P431? V —————— M’W/de a JUL1.8 Q§9’ Is>héfiér€7$ BEIQRNING MATERIAL§5 P1ace in book drop to remove this checkout from your record. FINES wil] be charged if book is returned after the date stamped be10w. in AN ECONOMIC ANALYSIS OF MECHANIZED FOOD PRODUCTION SCHEMES IN THE CENTRAL PLAINS OP TNE SUDAN BY Mohamed Ahmed Osman Ibnouf A DISSERTATION Submitted to Michigan State University in partial fulfillment of the requirements for the degree of DOCTOR OF PHILOSOPHY Department at Agricultural Economics 1985 Copysight by Mohamed Ahmed Osman Ibnouf 1985 ii ABSTRACT AN ECONOMIC ANALYSIS OF THE MECHANIZED FOOD PRODUCTION SCHEMES IN THE CENTRAL PLAINS OF THE SUDAN BY Mohamed Ahmed Osman Ibnouf This study describes and analyzes the mechanized rainted food production schemes in the Damazine area, Sudan. The study describes the mechanized crop production schemes in the Damazine, evaluates the financial viability of these schemes under partial and full mechanization of sorghum harvesting. assesses the economic viability of the two alternative sorghum harvesting technologies. and makes policy recommendations. The study is based on primary data obtained from a survey of 73 Damazine farmers during the 1983/84 cropping season. Secondary data included published and unpublished government reports and studies. Static linear programming is used to analyze the income and employment consequences of the farm enterprise under partially and fully mechanized sorghum harvesting technologies. Farm enterprise budgets are developed to measure the relative contribution of each enterprise and to compare the farm's financial profitability under the two alternative sorghum harvesting technologies. The linear programming analysis indicated that combine sorghum harvesting increased farm income by 30 percent and the efficiency of resources use. Hired labor use per feddan Mohamed Ahmed Osman Ibnouf decreased by 40 percent for the sorghum crop and total hired labor use decreased by 22 percent, when sorghum was combine harvested. The financial analysis of the two production systems indicated that all enterprises under the two harvesting technologies gave positive net returns. Combine harvested farms gave higher return to management than when sorghum was partially machine harvested. In contrast, when all subsidies were accounted for, fully mechanized sorghum generated a net loss compared to net profit for partially mechanized sorghum. The study identified several policy constraints and makes recommendations regarding the need to develop an improved farming system, to staballize the domestic macro policy environment. expand the mechanized farming frontier though the importation of land preparation machinery, rather than by subsidizing labor displacing combine harvesting machinary,to change the local taxes on crop from a per unit of crop produced basis to a per unit of land basis, to use research resources to breed drought resistance and high quality sorghum varieties, improve the cultural practices, and develop a viable crop rotation; and to create an effective and responsive extension service. I ‘0‘ "to he UZIVEIE PTCfESE for his I? Jfac "Y he: inValu; ‘ D. Q h . ‘a(‘b‘s 1 N: A ACKNOWLEDGMENTS My sincere thanks to many individuals and institutions who have facilitated my graduate program at Michigan State University. I especially wish to express my deepest appreciation to Professor Carl K. Eicher, Chairman of my Guidance Committee. for his understanding, inspiration and guidance throughout my graduate program, and for the positive role he played as my mentor. The guidance, intellectual stimulation and invaluable help of Dr. Rick Bernsten, my Thesis Director, are gratefully acknowledged. In addition, I wish to express my appreciation to other member of my guidance committee: Professors. Carl Liedholm, Stephen B. Harsh. Milton H. Steinmuller, and Paul Nickel, for their helpful guidance, constructive criticisms and valuable suggestions throughout my graduate program. My thanks goes to Professor Warren Vincent who acted as Chairman of my Guidance Committee, before he retired. My profound gratitude and appreciation due to Dr. Fred Winch III, of USAID, Sudan, who provided continued guidance and encouragement during my field work in Sudan. I am also thankful to Dr. Abdel Moniem Elshiek the Director General Planning and Agricultural Economic Administrations, Ministry of Agriculture, Sudan, for all the logistical and personnel iii support during the field work. Dr. Hassan S. Ahmed. Manager of the Agricultural Economic Administration, and Dr. Abdelrazg E. Mohamed Manager of the Planning Administration, Ministry of Agriculture, Sudan, for allowing me the unlimited use of their departments resources. Thank is also due to Abdelrahim Ibrahim, Abdel Rahman Jaad Alla, and Abdel Gahini A. Hassan, Ministry of Agriculture, Sudan, for help during the field survey. . This study is funded by the Ministry of Agriculture, Agriculture Planning and Statistic Project, which is Jointly funded by the Government of Sudan and USAID. My special appreciation goes to USAID and Government of Sudan for providing financial support to this study. My deepest appreciation goes to Jan Bernsten for all the. help she gave in editing this study, Vicky Fox deserves a special mention for typing the thesis draft and Fernanda Lanna Verillo for the final typing. Loving thanks to my parents, my sisters and brothers, for all the sacrifices and support they gave me. I want to express my appreciation to my wife, Ayda, for help. encouragement, patience, and understanding through my graduate program. Above all, my special praise and thanks be to Allah "God", cherisher and sustainer of the worlds, Most Gracious, Nbst Merciful, for his innumerable bounties. iv LIST 0] LIST 0; Chagte 1 I TABLE OF CONTENTS LIST OF TABLES LIST OF FIGURES Chapter 1 INTRODUCTION... .................................... 1.1 Agriculture in the Economy of the Sudan ....... 1.2 Importance of the Mechanized Rainfed Sub- sector.OOOOOOOOOOOOOOOOOOOOOOOO 000000000000000 1.3 An Overview of Some Major Studies on Farm Mechanization in Developing Countries ......... 1.4 Need for the Study........... ....... . ......... 1.5 Objectives of the Study... ........ . ........... 1.6 Organization of the Study ..................... PHYSICAL CHARACTERISTICS AND POLICY ENVIRONMENT FOR THE DAMAZINE MECHANIZED CROP PRODUCTION RAINFED SCHEMES......... ....... .......... .................. 2.1 Physical Characteristics of the Area .......... 2.1.1 Topography and Soil. ...... . ............ 2.1.2 Climate.............. .................. 2.1.3 Vegetation........ ..................... 2.1.4 Domestic Water Supply .................. 2.2 The Policy Environment ........................ 2.2.1 Machinary Import Policy... ............. 2.2.2 Taxation and Subsidies ................. 2.2.3 Credit: Agricultural Bank of the Sudan. 2.2.4 Agricultural Research and Extension.... 2.3 Selection of the Study Area ................... 2.4 Data Sources and the Analysis Methods Used.... THE MECHANIZED CROP PRODUCTION RAINFED SCHEMES (MCPRS) OF THE DAMAZINE... ......................... 3.1 Historical Background of the MCPRS in Sudan... 3.2 The Development of the Damazine Area .......... 3.3 The Farming System ............................ 3.3.1 Land Tenure ............................ 3.3.2 Dominant Cropping Pattern .............. 3.3.3 Tree Clearance ......................... 3.3.4 Land Preparation and Planting .......... Page ix xiv 25 28 29 3O 31 31 32 36 36 38 39 42 46 5O 51 52 56 56 60 63 64 66 67 69 3.3.5 Weeding .............. . ................. 71 3.3.6 Harvest ................................ 72 3.3.7 Farm Labor ............................. 74 THE STRUCTURE OF THE LINEAR PROGRAMMING MODEL FOR THE DAMAZINE MCPRS ........... . ..................... 77 4.1 Introduction .................................. 77 4.2 Assumptions of Linear Programming ............. 78 4.3 Mathematical and Schematic Representation of the Damazine MCPRS LP Model ................... 80 4.4 Description of the LP Model ................... 82 4.4.1 The Objective Function ................. 82 4.4.2 Activities in the Model ................ 83 4.4.2.1 Crop Production Activities.... 83 4.4.2.2 Labor Hiring Activities....... 88 4.4.2.3 Capital Borrowing Activities.. 91 4.4.2.4 Parmers' Own Capital.......... 91 4.4.2.5 Crop Selling Activities....... 94 4.4.2.6 Capital Transfer Activities... 95 4 4 3 Constraints of the Model ............... 97 4.4.3.1 Land Constraints .............. 97 4.4.3.2 Labor Constraints ............. 97 4.4.3.3 Operating Capital Constraints. 97 4.4.3.4 Drinking Water Constraints.... 98 4.4.3.5 Non-Negativity Constraints.... 99 RESULTS OF LINEAR PROGRAMMING ANALYSIS ............. 100 5.1 Basic Solution. . ............. ............... 101 5.1.1 Resource Use. ........ . ....... ....... 103 5.1.2 Marginal Value Product of Resources. 103 5.2 Sensitivity Analysis of the Basic Model... 108 5.2.1 The Effect of Enforcing the Mechanized Farming Fallow Requirement............. 109 5.2.1.1 Cropping Pattern.............. 109 5.2.1.2 Marginal Value Product ........ 112 5.2.2 Yield and Prices Changes....... ........ 112 5.2.2.1 Yield Increase of 25 Percent.. 112 5.2.2.2 Price Increase of 25 Percent.. 114 5.3 Effect of the New Sorghum Harvesting Technology .................................... 115 5.3.1 Resource Use .......................... 117 5.3.2 The Marginal Value Products ............ 120 5.4 Sensitivity Analysis of the Model Under the New Sorghum Harvesting Technology ................. 122 5.4.1 A 25 Percent Increase in Yields of All Crops .................................. 123 5.4.2 A 25 Percent Increase in Sorghum Yield. 126 5.5 Employment Effects of the New Technology...... 128 5.6 Summary....... ........... ......... ............ 129 vi FINANCIAL AND ECONOMIC ANALYSIS OF THE DAMAZINE MCPRS................................ .............. 131 6.1 Distinction Between Financial and Economic Analysis... . ... ... . .... .................. 131 6.2 Financial Analysis of the Damazine MCPRS ...... 133 6.2.1 Derivation of Input/Output Coefficients 134 6.2.2 The Cost of Land Clearance ............ , 134 6.3 System 1: Production System Under Partial Mechanization of Sorghum Harvesting ........... 135 6.3.1 Crop Enterprise Budgets in System 1.... 135 6.3.2 Comparison and Apprasial of the Crop Enterprises in System 1 ................ 140 6.4 System 2: Production System Under Full Mechanization of Sorghum Harvesting ........... 143 6.4.1 Crop Enterprise Budgets In System 2.... 143 6.4.2 Comparison and Apprasial of the Crop Enterprises in System 2 ................ 147 6.5 Comparative of Financial Analysis of the Two Production Systems............... ............. 149 6.6 Comparative Financial Analysis of Sorghum Production with Partial and Full Mechanization of Harvesting. ............................ 153 6.7 Economic Analysis of Partially Mechanized Vs. Fully Mechanized Sorghum Harvesting ........... 156 6.7.1 Adjusting Prices for Economic Analysis. 157 6.7.1.1 Determining the Value of Foreign Exchange .............. 157 1.2 Import Parity Price of Sorghum 159 6.7.1.3' Calculating the Economic Costs of Sorghum Production. ........ 160 6.7.2 Comparative Economic Analysis of Partially Vs. Fully Mechanized Harvested Sorghum. ....... .... ............... 163 6.7.3 Comparison of Financial and Economic Costs of Fully and Partially Mechanized Harvested Sorghum ..................... 165 6.7.4 Sensitivity of the Economic Analysis Results to Changing Interest Rate and Exchange Rate Assumptions .............. 165 6.7.4.1 Changing the Interest Rate Assumptions ................... 165 6.7.4.2 Changing the Exchange Rate Assumptions ................... 167 6.8 Summary ....................................... 172 SUMMARY, POLICY IMPLICATIONS AND SUGGESTIONS FOR FURTHER RESEARCH .............................. ..... 178 7.1 Summary ....................................... 178 7.2 Policy Implications ........................... 184 7.2.1 Developing a Food Strategy ............. 185 7.2.2 Farm Employment ........................ 187 7.2.3 Credit and Taxation Policy ............. 189 vii 7.2.4 Agricultural Research and Extension.... 190 7.3 Suggestions for Further Research..... ......... 192 APPENDICES A. Research Methods. . ............................. 194 B. Economic Costs of Sorghum Production. ....... . 202 C. Estimated Costs of Farm Machinary and Jute Sacks. 205 BIBLIOGRAPHY.. .......................................... 210 viii Table 2.1 2.2 2.3 2.4 2.5 2.5 2.7 3.1 3.2 LIST OF TABLES Table Page 1.1 Land Use in Sudan, 1977 ..................... 2 2.1 Balance of Payments (1970-1982), Sudan ...... 40 2.2 Overvaluation of the Exchange Rate in the SUdan (1970-1980)eeeeeeeeeeeeeeeeoo oooooo 41 2.3 Total Tractor Importation of the Agricultural Bank of Sudan, Compared to Total Sudan's Importations (1969-1979)... 43 2.4 Import Tax Rates on Selected Items, 1969-1974, Sudan... ...... ... ............. 44 2.5 Agricultural Bank of Sudan: Estimated Cost of Land Preparation and Planting in MCPRS, Season 1983/84, Sudan ..... . ....... 47 2.6 Agricultural Bank of Sudan: Estimated Cost of Sorghum Harvesting in MCPRS, Season 1983/84, Sudan.......... ..... ... ......... 48 2.7 Agricultural Bank of Sudan: Interest Rates for Farmers, 1959-1983, Sudan..... ....... 53 3.1 Damazine MCPRS Area Development by Year (1957-1980), Sudan...... ................. 61 3.2 Seasonal Hired Labor: Participation X According to Place of Permanent Residence, Damazine MCPRS, Season 1983/84, Sudan.......... ................. 76 4.1 Partially Mechanized Harvested Sorghum Activities, Damazine MCPRS, Season 1983/84, Sudan. ......... ...... ........... 84 4.2 Sesame Production Activities, Damazine MCPRS, Season, 1983/84, Sudan.... ........ 85 4.3 Pearl Millet Crop Production and Crop Selling Activities, Damazine MCPRS, Season 1983/84, Sudan .................... 86 ix 4.4 4.5 4.6 4.7 4.8 5.1 5.2 5.5 5.5 (I. (D Fully Mechanized Harvested Sorghum Activities Damazine MCPRS, Season 1983/84, Sudan..... ............... . ...... 87 Hired Labor Activities, Damazine MCPRS, Season 1983/84, Sudan .................... 89 Borrowed Capital Activities, Damazine MCPRS, Season 1983/84, Sudan ............. 92 Farmers' Own Capital Activities, Damazine MCPRS, Season 1983/84, Sudan ............. 93 Operating Capitall Transfer Activities Damazine MCPRS, Season 1983/84, Sudan.... 96 Comparison of the Linear Programming and Survey Results, Damazine MCPRS, Season 1983/84, Sudan............ ............... 102 Optimum Plan Resource Use Under Existing Technology, Damazine MCPRS, Season 1983/84, Sudan............. .............. 104 Shadow Prices for Resources Used Under Existing Sorghum Harvesting Technology, Damazine MCPRS, Season 1983/84, Sudan.... 107 Optimum Enterprise Combination: Basic Model VS. the Model with MFC Fallow Requirement, Damazine MCPRS, Season 1983/84, Sudan.......... ................. 110 Comparison of the Marginal Value Product of Resources: Basic Model VS. Model with Fallow Requirement, Damazine MCPRS, Season 1983/84, Sudan .......... . ......... 111 Sensitivity Analysis on Basic Model: Level of Activities and Resource Use if Crop Yields Increased by 25%, Damazine MCPRS, Season 1983/84, Sudan .................... 113 Sensitivity Analysis on Base Model: Level of Activities and Resource Use if Crop Prices Increase by 25%, Damazine MCPRS, Season 1983/84, Sudan .................... 116 Comparison of the Optimum Organization: Base Model VS. New Technology Model, Damazine MCPRS, Season 1983/84, Sudan.... 118 5.9 5.1! 5.12 5.1: 6.1 6.1 .10 .11 .12 .13 Resource Use: The Base Model VS. the New Technology Model, Damazine MCPRS. Season 1983/84, Sudan .................... Comparison of the Marginal Value Product of Resources: Basic Model VS. Model with New Technology. Damazine MCPRS Season 1983/84, Sudan... ..... . ........... Employment Effect of the New Technology (Full Mechanized Harvested Sorghum), Damazine MCPRS, Season 1983/84, Sudan.... Sensitivity Analysis: Base VS New Technology Model, Level of Activities and Resource Use if Crop Yields Increase by 25%, Damazine MCPRS, Season 1983/84, Sudan.... Sensitivity Analysis on the New Technology Model: Level of Activities and Resource Use if All Crop Yields Increased 25$ VS. Only Sorghum Yield Increased 25%, Damazine MCPRS, Season 1983/84, Sudan.... Early Sorghum Costs and Returns Under System 1, (527 Feddans), Damazine MCPRS. Season 1983/84, Sudan........ ..... . ...... Late Sorghum Costs and Returns Under System 1, (725.7 Feddans), Damazine MCPRS, Season 1983/84, Sudan ............. Early Sesame Costs and Returns Under System 1, (247 Feddans), Damazine MCPRS, Season 1983/84, Sudan ............. System 1: Comparative Analysis of the Crops Enterprises Damazine MCPRS, Season 1983/84' sudanOOOOOOOOOIOOOOOO. .......... Early Sorghum Costs and Returns Under System 2, (1161 Feddans), Damazine MCPRS, Season 1983/84, Sudan.. ........... Early Sesame Costs and Returns Under System 2, (339 Feddans), Damazine MCPRS, Season 1983/84, Sudan ............. System 2: Comparative Analysis of the Crops Enterprises Damazine MCPRS, Season 1983/84, Sudan ........................... xi 119 121 124 125 127 136 137 138 141 144 145 148 6.3.1 6.4.2 6.5 6.6 5.7 5.8 6.9. 5.9 5.9 6.3.1 Comparative Analysis of System 1 and System 2 Whole Farm, Enterprises, Damazine MCPRS. Season 1983/84, Sudan.... 6.4.1 Comparative Analysis of Partially and Fully Machine Harvested Sorgum, Damazine MCPRS, Season 1983/84, Sudan.... 6.5 Subsidized and Unsubsidized Costs of Selected Agricultural Activities, Damazine MCPRS, Season 1983/84, Sudan.... 6.6 Damazine MCPRS, Economic Farm Gate Price of Sorghum, Season 1983/84, Sudan. ....... 6.7 Comparative Economic Analysis of Partially VS. Fully Mechanized Harvested Sorghum, Damazine MCPRS, Season 1983/84, Sudan.... 6.8 Financial VS. Economic Costs of Production on Fully and Partially Machine Harvested Sorghum, Damazine MCPRS. Season 1983/84, Sudan ..... . .............. 6.9.1 Sensitivity Analysis: Economic Analysis of Partially VS. Fully Mechanized Harvested Sorghum, with 35% Interest Rate on Credit, Damazine MCPRS, Season 1983/84, Sudan........................... ......... 6.9.2 Sensitivity Analysis: Economic Analysis of Partially VS. Fully Mechanized Harvested Sorghum, with 40% Interest Rate on Credit, Damazine MCPRS, Season 1983/84, Sudan.................................... 6.9.3 Sensitivity Analysis: Economic Analysis of Partially VS. Fully Mechanized Harvested Sorghum, with 50% Interest Rate on Credit, Damazine MCPRS, Season 1983/84, Sudan ....... . ....... ... .................. 6.10.1 Sensitivity Analysis: Economic Analysis of Partially VS. Fully Mechanized Harvested Sorghum, with SER of LS. 2.50 = USS 1.00, Damazine MCPRS, Season 1983/84, Sudan.... 6.10.2 Sensitivity Analysis: Economic Analysis of Partially VS. Fully Mechanized Harvested Sorghum, with SER of LS. 2.80 = USS 1.00, Damazine MCPRS, Season 1983/84, Sudan.... xii 151 154 158 161 164 166 168 169 170 171 173 .10.3 Sensitivity Analysis: Economic Analysis of Partially VS. Fully Mechanized Harvested Sorghum, with SER of LS. 3.00 a USS 1.00, Damazine MCPRS, Season 1983/84, Sudan.... Early Sorghum Economic Costs and Returns with Partial Machine Harvesting, (527 Feddans), Damazine MCPRS, Season 1983/84, Sudan............. .............. Late Sorghum Economic Costs and Returns with Partial Machine Harvesting, (725.7 Feddans), Damazine MCPRS, Season 1983/84, Sudan. ....... . .................. Early Sorghum Economic Costs and Returns Under System2, (1161 Feddans), Damazine MCPRS, Season 1983/84, Sudan.. ........... Estimated Costs of a 75 H.P. Tractor and a Disc Harrow, Damazine MCPRS, Season 1983/84, Sudan................. .......... Estimated Economic Costs of a 75 H.P. Tractor and a Disc Harrow, Damazine MCPRS, Season 1983/84, Sudan....... ...... Estimated Costs of Operating a 105 H.P. Combine Harvestor, Damazine MCPRS, Season 1983/84, Sudan....... ............. Estimated Economic Costs of Operating a 105 H.P. Combine Harvestor, Damazine MCPRS, Season 1983/84, Sudan............. Estimated Costs of Jute Sacks, Damazine MCPRS, Season 1983/84, Sudan.. ........... xiii 174 202 203 204 205 206 207 208 209 2.3 2.4 4.1 LIST OF FIGURES Mechanized Farming Schemes with Year of Establishment, Sudan .......... .. ......... Mechanized Farming Schemes, Sudan ........... Annual Rainfall, Damazine MCPRS (1951 -1980 Average), Sudan... ........... Mean Temperature, Damazine MCPRS (1951 -1980 Average), Sudan... ........... Relative Humidity, Damazine MCPRS (1966 -1980 Average), Sudan.... .......... Schematic Representation of Damazine MCPRS Basic LP Model. ....... ... ......... xiv Page 31 33 34 35 81 1.1 CHAPTER 1 INTRODUCTION 1.1 Agricultural in 325 Economy 9; the §gg§g The Sudanese economy is firmly based on agriculture. Sudan has an area of approximately six hundred million feddans.1 The total arable land is estimated to be 200 million feddans, out of which about 19 feddans (9 percent) is under cultivation (Table 1.1). The total population is estimated at 21 million (1983)2, equal to about 0.9 cultivated feddans per capita. Agriculture's contribution to the GDP has increased from 34 percent in 1975 to 37.2 percent in 1982.3 About 76 percent of the economically active population is engaged in agriculture. Agriculture is the source of 90-95 percent of the country exports, and 90 percent of the raw products processed in the country. Over 50 percent of the government's revenue is generated by agriculture. 1 1 Feddan = 1.038 Acres = 0.42 Hectare = 4200 sq. meters. 2 Democratic Republic of the Sudan, Ministry of Finance and National Planning, Department of Statistics, Khartoum, Sudan. 3 Democratic Republic of the Sudan, Ministry of Finance and National Planning, "Economic Survey 1982/83," Khartoum, Sudan (in Arabic). l I I (I! I 2 TABLE 1.1 Land Use in Sudan, 1877. ------ 1000's Feddans-------- Total Area 588,021 Land Area 585,714 Area Under water 30,807 Arable Land and Land Under Permenant Crops 200,000 Arable Land 181,315 Cultivated Land 18,685 Pasture - 57'(43 'Forest and woodland 217,857 Other 80,714 Source: The Statistics DiVision,Department of Agricultural Economics,M1nietry of Agriculture and Natural Resources, 0.8. of the Sudan,Sudan Yearbook of Statistics,1877. Agriculture consists of four major sectors. First, the irrigated sub—sector include about 4 million feddans, and comprises mainly consolidated schemes irrigated by the Nile waters. Second, as in most developing countries the majority of the population is dependent on some form of traditional agriculture. Mohammad (1982) estimates that more than 50 percent of the total cropped area is under the traditional agriculture sub-sector. The third sub-sector is the livestock sub-sector. This sub-sector has an estimated 19 million cattle, 18 million sheep, 13 million goats, and 3 million camels. The herds are owned mainly by nomads. The fourth sub-sector, the most recent to be developed, is the mechanized crop rainfed schemes (MCPRS) sub—sector. This sub-sector is located in Sudan's Central Clay Plains where rainfall is between 400 mm in the northern areas, and 800 mm in its southern boundaries. 1.2 Importance 9f the Mechanized Rainfed Sub—Sector Efforts to mechanized rainfed crop production were initiated during the Second World war. The objective was to supply the British troops in East and North Africa with 1 sorghum, Sudan's staple cereal for which the country was experiencing shortage during the war years. The scheme was 1 Sorghum is sorghum vulgane, locally known as "dura." started in 1944/45 in the eastern part of the country, and by 1960 it hab been extended to other areas of the central clay plains1 (Figure 1.1). Today, the area under mechanized rainfed farming is estimated at 6 million feddans, which represents 32 percent of the total cultivated area in Sudan. Sorghum and sesame2 are the major crops produced in the mechanized rainfed sub- sector. The area under mechanized sorghum represents approximately 89 percent of the total area under sorghum production, and accounts for 82 percent of the total sorghum production in the country (Hursany, 1984). This sub-sector also supplies 40 percent of the country's sesame output. Mechanized sorghum production represented 6 percent of the Sudan's total agricultural export earnings between 1976-1980 and contributed 15 percent of the agricultural export earning in 1980. The Mechanized Farming Corporation (MFC), which is the government agency overseeing the schemes, estimated that an additional 16 million feddans can be put under mechanized rainfed farming in the Central Clay Plains. The sub-sector is characterized by large farms of 1000 to 2000 feddans managed by individual farmers. Cultivation 1 . Sudan's Central Clay Plains represent one of the largest reserves of cultivable land in the world (Simpson, 1983). It is about 100 million feddans, and stretches across the central part of the country from east to west. 2 Sesame is sesamum orientale, which is locally known as "simsim." FIGURE 1.1 Mechanized Farming Schemes With Year of Establishment.3udan " ' 1’ '?_."' 2‘ ‘‘‘‘‘‘ Steed-me — —\ I . 0 ”Unusual . _/ ”I “A UBYA '7 \ a 1‘ M500» 1 CHAD SOUTH I GEDAREF . 9 ”m“ , oElODe-u 'M Q“ ‘ @I ‘* HABILA 1968— Jim w . I‘ 3" CENTRAL ./ ETHIOPIA AFRICAN . REPUBLIC \ 1 NORTH 2" I l ‘ KENYA CONGO UGANDA KEY Mechemeed Ferming Schemes with VI!!! 04 Establishment. -..—“.— --..-.‘._.._T]:1_E_SU_DAN o --—-—..-—. is carried out by wheel tractors (70-75 HP) using disc barrows. Weeding is done manually. Harvesting of sorghum is partially mechanized. The crop heads are cut by casual labor, and then threshed by stationary combine harvestors. Sesame is manually harvested. The term mechanized farming is strictly a misnomer since only land preparation and planting are fully mechanized operation on all farms. The sub-sector is credited with channelling substantial private savings into agriculture, and it makes a valuable contribution to food supplies for' both domestic and foreign consumption (ILO, 1976). At the same time, the sub-sector is criticized as a means by which the rich get richer through government subsidies and surface mining of the land (Kursany, 1984). 1.3 Overview 9; Some Major Studies 9; Farm Mechanization IE“ I? Developing Countries A review of some of the major studies will help to set the objectives of the study and indicate some of the issues involved. Dawlaty (1971) in his study of the effects of tractors on farm output, income, and employment found that at the early stages of mechanization in Afghanistan the amount of labor replaced by machines is relatively small. An important effect to mechanization in Afghanistan found by Dawlaty was a shift in tenure patterns from "independent" (Ejaradar) te La. la SC 1111 ir If in do me fa in St Co be ex be tenants to tenants who are less involved in decision making. Landlords who had previously rented all or most of their land became more involved in the management of their farms. Large landholders were found to became more attuned to scientific methods and more aware of economic market forces when they owned tractors. The study also found that tractor use increased cultivatable land areas, particularly in the irrigated areas. In most instances tractor use in Afghanistan was also found to both increase crop yields and increase the demand for labor in operations which were not done by tractors. Also, the research showed that mechanization, which enabled some farmers to increase their farm size, led to the diversification of farm operations, including more labor intensive enterprises. The data for the study were collected through interviews of tractor owners and was not checked with any other source of information. Consequently, one can expect significant bias in the data. Another drawback of the study is that it did not pursue a policy question in the objectives and the author did not explore whether or not the mechanization program was beneficial to the country as a whole. Singh (1971) studied the effect of technology on farm employment in the states of Punjab and Maharashtra in India. The basic approach used in the study was to attempt to measure the potential impact of high-yielding varieties (HYV) and other important technological changes on farm employment. In the Punjab where HYVs of wheat had spread rapidly, I that the 1 but the demand fc It was p: area will Increase decrease "Wk dura Yen. In growth of “1110:; w pu‘P‘Sets, “flitude . muting : Yet, this any .3?de IOPCQ. “1‘ cropping ' rapidly, wheat threshers were extensively used. It was found that the HYVs increased the demand for labor by themselves, but the pump-sets, threshers and tractors reduced the demand for labor such that the overall demand was reduced. It was projected by the study that by 1983/84 the cropped area will expand by 14 percent and the farm labor force will increase by 10 percent in the Punjab, reflecting a slight decrease in the worker/hectare ratio and an increase in the work duration of a farm laborer from 120 to 130 days per year. In Marharashtra, the study showed that the natural growth of the labor force will provide a surplus of 4.5 million workers by 1984. The labor displacing impact of pump-sets, threshers and tractors will not be of sufficient magnitude to counter-balance the additional demand for labor resulting from the expected increase in the area under HYVs. Yet, this net increase in demand will be too small to have any marked effect on employment of the rapidly growing labor force. With limited scope for irrigation and multiple cropping, on the other hand, the man/land ratio will remain high and the annual average working time of a farm laborer will decline. The impact of technological changes in the two states studied was found to be widely uneven and different. The study made no attempt to go into the impact of technological change in agriculture on employment in the non-farm sector. Green (1971) studied four different case studies of mechanization in different parts of Ethiopia using secondary data supported with informal interviews. The cases were described and analyzed for potential benefits, costs and compatibility with some objectives selected from the Ethiopian third five-year plan. Benefit-cost analysis was used to test the financial profitability of mechanization in the four districts studied. The author made some assumptions with regard to crop yields,4 population growth, labor efficiency, price, etc. on which he based his calculations. Budgeting models were used to generate data for benefit-cost analyses for the strategies suggested in each of the four cases. 'For Agnale village, only one form of hand-powered technology was studied. High and low production level models were tested. The analysis showed there was high potentials for increasing net returns by introducing unsophisticated improvements into hand-powered systems. Analyses of employment requirements indicated a decline in labor due to improvements assumed to follow in labor efficiency. For the Chilalo Araja case, eight hectare were selected as representative of the district. The two strategies studied were the present bullock technology, compared to improved bullock technology and tractor-hire. Benefit-cost analyses of the two strategies indicate a modest net return for high production levels and a negative returns for low levels. In this system where farms are small and fragmented Ithe analysis suggested that the bullock option was more appropriate than the tractor—hire alternative. The bullock option required less government investment and provided more enploynnt. Setit-Hunera representati'. assued level the existing Intensive te technology technology, 1What level expense of “filmed 10 employment. Benefit-cost analyses of two strategies in Setit-Humera for which 800 hectare was selected as a representative farm indicated high rates of return'for both assumed levels of production. The strategies compared were the existing labor intensive technology to more machine intensive technology. The returns to the labor intensive technology were lower than for the machine intensive technology, due to additional economies facilitated by the higher level of mechanization. Yet this was achieved at the expense of a lower level of employment. The Tendaho case evaluated mechanization on large-scale commercial plantations. Two strategies were considered here. Strategy I was based on the assumption that the plantations produce and sell raw cotton. Strategy II assumed the cotton was ginned before selling. In this case, returns to Strategy II were found to be higher than those for Strategy I, and also more labor will be employed. Green fully tested the financial‘ analysis of the four cases but gave a little interest to the economic analysis. Green's thesis did not draw national policy conclusions. Ahmad (1972) investigated the economic and social impacts of tractor mechanization in the Punjab Province of Pakistan. He analyzed the influence of mechanization on cropping intensities, yields, cropping pattern and rate of return on investment. The social aspects include influence of mechanization on employment, tenurial relationships and farming structure. Ahmad used secondary data and a cross— section Punjab P analyze t cause pr resources incentive t“bowells financial tubeWells "ith tubes "“131 can “Mlle, di'tortlon "l“ivuy counted t *Jectlon ”1181'; . A reecu-Glide. 11 section survey of 50 farmers in three districts of the Punjab Province. He used a linear programming model to analyze the data. Ahmad showed that government programs can cause price distortions that result in the misallocation of resources. Ahmad's linear programming model showed that the incentive to tractorization was very great. Farms with tubewells got higher returns to mechanization such that the financial rate of return was 46 percent while without tubewells it was only 3 percent. The increase in returns with tubewells was due to the increased cropping intensities which can be reached. He concluded that for farmers with tubewells, mechanization is profitable even when all price distortions were removed. Ahmad found that tractor farms had relatively less family labor but more hired labor per acre compared to bullock farms. Tractorization also caused tenant ejection and an increase in landholdings of the tractor owners. As policy implication for his research, Ahmad recommended encouragement of threshers instead of tractors in areas without tubewells. In areas where tubewells existed, he suggested a policy that will increase the foreign exchange savings, improve off-farm linkages and reduce tenant displacement. Ahmad sees technical change as critical to agricultural modernization and it should be considered as a bundle of inputs, rather than as a single input, e.g., tractors only. Clayton (1973) studied the impact of mechanization on employment in Uganda, Kenya and Tanzania. Clayton attempted to asses: lechaniza‘ concluded encourage: unecononi. governmen- that ther. over-311 ,. that a. decreased dutroy" Clay {manual sOCial “Adm,“ ”tinted Per 1.0c “All hc fang 12 to assess the income and employment impact of various mechanization programs in these three countries. He concluded that mechanization programs should 'not be encouraged in Uganda because they had proved to be uneconomic and labor-displacing. He suggested that the government should not subsidize farm machinery and argued that there was no indication that tractorization has raised over-all agriculture or labor productivity. Clayton claimed that ". . . the indications are that mechanization has decreased the demand for labor and is thus an employment destroyer." Clayton found that in Kenya mechanization was financially viable for large farms, but considering the social cost and benefits of mechanization, it was undesirable for both large and small farms. Clayton estimated that tractorization absorbed 80 employed persons per 1,000 hectares, compared with over 1,000 on peasant small holdings. Clayton advocated mechanization on family farms in the coffee/tea, pyrethrum/coffee and coffee ecological zones, particularly when these are near towns or it is physically suitable to plow with a tractor. In Tanzania, Clayton suggested that tractor cultivation was uneconomic, although he presented no data to support that conclusion. Finally, he approved the government policy to encourage ox plow cultivation and considered the continuous increase in the number of ox plows purchased as an indication of its profitability. 13 Abercombie (1973) reviewed the mechanization situation in Latin America and its impact on employment. He characterized Latin American countries as having‘ a high unemployment rate, and in the agricultural sector, underemployment was more serious than open unemployment. Abercombie, using data for Colombia, noted that the impact of tractors on employment varied with farm size. He estimated that on the average, as many as 19 workers could be displaced per tractor for farms in the 50 to 199 cultivated hectares range. For farms with over 200 cultivated hectares, however, the substitution ratio dropped to 2-3 workers per hectare. For Colombia, he estimated the introduction of one tractor resulted in an annual reduction of average labor requirements for major field crops of 5-7 man-years. This compared with 4.1 man-years in Chile and 6-8 man-years in Guatemala. The reduction in Chile was less than the other two countries because of the higher proportion of irrigated crops and greater use of animal power. His estimates were based on estimated labor requirement rather than actual figures. Abercombie estimated that the employment in off-farm employment due to agricultural machinery manufacture, distribution, maintenance and repairs for eleven Latin American Free Trade Association (LAFTA) countries in 1968 to be less than 150,000. Although these jobs were at a much higher productivity and income level than the agricultural jobs, they only represented 0.2 percent of total employment and about 0.5 percent of the 14 number of persons employed in agriculture. Using data from Brazil and Argentina, Abercombie estimated that an investment of up to US $20,000 was required to create one job in tractor manufacturing which would produce two to five tractors each year. The problem here was that each tractor had the potential to reduce farm employment by five man- years during each year of operation. The labor displaced differed substantially from crop to crop and also a greater displacement occured at the early stages of mechanization - - just the opposite from Dawlaty's findings in Afghanistan. Abercombie stated that most agricultural machinery in Latin America is owned by large-scale private farmers. They chose mechanization because it was profitable and convenient for them due to the distortions in factor prices which enabled them to borrow capital at less than its Opportunity cost to society. Abercombie recommended that the governments of Latin America stop policies which encouraged more mechanization and instead follow selective mechanization policies to ensure employment opportunities for their growing labor forces. Gostch (1973) in his study of mechanization in Pakistan concluded that government subsidies biased the private profitability of technology in a socially undesirable direction. In addition, institutional conditions would lead to the same results - — even if resources were valued at their opportunity costs. In Punjab Province, which is ecologically suitable for mechanization, he estimated that over fi evailabl primaril nearly on farms to the Pakistan far-er: numerous Which v Ind ne °PPOrtux decrEase thesG as "Plane Growth lasseS Revolut1 net be: argued large tenants 15 over five tractor horsepower per 100 cropped acres were available in central Punjab. This concentration was primarily related to the significance of irrigation, as nearly 75 percent of privately owned tractors were located on farms that had tubewells. The second reason was related to the farm sizes. Gostch concluded that tractorization in Pakistan was following a familiar pattern with the larger farmers adapting first. Government policies provided numerous incentives to mechanize. He suggested a policy which would reduce the divergence between net social cost and not private benefits by pricing capital at its opportunity cost. In addition, institutional changes would decrease the incentives to mechanize. Gostch did not see these as ways to improve the income distribution or increase employment, but they may lead to continued agricultural growth and a slow rise in farm wages sufficient to give the masses at least a nominal participation in the Green Revolution. Gostch reached the conclusion that the social net benefits from mechanization were negative. He also argued that if there were any benefits from mechanization, large landlords and urban consumers received them while the tenants and the landless were the adversely affected group. Gemmil and Eicher (1973) reviewed mechanization research in Asia, Africa and South America and divided these into short-term static studies, medium-term dynamic studies, and long-term perspective studies. The short-term studies mostly included cost-benefit analyses concerned with one 16 locality and tended to focus on a particular machine. The medium-term studies are the less common of the three types and tended to be carried out at the regional level. The long-term studies were usually carried out to explain the historical process of mechanization. Eicher and Gemmil observed that government programs and policies mechanization can be divided into short-, medium-, and long-term. Researchers have generally concentrated on short-and long- term policy questions. They noted that researchers have often reached unjustified regional and national conclusions from studies in limited geographical areas. A drawback in many studies of farm mechanization was their failure to pursue specific policy questions. They believed that the question of mechanization is an empirical one and should not be solved by rules of thumb, and that the most acceptable mechanization policy would involve a compromise between alternative goals such as food production, export crop production, employment, and income distribution. Merril (1975) reviewed a large number of mechanization studies in developing countries. He thought the farmers decision to substitute machinery for labor or animals depended on the relative prices of inputs or changes in the production function that increased the marginal productivity of machinery. His review showed that there is no way to prove or disprove general claims such as mechanization increases agricultural output and employment. From the review of the studies, he concluded that when mechanization 17 replaces animal power it results in a reduction in labor inputs. The degree to which the labor input will be reduced depends on the crops in question, the farm size, the extent, and type of mechanization. Mechanization in its early stages may be associated with a slight increase in cropping intensity, crop yields, and type of crops grown. Merril thought that unless there were government policies to prevent it, mechanization may result in an increase in land holdings and tenants displacements. His review of the studies indicated that the non-agricultural employment generated iby mechanization replaced only a small part of those displaced by mechanization. He concluded that while mechanization of agriculture is a continuous and inevitable process in economic development, its speed and direction can be altered by public policies and programs. Merril recommended that governments should not subsidize mechanization in a way that benefits large farmers, but it should support the development of agricultural machinery which can be used by small farmers and to a large extent be produced locally. He viewed mechanization as a part of modern agriculture which includes new yield increasing biological and chemical technologies. Stavis (1978) made a detailed analysis of how China faced the political and social dimensions of mechanization. He discussed how China, through conscious policies, pursued mechanization programs that contributed to greater food production, equitable food distribution and significant job 18 enrichment. Chinese leadership used mechanization to accomplish the broader goals of social transformation. Stavis showed how mechanization policies developed'in China and how the socio-political context shaped agricultural mechanization. Of ’significant importance is the fact that China has no seasonal internal migration and mechanization is needed to break the labor bottlenecks which resulted from increased multiple cropping. Another consideration was the conscious policy to improve the rural living standards and make it more equal to urban conditions. Mechanization was also used to free labor for other jobs, soil reclaimation, irrigation projects, etc. Finally, mechanization was used as a means to strengthen the economic foundations of large- scale collective agriculture. Stavis saw that the striking aspect of agricultural mechanization in China was that its benefits are shared widely throughout the community of collectively owned institutions. This is one dimension in which China is different from many other countries. A dominant feature of China's mechanization program was a concentration on small- scale, labor-intensive agriculture. Binswanger (1978) reviewed over 20 empirical studies on the economics of tractors in the Indian sub—continent and compared their reported results. Most of the studies reviewed were cross-sectional comparisons of various types of bullock operated farms with tractor operated farms. Other studies have compiled data for tractor farms only and have judged and aft perforna opportun addition a major tOgether are an C0nslder Cases th Yield d differen t° Prov tractorj which Na. "33 rea. °V9ra11 . Pattern 1 on labO) 10ng as 1 to exPECI intensivE BinSwangE 19 judged the impact of tractorization on the basis of before and after comparisons. Cropping intensity was the first performance measure considered. In areas where few opportunities exist for area expansion, the effect of additional power on cropping intensity is often regarded as a major potential benefit. However, the studies taken together give little support to the hypothesis that tractors are an important factor in crop intensification. When considering the yield effect of tractorization, out of 118 cases there were only five or six instances in which larger yield differences remain in the absence of' equally large differences in fertilizers used. In all, the studies failed to provide much evidence for the yield increasing effect of tractorization. Another essential gain of mechanization which was considered was timeliness. No conclusive evidence was reached when all the studies were considered. Also, overall the studies did not show strong evidence of cropping pattern shifts. With respect to the effect of mechanization on labor displacement, Binswanger's review showed that as long as the wage rates remained low, there was little reason to expect tractors to gain a comparative advantage in labor intensive operations. The basic conclusions reached by Binswanger was that the tractor studies surveyed failed to provide convincing evidence for substantial increases in intensity, yields, timeliness and gross returns due to tractor use. Likewise, the evidence on labor displacement was far from conclusive. D. econom; Sudan': rainfec employ: mechanj both PIOduct given t cost-be tfactor Di which Interna the IL "than: returns lechani: conclude Justifie ana1YSis Bin fap‘ing Afr1c3. studied external pattern a 20 Disney and Elbashir (1984) analized the technical and economic performance of tractors and harvestors in the Sudan's irrigated Gizera Scheme and Gedanef mechanized rainfed farms. Their analysis sought to determine the employment effect and technical and economic efficiencies of mechanization. Their results showed that all inputs used in both areas had positive and significant marginal productives. They concluded that labor use was excessive, given the level of real wages used in their analysis. Their cost-benefit analysis gave a higher rates of return to tractors than combine harvestors. Disney and Elbashir proposed policy recommendation which were in contrast to the recommeendations of the 1976 International Labor Office (ILO) mission to the Sudan. While the ILO mission argued for a reduction in the pace of mechanization, Disney and Elbashir contended that the social returns on imported agricultural machinery justified mechanization in the irrigated and rainfed sub-sector. They concluded that mechanization of agriculture in Sudan was justified in terms of both technical and economic efficiency analysis. Binswanger and Pingali (1984) studied the evolution of farming systems and agricultural technology in sub-Saharan Africa. Using data from ten countries in the region, they studied the relation between the population densities and external markets with changes in farming systems, land-use pattern and institutions. They concluded that as population 21 densities increase, agricultural production intensify and the agricultural system become more responsive to labor inputs, purchased inputs, and investments in land'- - such as irrigation. The increased population density lead to cultivation of relatively hard to work soils and so the farming system switch from the use of hand hoe to animal drawn implements and later to tractors. In sub-Saharan Africa chemical fertilizers was not commonly used, although it is usually associated with agricultural intensification, because long term soil fertility was maintained through periodic fallowing of land. As the population density increases, land acquisition change from communal ownership to more narrowly defined group‘ and ultimately to clearly defined private property rights. With these changes in land tenure and farming system, the institutions also change in form and functions. Binswanger (1985) provided a conceptual frame to measure the benefits from agricultural innovations in land abundant areas of sub-Saharan Africa and the implication of that on agricultural research in the area. He concluded that under low population densities and at low technology levels the benefits of yield increasing technology are confined to the reduction in labor use associated with the area savings made possible by the yield increase. The higher the preexisting level of purchased inputs and machinery use, the more valuable is the yield increasing technology. The benefits, and probability of adopting labor saving technol conclud quality of Jan labor a Bi biologi because Thailan failed innovat. abundant technolc reSeat-ct liiited 22 technologies increase as the wage rate increase. He also concluded that in land abundant areas, the benefits of land quality enhancing innovations are independent of the value of land. The quality enhancing innovations that require labor are more widely adopted where labor is cheap. Binswanger argued that, under land abundance, biological research has less opportunity to be adopted, because its benefits will be difficult to measure. In Thailand with an open land frontier, irrigation projects failed because of the limited demand for these types of innovations. The implication of this in the context of land abundant sub-Saharan Africa, is that yield increasing technologies may not be always appropriate. The limited research personnel and resources should concentrate on a limited number of probleis. Research in sub-Saharan Africa. as Binswanger contends, should be targeted to improving the grain quality, pest resistance and drought tolerance of crop varieties. It is also important not to emphasize labor intensive cultural practices to raise yields, because in land abundant areas there is a very low demand for labor intensive practices. He concluded by saying that the emphasis on yield increase that most agricultural specialists from developed countries and Asia bring to Africa is counter productive in projects as well as in research. In summary, this review of mechanization studies indicates that different conclusions have been reached with regax finar concl mecha diffe farm agric benef lecha; varie- use 23 regard to the impact of mechanization on employment, financial profitability and output. The differences in conclusion are expected from the different forms of mechanization considered, crops under question and difference in macro policies, land tenure, water supply and farm sizes. The consequences of changing farm power for agricultural and rural people have not always been beneficial. The effect of government policies on mechanization was documented by most of the studies. A wide variety of factors affect the decision taken by farmers to use, or not to use, farm machinery, but government policies have a great impact on that decision. Farm mechanization can be viewed as a continuous adjustment process involving people and government policies. From the review of the studies, it is clear that the influences of mechanization on output or employment will depend on the type of machines used and the operations performed. In addition, it is also clear from the review that mechanization studies should follow a more. dynamic setting by considering more than one crop and more than one operation to determine the influence of mechanization on employment or output. Conclusions from mechanization studies are usually limited to the area of the study due to differences between regions in regard to the many variables considered such as irrigation, topography, weather, and population density. The farmer's decision on whether to use more not 4 serie: irriga educa1 input: numbex factor irriga that and t and la inplic tern c OVErtj preSCr hen"1 are DC Erato“ COSt. comnun China) Un1VEr 24 more machine power or hired is a complex process that does not only involve the price of inputs and output, but a series of factors including land tenure arrangement, irrigation system, infrastructure, the farmer level of education, crops and crops varieties, availability of inputs, etc. Also the review of the studies showed the number of labor displaced by machines is due to a number of factors including the crop under investigations, method of irrigation, soil type, and farm size. Some studies suggests that there is a relation between the choice of technology and the land/man ratio, the market for inputs and output. and land use pattern and institution. This makes the policy implications of most of these studies geared to the short term or medium term. As the factors and environment change overtime, new evaluation of the situation and new policy prescriptions may be relevant. The review of the studies also showed that usually the benefits and cost of an alternative production technology are not equally distributed. The political environment has a profound effect on the distribution of the benefits and cost. On Ithe other hand, in countries where there is community control over the factors of production (e.g. China), the results suggests that the benefits and costs are universally shared. 1.4 goveI Ten (1971 1982, of 1 stres self. earnj news its Arab COmbj deve] ihltj Prov1 first expan 3Ub~s 3Ub~s govEr alrea Drodu 25 Sudan, as is the case in many developing countries, has a history of economic planning. Since independence the government launched three economic development plans: the Ten Years Plan (1960/61 ~1970/71), the Five Year Plan (1970/71 - 1974/75), and the Six Years Plan (1977/78 - 1982/83). The common theme of these plans was the dominance of the agricultural sector. All the development plans stressed the expansion in agricultural production to reach selfesufficiency in food crops and increase exports earnings. In the early 1970's Sudan was reported in the world news as the "Bread-basket" of the Middle East. Sudan, with its vast agricultural potential coupled with oil producing Arab countries' capital, was thought to be a perfect combination to supply the food needs of the Middle East. A development programme based on a bread-basket strategy was initiated, with capital from oil producing Arab Countries providing the major source of investment capital. During the first half of the 1970's the government pursued a policy of expanding cultivated areas under the irrigated and rainfed sub—sectors. Due to declining yields in all agricultural sub-sectors during the second half of 1970's, the government decide to concentrate on rehabilitating the already cultivated areas rather than expanding the area in production. In to cor 1500 1 foreigi produCI consumj M dYnami rapid the c becau: the 3 26 In the mechanized sub-sector the government policy was to continue the expansion of private sector farms (1000 - 1500 feddans) and also to allot large areas to national and foreign investors. The objective of this policy was to produce enough sorghum — the major staple - to meet domestic consumption, and also export an increasing surplus. Mechanized rainfed farming is currently the most dynamic sub-sector in Sudanese agriculture, in terms of its rapid area expansion. Mechanized rainfed crop production in the Central Clay Plains was promoted by the government because of both its contribution to the domestic food supply - - sorghum being the main staple diet - - and its potential as a source of badly needed foreign exchange.1 Also the sub-sector was credited with bringing vast sparsely populated plains under crop production (ILO, 1976). The Mechanized Farming Corporation (MFC) officials and the World Bank, the main international donor to MFC, believe that there is a seasonal labor shortage, especially during harvest time.2 To relieve the harvesting bottleneck, combine harvesting of sorghum, which can easily be widely adopted, is seen as a viable technical option. The MFC vis also 1 - In both the five year (1970/71 - 1974/75) and the six year (1977/78 - 1982/83) there was an emphasis on expansion of the MCPRS. It was credited with saving the country in the early 1970's, when drought struck the Sahelian zone (see Ministry of Agriculture, Food and Natural Resources, "Six Years Development Plan Agricultural Sector, 1977/78 - 1982/83," p. 6—7). 2 IBRD, "Appraisal of Second Mechanized . Farming Project, Sudan," IBRD, 1972. pursuing and wit] (NOR) sorghum polices low in creatin intensi Prosoti lajor (MCPRS) RI POlici, subsid resour 27 pursuing active adaptive research through its own organs. and with the collaboration of the National Research Council (NOR) to introduce herbicides and combine harvesting of sorghum and sesame in the MCPRS.1 The government through its polices of overvaluing the local currency, cheap credit, and low import duties on machinery, fuel and spare parts is creating an incentive for farmers to use more capital intensive technologies. Finally the government is actively promoting the combine harvesting of sorghum which is the major crop under the Mechanized Crop Production Schemes (MCPRS).2 I Recently, concern has been raised that the government policies of cheap credit and subsidized imported inputs are subsidizing rich farmers, misallocating valuable and needed resources, and enabling inefficient farmers to stay in business (Bateson, 1983: and Kursany, 1984). To date, there is a serious lack of micro economic data to study and evaluate the financial and economic viability of mechanized rainfed farming. Secondly, there is a need to evaluate the financial viability of the different cultural operations (harvesting) that can be adopted by farmers. 1 . MFC, "Task Force Report," Khartoum, Sudan, January 1984. 2 The Minister of Agriculture in an interview with "El Sahafa" daily newspaper (9/14/1983) was quoted as saying. "we will pursue to mechanize harvest sorghum and sesame grown under rainfed agriculture." 28 Thirdly, it is necessary to look at the MCPRS from the point 4 of view of the society, to see whether the country as a whole is benefiting or.whether their schemes are a means of subsidizing rich farmers. This study attempts to provide some understanding' of the economics of the MCPRS system, to help identify appropriate policies concerning future development of the MCPRS in the Damazine area, and relate that to the development of the country's food strategy. 1.5 gpjectiges g; t e Study This study will attempt to meet the following objectives: 1.) To describe the mechanized crop production rainfed schemes (MCPRS) in the Damazine. 2.) To evaluate the financial viability of the mechanized crop production rainfed schemes in the Damazine and measure the effects of adopting full mechanization of sorghum harvest on farm income and employment. 3.) To identify and measure the economic viability of fully mechanized harvested sorghum vs. partially mechanized sorghum in the Damazine mechanized crop production rainfed schemes. 4.) To identify the benefits and costs of alternative policy prescription for the future development of the mechanized crop production rainfed schemes. 29 1.6 Organization 9; the Study Chapter 2 presents a descriptive profile of the study area's physical characteristic and the farming policy environment. Chapter 3 provides a descriptive background to the study, including the historical development of the mechanized rainfed schemes and a discussion of the farming system in the Damazine area. Chapter 4 provides the description of the structure of the linear programming model used in the study. Chapter 5 includes an evaluation of the basic model, the results, and the sensitivity analysis. Chapter 6 contains the financial analysis of the farm enterprise budgets when sorghum harvesting is partially and fully mechanized. The second part of the chapter discusses the economic costs and benefits of sorghum production when harvesting is partially and fully mechanized. VFinally, Chapter 7 discusses policy implications of the findings. 2.1 (Mop the lati and the 720 2.1. act. or the ma 197 the “11d no CHAPTER 2 PHYSICAL CHARACTERISTICS AND POLICY ENVIRONMENT FOR THE MECHANIZED CROP PRODUCTION RAINFED SCHEMES IN THE DAMAZINE 2.1 Physical Characteristics pf The Area The Damazine mechanized crop production rainfed schemes (MCPRS) lie in the Blue Nile Province, which is a part of the Central Region of Sudan. The MCPRS area lies between latitudes 320 OO', and 340 40' north and longitudes 110 50', and 13° 15' east (Figure 2.1). The study area lies to the west of the Blue Nile River and includes approximately 720 sq. km. 2.1.1 Topography pp; Spilg The area is part of the Sudan Central Clay Plains which extend from east to west across the country. The land scape of this area is flat with very gently undulations. Most of the area is approximately 600 m above sea level. The flat plains have a gentle slope of 0.5-1.0 percent (Abdelkarim, 1976) with a few isolated high rock outcrops, which are locally known as "Jebels." The soils are montmorillonitic clays transported from the Ethiopian Plateau by the Blue Nile (Tothil, 1964). The underlying rocks are precambrian basement complex and have no influence on the top soil.. The isolated mountains are so 31 1‘ u 1 ..I. .\ ... z...1.._ .....Il.”/. (. Waszr W3 Q.. . i345... Cam-z... .1. 5:30... n.~ lKaOnh ..1171 N111? 1.. .o:.eu ceosm.eesenun measuem menacenuea .a 5.4.... . V‘I \. e- » grani‘ shalle nostl‘ are a They swell crack wet. 2.1.: rain: Pick Patt 0Cto Aug“ shov 800 dirI rai and in 391 So 9a 1c 32 granitic outcrops with narrow gently sloping pediment, and shallow profiles influenced by slow weathering. The area is mostly dominated by cracking clays (Dawoud, 1971). The soils are alluvial in origin with a clay content of 70-80 percent. They have a well developed self-mulching surface layer. They swell when wet and shrink when dry, resulting in deep wide cracks. Finally the soils are very sticky and plastic when wet. ‘ 2.1.2 Climate The study area lies within the semi-arid zone. The area rainfall is associated with the West African air mass that picks up moisture in the South Atlantic. The rainfall pattern is unimodel. Rainfall occurs between May and October, with the highest precipitation during the July and August. Annual average rainfall for the Damazine area is shown in Figure 2.2. The Damazine area lies within the 600- 800 mm rainfall isohyeles which run in a southwest-northeast direction (Figure 2.1). The amount and distribution of rainfall is very critical in determining the cropped area and the amount of output produced. Rainfall is also critical in determining the number of days available to complete agricultural operations (Mohamed, 1978). The fact that the soil gets sticky and plastic as its moisture .content increases, make it impossible to work the fields until 1—2 days after heavy rains. The daily mean temperature ranges from 30 to 40°C (86 - o 104 F). April is the hottest month, with a mean temperature cepsm.1ealhl>< OmmuI-nm~1mkkut Itww8IIQ.-eucqek ~Q:=:< N . N NKDUNK 1 11cm 9 2.2 FIGURE Annual Rainfall,Damazine MCPRS(1951-1980 Average),Sudan 33 n- /// /r WW /I- WV// {7155/ 474224222: 22/ Mt /7/7/7///// ' 7///////////// .. VOCC/VVVCCCK/V?OCC€//7n 1////////////////////1' W [ZZ///// FEB MAR APR MAY JUN ‘200- 0 'L—r“"1——4;‘D’ 150 :: I()C)° so: (ww) IszIva SEP OCT NOV DEC JUL AUG NK)NTH -Metrologicel Department,Khartoum,Sudan. Source. JAN cepzm.1eaeuo>< ore—-ace.1rzctl II.II- H .N HKDONI FIGURE 2.3 e,Damazine MCPRS(1951-1980 Average),Sudan Mean Temperatur 34 I MAY JUN JUL AUG SEP 0C1 NOV DEC 7// z W C///////4/j/////////d V/////// 7////A— W/i/ 7////////////fl WWWL J l l 1 l/l7/f/l/l/l/fT/7/T/fr //////// - 12?}7/7/’/////////////////Ar I JAN FEB MAR APF V/////////// I 1//////////// Vf/////A 1// 1- 24- 1 I I I «D A‘ R 6'9. m (0) Hamlvajawsl va‘w MONTH rtoum,Sudan. :Metrological Department,Kha Source CIOBQ.1OOILO>< OOO~IOOO~1MZEUI OCnICIIQ.>qu‘I32 O>wulwit Q .N I‘DUhL FIGURE 2}4 Relative Humidity,Damazine MCPRS(1966-1980 Average),Sudan 35 p h l/l/fr/f/7 f V////////// l///LL/l// ///////////////////////// 1 f OCT NOV DEC r r I I 'a/z//////////////////////////4/ LL h JUL AUG MONTH Metrological Department,Khartoum,Sudan. l wfig/W 1%Z/JJW1 IJIIIJLLL/L/J 111111111 V/////////// Li; Y////////////,;1 2 r FE 8 MAR APR 80- l I I O O O O O «D U? st "1 CV .lIIGIwr‘IL-I EAIlv’IQs. 70- Source: A‘ 10) I0 I“. No 36 o o of 32.2 C (90 F), and January is the coolest month, with a mean temperature of 26.00C (79°F).1 ( Figure 2.3). The relative humidity rises to 70 percent during the rainy season and drops to around 20-30 percent during the dry season (Figure 2.4). 2.1.3 Vegetation The Damazine mechanized rainfed farms lie within the low rainfall woodland Savannah (Harrison and Jackson, 1958). The dominant types of trees in the area are the Acacia's: Acacia Spygi, A; tishula, A; complylacanth, A; bulanities, and A; senegal (Gum Arabic). These Acacia's alternate with grasses and other trees such as Lannea fruticosa, Gardina species, Lanchocarpus Laxiflorus, Combretum hartmannianum, and Albizzia species. There are a wide variety of grasses in the area. The most common annual grasses are Sorghum purpureasericem, Cypbopogon nervatus, Hyperhenia pseudocypbaria, Hibiscus species, and Sehima ischacemoides. 2.1.4 Domestic Water Supply In general, water is scarce in the Central Clay Plains. except around streams and rivers. The shortage of underground water is due to the lack of a basement complex. (Shazali and Abdel Magid, 1972). The resulting shortage of domestic water is cited as one of the handicaps to the 1 Sudan Metrological Department, "Climatological Normals, 1951-1980," Khartoum, Sudan. 37 1 development of the Central Clay Plains. In the Damazine MCPRS area, as in other parts of the Central Clay Plains, surface water disappears completely by the beginning of harvest (October/November) and does not reappear again until about the end of June at the beginning of the next rainy season. The general method of providing domestic water for permanent settlements around the foot of the mountains is to dig water reservoirs ("hafirs") that are fed from natural drainage. The farmers in the MCPRS dig small reservoirs to store rain water.2 The large scale movement of nomadic livestock herds at the beginning and the end of the rainy season puts an additional strain on drinking water supplies. These herds are also a serious threat to the crops grown along the route to water supplies inside the farms. The farmers' "hafirs" usually dry out by the end of the rainy season. When this occurs, farmers have to transport drinking water for farm laborers from the nearest village "hafirs." In low rainfall years, farmers may be restricted from taking water from this source. Under such conditions, farmers may be forced to go to the Blue Nile River to obtain 1 J. H. K. Jefferson, "Hafirs or Development by Surface Water Supplies in the Anglo-Egyptian Sudan," Tropical Agriculture, Vol. 31, pp. 95-108. 2 Water reservoirs are locally known as "Hafirs." They are dug in depressed areas to catch rainfall run-off. Usually a "hafir" has dimensions of about 20x20x4 m. Water is taken from the "hafir" and distributed to casual field labor, using tractor pulled trailers. drir pror low This by I 2.2 hot key and uec inc mar Pep nec man to arm Sea: dOnI at; 38 drinking water. The shortage of drinking water can have a pronounced effect on the costs of production, especially in low rainfall years, and/or in times of gas-oil shortages. This is because the water is hauled using a trailer pulled by a tractor or sometimes in tanker trucks. 2.2 The Policy Environment In Sudan the government emphasizes the need to increase both domestic food supplies, and agricultural exports as the key to economic growth.1 This strategy calls for horizontal and vertical expansion in the agricultural sector. Farm mechanization is seen as one of the important vehicles to increase agricultural production for domestic and export markets (Mohammed, 1982). The country is relatively sparsely populated, with a low man/land ratio (FAO, 1973). Thus, mechanization is seen as a way to substitute machinery for manpower in a country where animal power is not widely used. In mechanized rainfed agriculture, the MFC is working to create conditions for full mechanization of all crops grown, in response to a perceived increasing shortage of seasonal labor (ILO, 1976). The World Bank, the main foreign donor to the MFC, also supports MFC policies of increased 1 Democratic Republic of The Sudan, Ministry of Development 1977(78-1982/83, (Khartoum: D.R. of The Sudan), p. 47-72, (in Arabic). 39 mechanization in the mechanized crop production rainfed schemes.1 The speed of adoption of available mechanical technology is influenced by the economic factor scarcities, and macro—economic policies, such as the interest rate. Mechanization could be directly promoted through subsidies, or indirectly through cheap credit policies, overvalued exchange rates, special tax and tariff treatments (Binswanger, 1984). 2.2.1 Machinegy Import Policy Sudan imports all its motor-driven farm machinery from abroad. The country has experienced a continuous trade deficit most of the period since independence in 1956 (Table 2.1). Several times during this period, restrictions have been imposed on many imported commodities. Yet, the importation of agricultural inputs has never been restricted or curtailed. Importers of farm machinery need only to present a certificate from the Agricultural Engineering Administration of the Ministry of Agriculture and Irrigation showing that the particular machine is suitable to work under Sudanese conditions. As a result, many different kinds and makes of machinery have been imported, making the importation of spare parts and maintenance of machinery a major problem (Simpson and Simpson, 1983). I Also, Sudan's currency has been overvalued during most of the period since independence (Table 2.2). The . 1 IBRD. "Appraisal of Second Mechanized Farm Project, Sudan," (Washington, April 6, 1972), pp. ii, iii. Balance of Payments (1870-1882),Sudan. 40 TABLE 2.1 1870 1871 1872 1873 1874 1875 1875 1877 1878 1878 1880 1881 1882 103. 114. .35 152. .01 153. 183. 230. 202. .57 .34 370. 483. 124 122 232 271 81 37 18 47 01 18 34 01 11 100. 115. 117. 101 247 341 448 855 1213. 12 44 81 .85 .48 358. .38 375. .45 477. 788. .71 88 48 32 18 78 -145 ”244 -515 -485. .58 -730 .78 .07 .44 .34 -125. -207. ~148. .31 -247. .55 .85 48 41 38 '7 l- 58 SourcezBank of Sudan,"Economic and Financial Survey," BOS,Khartoum,Sudan,1882. a-In 1884 the Official Exchange Rate L8 1.3 =US 5 1.00 Ill... ‘-~-1‘~- .1— 1 11 .4 :1 41. TABLE 2.2 Overvaluation of the Exchange Rate in the Sudan [1870-1880] Year Nom1nal Real-a Overvaluation-b (LS/$1-c (LS/5) (Z) 1870 .348 .522 50 1871 .348 .485 2.5 1872 .348 .515 48.3 1873 .348 .485 42.5 1874 .348 .505 45.4 1875 .348 .558 50.3 1875 .348 .552 51.5 1877 .348 .507 74.4 1878 Pre-June .348 .54 83.8 Post-June .4 .54 50 1878 Ere-Sept. .4 .31 82 Post-Sept .4 .731 45.2 1880 .5 .818 53.8 Source: Sigma One Corporation,Raleigh,N.Carolina,1882. a-The 1872 black market rate from Pick’s Currency Index (LS .515= USS 1.00) was assumed to be the real exchange rate. Real rates for the remaining years were calculated using the Consumer Price Index for Sudan(1875=100),CPIs, the IBRD world inflation index<1875=100),CPIw,and the following formula: E = E ------------ where E is the real b- Overvaluation = ---------- 100 where E 15 the noninal exchange rate in year i. c- L5 = Sudanse Found 100 Blasters: $ = U55. 42 governments exchange rate policy has permitted the importation of agricultural machinery at the official exchange rate. Since 1969, the Agricultural Bank of Sudan (ABS) has been the major importer of farm machinery (Table 2.3). The Bank, as a government agency, has obtain foreign exchange both at the official exchange rates and through international donors. Most of the Banks agricultural imports have been allocated to the MCPRS farmers.1 2.2.2 Taxation gpg Subsidies Whatever the implicit objective of the tax structure, it provides an incentive to distort resource allocation. The signaling power of taxes and subsidies are likely to exert an increasing influence on the choice of resources. In Sudan taxes make up a very important part of government resources, providing at least 80 percent of the central government's revenue since the mid-1970s (Sigma One Corporation, 1982). These include import, export and local taxes. Import Taxes: In Sudan there are three major types of import duties. The import tax,- additional tax, and the defense tax. The combined levies on imports account for about 50 percent of the total tax revenue. The import tax consist of 25 different ad valorem rates, and16 specific rates accounting for about 40 percent of all tax revenues (Economic Survey, 1984). The import tax ranges from as low as 6.5 percent to more than 600 percent (Table 2.4). The 1 . Agricultural Bank of Sudan, records. 43 TABLE 2.3 Total Tractor Importation of the Agricultural Bank of Sudan, Compared to Total Sudan's Importations [1858-1878] Year Total Importation Z (Sudan) (A88) (A85 Share) 1858 1200 850 70 1870 1350 0 0 1871 740 558 75 1872 1300 1000 78 1873 800 0 0 1874 1530 1387 85 1875 1530 0 0 1875 1240 1000 80 1877 1722 500 2 1878 872 0 0 1878 711 0 0 Total 13115 5305 40 Source: Agricultural Bank of Sudan,Khartoum,Sudan,1883. 44 TABLE 2.4 Import Tax Rates on Selected Items,1858-1874,Sudan-a Item 1858 1871 1872 1873 1874 ...-..—-.--.--...--....-..----.------‘-“-.cu....----.--——---.-—--.- Selected Food Stuffs Uheat 14.4 18.1 25.1 5.3 5.5 Sugar 35.8 35.2 35.2 34.5 53.5 Tea 48.5 44.4 32.3 50.5 28.1 Coffee 101.7 75.4 71.8 35.2 28.1 Cigarettes 504.2 534.2 774.3 538.8 570.5 Rubber 48.4 33.2 54.3 30.8 35.4 Iron and Steel 40.3 41.3 35.5 30.8 31 3 Machinery Electric 58.8 57.3 35.8 51.3 44.1 Non-Electric 21.2 33.1 2 .7 23.1 20.4 Cars 57.1 113.2 75.7 80.3 122.2 Trucks 55.2 51.8 81.8 46.1 38.3 Textiles 51.5 45.5 40.2 37.5 41.3 Sources: Shanker N.A.,”Incentives for Resource Allocation: A Case Study of Sudan," Uorld Bank Staff Working Paper No. 357,Uashington,1878. a-The Import Tax is Calculated Against the C.I.f Ualue. 45 additional tax is 13 percent and the defense tax is 15 percent. The custom duties are calculated on the CIF (cost, freight, insurance) price converted to Sudanese Pounds (LS). The rainfed sub-sectors, unlike the irrigated sub-sector, uses few imported inputs - — mainly machinery, spare parts, fuel, and jute sacks. Agricultural machinery, seeds and insecticides were exempted from import tax in 1976. Export Taxes: There are two types of export taxes - — the export and the development tax. The export tax is calculated on ad valorem rates, which range from 0-15 percent. The development tax is 5 percent and is imposed on all exports. Sorghum is subject to both taxes, while sesame is exempted from the export tax. Local Taxes: In Sudan the local governments has the power to impose local taxes. The most common local taxes on agricultural products are known as "usher and gibana." They 'are usually imposed as a percent of the price per unit sold. Typically, the price is based on a base year price, determined by the local authority and this price is changed as commodity price fluctuate. The "usher" tax is 10 percent of the value and "gibana" is 12 percent. The combined tax is usually between 10 and 15 percent of the actual price of the crop (Sigma One Corporation, 1982). In the Blue Nile Province, the tax rates in 1983/84 were LS. 1.50 per sack of 1 sorghum and 3.70 per sack of sesame. The local taxes on 1 Damazine Rural Council. 46 crops should be paid before the crop is transported off the farm. The farmers are supposed to pay the local taxes and obtain passes to transport their crops. Local goVernments have installed check points along the major roads, but some farmers evade the taxes by avoiding the check points. Farmers also can use the tax pass to transport more than the quantity for which the pass was originally given. The check point are usually manned by low paid guards, which open the doors to corruption. 2.2.3 Credit: Agriculture Bank 9; The Sudan The Agricultural Bank of Sudan (ABS) is the major source of formal agricultural credit. The ABS provides short, medium and long term loans for qualified individuals. The requirements vary according to the duration and use for which the loan is taken, and the type of farm (rainfed or irrigated). For the mechanized rainfed sub-sector, short term loans mature in 15 month and are intended to cover 70 percent of the variable cost of the activity for which it is intended. The costs are determined by the ABS regional offices (Table 2.5 and 2.6). Acceptable collateral required for securing short terms loan may include land, building, crops to be harvested or in stores, implements, bonds and shares, and guarantees by government, public institutions, autonomous agencies or cooperatives. Tables 2.5 and 2.6 clearly show that the cost estimates of agricultural activities is left to the discretion of the ABS branches managers. 447 TABLE 2 . 5 Agricultural Bank of Sudan:Estimated Cost of Land Preparation and Planting in MCPRS,Season 1983/84.3udan (In Sudanse Pounds1-a Branch Item --------------------------------------------- Gadaref Dilling Renk Kosti Damazine Maintenance 1 1 1 1 1 Fuel 2 2 2 1.5 1.5 Food 1 .85 .85 .8 .8 Salaries 1 1 1.35 1 35 8 .8 Weeding4cesh) 2.5 2.1 2 2 3 2.3 Total 7 2 7.3 7 2 5 5 5 5 Source: Agricultural Bank of Sudan. a- One Sudanse Pound (LS)- 100 Piasters. TABLE 2.6 Agricultural Bank of Sudan-Estimated Cost of So . r Harvesting in MCPRS,Season 1983/84,Sudan ghum Branch Item Sederef Dilling Renk Kosti Damazine ---------------------- LS/Sack ------------------ Cutting 5 Piling 2.3 2 2 2 1 5 Threshing 1 2 1.25 1 25 1.25 1 25 Sacks 1.03 1.5 1 5 1.5 1 5 Transportation 1.? 1.25 1 1.25 1 25 5 53 5 5.75 5 5 5 Source: Agricultural Bank of the Sudan,'The Agricultural Bank of the Sudan Role in Granting Loans for Sorghum Production in the Sudan,” The Second National Economic Conference,Khartoum,Sudan,1884.(In Arabic). a- LS-One Sudanse Pound-100 Piasters. One Sack of Sorghum-80 Kg. 49 Medium term loans, provides for purchasing capital items like farm machinery, mature in 5 years. The ABS give medium term loans in kind (i.e., machinery). Formerly, the loan covered 70 percent of the cost of the machine, but it was raised to 80 percent of the total cost in 1983.1 Acceptable collateral to secure medium term loans includes immovable assets, credit letters from commercial banks, shares and bonds, and guarantees of the government and public corporations. Collateral for medium term loans should have a value equal to at least 130 percent of the loan. For rainfed agricultural there is no long term loans. The interest rate on ABS loans has only been changed three times since the Bank started its lending activities in 1959 (Table 2.7). While the nominal interest rate, at least after 1981, .is reasonable high: inflation has significantly reduced the interest rate to a negative level. The most conservative estimates put the inflation at 30 percent per year. (Zaki, 1983). Consequently, the ABS credit subsidy to MCPRS farmers may significantly increase profitability of the MCPRS farmers (Bateson, 1984). The MCPRS are the principal recipients of government credit subsidies in the rainfed sub-sector. The traditional farmers in the rainfed areas do not receive any ABS credit as they do not qualify for credit according to the ABS's set rules. 1 ABS, Khartoum, Sudan. 50 2.2.4 Agricultural Research gpg Extension The Agricultural Research Corporation (ARC) is the government agency responsible for agricultural research in the country. Sudan has a relatively long history of agricultural research compared to many African coutries. Research on irrigated crops - - cotton - - started in the 1920's. Research on rainfed crops started in the late 1950's. The rainfed research station is located in the northern part of the Damazine mechanized rainfed area. The research is done on sorghum, sesame and a variety of other crops. The research on sorghum is concentrated on yield increasing and breeding combinable varieties. While a number of combinable varieties were released, mechanized crop production schemes farmers have not widely adopted them due to their low quality and poor drought tolerance. This situation also occurred in land ~abundant. Thailand where chemical and biological yield increasing technologies have not been widely adopted, because additional land can be put under crops. The Mechanized Farming Corporation (MFC) is now financing adaptive research experiments which is being carried by ARC. The MFC through its own organs or the ARC does not carried out any research to determine the economic of crop production under the mechanized rainfed condition. Consequently, the program to introduce alternative sorghum harvesting technologies has not been evaluated financial or 51 economically. One of the major functions of the MFC is to provide extension services to the farmers. Up to the late 1980's the MFC had no any form of extension programs or even information that could be passed to the farmers. The state farms which were run by the MFC and were supposed to be demonstration sites were financially a losing venture, partly due to lack of inputs at proper times. Recently the MFC established an extension. department which started working in the Gedaref area. The department still lacks a trained staff and clear recommendations to offer to the farmers. 2.3 Selection g; The Study Area The research objectives will be address through a study of the Damazine MCPRS, Blue Nile Province. There were five main reasons for choosing this area. 1. The MCPRS are the fastest growing sub-sector within the agricultural sector. Approximately six million feddans are under this mode of production which only started in 1945. The Damazine area is second only to the Gedaref area, in terms of total area developed, but in the near future the Damazine has the potential to be the largest area under mechanized rainfed crop production. 2. The Damazine area has recently been the focus of large-scale private investment (20,000 feddans and more). 52 Some of these investments are joint venture between local and foreign investors. 3. Kenana Agricultural Research Station, which was initially established to generate new technology for rainfed agriculture, is in the Damazine. In addition, the country's only rainfed seed propagation scheme (Tozi) is in the Damazine. 4. The location of the Damazine (Map 2) may make it possible to generalize some of the study findings to other mechanized rainfall areas. This is due to the fact that its soils and rainfall are similar to both the Gedaref area to the east and the Renk area which border the Damazine on the west. 5. The author has personal experience with the Damazine MCPRS area, having worked as the manager of a 200,000 feddans government farm in the area between 1975-76. 1 2.4 Data Sources and the Analysis Methods Used Data Collection: Primary and secondary data were collected for the study. The primary data collection activities were carried in three complementary phases. The first phase took place during March and April, 1983. This phase served three objectives: developing the 1 See Appendix A for detailed count of the data collection and research methods. 55 TABLE 2.? Agricultural Bank of Sudan Interest Rates for Farmers,1858-1883,Sudan. Date Short Term Medium Term Z Z 1858 to 1855 5 8 1857 to 1880 7 8 1881 to Date 14 14 SourcezAhamed H.A.A.,”Agricultural Finance and Credit in the Sudan,"Oepartment of Rural Economy,Faculty of Agriculture,University of Khartoum,Sudan,1883 54 sampling frame, studying the records of the MFC regional office in the Damazine, and visits to the study area. Using the MFC list of farmers as a sampling frame, approximately a 12 percent random sample (75 farmers) was selected from the total number of farmers (N-709). The second phase of data collection was carried out during June and July, 1983. A questionnaire was administered to obtain background information about the farmers and their farming conditions. Data on agricultural activities, technologies used, sources of inputs, credit, farm machinery, and government policies that affected the farmers' decisions were collected. The third phase of primary data collection was done during January and February, 1984. During this period a second questionnaire was administered to obtain input/output coefficients required to develop a linear programming model covering the 1983/84 cropping season. In addition to the primary data secondary data was collected during the period, March 1983 to March 1984. Sources of secondary data collected included: feasibility studies for the MCPRS in the Central Clay Plains, records of privately owned companies in the Damazine, MFC records and reports, Agricultural Bank of Sudan records and reports. Ministry of Agriculture studies and reports, local government reports, and the records and publications of many other government agencies and departments. The Analysis: After collecting the data and checking it in the field, it was taken to Khartoum - the capital city of 55 Sudan. There, the Ministry of Agriculture and Irrigation, Department of Agricultural Economics and Statistics microcomputer was used to load the data onto floppy disks. The disks were brought to Michigan State University, East Lansing for analysis. The data collected is first used to describe the history and present operation of the mechanized rainfed schemes and the policy environment under which the system functions. The second objective of the study is met through the application of linear programming (LP). LP was used to evaluate income and employment consequences of alternative harvesting technologies - - partially and fully mechanized sorghum harvesting. The third objective is met through the use of enterprise budgeting to determine the financial viability of the MCPRS under bothpresent condition and if fully mechanized harvesting of sorghum is pursued. Finally, budgeting techniques are used to determine the economic viability of the alternative sorghum harvesting technologies for MCPRS in the Damazine. The results from all the analytical techniques will be used in the final analysis to formulate policy recommendations and suggestions for future research. CHAPTER 3 THE MECHANIZED CROP PRODUCTION RAINFED SCHEMES (MCPRS) OF THE DAMAZINE 3.1 Historical Background pg 335 ggggg ip phg Spggp The development of mechanized rainfed agriculture in the Central Clay Plains of the Sudan can be divided into four phases. The criteria. for identifying each phase includes (1) the type and rate of development, (2) production relations, and (3) the degree of government involvement and control. This criteria was established by Osman and Abdel Magid (1972), who also described the first three phases of MCPRS development. Their criteria have been extend by this author to identify a fourth phase. gppgp pp; (1944-1954): Mechanized farming in the Sudan started in 1944 as a government sponsored activity on 1,200 feddans in the eastern part of the country. The main objective of this venture was to supply the British troops in East and North Africa with food during wartime food shortages. The government initiated a sorghum production project using a tractor drawn single-row disc for land preparation and planting. The experience of the first two seasons showed it was not feasible to produce sorghum under complete mechanization of all the agricultural operations, 56 57 as labor was needed for weeding and harvesting. To meet this labor demand, share croppers were introduced and each was allocated 28 feddans. Under this arrangement, the government completed land preparation and planting mechanically and the cultivator completed the remaining operations manually. At harvest the crop was shared equally. In 1949/50 some notables and merchants were given up to 240 feddans and the government provided custom hire machinery services to these farmers. The area cropped reached 31,000 feddans by 1954. Development during this phase was confined to the Gedaref area in eastern Sudan. ghppg 239 (1955-1968): In 1952 a working party was established by the government to evaluate the past experience of the mechanized farming project and to suggest policies for future development. As a result of their recommendations, the government made a number of decisions. The report advised the government to abandon direct state participation in crop production and concentrate on providing infrastructure and information to the private sector. Subsequently, pilot farms were established in several locations in the Gedaref area to study the problems of mechanized rainfed farming. In 1956 new areas were opened in the Blue Nile Province (now known as the Damazine Mechanized Crop Production Rainfed Schemes). In these schemes, individual allotments were increased to 1,000 feddan and leased for eight years. Phase Three (1968-1978): All of the developments in the 58 first two phases were in the northern parts of the Central Clay Plains. These areas were developed first because of their light tree cover, which make it easier and cheaper to put the land into crop production. As these lands were exhausted, the new areas for expansion were in the high rainfall, high tree density southern sections of the area. The cost of bringing these areas into production become increasingly expensive. Consequently, the government stepped in with a program aimed at providing farmers with farm machinery and credit. To do this, the government established in 1968 the Mechanized Farming Corporation (MFC) to administer the whole mechanized rainfed sub-sector. Its responsibilities, as defined in the 1975 Act were to: (1) survey, demarcate and allocate land for mechanized farming: (2) assist private investors: (3) manage state farms: (4) promote research: (5) provide credit: and (6) provide services such as, extension and workshops for machinery maintenance. When the MFC was established there were, 1,410,000 feddans already under production in Kassala, Blue Nile, and Upper Nile Provinces. The first plan executed by MFC covered a five year period (1970/71-1974/75) during which 2.7 million feddans were developed. The area developed was divided into three categories: (1) private sector - self financed 1.7 million feddans: (2) private sector - World Bank financed 600,000 feddans: 59 (3) public sector - State farms 400,000 feddans. gpggg Fppp - (1979 to present): The fourth phase is characterized by three developments. First, the government allotted about two million feddans to large scale private sector investors. The area allotted ranges from 5,000 to 500,000 feddans, but companies with areas over 20,000 feddans are not under the jurisdiction of the MFC. A new department in the Ministry of Agriculture, the Agricultural Investment Promotion Administration, was created to oversee companies with 20,000 feddans and over. In addition, special tax breaks and import duty exemptions were given to these companies under the "Agricultural Development and Investment Act of 1976."1 Some of these companies were joint venture between Sudanese and foreign investors. For example, about 250,000 feddans was allotted to the Sudanese-Egyptian Integration Agricultural Company, which is owned jointly between the Sudanese and Egyption governments, but run solely on a commercial basis. A second important development was the MFC's decision to abandon its state farms, as the government found that state run farms in the mechanized rainfed sub-sector were unprofitable (MFC Task Force Report, 1984). The same recommendations, regarding the role of the government in the 1 Ministry of Agricultural and Natural Resources, "Agricultural Development and Investment Promotion Act of 1976," Khartoum, Sudan, (in Arabic). 60 development of the MCPRS, that were reached by the Government Working Party on mechanized rainfed farming in 1952 were again repeated by the Task Force formed to revise the role of the MFC. The recommendations called for the government to concentrate on providing services and , information to farmers and to abandon any direct involvement in commercial crop production. ' The third important development which characterize this phase was the decision by the MFC to legalize the selling of schemes titles by farmers. While this new policy has not yet been evaluated, some argue that it will increase the concentration of land in the hands of rich farmers who already operate more than one farm. 3.2 The Development _£ the Damazine Area Mechanized crop production rainfed farming was introduced into the Damazine area in 1957, where 100,000 feddans were demarcated and alloted to farmers (Simpson, 1978). In the following year, 158,000 feddans were added. In the third year of development, another 198,000 feddans were alloted (Table 3.1). This expansion was not preceeded by any kind of feasibility studies. After a period of slow development, 299,000 feddans were allotted on the eastern side of the Blue NIle River. Unlike early development of MCPRS in the Gedaref area, the government did not play an active role in direct crop production in the Damazine area - 61 TABLE 3.1 Damazine MCPRS Area Development by Year (1857-1880),5udan. 1857 100 100 1858 158 258 1858 188 455 1857 25 482 1858 288 781 1871 408 1180 1875 202 1382 1875 22 1414 1878 200 1514 1880 52 1555 Total 1555 —--—-.—-—.—--—~-.—-.—---—-—--—---.—-—-—_-.--—-----------———--—. Source: Mechanized Farming Corporation, Damazine Regional Office Records. 62 - except for a 2,000 feddans demonstration farm established in 1958. In 1971 the government established a new policy which advocated direct government involvement in crop production in the mechanized rainfed areas. The main objectives stated for this policy were: (1) to stablize sorghum prices by building a reserve stock of sorghum: and (2) to establish the government as a leading innovator by demonstrating modern crop production systems. A state farm of 200,000 feddans was established in the Damazine in 1971. During the same period, 409,000 feddans were alloted to the private sector. Between 1975 and 1980 another 476,000 feddans were allotted to the private sector. Unlike the development in the other regions, specifically Gedaref and Habila area, there was no foreign aid used for private farms development. A two million dollars loan was given by the Kuwait government to develop the state farm in the Damazine area.1 In 1977 more than 2 million feddans was allocated to large companies.2 About 500,000 feddans of this land is already developed. Another dramatic development was the government decision in 1984 to abolish the government owned state farm and sell it to the Arab Authority for 1 MFC records. 2 These companies are national and joint venture investments between Sudanese public or private sector and Arabic public and private investors. 63 Agricultural Development. Recent estimates by the MFC estimated the area with a potential for mechanized farming in the Damazine at between two and three million feddans. 3.3 The Farming System This researcher's survey of 73 farmers in the MCPRS of the Damazine during 1983/84 season showed that all of the farmers 'were males and 93 percent of those interviewed were 40 years of age or older. Of the farmers interviewed, 95 percent had another income source beside farming. Analysis of the farmers' educational achievement shows that 54 percent had an equivalent of 6 years of schooling, 21 percent had 9 years of schooling, 19 percent were illiterate, 4 percent had a university degree, and 2 percent had a high school diploma. The educational level of the farmers surveyed was far higher than for the general population of the country.1 The survey shows that 75 percent of those farmers with another income source beside farming were merchants. Affan (1978), who studied ,the Habila MCPRS, Southern Kordofan Province, found that 88 percent of the farmers had a non- farming income source, and only 12 percent of the respondents gave farming as their sole occupation. 1 World Bank, "Annual Report, 1984," Washington, DC, 1984. 64 Typically the farm owner appoints a farm manager. locally known as the "wakeel," to carry on day-to-day farming decisions. While the survey showed that 90- percent of the farmers had "wakeels", the level of farm owner supervision varied between the farmers. Fifty eight percent of the farms surveyed were totally managed by the "wakeels," 42 percent of the owners said they were involved in running their farms, and only 10 percent of those interviewed said they managed their own farms. In addition, 4 percent of the farms' owners' said they spent the whole season on their farm, 6 percent said they didnot visit their farm, 20 percent said they spend 60 days or less on their farm, and 60 percent said they spent between 60 to 100 days on their farm during the 1983/84 cropping season. Over 70 percent of the farms were deserted during the period between the end of harvest and the beginning of the new season. While none of the farms surveyed had permanent building, each farm had 4-8 grass huts for accommodation and storage during the cropping season. 3.3.1 Th5 Lgpg Tenure Most of the land in Sudan is state owned, governed by the Land Settlement and Registration Ordinance of 1925. The government's policy is to retain land title and grant leases for the purposes and uses permitted by the law. In each province the Land Allotment Board is responsible for the allotment of rural land for the uses authorized by the regulations. In the case of the MCPRS, the MFC Board has to 65 approve Land Allotment Boards decisions before the leases can be granted to eligible individuals. The criteria for eligibility to MCPRS, as described by the MFC, require that the applicant (1) has or can obtain necessary agricultural machinery (2) has sufficient agricultural knowledge, experience, managerial ability and time to manage the farm, and (3) has sufficient capital to finance the farm. The selected applicants are granted 25 year leases. The size of the leased farm can be 1,000, 1,500, or 2,000 feddans, depending on the location and year of allotment. Farms surveyed for this study had an average size of 1,500 feddans. Before signing the lease, individuals had to pay a LS. 1,500.00 development fees.1 In addition, farmers pay an annual land rent. In the early 1940's, the rent was LS. 0.01 per feddan and was raised to LS. 0.05 per feddan during the 1960's. In 1978 it was raised to LS. 0.10 per feddan and raised again to LS. 0.25 per feddan in 1982. In March 1983 the land rent was raised to LS. 1.00 per feddan.2 The lease contract between the MFC and the farmer, upon allotment of the farm, details the relation between the two parties. The MFC requires that farmers cultivate the land 3 according to MFC regulations. The contract specifies that 1 One Sudanese Pound (LS.) is equal to 100 piasters. 2 Actually, the MFC announced it was raising the land rent to LS. 2.00 per feddan, but due to pressure put on the government by the MFC Farmers' Union, the MFC was ordered to roll back its land rent to LS. 1.00 per feddan. 3 Mechanized Farming Corporation, "Lease Contract for a Mechanized Scheme,“ MFC, Khartoum, Sudan, (in Arabic). 66 farmers must reside in their farms during the farming season, follow the rotation and guidelines set by MFC, and that at least one-third of the land in the farm is -fallowed each year. Failure to comply with the lease conditions, or breaking any of the MFC regulations, can lead to the farmer's eviction without any compensation. Although MFC has the legal power to evict farmers for noncompliance with its regulations or failure to satisfy the terms of the lease, in actual fact farmers were only evicted if they failed to pay land rent. Although the farmers interviewed acknowledged signing the lease with MFC and understood its contents, all said they had not been questioned by MFC officials about their farming practices. MFC officials contend that a shortage of qualified manpower and transportation facilities prevents them for continuously monitoring the farming practices by the leases. 3.3.2 325 Dominant Cropping Pattern While the area is technically suitable for a wide variety of crops, only three crops are grown in the Damazine MCPRS1 - - two cereals (sorghum and millet) and an oil crop (sesame). Sorghum has been planted in the Damazine MCPRS since it was started in 1957. In contrast, millet is a new crop in the area. Some farmers started to grow millet in the 1 Kennana Research Station studies in the area have shown that a number of crops can be commercially raised. These include .maize, safflower, sunflower, soybean and cotton. Of these, only cotton is raised by large companies and on the state farm. 67 late 1970's, believing that it could restore fertility, command a higher price, and compete well with weeds. Of the 73 farmers interviewed, 27 percent said they were considering growing millet in the future. Of these farmers, 56 percent cited the fact that it restores soil fertility, 24 percent said because it commands a better market price, and 12 percent cited the belief that it suppresses weeds. Yet, Mahmond,1 contends that there is no scientific basis to suggest that millet restore fertility (personal conversation). Sorghum is the dominant crop, followed by sesame. The survey of 73 farmers in the Damazine MCPRS showed that approximately 85 percent of the total sample area was under sorghum, 15 percent was under sesame, and about 3 percent was under millet. The MFC records for all the Damazine MCPRS indicated that in 1983/84 season, 82 percent of the area was under sorghum and 18 percent was under sesame.2 3.3.3 Tppp Clearance Tree and bush clearance is required before crop production is possible. There are two modes of tree clearance - manual and partially mechanized. Partially mechanized tree clearing is done in two operations. First, 1 Professor Mahmoud A. Mahmoud now works as a consultant to the MFC, on temporary release from the National Research Council. He was the head of the Kennana Research Station for a number of years. 2 Mechanized Farming Corporation Damazine regional office. . 68 the tree are up-rooted using a heavy crawler tractor. The second operation, chopping and burning the trees, is done by seasonal labor. Formerly, the MFC custom hired its heavy crawler tractors (D7's and D8's) to farmers. Two crawler tractors would pull a ten ton chain across the area to be cleared, up-rooting the trees. Subsequently, laborers chopped the trees and burned the remains. In the early 1970's, farmers lost interest in this mode of tree clearance because they felt the mechanical operation left an uneven surface. Manual tree clearance is now the only method used. The farm (1,500 feddans) is divided into 60 feddan squares (500 m by 500 m) which are locally know as "Marbu." A gang of 4-8 casual laborers is contracted to clear a "Marbu." The contract includes cutting the trees, destumping and burning the remains. The farmer pay the laborers the cash amount agreed upon in the contract, in addition to supplying them with raw food and water during their work period.1 Tree cost of cleaning trees varies, depending on the tree cover density, type and age of the trees. Information this researcher collected suggests that the tree clearance costs an average of LS. 16.00 per feddan. The MFC regulations require that farmers leave as wind breaks 10 m wide uncleared strip of trees every 500 m, 1 The labors are given raw food materials and they do the cooking themselves. The food materials given consist of sorghum flour, dry salted fish and/or wet salted fish, dried okra, onion, cooking oil, salt and pepper. 69 running east-west across the 2 by 3 Km farm. Also, the regulations require that gum arabic trees (Acacia gpp) and trees in low lying areas should not be removed. Field observations during the survey indicated that farmers in the area disregard these regulations and clear the whole farm area. Some observers believe that massive tree clearance in the MCPRS affects the micro climate of the area, with the recent decrease in rainfall cited as evidence (Kursany, 1984). The practice of massive tree clearance is -also considered harmful to the environment, and it may contributed' to wind and water erosion (Khider et. al., 1975). 3.3.4 pgpg Preparation ppg Planting The mechanized crop production system utilizes wheel- tractors (70-75 horse power) and single-row disc-narrows with a seed box attachment loaded on top. Although the system is known as “mechanized farming," the only fully mechanized operations are land preparation and planting. The single-row disc-barrow has been used for land preparation and planting since mechanized crop production started in the mid-1940's. The disc-harrows used have a width that ranges between 3-4 meters, with 24-32 relatively low concavity discs which are 45-60 cm in diameters. Land preparation is carried out after sufficient rain has fallen to germinate the weeds seeds and soften the soil. The first discing is usually done around mid-June. A second discing, sometimes necessary when the weeds population is 70 high, is usually carried out shortly after the first discing. The crops are sown with the second discing, unless a second dissing was necessary before sowing the crops. In such a situation, planing is done with the third discing. The number of discings required depends on many factors, including the degree of weeds infestation, availability of gas oil, financial ability of the farmer, the rainfall situation and the crop sowing date. While farmers usually plow no deeper than 15 cm, it is not known whether this is sufficient for the crops to utilize available soil moisture in the most efficient way (ILO, 1976). Khadir et. al. (1975) contends that the use of the single-row disc-harrow as a tillage and weed control implement results in poor seed bed preparation. Planting usually start in late June.1 Timeliness of planting is very critical in achieving adequate crops, with sesame more sensitive to sowing dates than sorghum (Mahmoud, undated). Sesame is sown first and is seldom planted after mid-July. Immediately after sesame is planted, farmers start sowing sorghum. Kenana Research Station recommends that sorghum be sown between late-June and mid-July. In practice, some farmers continue to sow sorghum until late August or even early September. Simpson (1978) contends that farmers delay planting to build up soil moisture, which reduces the 1 Kenana Research Stations "Technical Agricultural Papers" National Research Council, Undated. 71 time available for land preparation and planting. When soil conditions permits, land preparation and sowing are carried out in two shifts - a day shift and a night shift. ' None of the farmers surveyed used chemical fertilizers or herbicides. The only chemical fertilizer use is Alderx T for seed dressing. The survey conducted during the 1983/84 season revealed that of the 73 farmers interviewed, only 3 percent used improved seeds.1 Thirty-one percent of the _ farmers used seeds produced by other farmers and 65 percent used their own seeds. 3.3.5 Weeding Two to three weeks after the crop emerges, the fields are generally manually weeded two times. In some cases, a third weeding is carried out. Mohamed (1982) hypothesized the factors that determine the number and timing of weeding include the previous season's crop management, current season, rainfall, timing of land preparation and planting, availability of labor and/or operating capital, crop establishment level, and anticipated returns from the operation. Weeding is carried out by gangs of 3-7 casual labors who work on a per area contract basis. The contract is usually based on 60 feddans area ("Marbu"). The work is carried out using shafted hand hoes. The labors work from 1 Improved seeds refers to the seeds produced by the Plant Propagation and Certification Department of the Ministry of Agriculture. 72 sunrise to dawn, putting in about 10 hours of work. The contract include cash expenses plus feeding and drinking water supplied by the farmer during the period of the work. The cost of weeding varies depending on the crop, area. weeds type and density, and rainfall quantity and distribution. Kenana Research Station recommends that weeding be carried out in the first six weeks after planting. Farmers sometimes weed later to insure a clean crop stand to attract harvest labor, especially for sesame. 3.3.6 Harvest Sorghum and sesame are harvested in two separate activities. Sesame is harvested first, starting in early October. It take 90-100 days to mature, depending on the variety and weather conditions. The harvest timing is very critical because if the crop is harvested prematurely, the seeds can not be released from the pods. On the other hand, if the crop is left to dry the pods will open during harvesting and the seeds will be lost. Sesame is cut when the pods turn yellow, bound into bundles and the bundles are stacked in an upright-position against each other in clusters of 400 bundles, known as "hila."1 Cutting sesame takes 10-15 days, and the crop is left to dry before shaking it to release the seeds. 1 A "hila" is the local name used for a collection of 400 bundles of sesame plants. The bundles are tied firmly and each is about 45-60 cm. in diameter. 73 The casual laborers used to cut the sesame crop are paid according to the number of "hila's" they cut. The survey showed that the average laborer can cut 1.5‘ "hilas" par day. On the average, there were seven "hilas" per feddan. Casual labor are given raw food materials and water during the work period. Unlike sesame cutting, threshing of the sesame seed pods is contracted on the basis of a final payment per full sacks of sesame seeds.1 Sesame threshing is done by casual labor who works in groups of 2-3 individuals. The laborers hold the crop bundles upside down over a 2 by 3 meters cloth and shake them. After shaking the seeds out of the pods, they use sieves to separate the trash from the seeds. The clean crop is then put into jute sacks. Sorghum harvesting is usually carried out after the sesame harvested is completed.' Sorghum harvesting was partially mechanized in all the 73 farms surveyed. Sorghum is harvested by gangs of casual labor contracted to cut the sorghum heads heads and pile them into heaps. Usually 2-4 heaps are made per 60 feddan area. The casual labor are paid in cash and also provided with raw food and drinking water. The cost of cutting sorghum heads is a function of the time of the contract, the variety of sorghum, and the reputation of the farmer in honoring contracts with casual labor. After the sorghum heads are piled into heaps, they are threshed using a privately owned stationary combine harvestor. The farmer pays the combine operator on a per sack basis. 1 On the average, a sack of sesame weigh 75-80 Kgs. 74 3.3.7 Egg; pgpgg Farmers in the MCPRS hire both permanent and seasonal labor. The permanent labor includes a farm manager and a farm guard.1 They are paid on a monthly basis and are provided raw food and drinking water. Beside their salary, the permanent labor is given an incentive, in the form of grain sorghum, at the end of the season. Seasonal labor is of two types, skilled and unskilled. The skilled typically includes two tractor drivers and two assistant tractor drivers. Those are hired for two months for land preparation and planting the crops. They work in alternate shifts, one team during the day and the other at night. On the average, drivers are paid LS. 80.00 per month and the assistant drivers LS. 40.00 per month - - plus food, water and tea. One driver and his assistant are kept for the whole cropping season to transport food, water, crops and farm laborers. Seasonal unskilled labor is hired to carry manual agricultural operations, including weeding, harvesting, and the transportation of crops.2 This labor come mostly from outside the Damazine MCPRS (Table 3.2). The survey showed that the majority of the seasonal labor came from the Blue Nile Province itself. The majority of the seasonal labor 1 The farm manager is locally known ad the "Wakeel" and the farm guard is known as the "Gafier." 2 Seasonal unskilled labor is also hired for tree clearance, but this is done only once when the farm is first established. 75 that now reside in the Damazine MCPRS actually migrated to the area after mechanized crop productions started. The survey showed that all the labor that work in the farms surveyed are adult males. This reflect the difficulty of the work and the environmental conditions under which they work. For example, the average working day is 8-10 hours, depending on the time of the season and the crop. Manual seasonal labor is paid in cash and kind. The cash payment is on a per area basis, except for sesame threshing for which labor is paid per sack of seeds. The in- kind payment is in the form of raw food and drinking water. After the end of the rainy season (October/November), drinking water costs rise tremendously because it has to be hauled from permanent or semi-permanent water sources in nearby villages or sometimes from the Blue Nile River. '76 TABLE 3.2 Seasonal Hired Labor:Paticipation Z According to Place of Permenant Residence, DamaZIne MCPRS, Season 1883/84,Sudan Place of Residence Earning Activities Weeding Harvest ( X ) ------------------------ Sesame Sorghum ( Z ) ( Z ) DamaZIne Area 45 20 35 Southern Blue Nile 24 35 34 Western Sudan 15 25 8 Southern Sudan 8 14 20 Other Parts of Sudan 3 3 a Ethiopia 2 2 2 Source : Survey Data a = Less than 1 Z CHAPTER 4 THE STRUCTURE OF THE LINEAR PROGRAMMING MODEL FOR THE DAMAZINE MCPRS 4.1 Introduction The preceding chapters described the Damazine' MCPRS and the policy environment under which they operate. This chapter describes the linear programming model used to predict employment and income consequences of alternative sorghum harvesting technologies. The discussion includes assumptions of the model, the mathematical specifications, the objective function, the activity sets and the constraints structure. The wide application of linear programming to analyze small farmers enterprises in Africa has been critized as being too naive by assuming these farmers are profit maximizers. In contrast to the small traditional farmers generaly considered when studying African agriculture, this study involves large farmers - with 1,500 farms - who we can reasonably assume are profit maximizers. Also, the linear programming allows the rapid evaluation of alternative technologies given the required resource levels. Unlike budgeting techniques, linear programming can help to directly identify the optimum farm plans within the constraints of available resources. 77 78 4.2 Assumptions pg Linear Programming Linear Programming (LP) is one of the mathematical tools that can be used by managers to evaluate alternative objectives of their firms, subject to the resource restrictions under which they operate. Management objectives can vary, depending on the nature of the investment, the risk preference of management, the environment under which the enterprise works, and management goals. Linear programming is a mathematical structure, involving specific mathematical assumptions that can be solved using a standard algorithm (e.g., the simplex method). LP formulations and assumptions have been discussed widely in the literature. Five of these assumptions are reviewed briefly below. 4.2.1 Propgrtionality This means that for any given decision variable, the contribution that any activity makes to the objective function, or a constraint, is a linear function of the weight attached to the activity. For example, if N units of an input are necessary to produce one unit of output, then 2N units of that input will be needed to produce two unit of output. This implies a constant return to scale relationship for the entire production range. 4.2.2 Additivity This means that the total contribution of any restriction is the sum of the individual contributions. It 79 is assumed that there are no interactions between activities. If there are (N , N , N . . . N ) activities using resource B, then theiamoufit ofathe resoérce'used is equal to the sum of corresponding input quantities generated by each separate activity. 4.2.3 Divisibility This means that the activity units can be divided into any fraction, such that non-integer values can appear in the solution. Results are often rounded off to the nearest integer to overcome this limitation or integer programming is used. 4.2.4 Determinism This means that all parameters in the model are known with certainty. The input/output coefficients, the resource levels, prices, etc. are assumed to be known with perfect knowledge. 4.2.5 Non-Negativity This means that the levels of all activities, resource levels, and outputs are greater than or equal to zero. When assumptions 1 through 4 are violated, other programming models can be used such as mixed integer programming, integer programming, chance constraint programming, N stage Linear programming, separable programming models or quadratic programming.’ 80 Mathematical and Schematic Representation g; the Damazine MCPRSZLP Model The objective of the model is to maximize n z - E; e x (j a 1, 2 . . . n) .1 J :1-1 subject to the constraints n jZE: a x g b (i - 1,2 . . .m) ij j i 3'1 and x 30 1 Where: 2 - The net revenue to be maximized. c I The marginal contribution of the jth activity. x - The decision or activity variable. aJ I The input/output coefficient of the jth resource. 13 i.e., how much of the jth resource is required for each activity. b1 - A given amount of resource 1 available. n - The number of activities in the model. m I The number of resource restrictions in the model. For a mathematical formulation of LP models in matrix notation, see Heady and Candler (1973). 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Most of the LP analysis of African agriculture (DeWilde. 1967; Lipton, 1968; Norman, 1973) has dealt with peasant farmers. Shultz (1964) and Hoper (1965) contend that the peasant farmers are profit maximizers. On the other hand, Deflilde (1967) and Lipton (1968) argue that for peasant farmers, the most important consideration is food security. Charlick (1974) suggests that peasant farmers may have objectives other than profit maximization. The farmers considered in this study are by no means small peasant farmers as their farms are, on the average- 1,5OO feddans.1 Their farming objective is strictly commercial, although they may have other objectives such as improving their social status. Risk may play an important role in modifying the farmers' objectives due to the risky nature of their farming situation which is dependent on variable rainfall. The model assumes the farmer's objective is to maximize net revenue to fixed assets (equity capital). subject to the technical constraints of the production function; and the level of available resources. The net revenue is estimated per feddan of the mixture of field 1 One feddan = 4,200 sq. meters = 0.42 Hectare = 1.038 acres 83 crops (i.e., more than one crop in one farm). Expenses encompass all cash costs, including labor, raw materials. overhead and interest on borrowed capital. ' 4.4.2 Activities in the Eggs; Activities in the Damazine MCPRS LP Model include: crop production. labor hiring, capital borrowing. farmers own capital, crop selling, capital transfer, and capital repayment. 4.4.2.1 Qggp Production Activities The Damazine MCPRS farmers grow three crops in pure stands - - sorghum, sesame and millet. The activity choices for crop production are defined in Table 4.1 through 4.4. Two alternative ways of growing sorghum and sesame are shown - early and late growing. 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II.» I1.m m1 1.31 m oc.m I¢.m m1 Icas _ .01—tog 0:11-5010 w. o: 1u102 m Mm mm. at XIIJLAIK o I an. o: xsoacofi a n“ a: soacouoo fl. oz Lona->02 a w no.1 nn.1 oz Inseauo a no.1 1 nn.1 00.1 oz oan1uom &. 1 00.1 a: auaoa¢ m w” mm. mm. o: I131 W. mN. ON. 02 ocafi 1 Ion-1 3...: a A 1 1| cm a n1 1 1| on a I 1 .1| on a n 1 1| on a a 1 1| on m 1 1| on 1 1| on a w 1 1| on o w 1 1| an a u 1 1| on oom1 m 1 1 on oz<1 1101 |||||| |||||||||| || ||||||||||||||||||||||||||||||||||||||||u|r|||||||11c: ouIIOIIu o.¢N| o a a «c.m| o¢.m| hN| a a o o<.m1 oc.m| ||||||||||||| N1m>z 11m): New: 1cm: 121a 1521 N1m>I 11m): New: 1am: ~21m $021 1u.mu1 c011ucam mic 2u1m Iaxosom 01-4 Iatosom 5.1-w .conam ..oxnoo1 IIIIIm.maauz I:..IIIo . ‘0111311u< 8:4050m 20100:.QZ =0~1¢0100t L113; 4 . ¢ H.117: 88 For sorghum. two alternative technologies are considered. In the basic MCPRS model, only partially mechanized sorghum harvesting is included. Subsequently. the model is extended to include fully mechanized harvesting, as shown in Table 4.4. The input/output coefficients in Tables 4.1-4.4 represent the amounts of input required per unit of activity. They specify how the magnitude of a resource constraint would change with an increase of one unit of each activity in the model. The coefficients representing a decrease in the magnitude of a constraint carry positive signs, while those coefficients indicating an increase in the magnitude of a constraint have negative signs. The input/output coefficients of crop production activities are derived from the survey data of 69 farmers in the Damazine MCPRS. The activity unit or the crop production area that each unit of activity represents, is one feddan (See Appendix A for data collection details). 4.4.2.2 Labor Hiring Activities Farmers in the study area are totally dependent on hired labor. The labor hiring activities cover the whole cropping season from June to March (Table 4.5). The activity units are man-days (equivalent to eight hours of field work). The survey showed that all the labor employed were adult males. While no constraint was put on the amount of labor the farmer can hire, the availability of hired labor is partly constrained by the availability of operating £39 . nuouoC1m 001 I cocoa soc-van I ma >Iv|cot I a! IOMD¢ 600.1 I Sivfith I Ch Ovnm 66': USOAK I mflfl "coauul1bouan< uu-o xo>gam 1 omusom a « om.~ m1 «<2 o w om.~ m1 mm« o w om.~ m1 zoz o w, >~.m m1 poo a w. 1~.~ . m1 «mm a w. 1~.N m1 un< a mu on.m m1 son a w. <<.m m1 221 M .au_dmu mc_1mgmdo 1 o w 1| o2 «<2 o w 1| o2 mum a m 1| o2 zoz o u 1| . a: hoe a v 1| 0: mwm a 1| o2 un< a w 1| o2 saw a I 1| o2 znn roams no.1: 1101 ||||||||||||||||||||||||| ||II|I|IIIIIIIIIIIIII||||||||I|||||I|II|||||a.cD angnomom om.~| om.~| om.~| om.~| om.~| «N.m| 1N.~| 1N.N| oo.m| oo.m| |||||||||||||| mI« cm1m «<2 mum zoz poo «mm us< 131 2:1 1m.1u1 co_1uca« ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||| o>_uumfino .cmuam .smxmmo1 caIIIm .m««o2 Ic_uaeao .II_1_>_1I< roams no._: m.< m1m<1 90 capital and the availability of drinking water. Ten (one per month) hired labor activities are incorporated in the model, covering the June to March cropping season. - Labor is hired per unit of land (usually per 60 feddans) and remunerated both in cash and in-kind in the form of raw food and drinking water. For convenience, in- kind amounts have been translated into cash values (Mohamed, 1982). An average monthly wage rate was estimated by combining the value of the cash and in-kind payments. The labor hiring aCtivities have positive coefficients, indicating that one unit of hired labor is used by the model per activity. The hired labor wage rate is positive in the operating capital row, indicating that a one unit increase in hired labor will decrease operating capital by the amount of the wage rate. Thus, the extent to which hired labor can be used is limited by the availability of operating capital and drinking water. Labor hiring activities (c 's) have negative values which are equal to the average egtimated wage rate in. the particular month. This means each unit of labor that is hired reduces the objective function by the amount of the daily wage rate. For June and July, the wage rate was higher than for the rest of the period because it represents the wage rate for the tractor drives. During October when sesame was harvested, the wage rate was also above the average wage rate during the season. This was because sesame harvest demands a high labor requirement (4.7 man-day/feddan) and 91 during a short period of time (see, Chapter 3). 4.4.2.3 Capital Borrowing Activities Capital borrowing activities are shown in Tabie 4.6. The Agricultural Bank of Sudan (ABS) is a specialized public institution which supplies qualified farmers with credit for land preparation, planting, weeding and harvesting. Credit was given in several installments during the cropping season. The model includes monthly capital borrowing activities to cover the times when capital was borrowed. These activities have negative coefficients -in the operating capital rows to indicate the use of borrowed capital and positive coefficients in the limit in the borrowed capital rows to indicate a decrease in borrowed capital by the amount used by the model. The objective function (c 's)for borrowed capital are negative, indicating a decrease in the objective function by the interest rate paid on capital. As the Agricultural Bank of Sudan charges 14 percent interest, the objective function for capital borrowing activities is entered as -.14. 4.4.2.4 Farmer 933 Capital Activities Farmers in the study area use their own capital to augment borrowed capital. Farmers' own capital activities are represented in Table 4.7. The structure of the coefficient for own capital is similar to that of borrowed capital. As described in Chapter 3, most of the owners are merchant farmers who have the opportunity to invest their own capital in commerce rather than agriculture. For this €92 nuouoa1m oo1.I venom oecocom.I no 001“ can: uzo1¢ I max 10:01ue1>ounn< cyan ze>usmueuusom o w 1| 1 1 1 1 1 1 m4 _au_aeu mc_ungedo new 211 . . w 11 a mu 11 u 1 1 m ouo~1 u 1 m4 «mm oomu w 1 m1 un< cows w 1 m4 233 _Iu_«au «c11atoao 115.1 o w 1 1| m1 own 0 w 1| m1 >02 0 w 1| m4 kuo a w 1| m1 «mm o w 1| m1 03¢ a w 1| m1 _a1_uea3mc_uogoao 1_m1 |||||||||||||||||||||||||||||||||||||||||||||||||||a1c: entaoeem o <1.| e1.| <1.| <1.| <1.| <1.| |||||||||||||| mx« cn_m;IaI« own 302 poo «mm ua< 2:1 1..1u1 co_1uca« .>_.u.1go oe1u1>_uu< .eu1eeu uezogsom 0.1 m4mo>usmuoousom noooN w 1| 1 1 1 1 1 1 1 1 1 1 m4 .m«.oau 1:81 1_e_1 |1 a u 1 1| . m1 «<2 0 v 1| m1 mum o w . 1| m1 z02 0 w 1| m4 huo o w 1| m4 mum a 1 1| m4 u3< o w 1| m4 433 a v 1| m1 233 .m11dmu mc11mgmao 1 _m 1 IIIIIIIIIIIIIIIIIIIIIIIIIIIIII |I|IIII|||I|II|||||||||I||I|I|||I||||u_c3 ongaommm so.| mo.| 11.| N1.| <1.| o1.| o1.| m1.| N.| 1N.| ||||||||||||||| mIm cm_m xaaom.m02 #00 mum 03¢ 4:3 znfi . 1m.fiu1 co_1uc:u m>_1umfino GIOQM.VO\MOO1 co...m.nflm08 Oflqfldlln.ocqun>«00< ~¢u«.0 :30 .Iholuih 1m< m1m<1 94 reason, the interest rate that commercial banks charge to their most preferred customers (21 percent) is taken as the opportunity cost of using own capital. This assumption. is reasonable, given the high inflation rate in the economy. The objective function (c 's) for own capital activities is negative, indicating a decrease in the objective function by the interest rate (i.e., 21 percent). To guard against the high inflation rate, farmers hedge in farm machinery (mainly tractors and discs harrows) and acquire more land in both the demarcated or undemarcated areas. This is made possible by the ADB policy which permits farmers to obtain machinery loans (in-kind) as long as they have repaid previous machinery loans. The survey showed that more than 20 percent of the farmers owned more than one tractor. The illegal expansion of production to undemarcated land is pervasive. The Mechanized Farming Corporation records showed there were 1.7 million feddans in the Damazine which were unofficially cultivated (i.e., undemarcated and unallotted). Simpson and Simpson (1978) suggested that most of these unofficially cultivated areas were run by farmers who also had officially allotted farms. 4.4.2.5 9399 Selling Activities The LP model allows all crops produced to be sold. The five initial crop selling activities are early sorghum, late 1 A conservative estimates put the inflation rate at 30 percent (see Zaki, 1983). 95 sorghum, early sesame, late sesame, and pearl millet (Table 4.3). Two additional crop selling activities were added when a combine harvesting option for early and late sorghum was considered. The model assumes that all selling is done at harvest and that there is no storage. Prices are those observed during the survey. Sorghum sold during March commands a higher price than sorghum sold during December. This is because by March, all roads outside the production area are accessable so the crop can be easily transported to other consumption areas. In contrast, the traditional farmers harvest during December, making the supply higher than the local market demand. The selling activities units are one sack and prices are average prices received by farmers in the area in 1983/84. The objective function coefficients are positive because selling adds to the value of the objective function. The selling price coefficients appear negative against the operating capital rows because crop selling adds to the operating capital. 4.4.2.6 Transfer Activities Table 4.8 represents operating capital transfer activities which are used to pass surplus operating capital from one month to another during the cropping season. The transfer activities have a zero value in the objective function, and negative and positive values against the operating capital rows to transfer any capital surplus to the next month. The capital transfer activities are followed OHOuOfldl OOn I ”1.150% 0.110011%.I,” mm .oWww can: u:0 1m I m:« 1ec01ue1>eunn¢ anon >e>usmueousom a w 1| m1 «<2 a w 1 1| m4 mm« o w 1 1| m1 zoz a w 1 1| m1 boo o w 1 1| m1 «mm o w 1 1| m1 m3< a w_ 1 1| m1 125 o w 1 m1 233 g .M1_amu mc_1mgmno 1_m1 |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||| 1.:3 magaommm o o o a a o o a o ||||||||||||| mz« cm1m «<21mmu mmmxzoz >ozxpuo puoxmmm «mmxu:< u2<\1:s snsxzna 1m.qu1 co_1uca« I>11uaaao uo_u_>11u< 201acesw _a1_dmu mc_1mgmdo o.< MJm