Announcement of Nine Million Dollars Credit for a Flue-Cured Tobacco Project in Tanzania on October· 7, 1970

• INTERNATIONAL DEVELOPMENT ASSOCIATION 1818 H STREET, N.W., WASHINGTON D. C. 20433 TELEPHONE: EXECUTIVE 3-6360 IDA Press Release No. 70/47 Subje:_£!_: $9 million credit for a flue-cured October· 7/, 1970 tobacco project in Tanzania Diversification of Tanzania's agricultural output will be furthered by a project to expand smallholder production of flue-cured tobacco for which the International Development Association (:tl)A) is extending a ~redit of $9 million. The increased production, all of which will be exported, is expected to add some $11.5 million to Tanzania I s export earnings by 1978 and to i.mprove the livelihood of 15,000 farm families. Under the project, some 15,000 new tobacco growers will be settled in 150 • village coIIUllunities, cultivating at full development 30,000 acres. Each village and farm will be provided with infrastructure, such as water supplies, access roads, tobacco curing barns and grading and baling sheds. The settlement pro- grom will be planned by a central project group and assisted in the field by extension officers. The tobacco farms will be located in woodland areas of western Tanzania, which have little economic potential apart from tobacco cultivation and as cattle rangeland. Cooperative societies of about 1,000 farmers each will be set up to handle the distribution of fa:"Ill credit and inputs and to supervise the baling of cured tobacco. With a view to introducing auction arrangements to replace the present system of selling the crop through a foreign sales agent, a study of the storage, auction and processing facilities needed to handle the enlarged national crop • will be undertaken. A Government Tobacco Research Station will also be established • /more IDA P.R. No. 70/47 - Tanzania-Tobacco - 2 - Agricultural products constitute about 75% of Tanzania's total exports, which are valued at approximately $250 million a year. The country has tradi- • tionally depended heavily on three export crops -- cotton, coffee and sisal but the Government has been endeavoring to broaden Tanzania's agricultural base by encouraging the development of other commodities. Although flue-cured tobacco has been grown successfully in Tanzania since the early 1950s, it has only been in recent years that the crop has gained importance as an earner of foreign exchange. In view of the favorable price prospects for flue-cured tobacco in the world market, and the good quality and the competitive cost of Tanzanian production, the Government plans to double tobacco output by the late 1970s through increased production by small farmers. • The Ministry of Agriculture, Food and Cooperatives will have over-all responsibility fQr the IDA-«ssisted project. The National Development Credit Agency, a government entity,, will provide credit through the cooperative move- ment. The Tanganyika Tobacco Board (TTB), another statutory body, will be responsible for marketing and, through its subsidiary, the Tanzania Tobacco Processing Company, for processing. Expenditure on the project over the six years 1970/71-1~"7:.. :. ·S. is esti- mated at $14.7 million, of which some 60% will be financed by the IDA credit, about one-third by the Government, and the remainder by TTB. The IDA credit will be extended to the United Republic of Tanzania for a term of 50 years, including 10 years of grace. It will be interest-free, but a service charge of 3/4 of 1% win be made to cover IDA's administrative costs. - 0 - ••