Farm Reconstruction Project, Re-stocking Activities (1996) - IOE
Farm Reconstruction Project, Re-stocking Activities (1996)
Interim evaluation
The Federal Republic of Bosnia and Herzegovina (BA) is a small, mountainous country, almost landlocked. The climate is continental except for the immediate hinterland of the Dalmatian Coast on the Mediterranean Sea. The country has a surface of about 51 000 sq. km. and a population of about 3.4 million with an additional million living abroad (1995).
The project area was supposed to cover the whole area of BA. Implementation was to start in the Bosniac-Croat Federation (BiH) and then be extended to the Republika Srpska (RS) in co-ordination and accordance with the international community and the key institutions involved in the peace process. During its first phase the project has limited its interventions to the Federation’s territory, particularly to the areas that were mostly hit by the war (i.e. Bihac, Gorazdhe, Mostar, Sarajevo, Tuzla and Zenica).
Under the Reconstruction Programme for BA, the Government and the international community have formulated a USD 330 million Reconstruction and Rehabilitation Programme for Agriculture and Rural Areas. The Farm Reconstruction Project (FRP) initiated by IDA and IFAD is the first project under the programme. IFAD has financed the FRP’s restocking activities component.
At design, the target group of the IFAD-financed restocking activities component would be private, experienced smallholder livestock producers and their families, having use of land areas ranging from 1 ha to 5 ha. According to 1995 figures there were, in 1981, 264 406 private farm households within that range, i.e. 49% of the total number of private farms. Priority would be given to refugees, returnees and farm families who suffered substantial damage during the war, including the loss of all or the greater part of their livestock.
Additional eligibility criteria were: (i) technical competence in the relevant areas of livestock production; (ii) ability to provide adequate shelter and feed for new livestock provided under the project; (iii) access to an effective mating service; (iv) access to adequate product storage and marketing outlets; (v) agreement to keep mating/calving records for cattle and lambing records for sheep; (vi) agreement to returning animals of the same number, kind and condition which they had received; and (vii) bona fide evidence of their committment to rebuild and operate their farms, e.g. starting repairs and/or crop production (Staff Appraisal Report, paras 4.01-4.03).
The immediate objectives of the restocking activities component were to restore and improve the beneficiaries’ food security and help them generate additional cash income and employment. The medium-term objective was to lay the basis for beneficiaries’ participation in later development interventions aimed at enabling them to generate an acceptable standard of living from smallholder livestock production.
The FRP has four components: (i) Farm Mechanization; (ii) Restocking Activities; (iii) Animal Health; and (iv) Project Implementation Support.
Expected effects and assumptions
Expected benefits from FRP include: (i) increased farm production, on-farm employment and incomes; (ii) expanded off-farm rural employment opportunities; (iii) increased food security; (iv) a significant improvement in stock quality; and (v) cost-saving and revenue-raising opportunities for the Government. An initial 2 300 farm families would be the direct beneficiaries, followed by a second generation of direct beneficiaries of 2 000 farm families.
Key assumptions were (a) a stock distribution pattern of two heifers or ten sheep per beneficiary farm family, and (b) that the peace agreement would hold in the region.
An Interim Evaluation Mission of the FRP - Re-stocking Activities visited BA from 25 November to 11 December 1996 (a draft Executive Summary of the Interim Evaluation (IE) Report was made available to IFAD Operations Department on January, 1997). Due to the exceptional situation and time constraints, the evaluation took place contextually to a formulation mission (follow-up project) fielded by IFAD’s Near East and North Africa Division (PN), to look into the definition of a potential second phase of the Livestock Component. Although there was continuous and mutual exchange of information between evaluation and formulation experts, each mission was entirely independent from the other.
The evaluation mission’s specific Terms of Reference (TORs) were to (a) assess the importation and distribution of IFAD-financed cattle and goats into BA; (b) assess the distribution of animals to farmers, with particular attention to the suitability of recipient farmers in terms of the eligibility criteria set out by the Staff Appraisal Report (SAR); and (c) evaluate the living conditions for the livestock provided, particularly in relation to the availability and quality of feed, animal husbandry and access to mating services. The evaluation was to be based on (i) data provided by the Project Implementation Unit (PIU) and by the Regional Implementation Units (RIUs), and (ii) field visits throughout the Federation.
Bosnia has suffered tremendous damage since the war broke out in 1992. Around 250 000 people were killed and 1.5 million of the 3.8 million estimated to be currently living in BA are internal refugees or displaced persons. While the project was identified at the end of 1995, annual per capita income had fallen to an estimated USD 500 from USD 1 900 in 1990. Industrial input was about 5% of 1990 output .
Eighty percent of the population was partly or fully dependent on humanitarian aid.
A year later some significant improvements had been made, although poverty is still widespread and economic recovery will take time, as well as infrastructure reconstruction. The Dayton-Paris Agreement has managed to stop the war, but there is still high uncertainty regarding the future of civil cohabitation. Also, the problem of returnees has not been solved as yet.
The project covers most areas of the Federation, particularly those that were mostly damaged during the war. The project in general, and the livestock component in particular, was meant to address some of the most urgent needs of the rural population, notably to start reconstituting the family herd, either for self-consumption or in view of establishing a livestock-based micro-enterprise. Also, the project would contribute to the Government’s efforts to reconstitute a national herd of improved cattle and rehabilitate milk production and marketing.
The project was approved by the Executive Board in April 1996, therefore it only has a few months of implementation history behind. However, the progress made in these few months in terms of cattle selection, identification of beneficiaries at the local level and organizational arrangements for animal distribution is outstanding, given the logistical difficulties and the situation prevailing in the country. Thanks to a high level of committment of all parties involved (World Bank, IFAD, Bosnian Government, project staff, local staff), the implementation period was actually reduced from thirty to eight months and all animals were distributed before the end of 1996. This achievement cannot be underestimated, given the state of need of designated beneficiaries and the extremely cold weather conditions of continental Bosnia, whereby getting a heifer before roads are blocked by snow can make the difference between life and death.
There have been several adjustments of the project during the implementation phase. For example, (i) sheep were not purchased because those available for purchase were not suitable for the local climatic conditions. The sheep budget was used to buy more heifers; and (ii) on credit: the reimbursement system adopted was not in kind as assumed at design, but in cash as it was chosen locally.
Also due to its design and implementation speed, the project experienced a number of shortcomings and outstanding issues concerning targeting, credit, coordination, M&E, technical assistance, livestock distribution, veterinary services etc. These are briefly highlighted below (section 4).
Effects assessment and sustainability
Targeting. There has been no strict implementation of targeting criteria as designed in the SAR. Municipalities have publicised the program and drew up lists of interested farmers, setting the priorities according to local observation of actual needs. The only criteria which were reported to be applied everywhere were: (a) war-damaged households and (b) appropriate conditions for keeping the heifer. Nevertheless, in the prevailing situation, the system used has proved effective and targeting is satisfactory.
Beneficiaries' perception. The evaluation mission visited farmers in areas of Tuzla (2 days), Gorazdhe (2 days), West Herzegovina (1 day), Mostar (1 day), West Bosnia (1 day), Vitez (2 days) and Zenica (1 day). Farmers were randomly selected from the list of beneficiaries.
All farmers with one exception (Black & White, Tuzla) expressed high satisfaction with the quality of the animals they received. This also indicates that the selection process of heifers has been careful and highly professional. All farmers interviewed declared that this (livestock) program has addressed the basic and most urgent needs of distressed populations given the prevailing circumstances.
Effects on beneficiaries’ incomes. It was evident from field interviews (with one exception in the area of Mostar) that no cost-benefit analysis was made to see whether, and at what conditions, loans for heifers could be repaid out of the animal itself. Also, none of the farmers interviewed was keeping breeding records as stipulated in the SAR (ref. additional eligibility criteria).
Many beneficiaries’ main objective was to reconstitute the household’s assets stock using all available opportunities. Most of them are part-time farmers, therefore their concern about income-generation from animals is traditionally limited or non-existent, although employment opportunities are currently very slim for most people. Many beneficiaries are demobilized soldiers who do not appear to have the slightest worry about loan repayment. If this were the case, their investment would have a zero cost for the household, therefore would be an income-generating one independently of its actual profitability.
Specific effects on women. Most beneficiaries’ household heads are part-time farmers and borrowed for a single animal in order to satisfy family needs in terms of milk supply. Their main objective is that, whatever happens in the future, their children will not be left without milk again. The project has a direct beneficial effect on families, particularly on mothers of small children.
It is usually the women that look after the animals. When beneficiaries borrow for a single animal (which was the project policy in most areas), farming is not their main or exclusive source of income. As it is usually the husband that seeks off-farm employment, the wife takes care of the animal. Project-financed heifers are therefore a source of employment mainly for women.
Finally, a significant number of project-supplied animals went to female beneficiaries.
Specific effects on the environment. There was no evidence of any project-related detrimental effects on the environment.
Sustainability. It is too early to make an assessment of the perspectives of project activities in terms of sustainability. It is possible, however, to pinpoint the main aspects by which the sustainability of project-related activities is likely to be influenced. Such aspects relate to (a) the credit scheme, (b) the animals’ survival rate, and (c) political stability, upon which depends the flow of international funds for reconstruction.
Main issues
Credit supervision and repayment
The UPI Bank branch network does not appear to be sufficiently widespread over the Federation territory to guarantee for effective credit supervision. As farmers usually identify an institution with the person that represents it locally, UPI Bank is virtually non-existent as far as farmers are concerned. This could easily create problems in case of limited non-repayment and encourage widespread non-repayment as a consequence.
UPI has a high social motivation to perform credit supervision, but its financial interest (1% interest on sub-loans) is very low. Furthermore, the risk of non-repayment lies entirely on the Government [Ministry of Agriculture (MOA)]. The bank is also undergoing privatization of capital, as most financial institutions in Bosnia. In the light of the above, it is unlikely that UPI will use much of its own resources for the project credit supervision and to pursue bad loans in the long term.
The repayment system has to be reviewed and clarified. Loans have to be repaid in Deutschmarks, but many farmers are not aware of this and many of them have no easy access to foreign currency and/or institutions that accept it. As the risks of non-repayment have finally to be borne by the Government, the latter is the only authority that can actually guarantee enforcement of repayment.
Veterinary services
There are several areas within the Federation where veterinary services are either not readily available or not accessible to the poorer layers of the rural population, including IFAD project beneficiaries. The rehabilitation and supply of Municipal Veterinary Stations (MVSs) remains an outstanding issue although it is partly being addressed by the German development agency GTZ.
The quality of service by quarantine stations within the Federation is also questionable. According to IFAD livestock specialist, hygiene is not satisfactory in the stations and this causes an excessive death and abortion rate.
However, while the mission was taking place, IFAD reached an agreement with MOA and started financing local veterinary services -including artificial insemination- in order to ensure that veterinary support will be available for IFAD-financed heifers and their calves.
On the basis of this agreement, financed on a grant basis, performance-related contracts are signed by the PIU and MVSs, by which the latter should cover all heifers provided under the project for a period of one year.
Transportation system
Complaints have been expressed to the Interim Evaluation team on several occasions regarding the quality of transports provided for the delivery of heifers.
Technical assistance
The project implementation speed has contributed to contrasts and problems between the PIU and part of the foreign Technical Assistance (TA). The Bosnian project management has repeatedly highlighted to the evaluation team the need to use, whenever possible, available qualified local professional staff instead of foreign TA.
Project implementation Unit
Decentralization of decision-making process: several progress reports have highlighted the need for a higher level of decentralization of decision-making at the regional and municipality levels. Poor communication between PIU, RIU, municipalities and beneficiaries have been reported throughout the project implementation phase. Coordination problems are particularly acute in the case of the RIU Mostar, that operates on a mixed Bosniac-Croat territory.
Monitoring & evaluation: the M&E system has not been set up before project startup. Data collection has been limited to list of animals procured and list of final beneficiaries. The officer in charge of M&E within the PIU has just been appointed. The system and persons in charge of data flows from the grassroots level to the RIUs and PIU is not defined. Selected indicators for the evaluation of socio-economic project performance are not clearly identified and used.
Financial controller: the issue of finding a replacement for the TA Financial Controller has been addressed late and a possible solution to this problem was only found a few days before the end of the TA’s last contract.
Lessons learned and recommendations for a follow-up phase
Given the overall satisfactory performance of the FRP - Re-stocking Activities and the high level of unmet demand, a follow-up project is recommended along the lines of the first one. However, a number of changes should be pursued: a stricter application of more realistic targeting criteria, a revision of animals to be selected (i.e. several complaints about Black & Whites), a better defined credit supervision system, a more decentralized decision-making process, a livestock selection responding to different types of demand (i.e. subsistence and entrepreneurial) and a flexible, grass-rooted M&E system.
Herd-multiplication
Over 90% of farmers expressed their plan to keep the heifer if female, whereas less then 50% declared they would keep a male for more than a few months. Those who would keep the male were farmers planning to build up their own herd in areas where Artificial Insemination (AI) was either unavailable or too expensive. All the others would sell them for slaughter after a few months to a year.
In the region of Zenica, the Government had reportedly expressed to the beneficiaries its interest to recover part of the loan in kind, as to avoid the loss of animals of high quality breeds and to generate a revolving fund in-kind to benefit more farmers out of the heifers imported until now. This option could be experimented wherever the conditions of quarantine stations allow for safe animal collection and redistribution by the State. However, by no circumstances should this option become a compulsory sale of calves to the State Farms independently of the farmers’ own choice.
Further demand
There is a general pressure for more animals to be delivered, as a considerable share of demand has been unmet for several reasons. The only areas where no unmet demand was reported are those most war-affected areas that have been given top priority in distribution (e.g. Gorazdhe), but there again, the return of most refugees is foreseen as taking place next spring and more demand will emerge then. In other areas where activities started late because of institutional confusion (e.g. West Mostar and Livno areas), the real extent of demand has yet to emerge.
Two main lines of requirements have emerged from the farmers interviewed: (a) to get one heifer for family needs (demand unmet by the first phase); and (b) to get several heifers to develop a livestock micro-enterprise. The latter need has emerged predominantly, but not exclusively, in the Livno and West Mostar areas. These two types of need should both be addressed by a second phase, probably with separate components and with different types of animals.
Marketing of milk
Many beneficiaries interviewed expressed their interest to upscale their level of production, but only in case the milk marketing circuit were to be rehabilitated and efficiently managed. This issue should be addressed while pursuing the objective of reconstitution of the livestock national herd, as well as targeting micro-entrepreneurs through a second phase project.
Targeting
Targeting in the project has been satisfactory although SAR targeting criteria were not strictly applied. Beneficiaries selection by municipalities has generally been satisfactory, also due to the widespread state of need in rural BA. The follow-up project should try to address the needs of eligible farmers who have already been identified in 1996 but whose demand has been unmet. Rapid diagnostic surveys should also identify targetable returnees who regained their land after the baseline survey was conducted in the initial months of the project. Identification of beneficiaries in the areas of Mostar and West Bosnia, which started several months later for institutional problems, should be completed.
Targeting mechanisms in the follow-up project should consider the double nature of demand for heifers, i.e. for micro-enteerprise development and for subsistence purposes. Furthermore, it should be noted that the need to feed the animals (which has generated a 1 - 5 ha land availability criterium in the first phase) has excluded the neediest rural people from the project. In order to better match IFAD’s mandate, a follow-up project should consider ways of addressing the needs of these people, too.
Credit repayment
There are reasons to believe that the credit supervision and recovery system will create problems after the first instalments are due (April 1997). A financial institution able to guarantee supervision in the field should be in charge of the credit component. IFAD’s Project Management Department may wish to include in the Financing Agreement of a follow-up project a clause by which a scarce recovery rate in this project can cause a loan suspension in the next one.
Beneficiary participation
Due to time constraints, the participation of farmers in the selection of animals has been almost entirely absent. This should be rectified in the follow-up project where eligible farmers should be consulted in relation to their preferences for animals. This could be carried out in co-operation with Agricultural Staff in the Municipalities concerned.
The need for a rapid project implementation has also caused a generally poor information of farmers regarding the details of the credit scheme. As farmers are not receiveing heifers for free, a follow-up project should put much more emphasis in providing complete and consistent information to all farmers interested in the scheme.
Institutional arrangements
Given the difficulty of project implementation in the Croat-majority areas of the Federation, special institutional arrangements may need to be developed in the second phase in order to ensure a better functioning of project-related activities in these areas.
Financial management
The identification and recruitment of a local counterpart to replace the TA Financial Manager has been delayed for several reasons, notably the difficulty to find a technically highly-qualified person with an excellent knowledge of english, computer-literate and willing to accept a temporary employment (most people with such characteristics having a permanent one). The person selected and recruited for this delicate and crucial job will need to be closely assisted and supervised at least during the first period on duty. The TA or another financial expert should be guaranteed for this purpose during the initial stages of a potential follow-up project.
Monitoring and evaluation
The M&E system should be designed and put in place before project startup and be ready to start operations right from the beginning of project activities, as an integral part of the PIU. Arrangements should include a period of Technical Assistance by a qualified M&E expert to be distributed over the project period (e.g. two months at project startup, one month after one year of implementation, one or two months during mid-term evaluation or review, etc). A local M&E expert should be selected before project startup, receive some training and work in close co-operation with the TA. The M&E section should also be provided with a vehicle and computer facilities. Incentives should be foreseen for local field staff designated to systematically and continuously feed information into the system, to allow for effective management and, eventually, evaluation of project impact.
Surveys should include a non-targeted control group to facilitate evaluation of project socio-economic impact on its beneficiaries.
Technical Assistance
Given the difference in cost between the two categories of experts, the high unemployment rate now prevailing in BiH and the country’s generally high level of education, the Government’s request to absorbe local professional staff instead of foreign TA is legitimate and should be met whenever possible. On the other hand, it is useful for local project staff to benefit from the assistance of foreign TA in all those disciplines where there is limited internal knowledge (e.g. M&E) and also to learn to relate to foreign rules and regulations (e.g. finance and procurement, livestock supply). All parties involved have the responsibility of guaranteeing that the project is implemented in the best possible way and the argument of local unemployment should not be used at the detriment of quality of project performance.
IFAD, the Government of BiH and PIU should agree on a balance of TA and local staff requirements before project startup. IFAD and the Cooperating Institution should make sure during project implementation that the selected TA is actually performing according to the high standards required. On the other hand, monitoring should also make sure that the Government/PIU does not use this argument as a pretext to liquidate whatever TA is not in line with its modus operandi.