Malawi - Shire Valley Agricultural Development Project

ct-\\* FILE (AJPY COPY ~R ESTR ICTE D Report No. TO-61Za 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 The report may not be published nor may it be quoted as representing their views. INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT INTERNATIONAL DEVELOPMENT ASSOCIATION IALAWI SHIRE VALLEY AGRICULTURAL DEVELOPMENT PROJECT January 5, 1968 Projects Department  CURRENCY EQUIVALENTS Currency Unit - Malawi pound (X) US$ V 1O.4167 I; = US$2.40 l 1 million = US$2.-4 million WEIGHTS AND MEASURES 1 lb , 0.453 kg 1 sh ton - 2,000 lb 0.9072 m ton 1 ac = 0.405 ha  MALAWI Shire Val4ey Agricultural Develorment Project Table of Contents Page No. SUMMARY I. INTRODUCTION ...................,.,.......... 1 II. BACKGROUND .. 1 Development Program .. 2 III. THE PROJECT AREA. 2 IV. THE PROJECT .................... , . .. 4 (A) General Description. 4 Pest Control and Extension. 5 Credit and Sprayer Subsidy. 5 Infrastructure .............................. 6 Improved Market and Storage Facilities. 6 Land Demarcation for Settlement .7 (B) Construction Schedule. 7 (C) Cost Estimates .........., 8 (D) Financin. .*----------..-----..-------.------- 9 Procurement and Disbursement ..... .............. 10 V. ORGANIZATIONT AND MANAGEMENT ...... ................... 10 (A) Project Management ........ ..................... 11 (B) Training of Malawian Personnel ..... ............ 12 (C) Marketing and Credit ....... .................... 12 VI. PRODUCTION, MARKET PROSPECTS AND FARM INCOME ........ 13 Expected Yields .............. ....................... 13 Market Prospects ............ ........................ 14 Expected Production ......... ........................ 14 VII. BENEFITS AND JUSTIFICATION .16 VIII. CONCLUSIONS AND RECODv2ThENDATIONS .17 ANNEXES MAPS This report is based on the findings of an IDA appraisal mission which visited IMvalawi in May 1967, composed of M7essrs. Mlanning, Friedgut (of the Bank) and Bruce (of FAO).  MALAWI Shire Val1ey AAgricultural Development Project Table of Contents (Continued) LIST OF ANNEXES Pages 1. AGRICULTURE 1- 7 2. MA4RKETING AND CREDIT 1- 9 3. PROJECT PERSONNEL 4. COST ESTIMATES AND EXPENDITURE SCHEDULE 5. ORGANIZATTON CHART 6. ECONOMIC BENEFITS, FARM BUDGETS AND CASH FLOW  MALAWI Shire Valley Agri4cultural Development Project Summary i. The Government of Malawi has applied for an IDA credit to help finance a program to increase agricultural production in the Lower Shire River Valley. Malawi's per capita GNP, at about US$>52, is among the lowest of the Bank's member countries and is accounted for by the predominance of subsistence agriculture. ii. Increased acreage accounted for the greater part of Malawi's seven percent average annual growth of cotton production during the last 15 years, the average of the last three being about 17,000 tons of seed cotton. Of this the project area accounted for about 8,000 tons produced by some 15,000 farm families each having an average of less than six cropped acres. Maize is the other main crop in the area and is all consumed by the growers. iii. The project provides for the improvement of agricultural practices, particularly control of cotton pests which are the main reason for the current low yield of about 350 pounds of seed cotton per acre. iv. Project implementation requires a package approach involving infrastructure, personnel for training Malawrians, and provision of credit to 4armers for purchase of farm inputs. Thie project will cost about US$4.6 million ecquivalent with an estimated foreign exchange component of US$2.6 million. v. Net cash income of the average farm family of five persons would increase from US$65 to US$114 by the tenth year. The gross value of production would increase from US$1.8 to US$4.3 million during this period. The average annual net return to the economy should be about 21 percent. vi. The project is suitable for an IDA credit of US$3.7 million.  MALAWI Shire Valley Agricultural Develorment Project I. INTRODUJCTION 1.01 The Government of Malawi has applied for an IDA credit to help finance a program whose principal objectives are to induce existing farmers in the Shire Valley to adopt improved agricultural practices and to settle others on as yet uncleared land. The immediate impact of the program proposed will be to increase yields, especially of cotton, ultimately more than doubling cotton production with a modest increase in area. There will also be some improvement in production of the staple food maize. 1.02 The project submission was prepared at the request of the Govern- ment of Malawi, under the auspices of the United Nations Development Program (Special Fund), by the FAO/IBRD Cooperative Program. A mission consisting of Messrs. H.L. Manning and I.T. Friedgut (of the Bank) and Mr. R. Bruce (of FAO) visited Malawi in May 1967 to appraise the Government Project. This report summarizes the mission's findings. II. BACKG-ROUND 2.01 Malawi is a small, landlocked country with a land area of 36,000 square miles. Its current population of about 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. More than 90 percent of the population live in traditional villages and derive their livelihood from agriculture, from which average incomes are considerably less than the per capita GDP of about US$52 a year. 2.02 The extremely low level of per capita income in Malawi is due mainly to a heavy dependence on unimproved subsistence agriculture, which represented about 32 percent of the US$210 million equivalent 1966 GDP. One of the most encouraging recent economic developments, however, has been the renewed interest in cash crop production by African smallholders. Much of the credit for this increased production, shown at Annex 1, can be ascribed to the efforts of the Department of Agriculture whose extension services, with the full backing of the Malawi Congress Party, have suc- ceeded in gaining the confidence and cooperation of the smallholder. 2.03 The Department of Agriculture, which is described in Annex 1, is responsible for agricultural development, extension and research. It is a department of the Ministry of Economic Affairs, which is also responsible for veterinary services, forests and game, geological services, lands and surveys. 2.o4 It is only since Independence (1964) that the Government has succeeded in stimulating among the people a spirit of cooperation with the extension service. With the financial assistance of the United Kingdom, the  Department of Agriculture has embarked on a number of small agricultural improvement schemes. At the same tine, the Farmers' MIarketing Board (FMB) has been rapidly expanding its facilities in an attempt to keep up with the sudden resurgence in cash crop production, beginning in the early sixties. Development Program 2.05 In order not to lose the considerable momentum recently achieved in agriculture, the Government is now anxious to expand, with IDA assistance, some of the more successful im.provement schemes begun on a pilot scale with United Kingdom funds. Encouraging as it may be, recent growth has been primarily the result of expanded acreage rather than increased yields. In view of the limited possibility of achieving further long-run growth in this way due to the increasing pressure of population, the Government's program for agricultural development is concentrated on raising the yields of the existing smallholder crops. Preconditions for this yield take-off are the provision of water supplies, introduction of soil conservation, modern methods of cultivation, construction of markets and improved access. In the project area itself yield take-off denends principally on the introduction of pest control and improved cultural practices. The greatly increased extension effort necessary to achieve these aims will be facil- itated to some extent by the recent expansion of facilities for training M4alawian agricultural staff, but expatriate services. which the country readily accepts, will continue to be necessary in the short run. The measures proposed in this project have been tested among Malawi's cotton growers in a cotton improvement scheme financed by the TJnited Kingdom Government. The results appear quite promising and have encouraged the Government to initiate, in addition to the Shire Valley project, a similar project in the vicinity of Salima in the Central Region (see map). This project is being partially financed by a loan from the Government of West Germany. III. ThIL PROJECT AREA 3.01 The project area is situated in the heart of the main cotton growing region, the lower Shire Valley in the Southern Region of Malawi, and is confined to the west bank of the Shire River (see Map 1). Of the 830 square miles, mainly contained in the Chikwawa South Administrative sub-district, about 200 square miles (about 130,000 acres) have soils suitable for production of short-term annual arable crops such as cotton and maize. 1/ 3.02 Two broad groups of cultivable land form are recognized, the uplands and the Rift Valley Floor. The former at an altitude in excess of 500 feet above sea level, covers more than half the area and is known as Tomali (or Drift Plain) soil. These soils are of lighter texture and are less fertile than the Ngabu black cotton soil which makes up the remainder of the cultivable area. The Tomali soil area is less densely populated and is covered by open woodland, clearing of which is relatively 1/ The project area is officially described in the Government of Malawi's General N7otice No. 866 of December 6, 1967.  - 3 - easy where no attempt is made to remove the larger trees. In addition to these two groups of cultivable soil there are two uncultivable groups; shallow acid uplands soil and azonal, poorly drained heavy clay soils in the flood plains. 3.03 The total area of land suitable for development is distributed as 69,000 acres of Ngabu soil and 60,000 acres of Tomali soil. Already some 59,000 acres of the Ngabu area and 27,000 acres of the Tomali area are cropped, so that much of the new development would be on the less productive Tomali soils. 3.04 About 25 inches or 90 percent of the average rainfall occurs during the period November through April. This is satisfactory for annual crops but, because of the long, dry season from May through October, double cropping or perennial crops such as sugar cane, require supplementary irrigation. The relatively high monthly mean maximiurm and minimum temper- atures which favor cotton are not conduc-ve to optimum seed production of maize, whose yields are consequently low. 3.05 Communications within the project area are still rudimentary, being confined to a single gravel-surfaced road, passable during most periods of the year, which connects Chikwawa with Chiromo. There are a number of secondary roads but movement over these during the rainy season is restricted to four-wheel drive vehicles. -3.6 Tne water supply is extremely poor. During the wet season small supplies can be found in the shallow holes dug in sandy river beds, but these are transitory and hazardous to health. These meager supplies are supplemented by 82 boreholes with modest output and two 40-foot deep wells. 3.07 The 1965 census indicated that there were about 78,000 people in the area. 1/ Of these, five percent live in rural centers or on the nearby Sucoma Sugar Estate. Siqallholder population is therefore of the order of 75,000, which, with an average of five per household, represents some 15,000 families. These are distributed as 7,500 in the more densely populated Ngabu area, 4,1500 in the Tomali area and 3,000 in the flood plains and upland area. The typical farm around Ngabu is about 71-2 acres, having 4