FACILITATING EQUITABLE FACILITATING EQUITABLE AGRICULTURE DEVELOPMENT AGRICULTURE DEVELOPMENT IN SUB-SAHARAN AFRICA: A IN SUB-SAHARAN AFRICA: A

CASE OF TANZANIACASE OF TANZANIA

By The Economic and Social Research The Economic and Social Research

Foundation (ESRF)Foundation (ESRF)

Content

• Introduction • Study Rationale • Objectives and Methodology• Agriculture ; Nature and Challenges• Stakeholders; Roles and interactions• Towards Equitable Terms of Trade among

Stakeholders • Problems Facing Private Sector .• Conclusion and Recommendations•

Introduction

• Tanzania has been able to sustain economic growth rate of not less than 6 percent.

• However the Poverty is reported to be almost 33 percent (HBS,2007).

• Public spending has been increasing over the years with fiscal deficit peaking to almost 6.6 percent of the GDP.

• High inflationary pressure is yet another problem.

Introduction

• External sector performance slightly improved. Although the country still maintains a trade deficit.

• Financial crisis affected the country. • Economic rebound is expected (The Economic

Report on Africa,2010).• More specifically, demand and prices of exports

are expected to increase, leading to more export earnings.

Agriculture and Poverty in Tanzania

• Agricultural sector is the major employer (ILFS, 2001/2002) and contributes to GDP.

• The sector is critical for poverty reduction.

• However there are vast potentials for agricultural production.

Demand and Supply of food in year 2009

Cereals: Maize Sorghum

and Millet Rice Wheat Sub-Total

Production 3326200 926683 867619 95124 5218626 Requirement 4,115,581 1535082 712390 204018 6567071 Gap(-) Surplus (+) -789,381 -608,399 155,229 -108,894 -1,348,445 Non-Cereals:

Pulses Bananas Cassava Potatoes Sub-Total Production 1116312 1073149 1972148 1392443 5554053 Requirement 657926 733176 1830567 781106 4002774 Gap(-) Surplus (+) 458386 339973 141581 611337 1551279 Total (Cereals and Non-Cereals): Production 5218626 5554053 10772679 Requirement 6567071 4002774 10569845 Gap(-) Surplus (+) -1348445 1551279 202834

Agriculture and Poverty

• The World Bank Report (2008) on agriculture

states that in the 21st century, agriculture shall continue to be a fundamental instrumental for sustainable development and poverty reduction.

• Slow growth rate = slow pace in poverty reduction.

Poverty status

Main Policy Framework • Agricultural Policy • ( Lead to ASDS, then ASDP).• Kilimo Kwanza was established.• Trade Policy ( Passed through 3 phases). The

policy endeavours to integrate Tanzania into a global economy through trade.

• Investment policy attempts to encourage investors in the agricultural sector.

• There is no contradictions between the policies.

Agricultural Policy

• The policy has spelled out main objectives to be realized are;

• Food security, nutrition, improving standard of living in rural areas and increasing foreign earnings.

• Supplying raw materials for industrial outputs, and developing technologies for land and labour productivity.

• Developing human resources and support services for enhancing agriculture.

Study Rationale

• Transformation of agricultural sector is critical for poverty alleviation in Tanzania.

• Pre –requisites include, improved production and productivity to develop infrastructure and trade facilitation measures, and finally, to create enabling environment for health and productive interaction between farmers, traders and investors.

• However there has been less emphasis on the third condition.

Main Objectives • To examine the relationships existing between the agriculture

policy makers, farmers, investors and traders in the country as well as their role/contribution to the policy formulation and implementation;

• To identify both the positive and negative elements in the relevant policy framework that either facilitate or hamper positive interaction and equitable terms of trade among farmers, investors and traders;

• To encourage and promote dialogue among farmers, investors, traders and policy makers through inclusive research methodology; and,

• To generate a set of practical recommendations directed at all relevant stakeholders which will be the basis for advocacy for farmer-friendly and private sector-led agricultural development in the country

Specific Objectives • To review policy framework related to agriculture in the country

(e.g. policies and strategies related to agriculture, investment, trade and development) and its implications on the farmers, investors and traders;

• To examine the role of and constraints faced by famers, investors and traders in agriculture development in the context of existing policy framework;

• To establish linkages and relationship among stakeholders in the agricultural sector with focus on identifying both the positive and negative elements and instances of interaction and terms of trade among farmers, investors and traders; and,

• To identify and to articulate clearly all elements of an enabling environment for farmer-friendly and private sector-led agricultural development

Specific Objectives • To review policy framework related to agriculture in the country

(e.g. policies and strategies related to agriculture, investment, trade and development) and its implications on the farmers, investors and traders;

• To examine the role of and constraints faced by famers, investors and traders in agriculture development in the context of existing policy framework;

• To establish linkages and relationship among stakeholders in the agricultural sector with focus on identifying both the positive and negative elements and instances of interaction and terms of trade among farmers, investors and traders; and,

• To identify and to articulate clearly all elements of an enabling environment for farmer-friendly and private sector-led agricultural development

Methodology• Primary information was collected using an

interview guide.• The interview guide focused on establishing

constraints. • Role of different associations formed by different

actors was also established .• Secondary information was gathered from

institutions such as The Ministry of Agriculture, Food Security and Cooperative, Economic and Social Research Foundation Library, the National Website, etc.

Agriculture ; Nature and Challenges

• The sector is composed of mainly smallholder farms, medium and few large scale farmers.

• Each category play its own functions.• Policies recognize needs of each category. • They require land allocation, tax exemption on

imported capital goods, transport infrastructure development, human resource with required skills, etc.;

Agriculture ; Nature and Challenges

• Challenges facing the sector include;• Supply constraints.• Conflict between actors. • Low development in value addition.• Contract farming or out grower scheme.• Inefficient marketing systems.

Stakeholders: Their Roles and Interaction

• Stakeholders include; farmers, private traders invested in farm production, processing and distribution.

• institutions such as those which provide financial services, agricultural inputs,

• Non-Governmental Organizations (NGOs)• Government ( They undertake different roles).

Stakeholders: Their Roles and Interaction

• Private traders can be classified as small, medium and large scale operators.

• Each category face different challenges and represented by different associations.

• Vertical or horizontal integration among the private players is still weak.

• Ad hoc policy is a problem.

Stakeholders: Their Roles and Interaction

• Ministry of Agriculture, Food Security and Cooperative (Government).

• Warehouse Receipt Agency.• Crop Marketing Boards.• Agricultural Research Institutes (ARI)• Local Government Authority • Agencies In-charge of Standards • Farmers and their Organizations• Private Sector

Towards Equitable Terms of Trade among Stakeholders .

• Constraints impede efficient and effective

interaction between stakeholders within the agricultural sector.

• Most of these constraints are either related to poor policy implementation, policy inadequacy and/or policy failure.

• Affects entire crop subsector.

Towards Equitable Terms of Trade among Stakeholders

• Factors affecting equitable terms of trade are; • Inefficient Marketing System.• Inaccessibility to Financial Services and agric-

inputs .• Weather condition.• Poor Extension Services.• Ad hoc policy.• Tax or crop levy.

Problems Facing Private Sector

• Lack of Steady Supply of Crop Produce• Problem of Electricity.• Transaction Costs.• Poor infrastructure in rural areas.• Low production given the use of rudimentary

technologies. • Ad hoc policy.

Expectations of Farmers and Private Sector

• Smallholder farmers need subsidy and efficient marketing system.

• Lack of conflict between farmers.• Private sector expects the Government to

implement business policies including identifying solution to problem of electricity.

Conclusion

• The sector is dominated by small farmers and there are few medium and large scale farmers.

• They differ in terms of assets and resources endowments.

• Their production activities are affected by similar factors such as lack of access to credit, market information, agricultural inputs, storage facilities and insufficient supportive services.

Conclusion

• Farmers use different mechanisms to influence policies .

• Large scale farmers use their association or even individual firm to lobby for a particular policy change.

• NGOs or CBOs represent smallholders in policy review or lobbying and advocacy for policy change.

Recommendations

• The Government should increase resources allocation in order to build up infrastructure.

• This will entice more actors to invest and increase level of competition.

• Public institutions need to be strengthened in order to pick up existing and even future challenges.

Recommendations

• Warehouse receipt system should be scaled up and introduced to other crops subsectors as well. This is an area where the Government should collaborate with the Civil Society Organizations (CSOs).

• Contract farming, which will include provision of agricultural inputs and even extension services, may help to reduce transaction costs of dealing with the smallholder farmers.

Recommendation

• CSOs should collaborate with the Government in undertaking a national sensitization campaign to smallholder farmers so that they can understand and consider large scale farmers as partners rather than just land grabbers.

• Development partners, should avail more financial aid to the sector either through basket funding or even project financing.

End

Asante Sana