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This report is restricted to use within the Bae.
INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT
TECHNICAL REPORT
ON THE
AGRICULTURAL MACHINERY PROJECT
IN
IRAQ
February 19, 1951
Loan Department
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aEPOPT ON ARICUnLVtIPAL -ACHINERY PROJECT - IRA,
I. Purpose and Scope of this Report
1. The Government of Iraq originally requested in June 1950 that theBank consider a loan to cover the foreign exchange required for the importof the total farm maohinery requirements of the country for the next threeyears on the basis of a government monopoly. Hovwever, this basis wF,asaltered several times during discussions with the iMlission and is now limitedto the machinery,spare parts and repair equipment which ,will be acquiredduring three years on government account plus that wrrhich is expected to beimported by private dealers during a period of one year. This report coversan analysis of the proposed project as presently conceived.
2. The report covers a di.scussion of the background of this applica-tion, a description of the project as developed with the cooperation ofthe Bank Iiission, estimated costs and the justification of the project interms of need and earning pow.er.
3. The report is based on observations and recommendations of ProfessorGeorge B. Nutt, Consultant to the Bank on Agricultural 1I'achinery, discussionswrith interested Iraqi agencies, and documents received from them. The infor-mation available, while by no means complete, appears to be adequate to per-mit the Bank to reach a decision regarding a loan on this project.
II. Background Information
4. Mlechanization of agriculture in Iraq has been a natural development.W.Fith a large acreage planted in cereal crops and a terrain wlhich is sub-stantially level throughout most of the country, conditions permit the useof heavy machinery for tilling and harvesting to the greatest advantage.
5. The first impetus towiards farm mechanization resulted from the avail-ability of more than 100 heavy tractors obtained through Lend-Lease in 19h4.Then, followl.ing the war, most of the American and British manufacturers oftractors and implements established agents in Iraq wvho enjoyed a very profit-able business wTith a relatively large volume. American machinery gained astrong preference due to its more rugged construction and in 1948 about 80%of total sales were by agents of U.S. firms.
6. .'hen devaluation of the dinar occurred in September 1949, the priceof U.S. machinery increased to a level where there was practically no marketfor such equipment. Dealers' stocks were sold out at or somewhat over pre-devaluation prices and imports of tractors from U.S.A. have completelystopped in 1950. It is the opinion of the Government, based on dealerstapplications for import licenses, however, that present prices for agri-cultural products are sufficiently high to have created a substantial demandfor new farm machinery, and present plans contemplate very substantial importsof machines by dealers and the Government in 1951.
1/ Note: Based on En7ineering Staff report on same project by E. . Rembertdated January 26, 1951 and revised as of February 3.
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7. Iraqi experience nith farm machinery dealers has been bad., To datethey have failed to provide adequate stocks of spare parts and have notestablished adequate repair facilities for their equipment. Prices ofmachinery and spare parts have been subject to excessive mark-ups, and blackmarket operations in spare parts have not been uncommon. Furthermore,dealers in the past have failed to pro-ide for training of operators and,in general, have not furnished suitable instructions for the use of theirequipment.
8. As a result of the bad experience tith dealers in providing servicefor equlipment sold oy them, and owing to the general feeling toward mostdealers, the Government in June 1949 had enacted a Farm MIachinery MIonopolyLawiF which established the Agricultural PIachinery Administratiom and con-fined the importation and sale of all farm machinery to the A.1,MI.A. TheAdministration wvas authorized to select the best types of machines for Iraq,to provide training for operators and maintenance men, to establish work-shops throughout the country for the repair of farm machinery, and to main-tain adequate stocks of spare parts for all types of machinery which wTerein use. The Administration was also required to maintain a pool of machinesand crews for hire, the size to be consistent lwith the demand. However,owing to a shortage of funds, the Government was unable to implement theMonopoly LawC- and in the summer of 1950 the law was amended to nermit privatedealers to oberate on the basis of import permits issued by the A.11.A. Thelaw, as amended, is attached as Appendix A. In the meantime; however, theincreases in the dinar prices of U.S.. agricultural equipment had discourageddealers from applying foir import licenses.-
9. During discussions -,with the Mission in November 1950, opinion in theGovernment was divided Concerning a monopoly operation. Some held to thethought that private dealers should operate only until such time as theGovernment covld take over all sales of farm machinery. The M,ission ad-vised the Government that the Bank could not consider financing a monopolyoperation of this type and that the lair, as amended, provided a basis forestablishing the requirements of a dealer so that the difficulties which* had existed in the past could be eliminated.
10. The A. -.A., wIth the help of the Mlission. has developed the require-ments of a qualified dealer in farm machinery, a tentative draft- of whichis attached as Appendix B. Based on these reauire-ments, the number ofdealers and the manufacturers wrhich they would represent wvere tentativelyestablished, and probable imports by these dealers were estimated. Thedirectors of the !.M.A. agreed that practically all machinery for sale to'farmers would be imported by private dealers and the requirements of A.MIv..A.would be limited to replacements in its hiring pool and to the establish-ment- of repair facilities. The amount of hard currency required for dealerimports for one year and that required by the A.k.A. for a three year programnow form the basis for the loan application, along aith an operation tobe carried out through the instrum.entality of the Agricultural Bank usingthe dinar counterpart of an IBRD loan for the purpose of extending agri-cultural credit.
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III. Description of the Project
11. The proQect as presented consists of the following principal opera-tions:
(i) The financing of the total import requirements of the A.M.A.,A,for a period of three years, from the hard currency areas,of agricultural machinery to be used in its hiringJ trainingand testing programs;
(ii) The financing of the hard currency requirement-s of the A.;..A.for the completion of five workshops, and the procurementof the spare parts reauired for the maintenance of equip-ment in its pool and that of private o-mers as required;
(iii) Provision of forei-gn exchange required for the import offarm machinery by private dealers, for a period of oneyear starting about June 1, 1951, from the hard currencyareas;
(iv) The use of the dinar counterpart of an IBRD loan by theAgricultural Bank for short-terlm lending to farmers forthe purchase of agricultural machinery and other productive-purposes.
Equipment for the A.1IA. Pool
12. As of November 23, 1950, the A.M.A. owned and operated a total of 82tractors, 72 self-propelled combines, 90 plows and a small amount of miscel-laneous equipment wAhich represented an initial investment of about ID 200,000.All of this eauimruent was purchased prior to devaluation. A breakdown ofthis pool into the numbers and types of equipment and the initial cost ofeach is given in Table I attached.
13. T'he A.M.A. estimates that it rill require h0 additional tractors in1951, of wrhich 20 of Caterpillar D-}} track type, and 10 of International,'TD_9 w.heel type. It will also require a total of 10 M.iassey-Harris 12tself-propelled combines and 20 sets of w.-Iheels and tires for the conversionof 20 track type combines now in the pool "With regard to implements, themost important items wrvill be 25 moldboard plows (4 plows each 12") and 12disc tillers. A breakdown of the total estimated requirements for the year1951 by item.s is given in Tabl'e II attached.
14. Requirements of the A.N.A. for the years 1952 and 1953 are estimatedto be substantially the same as for 1951, These estimates are based on thepresent condition of the equipment in the pool and on the estimated increasein demand for equipment on a hiring basis.
15. A portion of the equipment to be purchased by the A.M4.A. will be usedfor training and demonotration programs. The actual amount and types of
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equipment to be used for this purpose have not yet been determined butall will be obtained from the list given in Table II.
16. The A.;W..A. list of equipment to be purchased in 1951 has been analyzedby Professor George B. Nutt, Consultant to the Bank on agricultural machinery,who considered that the types of machines are consistent with good practicein Iraq and that the number to be purchased is in line with probable require-ments.
A.M.A. Repair Shops
17. The A .M..A. has established mode:rn repair shops in Baghdad, Kirkuk andDiwuaniya for the maintenance of equipment in its pool and for the use ofprivate owvners as required. It proposes to build tvTo additional shopsin 1953 to be located at MIosul and Kut.
18. It proposes to expand the existing shops.through the addition ofmiscellaneous machine tools such as lathes, drill presses, milling machinesand similar equipment. Electric and gas vrelding equipment will also beincluded.
19. Irnport requirements for the newvv workshops at .Iosul and Kut includestructural steel, doors, w indow sash and similar items for the building aswell as complete layouts of machine tools and other repair equipment.
20. In addition to the permanent workshops described above, it isproposed to purchase two mobile units ecuipped with welding units and lightmachine tools for making field repairs in outlying areas.
Imports by Private Dealers
21. The A.M.A. estimates that it w"'ll be able to qualify 11 private dealersin agricultural machinery and has, in cooperation with these dealers,developed a transitional import program for the period December 1, 1950,to June 1, 19' , to cover requirements before IBRD funds might become avail-able. These qualified dealers -wi1l represent practically all of the princi-pal manufacturers in the U.S., Canada, and ̀ Uestern Europe and can providepractically all of the equipment required by farmers as wfell as that wrihichwill be purchased by the A.M.A.
22. Exclusive of A.11.A. requirements, imports, including spare parts, byprivate dealers during this period from all sources are estimated to beabout ID 5643o0o of w-hich ID h93,000 (4l.38 million) will be from the hardcurrency areas. The financing of this program w!rill be done through usualbanking channels and all imports wvill be on the basis of permits issued by.the .M.A. Full details of this import program are available. The number andtypes of machines involved have been reviewfed by Professor Nutt who consideredtnat the program is consistent 1with Iraqi requirements.
23. Imports for the period December , 1950 to June 1, 1951 are expectedto be somewvhat greater than normal requirements due to the backlog created
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during the past year as a result of lack of sales due to high prices andthe shortage of hard currencies. Annual imports by private dealers areestimated to average ID 750,000 ($32.1 million) per year for the years1952 and 1953 of .r,hich up to 90% (-~1.9 million) may be required from thehard currency areas.
24. Tt has been proposed that the hard currency required for the iy2portof farm machinery by private dealers for a period of one year, in additionto tne financing of IMMA requirements, be provided by a loan from the Bank.The proceeds of such a loan vwould not be made available to the dealersfor credit operations but to the Iraqi Government for the purpose of easingits hard currency position and for making possible a credit operation inlocal currency through the !gricultural Bank.
Farm M1achinery Credit Coeration Through The Agricultural Bank
25. The proposed operation is discussed in the ODerational Report.
IV. Estimated Cost of the Project
26. The estinated cost of imports of farm machinery by A.M.A. for theyear 1951. by major categories is as follo.rs:
Item Cost in ,Il,000
Tractors 197.7
Implements 7.-3
Clombines 51.8
Trucks, Jeeps & Trailers 70.0
Misc. Equipment for Test and $ale h6.8
Total h13.6
27. A breakdoi.wn into individual items, wxith unit and total costs isgiven in Table II attached.
28. The estimated cost of spare parts, machine tools, structural materialsand mobile shops for expanding the repair facilities of A.I'I.A. broken dowmby major items is as follows:
Item Cost in '1,000
Spare parts (30S of the cost of machineryand vehicles) 118.4
Miachine tools 98.0
Structural materials 56.0
,lobile !Torkshops 28,0
Total $300.4Total A.I..A. Program .. 714.0
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In the above estimates ,prices used were as of October, 1950, largely onthe basis of manufacturerts lists cif Basrah.. They can be assumed to bereasonably accurate.
29. Spare parts have been estimated as 301c of the cost of farm machineryand vehic'les This is an adequate allowance for spares for the newlr equip-ment to be purchased but irzll not cover spares for existing machinery inthe pool. Such spares can be purchased through dealers from dinar resourcesof the A.1,i.l..
30. The estimated expenditures of the A.M.A. for machinery and spareparts for 1952 and 1953 are tentatively estimated at about M700,000 peryear. These estimates obviously are based on 1951 requirements and representabout the best approximations that can be made at the present tine.
31. As stated above, inports by private dealers, including spare parts,for the period December 1, 1950 to June 1, 1951 are expected to be about$il.4 million from the hard currency areas, W.1hile the exact requirementsin hard currency for the year folJowing June 1, 1951 cannot be determinedaccurately, they may be taken for present purposes at about ̀ 1.9 million.
V. Estimated Income, Expenses and Net Earnings of the Agricultural lMachineryAdministration
32. Prior to the organization of the A.2.I.A. under the farm machinerymonopoly la:w of 19h9, pool operation of farm machinery for hire by theGovernment had been provided by the Agricultural Mlachinery Department ofthe iinistry of Economics since 19L5. The physical assets of this Depart-ment uere taken over by the A.M1.A. in January 1950,
33. The accounts of the Agricultural Machinery Department indicate thatit operated at a profit in the fiscal years 1945/46 and 1946/h7. Since thattime, the operation has shown a substantial deficit. However,, the methodof accounting used by the department does not give a true picture of itsfinancial position since the cost of all new equipment purchased for thepool was included in current expenditures and no allo-wance was made fordepreciation; it seerms, how,ever, that the past four years of operation.shovued a real operating deficit of the order of 25%-30%.
34. Since previcus accounts do not provide a basis for estimates offuture earnings of the A.M,.A.., an attempt has been made by A.M,I.A. to esti-mate the results of operations fox, the year 1955 rrhen the size of t1he poolw^ill be stabilized and all repair facilities wdll be in operation. Also,,by this time, all equipment in the pool wfrill have been purchased from theproceeds of the proposed loan and full financial charges will be in effect.This estimate is given in detail in Tmable III attached and can be summarizedas follows:
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I. Income ID
1. Revenue from hiring 134,880
2. Profit from direct sale byA.:I.A. of equipment 20,100
3. Profit from sale of spare parts 9,800
4. Income from repair shops 5,0C0
5. Other income 17,000
Total 186,780
II. Expenditures
1.- Agricultural 1.achineryOperation 714,000
*2. Operation of 'Torkshops 27,2C0
3. Administrative Expenses 27,300
Total 128,500
Net income before debt service 58,280
Debt service (principal equivalent to`2s100°,00) 158,570
* Net after debt service - 100,290
It will be noted that, on the basis of the above calculations, net incomewithout allowance for depreciation would fail to cover debt service by about70%.
35. It is claimed by the A.Ii.A. that about 25Xo of the total cost of itsoperations, plus debt service, is incurred in educational work involving thedemonstration and testing of various types of machinery as a part of a programdesigned to extend the use of farm machinery in Iraq, The expenses incurredas a result of such activities are claimed to be chargeable to the govern-ment and should be paid to the A.-..A, from budget appropriations. Thisseems reasonable so long as the demonstration activities are not for thepurpose of promoting the use of the pool, in which case the charge should be
%/ Assumes that present hiring rates will remain in effect.
carried as a sales expense. On the basis of estimated expenditures in1955, including debt service, income from the government for educationalwork would amount to about ID 72,000 on the basis of 25% of expenditures.W'Vith these funds available, howaever, the operation wvould still result ina deficit of about ID 28,000 after debt service.
36. The hiring rates used in these estimates are those nolw in effectand are obviously much too low for service of this type. Tractors andplows 7.hich cost the equivalent of about :4,000 are hired at ID 4` (22.20)per day, this price including a driver and assistant paid by the A.I..A.This equipment forks about 120 days/year. Combines costing about '2,000hich lwork 70 days/year are hired at ID 10(,28.00) per day with a driver
and assistant furnished by A.M..T.A. The cost of operation of the same equip-ment bought by a private o Qner, on the basis of a 4 year 8% loan, for thesame number of days each year, nwould be equivalent to about ̀ 25 for a tractorand plowrf and about S`33 for a combine.
37. The A.I..A. stated that an increase in hiring rates lwould meet 4ithconsiderable farmer resistance. Hovwever, there is no apparent reason fromthe standpoint of the cost to the farmer w..hy these rates should not be in-creased to at least the minimum cost of operation of similar equipment toprivate owners. On this basis, tne 'hiring rate on tractors should be in-creased to about ID 9 (';25.20)/day and on combines to about ID 12 (;33.60)/day. These rates, equivalent to the minimum cost of operation of the sameequipment by private o-w,ners under existing conditions wvith respect to thelife of machinery and prevailing interest rates, -.rould increase revenuesof A.L.I.A. by about ID 100,000 per year.
38. It is, however, expected that, as a result of the greater avail-ability of repair facilities, the life of farm. machinery in Iraq will becradually increased and a fair basis for calculation during the life of aloan may be taken at five years instead of four, the present average. If,as a result of larger funds -wl..-hich are expected to be put at the dispopalof the Agricultural Bank, interest rates charged to farmers could be re-duced to 5 the cost of operation of a tractor might be calculated atID 7.6 (;21.20) and the cost of operation of a combine at ID 10 ( '28.0).
39. The financial position of A.H.Ai. in the year 195 has been calculatedon the basis of two sets of assumptions, the results of w-hich are shown inthe follo-.zing table.2/ The financial situation as presented in Case I is
1/ Assuming that an increase in hiring rates. of the order of magnitude dis-cussed above and coverage of educational costs from budget appropriationsare forthcoming in 1951, the financial position of A.MI.A. in the years1951 through 1953 should be 6omew.hat better than is estimated for 1955,since a large proportion of the old equipment presently in the pool hasbeen wnrritten off. Also, debt service would not reach a maximum until1954, assuming a loan to cover,import requirements for a three yearperiod.
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based on an adjustment of the hiring rates to conform to the minimum.operating costs w.hich could be obtained by a private owner under existingconditions, that is, the equivalent of about :325 per day for a tractorand ','33 per day for a combine. Case II presents the position which mightbe encountered in the future on the basis of longer life of the equipmentand low,er interest rates as discussed above. In this case, the assumedhiring rates are equivalent to $21.20 fora +tractor and ''28.00 Lor acombine.
Case I Case IIin ID
Income from hiring 228,680 195,360
Other operating income, ex-cluding educational activities 51,900 51,900
Total income 285,580 2h7,260
Operating expenditures beforedebt service 128,500 128,500
Net income before debt service 152 080 118-760
Debt service 158,570 158,570
Balance after debt service 6,490 - 39,810
Estimated income from govern-ment contribution for educa-tional activities (25% ofoperating em,renditures plusdebt service) 72,000 72,000
Surplus 65,510 32,190
40. It is apparent that without comoensation for educational activities,the A.M.A. would probably operate at a small loss even if hiring rates wrereadjusted to the minimum cost of operation of similar equipment by privateoavners. This loss becomes much greater on the basis of lower hiring ratesWhich assume a longer life for the equipment and lower interest rates asshown in Case II above. Holvever, if compensation js received from theGovernment to cover the cost of educational activities to the assumed amountof 25% of operating expenditures (including debt service) and if hiring ratesare adjusted to conform to present conditions, a surplus of about ID 65,500would result; this figure would be reduced to about ID 32,000 if hiring ratesare estimated as in Case II above. In an operation of this type, inclusionof depreciation is not considered necessary. If an operating surplus could.be accumulated it would gradually reduce the necessity for borrowing infuture years should it be decided by the Government to continue A.4Mv.A. activi-ties on a permanent basis.
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VI. Justification of the Project
General Considerations
L1, Statistical information and operating data are not available toprovide a complete justification of this project. Information is lackingon the extenslon of acreage which has resulted through the increasing useof machinery and no comparative data are available on costs of cultivationand crop yields -with machinery and draft animals. Howuever, there are anumber of qualitative factors of interest and these are discussed belowi
42. . It is estimated that about 30 million acres are suitable for cultiva-tion in Iraq, of which about 20 million require irrigation, the remaining 10million acres being suitable for dry farming. At present, U.1.2 million acresare under cultivation, of which about 5.9 million are planted annually, theremainder lying falloiT in alternate years. On the basis of the total of11.2 million acres which are being worked, about 3 million acres are in thedry farming area. There are, therefore, about 7 million acres Vdhich can bebrought under cultivation without investment in irriigation works and thiscan be accomplished rapidly through the use of agricultural machinery, Onthe other hand, the areas requiring irrigation --ill require very substantialinvestment and their development will occur at a relatively slow. rate.
43. It is the established policy of the government to expand the acreageunder cultivation as rapidly as possible for several reasons. First, in-creased production of cereal croDs and cotton will provide a substahtialincrease in foreign exchange earnings since imost of any increase in produc-tion can be exported. Also, any increase in the cultivated areas providesfor the settlement of ivorkers, either as owners, tenants or laborers, andthis is considered to be a political necessity..
L'L. It is impractical to consider a program for the rapid expansion ofacreage under cultivation in Iraq through the use of draft animals sincethese are limited in number and are of poor quality. There is little possi-bility of increasing the supply of animals fron domestic or foreign sourcesat a rate consistent -ith requirements even if it wrere economically justified-.The use of tractors and heavy implements has proven to be the answer to theproblem. _Tiile statistics covering the increase in acreage under cultivationwhich has been obtained since farm, mechanization was started in 1944 are notavailable, it is estimated that about twdr-thirds of all farm machirery in thecountry is working on land not previously cultivated.
45. The contour of the lands planted in cereal crops and cotton is suchas to make the use of heavy machinery pairticular y attractive. The land isgenerally flat or slightly rolling with few ditches or other depressions.Thip permits easy operation of heavy units at maxinv~m efficiency.
46. idotor fuel in Iraq is relatively cheap. Kerosene and light dieseloil is available to the farmer at-the equivalent of about 7.50/U.S. gallon.Heavy diesel oil is priced at the equivalent of about 30/U.S, gallon. Theseprices are about one half those prevailing in the U.S. at the present time and
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are probably lower than in any country in the world today. This situationstrengthens the case for mechanization in Iraq both from the standpoint ofreplacing draft animals and releasing the acreage required to feed them aswell as giving production costs wVhich are competitive in world markets. Inaddition, the use of combines should result in a higher quality of grain.
47. Due to the past tendency of agricultural labor to migrate to thecities, a shortage of farm labor during the sorving and harvesting seasonshas developed throughout the country and is particularly acute in the north,-,here until recent years only a relatively small acreage was under cultiva-tion. l-pith rapid expansion of the acreage under cultivation and the relativeirmmobility of labor, the use of agricultural machinery appears to be the onlysolution to the problem if the present policy of the governmnent of expandingagricultural production is to be implemented.
A.'M.A. Hiring.-Program
4-8. Justification for the AJ.A, hiring program lies in the fact thatprivate capital v4ill not enter this flield in Iraq due to the relatively 'o-.return which can be realized by comparison with investments in other fields.Some large land owners who had purchased agricultural machinery make a practiceof takin- some w,Tork on contract for smaller farmers but this is limited tothe tine during w>.,hich the equipment is not being used for their ovm require-men-ts and is confined to small areas. The A...A. pool wVas established as theresult of demands of the smaller farmers on the government to make equipmentavailable for hire in order that they could maintain a competitive positionwith respect to the large o-mners. Having established t1his pool in 19L5, ithas been considered desirable to contirue anid expand its operation. The equip-ment in the A.jT.A. hiring pool is used largely on land already under cultiva-tion rather -than for opening newv.r areas.
k0ol*A. Re-air Shops
1h9. The repair facilities of the A.L:.A. are necessary for the propermaintenance of its ovwn equipment and for servicing the equipment of privateonmers until such time as this -work can be done by private dealers. Due tolack of experience in handling mechanical equipment, the average life offarm machines in Iraq has been less than half of that of the same equipmentin the U.S. The A.I.A. expects that, through adequiate training programs andthe nrovision of repai_r `acilities, the life of° machinery in Iraq may approachthat obtained in other countries lrith a correspondin, reduction in imr,portrequirem.ents; this may result in a savring of .Lore than -500,000 per year.
VII. Conclusions
50. Miechanization of agriculture in Iraq progressed relatively rapidlyfromi 1944 to 194t9. The types of equipment most suitable for Iraqi conditionshave been established. Heavy tractors and imUplements from the U.S. haveproven to be most suitable for general use and, at present, it is contemplatedthat up to 901%0 of total requirements wrill be imported from the U.S. and Canada.
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51. The agricultural machinery project, as described above, can beconsideted as a possible basis for a Iloan from the Bank. If this projectis accepted as a basis for a loan the follow`Lng points should be takeninto consideration:
(a) Borrowing from the A.M.A. should be limited to about ID 250,000per year and the items to be financed in ahy one year should be subject toapproval of IBRD on the basis of an annual program.
(b) The A.M.A. should purohase equipment and spare parts throuighqualified dealers in Iraq so far as possible at prices not higher than themanufacturer's list. If prices qLuoted are higher than list prices, or ifa manufacturer is not represented in Iraq, then A.MI.A. should buy directfron the manufacturer,
(c) The A.Z1l.A. should immediately increase hiring rates on its poolequipment and reach an agreement with the government regarding paymentsfor its educational activities so that sufficient income will becor.me avail-able to meet operating expenditures and debt service.
(d) Any changes in the la.r or regulations covering the responsibili-ties and operations of the A.I.,L . including regulations concerning qualifieddealers, should be subject to prior consultation with the Bank.
February 13, 1951
INote:
It is now proposed that the loan to provide equipment for theAgricultural Eachinery Administration be reduced to cover requirem.Lentsfor one or, at the rmost, twio years.
February 19, 1951
Table I
Equipment Owned by A.M.A.
November 23, 1950
Agricultural Machinery for Hire
Quantity Description Cost PriceTractors Dinar Fils
5 International W-9 Tractor)10 II WD-9 I )6 TD-9 " )29 Minneapolis lioline " )7 Caterpillar D-2 tt )6 D-4 "2 D-6 " )1 Fordson " ) 78962/2295 Allis Chalmers HD-- 5 )1 Oliver Cletrac Model )
HG " )5 Oliver Cletrac Ivtodel )
BD " )3 Oliver Cletrac Model )
1 Case Ylodel IA r
1 I " LAH " )
82
JMassey-Harris Self-Fropelled Combines
10 MTIH S/P Ccmbines 8 ft. cut Model 222)17 it Vi It 10 Ui If It 2)169/,44 ft i t 12 " It It 21421A)..1 1H II u 14" )________
72 C.I.F, 185661/339
Cost PriceQuantity Description Dinar Fils
C.I.F. 185661/339
PLOWS
30 International Plows )28 Fisher Humphries n )6 Fordson )12 John Deere ) 8551/4345 Allis Chalmers " )h MIinneapolis-Moline Plows )h Case Plows )1 Massey Harris Plors )
90
4 MI.nneapolis-Mdoline Disc Plot 61h1/o20
5 Massey Harris Disc Harrows ) 6 52 MSinneapolis-Iloline Disc Harrows
7
1 BTMinneapolis-Y1oline Cultivator 156/919
1 Massey Harris Grain Drill 189/242
2 Belle City Stationary Thresher)3 Oliver Stationary Thresher ) 2976/920
5 Grand Total Dinars 198589/451
TABIE II
Requilrements for the .1Iechanization ProjectAgricultural M,lachinery Administr&tion
for the year 1951
Cost per Unitc.i.sf Basrah Total
Quantity Description (Dinars) (Dinars)
4 Caterpillar D-6 tractors 2,850 1l1LOo
20 Caterpillar D-4 tractors 1,800 36,0o0
10 International.'D-9 tractors(rubber tires) i,45o 1h,500
6 International #D-9 tractors(steel vwheels) 1,50 8,700
10 IMrassey-Harris 12 ft. self-propelled combine, nIodel 27on rubber tires ).65o 16,500
20 Sets of wheels and tires toreplace track system onMA combines 100 2$000
h l.oldboard Plows 6-122" bottoms 350 1i,00
3 Disc Plows for D-6 tractor 350 1o050
25 Mloldboard Plows 4-12" for D-Lan-d !WD-9 tractors 250 6.,250
12 Disc Tillers for use with D-4and VW-9 250 3,000
3 Disc Tillers for D-6 tractors 300 900
2 Bulldozers for D-6 800 1,600
4 Tool bars with cultivator andfurrowT openers to be mounted toD-4 0oo 1,600
1 Nower for D-2 with bush type guards 150 150
1 Road Grader suitable for D-4 300 300
1 Ditcher (medium 1 killefer) 250 250
8 Seed boxes suitable for Disctiller for use with D-6 50 400
106,000
-2-con't.
Costper urit
Quantity Description ceif. TotalBasrah (Dinars,(Dinars)
106,0005 Pick-ups, Jeep 4-wheel drive
complete with canopy 800 4,000
6 International trucks 22.-3 tonschassis fitted with winches 1,500 9,000
4 Special low base trailers fortransport of combines 3,000 12,000
2 Mobile Workshops 5,000 10.CQ141,000
30% Spare Parts 42- a30183,300
Miscellaneous equipment comprisingtractors, combines, implements foruse and sale 16,700
200,000
Workshops required for the year 1951only to complete equipment in Baghdad,Nirkuk and D%waniya workshops such as;lathes, drills, reamers, milling.machines, grinders, electric andacetylene welders, testing equipment,electric generators, battery chargers,transformers, etc. 15,000
Machine Tools for new workshopsat Mosul and Kut 20,000
Steel requirements for two newworkshops to be built at MIosul and Kutsuch as: joints, iron bars, iron girders,windows, galvanized iron sheets, steeldoors, etc. 20.000
55,000
200,000
Grand Total 255.000
Table III
RST1I.,A1-iD IOCWE. -XPhi\Vb1:UR3S A-XD WET RAPRNINGS OF Ti[Eh,iGRICULTURAL ilAiCHIPERY 1 iDMTINIS:ERAT1ION JFOR T2H: YS,iiR 19
A MOUNT 'TOTALARTICLE DESCRIPTIO1N ID ID
INCOTE
1. Revenue from Hire
140 Tractors - © 120 working days each per annum - 16800working days, C ID.4. - p.d. 67200
2 Bulldozers C 120 working days each p.a. - 240 working,days C ID.16 11520
2 Ditchers - e 120 working days each p.a. - 240 wS,orkingdays C ID.8. 5760
70 Combines - C 70 working days each p,a. - 4900 workingdays C ID.10. 49000
5 Thrashers - C 70 working days each p.a. - 350 wtorkingdays C ID.4 1400
134880 134880
2. Other Income
Profit on sale of miscellaneous agricultural equipmentC 30b6 of cost of ID.67000, See note 20100
Profit on sale of spare parts supplied to farmerstequipment repaired in A.M.A. work-shops t 40%of cost of ID.12000. See note 4800
-Income from repairs to farmers' equipment repaired inA,M.A. workshops - labour charges. 5000
Income from transport of machinery - collected fromfarmers' - against transport charges of ID 1500. 2000
Profit on sundry sale of spare parts to outsiders C 40Cof cost of ID.12500. See note 5000
Profit on sale of old machinery (scrapped) - differencebetween realizable value & book value. 15000
51900 186780
-2 - AMOUNT TOTAL
ARTICLE D SCXiPTIOF ID ID
3. Income from Educational AXctivities 72000 72000
TOTAL I,C0i-iE 258780
II. EXPElDIITUURES
1. Llorkshops - Baghdad, Kirkuk, Diwaniyah & Mosul
Salaries, wages & cost of living allowances 20500
Repairs to Prernises 1600Heat, light & power 3000Rent of Plosul workshop 300Insurance 800Sundry expenses - telephones, travelling, stationery, etc. 1000
27200 27200
2. Agricultural Machinery Operation
*Salaries, wages & cost of living allowances 45000
Fuel & oils 7500
Transport expenses 1500Spare parts for repairing equipment of the Af.lh,A. 20000
3.**Administrative Exoenses - Directorate General & 74000 74000
District Offices
Salaries, wages & cost of living allowances 21000
Remuneration of Board of Directors 2000Audit Fees 500
Sundry Expenses - stationery,. advertising, postages,telephones, light, etc. 1500
Rent 1300
Travelling & transport 500
Gratuities .0O027300 273S0
TOTAL EXPEIDITUP S 1285CO
3-A\MOUNT TOTAL
aRT I CT,j T)2 PCTI TI0N ID ID
Total Exoenditures (Carried forward) 128500
Net before debt service 13028o
4. Debt Service 158570
Net after debt service - 28290
5. Depreciation 132000
Agricultural Machinery & tractors C 25&' onreducing balnnce 102000
Vehicles C 255; on reducing balance 24000
Tools & workshop equi-pment C 106 on reducingbalance 4400
Furniture & fixtures @ 1OG on cost 200
Buildings @ 27 on cost 1400132000
Deficit after depreciation - - 162900
*Includes 120 drivers at ID 15 monthly.
" 120 assistant drivers at ID 7.500 monthly..
**Approximately 1950 figures.
XNOTES
1. Profit on sale of miscellaneous agricultural equipment @ 30%
of cost viz. ID. 20,100. The cost of ID. 67,000 is C. & F. cost,
the payment for which is provided for in the purchase program for the
last three preceding years. The rate of 30% profit comprises 10%
for expenses & 20% profit.
2. Profit on sale of spare parts supplied to farmers equipment @
40% of cost viz. ID. 4,800. The cost of ID. 12,000 is C. & F. cost, the
payment for which is provided for in the purchase program for the last
three preceding years, as a part of the several spare parts. The
rate of 40% profit comprises 20% for expenses & storage & 20% profit.
3. Profit on sundry sales of spare parts @ 40% of cost, viz.
ID. 5,000. The cost of ID. 12,500 is C, & F. cost, the payment for
which is provided for partly in the purchase program & partly from
own finances. The rate of 40% profit comprises 20% for expenses &
storage & 20% profit.
APPENDIX A
No. 32 FOR TIE YEAP. 19h9IAVJI OF AGRICULTURAL IACHINaPLY AD1.IINISTRAT ION
After perusal of Article 23 (as amended) of the organic Laiw and writh theapproval of the Senate and the Chamber of Deputies, we hereby order the pro-mulgation of the following lawv on behalf of His Royal Highness the ExaltedRegent.,
Article 1:. - In this law the following terms are defined as followo:
AGRICULTVRAL I11ACHINFRY ADMIFUIS71ATION: Shall mean the Administration esta-blished in accordance with this lawr.
AGRICULTURAL MACHINES & YIPLEIMTTS:(a) Agricultural Mnachines and Implements used for plowing, levelling,
grain-drilling, harvesting, threshing and tractors used for agriciul-tural purposes.,
(b) Other agricultural machines, implements and vehicles which shallbe specified by notifications which shall be issued by the 1Ninisterwith the approval of the Council of Ministers including machinesand pumps used for irrigation.
(c) Requirements and parts necessary for the agricultural machines andimplements mentioned in paras. (aW:b) above.
THE M17INISTER: Shall mean the Iiinister of Economics.
BOARD OF DIR.ECTORS: Shall mean the Board of Directors of Agritcultural INa-chinery Administration which shall be established in accordance with thislaw.
Article 2: - The importation, sale and distribution of agricultural machinesaind iplements and the relevant agencies in Iraq shall be colfined to theAgricultural Machinery Administration from the date of coming inlto forceof this law.
Article 3:(a) An Administration shall be established for the administering of agri-
cultural machines and implements and shall be of a legal identityhaving the authority of appropriating moveable and imnmoveable prop-erties and shall be attached to the MIinistry of Economics; Its ad-ministration shall be entrusted to a Board of Directors wnich shall beindependent in economical and administrative matters according to theprovisions of this law, This Bvard shall be composed of seven per-sons including the Director-General of the Administration, a represent-ative from the Dir~tcrate-General of Agriculture, a representativefrom the Agricultural Bank and the other ftur shall be from among ex-pert persons, specialists and agriculturists.
(b) Members of Board of Directors shall be appQifted by a decision of theCouncil of 1M1inisters and by a Rcyal Irada for a periQd of two years.The member whose period of membership has expired may be re-appointed.
- 2 -
(c) The Board of Directors may select from among its members a presidentand vice-president at the beginning of every calendar year.
(d) The Council of M,Ainisters nay appoint additional members to replacethe absent members,
(e) In the absence of the Director-General of the Administration, theperson carrying out his duties shall officiate on his behalf.
(f) Decisions of the Board shall be taken by majority of votes; thepresence of at least four members including the president of the Bcardshall form a quorum, a copy thereof shall be sent to the M.inister.
(g) The Minister may ask, for the re-consideration of any decision of theBoard of Directors which he deems to be detrimental to the interestsof Agricultural Machinery Admin4stration provided that he submitshis request within seven days from the date of the decision havingbeen served upon and in this case it is not permissible to executesuch decisions until after the Board of Directors has re-consideredit and insisted upon it.
(h) The president or members of the Board of Directors shall not be fi-nancially responsible for the duties carried out by them in accord-ance with the provisions of this law.
Article 4: - The Board of Directors shal1. carry out the following duties:71) Importation of Agricultural machines and implements, selecting the
best types thereof which are suitable for the Country, introducing,selling and hiring these machines to farmers and consumers.
(2) Opening training courses lor drivers and mechanics of Agriculturalyachinery 0
(3) Establishing workshops for the repair and maintenance of AgriculturalHachinery,
(4) Establishing stores for the spare parts of Agricultural lAachinery.(5) The profit of selling the agrioultural machines and implements shall
not exceed 20Q of the cost price and the expenses incurred thereunto,provided this profit shall be utilized for the interest of the Ad-ministratione
Article 5:-(a) TheWBoard of Directors shall submit to thie Ytinister before the 31st
day of January of each year annual estimates of revenaue and expen-ditures for submission to the Council of Ministers for sanction afterthey have been checked by the 2Iinistry of Finance.
(b) There shall be appointed by a decision of the Council of Ministers,comptrollers who shall audit the accounts of the Agricultural va-chinery Administration and submit a comprehensive report thereon tothe Mlinister and the Board of Directors, The Administration shallhand over to the comptrollers all the documents, registers, vouchers,informations, accounts, annual budget and the balance sheet.
Article 6: - The establishments of Agricultural Mlachinery Administration,powers o7 its staff and the manner of administering its duties shall bespecified by a regulation.
Article 7: -(a) In order to realize the objects provided for in this law, the govern-
ment shall at the time of coming into force of this law, grant theAgricultural Mr¢achinery Administration an advance not exceeding
- 3 -
1D.o5C00,C0/-. including the properties of rights of the Directorateof Agricultural Machinery after estimating the value thereof; pro-vided that the advance be repaid to the Government in yearly instal-ments not exceeding fifteen instalments 0 The repayment of the firstinstalment shall commence five years after this lawi coming into force,
(b) The Agricultural machinery Administration may borrgw money the totalsum of which shall not exceed one million Dinars to be guaranteed bythe Government,
Article 8: From the date of coming into force of this law all rights,obligations agreements contracts and properties which belong to the Direc-torate of Agricultural Flachinery, irrespective of whether they are due toor due from the said Directorate, shall be deemed to be transferred to theAgricultural Machinery Administration which sha); be established under thislaw.
Article 9:- Profits of Agricultural machines and implements shall not beliable to income tax.
Article 10: - After taking regard to Article 11 of this 'aw,, any person nm-p-ing selling, possessing with object of selling agricultural mac'ines
and implements, or any person acting as agent or mediator in this respectshall be punished with a fine not exceeding ID, 1000/- and the agriculturalmachines and implements may be confiscated,
Article 11: -(a) At the timo of coming into force of this law, un-used agricu].tural ma-
chines and implements.which are available in Iraq or those the im7orta-tion of which had been permitted prior to the execution of this lawshall not be sold ex.aept with a license from the Agricultural Ma-chinery Administration; any person contravening the provisions ofthis artiole shall be punished with a fine not exceeding ID, 500/-and the agricultural machines and implements may be confiscated.
(b) Any person wishing to sell another second-hand agricultural machine andimplement shall be bound to give information of his intention to thesaid hdministration, and, any person who makes such sale without giv-ing information to the Administration within fifteen days from thedate of sale shall be punished with a fine not exceeding ID. 20/-,.
Article 12: - This law shall come into force six months after its publica-tion in tEHe Official Gazette.
Article 13: - The Minister of Economics is charged with the execution ofthis law.
Made at Baghdad this seventeenth day of Shataban, 1-368 and the four-teenth day of June, 1949.
REGENCY COUNCIL
Saleh Jabr Ali Jawdat Al-Ayoubi Jamil Al-Madfait
Dhiyat Ja?afar Umar NadhmeMinister of Economics Vice-Prime Minister
Council of MUinisters.Stamp.
APPET'DID, A
O0 (3)
FOR THE YFAR 195o
ORD INANCEAlEDITENT OF AGRICULTURAL MACHINERY IAW NO. 32
FOR THE YEPR, 1949
After perusal of Article (23) (as amended) and pars. 3 of Article(26) of the Organic Law and in accordance with the power vested in us,and upon the suggestion of the Minister of Economics and with the approvalof Council of M1Iinisters, we hereby order the promulgation of the follcs-ing Ordinance on behalf of His Ro.yal Highness the Exalted 'Regent,
Article 1. - Article 2 of Lawr No, 32 for the year 19249, is hereby can-celled and replaced by the following:
;l Dportation and Sale of such Agricultural Mlachinery asshall be specified by notifications which the Iinistershall issue and publish in the Official Gazette from timeto time, shall be confined to the Agricultural IlachineryAdministration,t
.APPENDIK -B
Proposed Qualifications and Regulations fora MIachinery Dealer to Import and Sell FarmMachinery in Iraq
1. Dealer must be manufacturer 1 s direct representative. Letters confirm-ing the validity of th.e dealer contract should be provided to the Agri-cultural Machinery Administration.
2. Dealer must have adequate operating capital confirmed by accreditedbanks in Iraq,
34 Dollars allocated to a dealer for the importation of agricultural ma-chinery must be expended solely for that puirpose.
O Orders approved by the Agricultural Machinery Admninistration must beplaced, with the manufactu.rer in the following manner:
(a) Spare parts for existing machines shall be ordered immediately;
(b) Tractors and implements are to be classified by seasonal re-quirements and given priority accordingly;
(c) Conditions resulting in the delay of manufact.urer t s fillingorders should be conveyed in writing to the AgriculturalMachinery Administration.
5, acili.ties
(a) Adequate spare parts, repair and maintenance facilities mustbe provided consistent with the volume and distribution of equip-ment,, In general) 25 to 30 percent of dealer imports should bein spare parts,
(b) Service stations should be provided in provinces where the ma-chinery population of a given make is sufficient to justify theinvestment.
(c) The dealer must maintain in his employ a sufficient corps ofcompetent mechanics to insure adequate service.
(d) MIanufacturersl representatives should be available at frequentintervals for training dealer personnel in the operation, main-tenance) and repair of equipment.
6. Compensaton to Dalers
Dealers will be permitted a profit based on 30 percent of the net price oftractors and implements c,i.f, Basra.
A profit of 50 percent shall be permitted on spare parts and calculated inthe marner set forth above.
Equipment required by the Agricultural Machinery Administration for the rown use shall be obtained through qualified dealers at negotiated pr4.cs.
