|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 Gedaref Dura Schemes were designed during the decade of 1960-70 to use the so far unemployed land resources for cultivation of aura (sorghum) for domestic and export sales. Through credit facilities to private operators for bush clearance and land development, tractor and equipment purchases, and machinery repair, as well as through public investment in road construction and water supplies. it was hoped that the whole area could develop and thus contribute to a better supply of aura for the urban population and for an improved balance of payment situation. It was calculated that the foreign exchange requirements to import machines, equipment. fuel. etc would be much lower than the earnings which could be expected from the export to the world market. In this way, the necessary World Bank loan could be easily repaid. The employment component was expected to be low because of the high degree of mechanization necessary.
3.8.1 Production Aspects
The Gedaref Schemes have now been in operation for 10 to 15 years. A comparison of two studies (mentioned as major sources). nearly 10 years apart, shows changes of economic determinants with influence on costs and returns of the scheme owners. The two studies are quoted in some detail to provide insight into why such changes have influenced the scheme performances.
During the first ten years of aura cultivation in the Gedaref district. the total area planted varied greatly between 700,000 and 2,000,000 feddans due to natural and operational forces. The most popular varieties of aura grown were at first Feterite. Gedaref, Mugud. and Safra. Later another variety. Wad Yabis. predominated on the schemes, accounting for more than 90 per cent of the total area sown in 1974/75. All varieties are long-stalked and are unsuitable for combine harvesting but have grain characteristics acceptable to local consumers. The cultivated land is flat; the fields' preparation is only possible and sensible after the seasonal rains have started.
The mean area recorded as cultivated under one scheme was around 800 feddans. Some of the operators in the schemes were, for financial reasons, unable to clear their whole area of a "1,000 feddan scheme" during the first year after allocation. Quite a number were found to be still cultivating only a fraction of the area allotted even after three or four years. This certainly fed to an under-utilization of their expensive capital investment in machinery, equipment. etc. A scheme owner has to clear his fields of trees and other vegetation before he can commence cultivation. Clearing is most frequently done by manual labour, although crawler tractors are sometimes used. Often the clearance is undertaken by a contractor at a fixed rate with the labourers employed by him. Clearance costs varied widely from scheme to scheme. A number of factors were responsible for this, including the date of initial clearing, whether or not the full area has been cleared, and the density of tree cover.
The preparation for cultivation starts early in the season with the transport of fuel and grease to the schemes and the construction of huts for the lodging of the licensee and his staff. The first ploughing begins around 15 July and takes about ten days if it is not delayed by heavy showers. Under favourable conditions, a tractor can plough up to 100 feddans daily. During this period the seed is prepared and chemically treated with copper carbonate against the covered smut of sorghum. Usually a second ploughing is then needed and this is done combined with sowing (a seed drill is attached to the tractor). After the emergence of the plants, the weeding operation is begun. It usually takes 45 days for an average crop and requires about 300 labourers for a 1,000 feddan scheme.
3.8.2 Production Costs
Apart from tree clearance, scheme owners must also make a substantial investment in machinery. A tractor with a wide-level disc harrow and seedbox are normally regarded as essential items, while many scheme owners also possess a four-wheel-drive pickup truck, a lorry, and sometimes a combine harvester (used primarily as a stationary thresher).
Schemes which do not have a tractor hire them for discing and sowing; the charge for such services in 1974/75 was between £S 0.75 and £S 1.00 per feddan. Hiring was also resorted to on some of the other schemes. possibly because of tractor breakdowns. An owner who relies on hiring must of course wait until a tractor is available and this may well result in much delayed sowing dates.
The average initial investment in machinery was £S 3.391 per scheme but the variation is very wide, with some schemes (those without tractors) returning a zero investment. The figure of £S 3,391 is. of course, well below current replacement costs-a tractor and disc costing £S 2,500 in 1970 now costs over £S 4,000. The most popular make of tractor was Massey Ferguson (usually the MF 165 model). The age distribution of the tractors is between one and seven years with, for the most part. the original tractors still being used.
The annual cost of machinery depreciation has been calculated on a 25 per cent written-down basis, that is, taking the cost as 25 per cent of the previous year's depreciated value. This is thought likely to reflect the changing value of machinery as it ages better than straight line depreciation where the initial cost is divided by the number of years assumed for the life of the tractor. On the written-down basis, a tractor's value is never reduced to zero, but with a 25 per cent rate, its value in the eighth year will be only one-tenth of its initial cost. The average cost of machinery depreciation per scheme was £S 369.
Other fixed costs
The other fixed costs could be obtained from the reports only for the year 1974/75. Staff salaries represent the cost of employing a wakeel (foreman), guards, and storemen over the year, and tractor drivers and greasers during the season. The wakeel is usually paid £S 30 per month but is sometimes remunerated by a share of the profits, although the survey records did not indicate that this increased the total received. Guards, storemen. and greasers received between £S 10 and £S 15 per month. The rate for a tractor driver is £S 25 per month. Such a salary will attract good drivers and compensate them for the harsh conditions under which they perform their jobs. The Ministry of Agriculture has established a training institution at Wad el Huri to prepare people for driving and repairing tractors. These drivers are normally preferred by scheme operators and are paid higher salaries. The great difficulty in this is that they will be employed only for the short period of about three months, which reduces the interest of qualified drivers to work in the schemes if they find other alternatives.
Drinking water usually has to be transported to the schemes although there is sometimes a small hafir on the scheme. Transport may be undertaken with the scheme's tractor or lorry. but in some cases water is purchased from tankers. The average expenditure under this heading was £S 64 per scheme in 1974/75. The buildings on the schemes usually consist of a group of grass huts, and these require rebuilding or repair as necessary by local specialists. There is also need to replace hand tools used by the seasonal labourers. Costs under these two headings averaged £S 195 per scheme in the same year. A final fixed cost item is the payment of a land rent of 5 piastres per feddan which should be made to the government through the Mechanized Farming Corporation.
The average variable costs per feddan have risen steadily since the establishment of the first schemes. Despite some difficulties of comparison due to different methods used for data collection, Table 23 attempts to indicate the magnitude of increase of variable production costs. While on the average, for 1968/69, a variable cost figure of £S 3.36 per feddan can be assumed, for 1974/75 this figure is £S 5.53.
Labour costs and other variable inputs show increases between 1968/69 and 1974/75 of 50 to 200 per cent. This reflects price increases for production factors that can be seen in Sudan's economy in general: they are not characteristic for the Gedaref region only. But in connection with static or decreasing yields due to environmental reasons, the absolute level of production costs may soon become too high to allow any benefits in all operations. If expenditures increase further at this rate, they would have to be matched by either price increases for the crop or higher yields or reduced profit rates. The high element of gambling involved, while expecting windfall gains. may still attract a number of new operators to replace people who do not go back to their schemes after losing part of their invested capital. Further investigation is needed to determine whether or not substantial cost reductions are possible, for example through a change to combinable sorghum varieties with less labour demand, to offset the narrowing price-cost squeeze. If yields. for climatic reasons under rain-fed conditions, cannot be raised, or if the more intensive cultivation of sorghum would endanger the possibility of permanent production, then price increases or cost reductions are the only way out of this situation. While price questions will be discussed in section 3.8.3, below, another aspect of cost reduction should at least be mentioned here. It cannot be expected that the individual operator would benefit from a larger total area cultivated per scheme. It must be assumed that further economies of scale are quite difficult to obtain because of the high seasonally of land preparation and crop harvesting in a very short time period only. At least more substantial public investment in the physical infrastructure of the region would be needed to allow the operators a fast and flexible adjustment (transport, transfer of equipment and labour, etc.) to changing weather and operational conditions.
The other major items of variable costs, as seen in Table 23, are now discussed against this background. Seasonal labour, machinery work. and additional inputs are the most important items.
Labour costs and machine work account for more than half of the total variable costs. The seasonal labour (except drivers) is recruited as needed for weeding and cutting. while threshing is presently partly done by combine. The labourers in the schemes are locally recruited or come from the Kurmuk and Geissan districts further south and adjacent to the Ethiopian border. Scheme owners send their own or hired lorries to these districts to collect labourers. Recruitment is often done through the village sheikhs, to whom a commission is paid for each man recruited. Advances on the recruited man's wages may also be paid to the family left behind.
Payments to seasonal labourers are invariably on a piecework basis. Payment for weeding and cutting aura is by area. In addition to the cash payments, scheme owners also provide food (aura, oil, and fish) and some kind of shelter. The rates quoted in 1974/75 for weeding aura were in the range of £S 0.20 to £S 0.80 per feddan. and for cutting (involving the removal and collection of the heads) £S 0.70 to £S 1.60 per feddan. The wide ranges reflect both differences in the work involved (which is dependent on the weediness of the crop or its size at harvest) and the immediate bargaining strength of labourers and owners. The operators worry about the ever existing shortage of casual labour. This is ascribed to the rapid rate of development (both at Gedaref and Khashm el Girba) as well as to the competition with the large-scale irrigation schemes of Gezira and Rahad. Consequently, great interest was expressed in the possibilities of chemical weed control and combine harvesters as a means to reduce the demand for seasonal labour. But this will lead, without any doubt. to greater needs for foreign exchange and should be calculated carefully against the benefits to be expected.
The cost of fuel for tractors and pickups is a considerable item. The average figure in 1974/75 of £S 601 per scheme is for schemes without lorries; including the lorries it gives an average of £S 785 per scheme, but the former figure would seem more appropriate in considering the agricultural costs. Even at £S 601 per scheme, the figure is high compared with estimates of a maximum of £S 500 per scheme quoted by the MFC, especially when it is remembered that nearly a quarter of these schemes did not have their own tractor. The cost represents the use of about 1,450 gallons of fuel at the official price. It is known that with fuel shortages owners are often prepared to pay black-market prices. Fuel is purchased in fourgallon tins and stocked, if possible, for the beginning of the season. and so discrepancies could occur between the amounts purchased and those actually used.
TABLE 23. Average Variable Costs in Gedaref Dura Schemes (£S per feddan)
|TOTAL VARIABLE COST||S£ 3.36||S£ 5.53|
Source: Calculated from various data provided by the sources listed in the footnote to section 3.8. above.
Further items of some importance in variable costs are sacks and strings for tying the sacks. Dura is handled entirely in sacks and the grower has to purchase these each year. A final item. seed costs, is relatively small. with seeds either being retained from the previous harvest or purchased locally.
3.8.3 Production Income
Yields of aura in the entire region varied widely and showed a tendency to go down over a number of years. Some actual yields were reported orally by the MFC (responsible for the support of the Gedaref schemes) as being in the range of 480 kg/feddan in 1969/70 and 150 kg/feddan in 1974/75. There is no information whether these results were obtained from the same area cultivated or not. A correlation of yields with average rainfall figures is also not very helpful. They alone do not explain the decreasing trend of yields. It should be noted that rainfall timing is perhaps as important as rainfall quantities. especially in connection with environmental and erosion problems.
The specific yield figures for the schemes analyzed in the main reports show a low average yield of 279 kg per feddan of aura for 1974/75, which is reported as well below the previous season. Given the importance of aura yields in determining scheme profitability, the question arises as to the extent to which yield is a function of the skill with which a scheme is managed-or is it more the result of uncontrollable factors such as the amount and timing of rainfall or the incidence of plant disease ? The reports of the major sources provide only a limited insight into this problem.
Respondents to a survey in 1974/75 were asked to give crop acres and levels of production for the 1973/74 season as well as for 1974/75, thus enabling yields to be calculated for both seasons. If management skill is a major factor determining yields, schemes with above-average yields in 1973/74 would be expected to have above-average yields in 1974/75. and the same could be said for those with belowaverage yields. In other words. there should be a correlation between yields in the two seasons. For the 30 schemes for which the two-season information was obtained, the correlation coefficient (r) is + 0.395, which is just significant at the 5 per cent level. This indicates that while management appears to have had some effect on yield. the aggregate effect of the other factors was much larger.
Experimental trials at the Tozi research station and elsewhere have shown very clearly that the time of sowing has a major influence on aura yields. with early sowing giving much higher yields. The time of sowing is partially controlled by management. Under good management, machinery will be in good condition at the start of the season (thus lessening the chances of breakdown). adequate stocks of seed, fuel, and machinery spare parts will be on hand, and the tractor drivers recruited in good time. However, even with all these measures taken. sowing may still be delayed by adverse weather and other unpredicted eventualities. The date of completing sowing at the different schemes was taken as an indication of the earliness or lateness of sowing, but no relationship was found between them and the calculated scheme yields.
Given that yield is a major determinant of profitability and that yields fall relatively rapidly with time under current husbandry practices, then these mechanized schemes may quickly become financially unviable unless the owner moves to new land. Traditional agriculture is usually on a shifting basis in these savanna areas. but shifting mechanized agriculture is a rather more serious threat to the environment. In the Gedaref area, many mechanized cultivations have already been abandoned in favour of new virgin land and sometimes serious sheet erosion has resulted.
Dura is normally sold by the sack. In 1974/75 there were no controls on aura prices. but scheme owners selling from the farm would receive lower prices to allow for transport and other marketing costs. The prices received therefore varied between £S 2.00 and £S 3.00 per sack in 25 schemes where this information was available. The price in the lower range would probably represent shall transactions when the crop is sold before harvest. The higher price could well be reported by scheme owners who were also merchants and so could presumably obtain higher than average returns. Prices also vary according to whether the local produce tax. the usher. is paid by the producer or the buyer. In the Gedaref region this tax is assessed at 12.5 per cent of the estimated production of each scheme and the crop is not supposed to leave the farm until the tax is paid.
What is the effect of variation of aura yields on the profit of schemes ? If yields per feddan of aura are as low as 100 kg only, this amounted in 1974/75 at the investigated schemes to a loss of over £S 3,000, while at 600 kg per feddan, a profit of over £S 4,000 could be calculated. The break-even point was 310 kg per feddan. which compares with the survey average of 280 kg per feddan. From those results it must be assumed that only half of the schemes were able to make a surplus at all. The variation of those schemes with positive figures was quite large. Nine schemes earned up to £S 990 surplus, five between £S 1.000 and 1,999, one between £S 2,000 and 2,999, two between £S 3.000 and 3,999. and finally, three between £S 4,000 and 4,999.
The mechanized Dura Production Schemes in the Gedaref region are a most vulnerable type of land-use system. The operator is able. under favourable circumstances. to earn large windfall gains but must take the risk of losing part of his investment if weather conditions are adverse. The question of environmental threat is difficult to answer. The usual practice of shifting cultivation to new ground if yields are no longer sufficient shows that the danger of depleting the soil is a real one. There are no data available on how long a period is required to restore the original fertility of the soil after a scheme has been abandoned. Major complications are also observed in the operational field because of the low level of infrastructure in that area which does not allow more efficient use of the production factors involved. It is expected that problems of obtaining seasonal labour for weeding and harvesting in these remote areas will increase to such an extent that the pressure to switch to chemical herbicides and to combinable aura varieties will be unavoidable.