1) Plans of Vertical Development
An emphasis that the main intention is to manage the project as an economic proposition and not as a welfare scheme for the benefit of the local population should henceforth be made. Future plans of vertical development in the scheme aim at, besides raising the general standard or living of the tenant, increasing the national revenue. Mechanization of agricultural operations as far as can be practicable or the three crops cotton, groundnuts and wheat - is envisaged to increase the yields considerably. Whilst putting more responsibility on the management side, the tenant will be greatly relieved of many of his obligations towards the production of groundnuts and wheat in particular. The Board shall undertake all the operations except those minor ones for which the tenant will be paid in advance to employ labour or provide a private tractor. He will thus be encouraged to utilize the time saved on animal husbandry and the production of suitable fodders.
Cotton groundnuts and wheat will all be attended to equally well by the Board. Dura will remain a sole tenant crop.
Forms of Profit Sharing
Many forms of profit sharing have been discussed when planning the Rahad Project.
a) Different Forms of Crop - Sharing
A partnership as such can be maintained if the crops to be shared can only be disposed of by the management of the scheme or any other controlling body.
The Sudan Gezira Board System
Under this system the joint accounts are deducted from the proceeds of all cotton products and the balance is distributed among the three partners - Government, Tenant and Sudan Gezira Board - in the agreed ratio as follows :
- i) Government 36%
- ii) Tenants 50% - (of which 2% for Tenants Reserve Fund)
- iii) Local Government Councils within the Irrigated Area 2%
- iv) Social Development 2%
- v) Board 10%.
The actual figures for the division of Gross income for the years 1965/66 and 66/67 are given below at average yields of 3.672 and 4.604 respectively :-
| 1965/66 | 1966/67 | |
| Sudan Government | 3,273,884 | 4,981,749 |
| Tenants | 4,365,179 | 6,642,332 |
| Tenants Reserve Fund | 181,883 | 276,763 |
| Local Government Councils | 181,882 | 276,764 |
| Social Development Funds | 181,883 | 276,764 |
| Sudan Gezira Board | 909,412 | 1 ,383,8l9 |
| 9,094,123 | 13,838,19l |
Here the main criticism is that any intensification within the rotation adds more obligation on the part of the Government through supplying additional water and on the shoulders of the Board though more supervision and more intensified services without payment in return. On the other hand the tenant will naturally devote as much of his time, as can make him secure a reasonable tenure of his tenancy, to the other crops.
System of Crops Division on Equitable Basis
All production costs covering rent of land, interest and amortization of the capital cost of the project, the recurrent cost of management and of supply of irrigation water - should be assessed here for all crops. These would be deducted from the total sales revenue obtained and the balance to be divided between the Government and the tenants in an agreed ratio.
Many other systems of crops division for raising revenue from the tenant can be discussed but in all cases the difficulty of getting the tenants to bring in all their other crops will remain to be solved.
Partnership Conflicting Objectives
However more alarming is that so long as the Partnership concept
does exist the tenant (a junior entrepreneur partner) will
endeavour to continuously improve his own living standard whilst
the Government (a senior entrepreneur partner) will tend to
maximize the contribution of the scheme to state funds. The
tenant through his organised union moves, as previously
experienced, can press in an attempt to increase his share and
every now and then he can succeed even though his real status in
the partnership pattern of responsibility may not have changed.
The main argument against crop-sharing systems is that the sharing of' the proceeds in a definite and fixed ratio far reduces the incentive of the tenant to improve. There will be more incentive for the tenant to farm well in a profit rather than a crop-sharing system.
b) Fixed Land & Water Charge System
The revenue derived from land and water rate will be in view of renting the land, providing water to field, maintaining canal structure, interest and amortization of capital, supply of supervisory staff etc. The marketing cost, ploughing, fertilizer application etc. all done by the management will be charged to tenant account.
There is a good case here for discontinuing the joint account and the tenant should shoulder the full responsibility for crop production.
Three examples to illustrate the Land and Water Charge (L.W.C.) System are given :-
i) Rahad Scheme Planners Example
A fixed water rate per feddan per irrigation in respect of each crop grown was suggested as shown here-under :-
| Cotton Medium Stable | 10 Waterings | X £2 | = 20 per fed. |
| Graundnuts | 6 Waterings | X £2 | = 12 per fed. |
| Dura | 3 Waterings | X £2 | =6 per fed. |
| Wheat |
__
|
__
|
__ |
The per feddan per crop rate was recommended for crop safety against tenants economizing in water to avoid a heavy water charge.
ii) Working Party Final Report Example
On a 40 feddans tenancy of 10 feddans of Cotton it is estimated that the three crops grundnuts, wheat and dura having 5 feddans each will add a margin, at the typical yields, of £80. Total Margin on the tenancy and possible land rent are shown below :-
| Cotton Yield | Margin to Tenant from Cotton |
Margin from other Crops | Total Margin | Suggested Rent | Tenant Profit |
|
3
|
70
|
80
|
150
|
60
|
90
|
|
4
|
155
|
80
|
235
|
120
|
115
|
|
5
|
240
|
80
|
320
|
180
|
140
|
iii) Gezira Study Mission Proposed Income Formula
The 1964/65 year figures closely approximate to the average of the 5 years period 60/61 - 64/65 and was therefore taken as a representative year for calculation of Profit Sharing results as follows :-
| Sales income of Cotton | = 508,228 X 3.554 X £14.143 | = 25,546,507 |
| Joint Account Estimated | = 9,649,829 | |
| Gross Profit to be shared | = 15,896,678 | |
| Farmer's Share at 50% | = 7,948,339 | |
| Board Costs | = 1,362,823 | = 9,331,162 |
| Government Share | = 6,585,516 | |
| (is the balance inclusive of |
2% Local Govt. 2% Social Development |
|
|
Land and Water Charge on amount to recover |
= 6,585,516 1,775,088 |
= £3.710 per irrigable feddan. |
In each case by removing the partnership concept it does mean that the tenant has an added incentive to work andamp prosper on the grounds that added inputs from his side result in higher profit accruing to him and do not have to be shared.
The main danger in this situation is that he will become the master and the only entrepreneur - a big bourgeois class, which can direct through massive movements the whole state as it wishes, will come to existence.
The Employed Tenant System
No system as such has been previously codified or discussed. But plans of vertical development bring up the thought. Under this :-
i) the status of the tenant in the production relationship pattern relative to the three crops - Cotton, Groundnuts and Wheat will weaken appreciably in view of his diminishing responsibility. The management of the scheme shall undertake almost all direct responsibility on behalf of the Government. A new relationship, in which the partnership concept disappears, will be realized and the conflict in objectives between the parties involved can be easier resolved.
ii) a reasonable measure of incentive to put more effort and increase production can be incorporated in which case diverse talents and resources of all those concerned can be put to maximum.
iii) a kind of set up such as to allow flexibility and diversity of production in the case of changing markets and technology can be established.
How? through raising a well secured income payment to the tenant proportionate to the yield for the three crops - cotton, groundnuts and wheat. This is to be so assessed (calculated) as to:-
- 1) make the individual tenant realize an improvement over his previous condition - in his standard of living, security of income in bad years, if any; thus guaranteeing a state of settlement to the younger generations whose natural tendency is how to seek their fortune (employment) in the growing towns.
- 2) generate an additional income to the national revenue after
making for all Board costs.
These are to be so timely paid in order to help the tenant to maintain good living throughout the 12 months of the year. In this case the tenant will enjoy a definite pay irrespective of future sales prices.
Suppose yields fluctuate under the future vertical development
plans as follows :-
Cotton For a holding of 40 feddans in the present Gezira rotation
cropping pattern, the average yield division is assumed to make
the tenant attain an average reasonable living standard comparable
with a group III Wakefield labourer's annual pay. Taking in this case as a rate £240 per year on cumulative
basis for the three crops averages (or £276 to include for his
income from Dura, vegetables and live stock, i.e. = £23 per month)
the crops may each contribute a ratio :-
£144
£2.88
ii) Total Tenant Income at Maximum Yields
This assumes a prosperous living at the sub-professional
status of £600 per annum (or £648 to include for his own crops
i.e. equiv.
to £54 per month). This is much debatable. But strictly speaking the tenant's income
should be zero if not negative. However consideration is to be
given for compensating the tenant in bad years. These assumptions need be checked by assessing in each case the
balance, after
deduction of all costs, so as to see how far the proposed
system will add up to the national revenue. If all objectives are
well satisfied a new relationship formula can
be advocated. An illustration of this is shown in the following table for
average yields as well as for the potential of maximum yields.
Graphs could be designed after working out results for all yields
between the minima and maxima assumed for the three crops. Such
graphs can readily give the divisions for profit sharing at the
various yields. At Average Yields
£14.000m/ms
£70.000
£35.000
£35.000
£14.400
£20.600 At Potential of Maximum Yields
£14.000
£140.000
35+ (3X5)
£90.000
£36.000
£54.000 The Writer acknowledges with admiration and
thanks the valuable contribution given by Mr
M.A. El Mufti, Agricultural Department, Sudan
Gezira Board.Suggested Approach to Tenants Income Payments
3.0 - 10.00 Kantars per feddan (as average)
5.000 (as average)
0.4 - 2.5- tons per feddan
1.000 (as average)
0.2 - 1.75 tons
0.750 (as average).
i) Total Tenant Income at Average Yields
Feddans
Yield
Produce
Ratio
Proportions
Cotton
Groundnuts
Wheat
Cotton
10
10.00
100.00
60%
360
3.60
Groundnuts
5
2.50
12.50
30%
180
14.40
Wheat
5
1.75
8.75
10%
60
6.86
iii) Total Tenant Income at Minimum Yields ( OR Lower)
Assessment of Government Revenue on the Employed Tenant
System per Feddan
Crop
Yield
Price per Unit
of Production
Proceeds
Total Expenditure
Gross Revenue
Tenant Net Income
Management Cost and
Govt. Net Revenue
Cotton
5.00K.
Groundnuts
1.00T.
36.000
36.000
14.000
14.000
14.000
7.600
Wheat
0.75T.
28.000
21.000
14.000
14.000
4.800
2.200
Crop
Yield
Price per Unit
of Production
Proceeds
Total Expenditure
Gross Revenue
Tenant Net Income
Management Cost and
Govt. Net Revenue
Cotton
10.00K.
Groundnuts
2.50T.
36.000
90.000
14+ (10X1.5)
61.000
36.000
25.000
Wheat
1.75T.
28.000
49.000
14+ (8X1)
27.000
12.000
15.000
Acknowledgement
References
Author: Hussein Omer
Kisha, Published on 25 March 1970.