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(b) Provision 37 the necessary facilities and equipment. There was afse8us gunderestimate of the speed at which the requisite fleet of heavy tractors

could be put into service. The tractors were quickly acquired from omen war surplus stores and by the conversion of Sherman tanks. But it is taking a much longer time to recondition or convert them to their new abalijoinata

purpose than was estimated. Equally, there was a serious under- but estimation of the time required to erect in the middle of Africa the major civil engineering works essential for the scheme the heavy repair shops required to service the tractors, the necessary housing for both Africans and Europeans, the provision of additional railway and port facilities on the existing communication system, the establishment of adequate water supplies and so on.

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Difficulties of clearing.—The work of actual clearing, particularly at Kongwa, has proved more difficult than was originally anticipated. The acacia bush is not easy to dispose of when initially flattened a tangled mass of roots is left beneath the surface after the initial operations, and they require special and prolonged clearance measures : the soil is highly abrasive in the dry season. But there is good reason to hope that these difficult conditions will not be met with in the two other areas. (d) Organisation.—It has taken longer than was anticipated to build up a large-scale organisation in Africa and to train raw African labour in completely novel mechanical work. And although the enthusiasm and competence of the main European staff of the Corporation is most by encouraging; there have inevitably been a number of misfits and failures in the higher executive posts which are having to be corrected. I am glad to say, however, that, contrary to some early fears, the position as regards the availability and adaptability of African labour is on the whole satisfactory.

The Future Outlook

6 Essentially what has happened up to the present is that the effective start of the scheme has had to be delayed by anything up to two years because of the difficulties to which I have just referred. That in no way invalidates the original decision that this project should be the main British productive effort in overseas agriculture in the post-war period. Though our own position has slightly eased in recent months, the world shortage of oils and fats, particularly in the non-dollar area, will remain obstinate and long-enduring.

Cost and Revenues of the Scheme

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The fact of this continuing world shortage has, of course, a fundamental bearing on the economics of the project. On the one hand, it is clear that, given the delays in starting the scheme and the fact that the cost of providing the necessary capital facilities was seriously underestimated, the total capital expen- diture involved will be, I fear, between 1 and 2 times the original £25 million estimated. So far £20 million has been spent, mainly on capital development. But, on the other hand, the annual revenues of the scheme when it is producing at capacity may also prove anything up to twice as much as was originally estimated. The assumption on which the scheme was accepted was that the current price for groundnut seeds would be £30 per ton, dropping in 1952 to £20 per ton. But the comparable price which we are paying for West African groundnuts is to-day £51 arton As I have said, there are no signs of such a general easement in the world position of this crucial requirement as would point to anything more than a slow and very moderate reduction in price over, say, the next 5-10 years.

Objects of the Scheme

won 7. The primary objective of the scheme is, of course, the production of a substantial and sustained contribution to the world supply of edible and inedible oils and of cattle feed and to our own supplies in particular. The Wakefield report estimated that 600,000 tons of oil seeds could be produced annually by means of the clearing and cultivation of approximately 3 million acres. The Corporation's latest calculation is that, even if a lower estimated yield per acre is taken than that assumed in the Wakefield report, it should be possible to produce this volume Bagi seeds from an acreage of approximately 2 milion aeres. 488

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Revised Cropping Programme

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revised estimate of the total acreage rented 7s hated on a proposed fundamental change in the plans for the rotation of crops. The Wakefield Report proposed a four-year rotation only two crops of groundnuts would be grown on a given area before the land was rested under grass. The advice of the Corpora- tion's scientific advisers, reached after much experimental work and consultation with leading scientific authorities, is now that a ten-year rotation should be adopted. During the new rotation, as under the original four-year rotation, the land would be under groundnuts for half the period.e., for five years out of ten- under sunflowers for three years, and for the two remaining years under grass or possibly a cereal crop. The essential feature is that under this revised rotation four-fifths instead of one-half of the acreage would be under oil-bearing crops in any given year, resulting in a substantial increase in the production of oil seeds per cleared acre.

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Introduction of Sunflowers as Second Oil-bearing Crop

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8. It will be seen that the key to this important new feature of the scheme is the introduction of sunflowers as a second oil-bearing crop... The main dis- advantage of sunflowers is that they have a rather lower content of oil per ton of seed than groundnuts and that in order to avoid deterioration the seed has to remain undecorticated until the oil is extracted. On the other hand, sunflowers not only provide a rotation crop (being a fundamentally different type of plant from groundnuts), but on many soils have a higher yield of seed per acre than groundnuts, are easier to sow on newly cleared ground, have a dense growth which gives good cover to the soil and keep down weeds, while, as I have already indicated, their cultivation will enable four-fifths instead of one-half of the cleared acreage to be under oil-bearing crops in any given year.

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Target Acreage

9. I have mentioned that the Corporation's estimate is that 600,000 tons of oil seeds can be produced from 2 million acres. It should not be inferred, however, that 2 million acres has become a fixed and definite target. Obviously it will be some years before a really large area has been cleared, and a decision as to what the final acreage target should be will have to be taken then in the light of the then existing conditions as regards costs of cultivation, the level of oils and fats prices and the like. But the Corporation's present estimate is that something between 1 and 14 million acres is the minimum which should be cleared, in the sense that if a lesser acreage were cleared the annual revenue which would be derived from the scheme could hardly give an economic return on the capital investment.

Proposed Speed of Development

10. One crucial question which will have to be decided is that of the speed at which development should take towards the attainment of the full cleared acreage of, say, 1-2 million acres. This is a problem to which the Corporation is devoting close attention but on which it will not be able to put forward a fully considered view until after the outcome of this season's clearing and planting is known. The problem is essentially one of balance. High-speed development is desirable in view of the pressing need of the world for more supplies of oils and fats. But the compression of a great deal of effort into a short space of time means that capital works and services have to be built up to a level about that required for the continuing needs of the scheme. This additional expenditure does not create any revenue-earning assets. On the other hand, too slow a develop- ment means not only that the provision of urgently needed supplies is postponed but that the revenue-earning stage of the scheme is delayed with a consequent increase in the capital expenditure at risk.

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All that I can say on this general question at the moment is that it now looks as if the right balance will be struck by thinking of the scheme as one which may take some ten years to complete (instead of the five years envisaged in the Wakefield Report). As I have said, the Corporation will be submitting their considered views on this question in the light of their experience in the current

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Plage The Corporation should also at that timp have had sufficient experience to be able to decide definitely upon what areas in East Africa their main effort

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will be concentrated 7The spreading of the operation over three preas is attractive in that the risk of simultaneous crop failures is minimised and wider experience is gained of operations under diverse conditions. But it is probable that, in the outcome, as soon as the new railway and port facilities become available, the Corporation will decide to concentrate its maximum effort in the southern area, and to limit the expansion of operations at both Kongwa and Urambo. The Southern area is potentially by far the most attractive and fertile area of the three: clearing should be easier there than at Kongwa and climatic conditions more favourable. But, as I have already explained, the Corporation have decided-in my view wisely that large-scale development in the area must await the completion of adequate permanent communications. The new railway should reach the edge of the groundnut area in September, but it will probably be a year later that the first deep-water berth at Mikindeni will be available and that this major area can be developed without communications becoming a limiting factor.

Conclusion

12. The rate of progress has been disappointing; some serious mistakes have been made; the cost of the scheme will be heavier than the original estimate; there may well be further serious obstacles of which we are as yet unaware. But no one expected a great new experiment like this to run like clockwork from the start. Nothing that has happened affects in any way, in my view, the absolute rightness of the decision to go ahead with this great constructive enterprise. It will go down to history, not only as a resolute measure of self-help, but as our signal contribution, initiated and pressed forward in the midst of great difficulties, to the rehabilitation of the under-developed areas of the world.

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Ministry of Food,

Whitehall, S.W. 1,

11th March, 1949.

J. S.