Y DOCUMENT OF INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT INTERNATIONAL DEVELOPMENT ASSOCIATION Not For Public Use on Report No. 235a-MAI AGRICULTURAL SECTOR REVIEW MALAWI December 28, 1973 East Africa Regional Office Agriculture Projects Division This report was prepared for official use only by the Bank Group. It may not be published, quoted or cited without Bank Group authorization. The Bank Group does not accept responsibility for the accuracy or completeness of the report. 3ACKGROU\Y DATA /1 Rate of exchange US$L = 0.81 Kwacha (K) Kwacha (K) 1 = 1.23 US$ Popul ption /2 Total population 4.7 million (1972) Rate of growth 2.5% (1966 to 1972) Rural population 4.3 rillion or 90% of total population. In paiad employment 0.19 izLlon Density of population 49 per sq. km. ;Rural population per cultivated area 1 per 0.44 ha. Lind Use (million h) of total Customary land under cultivat,ion 1.9 19.6 Customary land, fallow 2.9 30v8 3states 09 1.0 Non-Arable 3,3 34.9 Other land 1,3 13.8 Total land area 9 4 100l 0 National Income (at factor cost 1972) Growth rate 1 964-72 (K mtllicn ~ (GErrn Pri-ces) ,ALc gLtt ''° -a re a E: I ItIhIaa Subsistence 105 31 7 Konetary 45 14 14 Estate 20 6 16 Total Agriculture 170 51 9 Total GDP 333 100 1 Per capita GDP K 71 (US$87) /1 As of mid-March 1973. The ivalawi Kwacha is pegged to the floatiing pound sterling. /2 Estimated mid-year population. 2- Agricultural Production (Smallholder) /1 /1 Total Total Marketed Fa:-Ti % Production Production Ga bE Area Mixed '000 MT '000 MT PrLces '000 ha. Stand (1970) (1970) K iC Maize 1,068 94 1,019 105 '.76 Groundnuts 449 90 102 33 1.33 Pulses 811 99 121 17 3.82 Millet/Sorghum 496 97 71 6 . Cassava 299 89 81 23 1.65 Paddy 48 NA 21 12 ,.51 Cotton 37 NA 23 (seed) 23(seed) 1:L.57 Tobt'cco 32 NA 24 24 24.25 Index Average 1968-72 1972 (Average 1964-67) Sxports tooo MT 100) Snallholder crops Maize 37 93 Pulses 16 51 Fire and air-cured tobaccos 141 96 /2 Cotton fibre 5 103 T Groundnuus 36 121 Bice 7 272 gstate crops Tea 20 154 Burley tobacco 5 154 miue-cured tobacco 6 306 Farm size and input-s Average size of holding 1.5 ha Average rwnmber of persons per holding 4.6 Nuanoer of holicngs 885,000 10:ar"ber of holding using fertilizer (1969) 13% Total fertilizer consurnntion (1973) 24,000 MT Consumption per ha (1973) 13 kg /1 See StatisticaL Annex, Table 12. L2 Includes oriental tobacco. /3 Low due to increased domestic processing. - 3- % of holdings -with work oxen (1969) 5 p of holdings with cattle (1969) 11% % of holdings with sheep (1969) 2N % of holdings with goats (1969) 23% % of holdings with pigs (1969) 9% % of holdings with chickens (1969) 57% Livestock Population (1972) Cattle 572,905 Sheep 88,516 Goats 565, 580 Pigs -172,333 Public hcpenditures (1973/74) Development budget Agriculture 28% Recurrent budget 7% MALAWI AGRICULTURAL SECTOR REVIEW TABLE OF CONTENTS Page No. SUWIHARY AND CONCLUSTONS .........................., i - iv I. INTRODUCTION ..1....................,.,.,.......... I II. PRESENT STATUS OF AGRICULTURE ....................... 1 A. General ........................................ 1 B. Role of Agriculture on the Economy . . 3 C. Agricultural Production .......................... 5 D. Government Agricultural Policy ................... 8 E. The Hinistry of Agriculture . . 9 III. PRODUCTION OPPORTUNITIES .............................. 18 IV. DEVELGPMENT CONSTRAINTS ............. .. ................ 25 V. DEVEL3PMENT STRATEGY .................................. 30 VI. IiiVESTHENT PROGRAM ........................., 38 Vii. PRODU CTIOT 7ST-i-IlATES v. .......................,... 41 TABLES 1. Land Use. 2. Volume of Cash Sales and Exports. 3. Percentage of holdings by Size of Holding. 4. SmalTholder Area and Marketed Production. 5. Fertilizer Sales to Smallholders. 6. Livestock Population. 7. Major Developmenz Projects. 8. Expenditures on Development Account. 9. ADMARC Prices and Volume Purchased, 1971/72. 10. ADNLARC Trading. 11. Export Price Forecasts. 12. Returns to Land and Labor in Production of Selected Commodities. 13. Yields of Shelled Maize. 14. Financial Implications of a National Rural Development Effort of the Lilongwe Type. -2- 15. Export Volume of Maize and All Crops 1964-72. 16. Allocatiot of Land Use Rights. 17. Credit Arrangements Proposed by Government. 18. Alternative credit Arrangements. 19. Proposed Investment Program 1974/75 - 1978/79. 20. ProductiorL Estimates. STATISTICAL ANNEX Tables 1. Population by Regions, Age and Sex, 1966. 2. Farm Population, 1969. 3. African Population: 5 years and Over by School Attendance. 4. Gross Domestic Product at Factor Cost. 5. Exports of Main Agricultural Products (MT). 6. Exports by Main Commodities, Current Prices. 7. Exports of Main Agricultural Products at Constant 1964 Prices. 8. Imports of Meat (MT). 9. Land Use. 10. Acreage Under Cultivation by Pure and Mixed Stand. 11. Farm Size Distribution and Fragmentation. 12. "Production and Disposition of Agricultural Products, 1970. 13. Smallholder Cotton and Tobacco Production, 1950-1972. 14. Purchase by FMB/ADMARC of Major Crops Grown by Small- :aolders, 1950-1972. 15. 1Crop Production From the Estate Sector, 1950-1972. 16. 'Livestock and Livestock Production. 17. Number of Holdings with Livestock and Number of Livh!- stock Owned. 18. Number of Work Oxen and Implements Owned. 19. Percentage Using 'Miacern Inputs and Employing Hired :,abor. 20. ExDeniditures on Development Account. 21. Settlements, 1973. 22, F-ield Contact Staff in Relation to Population Servec:.. 23. iJlocation of Newly Trained Field Assistants from C:;lby College, 1967.-> : 24. Extens]ion and Training Department, Senior Staffing Situations, 25. 'otal RecordeZd Cash Receipts in Smallholder Agriculi:ure. 26. Realized Average Export Pri^ces. 27. Ecroducer Prices for MAaoor Crops. 28. Producer Prices .or Livestock P-oducts. 29. Fertilizer Prices to Farmers. 30. T'ransport Charges. 31. lBlantyre Retail Price index. -3- ANNEX 1: Institutional Arrangements for the Expansion of Agricultural Credit Operations. ANNEX 2: Smallholder Virginia Flue-Cured Tobacco Production. BIBLIOGRAPHY. HAPS Annual Rainfall (IBRD, 10496) Land Use (IBRD, 10497) Agricultural Project Areas (IBRD, 10498) Roads, Communications, Land Settlements and Irrigation Schemes (IBRD, 10499). CHARTS Ministry of Agriculture and Natural Resources. Credit Institutions: Existing Proposals. Credit InstitUtions: Alternative Proposals. MALAWI AGRICULTURAL SECTOR REVIEW SUINIARY AND CONCLUSIONS i. The purpose of thlis study ls to review the opportunLities, constraints and strategy for agricultural development in Malawi and on this basis to sug- gest a long term lending program. The review is selective in coverage and no consideration has been given to the forestry and fisheries subsectors or to estate production. The main thrust of the report is the proposal for a National Rural Development Program. throughout the coun.-y`which would achieve a substantial increase in smallholde- p-roduc& ily.j- tiri a period oE twenty years. The program would supplement existirng extension and marketing systems, improve input supply, credit and infrastructure, and create the basis for a more comprehensive effort to follow. ij. Malawi is a landlocked country whie.^ is relatively dansely populal_ed (49 per kin2), and has a rate of population growth of about 2.5%. About 90% of the total population is located in rural areas. With the exception of a few areas which are costly to develop, Malawi is short of suitable land for cul-ti- vation. Fallow periods have been reduced and erosiLon prone areas are farmed at a considerable risk to long-term fertility. The climatic conditions are relatively favorable. The natZional cattle herd is small (' head per S persons) and owned by a small proportion (10%) of the farmers. With the exception of the estate sector, which occupies only 5% of total cultivated area but contri- butes 11% of total agricultural production, land iS communally owned and farm size averages 1.5 ha. iii. The domestic market is small and the main possibility for improving the living conditions of the rural population involves improved yields and the export of surplus production. Government relates farm prices to the world mar- ket situation but eliminates short term fLuCtuations. One-thaird of the devel- opment budget is devoted to agricultural development0 Peasant farming is supported through a relatively well-established and trained extension service. Four major development projects have been established which have attempted to achieve a rapid expansion of smalLholder production through irntensified extension in combination with credit, improved marketirg, supply of inputs, roads and soil conservation. Settlement on new landC, partly in connection with the construction of irrigation faci.ities, is act:vely promoted. A public corporation 1/ is responsible for marketing of smaleholder production throughout the country. The Government permits civilE servants arnd other persons to engage in commercial agriculture and makes land availaDle -for this purpose. The off- take from the national herd has been enhanced by improved disease control and the establishment of marketiag outlets. The provision of cattle for fattening, power or dairy production to stockless farms has also been given serious attention. 11 Agricultural Development and Marketing Corporation (MAMARC). - ii - -,-e Rsearch efforts have produced impressive results, particularly with . e-ac.re c maslze, groundnuts, tobacco and cotton. Maize presently occupies 78%' o.H al! cultivated iand (pure or mixed stand) but productivity increases o'_ _-fer n eicellent prospect for reducing this proportion, thus releasing for production of other commodities. Malawi specializes in confec- t'onary groundnuts, and export opportunities appear excellent. The production of flue-cured tobacco has expanded rapidly and further expansion appears feasi- blae particularly if Malawi succeeds in gaining access to the EEC market. The market prospects for fire-cured tobacco are less promising. Certain areas along t'ae Lake and in the Shire Valley are excellent for sugar production, and in spi.e of the transport cost ialawi will be competitive on the world market. Rainfed cotton can be efficiently produced in certain low-lying areas and there is an expanding domestic market as well as an established market in the U.K. Both product0on and marketing of irrigated rice have thus far been disappoint- ing. Livestock production faces an expanding domestic market and good efxport prospects. By increasing beef prices to an export parity level and giving fur- tner attention to the development of poultry production for domestic consump- tion it may be possible to enhance beef exports. v. Production of the estate sector (flue-cured and burley tobaccos, sugar, and tea) has expanded rapidly, while with the exception of paddy and cotton, marketed smallholder production has stagnated (groundnuts, maize) or decreased (pulses, fire cured tobacco). The major constraints have beern the lack of ctedit, seasonal inputs, extension services, communications, and finan- cial resources, as well as soil erosion. Where these constraints have been re- moved througii the integrated regional development projects, production has gradually expanded. Thc-e ultimate aim should be to extend the rural development process over the country as rapidly as possible to avoid creating income dis- parities between regions. A first aim should be an initial increase in cash in- come. This limited objective would mrinimize immediate resource requirements and it would also generate resources to satisfy demands for improved living conditions. Sequential development would allow the organization of local, sea- sontally under-utilized manpower in self-help efforts. To assure sufficient re- sources for further development it would be necessary to start with those areas which have the highest potential for development; This pattern may be modified, > however, to give attention to t where incomes are particular depressed. In order to increase cash income it will be necessary to strengthen the exten- sion service, maake credit available for seasonal inputs, and proceed with con- struction of essential infrastructure (roads, soil conservation). This first effort should be concentrated on maize (to release land and 'labor) and the most promising cash crop for the area in question. vi. The existing major projects should be utilized to find ways to economize on manpower and financial resources in iniLtiating an effective national rural development program (as described above), as well as to indi- cate suitable approaches in the continuous ef fort that must fo}low the first step. Training of staff for the national program should also be part of their "ispearhead" function, - ilk - vii. Progressive farmers should be given an opportunity to expand their productive capacity, and medi-m-term credit should be provided for this pur- pose. In view of the existing program for such farmers, credit of this kind should be made available throughout the country. In the promotion of medium and large-scale commercial farming, consideration should be given to efficiency as well as employment and income distribution criteria. A farm management service has already been established within the Department of Extension and Training, but this needs to be strengthened and converted into a fee-charging organization to provide an investment planning and implementation service for commercial farming. viii. The emphasis. in the settlement program should be shifted towards a consolidation of existing schemes, especially those involving irrigation. A review should be undertaken to determine the ways in which costs can be reduced and the self-reliance of settlers increased. Until new methods have been suc- cessfully tested, the expansion of settlement should proceed slowly. ix. Further livestock development requires importation of breeding animals. The establishment of ranches to assure a satisfactory reproduction and allow a wide distribution of the offspring is recommended. The promotion of small scale poultry units should be accelerated. x. A credit institution for small and medium scale farms and for short, medium and long-term credit should be established which would work in close collaboration with the extension service and ADMARC. Land use planning should De accelerated to identify imediate development areas. Crop pricing policy nias two major d6jectives: to nmaximize and stabi'lize smallholder income and to ensure the availability of funds for investment to promote agricultural development. Prices are set by the Government, and ADMiARC efficiently markets smallholder produce and invests the Drofits derived. The two objectives, both c W a ;.-e assent-al, a re obviotzusy co=flicring. Governmaent ma', want to -.s-Zeer a7z-mnatz_ve - svng aelGpmaent zina-ace i-a order to improve ;roducer incentives a.t,/,eYzeczive stabi izacion and to ensure an investment program which is less dependent on world market fluctuations. xi. The projects identified in this report., together with the continua- tion or expansion of ongoing projects are estimated to cost K 54.7 million over the period 1974/75 - 1978/79. To implement this program would require a 3% annual increase in the agricultural development budget.Ongoing projects will require K 19.3 million during this period. Tt I's suggested that K 10 million be allocated for improvements in research, veterinary services, agri- cultural training and continuation of selected projects such as Salima; K 25.4 million would be needed for the projects described below, which may be of po- tential interest for IDA support. (a) National R'rai Developmene. This project would initially involve the development of 2-3 new areas annually, eac' containing about 15,000 farms; it is axpected that develop- ment would accelerate as experience is gained. The total cost for a five-year period is estimated at K 17 millioa, - iv - of which K 5 million will be needed in or before 1978/79 assuming the project will be ready for implementation in early 1977. (b) Lilongwe Phiase III. Continuation of present program with some additilonal spearhead tasks. Total cost for a four- year period is estimated at K 10 million, all of which will be needed in or before 1978/79 assuming the project will be ready for implementation in early 1975. (c) Karonga Phase II. Continuation of present program with some additional spearhead tasks. Total cost for a five-year period is estimated at K 5 million, of which K 1 million will be needed in or before 1978/79 assuming the project will be ready for implementation in 1977. (d) Flue-cured Tobacco. The establishment of a further 2,400 smallholder producers is now being planned. The project would be developed over five years starting in early 1976. Total cost is estimated at K 4.2 million, of which K 3 mil- lion would oe needed in the 1974/75 - 1978/79 period. (e) Livestock Development. Under the proJect about 2,000 cows would be imported arnnually. Tihe project would begin in 1976 and be completed by 1980 at a total cost of K 3 million, of which K 2 million would be needed in the 1974/75 - 1978/79 period. (f) Sugar. A study of the feasibility of a nucleus estate- smallholder sugar scheme i's underway. If agreed, the project may be ready to proceed in 1977. Total cost is estimated at K n million 'excluding the cost for the factory), of which K 2-4 mi 1ion would be needed in the 1974/75 - 1978/7`i period. (g) Shire Phase M. By 1978 - -e- te tnt the third phase of the Sh ra V?.0.1e Agri'cultural Development Project is ex- pected go z Urequreii anice. Tr. is anticipated that tais phase WOU1d include a large-sca'e irrigation project based on a majo-2- carna from the ialls oz ..he Shire River. Farming systems whinch could use this water profitaiby are being sought as p o e Pnase Project. The total. cost of the project is roughly Es-ilLated at K 15 miillion, oi- andich about K 2 mil- i-3n is expected to be required !n 1978I79. (h) Rural Deveaopmeht Bank. A Rural Development Bank would be established in con_unction with the launching of the National Rural Development Project (NIDP), and funds for its activities are -incaluded under several of -i.e above projects. Support for the establishment of the Bankc should be included in the NRDP. MALAWI AGRICULTURAL SECTOR REVIEW I. INTRODUCTION 1.01 This report represents the findings of a mission consisting of Messrs. B. Nekby (Chief of Mission), R. Henderson, J. Russell (RMEA) and W. Schaefer-Kehnert (kMEA). The mission visited Malawi in April 1973 to review the Government's strategy for increasing agricultural production and improving rural living conditions. The report is intended to provide a basis for discussions between the Malawi Government and IDA concerning assistance for the agricultural sector. It is selective in coverage and no consideration has been given to the forestry and fisheries subsectors or to estate production. 1.02 After a review of the present structure of the agricu'ltural seccor and of existing policies and development efforts, an analysis of the oppor- tunities and constraints for agricultural development is presented; taILs is followed by a discussion of future strategy, investment programs and growthl- estimates. Details of smallholder flue-cured tobacco projects and the in- stitutional arrangements for agricultural credit are found in the Annexes. This report does not attempt to provide a comprehensive description of agri- culture in Malawi; however, further information may be obtained from the Statistical Annex and through the publications listed in the Bibliography. Maps and charts are attached to clarify the presentation. 1.03 This report has been developed in close collaboration with the Malawi officials in the Ministry of Agriculture and National Resources and the Treasury, and to a large extent reflects a consensus of opinion with respect to the strategy of agricultural development. The responsibility for - the statements made rests, however, with IBRD/IDA. II. PRESENT STATUS OF AGRICULTURE A. General 2.01 Malawi is a landlocked country extending some 900 km from north to south, and less tharn 200 km from east to west. It is bordered in the east and south by Mozambique, on the northwest by Zambia, and on the north- east by Tanzania. In the 1966 census Malawi's population was estimated about 4.04 million, increasing annually at 2.5%. The current population is about 4.7 million; 4.3 million of these are located in rural areas, and the number is expected to increase in absolute terms for the forseeable future. The average population density is 49 per kin2, and it exceeds 100 per km2 in the most productive agricultural areas of the Central and Southern Regions. -2- -o the 'atest copulation census (1966), 36% of the population age 7,;- arg or o-ver had aiCtende6 school for at least one year. Education ha., -'gh priority, and it is expected that the enrollment rate in primary oca,oo7s will be raised to 50% by tne end of the decade. Agriculture is @2- taught ir both primary and secondary schools. 2.02 Thle plateau in Malawi has been interrupted by rift movements o:. con- aide-rao e miagnitude; these have formed the rift troughs of Lake Malawi a id the Sare Rive-r and give lalawi a generally dissected topography with many s':eep slopes. Tq ere are three topographic regions withi-n the country: (a) The Shire VEJUley and Lake Maalawi littoral, ranging in elevatiorL from 40 to 500 meters; (b) The plateau areas of the Shire Highlands, Central Region and the Mzimba District of the Northern Region, generally between 750 and 1,400 meters; and (c) The highland areas of Nyika, Vipya, Misuku, Mafingi, Dowa, Dedza, Kirk, Zomba and Mulanje, ranging from 1,400 to 3,000 meters. 2.03 The land area oL some 9.4 mil'ion hectares is administratively divided into three regions - the Northern, Central and Southern regions; about 50% of the total area can be classed as arable, and only 20% i s under cu.tiva- tion. Table 1: LAND 1USE Percent Arab Le :Jaina t 000 of Hectares Total Land customarily uinder cultivation 1 840 19.6 Land customarily under faJlow 2,895 30.8 Estates and plantations 92 1.0 Land not arable (grazinig, long fallow and restricted drainage valley areas) 3,279 34.9 Other land (steep ruggecd courntry, forest, permanent swamps, cown-s and villages) _1,294 1,3.7 9,4i00 0o.0 Source: Ministry of Agriculture and Natural Resources. 2.04 Malawi has a warm rainy season from November to May, a cool dry season in June and July and a hot dry season in September/October. Average rainfall varies from 750 mm to 1,600 mm. Rainshadow areas in the Lower Shire, Mzimba and Lupembe (5% of total land area) have a rainfall less than 750 mm; the high plateau areas of Mulanje, Zomba, Vipya and Nyika (4% of total land area) receive above 1,600 mm, with a maximum of 3,200 mm reached on the slopes of Mt. Mulanje. Rainfall is consistent in most areas and often of high inten- sity; severe cyclones may occur in certain areas about once in five years (twelve having occurred in the last sixty years). Temperatures average 24%C along the Lake Shore and in the Lower Shire areas and 18'C in the higher plateau areas; the mean annual range is from 6° to 8°C. 2.05 About 93% of Malawi's land area drains into the Lake Malawi (79%) - Shire River catchiment (14%); the remaining 7% drains into the shallow and slightly saline Lake Chilwa and Lake Chiuta which have no outlet. Lake Nalawi covers an area of 2.2 million ha, and is well watered by perennial streams. Changes in lake level have however caused fluctuatiorns in the rlow ofL the Shire River. (The mean annual flow at Chikwawa varied from 8 to 15 thousand cusecs in the 1950's). The Liwonde Barrage is designed to control these fluctuations. New power installations are being constructed at Tedzani, ac.d an irrigation canal to serve '0,000 ha is under consideration for the Kasinthula area. Recent deta4led studies by Sir W. iialcrow and Partners have investigated the water resources and irrigation potential of both the lake shore areas and the Shire Valley. B. Role of Agriculture in the Economy 2.06 Agriculture contributes about 50% of Gross Domestic Product (GDP), a slight decrease from an average of 57% in the years immediately after inde- pendence in 1964. The estate sector is responsible for about 11% of total agricultural production, as compared with 7% in 1964. The smallholder sector, which is primarily subsistence, is responsible for the balance. Cash sales were around 20-24% of the total during 1964-70, increasing to about 28% over the last two years. The annual growth of total agricultural production. in cur- rent prices has amounted to 9% since Independence. The estate sector grew at a rate of 16%, while smallholder subsistence production expanded by 7% and cash sales by 14% per year. The growth of smallholder production is, however, mainly due to price increases and the low production levels in 1964. If the average volume of sa'es during the period 1968-71 is compared with average sales during the first four years after independence (Table 2), then only cot- ton and rice (where the development effort has been concentrated) show sub- stantial increases, while smallholder sales of maize, pulses and tobacco have decreased. -4 Table 2: VOLUM OF CASE SALES AND EXPORTS (Index; average 1964-67 = 100) Average Szallholder Sales 1968-71 Haize 91 Pulses 54 Fire-cured tobacco 71 Seed cotton 125 Groundnuts 98 Rice 222 Average Exports 1968-72 Smallholder crop Maize 93 Pulses 51 Fire-cured tobacco 96 Cotton 03/1 Groundnuts 121 Rice 272 Estate Crops Tea 154 Burley tobacco 154 Flue-cured tobacco 306 /1 Low due to increased domestic processing. Source: Economic Report 1973, Compendium of Agricultural Statistics 1971. 2.07 In view of the absence of other resources, Malawi's exports a--e almost entirely agricultural (95%). TIne main exports from the smallholler sector are fire-cured and sun/air cured tobaccos, groundnuts, cotton, p-lses, maize (8 years out of 9), coffee, cassava and recently rice and sunflower seed. Tea, and flue-cured and burley tobacco are the sain export crops produced in the estat:e sector. Exports from both sectors have grown by about 11% annually in current prices during the nine years since Independence. The growth of estate exports has beer. steady, while sma llholder exports havo fluctuated considerably. About 57% of actual growth of exports is due :c increased volme. 'hlis proportion is considera.oly lower (46%) for the :rall! holder sector, where price increases are responsible for 54% of the actital growth. The low levels of exports ire the base year (1964) again inflat,s the growth rate. A comparison of the average volume of exports during the -irst four years after Independence with the last five years is given in Tabl.± 2; major increases took place only for estate crops and rice. C. Agricultural ?Production Land Tenure and Farm Size Distribution 2.08 About 82% of thne land area is head under customary tenure; about 2% is either freehold or leasehold estates or _lantations The remaining 16% has been acquired by Government for public use, and the maTjhri ty is devoted to either forests or national parks. A successfui schem.e of land re,sistra- tion giving a form of title to individual fami-lies on customary land has been initiated as part of the Lilongwe Land Development Project. As night be ex- pected from the relatively high density of the rural population, holdings are generally small in size, and average about ..5 hectares. The average size ranges from 1.3 ha in the South, to 1.4 ha in the Nort.h and 1.9 ha in the Central Region. It is interesting to rnote chat the size of 'holdings in the Northern and Sout-hern regio. s is about the sa:me (Table 3)s. Farm size is dictated by the amount of ±arc whichi can Ic cYutivatec by a Single _at 4 at well as by the availability of arable land. Table 3: PERENTAGE OF HOLDINGS BY SZ-2 OF L(ectares) Av, s_ize Av. \o o. =dz.er 4.3 & al 'hold- persons 'LAn,g Reaion 0.8 0D8-1.6 Ki37-2.4 2.5-4.7 over is on old g-as All Malawi 28.7 342i 18.4 16.7 2.1 1.5 4.6 N. Region 31.9 34.6 176 ¾ .4 4 5 1,4 4.3 C. Regior. 17.8 30.4 22.3 25.4 42 .9 4.7 S. Region 35.6 36.5 15.9 11.2 0.9 '.3 4.6 Source: National Sample Survey of Agriculture (NSSA) 1968/69. Estate and Smallholder Productions 2.09 The estate sector, althougn only a s,,all proportion of total culti- vated area, is responsioLe for almosc all the Droductsoi. of tea, flue-cured and burley tobacco, sugar, and som,e t-ung oil; it is also involved in a miinor way in beef production and to a lesser extent in dairy and- poult_ry nroduction. The value of exports from this sector has grown from X 9.9 mIllion in 1964 to K 24.1 million in 1972. 2.190 The majority of smailholders are subsis-tence cultva-tors . Mize fs the staple crop, occu?ying 78% of all cultivated land - much of it in nixe"' stands. Other major subsistende cro,s are pulses, grounciuts and cassava, wich minor quantities of rice, sorghum and wheat. The major cash crops are grouCnd- nuts, fire and air-cured tobaccos, oriental tbacco, cotton, cassava and rice, and a 1little coffee and sunflower. Tne exzort value of small.holcder crops hlas grown from K 12.2 million inr 1964 to K 28.2 ml1io-n in i972. Smallholder areas and marketed production is given below an Table 4. Table 4: SMALLHOLDER AREA ALND MARKETED PRODUCTION 1969 % Total Total area Mixed Production Marketed Productioni Crco-:3 (000 ha) Stand 1970 ('000 MT) 1970 ('000 MT) Maize 1,068 94 1,019 105 Grolndnuts 449 90 102 33 Pulses 841 99 121 17 Sallet/Sorghum 496 97 71 6 Cassava 299 89 81 23 Paddy 48 NA 21 12 Cotton 37 NA 23 (seed) 23 (seed) Tobacco 32 NA 10 10 Source: NSSA 1968/69 and National Accounts Report 1972. The hig percentage of mixed stands from these NSSA figures, particularly for grounrnuts and cassava, seems questionab'le. Cassava, for instance, is often underplanted late in the growing season in a maize field to get it established before the dry season; it is also found in the outer fringe of Et field in a mixed stand. The tota1 acreages derived from the mixed stand fiures should thus be treated wit'n reserve, as they undoubtably overstate the effe:-- tive extent of the rixed cropping. 2. 1" Government policy has been directed toward the irprovement of small'older production. Particular attention has been paid to the use of fertilizer and improved seed. The growth of fertilizer sales is given in Table 5. T"able 5: FERT:ELIZER SALES TO SXALLIBOLDERS ('000 M TONS) i960 1961 1962 1963 1964 965L- 1966 i967 1968 1969 1970 971 ? )72 197.'i 0.2 0.3 0.5 1.0 2.0 5.6 7.1 8.6 9.8 9.9 i5.5 20.7 2) .8 24. 'J /, Introduction of Fertilizer Subsidy. 12 lip to 1973 alI fertilizers used by sma-11nolders can 'be considered as b.!ing 20% nitrogen. In the future as urea is iatroducedA, fertilizer sales w. 1L have to be expressec in tons of nitrogen sold. Source: Ministry of Agriculture and Natural Resources, Annual Reports. The recent world orlce increases for fertilizer coupled with the removal of the 40% Government subsidy on sulphate of anmonia led to very 'Large increas!s in prices to farmers between 1973 an-£d 1i93. Compound phosphatic! njitrogencis fertilizer and sulphate of aiwonia have increased in price by 110% and by 52%, -7 respectively. This increase and adverse planting conditions resulted in a 20% cutback in fertilizer sales between 1971/1972 and 1972/73; the upward trend can be expected to resume, however, although the profitability of fertilizer use has been reduced. The major development projects 1/ have been least affected by the decline in use; the 4,000 tons used (out of the national total of 20-,000 tons) was a slight increase on the previous year, although below projected targets. 2.12 The cattle industry is constrained by the small size of the national herd which totals about 573,000 head 2/ with a 9/ offtake rate; this means that only one animal is slaughtered per year for each 75 meibers of the popu- lation. Only 10% of farrmers own any cattle, 'out goats flourish and are arn important source of meat. Pigs remain a constarn: prey to endemic swine fever, and the problem of controlling parasites and WO in sheep has constrained efforts to inerease the nuiber off these animals. Poultry are an iimortant source of protein, and vilLage flocks are variously estimated at some 4 mil- lion. Total livestock poDulation is given below in Table 6. Table 6. IVESTOC; POPULATION ('000 Head) Cattle S bee Goat, __ Ci50 5oS 6 1950 ~~~~ ~~~264 39 2605 1955 307 79 326 77 1960 357 69 442 72 1'965 432 72 465 124 i970 492 9 16 639 146 1972 573 89 566 172 Source: Nlazoria Si;a.f f_` >ce counoenatd a: of ariLd _NazL .ral _ _ : : o . 2.13 The Government, tlhrough tAe combined actnivizie of the research branch, the extension service, developmenlt projects and AII'FRC 3/ 4is breeding or buying improved varieties of seed of the rfajor crops (maize, tobacco, groundruts, cotton and rice, as well as grasses and ogiuzaes) Tefe are on-going programs for ceri-ficated seed mnultipi7catioO by &overnment, ADkRC and selected farmers. I/ Lilongwe, Salima, Shira aLd Karonga (paras 2 .3-2C3i). 2/ Probably underestimated. National Sample SLzvey o Agricture, 1968/69 reports 723,000 cattle orn cor=unal land ailone. 3/ Agricultural Development and Marketinig Corporation (para 2.37). -8- D. Government Agricultural Policy 2.14 In view of its role in the economy, agriculture has been given top priority in Mala'ui's development efforts; 1/3 of total public invest- ment during the next three years has been allocated to this sector. Over the past decade the increase in productivity has been slower than populat:ion groth, and increased food requirements have been met mostly through an expansion of cultivated area. This in turn has meant both that land MCret susceptible to erosion has been taken under cultivation and also that t:fE! fallow period for land under shifting cultivation has been reduced. Fa,:e!d with the need to maintain soil fertility and to reduce the pressure for cultivation of areas incapable of sustaining continued cropping, the emphasis of agricultural policy is now on increased productivity. Such an incre,ase can be achieved by making the most efficient use of available land and Labor, while economizing on the use of scarce capital and skills. 2.15 In implementing this policy the Ministry of Agriculture has ui:ilized several development tools: (a) A national program carried out by the extension service; (b) Concentrated extension efforts; (c) Comprehensive regional development efforts implemented by semi-autonomous projects; and (d) Settlement schemes. The general extension ef'forts have to a large extent focused on progresEsi,e farmers (AchikLmbi) but they have also been able to promote adoption oL :Lm- proved varieties and fertilizers. Recently, concentrated efforts have been made in areas selected on the basis of active local participation. In such areas credit and the provision of minimum infrastructure have supplemented the extension efforts. Tre a4jor projects have a semi-autonomous status ana represenst a more compreAeasive and integrated rural deveiopment effort. Unrder the settlement >Crogram underutilized land and water resources- are provided for use ioy esci.i7 ,^ e;ezted and trained young persons in the Y.alawi Youarg Pioneers, whose employment opportunities outside traditional agricalture would otherwise be limniteo. 2?,6 The Gove^.nnnen:s livestock program. incl..-des improvements in marketing3 animta health, anr t1he introduction of ore productive breeds whenever condit-ions allow. A maJor aim is to increase the traditional hsrd to make better use of available grazing resources (particularly in the N)rth) and to integrate stock into arable areas to achieve a better utilization of crop residues, and provide draught power and manure. The fertility o-' the land would also be improved through tne introduction of fodder crops and leys. 2.17 Producer prices are set by the Government with the dual purpose of maximizing smallholder income and deriving funds Aor agricultural develop- ment, notably the expansion of production of flue-cured tobacco. The prices of export crops are generally related to export parity, while food crops for domestic consumption (particular'ly maize) may be priced slightly h.igher (but still below import parity) in order to encourage an adequate supply. The Government aims at maintaining a buffer stock of 830000 MT of maize (7% of total production) against crop failure, The costs of storing and disposing of the unused proportion of the buffer stock are met by the producers. Mini- mum guaranteed prices are generally announced before planting and short term fluctuations in world market condition are expected to be minimized. ADMIARC, the Government's marketing organization; the sole buyer of aLl smalholder crops not required for local sulbsistance. The Corporation offers a uniform price throughout the country, but is permitted to restrict its buying irn areas of excessive transport cost. ill costs are supposed to be covered but a cer- tain crop (presently, for example, rice) may be subsidized to provide an ini tial incentive if the longterm prospects for econormic production are expected to be adequate. ADMARC is expected to set asi-de a certain. proportion of its gross turnover as a price reserve fund to be held in liqud assetas Fertili- zer is subsidized from the development budger. The ulZimate aim of the oov- ernment is to remove the subsiay 'Lor nitrogen, an.d tis oblective -as basical,y accomplished in 1972. In the face of risirng world market orices it has been decided, however, to keep prices to fLarmers constant and thus to accept a temporary and limited reinstatement of this subsidy. E. The Ministry of Agriculture 2.18 Development of the agricultural sector is controlled by the Hinistry of Agriculture and Natural Resources under the direction of t1le Minister, presently H.E. Dr. Kamuzu Banda, the Life President of Malawi and his Permanent Secretary. The Ministry has three major Divisions: Agriculture, Natural Resources (forestry, wildlife, hnydrology and geological survey), and Administration. The Natural 'Resources and Administration Divisionis will not be considered here. The Agricultural Division consists of t:e Departments of Extension and Training, Research, An.znal Health and Industry, Technical Services, Fisheries, and a Planging Unit. it oversees the four major deveLop- ment projects which h-ave a direct inik with the Permanent Secretary, who is also a Board Member (generally Chairman) of a numoer of statutory corporations (Chart 1). The act-iVities and resources of some of the various departments, projects and corporations are briefly reviewed below. Departments 2.19 Extension and Training Th rtme-&t, The exteS-sion program is designed both to assist those individual farmers who aave shown an interest -ini progressing from subsistence to commercial farming, and to creaLe an interest n i improved farming methods among the large number of suasistence farmers. About '50 f£rmers are certified annually as Achikumbi and a limited amount of credit is made available to them from the Central Farmers Loans Board. A more intensive approach has been adopted in specific areas w;.i. asstaince from British Aid. These areas include West Mzimba in the o.,e Region where 6,000 farm families on 18,000 hectares are receiving mo-re i-JnSensive extension advice on maize, groundnut and oriental tobacco production, land conservation and increased use of oxen; particular emphasis .Ls placed on animal husbandry and establishment of improved pastures. A similar scheme involving 4,000 farm families on 15,000 hectares at penu in t1he Nathenjie area of Central Region is designated to increase maize yields whi,e reducing total maize area, increase groundnut yields and area, and improve conservation by contour ridging. Both these schemes have made a successful start and have made good use of local self-help efforts. In each case the constLructlon of feeder roads, improved water supplies and the introduction of some short-term credit for seasonal requirements were essential features of the scheme. A new scheme aided by ODA is proposed for Phalombe in Southern Region where recently improved water supplies will be incorporated in a small integrated devel-opment program involving various Government agencies. The program will involve some 22,000 farm families on 59,000 hectares. Other development efforts involve special assistance from ODA with cotton and tobacco growing. The cotton development effort aims at increasing yields through insect control and through opening new areas for cotton cultivation. ADMARC provides insecticides on credit. Repayment results have been poor mainly due to the lack of concentration of tne field staff. The effort with regard to tobacco has been concentrated on quality and yield improvement. The Extension and Training Department, together with the Animal Health Department, has attempted through the demonstration of improved feeding and management techniques, to integrate livestock production (for draught power as well as dairy and beef) with crop husbandry. About 60 animal husbandry demonstration units and 60 ox training units have been established and 1,500 s tallfeeders distributed. 2.21 The field service includes three regional ofLfices with specialists and supervisory staff, 13 divisions each with a residential fanners' train- ing center, and about 50 areas, each headed by an area supervisor and containing a non-residential training center. The Department in 1971/72 employed 42 university graduates, 106 diploma level staff and 734 junior staff with two years of agricultural training. 2.22 The Bunda Agricultural College, now a part of Malawi University, offers degree and diploma training. The present annual output is about 12 degree-holders and 60 diploma level students. The Colby College aims at an annual output of 150 students after a two-year practical training course. A new Natural Resources College is contemplated which wouid replace and bring together all agriculturally based certificate training; this would increase the output of extensior. staff to 185 per annum. 2.23 Researcen Deartment. Agricultural research is conLducted at four institutions - the Research Departmert of the Miinistry of Agriculture and Natural Resources the Agricultura1 Research Council (ARC), the Tea Research Foundation and the Agricultural Faculty of the University .f Malawi. Research in flue cured tobacco is financed largely by a cess, the proceeds from which - 1 1 - are paid to the Tobacco Research Board of Rhodesia. The Ulniversityts contribu- tions are mainly 4n the fields of agricultural economics, cattle breeding and pasture improvement. The Agricultural Research Council takes major responsi- bility for cotton and grain legume research (groundnuts and soya beans) and biometric work, while the responsibility for all other research falls on the Research Department of the Ministry. Research stations now cover all major ecological zones, and available resources appear adequate. 2.24 A Government research advisory comTittee controls the overall research program, and ARC has its own Scientific Council. Continuity of staff and research results are among the best in Eastern Africa. Over the years, agricultural research has concentrated on key points of constraint, arnd excellent results have been achieved in several areas. The great increase in cotton yields from the use of insecticidal sprays has made possible the establishment of a major export industry. Also, the breeding of groundnut varieties resistant to rosette disease and the use of fungicides to control leaf spot should enlarge the confectionary growing areas and give a substantial increase in average yield. 2.25 Animal Health and Industry Department. Comipared with neighboring territories, Malawi is relatively free of major diseases; however, Foot and Mouth Disease (in the North), East Coast Fever and tuberculosis are among the most lmportant ciseases which pose a potential threat to Malawi cattle. Trypanosomiasis is found in isolated areas througnout Malawi, but the disease will not become a major .actor unt11 the i-nfested areas are required for an increased national herd. The Animal Hlealth and Industry Department has sought to protect local cattle from Foot and Mout Disease infected cattle from Tanzania by campaigns of preventive imunization and by institution of a disease-free area which would act as a barrier agaist tnSe .nvement of cattle from infected areas. Tre Department 5nas a vaccination program to reduce --_rculcsi s a'out 60,uU3 a-. t a .. __Y' an Vas C oa'st fever an.d ozae.r tick hIo=e diseaase! hlave ':eaa%i cuontroIled throt-' the establishment of dipp-ing facilities (255 dip tanks are now in use, of whlich 29 are private). About 300,000 head of poultry are vaccinated against Newcastle disease annually. 2.26 Genetic improvement of the local Zebu cattle has been undertaken through an Artificial InseminationI Service, and by the provision of bulls from two improved herds of Malawi Zebus. Two main exctic breeds are being introduced - Friesian and Brahman; the latter is being introduced iainly in the Lake Shore and Iower Shire areas in view of its tro-piccal adaptation. About 2,000 inseminations are carried out annually and about 100 crossbred females are distributed. 2.27 To facilitate the sale of slaughter animals and increase the offtake frokm the national herd, the Department operates 34 cattle -ariarket5s and 8 ho'Lding grounds throughout the country. About 12,000 cattle -12% of total offtake) are marketed annually through these facilities. About 1,500 animals extracted from the rational herd are distributed annual>l7 to individual farmers for stall fattening. 1,11O0 pairs of oxen were zrained at Government centers in 1972. 500 farmers deliver milk in0to Lwo schemes in Liongwe and Blantyre under a Milk Marketing Pro-ect sponsored by TUND and Danish b'ilateral aid. - 12 - 2.28 The Department employs 17 veterinarians, 28 senior staff, and a field force of veterinary assistants and dip attendants. Training for junior staff (presently around 40 per annum) will be transferred to the. Natural Resources College when established. A new central veterinary laboratory is being established at Lilongwe, and the existing laboratory in Blantyre will then serve as a regional center. 2.29 Technical Services Department. This Department contains three sections. The Land Use end Planning Section is concerned with identifyiiag and planning settlement schemes and assisting the new medium-sized estate owners. Its main task is the evolution over the next five years of a comprehensive land use plan for the whole of Malawi. The Irrigation Section gives particular attention to the design and construction of small irril.gia- tion schemes primarily for rice production. The Settlement Section helps to ensure the most efficient use of unoccupied land by establishing both Cryland and irrigated settlements; priority is given to the settlement of youn~:1 persons trained by the Malawi Young Pioneers. Thus far, ten irrigated settlement schemes have been established with a total of 1,900 settlers on 1,400 hectares (880 ha of rice); there are also four other schemes receiving technica:i, assist- ance from Taiwan. Ihere is a pilot irrigated rice scheme at Dwangwa sL-pported by the British which. has been most successful with its initial settlers and its experimental program. The average development cost has been K 1,3(0 per irrigated ha. There! are now also twelve rainfed schemes with a total c:f 1,200 settlers on 12,000 ha (2,100 ha cultivated). The main crops are maize," cotton, burley tobacco and groundnuts, and the cost of these dryland settlemenlL:s averages about K 4550 per ha. Present plans call for the establishment of one or two irrigated set:tlements (200 ha) and four rainfed schemes (1,000-';,;500 ha) annually. 2..30 Planning tUnit, The Ministry has a small unit for planning, 7roject preparation and the collection of basic data. To date, it has mainly Teen concerned with major project preparation. Mayor Pro4ects 2,3Sd D r D.ring the last six years Malawi has been a forerunner in th:.! fiel-d of integrated rural development for the subsistence farmers. To date, fozr inajor projects have been started with promising results. These p`:ojects cover areas containing about 184,000 farm families (20% of the total rxtral noDulation). The cost per family is givern in Table 7. - 13 - Table 7: M{AJOR DEVELOPMENT PROJECS Target Number of families Total adopting cost Total number improved Cost per (mil- families in Cost per pi technology - adopting,2 Project lion K) project area family (K)- final year family (K)- Lilongwe 12.8 52,000 246 29,000 441 Shire 14.1 74,000 1191 25,000 564 Salima 3.3 40,000 83 9,000 367 /3 /4 Karonga/ 5.0 18,000 278 4,600 0 7 /1 The comprehensiveness of the projects and thus the benefits to the recipients vary between projects. /2 Includes costs for non-agricultural purposes which may benefit a larger number of farmers. /3 Has just started. /4 Includes a district hospital and two minor irrigation schemes. Source: IBRD appraisal reports and Government Development Budget 1973/74. 2.32 The Lilongwe Land Development Project, supported by IDA, is now in its second phase. It covers an area containing about 52,000 farm families at a total ccost of K 12.8 million. This integrated smallholder project provides for a complete road network, a soil conservation system of mechani- cally constructed terraces, marketing centers, credit, land registration and extension advice. The major crops are maize, grounidnuts and tobacco, and a breeding ranch is operated to supply feeder cattle for a cattle fattening program. An evaluation of the Project is now being undertaken by the Bank, but findings have been constrained by the lack of pre-project data for comDarison purposes. The project has been successful in reaching a large proportion of farmers, ir, achieving substantial yield increases for mnaize and groundnuts, and in o&btainirlg excellent repayment records in its credit operations. The construction of the physical facilities is proceeding satis- factorily and there has beern good progress on land reoistration. 2.33 The Lower Shire Rura DeveloDment Project, also supported by IDA, is ending its first five-year phase and commencing a greatly enlarged second phase. The Project will ultimately cover an area with 74,000 farmers at a total cost of K 14.1 million. The first phase dealt with an almost totally underdeveloned area, and had the single aim of improving the cotton crop by supplying medium-term credit for back-pack cotton sprayers and short-term - .4 - credit LOr the yearly supply of insecticides. Extension and marketing serv ces were also provided, as well as some road and water supply cons truc- tion. Yield targets of 900 kg/ha have been achieved, as compared with aOC 'g/ha for nonspraying farmers. Loan repayments average about 97%. P.^aase e xpEnded into an Integrated Rural Development Project; it continues cotton spraying but alLso provides credit and extension for rice, maize, sorgur., groundrnuts ,and cocoa as well as an overall land and crop use pli n for 'the :wer Shire Valley, inputs for a district grazing scheme, research, some land reorganization 4and improved social facilities. 2.34 The Salima Lake Shore Development Project, now lin its 5th year: covers a?. area with about 40,000 famlies at a total cost of K 3.3 millLon; 4it is part ty fin.anced by the West German Government. The concept is similar to that of Lilongwe, but there is less emphasis on mechanized road cons.truc- tion and soil conservation (although a certain amount of road building is being urdertaken in the later stages). Major crops are cotton, maize a:c. groundnuts. Yield targets have been achieved (900 kg/ha seed cotton ani 1,000 kg/ha Mani Pintar groundnuts). Salima has been particularly success- ful in the training of rural craftsmen. 2.35 The Karon a Rural Development Project received an IDA credit Dn 1972, and building construction and staffL hiring has now started. The ::)roj-- ect will eventually cover an area containing 18,000 farmers at a total zost of K 5.0 million. It: is located in the north of the country in an area with difficult communications which is cut off from the lake shore road by a: es- carpment; this renders the area dependent on an underdeveloped lake tra.nsport system. The Project will provide extension and credit for cotton, maizi , grourndnuts and rice, with some irrigation facilities; a livestock comDpo .:ent aimed at developing marketing and livestock offtake oy provision of sto: kroutes plus improved disease control is also included. Expenditures 2.36 The total development expenditures of thie inistry of Agricul:ure and Natural Resources (excluding forestry and fisheries) are summarized ifn Table 8. Recurrent expenditures increased from K 2.2 million in 1971/17 to K 3.2 mallion in 1973/74; the latter represents about 7% of total recur::e:.:t expenditure. - 15 - Table 8: EPENDITYEES ON DEVELOPMENT ACCOUNT (Million K) Exp. before Revised Estinate Remaining Total cost 3/31/72 Est. 1972/73 1973/74 Cost Extension & Training/1 5.6 2.3 0.8 1.1 1.4 Research 1.5 0.7 0.2 0.2 0,4 Animal Health & Ind. 4.9 1.3 0.8 1.3 -1.5 Technical Services 9.1 3.2 1. 1.7 31 Planning Unit 0.3 0.1 0.1 0.1 Major Projects 35.2 11.0 3.7 5.4 14.9 Other 0.8 0.3 0.2 0.1 0.2 Total 57.4 18.9 6.9 9.9 21.5 Of which external assistance 46.9 15.3 5.6 7.9 18.0 /'1 includes fertilizer sx;bsidy. Source: Government Development Budget, 1973/74. Other Institutions 2.37 The Agricultural Development and Marketing Corpoation (ADiLkRC) is charged with the marketing of smaliholder crops, and with supplying1 inputs and implementing Government price policy. The corporaticn maintains 52 rmain storage depots and over 700 temporary produce-buying station'as througout the country (1 station per 1,300 farm, families), and has a storage capacity of over 225,000 metric tons (MT). ADMARC and its predecessor have made substantial crop marketing profits during the last few years; these a.mounted to K 2.0 million in 1969/70, K 2.7 million in 1970/71, K 8.7 million in' 1971/72 and are estimated at K 6.0 million in 1972/73. It can be seen below (Tables 9 and 10) that the trading in tobacco and to a lesser extent in ground- nuts has shown profits, while that in maize and paddy has experienrced a sni>et loss. The corporation is required to invest in a great nu-mber of old and new ventures, some of which have no connection with smallholder productiork thus - 16 - far, it has extended unsecured 'oans of K 1.9 million, secured loans of K 8 million and shares of K 3 million to a number of estates, but as some Df these have not proved viable, K 1.0 million has been written off. Table 9: .ADMARC PRICES AND VOLUME PURCHASED, 1971/72 Vo Ltme Farm Gate Price Average Farm Gate Sale Price Pur:hased Crop Gp rade (KIW l) Price Paid (K/MT) (K/MT) (tO)Ci 14T) Cotton 121 111 NA 22 Groundnuts 143 106 185 37 Tobacco 331 273 731 15 15aize 28 24 43 37 Paddy 73 72 76 I7 Source: ADMARC Annual Accounts, 1971/72. Table 10: ADMARC TRADING, 1971/72 ('000 K) Percen- Percen- tage of Change tage of Purchase Buy:Lng Cost to in Sales Sales Cost to Value Costis Value Stocks Value Costs Value Overhead P::-cfits Cotton 2,466 896 36 +316 4,250 102 2 198 804 Ground- nuts 3,907 904 23 +429 7,065 372 5 200 2,111 Tobacco 3,933 1,415 36 - 11,456 183 2 312 5,553 Malze 834 413 47/1 -208 1,599 46 3 91 - 42 Paddy 1,223 228 19 +145 1,173 2 0 51 -185 Othle, _486 Th1 18 +184 2,162 73 3 58 474 Total 13,899 4,117 29 +866 27,711 778 3 910 8,715 /1 Includes storage costs. Source: ADMARC Annmual Accounts, 1971/72. - 17 - 2.38 The Government Loans Board (GLB) is under the supervision of the Ministry of Trade, Industry and Tourism, but field work such as the prepara- tion of loan applications and loan supervision is carried out: (i) for farm- ers by the extension staff of the Ministry of Agriculture and National Re- sources and (ii) for businessmen by District Commissioners and District Loans Boards. The original plan for farm credit was to provide progressive small farmers with medium-term credit for purchase of draft oxen, implements and oxcarts. At present, however, K 153,000 of the loan portfolio of K 201,000 is tied up in six loans to large estates, and some funds have recently been reserved for short-term credit in some new extension ventures (para 2.20). Total capital funding is small (about K 242,000); approximately 60 percent of the loan portfolio is in arrears, and 40 percent of this is considered to be uncollectable. 2.39 The Kasungu Flue-Cured Tobacco Authority has initiated a program to establish 120 tenant tobacco growers on 70 ha farms (8 ha tobacco). The project is financed by the Commonwealth Development Corporation which acts as managing agents of Government. As a result of careful preparation, sound and adequate trainiing and a balanced rate of initial development, the Project has been successful. The quality of flue-cured tobacco is excellent, and yield and prices obtained by the tenants are above the average for Malawi; in 1972 50 tenant farmers averaged 1,550 kg/ha at 20 t/kg. A smallholder scheme of 50 farmers has been launched and is expected to be expanded by 600 farmers as part of a new project in 1973/74. 2.40 The Cold Storage oany, using the buying and coountry market organization of the Animal Health and industry Department, is the Govern- ment 's residual buyer (at floor prices) of cattle obtained at official auctions. These animals are either slaughtered directly at abbatoirs operated by the Comarny at the Blantyre and Lilongwe marketsD or the cattle c *^e ,-cessed through t%ne sml.-I r atzef-ri-, schamE: i00 head ?er ann-tl) to increase %eignS and -radea. s a result oe> past sudies, a new abbatoir at Nzuzu in the Northern Region is now under consideration. The Company is charged with responsibility for Government price and stabilization policies, and presently handles about 20% of the cattle trade. The Company is also responsible for all meat imported for local consumption. 2.41 The National Oil industries (NOIL) is in charge of rice milling; it also oversees the extraction of oil from cotton seed, and in 1971 it took over the cassava trade from private traders. The corapaSry buys cassava fror farmers in peeled, dried and chipped form at 1.7 t./kg; and i4n 1972 it exnorted 28,000 M: to Europe at a slight profit. ADYiLRC has recently acquired the majority interest irn NOIL, and is handling the export and internal marketing of all NOIL's produce. 2.42 Cooperative Movement - Cooperative developnent was f£rst enicouraged in the 1950's; development suffered, however, from an overly ranid expansion coupled with a lack of experience and training. Cooperatives are not et this time actively encouraged by Government, but societies are assisted if they arise spontaenously and show signs of viability. - 18 - III. PRODUCTION OPPORTUNITIES 3.01 Malawi is; self-sufficient in the major staples; subsistence cultivation of maize, pulses, groundnuts and other basic foods has gewerally been sufficient to satisfy domestic requirements (Table 12, Statistical Annex). Government policy :Ls to increase yields to cover the increased demand generated by population growth (estimated at 2.r6% p.a.). Such a poli:y would help avoid the necessity of bringing marginal lands under culti-ration and would help preserve soil fertility. The small domestic market fo:r staple foods as well as for sugar, beef, milk and poultry products is grawing> in relation to the rate of urbanization, and will be further augmentel with improvements in income. Between 1968 and 1971 the number of wage earnters increased by 6.4% annually to a level of about 170,000; per capita ealnings increased over the same period by 2.5% annually. The possibilities for exports are, however, the nain determinants of farm cash income and price forc!casts are summarized in I'able 11. Table 11: EXPORT PRICE FORECASTS (K/MT) .11 Realized DEVPOL- L Malaw-i Estimated World Market Prices Export Export IBRD Prices Prices Realized Forecai 1972 1980 1972 1980- Descript iOn Tobacco fire-cured 1 , 0o00 662 - burley ) 881 882 - - flue-cured) 1,448 1,103 767 701 India Expor: Groundnuts 200 165 216 138 Nigerian, c:.f Europe Pulses 78 88 - t1a° ze 35 29 58 41 US No. 2, f:b Gulf port. Rice 153 121 120 100 Thai, 5% brc ken fob Bangk>!k Cassava 29 29 - Cottonr (fi:er) 5$6 418 676 466 Mexican I-1,Ir'' cif Liveri:ool Sugar 96 68 130 99 "World" fob Caribbean ,eef _ _ 2&026 ,1,789 Argentine wlo.Lesale London /1 Statement of Development Po2icies, 1971-80. /2 In constant 1972 terms. Source: Malawi Governments Statement of Development Policies (DEVPOL), 9971-80 Malawi Government, Economic Report, 1973, IBRD (Working Paper) Exports of Developing Countries, 1973. - 19 - 3.02 Increased production in response to domestic and export requirements depends largely on farmers' incentives, improved techniques and the amount of new land that can be brought under cultivation. Tabl1e 12 summarizes the returns to land and labor which can be expected from the main crops under present and improved technLiques. Most cultivable land of good quality with readily available domestic water supplies is already in use, and new land can only be brought into cultivation with increasing risk of fertility and erosion problems. Where unused arable areas still exist there is usually an inadequate water supply and efforts are required to identify these areas and arrange for their productive use. Priority should be givena to high value crops such as flue-cured tobacco which would make maximum use of the development resources required. The exploitation of the irrigation potential is evern more costly and substantial benefits would have to be projected before investment could be considered. Table 12: RETURNS TO LLND AND LABOR IN PRODUCTION OF SELECTED C=1ODITIES Present Techniques 55 soVed Technies Gross Gross G_ross Gross Price Yield Return Cost iXarg-in Yield Return Cost Margin (Kb 00 kg) (kg/ha) (K/ha) (K/ha, (K/ha) (kg/ha) (K/ha' (K/iha) (K/1,a) Maize 2.76 900 25 1 24 2,500 69 16 53 Groundnuts 1,4.33 450 64 13 51 900 129 20 lo0 Fire-cured tobacco 24.25 225 55 - 55 560 136 25 1i1' Flue-cured tobacco 88.18 - - - - 1 ,O00 970 711 259 Cotton 11.57 335 39 - 39 `1,000 116 46 70 Rice 5.51 1,000/1 55 6 49 3,300/2 182 31 151 Cassava 1.65 1,100 18 - 18 3,300 54 12 49 Pulses 8.82 335 30 - 30 670 59 17 42 Grass-Fatterning 25/3 - - - - 7 175 115 60 Grass-Dairy 11/4 - - - - 3,000 330 140 190 Ra3n-fed. /2 Irrigated. /3 Feeder (difference between selLing and buying price, K per feeder). Source: Mission estimates. Maiafze 3.03 About 100,000 MT of maize are marketed by smal.holders outside ADHARC. It is Govermmenies policy to hold about 80,000 MiT (7% ofj production) as an insurance against crop failure; in practice oniy half of this amount is actually stored. Assuming that wage earners' demand grows by 6.4% and - 20 - des_red stocks by 2.6%, if 7% of total production is continued to be held as a nsurance factor, then the marketed surplus by 1980 should amount to, 250,000 Tf : 110,000 MT above the present level. To allow total produ.tion to grow by 2.6% annually, yields must increase from 1,000 to 1,250 kg/h;a by 1980, assuming that no new land is bought into production (although some &doubtedly will bed. Government policy provides that wnen production in a normal year exceecls domestic demand the producer price will be gradu...lly aausted to an export parity level; this would encourage diversificatiL.n, provide cheap livestock feed and allow unsubsidized exports. Maize re. earch carried out at Chitedze has concentrated on fertilizer requirements an.' the provision and testing of maize varieties including hybrids, compos:i tes and synthetic types. This research has demonstrated the great potenti -1 increases possible using improved seed, fertilizers and good husbandry (Table 13). Table 13: YIELDS OF SHELLED MAIZE (kg/ha) Composites, Synthetics, Unirmproved Douole HyDrid etc. Seeds W.ith fertilizer Research results 7,000 4,500 2,800 Farmer results 4,000 2,200 1,500 No fertilizer Farmer results - 1,300 1,000 Groundnuts 3.04 About 67% of groundnut production, or 70,000 MT is used for subsistance consumption, which Is increasing at ;bout 'tne same rate as :he populatiorn. There is a firrfm demand on world markets for conrfectionary nuts, whose prices appear to be fairly independert of -those of oil nuts. Present price levels are slig,.htly more than K 200 per ;M and are expectn to be maintained even if exports doubl'e. The nuts have a low content o:- aflatoxin, which gives Malawi a comr4parative advantage over other produc;trs. Due to th-e hiegh cost of 'importing canning mat-erial and the limited duran)ility of treated non-canned nuts, the possibilities for further processing wi:hin Malawi ate not very encouraging. A lir.ited amount of low-grade nuts ar.' sold locally for processing into oil. Present yields are about 450 kg/ha of nuts: in shell, with- considerable scope for increases. Several improvements ..ave raised yie'lds and consequently retu-rns to farmers, and varieties for di fferent ecological conditio-ns are riow available. Sulionur has been used to cont: ol the major cercospera leaf spot fungal& disease. Progress is also being made i rn breeding rosette resistant var°eties. Th'e Chaliabana variety commands .-. 'aigh conf^ectionary price but has a large irregular nut; this necessitates ha: d shelling and means there is a high iabor requirement. A single family i:aa - 21 - shell the production. of only about 0.7 ha. Attempts made to develop family size mechanical shellers have thus far been unsatisfactory, as they give rise to an unacceptable proportion of broken kernels. The absence of such a machine is a major bottleneck in the future expansion of production and this factor should be given increased attention in the research program. Among other oil crops, sunflower seems to offer good prospects. Pulses 3.05 Pulses play an important part in the diet of the rural population, but production has not kept pace with local demand. Present production encompasses a wide variety of types and grades. About 15% of the production or 17,000 MT of the white harricot and sugar beans are exported. With better grading a slight improvement in price may be expected. Yields couild be doubled in pure stand by improved cultural practices. Soya beans have been tried but the present conclusiorn is that they will not be an attractive proposition to growers. Work is now being done on a suitable canning bean for use as a winter crop in irrigation schemes. Cassava 3.06 Cassava is a highly drought-resistant crop grown as a standby in the case of drought. Most of the production is consumed on the Larm and about 25-30% is marketed. In response to recent favorable prlces within the European Economic Community (EEC), exports have totalled about 28,000 MT. The future prospects are difficult to forecast but with present farm prices of K 16.50/MT for dried, peeled and chipped cassava, farmers with marginal soils find it an attractive crop. Fire-Cured Tobacco 3.07 As fire-cured tobacco is sensitive to world overproduction, the Government limits the supply by licensing producers and imposing production quotas; increases are decided on only after discussion with major auction floor buyers. The US has lowered production in the face of increasing costs in this labor intensive industry and has also removed a subsidy given to its producers. The effects of this and of the recent dollar devaluation are unclear. Other producers have been increasing production, but appear to have trouble in maintaining quality. Limited expansion possibilities exist for this crop within Malawi, and prices will remain stable with effective produc- tion and quality control. At present prices and with improved techniques, tobacco production is a very attractive proposition. Burley Tobacco 3.08 Production of burley tobacco has been stimulated over recent years, and there has been a considerable increase in the number of growers. These new growers have opened new areas for tobacco production. In this process quality has suffered slightly, but the problem is being tackled by the joint efforts of the Research and Extension Departments. - 22 - -T e t.acco a09e -Malawi has used the Rhodesian situation to increase its market -re o- flue-cured tobacco from 900 to more than 8,000 NT, and is now rialy established as a major producer of leaf of satisfactory quality. The Ir-it4sh Commonwealth preference is safeguarded until 1975 (under Protocol 22 of the Treaty of Accession by which Britain joined the European Community). Tn order to gain long term preferential access to these markets, Malawi has applied for association with EEC. Provided this is successfully negotiated, Yalawi would have excellent prospects for further expansion of production. The increased production has thus far been derived exclusively from the larger farms and estates, but the successful project at Kasungu has demon- strated the feasibility of tenant and smallholder production. Utilizing this expertise, a maajor extension of smallholder production should be given serious consideration. Average yield figures have increased from 600 kg per hectare in the 50's to 1,200 kg in the period 1967-72. Research efforts promise fur- ther yield increases, although major production increases will come from an expansion of area. The current rapid development of new estates will continue, spurred on by the 50% rise in average prices from 89 t/kg to over 118 t/kg received at the current 1973 auctions. Over the past 6 years some 70 new medium and small estates have opened in Central Region, and these have not yet reached their full potential. Cotton 3.10 Malawi produces a strong medium-to-long staple cotton for which there is a good demand in the UK. Total production of seed cotton in 1972 VSf /amounted to about 22,000 MT; with a 30% ginning out-turn, this produced about 6,600 MT of lint, 5,000 tons of which was exported. World market prices are expected to drop, however. Local processing is expanding, and would require about 3,250 tons in 1973. Pest control through spraying is vital throughout Malawi, and has resulted in large increases in yields (from 300 to 1,000 kg/ha). It is a costly process, however, and requires intensive extension efforts. Production will increase on the Lower Shire, but will only exparnd in other areas if cotton remains competitive with respect to alternative crops. There are already signs of a decrease in farmer interest in the Salima Project, where groundnuts show more attractive returns. 3.11 Ongoing breeding research is excellent, and the next generation of higher yielding varieties will soon be issued. The cotton research program on chemical insect control has been very successful, as has been the preliminary work on biological control of insect pests. The biological program, however, must be expanded if thae continuous long-term application o0 chem icals to crops is to be avoided. The present practice of issuing free seed is both wasteful of seed (an average of 65 kilos per hectare are distributed,, whereas 25 would suffice) and encourages cotton growing by the inefficient who do not spray. A pilot program to sell de-linted seed is being conducted in the Lower Shire and shou'ld be applied countrywide. The irtroduction of this change could be associated withl the existing proposal for a modest price rise. As credit is already needed for pesticides, it could also be given for seed; in view of the monopoly position of - 23 - ADMARC (the purchaser), this should not present a repayment problem. Produc- tion increases can be realized, but they must be based on the present Shire and Salima projects and the selection of areas such as Bwanje Valley for intensive extension efforts including credit. Rice 3.12 Malawi has developed an export rice market, but the long-term price prospects do not appear favorable. Malawi presently produces some US varieties (mainly Blue Bonnet) but has experienced difficulties in achieving a good auality and in double cropping due to long growing periods. Preferential treatment has been obtained in the South African and Rhodesian markets, but export costs are not fully covered at present farm gate prices. Until 1968 the majority of the rice production came from rainfed cultivation, but over the last five years increasing attention has been given to irrigated rice production; this has in turn led to a significant increase in exports from 1,000 MT in 1964 to 7,000 ME in 1972. More research must also be given to rainfed rice productiorn, and to other irrigated crops that could be grown instead of or in combination with rice. Sugar 3.13 Domestic demand for sugar is estimated at 38,600 MT in 1973, and is expected to double by 1981. Malawi has acquired a quota of 14,000 MT under the United States Sugar Act and has applied for a quota of 20,000 NT rising to 30,000 MT under the new International Sugar Agreement. Exports in 1972 amounted to 3,800 MT, but in 1973 are expected to reach 20,000 MT. World market prices are expected to remain favorable for the foreseeable future. Malawi has areas with a good potential for irrigated sugar production. Since 1966 an area of 4,850 ha has been developed in the Shire Valley bV the Lonhro Co-narny and a further expansion of -ene Lonnro estate b-y 4,'60 oha has De2n agreed. This is exDected co increase total Droduction to a level of about 95,000 MT by 1979, whi'ch would still be short of estimated demand. 3.14 Government is contemplating two alternative areas for additional sugar cultivation: Kasinthula which contains an area of 8,000 ha adjacent to the Sukoma sugar estate (this could be irrigated either by pumping from the Shire river or by gravity through a 26 km canal) and Dwangwa at Lake Malawi, which also contains about 8,000 ha of irrigable land. A successful pilot rice scheme is in progress in this area. Yields in Sukoma average 12 MTf/ha: this compares favorably with Mauritius at 9 MT/ha with doible the labor costs. No data is available for Dwangwa, although a crop presently in the ground shows excellent promise. Figures for Mauritius indicate a profitability of US$250/ha with a labor cost of US$370/ha and a sugar price of US$88/ton at farm gate. Malawi, using a low export price of US$70/ton might show a profitability of around US$350/ha. Present transport costs from Sukoma are around K 18/ton for export and K 6 for internal consumption. Costs at 1f.wangwa would be similar or lower for internal consumption, but considerably hLgher for export. Thus the Dwangwa area is in a better position to provide sugar for domestic consumption while export production would be at a considerable - 24 - disadvantage. Also, the Dwangwa area is more fertile and suitable for aLter- native crops. It cou]Ld be partially developed for settlement without ant special difficulty. Macadamia Nuts 3.15 Thie Government Research Service at Bvumbe has been investigating the possibilities of production of the maacadamia nut. Besides the provision of grafted seedlings, yield and spacing trials have been instituted and advice given to tea estates around the Mulanje and Nkhata bay area which have devoted some 80 ha to this crop. Provision has been made for a furTher 400 ha, including a possible smallholder scheme. With potential yields at around 110 kg shelled nuts per ha per annum and a price around K 0.90 per kg, this tree may produce a potentially valuable export crop. Livestock Products 3.16 The prices of beef, pork and milk are regulated by Government. As cattle are kept by only 10% of rural households, subsistance consumption of beef and milk is very smal.l. The situation is somewhat better for poult;TY products, since an estimated 57% of farm households have some poultry. qI;irban. demand is marginal (10% of total population). The price of beef is only half the price of poultry and is below export parity; this in turn has led to a scarcity of animals for fattening schemes. The price of poultry appears to be high in relation tc the costs of production, which in turn reflect a lack of competition in production and deficiencies in the distribution networ.,. Demand for livestock products can be expected to grow by at least 4% annm-ally $ assuudng unchanged prices). The numbar of cattle slaughtered has only :,n- creased by about 2% annually over the last five years. Imports amounted to 391 MT of beef, 5 NT of pork and 70 SJ of mutton in 1972. Beef imports more than quadrupled over tie past five years, but they stili amount to only 1% of domestic production. Through an increase in prices paid to farmers, impcrts of beef were slightly reduced inr 1973. 3.17 ExDanded livestock production has been encouraged for several reasons. a) To pro-moLe =ixed farmirDg in order to introduce animal power and rotational culLivat-ion and to utilize crop residues. This would allow an expansion of cultivated area through a reductiLon ina hne amount of fallow (See also TabIe 1; (b) To avoid further increases in imports ard if possible exploit the favorable market prospects for beef; and (c) To improve protein consumption. - 25 - However, as in surrounding countries, cattle are regarded as a source of wealth and security and cornunal grazing patterns make it difficult to introduce improvements. Nevertheless, improvements in marketing and disease control have been achieved. An organized grazing area with voluntary stock registration and herd restriction will be initiated shortly in the Shire project. The introduction of cattle on stockless farms has been supported by the development of successful methods for pasture improvement. Through crossbreeding with Friesian a heavier animal producing 1,200-i,500 kg of milk per annum has been introduced. Small scale pou'ltry units have been. successfully established and could be multiplied. Swine f-ever reduces the possibilities for successful pig production. 3.18 The main restrictive factor in the promotion of mixed farming is the lack of available stock. The demand for feeder stock for sta1l fattening i-s already well above the 1,500 avaltable per anrnum from the traditional herd. The Dzalanyama ranch was established to improve the production of stall feeders, but it has proven impossible thus far to stock it properly. IV. DEVETL0PNT CONSTRAINTS 4.01 A number of constraints have restricted increased production in the agricultural sector. The most important of these are the lack of financial resources, trained manpower and agricultural credits and problems associated with marketing, cormnunication, land tenure and soil erosion. These constraints will continue to be limiting factors in the future, and the success of the major development projects has, to a great degree, depernded on their successful removal. As such, these projects thus provide a guide for future development strategy. Financial Resources 4.02 The Lilongwe experience indicates that about K 100 per family is required for physical investment in feeder roads, soil conservation, marketing centers, staff housing, etc. The recurrent costs can be estimated at about K 10 per family per year. The initial heavy input of extension staff would * be reduced after a certain stage oF development is reached, and the staff thus released could be used to carry out a gradual broadening of the rural development effort. Table 14 illustrates the financial Lronlicatilon ift the Lilongwe method is adopted nationally; assuming that 65,000 families are added to the program annually, this would allow a total coverage of the country in twenty years. - 26 - Table 14: FINAXCIAL IMPLICATIONS OF A NATIONAL RURAL DEVELOPMELT EFFORT OF THE LILONGWE TYPE (K Million) Maint. & Number of Initial Additional Extensior Farm Families Capital Credit Re- Recurrent of Origira:L Year Covered Investment quirements Cost_ Investmer t Total 1973 100,000 6.0 - 2.0 - 8.2 1978 425,000 6.5 1.0 4.3 4.3 16.1 1983 750,000 6.5 1.0 7.5 7.5 22.5 1988 1,075,000 6.5 1.0 10.8 10.8 29.1 1993 1,400,000 6.5 1.0 14.0 14.0 35.5. Note: Assumptions K 100 per family for initial capital investment., K 15 per family for credit inputs, K 10 per annum per family for recurrent costs, and K 10 per annum per family for maintenance and extension of the initial investment (10% of the initial inves tment) . Source: Mission estimates. The table implies an annual growth of expenditure. in constant prices )f 7.7%. The estimates presented are indicative only, however, and refer to the ex- tension services and allied work. Additional Government funds and resources would be required for the research, settlement, irrigation, veterinar 7 programs as well as for the promotion of high value crops such as sugar and flie-cured tobacco; expenditure for these programs presently exceeds K 5 million. Fur- thermore, the construction of primary and secondary roads would need :o be accelerated; in 1973/74 K 4 million was spent in this area. 4.03 With agriculture already receiving 30% of the development bu.dgez, an expansion of the allocation by 7.7% annually in real terms may bee ceon-- sidered unrealistic. The Government has two possible courses for futitre strategy. Either the Lilongwe type comprehensive development effort .oculd be used - which wit h a 4% annual increase in the allocation of funds Iculd allow total coverage of the country in about 40 years - or some less :'nten- sive, sequential development method could be adopted which would make it possible to acceierate the development process throughout the country in a considerably shorter period of time. m$nower 4.04 The proportions of degree, diplomate and certifeate level s:aff being trained is satisfactory (1:3:15). Under present staFfin- level.;, the number of farmLng families per trained field extension staff is a.> follows: - 27 - Outside Major Projects 1:2,000 ,ilongwe (target) 1:250 (initially) Shire (target) 1:150 The ratio of field eeision staff (trained and untrai`ned) to farm fa-milies in 1971 was 1:470; this represents an average for all Malawi and includes all disciplines covered by the Ministry of Agriculture and National Resources. With the planned training capacity oL the National Resources College, it would be possible to achieve a staffing ratio of one trained extens4on worker per 400 families by 1990 (assuming 1.4 million farm families) T'his staff- ing ratio would be sufficient if the Lilongwe approach is modified with re- spect to credit procedures (para 4.05), if initially only a few innovations are emphasized and if the extension effort is initially concentrated oin part of the area. The model farmer approach, (i.e. requesting an elected vilLage representative to assist in demonstration and credit activities) may also merit consideration. Overall, graduiates from existing institutions appear well prepared for their future assignment, and manpower is unlikely to become a serious constraint. Provision must be made for in-service trainin>g in collaboration with major developmernt projects and for training of specialized (tobacco and sugar) and management staff. Agricultural Credit 4.05 Short and medium-term credit for smallholders is practically non-existent outside the major projects. The National Sample Survey of Agriculture in 1969 reports that 13% of the holdings use fertilizer, 2% insecticides and about 1-2% ox-drawn implements. Since that time fertilizer consumption outside maJor projects has irncreased from 10,00 to 2too UTL., Experience has shown that credit wi'±l facilitate wide-spread adoption where recommended inputs are beyond the means of the farmaers. Tn LLDP careful in- div-idual screening, supervision of borrowers and integration with-. marketing nas given a recovery ratio in excess of 95%. The procedure is, however, very resource demanding and an alternative approach of extending credit to the village members as a group should be considered. The experiments with village group approaches in the Lilongwe and YMpenu areas should be extended and strengthened. !t may in this connection be worth trying the security fund concept -under which a certain percentage of the credit would be deposited into a fund with the urnderstanding that this fund would be used to cover any shortfalls in credit repayment. The group would be free to evict any default- ing member Dut would be obliged in any event to replenisn the security fund before new credit would be issued. Over the years the fund could be further built up for crop insurance purposes. The farmers could eventually form a cooperative society. Farmers' cooperatives should be the end product, follow- ing naturally the introduction of new technology by the extension service. Marketing and Supply of Inputs 4.06 Malawi already possesses an impressive marketnag structure. Within this framework , further encouragement should be given to cosFmev, groups who undertake joint marketing operations or purchase inputs as- a-group. - 28 - Tie successful group purchasing of five ton lots of fertilizer has alrcady been demonstrated and orice incentives could be used to facilitate similr.lr operations. 'Waere private facilities are inadequate ADMARC should esteb.'Lish a sieeling service to handle increased quantities of maize and groundni,its. Exist_ing buying points should be converted into permanent buying and selling caters to assure timely input supply. ADMARC should also create a sepa:rate department to ensure tae efficient handling of input supplies. Transport and Communications 4.07 Since Independence, Malaw4 ts inadequate transportation netwol:k h.as been considerably improved. A new rail link of 888 km has been opLned to Nacala in Mozambique in addition to the existing line between Beira and Salima. The Class I highway linking Blantyre with Lilongwe is to be e-tended to the Zambia border near Chipata and to Kasungu. The new Lakeshore ,;.oad has opened up large tracts of farmland in the Middle Lakeshore area. The la]ke service transport system which carries 35,000 MT each year is being im,:roved; this will particu'larly benefit the northern lakeshore. The lack of fec.der and village to market roads has been a major constraint for individual farm- ers and construction of these has been a prominent feature of all the i.n ten- sive rural development projects. For all future developmenit areas it i.s essential that a skeletal plan of the ultimate road network be developed, with indications of immediate priorities and possibilities for self-hei.p construct ion. 4.08 The export tonnage moved by rai I and road has varied greatly over the past ten. years, due largely to fluctuations in the export of surplus maize. The figures are reproduced below: Table 15: EXPORT VOILMiE OP MAIZE AND ALL CROPS, 1964-72 ('000 Yetric Tons) 1964 i96_5 1966 1967 1968 i969 1970 1971 1972 2±aize 13.7 1.0 44,4 91.8 37.0 47.3 0.9 4.6 36.8 All Crops 90.8 88.8 140.6 229.8 212.1 163.2 102.7 118.8 >830.9 Source: Mialawi Government, Economic Report 1973. Considerable additional strain is being placed on the transportation network by efforts to assist Zambia with transit trade after the cLosure of thE. Rhodesian border. However * this problem has been overcome. Land Tenure 4.09 Customaay rights given to farmers include that of usufruct, cr the right to cultivate a-.nd ,harvest crops, but do not irnclude the right afi exclusive grazing, m3rtgsging or sel.ing. T5he traditional authorities administer the land througi either'matrilirlear or patrniiinear systems. I:n - 29 - the former case, a youn.g mar, moves into the village of his wife's family and is allocated the use of a piece of Land oy her maternal uncle, who is regarded as the protector of his sister and her children. It is thus the maternal uncle wiho Dasses the land upon his death not to his own children but to his nephews and nieces kthe children of his sisters). Where there is Land pressure, this tradition is undergoing radical changes, as more children inherit land from their parents. W-Jith the appearance of more individual A interest in land, arnd with a more stab:e farming systea., thils tendency away from customary systems nas been accelerated. The origin of rand use rtghZts is illustrated in Table 16. Table 16: ALLOCATION OF LAND USE RIGHTS Relative Relative Ao by B4irth b Marriaze ,Non-Relat-ive Per- Region Ma le Female MIale Female Headman Other mission Total North 56.2 7.4. 4.6 0.7 29.6 C.5 t 30.0 Uentral 36.0 22,7 4,. 5.5 28.S 1.3 1.0 100.0 Southern .8.0 22.1 8.0 8.7 37.9 3.2 2. 00,0 .All Malawi 29.5 20.7 62 6.5 33.4 2.2 I' 1000, Source: Nazional Statistical Office, c National SaXsle Survey of Agriculture 1968/69. Land registrati.on is part of the Lilongwe development project. Tihus far 1038,000 acres have been demarcated and certificates for 36,000 acres were -issued in 1972. Some 120,000 acres are due for registration in '9973. TS al&rnost each case, the land hold-ing of a consa:nguineous family unit has been the unit of registration. individuals are reg-Istered as a member of th e family with rights to land withI-n the unit. The cost of the denarcatuon, anc registration has been K 1.44/ha; this is high, and Governmient should examine the standards of survey and consider modif"ication. Registered tit-le is necessary for corrtercial farmin0, but it is not imnediately essent-ai for t-he developmment of s-mnal-hiolder farming. Demand for a registered title winL arise duri4-ng the Later stages of development wh.n mare perm.manent inputs ar±a system of farning are introduced. Soil Erosion 4. 10 Malawi exper erices rarin.al. of .ll, inten it has a dissected topograpnih with mianzy steep slopes, aidi Soils ove-r large areas at-a light. Tfhese factors zlus dense settlement, in-tensive cu.Lt-ivation a-nd reducedi fallow neriods have resulted in conasierable prohlezcs of arosi on. The extension service is crying to promote contour ridlging, wnhich4 is slowly being adopted. In the area covered b;y the LilonAre protect a complete system, of terraces arc roads 5s bsnin-2 Jintroduced. In order to minimize tre recuirements of funds and s ail ` m2xf-mize local particinacion - in construction. and main- azna-nce, one consarvoa-on roads in various %arts a: on-.e country should be identified and n o.i.oLc anproacn aria pnasing in eackhi situation determai;nedc V.DEVL0PMffNT STRATEGY .u litependence, the Government was able to finance only about half o 'ts r_ecent expraditures from local resources. Thle deficit was met: by Zt&c an(iOLan tiProm at U.K Between 1964 and 1971 however, lmproVeellments .iin _'>ax ad' ri:tration and some & anges in the tax system caused domestic. vewnua --to r-i'se b' I' a year; tne averase annual increase in recurrent zr.endf titve was onliy 7%. Even thourgh agriculture was accorded priority anid itow raceaVas one-third of all development funds available, agricultural aevelophmeat Ihas baa to proceed cautiously. s3t02 The emnphasis ln the traditional s-b-sector was first on the produc- `Cian o. export cash crops, secondly on import substitution, and finealLy o- t'he production of local foods cropos. An extertsion service with a high standard of traininig ansd ability was created and the necessary infrastrtucrure - c7munications, borahol±as and markets - was slowly improved. 'he prot&f3ion of inputs to agriculture has beera gradually expanded. The malor ?ronecIts have sievutaneously deva±oped specific areas and croes and demorstrated the taechn4ues of credit, i43ut organtizationq, ;ield ffnreases and -oromunicat:ion,1 and marketing. Generally this strategy has provided a sound basis for future development. 5.03 ?Estate production of $ ue-csred tobacco, tea au& sugar hrwas ext e%.3nded rapidly since Independence: on the ocher hand, marketed smallTholder prociU. 4ot.,-I& With the exceantion a. cottan and rica, has only expanded sufficieytly to cover Inc;oratori on new schemes should be introduced to fill existina vacant plots. The program should then be continued on a scale which would allow solutions to be found for the training and credit problems and which would introduce more self-help in the establishment of the schemes. Areas suitable for settlement need to be identified more closely and ranked with respect to their potential. Livestock Develo=ment 5.13 The productive capacity of the existing -national cattle hers has n.creased significantlBy through improvements in disease control awnd mrzket ing facilities. Further increases through controlled grazsn* a.e foss-ib- L Te most important task to be completed lies howeve- in the introduction of cattle on stockless fa-ms. The main constraint is the lack ofel famale breedir-g animals. Importation of stock appears to be the only soluzion Zfor a rapid expansion of animal production.- To allow for increased reproduc''-Or and a wider distribution of cattle it is suggested that additional breed&ng randc es oe developed, arnd the breeding program of state rancnes be adtusted to acconplish these ends, Distribution to individual farmers would have to be accompanied by tlhLe introduction of fodder crops and other means o*l sup-pieementary feeding to replace maize bran, which will gradually divinish in importance With the int-roduction of mechanized milling. As soon as the stock situation allows, both the fattening and the work oxen schemes shoul.d be expanded. There is also scope for experimentation with a wider dcistribution of improved dairy stoc k to farmers who have expanded threir crop production and thus their cash incomes; these farmers could use the atilk for family consumption or for sale to neighbors. The breeding progran. onr the proposed ranches should consider the need to develop a multip-uross &aiaal for the development program. A welfare program to make vii2lk avail- aole in schools and health centers may have considerable merit. Small scale oultry prodiction ought to be actively promoted and credit made available for this purpose; w,ith an expanded supply the price of poultry pr-oducts will decrease and consumption expand. With efficient production tethods it will, nevertheless, be possible to make an attractive proafit. `ia&nd Large-Scatla F 5e 4 Tha Government permits civil servants and other persoas to ta'ke uo l.arge- and mediu-m-scaale farming and offers leases of land for tnis purpose. The soundness of this policy is contingent upon experience and efficient management. In such allocation of public land careful consideration should be given to efficiency as well as employment and income distribution cr'teria. Many of the medium and Large-scale farm.ers have managerial problems. 71he establis .xent of a "Farm Management Service" (M) witAil tne - 34 - ofg pZIxtCenrtoion and Training would help in preparing farm investment '.S ana assiLst in taeir implementation. This service should be commercially oriencted and at least Dartly able to recover its costs. The training of t Žpeten' managers should also be contemplated. A source of medium and long- terr credit for efficient commercial farming enterprises is also required if further development is to take place (Annex 1). Organnzation ad A&-inistLation 5.15 The organzational structure of the Ministry of Agriculture has proved successful and needs no major changes (Chart 1). Some flexibility in te application of civil service regulations is however desirable to permit the Mtiistry to recruit, dismiss, train and promote staff in a more expeditious manner. The Ministry of Agriculture and Natural Resources expects its Pleannng Unit to carry out project preparation and evaluation; the account- ing system should be designed to provide managerial guidance and data for evaluation. Close integration and coordination of the extension activities with ADMARC and the organizations overseeing credit and road construction as well as widt the local admiristrationas must be assured both at the field level and on a regionil and national basis. Credit and Inputs 5.16 There is a nead foTr close coordination between extension, market- ing, supply of inputs and credit. This does not mean, however, that these services must be provided by one single organization. Various arrangements are feasible and eaha may have its ot n advantages The Malawi Government proposes that the services would be provided by baot new and existing institutions, as sho0a in Table 17 Tb@ outstanding features of these proposals are tnat: (a) An. gricultural Supply and Credit Organization (ASGOM) would be created as a sabsidiad y to ADMARC to provide inputs and short-term credit to sma±l fanrers Aittin project areas. (b) An Agricultu.ral Bank (ABM) wo d be created to provide short and mcdi -tertm credit to medium-sized farmers. (c) Medim and lang term credit to small farmers would continue to be proviaed by the Centrat Farmers Loan Board (CflB) and in thJe case of major projects by the project authority - 35 - Table 17: CREDIT ARRANGEMENTS PROPOSED BY GOVERNMENT Outside Medium Maj'or Proposed Rural Project Sized Service Projects Development Areas Areas Farms Extension Project Auth. Ext. Dept. Ext. Dept. Ext. Dept. Input Supplies ASCO:M ASCOM ASCOMI Commercial Short-Term Credit ASCOM ASCOM - ABM + Com. Banks Med. & Long- Term Credit Project Auth. CFLB CFLB ABM Marketing ADMARC ADMARC ADMARC Commercial 5.17 These arrangements appear to be unsuitable for the following reasons: (a) Two new credit institutions would be established but neither would provide medium-term, credit to small- holders, a service for which demand is increasing. (b) No new arrangements are foreseen which would improve or replace the unsatisfactory credit operations of CFLB. (c) It would be more appropriate to retain all credit operations in one institution. (d) Input supplies wouid cortiznue t3 be better provided in combination with marketing services (as is presently done by ADMARC). (e) Some inputs cannot be supplied by ASCOM e.g. dairy cows, draft oxen, and these would need special credit arrangements. (f) As the proposed ABM would have a small volume of loans and a large overhead, its financial viability would be very doubtful. (g) The establishment of two new credit institutions (ABM and ASCOM) in addition to those already exisLirLg would aggravate the problem of scarce agricultural credit expertise. - 36- 5.18 For these reasons the creation of one single agricultural credit institution "The Rural Development Bank of Malawi" (RDBM) to supply short, medium and long-term credit to both small and medium-sized farmers seems more advantageous. This would enable the small farmer who has successfully utilized short-term credit to stay with the same credit institution when he moves to medium-term investment (e.g. dairy cows, curing barns, draft oxen, technical equipment). An alternative institutional arrangement is shown in Table 18. RDBM would provide all credit services and ADMARC would provide the input supply and marketing services as at present. ADMARC should, however, streng- then its input supply services and convert its temporary buying stations into more permanent centers. Table 18: ALTERNATIVE CREDIT ARRANGEMENTS Outside Medium Project Proposed Rural Project Sized Service Areas Development Areas Areas Farms Extension Project Auth. Ext. Dept. Ext. Dept. FMS + Ext. Dept. Input Supplies ADMARC ADMARC ADMARC Commercial Short-Term Credit RDBM RDBM - RDBM + Coim. Banks Medium & Long-Term Credit RDBM RDBM RDBM RDBM Marketing ADAROC ADNARC ADMARC Commercial Research 5.19 There has been excellent coordination between various research institutions in Malawi, which have Lade good use of funds and their specialized research staff. Continuity of staff and research results are among the best in Eastern Africa. The Budget for the Research Department in the X^a:stry of Agriculture and NWatural Resources is being increased to allow ftr the phasing out of British aid for capital and recurrent costs. The budget will be aaintained at a level sufficient to allqw the essential research programs to be carried out. There is also a recurrent problem of replacing expatriate research staff with fully-trained and experienced Malawians. A review of present arrangements for training of staff is thus urgently needed. - 7 - 5.20 Thte present work on biological control of insect pests in cotton should be expanded, with facilities allowing larger field and district trials. In view of the crop's regional importance there is a strong case for outside financial aid. Government should consider expanding the excellent research on other crops, especially high value t.ree crops such as macadamia and cashew nuts. The development of a mechanical shelling device for the Chalimbana confectionary groundnuts should receive highest priority. t woul-d also be useful iin view of the present level of exports to examine cassava husbandry and to continue rice research at Dwangwa. Land Planning 5X21 In view of the proposals for rural development, development of smallholder flue-cured tobacco, dairy, beef and ranching as well as develop- ments in irrigation and settlement, it is recommended that a short-term land utilization survey be mounted to identify the most suitable areas for devel- opment. To achieve early results, it is recommended that the first phase of the present 5-year land utilization survey be a 12-18 month interim suxrv-y to identify immediate development areas. The physical planming and survey staff should be strengthened by an experienced agriculturalist and a fazT management economist. Information identified should include: (a) Production potential, existing population density, size of holdings, livestock and farming systems; (b) Water availability for domestic, livestock and irrigation use; kc) Areas with urgent conservation problems; and (d) Existing comLmunications and services. The siting of all new rural agricultural development projects should be reconciled within the framework of this new land use plan. PricePolc 5.22 ADMARC has proved to be a comparatively efficient marketing or-a -iza- tion; farmers have been, offered relatively attractive prices and the Corpera- tion has been able at the same time to accumulate substantial profits over the last five years, particularly f4rom tobacco and groundriuts. There is, however, an obvious conflict of goals in the Drice policy between the zaximization and stabilization of small holder income and tile accumulation and investment of developmert finance. This conflict may become more pronounced in the future end jeopardize farmers' incent'ves. TLhe Goverrument may thus want to consi.sder a separation of the two functiorns by using alternative means of otaining development finance. Stabilization tends to be interpreted to meati that nto price adjustments downward would be tolerated, and consequentl,r there is a reluctance to make upward adjustments; more flexibility is thus des7irable- -38 - J.23 The recent reduction of the subsidy on sulphate of ammonia coincided wihth a substantial increase in world fertilizer prices, and this contributed -£ an overal' reduc lion in the amounts utilized. Although the use of fertilizers remainis pro'Litable, it is recommended that the remaining subsidy 'iUz- comqpound) should be contintue to prevent a further drop in sales. Wonsidera-ion should- be given to the use of the large profits derived by oD-UUR fzro-on tobacco production to encourage the use of improved inputs. VI. INVESThENT PROGRAM 6,01 It is estimated that ongoing projects would require K 21_5 million in the period 1974/75 - 1978/79. Certairn adjustments in the settlement program and tne transfer of the fertilizer subsidy program to AEI4ARC will save K 2.2 mil'Lio i. The investment proposals which are outlined beiow will require about K 25.4 million during this five-year period while further i.nvestment in research, animal health, the Salima project etc., would requtre an. additional K 10 million. Total requirem.ents for the five year period would therefore be K 54.7 ml.lio4. This reDresents a 3% annual compourd rate of growth, of the agricultura l development budget. Tabble 19: PROPOSED INV:ESTET PROGRAM 1974/75 - 1978/79 (Million K) Start- Number Total Investment ing of Invest- 1974/75 to Pro ect Year Years ment 1978/79 Lilongwe Phase iLI 11975 4 10.0 10.0 Flue-cured Tobacco 1976 5 4.2 3.0 National Rura: Development 1977 5 17.0 5.0 Livestock Development 1976 4 3.0 2.0 Sugar (excl. nucleus estate and factory) 1977 5 6.0 2.4 Karonga Phase II 1977 5 500 i.0 Shire Phase Ii3; 1978 5 15.0 2.0 Subtotal 60.2 25.4 Ongoing Projects 2105 Adjustments in present program - 2.2 S abtotal 19.3 Unscheduled investments 10.0 Total aLwvestT^ats 54.7 - 39 - National Rural Development Project 6.02 A rural development program which would cover the country withir, a period of 20 years is recommended. This would initially involve the development of 2-3 new areas annually, each containing about 15,000 farms. Emphasis would be given to ani integrated effort including extension, credit, marketing, agricultural inputs, the construction of feeder roads and soil conservation works. The program is expected to be accelerated as more experience is gained. The project would fund the first five years of the development program. The project areas would be selected on the basis of their production potential from the land use plan (para 5.21). Development in each area would be coordinated by a development officer (area supervisor) who would be supported by the divisional, regional and central staff of the Extension and Training Department. The program would aim at raising farmers' cash income by increasing yields of selected cash and food crops. Tne major cost items of the project would be farm inputs, construction material and equipment, transport equipment, staff salaries and operating costs. In preparation, particular attention would be given to the institutional credit arrangements. To allow farmers to realize their full potential the project would also provide credit for long and medium-term investment to progressive smallholders and medium sized farms. A survey of the number of farms in those categories is required. The project should be ready for implementation in early 1977 and the cost is tentatively estimated at K 17 million. Lilongwe Phase III Project 6.03 The second phase oL the Lilongwe project should be completed in April 1975 and preparation of a Phase III project has commenced. Phase HI objectives should now be augmented to allow the project to give maximum sup- port to the national rural developnent effort. Training and evaluation facil- ies SiOuld be extended beyond t1he ro-ect'z itediate needs Phnase ILT ]ou6 ebse ally be an Exte -s'on of Phase IT and would utilize the full admdn- istrative capacity and central facilities of the existing project. The project would remain as a semi-autonomous entity but would liase closely with the Extension and Training Department. The cost is estimated at about K 10.0 mil- lion for a four year period. Karonga Phase II Project 6.04 Phase I of this project will be completed in i977 and Phase II would perform the same functions for the Karonga and Chitipa Districts. It is expected that the project would gradually assume the same spearhead function as the Lilongwe project performs for the Central Region. The project would cover five years, and would be ready for implementation in late 1977 at a cost of K 5.0 million. - 40 - Livestock Production Project 6.05 The main purpose of this project would be to increase the natJioal breeding herd (para 5.13). About 2,000 cows would be imported annually for four years (from Botswana or elsewhere) for stocking existing Government land holdings or for sale to private large--scale breeding ranches. The project would begin in 1976 and be completed by 1980 at a total cost of about K 3 million. It is also important that the Dzalanyama Ranch (Lilongwe l roject) be fully stocked without delay. Smallholder Flue-Cured Tobacco Project 6.06 The Kasungu smallholder scheme involving about 50 growers is Xiinan- cially successful and has achieved high yields of quality tobacco. This will be expanded to include 600 growers by 1973. It is recommended that Government establish a further four schemes of 600 growers each, thus adding about 1,500 hectares of flue-cured tobacco. 'The project would be developed over four to five years depending on the availability of suitable land; it would conmlence in early 1976 and would cost about K 4.2 million. The project would be oper- ated by an expanded Kasungu tobacco authoriLty. Development of this project should proceed ir. close conjunction with CDC. Smallholder Sugar Pro,ject 6.07 A survey is requiired to determine the feasibility of expanding sugar production in M.alaw:i. Such a survey should consider marketing pro 3pects, the Dwangwa and Kasinthula sites, tre basis for production (smallholder, estate or both) and enlgineering and agronomic aspects. A pre-feasibilit A study of the prospects for sugar production at Dwangwa is now underway, .nd a report was expected inl November 1973. In spite of organizational and adu-inistrative diLfficuliles a smallholder nucleus estate approach is recommended L'or he f olloing reasons: (a) A sma-ll' older sc heme 4i s more flexible than a single crop estate; it allows crop diversification and livestock production c3nd a more complete use of the available land. (/b) Estate su-_ar ,product- i on although achieving production targets wou..d ha1e . tte in `s-e dsibution effects and less effi ent use of by-products, Projec.t prepaa'Lion should be co-mipleted withi-a 2 years and the project s Lould starc in 1177 me cost of aevelcpifg a 4,000 hectare scheme over a fiveii yeaLr ceriod wou'd be absut K 6.0 million, excluding zLe cost for the factory. In the meantime, sugar experimentation shouLd be -ntensified at Dwangwa. - 41 - Shire Phase III Project 6.08 By 1978 the th'xd phase of the Shire Valley Agricultural Development Project would d It,is anticipated that this phase would include a large-scale irrigation project based on a major canal from the falls of the Shire River. Farming systems which could use this water profit- ably are being sought as part of the Phase II project. The total cost of the project is roughly estimated at about K 15 million, of which about K 2 million would be required in 1978/79. VII. PRODUCTION ESTIMATES 7.01 Estimates of marketed production of major export crops in 1980 were given by the Malawi Government in the "Statement of Development Policies", 1971; these estimates have been recently revised in the light of experience. Present production levels as well as the two forecasts are presented in Table 20. An index comparing the level of production during the last 4-5 years with the level of marketed production during the four years immediately after Independence is also included. Table 20: PRODUCTION ESTIMATES (?OO0 MT) Marketed Production Marketed Production Index. Average 1968- Actual Dev. Pol. Revised 71 (Ave age 1964-67 Estimates Estimates Crop = 100)1 1970 1971 1972 for 1980 for 1980 Maize 91 8.1 34.8 66.7 182.9 182.5 S-Gr.=.^auts 98 26.4 36.7 39.2 90.9 71.7 Pulses i4 7.3 17.5 16.2 27.3 3 Seed Cotton 124 21.6 22.2 21.8 57.3 - Paddy 222 9.3 18.7 19.8 109.1 55.3 Tobacco fire 71 10.0 12.1 14.5 19.0 22.2 flue 320 4.7 6.4 8.6 9.1 15.6 burley 190 5.7 5.7 5.5 9.1 9.4 Tea 122 18.7 18.6 20.7 26.0 27.1 1/ Some variation in periods occur. Sources: Malawi Government, Statement of Development Policies. National Statisticai Office, Compendium of Agriculture. Ministry of Agriculture, Working Document. - 42 - 7.02 The production of export crops such as tobacco and tea has expanded beyond expectation and the targets have been revised upward. There should be no difficulty in achieving these adjusted targets. Production of flue_cured tobacco has been particularly successful. If market conditions continue to be favorable it should also be possible to reach the target level for fire- cured tobacco. While in the long run the prospects for expanding other small- holder production appear favorable, the targets for 1980 may be overambitious In view of population increases, the marginal character of new land, and price increases for fertilizers, only very limited growth of marketed production can be expected from outside the development projects and settlements. 7.03 The maximum quantity of maize thus far sold to ADMARC was 91,000 MT in 1967. The 1980 target is twice this amount. Over the past eight years total marketed production has exhibited a downward trend, indicating that the growth of total production has been below the rate of populatior, growth. Attempts to reverse this trend through the Lilongwe, Mpenu and other projects are not likely in a normal year to result in the surpluses predicted in Table 20 unless relative prices are changed in favor of maize. Efforts under the proposed national rural development projects are unlikely to yield any significant production increases in the period in question, The actual marketed production by 1980 is thus likely to fall about 100,QOO MT short of the target. 7.04 Groundnut production appears to have kept pace with population growth and, except for the sheiling difficulties with the Chalimbana variety, is an attractive crop for farmaers. The revised target represents a doubling of the 1971 cash sales, but is 20% lower than the original forecast. Some switch from cotton to groundnuts has been reported. The Lilongwe project represents the main development effort aimed at increasing production of groundnuts. Even the revised target appears to be optimistic, however, and sales may fall slightly short. 7.05 Sales of pulses lave decreased sIgnificantly since Independence, and productiori £or the market is not very attractive to the farmers. No par- ticular efforts to increase production, are in progress. Prices for most pulses have recently been inereased significantly, and as a result it is expected that producers w i]. increase tneir future surplus production. 7.06 The prox'ucctio of cotton, has expanded Primarily through the Shire and Salima proiects. The new. l,ake Shore road may also open up new areas with a Pot,-& l for cotton growing and th.e pros?ects for further growth of roducr ae tus encouraging. The estimated production is about 2.5 times te present production ard would imply a compound growth rate of about 11% per year, which i.s more than double the rate by wh'ic production -ras expanded in the past. A rorecast of about 40,000 Y'T appaars more realistic than the "DevPoll target of 57300 M-. However, if the rapid growth of domestic demand results in prices above export parity and a change in the relative price structure, the estimate may then become more realistic. - 43 - 7.07 Paddy production has grown rapidly through the expansion of both irrigated settlements and rainfed cultivation, although there have been marketing constraints as well as technical difficulties. The further expansion of rice production at Dwangwa may be limited by plans for sugar production in the same area. The target production has recently been reduced by one-half, but it is still about triple the present production (13% annual growth assumed). Although growth in the past has been even higher (starting as it did from a very low basis), the constraints and the recommended decreased emphasis on settlements during the next five-year period make it unlikely that the estimate will be reached. With increased irrigation potential, the development of more suitable varieties, and with improved settlement methods, production of rice could in the future be of considerable interest, however. 7.08 Sugar production is expected to expand rapidly. It is estimated that beef production will reach 12,000 MT in 1980 (present level, 7,600 MT). This represents a growth rate of more than 6% annually; actual growth in the past has been slightly more than 2%. In spite of considerable efforts to increase production, however, the estimate is Likely to prove over-optimistic. Statistical Annex Table 1 MALAWI AGRICULTURAL SECTOR REVIEW Population by Regions, Age and Sex, 1966 a/ Under 5 5 to 14 15 to 44 45 to 64 65 Years All Pei-sons Per Years Years Years Years and Over Ages Square Kilo- meter b/ Malawi, Total 748.2 1026.5 1645.7 457.6 L6L 4039.6 43 Male 366.1 513.2 732.5 219.5 81.9 1913.3 20 Female 382.1 513.4 913.2 238.1 79.5 2126.3 23 Southern Region Total 372.8 517.8 856.7 241.9 78.1 2067.1 65 Male 182.3 259.6 387.4 121.6 41.8 992.6 31 Female 190.4 258.2 469.3 120.3 36.3 1074.5 34 Central Region Total 282.7 375.6 598.1 155.7 62.8 1475.0 41 lale 138.3 187.6 263.2 71.9 30.6 691.6 19 Female 1"I.4 188.0 334.9 83.8 32.2 783.4 22 Northern Region Total 92.8 133.2 190.9 60.1 20.5 497.5 18 Hale 45.5 66.o 81.9 26.1 9.5 229.0 8 Female 47.3 67.2 109.0 34.0 11.0 268.4 10 a/ Tn thousands of persons except where otherwise specified. b/ Land area only, i.e excluding all lakes. Source: Malawi Population Census, 1966. Dbecember 4, 1973 Statistical Annex Table 2 MALAWI AGRUICULTURAL SECTOR REVIEW Farm Population, 1969 (1000) Region Non Ubrking Working Total Northern Region 8l4.O 314.6 498.6 Central Region 581.6 907.9 .L489.5 Southern Region 798.1 1285.3 2083.4 All Malawi 1563.7 2507.8 4071.14 Source: National Statistical Office, National Sample Survey of Agriculture, 1968/69. December 14, 1973 Statistical Arin Table 3 MALAWI AGRICULTURAL SECTOR REVIEW African Population 5 Years and Over by School Attendance Had Attended School R;egion Total Total % EHigher University Northern Region 404.,000 223,000 55.1 19,0o 73 Central Region 1,189,000 417,000 35.o 23,500 119 Southern Region 1,682,000 531,000 31. 5 38,000 273 All Malawi 3,275,000 1,171,000 35.7 81,500 465 Source: Malawi Population Census, 1966. May 30, 1973. MALAWI AGRICULTURAL SECTOR REVIEW Gross Domestic Product at Factor Cost (Current Prices K'OOO) Est. Est. 1964 1965 1966 1967 1968 1969 1970 1971 1972 Agriculture, Forestry, Fishing Smallholders Non-Monetary 62,946 71,059 78,748 78,380 79,038 80,691 87,916 102,000 104,700 Monetary 15,910 21,756 21,858 24,294 21,940 26,036 25,511 40,200 44,600 Estates and Government 5,942 6.412 7,038 7,332 9,038 11,116 11,402 17,100 19,700 Total Agriculture 84,798 99,227 107,644 110,006 110,016 117,843 124,829 159,300 169,000 Estate as % of Total Agriculture 7.0 6.5 6.5 6.7 8.2 9.4 9.1 10.7 11.7 Total GDP 148,074 173,483 194,534 204,560 214,442 233,309 258,059 309,400 333,300 of which Agriculture (%) 57 57 55 54 51 51 48 51 51 Net Indirect Taxes 4,864 6,854 9,928 10,926 11,142 13,297 15,533 21,600 23,600 Total GDP at 152,938 180,337 204L,462 215,486 225,584 246,606 273,592 331,000 356,900 Market Prices Total GDP at Market Prices in 1964 Prices 152,900 180,700 198,500 221,700 208,400 215,300 222,700 255,800 n.a. Index Agriculture (1964 = 100) Smallholder Non-ITonetary 100 113 125 125 126 128 140 162 166 C Monetary 100 137 137 153 138 164 160 253 280 C P Estates and Government 100 108 118 123 152 187 192 288 332 Cm Total 100 117 127 130 130 139 147 188 199 Uyw=c .Mrattv.^i vwa> LQ .l i-i=a- L atdiunLai accounts teport, November 1Yf2. It May 30, 1973. MALAWI AGRICULTURAL SECTOR REVIEW &xports of hain Agricultural Products (Metric Tons) 1964 1965 1966 1967 1968 1969 1970 1971 1972 Smallholder Crops: Tobacco (fired) 9,812 14,o069 12,476 11,372 11,518 9,457 10,621 11,936 13,556 Groundnuts 15,761 18,939 14,851 51,046 29,996 34,260 22,511 29,186 35,697 Cotton fibre 4,235 4,648 4,838 3,149 2,488 3,815 5,859 4,819 4,786 Pulses 24,693 25,150 17,389 27,364 10,392 15,851 9,991 8,568 15,670 M4aize 13,684 1,016 44,358 91,445 86,974 47,305 - 4,601 36,83i Cassava 4,080 5,277 24,934 21,341 47,693 21,964 22,208 20,161 28,168 Rice 1,256 1,053 1,390 1,518 893 1,678 2,828 5,171 7,148 Sunflower 31 50 192 354 659 2,870 1,395 2,712 3,687 Coffee 174 29 132 169 198 180 137 204 156 Estate Crops: Tobacco (burley, flue cured) 3,493 3,575 3,564 3,422 4,588 5,124 6,762 8,977 11,023 Tea 12,235 13,198 15,223 16,840 15,792 17,248 17,709 18,157 19,851 Tung Oil 1,301 1,843 1,246 1,761 940 1,141 1,139 858 539 Sugar - - - - 5 2P274 1,545 3,439 3,762 Total 90,755 88,847 140,593 229,781 212,136 163,167 102,705 118,776 180,874 Source: Malawi Government, Economic Report, 1973. b m H- December 4, 1973. CD MALAWI Statistical Annex AGRICULTURAL SECTCR REVIEW Table 6 Exports by Main Commodities, Current Prices (K'OOO) Anx aaL Grofta Rate 1964 1965 1966 1967 1968 1969 1970 1971 1972 1964-1972 Smallholder Crops: Tobacco a/ 5,754 7,878 6,372 5,139 5,984 6,424 8,413 11,671 11,708 Groundnuts 2,226 33270 2,574 6,868 4,616 5,590 4,241 5,883 7,123 Cotton 1,934 2,158 2,168 1,384 1,274 1,730 2,777 2,547 2,567 Beans, peas, etc. 1,526 1,858 1,248 1,528 862 1,022 1,038 1,227 1,218 Maize 476 34 1,570 3,278 3,008 2,132 - 411 1,302 Cassava 122 136 692 532 1,384 638 724 545 825 Sunflower seed 2 2 10 22 58 172 92 317 359 Rice 130 122 142 158 94 274 556 956 1,092 Coffee 78 16 40 102 112 100 102 161 84 Total 12,248 15,482 1L4,816 19,011 17,392 18,082 17,943 23,718 26,278 liL.O Estate Crops: Tobacec b/ 2,682 2,382 2,670 3,312 4,586 6,223 8,179 10,395 13,260 Tea 6,676 7,536 8,898 8,982 9,700 9,526 10,916 11,905 12,022 Tung Oil 432 606 344 410 246 306 411 239 127 Sisal 104 54 52 36 14 2 - - - Sugar - _ 2 220 - 154 158 314 360 Total 9,894 10,578 11,966 12,960 142546 16,211 19,664 22,853 25,769 1 3rand Total Agric. 22,142 26,060 26,782 31,971 31,938 34,293 37,607 46,571 52,047 1 .3 Main Manufacturers: Cattle Cake 134 188 128 224 288 360 343 360 408 Cement - 60 112 68 178 - - - 1 Wooden boxes 142 166 58 108 26 54 84 76 107 Clothing and footwear - 8 46 44 164 467 524 388 295 Other C/ 52 54 94 118 212 186 260 273 185 Total 328 476 438 562 868 1,067 1,211 1,097 996 Other miscellaneous commodities d/ 538 548 450 571 752 1,228 1,759 1,909 1,099 Total Exports 23,008 27,084 27,670 33,104 33,558 36,588 40,577 49,577 55,142 Agriculture as % of Total 96 96 97 97 95 94 93 94 94 a/Dark-fired, fire-cured, sun/air-cured and oriental tobacco. b/F1ue-cured and burley tobacco. F/alycerol, paper products, holloware, fishing nets. d/Mainlyt fish, hides and skins, precious stones and migrants effects. Source: National Statistical Office, Annual Statement of External Trade for 1964 to 1971. 1972 figures provisional estimates from NSO and commodity organizations. December 4, 1973. MALAWI AGRICULTURAL SECTOR REVIEW EDxorts of Main Aricultural Products at Constant Est. 1964 1965 1966 1967 1968 1969 1970 1971 1972 Smallholder Crops: Tobacco 5,750 8,244 7,311 6,664 6,750 5,542 6,224 6,994 7,823 Groundnuts 2,222 2,670 2,095 7,197 41,229 4,831 3,174 4,116 4,797 Cotton fibre 1,935 2,124 2,211 1,439 1,137 1,743 2,678 2,203 2,289 Pulses 1,531 1,559 1,078 1,697 644 983 619 531 945 Maize 479 36 1,552 3,201 3,044 1,656 - 161 1,242 Cassava 122 158 748 640 1,431 659 666 605 878 Rice 131 110 145 158 93 175 294 538 1,297 Sunflower 2 3 12 23 43 187 91 176 251 Coffee 78 13 59 76 89 81 61 92 53 12.,250 14,917 152211 21,095 17.,460 15,857 13,,807 15,416 19.,575 Estate Crops: Tobacco 2,683 2,746 2,737 2,628 3,524 3,935 5,193 6,894 8,350 Tea 6,680 7,206 8,312 9,195 8,622 9,,417 9,669 9,914 10, 872 Tung Oil 432 612 414 585 312 379 378 285 157 Sugar - - - - 0 155 105 213 247 Total 9,795 10,564 11,463 12,408 12,458 13,886 15,345 17,306 19,626 HCI Grand Total 22,045 25,481 26,674 33,503 29,918 29,743 29,152 32,722 39,201 0 FH Source: Malawi. Government, Economic Report, 1973. May 30, 1973. Statistical Annex Table ? MALAWI AGRICULTURAL SECTOR REVIEW Imports of Meat (MT) Year Beef Pork Mutton and Lamb 1968 86 19 49 1969 167 103 71 1970 161 112 101 1971 225 97 72 1972 391 57 70 Source: Department of Veterinary Services. December 4, 1973. MALAWI Statistical N.i AGRICULTURAL SECTOR REVIEW Table 9 Land Use ' 000 A. Arable land Hectares 1. Dry land cultivation in current use 1,774 118.9 2. Cropped dambo, dimba and flood- plain cultivation 66 0.7 3. Estates and plantations 92 1.0 4. Recent fallow l,437 15c3 5. Longer fallow (4-20 years) 1,4558 15.5 Sub-total 4,827 51Jl4 B. Suitable for grazing only 6. Very long fallow l1,710 18u2 7. Dambo grassland, drainage lines 282 3.0 8. Soil and topographic problems 1,287 13.7 Sub-total 3,279 34i9 C. Other land 9. Swamps and marshes 221 2.4 10. Steep rugged country 733 7(4 11. Water surfaces 168 106 12, Towns, villages, etc. 159 1.7 13. Severe erosion 13 O.L Sub-total 1 294 13.8 Total land area is 9.4 million hectares. Source: Miristry of Agriculture and Natural Resources; Stobbs unpublished Report, "Malawi National Land Use Summary." December 4, 1973. Statistical Annex Table 10 MALAWI AGRICULTURAL 0CTOR iRVIIvw Acreage under Cultivation by Pure and Mixed Stad (1000 hectares) All Malawi Northern Central Southern Pure and Mixed Stand, To,ta 1,362.0 166.9 609.h 585.7 of which: Maize 1,068.5 110.2 463.4 494.9 Grouncdnuts 449.5 35.8 216.5 197.2 PJulses 8441.5 71.7 352.9 416.9 Cassava 298.7 37.3 89.5 171.9 Millet/Sorghum 496.4 29.9 177.2 289.3 Potatoes (a) 180.6 8.0 93.9 78.7 Other .. .. Pure Stand, Total 218.6 51.2 110)5 V f of which: Maize 68.6 l1.6 42.2 15.0 Groundnuts 43.5 5.3 33.1 5.1 Pulses 8.1 1.7 5.8 0.6 Cassava 32.5 15.2 4.5 12.8 Millet/Sorghum 14.14 9.6 1.14 3.4 Potatoes (a) 9.0 1.1 6.6 1.5 Other 42.1 6.7 16.9 18.5 Mixed Stand, Total 1,143.4 115.7 498.9 528.8 of which: Maize 999.8 98.6 421.1 480.1 Groumdnuts 405.9 30.4 183.4 192.1 Pulses 833.4 70.1 347.1 416.3 Cassava 266.2 22.1 85.0 159.1 Millet/Sorghum 805.9 20.3 175.7 285.9 Potatoes (a) 171.5 7.0 87.3 77.2 Other 9.3 * Mixed With Maize, Total 999.7 98.6 421.1 480.o of which: Groundnits 343.2 27.5 131.1 184.6 Pulses 768.6 66.5 307.2 394.9 Cassava 239.1 16.7 74.6 147.8 Millet/Sorghum 434.0 12.1 162.7 259.2 Potatoes (a) 151.9 5.7 75.4 70.8 Other . Not Mixed With Maize, Total 143.7 17.2 77.8 48.7 of which: Groundnuts 62.7 2.9 52.L 7.4 Pulsea 64.8 3.5 39.9 21.4 Cassava 27.0 5.3 10.4 11.3 Millet/Sorghum 47.9 8.2 13.0 26.7 ?otatoes (a) 19.6 1.3 11.9 6.4 Other .. .. (a) Irish and sweet potatoes. .. not available Note: Area under mixed stand are included for each crop in the mixture but only once in the totals. Totals also include areas under crops not listed above. Source: National Statistical Office, National Sample Survey of Agriculture, 1968/69. December 4, 1973. Statistical Annex Table 11 MALAWI AGRICULTU.AL SECTCt. IV'W Farm Size Distribution and Pragmentation Size of Holdings Hectares Siste of Hldi ngn &ftS Total all Region under 0.8-1.59 1.6-2.39 2.4-4.8 above holdings 0.8 4.8 A. Percentage of holdings North,.Reg. 31.9 34.6 17.6 14.4 1.5 100 (117100) Central Reg. 17.8 30.4 22.3 25.4 4.1 100 (316900) Southern Reg. 35.6 36.5 15.9 11.2 0.9 100 (451000) All. Malawi 28.7 34.1 18.4 16.7 2.1 10 (885000) B. Average number of acres per holding North. Reg. 1.0 2.8 4.8 8.0 14.1 3.5 Central Reg. 1.2 2.9 4.8 7.6 15.3 4.7 Southern Reg. 1.1 2.8 4.8 7.9 14.1 3.2 All Malawi 1.2 2.9 4.8 7.8 14.9 3.8 C. Average number of fields per holding North. Reg. 3.2 4.2 4,3 5.0 5.9 4.o Central Reg. 1.9 2.1 2.6 3.1 3.9 2.5 Southern Reg. 2.3 3.3 4.4 4.7 4.4 3G3 All Malawi 2.4 3.o 3.6 3.9 4.2 3.1 Source: National Statistical Office,, National Sample Survey of Agriculture 1968 692 December 4, 1973, MALAWI AGRICULTURAL SECTOR REVIEW Production and Dispoi6ii0n of ARricultural Prod-t 1970 DISPOSITION OF RET PRODUCTION TOTAL WASTAGE NET __.__ CROPS PRODUC- AND PRODUC- .lal to Tota S- TION LOSSES TION Own Consumptin at the Fern Change huDan Canan ptica _ Total in stocka (c) (d) With Seed Aninal Own at the O whith DireRt farther fa- Peed Coansup- Porn (b) ADiMARC other Total eaparted _ Processing ReplDnting Clan I Food Craps 1. Maise 1,057,763 40,683 1,017,080 44,405 843,675 23,582 45 911,679 _ 8,066 97,335 105,401 I 2. Millet and S-rghum 71,123 711 71,112 - 53,627 10,725 - 04,353 _ 9 6,750 6,759 52 3. oaa 81,176 - 81,176 3,903 55,797 - _ 58,063 _ - 22,475 22,475 22,194 4. Wh-t 868 - 868 - - - 868 868 3. Pddy 21,851 724 21,128 - 7,407 1,680 9,079 9 9,343 2,697 12,040 2,779 6. Groundnuts (ahelled) 101,990 152 101,838 43,314 1,348 23,811 _ 46,476 26,827 6,071 32,899 22,503 L Vegetables -ad Frait 7. Mined beons cad peas 123,591 2,540 121,052 80,438 _ 23,193 _ 103,631 7,040 10,381 17,421 9,986 8. On'in 8,514 8 8,506 7,249 _ 7,249 _ - 1,257 1,257 13 9. Cabbhage 10,773 11 11,762 9 091 _ _ _ 9,091 _ 1,672 1,672 - I0. Tonatoes 19,055 - 19,055 16,289 _ _ _ 16,289 _ _ 2,766 2,766 11. Patetoee 10,251 9 85,248 75,359 _ _ _ 75,359 _ _ 10,889 10,809 30 12. Other vegetahle leenes 980809 _ 98,809 96,809 _ _ _ 98,809 _ _ 9,981 9,982 25 13. Pruit 171,842 17 171,825 151,951 _ _ - 151,951 _ - 19,221 19,221 29 211 Other Crops (e) 14. T.ahco 24,139 _ 24,139 _- - _ 11,876 12,263 24,139 16,175 15. Tea 18,728 _ 18,728 _- - - 18,728 18,728 17,706 16. Cotton lend 24,183 _ 22,815 _ _ 1,369 _ 1,369 22,815 - 22,815 8,597 17. TunR Oil Nat 2, 600 _ 2,600 _ _ _ 2,600 2,600 18. S.nfl-wer -eed 1,395 _ 1,395 _ _ _ _ _ _ 2 1,393 1,395 1,395 19. Uago cr 288,106 _ 288,106 _ _ _ _ _ _ 288,100 288,106 20. Caffes 262 262 _ _ _ 202 - 262 136 21, Spices (a) 23 _ 23 _ _ _ _ _ - 23 23 23 :ti_ _ _',. __ " ,~l (a) Na estimates were node of production for awn account consumption. (6) No estimates werr node Ear chaRes i,n stochs at the fars as basic atatistics were -ot availahle. This iten is therefore assumed to be nil. . a) (c) Agricultural Development and Marketing Corporation. as. (d) Includes direct retail sales by fanors in rol and -rban areas as well as p-rchase ftr Report cad further procesRing by orRanieations other than ADMARC. e. (e) Fxcls,des 40 tnon of manufactured tobacco e-p-rts. loarce, National Statistical Office, Nati,,.al Accounts Report, Novenobr 1972. Deccmber 4, 1973. MALAWI AGRICULTURAL SECTOR REVIEW Annual Average Smallholder Cotton and Tobacco Production 1950-72 Yield UNITS 1950 1955 1960 1965 1966 1967 1968 1969 1970 1971 1972 1. COTTON Hectares planted '000 has n/a 21 21 41 53 56 45 37 48 53 50 150 No. of growers '000 farmers 41 45 35 54 69 73 57 46 56 61 62 to Crop purchase '000 metric tons 5 8 11 21 13 12 12 18 91 22 22 350 kgs/ha 2. FIRE-CURED TOBACCO Hectares planted '000 has n/a 30 84 50 42 38 27 20 26 30 34 240 No. of growers '000 faxmers 95 47 51 83 59 49 46 38 48 50 53 to Crop purchases '000 metric tons 9 5 7 14 12 14 8 6 10 12 15 360 kgs/ha 3. SUN/AIR-CURED TOBACCO Hectares planted '000 has n/a 1.5 4 11 11 3 4 5 5 7 8 120 No. of growers '000 farmers 8 4 8 24 15 5 6 6 8 12 10 to Crop purchases '000 metric tons 0.4 0.3 2 3.0 2.6 1.2 1.1 0.9 1.8 2.4 3.0 325 kgs/ha 4. ORIENTAL TOBACCO Hectares planted has nil nil 38 269 239 n/a 90 194 198 304 374 300 to No. of growers farmers nil nil 906 4,018 3,690 2,168 1,750 2,827 3,443 2,710 3,700 470 kgs/ha Crop purchases metric tons nil nil 15 96 91 58 45 89 74 131 183 Source National Statistical Office Compendium of Agricultural Statistics, 1971; Annual Reports. December 4, 1973. MALAWI A&GUaULTUR&L W,LCTOri AVIi Purchase by F?AB/ADXARC of Major Crops Grown by S3allholders - 1950-1972 (Metric Tons) Sorghum Year Maize Groundnuts Pulses Millet Wheat Rice Cassava a/ Cotton Tobacco Coffee Sunflower 1950 9,453 8 1,468 2 486 1,579 - 5,209 10,235 3 - 1955 4o,6o4 9,363 5,758 1,050 602 6,534 - 7,793 5,575 12 - 1I60 15,071 18,777 5,734 NA 407 6,482 - 11,354 9,204 107 - 1965 21,915 22,855 27,272 3,100 500 5,053 5,262 20,577 18,409 128 - 1966 56,890 42,158 18,426 883 611 4,047 24,948 13,246 14,560 166 - 1967 90,743 43,180 21,179 2,963 764 4,627 21,272 11,839 15,892 151 - 1968 83,686 22,773 3,459 85 629 2,052 47,719 11,609 8,796 145 - 1969 52,819 37,065 16,378 6 665 8,470 21,954 18,328 5,842 156 _ 1970 8,068 26,419 7,271 140 868 9,345 22,226 21,559 11,957 269 2 1971 34,845 36,722 17,480 67 485 18,710 20,866 22,192 14,239 231 3,379 1972 66,700 39,181 16,190 34 854 19,827 27,443 21,823 16,692 189 3,574 P/1965-1970 show cassava export figures purchased by traders for 1971/72 - actual purchase figures by NOIL Industries are given. CD w Source: National Statistical Office, Malawi Statistical Yearbook and E Compendium of Agricultural Statistics. December 4, 1973. MALAWI AGRICULTURAL SECTOR REVIEW Crop Production from the Estate Sector, 1950 - 1972 CROP UNITS 1950 1955 1960 1965 1966 1967 1968 1969 1970 1971 1972 1. Tea Hectares producing '000 has 9 11 12 14 14 14 15 15 15 16 16 Total Production MT 6800 7700 11800 13150 15400 16800 15900 16800 18600 18600 20900 Value of exports Million kwacha 3.4 6.3 7.6 7.6 8.9 9.0 9.7 9.5 10.9 11.9 12.2 2. Sugar Hectares hervested '000 has nil nil nil nil 0.5 1.7 2.2 2.2 2.6 2.6 Total production MT nil nil nil nil 4 16 20 27 33 33 38 Value of exports Million kwacha ril nil nil nil n.a. 0.2 n.a. 0.2 0.2 0.3 0.4 3. Flue-Cured Tobacco Hectares planted 1000 has n.a. 2.8 1.3 1.1 1.2 1.6 2.2 2.8 4.0 5.8 7.1 Purchases MT 1180 1680 1315 1225 1225 1810 2770 2770 4670 6400 8664 Average price K/MT 534 498 604 600 694 952 791 869 838 908 891 a/ Total value at Million kwacha 0.6 o.8 0.8 0.7 0.9 1.7 2.2 2.4 3.9 5.8 7.7 auction 4. Burley Tobacco Hectares planted '000 has 2.2 2.4 3.6 3.2 3.7 3.1 4.1 5.6 7.3 6.5 Purchases MT 360 900 1315 2600 2400 2680 3040 3450 5670 5670 5440 Average price K/NT 452 496 602 430 450 344 553 816 626 527 556 Total value at Million kwacha 0.2 0.5 0.8 1.1 1.1 0.9 1.7 2.8 3.6 3.0 3.0 auction 5. Tung Oil Hectares bearing '000 has 4.6 6.2 6.1 n.a. n.a. n.s. n.a. n.a. n.a. n.a.. n.a. q Total oil production Metric tons 352 882 1111 1511 1652 1910 1018 1141 1156 885 925 c, Value of exports Million kwacha n.ea. n.a. n.a. 0.6 0.3 0.4 0.2 0.3 0.4 0.2 0.1 P a/ The average price paid at start of sales in 1973 was 1500 K/MT Source: National Statistical Office, Compendium of Agricultural Statistics, 1971; (D MiniStry of Agriculture and Natural Resources, nnual Reports. Decemiber 14, 1973 AGRMCULTURAI, SECMR F-TIEWStatistical Annex AGIRIC1TUAI,_SECIJR REVIEW Tbe1 !/ Table 16 L,ivetozk and I-vegtcck Production Cattle Goats Pigs Sheep Recor-ded Recorded Recorded Recorded Year Number Slaughter- Number Slaughter- Naumber Slaughter- 'Number SlJ ughter- ings in angS i g 1960 356,677 29,440 142,622 15,773 72,470 7,390 69,098 3:367 61 374,762 32,7766 529,4L8 18,656 10),479 7,947 82,223 3.192 62 380,387 35,853 493' 16,4 18,323 105,166 8,521 77,757 2, 8B3 63 396,145 ho 353 5 :38,488 18 .iO3 127,897 8,695 81,918 2,,4!52 64 4:l,4a9 39,6D13 46Of895ziN 22,,>35 135,395 10,557 74,139 2,355 65 432,293 39,6576 46I,)548 24,886 123,773 11,936 71,337 2,)91 66 450,128 42,4i59 626> 2, 2 28,1 2:1 1'42,666 12,273 88,820 1, 923 67 464,o06 5, i -o 85,ooE 7 34,t-54 '149,276 12,902 81,277 3 ,)27 68 479,816 54,_3'2 t,lb6 >'91 16_ }465 180,234 10,338 90,280 2, 367 69 491,459 55,816 599,393 1, 408 149,772 12,930 81,136 3,2P3 1970 491,517 56,187 6039, I9 44,oo6 146,344 14,837 121,979 4, S'4 71 540,865 5r 3 629,901 t 4,529 172,441 12,986 179,469 4,)19 72 572n905 Y :6J80 fl'a 172333 n/a 88,516 n 'a a/ xccluding mcst home slailghterings.. Source: National Statistical Office, compendiurr of Agriculture, 1971, Statistical Yearbook 197 and t,alawi Goveminwent Economic Report, 1973. December 4, 1973 Statistical Annex NALAWI AGRICULTURAL SECTOR REVIEW Number of Holdings with Livestock and Nuber of Livestock Owned 1969 a! (-000) Cattle Sheep Goats Pigs Chicken Region - -- - ~ ~ Holdings No. Holdings No. Holdings No. Holdings No. Holdings No. Owned Owned Owned Owned Owned North. Reg. 28.7 1.81.8 1.8 9.5 8.9 31.0 5.5 12.6 87,1 696e7 Central Reg. 52.0 434.3 7.8 27.9 134.0 689.5 40.4 181.7 189.9 1J15.1 Southern Reg. 13.6 106.4 5.6 28.1 64.9 309.4 36.8 144.6 229.0 1474.4 All Malawi 94.3 722.5 15.2 65.5 207.8 1029.9 82.7 338.9 506.0 3686.3 % of total no. of holdingsl - 2 - 23 - 9 - 57 - a/ Note that the total number of livestock in this survey is considerably higher than the estimates by the Department of Animal Health and Industry. Source: National Statistical Office, National Sample Survey, 1968/69. May 30, 1973. Statistical Annex Table 1JW MALAWI AGRICUITURAL SECTOR REVIEW Number of Work Oxen and Implements Owned, 1969 (OOO) Region Work Oxen Ox Carts Ploughs Sprayers Hoes Northern Reg. 10.4 1.1 7.9 °.5 278.8 Central Reg. 30.4 10.4 6.7 2.3 924.7 Southern Reg. 0.4 0.1 0.3 7.8 1269,9 All Malawi 41.2 11.6 14.9 10.6 2473,14 Source: National Statistical Office, National Sample Survey of Agriculture, 1968/69. May 30, 1973. Statistical Annex Table 19 MALAWI AGRICULTURAL SECTOR SURVEY put m)oying Hired Percentage of Farmers Using l4odern Diput and !?1oin Hre Iabor 1969 Applying Region Fumigating Employing Fertilizer Insecticide Manure Store Labor Northern Reg. 15.1 2.4 2.9 3.6 38.1 Central Reg. 15.5 1.5 2.7 2.2 25.9 Southern Reg. 10.5 l.5 0.1 4.9 28.0 All Malawi 12.9 1.6 1.4 3.8 28.6 Source: National Statistical Office, National Sample Survey of Agriculture, 1968/69. May 30, 1973. Statistical Annex Table 20 MALAWI ArRICULTI'RAL SEC70R RFVIEW Experndilures or, Develop,rent Account (OOO K) Exp. before Revised Est. Estimate Project Total Cost YaS 31,1972 1972/73 1973/74 Balance 1. ETctension &n Training Animal husbandry 808 26h 112 139 293 Farmer training 1,031 37h 126 185 3b6 Housing 905 329 97 170 3C9 Hom.e economic training 76 h,3 17 6 10 Nat. resources Coll. (planning) 34 4 2 28 - Fertilizer subsidy 1,0O9 606 207 196 Seed production 217 17L h3 Cotton dev. 476 W73 103 - Tobacco dev. 567 160 91 l11 206, MPpeiu 249 - - 172 77 Mzimrba 185 24 32 32 97 Phalcmbe 69 - - 51 18 Total 5,626 2,351 830 1,089 1,356 2. Research Agr. Res. services 1,226 591 133 181 321 Agr. Res. council 202 70 28 68 36 Hydrological studies (tea) 38 13 7 9 9 Village grain storage 50 38 12 - Farr. Mach. workshop 6 6 - - - rotal 1,522 718 180 258 366 3. Animal Health '_ Industries Livestock marketing 655 334 96 77 118 Disease control 1,238 55h 93 241 3L9 Staff training 63 49 13 1 - Poultry improvement 278 80 29 67 102 Cattle breeding improveecent 647 161 98 160 228 Dairy development 383 56 91 79 117 Veterinary laboratory 520 L 15 165 336 UNICEF Pilot dairy 63 22 10 31 - New capital dairy 659 - 340 279 4°0 Cattle survey 17 3 3 1I - U1199 Livestock/dairy (lccal cost) 349 52 13 146 138 Bwembwa resettlement 18 18 - Total L,890 1,35 819 1,257 1,58 14. Technical Services Rural water supplies 115 139 6 Conservation branch 639 596 a3 Irrigation brarch 873 873 - Settlenent branch 1,164 942 89 109 21, Technical services (lntegr.) 4,829 - 722 1,265 2,812 Lard In water resources 286 286 - - Kasinthula 395 1, 155 120 116 Rice (Dwangwa) 755 390 61 157 147 Total 9,086 3,230l 1,076 1,651 3,129 5. Planning Unit Agro-econ. survey 143 79 54 10 - Mapping Dwangwa 1 - - 4 4 Planning major projects 102 22 h0 1, - Total 249 101 94 51 - 6. Major Projects Salima 3,310 1,413 818 524 555 Lilongwe 12,756 6,791 1,658 1,522 2,785 Shire lh,126 2,809 1,923 2,300 7,991 Karonga 4,966 - 380 1,020 3,566 Total 35,158 11,013 3,879 5,366 14,900 7. Other Smallholder tea 411 153 81h 60 17L SmalTholder coffee 287 85 53 62 87 Miscellaneous 95 78 1? - Total 793 316 15L 122 201 GRANT) TOTAL 57,321, 19,081, 7,032 9,797 21,410 - of which external resources h6,865 15,31, 5,587 7,899 18,038 - of which domestic resources 10,459 3,7L3 1,445 1,89 3,372 - of which domestic resources 18% 20% 21% 1-9% 16% May 30, 1973 MALAWI AflRTCULTURAL SECTOR REVTEV Settlements_, 1973 No, of Settlers % Area Cultiv b ha Scheme Total MYP Local Total Vacant Credit Re- Rice Maize Cotton Burley Other Ground- Has Plots _aient Tobacco Tobacco nuts Beans Other Hara 223 63 232 295 - 82% 150 - Limphasa 243 88 111 199 77 45% 109 - - - - Nkhozo 1012 75 42 117 38 62% - 181 - 33 12 10 Kaporo 45 - 88 88 - 100% 44 - - - - - Wovwe 116 90 92 1; 2 4 75% 74 - - - - Thulwe 608 90 5 95 77 70%/ - 92 - 31 - 9 8 Mubangwe 2430 77 4 81 166 n/a - 43 - - 7 11 2 - Limphasa(2) 101 61 114 175 25 n/a 40 - - - - Salima 1620 83 69 152 157 n/a - 149 126 - - 66 - - Namitete 1215 167 5 172 35 93% - 213 - 126 - 35 - - Mpamantha 20 28 - 28 2 100%. 17 - - - - - - - Kaombe 200 - 304 204 1 100%/ 182 - -- - - - BIRP 24 22 62 84 - 100% 23 - - - - - - - Rusa 810 113 - 113 140 46% - 57 - 45 34 - - Mangulenge 1012 128 53 181 125 n/a - 10 291 - - 2 - 17 Rivi Rivi 1823 45 62 107 28 21% - 114 72 - 4 - 17 Chikonje 101 17 - 17 6 29% - 23 14 - - - - 4 Likangala 405 51 519 570 - 77% 174 1 - -- - - - Mlomba 405 - 81 81 6 56% - 112 - - 29 10 - 3 Khanda 68 - 91 91 2 98% 67 - - - - - Nthawira 57 7 - 7 3 61% - 6 - - - 2 6 - Ngopani 1012 71 - 71 19 n/a - 64 - - - - - - 13550 1276 1934 3110 911 a/ 880 1065 503 190 81 185 26 41 1-' rt ID H. a! 300 plots have not yet been allocated. Source: Ministry of Agriculture and Natural Resources, Working Paper, 1973. May 30, 1973. Statistical Annex Table 22 MALAWI AGRECTULTURAL SECTOR REVIEW Field Contact Staff in Relation tc Population Served ( at 31st December 1971) Population Trained People per Semi- Total Peopl(i per Served Staff Trained Trained Field Field Con- ('OOCs) St.iff Staff Contact tact itafff Member Staff Membe r A. MAJOR PROJECTS Lilongwe 130 147 885 69 216 6':lo Salira 1514 38 4,050 91 129 1,1,.'5 Shire 106 34 3,120 140 174 6:i.o Total Major Projects 390 219 1,780 300 519 7,0 _ B. SETTLEMENT SCHEMES (NOTE T3) NR 3 11 272 38 49 )2 CE I 6 333 26 32 [,>3 SR it 7 573 36 43 Q2 Total Settlement Schemes 24 330 110 124 C. EXTENSION & TRAINING DEPARTMENT NR 489} 98 5,000 97 195 2 5' CR 1,235 149 8,300 232 381 5,3'9O SR 1,903 143 13,300 327 470 4,o,c Total 3,627 390 9,300 656 1 ,o46 3,W3C All Malawi 4,025 633 6,380 1, 066 1,689 2,3 3C Source: Ministry of Agriculture and Natural Resources, Working Paper: Allocation of Human Resources to Agriculture Development in Malawi, 1971. May 30, 1973. Statistical Annex Table 23 MALAWI AGRICULTURAL SECTOR REVIEW Allocation on Newly Trained Field Assistants from Colby College, 1967 - Department Six Year or Section Y e a r Total 1967 1965 -1-969 1970 1971 1972 EXTENSION DEPT. NR 6 8 3 11 13 23 64 CR 7 24 14 19 16 29 109 SR 16 22 17 20 23 27 125 Extension Aids 2 2 1 - - -5 Colby College 2 3 3 - 3 - 11 Total Extension 33 59 38 50 55 79 314 MAJOR PROJECCTS Shire - 7 - 10 7 4 28 Sal'-ma 3 - 9 9 11 - 32 Lilongwe 12 11 31 29 36 38 155 Karonga - - - 7 7 Total major Prjcs 15 18 4O 48 5)4 49 222 OTHER SECTIONS Research Department 2 14 4 4 5 2 31 Settleament - - 8 4 7 8 27 Agro Economic Survey - 3 2 - - - 5 Land Husbandry - - - 3 3 Tea futhority - 2 2 3 3 1 11 Total Other Sections 2 19 16 11 15 14 77 Total New Staff 50 96 94 109 12L 142 613 Wastage During Year 11 31 31 32 8 NA 113 Size of Cadres at 31st December 349 413 477 556 674 NA - Source: Ministry of Agriculture and Natural Resources, Working Paper: Allocation of Human Resources to Agriculture Development .n Malawi, 1971. May 30, 1973. MALAWI AGRICULTURAL SECTOR REVIEW bxtension and Training Departnent Senior Staffing Situation YEAR END ESTABLISHMENT MALAWIAN EXPATRIATE VACANCIES Professional Officers 1966 29 5 24 Nil 1967 33 6 25 2 1968 30 8 15 7 1969 37 13 18 6 1970 38 14 14 10 Technical Officers 1966 '71 48 20 3 1967 83 51 21 11 1968 94 53 16 25 1969 101 65 21 17 C+ H Ci 1970 109 72 18 19 co C) Jource: Ministry of Agriculture and Natural Resources, Working Paper: Allocation of Human Resources to Agriculture Development in Malawi, 1971. ( May 30, 1973. Statistical -Annex Table 2 MALAWI AGRICULTURAL SECTOR REVIEW Total Recorded Cash Receipts in Smallholder Agriculture, September 1968 Aust 1969 ('000 K) Northern Central Sothern Malawi Region _egi Reon Current Farm Cash Receipts Maiaze 962 129 269 563 Groundnuts 2,1473 225 13931 317 FhU1 se s 519 66 202 251 Cotton 1,477 66 147 1,263 Tobacco 1,282 79 1,137 66 Rice/Coffee/Tea 432 281 146 1O Cassava/Millet/Sorghum 479 161 37 281 Other Crops/F'ruitAfood 1,277 187 409 681 Livestock/Poultry 2 347 1,235 699 Gross Agricultural Receipts 11,182 1,541 5,1413 4,226 .ess farm Expenditure- 2,913 - 251 -_861 _ ;.80o Net Agricultural Receipts 8,269 1,290 4,552 2 2 26 Per Capita K 2.03 2.59 3.06 1,i6 Other Current Cash Incomre 21,506 2,730 5,286 132,1 0D Cash Transfers- 3.,265 675 936 1,654 Credit Received 788 99 218 472 Withdrawal of Satrings 12 456 47 6143 567 Other Income 27s015 3,751. 7,083 16,183 Per Capita K 6.64 7.52 14.75 7 77 Total Cash Receipts 352284 5,041 618609 ",r Carpita K 8.67 10.11 7.81 8393 a/Fcr tools, insecticides, fertilizer, seeds, hired labor and tranaport. b,Agage income plus forestry, fishing, brewing, carpentry, weaving, retail and wholesale activities, etc.. C/Including transfers fram abroad. Source: National Statistical Office,, National Sample Survey of Agriculture, 1968/69. May 30, 1973. MALAWI AGRICULTURAL SECTOR REVIEW Realised Average Export Prices (K/MT) 1964 1965 1966 1967 1968 1969 1970 1971 1972 Smallholder Crops: Tobacco 586 560 511 452 520 679 792 978 864 Groundnuts 141 173 173 135 154 163 188 202 200 &+2 1 4V4 44V 440 512 453 474 528 536 Pulses 62 74 72 56 83 64 104 143 78 Maize 35 ~~~~33) 3 5 36 3 5 45 - 89 35 Cassava 30 26 28 25 29 29 33 27 29 Rice 104 116 102 104 105 163 197 185 153 Sunflower 65 40 52 62 88 60 66 117 100 Coffee 448 552 303 604 566 556 744 785 444 Estate Crops: Tobacco 768 666 749 929 1,000 1.,214 1.,210 1,158 1,203 Tea 546 571 585 533 614 552 616 656 6C6 Tung Oil 332 329 276 233 262 268 361 279 236 Sugar ~~~~~ ~~~~ ~~~~- 68 102 100 96 CD aource: Malawi Goverm ment, EconoTaic Report, 1973. C+ Deceaber 4, 1973. CD MALAWI AGRICULTURAL SECTOR REVIEW Producer Prices for Major Crops Advance CROP UNIT 1950 1955 1960 1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 Maize K200 lb bag - - 1.88 1.88 1.88 2.10 2.10 2.00 1.75 2.50 2.50 2.50 2.50 Groundnuts Con- t/lb - 2.92 4.58 4.17 5.0 5.0 5.0 5.0 5.0 6.0 6.o 6.5 7.5 fectionary Groundnut-Oil " - - - - - - - - 5-O 5.0 5.0 5.5 Rice (Paddy) "Gd I 1.25 2.08 1.67 1.88 1.88 1.88 1.88 2.5 3.3 3.3 3.3 3.3 3.3 Cassava " - - - - - - 0.75 0.75 0.75 0.75 0.75 0.75 - Mixed beans " - - - - 2.5 2.5 - 3.3 - 3.25 3.25 3.75 4.75 Wheat " 2.5 2.08 1.67 2.5 2.5 2.5 2.5 2.5 3.5 Flue-cured " 24 23 27 27 31 43 36 39 38 41 40 Fire-cured 7 8 5 10 9 10 6 7 9 10 10 Sun-cured " 7 9 8 9 8 6 5 8 8 10 10 Oriental " n.a. n.a. 25 20 17 16 24 19 18 19 20 Burley 21 23 27 20 20 16 25 37 28 24 25 Cotton (Seed) " 2.5 4.17 5.o 5.42 5.0 5.0 5.0 5.0 5.0 5.0 5.5 6.o 7.0 Tea " 32 36 31 27 26 24 28 25 28 36 34 a/ rn C Coffee " n.a. n.a. n.a. 14 16 14 13 19 13 13 14 17 C) a/ Free on rail price at Blantyre/Luchenga. December 4, 1973. Statistical Annex Table 28 MALAWI AGRICULTURAL SECTOR REVIEW Producer Prices for Livestock Products (K/Kg) Cold Storage Company- Butcher Prices at Pre-1973 After 2/1-1973 Auction Prime 1.79 - Standard 1.46 1.95 Up to 2.64 Commercial 1.19 1.26 Up to 1.98 Cows - 1.76 Feeder A- 14 ( ( (1.87 (1.54 Feeder B-. 1.33 ( ( Inferior o.45 o.66 Producer Price Town Retail Countryside Mutton - 0.88 0.33 Goat meat _ . 0 33 Poultry meat 0.62 - 0.73 0.73 - 0.84 0.33 Eggs (K/dozen) 0.33 - 0.38 0.38 - 0.43 0.24 Milk 11 21 6-13 a/The old market prices were subject to small seasonal fluctuations which have now been abandoned. b/yMinimum live weight 450 :Lbs. Source: Cold Storage Company, Department of Animal Health and Industry. May 30, 1973. Statistical Annex Table 29 MALAWI AGRICULTURAL SECTOR REVI-,iW Fertilizer Prices to Farmers (K/MT) Sulphate of Ammonia 20-20 Compound 1967/1968 28 1968/1969 28 1969/1970 33 40 1970/1971 33 33 1971/1972 44 h5 1972/1973 55S 69 1973/1974 h5 69 December 4, 1973. Statistical Annex Table 30 MALAWI AGRICULTURAL SECTOR REVIEW Transport Charges, 1972 A. Internal Costs 1. Road Gravel/earth roads 0.05 K/MT km. Bitumen roads 0.04 K/MT km. 2. Rail Short distance 0.02 K/MT km. Long distance 0.015 K/MT km. Class 11/12 Class 13/14 3. Lake Long distance (500 'km) 0.03 K/MT km. 0.015 K/MT lkm. Short distance (160 km) 0.10 K/MT km. o.04 K/MT lcr. B. External Costs (K/MT) Rail-Bordier to Port Freight to Crop Beira Nacala Insurance Port Handling _uEr)e Maize 2.32 3.10 0.17 4.18 12.00 Tobacco 17.60 21.78 NA NA 57.).0 Tea 16.28 20.24 NA NA 24.EO/cn.n. Groundnuts 4.29 5.10 2.34 11.22 22.50/cu.m. Cotton 7.22 8.91 2.18 8.87 22,30/cu.m. Cassava NA NA 0.25 6.o5 17,80 Source: Ministry of Transport and Communications, ADMARC and NOIL, Working Pap,rs, 1973. May 30, 1973. Statistical Annex Table 31 MALAWI AGRICULTURAL SECTOR REVIEW Blantyre Retail Price Index (1970_- 100) Low Income Index All Items Food Non-Food High Income Index 1968 90 85 N/A 90 1969 91 86 97 g9 1970 100 100 100 100 1971 107 109 105 108 1972 112 116 109 111 Source: National Statistical Office, Monthly Statistical Bulletin, March 1973. May 30, 1973. ANg 1 Page 1 MALAI SECTOR REVIEW INSTITUTIONAL ARRANGEMENTS FOR THE EXPANSION OF AGRICULTURAL CEDIT OPERATIONS A. Introduction 1, IIIn connection witn the agricultural sector review the Government of Malawi requested the mission to give special attention to the institutiornal arrangements that will be required for expanding agricultural credit operations in the country, and to consider in particular the proposed establishment of an Agricultural Bank of Malawi (ABM) for which the Government would seek financial assistance from Bank/IDA. In fact, the Government had hopes that the mission would assist in drafting a loan request for this purpose, but this was not possible for various reasons: (a) The proposal for setting up 13M (whicn is supposed to serve exclusively medium-sized and larger farms) could not be considered in isolation. it had to be viewed in the broader context of the credit needs of the whole agricultural sector-, a subject on which little information is available at present. (b) Even the credit needs of medium-sized farms (with respect to type of -iveszrment, anbae: of prospective borrowers, ea.j 1-Žad ot ''ten v" , z1ysed, and t*se would erta_rdy nead to 'D vad befor- a loan request could be drafted. (c) Also to be taken into account was the fact that Government intends to establish an Agricultural Supply and Credit Organization (ASCOM) which would supply farum inputs on short-term credit. Although this institution is supposed to serve primarily small fams, its rol.e and function could not be isolated from the ABM proposal. 2. For these reasons the mission tr-i@.e first of all to collect more background information on the credit needs and the existing sources of credit within the agricultural sector, and then tried to relate this information to the institutional proposals outlinked above. The mission also considered the findings and recomendations of a previous agricultural credit survey carried out by a Bank mission under Mr. A. Stonenam in September/ October 1970. The mission eventually determned that it was not able to support the Government's current proposals. It appears that different institutional arrangements wou-ld serve Malawi's agricultural development ANNEX 1 Page 2 plans in a more effactive way; ttis would be particularly true if a rural developiment progra as suggested by the mission is implemented. 3. The i$s sn diseissed its views with senior Government officials and agreed ih thm at more inforation would need to be collected before definite proposalI as to the esrtablishment of one or two agricultural credit institutions could be fo'imaLatad. Thus, the views expressed below are purely of a tenta tive -and are intended primarily to serve as a basis for further discussio$s. B. Bacground Present So-ures of Fa=o Credit: 4. Ina the absence of a central agricultural credit institution almost all i. titutional fa credit operations in Malawi are at present carried out by seacial develo7met agencies or commercial banks* These include: (a) Integrated regional de6relopment projects (such as Lilonngw &li9 Lwer Shire and Karonga). (b) Tec hncal Sem.- Iaes e' Qart nt (Settlements). (c) Crop de.eloptrtent authri ties. (6) Centra Farmr Loans Board (C ) (a) Agicult'fal velo=aewt a-LiTd M.ark eting Corporation (ADMARC). (f) l.nt a. Davt t'e-d Barik of Malawi Ltd. (INDEBAIK). (5, C ercnaA ban..? 5, Thtitka >Juteg-;tea ;nr tara rtects include the IDA finarced p-rrJ-caat b4l a.lF i'z c tr'L a?arations is f2or short-terr inputs such as aseedst , tO tw andtac izasacZcttc½ees iedtitm-term loans are primarily made for tive purcase of draft oxe't,^ ox-drawn implements and ox carts. Since the aredit eratoxzs aze stricty supervised and properly supported by extension, iaput su-pply and marketing services, the repayment rates are above 90 p>term 6. Under ths Go e& 'nslaS ens about twenty schemes have been inlitiated; U ese wera yprictaarCy nte ed for Malawi Young Pioneers () but have increa.singl taken in local farmers. Credit for short and NEU Page 3 medium-term inputs 4s made available through the Settlement Credit Fund. Due to lack of proper management and supervision, repayment records are unsatisfactory in many schemes. 7. Crop development authorities have been established for smaliholder tea, coffee and flue-cured tobacco development. The Kasungu Flue-Cured Tobacco Authority also trains, settles and finaaces medium size growers with 20 acres of tobacco each. Credit operations are for short and medium-term inputs, and due largely to good managemenat and the full control of market outlets repayment records are satisfactory. 8. The Central Farmers Loans Board (CFLB) is part of thne Government Loans Board - wich, also includes a Central Business Loans Board - and is under the supervisior. of the Ministry of Trade and Industry. Field work such as the preparation of loan applications anad loan supervision is carried out by extension staff of thie Ministry of Agriculture and Natural Resources. The original intention was to provide progressive small farmers outside the project areas with medium-term credit, especially for the purchase of draft oxen, implements and ox carts. At present, however, K 4153,000 of the loan portfolio of about K 201,000 is tied up in six loars to large enterprises, and soe funds are also being used for short-term credit in two extensive development zo-nes under the regular extension services The total capital funding of CFLB is small (about K 242,000) and approximately 60 percent of the loan portfolio is in arrears; 40 percent of this is considered to be uncollectable. 9, The kgricultura. Develo ment ard =_e kInn , orattion -iE.RC) extends credIt for cotton insecticides i'1. non-prozect areas since rvo oti er .6@w4Sy@^Sg&it 2£or ;--L*-S 33 r,:.+. u~er,5 zur 5z2'it 7s rted I),, )t'Y&&VW -t paztic~uazr seeds atnk -etilriza -r a. va'.ab ,n cze&it outsde established project areas. The corporation h'as also been required to extend a number of unsecured loans from its profits to certain larger estates. 10. The Investment and Developmeat >rŽ of nalawi_Ltd. ( EBANK) was established at the end of s972 wit1s an authorized share capital of R 2K 5 million; K 750,000 has been subscribed equally by ADMARC, CDC and a Dutch development finance corporation. A German development finance corporation is also expected to participate. No loans have beer made aS yet, but among other requests, loan applications have been reaeive6 Zrom, larger fari.s and estates for medium and long-term invesrments. bost af dhese applications, which were primarily for the refinancing of short-tern Loans (p:rviouSly made by commercial banks for long-term investents), 9-ill probabiy not be considered by INDEBANK. Loans for naew investments ir agriculture combir.ed with modest refinancing are, however, expected to form an important part of "-NOY26 ANK's future credit operations. 11, Commarcial banks are extending corns_iderabLe smzounts of short-term credit to larger farms .and coamnercia. eastates. The NatLoaal Bank of Malawi3 for examp le, estimates that: abou= one- uarter of ita Loan rprtcfl:fi io of K 25 million is being used $or agricultural psurposes and thac K 3-4 mfLiuion have ANNEX 1 Page 4 been lent to larger farming euteprises. A great portion of these short-term loans have been used for medium and long-term investments, and therefore need to be renewed every year. It is expected that ABM would refinance such loans on more appropriate terms. Demand for Farm Credit 12. The mission s a anov able to collect complete statistical informa- tion on the present vo'ume of farm credit operations or to make projections of future demand. The Economic Planning Division of the President's Office has undertaken, hia ver, to up-date the statistical information contained in ir. Stoneham's -report and to reconcile this with projections made by the Government as to the expected credit operations of ABM and ASCOM. 13. Sma.11 Fazms. In the proposal for establishing ASCOM, the Government estimates that the demand for credit by small farms (including some 20 acre tobacco farms) will develop as shown in Table 10 This projection shows that Table 1: PROJECTED CREDIT DEMAND OF SIALL FARM (VTOO0) -ctual Projected … 1971/72 1974/75 1977/78 1980/81 Regional development projects 710 1,820 2,550 3,120 Settlement projects 72 197 330 460 Now and other projects - 20 620 __52_ Sbitotal 782 2,037 3,500 5,100 ADMARC 72 106 154 225 CGLB 35 52 76 111 Suobtotal 107 158 230 336 Crop development authorities 235 347 454 529 Total 22542 4,184 5,965 Source. "Th'ie Future Supp.,y of Farm Iaputs and Credit in Malawi", Draft Paper, Economic Planning Divisiort, May 1972. the major expansion of smail farm credXt is expected to originate from ongoing and new development projectiO it is anticipated that one new regional develop- .aent project a year wAi-1 be tantiated from 1975/76 onwards. This may be modified by the mission's proposal of initiating a rural development program Page 5 vu uAd maosit lkely result in larger credit needs. Government anticipates ,:at the CreCir amoants showa i- Table 1, except for the loans made by the zrcr dea d5o enc authorkties, will be financed by ASOOM and that 15 percent of tinesei amouts wail be for medium-term credit. It is also estimated that t1he total value of irputs supplied by ASJC04 will be about twice the credit nounts - or, ing other words, teat about 50 percent of future farm irputs will be supplied orn credit. If the Government accepts the mission's proposal to initiate a smallholder flue-cured tobacco development project (which would be on. a much larger scale than the project presently envisaged) te credit smou-nts projected for the crop de-velopment authorities would increase considerably. Tnhs and other proposals put forward by the mission waill need to be quantified in the course of project preparation. 14. mium an.d Lare-scale tadivIdualy- ead Farms, No information 'as available as to tee nu-ber of existing medium and large-scale, indiviitual1y- onned farms, their present credit demand and type of production. hee are indications, however, that the number of these farms is very sm;all, and that they are involved primariy in burley and flue-cured tobacco production. Most of these farms are ovied by high ran1king ciAvil seZvafltS who do not reside on the farms. So-me owners employ farm managers, b'ut since there is a great shortage of experienced managers, the standard of management on these farms is generaiiy poor. As mentioned before, many of tese raams have used short-term credit for financing medium and long-term investmenrcs andu are now in a tight liquidity positiona Government Intends to frurther expand the reuSer of these individually-owned farms by offering Governmenat land to civil servants under long-term leasehold arrangements The proposed Agricultural. Bank wovid be estalizshei with lie speci%"ic purpose of helping to finance such new farms and of refinancing existing ones. Th..e AMM proposal estimates of no' capital and refinancting requirements are shrm in Table 2. Table 2: ESTrWTED t 'Ci 5'f AND EJIY i-'0-E-.LRiW'.S OF MEDIIl MD ARCE-SC'LZ FARMS (VK'00) New Ca ital Refan Totae Year 1 a,200 2,0s0 3,200 cumulative repayment 120 400 520 Year 2 2,280 1,600 3,880 Cumulative repayment 540 800 . 34, Year 3 3,060 1,200 4,260 Cmulative repayent 960 19200 2,160 Year 4 3,540 800 4,340 Cumulative repoa' xoev 1,080 1,600 92680 Year 5 4,020 400 4,420 Cumulative repayment 1I,200 2,000 3,200 Year 6 4,500 - 4,500 Source: Treasury!vTh, ±'he Establishen: in M'¶alawi of an Agricultural Bank," ja7uary ' s73. Page 6 15 Large-Scale Corporate Farming Enterprises. This group includes tea estates, a sugar estate and large-scale tobacco produc4lng enterprises. They are mainly owned by companies with a high proportion of non-resident shareholders, but more recently also include enterprises with prominent individuals in Malawi and ADMARC as shareholders. The credit requirements of these companies are properly covered by existing institutional arrangements. T'ne largest enterprises in th±s group are able to obtain capital fron abroad. I NDIK will soon became a local source for medium and long-term cazptal, and short-term capital is supplied by commercial banks. Tnis group of farm- ing enterprises can therefore be excluded from the following considerations, C. roposed Institutional Arrangements Tihe Stoneh!Report 16 After a survey of the agricultural credit situation ir 1970, &-. Stoneham concld ed that an agricultural bank should be created. As a first step, this bank would take over and revive the functions of CFLB in supplying individual farmers with medium and long-term credit and in addition would also extend short-term credit. Although not clearly expressed in the reports it can be assumed that medium size and larger indi iidually- owned farms would not have been excluded from these operations. Together with the small staff and assets of CFLB, the bank would have taken over the credit staff of about 50 people from the Ministry of Agriculture. As a scond step the new bank would have gradually taken over the credit operations of regioral development and settlement projects. This would have taken place at the latest when the existing project administrations were disbanded or moved to other areas. During an interim period it was envisaged that the bank "would maintain close siaison with the development projects a7nd Bettlement schemes and in due course, by negotiation with each separately, participate in them, lendina either direct to the project authority or to farmers and groups of farmers". TbAe AB roposal 17. Under the assumption that ASCOM would meet the credit needs of small farmers, Goverrment proposes to set up ABM exclusively for t'he purpose of supporting medium size and large in diviLdually-owned farm.ing er.terprises. ABE would in tie 'Lirst instance provide medium and long-term capital but would not exclude.making short-term loans if necessary. Xle expected volume of operation and its breakdown into new cap4 tal and refinancing was 'hown in Table 2. 18. The Government's proposal is not very specific as to the staffing of ABM and in particular does not explain how A3M will solve the prdblem. of improving the management of existing farms and also of providing trained managers to new farms. If farms 4n this size group are properly managed AN'NEX 1 Page 7 and need in the first instance capital for new investments, the mission was assured by INDEBANK's management that they could also be financed by INDEBANK. Therefore, it appears that the most urgent need is to create a farm management service for this group of farms and that ABM is needed primarily for solving the refinancing problems. The ASOOM Proposal 19. As a means of improving assistance to small farmers on customary lands the Government proposes to combine input supply operations presently handled by ADMARC, with short-term credit operations presently handled by development and settlement projects (including ADMARCts credit for cotton insecticides). These operations would be allocated to a new institution called ASCOM, which would be a subsidiary of ADMARC. Credit schemes carried out by crop development authorities would not be incorporated because these schemes are specially tailored to meet the needs of their own particular crop. With respect to medium-term credit it is undecided thus far whether CFLB will be incorporated in ASCOM, but it has been assumed that development and settlement projects "will continue to be the main suppliers of medium- term credit". No explanation is given how the projects would split their credit staff and organization into short-term operations to be handed over to ASCOM, and medium-term operations which would be retained by the projects. 20. Somewhat unclear is also the prepared separation of input supply operations from ADMARC. At present ADYA4C does not maintain any specialist staff for input supplies. Procurement, storage and distribution of seeds, fertilizers, insecticides, etc. is handled by the same staff which is in charge of produce marketing. This is convenient because these operations :aKe pl'ace at differenit seasons of e year n a-;e therefore ideally mato6aed With each -ocha. Part oe tlha t nzv- anad storage facilities are also used for both purposes. Therefore, the physical separat4on of ASCOM's input supplies from ADMARC's marketing operations would create considerable dis-economies and is certainly not envisaged. A separation could be carried out on paper by a complex accounting system, but it cannot be seen what advantages this would have. Assessment of Current Proposals 21. In assessing the ABM and ASCOMO proposals it has to be kept in mind that any farm development program needs a minimum of four basic services: (a) Extension (for technical advice); (b) Input supplies (for the application of modern technology); (c) Credit (for financing these inputs): (i) short-term (production credit); (ii) medium and long-term (development credit) , and ANNEX 1 Page 8 (d) Marketing (for selling the additional produce generated). These services are supported by the Government's price policy and need ;l:o be closely coordinated, but this does not mean that they must be provided l:'y one single institution. Various organizational arrangements and combinatiors are feasible and each may have its own advantages under given circumstances, 22. The current: proposals envisage t'.at the above services would Ye provided as shovwn in Table 3 by both new a,d existing institutions. Thi. outstanding features of these proposals are that: (a) ASCOPf would provide input supplies countrwide, and short-term credit to small farmers inside major projects and proposed rural development areas; (b) ABM would supply short, medium and long-term credit to medium sized farms; and (c) Existing institutions such as project authorities and CFLB would continue to supply medium-term credit to small farmers inside and outside project areas. Table 3: INSTITUTIONAL ARRAGEMNTS PROPOSED BY GOVEMMINT Small Farms Inside Outside Inside Proposed Rural Project Medium S ized Service Xajor Project Areas Development Areas Areas Farms Extension Project .Authority Ext. Dept. Ext. Dept. Ext. EIpt. Input Supplies ASCOM AS OM ASCOM Commer -i al Short-Term ASCOM ASCOM - ABM & ocnmner- Credit mercial Banks Medium and Long-Term Credit Project Authaorzy 3 CFLB ABM Marketing ADCARC ADoC AeARC er:i.al 23. Thce mission does not consider tntese arrangements to be the most appropriate ones for t2e fo lowing reasons (a) Two new creLit irnstitutions vlsould. be established, but neither of these would provide for medium-term. credit to smallholders, a service for whiih demand is considerably increasing in the course of riral development; Page 9 (b) There is in particular no new arrangement which would improve or replace the unsatisfactory credit operations of C0B2; (e) At Malawrl's stage of develeoment, it appears more anpropriate to coribi-ne shtort and mediu-term credit operations in one irstitution ratner tlan to combine input supplies and short- term credit as envisaged under the ASCO-M proposal; (d) Input supplies wouId better continue to be provided in combnacrion with marketing services as is presently done by ADMaRC (para 20); (e) Some in?pts cannot be supp]lied by AO8M, e.0. dairy co°ys, draJt cxen etc., and -naeed special credit arrangements; (f) As the proposed 1BM will inr all Like±ihood have rather lJmiLted operations and iar&e overnead, its financial viability is very doubtful; and (g) ThPe establishrtment of two new credit tnsticutions (ABM and ASCOMj na acddition to existin6 ones will certainly aggravate tne problem of scarce agricultural credit expertise in the country. Alteinative Proeosais 24. For the above reasons the mission believes it would be better to create one stngle agricu±tural credit institution, known as the Rural Development Bank of Malawi (CDBr 3, which would supply short-term credit as well as medium and long-term credit to both small and medium.sized farms. sThis would enable the small frarmer who has successfully introduced new technology with the hel- ) of snort-term credit (for purchasing improved seeds, fertilizers and ir.setiLcides) to stay with the same credit instiitution when he Lioves to mediut -;1t iUveStments (e.g. diiry cows, curinsg barns, draft oxea, Lechnical: evipmeyit, etct. in the aext phase of fara developm ent. A road based agricultural bam shoud also be able to accept deposits rom sma.l rarmer6 (a sewvKc. 'for ;ihiL great damand exists fr ost countries) and th us, increase Local capital supplies 25. To facl'litate service of medLum siLzed farms, RDBM Edeeds to be assisted by a speciLa :a-rzm ranagement service FMS which woul elp ir prepa xing ant implem eting farm investamet planss. La some cases nTh may everL raced to proviUe fai managers for the reliabfLLtation of mismana-ed farms. it can not be eRpected that such serz-vces coclad be proviaed by the Extension Department of tie hinistry of Agriculture. As a ratter of poliCv tAe FIS srhou'd be a coc urerciellvy ar½e ited service exclusively serving commercial arms; it shoualQ, 10 0 _24254 5 127 M0 0 | / ¢ ) 11_ l y A S 0 N 0 F M A MJu e (se.J;f | 9 | \RHODERE55AtZ 3'4° ;°JULY 1973 - N 2 A @ / MALAWI hp Xi LAND USE . > .E \ wKaperroC/NU', 1 ,,oNthate f t Z ,LImphass (Choiese |, Z A M B I A rmbo Kanse -12t : ff 't Oh wana /2' sf : \) 'ts be j ISLAND I N ( f w }g S fD~~~~~~~~~wcngws,/Nsvssagf ) jS | _<4 \8 MO Z AM B l Q UE rf - ; 0 ( v ftrr g > , \, '\ 3alavkcwc 'wish .":, 'VtSwArIAtt \ X /9/ \ffi> >, R . : \ s,Js 4O 0,vH aFCA O0 20 O oo a0_ an G i2 40 5(1 bRX t no . 0 36' i IBRD 10498 j 7 S3___ v/ro DAr C 5vvAA 3D JULY 1973 MALAWI SX Ch9oIT. (N , AGRICULTURAL PROJECT AREAS S I N ~~~~~~~~~~~~~~~~~~~Existing major Project Areas - j qK:roroo i5 MWPionned major Project Areas R L?0VAKEASUOEk Potential future major Project Areas i PREQ/CT (RICE) M. t Plaknned future Externsion Areas MO/wE LŽ~~~kŽ Ranching areas [ (/ 0 t--- C4 9 i 7 $ ..Sugar Schemes -_7 s ,--~__,._Pnncipal roads / Llv ngs onia Ch iwerv -.--Roilways I, - ~~~----Rivers ............ Regional boundaries i . ,,<. 2 . j D : - -Internotional boundaries ) - s~~xzN O'oR [HR N/ ( , ~~~i,R E GI/,AO N ' \ ScW S.$, X \zuzuzu Z a k N. 'S Nkhauio Bay . - -~~ 1T VA/Z{ 4PLAHAS4 Li4/APO TEPOV'-J E SCHEMEZ Z A M,A 13 A LzKb O /LAOMA.A k . - ' . < ) ---X>/i]S-More zt'CHIZUMULr' M 4a/la w/ "DV1AN6-iA\ o 4; / Kvvvvgv ~ ~~,NLhoivk~ 0 Z| A M I Q U E . L ,,, = ,CAcC,, IUTEOR . , ) CENTRAL REGI4? ? ON CETRALEC/O OEV5iOP6EVT .11~ WE , ' i 6 . J ',,- l O,} Si C & LakW t M O Z7 A .k/t 13 I Q U ZE / g i ,@ XOMBA i t * I G ,iA,vfaR N/- 1 Ch, .~~~~~~L Ire +s no / ~ 9X? i40 LANTYRE 2Lme P4 T,N,,vv vvr.v,v r_ , , ,5 S vvpAv o.,,v.~v v..tc , o o 0 o 4 L SCI:LFR f EN'I5S-X ,3 xEPUv'LZ MIL ES la.! ~ 'i< -* OEEE'OEMA'T .0ROsET IRE/OAr/N TEA AREA -- '-~~~~~~~~~i CAALAWI~~~~~~~~~~~~ I ZAMe[A ~ ~ ~~~~~~KLMEER ~ *1 LU - L ~ DXE ui 5~~C CLI) _ Z 0~~ X O E 0S I- 0 ,. z 4< 0n W K t_ 7 txa 0~~~~~~~~~~~~~~~~~~~~~ .2 o -~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~.......... C I~~~~~~~~~~~~~~~~~~~~~~~ . X . . 6 . a \ - < , 5 24 C e t.w-v % 0 -0 ... ...... ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ . ,. ~ v \ ~ ~~~~~ u i" , s' '' - ' X'\ ',', PP~~~~~~~~~~~~- ET~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ C<~~~~~~~~~~~~~~~~~1 NI &~~~ *~. ~~0~(C0 0~ Al~~~~~CA MALAWI AGRICULTURE SECTOR REVIEW MINISTRY OF AGRICULTURE AND NATURAL RESOURCES Minister - - - - - - - - - - - - _- Statutory CorPorations, ADMARC, Permanent Secretary Tobacco Control Commission, Smaliholders' Tea & Coffee Authorities, Agricultural Research Council, Kasungu Flue-Cured Tobacco. Deputy Secretary Chief, Agricultural Officer - ________________. e Deputy Secretary Agriculture Natural Resources ItC, Development Projects Director of Chief Game G~~~~eologicalndRsrc TechnicalHat&Fihre Forests Warden Hydrology S~~~urveyrSrie 1d1r £91~~~~~~~~~~~~~~~~~~~~~~~~~~Rgo II| Agri.2A Wg[i Irrigation, Land Use Planning, Settlenent Adrrminsintrson Project Managers __ World Bank- 7758(R) Lilongwe Land Development Prolect Slume Vallev Rural Development Project Karonga Rural Development Project Sahma Cotton. Rice and Land Develor,ment Project MALAWI AGRICULTURE SECTOR REVIEW CREDIT INSTITUTIONS EXISTING PROPOSALS . Ministry of Agriculture *I Department of Extension ADMARC (HQ) Agricultural Bank Marketing; ASCOM I I Regional Agricultural Offices ADMARC (Reg.) Marketing; ASCOM (Long & medium term credit) Divisional Agricultural Offices - - - - - - - - - - - - - - - - - - - Medium sized farms ~~~~~cash ___ ~~~~~~~Normal extension ol _ _, ~~~~~Rural Development cash & short areas term credit cash & short Major projects term credit MALAWI AGRICULTURE SECTOR REVIEW CREDIT INSTITUTIONS ALTERNATIVE PROPOSALS Ministry of Agriculture I. Department of Extension ADMARC (HQ) Rural Development Bank Marketing; Supply of Inputs I I Regional Agricultural Offices ADMARC (Reg.) Regional Branch Offices Marketing; Supply of Inputs {short, medium and long term credit) Divisional Agricultural Offices _ _ _ I H :;medium term credit ' Normal Extensionsr l l { to progressive smaliholders I Rural Dev. Areas I I I'I E I~ | i Major Projects - l- ---- --- Medium Sized Farms World Bank-7760OR)