|Development Projects in the Sudan: An Analysis of their Reports with Implications for Research and Training in Arid Land Management (UNU, 1979, 58 pages)|
|3. Project analysis|
The project was designed to create 140 farms through credit for bush clearance and land development, for construction of roads and water supplies, and for tractor and equipment purchases, machinery repair, and combine harvesting. The farms were to be in the private ownership of persons capable of bearing a large risk from their own resources if favourable weather conditions did not materialize to ensure sufficient yields to cover the cost of production. Originally, the project had been designed for the production of cotton to supply a nearby textile mill, but cotton production ceased in 1971/72 and it became an accepted objective to expand, instead, the production of sesame and sorghum (aura) to meet the domestic demand for food grains.
The institution to implement the project became effective in 1969 when the Mechanized Farming Corporation (MFC) was established to provide the necessary material and technical services.
3.1.1 Production Problems
This project was presented the first time in 1963 to the World Bank for a loan for land clearance and mechanized crop production in the Abu Irwa area south-east of Gedaref, covering 110,000 feddans (46,000 ha) of which 30 per cent were already cultivated. A large part of the project area was handcleared by unauthorized settlers before the mechanized programme started in the Simsim area, about 60 km south-west of Abu Irwa.
In the middle of the 1970s, an estimated 1.8 million feddans (800,000 ha) were under mechanized farming in Sudan. The majority were operated by absentee entrepreneurs on previously unalienated land which was state domain according to Sudanese practice. Some mechanized operators are squatters or hold the land by virtue of their tilling it, and some are leaseholders on mechanized schemes. The schemes, begun in the 1940s, are typically located on hard clay soils tillable only during and immediately following the annual rainy season. The ground is too hard to break by subsistence farmers on any significant scale without mechanized power. Scheme participants do not settle permanently on their plots: huts, if any, are used only during the single, long crop season. Production on earlier schemes suffered because farmers did not allow for restoration of soil fertility; they abandoned an area when it was exhausted and moved into fresh territory. As long as land is sufficiently plentiful, and capital and labour are sufficiently scarce. continuous cropping, soil depletion, and shifting cultivation seem to be the most economic response to prevailing prices and regulations.
In addition, a high proportion of the land was supposed to be kept in fallow (25 per cent on each farm) because the then-continuous sorghum cropping, the principal crop enterprise, was expected to lead to deterioration in soil structure, depletion of soil nutrients, weed and pest infestations, and invasion of wild sorghum. But fallowing. as an element of enterprise planning, was phased out in 1974/75 because of lack of control by the MFC.
The present land laws in the Sudan declare all native land to be under the ownership of the government, but local authorities have, in practice, control over all land. However, the land laws do not grant any proprietary title to cultivators of the land, only a right of occupation. Most of the land occupied by cultivators in the Sudan has been inherited; in the case of the Simsim Project the area was inhabited by nomads who apparently did not oppose the start of mechanized farming practices on their traditional grazing grounds.
The total land area of cultivated farms has increased steadily at the project site, reflecting the allocation of new farms and the expansion of farm sizes. Cotton cultivation ceased in 1971/72, and sesame expanded at a more rapid rate than sorghum in terms of land area. But most farmers were unable to complete plowing operations on water-logged soil, reflecting the critical importance of timeliness in this type of agriculture. The number of farms established and the area cultivated are indicated in Table 2.
The shifting from cotton to sesame reflects a greater profitability because of low yields of the first, and attractive prices for the latter, during most of the years since 1970. The primary constraint on increasing the sesame area occurs in harvesting, which must be done during a period of not more than four weeks before shattering occurs at full maturity. Mechanized technology for harvesting sesame has yet to be developed.
The yields obtained in the project area have varied considerably due to a number of factors. To summarize, it appears that farmers have on the average failed to obtain the yields projected, although there is. no doubt, a high reward in the form of relatively abundant yields in most years for good operators who have sufficient supplies of inputs, fuel and labour on their farms at the time when cultivation can begin, to permit them to get an early start and to work without interruption. MFC has reported the yields shown in Table. 4.
The table also lists appraisal estimates by the World Bank.
TABLE 2. Land Use on Cultivated Project Farms
|Number of farms|
|Feddans per farm||952||952||952||1 428||1 428||1 428|
|Total feddans on farms|
|Cultivated||38 080||80 920||113 288||131 376||167 076||184 212|
|Land use by
|Sorghum||14 280a||40 460||63 000||58 000||100 000||50 000b|
|Sesame||4 760||11 186||17 000||24 000||40 000||40 000|
|Cotton||9 520||9 044||-||-||-|
|Followedc||9 520a||20 230||28 322||-|
|Not cultivated or||49 376||27 076|
|Unaccounted for||-||-||4 966||94 212b|
|Total feddans||38 080||80 920||113 288||131 376||167 076||184 212|
Source: IBRD. Performance Audit Report. pp. 10-11. Data from Mechanized Farming Corporation.
Land-use data obtained in Gedaref differed somewhat from that provided in Khartoum.
a. Some reports from 1969/70 state that land scheduled for fallow in 1969/70
was planted with sorghum by government order. while other data maintain
following was as scheduled. MFC officials also gave conflicting reports on this
phenomenon when questioned during the audit field visit. It appears probable
that a portion of the 9.520 feddans originally scheduled for following was put
under sorghum. but that the order was received too late in the planting season
to have had an impact on the entire area.
b. Heavy rains resulted in greatly reduced areas cultivated in 1974/75.
c. Refers to a conscious attempt to restore fertility.
TABLE 3. Land Use in the Project in Percentages of the Total Area of Farms Cultivated
|Crop/Land Use||Appraisal Estimate||1969/70||1970/71||1971/72||1972/73||1973/74||1974/75|
Source: IBRD. Performance Audit Report, pp.10-11.
a. "Other'' lend use refers only to fallow land, land left uncultivated
for reasons other than intentional following and statistical errors and
omissions in land-use recording.
b. See footnote a in Table 2.
The appraisal report expected sorghum and cotton yields to be somewhat depressed during the first two seasons (presumably reflecting the farmers' and MFC's learning curves. the accumulation of field experience, etc.), but to achieve a projected plateau level in the third season. These expectations were based on the careful selection of tenants. the impact of MFC technical services and the use of mechanical planters, and good husbandry. As shown in the table, yields have been generally lower than expected and appear to decline erratically. The level of yields probably reflects organizational problems encountered by many farmers, which result in some untimeliness in their operations. Transport during the preparation and planting period is extremely difficult, making it imperative that logistic arrangements be completed prior to the start of the rains if timely operations are to be achieved. In addition, yields fluctuate greatly from season to season. It is certainly difficult to judge whether the decline in yields results from the amount and distribution of rainfall, or from the deterioration of management and soil exhaustion, as well.
3.1.2 Economic Performance
The economic performance of the project can only be calculated if prices, market volumes, and incomes are known and costs of operation are recorded.
Prices for sesame have increased each season and in 1975 stood at more than double the level prevailing in the project's first two seasons and thrice the figure quoted in the 1968 appraisal report. Prices for sorghum were already twice as high by the first year of farming compared with the forecast, reaching low points in 1971/72 but rising in 1973/74 and the following season to surpass the levels which were obtained at the start of the project. It is noteworthy that the project's worst year in terms of participants' interest, 1972/73, occurred after a 40 per cent fall in sorghum prices, and that the upsurge in participant interest in 1974/75 followed the recovery of sorghum prices and a jump in sesame prices to more than 50 per cent higher than those in earlier project years.
The estimated total project production (gross value) is £S 520,000 per annum using the conservative yield assumption given in Table 5. The variability of output and participants' income can be substantial, as suggested by the decline of almost £S 1,000,000 between the 1973/74 and 1974/75 gross output values. That difference is certainly an extreme, but the possibility of such fluctuation is obviously real and will be a function of the instability of prices as well as yields and areas.
The total costs of the project were initially estimated at $8 million (US dollars). But the actual spending was slightly lower because: (a) the unit costs of farm machinery and equipment were lower than expected, partly because of an increasingly competitive tractor market; (b) hand clearing proved more attractive than mechanical clearance if labour was available for a portion of the clearing.
The World Bank financed the whole foreign exchange cost, amounting to 62.5 per cent of the total. the farmers 7.5 per cent. and the Sudan government 30 per cent. The breakdown of the project costs shows:
|Land development (clearing,roads, hafirs, etc.)||$3.69 million|
|Farm investments (machinery equipment)||1.56 million|
|Land planning||0.14 million|
|Advisory services. management, administration||1.42 million|
TABLE 4. Comparison of Projected and Estimated Yields (kg per feddan) Obtained by Project Farmers, with Rainfall Data
|1973/74||180||160||510||400||157||n a.||(607 mm)|
Source: IBRD. Performance Audit Report, p. 13. Data from Mechanized Farming Corporation. Widely varying yield figures were obtained from different sources within MFC. a. The appraisal report indicates that average rainfall at weather stations near the project ranges from 670 mm to 731 mm. No indications of probability are given. It should also be noted that rainfall timing is perhaps as important as rainfall quantity in determining crop yields.
TABLE 5. Production Volumes and Values at Gedaref Market Prices, by Enterprise, Using Gedaref Yield Estimates
|Cotton- fattens||9 520||9 044||(Farm gate basis)|
|- kg yield per feddan||159||91|
|- total output in tons||1514||823|
|- market price per ton (£S)||37.80||34.30|
|- gross value of production (£S)||57 229||28 229||275 000|
|-kg yield per feddan||300||180||260||200||160||40|
|-total output in tons||1 428||2 013||4 420||4 800||6 400||1 600|
|-market price per ton (£S)||52.01||52.47||56.50||62.48||86.68||123.64|
|- gross value of production (£S)||74270||105622||249730||299904||554752||197824||50000|
|Sorghum -feddans||14 280||40 460||63 000||58 000||100 000||50 000|
|- kg yield per feddan||480||360||320||240||400||150|
|- total output in tons||6 854||14 566||20 160||13 920||40 000||7 500|
|- market price per ton (£S)||17.27||13.40||10.30||10.75||18.88||22.85|
|- gross value of production (£S)||118369||195184||207648||149640||755200||171 375||285000|
|Gross Value of Production for all Enterprises (£S)||249868||329035||457378||449544||1 309952||369199||610000|
Source: IBRD, Performance Audit Report, p. 16. Data from Mechanized Farming Corporation. Appraisal estimates are from the appraisal report and are for the project at maturity. projected for 1975/76 and following years.
However, the data given under-estimate the level of farm investments, as these figures relate only to the equipment supplied to participants under the auspices of the MFC. Many farmers purchased additional equipment financed from other sources, of course with some other alternative employment opportunities, especially for trucks.
The returns to the participating farmers show annual gross farm receipts ranging from £S 2.878 to £S 11,227 for the typical farm during the years of review, indicating a great deal of variability over time. The costs of production have mounted steadily during the life of the project. Labour is the largest single cost and the category responsible for most of the increase. Labour amounted to 48 per cent of the production costs of sorghum, and 63 per cent of sesame in 1969/70, compared to 64 per cent and 71 per cent, respectively, in 1974/75. Net farm profits have ranged between a loss of £S 3,244 and a profit of £S 2,1 26 for the typical operation over the period. Four out of six years have been profitable, although one of these four was only marginally so.
The hypothetical average farmer who joined the project in 1969/70 and cultivated each year since then appears to have incurred a financial rate of return on his equity well above 100 per cent through 1974/ 75 even after allowing for the depressing effect of the last year. Farmers who joined the project later missed the high yields of the first year and had to encounter losses over the total period. Despite this theoretical picture. negative for the average farmer. the long list of applicants for new plots at the project's expansion area reflects both the expectation that good years will return and short-run financial rewards of the risk taking can be realized, and the lack of alternative opportunities for working capital investment. Fallow and permanence are certainly not part of this strategy. The rate of return to the economy seems to be roughly equal to the private rate, as long as long-term environmental consequences are excluded. Calculations apply shadow rates to crop values. use market wage rates, and restore taxes, hidden benefits, and costs (including the loss of material for charcoal). The World Bank appraisal report calculated the economic rate of return to the investment at 17 per cent. However a major downward adjustment has to be made to allow for the apparent shortening of the project by not practising following. Soil exhaustion would reduce the life span of the project from 25 to 13 years, thus consequently, the economic rate of return would decline to a meagre five per cent. assuming that the cash flow is not more erratic than previously. This last calculation shows that private profitability in particularly good years because of sufficient rainfall-after that peak year, a private investor may move out with large windfall gains-is no indication whatsoever of how the economy as a whole will gain from such a project over longer periods.
Without the investment in infrastructure, the project's output and preceding input would also not have been forthcoming. The road-building component proceeded according to schedule and raised, graded, and drained a few important arterial routes, including the 70 km access road to the main Gedaref highway, and a small network of subsidiary roads. None were hard-surfaced, but they substantially improved the area's access.
The government also wanted water provided to every farm, but the original plan provided for community and private onfarm reservoirs only for those farms which were too far away from the existing reservoirs. The provision of water must be considered as the necessary precondition for farming in that area at all, and the costs are therefore part of the production input allocated to all farmers in various degrees.
3.1.4 Human Factors and Labour
The farmers who took up land under the scheme came from different quarters of the country. They belonged to the more wealthy strata of the society, showed risk-taking attitudes above average, and were apparently not interested in permanent settlement and cultivation. They used this opportunity as an alternative for investment, which could also have taken place in other sectors of the economy. The high degree of public support through the activities of the MFC made the enterprise possible (through loans and credit arrangements) and kept the risk of losing private financial resources quite low.
The initial group of farmers who started the scheme numbered 40 in 1969/70 and rose to 129 in 1974/75 but the number of farms which were "deserted" during that period was quite substantial and added up to 35 in the last year. This means that there has been considerable fluctuation and reallocation of farms to new owners. The "deserters" appear to fall into three categories. One category consists of inexperienced operators who had not performed according to their expectations and decided to cut their losses by discontinuing operations
TABLE 6. Estimated On-Farm Employment Created by the Project
|1. Per-farm basis. assuming 300 feddans sesame. 800 feddans sorghum:|
|Tractor Drivers||2 from July through September||6|
|1 from October through February||5|
|sesame||7 persons for two weeks||3|
|sorghum||1 man-day per feddan||27|
|sesame||3 man-days per feddan||30|
|cutting and tying. 5 man-days per feddan |
threshing. 1 man-day per feddan
|2 harvester operators. 2 greasers, and|
|(175 feddans) |
|8 laborers for 2 days at 10 feddans per hour||1|
|sorghum (625 feddans)||2 harvester operators. 2 greasers, and|
|8 laborers for 7 days at 10 feddans per hour||3|
|Total man-months of labor per farm||163|
|Total man-years per farm per season||14|
|2. Project basis. assuming 125 farms cultivated:|
|Total man-months per season||20 375|
|ToteI man -years per season||1 696|
Source: IBRD. Performance Audit Report. p. 26.
Another group included otherwise successful operators who had insufficient financial resources to operate their farms. A third group was found among those who were willing to leave their plots idle the following season because they felt that expected returns for that season did not justify the investment. Altogether. "desertion" leads to utilization rates of less than 85 per cent of the project area in each particular year. But in early 1975, over 800 applications were on hand for fewer than 100 plots. new or re-allocated in the First and Second Mechanized Farming Project areas, suggesting no lack of general interest in the farming schemes.It is estimated that at least 50 per cent of these applicants could not establish themselves as mechanized farmers without the project's help: others could, but took advantage of the opportunity to get access to additional resources to lower their personal risk.
Project operations are characterized by a relatively high degree of labour intensity. Weeding is done largely by hand. The preferred local sorghums are non-combinable and hence require hand cutting, transport to combine harvesters, and hand feeding into the machines, which perform essentially as threshing machines. Farm labour is drawn from several sources: residents of the Gedaref area, migrants from other parts of Sudan, casuals from Eritrea and the Tigre Province in Ethiopia. Assuming 125 active farms per season. the total project farm labour requirement is about 1,700 man-years per season. The wage bill probably exceeds £S 350,000 at current prices. Despite the fact that employment creation did not figure prominently among the project's goals, the above-stated fact gives at least some indication about the actual impact. In addition. some off-the-farm employment has been created. especially in servicing the machinery and transport vehicles, as well as in some marketing enterprises.
The Sudan government proposed the inclusion of co-operatives with local peasant membership in order to enable some of the poorer sections of the population to benefit from the project as farmers, not as simple farm labourers. But only seven farms allocated to co-operatives were cultivated in 1974/75. Three other societies failed to take up allocated plots in 1970/71 due to organizational problems and lack of capital, and several operational societies have subsequently failed to cultivate their plots on a continuous basis.
The question of failure of co-operatives at the Simsim Scheme is part of the general scope of problems that most co-operatives face in developing countries. They can be described in three major points: (1) lack of economic incentives for the members, (2) lack of sufficient working capital, and (3) lack of motivation and organizational know-how of the co-operative's staff.
The Simsim Mechanized Farming Project has nearly reached its objective to establish 140 farms to cultivate arid land previously not productive. The project thus enlarged the Sudan's agricultural potential and added to the market supply of sorghum and sesame for domestic consumption. The income from the scheme benefited a small number of entrepreneurs capable of bearing large risks of failure; the creation of additional employment was minimal. The gross value of production for all enterprises reached only two thirds of the appraisal estimates. The economic rate of return to the economy and to the private cultivator shows a great variability, but may be around 5 per cent per annum, relatively low due to soil exhaustion's reducing the life span of the project rapidly. Environmental threats must therefore be considered as important and have to be watched, but logistic and organizational problems also need particular attention.