draft report prepared by economics department university of dar- es -salaam

Friday, April 21, 2023

Analysis of the Performance of Agriculture Sector and its

Contribution to Economic Growth and Poverty Reduction

Draft ReportDraft Report Prepared by

Economics DepartmentUniversity of Dar-es-Salaam


Content

Objectives of the StudyMethodologySummary of the Major FindingsEmerging Issues and Recommendations


Objectives (1)

Overall objective is to assess performance of agriculture by identifying the critical factors that determine

The sector growth and The sector contribution to reduction of poverty

In addition, the study makes an assessment of existing policies and as well as recommendations for improvement


Objectives (2)

Specifically this enquiry has addressed the following components

Assess the contribution of agricultural interventions such as irrigation and inputs support in improving productivity and livelihoods;Assess contribution of selected sectors (land, Trade, Industry and Marketing, infrastructure, finance) to agricultural growth;Assess the contribution of small-scale agriculture to poverty reduction and the constraints faced by small scale farmers;Make comparison of the experience of other countries where initiatives in the agricultural sector have lead to poverty reduction and increased agricultural growth;


Objectives (3)

Assess the constraints for increased investment in large scale farming; Assess the private sector participation in agriculture by examining reasons for weak engagement;Assess the long term agricultural productivity and ways of scaling up public and private investments in the sector, including possible options of PPP and promotion of agri-business;Assess the levels of public investment compared to national budget and levels of private investment;


Objectives (4)

Assess and analyse the bottlenecks hindering development of agri-business and in particular investment in large scale agro-processing; agro-industrial parks and cottage industries;Assess the response to commodity boom (growth) and the associated multiplier effect towards poverty reduction;


Methodology (1)

Quantitative and qualitative dataSource

Official publications e.g. HBS, Agricultural Census, Economic Surveys, PHDR, BoT etc.Interviews with StakeholdersVisited 5 Agricultural related projects namely, TAHA; Climate Change Adaptation Project in Same District; Dunduliza Programme under FISEDA Warehousing Receipt System); Warehosung Receipt System – Tandahimba District; NARI – Naliendele; and AMAGRO


Methodology (2)

Data Analysis:Computation of indices such as poverty indices, crop yields per hectare, and growth rates have been made Simple econometric analysis to compute growth ratesThe trend analysis and comparative analysis Cross tabulation was also used to examine correlation between variables


Summary of Major Findings (1)

The total land area is 95.5 million hectares, out which the area cultivated accounts for 10.6% or 23% of the total arable landThe number and sizes of Medium and Large scale farms is yet to be established But it is known that these farmers occupy a total of 1.5 million hectares A big proportion of commodities (tea, sugar cane, sisal, coffee, tobacco and some food crops ) in this country are produced by these farmers



Total area suitable for irrigation is 29.4 m ha, but only 289,245 ha is put to use

Indicates a seriously low productivity in agriculture

Challenges facing the agricultural sector in Tanzania make it difficult for farmers to invest in the sector

Infrastructure, Markets, Agricultural experts/Ext services, low farm gate prices, storage facilities etc do not provide incentive to a farmer to expand investment in the sector



Private investors are not keen in investing in the provision of public goods and services eg Infrastructure and Agricultural experts/Ext services, because they cannot exclusively internalize all the benefitsDespite its importance, agriculture budget share is still small compared to the share going to some other MDAsDespite being small, an increase from 1.6% in 2008/09 to 2.4% in 2009/10 does not necessarily mean a significant part reached farmers



Fertilizer consumption in Tanzania lags far behind its supply and potential demand, thus creating an artificial surplus of about 40% (ss/consump ratio)Total requirement of improved seed is 120,000 tons annually, while annual supply averages 10,000 tons or 8% of total requirement (a supply constraint)Investment in capital goods in agriculture is still at a very low level which affects productivity

Current stock is 15500 Vs 9500 (61%) currently operational



Annual tractor replacement stands at 1000 – 1500 Vs the current 250-400 tractors per annum The country imports 2 million of hand hoes annually because it is dominant farm implement

Yet, all the factories used to manufacture hand hoes in the country are not running

Records show that Research and Development (R&D) institutions are underfunded

The “neglect” in financing R&D suggests that we will be obliged to depend on “Imported Green Revolution”, instead of “Local Green Revolution”



Farmers Education/Training Centers (Folk Development Colleges) which we used to have in some Regions of Tanzania are not there anymoreThey were important centers for propagating functional agricultural education “Education is a productivity factor” in developmentExamination of potential contribution of agriculture to poverty reduction

Made some assumptionsUsed top performance data from different countries around the worldConsidered 3 food crops (ma, pa, and sorg) and 3 cash crops (Te, Co, and Cas)



4 Scenarios (Potential Rates) were tested Producing at full capacity (100%)Producing at 75% capacityProducing at 50% capacityProducing at 25% capacity

The results indicate that GDP has substantially increased at any level of potential rateBoth the potential per capita GDP and that of per day indicate that they are above the poverty line at any level of potential rateNote that, many products including livestock has not been included



The potential from agro processing has also not been included. All this shows that our GDP is artificially low AND ACTIONS NEED TO BE TAKEN NOW!Let Strong-Pro-Farm Policies be the drivers of sustainable agricultural development in TanzaniaSince agricultural GDP share is currently about 25%, growth of agricultural sector no longer influence substantially the growth rate of GDP (like services – 46% and industry – 20%)

As in the 1970s and 1980s when it was contributing about 50% to total GDP



Agriculture grows at an average rate of 4.8% annually (2000 - 2008) While GDP has been fluctuating around 7% Thus, to a large extent GDP growth rate has been significantly determined by the growth rate in the services sector (7.4%) and industry (9.3%)Therefore, economic growth in Tanzania is not associated with poverty reduction which is high in rural agriculture supporting 74% of total populationContribution of agricultural related projects to economic growth and livelihoods


Challenges, Emerging Issues and Recommendations (1)

To accelerate the rate of growth of output in the agricultural sector, and increase the pace of poverty reduction it is necessary to:

Address the problem of low productivity

Adopt DELIBERATLY STRONG-PRO-FARM POLICIES


Challenges, Emerging Issues and Recommendations (2)

Promote Local Green Revolution by way of addressing the following:

Increase the intensity use of fertilizer and improved seeds and subsidize agricultural inputs

Improve extension services -number of extension staff, and working conditions

Increase the allocation of funds for Research and Development


Challenges, Emerging Issues and Recommendations (2) cont…

Re-introduce Farmers Training Centres (FTCs) / Folk Development Colleges (FDCs) for propagating farmers’ functional education

Reduce bureaucracy and red tape which usually increases the cost of doing business in order to attract private investment in the agricultural sector

Create conducive environment for private sector participation and offering incentives to attract private investment in agro-processing

Increase public investment in irrigation and other related infrastructure such as dams, water harvesting facilities etc


Challenges, Emerging Issues

and Recommendations (2) cont…

Support the promotion of rural financial institutions which will act as intermediaries for savings and investment in rural areas

Support the promotion of Non Farm Activities by strengthening Small Industries Development Organizations (SIDO) and other rural institutions

Improve rural Infrastructure e.g. road network, rural electrification etc.

Scale up resource allocation for agriculture (Public and Private)Ensure availability of Capital Equipment for Agriculture


Possible Outcome of the Domestic Green Revolution

Job opportunities created through e.g.Non Farm ActivitiesSmall Industries such as agro processing Research and TrainingCommercial farms

Increased Farm IncomesImproved Domestic GDPReduced number of people living below the poverty lineImproved livelihoods and welfare of rural populationSustainable Local Green Revolution initiative

(unlike projects)


Thank You All

draft report prepared by economics department university of dar- es -salaam

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