moving of unginned cotton from distant points is a costly operation, and at the minimum prices paid by the Government a loss was incurred on the 1925-26 operations. It is estimated that this loss. was at least counterbalanced by the increased earnings from railway and steamer traffic and in other indirect ways; but, in order to be on the safe side, provision has been made from the Reserve Fund to cover possible losses in 1926 and 1927. Cotton prices have improved recently, and the result for 1927 is likely to be quite satisfactory. The policy is to proceed with caution in this development, but, according to the results at present obtained, it appears that, with a price of 74d. for "American middling" in Liverpool, production can be carried on with a reasonable margin of profit in these provinces as soon as the local ginneries are operating. The indirect benefits which result from providing these primitive people with some chance of occupation and economic production are, from an administrative point of view, of great importance.

Agricultural Research..

110. Agricultural research should perhaps be mentioned in connection with the Government's commercial enterprises, as its results may have a very important bearing on their success. Progress has been made during 1926 with the Government's programme at the Gezira Research Farm near Wad Medani and the plant-breeding establishment at Shambat. The Sudan Plantations Syndicate and the Empire Cotton Growing Corporation are giving financial assistance to this work. It will be the Government's policy to devote a proportion of its revenue from the Gezira project to research work of this kind.

Sudan Light and Power Company (Limited).

111. Progress on the bridge across the White Nile, from Khartum to Omdurman, and the electrification of the tramway system have been delayed by the coal strike in Great Britain. In other respects progress has been satisfactory. The electricity supply to Omdurman was opened on the 1st December, 1926, and the water supply on the 1st January of this year. It is expected that the bridge and electric tram service will be completed before the end of 1927. The Government, according to its agreement with the company, remains entitled to a fixed rental at the rate of £E. 27,500 per annum until the 30th June, 1928. After that the Government's receipts will depend on the profits made from the undertaking.

External Trade.

CHAPTER V.--ECONOMICS AND TRADE.

112. The external trade of the country, excluding transit goods and specie, increased in value from £E. 9,606,091 in 1925 to £E. 10,764,906 in 1926, an increase of £E. 1,158,815, or 12 per cent. This result is due to the large increase in the value of cotton and cotton seed exported, viz., from £E. 1,756,053 to £E. 3,091,359, an increase of £E. 1,335,306. But for this larger output of cotton

the value of external trade would have shown a decrease as compared with 1925.

113. The value of foreign trade during the last four years has been as follows. The table includes values in 1913 for comparative purposes:

(In thousands £E.)

NOTE. If sugar, which has been under Government control since early in 1919, were classified as an import by the public, the comparison would be as follows:

114. The balance of trade shows an improvement as compared with 1925, as will be seen from the following table :

BALANCE of Trade (exclusive of Transit Goods and Specie).

Excess of exports over net public imports 217
Government imports (including specie),

less re-exports ...

Total excess of imports over exports

1,345

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If sugar, the whole of which is imported by Government, is treated as a public import, the balance of public trade works out as

115. An unsatisfactory feature in the imports last year is an import of dura (millet) of 21,784 tons, valued at £E 212,053. This import was necessitated by the shortage of local food crops owing to bad rains, a matter to which further reference will be made in this note.

Imports.

£E. 3,827,358

to

The

116. Public imports decreased from £E. 3,778,884, a decrease of £E. 48,474, or 1.26 per cent. chief increases were in dura (millet) by £E. 210,757, from £E. 1,296 to £E. 212,053; wheat flour by £E. 47,251, or 34 per cent. ; tea by £E. 58,547, or 37 per cent. ; motor cars, cycles, &c., by £E. 23,292, or 30 per cent. The chief decreases were in cotton piece-goods by £E. 354,880, or 30 per cent. ; tobacco, cigars and cigarettes, &c., by £E. 19,580, or 7 per cent.; soap by £E. 22,681, or 33 per cent.; coffee by £E. 74,741, or 23 per cent. ; machinery by £E. 59,126, or 41 per cent. ; and metal and metal-ware by £E. 27,921, or 15 per cent. Government imports increased in value from £E. 1,610,369 to £E. 1,795,517, an increase of £E. 185,148, or 11.5 per cent. The chief increases were in sugar, by £E. 111,083, or 29 per cent.; machinery by £E. 120,069, or 70 per cent.; arms and explosives by £E. 53,726. The chief decreases were in metal and metal-ware, by £E. 46,192, or 11 per cent., and timber and railway sleepers, by £E. 35,057, or 48 per cent. Government imports were mainly in connection with irrigation works in the Gezira and the railway and other public works.

Exports.

117. Public exports increased in value from £E. 3,801,348 in 1925 to £E. 4,876,236 in 1926, an increase of £E. 1,074,888, or 28 per cent. The bulk of the value of Sudan exports is comprised under very few headings, viz. :—

:

118. By far the greater part of the ginned cotton exported was from the Gezira irrigation scheme, the export value of which was. approximately £E. 2,200,000. Exports of gum increased by £E. 52,267, or 6.6 per cent.; of sesame by £E. 44,000, or 20 6 per cent.; of hides and skins by £E. 27,466, or 27.3 per cent. Ground nuts decreased by £E. 55,758, or 32.7 per cent.; dura (millet) by £E. 212,790, or 96 per cent.; cattle by £E. 22,248, or 18-6 per cent.; and sheep by £E. 16,841, or 38 per cent.

119. Goods to the value of £E. 1,724,107 were imported from Great Britain, i.e., 30.9 per cent. of total imports, as compared with a value of £E. 1,788,330, or 32.9 per cent. of the total imports in 1925. Great Britain took exports to the value of £E. 3,434,210, or 70-4 per cent. of the total exports, as compared with 56-6 per cent. in 1925. Goods of Egyptian origin were imported to the value of £E. 809,500, or 14.5 per cent., as compared with 20-2 per cent. in 1925; while exports to Egypt were £E. 585,197, or 12 per cent., as compared with 20-8 per cent. in 1925. Great Britain supplied, direct, cotton piece-goods to the value of £E. 190,700, a decrease of £E. 132,701, or 41 per cent. of the total imports of cotton piece-goods. 94.8 per cent. of the export and 73-5 per cent. of the import trade was carried by the Red Sea route. Trade with Abyssinia decreased from £E. 470,483 in 1925 to £E. 369,662 in 1926. This decrease is due to a decreased import of coffee into the Sudan and a decrease in Maria Theresa dollars forwarded in transit to Abyssinia viâ Gambeila. The value of trade viâ Gambeila was £E. 286,325, as against £E. 355,990 last year. The value of coffee imported viâ Gambeila decreased from £E. 209,955 in 1925 to £E. 173,174 in 1926.

120. There has been an increase in trade with Uganda and the Belgian Congo from £E. 24,052 in 1925 to £E. 26,760 in 1926, while the value of trade with Eritrea was £E. 54,487, as compared with £E. 32,125 in 1925.

Economic Situation.

121. In last year's note the economic position was discussed at some length. Briefly, the successful results of the first season's working of the Gezira cotton-growing scheme on a large scale were being eagerly awaited, but the anticipated success of the scheme was

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not enough to dispel the general feeling of depression and anxiety caused by the comparative failure of the food crops of 1925-26.

122. Prices of the chief food grain, dura (millet), were very high, and the people, especially those living in towns, were looking forward with foreboding to the hard times ahead before the next harvest, and to the worse difficulties that might follow a further short crop in 1926-27. Foreign trade was suffering from the unsettled state of the world's markets. The heavy decline in cotton prices had already set in.

123. The year 1926 thus opened with misgivings, and, with the notable exception of the Gezira irrigation scheme, where a high yield compensated for the lower price of cotton, has unfortunately fulfilled some of these gloomy forecasts and provided a number of unpleasant experiences.

Shortage of Grain.

124. The rains of 1926 were again insufficient, and the rain crop of 1926-27 takes its place beside that of the previous year as one of the smallest on record. But for the large sums of money derived from their cotton cultivation by the people on the Gezira scheme, about £E. 1 million, and the 50,000 acres of dura grown on this irrigated land, the economic position would have been very much worse, and in recounting the troubles under which trade has laboured of late there must always be set-off the immense advantage to the country in the acquisition of this vast permanent addition to its productive assets. A good Nile flood in 1926 also helped to ease the food situation by enabling a larger area of riverain food crops to be cultivated, while the prompt action taken by Government for the control of grain prices has done a great deal to restore the confidence of the people and put them in good heart. In spite of a second successive poor rain crop, the food question is causing less difficulty than it did a year ago. Nevertheless, the high price of grain during the last eighteen months, apart from its other ill effects, has been a severe handicap to trade, and has swallowed up the small surplus of trading capital possessed by the native population of the central and northern districts. Instead of exporting some 30,000 tons of dura, the Sudan has had to import 21,000 tons to supplement domestic resources, and is therefore some £E. 400.000 to the bad on its dura account.

Insurance of Food Supply.

125. In order to ensure a sufficiency of food for the people in the large towns and in districts where the crops had failed, the Government built up a central reserve of grain by purchasing dura from overseas through local importers. At the same time, the import duty on dura was waived and special cheap railway rate introduced for imported grain. The successful policy of noninterference with public imports or with the internal movement of grain resulted in a continuous inflow of grain supplies from India and elsewhere, and the demands on the Government reserve were small. There is no doubt that prices were stabilised by the presence