FILE COPY RRESTRICTED Report No. PA-76a This report was prepared for use within the Bank and its affiliated organizations. They do not accept responsibility for its accuracy or completeness. The report moy not be published nor may it be quoted as representing their views. INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT INTERNATIONAL DEVELOPMENT ASSOCIATION LILONGWE AGRICULTURAL DEVELOPMENT PROJECT PHASE II MALAWI April 16, 1971 Agriculture Projects Department CURRENCY EQUIVALENTS Currency Unit - Malawi Kwacha (from Feb. 15, 1971) Currency Unit - Malawi Pound (prior to Feb. 15, 1971) MK 1.0 - ME 0.5 ME 1.0 - MK 2.0 MK 1.0 - US$ 1.20 US$ 1.0 - MK 0.833 ME 1.0 - US$ 2.40 US$ 1.0 - ME 0.417 WEIGHTS AND MEASURES 1 acre (ac) - 0.405 hectare (ha) 1 mile - 1.61 kilometer (km) 1 square mile - 639.5 acre - 259 ha 1 ton (sh ton) - 2,000 pound (lb) - 911 kilogram (kg) 1 bag - 200 lb - 91.1 kg 1 hundredweight (cwt) - 112 lb - 51.02 kg ABBREVIATIONS ADS - Agricultural Development Services CADC - Chief Agricultural Development Officer CSC - Cold Storage Company DAO - District Agricultural Officer FMB - Farmers' Marketing Board (now Agricultural Development and Marketing Board) ADMARC - Agricultural Development and Marketing Corporation (formerly) Farmers' Marketing Board IDA - International Development Association LLDP - Lilongwe Land Development Program LADP - Lilongwe Agricultural Development Project MAB - Malawi Agricultural Bank MANR - Ministry of Agriculture and National Resources PEU - Project Evaluation Unit MALAWI LILONGWE AGRICULTURAL DEVELOPMENT PROJECT, PHASE II TABLE OF CONTENTS Page No. SUMMARY AND CONCLUSIONS ........................... i-ii I. INTRODUCTION ...................................... 1 II. BACKGROUND ........................................ 2 A. General ...................................... 2 B. Agricultural Sector .......................... 2 III. THE LILONGWE DEVELOPMENT PROGRAM . . 3 A. The Program Area ... 3 B. Crop Marketing, Prices and Exports ........... 6 C. The Program .................................. 6 IV. THE PROJECT .. 8 A. Description ... 8 B. Detailed Features ............................ 9 V. COST ESTIMATES AND FINANCIAL ARRANGEMENTS ......... 12 A. Phlase IT Project Costs ................... ... 12 B. Proposed Financing ... 14 C. Procurement .. ....... 14 D. Disbursement ... 15 E. Accounts and Audit ... 15 VI. ORGANIZATION AND MANAGEMENT ....................... 15 A. Organization ... 15 B. Staffing ... 17 C. Farm Inputs - Credit and Cash Sales .......... 18 VII. PRODUCTION, MARKETS, FARMERS' BENEFITS AND GOVERN- MENT BENEFITS ..................................... 19 A. Yields and Output ........ ................... 19 B. Markets and Prices ....... ................... 19 This report is based upon the findings of an Appraisal Mission comprised of Messrs. A. Denness, D. Gold, F. Lowenstein, A. Cole, and a survey of agricul- tural credit by Mr. A Stoneham. -2- Page No. C. Farmers' Benefits ....................... 20 D. Government Benefits ........................,.20 VIII. ECONOMIC BENEFITS AND JUSTIFICATION . . 21 IX. RECOMMENDATIONS ................................... 22 ANNEXES 1. Crops, Marketing, Prices and Exports 2. Agriculture in the Program Area and Changes Expected to Occur as a Result of Project Activities 3. Phase I Project Progress 4. Land Reorganization and Demarkation 5. Estimated Farm Input Use - Cash Sale and Credit Arrangements 6. Summary Proposals for the Establishment and Development of a National Seed Development and Production Association 7. Dzalanyama Ranch 8. Cost Estimates 9. Disbursement 10. Organization Chart 11. Beef Demand, Marketing and Prices 12. Government Cash Flow from the Phase I and Phase II Projects 13. Rate of Return Calculation MAP MALAWI LILONGWE AGRICULTURAL DEVELOPMENT E'ROJECT, PHASE II SUMMARY AND CONCLUSIONS i. This report appraises a project which would be the second phase of the Lilongwe Agricultural Development Project (LADP) and for which an IDA credit of US$7.25 million equivalent is proposed. In 1968 an IDA credit of US$6.0 million (Credit 113-MAI) was made to Malawi for Phase I of the proj- ect. The first phase has progressed satisfactorily, and current estimates indicate that it will generate an economic rate of return of 11%, compared with 9% estimated at appraisal. A second agricultural credit (Credit 114-MAI for US$3.7) was also made in 1968 for the Shire Valley Development Project; this project has made good progress. ii. The LADP is an integrated program including land conservation, agricultural extension, credit and marketing facilities, the provision of water supplies, road development, farmer and staff training and the evolu- tion of social and administrative structures capable of managing, maintain- ing, and indeed improving upon it. In Malawi, where 90% of the population is dependent on subsistence agriculture, the LADP is looked upon as a fore- runner for similar programs, capable of accelerating the transition to cash- oriented farming systems and increased farm incomes and national exports. Malawi's ability to raise resources for development and reduce its external budget support requirements is dependent upon its achieving increased agricultural exports. By full development, the annual additional exports from the Phase I and Phase II project areas would be about 78,150 tons of maize worth US$2.50 million, and 22,800 tons of groundnuts worth US$4.10 million. Additionally, the production of beef for domestic consumption and import substitution would be worth about US$0.30 million each year. iii. The program area comprises about 1.1 million acres and this would become a single local Government administrative district when Phase II is initiated. The Phase I and II project areas include a total of about 521,000 acres of arable land and a 161,000 acre-ranch, and about 52,000 farmers are involved. The Phase II project would include development of the ranch, construction of about 540 miles of roads, 1,700 miles of drainage ditches, 160 boreholes, and 14 unit service centers, all of which would serve some 240,000 acres of arable land, as well as the continuation of extension, credit and marketing services throughout the areas developed under the two phases. iv. Phase II project costs are estimated at US$8.6 million equiva- lent. The proposed credit would finance 84% of project costs, covering foreign exchange costs estimated at US$3.4 million, and 74% of local cur- rency costs. The balance of US$1.3 million local costs would be met from Central Government revenues and from program farmers who would purchase some farm inputs for cash. The Government would onlend US$194,000 to the Agricultural Development and Marketing Corporation (ADMARC) at 6% over 20 years for the construction of the 14 produce markets that would be constructed - ii - at the service centers and a fertilizer store. Project costs include US$220,000 for the experienced staff needed to set up a Malawi Agricultural Bank (MAB). These funds would be disbursed through the project authority. Where practicable, project procurement would be by international competitive bidding; goods obtained in this way would have a value of about US$1.62 mil- lion. Goods obtained within Malawi would be subject to local competitive bidding procedures. Retroactive financing amounting to about US$105,000 would be required for the initial development of the project ranch. v. The Phase I project is being carried out by a section of the Ministry of Agriculture and Natural Resources (MANR), headed by a program manager, responsible to the Permanent Secretary through the latter's Chief Agricultural Development Officer (CADO). While field management is excel- lent, the long chain of command above it has proved unsatisfactory. For Phase II, changes would be made to ensure the full support and cooperation of Government agencies. To ensure ministerial coordination, Government would set up a liaison committee of representatives from the Ministries most con- cerned with the program. The program manager would be responsible to the Under Secretary of MANR and quarterly and interim reports would be reviewed by the liaison committee. Plans for continuation of extension and local and technical support services after development is completed would be submitted to the Association for approval by June 30, 1972. The borrower would imple- ment the approved plans in accordance with a schedule which was acceptable to the Association. vi. At full development the Phase I and II areas would include about 156,300 acres of maize, 104,200 acres of groundnuts, and about 3,000 farm- ers stall-fattening an average of two beef animals each year. Average annual net farmer incomes would increase by about US$74/annum. Direct Government revenues, together with FMB operating surpluses generated by increased crop production by program participants, would cover Phase I and Phase II project costs by 1979/80, and would be sufficient to cover program area extension services and debt service costs, thereafter. In addition, estimated incremental Government revenue, mostly from consumer taxes, would amount to about US$1.0 million annually at full development. Based on current yield and price forecasts, the estimated economic rate of return from investments in the combined Phase I and Phase II projects is 13%. MALAWI LILONGWE AGRICULTURAL DEVELOPMENT PROJECT, PHASE II I. INTRODUCTION 1.01 The project appraised in this report would be the second phase of the Lilongwe Agricultural Development Project and would be carried out by the Ministry of Agriculture and Natural Resources (MANR) (see para 6.02). 1.02 The Lilongwe Agricultural Development Prolect is an integrated ag- ricultural development program based on a plan prepared for the Government by the Bank's Agricultural Development Service (ADS) under the supervision of the FAO/IBRD Cooperative Program. This plan recommended the improvement of agricultural production on an area of about 500,000 acres in the central region of Malawi through a program which included an integrated package of soil conservation works, crop extraction roads, water supplies, marketing, storage and credit facilities, and, in particular, a greater agricultural extension and credit effort. In addition, a system of voluntary land re- organization and registration of family holdings was included in the pro- gram. The program was designed to result in the increased production and productivity of food crops such as maize, as well as cash crops, including groundnuts and tobacco, and, consequently, the development of a market-orien- tated agricultural industry. 1.03 In January 1968, IDA approved a credit of US$6 million (Credit 113-MAI) to finance the first phase of the development project. During phase I land conservation and road building have proceeded faster than planned, while the supply of farm inputs and land registration have fallen behind project targets (see para 3.19). Therefore, Government's Phase II project proposals for a rate of development of 100,000 acres/year has been reduced to 60,000 acres/year and project integration emphasized. 1.04 Development of the LADP area's livestock potential was not included in the original plan. Livestock development has substantial potential, how- ever, and consequently would form a component of the Phase II project. 1.05 This report is based on the findings of an IDA mission to Malawi in September/October 1970, consisting of Messrs. Denness, Gold, Lowenstein and Cole, and a mission by Mr. Stoneham to survey agricultural credit. 1.06 In addition to Credit 113-MAI, the Bank group has made one other agricultural credit to Malawi; this was of US$3.7 million in 1968 for the Shire Valley Agricultural Development Project (Credit 114-MAI), a project with many similarities to the Lilongwe program. Progress on this project has been good. -2- II. BACKGROUND A. General 2.01 Malawi, a landlocked country extending some 700 miles from north to south, and 120 miles from east to west, has a total land area of about 36,000 sq miles, of which about half is cultivable. Its 1969 population of about 4.4 million is increasing at more than 3% annually, and while the average population density is 122 per sq mile, this figure is more than 250 per sq mile in the good agricultural areas, especially the central and southern regions. About 90% of the population are dependent on subsistence farming and obtain incomes less than Malawi's per capita GDP of about US$52 a year. B. Agricultural Sector 2.02 Principal subsistence crops are cereals (usually maize, the staple food), beans and other pulses including pigeon pea, which is some- times used for livestock feed. Substantial quantities of maize, surplus to family consumption requirements, are marketed, part directly to shopkeepers, and the remainder to the Farmers' Marketing Board (FMB). Except in years of a national deficit - the majority of FMB's purchases are subsequently exported. 2.03 Many farmers, particularly those in the Central Plains region, grow groundnuts and dark-fired tobacco 1/as cash crops; like cotton, the main cash crop of the lowlands, these are mainly for export. 2.04 Estimated contributisa by agriculture to GDP was K 93.2 million or 41% in 1966, while the contribution of subsistence agriculture was 27Z. In 1969 comparative figures were K 114.7 million, 37% and 24%, respectively. Lne decline in agriculture's contribution has resulted from reductions in quotas for smallholder tobacco (to avoid overproduct;ion) and to adverse weather in 1968 and 1969. 2.05 Prior to 1967, the long-term growth of agricultural production was achieved primarily by expansion of acreage. Because of the limited availa- bility of suitable agriculture land, future growth is dependent principally upon productivity increases, and a shift towards a more market-orientated agriculture. The results of projects financed under Credit 113 (Lilongwe) and Credit 114 (Shire Valley) and the Salima Lake Shore Project financed by the Federal Republic of Germany, show that productivity gains are possible 1/ Green Tobacco leaves cured in the smoke of a wood fire to produce a to- bacco darker in color than flue cured (without smoke) and used for pipes, chewing and snuff. -3- and that farmers are responsive to cash incentives. Yields of maize, ground- nuts and cotton, obtained by farmers fully participating in these projects, have increased between 50% and 100% within the short period of two to three years. 2.06 Experience indicates that significant improvements in productiv- ity can be obtained by an integrated package program consisting of soil conservation measures, improvements in rural infrastructure, a concentrated extension and credit effort, and land reorganization and registration of holdings -- the latter provides farmers with recognizable units of land and, consequently, promotes long-term farm improvements. The success in Malawi of the integrated project approach justifies what in 1968 was a departure from the usual type of Bank/IDA agricultural project. The land-locked location of the country has made it difficult and costly to connect prom- ising agricultural areas with export evacuation routes; and the poor con- dition of existing, mainly gravel, roads and low standards of vehicle operation, make the timely support of agricultural inputs and export of agricultural produce difficult and expensive. These conditions call for the concentration of the development effort in areas where production potential is high and attention can be paid to streamlining the transporta- tion of farm inputs and exports. III. THE LILONGWE LAND DEVELOPMENT PROGRAM A. The Program Area 3.01 As shown by the map, the Lilongwe Agricultural Development Project (LADP) area comprises some one million acres of the central plateau of Malawi. The area was selected because it has the highest agricultural potential of any region of Malawi, its population is receptive to change, the country's main agricultural research and training facilities are within the area, soils are satisfactory and permit good responses to fertilizers, rainfall is adequate and reasonably reliable; and, while good agricultural land remains uncultivated through lack of village water supplies, abundant supplies of potable underground water at a depth of about 100 ft remain untapped. 3.02 General Description. The original LADP area, as defined by the Lilongwe Agricultural Development Area Order, 1967, consisted of about 500,000 acres lying to the west of Lilongwe town, the administrative and trading center of the central region. Between its southwestern boundary and the Mozambique border (see Map), there is the Dzalanyama Forest Reserve and an area of lower potential productivity which would not be developed under the project. For the second phase project, the program area would be redefined to include a net addition of 260,000 acres of high potential land, 116,400 acres of low productivity land and 161,000 acres of the Dzalanyama Forest Reserve, for the phase II project ranch; a total of 1.0 million acres. - 4 - 3.03 The LADP area, lying at an altitude of between 3,500 and 4,000 ft above sea level consists of gently undulating plains with slopes of up to 5%, intersected with low-lying seasonal swampy areas, known locally as Dambos. Annual rainfall is 25-43 inches, almost all falling between December and March. Average temperatures range from 60°F in June to 74°F in November. Soils consist of well drained yellow-red to red, clay to sandy loams which give way to brown sandy clay loans near swamps. Dambos consisting of grey- black clays cover about 30% of the area. The main soil types which are slightly acid, normally contain adequate reserves of nitrogen, potash and phosphates, but continuous cropping quickly depletes these reserves and fertilizers are required to maintain economic yields. This combination of rainfall, temperature and soils is suitable for intensive production of maize, groundnuts and tobacco. Soil erosion is a problem but is controllable through the construction of rainfall diversion channels and crop production on properly aligned ridges. 3.04 Communications. Lilongwe, the administrative center of the region, is linked by a new paved road, financed under Credit 112, to Blantyre in the south, and by a low standard paved road to Salima, the railhead to the port of Beira in Mozambique (see Map). At present all heavy goods imported for Lilongwe are railed to Salima and then trucked to their final destinations. The final twenty miles of rail -- Chipoka to Salima -- are in poor repair; speed is restricted and heavier types of rolling stock cannot be used. This situation is aggravated by congestion of goods at Salima. Malawi Railways have insufficient road trucks to carry goods out of Salima, and commercial truckers are short of roadworthy vehicles. In view of the poor condition of the Chipoka-Salima stretch of rail, the construction of the new road, Blan- tyre to Lilongwe, and the rail link, Nacala-Liwonde, FMB have decided cor- rectly to erect their new fertilizer stores at Liwonde. 3.05 Within the LADP area, existing roads do not provide adequate access either to market centers or for the delivery of farm inputs to villages remote from main roads. While a limited mileage of main roads is necessary, the area's main requirement, which would be met by the program, is for feeder roads connecting remote villages with markets and the program's service centers. 3.06 Population and Crops. The 1966 census showed that the average pop- ulation density of the LADP area, excluding the ranch, was over 212 per sq mile, more than twice the national average, and one of the highest in Africa. Estimated annual population increase is about 3%. There are about 52,000 families, each with about five acres of crop. Average single family size is five. In the 1969/70 season, the Phase I project evaluation unit (PEU) sur- veyed 406,600 acres of the program area not yet covered by program develop- ments. It found that 50% of the land was under crops, with maize on its own covering 33% of cropped land, and in crop mixtures another 27%, that tobacco occupied 9% and that confectionery groundnuts, which are becoming of increas- ing importance, occupied 17% and 9% in pure and mixed stands, respectively. The remaining 5% was under minor crops and other crop mixtures, including beans, sweet potatoes, pigeon peas and cassava. - 5 - 3.07 LADP area farmers are of Bantu origin, their basic unit being the extended family which expresses itself geographically in the family village. Village committees are evolving, and beginning to play an impor- tant role in assisting authorities to demonstrate better farming practices, and to organize activities which lead to the improvement of village life. 3.08 Land Use. Aerial photographs show that the revised LADP area of 1 million acres (see para 3.02) includes in addition to the ranch (161,000 acres) and private estates (31,000 acres), 776,000 acres of good arable land and 116,000 acres of agriculturally marginal land. The photographs show also the following land use pattern: land not cultivable 30%, cultivable 15%, fallow 5%, and already cultivated 50%. 3.09 Few farm inputs are purchased, although the use of fertilizer is increasing. All arable crops are grown on ridges; soil preparation, plant- ing, cultivation and weeding are done with hand hoes. The number of work oxen is increasing, but they are used mainly for carting, and the number of ox-drawn ploughs and ridgers in use is insignificant. Harvesting, thresh- ing and groundnut shelling are by hand. Crops are stored on-farm in mud and thatch cribs in which grain storage losses are about 20%. Rainfall is low after harvest and crop-drying presents no problem. 3.10 More than half of the Lilongwe District farmers own small live- stock and over 80% keep poultry. About one in four owns cattle and the number of animals stall-fattened for beef is increasing. 3.11 Land Tenure. Land is cultivated under customary rights of usufruct. Succession is matrilineal and a man acquires use of land only by marriage to a woman who has land cultivation rights. However, since customary marriages are neither monogynous nor necessarily lasting, families frequently show no interest in making permanent improvements to the land, and are only concerned with the immediate benefits to be derived from its use. 3.12 In recent years, this system has tended to change as farmers take a much greater interest in educating and providing for their direct families. To encourage this trend, Government, in 1967, enacted three laws enabling the legal reorganization and registration of customary land, and the grant- ing of ownership titles to individuals or to family groups. Since the enact- ment of the laws, however, no land has been registered, mainly because it is extremely difficult for an individual farmer's land to be clearly defined. Progress is being made to overcome this problem through allowing, initially, land registration by large family groups with the ultimate goal of individ- ual registration. - 6 - B. Crop Marketing, Prices and Exports 3.13 The Farmers' Marketing Board (FMB) 1/, established when Malawi became independent in 1964, is a statutory corporation wholly owned by the Government; though under the general direction of the Ministry of Agricul- ture and Natural Resources, it is autonomous in its day-to-day operations. Details are given in Annex 1. ADMARC has a monopoly to purchase all major crops grown on smallholdings at prices which it fixes; so far, however, it has chosen to exercise this privilege only with respect to cotton, ground- nuts and tobacco. Maize is dealt with largely through licensed traders who purchase from the farmer in his village and resell to FMB at its central depots. 3.14 The responsibilities of the ADMARC are comprehensive. Apart from the purchase, storage, processing and disposal of produce grown on African smallholdings, FMB maintains a price stabilization fund, and stock food re- serves to meet possible local shortages, and supplies agricultural equip- ment and production requisites, operates groundnut and tobacco grading centers, and a seed production farm. 3.15 Market System. ADMARC operates permanent markets which have full facilities for grading, weighing, buying and storage; and temporary or bush markets consisting of a buying shed, enclosure, cash register, and spring scale. About 600 markets are operated throughout Malawi, the majority of them temporary. In 1969/70 the FMB operated 53 markets, 10 permanent, with- in the LADP area; these purchased groundnuts 17,992 tons, maize 16,431 tons, and tobacco 5,551 tons from the program and surrounding areas (see Annex 1). 3.16 In the LADP area, licensed traders are not permitted to operate since at this time it would not be feasible for them to collect farmers' credit repayments, and ADMARC has committed itself to purchasing all crops throughout the program area in line with infrastructure development and the provision of farmers' support services under the Phase I and proposed Phase II projects. C. The Program 3.17 The targets of the LADP as revised during implementation of the Phase I project, full details of which are given in Annex 2, include: (a) Detailed land use and conservation plans for the LADP area, and provision of appropriate roads, soil conserva- tion works, water supplies and markets. t/ The namni of FrMI has recen t ly hevil chiatged t.v Agr tfuittt- at D)evvelopo,ient and Marketing Corporation (ADMARC) and is iereafter referred to by its new name. -7 - (b) Development of agriculturally suitable land now lying idle and the better utilization of land now lying fallow. (c) Development of a 161,000-acre ranch to provide annually at full development 200 tons of beef and 3,700 animals for stall-fattening by program area farmers. (d) A tenfold increase in the marketable surplus of maize, increased production of export groundnuts, increased tobacco yields, and the increased produc- tion of stall fattened cattle by program area farmers. 3.18 Lilongwe Land Development Project, Phase I (Credit 113-MAI). The prolect partly financed by Credit 113-MAI (US$6 million) is the first phase of the Lilongwe Agricultural Development Project. The credit provided funds for developments on about 168,000 acres consisting principally of: -- construction and maintenance of 1,400 miles of rainfall diversion channels: 165 miles of crop extraction roads, 125 boreholes equipped with hand operated pumps, aerial photography, map preparation and surveving required for farm allocation and regis- tration, and the establishment of a suitably staffed office to carrv out such work; -- construction and equipping of eleven permanent markets and a 8,500 ton crop storage facility; provision of project management, staff training, ex- tension, input supply, credit services, and evaluation and review of project progress. The project is being carried out by a speciallv established section of the Ministry of Agriculture and Natural Resources, and is being developed over the period March 1968 through January 1972. 3.19 Progress has been good, physical targets will be completed by April 1971, a year in advance of schedule and infrastructure development has been initiated on a further 100,000 acres with IDA's approval. Develop- ment of this additional area is expected to be completed by October 1971. Extension work has been satisfactory but the supply of farm inputs on credit has yet to reach the levels forecast at appraisal, principally because project management wished to ensure high repayment levels in the first two years. The flow of credit is increasing rapidly, however, and the overall credit recovery rate of 97% is good. Yields are developing in line with appraisal report estimates. Costs have proved to be within estimates, and while disbursements were delayed due to administrative problems (disbursements were US$2.4 million at December 31, 1970 against total project expenditures of US$3.3), the recent correction of these matters has allowed most of the backlog to be disbursed. During appraisal of the Phase II project, the estimated economic rate of return from the revised Phase I investments was recalculated as 11% on the basis of actual costs and estimated benefits, compared with 9% calculated in 1968. Further details of Phase I project progress are at Annex 3. IV. THE PROJECT A. Description 4.01 Phase II of the Lilongwe Agricultural Development Project would be carried out over a four-year investment period, 1971/72-1974/75. This phase would involve: constructing about 540 miles of crop extraction road, 1,700 miles of rainfall diversion channels and boring and equipping 160 boreholes to serve an additional 240,000 acres of the program area; constructing 14 service centers, each including a produce market, a 450 ton fertilizer/seed store, and associated offices and housing; surveying, farm demarcation and reorganization, and land registration over about 375,000 acres of the phase I and phase II project areas; continuing agricultural extension and staff and farmer training services within the Phase I project area, and extending such services to an additional 24,000 farmers; providing seasonal and medium-term credit to Phase I and Phase II project farmers by means of a revolving credit fund operated by the project administration; and establishing arrangements for cash sale of inputs to project farmers; establishing a ranch to provide upgraded feeder stock for program area farmers; establishing a liaison committee to provide coordination between various agencies of Government for project activities; - 9 - developing plans for continuing LADP services and for maintenance of infrastructure after the development phase; and continuing a project evaluation unit. B. Detailed Features 4.02 Roads, Soil Conservation and Boreholes. The proposed schedule of road, drainage ditch and borehole construction is as follows: 1971/72 1972/73 1973/74 1974/75 Total Program Area Covered (acres) 60,000 60,000 60,000 60,000 240,000 Roads: 24 ft ditch to ditch (miles) 75 75 75 75 300 16 ft ditch to ditch (miles) 60 60 60 60 240 Drainage Ditch (miles) 423 423 423 423 1,692 Boreholes 40 40 40 40 160 4.03 To facilitate LADP management and farm development, the LADP area has been divided into units of about 20,000 acres; 14 units have been estab- lished during Phase I, (I through XIV), and an additional 12, (XV through XXIV) would be created and developed under Phase II. Within each unit up to 45 miles of crop extraction road would be constructed. Where such roads would form part of the area's planned main road system, maximum road width would be 24 ft, while crop extraction roads would have a maximum width of 16 ft. Although a road width of 24 ft does not meet the 36 ft minimum width required by the Ministry of Works, it would be sufficient for the levels of crop production and farm input requirements which are expected to develop within the program area during the next ten years. Should production in- crease beyond present estimates, and roads become inadequate, widening would not be difficult or expensive. During negotiations, assurances were obtained from the Government that LADP roads would be built to maximum widths of 24 ft and 16 ft. 4.04 About 1,700 miles of Vee bottoTned rainfall diversion channels would be constructed to prevent soil erosion by reducing run off to safe non-erosive velocities. Ditches would have a 9 sq ft cross sectional area, 1:400 grade and a capacitv of 22.5 cusecs. They would be spaced generally at 220 yd horizontal spacing, be a mile in length and about 100 acres of arable land would be protected by each ditch. - 10 - 4.05 To provide potable water for LADP area farmers, who now draw pol- luted water from rivers and drainage channels, about 160 boreholes equipped with hand pumps and surrounded by a protective concrete apron, would be constructed. Pumps would be sited so that water would be within 3/4 of a mile of most villages. 4.06 Service Center. A service center would be constructed in each unit. Each center would have a market where farmers' groundnuts and surplus maize crops would be purchased, and credit repayments withheld from crop sale proceeds, a 450 ton fertilizer/seed store, and the housing and offices required for market and extension staff. Service center markets, and a railhead fertilizer store would be constructed by the Agricultural Develop- ment and Marketing Corporation (ADMARC), and Government would on-lend US$190,000 of the credit to the ADMARC at 6% interest over 20 years, for this purpose. Local shopkeepers would be encouraged to establish their premises close to service centers, and they would be able to obtain official planning permission for this purpose. 4.07 Land Survey, Farm Demarcation and Reorganization and Registration. Aerial photographs of the LADP area would be taken and used to produce 1:5,000 contour maps. These maps would be used for planning rainfall diver- sion channels, road network, layouts, and demarcating existing holdings. After completing the physical layout of drainage ditches and roads, farmers' holdings would be demarcated and existing boundaries reorganized to straighten boundaries, compensate for use in road and drain construction and to consolidate fragments. A cadastral survey would then be made to de- marcate and record the new holdings and to be used as a basis of land title issuance. During Phase I, surveys were unable to keep pace with other proj- ect activities because of Government's difficulty in recruiting suitable staff, and by October 1971 surveys will be about 213,000 acres behind other project activities. Phase II would include sufficient staff and equipment to complete surveys prior to land registration, over the following areas: 1971/72 1972/73 1973/74 1974/75 Project Year 1 2 3 4 Area surveyed up to Farm Registration (acres) 75,000 100,000 100,000 100,000 Further details are given in Annex 4. 4.08 To retain the integrated nature of LADP development and to ensure that farmers are able to register their land, should they wish to do so, Government has given an assurance that if project staff is unable to meet land survey targets, surveys would be let to contract. 4.09 Extension and Staff Training. During the first two and a half years, after establishing a unit, one extension worker would serve 200 farm ffmilies, and this would be reduced to one worker for 400 families during ti.f following two and a half years. This intensity has yet to be reached in the Phase I units due to the shortage of trained extension workers and - 11 - management concentration on infrastructure development, but would be achieved during the Phase II project development period within which extension services would be extended to an additional 24,000 farming families. A livestock ex- tension unit would be included under the project and would be responsible for improving the program area herd, through improved disease control and management, and for increasing stall-fattening of stock by program area farmers. 4.10 Training for LADP staff and Phase I farmers is now being carried out at the Project Training Center and at unit service centers. This would be continued and extended to provide for the Phase II families. 4.11 The project evaluation unit (PEU), established during the Phase I, would continue to operate field surveys within the LADP area. Surveys would collect yield data for project evaluation. These data would be analyzed at the computer at the Malawi Regional Testing Center. 4.12 Credit. Proposed arrangements for credit and sales of farm in- puts to Phase I and Phase II farmers are described in paragraphs 6.08-6.12 and in Annex 5. It is estimated that during the project period about 55% of total input supplies would be provided on credit, the remainder being sold for cash. Credit would be issued to some 5,000 Phase I and Phase II farmers during year 1, and the number of credit accounts would increase by about 3,000/annum, reaching an estimated total of 14,000 in the final Phase II year. Within the four-year development period a total of about K 1.25 million (US$1.5 million) would be issued on credit for an estimated 10,000 tons fertilizer, 1,700 tons of improved seed (see Annex 6) and for insecti- cides. Medium-term credit for maize shellers, tree seedlings for fire wood and building poles, work oxen and ox-drawn implements would total K 126,000 (US$151,000) during the same period. Cash sales of seasonal inputs are expected to total about US$1.44 million for the four project years for some 12,000 tons of fertilizer and 543 tons of seed. 4.13 Ranch. A ranch of about 161,000 acres would be established in the Dzalanyama Forest Reserve (see Map) to provide upgraded feeder stock for stall-fattening by LADP area farmers. The ranch would be started initially with immature zebu type animals purchased locally. These would be crossed at first with improved zebu type bulls until a satisfactory animal health program had been carried out when either approved Friesian bulls would be imported or artificial insemination employed. 4.14 At full development, after 12 years, the ranch would produce annually 3700 young stock for stall-fattening and sufficient culled animals to give 200 tons of beef (see Annex 7). 4.15 Project Administration. A liaison committee composed of senior representatives of concerned ministries would be established to coordinate the various program policies of Government agencies. The program manager would be responsible to the Under Secretary of Agriculture and Natural Re- sources. Further details are discussed in paragraph 6.01 of this report. - 12 - 4.16 Credit After Project Development. Malawi farmers at present re- ceive agricultural credit under three ma4or, and four minor. develonment projects. The countrv's development plans envisage a large increase -n tie number of farmers receiving credit, but at present n^ central credit organi- zation exists. There is an urgent nrnd for a centr-' credit agency to handle farmer credits, and graduallv to take over the credit funct-ons of develop- ment projects. By June 30, 1972 plans would be submitted for IDA approval concerning development of such an institution (see para 6.05). 4.17 Ecology. The ecology of the 'eveloped areas would be substan- tially improved by Phase I and Phase II project activities. The slow wasting of the soil by erosion would be halted by the construction of drainage ditches and contoured ridges, and the soil structure would be improved by the increased use of fertilizers. Timber planting would make use of non-agricultural land, and would i-self assist to improve soil and water conservation. The human environment would improve also through the reduction of water-borne diseases as boreholes would be constructed to provide potable water. V. COST ESTIMATES AND FINANCIAL ARRANGEMENTS A. Phase II Project Costs 5.01 Estimated Phase II costs would total K 7.16 million (US$8.59 mil- lion) of which the foreign exchange component is about K 2.80 million (US$3.35 million) or 39% of total costs. 5.02 Costs include a 10% price contingency on farm inputs, vehicles, machinery, buildings, borehole and road construction materials and project administration and operation works, 5% on livestock purchases, and 3% on salaries of expatriate and local staff. Physical contingencies are not in- cluded since Phase II estimates are based on Phase I experience and provide for the maximum requirements permitted by the project. Farm family labor costs are excluded since no cash cost is attributed to familv labor. Costs do not include import duties, and are based on Government salary and wage scales, up-to-date building costs, recent quotations given by suppliers of vehicles, materials, and farm inputs. The breakdown of costs is detailed in Annexes 5, 7, and 8 and summarized in the tollowing table. -13- Sumasry of Project Costs _' K (millions) ITS$ (millions) Foreign Fxchange Local Costs 1971/72 1972/73 1973/7 1974/75 Total 1971/72 1972/73 1973774 1974/75 Total % US$ (miilions) Buildings and Land Development 2/ Vehiclesp machinery and equipment .18 .15 .16 .10 .59 .22 .18 .19 .12 .70 74 .52 .19 Buildings .24 .08 .08 .08 .50 .29 .10 .10 .10 .60 28 .17 .43 Expatriate staff .10 .10 .09 .09 .38 .12 .12 .11 .11 .46 5o .23 .23 Local staff .13 .14 .1k .14 .56 .16 .17 .17 .17 .67 0 0 .67 Operations and maintenance .19 .20 .19 .19 .78 .23 .24 .23 .23 .93 ho .38 .56 Sub-total .85 .67 .67 .62 2.80 1.02 .80 .80 .74 3.36 38 1.29 2.07 ProJect Administration 3/ V les, machinery, and equipment .0o .Oh .06 .04 .20 .07 .05 .07 .05 .2k 88 .21 .03 Expatriate staff .10 .11 .11 .11 .43 .13 .13 .13 .13 .51 50 .26 .26 Local staff .28 .32 .35 .38 1.33 .33 .38 h2 .45 1.59 o o 1.59 Operations and maintenance .14 .14 .15 .15 .58 .16 .17 .18 .19 .70 32 .23 .47 Sub-total .57 .61 .67 .68 2.53 .69 .73 .80 .82 3.o4 23 .69 2.35 Ranch Vehicles, machinery, and equipment .06 .03 .02 2/ .11 .07 .03 .02 3/ .13 63 .08 .05 Livestock .09 .09 .08 .09 .35 .11 .11 .10 .Io .42 90 .38 .04 Buildings .07 .4 .02 .01 .14 .09 .04 .03 .01 .17 30 .05 .12 Expatriate staff .01 .01 .01 .01 .02 .01 .01 .01 .01 .03 50 .01 .01 Local staff 4/ .01 .01 .02 .05 .01 .01 .02 .02 .06 0 0 .06 Operatics and maintenance .01 .02 .03 .04 .10 .01 .03 .03 .04 .12 28 .03 I08 Sub-total .25 .20 .17 .16 .77 .30 .23 .20 .19 .93 60 .56 .37 Fertilizer and Insecticides Credit sales .1.k .03 / - .16 .16 .03 5/ - .19 90 .18 .02 Cash sales .18 .05 .o6 .04 .33 .22 .06 .07 .05 .4o 90 ,36 .0 Sub-total .32 .07 .06 .04 .49 .38 .09 .07 .05 .59 90 .54 .06 Marketing and Storage Facilities of Fertilizer store .06 - - .C6 .08 - - - .08 30 .02 .05 Service centermarkets .04 .02 .02 .02 .10 .Ok .03 .03 .03 .12 30 .Oh .08 S ub-total .10 .02 .02 .02 .16 .12 .03 .03 .03 .19 30 .06 .14 Contingencies .1k .09 .09 .08 .1O .16 .11 .11 .10 .k48 47 .22 .25 Total 2.22 1.66 1.68 1.60 7.16 2.66 1.Q9 2.02 1.92 e.59 39 3.35 5.2k U Totals were added before figures were rounded. T/ Includes Conservation, Buildings (except for ranch), Surveys, and Land Allocation. 3/ Includes Headquarters, Unit Service Centers, Extension, Training, Marketing, Evaluation, and Credit Administration. i Less than K 5,000. 3/ Less than $5,000. April 12, 1971 - 14 - B. Proposed Financing 5.03 An IDA credit of US$7.25 million would be made to Government for 84% of Phase II costs. US$3.35 million, or 46% of the credit would cover the estimated foreign exchange costs. The balance of US$3.90 million or 54% of the credit would finance 74% of local currency costs. The Government contri- bution of US$0.94 million (11% of total Phase II costs) would be made from budgetary sources, while the farmers' contribution of US$0.4 million (5% of total project costs) would be made through the cash purchase of incremental seasonal farm inputs. During negotiations, assurances were obtained from Government that all funds needed for the Phase II would be made available in advance and in block form based on quarterly estimates prepared by the program manager. In addition to budget expenditures, the program manager would be authorized to maintain separate revolving funds financed initially from the credit for the procurement of farm inputs for cash and credit sales to farmers. If Government requires payment of import taxes on items included in Phase II costs, such taxes would be added to Government's financial con- tribution to LADP costs. Phase II would be financed as follows: K Million US$ Million % Government 0.78 0.94 11 IDA Credit 6.04 7.25 84 Farmers 0.33 0.40 5 Total 7.15 8.59 100 5.04 It has been necessary to start development of the LADP ranch to prevent delays in livestock development that would be included in Phase II. It is recommended, therefore, that the cost of ranch development begin- ning October 1, 1970 up to the signing of the Phase II credit prior to Phase II signature, amounting to US$105,000 be retroactively financed. The existing project authority for Phase I has followed satisfactory procure- ment procedures. C. Procurement 5.06 Procurement of vehicles, machinery, equipment, fuel and incremental credit supplied fertilizers valued at US$1.62 million would be subject to international competitive bidding, except for individual tenders totalling less than US$25,000. Phase II's building program of housing and stores costing about US$900,000 would be too small to attract international competition because of the small size of individual contracts. These would be subject to local competitve tender. There is a sufficient number of local contractors to ensure an adequate degree of competition. All Govern- ment tenders, local and international, would be processed by the Central - 15 - Tender Board. The Board's procedures are satisfactory. Roads, boreholes and rainfall diversion channels would be constructed under force account by the project authority. D. Disbursement 5.07 Disbursement of the IDA credit would be made against 88% of the cost of categories of expenditure (Annex 9, Table 2). The IDA credit would not include the cost of working capital for farm inputs to be purchased for cash from the project authority. US$0.42 million would remain unallocated and would be disbursed to meet contingency requirements. Expenditures would be evidenced by contracts, shipping documents and certified records of expenditure. Any surplus credit amounts would be cancelled. Estimated dis- bursements of the credit over the four-year project period are shown in Annex 9, Tables 1 and 2. E. Accounts and Audit 5.08 LADP accounts would be maintained by the project headquarters for all project expenditures, farmers loans and cash sales of inputs. In addition, ranch expenditures and receipts, 1/ and the credit and cash sales funds would be audited separately. The accounts would be maintained accord- ing to the breakdown of project estimates in Annex 8. These accounts would be audited annually by the Auditor General. An assurance was obtained during negotiations that audited accounts of project expenditures would be sub- mitted to the Association within six months after the close of the financial year. 5.09 The Agricultural Development and Marketing Corporation (ADMARC), formerly PFB, would maintain accounts for funds on lent to it under the project. Audit of these accounts would be carried out by independent auditors acceptable to ADMIARC and the Association, and assurances were obtained during negotiations that audited accounts would be submitted to the Association within six months of the close of the Board's financial year. VI. ORGANIZATION AND MANAGEMENT A. Organization 6.01 Phase I is carried out by a section of the Ministry of Agriculture andI Natural Resources (MANR) headed by a program manager (an expatriate Agricultural Development Service staff member). The manager is responsible 1/ Including a valuation of fattening stock supplied to project farmers on credit. - 16 - to the Ministrv's Permanent Secretary through the latter's Chief Agricultural De^velopment Officer (CADO). While project management at section level is excellent, the chain of command above the manager leads to innumerable delays and problems. With initiation of a second phase, changes are needed. Apart from streamlining the policy making process, changes would be made with the purposes of: (a) obtaining the support and full cooperation of the increasing number of Government: agencies involved in LADP operations: and ensuring that after the conclusion of the development phases, farmers would be provided with the support necessary for the generation of estimated project benefits; and that project infrastructure would be maintained satisfactorily; and (b) integrating technical program management with the political administration of the program area. 6.02 The Project Manager would be made responsible directly to an Undersecretary of MANR. There would be a Liaison Committee under MANR to assist the Ministery in coordinating all aspects of the project, to review quarterlv progress of the project and to ensure close cooperation of all interested organizations. The borrower would establish this Liaison Committee within 12 months of the date of the credit agreement. Members of this committee would be representatives of the departments of MANR and of other concerned Ministries, such as Treasury, Local Governments, Works, and the Cabinet. Plans to provide support service in the program area subsequent to the development phases should be formulated and activated well before the end of Phase II of the project. 6.03 The Phase I and II projects involve heavy investments in infra- structure - buildings, roads, conservation works, and boreholes. Buildings are either ADMARC property and would be maintained by ADMARC, or housing and offices which would be taken over by MANR. The maintenance of water supplies, roads and soil conservation works are, in Malawi, the responsibility of local Government Councils. Present program area taxation levels are inade- quate to meet the financial burden created by program-developed infrastructure without Central Government contribution. The increase in production and pro- ductivitv in the program area would permit an increased level of taxation, and propram participants should contribute to the maintenance costs of the improved infrastructure development from which they benefit. 6.04 At project authority level, management would continue to be exer- cised by the project manager at Lilongwe. Changes would be made at this level, in particular the appointment of a financial controller and chief ag- ricultural credit officer, and creation of five management divisions: Man- agement Support, Development Services, Construction, Training and Developed Areas (see Annex 10). Provision is made under the project for the employ- ment of four Malawian management trainees. They would be employed as as- s- stants to the Prolect Manager, Financial Controller, Evaluation Officer, ar;d the Senior Conservation and Planning Officer, who initially would all - 17 - be expatriates. The trainees 'ould work with each of the above officers in turn, for six months, after which they would be considered for permanent positions within the program. At the field level, the program would be or- ganized on a unit basis; each unit would be about 20,000 acres and would be run by a development officer. 6.05 The above arrangements for program management are not necessarily final. At Lilongwe a continuous process of developing and testing systems is occuring and by the time the final phase of development is completed, it is anticipated that an administrative organization geared to the needs of the situation would have evolved. An assurance was obtained during negotiations that before June 30, 1972, Government would submit for IDA's approval its detailed proposals for continuing LADP services, including plans for a central credit agencv, and maintenance of infrastructure after the development phase. Government would establish a time schedule for implementing these proposals which would be acceptable to IDA. B. Staffing 6.06 Problems are not anticipated in filling project senior staff posi- tions, since the majority of staff emploved under the Phase I project would be retained for Phase II. Government continues to be willing to appoint ex- patriate staff when necessary, and there should be no difficulty in filling the new posts created under the Phase II project. During negotiations, as- surances were obtained that appointments to the posts of Project Manager, Financial Controller, Chief Agricultural Credit Officer, and Ranch Manager would be mutuallv acceptable to Government and the Association and would be a condition of effectiveness of the Credit. Also, assurances were obtained that the terms of reference and conditions of employment of these officials would be mutually acceptable to Government and the Association and would be a condition of effectiveness of the Credit. 6.07 Phase TI middle level management posts would be filled by promoting Phase I staff, and their positions together with new ones created under Phase IT would be filled by Bunda 1/ graduates and prolect staff successfully completing an upgrading course at Bunda. Junior extension staff would be recruited from Colby 2/ and credit assistants would be secondary school leavers who would receive in service training. 1/ The Agricultural Faculty of the University of Malawi offering a five- year Degree course and a three-year Diploma course. 2/ School of Agriculture, offering a two-year course leading to a certificate of Agriculture. - 18 - C. Farm Inputs - Credit and Cash Sales 6.08 Fertilizers, seeds, insecticides, fencing materials, maize shellers, work oxen and implements, fattening cattle and tree seedlings would be made available to program farmers by the project authority on credit and for cash. The total value of such inputs is expected to increase from about K 400,000 annually in 1971 to about K 950,000 in 1974. About 55% of seasonal inputs and all work oxen, implements, fattening cattle and tree seedlings would be supplied on credit. 6.09 Individual credit accounts handled by the project would increase from 5,000 to 14,000 during the project period, including a small number of loans to registered creditworthy farmers' groups. Individual loans would be given for not more than 70% of a farmer's seasonal credit requirement, and it is expected that the average seasonal crop loan would decrease from K 38 to K 31 as farmers' cash incomes increase. 6.10 After 1972-73, the sale price of all inputs would include a minimum markup of 10% to cover handling charges; 10% interest on seasonal, and 8% interest on medium-term loans would be charged. 6.11 Unit credit staff would maintain credit records, authorize credit sales and collect bad debts, while extension staff would provide technical supervision. As areas are developed each farmer would be registered at the service center market through which he would obtain his input supplies, and to which, if he received project credit, he would be obligated under the terms of his loan agreement, to sell his produce. Credit repayments would be collected by ADMARC market staff and paid into the credit fund at project headquarters. ADMARC would be reimbursed the cost of debt collection, and during negotiations an assurance was obtained from the Government that ADMARC would collect such repayments at its markets. The policv of FMB not licensing buying agents in the developed area, would be continued and an assurance to this effect would be obtained during negotiations. Feeder stock issued on credit would be collected subsequently by project staff, sold at Government operated markets, and credit repayments deducted from the animals' sale price. 6.12 Cash sales would be mainly for tobacco and groundnut fertilizers, but some hybrid maize seed, fertilizers, insecticides and ranch produced feeder stock would be purchased also for cash. All input sales whether for cash or on credit would be handled by project marketing staff and the project authority would be responsible for input procurement. - 19 - VII. PRODUCTION, MARKETS, FARMERS BENEFITS AND GOVERNMENT BENEFITS A. Yields and Output 7.01 The large number of farm families (about 52,000) involved in the Phase I and Phase II makes variations in farm management standards, and yield inevitable. For LADP calculations it was assumed that project farms would fall into five maize and four groundnut production categories, details are given in Annex 2. Category 1 maize farmers who would comprise 45% of all maize farms by 1979/80, are expected to obtain average yields of about 3,000 lb/ac by using hybrid seed and fertilizer, while category 5 farmers are expected to ignore project advice and assistance and thus obtain the present program area average yield of 1,000 lb/ac. The overall average maize yield from the Phase I and Phase II project areas is expected to increase from 1,100 lb/ac to 2,000 lb/ac by 1979/80. The feasibility of achieving such an average is demonstrated by yields of 7,000 lb/ac obtained on trials in the area and the average yield of 3,400 lb/ac obtained in the 1969 maize growing competition. 7.02 Category 1 groundnut farmers using improved seed and good manage- ment practices are expected to average 800 lb shelled nuts/ac and category 4 farmers, the present program area average of 500 lb. Average groundnut yields are expected to reach 725 lb/ac by 1979/80. 7.03 Tobacco yields are expected to increase to 500 lb/ac by 1979/80. Presently, they average 200 lb, but yields in excess of 1,000 lb are Already obtained by better farmers following advice and using necessary in- puts. B. Markets and Prices 7.04 Except in drought years, it is expected that the Phase I and Phase II project areas will produce an exportable surplus of 89,000 tons of maize/annum from 1978 onwards. Export market prospects are good, and on the basis of the Bank Economics Department analysis, it is expected that the average long term price of maize, fob Malawi in terms of 1970 dollars, would be K 27.0 ton (US$32.4). 7.05 The low oil content and large and uniform size of the groundnuts makes them a well established export crop. It isassumed, therefore, that the additional groundnut production of about 22,800 tons annually by the two phases after 1979/80 would be absorbed easily by world markets, without adversely affecting world prices. The long term groundnut price projection in terms of 1970 dollars is K 149.0 ton (US$178.80) fob Malawi. - 20 - 7.06 ADMARC, through its close contact with tobacco manufacturers abroad, can adapt the production of its registered growers to potential demand. Under these circumstances, it is assumed that the present price of K 0.29/lb (US$0.35) would be maintained. 7.07 Beef production from the two phases is expected to increase to some 1,714 sh tons annually from 1973 onwards. Demand data indicate that this increase will be consumed locally (Annex 11, para 3), and that the minimum long term real prices would remain at 1969 levels. The latter averaged K 7.3/100 lb liveweight. Although a strong local demand for beef exists, the key to successful marketing will be efficient operation of the Cold Storage Company (CSC). CSC, while operating profitably, would be critically short of working capital; as the CSC is wholly owned by Govern- ment, an assurance was obtained during negotiations that Government would ensure that CSC had adequate working capital to purchase project fattened cattle. C. Farmers Benefits 7.08 The variation in size and cropping patterns of program farms and the different farmer responses to project activities preclude establishing typical farm budgets, but cropping patterns are shown in Annex 2. The range of individual net incremental incomes would be from zero in the case of the unresponsive farmer, to about K 100 (US$120) per annum in the case of the farmer fully participating, producing stall fattened cattle. The average net income from a 10 acre holding, including subsistence maize consumption of 2,700 lb/family for the 52,000 Phase I and II farmers, is estimated to increase from about K 80 (US$96) at pre-development to about K 142 (US$170.4) at full development. These increased incomes have proved satisfactory incentives in the case of Phase I development. D. Government Benefits 7.09 At present only poll taxes are collected from program area far- mers, and there are no export or other taxes on production. Government considers it impractical to raise the poll ta:es or to impose an income tax on program farmers, and believes that revenues; to meet program expenditures, including recurrent expenditures, can be generated by the existing tax system, which is based on taxes on consumer gioods. The program cash flow for the Phases I and II projects at Annex 12 shows that Government would recover all program expenditures by 1978/79, and a surplus uf about K 570,000 (US$680,000) over the 20 year program life from margins on farm input sales, ranch profits, profits on credit. operations and ADMARC operating surpluses from handling program area production 1/. In addition, it is estimated that 1/ It has been Government's practice to use \DMARC's (formerly FMB) operating surpluses as a source of Go"-rnment revenue. - 21 - at full development the Phase I and Phase II areas would generate an annual national income increase of some K 4.52 million (US$5.43 million) 1/, which would result in government revenues from consumer taxes amounting to about K 868,000 (US$1,041,600) 2/, and a total revenue for the program life of K 12.32 million (US$14.78 million). VIII. ECONOMIC BENEFITS AND JUSTIFICATION 8.01 Primary benefits from the Phase I and Phase II would be the increased production of maize, groundnuts and beef and resultant net annual foreign exchange earnings or savings amounting to about US$5.0 at full development. Other benefits would be the demonstration of improved agricul- tural techniques, and institutional development. Further benefits would be generated by the construction of about 1,200 miles of road and 350 boreholes, and the conservation of natural resources. The program would make a significant contribution to Malawi's economic development through demonstrat- ing a method of land reorganization and registration. 8.02 Eased on expected world prices for maize and groundnuts and the programs primary benefits the return to the economy from combined Phase I and Phase II project investments is 13% (see Annex 13). The calculation excludes any allowance for family labor since project benefits have been calculated on the incremental value of production, which would accrue mainly from the increased use of non-labor inputs; while additional labor would be required the amount would be small and alternative employment opportunities are negligible. Therefore, the opportunity cost of the additional labor has been taken as zero. 3.03 The rate of return has been tested for sensitivity at various cost and revenue (price/yield) levels. The return is most sensitive to variation in groundnut revenue since incremental groundnut production makes the greatest contribution to project benefits. At constant project costs and revenues from maize and livestock, a 20% reduction in groundnut revenue reduces the rate of return by about 3%. A 10% increase in farm input costs with constant revenue levels, reduces the rate of return by about 1%. Details of the sensitivitv analysis are given below and the assumptions made are described at Annex 13. 1/ Direct income of K 3.2 million (US$3.88 million) times a multiplier of 1.4. 2/ Assuming a marginal revenue/monetary GDP ratio of 20%. - 22 - --------------- As Percentage of Program Estimates -------------- Project Develop Farm Maize Groundnut Livestock ment and Adminis- Inputs Incremental Incremental Incremental Rate of tration Costs Revenue Revenue Revenue Return 100 100 100 100 100 12.96 100 100 90 90 90 10.35 100 100 100 80 100 10.07 100 80 80 80 80 9.58 100 110 110 110 110 14.44 100 110 100 100 100 12.02 8.04 While the economic rate of return from investment in the Dzalanyama ranch are included in the above, it has been estimated separately, also. The estimated financial rate of return from ranch investments, taking into account a residual value of the ranch herd, would be about 10%; additional economic benefits would accrue from stall fattening by project farmers of ranch pro- duced feederstock. Taking into account these benefits, the economic rate of return on ranch investment would be about 14%. IX. RECOMMENDATIONS 9.01 During credit negotiations, assurances were obtained from Govern- ment that: (a) that project roads would be built to maximum width of 24 ft and 16 ft (para 4.03); (b) should project staff be unable to meet land survey targets, Government would let survey contracts on terms mutually acceptable to the Government and IDA, (para 4.08); (c) government would make available all funds needed for the project in advance and in block form on the basis of quarterly estimates prepared by the Program Manager (para 5.03); (d) government would submit audited accotnts on project expenditures within six months of the close of the financial year, (para 5.08); (e) the Agricultural Development and Marketing Corporation's accounts on project expenditures would be audited by independent auditors acceptable to the government and IDA, and that copies of the audited accounts would be submitted to IDA within six months of the close of the financial year. (para 5.09); - 23 - (f) that before June 30, 1972, Government would submit for IDA's approval. its detailed proposals for continuing project serv- ices and maintenance of infrastructure (para 6.05); (g) during the IDA credit disbursement period, appointments to the posts of Program Manager, Financial Controller, Chief Agricultural Credit Officer and Ranch Manager, their terms of reference and conditions of employment would be mutually acceptable to Government and IDA (para 6.06); (h) ADMARC would assist the program management in collecting credit repayments (para 6.12); (i) no buying agents would be licensed by ADMARC to market produce in the developed parts of the program area (para 6.12); and (j) the Cold Storage Company would have adequate working capital to purchase project fattened cattle (para 7.07). 9.02 A condition of effectiveness and loan disbursement would be that the Program Manager, Financial Controller, Chief Agricultural Credit Officer and Ranch Manager had been appointed with terms of reference and conditions of employment mutually acceptable to Government and IDA (para 6.06). April 16, 1971 ANNEX 1 Page 1 MALAWI LILONGWE LAND DEVELOPMENT PROGRAM Phase II Project Crops, larketing, Prices and Exports A. The Farmers Marketing Board Responsibilities 1. The Farmers Marketing Board (FMB)-/ is responsible for marketing much of the agricultural output of the Lilongwe Project, and its facilities, organization, viability, and efficiency are essential to the success of the project. 2. FMB was established when Malawi became independent in 1964, and is a statutory corporation wholly owned by Government. Its Board of Directors consists of 14 members; four are senior government officials, four are members of Parliament, and one is the Executive and Chairman of the Board. Although autonomous in its day to dav operations, RB is under the general direction of the Minister of Agriculture and Natural Resources (MANR). Responsibility for overall administration is delegated to an expatriate manager, and a Malawian Regional Manager, located at Lilongwe, is responsible for the Central Region. r-FM is the main purchaser for export and domestic resale of all important cash crops except for estate grown tea and tobacco. Although it has the right to purchase all crops surplus to producer needs, in practice it does not exercise this right, allowing farmers to barter among themselves and to sell to local retailers. 4. The reqponsibilities of FMR are comprehensive. Apart from the purchase, storage, processing and disposal of produce grown on African small- holdings, they include the maintenance of a price stabilization fund, the maintenance of food reserves to meet possible local shortages, the supply at cost or at subsidized prices of agricultural equipment, the sale of seasonal supplies and provision of seasonal credit to farmers, and marketing petroleum. Marketing System 5. PTM operates about 600 markets throughotut the country, (within the program area there were 53 markets in 1969-70 as well as FMB's main 1/ This organization's name has recently been changed to Agricultural Development and Mlarketing Corporation. ANNEX 1 Page 2 Lilongwe Depot). FMB markets handled 17,992 tons of groundnuts, 16,431 tons of maize, and 5,551 tons of tobacco harvested in 1969. 1/ There are two types of markets; permanent and bush (temporary), and FME also licenses traders to buy maize and to deliver thJ- to its main depots. The permanent markets have proper facilities for grading, storage, weighing and buying commodities. Bush markets consist of a temporary buying shed, an enclosure, a cash register and a spring scale. Purchases must be moved promptly from bush markets to more permanent storage. Purchases by type of market and the number of markets of each type are shown below: Commodity Permanent Markets Bush Markets Traders Total Number Quantity Number Quantity Quantity (tons) (tons) (tons) Tobacco 3 5,551 10 - - 5,551 Maize ? 1,737 ) 54 14,640 16,431 ) 7 ) 43 Groundnuts ) 4,739 ) 13,253 - 17,992 These data show that most maize moves through traders, most of the groundnuts are bought at bush markets, and all of the tobacco is marketed at permanent markets. 6. Tobacco is delivered by farmers to FMB markets at a fixed price. In past years, farmers have complained that the price has been too low. In 1969, the system was changed and FMB instituted a two-stage pricing system for tobacco. A fixed price was paid the farmer when the tobacco was delivered and after the tobacco was sold, an additional return was paid to the farmer. Farmers prefer this latter system and are now filling all their market quotas. 7. Tobacco is graded by FMB and then moved to auction floors. On the auction floor, representatives of buying companies place their own grades on the tobacco and bid against each other for the tobacco. The purchaser then exports the tobacco. 8. Surplus production of maize, which is not bartered or traded to local shops, is purchased by FMB or its licensed traders at fixed prices. Currently FMB pays licensed traders K 0.80 per bag (200 lb) more than it pays farmers who deliver maize to its local markets. FMB supplies small quantities of maize to local millers and operates its own mill. Foreign trade data indicate that, in recent years, most of FMBE's purchases of maize have been exported, as shown below. Export markets are principally Western Europe and Zambia. 1/ 1970 harvest data were unavailable at the time of writing. ANNEX 1 Page 3 Maize: FMB Purchases and Exports (thousand tons) Year FMB Purchases Exports 1964 31 15 1965 24 1 1966 62 49 1967 100 101 1968 92 96 1969 60 52 9. Surplus production of groundnuts is shelled and delivered by farmers to FMB local markets at a fixed price. As shown below most of the surplus groundut production is exported to Western Europe by FMB. Groundnuts: FMB Purchases and Exports (thousand tons) Year FMB Purchases Exports 1964 20 17 1965 25 21 1966 46 16 1967 47 56 1968 25 33 1969 41 38 Financial Condition 10. In 1966, FMB made a small profit and its commodity stocks more than doubled, rising from K 3.0 million to K 6.2 million. FMB's books show stocks at the end of a fiscal year as beginning stocks at the start of the new fiscal year. The value of the ending stocks are deducted from expenditures during the old fiscal year and the value of beginning stocks are added to expenditures for the new fiscal year. In 1966, the increase in groundnut stocks was valued at K 3.2 million or about the same as the increase in the value of stocks of all commodities. Liquidation of these groundnut stocks took about three years. Even though FMB started reducing its stocks of groundnuts in 1967, it accumulated stocks of tobacco and maize (Table 1). Carrying large stocks of commodities from one year to the next is expensive and dangerous. There is a risk of sharp price declines, as occured in 1967 for groundnuts (see paragraph 28), and certain storage losses. In addition, interest charges (prime rate of 9% per annum in Malawi) for carrying such large stocks are costly. ANNEX 1 Page 4 11. Expatriate management was brought into FMB in 1968 and the efficiency of the organization improved. An analysis of the Boards accounts from 1964 to March 1970 in the table that follows illustrates the improve- ment after 1967. FARMERS MARKETING BOARD Analysis of Stocks and Marketing Accounts 15 Months Year to ending 1964 1965 1966 1967 3/31/69 3/31/70 Selling expenses as percentage of income 4.7 4.0 7.0 8.9 7.8 4.4 Selling expenses as percentage of sales at cost 7.3 6.4 10.9 10.7 11.5 8.2 Administrative and overhead expenses as percentage of income from sales 11.1 10.6 10.2 9.3 9.3 6.5 Administrative and overhead expenses as percentage of sales at cost 17.1 17.1 16.0 11.1 13.6 8.5 Stock purchasing expenses as percentage of stock purchases 23.7 24.6 21.0 25.4 36.8 31.3 Sales income as percentage of sales at cost 153 161 156 120 148 185 Profit (loss) as percentage of sales income 5.9 5.3 0.3 (23.3) 0.8 20.5 12. One of FMB's responsibilities is to accumulate a commodity price stabilization fund, which is held in the form of cash and liquid assets. The management estimates that a stabilization fund of K 5 million is needed; and this appears to be a satisfactory estimate. On March 31, 1970, FMB had K 3.8 million in this reserve (Table 2). These funds are held as cash and short-term investments. 13. In 1970, due to low domestic production caused by poor weather FMB imported 100,000 tons of maize at an average cost of K 6.65 per 200 lb bag. It is now selling this maize at K 4.5 per bag. Losses on this import ANNEX 1 Page 5 operation together with FMB investments in large-scale direct farming, will reduce the stabilization reserve to less than K 2.0 million by March 31, 1971. 14. The FMB trading account shows research contributions, seed distrib- ution costs, and losses on the Toleza Farm (seed production) of ME 122,845 for the year ending March 31, 1970 (Table 4). Of this total, losses on the Toleza Farm amounted to ME 20,718. FMB intends to Improve the management of this farm and is now trying to engage a management consultant to help improve its financial situation. 15. FMB's balance sheets show net assets of ME 4.5 million as of March 31, 1970, compared with M¢ 2.5 million a year earlier (Table 5). On March 31, 1970, current assets exceeded current liabilities by ME 40,897. Cash deposits and cash on hand totalled ME 1.0 million and accounts receiv- able were ME 0.7 million. Maize 16. Maize production in Malawi is estimated by FMB, the Department of Agriculture and Natural Resources, and the Economic Planning Division at 1.1 to 1.4 million short tons per annum. Most of the maize produced in Malawi is consumed within the country. A small proportion has been exported in the past (see table below). Malawi will need to export larger quantities of maize as supplies increase because of anticipated production increases in the Lilongwe project area. MALAWI: Exports of Maize by Country of Destinations (Short Tons) Country 1964 1965 1966 1967 1968 1969 Consignment 5,600 Zambia 34,784 Congo (Kinshasa) 20,000 Japan 1,120 Netherlands 20,720 11,200 United Kingdom 15,080 1,120 28,896 78,960 84,672 11,760 Other Countries 4 /1 _ _ _ _ Total 15,084 1,120 48,896 100,800 95,872 52,144 /1 Less than 0.5 tons. 17. In the past, Malawi has exported white maize to Europe at a premium of up to 23% over prices for U.S. maize. This maize was used mostly for distilling purposes. Some maize was exported to African countries fetching export prices somewhat lower than these obtained in Europe. In the future, premiums and discounts, depending on destination, are expected to ANNEX 1 Page 6 counterbalance each other and the average export price will probably be in line with these of US No. 2 and No. 3 maize cif European ports. 18. Consistent quotations for Malawi maize, cif London, are not avail- able, but prices for US No. 2 and 3 in 1975 are projected by IBRD at around K 48.4 (US$58.08). Based on US maize prices, it is assumed that the farm gate value of maize would be about K 20.0 per short ton for Phase II; about the same as from 1968 through 1970 and about K 3 below that of 1967. The difference being made up by K 21.6 for shipping costs from Malawi to Europe and K 7.0 per short ton for internal marketing (see table 6). 19. In 1969, Malawi's maize exports were 52,000 tons, compared with total world trade in coarse grains of 43 million tons in 1968-69, including a maize trade of about 29 million tons. World trade is expected to grow because of an increasing demand for coarse grains generated by a growing demand for livestock products. One projection of world coarse grain trade 1/ shows a growth in international trade of 3.5% a year or more from 1964-66 to 1980. This forecast indicates an increase in world trade in coarse grains of more than 20 million tons from the 1968-69 level. Malawi should be able to export its surplus at the world prices (quoted above) with little difficulty. 20. Normally, Malawi imports little maize - less than 500 tons per annum in 1964, and 1966 to 1969. However, in years of crop failure, Malawi has been forced to import more maize and in 1970, imports were about 100,000 tons, and in 1965 7,300 tons. Production of maize in the Lilongwe program area is expected to increase sharply and because of improved production methods the effects of poor weather conditions in the program area will be lessened. Consequently, dangers of severe under-supplies should diminish. The program would produce about 25,000 short tons of surplus maize in 1971- 72 rising to 83,000 tons in 1978-79 and to about 89,000 tons from 1978-79 onwards. If this surplus is exported at an fob price of K 27 per ton (see Table 6), project export earnings from maize would increase from about K 672,000 to K 2.4 million between 1971-72 and 1978-79 (Table 8). Net export earnings are discussed in paragraph 26. Groundnuts 21. Groundnuts grown in Malawi are in demand for confectionery pur- poses (cocktail nuts) and sell at a premium of about US$20 above groundnuts used for oil and meal purposes. The demand for confectionery groundnuts is growing stronger than the demand for crushings. It is unlikely, however, that the premium will increase appreciably since importers will substitute 1/ Rojko, Anthony S., and Mackie, Arthur B., "World Demand Prospects for Agriculture Exports of Less Developed Countries," "Foreign Agricultural Economic Report No. 60; U.S. Department of Agriculture, Economic Research Service, Washington, D.C., June 1970. ANNEX 1 Page 7 groundnuts used for oil crushing for confectionery purposes if the premium increases. Consequently, prices for confectionery groundnuts are influenced by price developments for all other groundnuts. 22. Prices for groundnuts varied from K 122.0 per ton to K 157.2 per ton fob Malawi as shown below. The ITRD price projection for groundnuts, fob Malawi, centered on 1975, is K 149.0 (US$178.8) per ton. Marketing costs are about K 27.2 per short ton, leaving a net price of about K 121.8 per ton or K 0.06 per lb. Such a price is about K 0.02 per lb higher than prices now being received by farmers and reflect FMB profits from the marketing of groundnuts. Costs of shipping groundnuts from Malawi to London are about K 21.4/ton and the cif London price is expected to be about K 170.4/ton (Table 7). Groundnuts: Prices, fob Malawi (ME and K/short ton) Year ME K 1964 64.0 128.0 1965 78.4 156.8 1966 78.6 157.2 1967 61.0 122.0 1968 69.8 129.6 1969 74.0 148.0 Source: National Statistical Office, "Annual Statement of External Trade", Zomba, issures for 1964 through 1969. 23. Exports of groundnuts have doubled since independence in 1964, as shown below: MALAWI: Exports of Groundnuts by Country of Destination (Short tons) Country and Area 1964 1965 1966 1967 1968 1969 Consignment - 280 - 641 - - Europe: United Kingdom 12,689 17,357 13,351 40,654 26,317 33,424 Netherlands 644 57 97 1,293 3,674 3,837 Italy 908 867 526 8,818 374 - Spain 710 255 392 108 560 502 Other 393 731 233 483 172 - Total Europe 15,344 19,267 14,599 51,356 31,097 37,765 Africa 169 563 788 875 260 - Asia 1,188 260 391 1,772 36 - Other 672 787 601 2,265 1,671 - TOTAL 17,373 20,877 16,369 56,268 33,064 37,765 ANNEX 1 Page 8 Implementation of Phase II of the Program, is expected to increase ground- nut exports by some 23,000 sh tons to a total of 31,500 tons in 1970. At an fob price of K 149.0 per ton (Table 7) gross export earnings should rise to K 4.7 million by 1981 (Table 9). Net export earnings are discussed in paragraph 26. 24. Almost all of the tobacco produced on the Lilongwe project is exported. Fire-cured tobacco is uused mainly for plugs, rolls and snuff. These are products which are gradually declining in use. On the other hand, world production of fire-cured tobacco has declined in recent years (Table 10), thus stabilizing the market. The price projection for this tobacco is about K 0.29 per lb fob Malawi. Marketing costs are around K 0.11 per lb, leaving an economic return of about K 0.17 per lb. The price paid farmers in 1969-70 was about K 0.08 per lb. The balance of K 0.09 per lb goes to FMB profits. 25. Production of tobacco on the Lilongwe Project is not expected to increase above 5,500 tons. Therefore, no benefits from larger exports are projected. Foreign Exchange Earnings 26. Net foreign exchange earnings are expected to increase sharply because of larger exports of groundnuts and maize, under phases I and II of the project (paragrah 24 and 21). Earnings are expected to increase from K 0.3 million to K 6.2 million per annum between 1971-72 to 1980-81 (Table II). In 1970-71, the foreign exchange used by the project will exceed its foreign exchange earnings by K 0.2 million. Net foreign ex- change earnings from 1970-71 through 1980-81 will total K 37.3 million (Table 11). 27. Gross foreign exchange earnings of these phases of the project are estimated to be between K 506,000 and K 7,092,000 per annum from 1970-71 to 1981-82. From these earnings, current foreign exchange ex- penditures are deducted from K 744,000 to K 925,000 per annum. The ex- penditures cover imported fertilizer, pesticides, equipment and materials for development, expatriate salaries and allowances. Conclusion 28. When managed adequately, FMB is an efficient organization. Sufficient funds result from its operation (about K 4.1 million profit in the 1970 fiscal year) to finance expansion of marketing and storage facilities required by larger production from the Lilongwe Program, 4.1 million cu ft over nine years costing K 1.22 million. Such profits are also sufficient to provide a satisfactory stabilization fund. However, the funds accumulated under FMB's operations are often siphoned into un- economic investments. If such investments are made in the future, an adequate stabilization fund will not be maintained and funds will not be ANNEX 1 Page 9 available tc finance the needed expansion of marketing functions. Effi- cient management is essential for the continuing success of the organiza- tion and present management levels must be maintained if losses are not to replace profits as they did in 1967, when management standards declined. 29. Demand for the additional output of maize and groundnuts result- ing from the Lilongwe Program appears to be sufficiently strong to significantly expand the foreign exchange earnings of the country. The economic benefits from this additional output will be quite important to the future of Malawi. February 24, 1971 ANNEX 1 Appendix 1 MALAWI LILONGWE LAND DEVELOPMENT PROGRAM, PHASE II PROJECT Export Market Prospects and Prices for Malawian Maize 1. Malawi's competitive position as a maize exporter improved signi- ficantly after the government purchase price guarantees for maize were reduced (in dollar terms) in 1968 and 1969. Although FMB transactions in maize were unprofitable during 1964-68, profits were earned in 1969 on export sales. At recent and projected selling prices for maize in Malawi, maize of this origin can be delivered to the United Kingdom and other important markets at prices fully competitive with current and project prices for equi- valent grain supplied by major exporters. 2. Under a wide variety of defensible assumptions, imports of maize and other coarse grains by Western African and West Asian countries are projected to increase between 4.4-5.8 million tons by 1980, and Japan's imports alone should grow by 6.5-10.4 million tons over the next ten years. Although prospective increases in imports by Western European countries are much smaller, Malawian white maize offered at competitive prices should retain its share of 50-80 thousand tons a year of this market. 3. During 1979-81, prices for U.S. No. 243 yellow corn, c.i.f. London or Liverpool, are projected to average between $55-57 per short ton (expressed in terms of 1970 dollars). Price premiums for white maize over U.S. yellow corn in the United Kingdom are traditional and should continue. These premiums should vary between 5-15 percent, depending on how much white maize is offered for export by the Republic of South Africa, which is the single large seller, and on the season of the year in which Malawi ships its grain. Export prices (f.o.b. Limber) for both yellow and white maize consigned to neighboring countries and Japan during the 1980's should compare favorably with prices received on sales made to the United Kingdom. Trade Policies and Export Projections Division Economics Department February 19, 1971 M A L, A W I FAMI6RS' 6hAOM7T211; 912.2 - PILD3 I- 7132) Trading A-ecc-ts Par tee yeac- 1966 to 196)6 1 95 _6_ 19Y 6 7 - 19" 66d_ 19Y 693 (Year aiMding 9wrar 31, 197:) loire .ecoatrrno 'obo,ar _ Oither Total '.ai-e QZroa:c botc Tob.acco (tlier l _cinG Oacoc Groundnats Ibobacco Other Total MaK-e Oroood-tan TobaccO Other aotal Bossbog toO Tirece inferrer Bags, twice -n1 Pe-o-os 65,37.' 19,219 61902 145,5)3 28'79 121,251 53,425 35.960 213,915 11,132 3-,557 11,608 12,545 74,952 6,260, 1309,215 5,112 28,41L 16,991 GradinE, gin6, end bailing 14,027 265,793 74,334 354,744 - - - 33,516 276,947 76,4-1 356,973 - _ 45,613 184i,6 79,351 309,575 _ _ 49,466 139,654i 1<3,d9p 313,032 T-anopnct oP crfpa i3<,36i 100,37- 97,660 387,yo) 1L0 ,6 257±,P4, 105,236 n4,3p4 532,b6O 146,3b5 131,36< 8 o,n42 54,714 451,5131 54,333 194,865 45,io 95,95-' 3e-:1,321 0cc-I diotribnt-rc 2,110 3,675 1437) 21,361 _ _ . 1,767 2,375 45,453 4?,615 1,111 i4 1,154 65,5yl 67,369 136 132 18,756 62,411 81,53.)7 cth- 651,139 52,34: 177,1(3 320,31, -6,177 135,1 15 13D,431 - 6669 531,q31 36,71< l1,794 65,325 133,127 366,960 1o6,867 147,359 155,176 211,953 621,360 MatcaG 333,10 4(1,295 424,543 1,2<4,947 221,141 549,_:7 572, 11. I ,37b r715,753 135,356 356, l17 331,175 345,376 1,'70,786 167,629 5(11,057 3o3,807 522,618 1,555,111 Prcb,ec^rno ?,05,932 1,422,41' 0,1.1, 1< 9,143,633 1, ,,10 2,359,517 1,6.1, 352 1,320,04P ,74,2J; 1,-87,-,53 1,)05,445 567,447 633,555 3,694,332 788,656 1,779,825 557,618 1,691, 16 5,037,263 PloJ stcntk oa il1 0t start period <37,674 - - - 1,274,74-4 1,510,423 476,139 i,352,:91 40,) -. 686,375 365J5 6 60.9:5 1,2)0 ,7-e 336,66 702,067 3,196,507 122,192 5o,o4o 119,663 218,816 5LO,711 cccs stoob o no hne -3 of Perice 1,652,091 L0,404D 1,162,511, 3,055,3305 866,935 1,144,786 325,69- .7 _ 507 5 s>,48 135,669) 13'l,947 447,259 1,272,623 20,6 92 35,433 - - - 310,423 366,545 SellIng 1,rpacoc 1)7,73(6 12,255 316,,4'7 467,5L3 '.)5,51 33,485 * -L 1.2, (:. 7 ,55 353,5364 151,561 44,4 35 83,,L3' 632,66 2 42,3> 226,226 37,583 117,6oi 423,522 Tootei-7 rcc-cren an.l Ezns.Osc 1.087,415 1,6'95,566 3,014,533 5,397,91l 1,521,984 3,83',4297,370 bapot and Storage 16,423 5,474 4,106 65,693 4,106 1,369 17,792 114,963 Bags, Twfne and Hess(an 13,430 109,215 5,112 6,260 6,379 256 8,339 148,991 79,08C Grading, Ginning ani Baling 123,392 49,486 139,654 - 313,032 336,009 Transport of Crops 39,375 194,865 45,109 54,393 35,806 2,937 17,836 390,321 497,348 Fumlgatton 9 9,427 879 12,597 9,135 32,047 74,787 Insurance - Cash ano Crop 2,242 4,655 1,009 3,038 788 114 1,828 13,674 18,527 Seei ODstrtbution f2,116 132 18,756 108 254 41 81,407 75,945 Research Contributions and Subsidies 12,611 5,218 13,156 5,118 2,617 38,720 21,214 349,208 501,057 363,807 167,629 82,400 8,248 78,162 4,000 1,555,111 1,400,280 PURCHASE OF CROP: 896,788 1,779,825 577,618 788,658 263,407 33,229 569,919 127,819 5,037,263 3,782,648 Add: Stock on Hand at 1st April, 1969 170,557 50,040 119,663 122,192 1,400 16,800 23,342 6,717 510,711 3,196,507 1,416,553 2,330,922 1,061,088 1,078,479 347,207 58,277 672,023 138,536 7,103,085 8,379,435 Less: Stock on Hand at 31st March, 1970 252,509 35,430 20,692 4,404 7,8CC 37,560 8,150 366,545 510,711 1,164,044 2,295,492 1,061,088 1,057,787 342,803 50,477 634,463 130,386 6,736,540 7,868,724 -__ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ SELLING EXPENSES: Auction Floor Charges and Cess 31,417 31,417 35,480 Co¢issIon 1,798 4,862 210 3,189 13 10,072 54,120 Insurance 6,396 24,263 114 87 30,860 27,501 Railage, Freight and Port Charges 99,113 196,901 6,166 42,102 2,801 4,09C 351,173 619,986 107,307 226,026 37,583 42,312 6,104 4,190 423,522 ?37,C87 TOTAL PURCHASES AND EXPENSES: 1,271,351 2,521,518 1,098,671 1,100,099 342,803 56,581 638,653 130,386 7,160,062 8,605,811 SALES: 1,455,915 3,445,226 2,059,246 1,316,514 332,531 61,993 777,132 139,171 9,587,728 9,563,652 GROSS PROFIT: 184,564 923,708 960,575 216,415 (10,272) 5,412 138,479 8,785 2,427,666 957,841 ADMINISTRATION AND INDIRECT EXPENSES: (NET) 98,042 140,716 102,158 47,050 23,135 3,000 22,138 3,00C 439,239 881,699 86,522 782,992 858,417 169,365 33,407 2,412 116,341 5,785 1,988,427 76,142 ' g LOSS ON TOLEZA FARM (See Note 11) P P P L P 20,718 NET PROFIT 1,967,709 76,142 January 23, 1971 ANNEX 1 MALAWI Table 5 LILONGWE LAND DEVELOPMENT PROJECT PHASE IT - FARMERS MARKETING BOARD BALANCE SHEET AS AT 31ST MARCH, 1970. 31. 3.69 31. 3.70 £ £ CURRENT ASSETS £ £ 510,711 Crop Stocks 366,545 249,415 Stores 361,976 728,299 Debtors 665,75s _ Short Term Investments 878 888 91,814 Cash on Deposit 538,843 73,012 Cash at Bank and on Hand 449,210 1,653,251 3,261,721 CURRENT LIA8ILITIES 211,039 Bank Overdraft 234,742 Creditors and Accrued Expenses 287,638 101,960 Provisions - Provident Fund 127,988 582,844 35,103 - Leave Pay and Passages 25,271 440,897 1,070,407 NET CURRENT ASSETS 2,820,824 FIXED ASSETS AND INVESTMENTS LESS LONG TERM LIABILITIES: FIXED ASSETS 538,580 Land and Buildings - Freehold 568,460 272, 916 - Leasehold 332,290 208,041 Plant, Equipment and Furniture 200,717 25,562 Motor Vehicles 34,310 1,045,099 1,135,777 0,927 Capital Works In Progress 26,101 1,052,026 1,161,878 739,508 INVESTMENTS (At Cost) 835,445 1,791,534 1,997,323 1,437,993 353,541 Less: LONG TERM LIABILITIES 332,038 1,665,285 2,508,400 NET ASSETS 4,486,109 REPRESENTED BY: 884,059 RESERVES 1,867,441 1,624,341 WORKING CAPITAL ACCOUNT 2,618,668 2,508,400 4,486,109 ANNEX 1 Table E MALA WI LILONGWE LAND DEVELOPMENT PROJECT PHASE II Prices, Maize FMB Marketing Expenses /Sh Ton ME K Administrative and indirect expenses 0.7 1.h Buying expenses 2.8 5.6 Sundries .2 l Malawi to port 4.1 8.2 Expenses at port of loading 1.) 2.8 Ocean Freight 9.5 0. Expenses at port of discharge .5 1.0 Total 14.2 28.b Computation of Maize Prices /Sh Ton- Price, c.i.f. London 2h.2 L8.L Expenses at port of discharge .5 1.0 Ocean freight _ .5 9.0 Sundries 02 -7 Prices, f.o.b. port of loading 19.0 38.0 Expenses at port of loading 1.4 2.8 Malawi to port 4.1 8.2 Price, f.o.b. Malawi 1/ 13.5 27.0 Buying expenses - 2/ 2.8 5.6 Administrative and indirect expenses - .7 1.h Farm gate price 10.0 20.t 1/ Includes subsidies, seed distribution costs, and research contributions equal to bd/bag (K 3/bag. 2/ Includes subvention to government. January 23, 1971 ANNEX 1 MALAWI Table 7 LILONOWE LAND DEVELOPMENT PROJECT PHASE II Prices, Groundnuts FMB Marketing Expenses /Sh Ton ML K Administrative and indirect expensee 3.4 6.8 Buying expenses 10.2 ?0.), Sundries .2 .1 Malawi to port of loading 4.1 8.2 Expenses at point of loading l.l 2.8 Ocean freight .5 9.0 Expenses at port of discharge *5 1.0 Total 24.3 tt8.6 Computation of Groundnut Prices /Sh Ton Price, c.i.f. London 85.2 170.b Expenses at port of discharge .5 1.0 Ocean freight 4.5 9.0 Sundries .2 _ Price, f.o.b. port of loading 50.0 160.0 Expenae at port of loading 1.4 2.8 Malawi to port h.1 5.2 Price, f.o.b. Malawi 7h 5 119.0 Buying expenses - 2/ 10.2 20.b1 Adninistrative and indirect expenses 3.4. Farm gate price 60.9 1/ Includes subsidies, seed distribution costs, and research contributions equal to 0.ld/lb (K 0.08/lb) 2/ Includes subvention to governent January 23, 1971 ArNEX 1 MALAWI LILONGWE LAND DEVELOPMENT PROJECT PJASE II Maize: SurPlus Production and Gross Foreign Exchange Earnings Gross Foreign Total Surplus Exchange Year Subsistence Production Production jarninaR Sh Tons (K 1,000) 1968-69 t,995 6,h82 1,887 51.0 1969-70 13,635 18,830 5,195 VtO.2 1970-71 2h,135 39,635 15,200 210.h 1971-72 37,935 62,811 24,876 671.6 1972-73 )6,035 81,692 35,657 962.8 1973-7L 54,,135 100,556 L6,021 1,253.4 197I -75 62,235 119,336 57,101 1,5h1.8 1975-76 70,335 137,948 67,613 1,825.6 1976-77 70,335 1L6,053 75,718 2,04h.I 1977-78 70,335 153,816 83,)h81 2,254,0 1978-79 70,335 159,0)4 88,709 2,395.2 1979-80 70,335 159,0s 88,709 2,395.2 I At fob price of K 27/ton. January 23, 1971 ANNEX 1 Table 9 MALAWI LILONGWE LAND DEVELOPMENT PROJECT PHASE II Groundnuts: .Surplus Production and Gross Fbreign Exchange Earnings Year Surplus Gross Foreign 2! Production Exchange Eqrnings Sh Tons (K 1,000) 1968-69 873 130.0 1969-70 2,157 366.0 1970-71 h,983 742.b 1971-72 7,760 1,156.2 1972-73 11,58b 1,726.0 1973-74 16,092 2,397.8 197h-75 20,719 3,087.2 1975-76 25,257 3,763.2 1976-77 28,237 4,207.4 1977-78 29,968 4,565.2 1978-79 31,066 h4,628.8 1979-80 31,520 4,696.b 1/ At fob price of K 149/ton. January 27, 1971 MALA WI LILONGVIE LAND DEVELOPMENT PROJ MT PHASE II World Production of Fire-Cured Tobacco* Sh/Ton Country 1964 1965 1966 1967 1968 1969 United States 27,535 23,090 23,871 18,208 19,251 20,622 Italy 10,088 9,304 9,718 9,538 8,388 7,724 Malawi 8,316 15,748 13,360 13,450 8,436 5,272 Tanzania 384 1,200 1,683 3,454 3,500 3,500 Uganda 2,530 2,352 1,680 2,210 2,016 1,232 Ceylon 750 750 500 500 500 500 Indonesia 625 1,000 1,250 716 716 700 Pakistan 1,825 2,000 2,500 3,000 3,174 3,000 2/ Other 17,382 9,695 8,618 13,774 14,743 11,302 Total 69,435 65,139 63,180 64,880 60,724 53,852 * Source: U.S. Department of Agriculture, Fbreign Agricultual Service; "World Tobacco Production",e annual issues; Fbreign Agricultural Circulars, Washington, D.C. Most of the production from this group occurs in Poland, but annual data on Poland are not available. H x' 0 Januarv 23, 1971 ANNEX 1 Table 11 MALAWI LILONGWE LAND DEVELOPMENT PROGRAM PHASE II PROJECT PHASE I AND PHASE II PROJECT GENERATED NET FOREIGN EXCHANGE EARNINGS (M Kwacha'OOO) Net Year Gross Earnings F.E. Costs F.E. Earnings 1970-71 5o6.4 744.3 (237.9) 197i-72 1,152.9 830.6 322.3 1972-73 1,827.9 907.4 920.5 1973-74 2,688.8 1,023.4 1,665.4 1974-75 3,651.1 1,119.7 2,531.4 1975-76 4,628.9 739.0 3,889.9 1976-77 5,588.8 815.5 4,773.3 1977-78 6,251.7 879.1 5,773.3 1978-79 6,719.2 922.2 5,797.0 1979-80 7,024.0 924.8 6,og9.2 1980-81 7,091.6 224.8 6,166.8 Total 472131.3 9,830.8 January 26, 1971 ANNEX 2 Page 1 MALAWI LILONGWE LAND DEVELOPMENT PROGRAM, PHASE II PROJECT Atgriculture in the Program Area and Changes Expected to Occur as a Result of Project Activities A. General 1. The major crops in the program area are maize, groundnuts and tobacco in order of production volume. Tobacco production, however, is limited by Government quota, and due to improved husbandry, yields are ex- pected to increase, releasing tobacco land for alternative crop production. 2. All villages have some cattle, but these and other livestock are poorly managed. 3. Cotton and rice are not grown in the Lilongwe program area. Crops such as beans and sweet potato are grown on a minor scale as are fruit crops such as mangoes and bananas. B. Climate, Topography and Soils Rainfall 4. The Lilongwe Plain is situated 140 south of the equator and its climate is influenced by its altitude (3,600-4,000 ft). Other factors in- fluencing climate in the project area are the large expanse of Lake Malawi about 75 miles to the east of Lilongwe, and the still higher altitudes, 7,000 ft and above, of much of the surrounding country to the west and south. Annual rainfall varies from 25 to 43 inches. Ninety percent of the rain falls between November and March. Early rains are heavy and can cause serious erosion where soil conservation measures are not practiced. Soils 5. The predominant soils of the project area are red/brown loams, varying in structure from clay-loam to sandy-loam. Shallow valleys, known throughout Malawi as dambos, which are wet weather swamps probably formed by colluvial deposits from surrounding ridges, make up about 25% of the project area. The dambos are used for dry weather grazing by village cat- tle herds but they are poorly exploited, and considered by Malawian agri- cultural authorities to be vulnerable to erosion. However, controlled ANNEX 2 Page 2 utilization of dambos, as envisaged on the Dzalanyama ranch, could produce substantial benefits. 6. Soils on the upper and middle slopes are generally deep, well- drained and moderately productive. Levels of major plant nutrients are adequate but maize and tobacco respond to nitrogen and phosphate fertiliz- ers, particularly after several years of cropping. Although potash fer- tilizers do not give economic responses at present, indications are that nutrient levels are falling and potash would be required in the future. Fertilizer recommendations for the project area are made by the agricultural research station at Chitedze, situated in the program area, about nine miles from Lilongwe town. Recent recommendations have included the appli- cation of sulfur and boron; applications of 10 lb of sulfur per acre have doubled groundnut yields in trials conducted at Chitedze. Land Use and Cultivation 7. Precise information on acreages and yields of crops grown is not available. The Phase I Project Evaluation Unit (PEU) has been operating since May 1969 and has collected sample statistics for one year's cropping on the Phase I project area. These indicate that there are about 70,000 individual farm holdings within the 1,100,000 acres of the program area. The average holding is 10 acres of which about two-thirds is cultivated. Approximately 50% of the cultivated area is under maize and between 30% and 35% under groundnuts and tobacco. The latter have been changing: maize acreage is remaining constant, but the acreage under groundnuts is increas- ing gradually to about 30% of an average holding, while tobacco acreage is falling to about 5%. The remaining 15% or 20% of the average farm is planted to other crons, such as fruit trees and vegetables, with a propor- tion in fallow. 8. Cultivation is by hand, principally. There is very little agri- cultural machinery in use in the area, but under Phase I the use of ox- drawn implements is being encouraged through the provision of medium-term credit for the purchase of oxen and implements. This would be intensified under Phase II. Soil and Water Conservation 9. When heavy early rains fall on cultivated but bare soil there is a high risk of erosion. The Department of Agriculture has successfully trained large numbers of farmers to grow their crops on ridges, but as these frequently do not follow exactly the natural contours of the land, erosion remains a serious problem. Phase I included the introduction of soil con- servation measures, and the Phase I project area of 281,000 acres has been divided into 14 operational units (I through XIV). In each 20,000-acre nilt, 140 miles of diversion ditches have been constructed on the contour at a total cost, including depreciation, of ME 1.5 per acre. These works are built to strict specifications which have been modified as experience L,s been gained during Phase I. Further modifications would be made under :liast 11, principallv: the depth of the ditch would be increased from ANNEX 2 Page 3 1.5 ft maximum to 1.75 ft, the interval between ditches would be raised from 660 ft to 750 ft, and the area protected by one ditch increased from 80 to 100 acres. In order to provide controlled run-off from the diversion ditches, banked waterways are being constructed, about one for every 1,500 acres. 10. To encourage and assist farmers to plant their crops along the contours, parallel to the diversion ditches, marker ridges are put in by tractor as guidelines from which farmers align their planting ridges. These marker ridges cost about ME 0.25 per acre. C. Crop Development Maize 11. Yields. Phase I project development has not progressed far enough to determine accurately the impact of project activites on maize yields. Yield data for 1969/70, a drier than normal year, are the only available statistics for a complete growing season. Analysis of this data shows that program area farmers who received no benefits from the Phase I project obtained an average maize yield of about 900 lb/ac (this compares with a pre-development yield of 1,100 lb/ac estimated during Bank appraisal of the Phase I project). Therefore, since 1969/70 was a particularly dry season, a pre-development average yield of 1,000 lb/ac is used in Phase II calcula- tions. 12. Despite the poor weather in 1969/70, there is ample evidence of excellent future yield potential. A maize-growing competition in 1969/70, in which 46 farmers took part, was won with a yield of 6,800 lb/ac by a farmer using hybrid seed and fertilizers. Competitors' yields varied from an average of 3,000 lb/ac in Unit I to 3,600 lb/ac in Unit V. It is esti- mated that implementation of the program will increase average maize yields from a present 1,000 lb/ac to 2,000 lb/ac at full development in 1979/80. The breakdown of the maize acreage by production categories is estimated to develop as 'ollows: ANNEX 2 Page 4 Maize Acreage by Production Categories 1971/ 1972/ 1973/ 1974/ 1975/ 1975/ 1977/ 1978/79- Category 72 73 74 75 76 77 78 1987/88 …_____-------_------'000 acres------------------ 1. High fertilizer, hybrid maize 10.0 16.0 22.0 28.0 34.0 40.0 46.0 50.0 2. Low fertilizer, hybrid maize 6.5 10.4 14.3 18.2 22.1 26.1 29.9 32.5 3. Low fertilizer, synthetic maize 8.7 10.4 12.0 13.5 14.8 13.9 12.6 11.6 4. No fertilizer, synthetic maize 34.9 41.5 48.0 54.0 59.6 55.4 50.4 46.9 5. No improvement 24.2 24.0 24.0 24.6 24.6 21.0 17.4 15.6 13. Category 1 farmers are expected to achieve average yields of 3,000 lb/ac through the use of hybrid seed at a rate of 22 lb/ac and 100 lb/ac of a NP compound fertilizer at planting and 150 lbs N fertilizer as a top dressing. In the view of the high cost of seed and fertilizer, it is as- sumed that this category of farmers would need credit to purchase these in- puts. 14. Category 2 farmers, who would purchase all inputs for cash, are expected to obtain an average yield of 2,400 lb/ac. They would purchase the same inputs as Category 1 farmers, except for nitrogen fertilizer, of which only 100 lb would be applied as a top dressing. 15. It is assumed that Category 3 farmers would purchase the same fertilizer inputs as Category 2 farmers, but synthetic seed from the prev- ious year's production or through a project exchange arrangement would be used instead of hybrid seed. It is expected that average yields for this category would be 2,000 lb/ac. 16. Yields from Category 4 farmers would be about 1,100 lb/ac -- an increase of 100 lb/ac, as only improved husbandry techniques would be used. Category 5 includes those farmers who would not respond to program activi- ties. 17. The following table compares the proportions of land and produc- tion within the Phase I and Phase II project areas that now (1970/71) fall into the five categories described above, and the situation forecast for 1979/80 when development in these two areas would be completed. ANNEX 2 Page 5 Percentage of Maize Acreage Percentage of Maize Production Category 1970/71 1979/80 1970/71 1979/80 1 3 32 6 47 2 2 21 4 25 3 12 7 19 7 4 47 30 42 16 5 36 10 29 5 100 100 100 100 18. Storage Losses. After harvest, farmers store what they consider to be sufficient maize to last them until the next harvest; the remainder only is sold. Storage methods are poor and losses from pests and other causes average 20% of total grain stored. The project extension services are introducing improved corn storage cribs and are encouraging the use of pesticides through providing these for cash and on credit. This development would be intensified under Phase II. 19. Seed Supplies. Most farmers participating in the Phase I project have been supplied with synthetic seed of the variety Askari S7-37 and this has been well received. It is expected that the use of synthetic maize varieties will decrease significantly as better yielding hybrid vari- eties become more available. A local hybrid, Bingo IH 11 has been devel- oped at Chitedze and the University of Malawi's College of Agriculture at Bunda, both within the Lilongwe program area. Production of hybrid seed is limited currently, but Government has drawn up proposals for the estab- lishment of a seed production association comprising the Ministry of Agri- culture, Bunda College, Farmers Marketing Board (fMB) and commercial grow- ers. These proposals appear satisfactory and provide that Bunda College would produce most of the program's hybrid seed requirements. As an in- surance, however, hybrid seed would be imported should Bunda not be able to meet program demands. As yet there are no commercial seed growers in Malawi, but the Government's seed production proposals (Annex 8) provide for the encouragement of such growers and estimate that 200 tons of hybrid seed would be produced by commercial growers in 1972 and 300 tons in 1973. Groundnuts 20. Yields. Data collected by the PEU indicates that average shelled groundnut yields in 1969/70 obtained by growers not benefiting from project activities were about 575 lb/ac. .;is compares with a Bank estimate of 500 lb when Phase I was appraised. It is estimated that average yields during Phase II of the program would increase to 725 lb/ac. Until recently, groundnuts have shown little response to fertilizer, but in 1970 the Chitdedze Research Station recomumended the use of sulfur. Experiments have given groundnut yields up to 2,000 lb/ac using 10 lb of sulfur/ac, and it is assumed that farmers will obtain at least 40% of experimental levels. The estimated proportion of land producing different levels of groundnut production are as follows: ANNEX 2 Page 6 Groundnut Acreage by Production Categories 1971/ 1972/ 1973/ 1974/ 1975/ 1976/ 1977/ 1978/ 1979/ Category 72 73 74 75 76 77 78 79 80 --------------------'000 acres------------------------ 1 -- 800 lb 6.7 11.9 18.8 26.6 33.3 39.2 43.5 46.2 66.9 2 -- 700 lb 7.8 12.5 18.4 25.2 31.2 36.1 39.0 41.1 41.7 3 -- 600 lb 8.3 8.3 10.5 11.6 13.1 12.7 11.3 10.8 10.4 4-- 500 lb 7.9 7.5 7.9 8.4 9.1 7.2 5.9 5.1 5.2 Total Acreage under Groundnuts in Developed Areas 30.7 40.2 55.6 71.8 86.7 95.2 99.7 103.2 104.2 21. Category 1 farmers would obtain yields of 800 lb/ac of groundnuts by using sulfur and adopting improved planting and cultivation techniques. Category 2 farmers would not use sulfur, but would benefit from improved husbandry techniques only, while category 3 farmers would benefit from a much smaller improvement in crop husbandry. Category 4 would comprise those farmers not responding to program activities. 22. The proportions of land and production within the Phase I and Phase II project areas that now (1970/71) fall into the 4 categories, and the sit- uation forecast after the completion of development in these two areas in 1979/80 Percentage of Percentage of Groundnut Acreage Groundnut Production Category 1970/71 1979/80 1970/71 1979/80 1 -- 800 lb/ac 16 45 20 50 2 -- 700 lb/ac 22 40 24 39 3 --600 lb/ac 30 10 30 8 4 --500 lb/ac 32 5 26 3 23. All groundnut shelling is carried out by hand in Malawi. A number of mechanical shellers have been tested but all have caused excessive damage to the large nuts thereby reducing their value in the confectionery market. FMB is continuing its efforts to find a suitable mechanical sheller. If and when their testing is successful, FMB would purchase and install the equipment together with the extra storage that would be requirec. at program area markets. Tobacco 24. In 1968 a quota system was introduced to prevent a repeat of the eavy over-production of Malawi dark-fired tobacco and consequent slump in prices that occurred in 1967. A new grading structure was introduced also. And in 1970, prices received by project farmers ranged from K 0.18/lb for ANNEX 2 Page 7 the top grade to K 0.03/lb for the lowest grade. The average price re- ceived by farmers was slightly over K 0.11/lb, comparing well with K 0.08/lb in 1969 and K 0.07 in 1968. 25. The program area's overall tobacco quota of about 9 million lb will be raised to 10 million lb during the implementation of Phase II. Yields are estimated to rise from about 200 lb/ac, where farmers have not received project assistance, to 500 lb/ac with the help of fertilizers and extension services. As the number of farmers growing tobacco and the total quota are not expected to change, the acreage under tobacco will fall and probably will be replaced mainly by groundnuts. 26. Fertilizer recommendations for tobacco are similar to those of maize (see para 12) and are available on both credit and cash terms. Seed is provided by FMB. D. Reafforestation 27. Tobacco production in the program area is dependent on the avail- ability of firewood for tobacco curing. The Forestry Department estimates that at the present rate of population increase, all sources of firewood within the program area will be eliminated within 20 years; this estimate, however, could be an exaggeration as data on firewood availability is sparse. There are only about 5,000 acres of planted forest in the program area, and the Forestry Department further estimates that meeting the timber and fuel needs of the program area requires establishing the equivalent of 0.5 acres of forest per family, or 5,000 acres of forest per 100,000 acres of land. 28. Many reafforestation programs have been attempted in the past, but few have been successful. Experience has shown that farmers will not plant timber trees on land they cannot own, and also that they are not prepared to pay for tobacco curing wood fuel, grown on Forestry Department or District Council plantations. 29. An afforestation program is required, but it must be carried out as part of an integrated development program involving the registration of family holdings. Therefore, the Phase II project would include provision for family groups with registered land to obtain timber seedlings on a credit basis from the project authority, and technical advice from project forestry staff. Farmers would be charged K 0.02 per seedling. 30. The timber species used would be Gmelina arborea, a quick-growing species, grown in Malawi. Gmelina is a good general purpose timber, pro- viding termite-resistant house-building poles and fuel suitable for tobacco curing. Plantings would be carried out on land immediately surrounding villages and on holding boundaries in strips 3 to 4 trees wide. ANNEX 2 Page 8 31. The Forestry Department estimates that over an 8-year period, one acre of Gmelina would yield about 170 cu yd of firewood or 1,000 building poles. E. Livestock Development 32. There are no extensive grazing areas within the Phase I project area and all livestock are integrated with the existing arable cropping pattern of maize and groundnut production. During the wet season, cattle graze non-cultivated arable land and the drier areas of the dambos, besides utilizing any conserved crop residues; during the dry season, after ranging over the harvest fields, they return to the dambos. 33. Program area cattle numbers are estimated at 33,000, or about 27,000 livestock units, an overall stocking rate of 21 acres per livestock unit. Weaning percentage is about 51% and mortality about 10%. Cow and bull culling rates are very low, resulting in a high number of old animals, low herd fertility and a high mortality ratio. Due to heavy sales of young stock (about 13% of the total herd annually) the program herd growth rate is very low. 34. During Phase I, a small number of farmers have been encouraged to fatten steers under a stall-feeding system using home-mixed concentrates and crop residues. During 1968/69, 82 steers were stall-fattened, giving a net profit of about ME 8 per head over an average feeding period of 140 days. This net profit is considered very satisfactory and has led to an in- creasing demand for stall-feeder cattle. The program area is adequately covered by Veterinary Department personnel and the Department contemplates the introduction of compulsory dipping. In the light of adequate markets and chilling facilities, an increasing local demand for meat and the planned increase in crops and crop by-products, a component of Phase II would be a planned increase in program area meat production. 35. Phase II project organization would include a Livestock Unit pri- marily responsible for improving the program area herd and expanding the production of stall-fattened cattle. By the end of Phase II, the Livestock Unit would include the following staff: (a) Livestock Officer; (b) Assistant Livestock Officers; (c) Senior Veterinary Assistant; (d) Veterinary Assistants; and (e) 23 Unit Veterinary Assistants manning 23 new cattle dips. ANNEX 2 Page 9 36. It is estimated that the extension and disease control activities of the Livestock Unit would increase the productivity of the program area herd through increasing the weaning percentage to 60% and reducing overall mortality to 5%. Credit would be made available under the Phase II project to farmers wishing to erect fences for controlled grazing. 37. Stall-fattening would be expanded and by 1983 it is estimated about 6,000 animals would be fattened annually in the program area. Ini- tiallv, feeder stock produced by local farmers would be purchased by the project and allocated to selected farmers on a credit basis. Subsequently, all fee(ler stock made available to program area farmers on credit would be produced on the program ranch. However, some farmers would continue to pur- chase their feeder stock requirements privately. February 11, 1971 ANNEX 3 Page 1 MALAWI LILONGWE LAND DEVELOPMENT PROGRAM PHASE II PROJECT Phase I Project Progress ProectAppraisal Report Targets and Actual Performance e . . _J1 5 .j_1a_& 1. Project targets for physical development - buildings, road con- struction, soil conservation, borehole drilling will be completed by April 1971, together with these same activities on an additional 13,000 acres. In addition, these works will have been initiated in a further 100,000 acres, and if development continues at its present pace, most development work will have been completed on a total of 281,000 acres - 113,000 acres ahead of project targets - by October 1971. The conservation and road building works will be completed within total project costs. Land conservation, however, lhas moved too far ahead of other project activities. This has not yet created serious problems, but the future pace of land conservation will be reduced and land allocation and farm registration extension, credit and pro- vision of farm inputs, will be more closely integrated with land conservation. Costs_ Loan Disbursements and Financing 2. Most unit costs have proved to be within estimates despite a general rise in costs in Malawi. Credit disbursements at December 31, 1970 totalled US$2.4 million compared with a total expenditure at the same date of USS3.3 million of which about US$2.8 million is reimbursable under the credit. The low initial rate of disbursement reflects early administrative problems, but these have been corrected recently. Project management has experienced no problems in obtaining funds from the Government for the project. Project Organization and Administration 3. Project organization with a long chain of command whereby the program manager is responsible to the Permanent Secretary, Ministry of Agriculture and Natural Resources, through the head of the Agricultural Development Branch (ADB), has proved unsatisfactory. Delays have occurred in decision making, tenderin_, accounting and disbursement procedures. The program manager has found it difficult to keep accurate financial records, and obtain a satisfactory level of coordination between the several minis- tries involved in the development program. Proposals for improving program organization are given in Chapter 6 of this report. 4. Adequate numbers of qualified staff have been appointed to carry out the project, except for land survey and demarcation, and to a lesser extent, for credit and extension services. Government have been unable to recruit sufficient surveyors, and consequently land survey is substantially ANNEX 3 Page 2 behind other project activities. Proposals to reme(iy this situation during Phase II are given in para 4.07 of this report. 5. Although delays occurred in anpointing sufficient credit and extension staff, these problems are receiving attention, and will soon be satisfactorily resolved as morc Malawian staff are apnointed. 6. Project account. lhave been satisractorilv maintaine'. and although au(lit of 1968/69 project '7iJ Farmers Mar'-oting Board accounts lave been completed by the Auditor General, copies of these accounts have not been received by the Association; audit of 1969/70 project and MPt accounts has not been completed. Receipt by the Association of auclite,d aiccounts for 1968/69 and 1969/70 shouldl be a condition or Phase II credit negotiations. Credit, Extension, ivaluation 7. Althouglh, during Phase I most project activities have proceeded satisfactorily, the supply of farrm inputs on credit has not reached the levels envisaged during appraisal even though land development is ahead of schedule. This has been due to managerent policy to restrict loans until fanrers are well aware of repayment discipline, and to delays in setting up the project credit organization. This situation has itproved, as farmers have become aware of the benefits to be obtained thirough using purchased seasonal inputs, and the need to repay loans promptly. Credit repayments have improved steadily and by October 1970, 97% of loans given in 1968 and 1969 had been repaid. 8. Extension work has been satisfactory, with Malawian staff forming a substantial and increasing part of the extension force. Once over their initial mistrust of the project, farmers have proved very responsive to extension workers advice. 9. The project evaluation unit, established to provide a continuous survey of project progress and to provide planning data, had carried out satisfactorily, field survevs within the program area. Survey results show that actual yields before project development are close to appraisal esti- mates, while post development incremental yields are consistent with appraisal estimates. Rate of Return 10. During appraisal the rate of return for Phase I was estimated at about 9%. However, in view of the 100,000 additional acres covered by proj- ect land conservation works, a K .20 reduction in the farm-Rate price of maize, and 20% increase in the fob value of groundnuts from K 124/ton to K 149.00/ton, the estimated economic rate of return for Phase I project investments is about 11%. February 11, 1971 KNNEX 4 MALAWI LILONGWE LAND DEVELOPMENT PROGRAM, PHASE II PROJECT Land Reorganization and Demarkation A. Survey 1. Under Phase I of the project finance was provided for equipment and staff to enable the Survey Department to provide maps on which to base the programs of roads and conservation, and to survey farm holdings prior to land registration. The Department has had considerable trouble in ob- taining suitably qualified staff and although the development program has not been held up, the land registration program has been delayed substantially. In addition, expensive photographic equipment bought with IDA finance is standing idle due to lack of staff to operate it. 2. Under Phase II finance would be provided for sufficient staff and equipment to complete the surveys needed for land registration of over 100,000 ac annually from April 1972 onwards. Until April 1972, however, the maximum area that could be surveyed would be 50,000 ac by which time the survey program would be 200,000 ac, or two years behind infrastructure development and the provision of extension and credit services. The backlog of 200,000 ac has not seriously affected the project progress so far. It would, however, have the significant project repercussions in the long term, as the success of benefits initiated under the program would be mainly dependent upon farmers being able to own their land in perpetuity, and therefore having a much greater interest in maintaining and continuing improvements on their land. In addition to a staff shortage during Phase I of the program, or- ganizational and administrative difficulties have been encountered. During the second phase, therefore, all survey would come under direct project management control. Should staff shortages continue to limit survey progress, an(d should the survey program fall more than 200 ,000 ac behind the develop- ment program, surveys would be done on contract. B. Demarkation and Registration 3. Under Phase I it was intended that the ownership of each farm hold'ing (about 10 ac) would be registered. This has proved to be impracti- cable at this stage and holdings are being grouped by family (about 140 ac) for demarkation and registration. "Family" is defined as a Itconsanguineous 'roun within which marriage is not permitted." The early problems of educating the farmers to accept the principle of ownership rights have been overcome and the demand for registration is increasing. February 11, 1971 ANNEX 5 Page 1 MALAWI LILONGWE LAND DEVELOPMENT PROGRAM PHASE II PROJECT Estimated Farm Input Use Cash Sale and Credit Arrangements 1. Prior to the Phase 1 project, purchased farm inputs were used only on tobacco; while maize and groundnuts, the main subsistence and cash crops, were grown by traditional methods using local seed and a long fallow period. The more intensive methods of farming introduced by the program rely heavily on purchased, seasonal farm inputs, and a substantial increase in the use of these inputs would be essential to produce the improved yields anticipated under the program. During the four years of the Phase I project, about 5,500 farmers purchased seasonal inputs, mostly on credit. During Phase II the number of farmers from the Phase I and Phase II proj- ect areas, purchasing inputs annually would increase to about 25,000 in 1974/75. In addition, the project authority would supply feeder stock, and some medium term farm inputs to Phase I and Phase II project farmers. A. Maize Credit Purchases 2. During the Phase II project, credit would be given to Phase I and Phase II project area farmers for hybrid maize production only, usually in packages containing hybrid seed, fertilizer and insecticide as shown under category 1 in the table below. Total acreage under hybrid maize in this category, is estimated to increase from about 10,000 acres in 1971/72 to about 50,000 acres at full development in 1978/79 (see para 12, Annex 2). Category 1 farmers would obtain seed and fertilizer on credit for two acres of maize, and probably they would grow in addition, a third acre of maize using fertilizer purchased for cash, in quantities shown for category 2 below: ANNEX 5 Page 2 Maize Production Categories and Gross Margin Per Acre Category 1 Category 2/2 Category 3 Seed Costs K / 4.84 4.84 .22 (22 lbs) (22 lbs) Fertilizer Costs K /1 9.79 8.03 8.08 (2.5 bags) (2.0 bags) (2.0 bags) Total Purchased Inputs 14.63 12.87 8.25 Production Bags lb/ac 3,000 2,400 2,000 Value at K 2.0/bag 30 24 20 Gross Margin, K 15.37 11.13 11.75 /1 Includes a 10% mark-up charge to meet project distribution costs, but no subsidy component. /2 Hybrid maize, because of its greater yields, will probably be preferred by category 2 growers, despite a slightly smaller gross margin, than for farmers using synthetic maize in category 3. The estimated total consumption of maize inputs purchased on credit by Phase I and Phase II project area farmers are shown below: ANNEX 5 Page 3 Seasonal Maize Inputs Credit Sales from 1971/72 to Full Development of Phase I and Phase II Project Areas 1978/79- 1971/72 1972/73 1973/74 1974/75 1975/76 1976/77 1977/78 1987/88 Hybrid seed 200 lb bag 1,100 1,760 2,420 3,080 3,740 4,400 5,060 5,500 Value x K 40 44,000 70,400 96,800 123,200 149,600 176,000 202,400 220,000 Ferti- lizer,sh tons 1,250 2,000 2,750 3,500 4,250 5,000 5,750 6,250 Value x K 71.2/ sh ton 89,000 142,400 195,800 249,200 302,600 356,000 409,400 445,000 Lindane 10,000 16,000 22000 28,000 34,000 40,000 46,000 50,000 Total Value K 143,000 228,000 314,600 400,400 486,200 572,000 657,800 715,000 Cash Sales 3. During the Phase I project, farmers have de.monstrated an encouraging willingness to purchase seasonal maize inputs. In 1969/70, 75 short tons of fertilizer were purchased from the project authority, in addition some ferti- lizers, seeds and other inputs were purchased from FMB stores. It is assumed, however, that farmers who purchase inputs for cash probably would use less fertilizer per acre than those obtaining fertilizer on credit, and would therefore fall into categories 2 and 3 (para 2 above). The acreage of maize under category 2 is estimated to increase from 6,500 acres in 1971/72 to 32,500 acres at full development in 1978/79, and the total area under category 3 from 8,700 acres to 11,600 acres over the same period (para 20, Annex 2). Total estimated consumption of cash purchased inputs for maize production is given in the following table: ANNEX 5 Page 4 Seasonal Maize Inputs Cash Sales from 1971/72 to Full Development of Phase I and Phase II Project Areas 1978/79- 1971/72 1972/73 1973/74 1974/75 1975/76 1976/77 1977/78 1987/88 Hybrid seed 715 1,144 1,573 2,002 2,431 2,871 3,289 3,575 Value x K 40 28,600 45,760 62,920 80,080 97,240 114,840 131,560 143,000 Ferti- lizers sh ton 1,523 2,077 2,629 3,169 3,685 3,995 4,249 4,413 Value x K 73 111,197 151,650 191,946 231,366 269,034 291,664 310,206 322,178 Total Value of Cash Sales 139,179 197,410 254,866 311,446 366,774 406,500 441,766 465,178 B. Groundnut Inputs Credit Sales 4. During the Phase IT project 50% of program area farmers coming into the project would receive, for one of their first twqo years under the project, improved groundnut seed and sulfur on credit. Thereafter, farmers would be expected to purchase sulfur, for cash and to produce their own seed. The normal groundnut credit package would include 120 lb of seed and 10 lb of sulfur. Estimated groundnut input credit sales are shown below: ANNEX 5 Page 5 Seasonal Groundnut Inputs Credit Sales in Phase I and Phase II Project Areas 1971/72 to 1976/77 1971/72 1972/73 1973/74 1974/75 1975/76 1976/77 Seed sh tons 270 240 180 180 180 90 Value x K 133 sh ton 36,000 32,000 24,000 24,000 24,000 24,000 Sulfur sh tons 12 43 32 32 32 16 Value x K 70 sh ton 3,600 3,010 2,240 2,240 2,240 1,120 Value of Credit Purchases 39,360 35,010 26,240 26i?240 26,240 13,120 Cas1i Sales 5. After two years credit, all growers are expected to purchase sul- fur for cash, and produce their own seed, so that after 1977/78 all ground- nut inputs would be purchased for cash and about 50% of the total groundnut acreage would receive a sulfur application of 10 lb per acre. Estimated cash purchased inputs are shown below: Groundnut Inputs Cash Sales from 1971/72 to Full Development of Phase I and Phase II Project Areas 1971/72 1972/73 1973/74 1974/75 1975/76 1976/77 1977/78 1978/79 1979/80 Sulfur sh ton 76 124 167 199 231 263 279 279 279 Value x K 70 sh ton 5,320 8,680 11,690 13,930 16,170 18,410 19,530 19,530 19,530 Total Value of Pur- chases 5,320 8,680 11,690 13,930 16,170 18,410 19,530 19,530 19,530 A%.NNEX 5 Page 6 C. Tobacco Inputs Credit Sales 6. During the Phase II project, increased tobacco yields would be achieved by applying 20 lb of P 0 and 40 lb N fertilizer/ac. About half 2 5- of program area tobacco farmers use fertilizers already, and as tobacco growers are generally of a higher than average standard compared with other program area farmers, almost all should be nurchasing fertilizers for cash after about 4 years under the project. It is assumed that tobacco fertilizer credit would be provided to 50 of tobacco farmers coming into the project. Such credit would be available to each farmer only once, after which he would be expected to pay cash for his input requirements. Estimated tobacco credit sales are shown below. Tobacco input requirements are based on one acre per grower and 520 growers to each 20,000 acre unit. Seasonal Tobacco Inputs Credit Sales from 1971/72 to Full Development of Phase I and Phase II Project Areas 1979/80- 1971/72 1972/73 1973/74 1974/75 1975/76 1976/77 1977/78 ,_978/79 1987/88 Fertilizer sh ton 91 111 128 82 78 58 39 19 - Value x K 83.6/sh ton 7,608 9,238 10,688 6,855 6,521 4,890 3260 1,630 - Total Value of Credit Purchases 7,608 9,238 10,688 6,855 6,521 4,E0 3,260 1,630 - Cash Sales 7. It is expected that tobacco growers already using fertilizer would continue to do so, and would purchase theii requirements for cash. Estimated cash sales are shown below: ANNEX 5 Page 7 i3easonal Tobacco Inputs Cash Sales from 1971/72 to Full Development of Phase I and Phase II ProJect Areas 1979/80- 1971/72 1972/73 1973/74 1974/75 1975/76 1976/77 1977/78 1978/79 1987/88 Fertilizer Sh tons 422 491 780 988 1,148 1,226 1,284 1,343 1,343 Value x K 83.6/sh ton 35,321 41,089 65,208 82,597 95,973 102,616 107,513 110,644 112,274 Total Value of Credit Purchases 35,321 41,089 65,208 82,597 95,973 102,016 107,513 110,644 112,274 D. Stall Feeding 8. During the Phase II project, the two main sources of feeder stock would be the ranch and the existing program area herd. After 1971/72 only ranch produced animals would be available to project farmers on credit. The following table shows the source and estimated numbers of feeder stock that would be financed by credit. Credit for Stall Fattening Stock 1971/72 1972/73 1973/74 1974/75 Ex Ranch Zebu Steers/Heifers - 950 960 970 Value x K 44 - 41,800 42,240 42,680 Ex Ranch half-bred Steers/Heifers - - - 473 Value x K 56 - - - 26,488 Ex Project herd Zebu Steers/Ileifers 156 - - - Value x K 44 6,864 - - - Total Value 6,864 41,800 42,240 69,168 ANNEX 5 t'nge S Medium-Term credit Inputs 9. It is expected that the following medium-term credit would be issued during the Phase II project. 1971/72 1972/73 1973/74 1974/75 Oxen and Implements 22,000 8,000 22,000 33,000 Fencing 3,600 9,600 7,600 2,600 Tree Seedlings 14,000 14,000 14,000 14,000 Shellers 8,400 2,400 2,400 2,400 Total Medium-Term Credit 48,000 34_O0 46,00Q 52,000 The project would supply seedlings of a timber tree suitable for tobacco curing fuel, on credit to selected farmers with registered land. K 14,000 is included under project extension services for each project year, to meet seedling production and distribution costs, and therefore no financial pro- vision is required for the credit fund. E. Credit: Sales Organization 10. During the Phase I project, the use of credit inputs has not kept pace with other project activities. In 1968/69, K 4,800 (US$5,760) were issued on credit for fertilizers and seed to 700 farmers. In 1969/70, al- though the total amount of credit increased to K 7,000 IUS$8,400) only 650 farmers received credit. Credit repayment have reached the satisfactory level of about 97%, and in 1970/71 4,000 loans valued at K 84,000 (US$100,8000) were made. Therefore, at the beginning of the Phase II pro- ject the Credit Fund would have a capital of about K 93,000 (US$110,400). 11. During Phase II, the number of loan accounts would increase from 5,000 in 1971/72 to about 14,000 in 1974/75 and about 25,000 in 1978/79. The project authority would be able to handle the number of accounts satis- factorily. However, growers would be encou.aged to purchase their input requirements for cash, and credit facilities will be used primarily to initiate growers to the use of new inputs. Throughout the program period, credit sales are expected to account for about 55% of total seasonal farm input sales, and would increase in value from about K 190,000 (US$228,000) in 1971 to about K 715,000 (US$ 858,000) annually after 1979, when seasonal credit would be used mostly on seed and fertilizer for hvbrid maize produc- tion. ANNEX 5 Page 9 Credit Manapement 12. During the project period, credit policy and operations would be controlled from project headquarters by a Chief Agricultural Credit Officer, assisted by an accounting unit to maintain central accounts and audit Unit records. After completion of the Phase II project development period, re- sponsibility for agricultural credit in the program area would be assumed by the Malawi Agricultural Bank (MAB), which the Government is establishing (see Annex 8). 13. Credit field administration would be based on the Units were a Unit Development Officer would be assisted by two credit assistants to handle an expected maximum of 1,000 credit accounts per Unit. Extension staff, also under the Development Officer, would identify creditworthy farmers and supervise the use of inputs. Credit assistants would be re- sponsible for maintaining records, issuing supplies in cooperation with marketing staff, and collecting bad debts. 14. During Phase I, potential borrowers were identified by extension officers and referred to local village committees for final approval. This process, however, is slow and becomes unnecessary, once farmers are familiar with credit discipline, and therefore, during Phase II, borrowers would be identified by extension staff and assessed for creditworthiness by the credit officers. In addition to individual loans, project farmers would be assisted to form registered creditworthy groups, thus reducing credit service costs. 15. As program Unit areas are developed every farmer would be registered at the market of the service center through which he obtains his inputs, arnd under the terms of his loan agreement he would be obligated to sell all his produce through the same market. To reduce the risk of farmers selling produce outside their registered market, buying agents, licensed by the Farmers Marketing Board would be excluded from the project area until tlhe use of credit has become firmly established. The Unit FMB market officer would he expowered to direct farmers' debts from produce sales, and would provide repayment records to project headquarters. Credit repay- ments would be credited to the credit fund administered by project head- quarters. The project would reimburse FMB for its debt collection service. The above procedures would be followed for seasonal and medium-term loans and would replace current procedures whereby credit fund records are main- tained by the Chief Agricultural Development Officer. 16. Stall fattening cattle loans would be managed by project livestock and credit staff. Stock would be brought from the ranch to selected farms by the livestock officers. Delivery records would be maintained by Unit credit assistants. After 4 to 5 months, the livestock officers would collect fattened stock and deliver them to Government for auction or to the Cold Storage Company for slaughter. Farmers' debts including a 10% interest charge would be repaid from sale proceeds into the credit fund, and the balance paid to the farmers. ANNEX 5 Page 10 17. All seasonal crop credit would bear a minimum interest charge of 10% and a further minimum charge of 10% to meet project procurement and distribution costs. Both charges on credit items would be used to finance the credit fund. Medium-term credit would be issued at 8% per annum over 5 years, with a distribution charpe of 10%. In the absence of individual land ownership security would be taken only on crops and chattels. Bad debts are not expected to exceed 3% of total lending. 18. Credit administration costs would increase from K 48,000 (US$57,600) in 1971/72 to K 76,000 (US$91,200) in 1975/76, when all 26 units would be developed. Interest charges would exceed annual operating costs by 1077/78 after which the balance of earnings would be available for capital expendi- tures. Credit Fund 19. Assuming that the credit fund contained K 93,000 (US$110,400) from the Phase I project, an additional K 162,300 (US$194,760) would be re- quired for the fund during the period project. After 1975/76 the fund would be self-financing, and able to contribute to credit operating costs in the program area. The estimate of additional credit funds required annually during the project period is given in the Table below, where it is assumed that only 50% of the ranch stall fattening stock would be sold on credit to project farmers and that repayments for these would be made to the credit fund. ANNEX 5 Page 11 Credit Fund (M Kwacha '000) 1971/72 1972/73 1973/74 1974/75 Total Sources: New Funds 135.3 25.7 1.3 162.3 Surplus Funds .7 Principal (1) Seasonal Crop 84.0 190.0 273.0 351.5 (2) Feedlots Seasonal 34.0 48.0 36.0 (3) Medium 6.8 10.8 17.6 Interest /1 8.4 25.1 35.9 44.4 Service Charge 10% /2 19.7 28.4 36.9 Less bad debts 3% (including livestock) 3.7 8.3 11.9 14.2 Total Sources 224.0 293.0 385.5 472.2 Utilization Seasonal Credit 190.0 273.0 351.5 433.5 Medium Term Credit 34.0 20.0 34.0 38.0 Total Utilization 224.0 293.0 385.5 471.5 /1 Seasonal credit interest 10%, Medium term credit interest 8%, Feedlots credit interest 10%. 12 10% marku -charged on all inputs except feedlot stock. F. Cash Sales Organization Management 20. A Project Marketing Officer would be responsible for distributing inputs. Stocks would be held and sold at the Unit level by a Unit Market- ing Officer, supported by a clerical assistant. The marketing staff also would maintain stocks for credit sales, and would issue these after author- ization by the Unit Credit Officer. ANNEX 5 Page 12 21. The Project Financial Controller and headquarters accounts section would assist the Project Marketing Officer on financial and accounting matters relating to farm input procurement and distribution. The project would charge 10% on cash sales to cover operating costs. Storage 22. Covered storage for 450 tons of fertilizer, and open storage facilities would be provided at each Unit. These would be provided at each Unit and would be sufficient for program area requirements until at least 1978/79, when annual consumption within all Units would reach about 460 tons of fertilizer and 350 bags of maize seed. A 2,500 ton railhead store would be built to hold buffer stocks prior to delivery by road to Unit stores. The opportunities to use produce stores for inputs would be limited as sales would reach their peak at, or immediately after, harvest. Cash Sales Fund 23. Project headquarters would maintain a cash sale revolving fund to finance input procurement. It is assumed that the funds capital would increase from nothing in 1971/72 to K 408,000 (US$489,600) in 1974/75. Fund details are shown at Table below. Cash Purchase Fund (M Kwacha '000) 1971/72 1972/73 1973/74 1974/75 Total Sources New Funds 180.4 48.7 59.9 43.0 332.0 Previous Sales - 180.4 247.2 331.7 Service Charge 10% - 18.0 24.7 33.2 Total Sources 180.4 247.2 331.7 408.0 Utilization Seasonal Input Sales 180.4 247.2 331.7 408.0 G. Procurement 24. During the Phase I project, FMB was responsible for fertilizer and seed procurement. This arrangement has not been satisfactory and project staff have taken on some procurement and distribution responsibility. During Phase II, the project manager would be responsible for procurement and distribution of farm inputs. This would insure that supplies would be available when required by growers, and would increase the coordination of sales with the extension and credit activities. ANNEX 5 Page 13 25. The project probably would purchase most of its supplies of fertilizers from the FM , which is responsible for obtaining supplies for Malawi. Fertilizers purchased in this way would be financed from the existing balances in the cash and credit sales revolving funds. However, as FMB has found it difficult to comply with the Association's guidelines for procurement, fertiliz:ers that would be reimbursed with the IDA credit funds would be purchased directly by the project. The value of such pur- chases would not exceed the total incremental value of credit input sales for the project period, and would amount to about K 162,000 (US$194,000. All other farm inputs would be procured by the project and financed from the revolving funds. February 11, 1971 ANNEX 6 Page 1 MALAWI LILONGWE LAND DEVELOPMENT PROJECT, PHASE II PROJECT Summary Proposals for the Establishment and Development of a National Seed Development and Production Association 1. Government has proposed that a national association be established for the development and production of improved seed. Initially, the association would begin the production of adapted varieties of double-cross hybrid maize. The activities of the association would be directed by a body composed of one member from each of the interested parties: the Ministry of Agriculture, the Bunda College of Agriculture, Farmers Marketing Board, and commercial growers. The functions of each party would be: (a) Ministry of Agriculture (i) to coordinate the association's activities with national seed requirements; (ii) to advise, propose, and initiate legislative actions for efficient seed production; (iii) to develop, within the Ministry, an agency for controlling seed quality and purity; and (iv) to coordinate its own research with national seed requirements. (b) Bunda College of Agriculture (i) to train qualified staff for the regulatory and inspection services of the Ministry of Agriculture, and for commercial growers; (ii) to continue plant breeding and testing, and the production of initial stocks of parent material for new approved varieties; and (iii) to produce commercial seed from available parent stocks during the period seed growing farms are being established. (c) Farmers Marketing Board (i) to finance the development of seed production; (ii) to market and distribute commercial seed; and ANNEX 6 Page 2 (iii) to establish and manage a company which will produce commercial seed in Malawi. Development 2. Until commercial growers are in operation, production would be met by Bunda College and such other qualified growers as can be identified. Using an estimate of one ton of clean seed maize produced per acre, projected demands indicate that four farms would be required, with seed production phased as shown below: Proposed Development Plan … Planned Acres in Production--------- Tons Bunda Tons Year Required (and others) Farm 1 Farm 2 Farm 3 Farm 4 Grown 1970-71 250 200 - - - - 200 1971-72 500 300 100 - - - 400 1972-73 750 400 200 100 - - 700 1973-74 1,000 200 300 300 100 100 1,000 1974-75 1,250 Nil 300 300 300 300 1,200 3. While Bunda is producing seed commercially, its production would be defined by a contract with the proposed Seed Development and Production Association. To meet its production targets, Bunda would require financial assistance of about K 12,000 for land clearance, equipment, and crop finance, and it is proposed that a line of credit for this amount should be established by FMB. Negotiations with the Ministry of Agriculture and FMB for the use of equipment available within Malawi would determine the amounts of the loan used. If the 1970-71 production targest are met, Bunda expects to be self-supporting for the balance of its period of contribution to commercial seed production. Staffing 4. Qualified staff, the requirements of which are shown below by members of the Association, would be trained at Bunda. Seed Inspcctors Assistant (Ministry) Farm Managers 1971-72 1 2 1972-73 1 2 1973-74 1 4 Total 3 8 ANNEX 6 Page 3 Seed inspection posts would be staffed by degree graduates, while the assistant farm managers would initially be diplomates in general agri- culture, with Bunda providing specialized training during their third year to prepare them for commercial seed production. Organization 6. The four seed farms proposed above would be developed by a company managed and partly owned by the FMB. The company would have a general manager, witlh one section manager and two assistant managers on each farms. Accounting would be carried out by the FMB project accountant. The cash requirement for the central management of the seed production company would be K 30,000, and K 60,000 would be required for each of the four farms. A total of K 270,000 would be required over the years 1971 to 1974. February 11, 1971 ANNEX 7 Page 1 MALAWI LILONGWE LAND DEVELOPMENT PROGRAM, PHASE II PROJECT Dzalanyama Ranch 1. During recent years the demand from Malawi smallholders for a reliable supply of feedstock cattle for stall-fattening, using low-cost maize, pigeon peas and crop by-products such as groundnut haulm has been increasing. About 80 animals a year are fattened successfully by program area farmers in home-constructed stalls. As part of the Phase II project, 161,000 acres of the Dzalanyama Forest Reserve (see Map) would be developed as a breeding/feeder/steer ranch, to provide stall-feeders for program area farmers. Ranch Development Proposals 2. The ranch would be located in the Dzalanyama Forest Reserve, which is situated to the west and southwest of Lilongwe, some 30 miles from the new capital city site, and adjacent to the Land Development Project. Its western boundaries would follow the Malawi-Mozambique border on the south and the foot of the Dzalanyama Range in the north. 3. The ranch would cover 161,000 acres of natural Brachystegia- Julbernadia forest reserve in the major catchment area of the Lilongwe River. Rainfall is up to 60" per annum, with most occurring during the wet season from November to late March. The topography is gently rolling with some lightly forested areas. Some areas of heavier forest would require thinning by ring-barking. The area has two distinct grazing categories: (a) the southwest, covering 88,000 acres, of which 22,000 acres are "dambos" 1/ and 66,000 acres are lightly for- ested. The area is generally wet and better suited for dry season grazing than the remainder; and (b) the northwest, covering 73,000 acres with 11,000 acres of "dambos" and 62,000 acres of more heavily forested well-defined ridges suitable for wet weather summer grazing. 4. Ranch management would control stock movement from the southeastern dry season grazing areas to the northwestern wet season grazing areas. In addition, firebreaks would be constructed and some ring-barking undertaken 1/ Broad, gently concave valley floors with hydromorphic soils and marsh grassland. ANNEX 7 Page 2 in order to improve the utilization of the forested areas. These actions would be inexpensive but would provide better grazing control and permit a carrying capacity of about 1 A.U. to 14-15 acres. 5. The ranch would produce: (a) ranch-bred half-bred feeder stock for sale at about 30 months and weighing 650 lb liveweight to smallholders within the Lilongwe land development area; (b) ranch-purchased (at 12-18 months) immature steers for sale to smallholders for finishing at about 30 months and weighing 550 lb; (c) surplus crossbred heifers for sale to smallholders for milk production; and (d) cull cows and bulls for sale to local butchers. 6. The ranch would be stocked with immature stock purchased from the adequate supply which exists in the central and northern regions. Initial- ly, improved Zebu type bulls would be used on the ranch, but after an adequate animal health program had been implemented, either approved Friesian bulls would be imported from adjoining countries, or artificial insemination techniques employed. 7. Ranch development would be carried out over a four-year period, with the majority of the investment in the first two years. The ranch would be boundary-fenced (109 miles) to prevent squatter encroachment. Internally, the ranch would be divided into 30 grazing units (each of approximately 5,000 acres). These units would not be fenced, but would be surrounded by firebreaks (203 miles). In addition, nine fenced paddocks of between 2,000 to 3,000 acres would be constructed for breeding purposes. Sufficient dams and boreholes would be constructed under the project to supplement natural water supplies. Further investments would be made in housing, buildings, dips, handling yards, machinery, equipment and breeding livestock. Young steers purchased for growing out would be financed out of working capital. Finance 8. The following table summarizes total project costs over the four- year development period: ANNEX 7 Page 3 Foreign Years FE Exchange 1 2 3 4 Total % Total -k'000------------ - k'000 Recurrent Costs /1 '44.3 59.2 69.3 80.0 252.8 28 71.5 Fencing, roads, firebreaks 71.2 25.1 16.9 2.0 115.2 40 46.0 Water supplies 20.0 16.6 8.0 -- 44.6 56 23.3 Housing, dips, etc. 24.6 12.4 6.0 6.9 49.9 11 5.0 Machinery and equipment 20.4 11.5 10.5 -- 42.4 88 37.0 Livestock 66.0 71.0 60.2 65.2 262.4 14 36.0 Total 246.5 195.8 170.9 154.1 767.3 28 262.6 US$ Equivalent 295.8 235.0 205.1 184.9 920.8 28 262.6 /1 Includes annual purchase of immature steers used for growing out prior to stall fattening on project farms. 9. Project contingencies include 10% for capital on-ranch investments and operating expenses and 5% for livestock purchase. Ranch costs and benefits details are shown in Tables 1 to 6 of this Annex. Organization and Management 10. The ranch would be managed by a qualified Ranch Manager experienced in Central African ranching conditions. He would be responsible to the Project Manager for all management and development aspects. The ranch would not employ its own veterinary officer, but would receive whatever veterinary services it might require as part of the normal extension services of the Veterinary Department. 11. A small committee comprising the Directors of Veterinary and Forestry Departments would advise the Project Manager on all matters af- fecting animal health, forest use and watershed protection. Since the ranch would annex a substantial part of a gazetted Forestry Reserve, a management agreement giving the Project Manager full control of the ranch area would be signed between the Forestry Department and the project author- ity. Marketing 12. At full development, the ranch would produce annually about 1,800 improved steers for fattening, 180 cull heifers, 690 improved heifers for milk production or fattening, and about 750 cull cows and 20 cull bulls for sale to the Malawi Cold Storage Corporation or local butchers. A satisfac- tory marketing system and a market sufficient to absorb all project-produced beef exists (see Annex 5). ANNEX 7 Page 4 Ranch Benefits 13. It is assumed that ranch-produced animals would average the fol- lowing liveweights and values when sold from the ranch: Average Price/ Average Animal Wei,- '_lb) 100 lb Value Cull cows, years 4-14 - - K40 Cull cows, years 9-16 - - K50 Ranch-bred steers and cull heifers, years 4-7 550 K8 K44 Ranch-bred steers and cull heifers, years 8-16 650 K8 K52 Ranch-bred heifers in-calf 700 KS K56 Zebu steers 550 KS K44 Stall-fattening is expected to add values of K 9.4 for zebu animals and K 14.9 for half-bred stock. These values are net of feeding expenses, and are equivalent to an average grading for half-bred animals midway between the choice and prime grades (K 9.76/100 lb liveweight); and for zebu ani- mals, prime grade (K 8.9/100 lb liveweight). During stall-fattening, live- weight gains are assumed to average 1 lb/day, and the added value takes into account an expected improvement in the grading of the animals from the time they enter the stalls to the time they are slaughteredl. 14. The economic rate of return from investment in the ranch over a 20-year period would be about 14%, taking into account the benefits from stall-fattening (Annex 14, Table 6). The ranch's financial rate of return would be about 10.0% for the production of fattening, dairy and cull stock. February 11, 1971 MAIAWI LILONGWE SAND DEVELOPMENT PR0GR14M PHASE II PROJECT DZAL4ANYAM8A RANCH (N lOwacha) Breeding/Feedersteer Ranch Herd Projection and Technical Coefficients 161,Ooo acres Before Development 0 A.U. CATE(ORIES After Development 11,684 A.U. -------------------------------------------------- End of Year --------------------------- Herd Composition A5U. Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Year 11 Year 12 Cows 1.0 1,500 2,775 3,748 4,574 4,163 4,235 4,581 5,000 5,000 5,000 5,000 5,000 Weaners - 975 1,943 2,624 3,431 3,122 3,176 3,436 3,750 3,750 3,750 3,750 Steers 9-24 months 1.0 - - 487 972 1,312 1,716 1,561 1,538 1,718 1,875 1,875 1,875 Heifers 9-24 months 1.0 - - 488 972 1,312 1,716 1,561 1,538 1,718 1,875 1,875 1,875 Steers 24-36 months&/ 0.5 - - - 473 942 1,273 1,664 1,514 1,492 1,666 1,823 1,823 Heifers 24-36 months 1.0 - - - 473 943 1,273 1,664 1,514 1,492 1,666 1,823 1,823 Boils 1.0 60 139 150 183 167 169 183 200 200 200 200 200 Sub-total 1,560 3,f89 6,816 10,271 12,270 13,504 14,390 141,740 15,370 16,032 16,346 16,346 Purchased immature steeres 1.0 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 500 - - - Total head 2,560 4,889 7,816 11,271 13,270 14,504 15,390 15,740 15,870 16,032 16,346 16,346 Total Animsl Units 2,560 3,914 5,873 8,410 9,839 10,745 11,332 11.547 11,374 11,449 1l,684 11,684 Deaths Cows - 75 111 112 137 125 127 137 150 150 150 150 Steers 9-24 mnths - - - 15 29 39 52 47 46 52 52 52 Heifers 9-24 months - - - 15 29 39 52 47 46 52 52 52 Steers 24-36 months - - - - - - - - - - Heifers 24-36 months - - - - 14 28 38 50 45 45 50 55 Bolls - 3 6 5 6 5 5 6 6 6 6 6 Purchased in yearlings - 55 40 30 30 30 30 30 30 15 - - Total - 128 157 177 245 266 304 317 323 320 310 315 Purebases Cows and in-calf heifers 1,500 1,500 1,500 1,500 - - - - - - - - Bulls 6o 85 31 56 12 27 39 45 30 30 30 30 Im,mture steers 1,000 1,000 1,000 1,000 1,800 1,000 3,000 1,000 500 - - Total 2,560 2,585 2,531 2,556 1,012 1,027 1,039 1,045 530 30 30 30 Sales Cull Cows - 150 416 562 686 624 635 687 750 750 750 750 Cull bulls - 3 14 18 22 20 20 22 24 24 24 24, Cull heifers - - - - 47 94 727 166 151 149 167 182 Breeding heifers - - - - - - - 205 418 398 549 686 Ranch bred ste¶;s (sold at 2-1/2 years; IVs - - - 473 942 1,273 1,664 1,514 1,492 1,666 1,823 1,823 Purchased immat-re steers - 950 96o 970 970 9 9709 970 970 485 - - Total - 1,103 1,390 2,023 2,667 2,981 3,416 3,564 3,805 3,472 3,313 3,465 Technical Coefficients Calves weaned - 65 70 70 75 75 75 75 75 75 75 75 Cull cns - 10 15 15 15 15 15 15 15 15 15 15 Cull heifers - - - - -10 10 10 10 10 10 10 10 Cull b'lc I s - 5 10 12 12 12 12 12 12 12 12 12 Mortality - 5 4 3 3 3 3 3 3 3 3 3 Cows: t.t.1 herd ' 96 71 55 45 34 31 32 33 33 31 31 31 C c w cs : toticlh o Ird "L 63 41 27 19 16 15 14 14 il, it 1, 14 Output rate - 4 6 10 14 15 17 18 18 19 20 21 J Sold at 30 months of age weighing 650 lbs L.W. to smliholder fattener V 12-18 months of age to be grown fow one year and then sold to smallhcldor fattener Janwary 23, 1971 MALAWI LILONWE LAND DEVELOPMENT PRG0RAM PHAfiB II P'ROJFCT DZALANYAMA RANCH (M Kwacha) Ranch Income and Expenditure K Sales 1/ Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Year 11 Year 12 Year 13- Cull cows - 6,ooo 16,640 22,480 27,440 24,960 25,400 27,68O 37,500 37,500 37,500 37,500 37,500 Cull bulls - 216 1,008 1,296 1.584 1-44o 1,6,40 1,5864 1,728 1,728 1,728 1 72Q 78 Cull heifers _ - - - 2,068 4,136 5,588 7,0 6,6 6, 08 Incalf heifers - - - - - - - 11,680 23,408 22,2d8 307 21 38,410 38,43 Ranch bred steers _ - - 26,596 48,984 66,196 86,528 78,728 77,584 86,632 94,796 94,796 94,796 Purrcha.ed im,mature steers - 41.800 42,240 42,680 42,680 42,680 42,680 42,680 42,680 21,340 - Sub-total 48,016 59,888 91,052 122,756 139,412 161,636 169,256 189,544 176,066 172,116 180,442 180,462 Recurrent Costs Salaries and Wages Manager 5,600 5,600 5,600 5,600 5,600 5,600 5,600 5,600 5,600 5,600 5,600 5,600 5,600 Assistant Manager - 2,700 2,700 2,700 2,700 2,700 2,700 2,700 2,700 2,700 2,700 2,700 2,700 Clerks (1) 480 (2) 960 960 960 960 960 960 960 960 960 960 960 960 Machanics - (1) 480 480 480 480 480 480 480 480 480 480 480 480 Drivers (2) 480 (4) 960 960 960 960 960 960 960 960 960 960 960 960 Headmen 2/ (3) 540 (4) 720 (6) 1,08D (9) 1,620 (10) 1,800 (11) 1,980 1,980 1,980 1,980 1, 980 1,980 1,980 1,980 Herdsmen 3/ (26) 2,236 (39) 3,35h (59) 5,074 (86) 7,224 (98) 8,428 (107) 9,202 (113) 9, 718 (115) 9,890 9,890 9,890 10,062 10,062 10,062 Watchmen 7/ (3) 258 (4) 344 (5) 430 (6) 516 516 516 506 516 516 506 506 916 916 1.aintenance gang (2) 172 (4) 3I4 (6) 516 (8) 688 688 688 688 688 688 688 688 688 688 OtermasrytAs ant (1) 400 (1) 400 (1) 800 (2) 800 (2) 800 800 800 800 800 800 800 800 800 Other Casts Vehicle running and repairs 4/ (1) 1,850 (2) 2,450 2,450 2,645' 2,450 2,65o 2,450) 2,650 2,650 2,450 2,450 2,450 2,450 Water running and repairs 3/ - 364 366 364 364 366 366 364 364 364 364 364 364 Tractor running and repairs 3/ (1) 1,200 (2) 2,40') (3) 3,600 3,60 3,600 3,60D 3,6')' 3,63D 3,600 3,600 3,600 3,600 3,600 Lorry running and repairs 7/ (1) 2.000 (2) 4,000 4,000 4,000 4,000 6,000 6,3OO 6,000 4,000 4,000 4,000 4,000 4,000 Fencing maintenance 3/ - 412 674 908 908 9008 908 908 908 908 908 908 908 Building maintenance 7/ - 490 734 8se 988 988 988 988 988 988 988 988 988 Dipping 10./ 2,048 3,132 4,698 6, 728 7,872 8,596 9,066 9,238 9,100 9,160 9,348 9,348 9,348 Vet. ard minerals IT/ 1,792 2,740 6,112 5,888 6,888 7,522 7,932 8,082 7,962 8,014 8,178 8,178 8,178 Supplemontary feeding 13/ 3,072 4,696 7,048 10,092 11,806 12,994 13,608 13,856 13,648 13,738 16,020 14,020 14,020 Sundryytools and equipment 200 700 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 Livestock Purchases Immature steers 13/ 22,000 22,000 22,000 22,000 22,000 22,000 22,000 22,000 11,000 - - - Bulls - - - 2,400 5,400 7,800 9,000 6,000 6,000 6,ODO 6,000 6,000 horses - (2) 60 (3) 240 240 260 240 240 240 240 Machinerand E8ipment Replacements 14/I- - - 600 - 12,800 13,000 3.600 2,400 1,000 13,000 14,000 6,o0 fotal Recurrent Cost 44,328 59,246 69,280 80,036 87,208 106,568 111,348 103,900 88,234 76,026 88,832 89,242 81,242 1/ Price Assumptions; Cull cows - K 40 for first 9 years. K 50 thereafter. Cull bulls - K 72 (1,200 lbs L,W. at K 6 per 100 lbs). Ranch bred steers and cull heifers - K 44 years 1-3 onwards K 52 (550 lbs rising to 650 lbs L.W. at K 8 ) all steers sold between 30-36 monthe to feed loto. Purchased Immature steers at K 44. Heifers - t 28 (700 lb. L.W. at K 8 perlOO lhs) sold as incalf bet.een 30-36 macthe. 2/ K 180 per annum each. 3/ K 86 per annum each. i/ School transport K 1,230/annum * Land Roaer running. V/ K 1 per day or K 364 per annum. 6/ Tractor running and repairs Klper hour 1,200 hrs/annum each. 7/ 12,000 miles/annum at 17t per mile. 3/ Materials only at 2% of construction cast. 7/ Materials only 2% of construction cost. 10/ 80 t per L.U. per annum(2sing toxaphene dip). ri/ 70 t per L.U. per annum. N_ i1/ K 1.22 per L.3. for 3 months. 17/ K 22 per head. / Year 13 onoards K 6,000 per annum (machinery and equipment replacem-nts). January 22, 1971 MALAWI LILONOWZ LADD 1)VELOPNENr PROG0RtA PHASE II PROJECT DZALANYAHA RANCH (M Ihoacha) 0. Ranch Inseetonento K Unit No, of Units Unit Cost Year 1 Year 2 Year 3 Year 4 Total PF F!co Fencing, roads and firebroate Fencinge bondary 1/ Nile 109 2i3 13,050 9,8603 8,700 -- 31,610 Fencing interal Nile 51 270 7,567 3,240 2,970 - 13,770 Roads (16 ft between drains) Mile 41 180 7,380 4,770 - - 7,380 Firebe-ake (30 ft) Mile 203 90 13,530 _- - 18,270 Firebreoks r. seinting roads (20 ft) mile 17 60 1,020 1,020 Bridges (largo) NRober 2 7,200 14,400 - - _ 14,400 Bridges (smlll) NRostr 3 300 900 - - - 900 Dacto crossings NRooer 11 840 9,240 - - - 9 240 Night poddoeks 2/ NRtber 66 160 4,160 3,200 3,200 - 10,560 Ring barking Acre S,oOO 1 - 4,ooo 2,000 2.000 8.000 Sob-tota1 71,210 25,070 16,870 2,000 115,15O 46,0oo 4° Wat-r Soppli-s Da/borehole 3/ Nsober i4 2,000 12,000 8,000 0,000 - 20,000 Storage tanke NRboer 2 1,400 1,400 1,400 - - 2,000 Piping 'It Mile 3 2,000 3,000 3,000 _ _ 6, ooo Piping 3/40 Mile 4 1,200 600 4,200 - _ 4,800 Pomp hooss Roster 1 200 200 - - _ 200 robe-off noir NBtber 1 300 300 - - _ 300 Water troughs NRober 18 140 2,520 - - - 2,520 Sub-total 20,020 16,600 8,ooo - 44,620 23,310 52 Houing. boildings, dipn sod handling yads Maneger's homes Nuaber 1 13,000 13,070 - 13,000 Aseintent =tnger-s hense NRober 1 4,000 - 4,000 - - 4,000 H-dsa eos han. 4/ NRobor , lt 310 900 600 600 1,200 3.300 Oth0 r Jonior otaff hbos.ao Nrober - 300 1,000 - _ - 1,000 Htr&sdean hbosso 5/ NRober 117 200 1,300 650 1,000 2,900 5,850 Ablutions NRobtr 49 60 1,020 720 4d0 780 2,940 Offie and store Ntgser 1 2,220 2,220 - - 2,220 Implement shad NRober 1 500 S00 - - - 500 Dips NRooer 7 1,400 4,200 2,800 2,800 - 9,800 Spray rces Rotber 2 1,200 - 1,200 1,200 2,400 Nandlng yards Neber 2 2,000 2,000 - 2,000 4,000 Stables RMoser 20 4o 400 400 - - 800 Sub-total 24,540 12,370 6,020 6,880 49,810 4,979 10 Mechinsry and Eoiphnent Troto N-bser 3 2 600 2,600 2,600 2,600 - 7,800 7,020 Lorry (7 tosNuRber 2 6,000 6,ooo 6, oo0 - 12,000 10,800 Groder Nbeotr 1 1,200 1,200 - - _ 1,200 1,080 oroiner Nesber 2 000 800 -oo 1,600 1,440 Gyrososer sNb-er 2 600 600 600 1,200 1,080 Plmogh NRober 2 500 - 500 500 _ 1,000 900 Disc Barrow Rot=er 1 600 - - 600 _ 600 540 Sc les Nhootr 2 1,200 1,200 1,200 - 2,400 1,080 4-ebsel drive o,hicle Nesber 2 2,600 2,600 - 2,600 5,200 4,680 Veterioary eqeipsoct RMboer 2 200 200 _ _ 400 - Workshop tools NRster 2 1,000 1,000 - 1,000 _ 2,000 6,705 Saddl.ery N.estr 15 70 350 350 350 _ 1,050 - Bons. and effics furoitore - - 3,0G0 2,000 1,000 - - 3,000 - Pomp omd engine NRooer 1 900 900 - - 900 810 Radio, telephone NRboer 1 1,000 1,000 1,000 - - 2,000 900 S.b-tota1 20,450 ll,l,O I0,150 - 42,350 37.035 87 Li-stock Coos snd inolf heifers NRestr 6,ooo 36 54,000 54,00 0 54o000 54,000 216,000 B.us NRober 232 200 12,000 17,000 6,200 11,200 46,400 36,000 78 Sob-total 66,0oo 71,000 60,230 S5,200 262,b00 36,000 Total Copital Iost 202,220 136,490 101,540 74,080 514,330 146,324 Yotal Reourrent Coat 44,328 59,246 69,280 80R036 252,894 71,501 T.cIn RHnho Cost 246 $40 19S736 - 170 820 1S4.116 7b7.224 218.825 28 1/ Cost of onteril at K 270/oils - soon clearing at K 20/silo - Year 1 boundory feocing i-cludee al boundarirs e-cept for D-al-yaca rengc, border road and sajor perennial ri-ere (i.e. tette, Lilongve and Diompos) Y-sr 2 M.alni, Mo.aebiq-e border, Yew 3 gice and take foooieg co perennial riser- 2/ 14 acres peddo-k. 1,000 yards of f-eceat K 290/oil. 3/ K 12,000 in Year 1 a.loved for special water take off poiots fron those rivr -r.s which oight be sooc-ptible toercocca. 4/ 1 omodoso per 1,000U coial omit. / 1 herdesan per per 100 animal omit MAIAWI LILCNGWE IAND DEVELOPMENT PROGRAM PHASE II PROJECT Ranch development and Operation Cash Flow to Government ('000 M Kwacha) Year Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Year 11 Year 12 13-19 Year 20 SOURCES Services Ranch Sales 0.0 48.o 59.9 91.1 122.8 139.4 161.6 169.3 189.5 176.0 172.1 180.4 180.4 180.4 Increase Valuation of Ranch Herd - -- - - - - - - - - - - 709.0 2. Total Sources 0.0 48.o 59.9 91.1 122.8 139.4 161.6 169.3 189.5 176.0 172.1 180.4 180.4 889.4 Application Capital / 219.6 147.4 109.1 78.2 - - - - - - - - - - Operation and Maintenance / 46.3 62.2 72.5 84.0 86.4 105.8 11o.6 103.1 87.4 75.2 88.3 89.0 81.0 81.0 Total Application 265.9 209.6 181.6 162.2 86.4 lo5.8 110.6 103.1 87.4 75.2 88.3 89.o 81.0 81.0 Net Cash Flow (265.9) (161.6) (121.7) ( 71.1) 36.4 33.6 51.0 66.2 102.1 100.8 83.8 91.4 99.4 808.4 Cumulative (265.9) (427.5) (549.2) (620.3) (583.9) (553.0) (499.3) 433.1 (331.0) (230.2) (146.4) ( 55.0) 44.4 1449.2 j Herd Valuation Year 20 of the Ranch: Cows 5,000 at K 50 = K 250,000 Weaner calves 3,750 at K 28 = K 105,000 Heifers (9-24 months) 1,875 at K 40 = K 75,000 Steers (9-24 months) 1,875 at K 40 = K 75,000 Heifers (24-36 months) 1,823 at K 52 = K 94,796 Steers (24-36 months) 1,823 at K 52 = K 94,796 Bulls 200 at K 72 =K 14,400 Total Herd Valuation = K 708,992 CD Includes price contingency of 10% on vehicles, machinery, equipment and operational costs, and of 5 on livestock purchases. January 22, 1971 MALAWI ANNEX 7 Table 4 LILONGWE LAND DEVELOPMENT PROGRAM PHASE II PROJECT ECONOMIC RATE OF RETURN - RANCH M - KWACHA Ranch 1/ Added Value Total 2/ Investment Operational Total Valuation of Surplus Stall Surplus Year Costs Costs Costs Ranch Sales (Deficit) Fattening 3/ (Deficit) 1971/72 219,562 46,254 265,816 0 (265,816) (265,816) 1972/73 147,429 62,19b 209,623 48,016 (161,607) 8,930 (152,677) 1973/74 109,104 72,L52 181,556 59,888 (121,668) 9,024 (112,6W4) 1974/75 78,228 83,985 162,213 91,052 ( 71,161) 16,1h9 C 55,012) 1975/76 - 86,0oo 86,0oo 122,756 36,356 23,818 60,174 1976/77 - 105,800 105,800 139,412 33,612 29,407 63,o49 1977/78 - 110,600 110,600 161,636 51,036 35,739 86,775 1978/79 - 103,100 103,200 169,256 66,056 37,137 103,193 1979/80 - 87,400 87,400 189,544 102,1U4 39,753 141,897 1980/81 - 75,200 75,200 176,MAL 100,8U4 37,453 138,297 1981/82 - 88,300 88,4OO 172,116 83,716 37,740 121,456 1982/ 83 - 89,000 89,000 180,442 91,442 39,999 131,441 1983/84 - 81,000 81,000 180,442 99,442 39,999 139,481 1984/85 - 81,000 81,000 180,LL2 99,U42 39,999 139,4i4 1985/ 86 - 81,000 81,000 180,442 99,44L2 39,999 139,bbl 1986/ 87 - 81,000 81,000 180,442 99,442 39,999 139,4bl 1987/ 88 - 81,000 81,000 180,442 99,442 39,999 139,bbl 1988/ 89 - 81,000 81,000 180,bb2 99,U42 39,999 139,41l 1989 90 - 81,000 81,000 180,4b2 99,bb2 39,999 139,bbl 1990/ 91 - 81,000 81,000 889,442 808,LL2 39,999 848,441 1/ Financial Rate-of Return for Ranch. ROR 9.9%. 2/ Economic Rate of Return for Ranch including added value for fattening steers and heifers. ROR 13.86% 3/ Added value for stall fattening excludes feeding costs. January 21, 1971 MALAWI LILONGWE LAND DEVELOPMENT PROGRAM PHASE II PROJECT PROJECT COSTS - TOWN AND MOBILE HOUSES M - KWACHA FE Unit Cost Year 1 Year 2 Year 3 Year 4 Total Cost % Total FE Local Cost Housing Senior Housing (PH2) 1,860 66,960 (36) - - - 66,960 20 13,392 53,568 Junior Housing (2Z) 2,740 32,880 (12) - - - 32,880 20 6,576 26,304 Mobile Houses 200 3,000 (15) - - - 3,000 50 1,500 1,500 Fertilizer Store 63,554 63,55L - - 63,554 30 19,067 44,4 87 166,394 - - 166,394 4O,535 125,859 Operation and Maintenance Fertilizer Store - 2,600 2,600 2,600 7,800 - - 7,800 Maintenance - 4,ooo 7,000 9,000 12,000 32,000 10 3,200 28,800 Ii,O0O 9,600 11,600 1L,600 39,800 8 3,200 36,600 Total 170,394 9,600 11,600 1L,600 206,194 21 43,735 162,459 January 21, 1971 F-J MAIAWI LILONGWE LAND DEVELOPMENT PROGRAM PHASE II PROJECT PROJECT COSTS - SOIL CONSERVATION, PLANNING AND BUILDINM M - KWACRA Unit Total FE FE Local Item Cost 1971/72 1972/73 1973/74 1974/75 Cost % Total Cost Personnel Conservation and Planning Officer 17,520 17,520 (1) 17,520 (1) 17,520 (1) 17,520 (1) 70,080 50 35,040 35,040 Clerical Officer 400 1,200 (3) 1 278 (3) 1,356 (3) 1 434 (3) 5,268 - - 5,268 18,720 18,798 18,876 1 75,348 47 35,040 '0,308 Earthworks Unit Plant Superintendent 5,752 5,752 (1) 5,878 (1) 6,004 (1) 6,130 (1) 23,764 50 11,882 11,882 Senior Machine Supervisor 4,814 4,814 (1) 4,920 (1) 5,026 (1) 5,132 (1) 19,892 50 9,946 9,946 Mechanical Supervisor 4,500 9,000 (2) 9,168 (2) 9,336 (2) 9,504 (2) 37,008 50 18,504 18,504 Roads Supervisor 1,060 1,060 (1) 1,104 (1) 1,148 (1) 1,192 (1) 4,504 - - 4,504 Foreman Mechanic 1,060 1,060 (1) 1,104 (1) 1,148 (1) 1,192 (1) 4,504 - - 4,5o4 Road Foreman 1,060 1,060 (1) 1,104 (1) 1,148 (1) 1,192 (1) 4,504 - - 4,504 Senior Clerk/Storekeeper _ 1,060 1 060 (1) 1 104 (1) 1 148 (1) 1 192 (1) 4 504 - - 4 5c4 - tt243) ,5 ;680 39 S4,333 Land Use Planning and Layout Land Use Officer 5,752 5,752 (1) 5J878 (1) 6,oo4 (1) 6,130 (1) 23,764 50 11,882 11,882 Senior Field Officer 2,022 2,022 (1) 2,128 (1) 2,234 (1) 2,340 (1) 8,724 - - 8,724 Field Officer 1,060 1,060 (1) 1,104 (1) 1,148 (1) 1,192 (1) 4,504 - - 4,504 Senior Tracer 1,060 1,060 (1) 1,104 (1) 1,148 (1) 1,192 (1) 4,504 - - 4,504 Senior Leveller 1,060 2,120 (2) 2,208 (2) 2,296 (2) 2,384 (2) 9,008 - - 9,008 Tracer 400 1,200 (3) 1,278 (3) 1,356 (3) 1,434 (3) 5,268 - - 5,268 Leveller 400 12 000 (30) 12 780 (30) 13 560 (30) 14,34 (30) 52 680 - - 52 680 t7fft tlw,27:714 29,012 10,42 11 96570 Building Unit Chief Works Supervisor 5,752 5,752 (1) 5,878 (1) 6,0o4 (1) 6,130 (1) 23,764 50 11,882 11,882 Works Supervisor 1,060 1,060 (1) 1,104 (1) 1,148 (1) 1,192 (1) 4,504 - - 4,504 Tracer 400 400 (1) 426 (1) 452 (1) 478 (1) 1,756 - - 1,756 Clerical Officer 400 800 (2) 852 (2) 904 (2) 956 (2) 3 512 - - 3 512 H TI-017 B,260 ' 707 ' 77M 33,5 35 11,882 a T Plant Operators 1,200 30,000 (25) 30,000 (25) 30,000 (25) 30,000 (25) 120,000 - - 120,000 ~w Drivers 237 4,131 (17) 4,131 (17) 4,131 (17) 4,131 (17) 16,524 - - 16,524 Machine Assistants and Labor (300 per year) 80 24 000 24 000 24 000 24,000 96, ooo 96 000 S~~~~~~~ 8,131 232,52)4 - 3,2 Sub-totaL 133,883 136,051 138,219 140,387 548,540 99,136 449,404 April 9, 1971 MAIAWI LILONGWE LAND DEVELOPMENT FROGRAM PHASE II PROJECT PROJECT COSTS - SOIL CONSERVATION, PLANNING AND BUILDING M - KWACHA unit Total F.E. F.E. Local Operational Cost -1971-72 1972-73 1973 - 74 1974-75 Cost % Total Cost Building Maintenance Teams 2,385 2,385 2,385 2,385 9,540 - - 9,5°4 Building Construction Teams 15,661 15,661 10,661 10,661 52,644 - - 52,644 Bridge Building Teams 2,092 2,092 2,092 2,092 8,368 - - 8,368 Dambo Crossing Teams 10,664 10,664 5,66)4 5,664 32,656 - - 32,656 Road Construction Grader O/M K2.8 per hr 8,291 8,291 8,291 8,291 33,164 50 16,582 16,582 Road Maintenance " O/M K2.8 n 3,881 5,174 6,468 7,762 23,285 50 11,643 11,642 Diversion Ditch O/M K2.8 1 n 22,747 22,747 22,747 22,747 90,988 50 45,494 45,494 Water Channel O/M K2.8 ,, 1,0)42 1,042 1,0)42 1,042 4,168 50 2,0o84 2,0084 Road Construction Dozers O/M K5.08 it 5,913 5,913 5,913 5,913 23,652 50 11,826 11,826 Diversion Channel f O/M NK5.08 n 21,062 21,062 21,062 21,062 84,248 50 42,124 42,124 Water Channels "I 0/M K5.08 r 1,890 1,890 1,890 1,890 7,560 50 3,780 3,780 Wheeled Tractor 0/M KEl.0 t- 10,000 (10) 10,000 (10) 10,000 (lO) 10,000 (lO) 40,o00 50 20,000 20,000 Power Shovel O/M K5.08 fT it 10,160 (1) 10,160 (1) 10,160 (1) 10,160 (1) 40,640 50 20,320 20,320 Trailers O/M K .1 " " 350 (7) 350 (7) 350 (7) 350 (7) 1,400 50 700 700 Ploughs O/M K *o5 " " 250 (10) 250 (10) 250 (10) 250 (10) 1,000 50 500 500 Vibrator O/M K .05 " 60 (1) 60 (1) 60 (1) 60 (1) 240 50 120 120 Concrete Mixers O/M K .1 " n 600 (4) 600 (4) 600 (4) 600 (4) 2,400 50 1,200 1,200 Workshop running O/M 1,400 1,400 1,400 1,400 5,600 50 2,800 2,800 Tools 2,500 2,500 2,500 2,500 10,000 50 5,000 5,000 Drawing materials 300 300 300 300 1,200 50 600 600 Vehicles: FWD 20,000 x 6 t 6,000 (5) 6,000 (5) 6,000 (5) 6,000 (5) 24,000 50 12,000 12,000 Car 20,000 x 4 t 3,200 (4) 3,200 (4) 3,200 (4) 3,200 (4) 12,800 50 6,400 6,400 N/C 18,000 x 2 t 2,880 (8) 2,880 (8) 2,880 (8) 2,880 (8) 11,520 50 5,76o 5,760 5 ton 20,000 x 9 t 10,800 (16) 10,800 (16) 10,800 (6) 10,800 (6) 43,200 50 21,600 21,600 i-i 7 ton 20,000 x 10 t 8,000 (4) 8,000 (4) 8,000 (4) 8,000 (4) 32,000 50 16,000 16,000 30 cwt 20,000 x 9 t 1,800 (1) 1,800 (1) 1,800 (1) 1,800 (1) 7,200 50 3,600 3,600 CLX co Subsistence 2,500 2,500 2,500 2,500 10,000 - - 10,000 Bicycle Allowances 24 216 (9) 216 (9) 216 (9) 216 (9) 864 50 432 432 Uniforms 4 400 (100) 400 (100) 400 (100) 400 (100) 1,600 50 800 800 Sub-total 157,044 158,337 149,631 150,925 615,937 41 251,365 364,572 April 9, 1971 MALAWI LILONGWE LAND DEVELOPMENT PROGRAM PHASE II PROJECT PROJECT COSTS - SOIL CONSERVATION, PLANNING AND BUILDING M - KWACHA Unit Total FE FE Local Item Cost 1971/72 1972/73 1973/74 1974/75 Cost % Total Cost Capital Bull Dozer Replacement 46,000 46,ooo (1) 46,ooo 90 41,400 4,600 Wheeled Tractor Replacements 2,900 2,900 (1) 2,900 (1) 2,900 (1) - 8,700 90 7,830 870 Ploughs 300 300 (1) 300 (1) - - 600 90 540 60 Cement Mixers Replacements 800 800 (1) 800 (1) 800 (1) - 2,400 90 2,160 240 Vibrator 700 700 (1) - - - 700 90 630 70 Water Trailers 1,000 1,000 (1) - - - 1,000 90 900 100 Compressor 1,000 1,000 - - - 1,000 90 goo 100 Equipment for workshop - 1,600 - - - 1,600 90 1,440 160 Building Materials: Boreholes 900 36,000 (40) 36,000 (40) 36,000 (40) 36,000 (4o) 144,000 70 100,800 43,200 Borehole aprons and troughs 200 19,800 (99) 19,800 (99) 8,000 (40) 8,000 (40) 55,600 70 38,920 16,680 Dambo Crossings 360 12,960 (36) 12,960 (36) 12,960 (36) 12,960 (36) 51,840 70 36,288 15,552 Bridges 7,000 35,000 (5) 14,000 (2) 14,000 (2) 14,000 (2) 77,000 70 53,900 23,100 Culverting 500 15,000 (30) 15,000 (30) 15,000 (30) 15,000 (30) 60,000 70 42,o0o 18,000 Survey Equipment and Map Printer 1,824 - - - 1,824 90 1,642 182 Vehicles FWD Replacement 2,800 5,600 (2) 2,800 2,800 (1) - 11,200 90 10,080 1,120 Car 1,400 2,800 (2) - 2,800 (2) - 5,600 90 5,o40 560 M/C 500 4,ooo (8) - 2,000 (4) - 6,000 90 5,400 600 7 ton Replacement 4,800 - 9,600 (2) - - 9,600 90 8,640 960 7 ton Tippers Replacement 6,000 - 12,000 (2) - - 12,000 90 10,800 1,200 5 ton Flat Replacement 5,200 10,400 (2) 5,200 (1) 5,200 (1) - 20,800 90 18,720 2,080 m 30 cwt truck 3,200 3 200 (1) - - - 3 200 90 2,880 320 Sub-total 154,884 131,360 1 47 85,960 8 5U,62T 75 390,910 129,754 GRAND TOTAL 445,811 425,748 436,310 377,272 1 685 141 44 741.411 943 730 April 9, 1971 MALAWI LILONGWE LAND DEVELOPMENT PROGRAM PHASE II PROJECT PROJECT COSTS - LAND ALLOCATION M - KWACHA Item Unit Cost 1971/72 1972/73 1973/74 1974/75 Total Cost FE % FE Total Local Cost 1. Personnel Senior Land Allocation Officer 6,562 6,562 (1) 6,562 (1) 13,124 50 6,562 6,562 Allocation Officer 2,678 2.678 (1) 2,804 (1) 2,930 (1) 3,o56 (1) 11,468 - - 11,468 Demarcation Officer 1,o60 4,240 (4) 5,476 (5) 5,696 (5) 5,916 (5) 21,328 - - 21,328 Surveyor 4,619 4,619 (1) 4,619 (1) 4,619 (1) 4,619 U1) 18,476 50 9,238 9 238 Tracer 400 400 (1) 426 (1) 452 (1) 478 (1) 1,756 - _ 1, 56 Demarcation Assistant 400 3,200 (8) 3,408 (8) 3,616 (8) 3,824 (8) 14,048 - - 14,048 Survey Assistant 400 3,200 (8) 4,208 (10) 4,468 (10) 4,728 (10) 16,604 - - 16,604 Clerical Officer 400 3,200 (8) 3,808 (9) 3,834 (9) 4,068 (9) 14,910 - - 14,910 Casual Labor 2,400 2,800 2,800 2,800 10,800 - - 10,800 Drivers 432 3,024 (7) 3,456 (8) 3,456 (8) 3,456 (8) 13,392 - - 13,392 33,523 37,567 31,871 32,945 135,906 5 15,800 120,106 2. Operational Equipment and drawing materials 7,160 5,800 5,800 5,800 24,560 50 12,280 12,280 Subz.stence allowances 500 500 500 500 2,000 - - 2,000 Bicycle allowances 24 384 (16) 432 (18) 432 (18) 432 1,680 50 840 840 Vehicles: FWD x 12,000 x 6 t 2,880 (4) 3,600 (5) 3,600 (5) 3,600 (5) 13,680 50 6,840 6,840 Cars x 24,000 x 4 t 960 (3) 960 (3) 640 (2) 640 (2) 3,200 50 1,600 1,600 30 CWT 18,000 x 9 t 1,620 (1) 1,620 (1) 1,620 (1) 1,620 (1) 6,480 50 3,240 3,240 13,504 12,912 12,592 12,592 51,600 48 24,800 26,800 3. Capital Vehicles: FWD 2,800 - 2,800 (1) - - 2,800 90 2,520 280 Cars 1,400 2,800 (2) - - - 2,800 90 2.520 280 (Dfr 2,800 2,800 - - 5,600 90 5,040 560 w OD Total 49,827 53,279 44,463 45,537 193,106 24 45 640 147,466 April 12, 1971 I MALAWI LILONGWE LAND DEVELOPMENT PROGRAM PHASE II PROJECT PROJECT COSTS SURVEYS M - KWACHA FE Unit Cost 1 971/72 1972/73 1973/74 1974/75 Total Cost % Total FE Local Cost 1. Personnel Senior Surveyor 7,250 7,250 (1 ) 7,250 (1) 7,250 (1 ) 7,250 (1) 29,000 50 14,500 14,500 Staff Surveyor 5,655 11,310 (2) 11,746 (2) 12,182 (2) 12,618 (2) 47,856 50 23,929 23,928 Senior Photogrammerist 4,698 4,698 (1) 4,872 (1) 5,046 (1) 5,220 (1) 19,836 50 9,918 9,918 Senior Cartographer 4,698 4,698 (1) 4,872 (1) 5,046 (1) 5,220 (1) 19,836 50 9,918 9,918 Cartographer 1,208 2,416 (2) 2,508 (2) 2,600 (2) 2,692 (2) 10,216 - - 10,216 Surveyor 4,321 4,321 (1) 4,321 (1) 4,321 (1) 4,321 ( 1) 17,284 50 8,642 8,642 Photogrammerist 4,619 4,619 (1) 4,619 (1) 4,619 (1) 4,619 (1) 18,476 50 9,238 9,238 Photogrammneiist 1,208 3,624 (3) 3,762 (3) 3,900 (3) 4,038 (3) 15,324 - - 15,324 Senior Clerical Officer 1,060 1,060 (1) 1,104 (1) 1,148 (1) 1,192 (1) 4,504 - - 4,504 Senior Survey Assistant 1,060 2,120 (2) 2,208 (2) 2,296 (2) 2,384 (2) 9,008 - - 9,008 Senior Cartographer Assistant 1,060 2,120 (2) 2,208 (2) 2,296 (2) 2,384 (2) 9,008 - - 9,008 Survey Assistant 400 2,400 (6) 2,556 (6) 2,712 (6) 2,868 (6) 10,536 - - 10,536 Cartographic Assistants 400 3,200 (8) 3,408 (8) 3,616 (8) 3,824 (8) 14,048 - - 14,048 Clerical Officer 400 800 (2) 852 (2) 904 (2) 956 (2) 3,512 - - 3,512 Drivers 432 1,728 (4) 1,728 (4) 1,728 (4) 1,728 (4) 6,912 - - 6,912 Casual Labor 74 4,440 (60) 4,440 (60) 4,440 (60) 4,440 (60) 17,760 - - 17,760 60,804 62,454 64,104 65,754 253,116 30 76,144 176,972 2. Operational Subsistence 720 720 720 720 2,880 - - 2,880 Bicycles 24 216 (9) 216 (9) 216 (9) 216 (9) 864 50 432 432 Equipment and materials 12,816 9,916 9,916 9,916 42,564 50 21,282 21,282 FWD x 24,000 x 6 t 4,320 (3) 4,320 (3) 4,320 (3) 4,320 (3) 17,280 50 8,640 8,640 Truck x 18,OOU x 9 t 1,620 (1 ) 1,620 (1 ) 1,620 (1) 1,620 (1 ) 6,480 50 3,240 3,240 19,692 16,792 16,792 16,792 70,068 48 33,594 36,474 3. Capital Equipment 8,556 - - - 8,556 90 7,700 856 Aerial Photography 11,000 8,000 8,000 8,000 35,000 50 17,500 17,500 Triangulation and reflying 3,000 2,400 2,400 2,400 10,200 50 5,100 5,100 a Vehicles FWD Replacements 2,400 2,400 (1) 2,400 (1 ) 2,400 (1) 7,200 90 6,480 720 r X 24,956 12,800 10,1400 12,800 60,956 60 36,780 24,176 Total 105,452 92,046 91,296 95,346 384,140 38 146,518 237,622 April 12, 1971 MALAWI LILONGWE LAND DEVELOPMENT PROGRAM PHASE II PROJECT PROJECT COSTS EXTENSION, TRAINING AND MARKETING M - KWACHA Unit 1971/72 1972/73 1973/74 1974/75 Total FE FE Total Item Cost Year 1 Year 2 Year 3 Year 4 Cost % Total Locsl A. Principle Agricultural Officer 7,250 7,250 (1) 7,250 (1) 7,250 (1) 7,250 (1) 29,000 50 14,500 14,500 Driver 432 432 432 432 432 1,728 1,728 Operating Costs 1 FWD 0/ 24,000 x 6 t 1,440 1,440 1,440 1,44D 1,440 5,760 50 2,880 2,880 Capital 1 FWD Replacement 2,800 2,800 (1 ) 2,800 90 2,520 280 Total A 9,122 11,922 9,122 9,122 39,288 51 19,900 19,388 B. Marketing Senior Marketing Officer 7,250 7,250 (1) 7,250 (1) 7,250 (1) 7,250 (1) 29,000 50 14,500 14,500 Senior Clerical Officer 1,060 1,060 (1) 1,104 (1) 1,148 (1) 1,192 (1) 4,504 - - 4,504 Clerical Officer 400 800 (2) 844 (2) 88B (2) 932 (2) 3,464 - - 3,464 Driver 432 432 (1) 432 (1) 432 (1) 432 (1) 1,728 - - 1,728 Operating Costs 1 car O/M 24,000 x 4 t 960 960 960 960 3,840 50 1,920 1,920 Total B 10,502 10,590 10,678 10,766 42,336 39 16,420 26,116 C. Field Services Senior Ezcteniot Officer 4,680 4,680 (1. 4,680 (l 4,680 1) 4,680 (1 18,720 18,720 Senior Techca Officer 2,022 6,066 (3 6,384 (3 6,702 3 .020 (3) 26,172 -- 26,172 Research and Trials Officer 5,752 5,752 (1 5,878 (1 6,0a4 1 ) ,130 (1 23,764 50 11,882 11,8o2 Research and Trials Assistants 400 1,200 (3) 1,266 (3) 1,332 (3) 1,398 (3) 5,196 - - 5,196 Senior Field officer Farm Planning 2,340 2,340 (1 ) 2,446 (1 ) 2,552 (1 ) 2,658 (2) 9,996 - - 9,96 Leveller Farm Planning 400 2,400 (6) 2,532 (6) 2,664 (6) 2,794 (6) 10,390 - - 10,390 Tracer Farm Planning 400 800 (2) 844 (2) 888 (2) 932 (2) 3,464 - - 3,464 Clerical Officer Fanm Planning 400 400 (1 ) 422 (1 ) 444 (1 ) 466 (1 ) 1,732 - - 1,732 Forester 1,060 1,060 (1) 1,104 (1) 1,148 (1) 1,192 (1) 4,5o4 - - 4,504 Forest Ranger 400 1,200 (3) 1,266 (3) 1,332 (3) 1,398 (3) 5,196 - - 5,196 Livestock Officer 6,742 6,742 (1 ) 6,961 (1 ) 7,179 (1 ) 7,397 (1 ) 28,279 50 14,139 14,140 Assistant Livestock Officer 1,060 3,180 (3) 3,312 (3) 3,444 (3) 3,576 (3) 13,512 - - 13,512 Senior Veterinary Assistant 1,060 1,060 (1) 1,104 (1) 1,148 (1) 1,192 (1) 4,504 - - 4,504 X Veterinary Assistant 40o 1,600 (4) 1,688 (4) 1,776 (4) 1,B64 (4) 6,928 - - 6,928 Clerical Officer Livestock 400 800 (2) 844 (2) 888 (2) 932 (2) 3,464 - - 3,464 Drivers 432 5,616 (13) 5,616 (13) 5,616 (13) 5,616 (13) 22,464 - - 22,464 co Casual Laborer 74 592 (8) 5 (8) 592 (8) 592 (8) 2,368 - _ 2,368 45,488 46,939 48,389 49,837 190,653 14 26,021 164,632 MALAWI LILONGWE LAND DEVELOPMENT PROGRAM PHASE II PROJECT PROJECT COSTS EXTENSION, TRAINING AND MARKETING M - KWACHA Total FE FE Unit Cost Year 1 Year 2 Year 3 Year 4 Cost % Total Local Cost Operational and Maintenance Principle Field Officer FWDx 24,000 x 6 t 1,440 (1) 1,440 (1) 1,440 (1) 1,440 (1) 5,760 50 2,880 2,880 Research and Trials Officer FWDx 20,000 x 6 t 1,200 (1) 1,200 (1) 1,200 (1) 1,200 (1) 4,800 50 2,400 2,400 Senior Field Officer Farm Planning and STO Car x 18,000 x 4 t 2,880 (4) 2,880 (4) 2,880 (4) 2,880 (4) 11,520 50 5,760 5,760 Forester FWD x 20,000 x 6t 1,200 (1) 1,200 (1) 1,200 (1) 1,200 (1) 4,800 50 2,400 2,400 Livestock Officer FWD x 20,000 x 6 t 1,200 (1) 1,200 (1) 1,200 (1) 1,200 (1) 4,800 50 2,400 2,400 Assistant Livestock Officer M/C x 18,000 x 2 t 1,080 (3) 1,080 (4) 1,080 (4) 1,080 (4) 4,320 50 2,160 2,160 Senior Veterinary Assistant M/C x 18,000 2 t 360 (1) 360 (1) 360 (1) 360 (1) 1,440 50 720 720 Livestock Lorry 20,000 x 10 t 4,000 (2) 4,000 (2) 4,000 (2) 4,000 (2) 16,000 50 8,ooo 8,000 Research Lorry 18,000 x 9 t 3,240 (2) 3,240 (2) 3,240 (2) 3,240 (2) 12,960 50 6,480 6,480 Staff car and pickup 20,000 x 4 t 2,400 (3) 2,400 (1) 2,400 (1) 2,400 (1) 9,600 50 4,800 4,800 Subsistence 1,000 1,000 1,000 1,000 4,000 - - 4,000 Bicycle allowances 24 312 (13) 312 (13) 312 (13) 312 (13) 1,248 50 624 624 Unit Experiments 12,000 12,000 12,000 12,000 48,0oo 20 9,600 38,400 Uniforms 800 500 500 500 2,300 50 1 150 1 150 33,112 32, 32,812 32,12 131,54 37 4 el 7W Forestry Seedling Production 14,000 14, 14,000 14,000 56,ooo - 56,ooo Capital Vehicles Principle Field Officer FWD 2,800 2,800 (1) 2,800 90 2,520 280 Research and Trials FWD 2,800 2,800 (1) 2,800 90 2,520 280 Farm Planning/STO Car 1,400 2,800 (2) 1,400 (1) - 4,200 90 3,780 420 Forester FWD 2,800 2,800 (1) 2,800 90 2,520 280 Staff Car 1,400 1,400 (1) 1,400 90 1,260 1140 Motorcycle 500 2,000 (4) 2,000 (4) 4,000 90 3,600 400 5 ton Flat Trucks 5,000 5,000 5,000 90 4,500 500 Pickups 1,400 1,400 (1) 1,400 (1) 2800 90 2,520 280 3,400 2,800 11,200 8,400 25,800 90 23,220 2,580 Total C 96,000 96,551 106,401 105,049 404,001 28 98,615 305,386 MALAWI LILONGWE LAND DEVELOPMENT PROGRAM 407' & PHASE II PROJECT krontld) PROJECT COSTS - EXTENSION, TRAINING AND MARiKETING M - KWACHA 1971/72 1972/73 1973/74 1974/75 FE FE Unit Cost Year 1 Year 2 Year 3 Year 4 Total Cost % Total Local Cost Personnel D. Training Project Training Officer 6,742 6,742 (1) 6,961 (1) 7,j7t (1) 7,397 (1) 28,279 50 14,139 14,140 Senior Field Officer 2,022 2,022 (1) 2,128 (1) 2,236 (1) 2,340 (1) 8,724 - - 6,724 Senior Executive Officer 2,022 2,022 (1) 2,128 (1) 2,234 (1) 2,340 (1) 8,724 - - 8,724 Field Officer 1,060 4,240 (4) 4,416 (4) 4,592 (4) 4,768 (4) 18,016 - - 18,C16 Senior Field Assistant 1,060 1,060 (1) 1,104 (1) 1,148 (1) 1 ,1 92 (1) 4,504 - - 4,504 Senior Clerical Officer 1,060 1,060 (1) 1,104 (1) 1,148 (1) 1,192 (1) 4,504 - - 4,504 Field Assistant 400 9,000 (10) 4,220 (10) 4,440 (10) 4,660 (10) 17,320 - - 17,320 Clerical Officer 400 800 (2) 899 (2) 888 (2) 932 (2) 3,964 - - 3,464 Demonstrator iR8 2,880 (16) 2,880 (16) 2,880 (16) 2,880 (16) '1,520 - - 11,520 Drivers 432 3,888 (9) 3,888 (9) 3,888 (9) 3,888 (9) 15,552 - - 15,552 Casual Labor 74 148 (2) 148 (2) 148 (2) 148 (2) 592 - - 592 28,862 29,821 30,779 31,737 121,199 1 2 14,139 107,0'O0 Operational Subsistence 500 500 500 500 2,000 - _ 2,00C Pickups x 20,000 4 t FWD 2,400 (3) 2,400 (3) 2,400 (3) 2,900 (3) 9,600 50 4,800 4,800 Training Centre FWD x 20,000 x 6 t 2,400 (2) 2,400 (2) 2,400 (2) 2,400 (2) 9,600 50 4,800 4,800 Car x 18,000 x 4 t 720 (1) 720 (1) 720 (1) 720 (1) 2,880 50 1,400 1,400 Motorcycle x 12,000 x 2 t 1,200 (5) 1,200 (5) 1,200 (5) 1,200 (5) 4,800 50 2,900 2,400 9 ton trucks x 18,000 x 9 t 3,240 (3) 3,240 (3) 3,240 (3) 3,240 (3) 12,960 50 6,480 6,980 Bicycles 29 624 (26) 624 (26) 624 (26) 624 (26) 2,996 50 1,248 1,248 Training Centre, Visual Aids, Staff Upgrading 11,000 11,000 229 12,00 j.,000 I10 9,4.00 39,600 22,084 22,084 22,o84 22,089 88,336 29 25,568 62,768 Capital Vehicles FWD 2,80D 2,800 90 2,520 280 Car 1,40C 1,400 (1) 1,400 90 1,260 190 Motorcycle 500 2,500 (9) 1,500 (3) 1,000 (2) 5,000 96 4,500 5CO 5 ton trucks 5,o00 _ __ 5,000 (1) 5,ocs9, 70 9,500 500 2,900 1,970 6,500 3,800 14,200 90 12,780 1,420 Total D ?3,aO6 53,3095 59,76 57,021 223, 33 03 5'.>B 171,7L,8 .. Institutiosal Development Unit Personsel Senior Rural Developnent Officer '77 7 40 "11 , 772 rl) 7,f7? '1 7,() ' 31 ) ,92 cr 1', 33,7 76,399 Assistont Rural Develornmet Officer 1,799 0,7(Y (32 1 rn4 c,l (5) 0,2 '0) 33 5'6 _ '3,576 *' OP y 1.ists 4900 L. (l) 2,25 1i) 450 (I) f76 (I) l,750 _ 1,75r Clerizal C'ficers ',07 L.ro 'I 02, 201 70 '2) 027 (2) ' ,22 - 1,025 Drivers 2'_ 369 (22 868L '92 Ff4 (92 _6 (2) 3,'56 - -,956 1'i,,R9 080 7 Q(' 19,'05 19,920 72,2 'S 7' 57,151 Cpera.z'.-al Senrnr Officer - *: ( 071) ' 39C (l) .O) _,?Of r0 l,0l'o10 Support Vehicle : 8(o (1) r 0 (I) QOC '1) 950 (1) 3,200 50 ,1'0 1,600 Motor Cycles 360 1,960 (3) 1,080 1 j ,09o (7) i,3fo 3 9,320 50 ' 2,16C 9,,bsistanre 9)200 9nn 700 200 "son - Ao Materials 300r '00 000 1,200 50 600 3,100 ,9o 0 r,10 0,780 19,720 $,9fr 6,760 Capital Cars l,aO 1,90o (21 1,P70 ''n 1 9OC (1) - ,,2o0 90 - 420 Motor Cycles 500 1,5fr 'I, l,C0 (3 2, ( 3,300 (2) 5,00 0 9 600 500 0,0027 2,900lr 7,900 3 ,nO0 9,20n 8F?'0 990 "otal N 20,f6O 2?),3'0 29,3P5 279,000 Q0,1', 90 29,584 64,831 '.rand Total lP9,73n 176,73F 210,999 206,508 03,975 27 217,706 586,9 Wpril 12, 1971 MALAWI LILONGWE LAND DEVELOPMENT PROGRAM PHASE II PROJECT PROJECT COSTS - CREDIT ADMINISTRATION M - KWACHA Unit Total FE FE Local Item Cost 1971/72 1972/73 1973/74 1974/75 Cost % Total Cost Personnel Chief Agricultural Credit Officer 6,321 6,321 (1) 6 321 (1) (1) 6,321 (1) 25,284 50 12,642 1 642 Agricultural Credit Officer 1,060 3,180 (3) 4,372 (4) 5,' 0 (5) 5,828 (5) 18,988 - - 18 Chief Credit Accountant 6,321 6,321 (1) 6,321 (1) 6,321 (1) 6,321 (1) 25,284 50 12,642 12,642 Credit Accountant 1,060 2,120 (2) 2,208 (2) 2,296 (2) 2,384 (2) 9,008 - - 9,008 Clerical Officer 400 1,200 (3) 1,678 (4) 2,182 (5) 2,292 (5) 7,352 - - 7,352 Punch/Accounting Machine Operator 400 400 (1) 822 (2) 866 (2) 910 (2) 2,998 - - 2,998 Drivers 432 1,728 (4) 2160 (5) 2,592 (6) - 9,072 21,270 23,882 26,186 26,648 97,986 26 25,284 72,702 Operational Payment to FMB (Debt Collection) 450 1,500 2,500 3,500 7,950 - - 7,950 Maintenance and Stationery 600 1,400 1,600 1,800 5,400 50 2,700 2,700 Subsistence 600 800 1,000 1,000 3,400 - - 3,400 Vehicle O/M Cars x 20,000 x 4 t 800 (1) 800 (1) 800 (1) 800 (1) 3,200 50 1,600 1,600 Cars x 18,000 x 4 t 2,160 (3) 2880 (4) 3,600 (5) 3,600 (5) 12,240 50 6,120 6,12 ,61 7,380 9,500 10,700 32,190 32 T10T,4 21,770 Capital Accounting and ancillary equipment 3,000 3,000 - 1,000 7,000 90 6,300 700 Vehicles - New 1,400 - 1,400 (1) 1,400 (1) - 2,800 90 2,520 280 - Replacement 1,400 1,400 (1) 2,800 (2) 2800 (2) - 7,000 90 6,300 700 X M 4,400 7,200 4,200 1,000 ,800 1 0 15,120 1,680 o 01 Total 30,280 38,462 39,886 38,348 146,976 35 50,824 96,152 April 12, 1971 MALAWI ANNEX 8 Tabe77 LILONCIE LAND DEV1LOPMET PROGRAM PHASE II PROJECT PROJECT COSTS - HEADQUARTERS M -KWACHA Total FE FE Local Unit Costs Year 1 Year 2 Year 3 Year 4 Cost % Total Cost Personnel Managemept Project Manager 21,667 21,667 (1) 21,667 (1) 21,667 (1) 21,667 (1) 86,668 50 43,334 43,334 Finance and Administrative Controller 19,600 19,600 (1 ) 19,600 (1 ) 19,600 (1) 19,600 (1) 78,400 50 39,200 39,200 Management Assistants (Supernumsary) 4,000 16,000 (4) 16,000 (4) 16,000 (4) 16,000 (4) 64,000 - - 64,0C0 57,267 57,267 57,267 57,267 229,068 82,534 146,534 Transport Unit Transport Controller 2,640 2,690 (1) 2,796 (1) 2,902 (1) 3,008 (1) 11,396 - - 11,396 Senior Clerical Officer 1,060 1,106 (1) 1,104 (1) 1,148 (1) 1,192 (1) 4,55o - - 4,550 Clerical Officer 400 400 (1) 422 (1) 444 (1) 466 (1) 1,732 - - 1,732 4,196 4,322 4,494 4,666 17,678 - 17,678 Accounts Unit Chief Accountant 6,061 6,061 (1) 6,294 (1) 6,527 (1) 6,760 (1) 25,642 5o 12,821 12,821 Accountant 1,060 4,240 (4) 4,416 (4) 4,592 (4) 4,768 (4) 18,016 - - 18,016 Accounts Assistants 400 2,400 (6) 2,532 (6) 2,664 (6) 2,796 (6) 10,392 - - 10.392 12,701 13,242 13,783 14,324 54,050 12,821 41,229 Administration acd Personnel Senior Executive Officer 2,128 2,128 (1) 2,234 (1) 2,340 (1) 2,446 (1) 9,1L48 - - 9,148 Senior Clerical/Executive Officer 1,060 3,180 (3) 3,312 (3) 3,444 (3) 3,576 (3) 13,512 - - 13,512 Senior Stores Supervisor 1,060 1,o6o (1) 1,104 (1) 1,148 (1) 1,192 (1) 4,504 - - 4,504 Senior Clerk Storekeeper 1,o60 1,060 (1) 1,104 (1) 1,148 (l) 1,192 (1) 4,504 - - 4,504 Clerk Storekeeper 400 800 (23 888 (2) 976 (2) 1,064 (2) 3,728 - 2,346 3,728 Stenographer 1,400 2,800 (2) 2,888 (2) 2,976 (2) 3,064 (2) 11,728 20 9,382 Stenographer 3,886 3,886 (1) 3,886 3,886 3,886 15,544 s0 7,772 7,772 Copy Typists 400 1,600 (4) 2,466 (6) 2,538 (6) 2,610 (6) 9,214 - - 9,214 Messengers 146 584 (4) 584 (4) 584 (4) 584 (4) 2,336 - - 2,336 Watchmen 146 584 (4) 584 (4) 584 (4) 584 (4) 2,336 - - 2,336 Drivers 432 1,728 (4) 1,728 (4) 1,728 (4) 1,728 (4) 6,912 - - 6,912 Casual Labor 72 360 (5) 360 (5) 360 (5) 360 (5) 1,440 - - 1,440 Block allocation for trainees 4,00o 4,000 4.000 4,000 16,00 - 16,00 23,770 25,138 25,712 26,286 100,906 10,118 90,788 Operational H.Q. Running Costs 8,000 8,000 8,000 8,000 32,000 50 16,o00 16,00o Telephone and Radio 7,000 7,000 7,000 7,000 28,000 30 8,400 19,600 Vehicles: cars x 18,000 x 4 t 2,160 (3) 2,160 (3) 2,160 (3) 2,160 (3) 8,640 50 4,320 4,320 FWD x 20,000 x 6 t 1,200 (1) 1,200 (1) 1,200 (1) 1,200 (1) 4,800 50 2,400 2,400 Subsistence Allowances 2,0 2,000 2,000 8J0O 2,000 - 20,360 20,360 20,360 20,360 81,440 31,120 50,320 Capital Small equipment 20,000 6,ooo 6,ooo 6,ooo 38,000 80 30,400 7,600 Vehicles: Cars 1,400 2,800 (2) - 1,400 (1) - 4,200 90 3,780 420 FWD - - 3,400 (1) - 3,400 90 3,060 340 22,800 6,ooo 10,800 6,0oo 45,600 82 37,240 8,360 Total 141 094 126 329 132,416 128,903 528,742 33 173,833 354,909 April 12, 1971 MALAWI LILONGWE LAND DEVELOPMENT PROGRAM PHASE II PROJECT PROJECT COSTS - EVALUATION UNIT M - KWACHA 1971/72 1972/73 1973/74 1974/75 Total FE FE Local Item Unit Cost Year 1 Year 2 Year 3 Year 4 Cost % Total Cost Personnel Agricultural Economist 6,7142 6,742 (1) 6,961 (1) 7,179 (1) 7,397 (1) 28,279 5° l),139 l 0 Assistant Statistician 1,400 1,400 (1) 1,444 (1) 1,488 (1) 1,532 (1) 5,864 - - Executive Officers 1,208 3,624 (3) 3,762 (3) 3,900 (3) 4,038 (3) 15,324 - - 1¢,324 Statistical Clerk 400 12,000 (30) 13,460 (32) 14,164 (32) 14,868 (32) 54, 492 - - 54,492 Drivers 432 1,728 (4) 1,728 (4) 1,728 (4) 1,728 (4) 6,912 - - 6,912 Copy Typist 400 422 (1) 444 (1) 466 (1) 488 (1) 1,820 - - 1,820 25,916 27,799 28,925 30,o51 112,691 10 14,139 98,552 Operational Computer time 1,000 1,000 1,000 1,000 4,000 20 800 3,200 Bicycle allowances 24 720 (30) 768 (32) 768 (32) 768 (32) 3,024 50 1,512 1,512 Vehicles FWD x 20,000 mls x 6 t O/M 4,800 (4Q) 4,800 (40) 4,800 (40) 4,800 (40) 19,200 50 9,600 9,600 Allowances 576 624 624 624 2,448 - - 2,448 Uniforms KI0 per enumerator 300 (30) 320 (32) 320 (32) 320 (32) -1,260 50 630 630 7,396 7,512 7,512 7,512 29,932 40 12,542 17,390 Capital Card verifier 600 - - - 600 90 540 60 Office and field equipment 3,000 650 1,400 650 5,700 80 4,560 1,140 Vehicles FWD - 2,800 (1) 5,600 (2) - 8,400 90 7,560 840 3,600 3,450 7,000 650 14,700 86 12,660 2,040 Total 36.912 38.761 387.213 17323 25 -1 L April 12, 1971 MALAWI LILONGWE LAND DEVELOPMENT PROGRAM PHASE II PROJECT PROJECT COSTS - INDIVIDUAL UNIT COSTS M - KWACHA Unit Cost Year 1 Year 2 Year 3 Year h Year 5 CAPITAL A. Vehicles Cars 1,4OO 1,4bo (1) - - - 700 ) Motorcycles 500 1,000 (2) - 1,000 (2) - 1,000 (2) 2,4OO - 1,000 _ 1,700 B. Housing and buildings Development Officer and (Mhrketing Officer) 3G 3,000 6,000 (2) - - - (STA) 2Z 2,000 2,000 (1) - - (TA) PH 1,000 8,ooo (8) - - Temporary Housing (TAS's and Minor Employees) 280 2,520 (9) - - 1 Office Block 2,4OO 2,40O - - Market and store 7,000 7,000 - - Fencing and equipment 1,000 1,000 - - Clearing 300 300 - - - - Dip. 2,000 2,000 - - - - Fertilizer store 450 tons) (12,150 cu ft) 4,000 4,000 - - CD 35,220 - - Juriuary 22, 197. MALAWI LILONGWE LAND DEVELOPMENT PROGRAMiI PHASE II PROJECT PROJECT COSTS - INDIVIDUAL UNIT COSTS M - KWACHA Salary Unit Grade Scale Cost Year 1 Year 2 Year 3 Year 4 Year 5 Personnel Development Officer TO B3 1,060 1,060 (1) 1,104 (1) 1,1L8 (1) 1,192 (1) 618 (½) Senior Field Assistant STSX Cl 1,060 1,060 (1) 1,lOb (1) 1,1b8 (1) 1,192 (1) 1,236 (1) Field Assistant TA C2 bOO 4,000(10) 4,220(10) b,bbO(10) b,660(10) 2,bb0 (5) Veterinary Assistant TA C2 4OO boo (1) 422 (1) WIb (1) 466 (1) 488 (1) Credit Assistants TA C2 boo 800 (2) 8bb (2) 888 (2) 932 (2) 976 (2) Unit Marketing Officers STA B3 1,060 1,060 (1) 1,10l (1) 1,148 (1) 1,192 (1) 1,236 (1) Clerical Officer Marketing LO L2 bOO bOO (1) 422((l) 4L4 (1) b66 (1) 488 (1) Clerical Officer LO L2 bOO boo (1) 422 (1) 4b4 (1) 466 (1) 488 (1) Driver 432 432 (1) 432 (1) 432 (1) b32 (1) 216 () Watchman SCIV FL 146 146 (1) 146 (1) 1b6 (1) 1b6 (1) 146 (1) Guard SCIV Fb 1b6 146 (1) 146 (1) 1b6 (1) 1b6 (1) 1b6 (1) 9,90b 10,366 10,828 11,290 8,478 Operational and Maintenance Bicycle allowances 2b 312(13) 312(13) 312(13) 312(13) 192 (8) Cars 12,000 0/M x 4 t 480 480 (1) 480 (1) 480 (1) b8o (1) 240 (M) Motorcycles 12,000 miles O/M x 2 t 240 480 (2) b80 (2) 480 (2) 480 (2) 480 (2) Running costs for offices 100 100 100 100 80 Building Maintenance 1.5% 500 500 boo Running cost fertilizer stores 14O L4O 140 14O 1bo 1,512 1,512 2,012 2,012 1,532 Total Cost a I i) Capital 35,220 - 1,000 - 1,700 D 4 ii) Recurrent 11,b16 11,878 12,840 13,302 10,010 \ co 0 0 Total 46,636 11,878 13,840 13,302 11,710 1fi January 21, 1971 MALAWI LILONGWE LAND DEVELOPMENT PROGRAM PHASE II PROJECT PROJECT COSTS - TOTAL UNIT COSTS M - KWACHA Year 1 Year 2 Year 3 Year 4 % Total Local 1971/72 1972/73 1973/74 1974/75 Total FE FE Costs Capital A. Vehicles 15,000 15,600 17,000 19,700 67,300 90 60,570 6,730 B. Buildings 176,io0(5A/105,660 (3) 10 5,660(3) 493,080 30 147,924 345,156 191,100 121,260 122,660 125,360 56d,380 37 208,49. 351,886 Personnel Staff salaries 147,500 (l4 A8o,h30 (17) 207,712 (20) 228,4h6 (23) 764,o8 - - 764 i o88 Operational (14) (17) (20) (23) Vehicles O/M 13,440 16,320 18,2b0 19,920 67,920 50 33,960 33,960 Bicycle allowances 4,368 5,30b 5,760 6,096 21,528 50 10,764 10,764 Office and store operation 3,360 4,o80 4,720 5,3140 17,500 10 1,750 15,750 Building M4aintenance 7,000 8,500 9,600 10 600 35,700 10 32570 32,130 28,168 3b,20b 38,320 h1,956 l42,648 35 5O,Ob4 92,60b Total 366,768 335,894 36B,692 395,762 1,467,116 18 258,538 1,208,578 - m- 0 0 1/ Number of units completed in project year. 1/ Number of units in operation. ANNEX 9 Table 1 MALAWI LILONGWE LAND DEVELOPMENT PROGRAM PHASE II PROJECT ESTIMATED SCHEDULE OF DISBURSEMENT IBRD/IDA Fiscal Cumulative Disbursement Year and Quarter at end of Quarter (Us$toOo) 1971/72 December 31, 1971 March 31, 1972 92 June 30, 1972 559 1972/73 September 30, 1972 1,119 December 31, 1972 1,679 March 31, 1973 2,238 June 30, 1973 2,656 1_7/74 September 30, 1973 3,073 December 31, 1973 3,b89 March 31, 1974 3,907 June 30, 1974 4.,331 1974/75 September 30, 1974 4,757 December 31, 1974 5,182 March 31, 1975 5,606 June 30, 1975 6,005 1975/76 September 30, 1975 6,403 December 31, 1975 6,802 March 31, 1976 7,250 April 12, 1971 ANNE:X 9 Table 2 MALAWI LILONGiE LAND DEVELOPMENT PROGRAM PHASE II PROJECT PROPOSED FINANCING AND DISBURSEMENTS OF IDA CREDIT US$ '000 1971/72 1972/73 1973/74 1974/75 Total A. IDA Financing - 88.5% of expenditures in each category I. Vehicles, Machinery, Equipment, Fertilizer, and Insecticides 461 257 253 149 1,120 II. Livestock 93 99 87 93 372 III. Buildings (a) Housing 177 - - - 177 (b) Service Center Units 82 90 90 90 352 (c) Ranch 79 4O 24 9 152 Total 338 130 1114 99 681 IV. Services of Exoatriate Staff 220 222 218 221 881 V. Services of Local Staff (a) Soil Conservation, Planning and Building 91 92 9) 95 372 (b) Surveys and Land Allocation 49 55 56 58 218 (c) Extension, Training and Marketing, Service Center Units 225 267 299 323 1,11) (d) Ranch 5 11 13 22 51 (e) Headquarters and Evaluation Unit 70 73 76 78 297 Total 44O 498 538 576 2,052 VI. Marketing and Storage Facilities of AMARC 105 23 22 22 172 VII. Operating and Maintenance 363 386 392 4lo 1,551 Sub-total 2,020 1,615 1,624 1,570 6,829 VIII. Unallocated 1143 97 95 86 421 Total IA4 Credit 2,163 1,712 1,719 1,656 7,250 B. Government Contribution 282 222 225 214 943 C. Farmers Contributions 216 58 72 52 398 Total Costs 2,661 1,992 2,016 1,922 8,591 April 9, 1971 MALAWI LILONGWE AGRICULTURAL DEVELOPMENT PROJECT PHASE 11 ORGANIZATION CHART DEVELOPMENT COMMITTEE O(LILONGWE LAND DEVELOFMENT PROGRAM | PHASE IO PROJECT ADMINISTRATION S RPROGRAM MANAGER E WATE RUPPLS C V MAANAEMENT SUPPOON T N DEVELOPMENT ADMINISTATIO (DIVISION I) (DIVI SION U,ll (DIVISION IV)) SEVCSAEA EEOE SENfOR ~ ~ ~ ~ ~ ~~~OUE | CONSERVATION AND |P< FINANCE CONTROLLER | | AG7RINCULTUAL OFFICER(| PLANNING OFFICER FIAC COTOLE AGIULUA ,ICR RANCH~~~~~~ PLNIN BULDN MAKTN A 'UNADSAIS SUVY A. ''TC 2 RC'ADS, l q RORDS l j DESIGN l ;OAD MANDR SOI CRELDI|TMAAE LAN ALOCTIONSO | WATE SUPPLES | EARTH WOK CONS SE tP IERVAIONS TRNPR RARDESNCACONSHl TRS P PCA UIS q ENBANKMENTS | 4 W~~~ATEWYYOUADCUVRS| PRT OPENSON AN REGITRATON N A ~~D "Eyllo{UN CETR SAFFCNAEE1TRLID-53) ANNEX 11 Page 1 MALAWI LILONG94E LAND DEVELOPMENT PROGRAM, PHASE II PROJECT Beef Demand, Marketing and Prices 1. As a result of the Lilongwe Land Development Program, beef produc- tion from the program area is expected to increase by 1,714 short tons per annum, from 402 short tons at present to 2,116 short tons in 1983. About 3,500 head of this total would be supplied by the Dzalanyama Ranch, and the remainder would be from the program area herd, as shown below: Number of Beef Animals Slaughtered After Development Before 1983 Development Ranch Herd Cull cows 750 Cull bulls 24 Cull heifers 182 Steers 1,823 Heifers /1 686 _ Subtotal 3,465 Program Area Herd Cows 2,160 600 Bulls 108 69 Young stock 500 3,458 Oxen 1,422 293 Steers 1,936 - Heifers 1,569 - Subtotal 7,695 4,420 Total 11,160 4,420 /1 Though included here for beef, these may be used for dairy production and breeding. By year 1983, it is estimated that 11,160 animals would be slaughtered an- nually in the program area. Of this total, about 6,000 animals would be stall-fattened, providing 1,256 tons of choice and prime grade beef, or 73% of the total increased beef production of 1,613 tons in the program area. ANNEX 11 Page 2 Demand 2. During the 1960's, demand for beef in Malawi has been strong. Malawi has imported beef (para 7) in every year since 1964 and in recent years has consumed domestically all beef produced in the country. 3. Demand indicators provide strong evidence for larger domestic consumption of beef in the future, which would absorb all future production from the program area. A recent consumer expenditure survey shows an in- come elasticity for beef of unity. This, together with a minimum 3% annual population growth rate without a Government birth control policy, and an annual GNP growth rate 1/ of 7% over the next six years, is the basis for this projection. 4. In the unlikely event of beef production becoming surplus to do- mestic requirements, beef would be exported. An IBRD appraisal report on Zambia 2/ states: "By 1975, local supplies should rise to perhaps 80,000 head, which would require 85,000 carcass equivalents to be imported if present trends in demand persist, which is considered likely by knowledge- able Zambia agricultural planning officials." The Malawi Cold Storage Com- pany considers also that there would be a good market for exporting beef to South Africa. Therefore, if the domestic demands for beef would be oversupplied some time in the future there would be satisfactory export markets. Sup pji 5. The most reliable data on the number of cattle in Malawi 3/ indi- cate that the national herd rose from 374,635 in 1961 to 498,000 head in 1969. This increase represented an average growth rate of 3.4% per annum. On this basis, the national herd for 1985 is projected at 839,600 head and compares with about 498,000 head in 1969 (Table 1). 6. Data on the slaughter of cattle shows an average of about 9.4% of the national herd were slaughtered from 1961 to 1966, when it suddenly increasedl and stayed at a level between 11% and 11.5% -- averaging 11.2% from 1967 to 1969. The apparent higher level was caused by a change in reporting metlhods, which was instituted by the Department of Veterinary IMedicine. The slaughter percentage since 1966 appears to be reasonably stable and, therefore, the average slaughter percentage of 1967-69 is used for projection purposes for this project. The average cold-dressed weight 1/ "The Current Eeonomic Position and Prospects of Malawi", Report No. AE-5a, December 12, 1969. 2/ Livestock Development Project, Zambia, No. PA-109, May 27, 1969. 3/ Department of Veterinary Medicine. ANNEX 11 Page 3 per carcass of beef slaughtered in Malawi increased from 280 lb in 1966 to 292 lb in 1969, largely because of better animal husbandry practices, in- cluding more stall-fattening. These developments are expected to continue in the future and the Lilongwe Land Development Program would contribute to a strengthening of the trend towards heavier carcass weights. By 1985 the average national cold-dressed weight would be about 313 lb/carcass, and it is expected that Malawi's beef production would approximate to the following: Projections: Domestic Beef Supply Weight Number Year per Carcass Slaughtered Quantity of Beef lb (1,000 Carcasses) (1,000 sh tons) 1969 (actual) 292 55.8 8.1 1975 300 67.3 10.1 1980 305 79.6 12.1 1985 313 94.0 14.7 7. As shown below, beef imports from 1964 to 1968 were erratic, rel- atively small, and largely of the better grades: Imports of Beef (short tons) Top Low Year Grades Grades Total 1964 134 13 147 1965 77 4 81 1966 43 56 99 1967 58 70 128 1968 70 15 85 1969 115 72 187 1970 (Jan-Aug) 90 Production of choice beef from the project would more than substitute for these imports as the supply of such beef on local markets increased. Prices 8. Minimum prices for cattle within the country are controlled by the purchasing operations of the Cold Storage Company (see para 10). In 1969, the liveweight prices paid by the Cold Storage Company averaged about K 7.3 per 100 lb. These prices varied by grade as shown below: ANNEX 11 Page 4 Cold Storage Company: Price Paid for Beef, 1969 (K/100 lb, liveweight) Grade Price Choice 10.62 Prime 8.90 Standard 7.24 Commercial 6.00 Inferior .2.60 Hides and skins (per animal) 2.00 For projection purposes, prices are assumed to be the same in the future (in terms of constant price levels) as they were in 1969. Marketing 9. Cattle and beef marketing in Malawi is divided into two distinct parts: (M) the Cold Storage Company (CSC); and (ii) local butchers. 10. Cattle are auctioned at local markets and are bought either by local butchers or by the Cold Storage Company. The CSC announces the price it intends to pay in advance so that local butchers can always outbid the CSC. Local butchers slaughter their animals and market the beef through their own facilities. 11. Cattle purchased by CSC are either put in holding grounds before being trucked to a railhead, or taken directly to a slaughtering and chill- ing plant. The CSC estimates that each animal loses an average of 70 to 80 lbs between purchase and slaughter. From 1965 to 1969, the Cold Storage Company purchased about 22% of all cattle slaughtered in Malawi (Table 2). 12.. The Cold Storage Company is wholly owned by the Malawi Development Corporation, which in turn is wholly owned by the Government. The paid-up shares are ME 100,000. CSC's operations have shown a satisfactory profit and in 1969, the trading profit was ME 59,814 and net profit before divi- dends was ME 54,006, compared with ME 52,189 and ME 34,470 in 1968 (Table 3). 13. The CSC had net assets of ME 342,292 at the end of 1969, compared with Mt 281,793 in the previous year (Table 4), consisting of fixed assets of ME 353,903 (Table 5), less net current liabilities of ME 11,611. On balance, CSC appears to be well managed and is exnected to perform its marketing functions satisfactorily. 14. The Cold Storage Company's gross profit percentage to sales was 2(.55% in 196S and 23.84! in 1969. At the samc time, direct expenditures ANNEX 1 1 Page 5 in relation to the costs of sales declined from 12.25% in 1968 to 7.75% in 1969. The ratio of trading profit to sales increased from 8.94% in 1968 to 9.95% in 1969. Debts in relation to assets are not burdensome. In 1968, outstanding debts were 22.7% of assets and in 1969 they were 24.9%. CSC is expanding its facilities and on December 31, 1969, it had capital works in progress valued at ME 91,272. 15. Many of the cattle purchased in Malawi are raised in the north, while most of the demand for beef is located in the central and southern parts of the country. Therefore, cattle must be transported to the areas where the beef is consumed. At present, CSC moves the cattle to Blantyre for slaughter and storage. 16. Malawi has plans to construct a new capital city at Lilongwe. As this city develops, the demand for beef at Lilongwe will expand. CSC is already expanding its facilities to meet this demand and has an abattoir and chilling plant under construction at Lilongwe which should be in opera- tion early in 1971. Initially the Lilongwe plant will be capable of hand- ling 15 carcasses a day (4,500 carcasses per annum), and is designed so that the capacity can be easily expanded in the future. A refrigerated truck is on order and carcasses will be trucked from Lilongwe to the large storage plant at Blantyre, where there is sufficient capacity for carcasses from Lilongwe, until more chilling capacity is constructed at Lilongwe. If necessary, animals surplus to Lilongwe's needs would be transported live by road to Blantyre. 17. The Cold Storage Company purchases all skins and hides produced by local butchers and markets them with those from its slaughter operations. This commoditv is exported principally to Greece and Portugal. In 1968 and 1969, the value of these sales was ME 74,932 and ME 85,464, respectively. 18. Although the company has shown reasonable profits during 1968 and 1969, the cash position of CSC is not strong. At the end of 1969, it had a bank overdraft of ME 50,000 and had cash on hand and on deposit of only ME 1,000. Most of its assets are in fixed assets, stocks and stores, and accounts receivable (Table 4). However, since the company is wholly owned by the Government, Government would be expected to ensure that the CSC had sufficient funds to purchase all cattle offered for sale in the program area at all times. Conclusion 19. Despite larger beef production from the Lilongwe Program of 1,613 tons by 1983, demand for beef within the country is expected to remain strong. The increased production from the program would be easily absorbed by domestic consumption and cattle prices would probably be maintained at recent levels. 20. The new abattoir and chilling plant being built by CSC at Lilongwe, will be in operation shortly and is sufficient to cater for the estimated ANNEX 11 Page 6 increase in beef production. Should production increase more than anticipated this abattoir can easily be expanded. There is a refrigerated truck on order to deliver beef carcasses from Lilongwe to Blantyre. 21. Cash held by CSC is short and a more liquid position for the com- pany is desirable. The operations of the company seem to be efficient and the company's books show reasonable profits. February 11, 1971 AN;, X 11 Tsble 1 MALAiM LILONGWE LAND DEVELOPNENT PROJECT PHASE II National Cattle Herd and Slaughter National Herd Slaughter % of National (Te-ad)7- (Head) Herd 1961 374,635 32,766 8.7 1962 380,000 35,853 9.4 1963 396,145 h0,350 10.2 1964 4l11,419 39,613 9.6 1965 432,293 39,676 9.2 1966 450,128 42,459 9.h 1967 1464,oo6 51,190 11.0 1968 h79,916 54,372 11.3 *1969 498,OOO 55,816 11.2 *1975 601,ooo 67,900 11.3 **1980 710,350 80,300 11.3 **1985 839,600 94,900 11.3 * Estimate ** Projections January 23, 1971 ANNEX 11 Table 2 MALAWI LILONGVJE LAND DEVELOPMENT PROJECT PHASE II * Malawi: Beef Consumption, 1961 to 1969 (1,UUW uarcasses) Year Slaughter Imports Exports Consumption 1961 32,766 2,500 2,165 34,931 1962 35,853 2,199 1,824 37,677 1963 40,350 2,212 2,145 42,495 1964 39,613 1,231 966 40,579 1965 39,676 552 - 40,228 1966 42,459 641 606 43,065 1967 51,190 661 452 51,642 1968 54,372 579 _ 54,951 1969 55,816 1,284 - 57,100 ** 1975 67,900 200 _ 68,100 ** 1980 80,300-- 80 80,380 ** 1985 914,900 30 - 94,930 * Department of Veterinary Services and Economic Planning Division ** Projected January 23, 1971 ANNEX 11 Tabole 3 MALAWI LILONGWE LAND DEVELOPMENT PROJ BT PHASE II COLD STORAGE COMPANY LIMITED (Incorporated in Malawi) PROFIT AND LOSS ACCOUNT FOR THE YEAR MEDED DECFMBER 31, 1969 1969 1968 TRADING PROFIT 59,81. 52,189 Profit on Sale of Fixed Assets - 82 59,811 52,271 Deduct: 15,532 1lh,365 Directors' Fees 700 750 Audit Fee 1,150 1,100 Depreciation 13,682 12,015 Provision for Doubtful Debts __ -_ 500 PROFIT BD'ORE TAXATION lhh,282 37,906 TAXATIONT 7 , 7Lh6 11,h,l85 Provision on profits for the yenr 8,000 1T,S00 Adjustment in respect of prior years 25 ___ 15 _ PROFIT AFTIL TAXATION 3',536 23, 421 Unappropriated Profit - December 31, 1966 22,1470 16_0__9 59,oo6 39,)i70 Deduict: TRANSFERS TO RESERVES 5,000 5,000 Tax Equalisation Reserve 5,000 - Reserve for Extraordinary Cattle Losses -__ 5,000 5h,oo6 3h,170 Proposed Dividend 25,000 12,000 UNTAPPROPRIATED PROFIT - DECEMEER 31, 1969 L 221.t70 January 23, 1971 ANNCX 11 Table L LILONGWE LAND DEVELOPMENT PROJECT PIJ{AE II - COLD STORAGE CQMPANY LIMITED (Incorporated in Malawi) BALANCE SHEET 31st DECENMER, 1969 1 9 6 9 1_9 6 8 Issued amd Authorised fully Paid Authorised. AXilspaid CAPITAL AND RESERVES Share Capital Ordinarz Shares of L1 each &150,000 100,000 100,000 L100,000 100,000 100,000 Capital Reserves 89,218 89,218 Pre-incorporation profits 2,891 2,891 Loan waived by Malawi Development Corporation 86,327 86,327 39,006 27,470 Revenue Reserves Unappropriated profit 29,006 22,470 Tax Equalization Reserve 5,000 5,000 Reserve for Extraordinary Cattle Losses 5 000 ,. 228,224 216,688 MALAWI DEVLOPMNT CORPORATION Loan Accounts 3114,068 65,105 L~2.A292 L281 793 Represented by:- FIXED ASSETS 353,903 237,334 NET CURRZNT LIABILTIES 11,611 (44,,59) CURRENT LIABILITIES 118,188 90,518 Creditors 33,55o 21,472 Malawi Development Corporation 1,268 and its subsidiaries - Current Acounts 1,268 5,064 Bank Overdraft 5o,370 37,482 Provision for Taxation (Note 4) 8,000 114,500 Proposed Dividend 25,°00 12,000 1o6,577 134,977 CURRENT ASSETS Stocks and Stores 51,365 60,022 Stall Feeder Cattle 6,177 9,102 Debtors (after provision for doubtful debts L500 (1968: 1500) 36,017 44,050 Bal*nce at Bankers and Cash on Hand 1,038 7,630 Cash in Imprest Accounts 11,980 14,173 31342,292 L281.793 January 23, 1971 MALAWI LILONOIE LAND DEVELOPMENT PROJECT PHASE II - COLD STORAGE COMPANY, FIXED ASSETS k&m) 196 9 1 9 6 8 Cost Depreciation Cost Depreciation Land and Buildings Freehold 14,158 2,763 11,)95 13,216 1,550 11,666 Leasehold 195,338 23,870 171,468 159,799 19,909 139,890 Plant and Machinery 101,828 28,079 73,749 48,864 21,782 27,082 Motor Vehicles 9,500 6,192 3,308 9,500 4459 5,041 Fixtures and Fittings 4,335 1,624 2,711 _ 3594 1145 2,449 ;325,159 626528 262,631 .23049973 4888h5 186,128 91,272 51,206 i6353,*903 L237,334 January 23, 1971 tcrJ >t HXIAWI LILONa0WIE LAi DEVSLOPtENT PRORKPY. PHASE II PROJECT Government Cash Flow for the Phase I and II Projects (M Kwacha 10,000) 1968/69 1969/70 1970/71 1971/72 1972/73 1973/79 1974/75 1975/76 1976/77 1977/78 1978/79 1979/80 1980/81 Sourcesof? Fuidi TM Dhedl&-lI3 67.9 118.8 133.3 199.1 New Credit - 90.1 161.4 143.0 140.6 69.0 Total IDA 67.9 118.f 133.3 i28Y.Z 161.4 143.0 140.6 69.0 -- -- -- - Farm Inputs Credit and Cash Sales Credit - Principal 2.0 5.7 8.1 23.1 40.2 40.5 48.3 58.2 65.3 71.4 72.6 75.9 Credit - Interest .2 .6 .3 2.5 4.0 4.4 4.8 5.8 6.5 7.1 7.3 7.6 Cash Payments -- -- -- -- 18.0 32.9 33.2 39.5 47.7 53.5 58.4 59.4 62.2 Distribution Charge on Project Supplied Inputs -- -- -- 7.3 8.8 10.6 11.9 13.0 13.2 13.8 13.8 Total Farm Inputs -- 2.2 6.3 8.9 43.6 84.4 86.9 103.2 123.6 13f.3 150.1 153.1 159.5 FIB Loans nd Uperaing =Sur, us v First Loan / 1.5 1.5 1.5 1.5 1.5 1.9 1.5 1.5 1.5 Second Loan 1.5 1.5 1.5 1.5 1.5 FMB Prcfit on Groundnuts .1 .6 1.7 6.1 17.0 31.6 147.1 61.9 75-9 838 89.0 91.1 TotalFMB F .1 .6 1.7 7. 1 33.1 . 69 .9 8 820 9. 1 Ranch Sales 2.7 4.9 5.7 7.5 8.8 10.7 13.1 12.3 13.0 TOTAL SOU1RES 67.9 127.1 160.2 299.8 215.3 250.8 266 8 228.3 197.3 227.9 250.0 257.4 266.6 Application of Funds On-farm Costs 2.0 5.7 8.4 41.1 73.1 73.7 87.9 105.9 118.8 129.8 132.0 138.1 138.1 Administration Costs 77.0 130.0 155.9 213.5 164.5 158.1 156.8 112.2 69.5 63.3 56.9 50.0 50.0 FMB Loan 5.4 4.6 7.4 9.9 2.1 2.1 2.1 -- -- -- -- Total Application Before Debt Service 79.0 1141.1 168.9 262.0 247.5 233.9 246.8 220.2 188.3 193.1 18 .9 188.1 188.1 Debt Service i IDA Credit 1136, '5 1.4 2.4 3.8 3.8 3.8 3.8 3.8 3.8 3.8 8.7 8.7 8.6 New IDA Credit .3 1.3 2.4 3.5 4.3 I4.5 4.5 4.5 4.5 4.5 Total Debt Service .5 1.4 2.4 4.1 5.1 6.2 7.3 8.1 8.3 8.3 13.2 13.2 13.1 TOTAL APPLICATION 79.5 142.5 171.3 2b.1 252.6 240.1 254.1 228.3 196.6 201.4 200.1 201.3 201.2 NET CASH FLW 11. 21. (31.1) 33.7 (.) . 12.7 - 0.7 26.5 49.9 56.1 .4 Cumulative (11.6) (3.0) (64.1) 3D 4) 0) 44.31 443 43.6) 17. 1i 32.5 88 .6 154.0 Approximately / 180,000 would remain to be repaid over the period 1981/82 to 1992/93. Approximately K 260,000 would remain to be repaid over the period 1981/87.to 1996/97. FMB operating surpluses would be generated at the rate K 40 per sh ton of groundnuts. Excluding feeder stock supplied on credit. Approximately K. 4.85 million in principal would remain to be repaid over the period from 198482 to 2017/18. Apprcximately K. 5.83 million in principal would remain to be repaid over the period from 1981/82 to 2020/21. April 12, 1971 ANNEX 13 Page 1 MALAWI LILONGWE AGRICULTURAL DEVELOPMENT PROJECT, PHASE II Rate of Return Calculation 1. The annual costs and returns used in calculating the economic rate of return for the project are shown in Table 1. Based on the same assumptions, Tables 2 and 3 show the rates of return for Phase I on its own, and for the overall program of three phases. Annex 4 shows the costs and returns for the ranch. A sensitivity analysis with respect to changes in farm input costs and benefit levels assumed in the main calcula- tion at 'Cable 1, is shown in para 8.03 of the main report. 2. The following assumptions and data have been used in the calculations: (a) Project Area. In calculating the project's economic rate of return, Phases I and II are combined to make up an area of 521,000 acres of arable farm land and a 161,000 acre ranch. When fully developed the arable land would include about 104,200 acres of groundnuts and 156,300 acres of maize. The calculation for Phase I (Table 2) takes into account only 281,ono acres of arable land, and excludes all ranch costs and returns; when fully developed this area would include about 56,000 acres of groundnuts and 84,000 acres of maize. The full program calculation (Table 3) takes into account 581,000 acres of arable land and the 161,000 acre ranch; and (b) Project Life. The project is part of an integrated develop- ment program including conservation measures, infrastructure for transportation and marketing, and extension, credit and general administrative services. The effective life of these developments will vary but in assessing direct benefits the program's life is assumed to be 20 years. In subsequent years a direct relationship between program investments and production becomes tenuous. Phase II would run from midway through year 3 to midway through year 7 of the 20 year program, and for the rate of return calculations, benefits from the area developed during the first three years of the program are included as are all the costs of producing the benefits. 1/ 1/ If such costs are treated as sunk, the rate of return for the project is about 25%. ATNEX 13 age 2 (c) Project Costs (i) Project Administration. All project administration costs, both capital and r- t'rrent arising from the implementation of Phases I and II are included. They take account of initial development costs 1/ and the continuation of extension, credit and administrative services over 20 years starting 1968/69 and ending in l917/88. Residual values are included for houses and machinery that have a remaining value capable of producing benefits beyond the project period 2/. A residual is included for the incremental value of the ranclh herd. (ii) Iarketing Costs. The prices used for produce are net of marketing costs, and only a small element of marketing capital costs is included in the calculation for market stores constructed at unit centers. Operational produce marketing costs are not included, since these would be covered by the marketing differ- ential allowed in the prices used for calculating benefits. (iii) Farm Labor. It is assumed that only family labor would be used, and as benefits are calculated on the incremental value of production, family labor has not been costed. The incremental labor require- ments necessary for the projected increases x7ould be small as the major benefits would come from the use of fertilizers, improved seed and improved farm- ing methods. (iv) Farm Inputs. These are costed for the program life and are based on the amounts necessary to achieve projected benefits. Any increase in consumption of purchased inputs would be more than compensated for by additional benefits. The cost of farm inputs excludes subsidies and taxes. The 10% mark-up charged to cover distribution and procurement costs is excluded also as it is met by project administration costs. 1/ Including actual and estimated costs for Phase I and estimated costs with a contingency of 10% on capital, operational and maintenance costs for Phase II. 2/ lWhen residual values are omitted, the economic rate of return is 12.9%. ANNEX 13 Pago 3 (d) Benefits (i) Maize. Maize yields and value of production are shown in Table 4. A price of K 2 per bag, which corresponds to the projected fob price net of marketing costs, is used in the main calculation. At full development average vields are estimated to be 10 bags per acre and the incremental yield is obtained by deducting the equivalent of 5 bags/acre (the predevelopment average yield). Benefits derived from better farm storage are also shown in Table 4, and are based on a saving of two bags annually per farmer using insecticides. (ii) Groundnuts. Groundnut yields and value of production are shown in Table 5. A price of K 122/ton corres- ponding to the fob price net of marketing costs is used for the main calculation. Average yields are expected to rise from 575 lb of shelled nuts per acre to 725 lb/acre at full development. The incremental production includes doubling the current acreage through the use of land released from tobacco production and new land brought into cultivation. (Tobacco land will be released because of increased yields under a locally enforced production quota). (iii) Livestock. Livestock benefits included in the main calculation derive from total ranch production, and from stall fattening steers and heifers from the ranch and program area herds. The costs used for the economic rate of return calculations for the ranch are shown in Annex 4, while returns used for the program rate of return calculation include sale proceeds direct from the ranch and the added value from stall feeding ex- ranch and project herd stock (Table 6). The stall fattening margins used for both ex-ranch and ex-project herd animals are net of feeding costs and vary for half-bred and zebu animals (Table 7). February 22, 1971 MALAWI ijLONGWE iAND DEVELOPMENT PROGRAM PHASE II PROJECT ECONOMIC RATE OF REPHASES I ND If (M Kwacha 10,000) Development Construction Incre- Incre- and Atnirn- Fertilizer mental mental Ranch and Annual istration Seed and Medium tenm maize Groundnut Stall fattenrig Residual Surplus Year Costs Costs Insecticide farm inputs production Production Production Values (Deficit) 1968/69 77.7 0.7 1.3 - - 1969/70 135-4 2.3 3.4 - 2.0 0.4 (138-7) 1970/71 16o.5 7.3 15.7 - 8.6 2.0 - (172-9) 1971/72 220.9 10.9 26.2 3.4 27.0 5.3 0.3 (?28.8) 1972/73 17M.h 14.8 37.2 2.0 44.5 18.5 6.1 (159.3) 1973/74 160.2 18.4 50.0 3.4 65.5 51.8 7.5 (107.2) 197)4/75 158.9 22.7 61.4 3.8 86.4 96.4 11.4 (52.6) 1975/76 1Uh.3 27.1 72.6 6.2 107.2 143.6 15.3 50.0 95.9 1976/77 69.5 30.5 81.9 6.4 127.5 188.9 18.0 2.0 1148.1 1977/78 63-3 33.6 9o-4 5.8 145.0 231.4 20.9 2.0 206.2 1978/79 56.9 36.3 95.7 5.8 161.3 255.5 21.9 2bL.0 1979/80 50.0 36.3 96.0 5.8 171.8 271.4 24.9 280.0 1980/81 50.0 36.3 96.o 5.8 171.8 278.1 23.9 285.7 1981/82 50.0 36.3 96.o 5.8 171.8 278.1 24.0 285.8 1982/83 50.0 36.3 96.0 5.8 171.8 278.1 25.2 287.0 1983/84 50.0 36.3 96.o 5.8 171.8 278.1 25.2 287.0 1984/85 50.o 36.3 96.0 5.8 171.8 278.1 25.2 287.0 1985/86 50o. 36.3 96.0 5.8 171.8 278.1 25.2 287.0 1986/87 50.0 36.3 96.o 5.8 171.8 278.1 25.2 287.0 1987/88 50.0 36.3 96.o 5.8 171.8 278.1 25.2 70.9 357.9 Lconomic rate of return 13.3% April 12, 1971 MALAWI LILONGWE LAND DEVELoPMENr PROGRAM PHASE II PROJECT ECONOMIC RATE OF RETURN, PHASE I (M Kwacha 10,000) Development Farm Inputs Incremental Ranch Annual and Farm Inputs Fertilizer and Farm Inputs Maize Groundnuts Residual Surplus Year Administration Seed Insecticide Medium Term Production Production Values (Deficit) 1968/69 77.7 .7 1.3 - - - (79.7) 1969/70 135.4 2.3 3.4 L 2.0 0.14 (138.7) 1970/71 160.5 7.3 15.7 - 8.6 2.0 - (172.9) 1971/72 140.0 10.9 26.2 3.4 27.0 5.3 - (148.2) 1972/73 46.8 13.7 35.4 2.0 44.5 18.5 60.0 25.1 1973/74 43.4 16.1 44.4 3.4 62.5 32.9 2.0 (9.9) 1974/75 37.3 19.4 50.0 3.4 77.5 51.2 2.0 20.6 1975/76 33.2 19.4 50.0 3.4 90.1 87.9 72.0 1976/77 29.7 19.4 50.0 3.4 90.1 119.0 106.6 1977/78 29.7 19.4 50.0 3.4 90.1 138.9 126.5 1978/79 29.7 19.4 50).0 3.4 90.1 150.0 137,6 1979/80 29.7 19.4 50.0 3.4 90.1 150.0 137.6 1980/81 29.7 19.4 50.0 3.4 93.1 150.0 137.6 1981/82 29.7 19.4 50.0 3.4 90.1 150.0 137.6 1982/83 29.7 19.4 50.0 3.4 90.1 150.0 137.6 1983/84 29.7 19.4 50.0 3.4 90.1 150.0 137.6 1984/85 29.7 19.4 50.0 3.4 90.1 150.0 137.6 1985/86 29.7 19.4 50.0 3.4 90.1 150.0 137.6 1986/87 29.7 19.4 50.0 3.4 90.1 150.0 137.6 1987/88 29.7 19.4 50.0 3.4 90.1 150.0 137,6 LcEonomio rate of return 11.4% January 27, 1971 MAIUAWI LILOW,WE LAND DSVELOPMSNT TROGRAM PHASE II PROJECT ECCWOMIC RATE O RETURN FOR FULL PROGRAM (M Kwacha 10,000) Development Farm Inputs Incremental Incremental Ranch Annual and Farm Inputs Fertilizer ard Farm Inputs Maize Groundnut Stall Fattening Residual Surplus Year Administration Seed Insecticide Medium Term Production Production Production Values (Deficit) 1968/69 77.7 0.7 1.3 - (79.7) 1969/70 135.4 2.3 3.4 - 2.0 0.1 (138.7) 1970/71 160.5 7.3 15.7 - 8.6 0.4 _ (172.9) 1971/72 220.9 10.9 26.2 3.4 27.0 2.0 0.3 (228.8) 1972/73 174.4 14.8 37.2 2.0 44.5 5.3 6.1 (159.3) 1973/74 166.2 18.4 50.0 3.4 65.5 18.5 7.5 (107.2) 1974/75 158.9 22.7 61.4 3.8 86.4 51.8 11.4 (52.6) 1975/76 132.8 27.1 72.6 6.2 107.2 96.4 15.3 27.4 1976/77 92.9 31.5 82.4 7.2 127.6 143.6 18.0 30.0 150.5 1977/78 72.5 34.6 90.8 6.8 148.0 188.9 20.9 2.0 199.1 1978/79 68.0 37.7 100.8 6.8 165.4 232.1 21.9 2.0 239.3 1979/80 58.2 39.9 102.7 6.8 180.7 263.3 24.9 285.5 1980/81 53.0 39.9 102.7 6.8 159.6 287.5 23.9 314.6 1981/82 53.0 39.9 102.7 6.8 189.6 303.5 24.0 321.3 1982/83 53.0 39.9 102.7 6.8 189.6 310.1 25.2 322.5 1983/84 53.0 39.9 102.7 6.8 1B9,6 310.1 25.2 322.5 1984/85 53.0 39.9 102.7 6.8 189.6 310.1 25.2 322.5 1985/86 53.0 39.9 102.7 6.8 189.6 310.1 25.2 322.5 1986/87 53.0 39.9 102.7 6.8 189.6 310.1 25.2 322.5 1987/88 53.0 39.9 102.7 6.8 189.6 310.1 25.2 70.9 393.4 s.onomic rate of return 13.2% I/ Includes the ranch and development of 581,000 acres of arable land. April 12, 1971 MhLAWI LILONGWE LAND DEVELOP.MENT PROGRAM PHASE II PROJECT BENEFITS - MAIZE 1969/70 1970/71 1971/72 1972/73 1973/74 1974/75 1975/76 1976/77 1977/78 1978/79 1979/80 High Fertilizer Input Hybrid: Acreage - Boo 6,000 10,000 16,000 22,000 28,000 34,000 40,000 46,ooo 50,000 Production x 15 bags - 12,000 90,000 150,000 240,000 330,000 420,000 510,000 600,000 690,000 750,000 Low Fertilizer Input Hybrid: Acreage - 520 3,900 6,500 10,400 14,300 18,200 22,000 26,000 29,900 32,500 Production x 12 bags - 6,260 46,800 78,000 124,800 171,600 218,400 265,200 312,000 358,000 390,000 Low Fertilizer Input Synthetic: Acreage 1,332 3,594 5,364 8,730 10,374 11,994 13,494 14,754 13,856 12,594 11,634 Production x 10 bags 13,320 35,940 53,640 87,300 103,740 119,940 134,940 147,540 138,540 125,940 116,340 No Fertilizer Improved Synthetic: Acreage 5,328 14,376 21,456 34,920 41,496 47,976 53,976 59,616 55,625 50,376 46,948 Production x 5.5 bags 29,304 79,068 118,008 192,060 228,228 263,868 296,868 324,588 304,837 277,068 255,948 No Improvements Acreage 4, 4,0 11,010 17,580 24,150 24,030 24,030 24,630 26,430 21,030 17,430 15,630 Production x 5 bags 22,200 55,050 87,900 120,750 120,150 120,150 123,150 132,150 105,150 87,150 78,150 rotal Production Bags 64,824 188,298 396,348 628,110 816,918 1,005,558 1,193,358 1,379,478 1, 460,527 1,538,158 1,590,438 Projected Projection at Existing Yield 1/ 55,500 151,500 271,500 421,500 511,500 601,500 691,500 781,500 781,500 781,500 781,500 Incremental Production 9,324 36,798 124,848 206,610 305,418 404,058 501,858 597,978 679,027 756,658 808,938 Incremental Value of Production x K2 18,668 73,595 249,696 413,220 610,836 808,116 1,003,716 1,195,956 1,358,054 1,513,316 1,617,876 Storage loss savirgs 2/ 1,600 12,000 20,000 32,000 44,0o0 56,ooo 68,000 80,000 92,000 100,000 100,000 Total Incremental Benefit 20,248 85,596 269,696 445,220 654,836 864,116 1,071,716 1,275,956 1,450,054 1,613,316 1,717,876 1/ 30 % of developed acreage x 5 bags. 2/ 1 bag saved for each awacha spent on Lindane. January 21, 1971 MA1AWI LILONGWE LAN4D DEVELOPNSNT PROGRAM PHASE II PROJECT BENEFIrS - INCREWMNAL GROUNDNUT PRODUCTION (M Kwacha) 1968/69 1969/D 1970/71 1971/72 1972/73 1973/74 1974/75 1975/76 1976/77 1977/78 1978/79 1979/80 1980/81 Groundnut Acreage - 3,700 10,100 19,025 31,550 42,075 56,600 71,700 86,700 95,200 99,700 102,700 104,200 Total production sh tons 1/ - 1,095 3,063 5,637 9,598 14,053 19,432 25,021 30,459 33,949 35,920 37,228 37,772 Production at existing yeflds and acreage sh tons 2/ - 1,064 2,904 5,024 8,078 9,8Bo 11,529 13,254 14,979 14,979 14,979 14,979 14,979 Incremntal production sh tons - 31 159 433 1,520 4,249 7,903 11,767 15,480 18,970 20,941 22,249 22,793 Value x K 122 per sh ton - 3,782 19,598 52,826 185,440 518,378 964,166 1,435,574 1,888,560 2,314,340 2,554,802 2,714,378 2,780,746 1/ Average Years After Beginning of Land Developzmnt Yield Proportion of Land in Yield Categories Categories Year 1 Year 2 Year 3 Year 4I SOO lbs/ac IU-- 15% 30% -Mr- d 700 lbs/ac 15% 25% 30% 40% 600 lbs/ac 30% 35% 25% 10% 500 lbs/ac 45% 25% 15% 5% 2/ Assumed groundnut acreage 10% of developed area. Assumed yield 575 lbs per acre. January 21, 1971 MALAWI LILONOWE LAND DEVELOPMENT PROGRAM PHASE II PROJECT BENEFITS - LIVFSTOCK N - KWACHA 1971/72 1972/73 1973/74 1974/75 1975/76 1976/77 1 977/78 1 978/79 1 979/80 1980/81 1981/82 1 982/83 1983/84 to 90/91 Stall Fattening/Dairy Ex-Ranch Improved Stock Kwapha 1/ 7,031 14,700 20,319 26,621 28,019 30,635 32,894 37,740 39,999 39,999 Ex-Ranch Zebu Stock Kwacha / 8,930 9,024 9,118 9,118 9,118 9,118 9,118 9,118 4,559 - - - Project Herd Stock Xwacha 27 2,942 3,892 5,640 6,683 6,853 11,026 11,759 12,963 19,693 25,878 29,856 31,875 32,947 Total Added Value Fattening 2,942 12,822 14,664 22,832 30,671 40,463 47,498 50,100 59,446 63,331 67,596 71,874 72,946 Ranch Sales Cull Cows 3/ 6,ooo 16,640 22,480 27,440 24,960 25,400 27,480 37,500 37,500 37,500 37,500 37,500 Cull Bulls/ 216 1,008 1,296 1,584 1,440 1,440 1,584 1,728 1,728 1,728 1,728 1,728 Cull Heifers 5/ 2,068 4,136 5,588 7,304 6,644 6,556 7,348 8,oo8 8,008 Breeding Beifers 6/ 11,480 23,408 22,288 30,744 38,410 38,410 Ranch Bred Steers 7/ 24,596 48,984 66,196 86,528 78,728 77,584 86,632 94,796 94,796 94,796 Zebu Steers - 41,800 42,240 42,680 42,680 42,680 42,680 42,680 42,680 21,340 - - - Total Ranch Sales 48,016 59,888 91,052 122,756 139,412 161,636 169,256 189,54)4 176,o44 172,116 180,442 180,442 Total Livestock Benefits 2,942 60,838 74,552 113,884 153,427 179,875 209,134 219,356 248,990 239,375 239,712 252,316 ?53,388 1/ Net added value per animal 014.864. 2/ Net added value per animal K9.4. 3/ Cull cows K40 years 1-8, K50 years 9-20. 4/ Cull bulls K72. 5/ Cull heifers K44 years 1-8, K50 years 9-16. 6/ Breeding heifers K56. ILl 7/ Ranch half bred steers K52. 8/ Zebu steers K44. January 21, 1971 KALAWI LILONGWE LAND DEVELOPMENT PROGRAM PHASE II PROJECT FEEDLOT FATTENING BUDGETS SELECTED ZEBU KWACHA HALF BRED FRIESIAN X ZEBU KWACHA Purchase price of feeder (550 lbs ( K8 Purchase price of feeder (750 lbs § K8 per 100 lb l.w.) KWb.O per 100 lb l.v.) K0. 0 Sale value of fat animal Sale value of fat animal (Grade Prime @ K8.9 per 100 lb l.w. 50% choice, 50% prime (@ K9.77 690 lb) K61.4 per 100 lb. l.w. 890 K86.9 Cost of feeding K 8.0 Cost of feeding n/ 12.0 Gross Margin K 9.b Gross Margin Kl4.9 1/ 140 days fed @ 7 lbs Concentrates per day @ 0.Q1 K per lb. Liveweight increas.e of 1 lb Der day or 140 lbs. 2/ 1lO days fed @ 10 lbs Concentrates per day @ 0.01 K per lb. Liveweight increase of 1 lb per day or 140 lbs. 100 lbs of Recommended Concentrate includes: Maize Meal 20.5 lbs c 0.11 K per lb = 0.14 K Maize Bran 61.b lbs @ 0.02 K per lb = 1.28 K Pidgeon pea 17.1 lbs @ 0.25 K per lb = 4.26 K Salt 1.0 lb @ 0.17 K per lb = 1.7 K 100.0 lbs @ 0.0785 per lb - 7.85 K Januarv 21. 1971 1 -\ ,$ / \ M A L AW I ;>jI ', / - / LILONG\E LAND DEVELOPMENT PROGRAM .g,~~R'~/ NABM _ ..f . II T|OM2TMAI sPROGRAM + s . '- ' _ \ \ > >~~~~~~~~~~~~~~~~~~~~~ROOS v < $ | ¢ | 0 ; < _ r~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~o 5, jA L PHASE : O,, )-;- t ZOMZA J t ~~~~~~~NSARtJ <, S 9"\¢1 ) _.? \ \ ~~~~~~~~~~~~M}A}ZI \ r t ~~~~~~z~~~~~~~~~~~A~~~~ ._ I RXV' -*/ \+ < KALOLO IL ONGWE 4 MAIJOUNDE MKLIWKUN PHESE ? ) SHASE S NTHENGE PROJECT AREA . - -U E KID PHASE F ~ ~ ~ ~ ~ HA PROJECT AREA \'Y 1[**- PROEC1 RANCH ROUNDARY OP PROGRAM AREA . r ,(*tf 'l{|[|1./ '-''@ Aj I P E BOS , .-. MAIN ROADS ~ ~ ~ ~ ~ ~ ~ ~ MWID CHITEDZE RESEARCH STATION & * COLBY AGRICULTURAL SCHOOL \ :-s' i * PERMANENT PMB MARKETS ,3\ FERRUERY ARIL RA -ARA -ERRUARY 19. 1 IBRD Si jlHASE