somalia agrcultural sector review file copy

Report No. 2881a-SO

SomaliaAgrcultural Sector Review FILE COPY(In Three Volumes)

Volume IlI: Annexes 4-7lune 29, 1981

Eastern Africa Regional OfficeNorthern Agriculture Division

FOR OFFICIAL USE ONLY

Document of the World Bank

This document has a restricted distribution and may be used by recipientsonly in the performance of their official duties. Its conterts may not otherwisebe disclosed without World Bank authorization.

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CURRENCY EQUIVALENTS

Currency Unit - Somali Shilling (So.Sh.)US$0.1589 5 So.Sh. 1.00US$1.00 5 So.Sh. 6.295

WEIGHTS AND MEASURES

1 hectare (ha) 2 10,000 m1 square kilometer (km ) 100 ha1 metric ton (ton) 1,000 kg

ABBREVIATIONS

ADC - Agricultural Development CorporationENC - National Trading CompanyFYDP - Five Year Development ProgramGDP - Gross Domestic ProductLDA - Livestock Development AgencyMLFR - Ministry of Livestock, Forestry and RangeMOA - Ministry of AgricultureMNP - Ministry of National PlanningNBB - National Banana BoardNES - National Extension ServiceNRA - National Range AgencyONAT - Farm Machinery and Agricultural Services OrganizationSPC - State Planning CommissionTYDP - Three Year Development Program

FISCAL YEAR

January 1 - December 31

FOR OFFICIAL USE ONLY

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SOMALIA

AGRICULTURAL SECTOR REVIEW

The Spcial Impact of Agricultural Development

Table of Contents

Page No.

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

II. SOCIAL AND CULTURAL RESOURCES ............................. 1

A. . General .............................................. 1B. Population ........................................... 2C. Unifying Factors ..................................... 3D. Traditional Socio-Political Structure .... ............ 4E. Indigenous Systems of Production and Exchange .... .... 5

III. SOCIAL TRANSFORMATION ...................................... 10

A. The Role of the State ................................ 10B. The Growth of State Organizations .................... 14C. Redistributing Population ............................ 16D. Summary and Conclusions .............................. 18

IV. PROBLEMS AND PROSPECTS IN SOCIAL DEVELOPMENT .... .......... 22

A. General .......... .................................... 22B. Self-Reliance and Self-Sufficiency .... ............... 22C. Scarce Resources and Equitable Development .... ....... 23D. Popular Participation in Development .... ............. 24E. Institutions ............ ............................... 25F. ;Missing" Institutions ............................... 26

TABLES 1: Population, Area and Population Density by Region2: Population by Settlement Type, Region3: Estimated Average Number of Livestock per Agricultural

Household4: Earnings Differentials in Government Employment5: Earnings Differentials in SNAI Sugar Factory

MAP: Regions and Districts (IBRD 15413)

This document has a restricted distribution and may be used by recipients only in the performance oftheir official duties. Its contents may not otherwise be disclosed without World Bank authorization.

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SOMALIA


The Social Impact of Agricultural Development

I. INTRODUCTION

1.01 The objective of this annex is to review and analyze the impact thatrecent development policy has had upon Somali society. Since 1970 at least,when the Second Charter of the Revolution articulated the goal of socialjustice through the philosophy of scientific socialism, the Somali DemocraticRepublic has been clearly committed to a social policy of development withequity. Since over eighty percent of the population is directly engaged inagricultural production, an analysis of the social impact of agriculturaldevelopment can measure the degree to which overall Somali social policy isbeing achieved in practice. The first part reviews the country's socialand cultural resources, and the basic elements with which the developmentstrategy must work.

1.02 The second part examines the role of the state and its institutionsin transforming Somali society, and describes the consequences of politicaland social forces on rural producers. The final section focusses on problemsin, and prospects for, the achievement of social objectives and contains ourrecommendations for government action to resolve some of the dilemmas posed bythe gaps between the theory and the practice of societal development in Somaliconditions. This annex makes no judgment on the validity of Somalia's socialgoals, but only reviews how far government is now actually going to realizethe goals it has set for itself.

II. SOCIAL AND CULTURAL RESOURCES

A. General

2.01 The concept of "human resources" as generally used is far toonarrow to encompass the human factors that are so important in the developmentprocess. Society is much more than the sum of its individual members' energies,skills, and potentials that can be harnessed for new endeavors. Rather, it isa complex structure of groups, activities, interests, and relationships. Thisstructure must be understood, just like any other structure such as a soil orhydrogeological formation, before any decision on how best to mobilize it fornew undertakings can be taken. Existing patterns in the distribution ofsocial groupings, in the strategies by which groups attempt to achieve their


own goals, or in the relationships they have with one another can be obstaclesto particular types of change or they can be the building blocks for new ideasand structures. An adequate description of the social and cultural "landscape"is thus a necessary first step in assessing social policy.

B. Population

2.02 The data yielded by the national census of 1975 is currently beingprocessed. The provisional figures which have so far been released permit ageneral overview of population distribution, but do not yet allow detailedstatements of age and sex ratios, the total labor force, sizes and types ofsettlements, or the like. It is expected that the completed analysis will beavailable for the purposes of the next full round of development planning nowgetting under way.

2.03 The current revised figure for the total 1975 population is3,722,000. 1/ Accepting this figure, and further assuming a net annual growthrate of 2.5 percent estimates vary from 2.3 to 2.7 percent, the population inmid-1979 would have been over 4.1 million. Of the 1975 totals, 59 percent wereclassified as "nomads," 22 percent as "settled farmers," and 19 percent as the"inonagricultural" population.

Population by Region

2.04 Somalia is now divided into 16 administrative regions, as indicatedon Map 1. For general planning purposes, these regions are sometimes groupedinto six macro-regions which correspond to broad differences of geography.The area and population total and density for each region are shown in Table 1.

2.05 In general the lower rainfall areas of the northeast and centralrangelands carry the lowest and 1-^st dense populations. Two areas bear thehighest densities: the first is formed by the two major river valleys of thesouth and the better-watered Bay Region between the rivers; the second is thenorthwest, the primary area of intense commercialization of livestock. Inrough terms of economic geography, the country can be characterized as twozones of relatively concentrated activity connected by a large area which issparsely utilized. It is to be expected that one effect of the recent pavingof the highway linking the zones will be an intensification of economicactivity in the intervening zone.

1/ This total is 230,000 more than the provisional figures which appearin earlier government and IBRD documents. Since those figures werereleased, Lower Juba Region has been divided into Lower Juba andMiddle Juba Regions, and the total for the two, as now given, is193,000 more than the total for the former single region. The newfigures also give Middle Shebelli Region 37,000 more people thanbefore. In any case, the census was carried out in the disturbedconditions of the longest drought in modern history, and overcountingmay have occurred.


Population by Settlement Pattern

2.06 Three categories of settlement type were distinguished in the 1975census (Table 2). The "non-agricultural" population of the census was definedas the population of the regional and district capitals. This category,therefore, does not strictly coincide with 'urban population', since sometowns are not capitals. Furthermore, non-agricultural workers in areasoutside the capitals are not included while farmers and herders who happen tolive in the capitals are. The "settled farming" population means people inpermanent villages. This category, therefore, includes crop farmers (exceptas above), but it also includes many people who may live in permanent settle-ments but who derive the principal part of their income from pastoral activities.In Somalia there is a continuous gradation from non-livestock-owning farmersor plantation workers to sedentary but full-time pastoralists. This categorythus includes a large but unspecified number of people who are classified insome documents on Somalia as "semi-nomads." The "nomadic" population includesall those enumerated outside permanent settlements. It is evident from thetable that the nomads are not restricted to the rangelands of the central andnorth-eastern macroregions, but form a fairly high proportion of the populationof those regions where crop farming is practiced. In only three regions,Benadir (Mogadishu itself), Lower Shebelli and Bay (where substantial numbersof people have settled), do nomads constitute less than 60 percent of thetotal population. Nomads are the constant feature of the Somali sociallandscape, settled people (62 percent of whom live in four of the sixteenregions) the special case.

2.07 The large proportion of nomads poses special problems for Somalia(as for its sister "pastoral republics," Mongolia and Mauritania). Census-taking, planning, provision of social services and general administrationare all complicated by the mobility of the population. The government hasembarked upon a general policy of settling nomads, but realizes that this canonly take place as sufficient resources, which nomads now have to move toexploit, eventually become available at permanient sites. In fact the frequencywith which pastoral Somalis change residence, and the regularity of theirmigration routes, vary by area and over time. Some are almost sedentary butlive in dispersed homesteads, while others move frequently and opportunisticallyover a large territory. Most spend at least four months of the long dry season(jilaal) at or near a permanent water point. Even when they move, they rangewithin broad areas associated with their descent groups. Nomadic "anarchy" isan exaggeration; planning can proceed once detailed knowledge of environmentalconstraints on movement is assembled.

C. Unifying Factors

2.08 Somalia-s development resources include the relative unity thatexists in religion, language, culture and historical outlook; as far as theseare concerned, the Somali people have always been a nation. Only recently,however, have most of them been in a single state. This concensus manifestsitself concretely: civil servants, for example, can be posted anywhere in


the country without feeling alien in language or culture, and can thereforebegin working immediately; written communication is clear and well-understoodby all; the vision of all Somalis as underdogs in the partition of theirhistoric lands by more powerful foreigners underpins a loyalty to the nationwhich has endured over time and has been mobilized by successive nationalleaders from earliest days. The uniformity in even relatively esotericsubjects like the folk systems of astronomy, measurement, and edaphology, canenable extension workers, researchers, or curriculum designers to make quickprogress with their clients unencumbered by conflicting ideas or foreignconcepts.

D. Traditional Socio-Political Structure

2.09 The creation and expansion of colonial administrations in the firsthalf of this century wrought profound changes in the organization of Somalisociety. The independent state of Somalia has further altered the basicsocial and production processes, and will be examined in Part II below. Butthe traditional structure still exists, although it is being transformed andweakened by the growth of the modern state. That structure represented arelatively successful adaptation to environmental and social constraints at alow level of technological complexity. It enabled Somalis to occupy a vastand often inhospitable land, and it provided basic subsistence with social andphysical security. It still provides many Somalis with their most significantrelationships to other people and to the resources necessary for their dailylife. It is this structure that the state seeks to develop, change, orreplace.

2.10 The fundamental idiom in which the traditional world was understoodwas that of kinship. Membership in one of the six broad patrilineal descentgroups (technically, clan-families) gave each Somali an ultimate claim to aplace in the social order. Belonging meant sharing the overall rule ofcustomary law and having a stake in the particular resources of land, waterand power that each clan-family defended as the patrimony established by theclan's founder. Four of these clan-families were largely pastoral by occupa-tion -- the Darod, Dir, Isaq, and Hawiye -- while two were primarily agricul-tural -- the Digil and Rahanwin. Outside this structure in what is now theSomali Democratic Republic lay only the Arabized communities of the coastaltrading towns, some Galla-speaking pastoralists and farmers, and Bantu-speakingcultivation groups who pushed up from the south into the riverine areas andwere largely incorporated into the agricultural clans of the Somali.

2.11 The name of one clan-family provided the individual with a basic"address" (as l.M. Lewis points out), a location in the social structure.Each lower-order segment of one's genealogy identified one more specifically,and the relations between segments at greater or lesser genealogical distanceprovided guidelines to each person on how to behave toward others. Thisidentification was important in part because small groups were frequentlyphysically interspersed with others from many different clans. For while

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each of the large clans and clan-families was identified with from one tothree or four large blocks of territory, the exigencies of the environmentmeant that individual groupings might range widely into areas beyond the zoneordinarily most securely occupied by themselves and their close kin.

2.12 Among the pastoralists it was the dia"-paying group, however, thatwas the most effective mobilizer of ongoing loyalties and obligations. Formedfrom among close kinsmen (but not necessarily including all of them), thisgroup entered a collective formal contract (or treaty, "heer", in Somali) topay and collect compensation for injury and death. By sharing political riskand using physical force when necessary, the dia-paying group provided itsmembers basic social and physical security. The group acted only when necessary,however, and from day to day there was no centralized political authority overthe actions of individual herding units. The moral force and influence ofIslamic religious leaders helped to bind the otherwise centrifugal socialforces, while wealth, intelligence and tact could earn a man considerableinfluence within his lineage.

2.13 Among the cultivators of the south, control over access to thelimited resources of land and water enabled clan and lineage leaders to wieldmore power than among the pastoralists where these resources were more widelydispersed. Chiefly hierarchies were therefore more concretely established,and the statuses of stranger, client (which status was formally abolished in1960), and full clansman were more rigorously distinguished. Nonetheless,cultivating villages regularly comprised people of several different lineages,and village leadership was in the hands of the elders of the constituent clansegments. Villages as such were not aggregated into wider political units,but a solidarity grew across lineage segments within the village throughwater point construction, village maintenance, and agricultural task sharing.

2.14 Access to other major factors of production, labor and capital werealso regulated through the system of kinship. Islam, and specifically Somalicustom, guided the choice of marriage partners, in part on the basis of thewider political alliances they would encourage. Rules allowing polygamy andstrictly guaranteeing female chastity before and after marriage permittedpastorialists to disperse the family labor force as necessary to provide forthe different needs of various classes of livestock. Inheritance patternskept lands and livestock in family hands, usually in the male line.

E. Indigenous Systems of Production and Exchange

Pastoralism

2.15 The vast majority of the Somalia labor force is engaged in pastoralactivities. For the majority of the population, pastoral production is themajor subsistence mode. Most Somali cultivators also keep substantial herds,and even town-dwellers usually own a few animals. Few Somali own no livestockat all. Pastoralism is labor-intensive as well, in that it involves constant,


if not especially strenuous activity to care for the herds. Some animals,goats for instance, are easier to herd than others, and less labor is requiredduring certain parts of the year. In general, however, animal husbandry keepsall family members busy from an early age (in crop-growing families, childrenof nine to twelve are often responsible for the sheep and goats). The slackperiods associated with crop farming (when educational outreach, for example,can proceed) are much less pronounced among herding communities.

2.16 Pastoral production is carried out as a household enterprise, withthe senior male of the nuclear or composite household as herd manager.Individual animals may be owned by household members other than the head, andthose owners may thereby have a subsidiary role in major husbandry and offtakedecisions. Some animals may also be in the herd on loan or on contract, andmay not be alienable by the herd manager. Calculations of potential offtakefrom a herd must take into account the differential alienability of individualanimals within it.

2.17 The mix of livestock species that one family holds varies accordingto local ecosystemic factors such as disease vectors or the type of pastureavailable, to family fortunes and points in the domestic cycle, and, increas-ingly, to demand factors from the commercial sector. Table 3 gives theaverage family herd by livestock types and by regions of the country from the1975 census, but the figures (a) are likely to derive from relatively inacurratecounts, and (b) certainly mask wide variations among families in both the numbersof animals owned and in the mix of species in individual herds. Table 3demonstrates, at the most general level, the higher numbers of sheep and goatsin the non-agricultural areas of the north and the concentration of cattletoward the better-watered sodth. According to the census, it is the intermediateclimatic zone in the central rangelands that has the largest family herds inthe country.

2.18 Grazing management is cmnplex. It requires quick responses andgreat flexibility to take advantage of the sporadic and fleeting resources ofwater and grass in the arid lands where most pastoralists live. Somalis haveadapted to their particular ecosystem in three primary ways:

(a) By keeping goats and sheep plus either cattle or camels (rarelyboth), they make efficient use of the vegetation of individualand adjacent pastures and minimize the disease risk;

(b) By oscillating between dispersed grazing in the two rainyseasons to harvest the vegetation of areas as far frompermanent water sites as is practicable, and more concen-trated grazing in the dry season around the permanentwater, they in effect practice a rotational systemwhich reserves pasture for dry season needs; and


(c) By subdividing the herd into segments, with the bulk ofthe camel herd (halweyn) tended far away from the rest of thefamily for much of the year by the young men of the family, andsometimes also by keeping wives as sub-herd managers in differentlocations, they further minimize risk at the cost of dispersinghousehold members. 1/

2.19 Herd offtake in traditional conditions before the current eraof intense commercialization (para 3.07) is unknown. Somalia did not havea culturally-elaborated emphasis on bull animals, and it may be presumedthat male cattle and camels in excess of the number of potential breedersand workers were removed from herds early to increase the milk availablefor human consumption. In a pilot household survey carried out in 1975by the Somali Central Statistical Department, sex ratios of the differentanimal classes held by settled farming and nomadic families were enumeratedas follows:

Sex of animals held by 104 households

Middle Shebelli Region, 1975

Settled HouseholdsN------ ----- omadic Households------Males Females M/F Ratio Males Females M/F Ratio

Camels 5 2 1:4 190 404 1:2.1

Cattle 65 247 1:3.8 348 1,776 1:5.1

Goats 98 347 1:3.5 715 4,227 1:5.9

Sheep 19 58 1:3.1 414 2,802 1:6.8

The accuracy of these figures is subject to reservation and they aredifficult to interpret given the drought losses that could have occurredin the two years before this survey. It can be seen, however, that invirtually all cases, the offtake of males is quite high and that thenotion sometimes held that pastoralists build up their herds withoutconsidering the consequences is obviously mistaken.

1/ This strategy can complicate the task of extension education, sincedifferent decision-makers for any given sub-herd are in differentplaces; but it is, of course, an entirely rational way to manage thefamily herd and the range resources.


Cropping

2.20 There are households engaged in farming in Somalia, mostly asdryland farmers in the area between the Juba and Shebelli rivers, espe-cially in Bay Region. In addition, flood recession farming and traditionalsmall-scale irrigation are practiced on the banks of the two rivers. Thestatement is sometimes made that farming is a recent introduction inSomalia; in fact it has been practiced for at least four centuries.

2.21 As elaborated in Annex 5, dryland farms average about fivehectares. With technology based on the hoe, the area actually cropped isprimarily a function of labor availability at the peak period of demandduring weeding. Farm families average between five and six people.Those farm families with more labor available are likely to hold morelivestock and to devote that labor to animal husbandry: it appears thatthroughout the period for which there are any records, the use or sale oflivestock products has given more benefit than additional investments incroplands. There are few data on the size of holdings per active cropworker or on the use of hired labor or sharecropping clients. A summary ofthe data available on farm size, labor demands and yields is given in Table 4.In these circumstances it is impossible to discuss whether the growers of mostof the non-subsistence crops, or those who innovate with new crops, animalor tractor plowing, or schooling for their children are from any particularlayer or type of the dryland farming families.

2.22 In most areas of dryland farming the main crop is sorghum, ofwhich there are several local varieties. Pulses may be interplanted withsorghum, and sometimes millet and maize are also grown. The total areacultivated in any one year is divided into several plots in differentareas. Given the local conditions of highly scattered rainfall withoutland scarcity, this practice, and that of keeping plant densities low,maximize the farmer's chances of having at least some of his planting cometo full harvest. Field preparation is minimal except when the brush of afallowed area needs clearing. Seeds are dibbled or broadcast and coveredby slight ridging. Weeding is the most time-consuming of agriculturaltasks, and thus proves the major bottleneck to expansion of the areaunder cultivation. No inputs of insecticide, herbicide, or fertilizers(not even deliberate manuring by the local herds prior to planting) areused. Since local varieties are interplanted and have different maturities,harvesting is of individual heads of grain by the use of knives. Thecrop of the second, shorter rainy season (Der) is less likely to succeedthan that of the longer Gu, but if the year is a good one, farmers storeas much as they can -- up to three years worth has been observed andfarmers report stored grains lasting up to ten years in shallow pitslined with leaves, covered with branches, and sealed with soil. In allcases, crops are the personal possession of the household that growsthem, although fields may revert from the household to the wider lineagegroup if they are permanently abandoned.

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ANNEX 4Page 9

2.23 Traditional irrigation is done in two ways: by successivelyplanting the alluvial soils along the rivers as the flood recedes, relying onresidual moisture and rainfall; and by the construction of irrigation channelsfrom runoff streams or from the rivers. In both cases, for obvious reasonsof water use optimization, fields are smaller, closer together, and havehigher planting densities than in rainfed areas. Maize is the staple crop,but beans, fruit, cotton, and sugarcane are also grown. Technology issimilar to that of the dryland areas. Labor demands are higher for thepreparation of the generally heavier soils and for the maintenance of irriga-tion works. On the other hand, the greater potential for cash incomes fromthe wetland crops, as well as the greater prevalence of tsetse fly along therivers, correlates with the generally smaller livestock holdings of irrigationfarmers. Again, data on the mix of variables such as types of labor availa-bility (adult, child, hired, etc.) size of holdings, and returns to labor fromdifferent crops are not enough to indicate what the probable effects of suchfactors as price changes or reliable input supplies would actually be inany of these farming systems.

2.24 Other farming systems are even less well described in the literaturethan the above and are less significant. These indigenously developed systemsinclude: ex-plough cultivation in the Northwest Region; temporary cultivationof many small areas in abundant rainfall conditions (wherein nomads mayopportunistically scatter seed, protect the plot with a thorn fence and returnlater to harvest); runoff (tug) diversion in Sanaag and other northernregions; date palm cultivation in the northeast; and vegetable gardening(including, recently, a rapidly growing number of cassava farms) aroundMogadishu. The agriculture practiced by riverine peoples who spend largeamounts of their time working on various plantation schemes is also unstudied.

2.25 Social factors in indigenous agriculture include the mechanismswhich distributed workload and risk and therefore guaranteed a minimum ofsecurity except during general calamities. Land clearing, and the constructionof wells, water harvest tanks (uar), irrigation channels, and minor publicworks were all often carried out by community collaboration. Membership inthe group, whether acquired by birth or adoption, implied both acceptance ofthe tasks to be shared and the right to claim help in time of need. Clan andlineage organization and membership entailed a guarantee of security of tenureand the obligation to share in the compensation that might be assessed againstone's group for damages caused by any of its members. Whether a strongprinciple in favor of generous redistribution of grain surpluses existed isnot known: in some areas of Africa this factor helps account for the situationin which individuals, rather than reinvest in crops or hire labor, investinstead in livestock, which can be loaned out or "hidden" in distant herds.

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ANNEX 4Page 10

III. SOCIAL TRANSFORMATION

A. The Role of the State

3.01 The indigenous fabric of Somali society and culture is still intact.Indigenous cultural and economic systems have enabled Somali people to exploita harsh environment and to exert their influence over a physical area quitelarge by comparison with those of most other Eastern African ethnic groups.The southwestward expansion of Somali pastoralists and cultivators has ensuredthe "Somalization" of the peoples from the south who pushed up into thecoastal and riverine settlements of the southern part of the country. Somalipastoralists are increasing in numbers in neighboring Kenya, and Somalientrepreneurs have migrated both south and northward across the Gulf of Aden.The resilient internal processes Somalia-s culture have continued to producepoets, religious and political leaders. The 80% of Somalis who live in ruralareas still provide for most of their needs either by themselves or out ofresources available in their own local areas and from their neighbors andkin.

3.02 Nonetheless, there have also been profound changes in the society.Most have been brought about by the growth of the state political, administra-tive, and development apparatus in this century. It is not the task here totrace the details of Somali colonial history. But to understand the forceswhich underlie the development effort in Somalia it is necessary to analyzesome of the effects of the growth of the state.

Decline of Traditional Political Structures

3.03 Successive governments, the colonial administrations and the indepen-dent republic especially, have deliberately sought to substitute their politicalauthority for the older authority of the clan structures. As the state hasmonopolized the use of force, the relevance of the clans and the contractualdia-paying groups in guaranteeing physical security has declined. Everysuccessive government has exerted a firmer control of the instruments of forceand had a stronger determination to eliminate the influence of clan structuresat least in the domains of politics and of conflict resolution. There isdebate as to exactly how far clan loyalties have been eroded. One authoritypoints out that there are about as many candidates for the 1969 elections inthe country as there were dia-paying groups, and that even today, despiteofficial discouragement, clan ties provide the individual's primary identity.If clan still provides a social "address," however, it does not providefirepower: the government now makes effective use of its powers of coercionto ensure that its policies are carried out, while other bureaucratic agencies,for example pension schemes for civil servants or insurance companies, haveincreasingly taken over the payment of various kinds of compensation. In thesettled villages, moreover, the appointment of village chiefs is now firmlyunder the control of state authorities. The position at the moment is thatday-to-day matters of local interest are still being worked out mainly bylocal political processes, but the fundamental matrix of policy is now in thehands of the state.

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Urbanization and Migration

3.04 The expansion of the colonial and post-colonial state structure andthe accompanying economic changes have had a dramatic effect on the pattern ofurbanization in the country. First, the raisons d-etre of the coastal settle-ments have been transformed. In the past they were the entrepots of the dhowtrade, sited about a day's sail apart, where a harbor and fresh water wereavailable, and where access to the hinterland was relatively easy. While insome areas political influence spread from the port over the hinterland, forthe most part the interior was politically autonomous, and the relationshipwith the coast communities was cast in commercial terms only. In the modernperiod, a few coastal settlements have added major administrative and economicfunctions (Kismayo, Berbera, and especially Mogadishu), but most others havegone into steep decline (e.g., Adale, Mait, Zeila) as the dhow trade declinedand as economic and administrative functions were focussed along inlandcommercial routes. Second, this new pattern of urbanization concentratedactivities in a few locations. Hargeysa has grown from a tiny settlement tobeing the country-s second largest city by reason of its favored situation asthe colonial administrative center for the British protectorate in the north.Above all, Mogadishu has almost achieved a heavy urban dominance as political,economic, industrial, administrative, higher education and cultural activitieshave been centered in the capital. With 10 percent of the country-s totalpopulation, Mogadishu is now experiencing the difficulties of providing jobs,amenities and services that might better be handled with greater decentraliza-tion of urban activities.

3.05 The growth, first of the colonial administration, second of thecommercialization of agriculture, and third of the independent Somali publicsector has provided wholly new types of occupation. Wage employment hasbecome something that herders and crop farmers all over the country perceiveas a real possibility for at least some of thc4r children. So much so thatsome nomads are spending as much as So. Sh. 4,000 a year to board a child ofprimary school age near a village school. Some of the aspiration for wageemployment will be realized, of course, abroad on the Arabian Peninsula. Mostchildren may not finish school and may, if they find employment at all, findit at levels that require only muscle-power, not academic skills. Be that asit may, the current situation is that increasing numbers of rural families,even those not forced to migrate by drought or ill fortune, are sending one ormore children to the urban areas to diversify their sources of family income.In remains to be seen whether their expectations that sustained remittanceswill be forthcoming and will repay the investments in schooling and theopportunity costs of lost family labor will be fulfilled or not. Nevertheless,urbanward migration is now taking place on a major scale in Somalia and mustbe understood as an expression of confidence in the relative ability or urbanemployment to generate supplementary family income.

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Intervention in Production Systems

3.06 From the time of the earliest appearance of colonial interest inSomali territory, there has been intervention in the conditions of agriculturalproduction. At first this interest was commercial, and in the livestocksector the influence of the state has been mainly limited to conditioning thetrade flow in livestock. In the crop sector, influence has been more direct.The state has recently intervened with increasing intensity for ideological,strategic, and political reasons. The overall consequence of this history ofstate involvement in agriculture has been the emergence of an embryonic systemof social class, as will be elaborated below.

3.07 The Commercialization of Livestock. The earliest interest of theBritish in the northern Somali coast was as a source of meat for their expand-ing garrison at Aden. Trade in pastoral products (and those collected in thewild) from both coasts is ancient, being first recorded in detail 650 yearsago. Trade of live animals, ghee, hides and skins was entirely in privatehands, organized by brokers between pastoral producers themselves and merchantexporters, with some market dues going to the chiefs of the port communities.In the twentieth century, the trade has grown enormously; the oil boom periodsof the Arabian peninsula first in the 1950's and then in the mid-1970's havefunded huge new demands. In Somalia, production has remained with nomadicfamilies; there has been no substantial change in the organization of produc-tion itself. The primary orientation has changed, though, from subsistence tomarket pastoralism. Commercialization has undergone this significant intensi-fication while remaining virtually entirely in private channels. Privatetraders have invested in water storage units to localize production, in atransport fleet to move animals to market and port and in hay productionactivities (building enclosures in good rangeland) to support the internationalmovement of the live animals. Collective efforts have been made to gainincreased government support and to organize commercial transactions in theirbest interests. Government has responded to the importance of the livestocksector for overall government revenues by improving port and road infrastruc-ture, by providing animal health supervision, by organizing a payment transfersystem that enables the exporter to buy and ship imports with part of hisproceeds abroad, and by otherwise not intervening in the commercial sector inthe way it has for commodities traded by less influential, sometimes non-Somali,merchants.

Acquisition of the River Valleys

3.08 Those Somalis who were historically fortunate enough to acquire thelands along the two rivers have now all but lost them to large-scale privateand public interests. Such lands were traditionally claimed by clans orvillage groups, but relatively little was actually used on a continuous orintensive basis. As in many other countries, the colonial powers held thatlands not actually being intensively used were fair game for governmentpurposes. Thus, starting in 1908 with an Italian scheme for concessionaryagriculture to help pay for the colonial administration and to supply tropicalproducts to the metropole, large tracts of the best-favored riverine lands


were acquired for large-scale crop production. The first of these were forprivate banana plantations and the Jowhar sugar estate, but the right ofeminent domain has been asserted by each successive government to requisitionland for large-scale crop schemes. In some early cases there was acknowledge-ment of traditional tenure, since the land was purchased from clan elders (whomay not have had any clear right in customary law to alienate it). Mlorerecently compensation has only rarely been paid or sought, with the populationapparently "content to profit from the labor opportunities and increasedcirculation of wealth which the projects offer" (Lewis 1967:22), or at leastnot inclined to protest very sharply.

3.09 As irrigation canals were built away from the rivers themselves,additional lands were taken over for plantation crops. Some of it was developed,then abandoned, and sometimes repossessed as the economics or technology ofvarious crops fluctuated. There has been no attempt to account for how muchirrigable land, and of what quality, remains in the hands of villagers. Itmay be assumed that the 209 banana plantations on the two rivers, togetherwith the existing irrigation projects and state farms on both rivers, occupyvirtually all of the high-quality lands. In all, the 1977 Hunting Reportrecords that about 35,000 ha were under controlled irrigation (some 27,000 haon the Shebelli and 7,500 on the Juba). While some of these lands were beingoccupied, at least temporarily, by smallholders, most were held by large-scalefarmers (many of them the Somali successors of Italian concessionaries) andthe Government. A further 47,000 ha at least were identified for large-scaleirrigation development: indeed, as the Hunting Report notes, "the great bulkof investment in the rural sector is to be devoted to the construction of newirrigation schemes" (p. 33). If this development were technically possible(see Annex 2), it would complete the takeover of even bottomland (presentlyflood-irrigated) from traditional producers. The data on the present ratio ofsmall holdings to large is sketchy at best. In any case the central point ofsocial relevance is not this ratio, whatever it might be, but the overwhelmingtrend not just to controlled irrigation technology but to the permanentalienation of lands from their traditional owners.

Early Outreach to Small Producers

3.10 There were a few attempts in the past to improve conditions forsmall producers, but these were pale even by comparison with other Africancolonies. In the former British colony they were very limited, consisting ofthe creation of small veterinary and medical programs, the construction of ahandful of schools and a few roads and boreholes, and the beginnings of asystem of land registration for the agricultural holdings of the northwest andthe forest gum production areas to the northeast. In the south, the offer ofwage employment on what were to be models of progressive concessions turnedfrequently into the forcible impressment of labor. The building of a chain ofschools and medical facilities evidenced the early Italian motivation to"uplift" the population, but the agricultural experiments run at Genale andVilla d'Abruzzi were solely directed at plantation crops. After World War II,governments slowly extended health, education, and administrative services.For the first time there were experimental programs in farmer credit, water


catchment construction, grazing rotation, farm mechanization, animal tractionin the south (it was innovated indigenously in the northwest), as well as thebeginnings of agro-industry. But until independence there was no attempt atall to cover the countryside with any service or administrative demand: therewas not even the collection of a head tax or an animal tax that might havebrought government into contact with the mass of the population.

B. The Growth of State Organizations

3.11 Since Independence, and especially since the 1969 revolution, theactivities of the state in the countryside have accelerated considerably. Tounderstand the reasons for the particular programs undertaken and theirconsequences, it is necessary to see them in the context of the evolvingnationalist and socialist commitments of the country.

The Socialist Commitment

3.12 The declaration in 1970 of the socialist nature of the Somalirevolution, reflected the country-s growing consensus that the continuation ofpolicies begun during the colonial period could not break the chains of itspoverty. It also declared a will to effect change in the countryside after adecade of drift in development terms. These three strands of thought --ending neo-colonial subservience, ending national poverty and changing theface of the countryside -- have dominated development policy since.

Ideology and Education

3.13 The colonial experience had engendered a strong sense of nationalinjury among Somalis. The national territory had been divided, allocated andreallocated among foreigners with no consultation of Somalis. By comparisonwith her colonial neighbors, Som.ia had been clearly neglected. At thebeginning of the 1970's the new government determined to overcome this senseof disinheritance, this marginalization. It resolved a long debate by adoptingthe Roman script for the national language. It embarked on two major literacycampaigns, the first in 1973 in the cities and then in 1975 throughout thecountry. Even though the major drought had struck and the literacy workerswere diverted to the relief effort, within a few months 854,000 Somalis,nearly half the adult population, had become sufficiently versed in theirlanguage to earn certification of their literacy. For the first time, a massmobilization in the countryside had been undertaken, and it worked. In thecircumstances, the boost to national self-esteem may have been as important asthe technical result: since there were few materials available to sustain thenew reading skills, many people (one survey in 1977 said 50 percent) soonrelapsed into non-literacy. But the demonstration of education as a tool forparticipating in the nation was effective. Primary school enrollments, onlysome 70,000 in 1974, rose to nearly 200,000 in 1976, and more and more ruralparents were beginning to sacrifice the value of their children-s labor, and(for nomads) to meet the cost of boarding, in order to keep the children atschool.


3.14 Scientific Socialism in Development. Government s determination toeliminate the vestiges of colonialism and to force the pace of economic growthhas given rise to a number of interrelated policies. Among these the mostnotable have been:

- the nationalization of the banks and the creation ofstate export and import trading monopolies for manyitems to control elements of commerce felt to havebeen bleeding the country;

- the holding down of wages in the public sector in orderto try to prevent the use of government service to amasswealth. The wage scale has not been amended since 1969except for the lowest-salaried workers (although allowanceshave been changed), and inflation has seriously reducedthe purchasing power of salaries. Appendix I of thisAnnex outlines public sector compensation levels. Reactionto this squeeze has taken two forms: out-migration to jobson the Arabian peninsula (at salary levels wlhich Somaliacould probably not match anyway), and, at least as importantly,a massive diversion of attention from official duties topursue business ventures outside official duties.

- rapid expansion of the state sector in crop agriculture,and especially in irrigation. Annex 6 describes the CrashProgrammes and State Farms and the present and proposedstate or joint-venture projects in irrigation. All of thesestem from convictions, stated in explicit policy or not 1/,that crop enterprises offer the best hope of rapidly increas-ing national output and of substituting domestic productsfor imports, that state organization of these enterprisesshould be the most direct way of erfecting these increasessince technical and labor inputs can be fully controlled,and that irrigation more fully guarantees yields of high-value crops. Most of these convictions are shared by othercountries of far different political persuasion. Theygrew firm before the turn to scientific socialism andbefore the drought, events which merely deepened Somalia-scommitment to state production and irrigation to guaranteethe country's food security. Yet, faith in this directionhas not been rewarded, as production has stagnated.

1/ For example, the Ministry of Commerce and Industry, in a pamphlet describ-ing the Crash Programmes, states as their objectives: (a) creating jobopportunities, (b) promoting transformation of the land tenure system,(c) increasing food production for the country, (d) orienting youth tomodern farming, (e) motivating cooperation and spirit among youth. Thesegoals speak to legitimate national needs more fully than to the needs ofexisting farmers.


the creation and spread of cooperatives in agriculture,trade, and industry. The extensive organization intocooperatives was clearly meant to reach small producersand to help achieve the socialist transformation withinthe country. The Cooperative Law (No. 40) of 1973envisaged western-style service cooperatives only as aprelude to full collectivization of production.Service, or "multi-purpose", cooperatives and groupfarms were "lower type" cooperatives, while thetransition to "higher type" (collective) cooperatives"shall be the final stage" for the "future socialistpattern of the economy." 1/ In the absence of effectiveextension or a strong tradition of cooperative labor,the inducement to form cooperatives and group far-xs inthe crop sector (and grazing associations or traders'cooperatives elsewhere) was to be the provision of freeor highly subsidized government services including,notably, tractor plowing. Government intervention hashad technical and morale problems, however. As a result,attempts to organize and manage collective responsibilityhave failed; most noticeably on the group farms whichwere to have been small-scale collectives of volunteersworking surplus land with government support. TheCooperatives Department has reverted to a policy oftotal individual responsibility for plots within thefarm. No full-scale collectives of the third stagehave yet been organized and doubts have been expressedas to whether they ever will be.

C. Redistributing Population

3.15 A final aspect of policies to break the poverty of the countrysidehas been the strategy of resettling the population. It is important to notethat this social strategy had been proposed before the drought, and is onlypart of socialist strategy as a secondary matter. The policy arose for tworeasons. First, it is difficult and costly to bring administrative andsocial services to a dispersed and mobile population. This fact had earlysuggested to the Somali government, as it has to many others, the costefficiency of getting nomads into large, settled communities. The commit-ment to large-scale irrigation development also implied the growth of alabor force for irrigation well beyond that available from neighboringvillages. No overall calculations of labor force recruitment to the totalrange of projects was ever done (with the result that there has been seriouscompetition for labor and some shortages even of unskilled labor on the

1/ Quotations from Law No. 40 of October 4, 1973 as printed in AgriculturalCooperatives in Somalia: Handbook, Ministry of Agriculture, Mogadishu,1977.


Juba and in the Northwest). But the ILO/JASPA study estimated (p. 43) that27,800 laborers would be necessary for the agricultural projects in the1974-1978 Plan period.

3.16 It was in this setting that the drought struck in 1974-75. Suddenlythe attention of the nation was riveted not only on the need to care immediatelyfor those thousands of pastoral people bereft of their livestock, but also onthe prospect that all future population increase in the pastoral sectorshould be absorbed outside pastoralism to avoid any further charge on therangelands. The creation of the Settlement Development Agency in 1975(Annex 6) was the concrete response to the emergency situation, but the policyof attempting to redistribute population has taken diverse forms.

- The Crash Programmes were to provide employment andtraining and started by recruiting from the urbanunemployed, whose numbers had already become disturbingto the new government by 1970. The five RevolutionaryYouth Centers, created in 1974, are further institutionsfor training and education, mainly at younger ages, oforphaned or unattached children.

- The Sedentarization of nomads is generally understoodto be national policy, though it has never been explicitlyelaborated. The 1974-1978 Five-Year Development Programme(FYDP) called nomadic pastoralism a "tradition-ridden modeof production" (p. 21) and called for its "transformationinto a more secure and productive one" (p. 38). It maybe fortunate that the policy has not been pursued forits own sake, because worldwide experience has shownthat premature or forced sedentarization of pastoralpeoples simply does not work short of massive coercion.Creating the conditions under which pastoralists do nothave to search for water, forage, minerals, craftmaterials, market opportunities, and other necessitiesprovides the only basis for encouraging their settlement.

- The resettlement schemes were the response to thedrought emergency. In all, 105,000 people were taken fromnearly 20 refugee camps and resettled in the three largeagricultural settlements of Dujuma, Sablale, and KurtunWarey (90,000 total) under Settlement Development Agencyresponsibility, and the four fishing communities of Eil,Adale, Brava, and El liamed (15,000 total) under CoastalDevelopment Authority responsibility. As Table 4indicates, the population (especially of adult males)in the agricultural settlements has declined steadilyand is now at 56 percent of the original total. Moreover,their performance as agricultural production organiza-tions has been extremely poor to date, three years aftertheir founding. The population of the fishing settle-ments has held up, but the number of boats actually


working has declined to about 15% of those originallyavailable. Even if these communities eventually becomeeconomically self-supporting, the huge start-up costs thatwill have been involved obviously preclude the replicationof this technique of resettlement to any major degree.

3.17 Nonetheless, the ILO/JASPA employment study predicted that from 1977to 1981, Somalia's population would grow by 414,000, of whom the 186,000 in thepastoral sector should probably be moved into other pursuits in order toprotect the range (ILO/JASPA, pp. 25-26). If government accepts this position,and to the extent that resettlement is not spontaneous, it is clear that newstrategies will have to be devised to accomplish whatever resettlementtask government takes upon itself over the long term.

D. Summary and Conclusions

The Growth of Class Differentiation in Rural Somalia

3.18 Traditionally, Somalia was a land where class differences wereunmarked. The classic work on northern nomads is I.M. Lewis, "A PastoralDemocracy" (1961), so titled because of the strong political and economicegalitarianism of virtually all household heads. In the agricultural areasthere was somewhat more hierarchy of political power than among the nomads,but still general equivalence of access to resources within each clan-sterritory. 1/ Lewis also spoke of townsmen as the extension of lineage groupsin the countryside rather than as an urban class apart (1961:94), and saidthat Somalia's lack of resources had produced, even during colonialism,"little diversified class structure" (p. 267). While there may be some debateabout the past as Lewis has portrayed it, there can be little doubt that sharpdifferences of income have emergeu. Tables 5A and 5B show the extent of thesedifferences for the public sector as a whole and for a single agro-industrialenterprise, the sugar estate at Jowhar. The wages paid to civil servants andunskilled laborers at all the State Farms and other agricultural enterprisesand at the project construction sites are roughly equivalent to those in thissingle example. Unfortunately the size distributions of different shares ofrural wage income cannot be calculated, since the total numbers of workers atdifferent wage levels is not in any one record.

3.19 Differentials in the rural wage sector are only one small elementof a nascent class structure. Cash income from the sale of labor or ofsurplus produce accounts for only a part of the total income of rural

farming families. The larger share is still from subsistence production.Thus a part-time plantation worker who in addition raises most of hisfood and sells some of his crop surpluses may be better off than a full-time skilled worker whose sole income is his salary. The distribution

1/ I. M. Lewis, "From Nomadism to Cultivation," in May Douglas andPhyllis M. Kaberry, eds., Man in Africa, London: Tavistock, 1969,pp. 59-77.


of total income has never been researched, but it is still possible to speakof an emerging class system. Differentials of power, of access to strategicresources, and of opportunity are now cumulating in Somalia in ways that makethe lives of people in different classes substantially distinct. While someindividuals may overlap two or more categories, it is now possible to speak ofat least the four following classes in rural Somalia: (a) the agents of thestate, (b) rural wage workers, (c) the "mobilized" rural producers, and (d)the residual masses.

3.20 The agents of the state are those middle and higher level salariedworkers whose jobs put them into rural areas during at least part of theircareer. They are the managerial, technical, and skilled workers on stateenterprises, including foreign assistance projects, state farms, agro-industries,and district and regional administration. Their jobs are relatively secureand do not depend on their productivity in economic terms or even theirday-to-day health in the way that a herdsman's or a farmer's income does.Though their numbers are small, they control the fine detail of life in therural areas. They decide which laborers may be hired, they have access totransportation, determine what local suppliers will be favored or whoseservice needs will be met first, administer regulations and justice andsupervise a variety of government operations from purchasing grain to distribu-ting food-for-work. They have ready access to communications channels and arewell versed in their use, so their own needs are easily articulated. Liketheir urban counterparts, they have time and resources to engage in businessconcerns outside work. Because they know the bureaucracy, they can moreeasily provide their children with the help and education they will need toretain high status. Given that control of crucial means of production andredistribution of the social product is in the hands of the state, thesepeople, its local representatives, are all-important gate-keepers to governmentresources. Simply by being there, they become major local political figures.To the extent that the government role in the countryside increases, theybecome ever more significant. A parallel group in the private sector in therural areas, made up largely of merchants but also including some plantationowners, is in the same class position. It is defined by its public sectorsegment because its existence as a class, as we have seen in discussions oflivestock commercialization and the nationalization of certain enterprises, isso heavily dependent upon public policy.

3.21 Rural laborers. This class is like the first in owing its existenceto the activities of the state, and in depending on cash for many or mostsubsistence needs. It consists of construction and plantation workers and thelower-level staff of agro-industries. Much of it is made up of part-timelaborers who, in the main, retain claims on animals or land in the subsistence/produce marketing sector. Little is known of their total earnings or theirmethods of managing jobs with their own production enterprises. Obviouslyit is not a transitional group, for the size and permanence of this classhas grown with the enormous expansion of state enterprises in the last fewyears, and it will grow further if present policies continue. With someeducation and an increasing dependence on wages, its interests in suchsecular services as health and education are similar to those of the class

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in more active control of the wage sector. But it will realize its aspirationsfor steady employment or for better opportunities for its children only if thestate itself fares well, because unlike the first class, whose jobs are quitesecure, the number and duration of jobs for this class fluctuates widely.Petty traders also probably belong to this class, since their livelihoods alsodepend on the circulation of cash in the rural economy. For all of themembers of this class, political power is not a question: often their jobsare far away from their true homes, and the very servility of their status onthe job lends them no confidence in their positions. On the other hand theyare certainly not a rootless or landless class, either.

3.22 The "mobilized" rural producers. This class has arisen through itsmembers' own initiative and contacts with the state and its structures. Theyare the clientele of development projects and the administrative apparatus:the members of cooperatives, the attenders of adult educ-.rion classes, thelocal political leaders of small communities, the members of livestock grazingassociations, the adopters of new technology introduced by agricultural andfisheries agents, the nomads trained as fishermen or farmers in the resettle-ment programs. Through some dynamic of their own resourcefulness, their goodconnections with the first class, or their fortunate location, they are theones receiving a high share of state services. They do not rely so much onthe state as the first two classes: rather, they benefit from it. As itsbeneficiaries they can also be called upon to support it, and they form thebulk of the membership of the mass social organizations that regularly rallyin regional headquarters and provide the hard core of the supporters of theparty. Because they earn their livelihoods independently of the state, theyare more isolated from changes of broad policy than the rural laboring class.They, too, probably send high proportions of their children to school as awager on the urban economy, but their children are more firmly rooted inongoing community life than the more frequently transplanted members of thefirst two classes. As irrigated land or improved range is made available tosmall producers, they emerge with the lion's share of the best resources.Hlistorically, for example, nomadic sedentarization has usually led to increasedsocial differentiation -- those mobilized for quick exploitation of new opportun-ities will come out on top. This class is not necessarily a "progressive"class, however. Traditional society encouraged quick appropriation of availableresources, the difference being that those resources (like fresh grass) wereonly temporary themselves. A class mobilizing its own energies can also bethe most religiously orthodox or most loath to share any newfound opportunities.

3.23 The residual masses. It remains a fact of national life in Somaliathat a large majority of rural crop and livestock producers are beyond thereach of the agents of government. The prices they get for their products,the availability of goods they buy and the circumstances of their access tofacilities depend heavily on government policy, but they are only passivelyconstrained by those policies. The primary goal of their production is fortheir own subsistence, though their choice of subsistence techniques isaffected by market conditions. Many cannot afford to give up their children'slabor to have them attend the tuition-free schools, or if they are nomadscannot afford the boarding costs. By definition they are the last to be

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exposed to development projects, and before the benefits reach them, theprojects may run out of resources. In the nomadic areas they are the ones,for example, now losing range areas to fodder production, being reoriented bythe siting of wells or ranches without much consultation, and being disruptedby the continuing difficulty in obtaining unrestricted access to the Haudsummer pastures. Whether nomads or farmers, they are the most remote fromgovernment, but probably the most directly affected by natural forces. Sothey form the class from whom drought refugees have flowed. While they ownnot inconsiderable standing wealth in the form of land or animals, they arethe "poorest of the poor" in terms of their chances of improving their lot.Whether they will ever move into the ranks of the "mobilized" producersdepends on the cost-effectiveness of government strategies in extendingservices to cover their needs before other classes consolidate their positions.Thus government has clear choices to make about the future of this so farneglected class.

Summary

3.24 Any analysis of class differences necessarily relies on qualitativefactors beyond sheer quantities like the distribution of income. It is thusinevitably more subject than discussions of numerically-based issues. Inraising questions of the emerging patterns of differential influence, oppor-tunity, and income we cannot claim to be definitive. We have merely attemptedhere to stimulate further consideration of, and research on, such matters.The value of class analysis is to focus the attention of all the interestsinvolved on the ways in which policy implementation (and other social forcesthat may be beyond government's influence) are affecting the society in broadterms. The classes we have identified are not necessarilly fixed, nor arethey in overt conflict. Since we have not discussed urban class interests orthe class structure of the whole nation, much analysis remains to be done. Inthe meantime there can be no doubt that class interests have emerged and tothreaten to become more divergent in the future.


IV. PROBLEMS AND PROSPECTS IN SOCIAL DEVELOPMENT

A. General

4.01 Somali development policy is clearly and laudably devoted to thedevelopment of the Somali people, and not simply to abstractions like thegrowth of the economy or of production at large. This commitment to themasses of the citizenry has been expressed in both the statements and theactions of the Government and of the Somali Revolutionary Socialist Party. Asgeneral policies are translated into strategies for dealing with particularproblems, however, there is the danger of diluting the original goals. Somepolicy values may be in competition with others for priority. Strategies forachieving certain goals may work against the achievement of other goals.It is in the spirit of constructively monitoring the social effects of theagricultural development strategies that are now being implemented in thecountry that the following issues are raised. 1/

B. Self-Reliance and Self-Sufficiency

4.02 The concepts of self-reliance and self-sufficiency have differentimplications at different levels of the society. Traditionally, for example,individual rural households were self-sufficient for most of their routineneeds and self-reliant for the remainder by exchanging their labor, productsand loyalties with others £or clothing, social insurance and physical security.By contrast, in the contemporary national society physical security is providedby the state and a large fraction of the population, most obviously those inurban areas, must exchange their labor for virtually all their subsistenceneeds.

4.03 The Government is committed to the policy of self-reliance at thenational level because of two major considerations. First, the country mustbe able to import the things which it does not itself produce. Second,it must build up its capacity to care for its people at times of naturalcalamity. The first of these considerations primarily serves the urbanpopulation, because it is there that the bulk of import purchasing powernow lies. The second, meant to provide national food security duringdroughts, can be met in a number of ways, by exporting high-value goodsto build up national reserves, by raising and storing security food stocks,or by increasing the capacity of individual households and communities towithstand drought years.

1/ See also the 1977 ILO/JASPA report, Economic Transformation in a SocialistFramework, pp. 66-69, for an assessment of the contribution of particularprojects to overall development objectives. Their summary table isreproduced here as Table 6.

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4.04 So far, drought-proofing the nation appears to be taking precedenceover drought-proofing individuals. Indeed, individual families and communitiesare becoming more, not less, dependent on outside forces. This is because:

- strategies for self-reliance have favored large-scale cropproduction schemes rather than smallholder schemes,depriving smallholders of the best croplands and makingincreasing numbers of agricultural laborers dependentfor their livelihoods upon management performance overwhich they have no control;

- strategies for distributing domestic foodstuffs, especiallygrains, have discouraged on-farm storage;

- national land and credit policies outside the banana-growingareas have tended not to encourage capital improvements onfarms and rangelands except under direct government sponsorship;

- the particular commodities (rice, fruits, meat for canning,fish) favored for development or the ways of handling themhave been directed more to the urban or export markets thanto the feedback effects into the domestic rural economy; and

- insufficient attention to the diversification of exportmarkets has made especially the livestock and bananaproducers highly dependent upon conditions in a handfulof foreign markets.

4.05 In short, ways must be examined to increase substantially the effortsbeing made to achieve internal self-reliance and individual self-reliance atthe same time as national self-reliance. These goals are not mutually contra-dictory. But pursuing national self-reliance primarily with an export-orientedstrategy can put a heavy burden on the state as drought-proofer, when thatburden could in fact be shared with individual producers, communities, andthe internal marketing system.

C. Scarce Resources and Equitable Development

4.06 Government is committed to an egalitarian policy of development.This is reflected in its wage and price policies, its careful nationalizationof key sectors of the economy, and its construction of a powerful mass politicalparty to guide national policy. Yet its strategies of resource developmentcurrently run a strong risk of favoring the few rather than the many, andultimately of excluding many rural producers from the potential benefits ofdevelopment. Government must act with great vision to prevent the furthercrystallization of a pernicious class system in the rural areas. Key land andwater resources all over the country are being appropriated for particularpurposes without any overall assessment as to how all the people will beserved. If there were enough high-potential areas for everyone, this question


would not arise. As it is, however, it will at best be a very long timebefore the available good potential land can be improved enough to provide thepopulation anticipated to need it with a reasonable livelihood.

4.07 Favored rangelands are being appropriated by private traders forfodder production and holding areas, and by government both for its own ranchsites and on a first-come, first-served basis for grazing associations andcooperatives among willing nomads. So far there has been little complaintfrom nomads not included in these schemes, but we are forced to wonder whetherthe day will come when the large residual population will wake up to find thatit has been squeezed out of the all the good grazing lands.

4.08 There is a limited quantity of water currently and potentiallyavailable for irrigation and therefore, a limited number of people who candirectly benefit from the irrigation program. To date no application of anegalitarian-oriented strategy for maximizing this number has been attempted,now has this variable of benefit spread been included in decision-makingcriteria. Yet it may soon be too late for smallholders to get any benefit atall except as rural laborers.

4.09 In mixed agricultural areas, the provision of agricultural and socialservices has also tended to favor high-cost alternatives such as tractors andhospitals that can be replicated for everyone only over a very long term.Low-cost inputs and delivery systems in agricultural technology, extensionservices, health and education must take precedence (and indeed some effortsin this direction are beginning) before a structure of favored and disfavoredareas and individuals gets firmly fixed.

4.10 To summarize, rational overall land-use and resource-allocationplanning must be developed quickly to replace the piecemeal appropriation ofresources now taking place. The proposal recently mooted in the NationalRange Agency (NRA) for a national land-use planning unit ought to be pursuedwith vigor, either in the NRA or elsewhere.

D. Popular Participation in Development

4.11 Great strides have been taken by the Somali people and their Govern-ment to root development firmly among the people. The literacy campaigns,the self-help schemes, the crash programs and the mobilization of socialorganizations have all increased the readiness of Somali citizens to play afull role in their own development. Yet there are recognized problems inmaintaining the momentum that has been building up.

4.12 By 1977-1978, primary school enrollments had fallen off to 80percent of their 1975-76 peak, and 35 percent of those registered for Grade 1in that year failed to appear for Grade 2 in the next year. There was,however, a tripling of intermediate education and a doubling of secondaryenrollments over the same period. One survey, at least, has shown a 50


percent lapse of literacy skills among those who had earlier passed the test,while rates of completion of adult education courses are still very low. In1978, 74 percent of those enrolled in the final year of adult education tookthe exam, and of those who took it only 40 percent passed. Rural laborershired by the day or the task in herding, on farms or in other activities canhardly be expected to build up much commitment toward conserving the resourcesin their care. Waste of precious irrigation water, starving of calves tomaximize saleable milk by hired herders, "slaughter-tapping" of gum trees andgeneral lack of concern for the long term are now beginning to result frompractices which deny a worker his fair share of the rewards that can come fromoptimum resource conservation. Settlers in the agricultural and fisheriesresettlement schemes, having benefitted from the massive government droughtrelief effort, are now leaving the settlements in large numbers. If thistrend continues there is not only a grave threat posed to the viability of thesettlements themselves but also to the larger policy which the settlementschemes have represented, that of sedentarizing what is supposed to be atleast the excess population of the nomadic areas. To come to grips with thetheme of disillusionment or alienation that runs through these diversesituations, government must structure systems of incentives and rewards sothat people can build self-confidence in the knowledge that their efforts willbe supported and sustained.

E. Institutions

Uni-Purpose Agencies

4.13 In advanced production systems with highly specialized goals,individual enterprises can be serviced well by equally specialized agencies.In Somalia, however, for the vast mass of the population, agriculturalproduction is not specialized, and should and will not be specialized in theforeseeable future. So-called crop areas have large numbers of nomads andsemi-nomads in them, and the settled farmers themselves gain a substantialportion of their income from the sale of livestock products. In many of therange areas there are possibilities for some agriculture, tree crops, or evenfishing. Somali family agriculture enterprises normally engage in the diver-sified production of meat, milk, handicrafts, grain and other crops in someplaces, the collection of wild products for sale, and the part-time sale oflabor power in others. In this situation it makes little sense for eachspecialized agent of a different government institution to address the Somalismall producer in isolation. The logistics and management problems of fieldingdifferent corps of service agents with sufficient coverage to have a substantialimpact are costly and redundant. Should the crop farmer, for example, followthe advice of an animal husbandry man who tells him to turn his crop residuesinto silage, or that of a crop extension agent who urges him to plow hisresidue back as "green manure"? Who will know enough about the total situationof individual families - their available labor, demands of their herds, andtheir claims on land and water resources - to give those families adequateinformation on which to base their production and investment decisions?

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4.14 These questions are starting to be addressed in a few currentprojects through the concept of a multi-purpose extension service integratinga number of agencies and ministries. It is obvious that this integrationneeds to be followed through on a countrywide basis. In addition, theautonomy granted to regional and district ministry representatives under theleadership of Governors and Commissioners needs to be clearly and forcefullystructured so that local problems can be addressed by a fully collaborativeteam approach.

F. "Missing" Institutions

4.15 In the last ten years, social policy in Somalia has been made byincreasingly wide consultations with the Somali people. But institutions togather the information upon which such policy might be more knowledgeablybased are lacking. The Somali Academy of Arts and Sciences has just beenexpanded to undertake social science research, but no budget or staff have yetbeen added. Certain ministries have research sections within their PlanningDepartments, but they are either under-staffed or not staffed at all. If theydid begin to develop their research arms, it would undoubtedly be with technicalresearch workers rather than planners, ecologists or sociologists who couldexamine each ministry-s mission in a wider social context. So far, socialsciences other than economics have been taught in the national university-sFaculty of Education, whose main mission is to disseminate existing knowledgeto prospective teachers rather than to expand the frontiers of knowledge forthe purpose of informing action for national development.

4.16 There is, in short, a Dressing need for full-fledged, action-oriented research in such fields dS demography, social anthropology, sociology,regional planning, and policy studies. By monitoring ongoing social changeand analyzing existing social conditions, these social sciences can help toensure that the strategies chosen by policy-makers reach their objectives inways that are most beneficial to the largest number of people. The govern-ment should consider a program whereby the proposed Social Science Directorateof the National Academy can be fully developed to do research relevant todevelopment needs.

- 234 - ANNEX 4SOMALIA Table 1



Population, Area and Population Densitv by Region

Region Population Area 2 Population Density('000) ('000 km ) (population/km')

I- Northwest 698 86 8.12

Wagoyi Galbeed 440 45 9.78Togdheer 258 41 6.29

II. Northeast 386 174 2.22

Sanag 145 54 2.69Bari 154 70 2.20Nugal 87 50 1.74

III. Central 397 113 3.51

Mudug 215 70 3.07Galguduud 182 43 4.23

IV. Shebelli River 1,188 82 14.49

Hiraan 147 34 4.32Mid. Shebelli 263 22 11.96Low. Shebelli 398 25 15.92Benadir 380 1 380.00

V. Juba River 651 116 5.61

Gedo 212 32 6.63Mid. Juba 216 23 9.39Low. Juba 223 61 3.66

VI. Interriverine 402 66 6.09

Bakool 100 27 3.70Bay 302 39 7.74

Total 3,722 637 5.84

Source: 1979-81 Three-Year Development Program, Table 19-1.

-235 - ANNEX 4

SOMALIA Table 2



Population by Settlement Type, Region

Total Pop. Nomad: Settled: Non-Agricultural:Region ('000) Subtotal % Subtotal % Subtotal %

I. Northwest

1. W Galbeed 440 271 62 118 27 51 122. Togdheer 258 198 77 42 16 18 7

Sub-total: 698 469 67 160 23 69 10

II. Northeast

3. Sanaag 145 113 78 22 15 10 74. Bari 154 116 75 27 18 11 75. Nugal 87 66 75 15 17 6 7

Sub-total: 386 295 76 64 17 27 7

III. Central

6. Mudug 215 170 79 32 15 13 67. Galgudud 182 119 66 44 24 19 10

Sub-total: 397 289 73 76 19 32 8

IV. Shebelli River

8. Hiran 147 116 79 22 15 9 69. Middle 263 166 63 68 26 29 11

Shebelli10. Lower 398 193 48 143 36 62 16

Shebelli11. Benadir 380 - - - - 380 100

Sub-total: 1,188 475 40 233 20 480 40

V. Juba River

12. Gedo 212 181 85 22 10 9 413. Middle Juba 216 141 63 52 24 23 1114. Lower Juba 223 155 70 48 22 20 9

Sub-total: 651 477 73 122 19 51 8

VI.Interriverine

15. Bakool 100 79 79 15 15 6 616. Bay 302 100 33 141 47 61 20

Sub-total: 402 179 45 156 39 67 17

TOTAL: 3,722 2,184 59 811 22 727 20

ANNEX 4Table 3

SOMALIA



Estimated Average Number of Livestock Per Agricultural Household,by Region, 1975

TotalSheep & Livestock

Region Camels Cattle Goats Units

I. Northwest

1. W Galbeed 7.8 1.9 68.2 16.12. Togdheer 6.7 0.9 37.8 11.2

Sub-total: 7.3 1.5 56.6 14.2

II. Northeast

3. Sanaag 7.6 2.7 80.9 17.94. Bari 8.3 0.6 120.1 20.85. Nugal 9.7 0.8 52.1 15.6

Sub-total: 8.3 1.4 90.3 18.6

III.Central

6. Mudug 18.8 8.5 97.0 35.37. Galgudud 11.3 6.2 66.3 22.9

Sub-total: 15.7 7.6 85.0 30.3

IV. Shebelli River

8. Hiran 16.5 6.1 51.6 26.59. Middle Shebelli 5.0 7.8 22.2 13.510. Lower Shebelli 4.4 6.3 4.3 9.911. Benadir -_--_

Sub-total: 7.0 6.9 19.8 14.5

V. Juba River

12. Gedo 19.1 12.9 30.0 32.413. Juba (Before separation 3.7 12.9 3.2 14.3

into two regions)Sub-total: 8.9 12.9 12.5 20.5

VI. Interriverine

14. Bakool 10.1 5.3 17.3 16.115. Bay 7.5 5.3 5.6 12.3

Sub-total: 8.3 5.3 9.0 13.4

TOTAL: 8.9 5.3 41.3 17-.3

Notes: 1. Source: Table 19-4 of 1979-1981, Three Year Development Plan.Revised Draft.

2. Livestock units calculated on the basis of FAO norms: Cattle = .8;Camel = 1; Sheep and Goats = .1.

- 237 - ANNEX 4Table 4

SOMALIA



Earnings Differentials in Government Employment

Average Gross Coefficient of Differ-Reference Group Monthly Earnings entials in Earnings

(So.Sh.)

1) Messenger(Grade 4 on the "D" Scale) 220 1.0

2) Clerical and Technical Staff(Grade 2 on the "C" Scale) 660 3.0

3) Executive & Senior Technical Staff(Grade 1 on the "B" Scale) 1,030 4.7

4) Top Administrative & ProfessionalStaff

a) Middle Ranking SeniorAdministrator (A-4) 1,160 5.3

b) Director of Department (A-3) 1,950 1/ 9.0

c) Director General of a Ministry(A-2) 2,500 1/ 11.0

d) Minister 5,000 1/ 23.0

1/ After accounting for all allowances such as housing and responsibilityallowances.

Source: Computed from the salary scale attached to the Civil Service Law. FromILO/JASPA, p. 339.

- 238 - ANNEX 4

Table 5

SOMALIA



Earnings Differentials in SNAI Sugar Factory, 1976

Average Gross Coefficient of Differ-Occupational Group Monthly Earnings entials in Earnings

(So.Sh.)1) Unskilled Laborer in Plantations 200 1.0

2) Unskilled Laborer in the Factory 315 1.6

3) Semi-skilled Laborer in the Factoryand in the Field 600 3.0

4) Skilled Artisans

Electrician 690 3.4Mechanic 780 3.9Pan-Boiler 815 4.0Refiner 510 2.9

5) Technicians

Engineer 2,350 12.0Agronomist 1,575 8.0

6) Administrative & Senior Clerical Staff

Accounting Officer 795 4.0Middle Grade Clerk 693 3.5Low Grade Clerk 635 3.2

7) Managerial Staff

Head of Services 1,650 8.3Director of a Department 2,675 13.4General Manager 3,900 19.5

Source: Data supplied by the SNAI Sugar Factory - JOWHAR. From ILO/JASPA, p. 330.

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- 240 -

ANNEX 5

SOMALIA


Production Alternatives and Technological Choices

Table of Contents

Page No.

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

II. COMPARATIVE ADVANTAGES OF CROPS ......................... 1

A. Methodology ........................................ 1B. Main Results ....................................... 3

III. COMPARATIVE ADVANTAGES OF FARMING SYSTEMS ............... 5

A. Methodology ........................................ 5B. Main Results ....... ................ 7C. Additional Considerations ..... ............ 9D. Conclusion .................... ..................... 11

IV. CROPS DEVELOPMENT STRATEGY .................. ........... 12

ANNEX 5- 241 - Page 1

SOMALIA



I. INTRODUCTION

1.01 Very few reliable data are available on Somalia's agriculture. Datafrom countries with conditions generally similar to Somalia's were thereforeused as a guide in comparing the relative advantages to the national economyof one agricultural commodity or production system over another. Therecommendations concerning an appropriate agricultural strategy and theprojections of its long term effects on demand and supply of major crops werealso established using such data. While such an approach has obvious short-comings, it seems to be the only feasible one in view of the lack of documentedinformation. The sensitivity of the results has been tested under variousassumptions and they appear generally valid.

II. COMPARATIVE ADVANTAGES OF CROPS

A. MethodologV

2.01 The range of crops considered was limited to those which havealready been successfully grown in Somalia or for which production andmarketing prospects seem particularly favorable. The comparative advantageof these crops is determined by the gross margin between the value of theoutput and the direct production costs excluding labor. The higher themargin, the more the crop contributes to covering general and overhead farmcosts, including labor.

2.02 Since production decisions are usually taken on the farm, the valuesboth of input and of output have to be calculated as at the farmgate. Toeliminate the distortions resulting from national price policies and to avoidconfusion over the official and parallel market prices, world prices weresystematically used. Relative prices of various commodities can be expectedto change over time on the international market. Since sizeable amounts ofSomalia's agricultural commodities are either imported or exported, theseprice movements are expected to have an impact on the comparative advantageof crops in Somalia. For the price projections, IBRD Commodity Price Forecasts(1979 edition) have been used up to 1990 and held constant thereafter. Therelative farmgate values of crops considered as potential exports or as importsubstitutes are not identical. In the first case world prices have to bereduced by the transport and handling costs between the farmgate and theexport markets; in the second they have to be increased by the transportationand handling costs to the farmgate in Somalia. These (higher) import parityprices were applied for those commodities and inputs that are normally imported


and which comprise basically all foodgrains and sugar. The (lower) exportparity prices were used for commodities that are normally exported, includingbananas and livestock. However, in the long term price projections, exportparity prices have also been used for commodities where domestic production isexpected to exceed demand and an exportable surplus is likely to be generated.These crops include cotton and sesame. Details on price prospects and pricelevels of different crops are found in Tables 1-18 of this annex.

2.03 The competitiveness of various crops depends not only on price butalso on the physical yields and the amount of resources used. Presently,crop yields are very low in Somalia and resources used in the productionprocess are not combined efficiently. There is thus room for substantialimprovement of the input/output ratios. Based on present yields and givenpresent production technology, it is thought that yields could be increasedover a 20-year development period by between 50 percent and 300 percent,depending on the crop, and that a more rational use of farm inputs could beachieved at the same time. The assumptions for present and projected cropyields are summarized as follows:

Crop Present yield Projected yield

… ------------ ton/ha/year ----------Dryland Crops

Sorghum 0.4 0.8Pulses intercroppedwith sorghum 0.07 0.15Beans 0.3 0.5

------------ ton/ha/season ---------Irrigated Crops

Maize 0.8/1.5 a/ 2.5/3.0 a/Sesame 0.3 1.0Paddy rice 2.0 3.0Seed cotton 0.75/0.5 a/ 2.5Groundnuts (unshelled) 0.8 2.5

------------- ton/ha/year --------

Bananas 15.0 30.0Sugarcane 45.0 75.0

a/ Private farms/state farms.

2.04 Two criteria were used in assessing each crop: (a) its valueto the Somali economy as a whole; and (b) its contribution to farm income.The first approach makes use of economic prices, whereby foreign exchangecosts and earnings are converted at a shadow rate of exchange. For thesake of simplicity the effective rate under the present franco valuta system


(US$1=So.Sh.9) has been adopted. This is the rate that would likely prevailif Government's exchange control restrictions were removed. Customs dutiesand other transfer payments in local currency have been excluded sincethey do not increase the value to the economy of the commodity in question.The second approach, which aims at estimating the contribution of the cropto farm income, uses financial prices and foreign exchange is valued at theofficial rate. All taxes, tariffs and price subsidies are included sincethey do, in this case, represent costs and benefits. An additional refinementwas to account for the differing labor requirements of the crops. Directproduction costs do not include labor costs (para. 2.01) although this mightbe the most important input. Therefore, as an additional indicator, thegross margins have been related to the number of mandays required for theproduction process.

B. Main Results

2.05 The comparative advantage of different crops is detailed inTable 19 of this annex. For projected prices and yield levels, the mainresults may be summarized as follows:

Gross Margin to the Economy Gross Margin to the Farm[economic prices] [financial prices](1977 So. Sh.) (1977 So. Sh.)

Crop per ha per man-day per ha per man-day

Bananas 23,000 80 7,000 25Sugarcane 6,000 60 4,000 40Cotton 7,400/5,000 a/ 70/40 a/ 4,800/3,300 a/ 45/25 a/Rice 4,000/3,000 a/ 80/60 a/ 2,000/3,000 a/ 60/45 a/Sesame 4,000 100/70 a/ 2,000 50/30 a/Groundnuts 3,000/3,500 a/ 45 2,000 30Maize 2,000/1,500 a/ 40/20 a/ 1,500/1,000 a/ 30/15 a/Sorghum/pulses 1,000 14 700 10

a/ Large scale/smallholder technology.

2.06 Banana production is shown to be the most profitable long termactivity, both for the economy as a whole and for the individual farm. How-ever, if the margins are related to the necessary labor input, the crop isless attractive than certain seasonal crops with higher returns to labor. Atpresent world prices and current technology, bananas also produce the highestgross margins to the economy of all crops in Somalia; however, existingproducer prices and yield levels do not allow the farm to cover significantlymore than the direct production and marketing costs excluding labor. Theobvious policy adjustment is to raise the producer price to stimulate higheryields; this could be achieved either by adjusting the effective foreignexchange rate or by cutting marketing costs.

- 244 -ANNEX 5

Page 4

2.07 Sugarcane is the second most profitable plantation crop. Sugarproduction from sugarcane is attractive as an import substitute with grossmargins to the economy of about So.Sh. 6,000 per ha. As an export commodity,sugar would probably rank below other seasonal irrigated crops in profitability.Sugar production in Somalia is an integrated large scale activity coveringall operations from the cultivation of sugarcane to the production of sugarand alcohol. Returns to the "farm" can therefore not be compared to those ofother crops.

2.08 Cotton is the most attractive of the seasonal crops considered;gross margins per ha for the economy as a whole are between So.Sh. 5,000 and7,500 per ha, depending on whether small or large farm technology is applied.Like bananas, cotton is less attractive to farmers than some other seasonalcrops such as rice and sesame because of high labor requirements which leadto a relatively lower labor productivity. Under the present conditions ofimport substitution, cotton is the most profitable crop to the economy afterbananas. However, given the low existing producer price, margins to thefarmers are low. Since cotton is a cash crop produced mainly by smallholderfarmers, production may be expected to react significantly to price incentives.

2.09 Rice produces gross margins below that of cotton but yields thehighest returns per man-day of all crops. At present, rice has a return tothe economy of about half the future values indicated above. It is still anattractive crop to the farmers, however, because of the subsidized producerprice which is about 75 percent higher than the import parity price. This, ofcourse, implies a loss to the economy as a whole since rice could be importedcheaper from abroad and well-managed rice production in Somalia is competitiveand profitable even at world price levels. Producer prices could and should,therefore, be gradually reduced to these levels. Such an adjustment processwould be facilitated by the expected rapid real increase of rice prices in theinternational markets (+ 30 percent by 1990).

2.10 Sesame produces gross margins similar to rice and is also com-petitive in labor productivity. It is a crop already widely grown in Somaliaand has the lowest water requirements of irrigated crops. Present producerprices are among the lowest of all crops and amount to about 60% of theimport parity value. Since sizeable quantities of oil or copra, which couldbe replaced by Somali sesame, are presently imported, and since exports toJapan can be expected, an adjustment of the producer price would be beneficialto the farmers and the economy.

2.11 Groundnuts are one of the less profitable crops under irrigation butthey have, however, several compensating advantages. Being a leguminous cropthey enrich soil fertility by fixing nitrogen. They have moderate waterrequirements. They are used as protein-rich food crop or as cash crop forproduction of vegetable oil. As in the case of sesame, present producerprices are very low and there is ample room for price increase to stimulatecommercial production and substitute for imports of vegetable oil.

- 245 -

ANNEX 5Page 5

2.12 Maize although at present the second most important food crop inSomalia after sorghum is, in the long term, less competitive under controlledirrigation than many other crops. Maize cultivation has, however, importantadvantages in the short term which favor including it in the production plans.It is the most important food crop grown by small farmers on irrigated landwhich does not need any industrial processing and cultivation practices arerelatively simple and widely known. Improved higher yielding varieties havebeen identified by the Agricultural Research Institute and these could havean immediate impact on production, provided that seed production and supplycan be organized. Furthermore, although the present producer price isLoughly in line with the import parity price at the official exchange rate,it could be increased as a temporary measure to a level more closely reflect-ing the value of maize to the economy. Overall, maize appears to have thebest prospects of all crops for production increases in the short term.

2.13 Dryland Crops. Sorghum, pulses and rainfed groundnuts cannot bedirectly compared with irrigated crops because at present the only alternativeuse of the dryland areas would be for grazing. In the longer term, and withincreasing integration of livestock into crop production, fodder could be partof a dryland rotation. Under the present prices and production technologies,dryland crops contribute about So.Sh. 300 per ha and year to farm incomefor overhead and labor costs. With technical improvements, the return to thefarm could be gradually doubled and the return to labor increased by about50 percent.

2.14 Producer prices for dryland crops, except for groundnuts, arecurrently equivalent to import parity values. Unless a different foreignexchange rate or subsidies were considered, there is only a limitedpossibility of achieving price improvements through making the marketingchannels more efficient. It may also be assumed that producers would reactmuch less to price adjustments of dryland crops than of other crops due totheir subsistence character. At present only about 20 percent of productionpasses through official marketing channels.

2.15 Wheat. No production data are available but there are indicationsthat wheat has been grown successfully on bigger family farms in highlandareas of Northwest Somalia under relatively favorable soil and rainfallconditions and under flood irrigation. Experience with large-scale productionunder the Agricultural Crash Programme has been disappointing. The presentproducer price for wheat is double that of sorghum or maize and contains alarge subsidy element; it could be imported at about two thirds of thisprice. In order to provide for rational use of the resources of the country,wheat prices should be gradually adjusted to import parity prices, similar tothe procedure recommended for rice.

III. COMPARATIVE ADVANTAGES OF FARMING SYSTEMS

A. Methodology

3.01 Most of the irrigated crops can be grown under different farmingsystems. The alternatives in Somalia are either large scale farms under

- 246 -

ANNEX 5Page 6

some form of Government control, or family smallholdings. Dryland farmingareas are almost exclusively settled by smallholders, most of them shiftingcultivators and all attempts at large scale mechanized production in theseareas have so far failed. The comparative advantages of farming systems haveto be carefully assessed not only from the standpoint of optimum farm sizeand organization, but because the ranking of crops according to their grossmargin per ha or per man-day can be misleading for a variety of reasons.

3.02 Except for bananas and sugarcane, irrigated crops are grown inrotation. This is partly for agronomic reasons of soil fertility, and pestcontrol and partly to use the farm-s land, labor and capital resources tothe full. In the dryland areas, crops are traditionally interplanted, givingvariety in space rather than in time-sequence. In consequence, average marginsof rotations or cropping systems are a more appropriate measure of the com-petitiveness of different forms of agricultural production than the comparisonof individual crops. Furthermore, although animal husbandry is not yet fullyintegrated into the crop cultivation at present, livestock constitutes anindispensible element of the dryland farms and has thus to be considered inconjunction with the cropping system. The climatic conditions in Somaliaallow several harvests per year under conditions of controlled irrigation withsecure water supplies. This multiple cropping possibility further increasesthe competitiveness of seasonal crops relative to perennial or pluriannualplantations. Finally, in ranking individual crops by margins per ha and perman-day, (para. 2.05) certain farm-specific costs such as labor and overheadcosts (management, depreciation of capital investments, taxes) were notincluded and this is a further factor which is liable to make that rankingmisleading if considered in isolation.

3.03 In order to compensate for these possible sources of error, ananalysis was made of six different farm models.

Model I - a smallholder farm of about 4 ha in a rainfed area. Sorghumcultivation intercropped with pulses and a mixed animalhusbandry of about three head of cattle, five camels and sixor seven sheep and goats are the basic activities. Animalhusbandry would rely mainly on the resources of areas outsidethe farm. It was assumed that the introduction of animaltraction would allow expansion of the cropped area by about25 percent. 1/

Model II - a smallholder farm of about 4 ha under controlled irrigationcropped with food and industrial crops mainly groundnuts,rice and cotton, at 150 percent intensity. 2/

1/ This farming system is described in IBRD Appraisal of the Bay RegionAgricultural Development Project, November 29, 1979.

2/ The farming system is described in principle in the feasibility studyfor the original Afgoi-Mordile Project by Hunting Technical Services(1969).

- 247 -

ANNEX 5Page 7

Model III - a large-scale food crop farm, comprising 400 ha of irrigatedland which is under food crops (200 ha rice, 200 ha maize,100 ha groundnuts and 100 ha sesame) at 150 percent intensity.This farm model is smaller than the state farms presentlyenvisaged by the Somali Government which are believed to betoo large for efficient management.

Model IV - a large-scale mixed farm, comprising 400 ha of irrigatedland which is under food crops and industrial crops (200 hacotton, 200 ha sesame, 100 ha rice and 100 ha maize) at150 percent intensity.

Model V - a banana farm on 100 ha irrigable land, of which 60 ha arebananas in production, 15 ha bananas not yet in production,15 ha food crops (mainly maize) and 10 ha fallow.

Model VI - A sugarcane plantation on 7,500 ha irrigable land, of which6,000 ha are planted and 1,500 ha are fallow.

No model was established for smallholder farms in areas with flood irrigation.Although presently significant, their number will be reduced as a consequenceof river regulation (reservoirs) and the rehabilitation and expansion of thecontrolled irrigation systems.

3.04 The comparative advantage of different farming systems was measuredby their net farm benefit at full development. The net farm benefit is thevalue of the total annual production minus the direct production costs, hiredlabor costs and the costs of management or advisory services such as extension.As family labor does not receive a fixed wage but is remunerated out of theresidual farm income at the end of the year and mainly in kind, family laborcosts are not included as a cost item. However, for this type of farm, netfarm benefits have been related to the labor input. At this stage of assessmentof the competitiveness of farming systems, the cost for the development ofland and irrigation infrastructure has been excluded.

B. Main Results

3.05 The comparative advantages of the different farm models in the longterm are detailed in Table 20 of this annex. At projected prices and tech-nology levels they can be summarized as follows:


Annual Net Farm Benefit-aValue to the Economy Net Income of Farm

[Economic prices] [Financial prices]Farming system per ha per L.U.b/ per ha per L.U.b/

------------ (1977 So. Sh. 000) -----------

Controlled Irrigation

Banana farm 13.0 n.a. 3.1 n.a.Smallholder with cotton,rice, groundnuts 6.2 8.3 4.1 5.4

Large farm with cottonand sesame 5.9 n.a. 3.1 n.a.

Sugarcane plantation 3.8 n.a. 2.2 n.a.Smallholder with sesameand maize 3.6 4.8 2.1 2.8

Large farm with rice andmaize 3.5 n.a. 2.0 n.a.

Dryland Areas

Smallholder with sorghum/pulses and mixed animalhusbandry 1.2 2.6 0.9 1.8

a/ As defined in para. 3.04 and also excluding cost of land and irrigationdevelopment.

b/ L.U. = Labor Unit. Three labor units were assumed for family farms.Since labor on large farms is remunerated by payment of fixed wageswhich form part of the direct production costs, net farm benefits inlarge farms cannot be related to L.U.

3.06 At the projected prices and yield levels, banana production isby far the most profitable agricultural activity for Somalia's economy; netfarm benefits per ha are about twice those of the best farming systems withseasonal crops under irrigation. However, assuming a continuation of theexisting producer price and marketing system, incomes to the farmers willnot be significantly higher than for other crops. Indications are, thatat present, banana farmers operate at a loss, due to low yields and heavyoverhead costs and any increase in production would be contingent uponeffective incentives (para. 2.06).

- 249 - ANNEX 5

Page 9

3.07 Crop combinations with cotton, rice, sesame and groundnuts ranksecond after banana production in value added to the economy and are expectedto provide the highest farm income. The income per man-day for family laboron small farms is about twice as high as what has been calculated for hiredlabor on large scale farms. In the long-term, these rotations should occupythe bulk of the irrigated areas.

3.08 Crop combinations with maize, with either sesame (on smallholdings)or rice (on large scale farms) are less competitive in the long term thanfarming systems with cotton as the main cash crop. A particular disadvantageiv' the low return to family labor which amounts to about half of that on thecotton/rice farms, and which is thus of the order of the wage rates forunskilled labor, with no premium for farm management and risks. However,because of the many short-term advantages of maize cultivation (para. 2.12)these farming systems will prove competitive so long as demand for maizeexceeds local production.

3.09 Sugarcane plantations producing sugar in excess of to domestic demandappear to provide similar returns for the economy as the farms cropping maizein combinations. Sugar production is, however, highly competitive in thepresent import substitution situation.

3.10 The dryland farming system is a separate category which cannotdirectly be compared with the irrigated farms. Value added and labor incomesare low, reflecting on one hand the abundance and on the other the low marginalvalue of land and labor resources. These farms represent the last resort foremployment and subsistence in Somalia.

C. Additional Considerations

3.11 The above calculations are inconclusive as to whether large or smallfarm organization is the more appropriate for development of agriculturalproduction in Somalia. This is not the case for dryland farming, wherethere is no alternative to the low cost technology of smallholders. Forthe irrigated sector it appears, however, that the crop combinations, ratherthan the size or organization of the farm, is the decisive feature forfinancial and economic competitiveness. Additional criteria have thereforeto be introduced relating to: (a) past experience with different systems;(b) investment costs for new developments; (c) managerial requirements; and(d) foreign exchange requirements and earnings.

3.12 Past Experience. Somalia has a history of successful large scalecommercial farming enterprises in the banana industry. However, with thenationalization of the marketing services and most of the foreign-ownedplantations, production, yields and returns declined. The farms are hardlyable to cover their operating expenses generally and there is no incentive


for improvement. Bananas are not grown by smallholders at all. Sugarcaneis exclusively produced in Government-owned large scale units as part ofsugar processing plants. Experience with the Johwar sugar plantation ismixed. Only recently efforts were started to reverse the declining trendin production. The new sugar cane plantation being established in thelower Juba valley is designed to make maximum use of mechanization includingautomated sprinkler irrigation and harvesting machines. A substantial partof cotton production comes from state farms. Available information indicatesthat present yields on these farms are considerably lower than those achievedon private holdings. Rice is another crop grown predominantly on Statefarms; it is a relatively new crop and optimum production technology has notyet been established. All other crops are found both on small and on largefarms. Experience shows that despite the use of mechanization, of high costinputs and better access to irrigation water, large scale crop producers donot achieve significantly higher yields than small scale producers exceptin the case of maize. Due to higher expenditures for inputs and payment forlabor and management, the per ha cash income and the returns to the economyas a whole generated by these large farms are lower than the combined perha value of cash income and subsistence on smallholder farms under similarconditions. In many cases, Government subsidies are indispensible to thesurvival of state farms. There is practically no experience in Somaliawith government organized smallholder settlement schemes under irrigation.The competitiveness of existing smallholdings versus large Government runproduction units suggests, however, that small, owner-operated farms have aconsiderable development potential.

3.13 Investment. Investment costs per ha for the development of newfarms under controlled irrigation are higher for smallholder schemes than forlarge scale farm units. More feeder roads are needed and more land is lost tohomesteads, borders, roads, etc., reducing the net area available for irriga-tion. Additional water distribution facilities are usually required, moreover,due to the fragmentation of the holdings. However, if properly organized,small settlers become highly motivated at the prospect of long-term possessionof their own farm and tend to invest plenty of unpaid labor and care intotheir plot which more than counterbalances higher infrastructure costs.

3.14 Management. Irrigation development is management intensive bothfor large farms and smallholder schemes. Large farm production is veryresponsive to good management and improvements in the production process canbe achieved rapidly on a wide scale. Large farms are, however, very vulner-able to weak management unable to be decisive and exercise strict control.Under such conditions, work reaches an almost total standstill with lossesbeing covered from outside resources. Comparatively, smallholder schemes maybe slower in developing optimum production standards, but are also much lesssubject to failures of management. The threat of losing the means of sub-sistence coupled with the opportunity of realizing higher incomes ensuresthat work and production continue on such farms, albeit perhaps in a sub-optimal manner. Instead of requiring detailed and direct decisions fromthe administration, smallholders can be guided by overall regulation, arereceptive to supporting services and are open to incentives, a systemrequiring less control and less demanding of management resources.


3.15 Foreign Exchange. The various farming systems considered showsignificantly different foreign exchange costs and benefits. The costsconsidered here are direct production and marketing costs and do not includeinvestments in land and water development.

(a) Gross Foreign Exchange Earnings Per Ha. Banana farms are expectedto produce the by far higest gross foreign exchange earnings per land unit.Farms producing seasonal crops under controlled irrigation, both large scaleand smallholder, rank significantly lower. Food and export crops givesimilar gross foreign exchange returns as long as import parity prices areapplied for food. Were Somalia to achieve self-sufficiency in cereals, nocomparative advantage would result from further expansion of cereal productionfor export. Dryland farms rank lowest in terms of gross foreign exchangeearnings per ha, generating about one third as much as irrigated farmsproducing seasonal crops in an import substitution situation.

(b) Net Foreign Exchange Earnings. The various farming systems alsorequire different amounts of foreign exchange expenditure to achieve certainforeign exchange earnings. Large scale irrigated farms producing seasonalcrops would expend over half the value in foreign exchange of their productionin foreign exchange production and marketing costs due to their high degreeof mechanization. Banana farms, although entailing by far highest foreignexchange costs per ha, appear to give a slightly more favorable ratio betweenforeign exchange earnings and costs than the large scale seasonal crop farms,due to their superior gross earnings per ha. The ratio between foreignexchange costs and earnings obtained from the model of smallholder irrigatedfarm is about 1:4 and shows a further significant improvement, due to the morelabor intensive technologies applied in those farms. Smallholder drylandfarms, with their low cost technology, have a very favorable ratio of about1:20 in a food import substitution situation.

(c) Local Costs/Net Foreign Exchange Earnings Ratio. A wide ratio(i.e., relatively high local production and marketing costs and relative lownet foreign exchange earnings) was obtained from the model of large scaleproduction systems including banana farms, as a result of (i) the largeamounts of imported inputs used; and (ii) of being obliged to pay wages atfixed rates. With present technology and at present yield levels, the ratiofor these farming systems is, with fairly wide variations, higher than theofficial exchange rate ratio and fluctuates between 8:1 and 12:1. At theprojected production and technology levels, the ratio tends to be around thepresent official exchange rate. Smallholder family farms, both irrigated andrainfed show a ratio of about 2 or 3:1 as the main input, labor, is notaccounted for.

D. Conclusion

3.16 In summary, while some plantation crops such as sugar and bananasappear to be advantageous as large scale operations with closely integratedmarketing and processing services, larger scale Government farms producingseasonal crops have not proven superior to the alternative forms of farmorganization, such as smallholder schemes. The latter have the advantageof requiring fewer management and foreign exchange resources.


IV. CROPS DEVELOPMENT STRATEGY

4.01 Any strategy to develop crop production in Somalia should setpriorities such as the following to maximize economic and financial benefitsto the nation and to the farmers. Banana production for export should beintensified and expanded to the limits of prospective markets. This wouldrequire a review of prospective markets and prices for bananas, and in orderto diversify production and risks, for other promising tree crops such ascitrus fruits. The expansion of tree crop production would also require areview of the services, price policy and marketing operations of the NationalBanana Board. All expansion of the cultivation of these perennial cropsshould be limited to the Juba Valley because irrigation water supply isrelatively secure there. Sugar production should also be intensified andexpanded to meet domestic demand. The rehabilitation of the facilities atJohwar and the new sugar production complex under development near Gelib inthe lower Juba valley are expected to lead to this result. The feasibilityof sugar exports should be further explored before additional capacity iscreated. Sugar production is heavily subsidized in the industrialized nationsand export prospects are therefore uncertain. In addition, new sugar produc-tion complexes in Somalia would: (a) require heavy inputs of capital andmanagement assistance from abroad; and (b) severely reduce the availabilityof irrigation water for other crops (sugarcane is one of the crops with thehighest water demand).

4.02 Of the seasonal crops under controlled irrigation, cotton andsesame have the best long-term market and price prospects and their productionshould therefore be emphasized in areas under irrigation development. Bothcrops would initially substitute for imports but would subsequently becomeexport commodities, either as raw materials or, after processing in Somalia,as cotton lint, cloth, or vegetable oil. Further advantages are that thesecrops can be produced under a variety of farming systems and they thus allowfor flexibility. Their irrigation water requirements are relatively lowcompared to those of other crops. Food grain production under irrigation,such as maize and rice, should be expanded to the limits of the domesticdemand, i.e., until self-sufficiency is achieved. Due to high production andmarketing costs in Somalia and low f.o.b. export prices, export prospects arenegligible. Rice would have to be progressively replaced by other less waterdemanding crops to the extent that availability of irrigation water become anincreasing constraint.

4.03 General. Intensification of crop production in areas currentlyirrigated should have priority over expansion of such areas which wouldinvolve high infrastructure investments. Irrigable lands are under-utilized at present and considerable potential exists for increasing yieldsand lowering production costs per unit of produce through better managementof the resources already available.


4.04 Technological opportunities for the dryland farming areas arelimited to gradual improvement of existing cropping and farming systemsthrough introduction of labor saving techniques such as animal traction whichwould allow an expansion of the cultivated area on the farms. Intensificationand higher crop yields are limited by natural conditions although improvementscould be expected from better soil and water conservati.on methods, timelyseeding, use of clean and improved seed, better weeding and plant protection,and improved storage.

- 254 -

ANNEX 5

SOMALIA



List of Tables

Table 1: Price Prospects for Agricultural Commoditiesfor 1990

2: Import Parity Prices for Maize3: Import Parity Prices for Sorghum4: Import Parity Prices for Wheat5: Import Parity Prices for Rice6: Import Parity Prices for Groundnuts7: Export Parity Prices for Groundnuts8: Import Parity Prices for Sesame Seed9: Export Parity Price for Sesame Seed10: Import Parity Prices for Cotton11: Export Parity Prices for Cotton12: Export Parity Prices for Bananas13: Export Parity Prices for Livestock14: Import Parity Price for Sugar15: Export Parity Prices for Sugar16: Import Parity Prices for Oil17: Export Parity Prices for Grapefruit18: Price Levels of Agricultural Commodities

in Somalia, 1976-7819: Ranking of Crops20: Ranking of Model Farming Systems

- 255 - ANNEX 5I'able 1

SOMALIA



Price Prospects foL__ricultural Commodities for 1990

A. World Prices 1/ Index 1977 = 100

1. Sugar 151

2. Rice 140

3. Beef 138

4. Maize, Wheat 141

5. Sorghum 134

6. Cotton 99

7. Bananas, Citrus 91

8. Groundnuts 82

B. Somali Producer Prices 2/ Index 1977 = 100

Import ExportParity Parity

1. Livestock(live animals) -- 250

2. Bananas -- 223

3. Sesame 215 199

4. Maize 180 --

5. Shelled Groundnuts ]80 100

6, Seed Cotton 177 123

7. Sorghum 160 --

8. Wheat 109 --

9. Rice 66 --

1/ Source: IBRD Commodity Price Forecasts, May 1979.

2/ Possible change of 1977 producer prices to reflect 1990 projected world priceparity values at the exchange rate of US$ 1 = So.Sh. 9.0 (see alsotables 2 - 18).

-256 - ANNEX 5Table 2

SOMALIA



Import Parity Prices for Maize(Constant 1977 Prices)

---- Economic Prices- -----Financial Prices----Average Projection Average Projection

Unit 1976-78 1990 _ 1976-78 1990

F.o.b. Gulf Ports(US No. 2 Yellow) US$/ton 102 135 102 135

Add: Insurance andFreight US$/ton 40 40 40 40

C.i.f. Mogadishu US$/ton 142 175 142 175

F.o.B. Mogadishu So.Sh.iton 1,278 1,575 894 1,102

Add: HandlingCharges'/ So.Sh./ton 86 86 272 272

Free Mogadishu Warehouse So.Sh./ton 1,364 1,661 1,166 1,374

Less: Handling 21Margin ADG- " (147) (147) (250) (250)

Less: Transport toMogadishu " (160) (160) (160) (160)

Farngate Value 1,057 1,354 756 964

Economic Financial

1/ Handling Charges from ship to Warehouse So.Sh./MTLocal Agent Fees 4 4Landing Charges 45 45Insurance 20 20Transport to Warehouse 10 10Stevedoring 7 7Bank Charges -- 8Excise Duty -- 178

86 272

2/ Handling Margin of ADC So.Sh./MTMunicipal Tax -- 20Central Government Tax -- 70Bank Interest -- 15Empty Bags 30 30Postal Charges 5 5Porterage 20 20Field Transport to Storage 50 50Storage Expenses 5 5Fumigation 7 5Administration 30 30

147 250

August 9, 1979


SOMALIA



Import Parity Prices for Sorghum(Constant 1977 Prices)

----Economic Prices--- ---Financial Prices---Average Projection Average Projection

Unit 1976-78 1990 1976-78 1990

F.o.b. Gulf Ports(US No. 2 Yellow) US$/ton 95 118 95 118

Add: Insurance andFreight US$/ton 40 40 40 40


F.o.b. Mogadishu So.Sh./ton 1,215 1,422 850 995

Add: Handling Charges 1/ " 86 86 272 272

Free Mogadishu Warehouse " 1,301 1,508 1,122 1,267

Less: Handling MarginADC 1/ " (147) (147) (250) (250)


Farmgate Value " 994 1,201 712 857

1/ See Table 2.

August 9, 1979

ANNEX 5Table 4

- 258 -

SOMALIA



Import Parity Prices for Wheat(Constant 1977 Prices)

--- Economic Prices--- -- Financial Prices--Average Projection Average Projection

Unit 1976-78 1990 1976-78 1990

F.o.b. Thunder Bay(Canadian No. 1) US$/ton 132 163 132 163

Add: Insurance &Freight US$/ton 50 50 50 50


F.o.b. Mogadishu So.Sh./ton 1,638 1,917 1,146 1,341

Add: HandlingCharges 1 So.Sh./ton 86 86 272 272


Less: HandlingMargin 1 (147) (147) (250) (250)


Farmgate Value " 1,417 1,696 1,008 1,203

1/ See Table 2 as assumed for maize handling by ADC.

August 16, 1979

ANNEX 5- 259 - Table 5

SOMALIA



Import Parity Price for Rice(Constant 1977 Prices)

---Economic Prices--- --Financial Prices--Average Projection Average Projection

Unit 1976-78 1990 1976-78 1990

F.o.b. Bangkok(Thai 5% broken) US/ton 290 380 290 380

Add: Insurance &Freight US$/ton 30 30 30 30



Add: HandlingCharges 1/ So.Sh./ton 86 86 272 272

Free Mogadishu Warehousefor Milled Rice So.Sh./ton 2,966 3,776 2,286 2,853

Less: HandlingMargin 1/ " (147) (147) (250) (250)

Less: Transport Millto Warehouse " (30) (30) (30) (30)

Mill Level Price for Rice " 2,789 3,599 2,006 2,573

Equivalent Paddy Priceat 65% MillingRecovery / " 1,813 2,339 1,304 1,672

Less: Transport Farmto Mill " (40) (40) (40) (40)

Farmgate Value of Paddy Rice " 1,773 2,299 1,264 1,632

1/ See Table 2 (for maize).2/ Value of milling by-products bran, rice polish is assumed to cover the milling costs.

August 16, 1979


SOMALIA



Import Parity Prices for Groundnuts1977 Constant Prices)

--Economic Prices-- --Financial Prices--Average Projection Average Projection

Unit 1976-78 1990 1976-78 1990

C.i.f. Rotterdam US$/ ton 523 450 523 450

Less: Freight andInsurance 1/ US$/ ton (20) (20) (20) (20)

C.i.f. Mogadishu US$/ ton 503 430 503 430


Add: HandlingCharges So.Sh./ton 86 86 272 272

Free oil mill Mogadishu So.Sh./ton 4,613 3,956 3,438 2,979

Equivalent Value of Oilat 40% extraction rate 2/ So.Sh./ton 11,533 9,890 8,595 7,448

Less: Handling MarginADC So.Sh./ton (200) (200) (300) (300)

Less:Transport CostBuying Centerto Mogadishu So.Sh./ton (160) (160) (160) (160)

Farm gate value ofshelled groundnuts 6O.Sh./thn 4,253 3,596 2,978 2,519

Farmgate value of unshelledgroundnuts 3/ So.Sh./ton 2,551 2,158 1,787 1,511

1/ Estimated freight savings of transport from Sudan to Somalia, instead of Rotterdam.

2/ Costs of mill are assumed to be carried by value of by-products (oil cake)

31 Assumes 40% shells

August 24, 1979


SOMALIA



Export Parity Prices for Groundnuts

(Constant 1977 Prices)

Economic Prices 1/ Financial Prices -Average Projection Average Projection

Unit 1976-78 1990 1976-78 1990

c.i.f. Rotterdam US$/ton 523 400 523 400

Less: Ocean Freight US$/ton (40) (40) (40) (40)

c.i.f. Mogadishu US$/ton 483 410 483 410

f.o.b. Mogadishu So.Sh./ton4347 3690 3040 2581

Less: Handling & Transport 3/So.Sh./ton(360) (360) (460) (460)

Farmgate value of shelledgroundnuts it 3987 3330 2580 2121

Farmgate value of unshelledgroundnuts 4/ " 2392 1998 1548 1273

1/ at shadow exchange rate of US$1 = So.Sh. 9.

2/ at official exchange rate of US$1 - So.Sh. 6.295

3/ estimated

4/ assumes 40% shell.

- 262 - ~~~~~~~ANNEX 5Table 8

SOMALIA



Import Parity Prices for Sesame Seed(Constant 1977 Prices)

--Economic Prices-- --Financial Frices--Average Projection Average Projection

Unit 1978 1990 _ 1978 1990

Sesame Seed, c.i.f. Japan US$/ton 744 625 744 625

Less: Freight andInsurancel/ US$/ton (20) (20) (20) (20)



Add: Handling Charges - So.Sh./ton 86 86 272 272

Free Oil Mill Mogadishu So.Sh./ton 6,602 5,531 4,830 4,080

Equivalent Value of Oilat 50% extraction rate So.Sh./ton 13,204 11,062 9,660 8,160


Less: Transport Cost -Buying CenterTo Mogadishu So.Sh./ton (160) (160) (160) (160)

Farmgate Value of Sesame Seed So.Sh./ton 6,292 5,171 4,370 3,620

1/ Import assumed from Sudan. Savings in freight and insurance are assumed to be40% of that to Japan which is estimated at 50 $/ton.

2/ Assumed same as for Cereal imports.

3/ Costs of milling are assumed to be covered by value of by products (oil cake)

August 20, 1979


SOMALIA



Export Parity Price for Sesame Seed(Constant 1977 Prices)


Unit 1978 1990 1978 1990

Sesame seed, c.i.f. Japan US$/ton 744 625 744 625

Less: Freight andInsurance US$/ton (50) (50) (50) (50)


F.o.b Mogadishu So.Sh./ton 6,246 5,175 4,369 2,990

Less: Handling Charges- So.Sh./ton (86) (86) (86) (86)



Less: Transport -Buying Centerto Mogadishu So.Sh./ton (160) (160) (160) (160)

Farmgate Value So.Sh./ton 5,853 4,782 3,773 2,494

1/ Same as for Maize imports, excluding excise duty.

August 20, 1979

- 264L - ANNEX 5Table 10

SOMALIA



Import Parity Prices for Cotton(Constant 1977 Prices)


Unit 1976-78 1990 1976-78 1990

Cotton Lint c.i.f.North Europe(Mexican SMl-1/16") USO/kg 164 161 164 161

Less: Insurance andFreight 1/ US¢/kg (16) (16) (16) (16)

C.i.f. Mogadishu(cotton lint) US¢/kg 148 145 148 145

F.o.b. Mogadishu (Cottonlint) So.Sh./kg 13.3 13.1 9.3 9.1

Add: Handling chargesSomalteks and Transportto Factory So.Sh./kg 1.0 1.0 1.0 1.0

Factory gate value for cottonlint So.Sh./kg 14.3 14.1 10.3 10.1

Equivalent Value of Seedcotton 2/ So.Sh./kg 4.8 4.7 3.4 3.4

Less: Handling Margin ofADC and transport toginnexies3/ So.Sh./kg (0.1) (0.1) (0.3) (0.3)

Farmgate Value of seed cotton So.Sh./kg 4.7 4.6 3.1 3.1

1/ Estimated freight savings of transport from East African neighbor countries toSomalia, instead to North Europe.

2/ At 33% lint yield. It is assumed that the value of cotton seed equals theginning costs

3/ Estimated.

August 24, 1979


SOMALIA



Export Parity Prices for Cotton


Economic Prices V Financial PricesUnit Average Projection Average Projection

1976-78 1990 1976-78 1990

Cotton lintc.i.f. North Europe(Mexican SM/-1/16") USC/kg 164 161 164 161

Less: Ocean Freight USC/kg (50) (50) (50) (50)

c.i.f. Mogadishu(cotton lint) USC/kg 114 111 114 111

f.o.b. Mogadishu(cotton lint) So.Sh./kg 10.3 10.0 7.2 7.0

Equivalent value of seed cotton 3/ So.Sh./kg 3.4 3.3 2.4 2.3

Less: Handling and Transport 4/ So.Sh./kg (0.1) (0.1) (0.3) (0.3)

Farmgate value of seed cotton So.Sh./kg 3.3 3.2 2.1 2.0

1/ at shadow exchange rate of US$1 - So.Sh. 9.

2/ at official exchange rate of US$1 - So.Sh. 6.295.

3/ at 33% lint yield. It is assumed that the ginning costs are balancedby the value of cotton seed (which may be used for oil production).


SOMALIA



Export Parity Prices for Bananas(Constant 1977 Prices)

--Economic Prices-- --Financial Prices--Actual Projection Actual Projectior

Unit 1979 1990 1979 1990

Mogadishu, f.o.b. Kuwait US$/ton 200 200 200 200

Mogadishu, fo.b. Kuwait So.Sh./ton 1,800 1,800 1,259 1,259

Less: HandlingCharges NBB 1/ " (126) (126) (220) (220)

Producer Value at Packing 1,674 1,674 1,039 1,039Station 2/

1/ Handling Charges National Banana Board (NBB): Economic Financial

Bank Charges So.Sh./ton __ 11

NBB Commission So.Sh./ton 60 60

NBB Reserve Fund So.Sh./ton 10 10

Customs So.Sh./ton __ 44

Transportation So.Sh./ton 50 50

Loading So.Sh./ton 6 6

Port Charges So.Sh./ton 39

126 220

2/ Includes cost of packing.

ANNEX 5-267 -Table 13

SOMALIA



Export Parity Prices for Livestock(Constant 1977 Prices)

--Economic Prices-- --Financial Prices--Average Projection31 Average ProjectionL3

Unit 1975-77 1990 1975-77 1990

Live Cattle

C.i.f. Saudi Arabia US$/head 2101/ 294 2101/ 294

Less: Ocean Freight US$/head 23 23 23 23

Berbera, f.o.b. US$/head 187 271 187 271

Berbera, f.o.b. So.Sh./head 1,683 2,439 1,177 1,706

Less: Customs, Dutiesand Taxes So.Sh./head -- -- 114/ 171-

Less: Handling Charges-2 So.Sh./head 149 149 149 149

Producer Export Parity Value So.Sh./head 1,534 2,290 914 1,386

Live Sheep/Goats

F.o.b. Berbera US$/head 34 48 34 48

F.o.b. Berbera So.Sh./head 306 432 214 302

Less: Customs, Dutiesand Taxes 5/ So.Sh./head 24 34

Less: Handling Charges9/ So.Sh./head 61 61 61 61

Producer Export Parity Value So.Sh./head 245 371 129 207

Live Camels

F.o.b. Berbera US$/head 254 356 254 356

F.o.b. Berbera So.Sh./head 2,286 3,204 1,599 2,241

Less: Customs, Dutiesand Taxesl/ So.Sh./head -- -- 160 224

Less: Handling Charges 2 So.Sh./head 216 216 216 216

Producer Export Parity Value So.Sh./head 2,070 2,988 1,223 1,801

1/ IBRD Commodity Price Forecasts, May, 1979, adjusted for constant 1977 U.S. dollars.2/ IBRD Appraisal of the Central Rangelands Development Project, April, 1979.3/ Using World beef price projection (composite World indicator price), as in IBRD,

Commodity Price Forecasts, May, 1979.4/ Estimated at 10% of f.o.b. value.5/ Estimated at 11% of f.o.b. value.

August 28, 1979


SOMALIA



Import Parity Price for Sugar(Constant 1977 Prices)

---Economic Prices--- --Financial Prices--Average Projection Average Projection

Unit 1976-78 1990 1976-78 1990

F.o.b. Caribbean Ports US$/ton 202 270 202 270

Add: Freight and US$/ton 40 40 40 40Insurance



Add: Bagging andhandlingcharges 1/ So.Sh./ton 80 80 100 100


Less:Transport andHandling fromSugar Factory toMogadishu 1/ So.Sh./ ton (36) (36) (36) (36)

Factory gate price for sugar So.Sh./ton 2,222 2,834 1,746 2,015

Estimated value ofsugarcane 2/ So.Sh.Iton 111 142 87 100

1/ Estimated

2/ Estimated at 5% of sugar value.

August 24, 1979


SOMALIA



Export Parity Prices for Sugar


Economic Prices V Financial Prices 2/Unit Average Projection Average Projection

1970-78 1990 1970-78 1990

F.O.B. Caribbean Ports US$/ton 202 270 202 270

Less: Ocean Freight US$/ton (40) (40) (40) (40)

C.I.F. Mogadishu US$/ton 162 230 162 230

F.O.B. Mogadishu So.Sh./ten 1458 2070 1020 1448

Less: Handling and Transport 3/ " (100) (100) (120) (120)

Factory gate price for sugar 1358 1970 900 1328

Estimated value of sugarcane 68 98 45 66

1/ at the shadow exchange rate of US$1 = So.Sh. 9.

2/ at the official exchange rate of US$1 = So.Sh. 6.295.

3/ mission estimates.

4/ estimated at 5% of sugar value.


SOMALIA



Import Parity Prices for Oil(Constant 1977 Prices)


Unit 1978 1990 1978 1990

Cottonseed c.i.f. Japan US$/ton 176 189 176 189

Less: Freight andInsurance 1/ US$/ton (20) (20) (20) (20)


F.o.b. Mogadishu So.Sh./ton 1,404 1,521 982 1,064

Add: Handling Charges 2/ So.Sh./ton 86 86 272 272

Free Oil Mill Mogadishu So.Sh./ton 1,490 1,607 1,254 1,336

Equivalent Value of Oil 3/at 16% extraction rate So.Sh./ton 9,312 10,044 7,838 8,350

1/ Import assumed from Sudan. Savings in freight and insurance assumed to be about40% of that to Japan which is estimated to be 50 $/ton.

2/ Assumed same as for Cereal Imports.

3/ Costs of mill are assumed to be covered by value of by products (oil cake).

August 20, 1979


SOMALIA



Export Parity Prices for Grapefruit(Constant 1977 Prices)

---Economic Prices--- --Financial Prices--Actual Projection4- Actual Projection.k!

Unit 1977 1990 1979 1990

C.i.f. Europe US$/ton 3201/ 290 3201/ 290

Less: Freight andInsurance 3/ US$/ton (75) (75) (75) (75)

F.o.b. Mogadishu US$/ton 245 215 245 215

F.o.b. Mogadishu So.Sh./tan2,205 1,935 1,542 1,353

Less: HandlingCharges4/ So.Sh./ton (126) (126) (220) (220)

Less: PackingCosts 4/ So.Sh./ton (525) (525) (525) (525)

Producer Value at Pack-ing Station So.Sh./tonl,554 1,284 797 608

1/ Source: FAO Monthly Bulletin of Agricultural Economics and Statistics, 1977.

2/ Based on price projection for oranges and tangerines. IBRD Commodity Price Fore-casts, May, 1979.

3/ Estimated at 150% of grain shipment costs.

4/ Assumed same as for bananas.


SOMALIA



Price Levels of Agricultural Commodities in Somalia, 1976-78(Constant 1977 So.Sh.)

Economic FinancialWorld World --- Consumer (Retail) Price--- ---------Producer Price---------

Import Price Price As % of As % of c gs % of -as Z of- I Average Average Economic Financial Economic Financial

Export 1976-78 1976-78 1977 World World 1977 World WorldCommodity E So.Sh./ton So.Sh./ton So.Sh./ton Price Price So.Sh./ton Price Price

Maize I 1S057 756 1,160 110 153 750 71 99

Sorghum I 994 712 1,160 117 163 750 75 105

MilledRice I 2,789 2,006 5,250 276 262 3,500 125 175

Wheat I 1,417 1,008 n/a n/a n/a 1,550 109 154

CottonLint I 14,300 10,300 -- -- -- 7,7001' 54 75

SeedCotton(Grade

A) I 4,700 3,100 -- -- -- 2,600 55 '84E 3,300 2,100 2,600 79 124

Bananas E 1,674 1,039 n/a n/a n/a 750 45 1At

Sugar I 2,222 1,746 6,000 270 344 n/a n/a n/a

Oil 2/ I 11,533 8,595 12,150 105 141 -- -- --

GroundnutsShelled I 4,253 3,596 n/a n/a n/a 2,000 47 56

SesameSeed I 6,292-/ 4,3703/1 2,860 45 65 2,400 38 55

Sesame 3/

Seed E 5,853- 3,773 2,860 49 76 2,400 41 64

1/ ADC-Selling price.Z/ Groundnut oil.3/ 1978

August 28, 1979

ANNEX 5-273- Table 19

Page 1SOMALIA



Ranking ot Crops

I. At Economic Prices, 1980

(a) Gross Margins per ha So.Sh./ha

1. Plantation crops: banana, grapefruit, 9000 - 1500sugar cane

2. Smallholder irrigated crops: cotton, sesame, rice,groundnuts, maize 2900 - 900

3. Smallholder rainfed crops: groundnuts, sorghum/pulses 570 - 450

4. Largescale irrigated crops: maize, sesame, cotton 680 - 60groundnuts, rice negative

(b) Gross Margins per man-day So.Sh./manday

1. Smallholder irrigated crops: sesame, rice, cotton, 56 - 19groundnuts, maize

2. Plantation crops: bananas 19

3. Largescale irrigated crops maize, sesame, cotton 27 - 1(big variation):

groundnuts, rice negative


II. At Financial Prices, 1980 So.Sh./ha

(a) Gross Margins per ha

1. Plantation crops bananas, grapefruit 2200 - 1500sugar

2. Smallholder irrigated crops: rice, cotton, sesame, maize 2000 - 600groundnuts

3. Smallholder rainfed crops: groundnuts, sorghum/pulses 300

4. Largescale irrigated crops maize 550(big variation): sesame, rice, cotton,ground-

nuts negative


1. Smallholder irrigated crops: rice, sesame, cotton, maize, 50 - 13groundnuts

2. Plantation crops: sugarcane, bananas 15 - 4


4. Largescale irrigated crops maize 22(big variation): other crops negative

Gross Margin per crop = Gross Value of production less direct production costs, excludingcosts of labor, management, extension and land and water development.


Page 2

III. At Projected Economic Prices, 2000

(a) Gross Margins per ha So.Sb./ha

1. Plantation crops: bananas, sugar-cane 23000 - 6000

2. Largescale irrigated cotton 7400

3. Smallholder irrigated erops: cotton, rice, sesame 5000 4000

4. Largescale irrigated sesame: 4000

5. Largescale irrigated crops: groundnuts, rice,maize 3000 - 2000

6. Smallholder irrigated maize 1500

7. Smallholder drylar.d crops: 1000 - 900


1. Largescale irrigated crops: sesame, rice, cotton,groundnuts, maize 100 - 40

2. Plantation crops: bananas, sugar-cane 80 - 60

3. Smallholder irrigated crops: sesame, rice, ground-nuts, cotton 60 - 40


5. Smallholder dryland crops: 14

IV. At Projected Financial Prices, 2000 So.Sh./ha

(a) Gross Margins per ha

1. Plantation crops: bananas, sugar 7000 - 4000

2. Largescale irrigated cotton 4800

3. Smallholder irrigated crops: cotton, rice, ground-nuts, sesame 3000 - 2000

4. Largescale irrigated crops: rice, groundnuts,sesame, maize 2000 - 1500


6. Smallholder dryland crops: 700 - 500

(b) Gross Margin per man-day So.Sh./manday

1. Largescale irrigated crops: rice, sesame, cotton 60 - 40

2. Smallholder irrigated crops: rice sesame, ground-nuts, cotton 45 - 25

3. Plantation crops: sugar-cane, bananas 40 - 25

4. Smallholder maize 14

5. Smallholder dryland crops: 15 - 10

Gross Margin per crop = Gross value of production less direct production costs,excluding costs of labor, land and water development,management and extension.

ANNEX 5

- 275 - Table 20Page 1

SOMALIA

AGRICULTURAL SECTOR REVTEW

Production Alternativea and Technological Choices

Ranking of Model Farm Systvms

I. At Economic Prices, 1980 So.Sh./ha

(a) Annual Net Farm Benefit per ha

1. Smallholder irrigated plot with cotton, rice, 2700groundnuts

2. Banana plantation 2100

3. Smallholder irrigated plot with sesame and 2000

maize

4. Smallholder dry land farm with mixed animalhusbandry and sorghum/pulses 1000

(b) Annual Net Farm Benefit per Labor Unit (L.TJ.)2J So.Sh./L.U.

1. Smallholder irrigated 4-ha plot with cotton rice and

groundnuts 3660

2. Smallholder irrigated 4-ha plot with sesame and maize; 2700

andSmallholder irrigated 3-ha plot with cotton, rice and

groundnuts 270C1

3. Smallholder irrigated 3-ha plot with sesame and maize 2000

4. Smallholder irrigated 2-ha plot with cotton, rice and 1800groundnuts

S. Smallholder dryland farm with mixed animal husbandry 1700


II. At Financial Prices, 1980 So.Sh./ha

(a) Annual Net Farm Benefit per ha

1. Smallholder irrigated plot with rice, cotton and 2000

groundnuts

2. Smallholder irrigated plot with sesame and maize 1150

3. Smallholder dryland farm with mixed animal husbandry 780

4. Sugar Plantation 530

5. Banana plantation and largescale irrigated farms with negativeannual crops (3000-1000

(b) Ltatal Net Farm Benefit per Labor Unit (L.U.) I/ So.Sh./L.U.

1. Smallholder irrigated 4-ha plot with rice, cotton and 2800groundnuts

2. Smallholder irrigated 3-ha plot with rice, cotton and 2100

groundnuts


4. Smallholder irrigated 2-ha plot with rice, cotton and

groundnuts; and

Smallholder dryland farm with mixed animal husbandry 1350



Net farm benefit = Total value of production less direct production cost, hired labor cost,and farm management or extension cost, but excluding land and waterdevelopment costs and familv labor remuneration.

I/ For smallholder farms only which employ 3 family units (5.5 persons per family).

- 276 - ANNEX 5Table 20Plage Z

III. At Projected Economic Prices, 2000

(a) Annual Net Farm Benefit per ha So.Sh./ha

1. Banana Plantation 13000

2. Smallholder irrigated plot withcotton, rice and groundnuts; and

cotton/sesame largescale farm 6000

3. Smallholder irrigated plot withsesame and maize; rice/maizelargescale farm; and

sugar plantation 3500

4. Smallholder dryland farm with mixedanimal husbandry 1200

(b) Annual Net Farm Benefit per Labor Unit (L.U.)!/ So.Sh./L.U.

1. Smallholder irrigated 4-ha plot with rice,cotton and groundnuts 8300


3. Smallholder irrigated 4-ha plot with sesameand maize 4800


5. Smallholder irrigated 3-ha plot with sesame andmaize 3600

6. Smallholder dryland farm with mixed animalhusbandry 2600

7. Smallholder 2-ha plot with sesame and maize 2300

Economic Net farm benefit = Total value of production less direct production cost, cost ofhired labor, farm management or extension. Excluding costof land and water development and remuneration of family labor.

1/ For smallholder farms only.

-277- ANNEX 5Table 20Page 3

IV. At Projected Financial Prices, 2000

(a) Annual Net Farm Benefit per ha So.Sh./ha

1. Smallholder irrigated plot with cotton,rice and groundnuts 4000

2. Cotton/Sesame large farm 3000

3. Rice/Maize large farm and

Smallholder irrigated plot with sesame andmaize 2000

4. Dryland farm with mixed animal husbandry 900

(b) Annual Net Farm Benefit per Labor Unit (L.U.)1/ So.Sh./L.U.

1. Smallholder irrigated 4-ha plot with cotton,rice and groundnuts 5400




5. Smallholder irrigated 3-ha plot with sesame andmaize 2100

6. Smallholder dryland farm with mixed animalhusbandry 1800


Financial Net farm benefit = Total value of production less direct production cost, cost ofhired labor, farm management or extension, and taxes. Exclud-ing cost of land and water development and remuneration offamily labor.

1/ For smallholder farm only.

- 278 -ANNEX 6

SOMALIA


Institutions Serving Agriculture

Table of Contents

Page No.

I. THE MINISTRY OF AGRICULTURE ............................. 1

II. THE AGRICULTURAL CRASH PROGRAMME AND SETTLEMENT .... ..... 10

A. Agricultural Crash Programme ....................... 10B. Agricultural Settlements ........................... 12

III. INPUT SUPPLY ........................ 13

A. Present Arrangements ............................... 13B. Issues and Recommendations ......................... 15

IV. AGRICULTURAL FINANCE SYSTEM .............................. 18

A. Present Arrangements ............................... 18B. Issues ............................................. 21C. Recommendations .................................... 23

V. OUTPUT MARKETING ........................................ 24

A. Present Arrangements ............................... 24B. Issues and Recommendations ......................... 27


SOMALIA



1.01 Background. Nearly all of the activities and institutions servingagriculture, fisheries and, to a lesser degree, livestock are under Governmentcontrol, either through direct involvement of the Ministries concerned orthrough parastatal enterprises. This annex reviews the present functions ofthe Ministry of Agriculture, the Crash Programme and Settlement Agency andthe arrangements within the parastatal sector for input supply, credit, andmarketing and comments on the issues involved. The organization of theMinistry is presented in Table 1; the institutional organization of theparastatal sector in Table 2.

I. THE MINISTRY OF AGRICULTURE

1.02 The Ministry of Agriculture (MOA) consists of six departments:Research, Production and Extension, Plant Protection and Locust Control, Landand Water Resources, Agricultural Cooperatives, Planning and Statistics andAdministration (Table 1). It provides services to crop producers, coordinatesthe activities of other institutions in the subsector, and is directly in-volved in agricultural production.

Department of Research

1.03 Agricultural research in Somalia started in the 1960's with tech-nical assistance from the University of Wyoming, U.S.A. In 1969, the U.S.assistance was terminated abruptly and the subsequent slowdown of activitiesdisrupted the program as neither sufficient funds nor manpower to maintain itwere locally available. Under an arrangement between UNDP/FAO and MUCIA, (aconsortium of seven midwestern universities in the U.S.A.), research was resumedin 1976 and is still progressing. The department of research, which includesthe Agricultural Research Institute (ARI) is the largest unit in the MOA. In1977, 20 of the Ministry's 58 professionals were engaged in research. Thefacilities include the Central Agricultural Research Station at Afgoi in theMiddle Shebelli valley and four substations: Afgoi, near Mogadishu, with400 ha of rainfed and irrigated farming; Bonka, Bay Region, with 40 ha rainfedfarming; Gelib-Allessandra, in the Lower Juba area with 40 ha of rainfed farm-ing and Abuviu in the northwest region with 150 ha under rainfed agriculture.

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1.04 Issues and Recommendations. In the past, research concentratedmainly on the introduction of new varieties or of new crops into areas alreadyunder cultivation. Cultural methods, fertilization and plant population andpest control were also studied. This was basically a sound program and itshould be continued. In particular, new varieties of sesame, sorghum andrice better suited to Somali conditions need to be identified and no doubtmore suitable varieties of maize could also be identified or developed.

1.05 Most work was done under irrigation at Afgoi and personnel wereconcentrated there although some work was also done at Bonka on rainfed crops.However, it is in the interriverine area and in the northwest region that thebulk of the farm population live and most rainfed agriculture is carried on.To develop better technology and management techniques and thereby to raiseyields, farm income, and to reduce grain imports is of the utmost importance.The most critical factor is moisture and it is imperative that the ARI expandits activities in the rainfed areas, not only by introducing new varieties andcrops along with improved cultural methods, but by actively investigating waysto conserve soil moisture and make optimum use of available rainfall. Somesteps have been undertaken to include adaptive research components to rainfedfarming in the IDA-supported North West Agriculture and Bay Region Developmentprojects.

1.06 The livestock sector is the most productive part of the Somalieconomy. There are several areas where the livestock and crop sector overlapor complement each other. It has been suggested that the 21st of October DairyFarm at Afgoi be converted into an experimental station for livestock, a recom-mendation with which the mission concurs. The ARI effort should be directedtowards (i) the agronomic possibilities of producing fodder for livestock;(ii) crop by-products of significance to livestock production; (iii) farmingsystems involving livestock; and (iv) the agronomic improvement of the range-lands.

1.07 Damage caused by birds and post-harvest crop loss have so far beenneglected by reseachers. Bird control is essential in both rainfed and irri-gated agricultural areas. MOA has ongoing projects (para. 1.18) concernedwith this and ARI could give valuable support to the project unit in identify-ing the best planting dates, varieties least susceptible to damage and otheragronomic methods of reducing damage from this pest. Estimates of storage andpost-harvest losses vary considerably from nil to 40 percent of the harvests.An essential first step would be to determine the actual situation; this couldbe followed by trials of known improved storage methods. (Some work alongthese lines was done at Bonka where some simple storage facilities are stillin existence). In cooperation with the Agricultural Development Corporation(ADC, para 5.02 ff.), a research program should also be developed for cropdrying and storage methods. As most of the actual work and cost of theseprograms would be borne by the concerned farmers and by other organizations,the financial burden on ARI would be small.


1.08 Agricultural research in Somalia has so far produced onlylimited results of practical value to farmers. The objectives need tobe redefined and overall efficiency increased but this would depend on:

(i) A long-range program with well defined goals;

(ii) Sufficient and stable supply of operating funds;

(iii) Sufficient well trained manpower to carry out theprogram; professional employees should be givenincentives, and should be assured undisturbedtenure, if they perform well;

(iv) Supervision and backstopping to ensure that dataand materials are not lost when a professionalleaves;

(v) A minimum of outside interference;

(vi) Research being adaptive to maximize returns; basicresearch should only be done when a problem cannotbe solved in any other way;

(vii) Close cooperation with the extension service andthe seed multiplication program;

(viii) Regular field visiting by research personnel tostudy farmers problems.

Department of Production and Extension

1.09 This department is theoretically organized into six services:Extension and Training, Seed Production and Certification, Production, FarmCredit and Agricultural Inputs, Farm Management and Monitoring and Evaluation.In fact, only the first of these services is operational on a regular basis.It has 164 employees, of whom only eight are university graduates.

1.10 The bulk of department staff are attached to the Extension Servicewhich has nine regional offices, staffed by Regional Officers for Extension,Land and Water, Cooperatives and Plant Protection. Extension at the districtlevel is headed by a District Agricultural Officer supported by Extension,Plant Protection, Land and Water and Cooperatives officers; these positionsare not always filled, however, in practice. Agricultural training ofofficers in the field generally is through short-courses.

1.11 Training for agricultural technicians takes place at the SecondaryAgricultural School at Afgoi, which is financed by MOA through its Productionand Extension Department. It has facilities for 246 students and providesthree-year courses in Agronomy, General Agriculture, Animal Husbandry, Agri-cultural Economics, Farm Engineering, English, Chemistry, Mathematics, Biology,Physics, Education and the Somali language. Instruction is in English. The


teaching staff consists of four full-time instructors from MOA, nine full-timeinstructors from the Ministry of Education, and four part-time instructorsfrom various institutions, including overseas technical assistance institutions.The final examinations are conducted by the Ministry of Education. The numberof graduates for 1977 (first course) was 41 students; for 1978: 56 students;for 1979: 62 students (including five women). For 1980 and 1981, 82 and 90students respectively are expected to graduate. Thereafter they are normallyassigned to the MOA or continue studies at Faculty of Agriculture of theNational University of Somalia. The University is part of the Ministry ofCulture and Higher Education.

1.12 A seed production and certification project was started in 1976 withtechnical and financial assistance from UNDP and Misereor, a German Catholicorganization. It aimed at providing high quality seed for 50 percent of thearea under cultivation (about 2,500 tons per year). Three seed productionfarms have been assigned (Shebelli-Afgoi: 200 ha; Juba: 250 ha; and Bay-Bonka;200 ha). The project encountered many delays and technical and organizationaldifficulties. Buildings for the seed processing plants have not yet beenconstructed, as no private contractor can be engaged and MOA has been unableto undertake it. Some seeds were produced and distributed, probably withoutcharge to state farms; but no records exist.

1.13 Issues and Recommendations. The extension service in the past hasnot been very efficient, because:

(i) There have been practically no agents at the farmlevel;

(ii) Staff has been insufficiently trained;

(iii) Planning and supervision of programs has beeninadequate;

(iv) Not enough information has been forthcomingfrom the ARI, especially for rainfed agri-culture, to give a real extension message;

(v) Staff have not been sufficiently motivated;

(vi) Inputs, such as better seeds, pest controlmaterials, and (less significantly) fertilizershave not been readily available to farmers andcredit facilities have been inadequate; and

(vii) There have been no demonstrations at the farmlevel.

1.14 Agents at the farm level should be general agents with a good know-ledge of the area where they work, and possibly some special training for theirregion, for instance in sorghum for the Bay region or in maize and sesame for

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ANNEX 6Page 5

areas near the rivers. These general agents should be supported by specialistsat the regional or national levels. As long as there is the present shortageof trained specialists, however, this latter function could be assigned to theresearch organization. It is essential that both research and extension workas closely together as possible, and that MOA management take great care toavoid conflicts or rivalry over pay, privileges or prestige between staff ofthese two organizations.

1.15 Government recognizes the deficiencies of the present extensionservice and has started a reorganization and strengthening of the serviceunder the Agricultural Extension and Farm Management Training Project. Thisproject provides for the establishment of a Farm Management and ExtensionTraining Center to provide pre-service training for farm managers andassistant and field managers as well as for regional and district levelextension staff. The National Extension Service would be strengthened throughintroduction of an extension methodology which emphasizes continuous trainingfor extension personnel and regular contact with the farmer. The projectwould also establish a Farm Management Advisory Service to provide fieldback-up to existing and newly trained farm managers, and advise Governmenton large scale farming and related issues.

Department of Plant Protection and Locust Control

1.16 The objectives of the Plant Protection and Locust Control Departmentare to advise farmers and organizations on methods of controlling insect, birdand rodent pests and plant diseases; to provide farmers with the necessaryinsecticides, fungicides and sprayers, and to identify pest attacks anddisease outbreaks. The department employs 159 people of whom six havedegrees from overseas universities.

1.17 The Department provides its services, which include treatment ofseeds, free of charge with the result that farmers now believe that the Ministryshould be solely responsible for control of insect pests. This task, however,by far exceeds the capability of the Department which lacks personnel, fundsand vehicles. The situation can only be remedied by recovering all or partof the costs of plant protection from the beneficiaries, coordinating theavailability of materials through the regular input supply system, and advis-ing farmers on methods of plant protection through the agricultural extensionservice and thereafter encouraging self-help efforts.

1.18 Two bird control projects are being implemented by the Departmentwith technical assistance from UNDP/FAO. Birds like the quelea and thesparrow seriously endanger grain crop harvests in Somalia. Bird damagecan reach 80-100 percent and has apparently increased in recent years withnew areas being affected. The birds migrate between Somalia and neighboringcountries, usually appearing with the rains and reaching their largest numbersin June. The two bird control projects are mainly directed towards research,primarily on the quelea bird which is a major pest in other parts of Africaalso. The birds are controlled by spraying "Queleatox," an ornithocide oflow mammalian toxicity.


Department of Land and Water Resources

1.19 The Department is responsible for implementing Government policyon land and water resources. Land tenure is governed by Law No. 73 of 1975(Agrarian Reform Law) under which all land is declared state property.Farmers are required to register their holding and seek concessions for itsuse. The law also limits the size of the holdings and regulates the transferof arable land which may be held under a ten-year concession granted by theMOA. Individual concessions for plantations may not exceed 100 ha. However,this limit is not applicable to companies, cooperatives and state farms.Family holdings are limited to 60 ha for rainfed land and to 30 ha for irri-gated land. A family may be given one concession renewable for a secondten-year period. Mortgage, sale, lease or transfer of land is prohibitedexcept in the event that the original concession holder becomes disabled.Even then, the physically disabled farmer can sublet to another only ifofficial permission to do so is granted.

1.20 MOA is responsible for registering holdings and administering thislaw. Some initial registration has reportedly started, but on a very minorscale. Most land is still handled traditionally, most of it being consideredtribal property but with recognized and transferable user rights. The bananafarm concessions were originally granted by the Italian Colonial Administra-tion, and a number of Italian families still have their farms. The sizelimitation (para 1.19) is disregarded in some cases, and new joint ventures(private Italian-Somali Government) have been formed, which exceed it as domost Government-owned farms.

1.21 Land concession is subject to annual fees. Ordinary farmers andcooperatives pay the local Government So.Sh. 5/= per ha for rainfed landand So.Sh. 10/= per ha for irrigated. Private companies and individual farmersgrowing plantation and perennial crops such as banana, grapes, mango etc. paythe central Government So.Sh 30/= per ha for rainfed land and So.Sh 50/= perha for irrigated. Collection of these land taxes has not yet started andthere is some resistance to them from individual farmers.

Department of Agricultural Cooperatives

1.22 Cooperatives are one of the tools with which Government intends toachieve development and to build a socialist society. The agricultural coop-erative movement combines production goals with socio-political objectives andis based on the Law on Cooperative Development (Law No. 40 of October 4, 1973)which provides for establishment and operation of cooperatives. Promotion ofagricultural cooperatives is the responsibility of the Ministry of Agriculture.However, in 1978, the authority for overall coordination for all types of coop-eratives including those in other sectors, was transferred to the Organizationof the Somali Cooperative Movement which forms part of the Cooperative Bureauof the Party.

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1.23 Technical supervision and financing remain under the technicalministries. In 1979, eleven Department staff were posted at Headquarters andfifty in the field. This compares to a target of 648 cooperative instructorsfor the 1974-78 period.

1.24 Financing for the establishment of agricultural cooperatives is fromthree sources: (i) grants from the budget of MOA; (ii) contributions by thecooperative members in the form of membership fees and payment for shares; and(iii) loans from the banking system.

1.25 The actual development expenditure of the Ministry of Agriculturefor cooperative development between 1974 and 1978 amounted to So.Sh. 18 mil-lion (US$2.86 million), the bulk of which was used for procurement of agri-cultural machinery and land preparation through the Farm Machinery andAgricultural Services Organization (ONAT) (para 3.07). 47 tractors and 35water pumps have been distributed to cooperatives and 47 storage facilitiesbuilt (Table 3).

1.26 According to the by-laws for Agricultural Cooperatives 1/ membersare required to pay an initial membership fee of So.Sh. 5/= and to pay forshares according to the amount of cultivated land. The Commercial and SavingsBank and the Somali Development Bank are both involved in providing loans tocooperatives (see para 4.04 ff). While data on the precise loan amounts arenot available, their contribution to the financing of cooperatives probablyexceeds by far that of the grants by MOA. The Ministry is liable for defaultsof cooperatives on bank loans and does not encourage the use of credit.

1.27 Types of Agricultural Cooperatives. Following essentially themodels developed in the German Democratic Republic, the cooperative movementin Somalia envisages three types with increasing degree of integration:

(i) The Multi-Purpose Cooperative Society, where themembers land, tools and animals remain in indivi-dual ownership, and the cooperative essentiallyprovides services to its members. Multi-PurposeCooperatives cover two to four villages with aminimum of 100, and a maximum of 1,000 members.

(ii) The Group Farms Cooperative, where land is col-lectively owned and cultivated. Generally groupfarms are established on additional land which isbrought into cultivation outside the traditionalholdings. Group farms comprise a minimum of 25farmers or landless laborers and are often membersof the larger Multi-Purpose Cooperative Societies.The Government encourages this form of collectiveproduction by providing certain inputs free ofcharge during the first year. These include 100 kgof wheat for each ha of bush clearing, ploughing and

1/ See Handbook on Agricultural Cooperatives in Somalia, Mogadishu, 1977.


provision of seeds. Eighty percent of the productionvalue is distributed among the members according totheir work input, while 20 percent is retained as workingcapital.

(iii) The third type of Cooperative Farms, where all resourcesincluding labor are collectively used and private landis not allowed, has not been implemented. Instead,Government has established state farms operated directlyby the Ministry of Agriculture and parastatals.

1.28 Operating Results. In the first three years of implementationthe Cooperative Law an impressive number of cooperatives was legally estab-lished. By the end of 1978, 47 multi-purpose cooperatives and 224 group farmshad been registered, covering a total of over 27,000 farmers on about 63,000ha (Table 4).

1.29 Membership of multi-purpose cooperatives varies considerably between103 and 1,678 farmers with an average of 290. Two thirds of all land is irri-gated and 80 percent of the farmers practice irrigation. The average farmsize is 2.6 ha for dryland farms and 1.9 ha for irrigated farms. Twelve ofthe 47 cooperatives, located in the Bay region and the North, deal exclusivelywith dryland farms. Group farms have an average of 62 members and 141 ha ofland (2.3 ha per member). A greater number (77 out of a total of 224 groupfarms) were established on rainfed land.

1.30 Production marketed through cooperatives is extremely low andapparently has not followed the increase in the membership and areasserviced (Table 5). It is estimated that the recorded production of cerealgrains amounts to less than 5 percent of the total production in Somalia,although cooperatives serve about 10 percent of the total cultivated area.

1.31 Issues. It is not clear to what extent cooperatives have beenformed with the main purpose of benefitting from subsidies granted by theGovernment. Numbers and quality of technical staff of MOA are insufficientto provide effective assistance and follow-up. There are no accounts oraudit reports and only very scanty information is available on production.Despite some limited use of modern capital inputs (mainly mechanization)yields and production have been disappointing. According to MOA estimates,group farms have lower yields than individual members of multi-purpose co-operative societies farming in a more traditional way. Decision-making isnormally more based on traditional social relationships than on the cooperativeby-laws. This allows to a great extent to overcome deficiencies in formaladministration, accounting, and distribution of surplus.

1.32 As the members of most group farms cultivate holdings of their ownin addition to the collective land, their primary interest is geared to theseand they devote only marginal efforts to the group farm. The labor demandof these farms is not balanced as part of the cultivation is mechanized andpart is dependent on heavy labor input. There is also no animal husbandry

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which would even out employment, and use of wage labor, which could breaklabor peaks, is not allowed. It thus appears that group farming increasespeak labor demand, which often cannot be met by the farmers and consequentlyresults in lower yields and production.

1.33 Recommendations. Except for channelling Government grants andbank loans, agricultural cooperatives have so far little to offer establishedfarmers because extension, input supply, tractor hiring and marketing servicesare weak. Formation of cooperatives, however, has gradually become an end initself, despite the absence of any practical effect on production and incomes.Before cooperatives can extend effective services to their members and becomea real motor of development, the effectiveness of other services has to bestrengthened. Service cooperatives can play an important role in land develop-ment and settlement, complementing the individual efforts of settlers in a newarea with services and infrastructure investments which result from collectiveinterest, are indispensible and cannot be obtained otherwise.

1.34 The limited success of group farms indicates that they have serioustechnical and organizational shortcomings. Promotion should be more cautious,leaving it to interested farmers to organize themselves into this kind ofproduction unit. In dryland areas, the farming system is not appropriate asit does not include livestock production, a prerequisite in these areas tobalance the fluctuating crop income, provide subsistence and year-round familyemployment and productively use waste land, fallow and crop residues. Investi-gations should be carried out as to how livestock production can technicallyand legally be integrated into group farms.

1.35 Another constraint on group farms is the rigid labor supply aswage labor is not employed. Crop production and yields often depend on timingand labor input during critical phases, such as weeding. If this cannot beaccomplished through more flexible work, resources of land or labor remainunderutilized. Investigation should therefore also be carried out as to howwage and other types of labor can be legally incorporated into the system.This would also allow landless labor to find some employment.

1.36 The cooperative models have been taken from abroad without makingany adjustments to Somali conditions. It appears that there is a varietyof traditional social relationships within the Somali people that are moreeffective than the imported by-laws of cooperatives. It would appear worth-while to identify those processes which experience shows can solve internaldifficulties while neglecting formal requirements of the Cooperative Lawand incorporate them into the cooperative movement.

Department of Planning and Statistics

1.37 The department has never been operational so far. Since 1979 ithas been receiving technical assistance from UNDP/FAO to strengthen theplanning capability of the Ministry.

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II. THE AGRICULTURAL CRASH PROGRAMME AND SETTLEMENT

2.01 Background. Several development programs have been started underthe responsibility of the Bureau of the Somali Revolutionary Socialist Partyto cope with specific emergency situations of the country. Of importancefor the agricultural sector are the Agricultural Crash Programme and theAgricultural Settlements.

A. Agricultural Crash Programme

2.02 Objectives. The Agricultural Crash Programme was conceived as ameans for Government to implement the policy of self-reliance by (i) instillingproper work attitudes and (ii) fully using available human resources. It is amulti-purpose program which contains political, ideological, social, trainingand production components. Initially it was created to provide job opportuni-ties and training for unemployed youth in a variety of mechanical and agri-cultural skills.

2.03 Organization and Financing. Until 1972, the Agricultural CrashProgramme was under the responsibility of the Ministry of Agriculture.It subsequently became a Government Agency under the Bureau of the SomaliRevolutionary Socialist Party for Resettlement Agency and Crash Programmes.Financing is from three sources: (i) budgetary support from the CentralGovernment; (ii) subsistence production and revenues from sales; and (iii)grants. The budgetary allocation in 1979 was So.Sh. 11.0 million (aboutUS$1.75 million), of which about 45 percent was expected to be recovered bythe Government through income from sales which go directly from ADC and theNational Banana Board (NBB) to the Ministry of Finance. Grants were receivedfrom the World Food Program (WFP) between 1975 and 1977, mainly in kind aswheat flour, edible oil and dried skim milk, and also from UNICEF in the formof drugs and medicines. The financing of the Program over the last 10 yearsis detailed in Table 6.

2.04 Operating Results. The Agricultural Crash Programme Agency nowoperates a central office in Mogadishu and seven large scale farms (as against11 farms in 1973) covering a total of about 20,000 ha (Table 7). However,only about 12,000 ha are actually under cultivation. One 8,000 ha rainfedfarm is located in the northwest area; all other farms, five of them in theShebelli valley, are irrigated.

2.05 Production plans are prepared by the agency's central office accord-ing to Government policy decisions on priority crops. Mainly food crops suchas sorghum, wheat, sesame, rice, maize, pulses and vegetables are now grownas well as bananas and cotton. In previous years tobacco and sunflower werealso grown. There is no livestock production at all.


2.06 Crops are mostly grown in large-scale, mechanized operations whichare directed by a farm manager who is an agricultural technician. Yields areextremely low, despite production planning, use of modern inputs and mechani-zation and an abundance of labor (Table 8). On the larger irrigated farms,this seems to be attributable mainly to managerial constraints. Over 7,200volunteers are reported to work on the farms, i.e., about one worker per 1.6ha. These volunteers come mainly from the nomadic population. They receivefree food, lodging, clothing and health care, in addition to a cash remunera-tion of So.Sh. 2.2 per day. Betwen 1970 and 1978, nearly 14,000 volunteerswere trained, over three quarters of them as junior agricultural technicians"Table 9). The training is normally for one year, but it is not unusual forthe volunteers stay with the project much longer. In addition to practicaltraining on the farms a technical school was established in Shalambod whichcan accommodate 200 trainee mechanics.

2.07 Issues. Considering that the farms are presently staffed with about7,200 volunteers, the number of trainees (14,000 over an eight-year period)while appearing to be impressive at first glance, is rather low. Assuming aone-year training period, a large number of volunteers must either have leftthe farms without certified training or stayed much longer. It is not knownwhether a significant impact was produced by the trainees new capabilitieselsewhere. The rather poor performance of the training institution itselfsuggests that the training has been of doubtful quality.

2.08 The program is not self-sustaining despite 10 years of developmentand command of over 8 percent of the area under controlled irrigation inSomalia and a huge piece of good rainfed land in the northwest. Availableresources of land, water and labor are poorly managed, crop yields are farbelow the national average and, at times, staff of the farms have to dependon WFP food rations. As a consequence of the poor production record, theprogram has never reached financial autonomy and continues to be a heavyburden on the Government budget. The net cost to Government of each volunteeramounts to about So.Sh. 800 (US$125) per year, in addition to food and accom-modation provided by the farms.

2.09 Recommendations. The Agricultural Crash Programme Agency has out-lived its purpose and is not capable of satisfactorily fulfilling either itstraining or production roles. It also clearly duplicates efforts being madeby the Ministry of Agriculture in these fields. The overall justification forthe Agency is therefore seriously questioned. The future role of the CrashProgram farms should be reviewed in conjunction with that of the state farmsunder MOA, to which the farms should initially be transferred. The farmsshould be reorganized along the same lines as the state farms to make themmore productive. Training should be concentrated in a few places in accord-ance with MOA policy and Ministry of Lower Education in this field. Trainingfunctions should not be mixed up with employment objectives and a well-definedcurriculum should be followed.

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B. Agricultural Settlements

2.10 Background. Following the 1974/75 drought that severely affectedsome 250,000 people, the Government moved swiftly to assist the population byestablishing a National Relief Committee. The National Rural DevelopmentCampaign was also integrated into the drought relief effort, thus introducinghealth, literacy and general education components. Some 90 Relief Centers wereopened throughout the country, supported at the beginning by grants and foodprovided by the international community (over $100 million). The Centers soonbecame too great a burden on the country's balance of payments and it was there-fore decided in 1975 to close them down. Some 105,000 nomads from the reliefcenters were relocated on a voluntary basis to three agricultural settlementsbetween the Juba and Shebelli rivers. Another 15,000 people were relocated inseveral fishing communities along the coast. The Government mobilized andconcentrated most of the country's heavy equipment on the three agriculturalsettlements where some 4,000 ha of land were cleared in less than two years.In 1976 the Kuwait-based Arab Fund and IDA agreed to co-finance agriculturaldevelopment in the three settlements. The Arab Fund is financing the develop-ment of some 15,000 ha of irrigated cultivation while IDA supports the develop-ment of rainfed food production within the three settlements. Other donors

are assisting with finance for essential infrastructure.

2.11 Organization and Financing. A Settlement Development Agency (SDA)was established in 1975 to plan and implement the settlement programs. Alongwith the Agricultural Crash Programme Agency, SDA forms part of the Bureau ofthe Somali Revolutionary Socialist Party for Resettlement Agency and CrashProgrammes and is financed from budgetary sources and grants.

2.12 Issues. Serious misjudgements and deficiencies on the part of SDAhave so far prevented a smooth implementation of the settlement program. Thesites for all three settlements proved to be partially unsuitable. At Dujuma,poor soils forced to the relocation of 24,000 people to other locations.The other two settlements were established in marginal rainfall areas andrainfed farming has not yet proven to be successful. Staff numbers of SDA andtheir qualifications are not sufficient for the complex tasks they face.Despite the generous and continuous subsistence support to the settlers, thepopulation in the settlements is declining rapidly. By 1979, only about 56percent of the settlers registered in 1976 were still present, large numbershaving left to seek their livelihood elsewhere. SDA claims, however, thatsome of the local population have been integrated in the drought settlements.Overall, SDA was able to handle emergency operations during and immediatelyfollowing the drought. It has, however, so far failed to approach its secondobjective of creating a lasting development process. Originally, the settle-ments were intended to reach self sufficiency in food within four years and,moreover, to market some cotton. There is little evidence now that this goalcan be achieved.

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2.13 Recommendations. Settlement is necessary in Somalia to avoid deter-ioration of the range environment, massive unemployment and consequent needfor welfare action. This task is so great, however, that no Governmentagency, whatever its structure and budget, can cope if there is not a funda-mental change in strategy and a move to less expensive forms of settlement.It may be assumed that annually, about 65,000 people or 12,000 families willhave to find new subsistence opportunities in the rural areas.

2.14 Instead of bringing settlers into a situation where they relyentirely on Government for their subsistence (justifiable only during timesof emergency), prospective settlers should be encouraged to rely on theirown efforts and those of their families and relatives during the settlementprocess. Government should, however, be prepared to provide, as incentives,basic infrastructure and supply, marketing and social services for the newareas. Rather than take over responsibility for the subsistence of eachsettler, Government should limit its involvement to a planning, coordinating,regulating and supporting role. Since these are the normal functions of anyGovernment, an agency such as SDA is unnecessary. Responsibility and coordi-nation of this kind of settlement could be placed under MOA. It is, however,important that the general efficiency of all institutions serving agriculturebe greatly improved.

III. INPUT SUPPLY

A. Present Arrangements

Fertilizers and Chemicals

3.01 Somalia has no resources or facilities to produce fertilizer oragrochemicals and they have, therefore, to be imported. The responsibilitiesfor the supply of these commercial farm inputs have changed over time from oneorganization to another. Historically, banana plantations were the biggestconsumers of fertilizers and chemicals. The National Banana Board (NBB),(para 5.11) was the major importing and distributing organization, until theFarm Machinery and Agricultural Services Organization (ONAT) took over allimportation and distribution of fertilizers, seeds and chemicals in 1975. Inaddition, ONAT also sells various types of spraying equipment. Its AgriculturalServices Department employs about 50 people and uses depots which are attachedto the seven ONAT workshops located at Mogadishu, Shalambod, Giamama, Baidoa,Giohar, Afgoi, and Hargeisa, and 10 additional smaller depots at Gelib, Buale,Bardera, Balad, Bulo Burti, Belet Uen, Erigavo, Burao, Gebili and Koriole.ONAT's inability to supply inputs in time has led other organizations (NBB,SNAI) and the managements of agricultural development projects to resort totheir own procurement procedures.


3.02 ONAT bases its orders for imported inputs on requests made byother Government agencies. Consistent failure to submit such requests in timeover several years led to late placement of orders by ONAT and consequentlyinsufficient availability of fertilizer (Table 10). Advance payment by therequesting agencies of 100 percent of the value of letters of credit isregularly required now with regular orders. ONAT also uses its overdraftfacilities with the Commercial and Savings Bank.

3.03 ONAT sells fertilizers and chemicals at prices which reflect thec.i.f. prices at Mogadishu increased by a 3 percent commission for ONAT'sservices and by the actual expenses incurred for stevedoring charges, shippingagency fees, port fees and handling; these amount to about 27 percent of thec.i.f. price. The 1977/78 prices for fertilizers and spraying equipment aredetailed in Table 11.

Mechanical Services

3.04 Facilities for renting bulldozers, earth moving machinery, farmtractors and agricultural machinery and implements are controlled by ONAT.Besides its headquarters in Mogadishu, it maintains a network of six stationswith workshops and service facilities in six towns of the important agricul-tural areas of Somalia. State farms, agricultural development projects,cooperatives and some medium-size farms in the river valleys have their ownmachinery which they also rent out but they draw on ONAT's services in peakperiods, in particular for land clearing, land development and infrastructureworks where heavy earth moving equipment is needed.

3.05 In 1979, ONAT had a total of about 350 tractors (80 percent of whichwere made in the USSR in 1964), of which only 150 were in working condition.There is a general lack of spare parts. The last replacement of 133 tractorswas made in 1974. The workshops are either not yet fully equipped or in needof replacement working tools.

3.06 ONAT's staff is comprised of five higher level professionals (univer-sity graduates), 100 intermediate level staff (secondary schools leavers),120 skilled mechanics and assistant mechanics, 400-500 tractor drivers, 120watchmen and 50 staff dealing with input supply in the Agricultural ServicesDepartment. While the number of higher level staff is insufficient to meetthe variety of responsibilities entailed in ONAT's nationwide coverage,there are too many tractor drivers and mechanics for the limited number oftractors and workshops in operational condition.

3.07 Between 1975 and 1978, ONAT was also responsible for procurement,sale and service of tractors and farm and earth moving machinery which weresold to other Government organizations and cooperatives and private farms inSomalia. During this three-year period, 189 tractors of eight differentmakes and 17 different types, and 411 units of farm machinery and tractorimplements were imported. In September 1978, responsibility for importation,sale and service of tractors, earth moving machinery, spare parts and imple-ments was transferred from ONAT to the Trade Agency for Vehicles and SpareParts (WAGAD), a Government-owned agency comprising the nationalized firms


involved in the importation of vehicles and spare parts. The agency ownsand operates workshops in important cities of the country and has 15 spareparts distributing centers in regional capitals. WAGAD also supplies partsto privately operated stores. So far, WAGAD has not been involved inimportation of agricultural machinery.

3.08 The importation of farm machinery is not subject to any duty. Theaverage trade margin of ONAT for the sale of tractors (difference betweenc.i.f. and selling price) amounted to 15.5 percent in 1976, rising to 44 per-cent in 1977 and 48 percent in 1978. ONAT charges for tractor hire are basedon hourly rates; different rates apply for private farms and cooperatives asone group of users and state farms and development projects as another. Therates are administered prices and have not been adjusted since 1964 for privateand cooperative users. According to ONAT, present revenues do not even coveroperating costs. Present rates are summarized in Table 12.

Seed Supply

3.09 Provision of seed for agricultural crops falls under ONAT's respon-sibility. Unavailability of improved seed for the major agricultural cropshas, however, limited ONAT's activity to supplying small quantities of seedsfor horticultural crops. Farmers normally retain seed from their own pro-duction or obtain ordinary seed from ADC.

Livestock Inputs

3.10 There is no organized trade in animal feed. Livestock producersdeal individually with supplying agro-industries (mainly mills). Veterinarydrugs and chemicals are normally obtained from the Department of VeterinaryServices of the Ministry of Livestock, Forestry and Range.

B. Issues and Recommendations

Commercial Farm Input Supply

3.11 Since 1975, Government policy has aimed at centralizing the supplysystem for commercial farm inputs under one Government agency, ONAT. Thisorganization was not able to import any fertilizer during 1975 and 1976.Availability of fertilizer was thus restricted to some carry-over stockswhich NBB had transferred to ONAT, and which were resold through NBB to thebanana farms (Table 10).

3.12 ONAT normally delivers the inputs it has procured through otherstate enterprises such as NBB, SNAI and development projects of the Ministriesof Agriculture and Industry, not directly to the farms. The collection and

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consolidation of requests from these organizations into annual procurementorders apparently often lead to delays and interruptions of the supply.ONAT does not have sufficient working capital to maintain reserve stocksof fertilizers or chemicals to bridge temporary supply difficulties. Thisis due not only to inadequate initial provision but also to the fact thatpayments from its parastatal customers are in arrears.

3.13 Fertilizer consumption levels in Somalia are low, amounting toroughly 4,000 t of all fertilizer types per year. Assuming that all ofthese fertilizers are used on land presently under controlled irrigation(50,000 ha), the average fertilizer dose would be only about 80 kg per ha andyear. Elsewhere, this quantity, or more, is recommended for rainfed crops.

3.14 Aside from the organizational and procurement issues outlined above,fertilizer use in Somalia is affected by five factors as detailed below.

(i) Rainfed agriculture does not, at present, alloweconomically or technically for the use of com-mercial inputs. With Somalia's low and erraticrainfall, periodic crop failures are unavoidable.The adequate response to this situation isextensive land use with a minimum of inputs inorder to avoid financial loss;

(ii) A limited number of crops, for which improvedvarieties have not yet been identified, are grownunder rainfed conditions. Traditional varieties,naturally selected for drought and diseaseresistance, have normally a limited genetic yieldpotential and do not generally respond to fertilizerapplications;

(iii) The generally low and uncertain yield response oftraditional rainfed crops to fertilizer applicationsmake its use uneconomical;

(iv) Farmers in rainfed areas produce mainly for theirown subsistence and have little marketable surplus.At present production levels, sales and cash incomeare low and do generally not allow expenditure forcommercial farm inputs;

(v) Managerial constraints on larger irrigated farmshave prevented the use of adequate levels of com-mercial inputs for irrigated crops (bananas, maize,rice, etc.) despite proven responsiveness of theseto fertilizer applications.

3.15 In order to improve the availability of fertilizer and chemicalsthere is no reason why several organizations could not be involved in procure-ment and distribution of commercial farm inputs. Different organizations suchas NBB, SNAI, ADC and the autonomous development projects, could probably meet


the requirements of their particular clients in a more timely and precisemanner, in particular since they are already involved in ordering andadvance payment procedures. ONAT would offer its services for importationand distribution when and if requested by the other organizations and woulduse its branch network principally to supply inputs to farms not served byany other organization. However, as long as ONAT is, in fact, involved infarm input supply, it should have sufficient working capital and access toforeign exchange to maintain stocks of different types of fertilizers andchemicals adequate to meet requirements which emerge outside the plannedfarming sector and which may result from unforeseen procurement difficulties.

3.16 In order to stimulate use of farm inputs, close linkages should beestablished between the supply, marketing, research, extension services andcredit institutions to diffuse recommendations on input use, profitabilityand financing.

3.17 In the long term, when ADC has expanded the number of permanentbuying stations to absorb increased agricultural output, a gradual transferof the Government operated farm input supply services to this organizationshould be considered. Such would have the following advantages:

(i) ADC, with its numerous buying stations, is incloser contact with farmers than any other agri-cultural service organi£ation;

(ii) the addition of farm input distribution to ADC'sactivities would allow its stations to operate yearround or at least during longer periods of the year,thus reducing overhead costs;

(iii) ADC's transport fleet could be used for two-waytransports: bringing in farm inputs and takingout farm produce;

(iv) ADC's records of marketed produce enable it toappraise the creditworthiness of its clients,should they want to buy inputs on credit;

(v) ADC is also is a good position to recover loansfor farm inputs on behalf of financing institutionsfrom farmers- sales proceeds.

Mechanical Services

3.18 Reliance upon only one organization for mechanized agriculturalservices has not proven a success in Somalia. Lack of independencetogether with cash flow and management problems have prevented smoothoperation of ONAT. As with other agricultural services, the possibilityhaving a greater variety of sources of mechanical services should be con-sidered; diversification would remove the risk of relying entirely on one


organization. Moreover, farm machinery could increasingly be acquired byprivate farmers or by management of development projects who could then rentout any excess capacity, or by agricultural cooperatives for use by theirmembers.

3.19 ONAT should concentrate on providing mainly heavy earthmovingmachinery and specialized farm machinery such as combines, mills, etc., whilestill competing with the other suppliers of mechanical services. ONAT couldalso maintain stocks of spare parts for sale and operate workshops, both incompetition with WAGAD whose principal role should be the importation, saleand of vehicles of all kinds including farm machinery and spare parts.Future procurement of agricultural machinery should be geared to achievinga higher degree of standardization; spare part supply and repairs have beenunnecessarily complicated in the past by the wide variety of makes and modelsimported.

3.20 It is estimated that in 1979, ONAT's rates for tractor hire to pri-vate farms and cooperatives only covered about two thirds of the total costs(Table 13). It may, however, be expected that the rates paid by state farmsand development projects, which are about twice as high as the rates to theprivate sector, should enable ONAT to cover costs and to balance the lossesincurred in providing services to the private sector.

3.21 The dual rate structure, whereby private users of the service arecharged an artificially low rate, has disadvantages, in addition to impact onthe financial viability of the organization; farmers are encouraged to use theservice more than is economically justified and have no incentive to operatetractors on their own or jointly with other farmers. Instead of subsidizingthe rates, the sale price for machinery should be lowered (para. 3.08) and thedesirability of subsidizing the operation of spare part depots and workshops,and creating credit facilities and price incentives for agricultural productsshould be considered.

IV. AGRICULTURAL FINANCE SYSTEM


4.01 The agricultural finance system consists of the Government, theSomali Development Bank, the Commercial and Savings Bank of Somalia and a fewservice agencies.

4.02 The Government of Somalia finances infrastructure projects primarilyusing foreign loans and grants and, to a lesser extent, budget surpluses. Itacts directly through the Ministries of Agriculture; Livestock, Forestry andRange; and Fisheries as well as through the Settlement Development Agency andthe Crash Programme Agency. Indirect channels are the Central Bank of Somaliaand the service agencies ADC, ONAT and NBB. With the exception of a few

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subsidiary loans to service agencies, all Government funds are used as grantsor subsidies which appear in the current and/or development budgets of theMinistries.

4.03 The Government pays special attention to agricultural credit,requiring the banks to allocate certain amounts of credit to the sector eachyear. Individual farmers and cooperatives pay lower interest rates for bankloans than do states enterprises and non-agricultural sectors. Preferentialmeasures were also adopted in 1976 for banana growers who faced seriousfinancial difficulties. The authorities decided that the banana growers'Dad debts to the banks and the NBB (amounting to So.Sh. 30 million) shouldbe taken over by the Central Bank to be repaid over six years at a rate of4 percent interest p.a. Subsequent bank loans for investment and workingcapital were related to the past repayment record of the farmers; restrictionsand conditions were imposed in the case of delinquent borrowers.

4.04 The Somali Development Bank (SDB) extends investment and developmentloans to all sectors of the economy. The amounts and numbers of loan. to agri-culture have increased significantly since 1976, when small farmers were firstincluded in the credit program. Over 80 percent of all loans of SDB are nowdirected to the agriculture, livestock and fisheries sectors. However, theymake up only 30 percent of the SDB's total lending. The average agriculturalloan decreased from So.Sh. 77,000 between 1969 and 1975 to So.Sh. 43,000 in1976, but increased again to So.Sh. 72,000 in 1977 and So.Sh. 139,000 in 1978.Agricultural loans are mainly used for large irrigation programs and thepurchase of tractors, implements and machinery, in particular water pumps andwell equipment. In 1978, two thirds of the loan amount (So.Sh. 24.8 million)for agriculture went to the banana subsector, mainly medium and large-scaleenterprises. SDB's loan distribution is shown in Table 14.

4.05 Loan approval by the Somali Development Bank is based on a projectplan which is appraised by technical staff of the Bank. Loans up toSo.Sh. 200,000 are approved by the Management, larger loans by the Board.The loans cover up to 75 percent of the total project costs, are normally fora five year period, bear 5.5 percent interest p.a., and are used mainly forthe purchase of materials procured through Government agencies. Experiencewith agricultural development credit is mixed. Consistent data about arrearsis not available, but SDB staff estimate that the arrears percentage variesbetween different groups of borrowers, increasing from small farmers to co-operatives and peaking in the banana industry.

4.06 During 1978, an experimental pilot credit scheme was started in theBalad District with cash loans being made to individual farmers. The generalexperience was that the cash was often used for purposes other than thosedesignated. The program had to be changed and loans are now given only inkind, mainly for the improvement of irrigation facilities and for the pur-chase of tractors, or as group credit to villages. The District Commissionerapproves the loans and the village head is held responsible for repayment.The pilot credit scheme is being used to gain experience for a future ruralcredit scheme with nationwide coverage which is under preparation withassistance from UNDP/FAO.


4.07 The Commercial and Savings Bank of Somalia (CB), the former NationalCommercial Bank, provides short-term working capital for recurrent expenses.More than 60 percent of the loan amounts go to the trade sector, in particularfor livestock trade. Loans for agriculture, livestock production and fisheriesamount to about 20 percent of the total (Table 15A). Loans are extendeddirectly to private enterprises and cooperatives as well as for the refinancingof state enterprises. A breakdown of loans to the different users in the agri-culture, livestock and fisheries subsectors is given in Table 15B.

4.08 Traditional borrowers in the agriculture sector are banana growerswho use the loans to finance input, production and harvesting expenses andsmaller investments, and medium and large-scale growers of cereals and oil-seeds who use them mainly to finance harvesting costs. Small farmers and co-operatives have participated in the credit programs of the Commercial SavingsBank only since 1977. Loans to small farmers and cooperatives are appraised,approved and guaranteed by a District Credit Committee, consisting of theDistrict Party Secretary (as Chairman), the Manager of the Bank branch andrepresentatives of MOA, ADC, ONAT and other organizations involved. Loans tolarge farmers are financially appraised by Bank staff and guaranteed by theassets of the farm.

4.09 The loans are for a maximum period of 1 year and bear 5.5 percentinterest p.a. for small farmers and cooperatives, and 7 percent interest p.a.for larger farms and state enterprises (down from 10 percent until 1977).Small farmers and cooperatives show a poor repayment rate. As of mid-1979,from a total lending of So.Sh. 12 million to this group, only So.Sh. 5.7 mil-lion had been repaid. So.Sh. 6.3 million or 52.5 percent were in arrears.No detailed information is available on the repayment rate of larger farmers,but the Bank estimates it to be slightly better.

4.10 The Agricultural Development Corporation (ADC) grants small amountsof credit in kind (foodgrains and seeds) to its customers. It also occassionallyextends small cash loans for harvest expenses. In addition, ADC guarantees itslarger customers loans from the Commercial and Savings Bank or from ONAT forrenting agricultural machinery. ADC's credits in kind are interest free andrepaid out of the proceeds of sales of agricultural products to ADC. Cash loansare repaid after one or two months at 7 percent p.a. There are no securities;ADC staff in the field assess whether the borrower will be able to repay thecredit or loan from the sales proceeds of his crops.

4.11 Until 1975, the Farm Machinery and Agricultural Services Organiza-tion (ONAT) was involved in granting credits to farmers and state enterprisesfor the renting of agricultural machinery. Due to accumulated bad debt(So.Sh. 2 million by banana growers and So.Sh. 0.5 million by other farmersand cooperatives), all credit activities were stopped and ONAT does not dealwith individuals any more, except on a cash basis or at the specific requestof Government organizations or banks guaranteeing the credit.


4.12 The National Banana Board (NBB) used to deal with credit until 1976.It financed the expansion and improvement of land for banana cultivation usinggrants from Italy and the EEC. Most of these investments were made on threefarms owned by NBB. In addition, NBB financed irrigation facilities (welldrilling) for banana farms. NBB also credited sales of material inputs suchas fertilizer, pesticides which it delivered to banana farms and guaranteedONAT credits to its customers for the hire of machinery. NBB credits wereinterest free and made without security. The judgement on creditworthinesswas based on the past performance of the borrower. No regular repaymentschedule was applied in the case of development credits. By applying a fixedpercentage of the sales proceeds for debt service (up to 40 percent), long-term investments in irrigation facilities were often to be repaid as medium-or even short-term loans, thus overstretching the financial situation of thefarmers.

4.13 NBB's credit activities were stopped in 1976 in view of the seriousfinancial problems in the banana sector which culminated in the consolidationof the debts of the banana industry by the Central Bank (para. 4.03). NBB is,however, still active in giving advice on the feasibility of bank loans to thebanana farms.

B. Issues

Credit Coverage

4.14 Most credit to the agricultural sector is channelled to state enter-prises and larger market-oriented farms in particular the banana plantations.Medium and small-scale farmers have only limited access to credit. Severalfactors have contributed to this partial coverage:

(i) lack of branch offices: besides headquarters atMogadishu, the SDB has only two branches, one inHargeisa and the other Kismayo, CB has 24 branchesfor the whole country;

(ii) lack of funds in the lending institutions as a resultof poor repayment rates, accumulation of bad debtsand narrow interest margins;

(iii) the difficulties smaller farmers have with providingsecurities, coping with the paperwork involvedin making a loan request, and making the necessarytrips to the bank offices;

(iv) unavailability of farm inputs and services to purchasewith the credit;

(v) lack of profitable investment opportunities in thefarms due to poor husbandry and management standards,low yields, poor returns, and high risks;

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(vi) the structure of the farming enterprises which ischaracterized by a relatively small number of com-mercialized and market-oriented farms and a largenumber of small subsistence farmers who cannot takecredit because their marketed surplus is too smalland irregular to allow for regular repayment.

Repayment Rates

4.15 Repayment of loans given to individual farmers, cooperative andstate enterprises is generally poor. Arrears have been built up in theCentral Bank and other banks and have caused service organizations such asNBB and ONAT to cease credit activities. By contrast, small loans given byADC's local managers to well known individuals seem to have been success-fully recovered.

4.16 The poor repayment record may be attributed to a combination ofthe following:

(i) failure to exclude non-viable projects or doubtfulborrowers from access to credit;

(ii) lack of control over the ultimate use of funds,particularly cash loans;

(iii) inability of the borrowers to make full use ofinvestments or inputs due to lack of workingcapital, labor shortages, weather hazards,breakdowns or unavailability of machinery, andthe like; and

(iv) lack of enforcement of loan repayment fromdelinquent but capable borrowers which leadsto an ever increasing erosion of the creditmorale.

Interest Structure

4.17 Somalia has historically followed a low interest rate regime asshown by examples of important lending rates for the agricultural sector:

Central Bank of Somalia: Discount rate 3.5 percentGovernment 2.5 percent

Commercial and Savings Bank: Cooperatives and small farmers 5.5 percentPublic enterprises 7.0 percent

Somali Development Bank: Medium-term (2-6 years) loansfor agriculture and handicrafts 5.5 percent

Long-term (7-20 years) loans foragriculture and handicrafts 6.0 percent


Private savings at commercial banks earn 2 percent interest p.a. with privatetime savings up to 6.5 percent p.a. for deposits over 24 months.

4.18 These low interest rates were justified as long as the inflationrates were low and market forces were not decisive for the mobilization ofsavings and the allocation of capital resources within a planned state economy.However, inflation which was low before 1974, jumped up to an annual averageof 13.9 percent between 1975 and 1977, thus producing negative interest ratesfor the lending institutions and a decrease in the real value of their avail-able funds.

C. Recommendations

4.19 Before any major credit program for agricultural producers is under-taken certain factors should be weighed:

(i) Credit to the agricultural sector should be co-ordinated. At present, several banking institu-tions and service organizations are involved andall apply different procedures.

(ii) Credit should be channelled primarily through thebanking system. This, however, needs strengtheningand expansion. Geographical coverage and thenumber of staff qualified to appraise and supervisecredit technically and financially should both beincreased. In the medium term, local cooperationbetween the Commercial and Savings Bank, which has abroader network of branch offices, and the SomaliDevelopment Bank, which is in process of buildingup its technical expertise in loan appraisal andsupervision, is to be recommended.

(iii) Pilot schemes with varying credit procedures shouldbe continued and expanded to find viable solutions,since experience with agricultural credit in Somaliais so far not encouraging. If the ongoing villageand cooperative credit schemes prove successful,they could be used as intermediaries between thebanks and the smaller farmers, thus lowering thecost of credit administration and achieving a broadercoverage.

(iv) Credit funds should be self-sustaining and not beallowed to decrease through negative interest ratesand tolerance of low repayment rates. Interest ratesshould, ideally, reflect the real cost of capital


supply, taking into consideration inflation and adminis-tration costs. Stricter standards of technical andfinancial appraisal and supervision of credit use,penalty interest charges, rejection of new loan applica-tions when old loans are in arrears, and in the case ofsmallholder credit through villages and cooperatives,social pressure by other members of the community shouldcontribute to avoid build-up of arrears. Exemptionsfrom the scheduled repayment of loans and consolidationof debts should only be tolerated on the basis of aGovernment decree, in cases such as natural disaster.

(v) The terms of credit should reflect the development ofproductive investments they are financing. Short-termcredit should not be used to finance long-term invest-ments (as has been the case in the banana industry).

(vi) Savings facilities for the rural population should beexpanded and made attractive. This would allow a highermobilization of capital for lending purposes and alsofavor self-financing of the enterprises.

(vii) Marketing organizations should be actively involved incredit recovery through deductions from sales proceeds,in particular of commodities with a single marketingchannel. Subsistence farmers should not be included ina credit program as long as they do not produce market-able surplus.

(viii) Where agricultural credit for necessary productiveinvestment cannot be economically used, Governmentgrants are a more appropriate means of financing.In case of infrastructure investments, water charges,land charges and betterment levies could contributeto the recovery of these grants. Credit should,however, alway be fully repaid and must not be usedto subsidize agriculture.

V. OUTPUT MARKETING


5.01 Marketing of agricultural products is the responsibility of avariety of parastatal enterprises that belong to different ministries andwhich deal with specific products as shown in Tables 2 and 16. The privatesector has a major share only in the marketing of live animals, both forexport and for local consumption, and for fruits and vegetables.

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The Agricultural Development Corporation (ADC)

5.02 ADC was established in 1971 and has the Government monopoly on grainmarketing. ADC is the sole buying agent in the country for sorghum and maizeand is responsible for import, export, storage and nationwide distribution ofthese crops. By law, producers are permitted to retain 100 kg of their grainharvests per family member per year and are required to deliver the surplus toADC.

5.03 Due to the importance of the subsistence farm sector in Somalia,ADC receives only around 30 percent of grain production in years with normalharvests, and with wide fluctuations between harvest seasons and years. Inyears of poor harvest, farmers retain a higher proportion of their productionfor their own subsistence needs, thereby reducing ADC's share in the smallerharvest more than proportionally. During the 1974-75 drought years, ADC'spurchases of maize and sorghum dropped to about 30 percent of the averagevolumes marketed during the previous two years (Table 17). At the same timeADC was faced with increased demand due to shortfalls in producing areas.

5.04 ADC balances supply and demand by importing and storing grain.Table 18 summarizes the imports of grain for famine relief through rehabili-tation centers from 1975-1978. These imports amounted to about 40 percentof the grain volumes purchased by ADC from Somali producers. Nearly twothirds of the imports were maize. ADC has about 167,000 tons of storage capa-city, distributed over 35 locations (Table 19). They include 82 buildingsfor flat storage and 16 underground stores.

5.05 ADC buys directly from the producer and pays cash on delivery.Rice is only accepted milled, not as paddy; cotton is bought as seed cottonof three different grades and ginned in ADC-s own ginneries for sale as lintto SOMALTEX. ADC buys at the warehouse locations indicated in Table 19,but in addition, during the harvesting seasons, it establishes temporary buy-ing stations in the smaller towns and villages of the producing areas.

5.06 Producer prices are fixed by the Government in consultation withADC and MOA; they take into consideration the production cost of the crops.Prices are uniform all over the country. There is now, no consideration ofthe quality of the produce (variety, purity, moisture content, etc.) exceptfor cotton grades. Producer prices have been adjusted from time to time (mostrecently at end 1975 and end 1976), but have generally not kept up with thedomestic inflation. Producer prices paid by ADC are detailed in Table 20.

5.07 ADC has its own fleet of trucks (one per region) for the transportof produce but it also rents transport from the private sector. Transportcosts between warehouses are accounted for at a flat rate of So.Sh. 160 perton of produce. Handling margins are detailed in Table 21. Since the sell-ing prices of ADC are fixed by Government the margins are fixed. Taxes andtransportation costs are the largest expense items of ADC.


5.08 ADC sells the rice to the National Trading Corporation (ENC) forfurther distribution, oilseeds to the oil mills, cotton lint to SOMALTEX andthe cereal grains to local Governments who undertake further distribution toGovernment shops or licensed retail traders.

The National Trading Corporation (Ente Nazionale Comercio, (ENC))

5.09 As a Government enterprise under the Ministry of Commerce, ENC isresponsible for supply and distribution of sugar, rice, wheat, wheat flour,pasta products, edible oils, tea, coffee, dates, soap, cloth and plasticfootwear. It also handles imports on concessional terms (commodity aid,mostly wheat). Not included under ENC's activities is the supply of maize anasorghum, which are under the responsibilities of ADC. Procurement of selectedcommodities in 1977 is detailed in Table 22.

5.10 ENC has a network of branch offices and depots in each region andemploys about 1,000 workers. Transport is provided mainly by the privatesector; ENC delivers its goods to regional municipalities which are responsi-ble for further distribution to the villages and licensed retail merchants.ENC's selling prices are uniform all over the country and are fixed by theGovernment. Its imports are subject to duty at rates between 20 and 60 per-cent of the c.i.f. values. ENC has also to absorb fluctuations of the importprices through its trading margins.

The National Banana Board (NBB)

5.11 NBB is a Government enterprise under MOA and is the sole regulatingand promoting agency for bananas in Somalia. It has its headquarters withfour departments (Commercial, Technical, Production and Administration) inMogadishu and two branch offices which function as departments in the produc-ing areas of Shalambod and Kismayo. Present staffing of NBB is summarizedin Table 23. It is directed by a Board of Directors composed of representa-tives from within the organization including the two field directors, andfour producer representatives. NBB has a monopoly on banana exports since1970, it enforces regulations governing the banana industry, distributesinputs to producers, and until 1976 it issued credit for inputs and farmdevelopment projects. In recent years, NBB has moved into banana productionproper and now owns and operates six packing stations, 10 farms (in additionto one farm for the production of suckers) and has a 50 percent share in ajoint venture with an Italian company.

5.12 Banana production in Somalia is concentrated in the Lower Shebelliarea (Shalambod) and the lower Juba area (Kismayo). Since 1972, when bananaexports reached their maximum (Table 24) the number of banana producingfarms, the area under bananas, and yields of bananas for export have beendeclining in the Lower Shebelli area. In the Lower Juba area, the number offarms is relatively stable, but the area under bananas has been reduced byflood damage (Table 25).


5.13 Sizes of banana farms vary considerably. In 1978, the five largestproducers (out of a total of 111) accounted for 31 percent of all exports(Table 26). On average, the farms have about 60 hectares of plantation, ofwhich about 40 hectares are usually in production. They are required todevote 5 percent of their land to food crops for farm workers' subsistenceand for delivery to ADC.

5.14 For each shipment of bananas, the farmer informs the NBB branchoffice of his supply capacity. On the basis of these production estimatesand the available shipping capacity, NBB fixes quotas for each farmer. Inprevious years the farmer had to make compensatory payments if he failedto fulfill his quota. Recent years showed a considerable gap between thefarmer's production estimate, the actual production record and the actualvolumes shipped. In 1978, production estimates were 50 percent above actualproduction, and only 65 percent of recorded production was actually loadedfor export (Table 27). While between 1972 and 1978 the overall annual yieldsof exportable bananas were maintained at levels of 19-24 ton/ha, exportedproduction declined by about one third from 18.7 ton/ha to 12.6 ton/ha(Table 25). Considerable quantities of bananas must therefore either bewasted on the farm or marketed through other channels than NBB. Domesticmarketing of exportable bananas is illegal and the NBB is not involved inmarketing bananas of non exportable quality.

5.15 Until 1968, all bananas were exported to Italy. Thereafter, MiddleEast countries took an increasing share of Somalia's production until 1974/75while exports to Italy declined to about half their previous volume. Sincethen, disagreements have arisen with the distribution agent in Saudi Arabiaresulting in cessation of the exports to this important market. In 1978,other Middle East countries absorbed only about 10% of the 1979 volumes whileNBB was not able to regain the former market position in Italy nor could itdiversify exports to other countries (Table 28).

5.16 NBB sells bananas to foreign marketing organizations on a f.o.b.basis; it maintains five-year contracts with the Italian Company SocietaMercantile Oltre Mar (SMO), whereas prices with Middle East MarketingCompanies are negotiated for every shipment. NBB is involved neither inshipping nor in marketing overseas. Historically, as shown in Table 29,the net producer price amounted to over 50 percent of the f.o.b. price.The producer received only between 40 and 45 percent, of the 1979 f.o.b.prices (US$200-225 per metric ton), the remainder being used to cover thepacking cost, transportation, NBB charges, customs and other handling charges(Table 30).

B. Issues and Recommendations

Food Crop Marketing

5.17 Parallel Markets. Scarcity of supplies and low producer prices haveresulted in the emergence of a parallel market for food crops; its extent is


not known. Producers deal directly with the consumers or through middlemenat higher than the official prices. Transactions in these private marketingchannels are encouraged by the rigid ane uniform price structure whichdoes not allow for quality differences or differentials in actual marketingcosts (distances, transport costs). This parallel market should not besuppressed as it balances supply gaps not covered by official channels andapparently provides more efficient services to producers and consumers thanADC and the local Governments are able to in certain areas. The desirabilityof competition from private, licensed traders in the fields of purchase,storage and distribution of cereals and oilseeds should be considered.

5.18 Pricing System. Presently, official producer prices for food cropsdo not take into account value and cost differences. ADC's purchase and sell-ing prices are uniform all over the country for a given year and crop species.Differences in transport costs which vary with distance, in storage costs thatincrease over time, and in quality that depend on physical characteristics ofthe crop do not affect the unit price paid to the producer. The officialmarketing system has thus become the last resort recipient of surpluses asproducers give preference to their own subsistence and to alternative marketingchannels. The present pricing system does not encourage producers to deliverquality products or take over storage costs and risks. In addition, uniformproducer prices that ignore actual transport cost differentials prevent aregionally diverse cropping pattern that could exploit the resources of thecountry more economically.

5.19 In order to satisfy producer and consumer needs more efficiently,ADC should limit its function to regulating the market rather than monopoliz-ing it. Supply and demand could be regulated through official maximum andminimum prices at the producer and the wholesaler level. ADC would intervenein the market when the market prices rose above or fell below these levelsthrough selling or buying buffer stocks. These would have to be complementedinitially by imports.

5.20 In addition to the price spread, prices at the producer and whole-saler level should vary (i) according to quality standards; (ii) on a monthlyor quarterly basis, to reflect the costs and risks of storage and to stabilizemarket supply by allowing producers and traders to store; and (iii) on aregional basis, according to the main flow between producing areas and con-sumption centers and the actual costs of transport.

5.21 Producer Price Levels. In order to boost production through finan-cial incentives, producer prices should be increased for the following foodcrops:

(a) Maize, which is presently imported in large quantities andis the cereal crop that offers the greatest and fastestprospects of production increase. It is mainly grown onirrigated lands that allow for better control of thenatural factors influencing yields. It is also mainlygrown by small farmers who can be expected to react to


price incentives. An improved variety of maize has beenidentified and is already grown on some farms. Higheryield potential and increased profitability would alsoallow the use of yield-increasing fertilizers and chemicals.

(b) Oilseeds, (sesame, groundnuts, cottonseed): Somaliaimports about one third of its vegetable oil requirementsand present producer prices are very low in comparison tothe economic and financial costs of imports. As with maize,these crops are mainly produced on the better lands and bysmall farmers who may be expected to react to price incen-tives through expansion of the cropping areas and increasedsales. In addition, both the Mogadishu oil mill and theSOMALTEX cotton factory are underutilized.

5.22 Organizational Responsibilities. At present, the responsibilitiesfor procurement and distribution of different food crops are divided betweentwo parastatal corporations. Both corporations are involved in importation,domestic procurement, storage and distribution. In order to use scarce man-power and expertise in the most economic way, these responsibilities shouldbe set according to function rather than according to commodity. ADC couldbe made responsible for the regulation of the domestic market of food crops,including procurement, storage and distribution. ENC would take care of theimports and the export trade.

Banana Production and Marketing

5.23 Area Under Bananas. Banana production does not receive the atten-tion from farmers that its economic value to the nation would warrant. Un-certainties in the irrigation water supply in the Shebelli area and insuffi-cient protection from floods in the lower Juba area may have contributed tothe decrease in the area under bananas. It also appears that the financialreturns to the producers have not kept up with rising production costs.Banana producers do not benefit from more favorable exchange rates under afranco valuta system as do private livestock exporters since banana exportis fully controlled by a Government agency.

5.24 Yields. Banana yields have declined due to irregular suppliesof fertilizers and chemicals, limited availability of tractor services andrestrictions on credit. There are also indications that, in some areas,irrigation and cultivation methods are not optimal and soils have deterio-rated, in particular as a result of insufficient drainage. NBB should bemore actively involved in coordinating the services of other agencies tothe banana sub-sector, as well as in strengthening its applied research andextension activities.


5.25 Non-marketed Bananas. Increasing percentages of recorded produc-tion records fail to find their way to export markets. This loss of exportpossibilities is caused by NBB's inability to handle total production whichin turn results from farmers overstating their production in order to havethe greatest possible share of their real production marketed and to guardagainst NBB.s being unable to handle all recorded production. Private mar-keting on the domestic market also contributes to the loss. The situationshould be overcome by strengthening NBB's export capability, obliging pro-ducers to record their production more accurately by re-introducing sanctionsfor non-fulfilment of agreed quotas and legalizing domestic marketing ofbananas. In addition ways should be explored for using bananas of inferiorquality productively as dried banana flour or animal feed.

5.26 Domestic Marketing Costs. Costs of packing, transport and handlingof export bananas in Somalia are high. The cost of packing materials aloneamounts to about 40 percent of the present f.o.b. price, or 92 percent of thevalue of the bananas arriving at the packing stations. Banana boxes arepresently procured from the Incas carton factory at Kismayo which enjoys amonopoly. Procurement procedures and the prices for these materials shouldbe reviewed.

5.27 Export Promotion. The NBB is not involved in marketing operationsoutside Somalia. Its activities end with the delivery of bananas on boardship. It has no direct access to information about banana markets in theconsuming countries. In view of the decreasing market share of Somali bananasin its traditional markets and in order to open up new markets, NBB shouldconsider establishing a market information and promotion service throughrepresentatives in the consuming countries. Such an information service wouldbe useful in establishing a sales promotion strategy, in making improvementsin contractual relationships with foreign marketing companies, in establishingmore flexible and responsive procurement operations in Somalia, and in devisinga long-term production strategy.

5.28 Diversification. Export of agricultural crops have been limitedto bananas. NBB should try to find markets for other tree crops such ascitrus, in particular grapefruit, possibly mangoes and dates. These could bemarketed along with bananas.

SOMALIA



Organization Chart of the Ministry of Agriculture

Miniter of Agriculture}

Vice-Minister

Director General

aDirector of | |Director of Director of l iihrof Co- Dire

Research o Planing & eAdministrations Plnt Protection d ter tural Productio

Agri.ut _ralJCoStatistics and locust Contr 1 a ) Hsource oives a Exte esion

Hed of aod of Head of vof ead of of

Agricultural Statistics Accounts Diseases Control Irrigation FACO Eotension & Training ISciencel

Head of Head of Head of -Head of Read of -Head ofD

Head of Projects Labour Insect Control Land Use Group Farms & Production

Ecoomics &ae

Soil & WaterHead of Head of Head of - Head of Higher Co-op. - Head of

tHead of Economics tneral Services Bird & Rat HydroloSy Farms Credit &

Agricultural Control Head of Farm Implements

Hniead n ofado Bo Kein

- ead ofein Head of Meeorolog Suri'_Head of

Had iofiua Pesticides Spervsion Seed imtprovement &

Economicultu Storage Popularisation

Statistics _-Head of

Head of lontrol Service Supervision &

Library & Records _ a Aa

Head of Har anementAdministration

Source: Department of Planning & Statistics, MOA.

June 1979

ANNEX 6

-310- Table 2

SOMALIA



Framework of Parastatal Institutions Serving the Agriculture,Livestock and Fisheries Subsectors

Ministerial Responsibility Institution Main Responsibility

Agriculture National Banana Board (NBB) Marketing of bananas;Farm Machinery and Agricul- Hiring of mechanical ser-

tural Service Organization vices; supply of fertilizers,(ONAT) seeds, chemicals

Agricultural Development Marketing of sorghum, maize,

Corporation (ADC) cotton, oilseeds, rice,seeds

Livestock Forestry and Livestock Development Marketing of live animals

Range Agency (LDA)

Fisheries Las Koreh Fish FactorySomalfish

Commerce National Trading Corpora- Marketing of sugar, edibletion (ENC) oils, tea, coffee, wheat,

pasta products

Industry Somaltex Cotton processing

SNAI Sugar production

Kism,ayo Meat Factory (KMF) MeatMogadishu Oil Mill Edible oil productionMogadishu Flour/Pasta Flour,

Factory pasta

Municipal slaughter houses Meat(Mogadishu, Kismayo )

Tanneries (Hargelsa, Burao, Hides and skin processingMogadishu, Kismayo)

Fish freezing (Bolimag,

Kismayo)Maize Mills (Galcaio,

Mogadishu, Burao)Cigarette/Matches Factory

(Mogadishu)Incas Production of boxes

Mogadishu Milk Factory Milk processingITOP Fruit processing

Finance Somali Development Bank CreditCommercial and Savings Credit

Bank

Bureau of the Somali Crash Programme Agency Training and agriculturalRevolutionary Socialist production

Party

Settlement Development Settlement of drought andAgency war refugees

January 15, 1980


SOMALIA



Development Expenditure of the Ministry of Agriculturefor Cooperative Development, 1974 - 1978

(So.Sh.'000)

Land Preparation 6,783

Construction 2,032

Agricultural Machinery 6,983

Wages and Casual Labor 2,202

Total 18,000

Construction includes 47 warehouses and storage facilities.

Agricultural Machinery include: 47 tractors

35 water pumps

1979 Development Budget is So.Sh. 4 million


SOMALIA



Development of Agricultural Cooperatives1974 - 1978

Number Membership Total Area Irrigable Rainfedha ha ha

Multi-purpose Cooperatives 47 13,651 31,452 20,491 10,961

Group Farms 224 13,939 31,576 17,191 14,385

Total 271 27,590 63,028 37,682 25,346

Source: Ministry of Agriculture, Department of Agricultural Cooperatives.


SOMALIA



Production by Agricultural Cooperatives

Unit Year 1975 1976 1977 1978 1/

Sorghum/Maize ton 5,260 11,585 7,461 4,440

Rice ton 12 28 -- --

Sesame ton 521 493 521 1,006

Tomatoes ton -- 5,514 32 11,347

Wheat ton -- -- 3 2

Cotton ton 40 -- 15 3

Vegetables 2/, Fruits ton 369 _ 27 92

Tobacco ton -- -- 5

Watermelon Thousand pieces 19,025 -- 2,300

Onion ton -- -- 6

Groundnuts ton -- -- 0.2

1/ Gu-season only

2/ Cabbage, salad.

Source: Ministry of Agriculture, Department of Agricultural Cooperatives.

SOMALIA



Budget and Income of The Agricultural Craah ProgrJaqre Agency

YEAR 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979

A. Tudgetary Allocation / 3,529 n/a 13,904 12,000 12,000 lO.500 -14,000 14,9DD 14,9D9 11,000

C. Total Expendit re Sa 2,601 4,138 8,34D 10,821 13,290 12,381 14,607 10,497 12,206 10,986

C. Revenues from Sales -- -- -- -- 1,465 2,500 3,500 3,500 3,595 5,000

D. Net qovernment Expenditure 2,601 4,138 8,340 10,821 11,825 9,881 11,107 6,997 8,611 5,986

w

1/ Net of expected sales revenues

j Budgeted Amounts

3/ Including costs of Central Office in Mogadishu and costs of development of the farms; excluding value of grants of the World Food Program Aid whichcontributes between February, 1975 and February, 1977: 2,725 t of wheat flour, 242 t of vegetable oil, 180 t of dried skim miLk and $17,800 as WFPshare of unloading and internal transport costs; and also excluding value of drugs and medicines provided by UNICEF .

Source: Crash Programme Agency: ;!Mission FindingsJ

January 14,1980o


SOMALIA



Crash Programme Farms in Operation in 1979

CultivatedArea

No. Farm Region (ha) Main Crops

1 Tugwajale Hargeisa 8,000 l/ wheat, sorghum (El Jama)

2 Belet-uen Hiran 700 sorghum, cotton, sesame, wheat, beans

3 Johwar Central Shebelli 340 paddy rice, maize, sesame, onion

4 Janale Lower Shebelli 650 upland rice, maize, banana

5 Shalambod 2/ Lower Shebelli 1,500 upland rice, sesame, maize, banana

6 Haway Lower Shebelli 600 paddy rice

7 Jilib Central Juba 300 upland rice, maize, sesame, beans

Total Cultivated Area 12,090

Uncultivated areas in farmsNo. 3, 6 and 7 - about 8,000

Total Farm Area about 20,000

1/ rainfed; all other farms irrigated

2/ includes a rice-polishing factory

Source: Crash Programme Agency: A Brief Resume on the Activity of the AgriculturalCrash Programme Agency.

Mission Findings

SOMALIA



Production by Crash Programme Farms

1971 1972 1973 1974 1975 1976 1977 1978 1979

1. ber of Crash Programme Farms 7 9 9 8 7 7 7 7 7

2. Production (tons) r,a n/a n/a

Maize 641 1,454 248 194 390 207Cotton 21 53 79 14 5Sesame 30 36 22 9 77 81Groundnuts 109 12 33Wheat 241 360 570 170 253El Jama Sorgh's 946 83 28 28Ordinary Sorghum 287 91 131 221 36Upland Rice 24 60 428 717 183Paddy Rice 948Beans 2.0 3 4Tobacco 17 11Onions and Other Vegetables 9 17 6 7 4Sunflower 169 6Bananas 682 515 535

3. Cultivated Area (sa.)

Maize 1,403 465Cotton 70Sesame 454 595Wheat 2,400 2,503 3,000El Jama Sorghum 1,000 1,500Ordinary Sorghum 1,000 400Upland Rice 729 260Paddy Rice 496Beans 40Onions and Other Vegetables - 3 9Bananas 163 138

Total n a n/a n/a n/a, 7,152 6,476 n/a 12,090 12,000

4- Pbysical ielda 4La n/a n/a n/a n/a n/a n/a n/a

Maize 0.28 0.45Cotton 0.07Sesame 0.17 0.14Wheat 0.07 0.10El Jama Sorgshm 0.03 0.02Ordinary Sorghum 0.22 0.09Upland Rice 0.98 0.70Paddy Rice 1.91Beans 0.10Onions sad Other Vegetables 2.30 0-44Bananas 3.16 3.88

Source: Crash Progre Agency;

Mission Findings.

January 14, 1980


SOMALIA



TraininjgUnder the Agricultural Crash Programme1970 - l978

Profession Number of Persons Trained

Tractor Drivers 765

Auto-vehicle Drivers 885

Electricians 6

Welders 26

Motorists 30

Mechanics 38

Clerks (junior accountants, typists) 80

Blacksmiths 28

Telephone Operators 4

Junior Nurses 316

Farm Irrigators 400

Rice Technicians 50

Plant Protectors 200

Carpenters 22

Poultry Caretakers 69

Tobacco Curers 69

Masons 36

Painters 10

Turners 6

Plumbers 6

Junior Agricultural Technicians 10,828

Total 13,884

Source: Agricultural Crash Programme Agency: A Brief Resume on the Activityof the Agricultural Crash Programme Agency.

January 14, 1980

ANNEX 6

-318- Table 10

SOMALIA



Fertilizer Suaply in Somalia('000 tons)

1975 1976 1977 1978 1979 1980from Oct. estimate projection

Urea (46-0-0)

ONAT: carry over stock 0.3 1/ - - 0.3 - -

imports - - 4.0 2.0 3.0 3.0-3.25

Total 0.3 - 4.0 2.3 3.0 3.0-3.25

Sales of ONAT andother suDpliHrR

NBB 0.3 - 3.0 1.5 6.0 2/ 2.5 2/SNAI (Sugar Industry, Balad) - - 0.5 0.2 2.0 2/ 2.0 2/Settlement Development Agency - - 0.1 0.2 0.34 0.7Crash Programme Agency - - 0.05 0.4 - 0.3Ministry of Agriculture - - 0.05 - - 0.5 3/Fanole Project - - - - 2.0 0.7Balad Project - - - - 0.05 0.5Gelib Sugar Project - - - - 0.5 1.0Libsoma - - - - -- 0.5 2/

Total consumption of area 0.3 - 3.7 2.3 10.89 8.7

Ammonium phosphate (20-20-0)

ONAT: carry over stock 0.5 1/ 0.5 0.3 0.03 -Sales: all tO NBB - 0.2 0.27 0.3 -

Ammonium sulfate

ONAT: carry over stocks 0.8 1/ 0.8 0.55 0.17 -Sales: all to NBB - 0.35 0.38 0.17 -

Compound (16-8-12)

ONAT: carry over stocks 0.5 1/ 0.5 0.3 - -imports - - - 1.5 -Sales: all to NBB - 0.2 0.3 1.5 -

Total Fertilizer Consumption 0.3 0.75 4.65 4.0 10.89 8.7

Notes: 1/ transfers from NBB2/ own Procurement abroad3/ expected as FAO grant

Source: ONAT, Mission Findings


SOMALIA



Prices of Fertilizers and Spraying Equipment, 1977/78

Item Unit c.i.f. price per unit sale price per unit 1/US$ So.Sh. So.Sh.

Urea, 46% N 50 kg 9.90 62.90 82

Ammonium sulphate 100 kg 31.00 196.90 256

Ammonium phosphate 50 kg 19.53 124.05 161

Rustical-Compound 50 kg 19.00 120.70 157

Spraying equipment:

Motorized sprayer each 200.00 1250.00 1625

Hand operated sprayer each 63.00 400.00 520

C.P.3 Knapsack sprayer each 115.00 727.15 950

l/ estimated at 130% of c.i.f. price.

Source: ONAT


SOMALIA

AGRICULTURAL RESEARCH PROJECT


ONAT Rates for Mechanical Services, 1979

Tractor hire per hourRate So.Sh. per hour

Type of tractor Private Farms and State Farms andCooperatives Development Projects

Chain crawler 100-110 HP 48 95

Chain crawler 75 HP 36 65

Chain crawler 54 HP 27 65

Wheel tractor 50- 90 HP 25 55

Charges for tasks per ha (applicable only for State Farms & Development Projects)

Task Standard Performance Chargeshours/ha So.Sh./hour

Bush clearing w. 100-110 HP 3 285

Ploughing w. wheel tractor 4 220

Source: ONAT


SOMALIA



Model Calculation of Tractor Operating Costs

Basic data

Purchase price: 70 HP wheel tractor from ONAT US$ 15,0003 disc plough from ONAT US$ 1,200

Assumed life hours: Tractor 10 years or 12,000 hoursPlough 10 years or 6,000 hours

Cost per hour of operation

A) Depreciation Tractor $ 15,000 : 12,000 hours $ 1.25Plough $ 1,200 : 6,000 hours $ 0.20 $ 1.45

B) Interest (10% on half of purchase price)Tractor $ 7,500 : 1,200 hours $ 0.63Plough $ 600 : 6,000 hours $ 0.10 $ 0.73

C) Spare parts, maintenance and repairs(10% of A) $ 0.15

D) Fuel cost 70 HP x 0.1 liter/HP x 0.3 $/liter $ 2.10

E) Lubrication (20% of D) $ 0.42

F) Driver $ 0.50

Subtotal $ 5.35

G) Overhead cost (10% of A - F) $ 0.54

Total $ 5.89

Conversion to So.Sh.

At official exchange rate $ 5.89 x 6.295 So.Sh. 37 per hour

Source: Mission estimate


SOMALIA



Loan Distribution of the Somali Development Bank

---- From 1969 to 1975 --- ----- Up to 1978---------No. of Amount No. of Amount

Sector Loans So.Sh.'000 Percent Loans So.Sh.'000 Percent

Industry 48 104,750 67 92 136,816 55Agriculture 327 25,069 16 807 68,226 27Livestock 7 3,494 2 18 4,607 2Fisheries 29 1,778 1 38 2,447 1Transport 13 8,899 6 19 15,002 6Water Development 4 2,517 1 4 2,517 1Construction & Housing 2 2,800 2 4 5,611 2Tourism 2 4,201 3 2 4,201 2Others 8 3,358 2 39 10,481 4

Total 440 156,866 100 1,023 249,908 100

Source: Compiled from: Somali Development Bank: Nineth Annual Reportand Statement of Accounts for 1977; and Provisional Statementfor 1978.

ANNEX 6

- 323- Table 15

SOMALIA



A. Loan Distribution of the Commercial and Savings Bank

of Somalia

Dec. 1977 Dec. 1978Sector So.Sh.'000 Percent So.Sh.'000 Percent

Trade (including transport, housing,public works and others) 720,354 64 756,000 62

Agriculture 120,178 11 166,000 14

Livestock 80,597 7 100,000 8

Fisheries 13,524 1 15,000 1

Industry 183,919 17 185,000 15

Total 1,118,572 100 1,222,000 100

Source: Commercial and Savings Bank of Somalia: Report

and Accounts for the period ended 31st December1977; and Provisional Statements for 1978.

B. Breakdown of Loans of the Commercial and Savings Bank of Somaliato the Agriculture, Livestock and Fisherie-s Sectors

(So.Sh. Millions)

Outstanding Loans Overdraft FacilitiesSector December 1977 December 1978 December 1978

Agriculture:

Farmers and Cooperatives 50 44

ADC 19 31 45

ONAT 34 56 55

NBB 17 35 35

Sub-total 120 166 135

Livestock:

Traders 75 87 --

LDA 5 13 14

Sub-total 80 100 14

Fisheries:

Cooperatives and Private 13 15 --

Sub-total 13 15 --

Total 213 281 149

Source: Commercial and Savings Bank, Mission estimate.


SOMALIA



Institutions Involved in Marketing of Agricultural Products

MinisterialInstitution Responsibility Commodities Marketed

Agricultural Development Agriculture Sorghum, maize, cotton,Corporation (ADC) oilseeds, rice

National Banana Board (NBB) Agriculture Bananas

National Trading Commerce Sugar, edible oils, tea,Corporation (ENC) coffee, pasta products,

imports of wheat and rice

Crash Programme Agency Office of the Cereal grainsPresident

Livestock DevelopmentAgency Industry Live animals

Somalteks Industry Cotton


SOMALIA



ADC Grain Purchases('000 tons)

Year Season Maize Sorghum Total Grain

197J. Gu 45.2 13.4 58.6Der 9.3 16.0 25.3

83.9

1972 Gu 54.6 19.4 74.0Der 5.8 18.2 24.0

98.0

1973 Gu 9.5 3.1 12.6Der 8.6 2.2 10.8

23.4

1974 Gu 9.9 5.8 15.7Der 5.2 1.1 6.3

22.0

1975 Gu 20.0 12.0 32.0Der 5.2 1.1 6.3

38.3

1976 Gu 30.0 10.0 40.0Der 6.5 10.0 16.5

56.5

1977 Gu 17.9 42.8 60.7Der 3.4 8.8 12.2

72.9

1978 n/a 10.8 53.9 64.7

Source: ADC


SOMALIA



Imports of Grain for Famine Relief in Rehabilitation Centers1975 - 78

('000 tons)

Year Maize Sorghum Wheat Total Grains

1975 35.3 10.9 20.9 67.1

1976 15.5 - - 15.5

1977 5.7 - - 5.7

1978 8.6 - - 8.6

Total 65.1 10.9 20.9 96.8

Source: Ministry of Agriculture

ANNEX 6-327 - Table 19

SOMALIA



Capacity of ADC Warehouses

Numbers of Buildings TOTALDistrict Flat Storage Underground Storage (tons)

Xamar C-) 11 1 (1,400) 48,000Kismayo (-) 5 2 12,000Jamaame (-) 4 - 10,000Jilib (-) 1 1 1,200Bualle (-) 1 - --Saakoow (+) 3 - 1,500B/Dheere (+) 2 - 4,000Diinsoor (+) 3 2 4,000Ufurw (+) 2 2 1,800Q/Dheere (+) 2 1 1,500Baydhabo (+) 4 2 12,000B/Hakabo (+) 1 3 3,500Xudur -) 1 - 1,000Waajid (-) 1 300K/Waarey -) 2 - 3,000W/Weyn (+) 2 3 2,500Afgooye (+) 4 - 4,000Awdheegle (+) 2 1,000Qoryoolay (+) 7 6,000Shalambood (+) 5 1 13,500Sablaale (-) 2 - 3,000Baraawe -). 2 - 5,000Balcad (+) 3 - 3,000Jowhar (+) 3 - 5,000Mahaday (+) 2 - 3,000B/Burte (-) 1 - 800Jalalqsi -) 1 - 800B/Weyne (-) 1 - 800DH/Marreb -) 1 - 800Gaalkacyo (-) 1 - 800Garoowe (-) 1 - 800Qardho -) 1 - 300Ceerigaabo (-) 1 - 500Burco (-) 1 - 1,000Hargeysa (-) 3 5500

82 16* 166,900

* About 250 - 300 tons each, except in Mogadishu. Use of seaweed for insects eachtime before storing.

(+) Net surplus areas.(-) Net deficit areas.

Source: ADC


SOMALIA



Producer Prices Paid by ADC(So.Sh. per ton)

Commodity 1972 1973 1974 1975 1976 1977 1978 1979 19801/

Rice -- -- 3,500 3,500 3,500 3,500 3,500 3,500

Maize 500 600 600 600 600 750 750 750 1,000

Sorghum: I

Elmi Jama 870 940 1,100 1,100 1,100 1,100 1,100 1,100

White 500 600 600 600 600 1 l 900

Red 450 500 500 500 500 750 750 750 X750Brown 360 450 450 450 450

Sesame -- 1,600 1,800 2,000 2,400 2,400 2,400 2,400

Groundnuts, Sunflower 1,000 1,200 1,200 1,200 1,400 1,400 1,400 1,400

Seed Cotton - Grade A 2,600

- Grade B 2,400

- Ungraded 2,200

1/ Unofficial projection of ADC.

Source: Agricultural Development Corporation


SOMALIA



Handling Margins of ADC, 1978(So.Sh. per ton)

Maize and Sorghum

Producer Price 750

Municipal Tax 20

Central Government Tax 70

Bank Interest 15

Empty Bags 30

Postal Charges 5

Porterage 20

Field Transport to Storage 50

Storage Expenses 5

Fumigation 5

Administration 30

ADC Margin 250 250

Transport (from producing to consuming areas) 160

ADC Selling Price 1,160

Sesame

Producer Price 2,400

ADC Margin 300

Transport 160

ADC Selling Price 2,860

October 31, 1979

Source: ADC Records

SOMALIA



Procurement of Selected Commodities by the National Trading Corporation (ENC), 1977

Estimated ENC-ProcurementsTotal Supply Unit Tariff 2/ National as % of

Procurement Cost . Value Duties Requirements RequirementsCommodity (tons) (So.Sh.'000) (So.Sh./tons) (rate) tons) (M)

Flour, Wheat 23,923 (Import) 32,446 1,356.25 30% of c.i.f. 41,620 57

Vegetable Oil 11,974 (Import) 58,362 4,874.06 30% of c.i.f. 11,975 100

Rice 29,321 (Import) 58,364 1,990.51 80 So.Sh./ton 50,145 58

Tea 6,348 (Import) 17,037 2,683.77 20% of c.i.f. 6,348 100

Sugar, Imported 23,203 (Import) 42,867 1,847.48 3,700 So.Sh./MTI,I. 78,525 71

Sugar, Domestic 32,250 (Domestic) 54,024 1,675.18 -- Jl

1/ C.i.f. values for imports.

2/ Estimated

Source: ENC Records, Mission Findings

t M


SOMALIA



Staffing of the National Banana Board, 1979

1. Professional Staff

Department University Graduates2Y Secondary Gradesb/ Section Heads Total

Commercial -- 3 2 5

Technical 1 3 -- 4

Production 1 c/ 2 -- 3

Administration -- 4 6 10

Kismayo 1 1 6 8

Shalambod 1 1 6 8

Total 4 14 20 38

a/ employed as Head of Departmentb/ employed as Heads of Services or Head of Departmentc/ at the same time Director General of NBB

2. Technicians

At Packing Stations in Kismayo Area: 70

At Packing Stations in Shalambod Area: 50

Total 120

3. Ancillary Staff about 340

4. Total Staff of BHE about 500

October 31, 1979

Source: Mission Findings


SOMALIA



Development of Banana Exports, 1950 - 1978

Shalambod Kismavo Total Export IndexYear tons % tons % tons 1960' 100

1950 12,158.2 69 5,338.1 31 17,496.3 22

1951 17,159.9 68 7,993.0 32 25,152.9 32

1952 25,310.3 80 6,089.1 20 31,399.4 40

1953 17,823.9 58 12,864.4 42 30,640.3 39

1954 27,494.4 67 13,320.6 33 40,815.0 52

1955 32,580.3 71 13,024.7 29 45,605.0 59

1956 17,976.0 54 14,883.6 46 32,859.6 42

1957 27,694.4 70 11,397.5 30 39,081.9 50

1958 34,310.9 68 16,026.1 32 50,337.0 65

1959 33,254.3 60 21,884.5 40 54,138.8 70

1960 49,601.2 64 27,252.5 36 76,853.7 100

1961 48,666.0 61 29,872.1 39 78,538.1 102

1962 54,546.4 70 22,687.4 30 77,233.8 101

1963 60,373.0 62 36,810.5 38 97,183.5 126

1964 60,211.2 58 42,636.0 42 102,847.2 133

1965 60,568.7 61 38,259.5 39 98,828.2 128

1966 50,545.2 53 43,698.7 47 94,243.9 122

1967 41,368.5 48 43,445.0 52 84,813.5 110

1968 42,869.2 49 43,716.0 51 86,585.2 112

1969 42,273.0 45 50,545.0 55 92,818.0 120

1970 40,186.4 40 60,058.0 60 102,844.4 130

1971 36,709.4 40 66,605.4 60 103,314.8 134

1972 60,652.1 45 73,282.4 55 133,934.5 174

1973 46,723.5 42 65,207.8 58 111,931.3 146

1974 41,468.6 39 65,830.1 61 107,298.7 140

1975 34,994.9 43 46,846.0 57 81,840.9 107

1976 33,873.7 47 38,657.6 53 72,531.3 94

1977 28,811.8 54 24,999.7 46 53,811.5 70

1978 32,861.2 58 24,218.1 42 57,079.3 74

October 31, 1979

Source: National Banana Board: Statistics, 1978

ANNEX 6333 - Table 25

SOMALIA



Development of Banana Production in Somalia, 1972 - 1978

Year - 1972 1973 1974 1975 1976 1977 1978

1. Number of Producing Farms 145 139 140 129 116 122 117of which Shalambod 81 67 66 57 48 49 53

Kismayo 64 72 74 72 68 73 64

2. Total Area under banana (ha) 9,128 9,770 9,039 8,342 7,422 6,383 6,831of which Shalambod 4,700 4,695 5,075 4,209 3,987 3,895 4,011

Kismayo 4,428 5,075 3,964 4,133 3,435 2,488 2,820

3. Area in Production (ha) 7,137 7,054 6,721 6,148 5,319 4,547 4,605of which Shalambod 3,236 3,097 2,726 2,813 2,625 2,658 2,785

Kismayo 3,901 3,957 3,995 3,335 2,694 1,889 1,820

4. Exportable Yield (ton/ha) 21.2 22.6 22.6 18.9 24.0 22.2 19.3Shalanbod 19.4 21.7 21.7 17.8 13.7 10.7 18.8Kismayo 22.9 23.6 23.5 20.1 34.4 33.7 19.8

5. Exported Production (ton/ha) 18.7 15.8 15.8 13.2 13.6 12.0 12.6Shalambod 18.7 15.2 15.2 12.4 12.9 10.8 11.8Kismayo 18.6 16.5 16.5 14.1 14.4 13.2 13.3

October 31, 1979


- 334 - ANNEX 6

Table 26

SOMALIA



Structure of Banana Farms Producing for Export, 1978

Kismayo ShalambodBranch Branch Total

1. Number and ownership of farmersproducing for export

NBB Farms a/ 7 3 10

Joint Ventures b/ 2 - 2

Cooperative c/ - 1 1

Private Farms or Companies 54 44 98

Total 63 48 111

2. Average Export Production per farm (tons)

NBB Farms 566 835 647

Joint Ventures 1,097 - 1,097

Cooperative - 5,890 5,890

Private Farms or Companies 556 334 434

Global Average 685 384 514

Largest Five Producers (tons per farm)[,201 2,363 1,783

(% of total export production) 25% 36% 31%

a/ Plus 1 NUB farm for production of suckers in Shalawhod with a total of 118 ha ofwhich 60 ha producing suckers.

b/ Joint venture between NBB (50%) and an Italian Company (50%)

c/ Somali-Italian Agricultural Production Cooperative (SIPA)

October 31, 1979

Source: National Banana Board: Statistics 1978; Mission Findings


SOMALIA



Use of Banana Production, 1978Index

Actual ProductionMetric Tons = 100

1. Exportable production, as estimated by thebanana growers 131,389.9 150

2. Actual production of exportable bananas 87,331.3 100

3. Bananas loaded for export 57,079.3 65

4. Local consumption of exportable bananas 30,252.0 35

October 31, 1979


- 336- ANNEX 6

Table 28

SOMALIA



DestinatiOn of BanBnl1 E±pOrts

---- Italy---- -Middle East- Other CountriesYear tons tons % tons

1950-1968 100 -

1969 86,306 93 6,474 7

1970 84,439 84 15,805 16

1971 75,80 73 25,530 25 2 , 0 2 2 a/ 2

1972 78,411 59 45,578 34 9,945 a/ 7

1973 65,976 59 45,955 . 41 --

1974 40,323 38 66,97 62 --

1975 36,635 45 45,147 55 --

1976 45,314 62 27,217. 38 --

1977 46,40 87 7,38 13 25-/

1978 50,273 88 6,80. 12

a/ German Democratic Republic

b/DJ ibouti

October 31, 1979

Source: National Banana BOard: Statistics, 1978


SOMALIA



Banana Marketing Margins in Somalia and Italy (1959 and 1977)(Percentages of Retail Price)

1959 1/ 1977 2/

Producer Price 10.8 10.5

Shrinkage (on ship) and rejections 1.5 --

Packing and packing materials 2.6 10.0

Harvesting and transport to packing shed -- 0.9

Transport to ship, and stevedoring 2.5 1.7

Customs and other duties 2.4 1.1

NBB Commission (Service/Administration) 0.7 1.0

Miscellaneous small charges 0.3

Assembly Costs 10.0 14.7

F.O.B. Export Price (Somalia) 20.8 25.2

Ocean freight and insurance 12.7 14.3

C.I.F. Price 33.5 37.6

Unloading and handling (Italy) 1.1 2.7

Import duties 18.227.7

Importer's Commission (gross margin) 5.6

Import Costs 28.8 26.5

F.O.R. selling price 62.3 64.1

Wholesaler's (ripeners) gross margin 15.5 15.1

Retailer's gross margin 22.2 18.9

Wholesale and retail margins 37.7 34.0

Retail Price 100.0 100.0

1/ Source: International Cooperation Administration: "Inter-River EconomicExploration". The Somali Republic, Washington, DC 1961.

2/ Source: International Labor Organization "Economic Transformation in aSocialist Framework". Addie AbqaL 1977.

November 5, 1979


SOMALIA



Marketing Margins for Bananas in Somalia, 1979(So.Sh./ tons)

Exports toKuwait Yemen

Producer Net Price 565.00 565.00

Shrinkage -- 28.40

Bank Charges 11.20 11.20

NBB Commission 60.00 60.00

NBB Reserve Fund 10.00 10.00

Customs 44.30 44.30

Transportation Charge 50.00 50.00

Loading Charges 6.10 6.10

Port Charges 39.30 39.30

Packing Costsl/ 524.80 524.80

Marketing Charges 745.70 774.10

F.o.b. Cost 1,310.70 1,339.10

F.o.b. Export Price 1,246.50 1,421.00

NBB Profit/(Loss) (64.20) 81.90

1/ No detailed breakdown could be obtained of this important cost component.

Source: National Banana Board, Mission Findings.

November 5, 1979

- 339 - ANNEX 7

SOMALIA


Selected Agricultural Issues

Table of Contents

Page No.

I. PRICING POLICY .......................................... 1

II. MANPOWER ................................................ 5

III. ROLE OF THE AGRICULTURAL SECTOR IN THE ECONOMY .... ...... 7

IV. PROJECTED DEMAND AND SUPPLY FOR AGRICULTURAL COMMODITIES. 12


I. PRICING POLICY

1.01 By assuming responsibility for the marketing of essential commodi-ties, the Government has played a major role in the price mechanism. Itspolicy has been to fix prices for essential foodstuffs, both at the consumerlevel and at the producer level. To maintain producer prices at their level,the Government had to undertake more responsibility and to supply the producerwith subsidized inputs. In the industrial sector with the increased role ofstate government agencies, practically all prices are fixed and based on some.o.ional cost. The whole system is quite intricate and all prices are relatedto one another.

1.02 The Government has been successful in bringing down consumer foodprices in urban areas in the three years after the revolution. This successwas mitigated as import prices rose after 1973 and the country had to importsubstantial amounts of food grain to palliate some of the effects of thedrought. To check the effect of imported inflation and to ensure stability,the Government decided to subsidize a few essential items such as wheatflour, rice, oil and sugar.

1.03 With the drought and the need to import foodgrains, the Governmentcould no longer control the prices to the consumer. The Mogadishu PriceIndex, although its accuracy might be questioned, registered in 1974 and 1975increases of 13.2 and 19.4 percent respectively. As import prices acceleratedand the stocks were being progressively depleted, the parallel market playeda larger role in supplying the urban population.

1.04 After the drought, and with the availability of foodgrain providedunder various drought relief programs, the Government was able to importlarge amounts of foodgrain at relatively low prices. This permitted them tomaintain the consumer prices at relatively low levels and the movement inprices was mainly affected by the high prices fetched by the franco valutaimports. Textiles played a major share in the price increase.

1.05 The national trading agency imports and distributes eight majorconsumer goods items and, although the prices of some of these products havebeen increased by ENC to reflect the higher cost of imports, the Governmentstill subsidizes a number of these products.

1.06 ENC is responsible for importing food grain and selling it to ADCfor distribution. On grain imported at non-commercial terms under PL480 ordrought relief, ENC realizes a substantial benefit since it sells it to ADCat the official producer prices. On the other hand, when it has to importunder the franco valuta system, it realizes a loss which has to be coveredby the government budget or financed out of ENC-s own resources. There isno way to determine the actual profitability of the import operations sinceENC does not publish any accounts.

- 341 -

ANNEX 7Page 2

Table 1

Producer Prices, 1978(So.Sh./ton)

Present Farm LevelProducer World Market Price

Crop Price (US$1=So.Sh. 6.3) (US$1-So.Sh. 9) (USlSo.Sh. 11)

Sorghum 750 705 1,063 1,334Maize 750 750 1,130 1,412Rice 3,500 2,224 3,027 3,763Sesame 2,400 4,353 6,416 7,944Cotton 2,600 3,632 4,962 6,108Bananas a/ 750 1,040 1,580 1,980

a/ Official price at packing station.

1.07 Producer prices for food grain are determined by consumer prices.The difference between the two prices is expected to enable ADC to cover itsoperating and administrative costs. The producer price for maize and sorghumis in line with the world prices converted at the official exchange rate (seeTable 1). However, if converted at the franco valuta exchange rate, they arewell below the world prices. With producer prices fixed too low, this doesnot provide enough of an incentive to stimulate the farmers to market theirproduction. This has become particularly important with the extensive roleplayed by the franco valuta system in the last two years and the Government sdeliberate recourse to the franco valuta market to finance emergency imports.

1.08 The price for oil seeds is also controlled by ADC since 1973, whichpurchases the crop and sells it to the oil mill factory. Producer prices forsesame were raised from So.Sh. 200 per quintal in 1976 to So.Sh. 240. In realterms, these prices have declined and are well below their level of 1973.Compared to world prices they are well below, and the Government should bewell advised to keep them in line with the import party prices.

1.09 Banana producer prices are negotiated by NBB, the National BananaBoard, responsible for the marketing of bananas. NBB collects bananas at theproduction point, and transports them to Mogadishu and Kismayo for export tothe Middle East and Italy. Export prices have increased from So.Sh. 989 permetric ton in 1975 to So.Sh. 1,221 in 1978. Official producer prices havefollowed a similar pattern and have been raised from So.Sh. 500 in 1975 toSo.Sh. 750 in 1977. They have remained at the level since. However, in realterms, the price has declined. The increase in the prices of fertilizer andother imports has in many cases eliminated the profit of the producers.


1.10 Government pricing policy is inadequate to cope with the fluc-tuations of food production. Fixed producer prices, regardless of qualityand geographic location, constitute a major disincentive to stimulate produc-tion in deficit areas. Furthermore, the rigidity of the fixed price systemprevents the Government from using the price system as an incentive to attractfood grain to the collecting centers in periods of shortages. On the con-trary, it provides a strong incentive for a parallel market which tends tofavor leaks out of the official distribution system and further contributeto the shortage situation. Similarly, for the items where distribution isreserved to the public sector agencies, the government retail price policyseems too rigid. More flexibility should be introduced in the price setting.Maximum price could be set at realistic levels (including reasonable marginsfor trade), and it should be left at the initiative of the local authoritiesto decide to lower the price of certain perishable products in case of over-supply. Flexible prices adapted to the local and specific conditions should,on the contrary, increase the supply of food products available to the poorersegment of the population.

Table 2

Behavior of Producer Price in Real Terms a!(1973 = 100)

1974 1975 1976 1977 1978

Maize and Sorghum 101 93 89 101 93Sesame 98/109 91 80 88 80Cotton 121 101 107 105 96Rice 118 99 87 79 72Bananas 85 76/89 78 78 71

a/ Nominal price deflated by the Mogadishu Consumer Price Index.

Source: IMF 1979 Consultative Report.

1.11 The producer price of agricultural products has remained fixeddespite the general inflation in the country. The present producer pricestructure is responsible for a constant deterioration of the terms of tradefor agriculture since the early seventies (see Table 2). This urban orientedeconomic policy constitutes a major disincentive for agricultural productionand has an adverse effect on the supply and the distribution of food in thedomestic market. The producer prices for foodgrain have not been adjustedsince 1976, and do not seem to provide adequate incentive to increase produc-tion. The producer price has actually declined in real terms, while the costof fertilizer and insecticides and other imports have increased. Similarly,the prices for all products purchased by farmers mainly imported through thefranco valuta system have increased and, therefore, the farmers terms oftrade have deteriorated. It is urgent for the Government to reconsider itspricing policy.


1.12 The Government sets the producer prices on an assumed cost ofproduction to the farmer. This does not bear any relationship with the worldprices. With the foreign exchange constraint prevailing in Somalia, theGovernment would be well advised to relate the minimum producer price to theworld price and even pay the producer a premium over the imported price inorder to stimulate domestic production in the absence of any currency devalua-tion de facto or de jure.

1.13 One of the major objections presented in favor of maintaining theproducer price at the present depressed level is the impact of any upwardadjustment on the retail price level. In the food grain market, since asubstantial share of the supply is provided through imports from abroadfinanced on the Government s own resources or through the food aid programs,the effects of an increase in the retail price would be dampened. The retailprice could be set at a level below the full cost of distributing the domes-tic production. The food grain processed under the food aid programs wouldserve to subsidize the price to the consumer. Nevertheless, the retail priceshould be set at a level above the producer price to avoid that. Substantialbenefits would be obtained by selling to ADC food grain purchased on thedomestic market.

1.14 Prices in Somali shillings paid to the producers have to be in-creased to stimulate exports. In the meantime, the prices in foreign currencyhave to remain competitive on the outside market. A devaluation, implicit orexplicit, is the normal way to reconcile these two objectives. At present,the Government has resisted the idea of a formal devaluation and introducedthe franco valuta system which constitute a de facto devaluation for a certainnumber of products. The merits of such a scheme are not to be disclaimed; itconstitutes a substantial source of foreign exchange to finance imports, andit provides a good stimulus to exports.

1.15 With the temporary closing of the Kismayo meat factory and thereduced role of the Livestock Development Agency in the marketing and exportof livestock, the livestock sector is practically back in the hands of theprivate sector. By tolerating that livestock exporters exchange the differ-ence between the actual price they receive and the minimum export price onthe parallel market, the Government has been able to provide sufficient incen-tives to stimulate exports. Livestock exports benefitted by a de factodevaluation of about 50 percent. The impact on the export trade was a tre-mendous response in the exported quantities (40 percent for cattle and 55percent for sheep and goats). Other exports which did not benefit from thisscheme (bananas) continued to stagnate at a level 60 percent below the levelof exports achieved in the sixties. The other element which benefitted fromthis scheme was the remittances of expatriate workers who were given anincentive to remit a larger share of their salaries.

1.16 The success of the franco valuta system depends on two elements--themargin left to the livestock exporter between the minimum export price and theprice at which it sells its livestock on the foreign market. The higher themargin the more attractive is the scheme, and the more it stimulates exports.On the other hand, the repatriation of the foreign exchange depends on the


types of products which can be imported. Restrictions for certain classes ofgoods, such as medicine or construction materials, tend to channel the pro-ceeds of the system on other consumer goods which, in fact, may not be ofprime necessity. The other element influencing directly the value of such asystem for the importer, is the final exchange rate at which the Governmentmight repurchase the imported goods. This may have to be increased in linewith the rate on the parallel market; otherwise the existing 35 percentpremium paid by the Government may not constitute enough of an incentive toinduce importers to import according to government stated priorities.

II. MANPOWER

2.01 Skilled manpower resources are scarce and those available are notproperly utilized. There is no policy framework to remedy the situation.The number of qualified personnel is insufficient for the need of the economy.In many instances, the staff has received adequate training and there arelittle chances of receiving complementary training on the job due to thegeneral lack of technical expertise which prevails throughout the economy.

2.02 Another element of the critical shortage of manpower is that theperson trained for a job does not stick with it. Frequent turnover andpersonnel movements in the public sector contribute to the disorganizationof the manpower and are responsible for the lack of qualification.

2.03 Poor morale in the Civil Service constitutes a disincentive forjunior employees to perform and develop expertise. On the contrary, absen-teeism and the widespread practice of supplementing low salary by anothersource of income further demoralize the Civil Service. This reduces theenthusiasm of the new entrant to perform.

2.04 Somalia had to rely on education and training opportunities abroadfor the highest qualifications. The diversity of the sources of training andof the cultural background poses a series of delicate problems in the inte-gration of the staff. In many instances, the Somalis have to spend a few yearsto learn a foreign language before they can benefit from the training oppor-tunities. Back home he finds himself confronted with colleagues who havereceived their training in a different cultural environment and have adopteddifferent techniques and methods. This creates a communication problem amongthe staff of a given institution, and reduces the possibility of complementarytraining on the job.

2.05 Foreign advisers and experts further complicate the situation byintroducing new methods and techniques not necessarily compatible with thebasic training of the various staff members.


2.06 Emigration has also worsened the supply of skilled manpower. Alarge number of lower and medium level qualified personnel has been attractedby the Middle East countries where wages are seemingly comparatively higher.

2.07 This drain of qualified manpower contributes to the shortage ofpersonnel and accelerates the turnover as personnel is shifted to respond topriority needs.

2.08 Through no fault of their own, most of the existing technicians andskilled personnel have had little opportunity of formal training. They haveacquired most of their qualifications on the job. Therefore, the level ofknowledge and their skill remain low in relation to the required technicalqualification needed to perform.

2.09 A distorted wage structure and the lack of an effective incentivesystem to reward performance of skilled manpower further contribute to demor-alize the civil service and provides additional incentive for emigration.Salaries are extremely low and bear no relationship to work expectations. Noallowance is made to recognize superior performance and thus people areencouraged to supplement their income with other sources of activity whichtend to compete with the requirement of the main activity. This fuels theabsenteeism and contributes to a minimum involvement in the regular job and toa complete rejection of responsibilities.

2.10 Technical assistance is often used as a substitute for local man-power. But the weakness of the services makes the use of foreign techniciansineffective. The absence of Somali counterparts reduces the benefit whichcould be drawn from the expertise hired through technical assistance.

2.11 Lack of support and deficient management contribute to the poorperformance of the public services. Intermediate and lower technicians are ingreat demand. Administrative and secretarial staff are extremely scarce andthus contribute to the low productivity of the economy. The present governmentemployment policy to guarantee jobs to any school graduate does not contributeto improve the situation. The result is that there are no matching of qualifi-cations and job requirements.

2.12 To remedy the situation, the mission recommends the Government takesteps to upgrade the existing manpower whenever possible and the inadequatelyskilled people who occupy positions of skilled manpower.

(a) Encourage skilled manpower to seek employment outside ofthe public sector. In the short- and medium-terms, thiscan be achieved by encouraging private investments. Inthe long-term, employment in the private sector wouldincrease as production in agriculture, fisheries andother sectors increases, and as government's policy ofensuring equity in the provision of social services bearsits fruits;


(b) Adopt a policy for management of an orderly internationalmigration of skilled manpower and its reintegration withinthe system. The experience of countries such as thePhilippines, Tunisia and others can be drawn upon informulating such a policy;

(c) Introduce differential remuneration (however minimal) forvarying work conditions and performances;

(d) Ensure a greater degree of participation through effectivedistribution of responsibilities, especially to the lowerranks, and the introduction of a system of control andaccountability; and

(e) Ensure a careful assessment of the needs for TechnicalAssistance and limit its use to situations where it wouldcomplement local manpower and improve its availability andquality.

III. ROLE OF THE AGRICULTURAL SECTOR IN THE ECONOMY

3.01 With the exception of a few urban centers concentrated in thenorth and around Mogadishu, Somalia's population lives in rural areas eitherin nomadic or in semi-nomadic conditions. About 80 percent of the Somalipopulation depends on the agricultural sector for its livelihood. Althoughthere are no official national accounts, agriculture accounts for an estimated60 percent of GDP. Agricultural products are the main exports of Somalia,with livestock and bananas accounting for 91 percent of total merchandiseexports.

Livestock

3.02 Livestock rearing is the principal economic activity. Two thirdsof the population is engaged in livestock husbandry. The availability ofwater and grazing dictates the nomadic conditions of the major part of thatpopulation. During the rainy season, the nomads can travel over 1,000 milesmoving their camp and the animals from place to place. In the dry season,they return to their home wells and settle for a few months.

3.03 Since reliable data are only available for exports, it is difficultto assess the overall performance of the sector. There is no data on domesticconsumption and estimates of the size of the national herds vary from year toyear. Preliminary results of the 1975 census indicate that the total live-stock population in that year was around 33.7 million, comprising 24.7 millionsheep and goats, 3.7 million cattle and 5.3 million camels.

3.04 The 1973-75 drought caused a large number of young animals to die.Moreover, scarcity of available pasture led the nomads to sacrifice andsell a larger portion of their herds than they would have done in normal


conditions. Then, as conditions improved, efforts were placed on restockingthe herd by reducing the normal offtakes for export and domestic consumption.This trend is reflected in the volume of livestock exports, which, afterreaching a maximum in 1975 of 1,610,000 head, declined sharply the followingyear to 858,000 head, to cover progressively in 1977 and in 1978 to reach1,558,000 head. Preliminary indications for the early part of 1979 confirmthe recovery trend with a further increase in livestock exports.

3.05 There are no data on milk production, although milk constitutes themain diet of a large part of the population during several months of the year.A consumption survey taken in 1973 by FAO indicates an annual total productionof 175 million liters. This estimate corroborates the estimate which can bederived from the composition of herds (as indicated by the 1975 census) byassuming an annual production of 50 liters for she\ep and goats, 150 liters forcows and 350 liters for camels. There is, unfortunately, no way of evaluatingthe trend in production, but one might assume that it is closely correlatedwith the size of the herd and strongly influenced by the pattern of droughts.

3.06 The livestock sector contributes most of the country's exportreceipts. These are remitted either directly or through the franco valutasystem. The Livestock Development Agency fixes a minimum export price foreach type of livestock. The actual price received by the exporter is higherthan the minimum export price. The margin between the two prices is repatri-ated at a higher exchange rate on the parallel market. The higher the marginbetween the minimum export price and the actual price, the higher the profitfor the exporter and the more incentive to export. By letting the minimumexport price lag significantly behind the actual price, the Government hasprovided the sector with an efficient price incentive, as reflected in theremarkable increase in exports registered over the last three years.

3.07 Although the livestock sector plays a substantial role in Somalia-seconomic activity and represents the major source of foreign exchange, thesector does not contribute much to government finance. A tax on livestockexport is levied and contributes about 1-1.5 percent of government revenues.The tax levied on domestic slaughtering of cattle in municipal slaughterhouses represents a small contribution to local government budgets. It isfair to say that, on the other end, government expenditures for the livestocksector are only a small fraction of the total government ordinary budget. In1978, it was only 1.5 percent as against 33 percent for defense and 38 percentfor general services.

Agriculture

3.08 About 20 percent of Somalia's population earns its living from agri-culture (other than livestock). The contribution of the sector to GDPrepresents about 7 percent. Agriculture can be divided into two sectors; asmall irrigated sector cultivating bananas, sugarcane and cotton, and maizein a rotation, and a large traditional sector growing cereals (maize andsorghum) in flood irrigation or rainfed agriculture. Although no officialdata are available, it is estimated that 135,000 people make a living in theirrigated sector, either on their own farms, or on banana plantations andstate farms, and 680,000 earn a living by rainfed agriculture.


3.09 Bananas constitute Somalia's main cash crop and the second exportcommodity. Production is in the hands of a small number of private farmersand of a few joint ventures with foreign capital. The marketing of bananaexports is handled exclusively by the National Banana Board. Production hasdeclined because of a reduction in the cultivated areas, but more importantlya decline in the yields, from 27.4 tons per ha in 1971 to 14 tons per ha in1978. This declining trend in yield is caused by a host of factors. Theuncertainty concerning the future ownership of banana plantations has pro-gressively discouraged investment. Lack of management skills and difficultiesin the procurement of fertilizer and pesticides also contribute to the declinein yield. But it is more likely that the major factor is the sharp reductionin the profitability of the industry resulting from higher import costs andproducer prices lagging far behind the value of exports. These variousfactors, combined with frequent delays in shipping causing considerable lossfor the producer, result in decline in the volume of banana exports and astagnation in the value of exports. From 26 percent in 1972, the share ofbananas in total exports has declined to almost 8 percent in 1978.

3.10 Maize and sorghum are the two main staples in Somalia. They arealmost entirely produced by small farmers who produce for the need of theirown families and market the surplus to the Agricultural Development Corporation(ADC). The purchase of grain by ADC is the only way of estimating productiontrends. According to these data (see Table 3) the drought had more impact onthe government's ability to procure the grain domestically or to import itfrom abroad than on the production itself.

Table 3

Maize and Sorghum Production and Purchases by ADC('000 tons)

1972 1973 1974 1975 1976 1977

MaizeProduction 114.9 98.9 97.0 103.6 107.6 111.3ADC Purchases 63.9 15.3 18.4 31.7 36.5 21.3as % of Production 55.6 15.5 18.9 30.5 33.3 19.0

SorghumProduction 149.0 128.4 125.7 134.7 139.9 145.1ADC Purchases 35.3 21.4 9.6 19.5 17.5 51.6as % of Production 23.6 16.6 7.6 14.5 12.5 35.6

Production of Rice& Beans 13.8 12.4 12.8 14.3 15.1 18.5

Total Production 277.9 239.6 235.4 252.7 262.7 275.0

Imports of CerealProducts 68.5 51.0 27.0 116.9 102.7 122.7

Apparent Consumptionof Cereals 346.4 290.6 262.4 369.6 364.4 397.7


3.11 The estimates show that ADC purchases less than 20 percent ofdomestic production. This figure seems low, given the ADC's monopoly ingrain marketing, but it must be remembered that much of the supply does notenter the monetary economy. Another way to test the accuracy of the produc-tion data is to calculate the cereal consumption based on the 1973 foodsurvey. Assuming an average daily consumption of 100 gr for the nomadicpopulation, 500 gr for the semi-nomads and 400 gr for the urban population,the cereal consumption could be estimated for 1975 at about 340,000 tons.This matches the total availability of food grain as it results from theproduction estimate of the Ministry and the import of cereals and cerealproducts recorded in the foreign trade statistics (i.e. 370,000 t).

3.12 According to the data presented in Table 3, Somalia's deficitcan be estimated at about 30 percent of its needs over the years 1972-77.Grain imports represent about 25 percent of its apparent consumption. Thisaccounts for an annual deficit and the need for more imports in cases ofemergency. At present, grain imports constitute a major burden on the balanceof payments over the period 1975-77; it accounted for about 15 percent ofvalue of imports recorded by customs statistics.

3.13 Sugarcane production has consistently declined since the earlyseventies. From 463,000 tons in 1970, production fell in 1978 to a record lowof 312,000 tons. The sharp decline results from a reduction in the areaunder cultivation and a decline in yields caused by a succession of factors:lack of fertilizer, excessive rains, shortage of manpower, lack of pesticidesto control diseases, and salinity problems associated with an outmoded irri-gation system.

3.14 Some cotton is produced on large scale cooperatives, but most isgrown by smallholders. Production has slowly increased, reflecting anincrease in the acreage under cultivation and the government policy of distri-buting free seeds. The entire production is absorbed by SOMALTEX but isstill insufficient to cover the needs of the state-owned factory.

3.15 Oil seed production (sesame, sunflower and groundnuts), afterincreasing in the first part of the seventies, suffered a setback in thedrought. Production recovered to reach 40,000 tons in 1978, roughly thepre-drought level. Other crops, including grapefruit, rice, wheat, soybeansand vegetables, are mainly confined to government pilot farms. There are noindicators on their relative production trends.

3.16 Both the contribution of the sector to government finances and thebudgetary resources allocated to the agricultural crop production sector areminimal in relation to the importance of the sector. By and large, with theexception of the banana plantations, the farmers do not pay income tax.There are no specific taxes on export of agricultural products and the con-tribution of the peasants to government finance mainly comes from the tax onimported goods, to the extent they consume them. Since farmers mainly liveoutside the monetary economy and consume mainly the products of their farms,


their consumption of imported items is practically negligible. In 1977,the Agriculture Ministry received only 2 percent of total government ordinarybudget. In relative terms, the budgetary allocation in the extraordinarybudget looks more substantial (it accounts for 25 percent of the total extra-ordinary budget). However, this is still minimal, since in absolute terms,this allocation is not even twice as much as the amount allocated in theordinary budget. In 1977, it amounted only to So.Sh. 49.7 million (i.e. $8million at the official exchange rate).

Fisheries

3.17 As many as 90,000 persons are estimated to depend on fishing fortheir main source of income. Although commercial fishing has been done forseveral years, most records have been destroyed, or disappeared when theRussians left Somalia. It is estimated that the sector accounts for less than2 percent of GDP, as the catch has fluctuated between 4 and 11 thousandtons.

3.18 The fishing population is spread along the coastline and the absenceof road infrastructure and cold storage installations prevent most of themfrom producing anything but dried fish whose expert value is very low. Onlypart of the fishing potential is exploited. The major output is the produc-tion of the fish cannery which is mostly exported as canned fish or frozenfish and lobsters.

3.19 The contribution of the sector to government finances is negative,since there are no positive transfers to the government finances throughtaxation, while the Government allocates a small budget to the sector. Theshare of the Ministry of Fisheries in the ordinary budget is negligible--lessthan 0.5 percent. The share in the extraordinary budget has been progres-sively increasing over time from So.Sh. 5.3 million in 1975 to So.Sh. 9.2million in 1978 and a budget allocation of So.Sh. 27 million in 1979.

Manufacturing

3.20 Somalia's manufacturing sector is relatively small and is based onthe processing of livestock, fish and agricultural products. Food processing,including meat and sugar, account for about 46 percent of the output, whiletextiles account for about 12 percent. According to a survey of enterpriseswith five and more employees, total employment increased from 5,900 in 1974to 9,557 in 1977. The number of industrial establishments oscillates around270. Most of them belong to the public sector, either state governmentagencies or agencies of the local government and municipalities. Somecooperatives co-exist with the state agencies, but the share of the privatesector is reduced to a minimum.

3.21 Manufacturing output expressed in current Somali shillings hasgrown consistently since 1970 and by 1977 was reaching a level twice as highas in 1970. However, this performance is somewhat less, when it is deflatedby the Mogadishu Consumer Price Index used as a proxy to reflect the inflationfactor. But the performance of the various industries has been mixed. Output


of textiles, pasta and wheat flour has increased, but production in most ofthe other industries has declined due to the lack of input and shortages ofspare parts. The meat and fish factory has not been operating for most of1978 due to inadequate supply of spare parts and efforts to upgrade theplant.

IV. PROJECTED DEMAND AND SUPPLY FOR AGRICULTURAL COMMODITIES

Overall Perspective

4.01 Somalia's image in the year 2000 would be quite different from itspresent image, and planners should get a clear picture of the problems theywill be facing in order to adopt appropriate measures and remedial actions.The preliminary results of the 1975 Census indicated Somalia had a populationof 3.7 million inhabitants. Following the example of the 1976 ILO mission,the mission has projected the population by projecting individually thegrowth of nomads, rural and urban population using the historical growth rateassumed for these various groups (1.7 for the nomads, 2.2 for the rurals, 4.9for the urbans). Ecologic and economic consideration has led the mission toconsider that it would be appropriate to limit the nomad population more orless to its present size and therefore any increase in nomadic populationhas been arbitrarily affected by the rural group and has been assumed toadopt the practices and habits of this group. The net result of these projec-tions is that Somalia's population will grow at an average annual growth rateof 2.8 percent over 1980-2000 and that by year 2000 its total populationwill reach 7,150 million, with one third still nomads, one third rural andone third urban. This represents a drastic change from the present distri-bution (60 percent nomads, 22 percent rural and 18 percent urban).

4.02 Another corollary of this projected population expansion is theneed for food and other essentials. In a country like Somalia where basicdata are so scarce, it is difficult to make any forecast. However, it isstill possible by using experience acquired in other countries at similarlevels of development and judgement to work out illustrative projections.This exercise requires a conservative approach and should, in many instances,be considered as the minimum requirements, assuming no changes in consumptionhabits resulting from increases in income, and the adoption of appropriateprice policy to induce consumers choice and preference towards the goodsmore readily available in Somalia.

4.03 Data on dietary habits are rudimentary and all studies rely on anFAO survey conducted in 1973. No systematic updating has been done andexperts derive their analysis on this fragmentary information. All expertsrecognize that the nutrient intake of the Somali population is inadequate orimbalanced or both. Milk accounts for the basic diet of nomads during themajor part of the year (almost four liters a day). During a limited perioddiet is more diversified and includes cereals, etc. (see Table 4). Therural population is generally considered to have a protein deficient diet,


mainly consisting of sorghum and maize supplemented by limited accounts offruits and vegetables. The diet of the urban group appears more balanced interms of calories, but seems still deficient in terms of proteins. Shortagesof vitamins and calcium are currently noticed. Cereals still play a majorrole in urban diet, however, the proximity of this population with the importsupply is reflected by higher consumption of rice and wheat, and other cerealpreparations.

Table 4

Food Consumption of Somali Population Based on FAO 1973 Survey(per day per capita)

NomadsMar. to Oct. Nov. to Feb. Semi-nomads Urbans

Milk 4 1 0.5 1 0.5 1 0.1 1Meat 5 gm 50 gm 100 gm 80 gmCereals - 300 gm 500 gm 400 gmBeans - 10 gm 20 gm 20 gmGhee/oil - 30 gm 20 gm 20 gmDates - 20 gm - -Sugar - 30 gm 60 gm 35 gmVegetables - 20 gm - 100 gmSpices - -- 2gm

Source: Hunting Technical Services, Vol. 3, p. 103.

4.04 For the purposes of illustration, production has been projectedunder three different sets of assumptions. These assumptions grosslyrepresent the three different approaches to agricultural development which theGovernment could adopt.

(a) Rehabilitation and intensification of existing areas underproduction. As can be seen from Table 5, existingyields are very low and the mission considers that theycould be reasonably improved over the next 20 years. Incontrolled irrigation the 50,000 ha presently under irriga-tion would be rehabilitated by improving management, capitalequipment, irrigation infrastructure and reorganizing importsupplies, credit, marketing and extension services. Theexisting cropping pattern will be maintained. Given thepattern of rotation for major crops, the total crop areawill remain at 83,000 ha. The cropping pattern willcontinue to be: maize 45 percent, sesame 25 percent,bananas and fruits 9 percent, 2ugarc;; -e 8 -:--oat; ,-ound-nuts 7 percent, cotton 5 percent and rice 4 percent. Inrainfed and flood irrigation agriculture, the effort willbe concentrated on increasing the average cropped area's


performance by improved seeds and input availability.Extension services will be developed and on-farm storagefacilities and marketing services will be improved. Theextension of the cropped area will be at the expense offallow.

(b) Expansion of the area under cultivation by opening newareas in rainfed agriculture and in controlled irrigation.The mission has considered a program of 750,000 ha of rain-fed agriculture and of 85,000 ha of controlled irrigationto be progressively opened up during the next 20 years toaccommodate increased population. It has been assumed that5 percent will come under cultivation by 1985, 25 percentbetween 1985 and 1990, 30 percent between 1990 and 1995and 40 percent in the last five years. This reflectsa progressively built up capacity of the Government tocope with the various management and organizationproblems in the opening of new lands.

(c) Rehabilitation, intensification cum expansion. Thisrepresents a combination of the previous two approachesby which efforts are made to increase yields while newareas are opened.

Table 5

Present and Projected Yields for Year 2000 for Agricultural Crops

Present ProjectedUnit Yield Yield

Sorghum t/ha x year 0.4 0.8Maize t/ha x season 0.8 2.5Rice (Paddy) 2.0 3.0Sesame 0.3 1.0Groundnuts 0.8 2.5Cotton 0.7 2.5Sugarcane 45.0 75.0Bananas 15.0 30.0

Source: Mission estimates.

Food Grain

4.05 Based on the conservative assumption that Somali dietary habitswill remain as they were observed in the 1973 FAO Survey (Table 4) andassuming a progressive transfer of the nomads towards the rural agriculturalsector, the mission has estimated that food grain requirements will nearlytriple between 1980 and 2000, from 377,000 tons to 872,000 tons. At present


Somalia consumes 140,000 tons of sorghum, 158,000 tons of maize, 43,000tons of wheat and 36,000 tons of rice. There is no possibility to make theindividual crop projections because; (a) there is no data relating individualcereal consumption to income group; (b) consumer prices do not differentiatebetween maize and sorghum; and (c) government import of maize (60,000 tons),wheat (40,000 tons) and rice (30,000 tons) depends on the availability offood aid programs and foreign exchange reserves. The mission has thereforeassumed that consumer prices would be adjusted to stimulate sorghum consump-tion for which the country has a comparative advantage, and that consumptionof maize, wheat and rice would be controlled to adjust to the quantitiesavailable from local production or imports. Since wheat production contri-butes at present less than one percent of domestic consumption and the missiondoes not consider that it could be possible to increase significantly theproduction, it has been excluded of those projections. This does not affectthe overall picture, which is presented here.

Table 6

Food Grain Production and Consumption('000 tons)

1980 1985 1990 1995 2000(a) Rehabilitation &

Intensification

Production 262 310 392 472 566Sorghum 140 179 232 289 350Maize 118 127 155 178 210Rice (Milled) 6 7 8 8 9

Consumption 377 480 589 719 872Balance -115 -170 -197 -247 -306

(b) Extension

Production 262 299 359 479 680Sorghum 140 160 204 305 475Maize 118 122 135 144 165Rice (Milled) 4 17 20 30 40

Consumption 377 480 589 719 872Balance -115 -181 -230 -240 -192

(c) Rehabilitation &Extension

Production 262 338 496 779 1,276Sorghum 140 200 305 534 950Maize 118 130 167 204 267Rice 4 8 24 41 59

Consumption 377 480 589 719 872Balance -115 -142 -93 60 404

Sources: Annex 7, Appendix 1-4.


4.06 Table 6 presents the balance of food grain production and con-sumption under the three different approaches to increase production and theabove assumptions on consumption. Under the first two options of eitherrehabilitation and intensification, or extension alone, global self-sufficiency in grains could not be reached in the foreseeable future. Thethird option, a rehabilitation effort combined with area expansion, would leadto self sufficiency between 1990 and 1995 and thereafter generate a surplus insorghum, which could serve as the basis for poultry and cattle fatteningindustries.


Table 7

Cereals Balance Sheet

1980 1985 1990 1995 2000

I. Basic Assumptions

Production: Sorghum 140 200 305 534 950Maize 118 130 167 204 267Millet Rice 4 8 24 41 59

Total Cereals 262 338 496 779 1,276

Consumption 377 480 589 719 872

Balance -115 -142 -93 +60 +404

II. Same Production, 12 Per Capita and Year Increase in Consumption between 1981 and 1990

Production 262 338 496 779 1,276Consumption 377 504 619 755 916Balance -115 -166 -123 +24 +360

III. Same Production, 2X Per Capita and Year Increase in Consumption Between 1981 and 1990

Production 262 338 496 779 1,276Consumption 377 528 648 791 959Balance -115 -190 -152 -12 +317

IV. Only 75% of Production Targets Achieved and Basic Figures per Consumption

Production 197 254 372 584 957Consumption 377 480 589 719 872Balance -180 -226 -217 -135 +85

V. Only 75% of Production Targets achieved and Per Capita Consumption Increaseas in Alternative II

Production 197 254 372 589 957Consumption 377 504 619 755 916Balance -180 -250 -247 -166 +41

VI. Only 75% of Production Targets Achieved and Per Capita Consumption Increaseas in Alternative III

Production 197 254 372 589 957Consumption 377 528 648 791 959Balance -180 -274 -276 -202 -2


4.07 The sensitivity of the above basic estimate (third option) has beentested under various assumptions (Table 7 ). If cereal consumption were toincrease by 1 percent per capita and year during the 1980½s, global self-sufficiency would be delayed to about 1995; a 2 percent per capita and peryear increase during the 1980½s would postpone it further to the second halfof the 1990's. If cereal production would reach only 75 percent of thevolumes projected under the third option of Table 6 , and the per capitaconsumption would remain constant on the basis of the 1973 estimate, self-sufficiency would also only be reached during the second half of the 1990's.If the reduced production were to be accompanied by a per capita increase inconsumption, global self-sufficiency could not be reached until the turn ofthe century.

Oil Seeds

4.08 Fat consumption (ghee and oil) has been estimated. However, sincethere are no breakdowns available to differentiate among these two products,the mission has assumed that nomads were exclusively consuming ghee, whilethe rural and urban population were consuming only oil. The oil consumptionhas been converted into oil seed consumption by using a 40 percent extractionrate, without differentiating between groundnuts and sesame.

4.09 The production has been assessed under three different assump-tions. However, the areas under cultivation in assumptions 2 and 3 reflectthe opening of 85,000 ha of irrigated land and then cultivation under appro-priate crop rotation patterns. This means that areas under sesame cultivationwill increase from 130,000 ha in 1980 to 156,000 ha in 2000, and the areasunder groundnut will increase from 4,000 ha to 10,000 ha. This increaseis progressive and follows with the projected opening of new land.

- 358 -

ANNEX 7Page 19

Table 8

Oil Seed Production and Consumption('000 tons)

1980 1985 1990 1995 2000

Production

(a) RehabilitationSesame 39.0 52.0 65.0 91.0 130.0Groundnuts 3.2 4.0 6.0 8.0 10.0

Total 42.2 56.0 71.0 99.0 140.0

(b) ExpansionSesame 39.0 40.5 42.0 43.5 46.8Groundnuts 3.2 4.0 4.8 6.4 8.0

Total 42.2 44.5 46.8 49.9 54.8

(c) Rehabilitation &ExpansionSesame 39.0 54.0 70.0 101.5 156.0Groundnuts 3.2 5.0 9.0 16.0 25.0

Total 42.2 59.0 79.0 117.5 181.0

Consumption 33.3 43.0 55.0 69.4 86.6

Balance(a) Rehabilitation 8.9 13.0 16.0 29.6 53.4(b) Expansion 8.9 1.5 -8.2 -19.5 -31.8(c) Rehabilitation &

Expansion 8.9 16.0 24.0 48.1 94.4

Sources: Annex 7, Appendix 6 and 7.

4.10 From Table 8, it is clear that due to the large area under oilcrops, yield increases would have a very important impact on generating alarge surplus of oil seeds. Area expansion above does not provide theproduction increase that is necessary to satisfy the needs of the increas-ing population.

Sugarcane

4.11 Sugar consumption has been projected to increase from 34,900 tonsin 1975 to 90,700 tons. This sharp increase results from the transfer ofthe nomads in the rural sector who consume seven times more than other nomadsand two times more than the urban population. The sugar consumption has beenconverted in sugarcane equivalence by using a 10 percent extraction rate.


4.12 In the first option, the productivity of sugarcane has been projectedto increase from 45 tons per ha to 75 tons per ha. The area under cultivationhas been projected to double between 1980 and year 2000.

4.13 Table 9 below indicates clearly that self-sufficiency in sugarcaneis only possible in the third scenario and will only be achieved by the endof the century. This stresses the need to proceed with both rehabilitationof the industry and the need for expanding irrigation.

Table 9

Sugarcane Production and Consumption('000 tons)

1980 1985 1990 1995 2000

Consumption 400 495 612 748 907

ProductionRehabilitation 270 300 330 390 450Expansion 270 293 360 405 540Rehabilitation & Expansion 270 325 440 648 900

Cotton

4.14 Cotton consumption has been assumed at 2.5 kg per year and perperson. This assumption is based on a local production of 3,000 tons ofcotton seeds (equivalent to 1,000 tons of cotton lint) and the import ofabout 7,000 tons of textiles converted to 8,400 tons of cotton lint equiva-lent. This consumption estimate is consistent with data collected fromthe Somaltex Annual Report. However, it is extremely low compared to othercountries. As an example, Sudan's consumption is estimated at 4.5 kg perperson. Using this conservative estimate, Somali consumption is projectedto increase from 9,400 tons of cotton lint in 1975 to 18,000 in year 2000.Adopting a higher per capita consumption would lead to higher figures.Only under the third scenario will the country be able to achieve self-sufficiency in cotton by year 1995, and some surplus would be exported. Underany of the other two scenarios, Somalia will continue importing cotton overthe years. These results are illustrated in Table 10 below.


Table 10

Cotton Production and Consumption('000 tons of lint)

1980 1985 1990 1995 2000

Consumption 10,500 11,900 13,500 15,500 17,900

ProductionRehabilitation 1,000 1,300 2,000 2,900 4,000Expansion 1,000 1,400 3,400 6,000 9,250Rehabilitation &Expansion 1,000 1,900 5,900 15,400 37,000

BalanceRehabilitation 9,500 10,600 11,500 12,600 -13,900Expansion 9,500 10,500 10,100 -9,500 -8,700Rehabilitation &Expansion 9,500 11,000 7,600 -100 19,100

Bananas and Fruits

4.15 Consumption of fruits and bananas can be estimated in Somalia ataround 45,000 tons. This is based on the present estimated level of produc-tion of 105,000 tons and the registered exports of about 60,000 metric tons.Consumption has been projected along with population growth which means thatconsumption is expected to nearly double between 1975 and year 2000. Produc-tion has been projected along the three main scenarios. In the first one, theyield is assumed to recover from 15 t/ha to 30 t/ha. In the second one, thearea planted is projected to increase from 8,000 ha in 1980 to 12,000 ha inyear 2000. The third scenario has both assumptions. In all cases, bananasand fruits show substantial exportable surpluses.

Table 11

Banana and Fruit Production and Consumption

1980 1985 1990 1995 2000---------------('000 tons)…---------… ---

Consumption 45 50 59 67 78

ProductionRehabilitation 105 125 140 175 210Expansion 105 108 138 157 180Rehabilitation & Expansion 105 130 184 263 360


4.16 Table 11 above illustrates the potential exports under the threescenarios. In the first one they increase 2.2 times between 1980 and 2000.In the second one they will increase by nearly 80 percent and in the thirdone they increase by nearly 5 times. Although this represents a substantialincrease, Somalia represents only a small part of the banana market and couldeasily develop its export to Europe and the Middle East where it enjoys acomparative advantage.

Meat

4.17 Meat consumption is projected to increase rapidly as a result ofboth the transfer of the nomads into the rural sector and the overall growthof the urban sector. According to the FAQ survey, rural and urban dwellersconsume respectively five and six times more meat than nomads. As a conse-quence, meat consumption is supposed to grow from 75,000 tons in 1980 to about17,000 in year 2000. The mission has assumed that during the next twentyyears the pattern of domestic consumption will change. Price incentiveswill lead the Somali population to eat more beef and less sheep and goatswhich enjoys better prices on the export markets. It has therefore beenassumed that the share of beef meet in total meat consumption will progres-sively increase from 20 percent in 1980 to 40 percent in 2000, while the shareof sheep and goats will decline from 55 percent to 35 percent.

4.18 Sheep and goat production has been projected by assuming that theherd will remain around 24,200,000. The ecological environment enforces alimit to the expansion of the herd, otherwise the range may be permanentlydamaged and Somali cattle potential will be seriously jeopardized. On theother hand, the cattle population is assumed to grow from 3,700,000 to3,986,000 in 1990 and remain stable thereafter. The size of the camel herdhas been projected to continue to expand. In line with the stability ofthe modest increase in the herd, the mission assumed that thanks to betterveterinary and extension services, the offtake rate would increase as indi-cated below:

(offtake rate in percent)

1980 2000

Camel 1.7 3Cattle 4.7 10Sheep and Goats 14.4 20

The combined effect of these various factors is a relative stability of theexports of camel and beef while exports of sheep and goats are projected toincrease from about 1,500,000 head in 1980 to 2,500,000 head in year 2000.


Table 12

Animal Exports('000 heads)

1980 1985 1990 1995 2000

Camel 27 35 41 57 28Cattle 77 69 78 83 59Sheep and Goats 1,500 1,436 1,880 2,023 2,452

Sources: Annex 7, Appendix 12-16.

- 363 -

ANNEX 7Appendix 1

SOMALIA



Population Projection(millions)

Nomad Rural Urban Total

1975 2,184 811 727 3,722

1980 2,376 900 923 4,199

1985 2,400 1,184 1,170 4,754

1990 2,400 1,531 1,485 5,416

1995 2,400 1,918 1,887 6,205

2000 2,400 2,350 2,396 7,146

- 364 - ANNEX 7

Appendix 2

SOMALIA



Food Grain Consumption


Diet (kg/Year) 36.0 182.5 146.0

1975 (tons) 78,624 148,007 106,142 332,773

1980 85,536 164,250 134,758 377,632

1985 93,546 216,080 170,820 480,446

1990 93,546 279,407 216,810 589,674

1995 93,546 350,035 275,502 719,083

2000 93,546 428,875 349,816 872,237

Alternative Assumptions

Total consumption (tons) at aper capita increase per yearbetween 1981 and 1990 of

Year 1% 2%

1980 377,632 377,632

1985 504,468 428,490

1990 618,947 648,421

1995 755,037 790,991

2000 915,848 959,460

- 365 -

ANNEX 7Appendix 3

SOMALIA



Sorghum Production

1980 1985 1990 1995 2000

Intensification

Area ('000 ha) 350 359 387 413 438Yield (ton/ha) 0.4 0.5 0.6 0.7 0.8Production ('000 tons) 140 179 232 289 350

Extension of the Crop Area

Area ('000 ha) 350 400 509 763 1,188Yield (ton/ha) 0.4 0.4 0.4 0.4 0.4Production ('000 tons) 140 160 204 305 475

Extension & Intensification

Area ('000 ha) 350 400 509 763 1,188Yield (ton/ha) 0.4 0.5 0.6 0.7 0.8Production ('000 tons) 140 200 305 534 950

-366 - ANNEX 7Appendix 4

SOMALIA



Maize Production

1980 1985 1990 1995 2000

Controlled Irrigation

Rehabilitation

Area ('000 ha) 37.0 37.0 37.0 37.0 37.0Yield (ton/ha) 0.8 1.0 1.5 2.0 2.5Production ('000 tons) 30.0 37.0 56.0 74.0 93.0

Extension

Area ('000 ha) 37.0 40.0 45.0 50.0 60.0Yield (ton/ha) 0,8 0.8 0.8 0.8 0.8Production ('000 tons) 30.0 32.0 36.0 40.0 48.0

Extension & Rehabilitation


Flood Irrigation

Rehabilitation


- 367 -

ANNEX 7Appendix 5

SOMALIA



Rice Production (Paddy)

1980 1985 1990 1995 2000

Rehabilitation


Extension


Extension & Rehabilitation


- 368 -

ANNEX 7Appendix 6

SO, A

AGRICULTURAL SECTOM REVIEW

Selected Agricultural Iss"os

Oil Seed Consumption

Fat Cons tion Oil SeedNomad Rural Urban Total Tota ;

Diet (kg/year) 3.6 7.?

1975 'tons) 7,862 5,920 5,307 19,089 14,969

1980 8,554 6,57n 6,738 21,862 17,744

1985 8,640 8,64- 8,541 25,824 22,912

1990 1 ,640 l' 76 10,840 30,656 29,354

1995 8,640 14,061 13,775 36,416 37,035

2000 4,,640 17,155 17,490 43,2?5 46,193

- 369 -

ANNEX 7Appendix 7

SOMALIA



Oil Seed Production

1980 1985 1990 1995 2000

Rehabilitation

Groundnuts


Sesame


Expansion

Groundnuts


Sesame

Area ('000 ha) 130.0 135.0 140.0 145.0 156.0Yield (ton/ha) 0.3 0.3 0.3 0.3 0.3Production ('OU0 tGoi) 39.0 40.5 42.0 43.5 46.8

Expansion & Rehabilitation

Groundnuts

Area ('000 ha) 4.0 5.0 6.0 8.0 10.0Yield (ton/ha) 0.8 1.0 1.5 2.0 2.5Production (t 0 0 0 tons) 3.2 5.0 9.0 16.0 25.0

Sesame


- 370 -ANNEX 7Appendix 8

SOMALIA



Sugarcane Production

1980 19e 1990 1995 2?C00

Rehabilitatior.

Area ('000 ha) 6.0 6.0 6.0 6.0Yield (ton/ha) 45.0 50.0 55.0 65.0 75.0Production ('000 tons) 270.0 300.0 330.0 390.0 450.0

Expansion

Area ('000 ha) 6.0 6.5 8.0 9. 12.0Yield (ton/ha) 45.0 45.0 45.0 45.0 45.1)Production ('000 tons) 270.0 293.0 360,'; L405Q 540.f'

Rehabilitation & Expansion

Area ('000 ha) 6.0 6.5 d.0 9.8 1Z.Yield (ton/ha) 45.0 50.0 55.0 65.(/ 75.nProduction ('000 tons) 270.0 325.0 40.0 648.0 90C.G

- 371 -

ANNEX 7Appendix 9

SOMALIA



Sugar Consumption


Diet (kg/year) 3.6 21.9 12.8

1975 (tons) 7,862 17,760 9,350 34,927

1980 8,554 19,710 11,814 40,078

1985 8,640 25,929 14,976 49,545

1990 8,640 33,529 19,008 61,177

1995 8,640 42,004 24,154 74,798

2000 8,640 51,465 30,668 90,773


SOMALIA



Cotton Production

1980 1985 1990 1995 2000

Rehabilitation

Area ('000 ha) 4.0 4.0 4.0 4.0 4.0Yield (ton/ha) 0.75 1.0 1.5 2.2 3.0Production ('000 tons) 3,000 4,000 6,000 8,800 12,000

Expansion





SOMALIA



Banana Production

1980 1985 1990 1995 2000

Rehabilitation

Area ('000 ha) 7.0 7.0 l.0 7.0 7.0Yield (ton/ha) 15.0 18.0 20.0 25.0 30.0Production ('000 tons) 105.0 125.0 140.0 175.0 210.0

Expansion




- 374 -

ANNEX 7Appendix 12

SOMALIA



Meat Consumption


Diet (kg/year) 6.2 36.5 29.2

1975 13,540 29,601 21,228 64,369

1980 14,731 32,850 26,956 74,537

1985 14,880 43,216 34,164 92,260

1990 14,880 55,881 43,362 114,123

1995 14,880 70,007 55,100 139,987

2000 14,880 85,775 69,960 170,618


SOMALIA



Sheep and Goat Exports('000 heads)

1980 1985 1990 1995 2000

Production 3,550 3,631 4,114 4,356 4,840

Consumption 2,050 2,196 2,232 2,733 2,390

Exports 1,500 1,436 1,880 2,023 2,452

Camel Exports(tOOf heads)

Products 91 119 139 171 176

Consumption 64 64 92 114 204

Exports 27 35 41 57 28

Herd Popula-tion atYear End 5,300 5,430 5,556 5,700 5,850

Cattle Exports('000 herds)

Production 176 213 279 340 400

Consumption 99 144 201 257 341

Exports 77 68 78 83 59

Herd Popula-tion atYear End 3,700 3,888 3,986 3,986 3,986

somalia agrcultural sector review file copy

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