CAB129-33 — Page 370

SECRET

C.P. (49) 63

11th March, 1949

CABINET

Copy No. 31

THE FIRST YEAR'S WORK OF THE OVERSEAS FOOD CORPORATION

MEMORANDUM BY THE MINISTER OF FOOD

The Overseas Food Corporation will soon have been in operation for a year. The forthcoming debate in the House of Commons on the East African Ground- nuts scheme will provide an excellent opportunity for a review of the present position and the outlook for the future, and I shall be making a very full statement to the House. My colleagues will no doubt be interested to have some account of the main questions with which I shall be dealing.

The Immediate Position

2. The Corporation is concerned with two schemes-a relatively small one in Queensland for the large-scale production of feeding-stuffs, and later, pork and bacon; and the major groundnut venture in East Africa.

In Queensland the Corporation's scheme is running well ahead of its pro- jected rate of development. The scheme was only decided upon in the spring of last year, and the assumption was that about 20,000 acres could be ploughed and sown in the current crop year. But in fact no less than 30,000 acres have been ploughed and sown, at costs which have turned out to be very low. Rainfall has been satisfactory and the first contribution from this source to our supplies of feeding stuffs, in the shape of an initial export of 10,000 tons of sorghum, should be available in a few months' time. (The greater part of the first crop is being kept back for seed.) Pig production will follow in later years the immediate concentration is on the production of feeding stuffs.

The scheme is likely to remain relatively modest in comparison with the groundnuts project. The Corporation have £A.2 million towards the initial capital and the Queensland Government are participating to the extent of £500,000. The advances made by the Corporation to this scheme to date amount to only £100,000. An area of 300,000 acres has been acquired at a low average price of 14s. 6d. sterling an acre: another 200,000 acres are being bought, but having regard to the low cost of land and of ploughing, total capital expenditure in Queensland is not likely to exceed a total of £3 million, even if further areas are in due course acquired. It is planned to have an area of about 100,000 acres sown next year.

In short, the Queensland scheme has got off to an excellent start. Far more formidable difficulties have been encountered in East Africa, and the rest of this paper will be devoted to that project.

3. In East Africa development is taking place in three areas-the Kongwa or Central Province area-the Urambo or Western Province area, and the Southern area the largest area of the three, lying near the border of Portuguese East Africa. The Kongwa area is the only one where large-scale clearing has as yet been carried out. Approximately 46,000 acres have been planted there this year, about half being under groundnuts and half under sunflowers. (See paragraph 8 below on the reasons for planting sunflowers as an additional for 18) Development in the Urambo area is at a much earlier stage anything up to

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4,000 acres (making some 30,000 acres for the scheme as a whole) have been cleared and age being down there, mainly under sunflowerage 371 of 488

The Southern Province

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In the Southern area-which, as I believe, is destined to be by far the most important of the three-the Corporation have deliberately decided to con- centrate on the construction of the essential communication facilities (a new port and a railway) before attempting large scale clearing and planting.

This is a recent decision: it had been thought that clearance would begin on a fair scale in the Southern Province this year even before the permanent port and railway had been built, using temporary road communications. But experience has indicated that to do this would involve inacceptably high costs, so the delay in undertaking major clearing operations in the south until the winter of 1949-50 has had, reluctantly, to be accepted. In general we have come to the conclusion that we must not buy speed of development at too high a price, and this is the essential cause of the much slower rate of development which is now forecast.

Crop Prospects for This Year

Assuming normal yields, production this year from the areas sown in the Central and Western Provinces will be between 6,000 and 7,000 tons of ground- nuts and about the same amount of sunflower seed.

I have just had an encouraging report of the progress of the crops. The rains came late at Kongwa this year, but they have so far been up to average when they did come, and the groundnut crop in particular is above ground and is said to be looking very much better than the crops on most of the relatively small areas cleared last year. It is, of course, much too early to give an exact forecast of this year's harvest, but it will in any case be possible to say that a first modest contribution to our margarine ration will be made by the scheme this year.

The Delay in the Development of the Scheme

4. To clear and plant some 50,000 acres in East Africa is in itself a great undertaking; some 50,000 acres, or 75 square miles, is equal to an area one mile wide stretching from the House of Commons to Portsmouth. And I have no doubt that the clearance and planting of this acreage in fact represents a considerable achievement. Unfortunately, however, some 50,000 acres actually cleared by 1948-49 compares ill with the original estimate made in 1946 by the Wakefield mission. The Wakefield report estimated that no less than 600,000 acres could be cleared and sown by the end of 1948. What are the main factors which have brought about the long delay which it is now clear must occur before the scheme has been fully developed? For it is my present estimate that the period of develop- ment will in fact be some ten years instead of five.

5. The basic assumption in the Wakefield report was that by the application of modern mechanical methods it would be possible to clear several hundred thousand acres in a single year. Ultimately this assumption may still prove to be completely valid. But it is now abundantly clear that both the authors of the original report and all concerned with the scheme at its inception greatly over- estimated the speed at which such a vast operation could be got going in Africa.

The main factors which have brought about major delays and difficulties

are:

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(a) Communications. It was realised from the start that in the main area of the scheme, in the Southern Province, a wholly new railway and port must in the end be built; but it was thought, erroneously, that clearance could be got under way before they were ready. Even for the other areas large additional railway and port extensions were essential. These major works are being pushed on as fast as possible, but in present conditions-given the shortages of equipment and construction material (especially steel) and of skilled technical man- power-they are likely to take 3 to 4 years to complete rather than the 1-2 years envisaged in the report. This is a major factor in the delay in starting large-scale clearing in the main area of the scheme in the Southern Province.