World Bank Document

CIRCULATINGCOPY ReportNo. 897a-TA JMg10E RETURNED TOREPORTS DESK UnitedRepublic of Tanzania Appraisalof the FILECOPY NationalMaize Project Public Disclosure Authorized December8, 1975 General Agriculture Division EasternAfrica Regional Office

Not for Public Use Public Disclosure Authorized Public Disclosure Authorized

Document of the World Bank Public Disclosure Authorized This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization CURRENCY EQUIVALENTS 1/

SDR 1.00 - Tanzania Shillings (TShs.) 9.66

SDR 1.00 = US $1.20

US $1.00 = Tanzania Shillings (TShs.) 8.05

TShs. 1.00 = US $0.12

GOVERNNENT AND PARASTATALSFISCAL YEAR

July 1 - June 30

WEIGHTS AND MEASURES

1 hectare (ha) = 10,000 m = 2.47 acres

1 kilometer (km) = 0.62 miles

1 sq. kilometer (km2) 0.39 sq. miles = 100 ha.

1 kilogram (kg) - 2.20 pounds

1 liter (1) - 0.26 U.S. gallons

1,000 kg = 1 metric ton 0.98 long tons

1/ In October, 1975, the three East African Community currencies were pegged to the value of the Special Drawing Rights (SDR) of the InternationalMonetary Fund. An SDR/US dollar conversion rate of 1.2 has been assumed for purposes of this appraisal, although the actual rate is floating. ABBREVIATIONS

ABEDIA = Arab Bank for Economic Development in Africa AFO = Assistant Field Officer

ARTI - Agricultural Research and Training Institute AVI = Audio Visual Institute BRALUP Bureau of Resource Assessment and Land Use Planning, University of Dar-es-Salaam CAN Calcium Ammonium Nitrate CIMMYT = International Maize and Wheat Improvement Center, Mexico CUT Cooperative Union of Tanganyika DADO District Agricultural Development Officer DAP = Diammonium Phosphate DDD District Development Director DMPS = District Maize Project Supervisor EAC/MI East African Community, Management Institute FA Field Assistant FAO Food and Agriculture Organization of the United Nations GAPEX General Agricultural Products Export Corporation IITA = International Institute of Tropical Agriculture, Nigeria KILIMO = Ministry of Agriculture MDB = Marketing Development Bureau NADP National Agricultural Development Project NAPB = National Agricultural Products Board NBC = National Bank of Commerce NMC = National Milling Corporation NIMP = National Maize Project NPK = Compound Fertilizer PMO = Office of the Prime Minister and Second Vice-President PSU = Project Servicing Unit RADO = Regional Agricultural Development Officer RDD Regional Development Director RMPC = Regional Maize Product Coordinator TANU = Tanganyika African National Union TAT = Tobacco Authority of Tanzania TCA = Tanzania Cotton Authority TFA = Tanganyika Farmers Association TRDB = Tanzania Rural Development Bank TSP Triple Superphosphate UNDP = United National Development Program USAID = United States Agency for International Development VMT = Village Management Technician

TANZANIA

NATIONALMAIZE PROJECT

TABLE OF CONTENTS

Page No.

SUMMARY AND CONCLUSIONS ...... i - iii

I. INTRODUCTION ...... so.. 11.....

I1. BACKGROUND ...... 2

A. General ...... 2 B. Regional Government and Administration ...... 2 C. Villagisationand Land Tenure ...... 3 D. The AgriculturalSector ...... 4 E. The Food Situation ...... 7 F. The Maize Production Program ...... 7

III. THE PROJECT AREA ...... 8

A. Location...... 8 B. Land Use and Types of Farming ...... 8 C. Rural Infrastructure... %...... 9

IV. THE PROJECT ...... 11

A. Brief Description ...... 11 B. Detailed Features ....o...... 12 C. Project Costs ...... 17 D. Financing ...... 19 E. Procurementand Disbursement ....o...... 20 F. Accounts and Audit ...... 21 G. Ecological and External Effects ...... 21

V. ORGANIZATIONAND MANAGEMENT ...o .... o ...... 22

VI. PRODUCTION,MARKETING, FARMERS' BENEFITS, EFFECTS ON GOVERNMENT BUDGETS ...... 25

VII. ECONOMIC BENEFITS AND JUSTIFICATION ...... 27

VIII. AGREEMENTS REACHED AND RECOMMENDATION ...... 28

This report is based on the findings of a joint preparation- appraisalmission which made visits to Tanzania during March, April, May and June 1975. The mission was composed of A. Denness, R. H. Clough, J. F. A. Russell, F. Stubenitskyand G. Ablasser (IDA); and P. Grosjean and A. M. Wilson (Consultants). ANNEXES

1. Ujamaa and the Cooperative Sector

2. Extension and Training

3. Technologyand Potential for Maize Production

4. The National Milling Corporation (NMC)

5. The Food Crops Sector

6. The National Maize Program

7. Terms of Reference for Project Staff and Consultants

8. Project Cost Tables

9. The Tanzania Rural Development Bank

10. Maize Markets and Prices

11. Farmer and Government Budgets and Benefits

12. Schedule of Estimated Disbursementof IDA Funds

13. Economic Analysis

('harts

World Bank-8466(R) Government Organization

World Bank-8522(R) The Ministry of Agriculture

World Bank-15244 Implementation Schedule

Maps

IBRD1O?99 Agricultural Research and Training Institutions

IBRD11872 Regions and Districts

IBRD2803R Mean Annual Rainfall

IBRD28;4R Potential Land Use TANZANIA

NATIONAL MAIZE PROJECT

SUMMARY AND CONCLUSIONS

(i) Tanzania places high priority on agriculturaland rural development to close the gap between urban incomes and those of 90% of the population who live in rural areas and work mainly in traditional,near-subsistence agriculture. The developmentof collective and self-help activities through villages is emphasized. Because of poor rainfall and the disruptive effects of villagization,food production, especially the main staple maize, fell drastically in 1973 and 1974. Grain imports costing about US$160 million were required during 1974 and 1975. The Project, over a four-year development period, would assist Tanzania in increasingmaize production to replace imports, and would lay the foundation for the long-term development of food crop production through improved extension services and the introductionto farmers of modern inputs and better cultural practices.

(ii) The Project which would improve and expand the maize production program started by Government in 1973 would provide input and extension packages designed to increase maize production in about 950 villages located in the best maize growing areas in 13 regions of Tanzania. It would provide villages with subsidizedmaize production inputs and support maize production demonstrationsand research trials to further improve maize production practices throughout the Project area. Additional trucks would be provided to facilitate transport of maize and farm inputs within the 13 regions. Improved storage for maize and farm inputs would be establishedwithin Project villages and in regional centers. Extension services would be strengthenedthrough staff training, provision of adequate transport and extension aids, mobile film units and additional support for the Ministry of Agriculture'snewspaper.

(iii) A Project Servicing Unit would be established within the Ministry of Agriculture. This unit would be responsible for input procurement and disbursement,financial control, monitoring Project progress, preparing annual work programs, and provision of technical assistance to regional authorities responsible for Project implementation. A Maize Production Inputs Account would be established in the Ministry of Agriculture,which would be used to finance the purchase of maize production inputs and to subsidize their use when necessary. Initially, the subsidy on maize production inputs would be 75%, but Government plans to progressivelyreduce this as efficiency of input use and village incomes increase. The Project would also provide consultancy services to prepare investmentproposals for expanding and modernizing national grain storage and milling facilities; establishinga national grain reserve; and for the preparationof a national agricultural development program. - ii -

(iv) The Project would be implementedover a four-^rearperiod by regional authorities,who would be responsiblefor selecting the best villages within their regions, preparing village work programs, and ensuring the timely delivery of inputs and their efficient use. The Project design incorporates a flexible approach to Project implementationwhereby Project villages, and storage and transport requirementswould be determinedduring implementation and incorporatedin regional annual work programs. These programs would be approved by the Project ServicingUnit and incorporatedinto an annual national work program which would require the approval of IDA. Policy issues would be considered by a Project Steering Committee comprising representativesfrom the Ministries of Agriculture,Finance and Planning, the Prime Minister's Office, and the Commissionerof Cooperatives.

(v) The Project would cost US$38.1 million; its foreign exchange component would be US$24.4 million. The proposed IDA Credit of US$18.0 million would cover 47% of the Project's total cost. Thirteen percent of Project costs would be covered by a loan from the Arab Bank for Economic Developmentin Africa. The remaining 40 percent of Project costs would be covered by farmers (11%) and the Governmentof Tanzania (29%). Government'sshare includes the subsidy portion of the cost of farm input requirementsfor the first year (US$6.4million or 17% of Project costs) which would be financed from the proceeds of an existing USAID loan. Funds provided under the Project for constructionof storage and purchase of trucks would be channelled through the Tanzania Rural DevelopmentBank (TRDB). TRDB would borrow funds from Governmentat 4 percent interest and onlend at 8-1/2 percent. The terms would be set out in a subsidiary Loan agreement to be agreed by IDA.

(vi) Requirementsfor fertilizersand insecticidesfrom the second year onwards, and Project requirementsfor vehicles, village store construction materials and the contracts for the constructionof regional and NMC storage would be procured through internat:ionalcompetitive bidding, in accordance with IDA guidelines. Farm input requirementsfor the first year would be procured through the normal Goverrment of Tanzania procedures. Local manufacturerswould be allowed a pireferencemargin of 15 percent or the existing rate of duty, whichever is lower; local civil works contractors would be allowed a preferencemargin of 7-1/2 percent. Orders for small items such as office equipment costing less than US$120,000 and for maize seed would be placed in accordance with normal Government procedures.

(vii) Project incrementalmaize productionwould be about 195,000 tons annually at full development after 1982. At the 1975 producer price of TShs. 0.75/kg this would be worth TShs. 146 million (US$18.1million). 'lostProject produced maize would replace imports or be absorbed into the proposed national grain reserve. Small export surpluseswould be produced only in good seasons and absorbed in border trade. The Project would, therefore, not generate significantexport earnings, although the saving in foreign exchange expendituresthrough reducedlmaize imports would be substantial. The incomes of about 380,000 participat:ingfamilies who are among the poorer sections of the rural community in Tanzania, would be increased. At full development the average increase in family income has been estimated at US$42 annually or about 20% above current levels. - iii -

(viii) The economic rate of return of the Project is estimated to be 37 percent. The rate of return is high, partly because the Project would produce maize as a substitute for expensive imports, and also because the Project would concentrateon improving the efficiencywith which resources presently devoted to maize production are used.

(ix) The Project has considerablerisks on account of the unproven productive nature of the villages where the Project would be implemented,and uncertaintiesregarding farmers' willingness to purchase and use fertilizers and other farm inputs. Quality of management is also critical for the success of the Project. However, the sensitivityanalysis indicates that even with the very adverse assumption that incrementaloutput were 30 percent below expectation,the Project would still yield an economic rate of return of 16 percent.

(x) Nine IDA Credits totalling US$91.1 million and two IBRD loans for US$30 million have been approved so far for agriculturaland rural development projects in Tanzania. These include projects concerned with credit, livestock, tea, tobacco, cotton, sugar, cashewnuts and one regional development project. Implementationof those projects has generally been slow.

(xi) The Project is suitable for an IDA Credit of US$18.0 million on standard terms.

TANZANIA

NATIONAL MAIZE PROJECT

1. INTRODUCTION

1.01 Tanzania's rural development strategy emphasizes the need to increase agriculturalproduction by mobilizing the productive capacity, and improving the living standardsof the estimated 13 million people who live in the rural areas, and who are almost wholly engaged in traditional, near subsistenceagriculture. To implement this strategy,Government has taken three important steps: the regional decentralizationof its admin- istrativeorganization; improved coordinationbetween Government and the TanganyikaAfrican National Union (TANU), Tanzania's only officially recognized party; and the creation of developmentor ujamaa villages (para. 2.08). Although problems have arisen, especially in implementingdecentralization and villagisationpolicies, and the end result of the latter remains un- clear, rural people are now able to participatemore fully in the decision making process, and are being more effectivelymobilized for food production and other aspects of national development. Unfortunately,Government's in- tensificationof its villagizationprogram coincided with two successive years of poor rainfall. This situation, coupled with the inevitable dis- ruption of production caused by villagization,necessitated the import of large quantitiesof grain, particularlymaize. The proposed Project would assist Tanzania to increase its maize production and become less dependent on imports.

1.02 Previous Bank Group assistance to the agriculture sector in Tanzania has included IDA Credits totallingUS$91.1 million and IBRD Loans for US$30 million for nine agriculturaland one rural development project. Agriculturalprojects include one for agriculturalcredit, three for livestock, and one each for tobacco, tea, cotton, sugar and cashewnuts. A rural developmentproject has been approved for the Kigoma region. Credits have also been provided for agriculturaltraining (1971),and feeder road development (1972).

1.03 Project implementationhas been slow in most cases, but there has been some improvementrecently. In general, management, organization and staffing have been continuing problems. All small-holderprojects such as the cotton, tobacco, tea and rural developmentprojects have been affected by the sudden accelerationof the villagizationprogram in 1973 and 1974, requiringa major reorientationof these projects and causing significantdelays. Under the completed credit project, a need was found for improved supervisionof loan records and input distribution. The first livestock project was reasonably successful,but the second is progressing more slowly than anticipateddue to delays in preparationand approval of ranch plans, cost overruns in constructionof slaughterhouses,and changes in project management. The tea project has encountereddifficulties due to -2- inadequateservices and lack of effective managementcontrol. The Geita cotton project is experiencingproblems due to villagization,national emphasis on maize rather than cotton, and weak management. The Kilombero sugar project is proceedingwell, although some delays are expected due to slow delivery of constructionmaterial and equipment. The cashew project and the Kigoma rural developmentproject have only recently become effective.

1.04 The proposed Project was identifiedin the Bank's 1974 Agricul- tural and Rural Development Sector Study, and the credit application was prepared by the Government, assisted by the IBRD Resident Mission in East Africa (RMEA). This report is based on the findings of joint preparation- appraisal missions which made visits to Tanzania during March-June 1975. The missions were composed of A. Denness, R. H. Clough, J. F. A. Russell, F. Stubenitskyand G. Ablasser, (IDA) and P. Grosjean and A. M. Wilson (Consultants).

II. BACKGROUND

A. General

2 2.01 Tanzania with a total area of about 880,000 km is2sparsely populated with an average populationdensity of about 16 per km . The population of 14.3 million is increasingat about 3% a year. Average per capita GNP for 1973 is estimated at.US$110 per annum, but in many rural areas the per capita income does not exceed US$40 per year. Over 90 percent of the people are dependent on agricultureand 40 percent of GNP is derived from this sector. The real growth rate of the economy was about 4-1/2% per annum between 1969 and 1974. Actual growth has been behind the Second Five-Year Plan (1969-1974)targets, mainly due to failure of the main agriculturalcrops to reach plan projections and recent adverse changes in the country's terms of trade.

B. Regional Governmentand Administration

2.02 A major change in Governmentstructure occurred in 1972, with the decentralizationof a wide range of governmentalresponsibilities (Chart World Bank-8466(R)). In particular,regions were authorized to plan and implement their own development progreamsand allowed a high degree of autonomy in regional administration.

2.03 The regional political hea.dis the Regional Commissioner,with the rank of cabinet minister. He is a member of the National Assembly and TANU's National Executive Committee. His counterpartat the district level is the Area Commissionerwho is the TANU district secretary,chairman of the District Developmentand Planning Committee and a member of the District Development Council. All commissionersare appointed by the President. - 3 -

2.04 The regional administrationis headed by the Regional Develop- ment Director (RDD) who is assisted by a Regional Planning Officer and the heads of the ten regional functional departments. Heads of these departments report directly to the RDD, who in turn reports to central government through the Prime Minister's Office (PMO). At the district level the administration is headed by a District DevelopmentDirector (DDD). He is assisted by a District Planning Officer and ten district functionalmanagers. All importantdevelopment decisions are made by a District Development and Plan- ning Committee, chaired by the Area Commissioner,and have to be approved by the District Development Council, chaired by the TANU district chairman. While field staff are answerable to the DDD through the heads of their respective departments,they receive technical guidance from the staff at the regional level and through them from the Ministry of Agriculture (KILIMO). The organizationalstructure of KILIMO is shown in Chart World Bank-8522(R).

2.05 The new administrativearrangements ensure improved interaction between the political structureand the civil service, and enable villagers, through che basic TANU unit (the ten-family cell) to play a role in determining the developmentprocess. However, problems exist. Planned staff strengths have not been achieved, particularlyat the lowest level, and staff quality remains low. Project implementationcapacity varies considerably between regions and districts, and regional performance is affected by the interpretationof and relative emphasis given to aspects of national policy by regional officials.

C. Villagizationand Land Tenure

Organizationof Production

2.06 Until the advent of Government'svillagization program most production was concentratedon smallholdingswhich were cultivated by hand and produced family subsistenceand cash crops. Most holdings (over 80%) were less than 2 ha, and only 2.5% were 5 ha or larger. Plots tended to be irregularbut fragmentationwas a serious problem only in the densely populated areas of Kilimanjaro,Arusha and Mbeya regions.

Ujamaa and Villagization

2.07 The Arusha Declaration of 1967 and the TANU guidelines of 1971 reaffirmed Tanzania's commitment to a socialist society and identified the ujamaa village as a means of effecting self-relianceand a community approach to development. In addition to political advantages the ujamaa village was seen as the vehicle for providing economies of scale in de- livering inputs and social services,which could improve the lives of rural people. The ultimate objective is that ujamaa villages should become multi-purposecooperative societies with authority to own land and to borrow. Government has provided considerableassistance to newly developed ujamaa villages, mainly by transportingvillagers' effects, providing - 4 - building materials for houses, water supply schemes and other social services; and by encouragingthe development of productive activities. (Annex 1)

2.08 By early 1975 Government estimated that about 65% of the rural population, almost 9 million people, were living in ujamaa-type villages throughoutTanzania. Completionof the national villagizationprogram is expected by the end of 1976. The precise pattern of developmentwithin each ujamaa village has been left to villages and regional authorities to decide. Consequently,the extent of collectiveactivity varies among villages and the precise workings of ujamaa are still evolving. During 1974 and 1975 emphasis has shifted from the establishmentof ujamaa cooperatives to the formation of planned or development villages. A development village is any planned or existing village which is registeredwith the Registrar of Cooperativesand has thus attained cooperative society status with borrowingpowers. Only if in such a village production is organized primarily on a communal basis and the village has achieved economic viability can it be declared an ujamaa village, according to a recent Government directive.

D. The AgriculturalSector

Foreign Trade

2.09 Agricultureand livestock exports in 1974 were valued at TShs. 2,050 million. Cotton and sisal were the muajorforeign exchange earners, each accounting for about 23% of the total value of agriculturalexports. Other important crops were coffee and cashew, with export shares of 17% and 10%, respectively. Imports of agriculturalcommodities (food, live animals and animal fats and oils) reached a tota:Lof TShs. 1,138 million (US$159million) in 1974, equivalentto 21% of total imports. Important smallholdercash crops are cotton, cashewnuts,tobacco, coffee, maize and rice.

AgriculturalServices

2.10 Extension. The agriculturalextension service is organized re- gionally and coordinatedby KILIMO in Dar-es-Salaam. About 2,500 field staff are engaged in crop work, and a further 800 in animal husbandry and animal health programs. On average one officer is responsible for 900- 1,000 farmers (Annex 2).

2.11 So far the extension services have been ineffective in introducing improved techniquesto farmers. Major reasons have been the lack of adequate staff, inadequatetraining in the more valuable techniques,and poor management. The latter is reflected in a lack of work programingand logistic support, frequent transfers,and problems with the administrationof pay and allowance. Refresher courses are infrequentand a recent analysis revealed that, on average, an extensionworker receives additional training only once during his entire service. - 5 -

2.12 Research. Agriculturalresearch is organized in twelve major centers, each handling several crops or livestock. (Map IBRD10799) Priorities are set at an annual conferenceunder the joint chairmanshipof KILIMO's Directors of Crop Development and Livestock Development. Maize research is carried out at the Ilonga (Morogoro)and Ukiriguru (Mwanza) stations, and at the AgriculturalResearch and Training Institute in Mbeya. The Ilonga and Ukiriguru stations have developed several successful maize composites,of which the IC-A and UC-A are the best known and most widely used. Maize research is being supported by a grant from US-AID under which maize breeders and agronomists,including two seconded from the International Wheat and Maize ImprovementCenter (CIMMYT),are continuing to improve existing composites and develop new composites and hybrids. Trials to improve maize productionpractices and to test the use of fertilizershave been carried out in all major maize producing areas of the country. The results show clearly that maize yields can be significantlyincreased by the timely planting of improved varieties, effective weed and insect pest control and fertilizer use (Annex 3). Further work is required, however, for a more detailed analysis of existing experimentalresults and to refine the maize fertilizerand variety recommendationsfor some ecologicalzones and for varying levels of maize husbandry. Also, in view of the soil acidifying effects of continuous applicationsof sulphate of ammonia and its high trans- portation cost per unit of nitrogen, trials are required to determine optimum methods for replacing it with more concentratedand less acidifying nitrogenous fertilizer such as diammonium phosphate and calcium nitrate (paras.4.02 and 4.15).

Farm Mechanization

2.13 The use of oxen, tractors and improved implements has developed only slowly in Tanzania and programs to increase it have generally been un- successful. Tractor utilization has been poor, due to frequent breakdowns and poor maintenance, and trained oxen made available to farmers on a grant basis have often remained unused or underutilized. Trained instructorshave been in short supply and the use of improved low-cost implements has not been widely demonstrated. At present, ox cultivation is common only in Shinyanga region, but some use is also made in other western and northern areas. Government'svillagisation program and the urgent need to increase crop production have created renewed interest in acceleratingthe use of mechanization,especially oxen, to improve yields and expand cultivated areas. However, past problems associated with the introductionof ox cultivation justify no more than a gradual or pilot approach limited to those areas where oxen have traditionallybeen used, and ox training centers already exist (para. 4.18).

AgriculturalMarketing and Pricing

2.14 Major traded crops are marketed through state-ownedor controlled marketing boards or corporations. The National Milling Corporation (NMC) is responsible for purchasing,processing and marketing for internal consump- tionmai,z' rice and wheat (Annex4). Regionalcooperative unions and -6- primary societiesact as agents of the parastatals collectingmarketed crops and selling processed products. Unions obtain working capital from the National Bank of Commerce (NBC), and make cash payments to producers through member primary cooperative societies.

2.15 Producer prices and parastatals'buying and selling prices are establishedby the Economic Committee of the Cabinet. The former are an- nouced in advance of a planting season and are uniform throughout the country. Parastatals'buying prices at regional centers vary and allow for regional differences in handling and collection costs. Selling prices are uniform throughout the country.

2.16 Prices of production inputs are also establishedcentrally but because parastatals operate various input subsidy and credit schemes, prices for selected items vary throughoutthe country. An input subsidization policy was originallyadopted for cash crops only in order to provide incentives to farmers to adopt improved practices involving the use of purchased inputs. Such a policy has had the effect of lowering farmers' resistance to purchasing inputs largely as a result of the lower required cash outlays and, consequently,a diminished financing risk in case of crop failure. Subsidies have also reduced the need for credit to finance such inputs which is an important factor in view of farmers' liquidity problems and a poorly developed rural credit system. The cost of subsidizing inputs for cash crops has traditionallybeen recovered through the price mechanism and through taxes.

2.17 Under the National Maize Program, inputs were provided free in 1973 and 1974 since most participatingfarmers had only very limited financial resources and all previous attempts to institute a credit system for small- scale food crop productionhad failed. Only a small fraction of the maize input subsidy could be recovered through the price structure because of the high cost of marketing and government'sefforts to keep the rise in the cost of basic foods to a minimum.. This subsidy thus became a growing burden on the general budget. While continued subsidizationof certain farm inputs remains justified,subsidy levels and methods of cost recovery have to be reviewed with the objective of gradually reducing the cost to the Treasury and eventuallyeliminating the subsidies;the introductionin 1975 of a cash payment by farmers of 25% of input costs represents a step in that direction (para. 6.04). Government is aware of the need for a consistent input pricing policy and the importanceof keeping subsidy costs at manage- able levels and the Marketing Development Bureau of KILIMO is carrying out studies and assisting in the formulationof a viable long-run policy (Annex 5).

2.18 Farm inputs can be obtained relatively easily in the agricul- turally more developed areas of Tanzania, which include Mwanza, Mbeya, Iringa, Arusha and Kilimanjaro. Small and large-scalefarmers and estates in these regions are usually able to purchase their requirementsdirectly from organizationslike the TanganyikaFarmers Association (TFA). Similarly in those areas where cash crops (like coffee, tobacco, tea and cotton) have been developed,farmers are usually well served by the crop authorities and -7- cooperative societies. Outside these areas farmers experience great difficulty in obtaining inputs, and the performanceof cooperativeunions and primary societiesvaries enormously. Scarcity of skilled manpower to maintain accounts and manage and superviseunion and cooperative affairs, especially transport and produce handling, remains a major problem. The cooperativemovement, however, is receiving substantialassistance to overcome these problems under a project supportedby the Nordic group of countries. Further support would be provided under the Fifth Education Project for which IDA financing has been requested.

E. The Food Situation

2.19 Major food crops in Tanzania are maize, millet and sorghum, paddy, potatoes, cassava, bananas and beans. These are produced predominantlyby smallholders,many of whom live in newly establishedvillages and use most of their production for subsistence. Agriculturaloutput has stagnated in recent years, with real growth in GDP in the agricultural sector falling behind population growth. Similarly, food crop production has failed to keep pace with the expanding population,and Tanzania has become increasingly dependent on imports of maize, rice and wheat.

2.20 The deterioratingfood balance position was seriously aggravated by the poor harvests obtained in 1973 and 1974, and in 1974 some 440,000 tons of grain (291,000 tons of maize) were imported, at a cost of about TShs. 758 million (US$106million). Maize, the traditional staple, is particularly important since it is the only food crop marketed commerciallyon a national scale, and in the event of a general reduction in food crop production, unsatisfieddemand for other staple foods increases demand for maize. Further grain imports are required in 1975 and these are expected to total about 300,000 tons valued at TShs. 390 million (US$55 million), of which maize would be 247,000 tons (Annex 5).

F. The Maize Production Program

2.21 The food crop failures of 1973 and 1974 have emphasized the need to increase domestic food crop production and to establish strategic grain reserves. First among the national objectives is a significantincrease in the output of maize. To achieve this, Government initiated in 1973, and considerably expanded in 1974, a National Maize Production Program. This program, executed by regional authorities,consisted of the free distributionof inputs, mainly fertilizer, seed and insecticidesto farmers in newly-formedvillages. In 1974 the program was extended to 13 regions, and appears to have reached approximately25,000 farmers, or 150,000 people. The program, however, suffered from delays in input distribution,a poorly organized and badly informed extension service and from lack of effectivemanagement. Consequently, the program did not achieve its aim, and the increasedmaize production in - 8 -

1975 resulted mainly from the increase in the maize producer price and Govern- ment's measures to encourage an increase in the area under maize. The aim of the National Maize Project is to develop and expand the Maize Production Pro- gram, paying specific attention to increasing yields per area cropped. (Annex 6)

2.22 Seed multiplicationis carried out on Government regional seed farms, (supportedby USAID), and by a number of private growers and companies under contract to the Tanzania Seed Company. The latter is managed by the Tanzania Wattle Company, which itself is a major seed producer, and both receive financialand technical support from the CommonwealthDevelopment Corporation. Major problems are inadequatecoordination of seed producers' activitiesand the need to determinemore accuratelyactual requirementsof the various compositesand hybridIsfor each maize producing area. In this respect, additional expertise anclfinance are not required, but the Project would assist the Seed CoordinatingCommittee to operate effectively,and ensure an adequate supply of cert:ifiedseed by drawing up a quantifiedwork program, and introducingthe necessary inspection and reporting procedures.

III. THE PROJECT AREA

A. Location

3.01 The Project area would include virtually all high potentialmaize growing areas of Tanzania (Annex 3). These areas are located in the following thirteen of the country's 21 regions: Mara, Arusha, Kilimanjaro and Tanga in the north; Morogoro, Dodoma and Tabora in the center; Iringa, Mbeya, Rukwa and Ruvuma in the southern highlands; and Lindi and Mtwara in the southeast. Within these regions suitable maize producing areas have been identifiedin 28 of the 41 districts. Project activities would be limited to 950 villages, or about 50% of the total number in these districts. Maps IBRD11872and IBRD2803R show the regions and districts included under the Project, and rainfall distributionithroughout Tanzania, respectively.

3.02 The northern Project areas have a bimodal rainfall regime, with short rains in October - November, and main rains from February to May, which is the main maize planting season for these areas. The central and southern Project areas have a single rain season generally lasting from November to April. November is the main planting season but this extends into December in the more northern areas.

3.03 The land use potential map (Map IBRD2804R)gives details of soil types. Groups 5 and 6 which include the ferruginousand ferrisoils,respectively,have the highest potential; groups 4 and 7, which include the sandier soils, and the acid leached ferralitic soils of the higher rainfall areas, have generally low fertilityand only moderate potential.

3.04 The Iringa, Morogoro, Mbeya, Ruvuma regions and the Sumbawanga district of Rukwa region have excellent soils and rainfall conditionsfor - 9 - maize production,as also have the more fertile highland areas of Arusha, Kilimanjaroand Tanga regions. The Mpwapwa District of Dodoma region has soils of moderate potentialwhile, except for certain localizedareas, the soils of Tabora, Mara, Lindi and Mtwara regions are less productive.

B. Land Use and Types of Farming

3.05 All Project participantswould live in either ujamaa or development villages. In the former, farming is either on a communal basis or in blocks where individualshave their own holding, although normally each family also has a subsistenceplot. Developmentvillages are made up of scattered individualholdings but with village committees,and they will gradually be convertedto ujamaa villages with blocks cultivated either individuallyor communally.

3.06 Cropping systems vary widely throughout the Project area. Maize is the predominant food crop, being grown in combinationwith various other food and cash crops. The latter varies from tobacco in Tabora region, cotton and sunflower in Morogoro, and pyrethrum, coffee and tea in regions of higher elevation,while in the coastal areas coconut and cashew are important.

3.07 Various agro-economiczones have been identified throughout the Project area by the Bureau of Resource Assessment and Land Use Planning, but further work is required to develop improved farming systems for these zones. (Annex 3). The expertiseprovided under the Project would begin to rectify this situation.

C. Rural Infrastructure

Villages

3.08 Village structure in the Project area has changed significantly under the impact of Government'svillagization program and changes will continue to occur for a number of years. Facilities in these villages range from less than the bare necessities,to schools, health centers, piped water and other social and economic infrastructurefor which Government has been providing substantialassistance. Village size varies from about one hundred to more than a thousand families. This, and the fact that the economic base is extremelyvaried, makes village developmentplanning very difficult, and emphasizes the need for a flexible approach to deal with local conditions. However, despite the generally low level of development,and the difficulties arising from the brisk pace of the villagizationprogram, villages are the only practicalmeans through which a large number of rural people can be reached under this Project with its large geographicalcoverage. - 10 -

Marketing and Input Distribution

3.09 The National Milling Corporation (NMC) purchases maize and sells maize meal in all regions included in the Project area. In most regions, NMC buys from cooperativeunions; exceptions to this are Tanga, Mara and Ruvuma regions where primary cooperative societies sell direct to NMC. Coop- erative unions are the weakest link in the marketing chain, mainly because staff salaries are too low to attract management staff of the right calibre. It is expected that with the assistance being provided under the Nordic CooperativeProject these problems can be alleviated. (Annex 1)

3.10 With the exceptionof Arusha and Tabora regions cooperativesare not involved in the distributionof farm inputs. Where cash inputs are used, they are generally distributed either by the Tanganyika Farmers Association (TFA) which operates in Arusha, Kilimanjaro,Iringa and Mbeya regions, by the Regional Trading Corporations,or by cash crop authorities. The latter obtain financing for this purpose from the Tanzania Rural Development Bank (TRDB). Under the maize program, inputs have been distributed by regional and district authoritiesunder the supervisionof the Regional Development Director. These arrangementswould continue in most areas until cooperativesare able to assume this function,or other means, possibly involving cash crop authorities, can be developed.

3.11 The National Milling Corporation is responsiblefor the transporta- tion of marketed maize in the Project area, assisted in some areas by cooperative unions. Although NMC owns about sixty trucks these are insufficient, and a significantportion of the transport requirementsis still being met through the hire of trucks from small private operators. Lack of transport caused by poor vehicle maintenance,inexperienced and indisciplineddrivers, poor road maintenance,and a chronic shortage of vehicle spares is becoming a significantconstraint to expanding food crop production,and to rural developmentas a whole. There is no clear solution to these problems which are national in scale and can only be cured in the long-term. The rural area transportproblems could be alleviated in part by the railway, which should provide least-costtransport services in the areas served. The railway, however, is plagued by operational difficultiesand a continuous shortage of rolling stock.

3.12 Commercial grain storage facilitiesare largely owned by NMC and cooperativeunions. NMC's godowns and silos have a total capacity of about 260,000 tons of which about 140,000 tons are located within the Project area, 75,000 tons in Dar-es-Salaamand 45,000 tons in rural areas outside the Pro- ject. The cooperativeunions' utilizable grain storage is estimated at 75,000 tons, most of which is located within the Project area. The total storage capacity of district and regional godowns and silos in the Project regions available for maize and other grains is thus estimated at about 200,000 tons. In addition, cooperativesocieties own storage facilities which are, however, of generally poor quality and unsuitable for storage over periods longer than a few weeks. Losses due to inadequatestorage have been high, particularlyin years with large crops, earlier than normal rains and conditionsparticularly favourable to pest infestation. - 11 -

IV. THE PROJECT

A. Brief Description

4.01 The Project, over a four-year developmentperiod, would assist Tanzania to increase efficiency in maize production and raise output in order to lessen future dependence on imports. It would provide 950 selected villages within the thirteen most important maize producing regions of the country with maize production inputs, improved extension services, and maize demonstration plots; improved transport and storage facilities;and establish a central Pro- ject ServicingUnit in the Ministry of Agriculture to assist Regional Authorities in Project implementation. Detailed investment proposals for the long-term developmentof food crop production and processing and a national grain reserve would be prepared, and assistance provided for the planning of a national agriculturaldevelopment program. A Project implementationschedule is attached as Chart World Bank-15244. Specificallythe Project would:

a) Provide the maize seed, fertilizers,insecticides and, on a trial basis, herbicides required over the four-yearProject period, and establish a Maize Production Inputs Account to finance the purchase of production inputs and their distribution;

b) Strengthen extension services through staff training, a clear descriptionand arrangement of extension staff activities and providing staff with adequate transport and extension aids, and with the production inputs required to arrange for field demonstrationof improved maize husbandry;

c) Improve farm input supply and maize marketing arrangementsby:

(i) Providing transport at regional level to ensure the timely delivery of farm inputs and maize marketing; and

(ii) Constructingfarm input and maize stores at Project villages and at regional locations;

d) Expand ongoing food crop adaptive research programs;

e) Provide each Project region with a mobile film unit, and expand the circulationof KILIMO's agricultural newspaper; - 12 -

f) Implementa pilot scheme designed to develop methods for expanding the use of oxen cultivation;

g) Establish and staff within KILIMO a Project Ser- vicing Unit (PSU) responsible for input procurement and distribution,Project financial control, monitoring Project progress, preparing Project annual work programs, and providing regional authorities with the extension aids, films and technical assistance required to implement the Project;

h) Provide consultant and technical services to review Government'splans and prepare detailed investment proposals for:

(i) Establishinga national grain reserve;

(ii) Expandingand modernizing the milling and storage facilities of the National Milling Corporation;and

i) Assist in the planning and preparationof a national agriculturaldevelopment program.

B. Detailed Features

Maize Production Technology and Input Packages

4.02 The Project would initially provide three standard maize production improvementpackages for all Project areas. The packages would include fertilizer recommendationssimilar to those made recently by Government'sSoil and Fertilizer CoordinatingCommittee. 1/ Maize production recommendations would be continuallyreviewed as itformationbecomes available from Project field trials and demonstrations,and as changes occur in the price relation- ship between maize and purchased inputs. Revised recommendationswould be incorporatedin Project annual work programs (para 5.03).

4.03 The three maize productionpackages would be:

Package 1: Intensive extension to improve time and density of planting using composite seed, and improved weeding and pest control.

Package 2: When Package 1 has been adopted satisfactorilyand village maize yields have ri:sento about 1,500 kg/ha, fertilizer would be introducedequivalent to 50 kg/ha triple superphosphate, and 100 kg/ha sulphate of ammonia. Some villages

1/ The packages also would be similar to those recommended for the IDA assisted Kigoma Rural DevelopmentProject. - 13 -

in high altitude areas would use hybrid rather than composite seed.

Package 3: In areas most suited to maize production, some villages would move into Package 3 which would use the equivalent of an additional 50 kg/ha sulphate of ammonia, and in most cases hybrid rather than composite seed.

Generally, Project villages would move from Package 1 to Package 3 in a sequentialmanner. This arrangementwould ensure an improvementin husbandry standardsbefore introducingfertilizer, and an increase in village incomes from which,.purchasesof fertilizercould be met. However, as little is known about farmers' adoption behavior, the sequence of introductionof the Packages could be experimentedwith. Some villages are already at a stage similar to Packages 2 and 3. These would be assisted to improve further their present production levels. The use of more concentratedfertilizers would be encouraged,especially di-ammonium phosphate and calcium nitrate to replace sulphate of ammonia which increases soil acidity, while the long- term aim of the research program would be to develop crop rotations involving legumes to reduce the need for imported nitrogenous fertilizer.

4.04 Governmentwould initially subsidize all maize inputs except herbicides because of the high cost of inputs, especially fertilizer,the difficulties and cost of organizing a national credit program and the limited scope for providing added incentives to participatingfarmers through higher maize producer prices (paras.6.03-6.04). During 1975/76 the subsidy, which would be paid by Treasury from general revenue, would be equivalent to 75% of the farm gate cost of inputs. Project villages would pay in cash the difference between the Government subsidy and the actual farm gate cost. Governmentwould review the subsidy level annually in the light of experience gained under the Project, and with regard to changes in input and maize producer prices, and develop a program to gradually reduce and eventually eliminate the subsidy burden on Treasury. Assurances were obtained from Govern- ment that IDA would be consultedduring the annual review of subsidy levels.

4.05 Maize production inputs required for Project year 1975/76would be purchasedby Government. 1/ These total about 16,000 tons of fertilizer, 4,000 tons of seed, and 1,800 tons of pesticide. The returns from the sale of all maize inputs (at subsidized prices) would be channeled into a Maize Production Inputs Account (MPIA) which would be establishedfor the purchase and delivery of maize production inputs. In addition to the sales proceeds, Government would deposit into this account sufficient funds to cover payments for the purchase and delivery of inputs. The minimum amount to be deposited in the account at the beginning of each calendar quarter would be equal to the expected payments during that quarter. Total input requirementsfor 1975/76 and annual incrementalrequirements for Project years 1976/77 - 1978/79would be financed under the Project. The establishmentof MPIA would be a condition of Credit effectiveness.

1/ Government could be reimbursed for the subsidy portion of total input cost for that year from a USAID loan of July, 1975. - 14 -

4.06 Since during the 1973/74 and 1974/75 cropping seasons maize production inputs were distributed free, the degree to which villages would be able and willing to purchase maize production inputs is unknown. Consequently, should some of the inputs purchased by Government in the first year remain unsold at the end of the 1975/76 planting, these inputs would be retained for the next season. Incrementalinputs which are provided under the Project would only be purchased once inputs had been sold and the Maize Production Inputs Account had been funded in the agreed manner.

Extension Services, Training and Demonstrations (Annex 2)

4.07 Short courses in maize agronomy and extension methods would be given to all field assistantsand assistant field officers at their local rural training centers (RTC). These courses, lasting for two weeks, would be conducted by senior agriculturalstaff from the regions concerned. In the first year all staff would take one course with a refresher course every year thereafter. All staff responsiblefor teaching at the RTCs would attend a two-week course at the Ilonga Research Station. More intensive courses in maize agronomy and extensionmethods would be arranged for assistant field officers and the most progressive field assistants. These would be given at the agriculturalresearch and training centres. In addition, a few senior agriculturalstaff would be sent overseas for intensive courses in advanced maize agronomy.

4.08 To assist in arranging suitable training courses in maize the InternationalMaize and Wheat ImprovementCenter (CIMMYT) in Mexico would provide a senior training officer for a period of about four weeks.

4.09 Courses in organizationand management would be arranged for all regional and district agriculturaldevelopment officers, regional Project coordinatorsand district supervisors. These courses would last three weeks and be held at the TanzanianManagement Development Institute at Morogoro. In addition management seminars for regional and district staff would be arranged to ensure an exchange of views and experience between participating regions.

4.10 Two maize demonstrationplots would be planted annually in each Project village. One plot would be planted and managed by the village school, while the other would be the responsibilityof a progressive farmer selected by the village committee. In both cases, the necessary inputs and technical advice would be provided free by the Project. The school demonstration plot would be about half a hectare in area with four equal-size plots. Three plots would demonstrate the three production packages provided under the Project and one the prevailing traditional system. The village demonstrationplot would replicate the package being adopted by the village. These demonstrationactivities would also provide an opportunityfor extension staff to gain practical experi:ence. - 15 -

Input Supply and Maize Marketing (Annexes4 and 6)

4.11 During the Project period, regional cooperativeunions (or in certain regions, NMC) would become increasinglyinvolved in the distribution of maize productioninputs and the movement of maize grain. For the transport of the estimatedProject input requirementsand incrementalmaize production, an additional44, 7-ton, and 44, 10-ton trucks would be required. These would be provided under the Project.

4.12 There is a shortage of storage facilitiesin most of the newly establishedvillages. Under the Project about 530 villages would be provided with stores of about 200 tons capacity. Stores of this size would be expensive if constructedby contractors. Consequently,the Project would provide constructionmaterials and technicaladvice, while constructionwould be carried out by villagerson a self-helpbasis. The materials cost of village stores constructedin this manner would be about US$6,000 each.

4.13 Project villages would be selected by Regional Authoritiesduring Project implementation,and since there is no previous experienceof farmers' ability and willingnessto purchase maize production inputs it is impossible to estimate preciselyhow many stores would be required and how big individual stores would be. Consequently,a lump sum for village store construction has been included,and the exact size and location of village stores would be determinedduring Project implementationby Regional Authorities with the assistanceof the Project ServicingUnit. Inevitably,there would be a time lag between identifyingthe need for a store and completionof construction. To overcome this problem, and to ensure that adequate temporary storage was available,the Project would supply cooperativeunions with tarpaulinswhich would be used by Project villages until permanent stores were constructed.

4.14 There is a need also for additionalregional storage for maize and farm inputs. The Project would provide for the constructionof storage facilitiesfor about 34,000 tons of farm inputs and 80,000 tons of maize. Similar to village storage, the precise location of the new regional storage would only be determinedduring Project implementation. All Project storage and transportrequirements would be incorporatedin regional annual work programs. These work programs would be appraisedby PSU and would be subject to approval by the Project Steering Committee and IDA (para. 5.03).

Crop Trials and Adaptive Research (Annex 3)

4.15 While there is sufficientexperimental data to fully justify the general use of the varieties and the amounts and types of fertilizer recommended under the Project, further field research is required to determine more optimum recommendationsfor the various ecologicalconditions existing throughoutthe Project area and to find a suitable nitrogenousfertilizer to replace sulphate of ammonia (para. 2.12). About four trials would be establishedin each region every year and these would be organized by the Research Division of KILIMO. To enable the formulationof a national adaptive - 16 - maize research program and to give a clearer idea of maize production conditions throughoutTanzania, a dei:ailedreview would be made of all aspects of maize agronomy in the major maize growing areas of the country. The review which would include recommendations for the future agronomic developments required to put the maize industry on a sound- long-term footing would be carried out by a consultantagronomist especiallyrecruited for the purpose. Terms of referencefor the review are detailed in Annex 7.

Mobile Film Units and AgriculturalNewspaper (Annex 2)

4.16 The Project would provide a mobile film unit for each of the 13 Project regions. Provision would also be made for the purchase and production of suitable films on maize production.

4.17 KILIMO publishes a monthly agriculturalnewspaper (Ukulimawa Kisasa) although few copies are distributed in the newly establishedvillages. The Project would increase the number of copies printed and arrange for their distributionin all Project villages. Articles on maize productionwould be incorporatedin the paper. Maize production leaflets would also be prepared and distributed.

Oxen Pilot Scheme (Annex 6)

4.18 A pilot scheme to develop methods of improvingoxen utilizationand for proving suitable ox-drawn equipmentwould be carried out in up to twenty selected villages located in those Project regions where oxen use is most common. Selected villages would be required to own a minimum of ten pairs of oxen. Such villages would be provided with an experiencedoxen trainer for two years, and up to ten sets of ox-drawn equipment,each includinga cart, harrow, plough and cultivator. The equipmentwould be provided free with the proviso that it would be withdrawn if farmers failed to participate effectively in Project activities. In addition, the Project would provide oxen to four mechanized agriculture centers which are being established with UNDP/FAOassistance. The animals would be used for the development and testing of new ox-drawn implements,in particulara maize planter and interrow cultivator.

Project Servicing Unit (PSU)

4.19 Regional authoritieswould implement the Project at regional and district level. To assist them a PSU would be establishedwithin the Crop ProductionDivision of KILIMO. PSUrwould be headed by a Project Manager and would include the following key staff: Extension Specialist,Farm Manage- ment Specialist,Financial Controller,and Procurement and Distribution Officer. It would be responsible for controlling Project finances, procuring and distributingmaize production inputs and other Project-relatedmaterials and equipment,coordinating regional maize productionplans, preparing annual Project work programs, providing regional authoritieswith extension aids, and monitoringProject progress. The Project would meet the full costs of estab- lishing and operating PSU, including the cost of purchasing and operating a - 17 - light aircraft,which would provide the essential communicationlink between the Unit and the 13 Project regions. Terms of reference for the PSU are included in Annex 7.

Pre-investmentStudies

4.20 Government recognizes the need to establish a national grain reserve, for which maize is the most important commodity, and for expanding and modernizingthe milling and storage facilities of NMC. The Project would provide up to 60 man-months of consultancy services to carry out the required pre-investmentwork and prepare detailed investment proposals for a national grain reserve and for developing NMC's storage and milling facilities. Terms of reference for the pre-investmentstudies are included in Annex 7.

Planning and Preparationof a National AgriculturalDevelopment Program

4.21 The Project would provide US$180,000 over a three-year period for agro-economicsurveys, crop trials, land use planning and transport and allowances for KILIMO planning staff and consultants. A long-term national agriculturaldevelopment program would be prepared which is compatible with Tanzania's regional approach to implementingits development effort and directed mainly towards those research, extension and investment activities that are better carried out at a national rather than a regional level. A preparation program is presentlybeing prepared with RMEA assistance.

C. Project Costs

4.22 Detailed Project cost estimates,based on July, 1975 prices which have been adjusted to take account of the October, 1975 devaluationof the Tanzanian currency,are presented in Annex 8 and summarizedbelow: - 18 -

Foreign Local Foreign Total Local Foreign Total Exchange --(TShs. millions)------(US$ millions)---- %

Farm Inputs 30.8 84.6 115.4 3.822 10.508 14.330 73

Project Servicing Unit 4.6 5.3 9.9 0.566 0.667 1.233 54

Regional Staff and Support 18.0 16.2 34.2 2.237 2.008 4.245 47

Storage and Transport 24.1 43.8 67.9 2.989 5.440 8.429 65

Training 4.5 3.0 7.5 0.569 0.369 0.938 39

Air Transport 0.6 1.8 2.4 0.084 0.221 0.305 72

Pilot Ox Utiliza- tion 0.6 0.1 0.7 0.069 0.015 0.084 18

Project Prepara- tion Studies 1.3 4.2 5.5 0.152 0.527 0.679 78

Subtotal 84.5 159.0 243.5 10.488 19.755 30.243 65

Physical Contin- gencies 5.2 7.0 12.2 0.643 0.871 1.514 57

Price Contingencies 21.0 30.3 51.3 2.611 3.769 6.380 59

Total Project Cost 110.7 196.3 307.0 13.742 24.395 38.137 64

Physical contingencies have been included at a rate of 10% for all Project components except farm inputs, the pilot ox utilization scheme and project preparation studies, for which no physical contingencies have been allowed. Estimated input quantities are at maximum levels at which inputs could be usefully employed under the Project. Price contingencies have been included at the following annual rates: vehicles, equipment and general for 1975/76 - 1978/79 respectively: 11%, 9%, 8% and 8%; the foreign cost of buildings and civil works: 15%, 13%, 12% and 12%; and the local cost of buildings and civil works: 22.5%, 19%, 16.5% and 15% (Annex 8, Appendix 1). Local taxes, principallv including income taxes on earnings of local staff and some fuel taxes, are estimated to represent less than one percent of total Project cost. - 19 -

D. Financing

4.23 Financing of the Project would be as follows:

Sources of Financing Total Project Costs US$ (Millions) %

Governmentof Tanzania 1/ 11.1 29

Farmers 4.0 11

Arab Bank for Economic Develop- ment in Africa (ABEDIA) 5.0 13

IDA 18.0 47

Total 38.1 100

1/ Of which up to US$6.4 million is being made available to finance part of the cost of inputs in Year 1, from a US$12 million USAID loan to Tanzania's agriculturesector, thus reducing Government'sshare to 12% of total costs.

4.24 Under the proposed financing arrangementsthe cost of inputs in the first Project year would be financed by Government (US$6.4million) and farmers (US$2.1million). Of the remainingProject costs, Government would pay US$4.7 million, farmers US$1.9 million, ABEDIA US$5.0 million and IDA US$ 18.0 million. The ABEDIA loan, which would finance expendituresfor all project vehicles, the light aircraft, village equipment and overseas training,would be at 2% annual interest over 20 years, with a 5-year grace period. The fulfillmentof the conditions precedent to the effectivenessof the loan agreement between ABEDIA and Government would be a condition of effectivenessof the IDA credit. The ABEDIA/IDA contributionstogether would finance approximately$16 million of foreign exchange expendituresand US$7 million of local costs.

4.25 Funds for storage and transportwould be channeledby Government to TRDB (Annex 9) at 4% annual interest, over 20 years, with a 5-year grace period. TRDB loans would be at 8-1/2% annual interest over 10 years for the constructionof storage facilities and at 8-1/2% annual interest over 3 years for vehicles. These rates would be in line with TPDB's current standard terms for short-term loans and one percentage point above for medium and long-term loans. Should Governmentwish to make Project funds available to private transport owners for the purchase of lorries, such funds would be channeled through the National Bank of Commerce, through its wholly-ownedsubsidiary KARADHA Co. Ltd. The same terms as for TRDB would be applicable. Subsidiary - 20 - loan agreementswould be drawn up governing the terms under which Government provided funds to lending institutions. A loan agreementbetween Government and TRDB would be a conditionof credit effectiveness.

E. Procurementand Disbursement

4.26 PSU's procurementof Project incrementalfertilizer, insecticides, herbicides,vehicles, motor cycles, platform scales, safes, aircraft,village store constructionmaterials and the contracts for the constructionof regional and NMC storage (US$21 million) would be by internationalcompetitive bidding, following IDA guidelines. Local manufacturerswould be allowed a preference margin of 15 percent or the existing rate of duty, whichever is lower. Local civil works contractorswould have a 7-1/2% preferencemargin. All maize seed, and office equipment,bicycles, tarpaulinsand small miscellaneousitems costing less than US$120,000per contractwould be procured locally in accordance with normal Governmentprocedures which are satisfactoryto IDA. The required maize seed, mainly local varieties,would be supplied by the domestic seed industry. Thirteen fully equipped film vans would be obtained at special discount from UNESCO through the kudio-visualInstitute in Dar-es-Salaam. Assurances were obtained during credit negotiationsthat PSU would bulk orders for vehicles and other equiLpmentwherever possible; that draft tender documents for all contracts expected to cost in excess of US$300,000would be submittedto IDA for approval before invitationsare issued: that bid analysis and recommendationfor award woulel be submittedto IDA for comment before contractsare awarded; and that all other procurementwould follow standard Government procedureswhich are satisfactory.

4.27 Against appropriatedocumentation, IDA would disburse:

(i) For incrementalmaize productioninputs required in Project Years 2 to 4, includinginputs for research trials and demonstrationplots:

(a) 100% of foreign expendituresif directly imported;

(b) 80% of total expendituresif locallyprocured;

(ii) For equipmentand materials:

(a) 100% of foreign expendituresif directly imported;

(b) 80% of total expendituresif locally procured;

(iii) 80% of the cost of constructingregional and NMC storage as well as offices for Project ServicingUnit staff;

(iv) 100% of the foreign expenadituresof consultancyservices, includingPSU staff; - 21 -

(v) 80% of the cost of local training;local PSU and regional staff salaries;and the cost of operationand maintenanceof PSU and regional vehicles, excluding lorries.

Documentationfor expendituresunder (v) above would not be submitted to IDA for review, but would be retainedby the Borrower and be available for inspection by IDA during Project supervision. A schedule of quarterlydisburse- ments is in Annex 12. Any surplus funds would be subject to cancellation.

4.28 For the crop season 1975/76 retroactivefinancing would be required for the items detailed in Annex 8, Table 12. These items have a total estimated cost of TShs. 4.2 million (US$0.5million) of which TShs. 2.1 million (US$0.3million) would be eligible for disbursementby IDA and TShs. 1.5 million (US$0.2million) for disbursementby ABEDIA.

F. Accounts and Audit

4.29 Governmentwould maintain separate accounts for maize production inputs and for disbursementsthrough the Project ServicingUnit which would be auditedby the Auditor General. TRDB and NMC would also maintain separate accounts for subloansunder the Project. The TRDB and NMC accounts would be audited by the Tanzania Audit Corporationor any other independentauditors acceptableto IDA, and the accounts and auditors'reports would be submitted to IDA within six months of the close of each financialyear. Auditing of the regionaland village cooperativesis the responsibilityof the Prime Ministers Office; all audited cooperativeaccounts would be available for examinationby IDA.

G. Ecologicaland External Effects

4.30 The Project would have a favorableeffect on the ecology, in as much as soil fertilitywould be improved and erosion controlledby better husbandry, crop rotation and fertilizers. However, as part of the input package, the Project would recommendthe use of relativelysmall amounts of DDT 5% powder (10 kg.ha) against stalkborerand DDT 25% liquid against army worm for about 10% of the Project area. While DDT is the most effective and economic known control of the two pests, the Project would experimentwith other control methods as they become available. Although the use of DDT has been prohibited in some industrializedcountries, there is no evidence to suggest that the proposed quantitieswould have any harmful effects in the Project area. - 22 -

V. ORGANIZATIONAND MANAGEMENT

5.01 Project organization which would be based entirely on Government's existing administrativestructure would be as follows:

National level

5.02 A Project ServicingUrnit (PSU) would be establishedin the Crop ProductionDivision of KILIMO. Experiencedstaff would be appointed to PSU, including a Project Manager, a Financial Controller,and specialistsin extention, farm management,and procurementand distribution. Only if suitably qualified Tanzanianscould not be made available, these positions would be filled with internationallyrecruited staff. Appointmentsto the above positionswould be made in consultationwith IDA. It would be a conditionof Credit effectivenessthat staff in those positions,with the exceptionof the farm management specialist,have taken up their duties. Assurances were obtained during negotiationsthat, in case the farm management specialistcould not be recruitedby April, 1976 alternativearrangements to carry out the functionsof that specialist satisfactoryto IDA would be made until such time as the post could be filled.

5.03 PSU would have the followingkey functions:

(a) Project Planning and Cioordination:The maize production targets for each region have been establishedwith the aim of attainingself-sufficiency in regions where this is economically justified and increas:ingsurplus maize from those regions which are particularlysuited to production and reasonably close to consumingareas. Within these guidelines,a detailed work program would be prepared annually for each region and district. The PSU in conjunctionwith regional Project coordinatorswould consolidatethe regional plans into an overall national plan. This national plan would be reviewed annually by the Project Steering Committee anc.submitted to IDA for approval (para. 5.10).

(b) FinancialAdministration and Procurementof Inputs: PSU would be responsiblefor the administrationof Project funds and for operating the Maize Production Inputs Account. Inputs would be purchased at their full market price and sold to farmers through the regional cooperativeunions or regional authoritiesat subsidizedprices. Inputs would be sold in accordancewith Governmentpolicy which, at present, provides for uniform prices throughoutthe Project area. Government is aware that uniform producer prices would distort resource allocation in the long-run and is keeping its pricing policies under constant review. The Inputs Account would receive sufficientpayments from Government to meet the difference between the full cost of farm inputs, including transport,and the subsidizedsale price to farmers. PSU would keep separate accounts for maize production inputs transactions and its other operations. - 23 -

(c) Technical Support for the Regions: PSU would provide technical support to agriculturalstaff in the regions under the Project. This would include assistance with training programs for extension staff, production of leaflets on maize production methods, organizationof demonstrationplots and film shows.

(d) Transport and Storage: PSU would arrange the distributionof farm inputs to regional cooperativeunions or other agencies as appropriate. PSU would not operate its own transport for this purpose but would use the railways and transport companies. PSU would also play a major role in helping to prepare plans for development of storage and transport in the regions and approving expenditure for this purpose. It would arrange for assistance to be provided to villages to aid in village storage construction.

(e) Project Evaluation: An important aspect of Project implementation would be the continuous improvementof maize production technologyand the development of improved farming systems. The Project field research program, village demonstrationactivities and maize production statisticswould provide valuable data for this purpose. PSU would have responsibilityfor collecting appropriate statistics,through crop sampling and other evaluation means; for continuallymonitoring Project progress; and for revising Project plans as appropriate. PSU would be assisted in this task by USAID supported staff.

Regional Level

5.04 Within each region the Project would be administeredthrough the regional government administrationwith its chain of command going from the regional headquartersthrough the districts, divisions and wards down to the villages. In each region the regional authoritieswould appoint a Project coordinatorwho would be assisted in each district by a Project supervisor (Annex 7). Appointmentof staff in those positionswould be a condition of Credit effectiveness.

5.05 A farm management officer would be appointed in each regional headquarters. He would liaise closely with the farm management specialist assisting PSU (para 5.02). He would be responsible for monitoring Project progress, estimating input use, maize yields and production in Project villages and analyzing the results achieved on demonstrationplots and trials. Also, he would advise on the most appropriateproduction techniques for the Project within the framework of local farming systems.

5.06 PSU would generally supply regional cooperativeunions with maize production inputs, for onward distributionto village primary cooperatives. However, the establishmentof the cooperative arrangementswould take time, and until they are satisfactorilyintroduced inputs would continue to be - 24 - supplied through existing parastatal organizations,including cash crop authoritiesand regional authorities. Project villages would buy inputs on a cash basis at subsidizedprices. PSU would be reimbursed the cost of inputs by the respectivedistributing agency in the regions as they are sold.

5.07 Arrangementsfor the purchase of maize from Project villages, and for financing such purchaseswould continue essentiallyas at present. In most regions the primary cooperativesocieties would purchase maize at the village level, acting as agents of the regional cooperativeunion, who in turn would act as agent for NMC. The cooperativeunions would arrange for maize to be transportedfrom villages to regional NMC depots. The National Bank of Commerce would continue to advance funds to cooperativeunions, which in turn would provide financing to primary societies. Farmers would be paid cash on delivery at the official price. In regions where the cooperative system is unable to market maize efficiently,the NMC would purchase directly from Project villages.

Village Level

5.08 The village would be the basic developmentunit. Within each village, either a newly establishedvillage cooperative society or an older multi-villageprimary cooperativewould be responsible for distributing village requirementsof seeds, fertilizersand insecticidesand for the marketing of surplus maize.

5.09 The Project would provide one resident extension worker or village farm manager to each Project village. This would be difficult to achieve in some areas, and initially some villages would have to share staff. The village structure would make communicationmuch easier for extension staff. Villagers would cultivate at least part of their maize in communal plots or in blocks of individualplots, thus facilitatingcontact with groups of farmers.

Project Steering Committee (PSC)

5.10 To provide the inter-ministerialcoordination required for policy decision making and for the approval of Project annual work programs, a Pro- ject Steering Committeewould be establishedunder the chairmanshipof the Principal Secretary,KILIMO, and with members from the Prime Minister's Office and the Ministry of Finance and Planning, and the Commissionerfor Rural Development. The Project Mxnager would be secretaryof PSC. Establishment of PSC would be a condition of Credit effectiveness.

Staffing

5.11 The Project Manager, a Tanzanian, and deputy Project Manager (Agri- cultural DevelopmentService) were appointed in July 1975, and staff for the remaining key PSU staff positions are being recruited. Other Project staff, including regional coordinators,regional farm management officers, and - 25 - district supervisorswould be selected from the existing cadre. In order to achieve a staffing of one extensionworker per Project village, an additional 140 and 100 field extension staff, respectively,would be recruited in 1976/77 and 1977/78,mainly from Standard 12 school leavers of which sufficientnumbers would be available. Thirteen mobile film unit teams, consisting of a driver/mechanicand projectionist/narrator,would be recruited by the Project, and their training undertaken by the Audio-VisualInstitute in Dar-es-Salaam.

VI. PRODUCTION,MARKETING, FARMERS' BENEFITS EFFECTS ON GOVERNMENT BUDGETS

Yield and Production

6.01 Average maize yield in Tanzania are very low at about 750 kg/ha, although the range of yields is very large. The Project, which would include only the better maize producing areas, assumes a base yield of 1,100 kg/ha, increasing to 1,500 kg/ha for Package 1; 2,200 kg/ha for Package 2; and 2,700 kg/ha for Package 3. The higher yield levels are already being obtained by progressivefarmers in high potential areas. The assumed yields for all Project villages would increase from an average of 1,370 kg/ha without the Project to 2,050 kg/ha at full development. The Project would increase maize productionby about 20,000 tons in year 1 rising to about 195,000 tons at full development in 1982. Full development is not expected before 1982 because of an assumed three-year time lag between aDplicationof a certain input Package and the full realization of its yield potential.

Markets and Prices (Annex 10)

6.02 The Project would assist Tanzania to become more efficient in producing maize and substitute for imports which in 1974 and 1975 totalled about 291,000 tons (TShs. 360 million or US$50 million), and 247,000 tons (TShs. 301 million or US$42 million), respectively. During the Project period Government plans to establish a national maize reserve of about 90.000 tons and any Project production in excess of current requirements would be channelled into this reserve. Once the national reserve is established, Governmentpolicy would be to aim at maize production levels of about self-sufficiency. It would be assisted in this task by a strengthenedMarketing DevelopmentBureau which would be responsible for reviewing producer prices, and providing crop pricing recommendations. However, because of production fluctuationsdue to climate, it is inevitable that small maize surpluses would occur in some seasons which would be absorbed in border trade or added to the reserve.

6.!)3 According to projectionsprepared by the Economic Analysis and Projections Departmentof the World Bank, the internationalmaize price (current terms: f.o.b. Gulf Ports) is expected to increase from US$128/ton (TShs. 1,030) in 1975 to US$154/ton (TShs. 1,240) bv 1980. The farm gate - 26 - equivalent of these prices in Tanzania (import parity) is approximately TShs. 1,113/ton (US$138) for 1975 and TShs. 1,290/ton (US$160) for 1980. Actual farm gate prices for the 1974/75 season are TShs. 750/ton (US$93) and for 1975/76, TShs. 800/ton (US$99). Considering the sharp increases in producer maize prices in Tanzania in recent years (from TShs. 300/ton, or about 42% of import parity in 1973/74, to 73% in 1975/76), the unfavourable impact further increaseswould have with respect to the relative profitability of growing other crops, and the low estimated export parity price of Tanzanian maize of TShs. 550/ton in 1975, the domestic producer price for maize appears adequate at present. However, progressivelyhigher producer prices relative to import parity would be justified from 1976/77 onwards if there is an indication that production targets are not going to be reached with present price levels.

Input Subsidy, Government Budget and Foreign Exchange

6.04 The current subsidy level of 75% is intended to bring about a more economic use of inputs compared with the two preceding years when inputs were subsidized 100%, and still permit the target number of farmers to participate in the Project. The subsidy is justified in view of the high cost of inputs and because it is presently not feasible to provide sufficient incentives to farmers through such alternativemeans as credit or higher producer prices (Annex 5). Assuming that the 75% subsidy level would be maintained throughout the Project period, the cumulative cost of the subsidy is estimated at TShs. 289.7 million (US$36.0million) by the end of 1978/79: if the subsidy level were then reduced to 60% the following four years and to 40% thereafter, the cumulative cost over the ten-year period 1975/76 - 1984/85would be about TShs. 797 million (US$99 million). A reduction in the subsidy level should be possible as Project village incomes increase and with the anticipated fall in world fertilizerprices. It is Government policy to review future subsidy levels and options of recovery of the cost of the subsidy annually with a view to a progressive reduction in the budgetary burden.

6.05 With the proposed financing arrangements (para. 4.24) and the assumed future Government input subsidy policy (para. 6.04), the Project's overall negative impact on the Government budget would be a cumulative TShs. 281.6 million (US$35.0million) by end of 1978/79, and TShs. 915 million (US$114million) by 1984/85. This burden, which would be eased through contributionsfrom a USAID loan of an estimated TShs. 52 million (US$6.4 million), would not be larger than the burden resulting from continued importa- tion of maize in the absence of the anticipatedproduction from the Project.

6.06 The foreign exchange impact of the Project would be favorable, in spite of continuing fertilizer imports. The foreign exchange content of input costs would be TShs. 282 million (US$35.1million) for the four-year period ending 1978/79, and TShs. 988 million (US$123 million) for the ten- year period ending 1984/85. Including the foreign exchange content of maize inputs and all other Project related costs, the cumulative outflow of foreign exchange over the ten-year period would be TShs. 1,194 million (US$148million). Against these outflows are foreign exchange savings due to decreased maize - 27 - imports. Over the ten-yearperiod, gross foreign exchange savings from Project maize productionwould be about TShs. 1,931 million (US$240million), and total gross savings from maize productionplus inflows of external financingTShs. 2,116 million (US$263million); the net savings would be TShs. 922 million (US$115million).

Farmer Benefits (Annex 11)

6.07 Farm budgets for the three improved husbandrypackages (para. 4.03 and Annex 3) show that, at full development,farmer margins would be increased by 36%, 87% and 129%, respectively,over expected levels without the Project within three years of applicationof the packages. These margins would be sufficientlyattractive to encourage farmer participation.

6.08 Assuming that the Project maize area per farm family would be 0.75 ha, the average increase in farmer income at full development,including the value of additionalsubsistence production, would be TShs. 342 (US$42) per family in 1975 prices. The estimatedincremental cash income would be TShs. 228 (US$28). On a per capita basis these increaseswould be TShs. 68 (US$8) and TShs. 46 (US$6) respectively. This compares with the present estimatedrural per capita GNP of TShs. 350 (US$43) (Annex 11, para. 16). Although the Project would not benefit the poorest segment of the rural population,the present incomes of Project beneficiarieswould generally be below the average of rural incomes in Tanzania.

VII. ECONOMIC BENEFITS AND JUSTIFICATION

(Annex 13)

7.01 The primary direct benefits of the Project would be increasedpro- duction of maize and a resultant reductionof grain imports.

7.02 The Project's interal economic rate of return is estimated to be 37% over a 20 year period. Project costs except the costs of the oxen utilizationscheme and of NADP project preparation,and 50% of the cost of the storage and milling consultantswere included in the calculation. No cost was attributedto family labour since the Project would assist only those farmers already growing maize, and only a small incrementof presently under-employedfamily labour would be required under the Project. The costs of maize productioninputs and value of Project incrementalmaize output are based on recent World Bank projections. Project incremental maize production is valued at import parity up to 1980, since self-sufficiency would not be reached before then. From 1981 onwards Tanzania would aim to maintain self- sufficiency and a national maize reserve of about 90,000 tons and since small annual surpluses are assumed to alternate with small annual deticits, Project incremental production is valued mid-way bet-weenimnort and export parity. Foreign exchange costs and benefits are va'ued at TShs. 1G = US$1.00 to reflect the economic costs of foreign exchange to Tanzania: if foreign exchange were valued at the prevailing exchange -ate of TShs. 8.05 = US$1.00, the economic rate of return would he 30M. - 28 -

7.03 The risks most likely to effect the Project's economic rate of return are the uncertaintyabout the extent to which farmers would be willing to purchase fertilizersand other inputs and to apply the recommendedpro- duction methods. Only limited experiencehas been gained so far with the new village system and there is some doubt about how well this will work, especiallywhere communal methods of productionare emphasized. To the extent possible, these risks have been minimized by designing the Project flexibly so as to be able to utilize new experience gained during implementation and to eliminate those activities not yielding the expected results. Nevertheless, even if incremental output from the Project were 30 percent below expectation, the Project would still show a rate of return of 16 percent.

VIII. AGREEMENTSREACHED AND RECOMMENDATION

8.01 During negotiationsagreement was reached on the following principal points:

(a) Inputs would be sold for cash at subsidizedprices. The rate of subsidy would be reviewed from time to time in consultationwith IDA (para. 4.04);

(b) The Maize Production Inputs Account would be funded in the agreed manner (para. 4.05);

(c) All remaining new appointments and subsequentappointments to replace senior staff in the Project Servicing Unit would be made in consultation with IDA (para. 5.02);

8.02 It would be a condition of effectivenessof the IDA Credit that:

(a) The Maize Production Inputs Account had been established (para. 4.05);

(b) The conditions precedent to the effectiveness of the loan agreement between ABEDIA and Government had been fulfilled (para. 4.24);

(d) All remaining key staff of the Project Servicing Unit, except the Farm Management Specialist,had been appointed and had taken up their duties (para. 5.02); - 29 -

(e) The regional Project Coordinatorsand district Project Supervisorshad been appointed (para. 5.04);

(f) The Project Steering Committee had been established (para. 5.10).

8.03 The Project is suitable for an IDA Credit of US$18 million on standard IDA terms.

ANNEX 1 Page 1

TANZANIA

NATIONAL MAIZE PROJECT

UJAMAAAND THE COOPERATIVESECTOR

A. Cooperative Structure

Introduction

1. Cooperativesexist in large numbers throughoutTanzania. By the end of 1973, there were 2,200 registered cooperatives,including the Coopera- tive Union of Tanganyika,the Savings and Credit League, 25 cooperativeunions, 1,518 cooperativemarketing societies, 265 cooperativeproduction and marketing societies, 314 savings and credit societies, and 78 cooperativeconsumer societies. 1/ The existing cooperativestructure is in the process of change. The present 25 cooperativeunions are to be consolidatedand reduced to 20, one for each region.

2. The history of cooperativemovement in Tanzania goes back to the voluntary "growers associations"of the 1920s. In 1932 the first agricultural cooperativeswere registered in the Kilimanjaro area to promote coffee as a cash crop for peasant farmers. The movement soon became popular and spread quickly to other areas where commercial peasant farming was relatively advanced. By 1952, there were 172 registered societies and by 1961 the number had increased to 857. Thus, cooperativesgrew up spontaneouslyin the regions of Moshi, Arusha, Bukoba,Mwanza, Ruvuma, Rungwe&and Iringa. Shortly after independence, the Governmentdecided that the cooperativemovement should be made an integral part of the political structure and, consequently,that cooperativesshould be establishedin all parts of the country where they were previously absent. In subsequentyears, the Government exercised an increasingdegree of supervision and control. For example, Government now sets many of the financial margins within which the cooperativeshave to operate; controls the hiring and firing of all union officials with a salary above TShs. 650 a month; controls all cooperativeeducation;thas assumed virtually all responsibilities for inspectionof cooperative societies;has transferredto the unions special tasks previously performedby the private sector; and has moved to link in- extricably the cooperativemovement with ujamaa village development.

1/ Updated from annexes of the Kigoma (Cooperatives)and Geita (Ujamaa) Reports with assistance from the "Nordic CooperativeAssistance to Tanzania" Team. ANNEX 1 Page 2

3. In addition, Governmenthas appointed the executive committees of Coast, Dodoma and Mbeya regions, and the General Managers of Arusha and Coast Regional CooperativeUnions are appointed civil servants. Latest developments in the area of Government interventioninclude the liquidationof the Kigoma Regional CooperativeUnion, and the dismissal of all senior officials of the Tanga Regional CooperativeUnion, for reasons of inefficiencyand gross mis- management.

4. The cooperativemovement has thus evolved from a spontaneous effort designed to provide the benefits inherent in economies of scale to its member farmers, into a program initiated, supervisedand controlledby Government. Increasingly,the cooperativestructure is being used to further Government's political and socio-economicgoals.

5. The principal responsibilityof the cooperativeunions, apart from various consumer, financial, transportand other services they might perform, is to move the marketable surplus of virtually all scheduled crops in all regions of the country from the primary societies to the appropriate marketing boards. Affiliated primary societies, in turn, assist the unions in this task by acting as their collectingagents. The cooperativeshave been assigned sole buying rights for most crops. However, agriculturalproduction has sometimes suffered from such monopolisticpractices, because the cooperativeahave often suffered from poor management, petty corruption and low marketing efficiency. Problems arise, in particular,from an acute shortage of management and accounting skills, an absence of personal account- ability within the system, and the frequent allocationby Government of unrealistic costings and margins.

Legislation,Organization, and Supervision

6. The first CooperativeSocieties Ordinance, stipulatingthe legal basis for all cooperatives,was enacted in 1932. It was subsequentlyre- placed by the CooperativeSocieties Ordinance of 1968. A further supplement is expected soon, with the aim of specifying the processes and criteria by which villages are to become multi-purposeprimary cooperativesocieties. Two stages would be distinguished:

i) a fully-registeredmulti-purpose cooperative society, with complete legal independenceand status, and with limited liability;and

ii) full control of the major means of production in the village by the cooperativesociety; the village would then be a true Ujamaa. ANNEX 1 Page 3

7. The cooperativestructure in Tanzania consists of an apex organization, the CooperativeUnion of Tanganyika (CUT), regional cooperativeunions, and constituentprimary cooperative societies. CUT's functions as a representativeof the cooperativemovement -- exercised by agreement with the unions, not by law -- appear to have been eroded in recent years. CUT has provided and does still provide advisory, educationaland legal services to the country's cooperatives. However, many of its functions have been transferred to the Government. For example, CUT's education wing, the Cooperative Education Center, has been absorbed by the Cooperative College at Moshi and many of its legal and advisory activities appear to be shifting to the Prime Minister's Office.

8. Following the Government reorganizationof July 1971, the Rural Development Division, headed by the Commissionerfor Rural Development, 1/ was establishedto deal with matters relating to cooperatives. Subsequently, this division was changed to the "Ujamaa and CooperativeDevelopment Depart- ment" (see Chart 1). This central cadre is supported in each of the 20 regional administrativegovernments by an ujamaa and cooperativefunctional manager and his staff. Regional staff consists of ujamaa and cooperative development trainees,assistants and officers, all of whom provide advice, supervisionand inspection to ujamaa villages and cooperativesocieties, both from headquartersand in the field. The Commissionerof Rural Development also serves as the Registrar of Cooperatives,who is responsiblefor the registrationof all cooperatives. At the regional level, the Regional Develop- ment Directors have recently been named Assistant Registrars of Cooperativesand have been charged with registrationof all multipurposecooperative societies within their respective regions. Other institutionsdealing with the cooperatives include the Unified Cooperative Service Commission,and the Audit and SupervisionFund. The former is charged with the recruitment,appointment (includingpromotions and transfers) and terminationof all cooperative personnel earning TShs. 650 per month or more. The latter is responsible for the audit and supervisionof the financial records and the preparation of financial statements of all registered cooperatives.

9. The Audit and Supervision Fund currently has a network of 12 zonal offices distributedthroughout the country, which it plans to expand into 20 regional offices. Total staff consists of 125 personnel of which only 9 are qualified accountants. Approximately 10 percent of the staff is expatriate,projected to be phased out by June 1976, as qualified Tanzanian staff become available following the necessary training at either the Coopera- tive College at Moshi or the Institute of DevelopmentManagement at Morogoro.

1/ The Commissioneris head of the Ujamaa and Cooperative Development Department which is not within the Prime Minister's Office (PMO) but has the status of an extra-ministerialdepartment. ANNEX1 Page 4

Only about 50 staff members are currently qualified to audit and supervise the financialaccounts of primary societies. Each staff member could audit approximately10 societies per month if the accounts were properly maintained, but most societies are insolvent and their books in total disarray, requiring the accounts to be reconstructedbefore they can be audited. To simplify and standardiseaccounting practices at the society level, a simplified,uniform book-keepingsystem for ujamaa vi:Llagesis in the final stages of preparation. In summary, problems of audit and supervision of the cooperativescan be expected to persist throughout the country during-the-nextfive years. Financial accounts of both primary societies and cooperativeunions are rarely prepared adequately for audit and supervision. Moreover, neither the quality nor quantity of staff of the Audit and SupervisionFund is sufficient to respond satisfactorilyto the large task required.

Education and Traipnin

10. The extensivenetwork of ujamaa villages and cooperatives,and the supporting programs and institutions,draw upon a large number and variety of personnel, all of whom require training and education. The only national institutionsqualified to provide such services are the CooperativeCollege at Moshi and the Instituteof DevelopmentManagement at Morogoro. The Cooperative College currently offers diploma, final inspectors,and induction courses to a total of 272 students. The Institute of DevelopmentManagement presently has 240 students enrolled in a four-year diploma accountancycourse, to be doubled upon completionof building construction. In addition, rural training centers, coorespondencecourses, and regional education programs contribute to education and training at the local level.

11. Past efforts have, however, only begun to address the pressing needs to train and educate staff of the primary cooperativesocieties, the cooperative unions, and the Ujamaa and CooperativeDevelopment Department. The ujamaa and cooperative educationplan (1973 - 1979), therefore, proposes to establish over the niext two years five more zonal cooperative colleges as branches of the Cooperative College at Moshi. The zonal colleges will each have an eventual capacity of 150 students,will each require at least six teachers,and will provide courses for primary societies' secretaries,basic and final management and administration,and basic and final inspectors. Between 1U93/74 and 1978/79 it is estimated that 6,900 staff and leaders of ujamaa villages and 6,300 of other primary societieswill be trained. In addition, training for approximately 650 union accountantsand assistants and 1,100 senior and junior bookkeepers is projected over the period.

12. Substantial cooperative technical assistance is currently being provided by the five Nordic countries, under the "CooperativeAssistance to Tanzania" project. Of the 26 experts now assigned under an agreementorigin- ally signed in 1968, six are working within the Ujamaa and CooperativeDevel- opment Department and the Cooperative Union of Tanganyika to establish systems for wholesaling and transport, credit financing,management accounting, ANNEX1 Page 5 promotion and supervisionand consumer and retail activities. Another 11 experts are working on the specific problems of 11 regional cooperativeunions, and the remainderare working in the CooperativeCollege, of which five are stationed in Moshi and three in the regions. It is intended that the systems developed at the center (transportand primary society bookkeepingsystems are near completion)will be both integrated into the cooperativecollege curriculumand incorporatedwithin the operationsof the cooperativeunions.

B. The Ujamaa Village Program

13. Tanzania's socialist developmentpolicy is aimed at the simulta- neous achievementof economic growth and an egalitariansociety through an increasingemphasis on agricultureand rural development. In recent years this rural developmentstrategy has focussed on the establishmentof cooperatives or ujamaa villages throughout the country. The immediateob- jectives are social and political: to foster a sense of self-reliance through self-help,to achieve equality of income, and to raise rural incomes in order to close the rural-urbangap and reduce the flow of people to the major twowns. Government recognises,hcwever, that to be successful in these spheres, the strategy must be economicallvviable, and cooperativeproduction -- only possible with the new social ;ittzitude-- is set as the final goal. The formationof ujamaa villages through resettlement,which is one of the more conspicuousfeatures of the execution of the policy, is important in relatively sparsely populated rural areas of Tanzania. However, cooperative production can take place without any resettlementand, particularlyin the most densely populated areas, will probably also be developedon that basis.

14. Recently, the definition of in ujamaa village has been changed and the term is now reserved for those villages that have reached full control of the major means of production. Newly-formecivillages would be immediately registeredas primary societies (pare 6).

15. The Commissionerof 1'Jamaa& Cooperative Developmentis charged with the responsibilityof developing the ujamaa ideals, and of evaluating the program. There is close coordtnationwith TANU and the executive Ministries. The standardizationof reporting and assessmentof economic performance;s still poor but these problems are receiving close attention. Technical support is given by various Ministries, especially the Ministry of Agriculture.

16. It is difficult to gauge progress with ujamaa in quantative terms, because this is marked by the acceptance of a cooperativeattitude to working and living, as well as by economic success in production. The latter is only now being evaluatedby the Tanzanians. A count of ujamaa villages and the population involved in them is some guide to progress,but village ANNEX 1 Page 6 formationis reported in three stages and the first, unspecific stage, which dominates the statistics,tends to be over-estimatedinspite of efforts to improve reporting. Figures of populationin villages may also be high due to double counting. It is, however, now estimated that, by mid-1975, some 5,000 villages had been established,with a populationof between 3 - 5 million. The final number of villages may be in the 7 - 10,000 range.

17. Until recently,three stages in ujamaa developmentwere distinguished:

(a) A formativestage during which resettledvillagers require financialaid for activitiessuch as bush clearing, access road construction,and purchase of initial equipment. In practice, they often also need food, as they cannot always produce sufficientinitially. At this stage the Regional DevelopmentFunds are the major source of assistance. Villages that are members of primary marketing cooperativesalso receive the same servicingfacilities as individualmembers.

(b) An intermediatestage in which the village members learn to live and work together,putting increasinglymore of their work effort into commercialcrops and developmentactivities. At this stage the village adopts a workable constitution, and when it has become economicallyviable it registersas an AgriculturalAssociation. Credit may then be obtained from the Tanzania Rural DevelopmentBank (TRDB).

(c) The final mature stage is reached when the ujamaa village registerswith the Registrar of Cooperatives. It may become a full multi-purposecooperative society, and would have adequate security to attract commercialcredit. The assessmentof when this stage is reached is carried out by the local CooperativeOfficer, Agricultural Officer and TANU secretary.

18. Legislationnow before Parliamentproposes slightly different classi- fication,which would bring registrationas a cooperativeforward to the formativestage, and reserve 'Ujamaa'status for the mature stage.

19. Progress with ujamaa village formationvaries considerablyby region. The differencesreflect both the variety of motives for the formationof villages,and the social and geographicalconditions of the area. The greatest developmenthas been close to the boundry with Mozambiquewhere the dominant motivationhas been defence. Elsewhere the largest number of villages are in areas which have limited involvementin the cash economy, are sparsely populated,and have a harsh environment. These include Dodoma and Kigoma where there has been a concentrationof planning effort and technical ANNEX 1 Page 7 assistance. It is in these areas where the concept of physical movement into concentratedvillages (probablylocated on a reliable water supply), and the introductionof new crops (necessitatingrather intensive technical guidance, modern inputs and credit) is a particularlyappropriate approach. Because of the real need for services and little individual investment in their present situation these areas accept ujamaa most readily.

20. Progress in numbers has been noticeably slow in other areas, namely: (i) the densely populated highland areas where individually-owned land is under coffee, tea or bananas (such as in Kilimanjaro,Bukoba and Rungwe districts) and where ujamaa will be based on cooperativework on existing crops and is unlikely to involve any resettlement;and (ii) the generally less densely populated areas with established cash crops such as cotton, tobacco, and cashew. These are drier regions than the highlands, with more extensive cultivationand marked seasonal peak labor requirements (traditionallymet by hiring). Technical and social problems seem partic-iiarly likely in the cotton area around Lake Victoria, including Geita, where an individualisticattitude, typical of first-generationsettlers, exists. An unhurried approach to ujamaa seems especially appropriate in these areas.

21. The economic justificationfor communal farming rests on th'z greater production arising from economies of scale and division of labor, aae the more economical (and therefore increased per capita) provision of Gover"ment services such as extension advice, water supplies, schools and dispensaries. The case for economies of scale is based on (i) sharing bulk oreers of inputs and group marketing; (ii) making more efficient use of labor and hand or powered implements,enabling a greater area to be cultivated; (iii) allowing specializationof function, such as herding and tool repair in the village; and (iv) enabling wider access to technical advice. The channelling of agriculturalcredit is assumed to be facilitatedby cohesive ujamaa units, as can the economic distributionof packages of inputs supported by extension services. Potentially,ujamaa villages would extend the coverage of cooperative marketing organizations,but until they reach a sufficient size to provide marketing services economically,Ujamaa villages would be members of existing cooperative societies. A further argument in favor of ujamaa villages is that a group of farmers will accept ar. Jnnovationto which individuals are indifferent: the validity of this argument has yet to be proved. Also, there is a lack of empirical evidence on where economies of scale are achieveable in commercial production,and the optimum scale of different farming operations in not known. However, it is clear that radical changes are needed in farm management as village production becomes increasinglycommunal and is carried out on a larger scale. A well-trailedextension service, familiar with or trained in decision making on larg farms, then becomes a necessity. ANNEX 1 Page 8

22. These management changes will be particularlyrequired for crops like tobaccowith a high management requirement,and crops such as cotton which have a high pay-off from timely operations,and are typically included in a rotationwith food crops. The applicationof ujamaa principles to cotton growing, particularlywith mechanization,calls for major changes in farm management techniques. These would include new rotations, introductionof minimum tillage techniques,intensification of cultivationby use of sprays and fertilizers,and possibly changes in picking and sorting. Mechanization needs to follow intensificationand a reorganizationof land-holdings. It cannot economicallybe imposed on the existing low-yield system.

23. Difficultieswithin villages--which are likely to be a continuing concern -- are the lack of leadershipand management skills among village members, and problems of measuring the individual'sshare of communal production. The former can be helped by planning, training,and assistancefrom extensionservices. The most importantfactor is to ensure that ujamaa villages develop from the desire of the people and at a pace at which they can absorb the new ideas and techniquesessential for viable communal production.

TANU

24. The mobilizing force in ujamaa developmenthas been the political party TANU (TanganyikaAfrican National Union). Organizeddown to cells of ten families,TANU reaches the grassrootsof the rural areas, and in its pyramid structurerising through village developmentcommittees and ward organizationsprovides a hierarchy for chanellingboth policy decisions and local opinions. At the village Level it provides a forum within which a group of farmers can debate possible cooperationthrough which technical and planning advice (e.g. on site selection,crops, planting areas) can be channelled,and through which farmers' problems and wishes can be passed to the party and Government.

25. The unpaid leader of the 10-familycell, known as the 'Balozi',is a TANU member elected by party members of the cell. It is his job to keep records of the cell membership,collect dues from party members, and pass on politicaland policy informatz~onto the cell. He is also to keep the party leadership and -- through 1ANU -- the Government informed on local problems. The Balozi tries to settle local disputes which otherwise would go to the courts. The position is primarily political, but with Party and development matters so closely linked, the Balozi obviously fills an economic role as well. A Balozi may become the chairman of an Ujamaa village formed in his area only l.fthe villagers consider his technical knowledge adequate for the post. Although the 10-cell system has not been working uniformly well, partly because the duties of the Balozi have become overburdensome,it does provide an effective two-way channel for information available. ANNEX 1 Page 9

C. Training Program for Cooperatives

26. As pointed out in Section A, the responsibilityfor mobilizing the people, once settled in villages, (which are also primary societies) falls on the cooperativemovement which unfortunatelyhas many problems. Some of these problems have been created recently, as a result of the Government's social developmentpolicy. Personnelwithin the cooperativemovement are not prepared,by experience or training, for their tasks, and this explains the attentionGovernment is now giving to technical assistance and training.

27. The training requirementshave been identified at all levels of the cooperativemovement, and concern mostly management and accounting, although such areas as marketing, storage and transportmanagement also lack properly trained staff. The Nordic Group is assisting Governmentwith the formulationof an overall cooperativedevelopment plan, the identification of specific training requirements,and with technical assistance at regional level. The project has been in operation for seven years and at present comprises 26 Nordic personnel. The Project Coordinatoris attached to the Prime Minister'sOffice and the specialist staff and management technicians of the project assist with the work of the Ujamaa and CooperativesDevelopment Department at headquartersand regional level. In addition eight staff are attached to the CooperativeCollege at Moshi which provides the training for the staff of the College.

28. At the regional level, the Nordic Group has developed accounting systems for transportand storage, and they have provided for technical assistance to introduce these systems. In addition, they have provided for limited numbers of staff as advisers to management. The progress of this assistanceprogram is slow, and cooperativeunions still have a long way to go before they would be able to perform their functionsefficiently.

29. The National Maize Project, would, in the executionof its development activities,make full use of the regional cooperativeunions for storage of inputs and their distributionto villages, and for collection and storage of maize. In order to perform these functions effectively,and at low cost, the cooperativeunions would need technical assistance in marketing, accounting and transportmanagement.

30. Detailed requirementshave been drawn up, in cooperationwith the Nordic Group; they are presented in Appendix 1 to this Annex. The proposal estimates that 8 expatriateswould be needed, in addition to vehicles and accountingmachines; 4-year costs would be approximatelyUS$2.0 million.

31. Although this assistance would be of great significanceto the successful executionof the Project, the componenthas not been included for the following reasons. Firstly, training of, and technIcal assistance ANNEX 1 Page 10 to the cooperativemovement would place an intolerableburden on Project Management, who would be occupied full-time with the agriculturalcomponents. Secondly, the high expatriate staff component could be better provided on a bilateral (grant)basis. However, there is a real danger of complicating the integrated improvementand developmentapproach of the Nordic Team by a proliferationof agencies and/or projects operating in the same field.

32. At the village level, the Project would rely on the ability of village secretaries. Their tasks would include ordering inputs and their storage, storing maize and arranging for timely evacuation, applying for storage constructioncredit, and in general proper accounting of all NMP related activities. Their task would also include distributionof inputs and receipt of produce to be marketed together with all necessary records in villages, where farming is done on an individual rather than a communal basis.

33. It is recognized that, in general, village secretaries are not able to perform these functions effectively,and that additional training is required. Such training is all the more urgent, now that the entire rural populationwould be villagised by 1976, and now that practically all agricultural developmentwould be based and centered on these villages.

34. The 5th Education Project, proposed for World Bank financing,would address itself to the re-trainingof cooperativestaff at village level. The education project would train Village Management Technicians (VMT) who each would be assigned 5 villages, whilst living in one of them. These VMT's would be trained primarily in cooperativeorganization and marketing, management-orientedbookkeeping, economics, and mechanical and construction topics; training periods would be for 5-14 weeks. The VMT is expected to introduce accounting systems, developed with assistance from the Nordic Group, at village level, and to give individualvillage secretaries on-the-job training. The education project would start its VMT training program early 1976, and the first graduateswould be available for posting in mid-1976. It has been agreed that VMT's would be posted on a priority basis to wards with NMP villages, so that the National Maize Project might be the first to benefit from this training program.

D. CooperativeMarketing

35. Marketing for virtually all food and cash crops in Tanzania is the monopoly of parastatalsand cooperatives. Many small-scaleproducers are members of cooperativesocieties, which were originallydeveloped as marketing units for coffee, tobacco, cotton and cashew nuts. In addition, they took on the marketing of surplus food production on behalf of their members. ANNEX 1 Page 11

36. In most regions the primary societiesmarket crops through a regional cooperativeunion which acts as agent for the parastatalorganiza- tion responsiblefor the particular crop. Usually, the cooperativeunion arranges the transportof produce from the villages to the regional centres, where it is delivered to the parastatal concerned. Frequently, the cooperative union operates its own transport fleet for this puprose. In some regions, however, where the regional cooperativeunion is not too effective, the primary societies may deliver crops directly to the parastatalwithout going through the union.

37. Official policy does not encourageprivate traders and/or transporters to engage in marketing and transport of farm produce, be it food or cash crops. The consequent lack of competitionand the forced pace of developmentof cooperatives(paras 20-22) and parastatalshave created serious inefficiencyproblems for these organizations. There has been a tendency for the Governmentto re-organizeand re-name parastatals at frequent intervals in an attempt to overcome some of these difficulties. The poor state of organizationof several regional cooperativeunions and very many small primary societies is a serious constraint to agricultural development. However, the Government is engaged in a major program for cooperativedevelopment and trainingwith assistance from the Nordic countries (para 27).

38. In the more developedagricultural areas of Tanzania farmers have had relatively little difficulty in obtaining farm inputs. Larger-scale farmershave been able to obtain supplies themselvesfrom organizations like the Tanganyika Farmers Association (TFA) in the main towns. Likewise, in areas where a prosperous small-scaleagriculture had been developed on the basis of high value export crops like coffee, tobacco and cotton, farmers have been well-servedby cooperativesocieties and crop authorities. How- ever, the majority of small-scalefarmers in Tanzania are not so well served.

39. Most cooperativeunions and primary societieshave c.nfined them- selves to marketing farmers' surplus food crop production anc have not made a serious effort to supply inputs to farmers. Part y for thi3 reason, regional authoritiesin the main maize growing areas have undertaken a maize productionprogram for the last two years under which they supp'liedfertilizers, seeds, insectividesand, sometimes,machinery services to selected villages. Given that all villages will be registeredas cooperativesocieties, that they will all be affiliated to regional cooperativeunions, and that they will all be responsiblefor marketing farmers produce, it seems logical that farm inputs should also be supplied to farmers through the cooperativesystem. Thus preferencewill always be given to loaning lorries provided under the Project to regional cooperativeunions, as well as for them to control the additionalregional storage. As all "villages"will be multipurposecoopera- tives, the village stores will naturallv belong to the village society.

October 13, 1975 ANNEX1 Appendix 1 Page 1

TANZANIA

NATIONAL MAIZE PROJECT

UJAMAAAND THE COOPERATIVESECTOR

PROPOSALFOR ASSISTANCE TO REGIONAL

COOPERATIVEUNIONS

1. The Nordic Project for ('ooperative Assistance (N-PCAT) to Tanzania has suggested a program of assist.nce to regional cooperatice unions, 1/ which would enable these unions to effectivelydischarge their functions and responsibilities. The follow:Lngis a summary of these proposals.

2. All the 14 unions in the 13 regions would be included in the assistanceproposals made below, even though the National Hilling Corpora- tion (NMC) is currentlyundertak:ing the maize services, normally carried out by the regional cooperativeunions, in 5 of the regions covered by the Scheme. The unions' functionsmost directly affected by the NHP would be agriculturalmarketing, input .nd crop transport and accounting,all of which need assistance.

Marketing

3. Four agriculturalmarketing experts would be needed to assist the unions in their marketing operations. One expert each would be stationed in Mtwara, Mbeya, Dodoma and Mosh:i,and would cover the other unions in the NMP as indicatedby the four groups of regions in para. 1, footnote 1. The qualificationsof the experts would include training in economics and accountingand experiencein marketing. The main tasks of the experts would be:

i) To assist managementof the unions in the planning and operation of all marketing activities;

ii) To supervise the keeping of marketing accounts and records;

1/ The 13 regions affected by the NMP have been grouped, and the proposed centre of technical assistancefor each group is underlined,as follows: 1. Mtwara, Lindi, Ruvuma; 2. Mbeya, Rukwa, Iringa; 3. Central, Tabora, Morogoro; 4. Kilimanjaro,Tanga, Arusha, Mara. ANNEX 1 Appendix 1 Page 2

iii) To cooperatewith officialsof the Ministry of Agriculturein making local and regional crop estimates prior to and during the crop season;

iv) To assist union officials in coordinationof activitieswith the National Milling Corporation on tha regional level; and

v) To assist with the implementationof cooperative marketing systems, as developedby the Agricultural Marketing Section in the Prime Minister'sOffice and the CooperativeUnion of Tanganyika.

Transport

4. Four transportexperts would be needed to assist the unions in their transportoperations. Since such experts are difficultto obtain, flexibilitv should be exercisedin deciding on the type and extent of qualificationsre- Suired. The main tasks of the expertswould be:

i) To assist in transportmanagement, including allocationand service of vehicles,manpower organizationand administrativeroutines;

ii) To supervisethe keeping o- transportaccounts and records, as developedby the Nordic-PCAT:

iii) To introduceeconomic analyseswith reference to freight rate structure,costs and long-term budgeting;

iv) To assist in conductingtraining zourses for union transportofficers; and

v) To assist the Transport Section -i the Prime Minister'sOffice and the CooperativeUnion of Tanganyikain the implementat.anof cooperative transportsystems.

Accounting

5. A uniform accountancysystem, presentlybeirg -inalizedwith Nordic-PCATassistance, would be well suited for mechanization. A pilot scheme with mechanizedbookkeeping equipment, involving some 70 simple and robust machines,would be undertaken in one union. If successful,the mechanizedaccounting system would be introducedin all 14 cooperative unions. ANNEX 1 Appendix 1 Page 3

Costs

6. Estimated costs for such a 4-year assistanceprogram would be around US$2 million, broken down as follows:

Total Unit Cost Number Years Cost (US$)

A. Staff

Marketing Experts US$35,000/year 4 4 560,000 Transport Experts US$40,000/year 4 4 640,000

B. Material

4-Wheel Drive Vehicles US$ 7,500/each 4 1 30,000 Accounting Machines US$ 5,000/each- 70 1 350,000

C. Miscellaneous

Vehicle Operations US$ 0.20/km for 30,000 km 4 4 96,000 Training, Teaching Materials - 1 50,000

1,726,000 Contingencies 274,000

Total 2,000.000 NATiONt1L nrZE PROJECT UJAIQA AND COOPERATIVEDEVELOIUT DEPARTMENT

ICONISSIONER

oBjECTrVES Provide central government policy and technical leadership to ujamaa and cooperative development. WUJORTASKS: - Overall administration of the Department. - Act as Pl'Os senior expert on ujsmaa and Cooperative issus. - Perform duties as Registrar. - Administer and review law relatiny to ujamee and Cooperative societies. - Work with the Comisatemer for Regional Planning and Control. - Work with the Director of the DDCProject Team. - Ensure that concerned parties are regularly briefedin ujeasa and cooperative issues. - Maintain working relationships with other institutions.

POLICY DEVELOPMENT& RESEARCH SECTION AUDIT AND INSPECTION SECTION MANAGEMENTASSISTANCE SECTION CARDE DEVELOPMNT SECTION

MAJOR TASKS - MAJOR TASKS MAJOR TASKS MAJOR TASKS

Translate policy direction provided - Define procedures on legal - Assist and strengthen specialised - Advise Manpower Dev. Division and regions on staff by the President, Prime Minister aspects of registration of activities (e.g., smallacale in- required a.d TAN)l into operational proced- ujamac villages and co-opera- dustries, savings and credit, - Recomend schemes of service and raise related policy ures for implementation by the tive societies, and provide building and construction, retail issues regions and other ministries technical support for Regis- and wholesale, agricultural and - Develop & recommnend policies on secondment of cadre Monitor the implementation of trar function livestock) by officers to movement policy in the regions through the - Maintain register Developing staniard accounting - Forecast cadre manpower req,ir-ne"ts X propose plans planning process and by maintaining - Advise Registrar on dissolu- and management systems appro- to meet them current knowledge tion of cooperative societies priate for each type of - Propose annual manpower development plan for cadre Analyse ujamaa and cooperaLive - Act as central point of contact activity - Plan career dev. of key cadre officers section of annual performance for Chief Accountant, Audit and Developing manuals that describe - Submit request for allocation of school leavers and report and cou=enting through Supervision Fund, and work how to start up and organize graduates to Manpower Development Division the Principal Secretary to the closely with tonal auditors to each activity - Assist Unified Coop. Services Commission in staffing Planning and Control Department ensure societies and unions are - Provide a management advisory team cooperatives for action audited on time and audit re- to assist individual villages and Seconding staff as necessary Developing annual planning cosmendations followed up societies Assisting in recruitment of people from overseas guidelines for the regions and - Spot-check regional unios' - Act as liaison point at centre for Advising on submissions to high level manpower allo- ensuring they are transmitted, financial and management perfor- individual villages and societies cation coamittee working through the Principal mance in consultation with ROD - Inform Policy Development and - Prepare training programses for regions' use Secretary and advise Registrar on action Research Section of major problema - Manage training of cadre staff in PID Providing assistance in plan required with policy implications - Nominate cadre officers for training at higher education preparation, as required - Process CUT's and SCULT's - Prepare educational publicity institutions locally & colleges overseas Monitoring progress & problems estimate for approval by Regi- material - Act as parent Minist. for NICE through quarterly reports, strar and analyse their final - Assist UCSC determine manag nt - Work vith CUT and Unif. Coops. Service Com. to ensure reports of Zonal Offiders and accounts structure at union level, includ- Cadre and movement training programs are compatible reports from Audit & Inspection - Maintain copies of approved esti- ing staff calibre requirements Funds necessary for ujaisa training are available & Management Asst. Sections sates of unions - Work vith NICE on introduction of lMovement training programs are effective Develop ujamaa & cooperative posi- - Inform Policy Development and new mmgemnt systems in teaching - Propose transfers of cadre officers tion in rural development decisions Research Section of major prob- - Carry out annual promotion exercise Identify emerging policy issues & lems with policy implications - Maintain full and current records of cadre officers recommend the steps required to - Advise Management Assistance resolve them Section on need for system de- Fotmslate & propose longer term sign or changes Dev. strategies for consideration by the Commissioner, PS, PM & TANU Research specific problems & issues as agreed by the Coimissioner Maintain statistics on ujamaa and cooperative dev. & analyze trends annually

Source: "The Nordic Cooperative Assistance to Tanzania" Team Septemher 3, 1975. ANNEX 2 Page 1

TAN2ANIA

NATIONAL M0.IZEPROJECT

EXTENSION & TRAINING

I. EXTENSION

A. Background

1. The extension service is centered on the newly-formedvillages, and the ultimate aim is to have one extension worker, a Field Assistant (FA), for each village who would operate as Farm Manager of that village. It will take some years to reach this national objective;but for Project villages provision is made to recruit the requisite additional staff. At ward level an AFO is responsiblefor supervisionof agriculturalactivities, and he in turn is supervisedby the District AgriculturalDevelopment Officer (DADO). The DADO normally has between 3 to 4 wards in his district, and his total staff varies between 15 and 60 people (Table 1).

2. The Regional Agricultural.Development Officer (RADO) fulfills more of a service role, since all extension staff are operating in the districts, and are as such responsible to the DADO. However, the RADO influencesthe agriculturaldevelopment activities of the DADO's through regular meetings, visits, and discussion and approval,of work programs. He himself is responsible to the Regional Development Officer (RDO),who comes under the Prime Minister's Office, and the RADO only receives technical support and advice from Ministry Headquarters.

3. The Ministry of Agriculture (KILIMO) in Dar-es-Salaamis mainly a policy making body with technical staff who assist but do not direct regions in the preparationof annual work programs and their execution (see Chart World Bank 8522 (R)). In addition, KILIMO is responsible for the national research program, agriculturaltraining and identificationand preparation of national agriculturalprojects, which are, however, executed by regional authorities and/or parastatalorganizations.

4. Staffing in Project regicns is shown in Table 1; the figures are the latest available to KILIMO but only reflect the 1974 position. At present staff are inadequate in both number and training, and are poorly supervised, which is partly due to the chronic shortage of transport at all levels. ANNEX2 Page 2

B. The Maize Project

5. Improving the quality of the agriculturalextension serviceswould be criticallyimportant for successfulimplementation of the National Maize Project. The new village system would facilitatethis, since the villagers would live together and contact with groups would be easier. Upgrading of extension staff and improvingtheir mobility would be an important component of the NMP, and is discussed in paras. 20-34.

6. Ideally, each village would have a resident extensionworker (FA), although during the initial Project years some villages would have to share an extensionworker. These staff would ensure that well-run maize demonstration plots were establishedin every village (one on farmers' fields and one at the school), and that farmers attended regular field days at these plots. Inputs for the demonstrationplots would be supplied free under the Project, and yield data would be used in monitoringProject progress. These demonstrations would be half a hectare in size, and include the village's recommended package, and the next one to be reached.

7. The Project would also provide funds and transport for the Research Department to establishmaize variety/agronomytrials at about four villages in each region, thereby expanding their ongoing program. Informationfrom these trials would be collectedby the Regional Farm ManagementOfficers to be appointed under the Project. This would be used to continuallyimprove the productionrecommendations made under the Project, a task assigned to the Farm ManagementSection in PSU.

8. Leaflets on improved maize productionwould be distributedin every village, while mobile film units would show films on maize productionat regular intervals in Project village, (para. 16).

9. In each region a senior member of the agriculturalstaff would be appointed as full-time Regional Maize Project Coordinator (RMPC). He would be responsible for drawing up Project work programs and coordinating the Project within the region and with the Project ServicingUnit. In each district a field officer would be appointed as the full time Project supervisor; his title would be District Maize Project Supervisor (DMPS).

10. Each Regional MPC and District MPS would be supplied with a vehicle. AssistantField Officers responsiblefor supervisionof village level staff would receive financial assistancefor purchase and upkeep of motorcycles;a similar program would be extended for bicycles for field assistantsat the village level.

11. A Farm ManagementOfficer to the Project would be appointed in each region; his title would be Regional Farm Management Officer (RFMO). He ANNEX 2 Page 3 would ensure that the farming methods recommendedunder the Project were appropriatewithin the context of the local farming systems. He would also help to monitor Project progress, and be in close liaison with the Farm Management Section of PSU in Dar-es-Salaam.

C. Communications

12. Various communicationmedia have been tried to keep the farmer informed of new agriculturaltechniques and inputs, and to refresh him on husbandry details of establishedcrops and/or livestock but existing coverage is insufficient. The Project would strenthen the existing visual and audio- visual programs, by expanding the printing and distributionof KILIMO's monthly agriculturalnewspaper, and by providing Mobile Film Units.

13. KILIMO publishesa monthly agriculturalnewsletter in Swahili under the title Ukulima wa Kisasa (ModernFarming), first published in 1955. The paper covers the followingmajor subjects:

i) Agriculturaland veterinary practices. ii) Nutrition and home economics. iii) Agriculturalactivities in villages. iv) Entertainmentand sports.

The average number of copies is 27,000 per month, which are distributedvia Regional AgriculturalDevelopment Officers, parastatalsand cooperatives. A readership survey of several years ago indicated that each copy is read by about 5 people. Even so, it is clear that the majority of farmers never see a copy of Ukulima wa Kisasa. It also appears that very few copies reach the newly establishedvillages.

14. The Project would, therefore,provide financing for an increased production of the paper, which is at present partly subsidizedby Government. Most of these additional copies would be distributedfor sale to Project villages, through the RMPC's and DMPS's. The cost per copy, a proposed TShs.0/50against the present TShs.0/30, finances around one-thirdof printing costs. 1/

15. PSU would contribute to Ukulima wa Kisasa articles on maize husbandry, fertilizerapplication, etc., as well as on farm management in general. Leaflets and/or pamphletson these topics can also be printed at the paper's offset printingmachines, thus reducing present under-utilizationof equipment.

1/ NMP would finance the subsidized portion of printing costs of copies printed in addition to the current 27,000/month, which by Year 4 would total an extra 26,000 copies. ANNEX 2 Page 4

16. Experience has shown that films are an excellent media for mobilizing the interest of rural people in improving agriculture. A few mobile film units exist, but are insufficientto permit regular visits to the large number of existing villages. Furthermore,an improved mix of films is required. Con- sequently, the Project would provide a new mobile film unit for each of the thirteen Project regions. Each unit would be staffed with a driver, a projectionist and a commentator,who wotuldbe trained in Dar-es-Salaam at the Audio Visual Institute (AVI). Finance would also be provided for the hire and/or purchase, of suitable films. Special requirements,i.e. agricultural films in the Tanzania context, would be produced by AVI, and the Project would finance the production of one such film per year. AVI has a modest collection of films which can be hired at no charge. However, with the limited selection available and the intention to increase viewer interest by screening a variety of films, it would be necessary to buy such films for which funds would be provided.

II. TRAINING

17. Training under NMP would be restricted to agriculture and management; although there is a need for training in the cooperative sector, these requirementsare being met through the activities of the Nordic Group and the 5th Education Project, which is proposed for IDA financing (Annex 1). Provision has also been made for seminars of senior staff at regional and district level.

A. Agriculture

18. The training envisaged for agriculturalstaff consists of:

(i) Agronomy and extension course: for APO and FA (ii) Interphase course: for AFO and FA (iii) Maize production course: for diploma and degree holders (iv) Degree courses: for degree holders.

Agronomy and Extension Course

19. The object of the course is to upgrade all field extension staff -- Assistant Field Officer (AFO) and Field Assistant (FA) -- who would be responsible for day-to-day contact with farmers in Project villages. The course would consist of an agronomic section, which would emphasize husbandry and correct fertilizerapplication; a demonstrationsection, where layout and importanceof the demonstrationplots would be taught; and an extension ANNEX 2 Page 5 section, which would cover methods of communicatingwith farmers. The curriculum would be put together by KILIMO staff in the Training Division, by the seconded CIMMYT Adviser and by staff at the Ilonga Research Station. For the communicationaspect assistance would be sought from the Audio Visual Institute (Dar-es-Salaam)and the University of Dar-es-Salaam.

20. The trainers of the Agronomy & Extension course (and subsequent refresher courses) would be experiencedagricultural officers from the 13 regions of the Project. They would receive a 14-day course at the Ilonga Research Station.

21. The Project would attempt to train all field staff in villages affected by the Project in Year 1, before the start of the 1975/76 season. Some 540 villages would be reached in Year 1, increasing to 950 by Year 4 of the Project. It is estimated that 50% of the villages have one extension worker each, whereas in the remainder one extension agent covers 2 villages. This would give a total of 405 FA and AFO to be trained in Year 1. All AFO at ward level, who supervise the village staff, would also need to attend this course: on average there are 10-12 villages to one ward level AFO. Many villages will not be included in the Project and, therefore, each AFO may only be responsible for five to six Project villages, and, hence, around 95 would need to be trained. Thus, in Year 1 a total of 500 FA and AFO would participatein the Agronomy & Extension Course (Table 2).

22. Using a ratio of 15-20 students per course, some 26 courses would have to be organized in the 13 regions. Trainers for these courses -- senior agriculturalofficers in the regions -- would be trained at the Ilonga Research Station. There would be one trainer per region, with the exception of Iringa and Mbeya, who would have 2 trainers each due to the large number of students to be trained. In each of the subsequentyears (Project years 1976/77, 1977/78 and 1978/79) a total of 110 AFO and FA would be trained, to reach staff in new villages covered by the Project; these numbers include ward-level AFO's.

23. The aim of the Project is to reach an establishmentof one extension worker per village. Therefore, new staff would be recruited,mostly Standard- 12 school-leavers,who would be given a 3-month training course. Provision has been made for 140 trainees in Year 2, and another 100 in Year 3; courses of this type are already being organized by KILIMO, but the Project would provide for financing of this training program.

24. The Project would also organize annual refresher courses for all field staff; during these 12-day courses any new developments in maize agronomy could be covered, the experienceof the previous season reviewed, and emphasis would be given on extens:Lonmethods. The senior agriculturalstaff in charge of the Agronomy and Extension course would also teach the refresher courses. ANNEX 2 Page 6

Interphase Course

25. This course would last one entire growing season, and be given at the maize research stations. Extension agents (AFO and FA) would come for 2-3 weeks at the start of the season, and would be trained in phase 1 (land preparationand planting) of the maize calendar. They would then go back to their villages to implement this knowledge, after which they would return to the research station for training in phase 2, which would include weeding, and the applicationof top dressing and pesticides. Finally, the third period would comprise yield estimation,harvesting and marketing and some training on the economicsof maize production.

26. The "interphase"approach, which has been successfullytried in other countries,has several advantages:

(i) The agent is not completely taken off-duty; (ii) There is an immediate follow-up in practice of the teaching and demonstrationat the research station; and (iii) There is an immediate interactionbetween extension and research.

27. This type of course could take a maximum of 15 students per research station; included in the program would be the Ilonga Research Station (Kilosa), the Ukiriguru Research Station (Ukiriguru)and the Agriculturaland Research Training Institute (ARTI) at Mbeya. Thus 45 students could be trained per season, for a 4-year Project total of 180 extension staff. CIMMYT has agreed to make a Senior Training Officer available to organize this type of training in Tanzania.

28. Trainers for the 1st year's interphase course would be recruited from research staff at the above mentioned research stations. In subsequent years certificateand diploma holders who had successfullygraduated from the CIMMYT or IITA courses (para. 29) would be able to assume full teaching responsibility.

Maize Production Course

29. A few well-qualifieddegree holders would be sent to Mexico (CIMMYT) or Nigeria (IITA) for a season (5 months) course of intensivemaize production. These students would then become the trainers of extension agents for the interphase course.

30. In addition, graduates would be employed on maize research stations, particularly Ilonga, Ukiriguru and Mbeya. KILIMO has produced a staffing plan, aimed at providing the technicalmanpower to make Tanzania self-sufficient in maize production research. This national staff developmentplan emphasizes production-orientedresearch, and the IITA/CIMMYTcourses would be the first ANNEX 2 Page 7

stage of this program. Consequently, the NMP would provide training funds for 21 intensive maize production courses, to be taken at IITA (Ibadan, Nigeria) or at CIMMYT(Mexico). Since the IITA is concentrating on maize and legumes, and also on the adopticin of improved maize varieties to African conditions, most students would go to IITA.

Degree Training

31. The manpower analysis referred to above (para. 30) also points to the need for B.Sc. and M.Sc. degree holders. The Project would assist in providing some of these staff, by financing training, as follows:

1975/76 1976/77 1977/78 1978/79 Total

B.Sc. (2 years) 3 3 2 1 9

M.Sc. (2 years) 1 2 3 3 9

32. In the past, most degree training has been undertaken in American or European universities, which renders more difficult the transition to Tanzania, and the application of the training to tropical agriculture. There- fore, the NMP would provide financing only for degree courses taken at African universities.

B. MIanagement

33. NMP would be implemented at the regional level by regional and district agricultural staff (RADOand DADO) and by Project-appointed Regional Coordinators and District Supervisors. These staff, though usually well-trained in agriculture, have had little cr no management training and, thus, they are not always able to effectively organize and supervise their staff.

34. Consequently, the Project envisages the organization and financing of a management training course (some 3 weeks) for RADO's (13), DADO's (28), Regional Coordinators (13) and District Supervisors (28). These 82 staff could not be trained all at once; some 45 would be taken in in the first half of 1976, and another 45 in the latter half of 1976, with 10-day refresher courses to begin early 1977. The training of 90 staff takes into account transfers.

35. The management course, which would consist of case-studies and demonstrations, in addition to lectures, would be organized and given by the Tanzanian Management Development Institute at Morogoro. ANNEX 2 Page 8

36. In addition, the Project would provide financing for regular seminars, to be convened by the Project manager. The purpose of these meetings would be to discuss NMP work programs and to develop solutions to problems of implementation.

October 13, 1975 ANINU 2 TANZANIA Table 1 3ATIONALMAHXZ PROJECT ErMnD u uosSTAFF Plow- AND DISIRICT 173e 11COk M

Region/DlxtritC rialdAgrictul- Ai t nt Filil totel RegignfDintrict Arictl- pield Aeeietant FilId Total FIed Field P.1 Toa Neie tttt- ua f la lad .. i L.zf,_ offi. St 0 OffL Staff Officer Officer Offer AsetAtt Staff Officer OfficerA. ~~~~~~~~~~~~~~~~~~Aaaitetae

R.gisoal Staff 3 2 7 - 12 Regionol Stff 1 4 16 14 35 0 District Staff - Ar-earo - 4 19 8 31 DLacrit Staff - Kiltro - 1 5 8 14

HlDag* - 3 12 10 25 KiloecO - 3 20 21 44

Mboloc - 2 10 13 27 Mhi*fg. - I 1i 10 22

MHduli - 2 5 3 10 HorogorIo 1 3 16 1 38

Toa.l 3 13 53 36 105 Total 2 12 68 71 153

Joco.--- Mcvar

qrgio-al S-ff 2 a 6 9 25 Roional Staff 1 3 13 9 26 0 Xit-riot Staff - D7ds - 7 48 11 66 Ditrikt Staff - rSaaai I 1 14 18 34

itodoa - 2 30 19 51 Hr -te - 4 10 18 32

Mgoap.,a - 7 9 9 45 Naal. - 3 11 14 28

Total 2 24 113 48 187 Total 2 11 48 59 120

tRalocal Staff 1 3 7 1 12 Regioal Staff - 3 2 - 5 0 Datrlict Staff Inioga - 4 21 28 53 Diatrict Staff - Hp nda - 3 13 11 27

Hufi.dio - 4 15 16 35 Sonba gac 1 2 16 12 31

Ojonibc - 6 21 35 62 Total I a 31 23 63

To-aI 1 17 64 80 162 Ruv

f-egioal staff 1 4 12 5 22 Raglo-al Staff I a 8 2 19 Dietrict Staff - Mbirpg - 1 22 9 32

Merri- t Staff -Mfhai 1 4 32 71 108 S."...a 1 1 27 12 41

fore - 6 29 34 69 Tondoro - 2 24 9 35 0 Ro.b - 1 S 16 25 Total 2 8 85 35 130

Total 2 19 77 123 221 Tabora Li-di Regioral Stff I 1 13 S 23

itotiocol4 Staff 4 -loDi.trict Staff - NM9g - 6 20 14 40 Macriot Staff - Kilaw - 2 9 9 20 Tbor - 2 23 12 37

Llndil - 3 14 19 36 Urboc (rely ford diatriot; ea.ff i-ccidad order

NahinRg-.N 1 2 15 12 30 Tabor- District)

Total 1 42 40 94 Total 1 9 56 34 100

'fDa- Tape RegLoral Stff 2 4 4 1 11 Regional Stoff 1 4 19 10 14

co t-i Staff - Chuny - 2 14 9 25 Di-trict Staff - Handei - 1 16 24 41

fyrla 1 a 3 12 forego. _ I 11 14 26 t Sbrya - 3 25 15 43 Lu.hoto* _ 7 54 it 72

irlotic - 2 1! 17 30 *zheaa 2 23 24 49

R ngre - 3 13 20 36 PanRgni - 1 5 8 14 rOr-1 2 15 75 65 157 Kl Total 1 16 128 91 236

I/ Ar-rr ir iodi-ta NM Dierricat. otporo-r.o- ov3llebl5 for thit Ragios. sopc;r'cr 3, 2971. TANZANIA NATIONAL MAIZE PROJECT

TRAINING OF EXTENSION FIELD STAFF

No. of Field Staff Courses No. of 50% of Villages, 50% of Villages, Ward Level Total to (15-20 Villages 1 Field Staff 1 Field Staff AFO, One per. be Trained Students Region Year 1 Each for 2 Villa&es Total 5-6 Villages in Year 1 per Course)

Arusha 68 34 17 51 11 62 3

Dodoma 19 10 5 15 3 18. 1

Iringa 88 44 22 66. 19- 85 4

Kilimanjaro 36 18. 9 27 9 36 2

Lindi 31 16, 8 24 5 29 2

Mara 34 17 8. 25. 6. 31 2

Mbeya 60 30., 15 45 10 55 3

Morogoro 46 23, 12 354 7 42 2

Mtwara 42 21 10, 31. 6.- 37 2

Rukwa 24 12 6, 18- 4 22, 1

Ruvuma 24 12 6 18^. 4 22 1

Tabora 26 13 6 19 4 23 1

Tanga 42 20 11 31 7 38. 2

TOTAL 540 270 135 405 95 500 26

September 3, 1975. ANNEX 3 Page 1

TANZANIA

NATIONAI,MAIZE PROJECT

TECHNOLOGY AND POTENTIAL FOR MAIZE PRODUCTION

Introduction

1. Maize is the most important cereal crop in Tanzania and the staple food of much of the rural population. Varying estimates place the area under maize at 0.8 to 1.2 million ha with average yields of about 700 kg/ha. The crop is grown in all regions of Tanzania,but in some areas conditions are marginal. The bulk of production comes from Arusha, Tanga, Dodoma, Iringa, Mbeya and Tabora Regions; other regions of increasing importance include Kilimanjaro,Morogoro, Ruvuma, Rukwa, Lindi, Mtwara and Mara. Table 1 of Annex 5 indicates the relative importance of maize as a food crop in Tanzania, while Table 2 of Annex 5 shows marketed production from 1966 to 1973.

2. With only an estimated 25% of total production marketed, maize is primarily a subsistence crop. Cultural practices are often poor, resulting in the low national average yielclestimate of 750 kg/ha. Yields, however, vary widely throughout the country and from season to season with a range of 600 kg to 1,800 kg/ha. Under good husbandry in suitable areas yields of up to 5,000 kg/ha are obtained, and the potential for yield improvement is, therefore,very good. Furthermore,given the wide adaptability of maize, the crop is better suited to Tanzania's variable conditions than any other cereal. However, because Tanzania has such an extremely varied environment, and although on-going basic research work has provided sufficient data for formulatingmaize packages for irmediate use, their application to particular areas would be refined as more production data becomes available.

Maize Areas

3. In Tanzania, generally, the yield of maize has been found to increase with higher altitude and more rainfall, with a longer growing season and with moderate temperatures. Top yields of maize can be expected from areas with over 1,000 mm of rainfall well distributed throughout the growing season on a fertile soil. Good crops can normally be produced with over 750 mm of rainfall, but below this level of precipitation,and especially if distribution is poor within the season, yields will be reduced and crop failures can be expected. The altitude is also a key determinant in the length of the growing season, which increases with elevation, and maize breeders have evolved varieties suited to four broad altitudinal zones, as well as for varying rainfall characteristics. The zones, and general guidelines on the number of days to reach maturity, are shown below: ANNEX 3 Page 2

Altitude Zones and Length of Growing Season

Altitude Days from Planting Days from Tasselling in meters to Tasselling to Maturity

Below 300 44 - 55 50 - 60

300 - 900 55 - 75 60 - 70

900 - 1,800 85 - 115 70 - 80

Over 1,800 115 - 125 80 - 90

4. Considerableresearch on maize breeding has been done within Tanzania at the Ukiriguru (Mwanza Region) and Ilonga (MorogoroRegion) Research Stations, and by staff of the East African Agriculturaland Forestry Research Organization. Varieties have also been introduced from Kenya, Zambia and elsewhere. Ukiriguru and Ilonga have both produced composites now in general supply for farmers, while Kenya hybrids are favored for the higher altitudes where they produce better results than composites. In more marginal areas, the short-seasonKenyan Katumani Composite has been introduced. Table 1 summarizes the 1970-72 findings of research variety trials on the effects of altitude. Further varieties are now being evolved and tested by the research stations for possible introductionin two or three years' time. Present indi- cations are that these new varieties will give substantialyield improvement, and they include a short-seasonvariety, for use in areas where returns from maize are at present marginal.

5. In selecting areas suitable for the Project, emphasis has been placed on those regions and districts that are environmentallymost suited to maize production. However, areas which might be regarded as having intermediate potential but where maize is still a major crop have also been included to ensure that these areas reach at least self-sufficiencyin maize production, and that field research is carried out in areas faced with climatic problems in certain seasons. At the same time, other areas which are only marginally suited to maize growing, given present technology,have been excluded from the Project.

6. Although published physical resource data in Tanzania is limited, the Bureau of Resource Assessment and Land Use Planning (BRALUP)of Dar-es- Salaam University has published a paper on the Agro-Economic Zones of Tanzania, which is supported by a more detailed series of publicationsfor different geographic regions of the country (see Bibliography). A further BRALUP publication summarizes mainly in map-form rainfall and evaporation data. From these sources, it has been possible to derive Table 2, which shows into which rainfall and altitude zones the majority of the selected Project districts fall. The highest potential maize areas are those of the Southern Highlands ANNEX 3 Page 3 in Iringa, Mbeya and Ruvuma Regions, the higher elevations of Arusha and Kilimanjaro Regions, and the Usambara Highlands in Tanga Region. The remainder of the Project area has a medium potential for maize, including the intermediate elevation and rainfall areas of Central, (Morogoro,Dodoma, Tabora), Northern (Mara, Arusha) and North Eastern (Kilimanjaro,Tanga) Tanzania, and the high rainfall coastal and hinterlandareas of the South East (Mtwara, Lindi). Table 2 also shows that only five districts in Arusha, Tabora, Dodoma and Rukwa Regions have areas where annual rainfall is below 750 mm, and villages falling within these areas of the districts will be excluded from the Project. However, since these districts are all importantmaize growing areas, it is regarded as vital to study the problems of maize growing in areas of lower productionpotential, often only slightly above 750 mm average rainfall, and make recommendationsfor yield improvementor changes in cropping patterns.

Research

7. Considerableresearch on maize productionhas been carried out in Tanzania, based on a comprehensivenetwork of research stations and substations. There are now nine agriculturalresearch institutesand twenty three agricultural experimentalstations in the eighteen identifiedecological zones of Tanzania (Map IBRD 10799). Recently, KILIMO's research activities have been internallyreviewed, and a new system of Crop Research Coordinating Conmmitteesintroduced to streamlineand more effectivelycoordinate national research activities.

8. The present maize research program is evolved through the Maize Research CoordinatingCommittee, and has the followingmajor elements:

i) Maize variety trials to evaluate present and new varieties at 24 locations;

ii) Introductionand progency testing of new varieties;

iii) Village research trials in all maize growing regions combiningvarieties, fertilizeruse and the cultural practices;

iv) Cultural practice trials on seedbed preparation,time of planting, spacing, weed control and use of herbicides; and

v) Fertilizer trials.

Cultural Practices

9. A good knowledge exists of recommended cultural practices in most ecologicalareas and more attention to these alone could produce considerablyhigher yields, even without using fertilizer. At present ANNEX 3 Page 4 prices, it is generallynot economic to use fertilizerwithout improved practices. Thus, the first package recommendedunder the Project (para. 21) concentrateson improving cultural practices, combined with improved seed, and pesticides to control stalk borer, which are relatively cheap, easy to use, and technicallyproven.

Improved Seed

10. For the higher altitudes, hybrids developed in Kenya are generally recommended,and these are being produced locally for the Tanzania Seed Company. For medium and lower altitudes, the Ukiriguru and Ilonga composites have been developed locally, and are being multiplied on Government seed farms and also by individualsor companies under contract to the Tanzania Seed Company. For low-rainfallareas, the Kenya Katumani Composite is recommended, and is being multiplied on a Government seed farm at Arusha. The Government is receiving USAID assistance to its seed multiplicationprogram, and the Tanzania Wattle Company (TANWAT) is the major company involved with seed production outside Government seed farms. TANWAT is partially financed and receives technical assistance,including some resident staff, from the CommonwealthDevelopment Corporation, and TANWAT is also the managing agent of the Tanzania Seed Company. On the research side, the Government receives assistance from two internationalresearch organizations,CIMMYT in Mexico and IITA in Nigeria, and with this technical assistancewith the breeding program promising new varieties are at present under trial.

11. Despite this external support for breeding and seed multiplication, the existing National Seed Production Committee has not proved fully effective in coordinatingseed production to meet national requirements. It is essential for an executive subcommitteeof the main committee to define precisely national requirements,and then to ensure that seed production from all sources is geared to meet the demand. Thus for maize, as also for other crops, a specific seed production program must be evolved and closely monitored with an effective inspectoratefor assisting private growers. Government and regional seed farms and assuring the maintenance of correct standards. Prices paid to growers also need review to ensure the additional effort required to produce seed is sufficientlyrewarded. An essential element of the proposed Project would thus be the effective coordinationof all parties involved in seed supply.

12. Although composite seed can be retained for use over two or three seasons, it has been decided to replace composite seed annually under the Project, for reasons of a slight genetic yield loss, an even greater germina- tion loss due to poor storage, and a yield increase of up to 10% from continuous improvemenitachieved each year in the composite selection carried out at the Ilonga Research Station. It would take one or two years before composite seed production has increased to Project requirements. In the early years of the Project, when some composite seed would have to be retained, a seed dressing, sinuthion,would be nade available under the Project for use by villagers, to protect the seed in store from insect pests. ANNEX3 Page 5

Fertilizer Use

13. In many areas of Tanzania more than one essential element is lacking in the soil, and fertilizermust be applied to obtain optimum yields. Generally speaking, nitrogen and phosphorus are required together (and their interactionis often important),while in some areas potassium is also essential if yields are to be raised above subsistence levels. Fertilizers, however, are relatively expensive and in view of the poor husbandry standards and low average yields throughout Tanzania, and the inadequacy of information on which to base localized fertilizer recommendations,the Project would initially broadly follow the recommendationsof the Government Soil and Fertilizer Use CoordinatingCommittee. These recommendationsfor Project districts are summarized below:

Recommended Fertilizer Rates for Project

Districts

N P K N P K N P K N P K 30-30-0 30-20-10 20-20-0 10-10-0

150 Kg/ha SA and 150 Kg/ha SA 100 Kg/ha SA 50 Kg/ha SA 65 Kg/ha TSP 50 Kg/ha TSP, 44 Kg/ha TSP 25 Kg/ha TSP 24 Kg/ha M. Potash

Tarime Njombe Iringa Arumeru (part)

Serengeti Mufindi Morogoro (part) Tabora

Songea Kilosa Urambo

Mahenge Mbeya Mpwapwa

Morogoro (part) Sumbawanga (part) Sumbawanga (part)

Nachingwea Mbozi (part)

Newala Lindi

Mtwara Rombo

Masasi Arumeru (part) Hanang Nbulu Korogwe Lushoto

Source: Draft Handbook for Fertilizer Use in Maize in Tanzania. Ministry of Agriculture 1974. ANNEX 3 Page 6

14. Much higher optimum rates are listed for the better areas, but the draft handbook stresses the high cost of such packages. For instance, at present fertilizer prices (revised from 1974 publication)it would cost TShs. 1,900 to apply a recommended optimum applicationof N9OP60K20 per hectare and require at least an additional 2,400 kg/ha yield increase to break even on the extra cost. Such a yield increase is unrealistic for farmers just being introduced to improved practices, and hence the lower rates shown in the above list have been recommended. These rates are broadly in line with the modest fertilizer recommendationsin the Project packages discussed in para. 20, which comprise 100 kg/ha SA and 50 kg/ha TSP in Package 2, and 150 kg/ha SA and 50 kg/ha TSP in Package 3.

15. The benefits of the modest rates recommended by Government and utilized in the proposed Project are supported by results of a series of trials on farmers' fields in ten districts of Northern Tanzania that are documented in the EAAFRO Journal for 1969. Compound fertilizersused in the trials were Diammonium Phosphate (18N-47P),a 25N-10P Compound, and a 20N-20P-10KCompound. In every trial the application rate was only 112 kg/ha (100 lbs per acre). The response levels indicate yield increases in the range of 300 - 500 kgs for the more marginal areas, which would not be included in the Project, and from 600 - 1,300 kgs for higher potential areas, in some instances reaching 1,800 -1,900 kgs per hectare (Table 3).

16. Using yield data from Project village demonstrationplots, yield surveys of Project farmers' field and further research trials, fertilizer recommendationsfor the differing ecological conditions existing within the Project area would be developed during the course of the Project. Attention to this aspect would be a key responsibilityof Project Servicing Unit staff and the regional farm management officers, who would also draw on the assistance of all those engaged in maize agronomy in the country. Dependent on economic considerations,it seems possible that at elevations above 1,500 meters, where yield potential is greatest, a higher rate of fertilizer application could be recommended for the more successful villages. Evidence supporting this is available from six maize experimentsconducted at six off-station locations in Mbeya Region by Dr. Mattson and Mr. H. Zuberi in the 1974-75 season. The data presented in Table 4 show a significant increase in returns, when the level of N is increased from 50 to 100 kg/ha, using unsubsidizedprices. Further experimentationduring the 1975/76 season will assist in determining the need for any changes in the recommendations. In addition to further technical assistance from CIMMYT, the Project also provides for the service of an experiencedmaize agronomist to review existing maize agronomy in different areas of Tanzania, and make recommendationsfor its long-term improvement (Terms of Reference are given in Annex 7).

17. Present fertilizer recommendationsare based on using Triple Superphosphate (TSP) as the phosphorous source, and initially Sulphate of Ammonia (SA) for nitrogen. Both are produced by the Tanzania Fertilizer Company (TFC) at Tanga. In view of SA's soil acidifying effect, and the ANNEX 3 Page 7 high cost of transportationper unit of nitrogen, a more suitable form of nitrogen, such as CAN or Urea combined with the use of Diammonium Phosphate (DAP), would be investigatedunder the Project. The TFC factory could be modified to produce DAP but, until this is done, DAP requirementswould be imported.

Pesticides and Herbicides

18. The major pest affectingmaize in Tanzania is stalk borer, and the use of 5% DDT (powder) as a preventativemeasure is included in the recommendations for all areas in the Project. Research is ongoing in neighbouring countries to replace DDT by an equally suitable and cheap insecticide;once a recommended alternativeis available it would be adopted. Localized outbreaks of army worm are another problem, and provision is made under the Project for their control by 25% DDT (liquid) on up to 10% of the Project area.

19. Since each farmer under the Project is only assumed to grow an average 0.75 to 1 hectare of maize, he would have sufficient labour for adequate weeding. However, as maize is only part of his farm program, and as some more successfulmaize growing villages might wish to increase the acreage under maize, the Project would arrange for two percent of the area to receive a herbicide - Gesaprim is at present recommended - on a pilot basis. Villagers using Gesaprim would be expected to bear the full cost to ensure that its use releases labour at a true economic cost. Weeding is undoubtedlya constrainton the size of holding for many farmers, and the effectivenessof the herbicide has been well demonstratedon research trials and by some villages, where Gesaprim has already been introduced.

The Project Technical Packages

20. The national average yield for maize is estimated at 750 kg per ha. However, since the Project would concentrate its efforts only in the better maize growing areas, it is assumed that average Project area yields are about 1,100 kg/ha; this level has been used as the yield without the Project. In view of the present low husbandry standards, the initial extension effort would be concentratedon improving husbandry methods including early planting, correct spacing and timely weeding. The initial stage (Package 1) couples this with the use of improved seed and herbicides. Once this stage has been mastered, farmers would move on to Packages 2 and 3 which incorporatemodest increases in fertilizeruse.

21. The Project packages are as follows:

(i) Package 1: Farmers using this package would receive improved composite seed and insecticides,mainly 5% DDT for stalk borer control as a blanket recommendation, and also some 25% DDT to combat incidencesof army worm outbreaks,provided on the basis of requirementsfor 10% ANNEX 3 Page 8

of the cropped area. These inputs coupledwith the use of improved practices advocated by the strengthened extension services,would be expected to raise average yields to 1,500 kg/ha (36 percent) over a three- to four-year period.

(ii) Package 2: Inputs for this package would include those in Package 1 togetherwith modest use of fertilizer (50 kg/ha of TSP and 100 kg/ha of SA). The SA would be applied half at planting time, and half as a top dressing. The expected yield from this stage would be 2,200 kg/ha, which would further increase yields by 700 kg/ha. At higher altitudeshybrid rather than composite seed would be used.

(iii) Package 3: In the more favored growing areas with rainfall over 1,000 mm, a third stage would be introduced adding one additional 50 kg bag of Sulphate of Ammonia, or its nutrient equivalent. The nitrogen would be applied half as a basal and half as a top dressing. The eventual yield increase for this stage is placed at 2,700 kg/ha, in part attributableto the increased fertilizer use and in part to restrictingthis stage to only the best growing areas.

22. Although Package 1 realizes a 400 kg/ha yield increase, it is envisaged that all villages would move to Package 2 over a two- to five-year period. The yield increase could not be maintained in Package 1 on a continuous basis, and the advance to Package 2 is necessary to maintain fertility, as well as to further raise yields.

Other Technical Improvements

23. In addition to the various forms of assistance discussed under extension and training in Annex 2, the Project would support technical innovation in the followingways:

i) By making additional funds available to the Research Section of the Ministry of Agriculture to expand their network of village trials from the existing 34 up to 52 trials per season. These village naize trials include a variety trial to compare local and recommendedvarieties with new ones; a fertilizer trial; a management trial incorporatingvarious cultural practices including herbicide use; and also a research management block to demonstrate existing recommendations;

ii) By making additional funds available to the Research Section for conducting rotational maize trials with legumes as well as intercroppingtrials with the object of reducing the dependence upon imported nitrogen. In this sphere the findings ANNEX 3 Page 9

of the complementaryFAO/UNDP Assistance to Crop Production Project would provide an important input (Annex 7); and iii) By providing consultancy funds for a maize agronomist to review existing agronomic recommendationsfor maize for the various areas under the Project and make recommendationsfor the long-term improvementof maize agronomy. It is anticipated that the consultantwould be in the field for four months in Year 1, and a further two in the second year after more data is available on which to review recommendations. ANNEX 3 Page 10

BIBLIOGRAPHY

References Date

1. Agro-EconomicZones of Tanzania, BRALUP Res. Paper 25 1973

2. Agro-EconomicZones of:

i) N.E. Tanzania BRALUP Res. Report 13 1971

ii) Southern Highlands BRALUP Res. Report 22 1971

iii) Kigoma and Tabora Regions BRALUP Res. Report 46 1971

iv) Dodoma and Singida Regions BRALUP Res. Report 47 1971

v) Coast and Morogoro Regions BRALUP Res. Report 48 1971

vi) Southern Tanzania BRALUP Res. Report 49 1971

3. Rainfall and Evaporation in Tanzania, BRALUP Res. Paper 24 1973

4. National AgriculturalResearch Program 1974-75,Ministry of Agriculture 1974

5. Response of Maize to Applicationof Compound Fertilizers on Farmers Fields in Ten Districts of Tanzania,

Anderson, EAAFRO Journal, January 1969

6. A Handbook for FertilizerUse in Maize in Tanzania, Draft Edition, Cusani-Viscontiand Samki, Ministry of Agriculture 1974

December 1, 1975 ANNEX 3 Table 1

TANZANIA NATIONALMAIZE PROJECT RESEARCHMAIZE YIELDS IN 2A1ZANIA. BY ALTITWI AID VARIETt. 19-070-1971/72

1/ 1/ Altitude Nae of Composite Adjusted Adjusted LocatiormTested Range Vait rHybrid Yed ils o (meters) Variety orAll Sites 50% (Bags/ 1970 1971 1972 (bags/acre) acre)

Ilonga Coup Coup 12.2 15.8 4 4 2 Ilonga Coup A Coup 13.9 17.8 4 7 2 Below 300 H 512 Hybrid 12.4 15.1 - 3 2 H 511 Hybrid 11.0 14.3 - 3 - SR 52 Hybrid 13.8 17.6 - 3 - H 632 Hybrid 12.0 15.4 4 7 2

Ilonga Comp Coup 15.4 19.4 7 1 2 Ilonga Coup A Coup 15.1 19.6 7 8 1 300-900 H 512 Hybrid 14.2 18.2 - 4 2 H 511 Hybrid 13.0 16.1 - 5 - SR 52 Hbrid 16.7 17.0 - 4 - H 632 Hybrid 14.5 20.3 7 9 2

UkiriguruComp Comp 17.7 26.5 12 13 5 H 611 Hybrid 18.9 25.2 12 5 5 900-1800 H 632 Hybrid 17.9 23.3 12 13 5 H 512 Hybrid 20.5 25.0 - 6 5 H 511 Hybrid 25.7 27.4 - 6 - SR 52 Hybrid 21.6 27.8 - 6 -

Ilonga Comp A Coup 9.9 - 3 4 3 2/ Iloaga Coup CoUp 9.6 - 3 3 4 900-1800 Katuabili Coup 10.0 - - - 3 H 512 Hybrid 9.3 - - 2 3

Low SR 52 Hybrid 8.4 - - 2 - rainfall M 6 Coup 7.7 - - - 3 Katummni Comp B Coup 6.6 - - - 3

H 613 Hybrid 28.3 34.4 - 3 2 H 611 Hybrid 25.9 32.8 - 3 2 Above 1800 UkiriguruComp Comp 23.4 26.5 - 5 2 H 512 Hybrid 23.3 28.1 - 3 2 H 511 Hybrid 24.1 31.1 - 3 - H 632 Hybrid 22.5 24.8 - 5 2

1/ Figures are adjusted for seasonalvariations according to yield by standard varieties. Yields are expressedas 90 kg bags of shelled grain. Differ- ences between yields are not necessarilystatistically significant.

2/ Sites selected from severalaltitudes, all with low rainfall.

September 3, 1975. TANZANIA AMNEX3 NATIONALMAIZE PROJECT Table 2 MAJOR ALTITUDE AND ANNUAL RAINFALL ZONES OF PRDJECT DISTRICTS

Altitude Over 1,800 metres 900-1800 netres 300-900 metres Under 300 metres PROJECT PROJECT Annual 1,000mm 750- >750mo 1,000mm 750- 750 (1,000m 750 >7501 (1,0OOOmM 750 > 750mm REGION DISTRICT Rainfall 1, 'OODC1,00000 1,0001ma l,000 _ __

ARUSNIA Arumeru X X X X Hanang X - I _X Mbulu ______X I_ __ KILIMANJARO Moshi X X X I _ Rombo _X X X _ TANGA __hez __ _ .. X X X Korogwe X X X_ Lusboto X _X X MOROGORO Kilosa X X _ Morogoro _ __X DODOMA ______Mabenge X =X

TABORA Tabora _ _ X X UramboX IRINGA _r_I _ X XX x _I _--_---_ Mufindi X X X _ MBEYA Mbeya_ _ _ __ X______XX Mbozi X, _ LINDI Nachingwea_ X_X_X

MTWARA M__asi _ X X

Mtwara x =-?, _ _X X_ RUVUMA Song_ea X X _

MARA Sumbawanga X _ _X X _ Serengeti I X

Recommended Seed Dy Zone Hybrid Hybrild - ybrid UCA IX IC IC Katumant IC IC _ 632 632 632 Katumani UCA UCA IC [C

N. B. At least 10% of the District area ust fall within the zone cited for inclusion of that zone to be Marked on the table. Villages in those parts of Districts vith annmul rainfall below 750im will be excluded frem the project.

Source: Agro-Economic Zones of Tanzania and Rainfall Data - BHALUP, 1973.

September 3, 1975. TANZANIA NATIONAL MAIZE PROJECT MEAN Y1TLDS AND RESPONSES OF MAIZE GRAIN FOR LOCALITIES IN EIGHT DISTRICTS OF TANZANIA, 1966

District Locality No. of Yield (Kg/Hectare) Mean Responses Trials Unfertilized Fertilized Mean Kg/Ha Per Cent

DODOMA Matambulu 6 590 1,025 307 435 73.8 Nkungu 5 309 665 488 355 114.9 Mndemu 3 610 855 733 245 40-3 Makulu 6 399 790 595 391 98.0 Mean for District 20 478 834 656 356 74.6

MBULU Hareabi I 12 3,421 3,865 3,643 444 13.0 Hareabi II 8 1,579 1,926 1,753 346 21.9 Kainam 6 2,611 3,402 3,007 791 30-3 Endabash 6 2,883 4,228 3,556 i,345 46.7 Mbulu town 4 3,708 4,349 4,029 641 17.3 Mean for District 36 2,841 3,555 3,198 714 25.6

SOUTH Uru 7 2,014 2,794 2,405 779 38.7 KILIMANJARO Machame 9 3,216 4,143 3,680 927 28.8 Kibongoto 7 2,847 4,236 3,542 1,389 48.8 Masama 4 3,i64 4,561 4,i6_ 79 21.2 Old Moshi 8 1,590 1,887 1,739 297 18.7 Central Hai 8 2,094 2,949 2,522 855 40.8 Mwika 6 2,762 3,726 3,244 964 25.9 WestVunjo 6 2,316 3,092 2,704 776 53.5 Mean for District 55 2,576 3,424 3,000 847 32.9 ARUSHA District 6 1,905 2,677 2,291 772 40.6

EAST KILIMANJARO Keni and Mkuu 5 657 1,528 1,093 871 132.3

MUHEZA- Muheza 11 1,961 2,799 2,380 839 42.8 KOROGWE Korogwe 4 1,397 1,999 1,698 602 43.0 Mombo 7 1,037 1,451 1,244 414 39.9 Mean for District 22 1,464 2,083 1,773 619 42.3 LUSHOTO Mtae 7 1,767 2,235 2,001 469 26.5 Mgwashi 7 2,652 4,608 3,631 1,956 73.8 Ubiri 7 919 1,470 1,195 550 59.9 Bumbuli 7 2,390 3,129 2,760 739 30.9 Soni 5 3,946 5,748 4,847 1,803 45.7 Balangani 6 2,054 3,124 2,590 1,071 52.1 Manga 4 2,088 2,430 2,760 1,342 64.3 Mean for District 43 2,260 3,392 2,826 1,133 50.1 °

TANGA Pon6we 11 1,537 2,516 2,027 979 6.7 Maramba 4 1,323 2,122 1,723 799 60.4 Kigombe/Mtangata 7 1,330 1,995 1,662 666 50.1 Mean for District 22 1,397 2,211 1,804 814 58.3

September 3, 1975. ANNEX 3 Table 4

TANZANIA NATIONAL MAIZE PROJECT

YIELDS AND RETURNS FROM SIX OFF-STATION MAIZE FERTILIZER TRIALS, MBEYA REGION, 1974-75

1/ 2/ Yield N P 05 Fertilizer Cost Value of Grain Net Return Kg/ha Kg/ha Kg/ha TShs. TShs. TShs.

1,620 0 0 0 1,215 1,215

3,000 50 0 607 2,250 1,643

5,100 100 0 1,214 3,825 2,611

1,790 0 25 147 1,343 1,196

2,560 50 25 754 1,920 1,164

4,530 100 25 1,361 3,398 2,037

1,830 0 50 294 1,373 1,079

3,310 50 50 901 2,483 1,582

5,730 100 50 1,508 4,298 2,790

1/ Unsubsidised prices. Cost of N = TShs. 12/49 per kg;

P205 = TShs. 5/87 per kg.

2/ Value of grain at TShs. -/75/kg.

November 20, 1975. ANNEX4 Page 1

TAIZANIA NATIONAL MAIZE PROJECT

THE NATIONALMILLI]NG CORPORATION (NMC)

A. Historical Background

1. The National Milling Corporation (NMC) was established in February 1968 to bring under one management.the grain milling organizationsnationalized immediatelyafter, and in accordarncewith, the Arusha Declaration of 1967. Under the National Milling CorporationAct of Parliament (Act No. 19 of 1968), ownership of the corporationhas been vested in the Governmentof the United Republic of Tanzania, in order to allow the State control over the major means of productionin the food processingindustry. At the time of the takeover, NMC became responsiblefor 12 grain milling establishmentswith an overall annual milling capacity of about 196,000 tons of grain. In subsequentyears, NMC acquired cassava flour mills, poultry and animal feed concerns, canning firms producinga variety of products like jam, fruit juices, squashes,and a wine bottling plant.

2. During the 1968-1973period, NMC acted exclusivelyas a processing concern, buying the raw material it needed from the former National Agricul- tural Products Board (NAPB), another State organizationresponsible for the marketing of food crops, vegetable oil produce and cashew nuts. When NAPB was dismantledin 1973, NMC took over the overall responsibilityfor food crop marketing in addition to processing. Although the legislationto that effect is still in the process of being approved by Parliament,NMC can now be consideredfor all practical purposes as a food crop marketing board responsiblefor the marketing of grain and certain other food crops.

B. Organizationand Management

3. NMC with headquartersin Dar-es-Salaamand operating through 14 branches throughoutthe country, is organized into seven Divisions responsible for Administration;Finance and Planning; Buying; Marketing;Technical and Production; Audit; and Personnel and Training. Each branch is directed by a Branch Manager who is assisted by members of the functional Divisions reporting through him to their respectiveDivision Heads. NMC employs about 1,200 staff out of which about 100 are professionallevel administrators, accountants or engineers.

4. NMC managementis vested in a Board of eight Directors,including the Chairman, all appointed by, and answerable to, the Minister for Agricul- ture. Each Director is appointed for a renewable term of two years. The powers and obligationsof the Board and the General Manager are detailed in the Regulations issued on the 5th February 1968 by the Minister of Agriculture under Section 5(7) of the NMC Act of 1968. ANNEX 4 Page 2

C. Storage and Milling Facilities

Storage

5. NMC estimates its own grain storage capacity to consist of godowns with a capacity of about 200,000 tons and silos with a capacity of 60,000 tons. In addition,there are 11 godownswith a total capacityof 44,000 tons to store finished products (Table 1). While the godowns are scatteredover 21 locationsthroughout the country, the silos, establishedwith SIDA assistance, are located near mills in Iringa,Arusha and Dar-es-Salaam. NMC also has access throughrental to godowns owned primarilyby cooperativeunions. Of a total estimated capacity of such facilitiesof 149,000 tons, 1/ about 75,000 tons can be used by NMC for grain storage. Capacityutilization in a normal production year has reportedlybeen around 50% for cooperative storage, 80% for NMC godowns and 80-100% for silos. There is considerable additionalstorage capacity owned by primary cooperativesocieties but this is generallyused only for transientstorage of grains and is not suitable for NMC use. With a yearly commercialconsumption of about 380,000 tons of the three major cereals, NMC's combined grain storage capacity of 335,000 tons representsa growing national bottleneck. Local storage problems are particularlycommon resultingfrom the suboptimalgeographical distribution of godowns. As an interimmeasure NMC, in early 1975, acquired 400 tarpaulins which provide temporarycover for about 120,000 tons of bagged grain.

6. NMC has prepared an investmentprogram for the third Five-Year (1975-79)Development Plan which by 1980 would establishan additionalgodown capacity of 425,000 tons and silo capacityof 340,000 tons at a cost of about TShs. 344 million. Related staff housing and ancillaryfacilities would require another TShs. 26 million. With this additionalinvestment, NMC would have approximately1 million tons of storage capacityby 1980. However, it was estimatedin the Agricultureand Rural DevelopmentSector Survey (Vol. III, Table 22) that the total volume of food crops handled by NMC in 1980 would be only about 700,000 t and the present expansionplans would thus seem excessive. Funds are included,therefore, in the present Project for only a fraction of estimatedrequirements, namely, some 34,000 t at regional level for production inputs and about 80,000 t for grains; in addition,consultancy services would be financed to evaluate the national storage situationand prepare investmentproposals. Swedish financial assistancewill continue to be available for the silo expansionprogram, but no other funds have so far been committed for NMC storage.

1/ As reported by NMC, a survey in mid-1974 conductedby MDB indicated existingunion storage capacity of about 200,000 tons. ANNEX4 Page 3

Milling

7. NMChas presently in operation or under construction eight maize mills, nine paddy mills and twc wheat mills with individual 24-hour milling capacities ranging from 10 to 250 tons. All facilities under construction will be completed in time to accommodate the 1975/76 harvest. The total annual milling capacity will have increased from 196,000 tons in 1968 to 317,000 tons by 1976. The breakdown by grains is as follows:

1968 1976 (1000 tons)

Maize 68 118

Paddy 54 110

Wheat 74 89

Total 196 317

NMChas also been subcontracting some of its milling to small private mills. This practice is expected to be discontinued eventually as those mills are in poor repair and because it is not favored by Government policy.

8. Future expansion plans call for additions in maize milling capacity of 110,000 tons by 1977 and another 100,000 tons by 1980, and of 25,000 tons (3 mills) in wheat milling capacity, possibly by 1977. At an average current cost of TShs.300 per ton of maize milling capacity, the required investment would total TShs.64 million. The cost of the planned wheat milling capacity expansion is estimated at TShs. 12 million. The current maize milling expansion program, already reflected in the above capacity figures, is costing TShs.18 million. The NMP Project would finance the preparation of investment proposals for the expansion of the milling sector but not actual investments.

D. Operations and Activities

9. Under its establishment Act (1968), NMCwas to carry out the following functions:

(a) To conduct the business of:

(i) Manufacturers and processors of such agricultural and other products as the Board may from time to time decide; ANNEX 4 Page 4

(ii) Importers,exporters, wholesale dealers and retailers of such merchandiseas the Board may from time to time decide;

(b) To conduct its business in an efficientmanner and in accordance with the best mercantile traditions.

10. In 1968, NMC was set to become the technologicalcenter for the food processing industry in the country. The additional responsibilities entrusted to NMC since the 1973 organizationinclude the fixing, in agreement with the Ministry of Agriculture,of producer prices for the main food crops, and overall arrangementswith cooperativeunions, farmer associationsand private traders for the purchase, transportand distributionof the marketable food crop production. NMC owns a fleet of 60 lorries and hires additional transportas required. Currently,NMC's predominantactivities are the trading and processingof maize, wheat and paddy.

11. In 1972/73,which can be consideredas a normal year from the climatologicalpoint of view, the total productionof maize in Tanzania was estimatedat about 813,000 tons out of which about 210,000 tons, or 25%, were marketed. NAPB/NMC purchased 106,000tons, i.e. 50% of the estimatedmarketed production. On average over the period 1968-1972NAPB/NMC handled 60% of the marketed production. Over the period 1969-1974,the annual tonnage of maize milled by NMC increasedfrom 58,000 tons to 98,000 tons. It is estimated that about 55% of Tanzania'swheat production is marketed with NMC handling nearly all of the marketed surplus. NMC increasedits processing of wheat from 57,600 tons in 1969/70 to 66,800 tons in 1971/72, then reduced it to 62,400 tons in 1972/73 and further to 49,600 tons in 1973/74 as domestic wheat productiondeclined. Sales of wheat flour amounted to 40,900 tons in 1969/70 and 50,500 tons in 1973/74with imported flour augmentingdomestic supplies in the latter year. The volume of paddy processed increased from 18,300 tons in 1969/70 to 48,300 tons in 1972/73 and declined to 37,600 tons in 1973/74. Includingimports, rice sales increased steadily from 11,700 tons in 1969/70 to 40,100 tons in 1973/74.

12. Other activitiesof NMC include the milling of cassava and the productionof about 25,000 tons of poultry feeds per year. The Food Canning Division,which has been expandingrapidly, processesprimarily mangoes, pine- apples, oranges, pickles, tomatoes and materials for jams. Wine production was started in 1970 and reached 60,000 bottles in 1973. Table 2 summarizes the sale value of NMC products over the period 1969-73. The total gross sale value increased from TShs132.9million in 1969/70 to TShs.1,906million in 1972/73,an annual increase of about 14%. On average, wheat has represented about 40% on NMC turnover,maize some 30% and rice about 20%. ANNEX4 Page 5

E. FinancialResources and Results

FinancialStatements 1/

13. The balance sheets and profit and loss accounts for the period 1969-73are shown in Tables 3 and 4. Out of an authorized capital of TShs.35 million, Governmenthas paid-in TShs.7.5 million as share capital. Long-termloans in 1969 amounted to TShs.23.8million. The annual interest charges on long-termloans has averaged 6.3% over the period 1969-73and the average annual repaymentof pr:incipalhas amounted to TShs.2.15million, i.e. 9%.

14. The return to the capital used has evolved in the followingmanner:

1969/70 1970/71 1971/72 1972/73 ---- (TShs. '000)…-…-______-_____

Net Profit 13,301 14,342 9,985 5,025

Capital 37,363 43,871 44,656 46,196

Ratio 35.5% 32.6% 22.3% 10.8%

The very high value of the ratio at the beginningof the period seems to indicate either that the balance sheet value of fixed-assetswas undervalued or that sale prices of produce were very high compared to cost of raw materials. The 1972/73figure for used capital may more accuratelyreflect the market value of such assets, and the return of 10.8% over used capital in that year more correctlyrepresents the economic return on capital.

15. NMC has been depreciatingits assets at an average rate of 8.7% over the period, implying an overall average life of 11-1/2 years for the fixed assets which is adequate. As indicatedbelow, NMC has created TShs.27.5 million of new fixed assets over the period considered,representing 61% of the total fixed assets by the end of 1973. 1969/70 1970/71 1971/72 1972/73 …______--…(TShs. '000)…------Fixed Assets (FA) at the beginning of FY 29,618 29,111 35,371 39,798 Depreciation 2,546 2,581 2,737 3,845 Disposal 28 78 - - Annual Addition 2,067 8,919 7,164 9,385 Brought Forward 29,111 35,371 39,798 45,338 Depreciationas a % of Initial FA 8.5% 8.8% 7.7% 9.6%

1/ The 1973/74 financialstatements had not been finalizedas of June 30, 1975. ANNEX 4 Page 6

16. During these years, the liquidityratio of NMC has evolved as follows:

1969/70 1970/71 1971/72 1972/73 ______-_--- (TShs. '000)…------

Debtors 7,507 10,401 9,977 10,089

Cash 1/ 4,818 19,332 16,516 21,027

12,325 29,733 26,493 31,116

Current Liabilities2/ 17,732 20,955 28,367 28,792

Liquidity Ratio 0.70 1.42 0.93 1.08

(LiquidityRatio Including Saleable Stocks) (1.64) (2.15) (1.96) (1.57)

1/ Including prepaid expenses.

2/ Excluding reserve for current bad debts.

On average, the ratio would seem to have been very low by accepted standards. However, in view of the magnitude of stocks for sale and their quickly realisable nature, the relatively low liquidity ratios do not reflect a strained liquidity situation.

17. The financialanalysis of NMC accounts shows first that these accounts are well kept: they indicate in detail the costs and returns of each branch and activities,and show clearly the progressivebuild-up and eventual consolidationin the Profit & Loss accounts and balance sheets. These accounts further show that NMC has been soundly managed over the period for which audited accounts are available.

The 1974 Trading Accounts

18. Because of the domestic shortfall in production in 1974, NMC had to import the equivalentof 440,000 tons of grains, out of which 291,000 tons, or 66% was maize. The total cost of these imports was TShs.758 million (US$105million). While importing at the relativelyhigh grain prices prevailing on the world market in 1974, NMC was bound by Government policy to keep the resale price at the pre-1974 official levels, thus incurringheavy losses. In late 1974 Government allowed an increase of grain retail prices ANNEX4 Page 7 together with increased producer prices for maize, wheat and paddy. The following table summarizesthe situation at the end of 1974; further details are in Table 5.

Sembe Flour Rice …(TShs./ton)------

Average NMCCost of Grain for Sale in 1974 1,502 1,644 4,348

Fixed NMC Selling Price 772 969 1,262

Loss per ton 730 675 3,086

Loss as a % of the Cost 49% 41% 71%

19. NMC purchaseswere made possible through an overdraft with the National Bank of Commerce and the required foreign exchange was made available by the Central Bank. At the end of 1974, the overdraft amounted to TShs.601 million (US$84.2million), partly representedby a 154,000 ton stock whose value at the 1974 resale price was TShs.144 million (US$20.2million). The net deficit of NMC was thus TShs.457 million (US$64million) as of December 31, 1974. In early 1975, the resale price increase authorizedby Government allowed NMC to adjust its stock value to TShs.348 million (US$48.7million), hence reducing its net deficit to TShs.253 million (US$35.4million). The Governmentpledged to reimburse this deficit to NMC, and the Treasury had already paid TShs.100 million (U3$14 million) by the middle of March 1975, leaving an unpaid deficit of TShs.153 million (US$21.4million) at that time. It appears, therefore,that NMC could have reimbursed its current overdraft for 1974 importswhen having sold the stock inventoriedas of December 31, 1974. Additionallosses are being incurred, however, on 1975 imports, which had reached a level of 243,000 t by July 1975.

F. Conclusions

20. Generally,NMC is well organized and its management has been dis- charging its obligationssuccessfully. Since 1973 however, the new tasks imposed on NMC have over-stretchedmanagement's capacity, which has not been reinforcedadequately to cope with the increased responsibilities. In addition to its new functions,NlM[C has had to face the grain shortage situation of 1974 (which it did successfully),but indicationsare that this has been at a certain cost in the timelinessof less immediatelyimportant functions like the finalizationof annual accounts, or the implementationof new investments. It is unlikely that NMC will be able to pursue this enlarged activity on a sustained basis without a significantreinforcement of its senior staff, and possibly a certain reorganizationwhich should define precisely the res- ponsibilitiesin the milling and the marketing sector. It is hoped that the ANNEX 4 Page 8 new legislationnow being reviewed by Governmentto establishNMC's marketing functions would allow for the overall need of reinforcingNMC capacity. A speedy resolution between NMC and the Treasury of the financial problems resulting from the unprofitableimport grain trade is essential for the continued viability of NMC.

December 1, 1975 ANNEX 4 Table 1

TANZANIA NATIONAL MAIZE PROJECT

GODOWN CAPACITY OF THE NATIONAL MILLING CORPORATION, JANUARY 1975 (Tons)

Godown Capacity for Location' Raw Materials Finished Products

Arusha 20,000 14,000

Moshi 14,500 -

Iringa (Mlandege) 16,300 10,000

Iringa 2,000 -

Mikumi 2,000 -

Dodoma 24,000 200

Mpanda 5,454 -

Musoma 4,500 -

Singida 4,500 -

Mwanza 4,500 -

Manyoni 4,500

Changombe Plot 35 32,500 -

Changombe Plot 33 2,800 2,700

Changombe Plot 5 4,300 -

Canning Division 5,900 2,100

Pugu Road 9,800 6,500

Kurasini 7,000 7,000

Rwanda 500 500

John Corner - 400

Kyela 50 50

Morogoro - 500

Tabora 20,000 -

Kigoma 15,000 -

TOTAL 200.104 43,950

Source: National Milling Corporation. September 3, 1975. TANZANIA NATIONAL MAIZE PROJECT

SALES SUMMARY OF THE NATIONAL MILLING CORPORATION, 1969/70 - 1972/73 (Amountsin TShs. '000)

1969/70 1970/71 1971/72 1972/73 Product Amount % Amount % Amount _ Amount %

Wheat 53,040 40 59,816 44 68,057 42 69,107 36

Maize 44,741 34 40,207 30 48,914 30 50.342 26

Rice 25,738 19 22,992 17 30,922 19 51,408 27

Cassava 214 - 22 - - - - -

Animal Feeds 6,424 5 9,136 7 10,075 7 14,133 8

Canning 2,457 2 3,093 2 3,525 2 5,205 3

Spices/Chall 244 - 110 - 39 - 1 -

Wine 5 - 147 - 238 - 385 -

TOTAL 132,863 100 135,523 100 161,770 100 190,581 100

Source: National Milling Corporation. (Dp September 3, 1975. l r- ANNEX 4 Table 3 TANZANIA NATIONALMAIZE PROJECT THE NATIONALMILLING CORPORATION BALAVCESHEETS, 1969170 - 1972/73 (TSbs ' 000)

1969/70 1970/71 1971/72 1972/73

A. ASSETS

Fixed Assets Consisting of - Land and Building 16,780 n.a. 18,649 19,241 - Plants, Machinery and Tools 11,432 n.a. 19,529 16,400 - Motor Vehicles 445 n.a. 1,126 2,026 - Furniture, Equipment, Sundry 455 n.a. 741 772 Work in Progress n.a. 6,659 753 6,899

Fixed Assets by the End of FY 29,112 35,371 39,798 45,338

Investments and Deposits 8,251 8,500 4,858 858

Current Assets 29,032 34,690 45,609 45,277

Sundry Debtors 7,507 6,550 9,977 10,089 Advances to N.A.P.B. - 3,851 - - Closing Stock 16,707 15,358 29,093 14,161 Cash 2,703 3,891 205 15,544 Pre-paid Expenses and Taxes 2,115 5,o4o 6,334 5.4R3

TOTAL ASSETS 66,395 78,561 90,265 91,473

B. LIABILITIES

Long Term Liabilities 35,827 36,264 34,165 31.651

Long Term Capital - Store 7,500 7,500 7,500 7,500 - Loans 23,800 21,265 19,566 17,352 General Reserves 3,827 6,799 6,799 6,799 Special Reserves 700 700 300 -

Current Liabilities 17,977 21,101 28.513 28,921

Corporation Tax 5,617 8,917 9,712 7,514 Tax Provision 5,320 5,737 3,994 2,010 Sundry Creditors 4,984 5,290 4,792 18,468 Accrued Charges 1,811 1,011 1,058 800 Reserve for Current Bad Debts 245 146 146 129 Bank Overdraft - - 8,811 - Balance of P/L Appropriation Account 12,591 21,196 27,587 30,901

TOTAL LIABILITIES 66,395 78,561 90,265 91,473

Source: National Milling Corporation

September 3, 1975. ANNEX 4 Table 4

TANZANIA NATIONAL MAIZE PROJECT

THE NATIONAL MILLING CORPORATION

INCOME AND EXPENDITURESTATEMENTS, 1969/70 - 1972/73 (TShs. '000)

1969/70 1970/71 1971/72 1972/73

A. PROFIT AND LOSS ACCOUNTS

Income Sales of Produce 132,863 135,524 161,769 190,581 MiscellaneousRevenue 1,031 921 1,003 1,650

TOTAL INCOME 133,894 136,445 162,772 192,231

Expenditures Overhead Expenses Technical Department 240 229 390 511 Marketing Department 795 1,121 1,135 1,494 Personnel Department 326 362 376 580 Administration 2,419 2,624 3,233 4,020 Unused Facilities 353 258 172 260 Stock Adjustment - (44) (61) -

Total Overhead Expenses 4,133 4,550 5,245 6,865

FinancialCharges Long-Term Loans 1,517 1,373 1,239 1,109 Short-Term Borrowings - - - -

Total Financial 1,517 1,373 1,239 1,109 Charges

Cost of Sales 114,943 116,180 146,303 179,233

TOTAL EXPENDITURES 120,593 122,103 152,787 187,207

Profit (Loss)Before CorporationTax 13,301 14,342 9,985 5.024

B. PROFIT AND LOSS APPROPRIATIONACCOUNT

Debit Balance brought Forward 4,900 12,591 21,196 27,587 Current Year Profit 13,301 14,342 9,985 5,024 Transferredfrom Special Resources 410 700 700 300

TOTAL DEBIT 18,611 27,633 31,881 32,911

Credit Provision for Corporation Tax 5,320 5,737 3,994 2,010 Transferred to Special Resources 700 700 300 - To Balance Sheet 12,591 21,196 27,587 30,901

TOTAL CREDIT 18,611 27,633 31,R81 32,911

Source: National Milling Corporation. September 3, 1975. TANZANIA NATIONAL MAIZE PROJECT THE NATIONAL MILLING CORPORATION FINANCIAL GRAIN TRADING ACCOUNTS, DECEMBER 31, 1974

Unit Maize Wheat Wheat Rice Paddy Total Remarks Flour

(1) Opening Stock (March 1974) Ton -- - (2)Imports Over - 1974 Ton 291,141 46,484 22,248 72,60o4 432,477 Local Purchases (3) Ton 22,482 11,533 - - 23,821 57,836 (4) Total Availability Ton 313,623 58,017 22,248 72,604 23,821 490,313 (1) + 2) + (3) (5) Consumption Ton 235,060 35,486 22,248 42,673 695 336,162 (6) Closing Stock Ton 78,563 22,531 - 29,931 23,126 154,151 (4) - (5) Value of (7) Importsat Cost TSh'OOO 433,013 81,885 43,528 301,512 - 859,938 (8) Value of Local Purchases at Cost TSh'OOO 16,828 9,210 - - 19,973 46,011 (9) Value of Available grainsat Cost TSh'OOO 449.841 91095 43,528 301,512 19,973 905,949 (7) 4 (8) (10) Overhead FrnensesI mTh'OO 12,309 2,493 1,191 8,251 547 24,791 (ii) Itnterest Charge .i TSh'O00 8,884 1,799 86o 5,955 394 17,892 (12) Total Cost of Grain for Sale TSh'OOO 471,034 95,387 45,579 315,718 20,914 948,632 (9) + (10) + (11) (13) Average Cost of Grain for Sale TSh/ton (1,502) (1,644) (2,049) (4,348) (878) (1,935) (14) SalesProceeds (12) + (4) TSh'OOO 181,415 34,395 39,587 91,600 722 347,719 (15) Average Selling Price TSh/ton (772) (969) (1,779) (2,147) (1,039) (1,034) (14) + (5) (16) Stock Value at Selling 1974 Price TSh'OO0 60,650 21,832 - 64,262 24,028 170,772 (6) x (15) (17) 1974 Sales Stocks and as of 31.12.74 TSh'O00 242,065 56,078 39,587 155,862 24,750 518,491 (14) + (16) (18) Deficit as of 31.12.74 TSh'OOO 39,309 5,99 386 430,141 (17) - (12) (19) New Selling Price TSh/ton (1,240) (2,219) _ (4,600) (2,729) - (20) New Value of Stock as of 31.12.74 TSh'OOO 97,418 49,996 _ 137,683 63,111 / 348,208 (19) x (6) (21) New Val0e of Stock plus Sales TSh'OOO 278,833 84,391 39,587 229,283 63,833 695,927 (20) + (i4) (22) Deficit with the New Stock Value 3 TSh'OOO 192,201 S 5,9 86,435 29 252,705L/ (21) - (12)

j Proportionallyallocated among each type of grain. As agreed with Government in early 1975. 3/ To be subsidized by Treasury. t, / According to NMC records, the NMC stock value of paddy has not been increasedto reflect the new stock value of price. If this is so, the deficit paddy remains as Tshs. 3,836,000 (line 18) and the total Government subsidy would increase to TShs 291,788,000 out of which TShs 100 million has already been paid in.

Source: National Milling Corporation. September 3rd, 1975. ANNEX 5 Page 1

TANZANIA NATIONAL MAIZE PROJECT

THE FOOD CROPS SECTOR

Food Crop Production

1. Food crops production in Tanzania is largely in the hands of small- scale producers, many of whom live in newly formed villages; most production is for subsistence. The major food crops are maize, millet, sorghum, paddy, beans, cassava, potatoes and bananas. Maize and cassava are the most important, contributingan estimated 28% and 20%, respectively,of total calories con- sumed. These are followed by millet and sorghum which supply 7% of calories, and plantains and bananas which provide almost 7%. Maize is also the single most important source of protein. 1/

2. Table 1 shows that, for the major food crops, the proportion of total production which was marketed was usually between 25% and 40%, and that, for many crops, smallholdersproduced 90% to 100% of total production. Wheat is the only food crop where the bulk of production comes from large- scale producers.

3. Agriculturalproduction has grown only slowly in recent years and average crop yields are still very low. In real terms, GDP in the agricultural sector grew at a rate of 1.9% per annum between 1969 and 1974, significantly below the estimated 3% growth rate in population. During this period of stagnant production,Tanzania has become increasinglydependent on imported food, whereas it used to be self-sufficient. Table 2 shows the quantities of maize, rice and wheat purchased from farmers by the National Milling Corporation (or its predecessors)since 1966, compared with the amounts of grain sold in Tanzania. For maize, the data indicates that there has been no apparent upward trend in commercialmaize purchases, but that there has been a significantincrease in maize sales. A broadly similar position is apparent for rice and wheat although Tanzania was not self-sufficientin wheat at any time during the period 1966-73.

4. The deterioratingposition illustratedin Table 2 was greatly aggravatedby the very poor harvests of 1973 and 1974. Large and expensive grain imports were required in 1974 to avoid famine: in all some 440,000 t of grain were purchased abroad, of which 291,141 t was maize. The c.i.f. cost of these imports has been calculated at TShs.758 million (US$106.2 million) (Table 3). Further imports were required in 1975: Table 4 shows

1/ From World Bank, Tanzania Agriculturaland Rural Development Sector Study, Washington, 1974, StatisticalAnnex, Table 18. ANNEX 5 Page 2 that commitmentsby June, 1975 totalled 290,725 t of grain, of which 247,264 t, or 85%, was maize. The c.i.f. cost of these imports amounted to TShs.390 million (US$54.7million). This situation could not have occurred at a more unfortunate time on account of the very high grain prices, and the very difficult balance of payments position in Tanzania. Dependence on imported grains will lessen considerably,however, after harvest of the 1974/75 crop which was expected to be good.

5. For most food products there is a strong case for Tanzania pursuing a policy aimed at self-sufficiencyplus a comfortablemargin for safety. The advantagesand disadvantagesof eventually producing export surpluses have to be consideredon a crop by crop basis, but are difficult to assess because of the wide divergence between import and export parity prices. The uncer- tainties about future world market prices, and the fact that the official exchange rate is considered to be overvalued, further complicatesthe issue. Among the most serious internal obstacles in the formulationand implementation of a national food crop policy have been the lack of adequate statistics,and absence of a reliable crop forecastingsystem.

Food Crop Marketing

6. Most of Tanzania'smajor food crops are marketed through a single channel system, dominated by cooperativesand parastatal organizations. Many farmers are members of primary cooperativesocieties, of which there are about 1,300 agriculturalones; they were originallydeveloped in order to market export crops such as coffee, tobacco, cotton and cashew nuts, and they are best organized in the areas where these products are grown. However, these societies also market surplus food crops on behalf of their members. Following the continuingwidespread villagization program in Tanzania it is Government's intention that each new village will become a registeredprimary cooperative society, although few have been registered yet. When the villagizationprogram has been completed there will probably be around 10,000 primary cooperatives (i.e. village) societies.

7. In most regions the primary cooperativesocieties market their cash and surplus food crops through a regional cooperativeunion which acts as agent for the parastatal organizationresponsible for the crop in question. Usually, the cooperativeunion arranges the transport of produce from the villages to the regional centers; frequently,it operates its own transportfleet for this purpose. In some regions, however, where the regional cooperativeunion is not too effective, the primary soc:Letiesmay deliver crops directly to the parastatalwithout going through the union.

8. The National Milling Corporation (NMC) is the most importantpara- statal concerned with food crop marketing. It handles a wide range of crops, includingmaize, wheat, rice, sorghum, beans and cassava. Groundnutsare the responsibilityof the General AgriculturalProducts Export Corporation ANNEX 5 Page 3

(GAPEX),while sugar is the responsibilityof the Sugar DevelopmentCorporation (SDC). These parastatalsare responsible for marketing, transport and storage at the regional and national levels, and for arranging necessary imports or exports. For certain food crops, such as bananas and vegetables, cooperative unions and parastatalsare not involved, and trade is dominated by small private traders mostly operating in local markets. Even for those products which are handled by parastatals,a significantproportion of the trade is undertaken through informal local markets by private traders. In the case of certain export crops, including tobacco, cotton, cashewnuts and tea, crop authorities have been establishedwhich, in addition to having responsibilityfor crop marketing, are also involved in production through supplying farm inputs to villages and providing (and financing) extension staff.

9. Official policy in recent years has not encouraged private traders or transportersto engage in marketing farm produce. The consequent lack of competition,and the forced pace of development of cooperativesand parastatals, have created serious problems of inefficiencyfor these organizations. There has been a tendency to reorganize and rename parastatalsat frequent intervals in an attempt to overcome some of these difficulties. The poor state of organizationand management of several regional cooperativeunions, and very many small, poorly organized and supervised,primary societies is a serious constraint to agriculturaldevelopment. However, the Government is engaged in a major program for cooperativedevelopment and training,with assistance from the Nordic countries (Annex 1).

10. Serious problems have also been encounteredwith both rail and road transport and with storage of farm produce and farm inputs. The well known financial and organizationaldifficulties of the railways are of profound significancefor economic development in Tanzania. The distances involved in transportinginputs to farmers, and produce to markets are often large, and the cost of transport by road is usually very much greater than by rail. Road transporthas also experienceddifficulties, partly on account of shortage of vehicles, but probably more so because of poor vehicle maintenance, lack of spare parts and official discouragementof private transporters.

11. Lack of storage space from the village to the national level has created further problems, and these have been compounded by the absence of an effective crop forecasting system. Tanzania has not been able to store an adequate reserve of foodgrains and when shortages have occurred they have not been anticipated sufficientlyfar in advance. Thus, the country only narrowly avoided serious famine in the early part of 1974 when the effects of the poor 1973 harvest were first felt. At the village level very little improved storage is available and, consequently,serious losses are involved in storing grain, both through exposure to the weather and from pest infestations. ANNEX 5 Page 4

The Distributionof Farm Inputs

12. There is enormous scope for increasingyields of most food crops in Tanzania through the adoption of improved methods of husbandry, the use of modern inputs such as fertilizers,seeds, insecticidesand, in certain cases, mechanization. However, it is critically important that these inputs are available in convenientlocations, and at the right time. In the more agriculturallydeveloped areas of Tanzania, farmers have had relatively little difficulty in obtaining farm inputs. Large-scale farmers have been able to obtain supplies themselvesfrom organizationslike the Tanganyika Farmers Association (TFA) which has branches in the main towns. Likewise, in areas where a prosperous small-scaleagriculture had been developed on the basis of high-value export crops like coffee, tobacco and cotton, farmers have been well served by cooperative societies and crop authorities. However, the majority of small-scale farmers in Tanzania are not so well served. Most of these farmers concentrateon productionof food crops, sell very little surplus and have correspondinglylow cash incomes. Consequently,they are served by poorly developed marketing systems. Supplies of inputs are usually available only in distant centers, and the difficultiesof transport and raising the required cash for payment are a deterrent for most farmers.

13. Even where supplies of farm inputs have been arranged, difficulties with transport and storage, and cumbersomebureaucratic procedureshave often caused serious delays. Lack of maintenance facilitiesand spare parts for tractors have meant that equipment:was idle for extended periods. Parastatal organizations,cooperatives and regional authorities have at times misjudged farmers' requirements,overordered supplies and finished up with large unsold stocks.

14. Most cooperativeunions and primary societies have confined them- selves to marketing farmers' surplus food crop production and have not made a serious effort to supply inputs to farmers. Partly for this reason, regional authorities in the main growing areas have undertaken a maize production program under which they supplied free fertilizers,seeds, insecticides,and sometimesmachinery services, to selected villages. Given that all villages will be registeredas cooperativesocieties, affiliated to regional cooperative unions, and that they will all be responsible for marketing farmers' produce, it is desirable that farm inputs should also be supplied to farmers through the cooperativesystem.

AgriculturalPricing Policies

15. Prices for many food crops are fixed by the Government at farm, wholesale and retail levels, and price control is therefore an important policy tool which has a profound effect on the pace of agriculturaldevelopment. It also used to influence the pattern of income distribution,and to generate revenue through export taxes on products such as cotton, coffee, sisal and tobacco. Decisions on pricing policy are usually taken at a very high level ANNEX 5 Page 5 in Government, often by the Economic Committee of the Cabinet with advice from the Ministry of Agriculture. The Marketing Development Bureau, a UNDP-supported project within the Ministry of Agriculture,provides advice on pricing policy; this organizationis being further strengthenedto enable establishmentof a regular price review system.

16. For most food crops Government-fixedprices are uniform throughout the country. Given the large distances involved, and the difficulty and expense of transport, this policy may be expected to lead to serious misallocation of resources in the long-run and could place a financial burden on parastatal organizationslike the NMC. The financial position of the NMC has also been seriously upset because it has been obliged to import very expensive grain recently and sell this at controlled lower prices within Tanzania (Annex 4, para. 18).

17. For these reasons, the NMC presently operates on a very wide margin between its buying and selling prices which stimulates blackmarket trading. The fixed nature of trading margins for food crops under which cooperative unions and cooperative societies operate also causes problems. For societies or unions with a large volume of business these margins may be more than adequate, but for organizationswith a low turnover the income from the fixed markup is in many cases inadequate to cover their costs.

18. Over the past several years domestic agriculturalprices in Tanzania had been allowed to slip increasinglybelow world market levels. This trend acceleratedsharply in 1973/74when world market prices rose to record levels creating a large price disparity for most products, including grains. Low producer prices which characterizedGovernment's agricultural pricing policies until the crop failures of 1974, had been an important factor causing sluggish growth in agriculturalproduction. In November 1974, however, significant increaseswere announced for the farm gate price of maize which increased from TShs.0.35/kg to TShs.0.75/kg. This increase should have a beneficial effect on production.

19. Part of these price increases has already been passed on to consumers but further upward adjustments in consumer prices, hence a widening of the producer-consumerprice spread, would aggravate the problem of blackmarket activity and may not be desirable unless controls in the marketing system can be tightened. In fact, in its June, 1975 price announcement,Government has lowered some consumer prices, notably for rice, partly to reduce the official trading margin and because the global supply picture has improved somewhat. The prices of maize and maize products were not changed, however.

The Pricing and Financing of Farm Inputs

20. Agricultural inputs in Tanzania were generally sold at full cost in the past and the main users were commerciallyoriented larger farmers who either had sufficient financial resources of their own or had access to ANNEX 5 Page 6 commercial credit. With Government'sstrong emphasis on development of smallholderproduction, ways have to be found to make modern inputs available to small farmers who are generaiLlyunaccustomed to the use of such inputs and do not have the resources to buy them. Some progressivesmall farmers have been using inputs for some years, but for the production of cash crops only. These inputs were acquired on commercial terms.

21. Various attempts at financing inputs used by small farmers have already been made. Several successive aggriculturalfinancing institutions were set up to provide credits though not especially or exclusively to smaller farmers (Annex 9). The repayment record has been unsatisfactoryand all predecessors of the present institution,the Tanzania Rural Development Bank (TRDB), failed for this reason. Selected schemes by TRDB to provide credit to smallholdershave also been unsuccessfuland neither the TRDB nor the National Bank of Commerce (NBC) are presently financing inputs to individual smallholders. The official channel being developed for such credit is from TRDB through the cooperativesystem. The record so far has been encouraging,only in those cases where relatively strict discipline has been imposed upon cooperative societies by cash crop authoritiesacting as the link between TRDB and the societies. Credit is generally recovered through the marketing system. But cooperative,parastatal or group credit schemes, based purely on smallholder food crop production,are considered unworkable in Tanzania at this time.

22. Inputs provided for cash crops such as tea, tobacco and cotton are provided at highly subsidized terms, though not completely free, and the subsidies are recovered by the respective crop authorities from the producers of these crops through the price mechanism. Recognising the difficulties associatedwith operating credit schemes for smallholder food crop production on the one hand and the need to encourage increased production of food crops on the other, Government embarked on a subsidy program in 1973/74 to increase smallholdermaize production. For two consecutive seasons, production inputs were provided free under the national maize program to smallholder growers in designated areas; the program was financed out of the recurrent national budget.

23. Continuationof the subsidy program for maize is justified on several grounds. There is only limited scope for providing added incentives to farmers to use modern inputs by raising producer maize prices since these have already been increased from TShs. 0.30/kg in 1973/74, or 42% of import parity, to an announced TShs. 0.80/kg in 1975/76, or 73% of import parity. 1/ Since prices of other crops competing for farmers' resources have not gone up as rapidly, less effort is being;devoted to those crops, some of which are of vital national importance as earners of foreign exchange. Moreover, it may not be in the long-termnational interest for domestic maize prices to move too closely to import parity because, resulting from the very large

1/ Before the devaluationof the ranzanian Shilling in October, 1975 the domestic maize price represented81% of import parity. ANNEX 5 Page 7 acreage under maize, Tanzania could, within a few years with above-average growing conditions,temporarily move into a surplus position. With the estimated export parity price of Tanzanianmaize of TShs. 0.55/kg already being far below present producer prices, any surpluses which could not be stored could only be disposed of through export at considerablefinancial loss to the country. Some scope for increasedproducer prices does exist, however, should it become apparent after the 1975/76 cropping season that productiontargets are not going to be reached with present price levels. But even with higher maize prices, farmers, in the absence of a viable credit system, could not finance the purchase of costly production inputs, nor would they be inclined at this stage of development to bear exclusivelythe large financialrisk associated with cash inputs, and input subsidieswould have to remain an essential element in the promotion of smallholdermaize production.

24. Partly to make its subsidy policy more consistent,but largely because it is felt that free distributionof expensive inputs does not ensure their economic use, Government is discontinuing the distribution of free inputs with the 1975/76 crop season. The subsidy rate for that season has been set at 75% of the farm gate cost of inputs. This relativelyhigh degree of subsidization is necessary to attract a sufficientlylarge number of farmers, who generallyface a severe cash constraint,to participatein the National Maize Project. The 75% level is still experimentalin the sense that little is known about the reactions of those farmers already having received maize inputs to changes in input prices since the majority so far had not had to pay cash. The Government,therefore, intends to keep the subsidy level under close review and introduce changes as needed to reconcile the conflictingfinancial implicationsof its objectivesof providing sufficientincentives to maize producers and keeping the budgetary burden resulting from its subsidization policy to a minimum.

25. The degree of input subsidizationand of cost recovery, and the method of implementationwill continue to vary from crop to crop but efforts are being launched with UNDP/FAO assistanceto progress towards a consistent national policy of input pricing. That policy will also be concernedwith aspects other than subsidization,as, for example, the concurrentdecision to provide subsidizedinputs to maize producers at uniform prices throughout the country, which is at variance with the practice of cash crop authorities which take actual transportcosts into account, and would be a step backwards from an economic point of view if it were to set the pattern for all input pricing in the future.

December 1, 1975 ANNEX 5 Table 1

TANZANIA NATIONAL MAIZE PROJECT CROP PRODUCTION 1/

Annual Annual Harvested Estimated Marketed Marketed Growth, Growth, Crop Production Smallholder Production Propor- Harvested Marketed 1972 Proportion 1972/1973 tion Production Production 1972 1965-1968 1965-1968 to 1969-1972 to 1969-72

('000 tons) (%) ('000 tons) (%) (%) (%)

Maize 881 7; 227 26 3.1 5.7

Millet 128 100 56 44 0.5 20.0

Sorghum 191 100 38 20 2.7 5.5

Wheat 98 25' 62 63 17.3 6.8

Paddy 171 9'i 72 42 11.6 19.3

Beans 153 95, 46 30 4.1 2.8

Cassava 793 1oC 181 23 11.8 8.4

Irish Potato 113 100 52 46 30.0 32.0

Sweet Potato 234 98 92 39 0.1 0

Groundnuts 29 98 5 17 - 8.1 - 7.4

Sesame 8 98 6 75 - 1.0 - 4.5

Castor Seed 17 n.a. 13 76 - 2.8 - 1.5

Bananas 1,206 95 229 19 3.3 0.3

1/ Considerable uncertainty surrounds the food crop estimates, particularly harvested production.

Source: Tanzania Agricultural and Rural Development Sector Study.

September 3, 1975. ANNEX 5 Table 2

TANZANIA NATIONAL MAIZE PROJECT COMMERCIAL PURCHASES AND SALES OF GRAINS BY GRAIN MARKETINGPARASTATALS IN TANZANIA, THREE YEAR MOVINGAVERAGES, 1966-73 ('000 Tons)

MAIZE RICE WHEAT

3-year Moving Local Sales Local Sales Local Sales 1/ Average Sae_aesSlsl Centered on: Purchases Purchases Purchases

1966 90 83 20 n.a. 31 n.a.

1967 96 81 19 19 30 69

1968 115 87 25 22 28 62

1969 95 102 31 24 27 60

1970 122 115 44 28 30 54

1971 94 133 47 37 42 70

1972 114 140 48 49 50 72

1973 75 181 40 57 47 90

1/ Sales data for wheat do not appear consistent. Estimates of total supplies (local production plus net imports) available for consumption have been used instead.

Source: Marketing Development Bureau Estimates.

September 3, 1975. ANNEXU5 Table 3 TANZUNIA NATIONALSITZE PROJECT THE GRAIN 7MPCT SITUATION. 1974

T~ % f Tt.1 Purobeas Price Inclding NnWrn.S Total mNC Into Ton.. Curr eny Aeonnt per Total Tranort,N Ton Port e-dlIna ...... TOD______(Tsh. '000)------(Tsh/To)

MSIZE IMPORT5

From: Argentina 38,967 1.3 US0. 170.12 47,910 3,303 3,666 54,879 1,403 Kenya 18,831 6 K.Sho. 895.00 17,020 1,273 1,779 19,072 1,013 M lei 5,794 2 M K. 143.17 7,028 627 547 8,202 1,416 Zabia 71,644 25 US0. 116.68 60,027 27,851 6,680 94,558 1,320 USA 128,381 44 SS.$ 213.45 197,395 10,521 12,814 220,730 1,719 Chin 14,024 5 US.$ 160.00 16,201 1,352 1,324 18,877 1,346 YoRSolaai- 13,500 5 US.$ 158.00 14,283 1,231 1,181 16,695 1,237

Total Malo. 291,141 (74) 10) US1. 171.67 359,864 46,158 27,991 434,013 1,487

A-erage Coot per Ton (TSb..) 1,236 155 96 1,487 1,487

WHPATIMPORTS: Aoetralia 46,484 1O( US0. 226.07 73,561 3,229 5,096 81,885 1,762

WHEATFLOUR IMPORTS: Holland 9,931 45 vS.$ 221.50 16,023 729 750 17,502 1,762 Garesy (Fed. Rep.) 12,317 55 US.$ 266.46 23,735 1,389 897 26,021 2.113

Total Flour 22,248 100 US.$ 246,49 39,758 2,118 1,647 43,523 1,956 (Wheat Sqoivalent) (29,663) (8) US.5 235.99

Aver-8. Coat per Tom of Wheat (TShe.) 1,583 69 110 1,762 1,762 Average Coat per Too of Floor (TSh..) 1,787 95 74 1,956 1,956

RICE DPORTS: From Chie 20,080 28 Stg. 193.13 65,984 2.330 1,552 69,866 3,478 egypt 5,488 0 US1. 590.20 23,474 1,107 411 24,992 4,554 P2kistan 1 663 2 us.$ 564.00 6,781 160 113 7,054 4,242 ThaiSnd 26,173 36 US1$ 588.00 112,333 4,582 1,955 118,870 4,542 Vene-enla 9,000 12 US.$ 523.00 33,960 1,500 750 36,210 4,023 Carr-ib-n 10,200 14 US.$ 573.00 42,300 1,500 750 44,550 4,368

Totel Rioc: 72,604 (18) 100 U. 3 41 12 284,532 11,179 5,531 301,542 4,153

Average Coat per Too (TShe.) ____ 3.923 154 76 4.153 4.153

TOTAL GRAIN DEPORTS 439.892 (100) US.$ 239,30 758,015 61,684 49,265 860,963 1,955

Sorce Notilo Milling Corporetion September 3, 1975. ANNEX 5 Table 4

TANZANIA NATIONAL MAIZE PROJECT GRAIN IMPORTS, 1975 COMMITMENTS

Volume % of Purchase Price Arrival Total Per Ton Total Date (C and F) (Tons) (TShs/Ton) (TShs'OOO)

Maize Imports

From: Argentina 15,864 6.4 1,151 18,263 March Malawi 5,100 ) 6.2 1,155 3,580 January 12,300 ) 1,780 21,889 February U.S.A. 36,728 ) 1,350 49,573 February 38,554 ) 1,324 51,057 March 39,618 ) 1,212 48,oo5 April 49,400 ) 87.4 1,070 52,849 May 33,550 1,083 36,335 June 18,150 1,099 19,939 July

Total Maize 247,264 1(0.0 1,219 301,490

Wheat Imports

From: Australia 29,197 100.0 1,270 37,082 n.a.

Rice Imports

From: Thailand 14,264 100.0 3,627 51,737. n.a.

TOTAL GRAINS 290,725 390,309

1 The information in this table dates from June 1975.

Source: National Milling Corporation.

September 3, 1975. MNZEX 6 Page 1

"ANZANTA

NATIONAILMAIZE PROJECT

THE NATIONAL MAIZE PROGRAM

Introduction

1. The Tanzanian National Maize Program was launched in the 1973/74 season to increase maize production and reduce imports after the poor 1972/73 crop. The program was designed mainly to assist newly formed ujamaa villages, and funds were made available to the thirteen regions involved for the purchase and free distribution of improved seed, fertilizer, pesticides, herbicides and tractor ser-vices, Unfortunately, further drought problems in the 1973/74 season necessitated additional massive maize imports (Annex 5). As a result, a strong political drive under the title "Kilimo Cha Kufa na Kupona" (Life or Death Harvest) was initiated to give added impetus to the program during the 1974/75 season. The program received a strong positive response in the rural areas and, coupled with favorable climatic conditions, good results (though still very difficult to quantify) are anticipated from the present crop year (1974/1975).

2. Although the program has now run for two years, its results have been limited by a number of consiraints,which the proposed Project would help resolve. These constraintsinclude late delivery of inputs, insufficient certifiea seed, lack.of research data on which to base recommendations,few village demonstrationsand poor supervisionand motivation of extension staff (partly due to lack of transport),management problems with some marketing cooperatives,and problems associatedwith the rapid villagisation program. Furthermore,while the free distributionof inputs provided significant finanicialhelp to new villages, it led to wasteful use of inputs and did not develop an appreciationof their costs and benefits. An evaluation of real progress was difficult due to the absence of reliable data on numbers of villages involved in the program, their size by district and region and on actual maize acreages and yields.

3. The National laizeProject (NMP) would build on the impetus created and experience gained during the first two seasons of Government'sprogram. Key production problems would be tackled by a strengthenedextension service, an expanded program of field demonstrationsand adaptive research, improved seed availab t11tyand better organised and timely input supply. On the marketing side, the situationwould be assisted by improved organization and increased transport and storage facilities. To encourage villages to ANNEX 6 Page 2

appreciate the true value of production inputs they would be required to make a cash payment (initially25%) on all inputs received (full cost for herbicides),contribute to the building of village stores on a self-help basis, and pay for the materials used through a loan. A real element of self-reliancewould be introduced and at the same time, Governmentwould be relieved of some of the financial burden which for the existing program it bears entirely.

4. In keeping with its socialist policy, Government wishes to improve the incomes and living standards of as many of its subsistence farmers as possible at the same time, rather than only assisting the few most progressive farmers, which would worsen income distributionat the village level. Consequently,each of the three maize productionpackages discussed in Annex 3, would be applied to an entire village rather than on an individual basis. There would probably be an economic cost to this strategy in the short-termbut, in the long-run, many more farmers would participate in. producing the required production increasesand a wider, but lower and more equitable increase in village income levels would result.

Project Phasing

5. The number of villages entering the Project each year, and the numbers receiving each maize production package are shown below:

Project Village Phasing

Traditional Package Package Package Total Methods 1 2 3 Villages ______-______inProject

Year 0 483 200 240 27 246

Year 1 410 195 312 33 540

Year 2 296 228 373 53 654

Year 3 157 261 439 93 793

Year 4 - 295 522 133 950

6. Table 1 shows the number of villages taking up each production package by district and region, for the pre-Projectyear and for the four years of the Project. The pre-Projectsituation is based on the amount of fertilizer actually distributedby the maize program. For Project planning purposes it is assumed that on average each Project village would have from 300 to 400 members, and would grow 300 hectares of maize each. Thus, each villager would be expected to grow between 0.75 and 1.00 hectare of maize under the ANNEX 6 Page 3

Project. However, the situationwith regard to populationand area under cultivation in Project villages will need careful evaluationduring the first year of the Project to refine present assumptions,and to prepare annual work programs.

Input Supply

7. Table 2 shows the annual input requirementstogether with the incrementalannual requirementsto be financed under the Project. Because of the benefits to be obtained from replacing composite seed each year, the table allows for full annual replacementof all seed. It may, however, take two years to gear up seed production to the required level; provision is thereforemade to finance seed dressing for protection against insect pests for those villages that retain their own composite seed from one year to the next.

Seed Supply

8. The Project ServicingUnit (PSU) would liaise with the Ministry of Agriculture's Input Supply Section of the Crop ProductionDivision and the Tanzanian Seed Company to ensure that sufficientseed is available for the Project. At present the Tanzania Seed Company, through its contract outgrowers, together with Governmentand regional seed farms supplies national requirements,supplemented by imports where necessary. However, it is intended that Tanzania should become self-sufficientin maize seed as soon as possible. A more careful analysis of national requirementsis now required against which to plan a suitable production program, and this is being undertakenby the National Seed CoordinatingCommittee. Furthermore, Governmentwould review its seed pricing policy and ensure that the maize seed producer price is sufficient to encourage adequate production. Table 3 indicates the seed position in Year 1, and the sources from which it will be obtained.

Fertilizerand Pesticides

9. Part of the national fertilizerrequirements are produced at the Tanga fertilizer factory, and t'hebalance is imported. Project incremental requirementsof fertilizerand pesticidesfinanced by IDA would be provided through internationalcompetitive bidding procedures. The type of fertilizers used would be varied in accordancewith research and Project experience, and new recommendationsincluded in the annual work programs.

Yield Assumptionsand IncrementalProduction

10. The followingyield and productionassumptions have been made for villagers with their varying maize productionpackages, based on each village growing on average 300 hectares of maize under the Project. ANNEX6 Page 4

Project Yields and Production Per Village Yield - Kgs/Ha. Production per Village (tons) Without Project At Maturity Without Project At Maturity

Traditional 1,100 1,100 330 330

Package 1 1,300 1,500 390 450

Package 2 1,850 2,200 555 660

Package 3 2,450 2,700 735 810

11. Full yield increases from each production package would be attained over a three- to four-year period, and full Project development would not be attained until the end of Year 7. The Project incremental production shown below has been calculated on the basis of the yield levels and numbers of villages with each package in Year 0 and Year 7 given above and in Table 1.

Project Incremental Production

Without Project Year 7 Yield Production Yield Production Villages (Tons) (Tons) Villages (Tons) (Tons)

Traditional 483 330 159,390 - - -

Package 1 200 390 78,000 295 450 132,750

Package 2 240 555 133,200 522 660 344,520

Package 3 27 735 19,845 133 810 107,730

390,435 585,000

Incremental Production 194,565

12. Assuming a gradual improvement in yields, the calculation of incremental production during the life of the Project is based on taking the overall increment over the Project period and assigning a 10% achieve- ment in Year 1, and a further 15% over each of the next six years to reach the full 100% of the increment in Year 7. The aggregate annual incremental increases calculated by this method are given below, while incremental totals by region, arrived at by this method, are given in Table 4. ANNEX 6 Page 5

IncrementalProject Production, By Project Year Year Percentageof Total Increment IncrementalProduction (Tons)

1 10 19,500

2 25 48,600

3 40 77,600

4 55 107,000

5 70 136,200

6 85 165,400

7 100 194,600

Transport

13. The Project would assist the need for intra-regional transport requirementsby providing additional trucks for moving marketed surpluses from village stores to regional godowns or mills. Seven and ten-ton trucks would be financed on a loan basis through TRDB to regional cooperative unions, or other companies or Individualswith which regional authorities may contract to collect the marketed maize and distribute inputs to village level. In calculatingtransport requirementsthe Project would cater for all Project incrementalproduction. Table 5 shows how the numbers of vehicles to be purchased are derived. It is assumed that 75% of the incrementalmaize productionin Project villages would be marketed, and that only two-thirds of this would be marketed through official channels, the remainder being sold locally or to private traders. Vehicles would have a three-month period in which to move maize from village stores to regional godowns or to mills, and each vehicle would make, on average, 75 trips within this period. The actual allocationof vehicles to regions would be decided against sub- stantiatedneeds and would be included in the annual work programs. To facilitatesupervision of subloans made under the Project, the Tanzania Rural Development Bank would receive two 4-wheel drive vehicles.

Storage

14. The Project would increase storage capacity at village level by making available materials to villages through TRDB loans for their construction on a self-help basis. It is envisaged that all villages reaching Package 2 and 3 under the Project would construct such stores, with an allowance for 20% of villages already having adequate storage. Some 530 stores would thus be constructedduring the life of the Project. ANNEX 6 Page 6

15. A further provision is made for 34,000 tons of input supply storage at regional level; the siting of such stores would be decided on the basis of a full inventoryof existing storage by region, and would be incorporated in the Project's annual work programs.

16. The Project would also provide funds to retain consultants to prepare detailed investmentproposals for grain storage, including provision for the proposed National Grain Reserve, and milling. The basis for this work would be a thorough review of the Ministry of Agriculture'sreport analysing the present status of grain production,which recommends setting up a National Grain Reserve, and the 5-year developmentprogram proposals of the National Milling Corporationfor improving storage facilities,modernising existing grain mills and increasingmilling capacity. In view of the immediate need for additionalstorage, Stage 1 of the consultants'recommendations, to be prepared within six months of inception,would include detailed investment proposals for the immediate constructionof about 80,000 tons of additionalgrain storage at those sites, where the need is most essential in the frameworkof a national grain storage plan. The Project provides US$3 million (TShs. 24.2 million) for the constructionof this storage in Years 2 to 4 of the Project.

Oxen Cultivation

17. Oxen cultivationoccurs throughoutthe Shinyangaregion and in some districts of Iringa, Mbeya, Arusha, Mwanza and Mara regions. The use of oxen is limited almost entirely to ploughingwith a single furrow plough. Very few ox carts exist in spite of the demand for village level transport,and other implementssuch as tool bars, barrows, planters and cultivatorshave yet to be extended to villages.

18. Various studies undertakenboth in Tanzania and elsewhere indicate that introductionof oxen is not without problems. In areas where a high populationdensity has resulted in competition for land, oxen are often weak at the start of the cultivationseason due to underfeeding,whereas the animals are in their best condition at the end of the growing season. Diseases, especially tsetse fly, limit the potential for ox cultivation;other dis- advantagesare the slowness of the animals, the difficulty of breaking up new land or heavy soils, and the fact that certain operationsare impossible with oxen. In addition, control over oxen must be good so as to result in precise cultivation. The advantagesof ox cultivation for small farmers are the low operating costs, the relativelysmall financial outlay and risk, the ease of replacementby home breeding and the multipurposenature of the animal which, in addition to draft power, provides manure and ultimatelymeat.

19. Governmenthas establisheda number of ox training centers and has distributedoxen to villages. The program has not been successful,mostly due to limited training of oxen and poor selection of farmer trainees. Oxen are trained onlv for ploughing,whereas they should also be taught other activities,such as ridging, weeding and threshing,and hauling. Farmers ANNEX 6 Page 7

also are not properly prepared to assume responsibilityfor the animals, and lack animal husbandry training. Death rates of oxen have been high, which has also discouraged farmer participation. Government has instituted a program whereby oxen are contributedfree of charge to ujamaa villages; unfortunately,however, lack of training and the absence of responsibility have led to misuse of the animals. In spite of the problems and past failures it is clear that the use of ox cultivationcould play an important role in increasingyields in the areas under cultivation. Furthermore,ox power should not be considered in isolation since with the establishmentof new villages opportunitiesare developing for integrating the use of oxen with tractors. Tractors could be used to carry out land preparation in large blocks and oxen on individualplots and for family transport.

20. To assist in identifying suitable methods for increasingthe use of tractorsGovernment, with UNDP/FAO assistance,is establishingfour mechanized farming centers, each of about 1,000 acres. Initially it was intended that the main work of these centers would be to demonstrate the use of tractors and systems of minimum tillage. However, it is clear that similar investigationsshould be carried out using oxen. While an adequate range of ox drawn implementsis available, funds are required to purchase 20 oxen for each of the four stations. These would be used for testing and developingnew ox drawn implements,especially a maize planter and interrow cultivator,since these would enable improved fertilizerplacement, most important of all weeding. Furthermore,the pace of the villagizationprogram and the increasingneed for more timely cultivationof larger areas justify further attempts to develop the use of oxen at the village level. However, in view of past failures such attempts are only justified on a pilot scheme which would intensify training and supervision in a few select villages where farmers already have some experience in handling oxen and have demonstrated a willingness to participatein such a scheme.

December 1, 1975 TANZANIA NATIONAL MAIZE PROJECT

ALLOCATION OF VILLAGES UNDER DIFFERENT PACKAGES

4 Pre-Project Year- Project Year 1 Project Year 2 Project Year 3 Prolect Year Package Package Package Package Package III Total I II III Total Region District I II III Total I II III Total I II III Total I II 7 33 10 20 10 40 ARUSHA Arumeru 7 9 2 18 7 12 2 21 8 15 4 27 9 17 14 26 10 50 Hanang 8 13 2 23 8 16 2 26 9 19 4 32 12 22 7 41 10 20 10 40 Mbulu 7 9 2 18 7 12 2 21 8 15 4 27 9 17 7 33 7 29 10 15 10 35 KILIMANJARO Rombo 7 7 2 16 7 9 2 18 8 11 4 23 9 13 15 10 35 Moshi 7 7 2 16 7 9 2 18 8 11 4 23 9 13 7 29 10

- 18 8 13 - 21 TANGA Muheza 5 6 - 11 5 8 - 13 7 9 - 16 7 11 8 20 - 28 Korogwe 5 9 - 14 5 12 - 17 7 15 - 22 7 17 - 24 7 13 - 20 Lushoto 4 6 - 10 4 8 - 12- 4 9 - 13 6 11 - 17

- 23 10 17 - 27 MOROGORO Morogoro 7 8 - 15 7 11 - 18 8 12 - 20 9 14 10 17 - 27 Kilosa 7 8 - 15 7 11 - 18 8 12 - 20 9 14 - 23 7 12 - 19 Hahenge 3 5 - 8 3 7 - 10 4 8 - 12 6 10 - 16

- 23 10 17 - 27 DODOMA Ipwapwa 9 8 - 17 9 iO - 19 11 12 - 23 9 14 - 20 8 15 - 23 TABORA Tabora 5 7 - 12 5 9 - 14 7 11 - 18 7 13 - 22 Urambo 5 5 - 10 5 7 - 12 7 8 - 15 8 10 - 18 9 13 9 44 18 23 15 56 IRINGA Iringa 13 13 3 29 13 16 3 32 13 16 5 34 16 19 19 17 50 Mufindi 10 8 4 22 8 11 5 24 11 14 7 32 12 16 12 40 14 21 24 19 64 Niombe 14 10 4 28 13 13 6 32 13 17 8 38 19 20 14 53 14 44 15 20 19 54 MBEYA Mbeya 12 9 4 25 11 12 6 29 11 15 8 34 13 17 32 - 47 Mbozi 12 17 - 29 11 20 - 31 11 22 - 33 13 26 - 39 15 - 19 7 15 - 22 LINDI Lindi 4 7 - 11 4 9 - 13 5 11 - 16 6 13 10 18 - 28 Nachingwea 7 8 - 15 7 11 - 18 8 13 - 21 9 15 - 24 - 18 8 13 - 21 MTWARA Mtwara 5 6 - 11 5 8 - 13 7 9 - 16 7 11 8 13 - 21 Newala 5 6 - 11 5 8 - 13 7 9 - 16 7 11 - 18 9 17 - 26 rasasi 7 7 - 14 7 9 - 16 8 12 - 20 8 14 - 22 41 12 25 13 50 RUVUMA Songea 8 10 2 20 8 13 3 24 9 17 5 31 11 21 9 - 33 12 26 - 38 RUKWA Sumbawanga 8 13 - 21 8 16 - 24 9 19 - 28 11 22

- 26 8 22 - 30 MARA Tarime 5 10 - 15 5 13 - 18 7 16 - 23 7 19 7 22 - 29 Serengeti 4 9 - 13 4 12 - 16 5 16 - 21 6 19 - 25 793 295 522 133 950 TOTAL 200 240 27 467 195 312 33 540 228 373 53 654 261 439 93

1/ Ministry of Agriculture Planning Division's estimate of villages with various packages in pre-project year, 1974/75. September 3, 1975. TANZANIA NATIONALMAIZE PROJECT SUMMARYOF INPUT REQUIREMENTSBY VOLUME (Tons)

Seed Fertilizer DDT Seed iJ Herbicide | Composite HHybrid TSP SA NPK 5% 25% Dressing (Liters) (Kg). A. TOTAL REQUIREMENTS Year O 2/ 2,948 555 3,615 7,575 1,230 1,401 56,040 _:7 10,00 Year 1 3,330 720 4,695 9,825 1,500 1,620 64,800 0.7 12,960 Year 2 3,953 953 5,760 12,195 2,010 1,962 78,480 0.7 15,696 Year 3 4,620 1,328 7,170 15,525 2,640 2,379 95,160 0.5 19,032 Year 4 5,385 1,740 8,820 19,335 3,315 2,850 114,000 o.4 22,800 B. PROJECT INCREMENTALREQUIREMENTS

Year 1 3,330 720 4,695 9,825 1,500 1,620 64,800 - 12,960 Year 2 623 233 1,065 2,370 510 342 13,680 0.7 2,736 Year 3 667 375 1,410 3,330 630 417 16.680 -,336 Yea-I 765 41: i,6bo 3,blO 675 471 18,840 - 3,768

TOTAL 5,385 1,740 8,820 19,335 3,315 2,850 114,000 0.7 22,800

The figures shown for Composite Seed permit replacementof seed every year, in practice this may not be feasible in early years, and seed dressing for retained seed is also included.

To be used on a pilot basis on 2% of the project area.

/ Theoretical allocation of package input in Year 0, only approximatelycorrect for fertilizerand pesticides,but not seed.

Full requirementsin Year 1 regarded as Incremental,and included in project totals.

November 12, 1975.

e.xHt19 TANZXAN NATIOMNLMAIZE PROJECT ESTIMATEDMIAZE SEED SUPPLY POSITION FOR 1975/76 SEASO (JUNE 1975)

I/ 2/ Composite Hybrld Volume Type Volume Type

3/ (Tons) (Tons) A. STOCKS 140 ZHI 522 613 217 632

B. MAJORSUPPLIERS 4/ TANWAT(Njombe) 250 UCA 300 613 325 632 5/ DA8AGA(Iringa) 150 UCA

ARUSHAGovt, Seed Farm 6/ 135 UCA

HZIISA Govt. Seed Fars 6/ 950 ICA

C. IMPORTS7/ 200 512 600 632

D. SUWMY OF A + B + C 535 UCA 140 ZNH 822 613 950 ICA 200 512 1,142 632

Subtotal 1,485 2,304

8/ E. OTHERSOURCES

HACHINGWEAFARM (NAFCO) 430 n.a. URM4BO FARtM(TAT) 9' 270 n.a. ARUSHARegional Farm 100 (Katumani) MOROGORO- University 350 ICA Prison Fare 360 ICA SHINYANGARegional Farm 40 n.a.

F. SUMLARYOF E 100 (Katumani)

710 ICA

740 n.a.

Subtotal 1,550

TOTAL 3.035 2,304

1/ Composites: ICA Ilonga Compaite A, UCA - Ukiriguru Composite A.

2/ Hybrids: Zambian Hybrid I (ZHI); Fx-Kenya Hybrids: 512, h13, 632.

3/ Are held by Tai%zania Farmers Associatino, (TFA) or Tanzania Seed Company (TSC).

4/ TANWAT: Tanzania Wattle Company under contract to TSC.

5| DA8A(A: A Government Seed Farm.

6/ These two government need farms receive USAID asststance.

7/ Already ordered by TFA from Kenya Seed Company.

-8 These supplies were uncertain as to both quantity and quality in June 1975.

9/ TAT: Tobacco Authority of Tanzania which runs farm in conjunction with Ministry of Agriculture. September 3, 1975. TAIZANIA NATIONAL MAIZE PROJECT INCREMENTALPROJECT MAIZE PRODUCTION BY REGION

Village Numbers Production Reglon Tradi- PsckYear0 Year 4 & Onrde, Totl Incremental 5/ Total, 4/ TrAdi-27 I/ -- -PaLckastes -r-,r7 Year Annual Annual Total Year 7 and tional I II III Total I II III Total Year Year I Year 2-7 Year 7 Onvards ------(-000 Tons)------______ARUSHA 71 22 31 6 59 34 66 30 130 53,625 2,954 4,430 29,535 83,160

KILIMANJARO 38 JA 14 4 32 20 30 20 70 28,710 1,629 2,444 16,290 45,000

TANCA 34 14 21 - 35 23 46 - 69 28,335 1,238 1,856 12,375 40,710

MOROCORO 35 17 21 - 38 27 46 - 73 29,835 1,268 1,901 12,675 42,510

DODOl. 10 9 8 - 17 10 17 - 27 11,250 447 671 4,470 15,720

TAB0RA 23 10 12 - 22 17 28 - 45 18,150 798 1,197 7,980 26,130

IRINGA 91 37 31 11 79 53 66 51 170 69,750 3,897 5,846 38,970 108,720

MBEYA 47 24 26 4 54 30 52 19 101 42,240 2,097 3,146 20,970 63,210

LINDI 24 11 15 - 26 17 33 - 50 20,535 890 1,334 8,895 29,430

MTWARA 32 17 19 - 36 25 43 - 68 27,735 1,190 1,784 11,895 39,630

RUVUMA 30 8 10 2 20 12 25 13 50 20,040 1,239 1,859 12,390 32,430

RUKWA 17 8 13 - 21 12 26 - 38 15,945 662 992 6,615 22,560

MARA 31 9 19 - 28 15 44 - 59 24,285 1,151 1,726 11,505 35,790

TOTAL 483 200 240 27 467 295 522 133 950 390,435 19,460 29,186 194,565 585,000

1/ These are villages eventually included in Project, but which were at Traditional level in Year 0. ,>

2/ Based on yields per hectare in Year 0 for Traditional of 1,100 Kg; Package 1: 1,300 Kg; Package 2: 1,850 Kg; Package 3: 2,450 Kg. e

3/ Based on yields per hectare at maturity (Year 7 onwards) for Package 1: 1,500 Kg; Package 2: 2,200 Kg; Package 3: 2,700 Kg.

4/ Production figures are based on 300 hectares of maize per village.

5/ Annual increments of l3o in Year 1 and 15% in Years 2-7 of the total incremental increase in production over the 7 year period.

September 3, 1975. TANZANIA NATIONAL MAIZE PROJECT ADDITIONAL TRANSPORT REQUIREMENTS

Year Incremental Incremental Incremental Cumulative Vehicles Required4/ Purchases Required Yield 1/ Surplus2/ Surplus 3/ Transport 7-ton 10-ton 7-ton 10-ton for NMC Equivalent

------Tons ------Number ------

1 20,000 15,000 10,000 10,000 8 8 8 8

2 30,000 22,500 15,000 25,000 20 20 12 12

3 30,000 22,500 15,000 40,000 32 32 12 12

X 30,000 22,500 15,000 55,000 44 44 12 12

TOTAL 110,000 82,500 55,000

1/ Figures for incremental yield rounded up to nearest 10,000 tons. 2/ Assumes 75% of incremental production will be marketed. 3/ Assumes that 33% of marketed production will be sold locally or through private traders. 4/ Based on transportable surplus being moved from village level to regional/district godowns or mills within 3 months.

September 3, 1975.

D(D3 Ml F' Ch ANNEX 7 Page 1

TANZANIA

NATIONAL MAIZE PROJECT

TERMS OF REFERENCE FOR PROJECT STAFF AND CONSULTANTS

CONTENTS

Page No.

A. The Project ServicingUnit: (PSU) ...... 1

B. The Project Steering Committee (PSC) ...... 9

C. Regional Project Staff ...... 10

D. Consultancyon Maize Agronomy ...... 11

E. Pre-InvestmentStudies of Grain Storage and Milling 11

A. The Project Servicing Unit (PSU)

1. PSU would be establis'hedwithin KILIMO, as part of the Crop Pro- duction Division. The Project Manager would be responsibleto the Principal Secretary,KILIMO, through the Director, Crop Production Division. PSU would be responsiblefor:

- overall Project implementation,coordination and supervision;

- controlling Project fiinances;

- provision of technical.and administrativesupport to regional staff;

- procuring and distributingmaize production inputs to Project regions.

- appraising regional maize production programs;

- preparingProject annual work programs;

- providing regional authoritieswith extension aids, films and technical assistance; ANNEX 7 Page 2

- organising extension and management training and refresher courses for staff;

- administeringthe Crop Production Fund; and

- monitoring Project progress.

2. The PSU would be staffed with the following senior staff:

(a) Project Manager,

(b) Deputy Project Manager/ExtensionSpecialist,

(d) Procurementand DistributionOfficer,

(e) Farm Management Specialist.

3. PSU staff qualificationsand responsibilitieswould be as follows:

(a) Project Manager:

Qualifications

The Project Manager should be a graduate of agriculture or agricultural economics,with:

i) experience in practical agriculture,and demonstrated managerial capacity;

ii) capacity for organising staff and ability to maintain good relations with Government, regional and cooperative union officials; and

iii) ability to write clear and concise reports on Project implementation. ANNEX 7 Page 3

Responsibilities

responsible to the Principal Secretary,Ministry of Agriculture, through the Director, Crop Production;

responsiblefor Project execution and implementation of all development objectives;

liaison with other departments of Ministry of Agriculture,other Governmentministries and regional authorities;

liaison with cooperativeunions at regional level;

liaison with agriculturaltraining and research institutions;

liaison with Marketing DevelopmentBureau and National Milling Corporation;

liaison with parastatals and U.N. Agencies (FAO);

responsible for personnel management, administrationand staff recruitment;

executive secretary of Steering Committee;

preparation of annual Project work programs after consultation with regional and Ministry staff;

control of the Maize Production Inputs Account, through the financialcontroller;

authorisedsignatory for Credit withdrawal applications;

authorised signatory for procurement and disbursement forms, as prepared by the Procurement & DisbursementOfficer of the Project; and

submission of quarterlr progress reports to IDA.

(b) Deputy Project Manager - Extension Specialist ANNEX 7 Page 4

Qualifications

The Deputy Project Manager/ExtensionSpecialist should be a graduate in agriculture,with:

i) substantial experience in tropical agriculture and extension methods;

ii) experience in managing agriculturalprojects;

iii) ability to organise and maintain good relations with staff at Government and regional level, and cooperative union level; and

iv) experience in the formulation and evaluation of crop production projects.

Responsibilities

- deputize for Project Manager as and when required, and generally to assist him in the execution of his responsibilities;

- be responsible for extension activities, including:

i) training of extension staff;

ii) preparation of extensionmaterial;

iii) publication of leaflets;

iv) publication of articles in Ukulima wa Kisasa;

v) preparation of radio programs; and

vi) preparationof agriculturalfilms.

- liaison with extension organisations in regions;

- organisationof Mobile Film Unit Services;

- liaison with research and training institutionsfor agriculturalextension staff, in particular regarding research trials, demonstrationsand curriculum development; ANNEX 7 Page 5

- liaison with the Farm Management Specialistand regional farm management officers to develop a suitable evaluation and recording system.;

- liaison with regional farm management officers on maize marketing and crop reporting;

- developmentand implementationof new extension techniques;

- assist the Project Manager in the preparationof annual work programs;

- make recommendationsor any changes in seed, fertilizer and pesticide input requirements,and collate input requirements by district/regionfor annual procurement;and

- represent the Project as a member of the maize and legume research and seed committees in KILIMO.

Qualifications

The FinancialController should be a graduate of Business Administration and Accounting,or equivalent,with:

i) experiencein independentbookkeeping and preparation of accounts,and in managing an accountingunit;

ii) ability to adapt accounting systems to Project needs;

iii) ability to extract from accounts informationfor managerial use; and

iv) experiencein drawing up procurementand disbursementaccounts.

Responsibilities

- responsibleto the Project Manager;

- responsibilefor management and control of Project funds;

- organisationof accounting procedures,and up-to-date maintenance of Project accounts according to acceptable accounting procedures; ANNEX 7 Page 6

derivation of accounting indicators for use in Project management;

responsiblefor all financial administrativeprocedures;

recruiting accounting staff;

advising Procurement and DistributionOfficer on financial aspects of procurementdocumentation;

preparing credit disbursementdocumentation;

responsible for accounting of the Maize Production Inputs Account;

preparationof quarterly and annual financial statements as required by IDA; and

keeping Project Manager informed of deviations in budget.

(d) Procurement and DistributionOfficer

Qualifications

The Procurement & DistributionOfficer should have training and proper experience in administrationand accounting,with:

i) experience in tenderingand procurementof goods;

ii) experience in organising procurementand distribution of goods;

iii) ability to coordinate transport facilities;

iv) ability to administer distributionof farm inputs.

Responsibilities

- responsible to Project Manager;

- responsible for procurementof all Project requirements, including farm inputs, the aircraft, transport, office supplies and equipment;

- organising distributionof farm inputs to regional level; ANNEX 7 Page 7

assistingwith distributionof farm inputs at regional level, i.e. to villages;

identifyingstorage requirementsat village and regional level;

assisting with credit applicationsfor constructionmaterial for village and storage;

preparingannual statementson distributionof inputs such as quantity, location,timeliness of availability,storage etc.

(e) Farm Management Specialist

Qualifications

The Farm Management Special:Lstshould be a graduate of agricultureor agriculturaleconomics, with:

i) experience in tropical agriculture;

ii) experience in laying down and evaluating trials and demonstrations;

iii) experience in crop samplingprocedures;

iv) ability to analyse farmldata, and devise farm plans and farming systems;

v) ability to communicatewith agriculturalextension and research personnel.

Responsibilities

- responsibleto the Project Manager;

- analysis of the village maize trial and demonstration results, and formulationof revised husbandry and/or input packages, on a regional basis;

- monitoring farmers' adoption rates, and yield responses through crop sampling; ANNEX 7 Page 8

formulationof ecology-specificinput packages, including seed varieties;

review of farming systems in the Project regions with alternativerecommendations for improvement;

- analysing the short and long-term economic and financial stability of maize production;

- liaison and guidance to Farm Management Officers at Regional level;

- classifyingthe various maize production areas in the Project according to input requirementsand yield potential and, at a later stage, in non-Project regions of Tanzania.

B. The Project Steering Committee (PSC)

4. The PSC would be established to resolve all policy issues, to ensure close liaison between Ministries concerned, especially between Regional DevelopmentDirectors and KILIMO PSU staff, and to approve annual work programs. It would consist of the following personnel:

Principal Secretary, KILIMO;

Representativeof the Prime Minister's Office;

Representativeof the Ministry of Finance and Planning;

Commissionerfor Rural Development;

National Maize Project Manager (Secretary).

The PSC would appoint its own Chairman, and the Project Manager would be its executive secretary. Ministerial representativeswould be of sufficient seniority to represent their ministries effectively in an executive capacity.

5. The need for the PSC arises from a number of different ministries being intimately involved in the Project, the key importance of maize in the national economy and the number of major policy issues involved,which include maize pricing, organisationof cooperativesand ujamaa villages, levels of subsidy, nature of target population and effects on regional development balance and strategy. Furthermore,because of the unavailability of accurate base line data in a time of rapid change in the rural scene, and the need to adapt rapidly to changing circumstancesthe Project has considerableflexibility in the allocation of its investments,which requires the preparation of annual work programs. These programs would be prepared by the PSU in conjunctionwith KILIMO and regional staff and be subject to IDA and PSC approval. ANNEX 7 Page 9

6. The PSC would need to meet at least twice a year, probably even quarterly. A pre-conditionfor disbursementof Project funds would be IDA agreement on annual work programs, which would be given by supervision staff of the World Bank's Regional Mission in Eastern Africa (RMEA) in Nairobi. Furthermore,an RMEA staff member would attend the meetings at which annual work programs are discussed,with observer status and to give IDA's views on the proposed program.

C. Regional Project Staff

7. KILIMO staff at the regional level and below, who would be engaged full-time on Project activities, would be a Regional Maize Project Coordi- nator (RMPC), a Regional Farm Management Officer (RFMO) and a District Maize Project Supervisor (DMPS).

8. The Regional Maize Project Coordinatorwould be a graduate Principal AgriculturalOfficer, and wouldlhave the following duties:

- Responsiblefor implementationof all maize Project activities to the RDD through the RADO;

- assisting regional staff in selection of villages to be included in the program, and their appropriate package level;

- liaising with the PSL and regional cooperativeson distributionof inputs, transport,marketing and storage requirements;

- organizingextension programs, training and refresher courses;

- liaising with the Research Section on selection of sites for trials;

- supervisingmobile film unit activities, and distributing extension aid materials to districts;

- advising DMPS on their work programs, and

- preparing a quarterly progress report on Project performance.

9. The District Maize Project Supervisorwould be a Senior Field Officer, and would have the followingduties:

- responsible for implementationof all maize Project activities in the District to the DDO through the DADO; ANNEX 7 Page 10

assistingdistrict staff in selection of program villages to be submitted to regional level for approval;

supervisingAFO's at ward level in their Project extension activities (which will only form part of an AFO's duties as they will have villages also which are not included in the Project), and FA's at village level, who should be involved in Project work on a full-time basis;

drawing up extensionwork programs and distributingextension aids to field staff;

selecting staff to attend training and refresher courses at regional level;

ensuring field staff select suitable sites and farmer groups for demonstrations,and record data accurately;

liaising with regional authoritiesand cooperativeson input distributionand marketing, and selecting villages for the execution of input storage; and

submittingmonthly reports on Project progress to the RMPC.

10. The Regional Farm Management Officer would be of Senior Field Officer grade, and would have the following duties:

- responsibleadministratively to the RADO through the RMPC, and technically to the farm management specialist in the PSU;

-* collecting, collating and summarizing the yield data from Project demonstrationsand village research trials, and for estimating total maize production from Project villages;

- the preparation of farm and village budgets for maize, and for other enterprisesincluded in Project village farming systems, and the developmentof improved farm systems;

- calculationof input requirementsby village;

- advising Project extension staff and village secretaries (in liaison with village management technicians)on record keeping and farm management economics: and

- submitting monthly reports on progress to the RADO. and quarterly ones to the PSU. ANNEX 7 Page 11

D. Consultancyon Maize Agronomy

I1. An experiencedmaize agronomistwould be required for visits totalling six months over the first two years of the Project and his terms of reference would be as follows:

- to critically review existing maize agronomy recommendations for the varying ecological areas in the Project, and to make recommendationsfor their improvment in the light of field visits, discussionswith technical staff involved and all relevant literature;

- to make recommendationson the layout of village trials and demonstrations;

- to review the present maize breeding and research program in the light of the long-term development of the Tanzanian maize industry;

- to examine the potential for improved rotations or inter- cropping with legumes, to lessen the dependanceon imported fertilizer; and

- to provide an interim report after the first year; and a final report after visits in the second year.

E. Pre-InvestmentStudies of Grain Storage and Milling

Background

12. Grain production in Tanzania has recently been very much below requirements. There have been local shortages, national stocks have been low, and large grain importationshave been necessary. The Government has taken a number of steps to overcome these difficulties: The producer price of maize and other grains has been increased substantially. There has been a major national campaign to increase food production, and maize production will be significantlystepped up under the expanded National Maize Project. The increased volume of food productionwill require that storage facilities be improved. Recent experiencehas also emphasized the need to maintain an adequate reserve of grain to cater for emergencies, in addition to the ordinary grain stocks kept for commercial reasons. Grain milling requirements will increase also because of the increased volume of consumption and the need to replace old mills with more modern equipment capable of producing more refined products.

13. The National Milling Corporation (NMC) has prepared an outline five- year development program covering the period 1975/76 to 1979/80. This includes proposals for improving storage, staff housing, office accommodation ANNEX 7 Page 12 and transport. The Marketing DevelopmentBureau in the Ministry of Agricul- ture has also prepared a proposal for developing a national grain reserve. 1/ Consultantsare required to review these plans and prepare detailed investment proposals for establishinga national grain reserve and developing grain storage and the milling industry.

Objectives

14. The objective of the studies would be:

(a) To identify Tanzania's grain storage and grain milling requirementsfor maize, wheat and rice up to 1985. The storage requirementswould include storage required for normal commercial purposes and for establishinga national grain reserve;

(b) To examine NMC's and other major existing grain storage and milling facilities to see the extent to which they fall short of the requirementsidentified in (a);

(c) To propose the additional grain storage and milling facilities that would be required to meet 1985 requirements,and to suggest methods for improving the efficiency with which existing facilities are used;

(d) To identify and prepare detailed plans for the highest priority storage developmentsincluded under (c) which could be constructedwith the funds allocated for that purpose under the National Maize Project;

(e) To prepare investment proposals for grain storage and milling in a form suitable for attracting financial support from an aid agency covering the developments proposed under (c) but excluding those to be financed under the National Maize Project.

Scope of ConsultancyServices

15. The consultant'swork program would be carried out in three stages, as follows:

Stage 1: Preparationof an Outline Development Plan to meet Tanzania's Grain Storage and Milling Requirements up to 1985;

Stage 2: Preparationof Detailed Specificationsand Tender Documents for High Priority Storage Developments to be financed under the National Maize Project;

I/ Ministry of Agriculture,A Strategic Grain Reserve Program for Tanzania. Marketing Development Bureau, November, 1974. ANNEX 7 Page 13

Stage 3: Preparation of InvestmentProposals for Grain Storage and Milling designed to meet requirements identifiedin Stage 1 which were not financed under Stage 2.

16. Consultantswould be required to complete Stage I and obtain Govern- ment approval for the proposals conitainedtherein before proceeding to Stages 2 or 3.

Responsibilitiesof Government, NMC and Consultants

17. The consultantswould be appointed by and be responsible to the Ministry of Agriculture. The Ministry and NMC would ensure that all relevant information is made available to the consultantsand that they will be given access to NMC's storage and milling facilitiesto enable them to examine their condition and operationalperformance.

18. The consultantswould work according to these terms of reference and would be guided by a steering committee. This committee would be chaired by the Ministry of Agricultureand include representativesfrom the Ministry of Finance and Planning, NMC, and the Project Manager of the National Maize Project. The steering committee would ensure that the consultantsunderstood their terms of reference and would act as a channel for securing Government approval for the Stage 1 development proposals. For each of the three stages the consultantswould be expected to discuss with the steering committee:

(a) Their interim findings approximatelyhalf way through their work period, and

(b) Their draft final report at the end of the period.

Detailed Terms of Reference

19. Stage 1 of the consultant'swork program should be completed in not more than three months and would be submitted to the steering committee in order to obtain Government approval for the outline storage and milling development plan before any detailed work was undertakenin Stages 2 and 3.

2u. Stage 1. The consultantsshall:

(a) Survey existing storage and milling facilitiesin the main producing and consuming centers. This would include all of the installationsunder the control of NMC, but would not include minor mills and stores in villages. This survey should identify the storage and milling capacity at each location and should examine their operational efficiency. ANNEX 7 Page 14

(b) Study all of the available informationand forecastsof production and consumptionof maize, wheat and rice (including their milled products)up to 1980.

(c) Prepare for each of the three crops, and where appropriate their milled products, forecasts for each year up to 1985 of:

Production

Total Volume of Local Production Marketed

Volume of Local ProductionMarketed through NMC

Volume of Imports and/or Exports

Consumptionof Grain and the Principal Milled Products

Storage Requirements,Including Adequate Provision for a National Reserve.

In making forecastsof requirementsfor milled grain products the consultantsshould seek guidance from the steering committee concerning the extent to which Governmentwishes to encourage the consumptionof the more refined but less nutritious products such as Sembe Grade 1.

(d) Study the present system of organizationin the grain milling and storage industry and make recommendationstor any changes which are appropriate.

(e) Given the storage and milling requirementsidentified in (c) above and the nature of the existing facilities identified in (a), prepare an outline developmentplan for grain storage and milling designed to meet 1985 requirementsincluding provision for establishingand operating a national grain reserve. This plan should:

(i) Be based on a storage and milling system where the different individual components are designed to fit in with the overall requirementsof the system, the capacity of the transport system, and the storage capacity at farm or village level;

(ii) Propose the quantity and type of new storage and milling or modernizationrequired, by location. Justification should be given for the type of improvementproposed. If proposals are made to establish bulk handling/storage facilities,particular care should be exercised to ensure that these are justified. These should include estimated reduction in storage losses; ANNEX 7 Page 15

(iii) Give complete cost estimates for the proposed developments;

(iv) Identify the highest priority storage developmentswhich should be constructedwith the funds made available for this purpose under the National Maize Project. Under this project a total of US$3 million has been provided and it is expected that this would be sufficient to cover the cost of approximately80,000 tons of conventional bag storage, spread over several locations throughout Tanzania;

(v) Suggest appropriatestaff training schemes to help improve the efficiency oF grain storage and milling in Tanzania.

(f) Propose detailed term: of reference for Stages 2 and 3 as outlined below.

21. Stage 2. This stage would be completed within two months after the Government has agreed to the Stage 1 outline proposed, and would include:

(a) Preparationof detailed engineeringplans for the high priority storage of about 80,000 tons at the locations and with the terms of reference proposed in Stage 1. The cost of the investment would be covered by funds amounting to US$3 million provided under the Maize Project;

(b) Preparationof tender documents for the proposed investment when the proposals have been approved by Governmentand review and evaluation of bids received;

22. Stage 3. This stage would be completedwithin six months and would include:

Outline design, cost estimates, economic and financial evaluationof a proposed storage and milling project in a way suitable for submission to an internationalaid agency for financial support. This would be based on the outline plan prepared in Stage 1 but excluding developments included in Stage 2.

December 1, 1915 ANNEX 8

TANZANIA NATIONAL MAIZE PROJECT PROJECT COST TABLES

CONTENTS

TABLE

1. Summary of Project Costs

2. Project Servicing Unit - Capital Costs

3. Project Servicing Unit - Recurrent Costs

4. Project-financed Regional Support Services - Capital Costs

5. Project-financed Regional Support Services - Recurrent Costs

6. Transport and Storage

7. Training

8. Air Transport

9. Pilot Ox Utilizsation Scheme

10. Project Preparation and Consultancy Services

11. Incremental Inputs

12. Cost Element Qualifying for Retroactive Financing

Appendix 1. Contingencies TANZANIA NATIONAr-n! =PROJECT SUMMARYOF PROJECT COSTS (TShs. '000)

Foreign Exchange Percent Reference Year 1 Year 2 Year 3 Year 4 TOTAL % Amount TOTAL Distribution ~1*2I1tus $ of Baseline '000 Costs

A. BASELINE COSTS

1 Incremental Inputs Table 11 66,922 13,501 16,944 17,986 115,353 73 84,593 14,330 48

2 Project Servicing Unit (i) Capital Costs Table 2 1,517 - - - 1,517 65 984 188 4 (ii) Recurrent Costs Table 3 1,834 2,200 2,188 2,188 8,410 52 4,384 1,045

3.Regional Staff and Support 3i Capital Costs Table 4 6,458 506 412 90 7,466 94 7,011 927) 14 (ii) Recurrent Costs Table 5 3,299 7,182 8,046 8,180 26,707 34 9,150 3,318)

4. Transport and Storage Table 6 15,142 19,119 21,790 11,802 67,853 65 43,790 8,429 28

5. Training Table 7 1,361 2,201 2,166 1,826 7,554 39 2,973 938 3

6. Air Transport Table 8 1,080 458 458 458 2,454 72 1,781 305 1

7. Pilot Ox Utilization Scheme Table 9 56 432 192 - 680 18 120 84 (.)

8. Project Preparation & Consultancy Services Table 10 2,442 2,293 605 122 5,462 78 4,242 679 2

Subtotal 100.111 47,892 52,801 42,652 243,456 65 159,028 30,243 100

B. CONTINGENCIES

1. Physical * 3,062 3,167 3,507 2,455 12,191 57 7,009 1,514 5 2. Price 4,371 9,693 18,609 18,682 51,355 59 30,344 6,380 21

Subtotal 7,433 12,860 22,116 21,137 63,546 59 37,353 7,894 26

TOTAL PROJECT COSTS 107,544 60,752 74,917 63,789 307,002 64 196,381 38,137 126

December 1, 1975

g- | ANNEX8 Table 2

TANZANIA NATIONALMAIZE PROJECT PROJECT SERVICING UNIT - CAPITALCOSTS (TShs. '000)

Unit Cost No. Totali/ Foreign Exchange A. VEHICLES TShs. % Amount

Range Rover 65,00O/ 1 65 95 62 Cars, 15/1600 cc Saloons 55,000 2 110 96 106 4-Wheel Drive, Station Wagon 78,000 1 78 96 75 4-Wheel Drive, Long Wheel Base!_ 67,000 2 134 96 129 Lorry, 7 ton 123,000 1 123 96 118

Subtotal 510 96 490

B. OFFICE EQUIPMENT

Desks 1,500 23 35 - - Tables 1,000 5 5 - _ Chairs 500 50 25 - - Bookcases 200 16 3 - - Filing Cabinets, 3 Drawer 1,290 28 36 25 9 Photocopier 11,100 1 11 90 10 Duplicator 4,500 1 5 90 4 Typewriters 2,800 10 28 90 25 Desk Calculators 4,500 4 18 90 16 Hand Calculators 1,700 2 3 90 3 Air Conditioners 4,500 6 27 90 24 Other Furnishing 11,000 - 11 30 3

Subtotal 207 45 94

C. CONSTRUCTION OF OFFICES

Office Buildin / 800,000 1 800 50 400

Subtotal A,B & C 1,517 65 984 Physical Contingencies, 107l5- 145 65 94 Subtotal 1,662 65 1,078

Price Contingencies5/6/ 100 65 65

TOTAL 1,762 65 1,143

1/ All purchased in Near 1. 2/ Purchased for preparation in 1974. 3/ One of these vehicles is for use by the CIMMYT Trainer to be stationed at Ilonga. 4/ Building size and construction standard to be determined by PSU. 5/ Excluding Range Rover purchased in 1974 (footnote 2). 6/ See Appendix 1.

November 25, 1975 TAY0512Ah12 A532 AATIONAL !tRIZB PRkOTECT 52216Cr RVIOCIN UN11T EECUBRJ3.TI- CDST5

Erxhare, Unit CoSt 0N.. Year 1 Year 2 Year 3 Year 4 TOTAL FSreign AwouotA TSs2.

A. STAF SALO7EM / 40 140 40 160 - - i;o.Jeot Manager 40,C000 3 40 325 325 325 1,300 74 962 Deputy Project Manager (ortte-ioo S ecialint) 2J 325,ooo 1 325 p 325 325 325 1,300 74 962 finre,ieia Controller ?J 325,000 1 325 325 325 1,300 74 962 & Distribution Officer 325,000 1 325 325 Proecrtent 325 325 1,300 74 962 Fa. Masa9e..nt Spoeialis& J 325,000 1 325 327 20 20 20 Bo Amcuntant Grade 1 0,00 s20 So 50 50 200 Avri-ewe-a1 Of3ficer 25,000 2 s0 25 25 25 100 Agrioutural3 R-onetiat 3/ 25,000 1 25 l8 18 13 72 _ A..latant Pr,oure,ent Officer 18,02 I 13 1S 1S 15 60 Statiatical AsAoltant ' 114,400 1 1S 9 9 9 36 - - Ace, nto A-Ietant 9,000 1 9 24 24 96 Seeretarl.e 4/ 8,ooo 3 214 24 56 36 36 144 TyplSts 6,0oo 6 36 6 6 6 24 Filing Clerk 5,300 1 6 7 7 7 28 Storekeeper 7,200 1 7 41 41 41 i164 Dri-era 5,800 7 41 9 9 9 56 measeng,er 4,400 2 9 (6,400) 60 (3,343) Sobtotal 32 (I 600) 1,600 1,600 1,600 1,360 / 6,160 6o 3,709

3. 9E2ICL 18 8 OSTS 26 26 26 100 65 65 Car at 12,000 o phyr *nnu 1.08 P.hr 2 22 86 86 86 328 65 213 b4 W.2. Vebfle At 18,000 km per annum 1.60 p.kmo 3 70 39 39 39 156 65 101 4 w1.0. vehicle at 18,000 kn per annum 2.16 P.eX 1 39 51 58 58 58 22 1_46 Lorry at 18,0o0 4 per a-u, 3.524 P.km 1 209 8o9 65 3 Subtotal 7 182 209 209

C. 03FC OfP3AT9IDG OSTS

10 180 180 666 - ao.6e Rent 71 3,000/- p... 5 126 30 30 30 1114 - 82rt of Store and Yard 2,500!- p. =. 1 24 23 23 23 75 50 58 laint/Replacement n-d OMf Flip. t 2.51; p.a. 9,000 6 12 12 12 38 10 4 maint/Repl.acemnt offic, SIrnituer At 108 p.a. 115000 2 25 25 96 50 48 Stationery 2,1/. p-. - 21 25 32 32 32 121 5° 60 Pootage and Telephona 2,700/- y m. 25 73 73 73 279 Treele Alloonce /J 60 12 - . 37 Allo,mooce for .8IMKfTrtreor 25 4 4 4 12 Elcbriolty 535/- P- m. 3 379 1.441 10 120 S-btotal 292 61 391 374 8,410 52 4,384 Subtotal A S C L,634 2,200 2,188 2,188 vhyaimal Cootingencets, 101O 9,251 52 4,822 2ubtnta.1 2,017 2,420 2,407 2,407 2,001 52 1 041 Price 12tnzaiaZ 387 _626 867 52 5,863 TOTAL 2,136 2,807 3,033 3,274 11,2S2

nca. LLocal staff are costed at ba.it salary, eVpatri.tfa inClude all paasagea and a11 2 xpatr,ite Poets atio flEt Ida TheseT etaff will worK in close liasior t1ith 7egiontaL 520'2 it fa.aoaaR-e ent ad For Project Meaager, Deputy Projeet ger -a, Finencial Controller. As aal staff Vill not be tn post at start of Year 1, a. 15% taTig is .taoued. all yet,2 / 60 re,duction3 have been ad.e in Year 1 cost0 as not f2711, operational DoPuty Project Manager, Fin=tial Ceetroller, eouae rent, (or to cover mortEage pay,eote if lcooe- purcha-cd) for hvovts for Ctoiect Ilatager, Procurement Officer and Fars 4magaaeet SpecisaiAt. allocevce included io sslaries. / Profesioa1 13.ff (4) 122 ni41Dtc at 100/-, Drivers 500 night. at 50/-, expntr2ote O/Oee Appendix 1.

Deceubea 1, 1975 TANZANIA NATIONAL MAIZE PROJECT PROJECT-FINANCED REGIONAL STAFF AND SUPPORT SERVICES - CAPITAL COSTS (TShs.'000)

Unit Cost Number Year 1 Year 2 Year 3 Year 4 TOTAL Forfign Exchange TShs. Amount

A. VEHICLES

4-Wheel Drive, Long Wheel Base -/ 67,000 49 3,283 - - - 3,283 96 3,152 4-Wheel Drive, Short Wheel Base2 50,4o0 13 655 - 655 96 629 Film Vans 4-WD, Fully Equipped-/ i1,ooo 13 1,482 - - - 1,482 96 1,423 Motor Cycles-/ 6,700 19o (100) 670 (50) 335 (40) 268 - 1,273 96 1,222 Bicycles-/ 540 950 (400) 216 (250) 135 (200) 108 (100)54 513 70 359

Subtotal 6,306 470 376 54 7,206 94 6,785

B. OTHER EQUIPMENT

Duplicators 2,700 13 35 - - - 35 90 32 Typewriters 3,300 13 43 - - - 43 90 39 Films 1,400 130 74 36 36 36 182 85 155

Subtotal 152 36 36 36 260 87 226 Subtotal A & B 6,458 506 412 90 7,466 94 7,011 Physical Contingencies, 10% 646 51 41 9 747 94 701 Subtotal 7,104 557 453 99 8,213 94 7,712 Price Contingencies § 426 89 118 36 669 94 629 TOTAL 7,530 646 571 135 5,552 94 X,341

1/ For Regional Coordinators (13), District Supervisors (28) and Research Section (8).

2/ For Regional Farm Management Officers.

3/ To be supplied by special discount from UNESCO through Audio-Visual Institute.

4/ For AFO's to be purchased by individuals with government loans. Numbers in brackets by year.

5/ For Field Assistants purchased by individuals with government loans. Numbers in brackets by year.

6/ See Appendix 1. November 12, 1975 TANZANIA NATIONAL MAIZE PROJECT PROJECT-FINANCED REGIONAL STAFF AND SUPPORT SERVICES - RECURRENT COSTS (TShs.'000)

Unit Cost No. Year 1 Year 2 Year 3 Year 4 TOTAL Foreign Exchange TShs. _ Amount A. SALARIES

Regional Project Coordinator 25,000 13 244 325 325 325 1,219 Regional Farm Management Officer 20,000 13 195 260 260 260 975 District Supervisors (Field Officers) 15,600 28 328 437 437 437 i.6659 Instructor (Film Vans) 15,600 13 51 203 203 203 6o0 Technician (Film Vans) 10,000 13 33 130 130 130 423 Field Assistant / 6,00D 240 - 840 1,440 1,440 3,720 Typists 6,000 13 58 78 78 78 292 Drivers 5,800 75 109 435 435 435 1,414

Subtotal 1,018 2,708 3,308 3,308 10,342 -

B. VEHICLE RUNNINGCOSTS 4 W.D. Vehicles at 18,000 km p.a. 3/ 1.60 p.km 62 893 1,786 1,786 1,786 6,251 65 4,063 Film Vans at 18,000 km p.a. 2.40 p.km 13 140 562 562 562 1,826 65 1,187 Motor Cycles at 7,200 kIo p.a. o.45p.km 190 250 486 616 616 1,968 65 1,279 Bicycles at TShs. 7.70 per month 7.70 p. m 950 28 60 79 8, 255 20 51

Subtotal 1,311 2,894 3,043 3,052 10,300 64 6,580

C. OTHER OPERATING COSTS Maint/Replacement of Office and Film Equipment at 25% 260,000 - 20 65 65 65 215 55 118 Stationary/Visual Aids 1,600/- p.m. 13 187 250 250 250 937 55 515 Postage/Telephone/Electricity 600/- p.m. 13 70 94 94 94 352 - _ Travel Allowance - Field Staff at 120 nights 25/- p.night 63 142 189 189 189 709 - - Travel Allowance - Drivers at 120 nights 15/- p.night 62 28 112 112 112 364 - Travel Allowance - Film Van Staff at 250 nights 25/- p.night 26 41 162 162 162 527 - _ Travel Allowance - Film Van Drivers at 250 nights 15/- p.night 13 12 49 49 49 159 - Film Production 25,000/- each 1 p.year 25 25 25 25 100 - - Hire of Films 2,000/- p.unit 13 13 26 26 26 91 30 27 Assistance to "Ukulima wa Kisasa" / - - 85 123 162 200 570 55 313 Inputs for 1/2 Ha Demonstration Plots 220/- each 2 p.village +25% extra 297 360 436 523 1,616 83 1,341 Inputs for 1/2 Ha Village Research Trials 970/- 52 50 50 50 50 200 13166 Additional Research Trials(incl.labor) 5,000/- 15 - 75 75 75 225 40 90

Subtotal 970 1,580 1,695 1,820 6,065 42 2,570 Subtotal A B C 3 299 7 182 B,o46 8,18 26,707 34 9,150 Physical Contingencies, 10% 3,029 7,189 8,056 8,18 26,70 34 9,1509 Subtotal 3 2 ,0 -2,7 4 l, Price Contingencies 3,218 1,264 B,3°l 329 _ L 022 34 10:06o

TOTAL 3,847 9,164 11,152 12,237 36,400 34 12,452

2 All staff for 9 months in Year 1, Film Vans Staff and Drivers and vehicle running costs for 3 months. 2/ Additional Field Assistants trained for 3 months in Year 2 and 3 to build up field strength. 3/ Includes vehicle rental fees in Year 1. / Subsidizing increasing circulation by 11,000 copies in Year 1, 16,000 in Year 2, 21,000 in Year 3 and 26,000 in Year 4. 5/ See Appendix 1. November 12. 1079 TANZANIA NATIONAL MAIZE PROJECT TRANSPORTAND STORAGE (TShs. '000)

Unit Foreign Exchange Cost No. Year 1 Year 2 Year 3 Year 4 TOTAL o Amount TShs. Aon

A. TRANSPORTAND EQUIPMENT Four-Wheel Drive Station Wagon 1/ 78,000 2 156 - - - 156 96 150 Ten-Ton Lorries 2/ 207,000 44 1,650 2,486 2,486 2,486 9,108 96 8,744 Seven-Ton Lorries 2/ 123,000 44 981 1,477 1,477 1,477 5,412 96 5,196 Tarpaulins 3/ 1,56o 8oo 780 468 - - 1,248 90 1,123 Platform Scales 4/ 3,360 950 1,815 383 466 527 3,191 96 3,o64 Safes 4/ 2,240 950 1,210 255 311 352 2,128 96 2.043 Subtotal 6,592 5,069 4,740 4,842 21,243 96 20,320 Physical Contingencies lo% 659 507 474 4864 2,124 96 2,039 Subtotal 7,251 5,576 5,214 5,32b 23,367 96 22,359 Price Contingencies 5/ 435 822 1.356 1,917 4,600 96 4,416 Total 7,686 6,4681 6,570 7,243 27,967 96 26,775

B. STORAGE

Construction Elements - Village Storage Sheds (1,500 sq. ft.) 6 30.01-/sq. ft. 530 6,750 6,750 6,750 3,600 23,850 65 15,503 - Regional Storage j 235/-/ton 34,000 1,800 2,8oo 2,800 590 7,990 35 2,797 Stage 1 of Investment Proposals for NMC 34, ,500 7,500 2,770 14,770 35 5,170 Subtotal 8,550 14,o5o 17,050 6,96o 46,610 50 23,470 Physical Contingencies,10% 855 1,405 1,705 696 4,661 50 2.347 Subtotal 9,405 15,455 1b,755 7,656 51,271 50 25,817 Price Contingencies 2/ 899 4,364 9,002 5,244 19,509 50 9,755 Total 10,304 19,819 27,757 12,900 70,780 50 35,572

TOTAL A & B 17,990 26,287 34,327 20,143 98,747 60 62,347

1/ For Tanzanfa Rural Development Bank. 2/ Allocated in annual work programs according to need, see Annex 6, Table 3 for calculation of requirements. - 3/ For use in villages prior to store construction. 4/ Provided for each village in Project on TRDB loan. 5/See Appendix 1. .o 6/ To be built in all villages in Project reaching Packages 2 & 3, except for 20% already having stores. 7/ Input storage to be built according to justified need agreed in annual work programs. 8/ Investment proposals would include first stage to finance NMC's immediate needs for increased storage with an allocathn of US $3.0 million. 9/ For annual percentages see civil works schedule in Appendix 1. December 1, 1975 TARZANIA NATIONAL MAIZE PROJECT TRAINING COSTS (TShs. '000

Course Cost per Year 1 Year 2 Year 3 Year 4 Total Foreign Exchange Duration Student Students Costs Students Costs Students Costs Students Costs Costs 6 Amount TShs. A. AGRICUILTURET Agronomy And Extension Curriculum 5 5 10 10 1 Training of Trainers l/ 19 days 1,OO/- 15 15 15 15 15 15 15 15 60 10 6 Training or Trainers 2/ 12 days 550/- 500 275 110 6o 110 6o l1 60 455 10 4o Training New Staff 2 3 months 2,000/- - - 14o s6o 100 400 - - 960 10 9b Refresher Course 12 days 550/_ - - 500 275 750 415 960 530 1,220 10 122

Interphaseh Curriculum 5 5 10 10 1 Training of Trainers 60 days 3,250/- 6c 195 60 195 6n 195 So 195 700 10 8 Refresher of Same 12 days 550/- - - 60 30 120 60 iBo 90 180 10 2

Maize Production 2/ IITA/CIMMYT Courses 6 months 40,200 6 241 6 241 6 241 6 241 964 100 964

Degree Courses i B.Sc, 2 years 85,000 3 255 3 255 2 170 1 85 765 100 765 M.Sc. 2 years 85,000 1 85 2 170 3 255 3 255 765 100 765

B. MANAGEMENTV/ Curriculum Development lo,0oO/- 10 10 15 1 5,000/- 45 225 45 225 15 75 15 75 6So 15 90 Training Course at EA/MI 3 weeks 86 Refresher - annual 10 days 2,500/- - - 45 115 90 230 90 230 575 15 Senior Staff Seminars and Meetings 1 week 500/- lO0 50 10 50 100 50 100 50 200 10 20 Subtotal 1,361 2,20' 2,166 1,826 7,554 39 2,973 Physical Contingencies, 10% 136 220 217 183 756 39 297 Subtotal 1,497 2,421 2,383 2,009 8,310 39 3,270 Price Contingencies 3/ 90 387 620 723 1,820 39 710

TOTAL 1,587 2,808 3,003 2,732 10,130 39 3,98O

Fifteen senior field officers, one fram each region and two from Iringa and Mbeya. For calculation of numbers see Annex 2 on Training. N See Appendix 1. November 12, 1975

CD-5CD TANZANIA NATIONAL MAIZE PROJECT AIR TRANSPORT (TShs. '000)

Unit Cost No. Year 1-/ Year 2 Year 3 Year 4 TOTAL Foreign Exchange TShs. % Amount

A. CAPITAL COSTS

Seneca II Aircraft 850,000 1 850 - - - 850 96 816

B. RECURRENT COSTS

Pilot Salary, Allowance, Housing 215,000--- 108 215 215 215 753 65 489

Insurance @ 6% p.a. 45,600 p.a. 23 46 46 46 161 - -

Landing Fees and Nav. Charges 3,000 p.a. 2 3 3 3 11 - - Allowance for Check III 8,000 p.a. 4 8 8 8 28 70 20 Operating Costs @ 50 hrs. per month 310 p. hr. 93 186 186 186 651 70 456 Subtotal 230 458 458 458 1,604 60 965 Subtotal A & B 1,080 458 458 458 2,454 72 1,781 Physical Contingencies, 10% 1O8 46 46 46 246 72 178 Subtotal 1,188 504 504 504 2,700 72 1,959 Price Contingencies g 71 81 131 181 464 72 334

TOTAL 1,259 585 635 685 3,164 72 2,293

1/ Available for 6 months in Year 1. 1

2/ See Appendix 1. November 12, 1975 TANZANIA NATIONAL MAIZE PROJECT PILOT OX UTILIZATION SCHEME (TShs. '000)

Unit Cost Number Year 1 Year 2 Year 3 Year 4 TOTAL Foreign Exchange TShs. % Amount

A. CAPITAL COSTS

Sets of Equipment 1,200 1/ 200 - 240 - - 240 50 120

Oxen 2/ 700 80 56 - - - 56 -

B. RECURRENT COSTS

Ox Trainers 9,600 per 3/ 20 - 192 192 - 384 - - year

Total A B 56 432 192 - 680 18 120

Price Contingencies 4/ 3 69 50 - 122 18 22

TOTAL 59 501 242 - 802 18 142

1/ Carts, TShs. 600; ploughs, harrows and cultivators TShs. 200 each.

2/ For four mechanized agriculture centers, to be used for experimentation with and testing of equipment.

3/ Includes salaries and field allowances.

4/ See Appendix 1. X X

October 6, 1975. TANZANIA NATIONALMAIZE PROJECT PROJECT PREPARATION AND CONSULTANCY SERVICES (TShs. '000)

Year 0 Year 1 Year 2 Year 3 Year 4 TOTAL Foreign Exchange % Amount

A. Project Preparation 149 - - - - 149 60 89

B. InvestmentProposals for Storage & Milling - 1,610 1,610 - - 3,220 85 2,737

C. ConsultantAgronomist 3/- 200 200 122 122 644 85 547

D. National AgriculturalDevelopm-ent Progran 483 483 483 - 1,449 60 869

TOTAL 149 2,293 2,293 605 122 5,462 78 4,242

1/ US $30,000 for Project preparation(including 4-WD vehicle now costed under Central Unit).

2/ 5 man-years @ $80,000 each over a 2-year period.

3/ 1 man for 6 months @ $80,000, 4 months in year 1, 2 months in year 2.

4/ us$60,ooo for each of first 3 Project years.

November 12, 1975. TANZANIA NATIONAL MAIZE PROJECT INCREMENTAL INPUTS (TShs.'000)

Unit Cost Year 1 Year 2 Year 3 Year 4 TOTAL Foreign Exchange TShs. % Amount 1/ A. FERTILIZER

Triple Superphosphate 2 17,418 2,822 3,541 3,944 27,725 82 22,735 Sulphatq of Ammonia 3/ 26,046 5,020 6,467 6,519 44,052 82 36,123 NPK - 4,980 1,610 1,846 1,795 10,231 82 8,389

Subtotal 48,444 9,452 11,854 12,258 82,008 82 67,247

B. OTHER INPUTS

Composite Seed 2,855/- p. ton 9.507 1,77Q 1,904. 2,184 15,374 J1 5,381 Hybrid Seed 4,620/- p. ton 3,326 1,076 1,733 1,903 8,038 50 4,019 5% DDT 2,740/- p. ton 4,439 937 1,143 1,291 7,810 80 6,248 25% DDT 12/- p. ltr. 778 164 200 226 1,368 80 1,094 Seed Dressing 4,380/- p. ton - 3 - - 3 80 2 Herbicide 33/- p. kg. 428 90 110 124 752 80 602

Subtotal 18,478 4,049 5,090 5,728 33,345 52 17,346

Total A + B 66,922 13,501 16,944 17,986 115,353 73 84,593

Price Contingencies -/ 2,008 2,160 4,405 6,475 15,048 73 10,985

TOTAL 68,930 15,661 21,349 24,461 130,401 73 95,578

1/ The volume of inputs is given in Annex 6, Table 2. The inputs for the first year will be financed by the Government of Tanzania, partly with a USAID loan, while later years will be financed by IDA/IBRD. Fertilizer prices for 1975 are based on the Tanga Factory prices while for later years, prices are based on the IBRD price projections. 2/ Prices: Year 1, 3,710/-; Year 2, 2,650/-; Year 3, 2,511/-; Year 4, 2,390/-. 3/ Prices: Year 1, 2,651/-; Year 2, 2,118/-; Year 3, 1,942/-; Year 4, 1,711/-.

4/ Prices: Year 1, 3,320/-; Year 2, 3,156/-; Year 3, 2,930/-; Year 4, 2,659/-. These were derived H from the TSP and S/A prices using the respective nutrient contents. X

5/ Three percent in Year 1 since most inputs had been purchased early in the year; for Years 2 - 4 see Appendix 1. A

b X November 12, 1975. ANNEX 8 Table 12

TANZANIA NATIONAL MAIZE PROJECT

COST ELEMENT QUALIFYING FOR RETROACTIVE FINANCING (TShs. '000)

Reference Disbursable Amount Table No. Cost IDA ABEDIA

A. Project Preparation Expenses prior July 1, 1975 10 149 89

B. Project Servicing Unit

Vehicles (2 Cars & 4 four-WD Vehicles) 2 440 422 All Office Equipment 2 242 205 Salaries!/ 3 630 470 Operating Expenses of Vehicles 3 80 64

Subtotal 1,392 73!S

C. Regional Staff & Support

Vehicles (Four-WD Vehicles and Vehicle Rentals, Motorcycles & Cycles) 4 1,000 9 60 Office Ejyipment 4 90 81 Salaries-.- 5 430 344 Operating Expenses of Vehicles 5 550 440

Subtotal 2,070 865

D. Training

All Year 1 Local Courses (except Management) 7 560 448

TOTAL 4,171 2052 1,471

1/ Includes 6 months' salary for all Central Unit less 30%. 2/ Full salaries for all staff (except Film Van Staff) for 3 months. N.B. Disbursements against the items qualifying for retroactive financing would be in accordance with agreed IDA/Government cost sharing procedures.

Noven.ber 25 1975 ANNEX 8 Appendix 1

Page 1

TANZANIA NA_IONAL MAIZE PROJECT

CONTINGENCIES

The Project Time Frame

1. All calculationsand phasing in the appraisal report are based on a 12-month period running from July 1st to June 30th. The project schedule is as follows :

Project Year Gregorian Equivalent

1 1975/76

2 1976/77

3 1977/78

4 1978/79

All baseline costs are up-to-dateas of July 1st, 1975. Unit prices have been adjusted, however, to take into account the October, 1975 devaluation of the Tanzanian Shilling.

Physical Contingencies*

2. A 10% contingencyhas been allowed for all Project costs except the pilot ox utilizationscheme, project preparation and consultancyservices, and incrementalinputs.

Price Contingencies

3. These have been applied to all Project costs, in accordancewith

Bank guidelineson the internationalinflation pattern and on projected escalationof the local cost of zivil works in Tanzania. The basis for the figures used is as follows: ANNEX 8 Appendix 1 Page 2

Projected Annual Rates of Cost Escalation Equipment & Civil Works Calendar Year General Foreign Cost Local Cost

1975 12.Q% 16.0% 25.0%

1976 10.0% 14.0% 20.0%

1977 8.0% 12.0% 18.0%

1978 8.0% 12.0% 15.0%

1979 8.0% 12.0% 15.0%

Project Year

1975/76 11.0% 15.0% 22.5%

1976/77 9.0% 13.0% 19.0%

1977/78 8.0% 12.0% 16.5%

1978/79 8.0% 12.0% 15.0%

4. The following compounded contingency percentages have thus been added to baseline costs:l/

Price Contingencies Equipment & Civil Works General Foreign Cost Local Cost

1975/76 6% 8% 11%

1976/77 16% 22% 34%

1977/78 26% 38% 58%

1978/79 36% 54% 83%

In practice this has meant that contingencies in all tables follow the percentage schedule for "Equipment and General", except for Table 6 where for village, regional and national storage contingencies have been calculated according to the percentage schedule for Civil Works.

1/ The mid-year rule has been applied in calculating the compounded percentages.

November 12, 1975. ANNEX 9 Page 1

TANZANIA NATIONAL MAIZE PROJECT

TANZANIARURAL DEVELOPMENT BANK TRDB

General

1. The Tanzania Rural Development Bank was created by the Tanzania Rural Development Bank Act, 1971 with the following objectives: (a) to provide medium- and long-term Finance for rural development; (b) to provide technical assistanceand advice for promoting rural development; (c) to administer such special funds as may from time to time be placed at its disposal; (d) to finance the purchase of agriculturalinputs; and (e) to undertake such other activitiesas may be necessary or advantageousfor furtheringthe fore- going objectives. IDA approved the creation of TRDB through an amending agreement (April 28, 1971).

2. Several rural credit measures had been adopted by Government before the TRDB Act was passed. Among them were measures authorizing the establishment of the Land Bank of Tanganyika (19'47-1961),the AgriculturalCredit Agency (1962-1964),and the National Development Credit Agency (1964-1971).

3. TRDB inherited some assets and liabilitiesas well as certain operations from the National Development Credit Agency (NDCA), including IDA credits 80-TA (US$5million, general agriculturalcredit) and 217-TA (US$6 million, flue-cured tobacco). Bad debts worth about TShs.31 million (US$4,350,000) were not transferred to TRDB. Nearly all of NDCA's staff were absorbed into TRDB and most of them retained their previous assignments.

Organizationand Management

4. The managementof TRDB is vested in a Board of Directors, including a chairman and managing director appointed by the President of the Republic, and eight other directors appointed by the Minister of Finance and chosen from among persons with knowledge and experienceof economic and financial matters, rural development,agricUlture, small-scale industries, ujamaa villages or cooperatives. The General Manager who is appointed by the Minister of Finance for a term of five years, manages the Bank through its five Depart- ments and various committees. TRDE has its head office in Dar-es-Salaamand 20 regional offices.

5. There are four Departments: Development,Finance, Administration and Operations. The regional offices represent the Bank at the regional level and provide technicalassistance in project developmentand implementation. ANNEX 9 Page 2

6. The regional offices are generallymanned by a Regional Representative and a Credit Supervisor. While the Regional Representativeis concerned primarily with developmentwork, including provision of technical guidance, it is difficult for one Credit Supervisor to attend to his various items of work effectively,particularly the collection of Bank loans (para. 15). TRDB should consider augmenting the number of credit supervisors,as appropriate,so that one credit supervisor does not have more than, say, 15 to 20 societiesunder his charge. TRDB has just recruited 18 credit supervisorswho are expected to be posted at regional offices after a three-week orientation training course.

7. There is also a need to augment staff in the Operations Department at head office to deal with loan proposals expeditiously (para. 12).

Capital Structure

8. TRDB has an authorized capital of TShs.300 million, divided into 300 equal shares, the Government being the sole shareholder. As of June 30, 1974, its paid-up capital stood at TShs.113.2 million consisting of 98 fully paid and one partly paid shares. General reserves amounted to slightly over TShs.2 million. Other TRDB resources comprised IDA and other international project funds aggregatingTShs.235 million (authorizedto TRDB), short-term deposits of about TShs.2 million, Government loans of over TShs.50 million, National Bank of Commerce overdrafts of TShs.3 million, and Ujamaa village bonds of TShs.10 million.

Loan Policy and Procedure

9. TRDB makes short- and medium-term loans up to five years and long-term loans up to 15 years. Eligible borrowers comprise cooperative unions and societies,district developmentcorporations, ujamaa villages and registered associations,corporations and individuals,and any other borrower falling within the scope of any agreement under which TRDB has borrowed funds. Project loans should be technicallyand financiallyviable and should be consistentwith national economic development priorities. TRDB secures its loans by either a first mortgage and movable property or value security at 75% of the appraised value of property. Short-term loans are generallymade at 8-1/2% interest per annum, while medium- and long-term loans carry interest at 7-1/2% per annum. There is also an application fee of TShs.5 to TShs.500 depending upon the loan amount. The Bank does not undertake any foreign exchange risks.

10. Upon receipt of a loan proposal from an eligible borrower, the Regional Representativeof TRDB makes a preliminary appraisal following a visit to the Project area and submits the proposal with his report to the Regional Advisory Committee (RAC) for consideration. The proposal with the RAC's recommendationsis then sent to the head office of TRDB for consideration7> After the proposal is reviewed as to its technical and economic feasibility, the management/loancommittee considers it for approval. ANNEX 9 Page 3

11. In accordancewith Bank policy, TRDB's Board recently delegated limited authority,subject to review, to the RACS (since designated as Regional Loan Committees)to sanction loan proposals up to a maximum ceiling of TShs.50,000per project and per borrower. At head office, the management (Chairmanand Managing Director) considers loan proposals for new projects for amounts of TShs.50,000 to TShs.500,000and up to TShs.one million for ongoing projects, while all loan proposals exceeding the above amounts are consideredby TRDB's Loan Committee, consistingof one Director, the Chair- man and the Bank's Secretary.

12. As of June 30, 1974, TRDB had on hand 96 loan proposals for amounts totalling TShs.55million awaiting consideration. The majority of the proposals had been pending for over six months at the head office and regional offices.

Loan Operations

13. The following table shows the developmentand diversificationof TRDB's loan operations since 1972:

(TShs. million) 1972 1973 1974

Seasonal Inputs 21.0 62.0 85.9

Crop Establishment 0.9 24.5 12.8

Rural Transporation 6.6 8.6 30.4

Farm Machinery 1.0 2.0 1.3

Storage 5.3 1.9 0.4

Commercial Ventures 0.5 - 2.7

Fisheries Project - 0.9 1.3

Livestock 0.5 7.8 25.8

Total 35.8 107.6 160.6

The number of loans approved by TRDB over the three-yearperiod increased from 91 in 1972 to 103 in 1973 and to 229 in 1974. During this period, loans for developmentof agricultureaccounted for 65% of all loans approved by TRDB. Further, consistent with the nation's long-term aim for rural development through the creation of cooperativeagriculture, agricultural loans through cooperativeswere of the order of TShs.92.2 million out of the total loans of TShs.160.6million approved by TRDB as of June 30, 1974. ANN 9 Page 4

Overdue Loans

14. The accumulationof overdues has been a constant feature of TRDB's operations over the last three years and as of June 30, 1974, these amounted to TShs.31.1million (principal)and TShs.4.4 million (interest)and formed about 21% and 74% of TShs.148 million (principal)and TShs.6 million (interest), respectively,outstanding and due on that date. If arrear loans are considered in relation to the amounts which fall due for recovery during the period ended on June 30, each year, the overdue percentageswould be much higher. Out of TShs.35.6million of arrear loans (principaland interest) as of June 30, 1974, TShs.29.4million related to DNCA loans taken over by TRDB. The overdues in respect of the new loans extended by TRDB itself totalled TShs.6.2 million and formed a little over 5% of the Bank's new loans outstandingas of June 30, 1974.

15. While a portion of the Bank's overdues can be attributed to the country's drought conditions during 1973, the main reason for this continuing feature is TRDB's weak machinery for supervision (creditsupervisors) over the utilizationof loans, follow-up of project implementation,recovery drive during harvest seasons and prompt action - legal or otherwise - against willful defaulters (para. 6).

Provision for Bad and Doubtful Debts

16. TRDB is at present making an ad hoc provision of 1% of new loans disbursed each year towards bad and doubtful debts.

Interest Rate

17. TRDB pays interest on loans from Government, including loans under IDA and other internationalcredits, at 3-1/2% - 4% per annum. On short-term deposits it pays 5% interest per annum, while the rate is 7% per annum on National Bank of Commerce overdrafts. On the special ujamaa village bonds, the interest rate is 3% per annum. TRDB charges 8-1/2% interest per annum on its short-term loans and 7-1/2% per annum on medium- and long-term loans. TRDB's interest spread is generally 5%. Interest rates of TRDB compare favorablywith those charged by the National Bank of Commerce (normal8% per annum) on working capital loans and the Tanzania Investment Bank (7-1/2%- 9-1/2%) on term loans.

Account and Audit

18. TRDB has adopted a mechanized accounting system. Audit of its accounts was performed by the Tanzania Audit Corporationwhich had already completed the audit for the year ending June 30, 1974. TRDB would be required to submit to IDA its audited annual accounts not later than six months after the close of its financialyear. ANNEX 9 Page 5

Financial Position

19. TRDB's net profit increased from TShs.152,000in 1972 to TShs.372,000 in 1973 and to TShs.946,000in J1974. The increase is due to a steep increase in the Bank's lending operations, the outstandingsof which increased from TShs.92 million in 1972 to TShs.115 million in 1973 and to TShs.154 million in 1974. TRDB's net earnings were, however, affected by an increase in arrear interest which as of June 30, 1974 amounted to TShs.4 million. Further, as against TShs.36 million arrear loans as of June 30, 1974, TRDB's provision for bad and doubtful debts stood at TShs.14 million.

Project Participation

20. TRDB would act as the channel for financing improved storage and additionaltransport under the National Maize Project. The following would be provided for this purpose under the Project:

TShs. '000

530 village Stores 34,701

Platform Scales and Safes for Village Stores 6,733

34,000 tons Regional Storage for Farm Inputs 11,932

Tarpaulins for Temporary Storage 1,506

Stage One Storage Proposal for NMC 24,150

88 Lorries for Regional Transport 19,544

Total 98,566

Funds for the village stores, platform scales and safes would be lent to the village primary societies. Those required for regional farm input stores, tarpaulinsand vehicles would normally be provided to regional cooperative unions, while funds for grain storage would be provided to the National Milling Corporation. TRDB would receive Project funds from Government at four per cent interest per annum for a term of 20 years with a five-year grace period. TRDB would onlend funds for storage at 8-1/2 per cent per annum with repayment over 10 years, while for vehicles, the interest rate would be 8-1/2 per cent with repayment over three years.

December 1, 1975 ANNEX 10 Page 1

TANZANIA

NATIONAL MAIZE PROJECT

MAIZE MARKETS AND PRICES

A. Domestic Production

1. As the most important staple food crop in Tanzania, maize is grown wherever climatic conditions permit. Smallholderor village production predominatesand only a small fraction of total output originates from private large-scalecommercial farms or parastatal estates. There are no accurate estimates of the country's annual output. Since 1966/67 the Ministry of Agriculture (KILIMO) has produced crop reports which are based on visual estimatesmade by field staff. The accuracy of these reports is unknown but their validity has been frequently disputed. For example, KILIMO's statistics did not signal any of the recent shortages in national grain supplies and, as late as November 1973, projected a very favourable picture for maize, wheat and paddy production for the crop year 1972/73, even though crops had then been harvested. Official estimates of harvested and marketed maize production are summarized in Table 1.

2. The data in Table 1 indicate that annual fluctuationsin maize productionhave been large. Production has also been nearly stagnant. In recent years producers have been discouragedby low fixed prices, while drought in 1973 and 1974 seriously upset production. The villagisation program has also had some disruptive effects in the last few years. Over the eight-year period 1966-73, the marketed portion of productionhas been estimated to average 22% of total harvested production. Parastatal marketing organisationshandled about 65% of the total amount marketed. In inter- preting the data of Table 1, some confusion can arise because of the definition of the reportingperiods. NMC purchases for a given year, say 1973/74, refer to its buying season (July 1, 1973 to June 30, 1974); however, crops bought during that season were harvested primarily before July 1, 1973, i.e. during the 1972/73 cropping season. The comparisonsmade in the table have been made in a way which permits the most legitimate comparison,although this is still not completelyaccurate.

3. While every region in Tanzania produces maize, commercial surpluses are concentratedin a few regions. Data for the 1970/71 - 1973/74 period, presented in Table 2, indicate that, during this period, Arusha, Dodoma, Iringa and Kilimanjaro regions produced 38% of national output, but supplied 84% of NMC purchases. The figures also indicate that Tanga region had one of the most rapid increases in production,although these data are suspect. ANNEX10 Page 2

B. Domestic Demand

4. Accurate data are not available for maize consumption. The 1974 Agricultural Sector Study 1/ shows an annual per capita consumption of maize of 57 kg for 1972 and a projected consumption of 61 kg per person for 1980. This implies that maize provided 28% of total national calory intake in 1972, although the estimates are not particularly relevant in assessing nutritional standards, since the importance of maize in the diet varies tremendously from location to location. The consumption figures were derived on the basis of an estimated 1972 harvested production of 881,000 tons, imports of 138,000 tons and wastage and other uses of 131,000 tons. The sector study estimated that the total domestic utilization of maize would increase from 1,019 thousand tons in 1972 to 1,338 thousand tons in 1980, assuming no changes in relative consumer prices. Recent price changes suggest, however, that the 1980 estimate should be reduced to slightly under 1,300,000 tons 2/ including all uses and waste.

5. Estimating consumptiont is difficult because a large proportion of domestic production, estimated at about 80%, represents subsistence consumption which does not enter trade. The second complicating factor is that part of maize production enters trade through unofficial channels.

C. The Maize Trade

Internal Trade

6. There are three channels of internal trade:

(a) Direct sales by producers to final consumers within the producing region;

(b) Illegal sales by producers to middlemen or buyers outside the producing :region; and

1/ From World Bank, Tanzania Agricultural and Rural Sector Study, Washington 1974, Vol. III, Table 20.

2/ This figure is in agreement with the official MDB/Devplan Projection for 1980 of a range of 1,286,000 - 1,309,000 tons. ANNEX 10 Page 3

7. Direct sales are a normal phenomenon,and take place in most of the rural areas on a small scale. Illegal sales result from large differ- entials between officially controlled retail and producer prices. The Government'spolicy of having uniform prices throughout Tanzania tends to exaggerate this effect. Black-marketsales, thought to account for a significantproportion of total sales, have been particularlyseriouAsin years like 1973 and 1974 when the official producer prices of maize were low and black-marketprices were very high because of shortages.

8. The summary of NMC's maize purchase in Table 1 shows the erratic pattern of local maize purchases,which fluctuated between 42,000 and 185,000 tons during the 1966/67 - 1973/74 period. This is in contrast to NMC's sales of sembe (maize meal) and maize which increased relatively smoothly from 104,000 tons in 1968/69 to 242,000 tons in 1973/74, as shown below:

NMC Commercial Disappearanceof Maize and Sembe 1968/69 1969/70 1970/71 1971/72 1972/73 1973174 ------('000 tons)…------

Maize and Maize Equivalent of Sembe 104.5 123.4 116.6 160.0 134.0 242.4

Source: MDB and NMC

9. Informationon the regional breakdown of such sales is not readily available. However, the Marketing Development Bureau has attempted to estimate the regional distributionof sales in 1972 on the basis of urban population in the regions. Another indicator for regional commercial demand is requirementsas estimated by regional cooperativeunions. The two independentestimates for 1972 are shown in Table 3.

10. Average monthly commercial requirementsof maize have ranged from 10,000 to 15,000 tons for the country as a whole until the effects of the drought become apparent early in 1974. Commercial demand then began to rise and reached about 30,000 tons per month for the period March to July 1974. It then declined to about 17,000 tons by September but increased again to 25,000 tons per month by October 1974. Since then it has declined to more normal levels. Significantly,as commercial demand eased in 1974, famine relief requirementsincreased and reached 10,000 tons for the month of October 1974. Requests for famine relief received by NMC for the period July 1973, to October 1974, summarized in Table 4, totaled 139,386 tons. ANNEX 10 Page 4

External Trade in Maize

11. As a result of local shortfalls in production, import requirements rose to unprecedented levels in 1974 (Table 5) and continued at high levels into 1975. Data on imports and exports for the years 1969 - 1974 are given below:

Imports Exports Net Trade /1 ------(tons)…------Year (tons) (TShs. Million)

1969 23,135 28,252 5,117 (1.8) 1970 23,329 23,339 10 1.3 1971 21,231 27,149 5,918 6.6 1972 134,019 - (134,019) (64.5) 1973 18,427 - ( 18,427) ( 9.9) 1974/2 291,141 - (291,141) (359.9) 1975/2 247,264 - (247,264) (301.5)

/1 Figures in parenthesis indLcate net imports or trade deficits.

/2 Provisional NMC figures.

12. In late 1974, NMC's maize import program for 1975 was pegged around 300,000 tons, but has since been reduced and shipments are now expected to total 247,000 tons of maize.

D. Maize Prices and Marketing Margins

Prices

13. Until the 1973/74 buying season, Government policy was to announce the buying price for maize in the regional buying centres. The regional cooperative unions then deducted their marketing costs to arrive at the price payable to producers. Since marketing costs varied among unions, prices received by farmers also varied from region to region. In 1972/73, for example, producer prices ranged from TShs. 0.20 per kg in Tanga, Mtwara and Lindi regions to TShs. 0.31 per kg in Mara region.

14. A system of fixed uniform producer prices was adopted for the 1973/74 season which has been maintained since then. Prices are announced far enough in advance for farmers to adjust their planting decisions. For the 1973/74 season, producer prices were set at TShs. 0.35 and 0.30 per kg., respectively, for "priority" and "other" maize growing areas. For the ANNEX 10 Page 5 followingyear, the announced price was a uniform TShs. 0.50 per kg. When it became apparent early on the 1974/75 buying season that insufficient supplies were forthcoming (6,500 tons during first three months), producer prices were increased to TShs. 0.75 per kg in November 1974. The Government is considering a further increase for the 1975/76 season. Average producer prices or announced prices for maize for the period 1968/69 - 1974/75 are presented in Table 6.

15. Consumer prices of maize meal likewise were increased from TShs. 1.40 per kg to TShs. 2.00 per kg in November 1974. Retail prices are uniform throughout the country except in remote areas where Regional Commissioners may allow a transport surcharge to be added.

16. The triggering factor for these sharp increases in producer and consumer prices for maize were very high prices in the world market which affected the domestic price structure as imports began to mount in 1974. Prices paid by Tanzania for imported maize remained stable between 1969 and 1973, then more than doubled in 1974, as shown below.

Maize Import Year Prices in TShs./Ton/1

1969 562 1970 566 1971 504 1972 481 1973 537 1974 1,236 1975 1,219

/1 C.i.f. prices at port of entry.

Source: Computed from East African Customs & Excise Department, Annual Trade Reports, and NMC.

Between 1975 and 1980 world market prices of maize are expected to rise more slowly than the prices of all traded goods combined. Assuming similar sources of supply as in 1974, import prices for maize facing Tanzania are forecast around TShs. 1,760 per ton by 1980.

Margins

17. With the existence of the one-channelmarketing system, consisting of the cooperativemovement and NMC, and as a result of Government's objectives to provide incentiveprices to producers on the one hand, and to keep the cost of food to consumers low on the other, serious stresses have occurred in the pricing structure of maize. These problems have become more severe in recent months since little or no control can be exerted over some of the cost elements in the marketing system. ANNEX 10 Page 6

18. During the 1973/74marketing season the prices per ton fixed for maize were:

- Producers: TShs. 350 (priorityareas) and TShs. 300 (other areas)

- NMC - into store: TShs. 390

- NMC - out of store: T'Shs. 461

The margins which these prices allowed were clearly not adequate, as cooperativemarketing costs in the preceding 1972/73 season already ranged from TShs. 98 to 223 per ton. Margins on other crops financed some of the incurred losses.

19. The maize price structure, based on the revised 1974/75 producer prices, is shown in Table 7. Cooperativeunion marketing costs of TShs. 261 per ton are now fully covered by the price structure. The NMC marketing margin which was previously also not adequate to cover its own costs, has been increased to TShs. 165 per ton. In addition, the price structure permits NMC to make an additional surplus of TShs. 64/00 per ton of maize and pay indirect costs of TShs. 51/19 per ton. The latter include provision for an animal feed subsidy and provision for reserves. They are, therefore, in effect a further surplus in the maize price structure.

20. NMC's operating costs .nd margins in the production of maize meal are shown in Table 8. These also are based on the revised price structure introduced in November 1974 and show the position for both locally produced and imported maize. For locally grown maize the present price structure permits NMC to make an operating surplus of about TShs. 222 per ton of maize meal (the normal margin of TShs. 83/79 and the "extra margin" of TShs. 138/64). For imported maize NMC still makes a deficit based on the cost of recently imported maize. This deficit amounts to about TShs 31 per ton (the normal margin of TShs. 96/61 less the negative "extra margin" of TShs. 127/90). Thus the present price structure for maize and maize meal should permit NMC to operate without loss, unless it is very heavily dependant on imported maize or its operating costs continue to escalate at a high rate.

21. While the present price structure for maize and maize meal is considered to be satisfactory,NMC incurred very large losses before the new price structurewas introduced at the end of 1974. These losses arose primarily because of the large voLume of expensivemaize imports. Recent cash flow projectionsfor the NMC indicated that it would take at least until the middle of 1976 to recoup the earlier losses from the present price structure. ANNEX 10 Page 7

22. The National Maize Project would involve selling subsidised inputs to maize farmers and the question arises whether part of the subsidy could be recovered through the price structure. As indicated above (para 21) this would not be possible until after the middle of 1976. Even then, it is doubtful whether this should be attempted. The present price structure for maize and maize meal incorporatesa large differentialbetween the producer price of maize and the retail price of maize meal. This differ- ential would encourage illegal maize marketing and a reduction in supplies to NMC. Given the present high costs of marketing maize, measures designed to recover part of the cost of input subsidies from the price structurewould tend to maintain or even increase the margin between producer and retail prices and thereforebe self-defeating.

December 1, 1975 ANNEX 10 Table 1

TANZANIA NATIONAL MAIZE PROJECT MAIZE PRODUCTION, HARVESTED AND MARKETED

Crop Year Total Harvested Marketed Production NAPB/NMC Purchases Production As a % of As a % of Volume ilarvested Volume Marketed Production Production

('000 t) ('000 t) (M) ('000 t) (%)

1966/67 739 147 20 113 77

1967/68 551 105 19 104 99

1968/69 638 163 26 128 79

1969/70 488 76 16 54 71

1970/71 719 255 35 185 73

1971/72 622 179 29 43 24

1972/73 883 114 13 96 84

1973/74 887 176 20 68 39

Source: KILIMO/NAPB/NMC as quoted in Market Development Bureau documents.

September 3, 1975. ANNEX 10 TANZANIA Table 2 NATIONAL MAIZE PROJECT REGIONAL MAIZE PRODUCTION AND COMMERCIALPURCHASES 1970/71-1973/74 j ('000 tons)

Region 1970/71 1971/72 1972/73 1973/74 Harv- NAPB Harv- NAPB Harv- NAPB Harv- NAPB ested Pur- ested Pur- ested Pur- ested Pur- Prod. chases Prod. chases Prod. chases Prod. chases

Arusha 110 42.5 6o 7.6 6o 17.2 48 6.9 Coast 2 - 2 - 2 - 2 - Dodoma 67 56.4 65 15.6 120 52.2 90 55.9 Iringa 90 43.2 72 7.7 90 8.2 68 10.3 Kigoma 26 0.1 27 - 28 - 10 - Kilimanjaro 28 15.1 28 2.9 4o 11.8 30 5.9 Mara 25 7.6 13 1.0 23 2.5 4o 2.0 Mbeya 67 2.4 62 0.2 62 2.0 61 1.8 Morogoro 30 6.3 65 3.9 25 9.0 30 5.4 Mtwara 12 - 19 - 31 - 35 - Mwanza 74 1.1 30 - 31 0.2 15 0.3 Ruvuma 29 1.4 51 1.4 44 0.5 31 - Shinyanga 36 0.1 5 - 59 - 79 - Singida 27 5.4 19 1.0 25 0.7 30 1.6 Tabora 30 1.3 30 0.1 80 0.4 95 0.1 Tanga 65 0.7 70 o.8 16o - 170 - West Lake 3 - 4 - - 3 -

TOTAL 719 183.6 622 42.2 883 ';4.7 887 68.2 j NAPB/NMC purchases in this table are those reported by the organizations' marketing branches and are at variance with totals in the audited accounts shown in the previous table.

Source: KILIMO/NAPB/NMC/MDB

September 3, 1975. ANNEX 10 Table 3

TANZANIA NATIONALMAIZE PROJECT ESTIMATEDNATIONAL MAIZE REQUIREMENTS,1972

Region Urban Estimated Stated Population NMC Sales Cooperative Requirements

('000 Persons) ('000 tons)

Arusha 57.9 10.7 21.6 Coast 396.7 73.2 49.2 Dodoma 31.3 5.8 0.7 Iringa 33.0 6.1 4.9 Kigoma 24.5 4.5 1.0 Kilimanjaro 37.9 7.0 3.4 Mara 22.4 4.1 o.6 Mbeya 16.7 3.1 2.5 Morogoro 33.3 6.1 18.9 Mtwara 23.6 4.4 1.9 Mwanza/Shinyanga 46.2 9.6 3.0 Ruvuma 10.6 2.0 0.3 Singida 15.0 2.8 0.3 Tabora 24.6 4.5 1.3 Tanga 77.0 14.2 16.o West Lake 10.1 1.9 3.0

TOTAL 860.8 16o.o 128.6

Source: MDB

September 3, 1975. ANNEX 10 Table 4

TANZANIA NATIONAL MAIZEMPROJECT FAMINERELIEF REQUIREMENTSFOR MAIZE, JULY 1973 - OCTOBER 1974

Region Requirements

(Tons)

Coast 245

Dodoma 92,111

Iringa 472

Kilimaniaro 898

Mbeya 2,Q41

Morogoro 29,690

Mwanza 3,852

Shinyanga 3,673

Singida 2,448

Tabora 1,224

Tanga 2,732

TOTAL 139,386

Source: National Milling Corporation.

September 3, 1975. orAAIOftNA MAIZETRADING AND MILLING ACCTWI'ITIS OF IN06IOLTEN, .4969/70 - 197/714

Unit 1969/70 1970/71 1971/72 1972/73 1i73/74

Purchases &/ Local Tons 54,000 185,000 42,312 1o6,39D 73,468 Abroad Tons 47.000 -2000 7Q. _____2 Total Purchases Tons 101 000 185 °°°i,12 Raw Material Used Tons 57,o59 58, 333 70,718 69,114 ) l06;0, to produce Sembe Tons 51,568 50,890 6o,037 59,918 914,559 to produce Maize Bran g/ Tons 6,307 7,513 10,681 9,222 9,586 Averege Extraftion Rate Sembe ' 89 87 85 87 89 Maize Bran 9 11 13 15 1 11 Sales of Sembe Tons 53,687 54,152 60,259 62,8l 97,651 Sales of Maize Bran Tons 5,714 6,698 8,974 8,8w 9,880 Proceeds of Maize Produce Sales TShs. '000 44,741 40,207 48,914 50,341 na. Cost of Maize Produce Sales TShs. '000 41,956 36,981 48,115 48,51" n.a. Average Selling Price of Sembe / TShs./kg 0.830 0.742 0.812 0.80c n.a. Average Gross Margin on Sembe TShs./kg 0.CS2 0.080 0.013 0.02 , n. a. Margin as a %of Selling Price * 6.3 10.8 1.6 3.6 n. a. Increase of Maize Milling by NW, Tons _ 444 12,385 (1,578) 36,945 over Previous Year % Q.760 21.23 -2.23 33 43 Increase of Sembe Sales Tons_ 4.65 61.07 2.638 n.a. over Previous Year 0o.86 n.27 .4.37 n.e.

/ Before 1973/74 purchases were made by NAPB for distribution of mize to NtW for milling and to retlers for sale. Figures given here show NAPBpurchases and imports. See TansAnia ThDSS, Vol. 1U Table 2.11 1A Vol.11I Table 16. i/ Including stock adjustments. 3] Assuming no resale value for maize bran.

Source: National Milling Corporation September 3, 1975. F' ANNEX 10 Table 6

TANZANIA NATIONAL MAIZE PROJECT MAIZE PRODUCER PRICES (TSlis.per Ton)

Crop Year Producer Price

1968/69 265

1969170 275

1970/71 250

1971/72 242

1972/73 2-6b -I/ 1973/74 300/350 2/ 1974/75 500(750)

11 In non-priorityand priority areas, respectively.

2/ As first announced and later revised.

Source: Bureau of Statistics and MDB.

September 3, 1975. ANNEX "LO Table 7

TANZANIA NATION"ALMAIZE PROJECT

PRICE STRUCTUREOF LOCALLYPROCURED MAIZE, DECEMBER1974

TShslton Percent

A. PRODUCER PRICE 750.00 60

B. UNION COSTS Direct Union Costs 201.15 16 Local Transport 100.00 Bank's Interest 10.94 Cash Interest 0.62 Stored Crop Insurance 0.94 Shrinkage 30.00 Bags and Twines 58.65

Indirect Union Costs 60.00 5 Union Levy 20.00 Society Levy 40.00

Total Union Costs 261.15 21 (per bag) (22.71)

Into NMC Field Store Cost (A + B) 1,011.15 82

C. NMC COSTS Direct Costs 113.66 9 Agents 4.60 Storage 12.07 Branch Costs 17.80 Insurance 1.31 Bank Interest 15.57 Shrinkage 10.11 Fumigation 1.15 O.H. Costs 22.30 Transport to Coast 28.75

Indirect-Costs 51.19 4 Animal Feed Subsidy 20.00 Import Cess Reserves 8.90 Capital Reserves Fund 22.29

Total NMC Costs 164.85 13 (per bag) (14.33)

Total Costs at NMC Mill Gate (A B C) 1,176.00 95 (per bag) (102.26)

Additional Cess or Surplus Available to NMC 64.00 5

Accounting Cost at Mill Gate 1,240.00 100

Source: National Milling Corporation. September 3, 1975. ANNEX 10 Table 8

TANZANIA NATIONAL MAIZE PROJECT

THE COSTS OF PRODUCING MAIZE MEAL (EWBE), DECEMBER, 1974

Locally Procured Imported Maize Maize ------(TShs./ton)-----…

NMC Production Cost of Sembe in Bulk

Extraction Rate: 92%; 1,000 kg of Sembe 1/ 1/ Requires 1,087 kg of Maize 1,374.88- 1,616.37-

Less 13 Empty Bags (13.00) (13.00)

Processing Costs 100.00 100.00

Less Credit for 80 kg of Bran at TShs. 0.27/kg (21.60) (21.60)

Total Cost of 1,000 kg of Sembe 1,440.28 1,681.77

NMC Production Cost of Sembe in Bags of 80 kg

Packing Material per ton 37.50 37.50

Administrative Costs at 5% 73.88 85.20

Financial Charges at 0.4% 5.91 6.82

NMC Margin at 5.67% 83.79 96.61

1,000 kg of Sembe 1,440.28 1,681.77

Ex-NMC Cost of Bagged Sembe 1,641.36 1.907.90 3./ Extra Margini- 138.64 (127.90)

Cost to Wholesalers 1,780.00 1,780.00

Wholesale Margin at 4% 71.85 71.85

Cost to Retailers 1,851.85 1,851.85

Retailer Margin at 8% 148.15 148.15

Retail Price per ton 2,000.00 2,000.00

1/ 1.087 x TShs. 1,240/ton of locally produced maize (Annex 10, Table 7). 2/ 1.087 x TShs. 1,487/ton of imported Maize (Annex 5, Table 3). 31 Balance between NMC cost and retailing cost at the government fixed retailing price.

Source: National Milling Corporation.

September 3, 1975. ANNEX I1 Page 1

TANZANIA

NATIONAL MAIZE PROJECT

FARMERAND GOVERNMENTBUDGETS AND BENEFITS

A. Maize Budgets

1. Three improved maize production packages would be introduced under the Project as described in Annex 3. Inputs required would be sold at subsidized prices; 1975 prices and subsidy rates are shown in Table 1. Fertilizer would be by far the most expensive input, mainly because of the very large price increases of the last two years. The subsidized fertilizer prices shown in Table 1 are similar to the full market prices of two or three years ago. World Bank projections show declining international fertilizer prices over the next few years, but since Tanzania has its own fertilizer factory about 50% of fertilizercosts are local costs which would probably continue to rise.

2. Per hectare maize budgets for each of the three improved packages are shown in Table 2. These are based on the 1975 producer price for maize and the subsidizedinput prices shown in Table 1. For Package 1 (P-1) the maize yield is expected to be 400 kg/ha higher than the traditionallevel and this incrementwould be worth TShs. 300 at the 1975 producer price. The incrementalcost of inputs in P-1 is only TShs. 11/ha, since the inputs in this package are limited to improved seed and insecticide. P-1 therefore produces a TShs. 289/ha higher margin than traditionalmethods, an increase of 36%. This should be financiallyattractive to farmers, since it enables them to obtain a significantlyincreased return with a very small cash outlay.

3. Maize production package 2 (P-2) is the same as P-1, except for the use of fertilizer,at the relativelylow level of one 50 kg bag/ha of TSP, and two 50 kg bags/ha of SA. These inputs would produce a yield of 2,200 kg/ha of maize, an increase of 700 kg over P-1, and of 1,100 kg over yield levels obtainablewith traditionaLmethods.

4. Incrementalproduction per ha with P-2 above that of P-1 would be worth TShs. 525, while incrementalinputs would cost TShs. 112. Thus, the ratio of incrementaloutput value to incremental costs would be 4.7, which would still be financiallyattractive to farmers. However, the financial risk of P-2 is higher than of P-1 because of the magnitude of unsubsidized inputs. Tnis would not create serious difficultiesif farmers progressed from P-1 to P-2 as envisagedby the Project, because the higher income earned from P-1 would help finance the input costs in P-2, while the better husbandry standards adopted in the earlier stage would lessen the risk of an inadequate ANNEX11 Page 2 response being obtained to the fertilizer used in P-2. It would be necessary to guard against farmers progressing too rapidly into the Packages which involved higher levels of inlput use. This would be particularly important in view of the Government's intention that all farmers in Project villages should be treated alike and adopt the same production package.

5. Package 3 (P-3) is the same as P-2, except that it involves the use of an extra bag of SA per ha and that it would be confined to the best villages in the best maize growing areas. Farmers in this stage would also normally use hybrid rather than composite seed. The yield in this package would be 2,700 kg/ha, some 500 kg/ha higher than in P-2. The margin in P-3 would be TShs. 339 (22%) more than in P-2; and the incremental output value to cost ratio of 10.4 would be a financiallystrong incentive.

6. In Table 3 maize budgets have been calculated in exactly the same way as in Table 2, except that inputs have been valued at their full, unsubsidized prices. The figures show that P-1 would still be very attractive to farmers, whereas for P-2 and P-3 the returns to higher input costs would not be attractive, although these would still be positive. Thus, the incremental output value to cost ratio would be 4.7 for P-1, but only l.b and 1.7 for P-2 and P-3, respectively,as compared to traditionalmethods.

7. The comparison of maize budgets presented in Tables 2 and 3 shows that:

i) The packages, at present producer prices, would only be attractiveto farmers if inputs were subsidized;

ii) Package 1 would give the highest incrementalmargin; and

iii) Package 2 would give the lowest incrementalmargin.

8. The figures bear out the argument advanced in Annex 3, that improvementsin husbandry, and use of better seed would be most attractive to farmers and the nation, by making more productive the farmers' present labor and investmenits,without requiring high additional cash outlays. However, it was also pointed out in Annex 3, that a farmer, no matter how well he applied P-1, could not expect to obtain a yield of 1,500 kg/ha on a continuous basis. Soils would become depleted, and P-2, incorporatingmodest use of fertilizers,is really aimed at maintaining soil fertility,while at the same time raising yields. The inevitable decline in yields under continued application of P-I is not reflected in the incrementalreturn calculations; for this reason P-2 shows up as a less attractive alternative to both P-1 and P-3. ANNEX 1 1 Page 3

B. The National Budget

9. Project financingwould be provided as follows:

Government 29% - TShs. 89.3 million

Farmers 11% - TShs. 32.6 million

ABEDIA 13% - TShs. 4U.3 million

IDA 47% - TShs. 144.9 mill-ion

These costs, calculatedover a 4-year period, include only incremental (year-to-year)input requirements;farmers and Governmentare also contri- buting, respectively,25% and 75% to the non-incrementalcosts of inputs which would amount to an additionalTShs. 255.9 million (US$31.8 million).

10. From year 5 onwards the cost of continuing Project operations would be borne by Government. Recurring costs of inputs, mostly fertilizers, would be financed by farmers and Government. The cash flow projection (Table 4) assumes a subsidy of 75% for years 1-4, 60% for years 5-8, and 40% for years 9-10, but these arrangementswould be reviewed annually. At the same time, Treasury would receive repayment of TRDB loans and only modest amounts of additionaltax revenue, mainly income tax on local staff salaries and fuel taxes.

11. Government'snet cumulativecash outflow during the first 4 years of the Project would amount to TShs. 281.6 million (US$35.0million), whereas the 10-yearnet outflow has been calculatedat TShs. 915 million, equivalent to US$113.7 million. The reason for this unfavorabledevelopment is Govern- ment's decision to subsidize farm inputs, of which the subsidy on fertilizer is the most important. (para. 15). Without the subsidy payments on maize inputs, the net cash outflow would be quite modest: some TShs. 118 million (US$14.7million) for the 10-year period.

C. Foreign Exchange Budget

12. The Project would enable Tanzania to reach maize self-sufficiency by 1980. The benefits of the Project have therefore been valued at import parity prices until 1980, and at a average of import and export parity prices thereafter (Annex 13). Consequently,and in spite of large and continuing imports of fertilizer,the Project would have a significantpositive impact on the country's foreign exchange position (Table 5). ANNEX 11 Page 4

13. The foreign exchange component of all Project costs is calculated at TShs. 196.4 million (US$24.4million), 94% of which would be covered by the proposed lending from ABEDIA and IDA, totalling TShs. 185.2 million or US$23.0 million. Foreign exchange saved through incrementalmaize production of the Project (TShs. 222.0 million or US$27.6 million) would, over the same period, more than offset foreign exchange outflows resulting from purchase of recurring inputs (TShs. 186.8 million or US$23.2 million). Consequently, already after 4 years the foreign exchange impact would be positive, an estimated TShs. 21.8 million (US$2.7million). Thereafter the net annual foreign exchange savingswould increase from TShs. 59 million in Year 5 of the Project to TShs. 215 million in Year 10. (US$7.3million and 26.7 million, respectively). The Project would reach full production in Year 8, and this explains part of the increase in foreign exchange savings.

D. Maize Production Inputs Account (MPIA)

14. The MPIA would be establishedby Government to facilitate the purchasing and selling of maize production inputs under the National Maize Project (Annex 7). During the first Project Year the initial, and thereafter the year-to-year incrementaluse of inputs would be regarded as Project costs, and financed by Government/farmers(year 1) and IDA (years 2-4). The total amount for inputs so provided is TShs. 130.4 million (US$16.2million). The recurring inputs for the 4-year Project period -- TShs. 255.9 million or US$31.F million -- would be financed by farmers (25%) and Government (75%).

15. Table 6 shows that during the first 4 years Government'sgross contributionto the MPIA would amount to TShs. 289.7 million (US$36.0million). Due to financialsupport from IDA, and because farmers pay 25% for inputs used, the net contributionby Government would be only TShs. 228.3 million (US$28.4million). Thereafter,Government subventionsto the MPIA would be TShs. 81 million in year 5, and TShs. 76 million in year 10 of the Project (US$10.1million and 9.4 million, respectively),assuming a reduction in the subsidy rate to 60X in years 5-8 and to 40Z thereafter. Over 10 years the net total amount of payments due from Government would come to TShs. 735 million (US$91.3million). 1/ Farmer contributionswould amount to TShs. 557 million (US$69.2million) over the same 10-year period.

E. Farmer Benefits

16. The gross value to farmers of annual incrementalproduction at full Project development,expressed in 1975 prices, is estimated at TShs. 146 million

1/ In July, 1975 Tanzania received an AgriculturalSector Loan from USAID from which up to US>6.4 million can be drawn to help financeGovernment's share in the cost of inputs in the first Project year. The projections in para. 15 do not reflect the USAID contribution. ANNEX 11 Page 5

(US$18.1 million). The total cost of incremental inputs at full development would be TShs. 19.6 million. Assuming a value of replaced traditionalmaize seeds of TShs. 3.7 million, net incrementalinput costs would be TShs. 15.8 million (US$2.0million). The annual aggregate net farm value of incremental maize productionwould thus be TShs. 130.1 million (US$16.1million). With a total of 380,000 beneficiaryfamilies, the incrementalvalue of productionper family would be TShs. 342 (US$42) and the incrementalcash income TShs. 228 (US$28) in 1975 prices. On a per capita basis, these increaseswould be TShs. 68 (US$8) and TShs. 46 (US$6), respectively. By comparison, the average 1975 rural per capita GNP in Tanzania is estimated at TShs. 350 (US$43).

December 1, 1975 ANNEX 11 Table 1

TANZANIA NATIONAL MAIZE PROJECT

INPUT PRICES AND SUBSIDIESAT FARM GATE, 1975 PRICES

Subsidized Percent Input Unit Full Cost Price Subsidy

Traditional Maize Seed TShs./kg -/75 -/75 -

Composite Seed TShs./kg 2/86 1/05 63.

Hybrid Seed TShs./kg 4/62 1/15 75

5% DDT TShs./kg 2/74 -/55 80

25% DDT TShs./liter 12/00 3/00 75

Herbicide TShs./kg. 33/00 33/00

Triple Superphosphate TShs./ 185/50 46/00 50 kg bag 75

Sulphate of Ammonia TShs./ 50 kg bag 132/50 33/00 75

November 12, 1975. ANNEX11 Table 2

TANZANIA NATIONAL MAIZE PROJECT MATZE BUDGETS WITH SUBSIDIZFD INPUTS AT 1975 FARI GATE PRICES (T--,-.pt-r Ha)

Traditional Package Package Package Methods - II III

Yield: kg/ha 1,100 1,500 2,200 2,700 Gross Return at TShs.750 per Ton 825 1,125 1,650 2,025

Input Costs: - Seed at 25 kg/ha 21 26 26 29 - 5* DDT at 10 kg/ha 6h 6 - One bag of TSP - 46 46 - Two bags of S/A in Package II - 66 - - Three bags of S/A in Package III - - 99

Total Input Costs 21 32 144 180 Gross Margin 804 1,093 1,506 J,845

Increment in Margin Above Traditional 289 702 1,041 (36*) (87g) (l2pg) Increment in Margin Above Previous Package 289 413 359 (36%) (38*) (22*) Incremental Value : Cost Ratio Above Traditional 27.3 6.7 7.5

Incremental Value : Cost Ratio Above Previous Package 27.3 4.7 o10.4

Note: Some farmers in Package II may use hybrid seed rather than composite while some in Package III may use composite rather than hybrid. Some farmers may also use 25% DDT to control army worm or herbicides on a pilot scale. A few farmers may also use an NPK compound fertilizer instead of TSP and S/A. These items have not been taken account of in the buidgets shown here.

ilovember 12, 1975. AtNEX 11 Table 3

TANZANIA NATIONALMAIZE PROJECT MAIZE BUDGETSWITH UNSUBSIDIZEDINPUTS AT 1975 FARMGATE PRICES (TShs.per Ha)

Traditional Package Package Package Methods I II III

Yields : kg/ha 1,100 1,500 2,200 2,700

Gross Return at Tshs.750 per ton 825 1,125 1,650 2,025

Input Costs: - Seed at 25 kg/ha 35 72 72 115 27 - 5% DDT at 10 kg/ha - 27 27

- TSP at one bag/ha - - 186 186

- Two bags/ha of S/A - - 265 -

- 398 - Three bags/ha of S/A - -

Total Input Costs 35 99 550 726

Gross Margin 790 1,026 1,100 1,299

Increment in Margin - 236 310 509 Above Traditional - (30%) (39%) (64%)

Increment in Margin - 236 74 199 Above Previous Package (30%) (7%) (18%)

Incremental Value : Cost Ratio - 4.7 1.6 1.7 Above Traditional -

Incremental Value : Cost Ratio - 4.7 1.2 2.1 Above Previous Package

November 12, 1975. TANZAPiIA NATIOUIAL KMITZEP'8OJICI'

JOOFE r T CASTI I'LOW (TShs. '030)

Total Total Years 1 2 3 4 Project 5 6 7 8 9 10 10-Year (4 Years) Period

OUTFLOW

Input (Incremental to Preceding Year) 68,930 15,661 21,349 24,461 130,401 ------130,401

Project Costs (Exel. Inputs) 38,614 45,091 53,568 39,328 176,601 27,900 19,100 20,100 21,000 38,200 24,900 327,801

Total Project Costs 107,544 60,752 74,917 63,789 307,002 27,900 19,100 20,100 21,000 38,200 24,900 458,202

Recurring Inputs - 65,498 83,866 106,536 255,900 135,744 144,439 154,624 165,734 176,845 189,807 1,223,093

Total Costs, inel. Recurring Items 107,544 126,250 158,783 170, 325 562,902 163,644 163,539 174,724 186,734 215,045 214,707 1,681,295 (incl. Price Contingencies) i/

Servicing ABEDIA Credit / - - 1,289 1,976 2,67? 3,458 3,458 12,853

S3-1cilng IDA Credit l1o 411 799 1,087 2,397 1,087 1,087 1,087 1,087 1,087 1,087 8,919

TOTAL OUTFLOWS 107,644 126,661 159,582 171,412 565,299 164,731 165,915 177,787 190,493 219,590 219,252 1,703,067

INFLOW

ABEOIA 15,000 8,000 8,100 9,150 40,250 ------40,250

IDA 13,300 41,500 51,700 38,400 144,900 ------144,900

Farmers - Inputs (Incremental) 17,232 3,915 5,337 6,115 32,599 ------32,599

- Recurring Inputs - 16,375 20,967 26,634 63,976 54,298 57,776 61,850 66,294 106,107 113,884 524,185

Taxes - 420 730 840 1,990 940 1,050 1,160 1,260 1,370 1,470 9,240

Repayment of Transport & Storage Loarns 3j ------1,949 4,825 8,581 10,785 10,785 36,925

Subtotal 45,532 70,210 86,834 81,139 283,715 55,239 60,775 67,835 76,135 118,262 126,139 788,099

Government (Treasury Obligation) 62,112 56,451 72,748 90,273 281,584 109,493 105,140 109,952 114,358 101,328 93,113 914,968

TOTAL INFLOWS 107,644 126,661 159,582 171,41S 565,299 164,731 165,915 177,787 190,493 219,590 219,252 1,703,067

Price Contingencies are based on assumed annual rates of inflation of ll' in Year 1, 9- in Year 2, 8p1 in Years 3 - 4, and 7% in Years 5 - 10. Terms of the ABEDIA credit: repayment over 20 years, 5 years grace, 2% annual interest. 3/ Funds onlent to TRDB: repayment over 20 years, 5 years grace, 4% (From Annex 8, Table 6).

December 1, 1975 TANZANIA NATIONAL MAIZE PROJECT FOREIGN EXCHANGE OUTFLOWSAND INFLOWS 2 (TShs. '000)

Total Total 9 10 10-Year Project Years Project 1 2 3 4 Project 5 6 7 8 (4 Years) Period

OUTFLOW

A - Foreign Exchange Component of: - - - 95,578 Incremental Inputs 2/ 50,319 11,433 15,585 18,241 95,578 - - - 11,550 21,010 13,695 183,823 Other Project Costs 2/ 22;010 25,702 30,534 22,417 100,663 15,345 10,505 11,055

Costs Total Project 11,550 21,010 13,695 279,401 (incl. contingencies) 72,329 37,135 46,119 40,658 196,241 15,345 10,505 11,055

120,986 129,097 138,559 892,862 Recurring Inputs i/ - 47,814 61,222 77,771 186,807 99,093 105,444 112,876

B - Debt Service 3,458 3,458 12,853 ABEDIA ------1,289 1,976 2,672 1,087 1,087 1,087 8,919 IDA 100 411 799 1,087 2,397 1,087 1,087 1,087

1,194,035 Subtotal 72,429 85,360 108,140 119,516 385,445 115,525 118,325 126,994 136,295 154,652 156,799

192,498 214,731 921.865 C - Net Foreign Exchange Savings & Earnings (44,129) (8,530) 23,380 51,034 21,755 59,145 114,975 130,696 188,065 371,530 2,115,900 TOTAL OUTFLOWS 28,300 76,830 131,520 170,550 407,200 174,670 233,300 257,690 324,360 347,150

INFLOW - - - 40,250 D - ABEDIA 15,000 8,000 8,100 9,150 40,250 _ - -

- - 144,900 E - IDA 13,300 41,500 51,700 38,400 144,900 - - - -

Subtotal 28,300 49,500 59,800 47,550 185,150 - - - 185,150 233,300 257,690 324,360 347,150 371,530 1,930,750 F - Foreign Exchange Value Maize Production 5/ - 27,330 71,720 123,000 222,050 174,670

371,530 2,115,900 TOTAL INFLOWS 6] 28,300 76,830 131,520 170,550 407,200 174,670 233,300 257,690 324,360 347,150

All figures are expressed in current value terms (see Annex 11, Table 4, Footnote 1).

Taken from Annex 8, Table 11: at 73 % foreign exchange content.

21 Taken from Annex 8, Table 1: at 57 % foreign exchange content. From year 5 onwards taken from Annex 11, Table 4, at 55 % foreign exchange content. i/ From Annex 11, Table 4: at 73 % foreign exchange content.

|/ Valued at import parity prices for years 1 - 5; thereafter 50% of incremental production at import parity. For rationale see Annex 14. The import and export parity prices were taken from IBRD projections, and expressed in Tanzania shillings at the official exchange rate. No allowances were made in these prices for internal transport or port handling costs.

i/ Does not include any portion of USAID Agricultural Sector Loan available to Government for financing of up to 75% of production inputs in Year 1.

December 1, 1975 TANZANIA NATIONAL MAIZE PROJECT MAIZE PRODUCTION INPUTS ACCOUNT (TShs . '0007)

Total Total Years 1 2 3 4 Project 5 6 7 8 9 10 lO Year (4 Years) Period

Input Requirements (Sales) j

Recurring 65,498 83,866 106,536 255,900 135,744 144,439 154,624 165,734 176,845 189,807 1,223,093 Incremental 68,930 15,661 21,349 24,461 130,401 - - - - 130,401

Total 68,930 81,159 105,215 130,997 386,301 135,744 144,439 154,624 165,734 176,845 189,807 1,353,494

Recovery of Funds i) Farmers i/ 17,232 20,290 26,304 32,749 96,575 54,298 57,776 61,850 66,294 106,107 113,884 556,784

of which: Recurring () (16.375) (20967) (76,634) (63,976) (5'4,212) (57,776) (61,850) (bb,294) (106,107) (113,884) (524,185) inremental (17,232) (3,915) (5,337) (6,115) (32,599) (-) () () () (') () (32,599)

ii) Government 3/ 51,698 60,869 78,911 98,248 289,726 81,446 86,663 92,774 99,440 70,738 75,923 796,710

of which: Recurring () (49,123) (62,899) (79,902) (191,924) (81,446) (86,663) (92,774) (99,440) (70,738) (75,923) (698,908) Incremental (51,698) (11,746) (16,012) (18,346) (97,802) (-) (-) (-) (.) () (.) (97,802)

Total 68,930 81,159 105,215 130,997 386,301 135,744 144,439 154,624 165,734 176,845 189,807 1,353,494

From Annex 11, Table 4. Of the cost of inputs used farmers have been assumed to pay during Years 1 - 4, 25%; Years 5 - 8, 40%; Years 9 - 10, 60%. Of the cost of inputs used Government has been assumed to pay during Years 1 - 4, 75%, Years 5 - 8, 60%; Years 9 - 10, 40%.

Note: IDA would provide financing as follows: - 15,661 21,349 24,461 61,471 - - - - - 61,471

Government's contribution to MPIA: 51,698 60,869 78,911 98,248 289,726 81,446 86,663 92,774 99,490 70,738 75,923 796,710

Ret Government Outflow (Input Subsidy): 51,698 45,208 57,562 73,787 228,255 81,446 86,663 92,774 99,440 70,738 75,923 735,239

Nowember 12, 1975. ANNEX 12

TANZANIA

NATIONAL MAIZE PROJECT

SCHEDULE OF ESTIMATED DISBURSEMENT OF IDA FUNDS (US $'000)

IDA Fiscal Year Disbursement Cumulative Disbursement and Quarter End in Quarter at End of Quarter

1976

September December March 1/ June 2/ 600 600

1977

September 800 1,400 December 900 2,300 March 900 3,200 June 1,000. 4,200

1978

September 1,000 5,200 December 1,100 6,300 March 1,200. 7,500 June 1,200 8,700

1979

September 1,300 10,000 December 1,300 11,300 March 1,300 12,600 June 1,200 13,800

1980

September 1,100 14,900 December 3/ 1,100 16,000 March 1,000 17,000 June 1,000 18,000

1/ Estimated quarter of signing of credit agreement. _I Estimated quarter of credit effectiveness. 3/ Estimated quarter of project completion.

_Mbcr 3, 1975 ANNEX 13 Page 1

TANZANIA

NATIONAL MAIZE PROJECT

ECONOMIC ANALYSIS

1. Project incremental costs and benefits are summarized in Table 1. These are expressed in constant value terms (base = 1975 prices) and are based on the maize production and input use data described in Annex 6 and the Project cost data in Annex B.

2. In the calculation of economic Project costs and benefits foreign exchange has been shadow-pricedat a rate of US$1 = TShs. 10 to reflect the economic cost of foreign exchange to Tanzania. Project costs include the full cost of farm inputs and have been adjusted to eliminate taxes.

3. The Project would increase maize yields per hectare, but not the area under cultivation. The improved production techniques to be introduced under the Project would require some additional labour input, but it has been assumed that this would be provided by the previouslyunder-employed farmers and their families and no cost has been attributed to it.

4. Project incrementalproduction estimates are based on realistic assumptionsabout yields and rates of input use (Annex 3). Prices used for fertilizersand maize have been based on the World Bank commodity price forecast, with appropriate adjustments for transport and handling charges. Yearly price forecasts have been taken into account until 1980; thereafter, prices have been assumed to remain at 1980 levels. The calculationsare shown in Tables 2 to 5.

5. It also has been assumed that Tanzania would not achieve self- sufficiency in maize productionuntil 1980. Incrementalmaize production from the Project, therefore,has been valued on the basis of import parity (i.e. priced highly) up to 1980. From 1981 onwards it has been assumed that Tanzania would be self-sufficientin maize, with an adequate margin for safety, but would not attempt to produce significantexport surpluses of maize. Export surpluses would be produced from time to time, however, when harvests were good. To account for such an alternating surplus/deficitsituation, incrementalmaize productionhas been valued midway between the export and import parity prices from 1981 ornwards. As the prices calculatedon the basis of import parity (Table 2) are roughly twice those based on export parity (Table 3), mainly due to Tanzania's inability to import large quantities from neighbouringcountries, this assutmptionhas a significanteffect on the internal economic rate of return of the Project. ANNEX 13 Page 2

6. Maize and farm inputs have been valued at the farm or village level. IncrementalProject costs for N4MCstorage and for transport have not been included in the economic analysis, therefore. The assumption is that the economic costs of transport and storage are reflected in the price structure beyond the farm level. However, the costs of village and cooperative storage have been included. The following assumptionshave been made about the costs for Project preparation and consultancy services (Annex 8, Table 10). The full costs for Project preparation and the consultant agronomist have been included. The costs associated with preparationof a national agriculturaldevelopment program have been excluded,while only one-half of the costs for the consultancyservices for maize milling and storage have been included. Apart from these exceptions, all of the Project cost items shown in the cost tables (Annex 8) have been included in the economic analysis.

7. The data in Table 1 indicate that the Project would produce an internal economic rate of return of 37 percent. At the official exchange rate, the rate of return would be 30 percent. This high rate of return is largely attributableto two factors:

a) The Project would produce maize as a substitute for imported maize, which would be expensive, especially during the early Project years when world food prices are expected to remain high; and

b) The Project would produce significantlyincreased amounts of maize with the investment of relatively small amounts of additional resources, as it would aim at increasing production from existing areas of maize through teaching farmers how to adopt better productionmethods, and utilizing the resources presently devoted to maize production more efficiently.

8. Sensitivityanalysis was undertaken to examine the effect of changes in the output and cost assumptions. This indicated that if output were reduced by 10 percent and costs increased by 10 percent the rate of return would be 25 percent. If costs remained unchanged but output were reduced by 20 percent the rate of return would fall to 24 percent. Even with the very adverse assumption of a 30 percent reduction in output, the rate of return would still be 16 percent. While the Project could be considered technicallysound, there would be uncertaintyabout whether farmers would purchase inputs in the quantities expected and adopt the improved production packages successfully. Nevertheless,despite these uncertainities,the sensitivity analysis indicates that the Project would still show an adequate rate of return even if incrementalproduction were much lower than expected.

9. The Project would produce some benefits which have not been included in the economic analysis. The training programs for extension staff, the mobile film units, and the improvementsin efficiency of the extension services would be beneficial for agriculturegenerally throughout the Project ANNEX 13 Page 3 regions. Likewise, the improved storage facilitiesand better transport would have more widespread benefits;village stores, for example, would be useful for all village farm inputs and produce, not just for maize. The regional crop trials and the work of the Regional Farm Management Officers in studying farming systems would help to lay the foundations for agricultural development generally, while the Project Servicing Unit might at a later date have more widespread functions than dealing with maize alone. Another importantbenefit is increased food security, especially since world market supplies are no longer reliable and terms of trade have been particularlyunfavorable when Tanzania had to face an emergency.

December 1, 1975 TANZANIA NATIONAL MAIZE PROJECT

ECONOMIC ANALYSIS

SUMMARYOF PROJECT COSTS AND BENEFITS (TShs. '000) J

Incremental Costs3 Regional Project Net Incrementa1 Farm Staff, Vehicles Servicing , Total Incremental Year Benefits / Inputst & Equipment Unit2/ Training StorageQ' Costs Benefits

1 - 13,456 16,893 6,133 1,637 10,691 48,810 (48,810) 2 25,194 26,542 10,019 4,619 2,648 11,942 55,770 (30,576) 3 60,847 43,418 10,440 3,547 2,606 11,942 71,953 (11,106) 4 97,155 59,944 10,289 3,547 2,197 5,240 81,217 15,938 5 130,754 57,780 18,143 2,923 1,003 2,002 81,851 48,903 6 118,085 57,518 10,208 1,976 1,003 2,002 72,707 45,378 7 143,402 57,518 10,081 1,976 1,003 2,002 72,580 70,822 8 168,718 57,518 9,647 1,976 1,003 2,002 72,146 96,572 9 168,718 57,518 18,143 4,073 1,003 2,002 82,739 85,979 10 168,718 57,518 10,208 1,976 1,003 2,002 72,707 96,011 11 168,718 57,518 10,081 1,976 1,003 2,002 72,580 96,138 12 168,718 57,518 9,647 1,976 1,003 2,002 72,146 96,572 13 168,718 57,518 18,143 2,923 1,003 2,002 81,589 87,129 14 168,718 57,518 10,208 1,976 1,003 2,002 72,707 96,011 15 168,718 57,518 10,081 1,976 1,003 2,002 72,580 96,138 16 168,718 57,518 9,647 1,976 1,003 2,002 72,146 96,572 17 168,718 57,518 18,143 4,073 1,003 2,002 82,739 85,979 18 168,718 57,518 18,208 1,976 1,003 2,002 72,707 96,011 19 168,718 57,518 10,081 1,976 1,003 2,002 72,580 96,138 20 168,718 57,518 6,736 1,021 1,003 2,002 68,280 100,438

% Using a shadow foreign exchange rate of TShs. 10 = US$ 1. g Incremental benefits consist solely of maize. The volume of incremental maize production is shown in Annex 6, para. 12. This has been valued at import parity up to 1979 and midway between import and export parity from 1980 onwards. Forecast import and export parity prices are shown in Tables 2 and 3 of this Annex. It has been assumed that maize from the 1975/76 crop would be harvested in 1976 and sold at 1976 prices, etc. 3/ Incremental costs are based on the cost data in Annex 8. They include both recurrent and capital costs, including capital replacement costs. Adjust- ments have been made where appropriate to remove the effects of taxes and subsidies. All figures are in 1975 prices and include no allowance for price contingencies. For the purposes of estimating incremental costs and benefits estimated production and input use levels in the 1974/75 season have been taken as the base period. Thus, while the project cost tables include the full cost of maize inputs used in 197)/75, the economic analysis includes only the amount of inputs which were incremental to those used in the 1974/75 season. j Fertilizers have been valued at the prices shown in Table 5 of this Annex. / Costs for the project servicing unit include the capital and operating costs for the project aircraft and the costs for project preparation and consultancy services. The costs for the latter item do not include costs associated with preparation of the National Agricultural Development Project or 50% of the costs required for consultancy on maize storage and milling. The cost of materials used in construction of village stores has been included but no cost has been attributed to the labour supplied by farmers for construction. Likewise, no cost has been included for any increased labour input made by farmers for increasing maize production. As incremental output and inputs have been valued at the village level, no costs have been included in the economic analysis for increased NRIO storage or maize transport charges. These are automatically taken into account through the price structure. November 12, 1975. TANZANIA NATIONAL MAIZE PROJECT

ECONOMIC ANALYSIS

ECONOMIC PRICES FOR MAIZE BASED ON IMPORT PARITY IN 1975 PRICES

IBRD Maize Price Less Import Forecast Sea Total Total Port Value in Internal Parity in In 1975 / Freight Value Value Handling Store at Handling & Producing Year Prices- Charges cif cif Charges Port_/ Transport / Area

(US$ per Ton)------(TShs. per Ton)------a) With a Shadow Exchange Rate of US$ 1 = TShs. 10

1975 128 45 173 1,730 100 1,830 408 1,422 1976 115 45 160 1,600 100 1,700 408 1;292 1977 ill 45 156 1,'c^ iG0 1,660 408 1,252 1978 111 45 156 1,560 100 1,660 408 1,252 1979 108 45 153 1,530 100 1,630 408 1,222 1980 105 45 150 1,500 100 1,600 408 1,192 b) At the Official Exchange Rate

1975 - - 173 1,393 100 1,493 380 1,113 1976 - - 160 1,288 100- 1,388 380 1,008 1977 - - 156 1,256 100 1,356 380 976 1978 - - 156 1,256 100 1,356 380 976 1979 - - 153 1,232 100 1,332 380 952 1980 - - 150 1,208 100 1,308 380 928

1/ IBRD May 1975 Commodity Price Forecast. 2/ It has been assumed that this represents the value of maize in the consuming areas. 3/ Import parity in the producing areas has been assumed to be equal to the value of imported maize in consuming areas less the costs of internal handling and transport to get locally produced maize from producing to consuming areas. In 1974 local costs for handling and transport of maize amounted to TShs. 375/(t otal union costs and direct NMC costs from Annex 10, Table 7). This has been increased by 5% to bring it up to TShs. 394/ton in 1975 prices. It has been estimated that 20% of this represents foreign exchange and 7% taxes. Adjustment for these items and the October, 1975 devaluation of the Tanzanian Shilling increases the charges to TShs. 408/ton for the calculation based on a shadow exchange rate and reduces it to TShs. 380/ton for the current official exchange rate estimate.

Nove.mber12, 1975. ANNEX 13 Table 3

TANZANIA NATIONAL MAIZE PROJECT

ECONOMIC ANALYSIS

ECONOMIC PRICES FOR MAIZE BASED ON EXPORT PARITY IN 1975 PRICES

IBRD Maize IBRD Maize Less Internal Price Price Transport. Forecast Forecast and Port Value in in 1975 in 1975 Handling Producig Year Prices Prices Charges-l/ Areal

(US$ per Ton) --- (TShs. per Ton)------… a) With Shadow Exchange Rate US$ 1 . TShs. 10 -

1975 128 1,280 508 772 1976 115 1,150 508 642 1977 111 1,110 508 602 1978 111 1,110 508 602 1979 108 1,080 508 572 1980 105 1,050 508 542 b) At the Official Exchange Rate

1975 128 1,030 480 550 1976 115 926 480 446 1977 111 894 480 414 1978 111 894 480 414 1979 108 869 480 389 1980 105 845 480 365

1/ The total of port handling and internal transportcharges from Table 2. 2/ This calculationis based on the assumptionthat the IBRD price forecastcould be obtained at the Tanzanianborder. If sea freightcharges had to be paid before the forecast price were received the net value per ton would be about US$ 45 per ton less than the figures shown.

November 12, 1975. TANZANIA NATIONAL MAIZE PROJECT

ECONOMIC ANALYSIS

FORECAST FINANCIAL PRICES FOR IMPORTED FERTILIZER BASED ON IBRD CONSTANT DOLLAR FORECASTS

IBRD 1975 Local 15% of Total Total Constant Costs for cif Price Cost Cost Dollar Price Sea Total Total Transport for Local in 1975 In Current 2 Year Forecasti' Freight cif Cost cif Cost etc.!/ Preference Prices2' Prices. A -(US$ per Ton)------(TShs. per Ton)------

Triple Superphosphate 1975 250 45 295 2,375 650 356 3,381 3,381 1976 171 45 216 1.739 650 261 2,650 2,886 1977 15u 45 201 1,618 650 243 2,511 2,954 1978 143 45 188 1,513 650 227 2,390 3,022 1979 134 45 179 1,441 650 216 2,307 3,136 1980 130 45 175 1,409 650 211 2,270 3,303

Sulphate of Ammonia 1975 139 45 184 1,481 600 222 2,303 2,303 1976 119 45 164 1,320 600 198 2,118 2,306 1977 100 45 145 1,167 600 175 1,942 2,285 1978 75 45 120 966 600 145 1,711 2,164 1979 63 45 108 869 600 130 1,603 2,175 1980 63 45 108 869 600 130 1,603 2,328

1/ Based on May 1975 Commodity Forecast. Sulphate of Ammonia prices have been taken at the midpoint of a range forecast. 2/ Including Port handling, TShs. 100; internal transport,TShs. 400 and 5% markup. 3/ Based on the fixed ex-factory prices and the assumption about transport costs included in the table, fertilizerproduced at Tanga in 1975 sold for the following prices: Ex-Factory Local Transport Total TSP: TShs./ton 3,160 550 3,710 z S/A: TShs./ton 2,151 500 2,651 X x

4/ The previous column increased by the relevant IBRD Index of InternationalPrices. November 12, 1975. TANZANIA NATIONAL MAIZE PROJECT

ECONOMIC ANALYSIS

FORECAST ECONOMIC PRICES FOR IMPORTED FERTILIZER

2/- Prices Based on Shadow Exchange Rate- Prices Based on Official Exchange Rate Total Cost Local Farm Local Farm Year cifl'/ cif Cost Transportl' Price cif Cost TransportA/ Price (US$ per Ton) …(TShs. per Ton) ------(TShs. per Ton)------

Triple Superphosphate 1975 295 2,950 650 3,600 2,375 570 2,945 1976 216 2,160 650 2,810 1,739 570 2,309 1977 201 2,010 650 2,660 1,618 570 2,188 1978 188 1,880 650 2,530 1,513 570 2,083 1979 179 1,790 650 2,440 1,441 570 2,011 1980 175 1,750 650 2,400 1,409 570 1,979

Sulphate of Ammonia 1975 184 1,840 600 2,440 1,481 520 2,001 1976 164 1,640 600 2,240 1,320 520 1,840 1977 145 1,450 600 2,050 1,167 520 1,687 1978 120 1,200 600 1,800 966 520 1,486 1979 108 1,080 600 1,680 869 520 1,389 1980 108 1,080 600 1,680 869 520 1,389

1/ IBRD May 1975 Forecast plus sea freight of US$ 45 per ton. Sulphate of Ammonia prices have been taken as the mid point of a forecast range in prices. 2/ TShs. 10 = US$ 1. 3/ The figure for port handling and transport is the same as that used in Table 4. Available data indicate that transport operating costs have a foreign exchange content of 50% and a tax content of 20%. The Adjustment for a shadow foreign exchange rate therefore exactly offsets that for taxes. 4/ The figure for transport and handling is TShs. 80 per ton less than that used in the financial prices calculation for this is the estimated tax content of these costs.

November 12, 1975. TANZANIA NATIONAL MAIZE PROJECT GOVERNMENT ORGANIZATION

THEP3EIT

DEVELOPMENTIISR OF. TEASURY S N E PLANNING

MINISTRYOF MINISTRY OF MINISTRY OF MIITYOF PRIME MINISTERtS MINISRY OF MIITY OF MINISTRY OFSC AGRICULTURE COMMERCEAND NATIONAL HEALTH AND OFFICE MINISTRY ON LAND NATURALRESOUR INUTR EDCATION SOCIAL SECURIITY MANEF OSRCINPOWERDELOMN ESIlIl'R5

|Printcipal Snlr.t.rV |

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REGiONA| REGIONAL 0EV ELOPMENT COMMISNER DIRECTOR

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World E.I.-1146EIR TANZANIA NATIONAL MAIZE PROJECT MINISTRY OF AGRICULTURE

MINISTER FOR AGRICULTURE

PRINCIPAL SECRETARY

. INTERNAL AUDITOR]

FINANCE AND SECTORAL PLANNING | ADMINISTRATION DIVISION DIVISION l

FINANCE SECTION

l H ~~~MARKETINGDEVELOPMENTl fNTSSEACCOUNTS SECTION BUREAU

GENERAL ADMINISTRATION STATISTICS SECTION SECTION

PROJECT IMPLEMENTATION UNIT

LIVESTOCK DEVELOPMENT CROP DEVELOPMENT MANPOWER DEVELOPMENT DIVISION DIVISION DIVISION

PROGRAMME PLANNING PROGRAMME PLANNING MANPOWER PLANNING SECTION SECTION SECTION

TECHNICAL SERVICES TECHNICAL SERVICES FESSIONAL TRAINING AND SECTION I SECTION RECRUITMENT SECTION

RESEARCH AND DISEASE RESEARCH AND DISEASE l |TECHNICAL TRAINING AND CONTROL SECTION | CONTROL SECTION RECRUITMENT SECTION

|TIONSSEcTION | I E I INrFARMERS' EDUCATION lOPERATIONS SECTION l l OPERATIONS SECTION SECTION

PROJECT SERVICING UNIT 1 PERSONNEL ADMINISTRATION (MAIZE) I SECTION

Source. Kilimo World Bank--8522(R) TANZANIA NATIONAL MAIZE PROJECT IMPLEMENTATION SCHEDULE

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TANZANIA U GA NDA a>. '- 312 L AK .7 ~~~~~~~ V i C TOR IA V K E NYA POTENTIALLAND USE ukahba Massing z o 200 300 r3 W As,\ KiLOMETERS 200 7 ~ ~ ~~~50 ~~~100 ~ ~~~~~~~~0ISO 4 ~~~~~~~~~~~~~~~~~~~~~~~~~GROUPOF SOILS flSoils unsuitablefor cropping [4(Game,limited grazing for in Wanz --T~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~L..cattle, possibly forestry humid areas.) BURUNDI Soils wherehrelite httle cropp,ngropngi is~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ois game,sometimes Shinyon~ ~ ~~ ~ ~~ ~ ~ ~~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~~~~~~~~~~~L..(Ranchmig,limitedcropping with sorghum, millet,castor, groundnuts.

40 Fertile soils wherelow rain- fl ~~~~~~~2fall or shallowrooting depth ii ~~~~~~~~~iI~~~~~~~~~~~~(Sisal,I! sorghum,cagton, beans with maize, wheat, pastares -'-'N '~~3~ IA sometimes irrigalted 4 '~~~~~~~~~~~~~~~~~~~~~~~~~~~~~i~~~~~~~~~~~~~~~~~~~~~~and7 (6 at higbaltitudes.) Kigoma~ ~ ~ ~ ~~~~~~~~~~~~~~~lLSICcoffee ~ ~ Soilsof verylowtnertility wits Koliuabora PEMBA ~ ~ ~~~~~~~~~~~~~~~~ moderate potential. a.-~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~U 1 (Sorghum,cassanva, cashew, coconuts, simsim, > ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~castor, cotton, 4 5 ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~tobacco,groundnuts, II ertzas pasatures,sotftwoods.) o Soilsof low to mediumfertility R. Weam withmoderate potential groundnuts, sorghum, sQL~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~9Mpcind zibo,~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~,[]~~~~~~~~~(Sisal, soya, cashew,castor, N,,, 5 ~~~~~~~~maize, Morogo D~~~~~~ARES SALAAM cotton, cassava, beans, pas- rN\ u tures.) 8 . - uaw.o0,u Soilsof mediumto highfertilitp w'hyhigh potential. (Arabico coffee, wheat,pyre- bananas potatoes, -N ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~k~~~~~~~~~~~~~~~thrum, aegetables, itincia ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~timber,onions, REPUBLIC temperatetraits, grass,legum pastures at high altitudes, sisal, citrus, cocoa, rabusta pastures, coconnuts, 8 ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~cotfee, spices ait low altitudes.)

4 ~~~~~~~~~~~~~~~~~~~Soilsof low fertility in areas of high rainfall. (Teca,rabusta coffee, bamnans,

ZAMBIA ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~Variousalluvial or colluvial u gle ~ ~~~~~~~~~~~~~~~~~~~~~~sailsof considerablepotential, Ebut often regainingflood control, drainage or special management. % '6 ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~(Sugarcane,castor, cashew, cotton,rice, pasture,legumes, c-~ ~~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~~~~~~~~3 Mtwara bananaS,onions.)

220~ ~ ~ ~ ~~~~~~~2