Cameroon - Agricultural sector review (Vol. 1 of 2) : Main report

Report No. 7486-CtAM Cameroon Agricultural Sector Report (In Two Volumes) Volume l: Main Report November, 1989 Occidental and Central Africa Department FOR OFFICIAL USE ONLY U 5. Document of the World Bank 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 ne disclosed without World Bank authorization.  ABBREVIATIONS AND ACRONYMS CAMCCUL Cameroon Credit Unioni League CDC Cameroon Development Corporation CENADEC Centre National de Developpement des Entrepriees Coop6ratives CENADEFOR Centre National de Developpement des For6ts CNCE Centre National du Commerce Exterieur COOP/MUT Direction de la Cooperation et de la Mutualite EAMI Entreprises Agricoles de Moyenne Importance FONADER Fonds National de Developpement Rural HEVECAM Sociftd de Developpement Hevea-Cameroun IRA Institut de Recherches Agronomiques IRZ Institut de Recherches Zootechniques MESRES Ministere de l'Enseignem'nt Superieur, de l'Informatique et de la Recherche Scientifique MIDENO Mis-ion de Developpement de la Provrince du Nord-Ouest MIDEVIV Mission de Developpement des Semences et des Cultures Vivrieres MINAGRI Minist6re de l'Agriculture MINDIC Ministere du Developpement Industriel et Commercial MINEPIA Ministere de l'Elevage, de la Peche et des Industries Animales MINFI Ministere des Finances MINPAT Ministere du Plan et de l'Amenagement du Territoire NWCA Northwest Cooperatives Association OC Office Cerealier ONAREF Office National de Reg6n6ration des Forets ONCPB Office National de Commercialisation des Produits de Base OiiDAPB Office National de Developpement Agricole et du Petit Betail OPV Office Pharmaceutique Veterinaire SEMRY Societe d'Expansion et de Modernisation de la Riziculture A Yagoua SOCAPALM Socidt6 Camerounaise de Palmeraies SODECAO Societe de Developpement du Cacao SODECOTON Societe de Developpement du Coton SODEPA Societe de Developpement et d'Exploitation de la Production Animale SODERIM Societe de Developpement de la Riziculture dans la Plaine de Mbo UCCAO Union Centrale des Coop6ratives Agricoles de l'Ouest USAID United States Agency for International Development ZAPI-EST Socift6 RHgionqle de Developpement des Zones d'Actior. Prioritaire Integree de l'Est  FOR OFFICIAL USE ONLY ABBREVIATIONS AND ACRONYMS CAMCCUL Cameroon Credit Union League CDC Cameroon Development Corporation CENADEC Centre National de Developpement des Entreprises Cooperatives CENADEFOR Centre National de D6veloppement des Forets CNCE Centre National du Commerce Exterieur COOP/MUT Direction de la Cooperation et de la Mutualit4 EAMI Entreprises Agricoles de Moyenne Importance FONADER Fonds National de Developpement Rural HEVE.AM Societe de Developpement Hevea-Cameroun IRA Institut de Recherches Agronomiques IRZ Institut de Recherches Zootechniques MESRES Ministere de l'Enseignement Superieur, de l'Informatique et de la Recherche Scientifique MIDENO Mission de D6veloppement de la Prov.'xce du Nord-Ouest MIDEVIV Mission de Ddvelopper2nt des Semences et des Cultures Vivrieres MINAGRI Ministere de l'Agriculture MINDIC Ministbre du Developpement Industriel et Commercial MINEPIA Ministere de l'Elevage, de la Peche et des Industries Animales MINFI Ministbre des Finances MINPAT Ministere du Plan et de l'Amenagement du Territoire NWCA Northwest Cooperatives Association OC Office Cerealier ONAREF Office National de Regeneration des Forets ONCPB Office National de Commercialisation des Produits de Base ONDAPB Office National de D6veleppement Agricole et du Petit Betail OPV Office Pharmaceutique Veterinaire SEMRY Societe d'Expansion et de Modernisation de la Riziculture A Yagoua SOCAPALM Societe Camerounaise de Palmeraies SODECAO Societe de Developpement du Cacao SODECOTON Societe de Developpement du Coton SODEPA Societe de Developpement et d'Exploitation de la Production Animale SODERIM Societe de Developpement de la Riziculture dans la Plaine de Mbo UCCAO Union Centrale des Coop6ratives Agricoles de l'Oue-.t USAID UTnited States Agency for International Development ZAP I=-S Tocidrt Rdgionale d6 D6veloppement des Zones d'Action Prioritaire Integree de l'Est 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. -J  PREFACE The report is based on two missions which took place in December 1987 and February 1988. The mission was led by Ms. Minh Chau Nguyen (AFlAG), and consisted of Ms. Kei Kawabata (AFlAG) and Messrc. Edward Quicke (AFlAG), Lorenz Pohlmeier (APTAG), Jean-Jacques Dethier (AGRAP), Joseph Ntangsi (CAMRES), John Gray, Richard Clark, Jacques Dubreuil and Charles Steedman (Consultants). The report was prepared with assistance of Mr. Rod Kite, technical advisor for the Agricultural Management and Planning Project (USAID/DEP), and Ms. Yasmin Saadat (AFIAG), and Ms. Mansoora Rashid (Summer Intern). The report also drew on project appraisal and supervision experiences of Bank staff in various subsect-ors, and extensive materials on the sector from Cameroon and from other donors. The report intends to provide a comprehensive review of the agriculture sector. However, the coverage and issues are not exhaustive. The report was discussed with the Government in April 1989. Revisions have been made to reflect comments from the Government and to take into account recent policy and institutional reforms. This report consists of two volumes: the Main Report (Volume I) and the Statistical Volume (Volume II). The Main Report is organi.zed around the central issues that we have identified as important factors for the sector performance and growth. The Executive Summary highlights the analysis from the report and puts on the agenda points for discussions with the Government. Chapter I gives a brief description of the economy. Chapter II analyzes the sector position and performance. Chapter III examines strategic issues for sector development, namely food security, export promotion and diversification, structure of incentives, livestock, forestry and environment, institutiona7. environment, and resource allocation and management. Chapter IV proposes a strategy for growth and presents priority areas for action. It also includes growth projection, donor support to agriculture in Cameroon, and Bank involvement in the sector. The mission's working papers, on file in Washington and Yaounde, are available on request. Working Papers Scope for Pricing Reforms of Export Crops & Import Substitutes in Cameroonian Agriculture Jean-Jacques Dethier Food Security John Gray Export Development Richard Clark Les Resources Naturelles Jacques Dubreuil Forestry Subsector Edward Quicke The Agricultural Institutional Environment and Its Problems Joseph Ntangsi Rural Development Planning & Budgeting in Cameroon Charles Steedman Cooperatives and Rural Finance Lorenz Pohlmeier Women in Development Kei Kawabata  CAMEROON AGRICULTUnRAL SECTOR REVIEW Table of Contents Page No. Social Indicator Data Sheet, Cameroon (1988) ............... . ...... i Executive Summary and Discussion Points ...... v I. THE ECONOMY .................... ............... 1 II. SECTOR POSITION AND PERFORMANCE .............................. . 3 A. Agriculture in the Economy . . ............................ 3 B. Performance of Agriculture ........................ . 4 Food Crops ............................................ 5 Export Crops ..... . . ................................... 6 Livestock and Fisheries .... 7 Agro-Industry ................................. .... . .. . 8 Forestry ............................................ . . 8 C. Structure if Production ............................... . . 9 Land Av. .ability ..................................... 9 Farm Size, Distribution and Characteristics.. ... 10 Cropping Pattern . . .................................... 11 Farm Income ...... . . .......... a ........................ 12 III. THE CHALLENGE FOR AGRICULTURAL DEVELOPMENT--STRATEGIC ISSUES 13 A. Food Security. ........................................... 13 Food Security Position .. 13 Food Security Issues ................... 19 Existing Government Policies .......................... 22 Food Security Strategy ............................... . 23 B. Export Development and Diversification .................. 26 Export Performance .. 26 Key Issues ........................................... . 29 Export Prospect .................. 31 Export Diversification .. 33 C. Structure of Incentives ...... . .......................... 34 Export Crops .......................................... 34 Food Products ......................................... 46 Input Subsidies ........................ 48 A Multi-Market Incentive Framework . . 50 D. The Livestock Sector ................................ * 53 Key Issues ............................................ 53 Institutions ..................... 55 Livestock Development Strategy ........................ 57 E. Forestry and Environment . . 58 Key Issues ..................................... ....... 58 Institutional Framework . . 63 Forest Development Strategy . . 63  Table of Contents (continued) Page No. F. Institutional Environment ............................... 65 Public and Para-Public Institutions ................... 65 Agricultural Support Services ................... 68 Information Systems .......................... . 72 Cooperatives . . ............................ * * * * . 73 Rural Finance ......................................... . ............. 76 Farm Modernization ........ ............ 80 G. Resource Allocation and Management . . 81 Resource Allocation . ........................... . 81 Budget Management .. 82 Restructuring Public Investments .. 83 IV. A STRATEGY FOR GRCWTH AND PRIORITY AREAS FOR ACTIONS . . 85 A. A Strategy for Growth ................. . . 85 Potential and Constraints . . . 85 Strategic Objectives . . . 85 B. Priority Areas for Actions .............................. 88 Public Policies ....................................... Public Investments .................................... 88 Private Investments ... ...... 89 C. Growth Projection ....................................... 90 D. Donor Support ........................................... 91 E. Bank Sector Involvement . ............................ 93 Evolution of Bank Lending ... 93 A New Approach to Bank Lending ... 95 Annexes 1. Summary of Issues and Proposals for Actions 2. Tradeable Crops Profile 3. Proposal for a Flexible Pricing System 4. Multi-Market Model for Agriculture 5. Public Investment Program Maps: IBRD 10723R3 - Ecological Zones IBRD 17515R1 - Rainfall and Relief  CAMEROON AGRICULTURAL SECTOR REVIEW List of Tables and Figures Included in the Text Table No. Page No. 1. Agriculture in the Economy . . 4 2. Average Annual Growth Rates in Production ..................... 4 3. Estimates of Land Availability, by Province .. 9 4. Parm Income by Province ... 12 5. Sale of Food Corps by the Traditional Sector . ......... 14 6. Structure of Expenditure on Food Products According to Revenue Class .................................... 15 7. Structure of Expenses on Food by Province of Origin of Head of Household ... ... 16 8. Fercentage of Family Members Consuming the Various Food Groups, by Province ...................................... 16 9. Trend of Projected Gap between Effective Demand and Supply of Food Products in 1900 and 2000................... 17 10. Actual Average Marketing Margins of Selected Food Stuffs in Yaounde (1985) . . . 18 11. National Nutrition Survey - Child Nutrition Results ........... 20 12. Export Performance ............................................ 26 13. Returns to Labor from Export Crops and Alternative Crops/Employment ............................................. 29 14. Real Exchange Rate Movements in Major Coffee and Cocoa Producing Countries ..................................... 30 15. Producer Prices in Selected Francophone Countries ............. 38 16. Cocoa and Coffee Financial Balance .. 40 17. Evolution of Intermediary Costs ............................... 40 18. Operating costs of ONCPB 1981/82 - 1985/86 .................... 42 19. Returns to Labor at Current Prices and Proposed Floor Prices ........................................................ . ..... 45  Tables and Figures Included in the Text (continued) Table No. Page No. 20. Berefit Cost Ratios for Selected Crops Under Optimum Fertilizer Use .............................................. ............ 49 21. Multi-Market Model--Reduction in Producer Price of Expor Crops --%Maximum Substitutior. in Supply and Demand ............. 52 22. Financial Comparison of Profitability of Logs and Sawn Wood Exports ....... .............................................. . 60 23. National Parks and Equivalent Reserves by Province ............ 62 24. Lost of Maintaining Major Parastatals ......................... 67 25. Public Investment in Agriculture ............................. . 81 26. Sources of Agricultural Investments ........................... 82 27. Recurrent Expenditure of MINAGRI and MINEPIA (1982/83 - 1987/88) . . . . .......... 83 28. Growth Projection ....... ............. . 90 29. Funds Levels - Major Donor Assistance to the Agricultural and Non-Agricultural Sectors . .......... 92 30. Bank Lending for Agriculture in Cameroon ...................... 94 Figure No. 1. Value Added In Agriculture (1983-1988 average) . ... 3 2. Yaounde Retail Price for Traded and Non-Traded Foods .......... 19 3. Share of Non-Agricultural and Agricultural Export Revenues ........................................ ....... 27 4. Marketing Circuits .. . .. . I .. ... ...... . 36 5. Comparison of Cameroon, Cote d'Ivoire and International Cocoa Price Index (1972 - 1 00) .............. .................. 39 6. Log Production, Export and Domestic Use ....................... 59 7. Percent of Crop Farms Using Fertilizer, by Province ........... 68  1988 SOCIAL INDICATOR DATA SHEET CAMEROON Reforence Groups (MAE) Most Recent Lower mid Upper Mid 1965 1975 Estimate income income AREA Total land area (thou sq kM) 475.4 475,4 475.4 Agricultural (% of total) 30.7 30.9 32.1 GNP PER CAPITA (current USS) 130 310 960 730 2.510 POPULATION AND VITAL STATISTICS Total population (thou) 5,825 7.439 10.927 Urban pop. (% of total) 17 27 44 38 64 Population growth rate(%): Total 2.5 3.2 2.5 2.0 Urban 7.3 7.9 4.2 3.2 Life expect. at Dortn (yrb) 48 52 56 59 67 Population projections: Pop, in 2000 (thou) 16t702 Stationary pop. (thou) 50.871 Population density per sq km of agricultural land 40 51 65 404 775 Pop. age structure (%): 0-14 yrs 41 41 46 42 36 15-64 yrs 55 55 50 59 65 and above 4 4 4 3 5 Crude birth rate (per thou) 40 47 48 35 27 Crude death rate (per thou) 20 17 13 10 8 Total fertility rate 5.2 6.3 6.9 4.7 3.5 Infant mort. rate (per thou) 143 114 85 76 43 Child death rate (per thou) 34 23 10 1 5 Family planning: Acceptors. annual (thou) 0 Users (% of married women) 3 FOO. HEALTH AND NUTRITION Index of food production per capita (i979-81 * 100) 89 116 94 106 101 Per capita supply of: Calories (per day) 2.043 2.328 2,080 2,507 2.964 Proteins (grams per day) 46 56 46 56 76 Pop, per physician (thou) 26.7 13.7 7.5 1.3 Pop, per nurse (thou) 5.8 13.7 0.9 Pop, per hospital bed (thou) tO .4 ' 1 Access to safe water (% of population): Total 26 36 Urban 35 46 Rural 22 30 Population Growth Infant Mortality Primary School Enrollment SR 25@j '2._ 4 - JO . 0 50.~~~~~~~~4 e CAIdENOOM * CAUCROON m nRsT Ir GRctouP O EDM RUr Cou  - ii - 1988 SOCIAL INDICATOR DATA SHEET CAMEROON Reference Groups (MRE) Most Recent Lower mid Upper mid 1965 1975 Estimate income income LABOR FORCE Total Labor Force (thou) 2.829 3,345 4.039 Female (%) 38 37 34 29 30 Agriculture (X) 86 77 70 55 30 Industry (%) 4 7 8 16 30 Participation rate (%): Total 47 44 40 37 37 Male 59 57 53 51 51 Female 35 32 27 23 23 Age dependency (%! 80.8 83.1 99-7 82.7 71.8 HOUSING Average size of household: Total .. 5 Urban .. 5 Rural .. 5 Percentage of dwellings with electricity: Total .. 6 Urban ..1 Rural I EDUJCATION Enrollment rates: Primary: Total 94 97 107 104 105 Male 114 108 116 i09 108 Female 75 87 97 99 102 Secondary: Total 5 13 23 42 57 Male 8 17 29 47 57 Female 2 8 18 36 56 Pupil-Teacher ratio: Primary 47 51 51 31 25 Secondary .. 30 26 23 18 Pupils reaching grade 6 (%) .. 53 57 72 65 INCOME. CONSUMPTION. AND POVERTY Energy consumption per cap. (kg of oil equivalent) .. 90 145 351 1.313 Percentage of private income received by: Highest 10% of households Highest 20% Lowest 20% Lowest 40% Est. absolute poverty income level (USS per capita): Urban .. 238 Rural .. 105 Est. pop. below absolute poverty income level (%) Urban 15 Rural .. 40 Passenger cars/thou pop. 3.0 7.2 Newspaper circulation (per thousand population) 3.1 3.4 3.5 43.5 106.2 IECSE August 1988 Not available. Note: Most recant estimates of population and GNP par capita are ftor 1987 unless otherwise note. Group averages are population weighted. Country coverage depends on data availability and is not uniform. Unless otherwIse noted. IMF6 rebre to any V"r betwen 162 and I98; 1975 between 1972 and 1978; and most recont estimate bstween 1080 and 1686.  - iMi - Definitions of Social Indicators Despite recent improvements in international ifsheweretobearchildrenateachageinaccordance comparability, definitions of social indicators may with prevailing age-specific fertility rates. still vary from country to country or from period to Infant mortality rate-Number of infants per period. These data should be used with caution. thousand live births, in a given year, who die before Area reaching one year of age. Child death rate-Number of deaths of children, age Total-Total surface area in thousands of square 14, per thousand children in the same age group, in kilometers, comprising land area and inland waters. a given year. Agricultural-Estimate of agricultural area used for Family planning: acceptors-Annual number of crops, pastures, market and kitchen gardens or acceptors of birth control measures received under lying fallow, as a percentage of total area. the auspices of a national farmily planning program. Gnp per Capita Family planning: users-Percentage of maried women of childbearing age who are practicing, or GNP per capita estimates for 1987 at current market whose husbands are practicing, any form of prices in US dollars, calculated by the conversion contraception. Childbearing age is generally 15 to method used for the World Bank Atlas. Because they 49, although for some countries contraceptive usage are not rounded, these figures differ marginally is measured for other age groups. irom tos M.in other Bank publications. Food, Health and Nutrition Population and Vital Statistics Index of food production per capita -Index of per Total population-World Bank estimates for 1987. capita annual production of all food commnodities. Urb , populaHon-Countries use different Production excludes animal feed and seed for definitions of urban population, which may affect agriculture. Food commodities include prirnary comparability. commodities that are edible and contain nutrients Population growth rate-Annual least-squares (for example, tea and coffee are excluded). They growth rates estimated mid-year for total and urban include nuts, fruits, pulses, cereals, vegetables, oil populations, 1965-75, and 1975-87. seeds, sugarcane and sugar beets, livestock, and lifeexpectancy at birth-Number of years a newbom livestock products. Aggregate production of each infant would live if prevailing patterns of mortality country is based on national average producer price at the timne of its birth were to stay the same weights. throughout its life. Per capita supply of calories-Computed from energy Population in 2000-Projected on the basis of total equivalent of net food supplies available in a population, age and sex distribution, fertility, country, per capita. per day. Available supplies migration, and mortality rates in the base year 1980. cornprise domestic production, imports less Stationary population-Projected population level exports, and changes in stock. Net supplies exclude when zero population growth is achieved: i.e., the animal feed, seeds for use in agriculture, and food birth rate is constant and is equal to the death rate, lost in processing and distribution. the age structure is stable, and the growth rate is Per capita supply of protein-Protein content of per zero. capita net supply of food per day. Net supply of Population density, agricultural land-Populatior per food is defined as above. Requirements for all square kilometer (100 hectares) of agricultural area. countries, established by United States Department Population age strcture -Children 0-14 years, of Agricuture, provide for ninimum allowances of working-age group 15-64 years, and people of 65 60 grams of total protein per day and 20 grams of years and over as percentages of population. animal or pulse protein. Crude ih rate-Annual live births per thousand Population per physican-Population divided by the population. number of practicing physicians qualified from a Crude death rate-Annual deaths per thousand university level at medical school. Note that the population. definition of recognized medical practitioners Totalfertiity rate-Average number of children that differs among countries. wouldbebornalivetoawomanduringherlifetime, Population per nursing person-Population divided by the numnber of practicing graduate nurses,  - iv - assistant nurses, practical nurses, and nursing groups. For some countries witb universal auxiliaries. education, gross enrollment will exceed 100 percent Population per hospital bed-Population divided by if some pupils are younger or older than the the number of hospital beds available in public and country's own standard primary school age. private, general and specialized hospitals, and Secondary school enrollment-Computed in the same rehabilitation centers. Hospitals are establHshmevnts manner as primary enrollment ratio; the age group permanently staffed by at least one physician. again varies but is usually 12-17. The ratio is for Access to safe water-Percentage of people with general secondary school enrollment and excludes reasonable access to safe water supply (includes pupils in vocational or teacher training secondary treated surface waters or untreated but schools.. The figures shownare different from those uncontaminated water such as that from springs, published in earlier reports, which included pupils sanitary wells, and protected boreholes). In an enrolled in more specialized secondary education. urban area this may be a public fountain or Pupil-teacher ratio-Total number of students standpost located rot more than 200 meters away. enrolled in school divided by the total number of In rural areas it Implies that members of the teachers. household do not have to spend a disproportionate Percentage af pupils reaching grade six-The part of the day fetching water. The definition of percentage of children starting primary school and "safe" has changed over time. continuing until grade six; based on enrollment Labor Force records. The end-of-year data are affected by repeaters and re-entrants trying to obtain school Total labor force-The "economically active," leaving and qualification certificates. population including armed forces and unemployed but excluding homemakers, Income, Consumption, and Povert caregivers, and students. Energy consumption-Annual consumption of Female-Female labor force as a percentage of total commercial primary energy (coal, lignite, labor force. petroleum, natural gas, and hydro, nuclear, and Agrulture-Labor force in farming forestry, geothermal electricity) in kilograms of oi hunting, and fishing as a percentage of total labor equivalent per capita. force. Incomedistribution-Income (both in cash and Idnd) Partiption rate-Percentage of population of all accruing to percentile groups of households ranked ages in the labor force, based on ILO data on the by total household income. In some cases statistics age-sex structure of the population, ob!ined hfom other agencies are revised by Bank Age dependency ratio-Ratio of population under 15 staff. and 65 and over, to the working-age population (age Passenger cars-Private motor cars seating seven 15-64). people or less, per thousand population. Newspaper circulation-Average circuladon of a Housing "daily, general interest newsiaper," defined as a Average size of household-A household consists of a news periodical published at least four times a group of individuals who share living quarters and week. main meals. stimated absolute poverty income level -The level Percattageofdwellings with elecrity-Conventioral below which a minimal nutritionally adequate diet dwellings with electricity in living quarters, as a plus essential nonfood requirements are not percentage of all dwellings. affordable. These estimates are based on special Education surveys that, in most cases, are now almost 10 year o.d. Priny school enrollment-Gross enrollment of all Esdimated population below absoluke poverty income ages at primnry level as a percentage of school-age level-Percentage of urban and nual populations who ch dren as defined by each country and reported to live in "absolute poverty," mosly based on the surveys Unesco. Although manycountriesconsiderprimary mentioned above. school age to be 6-11 years, othrs use different age  - v - CAMEROON AGRICULTURAL SECTOR REVIEW EXECUTIVE SUMMARY Chapter I: The Economy i. Over the past ten to fifteen years Cameroon has been one of the more successful economies in Africa. The economy grew sluggishly during the 1960s but picked up during the 1970s, growing at a rate of about 4.2Z per annum. Following the expansion in oil production in 1978, the economy began to grow vigorously rat 102 per annum. Economic growth slowed down in 1982, then finally began to decline in 1985. This decline was the result of falling commodity prices between 1985 and 1988, exacerbated by the sliding value of the US dollar against that CFA Franc. Slow economic growth is projected for the medium-term at about 1.52 to 31 per annum, even with the financial and economic adjustment measures that the Government intends to put in place during the next few years. This slow growth is mainly due to the diminishing oil production and declining cummodity prices. Agriculture, however, is expected to grow at the historical rate of slightly above 4Z per annum by the year 2000. Chapter II: Sector Position and Performance ii. Cameroon's agriculture sector is the backbone of the economy. Before the advent of oil production in the late 1970s, agriculture accounted for 301 of the gross domestic product (GDP) and 801 of total exports. Although the agricultural share of GDP has declined (to about 25Z in 1987/88), the sector still contributes about 501 of total exports and generates employment for about three quarters of the total population. With oil reserves and re7Jenues projected to decline, the economy will again have to depend on agriculture to provide the major impetus for economic growth. iii. Fundamentally, the country has a strong comparative advantage in agriculture. The scope for expanding agricultural production to meet rising domestic demand and to expand exports is significant, given the relative favorable land/population ratio, low yields (which leave a large potential for increase), under-exploited natural resources (forests, fisheries), and diversified products such as cereals and tubers, cocoa, coffee, cotton, rubber, oil palm, and tropical fruits and vegetables. Constraints, however, lie in the policy environment, spanning from the exchange rate to domestic marketing and pricing policies, and the weak, though proliferous, institutional support to farmers. Thus, a major adjustment in the incentive and institutional framework, as well as in the domestic cost structure is needed to enable the sector to reach its potential. This would have to be coupled with more cost-effective institutions to support, but not direct, farmers in their investment decisions.  - vi - iv. Past agricultural performance has been good, with an annual growth at about 4.41 between 1966 and 1988. Growth in the food crops subsector has managed to surpass the population growth. The export crop subsector exhibited a mixed performance, in spite of significant public investments made to boost its production. The outputs of traditional smallholders-- marketed by private traders with little Government support--have been entirely responsible for growth in the food crops subsector. In contrast, heavy government intervention in the pricing and marketing of export crops, input subsidies, state monopoly in distribution, and support to parastatal plantation estates, have had limited impact on the overall growth of the sector. v. The low population density (about 20 persons per km2) puts Cameroon in a relatively favorable position with regard to land availability. However, poor access to land caused by limited infrastructural development is now contributing to increasing pressure on land resources in some areas. In the highly populated area of the Far North, the West and the Northwest, land carrying capacity seems to have reached its sustainable limit. In the absence of greater infrastructural development, intensification of agriculture may be the only viable alternative for many farmers. Furthermore, as the cultivated area occupies about 30? of the arable land, and given the normal practice of rotation one out of five to seven years, greater expansion in cultivation will be at the expense of the forest. A6 icultural intensification is then necessary to protect the rich Cameroonian forests. vi. Although Cameroon has a well developed modern legislative framework that sets rules and conditions for obtaining ownership of land, in practice, the process for securing land title is not well developed. One constraint is the reluctance of government authorities to interfere with traditional rights and practices. It has been demonstrated elsewhere that security of land ownership is critical for agricultural intensification. The Government should include this objective in its agricultural development strategy. We recommend the acceptance of traditional rights as the basis for defining ownership, and the simplification of procedures for legalizing the process. Chapter III: The Challenge for Agricultural Development--Strategic Issues vii. Cameroon's historical self-sufficiency in food supply tends to mask natural and structural problems that greatly affect the food security position of the country. The main problems are: transitory food insecurity in the North where recurrent droughts occur once every three years; limited land capacity in highly productive areas in the West; poor infrastructure development and limited accessibility of the agricultural areas in the South and in the East; and high cost of food marketing (the ratio of retail to producer prices is about 2 to 3). Acute malnutrition is found in the North caused by poverty and inadequate health care. Chronic malnutrition is most accentuated in the West where dietary habits and the lack of time for women to devote to child care are major causes for malnutrition of youngsters.  - vii - viii. Rapid urbanization during the last decade will put increasing demand on the rural sector to prcduce more food with an aging population. Stagnating agricultural technology, especially in food crops, will make it difficult to respond to this pressure. Preventive and curative measures against malnutrition suffer severe budgetary cuts from the current financial crisis. Thus, the ability to assure access to a normal diet for a normal life to all members of households in Cameroon appears precarious in the medium term. Food imports, which have risen rapidly since 1980, are projected to grow faster if appropriate measures are not taken to remove supply constraints, and to compensate local production for the exchange rate problem and dumping from surplus countries. ix. The Government has a sincere concern for food security and has launched a number of food security related programs. Unfortunately, these programs have resulted in a number of incoherent policy decisions and costly interventions. Policy incoherence is most prevalent in the case of rice production, where producer prices for paddy are maintained at a relatively high level, and prices of imported rice have been effectively controlled at a lower level (an implicit subsidy caused by the fixed parity of the CFA Franc and low import duties). Costly interventions to stabilize food supply and prices -- without much success -- are demonstrated in the Government's support of two main parastatals: the Cereal Office (OC) and the Food Development Authority (MIDEVIV). In addition, public investments have emphasized production implemented by costly parastatals, benefitting mainly export crops and a limited number of farmers. X. The report recommends a national food security strategy aimed at removing both supply and demand constraints. On the supply side, the strategy should focus on intensifying smallholder production, developing measures to reinforce the supply stabilization function of the private sector, and providing protection measures to offset the effect of an overvalued exchange rate and international dumping. The operational implication of this strategy would be improving basic support services such as research and extension, ensuring timely delivery of inputs, reinforcing pricing and marketing information, expanding on-farm and secondary storage at the village level, promoting food conservation and food transformation, improving road links between the normally grain surplus provinces and the deficit ones, and most importantly, establishing an effective warning system and contingency plan for food movement in time of serious drought. xi. On the demand side, the food security strategy should aim at reducing chronic malnutrition and supporting income generating activities of the poor. The action plan should include measures aimed at raising women's productivity in agriculture, improving feeder roads in the remote areas, strengthening basic health measures such as immunization and household sanitation, targeting supplementary feeding programs to the most vulnerable groups such as school-age children in the poverty stricken areas, providing nutrition education, and creating opportunities for self-help and revenue- generating micro-projects in the urban and rural areas.  - viii - xii. The emphasis on women's role in food security is necessary as Cameroonian women are the main producers of food crops for both home consumption and markets. They are also responsible for family nutrition and child care. Improving women's access to technology, creating opportunities for them to earn incomes, and providing health and nutrition education are the necessary ingredients in the design of food security programs. xiii. In the foreseeable future, Cameroon will have to rely on agriculture to replace losses of export revenues from declines in oil production and prices. Export volumes of major commodities such as cocoa, coffee and wood products (accounting for 95Z of total value of agricultural exports) have either declined or stagnated, while export prices have fallen significantly in real terms. Other exports such as cotton, oil palm, rubber, bananas and tobacco have grown in volume over the years, but their weight in total exports is st'.ll too small to have an impact on the overall export performance. The poor performance in exports was exacerbated by the sliding value of the US dollar against the CFA Franc. While other major cocoa and coffee producing countries have adjusted their exchange rates to make their exports more competitive, Cameroon's fixed parity of CFA Franc has resulted in the loss of competitiveness of traditional exports in which the country formerly had a comparative advantage. To avoid losing its competitiveness in the long run, Cameroon will have to adjust its real exchange rate and/or to increase productivity. Alternative fiscal substitutes. such as import duty-cum-export subsidy schemes, have not worked elsewhere due to the high level of fraud. Thus, measures aimed at cutting costs and increasing productivity are indispensable for Cameroon to regain its competitiveness. Given the li.ited scope for raising producer prices, Cameroon will have to rely more on non-price measures to encourage replanting and to increase yields on existing plantations. xiv. The significant expansion in world cocoa and coffee production and slow growth in demand will result in a decline in world cocoa and coffee prices in the medium-term. Since Cameroon is a price taker for these commodities, export revenues obtained from them can only be increased by expanding volumes of these traditional exports. For cocoa, the characteristics of the Cameroonian product (high fat yield and the red color of its powder) have given it a strong hold in a specialized niche of the market. This market is expected to absorb anticipated increases in cocoa production (about 40,000 to 60,000 tons by the year 2000). xv. The future for coffee exports depends on the fate of the International Coffee Agreement (ICA). At the present ICA quota, Cameroon has overproduced coffee and accumulated expensive stock. However, given the significant and increasing spread between Robusta and Arabica coffee, Cameroon could maximize export revenues by expanding exports of Arabica coffee and cutting back on Robusta coffee production. As the quota is suspended, Cameroon will need to further expand its Arabica coffee production. In any case, a concerted effort must be made to improve the quality of exported coffee.  - ix - xvi. The prospects for increasing export revenues from timber export is good, with the declining supply of logs from Cote d'Ivoire. The future for exports, however, lies in the exploitation of decorative wood which commands a high world market price. To promote increased exports of the high valued timber product, Cameroon needs to open up access to the forests in the East (with care to the environmental impact), as well as to diversify markets outside of the traditional importers. There is a potential for exporting processed wood and semi-finished and finished products. However, Cameroon will have to revise its regulations regarding concessions and taxation, as well as improve training for sawmill personnel, if it wants to increase exports in processed wood. xvii. Given the poor prospect for traditional exports, the Government is attempting to diversify exports. There is a growing potential demand for tropical fruits from developed countries and processed products from regional markets. Cameroon has preferential access to the EEC market under the Lome Convention which has not been fully exploited. Trade logistics such as freight capacities and export procedures are also favorable relative to other competing countries. Cameroon should pursue an aggressive strategy to diversify into new products. Experiences from developing countries with successful export diversification programs have shown that the private sector plays a major role in responding to potential world market demand. This role has been made possible by a favorable macroeconomic framework such as a favorable exchange rate, liberal pricing and marketing policies, and light administrative control. Thus, a focus on the creation of an enabling environment for private investments is the minimum requirement for export diversification. xviii. The outlook for both traditional and non-traditional exports is not robust in the immediate and medium-term. The pursuit of an export strategy based on increasing the productivity of traditional products offers the best possibility for im-aediate growth. An increase of traditional exports by 2% to 3Z per annum, which is feasible, would result in a sector growth of 2.5Z to 3.5Z, all other things being equal. Export diversification will take time to develop. Cameroon will need to explore and develop its competitiveness in non-traditional products. Thus, export diversification should be an additional objective rather than a substitute for traditional exports. xix. The expansion of traditional exports is linked closely to the domestic incentive framework. The Governmentts intervention in pricing and marketing major export crops has resulted in heavy taxation on agricultural exports in the past. This was unfortunate as it constrained the investments in new tree stocks at the time when world market prices and exchange rates were favorable. The declining terms of trade for major export commodities and slim prospects for major world price recovery render discussions on incentive prices irrelevant. The relevant question is whether Cameroon can sustain the present level of producer price. It is demonstrated in the report that at projected world prices and exchange rates, Cameroon would have to subsidize traditional exports in the order of CFAF 50 to 60 billion a year well beyond 1990, a level which cannot be sustainable with the accumulated stabilization reserves. Thus, in the absence of exchange rate adjustment,  a reform of pricing policies is unavoidable. The Government has recently reduced producer prices for traditional exports as well as the intermediary costs to eliminate financial deficits from exporting these crops. xx. For the future, we recommend the use of a flexible price fixing mechanism, with a floor price and a progressive tax system above the floor price. Farmers should not have to pay for the cost of an overvalued real exchange rate, and hence they should be protected by a floor price that reflects the opportunity cost of labor. In the longer term, however, if and when the exchange rate constraint is removed, the Government should move toward free prices. The floor price would have to be low enough to prevent the need for perpetual government support. xxi. The flexible pricing system can only benefit farmers when it is accompanied by a more open marketing environment. When world market prices rise above the support level, competition will result in higher prices to farmers. The report recommends to eliminate the zonal restriction for traders, the quotas for exports by private exporters, and the monopoly for cooperativei in the marketing of cocoa and coffee. The role of the National Marketing Board (ONCPB/NPMB) should be restricted mainly to the management of a limited stabilization fund and quality control. xxii. Plantation products such as rubber and palm oil, where heavy investments have been made in the past, and the loss of competitiveness of these products vis-a-vis Asian producers, present a difficult choice for Cameroon. Phasing out investments in these plantation estates is not an expedient solution, as it would affect the livelihood of about 100,000 employees and deprive Cameroon of a source of export diversification. The prospect for privatization of these estates is also limited at the current world market conditions and exchange rates. In the mediwti-term, measures for increasing productivity and cutting costs should be pursued. The Government may have to assume losses occurring from exports of these products. Once efficiency is achieved, then export subsidy could be used to compensate for the effects of currency overvaluation. xxiii. The lack of competitiveness is also pervasive in import substitutes such as rice, edible oil, and sugar. The Government has encouraged domestic rice production by guaranteeing a producer price that is above the import parity price. This problem is aggravated by inadequate milling capacity at SEMRY (the parastatal responsible for producing and marketing rice) and the high cost of transport for moving rice from tne North to major consuming centers in the South. The Government has decided to protect domestic production through quantitative restrictions on rice imports and by the establishment of a rice equalization fund financed by a tax on imports. The revenues will be used to subsidize domestic production. xxiv. Quantitative restrictions have not been effectively enforced. While it is premature to judge the effectiveness of the equalization fund, experience in other countries indicates that the level of "fraud" in importing is extremely high, rendering import duties meaningless. It is further complicated in Cameroon by its open border with Nigeria and Chad, as well as by being the transit point for imports to Chad and Central Africa Republic. It appears that the projected world market price for rice will  - xi - remain at the present level in constant terms well beyond 1990. In the absence of exchange rate adjustment, the level of deficit financing will remain substantial, unless the equalization fund can be effective in raising import prices and domestic costs can be lowered. We therefore recommend freeing the rice producer price. SEMRY's role in rice marketing should eventually be phased out to allow the private sector and farmers to take over milling activities. This will have a positive effect on cost reduction for domestic rice production. An appropriate level of tariff should be maintained to offset the effect of overvaluation. xxv. We support the Government's reform program in phasing out subsidies and in privatizing input distribution, notably in fertilizer. There are indications that the program is surging ahead with the assistance of USAID. It is important that other donors do not undermine this effort through provision of aid in kind. The more serious concern is whether there is a sufficient demand for fertilizer to build up a private distribution network without financial subsidies. We argue that reliable input supply and other non-price factors such as the availability of profitable investments, effective extension support, and marketing opportunities are more important than subsidies in determining the demand for fertilizer as demonstrated in the cotton producing area. It is likely that even if subsidies were eliminated, fertilizer would be used on some food crops and on efficient coffee plantations - precisely the desirable result. Thus, the limited scope for price increases should not be perceived as an obstacle to pursue the reform program. Cameroon should consider extending similar reforms to other inputs, such as seeds and plant protection materials. xxvi. Cameroon is more fortunate than many other African countries in preserving its rich forest resources and environment. However, forest exploitation has not been adequately planned and controlled; concession policies encourage exploitation of few valuable species and favor log exports to processed wood. Forest industries are not competitive due to obsolete equipment and inadequate training of entrepreneurs. There is no plan for managing fuelwood extraction despite the fact that it is the major cause of forest depletion. Finally, existing reserves and national parks are in danger of being encroached upon. xxvii. The Government has been highly conscious of environmental problems and has commissioned a Tropical Forest Action Plan (TFAP) to deal with a series of issues including legislation, institutions, concession policies, forest management and conservation. The time is opportune to put in action the TFAP recommendations. We recommend focusing action on the revision of the concession policy in favor of long-term leases; the preparaticn of a forest management plan, and control and issue of logging permits according to the plan; the preparation of a forestry industrialization plan to provide incentives and training for the rational development of processed wood industries; the development of a household energy strategy using both forest resources and energy substitutes; and the creation of buffer zones surrounding protected areas. xxviii. Population pressure in the highly populated areas has led to desertification in the Far North and puts the pastoral system and its feed resources under great pressure in the Northwestern and Western provinces.  - xii - Migration from the Far North has taken place to less populated areas of the North, but this area also risks becoming overexploited, particularly with the presence of livestock and transhumant pastoralists from Nigeria and Chad. Hills and steep slopes utilized by livestock herders are the most endangered areas as these areas are often burned at the start of the dry season and erode rapidly during the following rainy season. Thus there is a need for improved livestock and pasture management to avoid erosion. While technology for increasing feed resources exists, th constraint in improved pasture management lies in the lack of secure land _enure. It is important to focus on the need to provide land rights to herder groups, which would provide them with incentives to properly manage pasture resources. A pilot land management program is being initiated under the Livestock Sector Development Project to test various land tenurial modes for a future generalization of their use in the country. xxix. A large number of institutions are involved in Cameroonian agriculture, including government ministries, local government bodies, parastatals and cooperatives. Key issues in the management of agricultural development are: slow decision making processes, lack of interagency coordination, and overlapping responsibilities and functions. A decentralization of decision making at,thority from the Presidency is called for, and reforms were begun after the election in May 1988. Efforts are also underway to improve interagency coordination. We strongly recommend the involvement of the technical ministries in policy issues such as pricing and marketing, which have been the domain of the Ministry of Industrial Development and Commerce. xxx. The most serious problem that will have to be addressed is the overlapping responsibility of specialized parastatals and the administration in provision of support services to farmers. This situation arose as external donors, in the effort to bypass the cumbersome procedures of administration, have pushed for the creation of extra-ministerial agencies to implement projects financed by them. This tendency, coupled with reliance on expatriate line managers, has eroded the management capability of Cameroonian institutions, in spite of the relatively good training that Cameroonian staff have received. A debating point is the role of administration and specialized agencies in providing support services to farmers. A more far-reaching question is the importance of institution building in promoting sustainable growth in agriculture and in determining the most cost-effective approach to achieve this objective given the financial constraints that the Government will be facing in the medium term. xxxi. We recommend an increased and more effective role for the technical ministries, notably the Ministry of Agriculture (MINAGRI) and the Ministry of Livestock, Fishery and Animal Industries (MINEPIA) in the provision of extension services to farmers. In practical terms, in areas where extension services have worked well under existing institutional arrangements, we propose that these ertension activities be retained, but they should be harmonized with the national extension services, and be extended to the farming system than just to a particular crop as in the past. In areas where extension services are poor, MINAGRI and MINEPIA staff should be trained and provided with operating means to carry out their responsibility. Institution building is critical for promoting growth, as demonstrated in the case of  - xiii - cotton development: the supply response would not have been substantial had linkages between research, extension, and timely input supply been absent. Learning from this experience, we are concerned with the inadequate attention to applied research. The government's own resources are becoming more scarce and donor assistance is becoming oriented toward adjustment lending. We urge that improvement of research programs and the strengthening of linkages between research and extension be put in the forefront of a long-term strategy for growth. The Government may consider entering into a long-term engagement with twinning institutions from bilateral donors to secure funds and technical assistance for research. The relationship between The Agricultural Research Institute, IRA, and IITA, under the National Cereals Research and Extension Project (USAID) is an example. xxxii. The cooperative movement in Cameroon is rich and diversified. Cooperatives are vital for the promotion of a smallholder economy and serve as an important link between the administration, traders, and small farmers. Historically, cooperatives have been construed as instruments of government policy and not as commercial entities which evolve from mutual interest of their members. Today most of the cooperatives are virtually bankrupt, and their management is in a shambles -- an unfortunate development at a time when there is a need for the transfer of public intervention in productive and commercial activities to the private sector. xxxiii. The cognizance of the weakness in cooperative development has resulted in a number of recommendations made during a recent seminar organized by MINAGRI. These recommendations center around the withdrawal of state intervention from cooperative administration and for reinforcing technical support to cooperative management. We recommend that the legislative framework for cooperative movement be modified to enable cooperatives to be established, to develop and operate exclusively under the control of their members and their elected representatives. Public intervention should be limited to the registration of cooperatives, control of financial audits, and provision of technical advice and training until such time as a national federation could be developed to cover these activities. xxxiv. Rural finance is perceived by the Government as critical for agricul.ural modernization and growth. Various studies on the rural finance subsector in Cameroon, however, suggest that low prices, marketing difficulties, and unreliable input supplies are more important constraints to expanded agricultural production than the lack of credit funds. Directed programs with subsidized funds and interest rates in the past have not proven successful as funds were diverted for housing and consumption purposes and there were no incentives for loan recovery. Given this diagnosis, we recommend that priorities be given to activities that will eventually raise the demand for credit, such as improvements in pricing, marketing, input supply, and technology transfer. In addition, a more effective credit program should respond to farmer needs, including consumption as well as investment loans. In this case, the criterion for lending must be the capacity of the specific borrower to repay.  - xiv - xxxv. The illiquidity of the present banking system and the dissolution of the state-owned specialized institution for agriculture, FONADER, have virtually dried up formal sources of financing for agriculture. The Government is in the process of setting up a new agricultural credit bank (Credit Agricole du Cameroun, CAC). At the moment, CAC exists mainly on paper as its functions are yet to be defined, and managers have not been appointed. We urge the Government to explore ways to expand the credit union movement that has been successful in the Northwest, West and Southwest to other parts of the country, and to increase commercial bank lending to agriculture once the liquidity problem is resolved. We reconmend that CAC be built up as a credit-cum-saving institution, which relies on member deposits for a substantial share of its revenues. It should also be allowed to charge interest that reflect the cost of borrowing with an adequate spread to cover costs. Is should be free of political interference, and the Government's injection of funds should be kept to a minimum. Evidence from numerous informal savings groups (tontiues) in Cameroon has shown that the propensity to save is high. The record of credit unions also supports this hypothesis. xxxvi. Loans to smallholders have not been favored by financial intermediaries because of the clients' lack of collateral; quite often, they are perceived as high risks. Experience elsewhere has shown that these risks could be reduced by the use of group pressure or solidarity for loan recovery. Smaller installments and a frequent recovery schedule could reduce the risk of non-repayment. This would undoubtedly increase the administrative cost of the financial institutions which will have to be reflected in the interest rate. Higher interest rates may not be affordable to all smallholders. However, it has been shown that high-cost credit can keep the influential non-target group away from a targeted credit program, which is a desirable result. A more important element in designing loan programs to serve smallholders is the effectiveness of the institutions in loan delivery, such as simple procedures, high accessibility, and well trained staff. These elements should be tried out by CAC and existing credit institutions. xxxvii. The Government has decided to promote farm modernizaston. through the provision of subsidies and credit for Lhe establishment of medium-scale farms under the Sixth Plan. The ambitious program which involves the establishment of modern farms costing US$5,000 per ha nas now been formulated. The program is now designed to provide technical assistance to those who want to establish medium scale farms in farm management and to facilitate their access to financial institutions in the country. This new orientation is in line with the proposed strategy and should be supported. xxxviii. Despite the Government's stated emphasis on agricultural development, the sector's share of financing has not kept pace with the overall growth of total investments. Investment in the sector in the past has been in favor of the development of expensive parastatals and government- owned plantation estates. The traditional sector, which contributes about 90% of value added to agriculture, has received little benefit in spite of the proliferation of the number of integrated rural development projects.  - xv - xxxix. The long standing issue of resource availability for agriculture has become more acute with Cameroon's current financial crisis. Budget allocations are not sufficient to finance ongoing projects and programs, and many productive activities have virtually been stopped. The portfolio of agricultural projects is large and diverse, and the lack of clear priorities has made it difficult to be selective in the reprogramming exercise. This is aggravated by the lack of systematic information on investments, inadequate evaluation of impact, and weak linkages between planning and budgeting. There is a tendency to reduce the budget across the board to the extent that no meaningful activities can be carried out. The recurrent budget continues to grow in absolute terms, but with the increasing proportion being spent on personnel. The result is a large administrative staff without the means to function. xl. There is a wide scope for improvement in planning and managing the budget for the agricultural sector. The first priority would be to set up a data system to collect relevant information on budgets and expenditures and to strengthen the capacity of ministries concerned to evaluate programs and projects. Efforts are already underway in the Ministry of Planning and Development (MINPAT), MINAGRI and MINEPIA. We also recommend institutionalizing the evaluation process to provide inputs for annual budget planning by the establishment of a task force with representatives from MINPAT, the Finance Ministry (MINFI), MINAGRI, MINEPIA, and the Ministry of Higher Education, Computer Science and Research (MESRES), to regularly review the performance record of ongoing activities which received funds from the previous budget and to review the justification for new investments. Finally, a three-year rolling investment plan should be established based on well defined objectives rather than unrealistic goals and targets. Efforts are underway to restructure the public investment programs. Most projects that are retained are largely those financed by donors. We urge that donors review and reorient these projects towards activities that would have a significant impact on growth: such as research, extension and rural infrastructure, to increase the disbursement percentage to help relieve the Government's budgetary constraints, and/or to help support the balance of payments. Chapter IV: A Strategy for Growth and Priority Areas for Action xli. The last chapter synthesizes various themes and proposes a strategy for growth. This strategy is based on three principal objectives: (a) maximizing food production to ensure food security for the Cameroonian population and to exploit the comparative advantage in producing food commodities for exporting to the West African region; (b) expanding traditional exports to the extent that they can be absorbed in the world market at reasonable prices while improving on quality and diversifying the export base; and (c) creating opportunities for increasing rural employment to reduce the income gap between urban and rural areas. xlii. We recommend an emphasis on the following factors ir. designing a strategy to meet these objectives: (a) intensifying agricultural production through improved crop and farm management practices (including livestock) which call for relevant research themes, effective extension advice, reliable  - xvi - input supplies and improved marketing opportunities; (b) raising the productivity of traditional farmer through effective research and extension messages, support to the development of genuine cooperatives serving their members, and an incentive framework that would attract small an% medium size farmers and livestock owners to invest in modern technology; (c) improving efficiency in exports through increasing productivity, reducing intermediary costs, improving quality particularly in Arabica coffee, and diversifying exports wherever feasible; and (d) rationalizing the exploitation of Cameroon's rich natural resources through adjustments in forest exploitation policies to favor long-term concessions to associate forest industries and farmers in protecting and regenerating forest resources and securing land tenure for land improvement. xliii. The above proposed strategy translates into an action program encompassing policy and institutional reforms, and selective investments. On policy reforms, we propose emphasis on the pricing and marketing framework, particularly of export crops, to relieve the budgetary burden of financial subsidies in the immediate term, while maintaining certain incentives in the production of export crops. We also support government efforts in phasing out input subsidies and privatizing distribution where appropriate (fertilizer, fungicides and livestock inputs). In areas where subsidies and government interventions are needed because of externalities, the Government should attempt to recover at least pert of the cost of the services. xliv. On institutional reforms, we propose that the Government withdraw immediately from product.ive and commercial activities that have not yielded intended benefits, such as supply and price stabilization of food crops, marketing of export crops, animal and food production, and cooperative management. The Government should also rationalize its investments in various developmen'. agencies to increase efficiency and reduce costs. Some forms of privatization could be explored, such as management contracts for plantation estates and agro-industries; joint ventures for processing industries; maintenance contracts ior road improvements; and inspection contracts for quality control. Agricultural training for young graduates should be oriented more towards management skill to prepare them for joining the private sector instead of being absorbed by the public institutions as in the past. xlv. At a time whin there is a limited scope for using p'rices as incentives, a strategy for growth will increasingly depend on non-price incentives. We believe that the priority in public investmeiits should include: (a) research and extension oriented toward the needs of farmers and livestock owners; (b) improvements of roads and basic infrastructure to facilitate marketing and technical support to farmers; (c) assistance in institution building, such as technical support to cooperatives and other farmer associations, pricing and marketing information, early warning systems, provision of land tenure, and forest management and conservation; and (d) support for enhancing management capacity, particularly through the use of resource allocation mechanisms to sharpen policy review and ensure implementation of priority investments.  - xvii - xlvi. As already mentioned, the Government will have to create a favorable environment for private investments to substitute for public intervention. The rationalization of the public investment portfolio is a step toward encouraging private investment. Elimination of excessive administrative control and simplification of import/export procedures will enhance private interest. Finally, the Government should explore means to encourage existing financial intermediaries to finance development loans in agriculture, based on sound financLal disciplines. xlvii. With the implementation of the proposed strategy, we project sector growth at about 3? in the immediate term (1989/90), 4.12 in the medium term (1990/95), and a recovery to match the historical record of 4.4Z in the longer term (199512000). Without adjustments, the sector is expected to stagnate in the immediate term, grow at 2.5? per annum in the medium-term. Details of the basis for these projections are provided in the report. xlviii. Donor support to Cameroonian agriculture has been broad-based and until recently, heavily concentrated on area development and commodity specific projects. The performance of externally financed projects has been mixed, but overall, these projects have not contributed significantly to sector growth. Donor support, however, has contributed to the proliferation of administrative structures and helped to complicate Cameroon's internal budget and evaluation process. In recent years, the larger donors have begun to take a sector approach to lending for agriculture in Cameroon. Given this emerging reorientation of donor activity toward sector support, it will be necessary that the donors maintain closer coordination than in the past. We believe that the Government is the main actor for coordinating donor activities. It should articulate the strategy and define investments for which donor assistance would be sought. xlix. Past Bank support for agriculture in Cameroon has evolved from plantation estates to smallholders, and in recent years, toward sector lending. The impact of Bank lending on agriculture has been limited, partly because the Bank has emphasized physical targets rather than policies and institutional development. The pursuit of the policy dialogue, until recently, has not been productive due to the lack of any mechanism in Cameroon for inter-ministerial coordination. 1. In line with the strategy outlined above and lessons learned from the past, we recommend a new direction for Bank lending with a focus on institutional building and policy reform. On institutional building, a National Agricultural Research Project is under implementation. It is important that this project be oriented more toward applied research and respond to the need of smallholders. A National Extension and Training Project is under preparation to link research to extension and to reach a majority of farmers. The Livestock Sector Development Project approved by the Bank will in January 1989 link livestock to crop management through improved extension services, to build up the planning capability of MINEPIA, to improve on pasture management, and to build up producer associations.  - xviii - Ui. Policy reforms iL pricing and marketing, input subsidies, cooperatives, and forestry exploitation and conservation are actively pursued under the Structural Adjustment Loan (SAL). The Livestock Sector Development Project also pursues policy reforms through the privatization of veterinary services, and full cost recovery for all clinical services and drug distribution. lii. Future lending would be programmed in three operations: A Food Security Project will follow the SAL to deepen the policy e.alogue initiated under the SAL, improve food distribution and address poverty related problems which are the major causes for food insecurity in Cameroon. A Forestry and Environsent Project would further extend the reforms on the fiscal and legislative framework for forest exploitation and conservation in support to investments for forest management, and for proteztion of the existing ecosystem. An Export Promotion and Diversification Project would focus on the promotion of traditional and non-traditional exports through both policy refinement and institutional support, and would provide credit for the private sector to invest in these industries.  CAMEROON AGRICULTURAL SECTOR REVIEW I. THE ECONOMY 1.1 Cameroon has a population of about 10.8 million (end-1987) and covers an area of 475,000 km2. It is one of Africa's most diverse countries, with a wide range of climatic zones, ecological conditions, natural resources, and population densities. Cameroon's main opportunities for development lie in the expansion of crop-based agriculture (primary products and processing), livestock and poultry, and forestry products. There are also possibilities for improving the performance of its industrial sector and for new oil discoveries (existing reserves are projected to be exhausted by the mid 1990s). Cameroon has undergone a rapid rural-urban migration since the discovery of oil; one third of the population now lives in the cities, with the heaviest concentrations in Douala, the major port city, and Yaoundo, the capital. The average per capita income was US$955 in 1987, one of the highest in Sub-Sahara Africa. Yet, there ia a wide imbalance between rural and urban incomes, with the former averaging about half of the latter. 1.2 Before the discovery of oil in 1978, the country's growth was largely based on the rural sector. Beginning in 1978, oil production became increasingly important, amounting to 19% of GDP in 1984/85. Oil production peaked at 9 million tons in 1985186. The impact of oil revenues on the economy was especially strong between 1980 and 1985; the economy grew at an annual rate of 9% in real terms, and fixed investment, which was only 10% of GDP in the early 1960s, had risen to 25Z by 1985. With the sharp fall in oil and commodity prices in 1985/86, the economy began to slow down. The GDP declined about 2.7Z in 1986/87 and 8.6% in 1987/88. Agriculture and manufacturing stagnated, and sharp reductions occurred in the public and service sectors. 1.3 8ameroon is in the midst of a severe financial and economic crisis: the current account dropped from a surplus of 3.9% of GDP in 1984/85 to a deficit of 6.8% of GDP during the past three years; a large deficit in the French Treasury's Operation Account emerged (CFAF 110 billion or US$350 million by the end of 1987); large new external borrowing was required; and the banks were forced to repatriate their foreign reserves. Public and publicly guaranteed debt service, as a ratio of exports of goods and non- factor services, rose from its historical level of under 10% to 18% in 1987/88. In terms of budget revenues, public debt service (including guaranteed) rose from 142 in 1984/85 to 182 in 1987/88. The 1987 budget registered a deficit of CFAF 464 billion (US$1.4 billion), amounting to lZ of GDP. The deficit was financed by large drawdowns of foreign and domestic commercial deposits, the accumulation of CFAF 250 billion in domestic arrears, and increased domestic financing from non-bank sources. 1.4 The present economic situation in Cameroon is characterized by stagnation in agriculture, a lack of competitiveness in manufacturing production, illiquidity of the financial sector, and inefficiency in both public and parapublic enterprises. The Government initiated stabilization measures in 1987 and continued them into 1988. The measures included fiscal  - 2 - restraints and revenue expansion. The national budget has been reduced and restrictions have been placed on foreign borrowing. The Government has concluded an 18-month stand-by program with the International Monetary Fund (SDR 69.5 million), received SDR 46.4 mill, on from the compensatory financing facility. The Government has also concluded a Structural Adjustment Loan with the Bank to correct the internal and external disequilibria, establish conditions for resumed growth, arrest the decline in per capita income, and cushion the impact of adjustment on vulnerable populat!.on groups. 1.5 The medium-term growth prospects are modest, with declining real per capita GDP which are expected to stabilize only in 1991 and to remain unchanged throughout the rest of the projection period (1991/2000) covered in the Bank's Cameroon model. The projected 1.3 X GDP growth rate between 1990 and 1995, and 2.8 Z between 1995 and 2000, is based on a continuous expansion of agricultural output, around the historical trend of 4.4? per annum. Although other sectors are also projected to grow at a relatively strong pace, the overall economic expansion is hampered by diminishing oil production. The macro context, including the unfavorable commodity market, severe financial constraints in the public sector, and the illiquidity of the banking system, has changed radically since a few years ago, making it more difficult for the Government to assure the above growth rate in agriculture. This situation forces the Government to find means other than government savings (improved efficiency and domestic resource mobilization), and incentives other than pricer, to finance and promote future growth in the sector.  - 3 - II. SECTOR POSITION AND PERFORMANCE A. Agriculture in the Economy 2.1 Despite the importance of oil in recent years, Cameroon's economy is still fundamentally based on agriculture. 1/ Over the period 1971/75, prior to the advent of oil in the late 1970s, agriculture contributed about 30? to GDP, and agricultural exports accounted for 82? of the total. In 1984/85, agriculture only accounted for 20I of GDP, while exports fell to 282 of total exports. However, the sector still provides employment to about three-quarters of the population and contributes about 15? to 202 of state revenues. Agricultural exports have regained their importance in recent years however, and accounted for about half of total exports in 1987/88. More importantly, the sector produces almost all of Cameroon's food and serves as the main source of raw materials for the agro-industrial subsector, the potential of which has not yet been sufficiently developed. 2.2 Although the shares of various components of the agricultural sector have varied over time, the food crop subsector has continued to provide the main agricultural contribution to GDP. This is demonstrated in Figure 1 below, which shows the 1983/1988 average shares of the various subsectors to the agricultural component of GDP. Over this period food crops accounted for about 54? of value added in agriculture, export crops about 21?, livestock and fishery about 16?, and forestry about 9X. Figure 1: Value Added In ADriculture (1988-1988 avergge o.a c m fvro CO) amalt *,mC21O -- z 11 l rfL tA C' y When agriculture is referred to in general terms in the text, it also includes livestock and forestry, except where the latter are mentioned separately.  - 4 - B. Performance of Agriculture 2.3 While agricultural performance has been modest relative to the resource base, the sector, since the mid 1960s, still average annual growth rate has not matched that of the general economy, the sector has, in some years, outpaced the general economy. During the 1960s, for example, agriculture grew at a rate of about 5.2Z per annum in real terms, much higher than the national growth of about 1.4Z. From 1970 to 1975, the sector grew at a rate of 3.4Z p.a., slightly lower than the GDP growth rate of about 4.2Z per annum. The sector regained its momentum between 1975 and 1982, growing at a rate of 7Z p.a., mainly due to expansion of export crops. After 1982, while the economy grew at 5.6Z p.a., the agricultural sector tended toward stagnation, partly because of unfavorable weather between 1982 and 1984, but mostly because of stagnating export crop production and unfavorable prices. Between 1986 and 1988, when the national economy declined at 1Z p.a., the sector did register a positive growth rate (4Z p.a.), due mainly to good weather and bumper food crops in 1986/87. The sector showed no sign of growth in 1987/88. The share of agriculture in the economy from 1971 to 1988 is presented below. Table 1. Agriculture In the Economr 1971/76 1978/81 1982/88 Share of GDP (X) 29.9 29.2 22.6 Share of ExportS (X) 82.8 72.3 46.9 CDP Growth Rate (#) 4.2 11.6 6.6 Agricultural Growth Rate (X) 8.4 7.0 1.9 Employment shares 79.4 72.8 76.0 Per Capita GDP (USM) 238.0 597.8 908.8 Por Capita GDP Agriculture (US) 69.9 172.2 204.0 SourceS: World Tables and National Accounts. 2.4 An an.lysis of data covering crop production for the 1971/87 period indicates that, overall, Cameroon has been more successful in producing food crups than export crops, as indicated in Table 2. Factors which have influenced this performance are explained below. Table 2. Average Annual Growth Rates In Production Food Croes Export Croes Crop Poriod Growth Rate CroP Period Growth Rate Maize 1971-87 2.9 Cocoa 1971-87 -8.8 Millet&Sorghum 1971-87 0.8 Arabica Coffee 1971-87 -2.6 Rice 1971-87 16.9 Robusta Coffee 1971-87 4.6 Cocoyams 1971-84 -0.4 Cotton 1971-87 7.9 Yams 1971-84 1.0 Palm Oil 1971-87 8.2 Cassava 1971-85 -1.6 Rubber 1971-82 1.9 Plantains 1971-85 8.8 Potatoes 1971-85 10.1 Source: FAO data, MINAGRI statistics: See also Statistical Volume, Annex 2.  -5- Food Crops 2.5 The time-series database on food crops is poor, and trend estimates from domestic, bilateral and international agencies often diverge widely. However, one picture that emerges from the various sources of data is t:hat, until recent years, Cameroon's food crop subsector has about managed to keep up with population growth. Food production per capita reached its peak in mid-1970, and since then it has declined. 2.6 Growth in food crop production has come mainly from area expansion. This area-based growth has become more limited in the Western and Northwestern provinces, the main food producing centers of the country, where land availability is a constraint. Yield increases have been limited due to inadequate attention to research and agricultural services for smallholders. In fact, Cameroon's public investment in agriculture has strongly favored the estate subsectcr, despite the fact that traditional smallholder farming dominates the sector in t-erms of employment and production. 2.7 Among food crops, maize, rice, plantain and potatoes production has grown significantly. Maize- production has increased steadily since 1971, except for a trough in 1979.. The major factor responsible for the steady growth in maize production is its high price, both in absolute terms when compared to maize prices in other countries and in relative terms when compared to competing crops such as coffee. According to the MADIA report, the coffee/maize price ratio has been consistently lower than in countries such as Kenya, Malawi and Tanzania. In 1982, the coffee/maize price ratio was approximately 6:1 in Cameroon, compared to 25:1 in Kenya and 10:1 in Tanzania. This, along with lower labor requirements and high yields in the volcanic areas, where coffee is grown, makes maize a more attractive crop to cultivste. The same pattern of relative profitability also exists for plantain. 2.8 The significant growth rate in rice production has been due to the performance of SEMRY, a parastatal responsible for irrigated rice, in the North (the traditional sector produces only about 1OZ of the nations rice). Yield increases have been impressive: they increased from one ton per ha in 1978 to about five to six tons per ha in 1983. However, low international prices, a relatively high cost structure and marketing problems have seriously affected the economic viability of this enterprise. Potato production, because of a growing demand and the availability of high yield varieties, has also shown an impressive growth record. 2.9 Millet and Sorghum are produced exclusively in the Northern provinces. Even though they are the most important food crops in the northern regions, production has stagnated, probably due to the increasing cultivation of maize in place of millet and sorghum. Production of cassava and yams has trended down, reflecting a change in diets as urbanization shifts tastes toward the more practical cereals such as wheat and rice.  -6- Export Crops 2.10 The performance of export crops over the last 25 years has been mixed. Among the major export crops, cotton and Robusta coffee showed significant increases, while cocoa and Arabica coffee production decreased. Palm oil and rubber, which are not significant in terms of exports and incomes, also showed increases. 2.11 Cocoa production has moved erratically, with sporadic increases and declines. The overall performance iss been poor due to the aging of trees (about 45Z of the tree stock is older than 20 years), a result of insufficient new plantings and replantings. The average yield is about 380 kg/ha, but varies significantly by producing region: yields are highest in the Southwest, at 600 kg/ha and lowest in the East, with a mere 200 kg/ha. Low producer prices over the 1974/78 period, especially in comparison with C8te d'Ivoire, were thought responsible for poor performance. However, during the 1978/87 period, prices were higher in Cameroon and performance did not improve. Non-price factcrs such as restricted manpower policies, inadequate investments in roads, erratic input supply, inadequate research, and poor institutional support to farmers, have also contributed to the overall cocoa decline. Problems with blackpod disease, as well as with capsid and other pests (which are related to both labor and input supply problems), also contribute to the poor growth in cocoa production. 2.12 Arabica coffee production fluctuated widely between 1971 and 1983, before severe drought conditions caused a severe drop in 1983/84. Production has not recovered, and as a result, the overall output for the 1971/87 period declined at an annual rate of 2.6Z. Arabica cultivat'on is afflicted by problems similar to those in the cocoa sector. Yields are low and have been dropping steadily. The major contributing factors are failure to replace aging plantations (9Z of the trees are less than 4 years old, while 22Z are over 25 years old);- lack of effective disease control programs,- inefriciencies associated with the fertilizer delivery system,- and unfavorable relative prices. The ratio between producer prices for Arabica coffee and maize is low in Cameroon and has been declining since 1971. The high price and lower labor intensity of maize makes it a more attractive crop than Arabica coffee. The practice of inter-cropping Arabica coffee with food crops and the fact that women are solely responsible for food crops and for maintenance of Arabica coffee also contribute to low yields of Arabica (presently estimated at 250-350 Kg/ha). It has been reported that women give more attention to food crop production because food crops are the sole source of income to women. Revenues from Arabica coffee are retained by men. 2.13 Unlike Arabica coffee, Robusta coffee output increased modestly between 1971 and 1987. There are a number of reasons for this difference. First, Arabica is grown at higher altitudes than Robusta and the land available for area expansion is limited and generally heavily populated. Second, for those farmers who do produce both crops (mainly in the Northwest Province), domestic price differentials between Arabica and Robusta have become less favorable, despite a growing price differential in world markets. The differential was CFAF 110/kg in favor of Arabica in 1976. It has declined steadily since 1976 and has been just CFAF 35/kg since 1984. As a  result, more Robusta coffee was planted and Robusta share of total coffee output increased (from 68Z in 1971 to 87Z in 1987). The age distribution of the Robusta tree stock is now much more favorable than it is for either Arabica coffee or cocoa. Overall, almost 50Z of the trees are under 12 years old and only about 20? are over 25 years old. As a result, the average yield from Robusta coffee is twice that of Arabica. 2.14 Growth in cotton production is the result of area expansion and, more importantly, yield increases (yields increased from about 400 kg/ha in 1971 to about 1.3 tons per ha in 1984). Cotton production is supported by a parastatal, SODECOTON, which has provided good linkages between research and extension, established effective support services to farmers (though at a high cost), and maintained favorable producer price incentives. In fact, Cameroon is the only country among the major eight cotton producers of West Africa to have experienced a regular increase in the producer price index. This pricing policy, coupled with effective assistance to farmers, has contributed to the high rate of growth. 2.15 Rubber and palm oil production increased significantly as a result of government investment in plantation estates. However, the economic rationale for investing in these crops based on plantation agriculture is not favorable. Astan producers have developed a high comparative advantage in producing these crops, partially because of lower management and labor cost. This has led to the consideration of promoting the "nucleus estate" to involve smallholders in the production process to reduc:e costs. Cameroon can benefit from the experience of Cbte d'Ivoire where such a system has proven profitable (but with private management, free market prices, uncontrolled marketing and no subsidies). Livestock and Fisheries 2.16 The livestock population was estimated in 1986 at 4.4 million cattle, 5.3 million sheep and goats, about 1 million pigs and 14 million poultry, with a total annual production of 120,000 tons of meat, 45,000 tons of milk, and 2,300 tons of eggs. Per capita meat consumption is about 15 kg per year, resulting in an annual demand of 160,000 tons. To satisfy its demand, Cameroon imports nearly 100,000 cattle on the hoof from the Central African Republic and Chad, and about 20,000 tons of meat from overseas (half of it in the form of heavily subsidized, low grade frozen beef from the European Economic Community). 2.17 Cameroon's livestock sector suffers from high mortality rates (5? to 10? in adult cattle and small ruminants, and 20? to 402 for young stock). This is due partly to poor delivery of animal health services and partly to unreliable availability of appropriate inputs. Appropriate technology for increasing livestock production exists and Cameroon's natural range lands are capable of producing enough to feed a considerably expanded national herd. With improvement in animal health services, better management of range land, and support to semi-intensive production of livestock, such as poultry farm, the sector could significantly reduce the national deficit in livestock trade and increase its contribution to the economy.  - 8 - 2.18 Industrial fishing accounts for only 1OZ of national production of almost 100,000 tons a year, the rest being equally divided among offshore and inland artisanal production. One parastatal -Crevette du Cameroun- and five private companies make-up the modern sector. There is ample scope for increasing fish production in Cameroor. as many lakes and rivers remain untapped while the production and processing technology is still rudimentary. Annual per-capita consumption is around 15 kg. Expansion of the sector is needed to slow down imports of frozen fish, which has reached 70,000 tons a year and will continue to increase with the growth in population. There are about 5,000 fish farmers, more than . dozen fstations aquacoles" and thirty reproduction stations. Extension services to farmers, the infrastructure for hatcheries and production of fish feeds will need substantial improvements to curb imports in the future. Agro-Industry 2.19 The agro-industry subsector includes processing industries in food and beverages, textiles and clothing, leather and shoes, wood and wood products, paper and paper products, and rubber and rubber products. These industries produce for both domestic consumption and export. Their cost structures range from high efficiency (food and beverage, which are relatively labor-intensive, and primary wood processing, which are local resource intensive) to medium efficiency (the textile and shoe industries). The rubber-related industries are relatively resource inefficient (DRC about 1.33). The potential for developing agro-industries is great due to Cameroon's abundant raw materials and entrepreneurial human resources. However, the subsector is constrained by policy distortions which give high aid variable rates of effective protection between industries. This is compounded by legislation offering duty exemptions to imported materials while taxing local production, resulting in high material import content and reducing linkages between agriculture and agro-industry, and limiting the development of activities based on Cameroon's comparative advantage. Forestry 2.20 Cameroon is a country dominated by dense forest. Recent estimates of the forest area indicate 16.5 million ha, of which 13.9 million ha are considered commercial forests with 7.2 million ha now being exploited. However, their exploitation has not been well planned and controlled, resulting in depletion of a few popular species (Ayous, Sapelli and Azobe). Total production of timber more than doubled between 1972 and 1985. The production of logs increased from 0.82 million m3 in 1972 to 2 million m3 in 1985. While, over the same period, the output of sawn wood increased from 0.2 million m3 to 0.7 million m3, the production of plywood and veneers remained constant (0.73 million m3/yr from 1973 to 1985). The transformation of logs, though desirable in terms of increasing value added and export revenues, is plagued with obsolete equipment and poor management. The Government is aware of the constraints and potential and has recently completed a Tropical Forest Action Plan (TFAP) and a strategy for the development of the sector. The richness of Cameroon's forests offers significant potential for increasing timber-based export revenue.  C. Structure of Production 2.21 Cameroon's agro-climatic zones range from tropical rain forests in the South to mountainous chains in the West and Sahelian plains in the North. This agro-ecological diversity offers a wide range of possibilities for crop production. Traditional smallholder farming dominates the sector (93Z of the agricultural output, which includes food cropd for domestic consumption and cocoa, coffee and cotton for export). The remaining 72 of output (rubber, palm oil, sugar, tobacco, bananas) originates from industrial plantations, which are mostly government-owned. Land Availability 2.22 Cameroon has a total land area of 46.5 million ha and a population of about 10 million people, so that overall population density is only about 20 persons per ha, much lower than in many African countries. The population, however, is unevenly distributed (about 632 of the people lives on 24Z of the land). Thus, some parts of the country are overcrowded while other parts are virtually uninhabited. Land availability and population densities vary from region to region as shown in Table 3. The West, Northwest and Littoral provinces, have the largest population densities, resulting in low land availability per capita, while the East and Adamaoua provinces have a higher per capita land availability. Much of this, however, is the rain forest, with uneven agricultural potential (though the forestry potential is important and being exploited). Table t. Estimates of Land Availability. by Province Per Capita Per Frm Capita Province Total Arabil Usble Aible Usable Population Land Land Land Land Land Density (Ha)