CiRCULATING COPY _ _5_ TiE RETURNED TO REPORTS D SK RETURN TO Report No. 426a-LBR REPORTS !DESK Liberia WITHIN Growth with Development ONE Wt( A Basic Economic Report (In Seven Volumes) Volume V: Agriculture I March 1, 1975 Western Africa Region Not for Public Use U Document of the International Bank for Reconstruction and Development International Development Association This report was prepared for official use only by the Bank Group. It may not be published, quoted or cited without Bank Group authorization. The Bank Group does not accept responsibility for the accuracy or completeness of the report. CURRENCY EQUIVALENT The official monetary unit is the Liberian dollar, with a par value equal to that of the U.S. dollar. Apart from the Liberian dollar, the U.S. dollar is a legal tender in Liberia. LIBERIA - THE AGRICULTURE SECTOR TABLE OF CONTENTS Page No. Preface I. THE STRUCTURE OF THE AGRICULTURE SECTOR 1 Farm System 3 Foreign Concessionaires 4 Commercial Agriculture 5 Traditional Agriculture 7 Production 11 Comparative Advantage of Crop Production 14 Marketing, Storage and Transport 16 Marketing of Rabber by Concessions 16 Marketing of EBport Crops and Rice by the Liberian Produce Marketing Corporation (LPMC) 17 Retail Marketing of Foodstuffs 18 Storage 18 II. GOVERNMENT POLICIES.AND ORGANIZATION OF SERVICES 19 Budgetary Allocation for Agriculture 1Q The Ministry of Agriculture 20 Agricultural Research 23 Agricultural Education 25 Pricing Policies 26 Land Tenure Policy 28 III. OPPORTUNITIES AND CONSTRAINTS FOR DEVELOPING AGRICULTURE 29 Opportunities 29 The Natural Resource Base 29 Market Prospects 30 Technology 33 The Constraints 33 The Ministry of Agriculture and the Problem of Absorptive Capacity 33 Price and Marketing Constraints 35 Transport Constraint 41 Input Supply Contraint 41 Agricultural Credit 42 Extension Service 42 Land Tenure 42 Education 43 Table of Contents (cont'd) Page No. Strategy for Agricultural Development 43 Regional Strategy Aspects 44 Strategy for the Coastal Belt 45 Strategy for the Interior 45 Action Programs 45 Reorganization of the Ministry of Agriculture 45 Pricing and Farm Income Policies 46 Organization of Marketing 47 Input Supply 48 Credit 48 Research and Extension 49 Land Tenure Policy 50 Production Programs 50 Traditional Agriculture 50 Commercial Agriculture 50 PREFACE (i) In previous economic reporting on Liberia little attention has been given to the agricultural sector and its main developmental issues. The purpose of this report is to present an initial overall view of the agricultural sector, to identify some of the key constraints and issues of Liberia's agricultural development and to suggest institutional and policy changes critical for accelerating agricultural output and improving incomes of the rural population over time. (ii) The quantitative basis behind the findings of this report are uncertain, since the existing data base is thin and much of the data available has limited reliability. Under the time available to the mission, no attempt has been made to subject the data base and the data series to any extensive analysis. This qualifying note is introduced at the beginning of the report to avoid constant repetition of the same point wherever data is cited. (iii) Given the above limitation and the Government's new increased emphasis on agricultural development and improvement of living conditions for the rural population, there is need to pursue more thoroughly a series of unanswered problems critical to agricultural development. This report, therefore, is a first attempt at an synthesis of available information which may outline some of the most urgent problems and prospects facing rural development in Liberia. II. -~~~~~~~~~~~~~~~ I~~~~~~~~5. 9~~~~~~~~~~~~~ 5 DI BR 1-06 35 SI E RRA LEONE G L Foy A;l>>;_ PRANDl \ 'AP -, S I' I G to =rR! f "2 .- IVR COAST v < WBRI BUANOR \ \*Qa ; it/ VGT TIN NI M V FR A NTATION k ? COUNTY- LIITO RAINFOREST Cc a* ,, Rf / wwrs r5X S EMAIN AGADECS 5OREST FtivercesSO -- i X > . N S g1 ip e _______ FARM AND SACONDARY ROADS T V 0 R Y C 0\A S T RAI NROA VIARR ZASSDAQ AA VA 'T, " FARM AND FLATATIDN i r :\ \./\\ y ,TT. | - FR ABNF ODARIAS Auchn IA tn Z iNE -LIIDFRAINFOREST OCef revlew-". .N FARMDNDAR SEONARY \FOREST SN8yc AINTERNATIONAL P DANT ARIES RILE 11'I'n. r1.5;˘=t < ,~P.A,AZ,A,.......... A ,,LA7A'A 'AX" = El.sR 1?. L I I IlAI.AL,A,OI,Z:3:h L IZI,'#l^ I '- 5FE~EE I. THE STRUCTUJE OF THE AGRICULTURAL SECTOR Agriculture in the Economy 1. In the past, the Government's policies towards agricultural development in Liberia were to a large extent centered around efforts to attract foreign investment into plantations, especially for rubber. While this approach was successful in promoting aggregate growth, providing limited foreign exchange earnings and creating employment opportunities, it resulted in the creation of enclaves which have had only limited impact on the rest of the economy. Capital equipment,materials, and top management for operat- ing the enclave activities were imported; the extracted raw materials were exported with little or no processing in Liberia, and profits of the con- cessionaires were repatriated abroad. This situation has remained unchanged up to the present. 2. Within agriculture commercial operations are dominated by large foreign-owned rubber plantations and logging enterprises. There are also a significant number of Liberian commercial farms - owned almost exclusively by the urban elite - less well-capitaliied and managed, and working at lower levels of efficiency. Their principal production is rubber, coffee, oil palm and cocoa. 3. Traditional agriculture is still generally outside the monetized economy and contains roughly 50-60 percent of the total population. It is based on staple crops and occasional cash crops, such as cocoa, coffee, and oil palm. As in other developing countries, the Government has devoted little attention-to this sector in the past. It has-failed to provide the physical and institutional infrastructure necessary to encourage the large mass of people to move into a modern and monetized economy. Moreover, establishment of concessions and commercial farms in some parts of the country has impinged upon the development of traditional smallMolders by displacing tribes from good farming land to areas remote from existing roads and marketing facilities. The average income of traditional smallholders is estimated to be about $70 per capita compared with a national per capita income of about $200 in 1972. This sharply limits the earnings available for self-investment in that sector. 4. Mission estimates of national accounts (presented in ?olume II) indicate that in the period 1964 to 1972 the value of output in the agricultural sector as a whole rose from US$68 million in 1964 to US$109 million in 1972, about 6 percent per annum in current prices and 5 percent in real terms. 5. While this growth performance has been remarkable, it has been concentrated primarily in rubber and forestry, most of which is in the hands of foreign concessionaires, and in fishing production, rather than in the traditional farm sector. Value added in export production by traditional farms more or less stagnated in real terms over this period. Overall, the real growth of traditional agriculture (composed of value added in export crops, and marketed plus subsistence food production), was only moderate, with an average annual rate of 2.4 percent.i/ Few agriculturally 1/. It should be noted however that the method of national account estimation guarantees that traditional products will not grow much faster than population. It is thus not entirely reliable as a measure of rural welfare. -2- oriented investments were undertaken by the public sector during this period and many of the road investments undertaken to "open-up" the country and to provide an access to markets for traditional farmers, eventually turned out to benefit urban residents who were able to acquire land adjacent to new roads. 6. Output per head in agriculture increased mainly as a result of expanded acreage and employment of additional manpower, intensive commercial exploitation of forestry and fishery resources, and a partial shift from subsistence crops to higher-valued export crops. This latter change occurred, however, without the adaption of new production techniques. No changes in food production techniques took place, except in some very limited instances of rice production. Changes in technology were largely limited to rubber production and occurred by the introduction of high-yielding clones. 7. Food marketed for cash by the traditional sector is estimated to have grown at 3 percent per armuum and at such a rate fell far short of the demand generated in the modern sector by its population growth of 7-9 percent and its rising income levels. Liberia, therefore, increased its dependency on food imports from $15.9 million in 1964 to $30 million in 1973. Apart from an increased demand for meet, sugar and wheat flour, the import figure reflects also an increasing deficiency in rice. The rice deficit is presently in the order of about 45,000 tons, a sharp inc ase over import figures of about 2,600 tons during the period 1949-1953.- 8. Almost three-quarters of the population are in rural areas. The natural rate of population growth is estimated at 3 percent per annum. Net migration to urban areas is about 2 percent, and thus the growth of the rural population may only have been about 1 percent per year. With about 37 inhabitants per square mile, the population density is low in comparison with other developing countries. Bong and Lofa counties, which posses probably the best agricultural base and infrastructure and contain a number of concessions, are among the most densely populated areas. The importance of agr- culture as a source of employment is great. Not only are about 400,000 employed in traditional agriculture, of the estimated 125,000 1/ Liberia has never, since its founding, been able to supply Monrovia with sufficient rice. Recent trends are only a continuation of this pattern. As rice eaters are more vocal than producers, the "food problem" is always a "crucial" one in Liberia. From an import point of view, the apparent income elasticity of rice is 3.0 while the price elasticity is -1.2. -3- Table 1: GDP ORGINATING I1l AGRICULTUIE, FORESTRY, AID FISHING ($ million at constant 1971 prices) 1964 1965 1966 1967 1968 1969 1970 1971 1972 TOTAL AGRICULTIRE 63.7 63.6 68.7 69.5 72.9 77.7 88.1 91.7 947.6 ionetary Sector: 34.4 33.3 38.4 38.2 40.6 41 .4 53.6 56.8 58.5 Agriculture 30.8 22- 34.8 34.7 36.1 37.4 412 .7 - o 43.5 Rubber 13.2 14.6 16.1 17.8 18.5 19.9 22.3 23.3 23.2 Coffee, cocoa, palm kernels 5.8 3.8 7.3 5.o 5.4 4.8 6.3 6.1 5.3 Other products 11.8 11.9 11.4 11.9 12.2 12.7 13.1 14.6 15.0 Forestr:Y & Hunting 2.0 L? 2.2 2 2.6 4 8.2 8.6 10.0 Forestry 1.5 1.2 1.7 1.8 2.0 3.5 7.6 8.0 9.4 H-lunting 0.5 0.5 0.5 0.5 0.6 0.6 0.6 0.6 0.6 Fishing 1.6 1.3 14 1.2 1. 9 3.7 _; 5 Subsistence Sector: 29.3 30.3 30.3 31.3 32.3 33.3 34.5 34.9 36.1 Source: IBRD estimates. people in permanent modern sector employment about 46,000 (37 percent) are also employed in agricultural activities. As a result of both the high rates of migration and labor market imperfections, there is not only a shortage of agricultural labor in commercial agriculture but also in some areas in traditional agriculture. FARM SYSTEM 9. Liberian-owned commercial farms employ relatively capital- intensive techniques and enjoy rather easy access to capital and other resources. They coexist with the large number of traditional farms using family labor with practically no access to modern inputs and capital. Farm sizes in the traditional sector are small (about 0.1 to 10 acres), with little or no adoption of modern innovations. Most production is for subsistence with cash crops and urban food supplies being produced to meet monetary requirement for taxes, school fees, etc. The rubber concessions -4- and commercial farms operate large land holdings, generally employ modern production techniques, and produce primarily for export. Foreign Concessionaires 10. While the first concessionaire, Firestone, arrived in 1926, it was not until after World War II that a large influx of foreign investment in rubber production provided a real impetus to the growth of Liberia's economy, foreign exchange, and employment. Yet this growth and its benefits were not diffused throughout the country, and the concessionaires' impact upon development in the agricultural sector in general was limited. 11. Foreign investment in agriculture is largely limited to rubber production and timber exploitation.l/ The basic features of concessions are: highly trained managerial and technical staff - most of them expatriates - working with a large, relatively unskilled, labor force; extensive capital investment; use of modern production techniques suitable for large scale operations; and operation at relatively high levels of efficiency. 12. Seven foreign firms operate rubber plantations under concession agreements with the Government. Prior to 1955, Firestone was the only foreign rubber concession and is still the country's major rubber producer. Concessions operate a total area of 140,000 acres of rubber, of which about 40,000 acres is as yet untapped, most of it being still immature. The area planted by Firestone is 92,000 acres, and the other six concessions each cover an acreage varying from 5,000 to 18,000 acres. In 1972, concessions produced 59 thousand long tons of dry rubber from 97,000 acres of mature trees, representing about 20 percent of total value added in agriculture. This rubber production was about 75 percent of total rubber production, the balance coming from Liberian farms. The concessions provided employment for about 22,000 persons, or about 18 percent of the employed labor force. 13. The terms of agreements between the G vernment and foreign companies are extremely favorable to the concessionaires. Firestone was granted a 99-year lease of 1 million acres, for which a rental of 6 cents/ acre is payable on acreage planted to rubber. Agreements with other con- cessionaires allow for leases of from 100,000 to 600,000 acres for up to 80 years at the same rental rate. Most concessionaires must pay the rent on a minimum of 15 to 20 percent of the acreage in the concession, whether such acreage is planted or not. With the exception of Firestone, whose agreement provides for corporate income tax payments, rubber concessions have been granted initial periods (of about 15 years) of income tax exemptions. Exemption is also provided from potential export duties, and from taxes on imports of all equipment ard supplies. Such privileges are, 1/ Getty interests are growing oil palm and the Liberia Company has some cocoa. -5- by today's standards, fairly lavish and the enterprises are as a result, highly profitable. It should be realized however that at the time of the Firestone concession in 1926, the terms were highly favorable to the country. The Liberian economy had been stagnant for 50 years and the country was deeply in debt. Firestone refinanced the debt, provided a certain amount of infrastructure, and in the mid-thirties when finances were particularly tight for the country, paid the land rent for a number of years in advance. The companies' commercial justification for all this was based on the British cartel price of rubber at $1.25 per pound (worth more than $3 at today's prices), and under normal prices they would have done considerably less for Liberia. In the succeeding decades, as circumstances changed, the terms of the agree- ments have been continuously revised in favor of Liberia, albeit at a pace far too slow to allow the country to regain a true position of equity. 14. Yields obtained by the foreign-owned plantations and the level of technology and research are only slXghtly below those of the efficient growing industries of Southeast Asia.1/ Output on rubber concessions fluctuated in the range of 1,000 to 1,500 pounds per tapped acre in 1972, and is about double of that of Liberian owned plantations. 15. Timber is the second most important area for agricultural concessions. In 1972 there were 17 logging concessions extracting timber from about 3.5 million acres. Prior to 1967 the exploitation of timber was fairly limited, with production estimated at about 50,000 cubic meters per annum. In recent years, responding to world market conditions, production has risen to over 400,000 cubic meters. In conjunction with the intensified logging operations has been the improvement of the infrastructure through logging and access roads in the high forest areas. Commercial Agriculture 16. The success of rubber concessions, the availability of cheap land and the supply of rubber seedlings from the Firestone Estate has induced the growth of Liberian-owned commercial farms around concession areas. While this group of farms primarilyproducesrubber, it is increas- ingly expanding production of poultry, hogs, coffee, cocoa, oil palm, rice 1/ It should be pointed out that good Asian clones will not automatically be so in Liberia. The process of clonal development for Liberian conditions is a slow and costly one. As a result, yields of Liberian concessions are in general at least a decade behind those of Malaysia despite continual interchange of material. -6- and vegetables. Operating on a commercial basis, not fully employing modern production techniquies, they generally are less efficient than the concessions, and employ a labor force of about 20,000. 17. Liberian farms now account for about half the total acreasge under rubber. Although this proportion has not changed in past years, the total acreage planted rose sharply from 115,000 acres in 1960 to 151,000 acres in 1972 with about 40 percent of the trees being still immature. In 1972 there were about h,200 such holdings. Their holding size is considerably smaller than that of the concessions, with only about 2 percent falling within the froup of 100 to 499 acres and less than 1 percent 500 acres and above.!/ The average planted with rubber is only 36 acres per holding, with much scope for extension of planting. Although the area under mature rubber is about equal to that of the concessions, the production was only about 30 percent of the total in 1972. 18. Commercial farming is often undertaken by the urban elite, resulting in a high degree of absentee ownership. With the lack of a social security system for civil servants, farming is often viewed as a substitute for a pension system. Only the largest Liberian farms have trained managers and on all but a few of the medium-sized farms, field management is poor and rubber yields are low (about 800 lb/acre on the best farms and 180 lb/acre on the worst). Low yielding planting material, absentee landlords, poor farm maintenance, inadequate tapper wages and incentives, high transportation and processing costs, lack of capital to open up new farms, and declining world prices in the past, have all contributed to the relatively poor performance of Liberian rubber farms. Sharp rises in rubber prices in 1973-74 have stimulated renewed activity on the part of Liberian farmers but with increased costs and a drop in prices, output has now (1975) fallen back to 1973 levels. 19. Production techniques within the commercial farm sector vary a great deal, and the use of capital-intensive technologies is greatly determined by the access to credit from commercial banks. However, as a result of high collateral requirements, it appears that these farms are generally short of capital and can consequently not employ techniques and inputs required for a profitable plantation operation. Improvements of output from commercial farms will partly depend upon the implementation of an effective input supply and credit scheme. 1/ Department of Planning and Economic Affairs, Liberia, Sconomic Survey 1967, p.h8. -7- Traditional Agriculture 20. About 150,000 farms, or 97 percent of all holdings, are in the traditional sector, located mostly in areas with little or no infrastructure.-/ The greatest part of traditional agriculture is still largely outside the monetized economy and produces predominantly for subsistence. During the past decade, however, a new trend has been seen from subsistence agriculture to surplus-producing farming as more "subsistence" farmers h y,e been engaged in the sale of produce or personal services for cash income.- The trans- formation of the subsistence sector and the pursuit of cash income, led to a migration from agriculture and to the rapid growth of the urban labor force.32/ 21. The Agricultural Census 1971, of which the first summary compila- tion was completed for Upper Lofa and Bong Counties during the basic mission, and a recently concluded agro-economic study of traditional farming in two districts of Upper Lofa and Bong Counties conducted by FAO0/, provide the first data-base of the traditional farm sector. According to the Census, only 10 percent of the total acreage is under cultivation in Bong County and less the 5 percent in Upper Lofai/ (see Table 1). In both counties the majority of holdings is small, cultivating less than 5 acres (see Table 2). 22. Crop production in traditional farming is based on rice, cassava and other food crops for subsistence, with sales of surpluses and sugar cane, coffee, cocoa and palm kernels exclusively produced for the market. In Bong and Lofa Counties, upland rice is the most important crop both in terms of acreage and number of holdings involved. Over 80 percent of all holdings 1/ Standards on rural roads are largely determined by the ability of the local tax collector to get to a village in his Land Rover. Better conditions, for example Jowa and Vahunr, result from political circumstances. Occasionally, a village will have enough cash to "buy" the services of the local PWD man and his grader. 2/ Generally, to pay taxes and fees, but occasionally (e.g., Upper Lofa) for general consumption purposes. 3/ ". . . the African farmer is not really a peasant and does not behave like one, being much-more open and receptive to change. While he is interested in economic and social security and, therefore, in land as a means to achieve that security, he does not have the deep emotional ties a peasant has toward a particular piece of land or to agriculture as a way of life. The African farmer has readily moved from one area of land to another and is still ready to move at any time". A.M. Kamarack, The Economics of African Development. New York: Praeger, 1967, p. 101. 4/ FAO, Selected Economic Aspects of ExDanding Rice Production in Liberia, With Special Reference to the Foya Area - Upper'Lofa and the Gbanga District - Bong County, FAO Rome mimeo February 1973. 5/ These percentages are not far from those required by the Shifting Cultivation System. cultivate this crop (see Table 3). On the average it was found that each holding has 15 different crops including rice, such minor crops as corn, pepper, bitter ball, and okra intercropped with rice or grown in kitchen gardens, and four to five different kinds of fruit trees, but usually citrus, banana and plantain, also intercropped with rice. 23. Livestock production is only of minor importance in traditional farming. A study of 508 farms indicated that there is no integration of animal husbandry with crop production in Liberia, even in cases where only few animals are kept.1/ According to the FAO study of Bong and Lofa counties, cattle are held by only 1 percent of the farms, sheep by 10 percent, and goats by 12 and 20 percent respectively in these counties. Hogs are relatively unimportant, while poultry is kept by about 65 percent of the farms. Adverse climatic conditions, particularly for cattle, animal diseases and the absence of a tradition in livestock production among Liberian tribesmen explain the minor importance of livestock. 24. The predominant characteristic of production is low productivity of land and labor. With the lack of moder,n agricultural techniques and land use, shifting cultivation on the uplands2/ is still the dominant technique. This cultivation method is determined by the necessity to restore soil fertility in what is generally poor, heavily leached soil. However, bush fallow cycles are shortened with increasing pressures on good farm land, readily accessible by roads, resulting in reduced soil fertility and increased erosion dangers. In both the Foya and Gbanga areas 7 to 20 years fallow periods have been reduced on some farms to 2 to 5 years,-/ a policy which will eventually destroy these areas of production land. 25. The main input in traditional agriculture, apart from land, is the farm family's own labor. Farm implements used are rudimentary, fertilizer is rarely applied, and disease and pest controls are virtually unknown. According to the Agricultural Census of 1971, the main non-labor input is seed, which is self-supplied in 85 percent of the holdings of pper Lofa and Bong. Fertilizer and other farm chemicals are only used by 2 per :ent of the holdings in Bong and by less than 0.5 percent in Upper Lofa. Apart from the shortage of farmers' own funds, the low use ofmDdern inputs is explained by the fact 1/ W.D. McCourtie, Traditional Farming in Liberia, UNDP/SF/FAO College of Agriculture and Forestry Project, University of Liberia, Monrovia 1971, p. 8. 2/ Under shifting cultivation usually secondary forest on the uplands is cleared, followed by one to three years of cultivation after which the land is returned to bush fallow for periods ranging from 7 to 20 years before a new production cycle is started again. Under this system, an average farm of 4 to 5 acres has 50 to 100 acres of land lying fallow at any given time. If the forest is virgin a crop of cassava can follow the rice, if not then the land becomes fallow immediately after the rice. 3/ FAO, ibid. -9- that none of these inputs can be purchased in rural areas. Annual labor inputs utilized for crop production by an average farm household, based on the FAQ study, were 394 days in Bong and 462 days in Upper Lofa. This compares with an annual potential number of available labor dayqs,per farm household of 840 and 1,200 days respectively in these counties,- The utilization of potential labor was, therefore, only 47 percent in Bong and as low as 38 percent in Upper Lofa. In both areas it was found that labor peaks, calculated on a monthly basis, never reached more than 80 percent of the maximum labor available per holding. However, part-time employment out- side agriculture in these counties and the time-consuming social obligations of the traditional society absorb a large part of the days not used for crop production. 26. The level of productivity in traditional agriculture and the degree of underemployment would suggest that there is scope for transforming it into a surplus producing sector. Large increments in output could be achieved through changes in farm technology. Yet this technology must first be made readily available to the majority of farmers. That traditional farmers are rational decision makers is sumgested by existing evidence in Liberia and other West African countries., Adoption of technology, therefore, will be determined by its profitability, which in turn hinges on the provision of adequate price incentives and the development of market outlets. More generally however significant price response will not come in the absence of overall rural development. 27. Table 2 shows a summary of income from crop production including both cash and subsistence income for Upper Lofa and Bong. 'While rice is by far the most important crop produced, it provides only 10 to 12 percent of cash sales and is grown mainly for subsistence. In contrast, nearly 70 to 80 percent of cash income from production is derived from the sale of sugar cane and vegetables. Of the total income per holding in both regions, about 75 percent comes from crop production, and 25 percent is derived from other economic activities. 1/ In Bong, the average farm household consists of 7.2 members or 2.7 labor equivalents and in Upper Lofa of 10 members or 4 labor equivalents. 2/ See especially de Wilde: =xperience with Agricultural Development in Tropical Africa. -i 0- Table 2 : GROSS VALUE OF CROP PRODUCTION PER FARM HOLDING ( in US$ ) Bong County 1972 Upper Lofa 1971 Gbanga District Foya District Crops Gross Value Cash Gross Value Cash of Production Sales of Production Sales Rice 210 12 245 15 Sugarcane 55 55 35 35 Coffee 3 3 14 14 Cocoa 5 5 1 1 Cassava 52 - 10 Groundriuts 10 5 10 5 Vegetables & Fruits 100 40 100 40 Total per holding 435 120 415 110 Table 3: TOTAL INCOME AND CASH INCOME PER FARM HOLDING (in US$) Bong County 1972 Upper Lofa 1971 Gbanga District Yoya District Total Income Cash Income Total Income Cash Income Farm Income: Crops 435 120 415 110 Livestock 5 _ 5 Oil Palm Produce 40 10 68 8 Off-farm Income: Part-time Jobs 75 75 40 40 Traditional Jobs 25 25 12 12 Total Income per Hollino 580 230 540 170 Average Members of Household 7.2 10 Per Capita Income 80- 54 S - - e: FAO, Farm Survey Gbanga and Foya District. -1 1 - PRODUCTION 28. Rough estimates of rice production indicate that 100,000 to 125,000 tons of paddy are produced per annum, most of this being upland rice. Estimates place the total acreage under upland rice at about 500,000 acres. Based on various farm surveysi/ average paddy yields are about 500 to 600 lbs but these yields range from about 200 to 2,000 lbs per acre. In the past, relatively little has been done to improve productivity of upland rice cultivation through the introduction of new improved seeds and fertilizers. Local trials indicate that the variety, LAC 23, and other improved varieties may have a yield potential of 2,000 lbs/acre under improved methods of upland cultivation. 29. The area under irrigated and rainfed paddy is still very small. Throughout the country swamp land is found between the rolling hills, but comprehensive estimates of its development potential have not yet been made. Swamp rice development, undertaken through a multidonor arrangement and with UNDP/FAO staff, has demonstrated that with transplanting, two to three crops per year can be achieved, with yields of over 5,000 lbs/acre paddy per crop. Recent field trials, adapting technologies suitable to farmers' mentality, have shown that even with direct sowing and supplementary transplanting yields of over 4,000 lbs/acre paddy can be achieved without irrigation under rainfall conditions. 30. Cassava is extensively grown, usually following the single crop of upland rice. While it is used as a staple food, it is only of secondary importance after rice, and its development does not offer the same prospects as rice. It is an easy crop to grow and harvest and at about $20 per ton provides a form of "saving" for emergency cash needs. 31. Fruit crops are mainly citrus, bananas, mangoes, pineapples, and papaya. Most production is for supplementary income, cultivation receives little or not attention, and many of the fruits, particularly citrus, suffer from diseases. Citrus are most widely grown. With a marked seasonal pattern and no storage facilities, prices are very low during the three months of production, while during the rest of the year the country has significant imports. 32. Sugar cane is widely grown for the preparation of cane rum throughout Liberia, with larger concentrations in Montserrado and Maryland counties, in the latter plans are well advanced for commercial production and processing. No estimates on total acreage are available; reported yields are in the range of 5 to 25 tons of cane/kcre. 33. Rubber is the single most important cash crop. Its main production area is along the road from Monrovia to Nimba. While the contribution of rubber 1/ W.D. McCourtie, ibd., and FAO, ibid. *-1 2- to GDP has been remarkable, it certainly unde-rstates the achievements in this sector in terms of physical production performance. 0--Y the neriod 1964 to 1972 rubber output increased at an average annual -ate of close to 8 percent. It is noteworthy-, that despite the limited viability of Liberian- owned rubber farms and `Lie cDntinuing fall in prices, the remarkable progress in rubber output since 1964 is greatly attributable to them. Over the eight- year period Liberian managed production rose more than 2˝? times; accounting for 28 percent of total output in 1972 as compared to 19 percen-t in 1964. More than half of the increase in output from "concession rubber" has been due to yield increases (3.5 percent per year), wuhile acreage expansion of mature rubber amounted to 3 percent per year. W4ith Liberian rubber, it appears that about two-thirds of the rise in output may be attributable to higher yields and only one-third to an increase in the acreage being tapped, reflecting technological change through the introduction of high-yielding clones. Yet despite this, the average yield of about 600 lbs/acre of Liberian-owned plantation is still low, compared to a range of about 1,000 to 1,500 lbs/acre on concessions. 34. Coffee and cocoa are the main export cash crops grown by traditional agriculture. It is difficult to estimate acreage as these trees are usually intercropped. Most of these crops come from Upper Lofa, Nimba, Bong and parts of Grand Gedeh. Production of coffee is primarily robusta, with Liberica accounting for only 5 percent of the crop. Yields are about 200 to 250 lbs of dry beans/acre and are low by most standards, reflecting largely the poor management. Export data (Table 4) indicates that production increased continuously since 1964. However, a large proportion of these exports reflect coffee entering Liberia from Guinea as a result of extremely low prices in that country. WShile Liberian production is estimated to have been only one- third of total exports in 1964, it rose to about three-quarters in 1972, increasing at an average annual rate of about 6 percent. Present production is about 80 percent of the ICO quota of 5,000 metric tons; a quota which will rise to 6,000 within the next three years. 35. Similar to coffee, cocoa management is poor and yields are low, with about 250 lbs dry cocoa/acre. Production has increased steadily since 1968, and its growth can entirely be attributed to area expansion. For the period 1964-1973, the average annual increase in production amounts to about 9.5 percent. iew plantings with improved amazon hybrid seedlings began around 1969, which should lead to significant increases in output. Cocoa production is in its infancy in Liberia. The country has a substantial potential, particularly in Grand Gedeh along the Ivory Coast border. However, modern production methods are virtually uiknown. Trees are in mixed stands and insecticides and fungicides are both unavailable and regarded as unnecessary. In 1972 LPMC buying stations did not exist in areas of greatest potential and the prices paid were but a fraction of those pertaining on world markets. Recent increase in purchases -13- appear to be in slightly lagged response to the price of 18' per lb which prevailed during mid-1969 to mid-1971 (this price itself being a lagged adjustment to world market situations). Moreover, it appears as though the climate in Liberia is sufficiently different from Ghana so as to make the fluctuations in cocoa output somewhat independent. This, plus the fact that Liberia's present and potential production is a fraction of Ghana's tends to indicate that it may be to the advantage of Liberia, particularly from a rural income's point of view, to encourage the expansion of cocoa. Year/1 World price/2 LPMC price/3 Ratio Purchases/4 1966/67 .275 .16 .582 1,501 1967/68 .309 .16 .518 1,975 1968/69 .452 .17 .376 1,672 1969/70 .373 .18 .483 1,960 1970/71 .292 .18 .616 2,355 1971/72 .290 .15. *17 2,535 1972/73 .493 .20 .406 2,276 /1 Crop year ending in September. / New York spot for Accra, #/lb. $'/lb. / Long tons. Table 4: EXPORTS OF RUBBER, COFFEE, COCOA AMN PAIM KERNELS, 1964-73 (in thousands of lbs.) Rubber Coffee Cocoa Palm Kernels 1964 95,484.0 17,272.2 3,390.8 15,055.7 1965 117,181.6 7,128.0 1,587.3 26,654.9 1966 121,866.5 19,646.1 3,359.2 29,813.2 1967 137,986.7 9,539.1 3,153.2 30,781.0 1968 142,625.8 10,330.5 5,049.9 26,564.8 1969 143,150.7 9,394.5 4,231.9 25,050.0 1970 183,874.5 10,949.5 3,573.5 27,466.1 1971 186,457.5 12,171.9 6,083.2 36,694.8 1972 182,922.9 12,3 2.6 7,019.8 9,913.5 1973 199,913.9 15,.299.0 5,,346.3 2,239.9 Source: Ministry of Agriculture 36. Coconuts are not grown on any extensive scale, although large areas along the coast would be well suited. Efforts are being undertaken to expand coconut production and the establishment of a 75-acre seed garden is the first step in this direction. 37. Oil Palm is indigenous and found over the whole country, but is best suited for the coastal belt stretching 50 to 60 miles inland. Local consumption of oil is presently estimated to be about 14,000 tons/year, most - 14 - of this demand being met from prodiction of wiid groves of oil palms estimated at about 9,000 to 10,000 tons of oil/year. About 3,000 tons are produced froza commercial oil palm plantations with about 1,000 tons being imported. Palm kernel exports were significant until 1972, but are now processed locally with completion of a 15,000 ton plam kernel mill, the cake and oil being exported as quantities used locally are still relatively small despite the existence of a local soap industry. 38. The area under improved oil palms managed by large plantations (concessions and Liberian-owned) is presently about 20,000 acres and about 2,000 acres of improved oil palms were planted by small farmers during the past 5 to 7 years. None of the acreage under improved oil palms is yet in full production but it is estimated that max;imum yields of up to 6 ton F.F.B. per acre are achievable in Liberia. Production of improved oil palm fruit is currently estimated at about 14,500 ton F.F.B. 39. Due to climatic conditions livestock has been a very minor part of traditional agriculture. Local consumption is largely met through imports, local production being less than 2,000 tons/year. Total imports of meat and live animals reached about $3.1 million in 1973, a sharp increase over the reported import figure of $2 million for 1970. Presently about 15,000 head of cattle on the hoof are imported annually from Mali, Ivory Coast and Senegal. The existing cattle population, mostly of tsetse tolerant N'dama stock is estimated at 15,000 head; it is kept in very small herds concentrated in Maryland, Upper Lofa and Nimba (the relatively drier areas). Sheep are estimated at about 10,000, goats at about 15,000 and pigs at about 20,000 head. 40. Fish production in Liberia has been mostly limited to shrimp. In terms of value added the sector grew at a spectacular rate of more than 15 percent per annum during the 1964-73 period. Total shrimp production in 1972 was r6ughly in the order of 25,000 metric tons. Exports of prawns were reported to be $100,000 in 196L rose to $2.5 million in 1972 and fell to $1.5 million in 1973. Most of the growth in production is attributable to a Liberian-owned commercial fishery. Artisanal fisheries are at a relatively primitive stage. Comparative Advantage of Crop Production 4j1. Table 5 gives a comparison of returns per man-day and per acre for producing different kinds of products in traditional farming, based on farm budget data of Bong and Lofa Counties. Given the conditions under traditional farming where land imposes nr constraint on production and capital inputs are not applied, the input of labor becomes the only constraining factor of production. Rational production decisions will, therefore, aim at maximi- zing the return per man-day rather than the return per acre. 42. Available data suggest that cocoa, groundnuts and sugar cane (in Bong County only) offer by far the highest returns per man-day. Rice produc- tion appears only as a profitable proposition for farmers under irrigated conditioons with double cropping; otherwise, returns per man-day from upland, swamp and rainfed rice compare unfavorably with those of alternative crops. Unless product prices, available technology and labor productivity can be changed drastically, it seems rather unlikely that government attempts -l 5.- Table 5 : COMPARATIVE ADVANTAGE OF CROPS ON TRADITIONAL FARKS: RETURNS PER ACRE AND PER LABOR DAY IN BONG AND UPPER LOFA (in US$) Bong Upper Lofa Gbanza District Foya District Return per Return per Return per Return per manday acre manday acre Cocoa/3 3.75 37. Groundnut 2.50 67.65 2.50 67.65 Sugarcane 2.70 156.50 1.21 156.50 Coffee/1 2.14 30.00 1.56 25.00 Vegetables 2.00 200.00 2.00 200.00 Rice upland 1.30 39.50 0.55 42.50 Rice swamp - - 0.72 54.20 Rice irrigated 1.81 253.40 Rice rainfed 1.09 58.44 Rubber (reopening of existing farm) (a) producer price for rubber cts. 20/lb. Year 1 2.16 102.98 Year 2 2.46 133.37 (b) producer price for rubber cts. 12/lb. Year 1 1.19 54.98 Year 2 1.44 65.37 /1 Based on mature plantings iur Appendix Tables 4, 5 and 6. to change traditional rice production from a subsistence to a cash crop will be successful. The low quantities of rice marketed by a traditional sector suggest that labor inputs forriceproduction are minimized to produce an output determined by subsistence requirements rather than cash income considerations. 43. Past experience in rubber production by smallholders has shown their great production flexibility by using their labor in such crops which appear to be the most profitable at a given time. As long as rubber producer prices remained depressed at about 12U/lb or below, the return to labor from low-yielding rubber plantations was not attractive, considering the opportunity return for traditional farm labor. It is only since 1973, when producer prices reached 20/lb that tapping has again become -16- even a remotely attractive proposition. Even with the exceptionally high rubber prices of 1973/74 it would appear that a farmer in Bong County trying to maximize his return was better off allocating his labor to cocoa production. MARKETING STORAGE AND TRANSPORT 44. The marketing system consists of four channels which reflect the nature of the commodities as well as the social structure of communities: ti) The marketing at the wholesale level of rubber is handled by the con- cessions and that of all other export commodities and rice by the Liberian Produce Marketing Corporation (LPMC). Export commodities allow economies of scale, permitting a reasonably efficient marketing process; (ii) In contrast, is the inefficiency of marketing at the primary level of export commodities (other than rubber) and rice. This has been completely in the hands of Lebanese traders, and only since 1972 have marketing cooperatives begun to replace them; (iii) Marketing of rubber at the primary level is undertaken by farmers through direct deliveries to the concessions; (iv) Food marketing at the retail level is characterized by a proliferation of small-scale operations and an extreme fragmentation of distribution, all of which reduce efficiency. Retail marketing of imported foodstuffs is mostly in the hands of Lebanese traders, while retail marketing of locally produced food is mainly handled by Liberians. Marketing of Rubber bv Concessions 45. There are four foreign buyers engaged in the marketing and processing of raw rubber for export: Firestone, B.F. Goodrich, the African Fruit Company, and Allen Grant, the former three being also large plantation owners. Liberian commercial farmers sell their rubber production as latex or coagulum at buying stations established by these firms throughout the rubber producing area. About 25 percent *f th?,,rubber produced by Liberians is sold to Firestone as ammoniated atex- by a relatively few large scale producers (500 gallons per day is the generally accepted minimum scale) who can guarantee output and the quality control required. The remainder is sold as coagulum - most as "specification coagulum" with high standards of cleanliness, and much of the rest as lower quality slab or non- specification coagulum. Commercial farmers usually deliver latex and coagulum independently. The few producers of latex use special tank equipment for del- ivery, but coagulum can be delivered by truck, mammybus or taxi. Rubber is sold on a d.r.c. (dry rubber content) basis; each delivery exceeding 500 lb is sampled individually, and buyers are paid cash at the rate applicable to the average d.r.c. of their five preceding shipments. 1/ Ammonia i base) inhibits coagulation while Formic acid is used to coagulate. Generally, the price relationships favor latex. -17- Sellers of small consignments (less than 500 lb at a time) may sell only once per month, and they are paid on the basis of the average d.r.c. of that day's coagulum. Marketing of Export Crops and Rice by the Liberian Produce Marketing Corporation (LPMC) 46. The LPMC is a marketing board dealing with coffee, cocoa, palm kernels and rice. Founded in 1962, LPMC is owned by Government of Liberia and the East Asiatic Trading Company, each having a 50 percent participation in the US$500,000 subscribed capital. The East Asiatic Company supplies management and exports the commodities on a commission basis. 47. LPMC fixes monthly buying prices at which its six designated agents will buy all quantities of produce offered to them. Most farmers'sell their crops to the newly established marketing cooperatives, or to Lebanese traders in those areas where cooperative establishment has not been successful. Although there are presently 20 registered marketing cooperatives, only a few are fully operative, and some of these are not true cooperatives but are controlled by local chiefs or by the elite. Cooperatives and traders sell their products to sub-agents who deliver the product to the designated agents. In general, farmers do not use drying or fermentation methods for cocoa and coffee, and the result is poor quality. This is largely encouraged from having a single price offered for each commodity rather than the quality differentials that have worked so well elsewhere in Africa. As a consequence of generally poor produce quality and profiteering by traders and sub-agents, farm gate prices are low and discourage increases in production. Moreover, with the farmer's unawareness of marketing costs, there is a high degree of distrust in local marketing. LPMC buys ungraded, impure, poor quality coffee and cocoa and does the clearing and grading for export sale. Rice is purchased as paddy and milled by LPMC. Palm kernels previously exported are now processed by a new oil mill financed and operated by LPMC. 48. In an attempt to upgrade the quality of coffee grown by traditional farmers, LPMC has established a model coffee estate and distributes high- yielding planting material. On behalf of the Ministry of Agriculture, LPMC imports cocoa and palm oil seeds of improved varieties for distribution to farmers and employs 12 extension agents for coffee, cocoa end palm oil production. 49. LPMC?s'basic role, however, has been that of a trading company although it has engaged, to some extent, in price stabilization of commodities. In recent years LPMC has increased and improved its storage and hulling capacity and plans for further expansion are well under way. Most of these facilities are located in Monrovia and local grading and processing facilities are very limited. At present LPMC is in the process of enlarging the net- work of rice purchasing agents'and establishing milling facilities at strategic points of production. But in terms of the establishment of market outlets much has still to be done if the Government is to be successful in developing and transforming rural Liberia. Retail Marketing of Foodstuffs 50. Little is known about the structure of the marketing system for common Liberian foodstuffs and even less about the quantities moving through the system. The major products are rice and cassava, but substantial amounts of fruits, vegetable oils, plantains, sweet potatoes, and fish are also traded. The retail market in the cities is generally in the hands of Lebanese traders. Women "making market" are a dominant factor at the local village level. Village markets are organized by farm women selling occasional surplus and by professional traders - women who buy products from farms for retail. Generally, these markets are dominated by one or two large traders. These markets are isolated from other areas by high transportation costs and are, therefore, liable to large changes in prices with small changes in supply or in demand. The turnover is low, and it is more a social than an economic phenomenon. 51. Howfever, some village markets are iLportant trading centers; for example, Foya in Upper Lofa - a town in the vicinity of over 7,000 farm holdings. In 1972, during 50 weekly market days, the market reached a total turnover of about US$350,000, consisting of: 390 tons of export crops valued at US$40,000; 400 tons of locally produced foodstuff for urban areas and exports to Sierra Leone valued at US$90,000; locally produced foodstuff for local consumption of 260 tons valued at US$22,600 and 800 tons of consumer goods and food items imported from Monrovia valued at US$188,000.1/ Storage 52. Problems confronting all market channels are relatively high transport costs, and the high storage loss from climate, insects and rodents. As a consequence, distribution margins for food items are high and net returns to producers are consequently reduced. There is a lack of adequate storage facilities at the farm level and those of local traders are deficient. Modern storage facilities are found only among the concessionaires, some large importers and wholesalers of rice, and at LPMC. Yet even LPMC's storage facilities, despite much improvement in recent years, are not adequa-le to handle all produce, leaving much to be stored in the open. In the Monrovia retail market, facilities are equally poor resulting in substantial loss of produce. 53. The Liberian road system of 4,150 miles is comprised of about 1,140 miles all-weather, primary roads; about 490 miles all-weather, secondary roads. With the necessary emphasis on primary road construction, little has been done to build farm to market roads. Those which do exist are largely commercially unpassable, forcing farmers to carry their produce on headloads to markets as far as 10 miles or more away from farms. This is one of the many constraints to agricultural development. 1/ FAO, ibid. - 19 - II. GOVERNMENT POLICIES AND ORGANIZATION OF SERVICES Budgetary Allocation for Agriculture 54. In spite of the fact that rubber, which is largely outside the control of the Government, dominates agricuilture, most of agriculture's growth problem is a reflection of the government policies toward that sector in the past. Prior to the present administration, little if any attention was given by the Government to non-rubber agriculture. Programs to develop traditional agriculture which have appeared sporadically over the past century were generally only expressions of intention, a fact clearly reflected in budgetary alloca- tions and public investment programs. Agriculture accounts for 25 percent of GDP and about a third of non-mining GDP. Yet total public expenditures (current and investment) for this sector were 3 to h percent of total budget expendi- tures - less than either defense or foreign affairs - and totaled less than one percent of GDP over the five-year period ending in 1972. During 1971 and 1972 only 1.3 percent of total current expenditures were devoted to agricul- ture. However, the absolute amounts allocated for agriculture increased significantly since the early 1970's. This suggests that a change in a different direction is taking place. One may argue that, both in absolute and relative terms, this is not enough and more money will be needed. The answer should-be that increase of allocations to agriculture should be made in a gradual way, keeping pace with improvement of appropriate organization and staffing. There are indications that the Ministry's absorptive capacity can hardly effectively cope with the amounts of money presently available. A superficial analysis of government budgets of the last years and in particular the budgets of the Ministry of Agriculture also shows that the allocation of funds between projects and programs and within individual programs is rather out of balance. A good example is the high amounts earmarked for mecha- nized land clearing. On the other hand, the extension service budget essentially is a personnel budget, and logistical support is negligible. Table 6: PUBLIC EXPENDITUHES FOR AGRICULTURE (US$ million) 1971 1972 1973 Actuals Actuals Budget Total Current Expenditures 60.65 65.38 72.47 of which: Agriculture 0.76 0.84 1.28 Percentage for Agriculture 1.30 1.30 1.80 Development Expenditures 6.59 7.38 10.58 of which: Agriculture 1.14 1.61 1.96 Percentage of Development Expenditure for Agric. 17.30 21.80 18.50 Sources: Bureau of General Accounting Annual Report on Government Ecpenditure 1971, 1972 and Budget of the GOL 1973. (Classification of current and development experditures by Mission). -20- The Ministry of Agriculture 55. The problem of agricultural development is further aggravated by the shortage of trained staff and the consequent deficiency of the Ministry to carry out its functions: agricultural policy formulation, research, extension, and the planning, implementation and execution of the agricul- tural development plan and investment program. This calls for greater attention to appropriate staff development both in quality and quantity. 56. The Ministry is striving to define development objectives and to formulate a development strategy for agriculture as a first step in its desire to initiate a systematic development planning. "Agriculturally based rural development" is the stated top priority of the new administration. In the absence of a comprehensive multi-year plan, authorities are taking steps to draw up a long-range sectoral program for agriculture that can be implemented in the context of annual budgets. Most of the earlier policy measures adopted by the new administra-tion emerged mainly from the ihlabited environment of general economic disarray that stemmed from an emphasis on short-range objectives, rather than at more distant time horizons and growth objectives. It is in this context that the plarning exercise undertaken by the Ministry of Agriculture indicates a significant departure in the Government's policies and programs towards agriculture. 57. Rural development in conjunction with the transformation of traditional agriculture into a surplus producing and monetized agricultural sector is the stated long-term objective of the Ministry. While this objective is sound, the Ministry's primary emphasis is on production objectives; the projects presently implemented fall far short toward achieving rural development. Presently, little or not attention is given to the removal of institutional and infrastructural constraints. 58. Attempts by the Ministry to accelerate the drive toward an efficient agricultural sector and thereby tackle the rural income problem are largely focused on two large-scale projects in Foya ari Cape Mount. The Foya project consists of: (i) land development of 3,000 acres for smallholder tree crop production (coffee, cocoa and fruits) and irrigated rice; and (ii) establish- ment of farm cooperatives or corpora-tions where individual farms are organized into a collectively-owned farm system. Under pressure of rapidly increasing rice import requirements, and in the absence of a viable and efficient rice extension service, the Ministry launched a large-scale rice development project in Cape Mount. The project is comprised of: land development of about 10,000 acres of swamp land for rice production of which possibly half the acreage will be irrigated should water resources prove to be sufficient. Because the area is sparsely populated and translocation of population has not proven successful, a synthesis of rural cooperatives with large-scale commercial farms - the latter on about 85000 acres - is planned. -21 - 59. One can sympathize with the desire of the Government to obtain quick results in agriculture, particularly with regard to rice production, but there is strong evidence that such development will be at a high cost. Both projects were started with great haste, and designs were altered on an ad hoc basis. Although a UNDP-led team undertook soil surveys and mapping of some selected areas, notably in the Foya area, the planning and appraisal of projects show great deficiencies. For mechanical land clearing and large- scale farm mechanization schemes, the Government has established the Agricultural Mechanization Company (AGRIMECO), wholly government-owned but managed by A,.B,IDEV Israel. Although AGRDIECO carries out now overall project execution it is neither designed nor staffed for this function. More impor-tantly, however, is its highly efficient operation in road construction and land clearing. The Ministry recognizes that as presently organized AGRIMECO is capable of moving faster in agricultural works than the planners and engineers are able to provide adequate feasibility studies, project appraisals and project designs. This accounts for hasty project adoption and the subsequent need to adjust on an ad hoc basis. 60. Fully mechanized land development may be justifiable in Liberia for large projects, in light of the shortage of farm labor. Yet there is strong evidence that these methods caused heavy damage to the relatively fragile top soil, and may prove to be too costly. From the stand point of soil conservation, cost and employment, intermediate clearing techniques may be more appropriate. Production potentials can only be fully exploited if supporting services and inputs are made available and farmers show a receptive- ness toward adopting modern production techniques. The Foya swanp rice project has shown, however, that after three years of foreign technical assistance by 1973, only 10 percent of the farmers have adopted intensive planting techniques for paddy in order to achieve two to three crops per year. General experience with the introduction of important and radical agricultural innovations of the type introduced in Foya is that five to ten years is a reasonable period for such innovations to be adopted by the majority of the farmers. The fact that 10 percent of the farmers adopted the new methods after three years may be encouraging would it not be for the high "hidden" costs of massive foreign technical assistance. Yet despite the many deficencies the general policy towards encouraging swamp.rice development is sound. 61. Given high land development costs, slow adoption of modern tech- nology, and poor project preparation and execution, the overall cost of these projects may be excessively high, even if the:demonstration potentials of such projects are taken into account. Concentrating large resources on a small segment of agriculture,.where increases.-,in production appear more likely..achievable.-7is a: sound -strategy if Jt-.is the aim; solely to increase marketable' output ,as quickly.as possible.: Yet such a policy would not be consist.ent.with the .Government ts:stated&objective of rural development and of improving:theo;welfare of the&massgof:-farmers in-the traditionlsector. Given the existing problems of income 7dispaxity, .a policy.which would combine the limited financial and human resources of Government with expanded use of labor and new technological know-how over a much larger proportion of farms is to be preferred. At present, those who are not in the special development -22- areas of Foya and Cape Mount suffer from the fact that the Government devotes its resources and attention to these projects whfile those in the development areas seem to resent the forcible change in their way of living - in having Government, justified or not, making investment decisions for them for which they have to bear the full cost. 62. The Ministry of Agriculture also executes two nation wide programs: the Tree Crop Development and the Extended Rice Program. 'While both programs are oriented to a large number of traditional farmers and not restricted to a few isolated and selected areas, they are modest in terms of the extension effort and the investment per farmholding. Due to the nature of both pro- grams, no spectacular effects can be expected in the short rin. The swamps for rice cultivation and the gardens for tree crops are small and dispersed. No sophisticated methods are envisaged and most of the reclamation and establishment works are being carried out by hand labor. Consequently national agricultural production through these projects will only rise slowly. The impact of these programs on farm communities and individual smallholders may prov-e to be very important. The Tree Crop Program aims at an annual planting of 1,000 acres each of cocoa, coffee and oil palm. The program consists of imports of cocoa, coffee and palm oil seeds and seedlings from the Ivory Coast in the absence of sufficient Liberian seed- gardens; the establishment of seedgardens and a chain of nurseries; and the distribution of improved planting material to interested farmers at highly subsidized prices.±" Tno p o an accon Fi sai,ents as zho ain T abi be Table 7_: PLANT DISTRIBUTION UNDER THE TREE CROP DEVELO0ENT PROGRAM 1971 1972 1973 (Target) Oil Pal-n 40,000 68,ooo 100,000 Cocoa and Coffee 750,000 1,300,000 2,200,000 Source: Ministry of Agriculture 1/ Planting material is available to all farmers regardless of road acces- sibility, processing and marketing facilities in the area; soil surveys to determine best planting areas and choice of crops are rarely under- taken; planting practices and spacing is poor: the bush is rarely thinned and shade is excessive; no fertilizer applications are given; and general upkeep and maintenance of new plantings is poor. -23- are certainly impressive, but as the result of inadequate extension service, the anticipated production may not fully materialize. 63. Extension'service available to the mass of small farmers is limited. It consists of about 300 Liberians, about 50 Taiwanese rice technicians and farmers, Peace Corps volunteers, and a small group of expatriate staff. Extension work for rice was newly organized in 1972 to form the Extended Rice Program and concentrated-in some areas of Bong, Nimba and Lofa Counties with the objective to assist smallholders in reclaiming swamps for the establishment of irrigated and bottomland rice cultivation. It is too early to assess its effect, but it appears that only small groups of farmers have received assistance. For the majority of farmers, extension service consists of a few demonstration plots. Transport facilities for extension staff hardly exist, which reduces its effectiveness. In addition, several of the most qualified extension agents and expatriates are seconded either part- or full-time to the management of farms and plantations owned by politicians and high government officials. 6a. An encouraging effort towards rural development is the so-called "Mats to Mattress Program" carried out by the Action Program for Development and Progress (ADP) in the Panta Chiefdom. ADP, which is now a separate ministry started this program very.quickly in 1972 and built a feeder road, school, a water supply, market place, a model house, community center, and finally a clinic. The program is very successful in infrastructure. It plans to expand into.agricultural production in the area, particularly in rice and tree crops, but thus far progress is limited. Most of the project work is undertaken by labor intensive methods through labor participation of the villagers. The cost is nominal, $35 per capita, but the absorptive capacity of the Agency is so limited that it would take between 60 to 80 years to cover the country at the present rate. Moreover, if no concomitant expansion of agricultural production is achieved, it may prove difficult for the community to maintain the.infrastructure created. Since ADP has been chosen by the President as the executing agency for all rural development projects in Liberia to be financed from the proceeds of the Rally Fund, ADP's absorptive capacity and activities will have to be.greatly expanded. It -is noteworthy, that the decision-b'y which devel'opment projects are to be.financed from the Rally Fund lies with .the village community and tribal chiefs, which ensures that the material or social benefits of investments are immediately commens- urate with the phychological. Much improvement is still indispensable to make ADP a more effective agency, but the direction of this development is encouraging. Agricultural Research 65. With the exception of rubber, agricultural research has been greatly neglected, and the limited research undertaken was of questionable use. The four organizations involved in researcl; activities are: the Firestone Plantation Company, the Liberian Agricultural Company, the Suakoko Experiment Station operated by the Ministry of Agriculture, and the College - 24 - of Agriculture and Forestry of the University of Liberia. Firestone has successfully been engaged in rubber research and the development of high- yielding clones. This research is made available to Liberian rubber farmers, and provides a sound technical base for the industry. The Liberian Agricul- tural Company (although a rubber company) has been engaged in applied agricultural research, particularly on rice and livestock. Its basic con- tribution was the selection of LAC 23, a high-yielding, upland rice variety. 66. The Suakoko research station was established by USAID during the 1950s. When USAID's technical assistance was withdrawn, the quality of research degenerated because of a lack of government support and the shortage of qualified Liberian research workers. Consequently, little useful research came forth concerning varieties, fertilizer use, and pest control for rice and tree crop production. In 1970, research activities were renewed in Suakoko as part of a four-year UNDP/FAO-assisted project for the develop- ment of rice cultivation. Much adapted research is urgently required if any rural development is to succeed in Liberia. Yet, the research station is not given adequate logistic support from the Government. Financial allocation is inadequate, disbursement of funds is irregular, and infrastracture is insufficient. The 1974 budget provided a substantial increase in funds allocated to research, but even more funding will be needed to launch the necessary research. The staff consists of six UNDP/FAO experts with insuf- ficient support from Liberian couterparts, although the training of counter- parts is a main component of the ongoing UNDP/FAO project. With little more than a year left before the termination of the UNDP/FAO project, the failure of the Ministry to provide counterparts for training was a serious concern. 67. The main focus on research at Suakoko is on rice. This work is progressing satisfactorily with primary emphasis on the selection of rainfed and irrigated, high-yielding varieties adaptable to Liberian conditions, development of improved rice cultivation techniques, and the operation of seed multiplication schemes. Research is also being undertaken on reclamation methods for small swamp development, and low-cost clearing techniques, using hand and tractor operator winches, have been recently developed. Research on pasture establishment has progressed sati factorily. Research on the adaptability of N'dama cattle has been start 3d, and preliminary results indicate the possibility for livestock development in Liberia, although most of the country is in the tropical rain-forest zone, with heavy tsetse fly infestation. No research has yet been carried out on cocoa, coffee, oil palm and other tree crops. 68. Some agronomic and economic research has recently begun at the University of Liberia, assisted by UNDP/FAO. The only systematically applied research is undertaken in forestry and wood untilization, whereas other research activities are limited generally to teaching requirements and have limited field application. - 25 - Agricultural Education 69. Agricultural education has exerted little influence on Liberian development for a number of reasons: the annual output of trainees has been limited (at the middle level it has averaged 12 per year, and at the higher level 4.5 per year during recent years); trainees have lacked the practical approach needed on the job and there is a pervasively low attitude towards employment in agriculture. 70. Middle-level agricultural training in Liberia is provided by the Booker Washington Technical Institute in its four-year upper-secondary (grades 10-13) course. Most of the agricultural extension staff received its training at the Institute. The curriculum provides for 40 percent farm practice, but facilities are so poor that the few students who complete the course cannot be considered qualified for agricuiltural employment and many drift into other jobs. Part of this problem, of course, also relates to the poor quality of previous schooling that some of the students have received especially those from the rural areas, who cannot be considered even full primary school leavers. 71. The College of Agriculture and Forestry of the University of Liberia offers a four-year post-secondary agriculture and forestry degree. Total output from the college has ranged between 10 and 15 per year during the last four years, and is expected to reach 20 in 1975. Because of the low caliber of secondary school students, the college's curriculum has had to contain an unduly high proportion of English and general studies; the agriculture and forestry content is well conceived but requires greater emphasis on management techniques, particularly for rubber. Physical facilities at the college's main site at the University in Monrovia are totally inadequate, and the college's farm and forest, which provide excel- lent opportunities for practical work, are 17 miles away and are, therefore, not fully utilized, owing to frequent difficulty with transportation and scheduling of classes. 72. In 1969, an agricultural extension training center was established at the college farm, providing six-month in-service courses for staff of the extension service, rubber advisory service and for forest rangers and home economics extension workers. Virtually no residential training is provided for farmers except under a Taiwanes'e bilateral assistance program for expansion of rice cultivation.' 73. The greater emphasis on agricultural development by the new Government will substantially increase the demand for agricultural graduates and a much greater effort in agricultu'ral education is needed. The annual need of the public services for agricultural graduates to be trained at post-secondary-level'is conservatively estimated at 20. The demand for agricultural and forestry personnel in the private sector is gaining momentum as a result of increased investment and about 30 graduates per year will be needed. Training of the 50 college graduates required annually should not - 26 - be of a high-level and academic nature, but should have a strong practical bias since most graduates will be employed as extension workers, farm and rubber estate managers. To achieve this objective, an IDA education credit approved in March 1972, included provisions for the construction, equipment and additional staffing for a new College of Agriculture and Forestry which will be established at the college farm in an environment in which theoretical and practical instruction can be closely integrated. 74. Effective utilization of college graduates will require the services of a sufficient number of middle-level agricultural staff. Require- ments are difficult to estimate, but the shortage of training in this field is so pronounced that a beginning should be made by introducing agricultural courses at the secondary-level in rural areas. Pricing Policies 75. The Goverrnent's direct intervention in the pricing of agricultural produce was largely limited to the stabilization of rubber producer prices and the stabilization of retail and producer price for rice. 76. Stabilization of rubber producer prices. The first price support scheme began in November 1967. In this year, Firestone started to operate a new processing plant which led to savings in processing costs of more than one cent per pound. Negotiations by the Government with Firestone to pass on these savings to producers were not successful. Instead a price stabiliza- tion scheme was proposed by Firestone for wlhich purpose it advanced US$500,000 to the Government. Minimum guaranteed prices were posted for cts. 12.5/lb for specification coagulum and cts. 11.5/lb for non-specification coagulum. Under this scheme, farmers were entitled to draw interest-free loans from the Government amounting to the difference between the factory posted prices and the min.imum guaranteed prices, with the provision that these advances would be retained by processors when factory prices exceeded the minimum guaranteed price by 1 cent per pound. The scheme was discontinued in March 1970, when the loaned amount of about US$286,000 was repaid. Generally, participation was limited and greatly confined to large farmers. By September 1970, rubber prices were again low, and a second stabili.zation scheme was started with minimum guaranteed prices of cts. 12 and 11/lb respectively for specification and non-specification coagulum. In the following months, rubber prices continued to fall, and in January 1972, when factory posted prices were as low as cts. 8.1 and 6.6 per pound respectively for specifica- tion and non-specification coagulum, the stabilization program was discontinued. The financial requirements of the second scheme were in the order of about US$600,000. More than half of the Liberian rubber farmers participated at one time or another in the scheme, but available data indicates that large farmers were the main participants. As has been discussed previously, this would suggest that at a rubber price of cts. 13/lb tapping was no viable proposition for small farmers, considering their opportunity return from traditional labor. For the large rubber farmers, who had no alternative other than to continue tapping or cease operation, the price support scheme did not encourage a shift from coagulum to the more profitable latex produc- tion. While the world market price differential between the two grades of - 27 - rubber was at the time about cts. 5-6/lb, the differential between the price of latex and the guaranteed coagulum price was kept at cts. 1-2. 77. Fixed producer price for rice. In the light of rapidly increasing rice import requirements, 1/ the Government became concerned with the obstacles to higher rice production and the need for offering farmers price incentives. In 1972, the Government announced a fixed farm price of 5 cts/lb for paddy or farm milled rice for all locations in the country which was raised to 7 cts/lb in 1973. No price differential between paddy and farm milled rice is offered, in order to discourage the pounding of paddy by farmers - a practice which contributed largely to the low quality of Liberian rice and consumers' preference for imported rice . Prior to the guaranteed price scheme, rice merchants offered between 2-3 cts/lb for paddy or rice. Subsequently prices have been raised in line with the movements in world prices. 78. Maximum retail prices for rice. Maximum retail price for imported rice in Monrovia was set at $9.d5/100 lbs prior to February 1973 and increased thereafter to $15.60/100 lbs. For outside Monrovia, these prices are adjusted by transport cost. Since September 1972, the maximum retail price for local rice is set at $10.00/100 lbs for Monrovia and at $10.50/100 lbs for the rest of Liberia. 2/ Given the difficulties on the part of the Government to enforce maximum retail prices in markets largely composed of street hawkers, these price regulations are respected for purchases of rice in 100 lb bags but greatly violated for purchases of small quantities. 79. There is no direct government intervention in the case of producer prices for cocoa, coffee and palm kernels. Prices for these export com- modities are fixed by LPMC in consultation with the Ministry of Agriculture and are related to world prices. Producer prices for rubber are in effect fixed by Firestone, yet bear little resemblance to world market prices, and the pricing policies which have been pursued in the past by LPMC and sanc- tioned by the Government were primarily dictated by profit motivation. Land Tenure Policy 80. Land tenure is regulated by statute law which provides for two systems: individual land ownership for the modern agricultural sector and communal land tenure for the traditional sector. Traditional principles and practices differ in detail among tribes, but all the variations of tribal tenure share the concept of collective rather than private owner- ship. The ultimate proprietor of land in Liberia is the State, and only Liberian nationals may own land privately. Most of the public land is 1/ Rice imports were about 30 thousand tons per year during 1961-65 and rose to 50 thousand tons in 1972 and 1973. 2/ Both the imported and local market price were subsequently changed in 1974 to conform to world market conditions, the relationship between the two prices remaining roughly the same. - 28 - administered under the tribal tenure system. Foreign concessionaires do not own land they exploit. They hold land under long-term leases (40 to 99 years) and for large areas (100,000 to 1 million acres). The terms on which concessions are awarded are the subject of negotiations, and there are few general guidelines or principles that have been developed. 81. The 1956 Code of Laws assures each tribe the use of as much public land in the area it inhabits as is required for farming and other enterprises essential for tribal necessities. This land interest may be transmitted into communal holdings on application by the tribe. Similarly, a tribe may petition the Government for the division of tribal lands into family holdings (25 ac.). The tiibal chiefs are the agents through whom all land allocation and distribution takes place. It appears, however, that in areas where tribal tenure is the rule and where chiefs are nominally responsible for the disposition and use of land, a measure of private acquisition and appropriation has developed. In several small swaiTp areas that have been cultivated for many decades, some tribal families "rentt' land (for acknittedly nominal fees) from other tribal members who are recognized as the owners. 82. While regulations guiding the acquisition of tribal -and as private property do exist, such land transactions are inhibited by the process of land registration. To purchase tribal land, a prospective buyer must first obtain a Tribal Certificate from the tribal authorities, indicating the tribe's willingness to relinquish the "Usufructuary Right" over it. Subsequently, the County Superintendent must certify that the land to be purchased is not part of a tribal reserve, and that it is unoccupied. Upon receipt of the certificate, the purchaser must have the land surveyed (at a cost of 50 cents per acre), and then, when the land is identified, make a payment of 50 cents per acre to the Treasury Department. - 29 - III. OPPORTUNITIES AND CONSTRAINTS FOR DEVELOPING AGRICULTURE 83. The problems and challenges of deepening the development process in agriculture are tremendous. There can be no doubt that Liberia has to take a long-term view to such development. Long-term projections of growth in agriculture are difficult, given the paucity of data. Nevertheless, there appears to be considerable leeway in aiming at a growth in this sector at around 6 percent by 1980. The opportunities for enhancing such a growth prospect lie in Liberia's favorable resource endowment, international and domestic market prospects and the availability of improved technology. Realizing the opportunities will require that drastic measures are taken to render most of all improvements in: (i) the absorptive capacity of the public sector to carry out projects effectively; (ii) the price incentive to producers; (iii) the marketing of produce, input supply, and agricultural credit; (iv) extension, training and research; and (v) land tenure policy. Provided these overriding constraints can be overcome and the effective utilization of large investments can be achieved through better project prepa- ration and implementation, Liberia's agriculture should be capable of making an increasing contribution to economic growth in the medium to long run. THE OPPORTUNITIES The Natural Resource Base 84. Liberia's climate, topography, and soil composition provide an environment where a great variety of crops can be grown. Moreover, Liberia has a favorable land/population ratio, and the availability of cultivable land imposes no constraint, not even in the more distant future. There are also considerable forestry and fishery potentials which are not at present adequately exploited. 85. Topographic map cover, hydrographic data, land use and soil surveys are inadequate to permit a detailed evaluation of existing land resources. Liberia's topography is gently rolling in the coastal area and becomes more rugged inland. The climate is tropical, and rainfall ranges from 165 inches/annum at the coast to 70 inches/annum inland. Most rain falls between April and November. Wetter area vegetation is evergreen forest, changing to deciduous and savannah forest in the drier areas of Upper Lofa and Maryland Counties. - 86. The dominant soil forming process in Liberia, as is to be expected in the uimid tropics, has been by laterization. Humic latosols occupy 75 percent of the total area of the country, the principal soil associations being related to the parent bedrock. Generally, the soils are of rapid soil degradation and erosion, and are unsuitable for continuous annual crops. Swampy lands are spread over the whole country, but no adequate mapping exists, - 30 - and the exact surface area, water-resources and development capacity are yet to be determined. Rough estimates by USAID indicate an area of over 700,000 acres of fresh water swamp. Part of this unexploited land resource is fertile and has a good potential for being developed for paddy cultiva- tion. The extent of such development is contingent upon the costly land- clearance required. The range of these swamps includes heavily-wooded swamps as well as swamps covered only with tall grasses. Much of the swampy land is not accessible by the existing road network, and is often far from inhabited regions. Without more data concerning the size and qualities of these swampy soils and the land clearing requirements, it is impossible to estimate even approximately the areas which could be developed productively. 87. Liberia's forest resources are great and still unexploited. Close to 50 percent of the area is under forest, and rough estimates indicate the existence of about 7 million acres suitable for commercial exploitation. The major forest area is in the eastern part of the country, which until very recently was virtually inaccessible. This area, as well as other parts of the country possessing high forestry potential, have been opened by recent road constructions. Indications are that S.E. Liberia has an annual export potential of 300,000 tons of logs and manufactau,ri- forest products of commercially recognized timber species. Forest resources could form the basis for large investment in timber processing industries, and the implemen- tation of an effective investment program geared to utilize the growth potential of the forest sector cou d reduce Liberia's growth dependence on iron ore exports in the long run.1/ 88. No systematic evaluation has ever been undertaken to evaluate the marine resources of Liberian waters, and the existing information is limited. Although some evidence suggests that the off-shore waters may not be as rich as those north of latitude 100N, Liberia's marine resources, particularly shrimp with a high export potential, are not yet fully exploited. Market Prospects 8.c. Liberia's exports of agricultural commodities form only a small part; of world trade. Rabber is by far the largest single export commodity, and Liberia's exports account for about 2 to 3 percent of world exports. Cocoa, coffee, timber and fishery exports are still small relative to rubber exports, but are nevertheless an important source of foreign exchange. Exports of agricultural commodities amounted to US$46.2 million in 1972 and accounted for 82 percent of non-iron ore exports. 1/ These aspects are discussed in detail in Volume IV. - 31 - 90. World demand for Liberia's agricultural export commodities may rise somewhere in the order of 2 to 3 percent per annum during 1973-80. Sharp price increases of rubber during 1973, could have exposed this product to intensified competition from synthetic substitutes would it not have been for the rapidly changing costs of petroleum and its by-products. Projected increases in world supply of rubber an(d cocoa in excess cf increases of demand may, however, exert a downward pressure on world prices. Coffee and timber are the only commodities for which market and price prospects are comparatively favorable. Overall, IBRD projections indicate that by 1980, the level of projected prices in constant 1973 dollars for all LIberian agricultural exports is expected to be below that which prevai]ed during 1973 and 1974. Substantial increases in the volume of exports will be necessary over the next seven years in order to maintain the real -.-alue of export earnings. Yet, maintaining or improving real price incentives for producers will depend entirely upon whethier the presently high margins between export and producer prices can be reduced firther through a more effective, low cost marketing and processing system. Improvement of rural incomes will hirnge, however - apart from these reductions in margins - to the greatest extent on produc- tivity increases and the implementation of complementary programs designed to achieve a real resource transfer to the rural sector which benefits the mass of traditional farmers. 91. Higher incomes, population growth, and increased urbanization will stimulate a strong damestic demand for food conmodities during the 1-970s and beyond. Data does not permit any demand projections, but probably the largest demand increase will come from meat and fish, palm oil, sugar and rice. It is rather unlikely that domestic demand for these commodities can be met internally during the next decade. Only in the-case of palm oil does it appear likely that Liberia will reach self-sufficiency or be a marginal exporter by 1980.1/ Domestic food prices may, therefore, remain strong, and some prices (notably meat and rice prices) may continue to rise in case import requIrements cannot be met fully. 1/ Local oil consumption is presently estimated at 14,000 tons per year and expected to reach 28,000 tons to 30,000 tons in 1980. Presently, production is about 10,000 tons oil from wild groves and 3,000 tons from improved oil palm plantings. By 1980, it is estimated that based on wild groves, existing planting and additional plantings of 600 acres between 1973-75, oil production could be in the order of about 32,000 to 35,000 tons. - 32 - Table 8: COMMODITY PRICES 1967-1974 AND FORECASTS FOR 1980 C(onstant Current Prices 1 97L4 _nrices Actuals Foreca st Commodity - Specification Unit 1967 1 968 1969 1970 1971 1972 1973 1 974 197 0 Cocoa: Accra, Spot New York ,lib. 29.0 34.4 45.7 34I.2 26.8 32-3 65 100 52 Coffee: Robusta, Spot New York g6lib. 33.51 33.86 33.11 41.4 4 42.26 45.19 62 66 65 Rlubber: RSSI, Spot New York g/lb. 19.9 19.9 26.2 21.0 18.1 18.2 36 l4O 35 Source: IBHD Econonric Analysis and Projection Department. - 33 - Technology 92. Raising prodactivity in agriculture will depend upon the availability of improved technology and the speed of its adoption. Improved planting material for rubber, cocoa, coffee and oil palm a8 well as higher yielding rice varieties are readily available. Moreover, it has been demonstrated in Liberia that in conjunction with fertilizer application, disease and pest control, and better farm management practices, yield increases of more than 100 percent can be obtained: Present yield Yield obtainable with lb./acre improved technology lb./acre Rubber (traditional farm) 600-700 1,200-1,800 Cocoa 200-250 700-800 Coffee 200-250 600-700 Oil palm (FFB) 2,000-3,000 6,000-12,000 Rice - Upland 500-600 2,000 Irrigated swamp 3,000-4,O00 15,000 (1 crop a year) (3 crops a year) The yield prospects look encouraging. Yet substantial improvements in exten- sion service, input and plant distribution, credit and farm management practices are indispensable in ensuring the adoption of improved technology among large sepnents of traditional farmers. Unless these improvements can be made, raising productivity in traditional farming may be far from remote. The work currently underway by the Ministry in tree crop production and the ongoing project pre- paration and studies would suggest that a far-reaching adoption of tree crop technology could be accomplished during the next decade. In contrast, programs geared for achieving a breakthrough in upland rice farming are still limited and the available quantities of LAC 23 base seed are inadequate for large-scale distribution. THE CONSTRAINTS The Ministry of Agriculture and the Problem of Absorptive Capacity 93. The present Government has recognized that development of agricul- ture will require more effective planning and investment in the non-enclave sector and a much closer integration of economic activities among the various regions as well as between the subsistence farmers, the enclaves and other productive sectors. The Ministry of Agriculture is the most important ministry as far as economic activity and development is concerned, yet its organization and staffing leave much to be desired. The shortage of qualified technical and administrative staff in all divisions of the ministry is pervasive. Moreover, the large number of expatriate advisors from both UNDP/FAO and USAID has not - 34 - materialy affected the shortcomings in staffing. Largely this situation has arisen for two reasons: First, there is the failure on the part of the ministry to integrate the expatriate staff with the ongoing operations. Consequently, expatriate staff, with rare exceptions, is insufficienctly utilized. Second, the terms of reference of many advisors do not appear to be clearly defined and/or do not meet the needs of the Ministry. Of equal concern is the apparent lack of an effectivecoordination between the Ministry of Agriculture and other ministries and agencies (Ministry of Rural Development, ADP, College of Agricul- ture, Rubber Plantation Association, etc.). Although there is obviously some informal coordination, it appears to be greatly deficient. 94. One could dwell at great length on the administrative reforms required. Of course, one cannot say that any single organizational setup is particularly suitable for Liberia or for assuring an effective development program in agri- culture, but if any one is particularly unsuitable, it is the one now existing. 95. Rapid development of agriculture appears severely restricted by the limited absorptive capacity of the ministry to implement projects. Technical deficiencies in project preparation arid appraisal impose further constraints. A reflection of these shortcomings is that despite more than two decades of foreign technical and capital assistance, Liberia has not been able to effect- ively increase its capacity for carrying out projects. There have been few agricultural projects other than those carried out by foreign assistance agencies, and the value of most of the foreign assistance received by Liberia has been vitiated because the Government failed to develop viable projects in order to benefit from such aid. 96. This failure appears to be recognized by the Government, and in 1972, the ministry established a division for planning and project appraisal. There is urgent need that this division be adequately staffed and that its services be adequately used; in other words, that projects undertaken by the Miidstry are based on technical, economic feasibility studies and not on political criteria. Equally important is the monitoring of project execution and supervision. These are functions to be undertaken by the ministry, but they are grossly neglected, and if they are undertaken, they leave much to be desired. Much of this is a reflection of staff shortage and the fact that divisions do not appear to have fonnal responsibility for project supervision in their area of activity. As a result, much of supervision and project monitoring has to be undertaken by the miniister himself who is already over- burdened with a completely centralized ministry. 97. The low level of public expenditures for agriculture- budgeted at US$3.2 million for 1973 - raises the question of the new administration's sincerity in giving agricultural development top priority. Expenditures for health, education, and transport in rural areas are not included in this figure, and to that extent the total flow of resources into rural areas is understated. Nevertheless, in the absence of substantially higher appropria- tions, the impetus needed for transforming traditional agriculture into a modern, market-oriented sector, capable of accelerating the growth of the economy, will be inadequate. Much investment is needed for agriculture, yet the size of an anticipated investment program must be realistic and bear in mind absorptive capacity constraints. Furthermore, large-scale development schemes are least necessary for the time when such projects cannot be provided with the necessary infrastructural support, when processing, marketing, storage and distribution facilities are inadequate, and when large-scale existing projects do not appear to have achieved the anticipated benefits because of the lack of necessary supporting services. Price and Marketing Constraints 98. Sustained output increases in agriculture will largely depend upon the price incentives offered to producers. Thas, the presence of an active farm price policy must become an integral part of the Government's agricultural policy. It must also be recognized that the success of a farm price policy will depend to a great extent upon improvements in the marketing efficiency and transportation facilities. 99. The existing marketing system and pricing policy have unduly dis- criminated against agriculture. Margins between producer and export prices for some products have been frequently or continuously excessive due to high profit margins of intermediaries, and high handling and processing costs of LPMC and the rubber companies. As a result, the income-earning opportunity in agriculture is low, and farmers are deprived adequate price incentives. 100. Producer prices for cocoa, coffee and palm kernels are fixed by LPMC in accordance with its agreement with the Government which states: "The corporation will buy produce as specified in the Act and pay prices to producers, fixed periodically on the basis of world market prices after deducting expenses for freight, insurance, handling, warehousing, shipping and any other charges incurred (i.e., Government inspection fee) and 10 percent of the f.o.b. value to cover overhead expenses and remuneration". However, announced and recorded "producer" prices are far from being farm gate prices and are in fact theoretical prices of reference to fix the LPMC payments to the agents for crops delivered at LPMC's buying centers. There is practically no control (except recently for certain cooperatives), and the prices received by farmers bear no resemblance to the "producer" prices. 101. Table 9 shows LPMC's unit "producerl and export prices. In general, unit "producer" prices followed movements of world prices although there has been some degree of price stabilization in the case of cocoa and palm kernels. Whereas, the "producer" price element for cocoa and palm kernels is more or less comparable to those in neighbori4g countries, in the case of coffee "producer" prices were much lower in Liberia than, for example, in Ivory Coast. This is particularly strange since Liberia has no quota problem like the Ivory Coast, where large amounts in excess of the quota have to be sold at low prices in new market countries. This indicates a much higher tax element in the liberian coffee price structure. Moreover, in spite of the coffee price boom in 1969/70, producer prices during this and the preceding year were substantially lower than in 1968/69. The rather non-economic price policy for coffee was further aggravated by the - 36 - decision to reduce the producer price for green coffee from 17 cents in 1970/71 and to increase that for berry coffee to 10.5 cents per pound. The rationale for this decision was to discourage smuggling from neighboring countries which mainly came in green coffee form. As a consequence, price incentives for Liberian coffee farmers were low, and they suffered more than the full brunt of world price fluctuations. Table 9: LIBERIAN MARKETING CORPORATIONS PRODUCER AND EXPORT PiIICES (in US$ per long ton) 1966/67 1967/68 1968/69 1969/70 1970/71 1971/72 1972/73 Coffee a. Unit producer price 409 403 353 370 297 269 409 b. Unit export price 667 682 655 748 847 854 757 - in percent of produ- cer price 163% 169% 186% 202% 317% 182% 185% Cocoa a. Unit producer 358 358 382 403 409 336 448 b. Unit export price 542 616 775 836 602 471 555 - in percent of produ- cer price 151% 172% 203% 207% 147% 140% 124% Palm Kernels a. Unit producer price 93 102 93 98 100 92 106 b. Unit export price 133 167 133 147 134 124 1/ - in percent of produ- cer price 143% 164% 143% 150% 134% 135% - TOTAL export earnings against producer price 154% 160% 140% 186% 173% 173% payments TOTAL producer price payments (US$ million) 3.51 3.84 3.77 3.77 4.26 3.74 Index of GDP deflator 10C.8 99.9 103.7 104.7 104.6 108.5 1/ No Sales - 37 - 102. The effects of the pricing policy pursued by LPMC and sanctioned by the Government did cause a continuous widening of the margin between "producer" payments and gross export earnings. As a consequence, total producer earnings from export crops have more or less stagnated in nominal terms since 1966/67, with the exception of 1970/71. Studies of price changes in rural areas are not available. Yet, the GDP price deflator would suggest that price changes were in the period 1966-72 only minimal and to that extent real incomes from export cash crops may not have differed significantly from nominal ones. 103. In comparison to other West African marketing boards, it appears that LPMC's margin between "producer" payments and export earnings has been excessive. As stated above, this margin is not only determined by profits, but also by agent commission, transport, warehousing, insurance, shipping, and LPMC's overhead and commission. The Mission was not able to obtain a detailed.breakdown for LPMC's accounts for the entire period of its operation. Yet available information shows that between 1963-69 and 1971/72, high profits - far in excess of the provision of the agreement - were largely contributing to the wide margin betweenl export earnings ancd "producer" pay- ments. According to the agreement, profits plus overhead expenses should not exceed 10 percent of the f.o.b. value of exports. Profits plus overhead expenses were in the range of 13.6 to 16 percent of f.o.b. turnover during the period 1965-69 and brought more than US$1 million in profits above what was provided in the agreement. For 1971 and 1972 profits plus overhead expenses were 14 and 15 percent, respectively. Of course, LPMC's excess profits were approved by the Government, and it has shared equally in these profits either through dividends, bonus shares and 50 percent ownership in the accrued reserves of LPMC. lo4. Between 1963-69 total profits amounted to over US$3 million. About one-third of it was retained for reserves and development functions with which LPMC was entrusted by the Government. Nearly US$250,000 were paid as bonus shares and US$1.8 million as dividends to the Government and East Asiatic Company. Since 1971, the Government has insisted on an increasing use of profis for agricultural investments and services, and large parts of reserves were used to subsidize prices for palm kernels and cocoa. These actions were undertaken largely against the desire of the Government's partner. Moreover, the division of the board is likely to increase in the future given: (a) The growing awareness on the part of the Government of their responsibility to promote agricultural development and to better protect the interests of the farmers. (b) The decreasing enthusiasm on the part of the foreign partner in the proper management of the LPMC due to decreased distribu- tion of profits caused by: (i) the end of the tax holiday in 1972; (ii) the growing immobilization of undistributed profits in social or development investments with low or diffused profitability; (iii) the extension of activities into new and low prifit- ability branches (rice marketing). - 38 - 105. Rice production has introduced a new dimension into LPMC's marketing in that rice is a crop for domestic consumption and not for export. While "producer' prices offered by LPMC for exportable cash crops resulted in reduced production incentives and lower farm incomes, all produce had to be through LPMC because of its monopolistic position. In such a situation, the costs of bad price conception and organization were born by the farmers. However, the conditions are entirely different with a domestically con- sumed crop. Unless the marketing organization is efficient and adequate producer prices are offered, it will suffer competition from other economic agents. Unless there is a coherent economic policy for rice, there will be increased competition which will take all kinds of forms, not all correct or honest. 1o6. Until recently a number of Lebanese traders in the producing areas were designated LPMC purclhasing agents for the collection of cash crops. They had to finance the purchases themselves. Since they were the only persons who could deliver to LPMC, the sole buyer in Liberia for those crops, and in the absence of effective controls, they were in a position to decide what price to pay to the small, illiterate and unorganized farmer-producer. The result was that farmers seldom if ever received the full producer price. 107. Recently the Lebanese traders have been replaced by cooperatives as the purchasing agents of LPMC. Even the best of these cooperatives are still in a very primitive stage. They are mostly based upon the rural socio- political structure, which gives a sound initial basis, but present serious limitations to evolving into more modern forms. There is a danger that cooperative property may be used for personal ends in the future. However, at least in Upper Lofa, popular acceptance of the cooperative seems to be genuine. This apparently is due to the fact that with the assumption by the cooperative of LPMC purchasing agent functions, the farmers now are receiving full or almost full producer prices for their production. 108. Price discriminations are, however, not only limited to products marketed through LPMC. In fact, they are even more pronounced in the case of rubber where pricing practices pursued by foreign concessions have pre- vented Liberian producers from obtaining an adequate share of world prices. No Liberian processing facilities existed in 1972 and producers had to sell to Firestone, Goodrich or Allen Grant. In contrast to other cash crops, there is no system of middlemen dealing in rubber. Firestone dominates the rubber industry by fixing prices which are followed by the other two concessions without competition, although Goodrich and Allen Grant have more efficient and low cost processing plants and could theoretically offer higher producer prices. To ameliorate this situation, the Government invited an independent foreign company (Guthrie) to establish two rubber processing plants, with the first to start operation in 1975. It is hoped that this will provide farmers with a real alternative to the concessions for the sale of rubber. - 39 - 109. The peculiarities of Firestone's pricing system are shown in Table 10 and characterized as follows: (a) The basis for payment for liquid latex to producer is not tied to any world price - Singapore or New York - but to an extra-market future contracts of Firestone Liberia with its parent company in the UJnited States. This anomalous practice caused Liberian latex prices to fall nearly USW3/lb below the price for coaguliun in 1973, although latex used to receive a premium over coagulum prices as is still the case in other rubber producing countries. (b) Producer prices for coaguluim are based on average Singapore prices for specification rubber, rather than on New York prices. Since all Liberian rubber is sold to the United States and Earope, the implied transport charges in the Singapore price are far in excess of transport charves between Liberia and Europe or the United States. Similarly as in the case of latex pricing, this anomaly is depriving Liberian producers from receiving their fair share of the world market price. (c) Since some of the rubber concessions sell nearly all their production to their parent company or itssubidiaries, they are not compelled to produce internationally recognized grades. As a result, what Liberian rubber is sold on the markets of New York or 3urope receives far lower prices than rubber from the Far East made to a grade recognized internationally. (d) A further anomaly is the fact that factory purchasing and finance expenses and processing costs are far in excess of similar operations in Southeast Asia. These deductions from the base price nearly twice as high in Liberia as in Malysia where companies have no duty free privilege on fuel, power and equipment (See Table lo). (e) Rubber concessions permit small producers with deliveries of less than 500 lbs. only one delivery per month, and base their payment on the average dry-rubber-content (d.r.c.) or the day's purchase rather than on the individual delivery. This penalizes small producers, since the d.r.c. of their delivery is much higher after one month's storage than when delivered fresh. Table 10: IATG INS -3 E7IE4l WRLD PRICES AID PRODUCER PRICES I ' i --rDr BT LIBERIA AND MhLAYSIA Tiarch 1973 US cts./lb (a) LIBERIA Average Singapore price for non-specification 22.17 Less selling expanse 0.50 21.67 Plus premium 0.38 22.05 Less deductions: Expenses for administration, purchases and interest 1.22 Expenses for processing 3.41 Profit before tax 1.27 Total deductions 5.90 5.90 Producer price 16-15 (b) MALAYSIA Deductions: Straits cts. lb Agents fee 1.5 ) Transport 1.0 2.5 Processing, marketing and freight 5.0 Research cess 1.0 ) Replanting cess 50 ) 2.5 Duty 2.0 ) Total deductions 15.0 5.0 Note: Because there is no research cess, replanting cess or duty in Liberia, a comparable deduction would be Straits cts. 7.5 or US cts. 2.5/lb. Source: Firestone, and Morris and Morris Report, G.0.L. 1970. - 41 - 110. Overall, the marketing and pricing system pursued by the rubber concessions must be considered unsatisfactory. It has denied Liberian producers a fair return on their factors of production, and the low price incentive offered has discouraged many from tapping or replanting plan- tations. Transport Constraint 111. Despite 20 years of road construction, the network remains indequate for a country of Liberia's size and population. Large parts of Liberia's traditional farming areas are isolated from marketing areas and are unable to realize their development potential. The greatest number of track roads are with laterite surface, sometimes poorly constructed and maintained, and hardly accessible during the rainy season. Moreover, with the lack of feeder roads, the marketing of farm produce is not only of high cost but also limited by the farmers' ability to carry the produce to far-distant marketing places. 112. Efforts on the part of the Government to develop agriculture have been hampered by inadequate transport facilities. Improving the infra- structure for the needs of the enclave sector's demands required relatively little planning. Now that stage is almost finished, the implications of the integration of isolated rural areas into a national market need to be worked out carefully, both in terms of general economic policies, and in terms of infrastructure needs. Input SuPP1y Constraint 113. Closely related to the intensification of Liberia's agricultural production and the adoption of new technology is the distribution and application of fertilizers and pesticides. Imports of fertilizers and pesticides amounted to a little over US$700,000 in 1972; nearly all of it was imported by rubber concessions and some large plantations. Practically no fertilizer is used on traditional farms and Liberian rubber plantations use minimal amounts. Similarly, hardly any insecticides or other agri- cultural chemicals are used for coffee, cocoa, and rubber plantings. The lack of any supply channels for fertilizers and chemicals, in conjunction with the lack of farm credit facilities, an inadequate extension service, and uneducated traditional farmers, are all imposing a constraint to a wide application of these inputs. 114. Improved cocoa, coffee and oil palm seeds are presently imported andc distributed by LPMC. The availability of improved planting material could impose a constraint on the Government's replanting program, and steps should be taken soon to establish seed gardens in Liberia. Similarly, the lack of seeds of improved rice varieties imposes a constraint on productivity in rice production. - 4s - Azricmltural Credit 115. While there are more than adequate bank:ing facilities available on Monrovia, in one coastal town and on two concessions, the rural areas have none. Undoubtedly, if development is to take place in rural Liberia, it has to be accompanied by banking services. Presently, the unorganized financial market - composed of money lenders and traders - with interest rate charges often in excess of 150 percent per annum, is the only source of credit in rural areas. Still most of the capital formation in tradi- tional agriculture is created through farm labor. Yet the transformation of traditional agricultuire into a modern production sector requires credit facilities for the farmers for the purchase of seeds, planting materials, fertilizers, pesticides, tools, and possibly subsistence payments during the long gestation period of tree crops. 116. Credit in rural areas not only causes problems to the farm sector but imposes a severe constraint on the flow of goods. Undercapita- lization of most traders in conjunction with the lack of access to bank credit severely restricts their purchasing activities and accounts for their deficient storage and tran4)ort facilities and their limited participation as suppliers of non-fanr consumer goods. Extension Service 117. The long gestation period required for the adoption of techno- logies alien to traditionql and illiterate farmers is a much more general problem. It relates partly to the complexity of new farm practices required, but it also relates to poor project management personnel and the lack of an effective extension service. Disregarding such factors would be illusionary. The widespread adoption of new farming techniques and the introduction of high-yielding varieties of rice and tree crops require the establishment of necessary institutional stractures and services accessible to small farmers. Without such measures capital investments in agriculture will not achieve the piurpose for which they have been planned. Extension services much improved in size and quality, supported by a functioning research service, accessible to small farmers, attuned to local conditions and capable of providing the necessary education and technical assistance are urgently needed so that potentials of undertaken investment can be fully realized. Land Tenure 118. The land tenure poliev has pernittld entrepreneurs, whether con- e,ossionaires or Liberian planters, to acquire large holdings necessary for modern plantation production. While successful in this respect, the land tenure system has two basic shortcomings: First, because land can be obtained cheaply and the annual rent is minimal, many concessions have leased and Liberian planters have bought more land than they can use and large areas c;2 prime land is unused. Second, the opening up of new roads has encouraged acquisiticn of tribal land by speculations. - 43 - 119. Over the long run this development may alienate many tribal lands, leading to a greater disparity in the distribution of wealth. Overall, the land tenure system has not been successful in fostering land ownership by traditional farmers. This could put constraints on on-farm investment and could also severely hinder farmers in obtaining bank financing on the basis of land collateral. Education 120. Only about half of school-age children get schooling. These will be the adults of the 1990's and beyond, and it is difficult to imagine how Liberia's strides towards development and the transformation of its tradi- tional society into a modern, monetized society can be achieved by a popula- tion which is half illiterate. It suffices to say that the formulation of an education policy relevant to the needs of the rural population is not only needed to fulfill each man's basic right to knowledge, but is even more a purely economic necessity. 121. Primary education is an important constraint on growth in general and on rural development in particular. Without much improvement it is very unlikely that human potentials can be mobilized and motivations can be developed among the rural population, both of which are essential ingredients for development of rural Liberia. An educational system which raises expectations of the rural youth for life in a modern, urban society and thereby inducing indirectly their migration away from the rural areas is not needed. What is necessary, therefore, is a complete revision of the rural primary education system - a reform which must go hand-in-hand with a complete change in the curriculum in such a way that primary education can provide the basic educational foundation and enhance the life in an agricul- tural society. Improvements in the quality of primary education in rural areas also necessitate a complete overhaul of teachers' salary scales which are inadequate - especially in comparison with teachers' salaries in Monrovia and with those the private sector offers - to attract qualified teachers into rural areas. 122. The quality of middle and higher agricultural education is still poor - although substantial improvements were made in the past - and the shortage of agricultural trained manpower deserves priority consideration. Undoubtedly, serious efforts are needed to improve the educational system on all levels, should it not emerge as a paramount constraint to development. STRATEGY FOR AGRICULTURAL DEVELOFMENT 123. A frontal attack on agriculture and rural poverty will be indispens- able for Liberia's development for the decades to come. WAth uncertainties over future iron ore mining and the constraints on the development of a modern industrial sector, much of future growth, employment and foreign exchange earning will have to depend on the development of agriculture. Reducing existing income inequalities between rural and urban populations will not only be called for purely on the ground of equity considerations, but also in order to reduce migration from rural areas and thereby prevent insur- mountable problems associated with high urban unemployment. Development of agriculture must be attuned to meet not only objective of gro-wth but also of equity, and the aim must be, therefore, at a redistribution from growth. 124. There are various approaches the Government could pursue in achieving its policy objectives. The strategy we suggest is based on a set of action programs the Government could foreseeably undertake in the medium run to improve most importantly the income earning capacity of the rural poor, and also to ra-ise production of export crops in the longer run. The principal points of this action program are: (a) ways to provide better-price incentives for increased production by adopting an active, price policy and improving the marketing and infrastructure; (b) improvements of the institutional structure to plan and carry out projects more effectively; and (c) institutional and organizational changes necessary to ensure that the complementary effects of package measures - extension, input supply, credit and marketing necessary for a widespread adoption of new technology can be fully realized by traditional farmers in order to raise their level of productivity. 125. A principal focus in any successful development strategy in Liberia will need to be regional because constraints and ecological conditions differ between the coastal belt and the rural interi)r. Over the long-term, efforts should be dir,ected at integrating the isolatel rural areas where the majority of the population live, and which are cut ofi from coastal cities into a national market. The immediate development policy for the rural areas of the interior must be based upon the recognition that these areas should be treated as landlocked areas, and efforts should be made for more or less self-contained development. REGIONAL STRATEGY ASPECTS 126. In view of the above, a regional development strategy should con- sist in general of one for the coastal belt, dealing primarily with plantations and commercial farms, and one for the rural areas of the interior based on integrated rural development. - 45 - Strategy for the Coastal Belt 127. Generally, land is plentiful along the coastal belt, but population density outside towns is low and labor is scarce; thus, the basic develop- ment effort should be on large-scale commercial farms and plantations producing palm oil, coconut and possibly sugar cane, irrigated rice and vegetables. Some plantations have already been established in recent years. Continuing development in the area will depend upon further investment, but given the scarcity of managerial talent in Liberia, the management of these enterprises (at least in the initial stage) should be largely left to expatriate firms or individuals operating under a management contract. A major objective of the Government should be to take advantage of existing roads or ongoing infra- structural developments of foreign concessions and to try to attract commercial farming to these areas, soil conditions permitting. Given the apparent shortage of farm labor and the anticipated large-scale farm operations, mechani- cal land development will probably be necessary. Strategy for the Interior 128. Because of the multitude of crops, the large number of small traditional farms as well as the lack of institutions and infrastructue in the interior, the development of this part of Liberia can most effectively be undertaken by integrated rural projects. An IDA credit (1973) provided finance for necessary pre-investment activities to prepare rural development projects in Lofa and-Bong Counties. These two rural development projects will be a significant attempt to upgrade the productivity and incomes of a large number of traditional farmers and provide the much needed social infra- structure. 129. To encourage production, rural development should aim at motivating farmers in order to utilize their production potential effectively and to induce new capital formation by the farmer himself. The success of this effort is, however, contingent upon the public sector's provision of a minimum package of essential services, as improved seeds and planting materials, fertilizer, farm implements, provision of credit, extension services reinforced by applied research, and processing and marketing facilities, all of which are designed to reach a large number of farmers.- -It is the complementary and simultaneious effect of these inputs and institutional services which should largely determine the success on the .procdiction side. ACTION PROGRAMS Reorganization of the Ministry of Agriculture 130. The shortage of highly qualified personnel and the insufficient coordination between the activities of the various divisions of the Ministry of Agriculture with other government agencies impairs effective functioning of the ministry. The ministry's functions-and organization is now being reviewed and, if necessary, they will be revised, and a five-year staffing, training and financing plan prepared. A full reorganization must await the outcome of this study, and every effort should be made to expedite it. 131. There is a real problem as to whether technical assistance in the form of advisors can be successful if the capacity is limited for imple- menting the advice. It would appear advisable that the Government re-examine the terms of reference of foreign advisors in the light of real needs. In addition, every effort should be made to assign qualified Liberian staff to assist foreign staff with the purpose of replacing these people according to a planned training and selection program. 132. In the course of the reorganization, the ministry should consider concentrating its activities on those which it can carry out most effectively, these being: policy formulation, extension work, planning and project admini- stration. Due to the shortage of qualified personnel, the ministry should basically disengage itself from direct project execution in areas where integrated rural development is undertaken; this could more effectively be done by the proposed CDC. To enable the Ministry to take a greater role in planning and coordination, proper attention should be given to adequately staffing the newly established division for planning and evaluation. Pricing and Farm Income Policies 133. The primary objective of agricultural pricing policy should be (i) to provide the much-needed price incentives to producers which are presently inadequate to ensure full utilization of Liberia's agricultural resources; and (ii) to reduce existing income inequalities between the rural and urban population by providing adequate farm income to the producer. LPMC's pricing policies and the oligopsonistic price settings by the rubber conces- sions have precluded the achievement of the above-mentioned objectives. Future world prices for exportable cash crops are not expected to improve real price incentives for producers. Efforts therefore, should be made to reduce the wide margins between export and producer prices. The Government's policy for improving farm incomes and price incentives will be hampered unless pricing policies and marketing operations pursued by LPMC and the rubber concessions can be changed. Encouraging action has begun. 134. Some recent actions by the Government have substantially improved prices received by fanmers and have altered the activities of LPMC in the direction suggested in this report. Since the Mission's visit to Liberia, cbanges in LPMC's pricing policy were introduced to increase farm gate prices, but also to build-up reserves for price stabilization, for establishment of nurseries and to provide funds for LPMC's technical assistance to farners. Plans are now being formulated to expand LPMC's activities to include input supply, farm credit and improvement of marketing facilities in the interior. 135. A re-examination of the Government's rice pricing policy is imperative. Despite announced producer prices, only a small quantity of rice is presently marketed through LPMC. It can be anticipated that popula- tion and income growth will exert further pressures on demand for rice. Prospects for increases in output and marketable surplus of local rice will largely depend upon productivity increases induced by a widespread adoption of improved seeds and fertilizer application, both of which are still alien to traditional farmers. The importance of developing an effective - 47 - marketing and transport system has been mentioned. In addition, higher relative prices for rice appear to be needed at least in the short-term to provide an incentive strong-enough to induce technological changes in produc- tion. Contrary to other countries where the tariff policy for food imports is dictated by farm income policy, it is the other way around in Liberia. The variable tariff imposed now on rice imports between the landed cost plus wholesaler-retailer markup and the establishment retail ceiling price could be allocated to a stabilization-equalization fund to finance a price support and production program. 136. Raising the import tariff on rice by a half cent per lb. would yield an additional half million dollars at present import levels. These funds could be used to subsidize consumer prices for local rice for such time period as a price differential between local and imported rice seems to be warranted due to consumer preferences. As local rice improves in quality and becomes more acceptable to urban consumers, this price differential can gradually be reduced, thus permitting the reduction of the ceiling price of imported rice or the raising of the consumer price for local rice. 137. Government actions are also called for in the case of rubber pricing. In order to ensure that producers obtain a fair price for rubber, considera- tions should be given to establish the following principles during negotiations with the rubber concessionaires: (i) The legal obligation by the concessions to provide a ready market for Liberian producers; (ii) the right of the Government rather than the concessions to announce each month the average producer price for each grade of rubber at which concessions stand ready to purchase; (iii) the price calculation for deriving the producer price should be based on average New York prices;and (iv) the processing, marketing and profit margins charged by the concessions should be reviewed periodically with the Government, but should as a principle bear some resemblance to margins deducted by similar operations in Asia. 138. Although action in pricing policy is urgently called for, it must be realized that a sole reliance on pricing policy to reduce income disparities between rural and urban incomes cannot yield a successful solution to the problem. Possibilities of raising rural incomes will hinge upon productivity increases and further reductions in the cost of transport, marketing and processing. There is also need for a higher allocation-of public sector investments for improving the rural infrastructure - i.e., feeder roads, transport and marketing facilities, etc.-- and for providing social services such as schools and hospitals. Moreover, to an increasing degree, processing facilities of raw materials should be located in the rural sector. Organization of Marketing 139. Consideration should be given-to modifying LPMC into an "Agricultural Service Corporation" (ASC) and to expanding its operations into marketing of inputs' - a service which is presently completely absent in Liberia. At the prodacer level an improved marketing system will necessitate the setting up of more depots by the corporation to effectively handle the purchase of produce - 48 - (other than rubber) and the sale of inputs (i.e., seeds, fertilizer, tools, etc.). At the wholesale level, ASC functions should include: (i) domestic wholesale of locally produced farm products, i.e., rice; (ii) international selling of export crops; and (iii) procurement and import of agricultural inputs, i.e. seeds, fertilizer, chemicals, and tools. None of these should be a monopoly of the ASC. 140. In cities and towns, efforts will be needed to ensure an adequate supply of food and to reduce existing marketing costs. More organized wholesale-retail marketing centers, with adequate storage and cooling facilities are needed, and studies should be undertaken to determine the optimum size and location. Such centers should reduce the dominant role of hawkers with their large retail margins. Input Supply 141. Intensification of agricultural production will require significant increase in the volume of fertilizer and pesticide available to farmers. The distribution of improved seeds and planting materials is equally important. ASC should procure and import seeds, planting materials, fertilizer, pesti- cides, other agricultural chemicals and agricultural tools and make them widely available in the rural area. In addition, a seed and plant multipli- cation scheme, monitored by the Suakoko Research Station, should be initiated as soon as is feasible to cover not only tree crops, but also to expand the production of base seed of improved rice varieties. 142. The development of cooperatives will require careful attention. Management of all cooperatives is still very weak. While recognizing the positive elements in the Liberian cooperative movement, it seems to be wrong to be over-enthusiastic and to fully entrust the cooperatives with all func- tions of marketing, input supply and cash management. In the initial stage, the approach to cooperative development should, therefore, be a "guided" one. In areas with integrated rural development programs, the proposed Agricultural Project Unit (APU) would provide the initial 1anagement, staff training and supervision of marketing and credit procedures. In other counties, the Government should continue to recruit expatriate aid workers to meet staffing needs and to provide on-the-job training for inexperienced Liberians. Credit 143. No estimates of credit requirements for either the traditional farm sector or Liberian-owned plantations exists. With the emphasis on tree crop and rice production by the traditional sector and on rehabilitation and replanting of rubber farms, annual credit requirements of US$1.5 to US$2 million may not be an implausible estimate. A reasonable estimate of seasonal short-term finance requirements for crop purchases by cooperatives would run from US$3.5 to US$4.5 million. 144. The past experience calls for a new approach to agricultural credit. This could be achieved if the Government creates a special budget-financed Trust Fund which the Liberian Bank for Industrial Development and Investment (LBIDI) could administer on the government's account. It should be envisaged that the Trust Fund operates independently of LBIDI's policies according to a trust agreement and on behalf of the Government. The broad functions of the Trust Fund should be to: (i) promote sound agricultural development on a project basis; (ii) provide finance for agriculture and promote the mobiliza- tion of savings; and (iii) provide the Government with banking services in the rural areas. To achieve these objectives LBIDI should establish, first on an experimental basis, field or branch offices in those counties where integrated rural development programs are undertaken or anticipated. In 1974 LBIDI began its own limited program of lending to agricultural crops. Research and Extension 145. Liberia does not have the staff nor the resources to carry out all applied research required to support agricultural development. The limited research activities undertaken in Liberia need to be coordinated to ensure the most effective utilization of resources. The establishment of an Agricul- tural Research Advisory Committee in 1973 was a first step in this direction. Preparation and implementation of a national research program is called for in order to combine research activities to the Suakoko Central Experiment Station and the University and link them to other national and regional research institutions. 146. Efforts should be made to ensure that research programs for cocoa, coffee and possibly cashew nuts and grapefruit are initiated in Suakoko. Given the limited stafffing and financial support for research it is suggested that all basic research activities be centralized in Suakoko. There is need to expand Suakoki's activities in order to: (i) monitor pilot experimentations carried out by the Ministry of Agriculture; and (ii) monitor base seed and plant multiplication programs. Management trials under farmers' conditions should, where possible, be carried out in the project areas. 147. Apart from higher budgetary allocations, the greatest need is for staffing at the Suakoko center. Counterpart posts to the FAQ team, vacant for several years, must be filled while additional recruitment of experienced staff will have to depend on expatriate personnel or further FAQ assistance. 148. For the interior, the improvement of the extension service could be most effectively undertaken by the proposed APJ of the integrated rural development program. The APU's should operate their own training centers for training of extension staff which would ensure applied training with high practical content. For the coastal areas with its proposed plantations and possible outgrower development, specialized staff trained in production techniques of various tree crops and possibly sugar cane will be required. The training of this staff may most effectively be undertaken by the exten- sion training center in Monrovia. To increase the service's efficiency the approach should be on package demonstration of improved planting and production techniques to organized groups of farmers and cooperatives. - 50 - Land Tenure Policy 1L9. Unlike many other developing countries there is no land shortage in Liberia, and a major program of land reform is not needed. Considerations should be given to modifying the present land tenure policy with the following objectives: (i) To prevent land "grabbing" by absentee land owners in areas where road construction or integrated rural development projects are planned, the area should be declared as "planning area" and all new land acquisitions be prohibited; (ii) To promote individual land ownership and on-farm invest- ment in rural project areas, the law should provide possibilities for easy transition of tribal landl to individual land tenure; (iii) To prevent idle land holding or sub]ease of unused land by Liberians or concessions, legisla- tion should prevent tenant farming (except for outgrowers of plantations), and introduce a progressive land tax on idle land holdings in areas easily accessible by roads; (iv) To secure tenant contracts for outgrowers of plantations, legislation should be introduced stipulating conditions for outgrowers; cultivation rights (i.e., duration of contracts, inheritance rights, standards of management required by tenants, their marketing rights, and a fair pricing of their produce). PRODUCTION PROGRAM Traditional Agriculture 150. Market prospects and the available technology indicate that highest priority should be given to cocoa, coffee and oil palm planting programs as well as the rehabilitation and replanting of rubber farms. 151. Rice production programs presently carried out by the ministry will require a careful re-evaluation. Given the high cost of mechanized large-scale land development for irrigated rice and the uncertainties of full adoption of modern paddy technology among traditional farms, it is more than doubtful whether this development should receive such a high priority for the time being. However, pilot schemes of small swamp development using intermediate methods of land clearing should be undertaken to determine tech- nical and economic feasibility. In addition, surveys should be made of acreage and soil fertility of swamp areas to determine their development potential. Upland rice production with imnproved seeds and fertilizers should definitely receive more attention than at present, and small-scale projects should be established. The hopeful start made since 1972, with the,EKtended Rice Program and the Tree Crop Program of the Ministry of Agriculture, which both have the "extension approach", should receive more emphasis in the future, but there is certainly a need to improve the effectiveness of these programs. Commercial Agriculture 152. Rice and vegetable production by commercial farms. The principal justification for considering such a project would be to increase the output of food necessary to supply the coastal, urban areas which are cut off from major farm areas. Such development would be strictly production-oriented, - 51 - and will generate little if any development impact in the major rural areas. Efforts should be made to interest private capital although some government financial participation may be necessary. A detailed pre-investment study, including a soil and hydrological survey, would be necessary before such project is started. 153- Plantation and outgrowers for oil palm. From the viewpoint of diversification of exports and of meeting increased domestic demands, establish- ment of nucleus plantations for oil palms would merit attention. The rapidly changing situation of the vegetable oils market in more recent years as well as the potential growth of domestic demand beyond 1980 suggest that future investment in oil palm production would be warranted. Although yields and consequent rates of return on oil palm investment are lower than in other major producing countries of Southeast Asia, they are probably still high by comparison with other production alternatives in Liberia. Possible sites for such plantations could be on the coastal belt of Cape Mount and Grand Bassa County where soils and rainfall appear to be suitable. Economic and financial feasibility of such projects would require further investigations which would have to take into account the, availability of high-yielding material available from IRHO (Ivory Coast) and the possible creation of an autonomous statutory corporation to implement the project as well as the provision of an extension service and credit facilities to outgrowers by the plantation. 154. Plantation and outgrowers for coconut development. Excellent opportunities appear for coconut development along the coastal regions of Cape Mount and Maryland County. It would be worthwhile to investigate the possibility of establishing a nucleus commercial estate of about 10,000 acres in conjunction with a smallholder scheme to provide a satisfactory basis for coconut development throughout the coastal belt. 155- Plantation and Outgrowers for sugar development. With favorable world market demand and price outlooks, investments in sugar production would merit attention. The most suitable area forcaneproduction is near Cavalla in Maryland County. Soils in Cavalla are of low nutrient content and will require heavy fertilization; however, light intensity in the area is high, and rainfall is adequate to allow cane production without irrigation. With sugar consumption estimated presently at more than 10,000 tons/year and likely to double by the end of the decade, the project feasibility depends upon export markets in West Africa and the United States. 156.. Livestock production. The expansion of cattle production is severely constrained in Liberia by: problems of climate and the heavy infestation with tsetse fly; the absence of a cattle raising tradition among the majority of farmers; the lack of professional animal husbandry staff; and the low animal productivity of tsetse-tolerant N'dama cattle. Possibilities seem to exist for cattle production in Upper Lofa and Maryland country - limited, however, to those areas which are in the transitional zone between rain forest and savanna. Possible cattle production would have to be based on conśmercial operations or groupings of farmers which would warrant the cost of experienced - 52 - management staff needed to ensure improved herd and pasture management and concentrate feeding essential for raising animal productivity of N'dama. 157. Before any investment is undertaken, there is need to: (i) inves- tigate the feasibility and potentiality of N'dama development in Upper Lofa and Maryland County; and (ii) start pilot investigation and experimentation in order to determine whether under upland farming conditions a rotation of upland rice (established with hand clearing) with a number of years of' pasture is possible. Pasture establislhnent with bracharia showed very satisfactory results in Suakoko. Yet the soil fertility retaining capacity of pastures versus the presently practiced fallows needs to be investigated. 158. Nearly all of slaughter cattle are move(d on hoof into Liberia from neighboring countries. Probably the quickest and most effective way of raising beef production would be by fattening this stock prior to slaughter. Investigation would be needed to determine the economic feasibility of cattle fattening. Research on conversion rates of feed into beef and possible liveweight gain rates of the different imported breeds should be initiated. The other approach worth investigating would be to establish pilot feeding ranches on the main cattle tracks leading -through transitional zones of Upper Lofa and Maryland counties. 159. With limitations to cattle production, primary emphasis should be placed on production of sheep and goats both of which could probably be successfully placed in the hands of traditional farmers. Studies are needed on disease control and prospects for improvements of breeding. Pig and poultry production would be suitable for snall farmers. Excessive cost for imported feedstuff inhibits development of commercial operations. There are little or no prospects for domestic feedstuff supply on a large scale although residue products from Monrovia's brewery could be used.