RETURN TO -REPORTS DESFI4ILL LU!'!RESTRICTEDREPORTS DESJR'"L COPY Report No. TO-656a

WITHINONE WEEK

This report was prepared for use within the Bank and its affiliated organizations.They do not accept responsibility for its accuracy or completeness. The report maynot be published nor may it be quoted as representing their views.

INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT

INTERNATIONAL DEVELOPMENT ASSOCIATION

BEEF RANCHING DEVELOPMENT PROJECT

TANZANIA

October 8, 1968

Projects Department

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CURRENCY EQUIVALENTS

US$ 1 = Tanzania Shillings 7. 14T. Sh 1 = 100 cents = US$ 0. 14

l I T. ShZ2 = US$ 2. 80J, 1 million = US$ 2. 8 million

WEIGHTS AND MEASURES

Imperial System

INITIALS AND ACRONYMS

ADS - Agricultural Development ServiceNACO - National Agricultural Company

Ltd.NDC - National Development

CorporationTPL - Tanganyika Packers, Ltd.

TANZANIA

BEEF RANCHING DEVELOPMENT PROJECT

TABLE OF CONTENTS

Page No.

SUMMARY

I. INTRODUCTION . ............................................ 1

II. BACKGROUND ..... ........................................ 1

A. General ........................................ 1B. The Beef Cattle Sector ..... .................... 2C. Animal Health .. . ............................... 2D. Agricultural Services ........ . ......... ..... 3E. Government Policies on Livestock Development ...

III. THE PROJECT ......................... , ...... ....... ... 5

A. Project Description ............................ 5B. Project Area .................... ........................... 6C. Detailed Ranch Features ........................ 6D. Land Tenure ...... .............................. 7E. Cost Estimates ... . ............................ 8F. Proposed Financing ...... ....................... 9G. Lending Operations ...... ....................... 9H. Procurement .......................... .......... . 10I. Disbursements and Auditing .. .................. . 10J. Financial Implications ..... .................... 11

IV. ORGANIZATION AND MANAGEMENT ...... ...................... 11

A. Project Organization ........................... 11B. Capitalization of the National Agricultural

Company ........................................ 0........ 12C. Technical Services and Training ................ 12

V. MARKET PROSPECTS AND RANCH INCOMES ..................... 13

A. Marketing ........ ............ .... 13B. Production and Income on Project Ranches ....... 14C. Financial Incentives .. .......................... 14

VI. BENEFITS AND JUSTIFICATION ............................. 15

VII. CONCLUSIONS AND RECOMMENDATIONS ... ... 15

This report is based on the findings of an IDA appraisal mission to Tanzaniain November and December 1967, composed of Messrs. J. Gerring, F. Knobel,A. Schumacher and T. Husain. Messrs. Gerring and Schumacher are primarilyresponsible for this report.

ANNEXES

1. National Development CorporationTable 1 - NDC Balance Sheets, 1964-1967Table 2 - NDC - Profit and Loss Accounts, 1965-1967Table 3 - NDC - Income, Investments and Loans, 1967Table 4 - NDC - Agricultural Department - Consolidated Balance

Sheets, 1965-1967Table 5 - NDC - Agricultural Department - Consolidated Profit and Loss

Statements, 1965-1967Table 6 - NACO - Proposed CapitalizationChart 1 - NDC - Organization ChartChart 2 - NACO - Organization Chart

2. Herd Development, Ranch Investment Costs and Operating ExpensesTable 1 - Kitengule - Breeding/Fattening RanchTable 2 - Mkata - Fattening RanchTable 3 - West Kilimanjaro - Breeding/Fattening RanchTable 4 - Breeding/Fattening Ranch

3. Table 1 - ProJect Investments)Table 2 - Phasing of Proposed Financing and IDA DisbursementsTable 3 - Projected Phasing of Ranch Investment CostsTable 4 - NDC - Projected Cash FlowTable 5 - NACO - Projected Cash Flow

W. Technical Services Budget

5. Training Program - Phasing and Cost

6. Duties, Responsibilities and Authorities of the Chief DevelopmentOfficer (Ranching)

7. Table 1 - Economic and Financial Rates of ReturnTable 2 - Annual Increased Turnoff of Beef and Breeding Stock at Full

Development from Project Ranches

MAP

TANZANIA

bEEF RANCHING DEVELOPMENT PROJECT

SUMMARY

i. The Governlment of Tanzania has requested an IDA Credit to helpfinance the first part of its national livestock development program, compris-ing mainly the development of five state beef ranches. The principal objec-tives of the Project would be to increase the output of beef and to expandthe production of improved breeding stock.

ii. Finance would be provided for such investments as on-ranch roads,firebreaks, fencing, water supplies, stock handling and animal health con-trol facilities, ranch buildings and an initial procurement of feeder steersfor fattening. Funds would also be allocated for technical services and atraining program for ranch management.

iii. One fattening ranch and four breeding/fattening ranches, all ownedby the National Agricultural Company Ltd (NACO), would be included in theProject. The funds from the IDA Credit for the development of these rancheswould be on-lent by Government to the National Development Corporation (NDC)at 4 percent per anmum for a term of 50 years including a grace period of10 years. NDC would on-lend these funds to NACO at 7 percent per annum fora term of 12 years including a grace period of 5 years.

iv. The Project is estimated to cost about US$2.0 million of whichUS$1.8 million would be for ranch development and the balance of US$0.2million for technical services and training. The IDA Credit would cover about65 percent of the total project cost. The other 35 percent would be providedby NDC and NACO. Thle foreign exchange component is about one-half of theCredit.

v. A Chief Development Officer (Ranching) of NACO would be responsiblefor preparing the ranch development plans and supervising their execution.He would also advise on and assist the on-going practical training programfor assistant ranch managers and field assistants.

vi. The Project is technically sound and economically justified.Expected benefits to NACO, Project ranches and to the economy are adequate.The proposed administrative arrangements are satisfactory. The Project issuitable for an IDA Credit of US$1.3 million. The borrower would be theGovernment of Tanzania.

TANZANIA

BEEF RANCHING DEVELOPMENT PROJECT

I. INTRODUCTION

1.01 The Gove-rnment of Tanzania hats requested an IDA Credit to helpfinance the first stage of its livestock development program. The Projectseeks to expand the beef ranching operations of the National AgriculturalCompany Ltd (NACO) a subsidiary company of the National Development Corpo-ration (NDC). The Project was prepared during 1966 and 1967 with the assis-tance of the Agricultural Development Service (ADS), an affiliate of theIBRD's Permanent Mission in Eastern Africa located in Nairobi. This appraisalreport is based on the findings of a mission which visited Tanzania inNovember/December 1967 composed of Messrs. J. Gerring, F. Knobel, A. Schumacherand T. Husain. Messrs. Gerring and Schumacher are primarily responsible forpreparing this report.

II. BACKGROUND

A. General

2.01 The mainland of Tanzania, with a land area of 341,150 square miles,has a variety of climatic and ecological conditions. Broadly, the countryconsists of four agricultural regions: the Eastern coastal belt (sisal andcashew nuts) extendinpa fArUu Dar es Salaam to the Mozambique border, theKilimanjaro area (coffee), a fertile belt around Lake Victoria (cotton, teaand coffee), the Southern Highlands (tobacco, tea and pyrethrum), and therange areas of Sukuaialand and the central plateau (cattle). The agriculturalsector provides a livelihood for 90 percent of Tanzania's 12 million popu-lation, most of whom live at subsistence levels.

2.02 Tanzania's economy depends mainly on agriculture, which contri-buted about 54 percent of the total GDP in 1966, with livestock accountingfor about 8 percent. Exports of meat, cattle and livestock products accountfor about 3-4 percent of total exports. In the face of uncertain price pros-pects for the three principal exports, cotton, sisal and coffee, diversifi-cation of farm production towards beef is most important, Tanzania's largebeef herd, ten million head, its extensive rangelands and favorable climateoffer good prospects for increasing the production of beef.

2.03 NDC was set up in 1965 to take the initiative in developing certainsectors of the economy on commercial lines. It is largely self-financing,investing its annual surpluses in new or existing subsidiary companies. NDCis in a strong financial position with capital and reserves of Sh 174 million(US$24.4 million) and projected annual net earnings from i-ts investments ofSh 24 million (US$3.11 million). NDC has incorporated its existing livestockinvestments into a subsidiary company (NACO). This new company plans tofurther expand its beef, dairy and pig operations.

B. The Beef Cattle Sector

2.04 The domestic livestock population of Tanzania comprises about 10million cattle, 3 million sheep and 4.5 million goats. These animals grazeon about 155,500 square miles. Approximately two-thirds of this area receivesless than 30 in of rain annually. Most of the cattle population is in thetraditional sector. Though the cattle are individually owned, they are grazedon communal lands. In consequence, each owner is intent on increasing hisherd but does little to ensure an adequate supply of pasture to feed it.Since the number rather than the quality of cattle is the symbol of wealth,the culling of unproductive stock is seldom practised. Historically, themaintenance of large numbers of cattle is regarded as sound insurance againstlosses. Under such conditions, serious overgrazing frequently results in amarked deterioration of the pastoral areas.

2.05 The off-take of cattle from the traditional sector is estimated at11 to 13 percent per annum. This estimate, however, is based on hide countswhich include both fallen animals and those killed for subsistence needs.Recorded sales through the local markets totalled 285,000 in 1966 or less than3 percent of the national herd. Potentially, there is considerable scope forincreasing the present off-take to a more desirable 18 percent and even morefor raising the average weight of slaughter stock, which currently is onlyabout 250 lbs per head on a cold dressed weight basis. The establishment offattening ranches for the purpose of increasing the weight of immature stockrepresents the best possibility for increasing beef production quickly inTanzania.

2.o6 Consumption of beef is expected to increase about 4 percent perannum during the next five years. Currently, per capita consumption ofbeef may be approaching 20 lb. This is higher than the estimated sevenpounds per capita consumption in Nigeria, but similar to estimated percapita consumption in Kenya and Uganda. Urban and institutional (hospitals,schools, military, etc.) demand is rising at 7-8 percent per annum, much ofit for improved grades of beef.

C. Animal Health

2.07 In recent years the Government has successfully controlled rinder-pest and contagious bovine pleuropneumonia. The last case of rinderpestoccurred in 1965 in Masailand (north Tanzania). Each year approximately onemillion cattle are vaccinated against this disease to form a barrier zone ofresistant animals should the disease be reintroduced across the country'snorthern boundary. However, it is over 20 years since rinderpest occurredin the southern half of Tanzania.

2.08 Contagious bovine pleuropneumonia last occurred some four yearsago in a small area of north Masailand where some 330,000 cattle are vac-cinated annually. Blood testing to detect infected animals and strictcontrol of stock movements are additional precautions taken against furtheroutbreaks.

2.09 Foot-and-Mouth Disease is endemic in the main areas of the tra-ditional livestock sector. Government vaccinates all cattle before trans-ferring them to new stock areas such as the West Lake Region. Any affectedherds are placed under strict quarantine. Government has stated that it willcontinue to apply effective measures of control.

2.10 Tsetse fly, the vector responsible for trypanosomiasis of cattle,infests more than 60 percent of the area of Tanzania. Since this diseasevirtually excludes the raising of cattle, it is the major factor influencingthe distribution of cattle in Tanzania. Economic production, however, ispossible where effective control measures are applied. Such measures arebeing directed against the fly as well as against the organism it transmitsin a number of areas of Tanzania. The methods used include clearance ofbush which harbors the fly; application of residual insecticides to thefoliage of the bush; and use of a variety of drugs to prevent or cure thedisease. In most cases a combination of two or more of these methods is used.

2.11 Tick-borne diseases, particularly East Coast Fever, are responsiblefor serious losses in the traditional livestock sector where dipping is notpractised. Routine dipping of all cattle effectively prevents these losses.Dips are being established in a number of districts to enable compulsorydipping schemes to be implemented. Routine dipping is practiced on all NACOranches.

D. Agricultural Services

2.12 The Ministry of Agriculture and Cooperatives is responsible forall disease control measures and for much of the existing effort to developthe livestock industry. Of its eleven divisions, the activities of fivepertain to livestock: Veterinary, Agriculture, Training, Planning andMarketing.

2.13 The Veterinary Division is mainly responsible for disease control,livestock research centers, tsetse control and eradication, stock routes,quarantine stations, meat inspection and breeding stations. The AgricultureDivision, inter alia, is responsible for soil surveys, livestock marketing,pasture research and livestock statistics. The professional staff of theVeterinary and Agricultural Divisions comprises 26 expatriates and 18 Tan-zanians and 59 expatriates and 46 Tanzanians respectively.

2.14 Education and training facilities have been expanded recently:Tanzanians are obtaining degrees in agriculture at Kampala, Uganda, and inveterinary science at Kabete, Kenya (University of East Africa). The Vete-rinary Training Institute at Entebbe, Uganda, conducts a two-year course forthe training of veterinary assistants with outstanding students permitted tostay for a third year for a diploma in animal husbandry. In addition, some800 Tanzanians are studying for certificates and diplomas in agriculture andveterinary science at seven training institutes in Tanzania. Of these stu-dents, about 50 field officers and assistant field officers are being gra-duated each year in animal husbandry with diplomas from Morogoro AgriculturalCollege and with certificates from the Ministry of Agriculture's Institute at

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Ukiriguru. However, it is evident that the agricultural sector will continueto require the services of expatriate professional and technical staff forsome years to come. Despite efforts to staff the Government services withTanzanians, there are more vacancies than can be filled by qualified Tanza-nians, especially in the fields of education, research, planning and themanagement of development projects.

E. Government Policies on Livestock Development

2.15 Government is beginning to recognize the important role of live-stock development in the diversification of its agricultural production. Ofthe planned development expenditure of Sh 371 million (US$ 52 million) in1967/68, the Ministry of Agriculture and Cooperatives was allocated nearlySh 50 million (US$ 7 million) or 12 percent of which the livestock sectoraccounted for about Sh 7 million (US$ 1 million). The bulk of this invest-ment is for clearing further areas from tsetse fly infestation, controllingtick-borne diseases, improving stock routes and quarantine stations and con-structing additional livestock improvement and breeding centers. Government'splans to extend its existing 1,400 miles of stock routes by another 1,600miles are contingent upon the provision of sufficient finance.

2.16 To promote livestock and crop development in the country's drylands, Government passed a Range Development and Management Act in 1964. TheAct empowers the Minister of Agriculture to set aside particular areas of thecountry as range development areas and to appoint a commission to administerthem. In addition, the Act sets out general provisions for controlling stocknumbers, grazing and cultivation rights and for facilitating range develop-ment by providing rights of occupancy to ranging associations formed by peoplewho hold customary rights in the areas concerned. The Government is also pro-posing to set up a National Livestock Commission which, as a statutory body,would advise it on all matters affecting the livestock industry, particularlywith respect to the organization and regulation of meat production and market-ing. These two pieces of legislation would provide the framework for thedevelopment of livestock production and marketing in large areas of thecountry. Following up this legislation, the Government has requested theassistance from UNDP of US$1.4 million for a major study which would investi-gate the potentials and means of increasing beef production from the tradi-tional sector.

2.17 Beef prices are free from central Government control for domesti-cally consumed beef. Tanganyika Packers Ltd (TPL), owned 51 percent by NDC,is a major buyer for the export market. For cattle meeting TPL's minimumweight criteria of 250 lb cold dressed weight (cdw), it pays a price ofSh 1.10 (US$0.15) per lb cdw. Cattle are purchased for domestic consumptionat prices ranging from Sh o.60 (Us$0.08) to Sh 1.40 (US$0.20) per lb cdw -slaughter weight and quality being the principal determinants of the differ-ential. There are no quotas on the export of meat. Government levies a taxof three percent on the export of processed meat. Municipal governmentscharge market and other fees ranging in total from Sh 2 to Sh 10 (US$0.28 toUS$1.40) per head marketed. Imports of virtually all agricultural inputs arefree from duty.

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III. THE PROJECT

A. ProJect Description

3.01 The Project would be part of the first stage of a long-term beefcattle production program. In this first phase finance vould be providedfor the development of five large-scale ranches owned by NACO. This vouldneed to be followed by a broader based second phase project with two closelyrelated objectives. The first objective would be to increase the sales ofcattle suitable for fattening from the large traditional sector by the wideruse of improved disease control measures and by the provision of better mar-keting facilities; the second, to raise the slaughter weight of these cattleby the introduction of improved bulls and the establishment of strategicallylocated fattening ranches. During negotiations assurances were obtained thatGovernment would undertake a survey of the livestock sector which would leadto a second phase integrated project.

3.02 For the investment program as proposed, provision would be made forfinancing on-ranch roads and firebreaks, fencing, water supply, stockhandlingand animal health control facilities, farm machinery, ranch buildings, pur-chase of breeding stock and an initial procurement of feeder steers for fat-tening. Finance for the cost of technical services and training would beincluded.

3.03 In the Credit request submitted by Government, the investment pro-gram included the development of a very large (254,000 acre) ranch complexlocated at Mkata as a breeding/fattening operation. However, this ranchat Mkata is subject to extensive flooding in the wet season, which makes asmuch as two-thirds of the area ungrazeable for up to four months of the year.In addition parts of it are infested with tsetse fly. While the flood areasoffer an additional grazing margin for exceptionally dry years, in view ofthe uncertainties involved, only about 80,000 acres of Mkata are included forinitial development in the present Project. The Project also comprisesranches at Kitengule, West Kilimanjaro and two further units to be selectedof approximately 80,000 acres each. Altogether, some 12 areas are at presentunder consideration as possible new sites for ranch development. Furtherportions of Mkata may be considered for fattening providing a study is madewith a view to determine the extent to which existing problems could be over-come, as well as the economic feasibility of such development compared withother possible sites. A field review of the feasibility of the two sitesselected for inclusion in the Project would be made prior to the IDA agree-ment to the site and for disbursement of IDA funds for their development.Assurances were obtained during negotiations that detailed ranch developmentplans for these latter two units would be submitted to IDA within the firsteighteen months from the effective date of the proposed Credit. A field re-view of their feasibility would be made by IDA in the course of projectsupervision.

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B. Project Area

3.04 The three existing project ranches are widely separated (See Map).Kitengule Ranch is in the West Lake region in the northwest part of Tanzania.West Kilimanjaro Ranch is located in the northeast region in the valley be-tween Mt. Kilimanjaro and Mt. Meru. Mkata Ranch is located on the railroadline about 200 miles due west of Dar es Salaam. For the sites of the twoadditional breeding/fattening ranches included in the project and yet to belocated, feasibility studies are being carried out at Pangani near Tanga,Missenye in the West Lake region and Kitulo near Mbeya in the southern region(See Map).

C. Detailed Ranch Features

3.05 The Kitengule Ranch, together with its extension, covers a totalarea of approximately 100,000 acres. Currently carrying about 9,000 animalunits comprising both local Zebu and improved Boran stock, this number wouldbe increased to around 16,000 at full development as a mixed breeding/fat-tening operation. The ranch lies at an altitude of 4,000 feet and is gentlyundulating to flat in contour. Annual rainfall, which normally exceeds 30 in,is reasonably well distributed. This ranch has had areas of tsetse fly in-festation on both its eastern and western boundaries. Control measures takensince 1966 by the Tsetse Control Division of the Ministry of Agriculture haveconsiderably reduced the level of infestation. Sufficient Government fundsare available to complete this work by mid 1969. Provision has been made inthe operating costs to maintain the barriers clear of bush and for drugs totreat the few cases of trypanosomiasis which may occur before the fly hasbeen eliminated.

3.06 The West Kilinanjaro Ranch of 82,000 acres is already stocked witha Boran-type beef breeding herd and a flock of Black-faced Persian sheep whichtogether total a cattle equivalent of around 7,000 animal units. The ranchis mostly flat with small areas broken in contour varying in altitude fromaround 6-7,000 feet. Rainfall is generally low at about 12 in per year. Itis outside the tsetse area.

3.07 The 80,000 acres of the Mkata Ranch included under the Projectare part of an extensive flat river basin. Situated at an altitude of about1,500 feet, the mean annual maximum temperature is 80-85°F (27-29°C). Ithas an average rainfall of around 30 in per year with a peak precipitationusually occurring from February to April and a dry period which normallyextends from June to October. At least two-thirds of the area to be se-lected would be free from flooding and hence grazeable all the year round.The third of the ranch subject to flooding would help to ensure an adequatesupply of feed during periods of drought while the remainder could carrythe stock during the wet season. Considerable areas of this ranch are mode-rately to heavily infested with tsetse fly and the cattle presently on theranch must be permanently protected with prophylactic drugs. Because of thedanger of inducing drug resistance, such areas are unsuitable for breedingstock. However, they can be used for grazing cattle over the much shorterperiod required for fattening. For these reasons together with its strategic

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location on the railroad line, this ranch would be used for fattening only.As such it vould have an important effect in increasing the weight of anappreciable number of animals sent for slaughter, and would begin to meetone of the objectives of a future second phase project (para 3.01). Duringnegotiations assurances were obtained from NACO (a) that all breeding cattlefrom the Mkata ranch would be transferred to two new ranches to be selectedas soon as these are ready for stocking (b) that Mkata ranch would be operatedas a fattening enterprise on approximately 80,000 acres (c) that NACO wouldtransfer any breeding stock on Mkata ranch in excess of 3,000 breeding cowsto other ranches during the period that the two additional ranches are beinglocated and developed and (d) but that NACO may operate approximately 80,000acres of Mkata ranch for the purpose of breeding and fattening cattle if evi-dence is submitted satisfactory to the Association as to the technical andfinancial feasibility of carrying on a cattle breeding enterprise on Mkataranch.

D. Land Tenure

3-.08 Land for the NACO ran etes is being obtained from Government on 99year leases at a rental of Sh 0.50 (US$0.07) per acre per year. Initially,provisional rights of user and terms are agreed to on the basis of sketchplans for the ranch land to be alienated. These provisional rights of userare replaced by registered Certificates of Occupancy after the completion ofa land survey. No disbursements would be made from proceeds of the IDA Creditfor investment on a Project ranch until the provisional rights of user coveringthe whole area for that ranch are established by Government and appropriatedocumentation is reviewed by IDA.

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E. Cost Estimates

3.09 The total estimated cost of the Project equivalent to US$2.04 mil-lion is summarized below by major investment categories (See Annex 3 fordetails).

Foreign ExchangeInvestment Category Cost Comionent

(Sh '000) (US, OOO) (US$'000

Physical Inputs

Roads and Firebreaks 740 104 73Water Supplies 2,260 316 190Fencing 680 95 56Spray Races/Dips 280 39 20Ranch Buildings 900 126 32Machinery and Tools 540 76 75Land Survey 100 14 -

Subtotal 5,500 770 446

Livestock

Improved Bulls 600 83 83Heifers 1,480 207 -Feeder Steers 4o6 568 -

Subtotal 6,140 858 83

Contingencies 1,175 164

Technical Services andTraining 1,770 248 151

Total Project Cost 14,585 2 040 680

3.10 Broken down by major investment categories, the bulk of the Projectcost would be for cattle (46 percent) and physical inputs for ranch development(42 percent). Funds for technical services and training account for the other12 percent of total Project cost. Funds allocated for initial purchases offeeder steers for fattening amount to 30 percent of total Project cost. Theavailability of such cattle is indicated by recorded sales of immatures throughthe primary markets. During the years 1960-1966 inclusive around 35,000 suchcattle were sold each year at a price ranging from Sh 85 to Sh 118 per head.In the Project cost estimates, the purchase price for immatures is conserva-tively estimated at Sh 200 per head. Approximately 20,000 unfinished cattleare currently being slaughtered each year at Tanganyika Packers Ltd (TPL).To discourage the sale of such unfinished animals for slaughter, TPL presentlypurchases this type of stock at a deliberate disincentive price of Sh 0.33 perlb liveweight compared to its price for slaughter stock above 500 lb liveweight

of Sh 0.55 per lb. In consequence, fattening is a profitable enterprise aswell as providing a method of quickly increasing beef output in Tanzania.

3.11 Cost estimates are based on prices prevailing in Tanzania. A con-tingency provision of around 10 percent is included to cover possible under-estimates in quantity and per unit costs of the inputs required for ranchdevelopment. The foreign exchange component is about US$680,000, 33 percentof total Project cost and 52 percent of the proposed credit. Estimates ofthe foreign exchange component of the Project were made on the basis of anassessment of the direct import portion of the inputs required for ranch de-velopment. The investment on each ranch would be disbursed over two to threeyears. Disbursement of the Project would be completed in four years. Esti-mates for technical services and training are projected in Annexes 4 and 5.

F. Proposed Financing

3.12 The Project cost of US$2.04 million equivalent would be financed asfollows:

Ranch TechnicalDeveloment Services and Training Total

Source (us$'ooo) (us$'ooo) % (us$ooo) %

IDA 1,165 65 161 65 1,326 65NDC/NACO 627 35 87 35 714 35

Total 1,792 100 248 100 2,040 100

Overall, the Credit would provide 65 percent of the total Project cost. NDCwould contribute 35 percent of Project on-ranch development costs as equitycapital. NACO would contribute 35 percent of the costs of the ranch manage-ment training program and technical services. Assurances with respect tothese financing arrangements were obtained during negotiations.

G. Lending Operations

3.13 The Credit would be made on normal IDA terms to Government, whichwould assume the foreign exchange risk. Government would lend the proceedsof the Credit to NDC for a term of 50 years including a grace period of 10years at 4 percent interest per year. NDC would relend to NACO these proceedsat 7 percent interest per year for a term of 12 years including a grace periodof 5 years. NDC would make available repayments of principal from NACO's loannot required to service the Government loan for financing the further develop-ment of the agricultural sector through its subsidiary agricultural companies.

3.14 Assurances were obtained during negotiations that: (a) Governmentwould make available to NDC the IDA funds for on-ranch development of NACOProject ranches on terms and conditions acceptable to IDA; (b) NDC would on-

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lend the proceeds of the Credit to NACO for development of Project ranchesfor 12 years including a grace period of 5 years at an interest rate of 7percent; and (c) NDC would make available repayments of principal not requiredto service the Government loan from its loan to NACO for financing the furtherdevelopment of the agricultural sector through its subsidiary companies.

H. Procurement

3.15 International bidding has been agreed for the purchase of fencingwire and water piping for Project ranches. Since the type and quality ofanimals required can only be obtained from specific areas of the world, inter-national competitive bidding would not be appropriate for livestock procure-ment for Project ranches. Other required physical inputs would be subjectto competitive bidding. Private contractors are available for the installationof water systems and construction of fencing.

3.16 All purchases of livestock required for the Project would be subjectto the approval of the Chief Development Officer (Ranching) and the purchasedlivestock would be inspected by the Chief Veterinary Officer before beingreleased on Project ranches. There is an adequate supply of immatures andunimproved breeding heifers in the country. Boran bulls would be purchasedfrom Kenya to upgrade local heifers on Project ranches. The development ofProject ranches would require in-country purchases of about 20,000 immaturesannually for four years. A total of 7,400 heifers suitable for crossing withimproved Boran bulls would be purchased in the country during the developmentperiod.

I. Disbursements and Auditing

3.17 NACO would submit appropriate documentation through NDC to IDAsigned by the Chief Development Officer (Ranching) and the Chief Accountant(NDC) for the disbursement of funds for ranch development. Withdrawals fromthe IDA Credit for the development of project ranches would be 65 percent ofthe disbursements made by NDC to NACO for the amounts paid by NACO for ranchdevelopment expenditures. Disbursements for 65 percent of the cost of NACO'stechnical services and training would be made against appropriate documen-tation certified by the Chief Accountant of NACO for such amounts as shallhave been paid by NACO for this category.

3.18 Independent commercial auditing services are available. CooperBrothers, a well-known international accounting firm with branch offices inTanzania, regularly audits the accounts of NDC and its subsidiary companies.These auditing services and practices are satisfactory. Assurances have beenobtained that separate accounts would be kept for each project ranch and thatthese accounts and the financial accounts of NACO would be audited annuallyby an accountant or accounting firm acceptable to IDA. Furthermore, theseaudited accounts would be forwarded to IDA within three months after theclose of NACO's fiscal year.

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J. Financial Implications

3.19 While NDC would contribute Sh 4.5 million (us$ 630,000) in equitycapital to NACO, it would have recovered in the 12th year of the Projectafter administrative expenses about Sh 9.7 million from the 3 percent spreadon its 12-year loan to NACO and the repayment of this loan to NDC. ThisSh 9.7 million (Us$ 1.36 million) would be reinvested in NDC's subsidiary agri-cultural companies. NACO's estimated net annual operating income from Projectranches before debt service would be Sh 2.8 million (US$392,000) at full de-velopment. After full repayment of the loan to NDC but before payment ofcorporate taxes (40 percent) the Project ranches would have generated an esti-mated cumulative cash surplus of Sh 10.6 million (US$ 1.5 million). NACO hasprojected its paid up capital stock (wholly owned by NDC) to be about Sh 43million (US$ 6 million) at the end of the disbursement period of the proposedloan. The long-term debt of NACO at the same time is estimated to be aboutSh 9 million. This would result in a very favorable ratio of medium termdebt to equity of almost 1 to 5. The financial implications of the Projectfor NDC and NACO are projected in Annex 3, Tables 4 and 5.

IV. ORGANIZATION AND MANAGEMENT

A. Project Organization

4.01 NACO would be responsible for carrying out the proposed Project.This company, proposed by NDC's Board of Directors in December 1967, waslegally incorporated on May 22, 1968. This incorporation of NDC's formerAgricultural Department into a separate subsidiary company has a number ofadvantages. It establishes a self-contained corporate and financial bodywhich facilitates financing development projects, permits realistic evalua-tion of operational and financial resuLts, and it is headed by a separateboard of directors who are responsive to the livestock industry. This boardwould be composed of five directors including the General Manager of NDC aschairman, the Principal Secretary and the Director of Veterinary Servicesfrom the Ministry of Agriculture and Cooperatives, the Principal Secretaryfrom the Ministry of Lands, Settlement and Water Development, and a prominentlocal farmer.

4.02 NACO would be responsible for planning, organizing and implementingthe investment program for each ranch, as well as for its management. Theprincipal administrative officer of NACO is the General Manager. Other admin-istrative officials directly concerned with the proposed Project would bethe Chief Development Officer (Ranching), the Chief Veterinary Officer andSenior Ranch Managers who direct the day-to-day operations of the ranches(see Annex 1 Chart 2).

4.03 The position of General Manager would be filled by a qualifiedTanzanian. The positions of Chief Development Officer (Ranching) and ChiefVeterinary Officer are filled by expatriates from the U. K. Any appointmentsto the positions of General Manager, Chief Development Officer (Ranching) andChief Veterinary Officer of NACO would be subject to the prior approval of

- 12 -

IDA during the Project disbursement period. The appointments of Senior RanchManagers of Project ranches would be subject to the approval of the GeneralManager, NACO, and the Chief Development Officer (Ranching) after prior con-sultation with IDA.

B. Capitalization of NACO

4.04 NDC has capitalized NACO with an authorized share capital of Sh 50million (US$ 7 million). Its initial paid up capital is Sh 17.4 million(US$ 2.4 million) being the equivalent of the amount of outside loans owed bythe Agricultural Department, its open capital account with NDC and cumulativelosses. This capitalization gives NACO a satisfactory financial position.It is now free of past debt and interest obligations to NDC. See Annex 1,para 17 and Table 6 for details of the Agricultural Department's financialcondition prior to incorporation and the capitalization of NACO by NDC.

4.05 Currently, NACO is considering an extensive program of developmentin the dairy sector. When the beef ranching development project was appraised,NDC planned to invest about Sh 15 million in dairy development through NACO,a sum about three times as large as NDC was planning to invest in beef deve-lopment from 1968-1972 No development plans have been put forward by NACOto indicate how this money would be utilized. In view of the size of thepotential investment in relation to NDC's proposed contribution to the beefproject, the fact that no detailed investment program has been put forward,NACO's lack of prior experience in the dairying field and the possibilitythat losses in the dairy program could impair the success of the beef ranchingprogram, assurances were obtained during negotiations that NACO would informthe Association of any proposed investment projects in dairying, sufficientlyin advance of such investments to enable NACO to take into account the commentsof the Association with respect to the technical feasibility and the economicand financial viability of such investment projects.

C. Technical Services and Training

4.o6 Technical services for the Project would be provided by the ChiefDevelopment Officer (Ranching), directly responsible to the General Managerof NACO. The Chief Development Officer (Ranching) would be assisted by theChief Veterinary Officer.

4.07 Finance for the cost of the Chief Development Officer (Ranching)and the Chief Veterinary Officer during the disbursement period of the Projectis included in the cost estimates of the Project; thereafter they would bemet from NACO's operating income. Finance is also included for short-termconsultant services to assist the Chief Development Officer (Ranching) (a) inpreparing the financial and economic aspects of the Project ranches (b) indeveloping plans for efficient livestock watering facilities and (c) evaluatingthe effectiveness of tsetse clearance and control measures for Project ranches.Details of the phasing and costs of technical services are given in Annex 4.

- 13 -

4.o8 The Agricultural Department of NDC had pursued a practical re-cruitment and training program of assistant ranch managers and field assis-tants for its ranches. NACO intends to continue this program. By 1970 some30 assistant ranch managers will complete their on-ranch experience (sixmonths) and classroom courses of two years in Tanzania Training Institutes,and University College at Kabete in Kenya. Assistant ranch managers will thenbe placed on ranches to work under the close supervision of the Senior RanchManagers. After four years of such additional experience, selected men willbe promoted to ranch managers.

4.09 In addition, some 25 Field Assistants will be given a year'straining course on the ranches. Six months will be spent on practical workprograms on NACO ranches and six months will be spent on basic courses onthe principles of elementary veterinary, animal husbandry and range manage-ment practices.

4.10 Currently, the expenses of this program are being met out of annualoperating income. In view of the anticipated ranch management needs of NACOand in view of the likely requirements of the livestock industry for suchmanagement skills, finance is provided for this program from the proposedCredit. Further details as to numbers participating, phasing and the annualcost are given in Annex 5.

V. MARKET PROSPECTS AND RANCH INCOMES

A. Marketing

5.01 An extra 1,600 tons of beef are expected to be produced annually atfull development from the Project, most of which would be consumed domesti-cally. Fat stock from Kitengule Ranch would be sold on-ranch to local butchersin the West Lake region to meet the rising demand for better quality meat inthat area. Surplus cattle above local requirements would be shipped acrossLake Victoria to Port Bell in Uganda for sale to the Uganda Meat Packers, Ltd.Surplus heifers would be sold to cooperative ranches being established in theWest Lake region. In neighboring Uganda improved Boran-cross heifers two tothree years of age are currently selling around Sh 500 per head. Cattle andsheep from the West Kilimanjaro Ranch would be marketed in the Arusha/Moshiarea. The establishment in Arusha of the headquarters for the East AfricanCommunity would provide an outlet for a large part of the quality beef andmutton supplied by this ranch. The bulk of the fattened steers from MkataRanch would be railed to Dar es Salaam for slaughter at the Tanganyika Packers,Ltd (TPL) plant. About one-half would be processed for export in cans, theother half slaughtered and sold for local consumption in Dar es Salasam. Themarketing outlets for the two unsited breeding/fattening ranches to be includedin the Project would be reviewed in the course of their evaluation.

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B. Production and Income on Project Ranches

5.02 The benefits to Project ranches from the new investments are pro-jected in Annex 2, Tables 1 - 4. These expected results are summarizedbelow:

Before After Five After Full PercentRanches Development Years Development- Lncrease

Kitengule Ranch (100,000 acres)Total Herd (Head) 12,250 21,600 21,600 76Cattle Sales (Head) 3,1,870 3,770 3,900 108Net Operating Income (Sh'000)-' 296 895 959 224Herd Value (Sh'000) 4,358 7,521 7,540 73

Mkata Fattening Ranch (80,000 acres)Total Herd (Head) 4,000 12,000 12,000 200Cattle Sales (Head) 3,760 11,520 11,520 206Net Operating Income (Sh'000)-' (812) 500 500

West KilimanJaro Ranch (82,000 acres)Total Cattle Herd (Head) 6,100 7,642 7,920 30Cattle Sales (Head) 920 1,200 1,400 52Total Sheep Herd (Head) 5,400 6,200 6,200 15Sheep Sales (Head) 1,130 1,510 1,510 34Net Operating Income (Sh'OOO) 139 250 352 153Herd and Flock Value (Sh'000) 2,540 3,040 3,174 25

Typical Breeding!Fattening Ranch(80,000 acres)Total Herd (Head) - 14,520 15,840 -Cattle Sales (Head) - 4,300 2,860 -Net Operating Income (Sh'000) - 470 565 -

Herd Value (Sh'000) - 3,974 5,533 -

1/ Seven Years for Kitengule, four years for Mkata, and seven years for WestKilimanjaro.

2/ After full development compared to before development.3/ Before taxes.

C. Financial Incentives

5.03 Prices received by producers of improved fat stock for sale forlocal consumption vary between Sh 0.70 - 0.75 per pound liveweight. Salesof fattened native steers to TPL and local butchers return Sh 0.55 - 0.60per pound liveweight. Sales of improved in-calf heifers are likely to obtainSh 500 per head (us$ 70). The increasing demand for improved breeding andfat stock, as well as fattened stock from the traditional cattle areas, islikely to keep these prices at or above these levels.

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5.04 There is a proposal for the establishment of a National LivestockCommission. Its functions would be to "promote, organize, regulate, controland develop the production, marketing, processing and distribution of live-stock, meat and meat products and by-products." This Commission intends tomake substantial improvements in the present live cattle marketing and distri-bution sector of the industry.

VI. BENEFITS AND JUSTIFICATION

6.01 The principal direct benefits resulting from the Project would bean increased production of beef and the increased production of improvedheifers, At full development, 1,800 additional breeding heifers valued atSh 900,000 (US$126,000) would be sold annually from Project ranches. The in-creased annual output of beef is estimated at 1,600 tons, cold dressedweight, valued at approximately Sh 4 million (US$56o,ooo).

6.02 The financial rate of return on the investment, adjusted after cor-porate taxes, is about 11 percent for Project ranches. The internal rate ofreturn to the economy of Tanzania, discounted over the life of the Project,is about 18 percent (Annex 7, Table 1).

6.03 The production of improved grades of beef from Project rancheswould partially meet the increasing internal demand for this type of meat.Stock from fattening ranches would be sold for canning and export and fordomestic consumption. The production of breeding heifers and improved bullswould substantially reduce Tanzania's import requirements from Kenya. Esti-mated foreign exchange savings from this latter source together with theforeign exchange earnings achieved from export sale of canned beef productionwould amount to about Sh 1 million (US$140,000) a year net of annual foreignexchange outlays directly imputable to the Project.

6.04 In addition to the benefits specified above, there would be cumu-lative direct benefits which are not quantifiable. The demonstration ofbetter management practices, improved production and disease control tech-niques are examples of such benefits accruing to the economy. Also, thepractical training program for assistant ranch managers and field assistantswould provide qualified staff for these and future beef ranching developmentschemes in Tanzania.

VII. CONCLUSIONS AND RECOMMENDATIONS

7.01 The Project is technically sound and economically justified. Thefinancial rate of return accruing to the investment in NACO is adequate.The rate of return to the economy is satisfactory. A Credit of US$1.3 mil-lion is appropriate. The borrower would be the Government of Tanzania.NDC would channel the Credit funds from Government to its subsidiary, NACO,as a long-term loan. NDC would contribute 35 percent of ranch developmentcosts to NACO in the form of an equity subscription. The Credit would be

- 16 -

about 65 percent of total Project cost. While the Bank's Economic Committeerecommended an average of 70 to 75 percent financing for projects in Tanzania,65 percent is considered appropriate for the Project in view of the projectedfinancial resources available to NACO from NDC. The foreign exchange componentwould be about 52 percent of the proposed credit.

7.02 During negotiations, assurances were obtained that:

(a) The Government of Tanzania would:

(i) undertake a survey of the livestock sector whichwould lead to a more broadly based project designedto integrate the traditional and commercial beefproducing sectors (para 3.01);

(ii) relend the proceeds of the Credit for ranch developmentto the National Development Corporation for a term of50 years including a ten-year grace period at 4 percentinterest per annum for these funds (para 3.13);

(b) The National Development Corporation would:

(i) contribute to NACO 35 percent of Project developmentcosts in the form of an equity subscription (para. 3.12);

(ii) on-lend the proceeds of the Credit to NACO at 7 percentinterest per annium for a term of 12 years including afive-year grace period for the development of Projectranches (para 3.13);

(iii) make available the proceeds of the payments receivedfrom NACO, not required to service its loan to Govern-ment and to defray administrative costs in respect toits NACO loan, for the purpose of financing furtheragricultural development through its subsidiary agri-cultural companies (para 3.13).

(c) The National Agricultural Company Ltd would:

(i) submit to IDA for its approval within 18 months of theeffective date of the proposed credit the full ranchdevelopment plans of the two new ranches to be selectedprior to requesting disbursement for development of thesetwo ranches (para 3.03);

(ii) transfer all breeding stock on Mkata ranch to two newranch sites as soon as these are ready for stocking, andthereafter operate Mkata as a fattening enterprise(para 3.07);

- 17 -

(iii) submit evidence to IDA of the provisional rights of userfor each Project ranch prior to requesting disbursementfrom IDA for investment on that ranch (para 3.08);

(iv) undertake international bidding for the purchase offencing wire and piping for water supplies for Projectranches and subject purchases of other physical inputsto competitive bidding (para 3.15);

(v) subject all purchases of breeding stock for Projectranches to the approval of the Chief Development Officer(Ranching) and inspection by NACO's Chief VeterinaryOfficer (para 3.16);

(vi) maintain separate accounts for each Project ranch,arrange for the auditing of these accounts and theaccounts of NACO by an accountant acceptable to IDA,and forward the audited accounts to IDA 3 months afterthe close of WACO's fiscal year (pars 3.18);

(vii) consult with the IDA on the appointment of Senior RanchManagers for Project ranches (para 4.03);

(viii) obtain the approval of IDA for any appointments tothe positions of the Chief Development Officer (Ranching)and the Chief Veterinary Officer under terms and con-ditions satisfactory to IDA during the disbursementperiod of the IDA Credit (para. 4.03);

(ix) obtain the approval of IDA for any appointment tothe position of the General Manager of NACO during theperiod of disbursement (para 4.03); and

(x) submit the investment program in the dairy sector forprior review by IDA (para 4.05).

ANNEX 1

TANZANIA

BEEF RANCHING DEVELOPMENT PROJECT

National Development Corporation

A. Background

1. The National Development Corporation (NDC) came into existence onJanuary 1, 1965. It was effected by an Act of Parliament passed in December1964 "to reconstruct and rename the Tanganyika Development Corporation Act,1962, to make provision for the transfer of certain assets of the Governmentto the said Corporation, to dissolve the Tanganyika Agricultural Corporation(TAC) and to transfer its assets and liabilities to the National DevelopmentCorporation".

2. Under the amended Act, "the business of the Corporation shall beto facilitate and promote the economic development of Tanganyika". It isgiven broad powers to achieve this objective by conducting business eitheralone or in association with any other person or body.

B. Organization

3. As provided in the amended Act, 1964, the members of NDC, whofunction as a Board of Directors, shall consist of:

(i) a Minister of State, nominated by the President, who shall beChairman;

(ii) five other Ministers, being the Ministers for the time being ofFinance, Industries, Commerce, Agriculture and Tourism; and

(iii) four other persons (referred to as "appointed members") appointedby the President.

The Minister for Finance is Deputy Chairman

C. Management

4. Business operations are conducted by a senior staff of about20 members through three principal divisions: Development, Finance and Invest-ments, and Business and Accounts. (See Chart 1 for organization structure.)Most staff members are Tanzanian citizens. The general manager, who is aGovernment career official, 38 years old, was appointed by the President inNovember 1966. The deputy general manager is an expatriate on contract. Thestrongest unit in NDC's organizational structure is a Projects Appraisal Com-mittee composed of the general manager, deputy general manager, chief accoun-tant, chief economist, chief development officer, and the managers of NACO

ANNEX 1Page 2

and the Tanzania Finance Company. This committee, which meets weekly,initiates policy, reviews investment projects, supervises operations andprepares the agenda for the Board of Directors.

D. Financial Condition and Operations

5. Whereas the predecessor corporation, Tanganyika Development Corpo-ration, was financed by subsidies from the Treasury, the NDC is self-financingand, apart from borrowed funds and goods transferred to it under inter-Governmental technical assistance, relies entirely upon its own income frominvestments for its operations. In this sense, the Corporation is a commercialorganization which needs to exercise its best efforts to operate at a profit.

6. NDC's capital fund represents the various amounts of shares andgrants received from Government plus the net assets taken over from theTanganyika Agricultural Corporation. This amounts to nearly Sh 100 million(US$14 m). Net operating surpluses of around Sh 10.5 million (US$ 1.5 m)annually since its incorporation have substantially improved NDC's totalreserves. These have increased from only Sh 2.8 million at the beginning ofits establishment (January 1, 1965) to about Sh 27 million (uS$ 3.8 m) at theend of 1966. They were further increased to Sh 77 million (US$ 10.8 m) for 1967.

7. NDC's net operating surplus (before provision for depreciation ofinvestment and loans) was Sh 10.9 million for 1965 and Sh 10.4 million for1966. Comparatively, its income was higher in 1967, about Sh 29 million(Annex 1, Table 2). This increase is attributable mainly to much larger divi-dends from its shares in Williamson Diamonds Ltd, which accounts for 70-75percent of its total gross income. Due to a change in 1966 in sorting arrange-ments of diamonds, only six sales were made, whereas normally 12 sales aremade annually. Hence, 18 sales were to be made in 1967. NDC projects itsaverage annual net income at around Sh 24 million (US$ 3.4 m).

E. Investment Portfolio and Policy

8. NDC's portfolio of investments and commitments covers a wide rangeof sectors. The principal sector is mining which accounts for 38 percent,but much of this is represented by its inherited shares from Government inWilliamson Diamonds Ltd. (NDC holds 50 percent of total shares). Agriculture,16 percent, and agricultural processing, 20 percent, closely equal the amountof investments in the mining sector. Other sectors of investment includehotels and tourism 7 percent, finance 6 percent, textiles,5 percent andmiscellaneous 8 percent.

9. It is a stated policy of NDC to place first priority of investmenton the agricultural industry (principally livestock and livestock products)and second priority on tourism.

ANNEX 1Page 3

F. Agricultural Department

Background

10. When NDC came into existence on January 1, 1965, it took over theassets of the Tanganyika Agricultural Corporation. These assets comprisedfive ranches - Ruvu, Mkata, Kongwa, Nachingwea, Kitengule plus the head officein Dar es Salaam. Another ranch, West Kilimanjaro, was acquired later in1965. All of the ranching operations have been handled by an agriculturaldepartment within NDC.

Financial Operations

11. Operational losses were incurred by the Agricultural Department in1965, 1966 and 1967 (Table 5). Several reasons account for these losses.Foremost has been the operation of the Nachingwea ranch situated in the south-east corner of Tanzania. It was operated as a beef breeding ranch for whichit is unsuitable because of unfavorable ecological conditions. In the future,it would be operated as a holding ground for grass fattening of cattle forshort intervals of three to four months. On this basis it is projected tobreak even. Other losses incurred are attributable to a one-time operationin 1966 (at Government request) of a holding ground a Shishiyu which waspoorly equipped and basically not suitable for short-term feeding operations;and the creation in 1966 of a Marketing and Planning Section at headquartersto which all planning and programming costs are charged but which more aptlyare development costs.

Management

12. At the time of appraisal, the position of General Manager of NACOwas filled by an able and well-qualified Tanzanian. Any new appointment tothis position of General Manager of NACO would be subject to the approvalof IDA. Three of the six ranches have expatriate managers. Assistantmanagers and field assistants are Tanzanians. NACO has had undervay forsome time a practical recruitment and training program to develop ranchmanagerial capabilities. Ultimately, some of the Tanzanian personnel wouldbe qualified for senior level management responsibilities.

13. The position of Chief Development Officer (Ranching) was establishedin 1967 and filled by a U.K. expatriate from the Agricultural DevelopmentService, Nairobi. The position of Chief Veterinary Officer is filled by anexpatriate from the U.K. The Chief Development Officer (Ranching) and theChief Veterinary Officer would be directly concerned with the development andoperations of the proposed Project ranches. These are key positions wherequalified and experienced management abilities will be vital for the successof the Project. Appointments to these two positions would be subject to theprior approval of IDA. The next lower echelon of management, Senior RanchManagers for Project ranches, would be subject to the approval of the GeneralManager of NACO and the Chief Development Officer (Ranching) in consultationwith IDA.

ANNEX 1Page 4

National Agricultural Company Ltd (NACO)

i4. Essentially, NDC is a development bank and a national holding companyfor Government's business interests. These functions are fundamentally dif-ferent from the operation of ranches, and it was an anomaly for NDC to showlivestock in its assets whereas otherwise its interests are composed predomi-nately of shares and debentures. Forming the Agricultural Department into alimited liability company places these investments in the same position asNDC's other investments. The advantages are as follows:

(a) NDC's liability is limited as a shareholder;

(b) NDC's investments are properly secured either as loan orequity;

(c) The new company has an established capital structure onwhich a proper return on capital could be evaluated;

(d) the new company has a Board of Directors who would reflectthe interests of the agricultural industry and would improvecoordination of national development policy; and

(e) the new company would be able to enter into partnership withother interests, local or foreign, for the promotion of jointventures.

15. NDC transformed the Agricultural Department into a subsidiary,the National Agricultural Company Ltd (NACO), effective May 22, 1968.

Administration of NACO

16. The present Board of Directors is composed of:

General Manager, NDC - ChairmanPrincipal Secretary, Ministry of Agriculture and CooperativesDirector of Veterinary Services, Ministry of Agriculture and

CooperativesPrincipal Secretary, Ministry of Lands, Settlement and Water

DevelopmentManager - Tanganyika Packer's Ltd.A prominent farmer (yet to be appointed)

The General manager is paid by NDC and seconded to NACO, as is the ChiefAccountant. The General Manager of NACO reports twice yearly to the Board ofNDC on progress of operations and brings to the Board further applications forinvestment by NDC in NACO. The organization of NACO is shown in Chart 3.

Capital Structure

17. NACO was incorporated in May 1968 with an authorized capital ofSh 50 million (US$ 7 m). The first step was the conversion of net assets and

ANNEX 1Page 5

long-term loans of the Agricultural Department into paid-up capital of aroundSh 17.4 million (US$ 2.6 m). Thus, NACO would have a sound financial base,free of interest and loan repayment obligations. Included in the phased capi-tal contribution by NDC to NACO is Sh 4.5 million (US$ 630,000) for the furtherdevelopment of the five ranches envisaged under the Project. NDC estimates ofits future phasing of paid-up capital to NACO are shown in Annex 1, Table 6.

ANNEX 1Table 1

TANZANIA

BEEF RANCHING DEVELOPMENT PROJECT

National Development CorporationAnnual Balance Sheet, 1964-1967

(Sh Million)

DECEMBER 311964 1965 1966 1967

ASSETS

Cash and Bank Balances 0.8 3.6 0.1 1.2Short-Term Deposits 1.7 8.9 0.5 32.7Debtors 0.3 1.7 0.8 5.1

Stock and Stores - 9.1 11.4 12.0Expenditure and Carried Forward - 0.3 0.7 3.7Subsidiary Companies (Shares and Loans) 5.8 19.7 26.6 111.5Associates (Shares and Loans) 18.1 82.7 87.1 95.8Land, Buildings and Installations 0.2 5.1 4.9 5.hPlant, Machinery and Equipment 0.1 1.0 1.1 1.3Capital Works in Progress, Estate and

Ranch Development - 0.2 0.6 1.9

TOTAL ASSETS 27.0 132.3 133.8 270.6

LIABILITIES

Bank Overdrafts - - 0.7 -

Creditors and Accrued Charges 0.1 2.0 1.7 4.2Taxation 0.8 0.7 0.5 0.3Short-Term Loans - 6.5 1.9 13.6Subsidiary Company -- - -

Long-Term Loans - 9.2 6.9 78.8

TOTAL LIABILITIES 0.9 18.4 11.? 97.1

CAPITAL AND RESERVES

Capital Fund 23.2 95.1 95.1 96.5Capital Reserve 2.8 9.9 12.0 20.7Revenue ReservesGeneral - 7.0 12.8 4l.8Subsidiary Companies' Losses - 1.1 1.7 4.2Unappropriated Profits 0.1 0.8 0.5 3.3Provision for depreciation of

investments _95

TOTAL NET ASSETS 26.1 113.9 122.1 173.5

TOTAL 27.0 132.3 133.8 27C.4

Source: NDC Annual Reports.

ANNEX 1Table 2

T A N Z A N I A

BEEF RANCHING DEVELOPMENT PROJECT

National Development CorporationProfit and Loss Account. 1965-1967

(Sh Million)

1965 1966 1967

Income from Subsidiaries 2.0 2.4 4.8

Income from Associates 12.3 10.3 4o.7

Interest Earned Less Interest Paidon Deposits 0.3 0.3 1.o

Miscellaneous Income 0.2 0.3 0.217.7 13.3 46.7

Losses Less Profits of Direct Projects 0.8 .7 4W 12.6 46.1

Head Office Administrative Expenditures 3.1 2.2 6.7

Net Operating Surplus of the Corporation 10.9 10.4 39.4

Provision for Depreciation of Investmentsand Loans - 2.6 6

10. 797Unappropriated Profits of the Previous Year 0.1 o.8 0.4Net Operating Profits 11.0 87 32.2

APPROPRIATIONS

Capital Reserve 2.1 2.1 -General Reserve 7.0 5.5 29.0Reserve for Losss of Certain Subsidiary

Companies 1.1 0.6 2.510.2' 31.5

Unappropriated Profits Carried Forward o.8 o.4 0.711.0 72.2

Source: NDC Annual Reports.

ANHZS 1Table 3

BEEP BANCHINB EEOOLOPMENT PROJECT

NATIONAL DE7ELOFMENT OFORPEATETON

INCOME OF TiHE EOFOB ATION JANUARY 1 - DBCIIBkE 31, 1967 INEVETIMBTS AND IOANS, DEBOEREB 31. 1967

Subsidiary Coanies Dimid-nde (TSh) Tasret (TEhs) Sobhidiary Companies Shares (TShs) Lo.sa (TShW)

ohioba Tea Cespany Limited _ 63,596 B. A. T. Taasaeia Lieited 39,600,000 -

ITtera-ti-la Tradiag ad Credit Bkoba Tea CGongny LImited 2,700,900 1,700,000Company af Tegmayika Lisited 1,617,030 -

Coastal En1Iry ITdetries Limited 325,900 -L.oc acyora Hatels Liaited - 10,000

PFrisdship Tactile Mill LTAited 20,000 _Mhanaaahi Engine-ring ad Co-

tr-otiDg Com0py Limitod 108,333 - Oateecatloal Trading aad CreditCnspmy of Taageytka Limited--

National Printing Company Limited - 9,902Etliajaro Bre-eie Limited 9.070,620

Heo ifrio- BoHsI Limited - 956Kiliajaro Kotal Limited 2,000 -

Ny-nsa SaIt Hines (Teaganyika) Limited - -Lake H¶aaaEtels Llnitad 1,060,000 21,,000

T-ogacyiko Tost-nt Coffee CompanyLimit.d - 87,062 Lime Prod-ote De-liop.-nt Liited 295,000 -

Ta-ganyik. Heersoheom Corporatio Heananohi Engineer-ig d Can-Limited -105,42 tra-ting Compy Limited 1,776,000 _

Tganyika Paok-re Lisited 1,90,H9t8_ - Hnanohi Trading Cs,pany Limited 95,260

Tanzania ireanries Limited 837,300 - Natio-n Printing Ceepany Limited 939,420 385,900

Tanzania Cashe.. HMahines Limited - 16,796 Hatiana1 Small IdustriesCoeporaito Limited 768,000-

Tan.ania ti Di d COtting CoGpany Linited - 12,740Nee Afrio- Hotels Limited 3,161,958 150,000

Tanznia Hildlifm Safaris Limited - 20,000NortherB DBiries Limited 40,0000

4,454,151 334,494 Nlza Salt Nines (Taganyika).......... ....... .. _. Limited

Toinl per prasit nd Loss acOGot TOts 47868645 Seremsti Sefari Lodges Limited 2,000 -

Tanganyika Thetnt CoffesCempany Lamited 2,400,000 1,600,00P

A.sooaited CanpaniseTanganyka Mee-ehaon

FPetoh ya Viaitni Hotels Limitsd - 7,500 Coep-ratio Lisited - 1,450,000

.hamm, NBega, Igemb.. bo Co- Tangauyikt Paokere Limited -overatie ai- Lio ited - 92,995

Tanzania Breveri- , Limited 13,418,027 -Kila.a Listrirt Deelopmemt ordo -

K-natilt Yet t.. Li ited - 44,129 iOne C.sth Macthime, Limited 1,000 270,000Tanaia Manad Totting

Me.-hi TLimt- d Vhil Cempry Limited 1,590,000 2,000,00CA,.- bl.- L1mited -5,965 _

Tazania Zlina SWp1lise Ligited 360,000 _M-ane Teottlee Limited - 11,630

Ng-T=leli FeD-rs T nr 4i Tinmo, Compeny Limid 20cc,T isOenCooperatims Usio Limited -- '8" Shares 2,300,000

Sihl So Mills (T,ang-y-ia) Limited _ 12,169 Tanzni Ptbli.hltO Noose Limited - -

Taganyikaa Portlftd Cemet Tanaia Tohaco Proo..simgCompany imitad 8 06,326 Company L00itd 2,000,000 -

Tanganyika Tegry Pleotis LiUited - 69,306 Tanania Wildlifa Safaris Limited 1,100,000 ,00,000

Tang-nyiaa Tobaaoo Hoard - - Tambo Chipboards Limited 336,0o0 -

Tanite Company Limited - 37b,250103,330,285 6,195,900

Williansoc DiEande Limited 40,000000 -_

Total per baano- shtot TSOs 111,526,185hO,005,965 698,305 ................. ......... ...

Totd1 per pr-Tit and lose aooaant TSh bo,70C4,270 Aesoniatsd Coopsaie

Host Africa Iadotrial PenmatianSaro.oes (Tana.nia) LimIted 2,000,000

Purata ye Viticni Sotels LUnited 450,000 100,000

H.11ar-k Hotels (Taoeanta) Limited 600 -

Yhean, Nesga, Igebec.a.bOc-operattos InUi- Limited - 1,156,638

tilasa Dhetriot D)ceop.eet Board - -

Ocantili Estates Limited 000,000 -

M-ananohi Traco,r and Vehicleissehbler Limited 258,720

M-nee Tentilee Limited 6,000,000 1,0oo,o0O

Natianal C.-operatime andDer-pMant Batk 2,500

N.tiol Steel Corporatioc Limited 20

S.lli bEtetas Limited h,882,260 -

Sikh SOa Hillc (Tangeiki) Licitad 1,019,362 132,000

Sisi Tntertr-ee. Limited 10,000 -

Company Lisitmd 6,000,000 -

Tanganyka Portland OmnetCr Lany imited 5,136,000 400,00

Tanganyika Tegry Pl-sticsLimited 1.170,000 1,103,60C

Tanite Compay Limited - 7,b85,00n

Tanzania Beg Corcoratio Limited 300,000

Willisan taDiadeLi.ited 56,451,500 -

83,8827962 11,957,230

Total psr balane sheet TShA 95,810,200

ANNEX 1Ta_bl_e 1

TANZANIABEEF RANHCING DEVElOPMENT PROJECT

CONSOLIDATED BAIANCE SHEETSAGRICULTURAL DEPARTMENT (NDC) 1965-1967

NATIONAL AGRICULTURAL COMPANY LTD., JAN. 1, 1968(sh'000)

ASSETS Decenber 31 January 1 LIABILITIES December 31 January]

1965 1966 1967 11968 1965 196O 19b7 1968

Current Assets Current Liabilities

Cash 1,688 112 767 767 Accounts Payable 290 357 315 315

Accounts Receivableand Sundry 1,202 462 454 455 Provisions 257 552 638 326

Debtors NDC HQ's Advances - - 1,900Livestock 8,618 11,020 11J,646 11,646 Sub-total 547 909 2,853 641

Non-prjoect ranches _ (5,923) (5,186 (5,186) Long-term liabilitiesProject ranches: / a Ranrc (Gov't Loan) 812 853 896Breeding stoc,3 (3,583) (5,825 (5,825) Ruvu Ranch (Gov't Loan) 1,500 1,500 1,440Feeder Stock- (1,514) ( 635 ( 635) British Aid (ex-Treasury) 1,168 1,168 1,168

Supplies 507 442 374 374 British Aid (ex NDC HQ's) 789 789 789

Sub-total 12,015 12,036 13,241 13,242 NDC HQ's W. Kilimanjaro 1,970 1,970 1,970.Sub-total 6,239 6,280 6,263

FIXED ASSETSLand and Buildings 3,781 3,584 3,540 3,981 TOTAL LIABILITIES 6,786 7,189 9,116Plant and Machinery 279 275 248 248Tractors and Vehicles 455 489 483 483 NET ASSETSFormation and Develop-ment expenses 135 141 146 146 NDC HQ's Current Acct. 10,955 10,955 10,955

Capital Works in Progress 83 52 120 120 Current and CumulativeMiscellaneous 89 83 107 107 Loss carried forward (904) (1,4814) (2,186)

Sub-total 4,822 4,624 4,644 5,085 TOTAL NET ASSETS 10,051 9,471 8,769 _- -SHARE CAPITAL 641

Authorized capital 50,0)Issued capital 17,373General Reserve 313

Total 16,837 16,660 17,885 18,327 Total 16,837 16,660 17,885 18,327

I/Paentheses indicate sub-totals by class of stock for non-project and project ranches.

SOURCE: NDC and NACO

ANNEX 1Table 5

TANZANIA

NATIONAL DEVELOPMENT CORPORATION

AGRICULTURAL DEPARTMENT

Consolidated Profit and Loss Statement.1965 - 1967(Sh to0)

1965 1966 1967

Agricultural Department Headquarters (230) (908) (1,197)

Kitengule Ranch (357) (395) ( 310)

Kongwa Ranch 257 893 946

Mkata Ranch (140) 6 ( 43)

Ruvu Ranch 103 428 102

West Kilimanjaro Ranch 18 ( 40) 11

Subtotal (349) ( 16) 4 491)

Nachingwea Base, Farms and Ranch (555) (564) ( 131)

Total (904) (580) ( 622)

Source: NDC - Agricultural Department and NACO.

ANNEX 1Table 6

TANZANIA

BEEF RANCHING DEVEIOPMENT PROJECT

National Agricultural Company. Ltd.Phasing of Capitalization by NDC

(Sh Million)

Initial Additional Capitalization by YearsCapital- Totalizationi/ 1968 1969 1970 1971 1972 (1968-72)

Beef Ranch Development(This Project) - 1.11 1.72 1.36 0.29 - 4.48

Dairy Development - 1.66 5.00 3.18 2.88 2.88 15.60

Hog Development - 0.02 - - - - 0.02

Estimated Cash Deficit 2.04 2.o4

Total 17,4o0 4.83 6.72 4.54 3.17 2.88 22.14

Source: NDC Board memorandum, December, 1967.

1/ Precise allocation by sector has not been made.

TANZANIA: BEEF RANCHING DEVELOPMENT PROJECTNATIONAL DEVELOPMENT CORPORATION

ORGANIZATION CHART

CHAIRMAN ANDBOARD OF DIRECTORS

GENERAL MANAGER

DEPUTY ASSISTANTGENERAL MANAGER GENERAL MANAGER

CHIEF ECONOMIST AND CHIEF ACCOUNTANTFINANCIAL CONTROLLER C ACUTN

GROUP CORPORATION GROUP DEVELOPMENT INVESTMENT DEPUTY TAFCO ANDPERSONNEL MANAGER ATTORNEY INTERNAL AUDITOR DIVISION MANAGEMENT CHIEF ACCOUNTANT TAFCO COMPANIES

DIVISION JAND INVESTMENTS

CHIEF CO-OPERATIVE ANDCORPORATION HEAD OF NDC NUTA INVESTMENTS

SECRETARY DEVELOPMENT DIVISION ACCOUNTING STAFF SPECIAL DUTIES BY

OFFICER ~~~~~~~~~~~~~~GENERAL MANAGER

CHIEF ACCOUNTANTSOF GROUP

COMPANIES

(R)IBRD-3749 z|

TANZANIA: BEEF RANCHING DEVELOPMENT PROJECTNATIONAL AGRICULTURAL COMPANY LTD.

ORGANIZATION CHART

NATIONAL DEVELOPMENTCORPORATION (NDC)

BOARD

GENERAL MANAGER*NDC

NATIONAL AGRICULTURALCOMPANY LTD. (NACO)

BOARD

NON- PROJECT RANCHES PROJECT RANCHES

| MANAGER l MANAGER l | MANAGER l|GMANAGER MANAGER

KONGWARANCHEFVRANCH MKATA RANCH W ANAR KITENSLE RAN(AARNCHPRJ RUANHEVPOJC RANCH E

MANAGER MANAGER MANA MGERS MANA ,GER MAN. AGER

KONGWA RONSAI HOLDINGRGROUNDS eREEDING/FATTENING BREEDING/FATTENING

PIG UNIT DAIRY FARM ~~~~HOLDING GROUNDS RANCH RANC

* eneraI Manager of Ntiional DeOelopment Corporation is Chairman of Boord of Nationol Agricultural Company Ltd.. ( z

J X

-June 1968 (3R)IBRD-375~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~1 1-4

NlES 2Table 1

T A N Z A N I A

- 3.EF RANCHING DEVELOPM-IT PSOJ ACT

EITEN3SLE BH6SDIOG/FATTENING RANCH - 100,000 ACHES

(16,600 Animal Units)

Before P R O J E C T E A R S

I T S M Development 1 2 3 4 5 6 7 o 9 10-16

H-.l) COICSITIC/J (No.)

Breedirg Cows 4,000 1,000 6,090 6,858 6,000 6,000 6,000 6,000 6,COO 6,000 6,000

Breeding Bulls 133 133 203 230 200 200 200 200 200 200 200

reaoers 2,400 2,400 3,958 4,800 4,500 4,5oo 4,500 4,500 4,500 4,500 4,500

Heifers (1-2 Yrs.) 1,200 1,200 1,200 1,979 2,400 2,250 2,250 2,250 2,250 2,250 2,250

Heifers (2-3 Yrs.) 1,128 3,128 2,128 1,140 1,880 2,304 2,160 2,161 2,160 2,160 2,160

Stuers (1-2 Yrs.) 1,200 1,200 1,200 1,979 2,400 2,250 2,250 2,250 2,2-0 2,233 2,250

Steers (2-3 Yrs.) 1,128 1,128 1,128 1,140 1,880 2,304 2,160 2,160 2,166 2,160 2,160

Steers (3.4 Yrs.) 1,060 1,060 1,060 1,072 1,083 1,805 2,212 2,071 2,074 2,071 2,074

Furchased Steers - 3,000 2,000 1,000 - - - - - _ _

TOTAL 12,249 17,249 18,967 20,198 20,343 21,613 21,732 21,594 21,594 21,598 21,594

ANIMAL UNITS 9,319 13,319 13,979 14,862 15,302 16,211 16,126 16,057 16,057 16,057 16,057

DEATHS (No.)

Cows 240 240 304 343 240 248 240 240 240 240 2640

Bulls 8 8 10 11 8 8 8 a 8 8 eHeifers (1-2 Yrs.) 72 72 60 99 96 90 90 90 90 90 90

Hoifers (2-3 Yrs.) 68 128 o1 57 75 92 86 86 86 R6 86

Steers (1-2 Yrs.) 72 72 60 99 96 90 90 90 90 90

Steers (2-3 Yrs.) 68 68 56 57 75 92 86 86 86 C6 86

Steers (3-4 Yrs.) 32 32 O6 27 22 36 44 41 41 L1 41

Purchased Steers - 10 100 50 - - - - - - -

701SUL 560 800 697 743 612 648 684 641 641 (11 641

SALS' (No.)

Zull Co.s 564 564 868 974 868 866 866 864 664 864 864

lull Bulls 20 20 29 32 28 28 26 28 28 20 28

Cull Heifers 106 106 107 109 180 220 207 207 207 207 207

Surplus Heifers 150 - - 515 521 888 763 763 763 763 763

Steers (3-4 Yrs.) 1,026 1,028 1,038 1,045 1,061 1,769 2,168 2,033 2,033 2,033 2,033

Purchased and Fattened Steers - - 20 21, 900 950 - - - - - -

6OTAL 1,868 1,718 4,858 4,575 3,604 3,769 8,030 3,895 3,895 3,295 3,895

HISES (50% of Deaths) 280 400 348 371 306 321 322 320 320 320 320

FUHCHAS31 (No.)

Heifers (2-3 Yrs.) - 2,000 1,000 - - - - - - - -Bulls 28 98 66 13 36 36 36 36 36 36 ,6

Purchased Steers - 3,000 2

,00C 1,000 - - -

TOTAL 28 5,098 3,066 1,013 36 36 36 36 36 36 36

TECFIIZTAL COEFFICIENTS (%)

Mortality 6 6 5 5 4 4 4 4 4 4 4

Calves Wleaned 60 60 65 70 75 75 75 75 75 75 75

Cows and Hulls Culled 15 15 15 15 15 15 15 15 15 15 15

Heifers Culled 10 10 10 10 10 10 10 10 10 10 10

5XTRACTION RAT3 (%) 15 12 12 14 13 18 18 18 16 l8 18

SALS (Sh '000)

Cull Cows 248.2 248.2 381.9 428.6 380.2 380.2 380.2 380.2 380.2 380.2 380.2

Cull 3S11s 14.0 14.0 20.3 22.4 19.6 19.6 19.6 19.6 19.6 19.6 19.6

Cull Herfers 38.2 38.2 38.5 39.2 64.8 79.2 74.5 74.5 74.5 74.5 74.5

Surplus Heifers 75. e - - 257.5 260.5 444.0 381.5 381.5 381.5 381.5 381.5

Steers (3-4 Yrs.) 514.0 514.0 517.0 522.5 530.5 884.5 1084.0 1016.5 1016.5 1016.5 1016.5

Purchased Steers - - 902.4 6o8.o 3'84.0 - - - -Hides 11.2 16.0 13.9 14.9 12.2 13.0 12.9 12.8 12.8 17.8 12,8

TOTIL SALES (Sh '000) 900.6 830.4 1874.0 1893.1 1571.8 1820.5 1952.7 1885.1 1885.1 1885.1 1865.1

LESS VALLE OF GATTL3 PURCUAS, FROBM INCOME (Sh '000)

EBulla 44.8 - _ 20.8 57.6 57.6 57.6 57.6 57.6 57.6 5 7.6

Heiftra - - - - - - - - -

Feeder Steers - - 400.0 201.0 - - - - - - -

Subtotal 48.8 - 400.0 220.8 57.6 57.6 57.6 57,6 57.6 57.6 57.6

NET SALES (Sh '000) 855.8 830.4 1474.0 1672.3 1514.2 1762.9 1895.1 1827.5 1827.5 1827.5 1827.5

OPERATING EXPENSES (Sh '000) 560.0 654.o 744.0 780.0 868.o 868.o 868.o 868.o 868.o 868.o 868.o

BALANCE (Sh'OOO) 295.8 176.4 730.0 892.3 646.2 894.9 1027.1 959.5 959.5 959.5 959.5

ANNX 2Table 1 (Conti d)

T A N Z A N I A

i3EF RANCHiNG D3;R3LOPMNE-T PROJ 7.T

RANCH INVESTMNNT COSTS

KITENGULE - BREr.)ING/FATTENINJ OPERATKON

C A T E 0 O R I Unit uantity Unit cost Total Cost(Sh tO'00) (Sh nI) yThT2

RANCH INV0SS,TI'N-3

Physical Inputs

Roads Mil3s 20 6.o 120.0 S16,800ra-cYs MilBs 25 2.0 50.0 7,000

Firebreaks Milbs 215 .2 L3.n o,020

Fencing Milas 50 2.5 125.o i(,S00

wiater Supplies3-mFaim.s No. 25 4.0 100.0 10,o0oLarge Dams No. 1 O.40,0 10.0 5,600Piping (P.V.C.) Miles 303 1l4.7 U1..0 I 6,7 0 lPiping (Galvanized) _ _ _ 1.3 161Piping Fittings __ 8.7 1,215Installation of Pipins / _0.0Survey of Water Supply -(Water Trouaghs No. 20 2,0 4D.0 -,S()Reservoirs No. 5 13.2 66.0 'Stora-e Tuik No. 1 25.0 25.oPunps, Sniiines No. 2 13.0 26.0 3,°l*0

Spray Races and Yards No. 20.0 60.o ,60

BuildingsRanch Manager,s House No. 1 80.0 90.0 1l,200Assistant Ranch ManaL,gr's 'louse No. 30.0 3.0 o , 0 OLabor Linss and Sanitation Nu. 115 1,2 138.0 1' 320Office B4uipment l'o. L 0Dffice and Storage Sheds .- ). 2 10.0 20.0 ,00

MachineryVeli-ghbridge (Small) No. 2 17.0 3L.0 oY deighbridge (Large) No. 1 30.0 30.0generator No. 1 7.0 7,' )I)Tractor No. I 2.0 (2L.0 ,;09)Vehicla (-waheel-drive) No. 22.0 22.0 3, )oaGrader No. 2.2 2.2 308Plough No. 2 2.2 4.4 o16Disc Tillar No. *.0 L0. 560Post Hole Digger No. 1 2.6 2.6 Jol4Trail Motor Bike No. 3 3.0 9.0 1,26uGyromower No. 1 5.7 5.7 798Miscellaneous Tools 8.,0 1,120Mobil'. Pump and Engine No. 6.0 6.0 6140Ralio Transmitter and Receiver No. 12.0 12.0 1,60O

Land Survey 10.0 1 1*00

Subtotal 1638.9 229,)Lt4

LivestockBulls No. 163 1.6 260.0 IBreeding lieifers ND. 3,000 .2 600.o n5, JOOSteers No. 3,000 .2 600.0 20,000

Subtotal IL6o.o 200,600

Contingencies - 301.1 142,1G1

T.OTAT 300. O fLa '

1/ Financed out of Technical Services

ANNEX 2Table 1 (Cont d)

T A N Z A N I A

BEEF RANCHING DEVELOPMENT PROJECT

KITENGULE RANCH - OPERATING EXPENSES(Sh '000)

Y E A R SI T E M 1 2 3 4 5-16

Renti/ 5 5 5 5 5

Ranch Management 90 95 90 100 100

3/Labort-/ 172 196 208 230 230

Dipping-4 62 70 75 83 83

Veterinary Expenses-/ 74 84 90 100 100

Fuel and Machine Maintenance' 74 84 90 100 100

Maintenance 47 54 56 64 648/

Headquarters- 70 90 96 108 108

Subtotal 594 678 710 790 790

Contingencies 60 66 70 78 78

TOTAL 654 744 780 868 868

1/ Sh. 0.5 per acre (Tanzania Governrmat standard rental).

2/ Salaries, medical, gratuity plus travel expenses for ranch manager andassistant manager.

3/ Six herdsmen S Sb 90 per month and three other labor units at an average of Sh 180per month per thoUSand animal unita (a.u.).

4/ Sh 5 per a.u. per year.

5/ Minerals, vaccines and medicines.

6/ 15 percent of capital cost.

7/ 5 percent of capital cost for roads, firebreaks, fencing and buildings.

8/ Allocated proportionately to each ranch including internal tra el of ChiefDevelopment Officer and Chief Veterinary Officer.

ANCECi 2Ca,lo 2

T A N Z A N I A

BEEF RANCHING DEVELOPNENT PROJECT

MEATA FAUTTENING RANCH 80.000 bCBES1,000 imh ital 00S A

Before P r o j e c t Y e a r sI T 3 X Developmmrt 1 2 3 L 5 -16

HERD INVENTORY (NO.)

Breeding Cows 3,000 3,o00 1,500 - -Breeding Bulls 100 100 50Weaners 1,800 1,800 900Heifers (1-2 Irs) 900 QOO L50Heifers (2-3 Yrs) 8L6 8t6 123Steers (1-2 Yrs) 900 sno LSo - -Steers (2-3 Yrs) BL6 8L26 L23Steers (3-L Yrs) 796 796 398Purchased Steers L,000 L,.o0o 8,000 12?000 12,000 12.000

TOTAL 13,188 13,188 1?, 5sL In,Goo 12,000 12,000

ANIMAL UNITS 11,338 11,388 1l,694 12,000 12,000 12,000

DEATHS (No.)

Co-'s 180- 10 90 - - -Bulls 6 6 3 - - -Heifers (1-2 Irs) 54 52 27 - -Heife-s (2-3 Irs) 50' 50 25 - - -Steers (1-2 Yrs) 54 52 27 - - -Steere (2-3 Irs) 50 50 25 - - -Steere (314 Irs) 21.. 2L 12 - - -Purchased Steers 24.0 240 L80 609 L.80 t80

TOTAL RHs 658 658 689 600 L80 t80

SALES (No.)

Cull CoGs 422. L22 211 - - -Cull Bulls 1L1 14 7 - - -Cull .4eifers 80. 80 Lo - - -Surplus Heifers 111, 11L 57 - - -Ranch Bred Steers 772 772 386-Purchased Steers - 3,760 3,760 7,520 11,409 11,520

TOTAL SALES 1,402 5,162 L,L61 7,520 11,Loo 11,520

HIDES (50% of Deaths) 329 329 3L5 300 240 2Lo

PURCHASES (No.)

Bulls 20 20 10 - - -Fattening Steers L,ooo L,000 8,o0o 12,000 12,000 12,000

TOTAL PURCHASES L,020 1,020 8,010 12,000 12,000 12,000

TECHNICAL COEFFICIENTS (%)

Mortality 6 6 6 5 2 LCalves Weaned 60 60 60 -Cows and Bulls Culled 15 15 15 -Heifers Culled 10 10 10 -

SALES (,h 'p0)

Cull Cows 185.6 135.6 92.8 -Cull Bulls 9.8 9.8 L.9 -Cull Heifers 28.8 28.8 14.L -Surplus Faifers 57.0 57.0 23.5 -Ranch Bred Steers 386.o 396.0 193.0 -Purchased Steers - 1203.2 1203.2 24.06.4 36.8.o 3686.tHides 13.2 13.2 13.8 12.0 u.6 9.6

TOTAL SALES 680.4 1883.6 1550.6 2118.2 3657.6 3696.0

LESS VALUE OF CATTL3 PURCHASED FROM INCO-M (Sh '001)

Bulls 32.0 32.0 Soso 1610.0 _ _Steers 90,.0 300.0 - 2Lo.0. 2t1o,0r

NET SALES (Sh 'ooo) (151.6) 1051.6 734.6 818.1 1257.6 1296.0

LESS OPERATING EXPENSES (Sh ,00() 660o. 700.0 758.0 806.0 796.0 796.0

BALANCE (Sh '000) (811.6) 351.6 (23.2) 12.1 461.6 500,0

VALU3 OF BR3EDING HERD TRANSFERREDTO RREEDING/FATTENING RANCHES (Sh '000) - - 1065.7 1065.7 -

NET BALANCE (Sh 1000) (811.6) 351.6 1022.3 1053.3 461.6 590.0

ANNEX 2Table 2 (Contld)

T A N Z A N I A

BEEF RANCHING DEVELOPMENT PROJECT

MKATA RANCH - OPERATING EXPENSES(Sh 70-00-T

Y e a r s

Item 1 2 3 4 - 16

Rent'- 4 4 4 4

Ranch Management?/ 90 95 100 100

Labors/ 162 162 168 168

Headquarters CostW 74 74 74 74

Dipping~/ 60 60 60 60

Veterinary ExpensesA/ 86 86 86 86

Prophylactic Drugs7/ 40 40 40 30

Fuel and Machine Maintenarm e 100 120 136 136

Maintenance-/ 22 48 66 66

Subtotal 638 689 734 724

Contingencies 62 69 72 72

TOTAL 700 758 806 796

1/ ShO.5 per acre (Tanzania Governrmnt standard rental).

2/ Salaries, medical, gratuity plus travel expenses for ranch manager and

assistant manager.

3/ Headmen, plus six herdsmen,, Sh 90 per month and three other labor units @ an

average of Sh 180 per month, per thousand animal units (a.u.).

i Allocated proportionately to each ranch including internal air travel of Chief

Development Officer and Chief Veterinary Officer.

5/ Sh 5 per a.u.

6/ Minerals, vaccines and medicines.

7/ For protection against trypanosomiasis, a disease transmitted by tsetse flies

and for maintenance of protective barriers.

8/ 15 percent of capital cost plus fuel.

2/ 5 percent of cost for roads, firebreaks, fencing and buildings.

ANNEX 2

T A N Z A N I A Table 2 (Conttd)

BEM' RANCHING DEVELOPMENT PROJECT

RANCH INVESTMENT COSTS

MKATA RANCH - FATTENING ENTERPRISE(ShtOOO)

Unit Quantity UnitC A T E G O R Y Cost Total Cost

(Sh'OOO) (ShlOOO) (US$)

RANCH INVESTMENTS

Physical Inputs

RoadsBlack Soils Mile 7 18.0 126.0 17,6h0Red Soils Mile 20 2.0 40.0 5,600Bridge No. 1 lO.o 10.0 1,400Firebreaks Mile 100 0.2 20.0 2,800

Fencing Mile 80 2.3 184.0 25,760

W'ater SuppliesBoreholes No. 3 60.0 180.0 25,200Dams No. 1 20.0 20.0 2,800Water Troughs No. 5 2.0 10.0 1,h00Storage Tanks No. 2 5.0 10.0 1,L400Mobile Water Pump and Engine No. 3 6.o 18.0 2,520

Spray Races and Yards No. 2 20.0 40.0 5,600

Ranch Manager's House No. 1 80.0 80.0 11 200Labor Lines and Sanitation No. 85 1.2 102.O 1h,280Office and Store No. 2 10.0 20.0 2,800

Land Survey 4o.0 5,600

MachineryTractor No. 1 24.0 24.o 3,360Disc Tiller No. 1 4.0 4.0 560Trail Motor Bike No. 2 3.0 6.0 84o

Subtotal 934.o 130,760

LivestockSteers No. 8,000 .2 1600.0 224,000

Subtotal 1600.0 224,000

Contingencies 246.0 34.440

TOTAL 2780.0 389.200

ANNEX 2T A N Z A N I A Table 3

BEEF RANCHIN3 DEVELOPMENT PROJECT

WEOT KILIMANJARO BRE3DIN3/FATTFNING R. NCRMlixed Cattle and Sheep 82,000 Acres

(7,300 Animal Units)

Before Y E A R S7I T 3 M Development 1 2 3 4 5 6 7 8-16

I. HE3D COMPOSITI3N (No,)

Breeding Cows 2,000 2,000 2,075 2,160 2,200 2,200 2,200 2,200 2,200Breeding Bulls 70 70 75 75 75 75 75 75 75Weaners (1 Year) 1,200 1,200 1,350 1,512 1,650 1,650 1,650 1,650 1,650Heifers (1-2 Yrs.) 600 600 600 675 756 825 825 825 825Heifere (2-3 Yrs.) 564 564 564 570 641 726 792 792 792Steers (1-2 Yrs.) 600 600 600 675 756 825 825 825 625Steers (2-3 Yrs.) 564 1,864 5614 570 641 726 792 792 792Steers (3-4 Yr-.) 530 530 1,790 536 5h1 615 697 760 760

TOTAL 6,128 7,426 7,618 6,773 7,260 7,642 7,356 7,919 7,919

ANIMAL ONITS 4,928 6,228 6,268 5,261 5,610 5,992 6,206 6,269 6,269

DEATHS (No.)

Co.s 120 120 10i 108 d8 88 66 88 06

Bulls 44 4 3 3 3 3 3Haifers (1-2 Yrs.) 36 36 30 34 30 33 33 33 33Heifers (2-3 Yrs.) 34 34 28 29 26 29 32 32 32Steers (1-2 Yrs.) 36 36 30 34 30 33 33 33 33Steers (2-3 Yrs.) 34 75 28 29 26 29 32 32 323teers (3-4 Yrs.) 32 32 90 27 22 25 28 30 30

TOTAL 296 336 3114 265 225 2

40 249 251 251

SALES (No.)

Cusl Cows 282 282 296 308 317 317 317 317 317

,.II Bulls 10 11 11 11 11 11 11 11 11Cull Heifers 53 53 51 54 62 70 76 76 76Surpl-s Heifers 75 - - 31 1568 222 279 279 279Steers (3-4 Yrs.) 498 498 1,700 509 519 590 669 730 730

TOTAL 915 844 2,058 913 1,057 1,210 1,352 1,413 1,413

HIDE5 (50% of Deaths) 148 168 157 132 112 120 124 125 125

PURCHA3ES (No.)

Steers (2-3 Yr-.) - 1,300 - - - - - - -Breeding Rulls 114 20 15 15 IL 14 14 lb 114

TOTAL 14 1,320 15 15 14 14 14 14 14

TSCHNICAL COEFFICI3NT- (9)

Msrtality 6 6 5 5 4 4 4 s L

Calves Weaned 60 60 65 70 75 75 75 75 75Coos and Bulls Culled 15 15 15 15 15 15 15 15 15Heifers Culled 12 10 10 10 10 10 10 10 10

EXTRACTIoN_RATS (8) 14 11 13 13 I5 15 17 17 17

SLSSE (¢h 1000)

Cull Cows .112.8 112.8 118.4 123.2 126.8 126.8 126.8 126.8Coil Bulls 7.7 7.0 7.7 7.7 7.7 7.7 7*7 7*7 7.7Cull Heifers 19.1 19.1 18.2 19.5 22.3 25.2 27.4 27.h 27.1Sorplus Heifers 37.5 - - 15.5 7L.0 110.0 139.5 139.5 139.5Home Bred Steers 249.0 249.0 251.5 254.5 259.5 29¢.0 334.5 365.0 365.3Purchased Steers - - - 383.0 - - - - -Hides 5.9 6.7 6.3 5.3 4.5 4.8 5.0 5.0 5.o

Cattle Sales h32.0 3956 785.1 425.6 h94.8 569.5 650.9 671.4 671.6Sheep Sales 79,2 79.2 81.6 90.3 97.9 105.5 105.5 105.5 105.5

TOTAL SALE3 (Sh '000) 511.2 573.8 366.7 515.9 592.7 675.0 756.4 776,9 776.9

LESS VALTE OF CATTLS PfRC',ASED FRCM INCOMS (Shs '007)

BsUla 22.4 - 24.0 24.0 22.4 22.4 22.4 22.5 22.5Purchased Steers ' - - - - - - - '

NET SALES 488.9 473.8 542.7 491.9 570.3 652.6 724.0 754.5 754.5

OPERATING EXPENSES /Sh i003) 359.7 366.2 39 1

.0 502.8 402.8 402.8 402.8 402.8 402.8

B515NCE (lh '000) 139.1 107.6 448.7 89.1 167.5 249.8 321.2 351.7 351.7

AnnexTable .

T A N Z A N I A

BEEF RANCHIND DEVELOPMENT PROJECT

ANEST KILIMANJARO - RREEDIN3/FATT3IN2 G RANCH - MIXEDL CATTL3 AND ShEEP

82,000 Aorae - 7,300 Ranch Livestock Units

T T 3 Befo1 Y; A R 3 6_16

1. FLOG!: Cl1I'MPOSIrION (No.)

Breeding 3wes 2,500 2,500 2,500 2,500 2,50n 2,500 2,500Bre,ding Raxes 90 90 90 90 90 90 /9_.i Hoggets 750 750 812 875 937 937 737le.rhe '9ogg ts 720 720 783 8L5 908 908 Q08

,,i 11' H g ts 30 30 30 30 30 30 302,, r n .,682 682 682 747 805 862 8622;,X. 6JtlUrs 655 655 655 720 777 835 835

TOTAL 5,627 5,427 5,552 5,807 6,047 6,162 6,162

ANI4iA. IUNITS 905 9°5 925 968 1,o08 1,127 1,127

L 6ArH1 (UN.)

Breed-l :u'V 150 150 125 125 125 125 125Be-eding aen 5 5 5 5 5 5 5Fwe Hogg-.ts 68 68 65 70 75 75 75Wet,her Hoggets 65 65 63 68 73 73 73Ra.9 Hogge s 3 3 2 2 2 2 22tn .ues L1 42 34 37 40 43 L32t5,, ethers 39 39 33 36 39 42 '2

TOrAT. 371 372 327 3L3 359 365 365

36133z (.io.)

}'ull _.. O70 470 .75 675 L75 L75 L 7''.ull11 .. ;1. 22 22 23 23:ursi, 2-h Ewes 21 20 L8 110 165 219 213

;,et.n-rz 616 616 622 684 738 793 79)

rOTAL 1,129 1,128 1,168 1,292 1,601 1,510 1,510

r3M4N1 ,iL X3-FICTENTS (7)

:Iorta,liy in Hoggets 9 9 8 8 8 8 9i,ortallt,y in 2th and Adult Stock 6 6 5 5 5 S SH.,ge.. P--red 60 60 65 70 75 75--.-s .a, 'nIns cullu A 20 20 20 20 20 20 20

SArLAS (St I Il')

lull hles 2E,.2 28.? 28.5 28.5 28.5 28.5 2B.5Zull iRams L .4 .4 .5 .5 . .SSurplun 2th Ewes 3 1.2 2.9 6.6 9.9 13.1 13.1Wetners 69.3 49.3 69.8 56.7 59.11 63.4 63.6

0,3AL .700) 79.2 79.1 81.6 90.3 97,91 105.5 105.5

ANNEX 2Table 3 (Cont'd)

T A N Z A N I A

BEEF RANCHING DEVELOPMENT PROJECT

WEST KILIMANJARO - OPERATING EXPENSES(Sh '000)

Y E A R S

I T E M 1 2 3+ ..- 16

Rent / 4 4

Ranch Management 2/ 43 44 8 48

Labor 3 92 95 96 96

Headquarters Cost 50 50 50 50

Dipping 5 34 36 36 36

Veterinary Expenses -43 43 44 4

Fuel and Machine Maintenance 7/ 57 66 68 68

Maintenance Y 10 20 20 20

Subtotal 333 358 366 366

Contingencies 33 36 38 38

TOTAL 366 394 404 404

1/ ShO.5 per acre (Tanzania Government standard rental).

2 swt w4cog, gratuity plus travel -expenses for ranch manager and

3/ Six herdsmen @ Sh 90per month and three other labor units @ Sh 180 permonth, per thousand animal units (a.u.).

b/ Allocated proportionately including internal travel of Chief Develop-ment Officer and Chief Veterinary Officer

5/ Sh 5 per a.u.

6/ Minerals, vaccines and medicines

7/ 15 percent of capital costs plus fuel

8/ 5 percent of capital costs for firebreaks, fencing and buildings.

ANNEX 2T A N Z A N I A Table~M (Cont'd)

BEEF RANCHING DEVELOPMENT PROJECT

RANCH INVESTMENT COSTS

WEST KILIMANJARO RANCH - BREEDING/FATTENINGMixed Cattle and Sheep

Unit Quantity Unit Cost Total Cost

(Sh '000) (Sh o000) (US$)

RANCH INVESTMENTS

Physical Inputs

Firebreaks Mile 90 .2 18.0 2,520Fencing Nile 45 2.5 112.5 15,750Spray Dip and Yards No. 1 20.0 20.0 2,800

Water Supplies

Boreholes No. 1 60.0 60.0 8.4ooStorage Tank No. 1 5.0 5.0 700Water Trough No. 4 2.0 8.0 1,120Pump and Engine No. 1 16.0 16.0 2,1240

Machinery

Weighbridge No. 1 17.0 17.0 2,380Gyromower No. 1 5.7 5.7 798Post-Hole Digger No. 1 2.6 2.6 364Generator No. 1 7.0 '7. 0 980Trail Motor Bike No. 1 3.0 3.0 _ 20

Subtotal 27h.8 38,h72

Livestock

Bulls No. 20 1.6 32.0 4,48oSteers No. 1,300 .2 260.0 36,4o00

Subtotal 292.0 4o,88o

Contingencies 53.2 7,448

TOTAL 620.0 86,800

T A N Z A N I A AN:;X 2Table4

BEEF RANCHIN2 DESE LOPM.NT PROJFCT

3RSi.DIN/7FATT331IN2 2RAIJH - 80,000 ACRES

(12,000 Ani-a Units)

I T ~A TER I1_________h__ 9 _1C 11 12 -_ _>

S COMMPOIfICN (No.)

3reedin- C.,o 1,500 2,721 3,509 3,201 3,33S 3,744 4,051 .,3h.1 0,400 4,400 o,400 4,4ZO3reedin- Bulls 50 90 117 107 111 120 134 1hl4 150 153 15C 150Oeansers 900 1,768 2,456 2,0C0 2,503 2,808 3,038 3,25B 3,300 3,30C 3,300 3,300ele-rs '1-2 Yes.) 450 450 884 1,22B 1,200 1,251 1,000 1,519 1,629 1,50 1,652 1,650Herlsrs (2-3 irs.) 1,623 1,423 428 80C 1,175 1,152 1,201 ',348 1 h59 1, 56. 1,584 1,580steers (1-2 Yrs.) 450 h5o 884 1,228 1,200 1,252 1,40h 1,519 1,569 1,650 1,650 1,650Steers 2-3 Yrs.) 423 423 a20 800 1,179 1,152 1,201 1,305 1,569 1,56L 1,56. 1,584Sters (3-4 Yrs.) 398 398 .02 007 806 1,132 1,106 1,153 1,294 1,.01 i 5o2 1,52i'urohosed OloStsers .o, 1,000 4,000 4,000 3,000 2,000 2,k'00 1,203 - -

TO'11 9,794 11,723 13,108 10,251 14,516 140615 15,539 15,633 15,320 15,679 1 ,820 15,039

o'IoI, ooIIITS 8,095 9,256 13,451 11,6118 11,610 11,241 11,948 11,800 11,373 11,679 11,7S9 11,779

001T7S (No.)

Coos 90 136 175 128 133 150 162 174 176 176 176 176du11 3 o 0 4 4 5 6 6 6 6 SHeifers (1-2 Yrs.) 27 22 44 49 h ,0 56 60 65 66 66 66Hifers (2-3 Yrs.) S1 .1 21 34 h h6 b0 54 58 62 63 93St-ers (1-2 Y-s.) 27 22 L,4 49 4d 31 56 60 65 65 66 66St-.rs (2-3 Yrs.) 25 21 21 34 07 426 L8 54 So 62 63Stmers (3-4 Yrs.) 12 13 10 8 16 23 22 23 26 28 Jo '

Purchased St-ers 212 200 200 1 0 5 50 40 - -

TOTAL 885 087 521 J 5 63 IJ1 L77 h71 .2. l166 10 h70

21100 (Is..)

Cull Coos 211 388 530 161 "s0 539 583 625 634 630 63h 632Cull 3-ls 7 13 17 15 15 1S 19 21 21 21 21 21Coi1 HSeiers 40 40 40 80 113 112 115 129 100 180 152 152S-1-31s Nelfees - - - - - - 202 4S51 5h2 559 559H,-h Brsd Steers 386 385 392 399 790 1,129 1, 280 1,130 1,200 1,373 1,072 1,l91.rrchased Sto,rs - 3,76T 3, 500 380B _ 3,840 _8B _ 1,92, 1,5920_ 260 _ _ _ ___

TOTAL 644 4,589 4,7h9 L,755 5,239 4,656 3,721 4,135 3,474 2,720 2,535 2,887

HIDES (506 of Deaths) 242 243 260 233 231 225 238 235 227 233 2J5 235

P13ZHASZS (Ns.)

HSlfe 1,200 1,000 - - - - - - - - - -llers 50 45 13 23 33 33 34 33 27 27 27 <7

F-,.son- Sters 4, 000 4,000 _002 ,,000 3,000 ,2000 2,000 1,000 - - - -

D T'6, 5,250 5,045 4,013 4,023 3,033 2,033 2,034 1,033 27 27 27 27

T3CHNIZ1A CC03'?FCIENT (8)

MHr-ality 6 5 5 o 4 4 * 4 4 4Talves eaned 60 65 70 75 75 75 75 75 75 75 7' 75Cows aod 3S1 CTolled 15 15 15 15 15 15 15 15 05 15 1S 1Sellers Coiled 10 10 10 10 10 10 10 10 10 10 10

?XTRAZTO0N RATS (57 13 12 10 9 12 10 13 15 16 17 18 11'

Cull so's 92.8 170.7 220.0 202.8 211.2 237.2 256.5 275.0 279.0 279.0 279.0 279.0Cull 3ulls 4.9 9.1 11.9 10.5 11.2 12.6 13.3 14.7 1L.7 14.7 14.7 1L.7Cull Heiers 14.4 14.0 1.40 28.8 00.7 39.6 1.4 46.0 50.4 50.0 50.7 54.7S-rplss Heifer - , r 1559o 225.5 271.0 279.5 272.5Steers (3-4 Yrs.) 293.0 190.0 196.0 199.5 395.0 ssL.5 542.0 565.o 634.0 6856,5 736.0 7N5.5Purchased Steer, - 1203.2 1216,0 1216.0 1228.8 921,6 61h.4 614,4 307.2 - - -Hides 9.7 97 10.0 9.3 9.3 9.0 9.5 9.0 9.1 9.3 9.4 9.4

TOTAL SALES (Sh '000) 314.8 1601.1 1668.7 1666.9 1996.2 1770.5 1477.1 1679.9 1519.9 1314.5 1373.3 1382.8

LESS VALUE OF CATTLE PU9CHASED -gOM JNOM Sh 000)

HefersBulls 72.0 20.8 36.8 52.8 52.8 54.4 52.8 03.2 43.2 03.2 03.2Fattening Steers - 800.0 800.0 600.o 400.0 00.0 270 -B

N3T SALES(Sh '000) 314.8 729.1 847.9 830.1 1243,4 1321.7 1022.7 1427.1 1076.7 1271.3 1333.1 1339.6

LESS OPERATING EXYENSES (Sh 1000) 5o6.o 640.0 776.0 776.0 776.0 776.0 776.0 776.0 776.0 776.0 776.7 776.o

BALANCE (Sh 200) (191.2) 89.1 71.9 54.1 a67.4 545.7 246.7 651.1 709.7 095.3 550.1 563.6

LESS VAL0E OF BREEDING HERD TRANSFERREDFROM ICATA (Sh '000) 1065.7 - - - _ _

NET BALANCE (Sh '000) (1256.9) 89.1 71.9 54.1 467.4 505.7 246.7 651.2 700. 7 095.3 550.1 563.6

T A N Z AN I A

BEEF RANCHING DEVELOPMENT PROJECT

BREEDING/FATTENING RANCH

OPERATING EXPENSES

(Sh '000)

y E A R S__

I T E M 1 2 3 5 6 7 9 9 _16

Rent-/ 4 4 4 4 h 4, L L

Ranch Management- 91 95 100 100 100 100 lO(, 100 100

Labor- lOu 120 160 160 160 160 16c 160 16o

Headquarters Cost4 LO 60 74 74 74 74 71 774

Dioping5/ 4o 50 600 o 60 60 6( 6o 60

6/Veterinary Expenses- 57 66 83 83 83 83 83 83 83

Prophylactic Drugs7 30 40 5° 50 50 5° SC 5o 50

Fuel and Machinery Maintenance- 90 108 112 112 112 112 112 112 11 9

Maintenance9/ L 40 62 62 62 62 62 62 62

Subtotal 460 583 705 715 705 705 705 705 705

Contingencies 146 57 71 71 _1 71 71 71 71

TOTAL 506 640 776 776 776 776 776_ 776 776

1/ Sh 0.5 per acre (Tansania Government standard rental).

2/ Salaries, medical, gratuity plus travel expenses for a ranch manager and assistant maager.

3/ Six herdsmen @ Sh 9Oper month and three other labor units @ an average of Sh 180 per month, per thousand animal units (a.u.).

4/ Allocated proportionately, including internal travel expenses of Chief Developmnt Officer and Chief Veterinary Officer.

5/ Sh 5 per a.u.

6/ Minerals, vaccines and medicines.

7/ For protection against trypanosomiasis, a disease transmitted by tsetse flies and for maintenance of protective barriers. J00

8/ 15 uercent of cost plus fuel. C-

9/ 5 percent of cost for roads, tracks, firebreaks, fences and buildings.

ANNEX 2WTabe h (Cont'd)

T A N Z AXN I A

BEV RANCHING DEVELOP4MT PROJECT

RANCH INVESTMENT COSTS

BREEDING/FATTENING RANCH

UnitRANCH INVESTMENTS Unit Quantity Cost Total Cost

(ShOOO) (Sh'OOO) US$Physical Inputs

Roads (on ranch) Miles 15 6.0 90.0 12,600Tracks Miles 20 2.0 40.O 5,600Firebreaks Miles 160 0.2 32.0 4,480

Fencing Miles 50 2.5 125.0 17,500

Water Supplies

Boreholes No. 3 60.0 180.0 25,200Dams No 2 20.0 40.0 5,600Troughs No 15 2.0 30.0 4IP200Storage Tanks No 3 5.0 15.0 2,100Pumps and Engines No 2 6.0 12.0 1,680Piping Miles 21 14.0 294.0 41,160

Spray Race and Yard No 20.0 80.0 11,200

Buildings

Ranch Manager's House No 1 80.0 80.0 11,200Assistant Ranch Manager's House No 1 30.0 30.0 4,200Labour Lines and Sanitation No 80 1.2 96.0 13,44oOffice and Store No 1 10.0 10.0 1,400

Machinery

Tractor No 2 24.0 48.o 6,720Vehicle (4 Wheel-drive) No 1 22.0 22.0 3,080Trailers No 2 5.5 11.0 1,5bOPlough No 1 2.2 2.2 308Disc Tiller No 1 4.0 4.o 560Post Hole Digger No 1 2.6 2.6 364Gyromover No 1 5.7 5.7 798Weightbridge No 1 30.0 30.0 L,200Generator No 1 7.0 7.0 980Grader No 1 2.2 2.2 308Trail Motor Bike No 2 3.0 6.o 840Miscellaneous Tools 6.o 800

Land Survey 20.0 2,800

Subtotal 1,320.7 18h,898

Livestock

Bulls No 95 1.6 152.0 21,280Heifers No 2,200 0.2 440.0 61,600Steers No 4,000 0.2 800.0 112.000

Subtotal 1,392.0 194,880

Contingencies 287.3 4o,222

TOTAL 3,000.0 420,000

T A N Z A N I A

BEEF RANCHTNG DEVELOPMENT PROJECT

PROJFCT INVESTMENTS

(Sh 'I/Y)

Breeding/ Breeding/ DollarWest Fattening Fattening Total Cost Equivalent Foreigi Exchange Component

Investment Category Kitengule Mkata Kilimanjaro Ranch Ranch (US$) US$ %

Physical Inputs

Roads and Firebreaks 213.0 196.0 18.0 162.0 i62.0 751.0 105,IL, 73,600 70Water Supplies 738.o 238.0 89.0 571.0 571.o 2257.0 315,98) 189,590 60Fencing 125.0 184.o 112.5 125. ; 125.0 671.5 94,010 56,410 60Spray Races and Yards 60.0 40.0 20.0 80.0 80.0 280.0 39,200 19,600 50Ranch Buildings 272.0 202.0 - 216.0 216.0 906.0 126,840 31,710 25Machinery and Tools 170.9 34.o 35.3 146.7 146.7 533.6 74,700 74,700 100Land Survey 10.0 LO.o - 29.0 20.0 90.0 12,600 - _

Subtotal 1638.9 934.0 274.8 1320.7 1320.7 5L89.1 768,470 445,610 58

Livestock

Bulls 260.0 - 32.0 152.0 152.0 596.0 83,440 83,440 100Heifers 600.0 - - 4-o.0 440.o 1480.o 207,200 - -Steers 600.0 1600.0 260.0 800.0 800.0 L4060.o

Subtotal 1h6o.n 1600., 292.) 1392.0 1392.0 6136.0 359 ,0MO 83,4.o 10

Total 3096.9 2534.0 566.8 2712.7 2712.7 11625.1 1,527,510

Contingencies 301.1 2L6.0 53.2 287.3 287.3 1174.9 .64,490 - -

Total Ranch Development 3400.0 2780.0 620.0 3000.0 30o0.0 12800.0 1,792,060 529,050 30

Technical Services 1280.0 179,200 125,440 70

Training Program 487.s 69,180 25,200 37

Total Prtect Cost1i567.0 2,039,380 679,690 33

DZ

T A N Z A N I A

BEEF RANCHING DEVELOPMENT PROJECT

PHASING OF PROPOSED FINANCING AND IDA DISBURSEMENTS

(US$)

Y e a r sC A T E G O R Y T O T A L

1 2 3 4

IDA DISBURSEMENTS

Ranch Investment 288.9 447.6 352.9 75.4 1,164.8

Technical Services 34.5, 27.4 23.7 30.9 116.5

Training 10.5 12.9 13.2 7.7 hh.3

Total (Raunded) 333.9 487.9 389.8 114.0 1,325.6

NDC EQUITY SUBSCRIPTION 155.5 2fj0.9 190.1 *0.7 627.2

NACO CONTRIBUTION

Technical Services 18.6 14.7 12.7 16.7 62.7

Training Program 5.6 7.0 7.1 4.2 23.9

Total (Rounded) 24.2, 21.7 19.8 20.9 86.6

CD X

ANNEX 3Table 3

T A N Z A N I A

BEEF RANCHING DEVELOPMENT PROJECT

PROJECTED PHASING OF RANCH INVESTMENT COSTS

(Sh 'oOO)

CATEGORY ~~~~~~~ e a r s OAC A T E G O R Y YearsT O T A L1 2 3 4

RANCH INVESTMENT COSTS

Kitengule Ranch

Physical Inputs 820.0 820.0 - - 1640.0Livestock 960.0 500.0 - _ 1460.0Contingencies 180.0 120.0 - - 300.0

Mkata Ranch

Physical Inputs 632.0 302.0 - - 934.0Livestock - 800.0 800.0 - 1600.0Contingencies 66.0 100.0 80.0 - 246.0

West Kilimanjaro Ranch

Physical Inputs 180.0 94.8 - - 274.8Livestock 292.0 - - - 292.0Contingencies 44.o0 9.2 - 53 .2

Breeding/Fattening Ranch

Physical Inputs - 870.0 450 .o - 1320.0Livestock - 1120.0 272.0 - 1392.0Contingencies - 180.0 108.0 - 288.0

Breeding/Fattening Ranch

Physical Inputs - - 870.0 450.0 1320.0Livestock - _ 1120.0 272.0 1392.0Contingencies - - 180.0 108.0 288.0

Subtotal

Physical Inputs 1632.0 2MO6.8 1320.0 450.0 5488.8Livestock 1252.0 2420.0 2192.0 272.0 6136.0Contingencies 290.0 409.2 368.o 108.0 11?5.2_

Total (Sh '000) 3174.0 o4916.0 3880.0 830. 0 12800.0

US$ Equivalent ('000) .444.4 688.2 543.2 16.2 1792.0

T A N Z A N I A

BEEF RANCHING DEViIIOPMENT PROJECT

National Development Co oration - Cash Projection

Pr o je ct Ye ar sC A r E G O R Y 1 2 3 4 5 6 9 10 11 12 Total

Cash Inflow

Loan for Ranch Development(from Ministry of Finance) 2,385 3,482 2,785 816 - - -- - - - - 9,468

Funds for NDC' s EquityContribution to NACO 1,111 1,721 1,358 290 - - - - - - - - 4,480

Repayment of Principal by NACO - - - - - 1,353 1,353 1,353 1,353 1,353 1,353 1,350 9,468Interest (7%) from NACO - 167 411 606 663 615 520 426 331 236 142 47 4,164

TOTAL 3,496 5,370 4,554 1,712 663 1,968 1,873 1,779 1,684 1,589 1,495 1,397 27,580

Cash Outflow

Ranch Development Loans to NACG12 2,385 3,482 2,785 816 - - _ - - - - - 9,468NDC's Equity Contribution to NACO 1,111 1,721 1,358 290 - - - - _ _ _ _ 4,480Repayment of Principal to

Finance Ministry - - - - - - - _ _ _ 95 95 190Payment of Interest to Ministry

of Finance (14%) - 95 234 345 379 379 379 379 379 379 375 371 3,694Administrative Co§Vs2/ 14 14 14 7 7 7 7 7 4 4 4 4 93Surplus (Deficit)- (14) 58 163 254 277 1,582 1,487 1,393 1,301 1,206 1,021 927 9,655

TOTAL 3,496 5,370 4,554 1,712 663 1,968 1,873 1,779 1,684 1,589 1,495 1,397 27,580

1/ Twelve-year loan at seven per cent per annum with a grace period of five years.

2/ Estimated values.

3/ To be reinvested by NDC in the agricultural sector through its subsidiary agricultural companies.

NOTE: Totals may not add due to roundirg. iw

T A N Z A N I A

BSEF RANCHING DEVELOPMENT PROJECT

NACO - Cash Flow for Combined Project Ranches(Sh '000)

P r o 3 e c t Y e a r sBefore

C A T 3 G 0 R Y Development 1 2 3 4 5 6 7 8 9 10 11 12

Cash Inflow

Net Sales 1,192 2,356 3,356 4,016 4,920 5,416 6,014 6,444 6,22- 6,323 6,780 6,226 6,480Loan (NDC) - 2,385 3,482 2,785 816 - - - - - - -Equity Contribution (NDC) - 1,111 1,721 1,358 290 - - - - -

rotal 1,192 5,852 8,559 8,159 6,026 5,416 6,014 6.4U4 6,222 6,328 6,780 6,226 6,480

Cash Outflow

Investment of NDC Loan Funds - 2,385 3,482 2,785 816 - -- - - - -

Investment of NDC Equity Funds - 1,111 1,721 1,358 2?0 - - - - - - - -Operating Ebcpenses 1,570 1,720 2,402 3,136 3,482 3,618 3,618 3,618 3,618 3,618 3,618 3,618 3,618Training Program & Technical Services - 173 155 141 149 - - - - - -Interest Payment NDC Loan l/ _ - 167 411 606 663 615 520 426 331 236 142 47Amortization NDC Loan - - - - - - 1,353 1,353 1,353 1,353 1,353 1,353 1,350

Subtotal 1,570 5,389 7,927 7,831 5.343 4,281 5,586 5,491 5,397 5,302 5,207 5,113 5,015

Cash Balance (376) 463 632 328 683 1,135 428 953 825 1,026 1,573 1,113 1,465

Total 1.192 5.852 8.559 8,159 6,026 5.416 6.014 6,444 6.222 6.328 6.780 6.226 6,480

Cumulative Cash Balance - 463 1,095 1,423 2,106 3,241 3,669 4,662 5,447 6,473 8,o46 9,159 10,624

Annual Herd Value 7,543 8,368 9,541 10,457 11,560 12,592 13,308 13,950 14,474 14,962 15,410 15,687 15,831

1/ Seven per cent interest

NOTE: Totals may not add due to rounding

ANNEX 4

TANZANIA

Beef Ranching Development ProjectTechnical Services Budget

(sh t~000) USsExpenditure Items 1 2 3 4 Total US$

SalariesChief Development Officer- 130 130 1LO 140 54O 75,600

(Ranching)Veterinarian 90 90 100 100 380 53,200

Consultant Services 2/ 60 60 - - 120 16,8J0

Other ExpensesChief Development Officer 30 _ _ 30 60 8,400(Ranching) - (International Travel)

Veterinarian (International Travel) 30 _ - 30 60 8,400

Contingencies 40 20 20 40 120 16,800

Total 380 300 260 340 1,280 $179,200

1/ Internationally recruited, amount free of tax, includes provisions for housing, gratuity, and educational allowances.2! Provision includes finance for consultant services to assist Chief Development Officer (Ranching) (1) in

preparing the financial and economic aspects of the twTo additional breeding/fattening ranch development plans; (2)in developing plans for efficient livestock watering facilities and~ (3) evaluating the effectiveness of tsetseclearance and control measures on Project ranches.

ANNEN 5T A N Z A N I A

BMEF RANCHING DEVKLOPMENT PROJECT

NACO - Training Program - Phasing and Cost

UnitItem Costper Y e a r s

Annum _ _ _ _ _ _ _ _ _

(Sh) 1 2 3 4 Total

Assistant Ranch Managers M a n -Y e a r sUndergong e2-YearTraining :LI (No.)

Training Institute (Tanzania) 6,000 9 7 9 5 30

Kabete, Nairobi 10,000 3 6 6 3 18

Total Training Years 12 13 15 8 48

Managers Completing Course 6 6 7 8 27

Annual Cost (Sh '000) 84 102 114 60 360

Foreign Exchange Component (Sh '000) 30 60 60 30 180

Field Assistants UndqM ing1-Year Training 1/ (No.)

NACO Training Center,Kongwa Ranch 3,000 7 10 7 5 29

Training Officer 3/ 10,000 1 1 1 1 1

Total Cost (Sh '000) 31 40 31 25

Total Annual TraininRg Cost (Sh '000) 115 142 145 85 487

US$ Equivalent 16,100 19,880 20,300 11,900 68,18o

Foreign Exchange Component(Sh '000) 30 60 60 30 180

US$ Equivalent 4,200 8,400 8,400 4,200 25,200

1/ Education: Higher School Certificate ('A' Level) or a good School Certificate ('0' Level)with a credit in at least one Science subject.

Pre-college Training: At least 6 months practical work on NACO ranches to test toughnessand leadership qualities and to get general idea of animal husbandry.

College Training: 2 years Veterinary, Animal husbandry and Range Management.

2/ Minimum Educational Requirement: At least a good pass in Std. VIII, preferably SchoolCertificate ('0' Level - pass or failure).

Training: 3 months preliminary work, both theory and practical at NACO Training Centre,Kongwa.

6 months field training on at least 3 NACO ranches.

3 months at NACO Training Centre - Elementary Veterinary, Animal Husbandryand Range Management. Enphasis is on Field Application

3/ Training Officer - Sh 10,000 per annum - Equivalent Rank to Assistant Ranch Manager.

A7*T. 6

T A TJ Z A Y T A

i 3, J' -:;kJTCHTTTkG TAVTq,0FWI.JT3 FI-6PJIKCI

Duti.es, iosponsibilities and Authorities of theC,hief 'Developm nent C_ffic cjat

The Chief 7'evelopment Officer (!~anching), who shall be d.rect>

respon-sible to the .Iana.,er (NACO), will have the responsibility for implerlentt-

ation and execution of the 3eef Ranching Development Pn Ject and shall have

the following specific duties and powers:

a. advising the Nanager on major policy decisnons in respect of the

Pro,ject;

b. executing the Project in accordance with policies and procedures

set forth in the Credit documents;

.c. recommending employment to the Manager (NACO) of local staff he

considers necessarv to carry out Project activities;

d. advising the Manager on the duties and responsibilities of each

ranch manager and assistant manager and ranch staff;

e. training ranch managers and assistant ranch managers in the

practical aspects of ranch development and management;

f. reviewing and if necessary, modifying existing ranch development

plans and preparing ranch development plans for future TAIZ ranches

to be financed under the credit;

ge providing such supervision and technical assistance as-necessary

to ensure successful completion of each ranch developrent plan

in accordance with the terms of the Credit documents;

A'r,- (Fa?.-e 2

. establlshing and maintaining records for D r :s

needed for ?rject evaluation;

i, makin7 n--oroposals to the TI,ana!er of NACO witli-, rcesn,erIt Jo:

i. the selection, promotion, demotion, sus*o is-C-I> or rernoval

of Project staff;

ii. and, together with the Chief Accountant, for tile est-blish.-

ment of annual budgets for the needs o-L the .Ero,iect ranches;

j. preparing quarterly and annual proEgress reports for submission to

the Ifanager for t,ransmitfral to the Association; and

k. advising the iHanager on the organization and. implementaMion of

consultant, studies for efficient development of livestock watering

facilities and on the effectiveness of tsetse clearance and control

measures for ProJect ranches.

TANZANIA

BPZ RAiNCHING DEV=IOPN31T PROJECT

EOONOMIC AND FINACIAL RATES OF RETURN(Sh ' 000)

EARS 1 2 3 4 5 6 7 8 9 10 1 12 13 14 15 16

Incremental Net OperaitingIncome After Taxes- 780 860 1,060 1,460 1,700 2,020 2,260 2,100 2,140 2,400 2,260 2,120 2,140 2,160 2,160 2,160

Ranch Investment 3,174 4,916 3,880 830 - - - _ _ _ _ _ _ _ _ _

Technical Sermices 380 300 260 340 - - - - - - - - - - - -

Training Progran 115 142 1145 85 - -

Increase in Herd Value - - - - - - - - - - - - - - - 8,346

Net Cash Flow (2,889) (4,498) (3,601) (171) 1,324 1,644 1,884 1,728 1,764 2,024 1,884 1,744 1,764 1,784 1,784 10,130

Finmcial Rate of Retarn - UL pw cent

Incremental Net OperatingIncome 1,020 1,332 1,260 1,814 2,180 2,772 3,200 2,980 3,080 3,540 3,380 3,300 3,32D 3,320 3,320 3,320

Ranch Investmeut 3,174 4,916 3,880 830 - - - - - - - - - - -

Technical Services 380 300 260 340 -

Training Program 115 142 145 85 - -

Increase in Herd Value - - - - - - - - 8,346

Net Cash Flow (2,649) (4,026) (3,401) 183 1,804 2,396 2,82h 2,604 2,704 3,161 3,oo4 2,924 2,944 2,944 2,944 11,290

Economic Rate of Retairn - 18 pw cent

I/ Corporate tax in Tanzania is 40 pw cent.

ANNEX 7 ANNEX 7

T A N Z A N I A Table Table 2

BEEF RANCHING DEVEIOPMENT PRDJECTANNUAL INCREASED TURNOFF OF BEEF AWD BREMIMM STOCK AT FULL

DEVELOPMENT FROM PROJECT RANCHES

Increased Output due to Project _ Total Annual OutputBeef Out- Beef Ou

No. of Surplus put i/ No. of Surplus put 1R a n c h e s Head Heifers ('000 lbs) Head Heifers ('ooo it

KitenguleSurplus Heifers 613 613 - 763 763Fat Steers 1,005 - 402 2,033 - 813Cull Cows 300 - 105 864 - 302Cull Bulls 8 - 6 28 - 22Cull Heifers 101 - 35 207 - 72

Mkata 2/Fattened Steers - 7,760 - 1,552 11,520 - 2,304

West Kilimanjaro 31Surplus Heifers 204 204 - 279 279 _Fat Steers 232 - 93 730 - 292Cull Cows 35 - 12 317 - 110Cull Bulls - - - 11 - 8Cull Heifers 23 - 8 76 - 27

Breeding/Fattening RanchSurplus Heifers 502 502 - 559 559 -Fat Steers 1,105 - 442 1,491 - 596Cull Cows 1423 - 148 634 - 221Cull Bulls 14 - 10 21 - 15Cull Heifers 112 - 39 152 - 53

Breeding/Fattening RanchSurplus Heifers 502 502 - 559 559 -Fat Steers 1,105 - 442 1,491 - 596Cull Cows 423 - 148 634 - 221Cull Bulls 14 - 10 21 - 15Cull Heifers 112 - 39 152 - 53

TOTAL 14,593 1,821 3,1491 22,542 2,160 5,720

TOTAL VALUE 5,100 910 h,l89 7,9U4 1,08n 6,86h(Sh '000)

1/ Beef output is valued at Sh 1.20 per lb cold dressed weight. Boran cull lills700 lbs cdw; Boran/Cross cull cows 350 lbs cdw and heifers; and Boran/Cross fatsteers 400 lbs cdw.

2/ Beef output is calculated on a net gain of 200 lbs liveweight (100 lbs cold dressedweight) while on the Mkata Ranch.

3/ This ranch also produces mutton with an estimated turn-off of abou' 13JO)D sheen ou-ally for slaughter, (equivalent to 64,500 lbs of mutton and lamb)and about 220surplus breeding ewes.

, U G A N D A AN ANA

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