhis new knowledge. The training staff would be drawn mostly from regularNIA personnel with extensive technical knowledge and field experience.Provision would be made for consultant assistance as required. The trainingfacilities centered on the pilot units would continue to provide refreshertraining after the initial five year period and would produce WMTs forother national irrigation systems. Further details on the proposed watermanagement training program are given in Annex 7.
National Irrigation Systems Improvement Study
4.18 The NIA operates about 100 gravity irrigation systems coveringsome 400,000 ha and ranging in size from 130 ha to 83,000 ha. The systemsare usually run-of-the-river schemes with insufficient control structuresin the canals, a marked lack of terminal facilities, inadequate drainageand little provision for access. Tfhe low efficiency of the systems has
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been reduced further by lack of maintenance caused by a shortage of fundsand equipment. With assistance from the Bank and the Asian DevelopmentBank, NIA is currently upgrading and extending a number of systems inCentral and Northern Luzon and in Mindanao. Despite this ambitious programover half the area under the national systems remains untouched and continuesto deteriorate.
4.19 The proposed National Irrigation Systems Improvement Study (NISIS)would inventory existing NIA systems and select a total of about 150,000 hawith the highest priority for improvement. In addition to economic factorsconsideration would be given to institution-building aspects and to thegeneral poverty of the region. The area selected would be divided intoconvenient packages for the preparation of four feasibility grade studies.The first report would be completed by mid-1976 and would be followed atsix month intervals by the remaining three studies. In addition to de-veloping a pipeline of system improvement projects, NISIS would developNIA's project preparation capability and review the organization andimplementation capacity of NIA's regional offices. Further details areprovided in Annex 8.
Cost Estimates
4.20 Total project costs are estimated at US$34.0 million, of whichUS$12.8 million or 37% is foreign exchange. Project costs are based onquantity estimates from feasibility designs and unit prices prevailing inthe UPRP area in May 1974. All unit prices were adjusted for inflationto a January 1975 level. Unit prices for equipment, materials and suppliesare based on quotations received by NIA, adjusted for expected price in-creases to January 1975. NIA's costs for design and construction super-vision are included under engineering while consultants' fees are includedin the cost estimates for the groundwater pilot project, the water manage-ment training and the NISIS. A physical contingency factor of 20% wasapplied to the costs of the irrigation and drainage systems and a factor of15% was applied to the groundwater pilot project, the water managementtraining and the NISIS. Costs due to expected price increases equal 35%of the cost of the project, including physical contingencies (Annex 9).
4.21 Details of the project costs are presented in Annex 9 and aresummarized below:
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ForeignLocal Foreign Total Local Foreign Total Exchange--- Pesos Million--- ---- US$ Million--- --- %----
Total Project Cost 142.8 85.7 228.5 21.3 12.7 34.0 37
Financing
4.22 The proposed Bank loan of US$17 million would finance the fullforeign exchange costs and about 20% of the local costs of the project. Itwould cover 50% of total project costs. The Government would provide theremaining P 114 million (US$17 million) to NIA out of annual budget a-propriations. To ensure the continuous and timely flow of funds, theGovernment has agreed to set up a special fund for the project and toreplenish it at monthly intervals to a level equivalent to the estimatedrequirements for the next three months. The fund would help ensurerapid payment of civil works contractors, which would help attract smallcontractors. Establishment of the special fund would be a condition ofeffectiveness of the loan.
Procurement
4.23 Equipment and vehicles for force account construction, operation,maintenance, the groundwater pilot project, water management training andt:he NISIS, costing about US$3.5 million would be procured after internationalcompetitive bidding in accordance with Bank Group Guidelines. A preferencelimited to 15% of the cif price of imported goods, or the custom duty, which-ever is lower, would be extended to local manufacturers in the evaluation ofbids. Procurement of off-the-shelf items costing less than US$10,000 eachwould be exempted from international competitive bidding and would be purchasedthrough normal government procurement procedures which are satisfactory. Thetotal for all such items would not exceed US$250,000. A detailed list ofequipment requirements is given in Annex 10.
4.24 Works on the project service area (US$16.2 million) would bescattered over a large area and include a large proportion of rehabilitationworks. These would have to be planned and executed on short notice toavoid the growing season and bad weather and would have to be phased withLrrigation releases. When similar works were advertised under UPRP the NIA
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failed to attract even local contractors. It is unrealistic, however, forNIA to expect to undertake all of its planned construction program inUPRP, the Aurora-Penaranda Project and the proposed project by force account.An assurance was obtained that NIA would investigate ways of expandingthe execution of civil works by contract, so that the amount of work doneby force account would not exceed 20% of the total cost of the work. Thebalance would be tendered after advertising according to contracting pro-cedures satisfactory to the Bank.
Disbursements
4.25 Disbursements would be made at the rate of 100% against the cifcost of directly imported equipment, 100% against the ex-factory cost oflocally manufactured equipment and 65% for imported equipment procuredlocally. For services of foreign consultants and for overseas training,disbursements would cover the actual foreign exchange cost, while for servicesof local consultants disbursements would be at 60% of total costs.Disbursements for civil works would be at the rate of 43% of certifiedmonthly progress payments or expenditures. For civil works contractors'mobilization and equipment, disbursements would be at 100% of foreign ex-change cost. It is expected that disbursements would be completed by June 30,1980, approximately one year after the end of construction. An estimated
schedule of expenditures on the project and a semi-annual disbursementschedule are given in Annex 11.
Accounts and Audit
4.26 The NIA is a Government agency and its accounts are auditedannually by the Government's Corporate Auditor's Office. Assurances wereobtained that NIA would maintain separate accounts for the project, andthat satisfactorily audited financial statements, together with the auditor scomments, would be sent to the Bank within four months of the close of eachfinancial year.
Environmental Effects
4.27 There is no schistosomiasis in the project area or in the islandof Luzon generally. Malaria is almost non-existent, except for about tencases per year reported near Capas at the southwestern corner of SM-ORIS.The Government runs an effective control program based on house sprayingwith residual insecticides. The main health problems in the area are pro-tein deficiencies and enteric diseases. The proposed project would havelittle impact on these.
V. ORGANIZATION AND MANAGEMENT
Proj.ect Management
5.01 NIA was created in 1964 and given responsibility for developing,operating and maintaining all national irrigation systems in the Philippines.
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NIA is also authorized by Government to levy and collect water rates frombeneficiaries of the national irrigation systems to defray operation andmaintenance (0&M) costs. The Government finances the NIA through the saleof bonds or from appropriations. A Board of Directors is responsible forthe Agency, and the Administrator, who is appointed by the Board with theapproval of the President of the Philippines, handles management.
5.02 A special project office under the direction of a Project Managerwas established to carry out the UPRP. The organization has proved effectiveand NIA has decided to entrust construction of the proposed project to theUPRP. Construction in the three Tarlac systems would be carried out by anewly constituted Division, wholly similar to the four Divisions now engagedin the same kind of work in the Pampanga and Penaranda service areas.
5.03 The Project Development Division (PDD) of UPRP would superviseand evaluate the groundwater pilot project and would also carry the main bur-den of the NISIS. The PDD was recently created to enhance NIA's project pre-paration capability and was put into the UPIRP because its main task wasthe Central Luzon Irrigation Development Study. NIA recognizes that thePDD's widening scope of activities makes its position as part of the UPRP:Lncreasingly anomalous. Assurances were obtained that NIA would reviewPDD's organizational location and consider alternative arrangements whichwould better integrate the planning and management of foreign assisted proj-ects for which NIA is the executing agency. The reorganization is expectedto be completed by the end of 1975. In the meantime, the location of PDDin the UPRP organization would not impart a regional bias to the executionof the NISIS. The PDD currently consists of some 30 professionals and 80;sub-professionals. NIA would strengthen the Division to deal with its in-creased tasks, and would engage consultants under terms of reference alreadyapproved by the Bank to provide guidance, special technical services andtraining to the staff engaged in both the groundwater pilot project and theNISIS. Assurances were obtained that NIA would provide additional personnelas needed by PDD and that, within three months of loan signature, NIA wouldengage engineering consultants satisfactory to the Bank for the groundwaterproject and the NISIS.
5.04 A fifth Irrigation District would be set up within the UPRP organi-zation to operate and maintain the Tarlac systems service area. The latterwould be divided into 50 ha irrigation units. A ditchtender would supervisetwo such units (100 ha) while a graduate Water Management Technologist (WMT)would control five ditchtenders (500 ha). A Supervisor would be responsiblefor a water management division which includes five WMTs (2,500 ha). Threeto four divisions would constitute a zone under a Superintendent. The pro-posed Tarlac Irrigation District would consist of three zones. Details ofthe organization are given in Annex 12 and Charts No. 8920 and No. 8921.
5.05 NIA would appoint a Director to supervise and coordinate the watermanagement training program (Annex 7). The Director would be responsible
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to the UPRP Project Manager. A Field Supervisor would be attached to eachof the five Irrigation Districts to be in day-to-day charge of the program.Training personnel would be drawn mainly from well qualified and experiencedO&M staff and from specialized NIA units such as the Agricultural DevelopmentDivision. Provision is made for consultant assistance, should it be required.
Supporting Agricultural Services
5.06 An Agricultural Development Coordinating Council (ADCC) has beenset up in the UPRP to coordinate the work of the various agencies providingservices to the farmers. The arrangement is still new, but it appears tobe working well. The proposed Tarlac project would be managed as an integralpart of the UPRP and should be brought under an ADCC. Since the Tarlacsystems are in a different province, a separate ADCC based on Tarlac prov-ince would be set up for the proposed project. The UPRP and Tarlac: ADCCswould have some members in common, as both provinces are in the CentralLuzon administrative region.
5.07 A number of Government agencies provide extension services in theproject area. Under the "Masagana 99" program aimed at increasing riceproduction, a total of 130 agricultural technicians was used in the projectarea municipalities. The technicians, all college graduates, came fromvarious Government agencies with the Department of Agrarian Reform supplyingthe majority. The ratio of extension workers to farmers worked oul: at oneto 300. Under the project the existing extension coverage would be strength-ened by addition of the water management staff (para 5.04).
5.08 Current fertilizer consumption in the project area amounlts to lessthan 4,000 tons per year, with urea accounting for about half the t:otal. Atfull development the project area would require some 7,000 tons of fertilizer,on the basis of 60 kg/ha nitrogen and 30 kg/ha phosphate per crop season.Existing supply channels would handle the increased demand without difficulty.The certified rice seed requirement at full development would total 400 tonsper year and no problems are expected in obtaining the amount.
5.09 The substantial increase in the irrigated area, slightly highercropping intensity and better farming practices resulting from the projectwould require a large increase in production credit. Under the agrarianreform and Masagana programs the Government has strengthend the creditinstitutions and eased credit to small farmers, previously dependeat on thelandlords for their requirements. A system of "supervised credit" is usedwhich includes the provision of technical services to the borrower to ensurethat recommended practices, such as variety, fertilizer and agrochemicalinputs, are adopted. Under the system no collateral is required. The RuralBanks in the project area and the Philippine National Bank granted loanstotalling p 22.3 million (US$3.4 million) for the 1973 wet season crop. Atfull project development, production credit requirements are estimated atabout P 36.0 million (US$5.4 million) annually. The existing credit institu-tions would be able to meet the requirement.
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5.10 The UPRP's Agricultural Development Division would be responsiblefor monitoring such aspects of the project's progress as: deployment ofextension and water-management personnel, pace of land reform, croppingpatterns, use of inputs and credit, incidence of pests and diseases, cropyields and farm incomes. The Division is already carrying out such work oUPRP.
Recovery of Cost
5.11 Republic Act No. 3601 establishing NIA gave it the authority to"collect from the users of each irrigation system constructed by it suchfees as may be necessary to finance the continuous operation of the systemand reimburse within a period of not less than twenty-five years the costof construction thereof." NIA's record of irrigation fee collection hasshown a steady improvement over the last five years. The total collectionhas risen from P 4.8 million in FY69 to P 7.9 million in FY73. Over thesame period the collection rate as a percentage of fees charged hasincreased from 53% to 65%. The better recovery is attributed to improvedand more timely billing, the use of more collectors, rehabilitation ofsome of the irrigation systems, withholding of water to delinquents andincentive collection bonuses.
5.12 Irrigation fees on the national irrigation schemes are now leviedat the rate of P 25/ha for wet season rice and P 35/ha for dry season rice.The NIA Board approved an increase in fees equivalent to two cavans ofpaddy per ha in the wet season and three cavans in the dry season, to beapplied uniformly to all national irrigation systems. At the existingGovernment support price for paddy the new fees would be equal to P 80and P 120/ha, respectively. The existing irrigation fees account forabout 4% of the current net income of a farmer in the Tarlac systems area,while the new rates would be equal to about 7% of the farmer's current incomeand about 5% of the estimated net farm income at full development. TheO&M costs of the project are estimated P 95/ha/annum (US$14.1). The ratesproposed by NIA would cover O&M costs, but would contribute almost nothingtoward capital recovery.
5.13 As an exception to the uniform rate policy, the Government hasagreed to raise water rates on the UPRP and Aurora-Penaranda project areasat full development to the equivalent of 3.5 cavans of paddy/ha in thewet season and 4.4 cavans in the dry season. Water rates for the proposedproject would be the same as for the UPRP. This would be equivalent toP 140 and P 175/ha in the wet and dry seasons, respectively, at the currentofficial support price, or a weighted average of IL 170/ha for a croppingintensity of 118% over the project area, to be reached gradually over aperiod of five years from completion of construction. Such a rate wouldbe within the farmers' repayment capacities and yet permit NIA to recovera substantial amount of the investment in the project. At a discount rateof 10%, the present worth of such a charge over the 50-year life of the
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project would be P 48 million. The present worth of the project cost 1/plus 0 & M costs at 10% is P 130 million, indicating a recovery ratio ofabout 37%.
5.14 To ensure sound operation and maintenance practices and an equitablecontribution by the beneficiaries toward recovery of the capital cost ofthe project, the Government has agreed that:
(a) the NIA would make adequate annual budgetary provisionsto supply the funds necessary for operation and maintenanceof the project. Total annual expenditure for operationand maintenance in 1974 constant prices is estimated atP 1.3 million beginning in 1977, rising to P 3.2 million(US$0.5 million) thereafter;
(b) irrigation fees would be levied to provide NIA withsufficient funds to maintain and operate the project andto allow for the recovery of investment cost within notmore than 50 years, taking into account farmers' incentivesand capacity to pay. A gradual increase in irrigation feesover a period of five years from completion of constructionto a level equivalent to about 3.5 cavans of paddy perha in the wet season and 4.4 cavans in the dry seasonwould meet the requirement; and
(c) the NIA would take all necessary actions to ensure fulland prompt collection of the irrigation fees.
VI. PRODUCTION, MARKET PROSPECTS, PRICES AND FARM INCOMES
Production
6.01 Upon completion of the project the area cropped would increasefrom about 38,600 ha per year at present, of which 13,000 ha are rainfedduring the wet season, to 40,200 ha of irrigated land. Since the projectwould not provide additional dry season irrigation water, the croppingintensity would increase only slightly from 114% to 118%. Better water
1/ Cost of investments for the project service area of P 127.7 millionexcluding price contingencies. In this analysis both costs andrevenues are evaluated at constant prices.
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control, improved extension services and expanded credit facilities wouldencourage increased planting of high yielding rice varieties, heavierfertilizer applications and greater use of crop protection chemicals. Theuse of machinery for land preparation and threshing would increase to meetmore exacting crop calendars. It is expected that at full agriculturaldevelopment in 1983 almost all threshing would be mechanical and mostfarmers would use a combination of machinery and animal-drawn implementsfor land preparation.
6.02 At full development, paddy yields from the wet and dry seasoncrops are expected to average 3.8 and 4.1 ton/ha respectively. It isestimated that in the currently irrigated areas these yield levels wouldbe achieved five years after the introduction of water control, while inthe existing rainfed areas the projected yield levels would be reached sixyears after the provision of water. Total paddy production from the pro-ject area would be about 155,000 tons at full development, compared with94,000 tons at present and an estimated 104,000 tons in future without theproject. Details of present and future yields and production are givenin Annex 14.
rsarket Prospects
6.03 One of the main goals of Government policy is to attain self-sufficiency in basic foods, especially rice and corn. The deficit in rice,the main staple food crop, has been a persistent problem for the Philippines.Based on population forecasts of 50 million in 1980 and assuming thatpresent annual per capita absorption of milled rice of about 100 kg wouldremain the same, total demand for rice in the Philippines in 1980 would bearound 5.0 million tons, equivalent to 7.2 million tons of paddy. To meetthe higher demand, local production would have to increase by about 4.5% to5.0% per year between 1974 and 1980. While the Government's recent campaignto increase rice production has met with considerable success, there is stillsome doubt about the Philippines' ability to attain self-sufficiency bythe early 1980s. In any event the additional production from the projectarea should be readily marketable.
Prices
6.04 The Bank projects the world market price of Thai 25%-35% brokenrice normally imported by the Philippines to fall from US$450 per ton fobBangkok in 1974 to around US$190 per ton (at constant 1974 prices) in the1980-85 period. These projections have been used to estimate the presentand future farm gate prices of paddy in the economic analysis. The corre-sponding farm gate prices fall from P 2,000 per ton (P 100 per cavan) in1974 to P 910 per ton (P 45 per cavan) in 1980 and beyond (Annex 15).
Farij Incomes
6.05 Farm models have been prepared for three typical farm sizes.The estimated present incomes and those projected at full development forthe three different models are presented in Annex 16 and summarized below:
6.06 Taking the 2.0 ha farm as the average for the project area,present net farm incomes before making land amortization payments of betweenP 3,400 (US$505) on rainfed land and P 4,100 (US$610) on irrigated landwould rise at full project development to P 5,500 (US$820). There is littleinformation on off-farm income in the project area, but observations andinterviews in the field indicate that such income is small relative to returnsfrom farm work. Although comparisons of farm incomes based on farm budgetswith income data based on national accounts aggregates must be interpretedwith caution, they do present a rough picture of the relative income positionof project beneficiaries. The present per capita farm incomes in the projectarea, based on the farm budget for a 2.0 ha farm and family size of six,vary from P 570 (US$85) to P 680 (US$100), or about 40-45% of the. currentper capita GNP of around US$220. At full development in 1983 per capitafarm income on the same size farm in the project area would rise to P 920(US$135) which would still be only about 40% of the per capita GNP, which isprojected to rise to US$330 by 1983. These comparisons indicate that theproject would not do much to narrow the income gap between the project areaand other parts of the country. It would, however, prevent the gap fromwidening and would set the stage for future improvements in relative incomesof project beneficiaries if and when dry season irrigation water is availableto serve the whole project area.
VII. BENEFITS AND JUSTIFICATION
7.01 The proposed project would increase yields on about 34,000 hacurrently dependent on run-of-the-river irrigation and rainfed cultivationb'y providing better water control, improved drainage and the necessaryagricultural supporting services. Rice would be the only crop grown in thearea. Assuming a 50-year project life, prices for rice and fertilizerbased on the Bank's commodity price projections through 1985 and a seasonallyvariable shadow wage rate for unskilled farm labor, the economic rate ofreturn on the project would be about 15%. (Annex 18).
7.02 Sensitivity of the rate of return to several of the basic assumptionsmade in the economic analysis was tested. These factors were chosen to testthe project's sensitivity to cost overruns and delays in construction such as
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those experienced in the development of the UTRP; to likely changes in theterms of trade between agricultural and manufactured goods; to failure toachieve the project's ambitious cropping calendar; and to difficulties inhiring additional farm labor in months of peak agricultural activity. In nocase did the rate of return fall below 11%.
7.03 Improved water management and scheduling of inputs and supportingservices throughout the project area would introduce a more taxing croppingcalendar and farmers would have to replace some animal draft power bymachinery for timely land preparation. Since the project would not provideadditional water for substantially increased double cropping, it would notgive rise to substantially increased use of farm labor. In fact, dependingon the rate of mechanization and adoption of the more intensive croppingcalendar, the project might result in a slightly reduced demand for farmlabor. On the other hand, the increased rice production would tend togenerate additional jobs in the transport, processing, marketing and serv-ice sectors. The Government is aware of the employment effect of intensi-fied agriculture in run-of-river irrigation systems and is doing all it canthrough the Central Luzon Study and the proposed groundwater pilot projectto identify dry season water supplies, to increase both production and em-ployment. The improved farming practices brought about through the proposedproject would make it easier to shift to full double cropping if and whendry season irrigation water becomes available.
7.04 At full agricultural development rice import savings due to theproject would amount to US$7.2 million per year at the projected worldmarket price cif Manila (in terms of constant 1974 prices). After deductingthe incremental cost of imported fertilizers and chemicals, the net foreignexchange savings as a result of the project would amount to about US$6.0 millionper year.
VIII. AGREEMENTS REACHED AND RECOMMENDATION
8.01 During negotiations, agreement with the Government was reached onthe following principal points:
(a) irrigation water abstracted from the San Miguel section ofSM-ORIS for use in the Hacienda Luisita sugar estate and millwould be returned to the systemi for use of farmers downstreamof the estate (para 4.07);
(b) NIA would strengthen the PDD to deal with its increasedresponsibilities under the project and would review itsorganizational location because of the widening scope ofPDD activities (para 5.03);
(c) NIA would make adequate annual budgetary provisions to supplythe funds necessary for operation and maintenance of theproject (para 5.14);
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(d) NIA would take all necessary action to ersure full and promptcollection of irrigation fees; and would gradually increasethe level of fees over a period of five years from completionof construction to a level equivalent to about 3.5 cavans ofpaddy/ha tn the wet season and 4.4 cavans/ha in the dry season(para 5.14).
8.02 A condition of effectiveness of the Loan would be the establishmentof a special fund for the project. The Govenmment has agreed to establishthe fund and to replenish it at monthly intervals to a level equivalentto the estimqted requirements for the next three months (Para 4.22),,
8.03 The proposed project would be suitable for a Bank loan of US$17.0million, with a 25 year maturity and a grace period of seven years. Theborrower would be the Republic of the Philippines.
ANNEX 1Page 1
PHILIPPINES
TARLAC IRRIGATION SYSTEMS IMPROVEMENT PROJECT
Central Luzon Irrigation Development
General
1. The Central Luzon basin covers approximately 1,800,000 ha of landin eleven provinces of which about 87% or 1,570,000 ha lie in the five prov-inces of Bulacan, Nueva Ecija, Pampanga, Pangasinan and Tarlac. Som,e820,000 ha are considered potentially suitable for irrigated agriculture.
2. Land is one of the main resources in the basin and agriculture,together with agriculturally based activities, is the major contributor tothe region's economy. The principal problem facing agriculture in CentralLuzon is the lack of dependable supplies of water for year round irrigation.Rainfall is usually sufficient to support crops during the wet season, butit is erratic as to time and place of occurrence and is unquestionably de-ficient during the dry season. In rainfed areas agriculture is limited tothe wet season and the land is idle in the dry months. Even on the 190,000ha of land served by national gravity irrigation systems in the basiln duringthe wet season, only about 30 to 40% are irrigated during the dry season.
3. Mean annual rainfall in the basin varies from 1,600 mm to 3,000 mm.About 90% occurs during June through November. The estimated annual runoffin the basin is over 21,000 Mm3, about 45% originating in the Pampanga riverwatershed, 50% in the Agno river basin and the remaining 5% from smallercoastal drainage areas.
4. In 1966, a water resources survey team from the U.S. Bureau of Re-clamation (USBR) prepared and submitted to the Government of the Philippinesa report on the Central Luzon basin. The report identified potential stor-age projects within the region, outlining the possible functions of eachscheme. The report set the stage for a program of irrigation developmentin the basin in which the Bank Group has played a significant part.
The Upper Pampanga River Project (UPRP)
5. A USBR team prepared the feasibility study of the project whichwas appraised by the Bank in late 1968, and financed under Loan No. 637-PH.The project includes the construction of Pantabangan dam and reservoir onthe Pampanga river, the rehabilitation of about 49,500 ha in existing Na-tional Irrigation Administration (NIA) systems and the construction of a
ANNEX 1Page 2
new system to serve 34,000 ha. The project will supply enough water togrow two rice crops per year on 78,500 ha, and a wet season crop on 5,000 ha,for a cropping intensity of 194%.
6. The UPRP is the first major irrigation project in the Philippineswith such a high cropping intensity. The degree of on-farm development onthe project is also markedly in advance of traditional NIA standards. Build-ing of the project has progressed well; work on the dam is finished and allconstruction work is expected to be completed by 1975. In the process ofbuilding and operating the UPRP, NIA has significantly increased its capa-bilities to deal with large and complex projects. The UPRP office of theNIA, created to carry out the project, has proved to be a highly effectiveorganization.
The Aurora-Penaranda Irrigation Prolect (APIP)
7. The feasibility study for the APIP was carried out by NIA withBank Group assistance under Loan No. 637-PH. The project was appraised inlate 1973 and receives Bank Group assistance under Loan/Credit 984/472-PH.The project includes the construction of two diversion dams to lead waterfrom the Aurora basin through a transbasin diversion channel into thePantabangan reservoir, the rehabilitation of 16,700 ha of the existingPenaranda river irrigation system and extension of the system to serve anadditional 8,600 ha. The entire 25,300 ha will be supplied with sufficientwater to permit double cropping of rice. On-farm development will be atthe same level provided on UPRP.
8. The UPRP organization is executing the APIP which is expected tobe completed by mid-1978. The project will be handled as an integral partof the UPRP both from the construction and operations points of view. Atfull development the UPRP-APIP complex will cover about 109,000 ha of irri-gated land, supporting some 45,000 farm families, comprising 250,000 people.
The Central Luzon Irrigation Development Study
9. The APIP includes provision for carrying out an irrigation devel-opment study in Central Luzon with the following objectives:
(a) to undertake a comprehensive inventory of the basin's landand water resources;
(b) to review the present status of water resources developmentin the basin and to determine present and future develop-ment needs in the light of current government plans andpolicies on irrigation, power, flood control, municipaland industrial water supply, and other uses of water;
ANNEX 1Page 3
(c) to formulate a plan of irrigation development for theregion, giving thorough consideration to other potentia]Lbeneficial uses of the water resources; and
(d) to identify specific potential projects which would meet:immediate and future water requirements in the basin.
10. The UPRP office of NIA, assisted by consultants, is responsiblefor carrying out the study, which is expected to be completed by mid-1977.The study will give particular attention to the potential for increasingdry season cropping in the basin by development of additional supplies ofwater, either from storage or from groundwater. The plan to be preparedunder the study will provide guidelines for the integrated implementationof irrigation projects in a logical sequence within the region.
The Tarlac Systems Improvement Project
11. The three existing NIA gravity systems in Tarlac province arefed by the O'Donnell, Tarlac and Camiling rivers which belong to the Agnobasin. The Tarlac systems are the largest existing irrigation systems inthe western section of Central Luzon and their improvement to UPRP stand-ards is an obvious need which does not require confirmation by the CentralLuzon Study. The proposed project for improvement of the Tarlac systemswould not preclude eventual additions to the existing water supplies fromstorage and/or groundwater that might be established by the Study. Infact, the substantial physical improvement of the systems and the betterwater management envisaged in the project would facilitate the effectiveuse of any additional sources of dry season water that might be developedlater.
PHILIPPINES
TARlAC IRRIGATION SYSTEMS IMPROVEMENT PROJECT
Climatological Data
Hacienda Luiaita
TRainfall1J Jan Feb Mar Apr May Jun Jul A Sep Oct Nov Dee Total
1 Period of observation 1951-1972.-/ Period of obaervation 1968-1972.
Period of observation 1951-1970.Period of observation 1958-1970. V
ANNEX 3Page 1
PHILIPPINES
TARLAC IRRIGATION SYSTEMS IMPROVEMENT PROJECT
Land Tenure and Reform
Background
1. Since the beginning of the century successive Governments in thePhilippines have introduced a series of laws to improve the lot of tenantfarmers. Until 1963 the principal objectives were to define and regulatesharecropping arrangements by formalizing share-tenancy contracts, to re-strict grounds for eviction, and to encourage a change from sharecroppingto cash tenancy or "leaseholding". While these measures produced some im-provements, sharecropping remained the main form of tenure. The resultinginequities in the distribution of income from land continued to producesporadic agrarian unrest.
2. The Agricultural Reform Code (RA 3844) became law in 1963. Theaim was to transfer ownership of rice and corn lands to the cultivatorsby a gradual process, leading to the ultimate abolition of tenant farming.The first stage in the transition would be the replacement of sharecroppingby cash tenancy or leaseholding with regulated land rentals. The secondstage would be the purchase by Government of the land farmed by the lease-holders for resale to them, thus transforming them into amortizing owner-cultivators. The third and final stage would be reached after the newowners had paid off for the land and become freeholders.
3. By 1971, little more than 50,000 sharecroppers, or about: 5% ofthe total, had reached the first stage of leaseholding. The second stageof amortizing ownership had been attained by only 3,400 former tenants.Since the declaration of martial law in 1972, the Government has pursueda vigorous program of agrarian reform aimed at the rapid transfer of landownership to tenant farmers on rice and corn lands. Presidential DecreeNo. 27 (PD 27), the basic piece of legislation of the new program, providesfor the immediate transfer to the tenant, whether sharecropper or lease-holder, of the land he tills up to a total of 3 ha in an irrigated area and5 ha in a rainfed area. The landlord is allowed to retain up to 7 ha pro-viding he cultivates them himself. The Decree lays down a system of valuingthe land and provides for the tenant to pay for it in 15&-equal annual instal-ments at an interest rate of 6% per annum.
4. In early May 1974 the Department of Agrarian Reform (DAR) hadobtained information on about 600,000 tenants on a little less than 1.0 mil-lion ha. While data gathering continues, it is estimated that the total
ANNEX 3Page 2
number of rice and corn tenants is about 1.1 million on some 1.3 million haowned by about 220,000 landlords. Some 80% of these landlords have holdingsof less than 7 ha. In addition the total number of rice and corn farmersprobably exceeds 2 million, while the total area of rice and corn lands isnot much more than 4 million ha, of which less than 1 million ha are irri-gated. There is therefore little prospect of achieving the objective of5 ha rainfed or 3 ha irrigated family farms.
5. A recent survey by DAR reports that 38% of the tenants on 24% ofthe tenanted area are under landlords with holdings smaller than the 7 halimit set by PD 27 for owner retention. This class of landowner accountsfor 83% of all landlords. The Government is anxious not to antagonize thesmall landowners and is looking for a solution to the problem which wouldbe equitable to both the tenants and the landlords. A possible outcomethat is being investigated would be a tightly enforced leasehold withsecurity of tenure and some form of cooperative association between ownerand tenant. To prevent abuses pending the issue of rules and regulationsunder the various decrees, evictions are forbidden and sharecropping hasbeen declared illegal and is being replaced by cash tenancy. In the mean-time, DAR has proceeded vigorously with the transfer of land in holdingsover 24 ha and by the beginning of May 1974 had issued land transfer cer-tificates to 168,000 tenants covering 300,000 ha in 58 provinces of thePhilippines. DAR expects to transfer to the tenants all land in holdingsover 24 ha by the end of December 1974.
Situation in the Project Area
6. DAR surveys show that 11,500 people own 38,000 ha in the projectarea, including about 4,000 ha that are out of command. Some 80% of theowners have holdings of less than 3 ha and 95% have properties of lessthan the 7 ha limit for possible landlord retention set by PD 27. How-ever this group of owners accounts for only 40% of the area. Owners ofholdings of 24 ha and over, the existing operational limit of land reform,account for only 2% of the landlords but occupy 38% of the land. The landownership pattern in the project area by size of holding as of December 1973was as follows:
Size of Holding Owners Area Owned(ha) No. % Ha
Less than 3 9,193 80 13,024 343- 7 1,779 15 5,916 167- 12 308 2 3,006 8
There is considerable variation in the degree of skewness of land ownershipin the three systems in the project area. The Camiling River IrrigationSystem (CRIS) shows the least inequality with the San Miguel-O'Donnell RiverIrrigation System (SM-ORIS) at the other extreme and the Tarlac River Irri-gation System (TRIS.) in the middle. The variations in land distributionbetween the three systems are as follows:
Size of Holding TRIS SM-ORIS CRIS(ha) % Owners % Area % Owners % Area % Owners' % Area
Less than 7 93 53 76 15 98 807-24 6 15 9 6 1 11
More than 24 1 32 15 79 1 9
Total 100 100 100 100 100 100
7. The average farm unit in the area is 1.9 ha with about 60% of the17,700 farms, covering 64% of the area, falling between 1 and 3 ha. Thefarm size distribution is as follows:
Farm Size Farms Cultivated Area(ha) (% (, )
Less than 1 30 131-2 39 342-3 21 303-4 5 94-5 3 7
More than 5 2 7
Total 100 100
There is little difference between the mean CRIS farm size of 1.7 ha andthe TRIS average of 1.6 ha. However, the SM-ORIS average of 3.1 ha isconsiderably larger.
8. The tenure situation within the project area at the timie of sur-vey in December 1973 was as follows:
Owner operators accounted for a little more than 20% of the farmers andthe remainder were all tenants, of whom more than half were sharecroppers.The differences in tenure between the three systems were as follows:
Conditions at SM-ORIS and CRIS once again tend to be at opposite ends ofthe range with TRIS falling between them. CRIS is more isolated than theother two systems, most of the landowners are small, many of the share-croppers are members of the landlords' families; these factors seem tohave produced a more cohesive and conservative attitude. The larger andmore uniform farm sizes, higher incidence of owner-operators and lease-holders and unusually low proportion of sharecroppers at SM-ORIS are theresult of conversion of a large part of the system from an estate to aland settlement after World War II.
9. The DAR plans to complete the issue of land transfer certificatesto all tenants on land holdings of 24 ha and over by December 31, 1974. Inthe project area this would mean the transfer of about 13,000 ha, equivalentto about 40% of the project area, to just under 6,000 tenant cultivators.The attainment of even such a limited objective would result in some 21 ,300ha, or 62% of the project area, being cultivated by 9,700 owner operators,equivalent to 55% of the farmers. Until a decision is reached on the issueof the small landlord it is not possible to determine what will be the ul-timate tenure picture. The most probable outcome would be a further in-crease in the number of owner operators, the total disappearance of share-cropping as a form of tenure and its replacement by a better controlled andmore equitable form of leaseholding. However, it is unlikely that therewould be any significant change in the existing farm size distribution.
ANNEX 4Page 1
PHILIPPINES
TARLAC IRRIGATION SYSTEMS IIIPROVEMENT PROJECT
Project Works
1. Service Area. The Tarlac Irrigation Systems Improvement: Projectwould improve three existing national irrigation systems currently builtto serve 22,700 ha and would extend these systems to serve an additional11,300 ha. 1/ The improvements would include new water regulating anddelivery structures, the construction and/or enlargement of canals and drainsand access and maintenance service roads. General features of the! improvedirrigation systems would include additional canal structures such as checks,control structures and turnouts to more effectively control water deliveriesand to provide water more efficiently to each field as needed. Constanthead orifice turnouts to sub-laterals would be provided for water deliveriesto rotational areas of about 50 ha. Turnouts would be provided fcor each 10ha unit from which farm ditches, constructed as part of the project, wouldconvey water directly to most farms. A few farms would still recetive waterthrough their neighbors' fields. Canals, except where specific reaches areidentified, would be unlined. Working stations for Water Management Tech-nologists (WMT) would be provided for about each 500 ha of irrigated land.The principal works are discussed separately for each irrigation system andare summarized in Table 1.
2. The Tarlac River Irrigation System (TRIS) was constructed in 1959for an area of 8,600 ha, but only 8,500 are irrigated. The system would beimproved by repairing canals and structures and constructing additionalsub-laterals, farm ditches, turnouts, drains and associated works. Newirrigation works would be constructed to serve extension areas of about5,400 ha. Concrete lining would be provided for 1.2 km of the main canalin two reaches downstream from the canal headworks where bank erosionoccurs annually. The intake structure and main canal would be rehabili-tated but would not have to be enlarged to serve the extension area sincethey were designed to serve 18,000 ha. Extension area "A" would be servedby extending the main canal 9.3 km and by enlarging Lateral F. Two newlaterals branching from Lateral F, with a total length of 13 km, wouldalso be constructed. Extension area "B" would be served by extendingLateral D 9.3 km. Additional laterals with a total length of 17 km wouldbe constructed.
1/ For explanation of discrepancies between area irrigated of 21,000 haand area "served" of 22m700 ha, see paras 2-4 below.
ANNEX 4Page 2
3. The San Miguel-O'Donnell River Irrigation System (SM-ORIS) is theoldest of the three systems. The San Miguel portion was completed in 1913and the O'Donnell portion in 1927. The existing system covers 5,100 haalthough only 4,800 ha are currently irrigated. The system would be im-proved and new irrigation and drainage facilities would be constructed fora 4,700 ha extension. The existing canal intake structure, which servesthe main canals for both the San Uiguel and O'Donnell sub-systems, wouldbe replaced by a new intake structure with a capacity of 19 m3/sec insteadof the present 11 m3/sec. The sluice gates on the diversion dam would berepaired. Concrete lining would be placed in the San Miguel main canalfor the first 5.6 km to stabilize the canal banks. The O'Donnell maincanal would be enlarged for the first 5 km. Laterals E and E-1 would alsobe enlarged for a combined distance of 6 kniT.
4. The Camiling, Piver Trrigation Systen (CRIS) was completed in 1957.Tlie existing system covers 9,000 ha, although only 7,350 ha are currentlyirrigated. The system would be improved in the same way as TRIS and newirrigation and drainage works would be provided for a 1,000 ha extensionarea. The concrete ogee weir section of the diversion dam would be resur-faced and the sluice gates in the dam would be repaired. The intake barrelat the head of the main canal would be desilted and rock excavation wouldbe performed in the first 100 P. of the canal to lower the invert to designgrade. The intake structure and canal would not lhave to be enlarged sincethey were designed to serve 10,000 ha. INo concrete lining would be requiredin the main canal. Lateral C would be enlarged from a capacity of 1.9 m3 /secto 4.0 m3 /sec for a distance of 5 km. NIew canals with a total length of10 km would be constructed.
5. Roads. Roads would be constructed on the canal banks accordingito the following criteria: for canals and laterals with a design capacitygreater than 5.0 m3 /sec, operation and maintenance roadways would be pro-vided on both banks; for canals with capacities between 2.0 and 5.0 m /sec,a road would be provided on only one bank; and no roadway would be providedfor waterways with capacities less than 2.0 n3 /sec. In addition, the exist-ing roads in the irrigated areas would be improved by widening and gravelsurfacing.
6. On-Farm Water Distribution and Drainage. The proposed level ofon-farm water distribution and drainage is similar to what is being implemnentedon the UPRP and would be a substantial improvement over the existing systemwhich makes no provision for access or for distribution beyond the sub-lateral. Rice has been grown in the project area for many years and theland is reasonably level and well laid out with little fragmentation of landholdings. Therefore no land leveling, boundary realignment or land con-solidation would be provided at this stage. The NIA is now building a1,000 ha pilot scheme on the UPRP to test the feasibility, costs and localacceptability of full on-farm development, including land consolidation,
ANNEX 4Page 3
land levelling and individual farm access to irrigation and drainage. Thepilot scheme will determine the effects of full on-farm development on yields,ease of operations and efficiency of water use and the findings would beapplicable to the proposed project as well as the rest of the UPRP.
ANNEX 4Table 1
PHILIPPINES
TARLAC IRRIGATION SYSTDES IMPROVEMENT PROJECT
Summary of Irrigation Facilities to be Provided or Rehabilitated
TRIS SM-ORIS CRIS Total
Rehabilitation Area (ha) 8,600 5,100 9,000 22,700Main Canal Kkm)
a) Canal system 105 251 109 139b) Drainage system 65 53 79 68c) Road system 44 35 41 41d) On-farm distribution 141 147 158 149
and drainageSub-Total
2. EXTENSION AREA
a) Canal system 140 268 192 199b) Drainage syptem 63 55 66 60c) Road system 26 58 25 39d) On-farm distribution 180 187 150 180
and drainageSub-Total 949 & im UR
TOTAL 4214
1/ Not including contingencies (20%) and engineering supervison and admini-stration (10%).
ANNEX 5Page 1
PHILIPPINES
TARLAC IRRIGATION SYSTEMS IMPROVEMENT PROJECT
Water Supply, Demand, and Quality
1. Water Supply. Each of the three Tarlac irrigation systems getsits water supply from a separate river source using its own diversion andconveyance system. In the dry season some use is also made of return flowsand water found in small localized ponds and tributary streams. There isno regulatory storage on any of the systems and none would be provided withthe project. The project would not develop new irrigation supplies, butwould improve and extend existing irrigation systems and, by using watermore efficiently, would enable them to serve an expanded area. Only 18%of the project area would have water during the dry season. However,additional water supplies for expanding dry season irrigation may be iden-tified for future development by the Central Luzon Irrigation DevelopmentStudy (Loan/Credit 984/472-PH) and/or the groundwater pilot project (Annex 6).
2. The Camiling River Irrigation System (CRIS) gets its water supplyfrom the Camiling river. Reliable streamflow records for the Camiling riverat a gauging station about 3 km upstream of the Magsaysay Diversion dam areavailable from March 1964. The monthly discharge records of this stationcorrelate closely with monthly runoff of the Pila river, which has dischargerecords dating from 1946. Therefore, flows of the Camiling river at thegauging station were synthesized from the discharge record of the Pila riverfor the period 1946 to February 1964. The flows at the diversion dam werethen correlated on an area basis with the actual and synthesized dischargeat this station to obtain correlated monthly flows for project use.
3. The San Miguel-O'Donnell River Irrigation System (SM-ORIS) getsits water supply from the O'Donnell river at a diversion point downstreamof the confluence of the Bangat and O'Donnell rivers. The discharge recordsof the O'Donnell river at a gauging station between the confluence and thediversion point proved unreliable. Therefore, a discharge record at thediversion site was developed on an area basis from the actual and synthe-sized discharge records at a gauging station on the O'Donnell river about5 km upstream of the confluence. These records date from November 1958 toNovember 1967, and correlate closely with those of a gauging station on theAgno river which date from September 1945 to December 1971. The Agno riverrecords were used to extend the O'Donnell records from 1946 to October 1958and from December 1967 to December 1971.
ANNEX 5Page 2
4. The Bulsa river is the main source of water for the Tarlac RiverIrrigation System (TRIS). The diversion dam is located just downstream ofthe confluence of the Bulsa and O'Donnell rivers on the Tarlac river. Dis-charge records for the Bulsa river at a gauging station about 15 km upstreamof the diversion dam are available from August 1960. This record was ex-tended back to 1946 by correlation with the Camiling river discharge record.The total flows at the diversion dam were then computed on an area basisusing these recorded and synthesized flows. In estimating the runoff atthe TRIS diversion dam the estimated flow at the SM-ORIS diversion dam up-stream on the O'Donnell river was excluded.
5. Water Demand. It was assumed that transplanted rice would be theonly crop grown in the project area in both the wet and dry seasons, using120-day, non photosensitive varieties. Water requirements were based onthe following cropping calendar:
DatesOperation Wet Season Dry Season
Land Preparationand Nursery mid-MIay - mid-Aug. end Sept. - end Nov.
Transplanting early July - late Aug. end Oct. - early Dec.Harvesting late Sept. - late Nov. late Jan. - late Feb.
6. Land preparation and nursery were estimated to take 25 days withwater requirements for saturation, flooding, evaporation and percolationof 280 mm in the wet season and 240 mm in the dry season. The consumptivewater use for rice was estimated using the Class A Pan Evaporation Methodsince previous studies by NIA and the United States Bureau of Reclamationin Central Luzon showed good correlation with this method. Pan evaporationdata are available in the project area from 1958. Field percolation losseswere estimated to be 2.0 mm per day based on permeability studies in repre-sentative parts of the project area. The effective rainfall was determinedfrom observed daily rainfall records, allowing water depth to fluctuate withthe growth of the rice plants and limiting maximum depth to 150 mm.
7. Overall irrigation efficiency was estimated to be 39% in the wetseason and 48% in the dry season at full development, based on farm irri-gation wastes of 42% in the wet season and 30% in the dry season, systemoperation losses of 15% and canal seepage losses of 20%. Monthly projectwater requirements and average river flows for each irrigation system areshown in Table 1. Seasonal and total annual diversion requirements aredeveloped in Table 2.
8. The size of the project area was determined from simulated opera-tion studies using the 23-year period of synthesized discharge records ateach diversion and the estimated seasonal water requirements for rice.The cropping calendar was chosen to maximize the use of rainfall without
ANNEX 5Page 3
exceeding local manpower constraints. No use of return flow or otherlocalized water sources was assumed, although as much as 10% of the areacurrently irrigated in the dry season uses water from these sources. Thisconservative 'assumption will offset lower farm irrigation efficienciesduring the project development period. Irrigation losses were limitedto a nominal 15% in each season for 20 out of the 23 years of study. Theshortages occurred mainly in dry season months, although some shortageswere indicated in the wet season as well. The irrigable areas selected forthe project and the currently irrigated areas are as follows:
IrriRation SystemTRIS SM-ORIS CRIS Total
Selected Irrigable Area (ha)Wet Season 14,000 9,800 10,200 34,000Dry Season 2,000 2,300 1,900 6,200
Currently Irrigated Area (ha)Wet Season 8,500 4,800 7,350 20,650Dry Season 1,500 1,350 1,800 4,650
9. Water Quality. Tests of water samples from the Camiling, O'Donnelland Tarlac rivers and from the main canals of each system indicate good waterquality with total dissolved solids under 200 ppm. The waters are of lowsalinity, slightly alkaline (pR 7-8) and are free of toxic elements. TheO'Donnell river since 1913 and the Camiling and Tarlac rivers since the late1950s have been used for irrigation in the project area without evidence ofany harmful effects, and no difficulties are expected from their continueduse.
ANNEX 5Table 1
PHILIPPINES
TARLAC IRRIGATION SYSTEMS IMPROVEMENT PROJECT
Estimated Water Requirement and Supply
Jan. Feb. Mar. Apr. May Jun. Jul. | Aug. Sep. Oct. Nov. Dec.
Wet Season paddy (34,000 ha) T+M H
LP + N Drainage'
Dry Season paddy (6,200 ha) H _
LP = Land Preparation, N Nursery, T Transplanting, M = Management, H = Harvest
Total Diversion Requirement 280 1,750 1,)470Overall Irrigation Efficiency 39% 46%
ANNEX 6
Page1
PHILIPPINES
TARLAC IRRIGATION SYSTEMS IMPROVEMENT PROJECT
Groundwater Pilot Proj ect
General
1. The main problem facing agriculture in Tarlac province and theCentral Luzon basin in general is the lack of a dependable supply of waterfor year round irrigation. Rainfall is usually suffici ent to support cropsduring the wet season, but it is erratic and deficient during the dry sea-.son. Consequently, cropping is limited to the wet season on rainfed areasand the land is idle during the dry season. Even in the irrigation systemsno more than 20% of the area can be irrigated during the dry season as aresult of low river flows.
2. A series of investigations has been carried out in the CentralLuzon basin to assess the possibilities of increasing the area under irri-gation in both wet and dry seasons. The main emphasis has been on poten-tial storage proj ec-ts, but some work has also been done on evaluation ofthe groundwater potential. Five production wells have been drilled in theGuimba area with assistance from the United Nations Development Program(UNDP). The Bank assisted Central Luzon Irrigation Development Study(Loan/Credit 984/472-PH) provides among other things for a two year surveyto assess the groundwater potential of the basin and to locate the areasof greatest promise. The groundwater element of the study would complementthe investigation of storage potentials.
3. The basin and range topography and high monsoon rainfall, charac-teristic of the bigger islands in the Philippines, provide favorable condi-tions for the occurrenice of large volumes of groundwate'r. Volcanic activity,continuing through the late Quaternary period, resulted in a thick accumu-lation of sediments in the intermDntane basins and alluvial valleys. Thepermeability of the sediments varies greatly, but discrete, often highlypermeable aquifers are found frequently at sufficiently shallow depths toencourage development. Alternating periods of volcanic activity and erosionhave formed a sequence of semi-confining and more permeable horizons. Mostaquifers therefore contain confined groundwater and free flowing wells arenot uncommon.
4. As part of the Central Luzon Study, UNDP is currently carryingout an exploration program with four heavy drilling rigs to determine theoccurrence, thickness and hydrologic properties of the aquifers in the
ANNEX 6Page 2
project area. Two of the proposed 19 wells have been completed and areyielding about 105 1/sec with drawdowns between 20 and 23 m. While theexploration program will make a valuable addition to the current knowledgeof groundwater in the area it will not provide any information on the ex-ploitation potential of the resource. The proposed Groundwater Pilot Proj-ect would meet this requirement.
Objectives
5. The objectives of the pilot project would be to:
(a) stress the aquifer system in each of the three irrigationareas to evaluate recharge, discharge and storage capabili-ties as well as groundwater movement;
(b) evaluate the technical and economic feasibility of dryseason rice irrigation by groundwater pumping;
(c) assess the potential for conjunctive use of the surfaceand groundwater resources of the project area and preparea preliminary development plan; and
(d) provide special training for NIA staff in groundwaterhydrology and well drilling techniques.
Project Works
6. The groundwater project would consist of one 300 ha pilot area foreach of three irrigation systems. Each pilot area would be served by aboutsix production wells, or one well to 50 ha. In the Guimba area, productionwells were designed to serve 80 ha, but mutual interference reduced theiryield and too little water was available for a dry season rice crop.
7. Project works would include the construction of about 18 wellsequipped with deep well turbine pumps and diesel motors, together with thenecessary laterals and farm ditches to connect up with the gravity system.The laterals would be provided with checks, turnouts and measuring devices.The production wells would be about 140 m deep with a pump chamber 45 cmin diameter and 40 m deep. The wells would be equipped with totalizingmeters to determine total pumpage. In addition to the production wells,about nine observation wells would be drilled and equipped with automaticwater stage recorders. A meteorological station would be established on eachof the pilot areas to obtain data on rainfall, evaporation and temperature.
Water Supply, Demand and Quality
8. Effective rainfall during the dry season crop period is negligibleand the project would be entirely dependent on the groundwater pumped fromthe 18 deep wells. Water supply is calculated on the basis of a 50 ha
ANNEX 6Page 3
service area per well and a yield of 100 1/sec. Water demand is based on
the cropping calendar shown in Table 1, assuming a requirement of 258 mnfor land preparation and nurseries over a 30 day period, a farm irrigationefficiency of 70% because of good management and limited water supply anda conveyance efficiency of 90% because of the closeness of the wells tothe irrigated land. The water demand for the groundwater pilot project isatypical of that for the project area as a whole as presented in Annex 5.This is because the cropping calendar for the pilot area is designed to stressthe groundwater aquifer, whereas the calendar for the rest of the irrigationsystem was designed to make maximum use of residual soil moisture and lateseason rainfall in October and November. The cropping calendar proposed forthe pilot area would also leave little time for maintenance of the irrigationsystem. Water supply would meet the demand with a 16 hour pumping day, givingabout 1800 hours of pump operation per year.
9. Groundwater in the area is of the calcium-magnesium type and issuitable for rice irrigation. The total dissolved solids are below 340 ppm,with chloride concentration at 40 ppm and pH 6.9. Continuous use of ground-water in the dry season is not likely to cause harmful accumulation of saltsdue to leaching during the wet season.
Implementation
10. The wells would be constructed by National Irrigation Administra-tion (NIA) personnel and equipment under the control of the Upper PampangaRiver Project (UPRP) organization. Consultants would be employed to providegeneral guidance to the project and expertise as needed to reinforce theUPRP staff. Construction would be the responsibility of the Tarlac Division(No. 5) to be set up within the UPRP. The evaluation aspects of the projectwould be under the control of the UPRP Project Development Division (PDD),which is also responsible for the Central Luzon Study. The PDD is organizedin five sections: Investigations, Economics and Land Resources, Hydrology,Plan Formulation, and Social and Environmental Aspects. The Division has astaff of approximately 30 professionals and 80 sub-professionals. With con-sultant assistance the PDD staff would be fully competent to execute theproject satisfactorily.
11. In addition to data gathering on the hydrological and geologicalaspects of the project, studies would also be made to optimize the use ofexpensive pumped water. Records would be kept of all production costs of
groundwater irrigated crops, together with similar data from neighboringgravity irrigated farms growing only wet season rice and growing rice inboth seasons.
12. The project would also include a training program for selectedNIA technical staff. It would provide suitable technicians an opportunityto widen their knowledge in the fields of groundwater resource exploration,utilization, management and evaluation. The training would cover all as-pects of the work and would include on-the-job training as well as academic
ANNEX 6Page 4
courses. The consultants employed by NIA for the project would assist withthe training, which would include both in-country and overseas training.
Consultants
13. NIA would employ under terms of reference already approved by theBank a firm of consultants to assist with the project. NIA staff would
carry out most of the data gathering, while the consultants would provideguidance, review and special technical services as required. The consult-ants would recommend the location of the three pilot areas after consideringthe results of the exploration program. The consultants would be responsi-ble for reviewing and evaluating the adequacy of all data, quantifying theamount of groundwater available for irrigation in the project area and de-termining the economics of groundwater use. They would ensure that workon the pilot project was coordinated with the needs of the Central LuzonStudy. The consultants would also prepare a report giving the results ofthe pilot project, together with supporting background information. Inaddition they would assist with the training of NIA personnel in ground-water technology.
Report
14. After not less than two full years of operation of the pilotproject, a report would be prepared which would include an evaluation ofthe groundwater resource in the Tarlac systems area and an assessment ofthe economics of development and use of the resource. Should the resultsof the pilot project warrant, the report would include a framework planand preliminary cost estimates for the conjunctive use of surface andgroundwater in the project area.
Costs
15. The pilot project is estimated to cost a total of US$1.2 million,including a foreign exchange component of US$0.9 million for the purchaseof equipment, vehicles, materials and supplies, consultant services andfor training costs for NIA personnel. Details of the cost estimate aregiven in Annex 9 and a list and cost of the proposed equipment to be pur-c:hased is shown in Annex 10.
PHILIPPINES
TARLAC IRRIGATION SYSTEMS IMPROVEMENT PROJECT
GROUNDWATER PILOT PROJECT
Estimated Dry Season Crop Irrigation Requirements
Oct. Nov. Dec. Jan. Feb. Mar. Ap. May
Dry Season Paddy (900 ha) LP T+M
___~~~~ 1 1IŽ~~ _
LP = Land Preparation, N = Nursery, T Transplanting, M = Management, H = Harvest
Vol. of Water Required (Mm3) 0 .69 2.53 2.53 2.86 2.84 .30 0 11.75Vol. of Pumped Water Available (Mm3) * 0 3.11 3.21 3.21 2.90 3.21 3.11 0 18.75Pump Operation (Hrs/Mo/Pump) 0 106 390 390 441 438 46 0 1,811
World Bank-8917* Assuming pump operates 16 hrs/day.
ANNEX 7Page 1
PHILIPPINES
TARLAC IRRIGATION SYSTEMS IMPROVEMENT PROJECT
Water Management Training
Background
1. Irrigation efficiencies on the National Irrigation Administra-tion's (NIA) gravity systems are generally lowq. Lack of terminal facili-ties, poor maintenance and inadequate staff have contributed to wastefuluse of water. Low efficiencies are particularly prevalent in the wetseason when there is no perceived need to economize on water. On mostsystems, dry season cropping, which relies almost entirely on irrigation,can only take place on about 307 of the wet season area. The UpperPampanga River Project (UPEP) has made double cropping on the entirearea possible by providing additional water from storage and by greatlyimproving the degree of on-farm development. The same will be true ofthe Penaranda project. The physical improvements proposed for the Tarlacsystems would result in a 50% increase in the area irrigated during thewet season and in a smaller increase in the dry season area from the exist-ing run-of-the-river sources. However, double cropping and the expansionof the area irrigated will not be feasible without a substantial improve-ment in irrigation efficiency.
2. On the UPRP and Penaranda projects the physical prerequisitesfor high irrigation efficiencies and the subsequent increase in croppingintensity are being provided. The NIA recognizes that improvements ininfrastructure can only achieve their objective if accompanied by moreand better operational staff. The NIA proposes to base project operationson a 50 ha rotational irrigation unit containing about 20-25 farmers. Tensuch units would be controlled by a Water Management Technologist (WMT)assisted by five ditchtenders (DT). The W2MTs are agricultural graduates,while the DTs have some secondary education. The main function of the WMfTswill be to improve water management practices, to educate the farmers tomake better use of water and to gradually prepare the farmers to assumemore active roles in operation and maintenance of the facilities at thefield level.
3. At the present time, newly recruited NIA personnel, includinggraduates, are not well versed in water management or crop productionaspects of irrigation or in methods of communication with farmers. Theproposed Water Management Training program would meet this requirement.
ANNEX 7Page 2
ObJectives
4. The objectives of the program would be to:
(a) provide training facilities in each of the five UPRPoperational districts aimed at teaching water manage-ment methods, rice production techniques and farmerorganization. The emphasis would be on learning bydoing; and
(b) over a five-year period to train about 300 WMTs re-quired to staff a total of some 143,000 ha of irrigatedland covered by the UPRP, Aurora-Penaranda and proposedTarlac projects.
Pilot Units
5. The training program would be based on pilot water managementunits. Each of the five O&M districts covered by the UPRP organization,namely, San Jose, Talavera, Santa Rosa, Penaranda and Tarlac would set upa 500 ha pilot unit. The District Chiefs and the Head of the AgriculturalDevelopment Division would thoroughly evaluate the physical aspects of thepilot units to ensure that they are functional from both the engineeringand agricultural points of view, as well as being typical of what the WMTswill have to handle after completion of training. Each pilot unit wouldhave a field office with storage for supplies and equipment, as well assuitable facilities for group discussions.
6. In addition to their training functions, the pilot units wouldalso serve as channels for introducing and demonstrating inputs such asfertilizer, herbicides, the use of hand tractors and row seeders, etc.Each unit would be provided with a range of equipment and supplies tofacilitiate demonstration. The concepts of water management would becrystallized through supervised field experience on the units.
Scope of Training
7. The principal emphasis of the training would be on water manage-ment. Training would include reading of flumes and other water measuringdevices; computing the amount of water needed for a given area; simple datacollection of rainfall, evaporation, seepage and percolation rates; usingwater balance models to compute field needs; supervision of field deliver-ies of water; control of drainage and other surface losses, including sys-tematic checking of canals and laterals to achieve desired rates of waterdischarge. The training would be reinforced by putting every trainee througha range of field situations on the pilot units where he can apply his newknowledge.
ANNEX 7Page 3
8. The success of the WMT will be dependent on his relationship withthe farmer who will come to him with production problems as well as withwater problems. To be effective the WMT will have to be suitably equippedwith the latest knowledge of rice technology. He should be in a positipnto help the farmer in such areas as a field identification of insects anddiseases, fertilizer application, weed control and other matters. The WMTwould not usurp the function of the existing extension services but wouldreinforce them by taking advantage of his close and constant associationwith the farmer. To equip the WMTs for these activities the training pro-gram would arrange for trainees to take part in one of the crop productiontraining programs available in the Philippines. One such program is theRice Production Training Program of the International Rice Research Insti-tute, Los Banos, which has a two week and a six month course.
9. Irrigation, as an input, differs markedly in character from otherinputs such as credit, fertilizer, machinery and agro-chemicals. It isa sustained activity. The farmer irrigates during land preparation, drainsthe field for transplanting, irrigates throughout the vegetative, reproduc-tive and grain ripening stages, and drains the fields two weeks before har-vest. In the course of these activities the farmers interact with watermanagement personnel throughout the cropping season. It is therefore logicalto think of water as the major single commodity around which to organizefarmers. The training program would teach the water management staff howto conduct farmers' meetings, how to distribute information and how to keepsimple records to evaluate what is happening. The training would providefor the organization of farmers through NIA personnel, as ultimately bothgroups would be responsible for the routine running of the irrigation system.
Implementation
10. The UPRP, APIP and proposed Tarlac project would have a total re-quirement of some 300 WMTs and about 1,450 DTs. The training program wouldbe aimed at producing the needed WMTs over five years. Allowing for attri-tion, there would be an annual intake of 65 trainees, or 13 candidates fortraining on each of the five pilot units.
11. The program would be under the control of a Director responsibleto the UPRP Project Manager. The Director would administer the program,coordinate the field aspects, negotiate with outside institutions for spe-cialized training or research inputs, and formulate and revise the contentof the program in the light of experience within the pilot units and else-where in the project areas. There would be a Field Supervisor attached toeach District Chief who would be responsible for day to day running of theprogram within the District. The training staff would be drawn mostlyfrom regular NIA personnel such as District Chiefs and other O&M staff withextensive technical knowledge and field experience. Specialized NIA unitssuch as the Agricultural Development Division would contribute both staff
ANNEX 7Page 4
and facilities to the program. The training facilities centered on thepilot units would continue after the end of the five-year period to providerefresher training and to produce WMTs for other national irrigation systems.
12. The program would produce operation manuals for the WMTs and theDTs and would prepare training aids for use by the WMTs in development ofgroup leaders among the farmers. Experience on pilot projects on UPRP hasshown that a cadre of group leaders is essential for spreading new ideasand technology as well as obtaining effective feedback. About three groupleaders per 50 ha rotational unit appears to be the right degree of cover-age. On this basis some 8,500 group leaders would have to be developed bythe WMTs.
13. There is considerable training expertise in the Philippines whichNIA could draw upon for assistance. However, consultant input might be re-quired in some aspects of water management, crop production and trainingfor group organization. As it is difficult to predetermine the nature andamount of consultant services that would be required, the possibility iscovered by a lump sum provision in the cost estimates.
Costs
14. The training program is estimated to cost a total of US$0.75 mil-lion, including a foreign exchange component of US$0.44 million for thepurchase of equipment, vehicles, materials, supplies and consultant serv-ices. Details of the estimate are given in Annex 9 and a list and cost ofthe proposed equipment to be purchased is shown in Annex 10.
ANNEX 8Page I
PHILIPPINES
TARLAC IRRIGATION SYSTEMS IMPROVEMENT PROJECT
National Irrigation Systems Improvement Study
General
1. The National Irrigation Administration (NIA) operates about 100gravity irrigation systems throughout the Philippines. They cover some400,000 ha and range in size from 130 ha to 83,000 ha. Approximately 65%of the systems are smaller than 3,000 ha and account for about 20% of theirrigated area. The national systems are usually run-of-the-river schemeswith insufficient control structures in the canals, a marked lack of terminalfacilities, inadequate drainage and little provision for access. The limitedefficiency of the systems has been reduced further by lack of maintenancecaused by a shortage of funds and equipment. The traditional form of reha-bilitation, consisting of desilting of canals and repair of broken struc-tures, is actually deferred maintenance and only restores the system tc itsoriginal unsatisfactory state.
2. With assistance from the Bank and the Asian Development Bank (ADB),NIA is currently upgrading and extending the Upper Pampanga, Penaranda andAngat-Magat systems in Luzon and the Davao del Norte system in Mindanao. Aliexisting canals and structures are being rehabilitated, new ones are beingadded, drainage is being provided for, the road density is being increasedand water management and rotational irrigation practices are being intro-duced. In addition the Pampanga, Penaranda and Angat systems have been sup-plied with year-round water through the provision of storage. Despite thisambitious program over half of the area under the national systems remainsuntouched and continues to deteriorate.
3. The proposed National Irrigation Systems Improvement Study (NISIS)would inventory existing NIA systems and select a total of about 150,000 hawith the highest priority for improvement. In the process a pipeline ofsystems improvement projects would be developed.
Objectives
4. The objectives of the study would be to:
(a) Compile an inventory of the national gravity systems,cataloguing all relevant data and material needed togive comprehensive information on each system;
ANNEX 8Page 2
(b) Select from the inventory a total of about 150,000 haof irrigation service area for upgrading. In additionto economic factors consideration would be given toinstitution-building aspects and to the general povertyof the region. The area selected would be divided intoconvenient packages for the preparation of feasibilitygrade studies;
(c) Develop the project preparation and planning capabilityof the NIA;
(d) Review the organization and implementation capacity ofthe NIA regional field offices; and
(e) Provide special training to senior regional personnelin all aspects of systems improvement, through on-the-job and consultant assisted training programs in thePhilippines and elsewhere.
Implementation
5. The Project Development Division (PDD) of the UPRP would be giventhe primary responsibility for carrying out the study. The PDD would ob-tain assistance from other specialized units of NIA as needed and wouldwork closely with the NIA regional offices throughout the Philippines.The PDD would be assisted by consultants, who would provide general guid-ance in the study and technical back-up as needed to reinforce NIA staff.The PDD is organized in five sections: Investigations Economics and Land
:Resources, Hydrology, Plan Formulation and Soil and Environmental Aspects.The staff consists of about 30 professionals and 80 subprofessionals forfield work, drafting, transportation and administrative support. Withsupport of consultants and assistance from other headquarters units andthe regional offices of NIA, the PDD staff would be competent to executethe study.
6. The first task of the study would be to collect data on the na-tional irrigation systems and to assess their potentials for benefits afterupgrading. The PDD would produce an inventory of the systems and wouldselect systems for further study. It is anticipated that a total of about150,000 ha of existing systems would be identified at this stage.
7. The second part of the study would consist of four feasibilitysurveys, each covering an irrigation system or package of systems totalingsome 30,000 to 40,000 ha. For the feasibility studies information wouldbe collected on rainfall, run-off, percolation, land classification andownership, farm size and tenure, farming practices, cropping patterns,yields and incomes, together with data on the irrigation layouts and theirexisting condition. The feasibility surveys would be expected to develop
ANNEX 8Page 3
parameters to justify the degree of rehabilitation or upgrading that isproposed for the selected systems. The level of facilities provided inthe UPRP would be taken as standard, but more or less sophisticated sys-tems may be called for, depending on factors which would vary from systemto system.
8. The improvement study would take three years to complete. Thefirst nine months would be devoted to compilation of the systems inventoryand to selection of systems for further study. The remaining 27 monthswould be allocated to the production of the four feasibility reports. Eachreport would require about nine months for preparation. The NIA proposesa stepped method of scheduling report preparation by which each report wouldoverlap the next report by three months. This schedule would enable NIA tospeed up the flow of projects for appraisal and would also result in proj-ects conveniently sized for a reasonable construction period. Assuming theimprovement study would start in early 1975, the sequence of events wouldbe as follows:
Period Activity
January 1975 - September 1975 Inventory and system selectionOctober 1975 - June 1976 Feasibility Report No. 1March 1976 - December 1976 Feasibility Report No. 2October 1976 - June 1977 Feasibility Report No. 3March 1977 - December 1977 Feasibility Report No. 4
9. The study would also provide a training program for NIA technicalpersonnel. The main objective of the training would be to strengthen NIA'sproject preparation capability. During the period of inventory compilationthe consultants would emphasize on-the-job training of selected personnelboth in the Philippines and abroad. The proposed scheduling of reportpreparation would also permit additional on-the-job training, as partici-pants would be given increasing responsibility with each subsequent report.
Consultants
10. NIA would employ consultants, under terms of reference alreadyapproved by the Bank, to assist with the study. NIA staff would carry outmost of the data gathering, while the consultants would furnish guidance,review and specialized technical services as required. The consultantswould set up inventory check lists for all information needed to assessthe present status and future potential of the systems, review the col-lected information and assist in the selection of systems for upgrading.The consultants would assist NIA personnel in preparing the feasibilityreports and would be responsible for training NIA staff in project prepara-tion. The consultants would review the organization of NIA's regionaloffices covered by the feasibility studies and make recommendations forchanges needed to implement the proposed program of system improvement. Theywould also outline a training program for regional staff to execute theimprovement projects.
ANNEX 8Page 4
Costs
11. The study is estimated to cost a total of US$2.5 million includinga foreign exchange component of UTS$1.0 million for the purchase of equip-ment, vehicles, materials and supplies, consultant services and training forNIA personnel. Details of the cost estimate are given in Annex 9 and a listand cost of the proposed equipment to be purchased is shown in Annex 10.
Annex 9Table 1
PHILIPPINES
TARLAC IRRIGATION SYSTEMS IMPROVEMENT PROJECT
Cost Estimate
Local Foreign Total Local Foreign Votal Foreign-------- (Pesos '000) ____ _____-_ (US$ '000) ------- Exchange
IV. InstrumentationMeter, water totalising, 18 units 9,000Recorder, gauges height, 24 units 20,000
Portable pH meters, conductivitymeters and other instruments, lump sum 4,000
Meteorological instruments, includingrecording rain gauges, wind speedrecorders, thermometers, wet & drybulbs and evaporation pans, lump sum 4 000
Sub-Totalt
Total: 550,0ooo
ANNEX 10Table 4Page 1
PH:LIPPINES
TARLAC IRRIGATION SYSTEMS IMPROVEMENT PROJECT
WATER MANAGEMENT TRAINING
List of Equipment and Vehicles
Item Estimated Cost- ~~~~~~~~~~~~~~~(US$)
I. Office and Training EquipmentTypewriter, 5 units 3,000Mimeo machine, 5 units 4,00Desk calculator, 10 units 1,000Slide projector w/screen, 5 units 1,000-Camaera, 5 units 1,000Movie projector, 1 unit 2,000Pablic address system, 5 units 5,000Tape recorder w/cassettes, 5 units 1P500Moisture meter, 5 units 1,500
Sub-Total: 20,000
II. Fazm feipoentRow seeder, 5 units 1,000Transplanter, 5 units 1P500Rotary weeder, 50 units 15,ooHand tractor w/attachements, 5 units 5,000Boom sprayer, 5 units 1,000Thresher, 5 units 102000
Sub-Total: 20,000
III. VehiclesBicycle, 10 units 1,000Motorcycle, 10 units 6,0O0Pickup, half-ton, 5 units 33,000Bus, 40 seat, 1 unit 15,000
Sub-Total: 55,000
ANNEX 10Table 4Page 2
Item Fotimated Goat
IV. Etudrmet lB toPortable FPrhill flues,
water level recorders, raingaugesand evaporation panas, lmp sum 20,000
V. Misc*1lane &!UmtPrOi'osiJotl for unilisted ite of
eqtip4mnt, apparatw and inrtruenta,lump gm 10,000
Total: 1 25,00O
ANNUX 1 0Table5
TL.AC IRIGATION S,T, I?ROVUW PROJET
MATI3IN.AL IIGATION S!STIAS MPROVM T STUDY
Equnt~, JIaor±a1a & SSaple
Estimaed CoBt
I. Vehicoes
Aircraft, twin engines, 6 seatu,l unit 75,00OJeep 4 s 4, 6 units )452000
Sub-Total: 120,000
II. &jiE mct
Survey & H drioftric Equ±pmutimup su 55iooo
Total: 175,000
PHILIPPINES
TARIUC IRRIGATION SYSTEMS IMPROVEVENT PROJECT
Estimated Schedule of Expenditures
TotalItem Cset FI751/ F176 F7 77 Pr 78 FY 79
----------- ----- 7us$ °°°T ---------------------
Tarlac River Irrigation System 6,920 140 980 2,780 3,020 -
SK-O'Donne3lRiver Irrigation System 6,800 60 370 2,720 3,650 -
Ca,iling River Irrigation System 5,28o 60 1,180 2,040 2,000 -
O & M Equipment 1,650 - 1,65o - - _
Groundwater Pilot Project 1,200 50 905 170 75 -
Water Management Training 750 50 285 165 120 130
National Irrigation SystemsDaprovoment Study 2,1%0 260 1,215 805 220 -
IBRD Fiscal Year Accumulated Disbursementsand Semester US$ '000 Equivalent
Fiscal Year 1976
1st 800
2nd 2,500
Fiscal Year 1977
1st 4,500
2nd 7,700
Fiscal Year 1978
1st 10,200
2nd 14.,000
Fiscal Year 1979
1st 15,500
2nd 16,500
Fiscal Year 1980
1st 17,000
ANNEX 11
PHILIPPINES
TARLAC IRRIGATION SYSTEMS IKPROVEYENT PROJECT
Proposed Allocation of Proceeds of Loan
Costs ProposedTotal Foreign Loan/Credit
---- (U~ >Mllion)--------------
Ct~e_gory
I. Civil works:TRIS, SM-ORIS, ORtS 1/ 13.2 4.0Grcm;indwater Pilot Project 2/ 0.4 0.3Water Management Training 3/ 0.3 0.1 10.5 *Nat..Irrig. Systems Improvement Study 4/ 0.5 -rExpecd P:-ice increase 5f 7.9 1.8
Sub-Toal 7a6
M (which (a) uS$1.6 million for mobilization and contractors' equipment and (b)iS$SZi., million for other civil works. Disbursement for (a) will be 100% offoroig,n exchange and for (b) 43% of total cost.
II. Equipment 6/ 3.7 3.7 3.7Disbursement will be 100% of foreign exchange
III. Consultants & Training:
Groundwater Pilot Project 0.2 0.2'Water Management Project 0.1 0.1Nat. Irrig. Systems Improvement Study 1.5 0.7
Sub-Total 4.5 l.6 1.8(Admin. and Engineering) (1.7)
Total 34.O 12.7 170
1/ Force account equipment, US$0.9 million (Annex 10, Table 1) excluded and transferredto Cat. II.
2/ Excludes cost of consultants & training (US$0.2 million) and equipment (US$0.5 million)Annex 9, Table 3).
3/ Excludes cost of consultants and equipment (US$0.4 million) Annex 9, Table 4.4/ Excludes cost of consultants, training & equipment (US$2.0 million) Annex 9, Table 5.5/ Excludes price increases for equipment and consultants (US$1.0 million) Annex 9, Table 66/ Includes equipment for force account (US$0.9 million) O&M (US$1.6 million) Groundwater
(US$0.6 million) Water Management Training (US$0.3 million) and Improvement Study(US$0.3 million) Annex 10, Tables 1-5.
7/ See Annex 9, Table 1.8/ Includes price increases on equipment (US$0.3 million) and consultants (US$0.7 million)
Annex 9, Table 6.
ANNEX 12Page 1
PHILIPPINES
TARLAC IRRIGATION SYSTEMS IMPROVEMENT PROJECT
Organization and Management
1. Since 1964 the overall respcnsibility for the national irrigationsystems in the Philippines has been vested in the National IrrigationAdministration (NIA). The NIA was set up under Republic Act No. 3601 toinvestigate, study, improve, construct and administer all national irriga-tion systems. It was given the power to carry out investigations intoall available water resources in the country in order to utilize them forirrigatior. and to collect water rates from the beneficiaries of the nationalirrigation systems. The NIA is financed by the Government through thesale of bonds or from appropriations.
2. The governing body of the NIA is the Board of Directors, composedof a Chairman and six members. Its management is vested in an Administratorappointed by the Board, with the approval of the President of the Philippines.The NIA is organized into five departments at headquarters, eight regionaland two sub-regional offices managing the field services and a number ofspecial projects offices. Consultants were employed under the provisionsof the Bank-assisted (Loan 637-PH) Upper Pampanga River Project (UPRP) tomake recommendations for a program for the improvement of NIA's operations,organizational structure and financial management. Most of the recommenda-tions have been implemented or are in the course of being put into effect.
3. A special project office under the direction of a Project Managerwas established to carry out the UPRP. The organization evolved both forconstruction and for maintenace has worked well. The UPRP now employsnearly 7,000 people of whom over 2,000 are engineers, agriculturists,economists and other professionals. The NIA proposes to entrust executionand operation of the Tarlac project to the UPRP organization. A fifthengineering Division would be created to assume responsibility for con-struction in the area covered by the three Tarlac systems (Chart No. 8921).The new Division would be completely similar to the four Divisions presentlyconstructing the UPRP service area.
4. The project Development Division (PDD) of the UPRP would beresponsible for supervision and evaluation of the Groundwater Pilot Project,while drilling of the wells would be done by the Groundwater Section of NIA.However, the irrigation infrastructure in the three groundwater pilot areaswould be built by the Tarlac Engineering Division. The PDD would also be
ANNEX 12Page 2
responsible for implementation of the National Irrigation Systems Improve-ment Study (NISIS). The PDD will require assistance from other specializedNIA headquarters units as well as from the regional offices.
5. The PDD is a recently created unit set up to enhance NIA's projectpreparation capability. It was put into the UPRP organization because itsmain task was the Central Luzon Irrigation Development Study, which is afunction of the UPRP. NIA recognizes that the PDD's widening scope of
activities makes its position as part of the UPRP increasingly anomalous.NIA is also considering a closer integration of the special organizationsset up to implement foreign assisted projects (Chart 8922) to avoid duplica-tion and increase transfer of experience between projects. The on-goingre-organization of NIA is due to be completed by the end of 1975.
6. The proposed organization for operation and maintenance (O&M)is shown in Chart No. 8920. The O&M of the three Tarlac systems would becatered for by creation of a fifth Irrigation District. The smallestphysical sub-division in the system would be a 50 ha irrigation unit. Twosuch units would be the basic organizational entity and would be supervisedby a ditchtender. Five of the latter, or 500 ha, would form a water manage-ment section under a Water Management Technologist, who would be an agri-cultural engineering graduate. Five sections, or 2,500 ha, would makeup a water management division under a Supervisor. Three to four divisions,7,500 to 10,000 ha, would constitute a zone, under a Superintendent. Theproposed Tarlac Irrigation District would be divided into three zones.
AINNK 12Table 1
PHILIPPINES
TARIAC IRRIGATION SYSTEMS OMPROVEMENT PROJECT
Cost of Operation aid Maintenance
Annual CostP/7ha
Salaries and ages 56.35
Equip nt Costs 36.35
Materials and Supplies 2.00
Total: 95 .0o
ANNEX 13Page 1
PHILIPPINES
TARLAC IRRIGATION SYSTEMS IMPROVEMENT PROJECT
Supporting Agricultural Services
Extension
1. A number of Government organizations currently has dealings withthe farmers. The principal agencies are:
(a) The Bureau of Agricultural Extension (BAE);
(b) The Bureau of Plant Industry (BPI);
(c) The Department of Agrarian Reform (DAR);
(d) The Agricultural Credit Administration (ACA);
(e) The Department of Local Government and CommunityDevelopment (DLGCD); and
(f) The National Irrigation Administration (NIA).
In addition there are the non-Government Rural Banks (RB).
2. In the Upper Pampanga River Project (UPRP) the need for coordi-nating the various agencies providing services to the farmers was clearlyfelt. In September 1972, the respective heads of the NIA, the ACA, theDAR, the Central Bank of the Philippines, the National Food and AgriculturalCouncil on behalf of the BAE and BPI and the Federation of Nueva EcijaRural Bankers signed a memorandum of agreement. The latter set forth indetail the responsibilities of the various agencies within the UPRP andprovided for coordinating machinery. Day-to-day control is exercised bythe Agricultural Development Coordinating Council (ADCC) consisting of theProvincial Heads of the participating agencies. While the arrangement isstill quite new, it seems to be working well. As the proposed Tarlac projectwould be operated as part of the UPRP, similar coordinating arrangementswould be made. The existing ADCC is organized on a provincial basis and islocated in Cabanatuan City in Nueva Ecija province, some 40 km from Tarlacthe capital of the province in which the proposed project is sited. Aseparate ADCC, based on Tarlac, would be set up for the project. The twoCouncils would have some members in common, as both provinces are in theCentral Luzon administrative region.
ANNEX 13Page 2
3. The BAE is mainly responsible for agricultural extension, withtechnical back-up provided by the BPI. Under the "Masagana 99" programaimed at increasing rice production, a total of 130 agricultural technicianswas used in the municipalities covering the project area. The technicians,all graduates, came from the BAE, DAR and BPI, with DAR providing some 60%of the total. This worked out to a ratio of one extension worker toabout 300 farmers.
4. The project would be organized on the basis of irrigation unitsof 50 ha in the same manner as the UPRP. The 20-25 farmers in such a unitwould be given every incentive to work together as a group. The NIA wouldschedule irrigation on a rotational basis thus promoting a uniformity ofoperations within each unit at any given time. The rotational area wouldalso be the basic unit for the provision of credit and the building blockfor the eventual organization of irrigation associations and cooperatives.In UPRP the NIA is assigning a Water Management Technologist, who is anagricultural graduate, to every 10 units. The same staffing pattern wouldbe applied to the Tarlac systems (see Annex 12). The water managementstaff, all of whom would be trained agriculturists, would supplement theexisting extension personnel provided by the various government agenciesand would help to increase density of extension coverage in the project area.
5. New extension work items to be emphasized would include improvedirrigation and drainage practices; the importance of scheduling of opera-tions; the use of good quality seed and even planting; proper fertilizerapplication; weed and pest control; and the use of tillage and threshingmachinery.
Research
6. There is no agricultural research station in Tarlac province but,the Maligaya Rice Research and Training Center is situated some 40 kmnortheast of Tarlac town and is within the UPRP boundaries. The Center isoperated by the BPI and is engaged in selection and breeding, fertilizerapplication, weed control, crop protection, water management and storageand processing investigations on rice. It also works on possible rotationcrops to rice, as well as being responsible for seed production, certifica-tion and testing for rice and other crops. The Center has training facilitiesand is being used by UPRP for training of staff. The Central Luzon StateUniversity, located at Munoz some 45 km northeast of Tarlac town, alreadyworks with UPRP on water management investigations. The UPRP also hasgood working relations with the International Rice Research Institute andthe Agricultural College of the University of the Philippines. The projectwould be able through UPRP to draw on research back-up from all thesesources.
ANNEX 13Page 3
Fertilizer
7. Annual consumption of fertilizer in the project currently amountsto less than 4,000 tons, of which about 50% is urea. Application ratesfor all fertilizers in the wet season run at a level of about 90 kg/ha. Inthe irrigated dry season crop the rate of application averages 130 kg/haof which just under 45 kg/ha are nitrogen. At full development the projectarea would require some 7,000 tons of fertilizer annually, of which about60% would be urea and the balance di-ammonium-phosphate. The average rateof application per crop season would be of 60 kg/ha nitrogen and 30 kg/haphosphoric acid. There are six ACA fertilizer outlets in the project areain addition to 60 commercial distributors. The supply channels areadequate to handle the increased demand.
S;eed
8. Some 2,500 tons of rice seed per annum are presently used in theproject area. Seeding rates tend to be unnecessarily heavy as an insuranceagainst the risk of seedling losses. Seed is obtained by retention fromthe farmers' commercial production and from seed-growing cooperatives.The Maligaya Center produces foundation and registered seed for bulking byselected seed-producing cooperatives. At full development the project woulduse approximately 2,000 tons of rice seed per annum. The decrease overpresent consumption, would be achieved by a reduction in the seed rateto 50 kg/ha. On the assumption that rice seed would be renewed every fiveyears, the estimated annual requirement of quality seed for the projectarea at full development would amount to 400 tons. No difficulties areenvisaged in supplying this amount.
Farmers' Organizations
9. As part of the Land Reform program the Government through theDLGCD is promoting the formation of pre-cooperative farmers' organiza-tions, based on the barrio or hamlet. The organizations would serve as achannel for the inflow of technical services, credit and inputs and as anassembly point for produce intended for market. It is hoped that at afuture date the organizations would grow into full fledged, formally con-stituted cooperatives. This approach to cooperative organization fitsin well with the 50 ha irrigation unit approach adopted by NIA in theexisting UPRP. The organizations are new and still unproven but theyappear to hold out considerable promise and would be extended from theUPRP to include the project area.
10. The NIA is committed to the creation of irrigation associationsamongst the farmers which would eventually assume a large part of theresponsibility for the operation and maintenance of the national irrigationsystems. Without losing sight of the ultimate objective, the main thrust
ANNEX 13Page 4
of NIA's efforts in UJPRP has been to organize the farmers within the 50 haunits primarily for production and water management. The immediate aimis to demonstrate to the farmers that working together and using waterefficiently is possible and profitable. Once this has been establisheda realistic framework for setting up irrigation associations would exist.The project area would be expected to follow on the exmaple and gain fromthe experience of the UPRP.
Credit
11. Some 10-202 of the farmers in the project area finance theirrequirement of fanm inputs and hired labor from their own resources.The remainder use some form of credit. The principal sources are:
(a) banks, notably the Rural Banks (RB), the PhilippineNational Bank (PNB), the Development Bank of thePhilippines (DBP) and private banks;
(b) the Agricultural Credit Administration (ACA);
(c) input dealers, marketing organizations and millers; and
(d) money lenders.
Twelve of the 16 RBs in Tarlac province are within the project area.
12. To ensure the success of the accelerated Land Reform program setin motion by Presidential Decree No. 27 of October 1972, the Governmenthas proceeded to strengthen the credit institutions and to facilitate thegranting of production credit to small farmers who previously depended onthe landlords for their requirements. RBs have been authorized rediscountingprivileges of 100%, Government guarantees of up to 85% of the loans madeand low-cost money from the Central Bank. The easier credit thus madeavailable is employed under a system of "supervised credit", which includesthe provision of technical services to the borrower to ensure that recom-mended practices, including variety, fertilizer and agrochemical inputs,are adopted. All loans granted under supervised credit are not secured bycollateral, but are covered by a Government guarantee; the interest is at12% per annum and the loan is for a period of 5 to 6 months. During the1973 wet-season crop a total of P 22.8 million (US$3.4 million) was issuedas production credit to rice farmers in the province. The RBs accounted forabout 60% of the total, the PNB for 30% and the balance was contributed bythe ACA. The area covered by the credit amounted up some 51,000 ha.
ANNEX 13Page 5
13. Under the "Masagana 99" program production credit was given atthe rate of P 700/ha, made up of p 380 for inputs and P 320 for services,which iticluded an element of subsistence. The Government proposes to raisethe rate to P 1,000/ha. Such an increase would be adequate to meet thegreater production costs estimated at full development. Assuming that atfull project development about 10% of the farmers in the project areawould find their requirements of inputs and hired labor from their ownresources, some 16,000 farmers would need credit from institutional sources.Should a loan level of P 1,000/ha be used, the total annual credit require-ment at full development would amount to P 36.0 million (US$5.4 million).The existing credit institutions are expected to be able to meet therequirement.
ANNEX 14Page 1
PHILIPPINES
TARLAC IRRIGATION SYSTEMS IMPROVEMENT PROJECT
Present and Projected Cropping Patterns & Production
Present Cropping Pattern
1. Some 21,000 ha included in the three Tarlac systems are currentlycultivated to rice in the wet season. During the dry season flows in theO'Donnell, Tarlac and Camiling rivers are only sufficient to permitcultivation on 4,650 ha, giving an overall cropping intensity on theexisting systems of 120%. In the rainfed areas adjoining the three systems,that would be developed under the project, only a wet season rice crop isgrown on 13,000 ha. The present overall cropping intensity in the projectarea is about 114%. Rice is by far the most important crop in the area.There is some small holder sugarcane grown in the rainfed areas, butfarmers change to rice as soon as irrigation is provided. Annual paddyproduction is estimated at 94,300 tons. The present cropping pattern andproduction estimates and projected future conditions without the projectare given in Table 1.
2. Wet season rice is grown between May and December. Transplantingis spread over a 12-week period between July and September and harvestingtakes place over a 12-week period between the beginning of October and theend of December. The dry season crop is grown between November and April,planting and harvesting is spread over an eight-week period in December-February and harvesting takes place between February and April. All riceis transplanted from field nurseries on to previously puddled land. Theextended period of transplanting is mainly due to the difficulties experi-enced in obtaining adequate and timely irrigation and consequent heavyreliance on rainfall.
3. Most of the farmers in the existing systems grow short-strawedhigh yielding varieties, while in the rainfed areas only about one-thirdof the farmers use the high yielding varieties, the majority relies on thelower yielding, but hardier traditional varieties. The average paddyyield in the rainfed areas is about 2.3 ton/ha, on the irrigated areas theyield in both wet and dry season is 2.5 ton/ha. The low yield levels arepartly due to unsatisfactory water management and partly to poor farmingpractices. The latter are exemplified by random transplanting, high weedinfestations, insufficient use of fertilizers and agrochemicals and untimeli-ness of operations.
ANNEX 14Page 2
Future Cropping Pattern
4. In the absence of the project the rate of increase in yield inthe rainfed areas is estimated at 1.0% per annum and would most probablybe due to a slow enlargement of the area under high yielding varieties.In the existing system the yields in both the wet and dry season crops areestimated to increase by some 1.3% per annum as a result of better cultiva-tion, more weeding and improved plant protection. The use of inputs wouldbe expected to increase with the availability of greater supplies of credit,and more extension effort as part of the Government's campaign for nationalself-sufficiency in rice. There would be no change in the existing croppingintensity due to shortage of water in the dry season.
5. The expected changes in the cropping pattern and in crop produc-tion under the project are shown in Table 2. The project would provide wetseason irrigation to the 13,000 ha of rice currently dependent on rainfalland would also allow for an increase of about 1,500 ha in the area irrigatedduring the dry season through better water management and improved facilities.Cropping intensity in the project area would rise from the present 114%to about 118%. The proposed cropping pattern based solely on rice isconsistent with soils and topography and with the customs of the localpeople.
Future Yields
6. With good water control, adequate supplies of credit and inputsand a strengthened extension service, future paddy yields are expectedto be 3.8 ton/ha and 4.1 ton/ha for the wet and dry season crops respec-tively (Table 2). In the presently irrigated area these yields would beachieved five years after the introduction of water control, while in therainfed areas it is estimated that the projected yields would be reachedsix years after the provision of water, or nine years after the inception ofconstruction.
7. The improved yields would be obtained from the introduction ofhigh yielding varieties throughout the project area, better land prepara-tion through greater use of machinery, certified seed, row planting,heavier fertilizer input and greater expenditure on crop protection andweed control. The improved road network envisaged under the project wouldallow better access to the farms, thus facilitating the inflow of inputsand outflow of produce. The projected yields are already being obtained bysome farmers in the irrigated areas who are using good farming practices.
Development Constraints
8. The project would bring a change in the cropping calendar, a smalldecrease in labor requirement, a greater degree of mechanization partic-ularly in land preparation, and a demand for additional drying and storagefacilities. The most important issues are examined briefly.
ANNEX 14Page 3
9. Cropping Calendars - To ensure efficient utilization of resourcesand the avoidance of technical and organizational bottlenecks, croppingcalendars must be prepared as a basis for extension and water managementactivities. The attached Chart No. 8919 shows a provisional calendar. Themain differences between the proposed and existing practices are to be foundin the shortening and bringing forward of the land preparation and trans-planting periods of the wet season crop, which is reflected in an earlierharvest. In the dry season crop land preparation would begin one monthearlier, thus taking advantage of residual soil moisture. Transplantingwould be brought forward to a six week period in October-December from thecurrent eight weeks in December-February. Harvesting would be completed byFebruary, leaving a period of sixty days in March-April during which theirrigation system would be shut off for maintenance. The main emphasis ofthe proposed crop calendar is on the maximum utilization of rainfall duringthe wet season.
10. Labor Availability. The supply and demand for labor with andwithout the project are examined in detail in Annex 17.
11. Mechanization - At present some 63% of the farmers rely entirelyon animal drawn equipment for land preparation. About 7% use only mechanicalequipment, usually small tillers, and the balance uses a combination of animaldrawn and mechanical equipment. There are no differences between practicesin the wet and dry season crops. With the improvement in water management,better access to the fields and the need for tighter scheduling of operationsto maximize water use, it is estimated that the use of machinery wouldincrease to the point that some 65% of land preparation in the wet seasoncrop would be mechanical. It is anticipated that the machinery would beoperated mainly by contractors, as is currently the practice.
12. Harvesting - The rice is harvested by sickle and the bundles maybe left for a few days in the field to dry, depending on the weather.Threshing is either carried out manually by beating the panicles on aslatted table or by mechanical threshers. The latter are fairly largemachines and need firm ground conditions. At present a surprisingly high75% of the crop is mechanically threshed. Under project conditions of muchbetter access to the fields and improved field drainage it is assumed thatthe entire crop would be threshed mechanically. This should not presentany difficulties as the existing contractors can be expected to meet therequirements.
13. Drying and Storage - At the present time the bulk of the threshedpaddy is sun-dried on whatever suitable surfaces are available. A few ofthe rice mills own small artifical driers, but they are seldom used becauseof the high operating cost relative to sun-drying. Ail mills have sun-dryingcapacity. The arrangements appear to be adequate for the present paddy cropof 94,000 tons. At full development the annual paddy production from theproject would total 155,000 tons. Production of the wet season crop would
ANNEX 14Page 4
increase by about 60%, while the increase in the dry season crop would beover 100%. The harvest of the latter should present no problems as itwould take place mainly in January-February, two of the driest months inthe year. Some expansion of drying facilities, both solar and mechanical,would be required to deal with the increased output for the wet season cropharvest in the wetter October-November period. No difficulties areanticipated in providing the additional facilities as the milling industryis enterprising and is aware of the need for drying. Storage capacitywithin the project area is adequate for present production, but would needto be expanded to meet the increased crop yields. In addition to on-farmstorage, there are public and private sector storage facilities. The latterare expected to increase storage space to meet rising paddy productionfrom the project area.
Processing
14. There are 311 privately owned rice mills and hullers in Tarlacprovince. Assuming a 12-hour working day and a 200-day milling season,the mills have an annual capacity of about 345,000 tons of paddy, comparedto the current provincial paddy production of some 230,000 tons. Millersare now importing paddy from Northern Luzon to utilize spare capacity.Under the circumstances there are unlikely to be any difficulties in millingthe additional production from the project area.
Marketing
15. The farmer has a choice of selling the paddy surplus to hisrequirements to a middleman, storing it in a private or Government ownedwarehouse in the hope of obtaining a better price, having it milled andselling the rice to a trader or selling the paddy to the National GrainsAuthority at the Government support price. He may use all of the abovemethods of disposing of his crop. While Government is involved in themarketing sector, there is no authority with specific responsibility formarketing. The part played by Government agencies and farmers' marketingcooperatives is remarkably small. With the emphasis presently beingplaced on development of the cooperatives, as an essential support to theland reform program, it is likely that at the time of full project devel-opment farmers' cooperatives would play a larger role in marketing of thepaddy.
PHILIPPINES
TARLAC IRRIGATION SYSTEMS IMPROVEMENT PROJECT
Present Production from the Project Ar-ea -1/
Gross Value Net Value Net ReturnsArea Paddy Farm Gate of Production of from
Yield Price Production Cost Production Project Area
1. One of the main goals of Government policy is to attain self-sufficiency in basic foods, especially rice and corn. The deficit in rice,the main staple food crop, has been a persistent problem for the Philippines.Official figures show that for 1963-67 the Philippines imported an averageof about 300,000 tons of rice annually. Although there were no imports ofrice in 1969 or 1970, rice stocks declined in those years. Rice importswere again over 300,000 tons in 1971, rose to 456,000 tons in 1972 due tothe disastrous floods that year and were 336,000 tons in 1973.
2. Official estimates as of May 1974 indicate that paddy productionwas about 5.5 million tons for the fiscal year ending June 30, 1974. Thisis some 25% above the poor 1972/73 harvest and 3-4% over the previous highof 1970/71. With population around 40 million, converting paddy to milledrice at the official average recovery rate of 67% and adding 300,000 tonsconsumed out of imports, per capita absorption of milled rice in 1973/74 wasabout 100 kg. Based on the current population forecast of 50 million in 1980and assuming that annual per capita absorption of milled rice remains at100 kg, total demand for rice in the Philippines in 1980 would be around5.0 million tons, equivalent at the official average recovery rate to7.2 million tons of paddy. To meet this demand, paddy output would haveto increase by about 4.0% to 5.0% per year between 1974 and 1980. This isapproximately the rate achieved during the late 1960s when high yielding ricevarieties were first introduced. While the Government's Masagana campaignto increase rice production has met with considerable success, there isstill some doubt that the Philippines will be self-sufficient in rice bythe early 1980s. In any case, no difficulties in marketing the additionalproduction from the project area are foreseen. The project area has tradi-tionally supplied milled rice for consumption in Manila and neighboringPangasinan province as well as locally, and it is expected that thispattern will continue with the project.
Prices
3. Since 1957 the Government has set an annual farm gate supportprice for paddy to encourage production and to allow some purchases of paddyby Government to build stabilization stocks. Responsibility for operating
ANNEX 15Page' 2
the system rested with an independent body, the Rice and Corn Administra-tion, which operated unsatisfactorily. On September 28, 1972 the respon-sibility for rice and corn price stabilization was transferred to a NationalGrains Authority under the Secretary of Agriculture.
4. During the 1950s and early 1960s the support price remainedvirtually unchanged and was P 9.5 per cavan 1/ (P 216/ton) in 1961. There-after, it was gradually increased and by 1971 it reached P 20.0 per cavan(P 454/ton). Although no precise figures are available to compare theannual average market and support prices for paddy before 1965, the SectorSurvey 2/ shows the market price about 10% higher in 1965, and the supportprice about 10% higher from 1966 to 1970. Since 1971 the market pricehas tended to exceed the support price.
5. The behavior of market prices in relation to the support priceis consistent with the record of domestic paddy output during the pastdecade. In the early 1960s, domestic production was unable to meet thegrowing demand for rice and this tended to raise market prices abQve thesupport price. After the mid-1960s, increased production as a result ofthe spread of high yielding varieties improved the balance between domesticproduction and consumption and tended to depress market prices. Duringthe last three to four years the trend has reversed and the support pricehas become increasingly less operative. As a result of continuing inflationand to encourage farmers to increase paddy production, the Government hascontinued to raise the official support price for paddy, which in mid-1974was P 40 per cavan (P 800/ton). At the same time the market farm gate pricein the project area was P 50-55 per cavan (P 1,000 - P 1,100/ton).
6. Through 1972, the farm gate support price for paddy and thedomestic consumer price for rice kept pace with changes in the world marketprice for rice. Since then, however, in an attempt to keep domestic pricesdown in the face of unprecendentedly high world market prices for rice,the Government has decided at least temporarily to subsidize consumers inurban and rice deficit rural areas. The low official ceiling price forrice and the correspondingly low farm gate price for paddy are maintainedby Government sales of imported rice on the domestic market below cost.Although official figures on the amount of the subsidy are not available,and the transaction is obscured by a large proportion of government-to-government and barter arrangements, a rough calculation indicates the orderof magnitude. The Bank's commodity analysts give the 1974 price for Thai25Z'-35% broken rice typically imported by the Philippines as US$450 per ton.
1/ Before 1974 a "cavan" or sack of paddy was equivalent to 44 kg. Since1974 the official weight of a cavan of paddy is set at 50 kg.
Adding US$40 ocean freight yields a cif Manila price of US$490 (P 3,290) perton. The official domestic consumer price in mid-1974 was P 1.9 per kg orP 1,900 per ton, which represents a subsidy of P 1,390 (US$207) per ton.Assuming that 300,000 tons of imported rice are consumed in 1974, the totalsubsidy would be some US$60 million.
7. The Bank projects the world market price of Thai 25%-35% brokenrice to fall (at constant 1974 prices) from US$450 per ton fob Bangkokin 1974 to around US$190 per ton in the 1980-85 period. These projectionshave been used to estimate the present and future farm gate prices ofpaddy in the economic analysis. The corresponding farm gate prices fallfrom P 2,000 per ton (P 100 per eavan) in 1974 to P 900 per ton (P 45 percavan) in 1980 and beyond. It is assumed that over this period the Govern-ment will maintain the current price ceiling for rice of P 1.9 per kg andsupport price for paddy of P 40 per cavan (at constant 1974 prices). Thisimplies that by 1980 the subsidy to consumers will fall to zero and themarket farm gate price will be about 10X above the support price for paddy.The projected price structure for rice from 1974 to 1980 and beyond asused in the economic analysis is presented in Table 1.
PHILIPPINES
TARLAC IRRIGATION SYSTEMS IMPROVEMENT PROE CT
Price Structure for Rice, 1974-80 and beyond(f/ton at constant 1974 prices)
1. The existing and proposed cropping patterns are given in Annex 14.This annex shows the following:
(a) Production costs for irrigated and rainfed rice underpresent and future "with" and "without" projectconditions (Table 1). Present costs are based on theresults of a survey carried out by NIA and interviewsin the area during appraisal. In the absence of theproject little change in the level of inputs is expectedin the rainfed areas. In the irrigated areas some improve-ment in husbandry is assumed. The input levels for future"with project" conditions are based on recommendationsby the Bureau of Soils and the Bureau of Plant Industry andthe assumption of increased mechanization of land prepara-tion and threshing.
(b) 'lonthly labor requirements for the dry and wet seasonrice crops based on present and proposed croppingcalendars (Table 2). It is assumed that under projectconditions the labor requirement for land preparationand harvesting would be reduced by the use of machinerywhile there would be an increase in the labor requirementfor crop management, covering such activities as weeding,fertilizer and pesticide application and irrigation.
(c) Crop budgets under present and future conditions "with"and "'without" the project (Table 3).
(d) Farm budgets for typical family farms of 1.0 ha, 2.0 haand 3.0 ha (Table 4). The budgets are calculated on a cashflow basis and only hired labor has been costed. The monthlyrequirement for hired labor was calculated by comparingthe labor requirement with the availability per farm of amaximum of 40 man-days/month and a total of 480 man-days/yearof family labor. Future water charges are at the level which
ANNEX 16Page 2
NIA has agreed should be applied to the Pampanga andPenaranda projects at full development, namely 3.5 cavansof paddy/ha in the wet season and 4.4 cavans/ha in thedry season. Payment for land is calculated in accordancewith Presidential Decree No. 27 on the assumption thatthe majority of farmers would be amortizing owners underthe Agrarian Reform program.
PHILIPPINES
TARLAC IRRIGATION SYSTEMS IMPROVEMENT PROJECT
Ricet ro Production Costs 1/
Present Future Without Proi et Future With Protect 2/
Wet Season Dry Season Wet Season Dry Season Wet Season Dry Season
Cash Inputs P/ha) Rainfed ri ated Irriat R Irrited --- ted Irrirjated Irri&ated
1/ Economic prices based on world market prices for rice and fertilizer for use in economic analysis. Figures in parentheses are financial prices
prevailing at appraisal for use in farm budgets. Costs at present are higher than in future because world market prices for rice (seed) and
fertilizers are projected to fall (at 1974 constant prices) and because threshing, which is now done in part hy hand on a crop-sharing basis is
expected to become complctel7 mechanized bv the time of full development, with or without the project.2/ Based on the following assumptions at full development
a) Cultivation - Mechanical 65% @ P 150/haAnimal 35% @ P 100/ha
b) Seed rate 1 cavan /ha @ P 60/cavanc) Fertilizer - Urea 110 kg/ha; DAP 65 kg/ha
Urea @ P 1.10/kg; DAP P 1.30/kgd) Agro-Chemicals - Lump sume) Harvesting - Mechanical threshing @ 5% of yield valuef) Interest @ 12% per year on production credit for 9 months on 90% of cash inputs
3/ Excluding labor handling farm machinery, the cost of which is included tinder cash inputs.
PHILIPPINES
TARLAC IRRIGATION SYSTEMS DMPROVEMENT PROJECT
Monthly Labor Requirements for Various Rice Crops (man-days/ha) 1 ' 2'
Net Value of Production(Before Water CharRes) (P) 1.755 1,990 3,025 3,410 4,145 5,805 4,735 5,810 8,125
Water Charges 3/ (P) - 30 175 - 60 350 - 90 510
Net Value of Production(After Water Charges) (P) 1,755 1,960 2,850 3,410 4,085 5,455 4,735 5,720 7,615
Annual Payment for Land 4/ (P) 475 515 785 950 1,030 1,570 1,425 1,545 2,355
Net Crop Income (P) 1,280 1,455 2,065 2,460 3,055 3,885 3,310 4,175 5,260 >
Farm Labor Requirement X X(man-days) 125 133 133 250 279 266 375 412 387 i s
CN
1/ Based on Annex 16, Tables I & 3.2/ Based on maximum of 40 man-days/month and a total of 480 man-days/year of family labor.3t Based on present charges of P25/ha in the wet season and P35/ha in the dry season and proposed
future charges of P140/ha and P175/ha for wet and dry seasons respectively.4/ Based on amortizing owner with annual payments over 15 years @ 6% compound interest on the unpaid balance.
ANNEX 17Page 1
PHILIPPINES
TARLAC IRRIGATION SYSTEMS IMPROVEMENT PROJECT
Parm Labor Analysis
Labor Supply
1. Based on surveys conducted by the National Irrigation Administra-tion (NIA), and data from the Department of Agrarian Reform (DAR) and the1970 Census of Population and Housing, it is estimated that at presentabout 17,700 farm families live in the project area. The average farmfamily contains six persons, three of whom are of working age (15 to 64 years).Prom this potential labor force, one person is usually assigned to domestichousework and is not available for farm work. Therefore, the currentlyavailable family farm labor supply is about 35,000 workers. Assuming 240days per worker per year, the annual family farm labor supply would be 8.4million man-days, or an average of 0.7 million man-days per month. Assuminga rural population groth rate of 1.0% per year in the project area (com-pared to an expected national population growth rate of 3%), 1/ the familyfarm labor force would increase to about 38,000 workers at project fulldevelopment in 1983. The annual family farm labor supply would be 9.2million man-days, or an average of 0.8 million man-days per month.
2. In addition to the farm families in the project area, there isroughly an equal number of non-farm families engaged in commerce, trans-portation, local manufacturing industries and a variety of services. Thesefamilies are concentrated along the major roads, and in the towns in theproject area. During periods of peak agricultural activity, these familiessupply hired labor to supplement the family farm labor force. Assumingthat each non-farm family supplies one farm worker at peak periods, thetotal monthly farm labor force in and around the project area in peakseasons is estimated to be about 50% greater than that supplied by farmfamilies, or about 1.0 million man-days per month at present and 1.2 millionman-days per month at the time of full project development.
1/ From 1960 to 1970, while total population in the Philippines grew byabout 3% per year, urban population grew by some 11-12% and ruralpopulation by less than 1% per year. Available data for the municipalitiesin the project area for the same period indicate similar results. Source:1970 Census of Population and Housing and E. M. Pascual, "InternalMigration in the Philippines," First Conference on Population, 1965,pp. 344-345. It is assumed that these trends will continue through the1980s.
ANNEX 17Page 2
Labor Demand
3. Estimates of average monthly and annual labor requirements per hafor different rice crops are given in Annex 16, Table 2. At present theannual labor requirement per ha in the project area is about 25% higherthan that in other parts of the Upper Pampanga River Project (UPRP) areabecause much less mechanical power is used in Tarlac for cultivation. Croppingcalendars in the project area vary widely. Land preparation ih particularis spread out over many months, depending on the local availability of waterand draft animals. The resulting diversity makes water management and thescheduling of inputs and supporting services difficult. In future withoutthe project, it is assumed that some additional mechanization would takeplace, thereby slightly reducing per ha labor requirements. With the project,scheduling would be essential to permit adequate irrigation of the wholearea. This in turn would require the replacement of draft animals by smallpower tillers for most land preparation, and a corresponding reduction inlabor requirements measured in man-days. At the same time, it is expectedthat mechanical threshing on a custom hire basis would become more widespread.Labor requirements at full project development are therefore estimated to beabout 20 man-days per ha less than at present.
4. Estimates of total monthly labor requirements are given in Table 1.The present requirement is about 4.8 million man-days per year, or about60% of the family labor supply. The demand for labor in the project areahas a pronounced seasonal pattern. Peak monthly demand in August andSeptember uses all available family labor plus some hired labor, while dryseason demand from January through May averages less than 20% of availablemanpower. In future without the project the total annual labor require-ment would fall slightly to about 4.6 million man-days due to increasedmechanization. The seasonal employment pattern would remain as at present.Since it would not provide additional irrigation water for dry seasoncropping, the proposed project would not fully use the available labor force.In fact, in order to achieve the project's production benefits throughimproved water management and scheduling, the total demand for farm laborwould fall from "without project" conditions by about 170,000 man-daysper year, or some 700 farm workers. The seasonal peak demand would shiftto July and August and would be more pronounced than at present to reflectthe proposed tighter cropping calendar. The dry season labor requirementwould be pushed forward to make better use of late rains and residual soilmoisture for land preparation, and to allow time for system maintenancein March and April under dry conditions.
5. It is difficult to evaluate the trade-off between this apparentloss of jobs and the need to increase rice output to feed the fast growingpopulation. However, the labor situation with the project is likely tobe better than the foregoing figures indicate because the increased riceproduction in the project area would generate additional jobs directly inthe transport, handling, processing and marketing sectors, and indirectly
ANNEX 17Page 3
in the services sector as the result of increased farm incomes. Further-more, the improved agricultural practices brought about through small scalemechanization, improved cropping calendars, water management, inputs andsupporting services would make it easier to shift to full double croppingin the project area if and when supplementary dry season irrigation waterbecomes available. Sources for such water will be evaluated as part ofthe Central Luzon Irrigation Development Study (Loan/Credit 984/472-PH)and the proposed Groundwater Pilot Project (Annex 6). If storage and/orgroundwater proves technically and economically feasible for the Tarlac area,labor demand for 200% cropping intensity would increase to some 7.6million man-days per year (83% of family farm labor supply at the time offull development), and seasonal fluctuations in employment would be muchreduced.
Economic Cost of Farm Labor
6. Detailed information on wages actually paid in the project areais limited. Most work is done by unpaid family labor and traditional"exchange" labor. Information on off-farm employment is even less reliable.The wage for hired labor in peak agricultural seasons ranges around p 5to 6 per man-day, which is assumed to reflect the opportunity cost of laborto the economy at such times. In months of high rural unemployment, whichcharacterize most of the year, the opportunity cost of labor would be muchlower. The economic cost of farm labor in the project area was thereforeestimated by taking account of the generally prevailing rural unemploymentand extreme seasonal fluctuations in labor demand.
7. It is postulated that the marginal opportunity cost of farm laborin the project area can be approximated by an S-shaped curve (Figure 1).The marginal opportunity cost is positive at all levels of labor demandand increases as more labor is employed in farm work. The increase is slowinitially, reflecting the scarcity of alternative productive employment,but becomes more rapid as the labor supply becomes fully used. At theemployment level corresponding to full employment of available family laborin the project area, the marginal opportunity cost is assumed equal to themarket wage of P 5 per man-day. The rural labor force in the Philippinesis highly mobile, and it is expected that at the market wage of P 6 perman-day, large number of laborers could be attracted to the project areafrom nearby areas if needed.
8. It is reasonable to approximate the S-shaped curve by threestraight line segments. Three points determine the position of the curve.Point A represents the minimum opportunity cost of farm labor which isestimated to be P 2 per man-day, equal to P 1.5 as the economic value ofalternative employment (casual non-farm labor, fishing, house repairs, etc.)plus P 0.5 to supply the additional food requirements of more strenuousfarm work with the project. Point B indicates that at full employment
ANNEX 17Page 4
of family labor the opportunity cost would equal the market wage of P 5 perman-day. The horizontal segment to the right of Point C indicates that atp 6 per man-day as many hired laborers as needed would be available for farmwork in the project area.
9. The monthly marginal opportunity cost may be read directly fromthe curve at the corresponding level of labor demand. With the project,it varies from P 2.1 per man-day in dry season months of high unemploymentto P 6.0 per man-day in the peak months of July and August. The totaleconomic cost of farm labor is then the area under the curve up to thelevel of employment. Computed this way, the future economic cost of farmlabor would be P 13.1 million with the project at full development andP 11.8 million without the project, or an incremental cost of P 1.3 million.The incremental cost is positive despite the lower annual farm employmentwith the project because work would be slightly more concentrated in thepeak season when the marginal opportunity cost is higher. If all farmlabor were priced at the peak season market wage of P 5 to P 6 per man-day,the incremental labor cost would be negative because of the reduced totalemployment.
PHILIPPINES
TARLAC IRRIGATION SYSTEMS IMPROVEMENT PROJECT
Total Monthly Labor Requirements ('000 man-days) -/
Area(ha) Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Total
1/ W = Future with project.2/ W = Future without project.
ANNEX 18Page 1
PHILIPPINES
TARLAC IRRIGATION SYSTEMS IITROVEMENT PROJECT
Economic Analysis
1. The following assumptions were made in evaluating the project'srate of return:
(a) Benefits - The expected paddy yields, prices, grossreturns, production costs, net returns (without accountingfor labor costs) and labor requirements per ha are shownin Annexes 14 and 16. Farm gate prices for paddy used inthe economic analysis are based on the Bank's world marketprice projections for milled rice and are derived in Annex 15.Table 1 shows the expected project benefits at full agri-cultural development.
(b) Investment Costs - All investment costs except costs due toexpected price increases (US$8.9 million), the costs of theGround Water Pilot Project (US$1.2 million), the WaterManagement Training Program (US$0.8 million) and theNational Irrigation Systems Improvement Study (US$2.5 million),have been included in the economic analysis. The incrementalcost of the Water Management Technologists is included underannual 0 & M costs.
(c) Development Period - According to the project implementationschedule, 40% of the currently irrigated areas would beimproved in time for the main wet season 1977 crop, and theremaining improvement and extension areas would be completedin time for the wet season 1978 crop. It has been assumedthat projected yield levels on the improvement areas wouldbe achieved over five years in equal instalments from theyear of completion (1977 or 1978) inclusive, while in theextension areas projected yields would be obtained over sixyears in equal instalments from 1978 inclusive. Full projectbenefits would be achieved in 1983.
(d) Pricing of Labor - Farm labor was evaluated at a shadowwage rate, which varies seasonally and averages p 3.0per man-day over the year under "with" project conditionsat full development, compared to a full employment market
ANNEX 18Page 2
wage of P 5.0 per man-day. A detailed analysis ispresented in Annex 17. The use of unskilled labor inconstruction and development works is limited and alllabor employed in such works was valued at the marketwage rate.
2. Using the foregoing assumptions and discounting project benefitsand costs over a 50 year project life, the economic rate of return isestimated to be 15% (Table 2).
Sensitivity Analysis
3. Several of the basic assumptions made in the economic analysishave been varied in order to examine their impact on the rate of return.These factors were chosen to test the project's sensitivity to cost over-runs and delays in construction such as those experienced in the develop-ment of the Upper Pampanga River Project (UPRP); to likely changes in theterms of trade between agricultural and manufactured goods; to failure toachieve the project's ambitious cropping calendar; and to difficulties inhiring additional farm labor in months of peak agricultural activity. Theeffects of these assumptions on the rate of return are as follows:
Alternative Rate of Return(%)
(a) a two-year delay in reaching full projectbenefits due to failure to complete constructionon time 13
(b) a 20% increase in construction costs 13
(c) a combination of a two-year delay in full projectbenefits and a 20% cost overrun 11
(d) a 25% increase in the world market price of rice 19
(e) a combination of a 25% cost overrun and a 25%increase in the price of rice 16
(f) a 15% decrease in project benefits due to a com-bination of decreased yields and area resultingfrom failure of farmers to adopt fully the proposedcropping calendar 11
(g) a market wage (and opportunity cost) of P 8 insteadof P 6/man-day to attract hired agricultural laborin peak season 14
PHILIPPINES
TARLAC IRRIGATION SYSTEMS IMPROVEMENT PROJECT
Economic Analysis - Net Value of Production
Gross Value Net Value Net ReturnsArea Paddy Farm Gate of Production of from
Yield I/ Price , Production Costs 2/ Production Project Area
W - with project - W without project W w--(P Million)--
1/ From Annex 14, Tables I and 22/ From Annex 16, Table l Total Net Value of Production 73.4 104.63/ From Annex 17, Table 2 Before Costing Labor
Less Imputed Cost of Labor 3/ 11.8 13.1
Total Net Value of Production 61.6 91.5 X
Net Incremental Value ofProduction at Full Project CD
Development. 29.9
PHILIPPINES
TARLAC IRRIGATION SYSTEMS IMPROVEMENT PROJECT
Economic Costs and Benefits
(IuS$ '000)
Project Costs IncrementalYear Capital 0 & M Total Pro ect Benefits
1 (1975) 2,480 0 2,480 0
2 (1976) 3,690 0 3,690 0
3 (1977) 8,340 190 8,530 61o
4 (1978) 6,140 480 6,620 1,920
5 (1979) 0 480 480 2,250
6 (1980) 0 480 480 3,090
7 (1981) 0 480 480 4'°50
8 (1982) 0 480 480 4,200
9-50 (1983-2024) 0 480 480 4, 450
Economic Rate of Return 15%
ID IX
too
PH-ILIPPINESTARLAC IRRIGATION SYSTEMS IMPROVEMENT PROJECT
Implementation Schedule
1975 1976 1977 1978 1979WODRK ITEM- - -- ---
J F MIAMIJ JA SOND JIFIMIAM J JAISIONODJ IMIAMIJ JA SON DJ F MA M J JA S 0N O FM A MJ J A S N D
TARLAC SYSTEM (TRIS)
Mobilization (for TRIS and SM-ORIS)Rehabilitation of existing systems (8,600 has.)Constr,ction of ness areas (9,400 has.) .Construction of roads -Irrigation service facilities
SAN MIGUEL-O'DONNELL SYSTEM (SM-ORIS)
Rehabilitation of existing systems 10,100 has.)l. %XConstruction of ness areas (4,700 has.)Construction of roadsIrrigation service facilitiesX
CAMILING SYSTEM (CR(S) X
Mobilization XRehabdiiation of existing systems 19,000 has.)lXConstruction of sass areas (1,200 has.) XConstruction of roads .
Irrigation service facilities "
GROUNDWATER PILOT PROJECT X
Mobilization I ISystem construction (900 has.)****Operation and evaluation I EiI
WATER MANAGEMENT TRAINING********** ************
NATIONAL IRRIGATION SYSTEMS IMPROVEMENT STUDY * ****
NOTE:Shading indicates met season months
World Bank-8923
PHILIPPINESTARLAC IRRIGATION SYSTEMS IMPROVEMENT PROJECT
