Tanzania - Dairy Development Project

Report No. 765-TA FILE COPY Tanzania Appraisal of Dairy Development Project May 23, 1975 Agricultural Credit and Livestock Division Eastern Africa Region Not for Public Use U Document of the International Bank for Reconstruction and Development International Development Association This report was prepared for official use only by the Bank Group. It may not be published, quoted or cited without Bank Group authorization. The Bank Group does not accept responsibility for the accuracy or completeness of the report. CURRENCY EQUIVALENTS US$1.0 = Tanzania Shilling 7.14 (Tsh) Tshl.0 = US$0.14 Tshl,00 = US$140 WEIGHTS AND MEASURES Metric System 1 hectare (ha) = 10,000 m2 = 2.46 acres 1 kilometer (km) = 0.62 miles 1 square kilomete (km ) 0.39 sq. miles - 100 ha 1 kilogram (kg) = 2.20 pounds 1 liter (1) = 0.26 gallons 1,000 kg 1 metric ton = 0.98 long ton ABBREVIATIONS AFO = AssiFtant Field Officer AI = Artificial Insemination BF = Butter Fat CDIL = Coastal Dairies Industries DAFCO = Dairy Farming Company DDC = District Development Corporation D8M Dar-es-Salaan ECF = East Coast Fever FI = First Generation Cross in Breeding FMD Foot and Mouth Disease FO Field Officer KNCU = Kilimanjaro Native Cooperative Union LIDA Livestock Development Authority MATI Ministry of Agriculture Training Institute MIFUGO = Livestock Development Division, Ministry of Agriculture NAIC = National Artificial Insemination Center NARCO = National Ranching Company NAFC0 = National Agricultural and Food Corporation NCO = National Cold Chain Operation TAC = Tanzania Audit Corporation TANU = Tanganyika African National Union TDL = Tanzania Dairies Limited TPL = Tanzania Packers Limited TRDB = Tanzania Rural Development Bank TSC Tanzania Sisal Corporation SMP = Skim Milk Powder SNF = Solid Non-Fats UHT = Ultra-High Temperature Processing VO = Veterinary Officer GOVERNMENT AND PARASTATALS FISCAL YEAR July 1 - June 30 TANZANIA DAIRY DEVELOPMENT PROJECT TABLE OF CONTENTS Page No. SUMMARY AND CONCLUSIONS ......... i - ii I. INTRODUCTION .......................... 1 II. BACKGROUND ....... ............... 2 A. General ..... . ............... . 2 B. The Agricultural Sector .................. 3 C. The Tanzanian Dairy Industry ............ 5 D. Agricultural Services ............ .. 7 E. Agricultural Credit ...................... 8 III. THE PROJECT ...... ..... .................. 9 A. General Description ...................... 9 B. Detailed Features ........................ 10 C. Project Costs ............................ 13 D. Financing ................................ 15 E. Procurement .............................. 15 F. Disbursement ............... ............. 16 G. Accounts and Audit ... ................... 16 H. Project Reporting and Monitoring ......... 17 IV. ORGANIZATION AND MANAGEMENT .................. 17 V. PRODUCTION, MARKETING AND PRODUCER BENEFITS 20 VI. ECONOMIC BENEFITS ANL JUSTIFICATION ........ 22 VII. RECOMMENDATIONS .............................. 24 This Report is based on the findings of an IDA appraisal mission to Tanzania in September-Octouer 1974, composed of Mr. D. Lomax, Ms. K. Marshall, Messrs. P. Sihm and S. Steengaard (IDA), Mr. L. Sandberg (FAO), and Mr. S. De (Trainee). Table of Contents (Cont'd) ANNEXES 1. The First and Second Livestock Projects in Tanzania 2. Agriculture and Livestock in the Economy Table 1. Staffing of HQ and Regional Services Table 2. Training of Personnel for Livestock Development 3. Ujamaa Villages and Dairy Development 4. The Tanzanian Dairy Industry Table 1. Estimated Breakdown of Cattle Population in 1972 Table 2. Estimated Production of Goat Milk in Tanzania, 1967-1970 5. Commercial Aspects of Dairy Development Table 1. Cattle Population and Milk Production Table 2. Net Imports of Milk and Milk Products, 1961 to 1972 Table 3. Imports of Dairy Products, 1973 Table 4. Estimated Total Demand for Milk and Milk Products in Tanzania, 1970-1990 Table 5. Imports of Dairy Products - West Lake Region Table 6. Imports of Milk and Milk Products: Mbeya and Rukwa Table 7. Fresh Milk vs. Reconstituted Milk: Basis of Calculation of Price Equivalents. 6. Milk Collection, Processing and Distribution Coastal Dairies Industries Ltd. Table 1. Milk Intake 1970-August 1974 and Average Fat Content in 1973/74. Table 2. Milk Grading System and Price of Fresh Milk Table 3. Average Daily Sales of Liquid Milk Products (1970-73) Table 4. Average Daily Sales of Various Milk Products, January-June 1974, Estimated Average Daily Sales for 1974 Table 5. Sales Prices (as from 3rd April, 1974) Table of Contents (Cont'd) Table 6. Comparative Balance Sheets as at 31 December 1971-1973 Table 7. Comparative Manufacturing, Trading and Profit and Loss Accounts for the Years Ended 31 December 1971-1973 Northern Dairies Ltd. Table 8. Milk Supplies and Production Table 9. Prices to Producers (from April 1, 1974) Table 10. Average Daily Sales - August 1974 Table 11. Sales Prices in Arusha, Moshi and Tanga Table 12. Comparative Balance Sheets as at 31 December 1971-1973 Table 13. Comparative Manufacturing, Trading and Profit and Loss Accounts for the Years Ended 31 December 1971-1973 Mara Dairy Company Ltd. Table 14. Comparative Balance sheets for the Years Ended 31 December 1971 and 1973 Table 15. Comparative Profit and Loss Accounts as of 31 December 1972 and 1973 7. Tanzania Rural Development Bank Table 1. Comparative Balance Sheets as at June 30, 1972 Thru 1974 (Tsh '000) Table 2. Comparative Profit and Loss Accounts for the Years Ended June 30, 1972 Thru 1974 Table 3. Project Related Cash Flow Chart TRDB Organization Chart - 1974 8. The Livestock Development Authority of Tanzania Table 1. Project Related Cash Flow 9. Development Projections Parastatal Dairy Farms Bagamoyo Dairy Farm Table of Contents (Cont'd) Table 1. 1 Unit of 356 Cows - Herd Projection Table 2. Investment Costs Table 3. Sales and Operating Expenses Table 4. Incremental Cash Flow Iwambi Dairy Farm Table 5. 1 Unit of 356 Cows - Herd Projection Table 6. Investment Costs Table 7. Sales and Operating Expenses Table 8. Incremental Cash Flow Kitulo Dairy Farm Table 9. 1 Unit of 356 Cows - Herd Projection Table 10. Investment Costs Table 11. Sales and Operating Expenses Table 12. Incremental Cash Flow Ngerengere Dairy Farms Table 13. Unit I - 1 Unit of 356 Cows - Herd Projection Table 14. Unit II - 1 Unit of 356 Cows - Herd Projection Table 15. Investment Costs Table 16. Sales and Operating Expenses Table 17. Incremental Cash Flow Patel Dairy Farm Table 18. 1 Unit of 356 Cows - Herd Projection Table 19. Investment Costs Table 20. Sales and Operating Expenses Table 21. Incremental Cash Flow Rongai Complex Dairy Farm Table 22. 3 Units of 356 Cows - Herd Projection Table 23. Investment Costs Table 24. Sales and Operating Expenses Table 25. Incremental Cash Flow Saleh Hajeh Dairy Farm Table 26. 1 Unit of 400 Cows - Herd Projection Table 27. Investment Costs Table 28. Sales and Operating Expenses Table 29. Incremental Cash Flow Table of Contents (Cont'd) Tanga Complex Dairy Farm Table 30. 5 Units of 356 Cows - Herd Projection Table 31. Investment Costs Table 32. Sales and Operating Expenses Table 33. Incremental Cash Flow Utegi Dairy Farm Table 34. 2 Units of 356 Cows - Herd Projection Table 35. Investment Cost Table 36. Sales and Operating Expenses Table 37. Incremental Cash Flow Table 38. Government Dairy Farms: Summary of Investment Costs Ujamaa Dairy Development Table 39.'Model of Ujamaa Component - Herd Projection - 20 Cows Table 40. Model - Investment Costs Table 41. Model - Sales and Operating Expenses Table 42. M9del - Incremental Cash Flow Table 43. 50 Ujamaas - Investment Cost Table 44. 50 Ujamaas - Sales and Operating Expenses Table 45. 50 Ujamaas - Incremental Cash Flow West Lake Heifer Breeding Unit Table 46. Herd Projection Table 47. Investment Costs Table 48. Incremental Sales and Operating Expenses Table 49. Incremental Cash Flow Milk Collection and Processing Table 50. Investment Costs Table 51. Milk Collection and Transport: Coastal Dairies Ltd. Table 52. Milk Collection Center: Northern Dairies Ltd. Investment Costs Table 53. Collection Centers - Operating Costs/Unit Technical Services and Project Preparation Table 54. Investment Projection Table of Contents (Cont'd) 10. Parastatal Dairy Farms 11. West Lake Heifer Breeding Unit 12. Foot-and-Mouth Disease Control: Applied Investigational Work 13. Summary of Annual Project Costs Table 1. Summary of Annual Project Costs - Project Components Table 2. Summary of Annual Project Costs - Category of Expenditure 14. Estimated Schedule of Disbursements 15. Project Reporting Procedures 16. Tanzania Sisal Corporation Table 1. Comparative Balance Sheets as at 31 December 1968-1972 Table 2. Comparative Profit and Loss Accounts for the Years Ended 31 December 1968-1972 Chart Tanzania Sisal Corporation Organization Chart 17. Financial Rates of Return 18. Government Cash Flow from Project 19. Economic Rate of Return Table 1. Economic Rate of Return Calculation Table 2. Sensitivity Analysis CHARTS 1. Livestock Development Authority Organization Chart 2. Project Organization Chart MAP Dairy Development Project (IBRD 11411) TANZANIA DAIRY DEVELOPMENT PROJECT SUMMARY AND CONCLUSIONS i. Tanzania's Development strategy emphasizes agricultural and rural development. As part of its rural development program a balanced regional development effort has recently been undertaken. Within this context greater attention has been given to the construction of agricultural feeder roads, rural water supplies and health and educational facilities. Government also intends to concentrate its resources in directly productive investments, par- ticularly in agriculture. Within the agriculture sector a high priority is given to dairy development for economic, social and nutritional reasons since imports of dairy products have increased rapidly to meet demand in the cities and milk represents an important part of the rural diet. ii. The proposed Project is aimed at developing dairy production, in the short-term, by developing dairy farms, and, in the longer term, by preparing the upgraded dairy cattle that would be required to develop dairy at the vil- lage level. It would comprise a five-year program to develop 17 dairy units of about 350 cows each, 50 Ujamaa dairy units of about 20 cows each, a heifer breeding program and improved collection, processing and distribution facilities. It would also have an important element of technical services including, technical assistance on the farm; preparation of projects in the traditional sector; and, applied investigational work on animal health. iii. Total Project cost is estimated at US$15.3 million. The proposed IDA credit of US$10 million would cover the foreign exchange costs and 33% of local costs. All funds, excepting those for technical services, would be chan- nelled by Government to TRDB at 4% interest per annum for 20 years with a 5- year grace period. Loans from TRDB to DAFCO, TSC, NAF00, NARCO, KNCU and Ujamaa units would be at 8-1/2% for 15 years with four years grace period while the loan to TDL would be 8-1/2% for 8 years and no grace period. Machinery for milk processing (US$0.2 million excluding contingencies) would be purchased directly from the supplier of the plants' existing equipment to ensure conformity and tronomies on spare parts and service. Other contracts for machinery, equipment and vehicles (US$2.0 million) would be awarded after international competitive bidding in accordance with Bank/IDA guidelines. Civil works contracts (US$1.9 million) which would be small and scattered throughout the country and unlikely to attract international bids, would be tendered locally (about US$1.3 million) or constructed by force account (about US$0.6 million). There is sufficient local competition in most regions for works of this kind. Construction works for Ujamaa units (US$0.1 million) would be done by village labor. Cattle would be purchased locally (US$2.3 million). iv. The Project would support Government's dairy development objectives by increasing production and improving collection, processing and distribution. At full development the Project would provide full employment for an estimated - ii - 650 people. 50 Ujamaa villages with a population of about 50,000 people would derive additional net revenue of about US$5,000 per village per annum. v. As.a result of the Project, total annual output of milk at full development (1987) would be 25 million liters as against an amount of 10 million liters produced now by the commercial sector. An additional 1 million liters would be produced in Ujamaa villages. Annual production of upgraded dairy heifers would be about 3,000 animals per annum by full development. vi. , The economic rate of return is estimated at 18% over 25 years. Foreign exchange costs and earnings were shadow priced at Tsh1O per US$ to reflect the scarcity value of foreign exchange in Tanzania. Farm labor was shadow priced at 50% of the actual wage which is equal to the value of sub- sistence production. vii. The Project's principal risk is quality of management. It requires a high degree of technical expertise together with sound management and train- ing skills. If management is not of high standard, expected high milk yields will not be achieved, yields being more likely to remain at their present levels or decline, resulting in farms not bying either financially, or eco- nomically viable. viii. A US$30 million program loan was approved in December, 1974 to ease the current adverse impacts on the Tanzanian economy (para 2.01). Eight IDA credits totalling US$91.1 million and two IBRD loans for US$30 million have been approved thus far for eight agricultural and one rural development proj- ect in Tanzania. Agricultural projects include one for agricultural credit, two for livestock, and one each for tobacco, tea, cotton, sugar, and cashew- nuts. A further credit in 1971 provided US$3.3 million for agricultural training, and a FY 1972 credit provided US$6.5 million for feeder road devel- opment. Performance under the projects has been mixed. ix. The Project is suitable for an IDA credit of US$10.0 million. TANZANIA DAIRY DEVELOPMENT PROJECT I. INTRODUCTION 1.01 Tanzania places high priority on agriculture and rural development in its development strategy, as over 90% of its population lives in rural areas and is mainly engaged in traditional agriculture. To facilitate rural develop- ment, and to promote a balanced regional development effort, Government, in 1972, undertook a major decentralization of its administrative functions to 20 regional administrations. This is designed both to make maximum use of the growth potential in each region and to narrow the gap between regions in terms of the supply of essential services. Within this context attention has been given to the construction of agricultural feeder roads, rural water supplies, health facilities, and the development of village centers with basic infra- structure and services. Efforts also have been made to gear the educational system more closely to the needs of a rural society. The Government has also emphasized directly productive investment particularly in agriculture to de- velop parastatal farms and promote village agriculture. Within the agricul- tural sector, priority is accorded to dairy development for economic, social and nutritional reasons, since imports of dairy products have increased rapidly to meet demand in the cities, while milk represents also an important part of the rural diet. The Government's strategy for dairy development aims at the development of large-scale dairy farms run by parastatal corporations to sub- stitute for imported milk products, and, in the longer term, at the development of dairy units in villages throughout Tanzania to provide milk for the rural population. 1.02 The proposed Project would assist the Government in achieving these objectives, both in the short term by developing Government dairy farms and improving milk collection services, and in the longer term by preparing the upgraded dairy cattle and the technical and managerial base that would be re- quired to develop dairy at village level. It would comprise a 5-year program to develop 17 dairy units, of about 350 cows each, 50 Ujamaa dairy units, with 20 cows each, a heifer breeding program, and improved milk collection, processing and distribution facilities. It would include also an important element of technical assistance. 1.03 A US$30 million program loan was approved in December, 1974 to ease the current adverse impacts on the Tanzanian economy of petroleum price in- creases and world-wide inflation (para 2.01). Eight IDA credits totalling US$91.1 million and two IBRD loans for US$30 million have been approved thus far for eight agricultural and one rural development project in Tanzania. Agricultural projects include one for agricultural credit, two for livestock, and one each for tobacco, tea, cotton, sugar, and cashewnuts. A rural develop- ment project for the Kigoma region was recently approved. A further credit in 1971 provided US$3.3 million for agricultural training, and a FY 1972 credit provided US$6.5 million for feeder road development. Progress under these projects has been slow but there has been some improvement recently; management - 2 - and staffing have been a continuing problem. Under the completed credit project, a need was found for improved supervision of loan records and input distribution. The first livestock project (also completed) was reasonably successful, but the second project is progressing more slowly than anticipated due to delays in preparation and approval of ranch plans, serious cost over- runs in construction of slaughterhouses and frequent changes in project manage- ment (Annex 1). Development of the tea project had been disappointing and slower than expected and encountered difficulties due to inadequate services and lack of effective management control. In the past recruitment of growers for both tea and tobacco has been slow although this has improved substantially recently. The cotton and cashew projects and the rural development project have only recently become effective, but they too face serious difficulties. The cotton project had been affected by the sudden acceleration of the villagiz- ation program in 1973 and 1974 requiring a major reorientation of the project and causing significant delays. Bids recently received for the major contract for the cashew project were higher than anticipated. An agricultural and rural development sector study for Tanzania was circulated in December, 1974. 1.04 The Project was mainly prepared by the Government. The original project proposal included 41 large-scale dairy units, the purchase of 5,000 imported Friesian dairy heifers, and the establishment of a pilot Disease Free Zone to control Foot-and-Mouth Disease (FMD). During appraisal it was agreed that for technical, financial and management reasons, this first phase Project should only develop 17 large scale dairy units. The mission recommended that no cattle importation be included, because of the high death risk involved, and because the proposed heifer b:reeding unit could provide an adequate supply of upgraded cattle within a tew years. The establishment of a disease free zone could not be justified in economic terms at this time, due to lack of evidence on the impact of FMD on productivity in the traditional herd. The Government agreed that the program of applied investigational work included in the Project would be undertaken to assess the effect of FMD within the traditional livestock sector. 1.05 This report is based on the findings of an appraisal mission to Tanzania in September-October, 1974, composed of D. Lomax, K. Marshall, P. Sihm, S. Steengaard (IDA), L. Sandberg (FAO) and S. De (Trainee). II. 3ACKGROUND A. General 2.01 Tanzania has a total area of about 880,000 km 2. The population of 14.3 million, which is increasing at about 3% a year, is concentrated in a few regions, with about two-thirds of the people occupying only 10% of the land. Tanzania is one of the 25 "least developed" countries in the world. Per capita GNP was estimated at US$110 in 1973. The growth rate of the economy was about -3- 5% per annum from 1964 through 1973, and actual growth has lagged behind the Second Five-Year Plan (1969-1974) targets, mainly due to failure of the main agricultural crops to reach plan projections. The 1973 drought and other fac- tors, including the accelerated villagization program (Annex 3), resulted in a serious reduction in agricultural production in 1974, necessitating major imports of food grains and causing severe balance of payments problems. The recent increase in petroleum prices and world-wide inflation have also had a severe adverse impact on the Tanzanian economy (para 1.03). 2.02 Tanzania aims at reducing inequalities in income distribution through emphasis on smallholder agriculture and rural development, and state control of important industries, services and large-scale agricultural enter- prises. Initiative for planning and implementing many development projects has devolved to the regional and district administrations. A third five year plan (1975-79) should be completed shortly; it is likely to emphasize develop- ment of productive activity, particularly in the rural sector, in conjunction with efforts to achieve balanced regional growth and a more equitable income distribution. B. The Agricultural Sector (Annex 2) General Background 2.03 Agriculture accounts for roughly 40% of Tanzania's GDP and approxi- mately half of the sector production is for subsistence. About 80% of total exports come from agriculture. Most of the population (90%) lives in rural areas, traditionally in smal isolated communities, and is engaged in agri- culture. Agricultural exports in 1973 were valued at Tsh 1,743 million (US$245 million), of which coffee accounted for 30%, cotton 20%, and sisal and cashews 13% and 10%, respectively. Other exports included tea, meat, pyrethrum and beans. Agricultural imports in 1973 amounted to Tsh292 million (US$41 million) of which dairy products accounted for 24%, sugar 32%, and food grains about 18%. In 1974, agricultural imports amounted to Tshl,050 million ,US$147 million) of which food grains amounted to Tsh790 million (US$110 million). Imports of dairy products increased from about Tshl9 million (US$2.7 million) in 1962 to Tsh70 million (US$9.8 million) in 1973. Organization of Production 2.04 Most production is concentrated on smallholdings which are cultivated by hand and produce family subsistence as well as cash crops. The family pro- vides most of the labor, and hiring workers is discouraged as contrary to the socialist principles of the country. Limited use is made of oxen, mainly in the less densely populated western cotton areas. The area cultivated by a family averages about 5-6 ha, varying from under 2 ha in the more favored agricultural areas to 50 ha in less favored areas. Plots tend to be irregular but fragmentation is a serious problem only in such densely populated areas -4- as Kilimanjaro. Shifting cultivation is practiced in many areas of the coun- try. Important smdllholder cash crops are cotton, cashewnuts, tea, tobacco, coffee, and maize and rice. Large estates produce sisal, coffee, tea and coconuts, and state farms mainly wheat, rice and livestock. Estate production has diminished in importance, and the state farm program remains small. Ujarnaa _and Villagization 2.05 The Arusha Declaration of 1967 reaffirmed Tanzania's commitment to a socialist society and identified the Ujamaa Village as a means of effecting self-reliance and a community approach to development. The Ujamaa village was seen as a vehicle for providing economies of scale in delivering inputs and social services, which could improve the lives of rural people. The ulti- mate objective is that Ujamaa villages become multi-purpose cooperative societies with powers to own land and to borrow. Most villages have been formed by physical resettlement. The precise pattern of development within each Ujamaa village has been left to-villagers themselves to decide, and Ujamaa development has varied considerably among regions. The extent of col- lective activity varies among villages, ranging from a predominantly communal or block farm approach to one which continues traditional individual family farms with a small communal venture for cash. The Government has provided considerable assistance to newly developed Ujamaa villages, chiefly by way of transporting villagers' effects, providing building materials for houses, and provision of water supplies and other social services, but also in encouraging them to develop productive activities. Within the past two years, the emphasis has shifted from development of Ujamaa cooperatives to formation of "planned" or "development" villages of between 1,000 and 2,000 families each. Under this villagization program, a substantial proportion of the rural population has been moved to new locations where the Government hopes to provide basic services and infrastructure. The program has caused some disruption in agri- cultural production (para 2.01), in part because of inadequate planning and preparation, but also because the vast scope of the program necessitates a major reorientation of traditional agriculture which is likely to take many years. Livestock 2.06 With about 10 million cattle, 7 million sheep and goats grazing about 400,000 km2, livestock represents a major national resource. Livestock development is the responsibility of the Livestock Development Division in the Ministry of Agriculture (Paras 2.12, 2.13 and 2.14). Most of the cattle pop- ulation is in the traditional sector and although individually owned are grazed on communal land. The location of the traditional herd is broadly determined by the absence of tsetse fly, which precludes extensive cattle keeping in the southeast and in large areas of the west. The greater part of the herd is located in the Mwanza, Shinyanga, Musoma and Singida regions, and large concentrations are also found in Dodoma, Arusha and Kilimanjaro. The offtake rate of the herd is only about 10% and productivity is extremely low; a calving rate of about 50%, a calf and adult mortality of about 20% and 10% -5- respectively, an average liveweight at slaughter of about 250 kg, can be attributed to inadequate nutrition, high disease incidence and parasite infes- tation, poor management, and the poor genetic quality of the native cattle (small East African shorthorn Zebu). The potential for livestock development in Tanzania is enormous, both through an improvement and intensification of husbandry in existing cattle areas, and by extending these areas through tsetse control. Animal Health 2.07 Rinderpest and Contagious Bovine Plueropneumonia, formerly major killers of cattle, have been successfully controlled by a Government vaccina- tion program involving about one million cattle per year; the last recorded cases occurred in 1964 and 1965, respectively. Tick-borne diseases, particu- larly East Coast Fever (ECF), cause serious losses in the traditional live- stock sector, but the Government is seeking to control these diseases by constructing dips throughout the country (1,300 to date) and operating them free of charge for traditional producers; the major problem is to persuade these producers to dip cattle regularly. Tsetse fly, the vector responsible for trypanosomiasis of cattle and sleeping sickness in humans, infests more than 60% of Tanzania, where beef production is possible only if prophylactic drugs are used or a tsetse barrier one to two km wide of cleared scrub, treated when necessary with insecticides, is established around the area. Foot-and- Mouth Disease (FMD) is endemic in the major cattle areas. The Government operates a control program involving vaccination and quarantine of infected herds, but the disease is nevertheless widespread. Other significant disease problems include internal parasites and liver fluke, which are controlled by drenching. C. The Tanzanian Dairy Industry (Annex 4) Milk Production 2.08 The Dairy industry in Tanzania is relatively under-developed, and Tanzania has imported an increasing volume of dairy products to meet rising demand in the urban areas (para 2.03). Milk is produced at present by four categories of producers. A small commercial sector is engaged in modern dairy farming, using almost exclusively exotic dairy cattle. Some farms are privately-owned, but most are now run by parastatal corporations; they are concentrated in the Arusha-Kilimanjaro and Dar-es-Salaam regions, and sell milk to the commercial daries there. The Tanzania Sisal Corporation (TSC) (Annex 16) as a part of its diversification program is establishing beef ranches and dairy farms in the Tanga region. Average yields per cow are estimated at 1,200 to 3,000 liters per lactation, 1/ but average herd yield is only about 1,900 liters per cow per lactation. Commercial dairying has 1/ Lactation is the period in each year during which a cow can be milked. -6- declined in recent years, and estimated total raw milk sales to the two major dairies fell from 8 million liters to 5.5 million liters between 1969 and 1973. The departure of non-African farmers and low milk prices have contributed to this decline, and many farms now stand in urgent need of rehabilitation. By far the largest volume of milk is produced by traditional cattle owners. An estimated 4 million cows each produce about 300 liters of milk per lactation, and milk not required by calves is consumed by humans, constituting an im- portant part of rural diets; total production is estimated (very roughly) at 475 million liters a year but only about one half that amount is available for human consumption and virtually none is sold outside the village. While the long-term prospects for increasing milk production in this sector are good, this will come only with general improvement of the herd and improvement in cattle husbandry. Milk is also produced by a relatively small group of traditional cattle owners for whom milk represents a source of cash income. They sell milk either to dairies or rural processing centers or directly to consumers in towns and villages. Some farmers own a few exotic or mixed dairy cows, particularly in the Arusha-Kilimanjaro area; in other areas such as Mara surplus milk from traditional cattle is sold. Finally, milk is produced in a very limited number of Ujamaa villages as a communal venture with mixed success. 2.09 Tanzania enjoys many natural advantages that favor dairy development, including suitable climatic conditions in several regions, and a strong tradi- tion of cattle husbandry. The principal constraints on dairy development in- clude the location of some high potential areas far from major markets, poor rural road networks and limited milk collection services, low milk yields of traditional cattle, shortage of feed during the dry season, weak extension services for dairy, shortages of inputs, and inadequate research to develop dairy farming systems suitable for Tanzanian conditions. If these constraints are removed or minimized, Tanzania could develop a viable, indigenous dairy industry, producing all its milk requirements. Milk Processing, Marketing and Consumption 2.10 Less than 2% of milk produced in Tanzania enters the commercial sector; most is consumed raw or slightly soured in villages. Five dairy plants serve the major urban markets; they are located in Dar-es-Salaam, Arusha, Utegi, Musoma, and Vyanwezi. Plants in Mbeya and in Tanga will begin operat- ing shortly. Tanzania Dairies Ltd has been formed to act as a holding company with the seven dairy plants as branches. The two largest plants, Coastal Dairies Industries (CDI) in Dar-es-Salaam and Northern Dairies in Arusha rely heavily on imported milk powder, butter oil and fresh milk (from Kenya) and produce reconstituted milk by recombining these with local raw milk and water, and process and pack 7t. The existing plants produce at well below full capacity, because of limited local fresh milk supplies, technical problems and outmoded or inadequate equipment. Milk is packaged in 1/2 and 1 liter packs and sold through numerous retail outlets in the large cities. Some yoghurt and cream are also produced. Local milk supplies could be increased somewhat if milk collection services and cooling centers were introduced or - 7 - extended. However, surplus milk available in the immediate vicinity of the large plants is quite limited, and major investment in collection services would be uneconomic unless substantial production increases were achieved (para 2.08). 2.11 Demand for dairy products has risen rapidly, and this trend is likely to continue as cities and towns expand and incomes rise. Milk sales could readily be doubled in many cities if fresh milk supplies were increased and plant capacity were expanded. In the rural areas, dairy products are much sought after but are available on an irregular basis; poor people are prepared to pay high prices for fresh milk (up to Tsh 1.50 per liter in some areas) when they can get it, and pay substantially higher prices for manufac- tured milk products (which are also scarce) thaa for fresh milk equivalents. Further milk production could provide a good source of income for small far- mers and would also improve levels of nutrition by supplying much-needed pro- tein and vitamins. D. Agricultural Services 2.12 The Livestock Development Division (MIFUGO) of the Ministry of Agriculture is responsible for all policy matters relating to livestock, in- cluding dairy. It carries out its policies through its veterinary, husbandry, research, training, and extension staffs and through parastatal corporations. The Livestock Development Authority of Tanzania (LIDA) was recently estab- lished as a statutory body with broad responsibilities in the field of livestock development, including marketing and production (Annex 8). Two existing parastatal companies, the National Ranching Corporation (NARCO) and Tanzania Hides and Skins Ltd. have been placed under LIDA, and tWo new subsidiary companies with responsibility for dairy development are being formed: the Dairy Farming Corporation (DAFCO) and Tanzania Dairies Ltd. (TDL) (para 2.10). NARCO is responsible for the development of large-scale beef and breeding ranches, Tanzania Hides and Skins Ltd. for curing hides and skins, DAF0 for developing large-scale dairy farms and TDL for developing and managing commercial milk collection, processing and distribution facilities. MIFUGO also runs livestock breeding units and bull centers, for upgrading cattle, and has recently launched a major Artificial Insemination (AT) program with Swedish assistance (Annex 4). Extension Services 2.13 The agricultural extension service is organized on a wegional and district basis, with policy direction and technical support provided by the Ministry of Agriculture. About 2,500 field staff are engaged in crop work and a further 800 in animal husbandry, animal health, and, to a limited extent, dairy development programs. The regional livestock staff is headed by a Regional Livestock Development officer assisted by a regional veterinary officer and, in some regions, particularly those in the Project areas, a dairy advisor. He supervises a District Livestock Officer, who has under him various - 8 - Field Officers (FOg) and Assistant Field Officers (AFOs) who constitute the field extension staff (Annex 2). AFO's are generally posted in villages. The extension staff is generally highly motivated, despite limitations of staff and funds, poor logistic support, frequent transfer of staff, and inadequate extension programs. Extension in the field of animal production (including dairy) is particularly weak, but disease control is relatively effective. Training for agricultural extension workers is generally adequate; a new training institute will open shortly in Mbeya, and will include specific training for dairy extension staff. Research 2.14 Agricultural research is carried out at twelve major centers each of which covers several crops or livestock. Livestock research is divided into production and animal disease activities. Research on animal disease has been effective, and involves routine diagnosis and classification of diseases. There is a need for further research on the traditional herd, how- ever, since little is known about the relative impact of various diseases at village level. Animal production research has been limited, and has focused on breeding and pasture development. Further research is needed, particularly for dairy, to develop effective techniques for fodder production and conserva- tion and to develop various farming systems adapted to Tanzanian conditions. E. Agricultural Credit 2.15 Tanzanian credit institutions, National Bank of Commerce, Tanzania Investment Bank and Tanzanian Rural Development Bank (TRDB) are wholly Govern- ment-owned with TRDB responsible for agricultural credit (Annex 7). It was created in 1971, as the fourth of a succession of rural credit institutions and the third since independence. It took over the operations of the former National Development Credit Agency together with agreed assets and liabili- ties. TRDB has its head office in Dar-es-Salaam and operates regional offices giving countrywide coverage. 2.16 The Government's intention when forming TRDB was that it would be- come a sound institution, competently staffed and, although Government-owned, possessing a reasonable degree of autonomy. The Bank/IDA concurred with these objectives and in support of them has agreed that TRDB should be the credit channel for a number of IDA credits in the past few years, (first and second livestock projects, and the tea, tobacco, cotton and Kigoma projects). However, it would not have been prudent for TRDB to function without substantial tech- nical support and consequently it has played a somewhat secondary role under these projects in that the major technical decisions have been taken by the specialist authority (e.g. tea, cotton and tobacco) while TRDB has acted as the disbursement, accounting and collection agency. It has thus been build- ing up its portfolio at the same time as it has been strengthening its staff and procedures. Although weaknesses still exist (para 2.17), this procedure has been satisfactory and if it continues TRDB should be capable in the future - 9 - of taking on an increasingly large share of project responsibilities. Under the Dairy Project, TRDB would function very much as it has under previous IDA projects with the exception of the Ujamaa component (paras 3.06 and 4.03) for which it would have its own technical staff and be primarily responsible for all preparation and supervision aspects. In view of TRDB's progress to date, this degree of responsibility seems appropriate. 2.17 TRDB provides long, medium and short-term credit to farmers through cooperative societies and Government guaranteed soft-term loans (3% p.a.) for particular Ujamaa development projects. TRDB is funded by a Government equity investment of Tsh113.2 million and loans of Tsh50 million. Other authorized resources of about Tsh235 million have come from IDA and other international aid funds onlent by Government with IDA accounting for about 80% of these other resources. TRDB's loan portfolio over the last three years has increased from Tsh79 million to Tshl40 million and annual net profits over the same period have increased from Tshl52,000 to Tsh946,000. Credit control is weak due to lack of staff at all levels and arrears of loan repayments falling due in fiscal 1974 were about 23%. About one-fifth of these arrears are more than 12 months old (para 4.03). Technical assistance is given to borrowers by regional representatives trained in agriculture and economics. Regional representatives and head office staff are also becoming Pore involved with project identification and preparation activities but this work is hampered by shortage of staff. In order to strengthen both its credit control and identification and preparation work, TRDB has recently engaged 18 new credit supervisors and a further 30 are presently involved in training programs prior to being appointed. It is anticipated that with this increase in staff and maintenance of good management, TRDB will, in the near future, have the capacity to prepare large scale credit projects suitable for external financing. The standard rates of interest set by Government and charged by TRDB are 8-1/2% on short-term loans and 7-1/2% on medium and long-term loans, and these rates are consistent with other lending rates in the country which range between 7-1/2% and 9-1/2%. Government, for this Project, has proposed increasing the medium-term rate from 7-1/2% to 8-1/2% per annum. III. THE PROJECT A. General Description 3.01 The Project would represent the first stage of a long-term program to develop dairy farming in Tanzania. It would over five years support the rehabilitation and expansion of commercial t' iry production on parastatal farms, improve milk collection and processing facilities, and provide the basis for dairy development in the traditional sector by supporting a pilot Ujamaa dairy program and by producing upgraded dairy heifers. It would in- clude: (a) establishment and development of 17 dairy units of about 350 cows each at 9 locations; - 10 - (b) development of small dairy units of about 20 cows each in 50 Ujamaa villages; (c) establishment of a dairy heifer breeding unit; (d) expansion of milk processing facilities, by replacement of equipment, and improvement of milk collection and distribution services; and (e) technical services to include: within the Livestock Development Authority, the services of five group managers, a manager for the heifer breeding unit, and specialists on machinery maintenance, dairy husbandry and pasture improvement, a dairy economist and provision for consultancy work on irrigation, processing and farm structures; within TRDB, a project preparation team consisting of a livestock specialist, an agriculturalist, an animal re- sources and extension specialist, and a pasture specialist backed up with consulting services; within the Ministry of Agriculture's Livestock Development Division, a veterinary economist to conduct a program of applied investigational work for animal disease control. 3.02 The Ministry of Agriculture would have overall responsibility for Project implementation. The proposed dairy units would be owned by DAFCO, 8 units; Kilimanjaro Native Cooperative Union (KNCU), 3 units; TSC, 5 units; and National Agricultural and Food Corporation (NAFCO), 1 unit while LIDA, through its subsidiary DAFCO, would be responsible for managing the units. TRDB, with the regional livestock staff, would be responsible for the Ujamaa dairy program, NARCO (para 2.12) would establish the West Lake heifer breeding unit, and TDL (para 2.10) would be responsible for the milk processing and collection component. Ministry of Agriculture, LIDA and TRDB would direct and coordinate technical services. 3.03 The Project would have a dual objective. The first: To increase milk production on Government-owned dairy farms, many of which already exist and urgently require substantial investments and improved management. Milk thus produced would help to fill the large deficit of dairy products for the major urban markets, and should permit the Government to reduce imports of dairy products. The second objective: to develop dairy in the traditional sector, by training managers, producing required basic stock, and developing appropriate farming patterns. This should provide the basis for a second dairy project that would strengthen dairy extension services, extend rural processing facilities, and provide essential inputs such as credit. B. Detailed Features Dairy Farms (Annex 10) 3.04 Seventeen dairy units of about 350 cows each would be developed or established on nine farms in five regions (see map). Seven new units would . - 11 - be established and ten units would be rehabilitated and expanded. The condi- tion of these farms varies widely, ranging from quite successful dairy farms to very run-down farms with animals in poor condition. Two new farms would be established also. The farms are located near existing or planned pro- cessing facilities. Modern intensive dairy farming practices would be follow- ed, with the predominantly exotic cattle of various breeds already there. Because of the short harvest season, a high degree of mechanization is nec- essary to produce and preserve sufficient fodder for the long dry season. The objective would be to achieve high herd average milk yields, estimated at 3,100 liters per lactation (Annex 9 - herd projections) throughout the year. The farms would, in addition to producing milk for the urban markets and steers and improved heifers, serve as a nucleus for development of farming techniques applicable to different regions and geographic conditions, and for training managers and farmers in dairy farming. They would share machinery with smaller farms in the vicinity where possible. Development of these units should per- mit the Government to develop parastatal dairy farming models that could be extended to other farms in the future. On some farms, plantation crops (coco- nuts, coffee, sisal) or food grains are now produced and could be continued and extended if such activities complement dairy (providing concentrates or fodder) and are profitable. 3.05 Investment required would vary according to the state of existing facilities, equipment and cattle and local conditions (need for water develop- ment, availability of labor). The main items financed would include buildings and installations, water development, equipment for pasture development and fodder production and preservation, milking machines where local conditions require them, cooling equipmept, vehicles, cattle, and working capital which would be one year of incremental operating expenses for each unit (Annex 9, Tables 2, 6, 10, 15, 19, 23, 27, 31, 35, and 38). Ujamaa Dairy Farms (para 2.06) 3.06 Small (20-cow) dairy units would be developed in 50 Ujamaa villages in regions with good potential for dairy (Annex 9, Table 39), as a pilot program to develop dairy in Ujamaa villages. These units would be based on upgraded cattle from the heifer breeding unit and to some extent from the dairy farms in the Project (para 3.07), and would be run as communal ventures, with milk sold within the village in most instances. Since no strong tradi- tion of Ujamaa dairy farming exists, careful planning would be required to select villages and to prepare appropriate farming systems. TRDB, with the regional livestock services, would undertake this planning, prepare village investment plans, and supervise development of the units (para 4.05). In most cases the dairy unit should be one of several communal ventures pro- ducing cash revenues. The alternative cash revenues would be used to service the loan since at its start, this development could entail significant risk due to animal deaths, and, it is likely that the milk produced would be con- sumed rather than sold for cash. This program should help to develop the technical and institutional base for future dairy projects. The principal investment items for the dairy units would be simple buildings and installa- tions, including fencing, some equipment, livestock and working capital (Annex 9, Table 40). - 12 - West Lake Heifer Breeding Unit (Annex 11) 3.07 A breeding unit would be established at NARCO's Kitengule and Missenyi ranches in the West Lake Region (see map) to produce about 1,800 dairy heifers a year, for sale to dairy farms, individual farmers, and Ujamaa villages. These heifers would be essential to build up herds for future dairy projects and on the dairy farms and Ujamaa dairy units developed under this Project. The breeding program would use 6,000 zebu-boran cows existing on the ranches, and would be based on artificial insemination with imported semen from pedigree dairy bulls. High grade bulls are available at the ranches to allow for any breakdowns in the AI program. The program would experiment with different dairy breeds, but most heifers would probably be first cross zebu-boran-friesian. Higher grade heifers could also be produced if there were a demand for them. Heifers would be reared on the ranches and sold at about eighteen months. The breeding unit would share facilities and equipment with the ranches, which would continue their beef operations. Items financed would include some additional buildings, fencing, a nitrogen plant for semen storage, breeding stock, and working capital (Annex 9, Table 47). Milk Collection, Processing and Distribution 3.08 The Project would improve milk collection systems in Dar-es- Salaam and Arusha, and processing and distribution facilities in Dar-es- Salaam. Coastal Dairies Industries (CDIL - Annex 6), Dar-es-Salaam would develop a milk collection system, which has not existed in the past. Two collection centers with 3,000 liters daily cooling capacity and one seven- ton tanker for transporting milk would be provided. The cooling units would be located on dairy farms, and would serve neighboring small producers. Equipment would be provided to extend and improve the collection system operated by Northern Dairies, Arusha. The facilities of CDIL would be expanded, out-moded equipment replaced, and new equipment provided to permit a doubling of processing capacity, to remove bottlenecks that have prevented full utilization of existing capacity, and to permit expansion of yoghurt production. Vehicles would also be provided to improve CDIL's milk distribution. The principal investment items would include construction of the expanded plant, cooling and processing equipment, dnd processing equipment, and vehicles for transport (Annex 9, Tables 50, 51, 52 and 53). Technical Services (Annex 9, Table 54) 3.09 Technical Assistance and Project Preparation. Technical assistance would be provided for the dairy farms, the West Lake heifer breeding unit and the Ujamaa dairy units, to train Tanzanian managers, develop management sys- tems and administrative procedures, and prepare future dairy projects. Due to the detailed technical aspects of these functions, it is unlikely that many of these positions could be filled by Tanzanians. Salaries of interna- tionally recruited specialists (about 14) and logistic support would be pro- vided for: (a) Dairy Farms - five group managers to assist in developing farm plans, manage a group of dairy farms for the first three years of each unit and provide technical support for other - 13 - dairy development. Additional technical support would be provided at LIDA headquarters, and would include specialists in machinery maintenance, dairy husbandry, pasture improve- ment, and dairy economics, and there would also be provision for consultancy work on irrigation, processing and far., structures. (b) Heifer Breeding Unit - A farm manager to develop the farm plan and manage the farm. (c) Ujamaa Dairy Unit - A project preparation team to include specialists in livestock and agriculture for three years each and specialists in animal resource/extension and pasture develop- ment for two years each. (d) Applied In estigation Work (Annex 12). A pilot program on the impact of Foot-and-Mouth Disease, other animal diseases and existing animal husbandry practices on the traditional cattle herd would be initiated. This program would be designed to analyze existing information on herd coefficients and the reported incidence of FMD and other diseases and to conduct applied investigational work at village level to measure losses in production that result from FMD ou,tbreaks. The principal items for this component would be a veterinary economist and staff and logistic support. (e) Financial Specialist - TRDB would be provided with consultant support to help determine its arrears position and develop effective recording systems for outstanding debts. (f) Training, monitoring and evaluation - funds would be provided for overseas fellowships and short courses on dairy farms to develop skills in dairy farming techniques, and for studies to assist in monitoring and evaluating Project performance. Operating Expenses and Working Capital 3.10 It will take 5 years of concentrated attention by the technical services staff to establish the income earning capacity of the farms. The operating costs of these services have therefore been considered as investment costs for the five-year Project period. Farm working capital is considered to be the first year's operating costs; the Project costs provide for farm working capital. C. Project Costs (Annex 13) 3.11 Total Project costs are estimated at Tsh 109.4 million (US$15.3 million), of which Tsh 52.4 million (US$7.3 million) or 48% represents foreign exchange requirements. Details are summarized in the following table: -114- Foreign Local Foreign Total Local Foreign Total Exchange -------Tsh millions------ ------US$ millionE------ % Government Daiy Farms 18.3 16.3 34.6 2.6 2.3 4.9 47 Jaaa Dairy Development 2.7 .5 3.2 .4 .1 .5 16 WeEt Lake Heifer Breeding Unit 9.3 1.0 10.3 1.3 .1 1.4 10 Milk Collection and Processing .5 3.0 3.5 .1 .4 .5 85 Technical Services Dairy Farms & Heifer Breeding Unit 3.0 ?.5 10.5 .5 1.0 1.5 67 Ujamaa Units (Project Preparation) 1.4 3.5 4.9 .2 .5 .7 71 Animal Health - Applied Investigational Work 1.3 L.3 2.6 .1 .2 .3 67 Training, Monitoring, Evaluation, etc. .3 .7 1.0 - .1 .1 100 6. 13.0 19.0 7 1 Total Project Cost before contingencies 36.8 33.8 70.6 5.2 4.7 9.9 48 Contingency Allowances Physical at 10% 3.7 3.4 7.1 .5 .5 1.0 48 Price escalation at 15% p.a. 16.4 15.2 31.6 2.3 2.1 1.1 18 Subtotal 20.1 18.6 38.7 2.8 2.6 5.4 48 Total Project Cost 56.9 52.4 109.3 8.o 7.3 15.3 48 Price contingencies reflect recent and expected conditions in Tanzania. In computing cost, prices at March 1975 levels were used. - 15 - D. Financing 3.12 Financing of Project costs would be shared as follows: Tsh US$ (million) (million) % Government of Tanzania 30.0 4.2 27 Parastatal corporations 7.6 1.0 7 Ujamaa villages 0.4 0.1 1 IDA 71.4 10.0 65 Total 109.4 15.3 100 3.13 The proposed IDA credit of US$10.0 million would be to Government on standard IDA terms. The credit would finance about 65% of total Project costs, including foreign exchange costs and 33% of local costs. The Govern- ment's contribution and that of the parastatals would amount to about 35% of total Project costs, which would be offset to the extent that Project costs include about US$0.2 million for taxes and duties. IDA's contribution ex- cluding taxes and duties would be about 66% of total Project costs. 3.14 All funds, excepting those for technical services, would be channelled by Government to TRDB at 4% interest per annum for 20 years with a 5-year grace period on interest and principal. Loans from TRDB to DAFCO, TSC, NARCO, KNCU, NAFCO and Ujamaa units would be at 8-1/2% for 15 years with four years grace period on interest and principal while the loan to TDL would be at 8-1/2% for 8 years and no grace period. The rate of 8-1/2% for medium-term loans represents a one percentage point increase over the existing rate charged by TRDB for such loans (para 2.16). Loans advanced by TRDB would be equivalent to the investment models (Annex 9) excluding working capital as beneficiaries would contribute their own working capital requirements. Funds for technical services would be channelled directly by Government to TRDB, LIDA and MIFUGO and would take the form of grants. Assurances as to the above arrangements were obtained at negotiations. A condition of credit effectiveness would be that a subsidiary loan agreement between Government and TRDB acceptable to IDA had been executed. E. Procurement 3.15 Machinery for milk processing (US$0.2 million excluding contingencies) would be purchased directly from the supplier of the plants' existing equipment to ensure conformity and economies on spare parts and service. Other contracts -16- for machinery, equipment and vehicles (US$2.0 million) would be awarded after international competitive bidding in accordance with Bank/IDA guidelines. In evaluation of bids, local manufacturers would be allowed a preference margin of 15% or the existing rate of Import duties, whichever is the lower. Civil works contracts (US$1.9 million) which would be small and scattered throughout the country and unlikely to attract international bids, would be tendered locally (about US$1.3 million) or constructed by force account (about US$0.6 million). There is sufficient local competition in most regions for works of this kind. Construction works for Ujamaa units (US$0.1 million) would be done by village labor. Cattle would be purchased locally (US$2.3 million). All orders would be bulked to the maximum extent possible. Government procurement procedures, which are satisfactory, would apply to small individual purchases not to exceed US$50,000. Draft tender documents for all contracts exceeding US$50,000 would be submitted to IDA for approval before invitations were issued. Assurances were obtained at negotiations that the above procurement pro- cedures would be followed. Retroactive financing may be required for technical assistance but this would not exceed US$50,000. F. Disbursements (Annex 14) 3.16 Funds from the Credit Account would be disbursed on the following basis: (a) 80% of each loan approved by TRDB (para 3.14) for development of dairy farms, ujamaa units, heifer breeding unit and milk collection and processing (US$6.5 million); (b) 100% of the foreign or 80% of local expenditures for technical services salaries, fees and equipment (US$2.Omillion). Disbursements against (a) would be made on the basis of certificates of ex- penditure indicating that procurement procedures specified in the Credit Agreement had been followed and that the related investments are only for investment plans approved by IDA. The documentation would not be submitted for review, but would be retained by the borrower and made available for inspection by IDA during the course of Project supervision. Disbursements against (b) would be fully documented. Any funds remaining in the credit account following completion of the Project would be used at the discretion of IDA for other Project-related activities. G. Accounts and Audit 3.17 TRDB, LIDA, TSC, KNCU and NARCO would maintain separate records and accounts for the Project adequate to explain all Project related activities. DAFCO and NARO would maintain for each farm all cost and other information necessary for proper management control. Assurances as to these arrangements were obtained at negotiations. While TRDB's operating policies are satis- factory there is a need for improvement in loan supervision and organization - 17 - of information on outstanding debts (para 2.16). Assurances were obtained at negotiations that a consultant would be employed to assist TRDB in develop- ing effective recording systems for its portfolio and in improving procedures for loan supervision. 3.18 The accounts of TSC are audited by an independent private auditing firm. Under-the Livestock Development Authority Act 1974, the Tanzania Audit Corporation (TAC), which audits the accounts of TRDB, KNCU, NARCO and other parastatal organizations, was appointed the auditor of LIDA and its subsidiaries (DAFCO, TDL, etc.). In the past there have been delays in TAC presenting audited accounts due to a shortage of personnel. Government and TAC, with the assistance of Swedish aid, have made considerable efforts and have suc- cessfully overcome this problem. The accounts of Government Ministries are audited by the Auditor General who has a satisfactory degree of independence. Assurances were obtained at negotiations that the accounts of TRDB, NAFCO, KNCU and TSC, LIDA and its subsidiaries (NARCO, DAFCO and TDL) would continue to be audited by independent auditors acceptable to IDA; and that a certified copy of these accounts and detailed auditors reports thereon would be submitted to IDA within six months following the end of their financial year. The Government were reminded at negotiations that TAC's continued acceptability would be dependent upon maintaining its achievement of high auditing standards and timely production of audit reports. H. Project Reporting (Annex 15) 3.19 Detailed procedures for reporting are described in Annex 15, and the suitability of these were discussed and agreed at negotiations. IV. ORGANIZATION AND MANAGEMENT Project Management 4.01 The Ministry of Agriculture would have overall responsibility for all Project activities. LIDA and its subsidiaries (DAFCO, 7ARCO, TDL), TSC, NAPCO and TRDB are already under the general direction of the ministry. A Co- ordinating Committee would be established for the Project. It would include the Director of Livestock Development of the Ministry of Agriculture, the Managing Director of LIDA, the General Manager of TRDB, a representative of the External Finance Division of the Treasury, a representative from the Prime Minister's Office, representatives from TSC, NAFCO and KNCU and the Project Co-ordinator. The Head of Technical Services in LIDA would be appointed as Project Co-ordinator. The committee, whose members, with the exception of the project co-ordinator and the TSC, NAFCO and KNCU representatives, are all - 18 - represented on the LIDA board of directors, would meet quarterly and would have responsibility for policy guidance, coordination and reporting to IDA. Separate Project components would be managed as follows: the dairy farms by LIDA's subsidiary, DAFCO, and the Ujamaa dairy farms by TRDB and the Regional Livestock Services, the West Lake Heifer Breeding Unit by NARCO (LIDA subsidiary), the milk collection and processing component by TDL (LIDA sub- sidiary); and technical services by the Ministry of Agriculture, TRDB and LIDA. LIDA 4.02 The Livestock Development Authority of Tanzania (LIDA - para 2.12 and Annex 8) would supervise implementation of those parts of the project to be carried out by its subsidiaries, DAFCO, NARCO and TDL. LIDA was es- tablished as an operational organization in July 1974, and it functions as a holding company with five service divisions (procurement, administration, finance, marketing and technical services), and the four subsidiary com- panies named above (para 2.12). The service division chiefs are currently employed by LIDA and are assisted by a staff of about ten. The Managing Director of LIDA is responsible to a Board of Directors, appointed by the Minister of Agriculture, and the chairman is appointed by the President. LIDA's resources include funds provided by Parliament either as grants or loans, loans from Government or other sources, and revenues from its operations. Due to the highly technical nature of the Project LIDA would be assisted in its Project activities by nine internationally recruited technical specia- lists (Annex 9, Table 54). TRDB (paras 2.15-17, Annex 7) 4.03 TRDB would be the channel for IDA financed loans for dairy farms, ujamaa units, the heifer breeding unit and milk collection and processing (para 3.14). It would have direct responsibility for preparing and supervising loans for Ujamaa dairy units, in conjunction with the regional livestock services. TRDB would approve loans on the basis of investment plans prepared by the responsible agencies. TRDB's normal procedures and staff are adequate to carry out this function. For the Ujamaa dairy program, which would in- volve substantial preparatory activities for future projects (para 3.03), a special unit would be established including internationally recruited specia- lists and counter-part personnel. Project Developments 4.04 Dairy Farms. DAFCO would manage the dairy farms. TSC, KNCU and NAFCO already operate or are developing some of the proposed farms (para 3.02). Each unit would be managed by a Tanzanian farm manager and an assistant manager. Units would be grouped under the general direction of five group managers who would be internationally recruited, and who would supervise between two and five units, depending on location and development work required (Annex 10 para 54). The group manager would live on one of the farms in his group. - 19 - The group manager and farm managers would prepare an investment plan for each farm (para 3.04), which would be submitted for review to the Head of Technical Services within LIDA. TSG,NAFCO and KNCU plans would then be returned to their Boards for final approval. Each of the plans would then be forwarded to the coordinating committee for approval and submission to TRDB. These plans would cover the farm management system to be employed, with particular attention to feeding programs, fodder production and conservation, pasture improvement, breeding policies, and recommended milking technique. The plan would include basic data on the farm and the proposed phasing of investment. Assurances were obtained at negotiations that: (a) DAFCO and TSC had obtained title to farms to be developed by them; (b) Farm investment plans would be submitted to IDA for approval; the outlines of these are set out in Annex 9; (c) LIDA would consult with IDA on the appointment of group managers and farm managers. It would be a condition of credit effectiveness that at least three group managers had been recruited, and of disbursement for each group of farms that the group manager for that group had been recruited and that a contract satisfactory to IDA had been signed between DAFCO and each of KNCU, NAFCO, and TSC. 4.05 Ujamaa Dairy Units. TRDB would prepare plans for the Ujamaa dairy program, including general guidelines and criteria for development, recom- mended farming systems, and individual loan documents for each of 50 Ujamaa villages. They would be assisted by the regional livestock officers through- out the program, but particularly in the implementation stage. Internation- ally recruited specialists with specific responsibility for this program would be a livestock specialist, agriculturalist, and agricultural economist, and consultant services for pasture development would be needed within TRDB. These specialists, located in Dar-Es-Salaam, would provide assistance to TRDB staff in Dar and in the regions. This same team would assist TRDB, LIDA and the Ministry of Agriculture in preparing future dairy projects, with primary emphasis on village level developments. In preparing the Ujamaa dairy loans particular attention would be accorded to: (a) existing herd size, experience with livestock and dairy, and previously expressed village interest in dairy; (b) suitability of the site for dairy, particularly altitude and rainfall; (c) capacity of regional livestock services to provide technical assistance; (d) alternative sources of cash income for villages; (e) proximity to project parastatal dairy farms; (f)aninal health situation; and (g) proposed disposition of milk (sale or consumption). Assurances were obtained at negotiations that detailed plans for Ujamaa dairy development, including a list of Ujamaa villages with general data on them, would be submitted to IDA for comment before loans were made. - 20 - 4.06 West Lake, Heifer Breeding Unit. NARCO already manages the Kitengule and Missenyi beef ranches where the heifer breeding unit would be located, and, would develop and operate the breeding unit there. An internationally re- cruited veterinarian would supervise the breeding program, while a NARCO man- ager would oversee general operations. A detailed development plan would be prepared and submitted to LIDA and TRDB for approval. Assurances were obtained at negotiations that this plan would be submitted to IDA for approval within six months of loan signature. 4.07 Milk Collection and Processing. TDL would be responsible for the milk collection and processing component, through its CDIL, Dar-es-Salaam, and Northern Dairies, Arusha (para 3.08). These are both well established and have adequate management to carry out the Project. Plans for the plant expansion at CDIL have already been prepared, and CDIL and Northern Dairies would prepare tender documents for plant and equipment, with assistance from LIDA. 4.08 Technical Services. With the exception of technical assistance for respective Project components described above, Ministry of Agriculture would be responsible for technical services, including the applied investi- gational work program (para 3.09) to be supervised directly by the Director of Livestock Development and his research service, training and special monitoring and evaluation studies. Assurances were obtained at negotiations that a detailed proposal for the applied investigational work program for animal disease control would be submitted to IDA for comment. V. PRODUCTION, MARKETING AND PRODUCER BENEFITS Production 5.01 Project production would be derived from increased production of milk, production of high grade heifers, additional steers, improved milk collection services, and increased processing capacity. Project non-commercial production in Ujamaa villages is estimated at 1.1 million liters a year in- crease. Total milk production in Tanzania is currently estimated at 500 million liters a year with about 10 million liters entering commercial markets. Annual incremental Project production by year 5 would be about 10 million liters of milk, valued at Tsh 12.3 million (US$1.7 million), and by full development in 1987 (year 11), it would be about 15 million liters of milk, valued at Tsh 18.4 million (US$2.6 million), 2,850 dairy heifers, valued at Tsh 4.0 million (US$0.6 million), and other livestock sales valued at Tsh 7.2 million (US$1.0 million). 5.02 Milk produced on project parastatal dairy farms and provided through the improved collection system would be sold to the commercial dairies. On completion of planned plant expansions, including those proposed under this - 21 - Project, the capacity of the processing facilities should be adequate to handle the anticipated increased volume (para 2.10, 3.08). Milk produced in Ujamaa villages would in general be sold within the village, but in,some instances surplus milk might be sold to commercial dairies. Heifers produced by the parastatal dairy farms, the Ujamaa dairy farms, and the heifer breeding unit would be sold through existing marketing channels, where there is a substantial demand for such animals. Steers would also be marketed through these channels. 5.03 Milk prices are controlled at the producer and retail levels for commercially processed milk. Producer prices are established at the region- al level in consultation with processing plants, and in the past these prices have varied among regions. Retail milk prices are also set by regional authorities. Prices for milk sold outside commercial channels fluctuate widely according to season and level of supply in the region; in many cases these consumer prices are higher than the price paid by the dairies, although compulsory marketing orders oblige producers to sell milk to dairies if they exist in the vicinity. The Government has attempted to keep milk prices low since milk is viewed as a product of primary necessity, but has indicated that it will increase the price to ensure an adequate level of milk produc- tion in Tanzania. Current prices range from Tsh 0.5 to Tsh 1.14 per liter with the average being about Tsh 1.00. A uniform national milk price of Tsh 1.25 a liter (US$0.8 per gallon) to producers has been proposed. This price level should assure an adequate financial return on dairy farms at current price levels, and is reasonable in that it is equivalent to prices paid at present for imported skim milk powder and butter oil used for producing reconstituted milk (Annex 5, Table 7). Pricing policies will assume greater importance in future as the commercial market is extended, with construction of new processing facilities, and as the traditional dairy industry expands. Price levels should therefore be reviewed on a regular basis to ensure that they are set at a level that will assure an adequate return both to large and small producers. Assurances were obtained at negotiations that con- sultations on milk price levels would be held with IDA from time to time not less frequently than annually. The Government confirmed its intention to raise milk prices to Tsh 1.25 per liter. Heifer constant 1975 prices are Tsh 1,400 (US$198) although at full development grade heifers produced at Government dairy farms would probably be worth significantly more. 5.04 Milk produced in Ujamaa villages would represent increased consump- tion. Milk sold to commercial dairies would subsititute for imported dairy products and would thus reduce import requirements, and represent savings of foreign exchange of about Tsh 20.0 million (US$2.7 million) annually at full development. The annual net foreign exchange saving would be about Tsh 12.5 (US$1.8 million) in 1987. Milk produced by the Utegi and Tanga farms would be required for processing plants there to operate at economic levels (Annex 6). - 22 - Producer Benefits 5.05 Financial rates of return on investments 18% for dairy farms, 28% for the Ujamaa dairy units, and 33% for the West Lake Heifer Breeding Unit (Annex 17). In calculating these returns constant prices estimated at March 1975 levels and, the Government's proposed milk price of Tsh 1.25 per liter were used (para 5.03). Milk pro6uced by Ujamaa villages was valued at Tsh 1.0 per liter to allow for transport and collection costs. The returns for some of the dairy farms and for the heifer breeding unit reflect incremental investments, since farms are already operating. An important benefit from the Project which cannot be quantified would be the development and demonstration of dairy farming techniques, which would be an essential prerequisite for future dairy development, both through parastatal companies and at village level. Farmer Benefits 5.06 Ujamaa vilages participating in the Project would derive bene- fits either in the form of increased milk for consumption (and thus improved levels of nutrition) or its equivalent value as cash revenue, estimated at Tsh 21,600 (US$3,000) per village annually at full development, and Tsh 14,000 (US$2,000) annually from livestock sales (excluding price con- tingencies). Government Benefits 5.07 The dairy farms, heifer breeding unit, and milk collection and processing services would produce revenues for parastatal companies. Sur- pluses would be available to be turned over to the Government Treasury. Pro- ject-related cash flows are shown for the Government in Annex 18, for TRDB in Annex 7, Table 3, and for LIDA in Annex 8, Table 1. Taking into account other Project costs and service on the IDA credit, repayments from TRDB for Project loans and transfer of surpluses from LIDA, TSC, NAFCO, NARCO and TRDB, the Project is expected to result in a net cumulative cash surplus to the Government of Tsh 13.6 million (US$1.9 million) by year 5 and Tsh 123.7 million (US$17.3 million) by year 15 (excluding price contingencies). VI. ECONOMIC BENEFITS AND JUSTIFICATION Benefits 6.01 The benefits of the Project would consist of increased production of milk and high grade dairy heifers (para 6.01), which would result in savings of foreign exchange and increased milk consumption in villages where nutritional levels are low. - 23 - Economic Rate of Return (Annex 19) 6.02 The economic rate of return from the Project is estimated at 18% over 25 years. Project investment and operating costs with the exception of the applied investigational work program for animal disease control and that part of technical assistance intended for future project preparation were included in the rate of return calculation. The cost of unskilled labor on farms and Ujamaas was valued at one half the prevailing wage rates, which reflects the value of foregone subsistence production. All other labor costs, for construc- tion and for processing plants, were valued at prevailing wage rates, which are assumed to reflect the economic cost of this type of labor. Foreign exchange costs and benefits were valued at Tsh 10 per US$1.00 to reflect the scarcity value of foreign exhcange; if it were valued at the prevailing exchange rate (Tsh 7.14 = US$1.00), the overall economic rate of return would be reduced by 2 percentage point to 16%. Separate financial rates of return have been cal- culated for those separate Project components which are directly productive (para 5.05), and each of these is satisfactory; in each case the economic rate of return would be higher. Milk prices were assumed to be Tsh 1.25 per liter at the outset of the Project, which is the price currently paid by CDIL for the equivalent imported ingredients required to produce a liter of reconstituted milk (para 5.03); this price was reduced by 1% a year to 1980 to take irto account anticipated declines in world milk powder prices. Sensitivity and Risk 6.03 An increase in total costs of 10% would lower the rate of return by 4 percentage points to 14%. A decrease in total benefits of 10% would lower the rate of return by 4 percentage points to 14% (Annex 19, Table 2). The principal risk involved in this Project relates to the success of farm manage- ment on the dairy farms and the heifer breeding unit. The Project requires a high degree of technical expertise together with sound management skills, par- ticularly in training of Tanzanian managers. If management is not of high standard, expected high milk yields will not be achieved, yields being highly likely to remain at their predevelopment level or to decline, resulting in the farms not being financially or economically viable. Care should be exercised by the Government and IDA to develop the institutional and procedural framework that will promote development of the managerial capacity required. The Ujamaa villages involve a high risk since experience with this farming model is'very limited, and the program is essentially a pilot effort. However, given the volume of production in the traditional sector at 475 million liters annually (more than 90% of total milk production), the benefits resulting from the program could be enormous. The quality of management within this program and the amount of Government support are crucial. Offsetting tb:se risks, however, are the benefits the Project would offer in developing the trained manpower and technical basis that would be required to develop a viable dairy industry in Tanzania. - 24 - Employment and Income Distribution 6.04 Fifty Ujamaa villages, with an estimated population of 50,000 peoplb, would derive additional cash revenue of Tsh 36,000 (US$5,000) per annum per village, or the equivalent value in additional milk for village consimption (para 5.01). The Project would provide additional revenue for the Government which could be used in its programs to promote rural development and balanced regional development (para 5.07). The Project would provide employment for an estimated 650 persons who would be employed on parastatal farms; an additional 300 persons would be employed during the construction period. VII. RECOMMENDATIONS 7.01 During negotiations, assurances were obtained on the following points: (a) that farm investment plans would be submitted to IDA for approval; (b) that LIDA would consult with IDA on the appointment of group managers and farm managers (para 4.04); (c) that detailed plans for Ujamaa dairy development, including a list of Ujamaa villages with general data on them, would be submitted to IDA for comment before loans were made (para 4.05); (d) that a detailed development plan for the West Lake heifer breeding unit would be submitted to IDA for approval within six months of loan signature (para 4.06); (e) that a detailed proposal for the applied investigational work program for animal disease control would be submitted to IDA for comment (para 4.08); (M) that consultations on milk price levels would be held with IDA from time to time not less frequently than annually (para 5.03). 7.02 Conditions of credit effectiveness would be: (a) that a subsidiary loan agreement between Government and TRDB, acceptable to IDA, had been executed (para 3.14); (b) that at least three group managers for dairy farms had been recruited (para 4.04). - 25 - 7.03 A condition of credit disbursement for each group of dairy ,farms would be the recruitment of the group farm manager for that group and that a contract satisfactory to IDA had been signed between DAFCO and each of KNCU, NAFCO and TSC (para 4.04). 7.04 The Project is suitable for an IDA credit of US$10.0 million on standard IDA terms. May 13, 1975  ANNEX 1 Page 1 TANZANIA DAIRY DEVELOPMENT PROJECT The First and Second Livestock Projects First Livestock Development Project 1. The first IDA credit for livestock was made in 1968 for US$1.3 million to cover 65% of a beef ranching development with a total cost of US$2 million. The project aimed to increase the output of beef, expand the production of improved breeding stock and demonstrate the advantages of modern ranching techniques by developing five cattle ranches and providing technical services and a training program for ranch management. Ranch de- velopment was satisfactory and early difficulties were overcome. Poor man- agement on two ranches was rectified by replacing managers with experienced staff. Severe drought conditions resulted in high cattle mortality on one ranch and cattle rustling led to unexpected transfers of stock from one ranch to another. A problem outside NACO's control was the low fixed meat prices prevailing in Tanzania. Prices though still controlled have been substantially increased. Generally, this project demonstrated the feasi- bility of establishing an efficient beef industry in Tanzania. Second Livestock Development Project 2. The second IDA credit for livestock was made in 1973 for US$18.5 million to cover 75% of the costs of a broadly based program aimed at in- creasing beef production in Tanzania through ranch development, meat pro- cessing and by improving essential infrastructure. The Project included: (a) development of 11 NACO ranches, four DDC ranchers, and 22 ujamaa cooperative ranches; (b) development of three large markets, 10 medium-size markets, and 20 small markets and the remodelling of 104 small existing markets; (c) development of 2,300 km of new stock routes and 2,200 km of existing stock routes and establish- ment of four new holding grounds and improvement of 23 existing ones; (d) reconstruction of one meat processing plant (TPL) and the construction of two new ones; and (e) provision of technical services, training and project preparation. ANNEX 1 Page 2 3. Ranch development has been much slower than anticipated due to management problems in the processing of ranch development plans. Only 4 NACO and 2 DDC ranch development plans have been approved. Development of the NACO ranches is progressing satisfactorily but slowly. Now plans have been approved for the development of Ujamaa ranches. Of the 13 key staff only 7 are in post. Recruitment arrangements are unsatisfactory. Manage- ment has been restructured following the establishment of LIDA and the sit- uation is expected to improve. The marketing program is also moving ahead slowly. The meat processing component has suffered from recent inflation. Original appraisal estimates for this component were US$6 million against bid quotation of around US$19 million. IDA has agreed to an alteration in disbursement categories to enable the credit to be used in the financing of the TPL reconstruction and the construction of the Shinyanga plant. May 13, 1975 ANNEX 2 Page 1 TANZANIA DAIRY DEVELOPMENT PROJECT Agriculture and Livestock in the Economy Geography and Climate 1. Tanzania, located in East Africa between latitudes 1 and 12* South and longitudes 29* and 400 West, has a total land area of 91 million ha. Nearly all of the country, with the exception of a narrow coastal belt in the west, is over 300 m above sea level and more than half is above 1,000 m. The country can be divided broadly into five agricultural areas: (a) the eastern coastal belt extending from Kenya in the north to Mozambique in the south (sisal, rice, cashew nuts, copra, and cotton); (b) the Iringa/Mbeya regions which, together, make up the Southern Highlands in the southwest (tea, coffee, maize, tobacco, potatoes, pyrethrum, and livestock); (c) the central plateau encompassing the Dodoma, Tabora, and Kigoma regions (groundnuts, maize, palm oil, sun- flower and castor seed, tobacco, cotton, and live- stock); (d) the area adjacent to Lake Victoria, extending from Bukoba in the west around the lower extremities of the lake to Mwanza and beyond on the eastern shore (coffee, bananas, tobacco, tea, coffee, cassava, and livestock); (e) the north central area, comprising Arusha and Kilimanjaro (coffee, potatoes, vegetables, sugar, sisal, wheat, barley, coffee, pyrethrum, and live- stock). 2. Most of the country experiences a dry season from June to October and a rainy season between November and May. Many areas also have a short dry season in December. Annual precipitation varies from around 500 mm a year in Dodoma to 2,000 mm and above in the Bukoba Region and parts of Mbeya and Iringa. Temperatures vary from a typical tropical pattern in the eastern coastal belt to a temperate one in the Southern Highlands, where a considerable expanse of good agricultural land lies at elevations of 2,000 to 3,000 m. ANNEX 2 Page 2 Livestock in the Agricultural Economy 3. Agriculture provides a livelihood for some 90% of Tanzania's 13.5 million people, the majority of whom live at subsistence levels. The total value of agricultural production in 1973 was approximately US$500 million which represented some 38% of GDP. Cotton, sisal, livestock, coffee, cashew nuts, tea, groundnuts, pyrethrum, and tobacco are the most important agri- cultural export products. Total beef offtake amounted to approximately 11% of total agricultural production. 4. The total value of agricultural exports in 1972 was about US$134 million, of which about US$6 million, or 4.3%, were from processed and live beef cattle. Because of uncertain market prospects for the three most im- portant export crops--coffee, cotton,, and sisal--diversification of produc- tion, with emphasis on beef production, is given high priority by Govern- ment. Considering that Tanzania has a beef herd of some 10 1/ million head, the second largest on the African Continent, and extensive range and grass- lands and equitable climate, the possibilities for expanding beef production are good. 5. The local cattle are a mixture of breeds, with Zebu blood pre- dominating, but overall they might be descriled as a small, unimproved type. The mature weight of cows ranges from 240 to 280 kg. In the past, various breeds, including the Shorthorn, Holstein, Devon, Angus, and Boran, have been used to upgrade the quality and size of the Zebu, but the most successful cross, from a commercial point of view, appears to be the Zebu and Boran. Steers have reached mature weights of 480 kg, according to records kept by NACO at the Kongwa ranch. For the full potential of these crossbred animals to be realized by the traditional farmer, however, there would have to be a considerable increase in the general standard of feeding, management, and disease control. 6. An estimated 85% of the national herd is distributed throughout the northern part of the country, with the heaviest concentrations in Mwanza, Shinyanga, Musoma, and Singida regions and lesser concentrations in the Dodoma' Arusha, and Kilimanjaro regions. This pattern is largely de- termined by the distribution of the tsetse fly, which limits cattle raising in the southeast and west of the country, except for the Mbeya region in the southwest. Cattle are a multipurpose resource for the traditional farmer, supplying milk, and providing beef when slaughtered; manure is utilized as fertilizer for the soil and as fuel; a power source as draft animals, and as raw materials for craft use. Only a small percentage of the national herd, 1/ Previous estimates had put the national herd at about 13 million head. A 1972 census, however, indicated that the actual herd size was 9.5 million head. Since there are indications that there was some under- counting in the census, the figure 10 million is used here; it is clear, however, that this is a rough estimate. ANNEX 2 Page 3 about 250,000 cattle, is found in the commercial sector and these are largely managed by the Government through parastatal corporations or to a smaller extent by the District Development Corporations. 7. In the Mwanza, Shinyanga, Musoma, and Singida regions, the Sukuma people are the main cattle owners, running small herds (average, 20-30 head) to supplement their earnings from cotton and maize, which are the principal income earners. In the Dodoma, Arusha, and Kilimanjaro regions, the Gogo and Masai peoples run bigger herds (average, 50 head), which tend to provide most of the family income. The Sukuma, the Gogo, and the Masai all graze their cattle on communal lands and since animals are regarded as capital (i.e., "wealth"), they prefer, in general, to increase their herd size rather than to sell animals. This attitude has been an important factor contributing to the expansion of the national herd from around 3 million head in 1921 to an estimated 10 million in 1974. 8. The latter increase in cattle numbers, without an accompanying improvement in feed supply and management, has resulted in overstocking in several areas to a dangerous level, which can neither be increased nor even tolerated indefinitely. Furthermore, increasing pressure to use the better land for cash cropping is tending not only to.reduce available grazing area but is forcing cattle back to the poorer and less productive areas. 9. In all areas presently used for cattle raising, considerable scope exists for improved production. Better better watering facilities, firebreaks, and additional stock routes, and such facilities are needed. More efficient utilization of existing dips is also necessary since less than 1 million of the national herd are now treated regularly, although existing facilities could accommodate about one-half of the total number. Knowledge of nutrition and management techniques is inadequate among the majority of traditional producers, so that there is an urgent need for training throughout the entire country. Again, in the Southern Highlands lie hundreds of thousands of acres of good land free of tsetse that could be developed into high-producing temperate grasslands, based on perennial ryegrass/white clover mixtures, where beef or milk, or a combination of both, could be produced economically. The Kitulo and Lukinga areas are examples of this class of land and considerable investigational work has already been done on the former, under UNDP/FAO auspices, to demonstrate its potential. The Second IDA Livestock Project is seeking to improve productivity in all these areas. 10. As might be expected, the offtake of cattle from the traditional sector is low, estimated at 10 to 11% per annum. This figure is based on export numbers of hides and skins, which includes hides from animals that were dying from disease and other causes, along with those killed for sub- sistence needs. In 1970, only 318,000 cattle, or 27% of total estimated offtake, passed through organized market channels. There is wide scope for increasing offtake to almost double the present figure and for increas- ing both slaughter weights and carcass quality. Such increases can result ANNEX 2 Page 4 from improved animal management and a more rational use of existing re- sources, and from the application of newer techniques and modest physical inputs. Livestock Health 11. The main animal health problems are caused by poor general nutrition, Trypanosomiasis, East Coast Fever (ECF) and Foot-and-Mouth Disease (FMD). 12. The quality of cattle nutrition in Tanzania varies with the season, and animals are usually underfed during one or two periods each year, depend- ing on the amount of rainfall and its distribution. No attempt is made to provide supplementary feed (e.g., hay or silage ) during these periods nor to provide areas of crop or special-purpose pasture. Under severe conditions, older animals lose weight to the point of emaciation and younger animals fail to grow. The situation is often aggravated by the added stress of in- ternal and external parasites, disease, mineral deficiency, and lactation. 13. The tsetse fly, the vector of Trypanosomiasis in cattle, is widely distributed throughout the country, infesting approximately two-thirds of the total land area. Where infestation is severe, cattle raising is vir- tually excluded (para 6). This disease, however, can be eradicated by clearing areas that are the habitat of the fly through a combination of bush felling and insecticide spraying, and its effect on individual ani- mals can be controlled by treatment with drugs. Either of these two ap- proaches, or a combination of both, can be used but large-scale on-going ranching enterprises find it rdore 1?ractical and economical (on areas over 80,000 ha) to eradicate the fly from the farmed areas. Much research has been carried out on this approach in Tanzania and elsewhere in East Africa, and an effective program, involving ring clearing of bush and aerial and ground spraying is now in operation under the Ministry of Agriculture and Cooperatives. A research project on sterile males is also underway. 14. Diseases transmitted by blood-sucking ticks constitute the major cause of mortality and retarded development in cattle. The heaviest losses are caused by East Coast Fever (Theilevia parva); Anaplosmosis, Babesiosis and Heart water also occur and cause mortality. In addition the presence of large number of ticks on animals causes loss of blood which may be con- siderable,and in itself causes lower production and retards development of young stock. Indigenous cattle living in areas where ECF is enzootic ac- quire a certain resistance after surviving initial infection. Even so losses among calves may run as high as 20%. In years of heavy rainfall when the tick zones expand abnormally, losses as high as 90% among susceptible adult cattle have been observed. The control of these diseases centers largely on the control of the disease-transmitting ticks through dipping and spraying with suitable insecticides. Research on more sophisticated methods of disease control, including immunization, is continuing at the Central Veterinary Laboratories under an FAO/UNDP project. The Government estimates that 1,300 dips are in operation in the country and that there is a need for a minimum ANNEX 2 Page 5 of 700 additional dips or spray races. However, existing dips are often under-utilized. Although dipping is made available free of charge, the major problem is to convince the cattle owner that regular dipping is necessary to avoid tick resistance to the insecticides. For the control of East Coast Fever a routine of twice weekly dippings is a must. ECF control is particularly important where exotic or grade cattle are concerned, and a very strict dipping routine must be maintained for such animals, whether on government farms or in villages. 15. Foot-and-Mouth Disease is endemic in most regions and is enhanced by the movement of trade stock. The disease is seldom reported by cattle owners due to the weak clinical symptoms in indigenous cattle which have been regularly exposed to infection, and therefore data on incidence and the effects of FMD are poor. Massive outbreaks occur when a strange type is introduced by trade stock, when non-resistant cattle enter a region where the disease is endemic or when the proportion of susceptible stock in a herd has grown large. FMD is an important constraint to the increase of productivity through upgrading of cattle or the introduction of exotic breeds. Vaccination of improved herds and upgraded cattle introduced in the village environment is therefore an essential requirement. Currently, improved cattle in Tanzania must be protected against Types A, 0, SAT I and II. The high cost of vaccine has so far precluded vaccination of all cattle, but with the increase of productivity through upgrading of the national herd and thus an increase of economic risk, the question of ade- quate control measures becomes more pertinent. The Government currently has a program to control FMD by vaccination and quarantine, but the pro- gram has been hampered by insufficiencies of vaccines of the right type and lack of staff. The Government has indicated that it intends to expand efforts to control the disease, not only because of its effect in lowering production, but also because it is an important constraint on the export of chilled and frozen meat to Europe and elsewhere. Although the Government has proposed to commence such a control program by establishing a pilot disease free zone, neither export prospects nor the demonstrated loss of productivity through FMD would appear to justify such a step at this time. 16. Other diseases, which in the past have been a problem, such as Rinderpest and Contagious Bovine Pleuropneumonia, have now been successful- ly contained through well executed control programs. Approximately 1 mil- lion animals in the north are vaccinated each year against Rinderpest to form a barrier against reintroduction from the north. No case of the dis- ease has been reported in Northern Tanzania since 1965 and it has been over 25 years since it last occurred in the south. Contagious Bovine Pleuropneu- monia was last diagnosed eight years ago in the north of Masailand but prompt vaccination and quarantine of the area prevented its spread; at present this disease does not occur in the country. Almost all the diseases of livestock usually found in other countries also occur in Tanzania, including Anthrax, Blackguarter, Bluetongue, Haemorrhagic Septiaeia and Brucellosis against which vaccination is undertaken and effective. Helminthiasis can be a problem, but can usually be countered by the use of vermifuges. Liver Fluke in flooded or marshy areas cause much ill-health and condemnation of livers. Among the diseases which cause heavy production losses but rarely kill animals ANNEX 2 Page 6 are Ephermeral Fever (Three Day Sickness), Infectious Epididymitis and the Mycobacterial Diseases (Tuberculosis and Jones Disease). Tuberculosis is prevalent in the Southern Highland and Jones Disease is increasingly becoming a problem in large herds. It is feasible to think in terms of eradication, on a large scale at this time, but in large herds, especially dairy-herds, testing and culling is being adopted. Technical Services 17. The Ministry of Agriculture and Cooperatives is responsible for production and marketing of livestock, for advisory services, research, and training within the agricultural sector. Four Divisions of the Ministry are directly involved--the Division of Agriculture, Food, and Advisory Ser- vices; the Division of Production Devblopment and Technical Services; the Division of Administration, Personnel, and Planning; and the Division of Research, Training, and Farmer Education. The Livestock Development Author- ity (LIDA) was recently established as a parastatal, and has under its jur- isdiction other parastatals in the livestock field (Annex 8). 18. Primary responsibility at the central government level for live- stock development lies with the Livestock Development Division of the Min- istry of Agriculture (MIFUGO). This Division is responsible for: (a) in- suring that animal health programs are feasible and coordinated; (b) the development and application of improved animal health management techniques; (c) research programs and the supply of technical information to outside groups, and (d) the management of selected livestock operations. The divi- sion consists of four sections: Program Planning, Technical Services, Re- search and Disease Control, and Operations. Staffing of the Division and of regional services is shown in Table 1. 19. At the regional level livestock officers and their staff plan and implement virtually all livestock programs, notably in the traditional sector, for there is a high degree of decentralization in all operational matters. The Director of Livestock exercises technical supervision and control, but day-to-day management and coordination with other services is the respon- sibility of the regional authorities. Despite the major constraints facing the regional field services, notably lack of funds and inadequate staff and transport, most regional officers are performing well, and staff are generally hard-working and dedicated. Given a clear policy and a program for action, these services could develop into an effective livestock extension service in the future. 20. Training. The key role of training at all levels is well recog- nized by Government and, insofar as projected requirements for technicians trained to the certificate and diploma levels in general agriculture are concerned, requirements through 1980 will, in general, be met by existing training schemes. Table 2 shows existing training programs and their out- put. The need for more graduates in agriculture at the degree level is ANNEX 2 Page 7 also recognized and appropriate steps are being taken to increase enrollment in the Faculty of Agriculture, University of Dar-es-Salaam, Morogoro. Addi- tional training courses are being organized for range management, and po- tential ranch and dairy farm managers are being sent overseas for practical and theoretical training, primarily to Australia and New Zealand. Veterin- arians are trained at the University of Nairobi. 21. A Research and Training Institute has recently been established at Mbeya with assistance from the Nordic Technical Assistance Program. The capacity of the Institute is 500 students at full development (expected in 1976). Two-year certificate courses in Agriculture, Animal Health and Ag/Home Economics will be conducted with 400 entrants of which 100 are ex- pected to be female students. The course will emphasize practical training through participation in daily operation of the Institute Farm and in the applied dairy and crop research being undertaken as part of the curriculum. After 1-2 years in the field approxitnately 100 students are expected to re- turn for 1-year diploma courses in Crop Husbandry, Animal Health and Dairy Husbandry. 22. Livestock Research. In general, the situation with respect to research is not as satisfactory as it is with training. The quality of veterinary research in Tanzania is relatively good as proven by the effective- ness of the dipping program and the tsetse control program. However, there is a definite gap in production-oriented research, and a great deal more needs to be done in such basic fields as branch and weed control, water reticulation, fencing, pasture utilization, supplementary feeding, fertilization and animal management. All research programs in the livestock field must be approved by the National Scientific Research Council, whose functions are: (a) to coordinate all national research; (b) to advise government regarding priorities, the allocation of funds, research policies and scientific standards; (c) to produce documentation and disseminate information; and (d) to collaborate with national and outside organizations on all matters pertaining to research. 23. Within the Livestock Development Division, research programs are handled by the Research and Disease Control Section. Implementation is divided into two main groupings; viz: Animal Disease Research and Animal Production Research. Animal Disease Research is organized with the Central Veterinary Laboratories, Temeke as the central research unit supported by five Veterinary Investigation Centers located in Arusha, Mwanza, Tabora, Mpwapwa and Iringa which in turn are supported by forty-two Veterinary In- vestigation Stations, comprising Dip-Testing Centers, Livestock Multiplica- tion Units and Livestock Research Centers. The Central Veterinary Labora- tories, Temeke, consists of a group of well-equipped units for Bacteriology, Chemistry, Helminthology, Protozoology, Pathology and Virology. A special unit for typing of Foot and Mouth virus will be constructed as part of the IDA-financed Second Livestock Development Project (Credit 382-TA) with assistance from the UNDP. At present this laboratory suffers from a short- age of staff and has encountered difficulties in expanding its services to ANNEX 2 Page 8 the regions, which in turn work under the constraint of insufficient budget allocations. Animal Production Research is carried out with the Mpwapwa Animal Production Research Institute as the central research unit and is concerned with research on animal nutrition, including forage and pastures, reproduction and progeny testing. This work is supported by three Livestock Research Centers at Iwambi (Mbeya), Sao Hill (Iringa), Mabuki (Mwanza), West Kilimanjaro and Mivumoni (Tanga). It is anticipated that the recently established Faculty of Agriculture, University of Dar-es-Salaam at Morogoro as well as the Training Institute at Mbeya will contribute useful research. Government Policy Towards Livestock Development 24. Government has gone to considerable lengths to define constraints in the livestock industry and has indicated its determination to do every- thing possible to promote expansion both of beef and dairy products (Annex 4). It has noted with concern the problem of overstocking in many areas and has provided good support for the Tsetse Control Unit, whose main responsi- bilities are to control the fly and undertake construction of roads and firebreaks for access and burn protection, and dams for water storage and reticulation. In order to improve the social amenities of the traditional producer and to provide a basis for more effective extension of improved management practices, Government is pushing ahead as quickly as possible with the concept of Ujamaa, which is explained in greater detail in Annex 3. Government believes that, given better social services, suitable land, modest physical inputs, technology, and a rational marketing system, the traditional sector is capable of significantly increasing production to meet the needs of both the eypanding internal and potential export markets. 25. In the next Five Year-Plan (expected to be completed shortly), the highest priority will be placed on manpower development. Research on disease and animal production, including pasture and fodder production, is also a priority area. The draft plan also emphasizes the need for better coordination and direction in the implementation of on-going and new pro- jects, and the creation of LIDA reflects the Government's concern in this regard. May 13, 1975 TANZANIA DAIRY DEVELOPMENT PROJECT Staffing of HQ and Regional Services (October 1974) Assistant Regional District * Regional Livestock Senior Field Field Officer Field Officer Veterinary Veterinary Veterinary Region Dev. Officer Officer I II III I II ufficer Officer Officer Arusha 1 1 10 2 12 48 1 1 2 Coast 1 1 3 2 5 12 1 Dar-es-Salaam(incl.HQ) 1 1 12 l' Dodoma 1 4 4 4 39 1 Kigoma 1 1 1 1 2 1 26 Kilimanjaro 1 6 4 6 20 1 1 Iringa 1 '4 2 3 33 1 Lindi 1 1 1 1 2 2 16 Mara 1 2 1 3 5 29 1 Mbeya 1 2 5 6 21 1 Morogoro 1 1 5 2 2 24 1 Mtwara 1 1 2 1 16 1 Mwanza 1 5 4 28 1 1 Rukwa 1 1 2 2 15 1 Ruv-una 1 2 2 17 Singida 1 2 2 3 28 1 Shinyana 1 2 4 4 - 32 1 Tabora 1 1 5 1 1 31 Tanga 1 2 5 2 4 32 1 West Lake 1 1 2 5 2 20 Central Veterinary Lab. 1 1 2 30 2 6 Multiplication Units Livestock and Veterin- ary Investigation Centers 12 Teachers in Training In- stitutes (MATIs) 5 On secondment to parastatals 9 Meat Inspection at TPL 2 Post graduate traintij Coorses 4 Total: 20 5 15 71 38 100 489 43 9 Compiled on information Ministry of Agriculture, October 1974. Regional Veterinary Officers and District Veterinary Officers may be also Regional and District Livestock Development Officers. February 5, 1975 TANZANIA D1IRY DEVELOPMENT PROJECT TRAINING OF PERSONNEL FOR LIVESTOCK DEVELOPMENT Level of training. Qualifications Designation Duration of training Specialisation Institute and location Annual turn-out Present no. in required service. Certificate Form 4 AFO 2-years pre-servive Veterinary Year I: Mpwapwa MATI 8o 7oo (0 level) Assistant II: Morogoro MATI Field Poultry Morogoro MATI 12 Officer Dairy Husbandry Tengeru MATI ,Arusha ho Diploma Form 6 FO 1-year in-service Animal Production Mpwapwa MATI 48 (A level) Field 1-year in-service Ranch Management Mkata 12 Officer 3-year pre-service Ranch Management Egerton,Kenya 6 1-year pre-service Dairy Technology Egerton,Kenra 2 3-year pre-service Animal Science Egerton,Kenya 12 235 Degree Form 6. V0 4-year pre-service Bach. Vet. Scien. University of Nairobi 15 81 (A level) Veterinary Officer AO 3-year pre-service B.Sc.(Agric) Faculty of Agriculture 5o 21 Agricultural Morogoro(Univ.of DSM) Officer B.Sc.(Agric) Animal Production ? (first degrees in 1977) Students studying abroad. Veterinary degree: 10 Animal Husbandry: 17 Total personnel: 1037 Dairy Husbandry 2 Dairy Technology 1 *Ministry of Agriculture nformation, October, 1974. February 5, 1975 ANNEX 3 Page 1 TANZANIA DAIRY DEVELOPMENT PROJECT Ujamaa Villages and Dairy Development Ujamaa Development and Villagization 1. Tanzania's socialist development policy is directed towards simul- taneously achieving rapid economic growth and promoting an equalitarian society. Perhaps one of the most important aspects of this policy is the increasing emphasis on agriculture and rural development, and in recent years the rural development strategy has focussed on the development of Ujamaa villages throughout the country. The immediate objectives are social and political: to foster a sense of self-reliance through self-help, to achieve equality of income, and to raise rural incomes in order to close the rural/urban gap and slow the pace of migration to the major towns. The final goal is the development of cooperative production by the Ujamaa community, with communal labor and communal ownership of land. When an Ujamaa village has developed to a certain stage, it can be registered with the Registrar of Cooperatives as a full multi-purpose cooperative society. Thus, the Ujamaa village has been seen as a vehicle for providing economies of scale in delivering improved agricultural techniques, inputs and social services, and as a focus for devel- oping a productive and socialist society in rural areas. 2. Ujamaa villages are often new settlements, formed by a group of families from another part of the country, as part of an effort to develop sparsely populated and relatively unproductive areas. Ujamaa villages may also be formed when a group of families decides to join together as an Ujamaa cooperative, pooling financial resources, land and labor for at least part of their activities. Other residents of the same area may join the Ujamaa as it develops. Ujamaa villages vary significantly at different stages of development and according to the resources and circumstances of their members. Differing degrees of cooperative production exist ranging from a very limited communal venture, such as a small area of coffee, tobacco or cotton which all members help to cultivate, while most energies are devoted to individual food crop production, to a fully collective organization of production where all land and labor are shared. Ujamaa villages receive financial assistance in the form of grants from the Regional Development Funds, and are eligible to borrow money, primarily from the Tanzania Rural Development Bank (TRDB) when they have a workable constitution and are registered as an Agricultural Association. An Ujamaa village registered as a full cooperative may also be eligible for commercial credit. 3. The Prime Minister's Office is responsible for the development of Ujamaa villages. A Rural Development Division works closely with TANU (the ANNEX 3 Page 2 political party organization) and other executive ministries, and is respon- sible for continuous evaluation of Ujamaa operations. The Ministry of Agriculture and other ministries provide technical support. With the decen- tralization of administration, regional and district authorities have assumed an increasingly active role in providing assistance to Ujamaa villages. 4. Since 1971, there has been increasing emphasis on a variant of the Ujamaa movement, known as villagization. The focus of this program is on the resettlement of the rural population which is traditionally relatively dispersed in many regions of the country, into what are known as "planned" or "development" villages of between one and three thousand people. The specific objectives of this program are to concentrate the population so that the government can more readily provide basic social and economic ser- vices - notably water, schools, dispensaries and extension - to facilitate mobilization of the population, and, to some extent, to promote national security. In the long term, formation of these villages is designed to encourage the development of comunal agricultural production as well as modern, commercial marketing. It is anticipated that the "planned" villages will ultimately become full Ujamaa villages in the sense that they will be cooperative societies. However, the villagization program as it is presently conceived does not rely on-obligatory communal production at least in the initial phase. There is no inherent conflict between the two programs. In effect villagization constitutes the initial phase in the theoretical development of an Ujamaa village. There is, however, a significant difference in emphasis as the policy has been applied, and it is recognized that the organization of collective production is likely to take some time, and that until such time has elapsed most agricultural activity will continue to be on an individual basis. 5. Within the past year, the pace of villagization has accelerated rapidly in many regions of Tanzania, and a significant proportion of the rural population has moved from their farms and hamlets into "development villages", which range in size between one and three thousand people. The impetus behind this massive movement is not entirely clear, but it appears that it was organized and encouraged primarily by local (district level and below) political leaders, who used either persuasive techniques, holding out the promise of improved services or, in some instances, a show of force to encourage people to move to new locations. Estimates of the number of people ipvolved vary widely, but press and official reports suggest that an estimate of three million people affected by the program in the past year is quite conservative. 6. The implications of these developments for future economic, social and political development are significant. In the short term, a serious drop in agricultural production seems probable for a variety of reasons. Because of insufficient planning and premature movement of people, many new villages are located at poor sites taking into account agricultural potential and relationship to other settlements. Many new villages lack basic facilities. Land use patterns often were not thought through before the new arrivals settled there. While these problems are sorted out, conditions for preparing ANNEX 3 Page 3 fields for cultivation will be difficult and much labor is likely to be diverted from farming to constructing new houses. It is not clear that necessary inputs will be available to the new settlements. In the longer term perspective, these problems should be resolved, whether by reorganiza- tion or relocation of villages. The more fundamental issues would then relate to a major reorganization of farming and animal husbandry patterns to suit an entirely different form of settlement. In the next few years, the Government should focus on completing basic indispensable planning for new villages where it was inadequate, and resources, human and financial, should be concentrated on resolving the problems of agricultural production in the villages. Pressures to provide services are likely to be significant, in part because they were often promised to the population, but also because their absence will become increasingly apparent in the larger new communities. If a great proportion of available resources go for schools, village wells, roads, dispensaries, etc., it may hamper the development of the new villages into productive and viable communities. If this does not occur, people may well move back to where they came from, or seek their fortune in the cities. Ujamaa Dairy Development 7. In parts of Tanzania where there is good natural potential (rainfall, altitude) a tradition of dairy husbandry has developed. This is most signif- icant in the Kilimanjaro area, but Mara, West Lake, Mbeya and Iringa also have significant numbers of small producers. Most dairy production is from traditional cattle, and is an adjunct of the traditional herd. Milk produc- tion is low, and it is unlikely that it can increase significantly without improved stock (upgrading animals) and much better management and animal health practices. Because of the nature of the village economy, this would almost certainly require a major expansion and reorientation of extension services to assist village producers, and substantial training of farmers. However, the long-term potential for a substantial increased production in the traditional sector is excellent (Annex 4). 8. The Government has placed a high priority on increasing dairy production, both for social (primarily nutritional) and economic reasons, and as part of its strategy is seeking to promote dairy development in Ujamaa villages. There is no clear tradition of collective or communal organization for dairy husbandry, and this program therefore requires both new techniques and entirely new forms of organization, which have not yet been developed on a significant scale or in adequate detail. In some regions the livestock officers, often assisted by a dairy development officer, have sought to promote dairy development in Ujamaa villages, and in some cases funds have been provided for dairy units from the Regional Development Funds. TRDB and its predecessors have also made some loans for Ujamaa d airy ventures. In most cases it is much too early to assess how effective such assistance has been, but in villages where some evaluation is possible, there is a great range of experience, from successful operation of medium-scale dairy units to utter disaster, where all cattle died immediately and an elaborate milking parlor stands totally unused. In at least one instance a missionary working ANNEX 3 Page 4 with an Ujamaa village has developed a successful dairy unit in an Ujamaa village. In Komuge, near Musoma, villagers have put their individual cows together into a "communal improvement herd", and share facilities, including dipping tank, a pasture and fodder program, improved bulls, and training. 9. If there is to be significant development of dairy in Ujamaa vil- lages in future, the first prerequisite is to develop farming systems that are appropriate for small-scale dairies in a traditional/Ujamaa setting, and that are adapted to different geographic conditions. As yet there are no clear models for Ujamaa dairy development. The second requirement is to develop the technical support, probably at the regional level, that would be required (supply of inputs, extension, training). Third, credit mechanisms must be assured. Finally, it seems likely that some upgrading of local cattle will be essential before villages can produce a signifi- cant amount of milk. In planning a Ujamaa dairy program, the implications of the villagization program should be taken into account, both in terms of the size of villages (and hence markets) and organization of production. In elaborating a strategy for Ujamaa dairy development, one objective should be to complement dairy development among traditional individual producers, since the two models (individual and collective dairy production) are complementary and even contiguous. Project Ujamaa Dairy Component 10. The funds included for Ujamaa dairy development under the proposed Project would finance a small program to develop Ujamaa dairy units of about 20 cows each in 50 villages. These villages have not yet been selected, but would be concentrated in those regions which show the best potential for dairy development. The program would be a pilot effort, and its most im- portant aspect would be the development of institutions and techniques that would prepare for a more extensive and comprehensive future project to de- velop dairy at village level, both through Ujamaa cooperatives, and on an individual or cooperative basis. 11. TRDB would have the principal responsibility for organizing the Ujamaa dairy program, and for planning for future development activities. A special unit would be formed within TRDB that would in the first instance determine criteria for selection of Ujamaa villages, then prepare loan materials, and finally supervise the initial phase of establishing the dairy units. The unit would have sufficient technical expertise to examine alternative models for dairy husbandry, to lay down requirements for animal health and feeding for each region, and to adapt those program as experi- ence warrants. In addition to direct supervision of Ujamaa dairy loans under the present project, the unit would prepare a program for future de- velopment. This would require extensive data collection on existing village dairy activities, an analysis of market conditions, studies of disease problems and other technical constraints to further development, and an evaluation of requirements for technical support through extension services and financial support through loans and even grants. ANNEX 3 Page 5 12. The Regional Livestock officers would share responsibility for implementing the Ujamaa dairy component. They would be responsible for furnishing day-to-day technical support in the field, and for supervising the establishment of dairy units. The program should furnish an opportunity to evaluate the effectiveness of current services at regional and district levels, and to prepare a program for strengthening them in future as proves necessary. 13. To the extent possible, the DAFCO dairy farms developed under the Project would also provide assistance to Ujamaa dairy units, particularly on technical matters such as animal health regimes and feeding programs, but also in sharing equipment and machinery where excess capacity exists. It might prove feasible to organize practical training for Ujamaa dairy farmers on the farms, and this possibility should be explored. 14. It is anticipated that most milk produced by the Ujamaa dairy units in this first phase program would be consumed in the village. Each village would determine its own arrangements for disposing of milk; in some instances it might be distributed in return for labor, while in others it might be sold for cash or kind within the village or to other villages nearby. Where the Ujamaa dairy was located near a major town or processing facility, the village might decide to sell some or all of its milk to commercial processors or vendors. This first project should support a dairy unit where that was the sole commercial venture of a village only in exceptional circum- stances, because of the technical undertainties involved, and the high risk involved in dairy production under present conditions. The dairy unit would thus be one of several communal ventures for each of the Ujamaa villages selected and revenue from milk sales would not be essential to service the loan incurred to set up the dairy enterprise. 15. Investment in this first phase would be relatively limited, and would be largely in upgraded (first cross) dairy heifers. Other inputs would include some water development and fencing, pasture development and fodder production, and very simple buildings and equipment (milking shed, calf pen) (Annex 9, Tables 40 and 43). February 13, 1975 ANNEX 4 Page 1 TANZANIA DAIRY DEVELOPMENT PROJECT The Tanzanian Dairy Industry Background 1. Tanzania's Dairy Industry is at present relatively under-developed. Dairy farming has developed in the past from two quite separate origins. "Modern," commercial dairy farming was introduced during the colonial era, with exotic stock imported from Europe, and essentially European dairy farm- ing techniques; these farmers were concentrated in the highland areas with high rainfall, around the centers of colonial settlement. The second pole of development is the strong tradition of livestock in Tanzania, and milk has long been an important element of both cattle and goat husbandry. There has in the past been no concerted effort to develop dairy in Tanzania, and milk production, particularly from the commercial producers, has declined in recent years, while the vast potential of the traditional herd has not been exploited. In view of the rapidly growing demand for dairy products, the Government has for over a decade indicated that it placed a high priority on developing an indigenous dairy industry. However, it is only recently that a basic investment program has been proposed, and the proposed Project would represent the first major attempt to define and implement a development strategy for dairy. 2. There are strong arguments that favor a policy to promote the development of dairy in Tanzania. Geographic conditions in many parts of the country are suitable for dairy, which requires relatively high rainfall, well distributed throughout the year, and equitable climate. The strong livestock husbandry tradition also favors dairy development, since a large part of the population owns and has worked with cattle. Dairy development is a logical development from a traditional livestock industry, calling for more intensive and sophisticated farming techniques, while offering a good source of income. The rapid growth of demand for dairy products, the result of rapid urbanization in a growing number of centers, also offers a major incentive for dairy development. 3. Dairy development has been limited in the past by two major factors: the long distances between the areas most suited to dairying and the major urban markets, which are concentrated along the Indian Ocean Coast, and by the absence of effective policies to stimulate dairy development. Kenya developed a thriving dairy industry during the colonial era, while such development was less marked in Tanzania, despite similarities in environment. The departure of expatriate and Asian farmers in recent years has resulted in a decline in production, largely because dairy techniques were not sufficiently adapted to Tanzanian conditions nor promulgated or extended beyond a relatively isolated group of farmers. ANNEX 4 Page 2 4. Prospects for developing a viable dairy industry in Tanzania are good. The strategy for promoting that development should concentrate on two separate objectives: First, to supply milk to the growing urban centers and thus to reduce import requirements for dairy products; in the short term, the commercial sector offers the best prospects for achieving rapid increases in milk production, although in the longer term, small producers should also be able to supply milk to cities and towns. The second objective should be the development of a rural dairy industry, based on the traditional herd. This would not only offer a means of providing small farmers with a steady source of cash income, but would also supplement rural diets, providing a significant improvement in nutrition for some of the poorest segments of the population. The Existing Dairy Industry 5. Milk is produced in Tanzania by several different types of farmers, under dissimilar conditions. Because the problems faced by these separate groups vary markedly, policies and programs for dairy development should address the distinct problems of each group. Four separate categories might be defined: (a) commercial dairy farms; (b) traditional cattle owners; (c) traditional dairy producers, oriented to milk production for cash; and (d) Ujamaa dairy farms. 6. Commercial Dairy Farms - in some parts of Tanzania, a modern, commer- cial dairy industry has developed. These dairy farms were generally developed by private farmers, but many are now run by parastatal corporations. Approx- imately one half of the cattld in Tanzania that are categorized as exotic, dairy animals (estimated total about 15,000) are on these farms, which are concentrated in the Arusha region and around Dar-es-Salaam, with a few in the Southern Highlands. All these farms are oriented to the commercial sector, and supply milk to the large dairies at Dar-es-Salaam and Arusha; supplies to the large dairies were estimated at 5.5 million liters in 1973. As European and Asian farmers have left Tanzania, many farms have been taken over by the Government, which has developed a few dairy units on cattle ranches also. Parastatal corporations, notably NARCO (Ngerengere, Kitulo, West Kilimanjaro), TSC and District Development Corporations manage many of these farms. In addition, KILIMO operates combined breeding and dairy operations at Mpwapwa, Tanga, West Kilimanjaro, and Mbeya, and prison farms, mission stations, and schools and training institutes often have small dairy herds run on modern, commercial lines. Some private dairy farmers continue to produce milk, notably in the Iringa area. Commercial dairy farms have experienced many problems in recent years, and there has been a significant decline in production (Annex 5). This can be explained in part by the departure of expatriate owners and managers, but an additional factor has been the low level of milk prices both in Dar-es-Salaam and in Arusha, which caused some farmers to go out of business. Many of the parastatals now operate at a clear loss. Farms have deteriorated, both in terms of physical assets (buildings, machinery, pastures) and animals, which are often producing at levels well below their genetic capacity. If steps are not taken in the near future to improve management on these farms ANNEX 4 Page 3 and to provide needed investment, these farms will certainly decline still further, and the benefits both of existing facilities and dairy herds built up over a long period, and long experience with dairy farming under Tanzanian conditions will be lost. 7. Traditional cattle farmers - dairy farming may be viewed as one aspect of the traditional livestock industry, as milk is one important by- product of the traditional cattle herd. Milk not required for calves is consumed by villagers, constituting an important part of their diet,; when there is a surplus, this is sold within the village or nearby. Occasionally, surpluses are sold commercially, but this is the exception rather than the rule, largely because the commercial dairies are not located where there are important concentrations of cattle. Although this sector produces by far the largest volume of milk of the four (an estimated 475 million liters a year - Annex 5, Table 1), there are no accurate figures on total production, since estimates are based simply on extrapolation from the general data on national herd size, proportion of cows, and average milk yields. Average yields per lactation are estimated at 300 liters; of this, probably 150 liters is consumed by calves and 150 liters is milked and used by humans. Table 1 shows the estimated cattle population by region, according to the 1972 livestock census, which gives some indication of how cattle are distributed, and where the regions of best potential lie. There is a wide range in herd size according to region; in addition, traditional cattle producers range from nomadic ,ecules to settled farmers with small herds. Goat milk is also important for traditional producers; most is consumed at the subsistence level (Table 2). 8. Traditional dairy producers - in some areas, notably on slopes of Mt. Kilimanjaro and Mt. Meru and in Mara, a tradition of dairy production by small African farmers, oriented to the commercial sector and producing milk as a source of cash income has developed. This development was stimulated in some areas by the proximity of markets, and by an extension of technology and exotic dairy animals from commercial dairy farmers; most farmers are smallholders, keeping a few cows and deriving an important source of income from milk sales to commercial dairies. Dairy farming techniques may be quite sophisticated, notably in the Kilimanjaro area where a system of stall-feeding cattle in con- junction with banana cultivation has evolved; in recent years, this system of dairy production has not developed very rapidly in the area, largely because of competing pressure on land for cash crops, notably for coffee. In other areas, farmers near cities and towns keep a few cows, perhaps with some exotic blood, and they or middlemen sell milk in the towns from bicycles. Finally, traditional cattle farmers in some major cattle areas sell milk to rural processing facilities or to entrepreneurs. Until recently, farmers in the Mara region sold milk to small-scale producers of ghee, who processed milk and returned skim milk to farmers (Annex 6). Similar processing facilities have developed around Tabora. 9. Ujamaa dairy farms - quite recently, the Government has embarked on a program to promote dairy farming in Ujamaa villages. To date, this has met with mixed success, and much planning will be required before this can ANNEX 4 Page 4 be extended on a large scale. The development of dairy farms in the Ujamaa villages is discussed in more detail in Annex 3. Government Assistance for Dairy Development 10. Development programs specifically oriented to dairy farmers have been limited in the past. Disease control programs and the general live- stock and veterinary extension services have directed limited attention to dairy. In some regions, Dairy Development advisors have been introduced, but without staff, funds or a program they have not been able to achieve significant results. The principal objective has been to upgrade dairy animals,.both through livestock multiplication units and bull centers run by Ministry of Agriculture and through an artificial insemination (AI) program. Dramatic increases in milk production can be achieved in the first generation of cross-breeding the Tanzanian Zebu to exotic dairy cattle: from 300 to 1,100 liters per cow per annum, and in some areas, the farmers' response to such programs has been enthusiastic. The scope and quality of the programs could, however, be improved. 11. An important Al program was launched in 1974 with assistance from Swedish Aid (SIDA). The objective of the program is to increase the number of upgraded dairy cows from 15,000 to 40,000 over nine years, and the aim is to inseminate 72,000 cows a year by 1977/78. ±he SIDA program will concentrate on two main activities: a National Artificial Insemination Centre (NAIC) and a training program for field inseminators. The NAIC center will be built near Arusha, and will be headed by a Tanzanian veterinarian assisted by three ex- patriate veterinarians. It will help plan and implement all Al programs in Tanzania, collect data, and help carry out local AI programs; it will also produce, import, store and distribute semen, diluter, and the equipment needed for AI work throughout the country. Semen production at the Mpwapwa center will be phased out and replaced by semen produced at the new West Lake bull center. The NAIC will also work in conjunction with a national breeding committee to plan and carry out a long range program for the importation of bulls and semen for both milk and beef production, including progeny testing of bulls. The training program will provide for the training of about 90 inseminators each year; the trainees would receive a one-year general course in animal husbandry, followed by a three-month training period at the NAIC center and nine months of field work. In addition, an intensive information campaign would be launched in an effort to introduce improved methods of livestock care to the smallholder cattle owners. The total cost of the program is estimated at Tsh 21 million, 60% of which will be financed by SIDA and the remainder by Tanzania. Problems and Constraints 12. The major constraints and problems facing all dairy producers in Tanzania may be summarized briefly as follows: ANNEX 4 Page 5 (a) Geography - long distances separate high potential areas from the major markets, particularly those on the Coast. Improved communications, the development of processing facilities equipped to preserve milk (cheese, butter, ghee) and to manufacture milk products (powder, tins) in high potential areas, and the rapid growth of towns, and thus commercial markets, throughout Tanzania promise to diminish this problem in future. (b) Poor road networks - even where potential markets exist, poor rural road networks hinder collection of milk, particularly during the rainy season when farmers have milk surpluses. Feeder road projects could stimulate dairy development. (c) Poorly developed collection networks - transport of milk to dairies has depended on farmers' initiative, resulting in haphazard supplies and adulterated or spoiled milk being sold in towns. (d) Technical constraints - upgrading of Zebu cattle, improvement of pastures, and preservation of green fodder for the dry season are essential if cattle are to produce higher milk yields, evenly distributed throughout the year. (e) Animal disease - dairy cattle, partly because of their exotic blood, are particularly susceptible to the disease problems which face all cattle in anzania (see Annex 2). The presence of tsetse flies effectively prohibits dairy farming in many areas of Tanzania, and FMD and ECF cause severe economic losses on dairy farms. Mastitis is a further common hazard for dairy farmers. Maintenance of a strict animal health regime, on commercial farms or in villages, is an essential prerequisite for successful dairy development. (f) Price controls - price controls on milk and compulsory marketing orders have discouraged dairy development in some areas in the past. (g) Extension services - have limited staff and experience with dairy, and there is no clear program now for dairy extension work. (h) Technical skills - dairy farming is a demanding activity requiring special skills and excellent management, to maintain animal health, to provide adequate feeding, to maintain proper hygience, and to make money. Such skills are in short supply among Tanzanian farmers. (i) Research - little applied research has been done to develop dairy farming systems appropriate for Tanzania, and applicable to different regions. Particular areas requiring investigation are pasture development, fodder conservation, and animal nutrition. ANNEX 4 Page 6 Strategy for Dairy Development in Tanzania 13. The strategy for dairy development must endeavor to resolve or surmount the problems outlined in para 12 above. This should involve both the rehabilitation and improvement of large-scale dairy farming, as an effi- cient way to produce milk for the cities, and the development of the potential for dairy production in the vast traditional sector. The strategy should include the following key elements: (a) Pricing policy - price levels will assume paramount importance as commercial dairying and the commercial market expands. If price levels are fixed by Government, they must be set at levels that will encourage dairy production (Annex 5). (b) Processing plants - although only a very small proportion of milk is processed at present, milk processing will become increasingly important as both towns and dairy production expand. Location of plants with appropriate capacity will be an important factor in stimulating dairy production and satisfying demand (e.g. at Kitulo). Collection systems should be developed concurrently with plants. (c) Regional distribution - dairy development should be concentrated in regions with high potential, notably the Kilimanjaro-Arusha area, Mara and West Lake, and the Southern Highlands. Commercial dairy farms may be feasiblV in other areas, notably Tanga, Dar-es-Salaam, and possibly Dodoma, if irrigation were economically viable, but smallholder production should focus on areas with an existing cattle population, tradition of livestock husbandry, and high rainfall. (d) Government services - dairy specialists among extension workers must be trained, and provided with adequate financial and logistic support. Supplies of essential inputs, notably drugs and adequate credit must be assured. Farmer training in dairy skills could be provided through extension or at rural training centers. The AI scheme should be supported, and upgraded heifers produced for sale to traditional producers. (e) 'Research - should be supported and expanded on a continuing basis to develop the necessary technical basis for development of dairy. 14. Government programs in the field of dairy development should take into account the respective requirements of the four groups described above in paras 6-9. This is particularly important because dairy development is likely to take place in quite a different pattern for each of these groups in the immediate future, and policies and programs should take their differences into account. 15. Commercial dairy farms - the basic strategy for these farms should be one of the rehabilitation, in some cases to the extent of being a rescue oper- ation. The most essential need is for excellent management. This would involve ANNEX 4 Page 7 training Tanzanian managers in dairy farming techniques, developing effective management systems adapted to Tanzanian circumstances, and developing of an institutional framework which would permit these farms to run efficiently and profitably. The commercial dairy farms would by definition be oriented to the commercial sector and major processing plants, and would be concentrated near them. These farms should be perceived as having a three-fold purpose: first, to supply milk to the major urban centers where the rising demand for dairy products has necessitated very substantial imports of dairy products from outside Tanzania (Annex 5), second, as a training center for Tanzanian managers, and third, as a nucleus for development of technology for the rest of the dairy industry. Sophisticated technology would be applied on these farms, since the objective would be to produce the most milk possible and to provide revenue for the parastatal organizations which now dominate the sector. 16. Traditional cattle farmers - the expansion of dairy production among traditional cattle farmers offers perhaps the best prospect in the long term for absolute increases in the volume of milk production. In the short term, however, it would appear premature to seek to develop dairy activities here in isolation. It would also seem to be unwise to attempt to rely too heavily on these tradi- tional producers to supply the needs of the urban markets until significant increases in levels of production produce a clear surplus of milk that can be sold. Therefore, the effort to increase milk production should be perceived as a part of the overall program for livestock development among traditional prod- ucers. As these programs help farmers to achieve better disease control and improved herd management, milk production will also increase. At that time, consideration should be given to improving collection services and developing rural processing centers, particularly those that might preserve milk surpluses during the wet season for use during the dry months (cheese, ghee, for example). It should be recognized that while even small increases in milk production will produce a substantial increase in total national figures, they will not for some time resolve the problem of serious milk deficits in the cities. 17. Traditional commercial producers - major emphasis should be placed on assistance to traditional commercial producers who are already interested in and to some extent, skilled in dairy husbandry. This should concentrate on regions with a tradition of commercial dairying and where processing facilities exist or are planned: notably, Arusha, Mara and Mbeya. The im- provement of extension services is an essential prerequisite. The program should focus on improved management of existing herds, which in itself would substantially increase milk yields and on AI and introduction of grade heifers. Fodder conservation could be introduced to small farmers with relatively limited investment. As levels of production increase, so also will the requirements for stringent animal health care and hygiene. Adequate price levels and assured supplies of essential inputs would encourage dairy develop- ment in this sector. The development of collection systems should be geared primarily to this category of producers. ANNEX 4 Page 8 18. UJamaa Dairy Development (Annex 3) - very little is known at this time about the possibilities for dairy development in Ujamaa villages. The rapid pace of villagization could dramatically alter market patterns, possi- bly extending the "commercial" (i.e. cash) milk market to many of the new "development" villages. Development of small dairy units to serve these villages could offer an effective means of introducing communal dairy ven- tures at a commercial level. As regards Government policies, the comments in paras. 13, 17 and 18 above would also apply here, depending on the loca- tion, economy and level of development of the village. Conclusion 19. The proposed Project would represent a first stage of a long-term program to develop dairy in Tanzania. It would concentrate on the rehabili- tation and extension of commercial dairy farms. This would appear to be the miost effective way to develop a technical and managerial base for future dairy,development, and to achieve the Government's objective of reducing imports,of dairy products. Medium to large-scale dairy farms offer consid- erable,economies of scale, and would lend themselves to immediate development, partictlarly where farms and dairy herds already exist. The Project would also seek to improve collection services and to extend and modernize processing facilities in Dar-es-Salaam and Arusha. The collection system should stimulate dairy production by small producers in these areas, and increase supplies of milk at the dairies. The Project would include development of a heifer breed- ing unit that would produce about 1,800 upgraded dairy heifers a year. These would be sold to small-scale producers for dairy units. An important aspect of the Project would be a substantial technical assistance program largely directed to the Project's commercial and Ujamaa dairy programs, and to pre- paration of a long-term strategy and program for dairy development among small, traditional producers (including Ujamaa villages and individual farmers). Thus, while this first Project would be directed primarily to supplying milk to the urban markets from government dairy farms, it would prepare the tech- nical and managerial basis necessary for a Second Project concentrating on village dairy development. February 7, 1975  Table 1 TA NZANIA DAIRY DEYELOPMENT PROJECT Estimated Breakdown of Cattle Population in 1972 Region Head of Cattle ('000) Arusha 2,376.9 Dodoma 767.4 Iringa 235.7 Kigoma 79.5 Kilimanjaro 241.5 Mara 769.9 Mbeya 522.7 Morogoro 92.5 Mtwara/Lindi 6.5 Mwanza 872.8 Coast 9.0 Ruvuma 25.8 Shiranga 1,381.9 Singida 775.8 Tabora 872.3 Tanga 176.5 West Lake 164.3 Total - - - 9,271.0 Source: KILIMO February 6, 1975 ANNEX 4 Table 2 TANUA DAIRY DEVELOPMENT PROJECT Estimated Production of Goat Milk in Tanzania 1967 to 1970 Goats in Milk Yield Estimated Production Year Head Gallons Gallons 1967 294,900 34 10,025,000 1968 303,800 34 10,329,000 1969 289,900 34 9,919,000 1970 296,300 34 10,139,000 Source: Dairy: Preliminaiy Cofmodity Note; Marketing Development Bureau, September 1973. (From FAO data). February 5, 1975 ANNEX 5 Page 1 TANZANIA DAIRY DEVELOPMENT PROJECT Commercial Aspects of Dairy Development Introduction 1. Less than 2% of milk produced in Tanzania enters the commercial sector. Dairy products are part of the production of the traditional herd, and are most often either consumed by the family or sold or bartered within the village. This annex is principally addressed to the commercial segment of the dairy industry, which concerns predominantly the urban markets, and which consists of a limited number of commercial dairy farms, the processing plants (Annex 6) and the marketing of dairy products. The role of dairy production for the vast rural sector is also discussed briefly. Milk Production (See Annex 4) 2. Data on total milk production is poor, since it is based on extra- polation from available information on the total cattle production and on co-efficients of production that are not well known. Most milk is produced by indigenous cattle owned by small farmers. In some parts of Tanzania, small farmers have animals with varying amounts of exotic blood, which are kept primarily for milk production. Estimates of total milk production are shown in Table 1. Significant quantities of milk are also produced by the national goat herd, but this is almost entirely consumed at the subsistence level (Annex 4, Table 2). 3. Commercial milk production is concentrated in the Arusha/Kilimanjaro and Dar-es-Salaam regions with lesser amounts near other urban centers, and is oriented to production for milk processing facilities. Fresh milk is produced by three groups of producers: state farms, individual large far- mers, and small farmers and village producers. The trend in commercial milk production in the last few years has been significantly downwards: total annual fresh milk intake at Coastal Dairies and Northern Dairies declined from more than 8 million liters in 1970 to 5.5 million liters in 1973. This decline is principally the result of abandonment of farms by non-African farmers, inadequate farm investment, and low milk prices (see Annex 6). Milk Processing 4. There are five commercial dairy processing units in operation located at Dar-es-Salaam, Arusha, Tabora, Musoma and Utegi. Individual farmers operate a number of dairies which cater mainly to smaller urban pockets not supplied by the main commercial processing units. New processing ANNEX 5 Page 2 units are planned in Tanga and Mbeya. Technical aspects of existing plants and current levels of production are discussed in Annex 6. The plants-pro- duce primarily pasteurized liquid milk but also some yogurt and a little butter, cheese and ghee. The largest plants, Coastal Dairies Ltd., Dar-es- Salaam, and Northern Dairies Ltd., Arusha, depend heavily on imported milk power and butter oil for their products. 5. The five main milk processing plants are all operating at well below full capacity, mainly because of shortages of raw milk and technical difficulties. The total quantity of local fresh milk processed is a very small fraction of total production; most milk is consumed raw by farmers or sold raw or slightly soured to other consumers in the locality. Imports of Dairy Products 6. Imported dairy products fall into two categories: those imported for the large-scale dairies, to be used for reconstitution of milk, and those imported for sale to consumers throughout Tanzania. Imports of dairy products have increased rapidly in recent years, in part because of the decline in commercial production, but primarily because of the rapid increase in demand for dairy products in the growing urban centqrs. Total imports of milk and milk products for the period 1961 to 1972 are summarized in Table 2. Table 3 shows 1973 imports broken down by principal groups of products and source of supply. An increasing proportion of dairy imports have come from Kenya, although within the past year there have been some difficulties with Kenyan supplies (primarily failure to deliver orders) and the commercial dairies are no longer permitted to import Kenyan skim milk powder or butter oil, although prices have been substantially lower than from other suppliers. The major growth items have been evaporated and condensed milk, skimmed milk powder, infants milk, and dried whole milk and cream. Coastal Dairies Ltd., and Northern Dairies import dairy supplies directly. All other imports are handled by the General Foods Company Ltd., and the wholesalers are Regional Trading Corporations. The level of imports is determined by the General Foods Company, according to foreign exchange made available by the Treasury and, to a lesser extent, requests from Regional Trading Corporations. Be- cause profit margins for dairy products are fixed at a low level, there is possibly some competition for import licenses among dairy products, which stand high on the priority list for social reasons, and other food products, which might qualify as luxury goods, and which are significantly more profitable. 7. Net imports of milk and milk products to Tanzania totalled 16.2 million kg in 1973 (value Tsh. 69.6 million), an increase of 2.7 million kg since 1970. This represented about 3% of Tanzania's total imports, and about 24% of total agricultural imports for 1973. In 1970, net imports to the Tanzania mainland were approximately equivalent to about 64 million kg whole milk (8.9% SNF); assuming that the import structure has not changed signi- ficantly in the last four years, present annual imports may be the equivalent of about 76.6 million kg of whole milk. Using this figure and data on ANNEX 5 Page 3 domestic production - totalling about 490 million kg in 1972 - the present average per capita consumption can be estimated at about 40 kg per annum or 110 gr/day of whole milk equivalent. It is apparent that given the rapidly in -easing demand for milk in Tanzania (Table 4 gives indicative projections), if the Government is to fulfill its objective of reducing imports of dairy products there would have to be a significant increase in both milk produc- tion per cow and in the size of the milking herd. Marketing 8. The milk plants deliver liquid milk in Tetra Pak cartons to a large number of retail outlets. Transport has presented a problem in Dar-es-Salaam where further outlets are required, but the distribution system generally works adequately. Fresh milk is transferred to a limited extent from urban centers with milk plants to towns with' no processing facilities. Imported dairy products are retailed by local food stores throughout Tanzania, and they appear to be a popular item in local dukas even in relatively remote rural areas. Condensed milk and infants' milk reportedly sell well when they are available, but there are frequent shortages. This suggests first, that even the rural poor will pay a high price for dairy products, and second, that there is a large unsatisfied demand for these products at present. Tables 5 and 6 show sales of imported, manufactured dairy products in two regions of Tanzania. Consumption and Demand 9. In most parts of Tanzania, supplies of liquid milk and manufactured dairy products are insufficient to meet consumer demand. This shortfall is most significant in the urban areas. Data on milk consumption are poor, and no adequate marketing studies have been undertaken. Current consumption levels and the potential for market expansion are therefore not known. How- ever, it is clear from past experience and from various sample surveys that there is a large unsatisfied demand for milk and milk products, both in the commercial sector and in the rural areas. Past growth rates in the large urban centers have been estimated at about 25% per year. 10. An estimate - albeit a crude one - is essential in order to arrive at possible future development targets for milk production as well as to quantify the total demand for milk and milk products calculated on a nutri- tional basis. One specialist 1/ estimated that the annual growth of demand with an income elasticity of 0.6 would be 4.3 percent over a 20-year period (up to 1990) and with an income elasticity of 1 percent, the growth of demand would be 4.8 percent per annum (Table 4). These estimates were, however, made under the assumption that the quantities consumed in 1970 totalled 750 million kgs of milk and milk products which in light of the revised 1972 figures on total milk production and imports may be 30-40% on the high side. 1/ "Dairy Production and A.I. in Tanzania," 1971. ANNEX 5 Page 4 Another assumption which is no longer valid was that consumer prices remain at the 1970 real values. Despite reservations, the report's estimates of total demand of milk and milk products (domestically produced and imported) are useful as an indication of the orders of magnitude and variance involved. However, projections of demand and of consumption tend to be rather academic in a situation where there are now and are likely to be for the foreseeable future major constraints in supply. Milk Pricing Policy 11. Prices are controlled at: the producer and retail levels for com- mercially processed milk. Prices to the producer are established by regional authorities (the Regional Price Controller) after consultation with the pro- cessing plants, because milk is viewed as a product of basic necessity. Prices paid to producers have varied significantly from region to region, ranging from 50 cents per liter in Mara to 1.14 shillings at Coastal Dairies. Although prices paid by consumers for direct purchases from farmers are generally higher than controlled dairy price, compulsory marketing orders oblige farmers near processing facilities to sell only to the dairies. Retail prices for processed milk products are established also by regional authori- ties in consultation with processing plants. Prices are determined by adding processing and distribution costs to the cost of raw milk and imported con- stituents. Prices of imported milk products are set by the National Price Commission; fixed margins are allowed for profits for importers, wholesalers, transport and retailers. Duties are charged on imported manufactured milk products from outside the East African community with the exception of in- fants' milk and skimmed milk powder and butter oil for commercial dairies, and these duties are passed on to the consumer. Price structures for the commercial dairies are described in Annex 6. 12. The Government has indicated that the aim of future pricing policy will be to set a price which will enable as much milk to be produced in Tanzania as is economically desirable, and yet which is not so high as to affect consumers adversely particularly those in the low income categories. They propose, with the formation of a single processing company (Tanzania Dairies Ltd. - TDL), to introduce a national milk price which would be adjusted for cost movements. They propose to increase the price paid to farmers to 1/25 per liter in 1975 by the time the Project commences. This price was almost exactly comparable to the equivalent cost of the imported constituents of a liter of reconstituted milk at the time the appraisal mission was in Tanzania, using prices actually paid by CDIL for imports scheduled for December 1974 delivery (Table 7). However, it must be recog- nized that there are many uncertainties in determining price equivalents among fresh milk products, reonstituted milk, and manufactured milk products (which are substantially more expensive now in Tanzania than fresh milk equi- valents), including uncertain projections for future SMP and butter oil prices, and possible price distortions in SMP prices. In comparing current price ANNEX 5 Page 5 levels in Tanzania and Kenya, it is apparent that Tanzania prices are sub- stantially higher (Tsh 1.14 per liter for CDIL for example, versus the official Kenya farm gate price of Ksh 0.75/liter; this reflects in part the higher cost of production in Tanzania, and the lower level of development of the industry. However, another factor is the likelihood that the Kenya price itself is somewhat arbitrarily fixed and is probably set now at too low a level. 13. The price paid to producers and the retail prices for dairy pro- ducts will in large measure determine the financial viability of the Project, and will have a major influence on future development of the Tanzanian dairy industry. In the past, low prices have had an adverse effect, but primarily on commercial producers, since traditional producers have been largely un- affected by the official price structure. As new processing facilities come into operation, if prices are fixed and compulsory marketing orders are enforced, the impact of price control policies will extend beyond the strict- ly commercial sector and will influence small producers to a greater extent. While it is important that producer prices be at a level that will ensure the financial viability of commercial producers, there is a risk that if price levels were too high, milk would be attracted from small producers to an extent that would be detrimental to nutritional levels in villages. This might occur in areas such as Mara, where current producer prices are relatively low, if a fixed national price were introduced. The objectives of pricing policies should thus be to ensure that dairy production is finan- cially viable, to encourage small producers to increase their production for the growing urban markets, but-to avoid drawing milk from the villages into the urban markets without a concomitant effort to assist in increasing pro- duction to a level where nutritional requirements would be met before sur- pluses were sold outside the village. Nutritional Aspects 14. The Tanzanian Goverment gives high priority to rural development, increased self-sufficiency and improved nutritional levels, particularly as regards the most vulnerable groups of the population, young children and pregnant and nursing mothers. It is therefore useful to attempt to quantify the nutritional needs for milk and milk products using infomration available in two main reports on the subject, 1/ and in other reports elaborating figures collected from limited areas. Milk is generally regarded as one of the most perfect foods available in East Africa from a nutritional point of view and the Tanzanians are usually keen consumers of milk although there are consi- derable variations in consumption habits in various parts of the country. 1/ Food Production in Tanzania - Strategy outline. Progress Report of Fourth Ministerial Executive Committee, Technical Committee IV: Food and Nutrition, Ministry of Agriculture and Cooperatives, 6/10/1971; and Dairy Development in Tanzania, Implications for Nutritional Improvement, Product Locations and Import Substitutions, Dr. Tom Zalla, Visiting Research Fellow, Economic Research Bureau, University of Dar es Salaam, 1972. ANNEX 5 Page 6 This might depend more on short supply and low purchasing power than on specific consumer preferences. Milk is an excellent complement to diets based mainly on maize, sorghum, banana, and cassava. The per caput require- ments of total protein have in some. studies been set at 60-65g per day for active adults and 45g for a 3-4 year-old child. Pregnant and lactating women have an estimated requirement of 90g/day. Accordingly about one third of a litre of milk would supply 17-19, and 25 percent of the total daily require- ment of protein for the first two groups respectively. The same quantity of milk would supply the total daily requirement of essential amino acids for adults except in respect to methionine and cystine, but the requirement for tryptophan would not be fully et at this level of intake. The most important sources of protein in the average national diet are cereals which according to "Food Production in Tanzania" are estimated to provide 37% of average intake, followed by animal products, 28%, and legumes, 19%. Consi- dering that a 20% intake of animal protein is generally seen as a minimum level, the above average is undoubtedly too low to ensure a sufficient and even supply of essential amino acids in all regions of the country. 15. The results of the most recent study of available data was published in 1974 ("Family Food Consumption Survey in Rural Tanzania", by Maletnlema, Nhombolage and Ngowi). Food consumption was studied in five villages in West Lake, Tabora, Coast, Kilimanjaro and Morogoro,regions and it was found that on the whole, calorie deficiency is the most severe problem in the five areas: "Protein calorie deficiency, especially kwashiorkor seems to be mainly due to improper use of available foods and repeated attacks by other diseases. Kwashiorkor Marasmus and various other forms of malnutrition are quite comon in Tanzania. From data collected so far by the Tanzania Human Nutrition Unit, on the nutritional status of about 4,000 pre-school children (and about 5,000 adults) it is estimated that about half a million children under five years of age suffer from mild to severe forms of protein calorie deficiency. This represents about 25% of the under-five population." The average calorie intake for adults was estimated at 2,520 calories in Kilimanjaro, 1,890 in Kisarawe (Coast Region) and 1,610 in Morogoro. This falls far below the recommended allowances computed from European figures, but agrees fairly well with the FAO finding of 2,000 to 2,500 calories per caput per day for the developing countries. However, in conclusion, it appears likely that the average deficit in the whole country might range between 20 and 40 percent due to regional and seasonal variations in supply. The study further reveals that the average intake of reference protein was 30gr per day per person among the 138 household members studied. Total crude protein intake was 60gr per caput per day in Karagwe and in Kilimanjaro. In the former area, however, intake was mainly of vegetable origin while the latter area's diet contained about 40% protein of animal origin. If the recommended intake of reference protein is set at a level of 35-38gr/person/ ANNEX 5 Page 7 day, the actual average intake in the whole country may at present be 15-20% below that level. 16. Milk and milk products are evidently an important part of the diets of Tanzanians, especially in rural areas, and an increase in milk production would contribute to improving diet and resolving protein deficiency problems. May 13, 1975 ANNEX 5 Table 1 TANZANIA DAIRY DEVELOPMENT PROJECT Cattle Populacion and Milk Production Indigenous Exotic Breed Population - '000 9,5001/ n.a. Cows in Milk - '000 1,556 6 Average Yield/animal/annual litres 306 / 2,4752/ Total Production, litres '000 4 h76,073 11,850 1/ Based on 1972 agricultural census preliminary results 2/ FAO data 5/ Calculated from estimated population and yield Source: Dairy: Preliminary Commodity Note, Marketing Development Bureau, September, 1973. January 3, 1975 ANNEX 5 Table 2 TANZANIA DAIRY DEVELOPMENT PROJECT Net imports of milk and milk products 1961 to 1972 East African Foreign Community Total Year kg shs kg shs kg shs 1961 6,131,719 13,286,900 1,004,004 5,382,860 7,135,723 18,669,760 1962 7,064,047 14,826,400 1,089,980 5,796,140 8,154,027 20,622,540 1963 7,102,423 16,724,871 1,385,974 6,964,860 8,488,397 23,689,731 1964 6,927,464 17,719,620 1,596,618 6,766,100 8,524,087 24,485,720 1965 7,361,882 20,562,820 1,718,274 6,251,940 9,080,156 26,814,760 1966 8,047,816 23,126,390 2,604,763 8,970,100 10,652,579 32,096,490 1967 10,338,814 31,682,900 3,357,534 11,427,320 13,696,343 43,110,220 1968 8,300,969 21,443,440 4,095,224 17,739,140 12,396,193 39,181,580 1969 9,288,003 24,396,974 4,659,957 19,180,571 13,947,960 43,577,545 1970 7,612,400 23,855,660 5,835,353 25,658,545 13,447,753 49,514,205 1971 8,128,500 24,617,974 5,693,166 23,432,444 13,821,666 48,050,205 1972 7,893,400 29,823,458 10,143,197 43,233,309 18,036,597 73,056,767 Source: Annual Trade Statistics, East African Community January 3, 1975 TANZANIA DAIRY DEVELOPMENT PROJECT Imports of Dairy Products, 1973 (Tsh '000) Nether- Switzer- West Kenya lands land USA UK Denmark Germany Other Total PRODUCT Fresh Milk 4,273.4 - -- - - - 4,273.4 Whole Milk Powder and Cream 13,958.3 390.5 1,341.9 - - 9.9 - - 15,700.6 Skimmed Milk Powder 2,525.1 2,846.2 - 3,455.5 311.4 - 0.2 1.6 9,140.0 Tinned Milk 17,705.0 3,597.8 - - - - 21,302.8 Butter 4,267.9 101.5 - - - - 4,369.4 Ghee 1,473.7 - - - - - - 861.2 2,334.9 Cheese and Curds 1,309.3 90.0 4.0 - - 34.2 169.5 111.6 1,718.6 Infants Food 7,133.8 1,867.9 - 1,260.2 - 536.4 0.7 10,799.0 Total 52,646.5 8,893.9 1,345.9 3,455.5 1,571.6 44.1 706.1 975.1 69,638.7 Source: East African Community Trade Statistics May 23, 1975 ANNEX 5 Tle TANZANIA DAIRY DEVELOPMENT PROJECT Estimated Total Demand for Milk and Milk Products in Tanzania 1970-1990 Demand of milk & milk products Year Population Income elasticity 0.6 Income elasticity 1.0 Mills. Growth Per caput Total quantity PercapVt Total quantity () (kg 1 year) (million kgs (kg/year) (million kgs whole milk equiv.) whole milk equiv.) 1970 12.9 58 750 58 750 2.7 1975 14.7 63 920 65 960 3.0 1980 17.1 66 1,130 71 1,220 3.0 1985 19.8 72 1,430 78 1,540 3.0 1990 22.9 76 1,750 84 1,930 Source: Rultnas Swicknertz, "Dairy Production and Artificial Insemination in Tanzania." January 3, 1975 ANNEX 5 Table 5 TANZANIA DAIRY DEVELOPMENT PROJECT Imports of Milk and Milk Products West Lake Region (Per Annum - 1973) Product Cartons Tinned Milk: (Liquid - Evaporated)I/ (a) Ideal - 1 x 48 tins 24,000 1 x 96 tins 3,600 (b) Gloria - 48 x 14 1/2 oz. 2,000 Infant Foods:- (a) Nespray - 24 x 1/2 kg. 1,200 12 x 1 kg 600 6 x 2 kg 360 (b) Lactogen 24 x 1/2 kg 1,800 12 x 1 kg 600 .6 x 2 kg 240 (c) Wan - 24 x 1/2 kg 240 6 x 2 kg 240 (d) Cerelac -- 24 x 1/2 kg 300 Fresh Milk: 300,000 1/2 liter tetra packs from KCC Source: Regional Livestock Development Officer, West Lake Region. 1/ Whole milk equivalent - 2.99 per kilo. / Whole milk equivalent - 6.52 per kilo. May 23, 1975 ANNEX 5 Table 6 TANZANIA DAIRY DEVELOPMENT PROJECT Imports of Milk and Milk Products: Mbeya and Rukwa (Month of July, 19T) 1. Tinned Milk: (Ideal) Sold - Large size tins (1W4 oz net): 800 x 48 - Small size tins (6 oz): 620 x 96 Bought (a 2/65 and 1/35 for large and small tins respectively. Retailed ( 1/20 for both small and large tins. 2. Lactogen: Sold - Large size tins (2 kg net): 43 x 6, a 205/45 per carton of 6 tins, retailed @ 34/95 each tin. - Medium size tins (1 kg net): 89 x 12, & 218/45 per carton*of 12 tins, retailed (9 19/10 per tin. - Small size tins (500 gms): 165 x 24, & 234/10 per carton of 24 tins, retailed @ 10/25 per tin. 3. Nespray: -(Powdered milk) Sold - Large tins (2 kg net): 30 x 6, & 186/85 per carton of 6, retailed @ 32/70 per tin. - Medium size (1 kg net): 191 x 12, W 199/50 per carton of 12 tins, retailed (a 17/45 per tin. - Small size tins (500 gms net): 146 x 24, & 212/90 per carton of 24 tins, retailed @ 9/30 per tin, 4. Powdered Milk: (500 tins gas net) Sold - (30 x 24) tins, @ 267/75 per carton of 24 tins, retailed @ 11/70 per tin. 5. Powdered Milk: (Tins 500 gs net) Sold - 23 x 24 tins, @ 300/35 per carton of 24 tins, retailed k 13/15 per tin ANNEX Table 6 Page 2 6. Condensed Sweetened Milks (Tins 400 gms net) (a) Smiling Boy - Sold (500 x 48) tins, @ 119/30 per carton of 48 tins, retailed @ 2/60 per tin. (b) Gloria - Sold.(900 x 48) tins, @ 157/10 per carton of 48 tins, retailed @ 3/45 per tin. 7. Butter (a) Tinned Butter (500 gis net) Y/- Sold (100 x 20) tins, @ 176/90 per carton of 20 tins, retailed @ 9/30 per tin. (b) Packets Butter ($00 gms) - Sold (30 x 50) packets, @ 398/60 per carton of 50 packets, retailed @ 8/35 per packet. Source: Livesock Development Officer, Mbeya. 1/ There is large demand and the supply is very limited; available on2y 2 months during the year. February 6, 1975 ANNEX 5 Table 7 TANZANIA DAIRY DEVELDPMENT PROJECT Fresh Milk vs. Reconstituted Milk: Basis of Calculation of Price Equivalents Fresh Milk: CDIL price at dairy: 1/14 Tsh. per liter Proposed price: 1/25 Tsh. per liter Reconstituted Milk (CDIL products) Assumption: 1 liter reconstituted milk is equivalent to 1.03 kg; it consists of: 3.2% butter fat 8.5% solid non-fats 88.3% water Prices, c.i.f.: Skim milk powder: US$1236 per metric ton or Tah. 8825 (December, 1974 actual price) Butter oil: 11/- kilo (99.3% MF) Water: 1/- ton Taking into account losses (@ 6% for SMP, and 1% for butter oil), the cost of constituent ingredients for reconstituted milk, prior to recombination or processing, is approximately 1/24 Tsh. February 7, 1975 ANNEX 6 Page 1 TANZANIA DAIRY DEVELOPMENT PROJECT Milk Collection, Processing and Distribution Introduction 1. Commercial milk processing is confined to the larger urban centers of Tanzania. There are five commercial milk processing units in operation: Coastal Dairy Industries Ltd. in Dar es Salaam, Northern Dairies Ltd. in Arusha, Mara Dairy Company Ltd. with two units, one in Utegi and one in Musoma, and the Vyamwezi Creameries operating a plant in Tabora. In addition, two small plants are under construction in Mbeya and one is planned for Tanga in the near future. Private producers process a limited amount of milk in Iringa. Coastal Dairy Industries (CDIL), Dar es Salaam 2. This milk plant has been in operation since late 1969. It became a subsidiary of the National Agricultural and Food Corporation (NAFCO) in August 1970 and NAFCO is the sole shareholder. The plant recombines skim milk powder and butter oil (virtually all imported) into reconstituted milk which is mixed with locally st4pplied milk for further processing into pasteur- ized toned milk and yoghurt. Sales of cream are insignificant and production of ice cream mix has been discontinued due to lack of storage facilities. The plant has a capacity of 60,000 litres per day; inadequate cold stores are the principal bottleneck to increasing production. Milk is sold in 1/2 litre and 1/5 litre Tetra Standard packs and yoghurt is fermented and sold in 250 grams plastic cups. Adequate machinery for proper treatment and packing of yoghurt is not available and this is the main constraint for increased sales of that popular product. Products are distributed to between 400 and 500 retail outlets, hotels, and institutions in the Dar es Salaam area (est. population 500,000). CDIL has a personnel of 170 divided as follows: Factory management 3, maintenance 11, reception 5, processing 16, packing 19, labora- tory 2, watchmen 5, and transport 9. The remainder are employed for administra- tion and 6ther unspecified duties. 3. Fresh milk is delivered to the CDIL plant by farmers. The dairy has no arrangement for milk collection. The fresh milk supply comes from about 20 producers within a radius of 40 miles from the plant, who deliver between 5,000 - 6,000 kg daily. Purchases of fresh milk have dropped signifi- cantly in the last 5 years from 3,546 tons in 1970 to 2,187 tons in 1973 (see Table 1). The lack of collection facilities is in part responsible for this decline, for it has deterred a number of small-scale producers. ANNEX 6 Page 2 4. Milk quality: Milk is checked daily with regard to fat content, specific weight (lactometer reading) and taste and flavor (organoleptic test); methylenblue and sediment tests are frequently carried out, particularly on qualitatively questionable supplies. The grading system and pricing applied by the plant is described in Table 2. About 98.3% of the total milk supply was of grade 1 in the first half of 1974, 0.7% of grade 2, 0.5% of grade 3 and the rest of low grade (rejected). The hygienic quality of milk varies widely; farms with cooling equipment and trained milkers can maintain a satisfactorily low total count of bacteria while milk from small producers in many cases arrives at the plant uncooled and in a rapidly deteriorating bacteriological condition. Adequate checking of coliform total bacteria is not carried out, due to inadequate laboratory facilities. 5. Price: The average price for milk to the producer varied between 95.6 cents and 96.0 cents/kg monthly before the price was increased by 20 cents/ kg from April 1974. 6. Milk Processing: The current processing capacity of the plant is as follows: Technical capacity Present throughput (units) in 12 hours production and production time units/day required (h) Pasteurized milk ("toned") Pasteurization) /1 Homogenizing ) 100,000 liters 42,000 liters/7h Separation ) Packing 1/2 L. Tetra Pak (3) 125,000 packs 68,000 packs/8h 1/5 " " (2) 100,000 packs 30,000 packs/5h (85,500 liters) (40,000 liters) Yoghurt Ripening, cooling) 1,000 liters .1,000 liters in churns and ) manual packing ) 4,000 cups 4,000 cups Packing Capacity ) 86,500 liters 41,200 liters /2 ) 230,000 packs 102,000 packs /1 9,000 liters/hr. /2 Standardized milk in bulk, 200 liters/day included. ANNEX 6 Page 3 The working day of the plant is presently divided into two phases. Loading of distribution trucks, milk reception and pasteurization starts early in the morning while packing begins at noon and continues to about 8.00 p.m. Some producers also supply milk in the evening. This schedule of production seems to extend the total time of operation unnecessarily and a more "over- lapping" operation could significantly lower costs. 7. Milk Sales: Total milk sales have increased considerably during the last 4 years. Table 3 gives a breakdown of average daily sales of the main gr9ups of products in 1970-73 and Table 4 gives a breakdown of sales of various products from January to June 1974. Sales have doubled in the past four years, providing for a liquid milk consumption in Dar-es-Salaam of nearly 0.1 liter per caput per day on an average basis. This figure probably varies between 0.05 and 0.2 liters for low incomes consumers and-more affluent citizens respectively. Table 5 shows sales prices for dairy products. 8. Distribution: CDIL has a fleet of 14 lorries for distribution. However, breakdowns and repairs considerably lower the capacity of the lorries; four are generally out of service and five experience continuous breakdowns. Only four vehicles, all 1973 models, are in reliable running order. The first delivery to customers takes place early in thd morning and a limited number of retailers are also supplied in the afternoon. An examination of the present distribution system indicates that CDIL supplies milk to only about one-third of the retail outlets in the city. Approximately 40% of the retail outlets do not sell milk and a further 12% are in short supply. CDIL also supplies some 14 milk kiosks which operate on a rental basis (Shs. 175/month). These wooden kiosks serve the passing public and it has been estimated that half the milk sold is consumed on the spot. Tables 6 and 7 provide information on CDIL's financial position. Northern Dairies Ltd., Arusha 9. The Arusha milk plant is a NAFCO subsidiary which began operations in July 1967. It is equipped to manufacture pasteurized milk, cream, butter, cheese, and,ghee but to date it has concentrated mainly on milk and small quantities of yoghurt, butter and ice cream mix for Arusha and Moshi (Table 8). Considerable quantities are also distributed in Tanga (in October 1974, 4,000-4,500 liters/day), which is 450 km from Arusha. The total population of three cities is approximately 140,000. The intake of locally produced milk to be used for "toning" of reconstituted milk is at present only about 25% of total requirements and the plant has imported considerable quantities of pasteurized milk in bulk from Kenya. In 1972-73, liquid imports equalled the amount collected locally (6,000-12,000 liters/day) but imports were discon- tinued in mid-1974 due to an increase in the price up to 1.35 sh/1, and the 10-ton tanker purchased for transport is presently not used. The plant employs about 103 people. 10. Collection and Processing: Northern Dairies provides limited collec- tion services for small producers at two points: Karangi (50 km from Arusha) and Ngaranyaki (40 km from Arusha). Total daily collection from these points ANNEX 6 Page 4 totals 4,000 liters. Most milk is collected from 24 large farms in the Kilimanjaro area. 11. Producer Prices and Quality Control: Prices to producers are given in Table 9. Prices paid for locally collected milk averaged 0.9 sh/kg in January, 0.89 in February, and 0.83 in March 1974, but rose in April to 1.12. The same level of 1.11 to 1.12 sh/kg was maintained in July-August. Local farm milk is checked daily organoleptically and using 10 min-Resazurin test. Fat content is checked twice monthly and sedimentation once monthly. Milk with a suspected fat content below 3.2% is tested with regard to degree of adulteration and acidity. About 93% of milk received is of 1st grade. 12. Plant Capacity and Daily Throughput: The Arusha milk plant has comparatively modern equipment; most vehicles were supplied by UNICEF. The pasteurization unit has a capacity of 40,000 litres in an 8 hr. shift. In a two shift operation the capacity would rise to 60,000 liters daily. The milk packing unit is comprised of 3 Tetra Pak filling machines (2 for 1/2 liter packs and 1 convertible unit for other sizes). The current output of this group is about 60,000 packs daily but the technical capacity in two shift production would be 100% more. Yoghurt is manufactured in a primitive way; hatch temperation and fermentation of milk in,churns, cooling in cold store and manual packing. The capacity of this labor intensive system is only 1,000 cups per day. The plant has a small butter manufacturing unit (80 kg butter per day) and a vat for production of ghee. The ice cream machinery is of moderate quality; it has a stated capacity of 1,500 kg per shift while the present throughput is about 250 kg per day. The factory building is compara- tively well utilized and an expansion may be required in about 5 years, al- though sales to Tanga are likely to be discontinued when the proposed milk plant there is completed. 13. Sales and distribution of milk and milk products: Northern Dairies has four covered lorries for distribution of milk in Arusha, one in Tanga and three in Moshi. One refrigerated lorry is available for ice cream distribu- tion in addition to a number of small ice boxes for selling on the streets of Arusha. Milk is delivered to the retailers during the early morning hours and a complementary supply is delivered at 2:00 - 3:00 p.. There are also 3 office vehicles available for service transport. Daily distribution of milk in August 1974 was as follows: Arusha 16,045 liters Moshi 11,228 liters Tanga 2,202 liters Total 29,479 liters The cost of transport of milk to Tanga is Sh 2,250/ or 41 cents/1 (delivery every second day). Sales and prices are shown in Tables 10 and 11. ANNEX 6 Page 5 14. Average daily milk sales have increased rapidly in the last two years, without any significant new marketing effort. There appears to be considerable untapped demand for fresh milk products in the Arusha and Kilimanjaro districts, and sales might easily be increased by an annual rate of 15-18%. Improved facilities for fermented low-fat milk processing would also be a good commercial and nutritional venture. Tables 12 and 13 provides information on the financial position of Northern Dairies. Mara Dairy Company Ltd., Musoma and Utegi 15. Until recently, there was one small milk plant in the Mara region at Musoma operated by the Regional Cooperative Union until 1966, when NAFCO took over as the main shareholder. The plant collected, pasteurized and retailed milk. The price paid to producers at collection points or at the dairy was 71 cents per liter; this relatively high price was possible because transport costs for raw milk were low. The total supply to the Musoma plant in 1970 was 637 tons; the main product was ghee, manufactured from cream supplied to the plant by several private producers with separators, who paid farmers about 14 cents a liter, but returned the skimmed milk to them after processing. After 1966, the Musoma plant was expanded and equipped with sophisticated machinery for pasteurization and separation, butter manufacture, and UHT (ultra-high-temperature) treatment and aseptic packing of milk, under a Danish credit. Operations were to begin in June 1974, but in September/ October 1974, only limited experimental production had been undertaken. 16. The company has also established a plant in Utegi in an old sisal factory. This plant has modern equipment for production of milk powder and ghee. It began operations in September 1973 and has to date absorbed the bulk of milk collected in the Mara region. One difficulty is that the Mara river can be crossed only by ferry, and supplies from Musoma are occasionally disrupted. 17. The Mara Dairy Company has a total personnel of 100 employees; 45 in Musoma, 40 in Utegi (including farm personnel) and 16 in administration. The Utegi factory reportedly employs 22 people; (management 3, processing and maintenance 13, transport 3, and administration 3). 18. - Production Capacity and Current Throughput: The current capacity of the Musoma plant is as follows: Milk intake 5,000 liters/hour Milk pasteurization and separation 6,000 liters/hour UHT-unit 2,000 liters/hour Aseptic packing 1,800 liters/hour (3,600 packs) Butter manufacture 1,000 kg/day ANNEX 6 Page 6 Thus, total processing capacity in one shift is: Pasteurized milk 40,000 liters UHT milk 10,000 liters Butter (cream from standardization of) 400 kg Thus, a supply of 15,000 tons of fresh milk per year (300 working days) would be required to operate the plant at full capacity in one shift. In October 1974, about 7,000 liters/day were received by the plant; 2,000 liters were pasteurized and distributed in bulk in Musoma (18,000 inhabitants) and 5,000 liters were sent to Utegi for further processing. Pasteurized milk sold for 1.40 sh/1 in bulk (90 cents/1 in rural trade), butter for 6.25 sh/kg ex-factory; including a sales tax of 40% the price was 8.75 sh/kg. 19. The Utegi plant has a maximum capacity of approximately 50 tons of milk per day which with 80% utilization would absorb about 15,000 tons of fresh milk annually. The intake of milk during the period January-August 1974 was however, only about 2,800 tons which gives an average capacity utilization of less than 20%. The Utegi plant's production from January to August 1974 was: dried skim milk powder 190 tons ghee 127 tons The plant also distributed about 700 liters of pasteurized milk per day in Utegi (1,500 inhabitants) and,in Tarimi (6-7000 inhabitants) at a selling price of 1.25 sh/liter while the retailing agent charged 1.40 sh/liter to the consumers. Tables 14 and 15 provide information on the financial position of the Mara Dairy Company. 20. Milk Collection. The Mara Dairy Company plans to set up a network of 90-100 collection/cooling centers with Danish assistance. In August 1974, 47 centers had been established with 18 in the Utegi area north of the Mara River and 29 in the Musoma area. The Musoma centers collected 1,230 tons in May-August (average 321 kg/day). The tanker collection fleet consists of 8 modern vehicles with a capacity of 5,000 liters each. Three tankers are located at the Utegi plant (1 out of service) and 5 in Musoma. The tankers are already, after 1 year's service, in comparatively bad condition due to the undevelop d infrastructure and almost complete absence of paved roads. Two additional tankers were recently delivered. 21. The current collection system is extremely expensive, given the limited supply of fresh milk in the Mara region. Supplies can be increased significantly only if milk yields from small producers rise, which would require a concerted effort to provide assistance to small producers, primarily through extension and improved animals. This will take a long time. An in- crease in the producer price might increase supplies immediately, and lower unit costs for collection and production; however, it might also attract more milk from the rural areas than is desirable, considering low levels of nutri- tion in this region. ANNEX 6 Page 7 22. Future Prospects: The two plants at Musoma and Utegi are likely to function well below their planned capacity for some time to come, and it would be difficult now to justify construction of these plants at their cur- rent location on economic grounds. However, the two plants exist and they are at present the only ones in Tanzania having facilities for preservation of milk, and efforts should be made to increase the supply of milk to these plants both from large-scale dairy farms and from small producers. From a technical point of view, the production of whole milk powder at the Utegi plant appears to represent the optimum utilization of existing capacities. Given the acute shortage of milk, a program of production and direction of supplies should be set up. It seems advisable to utilize the plants accord- ing to a system of alternation. The UHT-unit could operate perhaps 2 consecutive days/week, utilizing technical personnel from Utegi in addition to its own staff which could be minimized. The only activities to be simul- taneously carried out in Utegi would be a limited intake 'of milk for separation, pasteurization and cooling. Skim milk for drying and cream for production of butter or ghee could be accumulated in tanks at a low temperature (40 C) and processed after 24 hours. UHT-milk should initially be produced only on a limited scale as a luxurious product with a guaranteed high quality. The retail price should be set at a high level especially in Dar es Salaam where a potential demand may exist among more affluent consumers. It is necessary to gain experience in mastering technical and quality problems which unfor- tunately is unavailable for such a sophisticated production; this has caused high losses (5.7% in packing material and 2.5% in milk) experience is also required in marketing and studying consumer reactions before the decision is made to lower the price and expand the markets. Since qualitative failure in the phase of introduction would destroy the reputation of UHT-milk for years, it is recommended to start production on a limited scale. Other Milk Processing Plants Relevant to the Project 23. Tanga: The construction of a milk plant in Tanga is planned to commence in 1975. Initially, the plant will be equipped to process about 6,000 liters per day, but the provision of additional capacity up to 13,000 liters per day has been taken into account. The New Zealand Government will provide equipment and technical assistance at a value of Tsh 2.5 million and the Tanzanian Government will finance the building which will cost about Tsh 1.0 million. The plant will produce pasteurized milk, yoghurt, and butter for the Tanga township which at present is supplied from the Kange dairy farm and in smaller quantities from a few other dairies. Northern Dairies in Arusha has a depot in Tanga; average sales are about 1 million liters annually. The bulk of the milk is brought into town by milkmen selling milk of a question- able quality. The total supply has been estimated at about 8,000 liters per day currently; there is a potential demand for perhaps twice that much. Possible seasonal surpluses could at reasonable cost be shipped to Dar es Salaam for processing, packing and distribution (distance 280 km). 24. The Mbeya/Kitulo Area: The National Cold Chain Company (NCCO) has built a small milk pasteurizing and packing plant in Mbeya (capacity 3,000 ANNEX 6 Page 8 liters/day). In addition, a joint Tanzania/Nordic project is completing a large training center there. This institute will have a population of over 1,000 people and it is assumed that the milk produced at the training farm and processed by their plant will be for local consumption at the campus. It is unlikely that additional processing facilities will be required in the near future (3-5 years). However, if current plans for dairy development on the Kitulo Plateau are realized, a processing plant for drying and condensing may be a viable proposition. March 25, 1975 ANNEX 6 Tab1 I TANZANIA DAIRY DEVEIPMENT PROJECT Coastal Dairy Industries Ltd. Milk intake 1970 - August 1974 and average fat content in 1973/74 (m tons) % % Month 1970 1971 1972 1973 Fat 1974 Fat January 313.4 314.2 257.5 222.6 4.47 218.0 4.30 February 276.0 285.6 222.2 183.5 4.46 182.0 4.44 March 299.1 302.5 2b1.7 183.5 4.43 187.5 4.41 April 285.7 289.7 230.6 169.9 4.60 185.0 4.4a May 284.3 286.3 203.6 167.8 4.55 182.4 4.36 June 277.6 262.9 207.9 171.9 4.55 174.9 4.40 July 318.2 247.3 232.9 179.9 4.39 168.3 August 291.2 255.2 226.9 169.8 4.39 151.9 September 294.0 245.6 217.0 167.7 4.62 160.0* October 309.7 234.7 226.8 171.4 -.39 165.0* Novembqr 293.2 232.8 227.6 177.2 4.34 180.0* December 304.0 247.6 230.5 221.3 .9 200.0* Total 3546.4 3204.4 2725.2 2186.5 4.66 2155.0 * mission lDrojection Source: CDIL February 14, 1975 ANNEX 6 Table 2 TANZANIA DAIRY DEVELOPMENT PROJECT Coastal Dairy Industries Ltd. Milk Grading System and Price of Fresh Milk Grade: Fat Content (%) 1/ Price (Sh) 2/ 1 3*9% and above 1.14 2 3.5-3.9 1.12 3 3.2-3.5 0.21 1/ Milk fat bonus paid at a rate of 0.5 cent/0.1%/kg for milk with a fat content above 4%. 2/ Price raised by 20 cents/kg for 1.4.1974 (unchanged since 1970). Source: CDIL May 14, 1975 ANNX 6 Tale 3 TANZANIA DAIRY DEVEIDPMENT PROJECT Coastal Dairy Industries Ltd. Average Daily sales of liquid milk products (1970-73) (litres) 1970 1971 1 1973 "Toned" standardized milk of all types 19,000 21,000 27,000 35,000 Cream 21 40 41 40 Yoghurt 120 520 915 Total/day 19,021 21,160 27,561 35,955 Table 4 Average Daily sales of various milk products January - June 1974, estimated average daily sales for 1974 (litres) Toned ilk 3 1. 28,542 28,545 27,405 24,338 31,926 38,814 33,400 (3.2% B.F. 8.5% suF) 1/5 1. 4,970 4,268 5,274 6,o50 5,565 5,645 5,400 Bulk 284 290 252 269 190 129 200 Kamili 1. 627 650 634 - - - - Yoghurt 1. 1,148 1,035 1,048 689 1,054 1,021 1,100 Fresh Cream 48 49 46 46 45 46 50 Ice Cream Mix 75 70 79 60 48 59 3/ 35,694 34,907 34,738 31,452 38,828 43,714 4o,150 1/ Sales affected by storage of skim milk powder. 2/ Discontinued. 1/ Mission estimate. Source: CDIL and mission estimate April 16, 1975 ANNEX 6 Table 5 TANZANIA DAIRY DEVELOMENT PROJECT Coastal Dairy Industries Ltd. Sales prices (as from 3rd April 1974) (Tsh) Wholesale per pack Retail fixed price per pack Milk ' 1. 0.95 1.00 Milk 1/5 1. 0.40 0.45 mlk Bulk 1.75 (per litre) - Yoghur 1, 1.10 1.20 Cream ! 1. 4.50 5.00 Ice Cream Mix 8.00 Source: CDIL April 16, 1975 ANNJEX 6 TANZANIA Table 6 DAIRY DEVELOPMENT PROJECT Coastal Dairy Industries Ltd. Comparative Balance Sheets as at 31 December 1971-1973 (Tsh '000) 1971 1972 1973 Fixed Assets Fixed Assets at Cost 5,901 6,362 7,075 Less Depreciation 1±368 4,533 2,100 4,262 2,847 4,228 Work in Progress 5 500 Investment 90 Current Assets Current Assets 4,883 4,417 5,742 Less Current Liabilities 3 67 915 3,227 1,190 4,331 1,411 Net Current Assets 5,448 5,457 6,229 Long-Term Loans 3,005 2,475 Net Assets Representing Shareholders' Interest 21443 2,633 3,754 Share Capital Ordinary Shares of Tsh 100 each fully paid 2,000 2,000 2,000 Revenue Reserve 443 633 1,754 2,443 2,633 3,754 Source. CDIL April 16, 1975 AmEx 6 Table 7 TANZANIA DAIRY DEVELOPMENT PROJECT Coastal Dairies Industries Ltd. ComparAtive Manufacturing, Trading and Profit and Loss Accounts for the Years Ended 31 December 1971 - 1973 (Tsh '000) 1971 1972 1973 Cost of Raw Materials 6767 839 12598 Packing Meterials 1197 1832 2687 Wages and Overtime 202 213 222 Prime Cost 8166 10984 15507 Factory Overheads 1325 1584 1656 Net Factory Cost of Production Transferred to Trading Account 9491 12567 17163 Opening Stock 44 55 51 Cost of Milk Produced 9491 12567 17163 Total Available for Sale 9535 12622 17213 Less Closing Stock 55 51 66 Cost of Sales 9480 12571 17147 Sales 12326 15745 21131 Gross Profit 2486 3174 3984 Other Revenue 102 122 186 Total Revenue 2948 3296 4170 Less Administration, Sales and Distribution Expenses 1571 2158 2274 Net Profit for the Year 1377 1136 1896 Source: CDIL April 16, 1975 ANNEX 6 Table 8 TANZANIA DAIRY DEVELOPMENT PROJECT Northern Dairies Ltd. Milk Suplies and Production (1000 litres) Local Kenya Total SUpL Milk Supply Reconstituted Total 1970 3,775.o 452.6 4,227.6 - 4,227.6 1971 3,462.0 1,278.0 4,740.0 - 4,740.0 1972 3,546.6 2,807.9 6,354.5 - 6,357.5 1973 3,368.6 3,612.1 6,980.7 2,254.5 9,235.2 197 Jan. 216.8 140. 357.2 650.0 1,007.2 Feb. 163.1 150.4 313.5 313.7 627.2 March 180.0 - 180.0 381.7 561.7 April 239.7 171.7 411.4 141.5 552.9 Ma 281.3 183.6 464.9 26.8 711.7 ,une 2'1.8 306.0 567.8 518.3 1,086.1 *.uly 294.4 - 29.0 607.6 901.6 August 231.5 - 231.5 70L.0 935.5 Source: No.ther-n Dairies Ltd. April 16, 1975 ANN EX 6 Table 9 TANZANIA DAIRY DEVELOPI'MT PROJECT Northern Dairies Ltd. Prices to Producers (from 4.1.1974) 1st Grade Milk* 1.00 sh/kg 2nd Grade Milk 0.97 sh/kg 3rd Grade Milk 0.88 sh/kg Low Grade Milk 0.54 sh/kg Low Grade Milk 0.42 sh/kg Milk fat bonus: 1 cent per 0.1% b.f. over 3.5% a Source: Northern Dairies Ltd. April 16, 1975 1uaNEX 6 Page 10 TANZANIA DAIRY DEVEOPMENT PROJECT Northern Dairies Ltd. Average Dai.bj Sales - August 1974 Milk (2.5% BF and 9.1% SNF) Tetra litre pack 1,300 litres Tetra litre pack 27,700 litres Tetra 1/5 litre pack 50 litres Bulk milk 350 litres Raw milk (lshA) 25 litres Sour/skim milk 62 litres Cream 24 litres Yoghurt cups (N litre) 34 cups Butter 16 kg Ghee 70 kg Source: Northern Dairies Ltd. April 16, 1975 ANNEX Table 11 TANZANIA DAIRY DEVELOPMENT PROJECT Northern Dairies Ltd. Sales prices in Arusha, Moshi and Tanga (April, 1974 (Tsh) Product Wholesale Price Retail Price Milk in bulk 1.75/litre 1 Tetra 0.95/pack (a) 1.00/pack collected at retail outlet (b) 1.05/pack home-delivery 1/1 1 Tetra 1.80/pack (a) 1.90/pack (b) 1.95/pack 1/5 1 Tetra 0.40/pack .0.40/pack (a) and (b) Ghee 3 kg 51.50/tin 57.50/tin (recommended price) " 18 kg 296.05/tin 310.85/tin 1 n Butter (salted) kg 13.65/kg 14.00/kg " (unsalted) kg 13.90/kg 14.25/kg " Fresh Cream 1 1 2.50/cups 2.70/cups " 1 35.00/gal 37.00/gal Ice Cream 1 gal 24.60/gal 27.00/gal it if 2 1 12.30/pack 15.00/pack i I 1 1 8.40/pack 10.00/pack 1i if 250 cc cups 2.05/cups 2.50/cups it " 100 cc cups 0.80/cups 1.00/cups. (1.10 in Tanga) Chocolate Sticks 0.95 stick 1.10/stick (1.20 in Tanga) Ice Lollies 0.40/lolly 0.50/lolly (0.60 in Tanga) Source: Northern Dairies Ltd. April 16, 1975 ANNEX 6 Table 12 TANZANIA DAIRY DEVELOPMENT PROJECT Northern Dairies Ltd. Comparative Balance Sheets as at 31 December 1971-1973 (Tsh '000) 1971 1972 1973 Fixed Assets Fixed Assets Less Depreciation Land,Buildings & Installation 513 989 894 Plant and Machinery 614 1,091 1,065 Furniture & Fittings 72 106 116 Milk Cans 37 38 73 Motor Vehicles 244 246 345 Works in Progress - 1,480 - 2,470 40 2,533 Current Assets Current Assets 1,816 1,841 2,944 Less Current Liabilities 913 1,176 1,678 Net Current Assets 903 665 1,266 Total Assets 2,383 3,135 3,799 Less Long-Tem Loans 1,158 1,158 1,300 Net Assets Representing Shareholders7 Interest 1,225 1,277 2,49 Share Capital 600 600 600 Revenue Reserve 625 1,377 920 Milk Production Reserve - - 248 Retained Profit 583 Long-Term Interest Reserve - - 148 1,225 1,977 42A9 April 14, 1975 ANNEX 6 TANZANIA Table 13 DAIRY DEVELOPMENT PROJECT Northern Dairies Ltd. Comparative Manufacturing, Trading and Profit and Loss Accounts for the Years ended 31 December 1971 - 1973 (Tsh '000) 1971 1972 1973 Sales 7,235 9,436 19,186 Deduct Opening Stock 29 34 74 Add Milk Purchase 3,806 5,208 7,949 Add Transport 445 740 679 4,280 5,991 8,777 Less Closing Stock 34 4,246 74 5,917 66 8,711 Gross Revenue 2,989 3,519 5,476 Deduct Factory Overheads 1,783 2,283 3,554 Gross Profit 1,206 1,236 1,921 Other Income 160 197 108 Total Revenue 1,367 1,434 2,029 Deduct Administration, Selling & Distribution Expenses 669 756 1,119 Net Profit for the Year 698 678 910 Source: Northern Dairies Ltd. April 16, 1975 - ANNX 6 Table 14 TANZANIA DAIRY DSVELOENT PROJECT Mara Dairy Compan Ltd. Comparative Balance Sheets for the Years Ended 31 December 1972 and 1973 (Tsh '000) 1972 1973 Assets Fixed Assets at Cost 2020 1073 Less Accumulated Depreciation - 92 1928 1386 9187 Preliminary Expenses 1026 1026 Current Assets loss 484 1736 Profit and Less Account - Accumulated - 2586 Total 3438 Liabilities Share Capital 4000 4000 Less Calls Unpaid 1600 2400 742 3257 - 8482 Current Ilabilities 1038 2796 Total 3438 1h53 Source: Mara Dairy CampazW Ltd. May 15, 1975 TANZANIA DAIRY IVELOPMENT PROJECT Mara Dairy Company Ltd. Comparative Profit and Loss Accounts as of 31 December 1972 and 1973 (Tsh '000) 1972 1973 Income Sales 908 Other Income 1 1 153 1061 Expenditure Purchases - 522 Staff expenses 303 50h Other expenses 193 866 496 1892 1892 Less Closing Stock - 496 302 1590 Loss before Depreciation & Interest 495 529 Depreciation 49 1294 Interest - 49 763 2057 Net Loss for the Year 544 2586 Source: Mara Dairy Company Ltd. April 16, 1975 ANNEX 7 Page 1 TANZANIA DAIRY DEVELOPMENT PROJECT Tanzania Rural Development Bank General 1. The Tanzania Rural Development Bank (TRDB) was created by the Tanzania Rural Development Bank Act, 1971 with the following objectives: (a) to provide medium- and long-term finance for rural development; (b) to provide technical assistance and advice for promoting rural development; (c) to administer such special funds as may from time to time be placed at its disposal; (d) to finance the purchase of agricultural inputs: and (e) to undertake such other activities as may be necessary or advantageous for furthering the foregoing objectives. IDA approved the creation of TRDB through an amending agreement (April 28, 1971). 2. Several rural credit measures had been adopted by Government before the TRDB Act was passed. Among them were measures authorizing the establish- ment of the Land Bank of Tanganyika (1947-1961), the Agricultural Credit Agency (1962-1964), and the National Development Credit Agency (1964-1971). 3. TRDB inherited some 'assets and liabilities as well as certain opera- tions from the National Development Credit Agency (NDCA), including IDA credits 80-TA (US$5 million, general agricultural credit) and 217-TA (US$6 million, flue cured tobacco). Bad debts worth about Tsh 31 million (US$4,350,000) were not transferred to TRDB. Nearly all of NDCA's staff were absorbed into TRDB and most of them retained their previous assignments. Organization and Management 4. The management of TRDB is vested in a Board of Directors, including a chairman and managing director appointed by the President of the Republic, and eight other directors appointed by the Minister of Finance and chosen from among persons with knowledge and experience of economic and financial matters, rural development, agriculture, small scale industries, ujamaa villages or cooperatives. The General Manager, who is appointed by the Minister of Finance for a term of five years, manages the Bank through its five Departments and various committees (Chart 1). TRDB has its head office in Dar-es-Salaam and 20 regional offices. 5. There are four Departments: Development, Finance, Administration and Operations. The regional offices represent the Bank at the regional level and provide technical assistance in project development and implementation. ANNEX 7 Page 2 6. The regional offices are generally manned by a Regional Representa- tive (R.R.) and a Credit Supervisor. While the R.R. is concerned primarily with development work, including provision of technical guidance, it is diffi- cult for one credit supervisor to attend to his various items of work effec- tively, particularly the collection of Bank loans (para 15). TRDB should consider augmenting the number of credit supervisors, as appropriate, so that one credit supervisor does not have more than, say, 15 to 20 societies under his charge. TRDB has just recruited 18 credit supervisors who are expected to be posted at regional offices after a three-week orientation training course. 7. There is also a need to augment the staff in the Operations Depart- ment at Head Office to deal with loan proposals expeditiously (para 12). Capital Structure 8. TEDB has an authorized capital of Tsh 300 million, divided into 300 equal shares, the Government being the sole shareholder. As on June 30, 1974, its paid-up capital stood at Tsh 113.2 million consisting of 98 fully paid and one partly paid shares. General reserves amounted to slightly over Tsh 2 million. Other TRDB resources comprised IDA and other international project funds aggregating Tsh 235 million (authorized to TRDB), short-term deposits of about Tsh 2 million, Government loans of over Tsh 50 million, National Bank of Commerce overdrafts of Tsh 3 million, and Ujamaa village bonds of Tsh 10 million. Loan Policy and Procedure 9. TRDB makes short-and medium-term loans up to five years and long- term loans up to 15 years. Eligible borrowers comprise cooperative unions and societies, district development corporations, ujamaa villages and re- gistered associations, corporations and individuals, and any other borrower falling within the scope of any agreement under which TRDB has borrowed funds. Project loans should be technically and financially viable and should be con- sistent with national economic development priorities. TRDB secures its loans by either a first mortgage on movable property or a value security at 75% of the appraised value of the property. Short-term loans are generally made at 8-1/2% interest p.a., while medium- and long-term loans carry interest at 7-1/2% p.a. There is also an application fee of Tsh 5 to Tsh 500 depending upon the loan amount. The Bank does not undertake any foreign exchange risks. 10. Upon receipt of a loan proposal from an eligible borrower, the regional representative of TRDB makes a preliminary appraisal following a visit to the Project area and submits the proposal with his report to the Regional Advisory Committee (RAC) for consideration. The proposal with the RAC's recommendations is then sent to the Head Office of TRDB for consideration. After the proposal is reviewed as to its technical and economic feasibility, the management/loan committee considers it for approval. ANNEX 7 Page 3 11. In accordance with Bank policy, TRDB's Board recently delegated limited authority, subject to review, to the RACS (since designated as Regional Loan Committees) to sanction loan proposals up to a maximum ceiling of Tsh 50,000 per project per borrower. At Head Office, the management (Chairman and Managing Director) considers loan proposals for new projects for amounts of Tsh 50,000 to Tsh 500,000 and up to Tsh one million for on-going projects, while all loan proposals exceeding the above amounts are considered by TRDB's Loan Committee, consisting of one Director, the Chairman and the Bank's Secretary. 12. As of June 30, 1974, TRDB had on hand 96 loan proposals for amounts totalling Tsh 55 million awaiting consideration. The majority of the proposals had been pending for over six months at the Head Office and regional offices. Loan Operations 13. The following table shows the development and diversification of TRDB's loan operations since 1972: .(Tsh million) 1972 1973 1974 Seasonal inputs 21.0 62.0 85.9 Crop establishment 0.9 24.5 12.8 Rural transportation 6.6 8.6 30.4 Farm machinery 1.0 2.0 1.3 Storage 5.3 1.9 0.4 Comercial ventures 0.5 - 2.7 Fisheries project - 0.9 1.3 Livestock 0.5 7.8 25.8 Total 35.8 107.6 160.6 The number of loans approved by TRDB over the three-year period increased from 91 in 1972 to 103 in 1973 and to 229 in 1974. During this period, loans for development of agriculture accounted for 65% of all loans approved by TRDB. Further, consistent with the nation's long-term aim for rural development through the creation of cooperative agriculture, agricultural loans through cooperatives were of the order of Tsh 92.2 million out of the total loans of Tsh 160.6 million approved by TRDB as of June 30, 1974. Overdue Loans 14. The accumulation of overdues has been a constant feature of TRDB's operations over the last three years and as of June 30, 1974, these amounted to Tsh 31.1 million (principal) and Tsh 4.4 million (interest) and formed about 21% and 74% of Tsh 148 million (principal) and Tsh 6 million (interest) ANNEX 7 Page 4 respectively outstanding and due on that date. If arrear loans are considered in relation to the amounts which fall due for recovery during the period ended on June 30 each year, the overdue percentages would be much higher. Out of Tsh 35.6 million of arrear loans (principal and interest) as on June 30, 1974, Tsh 29.4 million related to NDCA loans taken over by TRDB. The overdues in respect of the new loans extended by TRDB itself totalled Tsh 6.2 million and formed a little over 5% of the Bank's new loans outstanding as of June 30, 1974. 15. While a portion of the Bank's overdues can be attributed to the country's drought conditions during 1973, the main reason for this continuing feature is TRDB's weak machinery for supervision (credit supervisors) over the utilization of loans, follow-up of project implementation, recovery drive during harvest seasons and prompt action - legal or otherwise - against willful defaulters (para 6). 16. TRDB has no system for an age-analysis classification of its arrears. The proposed Project would provide for the appointment of a consultant on a short-term basis, to examine the arrears, to determine their realizability or otherwise and to set up a system whereby TRDB would be able to find out periodically the age-analysis of its arrears. Provision for Bad and Doubtful Debts 17. TRDB is at present making an ad hoc provision of 1% of new loans disbursed each year towards bad and doubtful debts. On the basis of the age- wise classification of the arrear loans to be worked out by the consultant (para 16), TRDB should be able to judge the adequacy of the provision and consider the need for increasing it. Interest Rate 18. TRDB pays interest on loans from Government, including loans under IDA and other international credits, at 3-1/2% - 4% p.a. On short-term deposits it pays 5% interest p.a., while the rate is 7% p.a. on National Bank of Commerce overdrafts. On the special ujamaa village bonds, the interest rate is 3% p.a. TRDB charges 8-1/2% interest p.a. on its short-term loans and 7-1/2% p.a. on medium- and long-term loans. TRDB's interest spread is generally 5%. Interest rates of TRDB compare favorably with those charged by the National Bank of Commerce (normal 8% p.a.) on working capital loans and the Tanzania Investment Bank (7-1/2% - 9-1/2%) on term loans. Accounts and Audit 19. TRDB has adopted a mechanized accounting system. Audit of its accounts was performed by the Tanzania Audit Corporation which had already completed the audit for the year ending June 30, 1974. TRDB would be required to submit to IDA its audited annual accounts not later than six months after the close of its financial year. ANNEX 7 Page 5 Financial Position 20. TRDB's net profit increased from Tsh 152,000 in 1972 to Tsh 372,000 in 1973 and to Tsh 946,000 in 1974. The increase is due to a steep increase in the Bank's lending operations, the outstandings of which increased from Tsh 92 million in 1972 to Tsh 115 million in 1973 and to Tsh 154 million in 1974. TRDB's net earnings were, however, affected by an increase in arrear interest which as of June 30, 1974 amounted to Tsh 4 million. Further, as against Tsh 36 million arrear loans as of June 30, 1974, TRDB's provision for bad and doubtful debts stood at Tsh 14 million (Tables 1 and 2). Prolect Participation 21. TRDB would act as the credit channel for financing dairy farms, Ujamaa dairy units, the West Lake heifer breeding unit and the milk collection, processing and distribution components. In the case of the dairy farms, the Bank would receive Project funds from Government at 4% interest for a term of 20 years with a five year grace period. TRDB would onlend the funds at 8-1/2% interest p.a. for a term of fifteen years with a four year grace period, in accordance with farm investment plans submitted for TRDB's approval. TRDF's security would consist of a lien over the livestock held on such farms and a first mortgage on all project assets until outstanding loans are repaid. In the case of Ujamaa dairy units, TRDB would onlend funds at 8-1/2 interest p.a. for a term of fifteen years with a grace period of four years. The items of investment and security would be the same as for the dairy farms. For the milk collection, processing and distribution component, TRDB would onlend funds to TDL at 8-1/2% interest p.a. for a term of eight years without a grace period, and the loan would cover physical investment. TRDB's security would consist of a first mortgage on all project assets until outstanding loans are repaid. In the case of the heifer breeding unit, TRDB would onlend Lunds at 8-1/2% interest p.a. for a term of fifteen years with a grace period of four years; the loan would cover investments in livestock, buildings, installation of machinery, equipment and initial working capital. TRDB's security would be the same as for the dairy farms. March 25, 4975 ANNEX 7 Table 1 TANZANIA DAIRY DEVELOPMENT PROJECT Tanzania Rural Development Bank Comparative Balance Sheets as at June 30, 1972 thru. 1974 (Tsh '000) 1972 1973 19741/ Assets Loans (less Provision for Bad Debts) 79,036 106,289 140,755 Sundry Debtors 2,440 3,932 16,674 Cash and Banks 11,628 32,259 57,766 Fixed Assets 1,025 1,269 1,588 Total Assets _94,129 13749 216 783 Liabilities a. Current 20,955 32,267 22,3h3 b. Medium-and Long Term 33,348 51,184 78,257 Issued Share Capital 38,000 57,711 113,211 General Reserve 1,674 2,215 2,026 Profit 152 372 946 942129 1L3,749 216,783 Authorized Capital = Tsh 300 million 1/ Unaudited November 7, 1974 ANNEc 7 Table 2 TANZANIA DAIRY DEVELOPMENT PROJECT Tanzania Rural Development Bank Comparative Profit and Loss Accounts for the Years Ended June 30, 1972 thru 1974 1/ 1972 1973 19747 Income Loan Interest Received 4,671 6,683 7,587 Other Income 287 366 781 Total 4 958 7,049 8,368 Expenditure Cost of Funds 1,669 2,319 2.150 Personnel 1,271 1,903 2,139 Other Staff Cost 795 1,111 1,399 Occupancy 285 500 584 Administration 330 S01 755 Bad Debts 317 4 - Depreciation 139 339 395 Profit for the Year 152 372 946 4.958 7049 8,368 1/ Unaudited May 1$, 1975 TANZANIA DAIRY DEVLHENT PROJECT TRDB; Project Related Cash Flow (Tsh millions) ------------------------.----.------- -- ------- --- --------------------------- Project Year -------------------------------------------------- -------------------------------------------- 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 Sources Goernnt Loans 17.7 7.0 10.5 6.5 1.5 .1 - - - - - - - - - - - - - - - - - - - - Goverent Grant .7 .6 .5 .4 .4 - - - - - - - Loan Repayments - .6 .6 .6 5.4 5.7 8.1 8.1 8.1 7.5 7.5 7.5 7.5 7.5 7.5 2.7 2.4 - - - - - - - Total sources 18.4 8.2 11.6 7.5 7.3 5.8 8.1 8.1 8.1 7.5 7.5 7.5 7.5 7.5 7.5 2.7 2.4 - - - - - - - Loans to ]AFCO 5.9 2.7 5.5 3.9 .5 .1 - - - - - - - - NACO 7.0 2.0 - - - - - - - - - TDL 3.6 - - - - - - TSC 1.2 2.3 2.1 2.6 1.0 - - - - - - UjaaaVillages - - 2.9 - - - - - - - - Repayment of Government Loan - - - . - 1.9 2.7 3.8 4.5 4.7 4.7 4.7 4.7 4.7 4.7 4.7 4.7 4.7 4.7 4.7 2.8 2.0 .9 .7 .7 - Technical Se:vices .7 .6 .5 .4 .4 - - - - - - - Total Uses 18.4 7.6 11.0 6.9 1.9 2.0 2.7 3.8 4.5 4.7 4.7 4.7 4.7 4.7 4.7 4.7 4.7 4.7 4.7 4.7 2.8 2.0 .9 .7 .7 - Annual Cash Surplus/Deficit - .6 .6 .6 5.4 3.8 5.4 4.3 3.6 2.8 2.8 2.8 2.8 2.8 2.8 (2.0) (2.3) (4.7) (4.7) (4.7) (2.8) (2.0) (.9) (.7) (.7) - Cumulative Cash Surplus/Deficit - .6 1.2 1.8 7.2 11.0 16.4 20.7 24.3 27.1 29.9 32.7 35.5 38.3 41.1 39.1 36.8 32.1 27.4 22.7 19.9 17.9 17.0 16.3 15.6 - Loans for 20 years at 4% including a 5-year grace period. February 18, 1975 TANZANIA DAIRY DEVELOPMENT PROJECT TRDB Organization Chart - 1974 Board of Directors Chairman and Managing Director Loans Committee Regional Loans Committees General Manager Workers Committee Appointment Committee Development Finance Adrinistration Operations Regional Department Department Department Department Offices II i I Development Chief Accountant Secretary Operations Regional Rep. Officer Manager (21) _ _ _Credit Sup. (17) Project Financial Data Assistant Cashier Officers Analyst Processors Accountants I (6) (3) (2) Administ. Administ. Registry Officer Assistant Supervisor Project Project Project Project Project Project Credit Officer Officer Officer Officer Officer Officer Supervisors (Transport) (Fisheries) (Small Scale (Crops) (Horticulture) (Livestock) (8) Industries) November 7, 1974 ANNEX 8 Page 1 TANZANIA DAIRY DEVELOPMENT PROJECT The Livestock Development Authority of Tanzania (LIDA) 1. The Livestock Development Authority of Tanzania (LIDA) was estab- lished by the Tanzania Livestock Development Authority Act 1974 (The Act). The Act came into operation in July 1974. The Government's objective in establishing LIDA was to ensure more effective direction and coordination of parastatal organizations responsible for a variety of areas in the live- stock sub-sector. Functions 2. The Act indicates that the functions of LIDA will be as follows: (a) to promote, organize, regulate, control and develop the production, marketing, processing, and distribution of livestock, livestock products and by-products; (b) to improve the output and quality of livestock, livestock products and by-products; (c) to promote and undertake market research aimed at improving the distribution and marketing of livestock, livestock pro- ducts and by-products within Tanzania and the export of livestock, livestock products and by-products from Tanzania; (d) to advise the Government on all matters affecting the livestock industry; (e) to promote research on livestock. 3. The Authority, either directly or through agents, may: (a) raise, buy and sell livestock, livestock products and by-products; (b) establish, organize, maintain, control and manage livestock markets, holding grounds, ranches and stock-routes, and provide facilities for the transport of livestock, livestock products and by-products; (c) establish, maintain, control and manage abattoirs, freezing plants, cold stores, and plants for the processing and manufacture of livestock products and by-products; ANNEX 8 Page 2 (d) export livestock, livestock products and by-products; (e) operate services for the grading of livestock, livestock products and by-products; and (f) produce, manufacture and deal in feeding stuffs; 4. LIDA's powers are to be exercised subject to the governing authority of the Minister of Agriculture. 5. In practice, LIDA's functions will include establishing and develop- ing large scale dairy farms and marketing and processing activities previous- ly carried out by other bodies. Organization and Management (Chart I) 6. The Act provides for: (a) a Chairman appointed by the President; (b) a Managing Director appointed by the Minister; and (c) not less than seven and not more than ten other directors appointed by the Minister. 7. LIDA has been set u as a holding company having five service divisions: procurement, administration, finance, marketing, and technical services, and four subsidiary companies. These companies are the Dairy Farming Corporation (DAFCO), the National Agricultural Corporation (NACO), Tanzania Dairies Ltd. (TDL) and Tanzania Hides and Skins. 8. The Act which established LIDA outlined the responsibilities of the senior staff as follows: (a) Managing Director - appointed by the Minister, he is to be chief executive officer of LIDA with overall responsibility for the management and operations of LIDA. He would direct .implementation of the dairy farms, heifer breeding unit, and processing components of the Project; (b) Procurement Officer - responsible to Managing Director, who would: - purchase appropriate quantities of materials, at the right time, at the right price, using acceptable procurement procedures; ANNEX 8 Page 3 - maintain complete documentation records on all procure- ment transactions and accumulate statistics on purchase for use by the other divisions; - assist subsidiaries in establishing sound procurement procedures; - review procurement transactions made with LIDA funds; - maintain bidder lists and catalogues for reference by the subsidiaries; - encourage and execute bulk purchases on behalf of subsidiaries when possible; and - conduct training programs for staff members of sub- sidiaries in purchasing and materials management. The Manager of the Procurement Services Division is to represent LIDA in all contract negotiations and delegate this responsibility as required. (c) An Administrative Services Officer, responsible to Managing Director, would: - coordinate and supervise the activities of the personnel officer, LIDA accountant and the office supervisor in rendering administrative services to LIDA and various services to subsidiaries; - ensure that all legal requirements are observed and that Government directives are followed; - maintain all LIDA regulations and coordinate and establish a LIDA Operational Procedure Manual for all departments; represent all LIDA personnel in industrial relations matters and serve on various committees of workers; - act as the public relations officer for LIDA and encourage its promotion by selected advertisement and publications issued to the industry; and - ensure that a.l LIDA personnel receive their entitled employment services such as medical treatment, housing, transport etc., as established in LIDA regulations. ANNEX 8 Page 4 (d) Finance Officer, responsible to Managing Director would: - furnish information to LIDA and the subsidiaries' Managers regarding the economic operation of the enterprises and the actual direct management of cash; - apply various decision-making techniques, including statement analysis, break-charts, marginal and differential costing, cash and discounted cash flows, etc., to give information that is useful to management; - contribute to planning by assisting the subsidiaries in preparing their budgets (operating, capital, costs, and control); - analyze subsidiary budget submissions and report to LIDA management with specific recommendations; - assist subsidiaries in establishing acceptable budgeting procedures; - conduct cost studies and analysis in the livestock industries for use by the subsidiaries; and - conduct development training in the fields of management accounting, costing and budget analysis for staff members of the subsidiaries. (e) Marketing Manager, responsible to Managing Director, would: - assess markets and potential customer demand; - keep market conditions, international and national, under continuous review; - keep price levels of subsidiary companies products under continuous review in order to ensure that they are competitive ane profitable; - ensure adequate control of distribution activities; - keep a continuous watch on acceptability of subsidiary's products and recommend research or investigation in respect of improvement in quality, new types, or the correction of differences; - keep contact with various Livestock Associations throughout the world in respect of all matters concerned with prices and conditions of sale; and ANNEX 8 Page 5 - submit to the Managing Director reports of general economic conditions bearing on current and future sales of the subsidiary's products. (f) Manager - Technical Services, would: - coordinate and carry into effect appropriate activities of the planning, livestock husbandry, production engineering and civil and mechanical engineering sections of LIDA; - as the senior technical officer coordinate all operational projects developed by LIDA; - receive all requests for technical assistance from subsidiary companies and assign the same to a specific officer; - establish a working schedule and receive monthly progress reports from the staff of the technical services division; - coordinate with the other division managers and prepare a monthly technical report for the Managing Director of LIDA and the Board; and - review and approve all technical literature released to the public and for other government units. Subsidiary Companies 9. Dairy Farming Corporation (DAFCO) is a subsidiary of LIDA. Its main function is the establishment and development of large scale dairy and breeding ranches. DAFCO has a General Manager appointed by the Board of LIDA. It is intended that group managers will be appointed to provide overall management guidance for DAFCO farms. The group managers will report directly to the General Manager. Each of the farms under a regional manager will have a farm manager and an assistant farm manager. Separate accounts and management reports will be maintained for each farm. 10. Tanzania Dairies Ltd (Chart) TDL is a subsidiary of LIDA and acts as a holding company; it has the following subsidiaries: Coastal Dairies Ltd., Northern Dairies Ltd., Mara Dairies Ltd. and Vyamwezi Creameries Ltd. The main functions of TDL are milk collection, processing and distribution. TDL has a General Manager appointed by the Board of LIDA responsible for the overall coordination of the subsidiaries' activities. Each subsidiary company has a manager. Separate accounts and management reports will be maintained for each factory. TANZANIA DAIRY DEVELORMNT PROJECT LIIA - Project Related Cash Flow (Tsh millions) -----------------------------Project Year 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 Sources TRDB -Processing boan 3.5 - - - - - - - - - - - - - - - - - - - - - - - Goveranment Grants for technical services 3.5 2.8 2.8 2.0 1.5 - - - - - - - - . - . - - . . - - - - Net Cash Surplus - Farms, etc. 1.7 4.8 6.3 5.1 5.8 5.6 4.1 3.8 5.5 5.2 6.i 5.7 4.4 5.9 5.9 8.4 9.5 11.0 12.0 12.2 11.8 ii.6 11.7 11.6 11.6 12.2 Total Sources 8.7 7.6 9.1 7.1 7.3 5.6 4.1 3.8 5.5 5.2 6.o 5.7 4.4 5.9 5.9 8.4 9.5 11.0 12.0 12.2 11.8 ii.6 11.7 U.6 a.6 12.2 Uses Processing Investment 3.5 - - - - - - - - - - - - - - - - - - - - - - - - TRDB Loan Repayment for Processing - .6 .6 .6 .6 .6 .6 .6 .6 - - - - . . . - Technical ervines 2.1 2.0 0.0 1.5 1.1 - - - - - - - - -- - - - - - - - - - Technical services operating costs 1.4 .8 .8 .5 .4 - - - - - - - . . - . - - Total Uses 7.0 3.n 3.4 2.6 2.1 .6 .6 .6 .6 - - - - - - - - - - - - - - - Annual Cash Surplus/Deficit 1.7 4.2 5.7 4.5 5.2 5.0 3.5 3.2 4.9 5.2 6.o 5.7 4.4 5.9 5.9 8.4 9.5 11.0 12.0 12.2 11.8 10.6 11.7 11.6 11.6 12.2 1/ The cash surpluses could be available for distribution to Government. February 18, 1975 ANNEX 9 TANZANIA DAIRY DEVELOPMENT PROJECT BAGAMOYO Dairy Farm - 1 Unit of 356 Cows HERD PROJECTION (Number of Animals) YEAD CO1P0SITION iBE- . 1 2 3 1 5 6 7 8 9-25 j'S Abcve 2 1 years BEGINNING OF YEAR 110 234 239 260 356 356 356 356 356 plus FIRST CALF !EIFERS 80 18 79 174 78 78 78 78 78 plus PURCHASED 100 50 TOTAL MATED 290 292 318 434 434 434 434 434 434 less DEAThS 12 19 10 13 13 13 13 13 13 less CULLED 44 44 48 65 65 65 65 65 65 0N HAND END YEAR 110 234 239 260 356 356 356 356 356 356 PEIFERS 1-2 years BEGINNING OF YEAR 10 81 93 107 147 147 147 147 147 plus PURCHASED 86 less DEATHS 2 2 5 3 4 4 4 4 4 less SALES 26 65 65 65 65 65 O HAND END YEAR 10 18 779 174 78 78 78 78 78 78 CALVES 0-1 year CALVES BORN 202 218 238 326 326 326 326 326 326 wlMALES BORN 101 109 119 163 163 163 163 163 163 less DEATHS 20 16 12 16 16 16 16 16 16 ON HAND ED TYEAR 81 93 107 147 147 1147 147 147 147 MALES BORN 101 109 119 163 163 163 163 163 163 less DEATHS 20 16 12 16 16 16 16 16 16 ON HAND END YEAR 81 93 107 147 147 147 147 147 147 STEERS BEGINING OF PERIOD 81 93 107 147 147 147 147 less DEATYS 5 6 6 9 9 9 9 (over 2 yar period) less SALES 76 87 101 138 138 138 138 HERD BUILD-UP TOTAL ITD 454 504 648 728 728 728 728 728 728 TOTAL ANIMAL UNITS 292 318 434 434 434 434 434 434 434 SUPPLEMENTARY FEED COSTS (000 T.Sh.) CALF FEEDS 8.1 9.3 10.7 14.7 14.7 14.7 14.7 14.7 14.7 CONCENTRATE FOR MILKERS 11.1 12.1 14.3 20.3 22.3 26.3 30.4 34.4 34.4 PRODUCTION NO. FULL TACTATIONS/YEAR 55 164 179 195 270 270 270 270 270 270 MILK PER LACTATION (kgs) 1,500 1,800 1,800 1,900 1,900 2,000 2,200 2,400 2,600 2,600 MILK FOR CALVES 30.3 42.0 35.7 48.9 48.9 48.9 48.9 48.9 48.9 PURCHASES UNITS COWS No. 100 50 FIRST CALF HEIFERS No. F3 BREEDING HEIFERS No. SALES MILK .000 kgs 82.5 264.9 280.2 334.8 464.1 491.1 545.1 599.1 653.1 653.1 CULL Cows No. 44 44 48 65 65 65 65 65 65 HEIFERS 1o . 26 65 65 65 65 65 STEERS No. 76 87 101 138 138 138 138 -:RD COEFICIENTS CULLING % 15 15 15 15 15 15 15 15 CALVING RATE % 50 70 75 75 75 75 75 75 75 CALF MORTALITY 35 20 15 10 10 10 10 10 10 ADUItMCfrLITY 4 4 3 3 3 3 3 3 Assumptions for Bagamoyo Sarm: 1. Concentrate feeding o4 cows reduced by 50% due to the farms own qoconuts. Assumptions - (Applies to all herd models) 1. No. FULL LACTATIONS/YEAR - Cows on hand end year x calving rate. 2. MILKSALES: No. FULL LACTATIONS/YEAR x MILK DER LACTATION - MILK FOR CALVES. 3. MILK FOR CALVES = 150 kg/CALF BORN. 4. ALL STEERS ARE ASSUMED TO BE MATURE FOR SATES AT 36 MONTHS. 5. CONCENTRATE FOR MILKERS = LK YIELD - 1,500 + 150 x No. LACTATIONS x PRICE. 6. CALF FEED = No. CALVES END YEAR x 50. February 12, 1975 ANNEX 9 TANZANIA Table 2 DAIRY DEVELOPNT PROJECT Iagamayo Dairy Farm: Investment Costs (Tah 000) Year 1 Year 2 Years 1-2 Foreign Foreign: Investment Category Unit Unit Cost Units co Units oat Total Units Toir0)Cost E E Buildings and Installaticrs Manager's House No 50.0 1 50.0 - - 1 90.0 40 20.0 Junior Staff Housing No, 16.0 2 32.0 - - 2 32.0 40 12.8 Staff Housing No 7.0 14 98.0 - - 14 98.0 40 39.2 Silage Pit No 28.0 1 28.0 - - 1 28.0 40 11.2 Calf Feeders No 6.0 1 8.0 - . 1 8.0 O 3.2 Piping KM 17.0 8 136.0 a . 8 136.0 75 102.0 Water Troughs No 0.5 17 8.5 16 8.0 33 16.5 40 6.6 Fencing K 2.5 20 90.0 20 50.0 hO 100.0 60 60-0 Subtotal ____ ___ 0 43__7 Irrigation (shallow wells) No 5.o 8 o.0 - - 8 40o. 60 24.o Machinery and Eauipment Four Wheel Drive Vehicle No 90.0 1 50.0 1 90.C 60 30.0 Motor Bike No 9.0 - - 1 9.0 1 9.0 60 5.4 Tractor 70-80 H.P. No 89.0 2 170.0 - - 2 170.0 85 144.5 Tractor 50-60 H.P. No 67.0 1 67.0 - - 1 67.0 89 97.0 Plough No 9.0 1 9.0 - - 1 9.0 85 7.7 Harrow-Tine No 6.5 1 6.5 - . 1 6.5 85 5.5 Harrow-Disc No 11.0 1 n.0 - - 1 11.0 85 9.h Cambridge Roller No 12.0 1 12.0 - - 1 12.0 89 10.2 Manure Spreader No 4.5 1 4.9 - - 1 4.5 85 3.8 Cultivator No 6.5 1 6.9 - - 1 6.5 85 5.5 Notary Slasher No 9.0 2 18.0 - - 2 18.0 89 19.3 Hay Mower No 6.0 1 6.0 - - 1 6.0 85 5.1 Hay Roller No 5.9 1 5.9 - - 1 9.5 85 s.7 Foragp Harvester No 70.0 1 70.0 - - 1 70-0 89 59.5 Trailer - 3 Ton No 12.0 1 12.0 - - 1 12.0 89 10.2 Trailer Forage No 20.0 2 40.0 - - 2 40.0 85 3I.0 Grader Blade No 6.0 1 6.0 - - 1 6.0 85 5.1 Engine and Pump No 12.0 4 8-0 - 4 I8.0 89 40.8 Portable Electric Fences Set 3.5 2 7.0 - - 2 7.0 85 6.0 Hammer Mill No 10.0 1 10.0 - - 1 10.0 89 8.5 Churns No 0.29 - - 90 22.5 90 22.5 89 19.1 Veterinary Equipment & Tools Set 29.0 1 25.0 - - 1 25.0 85 21.3 Furniture & Office Equipment Set 20.0 1 20.0 - - 1 20.0 89 17.0 Spares for Machinery and Equipment 0 20% Cost - - - 120.8 - 6.3 - 127.1 - 105.1 Subtotal - - - 724.8 - 37.8 - 762.6 - 630.7 Livestock Purchase!/ - 100 :.0C.0 50 80.0 150 180.0 - - Incremantal Operating Exenses -- - - 450.9 - - - 450.9 132.9 Total Investment - - - 1 ,26.2 - 175.5 - 1902.0 Cows purchased at Tsh 1,000; heifers at Tsh 1,600 (to reflect market price of Tsh 1,L00 plus transport to farm). See Table 3. Total operating expenses financed in year one. @ Rates varying between 30% and 85%. February 11, 1975 TAZ 9 Table 4 DAIRY DEVELOPNTYV PROJECT Bma-~y. Lairy Farm: IncremenLal Cash Flew (Tsh '000) Develnent 1 2 3 4 5 6 7 8 9 10 i 12 13 14 15 16 17 1E 19, 20 21 22 23-25 Sourre of Fend, Sa 375.1 394.3 542.5 768.5 870.9 975.4 1,042.9 1,110.4 1,11o.4 1,110.4 1,110.4 1,lio.2, 1110.4 1,110.4 1,110.4 1,110., 1,no.4 1,110.4 1,nio.4 1,110.1 i,no,4 101o., 1,0': Development L-n ad Grant 1,726.1 175,8 - . - Total Sonrces 2011.3 570.5 542.5 768.5 870.9 975.4 1,042.9 i,lo,4 1,110. 4 1,11 1,.110.4 1,1l0.14 1.. 1,110.4 1,1.1, no1. 1,110.I 1,110.. 1,0.. 1,110.4 1,110.4 1,l10.)i 1,11o.I Usre f Fnda Uvestament Cost 1, 15.3 95.8 - - . . .. -. CT9-tieg C-t 450.9 460.5 51.8 532.2 534.2 38.2 5L2.3 546.3 546.3 516.3 5L6.3 546.3 546.3 546.3 546. 5146.3 546.3 546.3 546.3 546.3 546.3 536.3 546.3 -tal - - 51.0 278.0 9.0 170.0 50.0 - 59.0 9.0 50.0 - 170.0 278.0 59.0 - - - 409.0 179.0 - 1oa timentl_ _ _ _ .- 286.0 286.0 286.0 286.0 286.0 286.0___ _6. 5 8eg e 86O0 o80 286.0 - - - - - Tt2al Unes 5,726. 63 . 511.8 532.2 01.2 1,102. 337.3 0,001.3 881,3 832.3 1, 191.3 841.3 8.3 863 1,002.3 824.3 605-3 546.3 54C,3 546.3 9,5.3 725.3 546.3 a7naca rpu/efiit 9 73.3 0.07 126.8 6 108, i 228. 8: Å a_92_ ýo61 9PR1 087.1 108.1 286.1 505.1 06.1 s64.1 564.1 155.1 385.1 564.1 Loan Rpyable in 15 Yeara with a 4-yr grar period 8 9 Tntest per Gam Granr amount s aquygl.nt to Vgring ca;-tal hich la either aelf-finanecd or a grant fram Government through'LIDA and DAFOO, ay 23, 1975 ANNEX 9 TAH2ANII Table 3 DAIRY DFVELOMENT PROJECT Bagamoyo Dairy Farm: Sales and Operati (Tab '000) Before ------------------- .---------------------- Year -------------------------------- DevelopmentPL4 1 2 _ _ L_5 6 7 8.--25 call cows es. a 4.o 48.0 65.0 65.0 65.0 65.0 65.0 Heifers - - - 36.4 91.0 91.0 91.0 91.0 Steers 76.0 87.0 101.0 138.0 138.0 138.0 Milk 3;.13. 3518.5 580.1 613.9 681.6 768.9 816.4 Total Sales 375.1 394.3_ 54.2 768.9 870.9 975.6 1.042.9 1110.6 Operating Expenses Salaries and Wages maae39.6 39.6 39.6 39.6 Manager 20.7 20.7 20.7 20.7 Assistant Manager82 8.2 8.2 Field Assistants/Clerks senior Milkers 4.2 6.6 6.4 8.6 Milkers Milk Recorders 3 3 6.6 6.6 Calf Attendants 3.3 3.3 3.3 3.3 Feeders 3.1 6.2 6.2 6.2 Herdsmen 3.3 3.3 3.3 3.3 Drivers iS.6 i8 18.8 Mechanics 5.2 . 6.2 8.2 Skilled Labor9.4 . . Unkiled Labor 12. 12.4. 12.6 12.4- Unskilled Labor3. 62 62 62 Watchmen 3.1 6.2 Subtotal 166.2 170.6 212.1 29.7 Livestock Husbandry i veterinary & Drugs 310.5 11. 15.6 i5.6 15.6 15.6 15.6 19.6 Ariiil6.1 6.1 6.7 9.1 9.1 9.1 9.1 9.1 Artificial Insemination 1.6 1. 1.6 1.6 1.6 Hygiene & Miscellaneous '.0 1.3 1.3 Calf Feeds 6/ Concentrates 7/ 11.1 12.1 1.3 20.3 22.3 26.3 30.6 36.5 Minerals & Licks /2.8 3.0 4.1 4.1 6.i .i 4.1 4.1 Subtotal 39.6 43.0 52.6 65.4 67.6 71.6 75.5 79.5 Crop & Pasture 9/ Maize Silage 4.2) Hay Subtotal Fuel, Lubricants & Repairs Fuel and Lubricants LOJ 69.5 Motor Bike Allowance 11 3.0 Repairs-Vehicles 12/ 57.. - Tractors/Engine - Other Machinery 33.9 - Fencing/Water Supply )42.3 - Other Fixed Assets Small Tools 5.0 Subtotal 211.1 211.1 211.1 211.1 211.1 211.1 211.1 211.1 Miscellaneous Accounts 1/ 15.0 15.0 15.0 15.0 15.0 15.0 15.0 15.0 Total Operating Expenses 450.9 460.5 5i1.8 532.2 536.2 538.2 52.3 546.3 Met Incremental Operatiag Income (75.8) (66.2) 30.7 236.3 336.7 37.2 500.6 6i. 2i/ Sales:. Call Cows @ Tsh 1,000 Heifers B Tab 1,400 Steers @ Tab 1,000 Milk . T. 8..5 2/ Salances and Wagen: Based on parasiatal rates, including leave Pa , night allowance, provident fand and staff endowment schanes. v/ Teeiay o rg: Based on all cattle receiving two iocu:.atic na per year against FMD; annual inoculations against blackquarter and Atira; regalar treatnent against internal parasites; and other itlmenis. Young heifers will be vaccinated against brOcellosis. Cost: Tah 30 Sh per A.U. p... 2/Artificial Insenations: Based on the total number Of cows mated. @ Tab 20 par cow. 2/Hygiene and Miscellaneous: Covers cost of cleaning materials, milking machine rubber replacement paris and small miscellaneous items. 2/Cal! Feeds: Based on number of Salves at the end of the year rialti Plied by fifty @ Tab 4o per calf. 7/ Concentrates: Calculated on the following basis: Milk Yield k)_]-i,500 (kgs) + 150 a Na. Lactations x Price 2/Minerals and Links: Rased on a mixture of salt; boneneal ad rdaexalv. being available throbughout the year. / onsyand Pas uii: Based on irrigated maize for silage a,id Malde grass pasture (5years) and,maize for Silage O5th year) in rotation With maize as the nurse crop. Expected annal yields ore as follows: Continuous maize (do,uble. ocppe-d) - 200 acres.@ 20 tonp/acre Rotation maize (single cropped) - 30 acres at 15 ions/acre 12/ Fuel and Lubricants: Based on one tractor operating 1,500 hours per year with an average fuel consumption of one liter per hour; one landrover operating 36,000 Ins per year with an average fuel odx smLption of 0.25 'liter per-Is; one water pump engine at Tab 8,00 per year; a generatsr operating 3,650 hours per year wsiths als eraE a funl consumption of 4 liters per hour; and lubricants at 12.5 percent of fuel cast. illy motor Bike Allowance: Covers mileage allowance paid to Assistant Manager for ose of motor bike o farm activities. TIJ2 Rnairs: Based on standard estimates and experience of large ccale farms. 13/ Miscellaneous Accounts: Covers costs of telephone, postage, stationey, air travel uniforms and miseellaneous aministrative accounts. yi Assumption: Before development sales and casts were approxmately equal; all net revenoe thus representa innrenental revenue to tie farm. February 11, 1975 ANNEX 9 Table TANZANIA DAIRY DEVELOPMENT PROJECT IWAMBI Dairy Farm - 1 Unit of 356 Cows HERD PROJECTION IERD COYPOSITION -A __ 1 2 3 4 5 6 7 8 9-5 GO'WS abcve 2's years "3EGIN1IG OF YEAR 158 195 182 199 293 306 353 356 356 plus FIRST CALF LEIFLERS 83 30 60 159 80 125 81 78 78 plus PURCHASED TOTAL MATED 241 225 242 358 373 431 434 434 434 less DEATHS 10 9 7 11 11 13 13 13 13 less CULLED 36 34 36 54 56 65 65 65 65 CN HAND END YEAR 158 195 182 199 293 306 353 356 356 356 HEIFERS 1-2 years BEGINNING OF YEAR 31 63 64 82 129 134 155 157 157 plus PURCHASED 100 less DEATHS 1 3 5 2 4 4 5 5 5 less SALES 49 72 74 74 ON HAND END YEAR 83 30 .60 159 80 125 81 78 78 78 CALVES 0-1 year CALVES BORN 156 158 182 286 298 344 348 348 348 FEMALES BCN 78 79 91 143 149 172 174 174 174 less DEATHS 15 15 9 14 15 17 17 17 17 ON HAND END YEAR 31 63 64 82 129 134 155 157 157 157 MALES BORN 78 79 91 143 149 172 174 174 174 less DEATHS 15 15 9 14 L 17 17 17 17 ON HAND END YEAR 40 63 6 82 129 13 N 155 157 157 157 STEERS BEGINNING OF PERIOD 40 63 64 82 129 134 155 157 less DEATHS 4 6 6 6 8 8 10 10 (over 2 year ?eriod) less SALES 34 36 57 58 76 121 126 145 147 HERD BUILD-UP TOTAL HERD 351 370 522 631 699 744 748 748 748 TOTAL ANIMAL UNITS 225 242 358 373 431 434 43 1434 434 SUPPLEMENTARY FEED COSTS ('00 T.Sh.) CALF FEEDS 6.3 6.4 8.2 12.9 13.4 15.5 15.7 15.7 15.7 CONCENTRATE FOR MILKERS 13.3 17.1 24.5 52.7 69.8 88.8 97.3 109.9 109.9 PRODUCTION NO. FULL LACTATIONS/YEAR 95 127 127 149 234 245 282 282 282 282 MILK PER LACTATION (kgs) 1,200 1,600 1,800 2,000 2,400 2,800 3,000 3,200 3,500 3,500 MILK FOR CALVES 23.4 23.7 27.3 42.9 44.7 51.6 52.2 52.2 52.2 PURCHASES UNITS COWS No. FIRST CALF HEIFERS No. Pl BREEDING HEIFERS No. 100 SALES MILK .000 kg 114.0 179.8 204.9 270.7 518.7 641.3 794.4 906.6 934.8 934.8 CULL COWS No. 36 34 36 54 56 65 65 65 65 HEIFERS ITo. 49 72 74 74 STEERS No. 34 36 57 58 76 121 126 145 147 HEPD COEFFICIENTS CULLING % 15 15 15 15 15 15 15 15 15 CALVING RATE % 60 65 70 75 80 80 80 80 80 80 CALF MORTA-,ITY % 30 20 15 10 10 10 10 10 10 10 ADULT MonTALITY % 4 4 3 3 3 3 3 3 3 February 12, 1975 TANZANIA DAIRY DEVELOPMET PROJECT Iwambi Dairy Farm: Investment Costa (Tah '000) Years 1-3 Foreign Foreign Year 1 Year 2 Year 3 Total Total Exchange Exchange Investment Category Unit Unit Cost Units Cost Units Cost Units Cost Units Cost Tsh '000 Building and Installations Spray Race No 22.0 1 22.0 - - 1 22.0 40 8.8 Silage Pit No 28.0 1 28.0 - - - 1 28.0 4o 11.2 Calf Feeders No 8.0 1 8.0 - - - - 1 8.0 4o 3.2 Piping KM 17.0 3 136.0 - - - - 8 136.0 75 102.0 Water Troughs No 0.5 33 16.5 - - - - 33 16.5 40 6.6 Fencing KM 2.5 30 75.0 - - - - 30 75.0 60 45.0 Subtotal - - - 285.5 - - - - - 285.5 - 176.8 Machinery and Equipment Four-Wheel Drive Vehicle No 50.0 1 50.0 - - - - 1 50.0 60 30.0 Motor Bike No 9.0 1 9.0 - - - - 1 9.0 60 5.4 Tractor 50-60- H.P. No 67.0 2 134.0 - - - - 2 134.0 85 113.9 Tractor 70-80- H.P. No 85.0 1 85.0 - - - - 1 85.0 85 72.3 Plough No 9.0 1 9.0 - - 1 9.0 85 7.7 Harrow - Tine No 6.5 1 6.5 - - - - 1 6.5 85 5.5 Harrow Disc No 11.0 11.0 - - - - 1 11.0 85 9.4 Cambridge Roller No 12.0 12.0 - - - - 1 12.0 85 10.2 Maize Planter No 17.0 17.0 - - - - 1 17.0 85 14.5 Seed Drill No 18.0 L 18.0 - - - - 1 18..0 85 15.3 Weed Sprayer No 8.0 8.0 - - - - 1 8.0 85 6.8 Fertilizer Spreader No 4.5 4.5 - - - - 1 4.5 85 3.8 Cultivator No 6.5 1 6.5 - - - - 1 6.5 85 5.5 Rotary Slasher No 9.0 1. 9.0 - - - - 1 9.0 85 7.7 Hay Mower No 6.0 1 6.0 - - - - 1 6.0 85 5.1 Hay Rake No 5.5 3. 5.5 - - - - 1 5.5 85 4.7 Hay Baler No 50.0 1 50.0 - - - - 1 50.0 85 42.5 Forage Harvester No 70.0 1. 70.0 - - - - 1 70.0 85 59.5 Trailer 3 Ton No 12.0 1. 12.0 - - - - 1 12.0 85 10.2 Trailer Forage No 20.0 1 100.0 - - - - 5 100.0 85 85.0 Grader Blade No 6.0 1 6.0 - - - - 1 6.0 85 5.1 Engine & Pump No 12.0 1 24.0 - - - - 2 24.0 85 20.4 Portable Electric Fences Set 3.5 1 3.5 - - - - 1 3.5 85 3.0 Hammer Mill No 10.0 1 10.0 - - - - 1 10.0 85 8.5 Churns No 0.25 9C 22.5 - - - - 90 22.5 85 19.1 Veterinary Equipment & Tools Set 25.0 1 25.0 - - - - 1 25.0 85 21.3 Furniture & Office Equipment Set 20.0 1 20.0 - - - - 1 20.0 85 17 .0 Spares for Machinery and Equipment @ 20% Cost - - - 146.8 - - - - - 146.8 20 121.9 Subtotal - - - ,166.3 - - 1,166.3 - 731. Livestock Purchase 1/ No. 1.6 - - - - 100.0 160.0 - 160.0 - Incremental Operating Expenses - - - 431.7 - - - - - 431.7 130.5 Total Investment - - - 1- - - 160.0 - 2,043.5 138.6 1 Heifers purchased at Tsh 1,600 (Table 2, Note 1) 2 See Table 7. Total operating expenses financed in Year One. @ @ Rates varying between 30% and 85%. February 11, 1975 ANNEX 9 Tabla 8 DAIRY DEVELO110 T PROJECT Iwabi Daiy Fas-h Insrst.al Gash Flei (T 'o0o) Before Development 1 2 3 4 5 6 7 9 J0 11 12 13 14 15 16 17 1 19 20 21 22 23 25 Source of Donds Sales 294.8 326.1 431.4 760.4 933.6 1,247.6 1,425.1 1,482.1 1,484.1 1,'4.1 1,484.1 1,484. 1 1, 14.1 1,484. 1,484.i 1,484.1 1,4B4.1 1,484.1 1,484.1 1,484.1 1,481.1 1,484.1 1,484.1 svelopment Loan and Grant 1883.5 - 160. - - Total Sources 2178.3 326.i 591.4 760.4 933.6 1,247.6 1,425.1 1,482.1 1,484.1 1,484.1 1,484.1 1,484.1 1,484.1 1,484.1 1,484.1 1,484.1 1,434.1 1,44.1 1,44.1 1,44.1 1,44.1 1,484.1 1,484.1 Uses of Funds Ineostmnt Cost 1,451.8 - 162.0 - - - - - - - - - - - ooraing Cost 431.7 436.0 4,1.0 4H7.4 508.1 530.8 539.5 5 552.1 552.1 521 552.1 552.1 552.1 552.1 552.1 52.1 552.1 352.1 552.1 552.1 552.1 552.1 capital Repla aent - - - - 50.0 264., - 256.0 90.0 - 3BO.5 - 50.0 - 256.0 264.5 50.0 - - 430.5 256.0 - o Inalm.t i/ - - - - 316.3 316.0 316.0 316.0 316.4 3 56.0 316.0 316.0 316.0 316.0 316.0 - - - - - __- Total Ues 1883.4 46.2 611.o 487.4 87.1 1111.3 855.5 1124.1 918.1 868.1 1248.6 868.1 918.1 368.1 1124.1 B16.6 602.1 552.1 552.1 552.] 982.6 808.1 552.1 Annual Cash 1Urplus/Defict 294.8 (109.9) (19.6) 213.2 59.5 136.3 569.6 358.0 566.0 636.o 235.5 616.0 566.o 616.0 360.0 667.5 882.0 932.0 932.3 932.0 501.5 676.0 932.0 1/ Lown Repsble in 15 years with a 4-Year grace period @ 8% J nteresi per au. Graot amont 4s. equiyalent to vorking capital whia is either self-finad or a grant from Govensment through LIDA and DAFCO, May 23, 1975 ANNEX 9 TANZANIA Table 7 DAIRY DEVELOPMENT PROJECT Iwambi Dairy Farm: Sales and Operating Expenses (Tah '000) --------------------------------------------------------- Year--------------------- Before Development L4 1 2 3 4 5 6 7 8 9-25 Sales Cull Cows 36.0 34.0 36.0 54.0 56.0 65.0 65.0 65.0 65.0 Heifers - - 68.6 100.8 103.6 103.6 Steers 34.0 36.0 57.0 58.0 76.0 121.0 126.0 145.0 147.0 Milk 224.8 256.1 338.4 648.4 801.6 993.0 1,133.3 1,168.5 1,168.5 Total Sales 294.8 326.1 431.4 760.4 933.6 1,247.6 1,425.1 i,482.1 1 1484.2 Operating Expenses Salaries & wages / Manager 39.6 Assistant Manager 20.7 Field Assistant/Clerk 16.4 Milkers .4 Calf Attendant 3.3 Herdsmen 13.2 Drivers-1. Mechanic 8.2 Skilled Labor 9.4 Unskilled Labor 12.4 Watchmen 6.2 Subtotal 159.6 159.6 159.6 159.6 159.6 159.6 159.6 159.6 159.6 Livestock Husbandry: Veterinary & Drugs 3j 8.1 8.7 12.9 13.4 15.5 15.6 15.6 15.6 15.6 Artificial Insemination /5.1 4.7 5.1 7.5 78 9.1 9.1 9.1 9.1 Hygiene and Miscellaneous 5/ 0.8 0.8 0.9 1.4 1.5 1.7 1.7 1.7 1.7 Calf Feed y6.3 6.4 8.2 12.9 13.4 15.5 15.7 15.7 15.7 Concentrates y/ 13.3 17.1 24.5 52.7 69.8 88.8 97.3 109.9 109.9 Minerals and Licks 2.1 2.3 3.4 8_5 4.1 4.. 4.1 4.1 4.1 Subtotal 35.7 40.0 55,0 91.4 112.1 34.8 143.5 156.1 156.1 Crop and Pasture 2/ Wheat 10.2 Maize Silage 4.2 lay 16.8 Subtotal 31.2 Fuel Lubricants and Repairs Fuel and Lubricants 2/ 73.8 Motor Bike Allowance.L/ 2.5 Repairs-Vehicles 12/) 53.8 - Transport/Engine ) - Other Machinery 46.5 - Fencing/Water Supply )8.6 - Other Fixed Assets Small Tools 5.0 Subtotal 190.2) Miscellaneous Accounts 15.0 15.0 15.0 15.0 15.0 15.0 15.0 15.0 15.0 Total Operating Expenses 431.7 436.0 451.0 487.4 508.1 530.8 539.5 552.1 552.1 et Operating Income 0.0 (136.9) (109.9) (19.6) 273.0 425.5 716.8 885.6 930.0 930.0 I/ Sales: Cull Cows @ Tsh 1,000 Haifers @ T68 1,400 Steers @ Tsh 1,000 Milk @ Tsh 1.25 2/ Salaries and Wages: Based on parastatal rates, including leave pay, night allowance, Provident Fund and Staff Endow,ment Schemes. 3/ Veterinary and Drugs: Based on all cattle receiving two inoculations per year against FMD1; annual inoculations against blackquarter and anthrax; regular treatment against internal parasites; and other ailments. Young hetfers will be vaccinated against brucellosis. ~/Artificial Inseminations: Based on the total number of cows mated. 5 Hygiene and Miscellaneous: Covers cost of cleaning materials, milking machine rubber replacement parts and small miscellaneous items. SCalf Feeds: Based on number of calves at the end of the year multiplied by fifty (coefficient). L'Concentrates: Calculated on the following basis: Mil Yield (kgs -1,0 (2kgs) + 150 x N. Lactations x Price Rotation maize (single cropped) - 30 acres at 15 tons/acre. Lo/ Fuel and Lubricants: Based on one tractor operating 1,500 hours per year with an average fuel consumption of one liter per hour; one landrover operating 36,000 kos per year with an average fuel consumption of 0.25 liter per kos; one water pump engine at Tsh 8,000 per year; a generator operating 3,650 hours per year with an average fuel consumption of 4 liters per hour; and lubricants at 12.5 percent of fuel coat. U,' Motor Bike Allowance: Cowers mileage allowance paid to Assistant Manager for use of motor bike on farm activities. L2/ Repairs: Based on standard estimates and experience of large scale farms. jJ/ Miscellaneous Accounts: Covers costs of telephone, postage, stationery, air travel,uniforms and miscellaneous administrative accounts. L4J Before development net revenue assumed to be 0 or less. February 11, 1975 ANNEX 9 Table 9 TANZANIA DAIRY DEVELOPMENT PROJECT KITULO Dairy Farm - 1 Unit of 356 Cows HERD PROJECTION HERD COMPOSITION ._1_2 3 L 5 6 7 8 9-25 ,-,ia3 above 2 years .LOINNING OF YEAR s 1 140 306 356 356 356 356 356 356 356 Dolus FIRST CALF iEIFERS 233 128 78 78 78 78 78 78 78 PLUS PURCHASED TOTAL MATED 373 1434 1434 4314 14314 434 14314 4314 4314 less DEATHS 11 13 13 13 13 13 13 13 13 less CULLED 56 65 65 65 65 65 65 65 65 ON HAND END YEAR 140 306 356 356 356 356 356 356 356 356 KEIFERS 1-2 years BEGINNING OF YEAR 160 127 157 157 157 157 157 157 157 plus PURCHASED less DEATHS 5 4 5 5 5 5 5 5 5 less SALES 27 45 74 74 74 74 74 74 74 ON HAND END YEAR 233 128 78 78 78 78 78 78 78 78 CALVES 0-1 year CALVES BORN 298 348 348 348 348 348 348 348 348 FEMALES BORN 149 174 174 174 174 174 174 174 174 less DEATHS 22 17 17 17 17 17 17 17 17 ON HAND END YEAR 160 127 157 157 157 157 157 157 157 157 MALES BORN 149 174 174 174 174 174 174 174 174 less DEATHS 22 17 17 17 17 17 17 17 17 ON HAND END YEAR 160 127 157 157 157 157 157 157 157 157 STEERS 160 127 157 157 157 157 157 157 BEGINNING OF PERIOD less DEATHS 10 8 10 10 10 10 10 10 (over 2 year -eriod) less SALES 200 150 119 147 147 147 147 147 147 HERD BUILD-UP TOTAL HERD 688 748 748 748 748 748 748 748 48 TOTAL ANI4AL UNITS 434 434 434 434 434 434 434 434 434 SUPPLEMENTARY FEED COSTS ('000 T.Sh.) CALF FEEDS 12.7 15.7 15.7 15.7 15.7 15.7 15.7 15.7 15.7 CONCENTRATE FOR MILKERS 77.1 98.3 106.8 115.4 123.9 132.5 132.5 132.5 132.5 PRODUCTION NO. FULL LACTATIONS/YEAR 112 245 285 285 285 285 285 285 285 285 MILK PER LACTATION (kgs) 3,00C 3,000 3, 00 3,400 3,600 3,800 4,000 4,000 4,000 4,000 MILK FOR CALVES 4"7 52.2 52.2 52.2 52.2 52.2 52.2 52.2 52.2 PURCHASES UNITS COWS No. FIRST CALF HEIFERS No. F1 BREEDING HEIFERS No. SALES MILK .000 kg2 336. 690.3 859.8 916.8 973.8 1030.8 1087.8 1087.8 1087.&1087.8 CULL CO4S No. 56 65 65 65 65 65 65 65 65 1EIFERS No. 27 45 74 74 74 74 74 74 74 STEERS No. 200 150 119 147 147 147 147 147 147 HERD COEFFICIENTS CULLING % 15 15 20 20 20 20 20 20 CALVING RATEA 80 80 80 80 80 80 80 80 80 CALF MORTALITY 15 15 10 10 10 10 10 10 10 ADULT MORTALITY % 3 3 3 3 3 3 3 3 3 February 12, 1975 TANZANIA DAIRY DEVELOPMENT PROJECT KITULO DAIRY FARM - INVESTMENT COST (Tsh '000) Year 1 Year 2 Years 1-2 Foreign Foreign Investment Category Unit Unit Cost Units Cost Units Cost Total Units Total Cost Exchange Exchange Tsh '000 Building and Installation Piping KM 16.o 15 240.0 - - . 15 240.0 75 180.0 Water Troughs No 0.5 19 9.5 19 9.5 38 19.0 40 7.6 Fencing KM 2.5 30 75.0 30 75.0 60 150.0 60 90.0 Calf Feeders No 8.o 1 8.0 - -.0 1 8.0 4o 3.2 Subtotal 332.5 84.5 417.0 280.8 Machinery & Equipment Motor Bike No 9.0 1 9.0 - - 1 9.0 60 5.4 Tractor 70-80 H.P. No 85.0 2 170.0 - - 2 170.0 85 144.5 Tractor 50-60 H.P. No 67.0 1 67.0 - - 1 67.0 85 57.0 Plough No 9.0 1 9.0 - - 1 9.0 85 7.7 Harrow No 11.0 1 11.0 - 1 11.o 85 9.4 Cambridge Roller No 12.0 1 12.0 - - 1 12.0 85 10.2 Seed Drill No 20.0 1 20.0 - - 1 20.0 85 17.0 Fertilizer Spreader No 5.0 1 5.0 - - 1 5.0 85 4.3 Hay Mover No 5.5 1 5.5 - - 1 5.5 85 4.7 Hay Rake No 5.0 1 5.0 - - 1 5.0 85 4.3 Hay Baler No 42.o 1 42.0 - - 1 42.0 85 35.7 Trailer No 15.0 2 30.0 - - 2 30.0 85 25.5 Hammer Mill No 10.0 - - 1 10 1 10.0 85 8.5 Milking Machine No 100.0 1 100.0 1 100.0 85 85.0 Churns No 0.3 130 39.0 130 39.0 260 78.0 85 66.3 Portable Electric Fences Set 3.5 - - 3 10.5 3 10.5 85 8.9 Veterinary Equipment Set 20.0 - - 1 20.0 1 20.0 85 17.0 and Tools Furniture and Office Equipment Set 15.0 - - 1 15.0 1 15.0 85 12.8 Spares for Machinery and Equipment @ 20% Cost - - - 104.9 - 18.9 - 123.8 - 104.8 Subtotal - - - 629.4 - 113.4 - 742.8 -629.0 Incremental Operating Expenses 1/ - - - 46- - - - 496.0 189.4 Total Investment - - - 1,457.9 - 197.9 - 1,655.8 - .2 I See Table 11. Total operating expenses financed in Year One. 2/ @ Rates varying between 30% and 851. February 11, 1975 ANNEXl 9 Table 12 TANZANIA DAIRY DEVELOPMENT PROJECT Kitulo Dairy Fanrm; Increental Csh Flo,r (Th. *000) Befr ..----..---------------------------- --------------------------------- ------------------------ Year---- ------------- --------------------------------------.------ ------.----------------------- ...-- ----- -....--....- Development 1 ? 3 4 5 6 7 8 9 e 11 12 13 14 15 16 17 16 19 20 21 22 23 25 S:reof Fndos Sales 1,156.7 1,352.8 1,433.6 1,532.9 1,604.1 1,675.4 1,675.4)_i,67., _ 1,675.4 1,675.4 1,675.4 1,675.4 _1,675.4 1,675.4 1,675.4 ne.elopmentLeaar.d Grant 1,1.57.9 197.9 - - - - - - - - - - - - - - - - - - - - Total Sour~e 2,614.6 1,550.7 1,433.6 1,532.9 1,604.1 1,675.4 1.675.'- us_a if Fnds- Inveem~n! Co-t 961.9 7.9 .. - - - - - - - - - - - - - - - - - -in os 49.0 46 27.7 673.4 681.9 690.5 699.0 707. 6) cap, ¯eplement - - - - - 202.5 - 82.5 - · 354.5 5. - - 72.0 202.5 10.5 - - - 35k.5 107.5 Ln- ent 1_/ -. - 28.0 2880.0 000.0 02.0 288.o o 0 p.o 288.0 288.0 988.0 288.0 -. - _- - - - - . Tot1 u 1,457.9 45.6__ 6.4 681.9 913, 1,129.5 939.6 1,018.1 935.6 935.6 1,290.1 971.1 935.6 935.6 1,007.6 910.1 718.1 707.6 707.6 707.6 1,062.1 815.1 707.6 Arru1, Csh1 srplus/leficit 1,156.7 705.1 760.2 851.0 6&$.6 549.9 739.8- 657.3 739,6 739.8 3851 704.3 739.8 739.8 667.g 765.3 957.3 967.8 967.8 967.8 613.3 860.3 967.8 / Loan repayable in 15 years with a 4-year grane period n13 8 ;/2% iterest peg 9ünu. 9x1n 99n5nt "s equy go¢t t4 xqknA capital which is either ,elf-finaned ar a grant fram Gavernment though IDA and DAFCD. May 23, 1975 ANNK 9 TANAI. Table 11 DAIRY DEVELOBMEr PROJECT ICitulo Dai re ales and 0 i Expenses (Tsh 000) Before 8r------------.- . . - -Year p55seet1 1 2 L 4 5 6 7-25 Cull Cows 56.0 65.0 65.0 65.0 65.0 65.0 65.o Ceif rs 37.8 63.0 103.6 103.6 103.6 l03.6 103.6 Steers 200.0 150.0 119.0 147.0 147.0 147.0 147.0 Milk 862.9 1,074.8 1,146.0 1,217.3 1,288.5 1,359.8 1,359.8 Total Sales 1,156.7 1,352.8 1,33.6 1,532.9 1,604.1 1,675.1 1,675.4 Operating Expenses Salaries & Wages 2/ Manager 50.0 Field Assist - Dairy 8.2 Field Assistant - Pasture 8.2 Tractor Drivers 14.1 Milkers 12.6, C al f A t t en d an t 3 .2 Herdsmen 12.8 General Labor 12.4 Watchmen 3.1 Subtotal 132.8 132.8 132.8 132.8 132.8 132.8 132.8 Livestock Husbandry I Veterinary & Drugs / - . 15.6 15.6 15.6 15.6 15.6 15.6 Artificial Insemination ! - 7.8 9.1 9.1 9.1 9.1 9.1 Hygiene & MI cellaneous - 1.5 1.7 1.7 1.7 1.7 1.7 Cslf Feeds Y 12.7 15.7 15.7 15.7 15.7 15.7 Concentrates ly .7.1 98.3 106.8 1l15.4 123.9 132.5 Minerals & Li4ks1 4.1 4.1 4.1 4.1 4.1 Subtotal - 118.8 144.5 153.0 161.6 170.1 178.7 Crop & Pasture 2/ Pasture Seed 100.0 17. Oat Seed 18.0 3.2 Planting Fertilizer 88.0 31.3 . Maintenance Fertilizer - 186.6 Baling Twine 3.6 3-6J Subtotal 209.6 242.5 242.5 242.5 212.5 242.5 242.5 Fuel. Lubricants & Repairs Fuel and Lubricants L/ 44.2 Motor Bike Allowance 11 3.5 Hired Land Rover 16.8 Repairs - Vehice 1 - Trctors/Engine 59.3 - Other Machineryr - Milking machine 2.5 Fencing/Water Supply *.5 Other fixed assets 2.8 Small ToolS 5.0 Subtotal 138.6 138.6 138.6 138.6 138.6 138.6 138.6 Miscellaneous Accounts .0 15.0 Total Operating Expenses 196.0 647.7 673.4 681.9 690.5 699.0 707.6 Net Operating Income 0.0 660.7 705.1 760.2 851.0 913.6 976.4 967.8 If Sas; Cull Cows @ Tab 1,000 Heifers 0 Tab 1,400 Steers @ Tab 1,000 Milk @ TSh 1.25 2/ Salaries and Wages: Based on parastatal rates, including Leav( pay, night allowance, provident fund and staff endowment schemes. / Veterinary and Drugs: Based on all cattle receiving two inoculatitns per year against FMD; annual inoculations against blackquarter and Anthrax; regular treatment against internal parasites; and other ailments. Young beifers will be vaccinated against brucellosis. Artificial Inseminations: Based on the total number of cows mated. 5 Hygiene and Miscellaneous: Covers cost of cleaning materials, milling machine rubber replacement parts and small miscellaneous items. Calf Feeds: Based on number of calves at the end of the year multipl'ed by fifty/Coefficient. / Concentrates: Calculated on the following basisl Milk Yield I3),.500 (hkgs ) + 150 x No. Lactations x Price Minerals and Licks: Based on a mixture of salt; bonemeal and ri*ez al!. being available throhghout the year. 2/ Crocs and Pastures: Based on irrigated maize for silage and Rhode6 grass pasture (5 years) and,maise for silage (5th yeir) in rotation with maize as the nurse crop. Expected anntl yieldn are as follows: Continuous maize (double cropped) - 200 acres.@ 20 tonp/acre Botation maize (single cropled) - 30 acres at 15 tons/aere 0/ F%eld and Lubricants: Based on one tractor operating 1,50) hocrs per year with an average fuel consumption of one liter per hour; one landrover operating 36,000 km per year with an average fuel CoA-mption of 0.25 liter per,km; one water pump engine at Tah 8,000 per year; a generator operating 3,650 hours per year with so ace a%s fol consumption of 4 liters per hour; and lubricats at 12.5 percent of fuel cost. Motor Bike Allowance: Covers mileage allowance paid to Assistmnt Manaer for use of motor bike on farm activities. 12 Pepairs: Based on standard estimates and experience of large scale f.orms. I Miscellaneous Accounts: Covers costs of telephone, postage, statioshey, air travel uniforms and miscellaneous administrative accounts. Before development net dairy revenue assumed to be 0 or less. February 12, 1975 TANZANIA DAIRy DEVELOPMENT ROJECT NGEENGEE Dairy Farm Unit 1 - 1 Unit of 356 Cows NERD PROJECTION YEARS 1-25 ILLRD COMP?OSITION BURD__OM?OSITION _ BE . 1 2 3 4 5 6 7 8 9-25 ?0. IN Oe02 AR 127 205 294 275 288 307 327 349 356 ulus FIRST CALF HEIFERS 126 159 67 104 116 123 132 121 114 olus PURCHASED TOTAL MATED 253 364 361 379 ok 430 459 470 470 less DEATHS 10 15 14 15 16 17 18 19 19 less CULLED 38 72 76 81 86 92 95 95 CN HAND END YEAR 127 205 294 275 288 307 327 349 356 356 FEIFERS 1-2 year7 BEGINNING OF YEAR 166 70 108 121 128 137 T45 155 158 plus PURCHASED less DEATHS 7 3 4 5 5 5 6 6 6 less SALES 24 35 38 ON HAND END YEAR 126 159 67 10k 116 123 132 139 114 11k CALVES 0-1 year CALVES BORN 164 254 270 284 304 322 344 352 352 FEMALES BORN 82 127 135 142 152 161 172 176 176 less DEATHS 12 19 14 14 15 16 17 18 18 ON HAND END YEAR 114 70 108 121 128 137 145 155 158 158 MALES BORN 82 127 135 162 152 161 172 176 176 less DEATHS 12 19 14 1k 15 16 17 21 21 ON HAND END YEAR 70 108 121 128 137 145 155 155 155 STERS BEGINNING OF PERIOD 70 108 121 128 137 1k5 155 less DEATHS 6 9 10 10 10 12 12 (over 2 year period) 99 1 i18 127 133 1k3 less SALES HERD BUILD-UP TOTAL E k19 504 577 .621 660 70k 7k9 798 786 78'6 TOTAL ANMAL UNITS 305 364 361 379 404 430 459 488 470 k70 SUPPLEMENTARY FEED COSTS ('I00UT.Sh.) CALF FEEDS 7.0 10.8 12.1 12.8 13.7 14.5 15.5 15.8 15.8 CONCENTRATE FOR MILKERS 21.9 40.1 46,k 55.1 65.6 69.8 7.7 84.1 84.1 PRODUCTION NO. FULL LACTATIONS/YEAR 76 133 206 .206 216 230 2k5 262 267 267 MILK ?ER LACTATION (kgs) 1,800 2,000 2,200 2,k00 2,600 2,800 2,800 2,800 3,000 3,000 MILK FOR CALVES 2k.6 38.1 k0.5 42.6 k5.6 48.3 51.6 52.8 52.8 PURCHASES UNITS COWS No. FIRST CALF HEIFERS No. F1 BREEDING HEIFERS No. SALES MILK .000 kgi 136.81241.4 415.1 453.9 519.0 598.4 '637.7 682.0 748.2 748.2 CULL COWS No. 38 55 72 76 81 86 92 95 95 HEIFERS No. 24 35 38 STEERS No. 6k 99 111 118 127 133 143 HERD COEFFICIENTS CULLING % 15 15 20 20 20 20 20 20 20 CALVING RATE A 601 65 70 75 75 75 75 75 75 75 CALF MORTALITY % 20 15 15 10 10 10 10 10 10 10 ADULT MORTALITY % k k k k 4 4 k k 4 February 14, 1975 Table 14 DAIRY MVEIOPWMENT PROJECT NGEMEGIZ UNIT II DA.?P~ - units of 356 Cows HEED ROSJECTION FiEPT)J COW'?OSITION tBE- . 1 2 3 4 5 6 7 8 9-25 COVS above 2s years 7iZGINNING OF YEAR k510 219 809 356 356 356 356 346 356 plus FIRST CA,F HEIFERS 378 280 236 84 84 84 84 84 84 plus PURCHASED TOTAL MATED 888 999 805 440 440 440 440 440 440 less DEATHS 36 40 32 18 18 18 18 18 18 less CULLED 510 133 150 121 66 66 66 66 66 66 CN HAND END YEAR 719 809 356 356 356 356 356 356 356 HEIFERS 1-2 years BEGINNING OF YEAR 176 246 276 254 139 139 139 139 139 plus PURCHASED less DEATHS 7 10 11 10 6 6 6 6 6 less SALES 181 160 49 49 49 49 49 ON HAND END YEAR 267 169 236 84 84 84 84 84 84 84 CALVES 0-1 year CALVES BORN 578 650 560 564 308 308 308 308 308 EMALES BORN 289 325 12 154 154 154 154 154 154 less DEATHS 111 43 49 28 15 15 15 15 15 15 ON HAND END YEAR 246 276 254 139 139 139 139 139 139 MALES BORN 289 325 282 154 154 154 154 154 154 less DEATHS 43 49 28 15 15 15 15 15 15 ON HAND END YEAR 246 276 254 139 139 139 139 139 139 STEERS BEGINNING OF PERIOD 290 246 276 254 139 139 139 139 less DEATHS 24 20 22 20 11 11 11 11 (over 2 year period) less SALES 266 226 254 234 128 128 128 128 HERD BUILD-UP TOTAL HERD 1s380 1,597 948 718 718 718 718 718 '718 TOTAL ANIMAL UNITS 888 1,045 440 440 440 440 440 440 440 SUPPLEMENTARY FEED COSTS 10.00 T.Sh.) CALF FEEDS 25.4 13.9 13.9 13.9 13.9 13.9 13.9 CONCENTRATE FOR MILKERS 37.1 41.3 24.7 24.7 24.7 24.7 45.3 PRODUCTION NO. FULL LACTATIONS/YEAR 250 250 250 250 250 250 250 MILK PER LACTATION (kgs) 1,800 1,900 2,000 2,000 2 000 2 000 2 600 LESS MILK FOR CALVES '000 84.6 46.2 46.2 6.2 6.2 6.2 t6.2 PURCHASES UNITS COWS No. FIRST CALF HEIFERS No. Fl BREEDING HEIFERS No. SALES MILK .000 kgs 365.4 428.8 453.8 453.8 453.8 453.8 603.8 CULL CoWS No. 178 118 121 66 66 66 66 66 66 HEIFERS No. 181 160 49 49 49 49 49 STEERS No. 266 226 254 234 128 128 128 128 HERD COEFFICIENT CULLI NG 20 15 15 15 15 15 15 15 15 CALVING RATE % 65 65 70 70 70 70 70 70 70 CALF MORTAULTY % 15 15 10 10 10 10 10 10 10 ADULT MORTALITY % 4 4 4 4 4 4 4 4 .4 February 14, 1975 TANZANIA DAIRY DEVELOPMENT PROJECT Table 15 Ngerengere Dairy Farm: Investment Costs (Tsh '000) Year 1 Year 2 Years 1 - 2 Foreign Foreign Investment Category Unit Unit Cost Units Cost Units Cost t Rtt1 x Exchange ROMl. 0s% Tsh '000 Building and Installation Manager's House No 50.0 1 50.0 - - 1 50.0 40 20.0 Staff Housing No 7.0 14 98.0 25 175.0 39 273.0 40 109.2 Office/Store Silage Pit No 28.0 2 56.0 - - 2 56.0 40 22.4 Bush Clearing 420.0 - - 420.0 - - Calf Feeders No 8.0 2 16.0 - - 2 16.0 40 6.4 Piping KM 17.0 12 204.0 - - 12 204.0 75 153.0 Water Troughs No .5 33 16.5 33 16.5 66 33.0 40 13.2 Fencing KM 2.5 20 50.0 10 25.0 30 75.0 60 45.0 Subtotal 910.5 216.5 1 o 369.2 Irrigation (Dam) 90.0 90.0 75 67.0 Machinery & Equipment Four-Wheel Drive Vehicle No 50.0 2 100.0 2 100.0 60 60.0 Motor Bike No 9.0 - - 2 18.0 2 18.0 60 10.8 Tractor 70-80 H.P. No 85.0 1 85.0 - - 1 85.0 85 72.3 Tractor 50-60 H.P. No 67.0 2 134.0 - - 2 134.0 85 113.9 Plough No 9.0 1 9.0 - - 1 9.0 85 7.7 Harrow Tine No 6.5 1 6.5 - - 1 6.5 85 5.5 Harrow Disc No 11.0 1 11.0 - - 1 11.0 85 9.4 Cultivator No 6.5 1 6.5 - - 1 6.5 85 5.5 Rotary Slasher No 9.0 1 9.0 - - 1 9.0 85 7.7 Manure Spreader No 4.5 1 4.5 - - 1 4.5 85 3.8 Hay Baler - No 50.0 1 50.0 - - 1 50.0 85 42.5 Grader Blade No 6.o 1 6.0 - - - 6.0 85 5.1 Churns No 0.25 - 90 22.5 90 22.5 85 19.1 Forage Harvester No 70.0 1 70.0 - - 1 70.0 85 59.5 Trailer - 3 ton No 12.0 1 12.0 - - 1 12.0 85 10.2 Trailer Forage No 20.0 3 60.0 - - 3 60.0 85 51.0 Engine and Pump No 12.0 1 12.0 - - 1 12.0 85 10.2 Portable Electric Fences Set 3.5 2 7.0 - - 2 7.0 85 6.0 Hammer Mill No 10.0 1 10.0 1 10.0 85 8.) Furniture & Office Equipment Set 20,0 1 20.0 - - 1 20.0 85 17.0 Cambridge Roller No 12.0 1 12.0 - - 1 12.0 85 10.2 Veterinary Equipment & Tools Set 25.0 1 25 .0 - - 1 25 .0 85 21.3 Maize Planter No 17.0 1 17.0 - - 1 17.0 85 14.5 Seed Drill No 18.0 1 18.0 - - 1 18.0 85 15.3 Hay Mover No 6.0 1 6.0 - - 1 6.0 85 5.1 Hay Rake No 5.5 1 5.5 - - 1 5.5 85 4.7 Spares for Machinery and Equipment @ 20% Cost - - - 137.2 - 10.1 - 147.3 - 119.4 Subtotal - - - 823.2 - 60.6 - 883.8 - 716.2 Incremental operating Expensesv - 692.0 _ - - 692.0 2/ 215. Total Investment - 2,515.7 - 2771 3!j. ToalInesmet277.1 2,792.8 1368.6 See Table 16 . Total operating expenses financed in Year One. 2@ 4 Rates varying between 30 and 85*. February 1975 TAWIANIA DAIRY DEVLOPMENT PROJECT Ngerengere Dairy Farm: Sales and Operating Expenses (TAh '000) Before ------------------------------------- Year ---------------------------------------- Deveopmeti 1 2 3 4 5 6 7 8 9-25 Cull Cow 216.0 173.0 193.0 142.0 147.0 152.0 158.0 161.0 161.0 Heifers 26.6 120.4 253.4 224.0 68.6 68.6 102.2 117.6 121.8 Steers - 266.0 290.0 353.3 345.0 246.0 255.0 261.0 271.0 Milk 301.8 518.9 IA4.1 11a4,8 1. j 1,364.4 1,342.3 1,51W.5 1,690.0 Total Sales 517.8 957-9 1,760.5 1,903.8 1,875.9 1,831.0 1,857.5 2,042.1 2,243.8 Operating Expenses Salaries and Wages 2/ Manager 39.6 Assistant Manager 20.7 Field Assistant/Clerk 3.8 Senior Milkers 8.4 Milkers 68.4 Milk Recorder 6.6 Calf Attendant 6.6 Feedera 6.2 Herdsman 1.8 Drivers 28.2 Skilled Labor 9.4 Unskilled Labor 12.4 Mechanic 8.2 Watchmen 6.2 Sub Total 273.5 273.5 273.5 273.5 273.5 273.5 273.5 273.5 273.5 Livestock Husbandry Veterinary and Drugs )/ 45.1 50.6 29.5 30.1 31.3 32.4 33.4 32.8 32.8 Artificial Insemination 24.0 28.6 24.5 17.2 17.7 18.3 18.9 19.1 19.1 Hygiene and Miscellaneous 5/ 0.8 1.2 2.8 2.8 2.9 3.0 3.1 3.1 3.1 Calf Feed Y 7.0 10.8 37.5 26.7 27.6 28.4 29.4 29.7 29.7 Concentrates 7/ 21.9 h0.1 83.5 96.4 90.3 94.5 99.4 108.8 129.4 Minerals and Liks / 11.9 13.4 7.8 8.0 8.3 8.5 8.8 8.6 8.7 Sub Total 110.7 144.7 185.6 181.5 178.1 185.1 193.0 202.1 222.8 Crop and Pasture 3/ Maine Silage 8.4 Hay 33.6 Sub Total 42.0 42.0 42.0 42.0 42.0 42.0 42.0 42.0 42.0 Fuel, Lubricants and Repair. Fuel and Lubricants l/ 98.9 Motor Bike Alloavnce 111 5.0 Repaira - Vehicles 63.9 - Tractora/Engine I - Other machinery 41,8 - Fencing/Water Supply 21.2 - Otber Fixed Assets Small Tools 10.0 Sub Total 240.8 Miscellaneous Accounts l9/ 25.0 25.0 25.0 25.0 25.0 25.0 25.0 25.0 25.0 Total Operating Expensea 692.0 726.0 766.9 762.8 759.4 766.4 774.3 783.4 804.1 Net Operating Income 0.0 (174.2) 231.9 993.7 1,141.0 1,116.5 1,064.6 k&,83.2 1,258.7 1,439.7 / LSales: Cull Co%s 0 Tsh 1,000 Heifere 0 Tah 1,400 Steers @ Tsh 1,000 Milk @ Tah 1.25 2 Salaries and Wages: Based on parastatal rates., including leav, pea, night allovance, provident fund and staff endoeent acbemes. A e inry and ags: Based on all cattle receiving tw iocu:.aticees per year against MND; annual inoculations against blackquarter and Anthrea; regular treatment against internal parasitea; and other oiiments. Young heifers will be vaccinated against brucellosis. 4 Artificial Inseminations: Based on the total number of ocos nated. gLygiene and Miscellaneous: Covers cost of cleaning materials, nilling machine rubber replacement parts and small miscellaneous items. Calf Feeds: Basd on nemuber of calves at the end of the y?ar mlti pl!ed by fifty/Coefficient. Concentrates: Calculated on the following basial Milk Yield 2 _-s -1500_Ngs) + 150 x No. Lactationa x Price 8 Minerals and Licks: Based on a mixture of salt; boneseal nd dsez ai; being available throhaghout the year. 2/ Crovs and PBsatrs: Bsed on Irrigated maine for sile ed MoleE grass pasture (5 years) and.maise for silage (5th yer) in rotation with maine as the nurse crop. Expected acnt a1 yields are as follns: Continuous maize (doxbl cmpp(d) - 200 acres.@ 20 tonsfaere Rotation maize (single cropied - 30 acres at 15 tons/aere 10/ Fueld and Lubricants: Based an one tractor operating 1,50) honrs er year with an average futel conasunption of one liter per hour; one landrover operating 36,000 he per year with an average fuel comaumption of 0.25 'liter per km; one water pump engine at Tat 8,000 per year; a generator operating 3,650 hours per year with an aierage fuel conmption of 4 liters per hour; and lubrionts at 12.5 percent af foei coat. 3. Motor Bike Allowance: Covers mileage allowance paid to Assist ant Y nger for use of motor bike on farm activities. 3./ Rpairs: Based on atandard estimates and experience of leogs ecale farms. I Miecellanes Aecounts: Covers cots of talephoam, postage, stationey, air travel unitams and miscellaneous aelasnistrative accounts. - Net revenue before development asasmd to be Teo sero or lose February 12, 1975 T TANZANIA DAIRY DEV40PMENT PROJECT NGERENGERE AIRY~FARM48 INCREMNTAL CASH FLOWI (Tsh'O000) Before --- ...---.. --- ---- -- -------------------------- ------------------ --- --------------------------- Year - ------------------------- ------- --------- -----.---.----.--.--.....----.....-------- -.......-.--.. -, .. ---- Development 1 2 3 4 5 6 7 8 9 .0 11 12 13 14 1 1 16 17 16 19 20 21 22 23-25 Source of Fund. 28 517.8 957.9 1,760.5 1,903.8 1,875,9 1,831.0 1;837.5 2,042.1 2,243.8- Dewelopment Loen end Grant 2.515.7 277.1 - - - - .- - - - - - -.- - - - - - - Total 20urces 3 1 760 5 1,903.8 1,875.9 -1 A n 877,5 ?02 ? 8, _. Ues of Fund. Inv.tment 0..t 1,823.7 277.1 - - - - - - - - - - - - - - - - - -- - - Operatlng Cost 692.0 726,0 766.9 762.8 759.4 766.4 774.3 783.4 804.1 804.1 804.1 8o.1 804.1 8o4.1 801 804.1 804.1 804.1 804.1 804.1 804.1 804.1 804.1 Cepital Replacement - - - - 100.0 253.0 18.0 208.5 100.0 - 352.5 28.0 100.0 - 208.5 253.0 118.0 - - - 452.5 268.8 - Loan Instalment 41400 .o U.o 1. 0 41. 0 1.o ä.o 414.0 414.o 414.0 414,0. - - - - - - - Total U.. 2,515.7 1,003.1 766.9 762.8 1,273.4 1,433.4 1,206.3 1,405.9 1,138.1 1,218.1 1,570.6 1,246.1 1,318.1 1,218,1 1,426.6 1,057.1 922.1 804.1 804.1 804.1 1,256.6 1,072.9 804.1 Annual Cash S.rplus/Deficit 8.0 517,8 _ _ 99,6 1,141,0 3 397.6 651.2 636.P 925,7 1,025.7 673.2 997.7 925.7 1.025.7 817.2 1,186.7 1,321.7 1,439.7 1,439.7 1,439.7 97.2 1,170.9 1,439,7 1/ loan R*payable in 15 year. with a 4-yea grace Period 4 Ef% Jn-rent per ann0. Gr-at amount 1 ,quIvalent to working . apItal whlIch le either ul f-financed or a grant fro- Govesent throush LIDA and DACO, May 23, 1975 ANNEX 9 Table 18b TANZANIA DAIRY DEVEIOPMENT PROJECT PATEL Dairy Farm-Unit of 356 Cows HERD PROJECTION EEJ CC OIFYEARS 1-25 1f,1D COM1'OSITION _ _ _ _. 1 2 3 4 5 6 7 8 9-25 C0S above 25 years "ECINNING OF YEAR 250 275 273 293 299 314 340 356 356 plus FIRST CLLF EEIrERS 90 58 85 96 109 127 123 107 107 Plus ?URCHASED TOTAL MiATED) 340 333 358 389 408 441 463 463 463 less DEATHS 14 10 11 12 12 13 14 14 14 less cUrEo 51 50 s 78 82 88 93 93 93 CU HAND END YEAR 250 275 273 293 299 314 340 356 356 356 HEIFERS 1-2 years BE-I1NNING OF YEAR 60 88 99. 112 131 13B 148 157 157 plus ?URCHASED less DEATHS 2 3 3 3 4 4 5 5 5 less SALES 11 36 45 45 ON HAND END YEAR 90 58 .85 96 109 127 123 107 107 107 CALVES 0-1 year CALVES BORN 220 234 250 292 306 330 348 348: 348 F7MALES BORN 110 117 125 146 153 165 174 174 174 less DEATHS 22 18 13 15 15 17 17 17 17 ON HA1D END YEAR 60 88 99 112 131 138 148 157 1571 157 MALES BORN 110 117 125 146 153 165 174 170 174 less DEATHS 22 18 13 15 15 17 17 17: 17 ON HAND END YEAR 88 99 112 131 138 148 157 1571 157 STEERS BEGINNING OF PERIOD 60 88 99 112 131 138 148 157 less DEATHS 3 3 3 3 4 4i 5; 5 (over 2 year period) less SALES .57 85 96 109 127 134 143 152 HERD BUILD-UP TOTAL HERD 509 556 613 670 717 759 777 777 777 TOTAL ANIRAL UNITS 333 358 389 408 441 463 463 463 463 SUPPLEMENTARY FEED COSTS (-0007T.Sh.) CALF FEEDS 8.8 9.9 11.2 13.1 13.8 i4.8 15.7 15-7 15.7 CONCENTRATE FOR MILKERS 24.1 40.1 55.3 70.5 81.4 87.9 92.1 92.1 92.1 PRODUCTION NO. FULL LACTATIONS/YEAR 160 179 191 205 224 236 255 267 267 267 MILK PER LACTATION (kgs) 1,800 1,800 2,300 2,700 3,000 3,200 3,200 3,200 3,200 3,200 MILK MA CALVBS 33.0 35.1 37.5 43.8 45.9 49.5 52.2 52.2 52.2 PURCHASES UNITS COWS No. FIRST CALF HEIFERS No. l/ Fl BREEDING HEIFERS No. SALES lilLK .000 kg9,288.0 289.2 404.2 516.0 628.2 709.3 766.5 802.2 802.2 802.2 CULL COWS No. 1 51 50 54 78 82 88 93 93 93 H&IFERS No. 11 36 45 28 STEERS No. 90 57 85 96 109 127 134 143 152 HERD COEFFICIENTS CULLING 7 15 15 15 20 20.20 20 20 20 CALVING RATE 64 65 70 70 75 75 75 75 75 75 CALF-NORTATJTY 25 20 15 10 10 10 10 .10 10 10 D-ULT MORTALITY % 4 3 3 3 3 3 3 3 3 1/ All animals from farm urchased by DAFCO in Year 1. February 14, 1975 TANZANIA ANNEX 9 DAIRY DEVELOPMENT PROJECT Table 19 Patel Dairy Farm: Investment Costs (Tah '000) Year 1 Total Total Foreign Foreign Investment Category Unit Unit Cost Units Cost Units Cost Excha Echange Building and Installationl/ - Tsh '000 Manager's House 5.0 5.0 - 5.0 - -.0 Assistant Manager's House No 38.0 1 38.0 1 38.0 40 15.2 Junior Staff HDusing No 16.0 3 48.0 3 48.0 4o 19.2 Staff Housing No 7.0 17 119.0 17 119.0 4o 47.6 Office/Store No 44.0 1 44.0 1 44.0 4o 17.6 Implement Shed/Workshop No 17.0 1 17.0 1 17.0 40 6.8 Spray Race No 22.0 1 22.0 1 22.0 40 8.8- Silage Pit No 28.0 4 112.0 4 112.0 4o 44.8 Calf Feeders No 8.0 1 8.0 1 8.0 40 3.2 Pumping KM 17.0 1 17.0 1 17.0 75 14.5 Water Troughs No 0.05 15 7.5 15 7.5 4o 3.0 Fencing KM 2.5 10 25.0 10 25.0 6o 15.0 Milking Parlor No 75.0 1 75.0 1 75.0 4o 30.0 Sheltered Feed Yard No 65.0 1 0 1 6 40 26.0 Subtotal -- 602. 602. 251.7 Irrigation 380.0 1 380.0 1 380.0 75 285.0 Machinery and Equipment Four Wheel Drive Vehicle No 50.0 1 50.0 1 50.0 60 30.0 Motor Bike No 9.0 1 9.0 1 9.0 60 5.4 Tractor 50-60 H.P. No 67.0 2 134.0 2 134.0 85 113.9 Tractor 70-80 H.P. No 85.0 2 170.0 2 170.0 85 144.5 Plough No 9.0 2 18.0 2 18.0 85 15,3 Harrow Tine No 6 5 1 6.5 1 6.5 85 5.5 Harrow Disc No 11.0 1 11.0 1 11.0 85 9.4 Cambridge Roller No 12.0 1 12.0 1 12.0 85 10.2 Maize Planter No 17.0 1 17.0 1 17.0 85 14 5 Weed Sprayer No 8.0 1 8.0 1 8.0 85 6.8 Fertilizer Spreader No 4.5 1 4.5 1 4.5 85 3.8 Cultivator No 6.5 1 6.5 1 6.5 85 5.5 Rotary Slasher No 9.0 1 9.0 1 9.0 85 7.7 Grader Blade No 6.0 1 6.0 1 6.0 85 5.1 Generator No 28.0 1 28.0 1 28.0 85 23.8 Portable Electric Fences Set 3.5 3 10.5 3 10.5 85 8.9 Hammer Mill , No 10.0 1 10.0 1 10.0 85 8.5 Veterinary Equipment & Tools Set 25.0 1 25.0 1 25.0 85 21.3 Furniture & Office Equipment Set 20.0 1 20.0 1 20.0 85 17.0 Milking Machine No 100.0 1 100.0 1 100.0 85 85.0 Front End Loader No 11.0 1 11.0 1 11.0 85 9.4 Spares for Machinery and Equipment @ 20% Cost - - - 133.2 - 133.7 j/ 110.3 Subtotal - - - 799.2 - 799. 7 - 661.8 Livestock Purchase 2 3t - - - 5 562.0 Incremental Operating Expenses - - - 596. - 161.5 Total Investment - - - 2,940.6 - 2,940. 6 1.36O.0 1/ For renovation of existing building and additions. 2] Cattle on farm before development must be purchased in year 1; Cows, Tsh 1000, Calves Tsh 600, See Table 20. Total operating expenses financed in Year One. V At rates varying between 304 and 85%. February 1975 DAIRY DEVELR T PROJECT T&ble 90 Patel Dairy Farm: Salus and Operating Expenass (Tah 'O00) Before 14r------------------------------------------- Year----------------------------------------- Development- 1 2 3 4 5 6 7 89-5 Sales 1 Cull Cows 51.0 50.0 54.0 78.0 82.0 88.0 93.0 03.0 93.0 Heifers 15.4 0.4 63.0 39.2 Steera 90.0 57.0 85.0 96.0 109.0 127.0 134.0 143.0 152.0 milk 361.5 505.3 645.0 785.3 886.6 958.1 1,002.8 1,002.8 1,002.8 Total Sales 502.5 612.3 784.0 959.3 1,077.6 1,188.5 1,280.2 1,301.8 1,287.0 Operating Expenses Salaries & Wages 2/ Manager 50.0 Assistant Manager 20.0 Field Assistant/Clerk 24.6 Milkers 29.4 Calf Attendant 3.3 _. __ Herdsmen 6.6 Drivers 9.4 Skilled Labor 4.7 Unskilled Labor 6.2 Watchmen 6.2 Subtotal 160.4 160.4 160.4 160.4 160.4 160.4 160.4 160.4 160.4 Livestock Husbandry Veterinary & Drugs 3 11.9 12.9 14.0 14.7 15.9 16.7 16.7 16.7 16.7 Artificial Insemination 4/ 7.1 6.9 7.5 8.2 8.6 9.3 9.7 9.7 9.7 Hygiene & Miscellaneous :/ 1.1 1.1 1.2 1.3 1.4 1.5 1.6 1.6 1.6 Calf Feeds / 8.8 9.9 11.2 13.1 15.8 14.8 15.7 15.7 15.7 Concentrates . 24.1 40.1 5".3 70.5 81.4 87.9 92.1 92.1 92.1 Minerals & Licks 8/ 2.9 3.2 3.5 3.7 3.9 4.2 4.2 4.2 4.2 Subttal 5.9 4.111-1.5 Subtotal 5 92.7 127.0 13.4 140.0 140.0. 140.0 Crop & Pasture 2/ Maize Silage 20 , Hiy __8 Subtotal 88 .38 88 88 88 88 88 88 88 Fuel, Lubricants & Repairs Fuel and Lubricants 113.6 Motor Bike Allowance 1/ 3.0 Repairs-Vehicles L2J 90.0 - Tractors/Engine ) - Other Machinery 45.0 - Fencing/Water Supply ) 21.0 - Other Fixed Assets Small Tools 5.0 Subtotal 277.6 277.6 277.6 277.6 277.6 277.6 277.6 277.6 277.6 Miscellaneous Accounts I 15.0 13.0 15.0 15.0 15.0 15.0 15.0 15.0 15.0 Total Operating Expenses 196.9 6.1 633.7 652.5 668.0 675,4 681.0 681.0 681.0 Net Operating Income . h.4) ( 28) 150.3 306.8 409.6 513.1 599.2 620.8 606.0 Sales: Cull Cows @ Tah 1,000 Heifers @ Tsh 1,400 Steers @ Tsh 1,000 Milk @ Tsh 1.25 2/ Salaries and Wages: Based on parastatal rates, including leave pay, night allowance, provident fund and staff endowment schemes. 3/ Veterinary and Drugs: Based on all cattle receiving two inoculations per year against PMD; annual inoculations against blackquarter and Anthrax; regular treatment against internal parasites; and other ailments. Young heifers will be vaccinated against brucellosis. Artificial Inseminations: Based on the total number of cows mated. Hygiene and Miscellaneous: Covers cost of cleaning materials, milking machine rubber replacement parts and small miscellaneous items. Calf Feeds: Based on number of calves at the end of the year multiplied by fifty (coefficient). / Concentrates: Calculated on the following basiss Milk Yield (kgs 1500 (kgs) + 150 x No. Lactations x Price 8 Minerals and Licks: Based on a mixture of salt; bonemeal and minerals being available throughout the year. 2/ and Pastures: Based on irrigated maize for silage and Modes grass pasture (5 years) and maize for silage (j9h7ear) in rotation with maize as the nurse crop. Expected annual yields are as follows: Continuous maize (double cropped) - 200 acres @ 20 tons/acre Rotation maize (single cropped) - 30 acres at 15 tons/acre 1 Fueld and Lubricants: Based on one tractor operating 1,500 hours per year with an average fuel consumption of one liter per hour; one landrover operating 36,000 km per year with an average fuel consumption of 0.25 liter per in; one water pump engine at Tsh 8,000 per year; a generator operating 3,650 hours per year with an average fuel consumption of 4 liters per hour; and lubricants at 12.5 percent of fuel cost. Motor Bike Allowance: Covers mileage allowance paid to Assistant Manager for use of motor bike on farm activities. 1/ Repairs: Based on standard estimates and experience of large sole farms. 13 Miscellaneous Accounts: Covers costs of telephone, postage, stazioney, air travel,uniforms and miscellaneous administrative accounts. Before development net revenue assumed to be Tsh zero or less. February 12 1975 AIMEX 9 fäbi. 21 TANZANIA DAIRY DEVELOEMENT PROJECT Patel Dairy FarM, Incremental Cash Flm (Tsh '000) .---- ------ --- ----------.. . ----..... - . ---------... --------- --------------------- --- ---- ------ - Year - ---------------------- ------------------------------- -- - -- - ------------------- -- -------- - Before Development 1 2 3 4 5 6 7 8 9 .o 11 12 13 14 15 16 17 2 19 20 21 22-25 Source of Fu,nda sales 502.5 612.3 784.0 959.3 1,077.6 1,188.5 1,280.2 1,301.8 1.287.0 Davleopment Loa and Grant 2,940.6 - - - - - - - Total Sou-res 3,43.1 612.3 784.o 959.3 1,077.6 1,188.5 1,280,2 1,310.8 1,287.0 Uses of Funds Tnve.taent -ot 2.4. - - - - - - -- -- -- Oparating Co5~ 596.9 615.1 633.7 652.5 668.0 675.4 681.0 681.0 681.0 881.0 .0681 6. 681. 81.0 681.0 681.0 681.0 681.0 681.0 Capital Rplacement- - - - - 5.0 361.0. - - 50.0 - 606.5 - 50.0 - - 361.0 50.0 - - - 656.5 - Loan Instalmsent f- - ·· - lo 4 46o. 460.0 460 46 0 46m. _46m 60.0 _ 460.0 46o0 n 6 - - Total Uses - ,4å.i 615.' 633.7 652.5 1,134.0 1,452.4 1,097.0 1,097.0 1,147.0 1,ö97.o' 1,703.5 1,097.0 1,147.0 1,097.0 1,097.0 1,042.0 731.0 681.0 681.0 681. 1,337.5 681.n Annual Cash Sarplus/Deficit 502.5 (?Z8I 150.3 306.8 (56.4) (263.9) 183.2 183,2 14.0 190.0 (416.5) 190.0 14.0 190.0 190.0 245.0 556.0 606.0 6o6.0 606.0 (50.5) 606.0 Lf Lan Repayable in 15 years vit! a 4-year grace period 8' 8I in,, rest per annu-. Grant amnt 1. equivale,t to working capital which t either celf-fl ~ced or a grant from eovere~nt through LIDA and DACO. MaY 23, 1975 TANZANIA DAIRY DEVELOPMENT PROJECT Model of RONGAI COMPLEX Dairy Farm - 3 Units of 356 Cows HERD PROJECTION HERD COMPOSITION . 1 2 3 1 5 6 7 8 9-25 OWS above 2 years BEGINNING OF YEAR 735 68o 697 796 883 927 1,003 1,068 1,068 plus FIRST CALF EIFERS 94 171 274 281 320 376 388 320 320 plus PURCHASED TOTAL MATED 829 851 971 1,077 1,203 1,503 1,391 1,388 1,388 less DEATHS 25 26 29 32 ~6 ~ 4 4 1:: i' i i '6 162 2 2 09 22 24 242 less CULLE 121 128 1146 1 2 240 2 8 78 278 CN HAND END YEAR 735 680 697 796 883 927 1,003 1,068 1,068 1,068 HEIFERS 1-2 years BEGINNING OF YEAR 176 282 289 330 388 467 469 500 499 plus PURCHASED less DEATHS 5 8 8 10 12 14 14 15 15 less SALES - - - - - 65 135 165 164 ON HAND END YEAR 94 171 274 281 320 376 388 320 320 320 CALVES 0-1 year CALVES BORN 664 680 776 862 962 1,042 1,112 1,110, 1,110 FEMALES BORN 332 340 388 431 481 521 556 555 555 less DEATHS 50 51 58 43 14 52 56 56; 56 ON HAND END YXAR 176 282 289 330 388 467 469 500 499 499 MALES BORN 332 340 388 431 481 521 556 555 555 less DEATHS 50 51 58 43 14 52 557. 56 56 ON HAND END YEAR 176 282 289 330 388 467 469 499 499! 499 STEERS BEGINNING OF PERIOD 176 282 289 330 388 467 469 499 less DEATHS 10 16 16 20 24 28 28: 30 (over 2 year ?eriod) 3 less SALES 36 166 266 273 310 6 439 441 470 HERD BUILD-UP TOTAL HERD 1,415 1,532 1,737 1,979 2,237 2,329 2,388! 2,3861 2,386 TOTAL ANIMAL UNITS 851 954 1,077 1,203 1,303 1,391 1,388 1,388: 1,388 SUPPLEENTARY FEED COSTS (1000 T.Sh.) CALF FEEDS 28.2 28.9 33.0 38.8 46.7 69 50.0 9.9 69.9 CONCENTRATE FOR MILKERS 138.7 159.0 200.7 275.3 3.450 397.0 422.7 22.7 422.7 PRODUCTION NO. FULL LACTATIONS/TER 514 544 558 637 706 742 802 854 851 854 MILK PER LACTATION (kgs) !2,200 2,600 2,800 3,000 3,200 3,400 3,600 3,800 3,800 3,800 MILK FOR CALVES 996 102.0 116.4 129.3 144.3 156.3 166.8 166.5 166.5 PURCHASES UNITS COWS No. FIRST CALF HEIFERS No. P, BREEDING HEIFERS No. SALES =1-LK .000 kgs 130C.8 1,314.8 1,460.141,79.6 2,129.9 2,378.52,730.9 3/778.43,078.73,078.- CULL COWS No. 124 125 146 162 240 261 281 278 278 HEIFERS No. 65 135 165 164 STEERS No. 36 166 266 273 310 464 439 441 470 HERD COEFFICIENTS CULLING % 15 15 15 15 20 20 20 20 20 CALVING RATE I 70 80 80 80 80 80 80 80 80 80 CALF MORTAJITY % 20 15 15 15 10 10 10 10 10 10 ADULT MORTALITY % 4 3 3 3 3 3 3 3 3 3 February 12, 1975 TANZANIA DAIRY DEVELOPNENT PROJECT Rongal Dairy Complex: Investment Cost (Tsh '000) Year 1 Year 2 Years 1-2 Foreign Foreign Investment Category Unit Unit Units Cost Units Cost Total Total Exchange Exchange Cost Units cost (Tsh '0O0) Building and Installation Junior Staff Housing No. 16.0 4 64.0 3 48.0 7 112.0 40 44.8 Staff Rousing No. '(.0 2 1h.0 1 7.0 3 21.0 40 8.4 Milking Parlor and Shed No. 175.0 1 175.0 - - 1 175.0 40 70.0 Silage Pit No. 28.0 2 56.0 2 56.0 4 112.0 40 k4.8 Roads KM 3.0 4 12.0 4 12.0 8 24.0 40 9.6 Piping KM 17.0 5 85.0 3 51.0 8 136.0 75 102.0 Water Troughs No. 0.5 28 14.o 22 11.0 50 25.0 40 10.0 Fencing KM 2.5 20 50.0 60 150.0 80 200.0 60 120.0 Subtotal 470.0 335.0 805.0 409.6 Machinery and Equipment Four-Wheel-Drive Vehicle No. 50.0 1 50.0 1 50.0 2 100.0 60 60.0 Motor Bike No. 9.0 2 18.0 - - 2 18.0 60 10.8 Tractor 70-80 H.P. No. 85.0 2 170.0 1 85.0 3 255.0 85 216.8 Tractor 50-60 H.P. No. 67.0 3 201.0 1 67.0 4 268.0 85 227.8 Plough No. 9.0 2 18.0 1 9.0 3 27.0 85 23.0 Harrow - Tine No. 6.5 2 13.0 1 6.5 3 19.5 85 16.6 Harrow - Disc No. 11.0 2 22.0 1 11.0 3 33.0 85 28.1 Cultivator No. 6.5 2 13.0 - - 2 13.0 85 11.1 Rotary Slasher No. 9.0 2 18.0 1 9.0 3 27.0 85 23.0 Seed Drill No. 18.0 1 18.0 - - 1 18.0 85 15.3 Hammer Mill No. 10.0 .2 20.0 1 10.0 3 30.0 85 25.5 Weed Sprayer No. 8.0 2 16.0 - - 2 16.0 85 13.6 Manure Spreader No. 4.5 2 9.0 - - 2 9.0 85 7.7 Hay Mower No. 6.0 1 6.0 1 6.0 2 12.0 85 10.2 Grader Blade No. 6.0 1 6.o 1 6.0 2 12.0 85 10.2 Hay Rake No. 5.5 1 5.5 1 5.5 2 11.0 85 9.4 Trailer - 3 Ton No. 12.0 3 36.o - - 3 36.0 85 30.6 Hay Baler No. 50.0 1 50.0 1 50.0 2 100.0 85 85.0 Trailer Forage No. 20.0 5 100.0 1 20.0 6 120.0 85 102.0 Forage Harvester No. 70.0 2 70.0 1 70.0 2 14o.0 85 119.0 Engine and Pump No. 12.0 1 12.0 1 12.0 2 24.0 85 20.4 Portable Electric Fences Set 3.5 5 17.5 1 3.5 6 21.0 85 17.9 Furniture and Office Equipment Set 20.0 1 20.0 1 20.0 2 40.0 85 34.0 Cambridge Roller 12.0 1 12.0 - - 1 12.0 85 10.2 Veterinary Equipment and Tools Set 25.0 1 25.0 1 25.0 2 50.0 85 42.5 Maize Planter No. 17.0 1 17.0 1 17.0 2 34.0 85 28.9 Spares for Machinery and Equipment @ 20% Cost - - 19.4 95.7 289.1 233.9 Subtotal - - 1,156.4 578.2 1,734-6 1,433.5 Incremental Operating Expenses 1/ - - 1,195.6 - 1,195.6 2/ 323.6 Total Investment - - 2,22o 913.2 3,73%2 2,166.7 1/ See Table 24 . Total operating expenses finaned in Year One,. 2/ @ Rates varying between 30% and 80%. February 14, 1975 MAIRY Dv 2 T0 PRJECT Rongai Dairy Complex: Sales and Operating Expenses (Tsh '000) Svllet 1 2 4 -5 7 9 Cull Cows 124.0 128.0 146.0 162.0 240.0 2610 281.0 278.0 278.0 278.0 Hifr- - - 91.0 189.0 231.0 229.66 Steers 36.0 166.o 266.0 273.0 310.0 464.0 439.0 441.0 470.o0. Milk 1643.5 1825.5 2243.3 2662.4 2973.1 3413.6 3848.0 38 .4 38.4 3848.4 Total Sales 1803.5 2119.5 2655.3 3097.4 3523.1 4229.6 47570 4798.4 4826.0 Operating Expenses Salaries & Wages 2/ Manager 118.8 Assistant Manager 62.1 Field Assistant/Clerk 24.6 Milkers 34.2 Calf Attendant 9.9 Herdsmen 39.6 Drivers 47.0 Mechanic 18.8 Skilled Labor 37.2 Unskilled Labor 12.4 Watchmen 12:4 Subtotal 421.0 421.0 421.0 421.0 421.0 421.0 421.0 421.0 421.0 421.0 Livestock Husbandry Veterinary & Drugs / 30.6 34.4 38.7 43.4 46.9 50.1 49.9 49.9 Artificial Insemination 17.9 18.2 20.9 23.2 25.9 28.1 30.0 30.0 Hygiene & Miscellaneous 10.9 11.2 12.7 14.1 14.8 16.0 17.1 17.1 Calf Feeds 6/ 28.7 28.9 33.0 38.8 46.7 46.9 50.0 49.9 Coneentrates 7/ 138.7 159.0 200.7 275.3 345.0 397.0 422.7 422.7 Minerals & Lic ks B .1 9.6 - 10.2 11.4 12.4 13.2 13.2 13.2 Subtotal 234.9 261.4 316.2 4o6.2 491.7 551.3 582.9 582.8 582.8 382.8 Crop & Pasture / Wheat 30.6 Maize Silage 12.6 Subtotal 93.6 93.6 93.6 93.6 93.6 93.6 93.6 93.6 93.6 93.6 Fuel, Lubricants & Repairs Fuel and Lubricants 10/ 150.1 Motor Bike Allowance 11/ 5.0 Repairs-Vehicles 1g/ 124.6 - Tractors/Engine ) - Other Machinery 82.3 - Fencing/Water Supply ) 2L.1 - Other Fixed Assets Small Tools 15.0 Subtotal 4o.1 ili. 401.1 401.1 401.1 401.1 401.1 4o.i 401.1 401.1 Miscellaneous Accounts 45.0 45.0 45.o 45.0 45.0 45.0 45.0 45.o 45.0 45.0 Total Operating Expenses 1195.6 1222.1 1276.9 1366.9 1452.4 1512.0 1543.6 1543.5 1543.5 1143.5 Net Operating income 607.9 897.4 1378.4 1730.5 2070.7 2717.6 3213,4 3254.9 3282.5 82.5 1/ Sales: Cull Cows @ Tsh 1,000 Heifers @ Tsh 1,400 Steers @ Tsh 1,000 Milk @ Tsh 1.25 2/ Salaries and Wages: Based on parastatal rates, including leave ps , night allowance, provident fund and staff endowment schemes. 7/ Veterinary and Drugs: Based on all cattle receiving two isocu.aticns per year against FMD; annual inoculations against blackquarter and Anthrax; regular treatment against internal parasites; and othar itilments. Young heifers will be vaccinated against brucellosis. V. Artificial Inseminations: Based on the total number of cows mate. 5 Hyaiene and Miscellaneous: Covers cost of cleaning materias, milking machine rubber replacement parts and small miscellaneous itemb. Calf Feeds: Based on number of calves at the end of the y:ar nult3plied by fifty (coefficient). 7/ Concentrates: Calculated on the following basisi Milk Yi:ldIkL< _ 1,500 (kg) + 150 x No. Lactations x Price 83 Minerals and Licks: Based on a mixture of salt; bonemeal md rise: al: being available throbghout the year. 2/ ops ad Pastures: Based on Irrigated maize for silage and R odeE grass pasture (5 years) and.maize for silage (5th year) in rotation with maize as the nurse crop. Expected anr al yields are as follows: Continuous maize (doubl -mcpped) - '00 acres.@ 20 tons/acre Rotation maize (single cropj d, - 30 acres at 15 tons/acre 10/ Fuel and Lubricants: Based on one tractor operating 1,500 hors ar year with an average fuel consumption of one liter per hour; one landrover operating 36,000 km per year with an average fuel cd.ss.ption of 0.25'liter per-km; one water pump engine at Tsh 8,000 per year; a generator operating 3,650 hours per year with an aieraei Mel consumption of 4 liters per hour; and lubricants at 12.5 percent of fuel cost. 11 Motor Bike Allowance: Covers mileage allowance paid to Assistrnt Vusger for use of motor bike on farm activities. 12 Repairs: Based on standard estimates and experience of large reale f.rms. 1 Miscellaneous Accounts: Covers costs of telephone, postage, as ati icey, air travel uniforms and miscellaneous administrative accounts. 14/ Before development net revenue assumed to be Tsh zero or less. February 12, 1975 ANNEX 9 Table 25 DAoTRY DT.0PMRN'I'5 2 PrTRMO Rongai Dalry Cplex: incrne-tal Cash Flow (Tsh 'GCO) Bef«o 4 5 6 7 8 9 .0 11 12 13 14 15 16 17 JE 19 20 21 22 23-25 Source of Funds .,803.5 2,U19.5 2,655.3 3,97.4 3,523.1 4,229.6 4,757.0 4,798.4 4,826.0 4,8P6.0 evelopnt Lon and Grant 2,8220 9 2 - - -- - - Total Sources 4,625.5 3,032.7 2,655.3 3,097.4 3,523.1 4,229.6 4,757.0 4,798.4 4,826.0 4,826.0 4,826.0 4.826.0 ,8262 4.826.0 4,326.o 4,826.o 4,826.0 4,826. 4,826.0 4,826o 4,8260 4,8261.0 4,82.,0 Ujses of Funoda 'rve-to-- Coat 1,626.4 913.2 - - - - - - - -- -- ------ ratmen Cost 1,95.6 1,222.1 1,276.9 1,366.9 1,452.4 1,512.0 1,543.6 1,543.5 1,543.5 1,543.5 1,543.5 i,543.5 1,543.5 f,543.5 1,543.5 1,543.5 1,543.5 1,543.5 .1,543., 1,543.5 1,'43.5 1,543.5 0,543.5 perting ose,1 -- 100.0 637.0 - 420.0 100.0 - 895.5 - 100.0 - 420.0 637.0 100.0 - - - 995.5 42o.o - oaptaleptl1ment 491.0 41 0 491.o 40.0 491,0 491.0 491.0 491.0 4 91 . 491.0 491.0 -- --- Total Uses 2,822.0 2,135.3 1276.9 1,366.9 2,043.4 2,640.0 2.034.6 2,405.5 2,134.5 2,034.6 2,930.0 2,034.6 2,134.5 2,034.6 2,454.5 2,180.5 1,643.5 1,543.5 1,543.5 1,543.5 2,539.0 1,963.5 1,543.5 Annu,al Cash Surplus/Deficit .0 1,803.5 8.7.4' 1.784 1730.5 1.9.7 1,589.6 2,7?.4_2,343.9 2,691.5 2,79_.5 ,896.0 2,791.5 2.691. 2,791.5 2,71 ,645 3,182.5 3,22.5 3,282.5 3,282.5 2,287.0 2,62.5 3,282.5 1/ Lon Repayable in 15 yara with a 4-year grace period @ *ß int, res3t per ann-. sant a,onot 0s equivalnt to vorng capital which is lether self--fLanced or a grant from Goyernseant thXogh IDA sad DAPCO, Hay 23, 1975 ANNEX 9 Table 26 TANZANIA DAIRY DMVELOPMENT PROJECT SALEH HAJEH Dairy Farm - 1 Unit of 356 Cows HERD PROJECTION BERD OT- yEARS 1-25 HE,RD 00M?0SITION elp 3 17 . 1 2 3 4 5 6 7 8 9-25 COWS above 2_ years fk5INNING OF YEAR 55 385 391 00 400 400 400 400 00 plus FIRST CALF HEIFERS 420 92 129 120 120 120 120 120 12Q nlus PURCHASED (475) TOTAL MATED 475 477 520 520 520 520 520 520 520 less DEATHS 19 14 16 16 16 16 16 16 16 less CULLED 71 72 104 104 104 104 140 104 104 CN HAND END YEAR 385 391 40 400 4oo 4oo 400 o 4oo YEIFERS 1-2 years BEGINNING OF YEAR 23 133 152 175 175 175 175 175 175 plus PURCHASED 70 70 70 70 70 less DEATHS 1 4 5 5 5 5 5 5 5 less SALES 70 97 120 50 50 5o 50 50 ON HAND END YEAR 22 59 50 120 120 120 120 120 120 CALVES 0-1 year CALVES BORN 332 358 390 390 390 390 390 390 390 FEMALES BORN 166 179 195 195 195 195 195 195 195 less DEATHS 33 27 20 20 20 20 20 20 20 ON HAND END YEAR 133 152 175 175 175 175 175 175 175 MALES BORN 166 179 195 195 195 . 195 195 195 195 less DEATHS 33 27 20 20 20 20 20 20 20 ON HAND END YEAR 133 152 175 175 175 175 175 175 175 STEERS BEGINNING OF PERIOD less DEATHS (over 2 year period) less SALES HERD BUILD-UP TOTAL HERD 540 602 625 625 625 625 625 625 925 TOTAL ANIMAL UNITS 407. 1450 450 450 450 uso 45o 450 450 SUPPLEMENTARY FEED . COSTS ('000 T.Sh.) CALF FEEDS 6.7 7.6 8.*8 8.8 8.8 8.8 8.8 8.8 8.8 CONCENTRATE FOR MILKERS 40.5 52.7 63.0 72.0 76.5 .85.5 94.5 103.5 103.5 PRODUCTION NO. FULL LACTATIONS/YEAR 270 293 . 300 300 300 300 300 300 300 MILK PER LACTATION (kgs) 1,900 2,100 2,300 2,500 ,600 2,800 3,000 0,200 3,200 MIK FOR CALVES 49.8 58.7 60.0 60.0 60.0 60.0 60.0 60.0 60.0 PURCHASES UNITS Cows No. 55 FIRST CALF IEIFERS No. 420 BREEDING HEIFERS No. 70 70 70 70 70 SALES -ff-u .000 kgs 463.2 556.6 '630.0 690.0 720.0 780.0 o 840.0 900.0 900.0 CULL COWS No. 71 72 . 104 104 10 104 104 104 104 HEIFERS No. 70 97 50 50 50 5o o 50 STEERS(as 2 months No. 133 152 175 175 175 175 175 175 175 calves) HERD COEFFICIENTS CULLING 6 15 15 20 20 20 20 20 20 20 CALVING RATE % 70 75 75 75 75 75 75 175 75 CALF MORTALITY % 20 15 10 10 10 10 10 10 10 ADULT MORTALITY % 4 3 3 3 3 3 3 3 3 Assumptions for Saleh Hajeh Farm: 1. 70 1st calf heifers are transferred from Kitulo Farm during first five years of operation. 2. Bull calves are sold at 2 months to permit herd expansion to 400 on the same investment and operating costs. 3. Heavy culling of low producers takes place at the end of second lactation. February 14, 1975 TANZANIA DASY DEVELOPMfT PROJECT ANEX7 Saleh Ha1eb.h Daiy Farm: Investment Costa (Tsh 1000) Year 1 Year 2 Years 1-2 Foreign Foreign Investment Category Unit Unit Cost Units Cost Units Cost Total Units Total Cost Ex Exchae Building and Installations Manager's House No 50.0 1 50.0 - - 1 50.0 40 20.0 Assistant Manager's House No 10.0 1 10.0 - - 1 10.0 40 4.0 Junior Staff Housing No 16.0 3 48.0 - - 3 18.0 40 19.2 Staff Housing No 7.0 15 105.0 4 28.0 19 133.0 40 53.2 Office/Store No 44.0 1 44.0 - - 1 44.0 40 17.6 Silage Pit No 28.0 4 112.0 - - 4 112.0 40 44.8 Spray Race No 22.0 1 22.0 - - 1 22.0 40 8.8 Water Troughs No 0.5 15 7.5 9 4.5 24 12.0 40 5.0 Calf-Feeders No 8.0 1 8.0 - - 1 8.0 40 3.2 Milking Parlor No 75.0 1 75.0 - - 1 75.0 40 30.0 Sheltered Feed Yard No 65.0 1 65.0 - - 1 65.0 40 26.0 Roads Km 3.5 2 7.0 - 2 7.0 40 2.8 Fencing Km 2.5 10 2 9 22 19 47.5 6o 28.5 Subtotal 578.5 55.0 633.5 263.1 Irrigation Works J Set 240.0 1 240.0 - - 1 240.0 75 180.0 Machinery and Equipment 4-Wheel Drive Vehicle No 50.0 1 50.0 - - 1 50.0 60 30.0 Motorcycle No 9.0 - - 1 9.0 1 9.0 60 5.4 Tractor 70-80 HP No 85.0 2 170.0 - - 2 170.0 85 144.5 Tractor 50-60 H P. No 67.0 2 134.0 - - 1 134.0 85 113.9 Plough No 9.0 2 18.0 - - 2 18.0 85 15.3 Harrow-Tine No 6.5 1 6.5 - - 1 6.5 85 5.5 Harrow-Dise N No 11.0 1 11.0 - - 1 11.0 85 9.4 Cultivator No 6.0 2 12.0 - - 2 12.0 85 10.2 Rotary Slasher No 9.0 1 9.0 - - 1 9.0 85 7.7 Grader Blade No 6.0 1 6.0 - - 1 6.0 85 5.1 Front end Loader No 11.0 - - 1 11.0 1 11.0 85 9.4 Manure Spreader No 19.0 - - 1 19.0 1 19.0 85 16.2 Trailer - 3 Ton No 12.0 1 12.0 - - 1 12.0 85 10.2 Trailer Forage No 20.0 3 60.0 - - 3 60.0 85 51.0 Engine and Pup No 12.0 1 12.0 - - 1 12.0 85 10.2 Portable Electric Fences Set 3.5 2 7.0 - - 2 7.0 S5 6.0 Veterinary Equipment and Tools Set 25.0 1 25.0 - - 1 25.0 85 21.3 Hammer Mill No 10.0 - - 1 10.0 1 10.0 85 8.5 Milking Machine No 100.0 1 100.0 - - 1 100.0 85 85.0 Furniture and Office Equipment Set 20.0 1 20.0 - - 1 20.0 85 17.0 Cambridge Roller No 12.0 1 12.0 - - 1 12.0 85 10.2 Maize Planter No 17.0 1 17,0 - - 1 17.0 85 14.5 Fertilizer Spreader No 4.5 1 4.5 - - 1 4.5 85 3.8 Weed Sprayer No 8.0 1 8.0 - - 1 8.0 85 6.8 Forage Harvester No 110.0 1 110.0 - - 1 110.0 85 93.5 Generator No 28.0 1 28.0 - - 1 28.0 85 23.8 Spares for Machinery and Equipment _@ 20% Cost - - - 166.4 - - 176,2 146.9 Subtotal - - - 998.4 - 58.8 - 1,057.2 - 881.3 Livestock Purchase N No 1.6 - - 545 839.9 545 839.0 - Incremental Operating xpensey 511.0 511.0 198.9 Total Investment - - - 2,327.9 - 952.8 - 3,280.7 - 1,523.3 Farm was developed about 20 years ago, but was abandoned entirely in 1970-71. No buildino and equipment can be used for future development . 2/ Estimate under Irrigationt headworks (Tsh 50,000), Distribution system (piping)(approximately Tsh 150,000) and drainage (Tsh 40,000). See Table 28 . Total operating expenses financed in Year One. @ Rates varying between 30% and 85%. Heifers purchased at Tab 1600. February 12. 1975 TANMZA DAIRY DEVLOPMT PROJECT sah Haieh Eairy Farm: Sales and Operating Expenses (Tsh '000) Before ------------------------------- Year - ------------------------------ Development 1 2 3 4 5 6 7 8 9 Sales 1 Cull Cows - 71.0 72.0 104.0 104.0 104.0 104.0 104.0 104.0 Heifers - - 98,0 135.8 168.0 70.0 70.0 70.0 70.0 Calves - 26.6 30.4 35.0 35.0 35.0 35.0 35.0 35.0 Milk - 579.0 695.8 787.5 862.5 900.0 975.0 1050.0 1125.0 Total Sales - 676.6 896.2 1, 06.3 1169.5 1109.0 1184.0 1259.0 1334.0 Operating Epenses 2/ Salaries and Wages Manager 50.0 Assistant Manager 20.0 Field Assistant/Clerk 24.6 Milkers 29.4 Calf Attendant 3.3 Herdsmen 6.6 Drivers 9.4 Skilled Labor 9.4 Unskilled Labor 9.3 Watchmen Sub Total .68.2 168.2 168.2 168.2 168.2 168.2 168.2 168.2 168.2 Livestock husbandry Veterinary and Drugs 1/ 14.7 16.2 16.2 16.2 16.2 16.2 36.2 16.2 Artificial Insemination / - 10.0 10.0 10.1 10.1 10.1 10.1 20.1 10.1 Hygiene and Miscellaneous / - 1.6 1.8 1.8 1.8 1.8 1.8 1.8 1.8 Calf Feed / - 6.7 7.6 8.8 8.8 8.8 8.8 3.8 8.8 Concentrates 7/ - 40.5 52.7 63.0 72.0 76.5 85.5 94.5 103.5 Minerals and Licks 8/ - 3.9 5.7 5.9 5.9 5.9 5.9 5.9 5.9 Sub Total - 77.4 94.0 105.8 114.8 119.9 128.3 1 7.3 146.3 Crop and Pasture / Maize Silage 20.0) Hay 68.0 Sub Total 88.0 88.0 88.0 88.0 88.0 88.0 B8.0 88.0 88.0 Fuel, Lubricants and Repairs Fuel and Lubricants L/ 113.6 113.6 Motor Bike Allowance 1- 3.0 Repairs - Vehicles 73.2 73.2 - Tractor/Engine I L - Other machinery 48.0 48.0 Fencing/Water Supply - 37.0 - Other Fixed Assets Small Tools 5.0 5-0 Sub Total 239.8 279.8 279.8 279.8 279.8 279.8 279.8 279.8 279.8 Miscellaneous Accounts,IV 15.0 15.0 15.0 15.0 15.0 15.0 15.0 15.0 15.0 Livestock Purchase 14 - 112.0 112.0 112.0 112.0 - - - Total Operating Expenses 511.0 628.2 757.0 768.8 777.8 782.9 679.3 688.3 697.3 Net Operating Income (511.0 . 139.2 293.5 391.7 3261 50.7 570.7 36.7 1 Sales: Cull Cows @ Msh 1,000 Heifers @ Tah 1,4oo Steers @ Tab 1,000, calves @ Tab 200. Milk @ Tsh 1.25 2/ Salaries and Wages: Based on parastatal rates, including leave pay, night allowance, provident fund and staff endowment schemes. / Veterinary and Drugs: Based on all cattle receiving two inoculations per year against FMD; annual inoculations against blackquarter and Anthrax; regular treatment against internal parasites; and otbr ailments. Young heifers will be vaccinated against brucellosis. V4 Artificial Inseminations: Based on the total number of cows mated. SHygiene and Miscellaneous: Covers cost of cleaning materials, milling tachIne rubber replacement parts and small miscellaneous items. Calf Feeds: Based on number of calvea at the end of the year multipliel by fifty/Coefficient. V Concentrates: Calculated on the following basisI Milk Yield (k .- 1500 s + 150 x No. Lactations x Price 8/ Minerals and Licks: Based on a mixture of salt; bonemeal and mlieials being available throbghout the year. Co2/ Crop EPastures: Based on irrigated maize for silege and Rho la gra;s pature (5 years) and,maie for silage (5th year) in otation with maize as the nurse crop. Expected cnt-l y.elds are as follows: Continuous maize (double Iarcped) - 200 acres.@ 20 tons/acre Rotation maize (single cropped) - 30 acres at 15 tons/acre 10/ Fueld and Lubricants: Based on one tractor operating 1,500 hour.3 per y-ar %Ith an average fuel consumption of one liter per hour; one landrover operating 36,000 km per year with an average fuel (oAump,on of 0.25 liter per km; one water pump engine at Tsb 8,000 per year; a generator operating 3,650 hours per year with an ave,-agl fuel ocsumption of 4 liters per hour; and lubricants at 12.5 percent of fuel cost. Motor Bike Allowance: Covers mileage allowance paid to Assistarl, Muagr for use of motor bike on farm activities. 12 Repairs: Based on standard estimates and experience of large soule f-as. 3 Miscellaneous Accounts: Covers coats of telephone, postage, stEtionary,air travel uniforms and miscellaneous administrative accounts. February 12, 1975 ANNE 9 TANZAIA 7able 29 DAIRY DEVEL0PMENT PROJECT Saleh HaJeh Dairy Fam I=nremenal Ch Flo (T.h '000) Befo----~---------------------- ---------------------------------------------------------------------- Year ---------------------------------------------------- . --------------------------------- --------- ---• Development 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 - 25 Source of und.s Sales - 676.6 696.2 1062.3 1169.5 1109.0 1184.0 1259.0 1334.0 1334.3 1334.0 1334.0 1334.0 1334.0 1334.0 1334.0 1334.0 1334.0 1334.0 1334.0 1334.0 1334.0 Development Lon and Grant 2327.9 - - - - - - - - - - - - - Total Sources 2327.9 1629.4 896.2 1062.3 1169.5 1109.0 1184.0 1259.0 1334.0 1334.0 1334.0 1334.0 1334.0 1334.0 1334.0 1334.0 1334.0 1334.0 1334.0 1334.0 1334.0 1334.0 Uses of FuXnd Invetmtt cost 1816.9 952.8 - - - - - - - - - - - - Operating Cost 511.0 628,2 757.0 768.8 777.8 782.9 679.3 688.3 697.3 697.3 697.3 697.3 697.3 697.3 697.3 697.3 697.3 697.3 697.3 697.3 697.3 697.3 Capital Replaceent - - - - 50.0 355.5 - 194.0 69.0 586.0 21.0 50.0 - 84.0 484.5 50.0 - - - 636.0 - Loan Instalment 1I - - - 536.0 536.0 536.0 536.0 536.0 536.0 536.0 536.0 536.0 536.0 536.0 - - - - - - - Total Unes 2327.9 1581.2 743.0 754.8 1349.8 1659.8 1215.3 1418.3 1302.3 1229.3 1815.3 1250.3 1279.3 1229.3 1313.3 1177.8 743.3 693.3 693.3 693.3 1329.3 693.3 Annual Cash Surplu./Deflcit - 48.2 153.2 307.5 (180.3) (550.8) (31.3) (159.3) 31.7 104.7 (481.3) 83.7 54.7 104.7 20.7 156.2 590.7 640.7 640.7 640.7 4.7 640.7 Lomn Repayable in 15 yeara with a 4-year grace period @ 814 interest per annu=. Grant nt is equivalent to workfng egpital which is ether self-Oenanced or a grant from Government though LTDA and DAFCO, May 23, 1975 ANNEX 9 T-able 30 TANZANIA DAIRY DEVELOPMENT PROJECT TANGA COMPLEI Dairy Farm-5 Units of 356 Cows HERD PROJECTION BYEAR E-A5 -_S14 lERD COAPOSITION ____. 1 2 3 4 5 6 7 8 9-25 COWS above 24n years 'EGINNING OF YEAR 420 689 683 1,223 1,591 1,605 1,757 1,757 olus FIRST CALF HEIFERs 154 827 843 494 676 553 553 plus ?URCHASED 500 400 TOTAL MATED 500 820 843 1,510 2,066 2,085 2,281 2,310, 2,310 less DEATHS 20 33 3 60 62 63 68 69 69 less CULLED 60 98 126 227 413 417 456 461 461 CN HAND END YEAR 420 689 683 1,223 1,591 1,605 1,757 1,780 1,780 HEIFERS 1-2 years BEGINNING OF YEAR 160 262 269 509 697 704 769 779 plus PURCHASED 600 600 less DEATHS 6 35 26 15 21 21 23 23 less SALES 130, 193 203 ON HAND END YEAR 1.54 827 843 494 676 553 . 553 553 CALVES 0-1 year CALVES BORN 376 616 632 1,132 1,550 1,564 1,710 1,732 1,732 FEMALES BORN 188 308 316 566 775 782 855 866 866 less DEATHS 28 46 47 57 78 78 86 87 87 ON HAND END YEAR 160 262 269 509 697 704 769 779 779 MALES BORN 188 308 316 566 775 782 855 866 866 less DEATHS 28 46 47 57 78 78 76 87 87 ON HAND END YEAR 160 262 269 509 697 704 779 779 779 STEERS BEGINNING OF PERIOD 160 262 269 509 697 704 779 less DEATHS 13 21 16 31 42 42 46 (over 2 year period) less SALES 147 241 253 178 655 662 723 HERD BUILD-UP TOTAL HERD 740 1,367 2,048 3,084 3,479 3,689 3,848 3,891 3,691 TOTAL ANIMAL UNITS 420 843 1,510 2,066 9,085 2,281 2,310 2,333 2,333 SUPPLEENTARY FEED COSTS ('000 T.Sh.) CALF FEEDS 16.0 26.2 26.9 50.9 69.7 70:4 76.9 77.9 77.9 CONCENTRATE FOR MILKERS 42.5 77.6 84.5 151.3 178.9 198.7 257.0 300.4 !380.5 PRODUCTION NO. FULL LACTATIONS/YEAR 315 517 512 917 1,193 1,204 1,318 1,335 11,335 MILK PER LACTATION (kgs) 1,800 1,900 2000 2, 000 ,900 2,000 2,200 2,400 2,800 MILK FOR CALVES 56.4 92.4 94.8 169.8 232.5 234.6 256.5 259.8 259.8 PURCHASES UNITS COWS No. FIRST CALF HEIFERS No. F, BREEDING HEIFERS No. 500 400 60 6oo SALES ILK .000 kgs, 510.6 889.9 929.2 1,664.2 2,034.2 2,173.42,643.112,944. 3,0.2 CULL COwS No. 60 98 126 227 413 417 456 461 461 HEIFERS No. 130 193 203 STEERS No. * 147 241 253 478 655 662 723 HERD COEFFICIENTS CULLING 7 12 12 15 15 20 20 20, 20 20 CALVING RATE 75 75 75 75 75 75 75 75 75 CALF MORTALITY % 15 15 15 10 10 10 10 10 10 ADULT IORTALITY %4 4 4 4. 3 3 3 3 3 FIVE UNITS: KANGE II MIVUMONI I + II AZIMIO I + II February 14, 1975 TAANIAA DAIRY XEVCPHMNT PROJECT Tanga Dairy Co%mlex Investaent Cost Toreign Foreign Investment Category UnYear I year 2 Year U 4 Tt %Rei a Exchange Exchange Investmn Ceunit cost U Cos a o aa oi UnM&6&rCt oft ol i o Cofft (Te'000) Building and Installation manager's House No 50.0 1 50.0 1 50.0 1 50.0 1 50.0 - - 4 200.6 40 80.0 Assistant Manager's House No 38.0 1 38.o 1 38.0 1 38.0 1 38.0 - - 4 152.0 40 60.8 Junior Staff Housing No 16.o - - 2 32.a - - - - - - 2 32.0 40 12.8 StaffHousing No 7.0 - - 10 70.0 10 70.0 18 126.0 - - 38 266.0 40 106.4 Otice/Store No 44.o - - 1 44.0 1 44.o 1 44.o - - 3 132.0 40 52.8 Implement Shed/Workhabop No 17.0 - 1 17.0 1 17.0 2 34,0 - - 4 68.0 40 27.2 Spray Race No 22.0 - - 1 22.0 1 22.0 2 44.0 - - 4 88.0 40 35.2 Roads KM 3.0 - - 8 24.0 - - - - - - 8 24.0 40 9.6 silage Pit No 28.0 2 56.0 1 28.o 1 28.o 2 56.0 - - 6 168.0 40 67.2 Calf Feeder No 8.o 2 16.o 1 8.0 1 8.0 2 16.0 - - 6 48.0 40 19.2 Piping KM 17.0 8 136.o 8 136.0 8 136.0 16 272.0 - - 40 680.0 75 510.0 Water Troughs No 0.5 33 16.5 33 16.5 33 16.5 66 33.0 - - 165 82.5 40 33.0 Fencing KM 2.5 6o 150.o 30 75.0 30 75.o 60 150.0 - - 180 450.0 60 270.0 Milking Parlor No 75.0 1 750 1 75.0 1 75.0 1 75.0 - - 4 300.0 40 120.0 Subtotal - - - 5 - 635.5 - 5 - 938.0 - - - 2690.5 1404. Irrigation Works - 30.0 - - 30.0 - 30.0 - - - - - 60.0 75 45.0 Machinery and Equipmlent Four-Vheel-Drive vehicle No 50.0 1 50.0 1 50.0 1 50.0 1 50.0 - - 4 2oo.0 60 120.0 motor Bike No 9.0 1 9.0 1 9.0 1 9.0 2 18.0 - - 5 45 .0 60 27.0 Tractor 50-60H.P. No 67.0 1 67.0 1 67.0 1 67.0 1 67.0 - - 4 268.0 85 227.8 Tractor 70-80 H.P. No 85.0 2 170.0 2 170.0 2 170.0 2 170.0 - - 8 68o.o 85 578.0 Plough No 9.0 1 9.0 1 9.0 1 9.0 1 9.0 - - 4 36.0 8S 30.6 HarroTine No 6.5 - - 1 6.5 1 6.5 1 6.5 - - 3 19.5 85 16.6 Harrow Disc No 11.0 1 11.0 1 11.0 1 11.0 1 f1.0 - - 4 44 .o 85 37.4 Seed Drill No 18,0 - - 1 18.0 - - - - - - 1 18 .0 85 15.3 Manure Spreader No 4.5 1 4.5 1 4.5 - - - - - - 2 9 .0 85 7.7 Cultivator No 6.5 1 6.5 - - - - - - - - 1 6.5 85 5.5 Rotary Slasher No 9.0 1 9.o 1 9.0 1 9.0 2 18.o - - 5 45 .0 85 38.3 Hy Mower No 6.o - - 1 6.0 1 6.o - - - - 2 12 .0 85 10.2 Hay Rake No 5.5 - - 1 5.5 1 5.5 - - - - 2 11 .0 85 9.4 Hay Baler . Ho 50.0 - - 1 50.0 1 50.0 - - - - 2 100 .0 85 85.0 Forage Harvester No 70.0 - - 1 70.0 1 70.0 - - - - 2 110 .0 85 119.0 Trailer - 3 Ton No 12.0 1 12.0 1 12.0 1 12.0 2 24 .0 - - 5 6o .0 85 51.0 Trailer Forage No 20.0 3 60, 2 40,o 2 40.0 2 4o .0 - - 180 .0 85 153.0 Grader Blade No 6.0 - - 1 6.0 - - - - - - 1 6 .0 85 5.1 Engine and Pump No 12.0 1 12.0 1 12.0 1 12.0 2 24 .0 - - 5 60 .0 85 51.0 Portable Electric Fences Set 3.5 2 7.0 1 3.5 1 3.5 2 7 .0 - - 6 21 .0 85 17.9 Churns No 0.25 90 22.5 90 22.5 90 22.5 180 45 .0 - - 450 112.5 85 95.6 Veterinary Equipment & Tools Set 25.0 1 25.0 1 25.0 1 25.0 - - - - 3 7,.0 85 63.8 Furniture & Office Equipment Set 20.0 - - 1 20.0 1 20.0 1 20 .0 - - 3 60.o 85 51.0 Milking Machine & Equipment No 100.0 1 100.0 1 100.0 1 100.0 1 100 .0 - - 400.0 85 340.0 Spares for Machinery and Equipment @ 20% Cost - - - . - 145.3 - 139.6 - 121.9 - - - 431.2 Subtotal -894 - 871.8 - 837.6 - 731.4 - - - 13a-a 2,587.4 Livestock Purchase 1/ No 1.6 - - 500 800.0 4o@ 64o.0 600 960.o 6oo 960.0 210.0 3,36. Incremental Operating Expensef/ - - - - 400.0 - 35 - 750.0 - - - 1,875. 7 474.4 Toteal Tnvestments . - - 1,577.6 - 2,737.3 - 2,462.1 - 3,3791 - 960-0 n,16.4 1/ Heifer purchased for Tsh 1600 ./ See Table 32. Total operating expenses financed in Year One of the starting of each unit. 3/ At rates varying between 304 and 851. February 12, 1975 TANZANI 2 DATHE DEVELOEMRO PROJE~t Tang. Dairy Complex: Sales and Operating Expensea (Tab '000) Before ..----------------- Year Develoment 1 2 5 6 7 8 9 10 11-25 Sales 1 Cull Cows - 60.0 98.0 126.0 227.0 413.0 417.0 456.0 46L.0 461.0 461.0 eirs- - -- - - - 182.0 270.2 284.2 284.2 Steers - - . 147.0 241.0 253.0 478.0 655.0 662.0 723.0 723.0 Milk - 638.3 1112.4 1161.5 2080.3 2542.8 2716.8 3303.9 3680.3 4347.8 4347.8 Total Sales - 698.3 1210.4 14j4.5 2548.3 3208.8 3611.8 4596.9 5073.5 5816.0 5816.0 Operating Expenses Salaries & Wages 2/ Manager 39.6 79.2 88.8 198.0 Assistant Manager 20.7 41.4 62.1 103.5 Field Assistant/Clerk 16.4 32.8 41.0 58.4 Mi A sneers 7.6 15.2 22.8 29.2 Calf Attendant 3.3 6.6 9.9 16.5 Herdsmen 13.2 26.4 46.2 66.0 * Drivers 18.8 37.6 56.4 79.9 Mechanics 8.2 16.4 24.6 24.6 Skilled Labor 9. 18.8 28.2 37.6 Unskilled Labor 12 4 24.3 37.2 49.6 Watcheinna 124 1.6 1. Subtotal. 155.8 311.6 435.8 681.9 681.9 681.9 661.9 681.9 661.9 681.9 681.9 Livestock Husbandry Veterinary & Drugs 3/ - 15.1 30.3 54.4 74.4 75.1 82.1 83.2 864.0 84.o Artificial Insemination - 10.5 17.2 17.7 31.7 43.4 47.5 48.5 48.5 48.5 Hygiene & Miscellaneous - 1.9 3.1 3.1 5.5 7.2 7.2 7.9 8.0 8.0 Calf Feeds 6 - 16.0 26.2 26.9 50.9 69.7 70.4 76.9 77.9 77.9 concentrates 7/ - 42.5 27.6 84.5 151.3 128.9 198.7 257.0 300.4 380.5 Minerals & Liks 8 - .0 8.0 14.3 19.6 19.8 21.7 21.9 22.2 22.2 Subtotal - 90.0 112.4 200.9 333.4 344.1 427.6 495.4 541.0 621.1 621.1 Crop & Pasture 9/ Maize Silage 4.2 8.4 12.6 21.0 Kay 16.8 33.6 50.4 84.0 3 Subtotal 21.0 42.0 63.0 105.0 105.0 105.0 105.0 105.0 105.0 105.0 105.0 Fuel, Lubricants & Repairs Fuel and Lubricants 1O 48.1 96.2 144.3 291.3 Motor Bike Allowance 11 2.5 5.0 7.5 12.5 Repairs-Vehicles 1/2 59.6 111.6 179.4 239.6 - Tractors/Engine ) - Other Machinery 27.6 70.3 110.2 140.0 - Fencing/Water Supply ) 16.1 36.1 54.4 97.8 - Other Fixed Assets . Small Tools 5.0 150 25.0 Subtotal 1L58.9 329.2 510.8 806.2 806.2 806.2 806.2 806.2 806.2 806.2 806.2 Miscellaneous Accounts 3 15.0 30.0 45.0 75.0 75.0 75.0 75.0 75.0 75.0 75.0 75.0 Total Operating Expenses 350.7 802.8 1167.0 1869.0 2001.5 2012.2 2095.7 2163.5 2209.1 2289.2 2289.2 Net Operating Income (350.7) (104.5) 43.4 (435.5) 546.8 1196.6 1516.1 2433.4 2864.4 3526.8 3526.8 If Sales: Cull Cows @ Tab 1,000 Heifers @ Tab 1,400 Steers @ Tub 1,000 Milk @ Tab 1.25 2/ Salaries and Wages: Based on parastatal rates, including Leav pa,), night allowance, provident fund and staff endowment schemes. 3/ Veterinary and Drugs: Based on all cattle receiving two iaocu-aticas per year against FMD; annual inoculations against blackquarter and Anthrax; regular treatment against internal parasites; and othEr ilments. Young heifers will be vaccinated against brucellosis. V4 Artificial Inseminations: Based on the total number of cows mated, Hygiene and Miscellaneous: Covers cost of cleaning materi ls, mil) ing machine rubber replacement parts and small miscellaneous items. Calf Feeds: Based on number of calves at the end of the year itultiplIed by fifty/Coefficient. y/ Concentrates; Calculated on the following basist Milk Yield (k -1,500 SEs + 150 x No. Lactations x Price 8 Minerals and Licks: Based on a mixture of salt; bonemeal and ritaezal: oeing available throigbout the year. Crops and Pastures: Based on irrigated maize for silage and 1M odes grass pasture (5 years) and.maie for silage (5th Year) in rotation with maize as the nurse crop. Expected ann1l yields are as follows: Continuous maize (doubl( crcpped) - 200 acres.@ 20 tons/acre Rotation maize (single cropjed - 30 acres at 15 tons/acre L0/ Fuel and Lubricant: Based on one tractor operating 1,500 hot ra ISr year with an average fuel consumption of one liter per hour; one landrover operating 36,000 km per year with an average fuel cohamption of 0.25 'liter per-km; one water pump engine at Tab 8,000 per year; a generator operating 3,650 hours per year with an a% erag aul consumption of 4 liters per hour; and lubricawts at 12.5 percent of fuel cost. Motor Bike Allowance: Covers mileage allowance paid to Assisttnt Panfger for use of motor bike on fam activities. 12 Repairs: Based on standard estimates and experience of la:rge ieale fi.rms. 13 Miscellaneous Accounts: Covers costs of telephone, postage, at atic sey, air travel uniforms and miscellaneous administrative accounts. February 12, 1975 ANNE~ 9 'b, n 33 TANZANIA DAIRY DEVELW1RENT PROJECT Tasa, Ci GOn IOrtal Cash Flov Before ------------------- ----------------------- ----- -------- ---- -------- ------- Year -- Develo3ment 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Sources of Fnds D -Ln t698.3 1,210,4 ,394. 2,548.3 3,208.8 3,611.8 4,596.9 5,073.5 5,816.0 5,825.0 5,825.0 5,825.0 5,825.0 5,825.0 5,825.0 5,825.0 5,825.0 5,825.0 5,825.0 5,825.0 5,825.0 5,825.0 5,825.0 5,820.0 Denlopmnt Loao, end Grat _IJss.6 :2,737.3 476. 3.2 9160.,0- - - - - - - - - Total 2oe 2115.1 3.435.6 3.672.5 4.8i3. 3.508.3 3,208.8 3,611.8 4,596.9 5,073.5 5,816.0 5,825.0 5,825.0 5,825.0 5,825.0 5,825.0 5,825.0 5825.0 5,825.0 5,825.0 9825.0 5,825.0 0.825.0 5.825.0 5,825.0 5.825.0 Usee of Fuods Investment Coet 1,226.9 2,337.3 2,087.1 2,629.1 90.0 - - .. - O2rting Coet 350.7 802.8 1,869.0 2,015 2,001.5 2,012.2 2,095.7 2,163.5 2,209.1 2,289.2 2,289.2 2,289.2 2,289.2 2,289.2 2,289.2 2,289.2 2,289.2 2,289.2 2,289.2 2,289.2 2,289.2 2,289.2 2,289,2 2,289.2 2,289.2 Zaloa Inalen t - - - - 50.0 316.5 324.5 404.0 514.0 234.0 519.0 495.0 466.5 473.0 134.o 505.5 508.7 396.0 326.5 50.3 563.0 701.0 532.5 539.0 - Ins.ai--t 1,572.0 1.572.0 1,572.0 1,572.0 1,572.0 1,572.0 1,552.0 1,572.0 1,572.0 1,570.0 - ·· - - . - - - - - Total Uses -776 3.040.1 3,956.1 _ 4,630.9 4,583.5 3.900.7 3.992.2 4 133.5 49 1o5s 4.g p 4.,380.2 4,356.2 4,327.7 4,334.2 3,995.2 2,794.7 2.797.9 2.685.4 2.61527 2,39.2 2.,852.2 2.,990.2 2,821.7 2828.2 2,289.2 Anoal Cash Srplus/Defioit - -95--.5 (3^6 - ¯ 183.0 (i,075.2) (6919) (380-4) (4574.) 7784. 1,720.8 1,135.8 1,4598. 1,488.3 1,48.8 1,820.8 3,021.3 3,018.1 3,130.6 3,200.3 3,476.8 2,963.8 2,825,8 2,994.3 2987.8 3526.8 1/ Loan repayable in 15 years frm the date of lean with 4-yar grace period 8 8@* intere,t per annum. ant ~unt e equiv~lent to _orkig phiet whinh i seeelf-fianed or a garant frn Governnt through LIDA and DAFCO, My 23, 1822 ANNEX 9 Table 314 TANZANIA DAIRY DEVELOPMENT PROJECT UTEGI Dairy Farm - 2 Units of 356 Cows HERD PROJECTION HED COMPOSITION 3 E AR5 1-20 HN. .1 2 3 4 5 6 7 8 9-20 10,1 above. 2 years ?EGINNING OF YEAR 292 602 1 712 712 712 712 712 712 plus FIRST CALF HELFERS 442 266 156 156 156 156 156 156 91us ?UbCHASED 360 TOTAL MATED 360 734 868 868 868 868 868 868 868 less DEATHS 14 22 26 26 26 26 26 26 26 less CULLED 54 116 130 130 130 130 130 130 130 ON HA1!D END YEAR 292 602 712 712 712 712 712 712 712 EIFERS 1-2 years BEGINNING OF YEAR 60 167 234 276 276 276 276 276 276 plus PURCHASED 400 107 less DEATHS 18 8 7 8 8 8 8 8 8 less SALES 71 112 112 112 112 112 112 ON HAND END YEAR 442 266 156 156 156 156 156 156 156 CALVES 0-1 year CALVES BORN 252 550 650 650 650 650 65o 650 650 FEMALES B0RN 126 275 325 325 325 325 325 325 325 less DEATHs 19 41 49 49 49 49 49 49 149 ON HAND END YEAR 167 234 276 276 276 276 276 276 276 MALES BORN 126 275 325 325 325 325 325 325 325 less DEATHS 19 41 49 49 49 49 49 49 49 ON HAND END YEAR 107 234 276 276 276 276 276 276! 276 STEERS BEGINING OF PERIOD 107 234 276 276 276 276 276 less DEATHS 6 14 17 17 17 17 17 (over 2 year period) less SALES 101 220 259 259 259 259 259 HERD BUILD-UP TOTAL HERD 1,008 1,336 1,420 1,420 1,1420 1,420 1,420 1,420 1,420 TOTAL ANIMAL UNITS 734 868 868 868 868 868 868 868 868 SUPPLEMENTARY FEED COST T 1000T.Sh.) CALF FEEDS 13.7 23.4 27.6 27.6 27.6 27.6 26.7 26.7 26.7 CONCENTRATE FOR MILKERS 30.6 67.8 80.1 88.1 88.1 104.1 120.2 152.2 152.2 ?RODUCTION I NO. FULL LACTATIONS/TEAR 204 452 534 534 534 534 534 534 534 ILK PER LACTATION (kgs) 1,900 1,900 1,900 2,000 2,000 2,200 2,100 2,800 2,800 MILK FOR CALVES 37.8 82.5 97.5 97.5 97.5 97.5 97.5 97.5 97.5 PURCHASES UNITS COWS No. FIRST CALF HEIFERS No. 360 F1 BREEDING HEIFERS No. 400 107 SALES MILK .000 kg3, 349.8 776.3 917.1 970.5 970.5 1,077.3 1,184.3 1,97.7 1,397.7 CULL COWS No. 54 110, 130 130 130 130 130 130 130 HEIFERS No. 71 112 112 112 112 112 112 STEERS No. 101 220 259 259 259 259 259 HERD 00EFFICIENTS CULLIG I 15 15 15 15 15 15 15 15 15 CAL7ING RATE % 70 75 75 75 75 75 75 75 75 CALF MORTAITY % 15 15 15 10 10 10 10 10 10 ADULT MCRTALITY % 4 3 3 3 3 3 3 3 3 February 14, 1975 TANZANIA DAIRY DEVELOPMENT PROJECT Utegi Dairy Farm: Investment Cost (Th '000) Year 1 Year 2 Year 3 Years 1-3 Foreign Foreign Investment Category Unit Unit Cost Units Cost Units Cost Unit Eost Total Total Echa Excbange Buildinpp and Installations Manager's House No. 50.0 1 50.0 1 50.0 - - 2 100.0 o 4o.o Assistant Manager's House No. 38.0 1 38.0 1 38.0 - - 2 76.0 4o 30.4 Junior Staff Housing No. 16.0 2 32.0 2 32.0 - - 4 64.0 4o 25.6 Staff Housing No. 7.0 17 119.0 61 427.0 - - 78 546.0 4o 218.4 Office/Store No. 44.0 1 44.0 - - - 1 44.0 40 17.6 Implement Shed/Workshop No. 17.0 1 17.0 - - - - 1 17.0 40 6.8 Spray Race No. 22.0 1 22.0 1 22.0 - - 2 44.0 4o 17.6 Roads KM 3.0 4 12.0 4 12.0 - - 8 24.0 40 9.6 Silage Pit No. 28.0 1 28.0 1 28.0 - - 2 56.0 40 22.4 Calf Feeders No. 8.0 1 8.0 1 8.0 - - 2 16.0 40 6.4 Piping KM 17.0 8 136.0 8 136.0 - - 16 272.0 75 204.0 Water Troughs No. 0.5 16 8.0 50 25.0 - - 66 33.0 4o 13.2 Fencing KM 2.5 12.9 32.3 67.1 167.7 - - 80 200.0 60 120.0 Milking Shed No. 75.0 1 75.0 - - - - 1 75.0 40 30.0 Subtotal 621.3 945.7 - - 1,567.0 762.0 Machinery and Equipment Four-Wheel Drive Vehicle No. 50.0 1 50.0 1 50.0 - - 2 100.0 60 60.0 Motor Bike No. 9.0 1 9.0 1 9.0 - - 2 18.0 60 10.8 Tractor 50-60 H.P. No. 67.0 - - 3 201.0 - - 3 201.0 85 170.9 Tractor 70-80 H.P. No. 85.0 1 85 1 85.0 - - 2 170.0 85 144.5 Plough No. 9.0 1 9 1 9.0 - - 2 18.0 85 15.3 Harrow Tine No. 6.5 1 6.5 1 6.5 - - 2 13.0 85 11.1 Harrow Disc No. 11.0 1 11.0 1 11.0 - - 2 22.0 85 18.7 Cambridge Roller No. 12.0 1 12.0 - - - - 1 12.0 85 10.2 Maize Planter No. 17.0 1 17.0 - - - - 1 17.0 85 14.5 Seed Drill No. 18.0 1 18.0 - - - - 1 18.0 85 15.3 Weed Sprayer No. 8.0 1 8.0 - - - - 1 8.0 85 6.8 Fertilizer Spreader No. 4.5 1 4.5 1 4.5 - - 2 9.0 85 7.7 Cultivator No. 6.5 1 6.5 1 6.5 - - 2 13.0 85 11.1 Rotary Slasher No. 9.0 1 9.0 1 9.0 - - 2 18.0 85 15.3 Hay Mower No. 6.0 1 6.0 - - - - 1 6.0 85 5.1 Hay Rake No. 5.5 1 5.5 - - - - 1 5.5 85 L-7 Hay Baler No. 50.0 1 50.0 - - - - 1 50.0 85 42.5 Forage Harvester No. 70.0 1 70.0 1 70.0 - - 2 140.0 85 119.0 Trailer - 3 Ton No. 12.0 1 12.0 1 12.0 - - 2 24.0 85 20.4 Trailer Forage No. 20.0 1 20.0 2 40.0 - - 3 60.0 85 51.0 Grader Blade No. 6.0 1 6.0 - - - - 1 6.0 85 5.1 Engine and Pump No. 12.0 1 12.0 1 12.0 - - 2 24.0 85 20.4 Portable Electric Fences Set 3.5 2 7.0 2 7.0 - - 4 14.0 85 11.9 Hammer Mill No. 10.0 1 10.0 - - - - 1 10.0 85 8.5 Churns No. 0.25 67 16.7 113 28.2 - - 180.0 45.0 85 38.3 Veterinary Equipment and Tools Set 25.0 1 25.0 1 25.0 - - 2 50.0 85 42.5 Furniture and Office Equipment Set 20.0 1 20.0 1 20.0 - - 2 40.0 85 34.0 Milking Machine No. 100.0 1 100.0 - - - - 1 100.0 85 85.0 No. 1.6 Spares for Machinery and Equipment @ 20% Cost 121.2 121.2 - - 242.3 2/ 201.2 Subtotal 726.9 726.9 1,453.8 1,201.8 Livestock Purchtse 76o 1216.0 107 1,387.2 Incremental Operating Expenses 659. 659.2 187.3 Total Investment 2,o07.4 5,067.2 2,151.1 1/ See Table 36. Total operating expenses financed in Year One. 2/ @ Rates varying between 30% and 85% February 12, 1975 DAZE DIV RMT PROJECT Utegi Dairy Farm: Sales nd Operating Exenses (Tsh '000) o or f - - - - - - - - -- - - - - - - - - - - - - Year -- - - - - - - - - - - - - - - - - - - - - - - - - - - Development 1. 2 3 4 5 6 7 8 9 2.0 lr~25 Cull Cove - 54.0 110.0 130.0 130.0 130.0 130.0 130.0 130.0 130.0 Heifers 99.4 156.8 156.8 156.8 156.8 156.8 156.8 Steers 0 220.0 259.0 259 259.0 259.0 259.0 Milk - 437., 970.4 1,146.4 1,213.1 1,213.1 1,346.6 1,480.4 1,747.1 _1.747.1 . Total Sales 491.3 _o80.4 1.476.8 ij71.9 1,758.9 1,892.4 2,026.2 2,292.9 2,292.9 Operating Expenses Salaries and Wages Manager 79.2 Assistant Manager 41.4 Field Assistant/Clerk 2. Milkers 22.8 Calf Attendant 6.6 Herdsmen 12.4 Drivers 32.9 Mechanic 8.2 Skilled Labor 14.1 Unskilled Labor 24.8 Watchman Subtotal 276.3 276.3 276.3 276.3 276.3 276.3 276.3 276.3 276.3 276.3 276.3 Livestock Husbandry Veterinary & Drugs-/4/ - 26.4 31.2 31.2 31.2 Artificial Insemination- - 7.6 15.4 18.2 18.2 Hygiene and Miscellaneous-5 - 6.0 8.0 8.5 8.5 Calf Feeds 6/ - 13.7 23,4 27.6 27.6 Concentrates 7/ - 30.6 67.6 80.1 88.1 Minerals & Licks /- 7.0 8.2 8.2 8.2 Subtotal - 91. . 154.o 173.8 181.8 181.8 181.6 181.8 181.8 181.8 181.8 Crops and Pastures Wheat 20.4 Maize silage 8.4 Hay 33.6 Subtotal 62.4 62.4 62.4 62.4 62.4 62.4 62.4 62.4 62.4 62.4 62.4 Fuel, Lubricants & Repairs Fuel and Lubricants 10/ 92.5 Motor Bike Allowance 11 5.0 Repairs - Vehicles 12 77.2 -Transport/Engine ) - Other Machinery 62.5 - Fencing/Water Supply 43.3 - Other Fixed Assets Small Tools 10.0 Subtotal 290.5 290.5 290.5 290.5 290.5 290.5 290.5 290.5 290.5 290.5 290.5 Miscellaneous Accounts L/ 30.0 30.0 30.0 30.0 30.0 30.0 30.0 30.0 30.0 30.0 30.0 Total Operating Expenses 659.2 750.5 813.1 833.0 841.0 811.0 841.o 841.o 841.o 841 841 6 Net Operating Income (659.?) (259.2) 267.2 643.8 878.9 1.7.9 8.o051.4 1,185,2 1,451.9 jSales, Cull Cows @ Tsh 1,000 -eifers - T 1,400 Steers @ T$h 1,000 Milk 7 Tsh 1.25 2/Salaries and Wages: Eased on parastatal rates, including leave pay, night allowance, provident fund and staff endowment schemes. 3/ Veterinary and Drugs: Based on all cattle receiving two inoculations per year against FMD; annual inoculations against blackquartes; anthrax; regular treatm-nt against internal parasites; and other ailmsents. Young heifers will be vaccinated agaipst brucellosis. V4 Artificial Inseminations: Based on the nusmber of cows nated. r5 ygiene and Miscellaneous: Covers cost of cleaning materials, milking macblnc rubber replacement parts and snall Miscellaneous items. _/Calf Feeds: Based on nmbser of calves at this end of the year,mutiplied by fifty/Coefficient. ~I Concentrates: Calculated on the following basis: Milk Yield k )-1,500 (kg j 150 x No. Lactations x Price. 124 8/ Minerals and Licks: Based on a mixture of salt; bonemealI and Minerals being available throughout the year. 2/Crops and Pastures: Based mu irrigated maize for Silage and Mhodes grass pasture (5 years) and maize for Silage (5th year) in retation with maize as the nurse crop. Expected animal yields are as follows: Continous maize (double cropped) - 200 acres @ 20 tons/acre. Rotation maize (single cropped) - 30 acres at 15 inns/acre. Log/ Fuel and Lubricants: Based on one tractor operating 1,500 tons per year with an average fuel consumption of one liter per hour; one landrover operating 36,000 kcs per year with an average fuel consumption of 0.25 liter per kns; one watrr pomp engine at YT 8,000 per year; a generator operating 3,650 hours per year with an average fuel consumption of 4 liters per hour; and lubricants at 12.5 per cent of fuel cost. ~/Motor Dike Allowance: Covers mileage allowance paid to Assistant Manager for use of motor bike an farm activitie.s. E2/ epirs: Based on standard estimates and experience of large scale fars. 1/Miscellaneous Accounts: Covers cosa of telephone; portage; stationery, air trave;, uniformss and miscellaneous administration accounts. February 12, 1975 TANZANIA Table 37 DAllf DEVELORMT PROJECT Utegi D,iy Fa,m Inre,Letal Cos Flow (Tsh '000) Bef-----------------------.. ------------------------------------------------------------- - ------- Y -ar ----- --- ------ --- --------- --------- .._---- ---- ---- ------------- ------ ------------ ---- ------ Develoinent 1 2 3 4 5 6 7 8 9 2 11 J2 13 14 15 16 17 1) 19 20 21 22 23 25 Boarce of Funoda 4ales - 491.3 1,080.4 1,476.8 1,719.9 1,758.9 1,892.4 2,026.2 2,292.9 2,292.9 2,292.9 2,292.9 2,292.9 2,292.9 2,292.9 2,292.9 2,292.9 2,292.9 2,292.9 2,292.9 2,292.9 2,292.9 2,292.9 DCeIeoe Loan and Grant 1,677,8 2,002.2 1,312.0 171.2 - - -- - - - Total Sources 1,677.8 2,493.5 2,392.4 1,648.0 1,719.9 1,758.9 1,892.4 2,026.2 2,292.9 2,292.9 2,292.9 2,292.9 2,292.9 2,292.9 2,292.9 2,292.9 2,292.9 2,292.9 2,292.9 2,292.9 2,292.9 2,292.9 2,292.9 Useb of Funds InvreosenOost 1,018.6 2,927.1 560 149.8 - - - - - - - - - Op.rating 7ost 659.2 750.5 813.2 433.0 841.o 841.0 857.0 873.1 905.1 905.1 905.1 905.1 905.1 905.1 905.1 905.1 905.1 905.1 905.1 905.1 905.1 905.1 905.1 Capital Replacement - - - - - 100.0 364.5 - 100.0 - 633.5 633.5 - 100.0 - 278.0 264.5 10,0 - - - - Lon Insta,lmen i/ - - - - 857.0 857.0 857,0 857.0 .57.0 857.0 857.0 857.0 857.0 857.0 857.0 - - - - - - - - lotal Use. 1,677.8 3.677.6 1,373.2 982.8 7,798.0 2,065.5 1,714.0 2,008.1 1,862.1 1,762.1 2,395.6 1,762.1 1,862.1 1,71?.1 2,40.1 1,069.6 1,005.1 905.1 1,905.1 1,687.8 654.3 1,21.1 905.1 Ar~al Oasb surplus/Defriit 0.0 - (1.186.0) 1.019.2 665.2 (78.1) (303.6) 178.4 18.1 430.8 530.8 (10.7) 530. 430.8 530.8 252.8 1,023.3 1,287.8 1,367.8 1,387.8 1,387.8 694.3 1,091.8 1,387.8 Lran Repayable in 15 years Ndth a 4-year grace period 8 tgset P-ean. Gant assoat la eq|ltalent sa aQaatn apital which is eiter ~elf-finaned r a grant fram Goerent through LIDA and DAPCO, May 23, 1975 1 TANZANIA ANNEX p DAIRY DEVELOPNENT PROJECT Table 38 Project Dairy Farms: Summary of Investment Cost (Tsh '000) Foreign ---------------------- Year ------------------------- Exchange Investment Category 1 2 3 4 5 Years 1-5 Cost Bagamoyo Fixed Investment - 450.5 58.0 - - 508.5 279.0 Machinery & Equipment - 724.8 37.8 - - 762.6 30. Cattle Purchase 100.0 8Q.0 - - 180.0 - Working Capital - 450.9 - - - 450.9 138.9 Subtotal - 1,726.2 175.8 - - 1,902.0 1,048.6 Iwambi Fixed Investment - 285.5 - - - 285.5 176.8 Machinery & Equipment - 1,166.3 - - - 1,166.3 731.3 Cattle Purchase - - - 160.0 - 160.0 - Working Capital - 431.7 - - - 431.7 130.5 Subtotal - 1,883.5 - 160.0 - 2,043.5 1,038.6 Kitulo Fixed Investment 332.5 84.5 - - - 417.0 280.8 Machinery and Equipment 629.4 113.4 - - - 742.8 629.0 Cattle Purchase - - Working Capital 496.0 - - - - 496.0 189.4 Subtotal 1,457.9 197.9 - - - 1,655.8 1,099.2 Ngerengere Fixed Investment 1,000.5 216.5 - - - 1,217.0 436.7 Machinery & Equipment 823.2 60.6 - - - 883.8 716.2 Cattle Purchase - - - - - - - Working Capital 692.0 - - - - 692.0 215.7 Subtotal 2,515.7 277.1 - - - 2,792.8 1,368.6 Patel Fixed Investment - - 982.5 - - 982.5 536.7 Machinery & Equipment - - 799.2 - - 799.2 661.8 Cattle Purchase - - 562.0 - - 56g.o - Working Capital - - 596.9 - - 596.9 161.5 Subtotal - - 2,940.6 - - 2,940.6 1,360.0 Rongai Fixed Investment 470.0 335.0 - - - 805.0 409.6 Machinery & Equipment 1,156.4 578.2 - - - 1,734.6 1,433.5 Cattle Purchase - - - - - - Working Capital 1,195.6 - - - 1,195.6 323.6 Subtotal 2,822.0 913.2 - - - 3,735.2 2,166.7 Saleh Hajeb Fixed Investment - - 818.5 55.0 - 874.0 443.1 Machinery & Equipment - - 998.4 58.8 - 1,057.2 881.3 Cattle Purchase - - - 839.0 - 839.0 - Working Capital - - 511.0 - - 511.0 198.9 Subtotal - - 2,327.9 952.8 - 3,280.7 1,523.3 Tanga Fixed Investment 537.5 665.5 609.5 938.0 - 2,750.5 1,449.2 Machinery & Equipment 689.4 871.8 837.6 731.4 5,880.7 2,587.4 Cattle Purchase - 800.0 640.0 960.0 960,0 3,360.0 - Working Capital 350.7 400.0 375.0 750.0 - 1,875.0 474.4 S,btotal 1,577.6 2,737.3 2,462.1 3,379.4 960.0 11,116.4 4,511.0 utegi Fixed Investment - - 621.3 945.7 - 1,567.0 762.0 Machinery & Equipment - - 726.9 726.9 - 1,453.8 1,201.8 Cattle Purchase - - - 1,216.0 171.2 1,387.2 - Working Capital - - 659.2 - - 659.2 187.3 Subtotal - - 2,007.4 2,888.6 171.2 5,067.2 2,151.1 Total Investment Cost 8,373.2 7,735.2 9,913.8 7,380.8 1,131.2 34,534.2 16,267.1 See Tables 2, 6, 10, 15, 19, 23, 27, 31, 35. March 26, 1975 ANNE 9 TA1ZANIA DAIRY DEVELOENT PROJECT Modal of 20 Cows .BE- I IRS 1.1-2 1 RD COMPOSITION E-25 !;;F. 1 121 3 & 5 6 7 1 8 9-25 6rS about ;F years BEGIKNING OF YEAR 23 18 15 17 19 20 20 20 plus FIRST CALFI iIFERS - - 6 6 5 14 4 4 plus PURCHASED TOTAL MATED 23 18 21 23 24 24 24 .24 less DEATHS 2 1 1 1 1 1 It i less CULLED 3 2 3 3 3 3 3 3 ON HAND END YEAR o 18 15 17 15 20 20 20 20 HEIFERS 1-2 yeara BEGINNING OF YEAR 6 6 7 7 8 8 8 plus PURCHASED 25 leas DEATHS 2 . 1 1 1 1 1 less SALES - 1 2 3 3 3 ON HAND END YEAR o 23 6 6 5 4 4 4 4 CALVES 0-1 year CALVES BORN 16 14 16 16 18 18 18 18 FEMALES BORIT 8 7 8 8 9 9 9 9 less DEATHS 2 1 1 1 1 1 1 1 ON HAND END YEAR 6 6 7 7 8 8 8 8 MALES BORN 8 7 8 8 9 9 9 9 less DEATHS 2 1 1 .1 1 1 1 1 ON HAND END YEAR o 6 6 7 7 -8 8 8 8 STEERS BEGINNING OF PERIOD 6 6 7 7 8 less DEATHS 1 1 1 1 1 (over 2 year period) less SALES 5 6 6 7 HERD BUILD-UP TOTAL HERD o 23 30 33 37 38 40 40 0 '40 TOTAL ANIMAL UNITS o 23 18 21 23 24 24 24 24 2k SUPPLEMENTARY FEED COSTS ('000 T.Sh.) CALF FEEDS CONCENTRATE FOR MILKERS PRODUCTION NO. FULL LACTATIONS/TEAR 12 11 12 13 14 1 14 14 MILK PER LACTATION (kgs) 1,600 1,800 1,800 1,800 1,800 1,800 1,800 1,800 LESS MILK FOR CALVES .3.2 2.8 3.2 . 3.2 3.6 3.6 3.6 3.6 PURCHASES UNITS COWS No. FIRST CALF HEIFERS No. F BREEDIG HEIFERS No. 25 1 . 1 1 SALES MILK .000 kgs 16.0 17.0 18.4 20.2 21.6 21.6 21.6 21.6 CULL COS No. 3 2 3 3 3 3 3 HEIFERS No. 1 2 3 3 STEERS No. 5 5 6 6 7 HERD COEFFICIENTS CULLING % 12 112 12 12 12 12 12 12 12 CALVING RATE % 70 70 70 70 70 70 70 70 CALF MORTALITY 20 15 15 15 15 15 >15 15 ADULT MORTALITY 8 8 5 5 5 5 5 February 11, 1975 TANZANIA DAIRY DEVELOPMENT PROJECT Ujamaa Dairy Farm-Model: Investment Cost (Tsh '000) Year 1 Total Total Foreign Foreign Unit Unit Cost Units Cost Units Cost Exchange Exchange % (Tsh'000) Fixed Investment Building and Installation Milking Shed (Pen) No. 7.0 1 7.0 1 7.0 40 2.8 Water Troughs No. 0.5 1 0.5 1 0.5 40 0.2 Fencing KM 2.5 1 2.5 1 2.5 60 1.5 Water Supply - Piping KM 17.0 0.3 5.1 0.3 5.1 75 3.8 Small Utensils and Tools No. - - 0.5 - 0.5 40 0.2 Pasture Development - - - 0.1 - 0.1 40 - Subtotal 15.7 15.7 8.5 Livestock Investment Bulls No. 1.6 1 1.6 1 1.6 - - Heifers No. 1.6 25 40.0 25 40.0 - Subtotal - - - 41.6 - 41.6 - - Operating Cost 1/ - - - 7.4 - - 2.2 Total Investment - - - 64.7 - 6.7 - 10.7 L/ See Table J4. Total operating expenses financed in year one. February 11, 1975 TANZANIA DAIRY DEVELOPMENT PROJECT Ujamaa Dairy Farm Model: Sales and Operating Expenses (Tsh '000) Before ---- --------------- --- Year -------------------- Sales Development 1 2 3 4 5 6 7 8 9 10-25 Cull Cows - - 3.0 2.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 Steers - - - - - 5.0 5.0 6.0 6.0 7.0 7.0 Heifers - - - - - 1.4 2.8 4.2 4.2 4.2 4.2 Milk (Tsh 1.0) - - 16.0 17.0 18.4 20.2 21.6 21.6 21.6 21.6 21.6 Total Sales - - 19.0 19,0 _21.4 29.6 3294 34.8 31h.8 35.8 35.8 Operating Expenses Wages 1/ - 4.8 4.8 4.8 4.8 4.8 h.8 4.8 4.8 4.8 4.8 Livestock Husbandry 2/ - 2.6 2.0 2.4 2.6 2.6 2.7 2.7 2.7 2.7 2.7 Repairs and Maintenance - - 0.8 0.8 0.8 0.8 0.8 0.8 0.8 0.8 0.8 Total Operating Cost - 7.4 7.6 8.0 8.2 8.2 8.3 8.3 8.3 8.3 8.3 Net Operating Income - (7.4) 11.4 11.0 13.2 21.4 24.1 26. 26.5 27.5 27. 1/ 1 Milker and 1 Herdsman. * 2/ Veterinary Cost @ Tsh 36/Animal Unit, Minerals and Supplementary Feed 0 Tsh 80/A.U. February 11, 1975 TANZANI DAIRY DEVELOPHENT PROJECT Uiana Dairy Farm Model: Incremental Cash Flow (Tah '000) Before ----Yearr. Development 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 -25 Source of Funds Sales - 19.0 19.0 21.4 29.6 32.4 34.8 34.8 35.8 35.8 35.8 33.8 35.8 35.8 35.8 35.8 Development Loan and Grant 647 - - Total Sources 64.7 19.0 19.0 21.4 29.6 32.4 34.8 34.8 35.8 35.8 35.8 35.8 35.8 35.8 35.8 35.8 Uses of Funds Investment Cost 57.3 - - - - - - - - - - - - - Operating Cost 7.4 7.6 8.0 8.2 8.2 8.3 8.3 8.3 8.3 8.3 8.3 8.3 8.3 8.3 8.3 8.3 Loan Installmsent 1/ - - . - 9.6 9.6 9.6 9.6 9.6 9.6 9.6 9.6 9.6 9.6 9.6 - Total Uses 64.7 7.6 8.0 8.2 17.8 17.9 17.9 17.9 17.9 17.9 17.9 17.9 17.9 17.9 17.9 8.3 Annl Cash Surplus/Deficit 0.0 * 11.4 11.0 13.2 11.8 14.5 16.9 16.9 17.9 17.9 17.9 17.9 17.9 17.9 17.9 27.5 1/ Loan Repayable in 15 years with a 4-year grace period @ 8% interest per annum. Loan amount is equivalent to investment coot loss working capital February 18, 1975 I - e: M ut ost 7 .3 - - -- - - -- - - TANZANIA DAIRY DBVELOFMENT PROJECT Ujamas Dairy Farm (50 UJamaas): Investment Cost (Tsh '000) Year 1 Total Total Foreign Foreign Fixed Investment Unit Unit Cost Units Cost Units Cost Exchange Exchange (Tsh 1000) Building and Installation Milking Shed (Pen) NO 7.0 50 350.0 50.0 350.0 40 10.0 WaterTroughs NO 0.5 50 25.0 50.0 25.0 40 10.0 Fencing IM 2.5 50 125.0 5o.o 125.o 6o 75.0 Water Supply - Piping KM 17.0 15 255.0 15.0 225.0 75 168.8 Small Utensils and Tools NO - - 25.0 - 25.0 4o 10.0 1ature Development - - - - 50 2.0 Sub Total - - - 7 0 - Livestock Investment Bulls NO 1.6 50 80.0 50.0 80.0 - - Heifers NO 1.6 1250 2000.0 1250.0 2000.0 - Sub Total - - - 2080.0 - 2080.0 - Operating Expenses L/ - - -370 0 110.5 Total Investment - - - - - 516.3 1/ See Table 4 . Total operating expenses financed in year one. February 11, 1975 TANZANIA DAIRY DEVELOPMENT PROJECT Ujamaa Dairy Farms (50 Ujamaas): Sales and Operating Expenses (Tsh '000) Before ------------------------------------------------ Year---------------------------------------------------- Development 1 2 3 4 5 6 7 8 9 10-25 Sales Cows - 150.0 100.0 150.0 150.0 150.0 150.0 150.0 150.0 150.0 Steers - - - 250.0 250.0 300.0 300.0 350.0 350.0 Heifers - - - 70.0 140.0 210.0 210.0 210.0 210.0 Milk (Tsh 1.0) - - 800.0 850.0 920.0 1,010.0 1,080.0 1,080.0 1,080.0 1,080.0 1,080.0 Total Sales - - 950.0 950.0 1,070.0 1,480.0 1,620.0 1,740.0 1,740.0 1,790.0 1,790.0 Operating Expenses Wages 1/ - 240.0 240.0 240.0 240.0 240.0 240.0 24o.0 240.0 24o.0 240.0 Livestock Husbandry 2/ - 130.0 100.0 120.0 130.0 130.0 135.0 135.0 135.0 135.0 135.0 Repairs and Maintenance - - 40.0 40.0 4o.o 4o.o 4o.0 4o.o 4o.o 40.0 400 Total Operating Cost - 370.0 380.0 400.0 410.0 410.0 415.0 415.0 415.0 415.0 415.0 Net Operating Income - (370.0) 570.0 550.0 660.0 1,070.0 1,205.0 1,325.0 1,325.0 1,375.0 1,375.0 1/ 1 Milker and 1 Herdsman. 2/ Veterinary Cost @ Tsh 36/Animal Unit and Minerals and Supplementary Feed @ Tsh 80/A.U. February 12, 1975 TANZANIA DAIRY DEVEIOPMENT PROJECT Ulamas Dairy Farms (50 UiaMnas) Incremental Cash Flow (Tsh '000) Before - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Year - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - . - - - - . - - . - . - . Development 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 - 25 Source of Funds Sales - 950.0 950.0 1,070.0 1,480.0 1,620.0 1,740.0 1,740.0 1,790.0 1,790.0 1,790.0 1,790.0 1,790.0 1,790.0 1,790.0 1,790.0 Development Loan and Grant 3,235.0 - - - - - - - - - Total Sources 3,235.0 950.0 950.0 1,070.0 1,480.0 1.620.0 170 1 1 1,790.0 1,790.0 1.79.0 1 1,790.0 1,790.0 1.790.0 Uses of Funds Investment Cost 2,865.0 - - - - - - - - - - - - - - - Operating Cost 370.0 380.0 400.0 410.0 410.0 415.0 415.0 415.0 415.0 415.0 415.0 415.0 415.0 415.0 415.0 415.0 Loan Installment 1/ - - - - 570.0 570.0 570.0 570.0 570.0 570.0 570.0 570.0 570.0 570. - Total Uses 3,235. 380.0 400.0 410.0 980.0 985.0 985.0 985.0 985.0 985.0 985.0 95.0 985.0 985.0 985.0 415.0 Annual Cash Surplus/Deficit - 570.0 550.0 660.0 500.0 635.0 755.0 755.0 805.0 805.0 805.0 805.0 805.0 805.0 805.0 1,375.0 1/ Loan Repayable In 15 years, with a 4-year grace period @ 83% interest per annum. Loan mount is equivalent to investment cost less working capital. February 18, 1975 ANNEX 9 TANZANIA Table 16 DAIRY DEVELOPMENT PROJECT Model of WEST LAKE Heifer Breeding Unit HERD PROJECTION I y AE R 1-25 -EuD COM?OSITIO?N 1 2 6 5 6 7 81 9-25 ZI about 21 years MIING OF YEAR 3,960 3,960 3,960, 3,960 3,960 3,960 3,960 3,960 plus FIRST CALF HEIFERS plus PURCHASED 6,000 2,040 2,040 2,040 2,040 2,040 2,040 2,040 2,040 TOTAL MATED 6,000 6,000 6,000 6,000 6,000 6,ooo 6,000 6,000 6,000 less DEATHS 240 240 240, 240 240 240 240 240 240 less CULLED 1,800 1,800 1,800 1,800 1,800 1,800, 1,800 1,800 1,800 GK HAND DD YEAR 3,960 3,960 3,960 3,960 3,960. 3,960 3,960 3,960 3,960 EEIFERS 1-2 years BGflhING OF YEAR 1,912 1,912 1,912 1,912 1,912 1,912 1,912 1,912 plus PURCHASED less DEATHS 77 77 77 77 77 77 77 77 less SALES 1,835 1,835 1,835 1,835 1,835 1,835 1,835 1,835 0 HANDE D YEAR 0 0 0 0 0, 0 0 0 'ALVES 0-1 year CALVES BORN 4,500 4,500 4,500 4,500 4,500 !4,500 4,500 4,500 4,500 IEMAT,ES BORN 2,250 2,250 2,250 2,500 2,500 2,500 2,500 2,500 2,500 les DEATHS 338 338 338 338 338 338 338 338 338 CH HAND END TEAR 1,912 1,912 1,912 1,912 .1,912 1,912 1,912 1,912 1,912 MALES BORN 2,250 2,250 2,250 2,250 2,250 2,250 2,250 2,250 2,250 ess DEATHS 338 338 . 338 338 338 338 338 338 338 SOW AT W.EWNIN0 1,912 1,912 1,912 1,912 1,912 1,912 1,912 1,912 1,912 MR BUILD-UP COSTS "H00T "R..1.1 CALF FEEDS 239.0 239.0 239.0 239.0 .239.0 239.0' 239.0 239.0 239.0 -AMEERMT FOR MILKERS 120.0 120.0 120.0 120.0 120.0 , 120.0 120.0 120.0 120.0 PURCHASES UNITS m No. 6,000 2,040 2,04C 2,040 2,040 2,040 2,040 2,040 2,040 SALES . CUm- COWS No. 1,800 1,800 1,800 1,800 1,800 1,800 1,800 1,800 1,800 No. - 1,835 1,835 1,835 1,835 1,835. 1,835 1,835 1,835 SLEXCALVES - No. 8 months 1,912 1,912 1,912 1,912 1,912 1,912 1,912 1,912 1,912 H ERD COEFIIENDTS CULLING % 30 30 30 30 30 30 30 30 30 CALVING RATE % 75 75 75 75 75 75 75 75 75 CALF MORTALITY % 15 15 15 15 15 15 15 15 15 ADULT MORTALITY % 4 4 14 1 4 4 4 4 14 February 11, 1975 TANZANIA DAIRY DEVELOPMENT PROJECT West Lake Heifer Breeding Unit:Investment Costs (T.Shs. '000) Foreign Foreign Unit Year 1 Year 2 Years 1-2 Exchange Exchange Investment Categoryl/ Unit Cost Units Cost Units Cost Total Units Total Cost (T.Shs.'000) Building and Installation Manager's House No. 100.0 1 100.0 - - 1 100.0 40 40.0 Assistant Manager's House No. 38.0 1 38.0 - - 1 38.0 40 15.2 Inseminators' Houses No. 15.0 6 90.0 - - 6 90.0 4o 36.0 Herdsmen Houses No. 7.0 6 42.0 - - 6 42.0 40 16.8 Office/Store No. 40.0 1 40.0 - - 1 40.0 4o 16.0 Nitrogen Plant No. 350.0 1 350.0 - - 1 350.0 75 262.5 Water Troughs No. 1.0 24 24.0 - - 24 24.0 4o 9.6 Artificial Insemination Points No. 12.0 4 48.0 - - 4 48.0 40 19.2 Feed Storage No. 10.0 4 40.0 - - 4 40.0 40 16.0 Tank Molasses No. 5.0 2 10.0 - - 2 10.0 40 4.0 Fencing Km 2.0 314 628.0 - - 314 628.0 60 376.8 Sub-Total - - - - - - 812.1 Resr No. 15.0 2 30,0 - - 2 30.0 75 22.5 Machinery and Equipment Four-wheel Drive Vehicle No. 50.0 1 50.0 - - 1 50.0 60 30.0 Tractor 30-40 H.P. No. 50.2 1 50.2 - - 1 50.2 85 42.7 Trailer No. 12.0 2 24.0 - - 2 24.0 85 20.4 Sub-Total - - - 124.2 - - 124.2 931 Total Fixed Investment - - - 1,564.2 927.5 Livestock Purchase 2/ Spotter Bulls No. 1.0 50 50.0 - - 50 50.0 - Cows No. 1.0 6,ooo 6,ooo. 2,040 2,040 8,040 8,o4o.- Sub-Total 6,o5o.o 2 8,090.0 Total Operating Expenses 69l. - - 691.8 Total Investment 8,36.0 2,040 10,346-0 I/Incremental investment required to establish breeding unit at Kitengule and Missenyi Ranches (NACO). /Cows (Zebu-Doran' purchased from beef operation for Tsh 1000 each :/Total operating expenses financed in Year 1 (Table 48)) February 12, 1975 TANZANIA ANNEX 9 DAIRY DEVELOPMENT PROJECT TablelT West Lake Heifer Breeding Unit: Iroremental Sales and Operating Expenses (T.Shs.'000) Item Year 1 Year 2 Year 3 Years 4-25 Sales!' Cull cows - 1,800.0 1,800.0 2-year old F-1 Heifers - 2,569.0 2,569.0 Male Calves - 1,147.2 1,147.2 Total Sales 5,516.2 5,516.2 5,156.2 Operating Expenses 2/ Salaries and Wages - Veterinary Manager 84.0 Assistant Veterinary Manager 20.7 Clerk 7.0 Inseminators 72.0 Herdsmen 12.6 Drivers 7.0 Sub-Total 203.3 203.3 203.3 203.3 Livestock Husbandy Drugs3 42.0 Artificial Inseminaton Semen. 156.0 Supplementary Feed2 240. Feeding labor 4.0 j Sub-Total 442.0 442.0 442.0 442.0 Fuel, Lubricants and Repairs Fuel an Lubricants 28.2 Repairsl" 18.3 Sub-Total 46.5 46.5 46.5 46.5 Livestock Purchase 8/ - - -- &_ 2 Oku. Total Operating Expenses 691.8 691.8 2,731.d Net Operating Income (691.8) 4,824.7 2,784.4 2784.4 I/Cull cows @ T.Shs. 1,000; Heifers @ T.Shs.1,400; Steers @ T.Shs. 600. 2/Based on parastatal rates, including leave pay, night allowance, provident fund and endowment schemes. 3/Based on a rate of T.Shs. 7/animal unit for 6,00C cows. i/Based on a rate of T.Shs. 26/cow. 5/Based on a rate of T.Shs. 40 /Based on one tractor operating 1,500 hours per year with an average fuel consumption of 1.1 liter per hour; one land rover operating 36,000 km per year with an average fuel consumption of 0.25 liter per km and lubricants of 12.5 percent of fuel cost. 7/Based on standard estimates and present experience. /Cows purchased from beef operation for Tsh 1000 each February 12, 1975 TANNI!I 9 DA1RY EVELOPMENT P2TrTTbe4 West Lake Heifer Breeding eit (Tak '293) Betor "--'----- ------------. ---------------------------------y- -------- D eel t i 2 3-----6-7---------.----- -.ear ..----.. ----... - l 7 0 1 12 13 14 15 16 17 18 19 20 21 22 23 24 1 S-urce of Fuds 25 Sales - 5516.2 5516.2 Development lan ad Grant 8306.0 2040.0 - - Ttal 8ources 8306.0 7556.2 5516.2 5156.2 5156.2 5156.2 5156.2 5156.2 5156.2 5156.2 5156.2 5156.2 5156.2 '156.2 5156.2 5156.2 5156.2 516.? 5156.2 5156.2 5156.2 156.2 5152 5156.2 5156.2 Uea of lad. 16s55. 162 55. Investment Coet 6050.0 2040.0 - - - -- - ~ cap1tal . ep1ac ent 691.8 273L8 2731.8 7.8 2731.8 2731.8 2731.8 2731.8 2731.8 2711.8 2731,8 2731 .8 2731.8 - L -a Insta oe t f9 07 1 - - 0. - 22731.8 2731.8 273 .8 2 31.8 2731.8 2731.8 2731.8 2731.8 2 7 L 8 2731 --9. 90- - - 90.0 - -3. 7731.8 9 : 90.0 179. 1769,0- - 300 1769.0 1769.0-1769, 0 1769.0 176 9 .0 1709.0 1769.5 1769.0 1769.0 1769.0 1769.0 769.0. - - Tat ule 8306.0 4771.8 2731.8 2821.8 .500.B 4500.8 4 5.8 4590.8 4500.8 45 0.8 4500.8 4590.8 4500.8 4500.8 4500.8 2821.8 2731.8 2731.8 2731.8 2731.8 2731.8 2731.8 27318 2731.8 2731.8 A-atl C.eh arplo/Defiojt - 24,2784.4 234.4 655.4 655.4 655.4 565.4 655.4 6 5.4 655.4 565.4 655.4 655.4 655.4 2334.4 242.4 2424.4 2424.4 2334.4 2424.4 2424.4 2424.4 2334,4 2424.4 Loan Repayable in 15 years with a 4-year grace peried & 8 1nterea per ann. ~ranea'ount ie eqi. alenr erre e capital whilh 1s either elf-fianed or a grant from Goveenc t through LIDA and DU00, May 23, 1975 TANZANIA AN2EX 9 DAIRY DEVELOPMENT PROJECT Table 50 Milk Collection and Processing: Investment Costs (Tsh '00) Foreign Foreign Investment Item Capacity/ Unit CoKt Year 1 Total Exchange Exchange Unit (Per m ) Cost Cost (Tsh '000) Milk Processing Coastal Dairy Industries Ltd. Buildinp and Installationsl/ Cold Store )20,000 Liters 3.0 ) 300.0 300.0 85 255.0 Freezing Stores (2) 2/ ) 5,000 " 3.0 Processing and Packing 2.7 54c.0 540.o 85 459.0 Crate Store 1.5 105.0 105.0 85 89.3 Services Piping Tunnel 1.8 45.0 45.0 85 38.3 Platforms 1.0 105.0 105.0 85 89.3 Engineering Techniques 3/ 150.0 150.0 85 127.5 Planning and Supervision 120.0 120.0 85 1C2.0 Subtotal 1,365.0 1,365.0 1,160.4 Machinery and Equipment Butter Oil Melting Unit 400 kg/hr 50.0 50.0 85 42.5 Milk Tank 12,000 liters 65.0 65.0 85 55.3 2 Youghurt Tanks / 2,000 liters 85.0 190.0 190.0 85 161.5 Filling Machine for Cups 4,000 cuns/hr 100.0 100.0 85 85.0 Tetra Pak T-500 DE 3,6CC f liter pack/hr 160.0 160.0 85 136.0 Crate Washing Machine )1,000 crates/hr 80.0 80.0 85 68.0 Crate Conveyors, 50 m ) 50.0 50.0 89 42.5 Separator 6/ 9,000 liters/hr 150.0 150.0 85 .127.5 Complete Sets of Spare Parts 150.0 150.0 85 127.5 Pipes, Fittings. Valves Control Panels 7/ 50.0 50.0 85 42.5 Installation 100.0 100.0 85 85.0 Subtotal 1,145.C 1,145.0 973.3 Regrigeration Equipment for Cold Stores and Chilled Water Production 8/ Compressors, Coolers and Auxiliaries 165.C 165.0 85 140.3 Ammonia Pipeworks 20.0 20.0 85 17.0 Control Panel 30.0 30.0 85 25.5 Evaporative Condenser 50.0 50.0 85 42.5 Installation 4o.o 40.0 85 34.0 Subtotal 305.0 305.0 229.3 Water Supply Water Balance Tank 250 m3 150.C 150.0 85 127.5 Installation 20.C 20.0 85 17.0 Subtotal 170.0 170.0 144.5 Collection Centers Building and Installation 9/ 2 140.3 280.6 280.6 85 238.5 Transport Equinment 1 140.0 140.0 140.0 85 119.0 Subtotal 420.6 420.6 357.5 Total 3,405.6 3,405.6 2,895.0 Northern Dairies Ltd. Collection Center la/ 1 165.0 165.0 165.0 85 140.3 Total Investment 3,570.6 3,570.6 i/ Total building volume 3,000 m3, materials used: cold store-floors of steel tile; walls plastered and painted. Freezing stores - floors of vitrious tiles (klinkers); walls plastered and painted; insulated materials in racricerated stores - polystyrene. Processing and Packing - floor material - vitrious floor tiles (200 m2); walls - ceraic tiles (2 m), plaster and painting. Crate Store - floors of grinded cement; walls and roofs painted. 2/ For local distribution of ice cream to be shipped from Arusha; later possibly own production of ice cream and ice lollies. 3/ Includes water supply, lighting and ventilation. 17/ lot subject to import duty; included 151 for insurance and freight. F/ For pasteurizing, fumigating, fermentation and cooling of yoghurt, milking equipment with an inbuilt cooler/mixer and steam chilled water supply. 6/ To facilitate continous processing during necessary cleaning of the second separator, 7/ To facilitate efficient "in-advance" maintenance of crucial devicesr homogenizer, plate pasteurizer, separators and steam boilers. Not subject to import duty; includes 15 for insurance and freight. / Please see Table 51. 10 Please see Table 52. February 12, 1975 ANNEX 9 Table 51 TANZANIA DAIRY DEVELOPMENT PROJECT Milk Collection and Transport: Coastal Dairy Industries Investment Cost (Tsh t0O) Investment Items Capacity Per Unit Collection Centers (2) 3,000 Liters Buildingal/ 35.0 Cooling Tank 65.0 Can Rinsin1Tank 4.0 Water TankE/ 3.0 Piping 2.0 Milk Pumps 2.0 Fencing, 'Road Clearance and Land 5.0 Filters, Scale 9.3 Water Heater 10.0 Laboratory Equipment 3.0 Lactometers, Chemicals and Office Equipment 2.0 Sub-Total 140.3 Transport Equipment Unit 7 Ton Tanker]- 100.0 Insulator Tankers (2)' 18.0 Pumping Equipment, -De-aerator, Flow Meter 16.0 Assembly 6.0 Sub-Total 140.0 Total Investment Jgg 1/Light structures, erected on a concrete slab; impregnated wood or steel framework covered with asbestos or aluminium sheets; removable and ex- pandable in sections. 2/For centers with problematic supply of water, in some cases water may have to be supplied by tanker. 3/Extended chassi to provide covered space for mill samples, churns and pumping equipment able to suck milk from centers; capacity 5,000 tons. k/Movable, capacity 2.5 tons, insulated. May 146, 1975 TANZANIA AlNEX 9 DAIRY DEVELOPMENT PROJECT Table 52 Milk Collection Center Northern Dairies ; Investment Cost (Tsh tO000) Investment Items Caacity Per Unit (6,000 Liters) Buildingl/ 35.0 Cooling Tank 90.0 Can Rinsing TankA' 4.0 Piping 3.0 Milk Pumps 2.0 Fencing, Road 2.0 Clearance and Land 5.0 Fitters, Scale 9.0 Water Heater 10.0 Laboratory Equipment 3.0 Lactometers, Chemicals and Office Equipment 2.0 165.0 I/Light structure, erected on a concrete slab; impregnated wood or steel framework covered with asbestos or aluminium sheets; removable and ex- pandable in sections. 2/For centers with problematic supply of water, in some cases water may have to be supplied by tanker. May 14, 1975 ~E~ 3 TANZANIA DAIRY DEVEPWNT PROJECT Collection Operating QDsts/Unit kTsh 1000) Capacity 1,500 liters 3,000 liters Salaries - Manager 7,200 9,600 - Assistant 4i,200 4,200 fPel & Lubricants for Generator 3,600 4,500 Repairs & Maintenance 3,000 4,000 Chemicals, Consumables 3,000 4,000 Average Capital Replacements 10,50 13,600 Annual Operating Costs/Unit 31,500 37,900 Per kg. at 50% utilization (cents) 11.5 6.92 Per kg. at 80% utilization (cents) 7.2 4.33 February 14, 1975 T4NZANIA EM DAIRy DEELPFZO9 PXRCT TechnicaI Services and Proit Pre1aration: Inveåtaant prolmotion Total Years Foreign Exchange Foreign Exchangs Inveatment Cateare Uniat unit Cost Yeari Year 2 Yar 3 Year 4 Year 5 1-5 ()(TShn .000) Technical Assistance Large Scale Fams Group Fam Managers Man-Yea 210.0 84C.0 840,0 1,050.0 840.0 420.0 3,990.0 85 3,391.5 Reifer Breeding Unit Ranch Manager 210.0 21C.0 210.0 210.0 210.0 210.0 1,050.0 85 892.5 Machinery Maintenance Specialist " 210.0 210.0 210.0 210.0 210.0 210.0 1,050.0 85 892.5 DaIry Husbandry Specialist 210.0 210.0 210.0 210.0 210.0 210.0 1,050.0 85 892.5 Dairy Ecnmist (lcal) " 35.0 35.0 35.0 35.0 35.0 35.0 175.0 - - Pasture/Fodder Specialist " - 210.0 210.0 210.0 210.0 - - 630.0 85 535.5 Fam Structre%C-ultant 140.0 140.0 - - - - 140.0 85 119.0 Dairy Marketing and Procesaing Consultant " 80.0 - - 80.0 - - 80.0 85 68.0 Irrigation Consultant " 140.0 140.0 140.0 - - - 280.0 85 238.0 Sub-Total 1,995.0 1,ä55.0 2,005.0 1,505.0 1,085.0 8,445.0 7,029.5 Andma1 Health - Applied Investigatiol Work Veterinary Economist " 210.0 210.0 210.0 210.0 - - 630.0 83 UJaaa Datry Development Livestock Specialist " 210.0 210.0 210.0 210.0 210.0 210.0 1,050,0 85 092.5 Agriculturalit " 210.0 210,0 210.0 210.0 210.0 210.0 1,050.0 85 892.5 Agricultural Economist 35.0 35.0 35.0 35.0 - - 105.0 - - Pasture Specialit " 140.0 140.0 140.0 - - - 280.0 85 238.0 Animal 7eource Investigation/Extension " 140.0 140.0 140.0 - - - 280.0 85 238.0 con.ulting Services " 35.0 35.0 35.0 35.0 - - 105.0 - Financial Econmi.t " 140.0 70.0 - - - - 70.0 85 59. Sub-Total - 840.0 770.0 4.0 420.0 420.0 2,940.0 2.856.0 Total recnical AssI.tace - 3,045.0 2,835.0 2,705.0 1,925.0 1,905.0 12,015.0 9,885.5 Training and Fellowship. - 160.0 160.0_ 160.0 160.0 160.0 160.0 800.0 85 680.0 Mocitoring and Evaluation - 10.0 10.0 10.0 10.0 50.0 85 42.5 Pro ject Management - Technical Support Four-cheel Drive Vehiclemil N. 50.0 550.0 50.0 - - - 600.0 60 360.0 Operating Cout (including Driverg- Salary, - - 327.4 467.2 477.2 238.6 198.8 1,709.2 50 746.4 Puel and Rpeirs)- Miscellaeous Office Equipment Se 10.0 10.3 30.0 10.0 10.0 10.0 70.0 - Secretarial Support " 35.0 245.3 245.0 245.0 175.0 105.0 1,050.0 - Radio Equipmnet - Set 40.0 240.) - 40.0 - - 280.0 85 238.0 Air Teavel Year 60.0 60.0 60.0 60.0 &0.0 60.0 300.0 Sub-Total - , 852.2 832.2 483.6 373.8 3,974.2 1,344.4 Animal Health-Applied Investigational Work 9/ - - 430.3 430.0 430.0 430.0 430.0 2,150.0 50 1,075.0 Total Investment - - 5,077. 4,287.2 4,137.2 3,08.6 ,47.8 9 13,027.4 1 Anial Health Dairy Farms 10, Ujaaa 1, and A"al Health 1 3 Dairy Fam 10, Ujsamas 1, and Health 1 D.iy Farm 5 Dairy Farmu 4, Uj~aaa 2, AnIma. Health 1 &J/D&Irr Faas Oepair. and Pael 2/ See Annec 12 March 25, 1975 ANNEX 10 Page 1 TANZANIA DAIRY DEVELOPMENT PROJECT Parastatal Dairy Farms 1. An important objective of the Project is to increase domestic milk production on government-owned and operated farms. The milk thus produced would be destined almost exclusively for the large processing facilities which serve the major urban centers. In most instances, the Project would take over existing farms, most of which are already engaged in dairy produc- tion to some extent. These farms are in most instances producing at a far lower level than their geographical and technical capacity would permit; this is generally the result of poor management which has deteriorated over a period of time. Some farms formerly belonged to private individuals and were taken over by the Government to be run as parastatals. 2. The aims of the Project for these farms would be two-fold: the first to increase milk production to the maximum extent feasible and thus increase the supply available to commercial dairies. This would enable the dairies to use a higher proportion of fresh milk in their dairy products and should thus reduce, at least relatively, requirements for imported milk powder and butter oil. The second, and more important, objective would be to develop a nucleus of well-managed dairy farms using the most sophisticated techniques available, and to develop a cadre of highly qualified Tanzanian managers. This should permit the Government to expand its commercial dairy operations in a subsequent project. It should also provide the technical and managerial inputs that would be an essential prerequisite to a major effort to increase milk production in the traditional and Ujamaa sectors. A further benefit of the development of large farms would be the production of surplus grade heifers after the herd was developed, which could be sold to other farms or to traditional producers. Finally, the farms should be able to make equipment, machinery, and training available to smaller producers in the vicinity. 3. This component of the Project was planned on the basis of farm units of 356 cows each, of which 230 to 260 cows would be milking at one time. Total stock on a farm unit would be about 700 animals (Annex 9, herd projections). This unit size has the advantage of being large enough to support forage harvesting and other equipment at a reasonable level of utili- zation. Each unit would be managed separately, although adjacent units would share common service facilities for machinery repair and fodder mixing. There would be 5 gray managers who would supervise development and operation of between 2 and 5 units. ANNEX 10 Page 2 4. Seven existing dairy operations, owned by NARCO, TSC, NAFCO, KNCO, KILIMO Ministry of AGriculture, and private individuals, would be taken over and operated by the new Dairy Farming Company (DAFCO), which would also establish two farms at new locations where no dairy operations exist at present. At these 9 locations, a total of 17 farm units would be developed over a period of 5 years, with a total of about 6,000 cows at full development. Project farms were selected for their proximity to markets and the suitability of local geographic conditions, particularly their potential for fodder produc- tion and availability of water. An additional factor was the possibility of taking enterprises which were not going well and making them into viable financial ventures by improving management and providing needed investment. The farm units to be developed are as follows: No. of Units Unit at full development Authority Bagamoyo 1 NAFCO Iwambi 1 DAFCO Kitulo 1 DAFCO Ngerengere 2 DAFCO Patel 1 DAFCO Rongai 3 KNCU Saleh Haji 1 DAFCO Tanga 5 TSC Utegi 2 DAFCO The Government had proposed to develop a total of 41 dairy units. The appraisal mission, however, determined that many of the proposed sites were unsuitable for technical reasons, at least at the present level of develop- ment of the dairy industry. It was felt that 17 units was the optimum number that could reasonably be developed in a first phase project. 5. The state of the existing dairy farms varies widely both in physi- cal infrastructure and machinery and equipment available, and in the number and quality of dairy animals. The individual circumstances of each proposed farm are described below in paragraphs 9 through 48. For most farms, the main investments would be bush clearing, fencing, additional housing, machi- nery, equipment, and herd build-up. Where larger new works are required, the first year of operations would be devoted to the construction of buildings, fences and other structures, establishment of improved pastures and growing and conserving one year of fodder as an initial reserve. Where the number of animals available is limited, most stocking would take place in the second year. At the earliest stage feasible, stocking would be from the Heifer Breeding Unit to be established under the Project (Annex 11). Prior to the time that these animals were available, Project farms would purchase animals where they were available. ANNEX 10 Page 3 6. On the dairy farms, animals would rely on improved pasture for much of their feed requirements, but an important feature on most of the farms would be high quality fodder conservation to feed the stock during the dry season (see below, paras. 49-52). Some hay production would take place, but more emphasis would be placed on silage making as the best way to conserve large qualities of fodder. This should be possible because grasses, green maize and sorghum can be harvested over a longer period of time than hay. Irrigation would be utilized on two farms where climate and soil makes this necessary and green forage would be available here throughout the year. Artificial insemination would be practiced on all farms using semen from high quality dairy bulls. Milking would be done by hand on some farms and by machine on other farms, depending on financial factors, on the local labor situation, and on access to spare parts and servicing. All farms would be covered by an adequate animal health program to prevent disease outbreaks. Animals would be run in small herds, the size to be determined by the farm manager. 7. Each farm would be managed by a Tanzanian farm manager. They would be supported by five internationally recruited dairy specialists who would be employed as group managers with responsibility for a group of farms. It would be their primary task to ensure that the feeding program and management system employed are appropriate to Tanzania circumstances and to the needs of the region, and to train the local managers and staff in the management techniques required for effective dairy operations. Their principal objective should be to increase the quality and quantity of feed available, to increase the milk yield per cow, and to reduce the inter-calving interval. The managers should employ flexibility and imagination in developing management plans for each farm, and should make maximum use of local by-products for feeding animals: for example, copra and cotton seed cake. It is anticipated that some farms would be run as mixed ventures, for example with plantation crops such as coconuts, sisal or coffee in conjunction with dairy, or other crops such as wheat and beans. Details of such development would be spelled out in the individual farm investment plans. 8. A farm investment plan would be prepared for each unit to be developed under the Project. This plan should take full account of existing facilities and equipment, using them to the maximum extent feasible. The feeding program should be carefully planned, with due regard to local circum- stances. -An important factor in evaluating the plan should be the financial viability of the farm. Once the plan is approved by LIDA and TRDB, the farm managers should be accountable for the farms in both financial and technical terms, and it should be a continuing concern of Government that these farms yield an adequate financial return. Project Dairy Farms 9. Bagamoyo Dairy Farm is located on the Indian Ocean Coast 60 kilometers north of Dar-es-Salaam on the Bagamoyo road. It is also known as the Opel Estates. It covers an area of 650 ha divided into four sections of which all ANNEX 10 Page 4 but 150 ha is covered by 40,000 old coconut palms and 5,500 cashew trees. The soils are mostly sandy with pockets of heavier sandy loam. 140 ha are marshy and waterlogged, but may offer prospects for fodder production if drainage is undertaken. The natural pasture consists of Cynodon dactylon under the coconut palms judged to be yielding 12.5 tons of green matter/ha, which is probably less than half the potential yield. The rainfall is bimodal and totals 1,000-1,200 m annually. The "long rains" last from March to May and the "short rains" fall in November and December. Buildings are adequate for one of the three sections into which the herd would naturally be divided by the segments of the coconut plantation. Water is supplied from shallow-wells and the high groundwater table would appear likely to facilitate the development of further wells and irrigation. The farm has its own copra-drying plant. 10. The farm was developed as a-combined coconut/dairy operation beginning before 1900, by private individuals, and was considered highly successful. The farm was acquired in 1973 by NAFCO and CDIL, and it has continued as coconut/dairy operation. However, lack of proper herd-rearing and grazing management has resulted in a drop in milk yields to well below the genetic capacity of the mixed Angler/Jersey herd. To realize the full potential of the farm, the following steps should be taken: (a) the improve- ment of natural pasture by disking before the-rains and the application of fertilizer; this would encourage growth of natural legumes and should also have a beneficial effect on the coconut production; (b) the introduction of legumes (Phaseolus, Centrosema or Stylosanthes) into present pastures and the establishment of new pastures (Digitaria/Centrosema), on an experimental basis; Guinea grass (Panicum maximum) already grows in patches on part of the farm near the coast and might be grown on 40 ha of open land for grazing, hay-making and for silage. It is expected that as much as 5 tons of dry matter per ha could be obtained in the rainy season and 4 tons during the dry season; (d) provision of feeding paddocks in the form of green fodder or improved pasture; (e) some experimentation with decentralizing the milking operation by the adoption of milking in the paddocks, using a moveable bail system of hand-milking. 11. The present herd of about 120 cows and heifers would be supplemented through the purchase of about 100 in-calf heifers and 50 yearling heifers in Project years one and two (Annex 9, Table 1). The estimated present milk production of 82.5 tons annually is expected to be increased about 650 tons by year nine, by first by realizing the genetic potential of the herd through better feeding and management, and second through an A.I. program using semen of exotic breeds supplemented as needed with semen of improved Sahiwal bulls. 12. Milk produced on the farm is cooled at the farm, then transported by the farm's own lorry to Coastal Dairies in Dar-es-Salaam; the farm is obliged to sell milk there because of compulsory marketing orders in force. The farm manager and a veterinary assistant are provided by NAFCO, and there are 50 permanent workers. ANNEX 10 Page 5 13. Iwambi Dairy Farm. The Iwambi farm is located 5 kilometers south of the town of Mbeya. It is now run as a Livestock Multiplication Unit for dairy cattle under the Ministry of Agriculture, and produces heifers and improved bulls which are sold at subsidized rates 1/ to "progressive" farmers in the district and to Ujamaa villages. The farm was originally developed as a coffee farm by a Greek farmer, and the Government acquired it in 1966. Since then, the principal activity of the farm has been dairying and some crop farming. The farm also has some pigs and poultry. 14. The farm covers an area of about 2,500 ha of which about 1,250 ha are in use: 900 ha is under improved pasture, 24 ha is under crops (barley, wheat, beans, maize), and the remainder is natural pasture. The farm is situated at an altitude of about 2,000 meters. Rainfall averages 1,000 um annually concentrated between November and May/June. Water supply is from town water and the permanent river Niowvwe. Fields are on an undulating plateau and soils are dark loans, generally low in phosporous. 15. Improved pastures are under Rhodes grass, Setaria, Sudan and Elephant Grass, and legumes (Desmodium, Lucerne) have been tried and are doing well. Pastures are rotated every 7 years and yields of 4 ton/ha (1st cut) and 1 ton/ha (2nd cut) have been obtained. Irrigation has also been tried using overhead water pumped from the river. Locally available feeds include cotton seed cake and rice polishings; calf feeds, dairy meal and mineral supplements are obtained from the National Milling Corporation in Dar-es-Salaam. 16. The farm has considerable existing facilities. Its buildings are adequate for the present herd and include a calf barn and a milking parlor. The entire perimeter is fenced and 43 paddocks of 7-15 ha each have been established. If the herd were expanded, additional buildings and fencing would be required. Most of the farm machinery should be replaced. 17. The farm is managed by the Ministry of Agriculture; this has given rise to some problems because of centralized decision-making. Management problems include lack of supplies, notably drugs and parts for milking machines. There is a Field Officer assigned to the farm responsible for animal health. At present milk produced is sold at the farm-gate to local consumers. However, there is a considerable market in the town of Mbeya which has scarcely been tapped. In October, 1974, the farm was stocked with 158 dairy cows (Ayrshire/Jersey), 114 heifers and calves. 18. The Project would aim at improving facilities by providing a limited number of new buildings and replacing equipment. The principal objective, however, would be to improve both technical and financial manage- ment. On the technical side, it would emphasize the production of sufficient fodder crops for silage to cover the dry season, improved breeding, feeding 1/ 650 Tsh. for an in-calf heifer, 450 Tsh. for young bulls. ANNEX 10 Page 6 and milking operations, and an expansion of breeding operations, probably with cull cows from the Kitulo farm. On the financial side, the farm manager would be made accountable for farm operations, and would have a budget and plan of operations for which he would be responsible. Milk produced on the farm would be processed at the new National Cold Storage Company facility in Mbeya, and marketed locally by them. 19. Kitulo Dairy Farm. The Kitulo Ranch is located in a high plateau area near the town of Mbeya, which covers a total area of apnroximately 400,000 ha. The farm comprises 22,000 ha and is situated 60 km SE of Mbeya at an altitude of 2,500 meters. It is served by an all-weather rough-surface road. The annual rainfall ranges around 1,600 mm and the majority falls during the period November-May with occasional showers during the dry season. 20. In 1966, a state farm of 22,000 ha was established on the plateau with assistance from the FAO/UN'DP; the objectives were to investigate the possibility of sheep farming and cereal production potential. In the experi- ments conducted, oats yielded very good results, whereas wheat and barley did not. In 1968 dairy and beef cattle were introduced on an experimental basis. On the basis of the results of this venture, a beef breeding ranch was included under the IDA Second Livestock Project (Credit 382-TA). 21. In October 1974, the Kitulo farm comprised 20,000 ha of which 950 ha were improved and paddocked. The farm was operated in three sections: a sheep section with 9,200 Corriedale sheep, a beef section with 1,800 cattle of which a 300 head breeding unit (Ayrshire, Friesian and Aberdeen Angus) and a dairy section consisting of 85 Friesian cows and 55 recently acquired Friesian in-calf heifers of American origin, and young stock. 22. TRDB has recently approved a two-year investment program for the Kitulo farm under the IDA Phase II Project that is designed to: (a) maintain the cattle and sheep herds at approximately their current levels (1,825 and 9,000 respectively); (b) experiment with cross--breeding Boran/Friesian; (c) renew and maintain improved pasture; (d) experiment with and evaluate the technical and financial coefficients for pasture improvement and beef and sheep production; and (e) establish-simple facilities for the dairy unit. The cost of the program is 2.5 nillion Tsh. At the end of two years, a further evaluation would be taken, and a long-term development program for the ranch prepared. ANNEX 10 Page 7 23. The Government proposed to establish one 356-cow dairy unit on the Kitulo Ranch under the Dairy Development Project, and the mission recommends accepting this proposal. The dairy farm would make use of existing buildings. In addition it would require an estimated 400 ha of improved pasture (to be established) which would be used for a rotation of fodder and forage crops, 1,400 ha of unimproved natural pasture, and some additional equipment. The establishment of this unit would complement devel- opment of the Kitulo Ranch under the IDA Phase II Livestock Project. The Phase II project envisaged development of beef and sheep on the whole of the 20,000 ha ranch; a subsequent supervision mission authorized also the estab- lishment of a 100-cow dairy unit on the farm. Since appraisal of the livestock project questions have been raised about appropriate coefficients for stocking rates for beef and sheep and for pasture development, and about the long term financial and eocnomic viability of beef and sheep production on the Plateau. It now appears that dairy development is likely to be the best long-term land use for the area, but before a large-scale enterprise is undertaken, a number of questions should be addressed: first, questions of a technical nature relating to pasture establishment and rotation (types of grass, quantity of fertilizer, length of rotation, etc.) and second, economic issues concerning feeding programs and the degree of intensity of operations. If the proposed dairy unit is successful, then the Government might consider the establishment of further units and perhaps smallholder production on the Plateau. In that event, processing facilities would be required, perhaps for producing skim milk powder and condensed milk for the major urban markets in addition to fresh milk, butter and cheese for the Mbeya region. 24. The principal investments on this farm would be in the form of equipment and management. The emphasis during the Project would be on the production of fodder crops sufficient to support a high level of milk produc- tion throughout the dry season. Further feasibility studies might also be undertaken for future projects involving additional farms and processing facilities. 25. Ngerengere Dairy Farm. This farm is situated approximately 145 km west of Dar-es-Salaam and about 50 km east of Morogoro. It consists of three contiguous abandoned sisal estates which were taken over by NACO in 1969. The farm is operated now as a mixed livestock farm with beef, dairy and pig enterprises. The farm has a total area of 6,000 ha, of which about 2,000 ha is free of sisal and bush. Rainfall is around 1,000 mm annually and the long dry season lasts five months from April to August. The altitude is about 200 m. Natural grasses are good, mainly Panicum maximum, Hyparrhenia and Cynodon. 26. At present NACO is operating the farm and there are a total of about 3,200 head of cattle which are divided into dairy and beef herds. The dairy herd consists of some 130 cows, among them 40 Friesians, 20 Ayrshire, 20 Zebu-Boran, 43 Sahiwal, 4 Brown Swiss, and similar numbers of dairy heifers. ANNEX 10 Page 8 27. Under the Project, two dairy units of 356 cows each would be developed; one unit would be built up from the existing dairy herd starting in Project year 1. The second unit would be built up from the beef herd by upgrading about 510 crossbred cows and about 380 heifers, mainly Zebu-Boran, Zebu-Friesian, Friesian-Ayrshire, Boran-Sahiwal and Zebu-Ayrshire. Artificial insemination would be used; previous experience has demonstrated that the use of exotic bulls for natural service has been less efficient due to heat stress. Because of the low altitude, heat-stress and the presence of tsetse fly, it would not be possible to maintain a pure exotic breed at Ngerengere; therefore the level of exotic blood would be maintained at about 60% through crossings between Friesian, Boran and Sahiwal. It is anticipated that at full development, total milk production from the two units would be approxi- mately 1.35 million liters annually (Annex 9, Tables 13 and 14). 28. An important objective in developing the farm would be to produce a sufficient amount of roughage such as silage and hay, in order to maintain a high level of milk yields all the year round and especially during the long dry season. Assuming that dairy cows should be provided with about 15-20 kg silage and some hay each day during the driest months, as supplemental feed, an estimated total of about 3,500 tons of silage should be produced annually at full development; depending on yields and rainfall, approximately 200 ha of fodder crops such as green maize and sorghum should be grown, harvested and made into silage each year to produce this quantity. Bush clearing would be undertaken in order to improve the existing natural grasses; in addition, legumes, notably stylosanthes and lucerne, would be established, and making up an important part of the pasture and fodder development program on the farm. 29. The general program should include appropriate fodder production and pasture development, but the detailed planning of the feeding program would be the responsibility of the farm manager. The main investments at Ngerengere would be for bush clearing, fencing, machinery for fodder crop production and harvesting, housing for staff, water development and vehicles. 30. Patel Dairy Farm. The Patel farm is a working dairy farm of 300 ha located about 65 km from Dar-es-Salaam on the Morogoro road. At present, the farm is privately-owned but it is anticipated that it would be purchased by the Government and operated by DAFCO. At an altitude of about 60 m, the climate is hot and humid, and rainfall is approximately 900 mm annually. The farm area is composed of a low-lying, gently sloping flattish area that adjoins the Ruvu river, and higher ground to the east of this area. The soils of the area are largely clay and those of the higher ground range from clay loam to loam. The flat area is subject to annual flooding for a period of about 15 days during the rainy season when the river overflows its banks. Pastures on the higher grounds, which are mainly Themeda and Hyparrhenia grasses, are overgrazed. The low-lying grounds have heavier soils and are grazed during the dry season; grasses are Bracharia and there are some natural legumes. The farm has a smaller area planted with high-yielding Napier and Guatemala grasses, which could provide a good stock for multiplication. ANNEX 10 Page 9 31. In October, 1974, the farm had a total dairy herd of 550 hea4 of which 250 were cows, and 90 heifers which would be a good foundation stock for future breeding. The breeds are Ayrshire, Sahiwal and Angler; the daily average yield per cow was about 6 liters of milk, which was delivered to Coastal Dairies twice daily after being cooled on the farm. The farm buildings and the machinery are old and of little value. 32. Under the Project, this farm would be developed as an intensive dairy farm with 356 cows (one unit). It would rely heavily on irrigation, and water rights should be confirmed prior to development. The land would be protected from floods by a bund along the river. This bund would be about 3 m high and 3 to 4 km long. For irrigation, water would be pumped up 6 m from the river to the high ground at the head of the low-lying area and dis- tributed from there by gravity. The Ruvu river has an adequate flow for these purposes even in the driest season. With irrigation some fodder crops (double cropped) could be grown. These, together with other high yielding tropical grasses would provide sufficient green fodder for the dairy herd during the dry season. It is anticipated that the present milk production of about 300,000 liters annually would be increased to about 800,000 liters. All milk would go to the Dar-es-Salaam market and would be processed at Coastal Dairies. The main farm investments would be for building replacement, flood control, irrigation equipment, and machinery for fodder handling. It would also be necessary to purchase cattle already on the farm. 33. Rongai Dairy Complex. Four dairy farms in the West Kilimanjaro area in northern Tanzania will be merged into one dairy operation. These farms, located about 65 km northeast of Moshi on the western slopes of Mt. Kilimanjaro are well-developed and stocked dairy farms. The temperate climate is well suited to keeping exotic dairy cattle. The altitude varies between 1,300-1,500 m and rainfall between 600-800 mm annually. Four adjacent farms are operating at present and are fairly well-developed and stocked dairy farms: they are the Rongai Dairy Farm, operated by NACO, and the Gararagua estate, Lerongo Farm and Molomo Farm, all operated by the Kilimanjaro Native Cooperative Union (KNCU). Soils are generally volcanic and the natural vegetation for the area is woodland and wooded grassland where the predominate grass is Themeda Triandra. 34. The Rongai Dairy Farm itself covers 1,200 ha, of which about 200 ha are under cultivation, 800 ha are natural pasture, and the rest forest. Water supply is obtained from a water furrow above the farm. The existing herd of about 300 dairy cows has been built up by upgrading Boran cattle, local purchases and importation from Kenya. The breeds are predominately Friesians and Ayrshires. The existing buildings are fairly good but farm machinery needs to be replaced. About 80 ha have been planted with Rhodes grass, which has been harvested as hay; only a limited quantity of silage has been made in the past. Other crops are maize for grain and wheat which is grown as a nursery crop in Rhodes grass establishment. Annual milk production is about 400,000 liters per annum. ANNEX 10 Page 10 35. The Gararagua estate, operated by KNCU, is located near the Rongai Dairy Farm, in the Sanya Juu area. The farm's total size is 1,400 ha and it is operated as a mixed farm with a dairy herd of about 155 cows. Crops in- clude 100 ha of beans, 100 ha of maize, 120 ha of wheat and 28 ha of irrigated coffee. The farm has about 30 ha of Rhodes Grass for hay production and the rest of the land is under natural pastures. The farm has a good forage po- tential and is well suited for dairy development. 36. The Lerongo Farm, located south of Gararagua, is also operated by KNCU. It covers about 220 ha and it is operated as a mixed farm with a dairy herd of about 100 high-quality Ayrshire cows. Daily milk production is about 10 liters per cow. 40 ha are planted with coffee, together with 30 ha of beans and 36 ha of maize. The entire farm is under cultivation and about 90 ha are seeded with Rhodes grass. The farm is one of the most developed in the area and is capable of high yielding forage production. 37. The Molomo Farm, located in the same area covers 880 ha and is operated by KNCU. The farm has a dairy herd of about 180 cows, and average daily milk production is 6 to 7 liters per cow. Soils are similar to those of the Rongai Dairy Farm and natural pastures are mainly Themeda triandri. Irrigated coffee is cultivated on 26 ha. 38. Under the Project, three dairy units, each consisting of 356 cows, would be developed as the Rongai Dairy Complex and transferred to DAFCO. The main investment on all farms would be general infrastructure such as fencing, water development, and building construction. In addition, machinery would be needed for fodder conservation (silage making) as this would play an important role in providing high quality fodder which would be essential to maintain high milk yields among the exotic dairy cattle. Yields would be expected to increase from the present 1.1 million liters per annum to 3 mil- lion liters at full development. All milk would be sold to the Northern Dairies Ltd. in Arusha. 39. Saleh Hajeh Dairy Farm. This farm is situated 40 km northeast of Mbeya, 10 km off the Mbeya-Iringa road and adjacent to the Usanga Ranch which is operated by NACO. It covers an area of about 760 ha located in a fertile valley, much of which is now or has in the past been under irrigated crops. It incluaes level and irrigable land and lies at an altitude of about 1,300 meters. Annual rainfall varies from 800-1,000 mm and is concentrated in the months from December through April. Soils are of the clay/alluvial loam type. A river bordering the farm provides water for irrigation: the farm has 99 year water rights of 6 cu.ft./sec. during the wet season and 3 rusecs during the dry season. 40. In 1950, the farm was acquired by its present owner, who established an irrigation system two years later. Until 1972, the main crops cultivated were maize, rice, onions and mixed vegetables, all under irrigation, and double cropped; 80 ha were used for grazing a 100-head dairy herd. Farming was not intensive, and did not provide the principal source of livelihood ANNEX 10 Page 11 for the family, who used little machinery and never used fertilizer. The farm has not been cultivated since 1972, largely because the owner could not afford the cost of inputs. At present, all buildings are in run-down con- dition and there is virtually no machinery in working order. Both the irrigation canals and intake facilities from the river require significant rehabilitation works. The access road to the farm must be reconstructed; NACO, whose Usanga ranch is immediately adjacent to the farm, plans to do this with funds from Credit 382-TA. There is considerable unutilized land in the immediate vicinity of the farm, and water would be available for irrigation there also. An estimated 4,000 ha, completely undeveloped, is similar to the Saleh Hajeh farm in topography and could be acquired for development as a dairy farm. 41. Under the Project, one relatively intensive dairy unit would be developed on this farm, and it would rely on irrigated pasture and fodder crops. The farm would probably have 400 cows (as opposed to 356 in the model), and would sell bull calves at 6 months of age (Annex 9, Table 26) to the neighboring Usanga Ranch, in order to allow the farm to carry a higher ratio of milk-producing animals. It is anticipated that the farm would initially be stocked with dairy heifers, probably from the West Lake Heifer Breeding Unit, and possibly with surplus dairy heifers from Kitulo. Particu- lar care would be required in planning this farm, to ensure that it could be rund as a viable financial and economic enterprise. Preliminary studies of irrigation works and a soil survey to estimate fertilizer requirements should be undertaken prior to development which would probably take place at a later stage in implementation of the Project. Planners should also assess alterna- tive development possibilities since the best long term land use for the area is likely to be cropping. At present, however, given the large expanse of unutilized land in the vicinity, the existence of a developed farm, and the proximity of the Mbeya market, establishment of a dairy farm appears to be justified. This would also afford the Government the opportunity to develop a dairy farm on an intensive, irrigated model, and thus to assess the poten- tial for such a farming system on an expanded scale in future. 42. Tanga Dairy Complex. Under the Project, five dairy units would be developed in the Tanga region over a period of five years. The northeastern Region of Tanzania, in which this complex would be developed, is primarily a crop area with sisal and coconuts as the dominant crops. The land on which the proposed farm units would be located belongs to the Tanzania Sisal Cor- poration and livestock has been introduced on part of the area to be developed as part of a diversification scheme. The farms are situated at about 150 meters above sea-level; annual rainfall varies around 800 mm and is bimodal with the "long rains" from March to May and "short" rains in November/December. The water supply on existing beef units comes from dams on the adjoining river. The combined area of the proposed units would be about 5,400 ha. Ongoing experiments with fodder growing indicate that dry matter yields under irriga- tion of sorghum, panicum maximum and maize could be as high as 30 ton/ha of green fodder. TSC is at present operating two dairy units (Kange I and Kilosa), ANNEX 10 Page 12 where staff and milkers are being trained. Considering constraints in the region, these farms have been very successful, and are well-managed. 43. The Complex would comprise five farms, each with a dairy unit of 356 cows; one would be located adjacent to the Kange dairy farm, two would take over the facilities of an existing beef ranch at Azimio, and two would replace a beef ranch currently being developed at Mivumoni. As the dairy units were developed, beef operations would be moved to new areas to the south, which are now totally undeveloped (dominated by lions), but which could be relatively readily developed for beef. 44. The Kange farms and the Azimio units were developed from old sisal plantations and the Mivumoni units are being developed partly by clearing old sisal and partly by clearing heavy bush country. 100 ha on each unit would be irrigated for fodder production through construction of small dams, and the development of improved pasture on parts of the farms would permit an increase in the stocking rate from 4 ha to 1.5 ha/cow. Grazing areas would be fenced and night paddocks established. A central milking operation would be constructed for each unit. It is anticipated that the planting of coconut palms would be continued in order to provide shade for grazing cows and copra for concentrate feeding. The units would be stocked with improved dairy cattle with similar restrictions on upgrading as those at Ngerengere. The closeness of the Azimio and Mivomoni units and also the Kange II unit to one another and to the existing Kange Dairy Farm should permit rationalization and significant economies in machinery use. 45. At full development, an annual production of about 3,500 tons of milk is expected from the five units. The milk would be processed at the Tanga Dairy which is planned under bilateral technical assistance (Annex 6). Milk would be marketed in Tanga, with any surplus shipped to Dar-es-Salaam. The proposed Kange unit is immediately adjacent to the plant site and the other units are located about 20 km away on an asphalt road. Because of the diffi- culties facing dairy development in the Tanga region, notably tsetse and the long dry season, there should be an interim evaluation of development after two years to determine whether the full program proposed here continues to be feasible. 46. Utegi Dairy Farm. An area of about 4,000 ha has been designated for dairy farming at Utegi, 80 km northeast of Musoma in the north Mara region which lies on the east coast of Lake Victoria, close to the Kenya border. Up to the present, NAFCO has had the responsibility for developing the farm. A soil survey undertaken in 1973 indicated that a significant part of the proposed farm is physically suitable for pasture establishment. The soil is clay to loamy with some parts stoney but more than half of the area can be cultivated. About 2,700 ha are under good natural pastures and about 1,200 ha of land along valleys and depressions are under light bush. The natural grasses are themeda and hyparrhenia. Rainfall is similar to the Kenya Highlands with an annual rainfall of 1,200 mm; there are two rainy ANNEX 10 Page 13 seasons, with short rains from September-December and the long rains in March-May. During the driest months of July and August the area is cool and grass remains green. Water for cattle is available throughout the year from a river passing through the area. 47. The proposed dairy farm is located immediately adjacent to the new- ly established Utegi milk powder plant, financed through a Danish bilateral loan (Annex 6). The dairy farm would sell milk to the factory, to supplement milk supplied by local smallholders in the area which has proved to be totally inadequate to permit the plant to operate at full capacity (Annex 6). Prac- tically no facilities exist on the farm, and there is only a small Zebu herd which was purchased recently; there are a few laborers on the farm at present. 48. Under the Project, two units would be established here and at full development 712 cows would be in milk at a time. The estimated annual milk production of 1,400 tons would be sold to the Utegi plant or to the nearby Musoma facility. Development would probably commence in the third Project year. The farm would be stocked largely with Fl heifers from the West Lake Breeding Unit. DAFCO would assume responsibility for developing and managing the new dairy farm. The principal investment items here would be pasture improvement, fencing, water piping, housing for staff and farm buildings, machinery for cultivation, planting and harvesting of fodder crops, silage and hay-making. It is anticipated that ultimately, up to seven units could be developed in the area, since the natural conditions are highly suitable for dairy development, sufficient land is available, and there is likely to be significant unused capacity at the processing plants for some time to come. However, development of large parastatal dairy farms should be accom- panied by an intensive extension effort, since there are numerous small pro- ducers in the area, and their milk production could be significantly increased if needed inputs were provided. The DAFCO dairy farms should be developed keeping this smallholder production in mind, and the farms should provide a nucleus for training and technical support to the maximum extent feasible. 49. Fodder Production. An important aspect of the proposed Project would be the establishment of suitable pastures for dairy cattle. Grassland products - even in a conserved form such as hay or silage - are far more economical than any other feeds, but the natural pastures available in Tanzania must be improved and their management carefully controlled if they are to support a modern dairy herd. The Project would therefore include several inter-related methods for improved fodder production: (a) improvement of natural pastures with Stylosanthes and other legumes; (b) institution of a rotational grazing system; and (c) mechanized harvesting and conservation of fodder. ANNEX 10 Page 14 In addition to these measures, a concentrate feed mixture supplemented with vitamins and minerals would be provided. 50. In order to improve the nutritional status of the natural pastures, legumes such as Stylosanthes and lucerne would be introduced on each farm; the type of legume to be introduced would vary according to the climate in each area. The regular importation of grass and legume seeds would be re- quired, as Tanzania does not as yet have a well developed seed production program. Each farm would serve as a pasture experiment station, and valuable data would be collected with regard to methods of cultivation, seed planting rate, rainfall, temperature, yields of various test plots, feeding value, etc. This data, together with others regarding herd performance, and financial aspects would be collected under the reporting procedures required of each farm by the Project authority. The Project would include provision for a pasture specialist for 3 years to advise on pasture improvement and fodder production practices. 51. In order to ensure the most efficient use of pastures, a form of rotational grazing would be introduced and several paddocks established on each farm. The Project would include provision for paddock fencing; in order to reduce the orginarily high costs of this fencing movable electric fencing would be introduced. It is expected that a system of "strip grazing" could produce increases in pasture productivity of up to 30% over the conventional rotational system. At present, manure is seldom employed as a substitute for fertilizer, although it fs evident that such a practice could result in substantial savings. A cow produces about 10 tons of manure annually, and extensive use would be made of this resource to fertilize the soil on all Project farms. This would result in substantially higher fodder crop yields and reduce expenditures on fertilizer. Equipment for handling of manure would be included in the farm machinery. 52. Fodder conservation would also be developed under the Project. At present, only a small amount of low quality hay is available in Tanzania, and almost no silage at all. During the wet season when green fodder is plentiful, each farm would conserve excess herbage for use in the dry season, thus enabling them to maintain a high level of production throughout the year. Fodder would be conserved in two forms, as hay and silage. The traditional method of fodder conservation has been that of natural drying of grass to make hay, which can then be stored in bulk without risk of spoilage. Grass should be cut for hay-making when the ratio of crude protein to crude fiber is at its optimum. The rate of herbage growth in tropical parts of Tanzania is very rapid; the vegetation flowers and seeds quickly, producing forage of low protein and high fiber content. Thus, the period when plants are highest in nutritive value is very short, and mechanized harvesting would therefore be essential. Unfortunately, the time when grasses should be cut for hay often coincides with heavy rains, which limits the extent to which this method of fodder conservation can be used, and calls for an increased emphasis on production of silage. If silage is properly made and conserved, green food can be preserved with relatively small losses, providing a succulent feed ANNEX 10 Page 15 for stock during the dry season. Furthermore, silage can be made from a wider variety of farm crops than hay; apart from pasture herbage, silage can be made from maize, sorghum and most tropical fodder grasses such as Elephant and Sudan grass; like hay the crop is cut for silage making when the nutrient content is optimal. Hay and silage making equipment would therefore be pro- vided for all parastatal dairy farms. Funds would also be made available for the construction of tranch silos where the silage would be stored; this type of silo, apart from being inexpensive, ensures minimal losses. Provision would be made for the storage of a full year's production of silage fodder; this would help minimize the risk of crop failure during a drought year and the catastrophic drop in milk yields and the losses of animals that such a failure would otherwise entail. 53. It is anticipated that a concentrate mixture would be fed to dairy cattle both just before and during lactation in order to meet the cow's high demand for nutrients during these periods. Under Tanzania's conditions, lactating cows should obtain their requirements for maintenance and for the production of the first 5 liters of milk from grass or other roughage. Pro- duction above this level should then be supplemented with concentrates. With the present shortage of cereal grains both in Tanzania and throughout the world, to use grain in any of the supplemental feed mixtures for dairy cattle would not be justified. These feeds would be derived from locally available by-products such as copra cakes, cotton-seed cake, etc; funds would be made available for machinery to allow milling and mixing on the farms. A "least- cost" ration using local available raw materials would be worked out by the management on each farm. Essential vitamins and minerals would be added; if sufficient supplies are not available the Project should have special per- mission to import these essential ingredients. Milk yields from each cow would be recorded monthly and the correct amount of concentrate weighed for each cow individually and fed during milking. At the beginning of every month the farm management would calculate and set up a balanced ration for each milking cow in the herd according to the feeds available. Regional Ranch Managers 54. Group ranch managers would be assigned as follows: Number of Farms Units 1. Bagamoyo 1 Ngerengere 3 Patels 1 2. Rongai 2 3. Iwambi 1 Kitulo 1 Saleh Hajeh 1 4. Tanga 5 5. Utegi 2 February 14, 1975 ANNEX 11 Page 1 TANZANIA DAIRY DEVELOPMENT PROJECT West Lake Heifer Breeding Unit (Annex 9, Tables 46 to 49) 1. One of the most important constraints to further development of the Tanzanian dairy industry is the shortage of exotic dairy cattle and cross-bred cattle with a potential for high milk yields. Importation of dairy heifers involves high costs, and there are significant risks attached. For the traditional smallholder dairy producers and for ujamaa dairy units in particular, the best policy would be to begin with cross-bred dairy animals, probably F-1s, and to upgrade them progressively as improved management permits. This type of animal should also be used as foundation stock on many of the proposed parastatal dairy farms, particularly where experience with dairy farming is limited. 2. Under the Project, a breeding program of upgrading beef cattle would be undertaken on the Kitengule and Missenyi ranches in the West Lake Region. These ranches, which are operated by NARCO, were developed under the IDA First Livestock Project. The Kitengule ranch is situated between the Mwisa and Kagera rivers west of Bukoba, on the western shore of Lake Victoria. The ranch has 32,000 ha and was stocked with about 20,000 beef cattle in October, 1974. The Missenyi ranch, located near the Kitengule ranch directly on the Uganda border, has about the same area and had about 20,000 cattle, including 2,000 Boran cows and 3,000 Zebu cows. Both ranches are suitable for a heifer breeding and rearing project and a sufficient amount of green grass for rearing good heifers is available throughout the year. The climate of the West Lake region is very favorable for cattle raising; rainfall varies from 800 to 1,500 mm annually with only about 2 months of dry season; grasses are abundant and grow naturally and cattle in this region appeared to be in better condition than in most other areas of Tanzania. While is likely that the long-term land use of the area would be for crops, the Government in- tends in the foreseeable future, to develop this region, which was virtually uninhabited, for livestock production. 3. The breeding unit would be located on parts of the existing ranches, which would continue at approximately the same level of production as in the past, minus 6,000 Zebu-Boran cows, that would be transferred to the breeding unit, and their female progeny. Male progeny would be raised as steers as part of the beef operation. The impact on the Kitengule and Missenyi ranches of this new development would be minimal, and would consist primarily in reducing the number of surplus heifers available for sale. It would, however, alter somewhat the proposed development of adjacent ranches to be developed under the Second IDA Livestock Project (Missenyi II and the Mwisa Ranches), since cross-bred cull cows would no longer be available for stocking new ranches. However, the ranch managers argued that it would be prudent to ANNEX 11 Page 2 stock these farms initially with Tanzanian Zebu animals. An additional factor in assessing the impact of the breeding unit on beef operations is difficulties which have developed in selling animals to Uganda, as was initially planned. Some slowing of development of beef ranches might be a prudent course of action at this time, given potential marketing difficulties. 4. The heifer breeding program would be based on 6,000 Boran-Zebu cows (Annex 9, Table 46). 6,000 cows would be mated each year, using artificial insemination; the semen to be used would be imported frozen semen from elite bulls of Friesian and other dairy breeds. An AI program was initiated in this region but because there was no nitrogen plant to provide cooling for semen storage, the program was suspended. Under the Project, a cooling plant would be provided to insure continuing operation of the AI program. It is assumed that 30% or 1,800 first cross.heifers would be produced annually. The crossbred heifers would, after weaning, be grazed in fenced paddocks and would be fed cottonseed cake as a supplement during the dry period. The heifers would be sold to dairy farms, ujamaa units, or traditional producers for mating at 10 to 24 months of age. Other investments would be for fencing and water points, to permit better grazing control. Six insem- inators would be employed and a set of corrals and crushes, together with a storage shed, would be provided for each inseminator. Matings would be carried out throughout the year and a qualified technician would supervise the program. The program should be flexible and the number of animals pro- duced and the dairy breeds used should be adapted according to demand from purchasers: Sahiwal semen might be used for example, or the unit might eventually produce second cross dairy heifers also. March 25, 1975 ANNEX 12 Page 1 TANZANIA DAIRY DEVELOPMENT PROJECT Foot-and-Mouth Disease Control: Applied Investigational Work Background 1. The expansion of livestock improvement programs, involving the breeding and multiplication of more productive stock, and the interest of many developing countries in exporting live animals and meat, are causing serious attention to be paid to Foot-and-Mouth Disease (FMD) by countries which hitherto have not practiced any significant control. Factors contri- buting to the low priority put on the control of FMD in the past include: (a) the low productivity and relatively high resistance of the indigenous herd to enzootic types of the disease snd consequently the limited eocnomic losses caused by an outbreak; (b) the relatively high cost of vaccine and the limited duration of the immunity which this vaccine conferred; A (c) the absence of an assured markets for meat which require disease free status; and (d) the concentration of the veterinary services on the control and eradication of animal diseases accompanied by high mortality rates such as Rinderpest and Contagious Bovine Pleuropneumonia. Now that the most serious diseases have been controlled and considerable progress has been made in the field control of vector-borne diseases, the Government is devoting more attention to FMD. This is explained in part by the need to protect investments in beef and dairy development, which have been orientated primarily towards increasing the productivity of the indigenous cattle population. The growing domestic demand for meat and milk products and the increasing international market potential have also focussed atten- tion on FMD. Foot-and-Mouth Control in Tanzania 2. The present policy for FMD control consists of vaccinating cattle on stock routes when they cross district boundaries, as well as the vaccina- tion of cattle on parastatal farms and grade cattle on private dairy farms. Future alternative policies are: ANNEX 12 Page 2 (a) the establishment of Disease-Free Zones to the extent that the country's export of beef gains access to high- price "disease free" markets; (b) the expansion of vaccination of large herds and grade cattle to prevent production losses; (c) vaccination to protect improved cattle (Fl) when intro- duced into the village environment, either by treating the villages as large farms or by establishing FMD-free areas in which improved cattle may be introduced. Using available information, a rough cost estimate for a national campaign against FMD would be on the order of Tsh. 300 million over a 15-20 year period. Prior to undertaking such a program, a careful assessment should be made of the possible benefits to be derived from it. 3. Alternative policies for FMD control should be assessed in relation to the above alternatives and their respective cost. Here, however, numerous difficulties arise in estimating accurately potential benefits. One problem is that FMD is only one of many diseases affecting the national cattle herd and in trying to accord FMD control a certain economic benefit one is facing the following questions: (a) what is the uncontrolled incidence of FMD in the national herd in different districts? (b) how great a part of herd losses (adult and calf mortality) may be attributed to FND, as distinct from other diseases? (c) can losses from FMD and hence the benefit of controlling it be measured? (d) what is the impact of management improvements in increasing disease resistance in cattle? 4. The issue of FMD control is particularly important where upgraded animals dre concerned, for resistance to disease, including FMD, is lowered by each step of improvement where grade animals are concerned (as is the case with dairy). Thus it becomes essential that FMD be controlled, whether by vaccination or elimination of the disease on a regional or national basis. The economic benefits of FMD control are much easier to demonstrate where such animals are concerned. Proposed Pilot Disease Free Zone 5. The Government of Tanzania, as part of their Project request, pro- posed to establish a pilot "Disease-Free Zone" in the Mbeya-Iringa area ANNEX 12 Page 3 comprising a six-year program of FMD vaccination at a total cost of Tsh. 17,358,000 (US$2.4 million). The objectives of the program were: (a) to avoid frequent and costly interruptions in livestock marketing and exports; (b) to gain access to high-price markets by attaining "disease free" status for animals and animal products from that area; (c) to achieve a long term increase in cattle productivity through disease control and preparing the ground for importation of exotic breeds of cattle, and for upgrading of the indigenous herd; and- (d) to provide experience for the veterinary services and to increase the confidence of cattle owners in modern prophylactic measures. The proposed program was loaded on the FAO/UNDP 1/ report of 1972. 6. The preparation report refers to the difficulty of evaluating the economic benefits from controlling FMD: "Due to the paucity of information on the incidence of disease and the consequent losses attributable to FMD, either directly or by exacerbation of intercurrent diseases, it is not possible to undertake a detailed cost/benefit appraisal. The most tangible economic benefit appears to be the export potential from an FMD-free area, in the first instance to neighboring African countries, such as Zambia, and it is mainly on this export potential that a pilot vaccination scheme is economically justified ..." 7. While the proposed Pilot Disease Free Zone is technically sound, serious questions remain as to whether it can be justified at present in economic terms. First, the anticipated benefits from exports of meat to countries requiring a disease free zone appear unlikely to materialize, since there were some uncertainties regarding timing of construction of the slaughter- house at Mbeya, supplies of cattle for export, and the necessity of a full disease-free zone for the Zambian market. Second, information on the incidence of FMD in the traditional herd and its impact on productivity was not adequate to evaluate the benefits to be derived from increases in productivity in the traditional herd. On the contrary, it is apparent that among farmers and livestock officers the impact of FMD is viewed as minor compared with other 1/ Report to the Government of Tanzania on the Control of Foot-and-Mouth Disease and the Establishment of a Disease-Free Zone; FAO, Rome, 1972. ANNEX 12 Page 4 diseases. For these reasons, the establishment of a disease-free zone cannot be justified at this time. The mission has proposed that the Government undertake a pilot program of applied investigational work which should assist them in evaluating the importance of FMD in economic terms, and in deciding on the most effective control program. The Pilot Program 8. The objective of the program would be to analyze the economic benefit to Tanzania and to an individual herd of cattle of animal disease control with special emphasis on FMD. The program should focus on investi- gating the following questions: (a) what is the incidence of Foot-and-Mouth Disease in the various regions of the country? (b) what share of mortality and production losses in the indigenous herd should be attributed to FMD? (c) what are the requirements and costs of conducting alter- native FMD control programs, such as: - individual herd and village control of FMD; - establishment of FMD free zones; and - a national eradication program. (d) what are the economic benefits which could be expected from the above programs? The pilot program should also yield useful information on the following: the share in mortality and production losses of the cattle diseases normally occurring in the indigenous herd and the cost of their control; the feasi- bility of establishing FMD free-zones, the infrastructure and organization needed for their management; and ways and means of improving the efficiency of the livestock field services. 9. The program would be designed by a veterinary economist working under the Director of Livestock. It should include a general survey of existing data on herd coefficients and on the incidence of FMD. In addition, it would involve a limited program of field experimental work with tradi- tional herds to determine the impact of FMD on the productivity of individual herds (weight losses, mortality, drop in milk production, abortions, calf mortality, etc.). Assurances would be sought at negotiations that the pro- posed program would be submitted to IDA for comment. February 7, 1975 TANZANIA DAIRY DEVELOIMENT PROJECT SUMMARY OF ANNUAL PROJECT COSTS - PROJECT COMPONENTS (Tsh '000) Total Project Year 1 Year 2 Year 3 Year 4 Year 5 Period INVESTMENT ITEMS Project Dairy Farms Bagamaeo - 1,726 2 X75.8 - - 1,902.0 Iwambi - 1,883.5 - 160.0 - 2,043.5 Kitulo 1,457.9 197.9 - - - 1,655.8 Ngerengere 2,515.7 277.1 - - - 2,792.8 Patel - - 2,94o.6 - - 2,940.6 Rongai 2,822.0 913.2 - - - 3,735.2 Saleh Hajeh - - 2,327.9 952.8 - 3,280.7 Tanga 1,577.6 2,737.3 2,462.1 3,379.4 960.o 11,116.4 Utegi - - 2,007.4 2,888.6 171.2 5,067.2 Sub-Total 7,735.2 9,913. 7,380.8 1,131.2 34,534.2 Uiamaa Dairy Development - 3,235.0 - 3,235.0 West Lake Heifer Breeding Unit 8,3o6.0 2,04o.o - - - 10,346.0 Milk Collection and Processing CDIL 3,405.6 - - - - 3,405.6 Northern Dairies Ltd. 165.0 - - - - 165.0 Sub-Total 3,570.6 - - - -3,7. Technical Services Animal Health - Applied Investigational Work 430.0 430.0 430.0 430.0 430.0 2.150.0 Technical Assistance 3,045.0 2,835.0 2,705.0 1,925.0 1,505.0 12.6l5.0 Training and Fellowships, Monitoring & Evaluation 170.0 170.0 170.0 170.0 170.0 850.0 Project Management - Technical Support 1 432 4 852.2 832.2 483.6 373.8 3,974.2 Sub-Total 24,27.2 4,137.2 3,0019 29 Total Investment dost (Excluding Contingencies) 25,327.2 14,062.4 17,286.0 10,389.4 3,610.0 70,675.0 Physical Contingencies (10%) 2,532.7 1,406.2 1,728.6 1,038.9 361.0 7,067.5 Price Escalation (15% p.a.)lJ 4 179.0 4 988 6 9,904.2 8 559.9 ol6.1 31,647.8 Contingencies 6,711.7 11,632.8 9,377.1 38,715.3 TOTAL PROJECT COST 32,038. 20,457.2 19,988.2 7Z2871 193903 1/ 15% Compounded annually e1 March 26, 1975 TANZANIA DAIRY DEVELOPMENT PROJECT SUMMARY OF ANNUAL PROJECT COSTS - CATEGORY OF EXPENDITURE (Tsh'000) Total Year 1 Year 2 Year 3 Year 4 Year 5 Years 1-5 INVESTENT ITEM Governmen D%ryFarms Buildings and Installations 2,340.5 2,037.5 3,089.8 1,938.7 - 9,406.5 Machinery and Equipment 3,298.4 3,515.1 3,399.9 1,517.1 - 11,730.5 Livestock Purchase - 900.0 1,282.0 3,175.0 1,131.2 6,488.2 Working Capital 2 734.3 1 282 6 21142.1 750.0 - 09.0 Sub-Total o7,735.2 o T,3 0.2 UjSamaa Dairy Development Building and Installations - - 785.0 - - 785.0 Livestock Purchase - - 2,080.0 - - 2,080.0 Working Capital - - 370.0 - - 370.0 Sub-Total 3,235.0 3,235.0 West Lake Heifer Breeding Unit Building and Installations 1,40.0 - - - - 1,440.0 Machinery and Equipment 124.2 - - - - 124.2 Livestock Purchase 6,050.0 2,010.0 - - - 8,090.0 Working Capital 691.8 - - - - 691.8 Sub-Total T 0- - -10,305070 Milk Collection and Processing Building and Installations 1,810.6 - - - - 1,810.6 Vehicles, Machinery and Equipment 1,7600 - - - - 17600 Sub-Total 6,- - - - _ Technical Services Vehicles, Equipment, Mis- cellaneous 1,187.4 607.2 587.2 308.6 268.8 2,959.2 Technical assistance, Studies 3 890.0 3 680.0 3 550.0 2 700.0 2 210 0 16 030.0 Sub-Total f Ki3.27.2 3 00 . T 1,192 25,*2.2 - '06*. 17,28. ~ T 3,610.0 l75.o Total Cost(Excluding Contingencies) 25272 30 CONTINGENCIES 6,711.7 6,394.8 11,632.8 9,598.8 4,.77.1 38,715.3 TOTAL PROJECT COST 32,038.9 7&987.1 February 12, 1975 oil ANNEX 14 TANZANIA DAIR DEVEIDPMENT PROJET Estimated Schedule of Disbursements (us$ '000) IDA Fiscal Year Disbursement and Quarter End In Quarter Mmulative 1975/76 September . . December - - March 500 500 June 500 1,000 September 900 1,900 December 900 2,800 March 900 3,700 June 1,000 4,700 1977/78 September 800 5,500 December 800 6,300 March 800 7,100 June 800 7,900 1978/79 September 300 8,200 December 300 8,500 March 300 8,800 June 300 9,100 1979/80 September 300 9,00 December 300 9,700 March 200 9,900 June 100 10,000 Estinted date of signing: June 30, 1975 Estimated date of Effectiveness: September 30, 1975 February 13, 1975 ANNEX 15 Page 1 TANZANIA DAIRY DEVELOPMENT PROJECT Project Reporting Procedures 1. The following are guidelines for the recording and reporting pro- cedures to be set up for the various managerial units responsible for imple- menting the Project. Specific details should be discussed and agreed during negotiations. Coordination Committee 2. The Coordination Committee established under the Project, which would be expected to meet at least quarterly, would be responsible for the preparation of six-monthly Project Progress reports. These reports would cover in detail each of the separate components of the Project and would summarize the various component reports submitted to it. In particular, it would concentrate upon those aspects of Project implementation on which such a committee is expected to exert an influence and stimulus. These aspects would include: Project disbursement and Reimbursement from IDA, including identification of any bottlenecks; problems relating to recruitment of managers; preparation of tender documents. It is expected that this committee would, as a full committee, meet with the IDA supervision team during each of the supervision missions. Dairy Farms 3. Each dairy farm would be treated as a profit center and would main- tain the following bookkeeping records: 1. Cash Book 2. Wages Book 3. Asset Register 4. Purchases/Sales Book 5. Receivables and Payables Ledger Each month, trial balances would be prepared and income statements would be prepared each quarter and every six months. A complete set of annual accounts would also be prepared. 4. Inter alia the following management records would also be maintained: ANNEX 15 Page 2 1. Herd Book - showing breeding and calving records 2. Milk Production records - daily production/cow 3. Fodder production records - silage making, yields of green fodder, harvesting, acreage 4. Feeding records - supplement/roughage 5. Machinery usage and maintenance records 6. Pasture records - acreage, grasses, method of planting, rotation, etc. Each month the farm manager should prepare a report showing at a minimum the following: 1. Herd Analysis 2. Milk production 3. Fodder production 4. Machinery maintenance 5. Feeding 6. Trial Balance 7. Progress in building and construction These reports would be submitted to the regional manager together with relevant explanatory notes. 5. Each quarter the regional manager together with the farm manager would submit a quarterly report to DAFCO to be forwarded to the technical services division of LIDA. Each quarterly report would summarize the monthly reports and would concentrate on those factors affecting implementation and would analyze variances between the original farm management plan and actual progress in implementation. On an annual basis the regional manager and the farm manager would revise the farm management plan and budget for the ensuing year and would present the preceding year's accounts together with full de- tails and comments following the categories set forth above (para 4) for the monthly reports. West Lake Heifer Breeding Unit 6. Accounting records and management reports would be prepared on the same lines as for the dairy farms. Management records would inter alia include the following: 1. Herd Book 2. Breeding analysis - Semen purchased, delivery dates, etc. ANNEX 15 Page 3 Milk Processing 7. TDL through LIDA would be the reporting channel for this component of the Project and would secure required information from CDIL and Northern Dairies. The existing monthly reports issued by the TDL subsidiary companies are good and no extra reporting is required except to the extent that the results of new equipment, input related to capacity, running time and produc- tion should be identified on a quarterly basis. Tendering timetables and procurement progress would also be reported. LIDA 8. LIDA, as the parent organization for the institutions named above, would be expected, through its technical and financial divisions, to perform an audit and evaluation service as an ongoing function, and to review future plans and particular problems that might arise on a regular but unstructured basis. LIDA would maintain records showing the time lapse in the preparation of farm management plans and processing investment, from initiation of prepara- tion through submission to TRDB to approval by TRDB and implementation. Full reports would be prepared for the Coordination Committee on matters relating to tenders and any awards of contracts and technical assistance. Ujamaa Dairy Units 9. TRDB would be the reporting channel for this component of the Pro- ject; it would also report on the time lapse situation of the parastatal dairy farm management plans and draw down of funds. With regard to the Ujamaa component, TRDB would report on the recruitment of internationally recruited technical assistants and would submit to the Coordinating Committee for its approval the agreed program of operations for the team responsible for future Project preparation. This program would include all the elements of required preparatory work together with expected dates of completion. TRDB would re- port to the Committee on the progress of the program on a quarterly basis. Animal Health - Applied Investigational Work 10. The Livestock Development Division of the Ministry of Agriculture would be the reporting channel for this component of the Project. Reports to the Coordinating Committee would be on a quarterly basis and would be prepared by the Livestock Director on the basis of reports submitted by the work team. Reports would include, initially, terms of reference for a veterinary economist and details of animal health program, and subsequently reports on the implementation of the program and conclusions derived from it. March 25, 1975 ANNEX 16 Page 1 TANZANIA DAIRY DEVELOPMENT PROJECT Tanzania Sisal Corporation Background 1. The Tanzania Sisal Corporation (TSC) was established on October 27, 1967 under the Tanzania Sisal Corporation (Establishment and Vesting of In- terests) Act 1967 for the purpose of conducting the business of sisal growers, processors, exporters, and manufacturers of sisal products and for carrying on any business or activity conducive or incidental thereto. The Corporation may, among other things, acquire by agreement and hold interests in any com- pany or firm carrying on business concerned directly or indirectly with sisal, and manage the affairs of and continue the business of any firm, the interests of which are vested in or acquired by the Corporation under the provision of this Act whether or not that business relates,to sisal. 2. As from the effective date of the TSC Act, i.e. October 27, 1967, the Corporation took over the individual businesses in Tanzania of 39 firms. As of January 1, 1968 the net book values of the assets taken over according to the previous proprietor's accounts, stood at about Tsh. 139 million. The United Republic of Tanzania has stated its intention to pay full and fair compensation in respect of the net value of the assets taken over under the Act. The compensation negotiations between the Government and the estates taken over were pending finalization at the time of the appraisal mission. Organization and Management 3. The Management of the Corporation invested in a Board of Directors, including a Chairman who is appointed by the President and eight other direc- tors appointed by the Minister of Agriculture. The General Manager, who is appointed by the Board with the approval of the Minister, manages the day-to- day business of the Corporation through its four Departments: Production, Administration, Engineering and Accounts (Chart). Besides the Head Office at Tanga, the Corporation has a branch office at Morogoro. 4. The Board of Directors of the Corporation decided on March 9, 1968 to diversify its activities from sisal estates in view of the continued decline of the sisal prices in the world market, in order to maintain the economic viability of the estates. The diversification envisaged covered cattle ranching, dairying, cultivation of rice, sun-flowers, soyabeans, papaya, coconuts, sorghum and fodder crops. ANNEX 16 Page 2 Capital Structure 5. The funds and resources of the Corporation consist of (a) such sums as may be provided for its business by Parliament by way of grant or by loan, (b) any sum borrowed by the Corporation with the approval of the Agriculture Minister and (c) any sum or property which may in any manner become payable to or vested in the Corporation pursuant to the TSC Act or as the result of its functions. Up to December 31, 1972, the Corporation had received from the Government grants aggregating TSh 938,000 and loans amounting to Tsh 16,240,000. Other resources of the Corporation included debenture stocks floated by it during 1968 for TSh 9,346,000, besides the net value of the assets taken over under the Act (Table 1). Financial Positions 6. Since its inception in 1967, the Corporation made losses until 1971 when its accumulated losses were TSh. 15.9 million. The main reason for the losses was the sharp decline in the world prices of sisal. However, due to gradual improvement in the world prices, the Corporation could show a net profit of TSh 688,000 during 1972 (Table 2). TSC's provisional accounts for the year ended December 31, 1973 showed a net profit of over TSh 57 million which is due to a four-fold increase in the sisal prices, which stood at TSh. 2,195 per ton as against TSh. 530 per ton in 1972. The production of sisal on the Corporation's estates remained constant at 58,000 tons during the two years. In view of these profits, TSC's accumulated losses should be completely wiped out. TANZANIA DAIRY DEVELOPMENT PROJECT Tanzania Sisal Corporation Comparative Balance Sheets as at 31 December 1968 - 1972 (Tsh '000) Liabilities 1968 1969 1970 1971 1972 Assets 1968 1969 1970 1971 1972 Assets acquired under the Tanzania Fixed Assets - at net Sisal Corporation (Establishment and book values at date Vesting of Interests) Act 1967 and of nationalization subsequent amending Act and orders. plus additional cost, less disposals and depreciation. 91,570 88,413 85,553 82,616 79,865 Part I - Firms whose assets and liabilities were acquired - Subsidiary Companies 42,370 45,958 47,596 45,493 38,311 net book values in previous Investments 775 901 928 824 5,857 proprietor's accounts. 97,486 97,486 97,486 97,486 97,486 Current Accounts - Part II - a) Companies whose entire Part I Firms share capital was acquired - nominal value of issued Current Assets capital. 35,114 35,114 35,114 35,114 35,114 Stores, stocks and b) Companies in which 60% work in progress 6,422 7,696 8,648 10,741 13,054 of the capital was acquired - sundry debtors, nominal value of 60% of issued deposits and pre- 4,429 6,161 4,896 6,199 7,912 capital. 6,563 4,763 4,763 4,763 4,763 payments. General Reserve 139 277 369 528 446 631 631 276 276 276 Funds held by law Secured Loans 9,346 8,346 7,346 6,346 5,346 Debenture Corp. Funds held by Arbuthenot Latham 1,518 1,518 1,518 1,518 1,518 Unsecured Loans Co. Ltd. 2,222 400 248 292 936 Ministry of Agriculture and Cooperatives 5,000 9,500 13,500 16,240 16,240 Cash at Bank and 15,222 16,406 15,586 19,026 23,696 in hand Current Liabilities & Provisions 3,569 4,363 4,290 4,148 4,112 Profit and loss A/C Losses to date 6,836 7,404 12,438 15,900 15,212 157,217 159,849 162,868 164,625 163,707 157,217 159,849 162,868 164,625 163,707 The Accounts have not been finalized by the Corporation's Auditors, M/S E.B. Parry, pending finalization of compensation negotiations between Govern- ment and the Estates taken over since nationalization in 1967. kebruary 5, 1975 *! ANNEX 16 TANZANIA DAIRY DEVELOPMEWT PROJECT Tanzania Sisal Corporation 1/ Comparative Profit and Loss Accounts for the Years ended 31 December, 1968 - 1972- (Tsh 1000) Expenditures 196 1969 1970 1971 1972 Trading Losses 4,127 - 618 66 - Head Office Expenses 1,232 1,564 1,616 1,284 1,810 Cattle Expenditure 322 757 1,111 526 483 Other Expenditure 333 715 478 558 939 Other Crops Ependiture - 119 212 185 251 Tobacco Project Expenditure - - 90 273 209 Provision for Audit Fees 120 80 100 100 125 Registration Exp. & Registrar's fees 21 34 25 28 30 Debenture Stock & Other Interest & Finance Exp. 898 586 586 549 443 Bad Debts written off - - 449 1,2322/ - Net Profit for the year - - - - 668 Total 7,051 3,855 5,286 4,801 5,530 Income Trading Profits - 1,550 - kk1 4,979 Sundry Revenue 130 1,702 54 78 8k Investment Income - - 8 - - Interest Income 53 8 189 229 121 Provisions written back 32 18 - 1 - Development Grants Received - - - 592 346 Loss for the year 6,836 569 5,035 3,460 Total 7,051 3,855 5,286 4,802 5,530 1/ The accounts have not been finalized by the Corporation's Auditors, M/S E.B. Parry, pending finalization of compensation negotiations between the Government and the estates taken over since nationalization in 1967. 2/ Includes provision for deficit on Estate shop operations and loss on disolution of Mdaula Estate. April 21, 1975 ANNEX 16 Chart TAN ANIA DAIRY DEVELO HENT PROJECT Tanzania Sisa Corporation Organizat on Chart Board of D rectors Chair an General M nager Ipternal Audit DeDartment Asaist-t Gtn A! Manager Accounts Department Engineering Production Administrative_Derrtment DepartmeptDeat.n - Production Manager o ion Ser3 Chief Tcountant (Sisal) Shipping Accountant I Accontant I Accountant III Agriculture Senior Econolist I Economs; II Livestock Assistant Chief Education E*tablistmnt Public Manager Officer Economist (Production)' (Diversifi ation) (Research and Development Secretary Welfare Officer Offizer Relations Feasibility Officer Officer Officer Studies) Chief Eng_ __near Senior Engineer Training Engineer Engineer Engineer Engineer Engineer (tractors (Construction) (Prodution (Electrical) (Stires-Department) & Vehicles) machinery February 5, 175 DALRY DEVE-PŒT PRojEC AN l 7 Fianil Rate of Retur (T. '000) -B - -. - . - . . . ................... - - - - - -.. . . - ... - .. - - - - - - - - - - - - - - - - - - - - - -- - - - - - -- - - year- - -- - - - - - - - - - ..- - - - - - .. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - COWP.NENT Dev2 nt 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 0 21 22 23 24 15 Bagam oo aiy arm1 1ale9 - 375.1 394 3 342.5 768.5 870.9 975.4 1042.9 1110.0 11..1 1100.4 1100,4 1100.4 900.4 1100.4 1100.4 1100.4 1100.4 1100,4 1100.4 1100.4 1100.4 1100.4 1100.4 1100.4 1100.4 0nveMtment 0osts - 1275.3 95.4:, - - - - 4 4 . 5 5 4 4 . 5 Operating c.ot. - 452 9 460.5 511.8 532.2 534.2 538.2 542.3 546.3 546.3 546.3 541.3 546.3 546.3 546.3 541.6. 3 5.3 546.1 546.3 546.3 546.5 - 546.3 546.3 546.5 546.3 l- - - - - 50.D 7.0 6.0 170.0 59 - 359.0 9.0 500 - 170.0 278.0 5 0 - - - 401.0 ' 79.0 - - - Incremental F iia Balance 0.0 (1351.1 162.0) 3.7 236.3 286.7 159.2 491.6 394.1 514.1 564.1 205.1 555.1 514.1 564.1 394.1 286.1 505.1 564.1 514 I 344 1 1551 385.1 564.1 514.1 858.5 1 FnnalRat of Ret.r 17,8 s 12111 148- 14". 4124 17. Day Fa- . 294.8 326.1 431.4 760.4 933.6 1147.4 1425.1 2492.1 1484.1 1484.1 1424 1 1484.1 1484.1 1484.1 1184.1 1484.1 1484.1 1494.1 1484.1 1464.5 1484.1 1484.1 1484.1 1484.1 1484 1 Investment 12222 - 1451.2 - 10.0 - - - - operating C2t - 431.7 436.0 451.0 487.4 508.1 530.8 539.5 552.0 552.1 550.1 2.1 552.1 510.1 52.1 5 1 550.0 550.1 552.1 552. 552.1 55.1 552.1 552.1 552.1 550.1 c n.1 a10 alanceA 0.0 15M.7 (1S.9) (173,6) 2 0 06 W5.6 9 82.0 932.0 551.5 92 5.2 932.0 76. 8 932 932 91 9;2 932.0 , K_tlo Dairy Far- Sales - 1156.7 1352.1 1433.6 532.1 1,604.1 1675.4 1675.4 1675.4 1675.4 1675.4 1675.4 1675.4 1675.4 1675.4 1675.4 1675.4 1675.4 1675.4 1675.4 1675 4 1675 4 16715.4 1675.4 1675.4 1675 4 1 - 9. 647.7 673.4 681.9 632.5 69.o 707.6 707.6 707.6 7!7.6 .6 777.6 707.6 707.6 707.6 707.6 707.6 707.6 707.6 737.6 7777.6 77.4. 707.6 707.6 lopIol 571201111- - - - - - 202.5 2. .2125 355 1 72. 202.5 00.5 --- 43 25 1 F3n0 a1129lanc2 >100% .0 (30L2) 507.2 760.2 851 913.6 967.8 885.3 -7 8 2.3 10.3 2.0 8 861.6 3222 765.3 21 967.8 947.8 967.8 '3 !.8 907.8 1019.6._ Finanial Rate of Retur Nrlo r - 517.8 957.9 1760.5 1903.8 1875.9 1831.0 1857.5 20.42.1 243.8 2243.0 043.0 0243.8 2247.8 2243.8 2243.8 2243.8 2243. 22463.6 223.8 2247.8 243.8 2243.6 2213.8 2243.8 7213.8 -nvestment Co2ts -- 1.23.7 277.1 - - • - - - 0perating 02210 - 692.0 726.0 766.9 762.8 759.4 766,4 774.3 783.4 804.1 804.1 804.1 8-4.1, 904.1 804.1 804.1 90404. 804.1 604,0 804.1 804.1 804.0 904.1 804.1 804.1 804.1 0os13 2010115 -. . 1 M 100.0 l o9.0 200.5 1000 - 352.5 28.0 100.0 - 2W8.5 253.0 118.0 - - - - 452. 5 2698 l . ' 01. 11 a a1 01l 0.0 (1997.9) (45.2) 993.6 10L.0 163 . 10.65M 1050.2 139.7 14,9.7 107 0 133lz 7 L4-7 1231' 1186.7 132L7 1639.7 1439.7 1439.7 92.7 472. 1 1459.7 1439.7 74.n2n11a1 6a1e 21 601212 38.2 1ales - 502.5 612.3 784.0 959.3 1077.6 1188.5 1280.2 1301 2 1287.0 1287.0 2^. . 1287.0 L287.0 1287.0 1287.0 1287.0 1287.7 1287.7 1?7.7 1287.0 4287.0 1287.0 007.0 1287.0 2202 -- 0343ll.7 - - . - _7 _7_7- te - 59 615.1 633.7 652.5 668.0 675.4 681.0 681.0 668. 81.0 L8- 681.0 603.0 681.2 600. 465.0 68L0 681.0 68L.0 68L 61.0 f68.0 6eL- 68.0 68L I5 0I l 1-... 51.0 - - .0 - 60.5 - 50.0 - - 760.3 50.0 - - - 656.5 - - 12121221 2 al 1a1a2 . (2438.1) (2.6) 150.3 306.8 409.6 450.1 599.0 690.8 556.0 606.0 (<2) 606.0 556.0 606. 606.0 245.0 556.0 606.0 606.0 606.0 (50.5) 606.0 606.0 606.4 i236.0 3f Financial1Rate of1Return 14,0i 21110 rFr1803.5 2129.5 2655.3 3097.4 3523.1 4229.6 4757.0 479.14 4826.0 6026.0 486o.o 4826.0 4826.0 4826.0 4826.0 48,6.0 4826.0 4826.C 4826.0 4826.1 4826.0 4826.0 4826.0 4826.0 4626.0 2.estment2c5 . 1626.4 93.2 - - - - - - 0perat2ng 02000 - 1195.6 1222.1 1276.9 1366.9 1452.4 0512.0 1543.6 135.5 1543.5 1543.5 1543.5 15435.5 543.3 1543 15.5 1543.5 1543.5 1543.5 1543 5 1543,5 1543.5 1543.5 1543.5 1543.5 1543.5 1pital Replacement - - - 100.0 637.0 - 42.0 00.0 . 895.5 - 100.0 - 420.0 637.0 100.0 - - - 995.5 420.0 - Incremental1Financial1Balanc 0.0 (1018.5) (13.8) 1378.4 1730.5 1970.7 2080.6 3213.4 2834.9 3182.5 3282.5 0307.0 3282.5 3182.5 3282.5 2862.5 2645.5 3480.5 3282.j 382.5 3282.1 27.0 2862.5 3262,5 3282.5 520.0, Financal2 2010 2f0R0tur2 89.0% 2a41 D - - 676.6 896.2 1062.3 1169.5 1109.0 1184.0 1 159.0 13M.0 1334.0 1334.0 1334.0 1334.0 134.0 014.0 1334.0 1334.0 1334 .0 134.0 1334.0 1334.0 1334.0 1334.0 1334.0 1334.0 0 11.0 757. 768.8 707.8 782.9 639.3 68. 697.3 693.3 693-3 693.3. 3 6 6933 693.3 693.7 69 .3 693.3 693.3 693.3 693.3 693.3 693.3 693.3 693.3 opoo 2211001 27. 768-.8 017.8 7855.3 6- 1648 69056 .3 503.3 642 48233.3.-- 3. 1 en1 712211 8209112 2.0 (2327.9' (90k.4) 139.2 293.5 341.7 (29.4) 504.7 376.77 5 64 556.7 056.2 190,7 640 644.7 640.7 11.7 640.7 64.7 64,7 15?o.o / 9120122104 00120 2f5R0turn 10. 3% T y1 l- 699,3 1210.4 1434.5 2548.3 30.8 361.8 4596.9 5073.5 586.0 58l6.o 5816.o 5816.0 5816.0 5906.0 5816.0 5816.o 5816.0 816.o 586..0 5816.0 581.0 5816.0 1816.0 5816.0 05nv056 Ot -t1226.7 2. . 8.0 869 0 2005 2012.2 2095.7 2123.3 2209.1 2289.2 29.2 219.2 228 229. 2 228.2 2260.0 789.2 0244.2 2269.2 2289.2 0700.0 2289.2 22 189. 0 t.11 517001 1 B.l- ( .) O-D 50 316.5 34.1 404.0 314 0 234.0 519.0 495.0 4663 473.0 134.0 505.5 508.7 396.0 326.5 50.0 563,0 701.0 532.5 539,0 539.0 r.0 na81 11 al25011 2Balance1 (l577.6) (244.8) (2043.7) (3063.9) (603.2) 880.1 1161.6 2029 4 2350.4 3292.8 R007.8 3031.0 3360.3 3653.8 3392.8 3021.3 3008.. 3430.6 3200.3 3476.8 2963.8 2825. 1994.7 7960,9 4200.02 2 ' Financial Rate of0Return 16,5% eDrFm - 491.3 1080.4 1476.8 1719.9 1758.9 1892.4 2026.2 2292.9 2292.9 2292.9 2292.9 2292.9 2292.9 2292.9 2292.9 2292.0 0042.9 2292.9 2292.9 2292.9 2292.9 2292.9 25.9 2292.9 011191.1 los 349,2 2008. 702 1512 . - -. . 99010.18002010 65.0 50. 134.2 833.Q 141. 41,0 44. 1 .0 0 Ioo 943 840 .. 84o 644.0 8114. 81.o 964.0 e1. 4. 40 0 4.0 04,o 06. 841., 4 221012a c (.20.4) (314.8) (60) 472. 779 534 1051.4 07. 151.9 14519 81Q.4 14549 9 1351.9 4 117. 10863 1355.9 14.9 1450.9 718.9 l'-932 1451.9 045.9 3000-04 FI1 a Ra- f Rturn 04.93 U5t10a1 00011 Far2 - 192301 sal3 - 19.0 21.4 29.6 32.4 34.8 34.8 35.8 35.8 35.8 35.8 35.8 35.8 35.8 35.8 35.B 75.8 35.0 35.8 35.0 35.8 35.8 35.8 35.8 Investment 412120 - 57.3 - - - - - . - - . - - -- Operatin t1. 18.0% - 7.4 7.6 8.0 8.2 9 2 9.3 9.. 2 3 9,3 8.3 9.3 0-3 .3 5.3 8.3 8.3 8.7 0.3 D 3 8.3 0.3 8.3 9 3 8.3 0.3 02510002201 0Fin 1ca Balane - (64.7) 10.4 11.0 93.2 21.4 1 24.4 2.5 263 j1 3 213 7.5 97. 2 27.5 77.5 5 _.5 7. 5 27.7.5 .5 07.5 7..5 5.1/ Finacia R-t of Retur 601502 81502028 and Rearing1 1ales - - 5516.2 5516,2 5516.2 5516.2 5516.2 556.2 556.2 5516.2 5526.2 5516.2 s516.2 5516,0 5516.2 5544.0 - 5946.2 5516.2 5516.2 5516.2 5516.2 56.o 5516.2 516.2 Invstentcots11714:.2 204.0 D - - - - - ----- 070100159 0ost - 69008 691.8 2731.8 273L8 273L8 273L8 2731.8 2731.8 2731.8 07318 2730.8 073. 2738 273L8 0701.8 2731.8 273.8 2734.8 2731.8 731.8 273.b 273.8 2731.8 27318 27 8 Capital R07001em0n • - - - 90.0 - 9 90.0 -~ - 90.7 - - 90.0 - - - 97,0 - '- 90.0 I mt.l Fin.i1l 21]anc 0.0 (8306 0) 2784.4 2786.4 2694.4 2783.4 R784.4 2784.4 2694.4 2784.4 2784.4 2764.4 2694.4 2784.4 2784.4 2784.4 26¯94.4 2784.4 ?784 2694. 604.4 2781 .4 4.4 2784.4 2694.4 40000.0 1/ Fin cil Ra20 of Return 33.36 1 In1cdes Incremental -ad Value April 16, 1975 TANZANIA DAIRY DEVELOPMENT PROJECT Government Cash Flow from the Project (Tah millions) Project Year- 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 26 25-50 Sources IDA Credit 17.0 8.0 11.5 7.0 3.0 - - - - - - - - - - - - - - - - - - - - Repayment TRDB Loan - - - - - 1.9 2.7 3.8 6.5 4.7 4.7 4.7 4.7 4.7 4.7 4.7 6.7 4.7 4.7 4.7 28.8 2.0 .9 .7 .7 Tax.s & Duties .6 .6 .3 .3 .3 .3 .3 .6 .3 .3 .5 .3 .6 .3 .3 .3 .3 .4 .3 .3 .5 .6 .4 .4 io.4 Total Sources 17.6 8.4 11.8 7.3 3.3 2.2 3.0 4.2 4.8 5.0 5.2 5.0 5.1 5.0 5.0 5.0 5.0 5.1 5.0 5.0 3.3 2.6 1.3 1.1 11.1 Uses Ink Credit - Repayment .1 .2 .3 .3 .3 .3 .3 .3 .3 .3 .6 .6 .6 .6 .4 .6 .6 .6 .4 .4 1.2 1.2 1.2 1.2 37.7 TRDB -Loan 17.7 7.0 10.5 6.5 1.5 .1 - - - - - - - - - - - - - - - - -Grant .7 .6 .5 . . -- - - - - - - - - - - - - - - - - Government technical services .6 .6 .6 .6 .6 - - - - - - - - - - - - - - - - LIDA-Grant (technical services 3.5 2.8 2.8 2.0 1.5 - - - - - - - - - - - - - - . - . Total Uses 22.6 11.2 16.7 9.6 6.1 .4 .3 .3 .3 .3 .7 .7 .7 .7 .7 .7 .7 .7 .7 .7 1.6 1.6 1.4 1.6 39.9 Annual Cash Surplus/Deficit (5.2) (2.8) (2.9) (2-3) (.8) 1.8 2.7 3.9 6.5 4.7 6.5 4.3 4.6 6.3 4.3 6.3 4.3 6.4 4.3 4.3 1.9 1.0 (.1) (.3) (28.8) Cumulative Cash Surplus/Deficit (5.2) (8.0) (10.9) (13.2) (16.0) (12.2) (9.5) (.5.6) (1.1) 3.6 8.1 12.4 16.8 21.1 25.4 29.7 36.0 38.6 42.7 47.0 48.9 49.9 69.8 49.5 20.7 1/ Cash flow does not show benefits of transfers which could be made from parsetatal corporations surpluses generated as a result of the Project. May 22, 1975 ANNEX 19 Page 1 TANZANIA DAIRY DEVELOPMENT PROJECT Economic Rate of Return 1. The economic rate of return was calculated on the basis of data presented in Annex 9, which is summarized in Table 1. Key assumptions and adjustments made were: (a) project life is 25 years; (b) all project operating and investment costs were included in the rate of return calculation, with the following exceptions: (i) the applied investigational work program in animal health, training, monitoring and evaluation, and part of technical assistance costs, which would be directed to preparation of future projects; and (ii) operating costs for milk collection and processing; neither costs nor benefits from increased milk sales resulting solely from improvement of collection and processing services were included in the analysis; (c) foreign exchange costs and benefits (import savings) were valued at the rate of Tsh 10 = US$1.00 to reflect the scarcity value of foreign exchange. (d) milk production was valued at prices paid to the producer (Tsh. 1.25 proposed national price) which were assumed to be comparable to international prices for equivalent milk powder and butter oil; these prices were decreased by 1% per annum to 1980 to reflect anticipated changes in international prices through 1980. Cattle produced were valued at prevailing market rates, which reflect their fair market value in relation to neighboring countries; (e) the shadow rate for unskilled labor on government farms was assumed to equal 50% of the monetary wage, which is approximately equivalent to the value of subsistence production which might be foregone; all other labor was valued at prevailing wage rates, which reflect the economic cost of labor; ANNEX 19 Page 2 (f) with the exception of milk prices (d) above, the prices of investment and operating cost items and outputs, in real terms, would remain at March, 1975 price levels. 2. Based on these assumptions, the rate of return was calculated to be 22%. The rate of return was calculated also with foreign exchange costs and benefits valued at Tsh 7.14 = US$1.00, which is the prevailing exchange rate; the rate of return using this assumption would be 20.%. The rate of return would be 21% if shadow prices were not employed for labor. 3. The sensitivity of these rates of return was tested under several unfavorable assumptions. The results of this analysis are presented in Table 2. February 13, 1975 DAM DE -LIM P=nECT - 6193A10E6219 - -------------------------------------------------------- - - ------------------------- ------------- - ---I -- - ----------- -------- ------------- PoetYas-------------------------- ------------------ -------------------------------------------------------------- -------- ---------------- 1 2 3 4 5 6 7 6 9 60 61 12 05 4 65 16 17 18 19 20 21 22 23 24 .5 1. 21l2 2,608.6 ,659.0 6,493.7 9,104.5 12,2594 13,965.3 15166.06 16,293. 17,22.6 18,689.1 18,436.8 2. 9e90er2 64.4 167.4. 2,926.0 2,696.6 2,875.6 3,158-4 3,516.2 5,777.6 3,976.0 4,662.6 3,976.8 7)____ - - -- ______ 3. 302 596.0 2,506 0 6,431.0 2,554. 2,984.0 ,224.0 3,317.0 3,36.0 5,552.0 5,376.0 3,572.0) 4. 0R2...r, 2,2 02lve, 236.0 13.2 1,946.2 2.283.6 2,450..1 2,565-2 3,22.0 3,57.2 31708.2 3,780.0 3830.0 TotUl Ir.2remen1 11.-in an-i e 3,504.6 ..911.6 13,496.9 16,838.7 0,659.4 22,12.92 5 221.2 266,9. 26,16.0 29,243.7 29361.6 29,66.6 29,611.6 29,601.6 9611.66 961 1.6 29.6 9,61.6 29,60.6 29,6 .6 29,61~.6 29,611.6 29.6 6,611.6 40,611.6 1. La001ar - 0,397.6 1,662.4 0,649.0 6,936,5 2,936.5 2,638.5 2,96.72,958.5 2,95.5 2,930.5 2,958.5 2,930.5 2,93.52 ,93.5 2,956.5 2,936.5 2,938.5 0,938.5 ,938.5 0,98.5 2,95.51 ,932.355 293.5 ,936 2. 1t6er 6pera0ing cost . 6,972.7 7,529.5 7,404.4 0,367.9 8,543.9 6,734.7 8,841.0 8,626.7 8.915.8 8,924.8 8,924.8 0,926.8 0,926.0 8,924.9 8,924.8 8,924.8 0,924.9 8,924.8 6,924.8 0,024.8 6,904.6 6,92,8 0,674.0 3,924.8 3. 02apital 2e21acement - - -. 740.0 0,510.0 6,986.0 2,07.0 ,9230.0 806.0 6,31.0 1.298.0 e93.0 .59.0 ,34.5 2,024.5 1,732.5 1,716,0 570.9 2.050-0 2,456.0 2,337.5 2.996.0 8-3.0 - TotalInrmetloeai t,92.9 7.1~I, 100.03.4 11,66.4 12,99.4 12,759,2 13,967.3 2995.1 12.660.3 16,204.3 13.661.3 14,456.3 12,457.3 2,897.8 19887.8 12595.8 1 =3.79.3 12.433.3 15.91.3 14,319.3 14,20~08 14,859.3 12,69J.3 11,863.3 1.5.22972n2est22e0t2 5,594.4 0,057. 3,74.8 1,938.7 - - - - - 2. 6ehicle2, Equipment, 020690219 6,070.0 4,122.3 3.987.L 1,825.7 968.0 . - - - -., -. 7. 112estock 06r1h021 6,053.0 2,946.0 3,362.0 ,175-0 1,431. 0 - - - - --- 6. ork0.. 35p,024 3,4260. 1,P82.6 2,512,1 750.0 5. Te'hnical Assistance 2.171.0 2,158.0 2,066.0 D ,498.0 1,140 - - - - - - 7T069ota Invetmnt 23,,602 ~9,5.4 35,702.0 9.187.4 2,50.0 .- - - N- In222222t6lFinan91alBenefits (20,103.6) (11.611.7) (9,495.0) (204.) 64,477 3 9,920.5 12,462.0 12,392.1 15,273.8 16.583.4 13,4c7.3 16,450.3 15,155.3 17154.3 16713. ,72. 16,015.8 16,032.3 17.678.3 15,698.3 15,292. 15,410.8 14.752.3 16,93.3 28.74.3 Ad,1tments to 019 60911mental 11n0916l 2212f292 1. 1axe, 400.0 430.0 416.0 63.0 265.0 36.0 315.0 375.0 327.0 505.0 485.0 335.0 400.9 300.0 325.0 550.0 356.0 356.0 360.6 375.1 33.0 387.0 40.0 310.0 270.0 2. 10221092 2 304' 31,0. 4 49 259. 479,0 459.9 659,0 459.9 459.6 459.0 459,0 459,0 459,3 459.0 459.0 459.0 459,0 45, 4. 459.0 459,0 459.0 659.0 459.0 34 F h ( (1.577.6) 98 566 4 010.: 4,149.6 2,812.8 5,272,. 4,269.6 5,2436 4,829.2 5,8.8 5,327.6 5,010.8 5,104.4 5,610.0 5,40 0 5,002.8 4,872.6 4,890.8 4,700.0 5,391.6 5.658.8 411Mil 00,i21070,029e2forW6262Pr90,2 (28.2) (92.7) (192.9) (358.6) (600.8) (686.4) (743.3) (798.5) (803,6) (866.5) (9033) 7973-3) (903.3) 790353) 799353) (923.3) >903.3) (903.3) (903.3) (903.3) (903.3) (903,7) (903.3) (903.7) (903.3) 912t6000e02n2a1 99onom10Bene1260 (23,040.2) (12,761.8) (10,426.1) (1.866.1) 9,515.0 13,706.7 16,582.7 17,17.2 20,029.0 21,732,9 17.717.6 21584.6 19.940,2 22,470.8 21.922.1 0660.3 21,1. 9 21..054.0 22..474.4 20,631.8 22,113.8 0244.3 919.8. 22,172.6 34,232.8 E:on6mic Rat of 2eturn: 26.9" l InJ.ode IMil remenk a 0119 0600e in Year-25 . 1/t900602 .nd 25% of0te,bni9al 1221292n2, 9os11 e004661d Uk i( 6 i_ o 72ll oroo 0n 0022rnment 7arms 2alued a1 29e 060002fficia 1121 1ate2 00211gn exchange 96alued atT1h ID -0JB$.00 Curren2 92i222 reduced9by % 9,0. 061960 Febua1r 46, 1975 ANNEX 19 Table 2 TANZANIA DAIRY DEVELOPMENT PROJECT Economic Rate of Return Sensitivity Analysis Rate of Return 1. Economic Rate of Return - Base!/ 18.0 2. Costs Increased by 10% 14.0 3. Costs Increased by 20% 11.0 4. Benefits Reduced by 10% 14.0 5. Benefits Reduced. by 20% 10.0 6. Foreign exchange valued. at Tsh7.14 US1.00 16.0 7. All labor costs valued at prevailing wage rates 17.0 1/ See Table 1 May 14, 1975 TANZANIA DAIRY DEVELOPMENT PROJECT PROJECT ORGANIZATION CHART Ministry of Agriculture Co-ordination Committee Livestock Development Tanzania Sisal 3. Livestock 4. Tanzania o e Authority Corporation Division Rural Development Min. of Ag. Bank National ' Tanzania 2 Dairy 3. Agricultural Dairies Farming Company Limited Company NOTE 1. Heifer Breeding Ranch 2. Processing Component 3. Large Dairy Farms 4. Animal Health Component 5. Ujamaa Dairy Units World Bank-9468  TANZANIA DAIRY DEVELOPMENT PROJECT LIVESTOCK DEVELOPMENT AUTHORITY ORGANIZATION CHART Ministry of Agriculture IL Board of Directors Managing Director Administrative Dairy Farming Division Company Procurement Tanzania Dairies Division Limited I Technical Services National Agricultural Division Company I Finance_ Division Tanzania Packers Limited I _ _ _I Marketing Division Tanzania Hides and Skins Corporation I L--- -- -- - -- -- -- --- World Ban k-9469  IBR D V411 I , - -y 1975 | II H C- ei--_.L i | Jå-- C-- *uchenz --- - . - Busolwel 9 tKondc I INANGA KI SING'DAG * u Kondoa eAG M\- ¯cnn PEPIJBLICNZ BA BomoyTMP pand ~ '' iCh- C ln..Calnz - AR-ES-SALAAM ýK 10 Od2GORO Rý MbuInniku SK,b,t, 191NGA MMheng PEPUJBU' -JF ,+ ZAMilA TANZ 1A Lndi _ -DAIRY DEVELOPMENT PROJECT MtýýTWARA -- Nangg N, M A AW -- -- -- -. MOZ AMBIQU E