Malawi - Third National Rural Development Program (NRDP) - (Karonga - Chitipa Agricultural Development Division) - Project

Document of The World Bank FOR OFFICIAL USE ONLY ,iL t >i I Report No. 3420-MAI STAFF APPRAISAL REPORT MALAWI NATIONAL RURAL DEVELOPMENT PROGRAM (NRDP) PHASE III PROJECT (Karonga-Chitipa Agricultural Development Division) September 23, 1981 Eastern Africa Projects Department Southern Agriculture Division 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.  CURRENCY EQUIVALENTS Currency Unit Malawi Kwacha (MK) US$1.00 = MK 0.78 MK 1.00 = US$1.28 WEIGHTS AND MEASURES 1 meter (im) 3 = 3.3 feet 1 cubic meter (m )= 35.3 cubic feet 1 hectare (ha) = 2.47 acres 1 kilometer (km) 2 = 0.62 miles 1 square kilometer (km ) = 0.39 square miles 1 centimeter (cm) = 0.4 inches ABBREVIATIONS ADD = Agricultural Development Division ADMARC = Agricultural Development and Marketing Corporation ARD = Agricultural Research Department CEU = Central Evaluation Unit DA = Development Area EPA = Extension Planning Area GOM = Government of Malawi KCRDP = Karonga-Chitipa Rural Development Project MFNR = Ministry of Forestry and Natural Resources MOA = Ministry of Agriculture NRDP = National Rural Development Program NSSA = National Sample Survey of Agriculture NSO = National Statistics Office GOVERNMENT FISCAL YEAR April 1 to March 31  FOR OFFICIAL USE ONLY MALAWI NATIONAL RURAL DEVELOPMENT PROGRAM (NRDP) PHASE III PROJECT Table of Contents Page No. I. BACKGROUND .......................... ................ 1 A. General .............................................. 1 B. The Agricultural Sector .............................. 1 C. Agricultural Development Strategy . . 3 D. Government Agricultural Services . . 5 E. Previous Bank Group Assistance . . 6 F. Recurrent Expenditure Problems and Implications for NRDP. . 8 II. THE PROJECT AREA . 9 III. THE PROJECT ............................................... 11 A. General Description .................................. 11 B. Detailed Features .................................... 11 C. Project Costs ....................................... 17 D. Financing ....................................... 18 IV. PROJECT IMPLEMENTATION . ................................... 19 A. Organization and Management .......................... 19 B. Implementation Schedule .............................. 20 C. Management and Implementation of Specific Components . 20 1. Extension ....................................... 20 2. Training ....................................... 21 3. Pilot Burley Tobacco Scheme . .................... 21 4. Research ....................................... 22 5. Livestock ....................................... 22 6. Credit ....................................... 22 7. Forestry ....................................... 23 8. Water ........................................ 23 9. Health ....................................... 24 D. Procurement ....................................... 24 E. Disbursement ....................................... 25 F. Accounts and Audit ................................... 26 G. Monitoring, Evaluation and Reporting ................. 27 H. Surveys and Statistics Unit .......................... 27 This report is based on the'f]indings of an Appraisal Mission comprising Messrs. A. Sidhu, C. Warnaars, Ms. L. Effron (IDA), and Mr. R. Ayre-Smith (Consultant), which visited Malawi in September/October 1980. The health component was appraised by Mr. V. Jagdish (IDA) in November 1980 and the surveys and statistics unit by Mr. D. Casley (IDA) in November 1980. 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.  Page No. V. PRODUCION, MARKETING AND PRICES ........................... 28 A. Food Crops ................. .......... 28 B. Cotton ........................... 31 C. Tobacco .......... ..................................... 31 D. Livestock .................................. 33 VI. BENEFITS AND JUSTIFICATION ................................ 34 A. Farmers Benefits ..................................... 34 B. Recurrent Cost Implications of Phase III .... ......... 36 C. Economic Analysis ..................................... 36 VII. ASSURANCES AND RECOMMENDATIONS ............................ 41 ANNEXES 1. Supporting Charts and Tables CHARTS C-1 Project Implementation Schedule C-2 Project Organization C-3 Forestry Section Organization PROJECT COSTS Table T-1 Phasing of Project Costs T-l(a) Extension (Karonga) T-1(b) Extension (Chitipa) T-1(c) Training T-l(d) Pilot Tobacco Scheme T-l(e) Research T-1(f) Livestock - Disease Control T-1(g) Livestock - Extension T-1(h) Livestock - Karonga Cienter T-1(i) Livestock - Meru Center T-1(j) Livestock - Pilot Grazing Areas T-1(k) Liviestock - Slaughter Facilities T-1(l) Credit T-1(m) Markets T-l(n) Lanid Husbandry T-1(o) Forestry: Reserves T-1(p) Forestry: Chitipa Plantation T-l(q) Health T-l(r) Project Administration T-l(s) Central Evaluation Unit T-1(t) Surveys and Statistics Unit  - iii - Table T-2 Estimated Schedule of Disbursements Table T-3(a) Incremental Crop Production (Karonga) - Rice T-3(b) Incremental Crop Production (Karonga) - Maize T-3(c) Incremental Crop Production (Karonga) - Cotton T-3(d) Incremental Crop Production (Chitipa) - Maize T-3(e) Incremental Crop Production (Chitipa) - Groundnuts and Beans Table T-4(a) Hectare Budget for Rice, Maize and Cotton (Karonga) T-4(b) Hectare Budget for Maize, Groundnuts and Tobacco (Chitipa) T-4(c) Summary of Input-Packages T-4(d) Typical Farm Budget - Karonga Maize Farmer T-4(e) Typical Farm Budget - Karonga Rice Farmer T-4(f) Typical Farm Budget - Chitipa Maize Farmer T-4(g) Budget for Livestock Owners Table T-5 Credit Fund Cash Flow Table T-6 Key Indicators Table T-7 Government Cash Flow - Phase III Table T-8(a) Economic Costs for Crops Component Table T-8(b) Economic Farmg4te Value - Rice Table T-8(c) Economic Farmgate Value - Maize Table T-8(d) Economic Farmgate Value - Cotton Table T-8(e) Economic Benefits for Crops Component Table T-8(f) Economic Costs and Benefits - Livestock Table T-8(g) Economic Costs and Benefits - Forestry Table T-8(h) Economic Costs and Benefits -Total Project 2. Selected Documents Available in Project File Project Preparation Report Working Papers 3. Maps: General Map of Malawi - IBRD 15611 Map of Project Area - IBRD 15612  I  YMALAWI NATIONAL RURAL DEVELOPMENT PROGRAM (NRDP) PHASE III PROJECT I. BACKGROUND A. General 1.01 The proposed Project was prepared by the Government of Malawi (GOM) with assistance from the Bank's Regional Mission in Eastern Africa (RMEA). In September 1980, GOM requested the International Development Agency (IDA) to consider financing the Project as a third phase of the on-going Karonga-Chitipa Rural Development Project (KCRDP). A mission comprising Messrs. A. Sidhu, L. Warnaars, Ms. L. Effron (IDA) and Mr. R. Ayre-Smith (consultant) appraised the Project proposals in September/October 1980. The health component and the surveys and statistics unit were appraised by Mr. V. Jagdish (IDA) and Mr. D. Casley, respectively, in November 1980. The Project would be part of the National Rural Development Program (NRDP) with the same overall object- ives of raising smallholder production to meet domestic needs, substitute for imports and provide exports; of assuring smallholder access to inputs and services; and of preserving Malawi's national resources. Specifically, Project activities would aim at strengthening KCRDP-s crops and livestock operations with emphasis on better integration and coordination of management and field staff. 1.02 Malawi i4 a land-locked country with a total area of about 118,900 Km2 of which 23,900 Km is lake surface. It is bordered in the north and north- east by Tanzania, to the east, south and south-west by Mozambique, and to the west by Zambia. The land area consists of three distinct regions: the mountainous northern region, the central plateau, and the southern low-lands. The population of Malawi as revealed by the 1977 census was 5.6 million, with an annual growth rate of about 2.6%; the same census fhowed one of the highest population densities in Africa, 60 inhabitants per km . This population is, however, unevenly distributed for reasons of history, topography and according to diflerent stages in economic development. Northern Region had 24 inhabitants per km in 1977; Central Region 59, and Southern Region 88. B. The Agricultural Sector 1.03 Agriculture is the most important sector of the Malawi economy, as it employs about 85% of the population, and in 1978 contributed about 43% of GDP and 89% of export earnings; these were derived mainly from tobacco (63% of agricultural export earnings), tea (20%), groundnuts (3%) and other crops (6%). Malawi's soils are relatively fertile and fairly reliable rainfall permits a variety of food and cash crops to be grown. About 3.3 million ha, 36% of the total land area, is considered suitable for arable agriculture. Of this, some 2.9 million ha are estimated to be under cultivation at present.  -2- Forest reserves occupy 9% of the total land area, while urban or infrastruc- ture areas and National Parks areas account for 11% each. Of the remaining 33% of total land area presently unused, 60% is estimated to carry natural, woody vegetation. Over 80% of the total land area is held under customary tenure, about 2% under freehold or leasehold, and 16% is public land. 1.04 The average farm size is estimated at 1.7 ha and the average farming family has five members. At this level of cultivated