Malawi - Second Shire Valley Agricultural Development Project

The World Bank FOR OFFICIAL USE ONLY FILE COPY Report No. 2593 PROJECT PERFORMANCE AUDIT REPORT MALAWI SHIRE VALLEY AGRICULTURAL DEVELOPMENT PROJECT PHASE II (Credit 363-MAI) June 29, 1979 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 Project Performance Audit Report MALAWI SHIRE VALLEY AGRICULTURAL DEVELOPMENT PROJECT PHASE II (Credit 363-MAI) TABLE OF CONTENTS Page Preface 11 Basic Data Sheet 111 Disbursement Table iv Highlights V PROJECT PERFORMANCE AUDIT MEMORANDUM I. Summary Background I Project Impact 4 II. Main Issues Crop Program Failure 5 Staffing 9 Measurement of Project Net Benefits 10 PROJECT COMPLETION REPORT I. Background 13 II. Formulation 15 III. Implementation 18 IV. Institutional Performance and Development 29 V. Financial Performance 33 VI. Project Impact 40 VII. Rates of Return 52 VIII. Bank Performance 54 IX. Conclusions 56 Annexes 1-11 Maps 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.  - L1 - Project Performance Audit Report MALAWI SHIRE VALLEY AGRICULTURAL DEVELOPMENT PROJECT PHASE II (Credit 363-MAI) PREFACE This is a performance audit of the Shire Valley Agricultural Development Project, Phase II for which Credit 363-MAI in the sum of US$10.5 million was approved in March 1973. The final disbursement was made on April 18, 1978 and the credit was closed on December 31, 1978 without any deferment. This project was followed by the Shire Valley Agricultural Consolidation Project (Credit 823-MAI) of July 1978 for US$10.7 million. This audit consists of an audit memorandum prepared by the Operations Evaluation Department and a Project Completion Report (PCR) dated December 22, 1978. The PCR was prepared by the Eastern Africa Regional Office on the basis of a visit to the country in July 1978. The audit memorandum is based on a review of the Appraisal Report (No. 33a-MA) dated February 15, 1973, the President's Report (P-1192) of March 8, 1973, the Credit Agreement dated March 28, 1973 and the PCR; correspondence with the Borrower and internal Bank memoranda on project issues as contained in relevant Bank files have also been reviewed and Bank staff associated with the project have been interviewed. A copy of the draft report was sent to the Borrower on April 19, 1979 for comment. No comments have, however, been received. On the basis of this abbreviated review process, the audit generally finds the PCR comprehensive and accurate with respect to the project's principal achievements and deficiencies. Selected problems noted in the PCR are amplified in the Memorandum and others not mentioned in the PCR are discussed because of their importance and relevance to this as well as other similar projects in Malawi and other countries; these include pricing policies, agricultural extension services, project staffing and measurement of project benefits.  - iii - PROJECT PERFORMANCE AUDIT BASIC DATA SHEET MALAWI - SHIRE VALLEY AGRICULTURAL DEVELOPMENT PROJECT - Phase II (Credit 363-MAI) KEY PROJECT DATA Appraisal Actual or Item Expectation Current Estimate Total Project Cost (US$ million) 13.5 13.0 Underrun (%) - 4% 1/ Credit Amount (US$ million) 10.5 Disbursed (US$ million) - 10.5 Cancelled (US$ million) - Date Physical Components Completed 3/31/78 3/31/78 Economic Rate of Return C%) 22 10 - 15 OTHER PROJECT DATA Original Actual or Item Plan Revisions Current Estimate First Mention in Files or Timetable 05/71 Government's Application 03/72 Negot iat ions 01/29/73 Board Approval 03/20/73 Credit Agreement Date 03/28/73 03/28/73 Credit Effectiveness Date 04/27/73 04/27/73 Closing Date 12/31/78 12/31/78 Borrower Republic of Malawi Executing Agency Gov. of Malawi Authority, Fiscal Year of Borrower April 1 - March 31 Follow-on Project Name SVADP Consolidation Project Credit Number 823 - MAI Amount (US$ million) 10.7 Credit Agreement Date 07/07/78 MISSION DATA 2/ Sent Month, No. of No. of Man- Date of Item Year Weeks Persons weeks Report Identification Gov. 05/71 Preparation Gov/PMEA 03/72 Preappraisal - Appraisal Washington 06/72 4 7 28 11/15/73 TOTAL 4 28 Supervision I RMEA 10/73 1 2 2 11/73 Supervision II RMEA 05/74 1 1 1 07/74 Supervision III RMEA 01/75 1. 2 2 04/75 Supervision IV RMEA 11/75 .7 3 2.1 02/76 Supervision V/ RMEA 05/76 2.5 3 7.5 07/76 Project Review Supervision VI RMEA 01/77 1 2 2. 05/77 Supervision VII RMEA 08/77 .5 1 .5 09/77 Sub-Total 17.1 Completion Washington 07/78 2.5 2 5 11/78 TOTAL 10.2 22.1 COUNTRY EXCHANGE RATES Name of Currency (Abbreviation) Malawi Kwacha (MK) Year: Appraisal Year Average Exchange Rate: US$1 = v[K .833 Intervening Years Average US$1 = 1K .874 Completion Year Average US$1 = 1K .880 1/ In MK there is an estimated cost overrun of 0.1%. 2/ Supervision Missions sent by the Regional Mission in East Africa, Nairobi Kenya.  - iv - Project Performance Audit Report MALAWI SHIRE VALLEY AGRICULTURAL DEVELOPMENT PROJECT PHASE II (Credit 363-MAI) DISBURSEMENT TABLE (US$ '000 Equivelent) Actual as % Quarter end-ing Appraisal Estimate Actual Disbursement of Estimate 06/30/73 794 - 0 12/31/73 2,381 727 31 06/30/74 3,345 1,132 34 12/31/7N 5,058 2,913 58 06/30/75 5,870 4,005 68 12/31/75 7,111 5,499 77 06/30/76 7,793 6,246 80 12/31/76 8,796 7,500 85 06/30/77 9,429 8,000 93 12/31/77 10,323 10,000 97 06/30/78 10,500 10,500 100  - v - Project Performance Audit Report MALAWI SHIRE VALLEY AGRICULTURAL DEVELOPMENT PROJECT PHASE II (Credit 363-MAI) HIGHLIGHTS Shire Valley Phase II was the Bank's fifth rural development project in Malawi. The project aimed at improving crop production on small farms through providing support to cotton, rice, sorghum and groundnut cultivation, and at increased livestock and fisheries production. Studies and provision of health facilities were also included in the project. Some project objectives such as the livestock and fishery develop- ment were over-achieved; others including roads, machinery purchases, credits to farmers, sprayers distributed and the number of health centers constructed fell short of their targets. Some sub-components were scaled down as the result of project experience, cost escalation or recommendations of a mid-term review. Through these reductions and the use of force account for many buildings constructed, total project cost was held slightly below the appraisal estimate of US$13.5 million. The livestock and fishery development programs can be considered successful but the crop program is far below project targets. Largely because of the failure of the crop program, the economic rate of return at audit is most likely between 10 and 15 percent compared with 22 percent estimated at appraisal. (The range in the audit rate reflects uncertainty about food crops yields.) The poor performance of the crop program can be attributed to insufficient extension services and unrealistic appraisal assumptions. Other points of interest are: - management attention required to implement the large and complex project detracted from development of extension services (PPAM para. 9); - government's price policy provided inadequate incentives to farmers (PPAM paras. 15 - 17; PCR paras. 6.11 and 6.12); - training of Malawians by expatriates was not carried out as expected at appraisal (PPAM paras. 20 - 22); - measurement of project net benefits not adequately treated in follow-on project appraisal and the PCR (PPAM paras. 23 - 25); and - evaluation section failed to provide useful information for monitoring and evaluating despite the fact that a wealth of data had been collected (PPAM para. 9).  Project Performance Audit Memorandum MALAWI SHIRE VALLEY AGRICULTURAL DEVELOPMENT PROJECT PHASE II (Credit 363-MAI) I. SUMMARY Background 1. The SVADPII project was identified in May 1971. Subsequently a Preparation Report pre ?red jointly by the Government of Malawi and Permanent Mission Eastern Africa- was submitted to the Bank in March 1972. The proposed project was to be implemented over five years at a cost of US$26.6 million, IDA was expected to finance US$22.6. The Government after closer examination revised the project, scaling the cost down to US$16.7 million and reducing the time period to three years and calling it Phase IIA. This was to be followed by a two year Phase IIB Project. The appraisal mission of June 1972 again reformulated and scaled down the project. Total project cost of this revised project was estimated at US$13.5 million of which IDA would finance US$10.5 million. The implementation period was expected to be five years. The credit was approved in March 1973 in the sum of US$10.5 million. 2. The overall objectives of the project were to increase crop, livestock and fish production and the incomes of farm families in the Shire Valley under a set of programs consisting of the following: (a) A program designed to increase production on 16,000 farms which in total would cultivate about 49,000 acres of cotton, 52,000 acres of maize, 19,000 acres of sorghum, 7,000 acres of rice, 4,000 acres of groundnuts and 200 acres of cocoa. (b) A program to increase livestock production through the operation of two grazing schemes on selected grazing lands, construction of fire lines, tracks, dipping tanks, weirs and dams, and the establish- ment of three training centers. (c) A program designed to increase the amount and value of the catch of about 1,000 fishermen through extension services, better fishing gear, kiln drying, training of boat builders and improved access to fish landings. (d) Engineering studies in the Elephant and Ndinde Marshes to determine the feasibility of low-cost fish farming and designs for the improvement of the Chikwawa - Bangula road. 1/ Presently, Regional Mission Eastern Africa - 2 - (e) A program to improve health services by constructing new or modifying existing health centers, providing personnel, drugs and equipment for operation of basic health services. (f) Maintenance and control for wildlife preservation at the Lengwe game park. (g) A program to improve agricultural research at Makanga, Kasinthula and Ngabu and fisheries research at Chiromo. (h) Funds to hire consultants to carry out certain parts of (a) and (d) of the project. (i) A program to assist farmers and livestockmen in land registration under parts (a) and (b). 3. It is not possible to determine the exact project costs and physical inputs that have been invested in the crop production program. Some project components are multipurpose, e.g. roads and contribute to livestock as well as crop production. To directly support crop production targets the project provided for improved and expanded extension services, including farmer training; short- and medium-term credit for improved seeds, fertilizers, insecticides and spraying equipment; research; boreholes; roads and new or renovated markets. 4. Use of seasonal and medium-term credit by farmers reached only 20% of appraisal estimates. Sales of fertilizer to farmers were lower than anticipated partly because its price rose faster than producer pricel,(see PCR para. 3.13) and partly because the use of fertilizer on dimba- crops turned out to be impractical because of uncontrolled flooding. Sales of maize seed were lower than expected because varieties offered to farmers were generally not suitable to the Valley and lacked response to fertilizer; and likely because of the low maize prices. Farmers used less insecticides for cotton spraying than expected; first, because spraying recommendations by the Extension Service were reduced because of better monitoring of infestations; and secondly, because cotton acreage planted by farmers was only about one-half that expected. Significant field research (trials) was conducted at project research stations - Ngabu, Nsanje, Tomali and Maperera. 1/ Cultivation of usually small plots along seasonal rivers which are flooded during the rainy season. -3- 5. A senior research officer hired at the start of the project left in 1974 and the position was not permanently filled until 1976; this likely accounts for the initially poor experimental design. There is no information on how this research might have affected crop production in the project area because no complete analysis has been made of adoption rates for improved varieties. 6. All construction goals, fire lines, tracks, dipping tanks and training, (see PPAM para. 3b) under the livestock.component were either achieved or exceeded. Sub-components for cattle markets, stall feeding, tsetse fly investigation and vaccination against foot and mouth disease, not specified in the appraisal, were also implemented. Most physical targets for the fisheries component were also either achieved or exceeded with the exception of access roads; only 4 miles were constructed compared with the appraisal estimate of 20. 7. Changes were made in the health component during implementation. Only seven health sub-centers were constructed instead of the eleven envisaged at appraisal because private funds became available for this purpose and further study revealed that certain planned health units would be too close together. The major transport structures, bridges, culverts and drifts, were completed as expected but road construction fell far short of the appraisal estimate. Only nine markets were constructed instead of 17 because realized production was much less than anticipated. 8. Construction of staff housing, administration blocks, training centers, stores and workshops met appraisal targets. The project plan for land registration and establishment of titles was not implemented because of a change in Government policy. The Land Registration Unit then demarcated and gazetted land in the Western escarpment and developed the Zunde Experimental Farm in Makande Plain. 9. Most senior project staff that were in post at the end of Phase I continued in the project into Phase II, but there were some relatively serious staffing problems throughout implementation. The Extension Service was never staffed with technically competent people; which reduced the effectiveness of the extension program. Overall manage- ment of the project was commendable; however, most of the management input was spent on implementing the physical components of the project. This is one of the reasons why the crop production program did not reach appraisal targets (PCR paras. 6.02, 6.03 and 6.04). Although an Evaluation Section was set up under Phase I and carried over in Phase II, little useful analysis was carried out. Even though a wealth of information was collected through farm surveys, they were not used to assess the impact of the project on production.!/ Project Impact 10. At appraisal it was expected that Shire Phase II would reach and affect production on about 50,000 acres of cotton by year 5 of the project but only 30,000 acres were covered during execution. Yields of all crops except cotton did not reach appraisal estimates by 1977/78 or at any time throughout the implementation period. During this period there were droughts in the valley; as a result yields varied greatly. Because of shortfalls in acreage and yields, total production of all project crops except sorghum fell short of appraisal estimates. Incremental (project) cotton production (1977/78) was only 30% of that estimated, maize, 12% and rice 6%. 11. Incremental livestock production exceeded expectations. Construction of dips permitted the treatment of about 70% of the cattle population. This together with the addition of waterpoints, holding grounds and markets is estimated to have increased herd growth by 22 percent and off-take rates by 44 percent. In total, livestock output due to higher off-take and carcass weights is estimated to have been increased by about 274 short tons (st) per annum by 1977/78 (PCR Annex 11). About 1,000 fishermen were trained in improved methods of fishing under the project. As a result, fish catch increased by about 2,100 st per year compared to an appraisal estimate of 3,300 st. Because most of the catch was processed in the project's improved smoke-drying kilns fishermen could obtain higher prices in the markets2/. 1/ The Central Projects Staff has made the following very important comment on the Evaluations Section's performance. "It is unfortunate that despite the attention given to monitoring and evaluation in both Phase I and Phase II and also at the national level, by having regular meetings and exchange of methodology for all M&E units, that we find that few useful analyses have apparently been done and that data collected do not permit accurate estimates of incremental crop production. There must be a lesson here for improving the ability of project supervision and management to give more guidance to M&E." 2/ The project introduced an improved kiln which required less fuel and at the same time produced much more palatable product. This new method of smoking is now being used for just about all the commercial catch. - 5 - 12. Farmers have received less net income than expected at appraisal. The major factor has been yields that were less than estimated. Some input prices were higher than expected at appraisal, others lower. However, crop prices were generally higher, at least by the 1977/78 crop year. On balance these price differences had little impact on net income realized. The estimated difference in net farm income from cotton and maize with and without the project was about 25% at completion. At appraisal it was estimated that the income of a typical farmer growing cotton, maize and sorghum would double under the project. No information is available on income improvement from livestock. It has been estimated (PCR Annex 9, Table 3) that the incomes of participating fishermen increased by over 150%, compared with an eight-fold increase estimated at appraisal. 13. At appraisal the economic rate of return for Phase II was estimated at 22% including the health component and 26% excluding the health component. At the end of the project implementation period, the rate of return was estimated to range between 4 and 9 percent depending on whether food crop yields have increased by 10% or 20% and on whether health costs are included or excluded. These lower rates of return compared with the appraisal estimate are due primarily to the poor performance of the crop sector in production of cotton and maize and, to a small extent, due to a shortfall of about 35% in fish catch vis-a-vis the appraisal assumptions. 14. The PCR (para. 7.02) claims the recent adoption and rising production of guar beans as a project benefit. The crop was tried out under the project's research program. It is an extremely valuable crop in the rotation and has become an important cash crop to farmers. When guar beans production is included in project benefits the rate of return ranges from 10 to 15% under the assumptions cited above. II. MAIN ISSUES Crop Program Failure 15. ADMARC Pricing Policies. The pricing policies of the Agri- cultural Development and Marketing Corporation (ADMARC) have been cause for concern in all of the Bank's rural development projects in Malawi - Lilongwe, Karonga and Shire Valley!1/. ADMARC's pricing policy has been to heavily "tax" farmers who produce cotton and groundnuts and to subsidize the production of rice and to a certain extent maize. The following table 1 illustrates this policy. 1/ See ,0ED Reports: No. 751, dated February 5, 1968; No. 895, dated February 5, 1968; and No. 1597, dated May 13, 1971. - 6 - Table 1: ADMARC Profit by Commodity Percentage of Average Price Paid to Producers (Percent) Year Cotton Groundnuts Rice Maize 1972 33 54 -15 -5 1973 38 48 -10 -3 1974 74 48 + 9 +75 1975 92 24 +36 +8 1976 16 24 -2 -49 1977 64 106 -46 -45 Source: Staff Working papers. A similar price policy is prevalent in many African countries. (The apparent taxation of rice and maize in 1974 and 1975 was due to ADMARC's pricing scheme that does not adjust domestic price to rapidly changing world prices). - 7 - 16. While ADMARC has increased farmer cotton prices over the project period these higher prices have not kept pace with increases in the general price level in Malawi, which have averaged about 12% per year (PCR para. 6.11). Because a large part of the benefits of Shire II were to be derived from cotton production, this price policy has had significant detrimental effect on the project (not overlooking the two years of poor weather). The price issue has been raised by supervision missions on numerous occasions for Shire as well as other rural development projects in Malawi (Karonga and Lilongwe). Missions correctly identified the lack of proper incentives to producers in light of much higher prices received by farmers in neighboring countries. Also the relative prices of cotton and maize have discouraged the production of cotton. In their discussions with Government officials supervision missions found pricing policy to be a sensitive political issue; a problem that might be solved only by a high level dialogue between the Bank and the Government. Despite repeated urgings from RMEA which was responsible for supervision of the project to initiate this dialogue, no action was taken by the Bank until recently. Discussions with the Government during the negotiations for the recent National Rural Development Phase I Project (Credit 857-MAI) resulted in a covenant for developing a national agricultural price policy.l/ 17. It should be noted, however, that the Appraisal Report for Shire II apparently assumed that a price of cotton, even ten percent below the actual, would be an adequate incentive to farmers to increase the production of cotton. At this lower price, the estimated net income 1/ "In order that marketing and pricing policy can be fully considered, a statutory or official pricing committee would be established at the commencement of the project consisting of members from Treasury, MANR, ADMARC and the Economic Planning Division of the Office of President and Cabinet. The committee would keep prices under review and submit a report to the Board of ADMARC for consideration by the Minister of Agriculture. Within 18 months of project commencement, Government would review marketing and pricing policies and prepare a report, in consultation with IDA, defining the marketing and pricing criteria and policies Government proposes to adopt. The pricing committee would review annually as part of its price and marketing analysis the production targets and achievements of NRDP. It would comment on the efficacy of its pricing policies in meeting these targets and the committee would communicate these comments through the Treasury to IDA. An assurance on these points was obtained at negotiations. ADMARC would appoint economists at its headquarters to deal with pricing, economic and marketing issues. To improve marketing and input supplies ADMARC would staff its headquarters, markets and stores with liaison personnel in sufficient numbers to meet the input and marketing needs of NRDP development areas. Assurances on these points were also obtained at negotiations." (Appraisal Report para. 6.04). - 8 - per acre from cotton would be 150% higher than without the project, assuming that farmers used the recommended cultural practices. But, net income was only 25% higher in 1976/77 (PCR Annex 9, Table 1), mainly because yields were ony 50% of those expected. Similarly for maize, net income per acre as estimated at appraisal was almost 300% higher with the project than if the farmer continued to use the traditional method of production. As estimated by the PCR (Annex 9, Table 2), net income per acre from maize in 1976/77 was only 25% above that obtainable by traditional methods, mainly because yields were below those expected. A minor part of this difference is due to the lower price received by farmers than estimated at appraisal; 2.25 t/lb vis-a-vis 2.59 t/lb. If the price of maize had been as expected, net income per acre would have risen by only 50% (PCR, Annex 9, Table 2). Thus it is evident that low prices were not the only factors that contributed to underachievement of the crop program. Weather was a major cause in two of the five years, but the failure goes deeper than that. 18. Inadequate Extension Advice. A special crop review mission, sent to Malawi in 1976 to make program recommendations on crop programs up to the end of Phase II, 1978, and for Phase III 1/, made the following recommendations for carrying out the last two years of Phase II: (1) that instead of discouraging the production of maize, farmers should be encouraged to use better production practices on the maize they do grow; (2) that for cotton a fixed spray regime should be introduced and further price incentives be given for all grades with a proportionately higher increase for grade C cotton; (3) that more attention be given to better cultural practices - land preparation, timely sowing, early weeding, etc. - by the Extension Service. 19. Essentially, what this mission recommended was a more intensive agronomic program than was expected under Phase II at appraisal. In cotton production, there was a very large shortfall in the number of sprayers purchased as well as lower yields on farms that sprayed cotton. Pest and disease infestations vary from year to year. If a farmer sprays and does not see any effect on yield compared with those who do not spray he is not likely to spray again. Thus he must be advised to spray at the right time and to spray only when needed. The Extension Service was both understaffed and staffed with unqualified personnel. Therefore, an essential ingredient of the crop development program was missing (PCR paras. 4.03 and 4.04). This fact is not mentioned in supervision reports, indicating that the missions were focusing more on implementation problems of physical components. 1/ RMEA, A Review of Agricultural Activities and Proposals for Future Development, SVADP II, July 1976 pp. 14 and 16. -9- Staffing 20. At the end of Phase II, 11 senior positions were occupied by expatriates. When Phase I was appraised it was anticipated that all expatriates required to initiate the project would have trained under- studies and would have been replaced by them at the end of five years, (Phase I, Apr. para. 5.05). This objective was not achieved even though the PPAR for Phase L1 stated that, for the most part, it was. 21. When Phase II was appraised no mention was made of any replacement of expatriate staff by Malawians. However, the Phase III appraisal notes that there were 11 expatriates in high level positions (para. 4.05). Moreover, during negotiations it was agreed inter alia that the Government would, in consultation with the Association, prepare a program for the training of Malawians to replace all expatriates in the SVADP Management team by 1982. While such action may solve the "Malawianization" of the Shire Valley project, under the present scarcity of professional manpower in Malawi, it may also pull staff away from other essential projects, both private and governmental. During negotiations, it was also agreed that sufficient new Technical Assistant positions would be established to meet project needs. 22. It is not likely that this covenant will solve staffing problems of the extension service. What is apparently needed is a general manpower requirement study for the entire country as noted in the PPAR for Karonga I. A study of this roblem has been included in the National Rural Development Phase I Project._/ However, as noted in the Karonga PPAR-/, a better procedure would have been to make the manpower study before undertaking the project. 1/ OED Report No. 895 (para. S.03), dated October 22, 1975. 2/ "Government would carry out by December 1, 1979, a study to examine and make recommendations on the present staffing levels and work programs of MANR to improve the agricultural extension services; the study would be carried out by consultants appointed in consultation with IDA and using Terms of Reference agreed to by IDA. Within 6 months of completion of the study Government would discuss with IDA the implementation of its conclusions" and "further expansion of the NRDP and other MANR development projects would be phased in such a manner that they would allow the full staffing of NRDP and other major projects to be fulfilled before new development undertakings were started." 3/ OED report under preparation (Credit 282-MAI). - 10 - Measurement of Project Net Benefits 23. PCRs for both Phase I and Phase II have noted the lack of sound production data upon which to measure project benefits. In 1975, the PPAR on Shire L1/ forecasted that production of cotton (the most important crop in the project) would not continue to grow by 5.7% per year as estimated at appraisal of Phase I but that the incremental output due to the project would stabilize at 4,350 tons per year after 1972/73. This forecast presumably was based on the production experience gained up to that time. However, as of 1973, the increases in output achieved were about in line with those envisaged at appraisal except for the drought of 1972/73 (see Table 2). Apparently on the basis of this experience, the appraisal of Phase II, reduced the projected growth in output of Phase I (which then became the without project case for Phase II) to 5% per year compared with the Phase I appraisal estimated of 5.7%. In constrast, the appraisal report then projected cotton production to increase by 21.0% per year betweem 1972/73 and 1977/78 as the with project situation. According to the PCR for Phase II (Table 10) cotton production, in fact, did not increase at all in the valley during this period, partly because of a setback caused by two more drought years, 1974/75 and 1975/76. Cotton production, however, recovered by 1977/78. 24. On the basis of the Phase II experience, the appraisal of the Shire Valley Agricultural Consolidation Project (Credit 823-MAI) assumed that cotton production with only Phases I and II, (the Phase II with project case and the Phase III without project case) would increase only at a rate of 1% per year, but that with Phase III (with project case) production would rise at 3.2%, per year, through 1982/83. Under these and similar assumptions for other crops the ERR for Phase III was estimated at 20%. However, if Phase II and Phase III costs and benefits are included in the rate of return calculation, the rate drops to 8 - 10%. 25. The lesson that can be learned from this is that the appraisal of the follow-on projects should be rigorous in analyzing project net benefits. It is acceptable to analyze the benefits of each follow-on project as if the preceeding one represented sunk cost; and perhaps realistic in some instances, to assume 1/ OED Report No. 895, dated October 22, 1975. - 13 - MALAWI SHIRE VALLEY AGRICULTURAL DEVELOPMENT PROJECT PHASE II Project Completion Report I. BACKGROUND 1.01 The Shire Valley Agricultural Development Project, Phase II (SVADP II) was designed to expand agricultural development and to improve health services and infrastructure in the Shire Valley in the Southern Region of Malawi and was a part of Government's strategy for improving smallholder agri- culture through an integrated regional approach. The Project was financed by IDA, and was the fifth IDA credit for such development, the others having been for projects in the Central and Northern Regions, and for a first Phase in the Shire Valley. 1/ The IDA Credit (363-MAI) was for US$10.5 million, to finance 78% of total project cost of US$13.5 million. 1.02 The Shire Valley accounts for about 6% of both the area and popu- lation of Malawi, and has always been considered one of Malawi's most dis- advantaged areas in terms of climate, incidence of human disease, and low agricultural productivity. Consequently, Government has since the late 1960's given high priority to the implementation of a comprehensive devel- opment program in this area. The first phase of this program - the Shire Valley Agricultural Development Project - SVADP I - was initiated in 1968. The Project covered an area of about 125,000 acres (about 7% of the total area and about 16% of the available arable land in the Shire Valley), and involved about 4,800 smallholder families (about 8% of the Shire Valley population). Its principal objective was to induce farmers to adopt improved agricultural practices, in particular the spraying of cotton, through the provision of extension services, credit, marketing facilities, and support- ing infrastructure. The Project was supported by an IDA Credit (114-MAI) of US$3.7 million, covering 80% of total project cost of US$4.6 million. 1/ 1968: Credit 113-MAI, LLDP, Phase I 1968: Credit 114-MAI, SVADP, Phase I 1971: Credit 244-MAI, LLDP, Phase II 1971: Credit 282-MAI, KRDP, Phase I These have been followed by several credits for follow-on projects: 1975: Credit 550-MAI, LLDP III 1976: Third Window Loan 1286 - KRDP II 1978: Credit 823-MAI - Consolidation Phase of Shire Valley - 14- 1.03 The Project was terminated on schedule on March 31, 1973. The completion report and the performance audit (PPAR 1/) considered the proj- ect to be well-conceived, effectively implemented, and generally successful. (See Annex 1 for details.) In particular, the Project was credited by the report as having successfully mobilized people at all levels in an area generally considered resistant to change, and facilitated a political re- integration of the area into Malawi's economic activity. These unquanti- fiable benefits were important for the participation and cooperation of the people in the subsequent phase. 1.04 Extension work concentrated on cotton because of the lack of any suitable innovative package for cereal crops. The success of Phase I may also be seen from the increases in cotton yields and the record of incre- mental cotton production (see Annex 1, Table 3). The appraisal projected that farmers adopting the spraying recommendation would increase cotton yields from 300 kg/ha to 800 kg/ha, and eventually to 900 kg/ha. In prac- tice, average yields ranged between 800 and 1,000 kg/ha, depending on weather conditions. Incremental cotton production followed appraisal projections closely up to year four; in year five, however, production fell to only one-third the expected level due to bad weather. 1.05 The PPAR re-estimated the economic rate of return for Phase I at about 15%, compared to 21% at appraisal, but a recalculation based on more current data would result in a lower figure because of subsequent drought, changes in relative input and output prices, and the decrease in overall cotton acreage in the Shire Valley. In addition, the issue of cost recovery was raised by the PPAR. As in the case of most rural development projects, the Government would recover only a minor part of its investments, since the benefits would remain with the participating smallholders. 1/ Project Performance Audit Report (Credit 114/MAI), October 22, 1975. Report No. 895. - 15 - II. FORMULATION Project Identification, Preparation, and Appraisal 2.01 Planning for SVADP, Phase II began with an Identification Report submitted in May 1971 by the Project Manager of SVADP, Phase I. This was followed by the Preparation Report submitted in March 1972 by the Government of Malawi, which was prepared jointly by Government and the staff of the Permanent Mission in East Africa (PMEA). The project envisaged was to be executed over 5 years at a total cost of US$26.6 million, and an IDA con- tribution of US$22.6 million. On closer examination of the financing re- quirements, Government reduced the proposed project to a three year project, Phase II-A, for US$16.7 million, requesting IDA to finance US$14.2 million, which was to be followed by a second two-year project, Phase II-B. The objectives of both proposals were to extend the operations of Phase I by increasing the production of cotton and diversifying production into other crops, fish and livestock throughout the whole of the Shire Valley. The project was to include marketing, roads, water supply, health services, and research components. 2.02 The subsequent appraisal in June 1972 formulated a project which was similar to the (initial five-year) Preparation Report in general outline and in the separate components, but somewhat reduced in scope. Specifically, the appraisal team reduced or excluded the following components which had been included in the Preparation Report: (a) crop development over an area more than twice as large as recommended by the appraisal team which limited the area to the more densely populated part of the Shire Valley; (b) a number of livestock components, such as construction of six slaughterhouses, which the appraisal team felt would not be justified by the demand for cattle marketing; (c) upgrading of 60 miles of the major road from Chikwawa - Bangula, for which the appraisal team agreed to include engineering studies under the Project. Funding for construction became available from another source. 1/ (For details on the differences between the Preparation and Appraisal Reports, see Annex 2, Tables 1 and 2.) 2.03 The IDA Credit that was approved in March 1973 for US$10.5 million, out of, the total project cost of US$13.5 million, covered the estimated for- eign exchange costs of US$6.8 million and 58% of local currency costs (US$3.7 million out of US$6.7 million). The balance of US$3.0 million was to be pro- vided by direct Government budgetary expenditure of US$1.7 million and by a 1/ The United States Agency for International Development (USAID) funded the road. - 16 - contribution of US$1.3 million from the Agricultural Development and Marketing Corporation (ADMARC) for construction of markets and for part of the farmers' seasonal credit fund. 2.04 The principal objectives of SVADP Phase II were to increase crop yields, livestock and fishery production, and to improve infrastructure and health facilities. In addition to providing benefits to participating farmers, the production targets were in keeping with the general national policy of expanding agricultural production in order both to improve the domestic food supply and to provide increased exports (in this case, cotton). The agricul- tural component of Phase II was to affect 16,300 farmers (about 24% of the Shire Valley population) and 1,000 fishermen (about 40% of the reported num- ber of fishermen), and was to cover about 20% of the available arable land in the Shire Valley (131,000 ac. out of 740,000, excluding the Sugar Corpo- ration of Malawi (SUCOMA)). Specifically, the components were: (i) improvement of 16,300 family farms producing maize, cotton, sorghum, rice, groundnuts, and cocoa (acreage of individual crops shown in Annex 3, Table 1), through improvements and expansion in the extension service and the provision of medium-term and seasonal credit to farmers; (ii) increase in the productivity of about 1,000 fishermen through improved extension services, construction of 5 boat yards to produce about 225 boats, 50 smoke- drying kilns, and roads to fish landings. There was also to be provision for fish culture trials at the Kasinthula Research Station, engineering studies in Elephant and Ndinde Marshes on the feasibility of intensive low-cost fish farming, and a pesticide monitoring program for the Shire River; (iii) development of livestock through operation of two grazing schemes and construction of firelines, tracks, dipping tanks, weirs and dams, and the establishment of three ox-training centers; (iv) construction of 17 new crop markets and improvement of 3 existing ones, to be financed and carried out by ADMARC; (v) improvement of 82 miles of main and secondary roads, construction of 108 miles of feeder roads of which about 20 would be gravelled, adaptation of the railway bridge at Bangula to carry road vehicles, and provision of consultants to carry out engineering studies for upgrading the Chikwawa-Bangula road; - 17 - (vi) improvement of water supply through drilling and equipping 140 boreholes; (vii) construction of new or conversion of existing health units to provide a new service center for Chikwawa Hospital, 4 primary Health centers, 11 sub centers, and 16 health posts. Personnel, equipment, and drugs would be provided for the health units; (viii) maintenance and provision of improved facilities of the Lengwe Park Game Reserve, including staff houses, access roads, and the purchase of a vehicle; (ix) a program to improve agricultural research at Makanga, Kasinthula and Ngabu and fisheries research at Chiromo by appointing a qualified and experienced Senior Research Officer to coordinate local programs, and construction of staff housing, offices and lab- oratories; (x) a program for land registration of farmers and live- stock owners involved in the Project area. 2.05 Improvements in husbandry practices and provision of credit for inputs under the Project were to increase yields of cotton and maize by up to 300%, rice yields by over 600% and sorghum yields by about 20% (see Table 11 for estimated increased yields). All farmers were not expected to grow the full range of crops, but were to adopt one of three main cropping pat- terns and net cash incomes, over and above subsistence requirements, were expected to increase by MK 77-104 (US$92-125) from an estimated MR 0-12 (US$0-14) per family. 1/ Fishermen were expected to increase net incomes from MK 239 (US$287) to MK 595 (US$714). 1/ 2.06 The rate of return estimated from the Project costs and benefits of incremental production was about 22%, including health costs, although this rate was sensitive to variations in cotton and maize revenues, because they accounted for the major part of Project benefits. The appraisal noted that the Government's cash flow resulting from investment in the Project would reach a cumulative deficit of US$1.8 million at the end of 20 years. The deficit was attributed to the Project's social expenditure and the limited potential cash income that could be derived from smallholder agri- cultu'ral enterprises operating close to subsistence levels. 1/ In 1972 terms. For comparison with estimated actual returns see Annex 9. - 18 - III. IMPLEMENTATION Effectiveness and Start-up 3.01 Phase II became effective April 27, 1973, as expected, after the termination of Phase I in March 1973. Because of the presence of an expe- rienced management team and staff, there were no major problems with the start-up of Phase II. Revision 3.02 After two disappointing crop harvests (1972/73 and 1973/74), a January 1975 Supervision Mission recommended that Government, with support from IDA, review the crop targets for Phase II. The mission felt that lower average holdings and lower yields than expected at appraisal would result in much lower acreages and incremental production. Relying on a compre- hensive report drawn up by the Government of Malawi, a Review Mission was carried out by RMEA in June 1976 and in July a report was submitted. 1/ The report noted that a number of factors was responsible for the failure to achieve Project-targeted levels of production: the increase in alter- native labor opportunities; 2/ low farmgate producer prices; lack of a suit- able technical package for maize or sorghum; and the heavy demands on Proj- ect Management of implementing a multi-component Project. 3.03 The Revision Mission presented estimates of production levels for the last three years of the Project that were less than half, and for some crops less than a quarter, of Appraisal estimates (see Annex 3. Table 1 for details), but recommended little or no change in the basic design of the Project except for the addition of several small components. 3/ The Report recommended increased extension efforts and careful evaluation of crop per- formance. There was no recalculation of the rate of return. Given that the rate of return had been especially sensitive to changes in revenues from cotton and maize, and that the revised projections of output of these two crops were less than 50% of appraisal levels, this would perhaps have been a worthwhile exercise. It is at this point that IDA might have recom- mended scaling down the Project design (rather than increasing it somewhat) to align with the more modest production benefits. 1/ A Review of Agricultural Activities and Proposals for Future Development. July 1976. 2/ From expanded activities of the Sugar Corporation of Malawi (SUCOMA), from increased construction of roads and Project infrastructure, and from employment opportunities elsewhere in Malawi or in the Republic of South Africa. 3/ Such as a pilot tube well program and a pilot 100 acre cocoa program, which had been deleted by Government. - 19 - 3.04 Revisions were also made of the health and road components, sepa- rate from the crop revisions. The health component was revised downward in Year 2 of the Project because since appraisal, private funds had been used to upgrade some of the facilities in the area, and certain health units were found to be too close together to justify upgrading all of them. The esti- mated construction costs of the revised component were close to appraisal estimates. The road component was also revised soon after the start of Phase II because of a rapid escalation in construction and equipment costs. The revisions included the reallocation of the funds originally planned for the engineering and design study of the Chikwawa-Bangula road, which was eventually financed by USAID. The other major revision was the elimination of the Mwamapanzi Bridge on the East Bank Road. Although the total mileage of roads built to various standards was not specified in the proposed revi- sion submitted by Government, the appraisal roads program was to be imple- mented with priority to the Tangazi and Chiroma bridges. The revision speci- fied that construction of other roads be carried as far as funds would permit. Physical Implementation 3.05 Roads and Bridges. Under the Project the major structures, i.e. bridges, culverts, and drifts, were completed, although overall road mileage fell considerably short of both the appraisal and the revised program, as indicated in Table 1. Table 1: Road Mileage Constructed Under Phase II (miles) Appraisal and Revision Actual Main Roads ) 82.0 48.5 Village Council ) 8.5 Access Roads 108.5 26.0 TOTAL 190.5 83.0 Roads maintenance developed into a serious problem with the Ministry of Works and Supplies (MOWS) providing poor upkeep of main and secondary roads, despite the agieement that they assume proper maintenance when Project constructed roads were completed to standard. Supervision reports raised this repeatedly as an issue but little improvement was noted. The Phase III (Consolidation Phase) Credit Agreement has included a covenant requiring MOWS to provide the necessary funds to adequately maintain all main and secondary roads con- structed under the Project in accordance with MOWS standards. 3.06 - Boreholes. The appraisal target of 140 boreholes was exceeded with Project construction of 151, bringing the Valley's total boreholes up to 698. A survey by the Project hydrogeologist at the close of the Project period showed 117 boreholes dried up and abandoned, and 78 slightly saline, with the remaining 503 in operable condition, although generally badly maintained. - 20 - Phase III has included methods and instruments designed to reduce the silting of boreholes and a study to locate the areas of potential salinity. It has also included as a condition of disbursement against additional boreholes that a program satisfactory to IDA be drawn up for village maintenance of the bore- holes. 3.07 Buildings. Construction of Staff housing, administrative blocks, training centers, stores, workshops, and game park facilities met appraisal targets and remained within appraisal projected costs. 3.08 Markets. Appraisal envisaged construction of 17 new cotton markets with the required storage and handing facilities and improvement of 3 exist- ing markets, but this was revised downward with IDA approval. The nine mar- kets constructed by ADMARC were deemed sufficient to service the additional production. 3.09 Agricultural Extension. In support of crop production goals the Project provided extension services, farmer and staff training, and research. Six administration centers (area headquarters) were established with housing, offices, stores, training facilities, and the necessary vehicles and training equipment. Each center was staffed with an Area Development Officer (T.O.) who headed the area extension team. Efforts to achieve a 1:400 or 1:500 ratio of qualified extension workers to farmers, however, were not success- ful because of the acute shortage of suitably trained personnel available to the Project. Development Assistants (DA) were substituted for experienced extension workers. These were usually young, inexperienced primary school leavers who were given in-service training and assigned to village level positions. The Project was able to recruit only 44 technically qualified, Colby Agricultural College trained Field Assistants (TA), while employing 211 untrained DA's. Although Project Management assigned TA's in supportive roles over DA's, the Project attained a ratio of only one technically quali- fied field officer to about 1,000 farmers. Extension staff used farm visits, demonstrations, and mass media techniques (radio and mobile film units) to present improved agricultural practices, and the numbers of "contacts," which included direct contacts, and attendance at demonstrations, meetings, and radio listening groups, reported in Quarterly Reports were impressive. For the last quarter of the Project, for example, there were a reported 154,000 farmer contacts. It should be noted, however, that large numbers of contacts are not by themselves an indication of a successful service, which depends on the quality of the contacts and the adoption rates of improved husbandry practices. 3.10 Training Programs for staff and farmers/farmer wives have shown ex- cellent acceptance over the five years of the Project. Courses were offered to farmers and farm women in various farming techniques, with an option for women to take a course in home economics. One-day courses were given at six regional training centers, and one center with a 90-bed capacity was used for residential training courses. The same facilities were used for staff training. Over the five years of Phase II, attendance at these courses was as follows: 21 - Table 2: Attendance at Training Courses Phase II - 1973/74 - 1977/78 Farmers Staff Men Women Residential Courses - 4,868 6,179 3,644 Day Courses 12,678 31,029 21,698 SOURCE: Quarterly Reports. Farmers often attended several courses, and therefore these numbers do not represent the number of farmers and staff trained. Evaluation surveys indi- cate, however, that in about 30% of the farming families of the Shire Valley, at least one member had attended one or more of the training courses. Since there were no estimates at the time of appraisal of numbers of trainees, these figures cannot be compared to appraisal estimates. The Project has reported, however, that farmers' sustained interest in the training program is consider- able. Phase III has made provisions for expansion of this component of the Project, and in view of the apparently wide coverage, supervision should make an effort to evaluate the content of the courses being offered. 3.11 Research. The Project coordinated its research program, based at the Ngabu Station, with the work of the research stations of the Ministry of Agriculture and Natural Resources (MANR) at Kasinthula and Makanga. The Proj- ect was slow in recruiting a Senior Research Officer and the position was finally filled with a qualified technician in 1976. Annex 4 (Research) shows that improvement in research results started after his arrival. The Makanga Station concentrated on a cotton and maize seed bulking program; the Ngabu Station specialized in research and trials for crops grown under rainfed conditions; and the Kasinthula Irrigation Research Station, working with irrigated crops, directed its program towards research in smallholder irri- gated crop production in order to develop farming systems suitable for tradi- tional farmers. 3.12 Field experiments were conducted on the four Project Experiment Stations at Ngabu, Nsanje, Tomali, and Maperera. Between 1973 and 1975, the forty-two crop weather plots contained only non-replicated observation -plots. 'Since 1976, however, they have accommodated replicated experiments and replicates of the scatterblock trials. D.D.T. soil residue work was conducted throughout Phase II, comparing sprayed and unsprayed cotton plots on the crop weather plots. Cotton breeding trials were carried out on the experiment stations and in farmers' gardens, as were the maize agronomy trials. Up to 1976, most of the field experiments carried out in the Shire Valley by Project staff were replicates of nation-wide trials designed at the Ministry Research Stations. They thus contained a large percentage of material that was not adapted to the lowland semi-arid tropical environment of the Shire Valley. Since 1976, under the new director of research, the - 22- policy has changed with some few Ministry experiments continued in order to finalize ongoing programs, but all the present and continuing trials con- ducted by the Project contain only those cultivars or treatments which were selected specifically for the Valley environment. A complete report of Research activity is presented in Annex 4. 3.13 Crop Production. The implementation of the Project with respect to crop production consisted of two kinds of activities: offering an input package on seasonal and medium-term credit consisting of improved seed var- ieties, fertilizer and, in the case of cotton, insecticides and spraying equipment and extending advice on improved husbandry practices. 1/ For a discussion of the success of this latter aspect of crop development, see paras. 6.07 and 6.19. On inputs for cotton, the program of insect and pest control that had been developed successfully under Phase I was extended throughout the Phase II Project area. Recommendations were reduced from 12 to 6 sprayings over a crop season, as the insect scouting program improved. Use of the cotton variety Albar A637, considered at the outset of the Project the most suitable for Valley conditions, was recommended, with seed provided free to cotton growers by the ginneries. By 1974/75, however, Makoka 72, a further-improved variety, was released and is now in widespread use. For maize, there was no successful input package. The maize seeds that were sold proved unsuitable for Valley conditions, and use of fertilizer became uneconomic both because the maize was unresponsive and because the price of fertilizer rose more rapidly than did the output price. On the other food crops included in the Project, rice and groundnuts, there are only incomplete data on the extent to which the Project was successful in encouraging use of an input package. Use of fertilizer on rice was not popular, again because of the price increase, but also because the rice fields were subject to un- controlled flooding, thus making use of fertilizer risky. Credit sales of seeds for both rice and groundnuts were far below appraisal expectations, and estimates of total acreages of these crops at the end of Phase II were below appraisal estimates of "improved" acreages. The cocoa component was never implemented at all, because Government decided not to support any cocoa production for reasons which were never adequately explained. The third Phase of the Project has been designed to fill in the serious gap in the supply of suitable seed for food crops by providing for a seed selection and multipli- cation farm which should produce maize, sorghum, millet, groundnuts, guar bean and edible bean seeds both suitable to and in sufficient quantity for the needs of the Valley. 3.14 Land Registration. Under the Project land registration and estab- lishment of titles for Project farmers was planned, however, this procedure was not implemented because of a change in Government policy. The Land Regis- tration unit then divided its activities between demarcation and gazetting of land in the Western escarpment, and establishing and developing the Zunde 1/ Such as ridging, contour planting, weeding, appropriate planting dates, plant spacing. - 23 - Experimental Farm on the Makande Plain. The Government issued a Control Order for the registration of a 475 sq. mile area on the Western Escarpment, part of which was demarcated for resettlement by about 560 farm families displaced by the expansion of the SUCOMA sugar estate. There were also about 50 families resettled out of the land area demarcated for the Lengwe National Game Park into this zone. The Unit also surveyed and demarcated the Gola Settlement Scheme for Malawi Young Pioneers displaced by the SUCOMA Estate expansion. 1/ In total, about 940 family holdings were established in the resettled area. 3.15 Following the completion of the resettlement of the three groups, Government made no further requests for land registration and gazetting, and activity focussed on the Zunde Intensive Conservation Area and the Zunde Experimental Farm Unit on the Makande Plane. The Unit engaged in conserva- tion, demarcation, and demonstration activities, similar to those engaged in the Makande Plain Development proposal in the original Preparation Report submitted to IDA. It is unclear why supervision missions accepted without comment this change from the originally intended activities to those that had been explicitly taken out of the Project by the appraisal team. The Unit also identified, for the crops traditionally grown in the Valley, crop combinations suitable for each of the six ecological zones in the Valley. In conjunction with the Extension Service, these cropping patterns were then recommended to farmers. The appraisal team for Phase III found that the Land Husbandry Unit had been doing useful work, and expanded their terms of reference and resources for the Consolidation Phase of the Project. 3.16 Livestock. Most of the construction goals for the livestock com- ponent were achieved and several were exceeded, indeed the Project provided facilities and services that were not mentioned in the appraisal, as shown in the following table: 1/ The first area for Malawi Young Pioneers was established during Phase I and was within the SUCOMA area. - 24 - Table 3: Implementation of Livestock Component Activity Appraisal Actual Ox Training Units 3 8 Oxen Trained (pairs) 250 698 Cattle dips 11 1/ 6 1/ Cattle markets 0 5 Stall feeding scheme 0 1 2/ Hill grazing scheme 200,000 acres Approx. 200,000 acres Tsetse fly investigation no mention yes FMD vaccination no mention yes 3/ 1/ It was agreed that 6 dips would be sufficient to cover the Valley's needs. 2/ To accommodate 150 head of cattle. 3/ For 45,000 head of cattle. The tsetse fly investigation was carried out in response to the increasing incidence, particularly in the partially wooded foothills of the Valley, of trypanosomiasis, which is carried by tsetse flies. The Project requested and received approval for use of funds for the investigation, the results of which will provide the basis for a decision on the type of tsetse control necessary in the Valley. The vaccination campaign against foot and mouth disease (FMD) was also carried out in response to a condition not foreseen at appraisal: the outbreak of the disease. Purchase of the vaccine was financed by the Project with IDA approval. In the case of the stall feeding scheme, the construction of the cattle markets, and the increased number of ox-training centers, there is no record of IDA approval, and they were included neither in the Appraisal Report nor in the Credit Agreement. There apparently was verbal agreement, however, during 1973/74 supervision missions for their addition to the Project in the form originally described in the Government's Preparation Report 3.17 Fisheries. All targets of the fisheries component were met and in some cases even slightly exceeded: - 25 - Table 4: Implementation of Fisheries Component Appraisal Actual Fishermen trained 1,000 1,000 Kilns constructed 50 62 Boat yards 5 1 Fishing boats 225 220 Landing sites (number) not specified 3 Access roads (miles) 20 4 Monitoring pesticides yes yes The fishermen received training in the use of modern gill nets for fishing and in the use of the kilns to smoke the fish. The kilns proved so popu- lar that additional ones were built by the Project as well as by private traders. Some were damaged or destroyed by floods and had to be replaced. It was decided to construct one central boat yard at Project headquarters at Ngabu rather than five smaller ones, and although there were some delays in obtaining the materials, by the end of Phase II boat construction had almost achieved its target, and boats 14 feet and 17 feet were sold on cash (42) and credit (178). Landing sites were improved by widening canals and sloping and planting grass on the banks, while the 20 miles of access roads envisaged at appraisal proved unnecessary and the 4 miles constructed proved adequate. The monitoring of pesticides was carried out in conjunction with the Tropical Products Institute (TPI) in London, where samples were sent for analysis. 3.18 Wildlife. The appraisal targets for improvement of Lengwe Park roads and housing for resident staff were achieved. The Project also pro- vided for construction of fences and game ditches along park boundaries to prevent movement by game and or domestic animals into and out of the park. 3.19 Health Services. Target construction of recommended health ser- vice facilities was reached and there was widespread utilization of the health centers and sub-centers, the health posts, and the maternal and child health clinics. The immunization programs and Bilharzia control were par- ticularly effective. The latter program lowered the general prevalence rate in the Rasinthula irrigated area from 82% to 20% and controls are con- tinuing with mass treatment, mollusciciding, sanitary facility provision, and health education. Health service staffing reached 90% of planned levels during Phase II. A complete report on use of Health Services is provided in Annex 5. 3.20 Credit and Input Use. Inputs were available on seasonal and medium- term credit. The use of credit for both categories was below estimates. Al- though by the end of Phase II the number of farmers using credit was about 24,000, which was close to the appraisal target, the total value of seasonal credit was only MK 250,000 compared to an estimate MK 1,214,000 (in current terms) at appraisal, and of medium-term credit only MK 73,000 compared to an estimated MK 1,743,000 (Table 5). There are several reasons for this: - 26 - Table 5: Seasonal a0d Medium-Term Credit Actual and Appraisal Estimates 1/ 1973/74 1974/75 1975/76 1976/77 1977/78 Seasonal Credit (MK '000) Actual 189 238 246 162 250 Appraisal estimate 180 488 941 1,414 2,024 Medium-term Credit 2/ (MK '000) Actual 43 135 119 63 73 Appraisal estimate 196 372 553 975 383 Credit Recovery (%) 3/ Seasonal and Medium Term 80 64 44 57 48 1/ Appraisal estimates were inflated by the GDP deflator to bring them into current terms. 2/ Actual amount excludes credit for fishing boats, stall feeding, leucaena, and craftsmen, which by 1977/78 was the following (cumulative): MK Boats 11,165 Stallfeeding 9,043 Leucaena 3,751 Craftsmen 4,297 28,256 Appraisal estimate of medium term credit includes boats, but does not include the other items, as these were not envisaged at appraisal. 3/ These figures represent the total cumulative amount collected as a proportion of the total cumulative debt. Information by year was not available. - 27 - (a) Fertilizer sales were lower than anticipated partly because the price rose at a faster rate than did the output prices for maize or rice, for which the fertilizer was intended, and partly because the use of fertilizer in dimba areas proved impractical as these areas are subject to periodic flooding. 1/ Farmers therefore didn't use fertilizer at all on the rice in these areas (as envisaged). (b) Maize Seed sales were disappointing because the varieties offered by ADMARC to the farmers (SV28 and SV37) were not generally well suited to Shire Valley conditions and proved unresponsive to fer- tilizer. (c) Insecticides for Cotton Spraying represented the most important shortfall in seasonal credit. The level of recommended spraying was cut in half from appraisal levels, and although there is some indi- cation from farm surveys that those farmers who sprayed were following the new recommendation, there were fewer farmers than envisaged who sprayed, and the average cotton acreage per farmer was about half of the expected average. As a result of these fac- tors, insecticide sales on credit were at most 30% of expected credit sales in any given year of Phase II (Table 6). Table 6: Seasonal Credit for Insecticides Actual and Appraisal Estimates (MK '000) 1973/74 1974/75 1975/76 1976/77 1977/78 Insecticides Actual 176.4 204.0 219.2 164.3 212.2 Appraisal @ MK 12.70/ac 1/ 558 770 1,065 1,327 1,633 1/ Annex 2, Table 4 of Appraisal Report. Inflated by GDP deflator for Malawi to current terms. 1/ Caused by uncoordinated control of the Shire flow by power authorities who control the Liwonde dam below Lake Malawi. - 28 - 3.21 Information on credit recovery is not available on a year by year basis, but only on cumulative amounts (i.e.,-total collected over the years as a proportion of total lent over the years - see Table 5). Nevertheless, the credit officer reported that the credit recovery suffered for two main reasons. The first was that there were bad drought years in which repayment of debts for many farmers was difficult, if not impossible. The second was that until the 1977/78 season, defaulters on past loans had no difficulty in receiving more credit, and thus there was no incentive to repay. This policy has been changed, so that no credit is extended to defaulters, and downpayments of 10-25% are now required on medium-term items. 3.22 As a further incentive to improve credit recovery, and in an effort to cut administrative costs, the Credit Unit, in line with national policy, offers a lower credit charge for seasonal credit to self-accounting groups. 1/ 3.23 The Credit Unit distributed all inputs during Phase II, by purchasing on tender from ADMARC then selling the inputs in unit centers throughout the Shire Valley. The quantity of inputs ordered is based on recommendations from the Extension Service, but the records from the Credit Unit show large sur- pluses at the end of every year throughout the Phase. For some items, the surpluses were over 50% of the amount ordered for several consecutive years. This represented inadequate planning and wasted resources and although super- vision reports noted accumulations of funds, none except the first report found this any reason for re-examining disbursement operations. 3.24 The extent to which credit was used is not an entirely satisfactory measure of input use, because inputs were available for cash as well. There is only partial information available on cash sales, but it appears from this that virtually all cotton insecticides and knapsack sprayers (90-95%), and most other large items obtainable on medium-term credit, with the exception of ploughs, were obtained by credit. On the other hand, of total sales of ploughs and seed for maize, groundnuts and rice, as much as 40-60% were for cash. It seems that for items used on cash crops farmers are more willing to make use of credit, while for items used on subsistence crops many prefer to use cash. Nevertheless, taking into account cash sales, the use of inputs, as an indication of the successful introduction of technological change, was much less than expected. A further discussion of this is found in Chapter VI. Compliance with Covenants 3.25 All covenants in the Credit Agreement were complied with, except for the covenant that called for the establishment of a liaison committee to coordinate the activities of the ministries and agencies involved in the implementation of the Project. Compliance with this covenant might have eliminated subsequent problems with road maintenance by establishing direct communication between the MOWS and the MANR, responsible through Project Management for road construction. 1/ The seasonal credit charges are also in line with national policy; 15% for individuals, 10% for groups. Medium-term credit is 10% per annum for 3-5 years (depending on the life of the equipment). - 29 - IV. INSTITUTIONAL PERFORMANCE AND DEVELOPMENT Organization 4.01 The organizational structure was the same as at appraisal for the first half of Phase II. 1/ With the arrival of the new Project Manager in July 1975, a reorganization was effected which involved grouping the Project Sections which had been directly under Project Management into four Divisions (see Annex 6, Charts 1 and 2 for organizational charts). This reorganization had the approval of MANR, and was implemented in order to improve communica- tion between sections which needed close cooperation (such as Extension, Research, Training, and Credit). The reorganization had the intended effect of improving management efficiency as well as the communication between sec- tions, but there was some feeling among Malawian middle-level staff and Section heads that this set-up reduced their direct accessibility to Proj- ect Management. Staffing 4.02 There were no major staffing difficulties at the senior levels. Eleven of the twenty-three professional and technical officers were already in post at the start of Phase II, and most were filled within a short time after. There were intermittent vacancies of senior posts throughout Phase II, but none that seriously hampered the functioning of the various sections. At the end of Phase II, as at the beginning, most of the senior posts were filled by expatriates. While employment of expatriates is evidently a pol- icy that the Government feels is necessary to assure effective implementa- tion of a number of rural development projects, there was a feeling expressed by the Malawian staff that there is not enough movement by nationals into the positions now held by expatriates, and for which nationals are supposedly being trained. One example of where this is not the case is the Fisheries Section (see para. 4.05). When this issue was brought up at a meeting with the MANR, it was apparent that Government was aware of the problem and hoped that over time there would be a sufficient number of trained and experienced Malawians to manage all the projects. 4.03 At the medium and junior levels, the vacancy rate of the (approxi- mately) 600 posts created was never more than 10-15%, and therefore also did not represent a major problem. The exception to the generally satisfactory staffing situation was the Extension Service, because although the posts 1/ Except that the construction units for roads and boreholes were de facto directly under Project Management (rather than under the Ministry of Works and Supply). - -30-- were filled, they were not filled wtth technically competent staff. 1/ Thus although target ratios of farmers to field assistants were reached and even surpassed, the ratio of farmers to technically qualified staff was more than double the target. The staffing situation remained inadequate throughout Phase II. This in turn had consequences for the effectiveness of the Exten- sion Service (see para. 3.09 for details). Supporting Services 4.04 The supporting services include administration, evaluation, finance, land husbandry, credit, hydrology, extension and training, research, fisheries, health, wildlife, livestock, construction, and mechanization. The performance of the sections was generally satisfactory to very good, with a few exceptions. The Credit Section had poor management of inventories (para 3.23), was too lenient in its policy toward defaulters (para 3.24), and had inadequate records for auditing annual accounts (para 3.21); the latter two problems have appar- ently been dealt with in the third phase of the Project, but inventory control at the end of Phase II appeared of no better quality than at the beginning. The Evaluation Section, although carrying on its activities from Phase I, did not supply survey information early enough in Phase II to be of use as indicators of low production response. In addition, although a wealth of detailed information was collected in the farm surveys, they were not useful as a management tool for assessing Project impact. 2/ It is not clear that Phase III has corrected this, and future supervision missions should pay attention to the activities of both the Credit and Evaluation Sections. 3/ The Extension Service ran into problems, as noted in para. 4.03, in having insuf- ficient numbers of qualified staff. Under Phase III the Development Credit Agreement includes a covenant requiring the Extension Services to be staffed with qualified personnel. The activities of the Land Husbandry Section evolved from its initial terms of reference in response to the change in the policy on land registration, and focused instead on conservation and demonstration activ- ities (see para 3.15). 4.05 There are also several sections which should be commended for their particularly impressive activity. The Construction Section that built both the roads and buildings carried out their work program with efficiency, using for the most part local materials and force accounts, which lowered the costs, while achieving a high quality of construction. The Fisheries Section, in the 1/ Government set these positions as "unestablished" posts, despite continued recommendations by supervision missions that they be "established" and therefore be eligible for benefits (housing, tenure, etc.) which would attract qualified candidates. 2/ There was no analysis of differences in yields that might be based on husbandry practices, which in turn would indicate an impact of the exten- sion service on production levels. 3/ Supervision missions should check that the Evaluation Unit is collecting and analyzing farm data, and reporting its assessment of Project impact to Project management. - 31 - early years of Phase II, was headed by an expatriate with previous experience in the Ivory Coast who was very effective in implementing the fishery activi- ties (kiln construction, fishermen training and boat construction) and after his departure continued under Malawian direction to have a successful program that was of significant benefit to fishermen (Annex 9, Table 3). Finally, the Health Section benefitted enormously under the direction of a Canadian volunteer medical doctor who was instrumental in establishing the health ser- vices under Phase II. At the same time, the Ministry of Health cooperated by supplying the staffing requirements at all levels. The doctor will con- tinue in post for another two years under Phase III. Project management s overall performance has been generally very effective in establishing a broad infrastructure for economic improvement throughout the Valley. Marketing 4.06 The Project Unit was to be responsible for the sale and distribution to farmers of all inputs supplies, while ADMARC was to be responsible for the purchase from farmers and for the marketing of all crops not consumed on the farm. 1/ Maize and sorghum were primarily for subsistence or for sale within the country, while cotton, groundnuts and rice were to be exported. Beef was to be marketed by private traders for domestic consumption, and a floor price assured by the Cold Storage Company, which was also obligated to purchase cattle in the absence of other bidders. Fish marketing was also to be in private hands, and it was expected that about 60-70% would be for domestic consumption and the remainder for export. 4.07 With respect to inputs, there were some problems in the first year of Phase II with delayed delivery of knapsack sprayers that had been ordered from Israel, because of the Middle East conflict, but others were obtained from India by January (in time for spraying). The other problem of input provision involved the sale of maize seeds. Two varieties were supplied to Shired Valley, SV28 and SV37, but the sale of each was restricted to certain areas and neither proved to be well-suited to Shire Valley conditions, and for the most part maize seed sales of both varieties were disappointingly low. There was some feeling on the part of Project Management that there was a deliberate policy of ADMARC to limit distribution of suitable maize varieties for the area, as ADMARC has regarded the Shire Valley primarily as a cotton producing area. To some extent, this was an accurate assess- ment of .the attitude of ADMARC toward the area as its most important sup- plier of cotton, and ADMARC has expressed the opinion that as much acreage in the Shire Valley as is suitable should be planted to cotton. At the same time, however, there was no variety of maize seed commercially available in the country that was suitable to the low altitude conditions that prevail in the Shire Valley. The Consolidation Phase of the Project (the third phase) has provided for a seed multiplication program which it is expected will produce sufficient quantities of suitable maize seed. 1/ Except for rice and cottonseed processing and marketing, which were to be the responsibility of National Oil Industries Ltd. (NOIL). ADMARC has 50% ownership in NOIL, however, and thus has effective control of its operations. - 32 - 4.08 There is some evidence that with respect to fishing boats manufac- tured and sold by the Project, orders often ran ahead of construction and there may have been some unsatisfied demand. There were no other apparent problems of delivery or availability of inputs, either seasonal or medium- term. 4.09 It should be pointed out that one weakness in the marketing of inputs was the poor inventory control exercised by the Credit Section (para 3.23), which may in part be due to unsatisfactory reporting by the Extension Service on the expected levels of demand for inputs by farmers and in part to inadequate management of the Credit Section. 4.10 As elsewhere in the country and notably in other rural development projects, ADMARC's marketing of output from the farmers was carried out effi- ciently and with no major problems. A number of cotton buying posts were constructed and surplus food crops were purchased by ADMARC for marketing domestically or abroad. Although ADMARC is to be commended for its efficient purchase of crops from farmers, there were problems of inadequate delivery of food crops to farmers during the periods of drought experienced in the Shire Valley. It is at least partly in response to the unavailability of food even in the market during these difficult periods that farmers would be anxious to assure themselves of an adequate supply of food. Thus in the years following the drought, there were increases in acreage devoted to food crops at the expense of acreage in cotton (Table 10). If the Shire Valley is to achieve higher levels of cash crop production (of cotton or sugarcane, for example), the farmers must either have high-yielding cereal varieties suitable to their conditions, which will assure them of an adequate subsistence from fewer acres, and/ or be assured that food will be available at affordable prices in the markets. 1/ This linkage between seed varieties, marketing of food crops and acreage under cotton in the Shire Valley is important, and one that ADMARC should be aware of. 4.11 Beef marketing was carried out mostly through private traders, at ten cattle markets, five of which were built under the Project. Although not initially in the Appraisal target, the addition of these cattle markets proved beneficial to beef marketing because after the outbreak of foot and mouth disease in the Shire Valley, beef destined for outside the Valley could only be sold at these markets which were under official veterinary supervision. Thus the Project had a positive impact on beef marketed for consumption outside the Valley. 4.12 Fish marketing was also through private traders, and was definitely improved through Project activities. The construction of access roads to fish landings, and the improvements of the fish landings themselves estab- lished market places where they had not previously existed. 1/ The Consolidation Phase calls for the establishment of a seed produc- tion farm for development and multiplication of Valley adapted cereal grains. - 33 - V. FINANCIAL PERFORMANCE Costs 5.01 Actual costs have been estimated from information provided by the finance section and compared to appraisal estimates, which have been inflated from constant 1972 terms to current terms. For total operating and mainte- nance costs (Table 7a), the project has overspent by about 6%, although there is considerable variation within categories. Research underspent because of a 2-3 year lag in employing a qualified research director, so that only a limited program of research was carried out during the first 3 years of the Project. Cost overruns occurred mainly for maintenance charges on buildings and roads, probably because of increased unit costs on materials, while the operating costs of salaries and vehicle running costs have remained within or been less than appraisal estimates. This would be due to two factors: careful financial monitoring and lower real salaries. Early in Phase II of the Project, when there was rapid escalation of unit costs, it became clear that close financial control would have to be exercised (this was noted in the second supervision report in August 1974). Project Management responded to this by monitoring both the employment levels and the use of vehicles. At the same time, there were no increases in Government salaries, so that as prices continued to increase the wage bill, in real terms, was smaller than it would have otherwise been. - 34 - Table -a: DOeratinr and Maintenance Costs Actual and Est-.ated Actual to Appraisal Estimate 1/ Actual Estimate (MK '000) (USS '000) (MK '000) (USS '000) Project Ad=inist7ation 1,982 2,268 1,509 1,727 76 Crop Developoent 1,075 1,230 1,175 1,344 109 Livestock 216 247 270 309 125 Research 539 617 331 379 61 Fisheries 155 177 133 152 86 Wildlife - - 14 16 - Roads 192 220 673 770 351 Yarkets 20 23 30 2/ 34 150 health Services 255 292 243 278 95 Buildings Maintenance 173 198 484 554 280 1OTAL OPERATING AN 4,607 5,272 4,862 5,563 106 M ,INTANCF COSTS 1/ Appraisal figures inflated GDP deflator for Halavi to current tertas. 2/ Est-zare based on inifcr.atiot supplied by ADMARC. Table 7b: Cartal Costs: Actual and Es:imated Z Actual to Aztraisal Esti=ate 1/ Actual 7s:inate (MR '000) (USS '000) (M '000) (USS '000) 'ehicles and Equiument 1,259 1,441 740 847 59 Housing, Buildirgs, Water 2,846 3,256 3,183 3,641 112 supplies, of which Houstng ) Offices, Stores ) 1,320 1,413 590 675 160 Laboratories health Buildings 774 886 411 470 53 Markets 430 492 363 415 84 Bobeholes 322 368 1,080 1,350 87 Roads 2.416 45 TOTAL CAPITA' COSTS 6,521 7,461 5,003 5,838 77 1/ See foo:note 1/ in Table 7a. Table 7c: Cost of Credit: Actua! and Estimated Actual of Appraisal Esrtiate 1/ Actual Fst4mate (MK '000) (US '000) (ME '000) (USS '000) Seasonal Credit 1,131 1,294 1,094 1,252 97 Medium-Term Credit 685 784 319 365 47 TOTAL CRDIT 1,816 2,078 1,413 1,617 78 Table 7d: Total Prc,ect Costs: Actual and Estirated Z Actual of Arvraisal EstImate 1/ Actual Estimate (MK '000) (USS '000) ('K '000) (USS '000) Operating and aintenance 4,607 4,862 106 Capital Costs 6,521 5,003 77 Credit Costs 1_816 1 78 TOTA .ROJECT COSTS 12,944 11,278 . 87 - 35 - 5.02 With respect to capital costs (Table 7b), although early supervision missions reported rapid escalation of prices during the first part of Phase II, most vehicles and equipment were purchased before the critical period, thus escaping the impact of rapid inflation. The costs of construction of health facilities and roads are the most underspent categories of capital costs, at about 50% of their estimated costs, both because of the efficiency of the Project's construction unit (para. 4.05Yand because the road mileage and number of health units built were lower than envisaged at appraisal. 5.03 The finances of the cost of credit, both seasonal and medium-term, present a confusing picture. It was discovered in 1973 that the Credit Fund had a large surplus of cash carried forward from Phase I, and it was agreed between IDA and Government to use MK 500,000 of this surplus as a part of Government's contribution toward Phase II costs. A second accumulation of cash was noted, however, toward the end of Phase II, as well as a very large stock of inputs. 5.04 ADMARC was to contribute the value of MK 700,000 to the seasonal credit fund, and according to the balance sheets of the Credit Fund (combined seasonal and medium-term), a contribution of MK 175,000 per year in cash was made for four years. 1/ The credit section continued to request disbursement against purchases of seasonal and medium-term credit items, despite the build-up of the second accumulation, noted above, of almost MK 1.8 million in stocks and cash (at least MK 500,000 of this was in cash). Again the Government requested, and IDA agreed, to use MK 458,000 of this toward two components of Phase II (construction of Mwampanzi Bridge and rehabilitation of the irrigation system at Kasinthula Research Station). It is not clear why the Project should have been making purchases of inputs and requesting disbursement from IDA for the purchase at the same time that it was accumu- lating both large stocks of these items and large cash balances. In spite of the fact that the Credit Agreement specifies that disbursement on credit, both seasonal and medium-term, would occur against total expenditure, and nowhere mentions incremental expenditure, an early supervision mission did remark on the large accumulation of cash in the credit fund and specified that no more disbursements should be made until this accumulation had been used. It is equally unclear why the disbursement against seasonal items should have exceeded the appraisal's estimated amount by over 35% in spite of a poor recovery rate, because the use of the credit in the Project was at most only -30% of the appraisal's estimated use (Table 5), and the amount allocated to seasonal credit items was only to cover 33% of the cost. It appears that given ADMARC's contribution of MK 700,000 and the low level of use of seasonal credit, 2/ disbursements from IDA for this category are much higher than they should have been. This issue should have been picked up by supervision missions. 1/ See Annex I , Tables 1 and 2 for latest available balance sheet and profit and loss account of Credit Fund. 2/ If only incremental amounts are considered, the need for additional purchases of inputs after the first year is almost zero. - 36 - Disbursements 5.05 Table 8 shows that there was a slow start on disbursements, which was evidently due to delays in the construction program. This in turn was because of the early difficulty in recruiting the additional staff. After the first two years, however, actual disbursements gradually caught up to estimated levels, so that by June 1978 the Credit was fully disbursed. 5.06 Although actual costs were less than estimated by about 13% (Table 7d) the Credit was fully disbursed because the US$10.5 million, which was to pay for 78% of total estimate Project costs of US$13.5 million, allowed a price contingency of only 5%. Average price increases over the Project period were close to 12% (using a measure of domestic inflation), and there- fore nominal expenditure was higher than anticipated. 1/ 5.07 The deviation between actual disbursement and allocated credit varies considerably from category to category (Table 9). As noted above-, it is difficult to explain the deviation for seasonal credit based on esti- mates of use of this credit and ADMARC's contribution to the credit fund. The other overspent categories of construction and maintenance are probably the result of larger-than-envisaged price increases, although Category VI(b), other personnel, should have been within the allocation since Government salaries did not increase during this period, and the Project was generally understaffed. Underspent categories such as Consultants' Services and Medium- Term Credit were generally due to less-than-envisaged use of this component. Procurement 5.08 Procurement proceeded satisfactorily due in part to the experience gained under Phase I, except that there were long delays in the delivery of certain items, 2/ which Project Management feels is an inevitable part of working in an isolated region. 3/ Contracting was carried out in accordance with IDA guidelines. 1/ If the entire construction program had been carried out as envisaged, at the same real cost as estimated, there would have been large cost overruns. 2/ Project Management reported frequent delays of 5 to 7 months, and occa- sionally as long as 9 months. 3/ Isolated in the sense both that Malawi is a landlocked country to which transportation is limited, and that the Shire Valley is relatively inac- cessible within Malawi. - 37 - Accounting, Audits and Reporting 5.09 Accounts were drawn up and eventually audited, although with some delay. Quarterly Reports were received regularly, and although the format of the reports was satisfactory, the monitoring of agricultural and livestock production was generally deficient. Supervision missions commented on this, and noted an improvement toward the end of Phase II, with the arrival of a new Agricultural Economist (in early 1976), but given that an Evaluation Unit had been set up and in operation during Phase I of the Project, it should have been more effective in gathering and reporting agricultural and livestock data. This weakness can be attributed partly to staffing problems, particularly during 1974-76, partly to the failure of Project Management to realize the usefulness of such a Unit for monitoring Project performance and partly to the failure of the supervision missions to make a stronger case for its role. 1/ Under the third phase it is hoped that the Evaluation Unit will function more effectively and that the Quarterly Reports will reflect this, but supervision missions should be aware of the potential problem. 1/ Supervision staff criticized this repeatedly in the field, but this criticism was not reflected in each supervision report. - 38 - Table 8: Disbursements - Estimated and Actual Accumulated Disbursements (US$'000 Equivalent) Actual as % of IDA fiscal year and semesters Actual Estimate Estimate 1972/73 June 1973 - 794 0 1973/74 December 1973 727 2,381 31 June 1974 1,132 3,345 34 1974/75 December 1974 2,913 5,058 58 June 1975 4,005 5,870 68 1975/76 December 1975 5,499 7,111 77 June 1976 6,246 7,793 80 1976/77 December 1976 7,500 8,796 85 June 1977 8,000 9,429 93 1977/78 December 1977 10,000 10,323 97 June 1978 10,500 10,500 100 Table 9: Disbursements by Category - Actual and Estimated (US $ '000 Equivalent) Disbursement Total Credit Total as % of Category Allocated Disbursement Deviation Allocation (DCA, Schedule 1) I. Seasonal Credit 300 413 -113 138 II. Medium Term Credit 600 310 290 52 III. Vehicles,Machinery and equipment 900 741 159 82 IV. Construction of: (a) Housing, buildings and water supplies 2,100 3,026 -926 144 (b) Road (including road construction equipment) 1,200 1,147 53 96 V. Consultants' Services 500 96 404 19 VI. Project Personnel (a) ADS Personnel 100 147 -47 147 (b) Other Personnel 2,000 2,492 -492 125 VII. Administration Maintenance 1,300 2,128 -828 164 VIII. Unallocated 1,500 - 1,50)) TOTAL 10,500 10,500 0 100 - 40 - VI. PROJECT IMPACT 6.01 The Project's major goals were to increase crop, livestock, and fisheries production and thereby increase smallholder incomes. The Project's impact, therefore, can best be measured by its effect on production in these three major areas of activity. Crop Production 6.02 To assess the impact of the Project by measuring incremental pro- duction it would be necessary to have either information on Project and non- Project participants during Phase II, with which to measure directly incre- mental yields, or to have baseline data from before Phase II, from which one could derive estimates of incremental production. With respect to comparative data between Project and non-Project farmers, because the Extension Service covered about 60% of the Valley farming population, 1/ there was no attempt in the survey work to distinguish between the two groups. As a result, and with the exception of data on cotton, there is no information available with which to assess the impact of the Project on incremental yields. Using base- line data from years previous to Phase II on acreage, yields, and production would not be helpful either, because a number of unforeseen events occurring in Phase II served to influence and perhaps determine cropping patterns and production more than did Project activities. 6.03 Crop acreage. Appraisal envisaged a continued expansion from Phase I of improved cotton acreage, along with improvements in cultivation of food crops. By reaching about 40% of the Valley's farming population, the Project was expected to affect about 163,000 acres by year 5 of Phase II, as shown in Table 10. 1/ Compared to an estimated 40% of the population estimated at appraisal. - 41 - Table 10: Total Crop Acreages, 1973/74 - 1977/78 and Appraisal Estimates of Improved Acreage, 1977/78 (acres) Appraisal Estimates of Total Crop Acreage, Shire Valley Improved Acreage 1973/74 1974/75 1975/76 1976/77 1977/78 1977/78 Cotton 57,000 65,000 55,000 52,000 49,300 80,150 1/ Maize 76,000 83,000 82,000 78,000 76,500 51,800 Sorghum 25,000 21,000 22,000 30,000 33,200 18,700 Millet 26,000 23,000 23,000 31,000 35,700 not specified Rice (rainfed) 3,000 5,000 4,000 4,000 2,800 7,650 2/ Groudnuts 4,000 3,000 2,000 5,000 3,300 4,500 Guar Beans - - 50 1,530 6,800 not specified Other 3/ 7,000 9,000 91500 13Y000 8P0 200 4/ Total Cultivated 198,000 209,000 198,000 215,000 215,600 163,000 Winter Crop (dimba) 5/ 12,000 12,000 12,000 12,000 12,000 1/ Includes 30,800 acres from Phase I. 2/ Includes some rice acreage in dimba areas. 3/ Pigeon peas, cow peas, beans, sweet potatoes, cassava, etc. 4/ Cocoa. 5/ Maize, sweet potatoes, rice, vegetables. Sources: SVADP, Evaluation Unit and Appraisal Report, Annex 2, Table 3. - 42 - By examining the total crop acreages over the five years of Phase II and assuming an extension coverage of about 60% of the farming families, the resulting estimate of crop acreages affected by the Project would be con- siderably less than envisaged at appraisal. Table 10 shows that for cot- ton, rice and groundnuts the total Valley acreage is less than the expected improved acreage. 6.04 The most important short fall was in cotton acreage, which was also to be the most important source of Project benefits. I/ Cotton acreage and production suffered for a number of reasons. In 1974/75 and 1975/76 a severe drought occurred in the Shire Valley, during which overall production of food crops as well as cotton dropped sharply (Table 11). At the same time, availability of food crops in markets was limited, and there were serious food shortages. At least partly in response to this, cotton acreage fell off, in 1975/76 by almost 20% and again in 1976/77 following the second year of drought, to 52,000 acres, while acreage of drought-resistant crops, especially sorghum and millet, increased. In addition, in 1974/75 SUCOMA incorporated 7,000 acres of a very good cotton growing area, thus reducing cotton acreage still further. 2/ Finally, there were increasing opportuni- ties for wage employment in the Valley, both from the expanded SUCO1A, where employment levels reached 6,000 in 1975 and 1976, and from construction of the Chikwawa-Bangula road (USAID financed) and Project infrastructure. Earnings from wage employment were much higher and less risky than from cotton cropping, and offered an attractive alternative. In addition, how- ever, returns per manday from cotton, even of improved farmers, did not compare favorably with those from some of the food crops (see Annex 9, Tables 1 and 2). As a result, cotton acreage did not expand as foreseen at appraisal. 6.05 Crop Yields. As noted above, it is not possible to make a direct assessment of the Project impact on crop yields from survey data, with the important exception of cotton. It is possible, however, to assess indirectly the probable impact on yields of food crops from information on the avail- ability of improved inputs and on the extension activites and farmer train- ing. 6.06 The production and average yields estimated in Table 11 clearly show the effects of the drought in the Shire Valley, and the question of what yields would have been in the absence of Phase II of the Project is clearest for cotton only, shown in Table 12. I/ By year 5 benefits from incremental cotton production were to account for about 65% of total benefits from crop production. 2/ Displaced farmers received compensation, and some of them moved to another area of the Shire Valley to continue farming, although not necessarily cotton. -.43 - Table 11: Esti=ated Total Production and Yields, 1973/7L-1977/78 and Appraisal EstiIates of Incremental Production and Inroved Yields, 1977/78 Appraisal Estimates of incremental Production and Total Production and Averaee Yields, Shire Valley Proiect Yields 1973/74 1974/75 1975/76 1976177 1977/78 9127.1 Cotton Production (ST) 16,700 10,600 8,400 10,600 15,800 18,400 Average Yield (lb/ac) 586 326 305 408 641 900 !aize Production (ST) 32,000 17,000 12,000 30,000 38,100 33,022 Average Yield (lb/ac) 842 410 293 769 996 1,800 Sorghu Production (ST) 5,000 3,000 4,000 10,000 11,000 (935) 1/ Average Yield (lb/ac) 400 286 364 667 663 800 Millet Production (ST) 5,000 5,000 5,000 6,000 7,700 not specified Average Yield (lb/ac) 385 435 435 387 431 not specified Groundnut Production (ST) 400 400 300 300 640 1,500 Average Yield (lb/ac) 200 267 300 120 388 800 Rice (rainfed) Production (ST) 1,000 2,000 2,000 3,000 2,950 5,460 Average Yield (lb/ac) 667 800 1,000 1,500 2,100 2,000 1/ Due to reduction in acreage, it -as expected that production of sorghu= would decrease. SORURCES: See Table 10. - 44 - Table 12: Sprayer Owners,-Borrowers and Non-Sprayers, Numbers and Yields, 1973/74 - 1977/78 Appraisal Actual Estimates 1973/74 1974/75 1975/76 1976/77 1977/78 1977/78 Sprayer Owners - no. 7,500 7,500 7,700 8,000 11,300 22,000 Yields (lb/ac) 913 550 457 640 774 900 Sprayer borrowers - no. 4,000 4,000 5,600 4,400 6,200 not specified Yields (lb/ac) 566 348 296 524 n.a. not specified Non-Sprayer - no. 30,100 26,100 13,200 13,000 18,500 not specified Yields (lb/ac) 342 185 135 189 492 300 Total no. of Growers 41,600 37,600 26,500 25,400 36,000 SOURCES: Quarterly reports and SVADP Evaluation Unit. Although the first year of Phase II showed that appraisal estimates of cotton yields could reach 900 lbs/ac as forecast, subsequent years saw a dramatic drop in yields from a combination of factors. The two drought years (1974/75 and 1975/76) affected yields of sprayed cotton as much as it did yields of the other crops, and although there was some recovery for sprayed cotton in 1976/77, yields have still not reached the levels forecast at appraisal and attained in the first year of Phase II. In part this can be attributed to a problem with pests, especially mice, which significantly reduced the tonnage available at harvest time. It is also evident that as the Project area in- creased and reached regions beyond the most productive black cotton soils of the Makande Plain, yields began to drop. In addition, lower yields may be due to the structure of the producer prices, where the price for grade C cotton has consistently been much lower than the prices offered for the higher grades, 1/ and thus offers a very low incentive to pick the cotton completely from the fields. 1/ Until 1977/78, the producer price for Grade C was only 40-50% of the producer price for grade A. In 1977/78 it was raised to about 57% of Grade A. Supervision reports repeatedly drew attention to the problems created by unrealistic pricing policies, although Government continued to respond with only nominal adjustments. - 45 - 6.07 For food crops, increased yields would have resulted from use of better inputs and adoption of improved husbandry practices. Because improved seed was not available and fertilizer proved impractical in dimba areas and unpopular because of the increased price, it can be assumed that any impact on food crop yields from use of better inputs was extremely limited. At the same time, however, extension activities were effective in reaching cotton farmers who also grew food crops, and fa-rmer training courses were widely accepted. Although the focus of the extension advice and training was on cotton cultivation, advice was also extended on improved husbandry practices for food crops. It is reasonable to assume that farmers adopted at least some of these practices as they adopted spraying, and this had an impact on yields. 1/ Thus, although yields dropped during the drought years and were well below appraisal estimates (which relied on improved inputs as well as improved husbandry practices) throughout the five years of Phase II, a defensible argument can be made that yields would have been lower, by perhaps 10-20%, in the absence of Phase II extension and training activities. 6.08 Incremental Crop Production The incremental cotton production attributable to Phase II is shown in Table 13. The large short fall is due both to lower than expected acreage and lower than expected incremental yields. By year 5 there were about 80% the projected number of sprayer owners and borrowers (Table 12) and their average acreage was only about 1.6 acres per sprayer borrower and 1.7 per sprayer owner compared to 3.5 acres per sprayer owner forecast at appraisal. The reasons for this lower acreage are discussed above (para. 6.04). The shortfall in improvements in yields are due to a number of factors as well: bad weather, pests, less fertile growing areas, relative price of cotton and the price structure of the different grades of cotton (see para. 6.06). 1/ See paras. 6.18 - 6.22 on technological change. - 46 - Table 13: Actual Estimated Incremental Crop Production and Appraisal Estimate, 1973/74-1977/78 (short ton) 1973/74 1974/75 1975/76 1976/77 1977/78 Cotton Actual 3,100 2,600 3,200 3,200 4,500 Appraisal 4,111 7,178 10,832 14,877 18,400 Maize Actual 1,280 1,020 960 3,000 3,810 Appraisal 2,550 8,925 16,957 24,990 33,022 Sorghum Actual 200 180 320 1,000 1,100 Appraisal (100) (300) (500) (700) (935) Rice Actual 40 120 160 300 295 Appraisal 540 1,740 2,940 4,140 5,460 SOURCE: See Annex 8, text and Tables 1 and 2 for assumptions and details. 6.09 The large discrepancy between appraisal estimates and actual (esti- mated) incremental food crop production are due almost uniquely to the absence of suitable technological packages, and to a lesser extent, to the effects of bad weather on all yields. Sorghum production exceeded appraisal estimates because acreage increased over Phase II 1/ rather than decreased, as expected. 6.10 Returns to Farmers were much lower than expected at appraisal. The most important factor was the disappointing yields. Estimated margins were reduced as input prices increased more quickly than did output prices (Annex 9, Table 4). The tables in Annex 9 show that the return per manday, even for the farmer who sprays, is just equal to the return per manday for unimproved maize. Growing maize is an option available to virtually all farmers in the Shire Valley, who currently do have at least part of their land in maize. If maize were to be valued at average local market prices, rather than official ADMARC buying prices, the return to improved maize would compare very favor- ably to cotton even on a per acre basis. If in addition, one takes into account that some cotton growers hire labor for picking, but that according to the farmers, labor is becoming increasingly scarce and therefore more costly because of alternative labor opportunities, the income margin from cotton reduces even further. It seems clear that the relatively low incentive 1/ Because it was the most drought tolerant of the food crops. - 47 - to growing cotton plays an important role in the explanation for the lack of farmer interest in the most viable cash crop for small-scale farms in the Shire Valley. On the other hand, because of the unreliable rainfall pattern in the Valley, farmers will continue to grow cotton because it is relatively drought-resistant and will always provide some cash return, while a maize crop can be a total loss during a dry year. Therefore, it is in the interests of both the country and the farmers to encourage cotton production in the Shire Valley by providing adequate price incentives. 6.11 Pricing discussion. During the first four years of Phase II the producer price increases for cotton did not keep pace with the increase in the general price level, which was on the order of 12% per year, nor did the producer prices compare favorably with the value of other crops. In 1977/78, in recognition of these facts, ADMARC increased the producer price for the three grades of cotton by 17-33%, the largest single increase in over ten years. This increase was announced before the 1977/78 planting, and although the Shire Valley did not witness an increase in cotton acreage for the 1977/78 season, there was a considerable increase in the number of farmers growing cotton. This may reflect a continued preoccupation with food production, and does not rule out a price responsiveness on the part of farmers once they can be assured of a food supply. 6.12 - Based on the current export price, the medium-term outlook (through 1985) for cotton prices, and based on the profits realized by ADMARC on cotton, 1/ there appears to be room for further increases in the producer price. In addition, the grading system that requires farmers to separate the cotton into three grades is a very labor-intensive activity. In most coun- tries there are only two grades of cotton, and it is not clear that ADMARC's claim that it receives a premium for its grade A cotton can be substantiated. A change in the procedure to limit it to two grades would result in a gain to the farmer in that less labor would be required at the same time that the average weighted price for cotton might increase. Historically, the Shire Valley has provided the country with over 60% of its cotton 2/, thus providing valuable foreign exchange earnings and savings. At the same time, cotton is the only viable cash crop suitable for cultivation for most of Shire Valley farmers. Appropriate pricing of cotton is therefore a vital issue to ADMARC, to the country and to the farmers in the Shire Valley. Livestock Development 6.13 The impact of the Project on livestock production probably has been greater than projected at appraisal,-although from services other than those envisaged at appraisal. It was expected that the impact of the livestock component would be confined to the 12-15,000 head involved in the hill grazing 1/ Net profits on cotton as a percentage of the producer price for cotton have ranged from 16% to 92% in the past six years. 2/ Until 1975/76 when the proportion fell to around 54%. In the past few years its contribution has remained at a lower level than in the past. - '48 - scheme. 1/ In fact, although the physical implementation of the scheme was completed, there was only limited participation by herders because alter- native traditional grazing was always available at no charge. As a result, the grazing scheme had no impact on livestock development. The area has been leased to a private feeder operator, and has been dropped from Phase III of the Project. The stall feeding experiments under the Project have proven impractical for wide replication because individually owned herds are fairly large (60-150 head), and as long as alternative opportunities for pasturing freely are available, there is no incentive to attempt stall feeding which requires increased labor and involves only a small fraction of the herd. In addition, the major ingredient used in successful stall feeding in the high- lands, maize bran, is not available in the Valley at a reasonable price. Furthermore, the Valley herders have an excellent market for yearling feeders which are purchased for stall feeding in the highland regions of the country. 6.14 The Project did provide services, however, that had an impact on most of the Valley's cattle population, estimated at 49,000 head in 1973. During the five years of Phase II, the total Valley livestock population grew by about 5% per annum, had an increase in offtake rate from 6% to 9% and a liveweight gain of about 8%. Because of the construction of additional dips, which made it possible to dip about 70% of the cattle population, water points, holding grounds, and cattle markets, and the provision of livestock extension service, the FMD control and tsetse investigation programs, it is reasonable to assume that about 50% of the increases in herd growth, offtake rate and carcass weight is attributable to the program. 6.15 In addition, the Project constructed eight ox-training centers (as opposed to three foreseen at appraisal) and trained three times the envisaged number of oxen. This in turn had an impact on farming technology (see para 6.20). 6.16 These results are not directly comparable to those expected at appraisal, and although the livestock component proved beneficial to live- stock owners, several activities not included in the appraisal were carried out without apparent IDA approval (market construction, stall feeding, addi- tional ox-training centers). Although these changes were agreed upon during supervision, they were not noted in supervision reports, and their positive outcome should not set a precedent for future Project changes without ex- plicit IDA approval. Fisheries 6.17 The objectives of the fisheries program was to increase the quality and the quantity of the fish catch and to improve the returns to fishermen. The program to train 1,000 fishermen in the use of gill nets was carried out, 1/ The impact was to consist of an increase in offtake from 10 to 15% and an increase in live weight of about 13% for this restricted group of cattle. - 49 - and it is estimated that this has enabled them to double their catch. Be- cause the fishermen chosen for training were usually respected members of their village, there were spillover effects as well, so that by year 5 of Phase II incremental fish catch probably accounted for about 25% of total catch, or 1,800-2,000 metric tons of fish, compared to an estimated 3,000 metric tons at appraisal. The difference is due mostly to the overestimate at the time of appraisal of the average catch of both the traditional and "improved" fishermen, and of the incremental catch per fishermen from use of the gill net. The training of fishermen in the use of smoking kilns, and construction of kilns at boat landings made it possible for fishermen to smoke a higher percentage of their catch (an estimated 80% of catch is smoked compared to 50% for traditional fishermen) which thus increased the value of their catch. 1/ In addition, the improved landing site provided a location for the development of fish markets where none had existed before, and the competition among buyers contributed to higher producer prices for smoked fish. The returns to fishermen using modern gear and smoking kilns is estimated to have more than doubled. (Annex 9 Table 3). Technological Change 6.18 Although lack of complete data prevents measurement in terms of yield response to Project impact on the introduction of technological change in crop production, fisheries and livestock, this impact is an important aspect of Project effectiveness. 6.19 Improved cotton practices were essentially the same as those developed successfully in Phase I, and the number of adopting farmers in Phase II was probably close to appraisal estimates, as a proportion of total cotton growers in the Valley. 2/ In addition, the extension services reached a wider farmer population than foreseen at appraisal, so that whatever im- proved husbandry practices were adopted for food crops were probably adopted on a larger scale than expected. As noted above, the improved input packages for food crops never materialized, so that the overall technological impact on food crop yields was much less than expected. On the other hand, farmers seemed particularly receptive to extension advice and training courses, so it can be assumed that,they found them useful. 6.20 Ox-training proved particularly popular, with almost 700 pairs of oxen trained during the 5 years of Phase II, as against about 300 pairs en- visaged. Although the intention of the training was to have the oxen used for land preparation, most of the oxen were used primarily for transport power, 1/ Both because smoking even by traditional methods increases the value per pound of the fish, and because kiln smoking increases the value per pound over the traditional method. 2/ Because there was no separation of Phase I from Phase II farmers for several years of the Project, and because of the shift of farmers out of cotton, it is difficult to determine this exactly. - 50 - and a large number (450) of -ox-carts were purchased to use in response to this need. Because the only other transport facilities available were hired lorries and head loading, farmers initially found this to be a lucrative source of income. It was pointed out by the livestock officer, however, that the rapid increase in the availability of the ox-drawn carts for transport has reduced the rates to a less profitable level, and that farmers are now working their oxen in their own fields and providing custom tillage for their neighbors. It can be assumed that the ready acceptance of the use of oxen stems in part from the availability of large framed cattle and the Valley's traditional pattern of mixed crop/livestock farming. There is evidence among Valley cattle of a strong strain of Afrikander cattle, a breed developed by the early South African settlers. These are heavy-shouldered, large-bodied beasts who make excellent oxen. Proper land preparation has been a cons- traint in the Valley to timely planting, which is important in a marginal rainfall region. In addition, planted areas have always been limited by the amount of labor a family had available to prepare the land. The combination of thorough and timely preparation and the possibility of increased acreage can produce significant gains in total production, and Phase II has made some contribution to farmers' acceptance of the role that oxen can play in this respect. Phase III has provided continued training in the use of oxen for land preparation, but involves field demonstration on the trainees' farms rather than in the fields of the training center. 6.21 Technological change in livestock husbandry practices attributed to the Project includes the general attitude of herders towards disease control. Herders now understand the value of dipping for the control of parasites, and have also cooperated in FMD control measures, which include regular vaccina- tion and restriction of all sales to supervised markets. In addition, the livestock extension staff are providing guidance in selection, culling and general upgrading of animal quality, although it will take several years for the effects of this program to be felt. 6.22 As mentioned above, the impact on fisheries has revolved around the introduction of new technology in the use of gillnets, improved boats and smoking kilns, and the Project should be credited with making a significant contribution toward fishing and fish marketing in the Shire Valley. Social Impact 6.23 Besides the components directly supporting production, the Project financed a broad spectrum of socially related programs, whose benefits are difficult if not impossible to quantify in economic terms. These programs, however, have had a significant impact on the lives of almost the total popu- lation in the Shire Valley. Project components which can be classified in this category are - health services, potable water development, access road construction and indirectly, construction of markets. Most of the Project- financed health centers, clinics, and maternal child health units were in place and staffed by 1976, where their presence provided easy access to health services for most of the Valley, and during the drought years especial- ly, must have contributed tremendously towards control of potentially serious diseases associated with general debilitation from poor nutrition. In the - 51 - case of markets, besides providing soufces of supply and selling points, markets usually have become the center of community activity with stores and maize mills setting up adjacent to the market, providing additional services accessible to the most remote villages. 6.24 It was during and directly following the two successive drought years, however, that the presence of Project-supported services provided timely assistance when it was most urgently needed. Project staff exercised sensible flexibility in adjusting its programs to respond to emergencies. During the cholera outbreak in 1973/74, Project vehicles and staff, in addi- tion to regular health staff, were diverted to support Ministry of Health personnel in setting up a mass educational effort in preventive methods. Films, lectures, public meetings were used, and Project staff visited vil- lages daily, persuading people to use clean water, construct latrines, and report dysentery cases as early as possible. The well-drilling program was diverted to the cholera area to provide as many new sources of potable water as possible in the shortest time. A mass vaccination program was carried on, also supported by Project personnel. During and following the drought, the health staff, assisted by Project staff and vehicles, helped distribute World Food Program emergency food supplies. At the same time, as it became evident that traditional plantings of food crops were providing insufficient supplies, the agricultural staff counselled farmers to increase their cassava plantings. The Project obtained supplies of cassava shoots and potato seed for distribution in the Valley. 6.25 Environmental Impact Under the fisheries component the Project provided for continual monitoring of the Shire river for possible insecticide buildup resulting from the expanding cotton growing area of the Valley and pesticide usage. Samples of river water were regularly sent for testing to the Tropical Products Institute in London. There has been no indication of significant residues. The Land Husbandry division exercised continual observation of agricultural practices affecting the ecology of the region and conducted research on various soil moisture conserving practices which were then incorporated into the extension service programs for farmer guidance. These included ridging and contour planting to prevent rapid runoff and subsequent soil erosion. The division also identified species of trees best suited for border planting of wind breaks to reduce wind erosion. - 52 - VII. RATES-OF RETURN 7.01 Economic rates of return have been estimated for Phase II, using the same treatment for costs components as at appraisal and making some assumptions on the benefits from food crops based on an estimated increase in yields. 7.02 The estimated rate of return for the entire Project includes the health and transportation components and 50% of the research component and excludes the wildlife component, as at appraisal. Economic rates of return are also found excluding the costs of health services, as at appraisal. The benefits include incremental cotton and food crop production, as well as incremental amounts of beef and fish. Under Phase II, production of guar beans brought additional benefits to a number of farmers, and because an argument can be made for attributing these benefits to Phase II 1/, economic rates of return were found including the benefits from guar bean production. For the purposes of comparison with appraisal, however, which did not en- visage guar bean production, rates of return were found excluding this component as well. The results are presented below: Table 14: Economic Rates of Return with costs of without costs of health services health services no guar bean including no guar bean including benefits guar bean benefits guar bean benefits benefits Assumption 1: 2/ 20% increase in 6.5% 12.4% 8.9% 15.0% food crop yields Assumption 2: 2/ 10% increase in 3.6% 10.0% 6.0% 12.4% food crop yields 1/ The production of guar beans started late in Phase II, on a pilot basis, and with urging from Project Management ADYIARC has now sought and found a marketing outlet for guar beans in Europe. By year 5 of Phase II guar bean acreage had expanded by 7,000 acres, and the benefits from this activity are substantial. 2/ See Paras. 6.05, 6.06 and 6.07 for explanation of these assumptions. 7.03 Appraisal estimated an economic rate of return of 22% with health services costs, and 26% excluding them. Depending on the assumption on yield increases of food crops and without benefits from guar beans, these recal- culated rates are considerably lower. Considering the circumstances in which the Project was functioning, however, they are not unacceptably low, and if the benefits from guar beans are included, the rates of return (10.0% - 12.4%, including health) are very respectable. The major sources of benefits were the livestock component and cotton production, although separate rates of return cannot be done by component because there was no information available on costs of construction by component. 7.04 The conclusion from these calculations is that the overall economic performance of Phase II, in'spite of adversary events such as drought, dis- ease, and lack of technical packages and of price incentive, was commendable. - 54 - VIII. BANK PERFORMANCE 8.01 The involvement of the Bank in Phase II of the Shire Valley Develop- ment Project can be assessed for its performance at appraisal and during supervision. The appraisal team, faced with a Preparation Report which pre- sented a program whose scale was considered too large, reduced the scope of the project while retaining the essential services. In conjunction with the preparation team, 1/ the appraisal team can be commended for addressing the needs of the Shire Valley population by including in Phase II provision for infrastructure development, health services, and structures for potable water. Improvement of the game park facilities contributed to potential income- earning activity. Of the directly productive components, the fisheries program was particularly well-planned, and proved to be an imaginative yet realistic approach to the development of an appropriate technology for small- scale fishing. 8.02 The other directly productive components, however, were not so well .envisaged at appraisal. The success of Phase I in increasing cotton yields over a relatively limited but productive land area provided the basis for unrealistic and over-optimistic projections for crop yields for cotton and for food crops for the Phase II area. The appraisal team should have taken into account that not only was the area much more extensive, but the land was generally less fertile, and thus they might have been more skeptical about achieving such dramatic improvements in cotton as under Phase I. Second, there had been a food crop component in Phase I that had never materialized, and the appraisal team thus should have been cautious in projecting improved yields, and especially when these improvements were supported neither by past experience nor by the existence of a proven technological package. The dramatic departure of actual incremental production from appraisal estimates cannot, of course, be attributed solely to the over optimism of the appraisal team, because unforeseen events in the Shire Valley (drought, SUCOMA take over of land, increased alternative labor opportunities, lack of price incentives) undoubtedly had a larger impact on farming patterns than did Project activity, but even in the absence of these exogenous factors, projections of the bene- fits from Phase II crop production were not realistic (see Chapter VI for discussion of Project impact). 8.03 With respect to the livestock component, and with the exception of the ox-training, it addressed only a small segment of the Valley's livestock industry, and did not consider the potential lack of interest of livestock owners in the grazing scheme. The subsequent failure of the scheme was due to this lack of interest, and is thus an example of the weakness of planning from the top down. The ox-training component, by contrast, did respond to a 1/ The Preparation Report was a joint effort of the staffs of SVADP I and PMEA. - 55 - need in the Valley, and although its initial popularity was for a function not foreseen at appraisal (transport), it has permitted the introduction of an appropriate new technology for small-scale farms. 8.04 Supervisions can be credited with flexibility in responding to needed changes in the weaker components of the Project, e.g., livestock, and to changing conditions in the Valley, such as the outbreak of FMD. In addi- tion, supervision missions also provided technical assistance to the road construction and health service components of the Project. 8.05 At the same time, however, it was not until 1975, the third year of the Project, that a supervision report commented on the weakness of the monitoring unit and on the :lack of reliable production data. Although super- vision did provide assistance to a mid-term comprehensive review of the Project, an effective monitoring program might have detected early problems in the lack of Project impact on production and could have provided direction to Project staff in establishing priorities. The review of the Project resulted in no fundamental change in Project scope or design, and given the sharp decrease in expected benefits from the Project, this would have been appropriate. 8.06 With the exception of the first supervision mission, there was in- adequate monitoring of the credit section, which accumulated a very large balance of stocks and cash in spite of a relatively modest level of use of credit by farmers. In addition, disbursements were apparently made against total expenditure rather than incremental, as was intended at appraisal (although not specified in the Credit Agreement). 8.07 The appraisal mission for Phase III was combined with the last supervision mission of Phase II. In consideration of both the weaknesses and strengths of Phase II, the appraisal team established priorities to support improvements in agriculture development. Accordingly, infrastructural devel- opment was limited to the completion of ongoing components in order to reduce staff involvement in the administration of physical development, and thus permit concentration on crop and livestock improvement. In addition, after the disappointing crop performance under Phase II, and in spite of the provi- sion of facilities to produce improved crop seed, Phase III appraisal pro- jected more modest and probably more realistic levels of improvements in crop production. Thus 'it seems that the Bank was able to learn from the mistakes and weaknesses of Phase II to formulate a sounder Project design for crop production in the Shire Valley. - 56 - IX. CONCLUSIONS 9.01 Based on the information contained in the preceding chapters, the conclusions are as follows: (a) The Project completed an extensive building program as envisaged at appraisal which included roads, bridges, potable water wells (boreholes), administration buildings, staff housing, health facilities, and game park facilities, and kept expenditure within original cost estimates. (b) The Project successfully introduced and executed an effec- tive fisheries improvement program which had a direct impact on the income of almost half of the 2,500 - 3,000 fishermen in the Valley. (c) The Project provided Valley-wide public health facilities based upon recommendations of the World Health Organization (WHO) for a comprehensive rural health program. It also introduced a successful Bilhariza control program in the irrigated areas of the Valley. (d) The Project's livestock component, as originally conceived, proved generally inadequate and the program was therefore adjusted to meet the disease control and marketing require- ments of the industry, and the developing demand for ox- training among smallholders. (e) The crop production program failed to meet appraisal targets due to a number of circumstances,which include: (i) Unrealistic crop yields, which were based for cotton on the positive results of Phase I and for the food crops on the expectation that there would be a suitable production package available. For cotton, the area under Phase II was both more extensive and less fertile than under Phase I, while for food crops, no technical package was ever produced; (ii) A serious drought which occurred in two consecutive years and affected both the yields of all crops and the cropping patterns. The result was that cotton acreage dropped while drought-resistant food crop acreage (of sorghum and millet) increased, and total cotton acreage in the Valley was even less than the envisaged Phase II cotton acreage; (iii) the relatively low return from cotton, which was the result of the increased availability of off-farm - 57 - employment opportunities, 1/ -the producer price for cotton that did not keep pace with the general increase in prices, and did not offer any better return than cultivation of maize, and the pricing structure for the three grades of cotton which has discouraged thorough harvesting; 2/ (iv) the weakness of the extension service, which, although reaching targeted staffing levels, was staffed with inexperienced, technically unqualified people; (v) inadequate attention of Project Management to crop support activities. The successful organization and execution of the extensive building program and the multiple components of the Project undoubtedly occu- pied most of their time and energy, leaving too little for the direction necessary for the crop production. (f) The financial performance of the Project was commendable. In spite of rapidly escalating prices, the costs of the Project remained within initially budgeted amounts, while implementing the full development program. This can be attributed to careful financial monitoring. The exception to this was the operations of the Credit Section, which was allowed to build up an excessive inventory of goods and of cash, and should have been corrected both by Project Management and by Bank supervision missions. 3/ (g) Although the Project failed to meet appraisal targets for crop production, when judged as the first truly broad - based rural development effort in the Valley it can be classified a modest success. The Project's impact on the socioeconomic structure of the Valley can be observed throughout the area. The roads, cattle markets, health facilities, and water supplies, together with the visible signs of agriculturally related activity, such as training centers, commodity supply and marketing depots, and the extension and research head- quarters are an indication of overall economic and social improvement and the existence of a supportive structure to develop the Valley's agricultural potential. 1/ Which meant that hired labor for picking cotton became increasingly scarce and costly. 2/ The lowest grade of cotton, Grade C, has a producer price that has been only 50-60% of Grade A. 3/ Only the first supervision mission in 1973 recommended that further disbursements for credit be stopped until the accumulated balance had been spent. - 58 - (h) Rainfed production in the-Shire Valley will always be subject to the risks of marginal rainfall. 1/ Planners have therefore maintained an interest in developing smallholder irrigated production based on the availability of the Shire River Water supply. Attractive as irrigation appears, it should be recognized that land and water limitation will permit irrigation of only about 25-30,000 acres which may even be an optimistic figure, since there is already competition for flowage with the power authori- ties who control the Liwonde Dam. In addition, there is concern for the effect on fisheries of drawing down the flow, as well as potential problems with respect to implications of water usage of an international waterway. Most important, however, is the fact that a majority of the estimated 70,000 smallholders now farming will not be accomodated in an irrigation scheme. Therefore, there should be a continuing effort to improve the productivity of traditional rainfed crops and to develop new cash crops. Thus the direction of emphasis of the Consolida- tion Phase of the Shire Valley Development Project has continued to focus on cotton and food crops, as well as on a new crop, the guar bean. In spite of the disappointing yields and low level of interest shown by farmers in cotton during Phase II, cotton remains the most drought- tolerant cash crop suitable to the largest areas of the Valley. In addition, the Project's research staff has identified improved maize and sorghum varieties suitable for Valley growing conditions, and is making a full supply of seed available to the farmers. With respect to guar beans, it is a drought-tolerant, inedible bean in demand in European markets, which offers a high return to farmers, and shows promise as a cash crop for farmers in areas less suitable for cotton production. The success of this Consolidation Phase will depend in part on the network of infrastructure and supporting services established under Phase II. 1/ The annual average rainfall of 700-800 mm is poorly distributed through- out the year, and therefore does not truly reflect the potential of that amount of moisture. ANNEX 1 - 5- Tables 1-3 )IALAWI SHIRE VALLEY AGRICULTURAL DEVELOPMENT PROJECT - PHASE II Completion Report Table 1 - SVADP - Phase I. Infrastructure Appraisal Actual Roads (km) 288 290 Productive Boreholes (no) 156 183 Markets (no) 7 8 Settlement (families) 4,000 340 1/ 1/ This component was deleted because of political considerations. Table 2 SVADP - Phase I Sprayer Owning Farmers 68/69 69/70 70/71 71/72 72/73 Number 853 1,819 2,994 5,364 4,800 1/ % of all farmers 5.2% 10.7% 14.4% 25.2% 21.8% 1/ Data incomplete for the Year. Appraisal target for sprayer-owners was 4,000 farmers by this year. Table 3 - SVADP Phase I - Incremental Cotton Production 68/69 69/70 70/71 71/72 72/73 Appraisal 750 1,782 2,872 4,126 5,744 Actual 867 1,821 3,004 3,725 2,021 Table 1 - 60 - MALAWI SHIRE VALLEY AGRICULTURAL DEVELOPMENT PROJECT - PHASE II Project Completion Report Table 1 - Comparison between Appraisal and Preparation Reports -Physical Targets Preparation Report AZoraisal Reperr (5 yeafs-1 Phase) Project Component Crop Development Project Area (acres) 314,100 131,000 No. of farmers 22,)00 16,300 Livestock Slaughterhouses 6 0 Stallfeeding Yes No Ox-training centers 6 3 Grazing schemes 6 2 Improved-bull scheme fes No Dips 14 11 Fisheries Kilns 50 50 Access roads 47 20 Boatyards 5 5 Nu=ber of boats 375 225 Pesticide Residue Analysis Laboratory 1 0 Research Station (included at Kasinthula) 0 1 Wildlife Park Improvement Lengwe Yes Yes Majete Yes No M,abvi Yes No Markets Market construction 17 17 Market improvement 3 3 Health District hospital improvement 2 1 Primary health centers - construction/improvement 1 4 Subcenter - construction/improvement 14 11 Health post - construction/improvement 13 16 Mobile health post - construction!improvement 10 0 Research Kasinthula Yes Yes Makanga No Yes Ngabu No Yes Roads Major roads 163 1/ 82 Feeder roads 88 108 Phase I feeder raods 30 0 Rural Water Supply Boreholes 303 140 Land Conservation - Makende Plain Construction of roads, .terways, crossinLs, contour ridging. Yes No Cotton Stcd Oil Fxtraction Plant of 12,000 at capacity Yes No 1/ Including 60 miles of the Chik"ava - Bangula Road. Annex 2 Table 2 jM A L A W I SHIRE VALLEY AGRICULTURAL DEVELOPMENT PROJECT - PHASE II Project Completion Report Table 2 - Comparison Between Appraisal and Preparation Reports Costs Preparation Report Appraisal Report (5 years-I Phase) (US$ m1n) (%) (US$ m1n) (%) Project Component Project Administration 5,265 19.8 3,330 24.7 Medium Term Credit Fund 1,706 6.4 820 6.1 Seasonal Credit Fund 1,360 10.1 Crop Development Xincluding extension) 2,465 9.3 1,800 13.3 Livestock 1,037 3.9 550 4.1 Fisheries 684 2.6 260 2.0 Wildlife 264 1.0 60 .4 Research 362 1.4 970 7.2 Roads 9,071 34.2 2,400 17.7 Markets 413 1.6 480 3.5 Rural Water Supplies 742 2.8 330 2.5 Health Services 1,736 6.5 1,140 8.4 Agro-Industry 767 2.9 - - Makande Plain 2,038 7.7 - - TOTAL 26,550 100 13,500 100 ANNEX 3 Table 1 - 62 - MALA W I SHIRE VALLEY AGRICULTURAL DEVELOPMENT PROJECT, PHASE II Project Completion Report Table 1 Comparison of Appraisal and Revision Reports on Estimated Production of Selected Crops 1975/76 1976/77 1977/78 Maize Appraisal Revised Appraisal Revised Appraisal Revised Number of Farmers 13,300 3,100 19,600 4,500 25,900 6,400 Acreage 26,600 - 7,200 39,200 9,080 51,800 11,330 Yield (16/ac) 1,800 915 1,800 970 1,800 1,000 Production (ST) 23,900 3,300 35,280 4,400 46,620 5,680 Sorghum Number of Farmers 10,000 435 14,000 1,600 18,700 2,840 Acreage 10,000 510 14,000 1,915 18,700 3,500 Yield (16/ac) 800 585 900 595 900 595 Production (ST) 4,000 150 6,300 570 8,415 1,040 Cotton Number of Farmers 17,000 15,000 20,000 17,000 22,900 19,000 Acreage 59,000 39,000 70,700 43,700 80,150 48,000 Yield (16/ac) 900 620 900 640 900 670 Production (ST) 26,900 12,100 31,800 14,100 36,100 16,100 Rice Number of Farmers 6,000 - 8,000 290 10,200 570 Acreage 4,500 - 6,000 120 7,650 240 Yield (lb/ac) 7,000 - 2,000 930 2,000 930 Production (ST) 4,500 - 6,000 56 7,650 112 SOURCE: Appraisal Report, Annex 2, Table 3, and A Review 6f Agricultural Activities and Proposals for Future Development IDA, RMEA, Nairobi July 1976. Table 2 and Annex 4, Table 3. - 63 - ANNEX 4 Page 1 MALAWI SVADP II - COMPLETION REPORT PROJECT RESEARCH INTRODUCTION The following is a description of the research carried out during Phase II, with yield results presented in the appendix. COTTON 1. Cotton trials were carried out throughout Phase II. These trials were designed and analysed by the staff at Makoka Research Station. The trials in the Shire Valley were managed and paid for by the Shire Valley Agricultural Development Project and the recording of data was carried out jointly by Makoka and Project staff. The trials given below were carried out both on Project Experiment Stations and in farmers' gardens in the Valley. NUMBERS OF TRIALS Cotton 1973/74 1974/75 1975/76 1976/77 1977/78 Variety Trials 20 26 31 56 59 Agronomy Trials - 3 8 6 - Entomology Trials 30 6 20 6 7 The variety trials led to the release of the improved variety Makoka 72 in 1974-75. Makoka 72 is now grown by all cotton farmers in the Shire Valley. The breeding program has now produced a higher yielding replacement for Makoka 72 with the variety ALA-54. Multiplication of breeder seed of ALA-54 was approved in 1978 and it probably will be ready for distribution for the 1980 crop. 2. The agronomy trials led to the standard spacing recommendation of planting at 2 ft apart on 3 ft ridges and thinning the seedings to 3 plants per stand. They also demonstrated that there was no response to nitrogenous fertilizer on the black cotton soils of the Valley. The entomology trials confirmed the recommendation of DDT spray treatments against the American Boll Worm Heliothis armigera (Hub) and carbaryl against the Red Boll Worm Diparopsis castanea (Hmps). The trials led to the recommendation of ultra low volume spraying as an alternative to the standard knapsack spray tech- niques. The present series of experiments are currently comparing new insecticides, particularly the synthetic pyrethrins, as possible replacements for the chlorinated hydrocarbon insecticides, DDT and carbaryl. Yield results are recorded in the appendix to this annex. - 64 - ANNEX 4 Page 2 MAIZE 3. Maize cultivar trials were carried out in the Shire Valley throughout Phase II. The number of trials is given below. NUMBER OF MAIZE TRIALS Maize 1973//74 1974/75 1975/76 1976/77 1977/78 Cultivar Selction 5 7 5 5 Agronomy - - 3 3 5 Maize Scatterblocks - - - 20 Of the cultivars tested in years 1 to 3, no replacements for SV28 for the low- land areas of the Valley floor and SV 37 for the hill areas were found. The maize agronomy experiments conducted in this period did not show, with the cultivars then in trial, any response to fertilizer applications. 4. In years 4 and 5, the cultivars screened in these trials were markedly changed and the results have led to the following cultivar recommen- dations. PNR 353 for the East Bank and the Western Escarpment PNR 95 for the West Bank North of Bangula R201 for the valley floor South of Bangula. These cultivars have been approved for limited release in 1978-79 and 20 tons of PNR 353, 25 tons of PNR 95 and 10 tons of R201 seed have been ordered from overseas for distribution in 1978-79. It is hoped that present negotiations with the Pioneer Seed Company will make it possible to produce both PNR 95 and PNR 353 under license in Malawi. Yield results are recorded in the appen- dix to this annex. SORGHUM 5. Sorghum variety trials were carried out in the valley in the first three years of Phase II as part of the National Sorghum Variety Trial. In these years, the trials contained both white grained and brewing sorghums. In years 4 and 5 the two groups were separated. The number of trials is given below:- - 65 - ANNEX 4 Page 3 NUMBER OF TRIALS SORGHUM 1973/74 1974/75 1975/76 1976/77 1977/78 Cultivar Trials of mixed types 2 3 3 - White Grained: Trials - - - 7 9 Scatterblocks - 18 15 Brewing: Scatterblocks - - 12 6 Disease Nurseries - 3 This series of trials has led to the recommendation of the short strawed, open pollinated, white grained sorghum cultivar PN3 for distribution in the Shire Valley, in 1978/79. Breeder seed to this cultivar was produced in 1977-78. It also led to the recommendation and distribution of the short strawed brewing sorghum hybrid cultivar NK283 in year 5 when 2,000 + acres were grown south of Bangula. Results of the trials are recorded in the appendix to this annex. PEARL MILLET 6. Trials with millet cultivars commenced in year 4. These trials were at the FAO Regional Cooperative Millet Nursery and compared eight selected introduced lines with the best known local line. Selections from these trials went out into scatterblock trials on the crop weather plots in year 5. 1973/74 1974/75 1975/76 1976/77 1977/78 Variety Trial - 5 1 Scatterblock - 6 The FAO millet nursery was replicated at nine other sites in Malawi and from this series of trials came the selection of Nigerian Composite for provisional release in the Shire Valley in 1978/79. Breeder seed of Nigerian Composite was produced in year 5. Trial results are recorded in the appendix to this annex. - 66 - ANNEX 4 Page 4 GUAR 7. Guar variety and time of planting trials were commenced in year 2. These were followed by a wider series of variety trials comparing cultivars introduced from India and the U.S.A. NUMBER OF TRIALS Guar 1973/74 1974/75 1975/76 1976/77 1977/78 Variety Trials 2 5 5 Scatterblock Trials - - 24 6 Agronomy Trials - 3 - Innoculation Trials - - 5 The variety trials have led to the recommendation of the variety Khampur for local cultivation in the wet season south of Bangula. Late planting in January, is recomended to permit the crop to ripen in the dry season and thus reduce the content of black grain. The innoculation trials are seeking to identify a nitrogen productive Rhizobium strain to innoculate guar seed. Current results indicate that satisfactory innoculation of guar seeding tap roots occurs from wild Rhizobium strains. GROUNDNUTS 8. Groundnut experiments were carried out on an agency basis for Chitedze Research Station by Project Staff. NUMBER OF TRIALS 1973/74 1974/75 1975/76 1976/77 1977/78 Variety Trials 2 2 3 3 3 Agronomy Trials - 1 - - 3 Fungicide Trials - 1 4 3 - The trials up to 1976 supported the recommendation of the varieties Malimba for the Valley floor and Chalimbana for the hill areas of the Western Escarp- ment. From the results of the 1975-77 experiments it is proposed to release the variety spancross to replace Malimba on the valley floor and ten acres of seed crop was grown in 1978 for distribution in 1979. The agronomy trials are designed to produce a recommendation for close spacing of the upright bunch types, grown in the Valley to reduce the incidence of rossette disease. The fungicide trials, aimed at the control of Cerocospora leaf spot and groundnut rust, failed to produce an economic control treatment. - 67 - ANNEX 4 Page 5 RICE 9. Rice experiments were carried out on an agency basis by Project staff for Lifu Rice Research Station. These experiments have led to the recommendation of the high yielding, dwarf variety Nilo 11 to replace the variety Blue Bonnet on the irrigation schemes in the valley at Kasinthula and Molo. Demonstration plots of Nilo 11 were planted in 1977/8, and if the farmers' response to the new plant type is favourable, it has been provisionally agreed at the National Rice Development Committee that farmers on Mlolo irrigation scheme will produce the entire seed requirements for Malawi of Nilo 11. LEUCENA Experiments on leucena cultivation commenced in 1973 with six observation plots at Alimenda, Kasinthula, Nsanje, Ngabu, Chitule and Pwadzi. Yield recording was carried on only up to 1976, when the Ngabu plot was converted to leaf and seed production. Replicated experiments were commenced at Zunde in 1975 with trials on seed rate, spacing and a comparison of cul- tivars. This work has led to the recommendation of the variety CUNNINGHAM for the Shire Valley because of its low Mimosine content. Seed production facilities have been expanded at Makhanga and Ngabu. PHASEOLUS BEANS 10. An extensive program of work on Phaseolus Beans was commenced in 1974. The trials were carried out on an agency basis for Bunda College. Eleven trials were carried out in 1974/75 and 1975/76. Two of these trials were continued in 1976/77 and then this program was abandoned. It is not possible to grow the crop in the wet season in the Valley owing to severe pest disease attack. The crop is grown successfully on the dimba gardens in the dry season and the programme will recommence in 1978/79 in the new fenced dimba trial sites. Minor Crops 11. Observation plots of senna, sunflower and caster bean were planted during Phase II, but work on these crops was not expanded. Sunflower work will recommence in 1978/9, together with a new program on green gram in the Nsanje Area. 68 ANNEX 4 Appendix I Page 1 COTTON 1. In 1973, the standard cotton variety ALBA 67 was replaced by Makoka 72. Fully detailed results are not available yet, but from 129 sprayed and unsprayed trials Makoka 72 gave a 7 percent increase in seed cotton yields and a 9 percent increase in cotton lint yields over ALBA 67. Other parameters of yield on which the recommendation was made were:- ALBA-67 MAKOKA-72 Boll Weight 5 gm 5.1 gms Lint per seed 51 mgms 54 mgms Seed weight 105 mgms 104 mgms The present breeding program has led to the recommendation that ALA-54 should replace Makoka-72 around 1982. The data to-date on which this recommendation is based are given below:- MAKOKA-72 ALA-54 % INCREASE 1975-76 Yields, Kg/ha; Sprayed 1,373 1,491 109 1976-7 Yield, Kg/ha; sprayed 1,634 1,828 112 Unsprayed yields, 1972-76 702 792 113 Lint yields Kg/ha 1976 517 641 124 Ginning % age, 1976 31.6 35.1 111 Boll size, gns, 1976 4.05 4.92 122 Seed weight, mgm/seed 96 106 110 Lint per seed, mgm 44 58 132 Plant height, cms. 134 119 132 From data expressed as means of a minimum of 10 sites, ALA-54 is earlier than Makoka-72 and has higher bacterial light resistance than Makoka-72. MAIZE 2. There was no recommended variety of maize for the Lower Shire Valley. The synthetic SV28 had been recommended for the Valley floor at the beginning of phase II. This variety was withdrawn in 1976, but is used as uniform control in the experiments recorded below:- Yield in Kgs/ha CULTIVAR NO. OF TRIALS MEAN YIELD % INCREASE PNR 18 3,690 55 R201 13 3,230 35 PNR 95 13 3,019 27 SV28 18 2,386 (These data do not include the 1977-78 time of planting and cultivar trials; these are at the computer). - 69 - ANNEX 4 Appendix I Page 2 Thus PNR353 gave 55 percent increase, R201 gave 35 percent increase and PNR95 gave 27 percent increase over SV28. SORHUM 3. There was no recommended variety of sorghum for the Shire Valley. The most widely grown white grained cultivar was the tall growing Thengala- manga. This is compared with the short stawed PN3 (=HP3) in two seasons. Yields in Kgs/ha 1976-77 Variety Trials CULTIVAR NO. OF TRIALS MEAN YIELD % INCREASE PN3 6 2,333 152 Thengalamanga 6 1,539 1977-78 Scatterblock Trials CULTIVAR NO. OF TRIALS MEAN YIELD % INCREASE H13 11 2,022 142 Thengalamanga 11 1,426 Thus PN3 gave an increase of 52 and 42 percent over the local variety Thengal amanga. MILLET There was no recommended millet variety available in the Valley. In 1976-77, the Nigerian composite was selected from material brought in from FAO. In 1977-78, the Nigerian composite was compared with an improved local selection in scatterblock trials. Yields in Kgs/ha CULTIVAR NO. OF TRIALS MEAN YIELD . INCREASE Nigerian Composite 10 2,034 147 Local Selection 10 1,383 The Nigerian Composite gave an average yield increase of 47 percent over the best known local variety. - 70 - ANNEX 4 Appendix I Page 3 RICE The dwarf variety Nilo 11 has now been recommended to replace the standard variety Blue Bonnet on irrigated rice schemes in Malawi. This recommendation is based on twenty nine trials carried out mainly in the last two years. Below are the yields from the replicates of the nationwide trials that were carried out in the Shire Valley. Yields Kgs/ha VARIETY NO. OF TRIALS MEAN YIELD % OF BLUE BONNET Nilo 11 7 5,843 154 Blue Bonnet 7 3,789 Nilo 11 gave an increase of 54 percent over the currently recom- mended variety Blue Bonnet. The same order of yield difference has been noted in other regions of Malawi. ANNEX 5 Page 1 S.V.A.D.P PHASE II HEALTH COMPONENT CONSTRUCTION A. PRIMARY HEALTH CENTERS According to recommendations of the Malawi National Health Plan, the Shire Valley should have had 6 Primary Health Centers by the end of Phase II. Phase II Project construction included: (1) Chikwawa District Hospital - New Administration, outpatient, laboratory, eye, X-ray, casualty, maternity, and pediatric departments; all began operation early Phase III. - Public health offices; T.B. ward renovations; drug store; laundry; gardian shelter. - Additional staff housing. (2) Montfort Hospital, (mission), Nchalo - This unit has rapidly developed in size and services with non-Project funding. (3) Ngabu Hospital - Outpatient department extension - Eye examination room and minor surgery - Kitchen and laundry renovations - Additional staff housing. (4) Trinity Hospital, (mission), Muona - Extensive hospital facilities present pre-Phase II. - Health Inspector house. (5) Tengani Health Center - 18 bed unit replacing a one room dispensary (6) Nsanje District Hospital - Additional staff housing. - 72 - ANNEX 5 Page 2 UTILIZATION OF SERVICES DURING PHASE II AT TENGANI HEALTH CENTER Average monthly number of first attendances, (does not in- clude subsequent attendances for same illness), (8/75-3/78): UNDER 5: 757 5+OVER: 1467 TOTAL: 2224 Average monthly number of women delivered, (10/75-3/78) 19 Average percentage of women delivered who attended ante- natal clinic 80% B. HEALTH SUBCENTERS (DISPENSARY + MATERNITY) According to recommendations of the Malawi National Health Plan, there ideally should be 4 Subcenters to every Primary Health Center. Facilities at the end of Phase II included: GOVERNMENT MISSION PRIVATE TOTAL Dispensary + Maternity 10 4 7 21 Dispensary 3 0 3 6 Maternity 0 0 1 1 Project Phase II financed construction included: New dispensary and maternity (no previous facilities): 1 New dispensary and maternity to replace old dispensary: 4 Renovations to old dispensary and maternity: 1 Adding dispensary to existing maternity: 1 Adding maternity to existing dispensary: 1 Statistics regarding outpatient attendance at dispensaries before Phase II are difficult/impossible to obtain. Regardless of changes in the number of attendances, the quality of care has improved by virtue of improved dispensary facilities. The 7 new maternities have provided a service which did not exist in those areas previously. The following statistics from Chipwaira Health Subcenters, (new dispensary and maternity with no previous facilities), indicate the utiliza- tion of entirely new services: UTILIZATION OF SERVICES DURING PHASE II AT CHIPWAIRA HEALTH SUBCENTER Average monthly number of first attendances, (5/76-3/78): UNDER 5:1027 5+OVER: 2198 TOTAL: 3225 Average monthly number of women delivered, (7/76-3/78): 18 Average percentage of women delivered who attended antenatal clinic 91% Average monthly number of children attending underfive clinic 356 - 73 - ANNEX 5 Page 3 C. HEALTH POSTS According to recommendations of the Malawi National Health Plan, there ideally should be four Health Posts to every Subcenter. The Lower Shire was selected as one of two pilot areas in the nation to test the feasibility of this idea. Construction of 7 Posts in Phase II brought the total number to 14. There are 24 established personnel positions for the Mother and Child Health Assistants who staff the Health Posts as well as 10 Subcenters and Primary Health Centers. Activities of M.C.H. Assistants at Health Posts include: Dispensary for under 5 children and general first aide: average 350 total attendances per month Malnutrition Clinic: average 20 children enrolled Women's Groups: average of one group with 10 women for 20 week course Home Visiting: average 30 homes per month Underfive and antenatal clinics: monthly STAFF Number of Positions Filled Vacant Created Position (at end of Phase) 1 Senior Medical Officer (Public Health) 1 0 3 Public Health Nurse 2 1 (Nsanje) 3 Clinical Officer 1 2 (Chikwawa, Nsanje) 2 Health Inspector 2 0 1 Medical Assistant 1 0 1 Laboratory Assistant 0 1 (Tengani) 5 Enrolled Nurse/Midwife 5 0 3 Health Assistant 3 0 24 Mother and Child Health Assistant 23 1 STAFF TRAINING A. Mother and Child Health (MCH) Assistant courses in Primary Child Health Care, (6-8 weeks long), qualified in 1975- 8, 1976-13, (4 to Karonga Project), 1977-8, 1978-8 plus 4 taking course for refresher purposes. B. Mother and Child Health Assistant meetings: monthly C. Half-day district medical seminars for all health staff: 24 (average attendance- 25), (4/76-3/78) D. District MCH Seminars/Training Courses, (in conjunction with Ministry of Health); (6/75-3/78): 7 - 74 - ANNEX 5 Page 4 MATERNAL AND CHILD HEALTH CLINICS The national "Miniplan", (1973-8), to strengthen and expand the system of underfive clinics has been implemented in the Lower Shire with Project financial, supervisory, and logistic support. CLINICS IN OPERATION AT END OF PHASE II CHIKWAWA DISTRICT NSANJE DISTRICT TOTAL Underfive 46 32* 78 Antenatal 32 20 52 Malnutrition 26 13 39 * Includes 6 Ndindi Marsh points visited by Project initiated boat service PERCENTAGE ACHIEVEMENTS FOR UNDERFIVE CLINIC FIRST ATTENDANCES AND IMMUNIZATION COVERAGE, (CUMULATIVE, 1/75-3/78) Chikwawa District Nsanje District * *First Attendances 98% 112% Smallpox 64% 108% B.C.C. 80% 132% D.P.T. (First) 68% 124% D.P.T. (Second) 38% 72% Polio (First) 48% 90% Polio (Second) 25% 47% Measles ** 61% 88% * Nsanje District figures are artificially inflated due to the large number of Mozambique and Thyolo District residents attending clinic and being counted as Nsanje residents. ** Measles vaccination began with a mass village by village campaign, (7-10/76), under joint Project-Ministry of Health sponsorship. This vaccinated over 80% of eligible underfive children. BILHARZIA CONTROL Kasinthula Research Station: general prevalence rate decreased from 82% to 20% after the first year of control, (8/75-8/76). Control con- tinued with mass treatment, mollusciciding, sanitary facility provision, and health education. SUMOCA Sugar Estate: Project sponsored bilharzia surveys led to a SUCOMA funded complete control program. - 75 ANNEX 5 Page 5 TUBERCULOSIS CONTROL Incidence rate for the Lower Shire, (1/76-3/78): 179 per 100,000 population. Project funded Chikwawa District Hospital T.B. ward renovations and T.B. Health Assistant transport as well as organizing outpatient treatment and reviews of Health Posts. LEPROSY CONTROL The Project provided the Seventh Day Adventist leprosy control program with office/lab space, vehicle repair service, and occasional adminis- trative assistance. By the end of Phase II, there were 1,910 registered patients, (prevalence rate - 0.55% of population), with over 90% regularly receiving treatment from bicycle transported Clinic Attendants. TRANSPORT AND COMMUNICATIONS Motorbikes for 5 Health Inspectors and 2 T.B. Health Assistants. Tengani Health Center ambulance Landrover/Peugeot transport for Senior Medical Officer and Public Health Nurses Bicycles for MCH Assistants and certain subcenters Provision of spare parts for any government bicycle used for health work Radiotelephones for Chikwawa Hospital, Trinity Hospital, Makhwira Subcenter EQUIPMENT AND DRUGS Equipping of all subcenters to UNICEF standards Furnishing of new additions to Chikwawa District Hospital Provision of funds for drug purchases for new units during Phase II. IVIALAVVI SHIRE VALLEY AGRICULTURAL DEVELOPMENT PROJECT - PHASE II ORGANI ATION CHART - APPRAISAL April 1973 - July 1975 MINISTRY OF WORKSROADS AND SUPPLY XK Bonr:HOLES GENERAL MANAGER ADMARC N CHARGE - FINANCE AND a - I CEDIT:ONTROL O.F F I COFFICR INE CHA RG E E"E : o - MIITR F G ICLUR- P NsoCK DEVELOPMENT - AND EXTENSION T H m E I ~~~~~OFFICER IN CAG AEHAQATA 'Z COMMRTTE A _ FISHERIES DEVELOPMEN AND EXTENSION %SENIOR TECHNICAL DEPUTY OFFICER IN CHARGE PERMANENT A PROJECTP AND on= ECF vzr=WE;CREDIT. CONTOL .I NATURAL RESOURCES SECETARY n MANAGER MANAGER AND OFFICER IN CHARGE FARMER TRAINING SOFFICER IN CHARGE 915 LVETOKREELOPMEN AAN EXTENSION OFFICER IN CHARGE 0 FERE DEVLOPEN ANDITF nEXENSO SEIRTEHIA DEPUTYICE OIFCE CNHCHAAG TRAINING OFFICER IN CHARGE WILDLIFE MINISTRY OF HEALTH - VEALTH SERVICES - 77 - ANNEX 6 Chart 2 M A L A W I SHURE VALLEY AGRICULTURAL DEVELOPMENT PROJECT PHASE II - CREDIT 363-MAI Project Completion Report Project Reorganization Chart July 1975 - August 1978 4 istry of Agriculture and Katural Uesource Treasury Ministry of Hesith ADMARC Malawi Young Pioneers Permanent Secrtr !Pojct -.l Project------ Eval"tirtio, * ProjAtamt Project ct Manager PcrojetEvla A ssr i cC i t LPrToj c M n a e -i - -- - A i s r t i o g r KGeneral Duties t.ec ctoo Agrculura Dviso rchncaDiisin Innema DivIt Ftil o - 78 - Annex 7 Table 1 SHIRE VALLEY AGR ICULTURAL DEVELCPM:NT ?ROJECT CREDIT F7ND BALANCE SHEET AS AT 30th SEFTE.3ER. 1976 1975 1976 K K K CURRENT ASSETS 1,057,308 Stock at Cost 1,008,412 115,702 Debtors' Seasonal Loans 254,369 Less 19,914 Provision Doubtful Debts 40,403 95,788 213,966 33,300 Sprayers Loans 88,098 56,382 Medium Term Loans 67,756 2,866 Seasonal Loans (Not Due) - 474 Stall Feeder Loans 6,859 63,178 Sundry Debtors 61,554 438,233 x .,309,290 1 0b b-5 160 Cash on 'and (Ipnrests) 424 656,810 Cash at 3ank 348,339 3-8,763 Less C0?RENT LIAILI77ES 10,686 Sunr'y Creditors K1,955,580 Kl,795,408 ?EPRESENTED BY:- 319,040 Phase I Accurulated Fund (Note 1) 316,915 704,808 Phase II Accumulated Fund 1,015,189 350,000 AD%ARC Contributior 525,000 654,383 Loan from De7elonment Fund Add Current Year's Profit 10,955 Less 72,651 Previous Years Deficit (Accumulated) 72,651 K1,955,580 i:1,795,408 (B. B. MtaQali) SECRETARY FOR AGRICULTURE AND NATURAL RESOURCES Note 1: Ptase I Accumulated Fund reduced by payments to Consolidated Fund as to K175,OOC In year 1972/3 and K325,000 in year 1973/4. - 79 - Annex 7 Table 2 SHIRE VALLEY A5RICULTTJRkL DEVELOPMENT PROJECT CREDIT FUND TRADING, PROFIT AND LOSS-ACCOUNT FOR THE YEAR ENDED 30th SEPTEMBER, 1976 1975 1976 K K K K 399,566 Sales 477,342 355,417 Stock, 1st October 1975 1,057,308 1,026,738 Purchases 335,627 1,392,935 1,057,308 Less Stock 30th September 1976 1,008.,412 324,84? Cost of Sales 384,523 74,719 Surplus on Sales. 92,819 15,773 Other Income 26,352 119,171 90.,492 Surplus on Trading Less Operating Expenses 32.,579 Salaries and Wages 35,818 1,757 Travel - Other Allowances 2,678 6,683 Vehicle Running Costs 6,985 .362 Protective Clothing 26 3,905 Printing and Stationery 5,588 3,569 Computer Bureau 4,927 - Hand Tools 275 120 Field Storage 660 - Maintenance Equipment 309 30,859 Administration Overheads (Note 1) 22,632 17,298 Doubtful Debts Provision (Note 2) 20,489 2,071 Sundry Expenses 7,829 118 Interviews, Recruitment - 704 Railage 100,025 108,216 ( K9,533) PROFIT/DEFICIT K 10,955 Notes 1. Prorated costs of Management and Finance Divisions: 2. Provision Based on 5% of Credit Sales (K409,782) ANNEX 8 Page 1 INCREMENTAL CROP PRODUCTION 1. Incremental cotton production attributable to Phase II was esti- mated by taking total cotton production from the sprayed acreage, subtracting an estimated production attributable to Phase I and an estimated without- project production on Phase II acreage. The acreage in Phase I was reduced in 1974/75 because of the takeover by SUCOMA of 7,000 acres, and because of the assumptions that most of this land was under sprayed cotton and that part of this was then replaced with resettlement in more marginal cotton- growing areas. 2. The estimated incremental food crop production assumes that acreage covered increases from 20% in year 1 of Phase II to 50% in year 4 and onward. Estimated incremental production will thus equal the acreage assumed to be covered under the Project multiplied by incremental yields. Incremental yields are assumed, for the sake of calculating the rate of return, to be 10% or 20% of the total yield. That is, without the project the total production from the acreage under the Project would have been 10-20% less than it was. Thus the formula for calculating incremental food crop production is the proportion of total valley acreage covered (20-50%) multiplied by the incre- mental increase in production (10-20% x total production). For example, in year 1 of the project total maize production was 32,000 ST. Incremental production, assuming a 20% increase in yield, is calculated as 20% (acreage covered) x 20% x 32,000 = 1,280 ST. In year 2 it would be 30% (acreage covered) x 20% x 17,000 = 1,020 ST (Table 13 and Table 2, this Annex). The assumption is also made that the cropping pattern would have been the same without Phase II. 3. The benefits from this production used in the calculation of the economic rate of return (Annex 10) are lagged by one year and are therefore from year 2 to year 20 of the Project life (as at appraisal). 1 -ANNEX 8 Table 1 Table 1: Estimate of Incremental Cotton Production Attributable to Phase II 1978/79 and 1973/74 1974/75 1975/76 1976/77 1977/78 onwards Sprayed Acreage (acres) 2,200 27429 27,500 29,600 32,000 of Sprayer Owners 21,900 23,200 23,000 18,500 19,700 21,000 of Sprayer Borrowers 5,300 4,200 11,900 9,200 9,900 11,000 Yields of Sprayer Owners (lb/ac) 914 550 457 640 774 620 of Sprayer Borrowers 566 348 296 524 660 417 Production (ST) 11,500 7,100 7,100 8,300 10,900 8,800 of Sprayer Owners 10,000 6,400 5,300 5,900 7,600 6,500 of Sprayer Borrowers 1,500 700 1,800 2,400 3,300 2,300 less: Acreage under Phase I (acres) 15,000 '12000 3/12,000 12,000 12,000 12,000 Ave. Weighted Yield 846 518 407 599 736 550 Production from Phase I (ST) 6,3C0 3,100 2,40) 3,60C 4,400 3,300 Production without Phase II in Phase II acreage (ST). 2/ 2,100 1,0 1,500 1,500 2,000 2,50 Incremental Cotton Production Attributed to Phase II (ST) 3,100 2,60) 3,200 3,200 4,500 3,000 2/ Sprayed acreage x unimproved yield. For 1978/79 average yield of 250 lbs/ac used. 3/ Reduced because of SUCOMA takeover. Secnotes. - 82 - ANNEX .8 Table 2 Incremental Food Crop Production, Assumption of 20% Improvement in Yields (short tons) 1978/79 2/ and 1973/74 1974/75 1975/76 1976/77 1977/78 onwards 20% 30% 40% 50% 50% 50% Maize 1,280 1,020 960 3,000 3,810 3,000 Sorghum 200 180 320 1,000 1,100 750 Bulrush Millet 200 300 400 600 770 750 Rice 40 120 160 300 295 350 Guar Beans 1/ - - 20 612 3,900 3,000 1/ Guar beans - 100% of production attributed to project. Average yield = 800 lb/ac. 2/ Cropping pattern assumed: maize 80,000 ac, sorghum 30,000 ac, millet 30,000 ac, rice 5,000 ac, guar beans 8,000 ac. -83- ANNEX 9 Table 1 MALAWI SHIRE VALLET AGRICULTURAL DEVELOPMENT PROJECT PHASE II PROJECT COMPLETION REPORT Illustrative Crop Budget - Cotton - 1 Acre (Current 1976/77 Terms) --------Actual-- Appraisal Without With Project Estimate Project Sprayer Owner With Project Yield (lb/ac) 250 .620 900 Gross Return (MK) 1/ 22.1 54.8 69.8 Costs Insecticides - 20.7 15.5 Tools, Sprayer Maintenance 2.0 4.0 .9 Credit Charges - 3.1 1.6 Total Costs 2.0 27.8 18.0 Net Income 20.1 27.0 2/ 51.8 2/ Mandays Required 70 85 Net Income Per Manday .29 .32 1/ At 8.84 t/1b weighted average price. Appraisal price: 7.76 t/1b. / Before loan repayment; assuming loan repaid at MX 22.7-per year for 3 years. Appraisal estimate of loan repayment at MX 23.6 per year. - 84 - ANNEX 9 Table 2 MALAWI SHIRE VALLEY AGRICULTURAL DEVELOPMENT PROJECT PHASE II PROJECT COMPLETION REPORT Illustrative Crop Budget - Maize - 1 Acre (Current 1976/77 Terms) ---Actual-- Appraisal Estimate Without With With Project Project 2/ Project Yield (lb/ac) 550 660 1,800 Gross Return (MK) 1/ 12.4 14.9 46.6 Costs Seed 1.5 1.5 2.2 Tools 1.0 1.0 - Fertilizer - - 6.7 Credit Charge .2 .2 .9 Total Costs 2.7 2.7 9.8 Net Income 9.7 12.2 36.8 Mandays Required 30 33 Net Income Per Manday .32 .37 1/ At official ADMARC price of MK 2.25/lb. Appraisal estimate: MX 2.52/1b. f/ Assuming a 20% increase in yield from improved husbandry practices. -85 - ANNEX 9 Table 3 MALAWI SHIRE VALLET AGRICULTURAL DEVELOPMENT PROJECT PHASE II PROJECT COMPLETION REPORT Fisherman's Budget One Year's Catch (In 1976/77 Prices) Unimproved Improved SALE OF CATCH Plank Canoe, Gear Used Traditional Gill Net and Longline Total Catch - 0M Tons) 2.7 5.4 Wet Price - MRIM Ton 66.0 66.0 Sold as wet (M Tons) 1/ 1.3 1.1 Gross Return (MK) 86.00 73.00 Smoked Price - MK (M Ton) 210.00 242.00 Sold as Smoked (M Ton) 2/ 0.5 1.5 Gross Return (MK) 105.00 363.00 Total Gross 191.00 436.00 Production Costs Canoe Replacement 4.0 11.0 Gear Maintenance 50.0 80.0 Interest - 15.0 Kiln Maintenance - 1.0 Fuel Wood 3/ 24.0 30.0 78.00 137.00 NET RETURN 113.00 299.00 4/ Incremental return improved over unimproved - 186.00 1/ Wet sales by traditional fishermen 50% of catch because primitive smoking pits limit -amount smoked; Wet sales of improved fishermen 20% - which represents family consumed and immediate sales. Availability of modern kilns makes it possible for fishermen to smoke 80% of catch to take advan- tage of higher prices for better quality products. 2/ Smoked fish reduces to 35% of wet catch by weight. 3/ Firewood consumption by old style smoking pit is about 3/4 of M3 ton fish while modern kilns consume only 1/3 M3 per ton fish. 4/ Compared to an appraisal estimated net return of MK 877. The estimated catch and the prices were both above actual. - 86 - ANNEX 9 Table 4 Table 4: INPUT AND OUTPUT PRICES: ESTIMATED AND ACTUAL (t/1b) Appraisal Actual Official Prices Estimated Prices 1/ 1973/74 1974/75 1975/76 1976/77 1977/78 1977/78 Seasonal Inputs 2/ Insecticides (MR/ac) 20.7 20.7 20.7 20.7 20.7 16.4 (for ULV sprayer) Sulphate of Ammonia 2.5 6.0 6.1 5.0 5.0 3.6 Compound 20:20:0 3.1 8.2 8.2 7.7 7.7 5.0 Maize Seed (SV28 or 37) 5.0 5.0 3/ 5.0 3/ 5.0 5.0 8.0 Blue Bonnet Rice Seed 5.0 5.0 5.0 5.0 5.0 8.0 5/ Groundnut seed Malimba, unshelled 4.0 4.0 5,0 5.0 5.0 8.0 Chalimbana, shelled 8.0 8.0 9.0 7.0 4/ 7.0 4/ - Sorghum 1.0 na na na na 4.8 Medium Term Inputs 2/ Fishing Boat 14 ft.. 50.0 50.0 50.0 50.0 50.0 80.2 17 ft. na na 110.0 110..0 110.0 - Knapsack Sprayer 20.0 32.0 41.5 45.0 49.0 72.2 ULV Sprayer 6.3 10.0 16.5 16.5 16.5 - Oxen (pair) 130.0 135.0 170.0 165.0 190.0 120.3 Farm Cart 175.0 175.0 286.0 317.0 317.0 - Ridger 31.0 31.0 36.0 36.0 36.0 Plough 20.0 20.0 22.5 25.0 25.0 - Crops Cotton 6/ 6.00 8.00 8.50 9.00 10.50 8.4 Maize 1.25 1.75 2.25 2.25 2.25 2.8 Groundnuts Malimba 5.00 6.50 7.00 7.00 5.00 4/ 6.4 Chalimbana 6.50 8.00 8.50 9.00 10.00 - Rize 3.33 4.00 4.50 4.50 6.50 4.0 Sorghum na na na na na 2.0 1/ Appraisal estimates were expressed in 1972 terms. To bring these to end-1977 prices, the GDP deflator was used. 2/ Prices of all inputs exclude credit charge. 3/ Could be exchanged for local maize. 4/ Unshelled 5/ For Faya seed 6/ Grade A - 87 - ANNEX 10 Page 1 ECONOMIC RATE OF RETURN 1. Following the procedures of the appraisal report for Phase II, the assumptions on costs and benefits were made as follows: (a) Project Life. Taken as 20 years. Benefits from individual farms taken from year 2 to year 20. (b) Costs. (i) Transportation. Transport costs included as one of cost components in arriving at economic parity prices. (ii) Health Services. Total cost of health services included. (iii) Medium-Term Inputs: Include the subsidy element for sprayers, which decreased gradually from 50% in year 1 of Phase II to no subsidy in year 5, as envisaged at appraisal. (iv) Farm Labor. As at appraisal, farm labor is costed at zero, except for rice production and fisheries, where it is costed at 23 tambala per day (the local minimum rate in 1972 terms). (v) Research. 50% of research costs were attributed to Phase II. (c) Benefits are based on the information and assumptions in Annex 7 on incremental crop production and on an estimated incremental production of beef and fish.  化 MARCH 1978  _7_ - , .. JIBRD 13346R 34° 30 .. . " MALAWI SHIRE VALLEY -4 -1 AGRICULTURAL DEVELOPMENT PROJECT AGRICULTURAL RESEARCH, ADMARC, G« AND EXTENSION PLANNING AREAS o epi1D f - 6Thi° 0 ' hcs b prp b6 ° h M4,2 B s sat ~4his,-twy ful t,. _ ~~s,sc of ffh. -ad-n o th. ~eo t. ahkh n ottschsd The dMadad tnd nd [he NAoTI A shoL Nho, endonoftYpI.wo ft~ p ('f h- W-rPd Brk dt Boundary-cY 1-dg-3 o th 1.B ° st of or* ExtnsonPlnnnorrenHddos~rsc M aj o R e s e orf hh S t ondorns 16 00Cop Wca e Ob 1sv0a0t M5oi rouciit Ra rch Paios Aav 00 AMasi e ilnd e S S I 30 1 1 Flarming Syse s Obevto Stea . RsER ATA * DvSe lte BeltuTre esvto . ATomal Mew Rad A Mare Reoad rce 97 8. R Riveriuns S NMar ke 17 ·7 S ivirnsional Hea dar0 Minorc Roand ryBln Railway. ExistiIL ES 0 5 10 15 20 25 30 35 40 KILOMETERS 34° 30' 35 00' MARCH 1978  긷 JANUARY 1978