Tanzania - Second Livestock Development Project

Document of F C The World Bank FOR OFFICIAL USE ONLY Report No. 4241 PROJECT PERFORMANCE AUDIT REPORT TANZANIA - SECOND LIVESTOCK DEVELOPMENT PROJECT (CREDIT 382-TA) December 27, 1982 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.  Weights and Measures 1 hectare (ha) = 2.47 acres 1 kilogram (kg) = 2.2 pounds 1 liter (1) = 1.76 British Imperial pints = 0.88 British Quarts = 2.11 U.S. pints = 1.05 U.S. Quarts Abbreviations BBL Brooke Bond Liebig Ltd. CCB Canned corned beef CCM Chama Cha Mapunduzi (Tanzanian sole political party) CEF Consulting Engineering Firm (for meat plant investment) DDC District Development Corporation EEC European Economic Community ERR Economic Rate of Return FMD Foot and Mouth Disease FRR Financial Rate of Return LIDA Livestock Industry Development Authority MOA Ministry of Agriculture NACO National Agricultural Company Ltd. NAFCO National Agricultural and Food Corporation NARCO National Ranching Company Ltd. NBC National Bank of Commerce NCCO National Cold Chain Operation PMEA Permanent Mission for Eastern Africa ((World Bank) PMO Prime Minister's Office RDF Regional Development Funds RMEA Regional Mission in Eastern Africa (World Bank) RTO Ranch Technical Officer SIDA Swedish International Development Agency TLMC Tanzania Livestock Marketing Company Ltd. TLTFC Tanzania Livestock Transport and Facility Company TMPC Tanzania Meat Processing Company Ltd. TPL ranganyika Packers Ltd. TRDB Tanzania Rural Development Bank USAID United States Agency for International Development  FOR OFFICIAL USE ONLY PROJECT PERFORMANCE AUDIT REPORT TANZANIA - SECOND LIVESTOCK DEVELOPMENT PROJECT (CREDIT 382-TA) TABLE OF CONTENTS Page No. Preface ............ ................................................ i Basic Data Sheet ................................................... iii Highlights ......................................................... iv PROJECT PERFORMANCE AUDIT MEMORANDUM I. SUMMARY .................................................. 1 II. MAIN ISSUES .............................................. 4 A. The Ranching Component ..... ............... 4 I. National Ranching Company (NARCO) .... .......... 4 II. The District Development Company (DDC) Ranches.. 4 III. Village and Ujamaa Ranching Component .... ...... 9 B. Tanzania Livestock Marketing Company .... ............ 12 C. Tanganyika Packers Ltd. (TPL) ....................... 13 D. Impact of the Project ................................ 16 PROJECT COMPLETION REPORT I. INTRODUCTION ............................................. 21 II. PROJECT FORMULATION ....................................... 22 General ................................................ 22 Tanzania Livestock Marketing Corporation .... ........... 23 Meat Processing Component .............................. 25 Ranching Components .................................... 28 III. IMPLEMENTATION ............................................ 31 Tanzania Livestock Marketing Company .... ............... 31 Meat Processing Component .............................. 34 National Ranching Company .............................. 38 District Development Corporation Ranches .... ........... 44 Cooperative Ujamaa Ranching ............................ 45 Heavy Earthmoving Equipment ............................ 50 | 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. TABLE OF CONTENTS (Continued) Page No. IV. OPERATING PERFORMANCE AND IMPACT ......................... 51 Tanzania Livestock Marketing Company ................... 51 Meat Processing Component .............................. 55 National Ranching Company .............................. 68 District Development Corporation Ranches .... ........... 76 Cooperative Ujamaa Ranching ............................ 77 Heavy Earthmoving Equipment ............................ 83 V. RATES OF RETURN .......................................... 85 VI. INSTITUTIONAL PERFORMANCE AND DEVELOPMENT .... ............ 88 LIDA ................................................... 88 LIDA Subsidiaries ...................................... 90 Ministry of Agriculture ................................ 92 TRDB ................................................... 92 Technical Assistance and Training ...................... 93 VII. BANK PERFORMANCE ......................................... 95 VIII. CONCLUSIONS .............................................. 97 Tables 1-39 ........................................................ 103 Appendix 1 - NARCO Ranches in Development or Operation in the Ranching Company 1970-1980 ............................... 143 2 - NARCO Ranches in Consolidation and Rehabilitation Plan (1978) .............................................. 144 3 - Theoretical Disposal of Commercially Marketed Cattle ... ...... 145 4 - Performance and Factors affecting Performance of Village Ranches .......................................... 147 5 - Extract from November 1976 Review Mission Report. Alternative System for Village Ranching in Major Livestock Producing Areas .......................... 148 Map 10039R (March 1977) Second Livestock Development Project TABLE OF CONTENTS (Continued) Page No. IV. OPERATING PERFORMANCE AND IMPACT ......................... 51 Tanzania Livestock Marketing Company ................... 51 Meat Processing Component .............................. 55 National Ranching Company .............................. 68 District Development Corporation Ranches .... ........... 76 Cooperative Ujamaa Ranching ............................ 77 Heavy Earthmoving Equipment ............................ 83 V. RATES OF RETURN .......................................... 85 VI. INSTITUTIONAL PERFORMANCE AND DEVELOPMENT .... ............ 88 LIDA ................................................... 88 LIDA Subsidiaries ...................................... 90 Ministry of Agriculture ................................ 92 TRDB ................................................... 92 Technical Assistance and Training ...................... 93 VII. BANK PERFORMANCE ......................................... 95 VIII. CONCLUSIONS .............................................. 97 Tables 1-39 ........................................................ 103 Appendix 1 - NARCO Ranches in Development or Operation in the Ranching Company 1970-1980 ............................... 143 2 - NARCO Ranches in Consolidation and Rehabilitation Plan (1978) .............................................. 144 3 - Theoretical Disposal of Commercially Marketed Cattle ... ...... 145 4 - Performance and Factors affecting Performance of Village Ranches .......................................... 147 5 - Extract from November 1976 Review Mission Report. Alternative System for Village Ranching in Major Livestock Producing Areas .......................... 148 Map 10039R (March 1977) Second Livestock Development Project  PROJECT PERFORMANCE AUDIT REPORT TANZANIA - SECOND LIVESTOCK DEVELOPMENT PROJECT (CREDIT 382-TA) PREFACE This is a performance audit of the Second Livestock Development Project in the United Republic of Tanzania, for which Credit No. 382 was approved on April 24, 1973 in the sum of US$18.5 million. The final dis- bursement in respect of this credit was made on April 1, 1981. The audit report consists of an audit memorandum prepared by the Operations Evaluation Department (OED) and the Project Completion Report (PCR). The PCR was prepared by the Regional Mission in Eastern Africa on the basis of a country visit in April 1981. The audit memorandum is based on a review of the Staff Appraisal Report (SAR No. 51a-TA) dated March 14, 1973, the President's Report (P-1168-TA) of April 10, 1973 and the Development Credit Agreement (DCA) dated May 23, 1973 and the PCR. A Review Mission revised the project scope, and its report, dated May 5, 1977, was also pe- rused. Correspondence with the Borrower, internal Bank memoranda as contained in Bank files and the Project Performance Audit Report (PPAR) of the first project (OED Report No. 994 dated January 28, 1976) have been consulted, and Bank staff associated with the project have been interviewed. An OED mission visited Tanzania in March-April 1982. The mission had discussions with officials of the Livestock Industry Development Authority (LIDA), which was in overall charge of project execution, and those of its three companies that were executing specific project components: the National Ranching Company (NARCO), Tanzania Livestock Marketing Company (TLMC) and Tanganyika Packers Ltd. (TPL). Discussions were held with District Develop- ment Company officials (DDC) operating a cattle ranch and with officials of Tanzania Rural Development Bank (TRDB). The information obtained during the mission was used to test the validity of the conclusions of the PCR and permitted discussion of issues arising out of project concept and execution. A copy of the draft report was sent to the Borrower on September 1, 1982. However, no comments have been received. The audit finds that the PCR adequately covers the project-s salient features and generally agrees with its conclusions. In addition to summa- rizing the objectives and achievements of the project, the PPAM reviews each of the components and examines development scenarios that may have made the project more successful. The valuable assistance provided by the Government of the United Republic of Tanzania, LIDA and its constituent companies and officials of TRDB is gratefully acknowledged.  PROJECT PERFORMANCE AUDIT REPORT TANZANIA - SECOND LIVESTOCK DEVELOPMENT PROJECT (CREDIT 382-TA) PREFACE This is a performance audit of the Second Livestock Development Project in the United Republic of Tanzania, for which Credit No. 382 was approved on April 24, 1973 in the sum of US$18.5 million. The final dis- bursement in respect of this credit was made on April 1, 1981. The audit report consists of an audit memorandum prepared by the Operations Evaluation Department (OED) and the Project Completion Report (PCR). The PCR was prepared by the Regional Mission in Eastern Africa on the basis of a country visit in April 1981. The audit memorandum is based on a review of the Staff Appraisal Report (SAR No. 51a-TA) dated March 14, 1973, the President's Report (P-1168-TA) of April 10, 1973 and the Development Credit Agreement (DCA) dated May 23, 1973 and the PCR. A Review Mission revised the project scope, and its report, dated May 5, 1977, was also pe- rused. Correspondence with the Borrower, internal Bank memoranda as contained in Bank files and the Project Performance Audit Report (PPAR) of the first project (OED Report No. 994 dated January 28, 1976) have been consulted, and Bank staff associated with the project have been interviewed. An OED mission visited Tanzania in March-April 1982. The mission had discussions with officials of the Livestock Industry Development Authority (LIDA), which was in overall charge of project execution, and those of its three companies that were executing specific project components: the National Ranching Company (NARCO), Tanzania Livestock Marketing Company (TLMC) and Tanganyika Packers Ltd. (TPL). Discussions were held with District Develop- ment Company officials (DDC) operating a cattle ranch and with officials of Tanzania Rural Development Bank (TRDB). The information obtained during the mission was used to test the validity of the conclusions of the PCR and permitted discussion of issues arising out of project concept and execution. A copy of the draft report was sent to the Borrower on September 1, 1982. However, no comments have been received. The audit finds that the PCR adequately covers the project-s salient features and generally agrees with its conclusions. In addition to summa- rizing the objectives and achievements of the project, the PPAM reviews each of the components and examines development scenarios that may have made the project more successful. The valuable assistance provided by the Government of the United Republic of Tanzania, LIDA and its constituent companies and officials of TRDB is gratefully acknowledged.  PROJECT PERFORMANCE AUDIT REPORT TANZANIA - SECOND LIVESTOCK DEVELOPMENT PROJECT (CREDIT 382-TA) PREFACE This is a performance audit of the Second Livestock Development Project in the United Republic of Tanzania, for which Credit No. 382 was approved on April 24, 1973 in the sum of US$18.5 million. The final dis- bursement in respect of this credit was made on April 1, 1981. The audit report consists of an audit memorandum prepared by the Operations Evaluation Department (OED) and the Project Completion Report (PCR). The PCR was prepared by the Regional Mission in Eastern Africa on the basis of a country visit in April 1981. The audit memorandum is based on a review of the Staff Appraisal Report (SAR No. 51a-TA) dated March 14, 1973, the President's Report (P-1168-TA) of April 10, 1973 and the Development Credit Agreement (DCA) dated May 23, 1973 and the PCR. A Review Mission revised the project scope, and its report, dated May 5, 1977, was also pe- rused. Correspondence with the Borrower, internal Bank memoranda as contained in Bank files and the Project Performance Audit Report (PPAR) of the first project (OED Report No. 994 dated January 28, 1976) have been consulted, and Bank staff associated with the project have been interviewed. An OED mission visited Tanzania in March-April 1982. The mission had discussions with officials of the Livestock Industry Development Authority (LIDA), which was in overall charge of project execution, and those of its three companies that were executing specific project components: the National Ranching Company (NARCO), Tanzania Livestock Marketing Company (TLMC) and Tanganyika Packers Ltd. (TPL). Discussions were held with District Develop- ment Company officials (DDC) operating a cattle ranch and with officials of Tanzania Rural Development Bank (TRDB). The information obtained during the mission was used to test the validity of the conclusions of the PCR and permitted discussion of issues arising out of project concept and execution. A copy of the draft report was sent to the Borrower on September 1, 1982. However, no comments have been received. The audit finds that the PCR adequately covers the project-s salient features and generally agrees with its conclusions. In addition to summa- rizing the objectives and achievements of the project, the PPAM reviews each of the components and examines development scenarios that may have made the project more successful. The valuable assistance provided by the Government of the United Republic of Tanzania, LIDA and its constituent companies and officials of TRDB is gratefully acknowledged.  - iii - PROJECT PERFORMANCE AUDIT REPORT TANZANIA - SECOND LIVESTOCK DEVELOPMENT PROJECT (CREDIT 382-TA) HIGHLIGHTS The Second Livestock Development Project aimed, in part, to com- plete the development of parastatal cattle ranches begun with the first livestock project (Tanzania Beef Ranching Development Project, Credit 132-TA, OED Report No. 994 dated January 28, 1976). In addition, it was designed to support the establishment/development of District Development Company ranches, 33 village ranches, build up the Tanzania Livestock Marketing Company (TLMC) to organize and operate cattle markets, stock routes and holding grounds, and also purchase cattle for parastatal organizations, and the expansion of one and the construction of two new slaughterhouses. Owing to cost escalations not foreseeable at appraisal, most of the components had to be reduced: only about two-thirds of the expected number of ranches were established; stock routes were reduced in length and holding ground in numbers. The meat processing facilities were completed as planned but required considerable additional funds, provided by the Swedish Inter- national Development Agency (SIDA). The project's contribution to the national economy has been, and is likely to be, minimal: livestock numbers in the country increased only marginally as a result of the project and offtakes from the national herd have not increased to any extent (PPAM, para. 45, and PCR, paras. 4.40-4.46). The economic rate of return is negative compared with an appraisal estimate of 35%. Some of the lessons learned, and points of interests, are the following: - livestock herding and management, perhaps more in Africa than elsewhere, is a highly personal and individualistic operation that does not readily lend itself to employing herdsmen with fixed working hours and little direct interest (PPAM, paras. 8 and 21); - the provision of reasonable housing facilities in remote areas is essential for good performance by all staff levels (PPAM, paras. 15 and 21); - under normal conditions, it must be assumed that the range-s carrying capacity is fully utilized and traditional seasonal migratory patterns are highly rational. Without considerable range improvement additional stock cannot thrive (PPAM, paras. 24-26);  - iii - PROJECT PERFORMANCE AUDIT REPORT TANZANIA - SECOND LIVESTOCK DEVELOPMENT PROJECT (CREDIT 382-TA) HIGHLIGHTS The Second Livestock Development Project aimed, in part, to com- plete the development of parastatal cattle ranches begun with the first livestock project (Tanzania Beef Ranching Development Project, Credit 132-TA, OED Report No. 994 dated January 28, 1976). In addition, it was designed to support the establishment/development of District Development Company ranches, 33 village ranches, build up the Tanzania Livestock Marketing Company (TLMC) to organize and operate cattle markets, stock routes and holding grounds, and also purchase cattle for parastatal organizations, and the expansion of one and the construction of two new slaughterhouses. Owing to cost escalations not foreseeable at appraisal, most of the components had to be reduced: only about two-thirds of the expected number of ranches were established; stock routes were reduced in length and holding ground in numbers. The meat processing facilities were completed as planned but required considerable additional funds, provided by the Swedish Inter- national Development Agency (SIDA). The project's contribution to the national economy has been, and is likely to be, minimal: livestock numbers in the country increased only marginally as a result of the project and offtakes from the national herd have not increased to any extent (PPAM, para. 45, and PCR, paras. 4.40-4.46). The economic rate of return is negative compared with an appraisal estimate of 35%. Some of the lessons learned, and points of interests, are the following: - livestock herding and management, perhaps more in Africa than elsewhere, is a highly personal and individualistic operation that does not readily lend itself to employing herdsmen with fixed working hours and little direct interest (PPAM, paras. 8 and 21); - the provision of reasonable housing facilities in remote areas is essential for good performance by all staff levels (PPAM, paras. 15 and 21); - under normal conditions, it must be assumed that the range-s carrying capacity is fully utilized and traditional seasonal migratory patterns are highly rational. Without considerable range improvement additional stock cannot thrive (PPAM, paras. 24-26);  - 1 - PROJECT PERFORMANCE AUDIT MEMORANDUM TANZANIA - SECOND LIVESTOCK DEVELOPMENT PROJECT (CREDIT 382-TA) I. SUMMARY-/ 1. The project reviewed in this audit memorandum was appraised in February-March 1972 and presented to the Board for approval on April 24, 1973. It was largely based on the Tanzania Beef Ranching Development Proj- ect (Cr. 132-TA), which was appraised in 1967/68. That first project was not completed till January 1974. Therefore, when the second project was appraised, final conclusions and lessons of the first project could not yet be drawn, although in 1972 its performance was satisfactory (SAR No. 51a-TA, paras. 1.03 and 2.25). However, at about the time the second project was presented to the Board (April 1974) performance under the first project had worsened markedly.2/ Unfortunately, it was not possible to make allowances for this deterioration in the design of the second project. 2. The first small (US$2 million total costs) project was entirely for ranching. It was implemented by a parastatal company now known as National Ranching Company (NARCO). In contrast, the second, far more ambitious, project was designed to assist also with cattle movement, livestock marketing and meat processing. The components were: A. Ranching: (i) By NARCO, the establishing of 8 new and further developing three ranches, which were seen to remain uncompleted by the first project; (ii) for each of four District Development Companies (DDC) establishing one ranch each; (iii) establishing 22 Cooperative Ujamaa3/ and 11 Village3/ Ranches. The last two components were new: the first project only supported NARCO ranches. B. Tanzania Livestock Marketing Company (TLMC):4/ (i) develop and operate cattle markets, thereby encouraging stock owners to sell more animals; 1/ Adapted from the PCR. 2/ OED Report No. 997, dated January 28, 1976, paras. 7-9. 3/ For a definition of "Ujamaa" and "Village", see para. 23. 4/ TLMC would be established under the project.  - 1 - PROJECT PERFORMANCE AUDIT MEMORANDUM TANZANIA - SECOND LIVESTOCK DEVELOPMENT PROJECT (CREDIT 382-TA) I. SUMMARY-/ 1. The project reviewed in this audit memorandum was appraised in February-March 1972 and presented to the Board for approval on April 24, 1973. It was largely based on the Tanzania Beef Ranching Development Proj- ect (Cr. 132-TA), which was appraised in 1967/68. That first project was not completed till January 1974. Therefore, when the second project was appraised, final conclusions and lessons of the first project could not yet be drawn, although in 1972 its performance was satisfactory (SAR No. 51a-TA, paras. 1.03 and 2.25). However, at about the time the second project was presented to the Board (April 1974) performance under the first project had worsened markedly.2/ Unfortunately, it was not possible to make allowances for this deterioration in the design of the second project. 2. The first small (US$2 million total costs) project was entirely for ranching. It was implemented by a parastatal company now known as National Ranching Company (NARCO). In contrast, the second, far more ambitious, project was designed to assist also with cattle movement, livestock marketing and meat processing. The components were: A. Ranching: (i) By NARCO, the establishing of 8 new and further developing three ranches, which were seen to remain uncompleted by the first project; (ii) for each of four District Development Companies (DDC) establishing one ranch each; (iii) establishing 22 Cooperative Ujamaa3/ and 11 Village3/ Ranches. The last two components were new: the first project only supported NARCO ranches. B. Tanzania Livestock Marketing Company (TLMC):4/ (i) develop and operate cattle markets, thereby encouraging stock owners to sell more animals; 1/ Adapted from the PCR. 2/ OED Report No. 997, dated January 28, 1976, paras. 7-9. 3/ For a definition of "Ujamaa" and "Village", see para. 23. 4/ TLMC would be established under the project.  -3- TLMC: (i) develop and operate cattle markets no change; (ii) develop and operate ) considerably reduced area and stock routes and ) number of holding grounds and ) length of stock routes to be (iii) develop and operate ) developed. holding grounds ) (iv) stock purchases, based on experience between 1973 and 1976, would be solely a custom operation: TLMC would buy only against specific orders from other parastatal organizations, on a "cost plus" basis. TPL: The three plants would be built and modified as planned. However, the Government of Tanzania, partly at the Bank's suggestion, invited the Swedish International Development Agency (SIDA) to finance the Mbeya plant and assist with the one in Shinyanga, for which IDA funds were insufficient to cover the foreign exchange costs. 4. Despite the reduction in project scope proposed by the Review Mission, total cost of the project nearly doubled, from US$24.7 million (TSh 176.3 million) to about US$48 million (TSh 350.5 million), even though phys- ical accomplishments fell short of the revised targets. Completion of the meat processing plants has been delayed and is not expected until the second half of 1982 at the earliest. (Information given to the audit mission in March 1982.) 5. The project must be regarded as a failure in almost all its aspects. A major objective was to strengthen and further develop the management struc- ture of the parastatal company that operated the first project, and to develop the organizational structure and know-how to manage the other components; this objective was only partially achieved. While technically there are encourag- ing signs of progress, effective financial management and control systems are yet to be established (PCR, paras. 4.10, 4.24 and 4.45). Concerning the project's components, while the ranches have made some contributioni' to increasing the country's cattle wealth, their economic return is negative. The financial rate of return is also negative. TLMC's market management 1/ The Livestock Specialist who supervised the project in its early years is of the view that, as a percentage of the national herd, the increase must have been very small. He points out that many of these areas, on the fringes of the tse-tse fly belt, did in fact carry some cattle. Undoubtedly these private herds still exist and therefore the NARCO animals represent additional stock numbers. However, overall, the contribution to the national herd is indeed small.  -3- TLMC: (i) develop and operate cattle markets no change; (ii) develop and operate ) considerably reduced area and stock routes and ) number of holding grounds and ) length of stock routes to be (iii) develop and operate ) developed. holding grounds ) (iv) stock purchases, based on experience between 1973 and 1976, would be solely a custom operation: TLMC would buy only against specific orders from other parastatal organizations, on a "cost plus" basis. TPL: The three plants would be built and modified as planned. However, the Government of Tanzania, partly at the Bank's suggestion, invited the Swedish International Development Agency (SIDA) to finance the Mbeya plant and assist with the one in Shinyanga, for which IDA funds were insufficient to cover the foreign exchange costs. 4. Despite the reduction in project scope proposed by the Review Mission, total cost of the project nearly doubled, from US$24.7 million (TSh 176.3 million) to about US$48 million (TSh 350.5 million), even though phys- ical accomplishments fell short of the revised targets. Completion of the meat processing plants has been delayed and is not expected until the second half of 1982 at the earliest. (Information given to the audit mission in March 1982.) 5. The project must be regarded as a failure in almost all its aspects. A major objective was to strengthen and further develop the management struc- ture of the parastatal company that operated the first project, and to develop the organizational structure and know-how to manage the other components; this objective was only partially achieved. While technically there are encourag- ing signs of progress, effective financial management and control systems are yet to be established (PCR, paras. 4.10, 4.24 and 4.45). Concerning the project's components, while the ranches have made some contributioni' to increasing the country's cattle wealth, their economic return is negative. The financial rate of return is also negative. TLMC's market management 1/ The Livestock Specialist who supervised the project in its early years is of the view that, as a percentage of the national herd, the increase must have been very small. He points out that many of these areas, on the fringes of the tse-tse fly belt, did in fact carry some cattle. Undoubtedly these private herds still exist and therefore the NARCO animals represent additional stock numbers. However, overall, the contribution to the national herd is indeed small.  -3- TLMC: (i) develop and operate cattle markets no change; (ii) develop and operate ) considerably reduced area and stock routes and ) number of holding grounds and ) length of stock routes to be (iii) develop and operate ) developed. holding grounds ) (iv) stock purchases, based on experience between 1973 and 1976, would be solely a custom operation: TLMC would buy only against specific orders from other parastatal organizations, on a "cost plus" basis. TPL: The three plants would be built and modified as planned. However, the Government of Tanzania, partly at the Bank's suggestion, invited the Swedish International Development Agency (SIDA) to finance the Mbeya plant and assist with the one in Shinyanga, for which IDA funds were insufficient to cover the foreign exchange costs. 4. Despite the reduction in project scope proposed by the Review Mission, total cost of the project nearly doubled, from US$24.7 million (TSh 176.3 million) to about US$48 million (TSh 350.5 million), even though phys- ical accomplishments fell short of the revised targets. Completion of the meat processing plants has been delayed and is not expected until the second half of 1982 at the earliest. (Information given to the audit mission in March 1982.) 5. The project must be regarded as a failure in almost all its aspects. A major objective was to strengthen and further develop the management struc- ture of the parastatal company that operated the first project, and to develop the organizational structure and know-how to manage the other components; this objective was only partially achieved. While technically there are encourag- ing signs of progress, effective financial management and control systems are yet to be established (PCR, paras. 4.10, 4.24 and 4.45). Concerning the project's components, while the ranches have made some contributioni' to increasing the country's cattle wealth, their economic return is negative. The financial rate of return is also negative. TLMC's market management 1/ The Livestock Specialist who supervised the project in its early years is of the view that, as a percentage of the national herd, the increase must have been very small. He points out that many of these areas, on the fringes of the tse-tse fly belt, did in fact carry some cattle. Undoubtedly these private herds still exist and therefore the NARCO animals represent additional stock numbers. However, overall, the contribution to the national herd is indeed small. 10. A further point is that all cattle that were brought to these ranches either came from earlier-established NARCO ranches or were bought for NARCO from the cattle-surplus grassland areas of Sukumaland (para. 24). In other words, they were moved into a less, rather than more, favorable environment (para. 8). Credit is therefore due to NARCO management for the good condition of the animals noted by the audit mission. The fact that calving and weaning rates have not reached appraisal estimates (75% and 70% respectively; see SAR Annex 6, Table 5) is therefore probably also a function of the environmental changes to which the animals were subjected and not only due to the standard of management. 11. In view of the foregoing, the audit believes that a different development mode should at least have been explored in this environment. More attention should have been paid to thinning the forest, since exposure to tse-tse fly infestation is almost directly proportionate to density of forest cover. One possibility in the more densely populated areas would have been for villagers to clear the trees, burn them and pursue the tradi- tional "ash agriculture" for its normal cycle of 3-4 years, after which regeneration of the forest would have been slowed down by good grazing manage- ment. This was partly done on one of the ranches and appeared successful. Exploitation of the forest for charcoal burning may have been another alterna- tive worth examining. 12. Pending the future thinning of the forest, the management of the cattle mobs would have deserved closer scrutiny. At present, the animals are mustered in widely separated night enclosures (bomas) holding 1800-2000 animals. They are grazed in herds of approximately 300 which, on all but one ranch, are being re-formed daily. As noted, two or three men cannot keep track of that many animals in the forest without keeping them on the move all the time (para. 8). The obvious answer is to run the animals in smaller mobs and to have more night bomas. While the former implies the engagement of more herdsmen, the latter entails little if any additional expense.l/ 13. Handling Facilities. The fact that animals are centered in a few large bomas also means that organizing tick control (to check East-Coast Fever) is more difficult. Tick control has to be done each week, and there- fore it is convenient to treat one-fifth or one-sixth of the herd on each working day of the week. This was not done; instead, at least on the ranches visited by the audit mission, all animals were dipped or sprayed on one or two 1/ A Bank livestock specialist comments on this issue as follows: "Although the degree of tree cover is an important factor in ranch development and animal management, ... a focus on one technical aspect ... when a large complex of factors is undoubtedly involved in performance...is inappropriate...". 10. A further point is that all cattle that were brought to these ranches either came from earlier-established NARCO ranches or were bought for NARCO from the cattle-surplus grassland areas of Sukumaland (para. 24). In other words, they were moved into a less, rather than more, favorable environment (para. 8). Credit is therefore due to NARCO management for the good condition of the animals noted by the audit mission. The fact that calving and weaning rates have not reached appraisal estimates (75% and 70% respectively; see SAR Annex 6, Table 5) is therefore probably also a function of the environmental changes to which the animals were subjected and not only due to the standard of management. 11. In view of the foregoing, the audit believes that a different development mode should at least have been explored in this environment. More attention should have been paid to thinning the forest, since exposure to tse-tse fly infestation is almost directly proportionate to density of forest cover. One possibility in the more densely populated areas would have been for villagers to clear the trees, burn them and pursue the tradi- tional "ash agriculture" for its normal cycle of 3-4 years, after which regeneration of the forest would have been slowed down by good grazing manage- ment. This was partly done on one of the ranches and appeared successful. Exploitation of the forest for charcoal burning may have been another alterna- tive worth examining. 12. Pending the future thinning of the forest, the management of the cattle mobs would have deserved closer scrutiny. At present, the animals are mustered in widely separated night enclosures (bomas) holding 1800-2000 animals. They are grazed in herds of approximately 300 which, on all but one ranch, are being re-formed daily. As noted, two or three men cannot keep track of that many animals in the forest without keeping them on the move all the time (para. 8). The obvious answer is to run the animals in smaller mobs and to have more night bomas. While the former implies the engagement of more herdsmen, the latter entails little if any additional expense.l/ 13. Handling Facilities. The fact that animals are centered in a few large bomas also means that organizing tick control (to check East-Coast Fever) is more difficult. Tick control has to be done each week, and there- fore it is convenient to treat one-fifth or one-sixth of the herd on each working day of the week. This was not done; instead, at least on the ranches visited by the audit mission, all animals were dipped or sprayed on one or two 1/ A Bank livestock specialist comments on this issue as follows: "Although the degree of tree cover is an important factor in ranch development and animal management, ... a focus on one technical aspect ... when a large complex of factors is undoubtedly involved in performance...is inappropriate...". 10. A further point is that all cattle that were brought to these ranches either came from earlier-established NARCO ranches or were bought for NARCO from the cattle-surplus grassland areas of Sukumaland (para. 24). In other words, they were moved into a less, rather than more, favorable environment (para. 8). Credit is therefore due to NARCO management for the good condition of the animals noted by the audit mission. The fact that calving and weaning rates have not reached appraisal estimates (75% and 70% respectively; see SAR Annex 6, Table 5) is therefore probably also a function of the environmental changes to which the animals were subjected and not only due to the standard of management. 11. In view of the foregoing, the audit believes that a different development mode should at least have been explored in this environment. More attention should have been paid to thinning the forest, since exposure to tse-tse fly infestation is almost directly proportionate to density of forest cover. One possibility in the more densely populated areas would have been for villagers to clear the trees, burn them and pursue the tradi- tional "ash agriculture" for its normal cycle of 3-4 years, after which regeneration of the forest would have been slowed down by good grazing manage- ment. This was partly done on one of the ranches and appeared successful. Exploitation of the forest for charcoal burning may have been another alterna- tive worth examining. 12. Pending the future thinning of the forest, the management of the cattle mobs would have deserved closer scrutiny. At present, the animals are mustered in widely separated night enclosures (bomas) holding 1800-2000 animals. They are grazed in herds of approximately 300 which, on all but one ranch, are being re-formed daily. As noted, two or three men cannot keep track of that many animals in the forest without keeping them on the move all the time (para. 8). The obvious answer is to run the animals in smaller mobs and to have more night bomas. While the former implies the engagement of more herdsmen, the latter entails little if any additional expense.l/ 13. Handling Facilities. The fact that animals are centered in a few large bomas also means that organizing tick control (to check East-Coast Fever) is more difficult. Tick control has to be done each week, and there- fore it is convenient to treat one-fifth or one-sixth of the herd on each working day of the week. This was not done; instead, at least on the ranches visited by the audit mission, all animals were dipped or sprayed on one or two 1/ A Bank livestock specialist comments on this issue as follows: "Although the degree of tree cover is an important factor in ranch development and animal management, ... a focus on one technical aspect ... when a large complex of factors is undoubtedly involved in performance...is inappropriate...". 10. A further point is that all cattle that were brought to these ranches either came from earlier-established NARCO ranches or were bought for NARCO from the cattle-surplus grassland areas of Sukumaland (para. 24). In other words, they were moved into a less, rather than more, favorable environment (para. 8). Credit is therefore due to NARCO management for the good condition of the animals noted by the audit mission. The fact that calving and weaning rates have not reached appraisal estimates (75% and 70% respectively; see SAR Annex 6, Table 5) is therefore probably also a function of the environmental changes to which the animals were subjected and not only due to the standard of management. 11. In view of the foregoing, the audit believes that a different development mode should at least have been explored in this environment. More attention should have been paid to thinning the forest, since exposure to tse-tse fly infestation is almost directly proportionate to density of forest cover. One possibility in the more densely populated areas would have been for villagers to clear the trees, burn them and pursue the tradi- tional "ash agriculture" for its normal cycle of 3-4 years, after which regeneration of the forest would have been slowed down by good grazing manage- ment. This was partly done on one of the ranches and appeared successful. Exploitation of the forest for charcoal burning may have been another alterna- tive worth examining. 12. Pending the future thinning of the forest, the management of the cattle mobs would have deserved closer scrutiny. At present, the animals are mustered in widely separated night enclosures (bomas) holding 1800-2000 animals. They are grazed in herds of approximately 300 which, on all but one ranch, are being re-formed daily. As noted, two or three men cannot keep track of that many animals in the forest without keeping them on the move all the time (para. 8). The obvious answer is to run the animals in smaller mobs and to have more night bomas. While the former implies the engagement of more herdsmen, the latter entails little if any additional expense.l/ 13. Handling Facilities. The fact that animals are centered in a few large bomas also means that organizing tick control (to check East-Coast Fever) is more difficult. Tick control has to be done each week, and there- fore it is convenient to treat one-fifth or one-sixth of the herd on each working day of the week. This was not done; instead, at least on the ranches visited by the audit mission, all animals were dipped or sprayed on one or two 1/ A Bank livestock specialist comments on this issue as follows: "Although the degree of tree cover is an important factor in ranch development and animal management, ... a focus on one technical aspect ... when a large complex of factors is undoubtedly involved in performance...is inappropriate...". 10. A further point is that all cattle that were brought to these ranches either came from earlier-established NARCO ranches or were bought for NARCO from the cattle-surplus grassland areas of Sukumaland (para. 24). In other words, they were moved into a less, rather than more, favorable environment (para. 8). Credit is therefore due to NARCO management for the good condition of the animals noted by the audit mission. The fact that calving and weaning rates have not reached appraisal estimates (75% and 70% respectively; see SAR Annex 6, Table 5) is therefore probably also a function of the environmental changes to which the animals were subjected and not only due to the standard of management. 11. In view of the foregoing, the audit believes that a different development mode should at least have been explored in this environment. More attention should have been paid to thinning the forest, since exposure to tse-tse fly infestation is almost directly proportionate to density of forest cover. One possibility in the more densely populated areas would have been for villagers to clear the trees, burn them and pursue the tradi- tional "ash agriculture" for its normal cycle of 3-4 years, after which regeneration of the forest would have been slowed down by good grazing manage- ment. This was partly done on one of the ranches and appeared successful. Exploitation of the forest for charcoal burning may have been another alterna- tive worth examining. 12. Pending the future thinning of the forest, the management of the cattle mobs would have deserved closer scrutiny. At present, the animals are mustered in widely separated night enclosures (bomas) holding 1800-2000 animals. They are grazed in herds of approximately 300 which, on all but one ranch, are being re-formed daily. As noted, two or three men cannot keep track of that many animals in the forest without keeping them on the move all the time (para. 8). The obvious answer is to run the animals in smaller mobs and to have more night bomas. While the former implies the engagement of more herdsmen, the latter entails little if any additional expense.l/ 13. Handling Facilities. The fact that animals are centered in a few large bomas also means that organizing tick control (to check East-Coast Fever) is more difficult. Tick control has to be done each week, and there- fore it is convenient to treat one-fifth or one-sixth of the herd on each working day of the week. This was not done; instead, at least on the ranches visited by the audit mission, all animals were dipped or sprayed on one or two 1/ A Bank livestock specialist comments on this issue as follows: "Although the degree of tree cover is an important factor in ranch development and animal management, ... a focus on one technical aspect ... when a large complex of factors is undoubtedly involved in performance...is inappropriate...".  - 11 - 26. The outcome of this development was clearly foreseeable. Even without any increase in the number of animals using the traditional village area, out-migration for part of the year has become the rule rather than the exception. This situation would be clearly exacerbated by increasing overall stock numbers. What has in fact happened was that when grazing became short, the individually owned village cattle encroached on the areas set aside for the ranches and migrated south only when that grazing was also exhausted. This left the ranch cattle with even less feed than would have been the case. Since no arrangements exist in Tanzania to agister2J cattle, village ranch herds suffered badly in dry years. Such arrangements that could be made to send cattle to areas where grazing was available were ad hoc, not repeatable and occurred but rarely.2 / Nevertheless, debt repayment by the Village and Ujamaa ranching corporations to the Tanzania Rural Development Bank (TRDB) is good, mainly because of the high increase in the nominal, if not real, price of cattle and because the greater part of costs were covered by grants from the Rural Development Board. However, their direct contribu- tion to the village area's economy remained minimal. 27. Indirectly, there were some benefits. Improved bulls, Boran or Boran crosses, were introduced to the Village and Ujamaa ranches, upgrading local stock. Water resources were developed, which helped all animals, not only those on the ranches. However, all these improvements could have been brought about more cheaply and undoubtedly more effectively without the establishment of the ranches. While this approach may not have been feasible in 1972/73, when the villagisation and the Ujamaa movement was in the forefront of the Government Planners- mind, the Bank should have resisted any plan that increased cattle numbers in any part of Sukumaland; increasing quality of the breeding herd and their management, and thereby offtake per- centages, was the only technically feasible betterment mode. 28. One inevitable general problem faced by NARCO, DDC and, to some extent, the Village and Ujamaa ranches was the quality of the female animals with which they were forced to start their operation. The heifers were bought in cattle markets through TLMC [para. 2-B (iv)] and traders. The primary sellers were the small stock owners who knew their animals intimately and, obviously, were not going to sell their best heifers or the female offspring of their prolific cows. This accounts for the low calving rates of purchased heifers (at the DDC ranch mentioned in para. 7) and also initial difficulties in getting the first-calvers in calf again. The quality and heredity of the heifers with which the ranches have started partly account for calving er- centages being much below appraisal estimates. This could and should have been foreseen at appraisal. I/ to send cattle to other areas for part of the year and pay either a grazing fee or a share of the animals for services rendered by the recipient. 2/ Information provided to the audit mission by TRDB staff.  - 11 - 26. The outcome of this development was clearly foreseeable. Even without any increase in the number of animals using the traditional village area, out-migration for part of the year has become the rule rather than the exception. This situation would be clearly exacerbated by increasing overall stock numbers. What has in fact happened was that when grazing became short, the individually owned village cattle encroached on the areas set aside for the ranches and migrated south only when that grazing was also exhausted. This left the ranch cattle with even less feed than would have been the case. Since no arrangements exist in Tanzania to agister2J cattle, village ranch herds suffered badly in dry years. Such arrangements that could be made to send cattle to areas where grazing was available were ad hoc, not repeatable and occurred but rarely.2 / Nevertheless, debt repayment by the Village and Ujamaa ranching corporations to the Tanzania Rural Development Bank (TRDB) is good, mainly because of the high increase in the nominal, if not real, price of cattle and because the greater part of costs were covered by grants from the Rural Development Board. However, their direct contribu- tion to the village area's economy remained minimal. 27. Indirectly, there were some benefits. Improved bulls, Boran or Boran crosses, were introduced to the Village and Ujamaa ranches, upgrading local stock. Water resources were developed, which helped all animals, not only those on the ranches. However, all these improvements could have been brought about more cheaply and undoubtedly more effectively without the establishment of the ranches. While this approach may not have been feasible in 1972/73, when the villagisation and the Ujamaa movement was in the forefront of the Government Planners- mind, the Bank should have resisted any plan that increased cattle numbers in any part of Sukumaland; increasing quality of the breeding herd and their management, and thereby offtake per- centages, was the only technically feasible betterment mode. 28. One inevitable general problem faced by NARCO, DDC and, to some extent, the Village and Ujamaa ranches was the quality of the female animals with which they were forced to start their operation. The heifers were bought in cattle markets through TLMC [para. 2-B (iv)] and traders. The primary sellers were the small stock owners who knew their animals intimately and, obviously, were not going to sell their best heifers or the female offspring of their prolific cows. This accounts for the low calving rates of purchased heifers (at the DDC ranch mentioned in para. 7) and also initial difficulties in getting the first-calvers in calf again. The quality and heredity of the heifers with which the ranches have started partly account for calving er- centages being much below appraisal estimates. This could and should have been foreseen at appraisal. I/ to send cattle to other areas for part of the year and pay either a grazing fee or a share of the animals for services rendered by the recipient. 2/ Information provided to the audit mission by TRDB staff.  - 11 - 26. The outcome of this development was clearly foreseeable. Even without any increase in the number of animals using the traditional village area, out-migration for part of the year has become the rule rather than the exception. This situation would be clearly exacerbated by increasing overall stock numbers. What has in fact happened was that when grazing became short, the individually owned village cattle encroached on the areas set aside for the ranches and migrated south only when that grazing was also exhausted. This left the ranch cattle with even less feed than would have been the case. Since no arrangements exist in Tanzania to agister2J cattle, village ranch herds suffered badly in dry years. Such arrangements that could be made to send cattle to areas where grazing was available were ad hoc, not repeatable and occurred but rarely.2 / Nevertheless, debt repayment by the Village and Ujamaa ranching corporations to the Tanzania Rural Development Bank (TRDB) is good, mainly because of the high increase in the nominal, if not real, price of cattle and because the greater part of costs were covered by grants from the Rural Development Board. However, their direct contribu- tion to the village area's economy remained minimal. 27. Indirectly, there were some benefits. Improved bulls, Boran or Boran crosses, were introduced to the Village and Ujamaa ranches, upgrading local stock. Water resources were developed, which helped all animals, not only those on the ranches. However, all these improvements could have been brought about more cheaply and undoubtedly more effectively without the establishment of the ranches. While this approach may not have been feasible in 1972/73, when the villagisation and the Ujamaa movement was in the forefront of the Government Planners- mind, the Bank should have resisted any plan that increased cattle numbers in any part of Sukumaland; increasing quality of the breeding herd and their management, and thereby offtake per- centages, was the only technically feasible betterment mode. 28. One inevitable general problem faced by NARCO, DDC and, to some extent, the Village and Ujamaa ranches was the quality of the female animals with which they were forced to start their operation. The heifers were bought in cattle markets through TLMC [para. 2-B (iv)] and traders. The primary sellers were the small stock owners who knew their animals intimately and, obviously, were not going to sell their best heifers or the female offspring of their prolific cows. This accounts for the low calving rates of purchased heifers (at the DDC ranch mentioned in para. 7) and also initial difficulties in getting the first-calvers in calf again. The quality and heredity of the heifers with which the ranches have started partly account for calving er- centages being much below appraisal estimates. This could and should have been foreseen at appraisal. I/ to send cattle to other areas for part of the year and pay either a grazing fee or a share of the animals for services rendered by the recipient. 2/ Information provided to the audit mission by TRDB staff.  - 11 - 26. The outcome of this development was clearly foreseeable. Even without any increase in the number of animals using the traditional village area, out-migration for part of the year has become the rule rather than the exception. This situation would be clearly exacerbated by increasing overall stock numbers. What has in fact happened was that when grazing became short, the individually owned village cattle encroached on the areas set aside for the ranches and migrated south only when that grazing was also exhausted. This left the ranch cattle with even less feed than would have been the case. Since no arrangements exist in Tanzania to agister2J cattle, village ranch herds suffered badly in dry years. Such arrangements that could be made to send cattle to areas where grazing was available were ad hoc, not repeatable and occurred but rarely.2 / Nevertheless, debt repayment by the Village and Ujamaa ranching corporations to the Tanzania Rural Development Bank (TRDB) is good, mainly because of the high increase in the nominal, if not real, price of cattle and because the greater part of costs were covered by grants from the Rural Development Board. However, their direct contribu- tion to the village area's economy remained minimal. 27. Indirectly, there were some benefits. Improved bulls, Boran or Boran crosses, were introduced to the Village and Ujamaa ranches, upgrading local stock. Water resources were developed, which helped all animals, not only those on the ranches. However, all these improvements could have been brought about more cheaply and undoubtedly more effectively without the establishment of the ranches. While this approach may not have been feasible in 1972/73, when the villagisation and the Ujamaa movement was in the forefront of the Government Planners- mind, the Bank should have resisted any plan that increased cattle numbers in any part of Sukumaland; increasing quality of the breeding herd and their management, and thereby offtake per- centages, was the only technically feasible betterment mode. 28. One inevitable general problem faced by NARCO, DDC and, to some extent, the Village and Ujamaa ranches was the quality of the female animals with which they were forced to start their operation. The heifers were bought in cattle markets through TLMC [para. 2-B (iv)] and traders. The primary sellers were the small stock owners who knew their animals intimately and, obviously, were not going to sell their best heifers or the female offspring of their prolific cows. This accounts for the low calving rates of purchased heifers (at the DDC ranch mentioned in para. 7) and also initial difficulties in getting the first-calvers in calf again. The quality and heredity of the heifers with which the ranches have started partly account for calving er- centages being much below appraisal estimates. This could and should have been foreseen at appraisal. I/ to send cattle to other areas for part of the year and pay either a grazing fee or a share of the animals for services rendered by the recipient. 2/ Information provided to the audit mission by TRDB staff.  - 11 - 26. The outcome of this development was clearly foreseeable. Even without any increase in the number of animals using the traditional village area, out-migration for part of the year has become the rule rather than the exception. This situation would be clearly exacerbated by increasing overall stock numbers. What has in fact happened was that when grazing became short, the individually owned village cattle encroached on the areas set aside for the ranches and migrated south only when that grazing was also exhausted. This left the ranch cattle with even less feed than would have been the case. Since no arrangements exist in Tanzania to agister2J cattle, village ranch herds suffered badly in dry years. Such arrangements that could be made to send cattle to areas where grazing was available were ad hoc, not repeatable and occurred but rarely.2 / Nevertheless, debt repayment by the Village and Ujamaa ranching corporations to the Tanzania Rural Development Bank (TRDB) is good, mainly because of the high increase in the nominal, if not real, price of cattle and because the greater part of costs were covered by grants from the Rural Development Board. However, their direct contribu- tion to the village area's economy remained minimal. 27. Indirectly, there were some benefits. Improved bulls, Boran or Boran crosses, were introduced to the Village and Ujamaa ranches, upgrading local stock. Water resources were developed, which helped all animals, not only those on the ranches. However, all these improvements could have been brought about more cheaply and undoubtedly more effectively without the establishment of the ranches. While this approach may not have been feasible in 1972/73, when the villagisation and the Ujamaa movement was in the forefront of the Government Planners- mind, the Bank should have resisted any plan that increased cattle numbers in any part of Sukumaland; increasing quality of the breeding herd and their management, and thereby offtake per- centages, was the only technically feasible betterment mode. 28. One inevitable general problem faced by NARCO, DDC and, to some extent, the Village and Ujamaa ranches was the quality of the female animals with which they were forced to start their operation. The heifers were bought in cattle markets through TLMC [para. 2-B (iv)] and traders. The primary sellers were the small stock owners who knew their animals intimately and, obviously, were not going to sell their best heifers or the female offspring of their prolific cows. This accounts for the low calving rates of purchased heifers (at the DDC ranch mentioned in para. 7) and also initial difficulties in getting the first-calvers in calf again. The quality and heredity of the heifers with which the ranches have started partly account for calving er- centages being much below appraisal estimates. This could and should have been foreseen at appraisal. I/ to send cattle to other areas for part of the year and pay either a grazing fee or a share of the animals for services rendered by the recipient. 2/ Information provided to the audit mission by TRDB staff.  - 16 - unit are of cast iron, while the present standards require them to be of stainless steel. The project had no plans to modernize cooking and canning installations, which may well have been an oversight. 42. Another issue affecting the financial viability of the Kawe plant is a rival slaughterhouse which now supplies the bulk of the fresh meat consumed in Dar-es-Salaam, situated at Vingonguti. This facility has been condemned as unsanitary since the late 1960s, yet, despite repeated requests by the Bank and repeated promises by the Government that they will prevail on the city authorities of Dar-es-Salaam to close it, this has not yet happened. Private views solicited by the audit mission doubted whether it will ever be possible to close the Vingonguti abbatoir. Its continued operation, while not an economic loss to Tanzania (apart from the risk of diseases due to unhygienic slaughter conditions), is a continuing financial loss to TPL, which now cannot service the Dar-es-Salaam butchery trade; therefore, its slaughter facilities operate well below capacity and do not meet overhead costs. 43. Market Research and Development. Finally, and notwithstanding TPL's optimism, in 1982, regarding its future outlets (para. 39), there is little doubt that TPL needs to organize a systematic market research and development effort for its main product, which is some form of processed beef. In the view of the audit, the Bank should have continued to advise in emphatic terms that they do so.l/ D. Impact of the Project 44. General. This project, which followed a relatively small ranching project,2/ expanded into fields of meat processing and marketing in which its management had little or no experience, especially, after nationalization (para. 2). Even the ranching component of the first project showed financial losses that should have engendered a more cautious approach and a smaller second project. Furthermore, beyond this general observation, specific portents have pointed in the same direction. 45. Ranching. Without a doubt, some of the NARCO and village ranches have added to the cattle wealth of the country by establishing ranches in areas where little or nothing was produced previously.3/ Other NARCO ranches, and most of the Village and Ujamaa ranches, however, merely replaced 1/ The Region comments as follows: "Emphasis was given by Bank supervision and review missions [during project implementation] to market development until the later years of the project when export prospects were nil". 2/ Cr. 132-TA was for US$1.3 million; total project costs were about US$2 million. 3/ See footnote to para. 5.  - 16 - unit are of cast iron, while the present standards require them to be of stainless steel. The project had no plans to modernize cooking and canning installations, which may well have been an oversight. 42. Another issue affecting the financial viability of the Kawe plant is a rival slaughterhouse which now supplies the bulk of the fresh meat consumed in Dar-es-Salaam, situated at Vingonguti. This facility has been condemned as unsanitary since the late 1960s, yet, despite repeated requests by the Bank and repeated promises by the Government that they will prevail on the city authorities of Dar-es-Salaam to close it, this has not yet happened. Private views solicited by the audit mission doubted whether it will ever be possible to close the Vingonguti abbatoir. Its continued operation, while not an economic loss to Tanzania (apart from the risk of diseases due to unhygienic slaughter conditions), is a continuing financial loss to TPL, which now cannot service the Dar-es-Salaam butchery trade; therefore, its slaughter facilities operate well below capacity and do not meet overhead costs. 43. Market Research and Development. Finally, and notwithstanding TPL's optimism, in 1982, regarding its future outlets (para. 39), there is little doubt that TPL needs to organize a systematic market research and development effort for its main product, which is some form of processed beef. In the view of the audit, the Bank should have continued to advise in emphatic terms that they do so.l/ D. Impact of the Project 44. General. This project, which followed a relatively small ranching project,2/ expanded into fields of meat processing and marketing in which its management had little or no experience, especially, after nationalization (para. 2). Even the ranching component of the first project showed financial losses that should have engendered a more cautious approach and a smaller second project. Furthermore, beyond this general observation, specific portents have pointed in the same direction. 45. Ranching. Without a doubt, some of the NARCO and village ranches have added to the cattle wealth of the country by establishing ranches in areas where little or nothing was produced previously.3/ Other NARCO ranches, and most of the Village and Ujamaa ranches, however, merely replaced 1/ The Region comments as follows: "Emphasis was given by Bank supervision and review missions [during project implementation] to market development until the later years of the project when export prospects were nil". 2/ Cr. 132-TA was for US$1.3 million; total project costs were about US$2 million. 3/ See footnote to para. 5.  - 18 - in overcoming past problems and new ones as they arise.-/ The audit under- stands that LIDA would welcome visits by the Bank's technical staff, which may well be more fruitful than in the past, when necessarily much time had to be spent by missions on financial, administrative and procurement details, possibly at the expense of matters that have greater long-term consequences. The 2jnechanism to continue involvement is laid down in Section 7.04 of the DCA- and would be a positive step in the Bank's desire to promote develop- ment in sub-Saharan Africa. 50. Finally, and notwithstanding the fact that livestock projects supported by the Bank in Africa are on the whole less successful than those dealing with crop production (OED Fifth, Sixth and Seventh Annual Reviews, Chapter 3), the audit believes it would be a disservice to development to discontinue Bank involvement in the sector. The problems presented are undoubtedly more complex; nevertheless, livestock development offers the only hope of economic advancement in the drier savannah areas of Africa, and therefore the Bank must continue to meet the challenge to identify and success- fully solve the technical and managerial problems livestock projects present. 1/ Precedents for supervision to continue after a project has been closed and audited do exist. 2/ According to which the provisions of the DCA end not before May 22, 1993.  - 19 - TANZANIA SECOND LIVESTOCK DEVELOPMENT PROJECT - CREDIT 382-TA PROJECT COMPLETION REPORT July 14, 1981 Eastern Africa Projects Department Regional Mission in Eastern Africa  - 21 - TANZANIA SECOND LIVESTOCK DEVELOPMENT PROJECT - CREDIT 382-TA PROJECT COMPLETION REPORT I. INTRODUCTION 1.01 The Government of Tanzania placed high priority on agricultural and rural development in its Second Five Year Plan (1969-74). Its goals in the agricultural sector were based on the organisation of rural economic activity on socialist lines. This included the encouragement of village cooperative and collective activities, the expansion of rural credit, the formation of District Development Corporations (DDC) and the expansion of parastatal marketing and production institutions. 1.02 Government considered livestock development to be a very important component of agricultural production and that it had a high potential for expansion. In late 1969, the Minister of Agriculture and Cooperatives appointed a Project Preparation Committee to prepare a livestock project suitable for World Bank financing. The principal objective would be "to improve the productivity of the 13 million head 1/ of cattle in the traditional herd, and lay the basis for the patterns of investment which could release the herd's full potential." 1.03 A preparation report was completed in November 1971 and the Government requested financial assistance from the Bank to implement a project based on the report. The project was designed to follow the ongoing First Livestock Development Project (Credit 132-TA), which had begun with IDA assistance in 1968 and was essentially a parastatal ranch development project; the new project would, however, have a wider involvement in the livestock subsector. The project was appraised in February-March 1972, negotiated in February 1973, approved by the Board in April, and became effective on 7/28/73. 1.04 The Credit was the fifth in the agricultural sector. The first was in 1966 for agricultural credit, and was followed by the livestock project, a tobacco and a tea project. The Credit was for US$18.5 million. 1.05 The completion report was prepared by one staff member who has supervised the project since late 1976. It is based on a review of reports, documents and correspondence available at RMEA and a 9-day mission to Tanzania. Prior to the field mission in early February 1981, comprehensive instructions were sent to project agencies in November 1980 indicating the data which should be collated for the completion report. The mission was delayed a week at the request of the project management to permit the compilation of the 1 The national herd was assumed to be of this magnitude at the time.  - 22 - requested data. Responses prepared by the agencies ranged from satisfactory to very poor. Extensive follow-up communication was necessary to obtain data which project agencies undertook to prepare for the mission after it returned to Nairobi. The last submission was received in June 1981. II. PROJECT FORMULATION General 2.01 The project preparation report was based on preparation work done between February 1970 and October 1971. Components included parastatal and village beef ranch development, cattle marketing and processing investment, land clearing for tsetse control, technical services and investment in control of foot and mouth disease (FMD). The Ministry of Agriculture and Cooperatives and the Tanzania Rural Development Bank (TRDB) were the major Government agencies contributing to the preparation, and had assistance from the World Bank Permanent Mission for Eastern Africa. Two consultants - an individual for preparation of parastatal ranch plans, and an engineering company (USA) for the meat processing component - were employed by Government to complement the preparation team. Overall the report was well presented and well documented. 2.02 The team for the appraisal mission in February - March 1972 was composed of three World Bank staff and four consultants. A number of changes were made to Government-s proposal during the subsequent to the appraisal mission before the Credit was signed. The approved project had the following components: (a) development of 8 new ranches under the National Agricultural Company Ltd. (NACO) 1/, averaging 40,000 ha each in unoccupied or underutilised land, and further development of 3 existing ranches of similar size under the same company; (b) establishment of 4 DDC ranches averaging 40,000 ha in under- utilised areas; (c) establishment fo 22 ujamaa cooperative 2/ ranches on under- utilised land in the Shinyanga region (each 50,000 ha), Dodoma region (each 20,000 ha) and Masai areas of Arusha region (each 5,000 ha). 1/ Subsequently under the National Ranching Company (NARCO); this component represented an extension of the Phase I project (Credit 132-TA). 2/ "Ujamaa" referred to a concept in which communal/collective activities would predominate in a society.  - 23 - (d) development of 33 new livestock markets and renovation of 104 existing markets; formation of 4 holding grounds, development of 2,300 km of new stock routes and improvement of 2,200 km of existing stock routes; and the establishment of a parastatal marketing company, Tanzania Livestock Marketing Co. (TLMC), to carry out these livestock movement/marketing developments and operate the facilities; (e) construction of 2 new meat plants (at Shinyanga in the western zone and at Mbeya in the southwestern zone, which are 1032 km and 935 km, respectively from Dar es Salaam), and the renovation of the existing plant at Kawe (in Dar es Salaam); a new meat processing company would be formed to undertake this development; and (f) procurement of heavy earth-moving equipment for the tsetse control unit (under the Ministry of Agriculture) for development work in the ranching and marketing components. 2.03 The changes which occurred between preparation and Credit signing are summarised in Table 1. The total project cost was reduced from US$38.37 million to US$24.7 million, and the proporations allocated to various components were modified. The support for NACO parastatal ranching was increased from 7 to 11 ranches. 1/ The appraisal mission reduced the number of village ranches and DDC ranches; this was due to there being inadequate experience with these types of development in Tanzania. Subsequent to appraisal, village ranches in the Westlake region were deleted at the request of Government. The FMD vaccine production facility was also considered unjustified and excluded. However, a lower cost FMD strain typing laboratory was included at negotiations. The meat processing component was modified to exclude the re-equipping and re-opening of the Arusha plant. The meat canning investment at the propsoed Shinyanga plant was excluded as the appraisal mission considered that canning operations should be concentrated at the Kawe plant in Dar es Salaam; boned out frozen meat would be sent from Shinyanga and Mbeya to Kawe for canning. Livestock procurement for the meat plants was also deleted from the working capital to be financed under the Credit. Comments on formulation of specific components follow. Tanzania Livestock Marketing Corporation (TLMC) 2.04 The appraisal report states that the marketing system was poorly developed prior to the project. About 220 primary markets (116 with "per- manent" facilities) were operated by district councils and 5 larger markets by the Ministry of Agriculture, but virtually none had "proper" facilities or 1/ When the Tanzanian Cabinet reviewed the project proposals, they were not in favor of the Westlake region Mwisa cooperative ranches, as they considered the scheme involved excessive Government support and subsidy and not enough of the "self help" principles. Government suggested 4 NACO ranches should be substituted, and the NACO ranches for development wee therefore increased from 7 to 11.  - 23 - (d) development of 33 new livestock markets and renovation of 104 existing markets; formation of 4 holding grounds, development of 2,300 km of new stock routes and improvement of 2,200 km of existing stock routes; and the establishment of a parastatal marketing company, Tanzania Livestock Marketing Co. (TLMC), to carry out these livestock movement/marketing developments and operate the facilities; (e) construction of 2 new meat plants (at Shinyanga in the western zone and at Mbeya in the southwestern zone, which are 1032 km and 935 km, respectively from Dar es Salaam), and the renovation of the existing plant at Kawe (in Dar es Salaam); a new meat processing company would be formed to undertake this development; and (f) procurement of heavy earth-moving equipment for the tsetse control unit (under the Ministry of Agriculture) for development work in the ranching and marketing components. 2.03 The changes which occurred between preparation and Credit signing are summarised in Table 1. The total project cost was reduced from US$38.37 million to US$24.7 million, and the proporations allocated to various components were modified. The support for NACO parastatal ranching was increased from 7 to 11 ranches. 1/ The appraisal mission reduced the number of village ranches and DDC ranches; this was due to there being inadequate experience with these types of development in Tanzania. Subsequent to appraisal, village ranches in the Westlake region were deleted at the request of Government. The FMD vaccine production facility was also considered unjustified and excluded. However, a lower cost FMD strain typing laboratory was included at negotiations. The meat processing component was modified to exclude the re-equipping and re-opening of the Arusha plant. The meat canning investment at the propsoed Shinyanga plant was excluded as the appraisal mission considered that canning operations should be concentrated at the Kawe plant in Dar es Salaam; boned out frozen meat would be sent from Shinyanga and Mbeya to Kawe for canning. Livestock procurement for the meat plants was also deleted from the working capital to be financed under the Credit. Comments on formulation of specific components follow. Tanzania Livestock Marketing Corporation (TLMC) 2.04 The appraisal report states that the marketing system was poorly developed prior to the project. About 220 primary markets (116 with "per- manent" facilities) were operated by district councils and 5 larger markets by the Ministry of Agriculture, but virtually none had "proper" facilities or 1/ When the Tanzanian Cabinet reviewed the project proposals, they were not in favor of the Westlake region Mwisa cooperative ranches, as they considered the scheme involved excessive Government support and subsidy and not enough of the "self help" principles. Government suggested 4 NACO ranches should be substituted, and the NACO ranches for development wee therefore increased from 7 to 11.  - 23 - (d) development of 33 new livestock markets and renovation of 104 existing markets; formation of 4 holding grounds, development of 2,300 km of new stock routes and improvement of 2,200 km of existing stock routes; and the establishment of a parastatal marketing company, Tanzania Livestock Marketing Co. (TLMC), to carry out these livestock movement/marketing developments and operate the facilities; (e) construction of 2 new meat plants (at Shinyanga in the western zone and at Mbeya in the southwestern zone, which are 1032 km and 935 km, respectively from Dar es Salaam), and the renovation of the existing plant at Kawe (in Dar es Salaam); a new meat processing company would be formed to undertake this development; and (f) procurement of heavy earth-moving equipment for the tsetse control unit (under the Ministry of Agriculture) for development work in the ranching and marketing components. 2.03 The changes which occurred between preparation and Credit signing are summarised in Table 1. The total project cost was reduced from US$38.37 million to US$24.7 million, and the proporations allocated to various components were modified. The support for NACO parastatal ranching was increased from 7 to 11 ranches. 1/ The appraisal mission reduced the number of village ranches and DDC ranches; this was due to there being inadequate experience with these types of development in Tanzania. Subsequent to appraisal, village ranches in the Westlake region were deleted at the request of Government. The FMD vaccine production facility was also considered unjustified and excluded. However, a lower cost FMD strain typing laboratory was included at negotiations. The meat processing component was modified to exclude the re-equipping and re-opening of the Arusha plant. The meat canning investment at the propsoed Shinyanga plant was excluded as the appraisal mission considered that canning operations should be concentrated at the Kawe plant in Dar es Salaam; boned out frozen meat would be sent from Shinyanga and Mbeya to Kawe for canning. Livestock procurement for the meat plants was also deleted from the working capital to be financed under the Credit. Comments on formulation of specific components follow. Tanzania Livestock Marketing Corporation (TLMC) 2.04 The appraisal report states that the marketing system was poorly developed prior to the project. About 220 primary markets (116 with "per- manent" facilities) were operated by district councils and 5 larger markets by the Ministry of Agriculture, but virtually none had "proper" facilities or 1/ When the Tanzanian Cabinet reviewed the project proposals, they were not in favor of the Westlake region Mwisa cooperative ranches, as they considered the scheme involved excessive Government support and subsidy and not enough of the "self help" principles. Government suggested 4 NACO ranches should be substituted, and the NACO ranches for development wee therefore increased from 7 to 11.  - 26 - (d) A new company, the Tanzania Meat Processing Company (TMPC) would be created and would own and operate the three plants. Its headquarters would be in Dar es Salaam, with branches in Shinyanga and Mbeya. No mention was made of a possible nationalisation of the Kawe plant. (e) As in the past, Tanzanian exports would consist mostly of canned cooked meat, as imports of fresh/chilled meat from countries with foot and mouth disease are banned by most European countries. The United Kingdom would remain the major market for Tanzania exports of CCB and by-products, as the UK seemed to have an unlimited market for corned beef. Tanzania only supplied about 3% of the UK imports of corned beef at the time. To ensure continued entry into this market and to enable Tanzania to avail itself of opportunities in other markets should they arise, the goal was set that all three plants included in the project would have to qualify for the UK, US and EEC sanitary standards. (f) The appraisal team was not aware of the possibility of re- opening the municipal abattoir at Vingonguti to custom slaughter for the Dar es Salaam market. It was assumed this would be a function of the Kawe plant. (g) Expansion of the meat processing industry would be supported by increased livestock production from both the modern and the traditional sectors. The presence of the meat plants in the livestock producing areas, the state and district ranches, and the market organization to be developed under the Project, would allow for a considerable increase in the offtake of cattle from the traditional herd. (h) A basic premise in the development strategy was that the national cattle herd stood at about 13 million head in 1970. On this basis, the appraisal mission assumed that internal supply/demand forces and pricing policy would be such as to allow the export of meat, especially CCB, at profitable prices. 2.09 As will be seen in Sector IV (paras 4.14 to 4.16), the most serious problem affecting the viability of the meat processing investment is the unlikelihood of Tanzania being able to profitably export canned meat in the foreseeable future. Due to local demand increasing at a greater rate than supply, local cattle and meat values have reached levels that preclude Tanzania from competing in the international market, even if it had an EEC export certificate for canned meat products. This situation was not foreseen at appraisal. As no detailed analysis of this issue was included in the appraisal report, it can be assumed that the mission accepted the data included in the preparation report.  - 26 - (d) A new company, the Tanzania Meat Processing Company (TMPC) would be created and would own and operate the three plants. Its headquarters would be in Dar es Salaam, with branches in Shinyanga and Mbeya. No mention was made of a possible nationalisation of the Kawe plant. (e) As in the past, Tanzanian exports would consist mostly of canned cooked meat, as imports of fresh/chilled meat from countries with foot and mouth disease are banned by most European countries. The United Kingdom would remain the major market for Tanzania exports of CCB and by-products, as the UK seemed to have an unlimited market for corned beef. Tanzania only supplied about 3% of the UK imports of corned beef at the time. To ensure continued entry into this market and to enable Tanzania to avail itself of opportunities in other markets should they arise, the goal was set that all three plants included in the project would have to qualify for the UK, US and EEC sanitary standards. (f) The appraisal team was not aware of the possibility of re- opening the municipal abattoir at Vingonguti to custom slaughter for the Dar es Salaam market. It was assumed this would be a function of the Kawe plant. (g) Expansion of the meat processing industry would be supported by increased livestock production from both the modern and the traditional sectors. The presence of the meat plants in the livestock producing areas, the state and district ranches, and the market organization to be developed under the Project, would allow for a considerable increase in the offtake of cattle from the traditional herd. (h) A basic premise in the development strategy was that the national cattle herd stood at about 13 million head in 1970. On this basis, the appraisal mission assumed that internal supply/demand forces and pricing policy would be such as to allow the export of meat, especially CCB, at profitable prices. 2.09 As will be seen in Sector IV (paras 4.14 to 4.16), the most serious problem affecting the viability of the meat processing investment is the unlikelihood of Tanzania being able to profitably export canned meat in the foreseeable future. Due to local demand increasing at a greater rate than supply, local cattle and meat values have reached levels that preclude Tanzania from competing in the international market, even if it had an EEC export certificate for canned meat products. This situation was not foreseen at appraisal. As no detailed analysis of this issue was included in the appraisal report, it can be assumed that the mission accepted the data included in the preparation report.  - 28 - Year Inventory Cattle Increment ('000) (%) 1958 7417 - 1959 7719 4 1960 7940 3 1961 8139 3 1962 7832 (4) 1963 8098 3 1964 8782 8 1965 9997 1/ 14 Also, the preparation report states that a 5.6% annual growth rate occurred between 1954 and 1965, and subsequently used this figure in projecting the high estimate. The correct rate for that period is 4.01% according to the figures presented (1954 - 6,488,000) in those years. The low rate of 2.75 was used to reflect the inventory change between 1921 and 1965; the correct figure is slightly lower at 2.70. 2.13 Consequently, there was a basic flaw in the formulation of the meat processing component of the project. The size of the national herd was substantially below the assumed levels (about 25% less), and herd growth rate assumptions were overoptimistic. Ranching Components 2.14 The NARCO ranching component was a follow-on to the First Livestock Development Project (Cr. 132-TA), which was essentially a ranching project. The Project Completion Report (PCR) and the Project Performance Audit Report (PPAR) on Credit 132-TA indicated that although the physical development and the operating costs on ranches were satisfactory, the ranch management was of a low standard, coefficients of production were low and overhead organisation was inadequate and costly. The PPAR addressed the issue of why such an expensive second phase ranching project should have been undertaken when the problems of the first project were evident, and this issue is again elaborated in Section VII. In hindsight, it now appears certain that the NARCO ranching component was far too ambitious considering the institutional and managerial limitations existing at the time of appraisal. The modifications which had to be made to this component (paras 3.26, 3.27) are ample evidence of this. 2.15 The DDC ranching component consisted of 4 ranches only. As this type of ranching organisation, which was essentially public sector ranching under a district authority which had various business interests, was relatively new in Tanzania, it was appropriate that only 4 such ventures should be included in the project. 1/ It is interesting to note that the report on the 1978 census used the 1964 figure rather than the 1965 figure as a ase to measure growth rates to the 1978 livestock count (2.25% p.a.).  - 29 - 2.16 The ujamaa cooperative ranches were a new development concept in line with the socialist political philosophy of Tanzania. Government wished to use this concept as "the key to present and future impact on the traditional herd". The preparation report included three types of ujamaa ranches. The first was based on relatively small groups of about 10 families be:Lng allocated unutilised land to form a ranch of 2,500 ha; labor for infrastructure develop- ment and 20 head of cattle (assumedly the whole of the herd owned by a member) would be the member contribution to the total development which would be largely financed by TRDB; Government would subsidize each family with TSh 600 per annum for 6 years. The second type was based on livestock/agricultural villages and would usually be more than 30 families and cover at least 4,000 ha. No cash subsistence would be given to this group, as they could rely on subsistence/cash crop production. The first type of ujamaa would receive greater emphasis under the project than the second type, as the Government considered that its potential for improvement in the traditional beef sector was very high. The third form of ujamaa ranch was that proposed to develop the Mwisa area in the Westlake Region after tsetse fly clearance (37 new ranches). The Mwisa ujamaa development would be supported by a special Project Management Service in the area. 2.17 The 90 ujamaa ranches proposed in areas other than the Westlake region were reduced by the appraisal mission to 14 of the first and second types described in the preceding paragraph. In addition, 8 bull breeding cooperative ranches were included in the Masai areas of Arusha Region. The latter would be about 4,000 ha and be associated with larger (150,000 ha) Ranching Associations; these were relatively loose associations of Masai livestock owners formed under the Range Development and Management Act. These major changes from the original proposal were due to the Bank considering that the development concept was as yet untried in Tanzania. After appraisal, the Mwisa cooperative ranch proposal was deleted at the request of Government. The Tanzanian Cabinet considered that ther was not enough of the "self help" principle incorporated in the schemes. 2.18 Considerable attention was given to the principles of the cooperative ranching concept in Annex 2 of the appraisal report. An ujamaa ranch "would recruit members willing to move to a ranch site, contribute animals to give it a start, contribute labor to run the ranch 1/, accept the principle of some commercial ownership of property ... be willing to accept the discipline imposed by the technical management, and to tolerate a rather low standard of living for a period of up to 10 years". The aim would be "to bring essentially unused land into productive use rather than to rework existing holdings in a new manner". This meant that only areas with low population density (0 to 6 per square km) were considered suitable for ujamaa ranch location. 2/ Each 1/ However, the text of the appraisal report (para 3.07) indicated that management and operational labor would be paid, as did the financial tables of the ranch models. Labor would be contributed for infras- structural development. 2/ This low population density would be largely associated with lack of water supplies which could be developed under the scheme.  - 30 - unit of about 10,000 ha 1/ would register as a primary cooperative society and would be issued with a certificate of occupancy guaranteeing exclusive use of the area allocated to it. The cooperative would be eligible for a development loan through TRDB. Secondary societies (Farming Unions) would be formed where husbandry and resource use considerations made larger units appropriate. A project management unit 2/ and TRDB, in collaboration with the Ministry of Agriculture Regional Directors, would be responsible for promoting and assisting in the formation and development of the ranches. 2.19 The ujamaa ranch model presented in the tables of the appraisal report for the non-Masai situation assumed that Government would subsidize each family at TSh 600/family for six years, and that this would cover their living expenses while the ranch was in the development and herd build-up stage. However, this model in Annex 6 of the report erroneously used the Mwisa ranch situation (Westlake Region) which was excluded from the project appraisal. Also, no Government contribution is included under the ujamaa ranch component in the project financing table in para 3.17 of the appraisal report. It therefore appears that this was an error in the report, and that the mission intended that no subsistence subsidy would be given, as proposed for the mixed livestock/agriculture villages in the preparation report. The appraisal report was therefore rather confusing in the type of cooperative ranching proposed for the non-Masai areas. The annex suggested that both the "new ranch site - total livestock dependence" concept and the livestock/agricultural village type of development would be used. The text implies only the latter form of organization. The Masai bull breeding model assumed that members would continue to maintain their own herds in the Ranching Associations from which the members came and would not need the Government subsidy. 2.20 A number of circumstances arose during implementation which resulted in a less than satisfactory performance of this component; these are elaborated in Section IV. However, with respect to formulation of this component, the PCR mission considers that the Bank was justified in scaling the component 1/ The appraisal report annex indicated 10,000 ha would be the most appropriate size, whereas the main text of the report (para 3.07) indicated 50,000 ha as a suitable size in Shinyanga and 20,000 ha in Dodoma. The annex indicates 15 ranches would be included in the project, whereas the text includes 22 ranches. 2/ A Project Management Committee was established for the project in accordance with legal agreements and was chaired by the Managing Director of LIDA and comprised senior officials of LIDA and its subsidiaries. A project executive committee was also formed under the chairmanship of the Director of Live- stock Development in the MOA to ensure coordination between the LIDA companies and other agencies. Membership included LIDA companies, TRDB, and the Prime Minister's Office (responsible for ujamaa villages and DDC's).  - 31 - down to 22 cooperative ranches. It further maintains that it would have been even more appropriate if the component was excluded completely until the applicability of the concept had been demonstrated. This is because the mission considers that a knowledge of the values placed on cattle and consequent attitudes to their ownership and management of traditional Tanzanian livestock owners should have indicated that an acceptance of voluntary loss of responsi- bility for individual ownership of cattle would have been extremely unlikely (paras 4.71 to 4.73). III. IMPLEMENTATION 3.01 The project in general experienced a slow start-up and most com- ponents experienced serious implementation problems. Overall project costs are presented in Table 2, and the disbursement schedule compared to appraisal projections appears in Table 3. The Credit Closing Date was extended one year to 12/31/80 and the Credit was fully disbursed. The implementation history of each component is reported separately in succeeding paragraphs. TANZANIA LIVESTOCK MARKETING COMPANY (TLMC) Phasing 3.02 The phasing of the investments made by TLMC under the project was significantly behind that projected at appraisal (1974 as year 1): Percentage of Total Investment 1974 1975 1976 1977 1978 1979 1980 Projected 32 31 22 15 - - - = 100 Actual 7 10 27 11 18 15 12 = 100. Apart from the relatively minor investment in recutting scrub on existing stockroutes (which mostly occurred in 1974 to 1976), this pattern reflects the general progress in investment in the various sub-components. The delays in implementation reflect the inability of TLMC to undertake the organisation of input supply and construction activities at the rate projected in the large program. Contributing factors were the scarcity of some essential inputs (e.g. cement and corrugated iron), very limited access to the project's heavy equipment 1/, shortage of fuel (especially 1978/79), and the temporary requisi- tion of construction vehicles in 1978/79 for use in the war with Ugandan Forces. 1/ LIDA heavy machinery was operated very inefficiently so that low annual hours of operation were recoreded and planned water development programs by project agencies were seriously delayed (paras 4.75 to 4.79).  - 32 - Total Investment, Number of Units and Unit Cost 3.03 The actual physical achievement at project completion is compared with appraisal projections in Table 4. The component and total expenditures are presented in Table 2. 3.04 Markets. The number of markets constructed and renovated are higher (by 14%) than that projected at appraisal. The average cost per new market 1/ was TSh 69,000 with a range from TSh 20,000 to TSh 200,000. At appraisal it was assumed that 3 large markets (1,000 cattle capacity), ten medium sized markets (500 cattle), and 30 small primary markets (50-200 cattle) would be constructed at unit costs of TSh 183,000 TSh 123,000 and TSh 37,500, respec- tively. In practice, nearly all markets were of about 250 to 300 cattle capacity. The range in investment cost was associated with the type of construction which varied from bush pole in concrete, through treated poles in concrete (in the north east) to burnt clay bricks/stone/timber facilities (in major centers). Similarly, in renovating markets, the range in cost of TSh 4,500 to TSh 12,000 per unit was largely associated with the type and scale of renovations made, but the average of TSh 16,360 was slightly less than the TSh 18,760 estimated at appraisal. Considering the assumptions which had to be made at appraisal, the market construction program was within the overall project markt development objective. However, the lowest grade market (bush pole construction) does have a relatively high maintenance cost, and it is now also apparent that markets should not have been built at some of the sites due to very low potential throughput of livestock (para 4.04). 3.05 Holding Grounds. The amount of development on new and existing holding grounds was less than half of that projected at appraisal. However, the total expenditure on holding grounds is about 40% more than that projected at appraisal; this means that the unit cost has almost tripled (factor of 2.8). This was largely caused by the very high cost of stock water facilities and sharply escalated cost in building construction. Appraisal Estimate - TSh 80,700 per equipped water facility Actual Costs: TSh. Mlogonzila - 638,000 per equipped dam Iyombo - 200,000 per unequipped dam Existing holding grounds - 100,000 to 400,000 per unit for repairs to dams and for new dams. 1/ As all costs incurred in construction had not been allocated to specific markets and holding grounds at the time of the mission, unallocated expenditures had to be prorated to each facility.  - 33 - 3.06 Restricted access to heavy equipment slowed down the holding ground development program, but the poor utilisation of these holding grounds and their doubtful financial viability also reduced the emphasis given to this work by TLMC management (para 4.06). Mlogonzila was given priority as it was important for improved livestock movement to Kawe meat plant near DAr es Salaam; water development on Iyombo was necessary for development of the Ndala - Kitaraka stock route. 3.07 Stock Routes. Only 23% of the projected distance of new stock route development was undertaken. Even then, there was negligible water development along stock routes, and very little overnight boma (cattle enclosure) construction was undertkane. The only new routes developed were Mikumi to Ndapata in the south east, and Iyombo to Kitaraka in the mid west. The latter was to be part of the important Ndala - Kitaraka route which was only commenced ind lae 1980 and consequently was not completed by project closiong. The Mikumi-Ndapata route was used twice by TLMC, but is not favored by private traders due to predators, tsetse and isolation. 3.08 The cost per km of new stock route develpoment was a little below that projected at appraisal (TSh 2,496 compared to TSh 2,800). However, this was due to the negligible investment in water development and to the Veterinary Department of the Ministry of Agriculture taking responsibility for veterinary crushes and dip construction. Indeed, the cutting of brush on new routes was TSh 1300/km compared to TSh 63/km projected at appraisal. 3.09 In renovating existing stockroutes, the project covered about half of the distance anticipated at appraisal, but this involved no more than reclearing a route on which bush had regrown. The appraisal assumed a cost of TSh 290/km, made up of TSh 227 for boma construction and TSh 63 for reclearing the route. In practice, only reclearing has been undertaken at a cost of TSh 220/km. 3.10 The original appraisal figure for clearing of new and existing stock routes was unrealistically low (TSh 63), but expenditures of this nature have a very temporary benefit (due to regrowth) unless frequently used an periodically maintained. The Mikumi-Ndapata route is not frequently used; the other new route from Iyombo to Kitaraka, however, should be used as it is in a major movement area. The renovated routes of Dodoma to Iringa, and Kondoa (Paloma region) to Temi (near Arusha) are well utilised, as is the short route near DAr es Salaam from Pugu to Kawe; the cleared route form Kibaya to Korogwe (Tanga region) is reportedly not well utilised as it runs north of the more popular old route which followed the road through Handeni to Korogwe. 3.11 Overall, the expenditure in stock routes has been very much less than anticipated (only 22% achievement), and the investment made are of doubtful long term significance in many cases (para 4.07). The latter is especially so when the lack of investment in water facilites is considered.  - 33 - 3.06 Restricted access to heavy equipment slowed down the holding ground development program, but the poor utilisation of these holding grounds and their doubtful financial viability also reduced the emphasis given to this work by TLMC management (para 4.06). Mlogonzila was given priority as it was important for improved livestock movement to Kawe meat plant near DAr es Salaam; water development on Iyombo was necessary for development of the Ndala - Kitaraka stock route. 3.07 Stock Routes. Only 23% of the projected distance of new stock route development was undertaken. Even then, there was negligible water development along stock routes, and very little overnight boma (cattle enclosure) construction was undertkane. The only new routes developed were Mikumi to Ndapata in the south east, and Iyombo to Kitaraka in the mid west. The latter was to be part of the important Ndala - Kitaraka route which was only commenced ind lae 1980 and consequently was not completed by project closiong. The Mikumi-Ndapata route was used twice by TLMC, but is not favored by private traders due to predators, tsetse and isolation. 3.08 The cost per km of new stock route develpoment was a little below that projected at appraisal (TSh 2,496 compared to TSh 2,800). However, this was due to the negligible investment in water development and to the Veterinary Department of the Ministry of Agriculture taking responsibility for veterinary crushes and dip construction. Indeed, the cutting of brush on new routes was TSh 1300/km compared to TSh 63/km projected at appraisal. 3.09 In renovating existing stockroutes, the project covered about half of the distance anticipated at appraisal, but this involved no more than reclearing a route on which bush had regrown. The appraisal assumed a cost of TSh 290/km, made up of TSh 227 for boma construction and TSh 63 for reclearing the route. In practice, only reclearing has been undertaken at a cost of TSh 220/km. 3.10 The original appraisal figure for clearing of new and existing stock routes was unrealistically low (TSh 63), but expenditures of this nature have a very temporary benefit (due to regrowth) unless frequently used an periodically maintained. The Mikumi-Ndapata route is not frequently used; the other new route from Iyombo to Kitaraka, however, should be used as it is in a major movement area. The renovated routes of Dodoma to Iringa, and Kondoa (Paloma region) to Temi (near Arusha) are well utilised, as is the short route near DAr es Salaam from Pugu to Kawe; the cleared route form Kibaya to Korogwe (Tanga region) is reportedly not well utilised as it runs north of the more popular old route which followed the road through Handeni to Korogwe. 3.11 Overall, the expenditure in stock routes has been very much less than anticipated (only 22% achievement), and the investment made are of doubtful long term significance in many cases (para 4.07). The latter is especially so when the lack of investment in water facilites is considered.  - 35 - 3.16 The Bank indicated that it could not finance the three plants under the Credit at the greatly increased costs. In February 1975, a delegation from Tanzania (LIDA and Treasury) and the supervising engineers employed by TPL met with Bank officials in Washington to discuss the issue 1/. The Bank agreed to finance part of the foreign exchange costs (US$6.1 million) of the investments in Kawe and Shinyanga, for which the total tendered price was US$10.9 million equivalent (FE 70%). Mbeya plant would no longer be supported by the Bank. In fact, the Bank's RMEA office in Nairobi considered that only renovation of the Kawe plant should be supported at that stage. Reasons given by RMEA were that: (a) Tanzania had lost access to the favorable UK market under the Fray Bentos canned corned beef brand (para 4.13); (b) the 1972 agricultural census had indicated a cattle herd of only 9.4 million (although not accepted as realistic by the Ministry of Agriculture) compared to the 13.0 million assumed at appraisal; and (c) concern that over 40% of the cattle supplied to the Kawe plant over the previous three years had come from the Shinyanga region (and consequent doubts as to the ability of the national herd to supply a new local plant in Shinyanga without seriously affecting the supply to Kawe). The Bank's headquarters did not consider these arguments sufficiently strong to reject the Tananian delegation's request for partly financing both Kawe and Shinyanga meat plants. 3.17 LIDA/TPL signed a contract with the successful bidder (the contractor, hereafter) for the three plants on 2/12/75 on the assumption that it could find alternative sources of financing. LIDA did negotiate a reduction of US$2.38 million in the total contract price by eliminating some items from the original tenders, and by LIDA itself undertaking to transport the meat plant equipment from the port of Dar es Salaam to plant sites (US$563,000). The contracted figure was equivalent to US$17.1 million for the 3 plants. The supervising engineer costs amounted to US$213,000, bringing the total cost to 188% greater than that estimated at appraisal (Table 2). All the unallocated funds in the Credit were transferred to Category III of Schedule I to permit the US$6.1 million support for the meat plant investments. The Swedish Government through SIDA agreed to finance US$5.87 million as the remaining foreign exchange required for the three plants (Table 13). SIDA undertook 1/ The meat processing component of the project was being adminstered at the time from the Bank's headquarters in Washington, D.C.. This was due to the supervising engineer firm engaged by Tanzania being based in WAshignton, D.C.. Supervision was transferred to RMEA in March 1975.  - 36 - this financing without doing its own appraisal, as the project had been appraised and supported by the Bank 1/. 3.18 The Tanzanian contractor retained two Danish subcontractors: one for the supply of machinery, equipment and some special building materials, and a Danish civil engineering firm, for the detailed drawings of the civil works. As previously mentioned, LIDA/TPL retained the services of a consultant engineering firm (CEF for reference) to superise the construction of the meat processing component of the project. CEF also drew up the tender documents and evaluated the bids received. 3.19 Problems in implementing the contract began very early. In June 1975, the contractor complained to CEF that TPL had not provided the 10% mobilisation advance nor confirmed the required irrevocable letters of credit. These items were to be processed within 45 days of contract signing and a date 4 months after signing had been reached without any action. The subsequent history of contract implementation was a continuous serious of problems caused by shortages of essential construction inputs in Tanzania,disputes between the employer and contractor over claims for additional costs by the contractor, slowdowns in implementation by the contractor pending resolution of claims on the employer, and disputes concerning responsibility for damaged and missing equipment which had been transported from Dar es Salaam by LIDA to sites, but for which irregularities had occurred in receipts for delivered equipment. 3.20 Shortages of cement, timber, nails and rail wagons for transport of supplies and equipment were major problems right from the early construction phase. The claims submitted by the contractor in September 1977 amounted to US$1.2 million plus TSh 4.3 million, and were due to: (a) delay by TPL in payment of mobilisation fee; (b) delay in opening of Letters of Credit; (c) devaluation of the Tanzanian shilling; (d) late clearance of and damage to materials by LIDA in delivery of equipment to land sites; (e) shortages of cement in Tanzanian; (f) extension of insurance policies; (g) late handing over of the Kawe plant for renovation by the contractor; and (h) leaking roof at Kawe causing delays. 1/ Disbursements were made from Stockholm against bills of expenditure without supervision from the Dar es Salaam SIDA office.  - 37 - 3.21 Although CEF gave its judgement on the contractor-s claims, the dispute continued through 1978, and a compromise "settlement" was not reached until October 1978. However, this did not end the disputes, and the Minister of Public Works became involved in early 1980 to ensure that the contractor performed in accordance with agreements and that supplies of cement would be forthcoming to the contractor. Cement shortages and insufficient rail transport continued as constraints. This series of problems resulted in successive delays in target completion dates for the plants. 3.22 As at December 31, 1980 (Closing Date) the situation was as follows: Kawe: civil works 85%, equipment installation 60% and electrification works 40% completed. Shinyanga: civil works 75%, equipment installation and electrification works 10% completed. Mbeya: civil works 80%, equipment installation and electrification works 15% completed. Anticipated completion date for Kawe, Shinyanga and Mbeya plants is now December 1981, provided replacements for missing equipment arrive early enough. The cost has further escalated to US$22,780 equivalent, which is 280% greater than the appraisal estimate (Table 13). The percentage increase is similar for both the local and the foreign exchange costs. 3.23 Despite this high investment cost, there is no guarantee that the meat plant complex will receive the EEC sanitary export clearance for which it was designed; 1/ some further expenditures will be necessasry. The black metal cookers of the Kawe canning line may have to be replaced with stainless steel cookers or a stainless steel continuous cooker system; 2/ faulty equip- ment in the meat extract department needs replacment; stipulation that general renovation (floors, walls, screens)for the sections of the Kawe plant not included in the contract can also be expected. Water purification systems are likely to be necessary at Shinyanga and Mbeya and quotations for these were being obtained at the time of the mission. The likelihood of these 1/ However, at least in the immediate future, this is not likely to be the most serious problem facing TPL, as at current prices it could not profitably export canned meat in any case (paras 4.6 to 4.18). 2/ The Kawe renovation contract did not include the canning line.  - 38 - requirements was indicated by supervision missions in 1976, 1978 and 1979 1/ and by the November 1976 review mission. In addition, one of the Kawe boilers requires extensive rehabilitation or replacement. For most of these items, CEF advised TPL to await an initial inspection by the EEC officials before undertaking major expenditures. 3.24 The preparation report proposed a new canning line at Shinyanga. The appraisal rejected this and maintained the canning line at Kawe, with deboned frozen meat blocks being transported by refrigerated road transport to Kawe for further processing. CEF maintained that road transport was impractical because of road conditions, and included in the tender the purchase of five 20-ton gross weight refrigerated containers, and two loading/offloading gantries at Shinyanga. The containers would be railed to Dar es Salaam on flat wagons. It was assumed that gantries were available at the Ilala off- loading point in Dar es Salaam. However, this system would have incurred a number of major problems, including the following: 2/ (a) there was no suitable off-loading gantry at Ilala; (b) the nearest railway siding to the Shinyanga plant was 6 km, in which distance bridges and culvert installations were of doubtful suitability for a gross 30-ton load; (c) flat bedlorries were not included in the tender and were not readily available in Shinyanga. Consequently, the plan of operation was again modified. The present intention is to transport frozen meat by insulated lorries from the Shinyanga plant for loading into the refrigerated containers which stay permanently on flat rail wagons. NATIONAL RANCHING COMPANY (NARCO) Content and Phasing of the Program 3.25 The parastatal ranching component had a delayed start and slow initial progress. This was due to a number of factors: (a) Replacement of some previously selected ranches (Appendix 1). The ranch on the Kitulo plateau was considered uneconomical for beef production due to confirmed high cost of pasture improvement and maintenance, and ownership was transferred to a sister dairy parastatal in 1975. The additional area required for Sumbawanga ranch development could not be obtained, and Kalambo ranch was substituted. 1/ A meat processing consultant was included on these Bank supervision missions. 2/ These problems and others were highlighted in the 1976 Bank review mission.  - 38 - requirements was indicated by supervision missions in 1976, 1978 and 1979 1/ and by the November 1976 review mission. In addition, one of the Kawe boilers requires extensive rehabilitation or replacement. For most of these items, CEF advised TPL to await an initial inspection by the EEC officials before undertaking major expenditures. 3.24 The preparation report proposed a new canning line at Shinyanga. The appraisal rejected this and maintained the canning line at Kawe, with deboned frozen meat blocks being transported by refrigerated road transport to Kawe for further processing. CEF maintained that road transport was impractical because of road conditions, and included in the tender the purchase of five 20-ton gross weight refrigerated containers, and two loading/offloading gantries at Shinyanga. The containers would be railed to Dar es Salaam on flat wagons. It was assumed that gantries were available at the Ilala off- loading point in Dar es Salaam. However, this system would have incurred a number of major problems, including the following: 2/ (a) there was no suitable off-loading gantry at Ilala; (b) the nearest railway siding to the Shinyanga plant was 6 km, in which distance bridges and culvert installations were of doubtful suitability for a gross 30-ton load; (c) flat bedlorries were not included in the tender and were not readily available in Shinyanga. Consequently, the plan of operation was again modified. The present intention is to transport frozen meat by insulated lorries from the Shinyanga plant for loading into the refrigerated containers which stay permanently on flat rail wagons. NATIONAL RANCHING COMPANY (NARCO) Content and Phasing of the Program 3.25 The parastatal ranching component had a delayed start and slow initial progress. This was due to a number of factors: (a) Replacement of some previously selected ranches (Appendix 1). The ranch on the Kitulo plateau was considered uneconomical for beef production due to confirmed high cost of pasture improvement and maintenance, and ownership was transferred to a sister dairy parastatal in 1975. The additional area required for Sumbawanga ranch development could not be obtained, and Kalambo ranch was substituted. 1/ A meat processing consultant was included on these Bank supervision missions. 2/ These problems and others were highlighted in the 1976 Bank review mission.  - 40 - the parastatal subsector, this strategy was appropriate. Cash flow projections indicated that with improved but conservative production coefficients 1/ NARCO could return to financial viability. Unfortunately, two of the Phase II ranches on which development had commenced (TSh 8.5 million expended) - Kalambo and Uvinza - could not justifiably be included in the program, and were held in a semideveloped state for the remainder of the project period (carrying 7,660 head in June 1980). The main reason for rejection of these two ranches was their isolation, which made procurement and marketing of cattle difficult and expensive. 3.28 The amount and phasing of NARCO investment in the project compared to appraisal projections was as follows: TSh millions Y1 Y2 Y3 Y4 Y5 Total Appraisal 12.2 19.2 21.2 4.1 1.1 - - 58. 1974/75 1975/76 1976/77 1977/78 1977/79 1979/80 1980/81 2/ Actual 3.2 4.1 12.1 16.2 24.7 19.9 12.0 3/ 92. Expenditures to June 30, 1979 were TSh 60.5 million compared to the appraisal estimate of TSh 58.1 million by that date, with phasing of expenditures to that date as follows: Percentage of Investment 1974/75 1975/76 1976/77 1977/78 1978/79 Appraisal 21 33 37 7 2 = 100 Actual 5 7 20 27 41 = 100 These figures reflect the project start-up problems previously referred to. They also suggest that the appraisal mission overestimated the capacity of the Tanzanian parastatal institutions to implement this very large program. However, in setting these targets, the appraisal mission was undoubtedly influenced by the satisfactory implementation rate on infrastructural develop- ment on the five Phase I ranches (Credit 132-TA). 1/ 10% calf mortality; 55% calving in 1978/79 increasing to 65% in 1982/83, and 70% in 1984/85. 2/ January 1, 1974 to June 30, 1975; other years are for July 1/June 30. 3/ Estimated. 4/ After projected physical and price contingencies.  - 41 - Physical Investments and Unit Costs 3.29 Investment Costs. The actual average investment on the twelve ranches financed under the project 1/ to June 30, 1980 was TSh 6.69 million (Table 19). If the TSh 12.0 million projected to be invested n 1980/81 is included, the average is TSh 7.68 million. This compares with an appraisal average of TSh 5.29 million after including price and physical contingencies. The range in investment per ranch excluding Kalambo, Uvinza and Missenyi 2/ was TSh 3.3 million to TSh 14.2 million to June 30, 1980. However, the four original Phase II ranches which were retained in the rehabilitation plan incurred investments of TSh 14.2 million (Mabale), 11.3 million (Kagoma), 10.0 million (Dakawa) and 5.6 million (Usangu). Therefore, the cost of development per ranch originally included in the appraised project and sub- sequently retained was generally very much higher (by about 90%) than the appraisal estimate- The expenditure on livestock was 75%, 76%, 46% and 43% of total investments, respectively for the four ranches, which compares with an appraisal estimate of 70.4%. 3.30 Table 18 also compares the percentage of total expenditure per in- vestment category. Of particular note is the high expenditure on vehicles and equipment (30.8% compared to 13% of fixed investment at appraisal) and the relatively low expenditure on water development. Actual unit costs incurred by NARCO in 1979 compared to appraisal assumptions are as follows: TSh. '000 Appraisal (1972) 1979 Escalation Item 1/ Actual Factor Ranch Manager's House 93,700 200,000 2.13 Dam - small 25,000 80,000 >2.0 (small to medium size) - large 50,000 Borehold with storage tank 125,600 - Boma 3,750 6,000 1.6 Dip 18,740 120,000 6.4 4-wheel drive vehicle 32,500 80,000 2.5 Tractor 36,250 120,000 3.3 Purchased steer 432 900 2.1 1T with physical and price contingencies added. 1/ Including expenditures on all ranches in the consolidation program and on the original Phase II ranches Kalambo and Uvinza before 1978. 2/ The former two ranches were excluded from the rehabilitation plan, and Missenyi was overrun and lost all livestock in the Amin invasion of Tanzania in late 1978.  - 41 - Physical Investments and Unit Costs 3.29 Investment Costs. The actual average investment on the twelve ranches financed under the project 1/ to June 30, 1980 was TSh 6.69 million (Table 19). If the TSh 12.0 million projected to be invested n 1980/81 is included, the average is TSh 7.68 million. This compares with an appraisal average of TSh 5.29 million after including price and physical contingencies. The range in investment per ranch excluding Kalambo, Uvinza and Missenyi 2/ was TSh 3.3 million to TSh 14.2 million to June 30, 1980. However, the four original Phase II ranches which were retained in the rehabilitation plan incurred investments of TSh 14.2 million (Mabale), 11.3 million (Kagoma), 10.0 million (Dakawa) and 5.6 million (Usangu). Therefore, the cost of development per ranch originally included in the appraised project and sub- sequently retained was generally very much higher (by about 90%) than the appraisal estimate- The expenditure on livestock was 75%, 76%, 46% and 43% of total investments, respectively for the four ranches, which compares with an appraisal estimate of 70.4%. 3.30 Table 18 also compares the percentage of total expenditure per in- vestment category. Of particular note is the high expenditure on vehicles and equipment (30.8% compared to 13% of fixed investment at appraisal) and the relatively low expenditure on water development. Actual unit costs incurred by NARCO in 1979 compared to appraisal assumptions are as follows: TSh. '000 Appraisal (1972) 1979 Escalation Item 1/ Actual Factor Ranch Manager's House 93,700 200,000 2.13 Dam - small 25,000 80,000 >2.0 (small to medium size) - large 50,000 Borehold with storage tank 125,600 - Boma 3,750 6,000 1.6 Dip 18,740 120,000 6.4 4-wheel drive vehicle 32,500 80,000 2.5 Tractor 36,250 120,000 3.3 Purchased steer 432 900 2.1 1T with physical and price contingencies added. 1/ Including expenditures on all ranches in the consolidation program and on the original Phase II ranches Kalambo and Uvinza before 1978. 2/ The former two ranches were excluded from the rehabilitation plan, and Missenyi was overrun and lost all livestock in the Amin invasion of Tanzania in late 1978.  - 43 - (c) external factors such as the war with Uganda which are elaborated further in the section on operational performance; and (d) a scarcity of funds due to Treasury being behind schedule in its contribution to the consolidation program in the 1978/79 financial year. Although the plan will not be completed by the intended June 81 date, the included ranches will be developed to a stage where infrastructural investment and available machinery and equipment will not be limiting factors to production for some time. The implications of the program's investment in livestock are discussed in the next section (para 4.45). Financing the Consolidation Plan 3.33 The acceptance of the consolidation plan in early 1978 meant that an additional TSh 34.1 million over that anticipated at appraisal had to be found. After allowance for commitments under the TLMC loan and other ranching components, there were insufficient Credit funds to enable the Credit to reimburse TRDB for 100% of its subloan to NARCO (which had to that date represented 70% of total investment). Consequently, Treasury agreed to finance 45% to complement a TRDB loan for 55% of investment. The agreed financing of the consolidation plan was as follows: TSh million TRDB (IDA financing) Treasury (Development Loan Equity + other 1/ 1/78 - 6/78 5.7 4.7 ( 4.7 + 0) 7/78 - 6/79 21.7 19.6 (17.7 + 1.9) 7/79 - 6/80 7.6 8.0 ( 6.2 + 1.9) 7/80 - 6/81 6.1 6.3 ( 5.0 + 1.3) 41.1 (20.0 approx.) 38.6 In practice, the financing was as follows: 1/78 - 6/78 5.7 6.6 7/78 - 6/79 10.2 17.3 7/79 - 6/80 17.3 7.1 + 6.5 for Missenyi 7/80 - 6/81 8.2 13.24 + 4.3 for Missenyi 41.4 44.24 10.8 1/ TRDB did not finance the operational losses on ranches in "holding status" (see Appendix 1). 2/ However, not all Treasury contributions went to intended new development investments; the operating margins were unable to meet short term loan/overdraft repayments and part of Treasury equity was used to this end.  - 43 - (c) external factors such as the war with Uganda which are elaborated further in the section on operational performance; and (d) a scarcity of funds due to Treasury being behind schedule in its contribution to the consolidation program in the 1978/79 financial year. Although the plan will not be completed by the intended June 81 date, the included ranches will be developed to a stage where infrastructural investment and available machinery and equipment will not be limiting factors to production for some time. The implications of the program's investment in livestock are discussed in the next section (para 4.45). Financing the Consolidation Plan 3.33 The acceptance of the consolidation plan in early 1978 meant that an additional TSh 34.1 million over that anticipated at appraisal had to be found. After allowance for commitments under the TLMC loan and other ranching components, there were insufficient Credit funds to enable the Credit to reimburse TRDB for 100% of its subloan to NARCO (which had to that date represented 70% of total investment). Consequently, Treasury agreed to finance 45% to complement a TRDB loan for 55% of investment. The agreed financing of the consolidation plan was as follows: TSh million TRDB (IDA financing) Treasury (Development Loan Equity + other 1/ 1/78 - 6/78 5.7 4.7 ( 4.7 + 0) 7/78 - 6/79 21.7 19.6 (17.7 + 1.9) 7/79 - 6/80 7.6 8.0 ( 6.2 + 1.9) 7/80 - 6/81 6.1 6.3 ( 5.0 + 1.3) 41.1 (20.0 approx.) 38.6 In practice, the financing was as follows: 1/78 - 6/78 5.7 6.6 7/78 - 6/79 10.2 17.3 7/79 - 6/80 17.3 7.1 + 6.5 for Missenyi 7/80 - 6/81 8.2 13.24 + 4.3 for Missenyi 41.4 44.24 10.8 1/ TRDB did not finance the operational losses on ranches in "holding status" (see Appendix 1). 2/ However, not all Treasury contributions went to intended new development investments; the operating margins were unable to meet short term loan/overdraft repayments and part of Treasury equity was used to this end.  - 45 - and due to lack of definitive action by the district authorities, combined with unsatisfactory DDC management, 1/ TRDB decided to foreclose in 1978: TSh 1.38 million of othe TSh 3.6 million loan had been expended and the ranch had TSh 250,000 arrears. However. local political intervention prevented foreclosure, and TRDB agreed to continue lending when the arrears were paid. The DDC paid the arrears with a cheque in October 1979 which was invalid due to lack of funds in its account and TRDB placed a stop order on its previously authorised disbursement at Kisasiga for TSh 873,000. This matter was subsequently resolved and in 1980 TRDB approved an additional loan of TSh 2.79 million to the ranch (not financed from the Credit). From 1979, the district authorities did manage to reduce the encroachment problem so that it was not a major constraint to operations. COOPERATIVE UJAMAA RANCHING 3.39 The appraisal projected that 22 cooperative ranches would be developed under the project, each having a development period of 2 years. Although phasing of this investment was not presented, the organisational requirements for this new concept would suggest that TRDB loan approvals to the ranches would have been spread over 3 years and development over 5 years with completion in December 1978. The situation at the close of the project (December 1980) was: Appraisal Projection Actual Loans % Disbursement of Loans Approved Approved Approved Loans Shinyanga/Singida/Dodoma 14 10 66 2/ (Non-Masai) Arusha (Masai) 8 3 40 2/ Ruvuma Nil 3 21 Total 22 16 46 The Phasing of loan approvals was as follows 1974 1975 1976 1977 Shinyanga/Singida/Dodoma 1 6 1 2 Arusha 2 1 Ruvuma 3 1 6 3 6 Cumulative Total 1 7 10 16 Disbursements on approved loans commenced as follows (cumulative totals). December 1976 5 loans December 1977 8 loans December 1978 13 loans December 1979 14 loans December 1980 14 loans 1/ The ranch manager was satisfactory. but the management of the DDC itself was deficient. 2/ Including one ranch on which no disbursements were made.  - 46 - Village Ranches (non-Masai) 3-40 The appraisal report indicated that TRDB would provide a loan to each non-Masai ranch for about TSh 1.27 million. This would finance 90% of physical infrastructure, 80% of breeding stock and 100% of steer purchases in the first year and operating costs in the first two years. Total investment would be TSh 1.35 million per ranch. 1/ Participants in the schemes would provide 10% of the physical infrastructure investment through his labor, and 20% of the breeding stock. The infrastructure would be for water development, firebreaks, stock dipping and handling facilities and housing. 3.41 In practice, the Regional Development Fund (RDF) 2/ was used to pay for all infrastructural development. In some cases the participating villagers contributed labor to construction activities, but mostly such labor was paid at the regular wage rates from the RDF. Permanent herding staff were employed on all but one ranch. TRDB financing was restricted to the purchase of livestock, mostly immature steers for fattening. 3.42 Apart from the 3 Ruvumba village (where there were no livestock holdings in existence), all participating villagers were expected to contribute breeding cattle (usually one heifer from each member) or equivalent cash in the individual development plans designed by TRDB and regional authorities. Cattle were contributed to 8 of the 10 ranches 3/, but in 2 of these cases this was also largely through RDF financial support. In nearly all cases, obtaining the necessary contribution of cattle from participants proved extremely difficult. This lack of willingness to contribute was reflected in the generally very poor type of females provided by participants (resulting in poor reproductive performance), and attempts (often successful) by villagers to obtain exchange animals of better quality when these became available through ranch purchase or breeding with improved bulls. The slow commencement of disbursement by TRDB to most ranches was also usually related to delayed contributions by ranch members. 3.43 The mission was unable to obtain data on the total investment on each village ranch. However, details were obtained from a sample of 2 ranches in Singida and 2 in Dodoma region. Total actual contributions were: 1/ The financing tables on pages 15 and 16 of the appraisal report have allowed for only seven ranches of this type rather than the 16 in the text. 2/ Funds provided from Treasury through the Prime Minister-s Office for use in development projects in the regions. 3/ The 3 Ruvuma ranches are excluded from this total.  - 46 - Village Ranches (non-Masai) 3-40 The appraisal report indicated that TRDB would provide a loan to each non-Masai ranch for about TSh 1.27 million. This would finance 90% of physical infrastructure, 80% of breeding stock and 100% of steer purchases in the first year and operating costs in the first two years. Total investment would be TSh 1.35 million per ranch. 1/ Participants in the schemes would provide 10% of the physical infrastructure investment through his labor, and 20% of the breeding stock. The infrastructure would be for water development, firebreaks, stock dipping and handling facilities and housing. 3.41 In practice, the Regional Development Fund (RDF) 2/ was used to pay for all infrastructural development. In some cases the participating villagers contributed labor to construction activities, but mostly such labor was paid at the regular wage rates from the RDF. Permanent herding staff were employed on all but one ranch. TRDB financing was restricted to the purchase of livestock, mostly immature steers for fattening. 3.42 Apart from the 3 Ruvumba village (where there were no livestock holdings in existence), all participating villagers were expected to contribute breeding cattle (usually one heifer from each member) or equivalent cash in the individual development plans designed by TRDB and regional authorities. Cattle were contributed to 8 of the 10 ranches 3/, but in 2 of these cases this was also largely through RDF financial support. In nearly all cases, obtaining the necessary contribution of cattle from participants proved extremely difficult. This lack of willingness to contribute was reflected in the generally very poor type of females provided by participants (resulting in poor reproductive performance), and attempts (often successful) by villagers to obtain exchange animals of better quality when these became available through ranch purchase or breeding with improved bulls. The slow commencement of disbursement by TRDB to most ranches was also usually related to delayed contributions by ranch members. 3.43 The mission was unable to obtain data on the total investment on each village ranch. However, details were obtained from a sample of 2 ranches in Singida and 2 in Dodoma region. Total actual contributions were: 1/ The financing tables on pages 15 and 16 of the appraisal report have allowed for only seven ranches of this type rather than the 16 in the text. 2/ Funds provided from Treasury through the Prime Minister-s Office for use in development projects in the regions. 3/ The 3 Ruvuma ranches are excluded from this total.  - 48 - villages (Mwanza and Makawa/Magesani). Under the 1975 Village Act 1/, many of the villages would not be classified as an "ujamaa village", but rather as a "registered village" with some communal activity (or activities). However, third detail of classification did not have any effect per se on the operations of the ranches. Nevertheless, the regional authorities and TRDB did not review the effects of villagisation on individual ranches and the likely impact on implementation of the cooperative ranch concept in these villages. The relatively standard development package was applied in each case. TRDB did not disburse any funds until all the required basic infrastruc- ture was in place (financed by RDF) and at least a minimum contribution had been made by the village concerned. Ruvuma Village Ranches 3.45 The three village ranches in Ruvuma were initiated in 1977 following the 1976 review mission which emphasized the problems of attempting to apply the village cooperative ranch concept in areas of relatively high livstock and human populaton density (which was generally the case in the traditional livestock zone of Shinyanga/Dodoma/Singida, where the 10 existing ranches were located). The Ruvuma region had very few livestock and villages had negligible 1/ Summary of Implications of the 1975 Village and Ujamaa Village Registration Designation and Administration Act. In a registered Village, each house- hold would have a designated land area for production which should be used according to the guidelines given by the Village Council. Livestock could remain the property of individuals but large equipment and community infrastructure would be the property of the Village. Communal activities could be undertaken and should be encouraged but would not be mandatory. Benefits from communal activities would be in accordance with inputs by the individual. The Village would be a corporate body which could borrow money in the same way as an Ujamaa Village. In an Ujamaa Village, communal activities would predominate although land could be allocated to indivi- duals once village communal requirements are satisfied. "Commercial" livestock production, such as organized beef ranching or commercial milk production must be owned and carried out collectively. However, the Act and Regulations did not specify that "subsistence" livestock could not be held by individuals. The inference was that if a collective livestock enterprise did not occupy all available gazing area in an Ujamaa Village, then animals could be held by individuals.  - 49 - experience in livestock husbandry. However, the problem of competition between individually owned livestock and the collectively owned ranch herd (para 4.67) would not exist, rainfall was reliable and natural stock water was plentiful. 3.46 The RDF provided all the infrastructure (about TSh 130,000 per ranch). Although the villages were supposed to contribute labor to the infrastructural development and to the clearing of bush on 200 ha on each ranch, the RDF paid the villages for their labor input. The major constraint to project implementation was the very limited supply of livestock and the difficult logistics and high cost in delivering cattle to the ranches 1/. Due to the high cost per animal delivered, the original TRDB approved loan per ranch of TSh 702,000 was increased to TSh 1,580,000. The regional authorities had selected the 3 villages as the most suitable for the ranching in the region; two of the ranches are developing satisfactorily, but TRDB suspended any further investment on the third in late 1980 until management and interst by the villagers has improved. Masai Ranches 3.47 TRDB approved loans to only 3 of the 8 proposed Masai ranches. On one of the three ranches (Kolomonik), the reticulation of water to the cattle dip and to the manager's house was not implemented by the RDF as required by TRDB and so TRDB loan disbursements had not commenced by the Credit Closing Date (despite the RDF having expended TSh 1.0 million in a large dam, a dip, cattle facilities and bush clearing). The approved loan amounts averaged TSh 597,000 and an estimated average of TSh 600,000 was invested per ranch by the RDF. On one ranch, Talamai, the Masai Livestock and Range Management Project financed by USAID channelled funds for the infrastructural development through the RDF. The Ranching Association pertaining to each bull breeding ranch were expected to contribute in excess of 600 breeding heifers to establish the ranches. The appraisal projections and actual expenditure and contribution programs were as follows: 1/ TLMC originally delivered 19 heifers to each ranch, but were unable to supply the additional numbers required. A competent trader quoted TSh 1,800 per head in late 1978, but TRDB considered this price too high. TRDB then issued a tender for delivery of 3240 steers, heifers and bulls. A firm won the tender at an average price of TSh 1,326 per head. AFter a series of major problems and mismanagement, only 119 animals had been delivered to eadh ranch by December 1979 and the firm went into liquidation. In June 1980, TRDB and the regional authorities again approached the original competent trader who agreed to supply at TSh 2,800/heifer. By December 1980, 200 heifers and 40 bulls had been delivered in good condition to one ranch.  - 50 - (TSh. '000) TRDB Loan RDF Investment Member Contribution Appraisal 592 - 300 breeders in calf TRDB loan plan 450-660 280-622 600-700 heifers Actual 1/ 240-470 600 1/ Excluding Kolomonik which was not operational at the close of the project. The three Masai ranches did not have the livestock and human population pressure problems incurred by many of the Shinyanga/Singida/Dodoma ranches, as selected ranch areas were subject to water scarcity or tsetse fly problems. HEAVY EARTHMOVING EQUIPMENT 3.48 At appraisal, it was intended that the earthmoving equpment would operate under the Ministry of Agriculture. However, although this Ministry prepared and evaluated the bids for equipment, responsibility was transferred to LIDA before firm orders were placed. The Tanzania Livestock Transport and Facility Corporation was established as a subsidiary of LIDA on June 12, 1975, and had responsibility for the LIDA lorry transportation business and the operation and maintenance of the heavy earthmoving equipment. In practice, this unit has not operated as a subsidiary company but functioned as a division of LIDA. 3.49 Major administrative delays were incurred in processing the procure- ment: this was partly associated with the changeover of responsibility for the equipment. Although the Bank approved the international competitive bidding documents in September 1973, the equipment was not delivered until late 1975 and early 1976. Fifteen units were procured - 9 crawler tractors, 4 mobiles scrapers and 2 motor graders. The total value with ancilliary equipment was TSh 10.5 million, including US$1.372 million in foreign exchange. Later expenditures on spare parts brought the expenditure under this project item to US$1.47 million, compared to the allocated US$1.5 million in Category I of Schedule 1 of the Credit Agreement. 3.50 The heavy equipment was procured to undertake construction of water facilities and access road and firebreak construction on project ranches and on holding grounds and stockroutes. Its actual use under the project is detailed in Chapter IV and Table 38.  - 51 - IV. OPERATING PERFORMANCE AND IMPACT TANZANIA LIVESTOCK MARKETING COMPANY (TLMC) 4.01 The appraisal assumed that the programmed investments in markets, holding grounds and stockroute facilites would result in a commercial offtake of 514,000 head of cattle in 1980 compared to an offtake of 398,000 without the project (i.e. an increment of 116,000 head) 1/. Of this increment, about 40,000 head were to result from the ranch investments under the project, leav- ing an incremental 76,000 commercial offtake as being directly due to TLMC investment. The following paragraphs analyze some of the major performance factors in the project, but in essence it can be concluded that there is no evidence that the project investments have been directly responsible for any significant increase in offtake from the traditional herd. However, it is also reasonable to assume that some investment in maintenance of existing facilities would have been necessary in the absence of project investment to maintain existing markets in operating order. Producer benefits have in- creased during the project period, but the main contributing factor has been the increased livestock prices due to supply/demand forces in a relatively free market meat retail system. Offtake 4.02 The commercial offtake of animals through markets from 1947 to 1980 is presented in Table 6. The figures do not indicate any increased offtake due to TLMC-s involvement in operation of or investment in the markets. The unusually high total marketed cattle figures in 1974/75 relate to severe drought conditions in which a major buying program was promoted by Government and involved NARCO and also TLMC in the latter stages. In 1980, the major offtake area of Shinyanga experienced severe drought conditions which contri- buted to the relatively high 1980 marketed figure. Cattle Trading 4.03 In Table 7 the heavy involvement of TLMC in purchasing cattle in markets in 1975 to 1977 is indicated. The Bank's mid-term review mission in November 1976 strongly advised that TLMC s participation in cattle buying and selling should be restricted to order-buying for institutions which did not have the capacity to purchase their own livestock requirements. This recommendation was based on the poor results being obtained in TLMC cattle trading activities as evidenced by the dissatisfaction amongst TLMC clients (NARCO, TPL and DDC ranches), by the mortality and liveweight losses being incurred while animals were in TLMC custody (Table 8) and by the financial losses sustained by TLMC due to trading operations (Table 9). In addition to high mortality figures, exceptionally high carcase shrinkage losses 1/ Equivalent to 91% of the full development projection, representing appraisal projections for 1980 compared to 1982.  - 52 - were recorded by TLMC between original purchase and final delivery, in excess of 18% in some cases from Shinyanga to Dar es Salaam. The latter was partly associated with the extremely poor service offered by the Tanzania railway system in transporting livestock from surplus cattle areas to Dar es Salaam. However, private traders were operating profitably at the same time, and it is therefore reasonable to assume that the attention given by traders to the procurement, transport and delivery of their animals to Dar es Salaam did reduce the consequences of the poor railway service. The losses in cattle trading also resulted in less than satisfactory main- tenance of may markets due to shortage of funds. Marketing 4.04 The trading and profit and loss statement in Table 9 indicates how the positive margins on market management were offset by the losses incurred in cattle trading in 1975, 1976 and 1977, resulting in substantial company losses in 1976 and 1977. The performance by TLMC in operating markets has been relatively better than in other operations. However, analysis of market- ing operations suggests that TLMC may have expanded into an excessive number of markets so that many are uneconomical to maintain or operate. From about 120 markets with significant infrastructure and a further 105 "temporary" markets existing at appraisal, TLMC now has approximately 250 markets under its control. A total of 23 marketing teams operated from 1975 to 1978, and 24 teams in 1979 and 1980. Market days of operation per annum have been 4273, 4362, 4455, 4447, 4323 and 4615 in the years from 1975 to 1980, respectively. 1/ This compares with an appraisal projection of 13 teams and 2164 market days per annum. TLMC has increased the frequency of market days in the more important markets in 1979 and 1980 so that there were one daily, 10 biweekly, 7 weekly and 17 bimonthly markets in operation in 1980. Assuming 450,000 cattle were sold through markets in 1980, this implies an average of only 98 cattle sold per market day. As many markets incur daily sales of more than double this figure, this implies that the throughput of some markets was extremely low. 4.05 Although the financial statements for 1980 were not available, TLMC experts to incur a loss of over TSh 1.5 million in 1980. In addition, repayments of principal of TSh 400,000 per quarter on the TRDB development loan commence in June 1981. In an attempt to operate markets profitably, TLMC has applied for approval to double market fees from TSh 20 to TSh 40 per head. This is reasonable as the fee has remained at TSh 20 per head since 1974, and cattle prices have increased by a factor of about 4 in the interim. TSh 40 would represent about 2.5% of the average market price of cattle and less than 1% of higher priced cattle. TLMC is currently examining the throughput and frequency of each market in a program of rationalisation which will eliminate uneconomical markets. It will reduce the frequency of other markets which have a low throughput but which can still be serviced and maintained economically. 1/ Total market days would have been greater if various markets had not been closed down due to MFD outbreaks in the districts and also due to Cholera (especially since 1978).  - 53 - Stockroutes and Holding Grounds 4.06 TLMC management reported that very little use was made of stock- routes and holding grounds. They attributed this to be lack of implementa- tion by the Veterinary Department of animal movement vaccination and quarantine procedures. The regulation of compulsory quarantine for 2 weeks after PMD vaccination before inter-district movement has not been applied. Movement permits are issued with or without vaccination and without quaran- tine. Markets are closed and movement officially banned only when FMD out- breaks occur. When fees are collected by TLMC (TSh 2.60 per head for holding grounds and TSh 1.0 per head of stockroute use), these are obtained by automatically adding them to the market fee, even though animals may not use the holding ground or stockroute facilities. 1/ Traders prefer to move cattle as quickly as possible and use holding grounds only in rare circumstances. TLMC has been the major user of its own holding grounds, and this use has decreased since 1977 when its buying operations were sub- stantially reduced. This reduced use is reflected in Table 9 and has been accompanied by an increase in the direct cost of operating holding grounds and stockroutes. Encroachment by privately owned herds has also been a serious problem in many holding grounds. 4.07 The contention by TLMC that stockroutes are not well used in general is more difficult to understand. Trade cattle must move between centers and districts and to railway loading points, and therefore must use an established stockroute. As TLMC has not improved any particular routes through water development, it could also be expected that the routes used by traders are traditional ones which in many instances would follow convenient roads and tracks between villages and known water points. These traditional routes were not always the ones included by TLMC for develop- ment (para 3.10). Producer Benefits 4.08 Although it could be expected that improved holding ground and stockroute facilities would decrease the overall cost of marketing (through less weight loss and mortality) and so potentially increase the proportion of final market value received by the producer, the input by TLMC in these facilities under this project has not been sufficient to have an appreciable effect. However, producer benefits have significantly improved during the project period due to a demand for beef which has been increasing at a greater rate than supply. Government's policy of controlling meat prices at a relatively low level broke down under supply/demand market forces in 1977, and the actual retail price of regular meat/bone/fat in Dar es Salaam has been as follows: 1/ Applied in Arusha, Nzega and Dodoma areas.  - 54 - TSh/kg Index November 1973 3.80-5.25 (depending on grade-gazetted price) January 1977 7.00 100 January 1978 12.00 to 13.00 September 1978 13.00 to 14.00 200 May 1979 16.00 November 1979 17.50 250 July 1980 19.00 to 20.00 January 1981 22.00 to 25.00 340 4.09 Regional Commissioners in some areas (e.g. Westlake, Dodoma and Ruvuma) have attempted to continue to control prives, but this has not been very effective when traders supplying the major markets in Dar es Salaam, Arusha and Tanga are competing for cattle and buying at prices which reflect real market values. 1/ The cost of rail transport increased substantially over the project period but not at the rate of cattle values: 1974 1976 1979 1980 Mwanza-Dar TSh/head 102 147.5 191.7 230 Shinyanga-Dar TSh/head 88.2 130.55 169.7 203.6 INDEX 100 146 190 228 Shinyanga TSh/kg liveweight 1.40 1.60 6.0 mature cattle INDEX 100 114 430 Financial Viability 4.10 The TLMC cash flow situation is presented in Table 11. The company has managed to stay afloat despite the accumulated losses (largely associated with cattle trading) indicated in the balance sheet statement in Table 10. This has been enabled by the injection of TSh 16.6 million as equity from the Government (through LIDA), TSh 13.6 million as long term loan from TRDB, a substantial short term loan from NBC peaking as an "overdraft" at TSh 28.4 million in 1977), and the profit generated by the marketing operations. However, the projected cash flow demonstrates that a large increase in marketing fees will be necessary if TLMC is to meet its loan repayment obligations and maintain existing facilities and equip- ment without undertaking any new development. The increase in per head marketing fee from TSh 20 to TSh 40 combined with a rationalisation of market operations and total stafing should allow TLMC to continue its operations without subsidy if finances are managed carefully. 1/ The Regional Commissioners at Dodoma and Mara attempted (relatively unsuccessfully) in 1976 to ban private traders from buying regional markets in order to hold down the local price of meat to the urban consumer.  - 55 - MEAT PROCESSING COMPONENT 4.11 A number of major problems hampered the operations of the meat processing industry in Tanzania during the project period, including the following: (a) Loss of the UK sanitary certificate for export of its major product, canned corned beef (CCB), to that market; (b) loss of the established CCB brand name of Fray Bentos upon the nationalisation of the Kawe plant, combined with sub- stantial reduction in international beef prices in 1974; (c) unexpected changes in the domestic meat supply/demand situation which deleteriously affected export potential; (d) unanticipated competition in custom slaughter operations for the Dar es Salaam market and in supply of meat to this market; (e) unsatisfactory management of the Kawe plant associated with lack of experienced and capable key staff during much of the project period. This has resulted in a meat processing company which has increased its accumulated losses from TSh 7.45 million in December 1972 to TSh 38.76 million in December 1980 at the close of the project (Table 16). Its export sales have been reduced from 70% of total sales value in the 1973/74 period to a negligible quantity in 1980, and annual cattle slaughtering has decreased from 115,000 in 1973 to 32,000 in 1980 (Table 14). It has almost completed the construction of two high cost regional meat plants (Shinyanga and Mbeya) geared to export standards, with consequent relatively high unit cost of operation, but with little prospect for profitable exports. It has incurred a debt to TRDB of TSh 61.65 million 1/ for the development expenditure on the 2 new meat plants and on Kawe. Under these circumstances the meat pro- cessing component of the project must be considered a failure in relation to the production objectives outlined in para 2.07. Canned Beef Exports 4.12 The project was to be implemented by a new parastatal - Tanzania Meat Processing Company (TMPC). Although the TMPC was created in 1973, LIDA subsequently reverted to the name of Tanganyika Packers Ltd. (TPL) for the meat processing company. In May 1974, the UK informed Tanzania that it was withdrawing the sanitary certificate which allowed Tanzania to export CCB to the profitable UK market. The British had been insisting on improvements to the Kawe plant for several years if the certificate were to be retained; hence the program of renovation to Kawe to export 1/ Loan of TSh 47.46 million plus accrued interest of TSh 14.19 million.  - 56 - standard under this project. However, the extended delays in project prepara- tion and implementation resulted in cancellation of the certificate. Also, in the second half of 1974, the Government nationalised TPL, thus terminating its partnership with Brooke Bond Liebig (BBL). 1/ 4.13 The loss of the Fray Bentos brand and the need for TPL to market CCB under a new name came at a time when the international market price of beef declined sharply. Prices dropped in the second half of 1974 and remained severely depressed until late 1978. The quality of the TPL CCB product also declined after 1974, making it less than first grade. The lack of an established brand meant that TPL in 1976 was realising 25% less than established second quality CCB products; the effect of absence of brand reputation combined with quality deterioration factors meant that TPL realised 33% less than the premium OCB products at the time (para 4.17). Export sales declined from TSh 47.1 million in 1974 to TSh 183,000 in 1980. 4.14 As pointed out in paras 2.09 to 2.13, a major issue affecting the project has been the rapid increase in local demand relative to supply, and hence the unanticipated large escalation in beef prices in Tanzania during the project period. Between the census years of 1967 and 1978, the total population increased at an average of 3.28%, Dar es Salaam 2/ population at 8.24% and Moshi 2/ population at 6.23%. With a livestock population growth rate at 2.25% as concluded in the analysis of the results of the 1978 live- stock census, and a national herd of only 12 million in 1978 relative to a population of 17 million, the strong pressure on increasing prices for commercially marketed beef (which largely supplied the major urban markets) must be expected. Cattle/human population ratios also reflect the acceler- ating trend: Year 1957 1967 1978 Cattle/Human Ratio 0.815 0.804 0.713 In addition, per capita income rose from TSh 561 to TSh 1,311 between 1966 and 1976 (8.86% p.a.); this further increased demand, more so in the urban centers where there was a larger rate of increase in income than in the rural areas. 1/ The question of compensation by the Government to BBL and the effect of this on TPL capitalisation was not clear to LIDA and TPL until early in 1981. Treasury advised LIDA that TSh 3.06 million had been paid to BBL and that this amount was to be repaid to the Treasury (in installments). LIDA/TPL had understood that any compensation paid would be treated as equity. LIDA has explained to Treasury that it is impossible for TPL to make any repayments in view of its financial position. 2/ The major Tanzania cities.  - 57 - 4.15 The beef price acceleration is amply demonstrated in the following table: Cattle and Beef Prices in Dar es Salaam TPL Purchase at Kawe Plant Retail Meat with Bone Year TSh./Kg live Index TSh./kg Index 1967-72 1.30 2.55 1973 1.70 100 3.42 100 1974 1.90 117 3.80 111 1975 2.70 159 N/A 1976 3.15 185 6.90 202 1977 4.90 288 10.40 304 1978 6.80 400 12.00-13.00 380 1979 7.20 424 16.00 468 1980 8.50 500 18.00 526 early 1981 10.00 588 22.00 643 Source: Bureau of Statistics; TPL records; direct observations of supervision missions. The table reflects a more than five-fold increase in Dar es Salaam prices between 1973 and 1980. The retail prices to 1976 were Government gazetted and control prices. In 1977, the City of Dar es Salaam did not gazette new retail prices but unofficially let butcher prices rise as buying pressure increased. In 1979 and in subsequent years, the prices rose to an extent that more or less permitted a supply-demand equilibrium at any one time. 1/, 2/. 4.16 The rise in local beef prices effectively forced TPL out of the CCB export market, as, regardless of product quality 3, competitors on the international market could procure red meat for canning at prices 1/ This was evidenced by the absence of queues for meat which had occurred earlier in 1977 when the prices still permitted a higher per capita demand. 2/ Substitutes for beef did not significantly abate demand. Chicken meat was priced relatively high in relation to beef (exacerbated by increasing feed costs); mutton prices were generally higher than beef; salt water fish was not generally favored but in any case experienced substantial price rises during the period. 3/ Which deteriorated after 1974.  - 58 - substantially below that which TPL had to pay. This was accentuated by the depressed world market for beef after mid-1974. The following comparison of prices with Australia, a major exporter, illustrates this point: Final market live weight price US i/kg 1973 1975 1977 1978 1979 1980 1981 Australia (cow beef) 0.44 0.27 0.24 0.33 0.78 0.78 N/A Kawe, Dar es Salaam 0.23 0.38 0.59 0.89 0.87 1.04 1.22 The Tanzanian disadvantage was further exacerbated by the lack of quality product with an established brand name (paras 4.11 and 4.13). 4.17 The appraisal in 1972 projected that the favorable UK market would be retained and that the CCB carton 1/ realisation price of US$10 to US$12 would also be maintained in relation to the Kawe live cattle price of about TSh 1.70/kg. Under the described circumstances, this was impossible, as the following figures show: Year 1972/73 1974 2/ 1976 1977 1978 1. Live weight price TSh./kg 1.7 2.0 3.15 4.90 6.80 2. CCB Export Realisation price US$/Carton fob 1/ 10-12 17 9-13 12 12 Ratio 2/1 5.9-7.1 8.5 2.9-4.1 2.4 1.8 CCB established market US$/carton fob - 2nd grade CCB 16 - 1st grade CCB 3/ 10-12 17 18 18.50 19.50 TPL Costs/Carton CCB US$ equivalent 9.0 18 39 Source: Basic figures derived during review and supervision mission. 1/ 24 x 12 oz. carton. 2/ First half of 1974 only. 3/ As for the first grade CCB product exported from Kenya Meat Commission to UK.  - 59 - In the years to 1978, TPL was unable to market CCB on the local commercial market as it was too highly priced for the domestic purchasing power. 4.18 In October 1976, TPL attempted to diversify production on its meat canning line by signing a contract with Star of Italy for the manufacture of beef in gelatine. Star provided the machinery on an interest free loan and the necessary technology. However, the cost of red meat was such that this was a substantial loss making proposition at the contracted prices 1/ and was cancelled in mid-1978. 2/ 4.19 In order to obtain scarce foreign exchange, Treasury provided an export subsidy to TPL in the years 1975 to 1978 to the extent of a net TSh 18.24 million. However, this ceased in 1978 when the cost of production made the subsidy uneconomic (para 4.17). TPL has not exported significant amounts of canned meat products since mid-1978. Fresh Meat Slaughter Operations 4.20 At appraisal, the TPL Kawe plant was the major wholesaler of beef to the Dar es Salaam market, although it could not operate this activity profitably because of Goverment controls of wholesale and retal beef prices. When higher prices were gazetted in 1973, 3/ the situation improved temporar- ily but worsened again in 1974. In 1975, Government decided that the Dar es Salaam District Development Corporation (DDC) would handle most of the whole- sale and retail beef market for the city through its 85 retail shops, thus excluding TPL from this trade. The National Cold Chain Operation (NCCO) retained a small share of the market, mainly for better quality meat. TPL undertook custom slaughtering of cattle for both DDC and NCCO. However, in 1976 the throughput of the butchery department was half the average of the previous few years. This was due to a major share of the custom slaughter- ing going to the condemned Vingonguti municipal abattoir on the outskirts of Dar es Salaam. This facility had been condemned by the Veterinary Depart- ment in 1967 as unsanitary. In succeeding years a greater share of total city slaughtering went to Vingonguti, as the fees charged per animal 1/ Cost/return ratios of 2.73 to 3.1 in March 1978 depending on plant throughput. 2/ The 1976 supervision mission and November 1976 review mission had cautioned TPL concerning the possible financial problems associated with this contract. The March 1978 supervision mission recommended that all canned meat exports be suspended due to poor cost/return ratios. 3/ The appraisal report used the improved retail, wholesale and pro- ducer prices in project analysis.  - 60 - slaughtered (TSh 13.00) were extremely low compared to the TSh 39.50 at Kawe in 1976-78. 1/ Despite protests from TPL, LIDA, the Ministry of Agriculture and Bank supervision missions, 2/ Vingonguti continued to operate and still had the majority of the city slaughter at the close of the project. The loss of this function meant substantial loss of income for TPL. Effects of the War with Uganda 4.21 When LIDA/TPL decided to suspend all exports of canned meat products due to their unprofitability in mid-1978, a major effort was made to return TPL to financial viability. The expatriate meat plant expert recruited in October 1976, was made factory manager, and he developed a new formula canned meat product with byproducts replacing as much as 25% of the red meat in the can. This was designed for the Tanzanian institutional market and was not suitable for export. Canning of beans was also expanded, again largely for the institutional market. A total of 300 excess staff were dismissed. On the assumption that 200 cattle per day would be custom slaughtered for the Dar es Salaam market, and a reasonable institutional market would be maintained for canned products, the newly appointed expatriate financial manager predicted that TPL could cover its operating costs in the 12 months ending June 1979. However, this would not cover due payments to TRDB for the development loan under the Credit. As the custom slaughter throughout was not forthcoming, the predicted improvement in operating performance would not have eventuated had it not been for the extraordinary circumstance of the outbreak of war with Idi Amin's forces from Uganda. 4.22 At the end of October 1978, Tanzania mobilized to defend itself against an invasion by Amin's forces into the Westlake region, and subsequently moved into Uganda to depose Amin. As the Tanzanian forces remained in Uganda at the request of the newly formed Government of Uganda throughout the remaining project period 3/ TPL was able to benefit greatly in supplying 1/ TPL proposed to install an effective charge for custom slaughtering at Kawe of TSh 90.00/head (TSh 45.00 as a direct charge and TSh 45.00 as an indirect charge due to paying less than market value for the hide) in June 1978 when it was negotiating with the Prime Minister's Office (PMO) to take over all custom slaughter for the city. 2/ In November 1979, a Bank supervision made an in-depth analysis of the Vingonguti situation and presented a report to the Principal Secretary of the PMO. Although repeated promises of action and even decisions to close Vingonguti were made, the pressures from the City Council prevented its closure. 3/ The Tanzanian forces were due to leave Uganda on June 30, 1981.  - 61 - military rations. These included the lower quality CCB and canned beans. In November 1978, Government instructed NARCO to deliver all steers down to 2 years of age to TPL for canning. Subsequently, 16,540 cattle contributed by livestock owners under the COM 1/ campaign to assist the Ugandan war effort (para 4.48 (c)) were allocated to TPL. In addition, as TPL as selling to the military on a "cost plus" basis, it was able to compete in the open market for further supplies of cattle. 4.23 Although the CCB was being marketed profitably to the armed forces the profit margin on red beans was about 4 times that of CCB, and the beans contributed about 65% of the operating margin (Table 15). TPL faced a set- back in the last quarter of calendar year 1979 and to February 1980, in that it could not procure cans from its supplier, Metal Box Company. The Central Bank had not authorised the importation of tin plate for can manufacture. An importation of more expensive made-up cans was arranged from the same company in Kenya, but these did not arrive until mid February. Although this reduced the 1979 income, TPL did operate at a profit in that year (Table 16), which was the first operating profit since 1970. The total TPL throughput of cattle in 1979 was 29,830 which was 32% more than in 1978, but was only 20% of the average for the 1973 to 1975 period. This reflects the derivation of the unusual profit, which was the ability to sell canned goods on a cost plus basis (with beans being more important than CCB) 1/, and a significant reduction in the cost of labor at the plant (a further 50% reduction in the labor force was authorised by Cabinet in mid 1978, and hence a 26% reduction in TPL labor costs occurred between 1978 and 1979 (Table 16)). Financial Position of TPL - a Summary 4.24 Losses were incurred by TPL in every year from 1971 to 1980 except in 1976 2/ and 1979 (Table 16). In 1970, the last year before substantial losses commenced, TPL was active in the wholesale meat supply trade to Dar es Salaam and had a healthy export of first grade CCB. At that time, the export trade was carrying the local meat trade, as Government price controls on wholesale and retail prices of meat precluded profitability in the local trade, but did allow profitable export. 1/ CCB was supplied to the military at TSh 340 and TSh 425 per carton of 24 x 12 oz. cans in late 1978/79 and 1980, respectively; this compares with an equivalent fob second quality CCB price of about TSh 140/ carton. 2/ The 1976 book profit was only possible due to a TSh 20.0 million grant to compensate for accumulated losses. An export subsidy of TSh 9.93 million was also included as income in that year.  - 62 - 4.25 The losses associated with the butchery trade continued until 1976 when TPL undertook custom slaughtering after being excluded from meat whole- saling business. Losses were accentuated in 1974 by TPL being obliged to purchase cattle from the drought stricken Arusha area of Tanzania; these cattle incurred high mortality after purchase and were of low quality and yield. Subsequent to 1976, Vingonguti municipal abattoir took the major share of the custom slaughtering in the city (para 4.20), initially for the Dar es Salaam DDC and later for private butchers when the DDC lost its monopoly in the trade. This loss of potential income had very negative financial consequencesfor TPL at a time when the canning department was incurring major losses. The canning department had operated at a profit in 1974 due to high prices received for CCB in the first half of the year before loss of the UK export certificate and the Fray Bentos brand name, but then incurred substantial losses from 1975 to 1978. 4.26 The financial benfit of TPL being able to supply canned goods to the armed forces commencing in November 1978 has been emphasised. Without this, TPL would not have registered the substantial profit in 1979 of TSh 13.0 million. A loss of about TSh 3.0 million was anticipated by TPL for 1980. The 1980 deficit would bring accumulated losses to TSh 38.7 million; this despite TSh 18.24 million export subsidies by the Government to TPL in 1975 to 1978, and a TSh 20.0 million grant in 1976 to write off accumulated losses. 4.27 TPL's balance sheet (Table 17) is not very informative, as it has included substantial advances against share capital by LIDA or Treasury, receipts of the development loan from TRDB and other creditors under "sundry creditors". This is in addition to a TSh 15.0 million advance against share capital which is accounted correctly. LIDA's audited accounts for 1978 indi- cate as advance against capital to TPL of TSh 97.3 million. The large increase in "sundry creditors" between December 31, 1975 and 1976 was largely due to the TRDB development loan (financed from the Credit) for TSh 44.7 million. The TSh 20.0 million grant from Treasury to cover accumulated losses (which appears under "extraordinary income" in the profit and loss statement for 1976) contributed to the reduction of the TSh 55.7 million overdraft which TPL had with the National Bank of Commerce (NBC). TSh 30.0 million of the remaining NBC overdraft debt was converted to a term loan. There remains a need for TPL to reconcile its books with LIDA and to present its financial statements in a manner which more truly represents their capitalisation. 1/ 1/ Overall, the mission had difficulty in obtaining accounting information from TPL accounts department to enable useful analysis; much reliance had to be placed on data provided to previous missions. TPL accounts are audited only to 1977, whereas the accounts of other LIDA subsidiaries are audited to 1978.  - 63 - Management of TPL 4.28 The circumstances described in foregoing paragraphs have been major constraints to TPL operating as a financially viable company and meeting its production objectives. However, even without these overwhelming factors, the management and organisation at TPL during most of the project period has been such that efficiency of operations has been very poor and income has been reduced accordingly. Supervision missions and the 1976 review mission repeatedly drew attention to major management deficiencies which required urgent attention: key positions being unfilled or occupied by inexperienced staff, inadequate control and supervision of staff and meat plant operations, excessive labor force, lack of appropriate management accounting records, poor maintenance in the meat plant and lack of attention to the most economical means of procuring cattle for the plant. 4.29 When experienced BBL staff left in 1974 and 1975 after national- isation of the plant, many of the key department head positions remained unfilled or inadequately filled. The November 1976 review reported that the positions of production manager, marketing manager, financial controller, internal auditor, chief engineer, chief microbiologist and electrical engineer were vacant at the time, and TPL had been without a chief accountant for several months. An expatriate technical advisor was provided under Dutch Aid from 1975 to 1977 but was of limited efectiveness. An experienced Argentinian neat plant manager was recruited (and financed from the Credit) in November 1976) and acted as technical advisor to the General Manager until he was made the production manager in early 1978. His contribution to a temporary improve- ment in the operations of the plant was substantial, but he did not renew his two year contract and systems subsequently deteriorated. 4.30 Apart from periods of a few months between appointments, TPL did have chief accountants (mostly recruited in Asia), but the accounts depart- ment staff were inadequate in number and experience to carry out the strict accounting controls needed for a meat plant where excess unit costs, wastage and pilferage significantly affect plant profitability. The situation improved with the recruitment (financed from the Credit) of an expatriate financial controller in mid-1978 on a two year contract. However, after the financial controller's departure in May 1980, the head of the accounting department has been a relatively inexperienced Tanzanian accountant; this, combined with the absence of a widely experienced production manager has meant that control and supervision of TPL operations have deterioated again. 4.31 TPL has not had a chief engineer since the departure of BBL staff. Danish Aid volunteers have acted as heads of the electrical engineering section. An expatriate was appointed (financed from the Credit) as resident engineer (largely to supervise the Kawe plant renovation and new plant con- struction for TPL) in July 1977 and continued in employment until the end of the project period. Experts from the Star company of Italy were provided (2 engineers and 1 production expert) to assist in the canning line operations for the production of beef-in-gelatin by TPL under contract to Star in 1977 and early 1978. However, these appointments did not replace the need for an experienced chief engineer. Plant maintenance was not up to a satisfactory  - 64 - standard during the project according to the meat plant experts included in the review and various supervision missions. 4.32 The mission appreciated the difficulties of management in the Kawe meat plant environment. The CCM has had an office on the site and actively participated in operational and policy matters having an effect on the labor force. Labor/management relationship was poor, and it took over 12 months of meetings between CCM, employees and management before a decision could be made to effectively fence the plant area to minimise pilferage of meat. It took Cabinet decisions to permit reduction of the grossly excessive labor force from 1211 in 1976 to 830 in late 1977 and 360 in 1979. 4.33 As soon as it first appeared that plants might become operational within a year, 1/ Bank missions expressed concern over the need to plan management and staffing of each operation. The type and design of equipment to be installed in each plant was relatively sophisticated, requiring experienced management with a strong technical supporting staff. Despite little progress by TPL in this regard, the priority of this issue was reduced as plant completion dates were successively postponed. Organograms for each plant have been developed, but little work has been done on fitting names to positions and ensuring the required management and experience will be avail- able when plants do become operational. However, of more importance for TPL is an analysis of the most appropriate future role and operations of each plant in view of the cattle supply constraints and lack of opportunity for profitable CCB exports. Future Prospects for TPL 4.34 The situation concering national cattle supply and local demand for beef as described in para 4.14 (and further described below) make prospects for economic export of beef in the forseeable future negligible. This means that the Government will have expended a large amount of funds (TSh 234 million) in constructing two new high cost meat plants to export standards 2/, and renovated the Kawe plant to export standards, without being able to derive the benefits of a profitable export market which requries these standards. 4.35 It is also unlikely that TPL will be able to process sufficient cattle to permit profitable use of the three plants. This prospect was raised during the first supervison mission when the estimate of a 9.4 million cattle herd in 1972 was made known. The 1976 review mission and subsequent missions also raised this issue. However, at the close of the project, 1/ Projections of operating data were progressively postponed due to difficulties enunciated in Section III. 2/ Assuming the EEC sanitary certificate is awarded; it is unlikely that this will occur without further expenditure (para 3.23).  - 65 - LIDA/TPL had been mostly concerned with getting the plants completed rather than giving the required attention to the operational policies for each plant. Indeed, at the time of the 1976 review, LIDA refused to accept the 1972 agri- cultural census figure for the national herd as being reliable, and maintained that supply and/or Government policies would ensure that plants were used to a profitable throughput. The inability of LIDA and the Ministry of Agriculture to cause the closure of the Vingonguti abattoir, which has essentially taken over the custom slaughtering for Dar es Salaam (to the disadvantage of the Kawe plant) does not augur well for Government action to ensure profitability of the plants. 4.36 Although data were insufficient to accurately predict the future demand for meat, the 1978 Livestock Census Coordinating Committee attempted to analyse the supply-demand situation on the basis of the 1978 census. This study divided the country into 6 zones and the offtake and demand within each zone and known trading patterns between zones were analysed. The "low demand" calculation assumed that consumption of beef per capita would remain at the same rate as that recorded in the 1969 Household Budget Survey, that popula- tion would continue to grow at 3% p.a. and that commercial offtake would be 4.5%. It did not allow any increased demand due to rising income levels, nor take account of decreased comsumption associated with increased real prices of beef. This simplified calculation indicated that there would be a slight surplus of cattle supply in 1979, and deficits of 90,000 head of cattle in 1985 and 290,000 in 1990 1/. 4.37 The PCB mission used the same data to also undertake a simplified analysis of the supply-demand situation but modified some of the assumptions used by the Census Committee (Appendix 3). The most important difference was that beef consumption per capita was assumed to be 75% of the measured 1969 consumption. This was to see the effect of a possible drastic reduction in consumption due to substantial beef price rises. On this basis, commer- cially marketed supply would satisfy demand to 1985 but be in deficit by over 130,000 head by 1990. Although simplistic, these analyses confirm that the supply/demand relationship is such that beef prices would have to be extremely high to force per capita consumption down to levels which would allow a surplus. If this unlikely circumstance occurred, the cost of the exportable product is likely to be far too high for economic export in the competitive international meat trade. 2/ 1/ For comparison, the total commercially marketed offtake at 4.56% of the national herd would yield 543,000 head in 1979 and 690,000 head in 1990. 2/ Although such a high internal market price of beef (which would be the primary input in an export meat product) would very likely be greater than the economic cost of beef production, levels of pro- duction efficiency and unit costs of transport and processing in Tanzania would nevertheless lead to a high economic cost in the final processed product.  - 66 - 4.38 On the assumption that exports will not be feasible, the financial viability of the investments in the plant should depend on their ability to ensure high throughput of cattle at suitable operating margins per head of throughput. the prospects for each plant are as follows: Kawe: Nominal capacity 200,000 head/annum. The best that Kawe could expect to achieve would be: (a) an institutional demand of about 37 head of cattle per production day for canned beef in 1981, or 9,600 p.a. 1/ increasing at say 3% p.a. to 12,525 in 1990; and (b) the slaughtering of all cattle for the Dar es Salaam market (through wholesaling or custom slaughter for private butchers) at an estimated demand of 180 per day in 1981 (65,700 p.a.) increasing at say 9% p.a. to 142,700 in 1990. This would require Kawe having exclusive slaughter rights for the city beef market, which it did not have at the close of the project. The throughput would theoretically be 75,300 in 1981 and 155,225 in 1990, or 38% and 78% respectively of the nominal capacity of the renovated plant. Shinyanga: Nominal capacity 50,000 head/annum. The best that Shinyanga plant could expect to achieve would be: (a) exclusive slaughter for the Shinyanga twon (estimated 4,400 head p.a. in 1981 increasing to 11,250 p.a. in 1990); and (b) compete in the market to procure cattle to enable a throughput of say 75% of nominal capacity (theoreti- cally 30,600 in 1981 increasing to 23,750 in 1990). This would require the local authorities agreeing to give TPL exclusive rights to slaughter the town's requirements at a cost which would undoubtedly be several times the current rate paid by butchers for slaughter in existing facilities. The Dar es Salaam experience is not encouraging in this respect. Secondly, TPL would have to compete with private traders for slaughter cattle in the zone, slaughter them at the plant and transport frozen deboned meat blocks (to the limit of the CCB institutional market) and frozen sides or 1/ This is based on the CCB production to meet institutional demand in the third quarter of 1978 before the outbreak of war with Uganda.  - 67 - deboned cuts to the Kawe plant. 1/ The efficiency of the TPL operation would have to be high enough to permit it to wholesale the frozen meat in Dar es Salaam at a price which would be competitive with the price that the private trader/wholesaler system could market fresh meat after animal purchase in the surplus areas and transport live to Dar es Salaam. Although, on paper, the transport of deboned frozen carcases could be shown to be more efficient than live animal transport (with inherent mortality and carcase shrinkage), a low level of efficiency in the parastatal operation could easily transfer the advantage to an efficient private trade in live animals. It is also likely that there would be some consumer resistance to frozen or thawed meat, so that fresh meat could command a premium. Mbeya: Nominal capacity 50,000 head/annum. In the years to 1989, satisfactory utilisation of this plant would rely on the same factors that affect the Shinyanga plant, i.e. exclusive slaughter rights and competitive procurement of cattle for export to Kawe. Competition from traders supplying the extremely deficit southern zone would be severe. However, the city demand is much more important in Mbeya than in Shinyanga and theoreti- cally could absorb the plant capacity by 1990 (Appendix 3). 4.39 According to the assumptions in the previous paragraph, if: (a) city slaughter regulations are favorable to TPL plants (i. e. exclusive slaughter rights), (b) city authorities accept the high per head processing cost of these high investment, export standard meat plants, (c) the total TPL operation is extremely efficient, and (d) producers respond to higher prices and increase their commercial market offtake to some degree, so that there will be a reduced per capita consumption in both urban and rural areas, 2/ and hence the theorretical commercially marketed deficit in the late 1980s reduced somewhat, 1/ However, the extent to which TPL would be successful in procuring cattle in Shinyanga for transport as frozen meat to Kawe for local consumption, would correspondingly reduce the live animal slaughter at Kawe for the Dar es Salaam market. 2/ This assumes Tanzania will not be in a position to import beef. As it is extremely unlikely that the herd growth will keep pace with population growth, and coefficients of production cannot be expected to increase quickly, the only way to increase the total marketed supply is for producers to consume less and market a greater per- centage of the herd per year (i. e. increased offtake).  - 68 - then, in theory, there is a chance that the three TPL plants could operate viably, although the Shinyanga and Kawe plants would likely compete with each other to some degree. However, past experience does not suggest that any of these conditions (a), (b) and (c) will be easily net. Condition (d) is uncertain but is likely to occur. In addition, TPL has accumulated losses of TSH 38.7 million. It also has a debt to TRDB OF TSh 61.6 million, although Treasury has reportedly been considering taking over this debt and either converting it to equity or as very long term loan without an interest charge, this had not eventuated at the close of the project. Overall, the prospects for TPL are not bright. NATIONAL RANCHING COMPANY (NARCO) Impact 4.40 The ranching component was expected to contribute an incremental 10,000 metric tons of beef at full development (1985). Of this, about 6,200 m tons could be attributed to NARCO. A 1980 projection for NARCO would have been about 4,775 m tons, which would be equivalent to an incre- mental offtake of about 35,370 head. Table 19 indicates that the total inventory of animals on NARCO ranches at June 1980 was essentially the same as in 1973 at project inception. The average annual offtake rate from the breeding herd (Table 20) over the project period (13.14%) is higher than the average for the years 1971 to 1973 (9.33%), but there are circumstances which reduce the significance of this (para 4.46), and the offtake is lower than the appraisal projection (17.4%). The actual numbers of cattle sold (Table 20) demonstrate that overall the impact of NARCO development invest- ments on beef production has not been significant to 1980. 4.41 Export sales as meat or live animals in live cattle equivalents have been as follows: Before Project Effer't With Project Effect Year 1973 1974 1975 1976 1977 1978 1979 1980 No. Head 2345 3248 1300 1618 712 310 2970 1264 1300 - - Average 1845/annum 974/annum Very few NARCO cattle have been processed for canning except for the Govern- ment imposed sale to TPL for canning in late 1978 for local military require- ments. Hence, the project has not contributed to incremental foreign exchange earnings.  - 69 - Operating Costs and Animal Values 4.42 Operating costs have increased by about 80% over the project period (Table 21). However, the average animal sale value/cost of production ratio, after declining by 15% in the 1974 to 1976 period, rose in the last 4 years of the project to be 35% higher in 1980 compared to 1972. In 1981, this ratio is expected to be 10.2 (2137/209). Consequently, taken overall, cost/produc- tion value ratios improved over the project period. The appraisal mission models have an average animal sale value/cost of production ratio of 11.4. Considering this ratio was 5.45 (Table 22) in 1972, the appraisal mission could be criticised for apparently not considering actual financial figures from existing amounts when preparing ranch cost/return models. 4.43 Amongst operating cost categories (Table 21), an exceptional increase occurred in chemicals and drugs. Although there have been signifi- cant increases in unit drug prices, the major factor in the overall cost increases was the additional procurement of prophylactic drugs for trypanoso- miasis. On Mzeri and Dakawa ranches, prophylaxis is now given at 2.5 month intervals; Manyara, Missenyi and part of Usangu and Kitengule (near the Kagera River) receive doses at 4-monthly intervals. Although vehicle oper- ating expenses increased disproportionately to 1978, NARCO rationalised its vehicle/transport policy under the consolidation program end has subsequently held thee costs in check. Company Performance 4.44 An assumption at appraisal in 1972 was that the ranching company (then NACO, subsequently NARCO) would overcome its operating losses which had been recorded in the 5 years to 1971 and be able to operate on a com- mercially viable basis. The situation in 1976 was such that production coefficients were poor, financial difficulties persisted, and total animal inventory had decreased from 1973/74 levels. This led to the rehabilita- tion program which involved a large injection of equity capital and increased long term loans in an attempt to place NARCO in a sound financial position. Revaluation of livestock in June 1976 wiped out the cumulative back loss to June 1976 (Table 23). Despite the small decrease in total animal Inventory value in this period was TSh 49.4 million. This was a direct result of the large and continuous increased in cattle prices, which was the major factor in allowing a cumulative book profit of TSh 19.1 million at June 1980. As production coefficients remained at low levels during the project period (Table 20 and para 4.50) NARCO's financial position would have con- tinued to be very weak without the extraordinary benefits derived from much improved animal values relative to costs. 4.45 Although the results in individual years are obscured somewhat by the animal inventory valuation methodology (Table 23), financial ratios extracted from balance sheets (Table 24) indicate a general improvement over the project period, and a marked improvement over the period of the rehabilitation program.  - 70 - Financial Ratios 1973 1/ 1975 1976 1977 1978 1979 1980 Equity 2/ /Total Liabilities 0.30 0.26 0.43 0.48 0.45 0.65 0.65 Short and medium term debt/Equity 0.93 1.09 0.63 0.51 0.43 0.12 0.08 Current Ratio 3/ 0.70 3.4 1/ December 31 for 1973; other years at June 30. 2/ Share capital, equity advances and reserves plus cumulative profit (1088). 3/ Current ratio is current assets (cash, debtors, stores and livestock to be sold in the following year) over current liabilities (overdraft, creditors, associated company debts, short term loans). The rehabilitation plan financed a large part of livestock purchases (both steers and females) on a long term loan basis, and so relieved pressure on the NBC overdraft (which had been an extended short term loan in practice); this contributed to the large improvement in the short-medium term debt/ equity ratio and current ratio. The increased value of livestock has also been heavily instrumental in improving these ratios. 4.46 NARCO was unable to provide sufficient data for a complete cash flow for the company over the project period. However, supervision reports indicated that availability of working capital was an important constraint to operations at various times (para 4.49).As supply/demand pressure will keep cattle prices high and very likely increase values even further relative to costs of production, the future cash flow situation of NARCO looks promising (Table 28). Provided the consolidation/rehabilitation phase is completed, and any further development is restricted to low risk investments with assured profitable marketing outlets, the company could be financially viable. Care would have to be exercised in ensuring that there is the management capability at all levels to handle further development, and that unit costs are kept in hand. Factors in Performance 4.47 Despite the recent more favorable outlook for NARCO as a viable company, production coefficients have been very low during the project, and financial problems have been a constraint to NARCO operations. The  - 71 - reasons for this less than satisfactory situation in the production and financial aspects of the company could be divided into: (a) influences not under the control of NARCO, and (b) factors for which NARCO management had responsibility. 4.48 External factors were as follows: (a) In 1974, NARCO was instructed by Government to purchase 10,802 male and female cattle from producers in the Arusha area who were affected by severe drought. A total of 3932 died before sale and NARCO registered a loss of TSh 1.94 million on the operation. The purchase was financed through an NBC overdraft which was extended into a short term loan and which NBC forced NARCO to pay off in 1977/78. (b) Due to a scarcity of meat in Dar es Salaam in 1973, NARCO was instructed to buy cattle for delivery to Dar where meat was sold at controlled low prices. This resulted in a loss of TSh 3.0 million, and was also financed through an NBC overdraft/short term loan which had to be reapid in 1977/78. (c) In 1978/79, NARCO was forced to accept delivery for fatten- ing on its ranches of 30,553 cattle ex TLMC holding grounds. These were cattle contributed by producers to the war effort in a scheme promoted and organised by CCM 1/. The animals were delivered to NARCO ranches between December 1978 and June 1979. The contributed animals were generally of a poor type, very often stunted and many were in poor health. This situation was worsened by overstocking of the holding grounds on which cattle were assembled, poor dip operation at the holding grounds, extremely bad conditions in trans- port by rail to Ruvu ranch, and a scarcity of FMD vaccine in the country. A total of 42% of the cattle received from holding grounds had died by December 1979. Surviving cattle gained little if any weight in the first few months and then gained at from 80 to 135 g/day. NARCO has approached Treasury to write off the value of the 42% losses. If this is done, NARCO should be able to make a reasonable profit on the CCM war time enterprise due to the big escalation in cattle prices since 1978/79. If full costs have to be borned by NARCO, the venture will have disastrous effects on NARCO's financial situation (Table 31). 2/ 1/ A total of 85,000 head were contributed by producers (immatures and slaughter animals). 2/ The cash flow in Table 28 assumes that Treasury will agree to write off these losses.  - 72 - (d) In December 1978, NARCO was forced to sell purchased steers prematurely (December instead of April/May at the end of the main growing season) and its ranch bred steers down to 2 years of age to TOPL. This was to supply red meat for canning for the military. Although full market value was received for this beef, NARCO's returns were reduced in 1978/80 returns were reduced by the sale of ranch bred animals at the young age in December 1978 (Table 23, 1/). There were only 365 three year old ranch bred steers on NARCO ranches in March 1979 compared to 4150 in March 1978. (e) LIDA had a policy of exporting ranch bred cattle wherever possible to earn foreign exchange. This was a logical policy. However, in 1978 NARCO could have received about 30% above the export fob value for the 1300 cattle exported to Kuwait. Consequently, although beneficial to the economy, NARCO's financial position suffered by THIS Policy (TSh 450,000). (f) In November 1978, Amin's Ugandan forces occupied the area north of the Kagera River in Westlake. All cattle on Missenyi ranch (13,000 head) were stolen (to Uganda pre- sumably) including 7800 females of which 4200 were over 3 years old. This was a severe setback to the inventory build up planned under the consolidation program. These external factors could not have been anticipated by the appraisal mission, but cumulatively they have had a deleterious effect on NARCO per- formance, especially financially. From experiences in parastatal livestock systems in Africa to date, an appraisal mission examining a parastatal ranch- ing project in 1981 would have to expect that this type of interferendce (apart from the loss of Missenyi) would occur to some degree and detract from a truly commercial operation. 4.49 A problem which was derived both externallly and internally was the chronic shortage of working capital for NARCO. This especially affected NARCO's ability to purchase immatures to replace animals which had been fattened and sold (note the years following 1976 in Table 19) 2/. It also resulted in NARCO selling ranchbred steers at about 3 years old from 1977 1/ The other factor in reduced sale revenue for 1979/80 was that most CCM steers did not gain enough condition to be ready for sale as slaughter animals in that year. 2/ Due to inappropriate steer purchasing arrangements, NARCO would have been making losses on many lots of purchased animals in the period 1974 to 1978, so that the lack of working capital for steer purchase did not have the same effect as if very profitable operations had been forgone (para 4.55).  - 73 - (Table 20 which shows a high offtake rate in 1977) instead of the normal age approaching 4 years; this despite ranches being grossly understocked (Table 19). On the one hand it could be argued that if NARCO had managed its operations more efficiently, then the working capital problem would have resolved itself. However, on the other hand, the external factors described in the previous paragraph, and Treasury's failure to meet its equity obliga- tions in a timely manner in the 1978/79 year of the consolidation program, also affected NARCO's working capital position. 4.50 Internal Factors. Apart from the external influences previously mentioned, the main factor affecting NARCO's poor performance has been the company's low beef production efficienty. The poor production coeffi- cients are evidenced in TAble 20, where a comparison is made with appraisal projections. The two most critical production coeficients in the NARCO breeding herd are weantag % and adult mortality %, which represent the capacity of the herd to reproduce and the survivial of animals to age of sale. As fattening of purchased steers is an important production compo- nent, the daily weight gain and animal mortality are the most important factors in this enterprise. The results of 1979/80 show an encouraging overall improvement on preceding years from 1974 to 1979, but are still only 83% of appraisal expectations for 1980, and are less than the 1971 to 1973 (pre project) coefficients which were themselves criticised in the Phase I audit report as being low. The low reproductive performance has been largely responsible for the stagnant total herd numbers indicated in para 4.40. 4.51 Although the war in Westlake in late 1978/early 1979 was an outside influence which detrimentally affected production coefficients in Westlake at that time and in the subsequent 12 months, the major responsi- bility for poor production coefficients during the project period must be attributed to management within the NARCO parastatal system. This refers to technical and organisational aspects rather than financial management. The project performance audit report and the 1976 project review report highlighted the need for improved management. Supervision letters to Government repeatedly focussed on the need for management improvements and recommended specific improvement measures. Later missions insisted that, unless coefficients were improved, the consolidation/rehabilitation plan would not be effective. There has been a marked variation in performance between ranches, as is illustrated in Table 32. Failures in management have occurred especially at the ranch level, but headquarters management also bears responsibility. 4.52 Lack of an appreciation of responsibility for results on the ranches has been associated with inadequate supervision and control of operations by ranch managers. Insufficient technical and management experience in managers has also contributed to poor results. Examples 1/ NARCO created zones with zonal managers in 1976 and 1977 to improve company management. Four zones were created - see Appendix 2 and para 4.54.  - 74 - of unsatisfactory management were: (a) the failure to mate 400 females at Mzeri in 1978 and 300 heifers at Manyara in 1979, (b) the keeping of breeders with broken mouths at Westlake in 1977, (c) the lack of attention to weaners as a group requiring maximujm attention and favored conditions, and (d) poor selection of immatures for fattening. Dishonesty has been a proven problem in the case of some managers and herdsmen. Supervision missions have justifiably suspected dishonesty to be even more widespread at the boma level considering the poor reproductive coefficients in relation to the production environment. 4.53 NARCO headquarters can be accused of not developing the most effective two-way information flow with ranch and zonal managers. 1/ Although a very good monthly recording system was instituted and results were regularly collated into ranch and company coefficients, maximum use was not made of this specific and comparative data to analyse reasons for performance and to take corrective action. The inadequate communication is evidenced by the major transfer of steers to Dakawa in 1978 when the ranch was largely burnt out and water was scarce in available grazing areas. This led to gross overstocking leading to 55% adult mortality. It could be argued that the manager should not have accepted the cattle, but the iicident does reflect an ineffective communication system at the time. The zonal management also failed to be effective in this instance. Where managers have been at fault, it has been common for a transfer to be arranged within NARCO rather than dismissal or serious demotion (although a couple of demotions have occurred more recently and one manager was prosecuted for theft). In November 1978, a supervision mission recommended that, in view of the increasing problem of tsetse fly and trypanosomiasis and the cost of prophylaxis, the priorities within the consolidation plan should be reviewed to possibly allocate funds for priority tsetse control. NARCO, with the cooperation of the MOA Tsetse Control Unit, prepared a proposal for all affected ranches requiring millions of dollars in 1979 (which was not apropriate under the existing financial constraints), but did not take advantage of the ideal opportunity to arrange for the aerial spraying of Missenyi and Kitengule in November 1979 when the contiguous NARCO ranches Mabale and Kagoma were aerially sprayed by the Ministry of Agriculture. 2/, 3/ The policy of mating breeders for only 3 months per year, which wad dictated by NARCO headquarters, was counter-produc- tive on many ranches. The negative implications for the NARCO herd at its 1/ MARCO created zones with zonal managers in 1976 and 1977 to improve company management. Four zones were created - see Appendix 2 and para 4.54. 2/ The MOA operation was scheduled for 4 years earlier but was progressive- ly postponed due to financial and organizational difficulties. 3/ NARCO did have an FAO expert in the field in January 1981 to examine priorities and to recommend appropriate action.  - 75 - existing reproductive level was pointed out in the 1976 review. However, In 1978, a supervision mission found that this severely restricted mating policy remained on some ranches where it should have been changed, and this practice was then modified only at the mission's insistence. In the interim, a con- siderable potential calf drop had been sacrificed. Although the latter in- stance could be classed as a deficiency in the practical, technical field, most failings were of an organisational/business management nature. 4.54 On the positive side, NARCO has recently introduced an incentive scheme in which ranches compete for bonus payments (distributed to all operational staff on a winning ranch). It has partially adopted a boma recording system which should prevent boima theft if properly implemented. 1/ NARCO in 1980 accepted a policy of leaving managers on ranches for a longer time period (5 years), so that a manager can identify with a particular ranch and be made more responsible for performance. This compares with the high turnover situation depicted in Table 33. The creation of zones with zonal managers in 1976 and 1977 was further improved in 1978 with accountants being posted to zones. This zonification should continue to improve headquarters- field communicatLons. 4.55 A negative factor which is not evident from the coefficients in Table 20 is the poor performance of steers purchased for fattening. However, evidence is provided in the ratio oE the total number of purchased steers sold in 1971 to 1980 over the total purchased steers on hand at the beginning of each of these years is 0.83; this does indicate a high mortality of about 17% in the steers purchased. Although the performance of individual mobs was not recorded (except in some groups of CCM cattle in 1979/80), investigations by supervision missions indicated that mobs of purchased steers in the years to 1977 yielded a negative margin or only a very small profit. This was largely associated with the poor type of animals being purchased for fattening, which resulted in excessively long periods required before sale of the majority (up to 2 years), and a significant "tail" 2/ which was maintained on ranches often in excess of two years. Initially this was associated with the LI]DA policy of the sister parastatal TLMC being responsible for supply of steers to NARCO, with poor performance by TLMC in this regard. Subsequently, when NARCO was allowed to purchase its own requirements, the situation improved a little. More recently, the Central Zone has resorted to using private traders to supply steers to ranches with a right o rejection by the zonal and ranch manager. This last measure should be the most suitable and results to date appear to have been satisfactory. Since 1977, overall profitability is purchased steer fattening has improved greatly, largely due to the escalating beef prices. 1/ However, although introduced in 1977, adoption of this system has not been thoroughly supervised. 2/ Relatively unproductive animals (often stunted) which do not fatten easily to reach slaughter condition.  - 76 - DISTRICT DEVELOPMENT CORPORATION (DDC) RANCHES 1/ Performance 4.56 The DDC type of ranch was similar to the parastatal ranch in that it was a Government enterprise without the performance incentives inherent in private ranching. However, a number of differences were apparent during the project period. 4.57 The three DDC ranches were able to quickly take advantage of profit- able steer fattening soon after development started. This was at a time when NARCO was obtaining very poor results in steer fattening. The DDC objected to having to sue TLMC as the procurement and marketing agent for cattle, and were able to select, manage and market steers to their own best advantage. Mufideco and Modeco also benefitted by selling steers through the DDC's own butchery business. Costs of operation per animal unit were also generally less than NARCO-s by 30% to 40% when a comparision was made in 1976. This difference largely reflected the cost of NARCO's very high overhead costs. consequently, the DDC ranch concept does have a potential advantage over a large parastatal company such as NARCO in having less overhead costs and more independence of action at the local level (the DDC); the latter capacity should have benefits in operating ranching as a business. 4.58 The three DDC ranches were not, however, without operational problems. The difficulties TRDB had with the Nzega DDC (which owns Kisasiga ranch) as a company have been mentioned in Section III (para 3.38). Kisasiga also suffered from severe encroachment problems until 1979. Modeco ranch operated well in its initial year, but was hampered by excessive investment in a sophisticated water distribution system. It also incurred an unexplained loss of 900 head of cattle in late 1979, 2/ which resulted in a loss for the year to December 1979 of TSh 1.6 million and an accumulated loss of TSh 2.5 million. 4.59 Although only three raches were included in the project, TRDB had 20 DDC livestock enterprises in its portfolio in 1977. Thirteen of these ranches were in arrears and were causing TRDB serious concern. In June 1979, TRDB had foreclosed on 4 DDC ranches. By June 1980, TRDB, still with 20 DDC ranches, had 28 separate loans in its portfolio; 20 of these loans were in arrears in repayments, 10 of which were in excess of TSh 100,000 (including the 3 Credit-financed loans). In addition, in June 1980 TRDB suspended all disbursements to DDCs pending the results of an investigation by the Prime Minister's Office into poor financial performance and heavy debt burden of DDCs throughout Tanzania. Consequently, taken overall, the DDC ranching enterprises have not been very satisfactory. 1/ TRDB was unable to supply the requested data to allow detailed analysis of the three DDC ranches. This was partly due to the DDC ranches not keeping satisfactory records and detailed accounts. 2/ Partly associated with inadequate accounting and recording of operations.  - 77 - 4.60 The main problems affecting DDC ranching appears to have been related to on-ranch management and to the management of the DDCs as public business institutions. Although individual exceptions occurred, there was a general deficiency in interest and/or capability of the DDC ranch managers who were normally seconded from the MOA; they were often on short term assignments and did not live on the ranch in many instances; they had a "dual allegiance" (to the DDC and to MOA which was their permanent employer) and normally had little or no ranch experience. The DDCs as business corporations suffered due to lack of experienced managers capable of handling a number of diversified business activities (transport, ranching, retail stores, butchery, hostels, etc.). In addition to the above general problems, TRDB also indicated that severe encroachment has been a problem on many of the DDC ranches. The mission was unable to obtain records of production coefficients on the DDC ranches as a group (nor on the three Credit ranches), which would have enabled further analysis and comment. Prospects 4.61 The nature of the problems would suggest that if satisfactory management at the ranch level and the DDC level were obtained, and if the ranches were sited so as to minimise the likelihood of enroachment by private herders, then the concept could be successfully implemented. Indeed, in two cases where these conditions have been met, TRDB reported good results. How- ever, there is a great scarcity of experienced ranch managers in Tanzania 1/, and management experience for diversified business of the type in which DDCs are engaged is a rarity in the public sector. The availability of a suitable ranch area on which encroachment is not likely to be a problem (at least in drier seasons is also limited in the major livestock producing areas. Hence the prospect for obtaining a significant impact on beef production through DDC ranching enterprises is not favorable. COOPERATIVE UJAMAA RANCHING Performance 4.62 With respect to repayment of TRDB loans to cooperative ranches, no serious problems have arisen. 2/ Of the 14 ranches which have received dis- bursements, none were in arrears at project closing. 3/ One of the 14 1/ Refer NARCO's problems in obtaining satisfactory ranch managers. 2/ TRDB loan terms were in accordance with project cash flows, and included the following range of total terms (yrs), grace period (yrs) and interest rate (% p.a.) - 9, 4, 8.5; 10, 4, 8.5; 12, 3, 8.5; 8, 3, 8.5. 3/ In addition to the 14 ranches, TREDB approved loans for 2 more ranches which did not register any disbursements in the project period.  - 78 - ranches, Mwanihanza in Shinyanga, had fully repaid its loan from TRDB which was half of the original aproved loan. Another, Shishiyu in Shinyanga, had reppaid the majority of Its TRDB loan which was 25% of the approved loan (and had ceased operations). 4.63 Deapite this favorable loan repayment record, froma a production point of view the program and the concept muat be genarally considered a failure. The ranches have been able to meet their repayment obligations despite very poor production performance due to three factors; (a) cattle price rises over the implementation period were extra- ordinary, with values per kg liveweight more than doubling in a four year period (as recorded in the analysis of NARCO operations); (b) the loan element in the total investment was generally 30% to 60% of the.investment 1/ (with the RDF providing most of the remainder) and was mainly for relatively quick returning livestock purchases so that the debt/-equity- ratio was very favorable, especially considering the circumstances of (a) above; and (c) in most cases the purchased steers financed under the TRDB long term loan have been only partly replaced after sale of fattened animals (average 69% depletion (APpendix 4)). 4.64 The approximate coefficients for annual calving and animal mortality for each ranch are presented in Table 34. In general, these are very poor and would probably be less than and certainly no greater than the coefficients obtained in the traditional herd. Exceptions to the generally very poor results would be the two Masai ranches (Talamai and Ngorongoro), and Mwamalasa ranch in Shinyanga before it was affected by severe drought and insufficLent grazing. At best, these three ranches could be classed as having fair produc- tion coefficients (35% to 50% calving). 4.65 The numbers carried per ranch after 3 to 5 years of operation were very low (Table 34), and were far below both appraisal and TRDB individual ranch plan expectations in Table 34 is that the ranclhes in general were delinquent in replacing the steers which were purchased with the TRDB long term loan; only about 30% of steers had been replaced with iimmatures after sale of the fattened animals. This, of course, has helped liquidity in using a long term loan to generate consumable cash, but at the same time has depleted the livestock earning asset. 1/ This compares with a loan for 70% of the total investment in NARCO development up to 1978.  - 79 - 4.66 There are a number of reasons for the unsatisfactory results of this component (Table 34). The difficulties associated with the selection of many village ranch schemes which were not in areas of low livestock and human population density, and the negative effects of villagisation on at least two ranching schemes (which increased the densities after the ranches were designed) have already been mentioned (para 3.44). 4.67 The high livestock population in an area was conducive to the common problem of encroachment by livestock owners from outside the village and from owners within the same village. The latter phenomenon was also related to a general lack of sincere commitment by the majority by the majority of people in most villages to the success of the collective schemes. Inadequate interest was also evident in the management of many ranches (e.g. on Mwanga, when the dip pump failed the villagers were not willing to fill the dip by hand, resulting in huge losses due to tick borne disease). Voluntary unpaid labor was generally not forthcoming for infrastructural investment, nor for herding. Contribution of heifers by members of the ranches was the most visible measure of village interest in and commitment to the concept; extreme difficulty was experienced in obtaining contribu- tions of cattle. In nearly all cases, when heifers were contributed, they were of a very poor type (often stunted or barren) which resulted in very delayed conception and contributed to poor reproductive rates in the first two years. Some villagers expected improved progeny back in return for their contribution. Animal exchanges also occurred; some who contributed animals took a purchased steer for draft cultivation obviously with the approval of the village ranch committee), others exchanged mature animals for their own immature stock. In one case (Mwanga), the district authorities promised the contributors good crosses from the progeny of the ranch herd in order to entice contributions. In another case (Makawa/ Magesawi), very high losses (442 head) occurred in October 1979 "due to East Coast Fever" when the MOA ranch advisor happened to be on leave; TRDB strongly suspected improper disposal of most of these animals. 4.68 Some problems occurred in water development and in animal health services to the ranches, even though the ranches represented a very small number of specially supported projects in a region. Inadequate permanent dry season water was a persistent problem on 6 ranches. This was asso- ciated with difficulties in selecting suitable sites for dams and tanks, in some cases poor design of dams and tanks, and in others lack of atten- tion to water problems by the district/regional water engineers. Deficien- cies occurred in animal health services, and these were usually associated with lack of drugs or acaricides in the district/regional offices or lack of fuel for transport of fuel for transport of veterinary officers. 4.69 The MOA provided a ranch advisor to each scheme and the project organised a three month training course for a local ranch manager in most instances. Ranch management was variable, and depended to a significant degree on the interest of the village ranch committee which in turn related to the general villager interest. There were a a few exceptional cases (e.g. Ngorongoro and Talamai Masai ranches) where the ranch managers performed well and demonstrated a keen interest in their job.  - 80 - 4.70 On the basis of this analysis, the mission concludes that the project has demonstrated that the collectively owned village ranch herd is not a suitable medium to achieve a significant increase in production from the national herd, at least in the traditonal livestock zones of Tanzania, where nearly all cattle are maintained. There may be some potential for the Masai bull breeding ranch version of the concept, but the sample in the project was too small to draw a conclusion on this type of enterprise. Although the preparation report wished to have a major investment in this concept, this was substantially reduced in the approved project and further reduced in project implementation. The component has, in effect, served as a pilot project to test the concept, and has been useful in this regard. Implications for improvement in the offtake from the national herd are elaborated below. Prospects 4.71 The mission considers that a collective herd concept could only work in the special circumstances where: (a) the collective philosophy is very well developed amongst villagers and strong village leadership exists; (b) individually owned animals do not compete with the collec- tive herd due to plentiful grazing and water relative to animal numbers carried in a village area; (c) the scarce resource of skilled and interested livestock management is obtained to manage the herd; (d) the required inputs (e.g. acaricides, anthelmintics, vaccines, etc.) are provided when required through the Government machinery; and (e) incentives are provided for the collective activity by Government grants for necessary infrastructure (water, corrals, dips), an appropriate debt/equity ratio is therefore ensured, and livestock prices relative to the cost of production inputs are satisfactory. However, the chances of having this combination of circumstances are very rare, and became even less likely as a program is obliged to extend beyond a few selected villages. 1/ 1/ This is supported by the problems encountered in the Shinyanga ranches in the project where the regional authorities and TRDB selected five "appropriate" villages out of 595 available villages.  - 81 - 4.72 The following factors weigh against successful implementation of the collective herd concept: (a) Traditional livestock owners are generally not willing to contribute their antmals to a collective operation (and lose ownership privileges and responsibility) when they also have the opportunity to own their own livestock. In the most important livestock zone of Tanzania, Sukumaland, people have always considered livestock (especially cattle) their most valued possession, and a number of secondary values 1/ have developed in their society based on the primary pro- ductivity of livestock in milk, meat, hides and draft power. Agricultural land has not traditionally been an individual possession but was used under a "right of occupancy" in their traditioqal culture. (b) There is not a large area of unutilised land in the tradi- tional livestock zones. Increasing population and related pressure to expand cultivation will reduce the better grazing areas. This will mean little chance of avoiding competition for grazing and water between a specially created herd on a designated area and privately owned animals (sedentary and migratory) in the area. (c) Skilled and interested management for a large number of ranches would be extremely difficult to obtain. 2/ The lack of interest by villagers indicated in (a) further reduces chances of effective management. (d) The cost of infrastructural investment per ranch prohibits the adoption of a large number of subsidised projects. This is even more so when the poor production efficiency demon- strated in the project and the scarce financial resources of Tanzania are taken into account. 4.73 Undoubtedly, if a significant increase in beef production is to occur in Tanzania, it must occur through improvement in the traditional sector which contains over 97% of the national cattle herd. Improvement 1/ E.g. security in case of crop failure, an appreciating capital asset, role in traditional customs and transactions, and display of wealth and status. 2/ Refer problems incurred by NARCO with a limited number of ranches and substantial and expensive backup support.  - 82 - in the traditional herd will not be easy 1/, but the mission considers that the following ingredients will be necessary if any program is to have a significant impact: (a) production systems or modifications to production systems are adopted which maintain the individual ownership of livestock (as opposed to collective ownership); and (b) livestock in the traditional sector (with the exception of pastoralist Masailand) is not treated as an isolated enter- prise, but as an integral part of a farm family production and social system. 4.74 A system of village ranching which maintained individual ownership of livestock was recommended by the November 1976 review mission (Appendix 5). It involved the retention of individual ownership of animals combined with single management of herd grazing, whilst maintaining milking of wet cows by individual owners; the Village Council would play an active part in maintain- ing individual livestock holdings at a level compatible with the available grazing. Unfortunately, no attempt was made to test this in the project. The implication of (b) above is that a comprehensive approach to development of the traditional sector is needed. Ideally, this would be done through inte- grated rural development projects in which adequate emphasis is given to livestock. However, the progress and impact of this type of comprehensive project in Tanzania has been less than satisfactory. Analysts have attributed this to a number of facgors: lack of a viable agricultural production package, poor extension and applied research services, inappropriate product pricing policies, and inefficient input supply and marketing systems (which in turn are associated with basic constraints of scarce trained manpower, scarce local finances, scarce foreign exchange and poor coordination between involved institutions). These constrains would suggest that programs which are more specific to livestock development in the traditional sector may be necessary for practical implementation reasons. If this is the case, it nevertheless would be essential that the role of livestock as part of an integrated farm family production and social system is taken into account in program design and implementation. A problem could be encountered in the more limited approach where improved livestock offtake is dependent on improved agricul- tural performance (e.g. more secure crop income). 1/ The established attituides to livestock ownership logically lead to maximisation of numbers held by individuals, with eventual over- stocking of the limited grazing resources and relatively low com- mercial offtake in beef. Consequently, improvement in productivity and more efficient use of the range resource can only be brought about by achieving an appropriate change in the attitude to livestock ownership.  - 83 - HEAVY EARTHMOVING EQUIPMENT 4.75 Extremely poor utilisation was made of the heavy equipment under the project. Table 35 demonstrates that the average annual machine hours of operation per machine ranged from 377 to 619 over the 1976 to 1980 period. By contrast, a private contractor would expect to obtain at least 2,000 hours of work from a machine per annum. 1/ 4.76 The arrangement for operation of the equipment from 1976 to 1979 was for the clinet (e.g. NARCO or TLMC) to be responsible for the costs of operation of the machine while LIDA as responsible only for the ownership costs (Table 36). This meant that the client had to organise and pay for fuel delivery to the site, supervise and pay the machine operator and service personnel, and pay for grease and lubricants. The LIDA charge was on the basis of machine hours worked, with no penalty for underutilisation of the equipment when in the charge of a client. This system resulted in very high down time for machines, improper supervision, and low performance per machine hour. The poor financial results are indicated in Table 37. Successive Bank supervision issions made recommendations on improved organisation and supervision of the ehavy equipment. In 1980, LIDA adopted the more appropriate system of full contractor responsibility for the equip- ment and accordingly charged a higher rate per machine hour. 4.77 A number of persistent problems contributed to poor performance of the equipment--unavailability of spare parts, lack of fuel and diffi- culties in transporting equipment between job sites. Spare parts were not procured with the initial machinery order, and reliance was placed on the local Dar es Salaam dealer to supply spares. The agent experienced difficulty in supplying spare parts even in the first year of operation, and this progressively worsened so that in 1978 three to six months elapsed between the order and delivery of spares. This was due to the agent not carrying adequate spares in Dar es Salaam, which in turn was associated with inability of the agent to obtain foreign exchange expenditure clearance through the Central Bank. To overcome this problem, spare parts were procured from the primary suppliers in 1979 and 1980 and financed from Category I of the Credit. Some critical parts were obtained via air transport, with the remainder by surface transport. Problems also occurred in delivering spare parts to isllated job sites. 4.78 The general scarcity of fuel in Tanzania, and the difficulties in distributing fuel to rural areas and to sites, meant many continuous 1/ Using double shifts on contracts which last for several months, efficient contractors can obtain over 4000 hours of work per machine per annum.  - 84 - days of down-time per job. Between site transportation was also complicated by their separation and isolation. LIDA did have a low leader but this was often under repair. Difficulties also occurred in obtaining flat rail wagons for transport of equipment, cometimes to the extent of waiting for over one month. 4.79 Although many of the difficulties experienced were to some extent beyond the control of LIDA (e.g. general scarcity of fuel, insufficiency of rail transport), much of the poor performance must be attributed to inadequate organisatioa and management by the parastatal. The low productivity of the heavy equipment had serious repercussions on the rate of development of infrastructure in project components. LIDA, despite requests by supervision missions, did not keep complete records and accounts for the heavy equipment, so that inefficiencies and financial losses were not eastly analysed. However, the performance recording and analysis improved substantially in 1979 and 1980, as did the organisation arrangements in 1980.  - 85 - V. RATES OF RETURN TLMC 5.01 The TLMC was created under the project to replace institutions operating the official marketing and livestock movement systems. Its basic objective was to increase the commercially marketed livestock offtake from the national herd. As there is no significant evidence to indicatethat the commercial offtake had been increased, the incremental investments made under the project cannot be judged to have yielded a positive economic rate of return. If a financial analysis is made using the methodology used at appraisal, a financial rate of return (FRR) on the total TLMC investment would be about 10%, provided the market fee is doubled (from TSh 20 to TSh 40 per head sold) from April 1, 1981, and a reasonably high market throughput is maintained. With a more conservative marketed figure, the FRR is 8%. Data were not available to analyse the situation with-TLMC and without-TLMC (i.e. facilities continuing under the muanagement of institutions existing at project appraisal); the FFR, however, would probably be less using this approach. 5.02 Despite the lack of impact on livestock offtake, TLMC has been created as an institution which, if managed astutely, could yield positive results for the industry through: (a) maintairitrig markets in a condition which is conducive to sellers and buyers using official markets and so maximising competition (maintenance should generally be of a higher standard than if facilities had been left with town councils); (b) developing a market information service which should benefit the trade by allowing quick responses to supply/ demand market conditions on a national scale; and (c) providing an organised marketing base and livestock quarantine/movement network for implementation of animal health regulations concerning lviestock movement, should these regulations be developed as an effective and comprehensive program. If, however, the TLMC marketing network were used to attempt to introduce livestock market price controls, it would have a negative impact on the livestock production industry. TPL 5.03 The meat processing investment was not completed at the close of the project. However, due to very poor prospects of the investments being able to obtain sufficient total annual throughput to operate profitably  - 86 - (paras 4.34 to 4.39), the financial rate of return cannot be projected as positive. The negligible prospects for TPL exporting meat products at anywhere near the costs of production, despite the very high foreign ex- change capital expenditure, must also dictate a negative economic rate of return for this component. NARCO 5.04 As the parastatal ranch component was modified during project implementation to address the requirements of NARCO as a company, rates of return have been assessed on the basis of the company as a whole. Comparison of results with a preproject situation would not be realistic considering the changes made in the specific ranches included in the development program. The NARCO situation with and without the project investment has therefore been analysed. This method also has the advantage that the effect of the major changes in product value/unit cost ratios are takeninto account. 5.05 Difficulties occurred, however, in simulating a without-project situation in which the negative external influences on the company (which would probably also have occurred without the project) could be accounted for. This was overcome in the analysis by including the losses incurred in 1973 by imposed cattle procurement for meat supply to Dar es Salaam, and the unprofit- able 1974 Arusha drought cattle buytag operation, as costs in the without- project projection (Table 26). The losses of livestock numbers from Missenyi ranch in late 1978 were also included in the without-project model (Table 25). The CCM cattle procurement was not allowed for, as the cost of excessive mortality in these cattle was assumed to be absorbed by Tresury and a sub- stantial profit realised in the with-project situation. 5.06 The without-project situation assumed that coefficients for the breeding herd and purchased steers were not improved over the 1972-74 levels. The major difference to the with-project situation was that there was no pres- sure to quickly expand the herd to bring new ranch development investments into production. Consequently, a more economically rational policy of purchas- ing steers for fattening was adopted. At the assumed coefficients of 18 months average ranch grazing for fattening, 7% annual mortality (10 1/2% over 18 months), and 8 1/2% annual interest rate on overdraft (8 months on purchase price, 1 year on costs), the following equations would be used to determine whether steers should be purchased: C - Cost per animal per year before depreciation and interest charges SP - anticipated selling price per steer BP - buying price per steer (a) Breakeven - no profit SP - 1.18 BP + 1.78 C  - 87 - (b) 10% margin (in 18 months) on the BP SP - 1.3 BP + 1.78 C (c) 20% margin (in 18 months) on the BP SP - 1.41 BP + 1.78 C. On this basis, as losses were being made in 1972/74 on purchased steers, the steer buying operation would have been suspended in 1975. Prices began to rise substantially in 1977/78 due to cattle supply/demand pressures. An astute manager would have projected that purchases in 1978/79 year at about TSh 660 would have enabled a sale price of at least TSh 1166 after 18 months, which would allow all costs to be covered. All indications were that prices. would have to continue to rise significantly as national meat production obviously had a low growth rate and demand was increasing rapidly. In practice, this would have resulted in profitable sales. Following the same price trend, satisfactory margins were enabled in subsequent years. 5.07 The herd models and cash flows for the with-project and without- project situations are presented in TAbles 25 to 28. The financial rate of return calculations appears as Table 29 and was negative 2.5%. 5.08 The incremental production from the NARCO proejct investment is essentially due to the increased livestock number being carried by the company, 1/ as production coefficients are no better than the without- project situation. To calculate the economic rate of return (ERR), the net incremental returns (over without-project situation) due to the company land improvement and livestock investment should be reduced by the net returns had the livestock included in the investment expenditure remained in the traditional sector. However, preliminary analysis indicated that the return would be negative even without this inclusion; hence a simplified economic analysis which did notinclude this economic factorwas made (Table 30). Beef export parity prices were used to 1977/78 and import parity prices thereafter in view of the changed internal supply/demand situation. This meant that the economic value of incremental production was higher than the existing Tanzania Shilling values in years 1975 to 1977 and 1979 to 1981 (see footnote to Table 30). The foreign exchange costs and values were shadow rated, but adjustments for transfer and without the proejhct would not significantly affect the result. This simplified analysis yielded a return of about zero, so the real ERR would be negative. DDC Ranching 5.09 Inadequate records were kept by the DDC and insufficLent data were made available by TRDB to enable a rate of return calculation on the three DDC ranches ln this component. However, as these ranches were operating in the 1/ 149,500 with-project and 108,600 without-project.  - 88 - same livestock Industry environment as NARCO ranches, and experienced invest- ment cost escalations and management problems similar to NARCO's, the results could be assumed to approximate the NARCO situation. UJAMAA Ranching 5.10 Here, also, the scarcity of village and TRDB records and the varia- tions between ranches would not permit sensible calculation of rates of return on the investment. However, considering the dismal general results obtained and the extremely poor production coefficients, the mission concludes that the economic rate of return for this component is negative. VI. INSTITUTIONAL PERFORMANCE AND DEVELOPMENT 6.01 At the time of appraisal, the Tanzania-n parastatal responsible for promotion of agricultural development and production was the National Agricul- tural and Food Corporation (NAFCO). A subsidiary parastatal, National Agricul- tural Company (NACO), was responsible for operation the Phase I (Credit 132-TA) ranches and was also to be responsible for development of the parastatal com- pany ranches under Phase II Credit 382-TA). Two new NAFCO subsidiary paras- tatals were to be formed - Tanzania Meat Processing Company (TMPC) and Tanzania Livestock Marketing Corporation (TLMC) - to implement the meat pro- cessing and livestock marketing c;omponents respectively of the project. LIDA 6.02 Fifteen months after the Credit became effective, the Government created a new holding company under the Ministry of Agriculture - Livestock Industry Development Authority (LIDA) - with responsibility for the livestock subsector, and also formed a number of subsidiary parastatals with specific responsibilities in the subsector. Consequently at the request of the Govern- ment, the project legal documents were ammended in June 1975 to incorporate these changes. Essentially, they were as follows: (a) NAFCO was replaced by LIDA, and the powers and duties of the holding parastatal were broadened with respect to the project; (b) NACO was replaced by NARCO; (c) TMPC was replaced by Tanganyika Packers Ltd. (TPL), which was the title of the recently nationalised company which owned the Kawe meat plant. (d) TLMC was retained but, as for the NARCO and TPL, it became a subsidiary of LIDA.  - 89 - 6.03 LIDA's role as a holding company was criticised by Bank missions in 1975 and 1976. These criticisms related mainly to inadequate guidance to subsidiaries in financial management (citiag NARCO and TPL), and a concern to expand activities and widen its influence rather than ensure that its existing ventures were soundly based and operating efficiently. Both criticisms appear to have been valid. However, the company was very young at that time and was staffed with people of limited business experience. Subsequent to 1976, LIDA did take a keen interst in the financial situation of its subsidiaries, and adopted a more mature business attitude in consolidation of its activities. 1/ However, this did not correct or prevent deterioration of the financial position of TPL. 6.04 In its quest to expand its operations, LIDA formed the Tanzania Livestock Transport and Facility Company (TLTFC) in June 1975. The objective of TLTFC was to transport livestock, to carry supplies to its subsidiary ven- tures, and to operate the heavy earthmoving equipment procured under the project. The initial major venture of the transport section was the trans- port of meat plant equipment from the port of Dar es Salaam to the meat plant sites. 2/ Due to improper organisation in handling this undertaking, major problems subsequently resulted in disputed responsibility for damaged and missing equipment. The poor operation of the heavy equipment as described in paras 4.75 to 4.79, although not all the fault of LIDA, does indicate that LIDA was unable to manage this machinery enterprise which is very demanding in organisational ability and business acumen. 3/ In practice, the TLTFC was never made operational as a parastatal, and the transport and equipment unit remained as a section within LIDA. This had the disadvantage that no complete financial statements were made for the transport and heavy equipment activities. 1/ In December 1980, LIDA had the following subsidiaries: Tanzania Dairy Farming Co. Ltd. - DAFCO National Ranching Co. Ltd. - NARCO Tanzania Livestock Marketing Co. Ltd. - TLMC National Cold Chain Operations Ltd. - NCCO Tanzania Dairies Ltd. - TDL Tanganyika Packers Ltd. - TPL National Chick Hatchery (a project under LIDA. It will be registered as a company in 1981). 2/ LIDA undertook this transport commitment when it negotiated a reduction in the turnkey contract for construction of the meat plants. 3/ However, the mission does not consider that the heavy equipment would have performed any better if it had been a unit in the MOA as originally proposed.  - 90 - 6.05 A Bank mission in January 1976 indicated that LIDA had made sub- stantial progress in developing a uniform accounting and financial control system; this was generally implemented in succeeding years by the subsidiary companies, but many imperfections persisted. In the case of TPL, which has had serious management and financial problems, LIDA did not ensure that the accounting department was adequately staffed throughout the project period to enable the accounting data required for effective management (para 4.30). In the case of TLMC, it was not until 1980 that the company had adequate internal auditors to check on its extensive livestock market money transactions. LIDA did successfully submit cases to Treasury for substantial increases in Govern- ment equity for NARCO and TPL. However, it did not arrange for increases in authorised capital to cater for increased invetment and capital in its sub- sidiaries 1/. This was a violation of the Tanzanian Companies Ordinance, but did not directly affect the viability of the subsidiaries. 6.06 At the close of the project in December 1980, audited accounts were available for LIDA, Narco and TLMC to December 1978. TPL was audited to 1977 only. Audit was done by the Tanania Audit Corporation, LIDA had an audited accumulated loss of TSh 1.9 million at December 31, 1978. 6.07 Following earlier criticism by the Bank that LIDA did not give suffcicient attention to the financial predicament of TPL, LIDA became very much involved in the operations of TPL. However, although this intervention was desirable and necessary, 2/ LIDA did err at times in not keeping TPL management adequately informed of its actions on their behalf. For example, LIDA took the initiative of recruiting the TPL meat technologist in 1976 without prior consultation with the TPL management. Similarly, LIDA organised the contract with Star of Italy for the production of beef-in- gelatine, despite some reservations on the part of TPL. LIDA Subsidiaries 6.08 Comments have already been made on NARCO management. The company suffered due to attempting an expansion program beyond the capacity of its management at most operational levels. It quickly developed a large and costly headquarters staff without having the production base to support such 1/ As per LIDA audit dated 2/22/80 for the year to 12/31/78 (TSh. '000): 1 2 3 4 5 Company Paid up Capital Advances 2+3 Authorised Excess Share Capital 4-5 NARCO 32,990 34,902 67,892 50,000 17,892 TPL 16,479 97,287 113,766 20,000 93,766 TLMC 10,000 3,820 13,820 10,000 3,820 2/ LIDA took full responsibility for hanbdling the disagreements between the meat plant turnkey contractor and LIDA/TPL.  - 91 - an overhead. Communications between headquarters and the field were unsatts- factory. The quality of individual ranch management left much to be desired. Later in the project period NARCO undertook a consolidation program and adopted a number of measures designed to improve its performance as a company - effec- tive decentralisation through the creation and stafing of zones, 1/ per- formance incentive schemes for ranches, more appropriate purchasLig arrange- ments for immature cattle (using private traders), and rationalisation of its vehicle fleet (which had been incurring very high repair costs per annum). The extraordinary rise in cattle prices had much improved NARCO's financial position, but as its coefficients of production remain less than satisfactory, it has not yet demonstrated that it is an institution which call functLon as a viable ranching company able to produce a product in an efficient and profit- able manner. 6.09 TLMC initially concentrated on its cattle trading operations whtch were inefficient and unprofitable. The mission has already indicated that this was an inappropriate role for a parastatal institution. When the emphasis changed to developing and operating market facilities and stockroutes, TLMC's financial position improved. In the latter part of the project TLMC also improved its accounting and internal audit procedures. There is no substantial evidence to indicate that TLMC's intervention in the marketing of livestock has increased off-take or improved prices received by producers; nor is there evidence to indicate that the situation would be any different if the respon- sibility for organised marketing had been left with the town councils. If the attempts to organise a market reporting and disseminations system (which was initiated at the end of 1979) are successful, then TLMC will have demonstrated one advantage in having a national parastatal responsible for supervision of markets (as opposed to local authorities). An important factor in support of a livestock parastatal of this nature in the project design was its assumed ability to maintain interdistrict and interregional stockroutes and livestock holding facilities. TLMC was deficient in this regard during the project period, as evidenced by the lack of development of planned water facilities on stockroutes. 6.10 Extensive comments have already been made on TPL as an institution. Without major improvements in the management and operations of TPL, the company can expect to incur major financial losses in the coming years. Even with these improvements, other constraints are likely to affect operational viability of this institution (para 4.39). 1/ Zones were created in 1976 but accountants were not posted to the three zones until March 1977 (Westlake), January 1978 (Northern), and May 1978 (Eastern).  - 92 - Ministry of Agriculture (MOA) 6.11 The MOA did not have a major direct role in the project. It was involved in technical assistance and services to the DDC and Ujamaa ranches, and its performance in this field varied from poor to fair for the various ranches. The tsetse contcol aerial spraying program at Westlake was completed four years behind schedule. The Foot and Mouth Disease typing laboratory was not financed under the project; despite repeated requests for action by super- vision missLons, the MOA delayed so long in procuring tenders that the Closing Date arrived before the Bank was able to assist with Credit funds. TRDB 6.12 TRDB had a special livestock unit throughout the project. An expatriate Livestock Credit Officer headed the unit (2 separate expatriates, one for three years and one for two years). Both officers made a substantial contribution to the project and their services were appreciated by TRDB management and the LIDA subsidiaries. 6.13 TRDB was the agency responsible for the organisation of inter- national procure,ment of the major inputs utilised by NARCO and TLMC as its other clients under the project; it performed this function satisfactorily. In dealing with NARCO, the TRDB livestock unti had a major input in preparing the consolidation/rehabilitation plan in 1977/78. In general, TRDB demon- strated a sympathetic and flexible approach in fianancing NARCO, as it con- sidered that the parastatal could become a viable entity (based on projected performance and cash flows prepared by its livestock unit). 1/ TRDB main- tained that it was not consulted or involved in the negotiations on the TPL loan (US$6.0 million), but was obliged to disburse to TPL under the project. By 1977, however, it indicated that TPL was very unlikely to be able to repay the loan TRDB and LIDA have subsequently been requesting Treasury to take over TPL's debt to TRDB. 6.14 While TRDB's supervisory input in the project (as the supervised credit institutton) was quite satisfactory for NARCO, it was not adequate for TLMC. Very little inspection was made of work carrted out under the TLMC development loan. TRDB played an important role in the promotion, planning and financing of the ujamaa livestock ranches. However, its live- stock unit manpower limitations meant that it could not provide the flexible and situation-specific service which was requried in implementing this new concept. The regional and district MOA authorities should have adopted the 1/ The consolidatin plan involved changes in the DCA and a waiver (con- cerning subloan terms) in the PA. These were approved by the Bank in the third quarter of 1979. The original NARCO loans under the project were for 12 years, at 8-1/2% p.a. within 6 years grace on principal repayment. The consolidation loan program permitted a new grace pertod of 5 years and a 17 year term; this combined with the previously allowed grace period meant up to 9 years of grace with a maximum of 20 year terms for the first loans made.  - 93 - primary role as contact officials. If this had occurred, then a knowlege of real attitudes of the majority of villagers to the collective schemes should have elL.niaated some of those villages which were included in the program. Under the circumstances, TRDB adopted a legitimate approach of only financing livestock, and then only after required infrastructure was developed and villager contributions had been made. 6.15 At the close of the project, the livestock unit was responsible for all beef ranches, dairy farms and poultry and piggery enterprises in TRDB-s portfolio. There were fifteen technical staff, nine of whom dealt directly with the Second Livestock Development Project; this included three field credit specialists stationed in Mbeya, Ruvuma and Musoma. A disturbing development at the close of the project was that, after the departure of the expatriate credtt specialist, the Manager of the Livestock Unit was having great difficulty in obtaining use of TRDB vehicles for supervision of live- stock projects. Another negative factor was that TRDB was unable to provide data which would enable a cash flow analysis of TRDB involvemnent in the project. Technical Assistance and Training 6.16 The Credit legal agreements indicated that specific positions in each of the implementing agencies would have to be filled with persons with qualifications and experience satisfactory to the Bank. These included the following: LIDA - economist, range and range water specialists NARCO - Financial controller, chief and senior development officers, 4 ranch technical officers TPL - meat technologist TRDB - livestock credit officer TLMC - chief accountant. 6.17 The Government received substantial assistance from USAID in providing expatriate staff in LIDA and TLMC. 1/ UNDP also provided an expatriate planning officer for NARCO. Most of the positions were filled during the project period with persons satisfactory to the Bank, although the effectiveness of individuals (expatriate and Tanzanian) was variable. Important departures from the project requirements occulrred, however, in the case of NARCO's ranch technical officers (RTO), the TPL meat tech- nologist position, and the range water specialist. Three RTO's continued their contracts from the Phase I project into Phase II. However, two of these terminated contracts in 1974 and late 1975. A Canadian volunteer (CUSO) occupied one of the posts for two years from 1976 to 1978, but this 1/ Nine staff positions were filled by a Texas A and M contract financed by USAID; 3 positions in LIDA, and a livestock facility specialist, an economist and 4 marketing officers in TLMC.  - 94 - effectiveness was limited due to his limited period with the project and his relative isolation at the Uvinza ranch. At the insistence of the November 1976 review mission, NARCO agreed to recruit another RTO for the eastern zone and this position was filled by an expatriate on direct contract from November 1977 to Devember 1980. At TPL, the meat technologist/technical advisor position was filled by an expert from Dutch Aid from 1975 to 1977 and by a direct contract expatriate appointee for two years from October 1976. It has been vacant since September 1978. There was a delay in filling of the water resource specialist position by USAID (October 1975) in LIDA and there was also a gap of a year from April 1976 to February 1977 in this post. Some substantial gaps were also experienced in the USAID marketing staff supplied to TLMC, but the filling of these positions was not a project requirement. 6.18 In considering the performance of expatriates employed under the project, although effectiveness varied according to individuals, the mission obtained the impression that those who had in-line positions tended to be more effective than those in advisory positions. Furthermore, the mission con- siders that this was so because an expatriate in an in-line position had grater opportunity to be effective. Examples of in-line positions success- fully filled by expatriates were the financial controller positions in LIDA and NARCO (throughout the project), the chieF accountant post in TLMC, the financial controller Position at TPL when it was temporarily filled by an expatriate (1978/79), the Chief Development Officer at NARCO, and the live- stock econoiaistat TLMC. When the TPL technical advisor was appointed produc- tion manager in 1978, his effectiveness greatly improved. When the NARCO RTO who was retained throughout the project was the manager of the Missenyi ranch, he considered he was very much more effective than when he was in the advisory position. The mission appreciates that the recrutiment of expatriates for in-line positions would not only require the support of the agency involved, but also would be difficult for the agency to convince the relevant unit in the Ministry of Finance that expatriate recruitment for such positions was justified. Nevertheless, it would appear that relegation of expatriates to advisory positions did tend to decrease their effectiveness. 6.19 The Credit was utilised to finance six overseas scholarships in livestock production and meat processing to US and UK universities. Ten TLMC staff were also sent to Texas A and M under the auspices of USAID in supporting the marketing component of the proejct. 1/ 6.20 At the request of Government, the Credit was used to finance the costs of UNDP staff working in the livestock sector (LIDA and MOA) for 9 months in 1976. This occurred when UNDP was short of funds and cost US$195,000. 1/ Five of these had not completed their studies at the close of the project.  - 95 - VII. BANK PERFORMANCE 7.01 The Bank mounted an appraisal mission two months after a request for financing was received from Government. The project was negotiated within one year of appraisal and was approved by the World Bank Board thirteen months after appraisal. This performance was satisfactory, especially considering it was at the time of reorganisation of the Bank into regions. However, the Bank reorganisation did deleteriously affect staff continuity during process- ing of the project. 7.02 Some aspects of the project design as accepted by the appraisal mission and the Bank have been criticised in previous sections of this report. The encouragement (through acceptance of the Government proposal) of a parastatal (TLMC) to be the major livestock trader in commercially marketed cattle was inappropriate, as was amply evidenced during the project (para 4.03). Undoubtedly, the Government's socialist political philosophy strongly influenced the mission's approval of this strategy. However, staEf experi- enced in livestock development 1/ should have objected to the proposed dominance by a parastatal in livestock trading,which function is more effic- iently handled by the private sector to the advantage of both producers and consumers in all but extremely rare situations. 7.03 The NARCO expansion program was over-ambitious for a company which had managerial and financial problems in the Phase I project (Credit 132-TA). The extent of these problems was apparently not so evident at the time of appraisal, and the infrastructural development on ranches in Phase I had been satisfactory. However, by the time of negotiations in February 1973, Nairobi based supervision missions had high-lighted the ranching company's organisational and financial difficulties. The Bank's Nairobi office did communicate its concern to headquarters for the major expansion program under these circumstances at the time of negotiations. The Bank negotiations obviously considered that NACO (subsequently NARCO) would overcome its difficulties and agreed to the program. This confidence proved unfounded, and led to the major reshaping of the NABCO investment program in 1978. 7.04 The Bank rightly reduced the other ranching components (DDC and ujamaa ranching) to far less than that proposed by the Government, as these ventures were essentially untried tn Tanzania. Subsequent to appraisal, the Mwisa cooperative ranches were deleted at the request of Government (paras 2.03 and 2.17). This, combined with the effect of discontinuity in personnel processing the project caused by the Bank's reorganisation, could explain 1/ The appraisal mission economist had been on several misstons as a Bank staff member; the mission leader (livestock) was on his second mission; the livestock specialist (Bank staff) was on his first mission with the Bank; the consultants (range/livestock, meat processing, economist and socio-anthropology) were all on their first Bank mission.  - 96 - the discrepancies in the appraisal report text, annex and ranch model for the ujamaa component (paras 2.18, 2.19). 7.05 With regard to the meat: processing component, the appraisal mission underestimated the investment costs, but, more importantly, there was a basic flaw in the concept of heavy investment geared to the export meat market; the national herd inventory was grossly overestimated, and this led to a situation of negligible exports even within the project period. The mission appeared to have accepted the "official" estimates of herd inventory and growth as pre- sented in the preparation report (para 2.10). Analysis of the basic data used to derive estimates should have suggested that the growth rate of 5.6% p.a. was unusually high for a traditional sector herd, and, in any case, was wrongly calculated by the preparation team (the correct inventory change for the period used was 4.0% p.a. - para 2.12). 7.06 When, after the Credit was effective, the Tanzanian agricultural census of 1972 revealed an inventory of only 9.4 million cattle, the possible dire consequences for heavy investment in export meat plants at that stage should have been apparent. In February 1975, when the Government went to the Bank's headquarters 1/ to discuss means of financing the greatly escalated investment cost of the meat plants, the Bank agreed to finance part of both Kawe and Shinyanga plants. At that time, the Nairobi office, which was supervising the rest of the project 1/, maintained that the Bank should pro- ceed only with the Kawe plant renovation, and delay any investment in the other plants until the supply/demand position became clearer. The Tanzanians were emphatic that all three plants should proceed, and did not officially accept the 9.4 million inventory figure, as it was so far below their previous estimates. The Nairobi office opiinion was overruled. In retro- spect, the more cautious attitude of RMEA in considering such a large investment would have been much more appropriate. The loss of the BBL brand of Fray Bentos for CCB and the exodus of skilled BBL personnel when the Kawe plant was nationalised in 1974, the loss of the UK canned meat export certificate in 1974, and the depression in international beef prices in later 1974, could have been expected to cause the Bank's supervisors to adopt a more conservative assessment of the situation. 7.07 Once the Bank had approved the use of US$6.1 million of Credit funds for Shinyanga and Kawe, almost all of this amount was quickly used up in foreign exchange contracts. consequently, when the 1976 review mission was undertaken, the Bank had little option but to attempt to emphasize existing and likely future problems in completing the plants and making them operational. The Bank continued its efforts to assist LIDA/TPL in these 1/ The meat processing component was being supervised from headquarters at that time (para 3.16).  - 97 - aspects by including meat processing experts on 2 Bank missions in 1976 and on missions in 1978 and 1979. Unfortunately, full use was not made by TPL of the recoimaendations made by these missions. The Bank also agreed to utilise funds from the on-going Dairy Development Project (Credit 580-TA) to assist in the 1978 livestock census which was very important to determine future opera- tional policies for the meat plants. However, although a report of the census was published, LIDA/TPL had not seriously addressed its implications for the meat processing industry at the close of the project. 7.08 When the Bank saw the undesirable consequences of TLMC being a major livestock trader, it correctly changed its previous position and recommended that TLMC's role in livestock trading should be minimised. The Bank also showed a desirable degree of flexibility in addressing NARCO's seriously deteriorating financial position in 1976 and 1977. Major changes were made in the appraisal program in an attempt to retuern the ranching company to financial viability. 7.09 Bank missions gave considerable emphasis to assisting the project agencies in technical and inanagerial issues. Most supervision missions in- cluded reports to project agencies making recommendations designed to improve performance. Missions also used their influence to assist project agencies in approaching central governnent institutions (e.g. Treasury and the Prime Minister's Office) to obtain support for operational requrieinents. 7.10 Overall, the Bank's performance in the project at appraisal and startup had a number of failings. Subsequently during implementation it showed a desirable amount of flexibility in adjusting to the prevailing circumstances in an attempt to assist Government to meet the development objectives of the project. VIII. CONCLUSIONS 8.01 The project had a number of design faults: (a) The expenditures under the meat processing components were included on the asstmption that Tanzania would be able to compete in the international 'neat market and profitably expand its exports of CCB; this now seems highly unlikely. The erroneous assumptions concerning national cattle herd inventory and growth were the main cause of this design flaw. (b) The intent to establish TLMC as the major livestock trader in commercially marketed offtake was inappropriate. Fortunately, this was corrected midway through the project.  - 98 - (c) The capacity of NARCO to expand its operations at the rate projected in the project was overestimated. This necesst- tated a complete revision of the development plan during the project in the form of a company consolidation/rehabili- tation program. 8.02 The inferences that can be drawn from these deficiencies Ln the project design are: (a) Project planners and appraisers should endeavour to ensure that the data base on which major investments are to be decided is as accurate and reliable as possible. When a serious element of risk in the investment is introduced by doubtful reliability of the data base, planners and appraisers should adopt a con- servative attitude. In the case of countries or institutions with severely limited financial resources, a very conservative approach would be more appropriate. (b) In designing a project, the creation of new institutions to perform functions which are already being undertaken by existing entities should only be considered in exceptional circumstances. There are also some functions, such as livestock buying and selling (trading), which by their nature cannot be performed efficiently by a Government body. (c) In follow-on projects, such as the NARCO ranching component in this project following the Phase I project, careful analysis should be made of performance in the previous project before embarking on a major expansion program. Although infrastructural development had been reasonably successful under the Phase I project, signs of major managerial problems were already appearing when the second project was appraised. As the investment was in a parastatal designed to operate as a commercially viable production com- pany, the managerial and organisational aspects should have been given more weight than the infrastructural development capacity of the company. 8.03 During project implementation, major management and organisational problems were incurred by LIDA and its subsidiary companies - TLMC, NARCO and TPL. At the close of the project, management of LIDA, TLMC and NARCO had shown signs of improvement, but TPL was still in need of major changes (Chapter VI). The DDC form of ranching also exhibited the problems of management and organisation experienced by the national ranching parastatal. The performance of the project components implemented by parastatals, (i.e. most components) reflected this unsatisfactory situation. Analysis of the implementation history suggests that the problems affecting the parastatals in the livestock sector of Tanzania are the following:  - 99 - (a) Difficulty in obtaining experienced and capable ofEficals in public sector business and service management; and/or (b) the lack of sufficient incentives for performance by managers and officials responsible for parastatal operations; and/or (c) the absence of a truly commercial orientation in managing the parastatal businesses. The latter factor is often exacerbated by the interference for social welfare, political or other reasons by Government in the policies and operations oF parastatals which are expected to operate profitably. Regardless of the legitimacy of such interventions, it does detract from a commercial orientation. 8.04 The mission considers the three factors listed in 8.03 above tended to occur in most of the project institutions. The importance of these constraints increases where thae parastatal has a commercial production func- tion (e.g. NARCO RANCHING, DDC RANCHING) or commercial trading function (e.g. TLMC as a livestock trader). It should be expected that the constraints would be less marked where a service role is performed such as by TLMC as a market operator and TPL as a custom slaughterer. Although the poor per- formance of TPL at the Kawe plant would tend to negate this last contention, the plant operation was subject to two peculiar circumstances: (a) the existence of an excessively large and undisciplined labor force (and the difficult political implications tnvolved in reducing and disciplining this labor), and (b) a general rundown in most areas of management and control systems since nationalisation in 1974. 8.05 As management was one of the key factors affecting perfortmance in a production parastatal such as NARCO, it could be postulated that a greater emphasis on ranch manager training under the project would have improved production coefficients and overall results. However, three of the managers had range/animal production degrees, and the remaintag managers had Egerton College diplomas from Kenya or had taken the Mkata/Morogoro ranch manager training course. The managershad therefore received theoretical training and had the opportunity to learn practical management in the company, especially after zonification when the more experienced staff were able to supervise new managers. Although in-service training could perhaps have been enhanced by making greater use of the expatriate RTO advisers in this field, it would appear that factors other than training were responsible for the overall poor management performance. This is also borned out by the fact that some individual young managers did register satisfactory performance when they had the same training as other less successful NARCO ranch managers.  - 100 - 8.07 The political system in Tanzania is such that it ts likely that parastatals will continue to have an important role Ln the livestock sector. Although LIDA, NARCO and TLMC did show some signs of institutional improvement towards the close of the project, the actual results of this project would suggest that the involvement of parastatals would preferably be restrLcted to service functions which facilitate and encourage efficient production by the private sector. Where it is necessary for Government to become involved in production, it could be expected that joint ventures with experienced private sector investors would be beneficial through the provision of skilled and experienced management and a definite colmmercial orientation. Should it become necessary for Government to involve a joint venture company in non-commercial or loss-making activities, the company could be compensated accordingly by Treasury. An alternative would be to accept the lower produc- tion efficiency pertaining to suboptimal management of public production enterprises, and assess the economic viability of investments using these lower production coeEficients. This could curtail investment in the sector, as more economical use of Government s scarce investment resources would very likely be available (unless, of course, competing investments were also plagued by the same problems of low performance expectations). 8.07 With respect to further investment by livestock parastatals and the desirability of support for specific investments by the World Bank, the PCR concludes as follows: (a) TLMC's cash flow projection (Table 11) indicates that with a doubling of market fees, rationalisation of market Operations and staffing and careful financial management, the company could operate without subsidy. This assumes no new investment but allows for replacement and maintenance of assets. As a negligible amount of the planned water development on stockroutes was implemented in this project, it could be assumed that investment of thits nature is still required. However, such investmnent should not be undertaken until an in-depth study of existing routes used by traders is mnade and the minimum required water investments defined in detail. Water development and the maintenance of water facilities is very costly in Tanzania, and would require skilled logistical management which is likely to be outside the competence of TLMC. The company could not cover the debt service and cost of operation of water investments from the proposed scale of fees for animals moving through markets (and subsequently using stockroutes). In short, a detailed study of the existing stockroute situation and possibilities for water development should be made, and satisfactory institutional and cost recovery arrangements should be defined before any further investmnent in stock- routes is undertaken.  - 101 - (b) TPL's immediate task is to develop a rational policy of utilisa- tion of existing meat plants when they are commissioned. As prospects for profitable exports of processed meat are very poor, it would not be appropriate for the Bank to finance further Lnvestments in these meat plants at this stage. (c) NARCO has adopted a number of measures in recent years which suggest that management and organisation within this institu- tion are improving. However, the facts are that the production coefficients on ranches have not improved over the levels exist- ing at the end of the Phase I ranching project. These levels were criticised as being unacceptably low in the Phase I PCR, and the rationale for the Bank supporting a second phase project with NABCO (then NACO) was that the investments under this project would permit an improvement in production per- formance; this was not forthcoming. In itself, NARCO's per- formance under the project should preclude further support by the Bank at this stage. In the future, if NARCO Could improve its production coefficLents floowing the consolidation/ rehabilitation plan and demonstrate an ability to produce efficiently, then this objection to further Bank support would be removed. However, of even more concern is the question of allocation of development investment resurces to t'ne parastatal ranching subsector. After 12 years of very substantial investment under two projects, NARCO is still dealing with less than 1% of the national herd. If an impact is to be made on meat production in Tanzania, it is obvious that improvements must be made in the traditional production systems in which nearly all livestock are raised (para 8.08 below). (d) Performance of DDC ranching (regional or district parastatals) in the project does not warrant further support by the Bank for this type of enterprise. 8.08 The ujamaa village ranching component of the project was essentially a pilot scheme to test the concept. The results obtained in the project have demonstrated that collective ownership of cattle in a ranching situation is not a suitable means of improving livestock productivity and offtake from the traditional livestock areas of Tanzania. It appears that production systems will have to be developed which enhance offtake whilst maintaining individual ownership of cattle. As over 97% of the national cattle resource is held by the traditional sector, it is imperative that appropriate methods of improve- ment in this sector be developed if the productivity of industry is to be significantly increased (paras 4.72 to 4.74).  - 103 - TANZANWA Table 1 SECOND LrVESTOCK DEVELOPOffT PROJECT - CRflIT 382-TA PROJECT COMPLETION REPORT Comparison of ProJect Costs in Preparation and Avmraisal Remorts Premaration Comvoenfts Aooraisal Comoonents Type Cost Type Cost us$ '000 US$ '000 RANCCE NARCO NARCO 7 new ranches 6,150 16 11 ranches 4 8,144 UJAMAA cooperatives UJAKAA Cooperatives 90 Village ranches 1,946 14 Village ranches 37 nws ranches in Mwisa 8 Masai ranches 2,389 area 3,400 14 DDC DDC 10 ranches 1,068 3 4 ranches 2,872 LIVESTOCK MAR1ETflG TLMC 4,44,0 11 TLMC 3,399 MEAT PROCESSING IPL - new plants: Shin7anga, T2 - new plants: Shinyanga, Mbeya Mbeya - renovbtion: Kawe,Arusha 14,800 38 - renovation: Kave only 6,005 2 TECHNICAL SERVICES Techaical Assistance and Technical Assistance and Ccasultants 2,241 , 6 Consultanta 1,886 FMD Vaccine Production 2,650 7 Not included at appraisal,-but an FM typing laboratory is mentioned in the Credit Agree- meat (under Technical Services) Tsetse Clearance and Land Not included specifically in appraisal Develaoment Unit 2,177 6 cost table (ass3uedly to avoid double costing as heavy equipm*nt operation vould be costed in develop- nents above). _ _ TOTAL 38,868 1/ .00 24,695 ^/ ;0 Including a total 10% contingency for price and physical escalation. I/ 2/ Including 5% physical contingency and 13 % price contingency.  - 104 - TANZAIA Table 2 SECOIp LrVESTOCr DEMOP'.T PROJECT - CREDIT 182-TA PROJECT COMPLETION REPORT TOTAL PROJECT COSTS (TSh '000) Comp=ent Apraisal Actual Est 4 =teS Exoenditure % % RAJCHING SARCO 58,148 33 92,200 1/ 27 26 (12 ranches) (10 + 2 patia.l.7 developed rancEe UJAMAA I7,057 '0 15,k80 2/ 5 4 (l11vi1lage and (212 vil2lae and 8 Massi ranches) 3 Masai ranches) DDC 20,506 2 1.8,949 6 5 (I4ranches) (3 ranches) LZVETOCZ MA4TM G MNIC 2k,269 14 21,T26 i/ 6 6 MEAT PROCESS=G m 42,876 24 l82,000 / 54 52 'ECEZCAL ASSTSTACH 13,466 a 9,L40 / 3 3 1.00 REAV NUMNT - _.0,72.0 176,332 100 350,505 100 _ _ ~~ _ ~ 1/ See par 3.28. 2/ , e r TA"AA ranches ars aproate, as details for all ranches vere not aailable. Ex7eaditre ieclutes d&oVel0Pnat costs imcUrred by the members as coutrmbutions, by the rauch tbrhub a =R loan, and by Govexr=ent thru=g its regional development f=mds. 3J Soe Table 5. 4/ See Table 13. 5/ Zzc2udes US$37M-00O paid to the consulti9 e=gizeers 'ho supervised the oast plant develoyme.t; this cest is iicluded udedr meac prccessi (as wt apprsisal). c  - 105 - Table 3 Fage I TANZANIA SECOND LIVESTOCK DEVELOPMENT PROJECT - CREDIT 382-TA PROJECT CO!MPLETION REPORT SCHEDULE OF DISBURSEMETS Accumulated Disbursements Actual or IDA Fiscal uS$ million Estimated as Year & Semester Actual Appraisal of Appraisal Actua.1 Estimate 19T3/T4 December 31 1.5 June 30 5.0 1974/75 December 31 _ 8.0 June 30 1.0 10.0 10 1915/T6 December 31 2.5 12.5 20 June 30 4.6 15.0 31 1976/77 December 31 8.8 16.0 55 June 30 10.7 17.0 63 19TT/T8 December 31 11.9 l&..0 60 June 301: 12.4 18.5 67 1978/79 December 31 13.1 7n June 30 15.0 80 1979/80 December 31 15.9 86 June 30 16.4 89 1980/81 December 31 17.0 92 Credit Closing 18.5 100 CLCSING DATE 12/31/80 12/31/79  -106 - Table Pap2 3 SECCD UMTOC DEVE.OPUT PP.OJECT - ChflIT 382- TA PR0JECT C0MM0O RPORT eDZT DZS3UMEG MIR CATEGORY (U53) Category As per Develomnt Actual at Czedit Ageu t Credit Clousig I. eavy a g 1,500,000 1,46T,098 equimt II. Subloars by TP$ for NARCO, DDC and Uinna rnch developmnt, liveteck uazet and stock route davelamnt 9,300,000 9,T91,598 I. Subloan by T fat mat processig developmet 3,5CO,000 5,641,T63 IV. Teclical services 1,600;000 1,599,51 V. tL'allocated 2,600,000 _/ - Total 184500,000 18,500,000 I Th/ e whole of the unallocated. portic of the Credit * allocated to Categam 1= is 1973 to total U856.1 zillion for disbusemet on the mat processing coponent. An aut of $UZS 456,237 ws ot utilised under this Cate=oz7 deuvite $ 16.3 million beizg required in foreip exchange for the meat plant izvestuantS. This was due to '!fDB not being wiLLng to lend the resnining funds in 1980 awhen it considered its loan to that date to be irrecoverable fro= 'EL.  - 107 - Table 4 TAZANIA S5COND LIVEST=CK DEVELOPMENT PROJECT - CRErDIT 382-TA PROJECT COW.OLESQN REPORT TL4C Investments - Phyrsical Achievement Appraisal l9t6 Actual S of Objective Modified Achievement Appraisal Obioctive Objiective Markets New Construction - large 1,000 cow/day capacity 3 3 - medium 500 cow/day 10 10 - small 50-200 cow/dar 20 20 34 1/ 33 33 34 103 Renairs - 50-200 cow/day capacity 104 104 122 117 Holdinz Grounds (HG) Nrew HG - number 4 2 Hlongenzils cepleted 40 NyJaguku Mlcagan ils, Usure Iyombo lyombo vater only Iyaiiua Chicola -dams 14 3 75 - crush 10 1 10 - dips 5 1 20 Renovate EG - number 23 22 10 43 - daw 24 7 29 - crush 40 - dips 24 Stock Poutes New Construction - distance cleared 2300 km 1270 km 528 km 23 - bomas 95 50 10 11 - veterinary facilities (including dip/crush) 6 3 - - - water points developed 90 50 2 1 Renovation - reclearing tracks 2200 2000 1060 48 - bomas 100 90 Nil Nil + 1 dam I/ Capacity approximately 300 to 350Wday.  - 108 - TAZAN IA ZIXLq 5EC0NlD LETOCz DEV=P!MMT PROJECT - CMMTT 382-TA PE!OJ!CT Co=aLTCN P"ORT 59: >:vestments - Zx=emditures 3/ Th '0l0 Pro3ected Actual Direc-t Other Tot&& Direct Other Total Markets 4471 720 5191 4357 USS J/ WS Holding Grounds - now 1563 655 2218 2319 UtS WES - existiug 5T761 3114 8875 7070 tZS llS Stock Routes - 30sr 6444 - 61I5 1318 - 1318 - existing 637 - 637 239 - 239 188T7 4489 23366 15303 5t05 21726 I/ Projected expenditues iclude phsic.1 cotingencies ad the averale 13.6% price ccntisca 7 usum.d at apprisal for totnl projec4 costs. l/ "Direct" ependitures izclude cutting of fi.rebreaks and tracks, stock facilities, water developmet, miction yard facilities and b:ild±p on holdizg grounds. "Other" expenditures i:cluds istrict and zoCal offices and vehicles and equiimt. The "other" ezpeditires are mot adaquate!7 differentiated im. ;v Invest- innt accoimts to include these specific fig-res.  - 109 - Table g TANZAIITA 1 SECOND LIV ESTOCK DEVELOP!T PROJECT - CP.EDIT 3P82-TA PROJECT CO!PLET1ON MORT LIVES5C5V SALES nt MAMRS. 1947-80 (TSh.') YEAR PRIMARY RE-SALE IMATURES TOTAL CATTLE FrVE-YEAR M , WAM I PRIMARY SALES IN AVERAC$ - - - MARFLMS MA_S 1947 166,307 65,932 5,744 23T,938 1948 196,222 71,525 5,902 273,649 1949 216,585 84,138 5,919 306,642 s15a 211,812 80,766 5,455 298.033 279,065 1951 181,223 52,092 56.418 289,733 1952 255,922 74,353 44,628 374,903 1953 282,156 90,579. 29,27S 4a2,013 1954 271,464 103,41T 25,7T0 419,509 1955 260,119 90,837 105,510 416,3714 380,506 1956 260,512 102,871 81,829 1145,212 1957 232,435 87,443 79,954 399,832 1958 224,605 75,591 59,320 359,516 1959 2L4,624 T3,14449 46,381 362,454 1960 232,635 60,342 45,801 338.778 3814158 1961 234,282 62,6T3 52,597 349,552 1962 215,217 57,929 56,088 329,234 1963 227T25T 64,233 49,901 341,391 1964 256,145 75,107 58,771 390,023 1965 257,623 n1,888 50,798 3&109 358,102 1966 284,151 58,709 51,0O7 393,867 196T 251,000 55,000 55,000 361,000 1968 237,000 48,000 37,OOC 322,000 1969 364,000 50,000 46,0co 460,000 1970 318,000 * 47,000 3e,OOO 380,373 1971 268,488 * 61,953 330,441 1972 312,083 * 29,709 341,t92 1973 309,034 * 39,034 348,068 1974 683,162 * 35.502 n18,664 1975 * 489.4714 44S,688 1976 C 1407,474 1977 * 360,156 1978 * * 346,305 *1070 * . 348,630 1980 C 460.000 4* 384,513 * Figures not available in this form. 1/ Estimate based on 424,167 to end of November 1980. Source: Report. on 1978 Livestock Census by .A4zistry of Agriculture and TU4C records.  TANZANIA FEOND)L.IVEBTOCK DEVELOIPMENT PROJECT - CREDIT 382-TA PROJECT OOMI.EP-ION RitPOnT Livestock Offered and Sales throuah TIMO Markets (T8h.) 1917 1915 1976 1977 1978 1919 1980 Cattle entering market 995,162 621,159 545,418 550,697 541,948 526,631 667,260o / Sales of cattle in markets 718,661 489,474 4O7,47h 36o,156 346,305 31.8,63D 42h,167 5 Sales of entries 72.21 78.8 7h.7 65.4 63.9 66.2 62.07 Sheep anid Goate entering market 279,216 256,987 245,399 239,758 235,897 217,964 303,192 1/ 8aleu of sleep and goats in market 183,721 178,319 156,810 143,136 138,000 122,496 17h,991 S sales or entries 65.8 69.A 63.9 59.7 58.5 56.2 57.7 Cattle purchased by TLMC 28,888 105,880 116,300 77,592 23,282 23,399 6,716 g/ % of sales purchlased by TIMC 11.0 21.6 35.9 21.5 6.7 6.7 1.91 (2.00%) 1/ 'lo November 1980. 2/ To September 1980.  TANZANIA BCOHND LIVEBTOCK DBVEM1011HT PIJECT - CREDIT 382-TA PRBlJCT CO)IOLETION REPORT Losses of Cattle in the Custody of TLI4C 197% 1975 1976 1977 1978 1979 1980 _ Cattle Purchased by TLVW 28,888 105,880 1M6,300 77,592 23.282 23,399 6,716 1/ Total Looses in TL)C Ctutody 1,081 7,312 17,356 4.024 1.453 1,539 256 Percent of Lose 3.7 6.9 11.8 5.13 6.24 6.6 3.8 Location of hosMes % $ , % % At up country markets ha8 4.4 82 1.1 101 0.5 12 0.29 81 7.00 120 7.79 between markets end Holding grounds 122 11.2 2869 39.2 138 0.7 61 1.26 91 8.13 98 6.36 At up country [folding Orounds 799 73.9 4210 57.5 8251 47.5 1721 42.76 515 47..11 738 47.95 In rail transit 28 2.8 24 0.3 34Bo 20.0 111 2.75 136 11.76 139 9.03 At receiving Uolding Grounds 63 5.8 87 1.1 5161 29.7 322 8.00 176 15.22 295 l9;16 At Delivery Point 21 1.9 40 0.5 222 1.2 1797 44.65 124 10.72 149 9.68 ¶I)TALs 1081 100 1312 100 17,356100 4o024 100. 1156 100 1539 100 V a, .]/ _/ I/ To Septeaber 1980. 2/ The compulsory acquisition of cattle of all types in 1974/75 as part of the Government'. emergency drought neasures contributed to the lossee in these years. _/ From late 1977 onvards, TLNC purchased only in response to specific orders from institution, such as the Armed Forces (70% of total procurement), DDC's and Zanzibar.  - 112 - tm IIWSS&.g 6.ato 65A= Mi o ca" Tr_: 317 .464 = WM:t u 93a 147"9 6r%4 M1TSo M"b ,.JAGN U."U0 '. 6SS -1". 267"6 291".a Una" , m' .gb 1M Ibg" 19 >.6 t"_ - C^ 9,U,2X LAMM 2,=W. W" Man,S Ls.0m LARO V Can" -on7 , I*v :~~.rpLS 9,N1O,; U.7M u.sho"T 99,Si,Jf wJn.sx in$=> U6me c adnt&ew n,^bmi 2.rZo &J141"s 3a6c so"n ouwnzoe -Yo Lo!LD9 Ms i,904 2d.0 Le9bdt LaS,a !a mem Mm WftX z4mT 5bS.Tn ,oRm no . -e ," ",sos, t, n.tso.s laun >w9b.nst sta te.s nf* sow :w6w eA ?Mr 6,6ST U10hS (%mon o.=ub wSn ~ ~ ~ c.z ~~~~~A* _rgt tm MLIT7S an.A Mat.=) *hju0b =s *-9 > .m.w 3#VAo:t W It".J GMLPf ! AQWJ 1d L6L"  TANZANIA ORCtNP LIMEBSOCK PZVELOPHET PROJECT - CIIEDIT 382-TA PHOJECT COHwLTTONItEPORT TLMC Balnce Sheete IButmaarieed) at December 31 for Years 1974 to 1980 1/ 1974 1975 1976 1971 1978 1979 1980 (Provisional) ASSETS Fixed Assets less Depreciation 1,293,130 3.464,990 9,508,438 13.966,320 19,263,065 22,472,697 24,420.000 Current Assets 6,290,229 18,207T176 29.116.466 29.978.1.87 25,323,207 25,847,758 24.338.000 Accumulated Losses - - 2.823,855 7,005,649 6,901,779 6,774.850 8.275.000 Total 7,583,359 21.672.166 141448,759 50,950,456 51,488.851 55,095.305 57,033,000 LTABILITISH Share Capitel 2,501,000 4,474,000 10,914,000 10,974,000 13,325,000 15,875,000 16,175,000 Capital Reserve/Dev. ?bmd. 395,128 490,000 490,000 - 91,500 91,500 158.000 Long Tera Loans - TRDB 2 - 1,931,114 5,071,052 8.656,817 10,307,866 11,4*52,338 13.6CoO.OO Current Liabilities 4,280,912 13,731*905 24,913,707 31.319,639 27,764,485 27,676,467 27,100,000 Accumulated Protits 406,319 1,0145,17 - - _ Total 7,583,359 21,672,166 ,41k48,759 50,950,456 51,188,851 55,095,305 57,033,000 1/ Years to December 1978 are audited- December 1979 unauditedi December 1980 estimated and provisional. 2/ For 1975 and 1976, interest on ThDB loan Is included with the long terp loen s*ubsequently, interest is allocated to current liabilities.  chlo.a (ISh °°°l)ii Coegol dted Caa ; 191. 1975 1916 1911 1918 1979 1980 1961 1982-05 1°06-90 1921-93 I)welopmeaLt Fun4de/are Capital trao LIDA 206 2068 650 _ 2351 2550 30 - loan 13011-lonug term - 1931 3110 3586 1651 111. 2156 Loan 130-short term/overdraft 1AW2 *'91 18323 hl73 lcom - Nsal-eta 2359 89811 12268 9123 7672 P867 l301O 15760 a0oo M8m 19000 - Livestock 9556 4671.8 6s5a2 61311 32172 28195 ° 15700 5700 15100 15100 I50 - Other 593 Is3 313 3210 2020 3991 2313 250 2500 2500 2500 Other deposits (including ere4itere) 2839 U*99 (23713 2251) 167 138) - - Cash from preceding year - 2918 12526 16am S99 56tb 4l7 3i23 3200 5119 1298 19605 12586 11W63O 97255 51732 *9316 31936 37183 39100 .25k9 501 InVestment la LiVnatock 11 proJect J1 1530 2200 5923 3311 *7B1 3850 25S0 - - - _ Otber Investment 13 666 1327 2526 1021 251 - aDo 10a0 1800 1800 Dlrect Cots - arketc 301 2152 3951 1o36 1116 kW2 1.600 *.200 *200 20o h200 - livestock 8171 17297 71031 70511 29202 25576 13900 13900 13900 13900 13900 - other 217 1058 871 881. 101 1061 1100 1100 1100 1100 1100 Overhods - field 8eo0 2284 1717 29h. 1801 2911 2900 2900 2900 2900 2900 - headquarters 1726 2008 2341 2211 1998 211. 3200 3200 3200 3100 3200 Intea-et -1l) - _0 280 518 093 890 973 1050 850 */ 310 Interest - NBC - 15 582 1651 2057 197 191.0 1900 1190 680 680 Principal repay Ier - TODD - - - - - - 3200 1 1511 1511 - - NlBC - - - - 112 50 50 3133 300 - - Increase in Current Assets 1312 2309 151.9 3"19 (18601 1761 - - Tax F-id - - 90520 - - - - - - - - Cas s urplue 2918 12526 1684 53 . 5.. .. 161 3223 3200 S19 129k1. 22368 19605 12506 131'638 97255 51732 19316 31936 31183 391.00 %25%9 5011. Projected Caah Ourplue wlthout Increase Ia Market Voss (35601 43251) 361.8 I/ Actual wvlue. to 1979. estimated values for 1980 projected 1980 constant values thereatter. Ji Assuptions post 19801 - ll further neu lawestment in feciltiea, but maiatenLace Is carried out and replaeements are made a necessary. - Market sales remain at .50,000 per annum until 1985, %6S,ooo to 1990, 715.000 to 19931 market operation. are rationalised in 1981 to re4uce coats. - Livedtack order buyins stabiliesa at 1980 levels. - MrkeLt tee are lucreased to t8h I0/head la March 3981. - Other operationa schieve similar results to 1980. - Ine NbC overdrart Is progreeaivaely re4uce4 4ue to the reduction in cattle trading Lj ThI,6.0 ml)lion by 19115. - AlthoutJl tatee would be paid aounet incooe after the accumulated lDb 8.21 million losses are ceocelled, this e not includcd tor imlplicit.. IIUdli.ag 1/ aintena1ce of fAcilitina and roplecaents of vehiCle. after '),4O. Averaged l'idures fur the incholdu yeaem.  TANZANIA BECOhD LIVEBT°CK PEVELOI'IMNT PROJIECT - CREDIT 382-TA PROJECT OMpLEUTION RiEPORT TlWt FINANCIAL RATE OF HIRU"N 1974 1975 1976 1977 1978 1979 1980 1981 1982/85 1986/90 1221)92 1993 Total Revenue 12508 61572 80521 80067 41864 40056 28113 33960 36200 36800 37200 37200 Hesi dual Value 229981 "ubtotal 12508 61572 80521 80067 41864 bos56 28113 33960 36200 36800 37200 60198 Iavestment ]/ 1573 2866 7250 5897 5802 4101 2550 - - - - - Replacement and intenance 800 1800 1800 1800 1800 Operating hxpenaea 11822 54803 82999 80642 38124 36200 25700 25300 25300 25300 253i0 25300 Incremental Working Capital 1A412 497 14323 8173 (1M112) (50) (550) (3733) (3000) - - - Subtotal 14837 62166 1O0172 94712 '3981b. 4o0521 o217O 22367 24100 27100 27100 27100 Balance using actual valuea to 1980 (2329) (594) (24051) (14645) 2050 (195) .13 11593 *ad constant 1980 values 12100 9700 10100 33098 thereafter 21 / A. Balance using constant 1980 values (4867) (1087) (38241) (19331) 2501 (220) 113 11593 12100 9700 10100 WV970 B. Balance uasing a market figure of 400,000 for 1981-85. 413,200 for 1986-90, and 422,000 tbereatter. (4867) (1087) (38241) (19331) 2501 (220) 413 9593 10100 7628 7972 42842 FRb for A - 9.9 11R for B a 8.0 I/ Includes total investments mde by TLIC since ito inception, including ites not funded through the project (e.g. aecondhand vehicles, weigb bridges funded by Government). furniture. 2/ Using the aesumptions noted for the cah flov in Table 11 wicleh assumes 450.000 cattle pass through markets in each year from 1981 to 1985. 3/ Includes incremental vorking capital (TWh 16,990.000) and 20% of value of original investment of T6h 30.038.000 (IS.. these values become TSh 32,1.7.000 and T8h 8,.21,200 respectively 6,oo7,600); when adjusted to 1980 values.  - 116 - Table 13 T4.NZA~Z SECOND LZVMTOCK DEVELOP.IMT PROJECT - CREDT 382-TA PROJECT COMPLETON EWORT COSTS OF MEAT PROCESSMG COMP0NET A=ruaisal P-ro.iections TSh. I'000 UtS 'CCO :rTE Cave 3,588 1,293 MLizyava 4,353. 1,569 Mbeya 3,995 L 439 Headquarters 61 22 11,995 + 4,323 j/ Total US$ equivalent TSbh 7.T14/$ 6,003 '00 Initial Ccntract Februarr 13, 1975 2/ 3awe 4,035 3,860 Shinysana 16,537 4,156 Mbeys 15.922 3.g52 36,497 T + 3.1,967 Supervising Vngineers 213 Total US$ equivalent a T'a 7.T14/$ 17.292 288 Additional Costs for.the 3 Plazts Constrution/Equipment 15,410 3,947 Supervissing Engineers 165 Final Total Costs to mgae ?lants Oerstional / 51,907 16,292 Total US$ equivalent a ISh 8.0/$ 22,780 j/ 379 Financin of Total Cost =DA 382-TA through TRDB 5,6s2 =DA 382-TA Supervisins Emeneers 33.8 S=A through Treasu:7 5,870 4/ Gcoernment k17807 IL7LO S/ 51,907 16,292 I/ Fro?m -pararph 3.17 of Appraisal Beportcand was 17._S% above basic costs to allow 'or ;rice contingencies. t included Mh. 2.2 m;licnfor.o L's eneering superriso=7 vrehead and TSh 2.3 .. ulioc for ;ial 7oring capital at Cae and Shiwanga. 2/ The contract was about 10% less thn the tendered price as some itea were deleted to reduce cossca. 3/ This total cost f±gure does nct inclues init_al worg cciia. fcr the [we and Shi::yanga plants. 1& To covr F costs cf Mbeya lant d also part of FE costs for Cae and / Of Goverer.t's cctribiution, aprcx=ate17 TSh Lo mi.'on still had to be expended as at 31 Januaz7 1981. Tras=su had allccated aLl tke O=ds i: L!h. but the Cent-al BarJc ad still to authaorize E eX;enditue for US$ s , .*  TANZANIA SECOND LIVESTOCK DEVELOPMENT PROJECT - CREDIT 382-TA PROJECT COMPLETION REPORT TPL PRODUCTION DATA' 1973 1974 1975 1976 L977 1978 1979 1980 Total Slaugher - Number 115,40o. 201,724 128,652 68,788 33,994 22,58. 29,830 29,952 Slaughter a/c TPL No. 28,403 107,953 91,961 11,237 18,810 22,101 29,618 28,561 Average Liveveight - kg 208 191 180 180 189 201 203 197 Average Carcase Weight - kg 104l 94.00 87.30 88.20 92 96.58 97.14h 95.54 % Carcase td Liveweight 49.92 49.06 49.50 49.00 48.70 49.05 48 h8.50 Custom Slaughter No.(DDC and NCCO) 8T,001 93,771 36,691 57,548 15,18h 1183 212 1,391. Local Meat/Byproduct sales kg '000 2,154 2,236 1,200 973 1,006 94.0 843 2,056 Canned Corned Beef 1/, 2/ 1/ 1/ 4 8xl98 gm - no. cartons 93,676 127,902 4,983 5,951 22,18o 88,h0ol 105,6X2 124,265 2Ax3iaO gm - no. cartons 17,655 289,786 199,900 16,210 44,524 - -_ Beef in Jelly 6 0x9O gm - no. cartons - - - - 15,274 7,081 - - 6 0x14ogm - no. cartons - - - - 5,037 10,958 - - 60x220gm - no. cartons - - - - 11,921 6,6h4 - - Canned Vegetables 3/ 24x300gm - no. cartons - - - - - 2,250 160,667 71,489 24Ax150gm - no. cartons - 14,991 33,369 30,914 - 19,645 45,858 44,943 1/ All sizes of cans; TPL was unable to provide a breakdown. 2/ The CCB formula was modified in early 1978 to a lover quality product suited to the local institutional market. 3/ Mostly red beans.  TANZANIA RECOND LIVERTOCK DEVELOPMENT PROJECT - CREDIT 382-TA PROJECT COMPLETION REPORT TPIL CANNING -INN RESiR,TO 71/1/78 - 3/31/80 (TSl '000) 7-9/78 % 10-12/78 1/ 1-3/79 4-6/79 7-9/79 10-12/79 1-3/8O 10/78-3/80 S RAL.R ___ Totals Meats 3;104 100 i8,787 20,580 18,700 13,963 1,507 9,186 82,423 100 Hed Beans 561 100 10,365 7,997 8,055 572 - 4,148 31,137 100 Navy Beans - - - 4,524 2,842 - - 7,366 100 Pineapples - - - - 176 - 176 100 DIRECT COBTS Ueata 3,331 107 15,569 18,336 15,766 12,589 2,282 8,964 73,506 89 fed Beans 309 55 4,520 4,219 4,241 300 - 2,177 15,457 50 Navy Deans - - 2,262 1,.21 - - 3,683 50 * Pineapples - _ - - 109 - 109 62 CONTlITUllITON TO OVER IIEAD Meats (227) (7) 2,918 2.244 2,93h 1,371 (775) 222 8,917 11 Bed Beano 252 45 5,845 3,778 3,814 272 - .. 1,917 15,680 50 Navy Beans - - - 2,262 1,421 - - 3,683 50 I'ineapples - _ - - 67 - 67 38 1/ tlipply or canned goods to Aramed Forces commenced in November 1978. F  Table 16 TAdZANIA BEbND LIVESTO(Y PgWLOPM4ET PllOJECT - CROPIT 382-TA PROUJEC COWLPIOIi tEPOWI 8UW4ARY OF T.P.L. PROFIT AND LOW BST^S fears ended December 31. 1973 '974 1975 1976 1917 Vl 1978 1979 1980 sales net - Export 27.065,880 43,229,266 8.02h,f750 Nil Nil 4,092,210 587,750 182.182 - Loc-l .0,669,171 6631.94291. 52,179,71k 33,o55,660 27,214.019 1.3,908,709 81841.,830 73.578.883 Other Income 366,093 216,231 1,049,830 1,900,930 1.591.069 1,451,098 1.733,495 363,053 Extraor4inary Income 2/ - - 1,656,1.0 29.931,.90 15,129,938 1,997,465 - - Profit oan aes of Fixed Aeset& 22,398 30,71.l 871,086 - - - - - TOTAL INCOME 67,923,541 109,670,528 61A,351,520 64,888,o080 41,535,026 51,1.9,%176 84,163,045 74,124,718 Raw Materials 53,953,955 97,915,892 52,15h,988 8,762,63T 22.902,1.66 28,578,105 38,355,052 1.8,621,206 Direct Materials Cost 3,158,315 12,121,982 7,'47,714 2,763,%26 5,651.,534 9,310,312 1AO9T7,.40 10,679,787 Direct Labour 2,855,h51h q.651,256 3,890,355 3,279,310 2,1.5h.4l1. 1,557,812 1,11.1,116 1,732,722 Overheada 11,883,860 17,702,332 18,064,773 19,702,622 18,097,031 14,731,619 13,618,770 16,326,560 Stock Adjust.mst 2,7140,155 (e5,291,037) 2,686,.06 17,278,708 6,160,o1. - - - Extraordinary Items / 128,772 h,098,507 2,160,285 - 9,600,950 3,.473,286 26,067 - TOTAL COtlS 75,020,511 111,198,932 86,6.oi,521 51,786,703 64.,869,eog 57,651,164 68,124,475 77,360,275 Net Profit or (Loas) (7,096;967) (1,528,40o) (22,053,001) 13,101,377 (20,334,783) (6.201,688) 16,038,570 (3,235,557) adj. (932) Profit or Lose B/r (7,450,013) (1.,5K6,98) (16,075,384) (38,128,385) (25,027,008) (45,362,723) (51,56h.,ull) (35,525,841) Accumulated Profit or Lose C/V {11,506,980) (16,015,381) (38,128,385) (25.027,008) (1.5,362,723) (51,564.,11) 035.525.811) (38,761,398) 1/ Accounts audited only to Deceuber 1971 subsequ:nt figurea are tentative. 2/ Extraordinary items include Government subsidy, tenrination benefits, losses of cash, end previous year adjustment. TPL received export subsidies of 'Sh 18.21 oillion over the yeara 1975 to 1978; this after taking into account the TSh 11.1 million for which TPI. wao eligible under its understanding with Treasury, but which subsequently lad to be written off as an extraordinary expenne in 1911 and 1978 when Treasury refused to meet the commitment in view of tle uneconomic level of export subsidy and continuing major financial loases. Treasury also provided a lSh 20.0 million subsidy (extraordinary income) in 1976 to assist 'ML to overcome accamulated losses; this was used directly to reduce the NBC overdraft, tbe remaining portion of which vas converted to a term loan (see Balance Shteet).  TANZANIA BSEOND I)l K110 VVgI8 P¶vu T 4tOJECT - CPEPIS 382-T PRCT 00WITION FREPO°t DAI.AJCI ONIWIU liiYCKHDHg 33) 7TIb 1 1913 19711 1915 1976 1977 1918 1979 3910 1. Casb ia benk 35Q,261 1103,037 252,221 66,381 21,871 1,753,894 104,398 - 2. Debtors 8,901,113 14,65N,097 19,078,008 30,213.033 12,617,697 1%,h83,680 13,845,350 13,500,000 3. litock 15,676.070 38,958,979 35,176,802 18,147,136 19,016,0110 8,321,919 5,7112,541 6,000,000 h. Vied "atsea 5,363,378 5,397,911 3,8971,05 3,451,415 ,315,121 1,011,15% 5,1119,902 5,5B2,000 5. Capital Work in Progress - 257,951 2,295,261 58,141,399 80,162,90 87,537,614 87,151.155 90.000,000 6. AccuSulated Loeg 1h,546,98o .16,0o5,3810 3B,128,385 ;25.027,008 45,362,723. 51.564,1.11 35,525,81l; 38,761,398 44,88s5,I0 75,9ki.,359 98,828.088 135,016,372 155,556,663 167,675.612 148,389,17 153,8.3,398 7. lank Overdraft 23,515,251 50,654,677 68,462,474 55,755,975 114007,387 18,085,707 8,225,410 20,050,922 0 8. Loans 2,000,000 - - - 30,000,000 20,416.674 14.999,965 9,999,913 9. Sundry Creditors ;t 2.891,319 .Q8134142 13,088,276 62,811,059 81,269,939 97,663,953 93,654,474 92,313,323 10. Bliare Capital 16,479,240 16,479,240 16,479,240 16.79q,210 16,419,240 16,479,240 16,479,240 16,1,79,240 11. AdvanceCd sgisnat SBare Capital V - - - 10,000,000 15,000,000 35,000,000 15,000,000 44,805,810 75,947,359 98,827,990 135,046,274 155,556,566 167.6115,574 1108,359,089 153.843.398 I/ Audited to Ileceuber 31, 19771 estimated assets 1960 2/ The situation with respect to advances against ahare cepital is coafuse4 by the way In which TPL has kept their accounts. In the audited 1978 LIDA accounts. the Deeember 31 statement indicated that TSfi 97,286,560 ha4 been advanced against share capital to TPL by LIDAI this coparesa with TSh 15.0 million in TPL's books. In practice, tbe developent expenditure by TPL on Its eeat plant appeard as work In progreaes and Is balanced as a liability under sundry creditors wviether it is an advance against share capital (IIDA.Treeaury or BIDA/Treseury sources) or the loan re- ceived from TIIDD througsh LIDA under the project. Bee Table 13 tor breakdown or development expenditure on the tihree 11PL plante. jI lhe dlcrepancies of S1h 98 in 1975-19771 and TOh 30,098 in 1978 and 1919 are due to errors in accumulated lone carryovers whiich I eve yet to be corrected Iy tPL.  TANZANIA _ECOID LIVg91OCK DIVEIWPkNT PRtJNCT - CIEDIT 382-SA PROJECT COIIPLETION REPORT IAROO ROUCH INV?STINT FOR RANCHUE FINANCED IN TSE 382-TA CREDIT AS AT 30th June, 1980 (T8h '000) INlCRelEIIAL (ACTUAL) (Ui PRAI8AL) 0 IN PROJECT 1/ ' I TUTAL Firebreaki/Roada - - 89.3 36.1 21.1 1026.9 79.4 12.2 332.9 101.6 667.5 j 70.3 2437.3 18.2 3.0 15 3.1 Water Development 22.3 332.0 204.9 41.1 520.0 35.0 215.2 282.2 334.2 157.1 42.8 2186.8 16.3 2.7 42 8.5 F Stock Facilitieo (Dips. Dowse and Fences) I 275.2 234.6 1.0 170.6 33.1 19.4 216.9 109.3 94.2 374.9 1529.8 11.4 1.9 6 1.2 Housing and Buildinge 441.0 467.5 81.8 633.8 - 381.7 425.3 189.4. 390.9 106.9 3118.3 23.3 3.9 24 4.9 Vehicles and Equipments and other Item. I88.1 - 482.6 265.6 230.1 605.0 4411.5 1lS.9 439.6 431.5 Total Fixed Investment 510.4 - 1620.1 1208.7 312.7 319.9 6135.1 30.8 S.2 13i aL2.6._ 375.1 2956.3 592.6 716.'. 1696.6 1166.0 1622.4 914.8 13107.4 100.0 16.7 100 20.3 Cattle Purchaeee 2817.0 90.0 10.671.3 8651.1 1470.0 4558.0 160.0 9519.5 2428.5 190.2 4235.8 1145.0 46216.4 57.6 70.4 Operating Expense. (throughi Loans) 2157.2 722.2 1887.4 1156.0 2102.9 24s59.1 2947..9 2597.4 1468.0 1997.8 805.2 Overall Total - 20601o8 25.7 9.3 5h68.6 812.2 14178.8 11315.8 3948.0 9971.1 3980.5 12861.3 5593.1 3354.0 6663.4 2059.8 80225.6 100.0 100 Planned Invest. 6/81 5716.7 3224.6 141t24.2 112216.7 7782.6 12715.' 11088.2 14795.3 9802.3 5450.9 7147.5 2418.9 106431.3 % I;pnditureto 6180 95.9 25.2 98.3 79.5 50.7 78.4 35.9 86.9 56.8 61.5 140.' Planned to 6/81 85.0 75 4 1/ Inve.tments vill have been enabled by Credit FmdaSTDSRFunds. Treasury Equity, and generstcd Incoie.  agnaW I.JWlBTOEZ MIMLOMM fI'JKC?t - CPEDIT 382-TA rnoizct E'I*IJoN DIWOHY INVWUTOIT or ANIMI4A AT JUNE 3) - COIENy "TAOla 1910 1911 1912 1973 19111 1915 1916 19fl 1918 1919 1980 Total Bree4er. plus followaers 56,022 66.108 76,881 09,125 96,268 95,822 811,099 95.351 93.291 80.602 86,1111 Total Purchased Bterer 19.556 20,085 11.239 22,915 15,1181 10,268 18.3)8 6,099 3,615 16,031 12.3117 Total Ani!!IAI 15,518 86.193 911.123 112,61,o 111.111 t o6,090V'102.101 1101.1,56 96.912 96,633 3/98.189 Carrying Capacity ot all Beachies in Animal UniLs Approx. capacity in Total Animals 1111,000 125.00 1111,000 125,000 1111,000 125,000 132,000 1115.0O00 132,000 AtpAW0 II^RCO~~~~~~~ 125,000 138,000 1115,000 160,000 110,000 186,000 1811,000 '202,000 17o,Ooo 181.000 175ooo' 190,000 A~tote. of 5331 ltacd were transferred to PAFCO with the Kitulo, libosai and Ugerengere farms. 3/A total of 13)00 had of cattle vere &tloln by Ugandan troopa during the November 1918 Amin in~vasion of Tanzania. ~/MAM00 estimates.  TAN2ZANIA SECOND LIVESTOCK DEVEtOPMEMT PROJECT - CREDIT 382-TA PROJECT COMPLETION REPORT MARCO PRODUCTION COEFFICIENTS FOR ALI. COOPANTY RAIIC3IIS AS A WIIOLE FOR YEARS ENDINa JllNB 301D 21970 197 2_ 1.92f 1976 1975 1 927 -8 2 1 1980 Appraisal 3/ Total Breeders (3 yre. and older) 25,631 29,607 25,398 31,259 36.101 38,218 39,524 38,075 36,603 32,792 V/ 34,520 Calving S 58.9 68.3 69.3 63.5 57.6 59.5 47.0 50.2 51.8 54.5 64.4 73.3 Veaning 1 55.3 63.8 62.6 59.3 52.6 53.h 4 2.2 43.8 43.41 40.2 541.7 66.o Adult Mortality 3.4 5.2 3.41 4.2 7.9 7.1 6.3 7.8 6.5 11.1 7.8 11.0 Calf Mortality 6.A . 8.1 9.7 6.7 8.6 9.8 10.4 12.7 16.3 11.8 14.6 10.0 Ranch bred Offtake (No.) - 5,775 5,256 7,409 9,061 7,720 15,341 19,607 13,982 13,113 6,681 Ofrtake S,of Ranch- bred animals 1/ - 10,0 ' .0. 10.0 10.0 8.O 16.o 23.0 11.0 13.0 8.0 17.4 Total Yemalea(weaners & older)in inventory 61,970 63,300 64,193 59,256 9/ 59,575 Purchased Steer Sales - 17,12h 12,172 16,813 22.393 18,326 11,308 12,531 10,006 5,759 7,245 1/ Includes all animals relating to breeding herd and excludes purchased steers from sales and from inventory. 2/ In 1978/79, 7,800 females of weaner and older age vere lost from Iiseenyi in the Amin invasion of Tanzania (1,200 females over 3 years of age). J/ As 62S of ranches are more than 7 years old and 38% are more than 4 years old, the appraisal gbjqctive for coefficients is weighted accordingly for calving, weaning and offtske percentages. a 0 f~~~~~~t) 0  TANZANIA 8ECOND LIVESTOCKI DEVELOPMENT PROJECT - CREDIT 382-TA PIIOJECT OONEPLTON pEPORT NATIONAL RANCHING COIOPANY lIMITED Annual Operating Costa - Per Animal Unit 1/ 19'l2 1974 1976 1978 1980 Tbah.. I !fiha. 1i ¶hf. 5 TBhs . % T8ha. I Chemicals and Drugs 11.32 11.07 17.69 14.99 19.85 13.76 23.39 15.03 36.24 19.61 lhusbandry - Labour 23.13 22.62 30.36 25.73 41.41 28.72 h2.95 o 27.60 6.58 25.21 - Mlisicellaneoun 2.83 2.77 8.05 6.82 5.27 3.65 2.56 1.65 1.86 2.63 Transport Operating 13.30 13.00 14.59 12.36 23.63 16.39 28.21 18.13 32.70 17.70 1 Tractor Operating 8.65 B,45 8.33 7.05 11.73 8.13 8.56 5.50 9.3h 5.05 Water Bupply Operating 6.50 6.35 5.38 4.55 6.70 4.6h 5.63 3.62 7.65 h.13 t ltancis Maintenance 15.11 11.77 8.00 6.78 9;40 6.52 12.96 B.32 15.78 8.53 On Ranch Adminiatration 21.h2 20.9h 25.59 21.68 26.18 18.15 31.37 20.15 31.69 17.14 Sub-Total 102.26 100 117.99 100 111.11y 100 155.63 100 1B14.84 100 Depreciation 16.14, 22.69 22.61 27.80 25.52 Intt reut on Overdraft 13.08 19.91 12.02 12.53 2.5h Tntereat on D)evelopmnent Loans 11.58 16.59 13.81 3h.22 47.47 Othier llead O0rice Coats and Zonal Costa h2.12 63.49 0,.18 45.86 60.h6 qOTAI. 185.18 2hO.67 232.79 276.014 320.83 1/ Animal Unit (A.U.) - Total cattle minim calves; years are July 1 to June 30. to.  TANZANIA SECOND LIVESTOCK DEVELOPMENT PROJECT - CREDIT 382-TA PROJECT COMPLETION REPORT NATIONAL RANCHING COMPANY LIMITED Cost-Return Comparisons 1972 1974 1976 1,978 1980 1. Number Animal Units carried 90,000 iol,oo 93,07h 84,316 89,261 2. Average on-ranch cost-per A.U. (excl.depreciation, intereat and HQ and zonal expenses) T8h. 102.5 118.0 1hh.2 155.6 1814.8 3. Average value (T8h.) per head of cattle sold in that year 559 557 629 875 1357 h. Ratio of 3/2 (Value/Cost) 5.45 h.72 h.36 5.62 7.3h Indexed Costs/A.U. 100 115 141 153 181 Indexed Average Value per head Of cattle sold 100 99.6 113 157 243 Appraisal Projection for 3/2 11.h 1C  0VUoip L1VL5T04W hp1fvln? lW)Ject - oat5IT 32-TA *NOJIC- txlMPI.gItPi fLVOhY NATIONAL. KUCH3ING 2DWhN (N AOII Prorit od4log. bIotmienta for Years 1913 ta 1980 I/ tW9. low net males 15,571 2%,913 16,511 23,002 21,601 23.091 19,311 Livestock hlveaeat Op aai. Oto"h 25,065 20,156 1. 11. p.661 67,35s 10.08 116.516 Purebase. 6.688 12.sl 13,615 ,s593 8,001 15,061 1i,.6 Cloelag Otock 28.156 311317 11.613. 61.350 1911 116.576 122,036 Net asin (lou.) (5.5971 (6,350) 23,951 49.9041 (5.270) 11,413 611 Otber lacome *66 86a 212 A1 562 7o9 3.607 Orono Profit tLome) 1 loA0. 39,I91 13,6&1 k6,317 16.696 55.213 21,532 Operetiag Expense. 10,1s2 21,1115 17.016 10,381 16,991 11.55I 2t.103 Depraeiation 2&616 3.53 a,246 2,189 2.311 1.996 2,279 Interest long term Ioanm 1,091 1,77 1.285 1,911 2.685 3.781 1.231 Intereet abor t rL loans 915 2,012 3,116 1.38 1.056 825 226 Net Profit (Lose) .91) 46,996) 21,682 (2.265) (6.380) 31.051 (9.313) Previoun Profit (L4o)l (Oo116) (i5.631) (2.6311 kg9 (2.216) (6.596) 2,4115 Cua.lstiVa Proft (Loss) (15,6371 (21.633) k9 (2,216) (8.5961 26,158 I9,115 Portlion ot Gross Profit *asoclatad wiLb chang in liveaLock uait valuation gylteu In 6/1916 and la brooder uait v.1au la 6/1919. 28,712 50.151 I) Audited to June 30, 19101 1973 is year to Dme. 31. 19731 191%/15 a for 10 soatba to June 30, 1915i 1978/19 *an 1979/80 are draft accomta. g/ Prior to June 19716. animal. warm velued on a coat of productioo basis. la June 1916. animle were valued at set realleable valuel -base. the large booi profit In 1915/76. In 1917 *ad 19170 breea4re were kept at tbe 1976 values wbila purebaedo taere bave been valued at cost bred stear, aL net realilable wvlue. tAiUOD.policy ieato revalue the bre4diag bard only every tbrhe years. In June 1919, breaedr unitsao4 reacb were revalued to provide a lncreental grcas profit ot 1i0b. 50.15 billion. ji In the 4raft accoluts of NAon, CA14 cattle are vrluedl t 11h. 9.9 illicn. IAIUC aow eapets this procureaent price to be reuaeed to fl. 1.3 sillion disc to exceptiouaal lonasa Ineurred in the CCII cattle whicb MUM was obliged Lo receive; thei etatement haa been *djusted accordingly. aaaenyl rand, was overrun by Asin.a 1igauidan forces Ina oweaber 39716 with a loae of %/ 5b. 9.3 million worth of livestock (12.120 bead of cattle). factor in the liveatock value Inventory change. Tisia wee a neigative lle difference In closing and oplni.ag inventories *a June 30, 1976 ve due to stock value tranafetred to M/ LaAM with three tranarerred for..  LA_UZANIA 81005D Lla >X?O l 1WIv3I PHUOIC - C0I3lt 382-TA PltOJECY lWLIMI101 DEPORT NATIOIAL PAUOniN OlANJ LIKI¶SE 1 Aim) ceCB on S t dod r P c * l8 X 11 21 1973 1914/75 1975/176 1976/1 1977/18 1978/79 1919/80 Ccab is eaod and book 2.1 231. 716 1,721 ,901 - 1.581 Debtors and IrepsymnDt I*,S21 3,588 3,313 1.280 2.917 3,900 4.756 Liveatock 28,155 3A,317 12,661 61,350 10.081 116,578 122.038 atores 1,362 2,158 2,.91 3,031 14.691 2,500 1.611 LAoociatod Copeon - - 1,132 1.002 - - limed Assets (net) 20,118 20,570 20,896 23,512 26.871 30.939 41.927 Deterred Bxpeditur - 1.156 _ 7,299 9.646 1S,89I6 18.91k6 Acc.mdatai Lnee 15,715 21.632 - 2,216 a,596 - W?AL ASOETS 10.112 86,655 100,080 107,541 128,711 112,a63 190,925 LIASILISITI ki/! Izhn Overdraft 12.1.30 13.511 10,606 10.529 11,5'0 9,500 - Creditors eod Aceruals 340 5.717 S.2.1 9,o09 11,573 2a029 5.599 Amsciat.ei Coupmalce - - 1,836 2,303 1.1.73 1,300 3,1794 I.S.C. 1U h.ort S.. LoAs, - 3,675 6.35a %.333 389 353 255 CAFOD/LID Short SCA Loan. 6*i- - - - - MAYCO/LIDA Lag form L4aws 5,259 5,259 k.617 h.611 I..617 161A 1,617 1 Treasury/IDA Loac Plane I B*320 9.264 9.26. 9,261 9.261. 9.261 9.264 lbRD/lCA Losn Phase 11 - 2.257 5,119 13.607 22.952 33,11.7 50,155 General *ea.rve 78 - - - - - Capital Reserve 19 49 371 -_ Accumulated Profit - - 50 - - 28,58 19.115 Treasury/1APO0/L3DA Equity Advaeee 3,800 13.810 20.598 20,8e49 33.943 3A.195 1.,800 Sbare Capital 32.990 32 990 32,990 32,990 32.990 50.000 50.000 TOTAL LIABILI?Ea 70,142 e6.655 100,080 1071541 128.741 172.865 190,925 I Dec 31 tor 19731 henceforth June 30. _/ Bee also tootootes in Profit and Loee Statements Table. I/ The livestock ilventory values ia UB1CD'e draft balance &beet&have been adjusted to reflect the PIL inventory values. h1 The value or Co! cattle contributed as equity by Treaeury (TOt. 1. million) bae been added to advences egainst equity and deducted from Creditors and accruals as they appeared in 53iC0e's draft acCOIutC. 1/ LIDA reported that It has repeatedly approached Treasury to convert this old NBC loan (for ut,ich thiere is no loan agreement) into Treasury equity in MAR0, and eipecta this to occur.  - 128 - TANZANIA Table 25 SECONDLIVESTOCK DEVELOPMENT PROJECT - CREDIT 382-TA PROJECT COMPLETION REPORT NARCO Herd Pro1ection Without Phase II Development 1/ 1974/75 1975/76 1976/77 1977/78 1978/79 1979/80 1980/81 1981/82 1982/83 1983/84 1984/85 Breeders at start (to calve) 31,980 32,478 35,252 37,947 39,153 35,234 36,699 39,051 39,051 39,051 39,051 + Replacements (to mate) 6,254 8,619 8,812 8,036 7,328 7,807 8,957 7,029 7,029 7,029 7,029 - Deachs 1,599 1,623 1,763 1,897 6,158 2/ 1,762 1,835 1,953 1,953 1,953 1,953 - Culls/Sales 4,157 4,222 4,354 4,933 5,089 4,580 4,770 5,076 5,076 5,076 On hand at end 32,478 35,252 37,947 39,153 35,234 36,699 39,051 39,051 39,051 39,051 39,051 Calves born in period 20,467 20,786 22,561 25,057 25,058 22,550 23,467 24,993 24,933 24,933 24,933 - Deaths 1,842 1,871 2.030 2,252 4,943 2/ 2,029 2,113 2,249 2,249 2,249 On hand at end 18,625 18,915 20,530 22,802 20,115 20,521 21,373 22,744 22,744 22,744 22,744 Female weaners at start 7,431 9,312 9,457 10,265 11,401 10,057 10,260 10,686 11,372 11,372 11,372 - Deaths 372 466 473 513 2,670 2/ 508 513 534 568 568 On hand at end 7,059 8,846 8,984 9,752 8,731 9,549 9,747 10,152 10,803 10,803 10,803 92-year -- females at start 7,650 7,059 8,846 8,984 9,752 8,731 9,549 9,747 10,152 10,803 10,803 + Purchases - - - - - - 959 - - - - Deaths 383 353 442 449 1,887 2/ 437 524 487 507 540 - Sales 383 353 442 449 487 437 477 2,631 2,141 2,759 - Transfer to breeding herd (same year) 2,700 4,853 7,462 7,586 6,878 7,357 8,507 6,129 7,004 7,004 On hand at end 4,184 1,500 500 500 500 500 1,000 500 500 500 500 -e 3-year females at start 3,950 4,184 1,500 500 500 500 500 1,000 500 500 500 - Deaths 198 209 75 25 25 25 25 50 25 25 25 - Sales 198 209 75 25 25 25 25 50 25 25 25 - Transfers to breeding herd 3,554 3,766 1,350 450 450 450 450 900 450 450 On hand at end - - - - - - - - - - Male weaners at start 7,431 9,312 9,457 10,265 [1,401 10,058 10,260 10,686 11,372 11,372 11,372 - Deaths 372 466 473 513 2,670 2/ 508 513 534 568 568 On hand at end 7,059 8,846 8,984 9,752 8,731 9,549 9,747 10,152 10,803 10,803 10,803 -42-year males at start 7,650 7,431 8,846 8,984 9,752 8,731 9,549 9,747 10,152 10,803 10,803 - Deaths 383 372 442 449 488 437 477 487 507 540 - Transfers to bull herd 520 639 676 624 450 758 686 599 599 599 - Sales - - - - 5,000 3/ - - - - - On hand at end 6,747 6,422 7,728 7,911 3,814 7,536 8,386 8,661 9,046 9,664 9,664 -93-year males at start 5,581 6,747 6,422 7,725 7,911 3,814 7,536 8,386 8,661 9,046 9,664 - Deaths 279 337 321 386 395 191 377 418 433 452 483 - Sales 4,000 5,000 5,101 6,342 7,516 3/ 2,623 6,159 6,948 7,228 7,594 8,181 On hand at end 1,302 1,410 1,000 1,000 - 1,000 1,000 1,000 1,000 1,000 1,000 4 -> -year males at start 1,703 1,302 1,410 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 - Deaths 43 33 35 25 25 25 25 25 25 25 - Sales 1,660 1,269 1,375 975 975 975 975 975 975 975 On hand at end - - - - - - Bulls at start 1,634 1,664 1,802 1,937 1,937 1,596 1,875 1,998 1,998 1,998 1,998 - Deaths 81 83 90 97 307 2/ 80 94 100 100 100 - Transfers in 520 637 676 624 450 758 686 599 599 599 - Sales/culls 409 416 451 484 484 399 469 499 499 499 Bulls at end 1,664 1,802 1,937 1,980 1,596 1,875 1,998 1,998 1,998 1,998 1,998 Purchased steers at start 15,000 5,950 - - - 9,300 13,950 13,950 13,950 12,090 12,090 - Deaths 1,050 119 - - 700 1,375 1,538 1,538 1,398 1,333 1,333 - Sales 8,000 5,813 - - - 8,975 13,462 13,462 13,462 11,666 11,666 + Purchases _ - - - 10,000 15,000 15,000 15,000 13,000 13,000 13,000 On hand at end 5,950 - - - 9,300 13,950 13,950 13,950 12,090 12,090 12,090 Total animals 88,622 86,759 88,960 92,850 94,399 101,179 106,252 108,208 108,035 108,653 108,653 Total animal units A.U. 69,997 67,844 68,430 70,048 74,284 80,658 84,879 85,464 85,291 85,909 85,909 4/+ 4,487 +5,731 +6,731 +6,731 +5,838 +5,833 Sales - ranch-bred 10,807 11,469 11,798 13,208 19,576 8,064 12,875 16,179 16,310 16,928 17,515 Sales - purchases steers 8,000 5,813 - - - 8,975 13,462 13,462 13,462 11,666 11,666 Purchases - steers - - - - 10,000 15,000 15,000 15,000 13,000 13,000 13,000 Purchases - heifers - - 959 - - - - Coefficients per annum: - Calving (%) 64 64 64 64 64 64 64 64 64 64 64 - Calf mrtality (%) 9 - Adult mortality (7,) 5 - Purchased steer mortality (%) 7 1/ Includes Kitengule, Miswanyi, Kongwa, Makata I, Usangu, West Kilimanjaro, Sumbawanga and Mzeri without new development after 1973. Carrying capacities are conservatively estimated in the 1973 state of development at 14,000; 13,000; 12,500; 12,000; 15,000; 5,000; 6,000; 5,000; and 10,000 A.U. Total capacity 92,500 A.U. 2/ Including 4,200 breeders; 2,688 calves; 2,100 female weaners; and 2,100 male weaners; 1,400 female from 1 year to 2 years, and 210 bulls, which were stolen by the invading Amin forces from Uganda. S Obliged to sell by Government to provide meat for cann for the military. 4/ Animal units - Total animals less calves; as purchased steers are retained for 18 months on average, an adjuatment to this formula is required to obtain a more accurate estimate of animal units carried.  - 129 - sk" d SI = DtFT0. 1P ? - Cvd? '82-TA Cub a snd smis .'er ".,fi;1 at 1tulzp : Sii u. 'O) Vwit h io= Situsia 197k/-'1 1975/16 1916/?? 104 6 '278/ 197/80 10/61 11/82 182/8 11/6. 1 I 1I4/1S L. Ur.wtoe Rasm U.6w 11.08T 9., 12.6T9 23.S16 23.08 56.i% 70.918 fl.89 2. Qter ftgesm 630 1.000 1.000 600 TOO 1.2 1. . 1,10 1. .0 3. nc ardraftlaaic It 8.000 I3.00 * ,co - ' a.orao iequity V/ 6500 T.8a T.3 ,333 1.00 11.2". 6,7W .300 - :.uk frim oeodoz yoe" 1 00 - - - - - - A.na 4.428 Sub-Ttal a2,8 19.p9 t.6S2 1T.6L2 -S.622 43.33 t7.335 900.36 L11..T26 S. :Mwft - L l - -1oeta" 6,600 12.000 20.890 21.490 I& 590 . e,oaas af IWa o i. 100 .00 100 1.0C 900 500 TOO tX 1700 d, prai.g zpe"uus '2. -4 1281 -1 i1. 1 S1 a!.o 22.160 22.772 22.72 9. sub-7ataL 12.739 12.383 13.13 15.080 23.7tk 1238 U.3*S. 64,92; k2.019 :Vrew4mt/lme Ls'ro / 1.03. as 88o as am0 1,221. 4.9 300 - Owrt/. .LOeWu 2.000 _.0 - l.ODO S.O 21.1.00 k,=0 - ?eo lam intstn ST 61.8 61s a 6as. 68 GA 5% 163 3M 2t8 18" 93 t m IS lweYW - - - - - 1391 1.33 .323 1.393 1.323 1.32 1.329 NAiC/LZA ST lam ioterm 31 3s0 1S ;CO/lDA r1os 2.M 2. 2.92 - - - - - - 3~I08/LZ2A b. 3.259.000 LArSuot Ao4 lkm uittem 4tf m tfw Y=-FU3 d ZsitMst. 1JJ08/12A P WW - 642e vulge oSf enw i l sti 2asue emset by eM 2..7O 2.2.70 - - - - - C.. sw1s - - - - - - - 88S18 19.1.8 n1011. 28.821 19.90 17.162 17.612 25.622 n 5.333 TT.T35 o..26 U14.48 18119 298/S n991./1, 1-2 :a= 12.36 12.08t 10.33 Z3.2 2h.216 2h.28 57 336 2.31 .2s8 .223.922 9. 'ists 12.T39 12.383 I3 I3 13,080 23.17k 32.338 73Tr 1A9,92 1.29 acTa1. ewoi*att it - (2.0O0) - - (1.P0) T.00 8.o00 (17.10) (4.OOmI %h%W - W:A! 's6ag to I 90t82 aiO Castast 80/81 'sLuu %her0ator (1.23) 1.0k (3.Z1) cum), 2.0.2 (i.053) 8.797 ".T96 37.2 33. 33n 9 2T7.201 Op!,tiag Cats/A.U. 1L2 181 193 201 21 233 24. 21T 217 7a±a ;pr riclb bred saLamod 682 692 M1 960 aq' 1.32 2.3n3 2.636 2.n9 r ;uaabiod steer sold pe-. 337 51 62 7% 1.01* ian 1.w 2400 2.= r pated pae: s*er 335 360 V 30T 6 8eo 1360 LO3 I.in30 ut;ur pmvwabmd boLter 1.1.3 1.393 1.600 = h. L2.1 uicUas* bem of 197%M yew " sh i*oem4fe "_ t Adc eme Zly e..4 _ & m&= teeu La. 3.1 :9iTmaxw t equity ism seaMe aa 601 of lh equLW aa.tadkma La ano 9U-u2W atuamiam a the WrOoet DuL&d t .;;;* 196;. zt shold be ated ta 1. aIso r4eo -sin Lael.ded ithe eat ma dasim ple; thi aef dis van rr_ghu in pwratLam betam Uw pSjeo itartid a. 6.37 M/ 7ldmpeA off ow 3 y-n. Im y S_ -hLa isat %es Late int Ms. to '1 ag dgm d ftr W09d1Vla m.a.  I d9 i ,d . .. . d I 1 d d4 . 5~~~~~~~~~~~~~~~~ . n s n d V d d' dZ. .4"d4t Rn^-*...... .. nsi i' - n ., , X 4 d ; WRIkXh% rlAc dnia. 3 I # FiM;E Ftd.?, §sl:z;R Rt P §t5i §d4,; ei4 q§ d3A §e4 g t4 -1S "-I£ i3n i 0~~~~~~~~~~~~~~ ;5¢w fi4 .3 * t!f4l4n% a'--. 3 4 -a zaQRt .. . 7m O~~~ ug~ iRS}:5tO .9,99 444*r *> 8t 2$ : ^ 2 |~i d e3 4E 2tt§§§# d4 P fI~ sij :4,11 .q'R IFII S J ~~~~~~~I EEji]Xj E5 331 !.3E5I  TANZANI A a V 1.1 VESICK PEYI O{P ?iTriiyjL 382-TA PI^IS.T COWI.ETiou RE1lT CAGILIIAAWITH1UI9AI lt;hu 'OG) 129JŽ0A1L1981182 lglIa/8j 1983/811- 19811/85 I9&,>/86 ig%/Oi1 1987/68 1988189 198941 1990/91 Liveatockl hevenue 48,011 57.1)0 65,2W */6,712 1,123 94,594 91.211 106,1120 109,461, 112.517 l11.111 Othier rwavnua 1,'a 1,800 I.0 8o 1,&10 1,Ono 1,800 1,81G0 1,83 x800 tWo l,&-Io Shtare Capital edvauice 17,540 - - - - - - - - ThIS WLg term loau 8,196 - - - - - - - - - - Overdraft *o,roo _ 3,000 - _ - - _ CGeni from preceding year - ILSIO 11.694 111.270 2.11?68 2!6.35 9 58.810 65.100 115,11i 57,.5L s,536 7J3,728 8h.,69$8 95,162 106,191 122,751 tbo,sat 161,03o 196,964 230,214 273.f62 laavceameait non-llvaatock - 6,613 livestock - 19,515 21.650 25,140 25,970 35.750 15,750 35,750 35,750 35,750 35,750 35,150 ileplaeeanant of machinery "aset - 5o00 500 950 950 950 950 950 950 950 950 Operating Expeia@e5 24,013 25,513 2f,910 29,)3) 31,51.8 33,723 31,8%3 35,191 35,692 35,659 35.859 Laal. hepkyments (a) Accruals eand creditore JJ interest 453 ION - - - - principal 5,500 1.530 - (b) Piause I loan - interest 6118 120 210 principal 3.264 3,000 3,000 - - - - _ _ _ _ (el IAVCOILIDA TlLh.5,269,500 lowa Assumd to be converted eventually to equity. (4) Phime 11 Iowa - ioteriet 3,850 5,011 4,629 3.917 3,205 2,491 1,7181 1,068 356 - principal , g a839 .319 8,3'19 8,379 6,379 8,379 8,379 - (c Overdraft repayment - interest 510 168 - 168 - - - - - - - priincipal 10,00 3.000 - 3,000 - - - - - - - Cash saurptue 21 11,618 11,696 14,270 24,268 26,159 41,.458 58,818 85,700 115,837 151,655 201o,J6 85.536 73,728 84,698 95,782 106,191 122,753 140.521 167,038 196,961 230,214 273,626 Operating Costa/AU 2a69 270 270 Vt4ue per raicb bre4 animal aol,) 2,635 2,700 2,715 Vallc per purckaaed ateer enld 1,83o 2,100 2,200 Cost per purchabsed steer 1.3u 1,11% I1,30 CsLt per purcltarnad lteiter 1,450 1,595 1,600 1/ A total of BtibS9.39 uillioal accor.ii.g to 6/30/80 blance shoeet, but thisi is reduced byg tie TI,. 2.361 million of interest eccrued tlae AVtlO/l.IA wIog termi Iowj whlicih onii ic aseuned to ba cosaverted to 'Treasury equity eventually. 2/ 'TJetiurL is not taken Ita accounit .4ue to lachi oa dta said (or simplicity J1A mnacjbia.  - 132 - TANZANIA SECOND LIVENTECK DEVEI,OTN7P82C REI R-CA Table 29 PROJECTCEPEINRPR Flta.c.. iate o-f ttR-- 1T98 'DOD) With Pro/ne 1974//75 19175/It6 1976/2/ 197 /7/05 9789 E8 19919/S 1990/SO 098'/92 1982/83 1983/84 1984/55 19B5/RN 19866/S7 1987/SI8 tSA8/IN [NAN/NO 1990/ 94 95 18994/ 1 . Lil-etok Rev-s 24,973 [6.544 23.002 21,694 25,091 19,380 48,011 57,110 65,202 /6,712 50,123 94.594 9/ ,2 71 108 ,42 0 109,464 112,51/ 114,171 114,171 2. OtherR--rc 868 1,42/ 543 56 2 709 1.607 1,787 1,900 1,800 1.900 1,8/0 1,600 1,600 1,800 I So 1,900 1,808 1,800 RO 3. Ro-id.e1Pel1e 299,893 4. SUB-TOTAL. 25.941 07,971 D3,545 D2,166 23,800 D0ON1R 49,1799 5891R 670,000 79,510 RINDS N6A/N4 99.071 108,D20 112,284 114.,377 105,901 415,R64 5. I--utr- Net-Llcrut-k 4,236 6,438 9,435 4,993 5,725 10,988 8,815 - - - - - - - - - . - 6. Liv--tok 7. ID,510 13,765 4.593 8.004 15,091 4,848 19,915 /4,150 25,740 25,970 35,734 35,750 35,7SR 35,750 38,110 35,750 35,750 35,750 7. Replucamee oP lahi-yrp/ehblc- - - - - - - - 400 500 950 950 950 950 850 910 950 950 950 Rep-nce 8. Operat.ing 21.143 17,006 017.68L 19 7/5 58,418 24,103 24.013 D5.513 27,9/0 29,130 31,540 33,723 34,843 359,191 35,692 35,859 35.859 3585.99 9. Ict--r-l On-draft 3.700 (20,5533 2,7509 (1 101 (9899 (2,04/1 500 (P.050) (3.0000) 3,000 (3,800) - - - - - - - SOB-TRTAIL 41,842 34,665 30,469 28,558 40,295 37,897 50.641 40,383 31,210 59,050 85,248 70,425 71,543 71,891 70,5892 72,999 72,S5N 77,559 I 9catate 18I0/8 Paesh.r-eE- /15,9802) (18,6942 (6.9231 (6,392) (16,4959 (1t,979( (945) 18,54/ 15,1792 19.482 16,615 25,971 27,529 36,328 39.9/2 41,810 43.412 343,305 B6.I6EtWITH00TPAR/DT (423) 0,504 93,011) (0,801) 2,042 (15,033) 9,1790 44,796 37,278 79 33,2 33.2/9 33.279 33,279 33,278 53.1279 33,219 33,279 257,201 I-re--to Nalan- dur to P-oJec (15,378) 1819,09) (3.812) (4.5919 (18,5371 (1.926) (9,640) (26,248) (20,481/ (13,917) (16,6040 (7,308)'(5,/Si) 3,050 8,583 8,539 10,033 86,104 /81 cea_ n 198R terms_ (32,1402 (33,502) (6,080) (6,080) (22,605) (1,106) ebone FEkOIIaED/ DATERE DTRII -egatin 7.57. SEOOND LIVETOCKRO P00/001T - CREDIT082-TA DEVLPML9ENT Table 30 P180.1CCCOMPLTIONREPORT68 NARCO SieplOifed Fteeceir Ret. nO Return 1974/75 1975/76 1976/77 1977/78 1978/79 1979/a0 1980/81 1981/82 1982/83 1983/84 1084/85 1985/86 1986/87 1987088 1988/89 1989/90 1990/84 1994/95 RefnporE "parlrp/lp-r penft 7 teeneta le De ... i 0.95 1.07 1,03 0.98 0.86 1.99 1.10 6.81 0.97 0.8/ 0.97 0.97 0.91 08.7 0.87 0.80 9.87 8.87 Sh.dv rete of e-haerrooraofacto 1. 40 1.22 1.32 8.50 1.07 0.46 1.46 1.46 1.48 0.46 1.46 1.46 1.48 0.46 1.48 1.46 1.48 1.48 Adj-eRnet for b-ef prloe aed ahade r-te 2/ 00119 P10/ETO jore-n 1,Rrnatotk Rererue PR Soetae 5) ~~~~~~ 943 ~~~~~7,540 1,052 779 1 82 77 951 10:,854 133 5,084 850 25,880 2.790 29,104 0,673 05,431 - 17,617 - 20, 728 - 21,649 - 25,559 - 26,282 - 28,754 - 29,577 - 30,410 30,849 30,9499 - IDp-ntlng Coat. (P.. ,507.) 4,229 9,6870 0,829 4,935 2,765 5,544 5,544 3,969 6,433 6,700 7,256 7,786 8,014 8,094 8,209 9,241 8.248 8,749 Replace-n (,.E.848%- - - - - - 056 195 071 370 370 371 371 371 571 571 370 008-TRIrAL 2.320 2, 401 4,486 3,946 0,449 17,476 21,891 9,402 10,989 05,651 04,008 11,432 17,897 20.289 20,997 21,800 22,230 22,230 W0TH00TPRO/DOTDeore..et LinesDck R-o-u 3,523 3,386 3,338 6,980 5,053 50,841 34,030 19,082 19,967 19,987 19,967 19,967 19,96/ 19,987 19.967 89,967 09,967 19,967 openeting Costa (P.E. 507,) 7,547 1,373 2,135 3,320 2,2118 9.5863 5,099 5,237 9,.2227 9,272/4 5 ,2227 5 ,2 27 5 ,22 7 5,227 0.227 5,223 5,727 5 ,2017 Replacmen (P.O. 85%) 34 10 27 423 206 496 274 274 274 20 274 274 274 274 274 274 274 274 90B-70742 942 9,994 1,194 2,965 2,933 28,082 28,657 13,651 14,468 04,488 16,466 04,466 14,666 14,468 14,466 14,468 14,468 04,466 ..t .tora..t. - acr.. vanet 1980/81 and cott__ 1980/91 nal o -tneft-r 8,428 40/ 3,292 981 (1,380) 19,606) (6.7/0) (4,244) (3,470) (909) (486) 2,966 3,431 5,923 6.531 7,534 7,784 7,764 AD/JUS0 BAIANCE0 (13,9501 (07,782) (520) (3,600) (19,921) (10,532) (16,410) (38,493) (24.960) (14,628) (17,8/0) (4,342) (2,320) 9,875 13,124 15,873 17,077 91,868 1980/91 .. t.taIcoa-o- 0ASTIRD BALANCE1 (29,1561 (32,559) (827) (4,765) (24,204) (13,031) an eboo 000.80111 9A10 OP 007169 0t68e043%. 1./ Reotp,Irty Is sue for81974/71 to 177/79 t 0 2.6; 3.0 34; and 3.9/kg 1 8...etIhM re p.ct ..tly. 6 Ipor patt 8cud ice e--o pa9r -c 'TSh'5.2; 12.1 11 2; 9. /kg Itaaglt.t 1981/82 and cone..r at T89.8 alta 1981/02(cren _lnto 0980/81 cod cona-te 1990/81 o-u1.t.. aCor9 2/ -a) -tn to Etc n-tn- end -t-t It the ltc-ott1 Ceble rtErppocnno o core ru the uculd cot bt etgcEfi-eo in cosprio the nihprjct d atboo projec nitattot  - 133 - Table 3t TANZANIA SECOND LIVESTOCK DEVELOPMENT PROJECT - CREDIT 382-TA PROJECT C0MPLETION REPORT NARCO Analysis of Einancial Performance of C.C.M. Cattle Received by NA.RCO Number Value TSh. 1. Cattle accepted at holding ground 30,553 12,707,036 2. Cattle value after 30% treasury deduction 1/ 21,297 8,900,000 3. Cattle value after 42% Treasury deduction l/ 7,370,081 4. Direct Costs (a) Labour 353,820 (b) Drugs 462,844 (c) Motor Transport 301,530 (d) Railage (i) Ruvu 490,080 (ii)Uvinza 487,840 977,920 (e) TLMC charges ,0ol4,648 (f) Ranch upkeep costs 4,962,201 8,072,963 5. Indirect Ccst 150.765 6. (a) Total cost (3 + 4 + 5) 15,593,809 (b) (2 + 4 + 5) 17,123,728 (c) (1 + 4 + 5) 20,930,764 7. Inventory as at 6/30/80 12,385 8 1200/- 1i4,862,000 Sales as at 6/30/80 3109 head 4,021,100 Total Sales plus Inventory 18.883,100 8. Profit/Loss based on 6 (a) 3,289,291 based on 6 (b) 1,759,372 based on 6 (c) (2,C47,654) 9. Number of steer months of grazing to 6/30/80 208,186 10. Profit/(Loss) per steer cmoth carried based on 6 (a) 15.80 6 (b) 8.45 b (c) (9.84) 1/ A 30% reduction in value was requested leaving 7070 of value to be paid by NAARCO representing cattle remaining after deducting aLl losses incurred before deliver7 at the ranch and all losses in excess of 10% on the ranch at September 30, 1979. The 42% reduction represents a later prcmosal by NARCO to Treasuyr in accordance with extremely high losses inc=rred on these cattle.  TARZANIA 090ONI I).JVWZI1P)CK 1EV3I.OPE"? PIiOJECT - CIElIIT 382-TA IMOJECT oiPioWETION REPORT NAHCO llfiCl Pro4uctign Coetricienta for 12 t"ItHa to itue 30, 1919 and 19B0 _ 1978/7.9 1979/00 bunch Namu 'Average No. Calving Weaniung Adult Nor- a 'Calving Ueaning Adult Nor-' Breeders S Z tolity S t tlitz Kongwa 3255 59.1 55.8 1.9 72.3 68.1 3.0 *Hat 3854 68.3 ./ 48.1 11.2 81.6 73.2 1.3 DPkeya 2856 39.5 30.0 1/ 55.1 1/ 54.0 3.31 8.8 Huvu 12,4 Is/ - - 10.1 Maeor 4738 38.2 3/ 30,8 tI 4.5 63.8 49.8 4-.7 Usangu 1936 81.7 .3/ 6h.4 2.7 88.8 81.6 2.5 lSltengule ) 520M 43.11 i/ 31.4 12.5 h/ V/ 54-5 44.6 5.4 Kagma ) estlake 1496 5h.8a 35.8 25.5 43.1 3A.6 17.2 Haliale ) 1863 19.3 10-7 20.6 57.2 35.2 17.1 U. Kilimanjaro 1328 83.7 81.0 0.9 88.9 85.9 1.3 tenyare 2037 60.7 .1.8 §/ 7-7 64.1 Q/ 52.0 5.3 Kalembo 1666 52.1 3.9.0 h.8 51.0 W.e1 6.6 Uvinsa 1120 24.0 18.0 b5.0 4/ 39.4 33.4 19.1 Heifer Breoding Project "abale 1613 0.9.1 J/ 43.5 Is.7 51.5 38.3 ha.i 4/ aa proweaning mortality and adult morta71ity w"a aesociated with irresponsible management and a now asnager war appointed. 21 At ieri,. the manger we guilty of mimenagement of the breoding herd and non-joining of 400 females to bulle (Incredible. yet it happened), and the non-joining of 100 temalea after 2 Inauminations by A.i.. 3/ nheae ranclea encountere4 extraordinarily wet conditions In March 1979, with heavy calf losase in boma, deapite serious qfforts on moae ranches to minimize the effect of uct copditlons by moving boes at 2 day intervals. §/ Those hial mortalities in adult cattle are partly *asociated with the CCII cattle procurement. 1/ Tne NnUk ranches were disrupted by the ALin Invasion In late 1978, with all cattle lhaving to be moved to labale tor 2 onthe with consequent overtaxing of facilities and meanageatznt. i/-,1m iAja prewe ... ia,Lrq.ortLliLy asu uauuci.tasl witis ua 14kun"dul ouLLrai of hOire.orrI,agie majtliouL.. / Over 30% of t deaths vere due to haseorrhagic septiemelea (18). whicb was associated with the military 1ud'nt car tle 'ror all.orpo to slatiahter at a site on Kitengule. with subaequent inftection of herds in 2 bomas and unavailability of the N1 vaccine In T anania. 8/ Over 300 leifelt suitable for mating were not mated by tbe manager.  TANZANIA SEWOND LIVESTOCK DEVELOPMENT PROJECT - CREDIT 382-TA PROJECT COMPLETION REPORT Period of Management by NARCO Ranch Managers (Each number represents a particular manager) Ranch/Year 1973 197h 1975 1976 1977 1978 1979 1980 1. Kitengule 27/30 30 30 31/29 29 29/15 15 15 2. Missenyi 5 '5 5 8/1 7 } 11 1U 3. Mabale - - 26 26 26/39 39 39/40 h0 h. Kagoma - - - 28 28 28 28 28 5. HBP Kikulula - - - h1 h1 h41 2 42 6. West Kiliuanjaro 2 3 3 3/16 i6 16 16/34 34 7. Mzeri 19 19/20 19/10 10/8 8 8/13 8/13 13 8. Manyara - - 1 1/h h/15 15/7 7/35 35 9. Kongwa 10/1 4 h 4/6 6 6/30 30 30 140, Hkats 1 7 37/1 31 31 31/6 6/5 5 11. Dakava - - 11 11 11 11/10 10 10 12. Rujvu 4/7 37 37/5 5/14 14/23 23/38 38 38 13. Ueangu 9 13 13 13 13 12 14 14 14. Uvinza 11 12 12 12 12 22/23 23 23 15. Sumbawanga 25 20/6 24 24 23/114 14/17 17/16 16 16. Kalambo - 18 18 18 18/17 17 17/16 16 Ii .,, l .s ; . U2X a J' B t aJ : i * :14U1 I . i.- .; s 1 Uzb @'s' . | "" ^ ' ' aS ' *-et ' ' *" V *U . C . .m Loan IS I; a ~~~~11 0 OIl.23 4 y fsfi- Ge IIV 1 flfi .*if *im zii4J S 8 VI lo~~ii IW4111 a * 3 zI 1,f br r F1 6 |1 * g1 , g 1 C; we" ggea It ,A " IlAIv l** UVIMOt f  - 137 - TANZANIA Table 3 SECOND LIVESTOCR DEVELOP!¢NT PROJECT - CREDIT 382-TA PROJECT COMPLETION REPORT LIDA HEAVY EQUIPMENT Total Machine Hours of Operation T__e Ni=ber 1976 19T7 1978 1979 1980 Scraper 4 1864 1574 1511 1599 743 Grader 2 1443 1004 474 729 1247 D7 6 3122 4371 3123 1969 3268 D6 3 3139 2329 2293 1369 2853 Total 9568 9278 7401 5666 8111 Annual Machine Hrs./ Machine 638 619 493 377 540  - 138 - Table 36 TANZANIA SECOND LVESOCK DECOP FM PROJECT - CREIT 382-TA PROJECT COIMLETION REPORT L=A UlEAVY EUIPMATT Rates cha-ged for each n3e of := lent (r5/hr) TIe 1976 197 1978 9 1980 DT with treep=her 249.83 249.83 249'.83 Before Ja:.31 620.00 2is9.83 After Jan. 31 432.68 DT with ripyor 274.70 274.70 274.70 3efore Jan.31 620.00 2T4.40 After Jan. 31 432.68 D6 196.62 196.62 196.62 Before Jan.31 495.CO 196.62 After Jan.31 340.53 Scraer 208.46 208.146 208.46 Before Jan.31 510.00 208.46 After J am. 31 351.63 Mater grader 125.93 125.93 125.93 3efore Jao.31 350.00 125.93 After Jan. 31 206 .T Basic for these Rates 1. Frm 1976 to Januazy 31, 1979, rates vere based on ownership costs - depreciati=n, insurance end repairs aud maintMennce, excluding cost of filters, oil and lubricants divided by 1500 orkin hoiurs per ar s. This basis was reared by- 4IB and accepted by LIA. The client -zas responsible for all other costs - ftel, oil, rlicsnts and. apercr costs. 2. Za February 1979 the rates y ere revised an the basis of .i corcja-ia rates charged by the other p-rastatals in the co=.t-7 'or cvner2ship c3ts. 3. a .1980, LAtook fill respcmsibili7 for creratica and =ai=tenan=ce of the equi;=nt and charged on a full contract basis.  - 139 - Table 37 TANZAIA SECOND LIVESTOCK DEVELOPMOT PROJECT - CREDIT 382-TA PROJECT COMPLETION REPORT LIDA HEAVY EQUIPMMT Financial Results (TSh. '000) 1976 1977 1978 1979 1980 1/ Receipts 1981.5 2195.1 1787.0 1885.7 4075.4 Direct charges for spare parts and repairs done under contract 755.5 795.6 673.9 1068.1 2054.0 Depreciation at 10% of capital cost 1023.4 1023.4 1023.4 1023.4 1023.4 Balance to contribute to costs of unit mne- ment overhead, unit em- ployees and central workshop repairs 202.6 376.1 89,7 (225.8) 998.0 1/ Receipts and direct charges in 1980 relate to the higher rate charged for a full contracting service and the higher costs (operation and main- tenance) associated with this service.  - 140 _ -Table 38 TANZAN SECOND LIT;80CK flD OPNo P - CEDIT 382-TA _JECT PESECT COTe=ON E:PORT &2A EMAV EQUZ2 Use ? Psarimcul Aae ines Aaenc~rtcs76 19 7 1978 _1M 1980 Totals TAECO 411h7 5109 3522 2611 6439 21,828 1>: Xg.951 726 24La L569 939 T,625 DDC Ranches 3198 3114T 1426 818 T33 9,322 uJama anches 186 168 - - - 331 Son-?TQject use by Regional and District C=ssiouers 86 128 13 668 - 895 9568 9278 T401 5666 8a12 40,024 - - - -_-  BN0lND LIV2070 p LVEWPII PBDJECT - CNPWIT 382-TA YIID CWLZTION *0uRE lWa LAM 8?ATIUTIC8 AS A? 613D/1980 I?Sb) J,/ Project 11- tlene ApProvEd Loans Data-ce xrera BeiGioP Origanal Consolidstion Totel Disbursed Plen Al AMh PUIfi Nhssapi - 1,773,5.5 1,113,5k5 959.602 513.91.3 7%,993 West Lae tebels 3.212.860 5,.408,95 8.621.755 5,211,038 3.110.711 376.501 Kazoo 3,211.710 5,355,215 8.566.915 6,850,025 1.116.890 511.296 Kitengols - 3,.10k,60 3.10..160 3.237.621 (93.161) 168,950 KeanD - 6,098,532 6,098.532 1.629,426 &,k6g,06 83.617 Dodo_ Nz.ri - 3,00D3,.6 3,003,I67 1,8D6,861 1,196.606 167,047 Tanga &01. - k,20,0.25 k,28D,A25 1,985,528 2,291k.897 202,851 morogoro DOsewa 3,710.700 ,4071,893 7.188.593 1,010.185 778.408 539,36h *uvu - 8.027.1kl 0,02,1.. 71.6k..81l 162.51. 355.322 Caat Usangu 2,931.800 - 2,931,800 4.828,o66 (1,896.266) 276.135 Macya F- 8ub-Total for.rnehebe under eonol)idtion plaa 13,061,060 1.1,695.s6 54.,236,606 I.,1.,2e9. 12,192,371 2,762,679 3/ A2 ise III 3,211.700 - 213,798 213,798 Nil - Weit Lake Hvisi IV 3.211,100 195,081 195,088 Nil - C 1bets 11 h.,099,00 - 1,111.56% 1.111,561 Nil - loroSoro aub Tota1 tor rances whose undieburee4 loss portion Wc eaneolled under coniolidation plan 10,523,900 - 1,520o.52 1.520,M52 il Iemneelled) *3 Kalasbo 1,693.280 - 1,693,280 1,9681,07 (268,591) 156,1.01 Buhua UyjIa* 3,323.200 _ 3,323.200 5,61.9,.15 (2, 3D6,215) 1,o6,6u12 Kigge Bub-Total tor IABOO ranchee operating on a bolding statue. 5,016.10 _ 5,016,480 aO*30 tOTAL NA*3D 28,606,850 h1,169,651.6 60.113,1531 i N j/ t1u could not provide loan statistic. to 12/31/a0 during tLb mission end vsa unable to provide the author with these stetisties by the time of final report on 6/26/8 1. A*1RCD MI paid all arrears to SMBPin early 1981. troject ames Loam Approved La" Dilwrsed aIace Arrears Regio S. fl1C .101.0(5) 139a 235 1.1.96.16 1.355.30 1/ Per maBl. 0. 1L - Ks.. 10,611.9 9,1 10,Ssog u r Ihl P9a6a0sso Om - AbIGNanga 21.650.326 85.OAS0SS 1.763.760 16,812,919 abiavlaag iAiL - TM 141.150.816 1.1..6.269 2.152.609 21.301.028 DOC - D. Nororo - IDA 3.150.s72 11a2.4112 6,090 511,070- lbrwro 31.59.W2 3.159.126 - 1.029..10 - Stlbfln - IUA 2.210,113 2,210,111 - 321.203 Iriass 1.332.915 1.311.t18 a,o21*,g6 26.l 0 IDA3.621.133 -u linings - 2.631633 90a.g9 11.131. Tabora aaOa.obo - 8*tM,o20 PD.L 19a162I" 13,35,1702 S,6.,095 3,025,a95 TAL IDA f,de0 on1y 9.5O2.1i1 *,ss.o 997.3 91*0 S. WAlU VILIAi4 lWASahbalum,d 6al,lJe 519.266 103.550 41,13 g ea ia leas 601,616 h31*196 251,622 20,590 * beaus 6 01.216 s 110 1641.0 ,, UbIabisa 601.816 167.339 511,1.9 95,000 fI,l.Pri.) - WIbeaLkeas 661.016 332.313 3149,505 All repaid M.aage 1 601,0 . 0 h6.531 195.201 SO daf Doroto X90,112 816,102 92,010 - o Sala/l mew1 1"26,900 W26,900 - - D Aeelejlus 81..1.00. wg/ 0o a6A.008 - - Me&ewejV.gaernl X R195.6 195.3g6 _ Siaka.1s/l4agaaaai 62,t.as !/ - 62Qa.Uj L jo&ho 1,500.000 i3.1.ip 1.266.501 - 3uvs_ moteal 1,50O,000 3.],663 1.25331 - Celoleal 1.520.000 115.650 1,26,e16%- USoroog.aro 603.125 21.0,000 U3.125 Armush Talmal 659.170 .10.000 109,110 _ EoloaJk 4150,000 - *50.000 - N ie lleaj* 626.261 - 626.261 - Do TOTAL (IDA tufd.d only) 1A. 3j,963 6,23.199 1.14.503! 156.723 1/I .C paid 40 ot ite errasre to T116 is Demaeer 19iD. Ti bam were uet IDA rinamc.l loons. a u 1960 T106 also provided a lSh 47.1260 loan Lu 12 of thu ranchea from ite owoa iada tor opereting aoel,. 3/ Aemaindar of loanhas btee, repaid. hin c uuL in uailikely t hL coverad.  TANZANIA B=NRD L1VE7T0CK IEVKIoPEtIT PROJECT - CRIEDIT 382-TA PROJECTODIftLLTION tPoIR I"ARMj Benches in Develompent or Operatlon in the Ranchina Comany 1970 1 980-AL - Ph< Phse 11 Rtech Nam 1969/70 1970/71 1971/72 1972/73 1973/74 1974/75 '1975/76 1976/77 1977/78 1978/79 '1979/ prais Ibchingwas ;l N8ereeue n - _ Ronla -__- ._ _= .I_Y Kitulo Misaenyl - = ._ _ . x Kitengule -- _ _ _ _ _ _ _ __ _ _ _ Bai ter bge_digx uni t _ _ Moabe^l. - -/ - K Ix I&ataLI - Imats. 1U Dekawa I longwo.-f Ruvu _ - UMBnQU ____-_j_. _ _____ _, 'kg' Kal8mbo _ - X~~~~_ _ ___ _.__ __ _ _ Nzeri - W. KilismnJaro _ _ - hoover. 1 - 1 ________~~~~~~1 1 --- 16 aJC Total Hancheas 11 11 10 12 12 12 16 16 16 16 16 5 Bj/ 10 1/ NACD to 1975s subsequently MIARC0 I/JncluJe Only ranches On which eoos dave1oe,ent t place. rck Others were Nlganyi Cast and two more ranches in Westlake noB devrelmndrto ona whcOri~na1y t imeking Place but book Smbewngawe.iucluded a total 11 was changed ranches whea to Kaladjo for develo veio at a&l npprl rawentaalbeo ubuna b&sta 11 was surrendered to the local Iteaci In 1976. *PWQ r&wt O vAlbea ubwne  - 144 - TANZAm :eadix 2 S_COND LISTOCK MVEWPmOr C- D= 82- PROJEGT CONQLEN RESPORT SARCO Ranches iz Cousclidattio and RehabiIittaion P1 (!97f8) 1. Ranches to receive d.veLozt and. liveswtock e ment Classifiezti= at A=rsisal Westlake Zcne Xbstba Phase =Z Cedit 3E2-M K.suem7i b.rse Ce,t L-2-A Ceatral Zone (eoauded) Dakav Phaae :Z Ceat 3'-&a asau (. scte= zone) n Eoncw Nat ineluded i CediUs 382-C md 132-TA Xerz ~ ~ ~ P>se: ~Cret 132-U 4kta r n 2. Bauch to b* mono d at "h "'ig Xeratic± " status Sozthes Zcne K.lAin = eIt Y 3& -u Suwbsww I3ct ie1,£ A.d i Credits 3f2-'VA ud 132-~E& 3. !ucIes to be dwvela;d. &ccoz,gta rescns !oese im tha s= Zone Northern Zone Vest M I aio hase _ Credit 132-A M -t ic±uded in Credts 382-7A ad 13Z-tl. Thiti.aLy M ad the Bank proosed that the ad and4 tfi.d asseX Si k_ans. s5huLd be tue4 over tc the reg.onal sLuthoeties. Ecv.,r, evntuLL5 T it ema decided to incoarT ste Stwuga .'rth th m..uu*t o: KaLImba.  - 145 - A=endix 3 Page 1 TANZANIA SECOND LIVESTOCK DEVELOPMENT PROJECT - CREDIT 382-TA PROJECT COMPLETION REPORT Theoroa+i cl.n'1 o9-l of rorr.ercmlly "arketed Cattle Western Zone Southwestern Zone (Shinyanga Plant) (Mbeya Plant) 1985 1990 1985 1990 Maxketed Offtake - Head of Cattle - (2.3 % growth rate; 4.5% offtake) 276,000 301,000 79,000 88,000 Zonal urban consumption excluding Shinyanga and Mbeya 1/ 69,ooo 111,000 20,250 33,750 Theoretical availability for local plant and live export from the zone 207,000 190,000 58,750 54,250 Possible local plant processing - city requirement 1/ 6,000 11,250 27,000 54,750 - carcases/blocks for Kawe.. 2y9000 750 8.ooo Nil (19.750) * 2/ 35,000 35,000 35,000 35,000 Live export from zone 172,000 155,000 23,750 (500) (To Southern Zone) Eastern Zone (Kawe Plant Total offtake 1985 1990 Total Offtake (2.3% growth rate; 12% offtake) 50,000 56,000 Trade from Western Zone 172,000 155,000 Trade from Central Zone 4o,000 50,000 Possible careases from Shinyanga 29,000 23,750 " it fProm Mbeya 8.000 Nil 299,000 284,750 Consumption requirements 1/ - urban areas 214,500 322,500 - rural areas 85o500 9.2000 300,000 415,500 Theoretical Surplus (deficit) vith consuzption per capita 75% of 1969 levels (1,000)(130,750) Footnotes: 1/ Assuming 75% of the per capita consumption figures used by the 1978 Census Comittee, which were equal to the 1969 Household Budget Survey (rural 6.83 kg, urban 16.63 kg, Dar es Salaam 18.47 kg). 2/ Assuming 75% of nominal capacity. AssuMptions: cont'd;  -146 - Paed2 ,Asaumtons: (a) Zones Westerm: Nara, Mwruza, Westlake, Sbinysnga, Migo= and Tabora regions. Soutbwestean: Mabea, Iringa and Rulcwa regions. Southern: 4tvar, Lindi and R mx regions. Central: Dodom and Singida regons. Northern: Art4sha, Kilim aeo and Tanga regions. Easterm: !orogaro, Coast and Dar cs Salaan regions. (b) Zonal Tradde The Northenr zone vas a deficit area in tWe 1978 census and had the highest per capita meat consumption in the 1969 surve7. 'Me Central zone is a surplus area. TZ the dispcsal table, the Central zone su- plua is msuimd to satisfy the Northern zone deficit and alsc sup1y 40,000 to 50,0C0 head to the Eaatern zone (which may be opti-mstic). The surplus Western zone also supplies the deficit Eastern zone in the table. he Southwestern zone should ha7e surplus avai.lable for t'-e Eastern and/or Southern zones in the cext far 788:r, but mW only be self sufficient bf 1990. (c) Regeonal, rsraL and ur-ban huxan populaticn grwth rates -. rexe the same as that used by the Census CoC ttee Jkich were based on 196T and 1978 censzs figmres.  - 147 - TANZANIA Appendix 4 SECOND LIVESTOCK DEVELOPMENT PROJECT - CREDIT 382-TA PROJECT COMPLETION REPORT Performance and Factors affecting Performance of Village Ranches 1/ o4 a o a ~~~~ .0~ a - , v S a < - 5 , a s c 0 0 o C-a s 50 5 o! E i .e ±5 5° a5 X .5 5 5 5 a p i - @ i C) 2, ° 5 2 '± w 6 5 - -° Total 2/ 7/ 3/ 4/ 7/ 5/ 6/ 7/ 7/ 7/ 7/ 1. Steer purchased financed by TRDB 620 618 753 210 456 420 660 1,154 645 - - - 177 986 - 6699 2. Steers on hand in 1980 146 165 269 Nil Nil 123 615 398 100 - - - - 267 19 - 2102 3. Ratio 2/1 .24 .27 .36 0 0 .29 .93 .34 .16 - - - - 1.51 .02 - .31 4. Commitment by members to Project S U U U U S U U - S U S U S 5. Contribution by members to investment (U = `507% planned contribution) U U U U U S U S U - U U U M M 6. Coefficients of production P F P P P P P P - _ _ - P/F F 7. Specifically noted problems associated with the following factors: 7.1 Competition from livestock from outside village Y Y N Y Y N Y - N N N N N 7.2 Competition from livestock from inside village Y Y N Y Y Y N N N N Y N 7.3 Inadequate permanent water facilities Y Y N N Y Y - N N N N Y Y 7.4 Lack of support from regional Water Engineer Y Y 7.5 Major upset through villagization Y Y 7.6 Disposal of steers for private ox ploughing Y Y 7.7 Dispose of animals through exchange, or suspected disposal to members under "deaths" Y Y Y Y 8. TRDB projected ranch inventory in Year 4 1,880 1,880 1,880 1,880 1,880 1,880 3,130 2,930 2,930 1,880 1,880 1,880 2,870 2,870 3,120 36,650 1,880 9. Actual numbers in 1980 560 289 810 - 185 227 851 1,087 159 - 132 149 397 794 630 - 6,270 1/ Keys: S = Satisfactory; M = Moderate; U = Unsatisfactory; P = Poor; F = Fair; Problems noted: Y = Yes; N = No. 2/ Mwamalasa in 1979 wished to close the ranch following two drought years. The local CCM officials would not allow this. The committee sold off sufficient cattle to be able to repay TRDB and the remaining herd of 300 were grazing on a nearby DDC ranch. 3/ Shishuyu sold all cattle and closed the ranch due to extremely high competition for grazing in this high livestock density area. The outstanding TSh 100,000 owing to TRDB is not likely to be recovered. Mwanihanza sold up cattle to fully repay TRDB loan in 1978, Only 185 head of cattle remained in 1980 with little 4/ interest by villagers in scheme. J Segala/Tzava ranch inherited substantial infrastructure from a previous FAO/MOA project. Sj Mwailanje is unlikely to commence; Kolomonik will probably commence, but without the support of the IDA/TRDB credit; Makoteni disbursements were suspended by TRDB and may remain that way due to low interest by villagers and poor management. 2/ TRDB rated Doroto and Talamai as satisfactory; Masewa as potentially satisfactory if management can improve coefficients;Ngorongoro as potentially satisfactory if more support from the Ranching Association can be obtained; Lijombo and Cheleweni iS Ruvuma region as promising (but too early to judge). Source: Based on TRDB reports and supervision reports; only specific references are recorded in the table, which implies that problems may have existed but were not recorded in the supervision notes which were not systematic.  - 148 - Amendix 5 Page 1 TANZANTA SECO=D &r=TOCK M LP- PROJECT,- CRQIT 382-TA PROJECT COMPLETION REPORT ACT from ovember 1976 Reviev Hission Report. Alternative System for Vi"L*ge Ranching in Xajor Livestock Producing Areas. 1. (a) Use a Re.s±tered Villaze (as opposed to U,amaa Villace). (b) Perzit continuation of individual owinership of cattle. (a) Regional authorities contribute infrastructure (water, di; etc.) 3ad D zakes a loan for steer purchase and bull purchlse (and posaibly other item) on the following conditions: (i) Manager must be employed on a contract basis and Village Couimcil =zt receive technical guidance from MCA technical services and undertake a sound animal health program. Pro- ducticn imputs would be organised through the D.3 and regio_&a serv.ces. (ii) All cattle must be herded in an organized systesm =der direction of the manager. Milking breeders would be main- taised near the settlemnt to facilitate milking by their oamers before moving out to grazing each day as one grcup. (iii) All .alocalves would be castrated and bulls would be sold. The purchase of Baran or improved bulls would be finazced by TEDB. In the case that acy good quality bulsL er.st in the village (and are approved by relevant authorities) under individual ownership, these could be ?urchased by the Village throu*h TBD loan ftuds. (iv) A lit t on the number of stock carried in the village would be imp;sed acd would be controlled by the Village Cc=cil. The =umber of steers to be purcnased by the Village (and financed by MM) ould be such as to generave sufficient f'Uds to meet repsyment of the Loan from TD3 for steers and bulls and for any other essential items which needed to be flnanced by roans'. I:ems in addition to steers and bulZ.s which could be fnanced wculd be related to the abilit7 of the Village to generate cash to meet commitments. This would be determined by the carTVr ig capacity of the ranch, g/ Completion Report Mssion c = ent: The application of the subsidised approach would be linited by the available Gcvere-:=t -nvestment rrsour- ces; systems -ould need to be developed which transferred roeacer res- ;aosibility for investment to the Village. This should enhance the ca-s mitnt of vllsagers to the develament, as well as reducing the finam- cial burden orvi"age on the regional develocment fnds. As mot all rillagers omm livestock, contribution zfro vi.Zlage revenue to the c-st of water dereloant would probably be :mre apprcpriate than other cc:- structi on.  - 149 - Aynendix 5 Page 2 the current ranch stocking and availability of pasture to graze additional steers and/or the willingness of the cattle owners in the village to reduce individual cattle holding to permit the grazing of extra steers. (v) The Village Council in controlling total numbers of live- stock carried would be obliged to develop a system in which individual holdings were controlled. 2. The advantages of the system in this situation are: (a) Individuals would continue to be able to milk some of their own cows for subsistence milk requirements. (b) Improved livestock husbandry systems and improved genetic material would be introduced to the whole village herd rather than to a portion of the cattle grazed in the total village grazing area. (c) Total stock carried on the total grazing area would be con- trolled to prevent overgrazing. (d) The spirit of cooperation would be fostered and the benefits of cooperation would be demonstrated in the organized herd grazing and husbandry and the income derived from collective steer purchase. (e) The village would be considered as an organized, productive livestock unit and so should warrant favourable attention by the Area Commissioner in preventing encroachment by non-village livestock owners onto the village grazing area. (f) The problem of obtaining contributions of one heifer (or equi- valent) from each household would be overcome since the herd would consist of the cattle in the hands of the villagers. However, if total numbers have to be reduced to allow profit- able purchase and grazing of steers, then the Village Couacil would be faced with the responsibility of directing sales pro-rated according to individual ownership. (g) The present problem of an Ujams. ranch receiving large pur- chases of poor quality and often young heifers as a breeding base with consequent very slcw generation of cash income will no longer be an issue. (h) The problem of overloading water facilities and overgrazing resulting from the combined Ujama and private herds in the present village would be overcome.  CNII~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~I 00 0 o0 00, 001 00 0 >*.$c E..dy4z F-~~~I 0100V oc O .~~~~~~- 0 - . J I'~~~~~d 00000 cOOlO 0 0 000c -0)0 c-'oro -00 -- 01 N M-MS.,,"U.0~~~~~~~~~~~~~~~~~~~~~~ E -d 1~~ - 00100 030- - -00 0000- bco =-..- 0=111=0 .c -OIIO'lop.= 4=k 0 .I,q )ND001 G- ~~ ~ ~ 1.0.1-000 0:1 00 11100100001 .OoooN &GN -~1-0 VAN~~~~~~~~~~ N.< N 'i0o~~~~~~~~~~~~~~~~~ .. ~~~~~~0000SflVI ~ ~ ~ ~ ~ ~ l/' IVINI VINVZNV / va vo 0101 1)040 =110~ ~~~~~E0 IllN