Malawi - Lilongwe Agricultural Development Project

RESTRICTED Report No. T O - 6 1 0 a This report was prepared for use within the Bank and its affiliated organizations. They do not accept responsibility for its accuracy or completeness. The report may not be published nior may it be quoted as representing their views. INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT INTERNATIONAL DEVELOPMENT ASSOCIATION LILONGWE DEVELOPMENT PROJECT MALAWI January 3, 1968 Projects Department  CURRENCY EQUIVALENTS Curveocy Unit - Malawi pound (J) US$ = E0.417 6 = US$2. 40 b 1 million = US$2. 4 million WEIGHTS AND MEASURES English System llb = 0.453kg I sh ton 2, 000 lb = 0. 9072 m ton 1 ac = 0.405ha I sqmi 2.59sqkm  MALAWI Lilongwe Development Proleet Table of Contents Page No. SUMMARY I. INTRODUCTION . . ........ .,.,................... 1 II. BACKGROUND ...... . . , .......... ..... 1 III. THE LILONGWE DEVELOPMENT PROGRAM . . . 3 A. The Development Area ....... 3 B. The Pilot Project . . . 6 C. The Lilongwe Development Program. 6 IV. THE PROJECT.... 13 V. ORGANIZATION AND MANAGEMENT . . .16 VI. PRODUCTION, MARKET PROSPECTS AND FAPIl INCOMES 20 VII. BENEFITS AND JUSTIFICATION . .. ..22 VIII. CONCLUSIONS AND RECOMMENDATIONS . . . 23 ANNEXES 1. Agriculture 2. Marketing and Credit 3. Cost Estimates and Phasing 4. The Department of Agriculture 5. Organization and Staffing 6. Economic Rate of Return MAPS This report is based on the findings of an IDA appraisal mission which visited Malawi in May, 1967, composed of Messrs. Malone, Haynes and Prout.   MATJAWI LILONGWE DEVELOPMENT PROJECT SUNMARY i. The Government of Malawi has requested an IDA Credit to assist in financing the first four year phase of the Lilongwe Development Program, a thirteen year scheme designed to increase agricultural production on a land unit of 500,000 acres in the Central Region of Malawi. ii. Despite the low per capita income in Malawi of about US$52 per annum, an inevitable consequence of a heavy dependence upon subsistence agriculture, an encouraging recent development has been the resurgence of cash crop production by peasant farmers which now accounts for about nine percent of GDP (as against six percent in 1957). The program aims at exploiting this renewed interest in cash crops to stimulate greater pro- duction of food crops. iii. There are approximately 38,000 families in the area to be devel- oped and the average holding size is about six acres. The main crops grown in the area are maize (the staple food), groundnuts, and tobacco. Although no accurate data are available it is estimated that the total income of the average farm family is about US$130 of which the net cash income is about US$50. iv. The Development Program includes an integrated package of invest- ments in soil conservation works, crop extraction roads, water supplies, marketing, storage and credit facilities, and in particular in a greater extension and credit effort. Further, the Program envisages some land re- organization and the registration of holdings and makes provision for the strengthening of the Survey Department to assist in this work. v. Overall responsibility for the implementation of the Program will be assumed by an Agricultural Development Branch now established within the Department of Agriculture. The Program Manager will be respon- sible to the head of this Branch, and will work closely with the Regional Agricultural Officer and other local officials. vi. The total cost of the 13 year Program is estimated at US.+,21.2 million. Staff costs will total about US$6,3 million; another major item will be capital investments in soil conservation, roads and water supply (US$2.4 million). Foreign exchange costs for the 13 year Program are estimated at US$12.3 million, or 58 percent of total costs. vii. At full production the net cash income of the average farm family in the area would be increased as a consequence of the Program by some 70 percent. The rate of return to the economy is estimated at about 13 percent. The estimated export value of the projected increase in marketable surplus in maize and groundnuts is US$5.2 million per annum at full production.  - ii - viii. The first four year Phase - for which IDA assistance is requested - is estimated to cost UStL.0 million. Staff and associated housing will cost US$4.1 million, other capital costs US$1.7 million and fertilizer purchases US$0.3 million. The foreign exchange component of this four year Phase will be US5t3.6 million, or 51 percent of total costs. ix. This initial Phase will include 79.5 percent of the cepital investment for the 13 year Program and the development of about one-third of its area, i.e., 163,000 acres. The rate of return of this first Phase is estimated at about 9 percent. x. The Lilongwe Developm-.ent Program is technically and economically sound and the first four year phase is suitable for an IDA Credit of us$6.o million which will cover 85.7 percent of its total estimated cost.  MALAWI LILONGWE DEVELOPMENT PROJECT APPRAISAL REPORT I. INTRODUCTION 1.01 The Government of Malawi has applied for an IDA Credit to assist in financing the first phase of the Lilongwe Development Program, an inte- grated agricultural improvement scheme covering 500,000 acres in the Central Region of Malawi. The program would increase the production of food crops, both for home consumption and for export, while maintaining the output of tobacco, an important export cash crop. 1.02 The project submission was prepared for the Government by the Agricultural Development Service (ADS) l/ under the supervision of the FAO/IBRD Cooperative Program within the scope of the UNDP (SP) Project in Southern Malawi. 1.03 This report is based on the studies of ADS and the findings of a mission which visited Malawi in May, 1967, composed of Messrs. Malone, Haynes and Prout. II. BACKGROUND 2.01 Malawi is a small, landlocked country with a land area of 36,000 square miles. Its population of four million is growing at more than three percent a year and has an average density of more than 110 per square mile, one of the highest in Africa. Over 90 percent of the population live in traditional villages and derive their livelihood from agriculture. 2.02 All farmers grow subsistence crops - cereals (usually maize, the staple food), beans and other pulses. This heavy dependence on subsistence crops accounts for the low per capita income of Malawi, US$52 a year. Unimproved subsistence agriculture represented about 32 percent of the 1966 GDP of US$210 million equivalent and its output tends to grow at the same rate as the population. Substantial surpluses of maize and othe food crops were marketed in the past, but marketings became erratic during the somewhat unsettled conditions of the past decade. Recent statistics, however, show that marketable surpluses are returning to the level of the early 1950's (see Annex 1). 1/ The Agricultural Development Service (ADS) is an organization set up to provide management services to agricultural development projects in Africa. It is operated under the auspices of the IBRD Permanent Mission in East Africa, located in Nairobi.  - 2 - 2.03 Many farmers in the Central Plains grow groundnuts and dark- fired tobacco as cash crops, in addition to maize. Like cotton, the main cash crop of the lowlands, these are grown mainly for export. Although subject to seasonal factors, output of these cash crops has not shown the marked variations that have characterized the marketing of surplus food crops. Cash crop production by smallholders has been increasing at some seven percent per annum in recent years and now accounts for more than nine percent of GDP (as against six percent in 1957). Although the private estates are small in total area, their production is about six percent of GDP, raising the overall contribution of cash crops to 15 percent, and of agriculture as a whole to slightly less than 50 percent of the G]P of Malawi. 2.o4 The long-term growth of agricultural production has been achieved primarily by expansion of acreage. Encouraging though it may be, the recent growth in cash crop production and in marketings of surpluis food crops has been due in part to bringing back under cultivation land which had been neglected during the previous decade. Further expansioan of acre- age is restricted by the limited area of agriculturally suitable land, particularly in the densely populated Central and Southern Regions. To maintain present outnut it will be necessary in many areas to protect farm land from erosion, a fact which was recognized in the past by the now- abandoned legislation making soil conservation measures mandatory on every farm. Further production increares will be dependent on increases in yields. Recent research and pilot programs have shown practical means of how such increases can be achieved. 2.05 A new Agricultural Development Branch has been established within the Department of Agriculture to assume responsibility for major agricultural development schemes in Malawi. The Government's agricultural development policy is concentrated on improving the production of the main existing small- holder crops. Two major development schemes 1/ are being launched to increase the yields of cotton, the main export crop. The rapid growth of population and the imminent threat of localized domestic food shortages, however, require greatly intensified efforts to raise the yields of -food crops, especially maize and groundnuts, which are most economically grown in the Central Plains near Lilongwe, the commercial hub of the populous Central Region. 2.06 Past experience, based on successful pilot schemes, indicates that intensification is best supported by an integrated package program, on a scale which is large enough to be effective but still manageaple. Such a program would consist of soil conservation measures; the_rural infrastructure; cultivation of remaining unused land; an intensive j extension and credit effort concentrated in a well-defined geographic area 1/ These schemes will increase the production of cotton from rainfed farms in the lowlands at the Salima lakeshore (Central Region) and the shire valley (Southern Region). The Salima Lakeshore Project is being financed by West Germany and the Shire Valley Project has been appraised for a possible IDA credit. Development possibilities in the Northern Region are being investigated by ADS.  ,in order to accelerate the use of modern inputs; and land reorganization Fand registration of holdings, which would provide farmers with recognizable junits of land and thus promote long-term farm improvements and sustain the results achieved in the short run. 2.07 The requirements for staffing and management of and local staff training for such a complex program, including the provision of housing, vehicles, and equipment, are far beyond Malawi's present human and financial resources. However, the benefits accruing from such a program would, in time, create substantial local resources of money and skilled manaower which could be mobilized for subsequent development in other areas. 2.08 This type of integrated development program, consisting mainly of technical assistance combined with a package of simple investments in infra- structure and productive working capital, is a departure from the usual type of Bank/IDA agricultural project. However, such a program is an effective means of initiating the development process in backward rural economies like that of Malawi and many other countries which are not yet at a stage where more technically advanced, capital intensive projects can be usefully undertaken on a widespread basis. III. THE LILONGWE DEVELOPMRTU PROGRAM A. The Development Ar^ea 3.01 The area selected for this Development Program is the Lilongwe Plain (see Map 1) a discrete geophysical unit covering some 800 square miles of the central plateau of Malawi (see Map 2). It has the highest agricultural potential of any region of Malawi and is ideally suited as the site of the first major development project devoted to food crops. The population is receptive to change, having been accustomed to the benefits of cash incomes for many years. The country's main agricultural research and training facilities are within the area. The soils are generally productive, although yields can be greatly increased by judicious use of fertilizer. The rainfall, averaging 32 inches per year, .s adequate for the usual annual crops although the rainy season is too shor2 to allow double cropping or perennial crops. More important, however, the annual rainfall is reliable, reducing the risks that accompany the use of fertilizer by smallholders in less fortunate areas. Over most of the Lilongwe Plain the relief is moderate, with gentle slopes (typically two to three percent and rarely more than five percent) interrupted by wide, shallow valleys. 3.02 The area offers many advantages, and opportunities for develop- ment. Few villages have a reliable water supply and good land lies unculti- vated because there is no water nearby. The Plain offers few sites for dams but there are abundant supplies of good underground water at a depth of about 100 ft which can be tapped by boreholes with simple hand pumps. Soil erosion is already a problem, especially on shallow soils and where the  -4- remains of abandoned conservation works concentrate the flow of rain water runoff. The problem is aggravated because farmers grow their crops on ridges but do not align them properly with the contour. There are few roads in the area and the network of paths and tracks is inadequate both for the outflow of the potential increase in production and the movement of extension and credit workers and supplies of production requisites. General Description of the Area 3.03 The Program area, as defined by The Lilongwe Agricultu"-al Develop- ment Area Order , 1967, consists of about a third of Lilongwe District and lies to the west of Lilongwe town (pop. 19,000). The town is the administrativ, headquarters and the main trading center of the Central Region. Land within the boundaries of the "Greater Lilongwe Deve'lopment Plan" (i.e. within a radius of about five miles of the township) will be excluded frorn the Program area. 3.04 The 1966 Census showed that the rural population of the area was about 190,000 (excluding 4,300 Government officials, traders, etc.). Over most of the area the density is approximately 250 per square mile, more than twice the national average. There are some 38,000 farms, with an average of about six acres of crops, and the average size of the farm family is five. Maize is the predominant crop covering 57 percent of the cropped land (133,000 acres). Tobacco, occupying 20 percent of the land (47,000 acres) has been the main source of cash in the past. Groundnuts, however, are assuming greater importance and now occupy some 17 percent of the cropped lands. Beans, sweet potato, cassava and other minor crops are also grown but inter-cropping is not common. Although the climate is less than ideal for perennials, over 60 percent of the holdings grow some fruit - mainly mangoes and bananas - for home consumption. 3.05 Production methods are typical of family-labor peasant farming. Few farm inputs are purchased, although use of fertilizer is increasing, about one farmer in ten buying small quantities (mainly for tobacco). About one farmer in three hires labor but a substantial portion of the wage is paid in kind. 3.06 All arable crops are grown on ridges; soil preparation, planting, cultivation and weeding are done with hand hoes. The number of work oxen is increasing, but they are used mainly for carting and only an insignificant number of larger farmers use ox-drawn plows or ridgers. Tractors are used only on estates, missions, and departmental stations. Harvesting and threshing are done entirely by hand, as is the shelling of groundnuts. Crops are stored on the farm in mud-and-thatch cribs in which storage losses of grain are said to be about 20 percent. Crop drying, however, presents no problems. 3.07 M4ore than half of the farmers in the Lilongwe District own small livestock, and over 80 percent keep poultry, but only about one in four owns cattle. Further details are provided in Annex 1.  -5- Land tenure 3.08 Land is cultivated under customary rights of usufruct. Each village controls an area of land whose boundaries, though unsurveyed and unmarked, are well known. In accordance with the matrilineal form of tribal succession traditional in this area, most of the cultivation rights are still held by women, and, when a man marries, he usually moves to his wife's village and farms her land. However, since customary marriages are neither monogamous nor necessarily lasting, he may neglect his farm and even his own family in favor of supporting his sister's children in his home village, where he will take most of the cash he earns. He is unlikely to want to make any improvements on the wife's farm since he will leave her village if the marriage ends. 3.09 In recent years there has been considerable erosion of this traditional system, however, and farmers are now taking a much greater interest in educating and providing for their own families. As a result of this and of the aggravated pressure on land, there is an increasing tendency for young men to stay in their own villages and farm the family land, which they hope to be able to leave to their own children. In order to encourage this trend, the Government has recently enacted three laws establishing a legal procedure which leads to the reorganization and regis- tration of land held under customary law and the granting of titles of ownership. These laws are of a permissive nature in that they allow regis- tration to occur at a natural rate rather than artificially forcing it on the people prematurely. Marketing 3.10 The Farmer's Marketing Board (FMB), described in detail in Annex 2, has a statutory responsibility to purchase all marketable produce grown on African smallholdings, although at present it delegates purchase of maize to licensed agents. Established in 1963, the FMB is largely autono- mous although subJect to general direction by the Minister for Economic Affairs. The FMB maintains nine permanent markets in the Program area. Their main function is to provide facilities for the purchase, temporary storage and relhandling of tobacco, and they are equipped adequately with enclosures, storage space, automatic recording scales, and cash registers. There are also 17 temporary F!-B markets serving the area. A grower may only sell his tobacco at the permanent market at which he is rej.stered but groundnuts may be sold at any of the temporary markets (whicth have little or no storage space and only spring scales and buckets for weighing produce). In many cases farmers prefer to bypass temporary markets and may walk as many as eight additional miles to sell their groundnuts at a. permanent market, where they are assured of receiving full payment. Maize is purchased in the villages by licensed traders who resell to the FMB at its central depots.  -6- Communications 3.11 Lilongwe town is connected by a tarred road to the rail-head at Salima, 65 miles away over the escarpment on the Lake Shore plain. All- weather gravel roads connect with DOaW and Kasungu to the north, and with Zomba and Blantyre to the south. The gravel road to Fort Jameson in Zambia bisects the area. Lilongwe town has regular postal and telecommunication connections with Zomba, Blantyre, and other maJor towns. Daily flights, connecting with international services at Blantyre, are schedule( from the all-weather airport. B. The Pilot Pro,ject 3.12 The aims and methods of the Development Program have been tested, since 1965, in a UK-financed pilot project operated by the regional staff of the Department of Agriculture a few miles south of Lilongwe (see Map 2). In the first year, storm drains were provided over 2,000 acres, nine miles of crop extraction roads built, 150 acres of holdings reorganized to straighten boundaries, consolidate fragments or compensate for land used for roads and drains. Extension activity was greatly increased, and im- proved seed was distributed. Roads and drains were installed in a further 6,500 acres during 1966. Minor adjustments were made to boundaries over an area of about 1,500 acres. Extension worlk continued, and increased use was made of ad hoc village committees. During 1967 development was completed on a 12,000 acre block adjoining the project boundary and land use plans were drawn up for the area covered by the first year of the project. ;3.13 Extension workers devoted much of their time to publicizing the purposes and benefits of the physical works and active campaigns were conducted to encourage the use of the improved synthetic maize tAskari" and of fertilizers. No total production figures are available, but the results of 26 demonstration plots on farmers' land during 1966/67 show encouraging responses to fertilizer: Ashari Askari Local Varieties Unfertilized Fertilized Yield of grain, lb/ac 1,100 1,310 3,110 Fertilizer is sold for cash or on credit: 92 percent of the credit extended for the 1966/67 crop had been repaid by November 1967. 3.14 The mission visited the pilot pro'ect, attended farmers' field days and observed the harvesting of trial plots. WIhile it is still too early to judge the results in terms of increased production or structural change, the recommended techniques are practical and extension methods effective. The pilot project adequately demonstrates the feasibility of the proposed Development Program.  - 7 - C. The Lilongwe Development Program 3.15 The aim of the Lilongwe Development Program is to raise agri- cultural production, by increasing yields and ensuring the effective use of all suitable land, and by furthering the transition from a subsi tence to a market economy. The Program would include closely integrated devel- opment of the rural infrastructure, provision of increased extension and credit services and the reorganization of holdings and registration of titles to land. The basic method will be the concentration of resources in limited areas until the desired results are achieved: thereafter, Program staff would be progressively withdrawn until, after five years of development, each area would be returned to the Jurisdiction of the normal regional services of the Department of Agriculture. 3.16 The targets of the 13 year Development Program include: (a) Detailed land use plans for each drainage area in the 500,000 acre area and provision of appropriate roads, soil conservation works, water supplies and markets. (b) Development of 60,000 acres (net) of agriculturally suitable land now lying idle and the better utili- zation of 40,000 acres of land now lying fallow. This would maintain the present ratio of cropped land to farm families for 15 years in spite of the high rate of population growth. (c) Provision for the voluntary registration of title to land. (d) !A tenfold increase in the marketable surplus of maize, in spite of rising consumption, and doubling of production of groundnuts. The production of tobacco would remain unchanged. Soil Conservation and Road Construction 3.17 Although most crops are grown on ridges, these ridges _re not properly laid out along the contours and do not lead into drainage ditches. As a result, considerable erosion occurs. In the future, nearly all arable land will be under cultivation, and the need for proper conservation will be greater than ever. Contour maps (provided by the Survey Department to a scale of 1:5,000) will be the basis for the detailed physical planning of each drainage area. Storm drains will be placed about 220 yards apart, their exact location depending on the slope. About 4,200 miles of storm drains will be required. Runoff will be discharged into natural or im- proved drainage ways. Marker ridges will be put in mechanically at short intervals to guide the farmers in ridging their fields by hand along the contour. The cost of these various measures will be about E1.27 per acre (Ul.93 per cropped acre). (Further details of soil conservation are given in Annex 1.)  -8- 3.18 The existing roads do not provide adequate access to markets nor for the delivery of farm requisites to villages remote from main roads. The lack of adequate crop extraction roads is one of the main factors limiting the marketing of the more bulky crops, maize and groundnuts, and will be a major handicap to the provision of an intensive extenLion ser- vice. The land use plans will make provision for roads sited, in the main, on ridges. Those serving markets will be built as crop extraction roads with culverts and bridges where necessary. Other roads will be little more than tracks, maintained by villagers. The Program incluOes 500 miles of roads, at an overall average cost of