Report No. 652-MAI FIL COPY

Appraisal of the Lilongwe Land DevelopmentProgram - Phase IllMalawiFebruary 28, 1975

Eastern Africa Projects DepartmentGeneral Agriculture Projects Division

Not for Public Use

Document of the Intemational Bank for Reconstruction and DevelopmentInternational Development Association

This report was prepared for offcial use only by the Bank Group. It may notbe published, quoted or cited without Bank Group authorization. The Bank Group doesnot accept responsibitity for the accuracy or completeness of the report.

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

CURRENCY EQUIVALENTS

Currency Unit = Malawi Kwacha (MK)MK1 = US$1.2 = f Sterling 0.5010US$1 = NKO.83 = 83 tambala (t)

NOTE: Above exchange rates are as of July 15, 1974., at which datethe Malawi Kwacha was floating with the f Sterling.

WEIGHTS AND NEASURES

-:lb. = 0.453 kg1 short ton = 2,000 lb = 0.9072 metric ton1 acre = o.4o5 ha1 sq mile = 2.59 sq km

ABBREVIATIONS

LIDP = Lilongwe Iand Development ProgramMANR = Ministry of Agriculture and Natural ResourcesADMARC = Agricultural Developm<ent and Marketing CorporationCSC = Cold Storage Company LimitedWHO = World Health Organization

Malawi Government and IDP Fiscal Year

April 1 to March 31

MALAWI

LILONGWE LAND DEVELOPMENT PROGRAM - PHASE III

TABLE OF CONTENTS

Page No.

SUMMARY AND CONCLUSIONS ....................... i - iii

I. INTRODUCTION ................. .................

II. BACKGROUND .................................... 3

A. General .................................. 3B. The Agricultural Sector .... .............. 3C. Agricultural Services ..... ............... 4

II. THE LILONGWE LAND DEVELOPMENT PROGRAM ......... 6

A. The Program Area ......................... 6B. Achievements under Phases I and II of this

Program ................................ 8

IV. TIIE PROJECT ................................... 10

A. General Description ...................... 10B. Project Cost Estimates ..... ............... 14C. Financing ................................ 16D. Procurement .............................. 17E. Disbursement ............................. 17F. Accounts and Audit ....................... 18

V. ORGANIZATION AND MANAGEMENT .... ............... 19

VI. PRODUCTION, MARKETING, FARMERS' BENEFITS ANDEFFECTS ON GOVERNMENT BUDGETS .... ............. 21

A. Yields and Production ..... ............... 21B. Markets and Prices ..... .................. 22C. Farmers' Benefits ..... ................... 22D. Effects on Government Budget .... ......... 23

VII. ECONOMIC BENEFITS AND JUSTIFICATION .... ....... 24

VIII. RECOMMENDATIONS ............................... 25

ANNEXES

1. The Lilongwe Land Development Program

Table 1 - Rainfall Data - Lilongwe Airport

Table 2 - Projected Crop Areas

Table 3 - Projected Input Requirements for Maize,Groundnuts and Tobacco

2. Planning, Construction and Conservation

3. Land Demarcation and Registration

4. Agricultural Extension and Training

5. Agricultural Credit

Table 1 - Seasonal Credit Packages: 1973/74

Table 2 - Requirements for Sundry Medium Term Credit

Table 3 - Cash Flow Statement of Medium Term Credit

Table 4 - Total Credit Cash Flow

6. Livestock Development

Table 1 - Beef Production from Village Cattle

Table 2 - Dzalanyama Ranch: Herd Projections andTechnical Coefficients

Table 3 - Dzalanyama Ranch: Beef Production fromRanch and Ranch-Supplied Steers

Table 4 - Dzalanyama Ranch: Ranch Income and Expenditure

Table 5 - Stall Feeder Budgets

7. Health Facilities

8. Project Cost Estimates

Table 1 - Summary of Development Costs

Table 2 - Project Headquarters

Table 3 - Conservation and Planning

Table 4 - Surveys

Table 5 - Markets and Input Stores

Table 6 - Marketing

Table 7 - Land Allocation

Table 8 - Extension

Table 9 - Training

Table 10- Credit Fund and Credit Administration

Table 11- Health

Table 12- Dzalanyama Ranch

Table 13- Livestock

Table 14- Dairying and Poultry

Table 15- Evaluation

Table 16- Project Preparation (NRDP)

9. Estimated Schedule of Disbursements

10. Administration of LLDP After the Project

Table 1 - LLDP Units by Year of Reversion to theRegional Agricultural Office

11. Smallholder Crop Marketing and Prices

Table 1 - FMB/ADMARC Crop Trading Accounts, 1966 to 1972/73

Table 2 - FMB/ADMARC Accounting Ratios 1966 to March 31, 1973

Table 3 - ADMARC Profit and Loss Account for the YearEnded March 31, 1973

Table 4 - ADMARC Balance Sheet as at March 31, 1973

Table 5 - ADMARC Comparison of 1973 Prices with Pricesas at September 30, 1974

Table 6 - Export of Maize by Country of Destination, 1966-72

Table 7 - Export of Groundnuts by Country of Destination, 1966-72

Table 8 - Exports of Unmnanufactured Tobacco, 1970 - 72

12. Beef, Milk and Egg Marketing and Prices

Table 1 - CSC Profit and Loss Account for the YearEnded December 31, 1973

Table 2 - CSC Balance Sheet as at December 31, 1973

13. Farm Budgets

Table 1 - Margins per Acre for LLDP Crops

Table 2 - Margins per Acre with Decreasing Costs of Fertilizer

Table 3 - Farm Budget for a Typical 4.5 Acre FarmWithout Tobacco

Table 4 - Farm Budget for a Typical 4.5 Acre Farm with Tobacco

Table 5 - Farm Budget for a Typical 8 Acre Farm

Table 6 - Farm Budget for a Typical 2.5 Acre Farm

Table 7 - Actual and Estimated Adoption Rates by LLDP Farmers

14. Government Cash Flow for the Project

Table 1 - Cash Flow for Phase III

Table 2 - Cash Flow for Phases I, II and III

15. Economic Costs and Benefits

Table 1 - Encremental Economic Costs for Phase III Alone

Table 2 - Incremental Economic Benefits for Phase III Alone

Table 3 - Internal Economic Return of the Ranch and Stalifeedar:Prograri

Table 4 - Incremental Economic Costs - All Phases of Program

Table 5 - Incremental Economic Benefits - All Phases of Progr.un

Table 6 - Incremental Maize Production

Table 7 - Incremental Production of Groundnuts and Tobacco

Table 8 - Poultry: Incremental Costs and Benefits

Table 9 - Dairying: Incremental Costs and Benefits

FROGRAM ORGANIZATION CHART

MAP

LILONGWE LAND D-EVE±OPMENT PROGRAM - PEASE III

SLThlARY AND CONCLUSIOMS

ITn 1968/69 L-alawi ermarked on the first of its intensive rural,efc.ieerent projects, the Lilongwe Land Development Program (LLDP) which

ti.- to,- .t he paterr. of the cou try's strategy in assisting the country's-t r for the remainder of the decade and into the 1970's. TMe

'P i ,n tne central region -arid ncw completing its second phase hasbe v.-'.a.ed Iwfith iDA assistance and has been f'ollowed (19 69/70) by the

cv Deve-.op-aent -Eroject ±n the southern region no.T in its sezondck..a, e Xrcnga Development Project (1972/73) in the northern regi4n in

A. .-;t phase botlb a-so assisted by IDA, and the Salima Lakeshore Develoy:, ~,, W 9 t os ssited y th el e-I Federal Republic of Germany.

All of t'.hese four projects are characterized by the provision ofinVfr's-uctssre., eaztension and farmer services within relatively con'.>&stec

at t<-"cr completion, it ,s' expected that some 1 million peovi.: ,.iila-n en!azlefi tted from them. While the intensive Projects have made signifca-.it cont- iblt-o10n bloth to institution-building and improved production andSt 4srd S livi ng for large numbers of people, nearly three-quarters of

alae.^t populatIon still remain unaffected by these developments. It isnereesary,, thereiore, to adopt a strategy which will promote more broad-basedde-velor,menc irn an expeditious manner. With the objective of providing improvedt,r)dctIen opportunities to the rest of Malaw7i's farm population over a 20-yearperiod, a Bank agriculture sector mission identified in 1973 the possibilities0v, .- Nmore extenmsive type of development which has become knowrm as the Nationa-1?:&;-c.D. Derclopmrent Project (NPDP). This is now under active discussion with

o7erme.netx and is likely to form an important part of the Bank's futurec.sr5bution. to this sector.

The proposed Project would constitute the third and final phase ofstarted in 1'368j69 with the aim of increasing crop production and farm

xnecŽncs oiler the program area. With the completion of Phase II in 1974/75yi _ eex-pected that of the gross program area of 1.2 million acres (874,000ac^es Oc''4 e6d by rmallholders) infrastructure and extension services would

;,>, .>en .rovvded to serve 664,000 acres through 25 unit centers and thata L) 3J. tfarmn(rers o£ the area's 109,000 total would have been reached wTith

c:,Z u*ptlts.The Project over a three year period would thus prov-7de0r 05 tinit centers, roads, conservation works, boreholes and

-- st., tihe last to be establisthed by the Agricultural Development andMarketing Corporation (ADMARC)) ancl extension serving an additional 21,00)0acrf.s snn Drovriding improved inputs to 32,000 more farmers making a totalott >9 000Q hby 1977/73. In addition, the Project would provide continuedserrico-. to units established under earlier phases but not yet fully developed,f7:r land dlemarcation and registration of 270,000 acres, for the contirnued

t

development of the Dzalanyama ranch and associ ated stall feeder scheme, arndwould introduce s.aall prograrns for poultry and dairy development. It wouldalso introduce a program of improved health services throughout the prog-ramarea and provide funds for continued program evaluation and the prepara.ionof the proposed NRDP.

(iv) The Miniistry of Agriculture and Natural Resources (MANR) woul.'-have overall responsibility for the Project which would be implemented ':hroughthe LLDP staff, with the health component administered by the Ministry of Healtr.ADMARC would contitnue to supply seasonal inputs and to purchase farmer t ;

produce, while the Departmerit of Animal Health and Industry would assis- thesmallholder egg and milk production programs.

(v) An IDA credit of US$8.5 million is proposed which would cover theforeign exchange component (US$5.4 million) and about 46% of local costs, orabout 70% of total Project costs of MK10.1 million (US$12.1 million). TheUnited Nations Capital Development Fund (UNCDF) would contribute US$1.6million or 13% of project costs. Government's contribution would total US,$1.0million or about 8.5% of total Project costs, and ADMARC (stores and markets),the Dzalanyama Rarvch, and farmers downpayments together would contribute theremaining US$1.0 million (8.5%). Project costs and financing are net of alltaxes except personal income tax on salaries which is immaterial.

(vi) Vehicles, machinery and equipment, in orders exceeding US$30,000would be procured by international competitive bidding in accordance withBank/IDA guidelines; orders would be bulked whenever possible. Procurenmn~rtof farm inputs and other recurrent supplies would be subject to local co.1-petitive bidding. Civil works wou'd be constructed either under contraci:sawarded on the basis of competitive bidding advertised locally, or by Go.'ern-ment or LLDP force account. Boreholes would be constructed by the Geolo,;.icalSurvey Department of the Ministry of Agriculture. These methods of procure-ment and construction have proved the most economical and satisfactory iithe past.

(vii) The Project would provide increased production of maize, groun.r:nits,tobacco, beef, milk and eggs. At the end of the three-year Project pericdthe incremental annual crop production would be 56,000 short tors of mai:e,4,000 short tons of groundnuts, 1,000 short tolls of tobacco, 100 short tCas;of beef. 40,000 gallons of milk and 2.5 -million eggs. Crop and livestockproduction would not achieve their full. production levels until 1985 and 1983respectively. At full development the program's incremental annual produ-t:ionwould be 184,000 short tons of maize, 13,000 short tons of groundnuts, 1, :) short tons of tobacco and 395 short tons of beef. Non-quantifiable benef tswould include improved health services, and benefits from the land demarc:itionand registration program.

- iiti -

(viii) The economic rate of return of the Project would be 18% over atwenty-five year period. The major risk facing the Project would be thatincreases in fertilizer prices would reduce fertilizer use with corseGuentreductions in crop yields: a 10% reduction of benefits would reduce theProject's return to 14%. The rate of return for all three phases of thetotal program is estimated at 13%. As a result of the Project and programthe annual income of a typical farmer cultivating 4.5 acres is expected toincrease from MK101 to MYb142 over a three year period, that of a farmercultivating 2.5 acres would increase from MK48 to MK70, while the income ofone cultivating 8 acres would increase from MK 179 to MK273. Additionalincremental income would accrue to the smaller number of farmers participatingin the beef, dairy and poultry production programs. More than any othersignificant income group in the LLDP area, the Project would benefit the 24%of farmers cultivating less than 3 acres and earning half the national averageincome. Such farmers woulad increase their income from crops by 46% as aresult of the Project.

(ix) With the end of the Project, the provision of the program's in-frastructure and basic services would have been completed and Governmentwould then assume responsibility for the cost of continuing operations, assetmaintenance and incremental farm credit, expected to result in full develop-ment in 1985/86 with 134,000 farmers participating. Assurances were obtainedat negotiations that Malawi Government would not later than September 1, 1976,submit to the Association satisfactory proposals for the continued administrationand financing of the program's operations.

(x) Since 1964 Malawi has received eleven IDA credits totalling US$76.6million. Five of these credits - two for each of LLDP and Lower Shire andone for Karonga - have supported integrated rural development schemes. Othercredits have been for road development and engineering, power, education andfor transport engineering and services connected with a wood and pulp project.Project implementation has been one of the best in East Africa, although dueto world price escalations and currency revaluations, costs overruns areexpected on Karonga and one of the two power projects. Progress under theLilongwe program has been generally satisfactory, and most development targetshave been achieved ahead of schedule.

(xW) Subject to the required assurances, the Project would be su-itablefor eSn IDA credit of US$8.5 million.

MALAWI

LILONGWE LAiND DEVELOPMENT PROGRAM- - PHASE III

I. INTRODUCTION

1.01 In 1968/69 Malawi ernbarked on the first of its intensive ruraldevelopment projects, the Lilongwe Land Development Program (LLDP) which wasto set the pattern of the countryts strategy in assisting the country's smallfarmers for the remainider of the decade and into the 1970's. The LLDP situated4n the central region and now completing its second phase has been financedwith IDA assistance and has been followed (1969/70) by the Shire Valley Develop-ment Project in the southern region now in its second phase, the Karonga Devel-opment Project (1972/73) in the northern region in its first phase, both alsoassisted by IDA, and the Salima Lakeshore Development Project assisted by theFederal Republic of Germany.

1.02 All of these four projects are characterized by the provision ofinfrastructure, extension and farmer services within relatively concentratedareas and, at their completion, it is expected that some 1 million people wouldhave benefitted from them. While the intensive Projects have made significantcontributions both to institution-building and improved production and stand-ard of i-ving for large numbers of people, nearly three-quarters of Malawi'spopulation still remain unaffected by these developments. It is necessary,therefore, to adopt a strategy which will promote more broad-based developmentin an expeditious manner. With the objective of providing improved productionopportunities to the rest of Malawi's farm population over a 20-year period,a Bank agriculture sector mission identified in 1973 the possibilities ofa more extensive type of development which has become known as the NationalRural Development Project (NRDP). This is now under active discussion withGovernment, and is likely to form an important part of the Bank's futurecontribution to this sector.

1.03 Since 1964 Malawi has received eleven IDA credits totalling US$76.6millior. Apart from five credits for the rural development projects - twofor Lilongwe, two for the Lower Shire and one for Karonga-other credits havebeen extended for road development and engineering, power, education and fortransport engineering and services connected with a wood and pulp project.Project implementation has been one of the best in East Africa, although inpart owing to price escalation and currency revaluations, cost overruns areexpected on both the Karonga project and one of the two power projects (TedzaniII). Progress under the Lilongwe program hias been generally satisfactory;most physical targets have been achieved ahead of schedule although crop yieldshave not reached expected levels. These and other aspects of the program arediscussed in Chapter III.

-2-

1.04 The proposed Project was prepared by Government with the assistanceof the IBRD Regional Mission in East Africa. This report is based on thefindings of an appraisal mission which visited Malawi in May/June 197g. com-posed of Messrs. U. Mbanefo, K. Niemann and H. van Voorthuizen (IDA).

-3-

II. BACKGROUND

A. General

2.01 Malawi, a landlocked country in Southeast Africa, is bordered onthe south by Mozambique, on the northwest by Zambia and on the northeast byTanzania. It has a total land area of about 36,000 square miles, and thecurrent population, estimated at 4.8 million, is increasing at about 2.6%per annum. About 90% of the population lives in rural areas, but the urbanpopulation is now estimated to be increasing at twice the rate of the ruralpopulation.

2.02 Between 1965 and 1973 Malawi's gross domestic product (GDP) at con-stant prices grew by an average of 8% per year to reach K429 million (US$515)in 1973. Per capita income grew at an average rate of 5.5% in the same period,reaching K88 (US$105) in 1973. In 1972/73 Government was for the first timeable to finance recurrent expenditures out of current revenues, and it isexpected that future ordinary budget requirements will be fully met fromdomestic sources. Development expenditures, however, are expected to continueto be heavily dependent on foreign sources of finance.

B. The Agricultural Sector

2.03 Agriculture is the most important sector in the Malawi economy,contributing about half of GDP and employing about 9$> of the ruralpopulation. The average rate of growth at current prices in the past 5 yearshas been about 8% compared with about 12% for total GDP. Agriculture accountsfor 95% of total export earnings; in 1973 the main export crops were tobacco(44%), tea (21%), groundnuts (10%), maize, sugar, rice and cotton.

2.04 About 82% of the total land area is held under customary tenure;about 2% is either freehold or leasehold estates or plantations, with remain-der state land mainly devoted to forests and national parks. Holdings aregenerally small (averaging about 3.5 acres), and their size is dictated inpart by the scarcity of additional cultivable land. Average population den-sity is 137 per square mile although it exceeds 280 per square mile in themost productive areas of the Central and Southern Regions. Customary tenureor usufruct, generally vested in the family unit gives the right to cultivateand harvest crops, but not to exclusive grazing or to mortgage or sell theland. As a first step in land tenure reform, Government in 1967 enactedlegislation which provides the legal and institutional framework for theclassification, registration and utilization of land. Over the past decadeincreased food requirements have been met mostly through an expansion ofcultivated area. This in turn has meant that land more susceptible to erosionhas been cultivated, and that fallow periods have been reduced. In view ofthe current need to maintain soil fertility and to reduce land pressure, theemphasis of agricultural policy is now on increased productivity.

-4-

, .05 Smallholder production accounts for over 87% of all agricultixralproduction. Maize is by far the most important crop, occupying 80% of allcultivated land; other major food crops are pulses, groundnuts and cassava,and co a lesser extent rice, sorghum and wheat. The export value of s?nall-older crops (mainly groundnuts, rice, fire-cured tobacco, cotton, pul:!es3nd maize) has grown from MK12.2 million in 1964 to MK28.2 million in i972though x'ith considerable annual fluctuations. Some production increaseshave been achieved within the major development projects. Elsewhere produc-Lion has been hampered by a lack of credit and farm inputs, as well as by ascarcity of trained staff.

2.06 Estates represent only 2% of the cultivated area, but account foraDout 13% of total agricultural production and slightly over half of agricul-tural exports (notably tea and tobacco) which have increased from MK10 m:Lllionin 1964 to MK(24 million in 1972.

2.07 The total number of cattle within Malawi was estimated at 580,000head in 1973, with an offtake rate of about 9%. Only about 10% of ruralfamilies own any catt:le, although many own some goats and poultry. In thepast the Department of Animal Health in the Ministry of Agriculture hasaimed to expand livestock production through the introduction of more pro-ductive cattle breeds, through artificial insemination and selective breed-lng to upgrade the lcocal Zebu cattle, and through a disease control programaic-.ed at the eradication of Foot and Mouth Disease, East Coast Fever andtuberculosis in cattle and to guard against Newcastle Disease in poultry.Other programs undertaken by the Department include a chicken distributionand egg production and marketing program, and a stallfeeder program forsmallho1der producers.

C. Agricultural Services

2Q08 The Ministry of Agriculture and Natural Resources is primarilyresponsible for the provision of services to the agricultural sector. Itooerates through four departments, Extension and Training which providesfarmer services throughout the country, Animal Health (para. 2.07), Researchwita particular specialization in agricultural economics, cattle breedingand pasture improvement, and the Technical Services Department which super-vises land use planning, settlement schemes and irrigation programs. ThiMinistrv is also responsible for the four major agricultural developmentprojects (para 1.01). Almost all organized smallholder credit in Malawi isprovided through these projects.

2.09 The Ministry of Agriculture also exercises general supervisionover the activities of the Agricultural Development and Marketing Corpor<-:.tion(ADMARC) - the most important institution involved in the marketing of sr,aLl-holder produce. ADMARC buys, stores, processes and markets (both locally andabroad) all marketable cotton and tobacco grown in Malawi and is also emyoweredto purchase all produce grown on customary land; for the latter ADMARC vcews

-5-

itself only as a residual buyer of smallholder produce, purchasing only thatoutput which farmers choose to market through it. A large amount of marketedsmallholder produce is either sold or bartered among the farmers themselves,and ADMARC's maize purchases, fo_ example, represent only a small proportionof the marketed total. In addition ADMARC implements Government's pricepolicy and supplies inputs to smallholders. Commodity prices are establishedby ADMARC (with the Approval of the Minister of Agriculture) and its officialprice list includes most cash and subsistence crops. In recent years ADMARChas accumulated substantial crop marketing profits particularly from tradingin tobacco, cotton and groundnuts and these have been applied to a variety ofdevelopment projects. ADMARC also devotes part of its turnover to a price-equalization reserve to stabilize domestic commodity prices, and maintains asmall food reserve stock. For these purposes it maintainIs 52 main storagedepots, over 700 temporary produce buying stations and in addition it operatestobacco and groundnut grading centers and seed production farms. ADMARC alsosupplies fertilizer, seed, and agricultural equipment to smallholders. Govern-ment formerly subsidized fertilizer prices to smallholders from the developmentbudget. These subsidies are being phased out, and current policy is to maintainfarmer incentives through higher crop prices rather than througlh input subsidies.

2.10 Other institutions involved in the marketing of smallholder pro-duce include the Cold Storage Company which is responsible for Governmentprice and stabilization policies in the livestock sub-sector. It is a resi-dual buyer of cattle at official auctions, and currently handles about 20%of the cattle marketed. The Danish-financed New Capital Dairy Company atLilongwe purchases milk from smallholders for bulking, processing and dis-tribution.

-6-

III. rHE LILONGWE LAND DEVELOPMENT PROGRAM

3.01 The Lilongwe Land Development Program (LLDP) is a three-phase in-tegrated developr.ent schemne covering an area of approximately 1.2 millionacres of which about 870,000 acres are cultivated by smallholders, and inwhich 101,000 1/ farm families are estimated to live. The program wasdesigned with the aim of increasing the production of the major farm crol)s,mainly naize, groundnuts and tobacco, and thus the incomes of farmers livingwithin the program area. This was to be achieved through the phased imple-mentation of an intenisive program providing substantial infrastructure andimproved farmer serviLces planned to cover the entire program area over 13years. New infrestructure provided under the program includes crop extractionroads, administrative centers, market facilities and boreholes, and farmerservices provided include improved extension and marketing, and credit andinput supplies. In addition comprehensive soil conservation measures havebeen undertaken, and a program introduced to survey, demarcate, and registerfarmers land.

A. The Program Area

3.02 The program area lies to the west and south of Lilongwe, the newnational capital and the main trading center of the Central Region. Most ofthe area is at altitudes of 3,500 to 4,000 feet above sea level, with theaverage temperatures ranging from 6o0F to 74°F. Rainfall varies between 25and 43 inches per annum, the majority of which occurs during the December-March rainy season. The well-drained red clay to sandy loam soils are :;light-ly acidic and generally have adequate nutrients, but with continuous crcippingthey need some fertilizer to maintain yield levels.

3.03 With an estimated populatioin density of about 305 per square nile(more than twice the national average), the average farm size within th.program area is about 4.5 acres; cropping patterns vary, the most imporlantcrops being maize, groundnuts and tobacco. In 1973/74 it was estimated thatof the total program area under cultivation, 62% was planted to maize, 22Z. togroundnuts and 13% to tobacco, with 3% to other crops. Most crops are Frownon ridges, and nearly all preparation, planting and weeding are carried ou1tby hand labor, as alsD is harvesting, threshing and groundnut shelling. Afew of the more prosperous f-armers lia e purchased ox-carts and maize mill:.The use of fertilizer has increased substantially over the past few yearswith the increased availability of program credit facilities. More tha. hialfof the farmers now own some small livestock; over 80% of them keep poultryand about 25% of the farmers have some cattle.

1/ With a 2e6% per annum population- increase, the program area is expectedto contain about 134,000 farm framilies by 1985/86.

-7-

3.04 For development and administrative purposes the area has been dividedinto units of approximately 20,000 acres each. There are two types: standardunits (in areas of higher potential) which would eventually cover about 661,000acres and modified input units (of lower potential land 1/), on about 213,000acres. The LLDP Program is phased to bring some new units into the programeach year, and the rate of development of the various program activities thusvaries considerably. Initially, a unit center comprising offices, staffhousing, a borehole and a shopping center is constructed to serve as the basefor program activities: in those units where marketing facilities are irnade-quate, a marketing and store center independently administered by ADMARC isalso established. Once unit centers have been completed, a wide range ofextension, credit and other farmer services in the area served are thenintroduced.

3.05 Originally, it was envisaged that the entire program area wouldcover about 500,000 acres and the first phase project included investmentfor all the equipment and 0O0% of the administrative structures for this area,as well as provision for extension training and credit services for the pur-chase of fertilizer and improved seed for farmers over 163,000 acres. Thefirst project (IDA Credit of US$6 million) thus provided for the establishmentof 14 unit centers, 630 miles of crop extraction roads, 125 boreholes, and11 permanent markets with a 8,500 ton crop storage facility, constructed1,400 miles of diversion channels to help control soil erosion prevalentwithin the area. During implementation, most of these infrastructure compo-nent targets were in fact exceeded. The project also provided for a compre-hensive land survey, demarcation and reorganization of land holdings, andeventual registration of family plots. It was recognized that this landreorganization scheme would require extensive planning, and that it would haveto proceed more slowly than the rest of the program.

3.06 With the second phase (IDA Credit of US$7.25 million) the gross LLDParea has expanded from 500,000 to 1.2 million acres (Annex 1, page 3) and thesecond project was originally planned to extend those activities initiatedunder the first phase over an additional 240,000 acres. In fact by the endof Phase II, the total area covered by Phases I and II would be 664,000 acresinstead ot the 403,000 acres projected in the Appraisal Reports (para. 3.07).Thie Phase II project provided for a further 12 unit centers and markets, 540miles of crop extraction roads, 1,700 miles of rainfall diversion channelsand 160 boreholes. Credit and extension services were to be extended to thoseareas covered by the new unit centers and the land surveying and registrationprogram continued in both the Phase I and II areas. The second phase projectalso established the 161,000 acre Dzalanyama ranch, designed to provide up-graded feeder stock for stall fattening by selected farmers and set up aliaison committee to coordinate the program related policies of various Govern-ment agencies.

1/ Mainly in the northwestern, southern and southwestern parts of theprogranm area.

-8-

B. Achievements under Phases I and II of this Program

3.07 With the anticipated completion of the second project in June 1975,the LLDP is expected to have successfully implemented within estimated costall the physical infrastructure required to support development under :;itsfirst two phases. In particular, the construction of unit centers, rord3,diversion channels, boreholes and marketing facilities has proceeded e.iit eron or ahead of schedule and the area and number of farmers served by pxograminfrastructure has thus considerably exceeded estimates. The land registra-tion program has proceeded more slowly than expected and experience to datesuggests that the detailed planning and procedures required involves a timelag of 12 - 24 months between farm demarcation and eventual registration oftitles. The shortfall shown below in acres registered (and farmers cove-redby land registration) merely reflects this time lag. The following table,which details the main achievements of LLDP, also shows that there is at con-siderable gap between the number of farmers served by the developed unit centersand those adopting irnproved inputs through the seasonal credit program. However,the actual adoption rate is more than twice the appraisal estimate.

LLDP Phases I and II (1968/69 to 1974/75)Combined I and II

Appraisal ExpectedEstimates Achievements /2 Difference

Acres developed /1 403,000 664,000 + 261,000

Number of unit centers 26 25 - 1 /3

Number of families covered 52,000 77,000 + 25,0)COby unit centers

Farmers adopting Credit 14,000 31,000 + 17,)00

Land demarcation (acres) 403,000 408,900 + 5,900

Land registration (acres) 403,000 273,800 - 129,':;00

Number of farmers whose land 90,000 91,000 + 1,1.00has been demarcated

Number of farmers whose land 90,000 61,000 - 29,(ODhas been registered

Road Mileage 1,180 1,290 + 1 )

Number of boreholes 285 344 + 59

Number of markets 21 21 -

/1 Smallholder area served by program infrastructure./2 Estimated completion as at end of second phase project in June 1975./3 Not essential for-program. Target revised.

9 -

3.08 In contrast to the more easily verifiable data on physical develop-ment, the measurement of production increases over the first two phases hasbeen more difficult to establish. Although LLDP was among the first projectsto include an evaluation unit, its initiation after the project had beenstarted posed problems in determining base-line figures and subsequent staf-fing problems added to the intrinsic difficulties in obtaining reliable andrepresentative data. In the case of maize in particular, marketed surplusrepresents only a small proportion of total production and of that most issold or bartered privately among farmers and is therefore unrecorded. Inaddition, the project has had difficulty in determining the extent to whichestimated total incremental production has resulted from increased plantedacreage as against increased yields.

3.09 The Phase II project appraisal estimated that maize yields for thetotal program area would increase from an average of 1,000 lb/ac to 2,000lb/ac by 1979/80. This expected increase was based on total demonstrationplot yields of 7,000 lb/ac and some individual farmer average yields of3,400 lb/ac. Experience todate indicates that up to 1973/74, maize yieldsover the total program area have probably averaged about 10% below impliedtargets with yields on developed units increasing from 1,045 lb/ac in 1969/70to 1,557 lb/ac in 1971/72, declining to 1,143 lb/ac in 1972/73 (a poor sea-son climatically) and increasing again to an estimated 1,340 lb/ac in 1973174(see Annex 1).

3.10 Groundnut yield increases have clearly been more disappointing, andagainst an expected total program increase over 12 years of from 500 to 650lb/ac, actual yields have shown a decline (to 438 lb/ac on developed units).The picture however is confused as in some years, yields from 'undeveloped'areas were reportedly higher than under the developed units. Over theperiod, the price relationship between maize and groundnuts has changed infavor of the former and as groundnuts require a greater labor input, andyield increases depend mainly on improved cultivation standards, all indi-cations suggest that this crop has been relatively neglected. Empiricalevidence, however,. confirms that with the recently agreed price increase,an average groundnut yield of 650 lb/ac remains a realistic target. In thecase of tobacco, the actual yield has probably exceeded the expected 380 lb/ac(from 340 lb) and would be even higher if its cultivation was not discouragedby the quota limitation.

3.11 In so far as farmers' incomes are concerned, the shortfall in yieldsas well as cost increases have probably been more than compensated by increasesin farmgate prices, particularly in maize. Other aspects of performance underthe first two phases have been a high level of credit repayment by farmers andthe program's demonstration and design value to other projects in Malawi andelsewhere. The Dzalanyama ranch and stallfeeder scheme has been slow to takeoff due to difficulties of obtaining enough cattle to stock the ranch, but thesituation has improved in 1973/74 and is expected to go on improving in the future.

3.12 The IBRD Operations Evaluation Department has recently carriedout an audit of Phase I of the LLDP and its report is expected to be issuedsoon.

- 10 -

IV. THE PROJECT

A. General Description

4.01 The Projec:t would constitute the third and final phase of thaLilongwe Land Development Program. Over a three year investment perioIl(1975/76 - 1977/78) it would (i) continue to support extension, farmercredit and infrastructure maintenance services for those previously es:eb-lished units which have not received up to five years of LLDP developmet.and financing; (ii) provide infrastructure, extension, credit and otherservices to farmers within an additional 210,000 acres not previously de-veloped, and (iii) introduce several new services throughout the entire pro-gram area. As a result of the Project, the total influence of the programwould cover a net smallholder cultivable area of 870,000 acres (theDzalanyama ranch covers another 161,000 acres), whose 101,000 farm familiesin 1974/75 are expected to grow to 109,000 in 1978/79 and 134,000 in 1985/86.Specifically the Project would provide for:

(a) construction of 15 uiiit centers, each containing aninput store, offices and staff housing and permanentmarkets in selected centers, roads, conservation worksand boreholes;

(b) survey and demarcation of about 200,000 acres andregistration of 270,000 acres;

(c) the prcovision of incremental seasonal and mediumterm farmer credit;

(d) extension services on units not fully developed andto be developed;

(e) continued development of the Dzalanyama ranch;

(f) introdluction of poultry and egg production anddairy development programs;

(g) expansion and improvement of health facilities in theprogram area; and

(h) project evaluation and future project preparation.

The Project would be implemented by the LLDP management under the gener .1direction of the Ministry of Agriculture and Natural Resources. The hez.lthcomponent would be administered by the Ministry of Health.

Headquarters Unit

4.02 The Project would include provision to meet the incremental cap-ital as well as the operating costs of the program headquarters established

- 11 -

at Lilongwe. Project costs would include salaries for staff and supportingpersonnel, as well as vehicle operating costs (Annex 8, Table 2).

Planning and Infrastructure (Annex 2)

4.03 The LLDP Planning and Conservation Unit undertakes comprehensiveplanning and construction of most program infrastructure. The Project wouldthus include provision for:

(a) Surveys of land to be developed under the Project(Annex 8, Table 4);

(b) the construction of the remaining 15 unit centers(12 standard and 3 modified) comprising offices,staff housing, boreholes and land provision forlater community facilities;

(c) the construction of about 265 miles of new crop extractionearth roads, serving 160,000 acres;

(d) the construction and equipment of 143 boreholes pro-viding the only service of potable water within theProject area; apart from those to be constructed atunit centers, boreholes would also be drilled through-out the Project area at the rate of one per 2,000acres in standard units and one per 4,000 acres inmodified units; and

(e) soil conservation measures comprising 1,075 miles ofdiversion ditches, 160 miles of waterways and markerridging serving 160,000 acres.

Markets and Input Stores

4.04 In addition to other facilities provided at unit centers, sevenpermanent produce markets would be constructed and operated by ADMARC inthose units which do not already have adequate marketing facilities. Eachwould have facilities for weighing, grading and bulking produce, storagefacilities and ADMARC offices and staff housing. The project would alsoprovide for input stores with a 380 ton fertilizer storage capacity to beconstructed by ADM}C in each of the 15 unit centers (Annex 8, Table 5).A Marketing Officer, Development Officer and supporting staff would beprovided to oversee these market facilities. (Annex 8, Table 6).

Land Demarcation and Registration (Annex 3)

4.05 The LLDP activities include the survey, demarcation and registrationof land in all the standard units withiin the LLDP area. The Project wouldprovide for the demarcation of some 200,000 acres not covered under the pre-vious two phases, and for the registration of a total of 270,000 acres (Annex

- 12 -

8, Table 7). Because of the economic social and po_itical implicaticas ofland registration, :esultiag Erom the high value attached to land in aa agrariantcommunity land is generally not registered until about two years after it hasbeen demarcated (paragraph 3.05) and at the end of the Project period thLerewould remain up to 50,000 acres undemarcated and 114,000 acres unregistered.This would be completed by Government in the post-Project period.

Extension and Training (Annex 4)

4.06 Extension services would continue to be provided to farmers servedby units previously established for the remainder of the five year developmentperiod (when extension becomes the direct responsibility of the Ministry ofAgriculture) and to additional farmers to be served by the remaining 15 unitcenters to be established under the Project. There would be a total o:' 8extension workers in each of the standard units - a Development Officer, anAssistant Development Officer, 4 technical assistants, a livestock ass:istantand a farm home instructress - and 5 extension workers in modified input areas(Annex 8, Table 8). The staff/farmer ratio in LLDP areas under developmentwould remain at about 1:300 in standard units and 1:450 in modified inputunits declining for all units after the five year period to 1:500. The Project:would continue the current farmer training program whereby farmers and theirwives are brought into unit centers for training and demonstrations in cropstorage, home economics, etc. More formal farmer training would continue tobe carried out at the training center at Nsaru. The program training centerat Lilongwe would coatinue to offer courses for Project staff: new staffmembers would receive specialized courses in their particular fields, and allextension staff wouldl receive follow -up training at the start of each cropyear (Annex 8, Table 9).

On-Farm Credit (Annex 5)

4.07 The Projecl: would provide -funds to meet the incremental credit re-quirements of the 55,000 farmers expected to be receiving credit under WI.DPby the end of the Project period (Annex 8, Table 10). Apart from seascialcrop requirements (fertilizer, improved seed and sulphur dust) short termcredit would be proviided for the purchase of stall feeders from the DzaLanyamaranch (paragraph 4.08), dairy cattle (paragraph 4.10), and to support t:hepoultry and egg production program (paragraph 4.11), medium term credit wouldbe provided for farm equipment (ox-carts, maize mills, tobacco barns, e:c.).Credit would be administered through the unit centers; farmers receivin,,credit would be registered at the market center which supplies their inp)utsand through which they would be required to sell their produce. The pro2ramwould be directed by the Senior Agricultural Credit Officer in each uni:,with four credit assistants per standard unit and two assistants per modlifiedinput unit. Instead of an interest charge there is a markup on seasona:. inputswhich would be increa.sed from the preserit 10% to 15% in 1974/75 and to .'0% in1975/76 to cover the cost of money and the administrative costs, and toencourage participation in the newly introduced credit groups which willi. beallowed a lower marku.p. Credit for other purposes carries an interest rate of10% annually and medium-term credit i's repayable over three years.

- 13

Livestock Development (Annex 6)

4.08 The Dzalanyama Ranch. Tne Dzalanyama ranch was started under phaseII to produce young steers to be stall fed by LLDP smaliholder farmers. Al-though most of the ranch's physical development has been completed, the build-up of the necessary breeding herd has been slow due to limited availabilityof cattle within the country, and the high cost of imports. The Project wouldinclude provision for the ranch's incremental capital costs mainly for thepurchase of cows and immature steers and its net operating costs over threeyears (Annex 8, Table 12). Apart from feeder cattle to be sold to smallholderproducers (paragraph 4.09), cull cows would be sold to either local butchersor to the Cold Storage Company, and breeding heifers for dairy development(paragraph 4.10).

4.09 Stall Feeder Program. This program would be considerably expandedunder the Project (Annex 8, Table 13). About 2,200 additional farmers areexpected to participate in this scheme during the Project period. Apart fromthe provision of credit for the purchase of stall feeders (paragraph 4.07),livestock extension services would be provided to improve the production ofvillage cattle by encouraging greater use of crop residues, production andstorage of fodder crops, and controlled grazing. Artificial inseminationservices would also be expanded, and a mobile cattle market established.

4.10 Dairy Development. In response to the growing demand for liquidmilk in the LLDP area, the Project would introduce extension services toencourage farmers to keep dairy cattle. (Annex 8, Table 14). LLDP wouldprovide credit paragraph 4.07) to pay for up to two-thirds of the initialcapital requirements (2 cross-bred dairy cows, buildings and equipment)and three months' working capital. Repayments would be deducted beforefarmers were paid for their milk.

4.11 Poultry and Egg Production. Under the Project, credit and exten-sion services would be introduced to encourage production of poultry andeggs to meet increased local demand. It is expected that 120 farmers wouldparticipate and they would be selected within a five-mile radius of themilk collection points, which would also be used for egg collection. TheCold Storage Company would set up processing facilities for cull hens oncethe program is underway. Credit would be provided under the Project (para-graph 4.07) to cover fixed and working capital requirements and would berepayable over three and one-half years (3 laying cycles).

Hiealtlh Facilities

4.12 Tile Project would introduce a comprehensive health improvementscheme throughout the program area through a network of primary health centers,sub-centers and health posts accessible to every member of the community.Services provided would include preventive and curative treatment, healtheducation, maternal and child health, communicable disease control, environ-mental hygiene and collection of health statistics. Provision, would beincluded for the construction, staffing and other operating costs of sixsub-centers and 21 health posts as well as for the improvement and staffing

- 14 -

of some existing health facilities (Annex 8, Table 11). The health comnponentwould be staffed and managed by the Ministry of Health under the direct super-vision of a Senior Medical Officer with public health experience who would bebased in Lilongwe working with LLDP management. Assurances were obtained atnegotiations regarding the early appointment of the Senior Medical Off:>cerand the provision of adequate staffing for the new health facilities p :oposedunder the Project.

Evaluation and Future Project Preparation

4.13 Continued support would be provided for the program evaluationunit established under Phase I. Apart from continuing field surveys theunit would process data already collected and would aim to improve itsanalysis of the Project achievements. During negotiations, the Associationdiscussed with Government the possibility of improving the effectiveness,and defining more precisely the role of the evaluation unit, by concentratingits future activities on the collection and analysis of reliable data such ason crop yields, acreages under cultivation, number of farmers in the LLDParea, number of farmers adopting Project inputs, and farm incomes. TheProject would also provide NK 200,000 for sgro-economic surveys, landresource surveys and crop trials to help with the preparation of the NationalRural Development Project (para 1.02).

Environmental Effect

4.14 Through the construction of diversion channels and waterways theProject would reduce soil erosion prevalent throughout the Project area.The supply of potable water, public health education, environmental hygiene,communicable disease control, and the increased availability of public icealthfacilities would alsco help improve living standards over a wide area.

B. Project Cost Estimates (Annex 8)

4.15 Total project cost is estimated to be MfK 10.1 million, or US$ 2e1million, witlh a foreign exchange component of US$5.4 million (45%). Detailedcost items are estimated as follows:

- 15 -

- - MKooo - ----- US$'0oo --- - -ForeignExchange

Local Foreign Total Local Foreign Total %

Headquarters Unit 310 207 517 372 248 620 40

Planning and Infrastructure 1,371 1,421 2,792 1,645 1,705 3,350 51

Markets and Input Stores 264 119 383 317 143 460 31

Land Demarcation and Registration 147 125 272 176 150 326 46

Extension and Training 719 331 1,050 862 396 1,258 31

On-Farm Credit 479 574 1,053 574 689 1,263 55

Livestock Development:

Dzalanyama Ranch 399 181 580 479 217T 696 31

Stall Feeder Program 88 127 215 106 152 258 59

Dairy Cattle Development 9 4 13 11 5 16 33

Poultry and Egg Production 6 4 10 7 5 12 43

502 316 818 603 379 982 42

Health Facilities 346 251 597 415 301 716 42

Evaluation and Future ProjectPreparation 183 158 341 230 179 _4h09 44

Base Cost 4,321 3,502 7,823 5,194 4,190 9,384 45

Physical Contingency 311 255 566 373 306 679 45

Price Contingency 902 738 1,640 1,083 885 1,968 45

Total Project Cost 5,534 _,495 10,029 6,650 5,381 12,031 45

- 16 -

Costs have been estimated at prices prevailing as of December, 1974, and in-clude capital costs plus all operating costs. A physical contingency of 5%per annum has been allowed on staffing and 10% on all other costs. A pricecontingency equal to about 20% of base costs over the Project period has alsobeen included. These price contingencies were calculated at the followingrates: vehicles, equipment and operating costs 11% in 1975 and 7.5% in1976-1978; civil works, wages and salaries 15% in 1975 and 12% in 1976-1978Except for tax on salaries, which is not significant, project costs do not ..ncludeany tax.

C. Financing

4.16 The financing of Project costs would be shared in the followingamounts and proportions:

% ofMlK (million) US$ (million) Total Cost

IDA 7.1 8.5 70

UNCDF 1.3 1.6 13

Government 0.8 1.0 8

Farmers 0.2 0.2 2

Dzalanyama Ranch 0.2 0.2 2

ADMARC 0.5 0.6 5

Total 10.1 12.1 100

The Proposed IDA credit of US$8.5 million would be on standard terms toGovernment. It would f:inance the foreign exchange costs (US$5.4 million)and about 46% of local costs, or about 70% of total Project costs. TheUnited Nations Capital Development Fund (UNCDF) would contribute a grant ofUS$1.6 million towards t:he financing of the capital elements of the health(US$0.8 million) and credit (US$0.8 million). components amounting to about13% of total Project costs. The farmerst contribution would be in the fonlof downpayments on credit purchases of farm inputs. The ranch is expectedto defray US$295,000 of its expenses out of its own revenues. ADMARC'scontribution would be for the construction of 15 input stores and 7 market,with offices and staff housing, and includes a proportionate share of thetotal provision for contingencies.

- 17 -

D. Procurement

4.17 Vehicles, machinery and equipment, (US$1.3 million) in ordersexceeding US$30,000 would be procured by international competitive biddingin accordance with Bank/IDA guidelines; orders would be bulked wheneverpossible. Procurement of farm inputs, drugs and other recurrent supplieswould be subject to competitive bidding advertised locally. Civil works(US$1.7 million) would be constructed either under contracts awarded on thebasis of competitive bidding advertised locally, or by Government or LLDPforce accotnt. Boreholes (US$0.4 million) would be constructed by theGeological Survey Department of MANR and markets and input stores (US$0.6million) by ADMARC. Construction of staff housing, offices, roads andbridges, as well as soil conservation works (US$2.2 million) would be under-taken mainly by LLDP force account. This procedure has proved a satisfactoryand efficient way of providing the agricultural expertise required for con-servation works, and fully utilizing existing construction capacity.

E. Disbursement

4.18 Disbursements of funds from the Credit account would be on thefollowing basis:

(a) 85% of total costs for civil works excluding thehealth facilities; and

(b) 100% of foreign exchange costs or 85% of local costsfor other costs except vehicles, equipment and drugs forthe health component, and incremental seasonal and meditw2term farm inputs.

All the items mentioned in (a) and (b) are (detailed and individually costedin Annex S. Disbursement against (a) and for vehicles, machinery anciequipment would be fully documente(l. Disbursement against all other costswould be mlade against certiLicates of expenditure endorsed by the LLDP ProgramManager, the documentation for hiich would not be submitted for review butwould be retained by the Government and available for inspection by theAssociation during the course of supervision. The estimated schedule ofdisbursement is at Annex 9. Any funds remaining in the Credit account at theend of the Project would be reallocated witlh the approval of the Association.As the Association is going to approve all Malawi Government claims for re-imbursement (including re-imbursements by UNCDF), there should be no difficultyin ens-uring that every such claim is correctly allocated either to theAssociation or to UNCDF.

- 18 -

F. Accounts and Audit

4.19 LLDP would continue its present accounting procedures for a:1project costs, subject to improvements now being introduced by the Fialan-cial Controller for IDA projects in Malawi. Individual accounts wou1cbe maintained to reflect costs for the various project components listedin para. 4.01, except the health and NRDP components, which would be re-corded by the Ministry of Health and MANR respectively. Program, Government,and ADMARC accounts would continue to be audited by independent auditorsacceptable to th.e Association, and would be submitted to IDA within six monthsof the end of each fiscal year. Assurances on the above were obtained duringnegotiations.

- 19 -

V. ORGANIZATION AND MANAGEMENT

Organization

5.01 The Ministry of Agriculture and Natural Resources (MANR) would haveoverall responsibility for implementing all aspects of the project, apart fromthe health component, which would be the responsibility of the Ministry ofHealth. MANR responsibility vwould be exercised mainly through LLDP manage-ment, with ADMARC supplying seasonal inputs and purchasing farmers' produce,and the Department of Animal Health and Industry staffing the smallholder eggand milk production. No changes are envisaged during Phase III in the organi-zational structure of the LLDP management itself. The program would continueto be administered through five divisions under the Program Manager coveringrespectively, evaluation, survey and management support; construction; financeand credit; field development services; and institutions and administration.Further details of the organizational structure and functions are in theorganization chart (IBRD 9121).

Management and Staff

5.02 Since its inception, LLDP, as most other major projects in Malawi,has depended heavily on expatriate staff, most of whom are on short termcontracts. Efforts to train more Malawians for senior positions in the Projecthave been hampered by a shortage of university graduates. The Government hastherefore designed a staff development program which includes the expansionof the training facilities at Bunda Agricultural College, participation of8 Malawians in the three-month courses sponsored in Swaziland by the Common-wealth Development Corporation, post-graduate training for agriculturaleconomists, and on-the-job training programs for other senior staff members.These training efforts would ensure that by 1979 all but 3 of the more than15 super scale and professional posts in LLDP would be occupied by Malawians,and enough trained Malawians would be left to substantially meet the projectedstaff needs elsewhere in the agricultural sector. Governments and the Asso-ciation would consult on any new appointments to the posts of Program Manager,Financial Controller and Principal Agricultural Officer.

5.03 At the completion of the Project, it is anticipated that theprogram management would be absorbed into MANR, though it is probable that,at least initially, the post of Program Manager and three divisions coveringfield development services, finance and credit, and administration would beretained. The proposed administrative organization would form part of thetransfer arrangements which Government would propose (para. 5.05).

5.04 No significant increase in tlhe number of junior construction staffor labor is expected during Phase IIT. It would be necessary, however, toemploy and train about 10 credit staff and about 60 junior extension staff.There would be no difficulty in recruiting secondary school leavers or intraining them, either in LLDP's Staff Training Center or at Colbv College.Applications for these positions generally exceed the number of vacancies.

- 20 -

Intermediate level staff of the Technical Officer and Senior Technical Ji-ficergrades are usually promoted from within the LLDP or the MANR. About 12 ofsuch staff would be needed for the new unit centers proposed under the Pr-oject.Sufficient experienced staff exist either in LLDP or elsewhere in the country,to enable these posts to be filled by promotion. After Phase III the namberof junior staff and labor is likely to be progressively reduced by about 50%with the completion of all construction, earthlworks and land demarcatio:i; itis anticipated that those released from the program would subsequently beemployed on other projects including the proposed National PRu-a" DevelopmentProject (NIRDP).

LLDP Administration after the Project (Annex 10)

5.05 LLDP was designed as a three-plhase program to establish a deliverysystem for the provision of extension services and credit for improved agri-cultural inputs throughout the Lilongwe area. By the end of the Projectperiod that delivery system would be complete, and the projected increases inproduction and farmer incomes should be achieved without significant newcapital investment. The program area is not expected to achieve its pro-jected maximum crop production until 1985186, however, and there is there-fore a need to maintain a skeletal administrative structure, staff, equipmentand farm inputs to continue these services in the program area after theProject's completion. Government is preparing proposals for post-projectadministration, but no arrangements have yet been proposed for the continuingadministration of sma]lholder credit. Consequently, assurances were obtainedat negotiations that Government would inform the Association by September 1,1976, of comprehensive proposals acceptable to the Association for admin-istering post-Project agricultural services, including credit to farmers.The cost to the Malawi. Government is estimated at about K750,000 (US$900,000)a year for operating expenses and equipment replacement and about K90,00;3(US$108,000) a year for the recurrent costs of the health facilities. IThaddition, at full development, fertilizer and other inputs would cost ab,::PutK3 million annually, requiring additional credit funds rising to aboutMK500,000 (US$600,000) by 1985/86. These costs are all estimated at constant1974 prices. Government is aware of these costs and recognizes its obli>;arionto finance them. Government projected cash flow statements (Annex 14) stLowthat the funds to be generated by the Project would be more than sufficientto meet these expenses.

- 21 -

VI. PRODUCTION, MARKETING, FARMER'S BENEFITSAND EFFECTS ON GOVERNMENT BUDGETS

A. Yields and Production

Crops

6.01 Under the Project, the average yields of a typical 4.5 acre farmeradopting improved inputs are expected to increase over three years as follows:maize from 1,000 to 1,900 lb/ac. groundnuts from 450 to 650 lb/ac and tobaccofrom 340 to 380 lb/ac. These estimated individual farmer yields are consideredrealistic having regard to experience under the earlier phases, 1/ the changedfarm-gate price relationship (favoring groundnuts)., continuing technologicaldevelopments and improving LLDP extension experience.

6.02 Crop production is expected to increase, as a result of the aboveindividual yield increases, and as more farmers adopt improved inputs andtechniques. Phase III expenditures would increase production not only inPhase III areas, but also in areas developed under Phases I and II. Duringthe 3-year Project period, crop productioni in all these areas is expected toincrease from 185,000 short tons (1974/75) to 241,000 short tons for maize,from 27,000 short tons to 31,000 short tons for groundnuts, and from 10,000short tons to 12,000 short tons for tobacco in line with projected demandwithin the limits imposed by national quota. Compared with previous esti-mates, these are conservative projections based on experience gained duringPhases I and II. For example, whereas Pihase II project estimates assumedthat 85% of project farmers would fully adopt modern inputs within 5 years,the above estimates assume a 75% adoption rate, and that this would take 8years to achieve.

Livestock (Aninex 6)

6.03 With the accelerated expansion of the Dzalanyama Ranch anticipatedduring the Project, the number of steers supplied by the ranch to farmersfor fattening would increase from 300 in 1974/75 to 1,100 in 1977/78, thusincreasing the beef output of the stall-feeder program (from 75 short tons to200 short tons per year). The number of cull animals produced by the ranchis also expected to increase from 300 to 550 per year. Smallholder dairyinkand poultry efforts would produce about 40,000 gallons of milk and about 2.5million eggs annually by 1978.

1/ These individual yields of farmers adopting improved inputs should notbe confused with actual yields achieved under Phases I and 11 (paragraph3.09) whicih represent average yields of farmers, both adopters and non-adopters, in units under various stages of development.

- 22 -

6.04 Crop and beef production in the LLDP area are not likely toachieve their anticipated maximum potential until about 1985 and 1983 respec-tively, although the infrastructure necessary for such achievement wol.l havebeen completed by tide end of Phase III. At full development the total ..LDParea is expected to show annually, an incremental production of 184,0(.;0 shorttons of maize, 13,000 short tons of groundnuts, 1,500 short tons of tobalccoand 395 short tons of beef, compared with projections without LLDP (Arnnex 15,Tables 6 and 7). These represent increases of 98% for maize, 43% for ground-nuts, and 15% for tobacco.

B., Markets and Prices (Annexes 11 and 12)

Markets

6.05 Sufficient demand is projected for all Project output, and wellorganized marketing arrangements already exist for them. ADMARC would buymaize, mostly for consumption within the country and groundnuts and tobaccomost of which would be exported. The Cold Storage Company (CSC) would buybeef, which although now almost wholly required for domestic consumption,could be exported. Egg marketing, now undertaken by the Department of AnimalHealth and Industry, would eventually be taken over by the proposed Egg Market--ing Board. The New Capital Dairy would buy and process milk for consumptionwithin Malawi.

Prices

6.06 The existing mechanism, whereby prices of all Project output arefixed by parastatal organizations and approved by Malawi Government, isexpected to continue;; ADMARC's pricing policy and price list as of July 5,1974, are at Annex 11. The maize purchase price has been increased in lS'74,with a view to maintaining farmers' incentives following recent increases inthe world prices of fertilizer and maize. As of July 15, 1974, CSC's officialbeef buying prices ranged from 15 tambala per lb for commercial grade t1) 24tambala per lb for choice grade beef.

C. Farmers' Benefits (Annex 13)

b.07 The Project would extend LLDP extension services and inputs tc32,000 farm families who have not previously directly benefited from LLIPand some 75% of the Project's recurrent expenditure would continue to benefitfarmers covered under the earlier phases, many of whom are estimated to hivenot yet reached their expected full production potential. For a typicalfarmer cultivating 4.5 acres, annual net income from maize, groundnuts aad

tobacco would increase over three years from K101 to K142. The income cf afarmer cultivating 2.5 acres would increase from K48 to K70, while an 8-acrefarmer's income would increase from K179 to K273. About half of LLDP farriersgrow between 3 and 6 acres of crops, about one quarter grow less than 3 acres,while the remaining oIne quarter have more than 6 acres. These income estimates

- 23 -

include subsistence. About 120 farmers are expected to take up egg productionyielding an annual net income of K231 while dairying would produce an additionalnet income of K107 per year for about 60 farmers. All these income estimatesare at constant 1974 prices.

D. Effects on Government Budget (Annex 14)

6.08 The Government cash flow arising out of the Project (Annex 14,Table 1) shows that there would be a cumulative surplus from 1978/79 whilethat for the total program (Table 2) would show a cumulative surplus from1977/78. Post-Project Government expenditures for the program includecontinuing operating costs (including that of the health program) and fixedasset replacements which in total and at constant prices are expected todecline from about K 950,000 in 1978/79 to K 850,000 in 1984/85, and theincremental resources for the credit fund requiring a total increase overthe period of about K 500,000. During this period the most significant revenueitem is the projected ADMARC net surplus realized from its marketing of farmer'sproduce under the program which is estimated at constant prices to increase fromabout K 850,000 in 1978/79 to about K 1,250,000 in 1984/85. This surplus isfreely available to Government.

- 24 -

VII. ECONOMIC BENEFITS AND JUSTIFICATION(Annex 15)

7.01 The primary benefits of the Project would be the increased produc-tion of maize, groundnuts, tobacco and beef, and in addition small pro,::uctionincreases in milk and eggs. Based on IBRD forecast internatlonal prici:s, theProject's internal economic rate of return to the economy (IER) is estimatedat 18%. IER of the ranch and stall-feeder program is estimated at 11% if allcosts and benefits are included, and 22% if costs and benefit prior to 1975/76are treated as sunk costs and benefits. No hiring of labor for farm operations;is envisaged. Family labor, whose employment may be slightly increasec: ?zythe project, is shadow-priced at zero cost because there is practically :noalternative employme:nt for such labor.

7.02 The risks most likely to affect the Project's rate of returnwould be lower production levels arising from abnormally adverse climaticconditions, or through lower than expected fertilizer use (despite increasedmaize prices which are expected to fully offset increased fertilizer costs).A 50% reduction in maize yields (and fertilizer use) would reduce the IERto 12%. A 10% reductiLon in benefits would reduce the rate of return to 14%,and this combined with a 10% increase in costs would reduce the return to 11%.

7.03 At the end of the Phase III Project, the LLDP infrastructure anddelivery system would. virtually be completed, providing an intensive extensionservice and modern farm inputs to some 109,000 farm families in 1977/78increasing to 134,000 families in 1985/86. At full development in 1985,'86the program's total incremental production is estimated to be 184,000 s:Lorttons of maize, 13,000 short tons of groundnuts, 1,500 short tons of tob.cLcco,and lesser quantities of beef, milk and eggs which would help meet the .row-ing internal needs of Malawi and also contribute to exports. Based on P.herevised estimates reflecting experience to date (including more conserv.. tiveyields and adoption rates) assumed in this report, the IER for all thre: phasesof LLDP is now estimated at 13%.

7.04 Both the program and Project analyses, exclude the benefits ofLLDP's land registration and health programs and senior staff trainingscheme, whiich are expected to be considerable. In addition, the progranvwould continue to provide a successful demonstration of rural development whichhas already attracted wide interest, and it would also provide a valuable basefor planning, launching and administering the proposed National Rural Develop-ment Program.

7.05 More than any other significant income group in the LLDP area, t:heProject would benefit the 24% of farmers cultivating less than 3 acres, lnldearning about half the national average income. Such farmers would incr2asetheir real income frora crops by 46% as a result of the Project.

- 25 -

VIII. RECOMMENDATIONS

8.01 During negotiations, assurances were obtained on the followingprincipal issues:

(a) A Senior Medical Officer with public health-experience to bebased in Lilongwe would be appointed by Malawi Governmentwithin 6 months of credit signing, to supervise the implemen-tation of the health component (paragraphs 4.12).

(b) Government would inform the Association, not later thanSeptember 1, 1976, of proposals satisfactory to the Associationfor administering project activities and assets after theProject period (paragraph 5.05).

(c) Government would consult the Association on any new appoint-ments to the posts of Program Manager, Financial Controllerand Principal Agricultural Officer (paragraph 5.02).

8.02 Subject to the above assurances, the Project would be suitable foran IDA credit of US$8.5 million to the Government of Malawi.

ANNEX 1Page 1

MALAWI

LILONGWE LAND DEVELOPMENT PROGRAM - PTHASE III

The Lilongwe Land Development Program

A. Background

The Lilongwe Plain

1. The Lilongwe Land Development Program is located on the LilongwePlain in Malawi's Central Region. The topography and the good, red-brownloam soils of the plain makes most of the area suitable for cultivation.The best soils on the upper and middle slopes are deep and well drained.Maize is the main food crop and is grown on about 60% of all cultivatedland. Groundnuts and dark fired tobacco are important sources of cashincome for the farmers. Associated with the good hill soils are largetracts of shallow valleys, locally known as dambos, which are made up ofheavy alluvial black soils with impeded drainage conditions. Dambos occupyabout 20% of all land and are traditionally communal land used mainly forcattle grazing. A better utilization of dambos - as through improvement ofthe pastures - appears to be feasible but little progress has been made sofar because the dambos are traditionally communal land.

Original LLDP Area

2. The forerunner of the Lilongwe Land Development Program was theTsabango Pilot Scheme which was started in 1965 with British aid. It in-volved the building of crop extraction roads, intensive extension advicebacked up by the availability of improved seed and fertilizer and thecreation of Village Planning Committees to stimulate agricultural andgeneral community development within the villages.

3. Subsequently, a 500,000 acre program area was defined by theLilongwe Land Development Order of 1967. The Lilongwe area was selectedbecause its agricultural potential was considered to be the highest of anyregion in Malawi. The population density was about 250 per square mile in1966, or twice as high as the national average. The soils were among themost fertile in the country and rainfall was considered adequate. Develop-ment opportunities were numerous. Few villages had a reliable supply ofwater, but there were abundant supplies of good underground water whichcould be tapped by boreholes with simple hand pumps. Although the reliefwas generally moderate, soil erosion was already becoming a problem in

ANNEX 1Page 2

certain areas. hlere were few roads and the existing network of pat isand tracks was inadequate. Marketing facilities and extension servi-eswere weak and the use of improved seeds and fertilizers very limited.Briefly, the area was found ideally suited as a site for the first majorfood and cash crop development project.

4. The program was designed as a 13 year continuing program, andfor purposes of implementation the area was divided into development unitsof approximately 20,000 acres each. Development of each unit would startoff with the construction of roads, soil conservation works, boreholes,staff housing and storage and marketing facilities. These physical develop-ments would be followed by the establishment of the necessary extension,credit and land reorganization servrices. It was expected that each unitwould be fully developed in five years time, and that nine years after thebeginning of the program the physical development would have been completedin all units; it was expected that by the end of year 13 full developmentwould have been reached in all units.

5. For purposes of financing, the program was divided into threephases of four, five and four years respectively. Thus the physical de-velopment would be completed at the end of the Phase II project (year 9)and Phase III (years 10-13) would consist of a continuation of extension,credit and land reorganization services in the not fully developed units.

Enlarged LLDP Area

6. During the preparation of Phase II the program area was extendedby 376,400 acres of crop land. Another 161,000 acres of the DzalanyaraForest Reserve on the western border of the program area was included aswell for the development of a cattle ranch. Part of the additional craoland, mainly on the north western, the south western and southern edgesof the program area had poorer soils and were less densely populated.Therefore these lands were grouped into modified input units" which re-quired a less intensive development approach than the "standard inputunits". Because the program area was virtually doubled and because thePhase II project was scheduled for four years instead of the originalli'planned five years, physical development will not be completed by the mndof Phase II despite the fact that construction works were implementedwell ahead of schedule right from the beginning of the program.

7. Except for a few minor changes of the borders no new land worldbe added to the Program area during the Project. The amount of land in-volved in the program can be summarized as follows:

ANNEX 1Page 3

Number of Units Acreage

Standard Input Areas 32 661,100

Modified Input Areas 8 202,150

Program area in Dedza District 10,800

Total smallholder land 874,050

Dzalanyama Ranch 161,000

Net LLDP area 1,035,050

Estates inside LLDP area 41,300

Dzalanyama Forest not in ranch 84,400

Gross LLDP area 1,160,750

A large proportion of Malawi's population benefits from the program.In 1973 an estimated 425,000 people, or nearly 10% of the country's ruralpopulation, were living in the LLDP area.

Land Use

8. Because of the continued population growth the intensity ofcultivation is increasing steadily in the LLDP area. The Evaluation Unitfound the following cultivation rates during the 1970/71 and 1971/72 gar-den surveys (average figures for the two seasons):

Total Area Cultivated Area Percentage Cultivated

Phase I project area 276,800 159,480 58

Phase II project area 387,150 211,490 55

Phiase IlI project area 199,300 101 870 50

All LLDP /1 863,250 472,840 55

/1 Excluding the area in Dedza District.

ANNEX 1Page 4

The percentages of land being cultivated varied from a high 75 to 80% :inthe first two devel'oped units close to Lilongwe Town to a low 36 to 44,'in the southern and south western Modified Input areas.

9. Unfortunastely, no accurate information is available on the 31:atusof land which is not cultivated. The program management estimates that: onaverage 30% of all land in the program area cannot be cultivated. This in-cludes mainly all dambo land (estimated at 20% of the total LLDP area) aswell as the roads, residential and commercial areas, the areas covered byconservation works, graveyards and rocky outcrops. The balance of land notyet cultivated consists mainly of natural or regenerated bushland.

10. A system of bush fallowing was formerly practised in the LilongwePlain but this system was gradually abandoned when the population grew toits present proportions. During the 1971/72 garden survey only 2% fallowland was recorded. Restoring of the soil fertility must therefore neces-sarily be achieved through the application of fertilizers. Only smallquantities of farm manure are available and these are mainly used intobacco fields.

11. It is est:Lmated that the farmers will continue to clear bushland at a rate of 2% annually until a maximum cultivation intensity of 70%of all land will be reached, probably by about 1985. It is evident thatunder these conditions the main effort of the Project must be directedtowards achieving higher productions per acre of land through better cropcare and the use of improved seeds and fertilizers.

Holding Size

12. The 1971/72 garden survey confirmed that LLDP farmers grow o0iaverage 4.5 to 5 acres of crops annually. This figure has remained fa'rlystable for several years and is not expected to change very much up to1985. Variations in the areas cultivated by individual farmers are nolexcessive. About half of them grow between three and six acres of cro!Ps,while one-quarter have less than three acres and the remaining quarterhave more than six acres. Only four percent of the farmers grow morethan ten acres of crops annually. Traditionally, the village headmenallocate the land to the farmers; the size of their families is the mai'ndetermining factor for the amount of land they can cultivate.

13. According to the 1971/72 garden survey the areas cultivatedby the farmers are somewhat smaller in the Phase III (Project) area thanin the Phase I and II areas.

ANIINEX "IPage 5

Distribution of holdings according to size (%

Size Class (acres) Phase I Phase II Phase III All LLDP

0 - 2.99 20 17 35 24

3 - 5.90 49 51 44 49

6 - 8.99 25 25 16 21

9 and over 6 7 6 6

Farm Operations

14. Virtually all cultivations are done by hand with simple tools.There are about 71,750 work oxen in the area but they are mainly used fortransport purposes and only a few farmers use them for ploughing. Privateestates and government farms employ tractors, but none are used on smalLholderfarms. Maize shellers were introduced in 1971 and have proved very successful.About 8,000 short tons, or 9% of the total maize production, were mechanicallyshelled in 1971772, and in the following year the performance increased to16,000 short tons or 16% of the total production. The shellers are stilloperated by the program management at a fee designed to cover the costs ofthe operation. It is hoped that village communities or other groups offarmers will take the shellers over in the near future. A series of ground-nut shelling machines have been tested in Malawi but none has been successfulfor confecti onery nuts so far because of breakage and damage problems.

Crops

15. Maize cultivation increased from less than 50% of all LLDP landin the 1960's to about 60% in 1971/72; at the expense of groundnuts, whichfell from nearly 30% to about 22%, and fallow areas, which declined fromabout 7% to only 2%. Dark fired tobacco areas remained fairly stable atabout 14%. The introduction of improved seeds and the availability of fer-tilizers favored the cultivation of maize. However, groundnuts also appearedto be less attractive because sizeable yield increases can only be achievedthrough more crop care which inevitably means more work for the farmer.Moreover, the groundnut prices were not competitive with those of maize untilthey were raised during 1973/74. Besides the three main crops only verylimited acreages of pulses, sweet potatoes and a few other vegetables aregrown in the area. Experiments have shown that soya beans and sunflower canbe grown successfully in the Lilongwe Plain but no major introduction ofthese crops is anticipated in the near future.

ANNEX 1Page 6

Rainfall

16. Rainfall is the single most important factor determining the successor the failure of a crop year. The rainy season runs usually for about 4 to5 months from November to April and the average annual rainfall of 30 to 35inches is adequate for the crops grown in the area. Variations in the annualrainfall are considerable, however. Data for Lilongwe Airport (Table 1) indicatethat the 1967/68 anti 1972/73 seasons were very dry with a total rainfall of lessthan 25 inches. On the other hand, 1973/74 was exceptionally wet with a record42.5 Inches up to the end of May. Distribution of rainfall over the plain andthrough the growing season is also liable to considerable variation. Rainfallpatterns during the planting and harvesting seasons are particularly important,and data show that these patterns are quite unreliable. The first raiisusually fall in late. October/early November but may not arrivefor a further two weeks. The variability of the main rains poses a dilemmafor the farmers since the advantages gained from early planting of crops isoffset by the danger of severe scorching of early germinating plants if thereis a long lag before the main rains commence. The risks involved are especiallygreat in the case of groundnuts because of the high value of the seeds. Rain-fall can be very heavy, especially in the early parts of the season. Sincethe fields are still bare at that time the heavy rains can create seriouserosion problems. lDng term protection through the implementation of soilconservation works is therefore indispensable especially in view of the in-creasing intensity of cultivation in the area.

B. Crop Development

General

17. The main objective during the Project period would continue t) beto raise the level of crop production in the LLDP area. The incentive :!c,rincreases in the tobaLcco production is small because of limited market i)utletpossibilities, but there are no such constraints on the production of theother two main crops, maize and groundnuts. Higher crop productions womildbe achieved through expansion of the cropped areas and through increases; inthe yields per acre. The areas under crops are expected to increase by 2%annually until a maximum of 70% of all land would be cultivated by 1985The increase of the cropping intensity in the LLDP area is basically nowrelated to the program but results from the continued growth of the popl-la-tion. The Project would, however, speed up this development to some ext:eatmainly through the construction o' roads and boreholes; no attempt has leanmade to quantify the effect of this increased activity, however.

ANNEX 1Page 7

18. It is expected that the proportions of maize, groundnuts and tobaccoin the cropping pattern would not change substantially, and that no new cropswould be introduced on a large scale in the near future.

Crop areas as percentages of total cultivated areas

Maize Groundnuts Tobacco O0thers and Fallow Total

62 22 12.5 3.5 100

This assumes, however, that the relationship between the per man-day returnsof the various crops would remain fairly stable and that price changes inmajor cost elements (for instance, fertilizers) would be reflected in thecrop prices. Table 2 gives the gross LLDP areas under development, the cropareas and the proportion of land expected to be cultivated from 1975/76 to1985/86.

19. The Project's extension, credit and marketing services would con-tinue to help improve the maize and groundnut yield levels. Experience indi-cates that some of the crop yield targets employed in appraising Phases Iand II need to be revised for the Project. A 5 year period is too short toraise the yields to the original full development level, and it is now be-lieved that a period of at least 8 years would be more appropriate. Boththe existing and future groundnut yield levels were probably over-estimatedwhen Phase II was appraised and have been revised downwards. Phase IIachievements and Project projections are discussed in detail below.

Maize

20. Phase II Achievements. A precise assessment of the project's impacton the yields during the limited number of years for which data are availableis difficult because of yearly fluctuations due to varying weather conditionsand because the available data do not appear to be very reliable in spite ofthe considerable efforts by LLDP's Evaluation Unit. Both the project's staffand the farmers claim that yields have been increasing over the past years.

Shelled Maize in lb per acre

1969/70 1970/71 1971/72 1972/73 1973/74 /1

De'veloped units 1,045 1,221 1,557 1,143 1,340

Undeveloped 1,008 1,153 972 1,008 n.a.

/1 Es timate

ANNEX 1Page 8

The low 1972/73 figures are puzzling. According to the Chitedze ResearchStation maize breeders, 1972/73 was a better maize year than is indicatedabove. This is reflected in higher research yields both on the ChitedzeStation and in LLDP trial plots. In January and February 1973 the rainfallwas more than 50% below average however, and since the farmers tend toplant too late it is quite possible that their crops have suffered. Thedata suggest that slightly higher yields were achieved in the developedunits than in the units which were not yet reached by the project.

21. Maize yield increases rely heavily on the use of improved seedsand fertilizer combined with better crop care. A comparison between theappraisal estimates and the actual sales figures for seeds and fertilizersduring the first three years of the Phase II Project is given below:

1971/72 1972/73 1973/74

Fertilizer sales (metric ton)

Appraisal estimate - Credit 1,140 1,810 2,500

- Cash 1,390 1,890 2,390

- Total 22530 3,700 j?80

Actual - Credit 2,565 2,000 3,010

- Cash 60 340 175

- Total 2 625 2,340 3,185

Difference between actual salesand appraisal est:imates + 915 - 1,360 - 1,705

Seed Sales (metric tons)

Appraisal estimate - Credit 100 160 220

- Cash 6 5 105 145

- Total 165 _265 365

Actual - Credit 223 130 144

- Cash _ 1 3 -

- Total 224 133 144

Difference between actaual salesand appraisal estimates + 59 - 132 - 221

ANNEX Page 9

22. Total sales of both fertilizers and seeds fell short of appraisalestimates, mainly because the farmers appeared to be unwilling to buy theseitems on cash terum. The farmer's reluctance is not surprising becausespending part of their limited cash resources on fertilizer and seeds wouldimply a major change from their traditional spending patterns. It would prob-ably take a long time before the farmers change their attitude, especiallywhen credit terms are readily available to them. Moreover the steep rise infertilizer prices from an average MK40 - 45 per MT in 1970 to about MO70 -75 per mt in 1972 and 1973, while the official maize price remained unchangedat MK2.50 per bag of 200 lb discouraged the farmers from buying larger quan-tities on cash terms. Indeed it is quite surprising that sales on creditstill increased under these conditions. Sales of seeds fell considerablyshort of targets, but it should be noted that the quality improved. Morethan 50% of seeds sold in 1973/74 consisted of the high yielding RhodesianSR52 hybrid variety against less than 10% of the 1971/72 sales. Sufficientquantities of both seeds and fert-ilizers were available throughout the firstthree years of Phase II to satisfy the demands of the farmers.

23. Project Projections. The Project would continue to encourage thesupply of improved seeds and fertilizers to the farmers. The Rhodesian hybridSR52 by far out-yields other seed varieties, as shown in the following resultsof trials in the LLDP area.

Yields in lb per acre

1971/72 1972/73

SR52 7,458 7,369

U.C.A. 5,067 5,674

L.H. 11 (Bingo) 4,443 5,022

SV 37 4,211 4,514

No new varieties which do better than the hybrid SR52 are yet in sight. Itis therefore expected that this variety would be introduced on a large scale.The Ukiriguru Composite A (U.C.A.) was recently introduced from Tanzania andis doing very well in the Lilongwe area. Yields from U.C.A. trial fieldswere markedly higher than those from the local hybrid LH 11 and from the syn-thetic SV 37 which have been supplied to the farmers in the past. U.C.A.produces a high proportion of flint cobs and is as palatable as the localsynthetics. It is expected that the farmers would be willing to replacetheir local hybrid and synthetic varieties by U.C.A. for their home consump-tion while SR52, which produces dent cobs only, would be grown as a cash crop.

ANNEX 1Page 10

24. By 1985 some 30% of the total maize area would be planted withSR52 hybrids; 40% with composites such as U.C.A. or synthetics, and theremaining 30% with local seed varieties. SR52 seeds cannot be prodi.:ced inMalawi and would continue to be imported from Rhodesia or Zambia. 'AnceSR52 is a hybrid, fresh seeds need to be supplied every year. Comptositesand synthetic seeds are produced on ADMARC seed farms and each farmo r isadvised to buy comnpletely new seed from the seed farm every 3 years.

25. Continuous cropping of the fields - which is now common practiceat LLDP - necessitates the use of fertilizers, especially when improved seedsare used. The use of fertilizers must be accompanied, however, by good crophusbandry practices such as timely planting and weeding and proper spacing.This becomes increasingly necessary as fertilizer prices increase. Maizerequires both nitrogen and phosphor fertilization, but no response to potashhas so far been determined at LLDP. Experiments at the Chitedze ResearchStation on SR52 and U.C.A. maize varieties have shown that, provided that40 lb P 05 is applied per acre, applications of up to 90 lb N per acreresult in almost linear yield increases. Farmers who take proper care oftheir crops would certainly be able to increase their SR52 yields by about1,000 lb, the U.C.A. yields by 700 lb to 800 lb, and the synthetics yieldsby 600 lb to 700 lb of maize for every 50 kg bag (110 lb) of CAN 26% orcompound 20.20.0 fertilizers. The yields would start to level off at about3 to 4 bags of fertilizer per acre for SR52 and 2 to 3 bags for U.C.A. andsynthetic maize varieties.

26. Since fertilization of maize is not yet common practice at LLDP,and because fertilizers are expected to be both scarce and expensive, atleast in the immediate future, only modest fertilizer applications a: e rec-ommended:

Hybrid Comeosites and_ynthetics Localwith With Without V,Lrieties

Fertilizer Fertilizer Fertilizer __.__

Maize areas (as a per-centage of total maize)

1975/76 9 9 23 59

1980/81 20 20 18 42

1985/86 30 30 10 30

Fertilizer (bags per acre) (1 bag CAN ) 1 bag CAN - -(1 bag 20.20.0)

Yield (lb per acre) 3,200 2,000 1,200 1,(100

AZMEX tPage 1 1

The projected yield levels reflect proper cultivation practices when fertil-izer is applied but below average crop care for the non-fertilized maize.The farmers could eventually raise the yields through improvements of crophusbandry techniques only, but it is assuned that those who do take morecare of their crops would apply fertilizers at the same time. From the dis-cussion in the previous paragraph, it is clear that further yield increasesthrough the use of more fertilizers are possible. Future price relationshipsbetween fertilizers and maize and the farmers responses to the program act-ivities wtill ultimately determine the level of maize production in the LLDParea.

27. Storage losses. Insects and moulds are known to cause damage tomaize when the maize cobs are stored under traditional village conditions.The extent of the damage varies with the seasons and is highest during pro-longed rains. A grain storage survey conducted throughout Malawi during the1969/70 and 1970/71 seasons recorded losses of 6% and 2% respectively, butexperienced agronomists in the country estimate that the losses can be ashigh as 10'., or even 20%. It is understood that a new survey would be under-taken in the near future. Use of lindane, a benzene hexachloride, was recom-mended to reduce storage losses, but this insecticide was banned for use onfarms in 1972 because it contaminated the tobacco. HIybrid maize is more suscep-tible to insect attacks because the tips of the cobs are not entirely cov-ered by the leaves. One of the aims of the maize shelling program is to re-duce the period between harvesting and marketing of maize and thus minimizethe storage losses. The use of improved storage cribs-is also being encour-aged by the program extension services.

Groundnuts

28. Phase II Achievements. As in the case of maize, a full assessmentof Phase T' results cannot be made. The available data unfortunately suggestthat groundnut yields did not increase.

Shelled groundnuts in lb per acre

1969/70 1970/71 1971/72 1972/73 1973/74 /1

Developed Units 499 461 431 266 438

Undeveloped Units 598 539 397 227 386

/1 Provisional estimate.

The particularly bad 1972/73 yields were largely due to unfavorable weatherconditions. Rainfall was 30% below normal and its distribution over thecrucial growing months was even worse. January received less than half and

ANNEX IPage 12

February less than one-third of the normal amounts. Long dry spells harip-ered the establishment and early grcrwth and the growing season was of com-paratively short duration. This was especi ally bad for the CThalimbana con-fectionery nut which requires a. long growing season of about 150 days.Moreover the poor rainfall conditions caused a severe outbreak of rosett:edisease. About one-quarter of all fields were abandoned by the farmers andin certain areas which are especially prone to the rosette disease, nearlyone-half of all fields were not harvested.

29. Unfavorable weather conditions in one particular year can, however,not explain the lack: of progress in groundnut yields over a period of fouryears. Many possible reasons have been put forward, but no consensus hasyet been reached on the subject. It is reasonable to assume that the farmershave given priority to maize at the expense of groundnuts. Maize is thestaple food crop and receives therefore more attention than other crops.Planting of maize always precedes that of groundnuts , and the latter areoften planted too late, especially when the rains do not arrive in time, orwhen the early rains are followed by a long dry spell. Since groundnutsare sensitive to late planting the yields suffer. This is reflected inlarge variations of groundnut yields between different years and differentlocations. Secondly, the scope for maize yield increases is much largerthan for groundnuts. Maize yields may be easily doubled, or even tripled,through the use of improved seeds and fertilizers. The incremental produc-tion requires only a few additional days of work at harvesting time. Ground-nut yields depend mainly on, good crop care, however, for instance:

(a) early planting, which definitely results in ahigher production, but involves the risk oflosing the seeds if the rains fail;

(b) proper rotation with other crops; groundnutsshould not be grown ori the same field for twoor more successive vears and should not begrown after tobacco;

(c) sufficient plant denss.ity which reduces the riskof losses through rosette disease;

(d) timely and thorough, weedings;

(e) repeated sui.phur dst t.gs to minimize lossesfrom :Leaf spot diseases.

These activities inevitably involve xaorc a.ork for the farmers.a It migh t verywell be that they havre devoted a larger share of their time and attenti 3n tomaize because increase in maize yields require less additional physical ef-forts than for grouncinuts. Under these conditions the competitiveness 'i.groundnut growing cart only be manintained through sufficient price incentives.A modest price increase from 6 to 6.5 tambala per lb was annotunced durili;the poor 1972/73 grotmdnut season. The official price was substantialliraised to 8 tambala per lb during the 1973/74 season and it is anticipatedthat this should result in increased. production levels.

AN'NEX IPage 13

30. The sales of fresh seeds and sulphur dust lagged behind the ap-praisal estimates in 1971/72 but exceeded them in 1972/73 and 1973/74. Asin the case of maize inputs, all groundnut seeds and sulphur dust were sup-plied on credit terms.

1971/72 1972/73 1973/74

Sulphur Sales (metric ton)

Appraisal estimate - credit 11 39 29

- cash 69 112 151

- Total 80 151 180

Actual - credit 69 210 269

-cash -

- Total 69 210 269

Difference between actualsales and appraisal estimates - 11 + 59 + 89

Seed Sales (metric ton)

Appraisal estimate - credit 245 218 163

Actual - credit 204 250 269

Difference between actual andappraisal estimates - 41 + 32 + 106

31. Project Projections. The long-term projections of groundnut acreageshave been revised for the Project. When Phase II was appraised in 1970 it wasestimated that the area under groundnuts would double over a period of 10 years,while maize and tobacco acreages would remain stable. The experiences of thepast years indicate, however, that it is more realistic to assume that ground-nut, maize and tobacco areas would increase in the same proportions. A rateof increase of 2% per year is expected for all crops, both with and withoutthe program. Further, it was assumed during Phase II appraisal that groundnutyields would rise from 575 lb per acre before development to 725 lb at fulldevelopment. But past experience indicates that the estimated yield levelsare too high, and that a gradual increase from 450 lb to 650 lb, mainly dueto improvements in crop husbandry, appears more realistic.

ANNEXPage 1J

Projected groundnut yields in lb per acre

Pre-development 1975/76 1980/81 1985/86

450 500 600 650

32. Fresh seeds and sulphur dust would continue to be distribut:ed byADMARC with credit support from the Project. It is expected that tAeChalimbana nut will remain the most appropriate variety for most of theLLDP area, at least for the near future. Several rosette resistant varie-ties have already, been developed, as for example RG1. This variety is dueto be released in 1974/75 in Units 4 and 5 which were very badly affectedby rosette disease in 1972/73. The nuts of this variety are however smallerand are classified as a grade B by ADMARC. Crossing of rosette resistantvarieties with Chalimbana continue on Chitedze Research Station and it ishoped that high yielding, good quality, rosette resistant varieties will bedeveloped in the near future.

33. Experiments conducted on Chiitedze Research Station have shown thatgroundnut yields can be increased by 50% from an average 1,000 lb to about1,500 lb of shell(ed nuts per acre through the use of sulphur dust when com-bined with punctual crop care. Large scale trials on LLDP farmers fieldsduring the poor 1972/73 season confirmed that a yield increase of about 50%can be achieved with sulphur dusting. Sulphur dust is a fungicide whichkills the cercospora fungi and reduces the incidence of leaf-spots; moreleaves will therefore stay on the plants and yields will be higher. 'tshould be applied at a rate of about 80 lb in about 8 successive fort--nightly intervals. Its effectiveness depends on good cultural practices,and it tends to work better in the higher altitude areas such as the ]Lilongw!Plain. It is estimated that the level of crop care should be high e-iclugh toallow for an incremental yield of 300 lb in order to make sulphur du.;3t:ing eczno-mically attractive for the farmer. About 10% of the groundnuts in the developedunits of LLDP were! sulphur dusted in 1973/74 and it is expected that this pro'-portion would rise to 20% by 1977/78. This low adoption rate is ref:Lected inthe average yields quoted in paragraph 31 above.

34. Althoughi fresh seeds and the use of sulphur dust would help toincrease the yields in the coming years, the main effort should be made bythe farmers themselves through improvements of their crop husbandry 1.rac-tices. It is expected that farmers would take more care of their grc1und-nuts and other crops when the scarcity of land becomes more evident :ln theyears ahead. It is also expected that the recent substantial increace ingroundnut prices will encourage the farmers, and it is essential thal: -ricesremain competitive in the future.

ANNEX IPage 15

Tobacco

35. Because of the limited export possibilities, the production ofNorthern Division dark fired tobacco is officially restricted by an indi-vidual quota system. Quotas were introduced in 1967/68 and are adminis-tered by ADMARC. In 1972/73 the national quota was 27 million lb, out ofwhich 11.6 million lbs were allocated to the developed part of LLDP. Theadministration of the quota system is not without shortcomings. LLDP'sextension staff observed that in some cases quotas are given to registeredgrowers who do not in fact grow tobacco but simply act as front men fornon-reg' st-ered growers. A recent LLDP survey indicated that 25% of alltobacco growers have no quota. It should also be noted that there is asteady demand for tobacco for the local trade, and recently for trade overthe border to Zambia. For this reason it is estimated that the productionexceeds the official quota, but there is no information on the quantitiesinvolved.

36. The large differences in ADMARC prices paid for the various gradesof tobacco results in considerable wastage of lower quality tobacco by thefarmers. Because of the quantity restrictions farmers attempt to fill theirquota with high value long leaves while throwing away the low value shortbottom leaves. In 1972/73 a new market was found in Europe for the lowquality bottom leaf and it is believed that about two million lb can bedisposed of without difficulty. The farmer's response in that year waslow and only a few thousand lbs were delivered to ADMARC markets. Tihe pros-pects for this special market are unclear.

37. The complicated marketing situation has impeded the EvaluationUnit's attempt to measure the yields of tobacco. Yields of 370 to 380 lbper acre have been computed for the seasons 1971/72 and 1972/73 by dividingthe total weight sold by the total acreage. These figures must be regardedwith caution, as the actual yields were probably higher than the "totalweight sold". The estimates of the national yields obtained by ADMARCbuyers varied between 1970 and 1972 from 340 to 370 lb per acre. The stan-dard of tobacco cultivation in the LLDP area is high. About one third ofthe farmers use farm yard manure on their tobacco and the application offertilizers appears to be almost universal. Sales olf fertilizer for tobaccototalled about 1,900 MT in 1973/74 - more than double the 825 MT estimateduiring the Phase II appraisal. Virtually, all sales were made on credit,contrary to the appraisal's projection that 85% of the fertilizer would besold for cash.

3!. For Project planning purposes it is estimated that tobacco grownin the not v,et developed areas of T,T,T)P receives 25 kg CAN, 26% and 25 kg20.20.0 compound fertilizers per acre and that the yield averages 340 lbper acre. In the developed areas the fertilizer application is estimatedat 30 kg cf both types and the yield at 380 lb per acre. The estimated

ANNEX 1

Page 16

yield levels assume the same degree of wastage of low quality tobacco asover the past years, but improvements on this situation are possible (para.36). The assumptions used imply that the tobacco acreage, like those ofother crops, would increase by 2% annually. Less tobacco, and conseqiuentlymore maize or groundnuts, would however be planted if one of the folli:wingsituations arose:

(a) ADMARC was unable to increase the quotas by2% annually;

(b) the yields rose substantially above theestimated levels;

(c) the possibilities of disposing of tobaccothrough unofficial marketing channels wasreduced.

Supply of Crop Inputs

39. Fertilizer, improved seeds and sulphur dust requirements for theProject, are listed in Table 3. ADMARC would continue to assure the saleof these inputs with credit support by the Project (for details see Annex 5).Registered tobacco growers would continue to receive seeds free of chargefrom ADMARC.

November 22, 1974

MALAWI

L-TIONGWE LAND DEELOPMENT PROGRAM - PHASE III

Rainfall Daa-Lioge aiprt (in inc~heB

Station - Lilongwe Airport Lat - 13 578 ", Long - 35 418 E Altitude - 3,'/(0 ft. TotalSeason Ly A ept. Oct. Nov. Dec. _ an Feu. Mar. Apr. Nay June Year

1957/58 00,03 00.07 - 08.24 07.12 09,99 01.24 00,78 - 00.05 27,52195S/59 - - 00.39 00.02 01L76 07,82 06.81 11.40 07.22 oo.47 00.42 - 36,311959/60 oo.o4 000 16 00,10 02,40 11.68 07036 o470o 04.99 00.83 00-05 - 32.311960/61 00,03 _ 00,55 02,57 07.13 07.17 07o16 08.13 01.61 00.45 00,53 35.331961/62 00.03 00,02 00.01 04e24 05.35 12.74 05,24 o4,o8 03,79 00.02 - 35.521962/63 ooeo8 00.16 - - 05.69 10.97 o4,26 o8.40 03.22 00,07 - - 32,851963/64 - - 00.09 00.24 02a94 03,41 10067 o6.53 02.13 - - 26.01

1964/65 00.01 00.02 - - 01.96 03.84 16.32 09,80 o3.96 00,54 oo.o4 - 36,491965/66 o- 0039 00.09 00°33 06c42 03e12 07,41 03,09 oo.60 03072 - .25.171966/67 - 00,15 oo.69 01.25 08,30 03.17 05.75 07,51 01,95 00.03 00.07 28.871967/68 n/a n/a n/a - 01.49 04.79 07025 03,70 02.45 01.62 n/a n/a 21.301968/69 n/a n/a n/a 00.19 07.28 13,49 08.75 o6.0g 00.89 02,79 - 00,02 39.501969/70 00.19 00.31 11.59 11.50 07.59 0137 01.29 - oo.o4 33.881970/71 n/a n/a n/a 00.03 02.14 10.82 09.11 10.32 03.65 01.35 00.07 - 37.491971/72 - - - 00-73 06.11 03.05 07.48 06.oo 02.61 01.60 01.73 00.01 29.32

1972/73 _ - 01.37 02.49 07.38 o4.og 02083 03.13 03.19 00.06 - 24.541973/74 00.03 00,03 - 00.35 0003 o6,64 13.02 08.19 07.64 03.98 02.59 n/a 42.5010 yr.ov. 00.01 00.01 o0.08 00.36 02.34 07.63 o8.38 06,77 03.63 01.89 00.91 00.02 32.0337 yr.av. 00.01 oo.o8 00.13 00.25 02.71 06.73 o8.48 07.76 04.94 01.54 00.37 00.04 33.o8

MALAWI

LIIONGWE LAND DEVEIDPIf4DT PROGRAM - PH1SI III

Projeeted.Crop Areas

1974/75 1975/76 1976/77 1977/78 1978/79 1979/80 1980/81 1981/82 1982/83 1983/84 li98/85 1985/86

Gross LTXP areas lnderdevelopment('000 acres) 652 703 757 863 863 863 863 863 863 863 863 863

Cultivated areas('000 acres)

Maize 239 261 284 323 330 337 343 350 357 365 372 375

Groundnuts 85 92 101 115 117 119 122 124 127 129 132 133

Tobacco 50 53 57 65 66 68 69 71 72 74 75 76

Other crops and fallow 11 14 16 19 19 19 20 20 20 20 21 20

Total 385 420 458 522 532 543 554 565 576 588 600 604

Cultivated areas as apercentage of grossLLDP areas 59.1 59.8 60.6 60.5 61.7 62.9 64.2 65,5 66.8 68.1 69.5 70.0

Fib0-t1

MALAII

LIDNGWE LAND DEVELONPMNT PRDGRAM - PHASE III

Projected Input requirements for Maize, Groundnuts and Tobacco(in M.T.)

1975/76 1976/77 1977/78 1978/79 1979/80 1980/81 1981/82 1982/83 1983/84 1984/85 1985/86

MaizeHybrid seed 235 313 453 528 606 687 771 858 948 1,041 1,124Synthetic or com-posite seed 417 468 566 594 622 652 683 696 710 725 749Fertilizer-CAN 2,344 1 3 )126 4,531 5,282 6,060 6,868 717iO 8,576 9,476 10,410 11,24o

-20.20.0 1,172 1,563 2,265 2,641 3,030 3,434 3,855 4,288 4,738 5,205 5,620

GroundnutsSeeds 503 549 834 850 867 884 902 920 939 957 965Sulphur dust 503 549 834 850 867 884 902 920 939 957 965

TobaccoFertilizer 3,151 3,438 3,915 3,994 4,073 4,155 4,238 4,322 4,409 4,498 4,532(50% CAN; 50% 20.20.0)

x,,n

ANNEX 2Page 1

MALAWI

LILONGOWE LAND DEVELOPMENT PROGRAMI - PHASE III

Plarning, Construction and Conservation

1. The Land UJse Planning and Conservation Section of the LLDP carriesout land surveys, construction of roads and soil conservation works, as weil asall building work except for the construction of boreholes. The health fac:ili-ties proposed under 8be Project would be contracted out.

Roads

2. Since the start of the LLDP the construction of roads has proceededwell ahead of the original targets. It is now estimated that by the end ofPhase II about 1,295 miles of roads serving an area of 702,550 acres will havebeen built. This compares with 1,180 miles over an area of 478,000 acresprojected in the Phases I and II appraisal reports. The increase in the areacovered is larger (50%) than the increase of constructed mileage (25%) as thedensity of the network for the modified input areas was reduced by roughly onehalf to about one mile of road for every 1,000 acres of land.

3. The road network in the LLDP area woule be completed during the firsttwo y.aa&s of the Project. Some 265 miles remain to be constructed over an areaof 160,700 acres; about: half of the mileage would be earth roads for cropextraction, generally with a maximum width of 24 feet, and the other half16 foot-wide feeder roads. A summary of the road construction program is nre-sented below:

Number of Devel- MiLes peropment Units Acreac Mileage 1 _,OO) Acres

Phase I (completed)

Standard Input Areas 14 276,800 642 2 3

Phase -- r (revised estimate)

Stanzard Input Areas 13 285,900 524 1.8Mod_&ied Input Areas 5 139,850 129 0,9

425,750 653

Phase III

Standard Input Areas 5 98,400 203 2.1Modified Input Areas 3 62,300 62 1.3

160,700 265

All LLDP

Standard Input Areas 32 661,100 1,369 2.1Modified Input Areas 8 202,150 191 0.'9

863,250 1,560

ANNEX 2Page 2

LLDP maintains its own roads. Road maintenance arrangements for the post-program period are discussed in Annex 10.

Soil Conservation Works

4. Farmers in the LLDP area have traditionally grown their crops onridges to protect them against excessive rains. In many instances, however,these ridges do not follow the contour lines as they should in order to helpprevent uncontrolled run-off of water. Marker ridging at 30 yard intervals bytractor and disc plough in order to indicate the proper direction of the ridgeshas proven to be very helpful to the farmers and would continue under theProject.

5. A diversion of excess water from the fields which also avoids soilerosion is provided for by the construction of V bottomed ditches with a gradeof about 1:400. The water is discharged from the ditches into embanked, widen-ing, waterways which channel the water downwards to the swampy areas. About7 miles of ditches and one mile of waterways were constructed per 1,000 acresduring Phases I and II.

Diversion Ditches WaterwaysNumber Miles/ Miles/

of Units Acreage Miles 1,000 ac Miles 1,000 ac

Phase I(completed) 14 276,800 2,041 7.4 230 0.83

Phase II(revised /1estimate) 11 235,300 1,689 7.2 225 0.95

/1 As road construction precedes soil conservation by about 6 months,the figures quoted here are smaller than those quoted in paragraph 3.

The constructed mileages are in line with the appraisal estimates.

6. An additional 1,075 miles of diversion ditches and 160 miles ofwaterways would be constructed during the Project. These estimates wereinitially based on a standard treatment for the remaining 160,000 acres ofstandard input areas; the modified input areas were not to receive any con-servation measures at all. Recently it was decided to be more selective inthe implementation of soil conservation works and to take the prevailingsoil types and slopes in the area into account. The conservation input instandard input areas where the slope is of less than 2% would be reducedunder the Project. Areas of 2-4% slope would be given standard treatmentif on sandy soils and areas of 4-6% slope would receive standard treatment,regardless of soil type. The anticipated reduction of works in the standardinput areas would permit the implementation of some conservation measuresin the modified input areas.

ANNEX 2Page 3

7. Benefits from the soil conservation works are difficult to quantifybut are expected to be considerable in the long run. The farmers would beexpected to mainitain the conservation works themselves. When these worksare well constructed the maintenance requirements are not particularly high;however, the extension services would have to make a major effort ta impressthe long term benefits upon the farmers. As a positive side effect of theconstruction of the ditches it should be mentioned that they improvE theaccessibility of the area. In many instances, the embankments of twe ditchesare being used as tracks for ox-carts, bicycles and even motorized ve.hicles.,

Boreholes

8. People in the Lilongwe have traditionally relied on rivers anddrainage ponds for their domestic water supply; hauling water from thesesources is time consuming, however, and use of such water is hazardous tohealth. Excellent groundwater is available at depths of 100-120 feet, andthe construction of boreholes equipped with simple hand pumps, is now beingundertaken throughout the program area. Construction of these boreholescommenced prior to initiation of the LLDP, and the construction schedulehas been greatly expanded by the program. Drilling and maintenance of theboreholes is done by the Geological Surveys Department of the Ministry oft ricu_ture and Natural Resources, and a minimum distance of half a milebetween the boreholes is maintained.

9. Prior to LLDP 130 boreholes were constructed, and by the end ofPhase II LLDP would have added another 344. This compares with the total of285 estimated during the Phase I and II appraisals. The constructicnschedule for the Project is as follows:

1975/76 1976/77 1977/78 Total

Number of boreholes 54 46 43 143

At the end of the program period ai total of 487 boreholes would have bieen con-structed by LLDP; thus including the boreholes constructed prior to .3hase I,the area would have a total of 617 boreholes. This would represent l densityof one borehole for every 150 to 175 families in the LLDP area.

10. LLDP provided funds for the maintenance of those boreholes constructedfor the program by the Geological Survey Department. Financial responsibiliLyfor borehole maintenance in the post-Project period is discussed in 1.nnex 10.

Unit Centers

11. Major development services such as extension, credit and nErketingservices are provided through the local LLDP unit center. An existir.g ruralservice center or entirely new center may be developed for this purpcse, themajor factor determining its location being its accessibility to the farmerswithin the unit. The size of the icenters varies from 25 to 60 acres, and a

ANNEX 2Page 4

typical unit center includes housing and office space for LLDP staff, aborehole and a market and input store owned and operated by ADMARC. It isexpected that the unit centers will gradually expand into true administrativeand commercial centers once the basic services have been established. There-fore, provisions are being made for land to establish shops, schools, clinics,churches, community halls, etc. Shops have already been established in allcompleted unit centers. By the end of the Project, unit centers would becompleted in 25 standard input areas, 8 of which would not require new marketsas they already had permanent markets. Staff housing and office space areconstructed by LLDP's building unit, while ADMARC constructs the markets andinput stores.

12. During the three year Phase III Project, unit centers would be builtin the remaining 12 standard input areas and in 3 modified input areas. Be-cause of envisaged reductions in the LLDP staff, housing requirements would beonly 14 units in the standard input areas and 9 in the modified input areas.ADMARC would construct 7 new markets and 15 input stores during the Project.Three units already have sufficient existing market facilities and 5 otherunits, among them 4 modified input areas, do not require markets. The storagecapacity of the input stores (measuring 1,800 sq. ft.) is about 380 tons offertilizer, which is sufficient for the normal annual requirements of a unitarea. The stores are designed on a module basis and extensions could be easilyadded if required.

November 20, 1974

ANNEX 3Page 1

MALAWI

LILONGWE LAND DEVELOPMENT PROGRAM - PHASE III

Land Demarcation and Registration

Background

1. Since the beginning of LLDP a great deal of attention has beengiven to improvements in the customary land rights system. Pressures uponthe traditional system resulted in Parliament passing the customary Land(Development) Act, the Registered Land Act, and the Local Lands Board Actin 1967 in order to institute a legal system for controlling and establish-ing land holdings and land use, and regulating matters pertaining to land.So far the Customary Land (Development) Act has only been applied withinLLDP.

2. Because the establishment of legal land rights is a new conceptin the traditional society, objectives and procedures needed to be testedin the field during the first two phases of LLDP. Important conclusionscan now be drawn after several years of pioneering. First of all, it hasbeen clearly established that providing a firm legal base for land owner.-ship in a situation where land is becoming increasingly scarce responds t:oa real need among the rural population. The farmers who have so far beei,affected by LLDP's activities in this field are unanimously in favor ofland registration because it provides them with greater security. Althotgithe effects are hardly visible at this stage, land registration willcertainly encourage farmers to invest in their land in order to maintainand improve its fertility. Secondly, it has become clear that the transitionfrom communal to indivLdual ownership is too big a jump to be made in a singleoperation. Therefore it has been decided to consolidate land iLlto familyunit holdings which might encompass some 100 to 200 acres of land. Thisshould be looked upon as a first important step in a framework into whicLultimately a movement to individual land tenure can be instituted. Thircl11it has been established that ample time should be allowed for the subseqtUentstages of demarcation, recording and registration of land. Land is thebasis for livelihood for the vast majority of the population and a low-kEybut a persuasive approach is appropriate in order to obtain full cooperationof all people involved.

Procedures

3. The land allocation and registration process in LLDP is precedelby various improvements in the infrastructure such as the construction ofroads and conservation works. These works are planned on topographic map;

ANNX 3Page 2

which are drawn up by the Department of Surveys using aerial photographs asa base. After the construction of the roads and conservation works a secondseries of aerial photographs are made which are then used as a base for landallocation and registration purposes.

4. The allocation process begins with the gazetting of unit areas as"development sections" and grants of powers of land allocation to thedemarcation officer. Introductory meetings are held and a land committeeof traditional leaders is elected to advise the demarcation officer oncustomarv matters. After seven days notice of commencement of work, back-ground information is collected on all relevant aspects such as the villagehistorv, family structure and the migration pattern of the people.

5. The demarcation wor7k begins with the definition of village bound-aries in cooperation and agreement with the traditional authorities and theheadman concerned. Work then devolves to the village level and boundariesbetween the various family unit groupings within the village are definedwith the approval of the village headman and family leaders. They aredemarcated so as to provide an equitable share of land amiong all people.The elected family representative becomes the absolute proprietor, and theland is categorized as "private freehold land." "Public land" is reservedfor public purposes such as unit centers and trading centers, schools andother communal purposes. Finally "customary land" is set aside for resi-dential purposes, forest sites, graveyards and communal "dambo" land.

6. When all pieces of land are demarcated and the boundaries drawnup, the aerial photographs are passed on to the survey section. From thephotographs, and in consultation with land allocation field staff, beaconsare located along every boundary. The beacons are then surveyed and theirexact locations plotted on a demarcation map. Ground methods of surveying,using a bar and theodolite, have been adopted at LLDP because this has provedto be more suitable than aerial methods. Meanwhile, a recording team visitseach family unit and records the number of demarcated plots within thatfamily unit. In the case of private freehold land, a record is made of thefamily representative and all the members of the family who are to be regis-tered as owning that land. For every parcel of land, al allocation recordis then completed showing the identification number and area of the piece asshown on the demarcation map, the owner(s) of that land if it is private, orwhether it has been recorded as customary or intended public land.

7. Notice is then given that the demarcation map and allocationrecord are completed and both are made available for public viewing andscrutiny for a period of 60 days. Thereafter the registrar of the localregistration district orders a registry map to be prepared from the demar-cation map by the Survey Department and he compiles a register in respectof each piece of land. Finally a land certificate is issued to the pro-prietor(s) of the private freehold land, the family leader being the elected

ANNEX 3Page 3

representative of his people. Once the land has been registered all landmatters have to be referred to the Local Lands Board, which is legally estab-lished for each registration district.

Program Achievements

8. In the earlier years of LLDP the land allocation and registrationprocess had a slow start and by the end of Phase I only 143,000 acres hadbeen demarcated. By the end of 1973 the demarcation and recording parts ofthe process were well under way and about 100,000 acres could be handledannually. Final registration of the land has lagged, however. It appearsthat a time lag of one to two years between demarcation and registration hasto be allowed for.

9. The schedule for the Project is included in the table below:

Demarcation Registration…-------- acres -----------

Phase I 143,000Phase II /1 265,900 273,800Phase III (the Project)

1975/76 64,600 88,0001976/77 67,233 91,2001977/78 65,167 90,900

200,000 270,100

Post Project1978/79 49,500 70,3001979/80 - 44,200

114,500

Total 658,400 658,400

/1 Revised estimate.

Since only about 120,000 acres were registered (or about to be registered)by the end of 1973 this schedule assumes that registration of the alreadi'demarcated areas would catch up during the remainder of Phase II. About200,000 acres would be demarcated during Phase III. An additional peridclof 18 months would be required to demarcate and register all the standarcinput areas. No land allocation is yet envisaged for the modified inputareas.

ANNEX 3Page 4

10. It is expected that during the Project the per acre costs would bein the neighborhood of MK1 for the allocation and demarcation process andthat another MKiper acre would be required for surveying and mapping of thearea. Total costs would thus be about MK2 per acre. It should, however, bekept in mind that the gross value of annual crop production would rise fromabout MK25 to MK40 per acre as a result of all development activities. Inthis context the one time only costs of land allocation do not appear to beexcessive. Especially in a situation where land is becoming increasinglyscarce, the long term benefits of secure land ownership rights are largerthan the costs involved.

November 20, 1974

ANNEX 4Page 1

MALAWI

LILONGWE LAND DEVELOPMENT PROGRAM - PHASE III

Agricultural Extension and Training

Introduction

1. The success or failure of LLDP depends to a large extent on theperformance of the extension services. During the first two phases of theprogram valuable experience has been acquired with respect to the organiza-tional structure, staffing and working methods of the extension services.No basic changes in the operations are being anticipated under the Proj ectalthough the number of field workers would be reduced to some extent and afew dairy, poultry and home economics extension workers would be added tothe staff. The program would continue to provide facilities for thetraining of both staff and farmers.

Extension

2. The organizational structure of the extension services would remainunchanged during the Project period. The field staff would continue to bebased in the unit centers from where they are serving on average about: 2,200farmers per unit center. Distances extension workers need to travel ia orderto visit the farms generally do not exceed 5 miles. The units are heaidd bya Development Officer who in turn is responsible to a Senior Developme.t: Officerin charge of an average of 6 or 7 units. At headquarters in Lilongwe a SeniorExtension Officer is in charge of all extension activities. He has daily radibcommunications with the field staff in the units.

3. All positions in the extension staff, including the Senior E:.tensionOfficer, are presently occupied by Malawi nationals. Colby College tu:ns outsufficient numbers of technical assistants to fill vacancies of the juiliorfield staff levels without any difficulty. But the number of graduate fromBunda College has so far been too small to fill all senior positions w::.th per-sonnel having a sufficient educational and professional background. T.iis sit-uation would probably continue to persist for a few years. Program ma;zagementhas therefore made it a policy to promote outstanding and experienced ;taffmembers from the ranks whenever this appears feasible.

4. In terms of numbers the field staff is being reduced in the lastyear of Phase II from 8 to 6 technical assistants per standard input a::ea.During the Project there would be a further reduction to 4 technical assistantcper unit. With better trained and more experienced staff this lower s :affdensity is considered adequate. The unit staff would continue to inclvd: alivestock assistant. A farm home instructress would be added to each t:nit

ANN EX 4Page 2

during the Project which would enable greater attention to be given to therole of women in agriculture. As in Phase II the Standard Unit's DevelopmentOfficer would be assisted by an Assistant Development Officer. The modifiedinput units would have a smaller staff comprised of either a DevelopmentOfficer or an Assistant Development Officer, two technical assistants, alivestock assistant and a farm home instructress. The staffing ratio on theunit levels would thus be one for about 300 farmers in the standard inputareas and one for 450 farmers in the modified input areas. It is envisagedthat in the post-Project period the staff density in the standard input areaswould be further reduced to about the same level as in the modified input areas.

5. The extension field staff would continue to assist in the settingup and functioning of the Village Planning Committees. Extension workerswould also continue to collaborate closely with the credit assistants (number-ing 4 in the standard input areas and 2 in the modified input areas) in selec-ting and advising those farmers who would receive credit packages from theProject. Monthly programs of activities are drawn up by the Senior ExtensionOfficer which contain the guidelines for the establishment of weekly workingprograms for individual staff. The program's Livestock Section formulatesprograms for the livestock technical assistants.

6. Specialized extension staff would advise the new Project dairy andpoultry farms. For dairying there would be 2 technical assistants in 1975and 1976, increasing to 4 in 1977; the general livestock assistants in theunits would also assist in the scheme. A technical officer specialized indairying would coordinate the activities, and overall technical directionwould come from the Central Region Dairy Officer through the program'sLivestock Officer. For the poultry scheme there would be three poultry tech-nical assistants to be headed by one of the existing livestock technicalofficers. The Central Region Poultry Officer would have overall technicalresponsibility for the scheme.

Trning

7. The program's Training Section would continue to run the staff train-ing center at Lilongwe. All new staff members receive courses in their partic-ular fields and all extension staff receive followup training at the start ofeach crop year.

8. One or two weeks training courses would continue to be provided forfarmers and their wives at the Farmer Training Center at Nsaru. In addition,some farmer training would be provided at Nambuma and Nathenje by the RegionalAgricultural Office. However, the training facilities at Nambuma would beimproved during Phase II, and those at Nathenje under the proposed Project.The recurrent costs of these centers would be borne by the Regional Agricul-tural Office. Facilities for women's training would be introduced at each ofthese centers one year after the physical improvements; provision would be

ANNEX 4Page 3

included for the cost of a demonstration kitchen. Finally, the TrainingSection would continue to operate two "yellow vans" as extension a.1ds fordemonstration purposes and film shows to farmers.

November 20, 1974

Pa-e

MALAWI

LILONG1E LAND DEVELOPN1ENT PPOGRAM - PIASE ITI

Agricultural Credit

General

1. The availability of credit facilities to finance the purchase Coinputs such as fertilizer and seeds is essential for the improvement ofproduction levels. At this time, however, there are only limited onpor'r_u2Izesin Malawi for smallholders to obtain short- and medium-term credit. Tttout

the availability of credit facilities, the use of chemicals, fertilizers andimproved seeds would be sharply reduced over current levels, and agricuitnuralproductivity would suffer. Therefore, the LLDP has provided credit facilitiesduring Phlases I and II and will continue to do so durin- the Project period.Project costs include the annual incremental credit requirements of thne nro-ram.Due to the administrative cost of running a scheme projected to serve ai<2out55,000 farmers at the end of the Project, a new feature in the form of grouncredit would be introduced. All credit operations would continue to be con-trolled by the LLDP's Chief Agricultural Credit Officer (who reports to thcProgram tanager through the Financial Controller). Field administration ofcredit operations would be based in the unit centers; each standard unit hasnow four credit assistants and each modified unit two assistants. Each farmerwould be registered at a market through which he would obtain his input suppliesand to which, if he received Project credit, he would be obligated under theterms of his loan agreement to sell his produce. Credit repayments would becollected by LLDP credit clerks posted at ADXARC markets for this purpose.Following traditional practice in Malawi, smallholders are not charg,ed -ispecified interest, but rather a "credit clharge which usually includesimplied interest rate of about 10% a year with or without some additionai per-centage points designed to recover administrative costs of operating the creditscheme.

Seasonal Credit

2. Seasonal credit is made available in packages to eligible farmers(the makce-up of these packages is detailed In Table 1). Up to 1973/74seasonal credit carried a mark-up of 10 percent, and the proposed increaseto 15 percent in 1974/75 and 20 percent thereafter is designed to cover risingadministrative expenses. The increase is also expected to encourage the useof group credit which would carry a marl-up of only 7.5 percent. In addition,it is hoped that the increased credit charges would encourage farmers to buymore inputs for cash than thev have done so far. Very good recoveries wereobtained in 1968/69 and 1969/70 (100%) and in 1970/71 (99%). Of the 1971172and 1972/73 credits, 95.3%. and 88.5% had been recovered as of January 31, 1974.This limited recovery rate was due in part to a relaxation of credit ratings(para 8). It is now proDosed that no new credit will be given to farmersunless their old debts are fully paid up. Should a farmer not be able to repaycredit due to crop failure, a charge of MK2 would be added and the new total

AN,EX 5Page 2

debt would be deducted from receipts from the next crop. This would mak:e thefarmers more conscious of their commitments, and it is expected that the rateof recovery should improve. The projected seasonal inputs and credit re luire-ments are detailed below:

(MK '(0)0O

Year 1 Year 2 Year 3(1973/74) C(1974/75)(1975/76)(1976/77 (1977/78) (1978/79)

Fertilizer for tobacco /2 526.0 551.0 602.0 685.0 699.0ilertilizer for maize /2 434.0 609.0 812.0 1,178.0 1,373.0siaize seed /2 129.0 169.0 216.0 301.0 343.0Groundnut seed /2 81.0 89.0 97.0 147.0 150.0Sulnhur dust /2 102.0 111.0 121.0 184.0 187.0

Total value of inputs 477.0 1,272.0 1,529.0 1,848.0 2,495.0 2,752.0

Percentage of inputs soldon credit 100 95 90 85 80 75Volume of seasonal credit 477.0 1,208.0 1,376.0 12_571.0 1996.0 ? 064.0

Percentage mark up 10 15 20 20 20 20Volume of seasonalcredit repayments /3 525.0 1,389.0 1,651.0 1 2,395.0 :1477.0

,/l Estimate from program management based on progress up to January 31, 1974./2 Details in Annex 1.3./3 These repayments will be received in the next financial year.

Medium-Term Credit

3. Medium-term credit would continue to be provided for farn carts, naizemills, farm implements, tobacco barns, fencing and for rural craftsmen. 0:, cartsconstitute the most convenient method of transporting smallholder produce, andthe program would support the training of these animals; the carts themsel,esare too expensive for farmers to buy for cash and the program therefore pr:videsa three-year loan for their purchase. These programs would both be contin edunder the Project. The purchase of maize mills is expected to decline aft(:rthe Project period as the number available reaches the saturation point. i.nominal sum has been provided for fencing of pastures, dambos and forestryplots. The construction of tobacco barns with more permanent materials wotLdbe encouraged and a nominal sum for the necessary construction materials wculdalso be provided. The funds required for rural craftsmen would cover a subsi.s-.ence allowance for the initial period of operation. Recovery of medium-termicredit has been satisfact:ory. Details of projected cash requirements formedium-term credit are given in Table 2, and the corresponding cash flowstatement is at Table 3.

ANNEX 5Page 3

Credit for Stall Feeders

4. Credit would continue to be given under the Project for all stallfeeders issued from Dzalanyama Ranch over the 3-year period. Projections arebased on the expected ranch sales detailed in Annex 6. In practice farmerswould be encouraged to purchase steers for cash (or part cash and part credit)by restricting credit availability to farmers who have not been issued steerson previous occasions. Some of the steers issued may be trained as work oxen,in which case medium-term credit would be provided. Other credit would berepayed 6 months from date of issue when feeder stock is sold for slaughter.LLDP would make arrangements for credit repayments to be deducted from theanimal's sale price. Consequently, no bad debts have been incurred and noneare expected in the future. A projected flow of the credit funds is shownbelow:

(MK)

Issue Year 1 Year 2 Year 3Utilization Price 1974/75 1975/76 1976/77 1977/78 1978/79

Purchased steers 64 (285)18,240 (570)36,480 (570)36,480 (570)36,480 (570)36,480Ranch-bred steers 64 (48) 3,072 (223)14,272 (2 6 0)16)64 (557)35,648 (762)48,768

Total 21,312 50,752 53,120 72_,128 85,248

Re2ayments:Cost 21,312 50,752 53,120 72,128 85,248Interest 10% A1 1,066 2,538 266 3,606 4 262

Total amount due 22,378 53,290 55,776 75,734 89,510Spread of repayment 11,189 26,645 27,888 37,867 44,755

122125 11_189 26,645 27,888 386

Total 23,314 54,533 65,755 82,622

/1 Actually 5%, since repayment assumed within 6 months.

Poultry

5. Credit for poultry would be given in the form of two loans:

(a) one to finance capital requirements (estimated at MK263) to be repaidwith interest-at 10% per annum over three laying cycles of 60 weekseach; and

ANNEX 5Page 4

(b) one to finance working capital for the cost of 96 birds an,l therearing feed (estimated at MK154) with a mark-up of 15% repayableover a single egg-laying cycle. It is proposed to provide theworking capital for four egg-laying cycles, after which th(! farmershould have saved sufficient capital to be self-financing.

Repayments for both loans would be made by deductions from egg sales to the eggmarketing organization. Projections of capital requirements and repayments areas follows:

(MK'0 00)

unit1L Year 1 Year 2 Year 3Utilization Cost (1975/76) (1976/77) (1977/78) 1978/79

Capital expenditures 313 (40)12,520(40)12,520)(40)12,520 (40)12,520Less farmers contribution 50 2,000 2 000 2 000 2,000

263 10,520 10,520 10,520 10,520

Working capital 154 (40) 6,160(80)12,320(120)18,480(160)24,640

Total loans (at cost) 16,680 22,840 29,000 _5,160

RepaymentsCapital loans /2 328 2,186 6,558 10,930 13,116Working capital /3 177 3,540 10,620 17,700 24,780

5,726 17,178 28,630 37,892

/1 Composition detailed in Annex 6./2 Repayment over three years, starting halfway through first year./3 Repayment over one year, starting halfway through the year.

Dairying

6. To assist in the expansion of the dairy scheme, farmers with-r, theLLDP area would be eligible for credit to purchase two dairy cows each. Theamount provided by the Project would cover two-thlirds of the initial c.: pitalrequirements; the remaining funds are expected to come from the farmer con-cerned. In addition, the credit fund would advance the necessary work:ingcapital for the first three months. Details are set out in Annex 6. Poreach of the first two years 15 farmers are expected to participate in [: hisscheme and in year 3 this number would increase to 30. Repayments wouldbe over a four-year period. The flow of funds is projected as follows;

ANNEX 5Page 5

(MK)

Unit Year 1 Year 2 Year 3Utilization Price (1975/76) (1976/77) (1977/78) 1978/79

Capital costs 380 (15)5,700 (15)5,700 (30)11,400 (50) 19,000Working capital 72 (15)1,080 (15)1,080 (30) 2,160 (50)360

6,780 6,780 13,560 22,600

Less deposit(1/3 of capital

requirements) 126(3/4 of working capital) 54

180 (15)2,700 (15)2,700 (30) 5,400 (50) 9,00

4,080 4,080 8,160 13,600

Add 10% p.a. interest onunpaid balance over4 years 1,020 1,020 2,040 3j4°°

Amount to be repaidby farmers 5X100 5,100 10,200 17,Q00

Repayments 1,428 2,754 5,406 9,758

Projected Credit Fund

7. Table 4 summarizes the cash flow of the various credit componentsdiscussed in the previous paragraphs. After completion of the Project, thecredit fund would generate a surplus of MK204,000 for lQ78/79. However, asmore farmers would adopt program inputs, another K500,000 would be requiredto bring the ftind up to the peak requirement expected in 19g5/86.

Group Credit

8. In 1971/72 the strict application of regulations for the assessmentof creditworthiness was relaxed, and there was also growing awarness of thebenefits of using improved seed and fertilizers. Consequently, the numberof loans issued per unit increased considerably as compared with the previousseason. An attempt at group credit was made at LLDP in 1970/71 when hybridmaize packages were issued on credit terms to smallholders through villageheadmen in twenty villages. The village headman was the individual legallyresponsible for the issue, and he allocated the packages among farmers inhis village. While the result of this experiment looked promising, it was

AiNEX 5Page 6

found that credit issues to village headmen involved far more administra-ivetime per issue than those to individual growers. A very considerable leirelof supervision of the accounts of village headmen was necessary because ofthe low levels of literacy among this group. and it proved necessary tcmaintain duplicate accounts. The experiment was not repeated.

9. Due to the increasing cost of administering a credit scheme,operating costs would be substantially reduced if seasonal credit wereavailable only to those smallholders who really need it. Group credit offersa method for effecting this reduction. It is proposed that initiallyseasonal credit would be made available only to groups in the three modi-fied input areas and that it would be simply encouraged elsewhere. It isenvisioned that a group of smallholders would form a voluntary associationfor the receipt of seed and fertilizers on credit. These would be issuedas separate items, not as packages, with the exception that if groundnutseed were required, an equal weight of sulphur would also be issued anda charge levied. Before any issue would be made, the group would pay adeposit amounting to 10 percent of the ADMARC retail value of the creditissues requested. Each member would contribute to the deposit in proportionto his requirements. (This is not essential as other members of the groupcould cover any other member judged by the group as a whole to be credit-worthy but unable to find the cash for the deposit.)

10. One or several members would together act as agent for the group,but responsibility for repayment would lie with the group as a whole. Tieagreement forms ensure that this requirement is recognized. Failure torepay the loan in full means that the group as a whole (and therefore eszlmember) loses its deposit, and that the group members 1/ could not be deizedworthy of credit in the following season. Responsibility for extractingpayment from defaulting individuals within the group would lie entirelywith the group as a whole.

11. It was expected that each group should have an average of 25members. In the 1970/71 exercise numbers have ranged from 9 to 52. Agroup would be expected to take credit to the value of about M200 althoi ghin the past a few have taken less (the lowest being MK148). The interes:charged on group loans would be 7-1/2 percent of the ADMARC retail cost.In addition, groups would pay an administrative charge of 10 percent ofthe deposit.

12. The expectation is that each unit would have an average of 1,350accounts. By 1977/78 the number of accounts in developed units might total

1/ The injunction must apply to individual members, since the whole pri:-ciple breaks down if the defaulting group were dissolved and membersformed new associations with other smallholders.

ANNEX 5Page 7

43,200. Bv that time the standard input units would need 128 credit assis-tants, and annual operating costs would reach about !1K114,000. If 10 Percentof borrowlers in a standard unit form groups, the number of accounts percredit assistant would fall from 350 to about 310 on average; if 20 percentof borrowers were to form grouDs, the number would fall to 275, assumingfour credit assistants per unit. If the number of credit assistants werethen reduced to three, each would have approximately 360 accounts. If thenumber of accounts and credit assistants per unit is reduced, the needfor additional supervisory staff would also decrease. The implication forthe credit fund is, of course, that because of a lower effective interest rateon group credit a smaller margin over the cost of seeds and fertilizers wouldaccrue to the fund than is the case with individual credit. This would only befair, since administrative costs and bad debts are also expected to be reduced.

13. Unless some form of group credit structure evolves within theLLDP, the cost of operating the credit program will continue to be highin relation to the value of credit issues of seeds and fertilizers. Becausefunds available for the financing of a credit nrogram are limited, not onlyshould group credit be encouraged as an alternative to individual credit,but incentives for purchases of seasonal inputs for cash by individuals andgroups should also receive greater attention.

Farmers' Contribution

14. Farmers' direct contribution to Project costs is restricted totheir participation in the medium-term credit, poultry and dairy schemes.The expected incremental cash purchases of seasonal inputs (estimated tobe about NX435,000) is not included in Project costs, as such purchaseswould be handled directly by ADMARC. No account has been taken of contri-butions to the group credit scheme because of the uncertainty which stillprevails regarding the ability and willingness of farmers to form creditgroups. The following table summarizes the anticipated pontributions bytypes of credit:

Year 1 Year 2 Year 31976/76 1976/77 1977/78 Total

Medium-term credit 55,150 64,350 65,550 185,000Poultry 2,000 2,000 2,000 6,000Dairy 2,700 2,700 5,400 10,800

59,850 69,050 72,950 201,850

November 20, 1974

ANNEX 5Table 1

LIL5 GWF IAND DSE LOMNT PROGRAM - PdiSE III

Seasonal Credit Packages: 1973/74

Content and prices of packages are:

Price RorndedPrice

Package A/73 (1 acre SR.52)(Zambian):

2 bags C.k.N. at K 3.30 per bag "K 6.601 bag 20.20 at K .45 per bag 3.4522 lbs. SR .52 lGbrid Seed Zambia 4.40PLUS 10% Credit Charges 1.45

K i5,0 K 16.00

Package AAAk/73 (1 acre SR .52)(Rbbdesian):

2 bags C.A,IA. at K 3.30 per bag 6.601 bag 20.20 at K 3.45 per bag 3.4522 lbs. SR .52 Fybrid Seed 5.60PiLtS 10% Credit Charges 1.57

K 17.22 K 17.25

Package 5/73 (1 acre Bingo):

1 bag C.A.N at K 3.30 per bag 3.301 bag 20.20.0 at K 3.45 per bag 3.4522 lbs. Bingo trbrid Seed 1.10PLUS 10% Credit Charges .78

K 8.63 K 9.00

Package C/73 (1 acre SV .37):

1 bag C.A.N. at K 3.30 per bag 3.301 bag 20.20.0 at K 3.45 per bag 3.4522 -bs SV .31 Synthetic Seed 1.10PLUS 10% Credit Charges .78

K 8.63 K 9.00

Package D/73 ',1 acre Tobacco):

1 bag C.A.N. at K 3.30 per bag 3.301 bag 20.20.0 at K 3.45 per bag 3.45PLUS 10% Credit Charges .68

X 7.63 X 7.50

Package E/73 (1 acre Groundrcuts):

80 lbs. Groundauts 6.5580 lbs. Sulphur , 5.24PLUS 1D% Credit Charges 1.18

K 12.97 K 13.00

TOP DRKSSING PACKAGES

Package h/73 (½Z acre Sulphur Dust):

60 lbs. Sulphur Dust 2.67PLUS 10% Credit Charges .27

K 2.94 X 2.70

Package li/73 (1 cLre Maize):

1 bag C.A.N. at K 3.30 per bag 3.30P_US 10% Credit Charges .33

K 3.63 K 3.70

Package Z/73 (1 acre Maize):

1 bag Urea at K 4.40 per bag 4.40PLUS 10% Credit Charges .44

K 6.84 K 4.85

Noveaber 13, 1974

MiALAWI

LIIDNGWE LAND DEVELOPMENT PROGRAM - PHASE III

Requirements for Sundry Medium Term Credit

(MK000 )

Issue Year 1 Year 2 Year 3Price 1974/75 1975/76 1976/77 1977/78 3978/79

PFaim carva 182 (140) 25,480 (160) 29,120 (180) 32,760 (200) 36,400 (200) 36,,400

Implements 60 (40) 2,400 (50) 3,000 (60) 3s600 (60) 3,600 (60) 3,600

Maize mils 2,330 (30) 69,900 (30) 69,900 (40) 93,200 (40) 93,200 (30) 69,900

Fencing 2*500 2,500 2,500 2,500 2,500

Tobacco barns _ 5,Cor 5,000 5,000 5 000

Rural c-'aftven 1,200 1,2 1,2 1.2 1,

Total 101 .481 138260 141,900 118 600

1/ Plough at MK3C and ridger at NK30; omen may be issued on credit witk' these impleaents; credit fundsare provided for under BtU1 feeders.

MALAWI

LThJNGW9 LAND DEVELOPMENT PROGRAM - PHASE III

Cash Flow Staterrent of Medim Term Credit

Year 1 'rear 2 Tear3

1973/74 1 974/75 (1 790-/6), (1976/7 (1977/78) 1978~/79

Basic Cost 47.2 101.5 110.7 138.3 141.9 118.6

Less deposits (1/3 of basic cost) 33_ 36.9 46.1 47.3 39.5773-78 92.2 -04-79 .1

Add inrterest*

7.1 15.2 16.6 20.7 21.3 17.8

38.6 82.9 90.4 112.9 115.9 96.9

_d_ 10% service carge_ 3e9 8. 9.0 11.3 11.6 9.7-rId 10% service ae2974;i 15.;2 127.5

Traisportation 24 24,6 24.6 24,.6

mount, ta be reyvid 'ivy fax%&r8 91.2 124,O _2.1 121

Spread of repaywi@:W over 3 years o104 1i4.1 30.4 ,I 149.g9 90e78,8 10.4 14.2 30.4 41.3 h- 9

8.8 o10.4 14.2 30.4 104

I/ In each unlt of the LLDP area o taare would be eligible for 25% of total ao%' for the purchane of a lorry.The reuiainng funds would " io cca(a frow the trpAer concerned and perhaps ewercial banks. Thc edlvaTerm Credit kW. wowld be afSccted by the following figures:

Year 1 rear 2 Tear 3Unit price - H17,30-

25% - YX1,825; (10)/18)250 (tO) 18,250) (tO0) 18,250 (104' 18R,P%ad:d W4Pee4t (22.5%) 4 106 4 106 4 106 4,1o6

22',356tl~- eyk W---add 1 0% se rvloe charge 2 236 21 26 2,236

2! k4~~~~,5922

*F The interest and ser-viee charg;e togthr om to aot35%9 o each aobooe u312 er ie aot F1ge~.orcor~e abot o lon ver~-12 yar ibouaou10% interest per year on the original amnout'C.

.1k.,r

MALAWI

LILONGWE LAND DEVEIOPMENT PROGRAM - PHASE III

Total Credit Cash Flow

(NK' 000) '

Yar 1 Year 2 -Year 31973/74 1974/75 1975/76 1976/77 1977/78 1978/79

Sources of Fbnd

Unspent balanee brought forward 402.9 270.9

New funds required 506.2 159.9 78.9 259.3

Loan Rbpayuents :Seasonal 392.4 525.0 1,389.0 1,651.0 1,885.0 2,395.0

Medium term 19.2 33.3 55.0 85.9 1,22.6 142.0

Stall-feeders 24.2 23.3 37.8 54'5 65.8 82.6

Poultry - - 5.7 17.2 28.6 37.9

Dairy -. 4 2.8 5.4 9.8

2/ 435.8 581.6 1,488.9 1,811.4 2,107.8 2,6'67.3

less bad debta 20.6 27.9 72.2 86.8 100.4 126.9

415.2 553.7 1,416.7 1,724.6 2,007.3 2,540.4

PFnds available for lending 818.1 1,330.8 1,56.6 1,808.3 2,266.3 2,540.4

Utilization of Funds

Seasonal 31 477.0 1,208.0 1,376.0 1,571.0 1,996.0 2,064.0

MIdium term - 47.2 101.5 129.0 157.3 161,0 137.6

Stall feeders 23.0 21.3 50.8 53,1 72.1 85.2

Poultry - - 16.7 22.8 29.0 35.2

Dairy _ - 4.1 4.1 8.2 13.6

Loans required 547.2 1,330.8 1,576.6 1,808.3 2,266.3 2,335.6

Unspent balance 270.9 - - - - 204. 8

| ,~~~~~~~~~~~~~~~~TM. . 2__

1/ Based on bank balance at March 31, 1973..-

2/ Bad debts at 5% of seasonal plus mdium-teru credit._ _ _ _JR Rwesents basic cost including transportation. -

ANNEX 6Page 1

MALAWI

LILONGWE LAND DEVELOPMENT PROGRAM - PHASE III

Livestock De'elpment

Introduction

1. Livestock development was started at LLDP during Phase II andincluded extension and disease control activities designed to improvethe productivity of the village cattle herd. Moveover, the developmentof a breeding ranch was started with the aim of raising feeder stockwhich would be issued to LLDP farmers for fattening. During the Projet,livestock developmerLt would be given greater emphasis and dairying andpoultry keeping would be added to the program activities,

A. Cattle Improvement

Background

2. LLDP has a large cattle population of about 70,000 head (1972estimate) which is about 12% of Malawi's entire cattle herd. There arenot many grazing lands left in the LLDP area, besides the dambos (swamps)where the cattle are kept during most of the year. The cattle density .Lshigh: about one head of cattle for every 12 acres of land. Overgrazinl,,is therefore a serious problem, especially during the dry season when t]Eieanimals are concentrated in the wetter parts of the dambos after havingranged over the harvested fields. About one half of the animals are cow>sor heifers, one quarl:er are calves and weaners and the remainder are bulls,steers and about 7,500 to 8,000 work oxen.

3. Mortality rates, especially among calves, are high and the pra-ductivity of the catt:le is still low because of generally poor husbandrytechniques and in spite of the fact that about three quarters of allanimals are now regularly dipped against tick-borne diseases. VeterinaryDepartment Statistics over the period 1967-71 indicate that the averageannual offtake for the Lilongwe District was about 10% and the growth rate1% per annum, giving an average productivity of about 11%.

Proj ect Activities

4, Livestock extension services have been set up during Phase II :!inorder to improve upon the productivity of village cattle, and theseservices would be expanded during the Project. Activities would include

KN2 NEX 6Page 2

(a) encouragement of greater use of crop residues with stallfeeding in order to achieve greater slaughter weight andhigher grades of beef;

(b) production and conservation of fodder crops particularly forfarmers participating in dairy developmenit with half-bredFriesiar's;

(c) controlled grazing of the dambos, e.g. through fencing andeducation of the stock owners;

(d) further culli'ng of surplus animals and a reduction of thenumber of surplus bulls.

5. Provisions was made in Phase II for construction of 14 dip tanks,but that number was reduced to five during implementation because construc-tion costs turned out to be about MK 5,000 each against an appraisalestimate of E 2,OO0. A careful investigation by the LLDP livestocksection has led to the conclusion that a further five dip tanks wouldneed to be constructed during the Project. After completion of theprograme all LLTDP area cattle would be within 4 to 5 miles of a dip.

6. Artificial insemination services would be expanded with theintroduction of four inseminators in the first year, increasing to sixin year two and eight in year three. The main semen used would probablybe Friesian which would give a supply of stock for the Lilongwe milk shedand also produce a high quality beef carcass. The services would bebased at the Regional Veterinary Office at Lilongwe and the Project wouldprovide ftunlds to cover salaries and transport of the inseminators as wellas the direct costs of the inseminators, equipment, semen and liquidnitrogen.

7. A mobile cattle market would be set up, which could lead to thesiting of a permanent market if cattle flows are sufficient.

8. It is anticipated that continued extension and disease controlactivities would increase the productivity of the program area cattleherd. Beef production would rise from an estimated level of about 1,050short tons in 1974 to about 2,040 short tons in 1994. Some 850 shorttons would be produced through stall fattening of village raised steersby that year (see Table 1).

B. Dzalanyama Ranch

General

9. Stall fattening or cattle by smallholders using maize meal, grassand crop residues such as maize bran, maize stems and leaves and groundnuts

ANNEX 6Page 3

haulms has been successfully encouraged in Malawi during recent years. Stallfattening is an attractive proposition for the smallholders because nilarly

all the required feedstuffs are readily available on the farms and thi! amountof labor involved is small and evenly spread over the year. Usually wso

animals are fattened at the same time, but some farmers already opera!:e

larger units.

Phase II Achievements

10. As a part of the Phase II project the development of a breedi.ngranch to produce stall feeders for LLDP farmers was started in 1970. Theranch covers an area of 161,000 acres of the Dzalanyama forest reservewhich is the major catchment area of the Lilongwe river in the south-westernpart of the program area. During the appraisal of Phase II it was estimatedthat full development of the ranch would be reached in 12 years, and thatabout 1,800 steers would be raised and issued to the farmers annually by1982/83. From year 8 onwards a surplus of breeding heifers rising to about700 annually was expected and these were to be sold to the farmers formilk production or fattening. Finally the ranch was expected to produceabout 950 cull cows, bulls and heifers annually at full development.

11. According to the Phase II projections all investments in theranch were to be completed during the four year project period. Theseincluded physical developments like the construction of roads, buildings,fences, fire breaks, boreholes, dip tanks and the purchase of some 6,000breeding cows and in-calf heifers and 230 bulls. Moreover some 1,000

immature steers were to be purchased annually to be issued subsequentlyto the farmers during the build-tip period of the ranch.

12. The physical development of the ranch, not including the purchaseof breeding animals, was virtually completed by the end of March 1974. Thecapital costs involved amounted to about M( 210,000 which compares with anappraisal estimate oil MK 252,000. Savings were made on boreholes; onlythree were constructed instead of the 14 planned because water proved mareabundantly available from natural sources than anticipated. Expenditure<,on machinery and equipment were also lower than estimated.

13. The Phase II cattle purchase projections could not be fulfillcd how-ever. Malawi's estimated catlie population of 560,000 to 580,000 head g10'owsby about 3.5% or 20,000 head annually. Stocking of the ranch at the anl.i::i-pated pace of 1 ,500 coDws and 1 ,000 steers annually would have meant thal: inorethan 10% of the national herd increase were to be diverted to the ranch,Moreover LLDP cattle buyers found themselves competing in the local market:swith representatives of other cattle expansion programs, for instance th;seimplemented by the Veterinary Department and the Central Region LakeshoraDevelopment Project. Prior to 1973 only 1,030 cows and in-calf heifers amd660 steers could be purchased over a period of 18 months, and this wasless than half of the appraisal estimaLtes of 1,500 cows and 1,000 steersannually. During 1973 LLDP cattle buyers were more successful and managed

ANiEX 6Page 4

to buy 970 cows and heifers and 1,040 feeders and young bulls. Althoughthe market situation was very tight, purcahse prices for cows exceededthe appraisal estimate of MK 36 per head by only 10-20%, The prices paidfor steers and bulls exceeded estimates of MK 22 per head by 60-80%,mainly because older animals were bought when no immature steers wereavailable. The slow expansion of the ranch herd resulted in a shortfallof steers sold to the farmers. Up to May 1974 a total of nearly 1,500steers were issued to stall fatteners, which is less than half the numberestimated at appraisal.

Pr o

14. Building-up of the Dzalanyama herd would continue through theProject, but at a slower pace than originally estimated (Table 2). Thepossibility of stocking the ranch with animals purchased in neighboringcountries has been examined but does not appear to be feasible becauseof high prices, disease problems or transportation costs. In view of theencouraging 1973 purchase record it is considered possible to buy locally750 cows and in-calf heifers and 600 immature steers per annum. By 1979/80the maximum number of 5,000 breeding cows would be reached and four yearsthereafter the ranch would reach full development production level. Somefurther investmen-s would be made during the Project, mainly for thereplacement of machinery and equipment and for the construction ofadditional fencing.

15. A stocking density of one animal unit for every 14 acres of theranch is considered feasible and would be reached at full development.In the dambos (swamps) which make up about 20% of the ranch area, thecarrying capacity is about 2-3 times higher than in the natural forestareas. Some thinning out of the latter would increase the grazingpossibilities without impeding its natural role as a watershed. Discuss-ions between the Forestry Department and Project management should resultin a balanced policy on this matter.

16. Particular attention would be given to the supply of mineralsand supplementary feeding of the animals. Salt and phosphate are essentialfor all stock throughout the year. A protein supplement in the form ofurea or maize germ is required for all breeding stock for a period of 4-5months during the dry season in order to maintain acceptable weaning andmortality rates.

17. Upgrading of the herd would be achieved through bulls raised inthe Chitedze Experimental herd and purchased exotic bulls as well as throughartificial insemination. A satisfactory working arrangement exists betweenthe Chitedze Research Station and Project management with regard to theexperimental herd. The herd 1/ is stationed on the ranch and Project

1/ As of March 31, 1974, the Chitedze herd included 371 Zebu cows, 129calves, 21 mature Zebu bulls and 38, 3-year Zebu bulls.

ANNEX 6Page 5

management in return has the first choice of the male offspring of the herd.To a certain extent the ranch would help relieve the shortage of half breeddairy cattle through the use of Friesian bulls for artificial insemination.

18. The ranch would continue to be managed by a qualified RanchManager and an assistant manager. The Project Manager would have ovecirallresponsibility for the development of the ranch until the end of theProject. Thereafter, the Veterinary Department would assume responsibilityfor the ranch. In order to control predators which caused the death of60 out of 110 animals lost in 1973, two game rangers would be employedby the ranch.

19. At full development the ranch would produce annually:

(a) About 1,700 ranch-bred steers to be sold to smallholders atan age of about 30 months and a live weight of about 700 lbs.During the first six years the majority of the steers wouldhowever st:ill be Zebu types either purchased or ranch bred,weighing about 100 lbs less.

(b) About 750 cull cows weighing about 650 lbs. Cows culled fromlocal purchases during the build-up period of the ranch areassumed to, weigh 550 lbs.

(c) About 180 cull heifers and 40 cull bulls, weighing 550 lbs and1,100 lbs respectively.

(d) About 510 breeding heifers which could be a half-bred Friesizntype suitalble for dairy development depending on the overalldemand and supply situation for this type of animal in thecountry. If sufficient da-lry cattle would be available fromother sources the heifers could be fattened.

The cull animals produced by the ranch would be sold either to local bu.tchersor the Malawi Cold Storage Company. Beef production from cull animals soldby the ranch and froml stall feeders issued to the farmers would be about620 short tons annually from 1984 onwards (see Table 3).

20. Details of annual ranch income and expenditure are presented irTable 4; a summary follows below (in '000 MK):

ANNEX 6

Page 6

Returns from Total Net CashYear Sales Expenditures Flow

1975/76 71 193 (122)1976/77 77 196 (119)1977/78 99 191 (92)1978/79 116 198 (81)1979/80 142 168 (26)1980/81 154 178 (24)1981/82 180 156 231982/83 218 157 621983/84 and following 244 158 86

The ranch cash flow would become positive from 1981/82 onwards and an addi-tional MK131,000 would be required to balance the ranch budget during thethree year period following the Project.

21. Stall fattening of the steers by small holders would add the followingvalues for the different types of steers to be issued:

Purchased MK 14.2Ranch bred, Zebu type MK 17.3Ranch bred, cross-bred type MK 18.0

The added values are net of feed costs; details are given in Table 5.

C. Dairying

Background

22. In February 1973 Government decided to concentrate the developmentof Malawi's dairy industry around the urban centers of Blantyre and Lilongwe.It was decided that resources available for dairy development would be verylargely directed to areas within a 25 mile radius of the two towns. In supportof this policy a smallholder dairying scheme is included in the Project.

23. With the help of a Danish loan, a new Capital Dairy and five collec-ting centers with cooling facilities were built in the Lilongwe area in 1973/74.The initial installed equipment of the dairy has a capacity of 2,000 gallonsof milk per day, but the dairy buildings have been designed to accommodateequipment dealing with a daily throughput of 4,000 gallons. Based on supply,demand and sales projections for milk the Veterinary Department estimates thatthe additional equipment necessary to reach the 4,000 gallons per day levelwould need to be installed in 1978. Out of the five collecting and coolingcenters, two have been constructed inside the LLDP area.

ANNEX 6Page 7

24. In 1973 liquid milk sales in Lilongwe averaged about 100 g.llonsper day, but the effective demand was projected at 600 gallons. Demw. nd is ex-pected to grow rapidly with the expansion of the new capital city, a:..d it isestimated that by 1980 a market for about 3,000 gallons of milk per c.ay woul(dbe developed. Half of the sales would be in the form of 3.5% fat or sD-called"high-income` milk and the remainder divided between 3% fat "middle-fnzome" and2% fat "low income"r milk.

25. The milk would be almost entirely supplied by smallholders, with orLlysmall quantities to be produced by a modest Government dairy farm which ispresently being developed. Cross-breeding of local Zebu cows with importedFriesians has been practiced successfully in Malawi during recent years. Thereare only a limited number of cross--bred animals available, however, and thenumber available from Government Expansion Centers is expected to rise ratherslowly from about 80 in 1974 to about 140 in 1982. It is therefore essentialthat animals bred by artificial insemination in the traditional herds are broughltinto the dairy scheme. The Dzalanyama Ranch offers a third possible source ofsupply. The ranch started using artificial insemination on a limited scale in1972 and has enlarged its program for the 1973 breeding season. A first batchof heifers could be ready for issue in 1977, and some 100 and 150 animalscould be delivered in 1978 and 1979 respectivley. The issue of these animalsfrom the ranch would depend upon a counter balancing number of other femaleZebu stock being available as replacements for the ranch.

Poject Activities

26. The number of dairy farms to be started inside the LLDP area .is tenta--tively estimated at 15 during the first and second year (1975/76-1976/77)and 30 during the third year of the Project. This assumes that half-breds wouLdbe available from the ranch, but takes no account of the success in en ouragine;farmers to milk thei.r own heifers bred from artificial insemination. 'The Proj-ect would provide credit to pay for up to two thirds of the initial capitalrequirements (cows, buildings and equipment) including three months wovkingcapital. The amount of the loan would be 1K272 and the interest rate 0'K perannum. Repayments would be made over a period of four years.

27. Initially the smallholder would keep two half-bred Friesian (ows.The half-bred can produce 400 gallons per lactation but requires a much hligherstandard of management. The system would be based on summer grazing arid winterstall feeding of conserved hay and crop residues. Concentrate rations are basedlargely on home produced crops with some purchased protein and minerals. Whereland acreages are limnited, stall feeding all the year round may be neces£aryand the labor input :Ln such a case would be greater.

28. The farmers' capital requirements and the annual costs and re .v.rnsof a unit consisting of two half-bred dairy cows can be summarized as follows:

ANNEX 6Page 8

Initial Capital RequirementsK

Cows 2 x K120 240

Fencing wire 90

Pasture, 3 acres x K 15 45

Building 30

Equipment 50

Annual Costs and Returns

Depreciation

Cows, 6 years, residual value K 60 per cow 20

Fencing wire, 10 years 9

Pasture, 4 years 11

Buildings, 10 years 3

Equipment, 6 years 8

Direct CostsK

Pasture maintenance, 3 x K4 12

Feed, 3,330 lbs x 1.5 t -/ 50

Veterinary, 2 x K5 1072

Total Annual Costs 123

Returns

Milk sales, 666 gallons x 32 t 213

Calf sales 3/ 17Total Annual Returns uo-

Margin 107

Margin per acre 36

Margin per cow 54

1/ Concentrate ration - 90% maize bran and 10% blood and bone mealplus salt; fed at 5 lbs of concentrate per gallon of milk produced.

2/ Milk production 400 gallons per cow per lactation ; 5 lactationsper 6 years.

3/ Price per calf MK 10; 5 calves per cow per 6 years.

AYNIE~l 6Page 9

29. Experience has shown that a two cow unit can be looked afti r bythe average family and that the labor requirement is somewhere in thi: rangeof 130 to 160 man-days per year. The net margin per acre of fooder (-rops ishigher than can be obtained from an acre of hybrid maize or groundnuts, butsligntly less than from an acre of tobacco. The margin from dairying would beincreased from .g107 to about KM165 per year for a two cow snit when threequarter-bred Friesilans would be kept instead of half breds.

D. Poultry

Background

30. Lilongwe has experienced regular egg shortages for a nunber of yearsand demand is expected to grow rapidly with the expansion of the new capitalcity. The results of a 1973 survey carried out by the Veterinary Departmentsuggest that the stpply of eggs to the town of Lilongwe was in the region of750,000 to 1,000,000 eggs per year, while the demand was estimated at 2.5 to3.5 million. The annual demand is expected to rise to about 6.5 to 9 millioneggs in 1978.

31. It is estimated that in 1973 about one half of the egg supplv for thetown of Lilongwe came from Bunda College and a few small comrmercial farms, whilesome two to six thousand eggs were shipped every week from Blantyre to Lilongwe.Local farmers were thought to bring only a few dozen eggs into town every week.

32. Detailed proposals for a smallholder poultry project in the ientralRegion were drawn up by the Planning Unit in conjunction with the Departmentof Ani.mal Ilealth and Industry in order to try to alleviate the supply Jproblem.Local progressive smallholders would be encouraged to enter commercial eggproduction along the sarae lines as the poultry project which has been X peratedsuccessf lfly for a feBw years in the likolongwe area near Blantyre. A s;mall-holder poultry enterprise would provide farmers with a regular income and canbe integrated into t le farming system. The proposals were submitted tc 1:heBritis'n Government and a Central Region poultry project for areas outside LLDPis expected to start in 1974/75. Similar proposals for poultry develor;:l.entinside LLDP would be implemented during the Project from 19751'76 onwardz_

Project Activities

33. SoTme 40 new poultry farms would be established per year, each witha battery cage laying unit of 96 hybrid birds, Battery cage production hasbeen selected as this has been proved to give higher egg production and requi.relower feed consumption than other systems. The type of bird used in th>. Proj-ect would be an improved hybrid layer type. At present the majority of thechickens are imported but it is expected that existing Malawi hatcheriesb wouldincrease their capacity. Up to the age of 6 weeks the chickens would bR. 'kept

Page 10

on the poultry farm of the Veterinary Department at Bweniba near L,longwe.After delivery to the farmers the chickens would be raised uip to the point-of--lay (age about 20 weeks) in rearing houses and subsequently be transferred tothe laying cages. The cages must now be imported, but the possibility of localproduction by rural craftsmen trained at the Rural Trade School (in Salima) isbeing explored. The Grain and Milling Company at Blantyre supplies feedstuffsfor other poultry enterprises and would do so for the LLDP poultry project aswell.

34. Participating farmers would be selected from within a 5 mile radiusof the milk collection points, which would also be used for egg collection.The farmers would transport their eggs to these points and the eggs would thenbe transported by the milk lorry to the department grading center at Bwemba.Since the farmers would have considerable difficulty in disposing of 80 to 90birds at the end of the laying cycle, processing facilities for cull hens wouldhave to be set up when the project starts. The Cold Storage Company has ex-pressed its willingness to assist in this matter and facilities could probablybe set up at Bwemba adjacent to the Company's Lilongwe abattoir. Marketinig ofthe hens would not present a problem since it is estimated that a minimum of2,000 extra table birds are required weekly in order to meet the present demandin the main townshitps of Malawi.

35. The Project would provide extension services and credit facilitiesto the farmers. Credit would be given from the LLDP credit fund in the formof two loans. The first loan would finance the initial capital requirementsexcluding the costs of labor and materials which are locally available. Theestimated amount of the capital loan is MK263 with an interest of 10% per annumAand to be repaid over three laying cycles. The second loan would provide work-ing capital for the cost of a batch of pullets and the rearing feed. The amountof the loan is estimated at NK154 with an interest change of 15% and repaymentover a single egg laying cycle (60 weeks). It is assumed that the working cap-ital loan would be given over four egg laying cycles, after which the farmerwould have saved sufficient capital to be self-financing. Repayments for bothloans would be made by deductions from egg sales to the egg marketing organ-ization.

36. It is assumed that the farmers would follow a 60 week production cy-cle. The bilrds will be in the laying unit from age 20 weeks to age 76 weeksand the cages would then remain empty for 4 weeks for cleaning. The productioncycle includes a concurrent 14 week rearing period from age 6 weeks to age 20weeks for the following batch of layers. The farmer's capital requirements andthe costS and returns per production cycle can be stmnarized as follows:

}NEX 6Page 11

Initial Capital Re,quirements K

Rearing and battery houses, local costs 50

Wire netting for housing 30

Cages for 96 layers 213

Feed and water trDughs for rearing housing 20313

Cost and Returns per Production Cycle

Depreciation

Housing, 10 years 9

Cpges and troughs,, 7 years 38

Direct Costs

100 pullets at 85 t 85

Feed for 100 birds for 14 weeks rearing(20 lbs at 3.439 t per lb x 100) 69

Feed for 96 layers(100 lbs at 3.75-5 t per lb x 96) 360

Maintenance of buildings and equipment 10

Miscellaneous charges 8

Total Costs 579

Sales

961/ birds at 18 dozen eggs at 44 lt per dozen 760

861/ birds at Kl fDr sale at end of cycle 86

Total Sales 846

Margin per Cycle 2 267

Adjusted Annual Margin 2/ 231

1/ Assumed mortality rate respectively 4% and 10% for pullets andfor layers.

2/ interest payments not included in the costs.

ANNEX 6Page 12

The net annual income from poultry keeping would be considerably higher thanthe average farmer earns from his crops. Incomes net of interest paymentswould be as follows:

Net IncomeInterest on Per Cycle Net

Net Interest on Working Total After AnnualCycle Income Capital Loan Capital Loan Interest Interest Income

------------------------ MK per cycle------------------------------

1. 267 32 23 65 202 1752. 267 22 23 45 222 1923. 267 11 23 34 233 2024. 267 - 23 23 244 2115. 267 - - 267 231

November 20, 1974

MAJAWI

LII.ONGWE LAND DEVELffI!ENT PROGRAM - PHASE III

Beef Production from Villa-e Cattle (Sh.tons)

Beef Produetion (eh.tone)Year Herd Without t re Incremental

Sise Project(number) Stallfed Other Stallfed Other Total

1972/73 70,000 1,022 1,022 _1973/74 71,050 1,037 1,037 _1974/75 72,116 1,053 1,053 _1975/76 73.198 1i06 1 ,06 _1976/77 74,296 1,o85 61 1,082 61 (3) 581977/78 75,410 1,101 124 1,130 124 29 1531978/79 76,541 1,117 190 1,161 190 44 2341979/80 77,689 1,134 257 1,136 257 2 2591980/81 78,854 1,151 326 1,111 326 (4o) 2861981/82 80,037 1,168 399 1,092 399 (76) 3231982/83 81, 38 1,186 474 1,068 474 (118) 3561983/84 82,457 1,204 553 1,046 553 (158) 3951984/85 83,694 1,222 634 1,018 634 (204) 4301985/86 84,949 1,240 718 994 718 (246) 4721986/87 86,223 1,259 732 1,012 732 (247) 4851987/88 87,516 1,278 746 1,034 746 (244) 5021988/89 88,829 1,297 761 1,053 761 (244) 5171989/90 90,161 1,316 776 1,075 776 (241) 5351990/91 91,513 1,336 791 1,095 791 (241) 5501991/92 92,886 1,356 806 1,119 806 (237) 5691992/93 94,279 1,376 822 1,140 822 (236) 5861993/94 95,693 1,397 837 1,164 837 (233) 6041994/95 97,128 1,418 854 1,186 854 (232) 622

ASSIIMPTIONS P ____ Ht P

1. Annual growth of herd: with and without project 1.5% throughout.2. Anmual off take: with project 1972-75: 10% ; 1976: 10.5%; 1977 11%; 1978 and aftr 11.5%

without project 10% throughout. 3. Proportion of steers in the herd is 7.4% throughout,. With the project an increasing proportion of the steers would

be stall fed starting with 5% in 1976, increasing by 5% each year, until in 1985 (50%) and thereafter at th-e -meme mtm.* w e s ;4 u~i,i - 0, then increasing by 0.5% D.a. due to the enffae-t of e'a-

, 3:6 sJLsU- ^ J..Jib.1i. inseatnaion,5, Carcass weight of other animals with the project 292 lbs until 1980, then increasing by 0.5% p.a. as note .

Without the project 292 lbs throughout.

A10122 6LILONG2WE 1L.2D DE7110PM2= PRO-B245' - '-LSE III BGDLe 2

Dzalaryaama Ranch

Herd Projections and Technical Coefficients

-- CC__ a___

CATEGORIES --------------------------------------------- vnd o Year ----------------------------------------------------- 3-- - I 2!1973_74 1974/75 1'975/76 1976/77 1977/78 1976/79 1979/80 19080/81 19_1/82 1982/683

Herd Composition A/ A.U. (31/3/74) (U) (1) '2) (3) (4) (5) (6) ;7 (6) 19695(9-20)

Cow. s 1.0 2,024 2,738 3,194 3, 595 , 220 4,929 5,00O0 5,000 5,000 5,000 5,000a1ves 642 1,315 1,73D 2,o76 2,57 2,954 3,450 3,750 3,750 3,750, 3,75^

Yearlr.gs 1.0 563 642 1,315 1,780 2,C76 2,517 2,954 3,450 3,750 3,1750 3,75CHe'fers 24-36 Months 1.0 389 267 305 62 8L5 986 1,196 1,4C3 _63 ;Bu-s 24-36 Mont s 1.0 12 36 3 63 4L 42 L2 ,_0Steers 24-36 Months 0.7 342 229 266 57_ 752 942 '.15L _,3 ,7Bulls 1. 1 10 2 17___

Tab-Total 1 ,090 5,338 7,027 - ^ ,672 12,569 13,996 1 U, , 2 =,2Purchased im.ature steers 1.0 31 600 600 ^ 600 6"D 400 2v

Total Head 4,090 5,938 7,627 9,445 11,272 13,169 14,396 15,406 17,978 16,262 16,26^

Total Animal Utnits 3,277 4,508 5,714 7,084 8,364 9,744 10,369 10,976 11,430 11,702 11,702

BeathsCows 10L 132 160 180 211 246 250 25' 250 2"5Year'- 'gs 29 32 65 90 1OL 125 1468 72 -Eeifers 2L-36 Yonths 20 13 13 31 42 49 60

-ills 2L-36 Mrths 2 2 3 3 2Sneers 24-36 Months 9 6 1 20 23 293ulls 6 5 6 7 3 10ourchased Steers -- 30 30 30 30 30D --

Total 166 225 234 355 4'8 485 519 548 572 582

Poroshase sCows and in-calf heife--s ,o 750 750 750 750 119 -- -- -- --

Inmature steersV, 6oo 600 600 600 600 400 200 -_ _

Polls 10 10 10 10 10 10 1C _ 10

Total136 91,360 1,360 1,36v 1,360, 36360 529 210 _1 _ 1C

SalesCulL Cows 3C4 4''l 1 79 539 6`3 739 750 750 750 75°Cull Pulls 2 22 2 29 34 39 4o 40 40 40Cul wHei-ers -_ __ -- _- __ -- 120 140 164 1'8zree'Irg Heifers -- -- -- --- -- -- 16 193 393 51412r12 '-a'e S"ee'sRT/ 333 223 260 557 762 919 1,125 1,322 ,557 c96

27 4' "se d S.ee:r -570 570 570 570 570 380

66- 1,226 ,33L 1,695 1,999 2,267 2,

Teco"ns'ca ConefficientsCa'ves -o/eane 665 6° 70 70 77CU1L Cuows . 1-5 -5 15 15 -' -'C-" 1s Heifers -- __ -- -- -- --

Bulls 20 20 20 20 20 20 23 2D 2 2vorta-y 5 5 5 5 5

0oxvs ~ztal hera3 1 49 LO 42 38 37 37 35 32 31 3.27055: ,Animal i01t 19 36 28 23 19 17 16 15 14 14 14C .o-t 2ate 9 9 '1 11 12 14 15 18 20

-/ Inclding the Zh:itedze Experamental herd

?Purchased at age 12-16 months

i Sold at age 30 mscnths

- Inn'lded in ranch-bred steers

-. cscs~~~~~~~~~~~~~~42,,x 6Teble 3

LILOCNGWE LAEND DEVEELSPRE,T PRC POGR-3iM - PHASE III

Dzalanyamsa Ranch

Beef Production from Dzalanyama Ranch and from Ranch Supplied Steers (Sh. Tons)

1975/76 1976/77 1977/73 9 ; 193-,3: 1980/81 L981/,82 1ic ,2 '83 19i,3/84to

ly', /95(1) (2) (3) (4 _ 9 (8) (y) 81 (9-2C)

Categories

C ull A -cia' s f-ro0

RanchCows 4 56 65 73 °6 iCC 102 102 -3 -

ulie 6 7 8 f 1. s_3_Hieifers 2/ _ _ _ _ _- r_

Sub-total W 72 73 -- -< _50

Stall Feeders 5Ranch-bred Steers 4 50 58 124 14D 24L9 305 360 --2 4acPurchased Oteers 95 95 95 95 95 63 32 -

Sub-total 15 153 219 7 3 392 7- 22 - 771

POTAL 207 225 300 360D 454 498 525 c8 6Ž,

As sumptions:

k/Cull cows - Year 1 - 7; 500 lbs live 're'gho (x50°, Standard x 5151 killing ow-s 1l4 los car-cas iwe set(x50% Commercial x 48% 3 ' _2 lbs carcass weight

272"- Year 8 ornrwards;650 lbs '½ve weight (x75% Standard x 51% killing out 249 lbs carcass reight

(x25% Commercial x 48% " 73 0bs carcass -- i_t

3272/Cull bulls 1,10O lbs live weight xlOo Commercial x 48% killing out 528 lbs carcass 3i3/Cull heifers 550 lbs live weight xlC0°, Prime B x 53% killing out _92 b cas cas . ,ht4/Purc. ased steers 6C0D lbs live weight (x 755% Choice x 65s killing ou' 252 lbs carcas; weignt

'x 20o% Prime A x 55% killinrg out 66 loD s carcas;: ;'ei_,mt(x 5%, Standard x 51% killing out 1> lbs carcas<: ight

333"'/Rionch-bred steers,

Zebu - Year 1- 4; 800 lbs live weig'it (x 90- Choi5

ce x 560, killing out 4-c r a -S cas. c -'-s-(x 10% Prime A x 557 killing out 4 -b Ifs c -* e_

Rancl,-bred st;eers,cross-bred,Year 5 onwards;97( lbs live weight (x 90- Choice x 56% killing out 2 ts careas:½xetc

(x I0o% Prime A x 55° killing out 53 lbs½ cara ei_,42

14ALAWI

LIUDNG LAJID DUMMEII P)Rh PR=S III

Ranch InoA.e and t r(M KV&cha

1 P75/76 1976/77 1977/78 1978/79 1979/80 1980/81 1981/82 1982/83 1983/84tlo

(1) (2) (3) (4) (5) (6) (7) (8) 1994/95(9-20)

aALES 3!

Cull Cows 18,495 21,555 24,255 28,485 33,255 33,750 33,750 42,000 42,000Cull Bulls 1,760 2,000 2,320 2,720 3,120 3,200 3,200 3,200 3,200Cull Heifers 6,840 7,980 9,348 10,146Breeding Heifers - - 1,920 23,160 47,160 61,680Ranch bred Steers 14,272 16,640 35,648 48,768 68,925 84,375 99,525 116,775 127,200Purchased Steers 36,480 36,480 35,1480 36,480 36,480 24,320 12,160 __ _

TOTAL 71,007 76,675 98,703 116,453 141,780 154,405 179,775 218,483 244,226

1/ Assumptions

Cull cows: Year 1-7 mainly from local purchases, 550 lbs. L.W. , price K45 per head, 1 -Year 8 and after, mainly ranch bred, 650 lbs. L.W., price K56 per head

Cull bulls: 1100 lbs. L.W., price K80 per headCull heifers: Finished at 36 months off grass at 550 lbs. L.W., price K57 per headBreeding heifers: K120 per headRanch bred Steers: Year 1-4: mainly Zebu type, 600 lbs. L.W. at 9.5t lb. + 1i2 for transport and handling: K64 head

Year 5 and after: mainly cross-bred 700 lbs. L.W. on above basis at K75 per headPurchased Steers: Same as ranch bred Zebu steers K64 per head

CD

0 '

MALAWI

LILONGWE LAND DEVELoMENT PROGRA,Mv - PHASE III

Ranch Income and Expenditures (cont.)(M Kwacha)

1983/84No. of units Unit to

Unit year (1)-(3) Cost 1975/76 1976/77 1977/78 1978/79 1979/80 1980/81 1981/82 1982/83 1994/95CAPITAL OOSTS ~(l) (2) (3 4) (%) (6) (7) _(8) (9)-(2o)CAPITAL COSTS

VehiclesCcttle truick number - 9,930 9,930 - _ _ 9,930 1,985 1,985 1,985Landrover LwE number 2 4,400 - I4k00 W-400 4,400 4,40D0 2,200 2,200Tractors number - 5&280 0,560 _ - - 10,560 2,110 2,110 2,110

Sub-total 20,490 4,400 4,400 -4,d90 E,74q5 b,295 6,095

MiscellaneousMachinery and equipment replacement -J 2,500 2,5G0 5,240 5,240 5,240 5,240 5,240 5,240 5,240Water bowser number 1 645 6&5 - - - - - - -Ox-carts number 5 S75 525 350 -17 175 175 175 175 175Additional fencing mile 30 325 - 9,750 _ -Ablutions number 11 55 220 165 220 220 165 165 165 165 165Temporary houses number 41 65 975 650 1,040 1,040 1,404 975 975Spray race number 1 2,120 2,120 - -- - -- _ _ Jumbo crossings number 10 500 24500 2,500

Sub-total 9,4_5 15,915 6620

Livestock PurchasesCows number 2250 55 41,250 41,250 41,250 41,250 10,940 _ - - -Imature steers number 1800 48 28,800 28,800 28,800 28,800 19,200 9,600 ---Bulls number 30 400 14l000 4.000 4°000 4,000 4,000 4,000 4,000 4o000 4.000

Sub-totsd 74,050 74,050 74,050 74,050 34_140 1,4,000 4,00Total 104,025 94,365 84,950 80,725 40,760 k5,o45 19,050 15,875 15,875

)01

MALAWI

LILONGWE LAND DEVELOP=ENT PROGRAM - PhASE III

Dzalanyama Ranch

Ranch Inc d ft 1ditures (cont'd)

fM Kwachs)

Unit 1975/76 1976/77 1977/78 1978/79 1979/80 1980/81 1981/82 1982/83 1983/84Cost to

1994/95OPERATING COSTS (1) (2) (3) (4) (5) (6) (7) (8) (9)-(20)

Salaries and WagesRanch manager CTO 7,524 7,524 7,524 7,524 7,524 7,524 7,524 7,524 7,524 7,524Assistant manager ST0 2,595 2,595 2,595 2,595 2,595 2,595 2,595 2,595 2,595 2,595Technical officer livestock TC 1,266 2,532 2,532 2,532 2,532 2,532 2,532 2,532 2,532 2,532Senior clerical officer SOC 1,218 1,218 1,218 1,218 1,218 1,218 1,218 1,218 1,218 1,218Clerical officer CO 495 495 495 495 495 495 495 495 495 495Veterinary Assistant TA 363 363 363 363 363 363 363 363 363 363Mechanic 530 530 530 530 530 530 530 530 530 530Tractor Driver 770 770 770 770 770 770 770 770 770 770Store keeper I90 190 190 190 190 190 190 190 190 190V'atchnan 190 380 380 380 380 380 380 380 380 380Station labour 100 300 300 300 300 300 300 300 300 300Game Rangers 30111 (2) 168 336 336 336 336 336 336 336 336 336Artisans - buildings 1,730 1,730 1,730 1,730 1,730 1,730 1,730 1,730 1,730Drivers (2) 400 800 800 800 800 800 800 800 800 800Headmen 1/ 204 (8)1,632 (10) 2,0140 (11)2,244 (13)2,652 (14)2,856 (16)3,264 (16)3,264 (16) 3,264 (16)3,264Herdsman 21 160(77)12,320 (,5)15,200(113)18,O8On132)21,120(144)23,040(155)24,800(160)25,600(163)26,080(163)26,080

Subtotal 33,715 37,003 40,007 43,535 45,659 47,827 147,o27 149,107 49,107

Other CostsDippp and Veterinary expenses l/ 7,890 10,000 12,400 14,640 17,050 18,150 19,210 20,000 20,480Salt U! 5/ 4,510 5,710 7,090 8,360 9,740 10,370 10,980 11,430 11,700Urea Compound/Bone meal - 15,330 19,430 15,940 18,820 21,920 23,330 24,700 25,720 26,330Maize germ - 3,670 4,840 5,610 6,760 7.930 9,060 9.740 9,740 9,7440Maintenance of roads, fire breaks, fencing 3,390 33,820 4,050 4,050 4,050 4,050 4,050 4,050 4,050Allowances 260 260 260 260 260 260 260 260 260Vehicle running and repairs 1/ 13,026 13,026 13,026 13,026 13,026 13,026 13,026 13,026 13,026Tractor running and repairs 5,040 5,040 5,040 5,040 55,040 5,o40 5,040 5,040 5,040Building Maintenance - materials 1,200 1,200 1,200 1,200 1,200 1,200 1,200 1,200 1,200Water supply and maintenance 300 '00 00small toola and equipment 900 ;oo 19000o ~ SVehicle insurance 160 1 15 n 1O 160 _160 _1Ko 15 Q

Sub-total 55,666 64,676 65,966 73,506 81,566 85,836 89,556 91,816 93,176TOTAL 89,381 101,679 106,053 117,041 127,225 133,663 137,383 140,923 142,283

2 One headman per 1000 animals2/ One herdsman per 100 animals5/ K 1.75 per A.U.

K 1.00 per A.U.Year 1 and 2 : K 3.40 per A.U; thereafter local manufacture: K 2.25 per A.U. during 4 months CoFor all bulls and weaners; cost K 6,50 per bull and K 2.25 per weaner 0

7/ 1 cattle truck, 18,000 miles - K 4,2301 LWB Landrover, 24,000 miles - K 3,0001 LEB Landrover, 36,000 miles - K 4,5001 LWB Landrover, 3,600 miles (Part time) - K 4501 Lorry, 3,600 miles (part time) - K 846

_/ 2 tractors, 1800 hours at K 1.40 per hour.

MALAWI

LILONGWE LAND DEVELOPMENT PROGRAM - PHASE III

Dzalanyama Ranch

Ranch Income and Expenditure (continued)(M Kwacha)

Ranch Income and Expenditure (Continued)

1975/76 1976/77 1977/78 1978/79 1979/80 1980/81 1981/82 1982/83 1983/84to

1994/95

(1) (2) (3) - (4) (5) (6) (7) (8) (9-20)

Total income from sales 71,007 76,675 98,703 116,453 141,780 154,405 179,775 218,483 244,226

Capital costs 104,025 94,365 84,950 80,725 40,760 45,045 19,050 15,875 15,875

Operating costs 89,381 101 679 106,053 117,041 127,225 133,663 137,383 140,923 142,283

Sub-total costs 193,406 196,044 191,003 197,766 167,985 178,708 156,433 156,798 158,158

Net Cash Flow (122,399) (119,369) ( 92,300) ( 81,313) ( 26,205) ( 24,303) ( 23,342) ( 61,685) ( 86,o68)

( I !rI 0

¢-0M

MALAWI

LILONGWE LAND DEVELOPMHENT PROGRAM - PHASE IIT

Stall Feeder Budgets

Purchased Ranch bred Ranch bredsteer steer steer

Technical Data Zebu type Cross-bred type

Live weight when issued (lbs) 600 600 700Number of days fattened 160 160 180Average daily weight gain (lbs) 1/ 1.25 1.25 1.5Average daily feed consumption (lbs) - 15 15 18Live-weight when slaughtered (lbs) 800 800 970

Price Data

Issue price (t per lb. L.W.) 11.40 1140 12.00Slaughter price (t per lb. L.W.) 12.15 12.54 12.54Feed price (t per lb.) 0.59 0o59 0o59

Budget for One Animal (k)

Sales 97.20 100232 121.64- Depreciation building 2/ 0.50 0.50 0.50

Costs - Animal 68.40 68.40 84.00- Feed 14.16 1 h1 19.12- Total 83.06 83.06 103.62

Net Income 14.16 17.26 18.02

1/ Feed conversion efficiency 12:1 based on the following ration:24 lbs maize meal at 1.75 t per lb. 5 42 t75 lbs maize bran at o.2 t per lb. = 15 t1 lb salt at 2 t per lb. = 2 t

59 t

/ Valued at K20; dapgeciation period 10 years and assuring that two pair$ of animals arefattened each year.

ANNEX 7Page 1

MALAWI

LILONGWE LAND DEVELOPMENT PROGRAM - PHASE III

Health

Background

1. As in nearly all Africa countries, Malawi's medical services arepoor by European or American standards. As this is very much a result ofshortage of money and trained manpower, it is merely another index of under-development. This problem affects all regions of the country in varyingdegrees. Malaria, bilharzia, respiratory infections, measles, parasiticinfections, and tuberculosis take a heavy toll of human life.

2. In recognition of this need, Malawi Government accepted, withminor modifications, the recommendations of a World Health Organization (WHO)Health Planning Team which visited Malawi in 1971. This plan proposed ahierarchy of units constituting a Health Unit, with the higher units super-vising the lower, and the lower referring patients to the higher. Each HealthUnit, serving a population of 50,000, would consist of the following at fulldevelopment:

1 Primary Health Center4 Health Sub-centers20 Health Posts

The WHO report obserives that most of the services proposed were already offeredby existing health Uniits, but in a fragmentary fashion with incomplete coverage.It emphasizes the need for integration of services at each location, an, theimportance of a structure permitting supervision and referral. Recogni2ingthat the basis for comprehensive care already existed, the report reconmlendedthat existing units should be regraded and improved where necessary to fit:into the overall structure of basic health services. While adhering to thebasic principles of the WHO recommendations, it has been found necessary Jnthe interests of ecornomy to make some deletions in these proposals from tiLeideal staffing pattern. No provision is therefore made for posts of HealthInspector at Primary Health Centers, or of Homecraft Worker at Sub-centersand Health Posts.

Health Unit Descriptions

3. A. Previous Structure:

(a) District Hospital - The main Ministry of Health hospital in anadministrative district, with a medical officer in charge.Usually has 50-150 beds, operating theatre, X-ray and laboratory.

ANNEX 7Page 2

(b) RrlHosital - Smaller Ministry of Health hospital, with aclinical officer in charge. Usually has 20-30 beds in male,female and maternity wards, but lacks theatre and X-ray.In future planning, most Rural Hospitals will be graded asPrimary Health Centers, see below.

(c) Mission Hospital - Range comprises both the above (andsometimes a smaller unit with beds). Mission Hospitalsfall outside the structure of Ministry of Health types, andoperate with substantial independence.

(d) Dispensary - (Government units have been recently retitledRural Health Centers). A unit providing simple outpatienttreatment given usually by a Medical Assistant. Most nowalso provide a regular under-five clinic.

(e) Maternity Unit - A unit providing beds for lying-in mothersand a delivery room under the care of an auxiliary midwife.Some units also provide ante-natal care and under-fivesclinics.

B. Structure Proposed by WHO Report

(a) DitictHosital - As above, District Hospital will alsoact as the Primary Health Center for the local area, butrequire additional staff to carry out the necessary super-vision.

(b) Primary Health Center - The Primary Health Center is at theapex of the basic health services structure. As an indepen-dent unit, it has 16 beds (10 maternity, 6 holding beds)and a staff consisting of:

1 Clinical Officer1 Registered Nurse1 Health Inspector1 Medical Assistant2 Enrolled Nurse/midwives1 Laboratory Assistant1 Driver3 Servants

In addition to providing services identical to those of the sub-center in its immediate locality, it is staffed to providereferral and supervisory services to the sub-centers andhealth Posts within its jurisdiction, an area containing50,000 population.

ANNEX 7"Page 3

(c) Health Sub-center - The Sub-center is the basic unit of thesystem at which curative and preventive services are in(:egrated.It is designed to serve a population of 10,000 with outpatienttreatment, under-fives clinics, ante-natal care and deliveryservice, health education and communicable disease controlmeasures, provided by a staff consisting of:

1 Medical Assistant1 Enrolled Nurse/midwife1 Health Assistant1 Homecraft Worker2 Servants

The first three of these staff constitute the clinic teamwhich visits the health posts to provide a weekly clinicand to supervise the Homecraft Worker.

(d) Health Posts - The Health Post is the smallest unit in thestructure, serving a population of 2,000 in its immediatelocality. It consists of a house for the Homecraft Worker,with an extended shelter for teaching and holding the weeklyclinic. The Homecraft Worker provides health education,particularly in nutrition, child care and home hygiene, doeshome visiting, and assists with the weekly clinic. She hassimple remedies to treat minor illnesses and injury on afirstaLd basis. Some health posts are unmanned.

(e) Health Unit - The WHO recommendations for planning basichealth services are based on a Health Unit serving a pop-ulationi of 50,000. Each Health Unit at full developmentwill consist of:

1 Primary Health Center 1:50,000 population4 Health Sub-centers 1:10,000 population20 Health Posts 1:2,000 population

Note: The Primary Health Center provides the Sub-centerservices to the adjacent 10,000 population. ThePrimary Health Center and 4 sub-centers provide thcHome Craft Worker Service to the adjacent 2,000population.

4. The WHO plan of health services, modified to suit local ccaditionsand the funds available, are already in operation in the Karonga and. LowerShire project areas and are being financed by German Church Organizations inthe Salima Project Area. The health services available in LLDP area are notvery different frcm those obtainable in these other areas, yet the W1lC schemeof services have not been extended to this area until now. Likuni hospital(one of the largest in the LLDP area) reported that a quarter of all cases

Page 4

referred to the hospital doctor or laboratory showed evidence of malaria,bilharzia or lhookworm. It is clear that here, as in other parts of thecountry, a shift of emphasis from curative to preventive medical services canreduce the incidence of some of the more prevalent diseases.

Health Services in the LLDP Area

5. As elsa-where in Malawi, health services in the Program area areprovided by a combination of the Ministry of Health, Missions, and theDistrict Council. The full list is as follows:

Location and Type OnrhiR

Likuni Hospital (160 beds" MissionNamitete Hospital M130 beds) MissionNambuma Hospital (50 beds) MissionMlali Hospital (74 beds) MissionMalingunde HosDital (50 beds) MissionKabadula Rural liospital (32 beds) Ministry of HealthNitundu Rural. Hospital (26 beds) Ministry of HealthC"hitedza Disper-Sary Ministry of HealthChileka Dispensery Minis try of HealthNathenje Dispensary Ministry of HealthKongoni Dispensary and Maternity District CouncilMalawi PYP Settlement Scheme Ministry of HealthBunda College Dispensary University of Malawi

Just outside the Program area are:

Lilongwe General Hospital (250 Beds) Ministry of HealthKawale Dispensary, Old Lilongwe Ministry of HealthArea 18 Dispensary, New Lilongwe Ministry of HealthDzenza Dispensary Mission

In addition to the above, there are a number of unmanned health posts, atwhich mobile clinic services are given. The Lilongwe District Council hasplans to build maternity services at Units 4, 22, 30 and 33 before 1975.Total bed provision in the area (even without taking account of LilongweGeneral Hospital, just outside the program area) is close to the nationalaverage at 1.33 per thousand population, but the number of units relativeto the population is clearly sparse, at 1:30,000 distinctly inferior tothe national average of 1:20,000.

IrOveaments to Basic Health Services

It has been decided that for purposes of local government administra-tion, the program area should be divided into six sub-areas, each composed ofa cluster of agricultural units. Although the population of each of thesesub-areas wil lverarae rather more than 50,000, it has been decided that the

ANNEX 7Page 5

health units should coincide with their boundaries. In 5 of the 6 subdivisions,there is an existing health facility which could function as a Primary HealthCenter, though in only one case will this be located at the main servicecenter of the Sub-area. The remaining agricultural units, each with a popu-lation of 10,000 - 12,000, would all merit a Health Sub-center. It is inotpracticable to make good all the accumulated deficiencies in one phase of theprogram, and it is therefore proposed that a limited number of new sub-centersshould be built at selected unit centers at this stage, and that unmannedmobile clinic posts should be established at all the remaining units. At alater stage, these iFacilities could be upgraded to Sub-center status. Jn theinterim, every unit would have a health service of some kind.

Aided Self-Help

7. Although health services have not hitherto been a direct responsi-bility of the program, the stimulus to development exerted by the program hasbeen evident in the health sector. There has been a quite spontaneous demandfor more accessible services in the program area, especially under fivesclinics. Further, in virtually every unit already taken over by the program,the local community has started to raise funds for self-help construction ofhealth facilities. Although self-help activity by its very nature is diffi-cult to coordinate, it is clear that the tremendous fund of enthusiasm behindthe self-help effort to improve health facilities cannot be ignored; it hasto be channelled into manageable projects which are consistent with overallplanning for the area. The present proposals attempt to take account ofthese considerations. It is suggested that in every unit where a HealthPost is to be established, the local community should be encouraged to con-tribute money, bricks and sand, and inskilled labor; the program buildingteam will provide materials, supervision and skilled labor. The necessaryliaison between the self help group and the building team will be providedby the program's Rural Development Section. The additional resources c3ntributeclby the self-help groups should be used to enhance the basic building. tn thoseunits where a new Primary Health Center or Sub-center is to be built, it isproposed that the self-help contribution should be channelled into the :c'n-struction of shelters for patients and their guardians.

Project Proposals

8. It is proposed to provide, either through upgrading of existinigfacilities or by entirely new construction, one new sub-center and threi:new Health Posts in the North West sub-area; two new subcenters and fouladditional Ilealth Posts in the North East sub-area; one new Sub-center .ndfive new Hlealth Posts in the West; one new Sub-center and four new Healt.hPosts in the Central Sub-area; three new Health Posts in the South West,and one new Sub-center and two new Health Posts in the South East. Inaddition to new buildings, most of the existing facilities will be imprcved,while the Project will finance staff and other operating costs during the3-year Project period. Present health facilities, Project proposals and i:hepost-Project situationi are all summarized in the following table:

ANNEX 7Page 6

Existing Project Situation at EndSub Area Facilities Proposals of Project

PHC SC HP PHC SC HP PHC SC HP

North West 1 1 - - 1 3 1 2 3North East - 1 1 - 2 4 - 3 5West 1 - 3 - 1 5 1 1 8Central 1 - 2 - 1 4 1 1 6South West 1 - 2 - - 3 1 - 5South East 1 - 2 - 1 2 1 1 4

Total forProgram Area 5 2 10 - 6 21 5 8 31

Key: PHC - Primary Health CenterSC - Sub-centerHP = Health Post

9. The health component will be staffed by the Malawi Ministry ofHealth under the direct supervision of a Senior Medical Officer with publichealth interest and experience. This officer will either be seconded tothe Project from the Ministry or be recruited especially for the job. Hewill be based in Lilongwe and will liaise closely with the LLDP ProgramManager in ensuring that the health component is implemented on schedule.

10. Cost estimates for the health component are at Annex 8, Table 11.

November 20, 1974.

MALAWI

LILONGWE LAND DEVELOPMENT PROGRAM - PHASE TI]

Summary of Development Costs(MK' 000)

Annex 8 FFrPign ForeignProject Year Table Year I Year 2 Year 3 'I'otal Exchange Exchange

_____ ________ ____ No, _ (1975176) ( 79/7 L1977/78) . / Amount

Headquarters 2 185 168 164 517 40 205Conservation & Planning 3 1,050 764 638 2,452 52 1,265Sulrveys 4 115 102 123 340 43 148A-lARC - Markets & Inputs 5 153 86 105 344 30 103Marketing 6 15 13 11 39 40 16Land Allocation 7 105 82 85 272 46Extension 8 341 257 249 847 28 238Training 9 68 66 69 203 46 93Credit Fund & Credit Administration 10 337 258 458 1,xo3 55 174Ilealth 1.l. 270 241 86 597 42 251Dzalanyama Ranch 12 122 120 92 334 53 176Livestock 13 67 79 69 215 59 1.27Dairying 14 4 3 6 13 31 4Poultry 14 4 3 3 10 40 4Evaluation 15 49 47 45 141 35 50NRDP 16 153 47 - 200 5 108

Total Project Costs without contingencies 3,038 2,336 2,203 7,577 46 3,490

Contingencies - Physical 240 178 148 566 45 255Price 426 476 738 1,640 45 738 (D x

FCOTotal Project Cost Plus Contingencies 3,704 2,990 3,089 9,783 45 4840

Seperember 2?(, l9'74

ANNEX 8

Table 2MALAWI Page 1 of 2

LILONGWE LAND DEVELOPMENT PROGRAM - PHASE III

Project Headquarters

tMK

Foreign

Unit Year 1 Year 2 Year 3 Total Foreign Exchange

Cost (1975/76) (1976/77) (1977/78) Exchange Amount

CAPITAL COSTS

ManagementMinor equipment 1,200 1,200 1,200 3,600 50 1,800

Passenger vehicle 3,380 - 3,380 - 3,380 90 3,042

Minibus 5,491 _ _ 5,491 5,491 90 4,942

Sub-total 1,200 4,580 6,691 12,471 78 9,784

Finance & AecountsBurroughs L5000 5,100 5,100 - - 5,100 80 4,o80

Minor equipment 625 625 625 1,875 50 938

Passenger car 3,400 3,400 - - 3,400 90 3,o60

4-wheel drive SVE 4,000 4,000 - - 4,000 90 3,600

Sub-total 13,125 625 625 14,375 81 11,678

Field Development Services

Minor equipment 625 625 625 1,875 50 938

Passenger vehicle 3,380 - 3,380 - 3,380 90 3,042

Sub-total 625 4,oo5 625 5,255 75 3,980

Administration4-wheel drive LEWB 4,400 4,400 - - 4,4oo 90 3,960

Motorcycles 520 - (2) 1,040 520 1,560 90 1,404

Pick-up 4,800 4,800 - - 90 4,320

Sub-total 9,200 1,o4o 520 10,760 90 9,684

Transportation ThitPassenger vehicle 2,290 - 2,290 - 2,290 90 2,061

4-wheel drive LWB 4,4 4,400 _ 4400 90 3,960

Sub-total 4,400 2,290 - 6,690 90 6,021

Total Capital Costs 28,550 12,540 8 461 49,551 83 41,147

September 27,1974

111100 8

PAge 2 of 21,11,3KW0 10D D7000OP2117T PR0OOE7lW - 210ASE III

Prooect ceeoiooArterelEo)

trade toiit Y-eA I Yeee 2 Year 3 Total Foreigr. ToebeegeCoet (1975/76) (1976/77) (1977/18) iooiaaee Toa

OF10ATING COSTS

Calartee aed W:gee

aenageaseotP-rgresl Meogser C5 7,416 7,416 7,416 7,416 22,248 50 11,124Ma-ane--et Asoietact 59 4,093 2) So106 (2j c 0 ) 1,16 24,6 -_Secretaris D1 4,698 (3) 14,094 (3) 14,094 (31 11,094 42,282 50 21,141Dri,er 400 (2) 807 (2) 800 (2 800 2,00 -

ftb-toto1 30,416 3D,416 30,416 91,248 35 32,265

Pi:eeo .ed A-ooootsFi-eeci,l C-nteoller I, `8 6,363 6,363 6,363 6,363 19,089 5 9,545Contributio- to ANNE ' 4,100 4,000 4,0c0 4,000 12,000 lOD 12,COOChief Acohntt CEO CEO 5,062 5,062 5,063 5,o62 15,186 50 7,593seeier doocoenteot SO SEO 2,709 2,709 2.709 2,709 6,127 -A -toeAAe EC 43 1,218 (4) 4,372 (4) 4,872 (4) 4,872 14,616 - -AooeAte AssistAt 4b5 (6) 2,790 (6) 2,790 (6) 2,797 1,377 -Coop Typ1er 316 3118 31 3 94 - -Mee,etger 168 (2) 336 (2) 336 (2) 336 1,oo8

4Cc (2) lco (30 800 (2) 600 2.400 - _

00b-tOtAl 27.250 27,250 27,250 81,250 35 29,138

Fieli D-eelopeo-t cer i-eePriecipel Agri, Officer S8 6,363 6,363 6,363 6,363 19,089 50 9,545Driver 400 4 4co 40 1,2CO - _

S0e-toctA 6,763 6,763 6,763 20,289 47 9,545

Ad.iirtertlo-Se-ior A.d= Off9icer s9 09 6,c80 6,o60 6,080 6,o80 I8,240 50 9,120Security Officer cO EO 1,218 1,218 1,118 1,218 3,654 - -CAtoCoeo 3168 (6) 1i,08 (6) 1,038 (6) i,oc0 3,124 _SenIor Stores .. perviser SEO SEO 2,259 2,259 28259 2,259 6,777Senier ctorekeeper SCO ScO 1,218 1,218 1,218 1,218 3,654Chief Y,eootl, Offloer- Per,oooei 020 2,976 2,976 2,376 2,976 8,928ETecctio- officer-Peolstey NE 1,218 1,218 1,218 1,618 3,654Exeeotive Officer- Office M-Ag'e=ent 70 1,218 1,218 1,218 1,218 3,654P2X Yelephone Operator 312 318 318 318 174PAdi. Operator 318 318 318 316 994

-eAd lceeeeer 204 204 204 204 612Messeeeer/cleAoer 168 (5) 840 (5) 840 (5) 84o 2,520Clerk 318 (21) 3,497 (11) 3,498 (11) 3,498 cc44--

iv.oor Steeoergpher 742 742 742 742 2,226Copy Tipist (Pool) 370 (4) 1,480 (4) 1,410 (4) 1,480 4,443 _Dri-er 400 (3) 1,200 (3) ,103 (3) 1,200 3 60c

Sib-total 25,795 25,795 25,79. 77,385 01 5,120

TrA-p-e-,etI- UlitTreoapopt Cootroller CTO 6,947 6,945 6,945 6,945 20,835 51 10,418geeior Mecahjoieal SCper-isor gTO 2,488 2,48i 2,481 2,481 7,443Tes-eNErt Ira-e-t-r 8O 1,371 1,359 1,359 1,351 4,077Me-h-ical Sepereo,- r TO 1,083 (3) 3,249 (3) 3,249 (3 3,2419 9,747Cetior Clerical OfIcer SC2 1,783 1,083 1,083 1,063 3,2L9Clerk 390 (3) 1,170 (3) 1,170 (3) 1,170 3,510Scorekeeper 390 (3) 390 (3 390 (3) 390 1,170Driver 4oo ,5) 2,000 (5) 2,000 (5) 2,000 6,0

Sb-tota.l 11,677 18,677 1B,677 76,032 la 10,418

"-.It Sri-s cnd Wx,g-e patriates 56,723 56,323 76,323 016,963 30,486Coral etaff 52,5278 ,2.578 157,734 - _

108,901 108,901 178,901 326,703 28 g0,486

000cr C-erAtiog Co,tc

Map:ge 2AntV.eMoile 00eciog feet,:PAssenger oar - 18,000 e/cc at 9t 1,620 1,620 1,62o 1,620 4,010 90 4,374lAiibVo - 16,077 n/yr et lOt 1,800 1,800 1,6oc 5,Lco 90 4,86cbl2oiatca-e 2,507 2,500 2,570 7,707Utilities 2,70O 12,500 12,500 37,500staciooer1 8,300 8,300 8,317 24,9 c 75 18,675Vehicle In-creace 50 (2) 100 (2) 120 02i 300 -0

S0O-total 26,820 26,62o 36,860 6c,46c 34 27,909

Fi-rc snd AcCntsVehilo BupAing Coot:P:senger oar - 12,-70 at 9t 1,080 1,080 1,060 3,240 90 2,1164-aoeel rive - 18,000 e/yr at 125t 2,250 2,250 2, 20 1,75c 9° 6,075statloocr- 2,500 2,700 2,500 7,500 75 51625

Oeroteleb 2 rreg sr.91,5000 2,400 2,40C 2,400 7,200 - -VelirDe Dcetoreiioe 5032 2) l (2) 103 (2) 100 300

coc-eocc 68,330 8,330 8,337 24,990 58 14,616

7ield Develop-ent Cepvioeecohicle Iraivoig Ceest6PAssergaer CAr_ 18,000 a/yr at It 1,t2c 1,620 1,620 4,186 90 1,374Vehiole InsurAnce 50 50 53 5_ 150 - -

,b-_tot:l 1,670 1,677 1,6-02 5,010 82 4,374

Aidrlinitr:tionVehicle runnin,s costse:

--- ege csy Y- 12,0000/71 kt 0t 1,98C 1,01o 1,110 3,240 90 2,9164-ohe-1 drive- 3,000 /yr at 12.5t 375 375 373 1, 25 g0 1.013

Pick-op - 6,000 /jyr at 9t 570 'IO 540 1,620 90 1,458M,otery-lee - 10,000 c/yr at 3.5t (3) 1,00 (3) 1,050 (3) 1,790 8,159 97 2,135Vshicle i--treove 50 (3) 157 (3) 130 3) 1g0

15o - -

s0b-toOtk 3,101 3,195 3,195 9,585 85 8,222

Ieh'ioe oIrviag Co-ts,Iae=oer oar- 12,710 o/yr 0y 7t s4D 834 840 2,520 07 2.2684-_heei drive - 1Booo n/y;r a 25t 2,250 2,250 270 150 90 6 0757-too lorry - 15,700 njyr at 23 5t 3,525 3,525 3,525 10,575 90 9,-18Vehicle T--oreoce 50 (31 150 (3) 150 (3) 150 450

12-btota' 6,765 6,765 6,765 20,295 81 17,661Total 0thev O-erAtle C-ts 46,7 46,780 4,780 14e,34eo i v5o_2 982

TOT.AL OPETTING COSTS 155,681 155,681 155,681 4670,c43 35 163,468

2epreaeeto pro-eJte propor.tionai Ao-tiboel- a toe east oi Fi-oial Controli:r etreaallieg aooooloo yrooedrre of 0DA pr-ecrts io 0101.

SCetber 27, 1974

06661 666 666.. W6 66 '6

6600 66 66 .06 UZ W. S O66S6

666 0 66 066'0 666 OP' 6 666'16 666106661 6616 666666 6

R 15 - - ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~........

YU'OO ~ ~~ ~ ~~~~ 66166 19 6O 66' t) Z 6 66666 661611616166 66'Z1167 oao- 059'7 66S Z6 055 6

008 K6 666 66 61 666 66) 6616 .66 66E 66666616 6 66 6106:NsM

666166CE6 0566 OOY 6616 06666 06161 YOL 1 66666, 6600. 66' 666666

06 '6 16 6161 666166 66. 661166 6661666 66116 1166106616 6*- 66A 16. ' 6W

W 6661 O e 6b 06E 6 . Zc 06 0' 6 0 6 6 61 .6 64I 6666 K 6W - M 6666666066 66l066 666

tIz 06 666SZ 6 SSZ 66666 6161 66tIY 11.6 6 l1.66666

I Z .5 06 l 6, 6666666 616 66 O66 6YD Z O lt i>Y1E t0b Y E -o _ b off uzKS oos v. oo. R, 1log

3 06 455 235 Ws 1 w oUE l 16 :s a4Zt7- WO 01 L - d---1

0b .K olA CeI 66WL6V 6 7 Tz l66 16 1 K;-66,6

666 6 01 !6<6 6'66666666

77 1- E.Il EC", ~ ~ ~ ~ ~ ~~~~~~~~~~~~ ~,.,....T r..d. Il

6 I CS 66 66766,66,6 66 I 6I<U

66 6 z n Io GI 6666c 666 s;v 6666666ns Y .<a1w 66666

- - gsas (09 7b .t, X7i-r t.b C4e MInI 1 Z

-6 6 1 6 6 1 666'u. 66'6 GSZ 1611 6666666IL 1 G _

-6 6 0 6 - , W,ii2.9 I 6666F161 666. 66 16dGU.: .66

1 6 6 D '. 6 . S 6 6iS ' 616 6 6f 6 6 t 6 O_ . 6D 666 .6K

11' ZY Zz D O. 66/1zoRw

r f 96 w u G ,7 1 Wa S W¢v COZ S1 11

5C1: g i 7 :' 5 8

GGG "I. EGr 'Y. n'Elli P

GG K ar 6 ,- UGS do MZ4

ss G 6z;G - O- L GGGIzC/GTEL UET

M ALAWfi

LIlIO, tGW LAD DEVELOPMENT PROGRA14 - P1ASE III

Surveys

% Froreign

Grade Unit Yeax 1 Year 2 Year 3 Total Foreign ;.xchange

Cost '1975/76) (1976/77) (1977/78) Exchange Amount

CAPITAL COSTS

4-wheel drive 4,401 (2) 8,800 _ (4) l(,60n 26,4oo 90 23,760

Eqnipment-Ulnbrellas 600 60D 600 1,800 - -

Equipment-Tents 4,380 - 4,380 8,760 90 7.884

Total Capital Costs 13.780 6 , 80 ,960 '6 31.6)44

OPFEATINS COSTS

Salaries - WagesSenior Surveyor SQ 6,080 6,o80 6,o80 6,o8o 18,24r) 50 9,120

Staff Su,rveyor po 5,063 (2) 10,126 (2) 10,126 (2) 10 ,126 30,378 50 15,189

Senior Photogramratrist 2T0 4,o64 4,o64 4,064 4,o64 12 191 50 6,096

Senior Cartographer ST0 4,o64 4,064 4,o64 4,o64 12,19Ž 50 6,o96

Surveyor TO 3,051 (2) 6,10. (2) 6,102 (U) G,102 18,306 50 9,153

Surveyor 'O 1,359 1,359 1,359 1,359 4,077 - -

Cartographer iQ 1,266 (2) 2,532 (Ž) 2,932 (P) 2,532 7,596 - -

Photogrommetrist 20 1,2-66 (4) 5,o64 (4) 5,064 (4) 5,o64 15,192

Senior Survey Assistant STA 1,125 (Ž) ",256 (2) 2,256 (1) 2,256 6,768

Senior Cartographic Assistant STA 1,1?8 (2) 2,256 {2) 2,256 (') .,2>6 6,768 - -

Survey Assistant 465 (to) 4,650 (10) 4,650 (lo) 4,650 13,950 - -

Cartographic Assistant 465 (3) 3,720 (8) 3,720 (8) 3,720 11,160 -

Secior erical officer 0OC l,28 1, 18 1,Ž18 1,218 3,654 - -

Clerical Officer 342 (2) 684 (Ž) 684 (2) 684 2,052 - -

Chairman 160 (9) 1,440 (9) i,44o (s) 1.440 4,320 - -

Laborer 100 (73) 7,800 (78) 7,800 (78) 7,800 23,400 - -

Artisan 370 370 370 370 1,110 - -

Driver 40)o (t)_ 4,4oo (11) 4,400 (11) 4,400 13,200 -

Total Salaries and Wages'- - Expatriates 30,436 30,436 30,436 91,308 50 45,654

- Local Staff 37 749 37,749 113,247 -

1 ~~~~~~~68,185 204,555 ? 224,5

vehicle unsning Cost5 ton Lorry-10,000 a/yr at 21.5t 2,150 2,150 2,150 6,450 90 5,805

4-wheel drive-lP,000 m/yr at 1'.51. 1,500 (lo) 15,000 (o) 15,000 (10) lS,000 4',ooo 90 40,500

Total Vehicle Running Cost 17,150 17,150 17,150 I '1,4,0 90 46,305

miscelleneousBase Mapping-Aerial Photography 1,1.00 1,100 1,100 3,300 100 3,300

-Ground Control 2,000 2,000 2,000 6,ooo 100 6,000

-Aerial Triangulatior 250 250 250 750 100 750

Post Gonservation Mapping 1,100 1,100 1,100 3,300 100 3,300

-General PhotographySi,bsistence Allowance 5,200 5,200 5,200 15,600 -

Photographic Materials 375 375 375 1,125 90 1,015

Drafting Materials 500 500 500 1,500 90 1,350

Instrunent i laintenance 2,125 2,125 2,125 6,375 75 4,775

Triangulation 2,375 2,375 2,375 7,125 50 3,565

Vehicle lnsurence 50 (11) 550 (11) 550 1.650 - -

Total miscellancous 15,575 15,575 I5,575 46,725 52 24,055

'IPotal Operating Costs 10ol,91G 100,910 100,910 302,730 38 116,o0.4

September 27, 1974

MALA4II

111 G LAND Dq6 ,f 'T !T pIRL4 - PHASE III

rlarc t,s and Input Stores (KD -TL'C)

UniL Cost Yesr 1 2 Yea 3 Percent Foreign(t 1`7 6) (1767777) (1 77i7/) Total Foreign Exchange

7 xchange AmoountInput tors ~ (,75C 30 42,5

"Irkct andi 19,7J (3) 59,'.Ci (2) 39,100 (2) 39,!,oo 137,900 30 41,370

½ousin.g 9,2')C (.:3) L7.60(' (218 ,2 1 ,.-400 30 19,32

TOP 8. 15,"3Lf? i3tJ 15C l5050 3L44, 050 30 103 215

September 27, 1974

KI.,

MA AWI

LILONGWE LAND DEVELOP= PROGRA - PHASE III

Marketing

(MK

Foreign

Grade Unit Year 1 Year 2 Year 3 Total Foreign Exchange

Cost 1975/76 1976/77 1977/78 Exchange Amount

CAPITAL COSTS

Passenger car 2,300 - 2,300 _ 2,300 90 2,070

4-wheel drive SWB 4,0 4 , 4,0 - - 4,000 90 3,600

Total Capital Costs 4 200_ 6,300 go 5,670

OPERATING COSTS

Salaries and WagesMarketing Officer STO 2,481 2,481 2,481 2,481 7,443 _ _

Development Officer TO 1,311 (2) 2,622 (2) 2,622 (2) 2,622 7,866 - -

Clerk CO 606 (2) 1,212 (2) 1,212 (2) 1,212 3,636 - -

Driver 40° (2' 800 (2) 800 (2) 800 2,400 - -

Sub-total 7,115 7,115 7,115 21,345 - -

Vehicle RSnning CostsPassenger car - 9.000 m/yr at 7t 630 630 630 630 1,870 90 1,701

4)-wheel drive - 20,000 m/yr at 12.5t 2,500 2,500 2,500 2,500 7,500 90 6,750

Siob-total 3,130 3,130 3,130 9,390 90 8,451

Vi scellaneousMaterials 625 625 625 625 1,875 75 1,410

Insurance 50 (2) 100 (2) 100 (2) 100 300 - _

Sub-total 725 725 725 2,175 64 L,410

Total Operating Costs 10,970 10,970 10,970 32,910 29 9,861

September 27, 1974

MALI, 4W

LII,ON(GW1. AS DEVELOPMENT PROGRAM - _P2AE T11

Land Allocation(251)

ForeignGrade Unit Year 1 Year 2 Year 3 Total F'oreign Exchange

Costs (1975/76) (19'76/7'7) (19'77/78) Exchange Aniount

CAPITAL COSTS

4-wheel drive 4,000 (5) 20,000 - - 20,000 90 18,000

Passenger Car 2,300 2,300 - 2,300 4,600 90 4.140

Equipment 1 1,250 1,250 3,750 90 3_3T5

Total Capital Costs 231,250550 128,350 902

OPERATING COSTS

Salaries and WagesSenior Land Allocation Officer S9 6,o80 6,o80 6,080 6,o8o 18,240 50 9,120Allocation Officer SEE 3,375 3,375 3,375 3,375 10,125 - -Senior Technical Officer STO 2,481 2,481 2,481 2,8181 7,443 - -Demarcation Officer TO 1,266 (6) 7,596 (6) 7,596 (6) 7,596 22,788 - -Demarcation Assistant (Senior) 747 747 747 747 2,241 - -Demarcation Assistant 390 (11) 4,290 (11) 4,290 (11) 81,290 12,870 - -Tracer 522 522 522 522 1,566 - -Survey Assistant 441 (14) 6,174 (14) 6,174 (14) 6,174 18,522 -Clerical Officer 465 (9) 4,185 (9) 4,185 (9) 4,185 12,555 -Artisans 212 (6) 1,272 (6) 1,272 (6) 1,272 3,816 -Casual Labor 1.06 (20) 2,120 (20) 2,120 (20) 2,120 6,360 -Driver 800 (13) 5,200 (13) 5,200 (13) 5,200 15,6oo -

Total Salaries and Wages:ExpatriaLes 6,080 6,o80 6,o80 18,280 50 9,120local Staff 37 962 37 962 37 962 113,886 - -

' '844'o42 44, o42 132,126 7 9,120

Vehicle Bunning CostsPassenger Car - 19,000 m/yr at 7t 1,260 (2) 2,520 (21 2,520 (o) 2,520 7,560 90 6,8044-wheel drive - 24,000 m/yr at ]2.5t 3,000 (6) 18,000 (6) 18,000 (6) 18,000 54,ooo 90 48,6004-wheel drive - 18,000 m/yr at 12 5t 2,250 (5) 11,250 (5) 11,250 (5) 11,250 33,750 90 30,375

Total Vehicle Running Costs 31,770 31,770 31,770 95,310 90 85,779 rs|

MiscellaneonsSuibsistence Allowance 1,000 1,000 1,000 3,000 - - - mAerial Photography enlargements 3,800 3,800 3,800 11,400 50 5,700Vehicle Insurance 50 (13) 650 (13) 650 (13) 650 1,

9 5 0

^"o5o 5,)150 , 16,350 no 0700

Tot.al Oporating Costs 81,262 81,262 243786 81 100,599

September 27, 1974

ANIIEX 8Table 8

LIL0ONGW LAND DEVELOPM05T 708R0AM _ PhAS3 III

(MK)

s Foreign

GraCe Unit Ye-p 1 Ye.T 2 Year 3 Total Foreign ExchangeCrot (1975/76) (1976/77) (1977/78) E-ch-bge ANqqnt

CAPITA COSTS

Frreo..cl Carier 9,930 (2) 13,960 9,930 2 9,790 90 p6,911

Minor Equip ent - 625 625 627 6 2Os 90 i/SO4-uherl Dive 4400 4,400 - 4,400 90 3,962PFeengor Ck 2,300 (55) 10,500 _ _ 11,500 90 10,350

SAb-t.tol 36,385 10,555 625 47,565 90 42,909

OfficMe Euipknt 575 (7) 4,o29 5 (3) 1,725 (5) 2,875 9,605 90 77563Po.o.nger br 0,3002 (10) 09,902 (2) 4,6oo 34,500 90 01.050

Mqtorcycles -20 (10) 5,200 5.200 90 4,60o

Sob-total 33,925 11,525 2,875 48,325 90 43,493

Inetitrti o.. &tral orcelurneot lUnitPFece.. er eC3 3,98o 03,09 - - 3,360 90 3,ol4Mot-o ,,cleo g20 (3) 1,2L 1-_6o LO 1,404

SOb-totL 4,94o - - 4,94o 90 4,446

Totnl Onpotol Cooto 750 20O0 3,500 10,3 90 90,74

OPgkAeING CG9LS

(a) Oeaoqoartneoselarlee and Wageo

Reo-arnh & Trial Offi.e. CTO/P 5,063 5,063 5,063 5,063 15.139 50 7,595orZxersion Officer 39 4,053 4,053 4,053 4,053 12,159 - -

Friuncipl Tield 09,Offi CTO 3,243 3,243 3,243 3,243 9,729Senior Decelompene Offi-er STO 2,481 (5) 12,405 (4) 9,924 (4) 9,924 32,233 - -Field Dfficer TO 1,407 1,407 1,407 1,407 4,221Field Ad,iera,- (Reoeorch &

Trial,) 493 (3) 1,485 (3) 1,485 (3) 1,495 4,455 - _LounlIoc 390 (3) 1,170 (3) 1,170 (0) 1,090 3,570

090 12) 780 (2) 702 ) ) 70 2,340 -Clerk 390 (2) 780 (2) 700 (2) 780 2,340 - -Driver 400 (11) 4,400 (9) 30600 (9) 3,600 11,600

Te-al Solorne- end nege: ropatnoatno 5,063 5,063 5,063 15,189 50 7,595onal Saf 29_723 263442 26,442 829607 _

subtotal 34,706 31,505 31,505 97,796 8 70595

Vohicle running CuosePec,o-nel Carie- - 20,000 0/yr at 23te 4,700 (3) 14,100 (2) 9,400 (2) 9,400 32,900 90 29,6104-h-e1i dri- - 18,000 (,lr t 12 i5t 2,250 (2) 4,500 (27 4,500 (2) 4,500 13,500 90 12,150Paceoueg- Con - 15,000 n/fr at 7n 05,00 (6) -c 300 (5) 5 250 (5) 5 250 16 800 00 15,120

taenl V0hlm CRnning lcre 24,900 19,150 29,190 63,200 90 56,980

Ooit n7enienents 3,120 3,120 3.120 9,360 75 7,020nicycle ALlownane 22 (39 66 (03 66 13) 66 198suboletence 4 Allonence, 255 153 135 4605 Foifurne 55 55 55 165

50 (11) 550 (9) 450 (9) 450 1,450

S.beutol 3,946 3,846 3,046 11,633 60 7,020

SubOol (a) 63 632 54,500 54,50L 072,634 41 71,91

(b) Field UritaOolociooaE=d Wage,

De-clopoen- Officer TO 1,537 (20) 31,740 (10) 29,560 (19) 28,566 88,872Asistant D-uo1up-en Offeer 54A 1,173 (21) 24,633 (19) 22,207 (22) 25,06 72,726ciend Anonneour 549 (92) 50,506 (74) 40,626 (76) 41,724 132,858

Field A-eieoac - Li--ketoci 549 (23) 12,627 (20) 11,529 (23) 12,627 36,703Fern Hou, Itoecuctne,, 390 (10) 3I902 (12) 4,600 (17) 9,630 15,210lotelupc,tt 0,,r,cane (Ten-1n) 232 (10) 2,020 (127 2.7&4 (12) 2,794 2,038

Cleniuol Office 549 (23) 12,627 (21) 11,529 (23) 12,627 06.073150 (23) 3,450 (21) 3,150 (23) 3,450 10,050

oaecbcen 150 (23) 3,450 621) 3,150 (23) 3,450 10,050L.bouree 88 (46) 4,048 (42) 3.696 (46) 4,048 11,792Lhi_er 400 (20) 8,000 (18) 7,200 (107 7,200 22 400

S0bc6-0n 157,303 139,197 148,912 445,412 - -

Cohicle Oceciog Ieee,HaeotorcyieCr - 12,000 a/yr 8O 7 047 (227 16,310 (10) 15,120 (107 15,120 47,040 90 42,336

nuonnc-12,0600 /F e .e 2 2 21(8,820 (1)7,980 1007 ,400 25,200 90 160

FoOal Vehicle tenoing Coets 25,620 23,100 25,520 72,240 90 65,016

office Running nurenono 105 (23) 2,415 (21) 2,205 (23) 2,415 7.035 - -Biyele ilcocce 22 (135) 2,970 ((10) 2,619 (0009 2 ,16 B,404 - -Snies 40 (2) 920 (01) 940 (27 920 20 6

Sondnie, - ~~~~ ~~~~~~~~ ~~~~~~ ~~ ~ ~~~~625 2 625 1,75 55 0

InceurEce 50 (20) 1,000 (18) 900 (10) 900 2,SOO - -

Subul-al 7,930 7,188 7,676 22,794 4 938

Suhbelel (b) 19(0,53 160,435 104,100 540,446 12 65,954

9n) I-ni-ttioelho Ru-l ueuou -netoUnieSalerie- end Wege,

Adlioera ice Offi.er 20 2,709 2,709 2,709 2,709 8,127 -Field Ofeccec T0 1,120 (37 3,3b4 (37 2,384 (3) 3,384 10,152

Drhi-er /Pln - ro 1,EOl 1,000 1,400 1,9 54 00 30 2,700402 400 400 400 1 200 - -

cotal SOlanino aud Wage,: eupaerlee 1,g00 1.800 10800 5,400 50 2,700Local Staff 6,493 s493 6,493 19,479

SubeoCel 8,293 8,293 8,293 24,879 11 2,700

OnOiclo tunning Coscs

P--ocnger Ckr - 15,002 0/yr an 9t 1,050 1,050 1,050 1.050 3,150 90 2,835oneorcycle - 16,000 n/ye en 3. 560 (3) 1,680 (3) 1,650 (3) 1.680 5 040 90 n,536

T-re ceh-cln .- uciug Ceos 2.730 2,738 2,730 8,190 90 7,371

50 50 50 50 150

Scbhe-el (c) 10,073 11,073 11,073 33,219 50 10,171

To-al Operatieg Cr- (2Otec( 265,558 235,059 245,602 746,299 20 147,520

Oxotebner 27, 1974

MmAAWT ANNEX Tahbl 9

LILONGWE 16140 DEVELOPMEFT - PHASE III

Training

1 Forei gn

Grade Unit Cost Year 1 Year 2 Year 3 Total Forei n Exchzrge

(1975/76) (1976/77) (1977/78) Excbasxge Aiouct

CAPITAL COSTS

VehiclesPassenger car 2,300 2,300 - _ 2,300 2,09

4-wheel drive - Etoension aide 5,110 - (2) 10,220 10,220 95 9,1'18-ersennel carrier 9,930 - 9,930 - 9,930 91 89:i

4-wheel drive - Pick up 4,400 4,400 - - 4,400 01! 3,960

Motor cycles 520 (2) - -. 040 O4 9 I

lob-total 7,740 9,930 10,220 27,890 90i 25,160

Isuinesent and MaterialsDenonstration kitchens 65 (7) 455 (3) 195 (5) 325 975 -Fquiprent (Rural training) 501 (7) 3,500 (3) 1,500 (5) 2,500 7,500 so 3,7'C

Reriigeratoro 580 (2) 1,160 - - 1,160 9C 1,044

Equipmoenr (Tellow vans) - 790 Soo 1350 2,940 90C 2.65

Gui-total 5,905 2,495 4,175 12,575 60 7,414

Tofal Conival C.--- 13,645 12,425 14,395 40,465 6O 32,515

OPEAeTING COSTS

Salaries & WabesPrograeme Training Officer PO 5.670 5,670 5,670 5,^-C 17,010 50 8,50i

Senior Executive Officer SEO 2,709 2,709 2,709 2.709 8,127 -

Senior Field Officer STO 2,259 2,259 2,259 2,259 6.777

Field Officer TO 1,452 (5) 7,260 (5) 7,260 (5) 7,260 21,780 -

Field Assistant 465 (7) 3,255 (7) 3,255 (7) 3,255 9,765 -

Clerical Officer 390 (4) 1,560 (4) 1,560 (4) 1,560 4,680 -

21cc senger 0IS (2) 360 (2) 360 (2) 360 1,080 -

Industrial ^lass labour - 4,460 4,460 4,460 13,380 -

Driver 400 (6) 2,400 (6) 2,400 (6) 2,400 7,200 - _

Total Salaries & Wases: Expatri.ates 5,670 5,670 5,670 17,010 50 6,505Local iltaff 24 260 8,505___ ____

-o,24263 24,263 24,263 72,789 _ 1

29,933 29,933 29,933 89,799 10 8,505

.Ž5isrellaeeousFood and other running coats - 8,155 8,155 8,155 24,465 50 12,230

Etatnsion aidsLibrary boonks 1,345 1,345 1,345 4,035 50 2,020

Tnifbrs books3- 65 65 65 195 90 170Scudio rems al 130 130 130 390 -Studio rental ~ 345 345 345 1,055 _

Sub-total 10,040 10,040 10,040 31,120 48 14,420

Vehicle insurance 50 (6) 310 (6) 311 (6) 300 900 _

Vehicle Ruonntng CostsFassenger car - 12,000 a/yr @g 7t 840 (2) 1,660 (2) 1,680 (2) 1,680 5,040 90 4,536

Personnel carrier - 20,000 rn/yr @ 23.5t 4,700 4,700 4,700 4,700 14,100 90 52,6904

-wheel drive - Extension aid vans -24,000 m/yr @ 12.5t 3,000 (2) 6,000 (2) 6,000 (2) 6,000 18,000 90 16,209

Motor cycle - 6,000 n/ye @ 3.5t 210 (2) 420 (2) 420 (2) 420 1,260 90 1,134

4-wheel drive pickup - 10,000 r/yr @ 12.5t 1,250 _I250 1,250 1,250 3,750 90 25

Sub-total 14,050 14,050 14,050 42,150 90 32,935

Total Operating Costs 54,323 54 323 54,323 162,969 37 60,660

Sepiember 27, 197L

MALAWI

LILONGWE LAND DEVELOPMENT PROGRAM - PHASE III

Credit Fund and Oredit Administration(MK)

Foreign ForeignUnit Year 1 Year 2 Year 3 Total Exchange Exchange

Grade Cost (1975/76) (1976/77) (1977/78) Amount

CAPITAL COSTS

Addressograph Equipment 950 950 950 2,850 90 2,565Minor Equipment 250 250 250 750 50 375Passenger Car 2,300 (4) 9,200 - (3) 6,900 16,100 90 14,4904-wheel Drive (SWB) 4,000 4.00 - - 4,000 90 3L600

Total Capital Costs 14,400 1,200 8,100 23,700 89 21,030

OPERATING COSTS

Salaries and WagesSenior Agric. Credit Officer S9 6,080 6,080 6,080 6,080 18,240 50 9,120Chief Credit Accountant CEO 5,063 5,063 5,063 5,063 15,189 50 7,595Field Audit EO 1,407 1,407 1,407 1,407 4,221 - -Senior Credit Officer STO 2,370 2,370 2,370 2,370 7,110 - -Credit Officer TO 1,266 (5) 6,330 (5) 6,330 (6) 7,596 20,256 - -Credit Accountant EO 1,677 (2) 3,354 (2) 3,354 (2) 3,354 10,062 - -Credit Accountants Assistant 293 (15) 4,395 (16) 4,688 (18) 5,274 14,357 - -Credit Assistants 390 (118) 46,020 (130) 50,700 (144) 56,160 152,880 - -Temporary Clerks 2,000 2,000 2,000 6,000 - -Driver 400 (8) 3,200 (8) 3.200 (9) 3.600 10,000 - -

Sub-total 80,219 85,192 92,904 258,315 6 16,715

Vehicle Running CostsPassenger Car - 18,000 m/yr @ 7t 1,260 (6) 7,560 (6) 7,560 (7) 8,820 23,940 90 21,5464-wheel Drive - 18,000 m/yr @ 12.5t 2,250 (2) 4.500 (2) 4,500 (2) 4.500 13,50 90 12,150

Sub-total 12,060 12,060 13,320 37,440 90 33,696

MiscellaneousBicycle allowance 22 (118) 2,596 (130) 2,860 (144) 3,168 8,624 - -Stationery 7,500 7,500 7,500 22,500 75 16,875Addressograph Maintenance 550 550 550 1,650 90 1,485Vehicle Insurance 50 (8) 400 (8) 400 (9) 450 1,250 - -

11,046 11,310 11,668 34,024 54 18,360

Total Operating Costs 103,325 108,562 117,892 329,779 21 68,771 a *-

Additional capital for credit fund 159,900 78,900 259,300 498,10o 85 423,385

Farmers' Contribution 59,850 69,050 72,950 201,850 30 60,555

September 27, 19 7 4

Y,000 I,1 00t00111 t000- 3010560 0h0

8.3/ 1971710 4 M

4O8 14100 2 Tot. 900l 4c.og

009111100018 ~ ~ ~ ~ ~ ~ 480

2 *..0 bOlt - Sob Art. 2.01.0 6.000 - 2,000 90 00,90

1400,.1 ob,t tot oto s,oO 00. 4.80 -M - 400 90 1.

10112 01000.1 50.0. ~~~~~~~ ~ ~ ~ ~~~31.10 5- - 010 ___

06 590 t~~~~ ~ ~~~~~~ ~~~~~,318 4,00 100-6

00 9 530, 530 590 159

000 590 5378 . 36 450 10 61 ,539 5,323 53- ,,92-1

Sot 00.~ OoAt 00,~t tol I 3 � 0 ,39 oo 2,13, w0,001 03 590~~~--2 530 530 0,5w0 -

bolt 00 ~~~~ ~~530 530 53 1590 -coot s 530 1,319 o5oo 54030

tot 17 5~~ ~ ~~~~30 530 530 0,590 -lOOt 00 .,,5Z2 .52~~ ~ ~~~ ~~~30 520 .1592

Sot 0210 OscO Otis 7 530 ~~~~ ~~~~~~~530 530 0,30 -

tools 00 ~~~~ ~~530 590 530 0,590

150501 ~~~~ ~~~~ ~~530 530i 530 ,3

toOl o9 ~~~~ ~~~553 530 530 1,30 -

900 '0 5~~ ~ ~~~~ ~~~~30 530 530 ,I

I50 ' ,53 5330 5332 0.

Sl-otl4,tl 14.35 5,94 6,7 .

000 OooosC.oolo,o 0~i54 530 530 530 ,3 50 530 130 50 153

00±00 1 ~~~~~530, 530,3,050

00,00 0 1~~ ~ ~~~~ ~~~30 530 533 ,3

toot 3 0~~ ~ ~~30~ 3 I09 3200i 9,1`0 -

tols5 590 530 530 1.530300 "I53 530 530 1,530 33 050 3 530 ,3

000 322 .3 .3 00

sot.000,o 3.050 ~~~~~~ ~~~~~~ ~~~~~~ ~ ~ ~~~~3,300 3,05 900

0,obt 35 ~~~~~530 530 530 t,i53 7

3010 300 ~~~~530 5375 3073 _,0_0, 7

-t-10. 0500 3,395 ,k 4,20 1,14

tot 010 tool Ot0, OlIl 3 575 1,575 3040 M7 75 2,o0

070, '9 505 575 575 0,75 75 0c0

50, 0' 535 575 5 75 ,15~ 7` 0,4904

Sot,t90O 0,33 3,1` 5,05 00~,0 75 9,0

3000 03 575 575 575 0705 75 193

l"It l 5375 575 515 0,705 75 1,094.090115 575 t,575 3,75 5.9, 75 2.1400

1000 tO ~~~~ ~~575 575 575 0,715 75 1,930

SoOt 07 ~~~~ ~~575 575 575 -1,75 75 0,90

Sob 0r,t 0,000 boOt 7 ~~~~~575 575 575 1,795 75 120

1111 00 ~~~~ ~~~575 575 575 "1,00 7 110

loll tO ~~~~ ~~575 575 575 0,725 75 1,190,

1021 oh ~~~~ ~~575 515 5 75 1,71 5 ,94loOt 30 ~~~~ ~ ~~575 0.0 533, M5,50 75 4,1)40100 '0 ~~~~ ~~~~575 575 575 1,715 75 .1,94

100 '0' 532 53~ ~ ~~~~2,54 5 27935 32 5.99

Soot cto l00100 loOt1 57 575 575 0,75 70 t,940

Oslo 0 ~~~~ ~~575 575~ 575 1,75 75 0,904

0015 6 575 ~~~~~575 575 ,0 75 t,90.

005 0 ~~~~ ~~575 575 575 0705 75 0Ž0

Oot-soto 0.300~~~~~~~~Be 0,, ,030 1,935 75 6,309

10205 ~~~~ ~~~575 575 575 0,705 75 0.094

000 3 5 575 575 575 ,75 75 I.294

00 33' 575 575 575 1,705 75 100

b0ob-totc 0,975 0,9's~~~~~~~~~~~66 9,075 0,05 75t,7

too Os.. 90000 OtMo SOt 05 575 ~~~~575 5754, 0,05 75 0,40

001 33 75 57 575 015 7 ,o0

ceblol. OoOoO.oot ~ ~ ~ ~ ~ ~ ~ 5 5

SoIA,t.0.00 - 40000125 50 0 15

00000t.t00500000.10

10 3

~~~~50 30 30 00

OtoAoo,ttOs 07 0.00 00 109 390 10 097,3 9" 8,3

- 001 0. 6,10 l.,o .0000 0 3,10 35 3. ~ 3,OOS 9,375 90 3,1430

- 000 to.. 010 - 3oOt 9 - 3,00~5 3.00 3, 95 90,375 30 6,431

- Sot 000. 00o5 0.ts - 00210 ,095 3,005 3,05 9 375 9" 0,430

- Sot As.,Soolt 01*1- 001194 3005 3,02S 3,125 9,375 30 8,0,38

- 360200.ot.oo, 3,015 3.025~ ~~~~~~ 3,02 4 ,375 93 3,638

Ottss2, 0700

ANNX 8

VALAWI Table 11Page 2 of 2

LILONGWE LAND DEVELOPMENT PROGRAM - PHASE III

Health(EK)

ForeignYear 1 Year 2 Year 3 Total Foreign Exchange

(1975/76) (1976/77) (1977/78) Exchange Axnount

Civil Works

BuildingsSub Area North West- Unit 26 22,260 24,380 - 46,640 30 13,990

MIA 'A' 1,275 850 - 2,125 30 635

MIA 'B' 1,275 850 - 2,125 30 635MIA 'C' 1,275 850 - 2,125 30 635

Sub-total 26,o85 26,930 - 53,015 30 15,905

Sub Area North East; Unit 12 22,260 24,380 - 46,64o 30 13,990

Unit 13 1,275 850 - 2,125 30 635

Unit 14 1,275 850 - 2,125 30 635

Unit 15 22,260. 24,380 - 46,64o 30 13,990Unit 16 1,275 850 - 2,125 30 635

Unit 17 1,275 85o - 2,125 30 635

Unit 22 1,315 - - 1,315 30 395

Sub-total 50,935 52,160 - 103,096 30 30,915

Sub Area West; Unit 7 1,315 - - 1,315 30 395Unit 10 1,275 850 - 2,125 30 635

Unit 11 1,275 850 - 2,125 30 635Unit 28 1,275 850 - 2,125 30 635

Unit 29 1,315 - - 1,315 30 395Unit 30 22,260 24,380 - 46,640 30 13,990

MIA 'D' 1,275 850 - 2,125 30 635

XIA 'E' 1,275 850 - 2,125 30 635

Sub-total 31,265 28,630 - 59,895 30 17,955

Sub Area Central; Unit 1 1,275 850 - 2,125 30 635

Unit 2 1,275 850 - 2,125 30 635

Unit 6 1,275 85o - 2,125 30 635

unit 8 1,275 850 - 2,125 30 635

Unit 32 11,660 13,315 E 24,975 30 7,495

Sub-total 16,760 16,715 - 33,475 30 10,035

Sub Area South West; Unit 3 13,145 13,145 _ 26,290 30 7,890Ulnit 4 1,315 - - 1,315 30 395

MIA 'F' 1,275 850 - 2,125 30 635

MIA '0' 1,275 850 - 2,125 30 635

MIA 'H' 1,275 850 - 2,125 30 635

Sub-total 18,285 15,695 - 33,980 30 10,190

Sub Area South East; Unit 24 6,575 - - 6,575 30 1,975

Unit 25 1,275 850 - 2,125 30 635

Unit 31 1,275 850 - 2,125 30 635

Unit 33 1,315 - - 1,315 30 395

UInit 34 22,260 24,380 - 46,64o 30 13,990

Sub-total 32,700 26,080 - 58,780 30 17,630

Total Civil Works 176,030 166,210 _ 342,240 30 102,630

Septemnber 27, 1974

2501005~~~~~~~~~~~~~~~~~ANE MAW-WI i

LILONGWE LAND DEVELOPMENT PROERAM - PHASE III

RonlooMJnotN Roanch

Grade Uite Year I Year 2 Year 3 Total Fc oljn tocbar 0 oCosts 1975/76 1976/77 1977/7E Ca haige Anott

CAPITAL TOSS

Vehiclas - t-eetors 5,P80 2) 10,56o0 lD- i6D'6 9,5G_ cattlE trclc 9,930 9,930 - - 9,930 ' D,9334

-Wn,eel doins 4,400 -a( _ 4,40q ,7 7L '7,921

20,409 4,40C 4,4o,00 29,290 2 D6, 361

MiseollaneousMacbhisec & Ernip-ent Replatemets: - 2,500 2,;00 5,240 10,240 99 9,21'Water Bowser 645 645 - 645 9) 58'Ox-carts 175 (3) 525 (2) 350 _875 61) 7901Additional fenting 325 mil - (30) 9,750 - 9,750 90 8,17',Ablutitns 55 (4) 220 (3) 165 (4) 220 605 15 46'Te-porr.y HNoses 65 (15) 975 (10) 650 (16) 1,040 2,665 75 2,00('Spray Rote 2,120 2,120 - - 2,120 90 1,911DRebo Cros-igs 508 2,S500 2,500 _ 5,000 I) ,500

Sob-Se-Sal 9,485 15,915 6,500 31,900 e0 25,225

Livestock- PorthasesCows 55 (750T 41,250 (750) 41,250 (750) 41,250 123,750 - -lm-ture Steers 48 (600) 28,800 (600) 28,800 (600) 20,100 86,400Bunls 400 (10) 4,000 (10) 4,000 (10) 4,000 12,000__

InS-tini 74,050 74,050 T4RSO 222,150 -

Total Capital Costs io4,025 94,365 84,950 283,340 1- 51,586

OPERATING COSTS

Salaries and Wa.,aRanSh Managar CTT 73524 7,524 7,524 7,524 22,572 50 11,286Agsistact Maa..e- STO 2,595 2,595 2,595 2,595 7,785 - -Techei-al Officer Lineetock TO 1,266 (2) 2,532 (2) 2,532 (2) 2,532 7,596Secior Clerinal offiner SCO 1,218 1,21021,210 1.218 3,654Clerical Officer 495 495 495 495 1,485Veterina-y Assistant 363 363 363 363 1,089Mechanic 30 530 530 530 1,590Traceoc Driver 770 770 770 770 2,310Scorekeeper 190 190 190 190 570Watchman / 190 (2) 380 (2) 380 (2) 380 1,140Station Labo-r .'J 110 (3) 300 (3) 300 (3) 300 900Coca Ragers 168 (2) 336 (2) 336 (2) 336 1,008Artisai s--Bildinsl 1,730 1,730 1,730 5,190Deavrs 2 / 400 (2) 800 (2) R00 (2) 800 2,400Headmen- 204 (8) 1,632 (10) 2,040 (11) 2,244 5,916Head-en 160 (77) 12,320 (95) 15,200 (113) 18,080 45,600

Total Salaries and aRges- Expatrtites 7,524 7,524 7,524 22,572 50 11,286Lnol 26,191 29,479 32,563 88,233

Miscallaneous 713,715 37,003 40,087 110,805 11 11,286

Miscallanorns:Dipping not -eterinary eapenses 3/ 7,890 10,000 12,400 30,290 90 27,261Salt 47 4,510 5,710 7,090l 17,315 - -Ucea Corp-ctne/ne-meal 57/ 15,330 19,430 15,940 50,700 68 34,476Mai-e gere 6! 3,670 4,840 5,610 14,120 - -Maitten-ece of roads, firebreaek, fTeeing 3,390 3,820 4,050 11,260 i0 1,126All-....c 260 200 2006 0 - -R-oning Cost - Vehielse:

Cattle track - 18,000 c/yr at 23.5t 4,230 4,230 4,230 4,230 12,690 90 11,4214-wheel drine- 24,000 c/ye t 12.5t 3,000 3,000 3,000 3,000 9,000 90 8,4004-wheel drive - 36,000 a/yr at 12.5t 4,500 4,500 4,500 4,500 13,500 90 12,1504-wheel drite - 3,600 a/yr at 12.5t(part time) 450 450 450 450 1,350 90 1,215Lorry - 3,600 a/yr ot 23.5t(par-t tie) 846 846 846 846 2,538 90 2,284Trac-re- MK 1.40 per hone 2,520 (2) 5,040 (2) 5,040 (2) 5,040 15,120 90 13,608Building Mainteaae- - material 1,200 1,200 1,200 3,600 31) 1,080Watee nppLY and mainnenance 300 300 300 9C00C 75 615Snail teals and e-ipn..at 900 900 900 2,700 75 2,025Vehiclr Insoranne 50 (3) 150 (3) 150 (3) 150 420 _ -

S,S-tntcl 55,666 64,676 65,966 186,300 61 115,421

Total Opecatnsg Ctns 09,31 101,679 106,053 297,113 45 1260707

RANCH INCOME

Sale of Call Cows 45 (411) 10,495 (479) 21,555 (539) 24.255 64,305Sale of Ctll Balls 80 (22) 1,760 (25) 2,000 (29) 2,320 6,800Sale RBooh Bred Steers 64 (223) 140272 (260) 16,640 (557) 35,648 66,560Sale oPurhesed Steers 64 (570) 36,480 (570) 36,480 (570) 36,480 109,440

Total Incomean 71,0 700675 98,703 340,335

Toral Exp.aditure 193,406 196,044 191,003 580,453

Total Exp-nditn-e Lees tecser (1S2,399) (119,369) (92,300) (334,068)

It GanB cf 1 mesoe, I caepeoter and 6 labrrer2/ One head-ae per 1,000 anicals

314 1.75 pet Animal UnitW/ IM 7.00 per Animal Unit

5/ Sear I and 2 Mh 3.40 per Aninal Unil; W::ereeCler 81 2.256/ Tar balls Mv 6.50: far we-a-rs MN 2.25

3eptenber 27, 1974

M1ALAWI

LILONGWE TUIDC DEV ELOWEDT PROGRAM - PIASE III Table 13

Livestockl

7n ForeignCrade Unit Cost Year 1 Year 2 Year 3 Total Foreign Exchange

(1975/76) (1976/77) (1977/78) Exchange Amount

CAPITAL COSTS

VehiclesMotor cycles 520 - - 520 520 90 468Cattle truck 9,930 - 9,930 9,'30 90 8,9374-wheel drive 4,O20 - 4,020 _ 4,020 90 3,618Passenger car 2,300 - 2,300 _ 2.300 90 2,070

4-wheel drive (LWB) 4,400 4.400 4,400 90 3_960

Sub-total 4,400 16,250 520 21,170 90 19,053

OtherMinor equipment 625 625 625 1,875 50 938A.I. equipment - field 450 (4) 1,800 (2) 900 (2) 900 3,600 90 3,240A.I. equipment - H.Q. 1,500 - - 1,500 90 1,350Weighing scale for mobile market 3,750 3.750 - - 3,750 90 3,375

Sub-total 7,675 1,525 1,525 10,725 83 8,903

Total Capital Costs 12,075 17,775 2,045 31,895 88 27,956

OPERATING COSTS

Salaries and WagesSenior Livestock Officer S9 8,280 8,280 8,280 8,280 24,840 50 12,420Livestock Officer (purchasing) STO 5,895 5,895 5,895 5,895 17,685 50 8,843Asst. Livestock Officer TO 1,311 (2) 2,622 (2) 2,622 (2) 2,622 7,866 - -

Senior Livestock Assistant STA 1,266 1,266 1,266 1,266 3,79-SClerical Officer 276 (2) 552 (2) 552 (2) 552 1,656Livestock Assistant 441 (4) 1,764 (4) 1,764 (4) 1,764 5,292 -

Inseminators (V.A.) 390 (4) 1,560 (6) 2,340 (8) 3,120 7,020 - -

Ox-training Livestock Asst. 390 (2) 780 (2) 780 (2) 780 2,340 - -

Demonstrator 204 (15) 3,060 (15) 3,060 (15) 3,060 9,180 - -

Driver 400 (5) 2,000 (5) 2,000 (5) 2,000 6,000 - -

Total Salaries & Wages - expatriate 14,175 14,175 14,175 42,525 50 21,263- local staff 13,604 14,384 15,164 a432

27,779 28,559 29,339 85,677 21 21,263

Vehicle Running Costs4-wheel drive - 24,000 ul/jr @ 2. 5 t 3,000 3,000 3,000 3,000 9,000 90 8,1004-wheel drive - 1,,000 m/yr @ 12.5t 2,250 (2) 4,500 (2) 4,500 (2) 4,500 13,500 90 12,150Passenger car - 18,000 m/yr @ 7t 1,260 1,260 1,260 1,260 3,780 90 3,402Motor cycles - 6,000 r/yr @ 3.5t 210 (4) 840 (4) 840 (4) 840 2,520 90 2,268Motor cycle - 8,000 rn/yr @ 3.5t 280 280 280 280 840 90 756Cattle truck - 18,000 m/yr @ 23.5t 4,230 4,230 4,230 4,230 12,690 90 11,421

14,110 14,110 14,110 42,330 90 38,C97

MiscellaneousOx training - subsistence & sundries 1,325 1,325 1,325 3,975 -

bicycle allowance 22 (17) 375 (17) 375 (17) 375 1,125 -

Running costs - A.I. - field 2,570 (4)10,280 (6)(v5,420 (8) 20,560 46,260 80 37,010- headouarters 1,14-, 1,145 1,145 1,145 3,435 s0 2,75C

Vehicle insurance 50 (5) 250 (5) 250 (5) 250 750 - -

Sub-total 13,375 l;,§,15 23,i55 55,545 72 39,760

Total "perating Costs 55,264 61,184 67,104 183,552 54 99,120

oeOpt>/beo ^7, l974

MALAWI

LILONGWE LAND DEVELOPMENT PROGRAM - PHASE III

Poultry and Dairying

(E)

% ForeignGrade Unit Year 1 Year 2 Year 3 Total Foreign Exchange

Cost (1975/76) (1976/77) (1977/78) Exchange Amount

Poultry

CAPITAL COSTS

Vehicle - Motorcycle 520 (3) 1,560 - 1,5690 1,404

OPERATING COSTS

Salaries and WagesTechnical Assistant 576 (3) 1,728 (3) 1,728 (3) 1,728 5,184 - -

Vehicle Running Costs

Motorcycles 10,000 m/yr at 3.5t 350 (3) 1,050 (3) 1,050 (3) 1,050 3,150 90 2,835

Total Operating Costs 2,778 2X778 2,778 8.,334 34 2,835

Dairying

CAPITAL COSTS

Vehicle - Motorcycle 520 (2) 1,040 - (2) 1,040 2,080 90 1,872

OPERATING COSTS

Salaries and WagesTechnical officer TA 1,218 1,218 1,218 1,218 3,654 -Technical Assistant 576 (2) 1,152 (2) 1,152 (4) 2,304 4,608_-

Sub-total 2,370 2,370 3,522 8,262 -

Vehicle Running CostsMotorcycles 10,000 m/yr at 3.5t 350 (2) 700 (2) 700 (4) L 428 90 2,520 H

3.070 3070 4 922 11[06 22 2,520

SepbJefliU^er Ž, i(Ly4

MALAWI

LILONGWE LAND DEVELOPMENT PROGRAM - PHASE III

Evaluation

7 MKT-

PFore3gn

Grade Unit Year 1 Year 2 Year 3 Total Foreign Exchange

Cost (1975/76) (1976/77) (1977/78) Exchange Amount

CAPITAL COSTS

VehiclesPassenger Car 2,300 - 2,300 - 2,300 90 2,070

4-wheel Drive 4,400 4,400 _ 4,400 90 3.960

Subtotal 4,400 2,300 - 6,700 90 6,030

Total Capital Costs 4,400 2,300 - 6,700 90 6,030

OPERATING COSTS

Salaries and WagesEvaluation Officer PO 5,670 5,670 5,670 5,670 17,010 50 8,505

Agric. Officer (Statistics) PD 2,034 2,034 2,034 2,034 6,102 - -Assistant Statistician EO 1,407 (2) 2,814 (2) 2,814 (2) 2,814 8,442 - -.Stenographer/Librarian Dl 1,083 1,083 1,083 1,083 3,249 - _Senior Statistical Clerk SCO 1,083 (4) 4,332 (4) 4,332 (4) 4,332 12,996 - -

Statistical Clerk 411 (24) 10,584 (24) 10,584 (24) 10,584 31,752 - _Casual Labor 1480 4800 180 1,440 - -Driver 400 (5) 2,000 (5) 2,000 (5) 2,000 6,ooo - -

Total Salaries and wages:Expatriate 5,670 5,670 5,670 17,010 50 8,505

Local Staff 23,327 23,327 23,327 69,981 - _

2T, 9-9 7 25, T, 9897 6,991 9 8,505

Vehicle Running CostsPassenger car - 8,ooo m/yr at 7t 560 560 560 1,680 90 1,512

4-wheel drive - 18,000 m/yr at 12.5t 2,250 (4) 9,0oo 9,000 9,000 27,000 90 24,300

Vehicle Insurance 50 (5) 250 (5) 250 (5) 250 750 - _

Total Vehicle Running Costs 9,810 9,810 9,810 29,430 87 25,812

Data Collection and ProcessingComputer time and Progranming 3,430 3,430 3,430 10,290 50 5,145

Hire of Equipment 32.0 320 32D 960 C

Sundries and Stationery 2100 2,100 2,100 6,300 75 ,725

Total Data Collection and Processing 5,850 5,850 5,850 17,550 56 9,870

Total Operating Costs 44,657 44,657 44,657 133.,971 32 _441,187

September 27, 1974

MSLAL4WI Table O'

Page 1 of 3LILONGWE LAYD DEVELO7IMENT PROOGSI4 - PEASE III

Preparat on Costs for I`ational =Rral Development Program

a, Land Resources Survey

( t )

For-iL;nYear I Year 2 Foreign Eye ange

Category I.ots (1975/77) (197D/77) Total Exchange Amo-rt

1 x B2 nhouse 1 2,00CC - 23,333 30 6,.oo.. CH ' hose 2 - -' :x 3 8, _ 8oO 30

Sub-total &8.800 - 28,800 33 8, C4c1

Caravans an.d associated ecaiprent 8Coo - 8,000 90 7,o30Stereoscopes and equpment 5 2,003 - 2,000 go 1, OC

-noltafax copier 6 1,50O - 1,500 93 1,:50

Dyoline nr¾#er 7 L - 400 90 36cCffice furniture 8 630 - 600 - -.

Sulb -tt Dti 1 '', -2,500 _ 12,500 85 10, 710

:se-sonal E rts1 Senio -or'ofassional of-fcer 9 3,822 3,822 7,644 53 3,822

1 io:^essioral officer 90 538 3,750 4,688 - -

Technical f'ier Drrughts-a-' 9 Sf0e 1,500 3,000 _ -

ut-Dtotal . ~6O 9,072 15,332 24 3,822

R'anrtn5 FopenpemStaff train'ng and advisor> -ustts 1,000 1,030 23000 90 1,800Renting of otfices (1' 720 720 1 L40

S t-A '723 1 ,720 3,440 52 1 8 O

Soecial Expen dtureAirp'notos arcd ma- materials (12) 400 - 1, L00 9C 1,2-0Prodc'.tion of orthophoto .aps (13) 20,000 - 20C000 9C 18, 'OCharter air reconnaissance/

ohotography 600 63° 1,200 100 133';O

Sub-total 22,000 60o 22,800 91 20,4 .Q

TaT7' 71,280 11,392 7 51 ,45 42

Notes:

1 Eor Sen4

or Professioral Of'ficer.P. or

7rofessioral Cfficer (Ira'ning>(filn-ced under Phase II).

F-r Oraughtenan.4 2 for Dowa, 2 for a,wer7.

5 1fo Dowa, 1 for Fa_wera, 2 for Headcuarters.6. For Lilnng.,e Office.7. Eor Blantyre Office (ncera).8. Dowa 300, ETamwera 5300.9. Local salary for full year.13. Salary for three months onLy, to allow for recruitment delays.11 1000 scuare feet at 36t per annum irLilongwe and Blantyre.'2. Io take enlarged base maps at 1:25,000 from purchased airphoto prints:

Dowa NamweraDo. Cost N,1o. Cost

Sheets at TK30 7 E40 -12 1TX360Airohotos at 50t 640o XK320 960 mK48o

13. Acreage unknown until basic surveys comapleted: a contingency figure.

September 27, 1974

At4LAWT mSNEX 8Table 16

LILONCWE LAND DEVEL0PMENT PROORAM - PHASE III Page 2 Of 3

Preparation Costs for N7ational Rural Development Program

b. Population Survey

-% PoreignYear 1 Year 2 Foreign Exchange

Category Note (1975/76) (1976/77) Total Exchange Amount

(2) Buildings1 x 33 house 1 -

(6) Plant & Vehicles1 LW3 Landrover 2 3,900 _ 3,900 90 3,510

(8) Personal Emoluments1 Professional officer 3 4,950 7,475 12,425 50 6,213

2 Statistical clerks 4 800 900 1,700 - -

Labour 5 750 750 1 500 - -Sub-total 6,500 9,125 155 39 T7

(9' Sunning ExpensesCoaputer charges and

card punching 6 800 800 1,600 50 800Stationery 500 500 1,000 75 750

Sub-total 1,300 1,300 2,600 59 1,550

(10) Special Expendi-ure

Site development chargesfor 23 house 2,000 - 2,000 30 600

(33) P.V. Hire ChargesHire charges for 4-wheel drive 2,500 2,500 5,000 g9 40500

TOTAL 16,200 12,925 29,125 56 16,373

C. Agro-Economic Survey(W)

(2) Buildings1 x B3 house 1 - - - - -

(6) Plant & Vehicles1 LWB Landrover 2 3,900 - 3,900 90 3,510

(8) Personal Emoluments1 Professional officer 3 4,950 7,475 12,425 50 6,2132 Statistical clerks 4 800 900 1,700 - -

Labour 5 750 750 1,500 -

Sub-total 6,500 9,125 15,625 39 6,213

(9) Running ExpensesComputer charges and

card punching 6 800 800 1,600 50 800

Stationery 500 500 1,000 75 750

Sub-total 1,300 1,300 2,600 59 1,550

(10) Special ExpenditureSite development chargesfor B3 house 2,000 _ 2,000 30 600

(33) P.V. Hire ChargesHire charges for 4-vheel drive 2,500 2,500 5,000 90 4.500

TOTAL 16200 2,925 29,125 36 16,373

TOTAL b. 4- c. - - 58,250 56 32,746

NOTES

1. For Professional Officer attached to Agro-Economic Survey (financed under Phase II).

2. To be used by the Professional Officer and Agro-Economic Survey staff for supervisionof survey and data collection aetivities in the project areas.

3. During 1st year: basic salary K2,500, inducement allowance K1,250, air tickets K900 and

baggage allowance K300. During 2nd year: salary K2,500, inducement allowance K1250,gratuity K950, vacation leave 150 days K1,575, air tickets K900 and baggage allowance K300.

4. 2 Statistical Clerks to assist in data processing of survey data.5 For the hire of temporary staff for tabulations, etc.6. Punching of 80,000 cards at K5.00 per 1,000 and 30 hours of computer time at K40 per hour

spread over 2 years.

September 27, 1974

MALAWI

LILONGWE LAND DEVELOPMENT PROGRAM - PHASE III

Preparation Costs for National Rural Development Program

d. Crop Experiments

(NK)

Year 1 Year 2 Foreign Foreign

(1975/76) (1976/77) Total Exchange Exchange

. % Total

Personal Emoluments

Technical Officer 2,100 2,100 4,200 50 2,100

Labour 800 800 1,600 - -

Sub-total 2,900 2,900 5,800 36 2,100

Capital

2 x 4-wheel drive (LWB) 8,000 - 8,000 90 7,200

Equipment 1,500 - ,500 90 1,350

Sub-total 9,500 - 9,500 90 8,550

Other Operating Costs

Travelling and Subsistence 1,000 1,000 2,000 - -

Vehicle Operation (PVHO) 20,000 miles @ 15t 3,000 3,000 6,000 90 5,400 w

Tools and materials 2,500 2,500 5,000 75 3,750

Miscellaneous 500 500 1,000 75 750 oD

Sub-total 7,000 7,000 14,000 70 9,900 * m

Access to trial plots (road improvements) 29.778 - 29,778 30 8,934

T 0 T A T. 97178 Az90 ______ 49 29,;8-,

September 27, 1974t'

ANNE 9

MALAWI

LILONGWE LAND DEVEIOPMENT PROGRAM - PHASE III

Estimated Schedule of Disbursements(US$'OO0)

IDA Fiscal Year DisbursementQuarter In Quarter Cumnlative

1975/76

SeptemberDecemberMarchJune 870 870

1976/77

September 870 1.,74oDecember 870 2,610March 870 3,,480June 660 4,14o

1977/78

September 660 4,800December 660 53460March 660 6,120June 600 6,720

1978/79

September 600 7,320December 600 7,920March 580 8,500

November 20, 1974

ANNEX 10Page 1

MALAWI

LILONGWE LAND DEVELOPMENT PROGRAM - PHASE III

Administration of LLDP After the Project

1. This Annex discusses four questions, viz:

(a) the continued provision of farmer services (e.g. fertilizer,seed, credit and extension service) in the LLDP area afterthe Project;

(b) the likely continuing cost of these services;

(c) arrangements for financing that cost; and -

(d) the future of the program administration, managementand staff after the project.

2. The LLDP area is expected to achieve its maximum potential produc-tion under present technology around 1985/86. For this to happen, it isnecessary to maintaini the extension service and supply of seasonal inputsintroduced by the program. Malawi Government has put forward a series ofproposals as to how this work could be carried out. They envisage that theunit centers, extension services, the Dzalanyama ranch, egg and milk produic-tion, and the evaluation unit would all be operated directly by MANR. Eloadswould be maintained by the Ministry of Works, and boreholes by the localauthorities (which would employ the Geological Survey Department for thispurpose). ADMARC would maintain their input stores and produce buying markets,while the Malawi Ministry of Health would maintain the health facilities.The only program component not yet provide for is the adminsitration of 31lall-holder credit, but it is expected that proposals with regard to this asp Bctof the program would be presented to the Association no later than April 1,1976 as part of final comprehensive proposals dealing with post-programadministration (paragraph 4.20).

3. It is expected that these services would cost the Malawi Goverimentat constant prices about MK 750,000 a year in operating and equipment reildace-ment costs. Another IV 90,000Q a year would be required to finance the rHcur-rent costs of the health facilities. In addition, the credit fund for farmerswould need to be boosted by a total of about MK 500,000 to cope with the inputrequirements at full production. Government is fully aware of these cosw:s andwould arrange for thei'r financing. Government cash flow statements for theProject and Program (Annex 14) show that both generate more than enough (oavern-ment revenue to finance these costs without difficulty.

ANNEX 1 0Page 2

4. Some of the present program staff are likely to be required inLilongwe to maintain the services discussed above. Those who are not sorequired would be either reabsorbed by the MANR or else reassigned to otherprojects and activities in the country where their Lilongwe experience isexpected to prove valuable.

MALAWI

LIWNGWE LAND DELOPMENi PPWGRAM - PHASE II1:

LIDP TUnits bry Year of Reversion to Regional Agricu'ltural Office

Sta ndard Modif ied All

Year Unit New Cumulative New Cumulative New Cumulati ve

1i94/735 1,P,3,4 (part), 5 5 5 _ _ 5 5

1975/76 6, 7, 8, 9 4 9 - 4 9

1976/77 12, 13, 15, 16, 17 5 14- - 5 14

1977/78 10, 29, 30 3 17 - _ 3 17

I97 /79 11 l 14, P7, 29, SWMI IAI/ 4 21 2 2 6 2.3

1979/80 21, 22, 26, 35, NWMIA 1/ 4 25 3 5 7 30

1980/81 4 (part), 23, 24 2 27 - 5 2 32

1981/82 31, 32, 33 3 30 - 5 3 35

1982/83 25, 34, SMIA 2 32 3 8 5 40

1983/84 4 (part), 23, 24 2/ 2 27 - 5 2 32

1984/85 31, 32, 33 g 3 30 - 5 3 35

1985/86 25, 34, smiA 2/ 2 32 3 8 5 40

1 These groups of modified imits might in practice be reversed if NWMIA -uit centers are constructedbefore those in SWMTA.

e1 These data. 1f-nef de r^cvo-rciGn to 'MANL- which would result from an 8-year "development period"for Phase III units.

ANNEX 1Page 1

MALAWI

LILONGWE LAND DEVELOPMENT PROGRAM - PHASE III

Smallholder Crop Marketing and Prices

The main crops marketed in the Lilongwe area are maize, tobaccoand groundnuts; there are insignificant quanties of sweet potatoes and beansgrown primarily for subsistence. In theory, LLDP farmers can dispose oftheir produce through private traders, the Lilongwe produce market, informalmarkets or barter, or through the Agricultural Development and MarketingCorporation (ADMARC). In practice, however, because licensed traders areexcluded from the LLDP area, and the Lilongwe produce market is remote, mostLLDP farmers dispose of their surplus produce through:

(a) sale and barter among other farmers and sales to unlicensedtraders; and

(b) sales to institutional buyers for either local processingand distribution or for export.

Sale and Barter Among Farmers and Traders

2. It is extremely difficult to gauge the amount of produce disposedof by barter or through unlicensed traders. No records of such sales exist,and attempts to deduce the size by subtracting institutional sales fromestimated total production run up against the problem that estimates of thetotal production may be wildly off the mark, and records of sales to institu-tions are only a little less so. In spite of the paucity of records, thereare many reasons to believe that a considerable quantity of smallholders'surplus produce (perhaps the bulk of it) is sold to non-institutional buyers.For example, a large discrepancy exists between quantities of smallholderproduction recorded by the LLDP Evaluation Unit and the quantities purchasedby either LLDP itself or by ADMARC. The discrepancy seems too large to beaccounted for simply by increased subsistance consumption. Moreover, privatetraders are known to have been paying higher prices for maize than ADMARC -a situation which encourages sales to such traders rather than ADMARC.Furthermore, significant quantities of maize may have been exported to Zambiawhere they earn higher prices through sources other than AD,-MRC.

P,nDP Maize TeilThg ?ogram

3. fn cr-.ei to encourage farmiers to sell their maize early and avoidrodent or weevil danmage, LLDP has been operating a maize shelling programavailable to ai1 farm;ers in the LLDP area. In providing this service LLDPwas acting as a licersed trader. In addition to shelling and transporting

ANN'N 11Page 2

maize for the farmer, LLDP pays a price of MK 2.70 tambala per bag, whichuntil the recent (August 1974) increase in ADMARC's official price for maize,was 8% higher than the ADMARC price.

ADMARC

4. Apart from LLDP itself, the only organization directly invcllved inthe marketing of stnallholders' crop is ADMARC. Established in 1971 by theAgricultural Development and Marketing Corporation Act, ADMARC must purchase"all cotton and tobacco grown on customary land or public land as it may, inits discretion, consider marketable". 1/ The Act also gives ADMARC the rightto purchase all produce grown on customary land. In interpreting this latterpower, ADMARC regards itself only as a residual buyer of smallholder produce,buying only what the farmers choose to market through it. ADMARC maintainsabout 52 main storage depots or markets, supplemented by over 700 producebuying markets throughout the country. Within the LLDP area, as of December1973, ADMARC had about 55 permanent and 34 temporary markets.

5. ADMARC is independent in its day to day management, but its overallpolicy is controlled by the Minister of Agriculture and Natural Resourceswho also appoints its Board of Directors. In addition to produce marketing,ADMARC supplies fertilizer, seed and agricultural equipment to smallholders.It also maintains a price stabilization fund designed to enable it to main-tain smallholder prices in the face of falling world commodity prices,and a food reserve (usually about 7% of the annual maize crop) to meetpossible food shortages. Finally ADMARC operates groundnut and tobaccograding centers, andi runs seed production farms.

6. It is clear that ADMARC's efficiencv, willingness to work in i:heinterest of smallho:Lders, and financial viability are crucial for the stuccessof LLDP. ADMARC is forbidden by its enabling Act (Section 3) from sell;-ngany produce at a loss, save bv special Ministerial authority in the case offood items sold wit:hin Malawi; in that case any losses are to be reinr-wrsedbv Government out of public funds.

7. Since 1969 ADMARC has made profits from each year's crop tratling,ranging from a minimum of MY152,000 in 1969 to a maximum of MK8.7 mill:-on in1972. Latest available audited accounts are as of March 31, 1973, and theyshow that in the year then ended ADMARC made a net profit of MK6.3 million,all of which was transferred to reserves. ADMARC's crop trading accourtsand accounting ratios for 1966 to 1972/73 are given in Tables 1 and 2. Itsprofit and loss account for the vear ended March 31, 1973 and its balarcasheet as at that date are in Tables 3 and 4 respectively.

1/ Source: Agricultural Development and Marketing Corporation Act.

ANNEX 11Page 3

8. Under the Project ADMARC would continue to market all LLDP small-holder tobacco, together with any other crops which program farmers sell toit as long as such crops are within ADMARC's official list of commodities(Table 5).

Crop Grading

9. Of the three main LLDP crops - maize, groundnuts and tobacco - onlymaize is purchased by ADMARC on an ungraded basis. It must, however, beshelled before marketing, must be clean and free from weevil, rodent or moulddamage, and must have a moisture content of 12% or less. ADMARC pays 1.75tambala per lb for maize of this quality. Groundnuts, which must also beshelled before sale to ADMARC, are bought in three grades - Grade A which arelarge whole nuts, Grade B which are smaller whole nuts and Grade X which areneither A nor B. There are considerable price differentials for the variousgrades of nuts (see Table 5). Tobacco is graded into eight different categor-ies; included in the many factors which determine tobacco grade are the lengthand breadth of the leaves, how properly they have been cured, and whether ornot they are spotted. The eight grades of tobacco and the prices ADMARC paysfor them are listed in Table 5.

Tobacco Quota

10. Tobacco is the only LLDP crop sold under quota. The quotas are issuedby ADMARC market supervisors on the basis of lists of recommended farmers sub-mitted by LLDP unit development officers. The average quota is 500-600 lbsper grower. Market supervisors issue about twice the quantity of seed requiredto produce this quota, thus ensuring that even under poor germination and grow-ing conditions the quota would still be met.

Transportation

11. All produce intended for sale to ADMARC has to be transported to theADMARC depots by the farmer. Of LLDP farmers, about 407 transport their pro-duce from the farm by ox cart, about 32% on foot, about 16% rely on the LLDPmaize shelling program, and about 5% use bicycles; the rest use other means,including group hire of lorries. Since only about 8% of LLDP farmers ownox carts, there is obviously a lot of hiring out or lending of ox carts.The ox-training program initiated under the LLDP would be continued duringthe Project so as to enable as many farmers as can afford them to buy andoperate their own ox carts. Once produce is delivered to ADMARC depots,it then enters the national transportation system. Most of it goes southeither directly by road (Lilongwe to Blantyre/Limbe) or by lorry to Salimaand thence by rail to Blantyre/Limbe. Some also goes by road and rail toRhodesia, South Africa and Zambia.

ANNEX 11Page 4

Storage

12. SmalJl.olders store their maize and other crops in large -ylindricalcribs made from interwoven twigs, bamboo or reeds and raised on stilts some!18" above the ground. Some of the cribs are covered with mud to p.ctect tae.contents more ef'fectively from rodents and insects. The cribs are known as"nkhokwe" in Malawi. The LLDP Evaluation Unit estimated that storige losses(due largely to moulds, especially the fungus Diplodia) averaged about 5% to6% during 1968/69. However, informed opinion in Malawi puts the averageannual loss nearer 10%.

13. ADMARC's main storage capacity - about 30,000 tons - is located atthe Lilongwe Depot. One half of this capacity is under cover. Produce, partic-ularly maize, can be stored for a year or more until a market can be found.Tobacco and groundnuts are, however, as a rule shipped out fairly rapidly.ADMARC storage losses are infinitesimal, and generally average less than 1%.Storage premises are sprayed before crops are moved in and fumigated ifinsects are later discovered.

Exports

14. Exports of unmanufactured tobacco and groundnuts have been consist-ent, averaging in value MK12.3 million and MK4.4 million respectively over theperiod 1964 to 1971. Maize exports fluctuate widely, with the marketed surlplusdrying up completely in years of poor harvest. ADMARC undertakes practicallyall exports of crops, especially smallholder crops. Tobacco is auctioned atLimbe before being exported, but groundnuts may pass directly into export chan-nels. The principal export route is by rail to the Mozambique ports of Nacalaand Beira, although there are also road and rail exports to Rhodesia,, SouthAfrica and Zambia. Malawi's exports of maize and groundnuts for 1966 to 1972are listed by colntry of destination in Tables 6 and 7. Tobacco exports arelisted by type in Table 8.

Price DeterminatiLon

15. Prices paid to the farmer at ADMARC markets for maize, groundnutsand tobacco are fixed by ADMARC with the twin aim of ensuring a reasonablereturn to the fanmer, while enabling ADMARC to earn surpluses to supportnational development programs. All ADMARC prices have to be approv,ld by theMinister for Agriculture and Natural Resources. A comparison of officialprices for 1973 with those for 1974 is given in Table 5.

16. Prices obtained for exports are determined largely by the wDrldmarket situation at the time of contract. Maize is sold on individt.al con-tracts. Representatives of international tobacco buyers bid at the newtobacco auctions in Limbe, while groundnuts are sold by forward conitractdirectly to confectionery manufacturers, mainly in England.

ANNEX 1 1P age 5

17. There is undoubtedly a good international market, and the futuremarket outlook is bright for all three crops produced at LLDP. Moreover,Malawi does not produce enough of any of them to make an impact on world prices.All their prices have gone up considerably between 1973 and 1974. However, itis difficult to project movements in world prices of LLDP products from thegeneral trend of wcr16 prices in similar products widely traded by other coun-tries. This is dzae to the fact that of the three products, only dark-firedtobacco is directly comparable to dark-fired tobacco produced elsewhere. LLDPgroundnuts are mainly chalimbana - a confectionery type whose market and pricesare quite distirnt from the Nigerian oil-producing groundnut usually quoted ininternational zrice lists. Similarly, while nearly all internationa:L grainprice lists quote the price of US yellow maize, few if any give the price ofthe white flint variety found in Malawi (and also South Africa/Rhodesia).International prices of these imperfect substitutes are therefore not a trueguide to likely movements in the world prices of LLDP products, although majorlong-term trends may be the same, especially for maize. In January to June1972, while the average UK c.i.f. price for South African white maize (similarto Malawi's) was MK45.2 per short ton, the comparable price of USA No. 3 Yellowmaize was MK4C.8. If that differential is maintained, the price of Malawimaize in 1974 using the IBRD Commodities Forecast should be MK132.9 per metricton. ADMARC estimated that the average c.i.f. UK price for Malawi chalimbanagroundnuts in 1973/74 should be about MK314 per short ton. The export pricefor Northern Division dark-fired tobacco (the type grown at LLDP) was estimatedby ADMARC at about 38 tambala per lb f.o.b. Limbe. The relationship betweenMalawi farmgate prices employed in calculating the internal economic rate ofreturn and the world prices is fully described in Annex 15.

November 20, 1974

MALAWI

LILONGWE LAND DEVELOPMENT PROGRAM - PHASE III

FM4B/ADMARC Crop Trading Accounts, 1966 to 1972/73 (K'OOO)

15 monthsy , Yin. to Y. Y. . Y.2. Y.

31/12/66 31/12/67 31l/39 31/3/70 313/71 31/3/72 31/3/73

1U,ES 13,406 15,870 19,127 19,175 21.084 27.612 29;227Deduct Seiiern Expenses 935 ,I4L9 1 , 493_ 847 _ 926 90l 1,652

-ALES Less Selling Ebpenses 12,471 14,451 17,634 b 18,328 b 20,158 26,711 27,575Movement of 8tocks - Increase/(Decrease) 3,085 283 (5,371) 289) 674 865 1,030iTF TA4LES VLTU7E OF CROF$3S PUTC! PSED 15,556 14,734 12,263 18,039 20,832 27,576 28,605

PURCHASE OF CROPS l1,687 13,529 7,565 1C,074 13,538 13,959 16,477Add 3ayin. and Direct pese 2,j458 23,431_ E782 3,110 3il27 3X392 4,43

T'rT ',' 1,G IL : T FYU: T:ES l4,145 49 16,960 101,347 13,184 17,265 17,951 21,420

7C Tz- ' lCFT/(L--) 1,411 (2,226) 1,916 4,855 3,567 9,625 7,185!"EA sLmin. Expenses 32 97_ 1,4C2 1,763 878 ------ 9112 858trl rt5D07T7/(iC 0< e r(' C '--- m;.iT z14 (3,628) 153 3,977 2,659 8,714 6,327

-Joorce: a n /;js/ ) C nrc .1 K orts and Accounts.

a The. fi Toures for 19l71/72 h tve been adjusted in the 1972/73 accounts by transferring part of the buying expensesrelating to"Be.s, tlwin' and hiessian" to sellineoxpenses.

h The firurcs for move rwent of crop stocks for the iperiods ended 31/3/69 and 31/3/70 do not reconcile with the bal1ancesheet figures fer crol, stocks. This eppears to be due to a change in the valuation basis, ancd also to a stock adjustrnentnate nrcr sevrnr the v-luatior by Y107,437 at 1st J nuary, 1969.

1 'he accountirn p.niod a.'t', chanrrcd from tho calendar yce-r to year ending 31st March, during 1969.

2. C-rtain cba:ncIs in the prmcenrtation of acccunrLs were made in 1969/70. Figures for that and subsequent periods may notbc strictly comparable witli earlier periods.

fD | -.

MALAWI

LILONGWE LAND DEVELOPMENT PROGRAM - PHASE III

FMB/ADMM - Accounting Ratios, 1966 - 31/3/73

15 monthsY.E. Y.7. to Y... Y T. Y.E. Y.7

31/12/66 31/12/67 31/3/69 31/3/70 3 1/3/71 3113/73

.ross Profit as percenta.-c of Sales 10.5 (14-0) 10.0 25.3 16.9 34.9 24.6

let Profit as percefntale of Sales 0.1 (22.9) 0O8 20.7 12.6 31.6 21.6

'et kdministrative 7xpenditure asperecnt%ve of Sales 10.4 8.8 9.2 4.6 4.3 3.3 2.9

,elIlin~ _xpt nses as pf rCcnti-c, ef

S - Ep s ,tso.7.0 8.9 7.7 4.4 4.4 3e3 5.7

BBuyin-.nd. Dirinct pen S'S parcenta-f

of Furohas es 21.0 .2534 37.0 30.9 27.5 2S.6 30.0

Patio of Debtors to Sales 13.1 14.4 14.1 9.0 7.2

Patio of Current .,ssets -to CurrentLiabilities 2.8 7,4 6-4 12.4 13.9

fAtio of Current -.lSSf.S -o Fixed's;3 ts 1.6 2.8 2.3 3.6 3.7

T-htie of Currant .se to Fixcd

.. scote plus ITnv-st.ewnts 0.9 1.6 1.2 1.9 1.9

NAet irofit as perc-nta- of vr -e

i_t A.3s,ts 1/ 56.8 2,5.7 55.6 27-9 z

Sourc: F'-/ , I nC rnu .1 Rcports and -ccounts;.

1 /.vir.'-a net ets h-ve bcen c-alcula-.ted from the fi arcs for net assets at the hb.;iInin.- and end of the financial year.

Certain fi ~ures for carlier years sauld not be calculatcd, since balance sheets were not ra.dily available.

ANNEX 11Table 3

MALAWI

LILONGWHE LAND DEVELOPMENT PROGRAM, PHASE III

cultural Development and Marketing Corporation

Prcf it and Loss Account for the Year Ended 31ST March 1973

1973 :11.972PROFIT TRANSFERRED FROM CROP

TRADING ACCOUNT ....... ... .. ... 6,326,850 8,:1:5,113

Add OTHER RExNJE AN1D PROFITS

Dividends Received ... ... ... ... 80,479 12,016

Interest Received ... ... ... ... 492,376 376,137

Handling C(harges-Zambian Maize ... ... -- 18,471

Petroleum Products-Profit ... ... 20,948 3,143

Toleza Farm-Profit ... ... ... ... 75,943 8,723

fDecimalisatior Provision No Longer Reguired -- 32,905

Commercial Vehicle Fleet Revenue 8,029 (12,770)

677,775 438,625

7,004,625 9,153 738

Less OTHER E=xENSES AND L.OSSES

Loss On Sale of Investrment ... ... 892 --

Fertiliser and Farmers Aids (Net) ... 77,808 2C0,326

Vipya Tang Estates-Loss ... ... ... 96,994 5 ,L64

Interest On Long Term Loans ... ... 131,971 13',O58

Provision For Doubtful Debts ... ... 320,000 4C,0o0

Pest Control Department, ... ... ... -- , 771

Coffee Authority-Contribution ... ... 7,580

Miscellaneous Projects ... ... ... 2,332 E L53

637,577 26C ,O6

6,367,048 8,892,932

Less GRANT-MALAWI GOVERNMENT 96,000 96c00o

6,271,048 8,796,932

Less PROVISION FOR DIMINUTION IN VALUE OF INVESTMENTS - 1,000. ODO

TRANSFER TO RESERVES ... ... ... K 2O71048 K7.97 932

ANNEX 1t

4ALA1Wii Table 4

LILONGWE LAND DEVELOPMENT PROGRAM - PHASE III

Agricultural Development and Marketing Corporation

Balance Sheet-31ST March 1973

FIXED ASSETS NOTES 1973 1972

Land, Buildings, Plant, Equipment ..and Motor Vehicles ... ... ... 2 3,970,508 2,804,278

Capital Works in Progress . ... ... 1,168,298 1,082,1805,138,806

INVESTMENTS ... ... ...... ... ... 3 4,949,520 3,653,558

CROP RESERVE FUND

Cash On Deposit ... ...... ... ... 2,000,000 1,000,000

CURRENT ASSETS

Crop Stocks ... ...... ... ... 4 3,220,565 2,256,336

G.rowing Crops-Develop. Projects ... 167,185 93,080

Stores, at cost .. 2,802,430 1,147,936

Debtors ... ... ...... ... ... 4,039,456 3,080,153

Short Term Investments .... ... ... 4,380,000 1,286,792

Cash on Deposit . . 1,50,345 4,288,473

Cash At Bank and In Hand 91 75 1,930,532

16 2956 14,083,302

Less CURRENT LIABILTT-ES

Creditors and Accruaed Expenses.. ...

CURRENT ASSETS LESS CU}{RHNT LIABILITIES. 15,27,700 12,945,027

K2,516,026 K2L)8324

FINANCED BY:--RESERVES ... ... ...... ... ... 5 6,549,320 7,505,797

WORKING CAPITAL ACCOUTJNT ... ... ... 6 17,233,064 11,063,766

CROP RESERVE FUID .. ...... ... ... 2,000,000 1,OOO,(0O

LONG TERM LIABILITTS ..... . ... ... 77

K27,5i6,026 K21,485,043

AlX 'I 1MALAW Table

LIINGDN LAND DEVE!ENT PROGRAM - PE Page 1 of 2

Agricultural Developmaet and Marketing Corporation

Official Price List - Comparison of 1973 Prices

with Priees at-Sept. 30, 1974

With the approval of *the Flinister for Agriculture ADlAARC are pleased

to announce the following prices. which uill be effective forthwfith

and until further not:Lce:-

GROUNDNUTS

Chalimbana GDA 8.Ot per lb., increase of 1.5t per lb.

Mwitunde/Kalisere GDB 6.Ot per lb., increase of 1.5t per lb.

Splits & Shrivels GDX 3.0t per lb., increase of 0.5t per lb.

Manipintar & Malimba (Shelled) 6.5t per lb., increase of 1.5t per lb.

(Unshelled) 4.5t per lb., increase of 1.2t per lb.

PADDY

Grade I 3.33t per lb., no change

Grade II 2.5t per lb., no change

Grade III 1,667t per lb, no change

COTTON

Grade A 8.Ct per lb., increase of 2e0 t per lb.

Grade B 5.51t per lb., increase of loot per lb.

Grade C 3.5t per lb., increase of 10t per lb.

BEANS

Vlhite Haricot 5.0t per lbo. incoease of 1oOt per lb.

lihite Kidney 5 .Ot per lb., increase of loot per lb.

Canadian Jonder or) 5.Ot per lb., new variety for purchasePure Red Haricot )Sugar Beans 5.Ot per lb..- increase of I.Ot per lb.

Mixed Beans 4.75t per lb. increase of 1oOt per lb.

Dolichos Beans 2.0t per 1b,, increase of l.0O per lb.

Ground Beans 3.5t per lb., increase of l.Ot per lb.

Soya Beans 4.75t per lb. increase on 1.42t per lb.

PEAS

Field Peas 2.Ot per lb... increase of l.Ct per lb.

Chick Peas 5.0t per lb., increase of 2.Ot cer lb.Cow Peas 2.Ot per lb., increase of C.75t per lb.

Pigeon Peas 2.5t per lb., increase of 0.75t per lb.

GRAM

Black 5.Ot per lb., increase of l,Ot per lb.

Green 5.Ot per lb., increase of l.Ot per lb.

ANNEX 11Table 5Nge 2 of 2

SESA-E 6.Ot per lb., increase of l.Ot per lb.

CASTOR SEED 4.5t per lb., increase of lot per lb.

MAIZE I 75.7. per lb, Lncrease of 0.50t per lb.

SUNFLOIER SEED

Grey Striped 3.Ot per lb., increase of 0.5t per lb.

Blackc or vfhite 2.5t per lb., increase of 0.5t per lb.

CHILIS

Small (birdseye) 20t per lb., no change

Large CapsTcums (1st grade) lOt per lb., no change

Large Capsicums (lnd grade) 4t per lb., no change

SORGHUM 1.5t per lb., no change

IJHEAT 3.5t per lb., increase of l1Ot per lb.

BULLRUSH MILLET O.5t per lb., no change

The changes in price are compared to last year's buying prices ara notto the minimi,d guaranteed prices announced in September, 1973.

It vo 0cc'- de-od to make no change in the guaranteed prices for tobacco,but it is re-affirmed that a second payment will be made, dependentupon the results or sales on the auction floor. The growers prices willbe as follows:-

TOBACCO (except Oriental)

Grade Cl 15t per lb.

Grade C2 14t per ib.

Grade K (Chikopa) 13t per lb.

Grade Gl lOt per lb.

Grade F It per lb.

Grade Xl It per lb.

Grade G2 8t per lb.

Grade X2 3t per lb.Northern Division Dark-Fired only

Grade L (LTower leaves) lOt per lb.

Sun/Air-cured only

Grade H (mottled) lot pe-r lb.

Oriental Tobacco

Grade Al .5t per lb.

Grade A2 21t per lb.

Grade Bl 17t per lb.

Gra--e B2 14t per lb.

Kappa 8t per lb.

ANNEX 11MALAWI Table t

LILONGWE LAND DEVELOPMENT PROGRAM - PHASE III

Export of Maize by Country of Destination, 1966-72 (short tons)

1966 1967 1968 1969 1970 1971 1972Consignm.entto Agents 5,600

Tanzania 14,036Zambia 34,784 1 5,073Japan 12,441Congo (Kinshasa) 20,000Netherlands 20,720 11,200United Kingdom 28,896 78,960 84,672 11,760 14,129Others 1, 120

TOTAL 48,896 100,800 95,872 52,144 1 5,073 40,606

VALUE (K'000) 1,570 3,278 3,306 2,132 - 411 1,302

AVERAGE PRICEPER SHORT TON (K) 32.1 32.5 34.5 40.9 _ 81.0 32.1

Source: National Statistical Office, Annua' Statements of External Trade.

ANNEX 11Table 7

MALAWI

LILONGWE LAND DEVELOPMENT PROGRAM - PHASE III

Exports of Grondlnuts by Country of Destination, 1966-72 (sh. tons)

1966 1967 1968 1969 1970 1971 1972

Consignment to Agents - 641 - - - - -

Europe: United Kingdom 13,351 40,654 26,317 33,424 22,005 27,842 34,258

Netherlands 97 1,293 3,674 3,837 2,169 2,775 3,453

Norway - - - - - 67 994

Italy 526 8,818 374 - 470 78

Spain 392 108 560 502 618 730 101

Others 233 483 172 - - 45 228

Total Europe 14,599 51,356 31,097 37,765 24,792 31,929 39,112

Africa 788 875 260 - 22 248 211

Asia 391 1,772 36 - - - 34

Others 601 2,265 1,671 - - - -

TOTAL 16,369 56,268 33,064 37,765 24,814 32,177 39,357

VALUE (K'OOO) 2,573 6,865 4,615 5,591 4,241 5,883 7,123

AVERAGE PRICE PERSHORT TON (K) 157.2 122.0 139.6 148.0 170.9 182.8 181.0

Source: National Statistical Office, Annual Statements of External Trade.

Groundnuts are a far from uniform commodity, and the firstnecessary distinction is between nuts grown primarily for their highoil content, and those of a confectionery type, which normally are lowerin oil content. Malawi Chalimbana-type groundnuts normally earn apremium over Nigerian HPS (hand-picked and selected) nuts, but are oflower value than South African Natal nuts. The table below shows recentprices for Nigerian and South African nuts with probable figures forMalawi for Chlimbana if they had been sold on the world market at that time.In practice, the bulk of Malawi's groundnuts are sold on long-term con-tract and the average actual prices obtained in 1972 were less than theftgures shown below.

GroAmdnut Prices, c.i.f. UK, 1972/73 (W/short ton)

Nigerian ffPS S.A. Natal Malawi55/60 60/70 Chalimbana

1972, Jan-Jun 225.4 292.9 2601972, Jly-Dec 257.3 302.5 280All 1972 241.4 297.7 ?701973, Jan-Jun 349.9 417.5 380

Source: Averages of weekly prices from 'Public Ledger', exeopt MalawiChalimbana which has been estimated from the prices of comparable ground-nuts.

MALAWI

LILONGWE LAND DEVELOPMENT PROGRAM - PHASE III

Exports of Unmanufactured Tobacco, 1970-1972 '1

1971 1972

Average Aerae AverageQuantity Value Pri re Luantit Value Price t'ua:.t Valae Price('0T0) (7T07) rt7b) (OO (ooo) (tlb) O (1" 000c) (t./lb)

Burley 7,155 3,488 48-75 9,219 3,722 40.37 10,497 4,193 39.95

Virginia Dark-fired. 18,815 7,240 38.48 19,922 9,802 49.20 21,053 9,548 45-35

Virginia Flue-cured 7,753 4,652 60.52 10,572 6,673 63.12 13,809 9,066 65.65

Virginia San-cared 2,198 1,030 46-86 3,365 1,576 46.84 3,735 1,792 47.98

Others 21 2,401 144 N/i 3,029 292 N1/A 5,103 369 N/A

TOTAL: 38,322 16,592 43.30 46,107 22,066 47.86 54,197 24,968 46.07

Exccluding pipe tobacco

2/ Includes Turkish leaf, strip and scrap; and rofuse and, stems.

Source: National Statistical Office, AnnLal. Statements of External Trade.

ANNEX 12Page 1

MALAWI

LILONGWE LAND DEVELOPMENT PROGRAM - PHASE III

Beef, Milk and Egg Marketing and Prices

Beef

1. Most of Malawi's 560,000 cattle are kept in village herds on custom-ary land more as a store of wealth than as a source of immediate income. Na-tional beef consumption, estimated at 8,500 short tons in 1972, is expectedto increase rapidly with population and income growth in the future. Beefconsumption in Malawi from 1966 to 1972 was as follows:

Year Slaughters /1 Imports Exports Consumption

1966 6,199 99 5 6,2931967 7,474 128 31 7,5711968 7,938 85 - 8,0231969 8,149 188 - 8,3371970 8,203 178 - 8,3811971 8,094 243 - 8,3371972 8,066 431 - 8,497

/1 Converted at 292 lb. CDW per carcass.

Malawi is, therefore, a net importer of beef. Domestic beef supplies areexpected to increase from about 9,000 short tons in 1975 to about 14,000 shorttons in 1985.

2. The Cold Storage Company Limited (CSC). CSC, a limited liabilitycompany owned wholly by the Malawi Development Corporation (a parastatal),operates abbatoirs in two main urban centers, Blantyre and Lilongwe. In 1973,the combined throughput of the two abattoirs was 12,194 cattle plus 4,687 pigsand small numbers of sheep and goats. A similar number of cattle were slaught-ered in 1973. This means that approximately 22% of all cattle slaughtered inMalawi are processed under modern hygienic conditions. CSC operates below itsfull slaughtering capacity because of shortage of slaughter stock. To encour-age farmers to take advantage of its modern facilities, it slaughters cattlefor them at MK4 per animal - a charge which does not fully cover the cost.

3. LLDP Cattle. The national cattle and beef situation and attitudesdescribed above are reflected in the LLDP area. Many program farmers buy cattleas an investment, although an increasing number now fatten steers for sale to

ANNEX 12Page 2

CSC. The abattoir at Lilongwe provides slaughtering senrices, and CSC providesfull marketing services to those farmers interested in selling their cattlefor slaughtering. There are really three groups of cattle produce-s in LLDharea:

(a) the Dzalanyama Ranch;

(b) smallholders involved in the stallfeeding scheme (Annex 6) and;

(c) village herdsmen.

The Dzalanyama ranch supplies most of its steers on credit to smallholders forstall fattening at prices designed more to encourage smallholders than tocover all ranch costs. Since the demand for the steers far exceeds the supplyat current prices, the ranch has no marketing problem in this respect. Afterfattening steers for about 6 months, the farmers sell them to CSC for slaught-tering.

4. It is clear from the above discussion that CSC is the main outletfor beef cattle in the LLDP area. Beef production from the ranch and stallfeeder operation is projected to increase from 207 short tons in 1975/76 to620 short tons in 1985/86. Beef production from the village herd is expectedto increase from 1,069 to 1,744 short tons. No difficulty is envisaged in dis-'posing of the beef which would be mainly of exportable quality. Full detailsof projected beef production are in Annex 6.

5. As of July 15, 1974 CSC's official beef buying prices ranged from15 tambala per lb for commercial grade to 24 tambala per lb for choice grade.CSC, which is also responsible for beef import and distribution, markets itsbeef on a profit-rnaking basis. Although both buying prices (from smallholders)and selling prices are subject to Ministerial approval, CSC made a prcofitbefore tax of MK380,000 in 1973, (MK64,000 in 1972). CSC appears to he anefficient organization operating from a position of financial streng :h. Itshould be able to continue to provide satisfactory marketing facilit:es forall beef to be produced within LLDP during the Project. CSC Profit :nd LossAccount and Balance Sheet as at December 31, 1973, are shown in Tabl,.>s 1 and 2.

Milk

6. There is a large unsatisfied effective demand for milk in blalawi.The country imports and consumes large quantities of milk powder each rear.Wlile effective demand for fresh milk in the Lilongwe area is projectedl atabout 600 gallons per day, production and sales in 1973 averaged only cabout100 gallons per day. Demand is expected to grow rapidly, reaching abuiLt 3,000gallons per day in 1980.

ANNEX 12Page 3

7. Almost all the milk is produced by smallholders. It is processed ina new Danish-financed dairy near Lilongwe, which is now operating well belowits full capacity of 2,000 gallons a day (with provision for doubling the hand-ling capacity to about 4,000 gallons a day by 1978).

8. There is a well-established milk run and future dairy farmers wouldlive within reasonable walking distance of the established milk-collecting cen-ters. There will clearly be no difficulty in marketing the incremental annualoutput of 40,000 gallons of milk (110 gallons a day) to be produced as a resultof the Project. The farmer is expected to get a price of about 32t per gallonwhich, although it is below the import substitution price, allows for the trans-portation, processing and marketing costs incurred by the dairy, and still as-sures the farmer a handsome profit. Culled animals would be sold to CSC forslaughter.

Eggs

9. A 1973 Mialawi Veterinary Department Survey estimated that the effec-tive demand for eggs in the town of Lilongwe was about 2.5 million to 3.5 mil-lion a year, while production was only about 750,000 to 1 million per year.By 1978 demand is expected to reach 6,5 million to 9 million eggs. There isthus a large gap which the Project will help to close, as farmers are ex-pected to produce an increrental 1.2 million eggs a vear at full development.In view of the nrojected effective demand, the projected outnot is not expected

to have any appreciable effect on Prices. Farmers would be paid an estimatedaverage nrice of about 40 tamrhala per dozen.

10. LLDP poultrv farmers, would live within 5 miles of the existing milkcollecting sheds, and their eggs would be collected from these sheds bv repre-sentatives of the Department of Animal Health and Industrv which nlreadv oper-ates egg grading and bulking facilities. During the Project an egg marketingboard would be established wrhich would buy all. the eggs from program farmersand others, grade, bulk and market then. Fach farmer is exnected to have 80 to90 cull birds at the end of each egg laving cvcle (60 weeks). The chickenswould be sold to CSC which has nromised to cooPerate in disposing of thesechickens. This should create no problem, as it is estimated that about 2,000extra table birds are required weeklv to meet nresent chicken shortages in theurban centers of Malawi. For a full discussion of the noultry, dairving andlivestock components, see Annex 6. Calculations of estimated economic netbenefits from poultry and dairvinle are in Annex 15, Tables 6 and 7.

November 20, 1974

ANNEX 2Table I

MALAWI

LILONGWE LAND )EVELOPMT PROGRAM - PHA1 III

Cold ',torage Company Limited

Profit and Loss Aeconmt for the Year Ended 31st Deecmber, 1973

1 9 7 3 1 9 7 2

K K K K

TRADING PROFIT 463,457 209,754

Less:

Administration fees 12,329 5,660

Directors' fees 1,700 1,250

Audit fees 2,700 2,700

Depreciation 54,846 56,691

Interest payable 12,461 19,985Provision for doubtful debts 34 4,000

84,070 90,306

FROFIT BEFORE TAXATION 379,387 119,448

TAXATION 156, 000 55,000

PROFIT AFTER TAXATION K223,387 KE4,446

Dealt with as follows:

DIVIDENDS

Paid 30,000Proposed 45,000 -50,000

75,000 'm0,000

PROFIT RETAINED 148,387 14,446

K223,307 KE4,446

ANNEX 1 2

MALAWI Table 2

LIIIONGWE LA DEVELOPMENT PROGRAM - PHASE III

Cold Storage Company L±inited

Balance Sheet - 31st December, 1973

1 9 7 3 1 9 7 2

K K K K

EMPLOYMENT OF CAPITAL

FIXED ASSETS 821,153 814,339

INVESTkEN TS 100, 000

CURRENT ASSETS

Stocks and stores at Directors'

valuation 117,960 140,038

Debtors 127,593 127,706

Cash and bank balances 63,643 17,270

Preliminary expenses -

Lilongwe abbatoir - 2,018

309,196 287,032

Less:

CURRENT LIABILITIES

Creditors 43,677 55,613

Bank overdraft - 49,083

Taxation 155,419 55,495

Proposed dividend 45,000 50,000

244,296 210,191

NET CURRENT ASSETS 64,900 76,841

9655053 891,160

Less:

AMOUNTS DUE TO HOLDING COMPANYAND FELLOW SUBSIDIARIES 235700 28,441

DEFERRED TAXATION 9D,000 90,000

113,700 118,441

K872,353 K772,739

CAPITAL EMPLOYED

SHARE CAPITAL 200,000 200,000

RESERVES 383,073 234,686

INTEREST OF THE SHAREHOLDERS 583,073 434,686

LONG TERM LOANS 289,230 336,053

K672,353 K772,739

ANNEX 1 3Page 1

MALAWI

LILONGIWE LAND DEVELOPMENT PROGRAM - PHASE III

Farm Budge:s

1. The benefits which typical farmers in the LLDP area wouldexpect to receive from cZops alone duri.g the Project are discussedbelow, Benefits from. beef production. dairyi'g and poultry are discussedin Annex 12.

2. 4A f aer's i ncome from crops -would depend, inter alia, on:

(a) his cropping pattern;(b) the extent to which he applied ferti-lizer, improved seeds

and other Project inputs;(c) his skill as a farmer and response to extension advice; and(d) climatic and other external factors over which the farmer

has no control,

Although there are numerous possible combinations of the above factors, fourtypical farm budgets have been prepared.

(a) a 4.5 acre farm with sonie tobacco;(b) a 4.5 acre farn. withou- tobacco;(c) a 2.5 acre faTm; and(d) an 8-acre farm.

It is believed that about O% of the farmers in the LLDP faJl in categtrries (a)and (b), with some 25"- in category (c) and another 10'% or so owning ar:und8 acres or more (category (d)). The use of the farm size as the criteAion ofincome reflects the positive correlation in LLDP between farm size, sk:ill,and response to modern technology. The aggregate production estimates f Drthe Project assume that 25%' of farmers in the LLDP area are unlikelv tc: applymodern inputs compared with 15° assumed in the Phase II appraisal repol:t.Similarly, the vields and speed of adoption (8 years instead of 5 years) aremore conservatively estimated in this report than previouslv. These rcvLsedestimates are based on experience at LLDP over the last six years.

3. Tables 3 to 6 of this Annex show that a typical fanner with c 1.5acre farm combining maize, groundnuts and tobacco in the proportions s1 zwn

in Table 4, would improve his income from K1Ol without the Project to K142over three years. The same farmer without tobacco, would increase his iricomefrom K88 to K130 in the same period. A 2.5 acre farner would be unlikcly togrow tobacco because of its small size and concentrating on growing loc:1J.variety maize for food would over 3 years increase his income from K48 Fc, K69

ANNEX 13Page 2

per vear. A typical S acre farmer would be expected to increase his incomefrom K179 per year to K263 per year over the same period. All the above in-conies include subsistence.

4. Yield assumptions are shown inl the farm budgets and projected farm-gate prices for maize, groundnuts, tobacco and sulphur dust are detailed inthe footnote in Table 1. Fertilizer costs have been projected in accordancewith the IBRD commodity price index at constant prices, the 1974/75 pricebeing 150%1 of the 1973/74 price. Although minor increases in seed pricescould occur, no such changes have been included in the projections as theireffect on incomes would be negligible. An exception was made for maize seedretained from own production, which has been valued at the official price of1.75 tambala per lb.

5. Recent extraordir.ary increases in the prices of all chemicalfertilizers have raised doubts about the profitability of applyingfertillizer to maize and tobacco. For the 1974/75 growing season, themost commonly used fertilizers at LLDP, Calcium Ammonium Nitrate 26%and Compound 20.2a00 are expected to cost about two and a half times that ofthe previous season. In addition, there was some uncertainty whether suffi-cient quantities would be available to satisfy the projected requirements.Malawi Government has rejected a fertilizer subsidy for smallholders becauseit fears, with reason, that subsidized fertilizers would be illegally ex-ported to neighboring countries or sold on the black market to private estates.Instead, the Government intends to compensate the farmers as far as possiblethrough higher produce prices.

6. As a first consequence of this policy, the farmgate price forshelled maize was raised in July 1974 from MK 25 to MK 35 per short ton.Table 1 shows that this increase effectively compensates for the expectedcost increases for fertilized maize while at the same time increasingthe margin per acre of non-fertilized maize by about 40%. No pricechanges were announced for tobacco up to August 1974. The production andcost filgures presented in Table 1 suggest that a tobacco price increase ofabout 15% would be required to offset the effects of a 150% price increasefor fertilizers. While Table t shows margins per acre if fertilizer priceswere to be pegged at MK 9 per bag, Table 2 shows how these margins would im-prove if fertilizer prices were to decline in the long run, as .s projectedin the IBRD commodity price index.

7. Results of surveys carried out in different parts of Malawi havebeen used to estimate the labor requirements for crop cultivation on anaverage farm with 4.5 acres. Required man days for the different crops overtwelve months is as follows:

ANMUE 13Page 3

Maize Groundnuts Tobacco Total

September S 3 - 11

October 14 5 6 25

November 14 13 10 37

December 27 11 8 46

January 25 9 7 41

February 11 8 4 23

March 8 12 8 28

April 16 16 17 49

May 14 13 10 37

June 11 7 5 23

July 8 4 3 15

August 5 3 - 8

161 104 78 343

It is further assumed that an average family can work a maximum of50 man days per month, divided as follows:

Man 25Wife 17Children 8

50

A comparison of the labor requirements with the availability of familylabor suggests that an average farm family on an average holding cancope with the workload all year round without outside help. They woulkhowever be fully occupied during the main planting and harvesting pericds,respectively November/January and April/May. For the average farmer perman/day at projected prices would be 65 tambala for maize, 37 tambalesfor groundnuts and 18 tambala for tobacco. A comparison of these retulnswith the income per acre shown in Table 1 (which favours groundnuts) hel?sto explain why farmers have in the past shifted their attention fromgroundnuts to maize. Government keeps all farmgate prices under constElni:review, to ensure sufficient incentive to farmers and has raised the pricesof both maize and groundnuts during 1973/74. This system of adjustingprices to serve the objectives of Government policy is expected to con-tinue.

MA LAWI

LILONGWE LAND )EVTELOPMENT PROGPAM - PHASE III

Msrgins per Acre for LLDP Crops

Maize Groundnuts Tobacco

nynrnetlc With Synthetic with- Local Tmprg/ed Aroundnuts 2- Fertil- 1.0 bags

hybrid fertilizer out Fertilizer Unimproved __I- Impr_ Aroved Unimproved 1 ag eertilizer/ac

At 1973/74 Prfcesl

Production- Yield, 11-/ac 3,200 2,000 1,200 1,000 900 600 650 450 380 340

- Value, B/ac 40 00 25.00 15.00 12.50 63.00 42.00 45.50 31.50 45.60 40.80

Costs, Kac 3/ 3/

- Seed- 4/ 5.50 0.70- 0.70- 0 20 6.40 5.60 5.75 3.50

- Fertilizer- S/ 6.75 3.45 - - - - - - 4.05 3.40

- Sulphur dust~ - - - - 5.20 - 1.05

- Credit charge 1.25 0.40 - - 1.15 - 25 - 40 35

Total 13.50 4.55 0.70 0.20 12.75 5.60 7.05 3.50 4.45 3,75

Margin, K/ac 26.50 20.45 14.30 12.30 50.25 36.40 38.45 28.00 41.15 37.05

At Projected Prices

Production- Yield, lbs/ac 3,200 2,000 1,200 1,000 900 600 650 450 380 340

- Value, K/ac 56.00 35.00 21.00 17.50 63.00 42.00 4';.50 31.50 45.60 40.80

Costs, KW 2- Seed- 5.50 0.75 0.75 0.25 6.40 5.60 5.75 3.50 - -

- Fertilizer- 17.50 9.00 - - - - - - 10.50 8.75

- Sulphur dust- - - - - 8.00 - 1.0 - - -

- Credit charge 4,60 1.95 _ - 2.90 - 0.60 - 2.10 1.75

Total 27.60 11.70 0.-5 0.25 6.40 5.60 3.75 3.50 12.60 10.10

Margini, K/ac 28.40 23.30 20.25 17.25 45.70 36.40 37.55 28.00 33.00 30.30

Price assumptions: 3/50% of area new seeds; 5/Sul]hur dust:

1973/74 Projected 50% seeds from own production. 80 lbs per acre

Maize 1.25 t/lb 1.7o 4/Fertilizers:

Groundnuts 7 t/lb 7 t/lb Hybri.d maize: 1 bag CAN and I bag 20.20.0 6/With sulphur dust and

Tobacco 12 t/lb 12 i/lb zer acre. fresh seeds.

CAN, 26°h K 3.30/bag of 50 kg K 8.50/bag of 50 kg Synthetic maize: I bag 20.20.0 per acre.

Compound, 20.20.0 K 3.4

5/bag of 50 kg K9.00/bag of 50 kg Tobacco: 50% CAN and 50'h 20.20.0/ 7/Improved husbandry only.

Sulphur dust 6.5 t/lb 10 t/lb

Maize hybrid seed 25 t/lb 25 t/lb 8/(Tp to 1977/78:

Maize syn:hetic seed 5 t/lb 5 t/lb 15% i5:.proved I

Maize seed fr,m own 85°/ improved IT

productfi,n 1.25 t/lb 1.75 t/lb after 1977/78:

Fresh groundnut seed 8 t/lb 8 t/1, 20% improved I

Groundnut seed own 807. improved II.

production t i/lb 7 t/lb

Credit charge 10% 20/

/ Seed rates - Maize hybrid 22 lb/ac , >

" syn"oetic 22 lb/ac" local 15 lb/ac

a

Groundnut improved 80 lb/acunimproved 50 lb/ac

Tobacco seeds suppliedfree of charge by ADMARC

MALAWI

LTLONGWE LAND DEVELOPMENT PROGRAM - PHASE III

Margins per Acre with Decreasing Costs of Fertilizer(Kwacha)

Tobacco

Hybrid Mai.ze Synthetic Maize with Fertilizer 1.0 bags an .2 bageac

Year (0) (1) (2) (3) (4) (5) (0) (1) (2) (3) (4) (5) (0) (1) (2) (3) (4) (5)

Fertilizer Cost Factorl! 100 86 7T 57 48 8j3 loo 86 72 57 48 43 100 86 7% 57 48 43

Production- Yield, lbs/ac 3,200 3,200 3,200 3,200 3,200 3,200 2,000 2,000 2,000 2,000 2,000 2,000 340 340 340 380 380 380

- Value, K/ac 56-00 56.00 56.00 56.00 56.0o 56.oo 35-00 35.00 35.00 35 .0 35.00 35.00 4o.80 40.80 40.80 45.6o 45.6o 45.60

Costs, K/ac- Seed 5.50 5.50 5.50 5.50 5.50 5.50 0.75 0.75 0.75 0.75 0.75 0.75 - - - - - -

- Fertilizer 17.5,0 15.05 12, 60 o.oo 8.4o 7.55 9.00 7-75 6.50 5.15 4.30 3.85 8.75 7.55 6.30 6.oo 5-05 4.5o

- Credit Charge 4.60 4.1o 3.60 3.10 2.80 2. 60 1.95 1.70 1.45 1.40 1.00 0.90 1.75 1.50 1.25 1.20 1.00 0.90

Total 27.60 o4.65 21.70 18.60 16.70 . 15.65 11.70 10.20 8.70 7.30 6.o5 5.50 10.50 9.05 7.55 7.20 6.o5 5.4o

Margin, K/ac 28.40 31.35 34.30 37.40 39.30 40-35 23-30 24.80 26.30 27.70 28.95 29.50 30.30 31.75 33.25 38.40 39.55 40.20

j Based on projections for Urea in IBRD commodity forecasts, April 8, 1974.

MALAWI

LILONGWE LAND DEVELOPMENT PROGRAM - PHASE III

Farm Buidget for a Ty-pical 4.~ Acre Farm Without Tobacco(Kwacha)

Withat. Development; Year 1 Year 2 Year 3 Year 4 Year 5

Area Yield Value Area Yield Value Area Yield Value Area Yield Value Value Value

(Acres) (lbs) (K) (Acres) (lbs) (K) (Acres) (lbs) (K) (Acres) (Obs) (K) (K) (K)

Income

Maize- Hybrid 1.0 3,200 56.oo 1.0 3,200 56.oo- Synthetic with Fertilizer - - _ 1.0 2,000 35.00 1.0 2,000 35.00 1.0 2,000 35.00- Synthetic withoutFertilizer _- - - - - - 0.5 6oo 10.50

- Local Unimproved 3.5 3,500 61.25 2.5 2,500 43.75 1.5 1,500 26.25 1.0 1,000 17.50.roundnuts 1.0 450 31.50 1.0 450 31.50 1.0 600 42.oo 1.0 65o 45.-50

Total Income 92.75 110.25 159~~~~~~~~~~~~~~~~~~a.25 1614.50 1614.50 164.50Total Income a5 1-5

Expenditure

maize- Hybrid - 21.70 18.60 16.70 15.65

- Synthetic with Fertilizer 10.20 8.70 7.30 6.o5 5.50

- Synthetic withoutFertilizer - - O.4 O. 0.40

- Local Unimproved 0.90 o.65 0.40 0.25 0.25 0.25Groundnuts 3.5 3.50 5.60 7.95 7.95 7.95

Total ErKenditure 4.40 14.35 36.40 34.50 31.35 29-75

Net Income 88.35 2590 122.85 130.00 133.15 134.75

MALAWI

LILONGWE LAND DEVELOWMENT PROGRAM - PffASE III

Farm !udAet. for a Tyrical 14.5 Acre Farm with Tobacco(Kvacha)

4.5 Acre Farm WAlout, Development Year 1 Year 2 Year 3 Year 4 Year 5'witlh Tobaeco)

Area Yield Value Area Yield Value Area Yield Value Area Yield Value Value Value(Acres) (lbs) (K) (Acres) (lbs) (K) (Acres) (lbs) (K) (Acres) (lbs) (K) (K) (K)

Inaoae

Maize. Hybrid - - - - . - 0.7 2,240 39.20 0.7 2,240 39.20- Synthetic with Fertilizer - = _ 0.7 1,400 24.50 0.7 1,400 24.50 0.7 1,400 24.50- Synthetic withoutFertilizer - - - - - - - - - 0.4 480 8.40

- Local Unimproved 2.5 2,500 43.75 1.8 1,800 31.50 1.1 1,100 19.25 0.7 700 12.25r,roundnuts 1.0 450 31.50 1.0 450 31.50 1.0 600 42.00 1.0 650 45.50Tobacco 1.0 340 40.80 1.0 340 40.8o 1.0 340 40.80 1.0 380 4560

Total Incone 116.05 Poo.67 175.45 175.45 1.4

Exapnditure

Maize- Hybrid 15.20 13.00 11.70 10.95- Synthetic with Fertilizer 7.15 6.10 5.10 4.25 3.85- Sunthetic without

Fertilizer 0.30 0.30 0.30- Local Unimproved 0.65 0.45 0.30 0.20 0.20 0.20Groundnuts 3.50 3.50 5.60 7.95 7.95 7.95Tobacco 10.250 9.05 7.55 7.20 6.05 5.40

Total Expenditure iALfS7 20.15 3h.75 5 30.45 28.65

Net Income 101.40 108.15 131.00 141.70 145.00 146.80

MALAWT

LILONGWE LAND DEVELOPMENT PROGRAM - PHASE III

Farm Budget for a 11ypica1 8 Acre Farm(Kwacha)

Without Development Year 1 Year 2 Year 3 Year 4 Year 5

Area Yield Val tie Area Yield Value Area Yield Value Area Yield Value Value Value(Acres) (lbs) (K) (Acres) (lbs) (K) (Acres) (lbs) (K) (Acres) (lbs) (K) (K) (K)

Income

Maize- Hybrid - 1.0 3,200 56.oo 2.0 6,400 112.00- Synthetic with Fertilizer - - - 1.0 2,000 35.00 1.0 2,000 35.00 1.0 2,000 35.00- Synthetic without -. - . 0.5 6oo io.5o o.3 600 10.50 0.5 600 10.50

Fertilizer- Local UTnimproved 4.5 4,500 78.75 3.0 3,000 52.50 2.0 2,000 35.00 1.0 1,000 17.50Groundnits 2.0 goo 63.oo 2.0 goo 63.oo 2.0 1,200 84.Do 2.0 1,300 91.00Tobacco 1.5 510 61.20 1.5 510 61.20 1.5 510 61.20 1.5 570 58.4o

Total Income 202= 222.20 281.70 334.40 334.40 334.40- .9 . _

Expenditure

Maize- Hybrid 21.70 37.20 33.40 31.30

- Synthetic with Fertilizer 10.20 8.70 7.30 6.o5 5.50- Synthetic without

Fertilizer , o.4o o.4o o.40 o.40 o.4o- Local Unimproved 1.15 o.ys5 0.50 0.25 0.25 0.25Groundnuts 7.00 7.00 11.20 15.90 15.90 15.90Tobacco 15.75 13.60 11.35 1O.80 9.10 8.10

Total Expenditure 31.95 5.3.8-5 71.85 65.10 61.45

Net Income 179.05 .25 227.85 262.55 2630 272 .5

-w~

MALAWI

LILONGWE LAND DEVELOPMENT PROG - PIASE III

Farm Budget for a Typical 2.5 Acre Farm(Kwacha)

Without Developmen _ Year 1 Year 2 Year 3 Year 4 Year 5

Area Yield Value Area Yield Vcu.e A3ea Yield Value Area Yleld Value Value Value

(Acres) (lbs) (K) (Acres) (lbs) (K) (Acres) (lbs) (K) (Acres) (lbs) (K) (K) (K)

Income

Maize- Synthetic with Fertilizer - - _ 0.5 1,000 (.!50 1.0 2,000 35.00 1.5 3,000 52.50- Synthetic without

Fertilizer _ _ _ 0.5 600 0.50 0.5 600 10.50 - - -

- Local Unimproved 2.0 2,000 35.00 1.0 1,000 3J.50 0.5 500 8.75 0.5 500 8.75Croundnuts 0.5 225 15-75 0.5 225 _a.75 0.5 300 22.00 0.5 325 22.75, _

Total Income 50.75 61.25 7 .25 84.0o 84.00 84.oo

Expenditure

Maize- Synthetic with Fertilizer 5.10 8.70 20.93 9.10 8.25- Synthetic without

Fertilizer 0 40 0.40 - - -

- Local Unimproved 0.50 0.25 0.15 0.15 0.15 0.15Groundnuts 1.75 1.75 2.80 4.oo 4.00 )1.00

Total Expenditure 2.25 7.50 12.05 15.10 13.25 12.40

Net Income 48.50 53.75 63.20 68.90 70.75 71.60

01

A1NEX 13Table 7

IVIALAWI

LILONJWE ,AND DEVELOPME\T PROGRAM - PHASE III

Actual and ZztimateJ Ados-tin Rates by LLDP Farmers

Total Families Borrowers from Shqrt-TermFamilies in Credit FundLLDp Area Developed Number Percentage Percentage

(206 growth Units of Total of Familiesper year) LLDP in

DevelopedUnits

1968/69 87,000 9,000 656 1 71969/70 89,ooo 15,000 561 1 31970/71 91,000 24,ooo 4,408 5 181971/72 93,000 34,000 19,804 21 571972/73 96,ooo 41,000 21,121 22 511973/74 98,0ooo 6,000 25,396 26 451974/75 101,000 77,000 31,000 31 4-1975/76 103,000 86,ooo 38,300 37 441976/77 106,000 95,000 46,ooo 43 491977/78 109,000 109,000 53,000 49 491978/79 112,000 112,000 6o,ooo 54 541979/80 115,000 115,000 67,000 58 581980/81 118,000 118,000 74,o00 63 631981/82 121,000 121,000 810o0 67 671982/83 124,000 124,ooo 87,ooo 70 701983/84 127,000 127,000 92,000 72 721984/85 130,000 130,000 97,000 74 741985/86 134,000 134,000 lo,000 75 75

I/ Figures of 1974/75 and after are projections.

MALAWI

LILONGWE INDAt DEVFLOPMENT PROG1M - PIEASE III

Government Cash Flow for Phase III 1/(M. Kwaoha'000)

Year 1 Year 2 Year 3 Year 4 Year S Year 6 Year? 7 car 8 Year 9 Year 10 Year I1 Year 12 Year 13 Year 14 Year 15 Year 16 Year 171975 '(6 1976/77 1977/78 1978/79 1979/80 1980/81 1981/82 1982/83 1983/84 1984/85 1985/86 1986/87 1987/88 1988/89 1989/90 1990/91 1991/92

CASH INFLOW

UFCDF Grant 590 480 530 - - - - - - - - -IDA Credit Disbursementj/ - 3,480 2,640 2,380 - - - - - - - - - - -ADMAPRC Profits / 129 15 19' 217 237 2S8 271 286 301 316 351 351 351 351 351 351 351Credit Charges 79 90 113 118 120 120 120 120 120 120 120 120 120 120 120 123 120

Total Casl ITnflow 798 4,205 3,478 2,715 3'7 378 391 )1o6 421 1436 471 471 471 471 471 47i 471= = _ = - = _ _ _ = _ _ _ _ _ _ .._~~~~~~~~~~~~~~~~~~~~~~~Z:z -

CASH OUTFLOW

IDA Credit Service 4 , - - 26 46 64 64 64 64 64 64 64 148 147 147 146 146 145Phase IIT Project Costs r' 3,523 ',798 2,920Project Operating Costs 1 - - - 196 174 169 156 147 137 138 138 138 138 I 8 i38 138 138Fixed Asset Reolacement Costsb' - - _ 3 34 34 34 34 34 34 34 34 34 34 34 34 34Health Recurrent Costs ' - - 93 93 57 9( 90 90 90 90 90 90 9! 90 90 9,Credit Tuiid Ti - - - C 15 1' 16 16 16 16 16

Total Cash Outf'low 3,5P3 3,798 2,946 381 377 368 360 351 341 342 342 410 409 409 408 408 407

Net Cash Inflow (Outtflow) (2,725) 1,407 532 2,334 (20) 10 31 55 80 94 129 61 62 62 63 63 64Cumulative Cash Inflow (Oiutflow) (2, 725) (1,318) (786) 1,548 1,528 1,538 1,569 1,624 1,704 1,798 1,927 1,988 2,050 2,112 2,175 2,238 2,302

m/ Iwnores possible Coli Storage Company Limited taxation and dividends receivable by Governmeut through Malawi Development Corporation.'/ Anaex 9.-, A pt'.' is assumed to earn in eaci year the percentage of net profit (or loss) on its incremental crop tradinag as it earned in 1972/73. and to pay

all of i1; to Goverinmeos (Phase III areas alotne).i,/ lncl,(ep repayment of psi±oeipal ori standard Itlh ternas, plus 3/41, cossaitmnnt charge on amoiunts withidrawscn and outstanding.

I/ nclutdes all project osats except Dzalanyama Ranch and Farmers' Contribution.6/ Includes only the aoportfoued cost of Phase III areas, First 3 years included in project costs.7/ K12), 000 contributed evenly over 8 years from 1978/79.

MALAWI

LILONGWE LAND DEVELOPMENT PROGIAYI - PHASE I1I

Government Cash Flow for Phases T/, II/ sand III(M, Kwacha'000

Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Year 11 Year 12 Year 13 Year 14 Year i1 Ye-, Ir Year 17

1968/69 1969/70 1970/71 1971/72 1972/73 1973/74 1974/75 1975/76 t'76/77 1977/78 1978/79 1979/80 1980/61 1981/81 1982/83 1983/84 1984/85

CASH INFLOW

UPFCDFSrset - - - - 590 480 530 - - - _ _ _ _

IDA Credit 113 (i.e. Phase Ol/ 679 1,188 1,333 1,991IDA Credit 244 MAI (i.e. Phase TT - _ _ 901 i,6i4 1,430 1,406 690 - -Proposed 1DA Credit for Phase IIT1 _ _ - _ - - - - 3,480 2,640 2,380 -AlNIARC Profit;/ 1 6 17 76 185 331 516 620 780 868 948 1,03'' 1,084 1, 1I 1,204 1,264Credit Charge - P2 63 89 436 848 869 316 360 452 472 480 480 480 48o 480 480Dzalaryama Hanch Sales i _ _ - - 27 9 57 71 77 99 1186 _ 14 154 1820 218 244

Total Cash Tnflow 679 1,211 1,402 2,998 2,153 2,51.2 2,663 2,183 5,017 4,501 3,836 1.570 1,t66 1,744 i,342 1,928 1,988

CASH O(ITTFCM

IDA Credit Service - Credit 113 5 4 24 38 38 38 38 38 38 38 87 87 86 87 86 87 86O-redit 2 41/ - - - 3 13 24 35 43 45 43 45 45 45 705 105 lo4 104

-Proposed Creditt _ - - - - - - - 26 46 64 64 64 64 64 64Project Expenditure- Phases I and 111 790 1,171 1,689 2,620 P,475 2,339 2,468 - - - -

Pro/eet Costs - Phase 11/ - - - - - - - 3,523 2,798 2,920 - - - -ProJect Operating CostsZ/ - - - - 785 695 659 623 587 551 551Fixed Asset Peplacemerl, Costs7/ - - - - - - - - - - 143 143 113 143 1143Health Recurrent Costol'i - - _ - - - - 90 90 90 90 9o 90 90C-edit Fnndl - -- - - - - - 62 63 62 63 62 63 62~-DSslsnyama Ranch Expenditure 4 6i - , - - - 193 196 191 198 218 69 157 17 158 15 8

Total Cash Outflow 795 1,425 1,713 2,661 2,526 2,401 2,541 3,797 3,077 3,220 1,313 1,262 1,328 1,332 1,294 1,260 1,258

Net Cash Inflow (litlow) (116) (214) (311) 337 (373) 111 122 (1,614) 1,940 1,281 2,523 308 338 412 548 668 730Cumolatlive Cash Inflos (Outflow) (116) (330) (641) (304) (677) (566) (444) (2,058) (118) 1,163 3,686 3,994 1,332 4,744 5,292 5,960 6,690

/ Prom Phase II appraisal report.2/ Pros, Table 1 of this An-ex.3/ Years through 1974/5 are from Phase I1 appraisal repo-t.

P/ Prom Annex 6.5/ K500,000 contrihbted evenly over 8 years from 1978/79.

Irx,lAded in "project expenditure" throHgh 1974/75.L' Included ir "project expenditure" or "project cost. - Phase III" through 1977/78.

ANNEX 1.'Page 1

MALAWI

LILONGCWE AND DEVEL.OPMENT PROGRAM - PHASE III

Economic Costs and Benefits

1. Tables 1 through 5 detail the costs and benefits used in calculat-ing the Internal 1Economic Rate of Return (IER) from the Project and program.

2. Incremental economic costs consist of the following:

(a) fixed asset costs;

(b) incremental farm inputs, which are substituted here forthe incremental credit fund included in the financialproject cost;

(c) operating costs of Project headquarters, extension serviceand similar services to be continuied by the 'Malawi Govern-ment after the ProJect and program neriod;

(d) the cost of replacinor vehicles and eouipment;

(e) incremental costs of the Pzal.anyama ranch; and

(f) farmer's poultry and dairving costs.

3. Incremental benefits consist of the value of the following troduceover the above what !would have been producecd in the program area withcut TT,DP:

(a) Maize, groundnuts and tobacco;

(b) cattle from the Dazlanvamna ranch:

(c) incremental beef produiced from traditional vilia½e herdsas well as value added as a result of the T,I.P stall-fattening proTram: and

(d) eggrs and rtllh.

4. Both the costs and benefits of the health and land allocatiorcomDonents have beer. omitted from the calcul.ations becau-se there is nosatisfactory basis for rtuantifying the benefits expected from these cor-ponents, and the rest of the Project coujld have been imnlemented withoctthem.

ANNEX 15Page 2

j. Family labor and land have not been assigned any incremental costeven though farmers may work a little harder on their farms as a result ofthe Project. No significant hiring of farm labor is anticipated.

Pricing of Costs and Outputs

6. Project outputs have been valued at world prices following the IBRI)commodity prices forecasts. As all the main Malawi products (maize, ground-nuts, tobacco and beef) differ from the particular types of these productsemployed in compiling the IBRD forecasts, some adjustments have been neces-sary. Actual world base prices for 1973174 have been used, but, for futureyears (i974/75 to 1985 and beyond) such prices have been projected in accord-ance with the IBRD forecast price index at 1974 constant prices. Costs andbenefits have both been projected at 1974 constant prices on the assumptionthat inflationary cost changes would generally result in similar changes inthe prices of benefits, or else in a corrective exchange rate adjustment.The actual prices applied in the calculations are computed as shown below inparagraphs 10 to 13,

7. In calculating the IER for the Phase III project alone, it has beennecessary to arpiortion the operating costs between Phase III and previousphases. Admirnistration costs of the project, e.g. salaries and vehicleoperating costs lave been allocated according to the number of farmers whilefertilizer and other inputs have been allocated on an acreage basis. Devel-opment costs and incremental benefits are directly attributable to Phase IIIareas or Phase III activities and therefore do not present the same appor-tionment problem. The Dzalanyama ranch is treated as a Phase II componentmerely continued during Phase III, its costs and benefits are thereforeomitted from the calculation of the Phase III IER.

Internal Economic Rate of Return (IER)

8. Based on the above assumptions, the IER for Phase III alone (de-fined as those costs and benefits attributable to only areas in which devel-opment was initiated in Phase III or arising only from Phase III activities)is 18k. For the entire 3-Phase Program, IER is 13%.

9. T'he lER for Phase III hias been tested for sensitivity to variouspossible risks, thie most likely perhaps, being the possible reduction infarmer use of fertilizer, with consequent reduction in maize yields. Theresults of the sensitivity tests are as follows:

ANNEX 15Page 3

IER for Phase :II

(i) Maize benefits and fertilizercosts reduced 50% 12.35%

(ii) Cost increased 10% 14..45;

(iii) Cost reduced 10% 21.55%

(iv) Benefits increased 10% 21.15 %

(v) Benefits reduced 10% 14.15 I

(vi) Cosit increased 10% at the sametime as benefits reduced 10% 11.15%

Computation of Worl.d Price for Malawi Maize

10. As of 1974, the c.i.f. UK port price for Malawi maize is analyzedas follows:

Kwacha per short ton

Price, c.i.f. UK port 73.0Ocean freight 14.6Handling and insurance 0.6 15.2

Price f.o.b. port of loading 57.8Expenses at port of loading 5.1Railway cost£i Malawi to port 5.4 10.5

Price in Limbe store 47.3Buying and direct expenses 7.9Transport 4.4 12.3

Farmgate price 35.0

Following the steep rise in world fertilizer and grain prices in 1973/-,4,ADMARC raised the maize price to the farmer in July/August 1974 to K35per short ton. This farmgate price has been projected in accordance withIBRD index of commodity price forecast for US No. 2 Yellow maize in 1974constant terms as follows:

1974/5 1975/6 1976/7 1977/8 1978/9 1979/80 1980 1985 ai..after

M. Kwacha perShort ton 35 33 32 30 29 28 26 27

ANNEX 15Page 4

Computation of World Price for Malawi Chalimbana Groundnuts

11. For 1973/74 c.i.f. London price for Malawi groundnuts ig madeup as follows:

M. Kwacha per short ton

Price c.i.f. London 314.0Ocean freight 27.6Hlandling and insurance 0.5 28.1

Price f.o.b. port of loading 285.9Expenses at port of loading 12.4Railway cost from Malawi to port 6.8 19.2

Price in Liwonde store 266.7Buying and direct expenses 15.9Ransport 10.4 26.3

Farmgate price 240.4

The above farmgate price has been projected in accordance with the IBRDindex of commodity price forecasts for Nigerian groundnuts in 1974 con-stant terms, viz:

1973/4 1974/5 1975/6 1976/7 1977/8 1918/9 1979/80 1980 1985 and.______ _ _ _ __ _ _ _ _ _ __ _after

M. Kwacha pershort ton 240 211 186 171 162 155 150 143 159

Computation of World Price for Malawi Northern Dark-Fired Tobacco

12. Nearly all Malawi tobacco is sold to representatives of worldmanufacturers at the Limbe auction. The difference between price on auctionfloor and farmgate price is kept under scrutiny to ensure a fair return tothe farmer. The Malawi auction price for this class of tobacco in 1973/74 ismade up as follows:

Tambala per lb.

Price at auction 28.0Marketing 1.3Grading 2.0Transport 0.7Other 0.5 4.5

Farmgate price per lb. 23.5Farmigate price short ton K470

ANNEX 15Page 5

The above price is projected in accordance with the IBRD index of com-modity price forecasts for Indian flue-cured tobacco in 1974 constantterms as follows:

1973/4 1974/5 1975/6 1976/7 1977/8 1978/9 1979/80 1980 1985

470 436 436 436 450 456 456 463 463

Computation of World Market Price for Malawi Beef

13. Cold Storage Company sources showed that mid-1973 prices of beefimported into Malawi are analyzed as follows:

Inferior Commercial Standard

Price ex-Salisbury (R$/Kg) 34.17 35.27 37.48Rail to Blantyre 3.48 3.48 3.48

Price c.i.f. Blantyre (R$/Kg) 37.65 38.75 40.96

Price c.i.f., Blantyre (t/lb) /1 24.8 25.5 27.0

Source: Cold Storage Company

/1 Converted at R$1.0 = K 1.45 (at 1/11/73), and 2.2 lb = 1 kg.

Based on the above calculations, an average farmgate price of 26 tambalaper lb. (i.e. K 520 per short ton) in 1974 is assumed for calculatingthe world price of M,alawi beef. This price is projected in accordancewith IBRD index of commodity price forecasts for beef as follows:

1974/5 1975/6 1976/7 1977/8 1978/9 1979/80 1980 1985

M. Kwacha pershort ton 520 536 524 520 532 504 560 621

MNAIAI

LILONGWE LAND DEVEODENT PROGRAM - PIABE III

Incremental Economic Costs for Fhase III Alone /(M.Kwacha ' 000)

Year Development Project Replacement Fertilizer Seeds Sulphur Farmers' Faxers ' TotalCosts Adnistration of Fixed Duat Poultry Dairying

Assets Costs Costs

1975/76 1 2,112 - 294 66 18 31 8 2,5291976/77 2 1,490 - 283 81 20 49 9 1,9321977/78 3 1,300 - - 311 115 30 68 18 1,8421978/79 4 - 196 - 307 127 30 55 4 7191979/80 5 - 174 - 316 139 31 55 5 7201980/81 6 - 165 36 337 152 32 55 5 7821981/82 7 - 156 36 366 165 32 55 10 8201982/83 8 - 145 36 397 178 33 65 9 8631983/84 9 - 138 36 429 192 34 65 14 9081984/85 10 - 138 36 461 206 34 59 7 9411985/86 11 - 138 36 502 218 35 59 7 9951986/87 12 - 138 36 502 218 35 59 8 9961987/88 13 - 138 36 502 218 35 59 8 9961988/89 14 - 138 36 502 218 35 59 8 9961989/90 15 - 138 36 502 218 35 59 8 9961990/91 16 - 138 36 502 218 35 59 8 9961991/92 17 - 138 36 502 218 35 59 8 9961992/93 18 - 138 36 502 218 35 59 8 9961993/94 19 - 138 36 502 218 35 59 8 9961994/95 20 - 138 36 502 218 35 59 8 9961995/96 21 38 36 502 218 35 59 8 9961996/97 22 - 138 36 502 218 35 59 8 9961997/98 23 - 138 36 502 218 35 59 8 9961998/99 24 - 138 36 502 218 35 59 8 9961999/2000 25 - 138 36 502 218 35 59 8 996

1/ Includes all Phase III development costs and all poultr-y and dairying costs, but only the incremental operating andseasonal input costs attributable to Phase III alone. II

MAIAWI

LIIDNWE LAND DEVEMISRIIT PROGRAM - PHASE III

Incremental Economic Benefits for Phase III Alone 1(M.Kwaeaha '000)

Year Maize Gromdnuts Tobacco Beef from Dairying Poultry TotalVillage Herd

Program

1975/76 1 359 108 1 5 _ 4 29 6151976/77 2 450 151 125 15 8 59 8081977/78 3 595 209 147 40 17 88 1,0961978/79 4 661 250 152 62 17 88 1,2301979/80 5 724 291 155 66 17 88 1,31,01980/81 6 755 327 160 bn 17 88 1,4271981/82 7 841 356 164 91 1g 88 1,5581982/83 8 927 385 167 130 1 9 88 1,6861983/84 9 1,017 416 170 110 21 88 1,8221984/85 10 1,109 414 174; I 2'0 17 88 1,9561985/86 11 1,239 529 175 147 17 88 2,1951986/87 12 1,239 529 175 150 17 88 2,1981987/88 13 1,239 529 175 156 17 88 2,2041988/89 114 1,239 529 175 161 17 88 2,2091989/90 15 1,239 529 175 166 17 88 2V21141990/91 16 1,239 529 175 171 17 88 2,2191991/92 17 1,239 529 175 177 17 88 2,2251992/93 18 1,239 529 175 182 17 88 2, 2301993/94 19 1,239 529 175 188 17 88 2,2361994/95 20 1,239 529 17le 193 17 88 2,241,1995/96 21 1,239 529 175 193 17 88 2,21411996/97 22 1),239 529 175 193 17 88 2,21411997/98 23 1,239 529 175 193 17 88 2,2l41

1998/99 24 1,239 529 175 193 17 R81999/2000 25 1,239 529 17 2RAA41

18i~± over 25 zteam for Phase III alone 1L-6 ___________ _______

1/ Includes incromentlal. mize, groimdrnats, tubacco, and beef benefitsf onY = n Pha=e 1ii.all incremental dal:iying and pejalt.ry benefits.

ANNEX 15Table 3

MALAWI

LILONGWE LAI DEVELOP=ENT PROGRAM - PHASE III

Internal Economic Return of the Ranch and Stallfeeder Program(M.Kwacha '000)

Year Incremental!/ Incremental/ Farmers3/ All IncrementalBeef Economic Incremental Incremental NetSales Costs Costs Costs Benefits

1971/72 3 - _- -

1972/73 2 12 247 1 248 (236)1973/74 1 53 196 3 199 (146)1974/75 0 149 171 10 181 (32)1975/76 1 91 154 5 159 (68)1976/77 2 111 193 13 2o6 (95)1977/7C 3 118 196 14 210 (92)1978/79 4 156 191 19 210 (54)1979/80 5 192 198 23 221 (29)1980/81 6 229 168 25 193 361981/82 7 279 179 25 204 751982/83 8 294 156 26 - 1 82 1121983/84 9 347 157 26 183: 16419864/85 10 347 158 29 187 1601985/86 11 347 15e 29 187 1601986 12through through200C 25 385 158 29 167 198

NOTES 1. IERE from the beginning of the ranch (1971/72) = 11%2. ITE with pre Phase III coste and benefits treated as sunk costs and benefits 22.155%

1/ Beef quantities for 1975/76 and after are in Annex 6, Table 3, and prices are in Annex 15text. For 1971/72 through 1974/75 benefits are supplied by Government.

2/ Ccsts for 1971/72 to 19741/75 are taken from the Phase II Appraisal Report. Ccsts for1975/76 and after are taken from Annex 6, Table 4.

3/ Farmers' costs of fattening ranch - supplied steers. Average of feed costs in Annex 6,Table 5.

MALAWI

LILONGWE LAND DEVELOPMENT PROGRAM - PHASE III

Incremental Economic Costs - All Phases(M.Kwacha'000)

3/ ~~~~2/4/ 2elcmn-/5!/ Fetlzr6/ ed7 8/ 9/1Development- Project-- Replacement-l-/ Fertilizer / Seeds7/ Sulphuir- DzaI aiaiyla--/ Farmers' Farmers' Total-

Costs Administration of Fixed Dust Ranch Poultry DairyingAssets (Cos ts Cos t>

1968/69 -6 - - - - - - - 622

1969/70 -5 - - - - J- - 1,2931970/71 -4 - - - - - - - l,3 95

1971/72 -3 - - - - - - 2,618

1972/73 -2 - - - - - ^- - 2,0148

1973/74 -1 - - - - - 1,7771974/75 0 - - - - - 2,391

1975/76 1 2,700 - - 1,176 265 /2 31 8 4,252

1976/77 2 2,078 - -_ 1,13' 322 /9 49 9 3,668

1977/78 3 1,888 - - 1,245 459 120 - 68 18 3,7981978/79 4 - 785 - i,22/ 507 1.22 198 55 / 2,8981979/80 5 - 695 - 1,263 556 124 168 55 5 7,866

1980/81 6 - 659 143 1,3/7 607 127 179 55 5 3,1221981/82 7 - 623 143 L,465 6'i9 1?9 158 55 10 3,242

1982/83 8 - 587 143 1 58/ /13 1 3 4 1; I 9 3,3931983/84 9 - 551 143 1 //le /C 7 i35 125 ( 14 3,5471984/85 10 - 551 143 1,845 825 137 158 59 7 :3,7251985/86 11 - 551 143 2,000 8/3 138 158 59 I 3,9371986/87 12 - 551 143 2,008 873 138 358 59 8 3,938

1987/88 13 - 551 143 2,008 873 138 158 59 8 3,938

1988/89 14 - 551 143 2,008 873 138 158 59 8 3,9381989/90 15 - 551 143 7,008 873 13 8 158 59 8 3,938

1990/91 16 - 551 143 2,008 873 138 158 59 8 3,9381991/92 17 - 551 143 7,008 873 138 158 59 8 3,938

1992/93 18 - 551 143 2,008 873 138 158 59 8 3,9381993/94 19 - 551 143 2,008 873 138 158 59 8 3,938

1994/95 20 - 551 143 2,008 873 138 158 59 8 3,9381995/96 21 - 551 143 2,008 873 138 158 59 8 3,938

1996/97 22 - 551 143 2,008 873 138 158 59 8 3,9381997/98 23 - 551 143 2,008 873 138 158 59 8 3,938

1998/99 24 - 551 1A3 2,008 873 138 158 59 8 3,938

1999/2000 25 - 551 143 2,008 873 138 158 59 8 3,938

1/ For 1968/69 to 1973/74 actual costs (and 1974/75 figures ere estimated) supplied by Malawi Government have been used less land allocation - costs projected inPhases I and IT IDA appraisal reports.

2/ Included in Development Costs for the Phase TII projcct period (1975/6 to 1977/8)X3/ All project costs, save health, credit and land allocatiosu , plry s physical cowingenciesb Credit has been replaced by the cost of actual inputs used up. dul 4/A Reduced by K90,000 in 1978/79 due to eliminatiod of Surveyino g and therenfy-c c reduces. by K36,000 ha year rS extlcesiod b;trvices arc a ipdually Liul

_~~~~ C -~ - ~, xrl ji u-Fj q.

,/ P1un< Sf I M~n-te 5'1eh'':. CAnd .4u1p. ad euid LO be replaced evenly every 5 years starting from 1980/81 (5 years after Start of Phase ITT).6/ Costed at 1974/75 smallholder prices (CAN K180 per metric ton; 20:20:0 K190 per m.ton) which are in line with TBRI) world prices. From 19/5/76 prices are

projected in line with IBKD( constant price indexes for nearest equivalents.7/ At actual prices to be paid by farmers in 1974/75 - projected aL 1974/5 constant prices. For projected quantities see Annex 2.8/ Costed at 1974/5 constant prices. For projected quanitities see Arymp 9,/ rurni A

NALAWI

LILONGWE LAND DEVELOPMENT PROGRAZ4 - PHASE III

Incremental Economic Benefits 1 / - All Phases

Year Maize 3Groundauts V Tobacco.' Beef from4/ Dzalanyama5/ Dairying&' PoultryZ/ Total Increeptal Net Incremental

- - Village Herd Ranch Incremental Cost- BenefitsStallfeeder Benefits (Costs)Program All Phases

1968/69 - 6 622 (622)1969/70 - 5 -- - 1,293 (1,293)1970/71 - 4 17 - - _ _ _ 17 1,395 (1,378)1971/72 - 3 56 - - - - - _ 56 2,618 (2,562)1972/73 - 2 882 120 - - - - 1,002 2,048 (1,046)1973/74 - 1 385 179 - - - 564 1,777 (1,213)1974/75 0 470 64 - - - - - 534 2,391 (1,857)1975176 1 1,436 430 458 - - 4 29 2,357 4,252 (1,895)1976/77 1,801 603 500 30 8 59 3,001 3,668 (667)1977/78 3 2,379 837 587 80 , 17 88 3,98g 3,798 1901978179 4 2,642 999 607 124 116 17 88 4,593 2,898 1,6951979/80 5 2,694 1,165 619 131 142 17 S¢ 5,056 2,&i6 2,1901980181 6 3,018 1,307 641 160 154 17 83 5,385 3,122 2,2531981/82 7 ,3,62 1,422 65b 181 i8G 19 S3 5906 3,242 2 341982/65 9S X1,73 1,541 667 199 21M 19 4 S 4 t 39 3,193 3,3A461983/9-4 ., 040i j1,665 68i 2. 244 '3 3 , s .7391984!85 3!! l33 1,792 34 341 T4, t7 2 75 5,t'5 , 831985/86 11 4,95w 2,114 700 293 24A 1D 4 4! >,937 42Ve71986387 t2 'P) 2,114 700 30i 424, ? 4 3 >8 4 4t3 1937J8f 13 4, 94 7 2,114 73 I , 2,4 i. , 5 J8 , 4..19S6,M8) . 14 .. 2,114 233 3 17 1 3,9- 59131989/91 A 14 i 9 2,114 30 5 1S 244 1, I i 2 4/ l141990191 34 4,957 2,114 70!3 -224 2.1 3, 4 r'241991/92 17 2,957 27.14 73 N) 244 1' S 2i 93G4 iS.51992/13 18 2,114 76,3 34' 24 i Sh -4 9 6199339/4 19 4,55 2,1la s11 3J5 1 2 * S43 3,931994/95 2a 4,957 2,114 70U3 396 .144. 1 ,1 3,938 4,5681995/396 9v 4,9417 2.i14 103 383 24. 1, 17 9S 3,503 3 933 4,5583996/97 27 4,957 2,114 7C90 3 8h 24'2 I! s1 3,036 3.433 4i,5681997/99 23 4,957 2. s4 700 3-4h 244 11 3 8,5306 3,938 4,5681998/99 24. 4,957 / '1i* 703) 3G6 744 17 3. a3,5v0 3,938 4,5681999/2000 25 4,957 O 14, 700 3316 244 17 3h 8,506 3,936 4,568

IER for t ;uikaaes I, 1 nd .a .9: __it__

1/ For price basis see text of Annex I), 1968/69 to 1973/74 aalee are actual figures reported by Malawi government.2/ Quantities from 1975/76 onwards are in Annex 15 Table 6.3/ Quantities from 1975/76 onwards are in Annex 15, Table 74/ Quantities are in Annex 7. Price basis is in text of Annex 15.5/ From Annex 7. Income for years prior to 1978/79 netted off against costs.7/ See Table 9.7/ See Table 8.8/ From Table 39/ For each year of Phase III alone, incremental benefits are defined as that year's incremental benefits less average annual incremental

benefits for 3 years ended 1974/75 (i.e. K700,000).

MALAWI

LILOINGWE LAND DEVELOPMENT PROGRAM - PHASE III

Incremental Maize Production

1975/76 1976/77 1977/78 1978/79 1979/80 1980/81 1981/82 1982/83 1983/84 1984/85 1985/86(15 l2} ~~~~(3) (4) (5) (6) (7) 8 (9) (105 13

Hybrid with Fertilizer

Acreage 23,450 31,260 45,310 ,2,o20 60,61o 6d,690 77,100 85,760 94,770 104,100 112,400

Production, sh. tons 37,520 50,016 72,496 84,512 96,976 109,904 123,360 137,216 151,632 166,560 179,840

Synthetic with Fertilizer

Acreage 23,450 31,260 45,310 52,820 60,610 68,690 77,100 85,760 94,770 104,100 LL2,400

Production, sh. tons 23,450 31,260 45,310 52,820 60,610 68,690 77,100 85,760 94,770 1o4,10o 1l2,400

Synthetic without Fertilizer

Acreage 59,920 62,520 67,970 66,030 63,980 61,820 59,580 53,600 47,380 40,'oo 37,450

Production, sb. tons2/ 35,952 37,512 40,782 39,618 38,388 37,092 35,748 32,160 28,428 24,'140 22,470

Unimproved

Acreage 153,700 159,160 165,060 15c,460 151,530 144,270 136,670 132,220 127,570 122,680 112,400

Production, sh. tons-/ 76,850 79,580 82,530 79,230 75,765 72,135 68,335 66,110 63,785 61,340 56,200

Total Acreage 260,520 284,200 323,650 330,130 336,730 343,470 350,450 357,340 364.490 371,780 374,650

Total Production, sh. tons 173,772 198,368 241,118 256,180 271,739 28'7,821 304,543 321,246 338,615 356,540 370,9104/

Prod-ae'.ion at base yield,sh.tons 130,260 142,0OO L61,825 165,065 168,365 171,735 175,225 L78,670 L82,245 185,890 187,325

Tncremental Production,sh tons 43,512 56,268 79,293 91,115 103,374 116,086 129,318 142,576 156,370 170,650 183,585

-/at 3,200 (bs per acreJ at 3,200 lbs per acre3Jat 2,000 lbs per acre Average 1.334

3/at 1,200 lbs per acres/at 1,000 lbs per acre

MAIAWI

LILONGWE LAND DEVELOPMENT PROGRAM - PHASE III

Incremental Production of Groundnuts and Tobacco

1975/76 1976/77 1977/78 1978/79 1979/80 i980/81 1981/82 1982/83 1983/84 1984/8_ 1985/86

Groundnuts

Acreage 92, 440 100,840 114,840 117,140 119,480 121,870 124,310 126,800 129,330 131,920 132,940

Yield, lbs per acre 500 520 540 560 580 600 610 620 630 640 65o

Production, sh. tons 23,110 26,218 31,007 32,799 34,649 36,561 37,915 39,308 40,739 42,2114 43,206

Production at base yield, sh.tonsl/ 20,799 22,689 25,839 26,357 26,883 27,421 27,970 28,530 29,099 29,682 29,912

Tncremental production, sh. tons 2,311 3,529 5,168 6,442 7,766 9,140 9,945 10,778 11,640 12,532 13,294

Tobacco

Acreage 52,520 57,300 65,250 66,560 67,890 69,250 70,630 72,040 73,490 74,960 75,540

Production, sh. tons! 9,979 10,887 12,398 12,646 12,899 13,158 13,420 13,688 13,963 14,242 14,353

Production at base yield, sh. tonDs 8,928 9,741 11,093 11,315 11,541 11,773 12,007 12,247 12,493 12,743 12,8142

Incremental production 1,051 1,146 1,305 1,331 1,358 1,385 1,413 1,441 1,470 1,499 1,511

Vat 450 lbs per acrei/at 380 lbs per acre3J at 340 lbs per acre.

MALAWI

LILONGWE LAND DEVELOPMENT PROGRAM -- PHASE III

Poultry Incremental Costs and Benefits

Income Expenditures

Number Eggs_/ Birds-V Total Buildings-/ Direct4/ Total Netof and Costs Benefit

Farms_ Equipment

1975/76 40 26.346 2.981 29,327 12520 18j44f 30,960 (1,633)1976/77 80 52,692 5,962 58,654 12,520 36,880 49,400 9,2541977/78, 120 79,038 8,943 87,981 12,520 55,320 67,840 20,1411978/79 120 79,038 8,943 87,981. - 55,320 55,320 32,6611979/80 120 79,038 8, (!3 87,981 - 55,320 55,320 32,6611980/81 120 79,038 8,943 87,981. - 55,320 55,320 32,6611981/82 120 79,038 8943 87,981 : 55,320 55,320 32,661.1982/83 120 79,038 8,91-3 87,981 9, 3,20 55,320 64,640 23,3411983/84 120 79,038 8,943 87,981 9,320 5.5320 64,640 23,3411984/85 120 79,038 8,943 87,981 9,320 55,320 64,640 23,3411985/86 120 79,038 8,943 87,981 3,200 55,320 58,520 29,4611986/87 120 79,038 8,943 87,981 3,200 55,320 58,520 29,4611987/88 120 79,038 8,943 87,981 3,200 55,320 58,520 29,461

1/ 96 birds per fari atv J8 (Iozecr eggs; at 441 per dozen per cycle (60 weeks).2/ 86 bir-ds at KI for f.iAe ct end. om (lyo ((0 weekr.).3/ per farm: housin)g 1K80 -Lifeie 10 ycarus

cages ai.d troc.ghs K233 - iet:lie / years.4/ per farm: K532 per cycle (60 weeks), inelLadee puJllets, fecd, et-c (see financial analysis).

I In

MALAWI

LILONGWE LAND DEVELOPMENT PROGRAM - PHASE III

Dairying Incremental Costs and Benefits

(M Kwacha)

Number Income Expenditure Total Total Net

of 1/ 2/ 3/ 4 6/ 7/ Inoe Expenditure BenefitFarms Milk- Calves- Cull- Heifers4 Building-' Pasture- Direct-

Cows Equipment Establishment Costs

1975/76 15 3,996 250 - 3,600 2,550 675 1,080 4,246 7,905 (3,659)

1976/77 30 7,992 500 - 3,600 2,550 675 2,160 8,492 8,985 (493)

1977/78 60 15,984 1,000 - 7,200 5,100 1,350 4,320 16,984 17,970 (986)

1978/79 60 15,984 1,000 - - - - 4,320 16,984 4,320 12,664

1979/80 60 15,984 1,000 - - - 675 4,320 16,984 4,995 11,989

1980/81 60 15,984 1,000 - - - 675 4,320 16,984 4,995 11,989

1981/82 60 15,984 1,000 2,400 3,600 750 1,350 4,320 19,384 10,020 9,364

1982/83 60 15,984 1,000 2,400 3,600 750 - 4,320 19,384 8,670 10,714

1983/84 60 15,984 1,000 4,800 7,200 1,500 675 4,320 21,784 13,695 8,089

1984/85 60 15,984 1,000 - - 1,800 675 4,320 16,984 6,795 10,189

1985/86 60 15,984 1,000 - - 1,800 1,350 4,320 16,984 7,470 9,514

1986/87 60 15,984 1,000 - 3,600 - 4,320 16,984 7,920 9,064

1/ per cow 333 gallon per year at 40t 1 gallon.2/ per cow: 5 calves/6 years (2 cows per farm); price KIO.3/ production lifetime cow 6 years; residual value K80 each.4/ 2 heifers per farm: price K120 each.5/ per farm: K30 for building - 10 years life

K50 for equipment - 6 years life >

K90 for fencing wire - 10 years life170 x

6/ per farm: K45 - 4 year life.7/ per farm: K72 (see financial analysis).

MALAWILILONGWE LAND DEVELOPMENT PROGRAM: PHASE III

ORGANIZATION CHART

MINISTRY OF AGRICULTUREAND NATURAL RESOURCES

I | | _l ~~~~~~~~~~~Ministry of lt | x 7 ~~~~~~~~~~Health

| PROGRAM MANAGE

r-DIVISION 1: DIVISION II: DIVISION 111: DIVISION IV: DIVISION V:

PROGRAM MANAGER'S OFFICE CONSTRUCTION FINANCE AND CREDIT CONTROL FIELD DEVELOPMENT SERVICES INS-ITUTION AND ADMINISTRATION

Evaluation Section Earth Work Unit Acorunts Sec ion a Planning Administration & Personnel

Management Support Land Use & Planning Credit Section Extotnsioii Section X RLiral Development

Survey Section l { ildi1 scilorl W { Iiketing Section Livestock Section Transport Section

Land Allocation Section Ranch

_4 Training Sectiona|

Vsorini bank-1Y121

I_ BR D 11209I SEPTEMBER 1974

M A L A W I

LILONGWE LAND DEVELOPMENT PROGRAMPHASING OF ROAD AND CONSERVATION WORKS

> 13°30' W A 13-30'-

^4' # S /f ~~~~~~~~~~~~~~~~To Kasul7ga

g s> / / k ,, / M~~~amnbuma\ I 7~~~~i7

15 ; 17 .' 9 ' 't /5 5

71~~~~~~~~~~~~~~~~~~

Nsara~~~~~~~~~~~~~

7I 14'°

( ~ r>'<tS E:j 0

72ce'9. S 4 Q A 30 75/760'72/73 68/69 74/75

PROGRAMR HEADQUJARTERSRAC . .7

FROGRAMA EOUNDARY < , ARE I 4s

-7 UN9T BOUNDARIES AND NsUM1BERS \- -- VX - DZALANYAMA N4 T > aaANZANIA7Q .Gfl7 YEAR GE DYVELOPMENT *i/' e

i FA~~ODIFIED INPUT AREAS - . ' f ' . RANCH <> * fo>

10430 . -LILON59WE CITY BOUNDARY*';-I t

T ~RIVERS ! tWI7 '\

NYVENAT10ONAL BOUNDARIES N \ 7;t t~< fJ\\-

0~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

M IL ES IS IS MOAB1V ,) ZOBlJ

i VrArIi,I .t.,s /.o /,,st I Gi 5 10 IS 20 25 -p L,C WI-rU YThIIW - O lw / Ieol K(iLO M ET ER S l >P

L 3i 33 3-LS7.