Document of

The World Bank

FOR OFCIAL USE ONLY

Report No. 8187

PROJECT COMPLETION REPORT

INDIA

JAMMU AND KASHMIR HORTICULTURE PROJECT(CREDIT 806-IN)

NOVEMBER 21, 1989

Agriculture Operations DivisionCountry Department IVAsia Regional Office

This document has a restricted distribution and may be used by recipients only in the performance oftheir oficial duties. Its contents may not otherwise be disclosed without World Bank authorization.

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[.|ST F ABBLaU

AIC - Agro-Industies Development Corporation

CLS - Crop Loan Scheme

DOA - Deprment of Agiculture

DOH - Deparment of Horticulture

DOHPM Depamment of Hoitcultmu Plnning and Marketing

GOI - Govenment of India

GOJK Govenment of Jammu and Kashimir

FAO/CP - FAQ/World Bank Cooprative Programme

HP - Himachal Pradesh

AP - Indo-Austalian Project

IDA - Intemational Developmnt Association

J&K Jamnmu and Kashmir

JKHPMC - Janmmu and Kashnmir Horticulture Produce Marketing and ProcessingCorporation Ltd.

NABARD - Natonal Bank for Agriculture and Rural Development

PPU - Project Preparation Unit

SAR - World Bank Staff Appraisal Report

SKUAST - Sher-e-Kashmiir University of Agricultural Science and Technology

UP - Uttar Pradesh

WB - World Bank

FOR OFFCAzL uSI ONLYTHE WORLD SANK

Washington. O.C. 20433US.A.

OlIked Of.cttw.wai

November 21, 1989

KENORANDUN TO THE EXKCUTIVE DIRECTORS AND THE PRESIDENT

SUBJECT: Project Completion Report on India Jammu andKashmir Horticulture Project (Credit 806-IN)

Attached, for information, is a copy of a report entitled"Project Completion Report on India - Jammu and Kashmir HorticultureProject (Credit 806-IN)" prepared by the FAO/World Bank CooperativeProgram, with an overview memorandum prepared by the Asia Regional Office.No audit of this project has been made by the Operations EvaluationDepartment at this time.

Attachment

Ti documnt has a restd dibutin and may be used by recipients ony in the perfomnceeof their offci duties Its contents may not oherwie be dislosed without World Bank authoation.

i

INDIA FOR OFFIC4L USE ONLY

JAMMUI AND KASHMIR HOIRTICULTURE PROJECT(Credit 806-IN)

PROJECT CDOMPL^ETION REPOHC

lable of Contents

Page No.

Preface iBasic Data Sheet iiEvaluation Summary ivOverview viii

I. INTRODUCTION 1

II. BROAD CHARACTERISTICS OF HORTICULTURESUB-SECrOR 1

Area and Production 2Servce Institutions 2Marketing 3

HI. PROJECT FORMULATON 3

Project Reconnaisce/Identification 3Project Preparation 4Appraisal 5Project Description 6

TV. REVIEWOFPROJECT IMPLEMENTATION 6

Negotiations and Credit Effectiveness 6Project Changes after Appraisal 7Implementation Schedule 7Physical Implementaton 7Project Cost 9Project Financing and Cedit Allocation 9Compliance with Covenants 10

V. ASSESSMENT OF JKHPMC'S PERFORMANCE 10

Expected Scale of Operations 10Actual Performance I IThe Crop Loan Scheme 12JKHPMCs Financial Position 12Constraints Affecting JKBPMCs OperationalPerformance 13

This document has a restricted distribution and may be used by recipients only in the ierforinanceof their official duties. its contents m&y not otherwise be disclosed without World Bank authorization.

Eap No.

VI. PROJECI ePACr 14

14Assess tfActualProiect mpa 14

V1I. BANK PERFORMANCE 15

Overall Peformace 1SSupevision 16

Vm. CONCLUSIONS AND LESSONS LEARNED 16

1. o inof Appaisal and Acl Costs2. Costs andComploau as at June 1986 of JKHPMC Facilities3. JRHPMC O aons with Apples and Walnuts4. JKHPaC - TeDms of Ma g D & Dem Dircwts5. Ex ncuredon App WalReseah Compoat6. Schedule of Dis tu (Cu e)7. Aoto of Cred Proceds

INDIA

JAMMU AND AMIR HORTICULTURE PROJECT (CREDIT 806-XN)

PROJECT COMPLETION REPORT

PREFACE

This is the Project Completion Report (PCR) for the Jammu andKashmir Horticulture Project in India, for which Credit 806-IN in theamount of US$14.0 million was approved on April 25, 1978. The credit wasclosed on June 30, 1986, two years behind schedule. The last disbursementtook place on February 12, 1987, at which time US$7.3 million wascancelled.

The PCR was prepared by the FAO/World Bank Cooperative Program andthe Overview and Evaluation Summary were prepared by the Asia RegionalOffice. They are based, inter alia, on the Staff Appraisal Report, theDevelopment Credit and Project Agreements; supervision reports; andinternal Bank memoranda.

This PCR was read by the Operations Evaluation Department (OED).The draft PCR was sent to the Borrower on September 8, 1989, for commentsby October 27, 1989, but none were received.

- il. -

JAAMU AND KASHMIR HORTICULTURE PROJICT

(CMi 06-1N)

PROJECT COMPIETION REPORT

Daic Dao Sb S

KEY PROJECT DATAActual Col. 2 as

Apprall Cuwreist 9Estlmate Esaimat* of CI. I

ll] [121 131

Total Project Cost ('SS milion) 27.6 21.81! 79Crdit AmoU (USS million) 14.0 6.7 48- Disbud 14.0 6.7 48- Casucleld 73 52

Date Phya Compone CompeedApple Cenes Sept 83 91/922/Cold SwU SpL 83 91/922/Waln utC;es Sep. 83 91/9221M{aXu;xpartCe SepL 81 91/922/

Tra"A_Cmeatcenve SepL 79 1984Etonamic Raw Of pAtum lkey negie 3/

CUMULATIE DISBURSEMENTS

FY JO FY 81 FY82 FY 3 FY 84 FY 85 !Y 86 FY 87Appsa Esdmate (USS milL) 0S.3 94 4 14.0 14.0 14.0iActul (UJSS milion) 0.1 0.3 2.1 2.6 3.6 49 6.1 6.7Actuals * of Appai sL (E() 33 21 40 27 26 35 44 48Dao of Fina Dlseaut 12-Feb-87PROJECT DAMS

Orlugnal Plan ActualOctNov. 74

Pap-tim (by Gowia _me) Aug-77 -

Appaisal SeptL 77Negodaui Apr-78BoardAppmval 18-May-78Cedit Signng 17-Jul-78CeitEffev s 20Oct-78 6.Jam-79Credit Closing 30-Jun-84 30-Jun46

(saf" "Oka)

fill ma r sn fS tMFlmn an F a EnO r M IAU r2ML

Pu.anruIamI 17.7 17.1 2.1 5.6 - _ _ _ _ _ _ _ _ 42.

Ae,reiugt - - - 115.4 - - - - - - - - - - 1 .4

N.6s*ImtI^t - - - .- - - - - - - - - - 5.06u"vw&emoa - - - *.6 22.1 1.6 1.8. 20.2 6.4 8.2 10.9 5.0 5.7 .6 U1.60tb.. - - - -- - - -. J

TmrAL 17.7 17.1 2.1 19.? 22.1 11.6 I8.0 20.8 6.4 8.2 10.9 8.0 5.? .6 2.0

- 1il -

ISSION DATA

No. Ssooclllzallans TMis1n Dat (t Pesn I Field Reprentd 41 8 6 TrW O Pvod 7j

Rec St 0 OcVN@v.74 St 3 63Appraisal SepOot-77 6 174 a..AI,h.vng.SupWvSln 1 Nov-76 4 24 ,t, 1S&Pboun 2 Jun-79 3 21 t,h 1Supevs 3 JuntJul-80 4 32 *.f.0 1 1 oSupevIion 4 Jun-61 :2 16 trng. 2 2 T.0SupeVbn 5 May-82 3 30 a a 2 u.oSupevIi 6 Mar-83 1 4 aSUP8Vl_l 7 Jul-63 1 6 a 2 2 M.OSupevIo a Aug-44 2 20 *.a 2 2 u.oSupe.vsIo 9 Apr-6 1 65 a 3 2 M.PSwls_ lm Oct-as 1 3 a 3 2 M,Psupus InI May-s 1 6 a 3 2 M.P

OThER DATA

Borroww: Goerment of IndiF1a Yew of 8o0mr: I Aprilo 31 MarchNam t Caumn (Ablarevltlon): Ruw p(R)Exdp PaIe PbAl".:

Appr"s Yes Avwqa (1977176): US$1 a Rug35v"nIng Yas (19717 - 641 US$1 * a Ft0

196 A rag: U8$1 - Ast12O

*! SXeo ot prea was redce dwrig brmpemeteUn21 Ukly aMnIlan at ms ao the tad_e In 16611.A tow tfilles Om rquf s*1_t wad

tobe IIled my in tnl obe i bI3J lb* tIU-e_ pleI so t r hve boe We ue, ed tfw bmIl hae bee gerate

Deft b not _Avaer ro-eftnWon d Uv ERR. brA ftt I n m and* ne_a tve41 a * eWkluf*lst* e - mmAnI th. fu nb l w isyiLI h a hutlaaftr a a cei o*peddst

a' - spo40ullsk sVg - 'n new.6I - Protes tre or Mnor Prlm 2 * Modmt Prmns 3 * Mpw Prolm61 -Improving, 2a .StOy, 3 a Dilenrtg7/ T -TechnIcMl,M Meni_. P a PaIIi,O a COr81 Fallow-up msso by IDA In May 1975 sad Jrway 1976. to ast

loal PaIl Prepwtn Unit In prepin do prel.

- iv -

INDIA

(0dt 806 - IN)

PROJECT COMPLETION REPORT

EVALUATION SUMMARY

Inoducn

1. The Jmnmu and Kashmir Horticulture Project was financed under redit 806-IN,appVed in 1978. The proect amed at integrating collection, packdng, processing andmarketing for apples, waln:us, hrooms and ther by-products by channelling theseactivies throug a to-be-established Jammu and Kashmir Horticulturl Product Marketingand Processing Corporan Ltd (JKHPMC). After an IDA reconnaissance mission in1974, the Govent of Jammu and Kashmir (GOJK) established a project preparatonunit which, assisted by consultants from the Agdcultumal Fmance Corpon of Ind,prepaed a draft praration report in 1976. The rport required repeated revisions untl thefinal draft of late 1977 was appraised by IDA. Total project costs wem esdmated at Rs.242.2 million (US$ 27.6 million), against which an IDA Credit of US$ 14.0 milLion wasnegotated. It was expected that the proect would be completed by 31 Decembe 1983, andthe Cedit would close on 30 June 1984.

2. bIplementadon began in 1979 after months of delay caused by changes in theonlending charnel for the apple j ice plant component from ARDC (now NABARD) to theIndustrial Devdepnt Ba of Edit Because of considebly higher costs thanestmated at appraisal, the size of the project was scaled down by about 40%. Considerabledelays in establishing prect inas occurred as a result of unfamiliarity with MDAproement polcies (this was the fist IDA assisted project in Jammu and Kashmir),review of cheaper altrnatives sinc the costs were higher than expected, and poormanagement control over covrucin, ordering of equipment and its installation. Aftertwo extensins, the Credit was closed on 30 June 1986, with a balance of US$ 7.3 millionthat was cancelled.

3. The first Bank assisted hordcultue project in India, for Himachal Pradesh,estabished a new pastaal to offer growers an alternative (public sector) market channel tothatprovidd by the traditonal trade. It aimed at lowering maketing costs, reducing thewide swing in prces due to seasonal apple gluts, itApwving fruit quality and utilizing appleculls.IThis commercially oriented parastatal was to maret fresh ruit through its owncollecdon centes, grading and packing houses, coldstores and transhipment centers, toprocess fruit into apple juice concentrate, and to provide infrructure (roads, aerialcablemays). Included in the project were also technical assistance, training of project staff,andaprojectevaluation study. The project was cnfined to specific marketingposarvest) probles in the apple industry despite the Govemnment's plea for assistance

for preharvest activities as welll.

'The Goverment of Himachal Pradesh had requested assistance for research intobredstocks, public sector nurmseies to produce better quality seedlings, on-farm producdonincluding equipment, agrchemcals, other supplies, and extension, as well as trsport,storage(includlng cold stores), processing and marketing.

4. Prior to the completion of the Hmachal Pradesh Apple Prcessing and MarketingProject (Cr. 456-IN), GOI and the Bank felt they had learned many lessons and proceededwith a sinilar horticulture project for Jammu and Kashmir. In addition to the abovecomponents, the J&K project provided for: sawmills to produce fuit boxes; hulling/dryingand packing centers for walnuts; seasonal credit to growers; apple, walnut and mushroomrseach; and sudies on apple, walnut and juice marketing. Excepting credit, no preharvestcomponent was included, although the reconnaissance mission had pointed to the need toupgrade the planting material and introduce improved orcharding practices. Furthermore, acomponent for low cost, on-farm storage included in the preparation report was deleted atthe time of appraisal in favor of large, centrally located cold storages. Also, a provision forJKHPMC to provide advances to growers similar to those offered by the private trade wasdrpped in favor of seasonal credit through banks.

hIplementation and Results

5. The project got off to a slow start Effectiveness was delayed due to a change in thefinancing channel for the juice plant and considerable further delays occurred duringimplementation. Establishment of project infrastructure was protracted as a result ofunfamiliarity with IDA procurement policies (this was the first IDA assisted project inJamnmu and Kar), review of cheaper alternatives since the costs were higher thanexpected, and poor managemznt control over construction, ordering of equipment and itsinstallation. Due to considerably higher costs than those estimated at appraisal, the size ofthe proect was scaled down to roughly 60% of the appraised size. Basically, fewerpackcing houes, coldstorages and walnut hulling centers were to be constmcted and thesawmill component was dropped. If account is taken for the reduced scale of investmentsthere was an estimated 45% cost ovenrun in rupee terms (20% in dollar terms).

6. At Credit closing on 30 June 1986, only six out of seventeen packing houses, twoout of seven coldstores, and two out of eight walnut hulling centers had beencommissioned in the scaled-down project. The apple juice processing plant was notfinanced under the project, because GOJK purchased an existing juice plant from theprivate sector to be owned and operated by JKHPMC. The component for credit tofarmers was not used -.t alL The research component for apples and walnuts was partiallycompleted, while little work was done to support mushroom research. The marketingstudies were never undertaken. The PCR estimated that the all project facilities would becomplete by 1987/88. However, subsequent data have revealed that no further facilitieshave been commissioned even though some were almost completed at the dme the Creditwas closed.

7. There has been poor farmer demand for JKHPMC services. Consequendy,capacity utilization has been low and the Corporation has incurred substandal losses.Now, with a negative net worth, its financial position is a disaster, and the ERR for theproject is almost ceruinly negative. Banks have been unwilling to provide additional termfinance to complete the unfmished facilities, and GOJK has not provided funds for thispurpose either. Various factors are responsible for the low capacity utilization, thepdncipal ones being:

a) Growers were not motivated to deal with the JKHPMC or use its facilities.Either they didn't perceive a benefit in using them, and/or they couldn'tmarket their fruit through JKHPMC or use its coldstores because they werealready committed to private agents from whom they had receivedpreharvest advances.

b) There were only limited quantities of fruit of a sufficiently high quality tocoldstore really welL

* vi -

c) The C aion was overy concemed with constuction during its earlyyeas and little attention was given to developing a viable marketingframworl. Theih staff was not truined in merchandising and they werecoained by baucaic procedures puting them at a disadvantage withpdvate traders and preharvest contractors.

d) The Corpon established for itself a poor reputation regarding prices forthe small quantities of fuit handled in the early years a situation that wasexcploited by private traders. A misconception about the shelflife of applessubjected to longterm coldstorage (that the apples would rot when taken tothe market) was also supported by traders not wanting to see their hold onthe pmduce diminished.

e) JKHPMC established a poor reputation in management, particullyfinancial management, which led to doubts by lending banks that it couldmanage a major marketing operation, and made them unwilling to financeworking capital.

8. Overall, JKBPMC has been unsuccessful in meeting the objectives set forth atapaisal. It has not had the quality of management to ceate demand for its services andopeate effecdvely. In any case, it is a moot point whether the corporation, as a parastatal,could have been expected to compete with the private sector. Nevertheless, JKHPMC hasplayed a developmental role in stimulating awareness of modern handling infas e. Italso created awareness, particularly among smaller growers, of pre- andpostharvst prtes through a crop loan scheme2 in which ferilizer in kind, customspraying, packuig matedal and maketing serices were made available to contactedgrowers.

SustainWltv

9. The project has failed to meet its objectives, and there is no evidence to suggest thatit will perform any better in the future. In order to make the JKBPMC a financially viableorganiztion the Government would have to inject additional equity to pay off theaccumulated losses and overdue loan payments of the Corporation, complete the unfinishedfaciliies, and strengthen management considerably. With a program which ties up inputcredit and later purchase of the produce from selected orchards the packing/gradirng housesand cold storages established under the project could be utilized. This, however, requiresthat the Coporation has sufficient working capital to purhase the fruit outright, and alsorequirs a high degree of management Another option to utilize the facilities created underthe project would be to seli or lease them out to the private sector. Traders and farmergroups have expressed interest in udlizing or tadng over the management of the coldstorages but so far no party has shown interest in the packing houses.

Fndings and Lessom

10. The PCR raises legitimate questions on the project concept, namely the introductionof an untried (in India) technology on a large scale by a newly established parastatalo.rganization.it remains unclear how or when the facilites established under the project(infraructure for apple grading, packing and storage, and walnut hulling and drying) maybe fully utilized. Lessons that emerge from the project are:

2The Crop Loan Scheme was not part of the appraised project. It was conceived andimplemented by JKHPMC during the project period.

- vii -

a) The Bank and the Goverment should be more cadful to understmdpnrdu needs and the dynamics of the market place in the subsector.

b) Caution mas be exeivised when introducing new technology when itsacceptabiity to the proposed beneficiaries has not been established underprvlig conditions

c) If efforts to improe the profability of production and marketing are tosucceed, emphasis must be given to improving the quality of the fruitproduced and maintaining the quality through the maetng chain

d) By not including in the project, even on a small scale, the proposals fordeveloping on-farm storage and manual rather than mechanical grading, anoppartunity was lost to ty out a lower level of technology.

e) Ihe choice of a public sector corporanon to market and process fruit andculls appears to have been an error, especially consiring that fuit is aperishable commodity which requires flexibilit in opeatng prcedue

f) If maketing hvestments are needed they should focus on assistng theidustry to become more efficient and competitive, by encouragig praeente= nurs to participate in an itegmted marketing process.

g) S3tonger direct fanmer paricipation in the mareng process shoud beencouraged. Establishing terminal iarkes closer to the producing aeasand introducing uniform grades should increase growers' maket power.

- viii -

INDIA

WM AND3 KASH HQMCa-mPOJE(Qeif 806- IN

PROJECT COMPLETION REPORT

OVEPVIEW

1. The Bank has suppored two horticultual projects in India The Hmachal PrdeshApple Processing and Marketing Project (Cr. 456-IN), approved in 1973, and the Jammund Kashmir Horticultuml Project (Cr. 806-IN), approved in 1978. The prmise of both

projects WaS that the main problem a0ecting the apple industry was manipuladon of themarket by private mechants to the detniment of the growes Under both projects.government corporations were set up to handle a small but significant potion of the crop,thereby providing growers with an alternative market outleL Although most of the plannedfacilities (grading, packing, cold storage and processing) were establshed, neithercrpoation has had much success in atracting farmer clients and oping its facilities on acommercial scale. Both are heavily in debL Problem encounted by the corpratonsinclude weak management, inability to obtin sficient woing capital, dificulties inobtaining high quality frut, percepion among the farmers that the cains pay lowprices, misconcepton among producers of the shelf life of colds fri, difficulte inmarketing juice concentrate, etc.

2. The attached Prject Completion Report, prepared by FAO/CP, was completed inJune 1987. With the benefit of two more years experience it stands clear that while thePCR reflects project background and prncipal implementaion features well, it could havedrawn stronger conclusions on weaknesses in pject concept anddesign, andrecommendatons for the futre. It could also have questioned whether sipeviszon atyeady intevals was adequate in view of the problems being experienced by the projectThis project has substantially been a failur. Whatever positive contbutdons the projecthas made to the hordculture subsector have been achieved at tremendous cost. In thecourse of preparing for a follow-on hotdculture project for the North West Hill Region(NWHR) in ia, recent missions have collected additional information on the status of theprevious projects and of the HPMCs in partcular. The JKHPMC juice factory is the onlypart of the operatons that is impving; it operated in 1988 at 71% capacity utiization.Notwithstanding their peiformance, the Coporation otherwise has not managed to attractmore fresh apple business from the farms; its financial situation has continued todeteriorate to a point where its net worth is negative; it has more staff than is needed forefficient option; and no further facilites have been comssioned, although some werealmost complete at the time the Credit was closed in June 1986 (neither the Banis nor theState Goverment have been willing to provide the necessary funds for completing thefahlities).

3. In addition to the main constraints given in the PCR (5.10) affecdng JKHPMC'sperforance, ithe following have been importnt reasons why the famers have beenreluctantto use project packhouses: (i) most growers have small ohards and family laboris available for packing, thereby avoiding additional transport and packing charges; (ii) aconcern that the fuit would get damaged during transport to the packhouse; (iii) cardboardcawra (iriginally planned to be used in packhouses as part of more efficient opertions -quicker paclidng) are twice as costly as tradidonal wooden boxes (Rs. 30/carton comparedto Rs. 16/box-- no subsidies are involved).

4. JKHPMC attempted to increase udlization of the cold stores in 1988 byadvertsing in local papers and promotion at growers' meetings. The facilites were offered

- ix -

at a price of about Rs. 2.50/box per month compared to Rs. 5-7/box charged at the Delhimaret Grower response was negligible. Their reasons for not using the facilides include:(i) a concemn to get the fuit out of the valley before the end of December when the mainroad south often gets blocked by snow and landslides; (ii) an immediate need for moneyfrom sale of the fiuit; (iii), cold storage of apples in Delhi itself allows taking advantage ofmarke price fluctuadons; (iv) low trust in the capacity of HPMC employees to operate thefacilities propery, and (v) a feelng that public sector services should be provided free ofcharge.

5. The main lessons from the two horticultural projects are threefold. Fimrd. ifefforts to improve the profitability of production and marketing are to succeed, emphasismust be given to improving the quality of the fruit produced and maintaining the qualitythrough the marketing chaun ''his would immediately result in higher returns to theproduces Furthermore, the cost of cold storage, which enables a prolonged marketingseason, can be justified only if the frit is of high quality. Incidentally, the need forpreharvest support (planting material, nurseies, extension, etc.) was recognized in earlyvers of the preparaton reports for both projects, but on Bank insistence, wassubsequentlydroppo Sedondy. stronger direct farmer participation in the marketingprocess, interms of a more equitable share of market power and risk, should beencouraged. P.resently, the fruit is sold on the farmers' behalf in Delhi, hence giving littleincentive to maketin intemediaries to move the fruit quicldy to reduce losses anddeterration in quality. Estabishng terminal markets in the producing areas andintroducing unifom gs and standards should help reduce the producers' risk. 2bkJLYthe saegy of imp ng the rketing system by providing drect competition in the formof a govrmemt managed maketing outlet has not worked. State goverment marketingcorporatins have not demonstrated the operadonal flexibility and business acumennecessary to diecdy manage commercial horticultural opans in effective competitonwith a vigous private sector. If marketing investments are needed, they should focus onating the industry to become more efficient and competitive, by encouraging privateenh~preneurs to participate in an integrated marketing process.

-1-

INDIA

JAMMU AND KASHNMI HO=UCULTUR PROJECr

(Credit 806-1N

PROJECr COMEIP=ON REPOR

I. INTRODUCTION

1.1 Up to the early 1970s horticulture had remained a largely neglected sub-sectrwithin the Govermment of India's (GOI) overall development sU=tegy, largely because of theprsg need to increase the output of foodgains. However, there was recognition within GOI ofthe ince of horticulture in dietary needs and to the economies of certain States, and theconsequent need for invesm in order to achieve better regional balance in agriculuredevelopment. In line with this, and at GOI request, the World Bank appraised the HimachalPradesh Apple Prcessing and Marketing Project in 1972 (Cedit 456-IN), followed by theJammu-Kashmir Horticulture Project in 1977 (Cedit 806-IN).

1.2 The Jammu-Kashmir Horticulture Project, the subject of this completion repoMt,was initiated in recognition of the fact that the overwhelmig majority of the State's rualpopulation relied on horticulture as a major source of income. The project, which was the firstBank group project in Jammu and Kashir (J&K), was aimed at prviding fruit growers with analenative marketing channel to that provided by the traditional privmate tades, tmugh theestablishment of a govemment-owned marketing and processing corporation (the Jammu andKashmir Horiculture Produce Makting and Processing Corpoation (JKHPMC)). It providedfunds for. setting up faciliides and services for apple and walnut grading, packing, processing andmarketing; fuit research; supporting mushroom development; seasonal credit to growers; trainingand technical assistnce; and for undaking fruit markeng studies. Over a six year period(1978f79-1983/84), the project was estmated to cost Rs 242.2 million (US$27.6 million).

1.3 The project was closed on June 30, 1986, after two one-year extensions.Accordingly, the FAO/World Bank Cooperative Programme (FAO/CP) was requested by theWorld Bank to field a mission to assist the Government of Jamrnu and Kashmir (GOJK) to preparethe PCR. On arrival in Srinagar (in August 1986) the FAO/CP mission found that the Governmentwas pumsng with the World Bank a further one year extension of the project. Consequendy, itwas agreed that a PCR would not prepred till the project extension issue had been resolved. Themission, however, was able to collect some data to allow an overall rewew of proqectimplementation, in support of an ongoing World Bank hordculture sub-sector review. Datacollectd and discussions held with the implementing agencies during the ,aurse of that mission,and additonal data provided subsequendy by JKHPMC provide the basis for this completionreport. In addition, the PCR is based on a review of the Staff Appraisal Report (No. 1890-IN); theDevelopment Credit Agreement dated July 17, 1978; and supervision reports and project files(available at the World Bank's New Delhi Office).

IL BROAD CHARACTERISTlCS OF HORTICULTURE SUB.SECTOR

2.1 In order to review project frmuladon and its subsequent implementaton, it isnecessary to set out briefly the broad cr of the hordculture sub-sector in Kashmir. Thischapter prsents the salient features of apple and walnut development since the mid 1970s (whenthe project was appraised).

I

-2-

Area and Pfaducio

2.2 The project was situated in the Kashmir vallcy where over 80% of the state's fruitpmduction is located, and which has a high potential for temperate fruits, vegetables and flowers.The valley's natural superiority is demonstraued by the fact that it produces nearly 60% of the dteenorth-wes hill State's (HP, J&K, and UP) total fruit production on 35% of the planted areas.The total area under horticultural crops in J&K has increased from around 90,000 ha in 1976 tonearly 150,000 ha in 1986. Most new plantings have been of the already domiinant crops, applesand walnuts. Apart from almonds all others (including mushrooms) were, and remain ninorcrops.

2.3 A99& are the predominant crop of the state, representing 98% of total fruitproduction. Between 1976M77 end 1985/86, the area under apples has gone up from 55,000 ha to6350 ha, while production has gone up fom aound 300,000 tons to 760,000 tons respectively.Red Delicious is the principal variety grmwn, and its prporton in tota production (around 45% atprsent) is gVowing as it fetches higher pices as compared to the other varieties. The majority ofholdings are less than 1 ha in si Whfle average yields have increased over this period, mostorchards continue to be managed with minimal inputs; very few growers use ferlizers, and cropthinnng is strongly resiste. One disease (apple scab) and one pest (San Jose scale) haveserously affected the fruiL More so becaus of the former, fruit quality has been very poor overmuch of thedcde. Other than orchard spraying, there has been no change since the mid 1970s,n the cultal pces followed by grows While moe recently there have been some

povemens in fruit quality, the post-harvest problems have worsened due to the significantincase in production, and the shortage in the availablity of transport

2.4 Walnuts are presendy grown on the equivalent of about 33,000 ha, as compared to18,000 ha quoted at appraisaL They are gown as scaeed trees or in groups, often witin andarund villages, and the above area estimates are based on the assumption that there are 75 teesp hectam Producion has howeve remaned unchanged at around 17,000 tons since 1974175,uggestng both low productivity and a high percentage of non-bearing trees It is suspected that

the low production is on account of nearly all plantng eing from seedlings, which has alsosulted in produce not being un=om, and of low quality. Returns to the growers are

consequntly low, and there is little incentive for making significant changes. This inevitablyhanicaps any processing and maredng efforts.

Service Insdtatons

2.5 The principal insdtutions servicing the horticulture sub-sector include theDepartment of Hordculnur (DOH), the Dep of Horticule Planning and Marketing(DOHPM), the Agro-Indusuies Development Corporaion (AIC), and the JKHPMC which was setup under the projec The Deparment of Agriculture (DOA) retains a small role in somehortculture areas. Research is now the resposibility of the Agncultural University (SKUAST).

2.6 While the two departments of hordculture are essentially responsible for providingextension as well as gathering market inteUligence data, there is an inevitable overlapping of roles.Over, the decade, DOH has been pmoccWied with the distribution of fungicides for the control ofapple scab, and there has consequendy been a serious absence of a technical extension. TheDOHPM has mostly worked with the Cwoperative Societies; furthermore, its existence, along withthe setting up of JKHPMC, has required DOH to absolve itself of responsibilities for post-harvesttechnology. This has also affected extension services to the growers, because both pre and post-havest technologies for fiuit are intertwined in a manner which makes technology advances

.Inedenet

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2.7 However, GOJK did introduce the Indo-Australian bilateral aid project (AP) in thelae 1970s to demonsae technology of makeing thrugh packhouse cold stores. Initally underdirecton of DOHPM and later the DOH both pre and post-harvest technology relevant to fitproduction, storage and peservaton were demonstred to growers and agents. In temms of pre-harvest opaations, the P concentraed its efforts through a network of demonstration plots.While succssful, there has been litde effort to extend the relevant cultral practices on a widerscale across the apple orchards in the valley. Nevertheless, LAP made a sigpificant contribution toJKHPMC, which used it extensively for staff training and advice, and finally adopted thetechnology for its crop loan scheme.

2.8 The AIC amages and prvides industry inputs. For a period it managed the supplyof fungicides for orchard spraying. However, in 1986 this function was retumned to the DOHLThe new Agricultural University (SKUAST) was set up during the decade and its horticulurereseach programs have yet to fully emerge. Consequently, the contribution of research to thehortdculture sector has, so far, been minimal.

2.9 Lending banks have expeinewd poor loan recovery perfo from theagriculte sector, and have been wary of providing loans to growers, including those supplyingfruit to the JKHIPMC The cooperative sector is small, and generally not p ing welL

2.10 The private marketng systm, with its inom cit argements, is still themain servicing insdtution tO the J&K apple and walnut producers.

2.11 Apple maedng, vrtually in its entirety, is caied out by the prate sectorcompisng forwarding agents, co=ission agents, wholesalers and ilers. An insi tamomI of the apples produced ane proceed. It is claimed that collusion among. andexploitation of the weaker producers is coon pracdce. What is of concern and im toJ&K is that while the maing system is "normal", this system also is normally devoid ofcommitment to overall industy expansion and development. It must however, be acknowledgedtbat the marketing sysem has so farbeen able to absorb big increases in annual suLesof apples.even though much has been of low quality. Unforamately prices have increased little if at allwhile makedng costs have sen.

2.12 The common observation has been that the sector does not exploit the market to fadvantage because it does not attempt to regulate supplies, and develop a more effective storageand distibution pater At the same tUme, the consumes' attitudes to "out of season" fruit have tobe kept in view, and in partcular their misconcepdons about the quality of cold sored produce.The proect through the etablishment of the JKHPMC, was designed to address these majorcnstraits ch have wosned due to increased producton.

]IlL PROJECT FOMLATTO

fmiec Reconnaissanlce/Identificatio

3.1 Soon after the Hmachal Pradesh Apple Prcessing and Marketing Project wasapprised in 1972173, the GOJK prepared a preliminy report poposing a similar project for J&KState, which included facilities for packing and Processing fmit, otier market development, and asubstatial technical assisunce component. In its rview of the proposals, DA found that thereport did not consider sufficieny the problems of the horticultual sector in the State. It was feltthat a project which did not adess the production problems in the State along with the marketingproblems would meet with limited success.

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3.2 Following the review, an IDA reconnaissance mission visited J&K in October1974, to assess the possiblity of designing and implementing an integrated horticultural project,and to assist the State govenment in idenifying and preparing it. Among the prinCipal prblemsidentified by the mission were: (a) poor quality of planting stock. leading to low yields and poorfruit quality, (b) an indequately trained extension service; and (c) a well entrenched commissionagent system for fruit procurement and mareting, which gave growers low prices, therebydiscouaging tm from adopting better cultural pactices. At the same time it was recognized thatJ&K had the basic ingredients for suwessfu commercial development of an integrated horticulralindustry, ie. suitable climate and land, and abundant cheap labor. In line with this, a possibleproject was broadly identified, which was expected to include components for: (a) on-farmdevelopment; (b) nursery improvement; (c) horticultral esearch; (d) establishment of a modernmushroom spawn labratory, (e) non-mechanized simple storage facilides, and manually opeatedpacking shedis (f) cameries and modern walnut prmcessing plants; (g) technical assistance andtrmg.

3.3 In making the above proposals the mission recognized that inspite of the need foron-farm devopment and imovement, many fanmers were not interested in borrowing for thispurpose. In addidon, the mission observed that no survey or study had been undertken todetenmine the potential size of the domestic market particularly for apple juice and concentrates, andthe intematonal market for walnuts. Fnally, the mission suggested that GOI and GOJK set up aProect Ppaion Unit (PPU) to undertake detailed preparation of the proposed project.

aiectP eaM01on

3.4 The Agricultural Finance Corporaton Limited, Bombay, supported by the PPU,prepared the project, based on detailed guidelines prvided by the Worid Bank. A prelimy

raftrport was prpared, which was reviewed by an IDA mission in mid January 1976. Theprincipal concern expressed at that stage was about the possibility of over-production of apples inthe face of limited consurdemand, patcularly from 1979 onwards The mission found thatthre were inuff t data available on which to base reliable estimates of fure production anddemand for apples and apple products. Very litde was known about the consumers; furthemore,there were no encoumging prospects of exportmng apples in significant quantities. Accordingly, it

that an indepth study be camed out prior to any furtier investment in the industry.It was expected that the findings of such a study would provide guidance in developing acoordined stategy for future apple producon programs in the three states of HP, J&K and UP.

3.5 While a rport on a study of the nantre envisaged above was not available to themission, it is understood that a study of the maiet for apples and apple p s was done byAFC as part of project preparto However, the prepaation report did not deal in any depth withthe issue raised above, as the proposals were aimed principally at developing a public sectorapple/walnut distribution and markeing corporation for existing and projected producion, withonly limited on-farm support for improving production. To this end, the repot proposed thesetting up of the J&K Horticultural Produce Marketing and Processing Corporapion.

3.6 The preparation report, which was completed in August 1977, proposed a projectincluding component for: (a) constructing 5,000 on-farm apple stores; (b) 25 apple grding-cum-pacing cenues, of which 10 were to be mechanicaUly operted (each of 6,000 ton capacity), and15 (each of 1,000 ton capacity) manually operad; (c) 20 walnut grading-processing centres(each of 500 ton capacity); (d) two processing and canning plants, and one botting plant; (e) oneSuit shipm centre; (f) a large mushroom development component, including a spawnpoduction latory and mushroom development centre, as well as the delopment ofm:usrm farms; (g) support for settng up JKHPMC, including a transport fleet; (h) creit togowers who entered into contract with JKHPMC, including term loans for orchard equipment;and (i) technical assistance and tmning

3.7 The prncipal reservations ecpressed by the W.9 on the proposed project related toproject scale, which was considered to be too large. Due to shortagc of skilled personnel and thediversity of the opaations proposed, it was fel that the JKHPMC would be senously over-extended.

3.8 Based on the above preparation repo, a World Bank mission visited India inSeptember/October,1977 to appraise the J&K Horticulture Project. During apprasal, the projectwas reduced in scope and size, though for apple giding and packdng, and for walnut processing,the proposals werc more or less in line with those in the prepation repor. The pnncipaldiffeences were:

(a) deletion of the component for on-farm storage. Instead, the mission proposed theconstruction of cold stores, as it was felt that these would be needed for year roundapple mareutig;

(b) prvision for only one apple processing plant;

(c) a more modest mushmom component, aimed at research and pilot level field testingof improved technology.

(d) increased size of the training and technical assistance component, as well asintoducing a component for apple and walnut research.

3.9 The prncipal issues mised at the time of appraisal related to the following:

(a) GOJK had suggested that the existing J&K Agro Inlustries Corporaion (AIC) beconsidered as a possible project agency. The mission took the view that a new

poration be set up, as AIC had a history of poor management and consistentlosses. Furthermore, it was felt that the marketing of perishable fruits requiredspeciazed nement, and the AICs existing activities bore litde resemblance tothe proposed project acdviis;

(b) the mission pointed out that the Corportion would need highly capablemanagement which would have to deal with perishable coodities. compete withthe private sector, and handle complex technical problems; and

(c) since many growers used pre-harvest contracts to obtain cash advances, GOJK feltthat the Corpoaon should provide credit to customers in a similar manner.However, the mission felt, and GOI agreed that banks should provide crop loans,and the Corpomtion should be a lender of last resort only, in case banks faid toprovide satisfactory service.

In order tO addrss (b) above, it was agreed that the formation of the Corpotion, as wdl as theappointment of a qualified Managing Direct would be conditions of credit negotiations. Inaddiion, a large component for technical assistance and training was included to support the newCorporation in the early stages.

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3.10 As appraised. the proect aimed to impove the apple mareting systm and toprovide processing and stpage facildes to ensure better rumns to growes and tO cater for therapidly increasing apple production It included the following components:

(a) foirag 25 apple grading and packdng centues, of which ten of 6,000 tonscapacty and 15 of 1,000 tons; 17,000 tons cold storage; ten sawmills atached tothe larger ging and pacing centres to produce fivit containers; a fhuit

ans pment ce and a 12,000 tons apples per year capacy juice processngPlan

(b) for walnu 14 hulling/drying and pacing cen, of which one 2,000 tonscapacity, one 1,000 tons capaciy and twelve 500 tons capaitr, and a 4,000 tons ayear procesing centre tO deal mainly with nuts for expor=s;

(c) formushrorn, improved spawn producion and research facilites;

(d) Rs 20 mdion seasonal credit to hep growers meet frut production and harvestngexpenss;

(e) specalid cold stoage, laboratory and libary facilies to enable DOH to conductpost-harven trials with ftuit;

(f) three studies to improve apple, walnut and apple juice .arketig, and a projectevalution study, and

() ninety man months consultants' time and 62 man months of overseas trainig tosupport design and opatdon of pojct faciLides, and to help DOH and DOAimprove fruit and mushrom poductio

3.11 Over a six year peiod (1978-1983), the project was esdmated to cost Rs 242.2million (US$27.6 millon). The JKHPMC was to be the main project executing agency. It wasalso expected to perform the functons of an apex oanization for fruit growers' cooperatves.The DOlH was to be responsible for lemendng the fnrt research component, wile the DOAwas to execute the mushroom rseah component. in addition, it was expected that DOH and theDepanent of Hortculte Planning and Mbarktng (DOHPM) would play an important role insuppordng JKHPMCs field and markig activities. With regard to credit arrangements, it wasexpected that commrcal banks would anlend to JKHPMC for constructdg and equippingfacilies, while both commercial and coopeative banks would finance short-tem crop loans tofruit grwers conacted to JKHPMC Refinance for credit opetions was to be provided by theAgricultural Refnance and Dvelopment Corpoation (now the National Bank for Agriculture andRural Development (NABARD).

IV.

sgg"n and Credit Effegiaivns

4.1 Negotiations between (01 and IDA for a US$14 million credit for the project tookplace in April 1978. The Bank's Board of Diectors approved the proposed IDA credit on May 18,1978, and it was signed on July 17, 1978. Credit effectiveness however, was delayed on accountof changes in the onlending channel for the juice plant component from ARDC. as originallyproposed, to the Industrial Development Bank of India. The credit became effective on January 6,1979.

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Px= Ca.g._anA-asal

4.2 During implementation the scale of the project was reduced. This was on accountof considerably higher actual costs than those esimated at appraisal (see para 4.15).Consequently, the sawmills component was dropped, while the number of apple grading andpacking centres was educed from the 25 to 17; the number of cold stores ftm 17 to 7; and walnutprocessing centres from 14 to 8. The revised scale was based on the funds available forcompleting the different components. In addition, the proposed apple juice plant was not fnancedunder the project. This was an account of the fact that GOJK decided against constructing a newplant (as proposed in the SAXR), prefeing instead to purchase an existing private sector juice plant.Institutional responsibilities tor executing some of the components were also changed duringimplementation. The responsibility for disbursing crop loans was taken over by JKIPMC asgwers were found to be reluctant to borrow from the participating banks given the requrmentsthat they should hypothecate their land to the banks as securty for the seasonal credit. heexecution of the fruit research component became the r nity of the Agriculural University(SKUAST).

LMIUmDMentti Schedule

4.3 It was expected at appraisal that the construon of project facilities would begin inthe second half of 1979, with all of them becoming operzt.onal by September 1983.Complementary technical assistance and taining was expectd to be completed by the end of 1982.i fact implementadon of the project has been conseably delayed, and as at June 30, 1986the majority of project fciiies had not been cmmisioned. The research components have onlybeen paially completed, while none of the studies proposed at appraisal have been undertaken.The project, which was to have closed on June 30, 1984, was extended twice by the Waord Bank,and closed on June 30, 1986.

Ph^ysical Implmenttio

4.4 iPMC Comnents. Observations in the early World Bank Supervsionmission reports inicate that the implementation of the project was initiated under a strong andenthusiastic senior mangement team recruited for the JKIHPMC. Land acquisition, which hasoften caused sinificant delays in the implementaton of projects had proceeded smoothly.However, as work progressed, various problems emerged which slowed down the pace ofimplemention, eventually leading to the situation where the majity of project facilities had notbeen commissioned at the time of project closing on June 30, 1986.

4.5 The table below summaizes the position, as at the end of June 1986, on the extentto which physical implementation has been completed. Details are given in Table 2.

Appraisal Revised NotItm. IaD ts _Targe ComnssDIo ComtmWssonfd

-- (Number)- -- (as at June 30, 1986)-

Apple Grading/Packing Centres 25 17 6 11

Apple TranshipmentCentre 1 1 1

Cold Stores 17 7 2 5Walnut Centres 14 8 2 6Walnut Export Centre 1 1 - 1

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With regard to overseas training, as against the 9 study tours proposed at appraisal, a total of 12JIKHPMC officers went on study tours under the prjet Of these. 8 are sti employed in theCorraion, Technical assince was availed of for the design of the JKBPMC facilities, as weilas for management advisory and walnut opeaions.

4.6 Various factors have contributed to the overall delays which have occured incompleting the proposed faciliies Being the first WB project to be financed in J&K state therewas little prior expience in ICB tendering and bid evaluadon procedures. Furthemore, the bidsthat were eceved at early stages (particularly for the cold stores and the walnut centrs) quotedprices which were considerably higher than those estimated at appraisaL Consequently, some timewas spent on reviewing altemative cheaper designs. For example, it became apparent that thedrying equipment for the walnut centres (which esented 80% of the total interationally bidprice for all equipment for these centres) could be produced locally from indigenous technologyand materials. This had to be investigated in detail, and ievitably caused delays.

4.7 Overall, while there were delays in completing the civil works part of the projectfacities. these turned out to be less serious. The principal problems experienced in compledngcivil works on dme were largely on account of cement shortages in 1980/81 and 1981182. Forexmple, no cement was made available to JKIPMC between July 1981 and April 1982. StilL themajority of the civil works for JKHPMC had been completed by 1983. The principal factoresponsibe for the delays which have finally occuared in getting project facilities opaional relateto equipmen ordering, and themafter its installation. There have been significant time lagsbetween completion of civil works, ordering and receipt of eqmipmemn and its final installation.Instances of poor management control over the constuction activities are also cited in the Bank'ssupnrvision reports. For example it was found in 1982 that some equipment which had actallyreached Kashmir had remained unopened in cmes, and in some cases had been offloaded at thewrong sites. Ther were insnces of equipment having been received, but contracts for theirinstallation had not been awarded. In addition, disputes arose between JKHPMC and the coldstore equipment supplier. as well as the equipment supplier for the walnut centres.

4.8 There have also been difficultes in getting electricity supply connections for thedifferent sites as J&K State faces a shorage in its supply. While for the apple packhouses 12KVA generators had been purchased, for the walnut centres the requirement is for 0.75 megawattsof power foreach site, the supply of which is sti a major cause for concern.

4.9 Finally, JKHPMC has faced considerable delays in obtaining bank loans to financeits investment program. Bank loans for the majority of facilities constructed wee largely availablefrom 1983 (see Table 2), with JKHPMC having financed eariier expenditures from the fundsreceived on account of equity contibutons. The credit problem has now become extremely acute,with banks rfuing to provide further finance prior to a detailed review by GOJK of theJKHPMC Discussions with NABARD revealed that the inability of JKHPMC to submitacceptable documentation in support of loan requests has been the pnncipal reason for thisetdcene on the part of the banks. The accounts of JKHPMC have not been audited since1980/81, and according to NABARD, audited statments of earlier expenditures were also notavailable. Furthemore, the banks express concem that even the facilites completed have not beensignificantly utilized. Another apparent impediment to the quick disbursement of loans appovedhave been delays in obtaining GOJK guarantees of the loans.

4.10 CM Producton Crdit This conponent was not implemented as originallyenvisaged, as growers were reluctant to borrow from banks due to vanous reasons. Among these,the principal ones were:

(a) the reluctance of growers to pay commei tserestrates for such credit. This wasparially on account of socialreligious factors (many growers are Muslim), and

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ptly because they obtaned inrest free cash advances from commission agents(many of course realiz that agents recover irterest in another form, duingsubsequent rasactions);

(b) growers' views that loan application procedures were complicated and theinsistence of banks on land mortgage as collateral, and that farmers enter into acontract, for selling their apples, with JKHPMC.

Subsequently, a crop loans scheme (CLS) was implemented through the JKHPMC, staring in1984/85 which was only partially supported by the banks. As shown in Table 3, a total of 3,349growers, covering 4,842 acres benefitted under the scheme over the two years 1984/85 and1985/86. Data are not available on the total amount spent by JKHPMC on tne scheme; however,draft accounts of JK1HPMC for 1985/86 show that Rs 9 million was due from growers, and Rs13.6 million was due to the banks for amounts borrowed for the CS, as at March 31, 1986.

4.11 &womb C1m The DOA mushroom component suffered many delays. Apertinent factor was the untmely death of the initial consultant. Subsequently, two otherconsultants were enlsted, and construction of a spawn producdon and bulk componentpasteization facility has been staroed

4.12 The facility is much larger than that poposed under the project, costing Rs 14.6million (Rs 7 million for civil woris and Rs 7.6 million for equipment) compared with the SAResemat of around Rs 4.0 million. Furmore, the implementing agency has disregarded WorldBank tendering procedures and consultant's advice about risks iherent in bulk paste:rizaton. Acontract has been awaded on a turnkey basis, and work has commenced on the proposed facility.The net result is to be a large centraized development to service the whole industry rather thanresearch support tO a distict development program. Staff appoinments, training, and all exceptone cons (marieting) have been completed.

4.13 Tne Horticulte research component was also delayed. Delays in recruitingconsultants and the subsequent transfer of all research work from DOH to the newly establishedAgricultual University (SKUAST) conmbuted to the overall delay in implementing thecompnent. A large number of the training opportities have not been availed of, and one oftht consultancies (codling moth) could not be arranged. The post-harvest research laboratoryand cold store were completed and operated on a pilot scale in 1985. SKUAST has applied itse!fethusiasically to the use of these facilities.

&WMec Cost

4.14 Table 1 gives a comparative satement of appraisal cost estimatm actual costsincued up to June 1986 and expected total costs (including esmated cost of completion). Theseare based on expenditure data prvided by the respective implementing agencies. When allowanceis made for costs to complete, the total final cost of the project would amount to Rs 228.5 million(US$21.75 million). Tlis represents 94% (or 79% in US dollar terms) of the originally estimatedtosal project cost. If account is taken of the reduced scale of investnents for JKHPMC (ascompared to SAR proposals), and appraisal cost estimates scaled down accodingly, there was anestimated 45% cost overun in Rupee terms (20% in US dollar terms).

4.15 Among the factors which have contributed to the cost overrun are significandyhigher average unit costs for consructing the proposed JKHPMC facilities than those foreseen atappaisal (as shown in the table below), and delayed project implemenation during a period ofhigh in-'aton. The depreciation of the Rupee against the US dollar duing project implementadonis reflected in the relatively lower cost overrun in US dollar terms.

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Average Cost Per Centr

-(~Rs Million)--

Apple Centres 1.95 2.84Apple Transhipment Centre 0.59 1.74Cold Stores 2.32 5.96Walnut Centres 1.61 4.14Walnut Export Centre 7.96 17.29

4.16 Disbursement of the IDA credit has been vcyq slow (see Table 6). To a largeextent, the initial delays were caused by unfmilaity with procedus for claniing IDAreimb umements for penditures incurred. Against the US$14 million credit negotiated with IDA,disbursements under the project toalled US$6.7 million (or 48% of total). Details of the allocationc5 credit proceeds disbursed are shown in Table 7. The final disbursment was made in Febmary1987, and the undisbursed balance of US$7.3 million (52% of tota) was cancelled. The principalfactors responsible for the low levels of disbursement are:

(a) reduction in the scale of the prqject;

(b) depreciation of the rupee visa-visthe US dollar, from Rs 8.75 = US$ at the dmeof appraisal, to Rs 12.4 = US$1 at present, combined with a project which had avery low foreign exchange component (9% in SAR) in total cost;

(c) vally no IDA funds were disbused for the juice plant (allocation of USS2.4million), which was purchased and not constucted as envisaged at appraisaLDisbusements aganst vehicles, equipment and materials for the apple and walnutcens were only 57% of the amount eamarked (US$3 million); also, very littlewas disbursed against the "crops loans" category (only 16% of original allocationof US$1.6 million).

Complianc with Coyenants

4.17 As indicated in the final WB Supervision Mission report, most covenants have beencomplied with, though delays were experienced n meeting the target dates in many cases.HIowever, covenants relating to furnishing auited financial statements to IDA have not beencomplied with JKHPMC accounts sinc 1981/82 onwards have not yet been audited; in addition,audit certificates for the DOH (SKUJAST) and DOA component expenditues have not beensubmitted to D)A since the stat of the project

V. AS.ESSMIT iE HPM C'S PERFORMANCE

5.1 The Jammu and Kashmir Horicultural Produce Marketing and ProcessingCorporation Ltd. was established in April 1978, with GOI and GOJK as the principalshareholders. The Head office of the Corporation is at Snnagar. In addition, it has threedivisional offices (Ananmag, BarnuUa and Srinaar), a wanshipment centre at Jammu (notoperating yet), and a marketing office at Delhi. Under a Board of Directors, the Managing Directoris the principal executive offwice, total regular and consolidated staff at the end of June 1986 were249. j

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5.2 At apprisal it was expected that by the htmoduction of a new maketing technology.JKHPMC would genrae profits from various operations, which would include:

(a) purchase under pre-harest contracts and resale of apples and walnuts;

(b) packdng and consigning apples on commission;

(c) customer services for the use of its apple packhouse/cold stores and walnutprocessing centres; and

(d) ganufacng and selling apple juice concene.

5.3 In estimating future JKHPMC income, the SAR assumed that it would take a periodof throe yeas for the apple and walnut cenres to reach ful opeatng capacity. The juice plantwould begin operations in 1982 and also reach full capacity opetion in three years. Inaicipation of operations being at full capacity by 1985. a full development rvenue of Rs 189.0 mwas prjected, which was expected to generate gross profits (before tax) of around Rs 30.0 m.

5.4 Ihe above results were based on JKlPMCs projected full development operattonsto include: (i) grading and packing 75,000 tons of apples; (ii) cold storage of 17,000 tons ofapples; (iii) processing 12,000 tons of apples into juice concentrat; (iv) hullng and drying 9.000tons of walnuts; and (v) processing 4,000 tons of walnuts for sale/exporL It was assumed that40% of the apples and 60% of the walnuts would be purchased, with the balance in each insmncebeing equally divided between commission sales and cusom services. In maIdng the aboveprections, it was expeted at appraisal that the pre-harvest support to apple production (in termsof ds e controL, quality apple production etc.) would be undertken by the other agenciesinvolved in the sector. Overall, it had been expected that DOH and DOHPM would play animportant mle in supportng JKHPMCs activities.

Acual Perfom.alce

5.5 Actual operatonal achievements to date are smmrized the table below, detailsare shown in Table 3.

Aooles WalnutsYAs t Cold CHandled

-(Tons La)-

1978179 4401979/80 1,900 - -1980/81 4,500 - 11981/82 2,640 40 -1982/83 1,520 - 41983/84 2,000 320 281984/85 5,660 200 131985/86 9,660 60 4

L& Derved from number of boxed handled (on average20 kg of apples per box).

5.6 Ihe total volume of apples handled by JKHPMC over the past eight years is onlyabout 28,000 tons. The amounts handled annually so far repsent an insignificant percentagc ofthe total apple marketed out of J&K Se (in 1985/86 J&K dispatched an esimated 535,000 tons

- 12 -

of apples). Of this smal quantity marketed by JKHPMC, almost none has been graded andpacked, or stared in the facils prwvided by the project. Also, only a negligible proportion hasbeen purchased outight These activities, ratherthan the consignment operatons, were expectedto be the pincipal revenue geneating activities for JKHPMC. The juice plant, which waspu d in 1985/86, opeated for 59 days in that year. It produced a total of 276 tons of appleconcentmrte and 10 tons of aroma (using 3,225 tons of apple culls). However, marketing haspwoved to be a problem, and at the time of the mission's visit only 150 tons had been sold. Theextent to which the plant will be operaed in 1986/87 was being reviewed, as no finm marketing tie-ups with existing soft drink producers had beer negotiated.

5.7 By the end of 1983, JKHPMC Management had recognized that opertions asoriginally planned would not be feasible, as (a) the prospects for geting quality apples for itsoperations remained almost hopeless; (b) the small proportion of quality apples produced were ofsuch value to the traditional trade that attracting it into the new system of grading, packing andmarketing was unralistc; (c) the weak segment of the industry which JK1PMC was supposed tohelp most was the outlying poorer apple gowers who were at the end of the line for Govementextension services or pre-hanest contracr The quality of thdr fruit was among the poorest ofall It was decided therefore to intmoduce the crop loan scheme (CLS), which was designed toassist the weaker segment of producers.

Ime Cmro Loan Schefe

5.8 The CLS adape the Indo-Austalian demonstration package t the fruitproc t needs of the Corpoaion. It was formulated with two specific objectives:

(a) to procure fruit from orchards near JKHPMC facilities and

(b) to ensure the fiuit was of a sufficiently high quality for packhoure/cold storeoperations.

Under the scheme, JKHPMC provided gpwers with inputs on credit, based on the procedures thathad been established in the demoation plots. These covered spray materials, sprayingmachinery, ferdlizer and supervisory staff. Growers' orchards were successfully contracted by theJM'- ICs field staff, and in 1984, seasonal opeations were mounted under the guidance ofconsultant technical experts. A good crop of quality apples was consequently produced. Thescheme has covered 1,435 acres (1,031 growers) in 1984/85, 3,407 acres (2,318 growers) in1985/86, and around 3,700 acres in the current (1986/87) season. It was wholly responsible forJKHPMCs increased apple c aoptions in 1984/85 and 1985/86, as shown in para5.3 above. It has not been possible to extend the coverage of this scheme on account of thereluctance of banks to prwide additional loan finance to JKHPMC.

JKHMCs Financial Position

5.9 The accounts of JlHPMC have not been audited since 1980t81. However, draftaccounts are available, which indicate that the Corporation is presently in a poor financialcondition, with large debts, significant accumulated losses, and so far very litde inrome generationfrom its asset. According to the unaudited accounts for 1985/86, accumulated loss,.s as at March31, 1986, amunted to Rs 58.5 million (US$4.76 million). Total borrowings frm the banks werestated at Rs 103.1 mi'lion (US$8.4 million), of which term loans represented Rs 83.6 nillion(US$6.8 million) and loans for the CLS and for short-tenn workdng capit.l Rs 19.5 million(US$1.6 million). Against these borrowings, amounts overdue for repayn=nt included interest onboth, term loan installments (Rs 3.2 million), and the total amount advanced for the latter category.IJteest due on tm loans as at the end of Marh 1986 is esdmated at Rs 15.8 million (US$1.25million). Income generadon by JKHPMC has so far been negligible, as shown by the low levels

- 13 -

of operations discussed above. The provisional profit and loss account for 1985/86 shows annualopeating costs (including depreciation and interest charges) of Rs 22.8 million, operating incomeof Rs 1 iniUiori. other income of Rs 1 million, and a net loss of Rs 20.8 million. On presentestimates, and even with rescheduling of bank loans, Government budgetary support (throughadditional equity contributions and other means) would appear to be essential to enable JKHPMCto meet its obligations.

Constrints Affccpne JK HMs Oeaoal PEaformmu

5.10 In assessing the overall performance of JKHPMC in terms of its marketingachievements, it is importat to recogize that the objectives set for it wete ambitious. JKHPMCsmajor problem was its inability to obtain supplies of apples and walnuts, and the following areconsidered to be some of the reasons:

(a) growers were not mouvated to deal through the JKHPMC and its facilities. Thestronger and more proge ssive group did not need them, the weaker group had nounderstanding of the services being developed. Also, in many instances the lattercould not escape the linked credit-contrar system even if they wanted to;

(b) the JKHPMC was unable to convince growers tO baow for crop Production, northe banks to lend to farmers;

(c) the Cption was overly preoccupied with completing te procurement andoIsunmuction activities, and till recently, litde attention was devoted to developing a

viable markting fhrmework though which growers could be atracted in largernumbers to its faclities; JKHPMC officers were not trained in merchanding.Also in the field they could not escape bureaucratic procedues, which put them at adisadvantage as compared to private pre-harvest contcts;

(d) the JKHPMC got a poor reputation regarding prices for the smanll quandties ofproduce it had mameted in the early yez of the projecL Ihis was exploited byprvate agents;

(e) supplies of apples suitable for a packhouse opation were very limited due to thepoor quality generally. Furthermore, the existng mareng system, pardcularly atthe growers' end, dd notprovide significant incentives to maret uniformty gradedquality fruit;

(f) there was a complete oncepton about the effects of cold storage in the valley,on the "market" or "shelf' life of apples when moved to the maiet from Marchonward; and

(g) the JIGPMC had established for itself, a poor reputadon in financial management.This placed doubts in dte minds of lending banks that it could manage a majormarktng operation through the new systm. The problem has been compoundedby the fact that since 1982, there have been four Managing Directors of JKHPMC,and the post of Finance Director has remained vacant for extended periods (seeTable 4).

5.11 In addition to the above factors, it is important tO recognize that the instituionssupporting the horticulture sub-sector in J&K, and which were expected to play an imporantcomplementary role to that of JKHPMC. have, due to various reasons, been unable tO meet theexpections which were there at the tme of appraisal. No serious attempt appears to have beenmade to bring the maretng of apples from Cooprative Societies (about 9,500 tons in 1986)

- 14 -

within the JKHPMC fold. As briefly reviewed in chapter II, there has also been a serious absenceof a technical extension program. both pre and post-harvest, which has resulted in the industrybeing unable to produce apples of a quality suitable for JKHPMCs needs. Furthermore, with theedconce of banks to provide additional working capital loans tO JKHPMC. the crop loan scheme

could not be operated in a manner and on a scale which would have better tesd the operationalcapabilities of te facilides constructed, as well as the abilitv of the staff and labor of theJKHPMC.

VI.

Inended Imact

6.1 At appraisal, project benefits were expected to be derived from mor efficientmarketing of apples and walnuts through JKHPMC with resulting cost savings; better quafity applegrading and packdng commanding an estimated 10% price premium over conventionally grdedfruit; price premium on *7,000 tons of cold stored apples for post-season marketing; returns fromprocessing 12,000 tons of previously wasted cull apples into juice concenta and other by-products; better processing of walnuts, lading to improved grade quality, estimated to yield a 10%price prmimTr and reduced losses of an estimated 1,300-1,400 tons of walnuts which would havespoiled uider conventional hulling/drying methods. Facilities constructed under the project wereexpected to reach 100% capacity utilizaion, within thee years to be achieved in year 8 of theproject (1985). Based on the above assumptions, an economic rate of return (ERR) of 21% wasesdmated for the total project, and ERRs of 22%, 31% and 26% respectively for the apple trading,wanut tading and juice plant components. The SAR noted tat JKHPMC managenal andmarketing acumen would be essential in achieving projected benefits.

Assement of A= fri je Imm

6.2 The size of the project has been consderably scaled down during the couse ofimplementation. It is clear fmm the earlier chapters that project implemention is far behndschedule and the level of JKHPMC operations to date have come nowhere near those anticipated atappisal. Farmers have not come forward in large numbers to use the facilities (even on aconsignment basis) which have been commssione. Of the relatively small quantities of applesmarketed through JKHPMC dunng uie past eight years, almrost none has been graded and packed,or stored in the facilities provided by the project; and only a ngligible propomon has beenpurchased outright. Consequently, as a marketing opion, the project has so far not succeededin generting the kind of opemtions and benefits which were expected of it at the tme of apprisal.As noted in the Bank's final supervision mission report, the problem was compounded when thequality of apples produced in J&K did not improve over the years, and even today remains notentirely suitable for use in the project facilities.

6.3 Given past performance, it is not possible at this stage to make any rationalassumptions to project future economic benefits. There are no studies available to indicate farmeratitudes towards JKHPMC, as compared to their atditudes towards the existing private markedngsystenr nor are there survey data available which would provide indications of the conditonsunder which farmers would be willing to adopt JKHPMC as their preferred marketing oudet.Most impoantly, the scale of future JKEPMC operations would depend on the strengths orweaknesses of its management. It must be recognized that the Corporation has to gear up itsmanagement to compete with an entrenched private sector in marketing a perishable connodity, togive a price advantage to the growers. In the light of the above crumstances, any easement ofthe economic rates of return estimated at the time of appraisal would, at this stage, be highlyspeculatve.

- 15 -

6.4 Howev, despite the geneda poor achievement in terms of meeting the perceivedgoals, the pwject has played an important development tole. Through its crop loan scheme,JKHPMCdemonsd on a smal scale an effective system of extension to smal grower. Dataare not available on the total costs incumd by JIHMC on the scheme, so far, and the extent towhich recovies have been effected from the grwas. These data partcularly the latter, wouldbeimportant indetming the extent to which KHPMC should and more so whether it canincrase the scale of this progm. However, the credit and technical assistn provided under thescheme has makedly improved quality and quantity of rit produced by its clients lead6in toincrases in the farm incomes of the partcipatng fars 'he scheme has certanly made aworthwhile contribudon to the obetes of increasing quality fit pmducion, which is crtical toeventually bringing the packhouse cold soe facilides into use. While, the scale of operadons ispresenty too small to ensure a sigficant utiiion of JKHPMC facilities, the scheme haspublicized the Corporaton's activities, and the facilides that have been constructed. An importantfactor has also been that due to the absence of adequate woring capial to mount the plannedoperations on time, the CLS has not been fully tested as intended.

6.5 No such service as the CLS was available for JKHPMCs walnut operations. Pilothulling tials have experienced the problems inherent with seedling nuts, and trial and emrr willplay a big part in bringing the facilides into efficient use. At this stage, there is little to suggest thatnuts will be procured in reasonable quantities, or that problems of elecuicity supplies will beovercome in the foreseeable fure, in oder to generate benefits on the scale perceived at appraisaL

6.6 Finally, the project has developed a significant asset of trned mnagers,supervisors, staff and labor. It has also generated consideable debate among the growers, and thesub-sector has begun enquiring about the prospects of cold storage, packaging, grade stadards,and the spread of the maret season. In his regard, the options of JKHPMC albeit liedhave proved to be an imporant catalyst in the development process.

VEL EBANK PERFORMANCE

7.1 The project was the f&-st Bank/IDA financed operation in the State of Jammu andKashmir. It was targtted at an imporant sector of the State - hotcuture - which was the majorsouroe of Ivelihood for the rural population. During the course of project formulation theconceptual framework of the project moved from one amed at developing an integrated pacge toaddrss both the on-farm production and the marketing and processing aspects of horculturedevelopme, to one essentally aimed at developing a new channel for fuiit markedng andpocessing. With the benefit of hindsight it is now obvious that the design of the project, as finallyappraised was ahead of itS dmes. In the absence of a production component. problems at the farmlevelassocied with ensuring the producdon of good quality apples still remain. In tenms ofinsdttuonal arrangements, the decision to set up another corporation, instead of msucturing andstrnghening the capabilities of AIC, suggests that it may have been the easier direction to take; atthe same time, no attempt was made to ratonalize overall institutional responsibilities.Consequntly, as the project progessed, JKHPMC found itself carying out some of DOHextension functions (through its crop loan scheme), and DOH those of AIC (selling of fungicides),while DOHPM has been the principal agency for servicing coopertives (which at apprisal wasexpected to be one of the roles of JKHPMC). There was vtually no extension service, pre orpost-harvest Given this situation, the agencies were to some extent competing with each other.

7.2 Based on implementation experience so far, conclusions can also be drawn withregard to one other aspect of project design. This relates to the scale of the project, ie. whether itmay not have been more appropriate to introduce the new technology on a smaller scale, initiallyusing more the IAP pilot project This would have allowed JKHPMC management to focus on a

- 16 -

smaler operation, in a more concentrated manner, without getting bogged down with thenumerous problems of procurement and installation which the larger progam entailed.Fuhermore, a better understanding of the needs of the market was necessary prior to theinumduction of new technology on such a large scale. As it transpired, the need for grading andbetter packing across the whole sector was not recognized by the market, pardculaly thecontnlling agents at the terminal wholesale markets. Without changes at that level, the success ofthe new technology was inevitably going to be limited In addition, the local shotages of powersupply which are affecting the likely future opeaions of the walnut drying centres were not fullyrecogoized Finally, by not including in the project even on a smal scale. the proposals fordeveloping on^fann stoage and manual rather an mechanically operated apple gading facilides,meant that an oppo2rtunty was lost to try out a lower level of technology thn that eventuallyadopted.

7.3 A total of 11 supervision missions were fielded by IDA between November 1978and June 1986. There was good continuity of staff between missions. and the frequency of thesupervsion missions was adequate. Most of the problems of project implementation highlighted inthis completion report had been brought out in the supervision reports. The mnssions made efforts,trugh organizing meetings of relevant agencies, aimed at resolving some of the problems.Cetain measres taken by IDA during the course of implemention, in particular the scaling downof project size, were wholly justified. An area where supervmision missions could have contributedbetter at ensunng more effective implementation, partcularly during the eadier stages, relates tomaing local sate agencies beter familiarized wih prcment procedures.

VIIL CONCLUSTONS AND lESSONS LFARED

8.1 The project was designed to provide physical facilities, raining, and throughJKHPMCb an altemaive technology and marketing channel to the entrenched private ma-rkeIngsystem which was perceived as unlikely to cope with futue industry development, particularly theexpected big increases in production. The project was expected to benefit smaller growers inpardcular, who were most prone to exploitation by the larger growers and merchants.

8.2 The JKHPMC managed to construct about 60% of the facilities and equip them, butmost have not been cossioned and brought into use. The Corporation has so far failet toatact growers to its intended opeatons of frit pMent, cold sta, improved grading andpresentation, and marketing. Consequently, neither the project not JKHPMC have as yet madesignificant progress towads achieving the broad objectives as originally perceived.

8.3 Conclusions that can be drawn at is stage are inevitably flavored by the generalquestion of whether public sect corporations can succeed in a highly complex indusuy, incompetition with a weil entrenched and organized private sector. Experience under the project sofar shows that due to vadous factors JKHPMC has been unable to compete effectively within theexisting private marketing system. Furthermore, once the decision to set up JKHPMC had beentake it seems that overall and sustained commitment which was necessary to enhance its chanceof success was missing. Ihis is particularly pertinent when it is recognized that JKHPMC wascharged with achieving objectives within a hostile enviroment of an existing entrenched privatemakeing system. The leading gr"oers did not perceive the need for a new Corporation; insteadthey viewed it as a threat to their pre-harvest contract operations.

8.4 Appraisal perceptions that the other GOJK departments dealing with horticultuewould play their role in addressing the producton problems did not matialize. There was nocmprehensive development plan within which the roles of the different agencies responsible forhortculture in the state were clearly defined. Consequently, there was little effecive cdinaon

- 17 -

of the project sector development generally. or of institutional support for the JKHPMC. WithinlKHPMC itsdf problems arse on account of poor financial management, and the relatively hightunover in Managing Direcus in the later period of project implemenaion.

8.5 The project tried to establish a big and new commercial operation, which inhindsight was too much to introduce over the period allocated. In funding further developments onpernn.ial fit crops, projects may need to allow more gradual implementadon over a longer

8.6 Lessons which emerge from the implementation experience of the prject so far,include the following:

(a) caudon must be exercised in introducing a wholy new technology on a large scale,when its acceptability to die proposed beneficiaries and under prevailing conditionshas not been established through smaller scale operations;

(b) while there was clearly a need for a bette fnrt maketing system and theintrduction of cold stores, the choice of using a public sector corporation toaddress these problems is questionable, partdculady in marketing a perishablecommodity which requires flexibility in operatng procedus;

(c) to ensure the wider adoption of a wholly new technology introduced under aprojec it must be accompanied by a suitable promotion/incentive package to enablean inidal brakough in achieving farmer accepmnce; the success of the projectwas wholly dependent on JKHPMC being able to provide better prices to growerand when this did not mateialze immediaely, JKHPMC found it difficult toestablish a sustainable relationship with gowers

(d) the projection and phasing of likely futue benefits in a situaton where a publicsector agency is to be established to opert a new commercial venture must allowfor a longer learning period, particulaly when there are few people available withthe relzvant entepreneurial skills; it should not be expected that dte provision of alarge training progam will ensure the rapid development of the required experise torun tie opeation; and

(e) the importance of good financial planing and management should not beunderestimtd

I ND a A

JAMU A tV_"^S R H m1luLlURE PROJECI

iCredit 6000-IN

Cougo-Crton ot Anarlsasl end ActuAl Co-tL

...hllML*I- 1

Estlpata .jV EmoenditurOS_ Estlmgtid Total cgalgZ.. Actual as S X"§1slk

UnIts Is000 USgo000 Up to 30 June s0 UnIte 3s600 USS 000 *i Untts Rs Cost USS Co-

Annie P.UcCsJMJjM1 833 . G 9a

GredinglPachign Collto 0 25 48.630 S.560 39.649 1 40.333 3.90b 00 e9 et

Cold Storag- FacIlIttes 1 39.440 4.505 30.532 7 4t,724 3.90J 41

Juice Concentrate Plant * 34.220 3.910 - 21 - - - 0 0

Seth- lustal 122.100 13.915 70.161 90.05J 043I 14 Oo

le.,lllng/Prplng OCue,.es. 5s 24.170 2.160 24.116 a 33.153 3.104 53 131 lot

l.a.n.l lentro I 7.960 901 13.521 * 11.293 1.401 lo1 217 154

bub- luIal 321630 3.610 31.631 50.446 4 505 I51 i2J

ILAIUhO_nL CebbktL # 690 To 1,740 I s.740 375 100 295 2Ol

Apple and Walnuts 6.960 495 6.500 ai 7.141 623 303 l01

mushrooms _ nco. Pilot st.e,1e) 5.430 $to 7.300 it 14.600 1.140 269 184

Sub-lotal V2-.390 I,45 ,oo600 21.741 .773 *75 1.5

i qnl.U. I A&.i a3.SIfa-3 6.300 S00 4.222 4.222 42S 62

'~~salai SWAS 20.000 2.205 ~~~~~~~~~~~15.563 Il15.563 1.215 94 SG

IELUUUEUL.UhLIJl.IJihl-fDI-IQ.I 41.000 5455 45.000 II 45.0s0 5.15 94

!fA C°df1-o 242,200 27.630 1' 3.143 226.526 21.754 94

j Psce sond PMevle-l Cosetlss gncles hove bee#s roughtly alucated to tndIwvdu8l coste.

st bot Implem@et.ed a propposed at appraisal.stimated. Os.tstandlfng Item Includes fIttIngs *nd delivarY of 2 refrigerattd vans.

51 A much le.o. *esentch unit boing constructed (us coopared to SAN proposals).

Uupenditwoes *epr-sent advance payments made tO contractor.§/ Replesoetsb awuuots outstandlno end due to S01 'r JKU as at 30.6.80 for loans taken

bt JMHPMC to tinslbce corop loans hIncd. power sprayers).

go eepresentisg Issued and paid top share cap4tal. Share capital worth an additlonal

os,23 .1111o6e is poending allotment.zi l.,l,,sIS.s o*5l.bdtesI cests for completing physiCal structures.

31 Convwoslo" at awerage eOLhange rate over the period of Implementation. F

US1.1

JAL-imicuLTUIIE ekuL,IE

* tC.eu3 SS06-S

Costs . Camnlatiln.Statun 1.3 eJuine_tM9ot_.aJKHPNC fae4i" l"'.

aasF1L.~ OCast lsi- It Ss n, ieO 11*

............. w so. t ,

Zabt,re 6919 2.242 3.615 Sol 1980, 61166 6.122 Cg 6*I.u2d

DosOgalt 3060 3.210 2.104 SOS ISIS. USd66 1.11 Co6 s.Ioe,..s

"-h--por- l606 3.414 2.500 553 1013. 15116{ 6.653

:raLJ; 1960 2.493 2.069 Sal t993. notes I S403 s

6190 2.402 2.626 Sal 1903. 05186 1.740 s

thnoeu o . 6150 2.502 3.025 501 062. 65/66r 1.46 _

*-o1rpor- 198 2.72S 2.005 503al 1904S. 36/66 1.720 3'

Trailpora Igo4 2.532 23010 Sol 160146. a5106 3.320 5Xanl*para *Sol 2.796 2.435 Sal 0904188f. W5oe 1.437

Tr-gore 4994 2.912 2197§ set 1994E6ffi Was@ 1.330

ge-t 1912 2.760 i629 Sal 19341l6. 1516 1.622

Chabthenjan 6900 2.203 2.623 Joe . l06o 36116 6.15 Cometslsoned

Patten 1960 3.412 3.330 Jis 6032. 65166 3.694 to

Sumba$ 6360 2.440 2.160 JiS 3902. o5gle 6.641 Coe_isslon"44

Cboedhrloguwl 1900 2.020 23.12 Jug 6383. 051006 t.9S CoM3se3o..ed

* erwab 6960 3.520 2.662 A6 3062. 151.6 6.080 Coomtsaoned

C3hadure 1003 3.624 3.161 .353 3064. 66 6.106 3

Sirgep"ure 1062 2.006 2.066 its 1945 60S04

a36.40) 11man-hnm~~ _ t-r-

Jaw Al 1.449 SoI l - - completed *ii 1)3

t6.1405

Chaklhanj-n 3063 4.e90 5.955 is& 3983. 65460 3 635 CoamtsetoneaS

lBohrs l060 4.930 o.6oa Sot 1904. o5gl6 3.726 Coe ossi00nd

0000oh 19930 5.034 5.740 Sal 1094. 566 3.152 I5

Souma$ 1902 5.025 5.640 jug 3064 4.020 At

Ramapoora 9032 5.063 s.335 set 1984i45* 15/oS 3.034 at

andware 3 0.0 6.000 Sol 3148/66. o5gle 2.061 5e

*ajpora 3062 6.363 6.412 S3l 934#95. UOS6 3.006 2'o 8

1.1 . I 4 j** 32 j 32 A.I._ M

Seormah 1960 4.157 4.592 JM6 9dI, 85/66 2.024

*tndoO-salangem I980 4.046 4.381 Jug 1982, 35s66 2.199

Chowdbrtgund 1990 3.304 4.174 Jug 0962. *5s66 2.189

mesas #990 3.659 3.99S JBs 1963. S5SI6 2.491

Chadura 1994 * 3.454 3.668 JMS 1983. USBSB 2.256

Aojpors 1960 2.510 3.930 So 1984. 65/66 1.930

Tral 1980 3.646 3.6b4 S5t 1954. OSI06 2.253

Achabal 1980 4.130 4.695 Sa6 1994. 65886 2 G6a CO_ SBSUS

DOa ft Ceastra

Quazlgund 1964 12.683 1.293 .0 1934/S5 9.920

Total 42.1AU OILAiM 2L34437.631) 2/

1p AS approveU by NASAeD. excludtng tlec Cost of land (the letter Is included In totals above).

II S0 has not yet approved the scheme. and lsence aso disbursement. *o far.

Ii Sanitary fttIngs. slectrtftcotton and Inetallatton of tranatoraur *till to be completed.

i/ Electrltfcatlon and transformer installation to bo templeted.I/ InntatlleSIon of tose machinery and electrificatlon to be Completed.§1 Aspects of c1vIl works. machinery Installation and electrificatlon to be completed.

Is Impenditures up to 30 June 1956.

I*

INDIA

JGK HORTICULTURE PROJECT(Credit 806-IN)

JKUPNC Operations with Apples and walnuts

Item Unit 1978179 1979/80 1980/81 1981/82 1982/83 1983M84 1984/85 1985/86

APPLE OPERATIONS

Crop Loan SchemeArea Acres 1,435 3,407

6rowers under Contract No. 1,031 2,318

Market OperationsSales under CLS Boxes - - - - - - 283,000 483,000

Other Comission Sales 0 22.000 95,000 225,000 132,000 76,000 100,000 - -

Sales on Outright Purchase " - - - 3,000 - - - -

Total Sales 22,C*X) 95,000 225,000 135,0d 76,000 100,000 283,000 483,000

Of Total Sates:i) Carton Packed at JKPC" n.a. n.a. n.a. n.a. n.a. 14,000 10,000 4,000

ii) wooden box " It n.e. n.a. n.s. n.a. n.a. 25,000 54,000 87,000

iii) Quantity Field Packed n.a. n.a. n.e. n.a. n.a. 61,000 219,000 392,000

Apptes Cotd Stored 2,000 16,000 10,000 3,000

Gross Sales Value Realised Rs'OOO 872 3,800 9,300 S,600 3,640 4,200 11,900 20,503

Gross Average Sales Value Per Box Rs/box 39.64 40.00 41.33 41.48 47.89 42.00 42.05 42.45

WALNUT OPERATIONS

No. of Growers/Agents Dealt With No. 3 28 37 7

Green Walnuts Processed- Outright Purchase Tons 112 49

- Custom Service 14 15

Dry Walnut Recovery 4 28 13 4

Source* J.lItt

INOIA

J&K HORTICULTURE PROJECT

(Credit 806-1N)

JKIPNC - Terms of Managing Directors 8 Department birectors

Name Date of Date Period PostJoining Relieved Remained Vacant

Managing IirectorsMr. M. Habibullah Feb. 1978 Jul. 1982Mr. A. Hafiz Jut. 1982 Aug. 1982Mr. N. A. Kamili Aug. 1982 Apr. 1983Mr. S. Shuja Hussain Apr. 1983 Mar. 1986Mr. 6. J. Nahvi Mar. 1986Director financeMr. R. N. Dawai Dec. 1978 Nov. 1980 Nov. 1980 - Feb. 1983Mr. M. L. Jain Feb. 1983 Dec. 1984 Jan. 1985 - Jul. 1985Mr. U. K. Kiul Aug. 1985 Nov. 2985 Nov. 1985 - Aug. 1986 N

Mr. Ramanathan Sept. 1986Director Operation 6Mr. A. Kar 1978 Not AvailableMr. A. Hafiz Nov. 1979 Oct. 1984 1/Mr. M. Y. Mani Sept. 1985Director MarketingMr. R. Anandum May 1979 Oct. 1981 Nov. 1981 Apr. 1983Mr. M. Y. Wani Apr. 1983Director EngineeringMs. S. Shuja Hussain Feb. 1979 Apr. 1983 1

1/ The respective Managing Directors have held the additional charge of these postswhen they were vacant.

- 23 -

TabL 5

INDIA

JSK HORTCUL. PROJECT(Credit 806-IN)

&MVitureS InMurred al DIe/WllrU Retsearch Comomt

.Sh~ SAR 1/ Act

*........... (R00.... a

CiviL Wm"

Cous ctim of CA itoe, l _ratory 28.0 1,392.57Custrtcticn of Library 121.0 898.66

CA Cotd Store Ejimw,t

Refrgpratiat Eo4pi.it 578.S

0G SEo & Electric Truufoi19r i125 58.32GJ ul>yser/Otaor & 6rwro 671.49

PL;tlc Craet 39.77

ftfH2mtsd vus Q wits) 2/ - l,ao.m

L;rstory Eaitt 481.2 2.8L89

Library

awks & Jowruls 2187 168.69EqWAP 77.0 98.12

Tedvhical Asistamice

Cotd Store Eirwr 131.2 36D XFmt"~R"ioLost 175.0 14G.M

Entaoist 87.3 niL

Training 8 St* Tanm 3/ 367.5 22.50

TotaL Cost 2,137.6 7,923.51

1/ ExcLuing Price Cotingpcies.

2/ Estiae cos, which incl.W aLL etrigaian ewiui 0Aich ha rat yet be

irutLLed

3/ Agairut 42 an .ut of st* tears pr o Pi in the SAR, 12 man w tJot be

i _ntd.

- 24 -

TabLe 6

J&LK HORrICULn.U PROJECT

(Credit 806-IN

ScheduLe of Disb.rsememts (Ctuuative)

Apaisai ACtuAL ActuaL as PercumtIDA Fiscal Year Estin?e Disbjsu'ns of AcwraisaL Estiue

.. U S ftte)......... O Lin ...... .... ...... m

1979/80 0.3 0.1 33

1980/81 1.4 0.3 21

1981/82 5.3 2.1 40

1982/83 9.6 2.6 27

1983/84 14.0 3.6 26

1984/85 14.0 4.9 35

1985/86 14.0 6.1 44

1986/87 14.0 6.7 48

Date of FinaL Disbjruunit - Februry 12, 1987

- 25 -

TabLe 7

IMOIA

JSK HOCRW.U PRE ECT

(Credit 8of6-w

ALLomaia9 of Credit Prwes1s

DwAisal bma fll.l JIdstIJrud

Cat!=_ ALLocaicDan O1dr Xe- of ALLocaio.......... *... css ao

(1) Wle & 6ltmA Cottres(a) Civil Wrlks 3,10 2,395(b) Vehictes, E*Aipi 4,5 ZM573 1,927 43

g Met ials

(2) DOwe Juice Pi cemsin Pait(a) CiviL Wwts 3D niL m0 1m

(b) VehicLes, EApwt 2,100 97 2,gM 95

& pte,iaLs

(3) MAhro., AML I WA" Ruset ch(a) Civiltrks 100 niL 100 1O

(b) VehicLes, 5Waip.-t s0 143 757 84

& etoriaLs

(4) Cro Lam IAM 255 1,345 84

(5) Stdies, Tecticat Assiste 1, 19 (24) (24)& Training

(6) LUaLLocat 5gm niL 5gm 1

ToutL 14, 6,73 7,2 52