Announcement of Four Million Dollars Credit for Smallholder Tobacco Project in Uganda on July 22, 1970

• INTERNATIONAL DEVELOPMENT ASSOCIATION 1818 H STREET. N.W., WASHINGTON 0. C. 20433 TELEPHONE: EXECUTIVE 3-6360 IDA Press Release No. 70/41 Subject: $4 million credit for small- July 22, 1970 holder tobacco project in Uganda The International Development Association (IDA) has approved a credit of $4 million to Uganda to help finance tobacco production by several thousand small farmers, thereby enabling Uganda almost to double its production of flue-cured tobacco and to increase the value of its tobacco exports by an estimated $2.8 mil- lion a year. The project involves the financing of production, the construction of curing barns and of storage and marketing facilities, and the improvement of managerial and extension services for tobacco farmers. Part of the IDA credit ~ill also be used for technical assistance to help the Government of Uganda pre• ~ ?are other agricultural projects suitable for external financial aid. Tobacco ranks after coffee, cotton and tea as Uganda's most important small- holder cash crop. It provides a livelihood for some 20,000 small farmers, most of whom cultivate less than half an acre; approximately 6,000 farmers will be assisted through the project. Tobacco cooperatives, to which all tobacco growers belong and which provide inputs, handle and market tobacco and grow fuel wood for curing tobacco, will be strengthened to make them a suitable channel for providing credits to farmers. Over a four-year period, some 4,700 acres will be added to the 7,100 acres now devoted to tobacco, principally by introducing tobacco on settled but under- ·:.tilized farms, and partly by extending tobacco growing by farmers who already cultivate and cure the crop. Flue-cured tobacco.production is expected to rise • £~om 2.7 million to 5.3 million kilograms (11.7 million pounds) a year. The bulk of the increased production will be exported. /more :.:!)A ~.,R~ r-b. 7•J/41 - IJf'.:~nda--Tobacco project - 2 - The project will be administered by a Proje.ct Unit established for this pur- • pose in the Ministry of Marketing and Cooperattves. It will cover farms in West Nile and Middle North, two areas where tobacco growing is already well established, and in Kigezi, a relatively new area for tobacco cultivation. Through cooperativ~s, tobacco growers will be able to obtain credits for the construction of tobacco- curing barns in the form of materials and services covering between 80% and 90% af production costs (excluding the farmer's own labor). Farmers will also be a.l.ile to obtain for some years seasonal credits for production inputs. Funds will be provided to cooperatives for constructing baling centers that wrill serve also as buying centers for leaf, cooperative union supply depots that will serve as distribution points for barn materials and farm inputs, and central tohacco storage facilities. Over a four-year period, the cooperatives will estab- • lish eucalyptus plantations to produce a substantial part of the fuel wood re- quirements of tobacco curing. The project also provides for training tobacco farmers and the management staff of cooperatives, and strengthening Government extension services to tobacco growers. The total cost of the project is estimated at the equivalent of $7.26 million. The IDA credit of $4 million will cover all the foreign exchange costs and part of local currency expenditures. The remainder will be provided by tobacco farmers and cooperatives, and the Government of Uganda. The IDA credit will be for a term of 50 years, including 10 years of grace. It will be interest-free, but will carry a service charge of 3/4 of 1% to cover IDA's administrative costs. - 0 - •