Tanzania - Smallholder Tea Development Project

FLE COPY RESTRICTED Report No. PA-97a This report Is for official use only by the Bank Gwoup and specifically authorized organizations or persons. It may not be published, quoted or cited without Bank Group authorization.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. INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT INTERNATIONAL DEVELOPMENT ASSOCIATION APPRAISAL OF SMALLHOLDER TEA DEVELOPMENT PROJECT TANZANIA November 16, 1971 Agriculture Projects Department CURREXCY rQUIVALENTS US$ T Sh 7.143 T Sh 1 US$ 0.14 T Sh 1 million US$ 140,000 WEIGHTS AND MEASURES Metric System AVERAGE CONVERSION RATE 4.8 kg green leaf - 1.0 kg made tea ABBREVIATIONS ASP * Audit and Supervision Fund Comworks - Ministry of Communication, Transport and Labour CTC - Cut, tear, and crimp ICO - International Coffee Organization NDCA - National Development Credit Agency NORAD - Norwegian Agency for International Development TAC - Tanzania Audit Corporation TANU - Tanzanian African National Union TFC - Tanzania Fertilizer Corporation TRDB - Tanzania Rural Development Bank TRI - East African Tea Research Institute TTA - Tanzania Tea Authority V.P. - Vegetative Propagation FISCAL YEAR July 1 - June 30 TANZANIA SALLHOLDER TEA DEVELOPMENT PROJECT ATTACHMENT TO APPRAISAL REPORT PA-97a Amendment to Project Costs and Financing 1. The Appraisal Report PA-97a was printed prior to exchange rate changes introduced on December 18, 1971. As a result of these changes, the foreign exchange costs of the project are likely to increase by the equivalent of US$ 400,000, raising the total to US$ 16.5 million. The cost table in para 5.01 of the Appraisal Report requires the following amendments: (1) the foreign element of the price contingency should be increased from US$ 369,000 to US$ 769,000, and (2) the total project costs should be increased from US$ 16,080,000 to us$ 16,480,000. 2. A corresponding adjustment to the financing plan is shown below. It replaces the financing table in para 5.05 of the Appraisal Report. Foreign Exchange Costs Local Costs Total Costs US$ million $ US$ million - US$ million i IDA 4.8 75 6.0 59 10.8 65 Norway 1.6 25 .4 4 2.0 12 Government - - 3.7 37 3.7 23 6.4 100 10.1 100 16.5 100 3. In the above table the amount of the IDA Credit was increased by US$ 300,000, raising the total from US$ 10.5 million to US$ 10.8 million. This increase maintains IDA's share of the foreign exchange financing as previously estimated in the Appraisal Report. The estimated disbursements of the Credit shown in Annex 10 require to be increased by approximately 2.8% per quarter. 4. The cost increase amounts to approximately 2.5% of the overall project costs. Its effect on the project's economic rate of return will not be significant. The possibility of future cost increases was con- templated by a sensitivity analysis (para 8.09 of the Appraisal Report). It was shown that a cost increase as high as 20% would reduce the rate of return from 17% to 13.4%. January 4, 1972  TANZANIA SMALLHOLDER TEA DEVELOPMENT PROJECT TABLE OF CONTENTS Page No. SUMMARY AND CONCLUSIONS ............................... i-i I. INTRODUCTION ......................................... 1 II. BACKGROUND ........................................... 1 A. General ......................................... 1 B. The Tea Industry ................................ 2 III. THE TEA GROWING AREAS ................................ 3 A. General ......................................... 3 B. Population and Tenure ........................... 4 C. Production, Yields, Extension and Research ...... 4 D. Cooperatives, Communications and Labor ........... 5 IV. THE PROJECT .......................................... 6 A. General Description ............................. 6 B. Detailed Features .............................. 7 V. COST ESTIMATES AND FINANCING ARRANGEMENTS ............ 10 A. Project Cost and Financing ...................... 10 B. Procurement and Disbursement .................... 14 C. Accounts and Audit .............................. 15 VI. ORGANIZATION AND MANAGEMENT ......................... 16 A. The Tanzania Tea Authority ...................... 16 B. Extension Services and Staff Training ........... 17 C. Smallholder Recruitment ......................... 18 D. Leaf Collection ................................ 18 E. Processing of Green Leaf ........................ 19 F. Land Clearing ................................... 20 G. Credit Channel .................................. 20 This appraisal report is based on the findings of an appraisal mission to Tanzania in February 1971 composed of Messrs. D.J. Parsons, F. Lowenstein and J. Gregor (IDA) and D. Taylor (Consultant) with help in Tanzania from Mr. F.D.T. Read (PMEA) and G. Thompson (Consultant). -2- Page No. VII. PRODUCTION, MARKETING AND FARMERS' BENEFITS .......... 20 A. Production and Yields ........................... 20 B. Marketing and Prices ............................ 21 C. Farmers' Benefits ............................... 22 VIII. BENEFITS AND JUSTIFICATION ........................... 22 A. Economic Benefits ............................... 22 B. Sensitivity Analysis ............................ .24 IX. RECOMMENDATIONS ...................................... 25 ANNEXES 1. Development Program Statistics 2. Smallholder Tea Cultivation and Research in East Africa 3. Staff and Technical Assistance Requirements 4. Statute, The Tanzania Tea Authority .5. Factory Design, Phasing, and Management 6. Road Works 7. Tanzania Rural Development Bank 8. Project Costs 9. Cash Flow 10. Disbursements by Quarter 11. Green Leaf Collection 12. Supply, Consumption, Marketing Charges and Prices 13. Market Prospects in the World Tea Economy 14. Farm Budgets 15. Economic Rate of Return -3- MAPS 1. Project Location 2. Rungwe Area 3. Bukoba Area 4. Lupembe Area 5. West Usambara Area  TANZANIA SMALLHOLDER TEA DEVELOPMENT PROJECT SUMMARY AND CONCLUSIONS i. This report appraises a project for expanding smallholder tea production in Tanzania. It would be the fourth Bank Group operation in the agricultural sector of the country. The other credits date back to 1965 and total US$15.3 million. ii. The expansion in smallholder tea planting would take place in four widely scattered districts - Rungwe and Lupembe in the southern highlands, Bukoba on Lake Victoria in the northwest and West Usambara in the northeast. The project would involve production of planting material, provision of fertil- izer to growers, the construction of about 300 km of green leaf collection roads, construction of tea factories, the purchase of leaf collection vehicles, and the provision of extension services to growers. At full maturity it would produce about 9.5 million kg on 8,300 ha. By comparison Tanzania produced about 8.5 million kg of made tea on about 9,300 ha in 1970, most of it by private estates and private outgrowers. iii. The project would be mainly carried out by the Tanzania Tea Authority (TTA), a parastatal organization, which would be responsible for developing nurseries, green leaf collecting, building and operating factories, marketing tea, and providing extension services. Green leaf collection roads would be built by construction units of the Ministry of Communications, Transport and Labour (Comworks); construction of the roads in the Rungwe and West Usambara districts would be financed with assistance from Norway. Fertilizer would be procured by the Tanzania Rural Development Bank (TRDB) and distributed to growers through cooperative societies and unions. Growers would obtain loans for the purchase of stumps during each year of planting and for the two succeeding years for infills and for the purchase of fertil- izer during the first two years. These loans would be repaid by deducting a cess from the proceeds of green leaf sales. iv. Project costs are estimated at US$16.1 million and cover a five- year period from 1972 to 1976. An IDA credit of US$10.5 million is proposed which would finance about 65% of total project costs. Norway would provide about US$1.9 million or 12% of project costs and Government would provide about US$3.7 million representing about 23% of project costs. Of this, about a third might be provided in local currency by a soft loan from the Inter- national Coffee Organization's Diversification Fund. The IDA credit would provide about US$4.3 million of foreign exchange costs and Norway would provide the remaining US$1.5 million. The credit would also provide about US$6.2 million or 61% of local costs. v. Procurement of vehicles, tea factories, and road construction equip- ment for the Bukoba and Lupembe areas would be by international competitive bidding. Contracts for construction of houses would be put out to local com- petitive bidding as their number and scattered distribution would not justify international bidding. Purchases of fertilizer would be through international competitive bidding, with up to 15% preference to local manufacturers. - ii - vi. The increases in project farmers' annual net cash incomes at full development are expected to be between T Sh 1,782 and T Sh 2,272 (US$249 to US$318) per farmer, depending on the area in which the farmers live. This increase is more income than a farmer would receive by having the head of the family working full time in agriculture at the legal minimum wage of T Sh 3.85/day. vii. The economic rate of return for the entire project is about 17% over a 50-year period. The rates in the various areas are estimated to be above 18% (24% in Rungwe) except West Usambara, where it is estimated at 7% to 8%. There are no alternative opportunities for farmers in West Usambara; Government has already embarked upon tea development in the areas and there would be significant but unquantifiable indirect benefits in this area. There fore, West Usambara is included in the project as requested by Government. viii. With the appropriate assurances, the project would be suitable for an IDA credit of US$10.5 million. TANZANIA SMALLHOLDER TEA DEVELOPMENT PROJECT I. INTRODUCTION 1.01 A smallholder tea project was identified in Tanzania by an IBRD/ PMEA mission in November 1968. The Tanzania Tea Authority (TTA), a para- statal organization, was established in 1969 and the United Research Company of Alexandria, Virginia was employed by Government and financed by USAID to prepare the project. The preparation report, together with a request for financing the project, was submitted to the Bank by Government in July 1970. 1.02 The proposed project included the planting of tea during the second five-year plan, from 1971 through 1974. As appraised, it has been modified to include plantings from 1972 through 1974 and the necessary factories, leaf collection facilities, nursery development, provision of growers' fertilizer, and extension services. The project would be mainly carried out by TTA. 1.03 The project would be the fourth Bank Group operation in the agri- cultural sector in Tanzania. The three previous projects were an IDA credit of US$5 million in 1965 for agricultural credit; a credit of US$1.3 million in October 1968 for beef ranching development; and a credit of US$9 million in September 1970 for flue-cured tobacco development. 1.04 Three other credits for smallholder tea development have been made in East Africa, to Kenya and Uganda. All of these projects are in some ways similar to the project proposed for Tanzania and are being successfully carried out. The main difference in the Tanzanian project is the use of a credit channel which makes the project more costly and complicated. However, the extra cost can be regarded as a contribution towards strengthening finan- cial institutions. 1.05 This report is based on the findings of an IDA appraisal mission to Tanzania in February 1971, composed of Messrs. Parsons, Gregor and Lowenstein of IDA, Mr. Reid of PMEA, and Messrs. Taylor and Thompson, Consultants. The annex on World Market prospects for tea was contributed by Mr. Elz of the Bank's Economics Department. II. BACKGROUND A. General 2.01 Tanzania is situated to the south of Kenya and Uganda in Eastern Africa. It extends from the Indian Ocean to its western boundaries with Zaire (formerly Congo (K)), Rwanda and Burundi (see Map 1). Its total area is 361,800 square miles (937,000 km2), including 20,650 square miles (53,500 km2) of inland water. With the exception of a narrow strip along its 550 mile (900 km) coastline, the country lies entirely at an altitude of - 2 - over 300 m. A large part of the country is a plateau at about 1,300 m, with mountainous areas rising to almost 3,000 m on its southern and northeastern borders. The continent's highest mountain, Mount Kilimanjaro, rises to a height of over 19,240 feet (6,000 m), close to the border with Kenya. 2.02 The population was estimated in 1970 at 12.9 million and its growth rate is about 2.7% per annum. There are on the average, about 15 people per km2, a very low rate. About 90% of the population is engaged in farming and agriculture accounts for about 40% of the Gross National Product (GNP). 2.03 In 1970, GNP was US$1,281 million (in 1968 dollars) and per capita GNP was US$99. From 1970 to 1976, total GNP is expected to grow at about 6.5% per annum and if this is achieved per capita CNP would increase at an annual rate of approximately 3.7%. 2.04 Imports of food, beverages and tobacco have accounted for a de- clining proportion of external imports (imports from countries of origin outside the East African Community) and in 1969 were only 4.4% of the total. 2.05 Exports of tea increased during the 1960's but in 1969 were still only 2.5% of total exports. Principal agriculture exports of the country in the past have been cotton, coffee, sisal, cloves (mainly from the Island of Zanzibar), and cashew-nuts. B. The Tea Industry 2.06 At the end of 1969 there were 9,260 ha of tea planted to estates and private outgrowers. These growers produced 8,492,000 kg of green leaf tea during 1970, compared with 3,721,000 kg in 1960. Between 1960 and 1970, output increased sharply, largely because of rising yields as shown below. TEA ESTATES AND OUTGROWERS Plantings and Production: 1960-1969 /1 Average Yield- Hectares Production Per Hectare Planted (Kg'000) (Kg) 1960 7,336 3,721 507 1961 7,797 4,458 572 1962 8,047 4,310 536 1963 8,271 5,018 607 1964 8,521 4,808 564 1965 8,794 5,639 641 1966 9,000 6,693 744 1967 9,077 6,922 763 1968 9,117 7,560 829 1969 9,259 8,197 885 /1 Includes newly planted and mature tea. - 3 - 2.07 During 1970, all tea was manufactured at factories located on es- tates. Private estates bought green leaf tea from outgrowers and smallholders for manufacture and marketing. A factory owned by TTA was recently built at Mponde, and will be in operation during 1971. An existing factory at Lupembe has been rebuilt by TTA. There is also a factory in Bukoba. This was owned by the Bukoba Cooperative Union and the National Agricultural and Food Corporation (NAFCO), but TTA has recently acquired NAFCO's interest. 2.08 Government's Second Five-Year Plan calls for a drastic revision in tea production, manufacture and marketing. TTA will administer this program. The Plan calls for the planting by smallholders of 9,482 ha from 1971 through 1974. Of this total, 8,345 ha are included in the project being considered for financing by IDA. III. THE TEA GROWING AREAS A. General 3.01 Tea is grown in four widely separated areas of Tanzania. The oldest tea plantings date from World War I and are in the Rungwe and Lupembe-Mufindi areas of the southern highlands and in the Usambara moun- tains, which are located along the Kenya boundary in the western part of Tanga region. More recently, tea has also been planted in Bukoba district which is on the western shores of Lake Victoria (Map 1). 3.02 Climate. Rainfall in all areas is generally adequate for tea production, annual averages ranging from 1,400 mm in Usambara to 2,500 in in Rungwe (Annex 1, Table 1). In some years, yields are reduced by drought in Usambara and Lupembe, and rainfall falls off steeply on the borders of the tea areas in both Usambara and Bukoba. Tea is grown at altitudes of between 1,000 and 1,700 m in Tanzania, which by world standards is medium/high altitude tea. Frost very occasionally causes damage in the Rungwe area. 3.03 Soils. Soils in all areas are suitable for tea production, but in two areas soil conditions give rise to some difficulty in the establishment of the young tea bushes. In Bukoba, the soils are loose and friable and lose moisture rapidly. In order to retain adequate soil moisture during the es- tablishment period, it is necessary to mulch between bushes with grass until a cover is formed by the tea itself. In Rungwe, the problem arises from the layer of volcanic pumice to be found at varying depths below the surface. Until the tea roots have penetrated this area into the fertile soils below, growth is often retarded. Hence, in these two areas, yields are reduced slightly in the early years of production. 3.04 Topography. Topography differs markedly among the main tea growing areas. In the Usambara mountains and in the Lupembe area of the southern highlands slopes are steep to precipitous and tea is grown on slopes of up to 50* or more. In Rungwe the country is mountainous, but the culti- vated hillsides are, as a rule, more gently sloping. In Bukoba, the landscape is gently undulating to flat. Soil conservation measures are necessary in all areas but, in general, the soils appear to accept the heaviest rainstorms on the steepest slopes without serious erosion (Annex 2). B. Population and Tenure 3.05 Population. Population densities in the tea growing areas are among the highest in the country, reflecting the fertile soils, adequate rainfall, and the generally healthy climate of the hilly areas where the crop is grown. Although the land available per family averages as much as 32 ha over Tanzania as a whole, the area available in tea growing areas varies from about 2 ha per family in Bukoba to over 4 ha in Usambara. By contrast, according to the 1967 census, in Lupembe where the land is at presen. spars, settled there were 27 ha per family available for cultivation. Lupembe was at one time more heavily settled, but a general exodus of population took place some years ago due to the lack of viable cash crops in the area and to the very poor maize yields realized from the only varieties available at the time. Presently a rapid, spontaneous resettlement of the area is taking place, activated mainly by the recent very successful introduction of a hybrid maize campaign in the area and by the attraction of tea now being developed as a cash crop. 3.06 Tenure. In the past, the usufruct of land was allocated to individuals by the traditional land authorities, who were the leaders, or elders, of the clan. Cultivators and their recognized descendants could retain these rights to land that was being rested and had remained unculti- vated for some years. In 1969, Government terminated these traditional rights and at present district councils and local Tanzanian African National Union (TANU - the national political organization) leaders have broad discretionary powers to permit occupancy of unused land. Any allocation of land to accommodate future tea planting can be finalized by the local council in cooperation with TTA. C. Production, Yields, Extension and Research 3.07 Production. At present, 94% of tea production in Tanzania arises from privately owned tea estates and privately developed outgrowers whose green leaf is processed by estate factories (paras 2.06 and 2.07). Small- holder tea occupies 18% of the total area planted to tea, but produces only about 6% of the national crop, since much of this area is newly planted and is not yet in bearing. By the end of fiscal 1969 (June 30, 1969), 1,955 ha of smallholder tea had been planted since the first trial plantings in 1961. 3.08 Yields. Yields of mature tea in Tanzania average about 900 kg/ha of made tea. Due to the recent introduction of fertilizers and new plantings, yields have increased 8.6% annually over the last 10 years, and are still rising, although at a reduced rate over the last three years. In a good year some estates with fully mature tea have averaged 1,500 kg/ha of made tea. Clonal material is becoming more widely available and with its increasing utilization, yields will certainly continue to improve. - 5 - 3.09 Extension. TTA has responsibility for all aspects of smallholder tea development. It is described more fully in paragraphs 6.01 to 6.05 and Annexes 3 and 4 of this report. It is responsible for carrying out extension in all tea areas. Field staff are seconded to it and financed by the Ministry of Agriculture and Cooperatives at the ratio of one assistant field officer for every 100 smallholders and one field officer to about 300-500 smallholders. Recruitment of new growers is carried out by this staff with help from local TANU officials. Extension staff also approve smallholder plots as being suitable for tea growing, and advise growers on land pre- paration, planting, fertilizing, cultivating, weeding, mulching, pegging, pruning and plucking. TTA has provided one Area Tea Development Officer with supporting staff in each of the four main tea producing areas to coordinate and administer the work of the field extension staff. The morale and effectiveness of this service is good. Extension staff are also responsible for making arrangements for the collection of green leaf, and for the delivery of planting material from the nurseries to growers. The actual production of seedlings and clonal material in the nurseries is carried out by TTA, using staff specially allocated to this work. 3.10 Research. Apart from some field trials conducted by the Ministry of Agriculture and Cooperatives in Bukoba, all tea research is carried out by the East African Tea Research Institute (TRI) at Kericho in Kenya. TRI operates a substation in Tanzania at Marikatanda in Usambara and carries out irrigation trials on tea at Mufindi in the south. It serves Kenya, Uganda and Tanzania, each of which contributes to its budget in proportion to the amount of tea produced. TRI is a well established organization of interna- tional repute. It is the main source of technical guidance to the tea industry and has made major contributions to the productivity of tea in East Africa. At present, on the advice of IDA, TRI is applying to UNDP for funds to strengthen its research capacity and to provide for an advisory service to operate in the three East African countries. D. Cooperatives, Communications and Labor 3.11 Cooperatives. The cooperatives are regulated by the "Cooperative Societies Act, 1968" and by the "Cooperative Societies Rules, 1968". There are some 1,750 cooperative societies in Tanzania, incorporating about 20% of all farmers; these primary societies may combine into unions and at present there are 26 of these. Government is pressing for amalgamation of the unions into 17 regional bodies with which it hopes all the primary societies will become affiliated in the course of the next few years. 3.12 The cooperatives are supervised by the Registrar of Cooperatives in Dar es Salaam, whose establishment is a sub division of the Ministry of Agriculture and Cooperatives with a complement of about 500 employees through- out the country. The affairs and accounts of the cooperatives are audited by the Audit and Supervision Fund (ASF), a self-financing Government organi- zation. ASF recovers its costs by charging audit fees, and employs about 100 people including 10 qualified accountants. Government runs a Cooperative College in Moshi in close cooperation with the Registrar's office. Basic and advanced courses for cooperative employees are given each year. - 6 - 3.13 Communications. The four areas in which smallbolder tea develop- ment is proposed are widely scattered (Map 1). Only one, West Usambara, is relatively close to a sea port -- about 130 km from the port of Tanga. For this area, tea and supplies must be transported through the mountains by truck for roughly 40 km to reach rail head. Bukoba, which lies on Lake Victoria at the northwest corner of the country, uses water transport across the lake to Mwanza where a rail connection with Dar es Salaam is available. A new port is being constructed a few miles from Bukoba which will permit the transport of loaded freight cars across the lake to the rail head at Mwanza. Rungwe and Lupembe are in the southwest corner of the country and have neither rail nor water connections with the nearest port of Dar es Salaam, about 1,000 km distant. Truck transport is now used for supplies between these locations and the port -- a two-day trip. The Tan-Zam Railroad, now being constructed by the Chinese, will serve Rungwe and Lupembe and is scheduled to be in operation in 1975/76. 3.14 Labor. Most of the population live in rural areas and are engaged in subsistence farming (para 2.02). These farmers have little cash income at present. There is a plentiful supply of labor in the tea growing areas for staffing tea factories, leaf collection vehicles and other project activities. The minimum wage in agriculture, including tea factories, is T Sh 3.85/day. IV. THE PROJECT A. General Description 4.01 The project includes continuation of the present planting program and subsequent maintenance and production of tea by 14,000 smallholders on about 8,300 ha in the four areas of Bukoba, West Usambara, Rungwe and Lupembe. The tea would be grown either on growers' existing holdings, on individually owned composite blocks on unutilized land, or on communally owned and oper- ated Ujamaa village blocks. The project, through TTA, would also finance the collection of green leaf from growers, and the processing, marketing and export of made tea. Development would be completed by 1982, but the whole area would be planted to tea by 1974. The development period for the purpose of disbursement of IDA funds would be through 1976. Thereafter, the project would be self-financing. The project would consist of: (a) strengthening of TTA by provision of technical services and construction and equipping of staff houses, offices, workshops, stores for TTA field operations, and training facilities at Kiwira in the Rungwe district; (b) construction of two and expansion of three tea factories and provision of processing equipment for them, phased approximately as shown in Annex 5; (c) provision of extension and leaf collection services for project growers and related transportation; - 7 - (d) construction of about 300 km of all-weather roads in the project areas, and provision of consultants' services for construction and maintenance of these roads and for the training of Tanzanian personnel in this connection; (e) establishment and operation of tea nurseries and mother bushes to provide planting material for the project growers; and (f) provision of credit to project growers for the purchase of planting material and fertilizers. 4.02 TTA would manage the project and purchase, own and operate the equipment and facilities required for leaf collection, processing and marketing. It would provide all the extension staff, on secondment from the Ministry of Agriculture and Cooperatives, required to recruit and instruct farmers in modern tea production techniques and be responsible for the pro- vision of adequate good quality planting material. Credit would be provided by the Tanzania Rural Development Bank (TRDB) and would be channelled to growers through existing cooperative societies. Road improvement would be carried out by units established under Comworks. Further details of the organization and management of the project are given in Chapter VI. B. Detailed Features 4.03 Planting Program. TTA would recruit tea smallholders in accordance with the schedule given in Annex 1, Table 3. Each grower would plant 0.2 ha in the first year and if his performance is satisfactory, he would plant a further 0.2 ha in each succeeding year until he had planted 0.6 ha in total. Spacing would be 3 feet by 4 feet. Planting would be carried out under the supervision of, and with material supplied exclusively by, TTA. 4.04 Rate of Development. The rate of development proposed for the project is very rapid. In the first year of the project, about 3,000 ha are scheduled for planting, with slightly smaller areas scheduled for 1973 and 1974 (Annex 1, Table 3). However, TTA is well ahead of schedule in the recruitment of growers, and planting material in sufficient quantity to meet the proposed planting schedule for 1972 and 1973 is already growing in TTA nurseries or will be planted shortly. Further consideration is given to this subject in paras 6.08 and 6.09. 4.05 Administration. TTA, which would manage the project, would be strengthened by increasing the number of management personnel at its head- quarters in Dar es Salaam and in the field extension service and by providing technical assistance in processing (Annex 3). In addition, the project would provide houses, offices, workshops and stores for TTA's field operations. 4.06 Factories and Equipment. Ten factories owned by TTA fully equipped for CTC 1/ processing and with the requisite storage and workshop facilities 1/ This process is described in Annex 5. - 8 - would be erected by 1982. Each factory would be completed in three phases to capacities of 0.57 M kg, 1.1 M kg and 1.7 M kg of made tea per annum, in accordance with the schedule given in Annex 5. 4.07 Transport. Vehicles and spare parts would be provided to enable the extension services to perform their functions efficiently on the scale of one field officer to every 500 growers and one assistant field officer to every 100 growers. This would require 20 four-wheel-drive pickups and 57 motorcycles. 4.08 Roads. It will be necessary to improve about 300 km of road to collect green leaf and to transport the tea from the factories. These roads would be distributed as shown below: Km Rungwe 105 Bukoba 85 Lupembe 75 West Usambara 35 Total 300 Assurances were obtained during negotiations that all the roads would be completed within 2 years of the signing of the Credit Agreement, that they would be constructed to a minimum standard as described in Annex 6 para 14 and that Government would satisfactorily maintain these roads after the construction period. 4.09 Assurances were also obtained that using IDA funds, Government would establish and operate two road construction units, one each in Bukoba and Lupembe, with plant and establishment outlined in Annex 6 and employ consultants, acceptable to the Association, for at least 2 years, to supervise and coordinate the construction and subsequent maintenance of the roads and to train local staff; and that Government would assign to these two units sufficient supporting staff and all other resources necessary for the com- pletion of the project roads in these two areas. The units so established would subsequently be available to construct and maintain other feeder roads in the areas. 4.10 The construction of roads in the Rungwe and West Usambara areas is expected to be financed by Norway, which has expressed willingness to finance feeder road programs, including tea roads in these two areas. The proposed arrangements between Tanzania and Norway for tea road construction and maintenance in Rungwe and West Usambara would be along the same lines as outlined for the Bukoba and Lupembe areas. The completion of arrangements satisfactory to IDA for financing, supervising and constructing the project roads in the Rungwe and West Usambara areas will be a condition of effect- iveness of the IDA credit. 4.11 Nurseries. TTA would continue to operate existing nurseries and establish new nurseries for production of seedlings and vegetatively - 9 - propagated (V.P.) material in adequate amounts and at suitable sites to enable them to supply all project growers with high-grade planting material (Annex 1, Table 4). They would also establish mother bushes of suitable clonal selections to provide V.P. material for farmers to establish their own nurseries. TTA would provide growers with all V.P. material by 1974 and would no longer need to continue nursery work once this program had become established by 1975. 4.12 Credit and Inputs. Credit to growers for planting material and fertilizers during the first two years until bushes came into bearing, and seasonal credit for annual fertilizer requirements thereafter would be provided through their cooperatives. All growers would be cooperative members. 4.13 The Tanzania Rural Development Bank. The principal agri- cultural credit institution in Tanzania, the National Development Credit Agency (NDCA), has recently been changed with the concurrence of IDA into a new institution, the Tanzania Rural Development Bank (TRDB). The two institutions and the circumstances leading up to this change are described in Annex 7. 4.14 NDCA was the credit channel for two IDA credits -- one for general agriculture (80-TA) in January 1966 for US$5 million, and one for flue-cured tobacco (217-TA) in September 1970 for US$9 million. About US$1.6 million of 80-TA was used by June 30, 1971 for smallholder tea development. 4.15 TRDB will be the credit channel for loans to TTA and the cooperatives. To TTA it will make available funds covering processing equipment for tea factories, tea factory buildings, vehicles and spare parts for TTA leaf collection services, office equipment for TTA head- quarters and establishment of nurseries. To the cooperatives it will make available loan funds for on-lending to project growers required for financing tea stumps and fertilizer. 4.16 TRDB's staff, mostly former NDCA employees, have had adequate ex- perience in appraising the creditworthiness of cooperatives and subsequent credit supervision. 4.17 IDA funds would be passed on to TRDB by the Treasury at 4% p.a. who in turn would on-lend to the cooperatives and to the Tea Authority at 8-1/2% p.a. 4.18 T Sh 0.20/kg of green leaf would be deducted by TTA factories over 13 to 15 years for payment of interest and principal on TRDB loans to cooperatives for the purchase of planting material and fertilizer. The proceeds of this cess would be remitted directly by TTA to TRDB and the cooperatives would receive records of the remittance. Assurances were obtained at negotiations that this direct payment procedure would be followed. The term of 13 to 15 years would include three to five years of grace during which period interest would be capitalized because of insufficient income. - 10 - V. COST ESTIMATES AND FINANCIAL ARRANGEMENTS A. Project Cost and Financing 5.01 Cost. Total project costs commencing from July 1971 are estimated at about T Sh 115 million (US$16.1 million). Approximately T Sh 13.3 million (US$1.9 million) would be financed by Norway, and about T Sh 26.5 million (US$3.7 million) would be financed by Government and T sh 75.0 million (US$10.5 million) by IDA. The foreign exchange component is about T sh 41.6 million (US$5.8 million). Detailed cost estimates are shown in Annex 8 and the table below: - 11 - Summary of Project Cost Estimates (T Sh '000) (US$'000) % For- For- Foreign Local eign Total Local eign Total Exchange Nursery Development Costs 12,872 678 13,550 1,802 95 1,897 5 Growers' Fertilizer 664 2,780 3,444 93 389 482 81 Road Construction 6,283 17,214 23,497 880 2,410 3,290 73 Factories and Leaf Collection Factory Building and Equipment 4,287 13,452 17,739 600 1,883 2,483 76 Leaf Collection Ve- hicles and Equipment 179 485 664 25 68 93 73 Subtotal 4,466 13,937 18,403 625 1,951 2,576 76 Extension Services Staff Costs and Allowances 14,985 214 15,199 2,098 30 2,128 1 Housing 969 171 1,140 136 24 160 15 Vehicles 126 544 670 18 76 94 81 Subtotal 16,080 929 17,009 2,252 130 2,382 5 TTA Headquarters Specialist Staff Costs 1,432 1,433 2,865 200 201 401 50 Staff Training 2,400 - 2,400 336 - 336 - Vehicles and Office Equipment 58 247 305 8 35 43 81 Subtotal 3,890 1,680 5,570 544 236 780 30 Credit Growers Purchase of Stumps 23,766 - 23,766 3,330 - 3,330 0 Seasonal Revolving Fund for Growers' Fertilizer Purchase 1,500 - 1,500 210 - 210 0 Subtotal 25,266 - 25,266 3,540 - 3,540 0 Costs Before Contingen- cies 69,521 37,218 106,739 9,736 5,211 14,947 35 Add Contingencies Physical 1,089 1,764 2,853 152 247 399 62 Price 2,610 2,632 5,242 365 369 734 50 Subtotal 3,699 4,396 8,095 517 616 1,133 54 Total Costs including Contingencies 73,220 41,614 114,834 10,253 5,827 16,080 36 - 12 - 5.02 Salaries and allowances for TTA's extension personnel and staff are based on salary levels presently paid for expatriate personnel and for Tanzanian staff. Physical contingencies include 10% for road construction and extension housing. A cumulative 5% p.a. for price contingencies is allowed for leaf collection vehicles, extension vehicles, factories and growers' fertilizer. Price contingencies for other costs are allowed at a cumulative rate of 3% p.a. 5.03 Additional capital investments in factories after 1976 would be as scheduled in Annex 5, Table 1. The additional investment would amount to US$5.9 million through 1983 (see also para 6.11). 5.04 Costs for fertilizer include the expense of purchasing fertilizer during the planting year and the immediately succeeding year. There would be no leaf plucked during these two years and fertilizer use during this period would be a capital cost. After the second year, green leaf would be harvested and growers would purchase fertilizer from the proceeds of their green leaf sales with use of seasonal credit financed by TRDB. 5.05 Proposed Financing. It is proposed that an IDA credit of US$10.5 million (T Sh 75.0 million) be made on standard terms to Government. The credit would cover 65% of project costs from 1972 to 1976 and Norway financ- ing is estimated to cover 12%. The Government would contribute US$3.7 mil- lion for local costs. It has approached the International Coffee Organiza- tion (ICO) for a loan on soft terms from ICO's Diversification Fund; ICO have expressed interest in providing about US$1.2 million in local currency for the project. This would become part of Government contribution. Foreign exchange and local costs covered by each source of financing are shown below: Foreign Exchange Costs Local Costs Total Costs US$ US$ US$ million % million % million % IDA 4.5 75 6.0 59 10.5 65 Norway 1.5 25 .4 4 1.9 12 Government 0 0 3.7 37 3.7 23 Total 6.0 100 10.1 100 16.1 100 5.06 Project cost estimates are free of import duties. Factory equip- ment, tractors and trailers are imported commercially free of duty and TTA purchases motor vehicles free of duty. The overall financing plan is shown below. - 13 - TANZANIA SMALLHOLDER TEA DEVELOPMENT PROJECT Financing Plan IDA Government NORAD Total TSh US$ T Sh US$ T Sh US$ T Sh US$ Mil. Mil. % Mil. Mil. % Mil. Mil. % Mil. Mil. % Nursery Develop- ment 9.48 1.33 70 4.07 .57 30 - - - 13.55 1.90 12 Road Construction for Bukoba and Lupembe 9.14 1.28 87 1.36 .19 13 - - - 10.50 1.47 9 Road Construction for Rungwe and W. Usambara - - - 1.42 .20 11 11.57 1.62 89 12.99 1.82 11 Factories and Leaf Collection Equipment 18.40 2.58 100 - - - - - - 18.40 2.58 16 Extension Services 12.11 1.69 71 4.90 .69 29 - - - 17.01 2.38 15 Credit 16.82 2.35 58 11.89 1.67 42 - - - 28.71 4.02 25 Tanzania Tea Authority Headquarters Specialist Person- nel Costs 2.87 .40 100 - - - - - - 2.87 .40 3 Staff Training 1.68 .24 70 .72 .10 30 - - - 2.40 .34 2 Vehicles and Office /1 Equipment .30 .04 100 - - - .30 .04 Subtotal 4.85 .68 87 .72 .10 13 5.57 .78 5 Contingencies 4.22 .59 52 2.14 .30 27 1.74 .24 21 8.10 1.13 7 TOTAL 75.02 10.50 65 26.50 3.72 23 13.31 1.86 12 114.83 16.08 100 /1 Less than .05%. - 14 - 5.07 The projections in Annex 9 show that during the first three years of the project TTA will build up a large surplus of cash, due to the sales of tea stumps, some of which were planted before the start of the project. This surplus will provide a cushion for the following four years, of which the last two will have a deficiency of cash inflows, likely to substantially deplete the accumulated surplus. Thereafter, the flows will be in balance with year 12 showing a stabilization of annual cash surplus. TTA will, therefore, require an eight year period of grace on its loan from TRDB, during which only interest would be paid, with a subsequent twenty year repayment period, so as to allow for any contingency caused by unfavorable cost or revenue deviations from the original assumptions. 5.08 TRDB will be the principal credit channel (paragraph 4.15). Other financing would be as follows: TTA would receive direct grants from Govern- ment towards the costs of services of experts employed by it, towards vehicles and spare parts for TTA extension services and staff houses and training facilities for extension services; the Ministry of Agriculture and Cooperatives would receive grants by way of annual budgetary allocations for the services of experts employed by it and for the services of Tanzanian extension service staff; Comworks would receive similar grants for the road construction machinery for Bukoba and Lupembe areas and for the construction of roads in those areas. 5.09 Repayments by TRDB of both IDA and government funds would also be over 28 years including 8 years of grace, during which only interest would be paid. B. Procurement and Disbursement 5.10 Procurement. Contracts for goods and services estimated to cost the equivalent of US$25,000 or more will be subject to international com- petitive bidding. This will include the procurement of vehicles, tea factories and road construction equipment for Bukoba and Lupembe. Because of their scattered distribution and the relatively small amount involved, contracts for construction of staff houses and for procurement of office equipment would not attract international competition and will be awarded following local competitive bidding. Tea cuttings, mulch, wire for shade construction and poles, all for nursery development, may be purchased under negotiated contracts, according to procedures acceptable to the Association. Any contract for goods and services estimated to cost less than the equiva- lent of US$5,000 may be awarded on the basis of quotations from local suppliers. 5.11 Procurement of fertilizer will be through international competitive bidding with a local preference of 15% or the appropriate customs duty, which- ever is lower. 5.12 Disbursement. The credit of US$10.5 million would be disbursed as follows: - 15 - (a) 100% of foreign expenditures on processing equipment for tea factories, road construction machinery for Bukoba and Lupembe area roads and the services of experts employed by both Government and TTA - US$2.4 million; (b) 100% of foreign expenditures or 70% of local expenditures on tea factory buildings, vehicles and spare parts for TTA leaf collection services and office equipment for TTA head- quarters, vehicles and spare parts for TTA extension services, fertilizer and tea planting material - US$3.9 millionz (c) 70% of total expenditures on establishment of nurseries, construction of roads in Bukoba and Lupembe areas, staff houses and training facilities for extension services and services of extension service staff employed by Government and seconded to the project - US$3.6 million; and (d) an unallocated amount of US$.6 million representing contingencies on the above categories and transferable to them as required. 5.13 As the project is a continuation of an on-going program, it would be desirable to finance certain expenditures retroactively to July 1, 1971. The amount involved is about US$580,000 and consists of: (a) US$85,000 for TTA's payments to personnel; (b) US$420,000 for cuttings and related materials for TTA nurseries as these cuttings must be in the ground by January 1972 so as to mature in time for distribution for the 1972/73 planting season: (c) US$29,000 for leaf collection vehicles required for the increased output of the first half of calendar 1972; and (d) US$46,000 for vehicles for extension staff advising new growers. 5.14 Since a phase II project is envisaged following 1976, it is pro- posed that any excess funds remaining in the credit account at the end of the disbursement period be cancelled. Applications for disbursement would be supported by contracts, shipping documents, and certified records of expenditures. A schedule of estimated disbursements by quarters is shown in Annex 10. C. Accounts and Audit 5.15 The system of accounts of TTA, which has been in business for about two years, requires reorganization to cope adequately with the greatly ex- panded activities envisaged under the project. During negotiations it was confirmed by Government that a Financial Controller had recently been recruited under the US technical assistance program and evidence was presented at negotiations that the design of a satisfactory accounting system to record the progress of the project, with a breakdown of all expenses according to their purpose (extension services, nursery development costs, leaf collection, factories, central office of TTA) and function (technical - 16 - assistance, personnel costs, travel, operation of factories and leaf collect- ion) had reached an advanced stage. Assurances were obtained during nego-- tiations that the accounts would enable IDA to readily identify expenditures in terms of the headings agreed in the credit documents. Assurances were also obtained that the tea cooperatives receiving loans from TRDB under the project would maintain individual project grower accounts and that Government would forward to the Association, TTA and TRDB, not later than four months after the end of each fiscal year, a report on the operations and financial condition of the cooperatives. The tea development cooperative officer and his staff would be responsible for seeing that these accounts are properly maintained. .5.16 The accounts and the general administrative systems and procedures of the TRDB would be those maintained by its predecessor, NDCA. These have been found satisfactory in connection with IDA's two previous projects. .5.17 Assurances were obtained during negotiations that TTA and TRDB would have their accounts audited by independent auditors acceptable to the Association and that their audited accounts and auditors' report would be furnished to the Association not later than four months after the end of their financial year. VI. ORGANIZATION AND MANAGEMENT A. The Tanzania Tea Authority 6.01 TTA was established by the Tea Ordinance, Cap. 291 as amended by the Tea Ordinance (Amendment) Act, 1968 (Annex 4), as a parastatal body corporate to be responsible for all aspects of smallholder tea development as well as for the functions previously exercised by the Tea Board of Tanzania. Under the guidance of the Minister of Agriculture and Cooperatives, who appoints its members, TTA is empowered to: promote, supervise and implement programs for the development of the tea industry, including the supervision of planting. cultivation and harvesting of tea; inspect plant- ations and green leaf' negotiate agreements for leaf processing; organize the purchase and transportation of green leaf- participate in the establishment, control and management of tea factories- control tea marketing, and act as a national marketing agent. TTA has not to date assumed responsibility for the two latter activities, which would require the Minister to publish an enabling order. TTA is also operating its own nurseries and is producing seedlings and clonal planting material for the smallholder program. 6.02 TTA's level of staffing is not adequate to meet future project requirements and certain changes to the TTA Board's composition and some of its procedures (Annex 3, para 7) should be considered by Government. During negotiations assurances were obtained that Government would review the level of TTA staffing and upgrade the more senior positions and those of their supporting staff. In doing so the salary levels relating to these positLons would be increased in view of the increased responsibilities, so as to attract Tanzanians of the highest ability to fill those posts. As a - 17 - condition of effectiveness, TTA will be required to employ a Chief Marketing Officer and a Planning Economist, whose experience and qualifications are satisfactory to the Association. During negotiations assurances were obtained that an Accountant with experience and qualifications acceptable to the Association would be employed before July 1, 1972. His main task will be to assist the Financial Controller (para 5.15) in the implementation of the new accounting system and cost control over the four project areas' activities. Assurances were also obtained that until completion of the project, TTA will consult with the Association prior to making any changes in the positions of its Chief Executive, Financial Controller, Accountant, Planning Economist, Chief Marketing Officer and Chief Factory Officer. B. Extension Services and Staff Training 6.03 TTA is entirely responsible for all advice on tea growing in the smallholder tea development areas. It has established an organization in each area headed by an Area Tea Development Officer, who is an agricultural officer with university training in agriculture and a professional officer in the Ministry of Agriculture seconded to TTA. Under this officer is a staff of field officers and assistant field officers of diploma and certif- icate level, respectively 1/. In addition to their basic training in agri- culture, these officers receive specialized training in smallholder tea development at the TRI Center at Amani in Usambara. Future requirements necessitate construction of new training facilities expected to be located at Kiwira in the Rungwe district. 6.04 At present TTA's extension staff of field officers and assistant field officers is adequate. Many of these people are newly qualified and are still gaining experience and knowledge of the practical problems of tea development, but their total numbers exceed the ratio of one field officer to 500 farmers and one assistant field officer to 100 farmers that is considered adequate for project operation. They will therefore be receiving "on-the- job" training until such time as the number of farmers in each area reaches the totals planned under the project. 6.05 TTA's extension staff is seconded to it from the Ministry of Agriculture and Cooperatives and is under the direct control of TTA for operational purposes. TTA finances travel costs and is responsible for providing houses and offices for this staff. However, the Ministry continues to be responsible for providing and paying the salaries of this staff, and would therefore cover most of the extension costs of the project without charge to TTA or the growers, as it does for other crops. Assurances were obtained during negotiations that these arrangements would continue and that the Ministry would supply the appropriate number of extension staff as and when required by TTA. 1/ Certificate level is reached after two years' training following school certificate. A diploma requires success in a three-year training course following school certificate with at least four credits. - 18 - C. Smallholder Recruitment 6.06 By the end of fiscal 1969 (July 1, 1968 to June 30, 1909), nearly 4,600 smallholders were growing tea in Tanzania, each averaging about 0.4 ha. TTA plans to recruit a further 16,000 smallholders during the second plan period, 1971-74. During fiscal 1970, TTA attracted nearly 2,300 new growers, exceeding its recruitment target of 2,079. However, the number of new growers needed to achieve the planting targets increases rapidly to almost 9,000 new growers in 1972 (Annex 1, Table 3). Plans for 1971/72 are well forward, and TTA already has lists of potential smallholders for the next planting season well in excess of the numbers planned in all arcas. 6.07 TTA relies heavily on help from local leaders and administr.tive officers of TANU in mounting intensive grower recruitment campaigns. These campaigns have been very successful and there is every indication that they will continue to be so. The extension services would continue to approve all individual smallholder plots as being suitable for tea cultivation. Theii suitability is judged by individual plot inspection and testing of soil depth. General suitability of soils in the areas has been established by large scale soil surveys. 6.08 Planting of tea in blocks in contiguous holdings and the formation of Ujamaa villages, would form part of the campaign, but local strategy would depend upon plans adopted by the Development Committees in each region. Where ver feasible, planting in blocks would be encouraged as this simDlifies grower recruitment, supervision, and green leaf collection. For example, in Bukoba, the blocks planted to tea by individual farmers average about 60 ha planted over three years by 100 individual farmers. In Lupembe, where the Ujamaa development is going ahead rapidly, the 1971 campaign included planting on 77 Ujamaa farms with an average membership of 27 families. This development has made achievement of the very ambitious planting targets possible and will enable further development to take place as planned. 6.09 If fulfillment of the recruiting and planting targets are delayed by as much as a year, factory construction could also be delayed without increasing costs. Disbursements by IDA would be delayed as well. However, proceeding with the project as appraised is considered justifiable. Assur- ances were obtained at negotiations that Government would ensure that the tea planting program would be phased approximately as set out in Annex 1, Table 3. D. Leaf Collection 6.10 Leaf collection centers would continue to be established on roads serving the smallholder areas at selected sites so that growers would not have to transport their green leaf more than about 3 km to collection centers. Until full development in an area has been achieved and final sites to suit the actual distribution of smallholders can be selected, these collection cen- ters would continue to be built of temporary materials supplied and erected by the growers themselves at no cost to TTA. At full development, sites - 19 - would be chosen and collection centers would be constructed of permanent materials. Materials available locally and all labor required would be provided free by growers, but building materials that have to be purchased would be financed by a loan from TRDB to the cooperative concerned. The cooperatives would remain in charge of collection center operations, weighing and recording, and preparation of leaf for transport to factories. TTA would be responsible for providing transport and leaf inspection, and for sche- duling leaf collection from collecting centers to factories. Further details of green leaf collection arrangements and the types of transport required are given in Annex 11. Assurances were obtained at negotiations that TTA would coordinate leaf collection schedules and acquire, maintain, and operate appropriate leaf collection vehicles required for leaf collection services to the project growers. E. Processing of Green Leaf 6.11 The projected production of made tea from existing and proposed smallholder plantings is shown in Annex 12. At present smallholder leaf is processed in factories at Bukoba and Lupembe and since April 1971, at its factory at Mponde in West Usambara. The Lupembe factory is owned by TTA. TTA now holds 907 of the Bukoba factory and the Bukoba Corporation Union holds 10% (para 2.07). Some smallholder leaf in the south of Usambara would continue to be processed by the privately owned factory at Ambangulu until such time as a second TTA factory is justified by increased production. Similarly, the two private factories in Rungwe would continue to process smallholder tea until TTA's factory, at present under construction at Katumba, comes into production in early 1972. Thereafter, factory construct- ion would be phased to process all smallholder leaf in accordance with Annex 5. The program would ultimately require a total of 10 factories by 1982, most of them with a capacity of 1.7 M kg of made tea per annum. Factories would be built in three phases to process first 0.57 M, then 1.1 M and finally 1.7 M kg/p.a. of made tea. Details of factory design and machinery, and the considerations that led to the choice of factory size, are described in detail in Annex 5. Assurances were obtained during negotiations that TTA would construct and operate additional tea factories to provide adequate processing capacity as required by the tea planting program (para 6.09); and that TTA would employ contractors acceptable to IDA, upon terms and conditions satisfactory to IDA. 6.12 TTA intends to manage all of its own factories in the future. It is essential that these be supervised by experienced managers, to ensure that quality tea continues to be produced and to train local management staff to take over in five or six years' time (Annex 5). Assurances were obtained during negotiations that until completion of the project, TTA would (a) employ a factory manager for each of its tea factories in Mponde, Lupembe and Katumba, whose experience and qualifications were satisfactory to IDA, (b) employ an experienced tea processing group or groups as visiting consultants, acceptable to IDA, for at least two years and on terms and conditions acceptable to IDA and (c) make arrangements satisfactory to IDA for the sound management of any other factories under its control. Parts - 20 - (a) and (b) of this assurance will be conditions of effectiveness of the credit. F. Land Clearing 6.13 Most of the Project tea would be planted on land that had already been cultivated, or, in Bukoba when block planting is carried out, on grassland. However, a small part of the Usambara area (possibly about 13C ha) would be cleared from heavy forest. Clearing would be done by hand by the farmers concerned at no cost to the project over the next three years in preparation for 1974 planting. This clearing of forest areas is corsid- ered necessary by Government to provide additional income for farmers living on the forest edge in conditions of considerable population pressure. G. Credit Channel 6.14 As in Credit 80-TA and 217-TA, and as a part of its institution building policy, Government wishes to use the TRDB as a credit channel for Loans to TTA and cooperatives; TRDB's investment policy is satisfactory to IDA and assurances were obtained at negotiations that this policy would not be changed without prior consultation with IDA. As Annex 9, Table 5 shows, TRDB can expect a considerable income from its participation. The first seven years alone will yield TRDB an aggregate of about TSh 12.8 million (US$1.8 million) in net interest revenues. 6.15 Since TTA, with some strengthening, could operate the project directly (as is the case with the Kenya Tea Development Authority and Uganda Tea Growers' Corporation), TRDB's inclusion would have two main effects: it would cause some administrative duplication, and it would bring about a transfer of funds generated by the tea industry to an institution which assists development in other sub-sectors of agriculture. As the TTA would be able to operate effectively without these funds, these costs are acceptable and, on balance, considered to be in the interests of overall development. VII. PRODUCTION, MARKETING AND FARMERS' BENEFITS A. Production and Yields 7.01 The utilization of fertilizers has only recently been adopted on most estates, and average yields have been rising accordingly to the present level of 900 kg/ha. In addition to ensuring full fertilizer use on small- holders' tea, TTA is taking steps to introduce improved selected clonal material for smallholder plantings and by 1974 all planting material will be vegetatively propagated. The projected yield of smallholder tea has therefore been increased above the present average as shown in Annex 1, Table 2. Estimated yields at maturity vary according to the area from 1,010 to 1,300 kg/ha. They are similar to yields now being obtained in Kenya and Uganda and are considered to be realistic. - 21 - 7.02 Production from project plantings would start in 1974, when it is estimated that 379 metric tons of made tea would be produced. Production is expected to increase steadily until 1984 (full maturity of project plant- ings) when project output is estimated at 9,600 tons of made tea. Facilities for manufacturing and marketing tea would be enlarged as production increases. Production at maturity would be derived from the four areas as shown below: Production at Maturity by Area Production Area Tons Percentage Rungwe 4,443 46.5 Bukoba 2,106 22.1 Lupembe 2,286 23.9 West Usambara 714 7.5 Total 9,549 100.0 Source: Annex 15. 7.03 Although production from plantings under the project will be about 9.5 M kg., production from all smallholder tea in Tanzania will be about 13.9 M kg from 1984 onward. The 4.3 M kg difference arises because some smallholder tea was planted as early as 1961 and the additional production would develop from the early plantings. B. Marketing and Prices 7.04 Marketing. Made tea would be transported by lake steamer, road, and rail to Dar es Salaam or Tanga. From these ports the tea would be shipped to markets in importing countries, in particular, Mombasa (Kenya), London and the United States. TTA would be responsible for marketing made tea and would arrange transport of the tea from factory to port and export. All tea would be shipped through the State Trading Corporation and TTA would have a marketing specialist, designated Chief Marketing Officer (para 6.02), who would work closely with the State Trading Corporation to assure prompt shipment of tea from Tanzanian ports. It is important that tea be shipped promptly as it deteriorates with time. He would supervise the marketing and shipment of tea from Tanzanian ports by TTA. The member countries of the FAQ Study Group on Tea, coordinating tea marketing action internationally, have received a statement of Bank Group interest in tea generally and have been informed of the project. No objections have been raised. 7.05 Prices. Prices for Tanzanian tea are projected at T Sh 7.35/kg CIF London from 1972 through 1980. After 1980, prices are expected to rise slightly to about T Sh 7.72/kg. The projected prices are lower than prices in recent months because a surplus situation is expected to develop in future world markets (Annexes 12 and 13). - 22 - 7.06 Marketing Costs. Costs of transporting made tea from factories to port vary according to factory location. The lowest costs are for the area closest to the sea, West Usambara; the highest charges are for the factories which are the greatest distance from the coast, at Bukoba. Transport charges for Rungwe and Lupembe are expected to decline after 1975 because the Tan-Zar Railroad is expected to start running to Dar es Salaam in that year (Annex 12, Table 1). The cost of shipping tea from Tanzanian ports to London is estimated at about T Sh 1.16/kg. C. Farmers' Benefits 7.07 Each farmer participating in the project would receive material to plant about 0.6 ha tea over three years. Tea farmers are smallholders who now are engaged in subsistence farming and have very little, if any, cash income. In general, they have two to three acres of subsistence crops consisting of maize, bananas, pulses, beans, and cassava. Some of them grow Arabica coffee, but tea would in no case replace coffee. A smallholder family has an average of three to six persons working on the farm and would have adequate labor resources to provide the 160 man-days of work p.a. required for 0.6 ha of tea, in addition to operating his existing small- holding. 7.08 Wages are costed at zero because of the subsistence nature of farming in the tea areas, and net cash income per smallholder from tea is estimated at T Sh 1,782 to T Sh 2,272 p.a. at full maturity, depending on the region in which tea is produced (Annex 14). These returns are attractive to farmers in all tea areas, and there is considerable demand from farmers to be included in the tea project. 7.09 The net income earned by individual smallholders from growing tea would be larger than earned from full-time employment of the family head at the minimum wage for agriculture, T Sh 3.85/day. VIII. BENEFITS AND JUSTIFICATION A. Economic Benefits 8.01 The project's principal economic benefit would be larger net foreign exchange earnings from the export of tea. At project maturity gross earnings would amount to T Sh 63.6 million (US$8.9 million) and net earnings would be about T Sh 55.8 million (US$7.8 million). The increase in cash in- come to farmers (para 7.09) would pave the way for secondary benefits in the project areas. These benefits have not been quantified, but they would en- hance the project's economic justification. 8.02 On the basis of yields, production and prices given in Chapter VII, and of costs given in Chapter V and Annex 8, and assuming a project life of 50 years, the rate of return to the economy from investments in the project is estimated at 17% (Annex 15). This rate of return assumes a - 23 - zero labor cost. Wages are assumed at 0 because of the very limited opportunity for employment for cash wages and, in any event, actual wages even for limited opportunities would not be more than half the legal minimum wage of T Sh 3.85/day. If labor is priced at T Sh 1.92/day, the rate of return would be 14.0%. 8.03 Economic rates of return were also developed for each of the areas but no costs for the central office of TTA were included for these comparison analyses. The rate of return ran from a high of 24% in Rungwe to a low of 8% in West Usambara for a 50-year period and with wages at zero. If labor is costed at T Sh 1.92/day being the current average daily rate, the range is from 19.6% in Rungwe to 5.9% in West Usambara (Annex 15). If central of- fice costs are allocated to the tea producing areas, the rate of return for West Usambara would be reduced to 7%, the cost of the factory already com- pleted in this area being treated as a sunk cost. 8.04 The reasons for the low rate of return for West Usambara are associated with higher costs for road construction, longer hauls for green leaf collection, economies of scale in manufacturing and lower yields than in Rungwe and Bukoba. The yields at full maturity in West Usambara and Lupembe are estimated at 1,010 Kg/ha, compared with 1,300 and 1,200 Kg/ha in Bukoba and Rungwe, respectively. The factories to be built in West Usambara are somewhat smaller than the factories in the other areas and, therefore, require larger investments and higher operating costs per kilogram of made tea than in the other areas. Also, the distance for hauling green leaf from leaf collection centers to the factories are somewhat longer in West Usambara than in the other areas and leaf collection costs are some- what higher, due to difficult terrain and longer carries, as shown below: Costs per Kg (Tsh) Factory Factory Leaf Collection Area Investment Operating Cost Cost Rungwe 1.90 1.41 0.51 Bukoba 1.46 2.33 0.57 Lupembe 1.64 2.50 0.55 West Usambara 3.47 6.28 1.36 Average 1.86 2.24 0.60 8.05 The low rate of return for West Usambara poses the question of its inclusion in the project. The area has at present a small amount of Arabica coffee grown as a cash crop, plantings of which cannot be increased by in- ternational agreement. There is a current program for the planting of carda- moms (a spice) under forest but the market and area suited to cardamoms is limited. The development of cash crops in the area is desirable to improve the standard of living and provide employment opportunities, but there is no alternative development possible other than tea. With these considerations in view, Government had already embarked upon tea development in the area and has established nurseries to cover plantings up to 1974; seedlings and V.P. - 24 - material for the 1972 and 1973 plantings are already growing in the nursery beds. In addition a factory to process smallholders' green leaf has al- ready been completed at Mponde, and will be operating during 1971. TTA has already recruited growers for the 1971 season, and at present there are over 200 ha of outgrower tea planted under the scheme in Usambara. Under these circumstances it would be unrealistic to expect the Government to cease tea development in this area, and it is in fact fully committed to continue the program. 8.06 Indirect benefits arise from increasing employment opportunities which will restrict migration to the towns, thus avoiding an increase in the social costs involved in supporting the unemployed in the towns. It i difficult to assess the value of this benefit. Other indirect benefits from project investments for West Usambara would arise from the markedly greater influx of cash to the local economy, at present based largely on subs.stence. This would arise both from income from tea and from employment. Multlier effects would be facilitated by road improvements, allowing the population greater mobility and easier access for trade. The improved roads would in fact allow development to expand in all sectors in areas that are presently isolated by the very steep and mountainous nature of the topography. Con- sidering these factors and in view of the fact that the IDA commitment in the area would amount only to US$0.6 million out of a total project commit- vent of about US$10.5 million, the Usambara area has been included in the project as requested by Government. B. Sensitivity Analysis 8.07 Sensitivity analyses were run for each area and for the total project assuming that the costs were decreased in 10% steps to 80% and that they were increased in 10% steps to 120% of those shown in Annex 15, Table 1. Sensitivity analyses were also run for tea prices. Tea prices, CIF London, were first lowered by 5% and then raised in two steps of 5% each from the level shown in paragraph 7.05. The results of these sensitivity analyses are summarized in Annex 15, Table 2. 8.08 A separate sensitivity analysis was run to determine the effect of variations in fertilizer prices. Fertilizer prices were dropped to 90% and then 80% of those used in the cost tables and then raised from this level by 10% and 20% (Annex 15, Table 2). 8.09 When all costs were raised to 120%, the rate of return for the total project declined to 13.4%. Variations in fertilizer costs appeared to have little effect on the rate of return. Variations in prices received for tea also had a relatively minor effect. For the total project, the low price caused the rate of return to decline to 15.9% and the highest price caused the rate of return to increase to 19.6%, compared with a base rate of 17.3%. Rates of return for the individual areas showed variations of the same order of magnitude. - 25 - IX. AGREEMENTS REACHED AND RECOMMENDATIONS 9.01 During negotiations, agreement was reached on the following principal points: (a) Completion of tea roads in all 4 project areas within 2 years of the signing of the credit agreement and their subsequent maintenance (paras 4.08 through 4.10), subject to a condition of effectiveness under 9.03 (a) below; (b) Strengthening of TTA's accounting system, upgrading and expanding its staff, adding training facilities and securing secondment of Government extension staff (paras 5.15, 6.02, 6.03 and 6.05); (c) Phasing of tea planting program, organization of leaf collection services and provision of additional tea factories (paras 6.09 through 6.11); (d) Terms of loan repayments from cooperatives to TRDB and submission of tea cooperatives' annual accounts to IDA (paras 4.18 and 5.15); and (e) TRDB's investment policy will not be changed without prior consultation with IDA (para 6.14); TRDB's and TTA's audit (para 5.17). 9.02 The following will be conditions of effectiveness of the credit: (a) Government to complete arrangements satisfactory to IDA for the construction of the project roads in the Rungwe and West Usumbara areas (paras 4.08 and 4.10); and (b) TTA to complete arrangments satisfactory to IDA for the employment of: Chief Marketing Officer, Planning Economist (para 6.02), Factory Managers and the visiting consultants (para 6.12). 9.03 The proposed project constitutes a suitable basis for an IDA credit of US$10.5 million on standard IDA terms. November 16, 1971  TANZANIA SRLLHOILDER TEA DEVELOPME PROJECT DevelopMent Program Statistics Average Mbnthly and Annual Rainfall -() Area and Altitude No. of Jan. Feb. March April May June July Aug. Sept. Oct. Nov. Dec. Total Station (meters) Years Records RUNOWE Makete 1,158 23 259 253 427 651 315 100 56 31 17 20 168 273 2,570 Tukuyu 1,554 51 255 224 360 620 344 108 76 57 52 50 135 238 2,518 Musekera Estate 1,372 35 241 203 392 637 334 92 68 50 23 55 115 229 2,469 Chivanjee Estate 1,219 16 211 195 387 705 274 113 70 25 21 12 144 262 2,420 Ndala 1,600 7 277 308 437 378 132 56 23 11 24 55 214 343 2,258 Rungwe Estate 1,585 31 253 231 298 386 168 69 46 31 28 30 155 299 1,996 LUPEMBE Lupembe Estate 1,600 21 264 261 359 309 64 10 4 23 37 79 139 286 1,83h BUKOBA Bukoba ( 1,500 48 147 163 248 374 318 85 49 T? 110 137 184 191 2,083 Maruku to 17 158 164 228 388 281 67 38 68 117 158 228 157 2,052 Katoke 1,650 18 140 123 212 335 193 40 22 74 101 115 195 209 1,758 Kashozi ( 8 135 106 152 238 207 63 28 44 75 104 lo8 115 1,373 UAMBARA Axtangulu 1,150 41 64 63 189 450 543 160 106 106 95 114 129 78 2,007 qerkI1 1,kOO 16 64 56 115 232 280 103 98 82 75 86 100 88 1,378 June 2, 1971 TANZANIA SMALLHOLDER TEA DEVELOPMENT PROJECT Development Program Statistics Projected Yields of Made Tea (Kg/ha) AMa----------------------------------- Years from Planting--------------------------------- 0 1 2 3 4 5 6 7 8 9 10 At Maturity Rungwe - - 125 300 550 700 850 960 1,050 1,14o 1,200 1,200 Lupembe - - 125 195 325 520 680 810 910 960 1,010 1,010 Bukoba - - 125 300 550 650 800 1,040 1,170 1,230 1,280 1,300 Usambara - - 125 195 325 520 680 810 .910 960 1,010 1,010 June 2, 1971 TANZANIA SMALLHOLDER TEA DEVELOPMENT PROJECT Development Program Statistics Actual and Projected Outgrower Recruitment and Tea Planting Schedules Rungwe Luembe Bukoba Usambara Total Fiscal Year Outgrowers ha Outgrovers ha Outgrowers ha Outgrowers ha Outgrowers ha Up to 1969 1,398 639 1,100 496 875 298 1,205 419 4,578 1,852 1970 943 258 499 167 257 47 380 210 2,079 682 1971 1,057 1/ 200 2/ 1,600 1/ 131/ 834 1/ 235 360 2/ 237 3,8515/ 803 1972 4,602 6-/ 1,339 1,801 835 1,700 Sh2L- 677 313 8,780 3,029 1973 - 1,132 - 798 - 554 - 2081 - 2,692 1974 - 1,23 / - 630- - 5241/ - 186 - 2,572 Totals 8 00oo 800 5,000 3,057 3,666 2,200 2,622 1,573 19,280 11,530 1/ Area reduced due to shortage of planting material from estates, but outgrowers already recruited. 1970 and 1971 outgrowers will plant only 0.1 ha this year. 2/ About one half of this area is planted with vegetatively Dronagated material. 3/ Outgrowers already recruited. T/ About 50% of this area is planted with vegetatively propagated material. 9/ At the commencement of the project the outgrowers in the actual project areas will number approximately: Rungwe 1600, Iupembe 1900, Bukoba 1100 and Usambara 600. 6/ Largely planned for block planting. 7/ About 15% of this area is planted with vegetatively propagated material 8/ All of this area is planted with vegetatively propagated material. June 2, 1971 'FAST'7ASTTA SMALLHOLDER TEA DEVELOPMENT PROJECT Development Program Statistics Nursery Program: Number of Plants Producedl/ and Area to be Planted Rungwe LuDembe Bukoba Usambara Totalg/ Area Equivalent Projected Area (thousands of seedlings and V.P. cuttings) (ha) (ha) 1972 12,200 6,920 4,950 3,360 27,450 3,050 3,029 1973 11,100 8,000 5,330 2,590 27,000 3,000 2,692 1974 8,930 6,910 5,080 1,850 22,770 2,530 2,5721/ 1975 -4 800 600 400 200 2,000 200 - 1/ Assuming 60% success from planting to sales. 2/ Totals rounded. By 197L some growers will be producing their own seedlings from 3elected mother bushes. Fbr infills it is estimated that 83% of plantings will survive up, to the replanting stage. June 7, 1971 ANNEX 2 Page 1 TANZANIA SMALLHOLDER TEA DEVELOPMENT PROJECT Smallholder Tea Cultivation and Research in East Africa General 1. Smallholder tea schemes are already operating in Uganda and Kenya under Bank Group financing. The proposed project in Tanzania would have many similarities with these projects and experience in them can in many cases be directly related. In addition the East African Tea Research Institute at Kericho in Kenya carries out programs of research on problems affecting tea production in all the three countries and is financed by them in proportion to the amount of tea produced. Nurseries 2. Most of the nurseries in Tanzania produce seedlings for sale as stumps at between 18 months and two years of age, as was the case in the ear- lier days of smallholder tea projects in Kenya and Uganda. This program (see Annex 1, table 3) is changing as material becomes available to produce one-leaf cuttings from selected clones by vegetative propagation (V.P.). Cuttings are grown in polythene sleeves and are ready for planting out from 8-12 months. The ultimate aim is to adopt the system at present practised in Kenya, where growers produce their own planting material in V.P. nurseries established on their smallholdings from cuttings supplied from mother bushes selected and maintained by the Tanzania Tea Authority (TTA). 3. In general an acre of nursery in Tanzania produces 100,000 plants gross (about 250,000 per ha). In most of the nurseries inspected by the appraisal mission a very high percentage of takes both from seed and cut- tings were observed. TTA estimates that usually 80,000 saleable plants can be produced per acre of nursery. As can be seen from Table 4 of Annex 1, TTA would produce sufficient planting material for the project assuming only 60% successes. Full details of nursery practice and all aspects of tea pro- duction are published in the Tea Growers Handbook 1969 1/, based on the ex- perience of the Tea Research Institute at Kericho and others. The successes obtained by the Kericho method of vegetative propagation of cuttings in the three East African countries is quite remarkable, and the mission saw evidence of spectacularly successful use of these methods both by Kenya outgrowers and by TTA in their V.P. nurseries. 1/ Published by the Tea Boards of Kenya, Tanzania and Uganda and TRI; this handbook is used as a standard reference book for all tea growers. ANNEX 2 Page 2 Site Selection and Clearing 4. Soils. Tea soils should be deep and free draining, without rock or impermeable pans, to a depth of at least 2 m. They should nevertheless be moisture retentive and ideally have an acid reaction between pH 4.5 and 5.5, although pH values between 4.0 and 6.0 produce acceptable yields. The soils of the development areas under the project have been surveyed for depth and pH values and are satisfactory. Plant nutrient levels are not critical since fertilizers would be applied as part of the project. A deficiency in soil copper levels has been found on volcanic ash soils at Rungwe and this introduces problems in the fermentation of young tea. Semiannual spraying with copper sulphate cures this condition, but is expensive, and further work is being carried out on this problem. Fermentation problems decline as the bushes mature. In Bukoba, sites are selected especially carefully as subsoil depth varies. 5. Climate. All areas selected for tea growing under the project are at suitable altitudes above sea level, varying from 1,000 to 1,700 m. Annual rainfall varies from just under 1,400 mm at Usambara to over 2,500 mm in Rungwe, and is generally concentrated between the months of September and May in Bukoba, and November and May or June elsewhere. In general suf- ficient rain falls during the dry weather to maintain the bushes at a very low level of productivity, but very dry conditions are sometimes experienced in Lupembe and Usambara, and this causes a reduction in average yields (see Annex 1, Tables 1 and 2). 6. Clearing. Most of the tea grown under the project would be cultivated on existing holdings on soils that have been recently cultivated so that on these areas there would be no clearing required. In the Bukoba area, many of the blocks selected for planting are on natural grasslands where clearing would be minimal. In Usambara, some 150 ha to be planted in 1974 are at present under high forest. Government considers this necessary to provide additional income for farmers living on the forest edges in condi- tions of considerable population density. This forest would be cleared grad- ually over the next three years by hand by the farmers themselves. Trees would be ring barked, and when dead would be felled and the roots removed as completely as possible to avoid Armillarea damage to tea planted on newly cleared land. Timber would be windrowed before burning to avoid raising the pH of the soils where tea is to be planted. Soil Conservation 7. Extension personnel are now being trained to mark out levels on farm- ers' fields and supervise the carrying out of soil conservation measures before planting begins. In Tanzania, these measures take the form of ditches constructed at vertical intervals adjusted to the slope and graded at 1/2%, discharging to controlled outlets every 1,000 ft. ANNEX 2 Page 3 Planting 8. Planting is carried out during the rainy months from December through March. Holes about 60 cm deep and 20 to 30 cm wide are dug at the recommended spacing of 4 ft by 3 ft along the contour, which gives a plant population of 8,872 per ha. Fields are inspected by TTA staff for satisfac- tory soil conservation measures and spacing before stumps or sleeved cuttings are issued. Stumps are kept wrapped in sacking until planting, after which they are watered in. Light temporary shade may be provided in the lower al- titudes during sunny weather. Fertilizers are mixed with the soil from the planting holes. In Bukoba, grass cut from surrounding fields is laid on the ground as a mulch after planting. 9. TTA estimates that about 83% of the stumps planted survives the first two years and adequate material is provided from its nurseries to in- fill the stumps that have died during the first two growing seasons. Weeding and Mulching 10. This is usually carried out by hand, using hoes or forks for couch grass. Where the problem is severe, the use of herbicides such as "dalapon" is growing in popularity. In Bukoba, plots are mulched annually by using grass cut from nearby fields, until the crop forms its own ground cover, usually in about the third year after planting at the recom- mended spacing. All areas also use pruned material as a mulch. Bringing into Bearing 11. The lower parts of the branch system of tea bushes will form the permanent frame which will remain largely unaltered throughout the lifetime of the bush concerned. This frame should be low, strong, and have a good spread. Two systems of bringing bushes into bearing, pruning and pegging, have been developed by TRI and both are being used in the Tanzania smaltholder tea development. 12. (a) Pruning (i) After about one year's growth, stump plants should be pruned at 8" (20 cm) from the ground when most shoots are 1 cm thick at that height. A second pruning at 16" (40 cm) should follow after about two years of growth when most shoots are 1 em thick at that height. Thereafter tipping should be carried out for about three rounds at a height of 24" (60 cm). This consists of removing all shoots as soon as they have developed three leaves and a bud above that height. No tipping or plucking should be done between formative prunes. (ii) Sleeved clonal plants tend to develop a strong main stem which should be checked at an early stage to ANNEX 2 Page 4 encourage strong lateral branching. However, they do not possess root reserves to support the development of new leaves and shoots unaided, so pruning should be delayed if the bush does not possess adequate leaves below the pruning level. When the plant is about 30 cm tall, the main stem is pruned back to 15 cm above the ground. Lateral shoots are not cut back at this stage. Next all shoots are pruned at 28 cm when most shoots are 1 cm thick at that height. A second pruning is subsequently carried out at 40 cm before tipping at 60 cm as for stump plants. (b) Pegging. When shoots have reached a height of between 45 cm and 60 cm, they should be pegged down to the ground using wood or wire pegs. Shoots should be distributed evenly around the main stem; usually between three and five such stems should be pegged. The terminal leaf and bud are removed from each stem so pegged. The bush should now be tipped at a height of about 45 cm for at least five rounds. It can be seen that pegged bushes will come into bearing con- siderably in advance of pruned fields. Pruning 13. After a few years the increase in height of the plucking table, and the increase in the number of shoots per bush which leads to a decrease in the size of each shoot, bring about a decrease in plucking efficiency and yields. Under Tanzania conditions it is desirable to prune back the table to about 2 inches above the last prune every three years or so. This process should continue until the table becomes too high for com- fortable plucking, when a prune to about 45 cm should be carried out and a new pruning cycle commenced. All prunings are placed on the field as a mulch. Pruning is carried out with a specially designed pruning knife which must be kept very sharp. A specially marked stick is used to measure the heights of the different prunes. Plucking 14. The object of plucking is to provide the factory with leaf suitable for processing into good quality made tea. The aim is to pluck a shoot con- taining two leaves and a bud. Plucking can be carried out at intervals ranging from five days to two weeks depending on growing conditions. Good plucking produces a level surface or 'table' which is held parallel to the ground surface. Smallholder plucking will be controlled to some extent by leaf collection schedules, which must be adjusted as much as possible to suit growing conditions. 15. During periods of adverse growing conditions due to cold or drought, the tea bush produces a larger proportion than usual of shoots on which the apical bud is dormant. This is known as a "bhanji" shoot. ANNEX 2 Page 5 These should normally be plucked as soon as they rise above the plucking surface, otherwise they will harden and cannot be manufactured. During periods of adverse conditions, however, they should be left on the plant. Fertilizers 16. Compound fertilizers have been used by smallholders since 1968 and TTA intends to continue their use in future. The annual applications proposed are below those recommended in Uganda, where growing conditions are somewhat better, and increased rates of applications may be encouraged in future years, depending upon the results of field trials at present underway, and the increased use of clonal material. At present a 25.5.5 compound is used in gradually increasing annual or semiannual applications, following the initial use of triple super phosphate and sulphate of potash at planting time. Applications of 25.5.5 fertilizer commence at 180 kg/ha and rise to 460 kg/ha during the 4th year after planting, and thereafter. Tea Diseases and Pests 17. There are no diseases or pests of tea in Tanzania that would be of major concern to the smallholder tea development program. The most serious disease is Armillarea mellea, a fungus of worldwide distribution that lives on the dead roots of forest trees. This is only locally serious on tea that has been newly planted on poorly cleared forest areas. It can be prevented by the complete clearing of roots from the soil before planting commences. Shade and Windbreaks 18. Recent work at Kericho has shown that at higher altitudes shade reduces yields of tea in East Africa. Hence there are no plans for shade tree planting under the development program in Tanzania. However, where tea is grown in blocks or on ujamaa farms of any great extent, windbreaks would be beneficial, and farmers would be encouraged to plant them. Irrigation 19. There are no plans for irrigating tea under the project. However, irrigation trials are progressing at Mufindi, where rainfall is badly dis- tributed, with very promising results. Any extension of the present project in future should have reliable results from these trials on which to base a judgment as to whether the extension of tea growing in Tanzania into areas that required supplementary irrigation would be justified. June 2, 1971  ANNEX 3 Page 1 TANZANIA SMALLHOLDER TEA DEVELOPMENT PROJECT Staff and Technical Assistance Requirements General 1. The Tanzania Tea Authority (TTA) and its functions are described in Chapter VI of this report and Annex 4 shows the ordinance establishing TTA as a parastatal body. At its present level TTA's staff would not be able to carry out its functions effectively under the expanded activities envisaged under the project. Considerable expansion of staff and facilities would be necessary, and some technical assistance from external sources would be provided until appropriately qualified Tanzanian nationals had acquired the experience to enable them to take over the posts concerned. Certain changes in TTA's Board and its present procedures are also considered desir- able. TTA's Staff 2. The level of the Executive Officer's appointment is at present that of Assistant Director of Agriculture in the Ministry, and subordinate staff posts are adjusted accordingly. As it will be necessary to increase TTA's headquarters staff considerably to accommodate its increased responsi- bilities under the project, the level of appointment of the Executive Offi- cer should be raised to that of Director of a Department of the Ministry, and his title changed to that of General Manager. The level of his subordi- nate staff posts should also be raised appropriately to accommodate their enhanced responsibilities. Technical Assistance 3. Fully qualified and experienced financial analysts, cost account- ants and planning economists are not easily available to TTA, and these posts may require temporary appointments from overseas until local staff have be- come experienced. In addition a Tea Marketing Specialist with experience in the trade overseas will be essential to help TTA in its marketing functions. 4. TTA has already made overseas appointments to the posts of Finan- cial Controller and Chief Factory Officer at headquarters and Chief Tea Maker at the Lupembe factory. Four Tea Development Officers have been recruited from India and Ceylon to help the Area Tea Development Officers operating in Bukoba, U3sambara, Rungwe and Lupembe. However, experienced tea factory managers are not available locally and Government does not wish to engage Managing Agents for the newly acquired smallholders factory at Lupembe, nor for the newly erected factory at Mponde, or that being erected at Rungwe. ANNEX 3 Page 2 It is vital therefore that experienced expatriate factory managers be employed to be responsible for the operation of these factories under the Chief Factory Officer, until such time as local managers are adequately trained and experienced. It will be equally vital for TTA to employ a suitable tea group or groups as visiting Consultants for at least the initial 2 years, to make available to the management both at headquarters and the tea factories their knowledge and experience and assist with the training of future tea factory managers. These proposals on staff and expatriate technical assistance posts are described graphically in the Chart attached to this Annex. The Tea Authority Board 5. Present Position. Under the Tea Ordinance, Cap 291, as amended by the Tea Ordinance (Amendment) Act, 1968, the Minister of Agriculture appoints members of the Board at his discretion. At present the Board consists of: - One member representing the Minister, as Chairman; - " I" nominated by the Minister of Finance; o fDevelopment Planning; I I T I Commerce; representing the tea trade; - Four members representing growers' cooperatives. 6. A Standing Committee composed of the Chairman, the three other Ministerial representatives, one cooperative member, and the Executive Officer of TTA as Secretary, carries out all regular business between Board meetings, which are convened by the Chairman as and when he deems appropriate. In effect, TTA's business is carried out by this Standing Committee. 7. Proposed Development. The Executive Officer as Secretary of the Standing Committee should also be a full member of the Board, and act as its Secretary. In addition the present arrangement under which the Standing Committee in effect excludes the Board from any effective function, narrows the base on which decisions affecting the tea industry as a whole are taken. The Board should be brought more into the picture of development and should be responsible for confirming all decisions taken by the Standing Committee before they can become effective. As the smallholder development proceeds it will be essential for the government members of the Board to keep in very close contact with the growers' repre- sentatives; Board meetings should be more frequent than is the case at pres- ent; and the quorum should be increased to include at least three unofficial members. October 21, 1971 TANZANIA SMALLHOLDER TEA DEVELOPMENT PROJECT PROPOSED PROJECT ORGANIZATION MINISTER OF AGRICULTURE TEA AUTHORITY BOARD EA TEA RESEARCH INSTITUTE, KERICHO COMWORKS STANDING COMMITTEE C O N S U L T A N T S . .- -.-.-.-.--- -- - *SMALLHOUDER DEVELOPMENTA *SERVICES SERICES I I HIEFI EXTENSION OFFICER CHIEF CHIEF CHIEF 3 FACTORY OFFICER MARKETING OFFICER C-FOIERAMNSC.PLANNING ECONOMIST FINANCIAL CONTROLLER TECH. ASST. SENIOR ACCOUNTANT 4 AREA TEA DEV. ACTORY MANAGERSCO-OF OFFICERS(LG)ACONNT FACORYMANGER FACTORY MARKETING & ADMGIN. ACCO. .UNGTNS& 4 AE.ASSEANC ANEV.IER ASST. CO-OF .. STATISTICS ASSISTANT ECONOMIST EVALUATION PSSFCOYSAFOFFICERS b. STORES b. COST ACCOUNTANT S SUPPLIES EC FINANCE ACCT. P. R.O. d, AUDIT ASST. ACCOUNTANTS III HIEOFCHIEF SBRD 57651R)  ANNEX 4 Page 1 TANZANIA SMALLHOLDER TEA DEVELOPMENT PROJECT Statute, The Tanzania Tea Authority Chapter 291 of the Laws An Ordinance to provide for the Establishment of a Tea Authority, the regulation of the planting and export of Tea, and the imposition of Ceases on Tea and generally for matters incidental thereto. PART I PRELIMINARY Short title 1. This Ordinance may be cited as the Tea Ordinance. Interpretation 2. In this Ordinance, unless the context otherwise requires - "Authority" means the Tanzania Tea Authority established by section 3 of this Ordinance; "cess" means any cess imposed in accordance with subsections (1) or (2) of section 21 of this Ordinance; "Director" means the Director of Agriculture; "East Africa" means the United Republic, Kenya and Uganda; "financial year", in relation to the Authority, includes the Authority's first accounting period, whether shorter or longer than a year and, if the Authority changes its accounting year, includes any accounting period, whether shorter or longer than a year, employed to give effect to the change; ANNEX 4 Page 2 "green leaf tea" means leaf detached from tea plants but not dried or processed in any way; "made tea" means the leaf of the tea plant when manufactured; "Minister" means the Minister for the time being responsible for Agriculture; "register" means the register maintained under section 9 of this Ordinance; "registered tea grower" means a registered tea grower for the purposes of this Ordinance; "tea" means the tea plant known botanically as Camellia Thea (Link) - Thea (Sinensis) (L) and includes its seed; "tea industry" means the tea industry of Tanzania. PART II THE TEA AUTHORITY Establishment of 3. (1) There is hereby established a body which shall - a Tea Authority (a) be a body corporate to be known as the Tanzania Tea Authority, with perpetual succession and a common seal; (b) in its corporate name be capable of suing and being sued; (c) be capable of holding, purchasing or other- wise acquiring, and disposing of, any property, movable or immovable, for the purposes of carrying out the functions con- ferred upon it by or under this Ordinance. (2) The provisions of the Schedule to this Ordinance shall have effect as to the constitution and proceedings of the Authority and otherwise in relation to the Authority. ANNEX 4 Page 3 Functions of 4. (1) The functions of the Authority shall be - the Authority (a) to promote the development of the tea industry; (b) to consider, prepare, implement, control and supervise programmes for the development of the tea industry; (c) to give such advice and make such recom- mendations to the Minister as it may think fit regarding the development of the tea industry; (d) to make such representations to an appro- priate authority, body or person as it may think necessary in relation to any matter affecting the interests of the tea industry and to nominate persons to represent the Authority on any committee or in any organi- zation or other body of persons which may be responsible for the coordination of such matters; (e) to recommend to the Minister the rate at which a cess may from time to time be imposed; (f) to provide services to the tea industry including - (i) the maintenance, in accordance with the provisions of section 9, of a register of all land planted with tea; (ii) the supervision of cultivation and harvesting of tea by tea growers; (iii) the inspection of tea plantations and green leaf tea; (iv) the negotiation of agreements for the processing of green leaf tea; and (v) the organization of arrangements for the purchase and transportation of green leaf tea. ANNEX 4 Page 4 (g) to participate in the establishment of processing factories for green leaf tea and to participate in the control and manage- ment of such factories; (h) subject to the provisions of section 5, to exercise such powers as may be conferred on the Authority in relation to the mar- keting of made tea; (i) to control the export of made tea by thie issuance of permits in accordance with the provisions of this Ordinance; (j) to use and administer in accordance with the provisions of this Ordinance the funds and resources of the Authority. (2) The Authority shall have power, for the purpose of carrying out its functions, to do all such acts and things as appear to it to be requisite, advantageous or convenient for or in connection with the carrying out of its functions or to be incidental or conducive to their proper discharge, and may carry on any activities in that behalf either alone or in association with the Government, a local authority, a cooperative society or any other person or body. (3) The Minister may give to the Authority direc- tions of a general character as to the carrying out of its functions and the exercise of its powers in relation to matters appearing to the Minister to affect the national interest and the Authority shall give effect to any such directions. (4) For the avoidance of doubt it is hereby declared that the provisions of subsection (2) with respect to the powers of the Authority relate only to its capacity as a body corporate and nothing in that subsection shall authorize the disregard by the Authority of any enactment or rule of law. Functions may be 5. (1) Where the Minister is satisfied that the mar- extended by the keting of made tea is likely to be advanced Minister in and improved thereby he may, by order published relation to the in the Gazette, declare that the marketing of marketing of tea made tea produced in any area shall be con- trolled, regulated or conducted by the Authority. ANNEX 4 Page 5 (2) The Minister may, by the order referred to in subsection (1) or any other made subsequent thereto - (a) confer on the Authority such additional powers and duties as he may consider necessary to enable the Authority to control, regulate or conduct the marketing of made tea; (b) empower the Authority to act as an agent or the sole agent for the marketing of made tea subject to such conditions as may be prescribed by such order; (c) provide for the fees, costs, disbursements and prices to be charged or paid by or to the Authority. (3) Any order made under this section may prescribe a penalty not exceeding a fine of five thousand shillings or imprisonment for a term not ex- ceeding one year or both such fine and imprison- ment for any contravention thereof. Funds of the 6. (1) The funds and resources of the Authority shall Authority and consist of - their investment (a) such sums as may be provided by Parliament for the purpose; (b) any loan granted to the Authority by the Government or any person with the approval of the Minister; (c) any sums or property which may in any manner become payable to or vested in the Authority in respect of any matter incidental to the carrying out of its functions. (2) The Authority may, with the approval of the Minister and subject to such conditions as he may impose, invest such part of its funds as are not for the time being required for the purposes of its business. (3) The powers of the Minister under subsection (2) shall be exercised with the concurrence of the Minister for the time being responsible for ANNEX 4 Page 6 finance and shall extend to the amount which may be invested and the nature of the investment and the terms and conditions thereof, and the approval of the Minister may be either general or limited to a particular investment. Report by the 7. The Authority shall, within six months after the Authority end of each financial year, make a report to the Minister on the conduct of its business during that year, and the Minister shall lay a copy of such report before the National Assembly. Accounts and 8. (1) The Authority shall keep proper accounts and audit other records in relation thereto and shall prepare in respect of each financial year a statement of account in a form approved by the Minister. (2) The accounts of the Authority shall be audited by the Tanzania Audit Corporation. (3) As soon as the accounts of the Authority for any financial year have been audited, the Authority shall cause to be sent to the Minister a copy of the statement of account prepared in respect of that year together with a copy of any audit report made thereon. (4) The Minister shall, within a period of six months (or such longer period as the National Assembly may by resolution appoint) after the end of the financial year to which the accounts relate, lay a copy of every statement of account and audit report before the National Assembly. 8A. No matter or thing done by any member, officer, servant or agent of the Authority shall, if the matter or thing is done in good faith for the purpose of carrying out the provisions of this Ordinance or of any order or regulations made thereunder, subject any person as aforesaid to any action, liability, claim or demand whatsoever. PART III PLANTING AND EXPORT OF TEA Registration 9. (1) The Authority shall cause a register to be of tea growers maintained of all land planted with tea and ANNEX 4 Page 7 of the owners, occupiers and managers thereof in such form as the Authority deems fit. (2) For the purposes of such register the owner, occupier or manager of any land which has been planted with tea, at any time prior to the date of coming into operation of the Tea Ordinance (Amendment) Act, 1962, shall upon request in writing by the Authority make to the Authority a return containing such parti- culars of any matter relating to the said land, the tea planted thereon, and himself as such owner, occupier or manager as afore- said as may be prescribed by the Authority in rules made under section 29 of this Ordinance. (3) Upon receipt of the said return the Authority shall cause the said particulars to be entered in the register and thereupon the said owner, occupier or manager shall in regard to the said land be a registered tea grower for the purposes of this Ordinance. (4) If any person who is required to make a return under subsection (2) of this section - (a) fails or refuses to make such a return upon request in writing by the Authority; or (b) makes or causes to be made a return which to his knowledge is false in any particular, he shall commit an offence against this Ordinance. Licenses to 10. (1) With effect from the date of coming into opera- plant tea tion of the Tea Ordinance (Amendment) Act, 1962, no person shall plant tea on any land in Tanzania which has not been planted with tea prior to such date unless he is or is deemed, under section 11, to be the holder of a tea-planting license issued to him by the Director after consultation with the Authority and relating to such land. (2) Any person who contravenes the provisions of subsection (1) shall be guilty of an offence against this Ordinance. ANNEX 4 Page 8 (3) When a tea-planting license is issued to any person, particulars of the land to which such license relates shall be entered in the register by the Authority and the licensee shall then in regard to such land be a registered tea grower for the purposes of this Ordinance. In any case where the licensee is, prior to such entry, already a registered tea grower, particulars of the land to which such license relates shall be entered in the register by the Authority and added to the particulars of any land previously entered therein in regard to which the licensee is already a registered tea grower. (4) Every tea-planting license shall specify - (a) the description and acreage of the land on which tea may be planted under such license, and the acreage of such land may be used as a tea nursery; and (b) the total acreage in regard to which the licensee is a registered tea grower under the provisions of section 9 and this section, and any licensee who plants tea on any land in excess of the total acreage so specified shall be guilty of an offence against this Ordinance. If license issued 11. Where a tea-planting license is issued to a coopera- to cooperative tive society, there shall be attached to such license society specified a schedule specifying the names of those members of members deemed the society who are tea growers, the description ho be licensees and acreage of the land on which each such member may plant tea under such license and the total acreage in regard to which each such memeber is en- titled to plant tea under the provisions of this Ordinance, and each such member whose name is so specified shall be deemed to be the holder of a tea- planting license in respect of the land, the descrip- tion and acreage of which is so specified, and to be a registered tea grower in respect of the total acreage so spceified and the provisions of section 10 shall apply to any such member as if he were a licensee to whom a tea-planting license had been issued in his own right. ANNEX 4 Page 9 Applications 12. An application for a tea-planting license shall be for licenses made in writing to the Director in such form as he may determine and the Director may require such further particulars from any applicant as he may deem necessary for considering the application. Forms and 13. '(1) :Subject to the provisions of this Ordinance, conditions every tea-planting license shall be in such of license form and subject to such conditions as the Director may in any case determine. (2) Any licensee who contravenes or fails to comply with any of the conditions subject to which his tea-planting license was issued shall be guilty of an offence against this Ordinance. (3) Without prejudice to the provisions of subsec- tion (2), if any licensee contravenes or fails to comply with any of the conditions subject to which his tea-planting license was issued, the Director may cancel the license or vary the conditions thereof, as he may think fit. (4) Where any license is cancelled by the Director under subsection (3), the person who was the holder of the license may within ninety days of such cancellation appeal in writing to the Minister whose decision shall be final. Powers of the 14. (1) The Director may, after consultation with the Director to Authority, refuse to issue a tea-planting refuse to issue license on any ground which appears to him to license be sufficient. (2) Where under subsection (1) the Director refuses to issue a tea-planting license, the applicant for such license may within ninety days of such refusal appeal in writing to the Minister whose decision shall be final; and where such refusal is contrary to the advice of the Authority, the Authority shall have similar right to appeal to the Minister whose decision shall be final. Licenses not to 14A. (1) No person to whom a tea-planting license has be assigned been issued shall lend, transfer or assign such license to any other person save with the prior permission of the Director which permis- sion shall be endorsed on the license. Before giving such permission the Director shall consult the Authority. ANNEX 4 Page 10 (2) Any person who lends, transfers or assigns any tea-planting license issued to him or to any other person without having first obtained the permission of the Director shall be guilty of an offence against this Ordinance. Power to enter 15. (1) It shall be lawful for any person authorized to inspect in writing by the Authority, and every tea grower shall at all reasonable times allow any person so authorized by the Authority, to enter upon any land or buildings occupied by any tea grower and make such inspection and inquiry as may be necessary for ascertaining whwether the provisions of this Ordinance have been or are being complied with. (2) Any person who hinders or obstructs any person so authorized by the Authority from exercising any power conferred by this section or who fails or refuses to give information in response to such inquiry as aforesaid by such person shall commit an offence against this Ordinance. Powers of 16. (1) Where any person has been convicted under sub- Director as to section (2) of section 10 of planting tea tea planted without a license or under subsection (4) of without license, section 10 of planting tea in excess of the etc. total acreage in respect of which he is a regis- tered tea grower, the Director may, by notice in writing, require such person within such period, being not less than thirty days, as may be specified in the notice, to uproot all tea which has been so planted. (2) If any person to whom a notice has been issued under subsection (1) fails within the period specified in the notice to comply with the terms thereof it shall be lawful for the Director, or any person authorized by him in that behalf, to enter upon the lands occupied by such person and to uproot at the expense of such person all tea so planted without license or planted in excess of the total acreage in respect of which such person is a registered tea grower; and any such expense shall be recoverable by the Director as a civil debt. ANNEX 4 Page 11 Tea export 17. No person shall export made tea to a destination permit outside East Africa except under and in accordance with a permit (hereinafter referred to as a "tea export permit") issued by the Authority and in compliance with any rules made by the Authority under this Ordinance. Such permit and any applica- tion therefor shall be in such form and subject to such conditions in any case as the Authority may determine: Provided that this section shall not apply to made tea exported by parcel post in packages not ex- ceeding two pounds each in weight or to made tea exported by way of samples not exceeding eight ounces each in weight which are made up as packages, or to re-exports of made tea. Power of 18. The Authority may in its discretion refuse to issue Authority to a tea export permit under this Ordinance on any refuse export ground which may appear to it to be sufficient: permit Provided that any person aggrieved by a decision of the Authority to refuse any tea export permit may appeal to the Minister in writing within ninety days of the date of such refusal. The decision of the Minister on any such appeal shall be final. Penalty for 19. (1) Any person exporting or attempting to export wrongful export made tea in contravention of the provisions of this Ordinance or of any of the conditions of any tea export permit shall commit an offence against this Ordinance and on conviction therefor shall be liable to a fine not exceeding two thousand shillings or to imprisonment for a period not exceeding three months, or to both such fine and such imprisonment. (2) Where any person is convicted of an offence under subsection (1) of this section, the Authority in its discretion may cancel any tea export permit granted to the person so convicted: Provided that any person aggrieved by a decision of the Authority to cancel any such tea export permit may appeal to the Minister in writing within ninety days of the date of such refusal. The decision of the Minister on any such appeal shall be final. ANNEX 4 Page 12 Restriction on 20. No person shall, without the permission in writing export of tea of the Authority, export tea seed, or any living seed, etc. parts of a tea plant which may be used to propagate tea, to any destination outside East Africa. PART IV IMPOSITION OF CESS Imposition 21. (1) There shall be raised, levied, collected and of ceases in respect of all tea manufactured in Tanzania a cess at such rate as the Minister may on the recommendation of the Authority from time to time impose by notice in the Gazette. (2) In addition to any cess imposed under subsection (1) of this section, the Minister may on the recommendation of the Authority from time to time impose by notice in the Gazette an annual cess in respect of each acre or part thereof registered under the provisions of this Ordinance: Provided that the amount of such cess shall in no event exceed five shillings in respect of each acre or part thereof registered under the provisions of this Ordinance. Payment of cess 22. Any cess imposed under the provisions of section 21 5 of 1951, s.2 of this Ordinance shall be paid in the case of sub- section (1) by every tea manufacturer and in the case of subsection (2) by every registered tea grower in the manner and at the time prescribed by rules made under section 29 of this Ordinance. Secretary to 23. The proceeds of any cess imposed under the provisions pay cess into of this Ordinance shall be in the custody of the bank Secretary of the Authority who shall, as soon as possible after the last day of each month or, in case such proceeds shall be received at one time, as soon as possible after receipt thereof, pay the amount of such cess into an account opened in the name of the Authority with a bank approved by the Minister. Purposes of 24. The proceeds of any cess and any other moneys accruing cess to the Authority shall be used and administered for - (a) the benefit of the tea industry in such manner as the Authority may determine; ANNEX 4 Page 13 (b) contributing to the finances of the Tea Research Institute of East Africa; (c) (deleted under Acts Supplement No. 5, of 16 August, 1968); (d) the employment of such staff as the Authority may deem necessary; (e) the payment of travelling expenses and out-of- pocket expenses by individual members of the Authority at rates to be approved by the Authority; (f) the payment of expenses and other charges incurred by the Authority or for which the Authority may become liable in the course of its business. Accounting 25. The accounts of the proceeds and expenditure of any for cess cess shall form part of the accounts referred to in section 8. PART V GENERAL Returns 26. Every tea manufacturer, registered tea grower, and 5 of 1951, export permit holder shall submit such returns in s.2 such form at such periods and to such persons as the Authority may from time to time prescribe in rules to be made under section 29 of this Ordinance and any person who fails to submit such returns when called upon to do so shall commit an offence against this Ordinance. General 27. Any person who commits any offence against this penalty Ordinance shall be liable on conviction for every such offence, except where in any other section a special penalty is provided for any particular offence, to a fine not exceeding two thousand shil- lings or to imprisonment not exceeding three months, or to both such fine and such imprisonment. Offences 28. Where any offence against this Ordinance committed committed by by a body corporate is committed with the consent bodies corporate or approval of any director, manager, secretary or other officer of the body corporate, such person, as ANNEX 4 Page 14 well as the body corporate, shall commit an offence against this Ordinance and shall be liable to be proceeded against and punished accordingly. Rules 29. The Authority with the approval of the Minister may make rules - (a) governing the collection, payment and utiliza- tion of any cess imposed in accordance with the provisions of this Ordinance; (b) governing the export of made tea; (c) prescribing the form of and the particulars to be included in any returns to be made under the provisions of this Ordinance, and all other matters relating to such returns; (d) fixing any penalty not exceeding a fine of two thousand shillings or three months' imprisonment or both such fine and such imprisonment for the breach of any rules made hereunder; (e) prescribing anything which is to be or may be prescribed under this Ordinance by the Authority; or (f) generally for the better carrying out of the purposes of this Ordinance. Provisions 30. In every case in which under this Ordinance provision regarding appeals is made for an appeal to the Minister, the appellant and the Authority may make any representations to the Minister by way of a memorandum in writing but neither party shall be entitled to appear in person before the Minister. Repeal and 31. The Tea Industry Ordinance is hereby repealed: Savings Cap. 148 Provided that - (i) this repeal shall be subject to the provisions of section 8 of this Ordinance as in force immediately prior to the coming into operation of the Tea Ordinance (Amendment) Act, 1968; (ii) any cess imposed under the provisions of the Tea Industry Ordinance and any rules governing the collection thereof shall, notwithstanding the repeal of the said Ordinance, remain in ANNEX 4 Page 15 force as if such cess and rules had been im- posed and made under this Ordinance until the same are revoked or replaced under and in accordance with the provisions of sections 21, 22 and 29 of this Ordinance; and (iii) subject to revocation or cancellation as hereinafter provided, any rule, order, notice or direction made, issued or given at any time previous to the commencement of this Ordinance under the Ordinance hereby repealed and purporting in express terms or by necessary implication to be still in force shall notwithstanding such repeal be deemed to continue in force by virtue of this Ordinance for any period assigned thereto, unless and until the same shall be earlier revoked or cancelled, which may be done as if it had been made, issued or given under and were subject to any corresponding provision of this Ordinance. ANNEX 4 SCHEDULE Page 16 1. (1) The Authority shall consist of such number of members as the Minister may determine. (2) Subject to the provisions of subparagraph (1) of this paragraph, the Minister may appoint - (a) one member representing the Minister for the time being responsible for agriculture; (b) one member nominated by each of the Ministers for the time being responsible for - (i) finance; (ii) development planning; (iii) commerce; (c) other members being persons who appear to him to have knowledge of and experience in tea planting or the manufacture of made tea or commercial or financial matters, administration or the organization of workers in the tea industry. (3) A member of the Authority shall, unless previously he dies or resigns or his appointment is revoked by the Minister, hold office for a period of two years from the date of his appointment and shall be eligible for re-appointment. (4) The Minister may fill any casual vacancy occurring in the membership of the Authority and may revoke the appointment of any member and appoint a replacement subject, where appro- priate, to the system of representation and nomination specified in subparagraph (2). (5) A member of the Authority may resign by giving notice to the Minister of his intention to do so. 2. (1) The Minister may nominate one of the members of the Authority as its chairman and the members shall elect a vice-chairman of the Authority from amongst their number. (2) The vice-chairman shall hold office for a period of one year from the date of his election and shall be eligible for re- election. 3. (1) Subject to the provisions of subparagraph (2) of this paragraph, the Authority shall meet at such times as may be necessary or expedient for the transaction of its business and all meetings of the Authority shall be convened by the chairman or, in his ANNEX 4 Page 17 absence from the United Republic or incapacity through illness, the vice-chairman, who shall appoint a suitable time, place and date for the holding of each meeting. (2) The chairman or, in his absence from the United Republic or incapacity through illness, the vice-chairman, shall convene a special meeting of the Authority on a request in writing signed by not less than four members of the Authority for such a meeting and shall cause the meeting to be held within twenty- one days of the receipt by him of such request. (3) Except in the case of a special meeting such as is referred to in subparagraph (2), at least fourteen days' notice in writing, specifying the business to be transacted at the meeting, shall be given of each meeting to every member of the Authority. (4) The chairman or, in his absence, the vice-chairman, shall preside at the meeting of the Authority. In the absence of both the chairman and the vice-chairman, the members present at the meeting shall elect one of their number to be chairman for that meeting. 4. (1) A majority of the members of the Authority shall constitute a quorum at any meeting of the Authority. (2) All acts, matters and things authorized to be done by the Authority shall be decided by resolution at a meeting of the Authority at which a quorum is present. (3) A decision of the majority of members present and voting at a meeting of the Authority shall be deemed to be a decision of the Authority. (4) Every member of the Authority shall have one vote and in the event of an equality of votes the chairman of the meeting shall have a second or casting vote in addition to his deliberative vote. (5) Notwithstanding the provisions of subparagraph (2), where the chairman so directs a decision may be made by the Authority without a meeting by circulation of the relevant papers among all the members and the expression in writing of their views, but any member shall be entitled to require that any such decision be deferred until the subject matter shall be considered at a meeting of the Authority. 5. Minutes in proper form of each meeting of the Authority shall be kept and shall be confirmed by the Authority at its next meeting and signed by the chairman of the meeting. ANNEX 4 Page 18 6. (1) The Authority shall appoint a Secretary to the Authority, who may or may not be a member of the Authority, for the purposes of attending meetings and performing such other duties as are imposed upon him by or under this Ordinance and as the Authority may from time to time direct. (2) The Authority may from time to time appoint upon such terms and conditions of service as it may think fit such employees as it may deem necessary for the proper and efficient conduct of the business and operations of the Authority. 7. Subject to the provisions of this Schedule and to any rules which may be made under section 29 of the Ordinance, the Authority shall have power to regulate its own procedure and may from time to time make standing orders providing for all matters relating to the meetings of the Authority and the proper conduct of its business. 8. All deeds, instruments, contracts and other documents shall be deemed to be duly executed by or on behalf of the Authority - (a) if sealed with the seal of the Authority and signed by the chairman or the vice-chairman and two other members of the Authority; or (b) if executed in that behalf by one member of the Authority and the Secretary to the Authority both of whom have been authorized by the Authority for the purpose. 9. Subject to the provisions of this Schedule relating to the quorum, the Authority may act notwithstanding any vacancy in the membership thereof and no act or proceeding of the Authority shall be invalid by reason only of some defect in the appointment of a member or a person who purports to be a member. ANNEX 5 Page 1 TANZANIA SMALLHOLDER TEA DEVELOPMENT PROJECT Factory Design, Phasing and Management Factory Design 1. Tea factory buildings throughout the world are not built to a specific design because of the various types of manufacture used. However, in Tanzania, it is generally accepted that the Rotorvane/CTC type manufac- ture produces a good quality tea readily saleable on the export market, and it is therefore recommended that this process be used for all factories in the project. 2. The design of the new Mponde Factory in West Usambara is based on CTC manufacture but could be improved by allowing more space in the processing department. Future designs should incorporate this suggestion and two bays should be allocated to each production line. When computing factory construction costs and machinery required, allowances have been made for this. 3. The withering building at Mponde factory was designed for single troughs as opposed to the double deck troughs used on other estates. This is considered wasteful in terms of building and roof space, and in future designs consideration should be given to using the double deck troughs. Mono-rail conveyors suitably placed in the department will reduce labor costs of handling leaf. Factory Capacity 4. Quality control is essential to the success of the project. Such control can only be achieved by first class manufacture of tea in factories which are of a manageable size. These factories must be readily controllable during the peak cropping months. The criteria would appear to be governed more by the machinery which has to be main- tained and run correctly than by the flow of green leaf being processed. Thus a three-drier factory producing 1.7 M kg of tea is considered the maxi- mum that one manager and his assistants can readily supervise and that can be expected to produce good quality tea the whole year around. 5. The table below shows the throughput and basic machinery requirements of a 1.7 M kg factory in three stages, and from this it can be seen that during maximum output, 13,600 kg will be processed in one day. The chests in which tea is dispatched from factories contain an average 50 kg net of black tea, and therefore 270 chests must be packed each day if a large accumulation of dry tea which would result in marked deterioration of quality is to be avoided. The dispatch of tea from the factory will in all ANNEX 5 Page 2 cases be by lorry transport, and the quantity will in itself present a problem if anything larger than 1.7 M kg is built. FACTORY CAPACITY AND OUTPUT Stage I Stage II Stage III AnnLual capacity of made tea-kg 570,000 1,130,000 1,700,000 Daily capacity of made tea-kg /1 4,560 9,040 13,600 Daily green leaf intake- 0.8% of crop 22,800 45,200 68,000 Minimum number of troughs required holding 1,320 kg each spreading 30 kg per m troughs 2.4 m x 20 m 16 32 48 Number of driers required uith capacity of 270 kg per hour, working 17 h per day 1 2 3 Number of processing units (CTC's and Rotorvanes) 1 2 3 /1 0.8% of the annual crop is the average peak day and this is standard throughout Tanzania. Factory Phasing 6. Rungwe Area. At present all smallholder leaf is manufactured by private factories, but the first TTA factory at Katumba is now being built and will be operational by the end of 1971. In view of the decision to standardize in 1.7 M kg factories, the smallholders' leaf would ultimately be processed in four factories. The location of each factory is shown in Mop 2. Each factory would expand to capacity as production increases. The phasing of the factories is shown in Table 1. 7. Bukoba Area. The existing factory would expand to 1.7 M kg made tea. as production increases and if the estimated production is maintained it would reach capacity by fiscal 1978. In the same year, the second factory at Katoke would be started and completed to phase I. This factory would gradually expand as production increases and would complete phase III by fiscal 1982. The combined output of both factories would be 3.4 M kg which is adequate for the anticipated yield of 3,113,000 kg made tea from the Bukoba area. 8. Lupembe Area. The existing factory would be expanded to a capacity of 1.7 M kg made tea by fiscal 1976. There is adequate space to enlarge this factory which would result in only two factories being required in the area. In fiscal 1977, the second factory at Ukalawa (Map 4) would be built to phase I and this would also increase in capacity to 1.7 made tea by ANNEX 5 Page 3 fiscal 1981. The expected yield from smallholder tea in the area is 3,404,000 kg by 1984. 9. West Usambara Area. Due to the very mountainous terrain in the area it is doubtful if a site could be found for a 1.7 M kg factory. The existing TTA factory at Mponde, due to start manufacture in March 1971, can be expanded to manufacture 1,130,000 kg only, and this would be achieved by fiscal 1978. However, after that year, the crop increases quickly to the estimated maximum of 1,589,000 kg made tea. Therefore the second factory to be built in the Sakare area would be started in 1978 and completed in 1979. This factory would only have a capacity of 570,000 kg. 10. The existing factory would be increased in capacity to 1,130,000 kg because most smallholders are to the north of the area and the site is satisfactory for a larger factory. A large site in the Sakare area would be difficult to obtain, but should present less problems for a small factory limited to phase I production. Factory Management 11. There are at present two smallholder factories operating, one at Bukoba and one at Lupembe. These factories also manufacture leaf from parastatal estates adjacent to the factories. (a) The Bukoba tea factory is jointly owned by the National Development Corporation and the Bukoba Cooperative Union. Additional machinery to expand capacity has been financed by the National Development Credit Agency (NDCA) and the factory is managed by a firm of managing agents who supply the management staff (George Williamson Ltd., U.K.). (b) The Lupembe tea factory is owned by the Lupembe Cooperative Society but TTA assumed managerial control early in 1971 and has invested capital borrowed from NDCA for expanding the capacity and replacing worn-out machinery. 12. TTA intends to manage all its own factories in future, but it is essential that they be supervised by experienced managers who should be re- cruited internationally to ensure that quality teas continue to be produced and to train management staff to take over in the future. 13. Power Supply. It has been assumed that the Tanzania Electricity Supply Company (TANESCO) will supply power to all factories in the proj- ect and assurances were obtained from the supply company to this effect. The cost of access lines to each factory is included in the first stage of each factory. Wiring and switch gear will expand at each stage. All factories are situated some distance from the source of power and in countries where rainfall is high, there are bound to be power cuts during peak periods. It is therefore essential that a certain percentage of standby power be guaranteed. The cost of diesel electric generating sets to cover one-third of the required power has been included in the ANNEX 5 Page 4 first stage. In the event of a power cut, when leaf is in the factory or being processed, the standby equipment will be sufficient to keep the withering fans operating, thus preventing the green leaf from deteriorating beyond use when power is resumed. Tea in the driers will burn if left in the machines for longer than half an hour. With limited standby power, the factories could also operate at low capacity instead of completely closing down. 14. Evacuation of Tea to Port. In all cases, packed teas will be evacuated from factories by lorries and/or rail. The distance from factory to railhead or port varies with each area and in some cases, notably Bukoba, it is well over 1,000 km. The West Usambara factories are situated only 70-100 km from the port of Tanga. 15. The Bukoba factory now dispatches packed tea by road to Dar-e.- Salaam because of heavy losses incurred when transshipment is made at Mwanza (a port at the south end of Lake Victoria) to railway wagons. A new port is to be constructed south of Bukoba township and this will be operational in 1973. This port will handle rail ferry cargo so that in future all teas from this area will be loaded from lorries directly into wagons for transportation to Dar-es-Salaam port. 16. Teas from the Rungwe area are now transported direct to Dar- es-Salaam by lorry but when the new Tanzania/Zambia Railway is complete they will be loaded into wagons at Mbeya and taken to Dar-eq-Salaam by rail. The same will apply for Lupembe, but for this area the loading station will be approximately 100 km north of the factories. The railway is scheduled to operate in 1975/76. 17. West Usambara factories present the least problems for evacua- tion. The new Mponde factory tea will be taken by road to a railhead at Mombo (a small town south of Lushoto) and the second factory tea will be transported to Korogwe at the foot of the Usambara mountains. In each case, the distance from the port is relatively short and in the region of 100 km. Manufacturing Process and Techniques 18. Green Leaf Reception and Withering. Grower's green leaf arrives at the factory in open weave bags, transported on trailers. The leaf is then check-weighed and placed in withering troughs, spread evenly to a depth of approximately 20 cm. With this spreading, one trough will accom- modate 1,150 kg of leaf. The trough bed should be 2.4 m wide and 20 m long. Provided all troughs are fitted with reversible fans and conditioned air supplied to each trough by means of steam radiators, a good even wither will be possible throughout the year. Since it is essential that the leaf be levelled off during the withering process, a 0.7 m passageway should be de- signed between each trough. This will also facilitate unloading of the trough for processing the leaf. The withering process for CTC manufacture usually takes between 16-20 hours, but will vary with climatic changes. ANNEX 5 Page 5 19. Leaf Processing - Sifting. When the leaf has withered to the correct degree for CTC manufacture (this is considered to be between 68% and 72%) it is passed over a green leaf sifter to extract sand and other extraneous matter before the leaf passes through the Rotorvane and CTC machines. 20. Rotorvane/CTC Machines. A modern CTC machine cuts the leaf twice and operates in conjunction with the Rotorvane. The output of this unit is sufficient to keep one 6-foot-wide modern drier working to capacity. Costs also include spare rollers for the CTC machine which must be kept sharp the whole time. No allowance has been made for roller sharpening equipment but as this is a specialized job carried out by a lathe turner, it would be more satisfactory if the work were carried out by private factories, who have the equipment. Bukoba is the only area where private factory facilities are not available, but the Bukoba Cooperative Union Workshop has good facilities and can carry out this work as at present. 21. Fermenting. A new type of fermenting machine has been installed in the new West Usambara Tea Factory at Mponde. Experiments using this machine for CTC manufacture have not proved satisfactory in Kenya but the suppliers have modified the machine and further tests are awaited. If the fermenting machine can be made to work efficiently and produce good quality teas, then a saving could be made in factory buildings, but at present there are doubts about this. One fermenting unit of machine is required for each production line. Further orders for these machines should not be placed until more information concerning its effectiveness under Tanzania conditions is available. 22. Driers and Fuel. The use of six-foot hot feed driers is recommended for all factories. These machines have a guaranteed output of 270 kg of made tea per hour when operating on steam. It is essential that steam be used because the drier chamber temperature differs greatly from the feeder unit temperature and this is impossible to control from one stove. The boilers will also provide steam for heating the radiators for withering. The type of fuel to be used will vary with the areas in which the factories are located. In the West Usambara and Bukoba the only fuel available is heavy fuel oil, but in Rungwe and Lupembe coal is available and Government has taken over the coal mine at Ilima, situated south of the tea areas. Fuel oil is expensive in these districts and will remain so until the Tanzania/Zambia Railway is complete. There is a possibility that TTA will obtain oil from the Tanzania/Zambia oil pipeline, but no information could be obtained on this. 23. Sorting and Packing. Modern sorting machinery is compact and takes up little room. It is as efficient as the old type and has there- fore been recommended. The vibroscreen sorters produce good clean grades quickly, but this is not the only consideration of this department. As the factory stages progress, more tea has to be handled daily and extra space is required for bulking and packing. An extra bay has therefore been allowed for in each stage. ANNEX 5 Page 6 24. The tea trade in London has not yet accepted a change from plywood chests to cardboard containers but the latter are being manufac- tured and are accepted by other importing countries. This should be kept under constant review, as it will reduce both purchase price and assem- bly costs. The cardboard containers used must conform to the standard metric tea chest sizes of 40 cm x 50 cm x 60 cm and 40 cm x 40 cm x 60 cm. These sizes are used worldwide in the trade and are suitable for palletizing. 25. Insurance and freight costs,ean be reduced if all teas are pal- letized either at the factory or on tie coast, and some importing countries will not accept teas that are not palletized. This also must be kept under constant review by TTA. 26. Grades. The normal principal grades and expected percentages of CTC tea are: - BPI (Broken Pekoe one) - PF (Pekoe Fannings) 77% to 82% - PD (Pekoe Dust) - BP (Broken Pekoe) - Fngs (Fannings) 17% to 14% - D I (Dust one) - BP II (Broken Pekoe two) - Fngs II (Fannings two) 6% to 4% - D II (Dust two) June 2, 1971 TANZANIA SMALLHOLDER TEA DEVELOPMENT PROJECT Fartory Construction and Capacity - - - - - - - - - - - Ruge- - - - - - - - - - - - - - - - - - - - Bukoba - - - - - - - - - - - - - - - - - - - - - - - Lnp-be - - - - - - - - - - - - - - - - - - - -- lest Usambar - - - - - - - - - - - - - Pr.Jet Staga Capacity Staga Capacity Staga Capacity Staga Capacity Produrtion F-rrory Construction All Facries Productin Factory Construetion All Factnries Production Fattnry Con trntion All Fantories Production Factory Cntrction, All Factries Production 2/ Factory Yea (1,000 kg) Location Completed (1,000 kg) (1.000 kg) Location Completed (1,000 kg) (1,000 kg) Locatinn Completed (1.000 kg) (1,000 kg) Ltaion C~pleted (1,000 kg) (1,000 kg) Capacity 1972 483 Katuba _1/ 570 384 Buknba 1/ 340 686 Lupe.be Start 2 1/ 570 262 Mp.nde CoPalete 1 570 1,815 2,050 1973 646 - - 570 500 Bukoba Complete 1 570 761 Lupembe Complete 2 1,130 355 - - 570 2,262 2,840 1974 984 Katuba Campla 2 1,130 688 Buknba Complete 2 1,130 938 - - 1,130 480 Mponde Start 2 570 3,090 3,960 1975 1,460 Katmba Complete 3 1,700 964 - - 1,130 1,173 Lapanbe Start 3 1,130 638 Mpnde Camplete 2 1,130 4,235 5,090 1976 1,805 Mpguso Caplete 1&2 2,830 1,326 Bukoba Start 3 1,130 1,484 Lupembe Coaplete 3 1,700 818 - - 1,130 5,433 6,790 1977 3,090 Mpaga~. Complate 3 3,400 1,677 Bukaba Complre 3 1,700 1,853 Ukalawa Snart 1 1,700 996 - - 1,130 7,616 7,930 .atoke Start 1 1978 3,311 Lug-mbo Complete 1 3,970 2,016 Katoke Complete 1 2,270 2,257 Ukalawa Coplete 1 2,270 1,183 Sakare Start 1 1,130 8,767 9,640 1979 4,381 Lug.mb o Complete 2 4,540 2,319 - - 2,270 2,633 Ukalawa Co-plete 2 2,840 1,332 Sakare Compiete 1 1,700 10,665 11,350 1980 4,904 Lugombo Complete 3 5,110 2,619 Katoke Complete 2 2,840 2,931 Ukalawa Start 3 2,840 1,442 - - 1,700 11,896 12,490 1981 5,214 Lang.a Completa 1 5,660 2,862 Katoke Start 3 2,840 3,099 Ukalawa Finsb 3 3,410 1,515 - - 1,700 12,690 13,630 1982 5,507 - - 5,680 0,996 Katoke Complete 3 3,400 3,247 - - 3,410 1,560 - - 1,700 13,310 14,190 1903 5,184 twangwa Coplete 2 6,250 3,066 - - 3,400 3.335 - - 3,410 1,579 - - 1,700 13,366 14,760 1984 5,760 - - 6,250 3,103 - - 3,400 3,405 - ..- 3,410 1,589 - - 1,700 13,057 14,760 1985 5,760 - - 6,250 3,113 - - 3,400 3,405 - - 3,410 1,589 - - 1,700 13,957 14,760 1/ ConstructEd before 1972. / Total smallholder output, including productin fram plantings bafo~e project and project plantinga. May 11, 1971 a  ANNEX 6 Page 1 TANZANIA SMALLHOLDER TEA DEVELOPMENT PROJECT Road Works Introduction 1. Reliable transport is essential to ensure prompt delivery of good quality green leaf to the factories. The largest production of green leaf occurs during and following the heaviest rains, when produc- tion may approach 1% of the annual totals on several days and when roads are prone to structural failure. With inadequate roads, collection vehicles may not be able to reach the buying centers, resulting in complete loss of plucked leaf; or delivery may be delayed, resulting in low quality tea. 2. Road location and design standards, the leaf collection system and factory size and location are all interrelated. In Tanzania, roads will be the sole means of transport within the producing areas for ex- tension personnel, stumps, fertilizers, green leaf and made tea. Only leaf collection and access roads within the four major producing areas are recommended for early improvement under the project, since major transport routes from producing areas to the ports are satisfactory or are being improved to satisfactory standards. 3. All-weather roads can be constructed at relatively low cost in all four major producing areas. With flexible geometric standards, roads can be designed to follow the existing topography, thus keeping excavation to a minimum. The present condition of the riding surfaces is the most serious obstacle to all-weather travel. In three of the areas, local gravels are suitable for surfacing, but crushed stone is recommended in West Usambara. The use of local gravel or crushed stone for maintenance would gradually increase the bearing strength of the sub- grades. Road Routing 4. A total of 300 km of road would be improved as shown below: Rungwe 105 km Bukoba 85 Lupembe 75 Usambara 35 Total 30 km ANNEX 6 Page 2 5. In the Rungwe area the road from Kyimo to Lugombo is included in a separate feeder road project and therefore is not included under the tea roads. The maximum distance a farmer should carry his leaf to a road is considered to be 1.5 km and about the same distance along the road to the nearest collection center. In general, alignments were chosen to follow ridge lines and existing terrain, thus keeping earthworks and drainage to a minimum (Map 2). 6. In the Bukoba area route selection is based on the same criteria as described in paragraph 5 above (Map 3). 7. In Lupembe (Map 4), all proposed routings follow existing alignments or paths. 8. In West Usambara (Map 5), a main spine road from Bumbuli to Dindira is included in a separate feeder road development project and is omitted from the proposed tea roads. Equipment used for tea road construction will also be used for the feeder road project. It is recommended, however, that the Mponde factory-Vuga road should be improved to the junction with the Mombo-Soni road. This road extension would provide a short route for the transport of made tea from the factory to the trunk road and railhead at Mombo. Financing and Timing 9. It is expected that Norway will finance the improvement of tea and feeder roads in the Rungwe and West Usambara areas. As a result, the project will only be required to finance tea roads in the Bukoba and Lupembe regions, at a cost of T Sh 9,796,000. 10. It is anticipated that Norwegian finance will be available in late 1971/early 1972. The proposed road improvements in the Rungwe and West Usambara regions would be completed by about January 1973 and September 1972, respectively. 11. Construction on the Bukoba and Lupembe areas would probably start in the ninth month and be finished in the 13th or 14th month after the start of the project. Execution of Work 12. The most practical and economical method of improving the roads would be by the use of independent construction units. It is also the intention of Norway that separate construction units be used in the Rungwe and Usambara areas. 13. The units would operate under the control of Comworks. Comworks would assign an experienced senior road engineer to coordinate this work and to ensure that the necessary priorities with regard to the road improve- ments are realized. He would be supported by another senior engineer acting ANNEX 6 Page 3 as Project Road Manager for Bukoba and Lupembe. It is understood that the Rungwe and West Usumbara areas would also be supervised by a Road Manager with a staff complement similar to that used in Bukoba and Lupembe. 14. The tea roads would be constructed to the following road design standards: Width :Minimum 7.50 m between centers of side drains. Cross-Section :Barreled cross-section; center line level minimum 40 cm above invert of side drains. Surfacing :Gravel or crushed stone, 3 m wide, to a minimum thickness of 10 cm. 15. As the construction requirements vary within each area, the composition of each unit would not be the same with regard to plant and staff. Proposals on the plant and staff composition of the units are given in Tables 1 and 2. 16. The economic operation of construction units depends on experienced supervision to ensure maximum output from the plant in con- junction with a minimum of detailed design. Proposals on the necessary supervisory staff for each of the units are given in Table 2. 17. Each unit should also be provided with adequate mechanical maintenance facilities and spares to ensure a minimum of "down time" on plant. Comworks' Project Coordinator should be given financial control over the funds available for the works. This control avoids the consider- able delays which can occur when approval is required for nominal expendi- ture necessary to keep the unit operating efficiently. 18. On completion of road improvement works, the construction units would be passed over to the regional engineers of Comworks to supplement their resources and ensure adequate maintenance on the additional roads. The amount and type of plant from the "units" would be an excess of requirements for maintenance, but this excess would be utilized by the regional engineers for improvement of further feeder roads within the districts. Comworks would also have the responsibility of maintaining all tea roads after initial improvement and construction, and the unit equipment would be sufficient to carry out the maintenance of district roads in addition to the roads constructed under the project. 19. Additional staff would be required for maintenance commitments. This staff would participate in a training scheme attached to the construc- tion units during the construction period. To fulfill these requirements, each expatriate needed to supervise the construction units would be training a Tanzanian assistant. 20. Field staff and plant operators would also be assigned to the "units" for specific periods for training purposes. ANNEX 6 Page 4 21. All structures required to dispose of rainfall runoff, other than structures with abutments, are included under minor drainage which primarily consists of round and arched corrugated pipe culverts. Major drainage includes bridges and larger culverts with abutments. Bridge decks would be constructed from precast units to simplify erection and to minimize the down time for existing bridges, which would require redecking and would be out of use during construction. Costs 22. The cost of road improvement is estimated at T Sh 22,226,000 for all areas. However, Norway is expected to improve the roads in Rungwe and West Usambara. Therefore, the project costs include only the costs for Bukoba and Lupembe estimated at T Sh 9,796,000 (Table 3). October 21, 1971 ANNEX 6 Table 1 Page 1 TANZANIA SMALLHOLDER TEA DEVELOPMENT PROJECT Construction Unit Plant and Costs The items of plant listed below would constitute one "unit" to be provided for each area. The approximate duty-free costs are shown. Bukoba and Lupembe Areas Cost Heavy Plant No. (1,000 T Sh) Bulldozer with angle blade and ripper 1 320 Bulldozer with angle blade and ripper 1 160 Heavy grader 2 480 Medium grader 1 180 Loader 1 140 Pneumatic rollers 2 150 Total 1,430 Light Plant 7-ton tipper trucks 8 288 7-ton flat truck 1 32 1,500-gallon water bowsers 1 36 Tractair compressor 1 60 Tractor and trailer 1 50 Fuel/Service truck 1 60 Concrete mixer 10/7 1 22 Concrete mixer 7/5 1 8 4-wheel-drive pick-up 4 72 Hand tools, water pumps, etc. - 40 Total 668 Cost of all plant 2,098 Spares (10% of plant cost) 210 Camps and workshop 160 TOTAL "UNIT" COST 2,468 ANNEX 6 Table 1 Page 2 Rungwe and Usambara Areas Cost Heavy Plant No. (1,000 T Sh) Bulldozer (Angle blade & ripper) 2 640 Heavy grader 2 480 Medium grader 1 180 Traxcavator 1 220 Loader 1 140 Pneumatic roller 1 70 Steel roller (10/12-ton) 1 80 Mobile stone crusher 1 500 Total 2,310 Light Plant 7-ton tipper trucks 10 360 7-ton flat truck 1 32 1,500-gallon water bowsers 2 72 Tractair compressor 1 60 Tractor and trailer 1 50 Fuel/service truck 1 60 4-wheel-drive pick-up 4 72 Hand tools, etc. - 20 Total 726 Bridge Construction Unit Concrete mixer 10/7 2 44 7-ton tipper trucks 2 72 7-ton flat truck 1 32 Tractor and water trailer 1 52 Compressor 1 30 Water tanks 1 20 4-wheel-drive pick-up 2 36 Hand tools, water pump, etc. - 40 Total 326 Plant 3,362 Spares (10% of plant cost) 336 Camps and workshops 200 TOTAL "UNIT" COST 3,898 N.B. The supply of a "unit" for the Usambara area is dependent on the "unit" undertaking the feeder road improvement also. The provision of 10% of plant cost for spares is based on the estimated requirements during the construction period and not on the economic life of the plant. June 2, 1971 ANNEX 6 Table 2 TANZANIA SMALLHOLDER TEA DEVELOPMENT PROJECT Staff Requirements for Construction Units Comworks, Senior Engineer, to act as Project Coordinator 1 Senior Engineer, to act as Project Road Manager (supplied by Consultants) Bukoba and Lupembe Consultants' personnel: I Resident Engineer I Road Construction Superintendent 1 Master Mechanic 1 Cost Accountant 1 Bridge Construction Superintendent (for Lupembe only) Local personnel: 1 Assistant Engineer 3 Road Foremen - Grade I 2 Mechanics - Grade I Rungwe and Usambara (NORAD) NORAD have indicated that in principle the same staff disposition would be followed as for Bukoba and Lupembe. N.B. Salaries quoted include the cost of housing, bonuses, etc., for expatriate staff. October 21, 1971  ANNEX 6 Table 3 TANZANIA SMALLHOLDER TEA DEVELOPMENT PROJECT Cost Estimates Rungwe 1,000 T Sh Construction Unit and Plant 3,698 Construction Costs 3,000 Camp Sites 200 Supervision 472 On Costs 134 Subtotal 7,504 Bukoba Construction Unit and Plant 2,308 Construction Costs 1,900 Camp Sites 160 Supervision 306 On Costs 196 Subtotal 4,870 Lupembe Construction Unit and Plant 2,308 Construction Costs 2,000 Camp Sites 160 Supervision 266 On Costs 192 Subtotal 4,926 West Usambara Construction Unit and Plant 3,698 Construction Costs 1,300 Camp Sites 200 Supervision 240 On Costs 47 Subtotal 5,485 TOTAL 22,785 June 2, 1971  ANNEX 7 Page 1 TANZANIA SMALLHOLDER TEA DEVELOPMENT PROJECT TANZANIA RURAL DEVELOPMENT BANK (TRDB) Background 1. TRDB was created by the "Tanzania Rural Development Bank Act, 1971" with the following objectives: to make available long- and medium-term finance for rural development; to provide technical assistance and advice for the purpose of promoting rural development; to administer such special funds as may from time to time be placed at its disposal; to finance the purchase of agricultural input; to undertake such other activities as may be necessary or advantageous for the purpose of furthering the foregoing objectives. 2. The creation of the new institution required the approval of IDA (formalized by an amending agreement signed on April 28, 1971) because TRDB was to take over certain agreed assets and corresponding liabilities as well as operations from the National Development Credit Agency (NDCA), an insti- tution handling a major part of Tanzania's agricultural credit including IDA Credits 80-TA (US$5 million agricultural credit) and 217-TA (US$9 million Flue-Cured Tobacco). TRDB took over almost all of the NDCA staff and all its offices and equipment including its field offices. Basically, TRDB will carry on with all NDCA's activities, broadening these as explained below (para 10). Certain assets of NDCA were not transferred to TRDB. These consisted of loans unlikely to be repaid which were either inherited by NDCA from its predecessor institutions or made as a part of unsuccessful Government loan programs. The classes and amounts of these loans were agreed with IDA prior to the creation of TRDB and an understanding reached that these uncol- lectable loans (worth about T Sh 31 million or US$434,000 equivalent, being about 30% of all loans) would remain with NDCA which would eventually be liquidated. Organization and Management 3. TRDB has a board of directors consisting of a chairman 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 chairman acts simultaneously as the managing director. Next is the general manager appointed by the Minister of Finance for a term of five years, responsible for day-to-day operations. The head office is in Dar-es-Salaam and there are 19 field offices. The total staff is about 70, of which about half are at the head office. ANNEX 7 Page 2 4. The present senior head office staff includes the posts of chief accountant and financial analyst, both of which have been filled with expat- riate officers with IDA's approval under Credit 80-TA, disbursed by June 30, 1971 and carried forward as one of the conditions of Credit 217-TA. Further senior posts include an economist and a legal officer, both of whom have worked for NDCA for over two years. It is intended to broaden the former NDCA rural coverage in order to tackle TRDB's enhanced objectives and in this connection the newly appointed chairman-managing director and general manager are preparing projections of additional staff requirements with emphasis on a development section with competent technical staff able to assist applicants with advice and preparation of projects relating to crops, livestock, fisheries, cottage industries and farm management. Resources 5. Under the TRDB Act, 1971, the authorized capital is T Sh 100 mil- lion in 100 shares of T Sh 1 million each, which may only be taken up by Government. Should the authorized capital be increased above T Sh 100 mil- lion, the President of the Republic may direct that such additional capital may be allotted in whole or part to a parastatal body. The opening balance sheet of TRDB, emanates from the agreed assets and liabilities transferred to it from NDCA. 6. Based on the tangible assets to be transferred, the initial sub- scribed capital will be 25 shares or T Sh 25 million and a reserve of 0.2 million. Other resources of TRDB will comprise short-term obligations including short-term deposits of about T Sh 10.5 million, IDA funds T Sh 29.8 million, various deposits T Sh 1.2 million and a bank overdraft of T Sh 7.0 million. The overdraft originally contracted by NDCA at 7% per annum from the National Bank of Commerce for the financing of a Government-directed tractor loan program, is due to be converted into a long-term loan on soft terms within six months of TRDB's commencement in business; Government's undertaking to that effect has been received by IDA as a part of the transfer agreement. The total resources will therefore amount to approximately T Sh 73.7 million. 7. Under the TRDB Act, 1971, TRDB may by a board resolution, sub- ject to the approval of the Minister of Finance, call up further capital from Government (Section 5.2) and in particular it may do so when funds are required for contractual payments of interest, other charges or amortization on TRDB's ordinary borrowing (Section 15.2). TRDB will also administer funds designated "special" which will be furnished by Government for the purpose of making loans on concessionary terms (see para 10 below). Use of Resources 8. The assets to be transferred to TRDB will consist of about T Sh 60.0 million (net of T Sh 6.7 million provision for doubtful debts) of loans and mortgages, the bulk of which consists of short-term loans (35%), medium- and long-term loans (26%), IDA loans (31%) and sundry advances (8%). The current assets of T Sh 12.9 million are mainly liquid funds and ANNEX 7 Page 3 the balance of T Sh 0.8 million is in fixed assets, giving total assets of T Sh 73.7 million. Lending Operations 9. During the last few years, the bulk of NDCA's lending was to the cooperative unions and a limited number of primary societies. The various procedures and administrative systems have been satisfactory. Generally, the accumulation of bad debts (para 2) was caused by badly conceived lending programs carried out under Government directives rather than inadequate administration. The bulk of current lending has been dominated by loans under the two IDA projects of which the Flue-Cured Tobacco project will sub- stantially enhance TRDB's operations over the next few years. Under this project the difficulty of collecting the participating farmers' repayments has been overcome by the deduction of repayments by the processing plants. A similar system would be adopted by the proposed Tea Development project: the tea growers would receive payments for green leaf net of a repayment deduc- tion, which would then be remitted monthly in bulk to TRDB. 10. It is Government's intention that TRDB will have a "soft window" for the financing of development projects as determined by Government policy. Government will provide special funds for these lending programs under Section 10 of the TRDB Act, 1971 (para 7). The special funds will be administered separately from TRDB's ordinary funds and expenses relating to these special operations will be charged against the special funds. TRDB will therefore need to develop adequate procedures for the allocation of all its special fund administrative expenses including a share of the general overhead in order to ensure that its ordinary resources do not subsidize the special operations undertaken on concessionary terms. Financial Position and Profitability 11. TRDB will go into business with sufficient liquid resources and a portfolio divested of apparent bad and doubtful loans. With the im- plementation of Credit 217-TA and the proposed Tea Development project, it should be able to build up a sound operation. As the major part of its re- sources will consist of equity and IDA funds, passed on to it by Government at an average of below 4% per annum, onlent at an average rate of over 6% per annum, it will have a reasonable margin to cover its working expenses, provided, however, that the intended extension into additional rural areas is undertaken within the limits of its prospective income, the costs of administering Govern- ment's special (concessionary) loans fully recovered and debt collection effectively controlled. Accounts and Audit 12. The present accounting system of NDCA, which will be continued by TRDB, is satisfactory. NDCA has in the past been audited by Cooper Brothers, Public Accountants, Dar es Salaam, and the last annual accounts (March 31, 1970) carry an unqualified clean audit certificate. TRDB is required by the Act to be audited by the Tanzania Audit Corporation, (TAC) a ANNEX 7 Page 4 Government institution. IDA has not had previous experience with TAC and it should reserve the right to require at any time an independent audit to be carried out by a person or firm of professional accountants nominated by it. TRDB would be required to submit to IDA its audited annual accounts and TAC's audit certificate not later than four months after the close of its financial year. Project Participation 13. TRDB would act as a credit channel for loans to TTA and the cooperatives. To TTA it will channel funds for the tea factories' processing equipment and buildings, vehicles and spares for leaf collection services, establishment of nurseries and headquarters office equipment. To the cooperatives it will make available loan funds for on-lending to project growers for tea stumps and fertilizer. 14, TRDB would receive the project funds at 4% p.a. for a term of 28 years including 8 years of grace, and on-lend them at 8-1/2% p.a. TTA would be given a similar repayment term. The cooperative loans would be repaid by a deduction of T Sh 0.20 from each kg of green leaf brought to the factories and this would be remitted directly to TRDB by TTA with noti- fication of details to the relevant cooperative. At this rate the deduction would repay the cooperative loan within 13 - 15 years including 3 - 5 years of grace. Interest would be capitalized during the grace period because of insufficient income. October 21, 1971 SMALHLER TADEVE-ME PROECT C9891 1972 199 1974 1979 1999 1972-71 1999 1998 1999 119 987 1982 1983 194 1985 1989 1 1989 1999 1991 9 1 19 991 19997 198 189 200 9091 !s D.. . Cos 5,958 9,616 1,989 189 - 13,550 - - - - - Gt-o8ers' Fertili.er 818 1,155 1,453 1,111 1,899 5,827 1,964 1,449 1,449 1 49 1,449 1,449 1,449 1,449 1,449 1,449 1,449 ,1,449 1 49 1,449 1,449 1,449 1,441 1,449 q449 '441 '949 1,449 4 Road Construction13,841 8,944 - - - 22,785 - - - - - - 189 131 181 - 466 64 198 8I 798 - 254 28D 137 180 - 16 799 87 108 - 254 199 137 180 - 166 I08 81 198 - 7perating9Expen1es 6251 883 1 1,442 1.539 5 697 1 7 1,803 1./8 1.I./1 a.91/ 1294 2 035 2.057 2,6_4 1.13 1.913 1, 91 3 191 13 1.913 , 1.903 1..9 11Ž2 191-Ž 1,913 191 1.91° 1_2911 Sub-t 97 1,0 1,94 1,442 1,795 6,41 1,89 8 1,984 1,83 1871 2 1l1 ,24 2,172 2,237 2,064 2,7'9 2,021 1,994 1,77. 1,9 2,167 2,093 250 2,193 7,913 1.079 2,921 7,794 2,027 7,41 7 :, 91,71 1,195 4,54 3,828 6,924 17,79 1,061 7,485 9,9 4,716 7 260 2,803 2,426 3,048 1,49 3,-79 4,71 9,065 3,051 3,158 9,736 3,061 2,24 3,314 2,99 4,533 5,894 4,124 3,641 7 5.56' O39- 29 4 9117 5,937 1.359 8 344 2.075 3 211 9 988 1.971 11744 11,744 11744 11,744 11.744 11.744 11 1744 11,744 11,.744 11,744 11744 11 744 1144 1.1.744 '11,74 Ž1-74 .1-7 1,2 J2 1,, --b.1tota 4,503 4.538 8,76 8,780 12,561 39,028 17,405 15,260 14,284 14,74 17 31 14,547 1 ,170 14,792 14,293 15,489 16,517 14,809 14,75 14,992 17,482 14,885 13,768 15,098 14,713 18,879 18,858 15,768 15,38 .5,42. 7 3 3..9 3 2,965 2,85 2,12 1,299 1,79 1,930 197 1,211 906 909 906 978 999 96 9 901 906 996 988 988 936 909 998 901 904 986 806 90 906 93 Hous19g .47 ·· - - - 1.140 - - ------ - 2,510 2,140 - - V2 e 219 6 - - 394 671 210 66 - 94 210 61 - - 34 1 66 - - 394 219 65 - 94 210 88 Trave, 29- 597 29 297 26 1424 218 218 218 194 12 89 89 89 89 9 89 89 89 89 8 9 9 89 89 89 89 2 9 Su.b-tal -,66 1,328 3,156 2,949 ,92912 74 2,358 ,882 1,421 1,040 1,422 1,205 1,67 995 985 1,389 1,205 l,061 995 993 1,389 1,205 2,961 995 995 2,899 2,345 1,06- 995 995 1,389 ¯.9. n1 ,1494 2,554 1,2- 1,622 1,622 7,914 7,,9 1,10 7,79 1,9 2,039 1,o39 1,039 1,039 1,-39 7,9 1,03 2,039 1,039 1,039 1,039 1,039 1,039 1,039 1,039 7,09 1,9 1,039 1,039 1,039 1,039 Staff Tra9n g .L20 '07 4,0 29 200 2,40 - - - - r9.,9 179 20 221 248 123 971 123 123 123 323 112 2 122 123 123 123 23 123 23 2 I29 12 109 1232321 12 20 70 123 123 129 Orlær Jf 507 579 519 373 579 .2821 579 579 578 579 579 579 579 579 579 79 579 578 579 579 079 579 579 579 5/9 379 979 579 579 6ub-total ,378 2,799 9,92 2,048 2,524 24,189 1,41 1,741 1,701 0,741 747 7,741 1,74 1,747 1,741 1,741 1,741 1,741 1,741 1,742 2,741 '74 1,741 1747 741 741 1,741 1,747 1.742 742 , 1,752 . 3, - - - 2 - 92- 11 12 4 7,208 2 115 2,383 2.131 2,101 2. 68 2.015 , 945 2928 93 2.5 2,361 _2,6 I2022 2.02 25 2.5 1.8 2 49 2.592 2 171 2 037 _3- _ _5 S4-9a.1 2,759 2,82 1,853 1,929 2,184 11,563 2,211 2,383 2,131 2,194 2,665 2,025 1,947 9,093 1,939 2,185 2,301 1,023 2,022 2,020 2.544 1,933 2, 07 1,990 2,924 9,594 2,71 2,922 2,389 2505 T094 79,942 31,206 84,365 19,45 23,04 130,303 22,846 24,598 22,927 22,996 27,679 23,081 22,538 23,252 22,401 24,326 25,234 23,080 23.023 23,020 26,770 23,349 21,949 23,441 22,801 27,59 29,388 24,184 /3, 1794 /7,16 May 4, 1971 аIг°- 1(р1 �оС '�I tl 110'1i ЬОб`6 6f1'б !ЬЕ'б п9В'6 1!0'Е1 С02'Ь СЕЬ`д 096`Р ЕЕ9'[ 1п0'll ЕЧб F д06'д 156'д t01`6 l9S'01 LZO'Ь 6д6'3 СЬ9�Ь SZ9`_ дС0`Z1 949�8 BBZ`tl hUf'Ь hпL'С !,д'Еп Е9('П1 ОLу'Ч 1nL'Ч ССС'01 >n о :У10У OZl`l СУ1'1 4[В ЧОЬ Е96 гпZ`l iAP /hP OSB С(Ч UL1 1 15tl Z98 Ьп0 69д 650'i hS0 i50 fbб 9L9 CLZ�1 19д п29 Ь96 ВВС 05г�У ВС1'С S69 И59 ldб c8L i.а�-Gп� O2i i 681 1 9(В 906 0% BOL 1 18В (qB 058 LL9 ПZ1 l 15д гпР бпЧ 5У9 55U I п58 15В С96 9(9 (CZ 1 1Чд пZВ б46 РР( 201 Е P5i i i69 9Ь9 д5Е йб! �sad � - - - CZ 4F - - - - - - - - - - - - - � - - - - " дhi'1 - - - £9Е 5RS lвaSa.S4d я6�uliecj 6Z6 CSC FSf 2ВЕ 106 п1г'L ЕЕЕ CSE LHf Чпп Ьг5 6CL С5� 2д( ЧhУ 6ZE С5С Е5Е 2ВЕ 9hh 6L5 ЕСС b55 2Z( пЕб СОд�9 (51�1 У9['I CZZ'1 д5L�1 506'1 Св�'��-9^5 Ь2 6i TiZ 6Z 6Z 6Z 6Z Ьг 6Z 6Z ЬZ 6Z 62 6Z 6L 5Z бг йL fiZ 6Z Ьг ЬЕ 9Р 9д 9д ZOC 9В hli hC1 011 п11 la^а�3 Ч(г - - 6t СЬ 9Cl - - eZ ЕЬ 9(1 - - 6г - - - - Гг f6 РЬ2 9[1 - - 6Z ЕЬ ' - ' - SЕп SB9 " - - - - - - - - - - - - - - - - " - Е5п - - 5Sп вNиlе4ан hlC 4ZE 4ЕЕ 9LF 92С hLC h2C п2Е пЕL пZЕ пZЕ пгЕ пгЕ пГь. hlt hZE ц( hZC пZС пгС VZC hZf д9п С09 5п[ дП5'S 16д 05П'1 бПi 1 51Z 1 fhL'I uofiiкg BZB'с 005`4 Zl4'9 609'9 005'9 [г0`В 005'9 Огг`9 41г'9 п46`п ыгд'( 98г'9 [Сг'9 огг'9 9дг'9 ЬЕп'l 98Z'9 Е[2'9 ОгВ'9 пББ`п CZL'В Себ'С 09h'С t51'9 СЕ9'b 869'01 ЬВ(�9 Ceh'Е 096'г СС[ Е£С 1я�о�-Vп5 пбб b %4 4 %6 4 %б q %б п %б п �Ь п %6 п h66 п %6 h пбб п 966 п пбб`И h66`п ЧЬб п h66 п пбб п пбб п h66 4 пбб п (г9 п 050 п hп9 С ((Z Е 00( Z 652 9 660 Z 055 1 441 i ЕСС EfC еабад 8вllаааЛ0 пЕБ'Е 905'} 81п'I 609`I 905'1 (ЕО'Е 905'l 92Z'l 612'1 - пЕ0'2 г62'г 6iZ'1 9ZZ'1 гбг.'1 iпh'Z t5Z'1 61г'I 91tl�1 - ПП1'0 ССб'l 91Р'I п[Р'Z ЕЕЬ'I ЬЕО'9 069'п f.E6'1 91B�1 - - �вю�ва ь5д 99< СЬ[ СЬ( ЕЬ[ (ZB 99t д08 БОВ АОР [SP 99! ffi/ ffi( (Ь[ CZN (28 S9B 5SB г0д ФСд Zп( ЕпС 09С С9( lC0'Z ИЬ9 El9 г15 Е(С 5LZ 1а�п�-9^5 99: 99L 99( 99[ 99( 99( 99[ 99( 99[ 99( 9ч[ - 99[ 99[ 99[ 99С (ZB С28 ftB 09( [И[ ZhC 91С СЕ( 91С CBZ Z (!9 [г9 69п 1СС ССЕ vвяивАхд Bellвaad0 гб - (2 LZ LZ г9 - гп гп гп 1ь - [г LZ Li г9 - Zh Еп Еп 16 - (i (2 (2 В81 l9 - f0 Е4 Zh ааl�tЧяА воiЭааll0'J Эаа'l LП( (П( [О[ (0( [О[ СО( (0( [О( СО( (0( (О( СО( [ОС СОС г0[ LOC CV< [ОС (О( СО[ C0L СПС /О[ (0( Ч59 гп[ г 59S ZИS Ео[ 5tf С[п �aailll�a� ,е an Э - - � - - - - - � � - - - - � - - - - - - - - - - h05'[ - - � Е5['Е 25G'Е uoS»пааяио� раау - " _ " - - _ - - - - . - " - - - - - - " - - - - Е09'S - С( 599 5В6'Z ЧLО'Z вl ?1 Э о�jал>aTiavi^ц l(ЮZ ОООЕ 666I 966i (66l 9661 5661 hбЫ Е661 Z661 16Ы 0бfil ЬВЫ 88Ы [FSI 986I 5861 гуВб1 Едб1 Z1ifil 1661 ОРЫ бС61 PLfil LC6i 9L-ZL6l 9C6S 5C6i hCбt fL6I ZC6l 6150� lv�п1 ГООО 45 1) вt П Iвпчоq�аq� vixvzиrг W"ý 1972 ý173 W' 1975 1.-1ý 1977 1978 1979 19N 1981 1982 1983 19ý 1985 1986 1987 198B 1989 1M 1,91 1992 1993 19ý 1995 1996 1997 1998 1999 2W C-t, J,WS 1,4ý 37ý 16 2,M9 - - - - - - - - - - - - - - - - - - - - 156 214 2. 189 234 1,057 275 M 296 29ý 296 ý9. M 211 2% ý9ý 29ý 29ý 29. ý9ý 2% 296 296 296 296 2.6 3,653 ý,2ý7 - - 4,870 43 - 43 - 31 - - 27 '2 43 43 11 27 27 - 52 43 - 41 - 35 27 - 27 - 5 2 ý2o ý£7 A.5_8 ý64 ýt66 2 4:32 4L32 ý132 432 ýt32 432 4-- 822 432 432 U2 432 ý32 432 ý32 i-37 175 263 294 IýL. 1-195 ý7ý 4ý02 174 411 ýj3~ 32 4 M 175 3D6 294 361 1,316 399 402 401 4W 491 49. 4M W 4ýý - 459 432 459 432 4" 475 432 475 432 467 459 432 451 432 4. cl-I - 286 816 - 967 3,.9 ,691 1,437 - 1.816 967 967 1,21. - W 2,.8 613 - 1,219 W "I - 418 - 753 2.783 æs - 1.418 753 733 33 I.I. 1. 1" 4.898 1 3" ý2294 2~ 2 700 LM jtffi LM 2,M 1,1 1,- 2,160 1,1" 2,111 7,967 5,ýl 3,ý 1,927 4,110 3,261 3, - 2,700 3, ý 7 5,568 3,313 ý,7. 3 » 919 3,347 3, ý7 2 .7W 4,118 2,7W 3,453 5,483 3,M5 2,7W 4,115 3,453 181 171 1,1 575 491 2,111 417 336 218 199 199 199 199 1,9 199 199 199 1. 199 199 199 199 199 M M 1" 1" 1 1" 199 ., - - .. - - » 1 85 - 41 13 - - 1. 133 11 13 - - 1. 42 13 - 7ý 42 13 - 78 42 13 76 42 11 -1. 1 11 11 21 .0 6- W .0 -1ý 2. 48 JL8 Jt.. -L- -L9 -Li -Lý -L -Li -Li -Li ~LI -Li _ý1 -2-1 -ll __21 -U - - "8 635 635 627 3,417 507 399 306 247 316 2. M 22. M 233 UO 22D 298 262 233 220 2" 593 "7 233 M zn 298 1" - - 741 - - - - 30 18 - 2ý. ý3ý 7 2 77 5ý 21 9 W2 21-1 __. ý.41 ffi i--, 5--2 4 1 350 538 60 7B6 44. j_. 4L62 455 2ý8 L6-1 iý6 ý03 L"- ý_69 i-6-1 Sý_ 65ý ý13 5 m 217 378 2,203 802 505 282 18ý 477 5. M 11ý 349 4. - 14ý - 529 462 ,, ý8 565 ý6 133 808 469 36ý 549 - 7 .216 5 n 5 , ý1 1 3,711 2 3, ý I 7,D24 4 , - 3,212 -,,633 4,ýl 5,219 4,037 5 4 H 4,031 4,868 7,371 4,714 4,025 5 4,887 4,835 4,009 5,674 3, 9ý 5,ý2 7,493 4,935 4 >- 5, ý1 5 5,033 28, TANAIA SHALLHOLDER TEA DEVELOPMET PRDJECTF LupIb A,na CI t <9 7h 0000) C0STS 1972 197 _1974 1971 1979 1972-76 4j7 197 j 19 9 j9 1982 1983 1984 2995 1986 1987 1988 9 199 1991 1992 1993 1994 1995 1996 1997 1998 199 2000 2GL Cost. 1,462 1,966 516 49 - ,993 - - + - - - - - - - - - - - 4rowr.'1ertii2e 144 342 387 374 341,9 73 3 77 344 344 744714 741 344 544 44 344 43 44 744 44 44 44 544 344 44 44 344 344 14. Rp_k _C4 _ruc o 3,64 1,232 - - - 4,71 - - Vehicles 44' 4 44 - 16 28 28 14 - 52 44 44 44 2 - - 52 44 44 44 - 36 28 28 29 42 operattng Expenses 73 _224 25 » 377 7 124 171 3_91 411 42 4' 3 41 451 404 4__ 4_25 425 425 4_72 421 42_5 412 5 1 421 42 425 425 425 I« 425 Su-tota- 179 267 297 92 9, 1,417 44 41 7 424 ,4/1 475 497 504 41 41 453 74 73 477 477 469 49 19 4 454 91 453 453 453 45 ,77 Capital Invstat9 909 94 96' 977 3,752 1,43 1,43/ 2,1 957 ,19- 1 614 - 14134 , 613 1, 27 647 2,255 805 805 - 753 753 805 905 1,419 753 7,' OperatLng97xpense7 73_ 2142 2_ 1.4 _142. 5.,715 1.354 1.9Ž 22?4 2954 >, .2200 2,/702 2.722 22/DO 2.700, 742 7 701_/4_0 /0 77_ 2.707 2.727 2_20 22 7 20_ 2799 2.709 2.790 12.7 12_ 6' 7ub-t4t' 1,67' 170 1,144 2,- - 2,47" 7,47' 4,78 3,64 4,1.' ,3, 3,313 3,3 3,91 0,347 4,95 3,505 3,125 2,77 3,453 3,453 3,505 3505 4,118 3,453 4,679 n 759 744 , 44 6 50 3,484 482 394 27 227 72 226 26 27 226 2' 21 142 2, ?0 11 2 2 126 223 229 226 226 229 226 226 226 97u.1-3 - - - 36 - - - - - - - - - - 29 3 - - -- 0.1,1., 02 1P - 710 12 57 1,, - - 4o 57 1 - - 7 7' 74 - 27/ 53 46 - 107 57 18 - · 107 74 09 74 _54 330 _458 _j10 77 _1 _1 _8 _1 _1_8 0 13 1 98 0 1 189 11 S777777 777,24,3 292 734 717 4,361 584 45' 74 244 7. 301 262 247 244 301 577 2144 24 351 301 174 244 244 64 666 211 244 244 351 1c16 591 - - - 1,222 - - - - - - . - 30 537 - - - - Pri44, 3,7 4444 1.7.8 481 554 614 472 I_L,_ 45j 46 V 47 464 4 15 4_ _735 493 49 5.. 471 55 560 489 583 470 692 S7-4ot' 77 979 311 524 444 2,957 16 531 724 444 776 459 46- 46 4 1 4 47734 37 447 '74 24' 47 5.' 597 489 693 43 752 7472L 9,857 ,7,76 3,471 ",97 4 333 28,666 ,595 5,115 5,29 4,749 7,73 4,-89 4,-/ 4,L7474,84. 4,.8 4,31. ',l,6,8 6,861 5,.l/ 5,47. ',110 4,94 7,48/ 5,56"13 7 7154.6,9,742 4,9 ,M May3, 17 TANZAN1A (T Sh 00 CSTS 1902 1973 1974 1575 1976 1972-76 1977 1978 1979 198 1981 1982 1983 [4 1985 1986 1987 1989 1989 1990 191 1992 199 199 199 199 1997 1999 1999 29 291 Nusr pet, cost 511 641 129 18 - 1,305 - - -- - - Rsad-C=.1truction 2,742 2,743 - - - 5,45 - - - - - - - - Gr ..e ' Ferilr 85 84 99 77 90 435 99 1.2 102 172 102 102 102 102 102 102 101 102 102 102 202 102 102 102 102 102 92 102 102 112 102 9.htele. 51 51 51 - 34 1B7 26 29 26 - 59 51 51 51 - 14 26 26 26 - 59 51 51 51 - 34 26 26 26 - 59 -Oating Expense. 120 15 222 232 03 970 264 277 284 301 304 909 309 l1 310 i 20 _20 29 290 120 290 290 299 L90 29 mn 98 jQ 90 290 20 *ub-tota 171 221 279 232 277 1,157 290 303 310 3D1 363 357 360 31 310 324 316 316 316 290 349 940 341 31 280 324 31326 326 290 349 a.p t Instment 662 - 909 908 - 2,479 - 1,137 1,437 - - 1.226 -- 10 60 - - 623 413 - - 1,609 - 710 720 - -- o0 0 - - Operating 2xs e 35 733 733 1 144 1 144 ,4.7 944 1.350 1350 5 1.350 1.350 1.350 1 350 1 350 135o .350 1,350 1.350 1.350 1.350 1 35G 1.350 1.350 13» .3W 1.35W L350 135 1.3520 Bub-t13t1 1,395 733 1,642 2,052 1,144 2,9 941 2,321 2,787 1,350 1,350 2,576 1,350 1,960 1,990 1,350 1,350 1,963 1,963 1,350 1,350 2,959 1,350 2,60 2,060 1,35 1,35 2.155 2.155 1,350 1,.30 829 426 426 420 366 338 1,982 296 258 200 157 11 57 157 157 157 157 157 157 157 157 157 157 137 157 137 157 157 157 o..g 135 - - - - 131 - - - - 6 - - -- - - 233 135 - - - 4 9eh!cl. 18 I - - 37 59 18 6 - - 34 18 6 - - 34 18 6 - - 31 18 6 - - 34 19 6 -- - 34 Tral -i _4 5 354 _2 258 39 _39 39 _39 _2 1 21 21 21 21 21 21 _21 2 2 2 1 221 2 _21 _21 _21 _21 _ 2 6ub--cote 633 486 490 420 414 2,433 343 322 247 220 227 190 184 178 178 02 196 184 178 178 212 196 194 178 178 447 331 184 178 178 212 Continenci7 42..2 - - 24- - -- - .. - - - - .. - - ·· - 24 14 - - - - Physe-1 425 411 - - - 836 - -4 1 Price 94 138 I08 320 184 1.044 16 27 4_11 18 15 376 192 283 275 187 16 272 278 182 227 431 190 296 28 232 212 307 397 192 131 6ub-9ota1 319 549 900 527 124 1,220 164 37B 411 182 195 376 192 283 275 187 186 278 278 182 227 431 190 296 289 256 226 307 322 182 191 59294 6,062 5,440 2,931 3,119 2,109 29,61 1,840 3,467 3,957 2,137 2,237 3,607 2,18 2,2. 2,015 2,175 2,150 2,843 2,837 2,102 2,240 4,029 2,167 2,977 0,918 2,479 2,325 3,064 3,058 2,12 2,24 y 3, 1971  TANZANIA SMALLHOLDER TEA DEVELOPMENT PROJECT MINISTRY OF WORKS Cash Flow Projections (T Sh '000) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16-30 1972 1973 1974 1975 1976 Sub-total 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987-2001 Total INFLOW TDA 5,202 5,203 - - - 10,405 - - - - - - - - - - 10,405 Government 782- - - - - - - - - - - -1564 5,984 5,985 - - - - - - - - - - - ---11,969 OUTFLOW: Roads 5,250 5,250 - - - 10,900 - - - - - - - 10,500 Contingencies 734 735 - - - 1469 - - - - -469 0.984 5,985 -196 11 -- -9 --9 1/ Roads to be financed ondo, a bilateral agreement between Government and NORAD (see para 5.01 of text) are omitted from the cash flows as IDA financing is not involved. October 5, 1971 IANZANIA SMALLHOLDEP FEA DEVELOPMENT PROJECT TANZANIA RURA DEVELOPMENT BANK CasF Flow Frojecotions (T Sh '000) 1 ? 3 4 5 6 7 8 9 10 i 12 13 14 15 16-30 Yeao 1972 1973 1974 1975 L906 Sub-LoLl 1977 j978 1979 1980 1981 1982 1983 1984 1985 1986 1987-2001 Total INIFLOW IDA Funds for Credit to Cooperaties 5,504 5,435 4,973 831 290 17,033 - - - - - - - - - 17,033 IDA Furds for TTA 5,616 _341 6,21 4,144 15_ 2 2 - - - - - - - - - - -29,426 Sub-total 11.120 11,776 11.183 4,975 7 0 6 45_ - - - - -.. - 46 Government Fonds for Credit to Cooperatives 3,695 3,935 3,601 603 210 12,044 - - - - - - - - - - 12,044 Governmett Funds fto TTÀ 1,764 2 271 741 214 247 _5237 - - - - - - - 5 Sub-total 5,459 6.206 4,342 817 457 178.21 - - -..7281 Total IDA and overnment Funds @ 4% p.a. 16,579 17,982 15,525 5,792 7,862 63,740 - - - - - 63,740 Interest from TTA @ 8.5% p,a. (during grace) 314 993 1,654 2,135 2,633 7,729 2,946 2,946 2,946 - -- - 16,567 TTA Repayments (Annu ity) - - - - - - - 3.663 3,663 3,663 3,669 3,663 3,663 3,663 47,619 73,260 Payments by Cooperatives, @ Sh .20/kg - - 349 1.071 1.838 3258 3.668 5,027 6 224 _Z.L2 _.63 8.6 3 8 975 5.014 - - - 56.104 TOTAL INFLOW 18,975 528 8.998 12.333 04,727 6,614 7.973 9.10 10 704 12,296 12,638 6,67? 3.663 3,663 4761 2 OUITFLOW Cooperatives for Stump Loans 8,235 8,100 6,831 600 - 23,766 - - - - --- 23,766 Cooperatvet for Fertilizer 918 1,155 1,081 290 - 3,444 - - - - - 3,444 Fertlizor Contingency 46 115 162 44 - 367 - - - - 367 Seasonal Fettl1iz- loonu - - 372 821 1,190 2,38 - - - - 2,383 Fertilizer Contingency - - 56 123 179 358- - - - - - 358 Sub-to,al 9,199 9.370 8,502 1,878 1,369 30,318 - - - - - - 30,318 Funds to TFA 7,380 8,612 6,951 4,358 7,362 34,663 - - - - - - - 34,663 Intersat to GoveTnment an IDA an-d Co,,ument Funds 4.0 p,. 332 1,023 1,693 2,119 2,276 7,443 2,550 2,550 2,550 - - - - - - - 15,093 Depaymenton D Aoveroment - - - -_ - - - - _ -. 4690 _4,690 4,69 4 690 4,690 4 690 60,970 93.800 T.Al 314TFPleo" I 1Lfl 5 1 ) 4 271, 24 2,550 90,9 4,690 4,690 4.690 4,090 49 6( 0970 173,74 Sorplus (nDefIil) (18) (30) 382 643 1,326 2,303 4,064 5,423 6,620 6,235 7,016 7,606 7,948 3,987 (1,027) (1,021) ()3351) 35,797 Cumulo a i.v Suplu - (48) 334 977 2,303 - 6,367 11,790 18,410 24,645 31,661 39,267 47,215 51,202 50,175 49,148 :., 79/ - 1/ Rlevolving Se.aoal Fenilizr 0un T Sh 1.5 oillIon - After year 5 seasonal fertilil-r inpu-r porchasec motly for oash TANZAN[A SMALLHOLDER TEA DEVELOPMENT PROJECT TANZANIA TEA AUTHORITY Cash Flow Projections (T Rh 'ORE) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16-30 Year 1972 1973 1974 1975 1976 Sub-total 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987-2001 Total INFLOW Not Income from Factory Operations 885 1,176 1,883 3,516 5,615 13,075 10,495 12,714 15,039 17,035 22,761 23,679 24,638 25,139 25,160 25,321 379,815 594.841 Ceso on Made Tea (incl. private estates) 940 979 1,052 1,151 1,257 5,379 1,450 1,595 1,718 1,821 1,897 1,952 1,9B2 2,000 2,001 2,001 30,015 53,811 Sale of Stumps 8,235 JJ10 6,831 600 - _237 - - - - z- - - - - 3,766 10.060 1,255 _L,76 jJ67 _6,2 _42220 11945 14,309 16.757 10,856 24,658 25,631 2 , 27.139 27,161 27,322 409,830 6741L IDA Credit at 83% via TRDB Locluding contingencies 5,616 6,341 6,210 4,144 7,115 29,426 - - - - - - - - - - - 29,426 Government's Contribution at 8k% via TRDB including contingencies 1,764 _2271 741 214 247 5237 - - - - - 5237 7.380 8,612 6,951 458 3 63 - - - - - -3,663 Grant: IDA Funds 2,868 947 926 785 1,064 6,590 - - - - - - - - - 6 590 Government Funds 798 145 129 70 176 1.318 - - - - - - - -3 3,666 1,092 1,055 855 1,240 7,908 - - - - - - - - . 7,900 Total Funds from IDA and Government 1,D46 9,704 8,006 0,213 8,602 42.571 - - - - - - 4571 TOTAL 21,108 19.959 17,772 10,480 15,47 84,791 11,940 14,30 16,757 18_, 22 OUTFLOW Nursery Development 5,058 6,626 1,686 180 - 13,550 - - - - - - - - - - 13,550 Factories and Leaf Colletion Investments inl. Replaeenta 1,751 1,332 4,722 3,808 6,790 18,403 7,168 7,266 5,177 4,716 7,514 2,983 2,565 3,228 2,549 3,905 59,541 125,015 TIA Headquarters 3,491 1,100 968 768 1,581 7,908 1,741 1,741 1,741 1,741 1,741 1,741 1,741 1,741 1,741 1,741 26,115 51,433 Contingencies 571 654 543 370 572 2,710 1,317 1,280 925 814 1,293 576 489 580 483 739 10,761 21,967 Working Capital 5,700 1,040 2,130 3,070 2,120 14,060 4,210 3,850 3,030 2,560 2,090 2,520 (330) 290 10 (10) - 32,280 Interest on IDA and Government Funds I 8k% p.. 314 993 1,654 2,135 2,633 7,729 2,946 2,946 2,946 - - - - - - - - 16,567 Repayment of TDA and Government Funda by equated payments over 20 years _- - - - - - 3663 3,663 3,663 3.883 3,863 3,663 3,663 47,619 73,280 16,885 11,745 11,703 10,331 13,696 64,360 17,382 17,083 13,819 13,494 16,301 11,483 8,128 9,502 8,446 10,038 144,036 334,072 Cash Surplus 4,221 8,214 6,069 149 1,778 20,431 (5,437) (2,774) 2,938 5,362 8,357 14,148 18,462 17,637 18,715 17,284 265,794 380,917 Cumnlative Surplus - 12,435 18,504 18,653 20,431 - 14,994 12,220 15,158 20,520 28,877 43,025 61,487 79,124 97,839 115,123 380,917 - 1/ At 6 months' factory operating expen.s plus one quarte of annual headquarters expenses TANZANIA SMALLHOLDER 1EA DEVELOBMENT PROJECT COVERNMENT CASH FLOW (T Sh 'n00) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16-30 31-50 Year 1972 1973 1974 1975 19/r Sub-total 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987-2001 Total 2002-2020 1NFLOW IDA Funds for: eorworks 5,202 5,203 - - - 10,405 - - - - - - - - - - - 10,405 TRDB: for TA 5,616 6,341 6,210 4,144 7,115 29,426 - - - - - - - - - - 29,426 for Cooperatives 5,504 5,435 4,973 831 290 17,033 - - - - - - - - - - - 17,033 Grants: Ministry of Agriculture 2,426 2,460 2,446 2,283 1,958 11,573 - - - - - - - - - - 11,573 TTA 2,868 947 926 785 1,064 6590 - - - - - - - - - - - 6,590 TOTAL IDA Funds 21,616 20,386 14,555 8,043 10,427 75,027 - - - - - - - - - - - 75,027 Payment of interest from TRDB to Treasury @ 4% p.. 332 1,023 1,693 2,119 2,276 7,443 2,550 2,550 2,550 - - - - - - - - 15,093 Annuity RepayMents - - - - - - - - - 4,690 4,690 4,690 4,690 4,690 4,690 4,690 60,970 93,800 TOTAL INFLOW 21,948 21,409 16,248 10,162 12,703 82,470 2,550 2,550 2,550 4,690 4,690 4,690 4,690 4,690 4,690 4.690 60,970 183,920 OUTFLDW Comorks 5,984 5,985 - - - 11,969 - - - - - - - - - - - 11,969 TRDB 16,579 17,982 15,525 5,792 7,862 63,740 - - - - - - - - - - - 63,740 Grarts- Minirtry of Agriculture: ExtensLon 3,409 3,458 3,440 3,210 2,753 16,270 - - - - - - - - - - - 16,270 TTA 3,666 1,092 1,055 855 1,240 7,908 - - - - - - - - - -7,908 sub-total 29,638 28,517 20,020 9,857 11,855 99,88/ - - - - - - - - - - 99,887 Repayents to TDA: Servir Charge @ 3/4% p.0. 81 239 370 454 524 1,668 563 563 563 563 563 557 551 546 540 535 6,724 13,936 3,207 Prinipal Repad 7S0 750 750 750 750 26,263 30,013 45,014 TOTAL OUTFLOW 29,719 28,756 20,390 10,311 12,379 101,555 563 563 563 563 563 1,307 1,301 1,296 1,290 1,285 32,987 143,836 48,221 Cash Sorplus or (Deficit) - Annual (7,771) (7,347) (4,142) (149) 324 (19,085) 1,987 1,987 1,987 4,127 4,127 3,383 3,389 3,394 3,400 3,405 27,983 40,084 48,221 - Cumulative - (15,118) (19,260) (19,409) (19,285) - (17,098) (15,111) (13,124) 8,997) (4,870) (1,487) 1,902 5,296 8,696 12,101 40,084 - ANNEX 9 Table 5 TANZANIA SMALLHOLDER TEA DEVELOPMENT PROJECT Tanzania Rural Developent Bank Interest Differential (T Sh '000) Year 1 2 3 4 5 6 7 8 1972- 197§3 1-97T -1-75 TM7 'TM7 TM"~i7 INTEREST RECEIVABLE From Cooperatives 391 1,213 2,062 2,617 2,743 3,067 3,016 2,845 From TTA 314 993 1654 2 23 2 2 2,946 Total Received 705 2,206 3,716 4,752 5,376 6,013 5,962 5,791 INTEREST PAYABLE 332 1 1P693 2P119 2,276 2525 2 2)55 Difference 373 j3 22633 3100 3 3 3 October 21, 1971  ANNEX 10 TANZANIA SMALLHOLDER TEA DEVELOPMENT PROJECT /1 Estimated Schedule of Disbursements- IDA Fiscal Cumulative Year and Quarter Disbursement at End of Quarter (us$ '000) 1971/72 September 30, 1971 - December 31, 1971 - March 31, 1972 695 June 30, 1972 1,390 1972/73 September 30, 1972 2,085 December 31, 1972 2,780 March 31, 1973 3,495 June 30, 1973 4,210 1973/74 September 30, 1973 4,925 December 31, 1973 5,640 March 31, 1974 6,187 June 30, 1974 6,735 1974/75 September 30, 1974 7,282 December 31, 1974 7,830 March 31, 1975 8,150 June 30, 1975 8,470 1975/76 September 30, 1975 8,790 December 31, 1975 9,110 March 31, 1976 9,512 June 30, 1976 9,914 1976/77 September 30, 1976 10,317 December 31, 1976 10,500 /1 It is estimated that the credit agreement will be signed in August 1971, and that the credit will become effective in October 1971. October 21, 1971  ANNEX 11 Page 1 TANZANIA SMALLHOLDER TEA DEVELOPMENT PROJECT Green Leaf Collection General 1. The collection of freshly plucked green leaf for delivery to factories in good condition from thousands of smallholders scattered over many square kilometers of mountainous countryside is a difficult operation demanding considerable planning, administrative ability and expenditures on staff, collecting centers, roads and transport. Up to 1971 the collection has been carried out by cooperative societies or private estates for manu- facture in their factories. Hereafter the Tanzania Tea Authority (TTA) will assume full responsibility for arranging and administering green leaf collection from growers to factories. An example of the collection schedules as now carried out is given in Table 1 to this Annex. Present Leaf Collection System 2. Outgrowers carry their freshly plucked leaf from their plots to existing collecting centers in baskets, bags or cloth sheets up to 5 km distance. The cooperative societies are responsible for weighing and recording leaf, which is inspected in the presence of a society committee member and a member of the Extension Staff. 3. A variety of transport methods are utilized which include leaf collection by private estates and cooperative society transport. In some areas, notably Bukoba, the society has purchased a large lorry which has been fitted out with racks for transporting leaf to the factory in open weave baskets. Other areas use light lorries with enclosed wire mesh sides or standard lorries with primitive racks on which bags are loaded. 4. Factory personnel handle final leaf weighing and inspection. All leaf is reinspected at the factory, although society staff are usually present. Proposed Leaf Collection System 5. TTA intends to take over the leaf collection during the fiscal year 1971 and will, therefore, be responsible for coordinating plucking schedules, leaf deliveries by growers, buying center operations and vehicle scheduling. These tasks will be the responsibility of the area Tea Officers assisted by the Transport Officers and Senior Field Officers of TTA's field staff. A schedule of equipment purchase for leaf collection is shown in Table 2. ANNEX 11 Page 2 6. If good quality teas are to be produced, which is essential to the success of the project, a high standard of plucking must be maintained. At least 70% of the plucking should be only two leaves and a bud. The leaf should also arrive at the factories in good condition. A steady flow of leaf to the factories will be required throughout the day. Leaf collecting centers would therefore be built along the main collection roads at intervals not greater than 2.5 km. This would enable growers to bring their leaf to the centers at frequent intervals, thus preventing heating up and bruising. When the leaf has been inspected, weighed and recorded, it would be held until the transport arrives. The societies would remain in charge of the collection centers and would be responsible, with help from TTA's staff, for leaf inspection, weighing, recording and preparation for transport to the factories. Collection Vehicles 7. In all areas, transport would be mainly by tractors and trailers, as shown in Table 2. Where distances are great in the first years of the project, lorries will be required, but eventually (by fiscal year 1976) all transport will be converted to tractors and trailers. Tractors of 40 HP would have adequate power for towing two-wheeled trailers carrying approxi- mately 2,000 kg of leaf. The trailers would be constructed with two or three fixed racks but would have drop down wire sides which, when in position, would prevent the bags and leaf from spilling during transportation. June 9, 1971 ANNEX 11 Table 1 TANZANIA SMALLHOLDER TEA DEVELOPMENT PROJECT Rungwe Tea Growers' Cooperative Society Limited Leaf Collection Commencing January 11, 1971 USHIRIKA/PAKATI SCHEME: Lorry No. 7 Lorry No. 3 Day Time of/1 Time of /1 Place Time of/1 Time of lace Arrival- Departure- Arrival- Departure-- Monday 6.00 6.45 Katusyo 5.00 6.00 Igalamu 7.15 8.00 Segera 6.30 7.30 Mibula 8.30 9.30 Nsyasya 8.00 9.00 Kyimbila 10.00 11.00 Pakati 9.30 10.30 Katonya Council 11.00 12.00 Ushirika Tuesday 6.00 6.45 Katusyo 5.00 6.00 Igalamu 7.15 8.00 Segera 6.30 7.30 Mibula 8.30 9.30 Nsyasya 8.00 9.00 Kyimbila 10.00 11.00 Pakati 9.30 10.30 Katonya Council 11.00 12.00 Ushirika Wednesday 6.00 7.00 Nsyasya 6.00 7.00 Mibula 7.15 8.15 Pakati 7.30 8.30 Kyimbila Council 9.00 10.00 Ushirika 8.45 12.00 Bujela 10.30 11.30 Itula Thursday 6.00 7.00 Mpombo 6.00 7.00 Ndubi 7.30 8.30 Kiloba 7.30 8.30 Itula 9.00 10.00 Nsongola 10.00 11.00 Lugombo 10.30 12.00 Bujela Friday 6.00 7.00 Mpobo 6.00 7.00 Ndubi 7.30 8.30 Kiloba 7.30 8.30 Itula 9.00 10.00 Nsongola 10.00 11.00 Lugobo 10.30 12.00 Bujela /1 Swaheli time: 6:00 is noon 12:00 is 6 am or 6 pm. June 9, 1971  ANNEX 11 Table 2 Page 1 TANZANIA SMALLHOLDERS TEA DEVELOPMENT PROJECT Schedule of Leaf Collection Vehicles Number and Cost in '000 (All Areas) .......Number of Vehicles ....... Fiscal Year Motor- Total Required Tractors Trailers Lorries cycles Costs (T Sh) 1971 5 11 1 8 287.6 1972 4 9 - - 184.9 1973 3 7 - - 140.8 1974 4 9 - - 184.9 Total 16 36 1 8 798.2 Unit costs are given under vehicle requirements for each individual area. Rungwe ... Number of Vehicles ... Fiscal Year Motor- Total/2 Required Tractors Trailers-- cycles Costs (T Sh) 1971 2 4 2 97,738.00 1972 1 2 - 44,034.00 1973 1 2 44,034.00 1974 1 2 44,034.00 Unit Cost (Shillings) 27,754 8,140 2,835-- /1 Trailer capacity of 2,200 kilos per trailer possible in this area. 7- Total costs include 20% of the vehicle purchase price for stock spares and tools. Maintenance of vehicles will be carried out at parent factory. These vehicles will be adequate for the first phase of the project but two tractors and four trailers will eventually be required for each factory. /3 One motorcycle to be equipped with radio transceiver, costing T Sh 2.400 additional. ANNEX 11 Table 2 Page 2 Bukoka ... Number of Vehicles ... /2 Fiscal Year / Motor- Total-L-- Required Tractors Trailers- cycles Costs (T Sh) 1971 1 2 2 49,704.00 1972 1 2 - 44,034.00 1973 - - - 1974 1 2 - 44,034.00 Unit Cost (Shillings) 27,054 8,140 2,885-- Details of /1, /2 & /3 as for Rungwe. Lupumbe ...........Number of Vehicles.......... /2 Fiscal Year /1 Motor- Total-- Required Tractors Trailers- Lorries- cycles Costs (T Sh) 1971 1 2 1 2 85,704.00 1972 1 2 - - 44,034.00 1973 1 2 - - 44,034.00 1974 1 2 - - 44,034.00 Unit Costs /3 (Shillings) 27,754 8,140.00 36,000.00 2,835.00-- Details of /1, /2 & /3 as for Rungwe. /4 This lorry will be used for long-haul green leaf but will cease to operate about Fiscal 1976. ANNEX 11 Table 2 Page 3 West Usambara ......... Number of Vehicles ....... Fiscal Year /I Motor- Total - Required Tractor Trailer- cycles Costs (T Sh) 1971 1 3 2 58,444.00 1972 1 3 - 52,774.00 1973 1 3 - 52,774.00 1974 1 3 - 52,774.00 Unit Costs /3 (Shillings) 27,754.00 8,340.00 2,835.00/3 11 Smaller trailers to be used in the area due to hilly terrain. An extra T Sh 200.00 added to local costs for extra freight. Three trailers per tractor as opposed to two in other areas. /2 As for Rungwe. /f As for Rungwe. June 9, 1971  ANNEX 12 Page 1 TANZANIA SMALLHOLDER TEA DEVELOPMENT PROJECT Supply, Consumption, Marketing Charges, and Prices Tea Supplies 1. Tea production in Tanzania increased from 3.7 M kg in 1960 to 8.5 M kg in 1970. Most of this production has been from private estates and outgrowers. Acreage on private estates is not expected to increase very much in the future but the planted area of smallholders is expected to increase by 8,300 hectares. Production of tea in Tanzania by 1985 is expected to be about 22 M kg. This estimate does not include plantings by smallholders after 1974 but it does include the output of expected planting under the project being discussed in this report. 2. Most of the Tanzanian tea is exported and only about 1.6 M kg per annum was consumed within the country during the late 1960's. An increase in domestic consumption of around 1 M kg is projected by 1975 with another 800,000 kg increase projected in 1980. 3. The increase in consumption will be smaller than the rise in pro- duction expected from tea planted prior to 1972. Production from this tea is expected to rise from about 8.5 M kg to about 12.6 M kg by 1980. 4. Exports of Tanzanian tea will increase because of larger production by estates and outgrowers. Plantings under the project will increase exports by about 9.5 M kg. This tea will be marketed primarily in Western Europe, North America, and Mombasa. About 80% of the tea produced in Tanzania is exported to countries outside of East Africa. Marketing Costs 5. Costs of marketing made tea from Dar es Salaam to London are esti- mated at about T Sh 1.16 per kg. These costs include port charges in Tan- zania and in London; marine costs; brokerage, auction and commission charges; and handling, warehouse and other charges in London (Table 1). 6. In addition to the charges explained above, there are export taxes and cesses of T Sh 0.24 per kg. These charges do not affect the economic return to the country from tea, but they are deducted from the proceeds which the factory and the growers receive. 7. The cost of shipping made tea from factories to port varies ac- cording to the location of the factory. The cheapest charges are, of course, for the area closest to a port, West URambara. The most expensive charges are for the area farthest from a seaport, Bukoba. The shipping charges for ANNEX 12 Page 2 Rungwe and Lupembe are expected to decline after 1975 because the Tan-Zam Railroad is expected to start running to Dar es Salaam in 1975/76. Shipment of tea by rail will sharply lower transportation costs from factory to port (Table 1). Prices 8. Through 1980 prices in London for Tanzanian tea are projected at about T Sh 7.35 per kg. After 1980 the prices may rise slightly to, say, T Sh 7.72 per kg. The projected prices are lower than prices in recent months (T Sh 8.43/kg in October 1970) because a surplus situation is ex- pected to develop in world tea markets. The increase in prices which is projected for the years after 1980 results from an expected adjustment in tea production throughout the world because of these low prices. Some high- cost producers will probably go out of production by 1980 (Annex 13). 9. Projected London prices indicate FOB prices in Tanzania of about T Sh 6.30 per kg through 1980 and about T Sh 6.66 per kg after 1980. Prices to factories in the various areas (excluding export taxes and cesses) are shown below: Through 1975 1976-1980 After 1980 Rungwe and Lupembe 6.01 6.10 6.47 Bukoba 5.88 5.88 6.24 West Usambara 6.13 6.13 6.49 June 9, 1971 ANNEX 12 Table 1 TANZANIA SMALLHOLDER TEA DEVELOPMENT PROJECT Supply, Consumption, Marketing Charges, and Prices Costs of Shipping Factory to London T Sh/kg Tanzania port storage .066 Port agency fees .044 Marine, CIF to London (prep. report 111-21 + 25%) .524 Brokerage, commission, and auction .078 Handling, warehouse, etc. (London) .451 1.163 Factory to port Bukoba - Dar es Salaam .310 Usambara - Tanga .060 Rungwe and Lupembe - Dar es Salaam Lorry *) .176 Tan-Zam RR (after 1975)- .088 Total costs Bukoba - London 1.4728 Usambara - London 1.2228 Rungwe and Lupembe - London Before 1976 1.3388 After 1975 1.2508 Export cesses and taxes .0240 /1 Assumes freight rate reduction of 50%. May 25, 1971  ANNEX 13 Page 1 TANZANIA SMALLUOLDER TEA DEVELOPMENT PROJECT Market Prospects in the World Tea Economy i Production 1. In 1967-69 world tea production was about 970,000 tons (Table 1). Sixty-three percent was produced in India and Ceylon and 10% in Africa, of which some 7% was supplied by East Africa 2/. In the 1960's India's and Ceylon's share of world production declined while the proportion produced in Africa increased. 2. From 1955-57 to 1967-69 world tea production increased by 2.9% yearly. The growth in production has been highest in Africa, approximating 9.5% yearly from 1955-57 to 1967-69. This rate compares with 2.0% for India and Ceylon. Over this period Africa added 66,000 tons to world supplies, about one-third of the increase in tea supplies from Africa, India and Ceylon. Future production is expected to increase between 2.9% yearly and 3.2% yearly during the 1970's. The lower growth rate assumes that pro- duction in India will continue to grow at the past rate. The higher growth rate assumes that the process of replanting and new planting in that country will be accelerated. So far there is no convincing evidence that this is going to be the case. Consumption 3. From 1955-57 to 1967-69 total world tea consumption increased by 2.9% yearly (Table 1). Tea use in Great Britain used to be the highest in the world, but in 1970 consumption in India exceeded that in the United Kingdom for the first time. India is expected to maintain first place in total world tea consumption. 4. The proportion of tea consumed in the developed countries accounted for 53% of world consumption. But this share has declined steadily in recent years, while the share consumed in developing countries has increased. 5. Based on demand analyses for individual countries it is estimated that world consumption will increase by 2.9% yearly from 1967-69 to 1980 and will reach 1,368,600 tons by 1980. This assumes that per capita consumption in the United Kingdom will decline further. Otherwise consumption in 1980 would probably rise to 1,377,600 tons. 1/ A more detailed account of this topic is given in Report on the World Tea Economy, EC-178, June 30, 1971. 2/ Kenya, Malawi, Tanzania, Uganda. ANNEX 13 Page 2 Exports and Imports 6. The principal feature of the international tea market over the past decade has been the steady increase in export volume of about 2.0% yearly and at the same time a stagnation in the total export value as the result of the downward trend in prices. In 1955-57 world exports amounted to 461,000 tons, representing an export value of about E sterling 206 mil- lion. By 1967-69 exports had risen to 573,600 tons but export value remained at E 206,100 million. Within this period, India's export earnings from tea declined by E 11.8 million and Ceylon's by E 3.6 million. In contrast, African exports increased by t 19.5 million mainly because exports increased and the decline in prices was considerably less than for Indian and Ceylonese teas. 7. Projections for export availabilities and imports indicate that both will grow at about 2.0% yearly during the 1970's and will be in equilib- rium in 1980. This forecast assumes that output expansion in India will not exceed 2.0% yearly as indicated before. Otherwise a potential surplus of about 35,000 tons could arise in 1980. The "Report on the World Tea Economy" study describes the situation in detail. Prices 8. The international market price for tea is determined at three major exchanges -- London, Calcutta and Colombo -- but the London price is the leading price indicator in the world market. The development of actual market prices for individual teas and the average for all teas on the London market are indicated in Table 2 and Chart I. 9. Until 1958 prices for various grades of tea moved fairly par- allel to one another. Since then there have been marked divergencies. Indian and Ceylonese tea prices continued to decline with short interruptions until 1969, particularly after 1960. In contrast, prices for African teas have not experienced the same declining trend since the late 1950's (even though their prices fluctuated more than prices of other teas), and the traditional premium commanded by Indian and Ceylonese tea prices, a reflec- tion of quality differences, narrowed or disappeared. These developments mainly reflected improvements in quality and the fact that blenders incor- porated a greater share of medium and CTC teas (which are supplied by Africa) in their blends. 10.. In 1970 a drastic increase in prices was experienced and the world market now appears to be in equilibrium. If world import demand and export availabilities grow at 2.0% yearly during the 1970's the average price for all, tea at London auction should remain at the 1967-69 level of 47 old pence/ lb (43.2 new pence per kg) 1/. It is likely that Indian, Ceylonese and Kenyan tea prices will remain slightly above this average, while prices for Tanzanian 1/ In February 1971, the United Kingdom adopted the decimal system for its currency. One new pence is equal to 2.4 old pence. ANNEX 13 Page 3 tea will fall to the projected level. Fluctuations around this level, of course, are possible. If a surplus should arise on the world market, London's auction prices could conceivably fall to 42 old pence/lb (38.6 new pence per kg). International Action 11. An international tea agreement is being discussed to achieve a balance of export supply and import demand through export quotas. So far these discussions have resulted in a short-term agreement for 1970, ex- tended to cover 1971. Tanzania, however, is not a party to the agreement. The Tanzanian Government maintains that an international agreement would stifle expansion of tea production in Africa and allow inefficient producers in India and Ceylon to continue increasing output exports. Whether a long- term system will ever be established is not clear; but it is fairly certain that it will not be achieved during the next three or four years. Bank Involvement 12. Exports from the project which have been incorporated in our world export projections are estimated to amount to about 7,600 tons by 1980. They account for about one percent of projected total tea exports in 1980. 13. To date the World Bank Group has committed US$37.2 million for tea expansion including road construction. The output from these projects will amount to about 38,000 tons in 1980. With the exception of one loan made to Kenya in 1964, all other loans were made after 1967. Since it takes at least eight years before the tea plant reaches full maturity, exports from these projects did not contribute to the decline in world market prices which was experienced until 1969. Future output from these projects and others which the Bank Group is considering for financing are included in our supply, de- mand and price forecast. July 20, 1971  TANZANIA SMALUIOLDER TEA DEVELOPMENT PROJECT ane 0 Table1 Tea: Production, Oonrumption, Trade Balances Actual 1967,69, Projected 1930 eetrsy er Bcgien Actual 1963-69 PrPjected 1980 * Apparent Per Capita Apparent Per capita Production Gonsuption Net Trade Consunption Production consuption Balance Consum;ption ......thousand metric tons........) (kilograms) (...............thousand metric tons.................) (kilogram3) D.,elopEd Dontrie United Kingdom - 222.9 223.2 4.02 - 224.5(233.5) 224.5(233.5) 3.70(3.85) EEC - 22.4 25.7 0.12 - 23.B 23.8 0.12 Irelanc - 11.6 11.6 4.30 - 13.6 13.6 4.00 OLIer Wetero Europe - 9.2 9.2 0.06 - 14.0 14.9 0.12 United States - 64.2 66.0 0.32 - 88.5 88.5 0.37 Canada - 20.6 20.6 2.99 - 26.0 26.0 1.00 South Africa - 18.5 18.5 0.85 9.1 30.0 20.9 1.3r Austraia - 23.3 28.3 2.35 - 32.1 32.1 2.20 New Ze-land - 7.7 7.7 2.82 - 9.7 9.7 J Gpn: 8r 65.9 87.3 - 1.8 O.86 102.0 192.0 - 0.91 BlacK i.6 4.9 7.4 0.25 - 14.0 14.0 0-13 Terxey 27.9 19.8 - 8.1 0.59 55.0 31.7 - 23.3 0.69 Totaj L ejd 117.2 L r 619.9(616.9) 3852) 0.t2(0 73T D 0-1 top0ng Goutries Sleonier 221.7 18.0 - 208.9 1.50 276.2 26.8 - 249.4 50 Ch-na (Taiwan); reen 21.3 4.9 - 16.4 0.36 27.3 7.3 - 20.0 Black 3.7 0.5 - 3.2 0.04 2.7 0.7 - 2.0 C.04 India 39.32/ 195.5 - 196.93/ 0.37 510.0(550.0) 350.0 - 60o0- 200.0) 1-51 ladonesia 37.5 - 8.0 - 29.5 - 0.07 52.0 12.0 - 40.0 u- Iran 18.0 24.0 6.0 0.89 32.1 32.1 - 0-89 Paiettan 29.3 29.2 - 0.24 35.5 40.5 5.0 0.24 Other preduer. L' .1 8.5 - o.6 0.32 11.0 11.0 - 0.32 Non-producers - 635 _6 .- 0.29 - 106 10.6 .3 Total Asia 73- 12.1 - ..0 33 946.8(986.d)540 -36.( .) 0. L1 Af.rica Cameoon 1.0 o.5 - 0.5 0.09 1.7 0.7 - 1.n 0-10 Congo, DC. Rep. 0.0 0.6 - 7.4 0.04 18.0 2.2 -15.8 G.31 Kenya 29.5 1,.2 - 26.3 C.41 71.8 7.3 - 64.S * 0.53 Malawi 16.5 0.4 - 16.6 0.C9 26.0 0.8 - 25.2 0.12 Mauritius 2.6 0.7 - 1.9 0.83 10.0 1.0 - 9.0 1.06 Mozambiqe 1'.9 -5 - 14.7 0.07 21.0 1.0 - 20.0 0 I Tanzana 8.0 1.9 - 6.8 0.15 22.G 3.7 - 11.3 0.25 Uganda 14.7 1.2 - 12.1 0.15 45.4 2.5 - 42.9 o2 Other produreso 3.5 2.8 - 0.7 0.35 6.5 3.5 - 3.9 Non-producers - 73.7 73.7 0.30 - 120.0 120.0 6 Total Africe 98.7 r -T1. 0.22 222.4 142.7 - 79.7 33 Latin Anerica Argentina 16.3 2.7 - 13.6 0.11 2-.0 4.2 - 19.8 Other producers 5.7 2.7 - 3.0 0.03 10.0 5.7 -4.3 Non-producers - 11.3 11.3 c.o8 - 2o.6 20.6 Total latin America 22.0 16.7 . 0.0 34.0 30.5 -~ Oceania 21 Papua cod New Guinea 0.1 0.2 0.1 0.08 4.0 0.8 - 3.2 0.30 Others - 0.3 0.5 0.09 - 0.7 0.7 0,33 Total Oceania 0.1 0.7 0.6 0.92 4.0 2.5 . «-2 Total Developing 835.6 456.0 - 44.0 0.28 1,207.2(1,247,2) 758.7 - 4465(- 486.5) 0.34 World (exoluding centrally Planned Ocuntries) 970.0 973.2 4.4 9.41 1,373.3(1,413.3) 1,368.6(1,377.6) - 4.7(- 35.7) 0.15 of which: Net exporters 865.5 - 567.2 ~,230.1(1,270.1) - 721.7(- 761,7) Net importer- o 0.5 571.6 143.2 2/ 717.0(726.0) Gontrally Planned ountre USSR 57.8 11.7 99.0 12.0 Chin (1h±nLand) 160.0 ) - 26 218.0 ) Borth Vietnam 3.0 ) 4.0 ) Eastern Europe - 11.0 - 18. 0 Total Cen%rally Planned 220.8 - 3.7 321.0 World (including Centrally Plnned Cotntriea) 1,190.8 0.7 1,694.3(1,734.3) - 4.7(- 35.7) Figures in parentheses represent alternativt assumption for consumption i. the U.ited Kingdom ard production in India and their influence on world import aend ond export availabilities. 1/ Black tea only. 6/ Brzil and Pru. 2/ Estim ted. 7/ Net importers during 1967-69. / Net weight. / Japan and Iran. / Includes Malaya and South Vietnami. a/ South Africa, Japan and Iran. / Southern Rhodesia end Rwanda. 10/ Includes green tea. Sourre: IBRD, conomics Department; population data: U.S. Department of Agriculture. ANNEX 13 Table 2 TANZANIA SKALLHOLDER TEA DEVELOPMENT PROJECT Annual Average Tea Prices for Selected Countries at London Auction, 195-70 (old pence per pound) IndWa Average North South Ceylon Kenya Uganda Tanzania Malawi All To-n 1955 63.6 53.6 61.3 bh.6 50.9 55.4 44.9 60.9 1956 61.1 51.1 66.2 42.6 42.7 h6.9 37.6 58.0 195? 56.6 65.1 58.2 1.2 43.1 44.5 37.4 53.2 1958 58.9 45.9 59.2 46.5 44.0 Jj7.8. 38.7 55,1 1959 58.1 44.5 60.8 46.9 12.3 h6.6 35.4 56 1960 59.2 47.7 59.9 51.2 47.3 47.7 39.7 5 1961 56.0 46.4 55.5 50.0 47.0 h9.7 40.3 52 9 1962 60.6 44.1 55.9 53.9 46.4 50.5 34.9 5> 1963 55.7 h3.4 52.3 48.1 44.1 36.0 35.2 50 1964 54.6 )45.9 53.9 50.8 4h.4 h7.5 33.6 >5 1965 52.3 44.8 51.2 49.3 46.h 48.7 40.8 5o 2 1966 52.1 41.0 50.9 50.4 65.3 49.1 36.1 9 1967 53.7 142.5 52.3 52.1 48.4 50.3 36.0 1968 48.4 42.3 49.9 48.8 43.0 46.3 1.3 L72 1969 45.3 314.14 48.5 48.2 40.0 43.4 28.1 th.1 1970 50.9 414.0 51.1 53.0 51.0 52.8 43.4 h9.7 Source: International Tea Committee, Annual Statistics. June 3, 1971 ANNUAL AVERAGE TEA PRICES FOR SELECTED COUNTRIES AT LONDON AUCTION 1958 - 1970 65 60 55 50 45 TANllNIA AVEMUE ALL TEAS 40 169 35_______ 1958 '59 '60 '61 '62 '63 '64 '65 '66 '67 '68 '69 '70 SOURCE: INTERNATIONAL TEA COMMITTEE, ANNUAL STATISTICS. IBRD 5758  TANZANIA SMALIBOLDER TEA DEFELOPENT PROJECT Farm Budget, Rungwe (T Sh) 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1989-2001 Expenditures Spply purchase Sumps @ hs .30/stump plus contingency 1/ Plantings 1972 - 0.2 ha 508 89 12 - - - - - - - - - Plantings 1973 - 0.2 ha - 564 87 12 - - - - - - - - - Plantings 1974 - 0.2 ha - - 580 87 12 - - - - - - - - Total stumps 948 649 679 99 12 - - - - - - - - Fertilizer plus contingency 2/ Plantings 1972 - 0.2 ha - 65 23 28 37 450 A h0 - - - - Plantings 2973 - 0.2 ha - 69 26 28 32 ho 40 - - - - - - - Plantings 1974 - 0.2 ha - 71 26 24 32 40 - - - - - - - Total fertilizer 65 92 125 91 96 112 120 - - - Hoes and baskets 11 11 19 28 35 39 35 - - - - - - - Total supply purchase 624 792 823 218 143 1? 199 199 155 159 199 199 199 199 Loan receipts (1972, 1973 and 1974) 613 741 804 - - - - - - - - - - Gross income from sale of green leaf @ sha .70/kg - - 84 286 697 2,044 1,h4) 1,747 1,926 2,122 2,283 2,384 2,423 2,623 Surplus (or deficit) (11) (11) 65 68 914 897 1,299 1,992 2,771 1,967 2,128 2,229 2,268 2,268 Cesses For cooperatives @ 5bs .02/kg - - 2 8 19 30 60 48 59 61 69 68 69 69 Loan repayment @ sh .20 kg - - 24 82 188 298 4O4 h83 50 606 650 680 _) - Total cesses - - 26 90 207 328 444 931 609 667 715 748 193 69 Net surnlus or deficit (11) (11) 39 (22) 307 969 815 1,061 1,166 1,300 1,413 1,481 - 2,115 2,199 Labor 9 shs 1.92/day 103 209 308 308 308 108 308 308 308 308 308 308 308 308 Surplus (or deficit) after labor costs (114) (216) (269) (330) (1) 261 907 753 858 992 1,109 1,173 1,807 8'991 1/ Contingencies are 3' year 0, 6% year 2, 9% thereafter. f/ Contingencies are 5% year 0, 10% year 1, 15% theroafter. April 20, 1971 'ANZANTA SMALIPOLDER TEA DEVELOPMENT PROJFCT Farm Budget, Bukoba (Q Sh) 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985-2001 Expenditures Supply purchase Stumps @ sFs.30/stump plus contingency 1/ Plantings 1972 - 0.2 ha 548 89 12 - Plantings 1973 - 0.2 ha - 564 87 12 - -- Plantings 1974 - 0.2 ha - - 580 87 12 - Total stumps 5[8 6h9 679 99 12 - - Fertilizer plus contingency 2/ Plantings 1972 - 0.2 ha 60 22 29 33 [2 [2 42 - - Plantings 1973 - 0.2 ha - 63 23 25 33 2 [2 - - Plantings 197[ - 0.2 ha - - 66 23 25 33 h2 - - Total fertilizer 60 85 114 81 100 117 126 - - Hoes and baskets 11 11 19 28 35 39 39 - - - - - - - Total supply purchase 619 7[9 812 208 1k7 192 161 161 161 161 161 161 161 161 Loan receipts (1972, 1973 and 197) 608 734 793 - - - - - - - - - - - Gross income from sale of green leaf @ ss .70/kg - - 81 273 627 96h 1,285 1,600 1,93k 2,211 2,365 2,[±B8 2,493 2,505 Surplus (or deficit) (11) (11) 62 65 )8n 812 1,12h 3,,39 1,773 2,050 2,20h 2,287 '32 2,344 Cesses For cooperatives @c shs .02/kg - - 2 9 18 28 37 [6 55 63 (8 70 71 72 Loan repayment @ shs .20 kg - - 23 78 179 275 367 [57 003 632 680 700 339 - Total ceases - - 25 86 197 303 40k 503 6oR 699 798 770 L05 72 Net surplus or deficit (11) (11) 37 (21) 283 909 720 936 1,165 1,399 1,996 1,517 .1,927 2,272 Labor shas 1.92/day 103 209 308 308 308 308 308 308 308 308 308 308 308 308 Surplus (or deficit) after labor costs (114) (216) (271) (329) (29) 201 [12 628 897 1,07 1,198 1,209 --1,619 1,969 1/ Contingencies are 3% year 0, 6% year 1, 9% thereafter. 2/ Contingencies are 5% year 0, 10% year 1, 15% thereafter. April 20, 1971 TANZANIA SMALIULDER TEA DFVELOPMENT PROJECT Far. Budget, Lupembe (T Sh) 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 198L 1985 1986-2003 Expenditures Supply purchase Stumps sE .30/stump plus contingency 1/ Plantings 1972 - 0.2 ha 5k8 89 12 - - - - - - - - - - - Plantings 1973 - 0.2 ha - 96k 87 12 - - - - - - - - - - Plantings 1974 - 0.2 ha - - 580 87 12 - - - - - - - - - Total stumps 548 669 679 99 12 - - - - - - - - Fertilizer plus contingency 2/ Plantings 1972 - 0.2 ha 65 25 28 37 35 35 35 - Plantings 1973 - 0.2 ha - 69 26 28 32 35 39 - - - - - - - Plantings 1974 - 0.2 ha - - 71 26 24 32 39 - - - - - - - Total fertiliser 65 9k 125 91 91 102 109 105 105 - - - - - Hoes and baskets 11 11 19 39 39 39 39 35 39 Total supply purchase 624 79 823 225 138 137 140 110 140 1b0 1L0 160 140 140 110 Loan receipts (1972, 1973 and 1974) 613 743 80k - - - - - - - - - - - Gross income from sale of green leaf @ shs .70/kg - - 87 222 447 720 1,099 1,390 1,663 1,852 1,992 2,061 2,096 2,096 2,096 Surplus (ordeficit) (11) (11) 68 (3) 309 583 915 1,250 1,5i3 1,712 1,852 1,921 1,956 1,956 1,956 Cesses For cooperatives @ shs .02/kg - - 2 6 13 21 30 hO 47 53 57 99 60 60 60 Loan repayment @ shs .20 kg . - 25 63 128 206 301 397 474 529 969 90 600 973 - Total cesses - - 27 69 1l1 227 131 '37 52y 982 626 6h9 660 633 60 Net surplus or deficit (11) (11) 41 (72) 168 396 984 813 999 1,130 1,226 1,272 1,296 1,283 1,896 Labor Q shs 1.92/day 103 209 308 308 308 308 108 308 308 308 308 308 308 308 308 Surplus (or deficit) after labor costs (114) (216) (267) (380) (140) 8 276 909 691 822 918 96h 986 975 1,588 1/ Contingencies are 3% year 0, 6% year 1, 9% thereafter. '/ Contingencies are 5% year 0, 10% year 1, 19% thereafter. April 20, 1971 TANZANIA SMALLHOLDFR TEA DEVELOPMENT PROJFCT Farm Budget, West Usambara (T Sh) 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 19E4 1987-2001 .xpenditures .30/stump plus contingency 1/ Plantings 1972 - 0.2 ha 548 85 12 - - - - - - - - - . - Plantings 1973 - 0.2 ha - 564 87 12 - - - - - - - - - Plantings 1974 - 0.2 ha - - 580 87 12 - - - - - - - - - Total stumps 518 649 679 99 12 - - - - - - - - - Fertilizer plus contingency 2/ Plantings 1972 - 0.2 ha 57 20 22 30 33 33 33 - - - - -- Plantings 1973 - 0.2 ha - 59 21 22 30 33 33 - - - - - - - Plantings 1974 - 0.2 ba - - 62 21 2 30 33 - - - - - - - Total fertilizer 57 79 105 73 85 96 99 99 - - - - . Hoes and baskets 11 11 19 35 35 35 35 35 - - - - - Total supply purchase 616 739 803 207 132 131 13. 13 13h 13. 134 13 134 13 131, 13b Loan receipts (1972, 1973 and 1971) 605 728 78 - - - - - - - - - - - - - Gross income from sale of green leaf 1 sbs .70/kg - - 81 208 41 667 993 1,308 1,562 1,7hh 1,875 1,940 1,972 1,972 1,972 1,972 Surplus (or deficit) (11) (11) 32 (1) 287 570 859 1,174 1,428 1,610 1,7611 1,806 1,38 1,838 1,938 1,838 Cesses For cooperatives @ shs .02/kg - - 2 5 12 19 28 37 45 5c 51 55 56 56 56 56 Loan repayment @ sha .20 kg - - 20 5-, 120 1Fo 284 374 446 198 536 Jja 560 560 212 - Total cesses - - 22 65 132 l200 312 412 491 5.8 590 605 616 616 268 56 Net surplus or deficit (11) (11) 40 (64) 155 544 547 762 937 1,062 1,151 1,201 1,222 1,222 1,570 1,782 Labor I shs 1.92/day 103 205 308 l08 30 '08 308 308 308 108 30 708 308 308 308 308 Surplus (or deficit) after labor costs (11L) (216) (268) (373) (153) 26 239 454 629 75 813 893 91 91 1,262 1,7 1/ Contingencies are 3% year 0, 6% year 1, 9% thereafter. / Contingencies are 5% year 0, 10% year 1, 15% thereafter. April 20, 1971 ANNEX 15 Page 1 TANZANIA SMALLROLDER TEA DEVELOPMENT PROJECT Economic Rate of Return 1. The economic rates of return were calcualted by using estimates of prices for made tea as shown in Annex 12, but some modification of the cost shown in Annex 8 was made (Table 1). 2. The modification of costs concerns roads. It was assumed in all areas that the tea roads would be used for purposes other than just collecting green leaf hnd transporting made tea from factories. Therefore, only one half of the road costs were allocated to the tea project in computing the internal rate of return. Also, the equipment used in constructing the roads would be given to Comworks for maintenance purposes and for constructing other roads after tea road construction was completed. It was assumed that the value of this equipment would be more than the cost of maintaining the roads, which would be the responsibility of Comworks. Therefore, no costs were shown for road maintenance in Annex 10. However, the actual costs of maintenance by Comworks are estimated and half of these costs were used in computing internal rates of return. 3. Table 1 shows the rates of return using base costs and base prices. The base costs are the best estimates that could be made at the time of appraisal and the base prices are T Shs 7.35/kg through 1980 and T Shs 7.72/ kg after 1980, CIF London. 4. Sensitivity analyses show rates of return with adjustments in costs and benefits as shown below (Table 2): (a) raising farm wages from zero to T Sh 1.92/day, one half the legal minimum wage for agriculture - T Sh 3.85/day; (b) increasing total project costs by 10% and 20% and decreasing total project costs by 10% and 20%; (c) raising and lowering fertilizer costs by 10% and 20%; (d) lowering tea prices by 5% from the base price and raising tea prices by 5% and 10% from the base price. 5. The rate of return using base costs and prices showed 17.3% for the total project and rates for the individual areas of 8.0 to 24.1%. However, there were no costs for the Central Office of TTA included in the calculation of the rates of return for the various areas. ANNEX 15 Page 2 6. The sensitivity analyses changed the rates of return for the entire project to a range of 13.4% (project costs 20% higher) to 22.3% (lowered by 20%). The returns for the various areas showed similar variations (Table 2) . 7. Because of the low rate of return to West Usambara, analysis was done which allocated the pro-rata (1/12 of the total) cost of the central office of TTA to this area to determine the true rate of return. The internal rate of return declined from 8% to 7%. Both calculations treated the cost of the factory already completed as a sunk cost. June 9, 1971 TANZANIA SMALLHOLDER TEA DEVELOPMENT PROJECT Economic 'Rate ol Retirn Economic Costs and Benefits (T Sh '000) 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 Annual Average 1985 to 2021 RUNG WE Production ('000 kg) - - 167.4 543.2 730.1 1,929.5 2,608.2 3,110.0 3,539.9 3,897.8 4,190.1 4,369.7 4,443.6 4,443.6 Prices (sh/kg) 6.0099 6.0099 6.0099 6.0099 6.0979 6.0979 6.0979 6.0979 6.0979 6.4653 6.4653 6.4653 6.4653 6.4653 Value of Production - - 1,006 3,265 4,452 11,766 15,905 18,965 21,586 25,200 27,090 28,251 28,729 28,729 Project Costs for Economic Rate of Return 6,900 7,237 6,913 6,709 10,517 7,896 9,461 8,440 8,798 12,230 7,777 9,849 9,141 9,636 Net Benefits (6,900) (7,237) (5,907) (3,444) (6,065) 3,870 6,444 10,525 12,788 12,970 19,313 18,402 19,588 19,093 BUROBA Production ('000 kg) - - 67.8 231.9 599.8 814.2 1,081.9 1,347.5 1,629.5 1,859.8 1,988.3 2,058.2 2,095.5 2,106.0 Prices (sh /kg) 5.8759 5.8759 5.8759 5.8759 5,8759 5.8759 5.8759 5.8759 5.8759 6.2433 6.2433 6.2433 6.2433 6.2433 Value of Production - - 398 1,363 3,524 4,784 6,357 7,918 9,575 11,611 12,414 12,850 13,083 13,148 Project Costs for Economic Rate of Return 3,908 4,303 5,201 2,639 3,835 7,148 5,090 3,336 5,757 4,965 5,343 4,167 5,604 5,138 Net Benefits (3,908) (4,303) (4,803) (1,276) (311) (2,364) 1,267 4,582 3,818 6,646 7,071 8,683 7,479 8,010 LUPEMBE Production ('000 kg) - - 104.4 262.6 505.7 816.4 1,187.5 1,546.6 1,826.3 1,980.0 2,128.6 2,216.3 2,285.6 2,285.6 Prices (sh /kg) 6.0099 6.0099 6.0099 6.0099 6.0979 6.0979 6<0979 6.0979 6.0979 6.4653 6.4653 6.4653 6.4653 6.4653 Value of Production - - 627 1,578 3,084 4,978 7,241 9,431 11,137 12,801 13,762 14,329 14,777 14,777 Project Costs for Economic Rate of Return 5,862 6,710 3,634 3,062 5,404 4,703 5,223 5,937 4,857 6,891 4,997 4,983 4,266 5,346 Net Benefits (5,862) (6,710) (3,007) (1,484) (2,320) 275 2,018 3,494 6,280 5,910 8,765 9,346 10,511 9,431 WEST USAMBARA Production ('000 kg) - - 39.1 87.0 165.5 266.6 381.5 491.7 579.8 640.4 685.1 704.8 714.1 714.1 Prices (sb/kg) 6.1259 6.1259 6,1259 6,1259 6.1259 6.1259 661259 6.1259 6.1259 6.4933 6.4933 6.4933 6.4933 6.4933 Value of Production - - 240 533 1,014 1,633 2,337 3,012 3,552 4,158 4,449 4,577 4,637 4,637 Project Costs for Economic Rate of Return 3,510 2,950 2,984 3,173 2,162 1,893 3,520 3,910 2,190 2,290 3,660 2,241 2,937 2,680 Net Benefits (3,510) (2,950) (2,745) (2,640) (1,148) (260) (1,183) (898) 1,362 1,868 789 2,336 1,700 1,957 TOTAL Total Value of Production - - 2,271 6,738 12,074 23,162 31,840 39,325 L5,850 53,771 57,714 60,007 61,226 61,292 Total Project Costs for Economic Rate of Return !/23,709 24,320 21,685 19,349 23,656 23,528 25,189 23,511 23,490 28,318 23,665 23,122 23,836 24,766 Total Net Benefits (23,709) (24,320) (19,414) (12,611) (11,582) (366) 6,651 18,814 22,360 25,453 34,049 36,885 37,390 36,526 1/ Includes Central Office - TTA. May 5, 1971 ANNEX 1 Table 2 TANZANIA SMALLHOLDER TEA DEVELOPMENT PROJECT Economic Rate of Return Sensitivity Analysis'! West Total Rungve Bukoba Lupembe Usambara Project Basic tea prices and project costs and farm wages at zero 26.1 18.8 18.6 8.0 17.3 Sensitivity variations Farm wages Fan wages at shs. 1.92/day 2/ 19.6 15.5 14.9 5.9 1h.0 Project costs lowered 10% 26.8 21.2 20.8 9.9 19.6 lowered 20% 30.0 2L.1 23.h 12.0 22.3 raised 10% 21.7 16.6 16.6 6.3 15.2 raised 20% 19.6 lb.7 lb.9 h.6 13.L Fertilizer costs lowered 10% 2b.3 18.9 18.7 8.1 17.h lowered 20% 24.5 19.1 18.9 8.1 17.5 raised 10% 23.9 18.7 18.L 7.9 17.1 raised 20% 23.6 18.5 18.3 7.9 17.0 Tea prices lowered 5% 22.5 17.-L 17.-L 6.9 15.9 raised 5% 25.5 20.2 19.8 8.9 18.h raised 10% 27.0 21.5 20.9 9.9 19.6 1/ Assumptions for sensitivity analysis: (a) Basic project costs are those shown in Annex 8 (b) Basic tea prices are shs. 7.3L87/kg, c.i.f. London, through 1980 and shs. 7.7161/kg after 1980. 2/ One-half legal minimum wage for agricultural workers. June 9, 1971 MAPI 俗 5 EPTEMB〔R 1971{8R0 3398R  [: 식  MAP 3 0 0 0 0 o 0 Bush shao o *°.. I0 O aishazi.* Iýt Kalema: hKhozi I ~ -.Kfilirna Katoma LA K E *Nyakato * Mugeza =;Kyakairab oaKhr (Kohorolraba V I C, T' 0 , R I A IRwamas nye Magoti Ka bre. 0511 BUKOBA lItwa Busi be BUKOBA __- I TEA . A COMPANY: RE Ei i nu. M raerr i'.2ryafng ree. TANZANIA a,. SMALLHOLDER TEA DEVELOPMENT PROJECT BUKOBA AREA Pcoads required for greenleaf collect,on All weatier ........ To be imDroved under The project May De -mroved after second hge year plan Extens.on of roads beyend greenleaf colection sgfjrm AlMuhu a ----Al wealher Muhwo.oo. To be improved under rne proleci ---.--- May be improved alter second tive year plan ----Otner roads 3----- - - Riders Busnp\ - Exisling smalihol,ier faciory TOKE JEA FACTORY g General location of Proposed smalinolder foctory Piainrng_pra_q_ram: ~ *d~ jC:=)Z Planting program fmis -.. KATOKE Scheme th Katoke :Kimbugu 5 uo i 0 10 oo°c . Ir I I . I lrer'~~'~ 5CIýOME TERS kePRI (h APRIL 1971 IBRD-3400  ~0 -o ot I~ I :I : 1 ,m m 3 m - oxe 03. < 0a o e , æmmO 3 r- . 00 < 3-. = * = 0= · r Me .L . m.. -4o <\ o> \ °> o.0 -MIr 0 0  MAP 5 Mtai SAGA I L FOREST RESERVE / / Kisangala MIalo10 OIK/ IKSIMA-GONJA BAGA 11 1FOREST FOREST RESERVE RESERVE / Ngoshele I Mazumbai / Mb la 0 MPONDE- BUMABULI DBumbuli - o NDELEMAII o/ FOREST T o RESERVE . -... /KwamnIVo M ,* MPOND* BUMBUL BubPONo Kweshangalawe -A TEA FACTOY .** ...Fu nta MPALALU N.A. FOREST RES. Ngwelo FOES FORES bulela0 BALAGANWESTIETmot REREVE SERooE ARE 00000000 1. 1. ' TANZANIA KwsSAKARE TEA FACTORY SMALLHOLDER TEA / DEVELOPMENT PROJECT WEST USAMBARA AREA G MIGOMBANIST Bungu FOREST T RESERVERerve Rxesno oads e b or d greenle f collection 5stm ********** To be improved under the project i- May be improved after second five year plan Al--- Other roads Rivers - -Forest reserves Existing smaltholder factory General location of proposed smallholder factory r iI Plantingpro dg r C:DPlanting program limits MPONDE Scheme name O 2 4 6 MILES O 2 4 6 81 10 KILOMETERS APRIL 1971 IBRD 3402