India - World Bank Documents & Reports

Report No. 1725a-IN

IndiaSecond National Seed Project FILE COPYMay 17, 1978

South Asia Projects DepartmentAgriculture D Division

FOR OFFICIAL USE ONLY

Document of the World Bank

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

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CURRENCY EQUIVALENTS

US$1 = Rs 8.75

Rs 1 = US$0.11Rs 1 million (M) = US$114,286

WEIGHTS AND MEASURES

Metric Units are used.

1 kilogram (kg) = 2.20 pounds1 metric ton (ton) = 1,000 kg = 0.98 long ton1 quintal = 100 kg

1 meter (m) 1.09 yards1 kilometer (km) 0.62 mile1 hectare (ha) 2 2.47 acres1 square kilometer (km ) = 0.386 square mile

INDIAN FISCAL YEAR

April 1 - March 31

FOR OFFICIAL USE ONLY

Abbreviations

ARDC - Agricultural Refinance and Development CorporationCSCB - Central Seed Certification BoardDOA - (State) Department of AgricultureGOB - Government of BiharGOI - Government of IndiaGOK - Government of KarnatakaGOO - Government of OrissaGOR - Government of RajasthanGOS - State GovernmentGOUP - Government of Uttar PradeshHYV - High Yielding VarietiesIARS - Institute of Agricultural Research StatisticsICAR - Indian Council of Agricultural ResearchJWP - Joint Working PartyNCAER - National Council of Applied Economic ResearchNSC - National Seeds CorporationNSP - National Seeds ProgramPMMC - Project Management and Monitoring CommitteePhase I - (First) National Seed ProjectSAU - State Agricultural UniversitySFCI - State Farms Corporation of IndiaSSC - State Seed CorporationSSCA - State Seed Certification AgencyTDC - Tarai Development Corporation

Glossary

Breeder seed - seed of high genetic purity, produced by the plantbreeder.

Foundation seed - progeny of breeder seed (or of first generationfoundation seed), produced to statutory qualitycontrol standards.

Certified seed - progeny of foundation seed, produced to statutoryquality control standards.

Kharif season - monsoon season (May - October).

Rabi season - dry season (November - April).

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

INDIA

SECOND NATIONAL SEED PROJECT

Table of Contents

Page No.

SUMMARY AND CONCLUSIONS ................................-

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

II. BACKGROUND ....................... ......................A. General ............................................ 1B. Seed Industry ...................................... 2

[II. NATIONAL SEED PROGRAM .................................. 3

IV. NATIONAL SEED PROJECT (Phase I) ........................ 3

V. THE PROJECT ............................................ 4A. General ............................................ 4B. Detailed Features .................................. 5C. Cost Estimates ..................................... 9D. Project Financing .................................. 11E. Procurement ........................................ 12F. Disbursements ...................................... 13

VI. ORGANIZATION AND MANAGEMENT ............ .. ............... 14A. General ............................................ 14B. Detailed Arrangements .............................. 15

VII. MARKETING .............................................. 17

VIII. FINANCIAL PROJECTIONS .................................. 20

IX. BENEFITS AND ECONOMIC JUSTIFICATION .................... 21

X. RECOMMENDATIONS ........................................ 23

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TABLE OF CONTENTS (Cont'd)

ANNEXES

1. Agriculture and Seed Industry2. Project Scope and Size3. Plant Breeding; Breeder, Foundation and Certified Seed

Production; Seed Technology Research4. Farm Development5. Seed Processing and Storage6. Quality Control7. Training and Technical Assistance8. Project Costs9. Project Financing and Disbursement10. Project Organization and Management11. Implementation Schedules12. Credit Services13. Demand, Marketing and Pricing14. Financial Analysis15. Economic Analysis

Map (IBRD 13038)

INDIA


SUMMARY AND CONCLUSIONS

Agriculture in India currently accounts for about 43% of the GNPand some 70% of the country's employment. A major objective of the Govern-ment's development activities is to increase the growth rate in food pro-duction. During the last decade, increases in yields have contributedmore to growth than increases in cropped area. Spread of new crop varietiesis recognized as the key to greater productivity, and quality seed is acknow-ledged as an input essential to the continued development of Indian agricul-ture.

ii. This project would be the third Bank Group assisted project inIndia's seed industry development. The first one, Tarai Seed Project, com-menced in 1969 and has been operating successfully. The second was theNational Seed Project (Phase I), the first installment of seed industrydevelopment under India's National Seed Program (NSP), which became effectivein October 1976. Phase I covers four seed producing states -- Andhra Pradesh,Haryana, Maharashtra and Punjab. The proposed Second National Seed Project,as with Phase I, would be concerned mainly with major cereal crops. It wouldcover five additional states -- Bihar, Karnataka, Orissa, Rajasthan and UttarPradesh. Seed output would be increased by about 125,000 tons under theproposed project.

iii. State Seed Corporations (SSC) have been established in four of thefive states. In Uttar Pradesh, the Tarai Development Corporation (TDC) isbeing converted to the SSC of that state. The SSC would be responsible forcertified seed production, processing and marketing. Certified seed wouldbe grown mainly by progressive farmers who would also be SSC's shareholders.Agricultural Universities would have prime responsibility for producingbreeder seed and foundation seed. The close association of the scientistsin these Universities is expected to help achieve quality improvement of theearly and critical generations in the seed multiplication chain. Qualitycontrol services would be provided through State Seed Certification Agencies(SSCA) and seed testing laboratories.

iv. The National Seeds Corporation (NSC) would, in accordance with NSPpolicy, gradually divest itself of seed production (except vegetable seed)and seed certification functions and concentrate on general promotion andcoordination of the seed industry. NSC's other main responsibilities wouldbe interstate marketing, coordination of foundation seed production, operationof the seed reserve stock scheme, and provision of technical advisory servicesto SSC. The coordination of the seed industry would be facilitated throughcross representation on NSC and SSC boards of directors.

v. Technical assistance would be provided for seed technology research,quality control and marketing. Twenty-two man-months out of a total of twenty-eight man-months services would be provided by Indian consultants, leaving sixman-months to be engaged from outside the country.

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vi. Project costs spread over five years are estimated at US$34.9 mil-lion with a foreign exchange component of about US$6 million. Project invest-

ments comprise processing plants; large farm development; facilities at Agri-

cultural Universities for seed technology research, breeder and foundationseed production and processing; quality control facilities for SSCA and seed

testing laboratories; incremental reserve stocks; incremental permanent work-

ing capital; and training and technical assistance.

vii. The proposed IDA Credit of US$16 million would cover about 50% of

the project costs net of import duties and taxes. The Credit would financeforeign exchange costs of about US$6 million and about US$10 million of local

costs. IDA funds for research and breeder seed production at AgriculturalUniversities; quality control; and training and technical assistance (US$1.5

million) would be channelled through Indian Council of Agricultural Research(ICAR), state governments and NSC respectively. All other IDA funds (US$14.5

million) would be channelled by GOI through Agricultural Refinance and Devel-opment Corporation (ARDC) and commercial banks for onlending to SSC and State

Farms Corporation of India and Agricultural Universities. The balance ofproject costs would be met by GOI (US$5.4 million), state governments (US$2.7million), ARDC and commercial banks (US$8.4 million), and seed growers (US$2.4million).

viii. Major items of processing machinery, laboratory equipment, farm

machinery and office equiment (US$12.1 million) would be procured by inter-national competitive bidding in accordance with IDA guidelines. Contractsfor minor items of machinery and equipment, not exceeding US$50,000 each,would be procured by competitive bidding advertised locally and in accordancewith local procedures which are satisfactory to IDA. Urgent purchases ofminor equipment up to a total value of US$1.0 million would be made by prudent

shopping. Contracts for civil works (US$10.3 million) would be let after com-petitive bidding advertised locally; because of their small and varied sizes

and scattered locations bulking would not be practical. On-farm development(US$1.3 million) by State Farms Corporation of India and Agricultural Univer-sities would be carried out on force account or on contract to be let aftercompetitive bidding advertised locally. The small size of individual contractswould not warrant international bidding. Vehicles (US$1.2 million) would also

be procured on the basis of competitive bidding advertised locally since onlya few would be purchased spread over the project period. Motorcycles (US$0.4

million) which would be owned by the staff would be purchased by them accord-

ing to their preference direct from dealers. Technical assistance services(US$0.5 million) would be engaged on terms and conditions satisfactory to IDA.

The balance of project costs (US$8.2 million) would cover reserve stocks,permanent working capital and operating costs not involving procurement.Equipment procurement up to a total of US$200,000 is proposed for retroactivefinancing in order to help speed project implementation.

ix. The major benefit from the project would be the increased cropyields obtained by the farmers who use the improved quality project seed.Annual incremental production at full development would be 245,000 tons of

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wheat, 324,000 tons of paddy, 85,000 tons of maize, 85,000 tons of bajra,60,000 tons of jowar, 40,000 tons of potato and 105,000 tons of other crops.Total value of incremental crop production would be about US$158 million peryear. It is estimated that 1.35 million farm families would derive directbenefit from the project. In addition, 13,500 man-years of seasonal employ-ment would be created for harvesting the incremental crops produced. Theeconomic rate of return from the project is estimated at over 100%.

x. The project is considered suitable for an IDA Credit of US$16 mil-lion to the Government of India.

INDIA


I. INTRODUCTION

1.01 The Government of India (GOI) has requested an IDA Credit for theSecond National Seed Project estimated to cost a total of US$34.9 million (M).This would be the third World Bank Group assisted project to support devel-opment of India's seed industry. The first, Tarai Seeds Project (614-IN),which commenced in 1969, has been implemented satisfactorily by the TaraiDevelopment Corporation (TDC) which was established specially for that proj-ect. The second was the National Seed Project (Phase I) (Loan 1273-IN) whichcommenced in 1976. Phase I was the first installment of investments under theNational Seed Program (NSP). 1/ Phase I and the project now proposed arebased on experience gained from the Tarai Seeds Project and TDC's successfuloperations.

1.02 This project was prepared, as was the Phase I, by a GOI Joint Work-ing Party (JWP) comprising mostly National Seeds Corporation (NSC) personnel,assisted by Bank staff stationed at New Delhi (NDO) and Washington. Thisreport is based on the findings of an appraisal mission comprising Messrs. S.Thillairajah, W. Schwermer (Bank), B.C. Bilbo, J.C. Delouche and J.R. Huey(Consultants) which visited India in April/May 1977. The mission was assistedpart-time by Messrs. B. Nekby and R.D.H. Rowe (NDO) and by senior executivesof NSC, State Farms Corporation of India (SFCI) and Agricultural Refinance andDevelopment Corporation (ARDC).

II. BACKGROUND

A. General

2.01 India's population exceeds 600 million and is growing at an annualrate of 2.3%. National income grew in real terms at about 3.7% per annumbetween 1950/51 and 1975/76 and per capita GNP reached US$150 in 1975/76.Per capita consumption of cereal grains averaged 133 kg during the 1950's,increased to 144 kg during the 1960's and is expected to exceed 150 kg by1980/81. Agriculture is the mainstay of India's economy, accounting forabout 43% of its GNP, and some 70% of the employed population. The growthrate in agriculture over the last ten years has been about 3%. Foodgrainproduction dominates the agricultural sector and is the focal point ofIndia's agricultural development policy. About 75% of total cropped areais devoted to foodgrains. Compared with previous decades increases in yieldhave contributed more to growth than increases in cropped area. The higheryields have resulted from the use of high-yielding varieties (HYV) together

1/ NSP is a program formulated by GOI in 1974 designed to give high priorityto seed industry development (para 3.01).

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with the more systematic use of the complimentary inputs, in particularfertilizer, pesticides and irrigation.

B. Seed Industry

2.02 India's seed industry was little developed until the early sixtieswhen, as a consequence of plant breeding breakthroughs, HYV emerged that weresignificantly superior to the traditional varieties. As use of HYV caughton the demand for seed increased rapidly and a seed industry began to developto meet this demand. In 1961 the first maize hybrids adapted to Indian con-ditions were released for general cultivation. This was followed by hybridsof sorghum (jowar) and pearl millet (bajra), then by high yielding dwarf ricevarieties and finally by high yielding dwarf wheats. In response to demandthere was a rapid growth of private sector seed companies. In 1963 the GOIowned and operated National Seeds Corporation (NSC) was established to promoteseed industry development from production through processing, storage andmarketing, and to establish a system of quality control. A Seeds Act waspromulgated in 1966.

2.03 Between 1963/64 and 1968/69 NSC was concerned mainly with founda-tion seed production. During this period there was a rapid expansion inseed production -- the certified seed area increased from 360 ha to 35,000 ha.This surge was mainly in the private sector, with the Bank supported TDC alate comer in the field (1.01). However, seed demand grew more slowly thanexpected. In self-pollinated crops (wheat and paddy), farmer retention andfarmer-to-farmer transfer accounted for much of the seed used. Further, someof HYV seed were inferior in grain quality to traditional types and thus lostfavor. Substantial overproduction occurred and large stocks accumulated withstate governments resulting in heavy losses and large scale curtailments ofseed business. During this period several private companies withdrew fromseed production and went into liquidation. Although demand began to pick upin 1971/72, the industry lacked the resources and confidence to meet therevived demand. NSC stepped in and developed a vigorous seed productionprogram. By 1974/75 NSC had become the largest producer accounting for73,000 tons of seed, representing about 50% of national output.

2.04 GOI commissioned a Seed Review Team in 1969 1/ which studied indepth the seed situation in the country. A further review of the seedindustry was carried out by the National Commission on Agriculture in 1971 2/.Based on their findings, and the encouraging experience with the Tarai SeedsProject (1.01), GOI decided to reorganize and expand the seed industry. Aworking group, based on NSC personnel, was thus established in 1975 toprepare proposals for a National Seed Program.

1/ Government of India "Seed Review Team Report", 1968.

2/ National Commission on Agriculture "Interim Report on Multiplication andDistribution of Quality Seed Pertaining to High Yielding Varieties andHybrids of Cereals", New Delhi, November 1971.

III. NATIONAL SEED PROGRAM (NSP)

3.01 The National Seed Program constitutes the systematic development ofa decentralized but coordinated network of seed production agencies throughoutthe country. Under NSP seed production, processing, storage and marketingactivities would be decentralized through establishment of State Seed Corpor-ations (SSC), organized along the lines of TDC. In accordance with the TDCmodel seed growers would be shareholders of SSC and shares would be held byAgricultural Universities which would be responsible for breeder and founda-tion seed production. SSC would take over the production which NSC hadperformed previously in the absence of other institutions. NSC would grad-ually phase out of its past role as the major seed producer and processorfor food grains and other major crops. However, NSC would expand its roleas a major producer of vegetable seed. Seed for each crop would be producedby more than one SSC to ensure competition and safeguard production. Seedproduction and processing would be organized in compact areas to ensure leastcost output of high quality seed. Certified seed growers would all be privatefarmers, except where SFCI or state government farms in project areas are alsoused. The concept of shareholder growers would contrast with NSC's patternof certified seed production in scattered locations organized through contractgrowers. The new approach would facilitate quality control and supervision.Quality is expected to improve from the vested interest the shareholdergrowers would have in the success of their own SSC. NSP would also supportseed industry expansion in the private sector. The private sector would berepresented on all major institutions involved in NSP and would receive equaltreatment with the public sector in matters like supply of foundation seed,quality control services and seed movement. The institutions participatingin NSP and their respective responsibilities are detailed in Annex 1, para 16.

IV. NATIONAL SEED PROJECT (Phase I)

4.01 The first phase of development of NSP constituted the National SeedProject (Phase I). This was approved by the Bank Board in June 1976, and theLoan (US$25 M) became effective in October of that year. Phase I, which iscomprised of physical and organizational elements similar to those describedin this report for the Second National Seed Project covered four states -Andhra Pradesh, Haryana, Maharashtra and Punjab - although investment proposalswere submitted to the Bank by eight states. When the Loan was negotiated itwas agreed with GOI that the Bank would consider a second project comprisingthe remaining four states and such other states that could and wished to playa role in NSP. At appraisal it was estimated that Phase I would increasecertified seed production by 73,000 tons of major cereals (34,500 tons ofwheat, 9,600 tons of paddy, and 29,000 tons of maize, jowar and bajra) and14,000 tons of cotton.

4.02 Under the Phase I project institutional developments and managerialarrangements, particularly at state level, have proceeded reasonably satis-factorily. Project implementation, however, has lagged behind schedule mostly

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because of coordination problems at the Center. These were a result of delaysin appointing a suitable replacement for the Chairman of NSC whose ser:iceswith the Corporation terminated in December 1976; objections of some NSC stafft- . the propzsed dir-nished 7rodu-tic- -ole of the Corporation in favor of SSC;and reluctance of ICAR to play its role in coordinating foundation seed pro-duction and processing investments. Progress under Phase I, although stillbehind schedule, began to pick up again in September 1977 following a strongendorsement of the project concept by the new Government. A new Chairman ofNSC has been appointed and is anticipated to assume full-time executive func-tions by July 1, 1978 - assumption of full-time responsibilities has been madea condition of Credit Effectiveness; consultants for the designing of seedprocessing plants are being engaged; consultants for other technical assist-ance services have been identified - an assurance was obtained that employmentof consultants would be completed by December 31, 1978; ICAR's role in theprogram has been redefined; and other bottlenecks have been eased. The waynow appears clear for NSP to proceed as originally planned.

V. THE PROJECT

A. General

5.01 The project would be the second phase of India's seed industrydevelopment program, and would cover five additional seed producing states:Bihar, Karnataka, Orissa, Rajasthan and Uttar Pradesh. Project componentswould be very similar to those provided under the first phase supported bythe Bank (Loan 1273-IN), except for components in Phase I designed to meetforeseeable nationwide needs in areas such as vegetable seed production.The project would increase the production, processing and marketing ofcertified seed of wheat, paddy (rice), maize (corn), jowar (sorghum), bajra(pearl millet), pulses, potato and groundnut as well as, on a lesser scale,oilseeds, cotton and jute. It would involve:

(i) establishment of SSC in each of the five states and equippingthem for production, processing, storage and marketing ofcertified seed;

(ii) development of State Agricultural University (SAU) farms forfoundation seed production;

(iii) development of 4,000 ha of SFCI farms for certified seedproduction;

(iv) assistance to SAU and research stations for laboratory,farm and processing equipment necessary for breeder andfoundation seed production and processing;

(v) expansion of SSCA;

(vi) provision of incremental permanent working capital requiredby SAU and SSC; and

(vii) technical assistdnce and training necessary to support

seed technology research, processing, quality controland marketing.

5.02 The five states involved in this project possess a comparative

advantage for seed production. The project areas chosen in the states

(Map 13038) have soils and climate suitable for the assigned crops, adequate

irrigation facilities, higher than average crop yields and large numbers of

progressive farmers capable of undertaking certified seed production. Three

other states, with relative production advantage for major crop seed are

Gujarat, Madhya Pradesh and Tamil Nadu. They could be brought under NSP

in a possible third phase project.

5.03 Annual incremental seed production at the end of the five year

project period would be about 125,000 tons - wheat 45,500 tons, paddy

20,900 tons, maize 5,600 tons, jowar 3,900 tons, bajra 2,800 tons, ground-

nut 4,600 tons, potato 30,900 tons and other crops, including pulses,

oilseeds, jute, cotton, about 10,800 tons. The proposed size and scope

of this project are determined on the basis of anticipated national seed

demand, and production capability of the participating states. A national

seed demand/production matrix was prepared by JWP for Phase I. It was

updated in April 1977 for the appraisal of this project (7.01).

B. Detailed Features

Breeder Seed Production

5.04 Provision was made in Phase I to support breeder seed production at

twelve institutions (six Agricultural Universities and six ICAR Institutes).

This project would support six more Universities located in the five partici-

pating states. ICAR would coordinate breeder seed production and assist these

institutions in preparing their investment plans. A senior official from ICAR

has already been designated full-time to be responsible for this task in thecase of Phase I institutions. An assurance was obtained from GOI that this

coordinator would also cover the additional institutions included in this

project.

5.05 Breeder seed is the most critical generation in the seed production

chain. In order to prevent problems caused by supply/demand imbalance, facil-

ities would be necessary to carry reserve stocks. Accordingly, provision hasbeen made for controlled environment storage adequate to carry a 50% stock

over each season (Annex 3).

Foundation Seed Production

5.06 Major responsibility for foundation seed production would rest

with State Agricultural Universities (SAU). NSC would estimate the demand

and coordinate production and distribution of foundation seed of nationalvarieties. Foundation seed of local varieties would be handled directly

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between SAU and SSC concerned. All foundation seed would be subject to cer-tification by SSCA, and grow out tests would be carried out on each lot. Toensure adequate supplies, foundation seed would be included in the reservestock scheme initiated in Phase I (5.14). All SAU participating in this pro-ject possess farm land which could be brought under foundation seed production.The SAU in Rajasthan, Orissa and Uttar Pradesh would, however, require addi-tional lands to fulfill the production assigned to them. Transfer of adequatelands suitable for foundation seed production would be a condition of disburse-ment against investments by SAU, and assurances were obtained that such landswould be transferred to SAU not later than June 30, 1979. SAU farms requiredevelopment. Main investments would be for land levelling, improvements inirrigation, farm machinery and buildings. Assurances were obtained that cri-teria to be agreed would be employed in farm development. Processing equipmentand storage facilities for foundation seed are also included in project costs(see Annex 3 for details).

Certified Seed Production

5.07 The SSC in each participating state would organize certified seedproduction through shareholder growers (3.01). The growers would be mostlyprivate farmers with relatively small holdings. The farm size would gener-ally range from 1 to 10 ha. Although a large number of seed growers would beinvolved in each state, the compact area approach to be followed would, to agreat extent, help to reduce inherent disadvantages of many small producers(Annex 2, para 6).

5.08 Concentration of well developed farms and progressive farmers weretwo important factors considered in project area selection. There wouldtherefore be no need for large scale on-farm development by seed growers.Many growers would, however, have to undertake minor development of theirfarms - fine levelling, deepening wells, improving irrigation facilities andreplacing tractors and water pumps. Farm development needs by seed growersare not included in project costs since such investments are already coveredfor financing under the ARDC II Credit (715-IN) and other projects (Annex 12).

5.09 Some GOS farms in the project areas and SFCI's Suratgarh farm inRajasthan would also produce certified seed for SSC. About 4,000 ha of theSuratgarh farm would be developed for certified seed production. Farm devel-opment proposed includes land levelling, improving main irrigation canal,lining of field channels, and purchase of tractors and farm equipment(Annex 4). An assurance was obtained that criteria to be agreed would beemployed in the development of the SFCI farm. Assurances were also obtainedthat seed production of crops handled by SSC would be confined on GOS andSFCI farms to project areas under contract with SSC or NSC.

Seed Processing

5.10 SSC would be responsible for certified seed processing and wouldconstruct new processing plants in each of the project zones described inAnnex 2, para 7, except in Uttar Pradesh where there would be three zones butonly two new plants - one in Faizabad and the other in Kanpur. NSC would hand

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over to SSC all processing activities in the project states 1/ and SSC would

take over from NSC (as part of NSC's share capital contribution to SSC) all

processing plants and equipmcnt that it could employ in its own operations.

Finalizing arrangements between NSC and SSC satisfactory to IDA for the trans-

fer would be a condition of Credit effectiveness. SSC would also constructgrading yards and cold storage facilities for seed potato. Drying yards would

be provided for groundnut sced. All processing facilities would be designedand constructed to permit future expansion with minimal disruption, and sites

would be adequate to allow this (Annex 5). Incremental seed processed annually

at full development would amount to about 79,000 tons cereals, 2/ 31,000 tonspotato, 5,000 tons groundnut and small quantities of pulses, oilseeds, cotton

and jute. The throughput planned at each processing complex is discussed in

Annex 5.

5.11 As provided in Phase I, SSC would contract with NSC for plant design,

preparation of tender documents, and procurement and installation of equipment.

This arrangement would be embodied in the NSC/SSC agreements (6.02). Prepara-

tion of specifications and tenders, and construction supervision of civil workswould be handled by SSC or, if SSC so desired, by NSC. Technical assistance

was provided in Phase I to assist NSC engineers in the designing of new pro-

cessing plants. Additional provision is not considered necessary in this pro-

ject. IDA approval of processing plant design would be a condition of dis-bursement against processing plant investments.

5.12 New processing plants would come on stream for the Kharif 1979

crops. Till then, inadequate processing facilities would constrain seed

output. Arrangements would therefore be made, where feasible, to temporarilyincrease existing plant capacities by installing equipment to be purchased

under the proposed Credit for new seed processing plants. This equipment

would subsequently be transferred to new plants (see Annex 5). As thisequipment should be procured urgently, retroactive financing is proposed to

cover its cost.

Seed Storage

5.13 Each processing complex would have provision for adequate storagefor seed stocks including requirements for reserve stocks. Under Phase I

additional storage totalling 45,500 tons was provided as transit stores and

bulk distribution depots. No additional bulk or transit storage provisionis considered necessary under this project.

Reserve Stock Operation

5.14 A reserve stock scheme was initiated under Phase I designed to buffer

seed users and the new SSC against marked fluctuations in supply/demand caused

1/ Except vegetables as NSC continues production and processing of vegetable

seed.

2/ Excluding 30,000 tons already processed in Uttar Pradesh by the TaraiDevelopment Corporation.

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by natural hazards - weather and disease epidemics. The scheme is to be oper-

ated by NSC. Operating costs are to be met by NSC for recovery through sales

margins. Provision has been made in this project for incremental reserve

stocks investments required until 1982/83 above the amounts estimated in Phase

I. Details are in Annex 13.

Quality Control

5.15 Impeccable control of quality at every stage of seed production is

critical to project success and hence the systematic development of the coun-

try's seed industry. The 1966 Seeds Act and the Seed Rules of 1968, if imple-

mented effectively, are adequate to ensure that high standards are maintained

in certified seed production. NSC which once served as the sole seed certi-

fication agency for the whole country has been gradually transferring thecertification function to independent State Seed Certification Agencies (SSCA).

All states participating in this project have already registered their SSCA. 1/

SSC would make their own internal arrangements to monitor seed quality at

various stages of production, processing and storage by setting up separate

quality control units. Investments required to develop the SSCA in the parti-

cipating states, including their operating deficits 2/ during the project

period, are provided in the project costs. Details are given in Annex 6.

5.16 GOI has established a Central Seed Certification Board (CSCB) with

composition and powers satisfactory to IDA to coordinate seed certification

at the national level and to ensure uniformity of standards and operation.

A seed testing service would be operated in each state established under theDOA to ensure compliance by project participants with the regulatory aspects

of the Seeds Act. There would be one well staffed and well equipped seed

testing laboratory in each of the participating states. Provision has been

made in the project to establish these or improve existing functions. GOI

operates a Central Seed Testing Laboratory which would act as referee in case

of disputes. It would also continue to develop and standardize seed testing

procedures and monitor performance of the state testing laboratories. Pro-

gress in implementing the regulatory aspects of the Seeds Act has been poor.

An assurance was obtained under Phase I that the states would intensify seed

inspection of the dealerships handling certified or truthfully labelled 3/

seed. Similar assurances were obtained from the five states that would par-

ticipate in this project. The five project states are presently represented

in the CSCB as special invitees. GOI has agreed to assist in arranging formal

representation in the Board.

Seed Technology Research

5.17 Applied research in seed technology is essential to the systematic

development and increased efficiency of the seed industry. Provision was

1/ These have been registered in accordance with memoranda of associationsatisfactory to IDA.

2/ SSCA are expected to be self supporting by the third project year.

3/ As defined in the Seeds Act.

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made in Phase I to support the development of interdisciplinary programs at

five SAU in the states included in that project. Additional provision has now

been made to support such programs at Kanpur and Faizabad SAU in Uttar Pradesh

and at the Bihar, Karnataka, Orissa and Rajasthan SAU. Project costs include

capital costs of the seed technology departments as well as operating costs of

these through the project period. Seed technology programs thereafter could be

financed out of research fund contributions from SSC. Details are in Annex 3.

Training

5.18 Training would be required to provide the skilled staff necessary

for expansion of seed production, processing, marketing and quality control.

Much of this would be on-the-job training. For providing off-the-job train-

ing for SSC and SSCA staff, NSC and TDC would naturally be first choice. How-

ever, some formal training in the area of marketing may have to be given out-

side the industry in Indian organizations handling other agricultural inputs

and in overseas seed companies. Provision for such marketing training has

been made in the project. Short overseas study tours for key staff of SSCA

and Seed Testing Laboratories have also been provided. In addition, funds

would be available for one candidate from each of the participating SAU for

an overseas graduate study program in seed technology research. Overseas

training would be organized by NSC, SSC and SAU. Details are in Annex 7.

Assurance was obtained from GOI that arrangements for overseas training of

staff would be on terms and conditions acceptable to IDA.

Technical Assistance

5.19 Adequate provision was made in Phase I for short-term technical

assistance to NSC engineers for processing plant design (5.11). Assistance

is not proposed now for seed processing. Provision is, however, required to

help the five new SSCA to develop administrative procedures necessary for the

seed certification role taken over from NSC and to be able to cope with the

greatly expanded certification activity, and for designing seed technology

research programs for the additional SAU participating in this project. Seed

marketing aspects - demand surveys, market research, sales promotion, distri-

bution logistics and retail marketing - have not been given adequate emphasis

in the implementation of NSP. Additional funds have, therefore, been included

now to supplement the Phase I provision. Details are in Annex 7. An assur-

ance was obtained from GOI that these technical assistance services would be

engaged on terms and conditions acceptable to IDA. Out of a total of 28 man-

months consultant services 22 man-months would be provided by Indian consult-

ants. Total costs are estimated at US$0.1 M. NSC in consultation with the

project institutions involved would be responsible for engaging the consultants.

C. Cost Estimates

5.20 Total project costs, including taxes and duties, over the five year

development period, would be Rs 305 M (US$34.9 M equivalent) of which about

US$6 M is estimated to be foreign exchange. Details of project costs, sum-

marized below, are in Annex 8.

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Thousand Rupees Thousand US Dollars

Category Local Foreign Total Local Foreign Total

SSC Processing PlantsCivil Works 51,709 5,752 57,461 5,910 657 6,567

Machinery & Equipment 23,286 15,017 38,303 2,661 1,716 4,377

Subtotal 74,995 20,769 95,764 8,571 2,373 10,944

SSC Headquarters 7,667 838 8,505 876 97 973

Incremental Permanent

Working Captial /a 55,732 - 55,732 6,369 - 6,369

Large Farm Development 23,814 10,601 34,415 2,722 1,212 3,934

Agricultural UniversitiesCivil Works 12,266 1,074 13,340 1,402 123 1,525

Machinery & Equipment 9,259 6,156 15,415 1,058 703 1,761

Research Operations 2,492 - 2,492 284 - 284

Subtotal 24,017 7,230 31,247 2,744 826 3,570

Quality ControlCivil Works 543 - 543 62 - 62

Equipment 4,911 2,557 7,468 561 293 854

SCA Operating Deficits 740 - 740 85 - 85

Subtotal 6,194 2,557 8,751 708 293 1,001

Training and TechnicalAssistance 674 2,796 3,470 77 319 396

Incremental Reserve Stocks 1,165 - 1,165 133 - 133

Total Before Contingencies 194,258 44,791 239,049 22,200 5,120 27,320

Contingencies- Physical 10,747 2,752 13,499 1,228 315 1,543

- Price 47,395 5,057 52,452 5,417 580 5,997

Subtotal 58,142 7,809 65,951 6,645 895 7,540

Total Project Costs 252,400 52,600 305,000 28,845 6,015 34,860

(Including Duties and Taxes)

/a Incremental permanent working capital requirements of SSC and SAU beyond

present public sector permanent working capital needs for seed production

processing and distribution.

5.21 Cost estimates are based on findings during appraisal updated to July

1977. Physical contingencies have been added at 10% on building construction

and large farm development and at 5% on all other investment costs excluding

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incremental permanent working capital, training and technical assistance

and reserve stocks. Price contingencies totalling 22% of base costs also are

included, representing expected price increases compounded annually on all

cost components. These are based on Bank guidelines for estimating inflation

rates in India and elsewhere (Annex 8, Table 2).

D. Project Financing

5.22 The project financing plan would be:

-------------- Thousand US Dollars --------------IDA

State ARDC/ Seed % ofTotal GOI Govts. Banks Growers Amount Total

State Seed Corporations 15,600 1,400 1,640 1,400 1,640 9,520 61

Incremental Working Capital 8,000 800 790 5,620 790 - -

Large Farm Development 4,910 1,370 - 740 - 2,800 57

Agricultural Universities 4,500 1,430 - 520 - 2,550 56

Quality Control 1,200 320 230 - - 650 55

Training and TechnicalAssistance 480 - - - - /480 100

Incremental Reserve Stocks 170 50 - 120 - -

Total 34,860 5,370 2,660 8,400 2,430 16,000 46

Percent of Total 100 15 8 24 7 46

5.23 The proposed IDA Credit of US$16 M would meet ahout 50% of the pro-

ject costs net of duties and taxes. The Credit would cover all foreign ex-

change costs estimated at US$6 M and about 34% of local costs. IDA funds for

research and breeder seed production by SAU; quality control; training and

technical assistance (US$1.5 M) would be channelled through ICAR, GOS, NSC and

CSCB respectively. The balance of IDA Credit (US$14.5 M) would be channelled

by GOI through ARDC and participating commercial banks to the respective

institutional borrowers. Details of the proposed financing plan are given

in Annex 9, Table 1. In order to speed project implementation, retroactive

financing up to US$200,O0() is proposed for equipment appropriately procured

after December 1, 1977.

5.24 GOI's contribution of Rs 70 M (US$5.4 M) would finance about 15%

of project costs. It would cover GOI's contributions to (i) SSC's share

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capital 1/, (ii) SFCI's share capital to enable it to increase its capacityto borrow from commercial banks, (iii) ICAR for seed technology research andbreeder seed units, (iv) SAU for farm development and foundation seed units,(v) seed testing laboratories for quality control investments, (vi) SSCA forcertification agency investment and initial operating deficits, and (vii) NSCfor maintenance of reserve stocks. GOS contributions (US$2.7 M) would financeabout 8% of project costs and cover GOS proportion of SSC's share capital andquality control investments at Seed Testing Laboratories and SSCA. Contribu-tions from seed growers (US$2.4 M) would finance 7% of project costs put in astheir equity into processing plants and incremental working capital. ARDC andcommercial banks would finance the remaining 24% of project costs (US$8.4 M)given as loans to participating institutions. The commercial banks would aspart of their normal operations also finance the project participants' seasonalworking capital needs, which are not included in project costs.

E. Procurement

5.25 Major items of seed processing machinery, laboratory equipment,farm machinery and office equipment (US$12.1 M) would be procured by inter-national competitive bidding (ICB) in accordance with IDA guidelines. /Local manufacturers would receive a margin of preference in bid evaluation of15% or prevailing customs duty, whichever is lower. It would not be practicalto bulk all machinery and equipment because of the many and varied individualitems and the widely dispersed institutions involved. Contracts for minoritems of equipment, not exceeding US$50,000 each would therefore be procuredon the basis of competitive bidding advertised locally and in accordance withlocal procedures which are satisfactory to IDA. Procurement under local com-petitive bidding procedures has been estimated to not exceed a total of US$1.5M. Urgent purchase of minor equipment and supplies up to US$10,000 each andup to a total of US$1 M would be procured by prudent shopping. Even underlocal competitive bidding and prudent shopping procedure, competition isassured by adequate representation of local suppliers and local agents offoreign suppliers.

5.26 Bulking would not be practical for civil works and building con-struction (US$10.3 M) because of their small and varied sizes, and scatteredlocations. Contracts for these would therefore be let after competitivebidding advertised locally. On-farm development (US$1.3 M) by SFCI and SAUwould be carried out by the respective institutions on force account or oncontract to be let after competitive bidding advertised locally. The smallsize of the contracts would not warrant international bidding. Vehicles(US$1.2 M) would also be procured by competitive bidding advertised locallysince only a few would be purchased spaced over the project period. Motor-cycles (US$0.4 M), which would be owned by staff, and not as institutional

1/ Held through NSC up to the limit of 30% envisaged under NSP (Annex 1,para 5).

2/ Small tractors for which GOI reserves procurement are not included inproject costs and would not be financed under the Credit.

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fleets, would be purchased by the individuals concerned according to theirpersonal preferences. Technical assistance services engaged and arrangementsfor overseas training (US$0.5 M) would be on terms and conditions satisfac-tory to IDA. The balance of project costs (US$8.2 M) would cover reservestocks, working capital and operating costs not involving procurement.Assurances were obtained from GOI and GOS that for contracts in excess ofUS$300,000 draft tender documents and bid evaluation would be submitted forIDA review before being acted upon. 1/

F. Disbursements

5.27 Disbursements under the proposed Credit would cover:

(a) 100% of foreign expenditures for directly imported items(US$3.0 M);

(b) 100% of ex-factory price of locally manufactured equipmentand vehicles (US$3.6 M);

(c) 60% of other locally procured items (US$1.8 M);

(d) 100% of technical assistance services and overseas training(US$0.5 M);

(e) 60% of expenditures for civil works, building constructionand related engineering (US$6.5 M); and

(f) 60% of on-farm development by SFCI and SAU (US$0.6 M).

Disbursements for items in sub-paragraphs (a), (b), (c), (d) and (e) abovewould be made against full documentation submitted to IDA. For items in (f),disbursements would be made against certified statements of expenditure.Documents supporting the latter type of disbursements would not be submittedto IDA for review but retained by GOI or the institution concerned and auditedquarterly by the Government Auditor General or the statutory auditor of theinstitution. 2/ Such documents would be made available for inspection by IDAduring supervision mission visits. Appropriate assurances were obtained fromGOI and GOS in this regard. A schedule of estimated disbursements is givenin Annex 9, Table 2.

1/ About 12 contracts are anticipated to exceed US$300,000 each for atotal of some US$8.6 M.

2/ The Auditor General does not audit documents retained by ARDC.

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VI. ORGANIZATION AND MANAGEMENT

A. General

6.01 Successful development of the Indian seed industry under NSP depends

heavily on the organizational and managerial strengths of the many constituent

institutions. The organizational and management structure was developed in thecourse of preparing Phase I, agreed with the Bank when Loan 1273-IN was made,

and is operational. The arrangements would remain unchanged for this project

and for the five states joining the program NSC would divest itself from theproduction and processing of seed (except vegetable seed). Ultimate respon-

sibility for the successful implementation of NSP rests with the GOI Ministryof Agriculture. The Ministry is advised by a National Seed DevelopmentCouncil established under Phase I. This Council would provide overall policy

guidance for the development of the seed industry. As a policy advisory body

it has wide representation from all parties interested in the industry: GOI,NSC, SSC, ICAR, GOS, seed growers, state marketing agencies, private sectorseed processors and seed dealers. Seed technology research and breeder seed

production is entrusted to ICAR and carried out through its Central Institutes

of Agricultural Research and SAU. The Agricultural Universities, in addition,

carry the main responsibility for foundation seed production. SSC organizethe certified seed production through shareholder growers, process and store

the seed and are responsible for intrastate marketing. Quality control, so

vital for project success is ensured by independent tests in the Seed TestingLaboratories and certification by SSCA.

National Seeds Corporation (NSC)

6.02 NSC is the backbone of the Indian seed industry. Although it isdivesting itself of the production and processing of seed 1/ (other thanvegetable seed) and seed certification functions, NSC is continuing to play a

major role in the future development of the industry by concentrating on co-

ordination, marketing and service functions. Functions of particular import-

ance are: equity participation in SSC; active guidance and assistance to SSCthrough board representation; estimation of seed demand, and coordination ofmarket research and sales promotion; interstate marketing; coordination of

foundation seed production; operation of the seed reserve stock scheme; andprovision of technical and common services to the seed industry. Participa-

tion by NSC in the share capital of SSC and NSC representation on SSC boards

of directors strengthen the NSC/SSC relationships. These relationships are

embodied in written agreements satisfactory to the Bank in the case of thefour Phase I states and signature of such agreements satisfactory to IDA with

each state included in this project would be a condition of disbursementagainst any project investment in a state.

1/ In the four Phase I states and the five states participating in

this proposed project.

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B. Detailed Arrangements

State Seed Corporations (SSC)

6.0:3 State Seed Corporation have been established under the Companies

Act 1956, in Bihar, Karnataka, Orissa and Rajasthan. Articles and Memoranda

of these SSC have been reviewed and will be revised to incorporate modifica-

tions suggested by IDA. In Uttar Pradesh, the Tarai Development Corporation

(TDC) is being restructured to become that state's SSC. The objects clause,

share capital structure and the board composition of TDC will be modified to

be in line with other SSC participating in the NSP. The share capital of all

SSC would be 75% ordinary and 25% preference shares. The share capital would

be held by NSC (on GOI's behalf), GOS and shareholder growers in the propor-

tion 30:35:35 in that order. The preference shares, which would carry a right

to dividends at 11% cumulative, would be subscribed equally by GOS and NSC.

The SAU participating in the project would hold at least 20% of the equity

capital allocated to the GOS concerned. An assurance was obtained from GOI

and GOS that the memoranda and articles of association of the SSC and NSC/SSC

agreements would not be changed without consultation with IDA. Initial funds

required by SSC have already been provided through NSC and GOS equity contri-

butions in all states except Orissa, where arrangements are being completed.

6.04 The board of each SSC would comprise representatives of parties

directly interested in the seed industry: GOS, seed growers, SAU, NSC, par-

ticipating banks and seed distributors. Each SSC board is likely to have more

than ten directors. The Agricultural Production Commissioner (APC)/Secretary

of Agriculture or the Vice Chancellor of SAU would be the chairman of the SSC

board. Full-time managing directors of SSC have been appointed in Bihar,

Orissa and Karnataka, and formal appointment is expected in Rajasthan in June

1978 and in Uttar Pradesh in October 1978. SSC would be managed on commercial

lines. The managing director would be vested with necessary powers to enable

him to discharge his responsibilities as the chief executive of the SSC. In

order to enable SSC to function independently from government departments the

managing director would work within the policy guidelines set by the board

of directors and report to the SSC chairman, but otherwise have independence

in all operational matters.

6.05 The managing director would be supported by senior executives as

managers of the Corporation's Production, Processing, Marketing and Finance

Divisions. Terms of reference for these five positions are in Annex 10,

Appendix 2. Recruitment for these and other executive positions would be

based on nationwide selection.

Credit and Input Services

6.06 Medium and long-term credit needed by seed growers for farm develop-

ment would be provided by Commercial Banks or Cooperative Land Mortgage Banks.

Most of such credit would be refinanced by ARDC which in part would use funds

supplied by IDA under the ARDC II Project Credit (715-IN). Short-term credit

for seed growers' working capital would be met mainly by Primary Agricultural

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Credit Societies financed through the Cobperative Banking System. These

arrangements are satisfactory as are existing arrangements for distribution

of fertilizer and pesticides through cooperatives, DOA outlets, public cor-

porations and private dealers. To provide short-term credit to growers who

do not have access to credit from Primary Cooperative Societies SSC would

make arrangements with commercial banks to help finance these growers.

6.07 Long-term and medium-term credit would also be required by SSC and

SFCI, and by SAU for farm development and foundation seed investments. This

credit would be financed under the project and be provided by commercial banks

selected by and refinanced by ARDC. A banking plan would be prepared by ARDC

specifying the participating commercial banks and detailing the lending arrange-

ments between GOI and ARDC, ARDC and participating banks, and banks and final

borrowers. Preparation of a banking plan satisfactory to IDA would be a con-

dition of Credit effectiveness. Details are in Annex 12.

6.08 SSC would need large amounts of working capital mainly to finance

seed inventory. About 30% of the total requirement would be financed from

SSC's paid up share capital and the balance obtained from banks under normal

commercial arrangements, secured by hypothecation of inventory and receiv-

ables. As it is vital that SSC and NSC have ready access to adequate credit

for inventory financing assurances were obtained from ARDC that it would con-

duct periodical reviews with the participating banks, SSC and NSC to ensure

the availability of sufficient working capital.

Other Institutions

6.09 The quality of project seed would be controlled both by SSC inter-

nally, and SSCA independently. The CSCB would play a coordination role inaddition to ensuring interstate uniformity of standards (5.16). Research

institutes and SAU would be responsible for seed technology research and

breeder seed production. These functions would be coordinated by ICAR.

Foundation seed would be produced mainly by SAU, and NSC would coordinate

the foundation seed production of varieties of national importance. DOA

would provide agricultural extension services to seed growers as well ascertified seed users.

Accounting Systems and Audit

6.10 SSC would install and maintain financial and cost accounting sys-

tems, and internal control, including inventory management and internal audit,

in accordance with commercial practice. The accounting procedures followedwould comply with provisions of the SSC articles of association which are

satisfactory to IDA. SSC's annual accounts would be audited by independent

auditors acceptable to IDA. Accounts of NSC, ARDC, SFCI are audited by the

Auditor General of India in a manner satisfactory to IDA. All institutions

participating in the project would prepare annual work programs, quarterly

pr,jgress reports, and annual accounts as they relate to project activities.

AssuranceD were obtained from GOI and GOS that copies of these documentswould be made available to IDA as follows:

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(i) annual work programs not later than two months prior tothe commencement of the institutions' financial year;

(ii) quarterly progress reports within one month of the closeof each quarter; and

(iii) audited annual accounts and reports within six months ofthe close of the institutions' financial year (within fourmonths for ARDC), including a statement on the appropriate-ness of expenditures on work done under force account.

Project Implementation

6.11 A Project Monitoring and Management Committee (PMMC) operates underPhase I for the purpose of coordinating project activities and for projectmonitoring; its authority would be extended to cover this project. Functionsassigned to PMMC include procurement and progress reporting to GOI and Bank/IDA. While the PMMC composition and powers are satisfactory, the staffing of

the PMMC secretariat has been inadequate. An assurance were obtained from GOIthat in future adequate staff support would be provided to PMMC throughout theproject period.

6.12 Each participating state has set up its own State Project Coordina-tion Committee comprising representatives of all participating agencies in thestate. The Committee is chaired by the Agricultural Production Commissioneror Secretary of Agriculture. The executive of this Committee, who would bean officer not below the rank of a Deputy Secretary, would be provided withnecessary support staff and would report directly to the Committee Chairman.

6.13 Evaluation arrangements would be made by June 30, 1979 to follow upproject implementation, identify problem areas, and assess effectiveness ofparticipating institutions and project benefits. Under these arrangementsthe project impact on the farmers for whom certified seed is produced, wouldbe measured, and costs and benefits realized would be compared with appraisalestimates and projections. Staff carrying out project evaluation would beindependent of all participating agencies. The executive responsible for theevaluation arrangements would report directly to GOI Secretary of Agriculture.Details are given in Appendix 3 in Annex 10. Terms of reference have beenagreed during negotiations, and an assurance was obtained from GOI that Pro-ject Completion Reports would be prepared and submitted to IDA promptly afterproject completion.

VII. MARKETING

Production and Demand

7.01 In order to improve previous seed demand forecasts, funds wereprovided in Phase I for a comprehensive demand survey. This was conductedby the Institute of Agricultural Research Statistics (IARS) in 1976. The

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National Council of Applied Economic Research (NCAER) analyzed the survey

results and its interim report on the farmer survey findings and seed demand

analysis was reviewed by JWP. Because of design faults in the IARS survey

and defects in the-NCAER analysis due to lack of experienced staff, the sur-

vey provided an inadequate basis for a seed demand forecast and JWP developed

its own projections. Although JWP exercised caution in its forecast, more

conservative demand estimates are considered justified because of deficiencies

in the data available to JWP for its analysis. To avoid the risk of over-

investment and over-production it has been assumed in project design and

appraisal that the demand and production levels anticipated by JWP for 1980/81

would be reached only at full development in 1982/83. (Details are in Annex

13). Thus the project is designed to produce at full development about

174,300 tons of certified seed annually including wheat 74,000 tons, paddy

31,800 tons, maize 8,500 tons, jowar 6,500 tons, bajra 3,700 tons, groundnut

4,700 tons, potato 33,000 tons, and other crops 12,100 tons. 1/ Details are

in Annex 5, Tables 1 and 2.

7.02 Under Phase I provision was also made to update the initial demand

survey biennially with the assistance of marketing consultants in order to

provide the basis for long range demand projections and expansion programs.

Because the IARS/NCAER survey has not established an adequate data base the

biennial update would not be meaningful. To complement the initial survey

an additional demand study would be carried out under terms of reference

satisfactory to IDA. A demand analysis and forecast would be furnished to

IDA by March 31, 1979. Appropriate assurances were obtained from GOI.

Short-term demand estimates would be made semiannually by NSC to determine

requirements for interstate marketing and to assist SSC in developing their

seed production programs. Intrastate demand projections in states with SSC

would be the responsibility of the respective SSC. The forecasts would pri-

marily be based on information gathered by NSC's and SSC's regional offices

and dealer network. NSC and SSC would strengthen market research and con-

centrate on this area as much as they need to on sales promotion and distri-

bution logistics. Provision is included for marketing consultants to assist

in setting up a market research division in NSC and in each of the SSC par-

ticipating in this project. Details are in Annex 13. An assurance has been

obtained from GOI that marketing consultants with terms of reference satis-

factory to IDA would be employed to assist NSC and SSC in market research.

Seed Procurement

7.03 SSC would organize certified seed production through registered

shareholder farmers. Seed growers would be provided with foundation seed

by SSC. SSC would procure the foundation seed from NSC in the case of na-

tional varieties or from one of the SAU in the state in the case of local

varieties. Staff attached to SSC's Production and Processing Divisions

would arrange with the seed growers the time schedule for harvesting,

inspection and transport of crop to plant site. The seed grower would be

responsible for bagging and transport of the crop to SSC plant site. All

seed meeting specified standards would be paid premium prices - a price

1/ Other crops include pulses, oilseeds, cotton and jute.

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higher than the price realizable for commercial crop. However, there would

be a time lag before the accepted crop could be verified suitable for seed.

In order not to inconvenience the seed grower all crop accepted at plant

site, after field inspection, would be initially paid for at market rate for

commercial crop prevailing at the date of delivery. This first installment

would be paid within three days of delivery. A second installmer;t, consLi-

tuting the premium, would be paid after SSC ascertains the portion of the

crop delivered that would be suitable for processing as certified seed.

The premium would be set by each SSC at a level to compensate for additional

costs and risks incurred in seed growing. Financial analysis (Annex 14)

indicates that at present levels of production costs and farmgate prices a

premium above commercial crop prices of about 25% to 35% for self-pollinated

crops, potato and groundnut, and up to 140% for hybrids would make seed

growing an attractive proposition to farmers. The methodology used for

computing premiums and arrangements for payment are described in Annex 13,

paras 34-35 and Annex 14, paras 7-10. Seed growers would receive a third and

final payment as bonus once the season's processed seed has been sold, and

financial results of SSC have been determined.

Marketing Channels and Distribution

7.04 Certified seed would be marketed through public and private sector

channels. SSC and NSC would use their own outlets as well as cooperatives and

private sector dealers registered with the corporations. SSC would be respon-

sible for marketing within its own. state whereas interstate marketing would be

the responsibility of NSC. NSC would purchase certified seed from SSC and sell

it to other SSC for intrastate distribution. In states without SSC, NSC would

distribute the seed through its own outlets and dealer network.

7.05 Most farmers obtain loans for agricultural inputs from their Primary

Agricultural Credit Societies - "Component A" given in cash to cover wages

and "Component B" given in kind i.e. inputs including seed (Annex 12). It

is therefore logical that these cooperative societies, which are the major

distributors of short-term credit and inputs, would handle the largest pro-

portion of certified seed marketed. However, NSC and SSC would also be free

to appoint dealers in the private sector.

Pricing Policy

7.06 Seed pricing is crucial in the development of the seed industry.

Prices should be kept as low as feasible in order to induce farmers to use

seed. On the other hand, seed prices should be high enough to permit an

attractive premium to be paid to the seed growers; an adequate margin to

cover distribution costs and dealers' profit; and a reasonable return on

capital employed by SSC and NSC. Financial analysis of the project oper-

ations of the Rajasthan SSC indicates that a return of 20% would be a

feasible objective (8.04 and 8.05).

Sales Promotion

7.07 As seed production would be developed to match potential demand,

aggressive sales promotion would be essential. Under Phase I, funds were

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provided to support sales promotion campaigns by NSC and the four par-ticipating SSC. A similar provision is made in this project to financeconsultancy services for establishing a sales promotion section in theMarketing Division of each SSC and to assist in the initial publicitycampaigns. Details are in Annex 13.

VIII. FINANCIAL PROJECTIONS

8.01 The purpose of the financial projections is to show that the pricelevels set for seed at various stages of production, processing and marketingprovide sufficient financial incentives to the participants and that resultantprices themselves are low enough to generate an increasing farmer demand forimproved seed.

Seed Growing

8.02 To establish the financial viability of the Universities' foundationseed units their production and processing costs have been analyzed and priceshave been projected (Annex 14, Tables 1 and 2) that would make the foundationseed unit self-supporting and yield a reasonable rate of return on capitalemployed. Costs and risks of certified seed growing have also been analyzedand prices have been established that would make seed growing attractive toSSC shareholder growers without having to pay excessive premiums (Annex 14,Table 3). With the establishment of SSC in the four Phase I project states,seed growers' prices have already been reduced significantly in 1976/77.Further price reduction of up to 30% appears, however, feasible for hybridcereal seed.

SFCI and Suratgarh Farm

8.03 The investment costs, operating results and cash flow relating to4,000 ha to be developed at SFCI's farm in Suratgarh are shown in Annex 14,Tables 9 and 10. The financial rate of return (ROR) on farm investmentswould be 24% on the assumption that the entire acreage developed would beutilized for certified seed production. With the probability that up to 500ha of this farm would be used for production of foundation seed which commandshigher premiums than certified seed, the ROR is likely to be higher and thecash flow more positive. Repayment of project loans could be accomplished atterms and conditions proposed under the project while permitting sufficientreserves for reinvestment.

State Seed Corporations

8.04 The financial viability of SSC's processing and other operationshas been established using the Rajasthan SSC as a model. The estimatedROR on investments based on this model would be about 20%. SSC's cash flowwould permit debt service at terms and conditions proposed under the project.Adequate reserves would be built up from the profits earned after providing

- 21 -

for reasonable dividends to preference 1/ and equity shareholders (Annex 14).SSC's articles contain clauses empowering SSC to establish adequate reserves.Each SSC would submit detailed cash flow projections to the lending bank andARDC prior to obtaining the loan for its investments. Seed retail prices havebeen substantially reduced in 1976/77. In conjunction with the establishmentof SSC in four Phase I states seed prices for self-pollinated crops havealready reached levels projected in the Phase I Project. Retail prices forhybrid cereals could, however, be reduced further by up to 40% from presentlevels.

8.05 The major uncertainty facing SSC is the sales volume. However,variable costs comprise more than 90% of projected total costs. Therefore,ROR would be relatively insensitive to volume. The greatest part of thevariable costs consists of the seed price paid to the grower, which would belinked to commercial crop prices. Seed growers' prices would only increase,if there was an increase in commercial crop prices. This, in turn, wouldpermit SSC to charge higher seed retail prices and retain the margin betweenprocurement and selling prices which provides the means of SSC's financialviability. A fall in seed demand after having procured the crop from thegrowers is, however, bound to have its adverse impact.

National Seeds Corporation

8.06 NSC's role in the NSP projects has become mainly that of a coordina-tion and service agency, having been obliged to transfer the major production,processing and intra-state marketing activities to the newly established SSC.While some redundant NSC staff have been employed by SSC and SSCA in Phase Istates, efforts in this regard will have to be stepped up in the future. Theexperience and knowledge of NSC employees in the areas of seed certification,processing and marketing would be a valuable asset for project institutions.Presently, NSC would require a minimum service charge of about 7% on interstatesales to cover its operating costs and an additional 4.5% to recover the costsfrom the reserve stock operation. Assuming that surplus staff w6uld be absorbedby SSC, SSCA and other institutions over a period of four years, NSC's minimumservice charges could be reduced to 8% by year 5. As the viability of NSC iscritical to project success, an assurance was obtained from GOI during Phase Ithat NSC service charges be regularly reviewed with the Bank and adjusted asnecessary to cover all costs.

IX. BENEFITS AND ECONOMIC JUSTIFICATION

Principal Benefits

9.01 The major benefit of the project would be the incremental cropyields obtained by farmers through use of project produced improved seed.Assuming no change in existing cultural practices or in the level of use ofother farm inputs, the use of certified seed from the project is estimated

1/ 11% cumulative payable on preference shares.

- 22 -

to result in annual yield increases averaging 150 kg/ha for wheat, 135 kg/hafor paddy, 105 kg/ha for groundnut and 800 kg/ha for potato. Benefitsfrom farmer-to-farmer exchange of subsequent seed generations produced fromproject seed would also be significant but have not been quantified as projectbenefits. Use of project produced hybrid seed would necessitate the higherusage of inputs, such as fertilizer and pesticides. Annual yield increasesattributable exclusively to the hybrid seed are estimated at about 225 kg/hafor maize, 190 kg/ha for jowar and 125 kg/ha for bajra. For pulses, oilseedsand jute annual incremental yields are projected at between 50 kg/ha and 140kg/ha. Details are in Annex 15.

9.02 At full development, the annual increment in production of commer-cial grain and other crops generated by the use of project seed is estimatedat 245,000 tons wheat, 325,000 tons paddy, 85,000 tons bajra, 40,000 tonspotato, 15,000 tons groundnut, and 90,000 tons of other crops including jute,pulses and oilseeds. The incremental value of these crops, calculated atinternational prices for commodities traded internationally, and at farmgateprices for those that are not, would be about US$158 M/year. This incrementalvalue would be off-set by the incremental annual cost associated with seedproduction and processing as well as the incremental costs incurred by farmersusing project seed. Total incremental costs are estimated at US$17.5 M.giving a net incremental value of production of US$140.5 M/year.

Beneficiaries

9.03 Incremental seed produced under the project would be adequate toprovide planting material for some 2.7 million ha. Assuming that the averagefarm would use project seed on 2 ha about 1.35 million farming families wouldbenefit directly from the project. This is probably a very conservativeassumption. Additional employment required at harvest to handle the increasesin yields is estimated to require 13,500 man-years annually. While larger andmore progressive farmers are likely to understand and profit first from thegreater availability of high quality certified seed small farmers shouldquickly realize the advantage and benefit from this relatively low cost meansof improving their production levels.

Economic Rate of Return (ROR (E))

9.04 The methodology used for computing the ROR (E) is described inAnnex 15. ROR (E) is estimated at 158% and remains satisfactory when variousalternative and adverse assumptions are tested. For example, an increase of20% in investment and operating costs coupled with a 20% decrease in projectbenefits would reduce ROR (E) to 111%. An unforeseen two year delay in thegeneration of project benefits would result in a ROR (E) of 109%. The rateof return is high because the use of relatively low cost seed of HYV wouldpermit the better utilization of sunk costs, in particular investments inmachinery, implements, irrigation, and land preparation.

Risk

9.05 The most serious risks are that seed demand may be lower thanexpected and project investments thus underutilized, and that the new and

- 23 -

inexperienced SSC would have difficulty in managing the complex seed pro-duction, processing and marketing processes with the consequences of highcosts and imbalances in supply and demand. Safeguards have been taken inproject design in regard to the seed demand factor by basing the processinginvestments on conservative demand estimates, by emphasizing the marketingfunction, and by providing for appropriate technial assistance and trainingfor demand studies, market research and sales promotion. Care would also betaken to ensure that the SSC are adequately staffed with people of appropriateskills and management experience in agro-industries. Absorption of qualifiedNSC employees by SSC should help reduce the risks. Against the substantialbenefits which would accrue to millions of families as a consequence of theproject acceptance of these risks is justified.

X. RECOMMENDATIONS

10.01 During negotiations assurances were obtained from GOI and stategovernments on the following matters:

(i) ICAR would coordinate breeder seed production and extendthe full-time ICAR coordinator's responsibilities to theAgricultural Universities participating in this project(5.04) (GOI);

(ii) state governments would transfer to the AgriculturalUniversities adequate land suitable for foundation seedproduction not later than June 30, 1979 (5.06) (GOS);

(iii) criteria to be agreed with IDA would be employed in SFCIand SAU farm development (5.06 and 5.09) (GOI and GOS);

(iv) seed production of crops handled by SSC or NSC would beconfined on GOS and SFCI farms to project areas undercontract with SSC or NSC (5.09) (GOI and GOS);

(v) arrangements for overseas training of staff would be onterms and conditions satisfactory to IDA (5.18) (GOI);

(vi) technical assistance consultants for the Phase I projectand this project would be engaged by December 31, 1978 onterms and conditions satisfactory to IDA (4.02, 5.19 and7.02) (GOI);

(vii) PMMC's secretariat would be adequately staffed throughoutthe project period (6.11) (GOI);

(viii) a Project Completion Report would be prepared and submittedto IDA promptly after project completion (6.13) (GOI); and

- 24 -

(ix) to complement the IARS/NCAER demand survey a seed demandstudy would be carried out by March 31, 1979 with termsof reference satisfactory to IDA (7.02) (GOI).

10.02 Agreement was also reached on the following conditions of Credit

effectiveness:.

(i) arrangements satisfactory to IDA for the transfer of NSCplants and equipment to SSC had been completed (5.10)(GOI and GOS);

(ii) a banking plan satisfactory to IDA had been prepared byARDC (6.07) (GOI and ARDC); and

(iii) the Executive Chairman of NSC has been functioning in thatcapacity on a full-time basis (4.02) (GOI).

10.03 The following conditions of disbursement were agreed:

(i) against investments by Agricultural Universities, thatadequate land suitable for foundation seed productionhad been made available (5.06);

(ii) against processing plant costs, that IDA had approved thedesign of each plant (5.11); and

(iii) against any project cost for a state, that an agreementbetween NSC and SSC satisfactory to IDA had been executed(6.02).

10.04 It is recommended that retroactive financing up to a total ofUS$200,000 be made available for expenditures after December 1, 1977 on

appropriately procured equipment.

10.05 With these conditions and assurances the project would be suitablefor an IDA Credit of US$16.0 M to GOI.

ANNEX 1Page 1

INDIA


Agriculture and Seed Industry

General

1. Agriculture is the mainstay of India's economy, contributing about45% of its GNP and employing more than 70% of its working population. Agri-culture also produces the raw material for the major export commodities. Thegrowth rate in agriculture in the last ten years was about 3%.

2. A major objective of GOI's planned development activities for a longtime has been to increase growth rate in food production. The introduction ofnew seed varieties of the five main cereals 1/ from early sixties was the maincatalyst of the rapid foodgrain expansion that occurred between 1966/67 and1970/71. The greater part of this increase was the result of rising productiv-ity. Compared with previous decades increases in yield have contributed moreto growth than increases in cropped area. Higher yields have resulted fromuse of HYV seed together with improved cultural practices - intensive use ofcomplimentary inputs, in particular fertilizer, pesticides and irrigation.It is not easy or very meaningful, at this stage, to analyze the contributionattributable to each of the inputs in the total package. The productivityincreases were the result of the adoption of a new package of practices andinputs, the component parts of which interacted to produce the welcome results.The impact of seed is best measured by the results of the total package itself.

3. After the five main foodgrains, the next most important crop iscotton whose production targets are dependent greatly on an improved seedprogram. During the seventies a number of new long staple cotton varietieshave spread rapidly and a relatively more profitable cotton seed productionindustry has grown, largely in private and cooperative sectors.

4. Jute is a crop of major importance in north - eastern India, contri-buting to about 9% of the country's total export earnings in 1975/76. Highproduction costs due to low yields pose a threat to jute in world markets.New jute varieties have been evolved and released for seed multiplication.Special programs were started with the Fourth Five Year Plan to produce qual-ity jute seed and to popularize its use in the major jute growing areas.These efforts have expanded the demand for quality high yielding jute seed.

5. Oilseed production in the Fifth Five Year Plan is expected to in-crease by 3 million tons to 12.5 million tons. Major reliance is placed on

1/ Wheat, paddy, maize, jowar and bajra.

ANNEX 1Page 2

spreading the production of two relatively new crops - soyabean and sunflower.

Both these crops require large quantities of seed which also would be produced

under the National Seed Program (NSP) projects.

6. The production of pulses, the main source of vegetable protein in

the national diet, is also emphasized in the Fifth Five Year Plan. Improved

varieties of pulses are, however, lacking. The Central Research Institutes

and Agricultural Universities have in recent years, produced some new varieties

with promise. There is keen demand from farmers for seed of such improved

varieties as are now available.

7. The more important of the other crops are potato, groundnut, vege-

table and fodder. These also require support and would be taken up for multi-

plication under the NSP projects.

Seed Industry

8. HYV resulted from plant breeding break throughs starting in the

early sixties before when seed industry was little developed. The private

sector produced small quantities of flower and vegetable seed. Public sector

attempts to disseminate improved seed from small government farms located in

each Community Development Block were not very successful. The difficulties

of managing so diffuse a scheme resulted in seed of doubtful quality. There

were also frequent imbalances in seed supply and demand due to inadequate

planning and control.

9. Release of maize hybrids in 1961 was followed by hybrids of sorghum

(jowar) and pearl millet (bajra), HYV dwarf paddy and HYV dwarf wheat varie-

ties. All of these varieties were highly responsive to intensive input use,

yielding larger profits, and consequent strong demand for quality seed.

10. Private sector responded very quickly to this demand for improved

quality seed and there was a rapid growth of private sector seed companies.

GOI, recognizing that a wide scatter of small Block seed farms operated by

state Department of Agriculture (DOA) were inappropriate to the technological

needs of seed production, particularly that of hybrid seed, decided to estab-

lish a central seed organization. Thus the National Seeds Corporation (NSC)

was incorporated in 1963 (Appendix 1). NSC was made responsible for promoting

seed industry development, from production through processing, storage and

marketing. NSC was also charged to establish a system of seed quality control,

and a Seeds Act was passed in 1966.

11. Through the mid sixties seed output expanded rapidly. This increase

was mainly due to private sector effort, NSC having concerned itself mainly

with foundation seed production and seed certification, with the Bank financed

Tarai Development Corporation (TDC) a late comer in the field. 1/ Unfortu-

nately seed demand grew more slowly than expected. Farmer retention and

1/ TDC is the executing agency of the Tarai Seeds Project - Loan 614-IN.

ANNEX 1Page 3

farmer to farmer exchange of seed accounted for much of self-pollinated wheatand paddy seed used. Some of the HYV were inferior in grain quality to tradi-tional types and thus lost favor. Substantial overproduction resulted in largeseed stocks accumulating with state governments. 1968-71 was a period of re-trenchment, and liquidation of several private sector companies resulted.During this period, state governments curtailed their seed production activ-ities, some undertaken directly on DOA farms and others through contractfarmers. The seed was seldom certified and was generally sold at little morethan grain price as part of the agricultural extension programs.

12. When seed demand picked up in 1971/72, the industry lacked the re-sources and the confidence to meet it. NSC stepped in and developed a seedprogram and, by 1974/75, produced 73,000 tons of seed; thus becoming thelargest seed producer in the country. Seed was produced almost entirelythrough contracts with progressive farmers.

13. A Seed Review Team was commissioned by GOI in 1968 to study indepth the seed situation in the country. 1/ The seed industry was furtherreviewed in 1971 by a National Commission on Agriculture. 2/ Based on theirfindings GOI decided to reorganize and develop the seed industry. In February1975 a Joint Working Party (JWP), based on NSC personnel, was established toprepare proposals for a National Seed Program (NSP), JWP also prepared thefirst National Seed Project (Phase I) and Second National Seed Project nowproposed.

National Seed Program

14. NSP represents a determined effort by GOI to develop a broad-based,decentralized network of seed production agencies, capable of meeting thecertified seed requirements for the country's planned agricultural programs.Agricultural development, basic to India's economic growth, will depend ongreater productivity since there is little new land suitable for cultivation.Quality seed is therefore an input essential to the continued development ofIndian agriculture. NSP which will provide support to all facets of seedproduction, from multiplication of breeder seed through to processing andmarketing of certified seed, is designed to be a coordinated seed developmentprogram.

15. A major feature of the Program would be the establishment of StateSeed Corporations (SSC), based on the TDC model, to take over the productionrole which NSC had performed by default. SSC are to be created in regionswith comparative technical and cost advantages for producing particular crops.Each crop would be produced by more than one SSC to encourage competition.NSP also provides for strengthening and expanding the production by the private

1/ Government of India, Seed Review Team Report 1968.

2/ Interim Report on Multiplication and Distribution of Quality Seed Per-taining to High Yielding Varieties and hybrids of cereal; November 1971.

ANNEX 1Page 4

sector and cooperatives. Seed would be produced in compact areas around eachprocessing plant by growers who will also be shareholders of SSC. This would

cortrast markedly with the past NSC pattern of scattered production by con-

tract growers. The new approach would improve efficiency in quality control,supervision and transport. Quality is also expected to improve from the

farmers' vested interest in the SSC in which they are themselves shareholders.

16. Institutions participating in NSP project would have specialized

responsibilities as follows:

(a) GOI to coordinate state policies on seed production, pro-cessing and marketing;

(b) NSC to coordinate SSC activities of national or regionalsignificance;

(c) state governments to concentrate on legal regulatoryfunctions and extension services;

(d) SSC to organize seed production through shareholder growers,and to undertake processing;

(e) Agricultural Universities to undertake research, and pro-duction of breeder as well as foundation seed;

(f) Indian Council of Agricultural Research (ICAR) to coordinatebreeder seed production by Universities;

(g) NSC to coordinate production of foundation seed of nationalor regional importance; and

(h) independent Seed Certification Agencies to ensure quality offoundation and certified seed.

17. The share capital contribution and board composition would be broad-

based (Annex 10, paras 16, 17 and 18). NSC would function as service agencymaking charges for its servies to SSC based on costs incurred. Intra-statemarketing would be SSC's responsibility while responsibility for interstatemarketing would continue to be with NSC.

18. Following these defined concepts many State Departments of Agri-

culture (DOA) which hitherto had been engaged in seed production, processingand marketing, in many scattered locations, are obliged to transfer theseactivities to SSC. Government farms 1/ suitable for seed production in proj-ect areas would be used as seed growers. Farms outside the project areas wouldbe used for foundation seed production 2/ where necessary, or for certified

1/ Including large farms owned by State Farms Corporation of India.

2/ Under the supervision of Agricultural Universities.

ANNEX 1Page 5

seed production of crops not handled by SSC. DOA or SFCI will not, after atransitional period, undertake processing of certified seed of crops handled

by SSC.

Tarai Development Corporation

19. TDC is the implementing agency for the Bank supported Tarai Seeds

Project (Loan 614-IN for US$13 M). This loan was made to assist in the produc-

tion, processing and marketing of certified seed of HYV. The project involvesthe development of part of the Tarai region of Uttar Pradesh. It envisaged

the development of 16,000 ha for seed production, including 5,000 ha of the

Pantnagar Agricultural University farm with a seed production target of 45,000tons. TDC was formed as a private company whose membership includes seed

grower farmers, NSC, Pantnagar University and Commercial Organizations. TDC

was also responsible for seed marketing and for providing services to seedgrowers. This project has been so successful that SSC under NSP have been

structured on the TDC model. TDC has been working very effectively and has

developed an excellent reputation for quality seed. Project implementation

has, however, not been altogether free of problems. At some point difficulties

were experienced in properly staffing TDC's top management and there have been

some delays in processing equipment procurement and consequent problems inexpansion of seed processing capacity. The loan closing date was therefore

extended to December 31, 1977.

20. Uttar Pradesh is one of the five states participating in the proposed

Second National Seed Project. In order to avoid competition between TDC and

a new SSC, it was agreed between GOI, GOUP and TDC that TDC would be restruc-tured to become part of the State Seed Corporation in UP and to undertake the

development now planned under NSP. The ratio of shareholdings in TDC would be

altered to make shares available to Kanpur and Faizabad Universities and toseed growers in the new project areas, and to bring the share distribution in

line with other SSC:

GOI 30%GOUP 35%Growers 35%

The Agricultural Universities would hold portions of the allocations against

GOUP (Annex 10, para 16). Board composition too would be altered to accom-modate representation from the two new Agricultural Universities and thegrowers in the new project areas.

National Seed Project

21. The first phase in the development of the NSP was the National Seed

Project (Phase I) 1/ approved by the Bank Board in June 1976. Phase I covered

1/ Loan 1273-IN.

ANNEX 1Page 6

four states - Andhra Pradesh, Haryana, Maharashtra and Punjab. It also pro-

vided assistance to NSC to improve storage and marketing and for vegetableseed production, and to Agricultural Universities to improve breeder seed

production and to support seed technology research capabilities. Production

of certified seed under Phase I was planned for 73,000 tons for major cereals(wheat 34,500 tons, paddy 9,600 tons and hybrid of maize, jowar and bajra

26,000 tons), cotton 14,000 tons and lesser quantities of other crops includ-ing vegetable and potato.

22. Phase I investments were thus designed to:

- improve breeder and foundation seed production;

- develop three large scale farms for certified seedproduction;

- remodel canals supplying irrigation water to largeproject farms in Haryana;

- establish and equip SSC;

- support expansion of private sector seed operations;

- expand seed storage capacity and establish a reservestock;

- expand quality control facilities;

- provide equipment for the expansion of NSC's vegetableseed operation;

- develop seed technology research; and

- provide training and technical assistance.

23. Although the loan was declared effective in October 1976 accordingto schedule, project implementation had not progressed as quickly as planned.At state level, project implementation, particularly institution building,managerial arrangements and registration of seed growers had progressed satis-factorily. NSC had withdrawn from seed production and processing in the fourparticipating states as planned, having handed over activities to SSC andSFCI. GOI, through NSC, and state governments have made the required equitycontributions to SSC for initial development, and funds have been made avail-able for some breeder seed investments. However, GOI has yet to sanctionfunds for further project development. Some of the other factors hinderingproject implementation have been:

- delay in project approval by central government cabinet until

September 15, 1977;

ANNEX 1Page 7

termination of the services of the executive Chairman ofNSC whose services with the Corporation terminated at theend of 1976 and delays in finding an appropriate successor;

failure to appoint the various technical assistance con-sultants provided under the project;

lack of enthusiasm on the part of ICAR to participateactively in coordinating the foundation seed productionand related investment activities of SAU;

lack of positive action to encourage the private sectorprocessors to particiate in seed industry development; and

slow procurement caused by procedural delays.

24. No loan disbursements had been made as of March 31, 1978. However,procurement has now gained momentum. Awards have been made for the firstbatch of seed processing equipment and bids for farm machinery and landdevelopment equipment have been evaluated. Design of the 5,000 ton modulefor cereal seed processing plants has been prepared by NSC and approved bythe Bank. NSC has also appointed a consultant to provide assistance in thedesign of larger cereal seed processing plants and plants for cotton seedprocessing. Other technical assistance consultants have been identified.

Most private seed processors have recently been informed about project fundsprovided for private seed industry investments and further publicizing ofthe private sector role is under way. Since March 1978 NSC has a new chair-man, and a new managing director has been designated. Although still behindschedule, the project now appears to proceed as basically planned. It shouldalso be mentioned that the delay in project implementation would not have adirect bearing on the progress of the Second National Seed Project. Know-ledge of problems and experience gathered in the implementation of Phase Ishould enable speedier implementation of this second phase project.

ANNEX 1Appendix 1Page 1

INDIA

SECOND NATIONAL SEED POJECT

National Seed Corporation

1. NSC is a GOI institution incorporated under the Companies Act 1956.It was created to be mainly a promotional agency. NSC was looked upon as anagency to initiate measures leading to the production of high quality seedand, in particular, to promote the production, processing, and marketing ofsingle crosses of hybrid maize. One of NSC's achievements was the evolvingof practical inspection methods and setting up national seed standards, bothfor quality and certification. From the first year of the enforcement of theSeeds Act, NSC functioned as the Certification Agency in all states exceptGujarat. Another of NSC's achievements has been the initiation and estab-lishment of a scientific seed processing industry in the country, and thepopularization of the use of certified seed by farmers.

2. NSC's share capital of Rs 31 N as of May 31, 1976 has been con-tributed by the GOI. The accumulated reserves on that date were Rs 15.2 M.GOI had, in addition, provided loans for Rs 125 M and NSC has arrangementsfor borrowing from the State Bank of India. It is managed by a board ofdirectors not exceeding 15 consisting of a Chairman, Managing Director, andother Directors representing GOI, state governments and other interests.The present board of nine directors includes representatives of the fourstate seed corporations set up under Phase I. The Managing Director is thechief executive and he is assisted by chiefs of the divisions of production,research, development and quality control, engineering, marketing, finance,administration and public relations. NSC has three Zonal offices and tenRegional offices. The Zonal offices have supervisory and coordinating func-tions while the Regional offices are engaged in production, processing, stor-age, and marketing.

3. The financial position of NSC during the last three years is sum-marized below (figures in Rs million):

Source of Funds 1973-74 1974-75 1975-76

Equity Shares 31.00 31.00 33.00Reserves 9.14 15.18 12.92Loan Funds 16.13 12.52 16.13

56.27 68.70 62.05


Use of Funds

Fixed Assets 10.10 13.03 16.15Investments 1.00 1.00 1.00Net Current Assets 45.17 54.67 44.90

56.27 68.70 62.05

Profits and Appropriations

Profit before tax 11.63 25.39 9.02Taxation 7.13 18.22 6.20

Profit after tax 4.50 7.17 2.82Dividends 1.38 2.48 2.60

Retained profit 3.12 4.69 0.22

4. There has been a marked fall in profits during 1975-76, largelydue to a reduction in margins in selling prices during the period of theemergency. NSC had made a loss during 1976-77 estimated to be Rs 2 millioncaused mainly by the transfer of business to SSC, slower than anticipateddevelopment of interstate marketing, and being obliged to carry, thoughonly temporarily, surplus personnel.

5. In 1975-76, the processing capacity in thirty-seven processingplants throughout the country was 89,000 tons per annum operating two shifts.Nine plants with an annual capacity of 39,000 tons have since been handedover to the four SSC in Punjab, Haryana, Andhra Pradesh, and Maharashtra, theproject states of Phase I.

6. NSC achieved record sales of certified seed during 1975-76 valuedat about Rs 200 M. The marketing and distribution system is now being reor-ganized to reduce sales and distribution costs. Distribution costs were high,particularly for hybrids; self-pollinated wheat and paddy seed was moved byrail, hybrids had to be transported by road at higher cost.

7. State Farms Cooperation of India (SFCI) and NSC had worked veryclosely in seed production activities. Close coordination with SFCI wasfacilitated by having a common Chairman.

8. Under NSP the organization and management aid functions of NSCare undergoing a change. A new major function is NSC's role in the coordina-tion of the large number of institutions involved in the NSP (Annex 10, para-graphs 3-14).

ANNEX 2Page 1

INDIA


Project Scope and Size

General

1. The project scope and size proposed are determined essentially byanticipated seed demand, comparative advantage for production possessed bythe participating states, and by the complementary activities necessary toensure the production and processing of the required seed quantities tothe desired quality. In keeping the country's emphasis on increased foodproduction and farmer's own desire to grow as much as possible of his family'sfood needs, the project emphasis would be on certified seed of food crops,mainly cereals: wheat, paddy, maize, bajra, jowar and pulses. Other foodcrop seed to be produced under project are potato, groundnut and oilseeds.Only very small quantities of non-food crop seed, for cotton and jute, areproposed (Annex 5, Tables 1 and 2).

Seed Quantities

2. The project objective is to satisfy, at full development in 1982/83,the anticipated countrywide demand for certified seed to be sold at pricessufficient to sustain financially viable seed production, processing andmarketing operations and to ensure the continued development of the Indianseed industry as envisaged under NSP. Seed demand at present is strong, andis expected to continue expanding. The Joint Working Party (JWP), in prepar-ing the project, have forecasted the seed demand for 1980/81 and proposedproduction targets and investments on the basis of these projections. Becauseof some deficiencies in the data used by JWP a more conservative approach wastaken in final project preparation assuming that the targets for 1980/81 wouldonly be reached in 1982/83 (Details in Annex 13).

3. The main factors taken into consideration in projecting demand are:

(i) total area of crop, irrigated and rainfed;

(ii) estimated area of crop under HYV;

(iii) anticipated increase in area under HYV;

(iv) rate of seed renewal; and

(v) varietal replacement factor.

ANNEX 2Page 2

Estimating demand for hybrid crop seed - maize, bajra and jowar - presentfewer complications-than for self pollinated crops, like wheat and paddy,since hybrid seed require replacement every year. In the case of self-pollinated cereals some farmers tend to replace seed less frequently thanthe four/five years recommended. Some farmers are not in the cash marketfor seed - either retaining part of their own crop for seed or relying onfarmer-to-farmer exchange. Hence, although agronomists recommend four/fiveyear replacement (20-25%) for wheat and paddy the national demand projections,as detailed in Annex 13, Table 5, are based on lower rates of 9% to 10%. 1/The production targets and project investments proposed should thus beconsidered conservative.

4. Seed production has been allocated to various states according totheir assessed comparative production advantage. Each participating statehas also been encouraged to concentrate on the production of crop seed mostconsumed in the state and considered more costly or inconvenient to importfrom other states. As for Phase I project, the following four criteria wereused for selection of states, and for selection of one or more productionzones within each participating state for development as concentrated areasof seed production and processing:

(i) the state must contain adi area that had favorable agro-climatic conditions for high quality production, preferablyin more than one season; as well as favorable conditionsfor seed storage. This tended to rule out in the mostpart those areas with very high monsoon rainfall;

(ii) given the need for maximizing seed multiplication ratio, thearea must also have the proven ability to produce crops withwell above average yields. This tended to favor areas withassured irrigation or with reliable but not excessive rainfall;

(iii) given the need to keep seed prices as low as possible the areamust be one where market prices for the crop were low relativeto the rest of the country. This usually meant areas whichhad a surplus of the crop in question; and

(iv) the selected areas should take into account NSC's programwith its existing seed production, infrastructure and theexperience of its contract growers in the technical know-howof seed production. This is of particular importance to seedproduction of hybrid crops with their complicated requirementsof detasseling, nicking, synchronization etc. It should belocated where the largest concentration of such growers couldbe found. This is invariably in the most favorable locationfor seed production within a state.

1/ In Phase I different seed replacement rates were used for differentstates, ranging from 1.5% to 50%.

ANNEX 2Page 3

Prolect Areas

5. Based on these criteria five states were selected to participatein the Second National Seed Project. These are Bihar, Karnataka, Orissa,Rajasthan and Uttar Pradesh. Those chosen for Phase I were Andhra Pradesh,Haryana, Maharashtra and Punjab. Apart from these nine there are threestates which possess comparative advantage for seed production and have atdifferent times, shown desire to participate in NSP. These three stateshave not yet been able to prepare and submit NSP projects acceptable toGOI. They are all net importers (from other states) of seed except TamilNadu which exports some hybrid cereal seed. Their present production andany foreseeable increase would be consumed within the respective states andare not expected to have an adverse impact on the production allocationsmade to the nine states participating in Phase I and Second National SeedProject. States not already brought under NSP for seed production couldbe considered for financing in further phases of seed industry developmentcontemplated when increased seed demand potential has been established.

6. In selecting project locations within each state great attentionwas paid to getting the potential seed growers in compact areas around eachprocessing plant. The compact area approach followed in NSP projects is inmarked contrast with NSC pattern of production under contract with farmersin widely scattered locations. The new approach would improve efficiency inquality control and supervision not only in the field but also in the largerprocessing complex. There would also be great potential for cost reductionthrough economies of scale and lower transport and handling costs. Carewas also taken to ensure that, in so far as it is practical, the AgriculturalUniversities providing seed technology research, and breeder and foundationseed are situated in or easily accessible to the compact areas proposed forthe project.

7. Following the aforementioned criteria certified seed productionwould be concentrated in each state in one or at most two 1/ compact areassuitable for high quality and low cost output. State governments alsocarried out farm surveys of areas proposed for selection. The areas finallyselected for this project are:

1/ In Uttar Pradesh there will be three production zones - two under thisproject in addition to the one already established under Tarai SeedsProject (Loan 614-IN).

ANNEX 2Page 4

No. of Project AreaState Zones Districts Major Crops

Bihar 1 Rohtas, Bhojpur wheat, paddymaize, potato

Karnataka 2 Dharwar, Chitradurga paddy, maizeBangalore, Kolar jowar, bajra,

potato

Orissa 2 Cuttack, Puri paddy, potatoSambalpur groundnut

Rajasthan 2 Kota, Bundi wheat, paddy,Sriganganagar maize, jowar, bajra,

groundnut, jute,oilseeds

Uttar Pradesh 3 Nainital, Rampur wheat, paddy, maizeBareilly pulses, potatoKanpur, JalaunFaizabad

Project areas covered under the Tarai Seed Project, National Seed Project(Phase I) and the proposed Second National Seed Project are indicated inthe Map (IBRD 13038).

Project Components

8. The project would provide support for all facets of seed industrydevelopment as visualized under NSP - from breeder and foundation seedproduction through certified seed growing, processing, storage, salespromotion and distribution. As in Phase I this project would:

- establish and equip State Seed Corporations (SSC) forproduction, processing, storage and marketing of certi-fied seed;

- support development of Agricultural University farms forfoundation seed production;

- support farm development by State Farms Corporation ofIndia (SFCI) of about 4,000 ha for certified seed pro-duction;

- provide laboratory, farm and processing equipment toAgricultural Universities and government researchstations for production, processing and storage ofbreeder and foundation seed;

- expand and equip State Seed Certification Agencies (SSCA);

ANNEX 2Page 5

- provide incremental permanent working capital requiredby Agricultural Universities and SSC; and

- provide technical assistance and training necessary tosupport seed technology research, processing, qualitycontrol and marketing.

9. In selecting project areas care was taken to ensure a concentrationof well developed farms and progressive farmers. This was designed to reduceon-farm development by seed growers, and to ensure that any minor developmentrequired would be undertaken willingly by the progressive farmer who couldappreciate the need for and the advantages of properly developed land withassured irrigation in certified seed production. Any on-farm development worksby seed growers would not be financed under this project as these and similarinvestments - land levelling, lining of water channels, new wells and deep-ening of existing wells, tractors and water pumps - are already covered underthe IDA financed ARDC II Credit.

10. Vegetable seed production, transit and bulk storage facilities forNSC's interstate marketing operations, and private sector processing wereincluded in Phase I. The investments provided for these components weredesigned for all national needs and not confined to the four seed producingstates taken up in Phase I. The provisions already made in Phase I for thesethree components are considered adequate for foreseeable needs. Hence thesehave not been included in the proposed project.

Project Participants

11. Agricultural Universities in each of the five participating stateswould be responsible for seed technology research and breeder seed production,and would in addition have the major responsibility for foundation seed pro-duction. ICAR would coordinate breeder seed production and assist theseUniversities in preparing their investment plans. A senior ICAR official hasalready been designated, under Phase I, to be responsible for this task. Thesame officer would cover the additional institutions included in the proposedproject.

12. NSC would coordinate the production of foundation seed of varietiesof national importance; SSC would be responsible for local varieties. SSCwould undertake production and processing and intrastate marketing of certi-fied seed, while NSC would be entrusted with interstate marketing of certi-fied and foundation seed. SSC would organize the certified seed productionthrough seed growers who would also be shareholders. This would include gov-ernment and SFCI farms in the project areas. State government activitieswould otherwise be confined to legal regulatory aspects - implementing theSeed Act - and to extension services. The State Seed Certification Agencieswould independently verify quality of foundation and certified seed. GOIwould coordinate state policies on seed production, processing and marketing.

ANNEX 2Page 6

Project Phasing

13. The project investments have been phased over five years. Majorfactors considered in scheduling the investments and operations under theproject are:

(i) past involvement and experience of states in seed industrydevelopment;

(ii) the detail work done by states in project preparation;

(iii) the extent of preliminary implementation actions comp-letedby states in anticipation of project commencement;

(iv) existing seed production and processing facilities, in projectareas organized by NSC or other government agencies, availablefor transfer to SSC;

(v) scale of seed production and marketing already establishedin the state. This is vital particularly for the large volumeof self-pollinated (wheat and paddy) seed and for seed potatobecause four of the five states 1/ under this project areexpected to produce seed essentially for local use;

(vi) assessment by each state of farmer response for enrollment asshareholder seed growers; and

(vii) lead time required for procurement and construction of pro-cessing plants;

Production phasing based on these considerations are given in Annex 5, Tables1 and 2. Investment phasing are summarized in Annex 8 and Tables 3-9 of Annex5.

1/ Uttar Pradesh would be a net exporter of wheat and paddy seed.

ANNEX 3Page 1

INDIA


Plant Breeding; Breeder, Foundation and Certified SeedProduction; Seed Technology Research

I. PLANT BREEDING

Introduction

1. Plant breeding research in India is conducted at 11 Indian Councilfor Agricultural Research (ICAR) Institutes (Table 1) and 25 Agricultural Uni-versities (Table 2). Most of it is financed from ICAR sources supplemented inthe case of the Universities by state funds. Support for cotton research isbeing provided under the Integrated Cotton Development Project partly financedby IDA.

2. Coordination of plant breeding and crop improvement research amongthe various institutions is achieved through 23 All-India Coordinated ResearchProjects concerned with food, commercial and horticultural crops 1/ under theaegis of ICAR. These projects include supervision of uniform varietal nurserytrials of elite strains on a national or regional basis, dissemination of re-search results, and the release of improved "All-India" varieties. Local varie-ties are released by the State Agricultural Universities.

3. Recently, the International Crop Research Institute for the Semi-AridTropics (ICRISAT) was established at Hyderabad, Andhra Pradesh: ICRISAT servesas a world center for improving the genetic potential of bajra, jowar, pigeonpea and chick-pea and its materials will be available to Indian breeders.

4. Major contributions to the production of food and fiber in Indiahave been made since the early sixties through the introduction, development,and release of high-yielding varieties (HYV) of wheat and paddy and of hy-brids of maize, bajra, jowar and cotton. The widespread adoption of HYV hasserved as a catalyst to improve other practices, particularly fertilizer use,irrigation, and plant protection.

5. The available HYV of the major crops provide a key substantial basefor further development of the seed industry. Although the more recent varietyreleases for the major crops, i.e., paddy, wheat, hybrid bajra, hybrid jowar,

1/ Rice, wheat, barley, maize, jowar, bajra and other millets, pulses, for-age crops, sugarcane, sugarbeet, cotton, jute, oilseeds, soybeans, tobacco,fruits, tuber crops, potato, vegetables, medicinal and aromatic plants,floriculture, spices and cashewnut, coconut and arecanut. _

ANNEX 3Page 2

hybrid maize, seldom have the yield superiority over the older HYV as thelatter had over the traditional varieties planted in the early 1960s, they arecontributing enormously to stabilization through improved pest resistance andadaptability, and to better acceptance through improved quality.

6. Superior and improved varieties of some of the lesser important cropshave been and are being released: grams and pulses, barley, groundnuts, pota-toes, and oil seed crops. Agricultural research has been transferred in moststates from the Departments of Agriculture to the Agricultural Universities.This should accelerate improvement in new variety development and breedingresearch for all important crops in the various states.

7. The success of the National Seed Program (NSP) will depend on theperiodic release of improved varieties of all crops included in the program,improvements in cultural and management practices, and continued and expandingcultivator interest in improved seed. The assistance provided under Phase Iand under this project for breeder and foundation seed production along withresearch resources already available would be adequate to accomplish the tasks.

Plant Breeding in NSP States I/

8. Plant breeding and crop improvement activities of Phase I stateswere reviewed during the Phase I appraisal. The Punjab Agricultural Univer-sity (PAU) has a strong and productive plant breeding department which givesparticular emphasis to wheat, bajra, pulses and oil seeds. The Haryana Agri-cultural University (HAU) has made major contributions in the release ofimproved gram, mung, and mustard (oil seed type) varieties. The Andhra PradeshAgricultural University (APAU) conducts breeding and crop improvement researchon paddy, jowar, maize, bajra and the minor millets. Its efforts are augmentedby and coordinated with those of the All-India Coordinate Rice ImprovementProject (AICRIP) and the All-India Coordinated Sorghum Improvement Project(AICSIP), located on the campus of APAU. The Agricultural Universities ofMaharashtra (3 of 4 included in Phase I) have active, productive researchunderway on breeding and improvement of cotton - including hybrid cottons -jowar, and pigeon pea. The cotton improvement research in Punjab, Haryanaand Maharashtra is being assisted and strengthened under the Integrated CottonDevelopment Project.

9. In the states included in this project, the Rajendra AgriculturalUniversity (RAU, Bihar) has a rapidly developing plant breeding and cropimprovement programs in wheat, paddy and maize. The University of AgriculturalSciences of Karnataka (UAD, Bangalore) made significant contributions in thedevelopment and release of improved varieties paddy, jowar, pulses, oilseeds,cotton and ragi. It developed the first interspecific cotton hybrid (Gossy-pium barbandense x G. hirsutum) for commercial production.

1/ Phase I: Andhra Pradesh, Haryana, Maharashtra and Punjab. This project:Bihar, Karnataka, Orissa, Rajasthan and Uttar Pradesh.

ANNEX 3Page 3

10. The research stations in Orissa were handed over to the Orissa Uni-versity of Agriculture and Technology in 1970 and since then several researchschemes, some sponsored by the OUAT and others by ICAR, are in progress. TheModel Agronomic Center of the All-India Coordinated Agronomic Research Project(AICARP) is located at Chiplima. Its objectives are to determine the produc-tion potential of crops under optimum input conditions as well as under re-source constraints operating in different agro-climatic conditions and toexplore and study the potential of intercropping systems. A Regional TestingCenter of AICRIP is also located at Chiplima with four cooperating disciplines:breeding, agronomy, entomology and pathology. The objectives of the center areto test and evaluate paddy strains and varieties developed at other researchcenters and to develop varieties resistant to gall midge and with good yieldstability. In paddy research, OAUT cooperates closely with the Central RiceResearch Institute (CRRI), Cuttack.

11. The University of Udaipur (UU, Rajasthan) has recently taken overagricultural research in Rajasthan. Main centers for breeding and varietaldevelopment are located at Durgapura (Jaipur), Udaipur, Sriganganagar. TheAll-India Coordinated Research Projects on various crops sponsored by ICAR,have intensified the breeding activities on important crops. Major effortsare directed at varietal improvement in wheat, paddy, bajra, jowar and maize.

12. Uttar Pradesh has three major Agricultural Universities: G.B. PantUniversity of Agriculture and Technology (GBPUAT, Pantnagar) Chandra ShekarAzad University of Agriculture and Technology, (CSAUAT, Kanpur), and theNarendra Deva Evam Prodyogik Vishwavidyalaya (NDEPVK, Faizabad). The latteris a new university under development. Plant breeding and crop improvementresearch is well advanced in Uttar Pradesh, especially at the GBPUAT. Majoremphasis is given to wheat, maize, paddy, pulses and grams, and oilseeds.

Outlook

13. After some slackening following the successful development, releaseand extension of the HYV in the 1960s, plant breeding and crop improvementresearch is being intensified under the pressure of stagnation in yields, oryield reductions from plant pests. Emphasis, therefore, is being given toincorporation of both horizontal and vertical resistance to pests in agronomi-cally desirable plant types. There is also much current interest in improv-ing "minor" and often neglected crops such as the grams and pulses, minormillets, and oilseeds. India has both the human and material resources neededto improve varieties of crops important to its economy. A provision for plantbreeding and crop improvement research is not considered crucial under this

project.

14. For further improvements in plant breeding and research ICAR would,to a greater extent than at present, relate allocation of resources for breed-ing programs to their productivity.

ANNEX 3Page 4

II. BREEDER SEED PRODUCTION

Present Situation

15. There has been inadequate recognition of the fact that plant

breeding per se is pointless. To be productive it must fuel a seed multi-plication chain. Breeder and foundation generations, for which the researchestablishment must have prime responsibility, are critical links in this

chain. They have been neglected. Production of high-quality certifiedseed has often been limited by insufficient or poor quality of breeder and

foundation seed. Inferior quality in the early generations also adds to the

cost of production through increased roguing and lower yields - hence increasedprice - of certified seed. Generally, plant breeders were not given adequate

resources for breeder seed production. Most so-called breeder seed was not

produced by the original breeder or research station; it was produced elsewherewithout checks to ensure trueness-to-type and was breeder seed in name only.This practice can lead to the loss of varietal identity and should be stopped.

To overcome the constraints requires additional resources for production, andcentralized coordination, to match the geographically wide demand for breederseed of each variety with the (normally) single source.

16. The project proposals under Phase I were directed at overcoming the

deficiencies in breeder seed production and improving the overall capabilitiesand responsiveness of the breeder seed production system in India.

17. Organization of Breeder Seed Production. The breeder who evolvedthe variety, or his successor, should be responsible for variety maintenance

and production of breeder seed. Exceptions should be made only where demandoutstrips the breeder's productive capacity, or where the variety is importedfrom outside India and then with arrangements to ensure trueness-to-type.Coordination of the production of breeder seed, of varieties relased by theAll-India Coordinated Crop Improvement Committees, would be the responsibility

of ICAR working from demand projections for foundation seed formulated by NSC.ICAR has designated a senior official, to be solely responsible for this task.

Breeder seed of local varieties would be produced by the Agricultural Univer-

sities on demand from the State Seed Corporations and private growers. Insti-tutions receiving project support for breeder seed production would establishunits equipped and staffed to specialize in the production and processing ofbreeder seed 2/. Greater skills and resources would thus be employed, and the

1/ Breeder seed is the original and recurring stock of seed or vegetativelypropagating material produced and controlled by the breeder (or hissponsor) that developed the variety. Breeder seed provides the source

for the production of foundation seed.

2/ At institutions producing both breeder and foundation seed the sameunit would be responsible for both.

ANNEX 3Page 5

breeder would be relieved of many non-scientific tasks (which he did at bestperfunctorily). However, the breeder would remain solely responsible forbreee2r seed quality.

18. Procedures for Breeder Seed Production. For self-pollinated cropsat least 500, and preferably 1,500 to 2,000 progeny rows would be grown. Prog-eny rows containing off-types would be removed before harvest; present practiceis more lax and seed off-types are inadvertently mixed with good seed. Theuse of threshing floors is now a common cause of variety mixing. This wouldbe eliminated by progeny row threshing in the field, using a small, mobile(Vogel-type) thresher, with bagging and labeling direct from the thresher.

19. If the breeder seed from the progeny rows were insufficient, afurther increase, not to exceed one generation, would be made by bulkplanting progeny seed and vigorously roguing out off-type plants. Theseed thus harvested would still be breeder seed since its production wouldhave been monitored by the responsible plant breeder.

20. In hybrids the inbreds would be maintained by selfing or sib-pollination, except for the male-sterile A-lines which would be maintainedby pollinating from a fertile counterpart. Breeder seed of composites ofmaize, jowar, or bajra would be produced with full sib-pollination, or byopen-pollination in isolation. Recognizable off-types and diseased plantswould be rogued out before pollen shedding; however, care would be takento avoid mass selection for specific characteristics since this practice maylead to a genetic shift in the population. Genetic shift may also resultfrom growing breeder seed in different environments. The latter would bepartially avoided by producing and storing a quantity of the original com-posite in a refrigerated area and utilizing it at regular intervals to starta new breeder seed increase.

21. Breeder seed production in potatoes would involve checking indi-vidual tubers and their progenies for freedom from viruses. The breeder seedstocks would then be increased in the field during the season when aphidpopulations were lowest. Potato researchers have developed a satisfactorytechnique.

22. Quality control of breeder seed would be monitored by a committeecomprising representatives of NSC, ICAR, the State Seed Certification Agencyand the breeder. Samples from every lot of breeder seed would be subject togrow-out tests by the producing institution. In addition to being a qualitycontrol aid, these tests would spotlight seed lots liable to give troubleat the foundation seed stage.

23. Demand projections would stem directly from the certified seed pro-g-ams determined by NSC and State Seed Corporations (SSC). Because of thelong lead times involved prediction inaccuracies would be large. In additiondemand/supply imbalances could occur because of poor harvest or quality con-trol failure. To safeguard against risks controlled environment storage wouldbe provided for a carry-over stock of about 50% of annual needs. In assessingbreeder seed demand the private sector would be fully catered for.

ANNEX 3Page 6

24. Project investments under Phase I. Phase I supported breeder seedprograms in 20 institutions at 25 locations. These included 6 ICAR Institutes

(7 locations), 6 Agricultural Universities (10 locations) in Phase I states,3 Agricultural Universities (4 locations) in states of this project, and 3Agricultural Universities to be included in a latter phase (details inTable 3).

25. This project would re-affirm the proposals under Phase I and extendsupport for breeder seed production programs to six Agricultural Universitiesin the five project states which either received no assistance under Phase I(RAU, NDEPVK, UU, OAUT), 1/ or require additional support beyond the provi-sion under Phase I (CSAUAT, UAS). Details of project support are given inTables 5, 6 and 7. The investments, estimated to cost Rs 2.7 M would provide:

(a) buildings for housing offices, laboratories, preparationrooms, processing and storage units;

(b) equipment for drying, cleaning and long-term storage ofvaluable breeder seed;

(c) office and laboratory furnishings;

(d) vehicles; and

(e) special farm machinery for producing breeder seed, suchas seed drills, threshers, sprayers and dusters.

26. Investment proposals would be subject to change within generalguidelines as the project progresses. ICAR would determine the needs ofeach institution relative to the expansion of breeder seed demand. Fundsfor the breeder seed programs would be provided by GOI as grants to ICARand thence as grants to participating Universities.

III. FOUNDATION SEED PRODUCTION 2/

Present Situation

27. Prior to Phase I, foundation seed were almost solely produced by NSCusing breeder seed obtained from ICAR Institutes. Under these arrangements

1/ Full names of Table 4.

2/ Foundation seed are the progeny of breeder seed and the source of seedfor production of certified seed. For crops, with low seed multiplica-tion ratios, e.g., potatoes, large-seed grams, foundation seed may beincreased in two stages rather than one.

ANNEX 3Page 7

the supply of foundation seed was often inadequate in both quantity andquality. The major reasons for this situation were the limited supply ofbreeder seed available, and the lack of proper quality control in breederseed production. In turn deficiencies in breeder seed production were attri-butable to poor organization, and insufficiencies in personnel and facilities.These inadequacies and deficiencies in both breeder and foundation seed pro-duction were addressed in Phase I, and ample provisions were made to overcomethem (see also paras 15 through 26).

28. In addition to the difficulties in the NSC-ICAR production programs,shortages of land forced NSC to contract foundation seed production with pri-vate farmers. This arrangement proved not to be satisfactory. The Universi-ties and State Departments of Agriculture also produced "foundation" seed,often in large quantities. Much of this production was of uncertain qualityand intended for direct distribution to farmers for commercial production,rather than for certified seed production.

Phase I Proposals

29. The proposals under Phase I were designed to establish foundationseed production at the Agricultural Universities so as to integrate them(the Universities) into the seed industry and provide for proper supervisionand quality control. Toward these ends investment proposals were made toprovide financing for establishment of a foundation seed unit at each parti-cipating University and to provide it with the staff, buildings, otherfacilities and equipment needed to produce foundation seed in the quantitiesand of the quality required.

Specifically, the Phase I proposals were as quoted below. 1/

30. "Organization for Production of Foundation Seed. Under the proj-ect, demand estimation and coordination of foundation seed production ofAll-India varieties would be the responsibility of NSC. Estimates offoundation seed requirements of local varieties would be developed by therespective SSC. In both cases the demand from private sector producerswould be fully catered for. In the event of overall shortage the privatesector would be treated on par with other users.

31. "Under the NSP the Universities would have first responsibility forfoundation seed production. It is a key element of NSP policy that theUniversities be fully integrated into the seed industry. This would increasethe breeders' exposure to seed users; increasing breeder responsibility andaccountability should improve seed quality through the multiplication chain.To assist the breeders, and to develop the skills necessary for foundationseed production, a special foundation seed production unit would be createdat each participating University.

1/ Appraisal of National Seed Project - India. Report No. 1064a-IN,Annex 1, paras 24-32.

ANNEX 3Page 8

32. "To the extent that Universities lacked land to fully meet founda-tion seed demand the balance would be produced by State Farms Corporationof India (SFCI) ...- All foundation seed farms require additional facilitiesto improve and expand their output and these would be provided under theproject.

33. "Under the proposed scheme, NSC would guarantee purchase of allfoundation seed, for All-India varieties, that it requests Universities (andother institutions) to produce. This quantity would be based on NSC's assess-ment of certified seed requirements for intrastate and interstate use. Thepurchase guarantee would not apply to local varieties produced for intrastateuse only. Because demand and production are not accurately predictable aGOI-financed reserve stock scheme would be operated for foundation seed asfor certified seed... Stocks maintained would be 50% for hybrids (maize,sorghum, pearl millet) and 10% for self-pollinated crops (mainly wheat andpaddy). The latter are less of a risk because, in an emergency, certifiedseed can be upgraded.

34. "Foundation Seed Production Procedures. Foundation of self-pollinated crops (wheat, rice, barley, pulses, etc.) and composites (maize,millet, sorghum) would be increased from breeder seed under appropriateisolation. Foundation seed of hybrids would be produced from parent inbredlines under appropriate isolation. With hybrids of sorghum and pearl milletthe male-sterile parent A-line would be produced by crossing with its male-fertile counterpart. A second state of increase from breeder seed would beneeded where the seed demand for a particular variety is large; this willoccur particularly in wheat. Rigorous roguing of all seed production fieldsis required. Cost of roguing foundation seed fields will be reduced if purityof breeder seed is high, as expected under the project; likewise high purityof foundation seed would reduce presently excessive roguing costs in certi-fied seed fields, a factor in high seed prices.

35. "Quality control would be provided by (a) official certificationof all foundation seed fields, (b) inspections made by the originatingbreeder, and (c) grow-out tests on all foundation seed lots by the StateSeed Certification Agency. The grow-out tests would serve as both post-control tests for the foundation seed and pre-control tests for certifiedseed lots. The latter would materially assist quality control in certifiedseed. Both private and public sector foundation seed producers would besubject to the same quality control procedures".

36. The above policies and proposals would be re-affirmed under thisproject.

37. Project investments. Under Phase I provision was made to improvethe seed processing facilities on the University farms of the four Phase Istates. Also included were investments for the development of Universityfarms to increase their capability to produce foundation seed. Similarly,under this project provision would be made for establishing and equippingdrying, processing and storage facilities at six Universities in the five

ANNEX 3Page 9

project states. Details of the estimated investment cost are in Tables 8, 9and 10. G.P. Pant University of Agriculture and Technology in Uttar Pradeshhas a well developed, operative foundation seed establishment, and requiresno further investment under the project. Investment cost related to Univer-sity farm development would also be financed under the project, but arediscussed separately in Annex 4.

38. Funds for the foundation seed program would be provided to theUniversities by GOI (25%) and participating banks (75%). Details are inAnnex 12.

39. The Universities would operate their foundation seed units ascommercial ventures and sell foundation seed at a price which would provideat least 18% return on capital employed at the time of full development ofthe program (see Annex 14, paras 1-6, and Tables 1 and 2).

40. NSC would provide consultancy services to the Universities onorganization, facility development and operational procedures, in additionto its role in assessing the demand for foundation seed and guaranteeing off-take of programmed production of foundation seed of regional or All-Indiavarieties. Procurement of buildings and equipment would also be handled byNSC with processing equipment being bulked with that of SSC.

41. SSC would project the demand for foundation seed of local, intra-state varieties and place firm orders for foundation seed with the Universities.

IV. CERTIFIED SEED PRODUCTION

Introduction

42. Phase I project included four states with certified seed production.This project extends certified seed production to five additional states.Coordination of production under NSP guidelines and key concepts and acceptanceof the national seed demand matrix (Annex 13, Table 5) would permit the devel-opment of a responsible and responsive seed industry while minimizing problemsassociated with over-and under-production.

43. Certified seed production is the central thrust of the NSP. The mainbenefits to India from implementation of the NSP will be derived from the in-creased food crops production and production efficiency resulting from farmeruse of high quality seed of superior varieties. To these ends the investmentsproposed are designed to provide the facilities and services required to developeffective, efficient and responsible seed industries in the states involved.

Present Situation

44. Seed production - certified and otherwise - is well developed inthe Sriganganagar District in Rajasthan, in Karnataka, and Uttar Pradesh,especially by the Tarai Development Corporation headquartered at Pantnagar,

ANNEX 3Page 10

U.P. In Bihar and Orissa, seed production is in its infancy and both states

have been almost wholly dependent on seed imports from other states.

45. The private sector is heavily involved in production of hybrid

seed in Karnataka, which has a very favorable climate for production of these

kinds of seed. Karnataka, therefore, is a major source of hybrid seed (prin-

cipally jowar, bajra and maize) for the other states. In Rajasthan, the SCFI

farms at Suratgarh and Jetsar, and some larger private holdings are major

producers of wheat seed for NSC. TDC headquartered at Pantnagar has developed

an outstanding, quality-seed production and supply program. It is a major

supplier of seed to the eastern states and frequently exports to Nepal and

Bangladesh.

Project Proposal

46. This project would extend certified seed production, to the follow-

ing five states: Bihar, Karnataka, Orissa, Rajasthan, and Uttar Pradesh.

Phased seed production goals would be those established in the national seed

demand matrix for paddy, wheat and the hybrids. The production goals for seed

of other crops are based on demand assessments by each state. Seed of the

latter crops would primarily be used within the state, while those of theformer would be used both internally and for export as per the demand matrix

(Annex 13, Table 5). The phased certified seed production goals are at

Annex 5, Table 1.

47. To accomplish the established seed production goals, a seed corp-

oration (SSC) would be established in each state. Investment proposals wouldprovide each SSC with adequate facilities for processing and storage of seed

(Annex 5). Services required for the proper quality control of seed wouldbe developed or expanded (Annex 6). The investments proposed for breeder and

foundation seed production would assure the proper development of these fund-

amental prerequisites for certified seed production (paras 15-41). Finally,

investments are proposed for further development of seed research at theUniversities so that an adequate capability would be developed for resolving

technical problems encountered in seed production, drying, processing and

storage (paras 48-64).

V. SEED TECHNOLOGY RESEARCH

Introduction

48. Successful implementation of a seed project of the size and scope

of the NSP, would require a continuing input of applied research information.Information derived from applied research, problem-solving and developmental

work is and will be needed to resolve the many difficulties and problemsthat exist and will arise during the project implementation phase and there-after.

ANNEX 3Page 11

49. It should be strongly emphasized that the seed research needs inIndia are of the applied, problem-solving, developmental types. Researchmust be focused on and relevant to the objective and mission of the NSP andrelated activities, i.e., production and supply of adequate quantities ofquality seed for the Indian farmer at reasonable prices. Considering themany problems in seed production, processing, storage and usage that presentlyconfront the seed program, and for which answers are lacking, non-missionoriented seed research of the academic type is a luxury that cannot be justi-fied. Ample research of this type is underway in the developed countriesand the results are equally available and useful in India.

Present Situation

50. There is very little seed research underway that is relevant toactual or potential seed problems in India. Yet, it was evident during theappraisals of Phase I and this project that there are a variety of seedproblems that must be satisfactorily resolved. Vital information neededduring the appraisals was often unavailable. Such information should havebeen available from applied, problem-solving research. Examples: during theappraisal the question was asked as to the yield advantage of industry pro-duced and supplied seed of an improved variety as compared to farmer savedseed of the same variety. This information was unavailable although it isvital for seed industry development, for extension programs, and for deter-mining the seed replacement rates needed for the different kinds of seed.During the appraisals, questions arose regarding the degree of "favorableness"or "adversity" of the prevailing climatic pattern for seed production andstorage. There were many opinions, but few facts.

51. Evidence obtained during the appraisals indicates that there areboth immediate and long-term needs for seed research in India to adequatelysupport the seed industry expansion proposals under the NSP.

Phase I Proposals

52. The establishment of seed technology research units along withadequate investments in facilities and equipment were proposed for fiveUniversities in the Phase I project. These included major research unitsat the Punjab, Andra Pradesh, and Akola (Maharashtra) Agricultural Universi-ties, and lesser programs at the Haryana and Parbhani (Maharashtra) Agricul-tural Universities.

53. Research tasks for each of the Universities were assigned on thebasis of their previous experience, climatic patterns, and the kinds of cropsgrown.

Proposals under this Project

54. The proposals in this project would establish seed technologyresearch units at RAU (Bihar), UAS (Karnataka), OUAT (Orissa), and UU(Rajasthan), with limited assistance to CSAUAT and NDEPVK (Uttar Pradesh).

ANNEX 3

Page 12

The GBPUAT at Pantnagar, U.P., has one of the two well developed, productiveseed research programs in India.

55. The seed technology research units proposed would be establishedas interdisciplinary projects or programs in each University rather thanas a new and separate department. A productive seed technology researchprogram requires a variety of talents from several disciplines: agronomy,botany, agricultural engineering, plant breeding, agricultural economics.A summary of the investment and operating costs at the various Universitiesincluded in the project is given in Table 11.

Rajendra Agricultural University (RAU, Bihar)

56. Seed technology research at RAU would be organized as an interdis-ciplinary program cooperative among the Departments of Agronomy (Plant Breed-ing), Botany, Horticulture and Agricultural Engineering. A coordinator andsenior research officer would be appointed and staff assigned from thevarious departments to the interdisciplinary program. Investment costs foradditional laboratory space, offices, and equipment together with operatingcosts are at Table 12.

57. Seed research at RAU would focus on:

- multiplication and production of potato seed tubers;

- the deterioration in seed quality associated with farmerseed saving practices;

- storage of wheat, gram and pulse seed.

University of Agricultural Sciences (UAS, Karnataka)

58. Seed technology research at UAS would be organized as on interdisci-plinary program among the Departments of Agronomy, Plant Breeding and Agricul-tural Engineering, with a Senior Research Officer appointed as coordinator orleader and other staff drawn from the cooperating departments. Investmentproposals for additional laboratory and office space, equipment, and otherfacilities together with operating costs are at Table 13.

59. Major research emphasis would be given to all problems associatedwith the production of hybrid seed: outcrossing, pollen shedding of male-sterile lines, mis-matching of anthesis and female flower receptivity,harvesting, drying and processing.

Orissa University of Agriculture and Technology (OUAT)

60. The OUAT would organize its seed research as an interdisciplinaryprogram cooperative among the Departments of Agronomy, Plant Breeding, andAgricultural Engineering. A Senior Seed Research Officer would be appointedas coordinator of the program with other staff drawn from the cooperating

ANNEX 3Page 13

departments. Investment proposals for additional laboratory and office

space, equipment, and other facilities as well as operating costs are atTable 14.

61. Seed research at OUAT would emphasize:

- relative advantages of seed production in late rabi("summer crops") versus kharif production;

- production of groundnut seed; mechanical damage asso-ciated with shelling and its effects on storability;

- multiplication and production of potato seed tubers.

University of Udaipur (UU, Rajasthan)

64. At UU, seed technology research would be organized as an interdis-ciplinary program cooperative among the Departments of Botany, Agronomy (PlantBreeding) and Agricultural Engineering with a Senior Seed Research Officerappointed as coordinator and staff drawn from the cooperating departments.Investments proposed for additional laboratory and office space, equipmentand other facilities as well as operating costs are at Table 15.

62. The seed research program at UU would seek to establish:

- the extent of yield losses associated with farmer seedsaving practices;

- the degree to which major cereal seed, particularly wheat,should be processed to remove undersize seed;

- the potential for production of vegetable seed under aridconditions in Sriganganagar area;

- the potential use of solar drying technology for dryingpaddy seed.

CSAUAT and NDEPVK (Uttar Pradesh)

-4. CSAUAT and NDEPVK would be provided limited funds for investments.n research equipment to develop a sufficient capability in an existingdepartment (Agronomy) to resolve some of the immediate technical problemsarising during implementation of the NSP in the zones they serve. Expansionmuch beyond the present operational capabilities would not be required, be-cause GBPUAT has a seed research program adequate to serve the long-term,broader needs of the overall seed industry in U.P. The amounts provided forthe purchase of equipment and instruments for seed research are Rs 50,000 foreach CSAUAT (Kanpur) and NDEPVK (Faizabad).

ANNEX 3Table I

INDIA


ICAR Research Institutes Engaged in Plant Breeding Research

1. IARI - Indian Agricultural Research Institute, New Delhi

2. CRRI - Central Rice Research Institute, Cuttack, Orissa

3. JARI - Jute Agricultural Research Institure, Barrackpore, W.B.

4. IHR - Institute of Horticultural Research, Bangalore, Karnataka

5. CPRI - Central Potato Research Institute, Simla, H.P.

6. IGFRI- Indian Grassland and Fodder Research Institute, Jhansi,U.P.

7. CTCRI- Central Tuber Crops Research Institute, Tivandrum, Kerala

8. SBI - Sugarcane Breeding Institute, Coimbatore, T.N.

9. CTRI - Central Tobacco Research Institute, Rajahamundry, A.P.

10. IRC - ICAR Research Complex, Shillong, Megghalaya

11. CICR - Central Institute for Cotton Research, Nagpur, Maharashtra(new in Fifth Plan).

July 22, 1977

ANNEX 3Table 2

INDIA


Agricultural Universities

1. GBPUAT - Govind Ballabh Pant University of Agriculture andTechnology Pantnagar (U.P.)

2. PAU - Punjab Agricultural University, Chandigarh3. UU _ University of Udaipur, Udaipur (Rajasthan)4. OUAT - Orissa University of Agriculture and Technology,

Bhubaneswar5. APAU - Andhra Pradesh Agricultural University, Hyderabad6. UAS - University of Agricultural Sciences, Bangalore

(Karnataka)7. JVLVV - Jawaharlal Nehru Krishi Vishwa Vidyalaya (West Bengal)8. BCKVV - Bidhan Chandra Krishi Vishwa Vidyalaya (West Bengal)9. KKV - Konkan Krishi Vidyapeeth, Dapoli (Maharashtra)10. MPKV - Mahatma Phule Krishi Vidyapeeth, Akola (Maharashtra)11. PKV - Punjababrao Krishi Vidyapeeth, Akola (Maharashtra)12. AAU - Assam Agricultural University, Jorhat13. HAU - Haryana Agricultural University, Hissar14. RAU - Rajendra Agricultural University, Pusa (Bihar)

15. KAU - Kerala Agricultural University, Mannuthy (Kerala)16. HPU - Himachal Pradesh University (Agricultural Complex)

(Simla)17. TNAU - Tamil Nadu Agricultural University18. MKV - Marathwada Krishi Vidyapeeth, Parbhani (Maharashtra)19. GAU - Gujarat Agricultural University

20. SMAU - Sadiq Memorial Agricultural University, Srinagar (J&K)21. ISARI - Indian Agricultural Research Institute, New Delhi22. CSAUAT - Chandra Shekar Azad University of Agriculture and

Technology, Kanpur (U.P.)23. NDEPVK - Narendra Deva Evam Prodyogik Vishwavidyalaya5Faiza-

bad (U.P.)24. BHU - Benares Hindu University (U.P.)

July 22, 1977

ANNEX 3Table 3Page 1

INDIA


Institutions Receiving Assistance Under Phase I for

Breeder Seed Production

Institution Location Crops

1. ICAR Research Institutes for Production of Breeder Seed

IARI Karnal, Haryana Wheat, barley, oatsmaize, pulses, oilseedsvegetables

IARI Katrain, H.P. Pulses, vegetables

CPRI Jullunder, Punjab Potatoes

AICRIP (will becombined with APAU) Rajendranagar, A.P. Rice

CRRI Cuttack, Orissa Rice

JARI Barrackpur, W.B. Jute

IHR Bangalore, Karnataka Vegetables

IGFRI Jhansi, U.P. Forages

2. Agricultural Universities in Phase I States

PAU Ludhiana, Punjab Processing and storage only

PAU Mattewara Farm Wheat, barley, maize, pearlmillet, pulses, oilseeds,fodders, minor millets,vegetables

PAU Kapurthala Farm Rice

HAU Hissar, Haryana Wheat, rice, pearl millet,cotton, pulses, oilseedsfodders, tobacco, vegetables


Institution Location Crops

APAU/AICRIP Rajendranagar, A.P. Rice, sorghum, pearl millet,maize, pulses, oilseeds,cotton, millets, vegetables

PKV Akola, Maharashtra Cotton, sorghum, pearlmillet, pulses, oilseeds

PKV Niphad, Maharashtra Wheat

MKV Parbhani, Maharashtra Sorghum, pearl millet,pulses, oilseeds

MPKV Rahuri, Maharashtra Sorghum, forages, oilseeds,rice, cotton

3. Agricultural Universities Outside Phase I States

GBPUAT Pantnagar, U.P. Wheat, barley, maize, pulses,oilseeds, vegetables

BHU Varanasi, U.P. Wheat

CSAUAT Kanpur, U.P. Wheat, barley, pulses,oilseeds

TNAU Coimbatore, T.N. Sorghum, pulses, oilseeds,millets, vegetables

UAS Bangalore, Karnataka Pulses, oilseeds, millets,vegetables

JNKV Jabalpur, M.P. Wheat, pulses, oilseeds,millets, forages, vegetables

GAU Jammagar, Gujarat Sorghum, pulses, oilseeds,millets

July 22, 1977

ANNEX 3Table 4

INDIA


Institutions to Receive Assistance for Breeder Seed

Production Under the Second National Seed Project

Agricultural Universities in Project States

1. RAU - Rajendra Agricultural University, Pusa (Bihar)

2. UAS - University of Agricultural Sciences, Bangalore(Karnataka)

3. OUAT - Orissa University of Agriculture and Technology,Bhubaneswar

4. UU - University of Udaipur, Udaipur (Rajasthan)

5. CSAUAT - Chandra Shekar Azad University of Agricultureand Technology, Kanpur (Uttar Pradesh)

6. NDEPVK - Narendra Deva Evam Prodyogik Vishwavidyalaya,Faizabad (U.P.)

July 22, 1977

ANNEX 3Table 5

INDIA


Breeder Seed - Investment Cost SuLmmary-'

Total ForeignCosts Exchange ---------- Phasing - ---------

Rs. '000 % Rs. '000 Year 1 2/ Year 2 Year 3

BIHARBuildings 235 10 24 85 150 -Processing Equipment 105 41 43 105 -Farm Machinery 67 25 17 34 33 -Other Equipment 165 23 38 - 80 85Physical Contingencies 40 18 6 - 10 30Subtotal 612 21 128 119 378 115

KARNATAKABuildings 205 10 20 105 100Processing Equipment 105 41 43 45 60Farm Machinery - - - - -Other Equipment 165 23 38 85 80Physical Contingencies 34 18 6 9 25Subtotal 509 21 107 244 265

ORISSABuildings 235 10 24 85 150 -Processing Equipment 105 41 43 - 105 -Farm Machinery 67 25 17 34 33 -Other Equipment 165 23 38 - 80 85Physical Contingencies 40 18 7 - 10 30

Subtotal 612 21 129 119 378 115

RAJASTHANBuildings 91 - - 60 31 -Processing Equipment -Farm Machinery - - _- -Other Equipment 85 18 15 85 -Physical Contingencies 13 14 2 3 10Subtotal 189 9 17 148 41

UTTAR PRADESHBuildings 293 8 23 58 235 -Processing Equipment 105 41 43 - 105 -Farm Machinery 67 25 17 - 67 -Other Equipment 250 24 61 - 100 150Physical Contingencies 50 14 7 - 10 40Subtotal 765 20 151 58 517 190

Total Breeder Seed Investment 2,687 20 532 444 1,558 685

1/ Further details in Tables 6 and 7.2/ Includes expenditures in pre-project year.

8/1/77

ANNEX 3Table 6

INDIA


Breeder Seed - Investment Costsl/

Unit BIEAR KARNATAKA-/ ORISSA ForeignITEM UNIT Cost RAU UAS OUAT Total Exchange

_______ __ (Rs. '000) No. Rs. '000 No. Rs. '000 No. Rs. '000 (Rs. '000) o/o Rs. '000

1. BuildingsOffices 2 0.4 30 12.0 30 12.0 30 12.0 36.0

Toilets 142 0.6 16 9.6 16 9.6 16 9.6 28.8

Preparation rooms (3) M2 0.4 90 36.0 90 36.0 90 36.0 108.0

General storage M2 0.4 50 20.0 50 20.0 50 20.0 60.0

Processing area M2 0.4 90 36.0 90 36.0 90 36.0 108.0

Cold store (seed) M2 1.0 60 60.0 60 60.0 60 60.0 180.0 25 45.0

Conditioned store M2 0.8 40 32.0 40 32.0 40 32.0 96.0 25 24.0

Threshing/drying floor M2 0.075 400 30.0 400 30.0 60.0

Subtotal 235.6 205.6 235.6 676.8 10 69.0

2. Processing EquipmentBagged seed dryer under

shed (48 bag unit) No. 24.0 1 24.0 1 24.0 1 24.0 72.0 30 21.6

Heater fan unit No. 20.0 1 20.0 1 20.0 1 20.0 60.0 30 18.0

Air-screen cleaners0.2 MT/hr No. 30.0 1 30.0 1 30.0 1 30.0 90.0 30 27.0

*Aspirator cleaner No. 12.0 1 12.0 1 12.0 1 12.0 36.0 95 34.2

*Lab. model indentseparator No. 10.0 1 10.0 1 10.0 1 10.0 30.0 95 28.5

Subtotal 96.0 96.0 96.0 288.0 45 129.3

3. Accessories Set 20.0 1 20.0 1 20.0 1 20.0 60.0 15 9.0

(moisture tester,tarpaulins, tools,sprayers & dusters,rotary drum, seedtreater, etc.)

4. Farm MachinerySeed drill No. 12.0 1 12.0 1 12.0 24.0 25 6.0

Sprayer (plot) No. 6.0 1 6.0 1 6.0 12.0 25 3.0

Thresher (vogel type) No. 35.0 1 35.0 1 35.0 70.0 25 17.5

Thresher (single head) No. 10.0 1 10.0 1 10.0 20.0 25 5.0

Maize sheller No. 4.0 1 4.0 1 4.0 8.0 25 2.0

Subtotal 67.0 67.0 134.0 25 33.5

5. Vehicles4WD "Jeep" w/ trailer No. 65.0 1 65.0 1 65.0 1 65.0 195.0 25 48.7

6. Furnishings Set 20.0 1 20.0 1 20.0 1 20.0 60.0

7. Generator (Diesel)50 KIJA No. 60.0 1 60.0 1 60.0 1 60.0 180.0 30 54.0

8. Totals 563.6 466.6 563.6 1,593.8 22 343.5

9. Import Duties 8.8 8.8 8.8 26.4

10. Physical Contingencies4/ 40.0 33.6 40.0 113.6 18 20.6

11. Total Investment Costs 612.4 509.03' 612.4 1,733.8 21 364.1

* Items subject to 40% import duty.1/ Full names of universities at Table 4.2/ UAS in Karnataka was already alloted Rs. 120,000 under Phase I.3/ Incremental cost over Phase I provision.4/ 10% on buildings; 5% on machinery and equipment.

August 3, 1977

ANNEX 3Table 7

INDIA


Breeder Seed - Investment Costs V

Unit RAJASTHAN ------ UTTAR PRADESH ------- ForeignITEM UNIT Cost UW 2/ CSAUAT 3/ NDEPVK Total Exchange

_ _ _ ___ (Rs. '000) No. Rs. '000 o_. Rs. '000 No. Rs. '000 (Rs. '000) 0/o Rs. '000

1. BuildingsOffices M2 0.4 60 24.0 30 12.0 30 12.0 48.0Toilets M2 0.6 32 19.2 16 9.6 16 9.6 38.4Preparation room (3) M 0.4 120 48.0 90 36.0 90 36.0 120.0General storage M2 0.4 50 20.0 20.0Processing area M2 0.4 90 36.0 36.0Cold store (seed) M2 1.0 60 60.0 60.0 25 15.0Conditioned store M2 0.8 40 32.0 32.0 25 8.0Threshing/drying floor M2 0.075 - 400 30.0 30.0

Subtotal 91.2 57.6 235.6 384.4 6 23.0

2. Prccessing EquipmentBagged seed dryer under

shed (48 bag unit) No. 24.0 1 24.0 24.0 30 7.2Heater-fan unit No. 20.0 1 20.0 20.0 30 6.0Air-screen cleanersC.2 MT/hr No. 30.0 1 30.0 30.0 30 9.0

*Aspirator cleaner No. 12.0 1 12.0 12.0 95 11.4*Lab model indent

separator No. 10.0 1 10.0 10.0 95 9.5Subtotal 96.0 96.0 45 43.1

3. Accessories Set 20.0 1 20.0 1 20.0 1 20.0 60.0 15 9.0(Moisture tester,tarpaulins, tools,sprayers & dusters,rotary drum, seedtreater, etc.)

4. Farm MachinerySeed drill No. 12.0 1 12.0 12.0 25 3.0Sprayer (plot) No. 6.0 1 6.0 6.0 25 1.5Thresher (vogel type) No. 35.0 1 35.0 35.0 25 8.7Thresher (single head) No. 10.0 1 10.0 10.0 25 2.5Maize sheller No. 4.0 1 4.0 4.0 25 1.0Subtotal 67.0 67.0 25 16.7

5. Vehicles4WD' "Jeep" w/trailer No. 65.0 1 65.0 1 65.0 1 65.0 195.0 25 48.7

6. Furnishings Set 20.0 1 20.0 20.0

7. Generator (Diesel)50 KUA No. 60.0 - - 1 60.0 60.0 30 18.0

8. Totals 176.2 142.6 563.6 882.4 18 158.5

9. Import Duties 8.8 8.8

10. Physical Contingencies5/ 13.4 10.0 40.1 63.5 14 9.1

11. Total Investment Costs 189.64/ 152.6-4/ 612.5 954.7 18 167.6

* Items subject to 40% import duty.l/ Full names of universities in Table 4.2/ UU in Rajasthan was already alloted Rs. 690,000 under Phase I.3/ CSAUAT in Uttar Pradesh was already alloted Rs. 690,000 under Phase I.4/ Incremental cost over Phase I provision.5/ 10% on buildings; 5% on machinery and equipment.

August 2, 1977

ANNEX 3Table 8

INDIA


Foundation Seed - Investment Cost Summar-l/

Total Foreign ----------- Phasing ------------Costs Exchange

Rs. '000 % Rs. '000 Year 1 2/ Year 2 Year 3 Year 4

BIHAR 3/Processing Equipment- 1,537 43 663 400 700 437Other Equipment3/ 521 30 157 80 200 241Buildings & Site Development 2,481 10 254 1,000 900 581Physical Contingencies 343 21 71 _ 40 100 203Subtotal 4,882 23 1,145 1,480 1,840 1,359 203

KARNATAKA 3/Processing Equipment- 2,002 42 844 400 900 702Other Equipment 3/ 687 31 213 350 337Buildings & Site Development 2,249 10 223 800 850 599Physical Contingencies 346 21 72 40 100 206Subtotal 5,284 26 1,352 1,200 2,140 1,738 206

ORISSA 3/Processing Equipment- 1,331 42 563 300 600 431Other Equipment 3/ 513 30 155 20 250 243Buildings & Site Development 1,716 10 170 700 600 416Physical Contingencies 255 21 53 20 50 185Subtotal 3,815 25 941 1,020 1,470 1,140 185

RAJASTHAN 3/Processing Equipment- 2,039 43 874 550 850 639Other Equipment 3/ 977 31 302 100 400 477Buildings & Site Development 2,275 6 139 1,150 750 375Physical Contingencies 363 19 69 40 100 223Subtotal 5,654 24 1,384 1,800 2,040 1,591 223

UTTAR PRADESH 3/Processing Equipment- 2,171 44 957 600 900 671Other Equipment 3/ 996 31 308 50 500 446Buildings & Site Development 3,110 6 197 1,050 1,280 780Physical. Contingencies 457 19 87 50 125 282Subtotal 6,734 23 1,549 1,700 2,730 2,022 282

Total Foundation SeedInvestment 26,369 24 6,371 7,200 10,220 7,850 1,099

1/ Further details in Tables 9 and 10.2/ Includes expenditure in pre-project year.3/ Includes duties, spares, assembly, installation and electrification.

August 25, 1977

ANNEX 3Table 9Page I

INDIA


Foundation Seed - Investment Costs

UNIT COST Bihar Karnataka Orissa TOTAL ForeignErchapeITEM UNIT (RS. '000) No. Rs. '000 No. RS. '000 No. RS. '000 (Re. '000) 7% RS. 100

1. Machinery/EquipmentIntake pit No. 15.0 1 15.0 2 30.0 1 15.0 60.0 - -Drying equipment

(1) Fan - heater unit No. 20.0 2 40.0 4 80.0 2 40.0 160.0 30 48.0(2) Inclined auger, 5M No. 8.0 1 8.0 1 8.0 1 8.0 24.0 30 7.2(3) Unloading auger, 4M No. 8.0 1 8.0 2 16.0 1 8.0 32.0 30 9.6

*(4) Portable, inclined drag No. 10.0 1 20.0 1 10.0 2 20.0 50.0 95 47.5flight conveyor

Sheller, maize (1 TPH) No. 12.0 2 24.0 1 12.0 - - 36.0 - -

Potato, sorting, washing, No. 100.0 2 200.0 1 100.0 1 100.0 400.0 30 120.0drying system (10 TPH)

Convev r , horizontal(1) 20 NT/hr. X 20M No. 50.0 1 50.0 1 50.0 1 50.0 150.0 30 45.0(2) 10 MT/hr. X IOM No. 20.0 1 20.0 1 20.0 1 20.0 60.0 30 18.0

Vertical bucket elevators(1) 10 MT/hr. X 8M No. 18.0 2 36.0 - - - - 36.0 30 10.8(2) 5 MT/hr. X 8M No. 12.0 2 24.0 4 48.0 2 24.0 96.0 30 28.8(3) 5 MT/hr. X 6M No. 10.0 6 60.0 6 60.0 7 70.0 190.0 30 57.0

Scalper (10 MT/hr) No. 35.0 1 35.0 2 70.0 1 35.0 140.0 30 42.0Air-screen cleaner

(1) 1.5 MT/hr., w/indent cylinder No. 120.0 1 120.0 2 240.0 1 120.0 480.0 95 456.0(2) 0.5 MT/hr. No. 20.0 1 20.0 - - 1 20.0 40.0 20 8.0(3) 0.2 MT/hr. No. 10.0 1 10.0 2 20.0 1 10.0 40.0 20 8.0

*Gravity separator (0.5 MT/hr.) No. 60.0 1 60.0 2 120.0 1 60.0 240.0 95 228.0Spiral separator (twin) No. 12.0 1 12.0 - - - - 12.0 - -

*Aspirator/cleaner (twin tube) No. 30.0 1 30.0 2 60.0 1 30.0 120.0 95 114.0Surge/holding bins with hopper

bottom(1M 1.5 X 1.5 X 1.5M No. 5.0 3 15.0 6 30.0 3 15.0 60.0 - -(2) 1.5 X 1 X 1.5M No. 5.0 2 10.0 4 20.0 2 10.0 40.0 - -(3) 1 X 1 X JM No. 4.0 2 8.0 2 8.0 2 8.0 24.0 - -(4) 1 X 1 X 0.5M No. 4.0 3 12.0 4 16.0 3 12.0 40.0 - -

*Treater, slurry "wet" No. 70.0 1 70.0 1 70.0 1 70.0 210.0 95 199.5type (5 MT/hr.)

*Bagger-weigher system with No. 35.0 1 35.0 2 70.0 1 35.0 140.0 95 133.0bag closer

*Bag closer, portable No. 10.0 1 10.0 2 20.0 1 10.0 40.0 30 12.0Bag carts

1 2 -wheel (100 kg) No. 1.0 6 6.0 8 8.0 6 6.0 20.0 20 4.0(2) 4 - wheel (800 kg) No. 3.5 4 14.0 6 21.0 4 14.0 49.0 20 9.8

*Bag conveyor, portable No. 25.0 2 50.0 2 50.0 2 50.0 150.0 95 142.5Dust aspiration system w/cyclone No. 25.0 2 50.0 4 100.0 2 50.0 200.0 30 63.0Q

Sub-Total 1,072.D 1,357.0 910.0 3,339.0 54 1,808.7

2. Accessory En uiimentVacuum cleaner (heavy-duty) No. 10.0 2 20.D 2 20.0 2 20.0 60.0 20 12.0Air compressor No. 9.0 1 9.0 2 18.0 1 9.0 36.0 20 7.2Diesel generator (60 KVA) No. 80.0 1 80.0 2 160.0 1 80.0 320.0 30 96.0

Sub-Total 109.0 198.0 100.0 416.0 28 115.2

3. Assembly, Installation 206.7 272.1 178.3 657.1 30 197.1& Electrification (17.5% ofsub-totals 1 & 2)

4. Spares (10% of sub-totals I & 2) 118.1 155.5 101.9 375.5 20 75.1

5. Miscellaneous Accessories Set 30.0 1 30.0 1.5 45.0 1 30.0 105.0 30 31.5(Platform scales, tarpaulins,

sprayers duster, gram scales,tools etc.)

6. VehiclesVan No. 60.0 1 60.0 1 60.0 1 60.0 180.0 25 45.04WD "Jeep" w/trailer No. 65.0 1 65.0 2 130.0 1 65.0 260.0 25 65.0Light truck No. 90.0 1 90.0 - - 1 90.0 180.0 25 45.0Motorcycle No. 9.0 2 18.0 2 18.0 2 18.0 54.0 25 13.5

Sub-Total 233.0 208.0 233.0 674.0 25 168.5

ANNEX 3nTaePage 2

INDIA


Foundation Seed - Investment Cost

UNIT COST Bihar Karnataka Orissa TOTAL Foreign ExchangeITEM UNIT (Rs. '000) No. RS. '000 No. Rs. '000 No. Rs. '000 (Rs. '000) % Re. '000

*7. Lab./Quality Control Equipment Set 40.0 1 40.0 1.5 60.0 1 40.0 140.0 95 133.0

B. ThreshersVogel-type No. 35.0 1 35.0 2 70.0 1 35.0 140.0 30 42.0Single head No. 10.0 2 20.0 2 20.0 2 20.0 60.0 30 18.0Sheller, maize, small No. 4.0 2 8.0 2 8.0 - - 16.0 30 4.8

Sub-Total 63.0 98.0 55.0 216.0 30 64.8

9. Air Conditioners No. 4.0 4 16.0 6 24.0 4 16.0 56.0 30 16.8

10. Site Development -/ ha 100.0 1.5 150.0 2 200.0 1.5 150.0 500.0 - -

11. Building/FacilitiesOffices M2 0.4 135 54.0 180 72.0 135 54.0 180.0 -

Laboratory M2 0.4 75 30.0 100 40.0 75 30.0 100.0 -

Toilets M2

0.6 54 32.4 72 43.2 54 32.4 108.0 -

Preparation area (2) M 0.4 162 64.8 216 86.4 108 43.2 194.4 -

General storage (2) M2 0.4 90 36.0 120 48.0 60 24.0 108.0 -

Receiving/intake area M 0.4 216 86.4 288 '115.2 144 57.6 259.2 -

areas 2quantities M 0.4 216 86.4 288 115.2 144 57.6 259.2 -

(2) Small quantities M2 0.4 120 48.0 - - - - 48.0 -

Ventilatecl storage -/ M 0.4 370 148.0 100 40.0 150 60.0 248.0 -

Conditioned storage 2/ M2 0.8 135 108.0 110 88.0 50 40.0 236.0 25 59.0Drying/storage bins 6/ 2

(1) Masonry bin w/shed - M 0.6 50 30.0 50 30.0 - - 60.0 - -

(2) Bagged seed dryer under shed - M2

0.3 156 46.8 46.8 140.4 312 93.6 280.8 - -

Cold storage (seed) 9/ M2 1.0 80 80.0 80 80.0 80 80.0 240.0 25 60.0Cold storage (potatoes) - M ton 0.8 1,000 800.0 500 400.0 500 400.0 1,600.0 25 400.0

Drying floor (elevated) M2 0.075 200 15.0 400 30.0 200 15.0 60.0 - -

Prep./sorting shed (potatoes) M2

0.3 400 120.0 200 60.0 300 90.0 270.0 - -

Workshop M 0.4 25 10.0 50 20.0 25 10.0 40.0 - -

Staff quarters MN 0.35 600 210.0 800 280.0 600 210.0 700.0 - -

Sub-Total 2,005.8 1,688.4 1,297.4 4,991.6 10 519.0

Architect's fee (8%) 160.5 135.1 103.8 399.4Office/lab furnishings Set 20.0 1.5 30.0 2 40.0 1.5 30.0 100.0Electrical(I) Power distribution - Lump Sum - 35.0 - 45.0 - 35.0 115.0 25 28.8(2) Internal illumination - Lump Sum - 60.0 - 80.0 - 60.0 200.0 25 50.0(3) Outside lighting - Lump Sum - 40.0 - 60.0 - 40.0 140.0 25 35.0

Sub-Total 2,331.3 2,048.5 1,566.2 5,946.0 11 632.8

12. Total 4,369.1 4,666.1 3,389.4 12,424.6 26 3,243.5

13. Import Duties 170.0 272.0 170.0 612.0

14. Physical Contingencies L-/ 342.5 345.7 255.3 943.5 21 194.7

15. Total leveatment Costs 4,881.6 5,283.8 3,814.7 13,980.1 25 3,438.2

* Items sutject to 40% import duty.1/ Investment needs based on a "set" of facilities and equipment required for one foundation operational sites. Allowances have been

made for different kinds of seed, quantities, season of production. Bihar and Orissa I and 1/2 sites each. Karnataka 2 sites.2/ Includes land leveling and grading, drainage and sewer, utilities, roads, parking and fencing.3/ Large and small processing areas have been provided to facilitate handling of widely varying quantities of different seed kinds.4/ Provided for 100% rabi season tonnage (1.3 M ton I M ).5/ TemperatuLre 15-C and relative humidity 60% or less. Unit cost include insulation and air conditioning equipment. Space

provided on basis of 75% yearly hybrid seed and/or 20% rabi season tonnage with maximum of 154 M2

per 200 M tons.6/ Used for maize on ear, also for groundnuts and other seeds.7/ Most flexible and safest type of dryer for breeder and foundation seed.8/ Temperatture 10'C or less and relative humidity of 507b or less will maintain seed viability for 4-5 years. Required are full

insulation, heavy duty refrigeration system with maximum dehumidification. Cost for insulation etc. included in unit cost.9/ Temperature about 3-5 IC; relative humidity 80-85%. Cost based on Central Warehousing estimates.

10/ 10% for buildings and site development; 5% for all other cost items.

August 2, 1977


INDIA

SECOND NATIONAL SEED PROJECTFoundation Seed - Investment Costs

-------Uttar Pradesh-------UNIT COST Rajasthan KanPr, Faizabad TOTAL Fbreign Exchange

ITEM UNIT (Rs. '000) No_ Ks. 'UUU _ Rs.'000 No. Rs. '000 (Rs. 000) R R. 000

1. Machinery/EauipmentIntake pit No. 15.0 2 30.0 1 15.0 1 15.0 60.0

in equipentFan - heater unit No. 20.0 4 80.0 3 60.0 2 40.0 180.0 30 54.0

(2) Inclined auger, 5M No. 8.0 2 16.0 1 8.0 1 8.0 32.0 30 9.6(3) Unloading auger, 4M No. 8.0 2 16.0 1 8.0 1 8.0 32.0 30 9.6

*(4) Portable, inclined drag No. 10.0 1 10.0 1 10.0 1 10.0 30.0 95 28.5flight conveyor

Sheller, maize (I TPN) No. 12.0 2 24.0 - - - - 24.0 - -

Potato, sorting, washing,drying system (10 TPH) No. 100.0 - - 0.5 50.0 0.5 50.0 100.0 30 30.0

Conveyors. horizontal(1) 10 MT/hr. x 10 M No. 20.0 2 40.0 1 20.0 1 20.0 80.0 30 24.0

Vertical bucket elevators(1) 10 MT/hr. X 8M No. 18.0 3 54.0 1 18.0 2 36.0 108.0 30 32.4(2) 5 MT/hr. X 8M No. 12.0 4 48.0 2 24.0 3 36.0 108.0 30 32.4(3) 5 MT/hr. X 6M No. 10.0 5 50.0 3 30.0 4 40.0 120.0 30 36.0

Scalper (10 MT/hr.) No. 35.0 2 70.0 1 35.0 1 35.0 140.0 30 42.0Air-screen cleaner

* (1) 1.5 MT/hr., w/indent cylinder No. 120.0 2 240.0 - - 1 120.0 360.0 95 342.0(2) 0.5 MT/hr. No. 20.0 - - 1 20.0 1 20.0 40.0 20 8.0(3) 0.2 MT/hr. No. 10.0 - - 1 10.0 1 10.0 20.0 20 4.0

*Gravity separator (0.5 MT/hr.) No. 60.0 2 120.0 1 60.0 1 60.0 240.0 95 228.0Spiral separator (twin) No. 12.0 - - 1 12.0 - - 12.0 - -*Aspirator/cleaner( twin tube) No. 30.0 2 60.0 1 30.0 1 30.0 120.0 95 114.0Surge/holding bins with hopperbottom(1) 1.5 X 1.5 X 5M No. 5.0 6 30.0 3 15.0 3 15.0 60.0 - -(2) 1.5 X 1 X 1.5M No. 5.0 4 20.0 2 10.0 2 10.0 40.0 - -(3) 1 X 1 X IM No. 4.0 4 16.0 2 8.0 2 8.0 32.0 - -(4) 1 X 1 X 0.5M No. 4.0 4 16.0 3 12.0 3 12.0 40.0 - -

*Treater, slurry "wet" No. 70.0 2 140.0 1 70.0 1 70.0 280.0 95 266.0type (5 MT/hr.)

*Bagger-weigher system with No. 35.0 2 70.0 1 35.0 1 35.0 140.0 95 133.0bag closer

Bag closer, portable No. 10.0 2 20.0 1 10.0 1 10.0 40.0 30 12.0

(1) ~2- wheel (100 kg) No. 1.0 10 10.0 5 5.0 5 5.0 20.0 20 4.0(2) 4 - wheel (800 kg) No. 3.5 8 28.0 5 17.5 5 17.5 63.0 20 12.6

*Bag conveyor, portable No. 25.0 2 50.0 2 50.0 1 25.0 125.0 95 118.8Dust aspiration system w/cyclone No. 25.0 4 100.0 2 50.0 2 50.0 200.0 30 60.0

Sub-Total 1,358.0 692.5 795.5 2,846.0 56 1,600.9

2. pmentVac cen (heavy-duty) No. 10.0 2 20.0 1 10.0 1 10.0 40.0 20 8.0Air compressor No. 9.0 2 18.0 1 9.0 1 9.0 36.0 20 7.2Diesel generator (60 KVA) No. 80.0 2 160.0 1 80.0 1 80.0 320.0 30 96.0

Sub-Total 198.0 99.0 99.0 396.0 28 111.2

3. Assembly, Installation 272.3 138.5 156.5 567.3 30 170.2& Electrification (17.57 ofsub-totals 1 & 2)

4. Spares (107. of sub-totals 1 & 2) 155.6 79.2 89.4 324.2 20 64.8

5. Miscellaneous Accessories Set 30.0 2 60.0 1 30.0 1 30.0 120.0 30 36.0(Platform scales, tarpaulins,sprayers duster, gram scales,tools etc.)

6. VehiclesVan No. 60.0 2 120.0 1 60.0 1 60.0 240.0 25 60.04WD "Jeep" w/tralier No. 65.0 2 130.0 1 65.0 1 65.0 260.0 25 65.0Light truck No. 90.0 2 180.0 1 90.0 1 90.0 360.0 25 90.0Motorcycle No. 9.0 4 36.0 2 18.0 2 18.0 72.0 25 18.0

Sub-Total 466.0 233.0 233.0 932.0 25 233.0

ANNEX 3

Table 10Page 2

INDIA


Foundation Seed - Investment Cost

-______Uttar Pradesh------

UNIT COST Rajasthan Kanpur Faizabad TOTAL ForeignExchange

IrEM UNIT (Rs. '000) No. Rs. '000 No. Rs. '000 No. Re. '000 (Re. '000) 7. Rs.

*7. Lab./Quality Control Equipment Set 40.0 2 80.0 1 40.0 1 40.0 160.0 95 152.0

8. ThreshersVogel-type No. 35.0 2 70.0 1 35.0 1 35.0 140.0 30 42.0

Single head No. 10.0 2 20.0 1 10.0 1 10.0 40.0 30 12.0Sheller, maize, small No. 4.0 1 4.0 2 8.0 2 8.0 20.0 30 6.0

Sub-Total 94.0 53.0 53.0 200.0 O 60.0

9. Air Conditioners No. 4.0 6 24.0 4 16.0 4 16.0 56.0 30 16.8

10. Site Development 2/ ha 100.0 3 300.0 1.5 150.0 1.5 150.0 600.0 - -

11. Building/FaciLities 2Offices M 0.4 180 72.0 90 36.0 90 36.0 144.0 - -

Laboratory M2 0.4 100 40.0 50 20.0 50 20.0 80.0 - -

Toilets M2 0.6 72 43.2 36 21.6 36 21.6 86.4 - -

Preparation area (2) M 0.4 216 86.4 108 43.2 108 43.2 172.8 - -

General storage (2) M2 0.4 120 48.0 60 24.0 60 24.0 96.0 -

Receiving/intake area M 0.4 288 115.2 144 57.6 144 57.6 230.4 -

Pr ~~~3/2Procesingareas-/ 2(I) Large quantities M 0.4 288 115.2 144 57.6 144 57.6 230.4 -

(2) Small quantities M 0.4 160 64.0 - - 120 48.0 112.0 -

Ventilated storage 4 M2 0.4 1,500 600.0 600 240.0 450 180.0 1,020.0 - -

Conditioned storage N/ M2 0.8 170 136.0 125 100.0 100 80.0 316.0 25 79.0

Drying/storage bins(1) Masonry bin, w/shed- 142 0.6 50 30.0 50 30.0 - - 60.0 - -

(2) Bagged seed dryer under shed - M2 0.3 468 140.4 312 93.6 312 93.6 327.6 - -

Cold Storage (seed) 8/ M2 1.0 80 80.0 80 80.0 80 80.0 240.0 25 60.0

Cold storage (potatoes) 9/ M ton 0.8 - - 200 160.0 200 160.0 320.0 25 80.0Drying floor (elevated) M2 0.075 400 30.0 200 15.0 200 15.0 60.0 - -

Prep./sorting shed (potatoes) M2 0.3 - - 200 60.0 200 60.0 120.0 - -

Workshop M 0.4 50 20.0 25 10.0 25 10.0 40.0 - -

Staff quarters 10/ M 0.35 - - 400 140.0 400 140.0 280.0 - -

Sub-Total 1,620.4 1,188.6 1,126.6 3,935.6 6 219.0

Architect's Fee (8%) 129.6 95.1 90.1 314.8 -

Office/lab furnishings Set 20.0 2 40.0 1 20.0 1 20.0 80.0 - -

Electrical(1) Power distribution - Lump Sum - 45.0 - 35.0 - 35.0 115.0 25 28.8(2) Internal illumination - Lump Sum - 80.0 - 60.0 - 60.0 200.0 25 50.0(3) Outside lighting - Lump Sum - 60.0 - 40.0 - 40.0 140.0 25 35.0

Sub-Total 1,975.0 1,438.7 1,371.7 4,785.4 7 332.8

12. Total 4,982.9 2,969.9 3,034.1 10,986.9 25 2,777.7

13. Duties 308.0 118.0 156.0 582.0

14. Physical CorLtingencies 1/ 362.9 227.9 227.8 818.6 19 155.5

15. Total Investment Costs 5,653.8 3,315.8 3,417.9 12,387.5 24 2,933.2

* Items subject to 40% import duty.1/ Investment needs based on a "set" of facilities and equipment required for one foundation operational sites. Allowances have been

made for different kinds of seed, quantities, season of production. Rajasthan and Uttar Pradesh 2 sites each. Provision forPantnagar in UP is not required.

2/ Includes land leveling and grading, drainage and sewer, utilities, roads, parking and fencing.3/ Large and small processing areas have been provided Jo facilitate handling of widely varying quantities of different seed kinds.4/ Provided for 1007. rabi season tonnage (1.3 M ton I M ).

5/ Temperature 15 IC and relative humidity 607. or less. Unit cost include insulation and air conditioning equipment. Space providedon basis of 75% yearly hybrid seed and/or 20% rabi season tonnage with maximum of 154M2 per 200 M tons.

6/ Used for maize on ear, also for groundnuts and other seed.7/ Most flexible and safest type of dryer for breeder and foundation seed-8/ Temperature 10 IC or less and relative humidity of 50% or less will maintain seed viability for 4-5 years. Required are full

insulation, heavy duty refrigeration system with maximum dehumidification. Cost for insulation etc. included in unit cost.9/ Temperature about 3-5 °C; relative humidity 80-85%. Cost based on Central Warehousing estimates.

10/ Staff quarters included in Rajasthan Farm Development Cost (Annex 4).11/ 107. for buildings and site development; 5% for all other cost items.

August 3, 1977

INDIA


Seed Technology Research - Investment Cost Summary-/

Total Foreign Exchange PhasingCosts

Rs. '000 % Rs. '000 Year 1 Year 2 Year 3 Year 4 Year 5

BIHAR 2/Capital Investments- 335 43 143 290 35 10Operational Expenses 517 37 117 120 121 122

Subtotal 852 37 407 155 131 122

KARNATAKA 2/Capital Investments- 490 39 190 375 95 20Operational Expenses 729 38 165 174 176 176

Subtotal 1,219 38 540 269 196 176

ORISSA2/

Capital Investments- 335 43 143 270 55 10Operational Expenses 517 37 117 120 121 122

Subtotal 852 37 387 175 131 122

RAJASTHAN 2/Capital Investments- 480 38 183 365 95 20Operational Expenses 729 38 165 174 176 176

Subtotal 1,209 38 530 269 196 176

UTTAR PRADESH 2/Capital Investments- 105 75 79 40 60 5

Total Seed TechnologyResearch Investment 4,237 17 738 150 1,904 928 659 596 X D

1/ Further details on Tables 12 through 15. -*2/ Includes Physical Contingencies.

7/27/77

INDIA


Bihar - Seed Technology Research - Project Costs

UNIT COST YEAR I YEAR 2 YEAR 3 YEAR 4 YEAR 5 TOTAL FOREIGN EXCHANGEITEM UNIT (Rs. '000) No. Rs. '000 No. Rs. '000 No. Rs. '000 No. Rs. '000 No. Rs. 1000 (Rs. '000) . Rs. '000

INVESTMENT COSTS

1. Buildings IAdditional construction - M 0.5 150 75.0 75.0

(offices - laboratory)2. Equipment for:

- seed physiology, quality evaluation - Lump Sum 40.0 10.0 50.0 .75 37.5and control research

- seed health research - Lump Sum 30.0 10.0 40.0 75 30.0- seed drying, processing and - Lump Sum 40.0 10.0 50.0 75 37.5

storage research- other specialized research - Lump Sum 20.0 - 20.0 75 15.0

Sub-Total 130.0 30.0 160.0 75 120.0

3. Office Furnishings & Fixtures - Lump Sum 15.0 15.0

4. Vehicle 4WD "Jeep" with trailer No. 65.0 1 65.0 65.0 25 16.3

5. Physical Contingencies 2/ 5.0 5.0 9.5 19.5 35 6.8

TOTAL INVESTMENT COSTS 290.0 35.0 9.5 334.5 43 143.1

OPERATIONAL EXPENSES

1. StaffSeed Research Officer and Coordinator M Y - 15.6 1 15.6 1 15.6 1 15.6 1 15.6 1 15.6 78.0

Seed Research Officer M Y 14.0 1 14.0 1 14.0 1 14.0 1 14.0 56.0

Ass't Seed Research Officer M Y 8.0 2 16.0 2 16.0 2 16.0 2 16.0 64.0

Research Assistants M Y 5.4 2 10.8 2 10.8 2 10.8 2 10.8 43.2

Lab. and Field Attendents M Y 4.2 2 8.4 2 8.4 2 8.4 2 8.4 33.6

Steno-typist M Y 4.2 1 4.2 1 4.2 1 4.2 1 4.2 1 4.2 21.0

Fringe Benefits (50%) 9.9 34.5 34.5 34.5 34.5 147.9

Sub-Total 29.7 103.5 103.5 103.5 103.5 443.7

2. Recurring Expenses

Travel Allowance 100 days 2.0 .25 0.5 0.5 1.0 0.5 1.0 0.5 1.0 0.5 1.0 4.5Vehicle operation and Maintenance 1,000 miles 1.0 1 1.0 2 2.0 3 3.0 4 4.0 4 4.0 14.0Expendable Supplies - Lump Sum 2.0 4.0 4.0 4.0 4.0 18.0Equipment Repair and Maintenance - Lump Sum 3.0 3.0 3.0 9.0

Utilities and Services - Lump Sum 4.0 6.0 6.0 6.0 6.0 28.0

Sub-Total 7.5 13.0 17.0 18.0 18.0 73.5

TOTAL OPERATIONAL COSTS 37.2 116.5 120.5 121.5 121.5 517.2

1/ New construction or renovation and remodeling.2/ 107. of building costs, 5'h of equipment and materials.3/ Man Year.

July 28, 1977

INDIA


Karnataka - Seed Technology Research - Project Costs

UNIT COST YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5 TOTAL FOREIGN EXCHANGEITEM UNIT (Rs. '000) No. Rs. '000 Nc. Rs. '000 No. Re. '000 No. Rs. '000 No. Rs. '000 (Rs. '000) 7 Rs. '000

INVESTMENT COSTS

1. Buildinst/Additional construction / N 0.5 300 150.0 150.0(offices - laboratory)

2. Equipment for:- seed drying, processing and - Lump Sum 50.0 40.0 90.0 75 67.5storage research- seed development and maturation - Lump Sum 40.0 20.0 60.0 75 45.0research- hybrid seed production research - Lump Sum 30.0 20.0 50.0 75 37.5- other specialized research - Lump Sum 10.0 10.0 20.0 75 15.0Sub-Total

130.0 90.0 220.0 75 165.03. Office Furnishings & Fixtures - Lump Sum 25.0 25.04. Vehicle 4WD "Jeep" with trailer No. 65.0 1 65.0 65.0 25 16.35. Physical Contingencies 2/ 5.0 5.0 20.5 30.5 30 9.1

TOTAL INVESTMENT COSTS 375.0 95.0 20.5 490.5 39 190.4OPERATIONAL EXPENSES

1. StaffSeed Research Officer and Coordinator M Y 3 15.6 1 15.6 1 15.6 1 15.6 1 15.6 1 15.6 78.0Seed Research Officer M Y 14.0 2 28.0 2 28.0 2 28.0 2 28.0 112.0Ass't Seed Research Officer M Y 8.0 3 24.0 3 24.0 3 24.0 3 24.0 96.0Research Assistants M Y 5.4 3 16.2 3 16.2 3 16.2 3 16.2 64.8Lab. and Field Attendents M Y 4.2 3 12.6 3 12.6 3 12.6 3 12.6 50.4Steno-typiet M Y 4.2 1 4.2 1 4.2 1 4.2 1 4.2 1 4.2 21.0Fringe Benefits (507.) 9.9 50.3 50.3 50.3 50.3 211.1

Sub-Total 29.7 150.9 150.9 150.9 150.9 633.32. Recurring Expenses

Travel Allowance 100 days 2.0 .25 0.5 0.5 1.0 0.5 1.0 0.5 1.0 0.5 1.0 4.5Vehicle Operation and 1,000 miles 1.0 2 2.0 3 3.0 4 4.0 6 6.0 6 6.0 21.0MaintenanceExpendable Supplies - Lump Sum 2.0 4,0 6.0 6.0 6.0 24.0Equipment Repair and Maintenance - Lump Sum 4.0 4.0 4.0 12.0Utilities and Services - Lump Sum 4.0 6.0 8.0 8.0 8.0 34.0

Sub-Total 8.5 14.0 23.0 25.0 25.0 95.5


1/ New construction and/or remodeling.

2/ 10h. for buildings; 5% for equipment and materials.

3/ Man Yearw

July 26, 1977

INDIA


O Sesearch - Proiect Costs

UNIT COST YEAR 1 yEAR 2 YEAR 3 YEAR 4 YEAR 5 TOTAL FOREIGN EXCHANGEITEM UNIT (Rs. '000) No. Rs. '000 No. Rs. '000 No. Rs. '000 No. Rs. '000 No. R.. '000 (Rs. '000) 7 Rs. '000

INVESTMENT COSTS

I. Build44js 1/ 2Additional construction M 0.5 150 75.0 75.0

(offices - laboratory)2. Equipment for:

- seed health research - Lump Sum 30.0 10.0 40.0 75 30.0- seed drying, processing and _ Lump Sum 50.0 20.0 70.0 75 52.5

storage research- seed production research - Lump Sum 30.0 20.0 50.0 75 37.5

Sub-Total 110.0 50.0 160.0 75 120.0

3. Office Furnishings & Fixtures _ Lump Sum 15.0 15.0

4. Vehicle 4WD "Jeep" with trailer No. 65.0 1 65.0 65.0 25 16.3

5. Physical Contingencies V 5.0 5.0 9.5 19.5 35 6.8



1. Staff 3Seed Research Officer and Coordinator M Y- 15.6 1 15.6 1 15.6 1 15.6 1 15.6 1 15.6 78.0Seed Research Officer M Y 14.0 1 14.0 1 14.0 1 14.0 1 14.0 56.0Ass't. Seed Research Officer M Y 8.0 2 16.0 2 16.0 2 16.0 2 16.0 64.0

Research Assistants M Y 5.4 2 10.8 2 10.8 2 10.8 2 10.8 43.8Lab. and Field Attendents M Y 4.2 2 8.4 2 8.4 2 8.4 2 8.4 33.6Steno-typist M Y 4.2 1 4.2 1 4.2 1 4.2 1 4.2 1 4.2 21.0

Fringe Benefits (50Z) 9.9 34.5 34.5 34.5 34.5 147.9

Sub-Total 29.7 103.5 103.5 103.5 103.5 443.7

2. Recurring Expenses

Travel Allowance 100 days 2.0 .25 0.5 .5 1.0 .5 1.0 .5 1.0 .5 1.0 4.5Vehicle Operation and Maintenance 1,000 miles 1.0 1 1.0 2 2.0 3 3.0 4 4.0 4 4.0 14.0Expendable Supplies - Lump Sum 2.0 4.0 4.0 4.0 4.0 18.0Equipment Repair and Maintenance - Lump Sum 3.0 3.0 3.0 9.0

Utilities and Services - Lump Sum 4.0 6.0 6.0 6.0 6.0 28.0

Sub-Total 7.5 13.0 17.0 18.0 18.0 73.5


1/ Additional or new construction.2/ 10%. for buildings; 5Z for equipment and materials.3/ Man Year.

-' :E

Jl 2July 27, 1977

INDIA


Rajasthan - Seed Technology Research - Project Costs

UNIT COST YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5 TOTAL FOREIGN EXCHANGEITEM UNIT (Rs. '000) No. Rs. '000 No. Rs. '000 No. Rs. '000 No. Rs. '000 No. Rs. '000 (Rs. '000) % Rs. '000

INVESTMENT COSTS

1. Buildings I/ 2Additional construction M 0.5 300 150.0 150.0

(offices - laboratory)

2. Equipment for:- seed physiology, quality evaluation - Lump Sum 40.0 30.0 70.0 52.5

and control research- seed drying, processing and - Lump Sum 30.0 30.0 60.0 75 45.0storage research- seed production research - Lump Sum 30.0 20.0 50.0 75 37.5- other specialized research - Lump Sum 20.0 10.0 30.0 75 22.5

Sub-Total 120.0 90.0 210.0 75 157.53. Office Furnishings & Fixtures - Lump Sum 25.0 25.04. Vehicle 4WD "Jeep" with trailer No. 65.0 1 65.0 65.0 75 16.35. Physical Contingencies 2/ 5.0 5.0 20.0 30.0 29 8.7



1. StaffSeed Research officer and Coordinator M Y - 15.6 1 15.6 1 15.6 1 15.6 1 15.6 1 15.6 78.0Seed Research Officer M Y 14.0 2 28.0 2 28.0 2 28.0 2 28.0 112.0Ass't. Seed Research Officer x Y 8.0 3 24.0 3 24.0 3 24.0 3 24.0 96.0Research Assistants M Y 5.4 3 16.2 3 16.2 3 16.2 3 16.2 64.8Lab. and Field Attendents M Y 4.2 3 12.6 3 12.6 3 12.6 3 12.6 50.4Steno-typist M Y 4.2 1 4.2 1 4.2 1 4.2 1 4.2 1 4.2 21.0

Fringe Benefits (50%) 9.9 50.3 50.3 50.3 50.3 211.1

Sub-Total 29.7 150.9 150.9 150.9 150.9 633.3

2. Recurring ExpensesTravel Allowance 100 days 2.0 .25 0.5 0.5 1.0 0.5 1.0 0.5 1.0 0.5 1.0 4.5Vehicle Operation and Maintenance 1,000 miles 1.0 2 2.0 3 3.0 4 4.0 6 6.0 6 6.0 21.0Expendable Supplies - Lump Sum 2.0 4.0 6.0 6.0 6.0 24.0Equipment Repair and Maintenance - Lump Sum 4.0 4.0 4.0 12.0Utilities and Services - Lump Sum 4.0 6.0 8.0 8.0 8.0 34.0

Sub-Total 8.5 14.0 23.0 25.0 25.0 95.5


1/ New construction and/or remodeling.2/ 107. of building costs, 5% of equipment and materials.3/ Man Year.

July 28, 1977 x

- Iw

INDIASECOND NATIONAL SEED PROJECT

BREEDER AND FOUNDATION SEED CENTER

VENTILATED STOREHOUSE

BREEDER AND FOUNDATION SEEDCENTER

COVERED REFRIG

; ------------ ---------- _-____1 WALK EQUIP

BATH-Room

48BAG ~~~~~~~~~ ~ ~~~~~~~~~~~~~~~SMALL LOTS AIR COLD ROOM COLD ROOM48 AGS PROCESSING CONDITIONED (5

0C -50%R.H.) |SAME)

PER UNIT BMAN PROCESSING AREA AREA STOREROOMPER UNIT MAIN PROCESSING AREA )IE-----------0

16C - 60SR.H.)BIN DRYER (4 BINS SHOP

UNDER SHED

BAGGEGD SEED D RYERHALLWAY PORCH

DRYING FLOOR (OPEN) I -| l | PREPARATION ROOM LAB.

RECEIVING AREA BREEDER SEEDSTORE- PROCESSING AREA /ROOM

l______SCALE______________L____________ ,_____L_______________X______|_________ PREPARATION ROOM | LAB.

SCALE: ----0 5M HALLWAY BATHROOM

OFFICE OFICEI OFFICE-OFC FIE OFC

COVERED PORCH

World B-ak - 17919

ANNEX 4Page 1

INDIA


Farm Development

1. The five states proposed under this project, as with those underPhase I, have comparative advantages in the seed production of certain crops.Geographically the project states are widespread, Bihar and Orissa in theNortheast, Uttar Pradesh in the north, Rajasthan in the northwest and Karna-taka in the south. Soils, climate and irrigation sources are equally diversein character.

Bihar

2. The project area in Bihar is located in the northwest in Rohtasdistrict and a small part of Bhojpur district. Most of the project area isserviced by the Sone Canal system, the new High Level Sone Canal project andthe newly inagurated Durgawatiweir project. Additional water is supplied byprivate and government owned tubewells. Groundwater conditions are consideredgood to excellent for most of the area. The seed to be produced under theproject in Bihar are mainly wheat, potato and maize.

Orissa

3. Orissa has two project areas. Sambalpur district--Zone 1 and theCuttack and Puri district--Zone II. Sambalpur district in western Orissa, anarea free of flooding and cyclones, would produce paddy, pulses, groundnutand potato seed. Canal and lift irrigation serve 28% of the cultivated landin Zone I.

4. Zone II, located in the coastal region in close proximity to OrissaUniversity of Agriculture and Technology (OUAT). Irrigation is supplied toabout 40% of the area by canal and lift irrigation. Seed to be produced inZone II of Orissa are potato and groundnut in rabi.

Karnataka

5. The project areas in Karnataka are located in two zones, parts ofBangalore and Kolar districts in the southeast make up Zone I, and Chitradurgaand Dharwar districts in mid part of the state make up Zone II. Most of theseed production, bajra, jowar and maize, in Zone I would be in rabi croppingseason under irrigation. Few commercial crops are produced in Zone I duringthis time of the year, making isolation of hybrid seed crops much easier.Irrigation is provided from dugwells.

ANNEX 4Page 2

6. Zone II in Karnataka is favored with good groundwater conditions aswell as canal irrigation. According to groundwater survey reports there isscope for additional groundwater exploitation in the area. Kharif croppingwill predominate with jowar, bajra, and paddy being the major crops.

Rajasthan

7. Rajasthan also has two project areas, Zone I in the Sriganganagardistrict in the very north part of the state and Zone II in the Kota and Bundidistricts in the south east part of the state. The Suratgarh farm, the onlySFCI farm included in this project, is located in Zone I. The project area isserved by three canal systems, the Rajasthan Canal, Bhakra Canal and the GangCanal. With irrigation and favorable climate a wide range of rabi and kharifseed crops would be produced in Zone I, the major ones being wheat, gram,bajra, pulse and oilseeds.

8. Zone II in Rajasthan is an elongated basin in the former alluvialplain of the Chambal River. The Chambal Canal system supplies irrigationwater to 70% of the project area and wells supply water to 20% of the projectarea. Groundwater surveys reveal there is good scope for additional ground-water exploitation. Most of Zone II is under the Bank assisted ChambalCommand Area Development Project (Rajasthan). 1/ Principal seed crops inZone II would be wheat, jute, oilseeds, jowar, groundnut and pulses.

Uttar Pradesh

9. Uttar Pradesh is the only project state with three zones for pro-duction, two under this project and one under the already established TaraiSeeds Project (Loan 614-IN). The two project areas are located in the centralpart of the state. Zone II is located in Kanpur district and Zone III inFaizabad district. Zone II is generally a level plain comprising of Gangeticalluvium. Canals, and private and state tubewells supply about 53% of thecultivated area with irrigation. The irrigation potential is being increasedby the launching of Ramganga Irrigation Project and the installation of addi-tional tubewells. The major seed crops to be produced during year aroundcropping in Zone II are wheat pulses, bajra, oilseeds and paddy.

10. Zone III is a level plain comprised of Sarju and Gomati alluvium.Private tubewells are the most important source of irrigation in Zone IIIalthough additional supplies from canals, state tubewells and dugwells con-tribute to a total supply of about 60% of the cropped area. With the instal-lation of additional tubewells and the construction of the Sarda SaliayakProject, the existing potential is sufficient to irrigate about 90% of thenet sown area. Wheat, paddy and pulses are the major seed crops to be pro-duced in Zone III.

1/ IBRD Report No. 430-IN, May 29, 1976.

ANNEX 4Page 3

Universities Farm Development

11. In this project, as in Phase I, a major element of the seed industrydevelopment policy is that Agricultural Universities be integrated into theNSP in order to ensure supplies of adequate quantity and quality of breederand foundation seed. In the past, the seed industry has suffered from short-ages and poor quality of seed of these critical generations. Under Phase I,the development of the following University farms were financed so that theymight fulfill their respective roles in the seed production process: AndhraPradesh, Haryana, Universities of Akola, Parbhani and Rahuri in Maharashtra,and Punjab. University farms to be financed under this project are in Bihar,Bangalore and Dharwar in Karnataka, Gambharipali and Patha in Orissa, Rojriand Umedgunj in Rajasthan, and Kanpur and Faizabad in Uttar Pradesh.

12. Some Universities do not have adequate land available to meet theirfoundation seed target under the project. State governments have agreed thatthese Universities would be given additional land to meet the projectrequirements.

13. In Rajasthan, the 596 ha Umedgunj Farm of State-Agro IndustriesCorporation in Kota district would be transferred to the University for seedproduction. At the present time 315 ha is under cultivation, 246 ha irrigatedby canal and 69 ha by lift irrigation. Foundation seed would be produced on307 ha in the rabi season and 163 ha in kharif. Relevelling of the field andthe cleaning and construction of drains are extremely important for the im-proved productivity and protection against salinity build up. Past attemptsto level additional land on the farm was found to be very expensive becauseof poor planning, the area selected, and the use of improper land levellingequipment (bulldozers). Areas being considered for reclamation would there-fore be mapped, surveyed, and evaluated as to soil quality, salinity, drainage,cost of supplying water and cost of development before a decision is made.Funds for the development of an additional 50 ha as well as for relevellingland in production have been included in the project.

14. Development of a University farm in Sriganganagar district (Zone I)is conditional upon the University receiving title to 1,000 ha of its choiceout of the 4,000 ha undeveloped Rojri Farm. A complete farm plan needs tobe drawn up immediately for the development of this farm so that work canstart without delay. An interim agreement would be made with the SFCI whichwould allow the University to oversee the production of required foundationseed on Suratgarh Farm while the first 500 ha of the Rojri Farm is beingdeveloped. The University proposal calls for the farm management and engi-neering unit to work at Rojri Farm in its three year development while theseed production staff would work at Suratgarh supervising the production offoundation seed. Foundation seed production in Zone I would be on 832 ha inrabi and 190 ha in kharif, with the major rabi crop being wheat. Because ofthe high investment required in equipment, water courses, land development,buildings and staff, it is proposed that there would be advantages to contractout to SFCI some of the wheat foundation seed to be grown under University

ANNEX 4Page 4

supervision, until the farm is firmly established and the production programadjusted to fully utilize the required additional investment. By contractingout some or all the wheat a smaller initial development is possible with ahigher cropping intensity and therefore better utilization of capital. Irri-gation is required for crop production and would be supplied by the RajasthanCanal through the Rojri Distributary. Along with providing the title to theUniversity farm at Rojri, GOR must ensure an adequate supply of water to thefarm to secure full production on all this land during both cropping seasons.The assured supply would nsed to be at least 2-1/2 to 3 times the presentwater allocation of 0.13 m /sec per 400 ha on a continuous basis.

15. Government of Orissa would transfer Gambharipali Farm (208 ha) andPatha Farm (135 ha) to Orissa University of Agriculture and Technology.Gambharipali would be of adequate size to handle its projected foundationseed requirements through the next five years. Patha would, however, need tocontract out, under University supervision, part of its projected 116-195 haof rabi season requirement since there is only 101 ha of cultivable land inthis farm. Patha's foundation seed crop production in project year five is91 ha of groundnut and 104 ha of potato.

16. Uttar Pradesh has three Universities producing breeder seed andfoundation seed. Only two of the University farms are to be developed underthe project at Kanpur and Faizabad'. Pantnagar University was included in theTarai Seeds Project (Loan 614-IN). Kanpur is a well established Universitywith 22 farms, but foundation seed production would be confined to its Kanpurand Mathura farms which have a total of 1,530 ha with about a third of itunder cultivation. Project projections call for peak production to be reachedin year four of 466 ha rabi crop and 132 ha of kharif crop.

17. Faizabad is a new University which started the development of itsfarm in 1976. It has planned to complete 240 ha of development by 1980.This University requires 353 ha for rabi crop in 1981. To meet this, it musthave an additional 120 ha land developed by mid 1981. Assurance was given byGOUP that adequate land would be transferred to the University for thispurpose.

18. Karnataka University of Agriculture Sciences campuses at Bangaloreand Dharwar would be responsible for foundation seed production in Zone I andZone II respectively. Dharwar has ample land locally to handle its 90 ha offoundation seed production for Zone II as projected under the project. GOK'soriginal proposal to develop land at seven widely dispersed farms for theproduction of 422 ha of rabi season and 16 ha of kharif season foundation seedfor Zone I would have caused problems--supervision and production would becomemore difficult and expensive where there are so many widely separated locationsof production. Some dispersement might be warranted because of the isolationrequirement of the hybrid crops. It was therefore agreed that an effort wouldbe made to consolidate the seed foundation production wherever possible andto present a complete farm plan for development. Out of some 1,900 ha of

ANNEX 4

Page 5

developed land available, 654 ha has adequate water supply. A good'- tubewellin Karnataka can irrigate 30-40 ha. Provision has therefore been made foradditional 16 tubewells instead of the 31 originally proposed by GOK.

19. Foundation seed production in Bihar would be undertaken by RajendraAgricultural University. Projections indicate that in project-year one, 252ha of rabi crop would be required rising to 763 ha by year four. The largestrequirement is for potato, 196 ha in year one and 507 ha by year four. Potatoseed production could be contracted out under University supervision. There-fore, provision has been made for the development of only 260 ha for wheat andmaize foundation seed.

20. The extent and type of development vary considerably betweenUniversity farms. The proposed investments are summarized in Table 1. Themain items of investment are farm machinery and land development includingreshaping, and irrigation facilities. The purchase of the farm machineryand much of the development work would take place early in the project toenable the University farms to commence production of foundation seed as soonas possible. By the end of project year two, all but one of the Universityfarms would be ready for full scale production of foundation seed. Rajasthan'sRojri Farm is the exception as it is a new development. Contract productionunder University supervision would be arranged until all production could betaken up at Rojri.

21. Funds for University farm development would be made available byGOI (25%) and participating banks (75%) (see Annex 12). Foundation seedgrown by the Universities would be sold at prices yielding a reasonablefinancial rate of return on capital employed at the time the farms havereached full development (see Annex 14).

Water Supplies

22. University farm planners must carefully analyze the quantity ofwater available throughout the year and the reliability of supplies especiallyin rabi. Project projections show that 83% of foundation seed productionwould be in rabi when irrigation is required. Most canal water allotmentsare inadequate for full crop production. Because of the importance of pro-viding quality seed at minimum cost, state governments would give seriousconsideration to allocating adequate supplies of water to the Universitiesfor the production of breeder and foundation seed. University farms whichmust depend on groundwater and those which are required to supplement theircanal water supplies would consult or conduct current groundwater surveys todetermine dependability of their supply. Once the groundwater supply isdetermined adequate and dependable, the source of power for pumping shouldbe considered. Where electrical power is limited to 12-16 hr/day or thereis a history of repeated disruption or shortage, diesel power for pumpingwould be considered. In areas where groundwater supplies are determined tobe doubtful or inadequate alternative sites for University breeder andfoundation seed production would be considered.

ANNEX 4Page 6

Land Development and Maintenance

23. All farms would need to be mapped and a general survey made. Fieldsshould be laid out in a rectangular shape and as large as possible for effi-cient use of mechanical farm equipment, while also considering slope andlength of field from the efficiency of water application. Before grading orregrading, the fields would be staked on 30 m squares and cut and fill mapsprepared. Bulldozers are not suitable for this type of precision grading andwould not be used. Tractors with carry-all scrapers or self loading elevatorscrapers would be engaged for this type of land shaping. Where this type ofequipment is not available on a custom contract basis the University wouldconsider purchasing or long term leasing and operating the equipment themselves.

24. Land planes are included in the farm equipment investment andwould be used to finish the land shaping job by making three passes overthe field, two passes crisscrossing in opposite directions and the finalpass in the direction of irrigation. Each field would be land planed intwo directions at least once a year to maintain the field shape.

25. Fields which are shaped for the first time would probably experiencesome yield reduction for the first year or two after the operation dependingon the depth of cut and fill and amendments use to help the recovery. How-ever, yields usually surpass previous yield by the third year due to betterplant stands and more even irrigation.

SFCI Farm Development

26. SFCI which is a corporation wholly owned by GOI operates 12 farmscovering 34,800 ha in nine states and has been producing certified seedfor NSC. NSP policy recognizes that where suitable large farms exist theycould be used to produce certain types of seed more efficiently with lesssupervision than large numbers of small growers. Under Phase I, two SFCIfarms were included for development, Ladhowal in Punjab and Hissar in Haryana.SFCI's Suratgarh Farm, in Rajasthan's Zone 1, is included under this projectfor certified seed production.

27. Suratgarh Farm established in 1956 has about 10,000 ha of culti-vatable land. Farm management is considered capable and crops have shownsteady improvement in yields ranging from 25% to 100% increase over thelast four years. Wheat yields of 2.5 tons/ha and paddy yields of about 4.0tons/ha have been reached in recent years.

28. Suratgarh is a long narrow strip of land about 37 km long and 2 to6 km in width located in the bed of the defunct Ghaggar river. In years ofheavy monsoon large portions of the land are under a slow moving body ofaccumulated rainfall during kharif. More than half of the rabi crop has beenproduced on the resulting residual soil moisture. About one-third of Surat-garh farm is now protected from flooding by a series of protective embankmentsand construction of additional embankments are planned.

ANNEX 4Page 7

29. At present, Suratgarh receives about 2.624 m 3/ec from two different

canals, the Bhakra and the Gang Canal system. The 2.2 m /sec from thi Bhakra

system is available 10 days in a 30 day cycle. The remaining 0.424 m /sec isavailable on a perennial basis. This is not enough water for the 3,500 ha of

wheat to be produced in rabi and 6,100 ha of other rabi crop is dependent onsolely residual soil moisture. Based on rabi cropping, estimated requirementof water would be 6.2 m /sec on a perennial basis, considering that pulses

would require very little irrigation. The Rajasthan Canal Board has agreed,

in princiyle, to meet requirements of the Suratgarh farm at the water allowance

of 0.67 m /sec per 1,000 ha, provided that SFCI agrees to pay a higher pro-rate

irrigation charge for increased water allowance as well as the difference incapitai cost of the distribution system required to carry a volume of water

0.67 m /sec per 1,000 ha instead of 0.38 m /sec per 1,000 ha. The estimateddifference in capital costs is Rs 3.0 M. This capital cost is included inthe project. The improvement in irrigation would benefit the entire farm.

30. Suratgarh farm management has experience in certified seed produc-tion, having produced seed for NSC under contract. Under the Rajasthan sub-project Suratgarh would cultivate up to 4,000 ha in certified seed. Cropsbest suited for Suratgarh's mechanized type of farming would be wheat, paddy,

pulses and oilseed.

31. Investments, other than the prorated cost (para 29) of the enlargedcapacity canal, would be limited to what is required for the development ofthe 4,000 ha located inside the protective embankment on which seed production

would take place. Equipment selection for land shaping and farming were basedon Suratgarh's particular requirements and utilizing equipment similar to thoseaccepted by the Bank for Ladhowal Farm under Phase I. Tractor horsepower wasmatched to the task such as land shaping, land planning, land preparation,planting and cultivating. The number of units needed were determined utilizingthe cropping pattern and crop calendar to determine peak power requirements.

32. The number of units for lanS shaping was based on 2,000 ha of lightreshaping, assuming a volu Ie of 400 m /ha to be moved and 2,000 ha of medium

reshaping with about 650 m /ha. Self-loading elevating scrapers are recommended,as under Phase I, to reduce costs and enable the operators to hold accuracy ofgrade where shallow cuts are to be made as in reshaping. On land where fineshaping was done in 1974, 6 ha test blocks were planted to wheat. The averageyield in 1974/75 was 2.3 tons/ha, 1975/76 2.7 tons/ha and 1976/77 3.5 tons/ha.Farmwise average for the last two years has been 2.5 tons/ha.

33. Investment in additional equipment required to effectively cultivate

the 4,000 ha seed area has been provided under the project (Table 2). Most

of the equipment would be purchased in project year one. The canal work wouldbe slow starting because of surveying and designing. Also, work would have tobe fitted in when the canal is shut down. An alternative is being consideredto make a second canal adjacent to the existing canal which would give more

flexibility to the system and might speed up the completion.

34. Funds for land development would be provided by banks and GOI (Annex

12). Rate of return projections are detailed in Annex 14.

ANNEX 4Table 1

INDIA


Farm and Related Development

Investment Cost Summary 1/

Total Foreign Foreign Year 1 Year 2 Year 3 Year 4 Year 5Cost Exchange ExchangeR'OOO Z R'OOO R'OOO R'000 R'OOO R'OOO R'OOO

Cost ItemIrrigationWell, deep 1,320 20 264 660 660 -

Well 560 20 112 200 280 80

Pump and motor for well 280 20 56 130 130 20

Land Development - EquipmentTractor 110 Hp 1,960 54 1,058 1,960 - - -

Elevating Scraper 7.3 m3 888 52 462 888 - - -

Land Plane 234 50 117 234 - - -

Motor Grader 450 62 279 450 - - -

Land Development - Operationby force account 2,746 34 934 916 915 915by contract 2,670 15 400 1,130 1,290 250 -

Fencing 400 - - 400 - -

Irrigation/Drainage System 4,560 - 990 2,665 905 -

Road Construction & Repair 190 - - 90 100 --

Crop Production EquipmentTractor 70 Hp 2,844 51 1,450 2,844 - - - -

Tractor 50-50 -Hp 2/ 1,440 50 720 960 420 60 - -Tractor 30-40 Hp 2/ 1,000 50 500 750 200 50 - -

Implements & Tools 3,077 35 1,077 2,635 412 30 - -

Land Plane 390 50 195 390 - - -

Combine Harvester 3,285 56 1,840 2,190 365 730 -

Trucks - Small 320 40 128 240 80 - -

Trucks - Large 160 40 64 160 - - - -

Spares for Equipment (20%) 3,209 50 1,605 50 500 909 1,000 750

Buildings 5,360 15 804 1,630 2,890 840 - -

Base Costs 37,343 32 12,065 19,897 10,907 4,789 1,000 750

Physical Contingencies 3/ 2,985 28 847 1,515 992 390 50 38

Total Costs (excluding PriceContingencies) 40,328 32 12,912 21,412 11,899 5,179 1,050 788

Totals net of 30-50 Hp tractors 4/ 37,254 31 11,374 19,258 11,118 5,040 1,050 788

1/ Details at Table 22/ To be omitted from project costs because GOI reserves procurement.3/ At 10% for all items excluding crop production equipment and associated spare parts for which 5% has been applied.4/ Proportionate amounts of spare parts and physical contingencies have been deducted.

August 11, 1.977

INDIA


Investments on Large Scale Seed Farms

University Farms SFCI Farm

Bihar --- Karnataka…-------- ---------- Orissa…---------- -------- Rajasthan--------- --- Uttar Pradesh------- SuratgarhUnit Rajendra Bangalore Dharvar Gambharipali Patha Rojri Lhmedgunj Kanpur Faizabad RajasthanCost 260 Ha 460 Ha 150 Ha 250 Ha 135 Ha 1,000 Ha 1/ 365 Ha 475 Ha 360 Ha 10,100 Ha 2/

Unit R No. R'0O0 No. R.OO Ro R'OQQ No. ROOO No. R.OOO No. RI.O0 N R'OO00 No. R'OO0 No. R'000 No. R'000Cost Item

IrrigationWell, deep No. 55,000 16 880 8 440Well Ho 20,000 4 80 12 240 12 240Pump and motor for well No. 5,000 16 80 8 40 9 20 4 20 12 60 12 60

Land Development-EquipmentTractor 110 Hp No. 280,000 7 1,960Elevating Scraper 7.3 m No. 222,000 4 888Land Plane No. 78,000 3 234Motor Grader No. 450,000

1 450

Land Development - Operationby force account 3/ Ha 686.50 4,000 2,746by contract - Lump Sum 200 300 120 100 100 700 350 400 400

Fencing 33 6,060 200 6,060 200Irrigation/Drainage System - Lump Sum 180 520 400 225 335 3,000Road Construction & ReDair - Lump Sum 150

Crop Production EquipmentTractor 70 Hp No. 158,000 1 158 1 158 1 158 1 158 1 158 13 2,054Tractor 40-50 4/ No. 60,000 2 120 5 300 2 120 2 120 1 60 4 240 4 240 2 120 2 120Tractor 30-404/ No. 50,000 2 100 2 100 1 50 1 50 1 50 3 150 3 150 1 50 2 100 4 200Implements & Tools variable 5/ 262 252 53 125 100 430 210 105 140 1,400Land plane No. 78,000 1 78 1 78 1 78 1 78 1 78Combine Harvester No. 365,000 1 365 1 365 1 365 1 365 5 1,825Trucks - Small No. 80,000 1 80 1 80 2 160Trucks - Large No. 160,000 1 160

Spares for Equipment (20%.) - - 160 146 45 59 42 316 272 175 192 1,802

8uildings 6/ _ Lump Sum 010 200 90 100 100 2,500 550 110 1 600

Base Costs 1,268 2,518 958 754 752 5,617 2,893 1,976 2,298 18,309

Physical Contingencies 7/ 80 208 82 58 63 467 208 145 172 1,502

Total Cost (excluding PriceContingencies) 1,348 2,726 1,040 812 815 6,084 3,101 2,121 2,470 19,811

1/ Total size of farm is 1,000 hectare. Only 500 hectare would be developed under the project.2/ Total size of farm is 10,100 hectare. Land development equipment would only be provided for seed area of 4,000 hectare. Irrigation system would benefit the total ar&a,3/ Development operations would be undertaken by farm personnel with equipment that would be purchased under the project. The cost include labor, fuel, lubricants

and oil. Replacement parts are included under "Spares".4/ To be omitted from project cost because GOI reserves procurement.5/ Costs vary with number and kind of tractors that would he purchased for a farm and the tools and implements that presently are already available.6/ Residential and farm buildings only. Buildings for seed cleaning, office and laboratory is included under foundation seed production, Annex 3.7/ Physical contingencies at 10% for all items excluding crop production equipment, and associated spare parts for which 5X has been applied.

August 11, 1977

ANNEX 5Page 1

INDIA


Seed Processing and Storage

Introduction

1. The proposed Second National Seed Project would establish StateSeed Corporations (SSC) with new seed processing plants in the five parti-cipating states and provide adequate storage facilities to help meet theanticipated demand for high quality seed.

2. The term "processing" encompasses the various operations involvedin preparing harvested seed for sale as certified seed i.e., drying, shelling,pre-cleaning (scalping), cleaning, sizing, grading, treating and packaging."Storage" in the present context refers to the period between the completionof the processing activities and the distribution from the processing plant.

3. Of the various kinds of seed covered under the project paddy andmaize require regular drying. Both are harvested at relatively high moisturecontents (16-22%) to minimize shattering losses, field deterioration andinsect infestation prior to harvest. Drying of other kinds of seed would benecessary only infrequently as might be the case in the event of unseasonalrains during the harvest - threshing period.

4. Shelling is an essential post-drying, pre-cleaning operation formaize, which is dryed on the cob. Groundnuts are shelled mechanically in mostdeveloped countries. Mechanical shelling is, however, a very damaging opera-tion at best, and very specialized equipment including color sorters, have tobe used to remove the severely damaged seed. Even then, germination willrapidly decrease unless the seed is stored under conditions of about 70Cand 60% relatively humidity. Therefore, the pods would be only roughcleaned to remove soil clods and peds and then would be packaged andmarketed along with an appropriate quantity of dust formulation seed treat-ment (fungicide). The farmer would hand shell the seed just before plant-ing and apply the treatment material.

5. Pre-cleaning conditions the seed and facilitates final cleaning,sizing and upgrading operations. Wheat, paddy, maize, barley, oil mustard,rape, gram, pulses, jute, linseed and soybeans would be pre-cleaned orrough cleaned with a scalper to remove materials substantially larger,smaller or lighter than good seed.

6. After pre-cleaning the seed would be cleaned with an air-screencleaner which closely separates from the seed any lighter, smaller or largermaterial. Additional cleaning/sizing/upgrading would usually not be required

ANNEX 5Page 2

for seed like pulses, grains, linseed, rape and oil mustard. Wheat, paddy,barley and hybrid bajra seed, however, normally would receive further clean-ing with an indent cylinder separator to remove short and cross-broken seed.Maize seed requires at least separation of the "rounds" from the "flats", andhybrid jowar often necessitates density grading (gravity table) to separateseed that remain enclosed in the glumes. Gravity separators would also beused for many other kinds of seed to remove insect damaged, badly deteriorated,and immature seed.

7. Hybrids, wheat and paddy would be treated with a fungicide. Thetreatment would usually be applied to about 25-35% of the tonnage duringprocessing, while the remainder would be treated just before distribution.In years of slack seed demand this procedure would permit the SSC to disposeof excess production as foodgrain, thus minimizing losses to the Corporation.

8. Processing of seed potatoes is quite different. The major thrustof the multiplication/production/processing scheme is to minimize transmis-sion of virus and other diseases. This would be accomplished through tuberindexing, establishment of clonal populations, vigorous roguing, and produc-tion in low aphid areas. After harvesting, the potatoes would be sorted forsize, and tubers in the size range of 2.5 cm to 5.5 cm in diameter would beretained for seed. Sorting would be done by hand. Mechanical sizers orgraders have been tried unsuccessfully in India with considerable damage tothe potatoes and subsequent rot during storage. Also, labor is plentifuland inexpensive during the January-February harvesting/processing season.After sorting, the selected seed tubers would be packaged in jute bags andplaced in cold storage (about 50 C, 80-85%, relative humidity) until distribu-tion before the next planting season.

Existing Processing Capacity and Phase I Plans

9. The seed processing capacity available with NSC, the state govern-ments and the private sector would be inadequate to meet the quality andquantity of projected seed demand under the National Seed Program (NSP). Toincrease processing capacity to the seed demand levels anticipated for 1979/80additional capacity of 55,000 tons for cereal crops and 13,700 tons for cottonhave been provided under the Phase I project. In this second phase of NSP, tobe constructed, processing capacity would be raised further to the level ofdemand projected for 1983/84. The estimated demand for the major cereal cropsis presented in Annex 13, Table 5. The forecast is intentionally conservativebecause the detailed demand survey and forecast contemplated under Phase I isyet to be completed and other data presently available is incomplete.

10. In the five project states SSC would take over public sector pro-cessing facilities in the project areas unless utilization of the plantsand/or equipment is uneconomical.

ANNEX 5Page 3

11. Seed processing facilities are essentially non-existent in thepublic sector in Bihar and Orissa. Seed produced by the Department ofAgriculture is not-cleaned adequately, seed quality accordingly is low. InBihar, private sector capacity amounts to about 500 tons per season. InOrissa, there is one private processor operating a plant of 1,000 tonsnominal seasonal capacity. Three cold stores with a capacity of 3,600 tonsare operated in the project area by the Orissa state government. The storeswould be transferred to the SSC.

12. Public sector capacity in Karnataka is about 5,000 tons most ofwhich is owned by Karnataka Agro-Seed Corporation. Of this capacity 4,000tons, including one NSC plant would be taken over by SSC. An estimated 7,500tons seasonal processing capacity is available in the private sector which ismainly involved in the processing and distribution of hybrid cereal seed.

13. The Rajasthan Department of Agriculture and the Rajasthan Agro-Industries Corporation have a number of small processing plants scatteredthroughout the state. Some of these would be useful in terms of interimcapacity, but most would be needed subsequently to process seed of cropsproduced outside the aegis of NSP. NSC presently operates some high capacitycleaning equipment of about 7,500 tons in a rented building at Suratgarh.This equipment would be taken over by SSC.

14. In Uttar Pradesh, the Pantnagar project area which encompasses TDChas adequate processing facilities and much experience in seed processing.TDC which would become part of the U.P. Seed Corporation has a seasonal capa-city of 25,000 tons and does not require further expansion under the project.In the Kanpur project area, Chandra Shekar Azad University of Agriculture andTechnology (CSAUAT) has recently established a 2,500-3,000 ton processingplant on its campus. This would provide interim capacity for certified seedprocessing until it will be used exclusively for foundation seed operationsby CSAUAT. In the project area around Faizabad there are no processingfacilities.

New Processing Plants

15. Plant Capacity. The capacities indicated above are nominal capaci-ties based on the possible throughput of wheat in one processing season,assuming a 60 day season and two 8 hour shifts per day. Since the hourlythroughput varies considerably for various kinds of seed and other operatingconditions may differ at different plants and regions, nominal seasonalcapacity has only a very general meaning in terms of measuring the additionalcapacity required.

16. For planning new processing plants the following factors have beentaken into account:

- targeted production on the basis of projected demand (Tables 1and 2);

ANNEX 5Page 4

existing processing facilities (paras 10-14);

length and number of processing seasons (sizable

variations exist for rabi, rabi-summer and kharif

crops);

characteristics of the crops to be processed;

probable number and size of seed lots to be processed

(to achieve economies of scale seed of the same variety

would be bulked before processing);

instantaneous capacity of various machines and conveying

systems; and

number of shifts.

Based on these factors requirements for additional capacity have been deter-

mined individually for each of the SSC that would be established under the

project, and investments in processing plants and equipment have been estab-

lished accordingly (Tables 4 to 8).

17. Plant Design and Processing Concept. The principle alternative

designs considered were (i) a horizontal flow plant and (ii) a vertical flow

(multi-story) plant. For reasons of lower capital costs, similar operating

costs, operational simplicity, ease of supervision and quality control, the

experience with TDC and the expressed preference of NSC staff, the horizontal

flow plan was selected as more appropriate to India's seed industry. A sug-

gested layout for a 10,000 ton capacity plant is in Figure 1.

18. Drying (primarily for maize and paddy) would be provided in the form

of round metal bins with perforated metal floors and coupled heater - fan units

for paddy, and rectangular masonary bins with slatted floors and coupled heater -

fan units for maize. Although the dryers are of the types preferred for each

of the two kinds of seed, they can be used interchangeably, and also for other

kinds of seed.

19. Intake facilities would primarily be for sacked seed, but also sat-

isfactory for bulk seed. The receiving or reception area would be spacious

enough for temporary storage of raw seed taken in excess of cleaning capacity.

20. The processing plant would be spacious enough to permit later

expansion, and would be provided with two intake pits so as to permit pro-

cessing of two kinds of seed at the same time.

21. Processing machinery would be of standard manufacture. Treating

and packaging equipment would have ample capacity to permit high volume

treating and packaging of seed late in the season (see para 7). Internal bag

ANNEX 5Page 5

transport would be by hand carts. The design would permit the use of fork-lift, palletized handling of seed. At present wage rates their use could,however, not be justified. The number and size of air screen cleaners woulddiffer from plant to plant in accordance with capacity requirements and thefactors pertinent to capacity determination (para 16). Other machinery andequipment would also be procured according to individual plant requirementswithout predetermining standard plant size. 1/

22. Ventilated storage would be provided for about 60% maximum tonnageduring the peak season (usually rabi). Additional storage would be in thereceiving area, in the processing area and in bulk bins. Storage would alsobe available in transit stores which would be constructed under Phase Iprovisions, and storage could be rented at State and Central WarehousingCorporation godowns. Conditioned storage facilitirs (about 150 C; 60% r.h.or lower) would be provided on the basis of 200 M minimum per plant, withadditional space in accordance with the seasonal peak of hybrid seed tonnageand other seeds requiring conditioned storage.

23. Potatoes and groundnuts would be handled separately from otherkinds of seed, although handling facilities could be located in the samecomplex. Groundnuts could be stored together with other seed, while potatoesmust be placed in cold storage (3-40 C; 80-85% r.h.). Potato cold storagewould be provided under the project for part of the total requirements.Additional storage would be rented. Sorting and grading of both potatoesand groundnuts would be done by hand on conveyor belts. A suitable laborintensive system would be developed by NSC.

24. Investments. In Bihar, one new cereal plant would be establishedwith a nominal seasonal capacity of about 8,500 tons. A potato processingcenter would also be set up with cold storage facilities of 9,000 tons (In-vestment Costs at Table 4).

25. Orissa would have a similar arrangement on a smaller scale. Onecereal processing plant with a 5,000 ton processing capacity in the Sambalpurdistrict and a potato-cum-groundnut facilities including new cold storage for1,000 tons would be provided. Processing of potato and groundnut seed would beconcentrated in the Cuttack, Puri districts (Investment Costs at Table 5).

26. Karnataka would have two processing centers, one in Chickballapurand one in Harihar. New nominal seasonal plant capacity for cereals wouldamount to about 5,000 tons in Chickballapur and approximately 3,000 tonsin Harihar. In addition, Chickballapur would obtain potato processing equip-ment and cold storage for 1,000 tons (Investment Costs at Table 6).

1/ In Phase IJprocessing plant plans are based on modules of 5,000 and10,000 ton nominal seasonal capacity.

ANNEX 5Page 6

27. In Rajasthan, there would be three plant sites, one site at Surat-garh that would take over most of the equipment from the existing NSC plantand two completely new plants, one in the Sriganganager project area the otherin the project area around Kota. Each new plant would be provided with equip-ment of a nominal seasonal capacity (as defined in para 15) of 5,000 tons.The effective capacity would, however, be at least twice as high, particularlyin the Sriganganager plant, because the dry climate permits a processing sea-son of at least 120 days (Investment Costs at Table 7).

28. Uttar Pradesh would receive two new processing plants, one each inthe Kanpur and Faizabad project areas. TDC in the Pantnagar area does notrequire additional investment. Only cold storage of 1,000 tons would be pro-vided under the project. The new plant in Kanpur would have a nominal seasonalcapacity of about 8,000 tons, the plant at Faizabad approximately 7,000 tons.Like in Rajasthan, effective capacities in both plants would be higher. Bothcenters would also include cold storage facilities of 1,000 tons each togetherwith potato handling systems (Investment Costs at Table 8).

29. SSC Headquarters would be established in each state. Investmentcosts have been detailed at Table 9.

30. Plant Design and Procurement. SSC would contract with NSC for plantdesign, preparation of tender documents and procurement and installation ofequipment. Tendering and supervision of civil works contracts would be han-dled by SSC or, if they desired, by NSC on their behalf.

31. NSC has an engineering section with considerable design capability.However, because of the lacking experience in designing plants of the sizeand equipment range proposed for SSC, provision has been made in Phase I forconsultant services to help in the design. No additional provision is re-quired under this project. The designs would be submitted to IDA for reviewbefore tendering commenced.

32. All equipment would be procured on the basis of international com-petitive bidding. Civil works contracts would be let after competitivebidding advertised locally. Individual works would be small and widelyscattered and thus unlikely to attract international firms.

33. Interim Capacity. Completely new plants would be fully operationalonly by kharif 1979. In Orissa and Bihar, where no processing capacity ispresently available, cereal seed processing on a limited scale would commenceonly in kharif 1978 (Orissa) and rabi 1979 (Bihar). Small quantities of seedpotatoes could be processed in existing areas and storage beyond the facili-ties to be transferred to SSC (Orissa) could be rented.

34. In Uttar Pradesh, seed processing would be expanded on existing TDCequipment until the new capacity comes on stream. In addition, the new equip-ment at CSAUAT would be utilized (para 14).

35. Rajasthan and Karnataka would undertake a bridging operation andpurchase a simple range of equipment including treaters, cleaners and baggers,

ANNEX 5Page 7

that would be located in existing facilities and supplement the capacity

presently available. In Karnataka, the present practice of utilizing private

sector capdclty on a custom-hire basis would be continued as an interim mea-

sure. The interim equipment purchases would require only negligible design

requirements, specifications would be simple and procurement could be swift.

Retroactive financing has, therefore, been proposed. When construction of the

new plants has progressed sufficiently, the equipment would be transferred to

the new sites.

36. Operating Costs together with the proposed staffing pattern are

detailed in Tables 10, 11 and 12. The staffing of processing plants with

permane.L employees would depend on the amount of annual throughput. Class I

plants with annual production of 15,000 tons or more would have fixed staff

costs approximately 50% higher than Class II plants with an annual throughput

if less than 15,000 tons (Table 10). All plants in Uttar Pradesh, the Bihar

plant and the Suratgarh processing facility in Rajasthan would be in the

group of Class I plants. All other processing centers would be of the Class II

size.

37. General SSC overhead costs vary from SSC to SSC and over the years

until SSC reaches full development in year 5 (Table 11). Seed Production

Assistants would be employed at the headquarter's production division based

on the hectarage in production during the major season (usually rabi). One

Seed Production Assistant would supervise 300 ha of non-hybrid crops and 200

ha of hybrids, except in Karnataka where one Seed Production Assistant would

cover 250 ha overall. In the low hectarage season, Seed Production Assistants

not being required in the production division could be employed as foremen in

the processing plants at a rate of 5 months (0.42 man-years) per Assistant.

In Class I plants one foreman would be employed on a full-time basis for each

of the sections: Receiving, Warehousing, and Drying and Processing. In

Class II plants permanent foremen would be one for Drying and Processing and

one for Warehousing. All other foreman positions would be filled by transfer-

ring Seed Production Assistants for 5 months each to the processing plant.

The related payroll cost would be charged to processing. A similar arrange-

ment would apply to Seed Production Officers who would work in the low season

at the SSC plants as Shift Supervisors. In Class I plants one Shift Supervi-

sor would be permanently working at the plant and three Seed Production Offi-

cers would be working as Shift Supervisors for 5 months each. In Class II

facilities only 2 Seed Production Officers would work part-time in addition

to the permanent Shift Supervisor.

38. Variable processing costs for different kinds of seed have been

estimated taking into consideration NSC/TDC experience (Table 12). Variable

labor requirements for Receiving, Processing and Warehousing have been pro-

jected on the basis of 50 man months per 1,000 tons of clean wheat or

potato seed. The corresponding labor requirements for paddy and hybrid

seed are estimated to be 62.5 and 75 man months respectively.

ANNEX 5Table I

INDIA


Planned Production of Clean Certified Seed 1/(in '000 tons)

77-78 78-79 79-80 80-81 81-82 82-83(Estimate)

Rabi Kharif Rabi Kharif R& h *abi Kharif Rabi Kharif Rabi Kharif

RAJASTHANWheat 8.0 - 10.0 - 12.0 - 23.0 - 24.3 - 25.0Paddy - 0.3 - 0.5 - 0.5 - 1.3 - 1.4 - 1.5Hybrids - 0.6 - 1.4 - 1.4 - 1.8 - 2.2 - 2.2Other 0.6 0.3 0.8 0.4 1.9 0.4 2.8 2.2 3.6 2.3 3.7 2.3

State-Total 8.6 1.2 10.8 2.3 13.9 2.3 25.8 5.3 27.9 5.9 28.7 6.0

UTTAR PRADESHWheat 20.5 - 21.0 - 24.5 - 32.0 - 37.0 - 42.0 -Paddy - 10.0 - 10.5 - 12.6 - 14.8 - 16.8 - 18.1Hybrids - 1.5 - 1.6 - 1.7 - 1.9 - 2.0 - 2.3Other 0.1 0.1 0.1 0.1 0.9 0.3 2.3 0.5 3.3 0.7 4.0 1.0

State-Total 20.6 11.6 21.1 12.2 25.4 14.5 34.3 17.2 40.3 19.5 46.0 21.4

BIHARWheat - - - - 1.5 - 4.0 - 6.0 - 7.0 -Paddy - - - - - 1.0 - 1.5 - 2.5 - 3.0Hybrids - - - - 0.3 0.5 0.6 1.0 0.9 1.6 1.2 2.8

State-Total 1.8 1.5 4.6 2.5 6.9 4.1 8.2 5.8

ORISSA7ayMy - - - 0.4 2.0 3.5 2.0 4.5 2.5 5.0 2.5 5.5

Other - - - 0.1 0.1 0.2 0.2 0.2 0.2 0.2 0.2 0.2State-Total 0.5 2.1 3.7 2.2 4.7 2.7 5.2 2.7 5.7

KARNATAKAPaddy - 0.6 - 0.8 - 0.8 - 0.9 - 1.0 - 1.2Hybrids 3.0 1.3 3.3 1.3 6.0 1.5 6.4 1.7 7.1 1.9 8.1 2.1Other - 0.3 - 0.3 - 0.3 0.1 0.3 0.1 0.4 0.1 0.4

State-Total 3.0 2.2 3.3 2.4 6.0 2.6 6.5 2.9 7.2 3.3 8.2 3.7

CROP TOTALSWheat 28.5 - 31.0 - 38.0 - 59.0 - 67.3 - 74.0 -Paddy - 10.9 - 12.2 2.0 18.4 2.0 23.0 2.5 26.7 2.5 29.3Hybrids 3.0 3.4 3.3 4.3 6.3 5.1 7.0 6.4 8.0 7.7 9.3 9.4Other 0.7 0.7 0.9 0.9 2.9 1.2 5.4 3.2 7.2 3.6 8.0 3.9

Total Production 32.2 15.0 35.2 17.4 49.2 24.7 73.4 32.6 85.0 38.0 93.8 42.6

1/ Includes all cereals and other crops for which the same equipment is used in seed processing.Seed production of potato, groundnut and cotton is detailed at Table 2.

June 28, 1977

ANNEX 5Table 2

INDIA


Planned Seed Production of Potato, Groundnut and Cotton -/

(in '000 tons)

77-78 78-79 79-80 80-81 81-82 82-83

(Estimate)

RAJASTHANGroundnut 0.1 0.4 0.4 2.0 2.2 2.3

Cotton - 0.1 0.1 0.2 0.2 0.2

UTTAR PRADESH

Potato 0.6 0.8 1.3 1.8 2.4 3.0Groundnut - 0.1 0.2 0.3 0.3 0.4

BIHARPotato - 0.5 7.0 15.0 18.0 22.5

ORISSAPotato 0.5 1.0 3.3 3.9 4.4 5.0Groundnut - - 1.0 1.5 1.8 2.0

KARNATAKAPotato 1.0 1.7 1.8 2.0 2.3 2.5

CROP TOTALS

Potato 2.1 4.0 13.4 22.7 27.1 33.0

Groundnut 0.1 0.5 1.6 3.8 4.3 4.7

Cotton - 0.1 0.1 0.2 0.2 0.2

Total Production 2.2 4.6 15.1 26.7 31.6 37.9

1/ Potato seed is grown in rabi season; cotton seed is grown in kharif season;groundnut seed is a kharif crop in Rajasthan and Uttar Pradesh, in Orissa

it is grown as a rabi crop.

June 28, 1977

ANNEX 5Table 3

INDIA


State Seed Corporations - Investment Costs Summary

(Rs. '000)

Total ForeignCosts Exchange --- … ---- Phasing ------------

Rs. '000 % Rs. '000 Year 1 1/ Year 2 Year 3 Year 4

BIHAR (Tables 4 and 9)Plant Sites & Civil Works 13,682 15 2,015 2,736 5,473 5,473Plant Machinery & Equipment 6,282 39 2,479 628 1,885 2,513 1,256Headquarters 1,393 10 137 139 627 627Physical Contingencies 1,719 22 383 172 516 1,031

Subtotal 23,076 22 5,014 3,503 8,157 9,129 2,287

ORISSA (Tables 5 and 9)Plant Sites & Civil Works 6,257 9 574 1,251 2,503 2,503Plant Machinery & Equipment 4,745 36 1,690 475 1,423 1,898 949Headquarters 1,329 10 131 133 598 598Physical Contingencies 960 16 154 _ 96 288 576

Subtotal 13,291 19 2,549 1,859 4,620 5,287 1,525

KARNATAKA (Tables 6 and 9)Plant Sites & Civil Works 7,142 7 465 1,428 2,857 2,857Plant Machinery & Equipment 6,449 40 2,611 1,935 1,935 1,290 1,289Headquarters 1,687 10 166 169 759 759Physical Contingencies 1,153 17 191 115 346 692

Subtotal 16,431 21 3,433 3,532 5,666 5,252 1,981

RAJASTHAN (Tables 7 and 9)Plant Sites & Civil Works 16,314 8 1,258 3,263 6,526 6,525Plant Machinery & Equipment 11,424 39 4,499 3,427 3,427 2,285 2,285Headquarters 1,943 10 192 194 875 874Physical Contingencies 2,332 16 365 233 700 1,399

Subtotal 32,013 20 6,314 6,884 11,061 10,384 3,684

UTTAR PRADESH (Tables 8 and 9)Plant Sites & Civil Works 14,066 10 1,440 2,813 5,626 5,627Plant Machinery & Equipment 9,403 40 3,738 940 2,821 3,761 1,881Headquarters 2,153 10 212 215 969 969Physical Contingencies 2,016 17 351 __202 605 1,209

Subtotal 27,638 21 5,741 3,968 9,618 10,962 3,090

Total State Seed Corporations 112,449 20 23,051 19,746 39,122 41,014 12,567

1/ Includes expenditures in pre-project year

8/1/77

ANNEX 5Table 4;Page 1

INDIA


Bihar SSC - Investment Costs of Processing Plants and Storage Facilities

UYIT COST Cereals Potatoes TOTAL Foreign ExchangeUNIT (Rs. '000) No. Rs. '000 No_. Rs.0OO (Rs. '000) Rs. '000

1. Plant Site ha Variable 3 120.0 4 120.0 240.0

2. Site Development 2 ha 150.0 3 450.0 4 600.0 1,050.0 - -

3. BuildingsReceiving, pre-processing M

20.4 480 192.0 - - 192.0 - _

Intake pit / No. 20.0 2 40.0 - - 40.0 - -

Drying/bulk storage bins

(1) Metal, round "silo" type No. 55/65.0 3 195.0 - - 195.0 50 97.5

(2)Masonry, .quare type M2

o.6 140 84.o - - 84.o - -

Processing area M2

0.5 600 300.0 - - 300.0 - _

Storage, ventilated M2

o.4 2,800 1,120.0 - - 1,120.0 - -

Storage, conditioned / M2

o.8 200 160.0 - - 160.0 25 40.0

Oold storage (potatoes) M N ton o.8 - - 9,000 7,200.0 7,200.0 25 1,800.0

Preparation/sorting shed X2

0.3 - - 1,600 480.0 480.o - -(potato, groundnut) 2

Offices & laboratory M 0.4 600 240.0 300 120.0 360.0 - -

Ancillary bldgs. & areas 7/ M2 0.2 875 175.0 375 137.0 312.0 - -

Staff quarters M2

0.4 1,000 400.0 500 200.0 600.0 - -

Sub-Total 2,906.0 8,137.0 11,043.0 18 1,937.5

Architect's fee (8% of Sub-Total) 232.5 651.0 883.5Office/lab. furnishings Set 20.0 1 20.0 0.5 10.0 30.0 - -

Fire fighting system Set 75/100.0 1 100.0 0.25 25.0 125.0 - -

Electrical(1) Power distribution - Lump Sum - 70.0 - - 70.0 25 17.5

(2) Internal illumination - Lump Sum - 140.0 - - 140.0 25 35.0(3) Road & boundary lighting - Lump Sum - 100.0 - _ 100.0 25 25.0

Sub-Tyotal 3,568.5 8,823.0 12,391.5 16 2,015.0

4. Machinery/EquipmentDrying equi=ment

(1) Fan/heater unit No. 50.0 5 250.0 - - 250.0 35 87.5*(2) Sweep auger No. 6.o 3 18.0 - - 18.0 95 17.1*(3) Unloading auger No. 10.0 3 30.0 - - 30.0 95 28.5

(4) Portable, inclined No. 10.0 4 40.0 - - 40.0 50 20.0drag - flight conveyor

*Sheller, maize (10 TPH) No. 87.0 1 87.0 - - 87.0 95 82.7Potato - sorting, washing and drying No. 100.0 - - 5 500.0 500.0 25 175.0

system (10 TPH) S/

nveyors, horizontal(I1 20 MT/hr. Y 24M No. 50.0 2 100.0 - - 100.0 30 30.0(2) 10 MT/hr. X 20M No. 30.0 2 60.0 2 60.0 120.0 30 36.o

Vertical bucket elevators(1) 20 MT/hr. X 22M No. 80.0 1 80.0 - - 80.0 35 28.0

(2) 15 MT/hr. X 8M No. 22.0 1 22.0 - - 22.0 35 7.7(3) 10 MT/hr. X 8M No. 18.0 4 72.0 - - 72.0 35 25.2(4) 5 MT/hr. X 8M No. 12.0 8 96.0 - - 96.0 35 33.6

*Scalper - 20 MT/hr. No. 50.0 1 50.0 - - 50.0 95 47.5*Scalper - 10 MT/hr. No. 35.0 1 35.0 - - 35.0 95 33.0

Air-screen cleaner with indentedcylinder senarator*(I) 3.5 MT/hr. No. 250.0 2 500.0 - - 500.0 95 475.0*(2) 1.5 MT/hr. No. 120.0 1 120.0 - - 120.0 95 114.0

*Gravity separator (1 MT/hr.) No. 75.0 2 150.0 - - 150.0 95 142.5*Precision grader/separator 9/ No. 80.0 2 160.0 - - 160.0 95 152.0

Sur9e/holding bins with hopper bottom(l) 2 X2 X1m No. 5.0 2 10.0 - - 10.0 30 3.0(2) 2.5 X 2.5 X 2M No. 10.0 4 40.0 - - 40.0 30 12.0(3) 3 X 1.5 X 0.5M No. 5.0 3 15.0 - - 15.0 30 4-(4) 2 X 2 X 2M No. 5.0 6 30.0 - - 30.0 30 9.0

(5) 1.5 X 1.5 X 1.5M No. 5.0 7 35.0 - - 35.0 30 10.5*Treater, slurry type 7MT/hr. No. 90.0 2 180.0 - - 180.0 95 171.0*Bagger - weighing system with bag closer No. 50.0 3 150.0 - - 150.0 95 142.5*Bag closer - portable No. 10.0 2 20.0 2 20.0 40.0 95 38.o

Bag Carts(1)a2 - wheel (100 kg) No. 1.0 15 15.0 10 10.0 25.0 10 2.5(2) 4 - wheel (800 kg) No. 3.5 10 35.0 10 35.0 70.0 15 10.5

Bag cleaner No. 5.0 2 10.0 - - 10.0 25 2.5Bag conveyor, portable No. 25.0 3 75.0 2 50.0 125.0 30 37.5Dust aspiration system Set 25.0 5 125.0 - - 125.0 30 37.5

Sub-Total 2,610.0 675.0 3,285.0 61 2,016.6

ANNE 5-able 4Page 2

INDIA

SECOND NATIOInAL SED PROJECT

Bihar SSC - Investrent Costs of Processing Plants and Storage Facilities

UNIT COST Cereals Potatoes TOTAL Foreign ExchangeUNIT (Rs. '000) No. Rs. '000 No. Rs. '000 (Rs. '000) T Rs. '000

5. Accessory EqipotVacuurn cleaner (heavy-duty) No. 10.0 3 30.0 - - 30.0 25 7.5Weigh bridge (30 MT) No. 30.0 1 30.0 - - 60.0 30 18.0Air compressor (5 HP) No. 9.0 1 9.0 - - 9.0 4° 3.6Transformer (100 KUA) No. 100.0 1 100.0 1 100.0 200.0 20 40.0Diesel generator (100 KUA) No. 150.0 1 150.0 - - 150.0 30 45.0

Sub-Total 319.0 130.0 449.0 25 114.1

6. Assembly Installation & Electrification 512.6 140.9 653.5(17.5% of sub-totals 4 & 5

7. Miscellaneous Accessories(Platform scales, tarpaulins, 75.0 1 75.0 1 75.0 150.0 15 22.5

sprayers, dusters etc.)

8. VehiclesCar No. 35.0 1 35.0 - - 35.0 25 8.84WD "Jeep" with trailer No. 65.0 2 130.0 2 130.0 260o. 25 65.0Light truck No. 90.0 1 90.0 1 90.0 180.0 25 45.OMotorcycle No. 8.0 3 24.0 2 16.0 4o.0 25 10.0

Sub-Total 279.0 236.0 515.0 128.8

9. Spares (10% of sub-totals 4,5,7 & 8) 328.3 111.6 439.9 20 88.0

10. Lab./Quality Control Equipment Set 130.0 1 130.0 0.4 52.0 182.0 60 109.2

11. Total 8,392.4 10,963.5 19,355.9 24 4,494.2

12. Duties 600.0 8.0 608.o

13. Physical Contingencies / 628.o 989.7 1,617.7 22 371.4

14. Total Processing Plant Cost 9,620.4 11,961.2 21,581.6 23 4,865.6

* Items subject to 40% import duty.Area requirements based on plant capacity.

| Includes leveling and grading, drainage and sewer, water, roads, parking and fencing.3/ Metal "silo" type bins provided for paddy; masonry room type bins for maize.2 Ventilated storage space provided for about 60% maximum seasonal tonnage.5 Cost of air conditioning is included in unit cost.

Cost per M ton based on Central Warehousing Corporation experience.7/ Includes chemical store; bag & certification material store; toilets; maingate with watchman cabin; workshop; general store; drying

floor (except for potato storage area where costs accordingly would be lower by Rs. 38,000). The unit cost isan average for the various areas.To be fabricated in India. Imported mechanical graders have not been successful.

2/ Provided for limited width - thickness (size) grading of maize seed.120 Includes equipment for moisture test, lab model cleaners and graders, hard screen, germinator etc., so as to permit plants to determine

screenings of individual seed lots as well as other quality aspects.Llj At 10% for civil works; 5% for equipment.

August 19, 1977

ANNEXTable Page

INDIA


Orissa SSC - Investment Costs of Processing Plants and Storage Facilities

UNIT COST Sambalpur Bhubaneswar TOTAL Foeign ExchangeUNIT (Rs. '000) No. Rs. '000 No. Rs. '000 (Rs. '000) * Rs. '000

1. Plant Site ha 15.0 3 45.0 2 30.0 75.0 - -2/

2. Site Development ha 150.0 3 450.0 2 300.0 750.0 - -

3. BuildingsReceiving, pre-processing M

2o.4 400 160.0 - - 160.0 - -

Intake pit No. 20.0 2 40.0 - - 40.0 - -Drying/bulk storage bins 1/Metal, round,"silo" type No. 55/65.0 8 440.0 - - 440.0 50 220.0Processing area N

20.5 600 300.0 - - 300.0 - -

2Storage, ventilated M2 o.4 i,8oo 720.0 670 268.o 988.0 - -Storage, conditioned 5/ M 0.8 200 160.0 - - 160.0 25 40.0Cold storage (potatoes) M N ton o.8 - - 1,000 800.0 800.0 25 200.0Preparation/sorting shed y

20.3 400 120.0 600 180.0 300.0 - -

(potato, groundnut) 2Offices & laboratory M 0.4 600 240.0 400 160.0 400.0 - -

Ancillary bldgs. & areas / M2 0.2 875 175.0 375 75.0 250.0 - -Staff quarters M 0.4 912 364.8 667 266.8 631.6 - -

Sub-Total 2,719.8 1,749.8 4,469.6 10 460.0

Architect's fee (8% of sub-total) 217.6 140.0 357.6Office/lab furnishings Set 20.0 1 20.0 0.5 10.0 30.0 - _Fire fighting system Set 75/100.0 1 100.0 0.2 20.0 120.0 -Electrical

(1) Power distribution - Lump Sum - 70.0 - 35.0 105.0 25 26.2(2) Internal illumiLnatior. - Lump Sum - 140.0 - 70.0 210.0 25 52.5(3) Road & boumdary lighting - Lump Sum - 100.0 - 40.0 140.0 25 35.0

Sub-Total 3,367.4 2,o64.8 5,432.2 11 573.7

4. Machinery/Equipment

DrigeluipmentTlFan/heater unit No. 50.0 8 400.0 - - 400.0 35 140.0*(2) Sweep auger No. 6.o 3 18.0 - - 18.0 95 17.1*(3) Unloading auger No. 10.0 3 30.0 - - 30.0 95 28.5(4) Portable, inclined No. 10.0 1 10.0 - - 10.0 50 5.0

drag - flight conveyorPotato - sorting, washing and drying No. 100.0 - - 2 200.0 200.0 25 50.0system (10 TPH) 2/

Conveyors, horizontal(1) 20 MT/hr. X 2

1M No. 50.0 2 100.0 - - 100.0 30 30.0

(2) 10 MT/hr. X 20M No. 30.0 - - 2 60.0 60.0 30 18.0(3) 20 MT/hr. X 28M with tripper No. 100.0 1 100.0 - - 100.0 30 30.0

Vertical bucket elevators(1) 20 MT/hr. X 22M No. 80.0 1 80.o - - 80.0 35 28.0(2) 15 MT/hr. X 8M No. 22.0 1 22.0 - - 22.0 35 7.7(3) 10 MT/hr. X 8M No. 18.0 3 54.0 - - 54.o 35 18.9(4) 5 MT/hr. x 5M No. 12.0 6 72.0 - - 72.0 35 25.2

*Scalper - 20 NT/hr. No. 50.0 1 50.0 - - 50.0 95 47.5*Scalper - 10 MT/hr. No. 35.0 1 35.0 - - 35.0 95 33.2

Air-screen cleaner with indentedcylinder separater

*(I) 3.5 MT/hr. No. 250.0 1 250.0 - - 250.0 95 237.5*(2) 1.5 NT/hr. No. 120.0 1 120.0 - - 120.0 95 114.0

*Gravityseparator (1 Mt/hr.) No. 75.0 1 75.0 - - 75.0 95 71.2Surge/holding bins with hopper bottom(1)2 X 2 X 1M No. 5.0 2 10.0 - - 10.0 30 3.0(2) 2.5 X 2.5 X 2M No. 10.0 2 20.0 - - 20.0 30 6.o(3) 3 X 1.5 X 0.5M No. 5.0 2 10.0 - - 10.0 30 3.0(4) 2 X 2 X 2M No. 5.0 5 25.0 - - 25.0 30 7.5(5) 1.5X 1.5X 1.5M No. 5.0 5 25.0 - - 25.0 30 7.5

*Treater, slurry type 7 MT/hr. No. 90.0 1 90.0 - - 90.0 95 85.5*Bagger - weighing system with bag No. 50.0 2 100.0 1 50.0 150.0 95 142.5

closer*Bag closer - portable No. 10.0 1 10.0 2 20.0 30.0 95 28.5Ba Carts

(1) 2 - wheel (100 kg) No. 1.0 10 10.0 10 10.0 20.0 10 2.0(2) 4 - wheel (800 kg) No. 3.5 10 35.0 10 35.0 70.0 15 10.5

Bag cleaner No. 5.0 1 5.0 - - 5.0 25 1.2Bag conveyor, portable No. 25.0 3 75.0 2 50.0 125.0 30 37.5Dust aspiration system Set 25.0 4 100.0 - - 100.0 30 30.0

Sub-Total 1,931.0 425.o 2,356.0 54 1,266.5

ANNEX Table 5Page 2

INDIA

SECOND NATIONAL SEED PROJRFT

Orissa SSC - Investment Costs of Processing Plants and Storage Facilities

UNIT COST Sambalpur Bhubaneswar TOTAL TF ign chaeUNIT (Rs. '000) No. Rs. '000 No. Rs. '000 (Rs. '000) L1 Rs 09

5. AccesoEquipentVacuu cleaner7 heavy-duty) No. 10.0 2 20.0 - - 20.0 25 5.0Weigh bridge (30 MT) No. 30.0 1 30.0 1 30.0 60.0 30 18.oAir compressor (5 hP) No. 9.0 1 9.0 - - 9.0 40 3.6Transformer (100 KUA) No. 100.0 1 100.0 1 100.0 200.0 20 40.0Diesel generator (100 KUA) No. 150.0 1 150.0 - - 150.0 30 45.0

Sub-Total 309.0 130.0 43j. o 25 111.6

6. AssembLY Installation & Electrification 392.0 97.1 489.1(17.57 of sub-totals 4 & 5)

7. Miscellaneous Accessories Set 75.0 1 75.0 1 75.0 150.0 15 22.5(Platform scales, tarpaulins,


8. VehiclesCar No. 35.0 1 35.0 - - 35 0 25 8.74WD "Jeep" with trailer No. 65.0 2 130.0 1 65.0 195.0 25 48.7Light truck No. 90.0 1 90.0 1 90.0 180.0 25 45.oMotorcycle No. 8.o 3 24.0 2 16.0 40.0 25 10.0

Sub-Total 279.0 171.0 450.0 25 112.4

9. Spares (10% of sub-totals 4,5,7 & 8) 259.4 80.1 339.5 20 67.9

10. Lab./Quality Control Equipment i/ Set 130.0 1 130.0 0.4 52.0 182.0 60 109.2

11. Total 7,237.8 3,425.0 10,662.8 21 2,263.8

12. Duties 3U1.2 28.0 339.2

13. Physical Contingencies 12/ 569.6 292.4 862.0 16 141.9

14. Total Processing Plant Costs 8,n18.6 3,745.4 11,864.0 20 2,4o5.7

^ Items subject to 40% import duty.i/ Area requirements based on plant capacity.2/ Includes leveling and grading, drainage and sewer, water, roads, parking and fencing.3/ Metal "silo" type bins provided for paddy; masonry room type bins for maize.

Ventilated storage space provided for about 60% maximum seasonal tonnage.a Cost of air conditioning is included in unit cost.

Cost per M ton based on Central Warehousing Corporation experience.7/ Includes chemical store; bag & certification material store; toilets; maingate with watchman cabin; workshop; general store; drying

floor (except for potato storage area in Bhubaneswar where costs accordingly would be lower by Rs. 38,000). The unit cost isan average for the various areas.

2/ To be fabricated in India. Imported mechanical graders have not been successful.2/ Includes equipment for moisture test, lab model cleaners and graders, hard screen, germinator etc., so as to permit plants

to determine screenings of individual seed lots as well as other quality aspects.1O/ At 10% for civil works; 5% for equipmeat.

August 19, 1977

ANNEX 5Table 6Page I

INDIA


Karnataka SSC - Investment Costs of Processing Plants and Storage Facilities

UNIT COST Chickballapur Harihar TOTAL Foreign ExchangeUNIT (Rs. '000) No. Rs. '000 No. Rs. '000 (Rs. '000) 'b Rs. '000

1. Plant Site 2/ ha 37.5 2 75.0 1.5 57.0 132.0 - -

2. Site Development ha 150.0 2 300.0 1.5 225.0 525.0 - -3. Buildings 2

Receiving, pre-processing M 0.4 400 160.0 256 102.4 262.4 - -Intake pit 3/ No. 20.0 2 40.0 2 40.0 80.0 - -Drying/bulk storage bins -(I) Metal, round, "silo" type No. 55/65.0 - - 3 165.0 165.0 50 82.5

(2) Masonry, square type 2 0.6 112 67.2 - - 67.2 - -Processing area M 0.5 600 300.0 400 200.0 500.0 - -Storage, ventilated - M* 0.4 1,600 640.0 1,000 400.0 1,040.0 - -Storage, conditioned - * 0.8 400 320.0 250 200.0 520.0 25 130.0Cold Storage (potatoes) 6/ M ton 0.8 1,000 800.0 - - 800.0 25 200.0Preparation/sorting shed M

20.3 400 120.0 - - 120.0 - -

(potato, groundnut) e2

Offices & laboratory 0,4 600 240,0 300 120,0 360.0 - -Ancillary bldgs. & areas 7/ M

20.2 875 175.0 875 175.0 350.0 - -

Staff quarters M2

0.4 1,709 683.6 1,600 640.0 1,323.6 - -

Sub-Total 3,545.8 2,042.4 5,588.2 7 412.5

Architect's fee (87% of sub-total) 283.7 163.4 447.1Office/lab Furnishings Set 20.0 1 20.0 1 20.0 40.0 - -Fire fighting system Set 75/100.0 1 100.0 1 100.0 200.0 - -Electrical(1) Power distribution - Lump Sum - 50.0 - - 50.0 25 12.5(2) Internal illumination - Lump Sum - 100.0 - - 100.0 25 25.0(3) Road & boundary lighting - Lump Sum - 60.0 - - 60.0 25 15.0

Sub-Total 4,159.5 2,325.8 6,485.3 7 465.04. Machinery/Equipment

Dryin epimentIF n/hter unit No. 50.0 2 100.0 3 150.0 250.0 35 87.5

*(2) Sweep auger No. 6.0 - - 3 18.0 18.0 95 17.1*(3) Unloadling auger No. 10.0 - - 3 30.0 30.0 95 28.5(4) Portable, inclined No. 10.0 4 40.0 1 10.0 50.0 50 25.0

drag - flight conveyor*Sheller, maize (10 TPH) No. 87.0 1 87.0 - - 87.0 95 82.6Potato - sorting, washing and drying No. 100.0 1 100.0 - - 100.0 25 25.0system (10 TPH) 8/

Convevors, horizontal(1) 20 MT/hr. X 24M No. 50.0 2 100.0 - - 100.0 30 30.0(2) 10 MT/hr. X 20M No. 30.0 2 60.0 1 30.0 90.0 30 27.0

Vertical bucket elevators(1) 20 MT/hr. X 22M No. 80.0 - - 1 80.0 80.0 35 28.0(2) 15 MT/hr. X 8M No. 22.0 2 44.0 - - 44.0 35 15.4(3) 10 MT/hr. X 8M No. 18.0 3 54.0 2 36.0 90.0 35 31.5(4) 5 MT/hr. X 8M No. 12,0 6 72.0 8 96.0 168.0 35 58.8

*Scalper - 20 MT/hr. No. 50.0 1 50.0 - - 50.0 95 47.5*Scalper - 10 MT/hr. No. 35.0 1 35.0 2 70.0 105.0 95 99.7Air-screen cleaner with indented

cylinder separator*(1) 3.5 MT/hr. No. 250.0 1 250.0 - - 250.0 95 237.5*(2) 1.5 MT/hr. No. 120.0 1 120.0 2 240.0 360.0 95 342.0

*Gravity separator (1 MT/hr.) No. 75.0 2 150.0 1 75.0 225.0 95 213.7*Precision grader/separator 9/ No. 80.0 1 80.0 - - 80.0 95 76.0Surge/holding bins with hopper bottom(1) 2 X 2 X IM No. 5.0 2 10.0 2 10.0 20.0 30 6.0(2) 2.5 X 2.5 X 2M No. 10.0 2 20.0 1 10.0 30.0 30 9.0(3) 3 X 1.5 X 0.5M No. 5.0 2 10.0 2 10.0 20.0 30 6.0(4) 2 X 2 X 2M No. 5.0 5 25.0 4 20.0 45.0 30 13.5(5) 1.5 X 1.5 X 1.5M No. 5.0 5 25.0 4 20.0 45.0 30 13.5

*Treater, slurry type 7 VT/hr. No. 90.0 2 180.0 1 90.0 270.0 95 256.5"Bagger - weighing system with MM *i er "i. 50.0 2 100.0 2 100.0 210. Os 1Iwo*Bag closer - portable No. 10.0 2 20.0 1 10.0 30.0 95 28.5Bag Carts

(1) 2 - wheel (100 kg) No. 1.0 10 10.0 10 10.0 20.0 10 2.0(2) 4 - wheel (800 kg) No. 3.5 10 35.0 8 28.0 63.0 15 9.4

Bag cleaner No. 5.0 2 10.0 1 5.0 15.0 25 3.7Bag conveyor, portable No. 25.0 3 75.0 2 50.0 125.0 30 37.5Dust aspiration system Set 25.0 4 100.0 4 100.0 200.0 30 60.0

Sub-Total 1,962.0 1,298.0 3,260.0 65 2,108.4


INDIA


Karnataka SSC - Investment Costs of Processing Plants and Storage Facilities

UNIT COST Chickball-vur Harihar TOTAL Foreign ExchangeUNIT (Rs. '000) No. Rs '000 No. Rs. '000 (Rs. '000) % Rsa '000

5. Accessory Equi:mentVAcUUI cleaner (heavy-duty) No. 10.0 2 20.0 2 20.0 40.0 25 10.0Weigh bridge (30 MT) No. 30.0 1 30.0 1 30.0 60.0 30 18.0Air compressor (S HP) No. 9.0 1 9.0 1 9.0 18.0 40 7.2Transformer (100 KUA) No. 100.0 1 100.0 1 100.0 200.0 20 40.0Diesel generator (100 KUA) No. 150.0 1 150.0 1 150.0 300.0 30 90.0

Sub-Total 309.0 309.0 618.0 27 165 2

6. Assembly Installation & Electrification 397.4 281.2 678.6(17.57. of sub-totals 4.& 5)

7. Miscellaneous Accessories Set 75.0 1 75.0 0.5 37.5 112.5 15 16.8(Platform scales, tarpaulins,


8. VehiclesCar No. 35.0 1 35.0 - - 35.0 25 8.74WD "Jeep" with trailer No. 65.0 2 130.0 1 65.0 195.0 25 48.7Light truck No. 90.0 1 90.0 1 90.0 180.0 25 45.0Motorcycle No. 8.0 3 24.0 3 24.0 48.0 25 12.0

Sub-Total 279.0 179.0 458.0 25 114.4

9. Spares (107, of sub-totsls 4,5,7 & 8) 262.5 182.3 444.8 20 89.010/

10. Lab,/Quality Control Equipment Set 130.0 1 130.0 0.5 65.0 195.0 60 117.0

11, Total 7,949.4 4,959.8 12,909.2 24 3,075.8

12. Duties 428.8 253.2 682.0

13. Physical Contingencies - 645.6 391.0 1,036.6 17 177.0

14. Total Processing Plant Costs 9,023.8 5,604.0 14,627.8 22 3,252.8

* Items subject to 407 import duty.1/ Area requirements based on plant capacity.2/ Includes leveling and grading, drainage and sever, water, roads, parking and fencing.J/ Metal "silo" type bins provided for paddy; maaonry room type bins for maize.4/ Ventilated storage space provided for about 60% maximium seasonal tonnage.5/ Cost of air conditioning is included in unit cost.6/ Cost per M ton based on Central Warehousing Corporation experience.7/ Includes chemical store; bag & certification material store; toilets; maingate with watchman cabin; workshop; general store; drying

floor. The unit cost is an average for the various areas.8/ To be fabricated in India. Imported mechanical graders have not been successful.9/ Provided for limited width - thickness (size) grading of maize seed.

10/ Includes equipment for moisture test, lab model cleaners and graders, hard screen, germinator etc., so as to permit plantsto determine screenings of individual seed lots as well as other quality aspects.

11/ At 107 for civil works; 5% for equipment.

August 19, 1977

ANNMX 5

Table 7Page 1

INDIA

SE1COND NATIONAL SEED PROJECT

Rajasthan SSC - Investment Costs of Processing Plants and Storage Facilities

UNIT COST Suratgarh Srigaganagar Kota TOTAL Forign ExchangecJNIT (Rs. '000) No. Is. '000 No. Rs. '000 No. Rs. '000 (Rs. '000) Rs. '000

1. Plant Site ha 40.0 3 120.0 3 120.0 3 120.0 360.0 - -

_. Site Developmnent ha 150.0 3 450.0 3 450.0 3 450.0 1,350.0 - -

3. .uildingsReceiving, pre-processing M 0.4 480 192.0 480 192.0 48o 192.0 576.0

Intake pit J No. 20.0 2 Z0.0 2 4o.o 2 4o.o 120.0Drying/bulk storage binsMetal, roud "silo" type No. 55/65.0 8 520.0 8 520.0 8 520.0 1,560.0 50 780.0

Processing area 0M2 .5 600 300.0 600 300.0 600 300.0 900.0 - -

Storage, ventilated 0. o.4 4,600 1,840.0 4,600 1,840.0 4,000 1,600.0 5,280.0 - -

Storage, conditioned 4M2 0.8 400 320.0 400 320.0 400 320.0 960.o 25 240.0Offices & laboratory M0.4 600 240.0 600 240.o 600 240.0 720.0 - -

AncillarJ bldgs. & areas M M2 0.2 875 175.0 875 175.0 875 175.0 525.0 - -Staff quarters M2 o.4 1,390 556.0 1,390 556.0 1,390 556.o 1,668.0 - -

Sub-Total 4,183.0 4,183.0 3,943.0 12,309.0 8 1,020.0

Architect's fee (8% of sub-total) 334.6 334.6 315.4 984.6 - -

Office/lab. furnishings Set 20.0 1 20.0 1 20.0 1 20.0 60.0 - -

Fire fighting system Set 75/100.0 1 100.0 1 100.0 1 100.0 300.0 - -

Electrical(1) Power distribution - Lump Sum - 80.0 - 80.0 - 70.0 230.0 25 57.5(2) Internal illumination - Lmp Sum - 140.0 - 140.0 - 140.0 420.0 25 105.0(3) Road i boundary lighting - LumP Sum - 100.0 - 100.0 - 100.0 300.0 25 75.0

Sub-Total 4,957.6 4,957.6 4,688.4 14,603.6 9 1,257.5

4. Maclinery/Equiprent

(1) Fan/heater onit No. 50.0 4 200.0 4 200.0 6 300.0 700.0 35 245.o*(2) Sweep auger No. 6.o 3 18.0 3 18.0 3 18.0 54.0 95 51.3* ( 3 ) Unloading auger No. 10.0 3 30.0 3 30.0 3 30.0 90.0 95 85.5

(4) Portable, inclined No. 10.0 2 20.0 2 20.0 3 30.0 70.0 50 35.0drag - flight conveyor

,Sheller, maize (10 TPH) No. 87.0 - - - - 1 87.0 87.0 95 82.6Conveyors. horizontal

(1) 20 MT/hr. X 24M No. 50.0 2 100.0 2 100.0 2 100.0 300.0 30 90.0(2) 10 MT/hr. X 20M No. 30.0 2 60.0 2 60.o 2 60.o SC.o 30 54.o(3) 20 MT/hr. X 28M with tripper No. 100.0 1 100.0 1 100.0 1 100.0 3I ,U 30 90.0

Vertical bucket elevators(1) 20 MT/hr. X 22M No. 80.O 1 80.0 1 80.0 1 80.0 240.0 35 84.0(2) 15 MT/hr. X 8M No. 22.0 - - - - 1 22.0 22.0 35 7.7(3) 10 MT/hr. X 8M No. 18.0 2 36.o 4 72.0 4 72.0 180.0 35 63.0(4) 5 MT/hr. X 8M No. 12.0 4 48.o 8 96.o 8 96.0 240.0 35 84.0

*Scalper - 20 M/Jr. No. 50.0 - - 1 50.0 1 50.0 100.0 95 95.0Scalper -10 MT/hr. No. 35.0 - - 1 35.0 1 35.0 70.0 95 66.5Air-screen cleaner with indented

cylinder separator*(1) 3.5 MT/hr. No. 250.0 - - 1 250.0 1 250.0 500.0 95 475.0*(2) 1.5 MT/hr. No. 120.0 - - 1 120.0 1 120.0 240.o 95 228.0

*Gravity separator (1 MT/hr.) No. 75.0 2 150.0 2 150.0 2 150.0 45o.o 95 427.5*Precision grader/separator J/ No. 80.0 - - - - 1 80.0 80.0 95 76.0

Surge/holding bins with hopper bottum(1) 2 X 2 X 1M No. 5.0 2 10.0 2 10.0 2 10.0 30.0 30 9.0

(2) 2.5 X 2.5 X 2M No. 10.0 4 40.0 4 40.0 4 40.0 120.0 30 39.0(3) 3 X 1.5 X 0.5M No. 5.0 2 10.0 2 10.0 2 10.0 30.0 30 9.0(4) 2 X 2 c 2M No. 5.0 5 25.0 5 25.0 5 25.0 75.0 30 22.5(5) 1.5 X 1.5 X 1.5M No. 5.0 5 25.0 5 25.0 5 25.0 75.0 30 22.5

*Treater, slurry type 7 MT/hr. No. 90.0 2 180.0 2 180.0 2 180.0 540.o 95 513.0'Bagger - weighing system with bag No. 50.0 3 150.0 3 150.0 3 150.0 450.0 95 427.5

closer*Bag closer - portable No. 10.0 2 20.0 2 20.0 2 20.0 60.o 95 57.0

Bag Carts

17 _ wheel (100 kg) No. 1.0 15 15.0 15 15.0 15 15.0 45.0 10 4.5(2) 4 - wheel (800 kg) No. 3.5 10 35.0 10 35.0 10 35.0 105.0 15 15.7

Bag cleaner No. 5.0 2 10.0 2 10.0 10.0 30.0 25 7.5Bag conveyor., portable No. 25.0 3 75.0 3 75.0 3 75.0 225.0 30 67.5Dust aspiration systen Set 25.0 4 100.0 4 100.0 4 100.0 300.0 30 90.0

Sub-Total 1,537.0 2,076.0 2,375.0 5,988.0 60 3,624.8

ANNf 5Table 7Page 2

INDIA

SECOND NATIONAL SEED EDOJECT

Rajasthan SSC - Investment Costs of Processing Plants and Storage Facilities

UNIT COST Suratgarh Srigaganagar Kota TOTAL Foreign ExchangeUlIT (Rs '000) No. Rs. '000 No. Rs. '000 No. Rs. '000 (Rs. '000) -: Rs., '000

5,, qi E otVac feaner (avy-duty) No. 10.0 2 20.0 2 20.0 2 20.0 60.0 25 15.0

Weigh bridge (30 MT) No. 30.0 1 30.0 1 30.0 1 30.0 90.0 30 27.0

Air compressor (5 HP) No. 9.0 1 9.0 1 9.0 1 9.0 27.0 40 10.8Transformer (100 KUA) No. 100.0 1 100.0 1 100.0 1 100.0 300.0 20 60.0Diesel generator (100 KUA) No. 150.0 1 150.0 1 150.0 1 150.0 45o.0 30 135.0

Sub-Total 309.0 309.0 309.0 927.0 27 247.5

6, Assembly Installation & Electrification 323.0 417.4 469.7 1,210.1(17.55 of sub-totals 4 & 5)

7. Miscellaneous Accessories . Set 75.0 1 75.0 1 75.0 1 75.0 225.0 15 33.7(Platform scales, tarpaulins,


8. VehiclesCar No. 35.0 1 35.0 - - 1 35.0 70.0 25 17.54WD "Jeep" with trailer No. 65.o 2 130.0 2 130.0 2 130.0 390.0 25 97.5Light truck No. 90.0 1 90.0 1 90.0 1 90.0 270.0 25 67.5Motorcycle No. 8.o 3 24.0 3 24.o 3 24.0 72.0 25 18.0

Sub-Total 279.0 244.o 279.0 802.0 25 200.5

9. Spares (10% of sub-totals 4,5,7 & 8) 220.0 270.4 303.8 794.2 20 158.8

10. Lab./Ouality Control Equipment Set 130.0 1 130.0 1 130.0 1 130.0 390.0 60 234.0

11. Total 8,400.6 9,049.4 9,199.9 26,649.9 22 5,757.1

i2. Duties 219.2 401.2 468.o 1,088.4

13, Physical Contingencies 707.4 748.9 746.3 2,202.6 16 350.7

14. Total Processing Plant Costs 9,327.2 10,199.5 41,414.2 29,940.9 20 6,107.8

* Items subject to 40% import duty.L Area requirements based on plant capacity.

Includes leveling and grading, drainage and sewer, water, roads, parking and fencing.3/ Metal "silo" type bins provided for paddy; masonry room type bins for manze.

Ventilated storage space provided for about 60% maximum seasonal tonnage.5v Cost of air conditioning is included in unit cost.

Includes chemical store; bag & certification material store; toilets; maingate with watchman cabin; workshop; general store; drying floor.The unit cost is an average for the various areas.

7/ Provided for limited width - thickness (size) grading of maize seed.Includes equipment for moisture test, lab model cleaners and graders, hard screen, germinator etc., so as to permit plants to determine

screenings of individual seed lots as well as other quality aspects.9/ At 10% for civil works; 5% for equipment.

Auigust 3, 1977

ANNDX5Tabl-e- Page

INDIA


Uttar Pradesh SSC - Investment Costs of Processing Plants and Storage Facilities

UNIT COST Pantnalar anpur Faitabad TOTAL Foreign Exchange

I,tNliIT (Rn_ '000) l ! 0 0

No. Rs.'000 No. Rs. '000 (Rs. '000) % Rs. '000

1. Plant Site he 40.0 - - 3 120.0 3 120,0 240.0 - -

2. Site Development ha 150.0 - - 3 450.0 3 450.0 900.0 - -

3. BuildingsReceiving, yrn-proceasing M2 0.4 _ 480 192.0 480 192,0 384.0 - -

intake pit 3/ No. 20.0 - - 2 40.0 2 40.0 80.0 - -

DrYing/bulk storage bins -Metal, round, "silo" type No. 55/65.0 - 8 520.0 8 520.0 1,040.0 50 520.0

Processing area M2 0. 5 _ - 600 300.0 600 300.0 600.0 - -

Storge, entiated4/ MStorage, ventilated S/ 1M 0.4 - 5,500 2,200.0 4,400 1,760.0 3,960.0

Storage, conditioned M2

0.8 - 400 320.0 400 320.0 640.0 25 160.0

Cold storage (potatoes)6/ M ton 0.8 1,000 800.0 1,000 800.0 1,000 800.0 2,400.0 25 600.0

Prepara.tion/sorting shed M2 0.3 200 60.0 200 60.0 200 60.0 180.0 - -

(potato, groundnut)Offices & laboratorv M 0.4 - - 600 240.0 600 240.0 480.0y

Ancillary bIdge. & areas 7/ M2 0.2 - 875 175.0 875 175.0 350.0 - -

Staff quarters M2

0.4 - - 1,300 520.0 1,300 520.0 1,040.0 - -

Sub-Total 860.0 5,367.0 4,927.0 11,154,0 11 1,280.0

Architect's fee (8I of sub-total) 68,8 429.4 394.2 892.4

Office/lab furnishings Set 20.0 - - 1 20.0 1 20.0 40.0 - -

Fire fighting system Set 75/100.0 - _1 100.0 1 100.0 200.0 - -

Electrical(1) Pover distribution - Lump Sum -- - 80.0 - 80.0 160.0 25 40.0

(2) Internal illumination - Lump Sum - - 140.0 - 140.0 280.0 25 70.0

(3) Road & boundary lighting - Lump Sum - - - 100.0 - 100.0 200.0 25 50.0

Sub-Total 928,8 6,236.4 5,761.2 12,926.4 11 1,440.0

4. Machinery/EpuipmentDrying equipment

( Theater unit No. 50.0 - - 6 300.0 8 400.0 700.0 35 245.0

*(2) Sweep auger No. 6.0 - - 3 18.0 3 18.0 36.0 95 34,2

*(3) Unloading auger No. 10.0 - - 3 30.0 3 30.0 60.0 95 57.0

(4) Portable, inclined No. 10.0 - - 2 20.0 2 20.0 40.0 50 20.0

drag - flight conveyorPotato - sorting, washing and drying No. 100.0 1 100.0 1 100.0 1 100.0 300.0 25 75,0

systen (10 TPH) /Conveyors, oiwna20 h5r,Aorizon5tal

(1) 20 MT/hr. X 24M No. 50.0 - - 2 100.0 2 100.0 200.0 30 60.0

(2) 10 MI/hr. X 20M No. 30.0 - - 2 60.0 2 60.0 120.0 30 36.0

(3) 20 NI/hr. X 28M with tripper No. 100.0 - I 100.0 I 100.0 200.0 30 60.0

Vertical bucket elevators(1) 20 Mr/hr. X 22M No. 80.0 - 1 80.0 1 80.0 160.0 35 56.0

(2) 15 MF/hr. X 8M No. 22.0 - 1 22.0 1 22.0 44.0 35 15.4

(3) 10 Mr/hr. X 8M No. 18.0 - 4 72.0 4 72.0 144.0 35 50.4

(4) 5 MT/hr, X 814 No, 12.0 - ' 8 96.0 8 96.0 192.0 35 67.2

*Scalper - 20 NI/hr. No, 50.0 - - 1 50.0 1 50.0 100.0 95 95.0

*Scalper - 10 MT/hr. No, 35.0 - - 1 35.0 1 35.0 70.0 95 66.5

Air-screen cleaner vith indented.- i a- «p8taLor

-(14 3. 'r' INo. 250.0 - - 2 500.0 2 500.0 1,000.0 95 950.0

: [ ' > r No. 120.0 - 1 120.0 - - 120.0 95 114.0

Nav ,, _alr,I MT/br) No. 75.0 - - 2 150.0 2 150.0 300.0 95 285.0

r, , LS tw hopper bottom(1) 2 2 X 1M No. 5.0 - - 2 10.0 2 10.0 20.0 30 6.0

'') 2.5 Y 2.5 X 2M No. 10.0 - - 4 40.0 4 40.0 80.0 30 24.0

r3) 3 x 1.5 X 0.5M No. 5.0 - - 3 15.0 2 10.0 25.0 30 7.5

1' 2' 2 X 2Kq No. 5.0 - - 6 30.0 5 25.0 55.0 30 16.5

(55 1.5 X 1.5 X 1.5M No. 5.0 - - 7 35.0 5 25.0 60.0 30 18.0

-'treater, slurry type 7 MT/hr. No. 90.0 - - 2 180.0 2 180.0 360.0 95 342.0

*.agger - weighing system with bag No. 50.0 - - 3 150.0 2 100.0 250.0 95 237.5

closet*8batl cl-c - portable No. 10.0 - - 3 30.0 2 20.0 50.0 95 47.5

Bag Carts(1) 2 - wheel (100 kg) No, 1.0 - - 15 15.0 15 15.0 30.0 10 3.0

(2) 4 - wheel (800 kg) No, 3,5 - - 10 35.0 10 35.0 70.0 15 10.5

Bag cleaner No. '5.0 - - 2 10.0 2 10.0 20.0 25 5.0

Bag conveyor, portable No. 25.0 - - 3 75.0 3 75.0 150.0 30 45.0

Dust aspiration system Set 25.0 - - 5 125.0 5 125.0 250.0 30 75.0

Sub-Total 100.0 2,603.0 2,503.0 5,206.0 60 3,124.2


INDIA

SECOND NATIOIAL SEED PROJECT

Uttar Pradeah SSC - Investment Costs of Processing Plants and Storage Facilities

NIIT COST Pantnagar Kanpur Faisabad TOTAL Foreign ExchangeUNIT (Ri. '000) No. Rs. '000 No. Ra. '000 No. R '000 (Rse '000) 7 R. '000

5. Accessory EquipmentVacuum cleaner (heavy-duty) No. 10.0 - - 2 20.0 2 20.0 40.0 25 10.0Weigh bridge (30 MT) No. 30.0 - - 1 30.0 1 30.0 60.0 30 18.0Air Compressor (5 HP) No. 9.0 - - 1 9.0 1 9.0 18.0 40 7.2Transformer (100 KUA) No. 100.0 - - 1 100.0 1 100.0 200.0 20 40.0Diesel generator (100 KUA) No. 150.0 - - 1 150.0 1 150.0 300.0 30 90.0

Sub-Total 309.0 309.0 618.0 27 165,2

6. Assembly Installation & Electrification 17.5 509.6 492.1 1,019.2(17.5% of sub-totals 4 & 5)

7. Miscellaneous Accessories Set 75.0 - - 1 75.0 1 75.0 150.0 15 22.5(Platform scales, tarpaulins,


8. VehiclesCar No. 35.0 - - 1 35.0 1 35.0 70.0 25 17.54WD "Jeep" with trailer No. 65.0 - - 2 130.0 2 130.0 260.0 25 65.0Light truck No. 90.0 - - 1 90.0 1 90.0 180.0 25 45.0Motorcycle No. 8.0 - - 3 24.0 3 24.0 48.0 25 12.0

Sub-Total 279.0 279.0 558.0 25 139.5

9. Spares (10% of sub-totals 4,5,7 & 8) 10.0 326.6 316.6 653.2 20 130.69/

10. Lab,/Quality Control Equipment - Set 130.0 - - t 130.0 1 130.0 260.0 60 156.0

11. Total 1,056.3 11,038,6 10,435.9 22,530.8 23 5,178.0

12. Duties 505.2 433.2 938.4

13. Physical Contingencies - 99,3 917,5 860.0 1,876.8 18 330.9

14. Total Processing Plant Costs 1,155.6 12,461,3 11,729.1 25,346.0 22 5,508.9

* Items subject to 40% import duty.1/ Area requirements based on plant capacity.2/ Includes leveling and grading, drainage and sewer, water, roads, parking and fencing.3/ Metal "silo" type bins provided for paddy; masonry room type bins for maize.4/ Ventilated storage space provided for about 607. maximum seasonal tonnage.5/ Cost of air conditioning is included in unit cost,6/ Cost per M ton based on Central Warehousing Corporation experience.7/ Includes chemical store; bag & certification material store; toilets; maingate with watchman cabin; workshop; general store; dryingfloor. The unit cost is an average for the various areas.8/ To be fabricated in India. Imported mechanical graders have not been successful.9/ Includes equipment for misture test, lab msdel cleaners and graders, hard screen, germinator etc., so as to permit plants to

determine screenings of individual seed lots as well as other quality aspects.10/ At 107 for civil works; 5% for equipment,

August 10, 1977

INDIA


SCC Headquarters - Investment Costs

Unit Cost Bihar Karnataka Orissa Rajasthan U. Pradesh Total Forein c=eUnit 000 No. Rs'OOO No. Rsoo00 No. R,Rs000 No. Rs'000 No. Rs'000 (Rs'OO _ Amount

I. Builig 2Offices and Laboratory N2 0.4 1,150 460 1,150 460 1,150 460 1,150 460 1,150 460 2,300Storage, General N

20.3 100 30 100 30 100 30 100 30 100 30 150

Garage and Shop N2

0.2 160 32 160 32 160 32 160 32 160 32 160Electrification andPower Distribution Set 60.0 1 60 1 60 1 60 1 60 1 60 300 25 75

Architect's Fee (8%) - - 47 47 47 47 47 235

Sub-total 629 629 629 629 629 3,145 2 75

II. Smiipmant-, And Firnitug 2/

Quality Control Equipment- Set 120.0 1 120 1 120 1 120 1.5 180 1.5 180 720 40 280Typewriters No. 3.0 10 30 10 30 10 30 12 36 12 36 162Accounting Machines No. 1.0 8 8 10 10 8 8 12 12 12 12 50 30 15Telephone, PBX Exchange No. 50.0 1 50 1 50 1 50 2 100 3 150 400 30 120Furnishings

(a) Offices Set 1.8 12 22 16 29 12 22 16 29 16 29 131(b) Staff Set 1.0 30 30 36 36 30 30 48 48 48 48 192(c) Laboratcry Set 6.0 1 6 1 6 1 6 1.5 9 1.5 9 36

Air Conditioners No. 5.0 5 25 6 30 5 25 6 30 6 30 140 25 35Water Cooler No. 2.0 2 4 3 6 2 4 3 6 3 6 26Miscellaneous - Lump Sum - 30 - 30 - 30 - 30 - 30 150

Sub-total 325 347 325 480 530 2,007 23 458

III. Vehicles

Car No. 35.0 2 70 2 70 2 70 3 105 3 105 420 25 105Mass Media Van and Equipment No. 95.0 1 95 2 190 1 95 2 190 2 190 760 25 1904 WD "Jeep" with Trailer No. 65.0 2 130 3 195 2 130 3 195 3 195 845 25 211Motorcycle No. 8.0 18 144 32 256 10 80 43 344 63 504 1,328 25 332

Sub-total 439 711 375 834 994 3,353 25 838

IV. Physical Contingencies 101 116 98 129 139 53 12 72

V. Total Rhadqartrw Intiwuent Ceets 1,494 1,803 1,427 2,072 2,292 9,088 10 910

V Headquarters are assumed to be at one of the processirg plant sites.If separately located costs will increase by about Rs. 150,000 pw Headquarter.

2/ Includes moisture tester, seed analysis and quick test equipse nt.2/ Includes 40% import duty on approximately 50% of the equipment.

i IOT 1ori buildings; 5% on vehicles, equipmenit and furniture.

August 1, 1977

ANNEX 5Table 10

INDIA


Processing Plant - Staffing Pattern

Cost per l/2/ 3/Man-Year Class I Plant- Class II Plant-/

Staff Description (Rs. '000) Man-Years Rs. '000 Man-Years Rs. '000

1. Permanent (Fixed) Staffand Labor

Plant Engineer/Superintendent 15.6 1 15.6 1 15.6

Assistant Engineer 14.6 1 14.6Administration-cum-

Accounts Officer 9.6 1 9.6 1 9.6Senior Accountant 6.2 1 6.2 1 6.2

Junior Accountant 5.8 2 11.6 1 5.8Quality Control Officer 9.6 1 9.6 1 9.6Seed Analyst 6.2 2 12.4 1 6.2Store (Warehouse) Officer 6.8 1 6.8 1 6.8

Shift Mechanic 4 5.8 4 23.2 3 17.4Shift Supervisor-4/ 11.5 2.26 25.9 1.84 21.2Foreman-Receiving- 7.2 1.84 13.2 0.84 6.1Foreman-Drying &Processing 4/ 7.2 2.26 16.3 1.84 13.2

Foreman-Warehousing-/ 7.2 2.26 16.3 1.84 13.2Senior Clerk 5.4 2 10.8 1 5.4Steno-typist 4.2 3 12.6 2 8.4Driver 3.6 4 14.4 3 10.8

Watchman 2.0 3 6.0 2 4.0Attendant 1.8 4 7.2 2 3.6Labor-Permanent 3.6 10 36.0 5 18.0

Subtotal 268.3 181.1Fringe Benefits (50%) 134.2 90.6

FIXED ANNUAL PERSONNEL COSTS 402.5 271.7

(Fixed Staff/Labor Costs per 1,000 Tons of Seed5/ 27 27

2. Seasonal (Variable) Laborper 1,000 Tons of Seed

(for receiving, processing,warehousing & general) 6/ 7/ 7/Wheat, Groundnut, Potato 3.6&- 4.177/ 15 4.172/ 155.217/ 721/Paddy 3.66/ 5 21- 19 5.21- 19Hybrids 3.6- 6.25- 23 6.25- 23

1/ In mid-1977 prices.21 Annual throughput 15,000 tons or more3/ Annual throughput less than 15,000 tons4/ See para 37.5/ Based on annual throughput of 15,000 tons for Class I plants and

10,000 tons for Class TI plants.6/ Includes Fringe Benefits.7/ See para 37.

August 3,1977

ANNEX 5Table 11

INDIA


State Seed Corporation Headquarters - Overhead Costs-

Unit Cost Bihar Karnataka Orissa Ralasthan Utter Pradesh

Unit (Rs. '000) No. Re. '000 No. Rs. '000 No. Rs. '000 No. Rs. '000 No. Rs. '000

OVERHEAD COSTS IN YEAR 5ff

1. Salaries and Yages

A. AdministrationManaging Director Man-Year 27.0 1 27.0 1 27.0 1 27.0 1 27.0 1 27.0

Company Secretary " 18.0 1 18.0 1 18.0 1 18.0 1 18.0 1 18.0

Personnel Officer " 14.4 1 14.4 1 14.4 1 14.4 1 14.4 1 14.4

Office Manager " 14.4 1 14.4 1 14.4 1 14.4 1 14.4 1 14.4

Clerks " 5.4 4 21.6 5 27.0 3 16.2 6 32.4 6 32.4

Steno-typists " 4.2 6 25.2 7 29.4 5 21.0 9 37.8 9 37.8

Drivers 3.6 5 18.0 6 21.6 6 21.6 8 28.8 8 28.8

Watchmen " 2.0 3 6.0 3 6.0 3 6.0 3 6.0 3 6.0

Peons & Attendants " 1.8 4 7.2 5 9.0 4 7.2 6 10.8 6 10.8

B. ProductionProduction Manager Man-Year 21.6 1 21.6 21.6 21.6 21.6 21.6

Seed ProductionOfficer 2/ " 11.5 2.7 31.1 2.7 31.1 1.6 18.4 4.3 49.5 5.9 67.9

Seed ProductionAssistant 2/ " 7.2 17.6 126.7 32.0 230.4 9.1 65.5 43.3 311.8 63.0 453.6

C. ProcessingProcessing Manager Man-Year 21.6 1 21.6 1 21.6 1 21.6 1 21.6 1 21.6

Others (for plantstaff see Table 8)

D. Quality ControlQuality Control

Supervisor Man-Year 15.6 1 15.6 1 15.6 1 15.6 1 15.6 1 15.6

Quality ControlAssistants " 7.6 2 15.2 2 15.2 2 15.2 3 22.8 3 22.8

E. Marketing & SalesMarketing Manager Man-Year 21.6 1 21.6 1 21.6 1 21.6 1 21.6 1 21.6

Market ResearchOfficer ' 15.6 1 15.6 1 15.6 1 15.6 1 15.6 1 15.6

Market DevelopmentOfficer " 15.6 1 15.6 1 15.6 1 15.6 1 15.6 1 15.6

Sales/DistributionOfficer 3 11.5 1 11.5 1 11.5 1 11.5 2 23.0 2 23.0

Marketing Assistants- " 7.2 5 36.0 5 36.0 3 21.6 7 50.4 10 72.0

F. Finance & AccountingFinance Manager Man-Year 21.6 1 21.6 1 21.6 1 21.6 1 21.6 1 21.6

Accounting Officer " 11.5 1 11.5 1 11.5 1 11.5 1 11.5 1 11.5

Audit & Cost ControlOfficer " 11.5 1 11.5 1 11.5 1 11.5 1 11.5 1 11.5

Accountants & Auditors " 7.2 4 28.8 4 28.8 4 28.8 6 43.2 6 43.2

Fringe Benefits (50%) 278.7 338.0 231.5 423.3 514.2

Total Salaries and Wages 836.0 1,014.0 694.5 1,269.8 1,542.5

2. Other Overhead Expenses

Repair & Maintenance- Cars, Jeeps, Vans 4/ 1000 miles 1.2 25 30.0 35 42.0 25 30.0 40 48.0 40 48.0- Motorcycles 4/ 1000 miles 0.45/ 54 21.6 96 38.4 30 12.0 129 51.6 189 75.6

- Buildings 5/ 1000 w2

11.2- 1.4 15.7 1.4 15.7 1.4 15.7 1.4 15.7 1.4 15.7

Travel Allowance 6/ 100 days 2.0 18.5 37.0 26 52.0 11 22.0 34 68.0 47 94.0Office Supplies - Lump sum - 40.0 - 50.0 - 40.0 - 60.0 - 80.0

Utilities - Lump sum - 50.0 - 60.0 - 40.0 - 80.0 - 100.0

Miscellaneous (10% ofOther Overhead Expenses) - - 19.4 - 25.8 - 16.0 - 32.3 - 41.3

Total Overhead Costs (Year 5 ff) 1,049.7 1,297.9 870.2 1,625.4 1,997.1

PHASING OF OVERHEAD COSTSYear 1 210 574 174 591 821

Year 2 255 958 537 711 1,070

Year 3 517 1,043 670 1,442 1,446

Year 4 805 1,152 792 1,591 1,722

Year 5 ff 1,050 1,298 870 1,625 1,997

1/ In constant mid-1977 prices.2/ See para 37,.3/ Marketing Assistants would be employed approximately at the rate of one per 5,000 tons of cereal seed, pulses, etc.,

and 10,000 tons of groundnuts and potatoes.4/ Approximate annual usage of cars, vans, etc., 5000 miles; of motorcycles 3,000 miles.5/ 2.5% of investment costs.6/ 50 days per year for officers and assistants in Marketing, Production and Quality Control; 400 days for remainder of

organization.7/ Based on yearly production hectarage in comparison to hectarage in year 5, but not less than 20% of total in year 5.

August 11, 1977

INDIA


Variable Processing Costs-/(Rs./Ton of Clean Seed)

Wheat Paddy Maize Jowar Bajra Potato2/ Groundnut3/

Processing materials-(bags, packaging, chemicals) 160 160 225 225 225 100 100

Electricity 4/ 8 12 12 8 8 25 2Other utilities 1 1 1 1 1 2 1Fuel oil 4/ 10 30 30 10 10 33 2Certification materials 12 12 12 12 12 12 12(tags, seals)

Variable labor 5/ 15 19 23 23 23 15 15

VARIABLE PROCESSING COSTS 206 234 303 279 279 187 132

1/ In mid-1977 prices. Processing costs include receiving, cleaning, packaging and treating.2/ Cost based on cold storage owned by SSC. In rented storage variable costs per ton increase to Rs. 274

per ton. Storage rental costs are Rs. 150 per ton and season; variable labor costs and utility & fuelcosts are reduced to Rs. 9 and Rs. 3 respectively, if seed is kept in rented storage.

3/ Differences are due to varying sizes and materials used in packaging seed.4/ Differences are due to different drying and cold storage requirements.5/ From Table 10.

August 3, 1977

pu1

- Ln


CEREAL PROCESSING PLANT LAYOUT l

ADDITIONAL STORAGE

PROCESSING CENTER (10,000 tons)

I INTAKE PIT - BULK OR BAGGED SEED2 SCALPER (20T/HR.1 15 HEATER-FAN UNIT3 VERTICAL BUCKET ELEVATOR (5- 20 T/HR.) 16 DRYING BIN (15T)4 HOLDING BIN - FLOOR SUPPORTED 17 MAIZESHELLER5 INTAKE PIT 18 COB WAGON6 AIR - SCREEN CLEANER (3.5 T/HR.) 19 HORIZONAL CONVEYOR STORAGE - BAGGED SEED

7 GRAVITY SEPARATOR (UNLOADING)8 SEED TREATER9 PACKAGING SYSTEM10 AIR - SCREEN CLEANER (1.5 T/HR.I11 SCALPER (1OT/HR.)12 METAL SILO (23 T DRYING, 60 T BULK STORAGE)13 HORIZONAL CONVEYOR (TO LOAD BINS)14 (TO UNLOAD BINS)

SILO DRYERS & BULK STORAGE RE N AA () i0

( i ) g~~~~~~~~~> z~~~~~ ~RECEIVING AREA 0 SUPPL STORAG

0~~~~

MAIN PROCESSING AREA

-L I I | | @ | r<g 4 l CHEMICAL STORAGE

L r s l Il l E t S @ BATHROOM

(ii 0 0

BIN DRYERS (Maize on ear and other send kinds) RECEIVING& SMALL LOT PROCESSING SHOP

SCALE t0 5M

OFFICE & LABORATORY AREA

W.1Id Bank - 17918

ANNEX 6Page 1

INDIA


Quality Control

Introduction

1. The National Seed Program (NSP) is designed to reorganize, expand,and improve the seed production and supply industry of the country. Thesuccess of this development effort and its impact on agricultural productiv-ity in India will be dependent on three major factors: (1) continuedimprovements in varieties of major crops to improve their productivity andincrease their resistance to production hazards including plant diseasesand pest; (2) the production and as importantly the marketing of the targetedtonnage of improved seed; and (3) rigorous quality control throughout allphases of seed multiplication, production, processing, and marketing toensure that the genetic, physiological and physical qualities of the seedare maintained so that they will perform well in the farmer's field.

2. In the seed industry, quality control has three important aspects:(1) establishment of minimum acceptable seed quality standards; (2) formula-tion and implementation of a system and procedures for achieving (and exceed-ing) the established quality standards, and maintenance of same; and (3) amethod of approach in identifying the causes of quality problems, and effect-ing their resolution.

3. The ideal of high quality and the concept (and application) ofquality control must permeate all phases and segments of the seed industry.Concern about seed quality and actions to ensure that standards are achievedand maintained begin with selection of seed for multiplication, extendthrough multiplication, production, harvesting, drying, processing, storageand distribution, and end only with satisfactory performance in the farmer'sfield.

Present Situation

4. India has already taken the major steps toward the establishmentof an effective seed quality control program. After careful consideration,the India Seeds Act was passed in 1966. The Rules required for implementingthe Act were then formulated and promulgated in 1968. Basically, the Act andRules promulgated thereunder, prohibit the marketing of seed of officiallynotified varieties of crops which do not meet minimum standards for purityand germination as prescribed by the Central Seed Committee established underthe Act. In addition to determining which varieties of which crops shall benotified for different areas, the Central Seed Committee acts as the princi-pal advisor to GOI on implementation and enforcement of the Act, and all otherseed matters.

ANNEX 6Page 2

5. Under the Seeds Act, a Central Seed Testing Laboratory was set up

to serve as a referee laboratory in the event of disputes, and to check on

the performance of state seed testing laboratories. The latter are also pro-

vided for under the Seeds Act. Many states have established and notified

an official seed testing laboratory. Other states, however, have paid little

atterLtion to seed testing and control and have chosen to notify the NSC

laboratory as the official laboratory for their state. All five states

included in this project have notified seed testing laboratories and a seed

control organization, although they need substantial assistance.

6. In terms of quality control, the most important and far-reaching

provisions of the Seeds Act and Rules relate to seed certification. Under

the Act, each state is empowered to establish a seed certification agency

for the purpose of providing a quality control service to seed producers,

and a third party guarantee of the quality of each seed lot. Only notified

varieties are subject to certification, and certification is entirely volun-

tary. A seed producer is free to use or not use the certification service

at his discretion. The minimum standards for certified seed and inspection

procedures have been promulgated by the Central Seeds Committee. Standards

for certified seed are higher than those for non-certified seed of notified

varieties.

7. The five states included in this project have already established

seed certification agencies.

8. India has wisely and realistically formulated seed legislation. In-

stitutions and agencies for implementing and enforcing provisions of the Seeds

Act have been established at the Center and in most of the states. Except

for the certification services performed by NSC, however, and those in a

few states such as Maharastra and Karnataka, little progress has been made

in quality control and the regulation of seed marketing. Recognizing the

deficiencies in implementation of the Seeds Act and Rules, the Central Govern-

ment has decided to take up a scheme for assisting state governments to estab-

lish independent control and regulatory agencies. These agencies would be

responsible for enforcement of the minimum standards and labelling provisions

of the Seeds Act, and also the Fertilizers Control Order and the Insecticides

Act. Thus, regulation and control of several important inputs would be

integrated under one Authority.

9. The Central Government has also taken steps to assist the states in

establishing independent seed certification agencies and to evolve an inspec-

tion system to ensure uniform application of seed certification standards

and procedures. A Central Seed Certification Board has been constituted and

the Central Seed Testing Laboratory at the IATI acts as referee on quality

standards.

10. Both the Central and State Governments have taken up schemes in

the Fifth Plan to establish and/or strengthen seed testing laboratories.

ANNEX 6Page 3

11. Deficiencies in quality control procedures have caused substantialproblems in the seed industry. Breeder and foundation seed have not alwaysbeen of highest quality, thus, cs .ribut Lg to _oguing r:bl2mE: :nd rejectionsat the certified seed level. Testing laboratories have not been able torender the prompt and accurate services required in a progressive seed indus-try. In some cases, standards and rules which were workable and effective inthe early stagces of seed industry development, have become cumbersome and actas a constraint on operational efficiency.

12. Although the present situation is far more favorable than it wouldbe in most developing countries much remains to be done to develop the qualitycontrol agencies with capabilities commensurate with seed industry developmenttargets.

NSP Proposals

13. The general quality control proposals established in Phase I arequoted below: 1/

"Varietal Release and Notification

14. "Established varietal release policies and procedures are adequate.Both the Central and State Varietal Release Committees, however, shouldestablish mechanisms for declaring varieties obsolete (de-notification) whenthey are replaced by superior varieties of similar adaptability. Privatebreeders are developing new varieties and these will be submitted to theVarietal Release Committees and Central Seed Committee for consideration ofnotification. These varieties should be considered on their merits with nodiscrimination with regard to source.

"Breeder Seed

15. "... since the quality of breeder seed has been a source of recur-ring problems in the seed industry, the following recommendations pertainingto quality control are made:

"(1) The originatin6 breeder should describe the variety asaccurately as possible. Particular attention should begiven to detailing those characteristics useful to fieldand seed inspectors in identifying varieties. The des-criptions should not just encompass average characteris-tics but should also establish the limits of variabilityof the principal characteristics, and describe all realvariants (off-types) and their incidence in the popula-tion.

1/ From: Appraisal of National Seed Project - India. Report No. 1064a-IN,Annex 5, paras 7-23.

ANNEX 6Page 4

"(2) Varietal maintenance and trueness-to-variety of breederseed should be closely monitored by a committee compris-ing the breeder and representatives from ICAR, NSC andthe foundation seed and Certification Agencies fromthe State in which the breeder seed are produced.

"(3) ICAR should maintain in cold storage an authenic stock(1-2 kg) of notified varieties to serve as a referencefor quality control of breeder seed production. Thereleasing institution should also maintain a stock ofauthenticated breeder seed in cold storage to serveas a duplicate and immediately available reference.

"Foundation Seed

16. "The essential task of the seed programs is to multiply breeder seed

up to the quantity required for large scale seed production while maintaining

the highest standards of varietal purity. Use of high quality foundation

seed virtually eliminates seed production problems related to varietal im-purity. Rigorous precautions, therefore, must be taken to maintain varietalpurity during foundation seed production. Precautions include: careful

selection of land; isolation as required; thorough cleanup of all harvesting,drying, cleaning, and packaging equipment and storage facilities; and mainten-ance of complete and accurate records on each lot of foundation seed production.

17. "To ensure highest quality of foundation seed, the following actions

are recommended:

"(1) Each foundation seed unit should formulate and implementpolicies and procedures for maintaining varietal purityof the species of seed handled. No deviation from poli-cies or procedures should be tolerated.

"(2) The originating breeder or his replacement should be re-quested to periodically visit foundation seed productionfields and make such inspections as he deems necessary.

"(3) All foundation seed production should be under officialseed certification and subjected to periodic inspectionby the most experienced inspectors of the CertificationAgency.

"(4) Post-control field trials should be made on all foundationseed lots produced to determine varietal purity. Theseplots should be observed by the originating breeder andcertification inspectors as well as by foundation seedpersonnel. Foundation seed post-control plots will alsoserve as "pre-controls" for certified seed production.Problem lots can usually be identified in advance ofregular certified class inspection and actions takenaccordingly.

ANNEX 6Page 5

"State Seed Corporations

18. "The SSC would be the major seed producers in project States. Al-though the seed would be produced under certification the SSC would not relyentirely on certification for quality control. Each would establish its owninternal quality control program. A quality control section would be estab-lished at SSC headquarters. To ensure objectivity it would be in the Market-ing Division since this would not be responsible for seed handling, hencecould not effect quality. The section would formulate and implement qualitycontrol procedures applicable to all operations - production through distribu-tion. It would have a small laboratory at headquarters. In addition, sub-units would be established at processing plants, they would also be equippedwith testing laboratories. For field work staff of the Production Divisionwould be used but procedures and quality control administration would remainwith the Quality Control Section of the Marketing Division. Costs of head-quarters laboratories are included in SSC investments...

"Seed Certification

19. "... Each State Seed Certification Agency (SSCA) would have a centralheadquarters and several field stations (usually two). The latter would belocated in the compact areas. The Agency would station at least two inspectorsat each major processing center to make necessary inspections and control thepackaging and tagging of seed. These inspectors would work closely with thequality control units of the SSC.

20. "After establishment and reorganization, each SSCA would initiatean in-service training program in cooperation with NSC and the State Agricul-tural University. The varietal evaluation plots of the Agricultural Univer-sity and the post control plots of the foundation seed program would be usedfor training in varietal identification and general field inspection procedures.

21. "The Agencies would cooperate with foundation seed programs in postcontrol trials of all foundation seed lots, which would also serve as pre-control plots for certified seed. They would also institute post controltrials of certified seed lots selected at random up to 20% of the total numberof lots certified. These post control trials could be carried out on Agricul-tural University farms under a memorandum of agreement.

22. "Certification regulations and standards must be realistic and re-flect the growth and modernization of India's seed industry. Processors wouldbe allowed to bulk seed of different growers that are of the same variety andfrom the same lot of foundation seed so as to permit efficiencies in process-ing operations. The minimum standards for certification and inspection pro-cedures adopted by each Agency would meet or exceed those established by theCentral Seed Committee. The testing of seed, as required for certification,would be done by the State Seed Testing Laboratory under a memorandum ofagreement establishing testing priority and fee.

ANNEX 6Page 6

23. "GOI has agreed to create the Central Seed Certification Board (CSCB)with composition satisfactory to the Bank, before negotiations. It would be

responsible for coordinating the work of the State Seed Certification Agen-

cies and monitoring operations to ensure uniformity of standards, rules and

procedures.

24. "The Agencies would operate at a deficit for one or two years

until work volume increased; these deficits would be covered by the

project.

"Seed Testing

25. "Efficient and accurate testing is vital to quality control in a

seed industry. Well staffed and equipped laboratories are required to pro-

vide the three essential testing services: for the Certification Agency;

for farmers and non-certified seed producers; and for seed control to deter-

mine compliance with labeling requirements prescribed in the Seeds Act.

Usually one good laboratory per State would suffice.

26. "The State Seed Testing Laboratories would give priority to tests

for the Certification Agencies. The seasonally excess testing capacity

would be used to expand testing for enforcement of the labeling provisions

of the Seeds Act, and to step up testing of farmer saved seed. The Central

Seed Testing Laboratory would continue to develop and standardize seed test-

ing procedures and monitor the performance of the State laboratories...

"Training

27. "India is fortunate to have a small cadre of well trained seed

specialists. These would be used to maximum advantage to train the greatly

expanded staffs envisioned in the project. Much of the training required

can be given in India, especially by NSC and at TDC. A few key individuals,

however, would be programmed for observational tours of pertinent seed

facilities and agencies in the developed countries.

"Technical Assistance

28. "Present recording and accounting procedures are not adequate for

the planned certification work load of SSCA. Improved procedures are neces-

sary to safeguard quality control per se and for cost control to maintain

financial viability. A consultant would be provided, through CSCB, to assist

SSCA develop improved procedures..."

Pro-ject Proposals

29. The proposals and recommendations pertaining to quality control as

quoted above are adopted and re-affirmed for this project.

ANNEX 6Page 7

30. Seed certification agencies in the project states would be strength-ened and reorganized to provide the certification services needed for theexpanded seed production prograns in the states. Investments required forstrengthening or establishing seed certification in the five states are givenat Table 2. Recommended staffing patterns, projected operating costs, andrevenues are detailed in Tables 3 through 7.

31. Seed testing in Bihar, Orissa, Karnataka, and Rajasthan would bestrengthened to develop an adequate capability to provide the testing ser-vices needed for the proposed expansion of certified seed production ineach state. Uttar Pradesh has adequate seed testing establishments atGBPUAT and CSAUAT. Investments required for strengthening seed testingin the four states are given at Table 8, and total quality control invest-ments are summarized in Table 1.

32. Each State Seed Corporation would have a Quality Control Sectionin its organization, a quality control laboratory at headquarters, andquality control labs at each of its processing plants. Investments pro-posed for SSC are detailed in Annex 5.

33. The SSCA Director and Seed Testing Officer from each of the fivestates would be programmed for observational-study tours of approximately1 month duration each in the developed countries. Details are in Annex 7.

ANNEX 6Table 1

INDIA


Quality Control - Investment Costs Summary -

(Rs '000)

Total ForeignCosts Exchange ------- 7- Phasing -----------------(Rs '000) % (Rs '000) Year 1- Year 2 Year 3 Year 4

BIHAR

Certification Agency(1) Capital investments 912 31 285 365 173 260 114

(2) Operating deficit 471 - - 313 138 - -

Testing Laboratories 501 40 200 334 - 167 -

Physical Contingencies 90 23 21 16 24 20 30

Subtotal 1,974 26 506 1,028 335 447 144

KARNATAKA

Certification Agency3/ 938 31 292 562 235 75 66


Physical Contingencies 91 31 28 - 20 31 40

Subtotal 1,787 31 548 1,106 255 320 106

ORISSA

Certification Agency(1) Capital investments 589 31 182 381 151 19 38

(2) Operating deficit 213 - - 209 24 - -



Subtotal 1,389 29 399 954 186 206 63

RAJASTHAN

Certification Agency(1) Capital investments 1,343 30 405 631 333 313 66

(2) Operating deficit 56 - - 56 - - -

Testing Laboratories 665 34 227 446 105 114 -


Subtotal 2,167 31 663 1,136 456 464 111

UTTAR PRADESH-4 !

Certification Agency 1,784 32 562 1,040 413 208 123

Physical Contingencies 84 31 26 - 15 30 39

Subtotal 1,868 31 588 1,040 428 238 162

TOTAL QUALITY CONTROLINVESTMENTS 9,185 29 2,704 5,264 1,660 1,675 586

1/ Furt'her details in Tables 2 through 8.

2/ Includes expenditures in pre-project year.3/ No operating deficit is incurred by Karnataka's SCA.

4/ Uttar Pradesh does not require additional investments for testing laboratories and no

operating deficit is expected for U.P.'s SCA.

August 25, 1977

INDIASECOND NUTIO01G§ED FRDJECT

State Seed Certification AMency - Investment. Costs(Rs.'000)

2/ 2/ 2/ 3/ 4/

Unit Cost Bihar Karnataka Orissa Raiasthan Uttar Pradesh Total Foreign lKhan

Unit (Rs.'OOO) No. Rs.'OOO No. Rs.'OOO No. Rs.'OOO No. Rs.'0oo No. Rs.'000 (Rs.1000) _, S R.IODO

1 Un.is IngT - lump sum 35 - 35 - 25 - 45 - 45 ld5

Office equipment - lump sum - 35 - 35 - 25 - 45 - 45 15Label and tag printer No. 40.0 3 120 3 120 2 80 4 160 4 240 720 95 684

Vehicles(1) 4 WD "Jeep" with No. 65.0 2 130 2 130 1 65 2 130 3 195 650 25 163

trailer(2) Car No. 35.0 2 70 2 70 2 70 3 105 3 105 420 25 1C5

3 Motorcycles No. 9.0 4 -a 4 _6 2 18 4 34 162 Q40Sub-total 2423 2,322 3 992

2. Field OfficesyFurnishings - losm - 15 - 15 - 15 - 40 - 60 145

Office equipment - lump sum - 15 - 15 - 15 - 30 - 40 115

Inspection and sarpling set 0.5 34 17 32 16 12 6 46 23 56 28 90

equipment(1) 4 WD "Jeep" with No. 65.0 2 130 2 130 2 130 4 260 6 390 1,040 25 260

trailer(2) Motorcycles No. 9.0 29 261 32 288 12 108 45 405 56 504 i,566

Sub-total T 1,2 Z,9562

3. Total 864 890 557 1,279 1,688 5,278 31 1,644

14. Duties 48 48 32 64 96 288

5. Physical Contineenciea (5%) 4 45 28 64 X 264 31 82

6. Total Investment Costs 955 983 617 1,407 1,868 5,830 30 1,726

v Office space would be rented.2/ Two field offices/ Three field offices

Four field officesSubject to 40% import duty.

August 5, 1977

ANNEX 6Table 3

INDIA


Bihar SCA: Operating Costs and Revenues

UNIT COST YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5 ff

ITEM UNIT (Rs. '000) No. Re. '000 No. Re. '000 No. Rs. 1000 No. Rs. '000 No. Rs. '000

A. OPERATING COSTS 1/

1. Headquarters

Staff Costs(1) Director MY2

119.2 1 19.2 1 19.2 1 19.2 1 19.2 1 19.2

(2) Chief Inspector M Y 15.2 1 15.2 1 15.2 1 15.2 1 15.2 1 15.2

(3) Senior Seed Officers MY 14.4 1 14.4 1 14.4 1 14.4 2 28.8 2 28.8

(4) Admin_cum-Accounts Officer M Y 9.6 1 9.6 1 9.6 1 9.6 1 9.6 1 9.6

(5) Field Inspector M Y 7.2 2 14.4 2 14.4 4 28.8 4 28.8 4 28.8(6) Senior Clerk M Y 5.4 2 10.8 2 10.8 2 10.8 4 21.6 4 21.6

(7) Steno-typist M Y 4.2 2 8.4 2 8.4 2 8.4 4 16.8 4 16.8(8) Driver M Y 3.6 3 10.8 3 10.8 4 14.4 4 14.4 4 14.4(9) Peonis & Watchmen M Y 1.8 2 3.6 3 5.4 4 7.2 4 7.2 4 7.2

Fringe Benefits (50%) 53.2 54.1 64.0 80.8 80.8

Sxub-Total 159.6 162.3 192.0 242.4 242.4

Other Costs(1) Office Rental -3/ 16.0 - 16.0 - 16.0 - 16.0 - 16.0

(2) Office Supplies - Lump Sum - 10.0 - 12.0 - 15.0 - 16.0 - 20.0

(3) Certification 100 M tons 0.4 30 12.0 152 60.8 281 112.4 362 144.8 437 174.8

Supplies 4/(4) Travel Allowance 100 days 2.0 1 2.0 1.5 3.0 2 4.0 3 6.0 3 6.0

(5) Vehicle Operation &Maintenance

(a) 4WD & Car 1,000 miles 1.0 5 5.0 10 10.0 15 15.0 20 20.0 20 20.0(b) Motorcycle 1,000 miles 0.4 2 0.8 3 1.2 3 1.2 4 1.6 4 1.6

(6) Pre & Post ControlPLot Work 5/ ha 2.0 1 2.0 2 4.0 2 4.0 2 4.0

(7) Utilities & Services - Lump Sum - 6.0 - 12.0 - 12.0 - 15.0 - 15.0

Sub-Total 51.8 117.0 179.6 223.4 257.4

2. Field OfficesStaff Costs

(1) Seed Officer M Y 14.4 2 28.8 2 28.8 2 28.8 2 28.8 2 28.8(2) Fie'ld/Seed Inspector M Y 7.2 4 28.8 9 64.8 17 122.4 24 172.8 29 208.8(3) Senior Clerk M Y 5.4 2 10.8 2 10.8 2 10.8 4 21.6 4 21.6(4) Steno-typist M Y 4.2 2 8.4 2 8.4 4 16.8 6 25.2 6 25.2(5) Driiver M Y 3.6 1 3.6 2 7.2 2 7.2 2 7.2 2 7.2

(6) Peons & Watchmen M Y 1.8 4 7.2 4 7.2 4 7,2 6 10.8 6 10.8

Fringe Benefits (50%) 43.8 63.6 96.6 133.2 151.2

Sub-Total 131.4 190.8 289.8 399.6 453.6

Other Costs(1) Office Rentals - 3/ 8.0 - 8.0 - 8.0 - 8.0 - 8.0

(2) Off-Lce Supplies 1 - Lump Sum - 3.0 - 4.0 - 5.0 - 6.6 - 6.6(3) Travel Allowance 100 days 2.0 4 8.0 9 18.0 17 34.0 24 48.0 29 58.0(4) Vehicle Operation & Maint.



Sub-Total 30.2 53.2 87.4 121.4 131.4

TOTAL OPERATING COSTS 373.0 523.3 748.8 986.8 1,084.8

B. PROJECTED REVENUES -/

1. Certification Fees(a) Non-hybrid Cereals, Pulses, 100 ha 5.0 0.5 2.5 12 60.0 26 130.0 39 195.0 45 225.0

Cotton, Groundnuts(b) Hybrids, Potatoes 100 ha 7.5 2.5 18.8 16 120.0 29 217.5 39 292.5 54 405.0(c) Registration Fee 7/ 100 ha 0.832 3.0 2.5 28 23.3 55 45.8 78 64.9 99 82.4

2. Tag/labeL Sales 100 M tons 1.2 30 36.0 152 182.4 281 337.2 362 434.4 457 524.4

TOTAL REVENUES 59.8 385.7 730.5 986.8 1,236.8

C. OPERATING SURPLUS (DEFICIT) (313.2) (137.6) 18.3 0.0 152.0

D. PROJECT OOSTS TO COVER DEFICIT 313 138

Physical Contingencies (5%) 16 7

Total to be included in Project Costs 329 145

1/ Constant mid-1977 prices.2/ Man Year.3/ 107. of estimated new construction costs for equivalent area used as annual rental expenditure.4/ 40 sets of labels, tags and forms required per M ton seed at Rs. 0.1 per set.5/ Plot work could be done at University on a fee basis.6/ Assumed is 100 days travel per seed inspector and year.7/ Based on Eee of Rs. 25 per 3 ha, which is the assumed average size of a certification unit i.e., grower.

July 29, 1977

ANNEX 6Table 4

INDIA


Karnataka - SCA: Operating Costs and Revenues

UNIT COST YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5 ffITEM UNIT (Rs. '000) No. Rs. '000 No. Rs. '000 No. Rs. '000 No. Rs. 1000 No. i. '0o00

A. l~~~~~/A. OPERATING COSTS -

1. HeadquartersStaff Costs(1) Director y/ 19.2 1 19.2 1 19.2 1 19.2 1 19.2 1 19.2(2) Chief Inspector MY 15.6 1 15.6 1 15.6 1 15.6 1 15.6 1 15.6(3) Senior Seed Officers MY 14.4 2 28.8 2 28.8 2 28.8 2 28.8 2 28.8(4) Admin-cum-Accounts Officer M Y 9.6 1 9.6 1 9.6 1 9.6 1 9.6 1 9.6(5) Field Inspector MY 7.2 4 28.8 4 28.8 4 28.8 4 28.8 4 28.8(6) Senior Clerk MY 5.4 4 21.6 4 21.6 4 21.6 4 21.6 4 21.6(7) Steno-typist M Y 4.2 4 16.8 4 16.8 4 16.8 4 16.8 4 16.8(8) Driver MY 3.6 3 10.8 4 14.4 4 14.4 4 14.4 4 14.4(9) Peons 6 Watchmen MY 1.8 2 3.6 4 7.2 4 7.2 4 7.2 4 7.2

Fringe Benefits (507.) 77.4 81.0 81.0 81.0 81.0

Sub-Total 232.2 243.0 243.0 243.0 243.0

Other Costs 3(I) Office Rental - 1 / 16.0 - 16.0 - 16.0 - 16.0 - 16.0(2) Office Supplies 4 - Lump Sum - 12.0 - 15.0 - 18.0 - 20.0 - 20.0(3) Certification Supplies -/ 100 M tons 0.4 82 32.8 112 44.8 124 49.6 137 54.8 154 61.6(4) Travel Allowance 100 days 2.0 1 2.0 2 4.0 3 6.0 3 6.0 3 6.0(5) Vehicle Operation & Maintenance

(a) 4WD & Car 1,000 miles 1.0 5 5.0 10 10.0 15 15.0 20 20.0 20 20.0(b) Motorcycle 5 1,000 miles 0.4 2 0.8 4 1.6 4 1.6 4 1.6 4 1.6

(6) Pre & Post Control Plot Work - ha 2.0 1 2.0 2 4.0 2 4.0 2 4.0 2 4.0(7) Utilities & Services - Lump Sum - 6.0 - 12.0 - 14.0 - 15.0 - 15.0

Sub-Total 76.6 107.4 124.2 137.4 144.22. Field Offices

Staff Costs(I) Seed Officer M Y 14.4 2 28.8 2 28.8 2 28.8 2 28.8 2 28.8(2) Field/Seed Inspector M Y 7.2 15 108.0 23 165.6 25 180.0 29 208.8 32 230.4(3) Senior Clerk MY 5.4 2 10.8 2 10.8 4 21.6 4 21.6 4 21.6(4) Steno-typist M Y 4.2 2 8.4 2 8.4 4 16.8 6 25.2 6 25.2(5) Driver M Y 3.6 2 7.2 2 7.2 2 7.2 2 7.2 2 7.2(6) Peons & Watchmen MY 1.8 4 7.2 4 7.2 6 10.8 6 10.8 6 10.8

Fringe Benefits (507.) 85.2 114.0 132.6 151.2 162.0

Sub-Total 255.6 342.0 397.8 453.6 486.0Other Costs 3/(1) Office Rentals - - - 8.0 - 8.0 - 8.0 - 8.0 - 8.0(2) Office Supplies 6/ - Lump Sum - 3.0 - 4.0 - 5.0 - 7.0 - 7.0(3) Travel Allowance - 100 days 2.0 15 30.0 23 46.0 25 50.0 29 58.0 32 64.0(4) Vehicle Operation & Maintenance



Sub-Total 66.0 92.4 107.0 131.8 141.4

TOTAL OPERATING COSTS 630.4 784.8 872.0 965.8 1,014.6

B. PROJECTED REVENUES

1. Certification Fees(a) Non-hybrid Cereals, Pulses, 100 ha 5.0 5 25.0 5 25.0 6 30.0 7 35.0 8 40.0

Cotton, & Groundnuts(b) Hybrid, Potatoes 100 ha 7.5 63 472.5 105 787.5 115 862.5 127 952.5 142 1,065.0(c) Registration Fees - 100 ha 0.832 68 56.6 110 91.5 121 100.7 134 111.5 150 124.8

2. Tag/label Sales 100 M tons 1.2 82 98.4 112 134.4 124 148.8 137 164.4 154 184.8

TOTAL REVENUES 652.5 1,038.4 1,142.0 1,263.4 1,414.6C. OPERATING SURPLUS (DEFICIT) 22.1 253.6 270.0 297.6 400.0

D. PROJECT COSTS TO COVER DEFTCIT 0.0

1/ Constant mid-1977 prices.2/ Man Year.3/ 10% of estimated new construction costs for equivalent area used as annual rental expenditure.4/ 40 sets of labels, tags and for-s required per M ton seed at Rs. 0.1 per set.5/ Plot work could be done at University on a fee basis.6/ Assumed is 100 days travel per seed inspector and year.7/ Based on fee of Re. 25 per 3 ha, which is the assumed average size of a certification unit i.e., grower.

August 2, 1977

ANNEX 6Table 5

INDIA


Orissa - SCA: Operating Coats and Revenues


ITEM UNIT (Rs. '000) No. e. '000 No. ReRs.00 No. e. '000 No.Rs Re. '0 No. Re. '000

Al OPERATING COSTS-/

1. Neadquarters

Staff Costs(1) Director MY -/ 19.2 1 19.2 1 19.2 1 19.2 1 19.2 1 19.2

(2) Chief Inspector MY 15.6 1 15.6 1 15.6 1 15.6 1 15.6 1 15.6

(3) Senior Seed Officers M Y 14.4 1 14.4 1 14.4 1 14.4 1 14.4 1 14.4

(4) Admin-cum-Accounts Officer MY 9.6 1 9.6 1 9.6 1 9.6 1 9.6 1 9.6

(5) Field Inspector MY 7.2 2 14.4 2 14.4 2 14.4 2 14.4 2 14.4

(6) Senior Clerk M Y 5.4 2 10.8 2 10.8 3 16.2 3 16.2 3 16.2

(7) Steno-typist MY 4.2 2 8.4 2 8.4 3 12.6 3 12.6 3 12.6

(8) Driver MY 3.6 3 10.8 3 10.8 3 10.8 3 10.8 3 10.8

(9) Peons N Watchmen M Y 1.8 2 3.6 3 5.4 3 5.4 4 7.2 4 7.2

Fringe Benefits (50%) 53.4 54.3 59.1 60.0 60.0

Sub-Total 160.2 162.9 177.3 180.0 180.0

Other Costs 3(I) Office Rental _ - 16.0 - 16.0 - 16.0 - 16.0 _ 16.0(2) Office Supplies - Lump Sum - 8.0 - 10.0 - 14.0 - 16.0 - 16.0

(3) Certification Supplies-/ 100 M tons 0.4 72 28.8 150 60.0 183 73.2 205 82.0 218 87.2

(4) Travel Allowance 100 days 2.0 1 2.0 1.5 3.0 2 4.0 3 6.0 3 6.0

(5) Vehicle Operation & Maintenance(a) 4WD & Car 1,000 miles 1.0 5 5.0 10 10.0 15 15.0 15 15.0 IS 15.0

(b) Motorcycle 1,000 miles 0.4 2 0.8 3 1.2 3 1.2 3 1.2 3 1.2

(6) Pre & Post Control Plot Work 5/ ha 2.0 1 2.0 2 4.0 2 4.0 2 4.0 2 4.0


Sub-Total 68.6 116.2 139.4 155.2 160.4

2. Field OfficesStaff Costa

1) Seed Officer MY 14.4 1 14.4 1 14.4 1 14.4 1 14.4 1 14.4

(2) Field/Seed Ihepector M Y 7.2 8 57.6 9 64.8 10 72.0 12 86.4 14 100.8

(3) Senior Clerk MY 5.4 2 10.8 2 10.8 2 10.8 2 10.8 2 10.8

(4) Steno-typist M Y 4.2 2 8.4 3 12.6 4 16.8 4 16.8 4 16.8

(5) Driver M Y 3.6 1 3.6 2 7.2 2 7.2 2 7.2 2 7.2

(6) Peons & Watchmen MY 1.8 4 7.2 4 7.2 4 7.2 4 7.2 4 7.2

Fringe Benefits (507.) 51.0 58.5 64.2 71.4 78.6

Sub-Total 153.0 175.5 192.6 214.2 235.8

Other Costs3(1) Officel Rentals - 8.0 - 8.0 - 8.0 - 8.0 - 8.0(2) Offic! Supplies 6 - Lump Sum - 2.0 - 3.0 - 4.0 - 5.0 - 5.0

(3) Travel Allowance-/ 100 days 2.0 8 16.0 9 18.0 10 20.0 12 24.0 14 28.0

(4) Vehicle Operation & Maintenance(a) 4WD & Car 1,000 miles 1.0 5 5.0 10 10.0 10 10.0 10 10.0 10 10.0

(b) Motorcycle 1,000 miles 0.4 18 7.2 21 8.4 24 9.6 30 12.0 36 14.4

(5) Utililties & Services - Lump Sum - 3.0 - 4.0 - 6.0 - 6.0 - 8.0

Sub-Total 41.2 51.4 57.6 64.0 73.4

TOTAL OPERATING COSTS 423.0 506.0 566.9 613.4 649.6

B. PROJECTED REVENUES -

1. Certificatlon Fees(a) Non-hybrid Cereals, Pulses, 100 ha 5.0 19 95.0 46 230.0 54 270.0 61 305.0 65 325.0

Cotton, & Grorudnuts(b) Hybrid, Potatoes 100 ha 7.5 2 15.0 4 30.0 4 30.0 5 37.5 5 37.5

(c) Registration Fees 7/ 100 ha 0.832 21 17.5 50 41.6 58 48.3 66 54.9 70 58.2


TOTAL REVENUES zi3.9 481.6 567.9 643.4 682.3

C. OPERATING SURPLUS (DEFICIT) (209.1) (24.4) 1.0 30.0 32.7

D. PROJECT COSTS TO COVER DEFICIT 209 24

Physical Contingencies (5%) 10 12~19 25

Total to be included in Project Costs 219 25

1/ Constant mid-1977 prices.2/ Man Year.3/ 10X of estimated new construction costs for equivalent area used as annual rental expenditure.

4/ 40 sets of labels, tags and forum required per M ton seed at Rs. 0.1 per set.

5/ Plot work could be done at University on a fee basis.6/ Assumed is 100 days travel per seed inspector and year.7/ Based on fee of Rs. 25 per 3 ha, which is the assumed average size of a certification unit i.e., grower.

August 1, 1977

ANNEX 6

Table 6

INDIA


Rajasthan - SCA: Operating Cost. and Revenues


ITEM UNIT (Ra. 000) No. Rs. 000 No. Re '000 No. Re. '000 No. Rs. '000 No. Rs. '000

A. OPERATING COSTS -/

l. Headquarters

Staff Costs 2/(1) Director M Y - 19.2 1 19.2 1 19.2 1 19.2 1 19.2 1 19.2

(2) Chief Inspector M Y 15.2 1 15.2 1 15.2 1 15.2 1 15.2 1 15.2

(3) Senior Seed Officers M Y 14.4 2 28.8 3 43.2 3 43.2 3 43.2 3 43.2

(4) Admin-cum-Accounts Officer M Y 9.6 2 19.2 2 19.2 2 19.2 2 19.2 2 19.2

(5) Field Inspector M Y 7.2 2 14.4 2 14.4 4 28.8 4 28.8 4 28.8

(6) Senior Clerk M Y 5.4 3 16.2 3 16.2 4 21.6 5 27.0 5 27.0

(7) Steno-typist M Y 4.2 4 16.8 4 16.8 6 25.2 6 25.2 6 25.2

(8) Driver M Y 3.6 4 14.4 5 18.0 5 18.0 5 18.0 5 18.0

(9) Peons & Watchmen M Y 1.8 3 5.4 4 7.2 5 9.0 5 9.0 5 9.0

Fringe Benefits (50%) 74.8 84.7 99.7 102.4 102.4

Sub-Total 224.4 254.1 299.1 307.2 307.2

Other Costs 3/

(1) Office Rental _ _ _ - 25.0 - 25.0 - 25.0 - 25.0 - 25.0

(2) Office Supplies - Lump Sum - 12.0 . 14.0 - 16.0 - 20.0 - 22.0

(3) Certification Supplies - 100 M tons 0.4 131 52.4 184 73.6 354 141.6 385 154.0 393 157.2

(4) Travel Allowance 100 days 2.0 2 4.0 2 4.0 3 6.0 3 6.0 3 6.0

(5) Vehicle Operation & Maintenance

(a) 4WD & Car 1,000 miles 1.0 10 10.0 15 15.0 20 20.0 20 20.0 20 20.0

(b) Motorcycle 5/ 1,000 miles 0.4 2 0.8 3 1.2 4 1.6 5 2.0 5 2.0

(6) Pre & Poet Control Plot Work - ha 2.0 2 4.0 2 4.0 2 4.0 3 6.0 3 6.0


Sub-Total 120.2 154.8 234.2 253.0 258.2


(1) Seed Officer M Y 14.4 2 28.8 2 28.8 2 28.8 2 28.8 2 28.8

(2) Field/Seed Inspector

(a) Ganganagar Zone M Y 7.2 10 72.0 12 86.4 25 180.0 27 194.4 28 201.6

(b) Kota Zone M Y 7.2 4 28.8 7 50.4 13 93.6 16 115.2 17 122.4

(3) Senior Clerk M Y 5.4 3 16.2 3 16.2 4 21.6 6 32.4 6 32.4

(4) Steno-typist M Y 4.2 3 12.6 4 16.8 4 16.8 6 25.2 6 25.2

(5) Driver M Y 3.6 2 7.2 4 14.4 4 14.4 4 14.4 4 14.4

(6) Peons & Watchmen M Y 1.8 4 7.2 6 10.8 6 10.8 6 10.8 6 10.8

Fringe Benefits (50.) 86.4 111.9 183.0 210.6 217.8

Sub-Total 259.2 335.7 549.0 631.8 653.4

Other Costs

(1) Office Rentals - - 16.0 - 16.0 - 16.0 - 16.0 - 16.0

(2) Office Supplies - Lump Sum - 4.0 - 6.0 - 8.0 - 8.0 - 8.0

(3) Travel Allowance 6/ 100 days 2.0 14 28.0 19 38.0 38 76.0 43 86.0 45 90.0

(4) Vehicle Operation & Maintenance

(a) 4WD & Car 1,000 miles 1.0 8 8.0 10 10.0 15 15.0 20 20.0 20 20.0

(b) Motercycle 1,000 miles 0.4 18 7.2 38 15.2 76 30.4 86 34.4 90 36.0


Sub-Total 69.2 97.2 160.4 179.4 185.0

TOTAL OPERATING COSTS 673.0 841.8 1,242.7 1,371.4 1,403.8

13. PROJECTED REVENUES 1/

L. Certification Fees(a) Non-hybrid Cereals, Pulses, 100 ha 5.0 66 330.0 97 485.0 204 1,020.0 223 1,115.0 227 1,135.0

Cotton, & Groundnuts(b) Hybrid, Potatoes 100 ha 7.5 9 67.5 14 105.0 26 195.0 31 232.5 32 240.0

(c) Registration Fee 7/ 100 ha 0.832 75 62.4 111 92.3 230 191.4 254 211.4 259 215.5


TOTAL REVENUES 617.1 903.1 1,831.2 2,020.9 2,062.1

C. OPERATING SURPLUS (DEFICIT) (55.9) 61.3 588.5 649.5 658.3

D. PROJECT COSTS TO COVER DEFICIT 56

Physical Contingencies (57.) 3

Total to be included in Project Costs 59

I/ Constant mid-1977 prices.

2/ Man Year.

3/ 107. of estimated new construction costs for equivalent area used as annual rental expenditure.4/ 40 sets of labels, tags and for-s required per M ton seed at Rs. 0.1 per set.

.5 Plot work could be done at University on a fee basis.

6/ Assumed is 100 days travel per seed inspector and year.

7/ Based on fee of Rs. 25 per 3 ha, which is the assumed average size of a certification unit i.e., grower.

August 1, 1977

ANNEX 6Table 7

INDIA


Uttar Pradesh - SCA: Operating Costs and Revenues


ITEM UNIT (Rs. '000) No. Re. '000 No. Rs. '000 No. Re. '000 No. Re. '000 No. Re. '000

A. OPERATING COSTS -

1. HeadquartersStaff Costa

(1) Director H Y-/ 19.2 1 19.2 1 19.2 1 19.2 1 19.2 1 19.2

(2) Chief Inspector MY 15.6 1 15.6 1 15.6 1 15.6 1 15.6 1 15.6(3) Senior Seed Officers MY 14.4 2 28.8 4 57.6 4 57.6 4 57.6 4 57.6

(4) Admin-cum-Accounts Officer M Y 9.6 3 28.8 3 28.8 3 28.8 3 28.8 3 28.8

(5) Field Inspector MY 7.2 2 14.4 2 14.4 4 28.8 4 28.8 4 28.8

(6) Senior Clerk MY 5.4 3 16.2 3 16.2 4 21.6 5 27.0 5 27.0(7) Sterno-typist M Y 4.2 4 16.8 4 16.8 6 25.2 6 25.2 6 25.2

(8) Driver MY 3.6 5 18.0 6 21.6 6 21.6 6 21.6 6 21.6

(9) Peors & Watchmen M Y 1.8 3 5.4 4 7.2 5 9.0 5 9.0 5 9.0

Fringe Benefits (507.) 81.6 98.7 113.7 116.4 116.4

Sub-Total 244.8 296.1 341.1 349.2 349.2

Other Costs(1) Office Rental _ - 35.0 - 35.0 - 35.0 - 35.0 - 35.0

(2) Office Supplies Q - Lump Sum - 14.0 - 16.0 - 18.0 _ 22.0 - 24.0

(3) Certification Supplies - 100 M tons 0.4 362 144.8 455 182.0 573 229.2 668 267.2 750 300.0

(4) Travel Allowance 100 days 2.0 2 4.0 3 6.0 4 8.0 4 8.0 4 8.0

(5) Vehicle Operation & Maintenance(a) 4WD & Car 1,000 miles 1.0 10 10.0 15 15.0 20 20.0 20 20.0 20 20.0(b) Motorcycle 5 1,000 miles 0.4 2 0.8 3 1.2 4 1.6 5 2.0 5 2.0

(6) Pre & Post Control Plot Work- ha 2.0 2 4.0 2 4.0 3 6.0 3 6.0 3 6.0(7) Utilities & Services - Lump Sum - 12.0 - 18.0 - 20.0 - 20.0 - 20.0

Sub-Total 224.6 277.2 337.8 380.2 415.0


(I) Seed Officer MY 14.4 3 43.2 3 43.2 3 43.2 2 43.2 3 43.2(2) Field/Seed Inspector M Y 7.2 30 216.0 35 252.0 43 309.6 50 360.0 56 403.2

(3) Senior Clerk MY 5.4 3 16.2 3 16.2 6 32.4 6 32.4 6 32.4(4) Steno-typist MY 4.2 4 16.8 6 25.2 6 25.2 6 25.2 6 25.2(5) Driver M Y 3.6 4 14.4 6 21.6 6 21.6 6 21.6 6 21.6

(6) Peons & Watchmen MY 1.8 4 7.2 6 10.8 6 10.8 8 14.4 8 14.4

Fringe Benefits (50h.) 156.9 184.5 221.4 248.4 270.0

Sulb-Total 470.7 553.5 664.2 745.2 810.0

Other Costs 3/(1) Office Rentals - - 24.0 - 24.0 - 24.0 - 24.0 - 24.0

(2) Office Supplies - Lump Sum - 6.0 - 8.0 - 12.0 - 12.0 - 12.0(3) Travel Allowance 6/ 100 days 2.0 30 60.0 35 70.0 43 86.0 50 100.0 56 112.0

(4) Vehicle Operation & Maint.(a) 4WD & Car 1,000 miles 1.0 8 8.0 10 10.0 15 15.0 20 20.0 25 25.0(b) Motorcycle 1,000 miles 0.4 60 24.0 70 28.0 86 34.4 100 40.0 112 44.8


Sub-Total 130.0 154.0 187.4 214.0 235.8

TOTAL OPERATING COSTS 1,070.1 1,280.8 1,530.5 1,688.6 1,810.0

1/B. PROJECTED REVENUES

1. Certification Fees(a) Non-hybrid Cereals, Pulses, Cotton, 100 ha 5.0 139 695.0 184 920.0 249 1,245.0 297 1,485.0 342 1,710.0

& Groundnuts(b) Hybrids, Potatoes 100 ha 7.5 13 97.5 16 120.0 19 142.5 22 165.0 26 195.0

(c) Registration Fee 7/ 100 ha 0.832 152 126.5 200 166.4 268 222.9 319 265.4 368 306.2


TOTAL REVENUES 1,353.4 1,752.4 2,298.0 2,717.0 3,111.2

C. OPERATING SURPLUS (DEFICIT) 282.3 471.6 767.5 1,028.4 1,301.2

D. PROJECT COSTS TO COVER DEFICIT 0.0

1/ Constant mid-1977 prices.2/ Man Year.3/ 107. of estimated new construction costs for equivalent area used as annual rental expenditure.4/ 40 sets of labels, tags and forms required per M ton seed at Rs 0.1 per set.5/ Plot work could be done at University on a fee basis.6/ Assumed is 100 days travel per seed inspector and year.7/ Based on fee of Re 25 per 3 ha, which is the assumed average size of a certification unit i.e., grower.

August 1, 1977

INDIA


State Seed Testirg Laboratories - Investments Costs

31 4/ 5/ 6/Unit Cost Bihar Karnataka Orissa Rajasthan Total Foreign &Rchange

Unit (Rs.'OO) o. R.000 No. R'.O000 NO. Rs.'OOO IR % Rs.'OOO

1. Civil WorksNew construction 0.5 300 150 15CSite preparation (15% of construction) 23 23Renovation and remodelirg M2 0.25 300 75 200 50 400 100 500 125 35CFencing - Lump um - 10 - 10 2C

Sub-Total 77 233 100 135

2. EquipmentAir conditioning and dehumidification

for sample storerooms Room 20.0 2 40 3 60 2 40 3 60 20( 25 50Air conditioning and metal cabinets

for germinator room Rooms 10.0 4 40 6 60 4 40 6 60 20( 25 50*Purity analysis equipment - Lump Sum - 50 - 60 - 50 - 50 21( 75 158*Germinators, cabinet type No. 50.0 2 100 2 100 2 100 2 100 40(O 95 380*Special test equipment

(health, vigor, moisture, quick test) - Lump Sum - 40 - 40 - 40 - 50 17 75 1-27Lab furnishings - Lump Sum - 30 - 35 - 25 - 35 12LOffice furnishings and equipment - Lump Sum - 15 - 20 - 15 - 25 7

Sub-Total 7i 75 13 7g 775

3. Vehicles No. 35.0 1 35 2 70 1 35 2 70 21' 25 53

5. Totals 425 678 445 585 2,131 3d 815

6. Duties 76 Bo 76 80 31

7, Physical Contingencies 2/ 25 46 27 36 13 31 41

8. Total Investment Costs 526 do4 54d 701 2,57k 33 d56

-Items subject to 40% import duty.1/ Uttar Pradesh requires no investments. - i2/ 10% for civil works; 5% for other investments. m w/ Strengthenirg of existing testing laboratory.

New testing lab at Dharwar; strengthening of lab at Hebbal.5/ Remodeling and strengthening lab at Bhubaneswar and branch at Balasore.G/ Remodeling and strengthening testing labs in Durgapura and Sriganganagar.

August 1, 1977

ANNEX 7Page 1

INDIA


Training and Technical Assistance

Training


1. Development of seed technology research as proposed would requirestaff with in-depth training in seed related research techniques and proce-dures. This type of training can best be accomplished through a graduatestudy program in an established seed technology curriculum in one of thedeveloped countries. Provision has therefore been made in project costsfor one candidate from each of the participating Agricultural Universitiesto undertake an advanced degree program in the USA, Europe or Australia.

Processing

2. Seed processing would be considerably expanded, necessitating train-ing of plant managers and operatives. This would be done at existing NSCand TDC facilities. Costs would be met out of normal SSC operating budgets.NSC would be responsible for providing technical services to the seed indus-try. To ensure that the responsible engineers were fully abreast of latesttechnology, provision was made in the Phase I project for two engineers tobe sent on a two month tour to study operations in developed countries.

Quality Control

3. With the expansion of certification and seed testing activity con-siderable staff training would be necessary. Most of this could be givenin India, using mainly NSC and TDC staff and facilities. Costs would be metout of normal operating budgets. Proposed training in India is:

- the Chief Inspector and Senior Seed Officer of eachcertification agency would be given four weeks on-the-jobtraining with counterparts at TDC and NSC;

- the Seed Testing Officer and two Seed Analysts from eachstate testing lab would be given four weeks on-the-jobtraining with the NSC and Central Seed Testing Laboratories;and;

- the Quality Control Officer and Assistant Quality ControlOfficers of each SSC would be given four weeks on-the-jobtraining with TDC and NSC counterparts.

ANNEX 7Page 2

After completion of training, these officers would be in a position toestablish and conduct training courses for their junior staff.

4. In addition to the above, it is proposed, as in Phase I, that theDirector or Chief Inspector of each SSCA, and the Senior Seed Testing Officerof each state testing laboratory, undertake a one month observational tourof established certification agencies and seed testing laboratories inAustralia, Europe or the USA. This would familiarize them with up-to-dateprocedures, management systems and equipment, and improve subsequent per-formance not only in expanding activity but also in training staff. NSCwould make the necessary arrangements and coordinate the overseas training.

Marketing

5. Training would also be required on a considerable scale in marketingaspects in order to provide adequate number and caliber of staff required forthe rapid expansion of the seed industry as planned. Much of this trainingcould be on-the-job. Some of this, however, has to be given outside theindustry -- in Indian organizations marketing other agricultural inputs or inoverseas companies as there are not many institutions with long experience inseed sales promotion and marketing. Three months of overseas training andthree months local training for each of the five SSC Marketing Managers hasbeen provided, and in addition, three months local training each for twoother marketing executives of each SSC.

Technical Assistance


6. Interdisciplinary seed technology research programs would be devel-oped at all Agricultural Universities included in NSP projects. Because thiswould be a new activity provision was made in Phase I for a specialist for twomonths to advise Universities on program planning and the facilities to bedeveloped. This specialist would be a senior staff member from an establishedseed technology program. An additional provision for three months has beenmade for this specialist to assist the Universities associated with the proposedproject.

Processing

7. NSC would be responsible for the design, inter alia, of SSC proces-sing plants. NSC engineers had developed a number of cereal seed plants butnone of the size, and with the range of equipment, proposed for SSC plants.They have had no experience of cotton seed processing. Provision was there-fore made in Phase I for five months services of a specialist to be engaged toassist NSC engineers prepare designs for two proposed cereal plant modules andfor the cotton seed processing units. The specialist was also to help commis-sion the processing plants and train staff in the operation. No additionalprovision is required under this project.

ANNEX 7Page 3

Quality Control

8. India has the technical expertise to expand quality controloperations. However, administrative procedures had received littleattention. Given the intent to decentralize certification from NSC toState Agencies technical assistance was considered necessary to developsatisfactory administrative procedures. Provision was made in Phase I forthe Central Seed Certification Board to engage a specialist for two monthsto assist State Agencies in this area. Additional two man-months of thisspecialist's services have been included in this project to help the fiveparticipating states.

Marketing

9. The importance of demand assessment, market research, salespromotion, sales and distribution in development of the seed industrycannot be overemphasized. Provision was made in Phase I for consultantsto be engaged by NSC to reorient its marketing efforts, to develop andrun staff training programs and to update the initial demand surveyundertaken by IRAS and NCAER. Provision has been made in this project for:

(i) seven man-months for setting up a market research divisionin NSC and in each of the participating SSC - two man-monthsfor NSC and one man-month each for the SSC;

(ii) marketing consultancy services, of three man-monthsfor each of the five participating states, to assistin the establishment of a sales promotion section inSSC's Marketing Division and to assist in the initialpublicity campaigns. It is expected that Indian firmswith marketing expertise would be qualified to undertakethese assignments.

10. Estimated costs for training and technical assistance are at Table 1.

INDIA


Training and Technical Assistance(Rs. '000)

No. of ---------Year ------ -- Foreign Exchange

Man-months 1 2 3 4 Total , d Amount

TRAININGA. SEED CERTIFICATION

SSCA Directors & Seed Officers (10) 10Travel at Rs. 16,500 each 83 82 - - 165 100 165

Expenses Rs. 400/day 60 60 - - 120 100 120

B. SEED TECHNOLOGY RESEARCHPh.D Fellowships (9) 324

Travel at Rs. 22,000 each - 66 66 66 198 100 198

Expenses Rs. 50,000/man-year - 450 45o 45o 1,350 100 1,350

Tuition & Books Rs. 15,000/man-year _ 135 135 135 405 100 405

C. MARKETINGMarketing Managers (5) 15

Travel at Rs. 16,500 each 82 - - - 82 100 82

Expenses Rs. 400/day 180 - - - 180 100 180-

Marketing Managers & Executives (15) 45

Expenses Rs. 6,000/man-month - 270 - _ 270 - -

CONSULTANTSA. SEED CERTIFICATION 3

Travel at Rs. 20,000 20 - - - 20 80 16

Fee & Expenses Rs. 55,000/man-month 165 - - - 165 80 132

B. SEED TECHNOLOGY RESEARCH 3

Travel at Rs. 20,000 20 - - - 20 80 16

Fee & Expenses Rs. 55,000/man-month 165 - - - 165 80 132

C. MARKETINGMarket Research - Fee & Expenses

Rs. 15,000/man-month j 7 70 35 - - 105 - -

Sales Promotion - Fee & ExpensesRs. 15,000 man-month j 15 90 135 - _ 225 - -

Total Base Cost 935 1,233 651 651 3,470 82 2,796

One month at each of the five SSC; 2 months at NSC.

Three months at each of the five SSC.

July 22, 1977

ANNEX 8Table 1

INDIA


Prosect CostsRs. '000)

2/ ~~~~~~~~~~~~Foreign ExchangeYear 1-/ Year 2 Year 3 Year 4 Year 5 Total % Amount

A. STATE SEED CORPORATIONS (Annex 5, Table 3)Plant Sites and Civil Works 11,491 22,985 22,985 - - 57,461 10 5,752Machinery and Equipment 7,405 11,491 11,747 7,660 - 38,303 39 15,017Headquarters 850 3,828 3,827 - - 8,505 10 838

Subtotal 19,746 38,304 38,559 7,660 - 104,269 21 21,607Contingencies - Physical 1/ 818 2,455 4,907 - 8,180 18 1,444

- Price 3/ 1,609 7,196 10,988 4,284 - 24,07 9 2,170

TOTAL A. 21,355 46,318 52,002 16,851 - 136,526 18 25,221

B. INCREMENTAL PERMANENT WORKING CAPITALState Seed Corporations 4/ 2,700 15,200 14,300 9,700 9,900 51,800 - -Universities 5/ 1,220 1,140 780 792 - 3,932 - -

Subtotal 3,920 1b,340 15,080 10,492 9,900 55,732 - -Contingencies - Price 3/ 314 2,614 3,619 3,458 4,222 14,227 _

TOTAL B. 4,234 18,954 18,699 13,950 14,122 69,959 - -

C. FARM DEVELOPMENT (Annex 4, Table 1) 17,845 10,163 4,657 1,000 750 34,415 31 10,601Contingencies - Physical 1/ 1,413 955 383 50 38 2,839 27 774

- Price 3/ 1,612 2,058 1,352 355 340 5,717 21 1,201

TOTAL C. 20,870 13,176 6,392 1,405 1,128 42,971 29 12,576

D. AGRICULTURAL UNIVERSITIESBreeder Seed Production (Annex 3, Table 5) 441 1,509 560 - - 2,510 20 502Foundation Seed Production (Annex 3, Table 8) 7,200 10,030 7,375 - - 24,605 24 6,021Seed Technology Research (Annex 3, Table 11) 150 1,384 908 594 596 4,132 17 707

Subtotal 7,791 13,423 8,843 594 596 31,247 23 7,230Contingencies - Physical 1/ 3 259 620 1,164 - 2,046 20 411

- Price 3/ 532 2,416 2,358 615 250 6,171 13 820

TOTAL D. 8,326 16,098 11,821 2,373 846 39,464 21 8,461

E. QUALITY CONTROL (Annex 6, Table 1)State Seed Certification Agencies 3,557 1,467 875 407 - 6,306 27 1,702State Seed Testing Laboratories 1,678 105 662 - - 2,445 35 855

Subtotal 5,234 1,572 1,537 407 - 8,751 29 2,557Contingencies - Physical 1/ 29 88 138 179 - 434 28 123

- Price 3/ 352 272 418 193 - 1,235 21 256

TOTAL E. 5,616 1,932 2,093 779 - 10,420 28 2,936

F. TRAINING AND TECHNICAL ASSISTANCE 6/ 935 1,233 651 651 - 3,470 81 2,796Contingencies - Price 3/ 89 213 169 228 - 699 87 610

TOTAL F. 1,024 1,446 820 879 - 4,169 82 3,406

G. INCREMENTAL RESERVE STOCKS 7/ 100 150 300 400 215 1,165 - -Contingencies - Price 3/ 8 24 72 132 90 326 - -

TOTAL C. 108 174 372 532 305 1,491 - -

H. PROJECT COSTS 55,572 81,185 69,627 21,204 11,461 239,049 19 44,791Contingencies - Physical 1/ 1,445 2,120 3,596 6,300 38 13,499 20 2,752

- Price 3/ 4,516 14,793 18,976 9,265 4,902 52,452 10 5.057

TOTAL PROJECT COSTS 61,533 9R,098 92,199 36,769 16,401 305,000 17 52,600

_/ Physical contingencies at 10% of civil works and farm development equipment and operations; 5% for other equipment2/ Includes cost for equipment being procured in pre-project year3/ For basis of calculation, see Table 24/ From Chart I; Inventory valued at procurement price plus variable processing costs and proportionate plant overhead (excluding

depreciation)5/ Estimated at 8% of SSC's incremental working capital requirements for the following year.6/ From Annex 7, Table 17/ From Annex 13, Table 6; certified seed has been valued at seed procurement price plus 50% of variable processing costs;

foundation seed has been valued at 50% of projected selling ?rice.

August 25, 1977

INDIA

SFCOND NATIONAL SEED PROJECT

Price Contingencies - Percentage 1/

Local Price Foreign PriceCalendar Project Local Accumlated Contingency Foreign Accumulated ContingencyYear Year 2/ Inflation Inflation Used Inflation Inflation Used

Machinery (&) Equipment 3/

1977 - 6.0 3.0 4/ 3 7.5 3.8 4/ 4

1978 1 7.0 8.4 5/ 8 7.5 9.6 5/ 10

1979 2 7.0 16.0 16 7.5 17.8 18

1980 3 7.0 24.1 24 7.0 26.2 26

1981 4 7.0 32.8 33 7.0 35.0 35

1982 5 7.0 42.1 42 7.0 44.5 45

Civil Works

1977 - 7.0 $L5 4/ 4 9.0 4.5 4/ 5

1978 1 8.0 9.7 5/ 10 9.0 11.6 5/ 12

1979 2 8.0 18.5 19 9.0 21.6 22

1980 3 8.0 28.0 28 8.0 31.6 32

1981 4 8.0 38.2 38 8.0 42.1 42

1982 5 8.0 49.3 49 8.0 53.5 54

Base: July 1, 1977

1/ Source: Program Division guidelines, February 1977.2/ Project years commence on April 1 of a calandar year and end March 31 of the following calendar year.3/ Rates have also been applied to services and working capital.4/ Pre-project expenditures are assumed to be sprea¶ evenly over the period September 1977 through

March 1978. Mid-point thus is end December 1977. O5/ 112 of 1977 annual inflation rate cumulateJ with 3/4 of 1978 annual inflation rate to bring pricesfTiiI July 1, 1977 -to September 30, 1978 (the mid-point of project year 1).

July 21, 1977


WORKING CAPITAL NEEDS OF STATE SEED CORPORATIONS

240 240__ _ _ __ _ _ _ _ _ _ __ _ _ _ _ _ _

200 ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~200

TOTAL

160~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~s

180 -~~~~~~~~~~~~~~~~~~~~~~~~~~ 180

160 ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~160

140 - -~

_________ ~~~~~~~~~~~~~~~~~~~~~~~~~~~~140

120 ~~~~~~~~~~~~~~~~~~~~~~~~~120

INCREMENTAL~

100 - ~~~~~~~~~~~~~~~~~~~~~~~~~WORKING 100CAPITAL ' #

RSSCUPSC/ 0

60~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~II 6

___ I 2'L. ~~~~~~~~~~~~ / SSC ~~~lk60I .. .......

20 P'- ***~~~~~~~~~~~ ~~~ j ~~ BSSC

20 O ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~~~O

A M JJA S0N DJ 1- MA MJ J A SON DJ F MA M. J A S NO D1 F MAM J J A S O NOJ F MA M iJ A S O ND J FM

1978/79 1979/80 1980/81 1981/82 1982/83

World B-kr - 17917

INDIA


Financing and Disbursement(Rs. '000)

IDA Financing __ _G01

Total Loans Through GOI Public Share State Seed ParticipatingCosts ARD Expenditure Capital Grants Governments Growers ARDC Banks

A. STATE SEED CORPORATIONS 1/Imported Machinery and

Equipment 18,221 lOO%cif 12,323 - iLocal Equipment and kl2,287 114,335 {L4,335 f 2,706 9,557

Civil Works 118,305 6 70 983 _ | (NSC) _|||Subtotal ,5 12,27 - 1,335 14,335 2,706 9,557

B. INCREMENTAL PERMANENTWORKING CAPITALAgricultural Universities 2 4,659 - i _ _ 1,165 - - 3,145 349

State Seed Corporations 1 65 300 -8- _ _ 877 _ 6,857 6,857 41,1 4,570Subtotal 6,2- - -5o 1,165 6,857 65 5

C. FARM DEVELOPMENTImported Machinery and

Equipment 12,791 lOO%cif - -_

Local Equipment and ~24,573 7,110 ~ 4,818 2,655 3,815Civil Works 30,180 69o ______f-(SFCI) 9/ I(SAU) / - - _ K

Subtotal 42,971 57% 24,573 1 - - 2,655 3,815

D. AGRICULTURAL UNIVERSITIESFoundation Seed /Dmported MachInery ana

Equipment 4,178 100%cif - - - -

Local Equipment and Pl8,84l §7,8i4 2,258 2,344

Civil Works 27,079 6 -_ _ -_ _ _

Subtotal 31,257 60% l7,84l 7,-14 -- 2,258 27,34

Breeder Seed and SeedTechnology Researchlmported Machinery and

Equipment 1,260 l0o%cif - 940 - 320

Local Equipment andCivil Works 4,155 60% - 2,510 - 1,645

Seed Technology ResearchOperations 2 79 - 2, 792

Subtotal 8,207 r - 3,450 4'757 - - - -

E. qJALITY CONTROLImported Machinery and

Equipment 1,786 1o0%cif - -_ - -

Local Equipment and b5,661 {1,935 {2,034Civil Works 7,844 60% - -_ x -

SCA Operati,g Defirits 790 - - - 790 -

Subtotal 10,420 54 - 5,661 - 2,7252

F. TRAINING AND TECHNICALASSISTANCE 4,169 100% - 4,169 - - - - _ _

G. INCRPMENTAL RESERVE STOCKS 1,491 - - - 447 - - _,o 044

H. TOTAL PROJECT 305,000 46% 126,720 13,280 25,274 21,726 23,226 21,192 51,903 21,679

------- 140,000 -------- ----- 47,000----------- (US$M16.0) ---- (uS$M5.4)_____ (US$M2.7) (US$2.4) (US$5.9) (US$2.5)

1/ Loans from banks for 70% of project investments; ARDC refinancing 90% of bank loans.2 Loans from banks for 75% of project investments; grants from GOI for 25% of project investments; ARDC refinancing 90% of bank loans.

May 10, 1978

ANNEX 9Table 2

INDIA


Disbursement Schedule -/

Cumulative Disbursementat End of Quarter

IDA Fiscal Year and Quarter (US$ Million)

FY 19791st 2/2nd 0.23rd 0.54th 1.0

FY 19801st 1.82nd 2.83rd 4.24th 5.8

FY 19811st 7.22nd 8.93rd 10.44th 11.8

FY 1982lst 13.02nd 14.03rd 14.64th 15.0

FY 19831st 15.42nd 15.73rd 16.04th 3/

1/ Calculated from Annex 8, Table 1 and Annex 9, Table 1, assuming1-2 quarter lags in disbursements.

2/ Estimated date of effectiveness: September 15, 1978.3/ Estimated closing date: December 31, 1984.

May 11, 1978

ANNEX 10Page 1

INDIA


Project Organization and Management

A. General

1. The government of India (GOI) and the state governments recognizethe need for effective management to ensure successful implementation of theNSP. Appropriate care has therefore been taken to strengthen institutionalarrangements for implementation of the proposed project. NSC which till 1976was the major seed production, processing, certification and marketing agencywill, under NSP, give up all but the last function. 1/ NSC will henceforthconcentrate on seed marketing and on overall coordination and promotion ofthe national seed industry. State Agricultural Universities would play aconsiderably enlarged role in breeder seed and foundation seed production,the former to be coordinated by ICAR and the latter by NSC. Certificationresponsibility is to be passed on to independent State Seed CertificationAgencies (SSCA). State Departments of Agriculture (DOA) and other stateagencies are to phase out of seed production, leaving it to State SeedCorporations (SSC) modelled on the Tarai Development Corporation (TDC).State governments are to concentrate on seed law enforcement and providingextension services to seed growers as well as seed users. Overall organiza-tion and management of the National Seed Projects is depicted in Chart I.

2. The ultimate responsibility for the successful implementation ofthe National Seed Projects would be that of GOI Ministry of Agriculture.Overall policy guidance for the development of the seed industry would beprovided by the National Seed Development Council (NSDC). The secretariatto NSDC would be provided by a Seed Cell in the Ministry of Agriculture withNSC's assistance. NSDC representation is broad-based to accommodate itspolicy guidance role. Agencies already represented on NSDC are: GOI, NSC,SSC, ICAR, Central Seed Certification Board (CSCB), Agricultural Universities,state marketing agencies, seed growers, private sector processors and seeddealers, and state governments. The Central Seed Committee constituted underthe Seed Act would continue to have the responsibility for variety release,for seed law enforcement and for notification of crops and varieties to whichthe Seed Act is applicable. This Committee would act in close consultationwith similar State Seed Committees which advise state governments on seedmatters. SSC and SSCA would be represented on the State Seed Committees.

1/ NSC will, however, continue vegetable seed production.

ANNEX 10Page 2

B. National Seed Corporation (NSC)

3. NSC was created to be mainly a promotion agency. In the absence

of other active agencies, however, NSC found itself in seed production,processing, certification and marketing activities (Annex 1, para 10). While

NSC would transfer gradually most of these functions to new agencies at statelevel, it would continue to play a pivotal role in developing the seed indus-

try. In future, NSC's concentration of efforts would be on marketing,

promotion of the industry, providing technical assistance and other commonservices, and general coordination of NSP.

Role in NSP

4. Specifically NSC would:

(a) contribute to SSC's share capital, nominate its represen-tative to serve on the SSC board of directors, and activelyassist SSC to take over NSC's seed production and processingactivities;

(b) coordinate certified seed production programs of the several

SSC participating in NSP projects;

(c) assess seed demand and to be responsible for interstatemarketing of certified seed;

(d) conduct biennial surveys of seed demand;

(e) plan and organize the production of foundation seed, mainly

through the Agricultural Universities;

(f) plan the production of breeder seed in consultation with ICAR;

(g) provide technical assistance services to SSC and privatesector processors designing, procuring, and constructingseed processing plants;

(h) coordinate market research and sales promotion efforts by SSC;

(i) provide training facilities for SSC and other staff partici-pating in seed industry development;

(j) operate the reserve stock scheme;

(k) provide certification services for states which do not haveestablished an independent Seed Certification Agency; and

(1) produce vegetable seed for local and export markets.

ANNEX 10Page 3

Capital Contribution and Board Representation

5. GOI which holds all of NSC's issued share capital would provide theadditional capital required to enable NSC to invest in SSC's share capital, orto enable NSC to borrow working capital and for developing its vegetable seedunit. NSC would subscribe up to 30% of SSC's share capital, at least 15% asequity and the balance as 11% cumulative preference shares. The value ofNSC's processing plants taken over by SSC would be counted as part of NSC'sequity contribution. NSC would be entitled to have two of its representativeson the board of directors of SSC. The Executive Chairman and the ManagingDirector of NSC normally function as NSC's representatives on SSC board. Inorder to facilitate coordination by NSC of SSC's certified seed production,NSC's board has been reconstituted to include SSC managing directors.

Certified Seed Production

6. NSC's seed production and program, except vegetable seed, in theproject areas would be transferred to the participating SSC. NSC would nolonger contract with seed growers in project areas after the 1977 rabi season.All NSC growers in the project areas would be invited to become SSC share-holders 1/ and NSC would assist SSC in enlisting new shareholder growers.Seed production by NSC outside the project areas would be phased out, inagreement with SSC, to match the increase in seed production within theproject areas.

Demand Assessment and Production Allocation

7. Demand assessment would be a key NSC activity. NSC would undertakeperiodical monitoring of the seed market and provide SSC with regular assess-ment of demand, prices, farmer reaction and seed availabilities. Nationalseed demand would be projected four to five years in advance and would beupdated on an annual basis or at more frequent intervals if considered neces-sary. Allocation of certified seed production to participating SSC would bemade at least three months in advance of the cultivation season. All SSC wouldbe offered the same ex-plant prices to encourage competition. SSC would notproduce seed of all crops and varieties but would specialize in those withlarger volume and best suited for production in the project area.

8. Demand assessment by NSC would be based on feedback from itsmarketing network - NSC's regional offices and retail dealership. Theseassessments would be supported by GOI's assessments from zonal conferencesorganized twice a year for this purpose. NSC would also undertake demandand farmer response surveys about every two years using qualified agencies.NSC receives firm orders from seed dealers backed by advance payment of 10%.Such orders would be passed on to SSC as firm orders with 10% advances. NSCwould place additional firm orders with SSC based on its own assessment of

1/ Similarly all seed growers who had contracts with DOA in all states,Agro Industries Corporation in Rajasthan or Agro Seed Corporation inKarnataka.

ANNEX 10Page 4

interstate demand. Such advance firm orders would be of help during the early

years when SSC's willingness and ability to take risks would be small. SSC

would be permitted to produce at their own risk any additional quantities

they wished. NSC would offer to charge 50% of the normal service charge on

seed that is produced by SSC at their own risk, and subsequently procured by

NSC. If despite all efforts, SSC together are not able or willing to under-

take production to the level of NSC's projected requirements for interstate

marketing, NSC would be free to continue with a seed program outside the

project areas. SSC agreement with NSC for supply of certified seed would

include suitable provision for payment of damages caused by failure of SSC

to supply or of NSC to procure contracted quantities.

Marketing

9. Intra-state marketing would be undertaken by SSC. NSC would continue

with the interstate marketing (Annex 13). No direct SSC to SSC or government

to government sales would take place without obtaining NSC's express consent.

NSC would carry out sample checks of the seed entering its marketing network,

and test it for purity and germination, and this will serve as an additional

quality control measure. NSC would also offer to sell, in the interstate mar-

ket, certified seed produced by private sector processors.

Breeder and Foundation Seed Production

10. Breeder seed production would be undertaken by breeders at the

Central Research Institutes and Agricultural Universities. ICAR would be

responsible for organizing and coordinating breed seed production. NSC would

keep close contact with ICAR to ensure that adequate seed quantities of the

required crops and varieties are produced (Annex 3).

11. Agricultural Universities would be responsible for foundation seed

production. SSC would contract with NSC for their requirements of foundation

seed of all-India varieties which form the larger proportion of seed require-

ments. For the smaller quantities of local varieties, SSC would contract

directly with the University concerned. Since foundation seed is produced

at least two years in advance, and it is a key input, it would be included in

the reserve stock scheme. Risks of carry over or absolescence would be met by

NSC and not by the Universities. Foundation seed prices would be set by NSC

to recover all costs of production incurred by the Universities, plus a

margin to cover a reasonable rate of return on capital employed, and all

handling costs incurred by NSC. Foundation seed needs of the private sector

would also be assessed and met by NSC under contractual arrangements similar

to those with SSC.

Reserve Stock Scheme

12. The reserve stock scheme has been initiated under Phase I. It is

operated by NSC under the guidance of a committee comprising representatives

from GOI Ministries of Finance and Agriculture and NSC. The committee is

chaired by the Secretary of Agriculture. Details of the scheme are in

Annex 13.

ANNEX 10Page 5

Technical and Other Services

13. NSC would provide SSC 1/ with engineering and technical advisoryservices, training and other common services which would benefit the seedindustry development in general. SSC would contract with NSC for design,procurement and construction of processing plants on a turnkey basis. NSChas strengthened its engineering division with a civil engineer capable ofpreparing complete seed processing plant designs. These plant designs wouldbe reviewed by a plant design consultant provided under Phase I. Civil workswould be contracted out by NSC or SSC, while installation of the equipmentand commissioning of the plant would be NSC's responsibility. NSC wouldalso help Agricultural Universities and private processors to design, procureand install their processing plants.

Organization Structure

14. NSC's organization structure is depicted in Chart II. NSC's boardchairman is also a full-time 2/ executive of the Corporation. However, themanaging director is effectively the chief executive of NSC and is supportedby five managers, one in charge of each of the following divisions:(i) Production and Quality Control: responsible for foundation seed andvegetable seed production, organizing certified seed production outside SSCproject areas, quality control for NSC's seed production activities and testchecks of seed in NSC's marketing network, and seed certification for stateswithout SSCA. (ii) Engineering and Technical: in charge of designing, pro-curement, construction, and commissioning of own processing plants and thosefor SSC, Agricultural Universities and private sector processors. 3/(iii) Marketing: demand surveys, market research, sales promotion, storage,

transport, distribution of all generations of seed, including vegetable seed;operation of the reserve stock scheme; liaison with marketing managers of SSC,

and training of seed marketing personnel. (iv) Finance and Accounting:responsible for financial and cost accounting, funds managements and banking,internal control and inventory management, management information; and liaisonwith independent auditors. (v) Personnel and Administration: responsible forall personnel management matters, legal and general administration, publicrelations, and staff training. NSC's regional managers report to the managingdirector. The main role of the regional offices would be dealer selectionand appointment, dealer training, advance ordering, demand assessments, salespromotion through dealers and DOA extension staff, liaison with SSC's produc-tion and marketing divisions.


15. Organizing certified seed multiplication, seed procurement, processingpackaging, storing and intra-state marketing in each participating state would

1/ And also to Agricultural Universities, SSCA and private sector wheneverassistance is required.

2/ The last incumbant was also the Chairman of SFCI.

3/ Private sector, including cooperative societies.

ANNEX 10Page 6

be undertaken by SSC. They would be legally, financially, and operationally

autonomous. SSC in four project states have been established under the Com-

panies Act 1956 with memoranda and articles of association acceptable to IDA. 1/

In Uttar Pradesh, TDC is being converted to the SSC of that state. Restruc-

turing of TDC is anticipated to be finalized by September 30, 1978. Essential

features of SSC are given in Appendix I.

Capital

16. SSC's share capital would be contributed by state governments,

NSC (on behalf of GOI) and seed growers approximately in the progDrtion

35:30:35 in that order. Up to 25% of the share capital would be in 11%

cumulative preference shares to be held equally by state governments and

NSC. SSC's equity capital would be subscribed in such proportions that:

(a) state government and NSC would hold approximately equal

percentages;

(b) seed growers would not hold more than the 50% of the total

equity shares;

(c) Agricultural Universities would hold at least 20% of state

government holdings; and

(d) other government agencies or corporations could hold up to

25% of the state government shares.

17. In this way excessive dependence on seed growers' equity as a

source of project finance is avoided. Shares earmarked for growers, but

not subscribed within three months, would be subscribed equally by NSC

and the state government concerned if cash flow consideration make this

necessary. Such shares would, however, be transferred to eligible seed

growers immediately upon request and payment. Only farmers within the

project area who offer to be seed growers under contract with SSC would

be eligible. A farmer should qualify to buy at least one share. Each

share would be Rs 500/= and share entitlement would be one share per one

acre farm devoted to seed production. Institutions like SFCI and Agri-

cultural Universities producing certifed seed in the project area would

be eligible to purchase shares out of the seed growers' allocation. While

a shareholder would have the option not to undertake seed production in any

one season, he would cease to be a member if he failed to grow certified

seed for his SSC for two consectutive seasons. SSC would offer seed produc-

tion program to farmers in proportion to their shareholdings. In order to

ensure that seed production programs allotted to growers cover a high propor-

tion of the farms offered for seed production, SSC would enroll grower share-

holders phased over four years by expanding the operational project area

progressively to reach the target area in about four years. Terms and condi-

tions of seed production by growers and procurement by SSC would be set out

1/ It was agreed during negotiations that changes suggested by IDA would

be incorporated in SSC's articles and memoranda.

ANNEX 10Page 7

in an agreement to be entered into between both parties. Registered growerswho find difficulty in paying for their shares would be helped by SSC callingup their payment in installments. The third payment of bonus payable to seedgrowers on seed procured would be accumulated by SSC in growers' accounts tobe used to meet calls made on shares.

Management

18. A SSC board would be responsible for the Corporation's businesspolicy. The board would generally comprise more than ten members. Up to threemembers in each board would be nominated by GOI and the remaining memberselected by the various groups of shareholders in proportion to their equityholdings. The board would comprise:

Agricultural Production Commissioner or SecretaryAgriculture in the state;

Managing Director of SSC

Agricultural University Vice Chancellor

Chairman and Managing Director, NSC

GOI Representatives

State Government Representatives

Participating Bank and

Seed Growers' Representatives

The Chairman of the SSC board would be the Agricultural Production Commissioneror Secretary Agriculture or the Vice Chancellor of a participating AgriculturalUniversity. The chief executive of each SSC would be a full-time managingdirector. The managing director would work within the policy guidelines setby the board, but otherwise have full independence in all operational matters.He would be appointed by the state government, with GOI's concurrence, upon therecommendation of the board.

19. Responsibilities of the board would be:

(a) formulating SSC's business policy;

(b) SSC's investment planning;

(c) approving appointment of SSC's senior executives basedon the managing director's recommendations;

ANNEX 10Page 8

(d) share capital allocation, issues and calls;

(e) authorizing borrowing limits and sources of finance;

(f) approving production programs and seed procurement and saleprices, based on NSC/SSC agreement and managing director'srecommendations;

(g) approving annual budgets, and reviewing monthly and quarterlyprogress reports, interim accounts, annual draft and auditedaccounts and audit reports;

(h) evaluating management performance; and

(i) approving appropriations of profits.

20. SSC's typical organization is depicted in Chart III and would con-sist of four major divisions under the managing director:

Production: certified seed production planning, organizingcontracts with growers, field inspection, extension services,quality control in field, seed procurement from growers, NSCand Agricultural Universities. Seed production officerswould work as processing plant shift - supervisors and fore-men during the processing season when field work would beslack (Annex 5, para 37).

Processing: management of processing plant operations, pack-aging, obtaining seed certification by SSCA, storage at plant,transport to and from plants and seed processing budgets.

Marketing: market research, sales promotion, transit storage,dealer selection and appointment, liaison with dealers, dealertraining, liaison with DOA extension and NSC marketing staff,demand projections and sales budgets.

Accounting and Finance: budgetary control and funds management,financial and cost accounting, computation of seed prices,inventory control, management information, and liaison withbanks and external auditors.

Responsibility for legal and general affairs, personnel management, stafftraining, public relations, liaison with state governments, GOI, NSC andother outside institutions would remain with the managing director who wouldbe supported by the secretary of the SSC, a personnel officer and otherassistant as he may deem appropriate for these tasks. TOR for the managingdirector and the divisional managers are given in Appendix 2.

ANNEX 10Page 9

Indian Council of Agricultural Research

21. Breeder seed would be produced by Central Research Institutes and

Agricultural Universities. Breeder seed production of varieties released by

All-India Coordinated Crop Improvement Committees would be coordinated by

ICAR, working from NSC's demand projections for foundation seed. ICAR has

designated a senior official to be full-time coordinator for this work and

to assist the Agricultural Universities in planning their investments under

the National Seed Projects. Breeder seed of local varieties would be produced

by the Agricultural Universities in accordance with orders placed by SSC and

private growers.

Agricultural Universities

22. Demand estimation and coordination of foundation seed production of

All-India varieties would be the responsibility of NSC. Estimates of founda-

tion seed of local varieties would be developed by the respective SSC. Under

NSP the Agricultural Universities would have the first responsibility for

foundation seed production. The Universities would organize a separate

seed production unit for production of breeder seed and foundation seed.

University Farm Departments would also supervise any certified seed production

program the Universities might be required to undertake. The plant breeder

would be expected to help in the technical supervision of all of the Univer-

sity's seed production program whether it be foundation seed or certified seed

production. Additional staffing would be required for research and seed

production activities but such additions would be kept to a minimum by calling

upon University teaching and research staff to provide technical support.

Close integration of University technical expertise brought to bear on the

project is expected to significantly improve seed quality.

State Seed Certification Agencies

23. Seed certification, until the advent of NSP, has generally been the

responsibility of NSC - all states had, complying with the Seed Act, notified

NSC as their independent certification agency. However, under NSP, GOI had

decided to support the creation of autonomous seed certification agencies.

Seed certification would be independent of both the producing agency (SSC/NSC)

and the seed law enforcement agency. State Seed Certification Agencies (SSCA)

have since been created or reconstituted under the Societies Act. The Govern-

ing Council of SSCA would comprise SSC, Central Seed Certification Board, seed

growers, seed users, private sector processors and Agricultural Universities.

It would be chaired by the State Secretary of Agriculture.

ANNEX 10Page 10

24. A Central Seed Certification Board has been established by GOI.The CSCB would coordinate SSCA certification programs to ensure interstateuniformity of standards and procedures. All SSCA would be represented onCSCB.

25. Seed law enforcement would continue to be state governments' respon-sibility. Under the National Seed Projects, support would be provided tostrengthen this activity by improving the state seed testing laboratories.State governments would also be encouraged to adopt the policy of creating aspecial inspectorate to enforce quality standards for seed, fertilizers andpesticide.

Project Coordination and Monitoring

26. A Project Management and Monitoring Committee (PMMC) was establishedin 1976 to oversee the implementation of NSP. This Committee comprises repre-sentatives from the GOI Ministries of Agriculture and Finance, NSC, all SSC 1/participating in the National Seed Projects, ICAR, ARDC and private sectorprocessors. 2/ The Secretary Agriculture, representing GOI, acts as theChairman of PMMC.

27. The functions of PMMC include:

(a) receiving, coordinating and transmitting to GOI and toBank/IDA quarterly and other progress reports on NationalSeed Projects;

(b) preparing other special reports on NSP requested by GOIand Bank/IDA;

(c) coordination of procurement of goods, and detailed planningof large farm development financed under the National SeedProjects;

(d) ensuring timely flow of finance from GOI to project institu-tions;

(e) reviewing problems of NSC, SSC, private sector processors,lending banks regarding working capital and other financingmatters, and recommending corrective action;

(f) ensuring speedy processing by GOI, Bank/IDA disbursementrequests;

1/ Will now be increased to nine.

2/ Private sector representatives yet to be appointed.

ANNEX 10Page 11

(g) ensuring that private sector producers, processors and dealers

are not discriminated against, and that they get equal treatment

with SSC and state institutions involved in the seed industry;

(h) assessing needs for further financing and identifying new invest-

ment needs under NSP;

(i) assisting in the recruitment of technical assistance specialists

financed under the National Seed Projects; and coordinating staff

training arrangements;

(j) providing liaison between all participating institutions, GOI,

state governments private sector and Bank/IDA;

(k) monitoring project implementation by and performance of all

project participants - NSC, SSC, ICAR, Agricultural Univer-

sities, SSCA; and

(1) arranging for special studies to be undertaken of topics

directly related to NSP and development of the seed industry

through the National Seed Projects.

28. Arrangements were made under Phase I for GOI Ministry of Agricul-

ture to provide the secretariat required for PMMC. A GOI Deputy Secretary

of Agricultural (Seed) is responsible for the PMMC secretariat. Executive

staff is provided by NSC. Staffing of PMMC requires strengthening. GOI

has undertaken to provide adequate staff for PMMC during the project period.

Project Evaluation

29. Project Evaluation Arrangements would be established to follow-up

project progress, identify problem areas and evaluate project benefits. The

evaluation system would mainly provide factual information on costs, benefits,

impact on beneficiaries for comparison with appraisal estimates. This infor-

mation and analysis thereof would be available for basing future policy deci-

sions and would serve as a general feedback for future activities. Such

evaluation would involve a continuous collection and analysis of data over a

period beyond project disbursements. Terms of reference for suitable evalua-

tion arrangements are given in Appendix 3.

Project Implementation Schedule

30. A time table to be followed in reaching Credit Effectiveness has

been developed in Annex 11, Chart 1. A longer-term implementation schedule

is given in Annex 11, Charts 2, 3 and 4. The details of the various imple-

mentation actions were discussed with GOI and state government representatives

and the schedules have been finalized during Credit negotiations.


INDIA


SCC: Articles of Association

Essential Features

1. Membership of SSC would be restricted to state government, NSCand seed growers in a well-defined project area who in the view of the SSCboard, possess the necessary skills and facilities to produce quality seed.Farmers who fail to undertake seed production offered by SSC for two con-secutive seasons would automatically lose membership. Project area wouldbe enlarged in a phased manner to reach the target project area in 3 to 4years. Changes in projects area to be subject to GOI approval.

2. Share capital. Seed growers together would own up to 50% of theequity shares, the balance being with state government and NSC. NSC'sminimum equity holding would be 15% of the total issued capital or 20%of the equity capital. 11% cumulative preference shares to be held equallyby NSC/state government, would not exceed 25% of the paid up capital.Shares allocated to growers by them within 3 months, would be temporarilysubscribed equally by NSC and state government and transferred to any eligiblegrower immediately upon request. However, such subscription would only takeplace after the other subscribed shares had been fully called up, and onlyif necessary to raise equity capital required by financing institutions.NSC/state government would not be candidates in elections to board of direc-tors representing growers by virtue of holding such proxy shares. At least20% of state government's shares would be held by participating AgriculturalUniversities and up to 25% by other state agencies.

3. Management. A board of directors would be elected by the share-holders, except for up to 3 members nominated by GOI. Elected positionswould be split between groups of shareholders on the basis of proportionalrepresentation. One of the nominated directors would be a representativeof the bank participating in the project financing of the SSC. The chairmanwould be either the Vice-Chancellor of a participating Agricultural University,Agricultural Production Commissioner or the Secretary of Agriculture. TheManaging Director would be a state government nominee and would be appointedwith GOI concurrence subject to board approval. Secondment of staff fromother agencies would be restricted to maximum one year.

4. Operations. SSC would sell all seed outside the state through NSC,and not deal directly with either state governments or other agencies. NSCwould sell all seed in the state through the SSC. Foundation seed of non-local


varieties would be procured by SSC for its growers through NSC. NSC would becontracted to do design, procure, construct and commission processing plantsfor SSC. Existing NSC plants in the project areas would be taken over by SCCat a price to be determined by a NSC/SSC joint evaluation. Contract productionoutside the project area by NSC would be phased out to match increased pro-duction within the project area. SSC would not undertake seed productionoutside the project area.

5. Financial Aspects. Prices would be determined for interstatetrade with NSC. Intra-state prices may be below ex-plant production costsonly, if the SSC financial reserves position is sound, and debt servicing orguaranteed divided payments are not affected adversely. Local seed retailprices would be at least the same percent premium above local grain prices,as the percent premium applicable on interstate trade. SSC would ensureprofitability so as to gradually build up special funds for expansion,replacement, loan redemption and research support.


INDIA


Suggested Terms of Reference for SSC's Senior Staff

1. Managing Director

The Managing Director of the State Seed Corporation would:

- be a full-time employee of the Corporation and function asits chief executive;

- be responsible and report directly to the Corporation Board;

- serve as a permanent member of the Corporation Board;

- coordinate the responsibilities of Managers:

Production, Processing, Marketing and Finance Divisions;

- be responsible for price setting, personnel management,legal affairs and general administration of the Corporation;

- implement the policy decisions of the Corporation Board;

- present to the Board -

(i) the Corporation's draft annual budget not later thanthree months prior to the financial year commencement;

(ii) Corporation's draft annual accounts together with hisown annual progress report not later than two monthsafter the end of each financial year;

(iii) audited annual accounts and audit report together withhis comments thereon not later than four months afterthe end of each financial year; and

(iv) quarterly progress report on the Corporation's activitiesnot later than one month after the end of the quarter.

Suggested Qualifications

- be not less than 35 and not more than 60 years of age;


have a University Degree or equivalent in agriculture,engineering, economics biusiness administration or financeand accounting;

have not less than ten years experience in business manage-ment or public administration of which he should haveserved a minimum of five years in the capacity of chiefexecutive of a recognized agricultural, industrial orcommercial institution;

be experienced in personnel management; and

be able to undertake frequent travel within the projectarea.

2. Production Manager

The Production Manager would:

- be responsible, and report directly, to the Managing Director;work in close cooperation with the Processing, Marketing andFinance Managers and the Secretary of the Corporation;

- be responsible for:

Corporation's certified seed operations, seed multiplicationby shareholder growers, (and SFCI, DOA, and Universities asappropriate), Production Division budgets, liaison withResearch Institutes, Agricultural Universities and SSCA,training of field staff, special extension service to reg-istered seed growers; seed procurement, and seed qualitycontrol in the field.



- have a University Degree in Agriculture;

- have not less than ten years experience in agricultureand farm management with at least three years at managerlevel;

- have experience in farm development, and cultivation, budgetpreparation, work planning, field costs, and staff training;and

- be able to undertake frequent travel to project areas vistingseed growers and their farms, and allied participating institu-tions.


3. Processing Manager

The Processing Manager would:

- be responsible, and report directly, to the Managing Director;

- work in close cooperation with the Production, Marketing andFinance Managers and with the Corporation Secretary;


all processing plant construction and operations;

workshops and laboratories;

seed transport;

seed storage pending delivery to distributors;

training of factory and workshop staff; and

Processing Division budgets.



- have a University Degree or equivalent in mechanical orproduction engineering;

- have not less than ten years experience in factory manage-ment with at least three years at the level of FactoryManager, preferably in agro-industry;

- have experience in machinery maintenance, production control,work planning, budget preparation, industrial costs recordsand training of factory staff; and

- be able to undertake frequent travel to processing plants,workshops and farm sites in the project area.

4. Marketing Manager

The Marketing Manager would:



work in close cooperation with the Production, Processing andFinance-Managers and with the Secretary of the Corporation;

be responsible for:

demand surveys and Market Research;

marketing techniques and strategy;

advertising, publicity, and sale promotions;

liaison with distributors;

after sales service;

sales budgets; and

staff training.



- have a University Degree;

- have not less than ten years experience in marketing ofwhich a minimum of five years should have been at Managerlevel in charge of marketing, preferably in agro-industrialbusiness;

- have experience in marketing including: market research,marketing methods, advertising and publicity, sales promo-tion, distribution, and staff training; and

- be able to undertake frequent travel to visit project areas,dealers and farmers.

5. Finance Manager

The Finance Manager would:


- work in close cooperation with the Production, Processingand Marketing Managers and with the Corporation Secretary;


preparation of the cash budget;


coordinating divisional budgets;

funds management;

financial and cost accounting and controls;

seed price computations;

internal control including inventory control;

internal audit;

management information, training of accounting and internalaudit staff;

annual accounts and quarterly progress reports; and

liaison with independent auditors.



- be a member of a recognized professional accountancy institutee.g., Institute of Chartered Accountants or Certified PublicAccountants - preferably with a university degree orequivalent in business adminsitration/economics or cost/industrial accounting;

- have not less than ten years post-qualification experiencein financial and management accounting of which at leastthree years gained from working in a large, preferably agro-industrial, company;

- have experience in budgetary control, costing, organization,and methods, internal auditing and staff training;

- have experience in procurement procedures and inventory man-agement; and

- be able to travel frequently to farms and processing plantsin the project area.


INDIA


Project Evaluation Arrangements - Terms of Reference

1. The implementation of India's National Seed Program and the relatedprojects involve nine producing states participating in the Phase I NationalSeed Project (4) and the Second National Seed Project (5), several institu-tions, thousands of seed growers and millions of farmers using projectcertified seed. In order to assist in the successful implementation of theproject as planned and in order to ascertain that the benefits forecasted noware in fact realized, project evaluation arrangements would be made in GOIMinistry of Agriculture and Irrigation.

2. A Deputy Secretary in the Ministry of Agriculture and Irrigationwould be designated to be in charge of this assignment. He would report tothe Secretary of the Ministry of Agriculture and Irrigation. Staff carryingout evaluation arrangements would be independent of all other institutionsparticipating in the National Seed Projects, including the Project Managementand Monitoring Committee (PMMC).

3. Project evaluation would cover physical, technical, financial,managerial and economic aspects of the project, and would involve thecollection of information from individuals and institutions directly andindirectly participating in the project. The following documents wouldbe relevant for the evaluation and reporting work:

Project Appraisal Report;Development Credit Agreement;Project Implementation Schedules;Annual Budgets; )Quarterly Progress Reports; ) of participatingDraft Annual Accounts; ) institutionsAnnual Audit Reports; )Correspondence with IDA;Directives issued and reports by PMMC;Seed demand studies; andSeed Corporation Annual Reports.

4. Information and data required for evaluation would be collectedboth from project records and from outside sources. Arrangements wouldinclude field visits to:


Headquarters, Branches, District Offices of allinstitutions participating in the project;

Seed processing plant and warehouses;Private sector participants;Seed growers and farmers; andMarketing outlets.

5. Evaluation would also include identification of major problems,deviations from appraisal estimates and annual budgets, and possible cor-rective action to be taken either by project managements or by governments.

6. Topics reported on would include:

Deviations from agreed Implementation Schedule -causes, extent, effects and action;

Project modifications from original plan - nature,reasons and effects;

Growth of certified seed demand;Variations of important assumptions made in theappraisal report;

Cost overruns and arrangements to meet them;Efficiency of the participating institutions;Credit Services to farmers, Seed Corporationsand Universities;

Agricultural extension services;Verification of project targets realized byparticipants and ascertainment of incidenceof benefits - numbers, geographical scatter,income groups;

Unusual features of significance.

7. Written evaluation reports would be prepared periodically - atleast annually - and submitted to the Secretary of GOI Ministry of Agricul-ture and Irrigation. Copies of evaluation reports would be made availableto IDA for information. A Project Completion Report would be preparedand furnished to IDA not later than six months after the Credit ClosingDate.

ANNEX 10Chart I


PROJECT ORGANIZATION & INSTITUTIONAL RELATIONSHIPS1 /

GOI

LARDC NS C .ilCAR PSP

PC s

GROWERS

ARDC Agricultural Refinance and Development CorporationCSCB Central Seed Certification BoardGO] Government of IndiaGOS State GovernmentsICAR Indian Council of Agriculture ResearchNSDC National Seed Development CouncilNSC National Seeds CorporationPCB Participating Commercial BanksPSP Private Sector ProcessorsPMMC Project Management and Monitoring CommitteeSAU State Agriculture UniversitiesSCA State Seed Certification AgenciesSSC State Seed Corporations

1/ Achieved by membership of Board of Managements.


NSC: ORGANIZATION CHART

B OARD OF DIRECTORS

CHIEFPRO DUCTI|N & MARECTON PUAL ITY CONTROLNIEEIGFNAC DINSRTO

ETARL

|VEGETARLE ll SALES A RESEARCH &lSEED UNIT DISTRIhUTION |EVELOPMENT

1/ Chief Production would continue to look after any NSC seed production till transfer to SSC;2 Processing plants, until handed over to SSC, would be managed by Chief, Projects and Engineering; :7f3/ Breeder seed inspection will be handled here; any NSC responsibilities in certification would be,

until transferred to SCA, handled here.

HO


SSC: ORGANIZATION CHART

BOARD OF DIRECTORS

I MANAGING DIRECTOR

COMPANY~~ ~SECRETARY &

ADIISTRATION

PRODUCTION QALITY CNT PLANT MANAGERS ACCOUNTING &

[SEED PRODUCTION DILSTRBTO &MARKET PLANNING & ACUT UI

| OFFICER OFIE DEEOMNlFIEROFCROFC

QUALITYi

CONTROL OFFICER

HIOH-q

ANNEX 11

Chart 1

INDIA


Implementation Schedule - Up to Credit Effectiveness

CompletionMain Activity Responsibility Time

1. Cabinet Approval of Phase I GOI Completed2. 'Incorporate in SSC memoranda

and articles changessuggested by IDA SSC September 10, 1978

3. Incorporate SSC (1) GOS Completed4. Constitute SSC Board of Directors (2) GOS Completed5. Appoint SCC Managing Director (2) GOS Completed6. Expansion of CSCB to include the

five project states GOI Completed7. Appointment of Executive

Chairman of NSC GOI Completed8. NSC Chairman assuming full-time

executive functions GOI July 1, 19789. Creation of Project Coordination

Committee at state level GOS Completed10. 1978/79 breeder and foundation

seed planning and allocation NSC CompletedICAR

11. Prepare processing plant designs SSC/NSC September 10, 197812. Preparation of Banking Plan (3) ARDC August 31, 197813. NSC/SSC Project Agreements NSC August 15, 197814. Inspection and evaluation of

NCS's processing plants NSC July 31, 1978SSC

15. Arrangements for NSC planttransfer to SSC NSC September 10, 1978

16. Publicity of private sector SSCparticipation NSC June 30, 1978

AFC

(1) Conversion of Tarai Seeds Corporation to the Uttar Pradesh Seedsand Tarai Development Corporation expected to be completed bySeptember 30, 1978.

(2) For Uttar Pradesh appointments anticipated by October 31, 1978.(3) ARDC/Participating Bank agreements anticipated to be completed by

September 30, 1978. Completion of SSC/Participating Bank agreementsexpected by November 30, 1978.


PROJECT IMPLEMENTATION SCHEDULE - STATE SEED CORPORATIONS

Activity Responsible Authority 1978 1979 1980

Arrange office accommodation SSCAppoint senior executives SSCRecruit support staff SSCPrepare project work program and

management procedures SSCPrepare specifications for urgent

equipment NSC/SSCProcure urgent equipment NSCInstall urgent equipment NSC/SSCValuation of NSC processing plants NSC/SSCTransfer of NSC processing plants NSC/SSCPrepare specification for new

plants NSC/SSCClear plant specifications with

IDA, advertise and receive bids NSCEvaluate bids, clear with IDA

and award bids NSCReceive and deliver processing

equipment to plant site NSCInstall plant equipment NSC/SSCCommission processing plant NSC/SSC

constructionConstruct processing plants NSC/SSCConstruct headquarter facilities NSC/SSCProcure furniture and equipment

for headquarters SSCRegister seed growers SSCNegotiate and sign consultant

services contracts inconsultation with IDA SSC/NSC/PMMC

Employ consultants(a) Market research NSC/SSC(b) Sales promotion SSC

Initiate promotional campaign SSCArrange overseas training for

marketing managers inconsultation with IDA SSC

Arrange local training for(a) Marketing managers and

executives SSC(bi Plant managers and

processing engineers NSC/SSC _t X(c) Quality control officers

and assistant quality Hcontrol officers NSC/SSC

World Bank - 17916


PROJECT IMPLEMENTATION SCHEDULE - AGRICULTURAL UNIVERSITIES

Activity Responsible 1978 1979 1980_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _A uthority

1. Breeder and Foundation Seed ProductionRecruit support staff SAUPrepare work program and management SAU

proceduresPrepare specifications for urgent ICAR/NSC/SAU

processing equipmentProcure and install urgent equipment ICAR/NSC/SAUPrepare specifications for non-urgent ICAR/NSC/SAU

processing equipmentProcure and install non-urgent equipment ICAR/NSC/SAU - -

Commission new facilities NSC/SAUConstruct new facilities NSC/SAU - -Transfer government land to Universities DOA/SAU _Prepare farm plans SFCI/SAUCarry out farm development SFCI/SAU - -Prepare specifications for urgent farm SFCI/SAU

equipmentProcure urgent equipment NSC/SAUPrepare specifications for non-urgent farm SFCI/SAU

equipmentProcure non-urgent farm equipment NSC/SAU -

2. Seed Technology ResearchEstablish interdisciplinary research unit ICAR/SAUPrepare work program, organization and ICAR/SAU

proceduresCommission new facilities ICAR/SAU -_ _Construct new facilities ICAR/SAUProcess and install seed technology ICAR/SAU _ _

equipmentNegotiate and sign consultant services NSC/ICAR/SAU

contract in consultation with IDAEmploy consultant SAUArrange overseas training in consultation ICAR/SAU

with IDA I - Until I_________________ l______ _ 1 = October 1981

World Bank- 17914 H 1-


PROJECT IMPLEMENTATION SCHEDULE - STATE FARMS CORPORATION;STATE SEED CERTIFICATION AGENCIES; STATE SEED TESTING LABORATORIES

Activity Responsible Authority 1978 1979 1980

1. State Farms CorporationPrepare farm development plans SFCI

Procure farm and development SFCI l -

equipmentCarry out farm development SFCI _ _Prepare survey and design for

irrigation canal enlargement SFCI _ - -

Carry out canal enlargement SFCI

2. Seed Certification AgenciesProcure equipment SSCA - _-Arrange overseas training in SSCA

consultation with IDAArrange local training NSC/SSCANegotiate and sign consultant SSCA/PMMC

services contract in consultation lwith IDA

Employ consultant SSCA

3. Seed Testing LaboratoriesConstruct or renovate existing DOA -

laboratoriesProcure urgent equipment DOAProcure non-urgent equipment DOA . !Arrange local trainingArrange overseas training in DOA/CSTL

consultation with IDADOA/CSTL

World Bank - 17915

ANNEX 12Page 1

INDIA


Credit Services

General

1. Most of the important investments would be financed from loans from

participating commercial banks at current commercial interest rates. In addi-

tion to long-term investments under the project, arrangements would be made

for the banking system to provide seasonal credit to participants for working

capital for operating and inventory purposes. Certain investments such as

technical assistance and training, seed technology research, quality control

and portions of Universities investments and reserve stocks would be given

to the participants as GOI grants.

2. Credit services should thus be made available to NSC, SSC, SFCI,

Agricultural Universities, seed growers and seed users (farmers) not only

for long-term but also short-term needs. In India institutional credit for

agriculture is handled by the Reserve Bank of India (RBI), Agricultural

Refinance and Development Corporation (ARDC), the State Cooperative System

and Commercial Banks. The Cooperative Credit system comprises the long-term

structure consisting of the two-tier Land Mortgage Banks (LMB) with the State

Cooperative Central Land Mortgage Banks and Primary Land Mortgage Banks, and

the three-tier short-term structure with the State Cooperative Banks at the

apex, Central Cooperative Banks at the district level, and primary Agricul-

tural Credit Societies at the village dealing directly with the farmer.

Agricultural Refinance and Development Corporation

3. ARDC was established on July 1, 1963 in the context of the high

priority accorded to agricultural development in the country's Five-year

Plans. Its specific functions are to supplement the resources of existing

institutional agencies disbursing long-term and medium-term credit; reorient

their operational policies; and provide refinance facilities to member banks

for projects which cannot be financed by them either because of the sizeable

outlays or because such lending cannot be brought within their normal rules

of business. ARDC's board has nine members including a Deputy Governor of

RBI, who acts as Chairman, and three GOI nominees. The Managing Director is

appointed by RBI in consultation with the Board. ARDC has its head office in

Bombay and fourteen regional offices in state capitals including one in each

of the five participating states.

ANNEX 12Page 2

Seed Growers

4. Seed growers would be selected from among farmers in the projectarea for their progressive agricultural operations. Most would already haveaccess to assured irrigation, and to a tractor for timely operations. Thus,need for farm investment credit is expected to be small. Any loans required,say for on-farm lined channels, or underground pipe linking two wells, wouldeasily be met by banks operating in the project area. Should the need forrefinance from ARDC arise, the SSC would assist its lending bank to draw upa scheme for such on-farm financing of seed growers' needs, and submit it toARDC. Under IDA Credit 715-IN and other projects, ARDC has sufficient fundsfor such purposes. See Appendix 1, paras 1 through 6.

5. Seed growers would need short-term credit for agricultural inputs.Although most seed growers could finance working capital to a large part fromtheir own resources, institutional finance would be necessary when they in-crease the area they devote to seed growing. Farmers who need credit mostlyobtain it through cooperative banks (90%) and some through commercial banks(10%). Under the National Seed Projects, state cooperative banks would con-tinue to be the prime source of seasonal credit for seed growers. The coop-erative banks obtain refinance from RBI at about 2% below the bank rate. RBIlimits the maximum borrowing of cooperative banks, but rarely have the banksbeen able to fully use their credit limits. In any event, RBI maintains flex-ibility so that no worthwhile proposals would suffer due to scarcity of funds.RBI often lends to state governments to invest in the equity of these coopera-tive banks in order to enable them to borrow more from RBI. Thus, RBI refi-nance is not expected to be a constraint. The quantum of RBI finance is amultiple of the cooperative banks' own resources (deposits plus equity). Themultiple, ranging from 1 to 4, depends upon overdues classification of thecooperative bank concerned. See Appendix 1, paras 7 through 14 for detailsof conditions in the project states.

6. Working capital needs per hectare for seed production of self-pollinated crops would be only 15-25% higher than that for commercial culti-vation. Thus, availability of bank seasonal credit for wheat and paddy wouldnot be a constraint to seed production. However, for hybrid seed cultivation,where working capital needs could increase by 40% or more, a problem doesexist, since the loan limit for seed production often needs to be signifi-cantly higher than for crop production. State governments would ensure thatseasonal credit limits for seed production would be set by the State Coopera-tive Banks in consultation with SSC.

7. Commercial banks invariably provide working capital support to allfarmers whose on-farm investments they finance. Even though the interest rateis generally higher than that of cooperative banks, given the simpler proced-ures and greater efficiency, it does not deter the farmers from borrowing.

ANNEX 12

Page 3

8. All seed sales of project seed growers would be through SSC. Thus,SSC would be in an ideal position to provide collection services to banksfrom farmers. The SSC would offer these services to commercial banks as wellas cooperative banks. The latter would be through the Central CooperativeBank, acting as agent of the Primary Agricultural Credit societies from whichthe seed growers would actually borrow. For those seed growers who do nothave access to a cooperative society, SSC would seek to arrange for seasonalcredit from the SSC's lending commercial bank.

Large Farm Development

9. Large farm development would be necessary on SFCI's Suratgarh farmin Rajasthan and on University farms in all five project states. Loans tofinance the development would cover up to 70% of the investments at the SFCIfarm and up to 75% of investments at University farms. The loans would behandled by commercial banks selected by SFCI and the Universities in consul-tation with ARDC. All loan proposals would be prepared by the borrowers intwo parts. The first would provide a farm mechanization proposal, supportedby a farm budget and a simple cash flow statement. The second would be adetailed farm planning exercise including topographical, soil, and groundwater surveys, and a work plan for farm development. Supporting financialstatements would be required for SFCI. Also a guarantee for principal andinterest repayment would be provided by GOI, in the case of SFCI, and GOS,in the case of Universities. ARDC would refinance up to 90% of participatingbank loans. The balance of the investment funds not provided as loans wouldbe made available by GOI in the form of grants (Universities) or equity(SFCI). The Agricultural Universities would be required to create separateoperating and accounting units for the seed operations and make arrangementsfor separate collection and disbursement procedures.

State Seed Corporation

10. SSC would need both long-term and short-term credit. Long-termfinance would be required to cover investment expenditures and permanentworking capital for carrying seed stocks. Short-term credit would be requiredto meet operating costs at seasonal peaks. NSC too would require credit toenable it to carry seed inventory - foundation seed for distribution to SSCand private sector producers, and certified seed for interstate marketing.

11. Long-term credit would cover up to 70% of investment costs, thebalance would be financed from share capital. ARDC would select one commer-cial bank in each state in consultation with the SSC concerned to be theparticipating bank. Refinance from ARDC to the lending bank would be up to90% of its loans to SSC. Loan requests for processing plant investments wouldbe prepared by SSC and submitted to the participating banks. The loan

ANNEX 12Page 4

application would include detailed investment proposals, plant location,phasing cash flow statements, report on SSC's financial position, managerialarrangements, and other information the lending bank or ARDC might specify.The bank concerned and ARDC would scrutinize the application and agree onthe loan terms and the disbursement procedures.

12. Working capital financing for seed inventory would come from parti-cipating banks against hypothecation of seed stocks. The participating bankswould normally have adequate funds to cover the working capital needs. How-ever, seed is a key agricultural input, like fertilizer, and its stockingprior to use should not be allowed to suffer by any constraints on the resour-ces of the participating banks. Thus, it was agreed for Phase I that GOIwould constitute a consortium of participating banks, along the lines of anexisting consortium for fertilizer stocking. The banks in the consortiumwould agree to assist each other in meeting the working capital needs of theNSC, SSC and the private sector processors. GOI would undertake to relieveany legitimate resource constraints the consortium may face in seed inventoryfinancing. Should NSC, SSC or private sector processors find difficulty inobtaining adequate seasonal credit for their working capital needs, or theprivate sector processors find that they are not being treated at par with theSSC, they would seek GOI assistance through the PMMC. SSC requirements forseasonal credit for working capital are likely to reduce as SSC build up theirreserves and it should be possible to discontinue the consortium within fiveyears.

University Foundation Seed Processing

13. For their foundation seed processing operations Universitieswould need both long-term and short-term credit. Long-term credit would beprovided for up to 75% of processing investment expenditures, the balancewould be financed from grants by GOI. ARDC would select participating banksin consultation with the Universities and would refinance up to 90% of theparticipating banks' loans. Loan requests for foundation seed processingfacilities would be prepared by the Universities and submitted to theparticipating banks. Loan applications would include similar informationas requested from SSC (para 11). ARDC and the participating banks wouldscrutinize the applications and agree on the loan terms and disbursementprocedures.

14. Short-term credit for seed inventory financing would be providedby participating banks against hypothecation of seed stocks.

15. Lending terms and conditions are summarized in Appendix 2.


INDIA


Long-term Credit to Seed Growers

1. In Rajasthan, seed growers would be selected from a part of theGanganagar district covered under the Gang and Rajasthan Canal Projects anda part of the Kota and Bundi districts covered under the Chambal CommandArea Development Project. On-farm development would consist of lining ofwater courses, construction and repair of field channels and land shaping,installation of pumpsets, and deepening of wells. The cost of developmenton an area of 8,500 ha in Sriganganagar could amount to Rs 12.5 M at anaverage cost of Rs 10,000 for a 6 ha farm. In the Kota area too the costcould be Rs 10,000 for a 4 ha farm and the total cost of development on7,000 ha could amount to Rs 17.5 M, making a total of Rs 30 M.

2. Two IDA financed projects for Command Area Development (CAD) are inoperation - the Rajasthan CAD project (502-IN) and the Chambal CAD project(562-IN). In both projects, the participating institutions are commercialbanks. Land Development Banks were left out because of the large overduesat the time selection of participating banks was made. Seed growers couldavail of the credit facilities under these projects for developing their farms.In areas not covered by the projects, seed growers could be financed throughthe local Land Development Banks by formulating suitable schemes for refinancefrom the ARDC which in turn would obtain reimbursement from the Second ARDCCredit (715-IN) approved in June 1977. Four of the six Primary Land Develop-ment Banks operating in the project area are eligible for unrestricted lendingas their overdues at June 30, 1976 were below 25%. No great difficulty would,therefore, be envisaged for the Primary Land Development Banks in the projectarea to provide growers with loans for on-farm development.

3. In Bihar, the project area covers' 16 of the 22 blocks in Rohtasdistrict and three out of the 19 blocks in Bhojpur district. Fields selectedfor development are well laid out and further investments needed would befor tractors and other farm machinery, dugwells and installation of pumpsets.In the project area, there are five branches of the State Land DevelopmentBank. As their recovery position has been good, all the branches would beable to undertake fresh lending without any restrictions. They have alsoconsiderable experience of ARDC schemes as they are implementing one of themore successful minor irrigation schemes in the area. ARDC would obtainreimbursement from the ongoing Bihar Agricultural Credit Project (440-IN) andafter its completion, under the Second ARDC Credit (715-IN).

4. In Orissa, the project area covers parts of four blocks in Sambalpurdistrict, portions of three blocks in Puri district and two blocks in Cuttackdistrict. The potential seed growers here would not require much on-farm


development for the present since it would be possible to select suitableseed growers from the farmers already having adequate holdings of well levelledland with adequate irrigation and drainage facilities. Some investments might,however, become necessary for new growers at a later stage. In the projectarea, four Primary Land Development Banks are functioning, of which two atPuri and Bargarh had loans outstanding of more than Rs 7.5 M on June 30, 1976.The recovery position in all four banks is satisfactory and when there wouldbe a need for financing seed growers in on-going schemes, there would be no

restrictions on their advancing fresh loans for the purpose. ARDC wouldobtain IDA-assistance through the Second ARDC Credit (715-IN) for any necessaryrefinancing.

5. The Uttar Pradesh project areas include parts of Faizabad, Kanpurand Jalaun districts. The concentration of seed growers would be close tothe proposed processing complexes - in the Gusaiganj-Akbarpur area of Faizabaddistrict and the Kanpur area for the Kanpur and Jalaun districts. In boththese districts refinance would be available through the Second ARDC Credit(715-IN). Schemes for land development have also been sanctioned under thecommand of major irrigation projects such as the Sarda Sahayak IrrigationProject in Faizabad district and the Ramganga CAD project in Kanpur district.The requirements of seed growers credit for on-farm development could, there-fore, be met out of the on-going credit schemes in the area. All State LandDevelopment Bank branches operating in the project area have a good recoveryrecord which enables them to undertake fresh lendings without any restrictions.The commercial banks are also active in the area and are participating in theIDA and CAD projects. They could also help in case of need.

6. In Karnataka, seed growers would be selected from the project areascomprising (i) Bangalore North, Devanahalli and Hoskote talukas of Bangaloredistrict, (ii) Kolar, Mulbagol, Mulur and Chikballapur of Kolar district,(iii) Davangere and Harihar taluks of Chitradurga district, and (iv) Haveriand Ranebennur taluks of Dharwar district. Investment credit needed by seedgrowers would be mainly for digging wells and installation of pumpsets inBangalore and Kolar districts while in Chitradurga and Dharwar the demandwould be for bore-wells in an area already served by canal irrigation. Kolarand to some extent Bangalore district have little scope for further ground-water exploitation. There is already a ban on further digging of wells inKolar. The wells in the area have been dug through rocky surfaces at greatdepths, yet, they are able to irrigate hardly one or two acres due to poorrecharge. Seed growers would therefore have to be restricted to those alreadyhaving sources of irrigation. There are seven Primary Land Development Banksin these two districts, and commercial banks are also active. They areproviding both short-term and long-term credit to farmers through sericulture-cum-farmers service societies which are being organized on a large scale inthe project talukas. As a result, the Primary Land Development Banks'


operations will be reduced and confined to non-members of these sericulturesocieties. The Primary Land Development Banks in the four talukas of Dharwarand Chitradurga districts are relatively large institutions and would be ableto meet the investment credit requirements of seed growers. Their recoveryposition is satisfactory. This would enable them to undertake unrestrictedlending. Both the commercial banks and Primary Land Development Banks (thelatter through the State Land Development Bank) would have access for refi-nance facilities out of the Second ARDC Credit Project (715-IN).

Short-term Credit to Seed Growers

7. In all five states, the seed growers would have to depend largelyon the Primary Agricultural Credit Societies (PAC) for obtaining theirrequirements of cash (A Component) as well as fertilizers, pesticides andother inputs supplied in kind (B Component). These societies in turn dependfor resources on the District Cooperative Banks (DCB) to which they areaffiliated.

8. In Rajasthan, there would be three DCB in the project area - atBundi, Kota and Sriganganagar. The last two are fairly large institutionswith outstanding loans exceeding Rs 40 M at June 30, 1976. The number ofPAC and the volume of their loaning operations are significant while theirrecovery performance is also satisfactory. The Kota DCB has agreed to re-laxing of the present limit of Rs 10,000 per borrower if there was a genuinedemand from seed growers. DCB would also be prepared to adjust the scale offinance to accommodate the cost of additional inputs in the form of fertil-izers, foundation seed, pesticides and other inputs.

9. All DCB obtain credit from the State Cooperative Bank which hasaccess to Reserve Bank of India for sanction of short-term credit limits.There should therefore not be much difficulty in raising any additionalresources needed to meet the requirements of seed growers.

10. Bihar presents a different picture. The two DCB in the project area,viz. the Sasaram-Bhabua Central Cooperative Bank in Rohtas and the Arrah CentralCooperative Bank in Bhojpur have been engaged in large lending for short-termagricultural purposes, with outstandings of Rs 15.3 M and 13.8 M respectively.Overdues have, however, been heavy in both banks and most of the affiliatedPAC have defaulted in repaying their dues. At the primary level, all PAC areconsidered not to be viable and the state government has undertaken a schemeof reorganization in order to have ultimately only 5,000 PAC in the state.Commercial banks have also been active in both the districts. In the eventof seed growers not being able to obtain credit from PAC, it would not bedifficult for them to obtain their short-term credit needs from commercialbanks.

11. Although on-farm investments are not envisaged to a great degree inOrissa, there would be need for short-term credit to seed growers. Four DCBfunction at Sambalpur (Bargarh), Cuttack, Puri and Khurda. All of them have


outstanding loans exceeding Rs 12 M. The Sambalpur DCB is perhaps the largestDCD in thie state wit;l loa.s exceeding Rs 35 M a' June 30, 1976. Recoveries,though satisfactory at the present time would however need watching. PAC inthe project area have built a large loan business.

12. In Uttar Pradesh, there is one DCB each in Faizabad, Kanpur andJalaun districts. The Jalaun (Orai) bank is considered by the RBI (Study Teamon Agricultural Credit Institutions in U.P.) as potentially viable in the sensethat it would become fully viable in the next five years. The other two areconsidered as non-viable and it would be some years before they attain a viablestatus. At the level of the PAC too, the overdues in absolute terms and aspercentages of demand are large. PAC have been recently reorganized and initialdifficulties arising therefrom might take some time to be resolved. In thesetwo districts, seed-growers might have to approach commercial banks for obtain-ing their short-term credit needs if PAC would be unable to provide it.

13. In the two project areas in Karnataka, there are four DCB. Of thesethe DCB in Bangalore, Kolar and Chitradurga have heavy overdues and are undera program of rehabilitation. The PAC affiliated to them are being reorganizedinto larger units by a process of amalgamation. In view of the weak financialposition of the above three DCB the commercial banks in the area have beenasked to finance PAC and they have already done so in a large number of cases.In Kolar and Bangalore districts, many seed growers are already obtaining creditfrom commercial banks. Seed growers in the project area covered by these threedistricts would therefore have to obtain their crop loan requirements eitherdirectly from the commercial banks or through PAC financed by them. The fourthDCB, viz. Dharwar is a large financially strong institution and is providingadequate short-term credit facilities to farmers through PAC for their creditrequirements. Commercial banks have adequate resources to meet the demand fromseed growers. The DCB have access to finance from the State Cooperative Bankwhich in turn can obtain finance from the RBI.

14. SSC would take the initiative to formulate specific proposals forfinancing seed growers both for farm development and for production credit.SSC should also take steps for credit arrangements with banks in the area forboth purposes.

Long-term Credit for Large Farm Development

15. Development of the SFCI farm in Sriganganagar district of Rajasthanand University farms would be supported under the project. The assistancewould be confined to the facilities needed for growing seed on land alreadydeveloped, such as irrigation and farm equipment and would not include thecost of reclamation and development of any land not under cultivation now.Farm equipment, irrigation development including lining of water channels,land levelling, drainage and fencing would be covered, so would buildingssuch as implement stores, threshing floors, warehouse for farm produce andsome residential quarters. Loans to SFCI and the Universities would be pro-vided by banks to be selected by SFCI and the Universities in consultation

ANINEX 12Appendix 1

Page 5

with the ARDC. Detailed proposals for farm investments would be submitted toARDC through the participating banks. Lending arrangements for loans to SFCIand the Universities would be regulated and implemented through a Banking Plan.

Long-term Credit for Certified and Foundation Seed Processing

16. The State Seed Corporations would require bank credit for long termloans for setting up the proposed seed processing plants as well as for perm-anent. working capital needed for operating them. As in Phase I the lendingarrangements between the ARDC and participating banks for loans to the SSCwould be regulated and implemented through a Banking Plan.

17. The proposed locations of the seed processing plants in relationto existing branches or offices of Commercial Banks which could be consideredfor participation are as follows:

Branches/Offices ofLocat ion Commercial Banks

Raj as thanUmedganj (Kota District) Central Bank of India (Lead Bank)

State Bank of India and severalother Nationalized banks.

B iharK(hudra (Rohtas District) Punjab National Bank (Lead Bank)

State Bank of India, AllahabadBank and Central Bank of India.

Oris saBargarh (Sambalpur District) State Bank of India (two branches

of which one is an agriculturaldevelopmnent branch), United Com-mercial Bank, Union Bank andUnited Bank of India.

Bhubaneswar (State Capital) State Bank of India and allNationalized banks.

Uttar Pradesh(i Gusaiganj (Faizabad District) Punjab National Bank.

orAkbarpur (Faizabad District) State Bank of India, Bank of Baroda.

orKathari (Faizabad District) Central Bank of India.

(ii) Kanpur (Kanpur District) State Bank of India and allNationalized banks.

Karnat aka(i) Chikballapur (Kolar District) Canara Bank (Lead Bank)

State Bank of Mysore

(ii) Harihar (Chitradurga District) Canara Bank (Lead Bank), StateBank of Mysore, Corporation Bank,Karnataka Bank.


18. Agricultural Universities would require bank credit for long term

loans for establishing foundation seed processing facilities. Lending

arrangements between ARDC and participating banks for loans to the Universi-

ties would be specified in a Banking Plan.

19. All investment proposals and processing plant designs proposed by

SSC and the Universities would be examined by NSC and appraised by the desig-

nated participating banks in accordance with their usual loan procedures and

the stipulations contained in the agreements under the project. The banks

would submit the proposals to ARDC along with NSC's recommendations. In

order to expedite loan approvals, ARDC would consider joint appraisal of the

proposals by ARDC, NSC and the participating banks. Each proposal would

conform to the technical and financial viability criteria and would be sup-

ported by cash flows of the projects.

Banking Plan

20. The Banking Plan for financing the investments of each SSC, each

University and SFCI would take into account participation of the (i) State

Bank group (including its subsidiaries), (ii) one or two of the fourteen

Nationalized banks having all-India coverage and, (iii) one or two of the

more active regional banks. As far as possible, one participating bank would

finance a processing plant. Joint financing with another bank in case of need

would not be ruled out. Since the participating banks are expected to provide

the SSC and Universities also with their large requirements of seasonal work-ing capital, the support of the State Bank group and the fourteen Nationalized

banks with their vast resources would have to be considered. However, the

regional banks would also receive a reasonable share of the project programs.

A certain degree of flexibility in regard to participation arrangements would

be allowed initially to enable ARDC to make any subsequent changes necessary

in the Banking Plan, in regard to dealings with NSC, SSC, SFCI and Universi-

ties.

21. Each participating bank would enter into a Refinance Agreement with

the ARDC on the usual lines as for other World Bank assisted projects. The

period of loan to be provided by the participating bank to the SSC. SFCI and

the Universities would be determined with reference to the cash flow of the

individual projects with the maximum period not exceeding 15 years. Grace

period on principal can be given to the extent necessary in each case but

would in no instance exceed five years.


INDIA


Lending Terms and Conditions

Borrower: India

Beneficiaries: National Seeds Corporation; State Seed Corporationsand Agricultural Universities in Rajasthan, UttarPradesh, Karnataka, Bihar and Orissa and State FarmsCorporation of India.

Relending Terms: (i) From GOI to ARDC

Repayable over 9 years at 6 3/4% per annum and 7 1/4%per annum over 15 years with rebate at 1/4 percentfor prompt repayment. Interest on capitalizedinterest, if any, to be at same rate as on principal.

(ii) ARDC to Banks

Interest at 8%; repayment to coincide more or lesswith payments by ultimate borrowers; refinance ofup to 90% of banks' loans.

(iii) Banks to Borrowers

Interest at 11%; grace period on principal not toexceed 5 years; no grace period on interest; repay-ment over periods not exceeding 15 years; loans tofinance up to 70% of SSC/SFCI investments and upto 75% of Universities farm development and founda-tion seed processing investments.

Lending Conditions: (i) For Banks to SFCI

Submission of detailed farm planning proposals,including soil, topographical and groundwatersurvey, farm mechanization and land developmentplans, cash flow statements to be provided;minimum financial rate of return to be 20%,with suitable cash flow. Security to be in


accordance with agreements between lendingbanks and ARDC. A GOI guarantee for repaymentof principal and interest would be provided ifbanks so desire.

(ii) Banks to SSC

Detailed investment proposal, supported by technicalreview and plant design by NSC, to be submitted,including cash flows and financial position. Secur-ity to be in accordance with agreements betweenlending banks and ARDC.

(iii) Banks to Agricultural Universities

For farm development investments, conditions wouldbe the same as (i) above, excluding GOI guarantee.A GOS guarantee for repayment of principal andinterest would be provided if banks so desire. Forfoundation seed processing investments, conditionswould be the same as (ii) above.

ANNEX 13Page 1

INDIA


Demand, Marketing and Pricing

Introduction

1. The coordination of the supply and demand of certified seed has beena major problem in recent years. Demand has usually exceeded supply, althoughon occasion high losses have resulted from oversupply of certified seed ofsome crops. A realistic demand assessment is considered the first key elementof a national seed production program.

2. Demand of certified seed is closely related to the growth of areaunder high yielding varieties (HYV), which in turn is linked to the introduc-tioII of new improved varieties. Accordingly, promotional efforts to makefarmers aware of the benefits derived from the use of existing HYV as wellas newly released varieties would play an important role in the marketingstrategy of each State Seed Corporation (SSC).

3. Seed demand is also influenced by the seed replacement rate adoptedby farmers. The farmer's attitude towards seed replacement is determined bytradition, seed prices and quality, and his knowledge of the benefits thatresult from certified seed usage. To make the farmer more responsive tocertified seed of self-pollinated crops, additional efforts would be made bySSC to demonstrate the yield improvements resulting from the use of such seed.The recommended replacement cycle for certified wheat and paddy seed is fourto five years. A reduction in germination rate, disease resistance and vigorover four to five seasons usually deteriorates yields to levels which make iteconomical to buy more expensive certified seed. Actual replacement ratespresently are significantly below the recommended level (paras 7 and 12).

4. Replacement rates differ also by ecological region. When storinggrain under unfavorable agro-climatic conditions its viability as seed wouldbe reduced and farmers would tend to purchase seed more frequently.

A. Demand

Past Developments

5. Details of the historical trends in HYV areas are provided inTable 1, together with the Fifth Plan Target areas and the projected HYVareas to 1983/84, Data on total certified seed sales for the years before

ANNEX 13Page 2

1973/74 are extremely limited. Sales figures for certified seed producedby National Seeds Corporation (NSC) and Tarai Development Corporation (TDC)from 1968/69 to 1972/73 and total certified seed sales during the followingthree years are shown in Table 2.

6. The relationship between the growth in HYV areas and the growthin certified seed sales is presented in Table 3. To smooth possible dis-crepancies between the years of recording the seed sale and measuringthe HYV area, the comparison has been based on two year moving averages.The correlation between the two growth rates is very close in the case ofmaize, jowar and bajra, but not in the case of wheat and paddy. The over-riding factor determining the high growth rate for the latter crops has beenthe increase in replacement rates.

7. Although reliable data on actual replacement rates is not avail-able, an approximate replacement rate can be calculated on the basis of totalcertified seed sales during the three years for which total sales are available,and the estimated total seed requirements for the HYV areas. 1/ The approxi-mate replacement rates are stated below. To reduce the impact of errors fromallocating seed sales and related crop production to different years, a two-year moving average has been used in the analysis.

Average AnnualAverage Replacement Rate Increase

73-74 / 74-75 74-75 / 75-76

Wheat 3.8% 5.3% 39%Paddy 5.1% 7.4% 45%

Demand Projection by Joint Working Party (JWP)

8. To determine a realistic amount of seed production under NSP theJWP estimated the certified seed demand for 1980-81 by projecting first thedemand for the years 1977-78 and 1978-79 and then extending the incrementaldemand in even amounts to 1980-81 (Table 4). The demand estimates for theyears 1977-78 and 1978-79 have been arrived at by:

(a) projecting the HYV areas for these years on the basis ofthe Fifth Five Year Plan;

(b) projecting seed replacement rates on the basis of estimatedprice developments, differences in agro-climatic regions,varietal replacement estimates and additional area comingunder HYV.

9. Further demand surveys have been carried out by the Institute ofAgricultural Research Statistics (IARS) and the National Council of AppliedEconomic Research (NCAER). Provision for financing these initial studies

1/ Assumed are seed rates of 100 kg/ha for wheat and 30 kg/ha for paddy.

ANNEX 13Page 3

and future biennial demand surveys was made in Phase I because it was felt

that a better understanding of the demand development was crucial for pro-jecting future investment requirements. The seed demand forecasts of both

institutions varied considerably from each other, particularly with regardto self-pollinated crops, and also differed in many instances significantlyfrom JWP projections. After reviewing the findings of NCAER and IARS, the

JWP considered its own, often more conservative projections, more reliable.The survey is not adequate nor representative enough to firmly establish

future seed demand patterns or an all-India forecast. It has thereforebeen agreed that a complementary demand study be carried out with terms ofreference satisfactory to IDA.

10. The JWP has exercised caution in finalizing the 1981-82 demand

matrix. However, in light of the unfinished demand survey an even more con-

servative approach has been taken in formulating production targets duringappraisal. As outlined below (paras 11-14), in developing a demand forecastit has been assumed that the recent growth in HYV area as well as in seedreplacement rates would slow down significantly with the result that formost crops the JWP demand forecast for 1981-82 would be reached only twoyears later in 1983-84. Accordingly, the SSC seed production envisaged byJWP for 1980-81 has been accepted with a two year delay and is anticipatedto be achieved in 1982-83 (Table 5).

HYV Projection

11. Table 1 summarizes the past performance in HYV area growth and gives

the projections for the future. Wheat HYV area has been estimated to increaseby only 2% p.a. to reach about 81% of the total wheat area by 1983/84. BecauseHYV coverage of the wheat area is already high a significantly higher growthrate should not be anticipated. For paddy, a rate of 8% p.a. has been assumed.Growth in the past has been higher for paddy than for wheat and HYV are atpresent grown in only about 34% of the total paddy area. At 8% growth, HYV paddywould cover approximately 63% of the cropped area by 1983/84. For HYV area ofbajra and maize a 4% p.a. growth rate has been estimated. The rate for jowaris assumed to be 6% p.a. on account of the strong performance over the six year

period analyzed and the acceleration of growth during the more recent years.

Replacement Rate Projections

12. Hybrid seed has to be replaced each season. For self pollinatedcrops, such as wheat and paddy, seed should be replaced every four to fiveyears to achieve maximum returns. Replacement rates presently are, however,not 20% to 25% but, as stated in para 7, about 5.3% for wheat and 7.4% forpaddy. Although the average increase in the replacement rates amounted to39% and 45% for wheat and paddy respectively, future rates cannot be extrap-olated at such growth levels. No analysis has been made to explain the highgrowth experienced during the last years under review. A major portionshculd, however, be attributed to the seed price reduction in the years underanalysis (para 31) and, more importantly, to the significant addition to theHY%F area during this period. Since it is anticipated that HYV area growth

ANNEX 1PPage 4

will be slower in the future, the growth in the seed replacement rate willhave to be scaled down. Future increases would largely depend on promotionalcf or.s of the SSC and of the government extcrizon ser-c.

13 The annual growth of replacement rates has been estimated to be7% for wheat and 4% for paddy. Seed replacement rates would reach about9% and 10% by 1983/84 for wheat and paddy respectively. A lower growthrate has been assumed for paddy than for wheat because a replacement ratemuch beyond 10% is not prudent to plan for at the present time althoughthe ideal rate is 20% to 25%. This is particularly true for transplantedcrops, like paddy, where the lower germination rate of ordinary seed is ofless importance because it does not materially affect final grain yields.Table 4 summarizes JWP's demand forecast together with the demand projec-tions based on the foregoing assumptions.

Seed Production of Potato and Groundnut

14. Proposals for potato and groundnut production have been made to meetintra-state demand only. The proposed production targets for the fifth yearhave been estimated conservatively at below 10% of total seed requirements.

Future Seed Demand Assessment

15. In order to establish a more reliable basis for long-term demandprojections the demand survey of NCAER and IARS is to be complemented by anadditional study which would be completed by March 31, 1979.

16. NSC would be responsible for making short-term demand projectionson which to base seed production programs. For interstate marketing and forintra-state marketing in states without SSC, NSC would continue to followthe present procedure of gathering demand data through its regional officesand dealer network (para 20). SSC would similarly obtain intra-state demandinformation and use this as basis of its demand forecasts.

17. Under Phase I provision was also made to update biennially theinitial demand survey discussed above with the assistance of marketing con-sultants. Proper assessment of the market, trend developments, potentialprsblem 3 consmer response to prices and other conditions affecting the far-mers' attitude towards seed, is essential to plan cautiously not only seasonalseed production and to decide marketing policy but also to prepare for futureexpansioa of seed processing capacity. NSC and SSC would therefore concen-trate -s much on market research as they need to on sales promotion anddistcibution logistics. Provision has been made in the proposed projectfor marketing consultants to assist in setting up a marketing researchdivision in NSC and each of the SSC participating in the project. Detailsa.. in Ar'ex 7.

ANNEX 13Page 5

B. Marketing

Current Distribution Network

18. Of all seed used for raising the major food crops in 1975/76 onlyabout 5% went through commercial marketing channels. Some seed is boughtand sold locally through village cooperatives. Most seed, however, is tradedfrom farmer to farmer or raised by farmers for their own use. For seedmarketed commercially, there are two marketing systems. Seed produced byState Agricultural Universities or on government farms are sold throughvillage cooperatives or government extension agencies. This seed is oftenunprocessed, and frequently not certified.

19. On the other hand, commercial seed producing agencies like NSC, TDCand SSC established under Phase I have developed elaborate marketing networks.NSC for example uses the following channels:

(a) state governments and their agencies;

(b) private dealers; and

(c) its own sales outlets.

Furthermore, with SSC having taken over seed processing and distribution inthe Phase I states, SSC function as distributor of imported NSC seed. Themajority of NSC sales are presently through state governments who place firmadvance orders for seed, arrange for transport and distribution and usuallyset the retail price at low levels. NSC has about 4,000 dealers and 84 salesoutLets scattered all over India. The dealers typically handle other kinds ofseed as well and also other agricultural inputs and commodities. The salesoutlets which play a major role in NSC's marketing research and sales fore-casting are of lesser importance with regard to seed distribution, handlingonly 10-15% of NSC sales.

20. Private sector marketing varies largely with the size of operation.Smaller processors are usually organized as producer associations or coopera-tives and handle local marketing of "truthfully" labeled seed. Large privatecompanies have well established marketing networks and sell also interstate.They are mostly concentrated in Maharashtra, Gujarat, Andhra Pradesh, TamilNadu and Karnataka.

21. Cooperatives are also very active in seed distribution. Seed maybe produced for the cooperatives by its members and sold back to them inthe following season or it may be purchased through the State CooperativeMarketing Federation or other institutions involved in the seed trade.

22. The Cooperative Marketing Federations are distributing seed inBihar, Orissa, Uttar Pradesh and Karnataka. The seed is usually suppliedby the state government, NSC or TDC. In Karantaka and Bihar, State Agro-Industries Corporation is also involved in seed distribution utilizing its

ANNEX 13Page 6

network of service centers. In Karnataka the Corporation has been the soledistributor of seed processed by its subsidiary Agro Seeds Corporation, whichhas become the Karanataka SSC. Agro Industries Corporation in Rajasthan has

been producing seed on its own farms for sale within the state.

Future Distributior System

23. With nine SSC in the four Phase I states and in the five states

under this project, NSC would become the principal coordinator of all SSC

production intended for interstate marketing and would also act as the whole-

sale distributor in interstate seed sales. Under this system production and

supply would be properly coordinated and transport cost minimized by rational

transportation planning and bulk shipments. Bulk storage at optimal loca-tions has been organized under Phase I. Duplication of sales offices for

SSC, NSC and other public sector seed suppliers would be avoided and seed

of all crops and varieties would be made available with every dealer.

24. In seed producing states SSC would establish a retail seed dealer

network using any existing NSC dealers. SSC would be free to choose theirdealers, private or cooperative, on the basis of the dealers' effectiveness

in seed marketing. The State Cooperative Marketing Federation would be

utilized in the seed distribution in all project states and would relinquish,

where applicable, seed production of crops handled by SSC. It would operateunder an agreement with SSC and receive a nominal service charge out of thedealers' 10% commission.

25. In states without SSC, NSC would expand its retail dealer network,

including private dealers. Cooperatives would be used to the maximum extentpossible. The marketing network of the State Agro-Industries Corporation andCooperative Marketing Federation would be employed for this purpose. Under

agreements with NSC both institutions would act as distributor receiving anominal portion out of the 10% dealer commission.

26.. When the NSP seed marketing network is fully developed, each Com-

munity Development Block would have at least four sale points. However, thenumber of dealers in any area would be related to the total quantity of seedto be marketed to ensure that each dealer would have a reasonable market

share. The latter consideration would be less important where seed is addi-

tional to a dealer's existing operation. The merchandising capability and

past performance of dealers in selling other agricultural inputs would begiven consideration. SSC and NSC contracts with dealers would clearly specify

their responsibility in sales promotion. Although market development wouldprimarily be SSC and NSC responsibility, all dealers would be required to do

a certain amount of publicity and advertisement and to participate in meetings

and demonstrations. SSC and NSC would supply publicity material, and under-

take advertising, NSC on a national level and in states without SSC, and SSCin their home states. Both institutions would work closely with the Depart-ments of Agriculture.

ANNEX 13Page 7

27. Aggressive sales promotion would be essential in the future inorder to meet the established seed production targets. Accordingly, theemphasis in marketing has to be placed on seed promotion and not, as inthe past, on distribution. A training program to assist each SSC in estab-lishing effective promotion units within its marketing organization is,therefore, proposed (Annex 7). Provision has also been made for mass mediavans and demonstration equipment like film and slide projectors which wouldbe used by SSC's marketing division in its promotion activities (Annex 5,Table 9).

NSC's Future Marketing Activities

28. Marketing would become the prime NSC activity. SSC would be respon-sible for intra-state marketing, while NSC would handle all interstate marketingas well as intra-state marketing in states without SSC. The proposed marketingorganization is shown in Chart I. Three major activities - market development,storage and transport, and sale and supply - would be directed by suitablyqualified managers. Market development activities at NSC headquarters wouldfocus on policy and national promotion or mass publicity. To foster closecontact between the dealers and NSC, dealership selection and servicing wouldbe the responsibility of NSC regional offices. Market promotion would beperformed from the regional office under the overall direction of headquarters.This would permit better adjustment to local situations and would require ashift from the current emphasis of regional offices on seed production. Atraining program to re-orient NSC staff towards seed merchandising wasproposed under Phase I. In addition, each regional office would have anextension specialist to work with state government extension services andto assist the dealers with seed promotion. Biannual dealer meetings todiscuss market development would also be organized.

C. Prices

29. Because commercial seed of self-pollinated crops can easily besubstituted by the farmer's own grain, seed demand is strongly linked toseed price and quality. Prices in informal farmer-to-farmer transactionscan hardly be higher than grain prices since the seed is hardly differentfrom grain. Prices for the small quantities of seed sold as part of govern-ment extension activities are kept only fractionally higher than grain prices.Certified seed, on the other hand, must be priced higher because additionalcosts are incurred for:

(a) on farm production, where seed production cost are higher by15-25% for self-pollinated crops, up to 40% for hybrids and20-25% for potato and groundnut. In addition, the seed growerhas to be paid a premium in order to compensate him for theadditional risk involved in seed production;

(b) seed processing, including removal of broken and foreignmatter and treating;

ANNEX 13Page 8

(c) certification;

(d) adequate storage under conditions that prevent loss ofseed quality;

(e) transportation and marketing; and

(f) management overheads and fixed and working capital investments.

Past Pricing Pattern

30. Generally, commercial seed prices of different producers in thepast followed NSC's price pattern, which is established on a cost-plus basis.The recent NSC price level for certified seed of the major cereal crops was:

NSC - Certified Seed Retail Prices(Rs/ton)

Average AnnualCrop 1974/75 1975/76 1976/77 /a Price Reduction

Wheat 3,200 3,000 2,550 11Paddy 2,800 2,650 1,950 17Maize 4,600 4,200 4,000 7Jowar 8,000 7,300 7,300 4Bajra 10,500 9,500 6,500 21

/a Prices in 1976/77 apply also to SSC established in thePhase I states.

Certified seed prices in the past were high because:

(a) demand for quality seed generally exceeded supply;

(b) NSC in determining prices on a cost-plus basis was charginghigher overhead cost per ton when turnover was low; and

(c) raw seed procurement prices paid to growers often exceededthe amount necessary to induce farmers to take up seedgrowing.

Anticipated Development

31. With increased seed production under NSP, supply would match demandmore closely and prices could not be kept high on account of unsatisfieddemand. Seed growers would in the future receive adequate premiums abovegrain price to compensate for the additional cost and risk of seed production.In general, the premimus would be lower than the ones paid in the past whichwould lead to lower seed prices. Price reductions for certified seed shouldalso result from,increased price competition among the various SSC and the

ANNEX 13Page 9

associated pressure to keep overhead cost low. Price competition would beencouraged by NSC offering to buy from all SSC only at the lowest ex-plantprice offered by an SSC. Seed procurement prices would only be raised, if thefull interstate needs cannot be met at the lowest ex-plant price. To ensurethe availability of a buffer supply in case of an emergency, NSC would offerto charge only half of its normal service charge on quantities procured fromSSC above the guaranteed offtake.

32. In setting certified seed prices the financial viability of SSCwould be the overriding criteria. Accordingly, prices have to cover the costof procuring, processing and distributing the seed. Overhead costs have tobe absorbed and an adequate rate of return on capital employed has to be pro-vided for. At present interest rates, a rate of 18% (before taxation) shouldbe considered a reasonable financial return. Furthermore, prices must allowthat sufficient reserves be accumulated to meet the needs for plant expansionand replacement, loan redemptions and research support. After having providedfor these reserves and an adequate rate of return on its capital employed,SSC's objective would be to sell at the lowest possible price to generateincreasing seed demand. Accordingly, ex-SSC plant prices 1/ per ton of seedcould reach the following levels at full development of SSC in 1982/83 (detailsare in Annex 14):

Wheat Rs 2,200Paddy Rs 1,750Maize Rs 2,800Jowar Rs 3,700Bajra Rs 4,200Potato Rs 1,750Groundnut Rs 3,600

Procurement Prices

33. SSC would organize certified seed production under contract throughregistered farmers. Seed growers would be provided with foundation seed bySSC. SSC would procure foundation seed of national varieties from NSC andseed of local varieties directly from one of the Agricultural Universities inthe state. Staff attached to SSC's Production and Processing Divisions wouldarrange with the seed growers the time schedule for harvesting, inspection andtransport of the crop to the plant site. The seed grower would be responsiblefor bagging and transportation.

34. All seed meeting specified standards would be paid a premium. Thepremium would be determined as a percentage or a fixed amount above the pricerealizable for commercial crop at the time of delivery to the plant. Becausethere would be a time lag between the date of delivery and the day the acceptedcrop could be verified suitable for seed, the grower initially would be paid themarket rate for commercial crop prevailing at the date of delivery. This firstinstallment would be paid within three days after receipt of the raw seed.

1/ In real terms.

ANNEX 13Page 10

The second installment, the premium, would be paid after SSC ascertains fromits laboratory the portion of the crop delivered that is suitable for proces-sing and selling as certified seed. The payment would usually be made notlater than three weeks after receipt of the crop in the plant. Details ofpremium calculations are in Annex 14.

35. The premium to be paid would be adjusted as necessary to accountfor screenings that can only be sold at a reduced price and not at commercialgrain prices. To discourage seed growers from delivering raw seed with ahigh percentage of foreign matter and to compensate SSC for the high proces-sing cost as well as the loss from the sale of the screenings, the value ofscreenings has been assumed to be 60% of commercial grain price. Thus, thepremium would be adjusted to allow for the 40% reduced value of screeningscompared to commercial grain price originally paid to the grower at deliveryof the crop.

36. Seed growers would receive a third and final payment as bonus, oncethe season's processed seed has been sold and SSC's income for the season canbe determined.

D. Seed Storage

37. Processed seed generally has to be stored for 4-6 months before use.Careful storage under safe conditions is crucial to maintain seed quality tillactual use. Storage for seed inventory held pre- and immediately after pro-cessing would be at each processing plant (Annex 5). For effectiveness inmarketing additional storage as transit stores and bulk distribution depotswas provided under Phase I. High capacity bulk storage with 34,000 tonstotal capacity would be established at five locations between processingplants and consumption areas with suitable dry climate for year-round storage.The buildings are to be designed and constructed by Central Warehousing Cor-poration (CWC) for long lease to NSC. Similarly up to sixty-four smallertransit stores were provided to be located in consumption areas and con-structed by State Warehousing Corporation (SWC) and to be leased to NSC orSSC. Additional storage required by NSC or SSC could be rented from CWC orSWC. No additional provision is considered necessary in the proposed project.

E. Reserve Stock Scheme

38. A reserve stock scheme for foundation and certified seed was ini-tiated under Phase I. The scheme had been proposed on the following grounds:

(i) seed production programs may be affected by adverse agro-climatic conditions or pest-disease problems;

ANNEX 13Page 11

(ii) natural calamities like floods or long dry spells duringthe monsoon season, in turn necessitating resowing ormid-course correction in cropping programs, may giverise to sudden unanticipated demand for seed;

(iii) inability to judge farmer reaction to new varieties mayresult in unexpectedly high demand for seed of a newlyreleased variety;

(iv) for foundation seed, reserve stocks become more criticalsince foundations seed have to be produced at least 2years ahead of commercial crop; and

(v) periods of shortages result in abnormally high seed pricesand the sale of sub-standard seed, and during periods ofglut that invariably follow, large surpluses result infinancial loss in the seed industry and economic lossesdue to loss of production.

The scheme is to be operated by NSC. Finance required for maintaining theseed inventory is to be provided by GOI. Storage cost and losses from theoperation of the scheme are to be met by NSC for recovery through salesmargins. The reserve stock scheme should be considered essential indeveloping a viable seed industry and carrying the cost of its operationshould not be deemed a hardship to the farmer who is the ultimate beneficiaryof such an investment.

39. Quantities of seed to be kept in the reserve stock would be relatedto the total demand estimates under the project. Initially, the scheme wouldbe confined to the major cereals. About 3% of anticipated demand for cer-tified seed of wheat and 2% of paddy seed demand would be held in reserves;for hybrids, the amount would be 10% of projected demand. Corresponding pro-portions for foundation seed would be 10% and 50%. Certified seed reservestock would preferably be held at processing plants to minimize problems ofquality maintenance and blending, and to minimize condemnation losses, sinceseed would be held untreated.

40. Foundation seed being more valuable and small in quantity would beheld in air-conditioned de-humidified seed stores. The storage cost incurredby the various institutions like SSC, Agricultural Universities or SFCI wouldbe borne by NSC.

41. Under Phase I provision was made for the reserve stock requiredin accordance with certified seed demand anticipated for the years through1980-81 and the foundation seed demand for the years until 1979-80. Underthis project funds would therefore be provided only for incremental reservestock requirements resulting from anticipated demand increases beyond thequantities projected under Phase I. Details are given in Table 6.

INDIA


Past and Prolected Development of HYV Areas(million ha.)

Total Cropped HYV Area V Plan Target Projected Projected HYV AreaCrop Area 1976-77 1969-70 1973-74 1974-75 1975-76 1/ for XYV in 1978-79 Annual Increase 1978-79 1983-84

Wheat 19.8 5.1 10.9 11.7 13.7 15.0 2% 14.5 16.1Growth Rate 69/70-75/76 - - - - - - - - -17.9%- - - - - - - -

- - - - 12.1% …

Paddy 38.5 4.3 9.6 10.5 13.0 18.0 8% 16.4 24.1Growth Rate 69/70-75/76 - - - - - - - - -20.2%- - - - - - - -Growth Rate 73/74-75/76 - - - - - - 16.4% - - - - -

Maize 5.9 0.4 0.75 0.8 0.9 1.2 4% 1.0 1.2Growth Rate 69/70-75/76 - - - - - - - - -14.5%- - - - - - - -Growth Rate 73/74-75/76 - - - - - - -9.5% - - - - -

Jowar 16.0 0.5 1.2 1.2 2.2 2.5 6% 2.6 3.5Growth Rate 69/70-75/76 - - - - - - - - -28.0%- - - - - - - - -Growth Rate 73/74-75/76 - - - - - - 35.4% - - - - -

Bajra 13.1 1.1 3.3 2.2 2.7 3.3 4% 3.0 3.7Growth Rate 69/70-75/76 - - - - - - - - -16.1%- - - - - - - -Growth Rate 73/74-75/76 - - - - negative 9.5% - - -

1/ Estimated actual. Source: Government of India, Economic Survey 1976-77.

HLM

July 14, 1977

ANNEX 13Table 2

INDIA


Certified Seed Production by NSC & TDC 1/(tons)

Average AnnualCrop :1968-69 1969-70 1970-71 1971-72 1972-73 Growth Rate %

Wheat 6,917 7,807 7,588 12,540 12,373 16

Paddy 2,747 2,499 3,974 5,136 5,311 18

Maize 2,525 1,975 1,892 3,172 3,090 5

Jowar 420 177 108 558 525 6

Bajra 587 872 825 2,297 1,373 24

Total Certified Seed Sales _/(tons)

Average AnnualCrop 1973-74 1974-75 1975-76 Growth Rate %

Wheat 18,300 67,600 66,500 91

Paddy 12,900 17,800 39,800 76

Maize 11,600 13,000 15,600 16

Jowar 7,800 14,000 17,900 52

Bajra 6,100 13,400 3,200 Negative 28

1/ Source: NSC

August 11, 1977

INDIA


Average HYV Area (000 ha) Average Seed Sales (tons) Increase (pecrease)Crop 73-74/74-75 74-75/75-76 73-74/74-75 74-75/75-76 in Area in Sales

Wheat 11,300 12,700 42,950 67,050 12.4% 56.1%

Paddy 10,050 11,750 15,350 28,800 16.9% 87.6%

Maize 775 850 12,300 14,300 9.7% 16.3%

Jowar 1,200 1,700 10,900 15,950 41.7% 46.3%

Bajra 2,750 2,450 9,650 8,200 (10.9%) (15.3%)

August 25. 1977

I-Jtx

U,

ANNEX 13Table 4

INDIA


Seed Demand Projections by Joint Working Party(tons)

Crop 1977-78 1978-79 1979-80 1980-81 1981-82

Wheat 118,000 124,000 130,000 136,000 142,000

Paddy 48,000 54,000 60,000 66,000 72,000

Maize 11,500 13,000 14,500 16,000 17,500

Jowar 23,000 24,500 26,000 27,5i,0 29,000

Bajra 11,000 12,000 13,000 14,000 15,000

Seed Demand Projection Used for Appraisal

Base Year 1975-76 Projected Annual GrowthHYV Area Seed Replace- Seed Replace- Seed Demand Projection

Crop (million ha.) ment Rate HYV Area ment Rate 1981-82 1982-83 1983-84

Wheat 13.7 5.3 2 7 122,700 133,900 146,200

Paddy 13.0 7.4 8 4 57,900 65,100 73,100

Maize 0.9 100.0 4 - 17,100 17,700 18,500

Jowar 2.2 100.0 6 - 37,500 39,700 42,100

Bajra 2.7 100.0 4 _ 13,700 14,200 14,800

Julv 18, 1977

INDIA


Seed Demand Projection for 1983/84 and SSC Production Program for 1982/831/(tons)

Wheat Paddy Maize Jowar BajraState Demand Production Demand Production Demand Production Demand Production Demand Production

Andhra Pradesh - - 5,500 18,000 1,100 7,000 3,000 2,000 1,000 3,000Punjab 14,000 25,500 700 2,500 1,000 - - - - _Haryana 8,700 29,000 400 3,000 - - - _ 800 -Maharashtra 12,000 - 1,500 - - 15,000 8,0o0 3,000 2,000

Rajasthan 9,300 25,000 - 1,500 800 500 - 400 1,300 1,300Uttar Pradesh 19,000 42,000 3,900 18,100 600 2,000 - - 300 300Bihar 22,000 7,000 4,500 3,000 6,ooo 4,000 - _ Orissa 4,800 - 8,000 8,000 - - - - -Karnataka - - 1,500 1,200 1,100 2,000 7,500 6,100 800 2,100

Gujarat 3,600 - - - - - 200 - 5,000 -Madhya Pradesh 13,500 - 4,000 - 700 - 1,300 - 200 -Assam 5,400 - 1,500 - - _ - - -West Bengal 26,500 - 8,ooo - - - - _ _Kerala - - 22,000 - - _- -Tamil Nadu - - 7,000 - 300 - 1,600 - 700 -

Other States 3,200 - 3,500 - 5,900 - 400 - 1,900 _

Total 142,000 128,500 72,000 55,300 17,500 15,500 29,000 16,500 15,000 8,700

1/ For HYV seed. The JWP demand estimate for 1981/82 and production projections for 1980/81 were taken as a basis.- Modifications agreed upon with the states have been incorporated.

October 10, 1977

ANNEX 13Table 6

INDIA


Incremental Reserve Stocks(tons)

Certified Seed Foundation SeedIncremental Incremental

Crop Demand 1982-83 % Buffer Quantity Demand 1981-82 % Buffer Quantity

Wheat 36,700 3 1,100 1,830 10 180

Paddy 29,700 2 590 3,690 10 370

Maize - 10 - - 50 -

Jowar - 10 - 50 -

Bajra (5,400)1/ 10 (540) (60)1/ 50 (30)

Total 61,000 1,150 5,450 520

1/ For Bajra a certified seed demand of 20,400 tons was anticipated under Phase I.The demand projection for Bajra under this project is only 15,000 tons in thefifth year of the project. Incremental demand is, therefore, negative.

July 19, 1977

INDIASECOND NATIONAL SEED PROJECTNSC: MARKETING ORGANIZATION

MANAGER MANAGER(MARKET DEV.) (STORAGE AND TRANSPORT) (SALES AND DISTRIBUTION)

MARKET EDETNI

AE

DEVELOPMENT EE XESG TASOT STORAGE EXOT DISTRIBUTION SALES DVLPET E XTIENSIO DISTRIBUTIONOFFICER OFFICER SPRIO SUPERIO SUPEVISO SUPERVISOR SUPERVISOR D= MN CROFFICEROFIER OFICR 1X

F- '

ANNEX 14Page 1

INDIA


Financial Analysis

Universities - Foundation Seed Production and Processing

1. Foundation seed production and processing by Universities wouldbe undertaken as a commercial venture. Universities would establish foun-dation seed prices so as to recover all variable and fixed costs associatedwith the operation, and yielding at the time of full development, a reasonablefinancial rate of return on capital employed. At present interest levels,18% would be considered adequate. Table 1 shows the cost of foundation seedproduction for the major kinds of seed included in the project. The costshave been developed on the basis of a 300 ha University farm and a croppingintensity of 130%. On a 500 ha farm, production costs would be lower byapproximately 8% for wheat, paddy and groundnut, 6% for hybrid cereals, and3% for potatoes.

2. Prices for breeder seed, which would also be produced and processedby the Universities, have been assumed to average approximately 150% of found-ation seed prices. Breeder seed production would not be organized as a com-mercial self-supporting operation. Salaries included in farm overhead costshave been allocated at an even rate per hectare, while depreciation andportions of "other" overhead costs were allocated on the basis of capitalinvestments required for cultivating the various crops.

3. Financing costs have been allowed on the basis of an 18% rateof return on fixed investments and permanent working capital. An interestrate of 15% was assumed for seasonal working capital. For the calculationof the average investment capital, farm land has been included at a value ofRs 9,000 per hectare. For calculating interest on working capital, it hasbeen anticipated that the variable production costs would accrue evenly overa 6-month period (average time of capital employment 3 months), while salariesand other overhead costs (excluding depreciation) would require financingfor a 6-month period.

4. Yields were estimated on the basis of past experience by NSC andother foundation seed producers. No attempt was made to differentiate betweenvarieties. In addition, for hybrid maize, jowar and bajra, yields and produc-tion costs have been averaged without separating male and female parentallines. Accordingly, the seed prices for hybrids in Table 2 are estimatedaverages.

ANNEX 14Page 2

5. Processing costs and transportation costs are detailed at Table 2together with suitable foundation seed prices that would yield an 18% rateof return on capital employed. The variable processing costs have been es-timated on the basis of the processing costs for certified seed (Annex 5, Table12), assuming a 20% cost increase in the major cost items due to the additionalcare required for processing and packaging foundation seed. Processing over-head costs have been allocated on the basis of total costs for all Universitiesparticipating in the project and the anticipated tonnage of foundation seed inproject year 5. For salary allocation, potatoes and groundnuts were given aweight of 50% in relation to other crops, and in calculation depreciationgroundnuts were weighted with 70% because of the smaller investment requiredfor groundnut processing.

6. Financing costs of processing investments has been allocated inaccordance with the cost of the processing equipment required for the variouscrops. For working capital requirements, a six-month time lag has beenassumed between harvesting and distributing the processed seed to NSC, SSCand private sector producers. Financing costs on fixed investments andpermanent working capital has been determined to yield a return of 18% p.a.,while interest for seasonal working capital has been calculated at a rate of15% p.a.

Seed Growers - Certified Seed Production

7. Table 3 illustrates the production costs for. both, certified seedand commercial food crops, and shows the premiums required to fully compensatethe grower for increased costs and risks of seed production. A premium abovefood-crop prices would be established which would be proportionate to theincrease in production costs after making allowance for screenings (and malerows in the case of hybrids) and after considering the risk of seed rejectionalong with opportunity costs (for jowar and bajra). It has been assumed thatat such a pre.ium the seed grower would be indifferent to seed or grain pro-duction and that an additional premium of 5% of food-crop prices would be ade-quate to induce him to seed production. In determining the production costsit has been anticipated that only progressive farmers would become shareholdergrowers who would make optimal use of seed and the other inputs in the produc-tion of both seed and commercial food crops. The foundation seed prices fromTable 2 have been used in determining seed costs for certified seed production.Seed costs for food-crop production has been calculated on the basis of thecertified seed prices from Table 4 after including retail margins and trans-portation costs. A seed replacement rate of 25% was assumed for growing wheatand paddy food crops.

8. To determine the cost of seed production the value of screeningsand male parental lines has been credited against production costs. In estab-lishing the value of screenings, the variable production costs were comparedwith the amount that SSC would pay for the screenings, and the lower amountwas used for valuation. For screenings, SSC would reimburse 60% of the food

ANNEX 14Page 3

crop price to the grower. Male rows were valued at variable productioncosts.

9. An allowance for anticipated rejections has been made on the basisof incremental production costs incurred in the production of the rejectedcrop. For jowar and bajra, opportunity costs have been taken into account.The progressive farmer would not be engaged in bajra or jowar production butwould grow more profitable maize food crops. For the determination of aseed price for these crops, it is, therefore, not sufficient to compare onlythe cost of seed production with the cost of producing commercial grain. Toinduce the farmer to growing bajra and jowar seed he would have to be assuredof a profit that would more than match the forgone profit of maize food cropproduction.

10. The required premiums above food crop prices to cover the increasedcosts and risks are:

Wheat 36%Paddy 27%Maize 49%Jowar 106%Bajra 136%Potato 31%Groundnut 28%

Compared with seed prices paid to growers in 1976/77 the suitable seed pricesindicated in Table 3 would be marginally higher for wheat, paddy and maize,whereas for jowar and bajra prices could be reduced by about 30% and 20%respectively. Potato and groundnut seed prices variations from state to stateare too wide to permit a general comparison.


11. Price Determination. SSC would be independent in their price deter-mination and establish prices which would cover all fixed and variablecosts and provide an adequate financial rate of return on capital employed.At present interest levels 18% (before taxation) could be considered a reason-able financial rate of return. Table 4 details the cost and suitable ex-SSCsales prices for certified seed. Fixed processing plant costs were allocatedon the basis of averages for the total project. Allowance was made for thelower fixed manpower and equipment requirements associated with processingof potatoes and groundnuts. Fixed and variable costs for potato processinghave been averaged over the total potato tonnage in order to establish asingle price for potatoes irrespective of the storage facilities used, be itrented or the SSC's own storage.

12. Financial costs on investment capital and permanent working capitalhave been estimated to yield an 18% rate of return on the average capitalemployed at the time of full project development. Total SSC project invest-ments have been used as basis. For working capital, it has been assumed that

ANNEX 14Page 4

on the average, SSC would pay the seed grower the full procurement price 6months before receiving funds from the sale of the certified seed. Workingcapital associatedwith variable processing costs and plant overheads(excluding depreciation) have been estimated to require financing for about3 months.

13. Headquarters overhead expenses have been allocated on the basisof total costs for SSC at full development and total throughput in year5. In the calculation, potatoes and groundnuts have been given a weightof 60% and 70% respectively, compared to cereals. Headquarters interestcosts and depreciation have also been determined on the basis of totalproject costs at time of full development. Financing costs have beencalculated so as to yield an 18% rate of return on the average capitalemployed.

14. Suitable prices for certified seed would not vary markedly frompresent seed prices for wheat and paddy, since prices for both crops havealready come down considerably under the National Seed Program in 1976/77.Future seed prices for hybrid cereals could, however, be lowered from pre-sent levels by 20% to 40% .

15. Cash Flows. On the basis of the targeted seed production (Annex 5,Table 1), seed procurement prices-(Table 3) and seed sales prices (Table 4)the cash flow for the Rajasthan SSC has been projected (Table 5). The pro-jection has been made in half-yearly time increments to account for the esti-mated time lag between SSC's cash outflow from the purchase and cash inflowfrom the sale of seed. The anticipated financial rate of return (ROR) is 20%before taxation. The analysis does not include jute, pulses, oilseeds andother crops which would also be processed by SSC Rajasthan (Annex 5, Table 1).Since prices for these crops would be determined similarly as for cereals,groundnuts and potatoes, their inclusion would result in a higher ROR and amore positive cash flow. ROR would also increase, if the anticipated reductionin hybrid seed prices would be phased over several years until they reach thelevels indicated in Table 4. The ROR remains satisfactory, if processing andoverhead costs would go up by 20% (ROR 16%) or if costs for new plant andequipment would be higher by 30% (ROR 18%). It would still be 14%, if pro-cessing costs, overhead and investment costs would all increase by 20%. Themost significant risk facing SSC is projected seed demand. However, sincevariable costs amount to between 80% and 90% of total costs, ROR is relativelyinsensitive to sales volume. A 20% reduction in output would lower the RORby only 4% to 16%.

16. Other SSC would have similar financial results since prices forcertified seed would be established so as to cover all costs and to providefor an adequate financial rate of return. Cash flow projections would bepresented to participating banks to support loan requests.

17. An income analysis of SSC Rajasthan covering the first ten projectyears is given in Table 6. The Corporation would earn profits commencingwith project year one.

ANNEX 14Page 5

18. SSC Rajasthan's projected Source and Use of Funds statement (Table 7)

demonstrates its ability to service project loans on the proposed terms (11%

interest, no grace- period on interest, 4-5 years grace on principal and up

to 10 years repayment). Accumulation of reserve funds is also shown, and is

expected to be adequate to meet the needs for plant replacement, loan redemption

and research support.

SFCI Suratgarh - Farm Development

19. Tables 8 to 10 show the financial analysis fo the SFCI Suratgath

Farm in Rajasthan. Only 4,000 ha would be developed for seed production.

The analysis is, therefore ,limited to incremental costs and revenues related

to this area. Since SFCI is already growing seed, it has been assumed that

the existing cropping pattern would continue. Incremental operating costs

accordingly are low. For combine harvesters that are presently rented,

operating costs would even be lower under the project. Cost and yield as-

sumptions are based on past management levels and tests that were carried

out on 6 ha test plots (Annex 4, para 32). The expected financial rate of

return (ROR) is 24%. In the analysis the total costs for the canal enlarge-

ment has been taken as incremental costs of the 4,000 ha development. Since

this investment will benefit the entire farm, ROR would be higher, if yield

improvements in the remaining 6,000 ha food grain area were taken into account.

ROR is not very sensitive to changes in incremental operating costs. A 30%

increase would reduce ROR to 23%. A 30% increase in investment costs would

lower ROR to 20%; a 30% reduction in incremental revenue would result in a

decrease of ROR to 17%. At a 20% increase of all costs combined with a

20% decline in projected incremental revenue ROR would still be 16%.

20. Incremental revenue during the first two project years would be

insufficient to cover the interest payment on the project loan. Yield

increases from irrigation improvement and land development would be small

until year 3. Grace period for interest payments would, however, not be

required since gross operating profits from seed production would amount to

more than Rs 3 million per annum during the first two years. Loan repayments

could be made over a four-year period commencing with project year 4. At the

end of year 7, reserves would be adequate to provide replacement of farm

machinery.

National Seeds Corporation (NSC)

21. For handling foundation seed and interstate marketing of certified

seed, NSC would establish service charges adequate to maintain the Corporation

as a financially viable entity. Minimum charges to cover NSC's operating costs

and the costs associated with the reserve stock schemes are detailed in Table

11. The analysis is based on:

(a) Proportionate establishment costs and miscellaneous operating

costs in year 1 would be the same as assumed for Phase I;

ANNEX 14Page 6

(b) Present surplus staff would be absorbed by SSC, SSCA andother institutions over a four-year period commencing withproject year 2. (Several employees have already beentaken over by SSCA, SSCA etc. of Phase I states);

(c) Certified seed production of SSC would total about 225,000tons by 1982/83. Interstate trade through NSC wouldamount to approximately 95,000 tons;

(d) 40% of foundation seed production would be distributedthrough NSC;

(e) Obsolescence and quality deterioration of reserve stockswould require the sale of the stock as food grain approx-imately once in five years.

22. To cover all costs, NSC's minimum service charges would have to beabout 11.5% of sales in year 1 and reach approximately 8% in year 5. Theminimum charge for the reserve stock operation would be about 4.5% in anyproject year whereas the charge from NCS's operation would decrease from about7% in year 1 to 3.5% in year 5. NSC's service charges would be reviewedperiodically with IDA.

ANNEX 14Table 1

INDIA


Foundation Seed - Production Costs -(Rs./ha)

Wheat?2 Paddy2- Maize4/ Jowar5/ Bajra5/ Potato6/ Groundnut7/A. PRODUCTION COSTS

Variable Production CostsLand Preparation and Sowing 280 250 280 280 280 550 320Breeder Seed 574 143 314 308 154 5,565 804Fertilizer 700 750 1,000 650 400 1,565 450Pesticide/Herbicide 145 150 150 100 55 275 120Irrigation 120 140 200 200 180 200 80Registration and Certification 50 55 80 80 80 55 55Transport and Handling 8 11 8 5 5 20 6Nursery and rransplanting - 200 - _ - - -

Weeding 50 120 90 90 70 240 8/ 180Roguing/Detassling 90 90 300 150 135 75 75

Harvesting and Drying 315 400 290 9/ 190 165 410 9/ 195Miscellaneous 85 120 100 120 110 90 85

Subtotal 2,417 2,812 2,173 1,634 9,045 2,370

Farm Overhed Allocation 10/Salaries 993 993 993 993 993 993 993Depreciation 368 368 274 274 274 274 274Other 365 365 299 299 299 299 299

Subtotal 1,726 1,726 1,566 1,566 1,566 1,566 1,566

Financial Cost Allocation 11/Investment Capital 1,685 1,685 1,601 1,601 1,601 1,601 1,601Working Capital 195 195 201 181 165 388 187

Subtotal 1.880 1.880 18 .72 1.766 1.989 .788

Total Production Costs 6,023 6,035 6,180 5,521 4,966 12,600 5,724

B. YIELDS (tons/ha)Foundation Seed 2.00 2.80 0.50 0.40 0.25 13.5 1.50Screenings/Male Rows 0.35 0.50 0.27 0.22 0.13 1.5 0.30

C. PRICES AND VALUE OF SCREENINGS15/Food-crop Prices (Rs./ton) 1,100 800 1,250 1,350 1,350 900 2,240Revenue from Screenings 385 400 338 297 176 1,350 672

D. NET SEED PRODUCTION COSTSCost per Hectar 5,638 5,635 5,842 5,224 4,790 11,250 5,052Cost per Ton of Seed 2,819 2,013 11,684 13,060 19,160 833 3,368

E. LOSS FROM SEED REJECTIONLoss per Ton Rejected 12/ 1,719 1,213 10,434 11,710 17,81^ 0 1,128Probability of Rejection 13/ 10% 10% 107' 15% 20%o 10% 10%Expected Loss per Ton of Seed 14/ 191 135 1,159 2,066 1,453 0 125

F. EXPECTED SEED PRODUCTION COSTPER TON 3,010 2,148 12,843 15,126 23,613 833 3,301

1/ Based on a 300 ha model farm2/ Based on Rajasthan/Uttar Pradesh conditions3/ Based on Orissa, Rajasthan and Bihar conditions4/ Based on Karnataka, Rajasthan and Bihar conditions5/ Based on Karnataka conditionsWi Based on Bihar/Orissa conditions7/ Based on Orissa/Karnataka conditions8/ Includes earthing9/ Includes sorting10/See para 2l1/See para 312/Loss per ton rejected = difference between Cost per Ton of Seed and Food-crop Price per Ton13/Based on Certification Agency experience14/Expected Loss per Ton of Seed = Loss per Ton Rejected x [l:(l-Probability of Rejection)-115/Includes male rows. Screenings and male rows would be sold at food-crop prices

August 25, 1977

INDIA


Foundation Seed - Processing and Transportation Costs and Seed Prices(Rs./ton)

Wheat Paddy Maize Jowar Bajra Potato Groundnut

A. Variable Processing CostsProcessing materials 1/

(bags, packaging, chemicals) 192 192 270 270 270 120 120Electricity 1/ 10 14 14 10 10 30 2Other utilities 1 1 1 1 2 1 1Fuel oil 1/ 12 36 36 12 12 40 2Certification materials 12 12 12 12 12 12 12Variable labor 1/ 18 23 28 28 28 18 18

Subtotal 245 278 361 333 334 221 155

B. Processing Overhead Allocation 2/Salaries 115 115 115 115 115 58 58Depreciation 113 113 113 113 113 113 79Other 13 13 13 13 13 13 13

Subtotal 241 241 241 241 241 184 150

C. Financial Cost Allocation 3/Fixed capital 216 216 216 216 216 306 126Working capital 113 84 467 494 682 49 127

Subtotal 329 300 683 710 898 355 253

D. Total Processing Costs 815 819 1,285 1,284 1,473 760 558

E. Transportation Costs 50 50 50 50 50 50 50

F. Suitable Foundation Seed Price 4/ 3,900 3,000 14,200 16,500 25,200 1,650 3,900 z z

1/ 120% of processing costs for certified seed (Annex 5, Table 12); increase due to higher value packaging,additional treating and increased care in handling 4

2/ See para 53/ See para 64/ Rounded total of expected seed production costs, total processing costs and transportation costs

August 25, 1977

INDIA


Certified Seed - Production Costs and Seed Growers' Prices

Wheat 1/ Paddy s Maize 5/ Jowar 5 Bajra 41 Potato 41 Groundnut J

Commercial Certified Comnerciul Certified Commercial Certified Co=sercial Certified Commercial Certified Commercial Certified Commercial Certified

A. V$IABLE PRODUCTION COSTSLend Preparation and Sowing 250 250 225 225 250 250 250 250 250 250 500 500 275 275

Seed - Commercial 152 - 35 - 47 - 50 - 19 - 3,005 - 360 -

- Foundation - 390 - 90 - 213 - 198 - 101 - 4,125 - 507Nursery and Trensplenting - - 200 200 - - - - - - - -

Fertilizer 700 700 750 750 1,000 1,000 600 600 350 350 i,565 1,565 450 45o

Pesticide/Herbicide 85 125 110 150 105 150 75 100 50 75 190 275 100 120

Weeding 40 50 80 100 50 75 50 75 4o 60 140o/ 200 5/ 130 150Roguing/Detassling - 6o - 6o - 200 - 100 - 90 - 50 - 50

Irrigation 120 120 140 14o 14 14o 14io i4o 110 110 200 200 8o 8o

Certification - 55 - 55 - 80 - 80 - 80 - 50 - 50

Harvesting and Drying 220 250 290 320 150 2/ 230 9/ 110 150 90 130 300 2/ 370 2/ 150 175Transport and Handling 8o 80 110 120 6o 70 40 50 40 50 200 200 40 50

Miscelleneous 59 67 85 98 63 77 56 8i 56 79 24 35 6o 76

B. VARIABLE FINANCIAL COSTS 2/ 43 54 51 58 48 63 35 46 25 34 154 190 41 50

Total Variable Costs 1,749 2,201 2,076 2,366 1,913 2,548 1 1,030 r1,09 S,27 7,760 1,6R6 2,033

C. YIELDS (tons/ha)Commercial 2.7 3.8 - 2.3 - 1.4 - 1.1 - 15.0 - 2.0 -Seed _ 2.3 - 3.0 - 1.50 - 0.90 - 0.72 - 13.5 - 1.7

Screenings - o.4 - 0.8 - 0.23 - 0.14 - 0.11 _ 1.5 - 0.3

Male Rows - - - - 0.57 0 0.36 - 0.27 - - - -

D. PRICE3 AND VALUE OF SCREENINGSAND MALE ROWS

Food-crop prices (Rs./ton) 1,100 800 1,250 1,350 1,350 900 2,240

Value of Screening LO/ 264 384 173 113 89 776 302

Value of Male Roe e/ 631 483. 346

E. NET PRODUCTION COSTSCost per Hectar 1,749 1,934 2,076 1,982 1,913 1,744 1,406 1,276 1,030 974 6,278 6,984 1,686 1,731

Cost per Ton 648 842 546 661 832 1,163 1,004 1,418 936 1,352 419 517 843 1,018

F. TNCREMENTAL COSTS FROM SEEDREJECTION

Incre-ental VariableCosts per Ton Rejected 11/ 194 115 331 414 416 98 175

Probability of Rejection 7 5% 5% 10% 15% 20% lo% 10%Expected Incremental

Costs per Ton of Seed L/ 10 6 37 73 104 11 19

0. EXPECTED VARLABLE PRODUCTIONCOSTS (Rs./ton) 648 852 546 667 832 1,200 1,004 1,491 936 i,456 419 528 843 1,037

H. OPPORTUNITY COSTS L2/ - - - 531 704 _

I. COST RATIO (%) LI 131 122 144 201 231 126 123

J. SUITABLE PFICE PFEMIOM ABOVEFOOD-CROP PRICES (,)_L6/ 36 27 49 106 136 31 28

K. SUITABLE GROWER'S SEED PRICE(Rs./ton) 1,500 1,020 1,870 2,790 3,190 1,180 2,870

i/ Based on Rajasthan/Uttar Pradesh conditionsJ Based on Orissa, Rajasthan and Bihar conditions3/ Based on Karnataka, Rajasthan and Bihar conditions

Based on Earnataka conditions

/ Based on Bihar/Orissa conditimosBased on Oriasa/Karnataka conditions

7/ At 15% p.a. for working capital (80% of variable productbn costs) for 2.5 months assuming that production costs wilL accrue evenly over 5 months until the crop is sold.| Ind udes earthing2 Includes sorting and cob handlingL See para 8 "_,

l%/ Difference between Net Production Costs per ton of certified seed and commercial grain

M/ Based on Certification Agency experience13/ Expected Incremental Cost per Ton of Seed - Incremental Variable Costs per Ton Rejected x IL: (-Probability of Rejection)-l3

E/ Opportunity Costs = Difference between profit per hectar from maize food-crop production and production of Jowar or bajra divided by seed yield of jowar or bajra

15/ Cost Ratio - Total of Expected Variable Production Costs end Opportunity Costs for seed divided by Expected Variable Production Costs of Commercial Crop

!E/ 5% above coat increase as determined under C.

Asgust 25, 1977

INDIA


Certified Seed - Processing Costs and Certified Seed Prices(Rs./ton)


A. CostsProcurement from Growers

(Table 3) 1,500 1,020 1,870 2,790 3,190 1,180 2,870Variable Processing Costs

(Annex 5, Table 12) 206 234 303 279 279 230 1/ 132Fixed Processing Plant CostsSalaries (Annex 5, Table 10) 27 27 27 27 27 16 2/ 19 3/Depreciation 4/ 70 70 70 70 70 45 fl 49 3/Maintenance 57 32 32 32 32 32 25 1/ 22 3/

Financial Costs - Processing

Plant 6/Investment capital 130 130 130 130 130 90 1/ 91 3/Working capital 155 115 196 274 309 123 266

Headquarters 7/Overhead expenses 60 60 60 60 60 36 2/ 42 3/Interest lost 10 10 10 10 10 10 10Depreciation 10 10 10 10 10 10 10

Total Costs 2,200 1,708 2,708 3,682 4,117 1,765 3,511

B. Suitable Ex-Plant Seed Price 2,200 1,750 2,800 3,700 4,200 1,750 3,600

1/ About 50% of potato production would be stored in rented cold storage2/ Allocated at 60% of cereal crop costs3/ Allocated at 70% of cereal crop costs4/ At 3.33% p.a. for buildings and 10% p.a. for machinery and equipment5/ At 2.5% p.a. for buildings and 5% p.a. for machinery and equipment6/ See para 127/ See para 13

August 25, 1977

INDIA

SECOD NATIONAL SEE PROJECT

SSC-Rajanthan - Finanein1 Pate of Return

Year 1 Year Y.er 3 Yer 4 Year I learn 6-10 Year 11 Year 12 Year 13 Year 14 Yern 15-21 Y-ear 020/

Reb i Karif Rabi Kharif OaRb Kearif Rat! Khapif Rbi KbiIf yat Khrlf MR Khrif RaRt Kherl NaO XIe-if Rai Xhaif Rbi Kharif Rabi

A. Revenue | Wheat - 22,200 - 26,400 - 50,600 - 53,460 - 55,000 - 55,000Padd- - 875 - 7s - 0,275 - r,450 - o,605 -Maine 840 840 - 1,1 20 1,400 1,4oo -t ) -nnant fur -rbiJOear _ _ 1,110 - 1,110 - 1,480 - 1,050 1,850 - ) and kaerifGran _ 3,360 3,360 4,2oo 5,4 - °° ,)4oO,rnenont - il - i 44o - 700 - 70 - .z.. - - _ _ - _ _ -- -- -

OneR-InPien - 8£,500 1w~ 2G,600 4r37 50, 50 17;,275 596rT iR5 5 19,195 55,000 19,195 55,000 19,195 55,000 19,195 55,000 19,195 55,00 19,195 55,000 97,195

R. Overattreg Oneta1. Rrnenreaent3/ Wheat 15,000 - 18,000 - 34,500 - 36,450 - 37,500 - 37,500 -

Paddy - 510 - 510 - 1,326 _ 1,428 - 1,530 - 1,530Maine - 561 _ 561 - 740 _ 935 - 935 _ 935 ) eunItaut fur ratJanar - 837 - 837 - i1,16 1,395 - 18395 8 1395 ) and khTifB-Jr. 0,552 - 20552 3,190) - ,008 - 3,3828 3:6812Grunednet - 1,148 _ 1,148 5 y,740 - 6,314 - 6,601 _ 6,601

20 Prnenniag W Wheat 2,060 - 2,477 - 4,738 - s,006 - 5,150 - 5,150 -Padd - 1-17 - 117 - 304 - 300 - 351 - 351)Maine - 91 - 91 _ 21 152 152 - 152 ) -onntant fur rsbiJunar - 84 _ 84 _ 112 - 140 _ 140 - 140) an kharifBaen - 223 - 223 - 279 1335 335 35)Groundnut _ 53 - 73 - 264 - 290 - 374 - 304)

3. Plnt OverReadSalaries and Wagen 2 337 337 337 473 473 473 473 473 473 463 473 473Maintenane, / L17 117 292 295 ' 57 1150 717 517 517 517 517 517

4. H-edqart.r. Overhead 29 3 355 1 21 o 812 812 812 )12 -Subtttai. 17/850 73rTh ;79T 70,296 14,044 43,060 16,931 44,4522 17,373 46,450 17,737 44,450 17,373 44,450 17,373 46,250 17,373 44,452 17,373 44,652 17,373

C. Innutneta1.3Ta-ur f 3NC PiantnQ/ 80027 Ne Plante and Headquarter2/ 3,442 ,442 5,53 5531 ,Jj51 5,19 2 1,842 .ŽZ2 - - - _ 1.6 ,631.633 1.929 1,929 1 487 1 487 1,104 1.104

Teta1 C-Rh-Outfle 22,952 10,368 26,987 12,827 46,074 20,036 4R,oB4 18,773 44,452 17,373 44,452 17,373 46,035 19,006 46,381 19,302 45,939 18,860 45,556 18,447 44,452 17,373

D. Net Cauh-IR)Ovt)flun '(22,052) 11,832 (19,362) 13,573 (38,449) 30,564 (28,809) 34,687 (25,792) 37,627 (25,257) 37,627 (26,890) 35.994 (27,186) 35,698 (26,744) 36,140 (26,361) 36,523 (25,257) 37,627 19,195

Financia Rate ef Return 200%

%/ MA-unta On eonctant rid-1977 priese

0 4x-pleat

prie- feon Table 43/ Pen=areenent prie.. n fPn Table 34' Preoentag east fraI A-en 5, Table 123 Fpon AwueX 5, TPble 10. SRC-RaJnthan neld h-ve 1 ClOe I 0l4et -nd 2 CCl-u II plant, Rae Clana II Plant be-.en epenitive be khtaif uY prueet pear 2. FPr the uther twe p plnla, Plant overhead ha bRena asaused at fUtI

an0unt nith begi-ing of pruJeet year 1.| At 2o5% fur building, and 5% fur -eaehia-ry and equip.eet7F Preq Anne 5, Tbla li

t/ letieated value uf NSC nqniP-eat tI bR taken uver by SSC. Enti.atin fun thin an-lysin unly. FiPal valuetin tu be prepared hy 00C and SsC.| Fr-n A.nen 5, T.ble 3. Replanset uP kdinery and equip-te 10 yearn fte nuouleeti-

2 LiquidatiOn of inventory in rabi of prjoect Yeon 22 neeured fur elynis punpunen only.

nAguan 25, 1977

INDIA


SSC - Rajasthan - Income Analysis

(Ts. 'COO)

Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10A. Revenue - 22,200 34,025 58,225 69,735 73,660 74,195 74,195 74,195 74,195 74,195B. Inventory Increases 2/

Paddy (Rs. 1,580/ton) 790 - 1,264 158 158 -Maize (Rs. 2,540/ton) 2/ 762 - 254 254 -Jowar (Rs. 3,470/ton) 2 1,041 - 347 347 - -Baira (Rs. 3,890/ton) 3,112 - 778 778 - _ _ _ _ -Groundnut (Rs. 3,320/ton)-/ 1,328 - 5,312 664 332 - - -

C. Operating Costs I/ 24,736 28,752 55,726 60,173 61,825 61,825 61,825 61,825 61,825 61,825D. Working Capital Interest -/ 1,345 1,716 3,313 3,825 3,935 3,936 3,936 3,936 3,936 3,936E. Operating Surplus

At mid-1977 prices4 3,152 3,557 7,141 7,938 8,390 8,434 8,434 8,434 8,434 3,434At current prices 4 3,262 3,938 8,462 10,065 11,385 12,246 13,098 14,017 14,996 16,050

F. Interest - Long Term Debt - 383 1,140 2,136 2,821 2,824 2,434 1,988 1,488 932 320G. Depreciation

Plant and buildings (3.33%) 102 355 636 682 682 682 682 682 682 682Machinery and equipment (10%) 444 895 1,266 1,561 1,561 1,561 1,561 1,561 1,561 1,561

H. Gross Profit 2,333 1,548 4,424 5,001 6,318 7,569 8,867 10,286 11,821 13,487I. Corporate Tax'es -/ 1,167 774 2,212 2,501 3,159 3,785 4,433 5,143 5,911 6,743J. Net Iucome 1,166 774 2,212 2,500 3,159 3,784 4,434 5,143 5,910 6,744

1/ From Table 5 m X2/ Valued at processing costs from Table 4 excluding 50% of interest costs a'3/ At an interest rate of 15% on 70% of average annual working capital requirements (see Annex 8, Chart I)4/ Assuming a 7% p.a. general price escalation from mid-1977 prices.51 At 11% p.a. for 70% of capital investment costs. Borrowing and loan repayments are assumed to take place in mid-year of any

project year.6/ Taxes of 50% are nominal and may be lower after allowing for faster depreciation, development rebates and bonus payments to

seed growers.

August 25, 1977

INDIA


SSC - Rajasthan - Source and Use of Funds -

Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10A. Source of Funds - - - - - - -Share Structure- - - - - -

1. Share Capital 2/ Equity Preference Total % of Equity

Seed Growers 1,614 1,357 2,196 736 51 35% - 35% 50%NSC 1,384 1,162 1,883 631 45 15% 15% 30% 20%State Government 1,614 1,357 2,196 736 51 20% 15% 35% 30%

2. Loans 3/Investment Capital 5,838 9,045 9,075 3,367Working Capital 4,923 - 5,569 1,541 343

3. Operating Surplusafter Taxes 4/ 2,095 3,164 6,250 7,564 8,226 8,461 8,665 8,874 9,085 9,307

Total Source of Funds 17,468 16,085 27,169 14,575 8,716 8,461 8,665 8,874 9,085 9,307

B. Use of Funds

1. Fixed AssetsTake-over of NSC

Equipment 5/ 800New Plants and

Headquarters 6/ 7,540 12,921 1.2.964 4,8102. Inventory Increases 7/ 7,033 - 7,955 2,201 4903. Long Term Debt Service

Interest (at 11% p.a.) 383 1,140 2,136 2,821 2,824 2,434 1,988 1,488 932 320Amortization - - - - 3,300 3,800 4,300 4,800 5,300 5,825

4. DividendsPreference Shares

(at 11% p.a.) 152 280 487 556 560 560 560 560 560 560Equity Shares 8/ - - - - 417 834 834 834 834 834

5. ReservesPlant Replacement 9/ 780 780 780 780 780 780 780 780Loan Redemption 10/ 570 498 343 1,730Research 11/ 78 87 181 209 56 42 49 60 73 88General 12/ 912 1,159 2,323 1,459 289 11 154 352 606 900

Total Reserves 1,560 1,744 3,627 4,187 1,125 833 983 1,192 1,459 1,768Cumulative Reserves 1,560 3,304 6,931 11,118 12,243 13,076 14,059 15,251 16,710 18,478

Total Use of Funds 17,468 16,085 27,169 14,575 8,716 8,461 8,665 8,874 9,085 9,307

1/ In current prices. Amounts are as of the end of a project year2/ 30% of investment capital and working capital3/ 70% of investment capital and working capital4/ From Table 65/ Estimated value used in this analysis. Final value is to be determined by NSC/SSC.6/ From Annex 5, Table 3 after addition of price contingencies.7/ From Table 68/ At 7% p.a. after loan redemption reserve is built up9/ Plant replacement reserve is to provide for increased equity requirement resulting from inflation until time of

machinery and equipment replacement (years 11-14). -_ H10/ Loan redemption reserve to be built up during grace period. Amount to cover 50% of following years debt service. 411/ At least 5% of total reserves would be placed into a fund to support research efforts by SAU/ICAR through suitable

problem specific grants.12/ Excess of projected inflows over outflows. Funds could be used for working capital financing. Other possible uses:

bonus to seed growers or dividend increase after year 4.

August 25, 1977

ANNEX 14Table 3

INDIA


SFCI Suratgath Farm - Incremental Investments andIncremental Annual Fixed Operating Costs l/

Incremental Investments 2/

Total Year 1 Year 2 Year 3

Land Development Equipment 4,662 4,238 424Land Development Operation 3,021 1,007 1,007 1,007Irrigation System 3,300 650 2,000 650Buildings and Roads 1,925 650 1,275Farm Equipment 3/ 1,517 1,000 517

Total 14,425 7,545 5,223 1,657

Incremental Annual Fixed Operating Costs

Year 1 Year 2 Year 3 Year 4

Salaries 8 15 15 15Wages - General Fixed Labor 4 4 4 4Maintenarce and Repair

Buildings and Roads (2.5%) 16 48 48 48Irrigation Channel (2.5%) 16 66 83 83Land Development Equipment (5%)A/ 177 194 194 -

Farm Equipment (5%) 42 63 63 63Administrative Supplies and Services 10 20 30 30Miscellaneous 5 10 15 15

Total 278 420 452 258

1/ In constant mid-1977 prices.2/ From Annex 4, Table 2; spare parts and physical contingencies have been

allocated to each investment category3/ Two 70 Hp tractors and 2 combines including spare parts, implements and

physical contingencies.4/ Will be sold in year 4.

August 25, 1977

INDIA


SFCI Suratgarh Farm - Incremental Variable Seed Production Costs and Revenues

Incremental Costs Incremental Revenues i/

Fertilizer Pestieide Irrigation Labor Equipment 3/ Seed Screenings Rejections 4/Area Per Per Per Per Per Per Per Per Per Per. Per

ha ha Total ha Total ha Total ha Total ha Total Total ha ha Total ha ha Total ha ha Total TotalR R'00R0 RO RO 2 R'000 BR R0i R R'OO R'OOO tons R li tons R R'OOO tons TR R'O R'OOO

YEAR 1Rabi: Wheat 3,500 - - - - - - - _ -

Gram, 500 - - - _ - - - - - - --Total Increment -

Kharif: Paddy 500 - - - - - - _ - (35) (18) (18)BaJra 150 - - - - - - - - -

Total Increment - - - (18) 718)

YEAR 2Rabi: Wheat 3,500 10 35 5 18 5 17 5 18 (70) (245) (157) 0.08 120 420 0.01 7 25 0.01 11 38 483

Gram 500 - - - - - - - - - - - -Total Increment (245) 157) 25W

Kharif: Paddy 500 10 5 5 3 5 2 5 3 (35) (18) (5) 0.08 82 41 0.01 5 3 0.01 8 4 48Bajra 150 20 3 5 1 5 1 10 2 - - 7 0.21 670 101 0.03 24 4 0.16 216 32 137

Total Increment 5 1 ; 3 5 T 2 137 l

YEAR 3Rai-: Wheat 3,500 40 140 10 35 30 105 20 70 (70) (245) 105 0.40 600 2,100 0.07 46 161 0.03 33 116 2,377

Gram 500 5 3 10 5 10 5 5 5 - - 18 0.07 140 70 0.02 17 9 0.01 14 7 86Total Increment T X3 110 75 25 3 2,170 170 123 2

Kharif: Paddy 500 15 8 10 5 10 5 10 5 (35) (18) 5 0.15 153 77 0.03 14 7 0.02 16 8 92Bajra 150 20 3 10 2 10 2 10 2 - - 9 0.21 670 101 0.03 24 4 0.16 216 32 137

Total Increment 1 7 7 7 Ti 17 112

YEAR 4Rabi: Wheat 3,500 50 175 10 35 40 140 30 105 (70) (245) 210 o.65 975 3,413 0.11 73 256 0.04 44 154 3,823

Gram 500 10 5 10 5 15 8 10 5 - - 23 0.15 300 150 0.03 25 13 0,02 28 14 177Total Increment i 1 (25 233 3,563 29T

Kharif: Paddy 500 15 8 10 5 15 8 10 5 (35) (18) 8 0.23 235 118 0.05 24 12 0.02 16 8 138Bajra 150 40 6 10 2 15 2 15 2 - - 12 0.31 989 148 0.05 41 6 0.24 324 49 203

Total Increment 77 7 7 IIr 20 2 v 57 31

YEAR 5 Ef'Rabi: Wheat 3,500 60 210 10 35 50 175 35 123 (70) (245) 298 0.81 1,215 4,253 0.14 92 322 0,05 55 193 4,768

Gram 500 10 5 10 5 15 8 10 5 - - 23 0.15 300 150 0.03 25 13 0.02 28 14 177Total Increment 215 i (245) 321 4 337

Eharif: Paddy 500 20 10 10 5 15 8 15 8 (35) (18) 13 0.31 316 158 0.07 34 17 0,02 16 8 183Bajra 150 40 6 10 2 15 2 15 2 - - 12 0.31 989 148 0.05 41 6 0.24 324 49 20

Total Increment ff 7 lo l0 25 23 57 386

In constant mid-1977 prices/ Seed prices and food grain prices from Table 3 used for valuation. Screenings have been valued at 60%

and rejections at 100* of food grain prices. Seed price for gram Rs. 2,000 per ton; food grain price per ton Rs. 1,400.Difference between operating costs of twn equipalent and equipment rental costs. Since rental costs exceed operatingcostsi incremental costs are negative and have been bracketed.

| Includes male rows of hybrid baJra.

August 25, 1977

AIWl 114

Table 10

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ANNEX 14Table 11

INDIA


NSC - Minimum Service Charges on Seed Sales(Rs. Million)

Year 1 Year 2 Year 3 Year 4 Year 5 ffA. Sales 1/

Interstate Sales of CertifiedSeed 2/ 147 166 190 203 208

Sale of Foundation Seed 3/ 17 20 22 24 24

Total Sales 164 186 212 227 232

B. NSC - Operating Costs 1/

Establishment 4/ 7.72 6.83 5.94 5.05 4.16Administrative 5/ 1.93 1.71 1.49 1.26 1.04Publicity (0.5% of sales) 0.82 0.93 1.06 1.14 1.16Miscellaneous 6/ 1.31 1.49 1.70 1.82 1.86

Total NSC Operating Costs 11.78 10.96 10.19 9.27 8.22

C. Minimum Service Chargeto Cover NSC Operating Costs 7.2% 5.9% 4.8% 4.1% 3.5%

D. Operating Costs - Reserve Stocks 1/

Carrying Costs 7/ 3.15 4.07 4.22 4.52 4.75Obsolescence & Storage Losses 8/ 3.68 4.72 4.86 5.20 5.44

Total Reserve Stocks Costs 6.83 8.79 9.08 9.72 10.19

E. Minimum Service Chargeto Cover Reserve Stocks Costs 4.2% 4.7% 4.3% 4.3% 4.4%

F. Minimum Total Service Charges 11.4% 10.6% 9.1% 8.4% 7.9%

1/ In constant mid-1977 prices.2/ Interstate trade through NSC in year 5: 50,000 tons wheat; 34,000 tons paddy;

11,000 tons hybrid cereals.3/ Assuming 40% of total foundation seed requirements will be handled by NSC.4/ Amount in year 1 from Phase I appraisal report, Report No. 1064a-IN, Annex 12,

Table 12. Take-over of present surplus staff by SSC, SSCA anticipated overyears 2 through 5.

5/ 25% of establishment.6/ Amount in year 1 from Phase I appraisal report, Report No. 1064a-IN, Annex 12,

Table 12. Increase in following years proportionate to sales increases.7/ Interest at 11% p.a.8/ 20% of difference between reserve stock valued as seed and as food grain (see

para 21).

August 25. 1977

ANNEX 15Page 1

INDIA


Economic Analysis

Benefits

1. The principal economic benefit to India resulting from this projectwould be increased grain production. The incremental grain production byproject year nine is estimated at 800,000 tons (Table 2) which would representabout 0.8% of the current national grain production. At full development,increase in production of other project seed crops would be about 145,000 tons.The annual incremental value of all crops grown from project seed would beUS$158 M.

2. The individual farmer using high quality certified seed wouldachieve higher yields than those from mixed low quality seed currently used.For wheat and paddy, which are self-pollinated crops, it is assumed that theproject certified seed would service areas already planted to HYV. No geneticimpact on yield is assumed. Therefore, no allowance is made for extra inputs -same cultural practices and standards are assumed for both with and withoutproject situations. No change in cultural practices also is anticipated forpotatoes and groundnuts. For hybrid seed (maize, bajra and jowar), however,it is assumed that all project seed would expand HYV area, involving a shiftin farmer technology based on a different package of inputs.

3. Incremental yield in wheat and paddy is expected to average 7-1/2%over four years before being replaced. In the case of hybrids the projectseed would be only one part of a package of inputs necessary for high tech-nology farming. It is impossible to ascertain empirically the proportionof yield increment attributable to each input in the package. The assumptionused for this analysis is that 25% could be deemded to be yield impact dueto improved seed. Yield increases assumed for all grains are believed conser-vative. The yield increase for potatoes and groundnuts is anticipated toaverage 5.3%. Benefits from farmer-to-farmer exchange of generations of seedproduced from project seed have not been counted.

4. Incremental production of all crops except bajra and potatoes havebeen valued at projected 1985 international prices in 1977 constant dollars(adjusted for CIF-Indian ports in the case of wheat, paddy, maize and jowarand FOB-Indian ports in the case of groundnuts). Details are in Table 5.Bajra and potatoes have been valued at 1977 Indian farmgate prices. Valuingall incremental production at Indian farmgate prices would reduce annualproject benefits at full development to US$113 M.

ANNEX 15Page 2

Costs

5. Incremental farm labor, required mainly during the peak demandseason for harvesting is costed at market rates and not shadow priced asare skilled and semi-skilled labor for processing, marketing, and administra-tion at Universities, SSC and SSCA. Prices of investment and operating costsare assumed at mid-1977 levels. Costs of plant breeding, seed technologyresearch, seed testing laboratories, training and technical assistance arecharged to the project. Import duties and taxes have been excluded fromcosts.

Other Assumptions

6. The following other assumptions were made in computing the economic

rate of return (ROR (E)):

(a) foreign exchange has not been shadow priced;

(b) cost streams are considered for only twelve years whichperiod is assumed to be the economic life of the pro-cessing investments; benefit,streams are included forone additional year to account for the increased cropyield from seed produced in year twelve.

(c) average lag between each crop multiplication would be oneyear. Thus, breeder seed would be produced three yearsbefore achieving related economic benefits. Operatingcosts and benefits have been phased accordingly using6 month time segments.

Economic Rate of Return

7. Based on the foregoing assumptions ROR (E) would be 158% (Table 3).A sensitivity analysis shows that ROR (E) drops to 145% if the investmentcosts were 20% higher, and to 147% if operating costs increased by 20%.If benefits were 20% lower, ROR (E) would be reduced to 130%. An increase of20% in investment and operating costs coupled with a 20% decrease in benefitswould result in a ROR (E) of 111%. An unforeseen two year delay in the gene-ration of project benefits would reduce ROR (E) to 109%. A reduction in yieldimpact that has been attributed to hybrid seed does not significantly affectROR (E). Assuming that for hybrid crops the seed would improve yields by only20% rather than by 25%, ROR (E) would be 147%. The Net Present Value of theproject at a discount rate of 10% p.a. is estimated at US$506 M. The projectedBenefit/Cost Ratio using a discount rate of 10% is 6.3.

ANNEX 15Page 3

Beneficiaries

8. About 1.35 million farmers would benefit directly from the projectsince the project seed would service 2.7 million ha. 1/ About 21,000 seedgrowers would also derive significantly higher farming income. In all, some6.7 million persons 2/ would benefit directly, being family members of farmerbeneficiaries. In addition, farm workers would benefit. About 13,500 man-years of seasonal employment would be created for harvesting. SSC, SSCA andadditional seed marketing outlets would provide direct employment to about1,250 people.

1/ Assuming that on the average a farmer would use project seed on 2 haannually.

2/ Assuming an average of 5 members per farming family.

ANNEX 15Table 1

INDIA

SECOND NATIONAL SEED PT:GJECT

Table of Economic Costs and Parameters 1/


Incremental Crop Cultivation Costsof Certified Seed User (Rs./ha)2/ 22 30 21 19 15 38 14

Variable Processing, Storage andMarketing Costs of Certified Seed(Rs./ton) 3/ 451 445 593 637 674 398 482

Incremental Costs of CertifiedSeed Production (Rs./ton) 4/ 60 72 91 117 140 9 49

Costs of Foundation Seed Process-ing, Storage and Marketing(Rs./ton) 5/ 411 444 527 499 500 330 264

Costs of Foundation SeedProduction (Rs./ton) 6/ 1,460 1,196 6,812 7,025 10,136 293 1,667

Costs of Breeder Seed Productionand Processing (Rs./ton) 7/ 4,300 3,400 16,000 16,600 22,500 2,100 5,000

Seed Multiplication Ratios 8/

From Breeder to Foundation 17 79 28 28 51 3.8 10From Foundation to Certified 20 90 90 67 135 4.9 12

1/ Costs are in constant Mid-1977 economic prices.2/ For certified seed users over non-certified seed users; for wheat, paddy, potato

and groundnut, only additional costs are for harvesting, handling and transport.For maize, jowar and bajra only 25% of incremental yield has been attributed toimproved seed usage; accordingly, only 25% of incremental costs for harvesting,handling and transport has been allocated to project.

3/ Variable processing costs from Table 12, Annex 5; 75% of retail commissions havebeen assumed to be economic costs.

4/ Derived from Annex 14, Table 3; economic value of by-products, certificationcharges and difference between seed costs have been deducted; labor has beenvalued at financial wage rate.

5/ Derived from Annex 14, Table 2.6/ Derived from Annex 14, Table 1, net of costs for breeder seed, certification

charges and value of by-products.7/ Allowing for overproduction of foundation seed (15%) and certified seed (10%) as

a safety margin.

October 4, 1977

INDIA


Economic Benefits

Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year rBali- lKsarif _Ra Kharif Rabi Kharif Rabi Kharif Babi Kharif _ab Kharif B Rabi bi Rhyarif ab Kharif

A. Incremental Seed Production('lo tons)l/

Wheat 2.0 - 8.5 - 27.0 - 34.3 - 40.5 -)Paddy - 1.1 2.0 6.5 2.0 10.6 2.5 13.5 2.5 15.9) ConstantMaize - 0.1 0.5 0.6 1.0 1.5 1.5 2.2 2.0 3.6) forJowar - 0.2 1.7 0.3 1.9 0.5 2.3 0.7 3.1 0.8) Rabi andBajra - o.6 1.1 0.7 1.1 1.0 1.2 1.4 1.2 1.6) KharifPotato 1.9 - 11.3 - 20.6 - 25.0 - 30.9 -)

Groundnut - o.4 - 1.5 - 3.7 - 4.2 - 4.6)

B. Parameters Seed Rate - - - - - - - -Increase in Yield -J - - - - - - - - - - - - -_ - -(tons/ha)

Wheat 0.100 0.o8 0.17 0.10 0 .050Paddy 0.030 0.25 0.15 0.09 0.045Maize 0,015 0.90Jowar 0.012 0.75Bajra 0.004 0.50Potato 2.500 1.50 0.90 0.53 0.270Groundnut 0.130 0.20 0.12 0.07 0.037

C. Incremental Crop Production ('000 tons) /

Wheat - - 5.6 - 27.2 - 92.1 - 151.4 - 203.0 - 230.1 - 240.0 - 243.1Paddy - - - 9.2 16.7 59.7 26.7 124.1 36.8 186.7 42.3 241.6 43.8 268.4 44.5 280.0 44.5 283.6Maize - - - 9.0 - 24.0 - 45.0 - 63.0 - 84.o - 84.o - 84.o - 84.oJowar - - - 29.7 - 34.4 - 43.7 - 59.4 - 60.9 - 60.9 _ 60.9 - 60.9Bajra - - - 53.1 - 56.3 - 68.9 - 81.3 - 87.5 - 87.5 - 87.5 - 87.5Potato - - 1.2 - 7.5 - 16.8 - 25.0 - 33.1 - 37.3 - 39.1 - 39.7 -Groondnut - - - o.6 - 2.7 - 7.3 - 10.8 - 13.4 - 14.7 - 15.0 - 15.1

D. ProLect Benefits (Rs. million) - 11.22 134.41 8o.41 242.78 220.92 402.89 350,44 561.54 459.22 685.66 514.27 727.44 534.84 745.00 540.99 750.46

/ From Annex 5, Table 1 after making allowance for project independent growth of TDC.

| For wheat, paddy, potato and groundnut yield increases from certified seed usage extend over a four-year period on a decreasing scale. hYbrids require annual replacement.

3/ Jowar, maize, bajra seed processed in rabi/summer would be used for sowing in the folloving kharif season. All other seed would be used with a time lag of one season after harvesting the seed crop.

Incremental crop production valued at international prices from Table 5. Potatoes and bajra have been valued at constant mid-1977 Indian farmgate prices from Annex 14, Table 3, Section D. 'It

October 10, 1977

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ANNEX 15Table 4

INDIA


Duties and Taxesl/

(Rs. '000)

… ----------------- Year --------

2/ 2 _ L 5 Total

A. State Seed Corporations 1,298 4,618 4,964 1,074 - 11,954

B. Farm Development 4,075 2,351 1,066 222 167 7,881

C. Agricultural Universities 624 1,967 1,114 140 48 3,893

D. Quality Control .664 236 326 46 - 1,272

E. Total Duties and Taxes 6,661 9,172 7,470 1,482 215 25,000

1/ Duties generally at 40% of imported items. Different percentages applicablefor farm equipment. Taxes at 8% of equipment and civil works.

2/ Includes duties and taxes on equipment procured in pre-project year.

ANNEX 15Table 5

IN4DIA


Economic Commodity Prices

(US$/metric ton)

Imported Commodities

Wheat Paddy Maize Jowar

1985 projected price in 1977constant dollars 1/ 187 207 129 112

Minus milling costs (to adjustrice price to paddy price) - 55

Plus shipping costs to Bombayor Calcutta 30 15 26 26

Economic price - 207 167 155 138

Exported Commodities

Groundnut

1985 projected price in 1977constant dollars 1/ 459

Minus 30% to adjust for weightloss in shelling 138

Minus costs of shelling 50Minus costs of transportation fromfarmgate to port, and handling 15Minus shipping costs to Europe 25

Economic price 231

1/ From IDA Commodity Price Forecasts, June 1977. Prices used: Wheat - CanadianNo. 1, WRS, in store Thunderbay; paddy - rice, Thai, milled, 25 - 35% broken,f..o.b. Bangkok; maize - US No. 2, yellow, f.qb. gulf ports; jowar - US No. 2Milo yellow, f.o.b gulf ports; groundnuts - Nigerian, c.i.f. Europe

2/ Transportation costs within India have not been considered. It has beenassumed that the costs for transporting commodities to wholesale marketswould be about the same from farmgate or ports.

October 10. 1977

7,1' \ /,J g, 805 SO/

/ ~~~~~~~~ND!AAFGHANISTAN '1K ½-* -N o._\SECOND NATIONAL SEED PROJECT

,~J' rARCP9su !l PROJECT AREAS AND PLANT LOCATIONS

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