Malawi - Lilongwe Agricultural Development - Second Phase - Project

Document of The World Bank FOR OFFICIAL USE ONLY Report No. 1 597 RETURN TO REPORTS DESK f WITHIN ONE WEEK Project Performance Audit Report MALAWI LILONGWE LAND DEVELOPMENT PROGRAM PHASE II (Credit 244-MAI) May 17, 1977 Operations Evaluation Department This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.   FOR OFFICIAL USE ONLY TABLE OF CONTENTS Page Preface Basic Data Sheet Highlights PROJECT PERFORMANCE AUDIT MEMORANDUM i-vli PROJECT COMPLETION REPORT I. The Program and Project 1 II. Project Implementation 2 III. Project Impact 14 IV. The Future and Bank/Project Relations 19 Annexes 1-4 Map This document has a restricted distribution and may be used by recipients only in the performance of their oMcial duties. Its contents may not otherwise be discoed without World Bank authorization.   Project Performance Audit Report MALAWI LILONGWE LAND DEVELOPMENT PROGRAM PHASE II (Credit 244-MAI) PREFACE Credit 244-MAI for US$7.25 million was signed in May 1971. It was the second in an ongoing series of three IDA credits helping to finance the Lilongwe Land Development Program (LLDP). The first IDA credit (US$6.0 mil- lion) was signed in February 1968. A third credit (US$8.5 million) was signed in May 1975. A performance audit report (PPAR) on the first project was issued to the Board in October 1975 (No. 751). LLDP started to attract widespread Bank interest in 1972 when it was included as a case study in the Africa Rural Development Study, managed by the Development Economics Department. The report of the case study was released late in 1974, and was followed within 12 months by the audit of the first project, by a follow-up evaluation for the case study, by a sepa- rate report prepared by the Development Economics Department questioning some of the findings of the earlier three reports, and, finally, by a project completion mission staffed by the Regional Office. A monitoring and evalua- tion capability was developed within LLDP in 1969, making this one of the few programs in the Bank's portfolio with several years of monitoring experi- ence and explaining some of the interest in LLDP. In terms of lessons for the Bank, this is one of the more important of the smallholder projects in its portfolio. Nevertheless, the intensity of recent reporting, including issue of a PPA on the first project little more than a year ago, persuades OED not to mount another full audit at this time. Also, the controversial topics will not be clarified until more years of farm performance have elapsed. The project completion report (PCR) for the second project, which forms the bulk of this performance audit report, brings the most important issues in LLDP up to early 1976, when the PCR was finalized. The audit of the third project will be the occasion for another in-depth review by OED. The short audit memorandum was based on a review of the three appraisal reports, the earlier ex-post evaluative reports, correspondence touching upon those reports, separate studies of two other Malawian special rural development activities implemented at Shire Valley and Salima in the same period as Lilongwe, and the PCR. A two-day visit to Lilongwe in March 1976 provided an opportunity to discuss with Government and LLDP staff the draft audit report. The PCR is judged in the light of the other material and comments received to present a good discussion of the project. The audit memorandum focuses on four subjects which follow from the substantial body of literature. The assistance of Project staff, farmers, and Government officials who provided data and responded so readily to questioning of the PCR and audit missions is gratefully acknowledged.   Basic Data Sheet MALAWI LILONGWE LAND DEVELOPMENT PROGRAM _ PHASE II (Credit 244-MAI) A. Amounts (in US$ million) Original Disbursed Cancelled Repaid Outstanding Credit 244-MAI 7.25 7.25 0 0 7 Exchange Adjustment 0.16 ) 7.41 B. Project Data Original Plan Revision Actual First Mention (Repeate-r Project) Government Application " " Board Approval 5/04/71 Credit Agreement 5/13/71 Credit Effectiveness 9/ /71 8/18/71 Physical Completion 12/31/75 12/31/75 Percentage of Original Project Actually Completed 100% + Loan Closing Date 3/31/76 3/31/76 Total Costs US$8.59 US$8.63 Economic Rate of Return 13% 1/ 8 % 2/ C. Mission Data Sent Month No. of No. of Man- by Year Persons Weeks Weeks Date of Report Appraisal Bank 5 April 16, 1971 Supervision I Bank June 1971 2 3 5 July 26, 1971 V " January 1972 1 1.5 1.5 February 22, 1972 VI ? August 1972 ? VII RMEA March 1973 .3 1 3 May 8, 1973 VIII " October 1973 3 2 5 November 14, 1973 (Appraisal III Bank May-June 1974 3 February 28, 1975) Supervision IX RMEA July 1974 1 1 1 August 12, 1974 if X " January 1975 2 1 2 February 28, 1975 Completion 4/ Bank September 1975 1 2.5 2.5 February 24, 1976 Supervision XI- RMEA February 1976 3 3 4 March 8, 1976 1/ The appraisal rate of return estimate of 13%_included Phases I and II. The rate for Phase I alone was estimated then at 11%. No separate estimate was given for Phase II. 2/ This is the mid-point of the range within which OED believes the final estimate is likely to fall. The figure refers to Phase I and II combined. See PPAM para. 9. The PCR does not recompute the rate. The PPA for Phase I did not either. 3/ Supervision Mission numbers pick up the series started in Phase I. 4/ Supervision of Phase III starts. Rate of Exchange Floating: in 1971 Mk 1 = US$1.3, in 1975 )k 1 = US$1.1.   Project Performance Audit Report MALAWI LILONGWE LAND DEVELOPMENT PROGRAM PHASE II (Credit 244-MAI) HIGHLIGHTS The audit reviews progress during the second of three phases of the Lilongwe Land Development Program (LLDP), the oldest of Government's four major area development schemes. Beginning with preparation in 1966, the Bank has been closely involved in the Program and has now committed a total of US$22 million in three separate credits. The Program, one of the first "integrated" rural development schemes, is more complex than most because the construction of physical infrastructure and delivery of ferti- lizer/seed packages was preceded by land survey and registration and other tenure reform. Phase II consolidates progress in the phase 1 area and extends LLDP activities to an area of about equal size. When phase III, begun in 1975, is completed in 1978, LLDP will cover almost one million smallholder acres and over 109,000 families. The Program through phase II is considered to be successful, but more so with respect to changes and innovations introduced to the farmers and in Gov- ernment policies and services than with respect to the original productivity objectives. The Bank, which for three years has been looking closely at this experience for lessons of relevance to other integrated programs, has shown concern for the lag in the rate of farmer adoption of the high yielding crop packages, the leading edge of the Program according to the appraisal report. That concern has generated fruitful discussion of the costs and benefits of yield measurements and of the role of LLDP's special Evaluation Section. The following points may be of particular interest: - The impressive evidence of progress and its interpretation (paras. 5-9 and PCR paras. 3.06-3.10) - Changes in crop yields and their limitations as indicators (paras. 6-7 and PCR paras. 3.02-3.04) - Major efforts in extension and other forms of farmer training (PCR paras. 2.07-2.10) - Controls over credit repayments and the near absence of delinquency (PCR paras. 2.11-2.14) - Impact of price changes on fertilizer use (PCR para. 2.15) - Delays in recruitment, promotion and localization (PCR para. 2.21) - Efforts to improve the project evaluation system (PCR paras. 2.22-2.24)   Project Performance Audit Memorandum MALAWI LILONGWE LAND DEVELOPMENT PROGRAM PHASE II (Credit 244-MAI) 1. The Lilongwe Land Development Program (LLDP) grew out of a pilot exercise begun in 1965 with British aid. Discussion with the Bank started at the same time. The first project was prepared the next year by ADS staff connected to the Permanent Mission in Eastern Africa, and appraised, along with the proposed Shire Valley agricultural development project, in 1967. The Government was at the same time finalizing plans for a third "integrated" agricultural development project at Salima, with German aid. The three projects were to be run by separate units under a new office - the Agricultural Development Branch - in the Ministry of Agriculture and Natural Resources (MANR). (A fourth project, partly financed by the Bank, was started at Karonga five years later.) A credit agreement for US$6.0 million (Cr. 113-MAI) was signed in February 1968; the credit was closed, fully disbursed ahead of schedule, in August 1972 (Project Performance Audit Report No. 751, dated 5/23/75). 2. The second phase, the subject of this Report, was appraised in 1970 as a direct sequel of the first phase. This phasing had been antici- pated in the original plan, but the area covered by LLDP was to increase even more than in that initial design. The most important innovation of the second phase was to introduce livestock activities - a state ranch and facilities for smallholder fattening of feeder stock from the ranch - to what had previously been an exclusive crop orientation. An agreement for a credit of US$7.25 million was signed in May 1971, became effective in August of that year, and was closed, fully disbursed, on schedule in March 1976. 3. That five-year implementation period was intercepted by several studies organized in the Bank outside of the Regional Office. LLDP's importance is partly explained by the fact that it included since its inception many elements of "integrated" rural development activity. It involved Bank staff in planning for integrated activity long before the latter became fashionable; it is the oldest program of the type in the Bank's portfolio; and it offers for review eight years of implementation experience. Its interest to the Bank is also explained by its Evaluation Unit, a small section, said to be understaffed at the supervisory level, which has unexpectedly found itself in the spotlight of the international development community with a reputation as being one of the most important experiments to date in farm level monitoring and evaluation (the work of the Unit is discussed in PCR paragraphs 2.22-2.24). The several studies of LLDP have provoked debate over the meaning and significance of the  - ii - collected field data, some of which has never been analyzed, so that LLDP is at once one of the best known and one of the more controversial among the Bank's rural development projects. 4. The Program will ultimately cover about one million acres of the plateau west of Lilongwe town, now the capital of Malawi. The area is the breadbasket of the country with an estimated population of 109,000 farm families. The dominant objective of LLDP has been to increase yields and production of smallholder maize and groundnuts, on expanding acreage, while increasing yields and maintaining production levels for tobacco on a reduced cropped area. The leading edge of the crop program, as discussed in all three appraisal reports, has been the maize package, a mix of a (then) new "Askari" synthetic variety, fertilizer, credit and effective extension. The maize package distinguishes Lilongwe from Shire Valley and Salima, lowland areas where the programs emphasized cotton and where maize played a much less important role. All three areas were rainfed, but conditions in the Lilongwe area are superior to the other two and the Lilongwe smallholders include the most progressive in the country. The economic rate of return to projects I and II strung together was estimated at appraisal in 1971 at 13%. 5. LLDP is much more than a maize fertilizer program. It includes the construction of approximately 40 unit centers, rural road improvements, conservation works, investments in health posts and boreholes (water for domestic purposes), organized extension, organized input delivery and crop purchasing systems, etc., all as described in the PCR. Although in the area as a whole the yield performance of the three crops has been variable and generally well below expectations, and although the volume of fertilizer sales on credit has fallen short of targets (especially, but not only, because of the increase in the price of these chemicals in 1974), the improvement of hus- bandry practices and yields on adopting farms and the creation of new physical infrastructure are apparent to observers. Moreover, the program projects an image of prosperity and vigor (see PCR paragraph 3.07). 6. OED will add four comments to the discussion of the PCR. The first is that LLDP's image of success is related less to signs of progress toward original crop and rate of return objectives than to other desirable improvements - increased farm consumption, new shops and other rural non- farm investments, experience in the administration of rural programs, training of Malawians for service on other schemes, etc. - which, although implicit as long-term goals, were not spelled out in this appraisal. It was the means to those ends which were specified in the first appraisal, and these targets were unambiguous; to intensify farm  - iii - practices in order "to raise the yields of food crops, especially maize and groundnuts".I/ The infrastructure was to be strengthened in order to ensure the widespread adoption of the food crop packages. This concept is echoed in the appraisal report of the second project. Except for the beef fattening activity, all rates of return analyses for the second project are tied to quantified estimates of yield increases on the average farm within the proj- ect boundary; all supplementary expenditures are justified in terms of the support they bring to the food crop production and marketing systems. 7. Early data suggested that yields of adopting farmers had been lagging, but Government believes now that those farmers are catching up to the forecasts. Nevertheless apparently only about half the farmers expected to adopt the high yielding packages have done so thus far, and average yields in the area therefore fall considerably short of projections.2/ The relia- bility and significance of the yield and adoption data have both been challenged, partly because of the high incidence of home consumption and smuggling. But the point is that LLDP cannot yet be called a success by appraisal standards on the basis of existing evidence, and the Region does not consider it so. 1/ Appraisal Report, January 3, 1968, page 2: "A new Agricultural Development Branch has been established within the Department of Agriculture to assume responsibility for major agricultural development schemes in Malawi. The Government's agricul- tural development policy is concentrated on improving the production of the main existing smallholder crops. Two major development schemes are being launched to increase the yields of cotton, the main export crop. The rapid growth of population and the imminent threat of loca- lized domestic food shortages, however, require greatly intensified efforts to raise the yields of food crops, especially maize and ground- nuts, which are most economically grown in the Central Plains near Lilongwe, the commercial hub of the populous Central Region. Past experience, based on successful pilot schemes, indicates that inten- sification is best supported by an integrated package program, on a scale which is large enough to be effective but still manageable. Such a program would consist of soil conservation measures; improvements in the rural infrastructure; cultivation of remaining unused land; an intensive extension and credit effort concentrated in a well-defined geographic area in order to accelerate the use of modern inputs; and land reorganization and registration of holdings, which would provide farmers with recognizable units of land and thus promote long-term farm improvements and sustain the results achieved in the short run." 2/ The PCR's updated yield estimates (PCR para. 3.02) are below those given in the last Bank evaluation of Lilongwe (June 1975), which, in turn, were higher than and used to challenge those of two earlier reports (September 1974 and May 1975). Substantial yield shortfalls are reported also in the Shire Valley and Salima projects, especially for the maize components. The PPA for Shire Valley I (No. 895) says there was no progress at all in maize productivity.  - iv - 8. Emphasis has been given in some other Bank reports,however, to the broader benefits of LLDP, postponing an assessment of husbandry improvements for several years when the ettects ot the erratic rainfall pattern of the early 1970s will have less influence on the averagesl/and when the adopter/non- adopter ratio will have stabilized. Also, it is argued that since the costs of securing accurate and meaningful yield estimates are high, LLDP and the Bank may have to settle for proxy indicators or for the other signs of increased economic activity and smallholder prosperity. This view was pressed on OED at MANR, which said it was prepared to accept yields lower than appraisal estimates (provided other program spinoffs remained high) and, therefore, was reluctant to exhaust the funds of evaluation units chasing after elusive yield estimates.2/ OED sees a danger, however, in bypassing the husbandry standards of appraisal. It is possible to be fooled by the physical appearance of input and market systems which are developed to sup- port new crop technologies. Program monies can buy those roadside appear- ances. If the underlying technical transformation of the farm enterprise is not successful, either the one predicted in the appraisal reports or a substitute, those appearances cannot be maintained without continuing sub- sidy from outside the food crop economy. 9. To date, one still must accept the conclusion of the audit of the first project that no convincing evidence is yet available to repudiate or to confirm the economic viability of the investment undertaken. MANR says the same thing - that none of the information on yields, production and sales adequately measures the output effects of the obvious improvements in crop husbandry. Officials have a gut feeling that there has been an important increase in production due to the project. But it cannot be confirmed. The economic rate of return is not updated in the PCR; the project authority has not recalculated it either. Since the cost schedule 1/ The early appraisal missions guessed wrong on the incidence of bad weather. The first appraisal report states: "the annual rainfall is reliable, reducing the risks that accompany the use of fertilizer by smallholders in less fortunate areas." 2/ MANR also suggested that the Bank's insistence on improvements in the measurement of yield and other crop variables reflected the Bank's interest in drawing universal lessons from LLDP, an objective which Malawi must con- sider a luxury and hopes will attract external support. MANR does not intend to ignore the output record. But it would like to discover a methodology which can use the cheaper input measures as a fair and ade- quate proxy for output. It looks to the Bank for advice on methodology, both to find the surrogate input indicators and to measure the "other" benefits.  was completed roughly on schedule, changes in the rate of return will hinge on shifts in the benefit schedule. If we accept the argument that adopter yields are now on target but that the rate of adoption of the full package is half as fast as expected, and assume therefore that the quantity of incre- mental crop production is and will continue to be about two thirds the apprai- sal level, then under these conditions, and holding all other factors constant (and ignoring other benefits), the rate of return for phases I and II combined would fall from the appraisal figure of 13% to about 8%. The latter figure allows for price changes,both for the relative increase of maize prices in Malawi in the years after appraisal, and for smuggling of Lilongwe maize into Zambia and Mozambique, where prices are at least twice as high. 10. The second point is related to the first. It is easily conceivable that a dynamic development process has been generated in the LLDP area, pre- sumably induced by LLDP, but that it is not dependent on the maize and ground- nut packages per se. The implications are intriguing. They could mean that the alleged core of the Program, the high yield maize fertilizer package and the extension and credit services that are linked to it, is essentially irrel- evant to the growth process that has been observed, or at least that it served as no more than an instrument for bringing available human resources together and for loosening the civil service system sufficiently to bring good talent in the Ministry quickly through the ranks to management positions. In ways that have not yet been explained, the growth process may be attributable to the roads, to the dynamization of extension activities, to the backward and forward influences exerted by the new market facilities, to the jobs and incomes created in the construction period, etc. The new maize and ground- nut technologies undoubtedly play some role in the process, but may not form the leading edge except as resource mobilizer. Other packages may have served the same purpose. Credit, or extension,may not be essential to it. The point to be made is that the link between the signs of prosperity and the food crop packages has not been made, and in fact would appear to be weak. That leaves a host of interesting questions to be answered about the mech- anism of development in Lilongwe. The PCR hints at another interpretation of the process, that labor and land resources have been freed by the partly successful maize and groundnut packages and it is the uses of those extra resources that is fueling the growth process (paragraph 3.04). Thus, though there is a basis for confidence that the LLDP is moving in the right direc- tion, not enough is known to say how and why. 11. And this suggests a third point to be made. The hard pressed Eval- uation Section probably does have a special role to play. It has a data base, especially the collection from three consecutive years of intensive farm sample survey, which will serve as a baseline and early program record  - vi - against which new information can be measured at the end of the decade and important growth hypotheses tested. The PCR argues that the Bank and the Government should find a way to capture the important micro detail of the surveys, because they offer a rich resource for subsequent ex post analyses (paragraph 2.24). The audit supports that view. The monitoring work should continue as well. 12. Fourth, and finally, one hopes that the micro detail of the Lilongwe farm studies ultimately will help identify the main factors limiting the rate of adoption and efficacy of the new crop technologies. The forecast yield and benefit schedules presented at appraisal are not unreasonable, at least for maize and groundnuts (the tobacco yield estimates look optimistic). In 1970 the appraisal team reported that research trials in the Lilongwe area with the Askari maize synthetic yielded 7,000 lb/acre, that the average yield in a 1969 maize growing competition was 3,400 lb/acre, and that the average yield for all farmers was 1,100 lb/acre. The team set 1979/80 targets of 3,000 lb/acre for the most progressive half (45%) of the LLDP farmers, and 2,000 lb/acre for all farmers living in the Program area, including non-adop- ters. Those targets, interpreted as forecasts in the economic analysis, seem acceptable. Nevertheless doubts have been raised by performance during the first half of the 1970s whether those average targets can ever be reached. Similar shortfalls from apparently reasonable food crop yield targets are reported in the majority of smallholder projects in the LDCs, and have yet to be adequately explained.l/ 1/ The Program unit stresses the importance of price policies on the rate of adoption; the Bank has picked that up as a major issue and recommended that Government reform its input and crop pricing formulas, both of which now tend to discriminate against the farmer.  Project Completion Report MALAWI LILONGWE LAND DEVELOPMENT PROGRAM PHASE II Note: The PCR was issued in February 1976. Data extends only through the 1974/75 season, and, with the exception of a few added footnotes (marked by an *) which bring pieces of the story up to date, the discussion refers to the period before the date of issuance. Since the credit was closed in March 1976, the PCR effectively covers the disbursement period. The Appraisal Report was entitled the Lilongwe Agri- cultural Development Project, Phase II.   MALAWI LILONGWE LAND DEVELOPMENT PROGRAM Phase II Completion Report - Table of Contents Para(s) I. The Program and Project 1.01 - 1.03 II. Project Implementation 2.01 - 2.25 Development Work 2.02 - 2.04 Dzalanyama Ranch 2.05 - 2.06 Extension Services and Training 2.07 - 2.10 Credit and Input Supply 2.11 - 2.16 Costs and Financing 2.17 - 2.18 Organization and Management 2.19 - 2.24 The Evaluation Unit 2.22 Legal Covenants 2.25 III. Project Impact 3.01 - 3.10 Crop Yields 3.02 - 3.04 Production and Sales 3.05 Incomes and lWealth 3.06 - 3.07 Self-help 3,08 Nutrition 3.09 Conclusion 3.10 IV. The Future and Bank/Project Relations 4.01 - 4.05 ANNEXES: 1 - Description of the Project 2 - The Stall Fattening Component 3 - Composition of Project Liaison Committee TABLES: Page 1 - Buildings and Other Construction 2 2 - Survey, Land Registration and Farm Demarcation (Acres) 3 3 - Dzalanyama Ranch: Stocking in Phase II 4 4 - Extension Services - Coverage in Phase II Project 4 5 - Seasonal Credit Operations 6  - ii - TABLES (continued) Page 6 - Fertilizer Use 8 7 - Expenditures Related to Estimates 10 8 - Schedule of Disbursements 11 9 - Annual Maize and Groundnut Yields 15 10 - Crop Purchases by ADMARC: Short Tons 17 11 - Unit and Trading Centers: Planning and 18 Establishment of Retail Shops  MALAWI LILONGWE LAND DEVELOPMENT PROGRAM PHASE II I. THE PROGRAM AND PROJECT 1.01 The Lilongwe Land Development Program was conceived to be implemented over 13 years in three phases, starting in 1968. The first phase,partly financed under Credit 113-MAI, was completed in 1972 and performance was reviewed by the Operations Evaluation Department in Report No. 751-MAI dated May 23, 1975. The second phase, the Project under review, covered four years between 1971 and 1975. Invest- ments under the third phase, appraised in May/June 1974 for financing under Cr. 550-MAI,started in August 1975. The Program was initially designed to increase production of major farm crops over 500,000 acres, especially maize and groundnuts to meet rapidly rising domestic demand, and to intensify tobacco production for export. The Program area was later extended to 1.1 million acres and beef, dairy and poultry components were added. The Program was the first of four similar rural development programs operating in Malawi and together covering some 20% of the country's farmers. All take a similar approach of integrating provision of roads, market and administrative centers, water supplies and conserva- tion measures with intensified extension services, credit and input supplies and varying levels of social services. Following recommendations of the Bank's Agricultural Sector Review report of 1973 (235a-MAI), planning of modified programs to cover the remaining areas of the country is now under way. 1.02 The Phase II Project includes construction of crop extraction roads, rainfall diversion channels and boreholes to serve an additional 240,000 acres of the program area divided into 14 units,each with its service center including a produce market and input store and staff housing and offices. It expands the provision of agricultural extension and training services. It continues the management organization estab- lished in Phase I and expands provision of inputs for cash or credit. It includes the establishment of a ranch to provide feeder stock for stall fattening by project farmers. Details are given in Annex 1. 1.03 The Project cost was estimated at US$8.6 million of which foreign exchange costs were US$3.35 (or 39%). The Credit of US$7.25 million was to meet 88% of major expenditure items. Retroactive financing for US$105,000 for ranch development was included. The Project became effective on August 18, 1971. It was to have been completed by September 30, 1975. The closing date is March 31, 1976. II. PROJECT IMPLEMENTATION 2.01 "Phase II" can variously mean an area--a series of units--of the program area in which work was started in the period 1971/72-1974/75, or, alternatively, operations taking place in that period in both the area mainly developed in Phase I and the Phase II area. The meaning is generally clear from the context.  -2- Development Work 2.02 Most physical construction was close to appraisal estimates in total and generally somewhat ahead of schedule in timing. At the start of Phase II land development works covered 286,000 acres compared with some 163 000 acres originally planned. During Phase II, in 1972/73- 1974/75, 11 standard "units" totalling 235,000 acres were brought into the Project against 12 units, estimated at 240,000 acres at appraisal. In addition five "modified input areas" totalling 140,000 acres (vs. 116,000 acres at appraisal) were incorporated in the Project, and 161,000 acres of the Dzalaryama Forest Reserve were developed as a ranch, as scheduled (see para 2.05 below). In total these areas cover about 77,000 farm families, 50% ahead of appraisal estimates. The Phase II Project aimed to reach 24,000 new farmers in the Phase II area as well as continue services to 28,000 in the Phase I areas at the intensities planned in Phase I but not achieved. 2.03 Unit offices and staff housing were built in all unit service centers as planned. Input stores have been built in all standard units, but two still lack permanent markets, to be constructed by ADMARC. Road construction exceeded estimates by 10% and 47 bridges were constructed, 24 in Phase I units and 23 in Phase II area. Rainfall diversion ditches were close to anticipation and some 260 miles of artificial waterways were developed in addition. Details are given in Table 1. Table I: BUILDINGS AND OTHER CONSTRUCTION Total Total to 1971/72 1972/73 1973/74 1974/75 Phase II End Phase II Housing Unit Offices 4 5 4 4 17 26 Housing Units 105 101 43 45 294 453 Temporary Housing 90 6 10 - 106 106 Water Water Supply 5 4 5 2 16 25 Dips - 3 2 - 5 5 Roads Bridges and Drifts 10 20 12 5 47 109 Road Mileage 240 158 152 50 600 1,233 Conservation Diversion Ditches (Miles) 214 378 551 506 1,649 3,690 Waterways (Miles) 88 42 83 50 263 493  - 3 - 2.04 At the time of the appraisal of Phase II, survey under Phase I was behind-hand due to shortages of qualified staff, and although the development program was not held up, land registration has been delayed. The staff situation was rectified by the end of 1971. During Phase II survey of some 376,000 acres was completed, above estimates and ahead of schedule (Table 2), and survey is no longer a bottleneck. Table 2: SURVEY, LAND REGISTRATION AND FARM DEMARCATION (ACRES) 1971/72 1972/73 1973/74 1974/75 Total Project Year: 1 2 3 4 Survey (Area surveyed up to Farm Registration) Appraisal Estimate 75,000 100,000 100,000 100,000 375,000 Actual 117,000 115,000 77,895 66,070 375,965 Registration - 33,178 21,991 41,324 96,493 Farm Allocation 33,220 93,280 75,500 59,800 261,800 Land allocation and registration only got under way in 1971 and have lagged, while farm demarcation, which was getting ahead of allocation/ registration has been held back. In the Phase II period about 262,000 acres were demarcated and 97,000 registered. Given a well-advised policy of not hurrying this process and given the enormous effort needed for this task, this seems, within the guideline of its objectives, creditable. However, land reform does not finish at allocation--people have to take up their allocations and transfer plots--and although there are no data on progress with this, there are reports of slow take-up of allocations. Dzalanyama Ranch 2.05 The scheduled 161,000 acres of the Dzalanyama Forest Reserve were released to the Project and are being developed as a ranch to provide feeder stock for program farmers. However, the build up of the herd has been restricted by shortage of stock in Malawi and high prices due to this and competition from a number of livestock projects. By the end of Phase II the herd was scheduled to be about 11,000 head: it was, in fact, only slightly over 5,000 (see Table 3), and instead of sales to farmers of fatteners of about 2,000 a year the level was about one-third. The fattening component appears to be operating well and is showing a handsome gross profit to farmers (see Annex 2). There is some suggestion, however, that feed (principally maize stalk) would be inadequate for the level of development which was planned: the evaluation unit is to investigate this. * The herd continued to expand in 1976, though the head count can be mis- leading because of the success of the programs for selling heifers and steers to smallholders. The March 1977 Supervision Report shows herd size at 92% of appraisal forecasts in December 1976.  - 4 - 2.06 Considerable loss of grazing has taken place through brush fires, apparently particularly prone to enter from the Mozambique border. The cost of establishing fire breaks would be considerable but from information available could be a viable operation. The wood resources of the ranch area are not being methodically exploited although selective cutting would appear to be beneficial to both forest and grazing, and remain essentially on a protected basi6 as the area is gazetted forest reserve. A cost/benefit analysis of both fire control measures and full exploitation of the timber resources of the Ranch area vould be justified. Table 3: DZALANYAMA RANCH: STOCKING IN PHASE II Oct. 1971 Dec. 1971 Dec. 1972 Dec. 1973 Dec. 1974 Mar. 1975 Cows 172 271 798 1,572 2,000 2,071 Calves 59 107 412 682 1,012 932 Heifers 102 113 124 152 468 490 Steers 225 226 278 500 648 616 Bulls 35 35 48 48 54 51 Weaners - - 126 670 653 765 Quarantine - - 162 54 82 134 Total 593 752 1,948 3,678 4,917 5,059 Extension Services and Training 2.07 The appraisal report called for expansion of extension coverage to an additional 24,000 farming families for a total of almost 50,000. In fact cover, as defined by the number of farm families within the orbit of unit centers, had reached nearly 78,000 by 1975. The ratio of extension workers to farmers was expected to be 1:200 for the first 2 1/2 years after establishing a unit and 1:400 thereafter, a level which was not, however, achieved in Phase I because of a shortage of trained extension workers. Similar difficulties continued into Phase II and the overall Program ratio was 1:374 in 1975,or 1:348 in the Phase II project area alone if it is assumed that Phase I areas and early Phase II areas each had a 1:400 staffing ratio (Table 4). Given tnc resuurce constraints, Government feels that these ratios are quite satisfactory an' that the appraisal target was unrealistic. Table 4: EXTENSION SERVICES Coverage in Phase II Project Overall Phase I Phase II Extension Probable Extension Area Area Total Workers/ Ratio in Year Staff Families Families Families Families New Areas a/ 1971/72 148 25,300 9,200 34,500 1:233 1:233 1972/73 178 26,100 19,900 46,000 1:257 1:216 1973/74 228 26,800 40,200 67,000 1:294 1:237 1974/75 208 27,600 50,300 77,900 1:374 1:348 a/ An approximation which assumes 1:400 ratio is maintained in areas exposed to extension workers for 2 1/2 years or more. * These brush fires were brought under better control in 1976.  - 5 - 2.08 Mere numbers do not, of course, make an efficient extension organization; it has to have a well structured line of communication to and from farmers, and have up-to-date and worthwhile advice to transmit. In this, LLDP seems strong; a pyramid structure provides a ladder from the Principal Field Officer, through Senior Field Officers in charge of groups of five units, each headed by a Field Officer supervising two Field Assistants per unit; and staff transportation seems adequate.l/ Impres- sive monthly farm activity schedules are drawn up and these together with regular briefings on project matters from Project Manager through Divisional and Section heads down to contact staff ensure the pyramid is used. Each farmer should be contacted about four times a year. Random checks during field visits left some doubt whether this level was achieved, whether everyone who should be reached is regularly reached, and whether the information is passed on adequately (producer price information did not appear to reach the village very reliably): but the general impression was an extension service that was enthusiastic, well briefed and active. Effectiveness is harder to judge in a short visit outside the main crop period, and in large part depends on such exogenous factors as producer price levels. 2.09 The cattle dipping program expanded during the Phase from covering nine units to 24 units, and the rather shaky data suggest an increase in the proportion of the herd dipped. Dipping rates vary seasonally, principally because access is limited by crop cultivation, but in 1975 it appears that about 80% of the 48,000 head herd in LLDP was covered. Unfortunately there has been no attempt to measure the effectiveness of the program within LLDP. 2.10 Staff and farmer training programs appear to have continued at the Project Training Center and Nsaru FTC respectively much as anticipated by the appraisal mission. The level of 200-250 days of staff training maintained each year appears satisfactory given the virtual exclusion of training in the main agricultural season, November through March. Courses averaged 5-7 days with 20 resident places filled per course. Farmer training contact increased through the Phase and in 1973/74 (the last year for which figures were complete) there were 94 residential courses over 313 days involving 2,700 students and 7,600 student days: whilst day courses involved over 30,000 students that year. One-third of all resi- dent students, and over a half of day class participants were women. No courses were current during the completion mission, but the interest of training staff supported the impression from the figures that the training program was operating well. Credit and Input Supply 2.11 Nearly all seasonal inputs used in the Project have been made available on credit in kind. During the Phase II period the number of borrowers rose from under 5,000 to over 25,000 in the peak year 1973/74 1/ And possibly excessive in quality: the proportion of four-wheel drive vehicles in the LLDP fleet may be greater than is justified given the road conditions and probably low cost of delays in operations which the use of standard vehicles would entail.  - 6 - when the total loan value was K495,000. These were close to appraisal estimates for 1974/75 1/ in which year there was in fact a decline in borrowers but an increase in the amount lent and a doubling of average loan size (Table 5) all caused by the sharp increase in world fertilizer prices that year. In 1973/74 rather under 40% of families covered by the extension services in that year received seasonal credit: but credit was received by 75% of families in units established for at least two years and who were, therefore, most likely to have been appraised for credit- worthiness. Table 5: SEASONAL CREDIT OPERATIONS Borrowers Number of Total Av. Size Repayments Fully Paid Back Year Borrowers Loans(K) (K) On Timee Later On Time Later -- - - -- - - %