Report No. 1616-TA

TanzaniaBasic Economic ReportAnnex VI-Key Issues in Agrcultureand Rural DevelopmentDecember 1977

'astern Atnca Country Progfams I

FOR OFFICIAL USE ONLY

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CURRENCY EQUIVALENTS l/

SDR 1.00 Tanzania Shilling (T. Sh.) 9.66US$ 1.00 - Tanzania Shilling (T. Sh.) 8.30T. Sh. 1.00 - US$0.12

TANZANIA 'FISCAL YEAR

July lst -June 30th

11 In October 1975 the Tanzania Shilling was pegged to the value ofthe Special Drawing Rights (SDR) of the International Monetary Fund.The US Dollar/Tanzania Shilling exchange rate is therefore subjectto change.

FOR OFFICIAL USE ONLY

TANZANIA - BASIC ECONOMIC REPORT

ANNEX VI

KEY ISSUES IN AGRICULTURE AND RURAL DEVELOPMENT

Prepared By

Mr. F. S. O'Brien

The full report consists of the following separately boundvolimes:

Main ReportAnnex I - Domestic Finance and Resource UseAnnex II - Fiscal Implications of Universal Primary

Education and Universal Rural Water SupplyAnnex III - Labor Market Allocation and Income

DistributionAnnex IV - Income Distribution and Growth: A simulation

ModelAnnex V - Industry: Perspective and Strategic ChoicesAnnex VT - Key Issues in Agriculture and Rural DevelopmentAnnex VII - Approproate Technology in Tanzanian

Agriculture. Some Empirical and PolicyConsiderations

This doument has a mtictad distibution and may be used by recipietns only in the perfonnanceof their officia duties. Its contents muy no ohrwise be discoed wthout Worik Bank authorization.

TABLE OF CONTENTS

PageI. Introduction 1

II. The Agricultural Setting 3

III. Trends in Agricultural Development 6

A. Pre-Independence 6B. Post-Independence 8

IV. Government Objectives, Strategy. Programsand Policies for Rural Development 13

A. Objectives 13B. Strategy 14

(i) The Village Settlement Scheme 14(ii) Ujamaa Villagization 1S

(iii) The 1974 Villagization Campaign 19

C. Programs and Policies 20(i) The Cooperative Movement 21(ii) Parastatal Crop Authorities 24(iii) Research and Extension 26(iv) Credit 27(v) Input Supply 28(vi) Pricing Policy 30(vii) S m=ary 33

V. Key Issues in Rural Development 33

A. Villagization 33B. Governmental Organization 35C. Incentives 36D. Other Issues 37E. Prospects for the Future 38

Statistical Appendix

List of Statistical Appendix Tables

1. Gross Domestic Product in Agriculture, 1964-1975

2. Fixed Capital Formation in Agriculture, 1966-1973

3. Marketed Production of Selected Crops, 1964-1975

4. Government Purchases of Major Food Grains

5. Volune and Price Trends of Major Agricultural Exportsof Tanzania (Mainland), 1965-1975

6. Selected Producer Prices

ANNEB VI

AGRICULTURE AND RURAL DEVELOPMENT

I. INTRODUCTION

1. The purpose of this Annex is to review the major trends in theperformance of the Tanzanian agricultural sector over the period sinceIndependence, to examine the various programs and policy initiativeswhich the Tanzanian Government has introduced in its efforts to overcomethe constraints facing agricultural production, and to assess the prospectsfor a higher rate of agricultural output growth in the future. Agricultureis the predominant sector in the Tanzanian economy and it provides thesource of livelihood for the vast majority of the Tanzanian population.It has been the focal point of the Government's development strategy sinceIndependence, both prior to and subsequent to the Arusha Declaration of1967. However, it is perhaps the one sector where the economic resultshave been most disappointing. 1/

2. Any assessment of the problems and prospects of the agriculturalsector is difficult for at least two basic reasons: first, because informa-tion about the resource base and about yield-improving technical innovationsis still woefully deficient, 2/ and, second, because the very rapid pace ofGovernmental interventions and policy changes prevents a ceteris paribusanalysis of the underlying economic forces at work in the rural sector. Therecent record of continuing institutional changes imposed on a traditionaland conservative peasant agricultural society is the most striking aspectwhich confronts the observer of Tanzania's rural development efforts. Asis stated in the main report, this record of institutional change makesevaluation of Tanzanian economic performance in all sectors difficult.

1/ "...the agricultural results have been very disappointing. Modernmethods have not spread very quickly or very widely; the majority ofour traditional crops are still being grown by the same methods as ourforefathers used... In food production, for example, the increase inoutput has not kept pace with the increase in population.... Ouragricultural production is too low to produce a surplus that can feeda larger urban population or maintain strategic reserves." Julius K.Nyerere, The Arusha Declaration, Ten Years After, Dar-es-Salaam,January 1977, pp. 19-21.

2/ It must also be stressed that analysis of past production trends isconstrained by lack of reliable data. Information on total productionof major cash crops which are purchased entirely or largely byGovernmental agencies and on agricultural imports and exports isreasonably accurate, but similar estimates for production and consumptionof the major food crops, the bulk of which are consumed on the farm bysubsistence producers or sold in private markets, are at best onlyguesses. Both benchmark data and trend series are unreliable. Neverthe-less, despite the paucity of accurate data, the overall levels andtrends of activity in the rural sector can be determined to a sufficientdegree to permit description of the major problems which confront Tanzanianpolicymakers.

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3. In preparing this Annex the basic economic mission has not carriedout new research on the agricultural sector as a whole. (However, importantoriginal research on technologica'l choices in agriculcural production has beena part of the basic mission and the findings and policy implications of thisresearch are presented in Annex VII. In addition, an in-depth analysis ofthe trends in rural and urban incomes and the consequences for production,employment and unemployment is contained in Annex III.) This Annex is rathera synthesis and review of recent research and experience on the problems ofTanzania's rural sector. Our starting point is the World Bank's majorsurvey of the sector wnich was issued in December 1974. 1/ That report providedan excellent review of past developments in the agricultural sector and acomprehensive analysis of development issues, including the ujamaa villagemovement, the incentive framework, problems of the marketing system, thecooperative movement and the extension services, and the need for greateremphasis on production. However, it is necessary to move beyond the sectorreport because the nature of certain sectoral issues has changed and becausea number of important policy changes have occurred since it was issued. 2/Nevertheless, many of the issues raised in that report are still relevantand many of the conclusions which it reached are still valid. Finally, thesector report was limited in scope; rather than encompass all components ofthe agricultural sector it concentrated on the smallholder sector and onthe opportunities for improving rural living standards through increasedsmallholder production. No attention was given to forestry and fishing or toirrigation, and the livestock subsector was dealt with only briefly. ThisAnnex will likewise concentrate on the problems of the smallholder sectorbecause this is the area where the Tanzanian Government is focusing its ownattention.

17 Tanzania Agricultural and Rural Development Sector Study (3 volumes),Report No. 541a-TA, December 10, 1974. This is only the latest ina series of World Bank surveys of Tanzania's agriculture. See also,The Economic Development of Tanzania, the Johns Hopkins Press, Baltimore,1961, Chapters 4-11; The Economic Development and Prospects of Tanzania,Report No. AE-7, March 18, 1970, Vol. II, Agriculture and RuralDevelopment; and The Economic Development and Prospects of Tanzania,Report No. AE-26, June 22, 1971, Annex I, Agriculture and Rural Development.

2/ In particular, the sector report was finalized prior to the mass villagiza-tion campaign of 1974/75 and thus could not anticipate the extent to whichthe rural society and economy would be modified by the sudden shift ofmillions of peasant households. At the same time the Government's earlieremphasis on collective production has, for the moment at least, givenway to "block farming" and to individual plots in the new villages. Inaddition, there have been major modifications over the past three yearsin the status of cooperative societies, in input distribution and cropmarketing systems and in the Government's pricing policy in agriculture.Furthermore, a significant reorientation has been taking place in theallocation of public investment funds and new production-orientedagricultural programs have been introduced. In updating the analysis andconclusions of the sector study it is necessary to include some assessmentof the implications of these new factors.

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4. In this Annex we first briefly describe the agricultural settingand the constraints which the natural environment imposes. Next we reviewthe cutput performance of the agricultural sector. This review concentratescn the post-Independence period, and particularly on the last ten years(roughly coinciding with the post-Arusha Declaration period), but becausesome of the recent problems of the sector are linked. with trends whichbegan during the colonial period, the pre-Independence era is examined briefly.This is followed by presentation of the objectives of the Tanzanian Govern-ment for the rural sector, as they have been expounded in a series of develop-ment plans and policy statements, and by examination of the record of govern-mental strategies, programs and policies for agricultural development. Inthe same section we analyze these strategies, programs and policies todetermine their compatibility with the overall objectives, their internalconsistency, the effectiveness with which they have been implemented, andthe likelihood that they can successfully overcome the constraints to ruraldevelopment. A final section reviews the central issues brought out by thisoverview of Tanzania's rural sector and makes certain general recommendationsconcerning the broad outlines of government policy in the future.

II. THE AGRICULTURAL SEmTING

5. Tanzania is situated just south of the equator, and most of thecountry, with the exception of the coastal belt, is located on the centralAfrican plateau at altitudes ranging between 1,000 and 1,500 meters. Thetotal land area of mainland Tanzania is slightly over 880,000 km2. Witha total population of some 15.3 million (mid-1976 estimate), overallpopulation density is low -- approximately 17 persons per km2. However,less than 10 percent of the total surface area is considered suitable forcultivation and much of this is of inheren-ly low fertility. At the presenttime only about 5Z of the total land area 1'L used for crop production. Theremainder consists primarily of rough grazing areas (52Z) and of woods andforests (43%). Some further expansion of cultivated area will be possibleto accommodate a growing rural population, but most of the uncultivatedland is of lower fertility than that currently in use. It has been estimatedthat irrigation and flood control might add some 1.6 million ha (less than2Z of total land area) to the stock of cultivable land. 1/ However, theeconomic viability of further irrigation development has not been adequatelyinvestigated.

6. The topography to a large extent determines the rainfall patternwith most of the country experiencing a single rainy season during theperiod November-May. For most annual crops, depending on elevation, plantingtends to be concentrated in October-January, with harvesting in May-August.The point which must be stressed is that many parts of the country receiveinsufficient rainfall for crop production, while throughout most of thecountry the rainfall pattern is highly erratic, varying in timing during therainy season and in total volume from year to year, with periodic droughts

1/ The area currently under irrigation is estimated to beonly about 130,000 ha.

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causing widespread hardship. Much of the center of the country is semi-arid while the higher altitude areas in the south and north experiencerelatively high rainfall. (The drier areas also have generallv lower soilfertilitv.) As a result of the rainfall pattern the people have historicallytended to live on widely scattered farmsteads (shambas) with much of thepopulation and economic activity concentrated around the periphery. This,in tuwrn, has increased the cost of providing trans?ort links and otherinfrastructure.

7. While all Tanzanian agriculture shares certain common aspects,there is wide variation in the natural environment with a great diversityin soil types and fertility, in elevation, climate and rainfall. Thereis also a wide variation in population density and land use and in accessto markets. This leads to substantial variation among regions in growingconditions (there are over 200 different agro-economic zones in Tanzania)and in type of crops grown. For example, the maize growing season variesfrom around 90 days to over 200 days, depending principally on elevation.While maize is the main staple food crop, Tanzania also produces largeharvests of cassava and bananas and significant amounts of sorghum, millet,wheat and rice. There is also a wide variety of cash/export crops produced.Agricultural products account for over 80 percent of Tanzania's exportearnings, but no single export crop is dominant. The leading export cropsover the past 15 years have been coffee, cotton, cashews and sisal, but noneof these has accounted for more than 25 percent of total export revenues. I/

8. Tanzania is predominantly a nation of small peasant farmers. Anestimated 94% of the population lives in che rural areas, 90%. of theeconomically active population is engaged in agriculture, and smallholderscultivate almost 90% of the area under crops. The agricultural censusof 1972 reported a total of approximately 2.5 million farms of which 832were below 2 ha in size and 97% were below 5 ha. Large scale agriculturecomprises a few estates engaged in coffee and tobacco production and statefarms concentrated in wheat, rice, sugar, sisal and livestock. Estateproduction has diminished sharply in importance since Independence 2/because of nationalizations, and the state farm program remains small.

9. The pattern of farming which developed in response to Tanzania'snatural conditions was that of shifting cultivation or the "bush-fallow"system which is common in many parts of Africa. This pattern of cultivation

1/ These four commodities have accounted for a very high but decliningproportion of mainland exports during the entire post-World War II period.Their share was 74 percent in 1948/49, 63 percent in 1957/58, 55 percentin 1965, and 52 percent in 1975. However, over this period their relativeimportance has shifted considerably, with sisal in particular, droppingfrom 57 percent of total exports in 1948/49 to 7 percent in 1972.

2/ In 1961 only 900,000 ha, or about I percent of total land area, was occupiedby estates owned by non-Africans. However, these estates accounted for35 percent of total marketed agricultural production and 45 percent ofagricultural exports. IBRD, The Economic Develooment of Tanganvika, p. 20.

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was compatible with the traditional communal tenure system and with theavailability qf unused larnd. It did not depend on use of chemical fertili-zers or animal manure to ma$ntain or restore soil fertility. However,over time this system has had to give way to permanent, more intensivecultivation in the more fertile areas where population density has beenincreasing. In these areas land has commonly been bought and sold an_'various forms of tenancy arrangements have evolved. Today Tanzaniacombined areas of relative land surplus with areas of critical and growingland scarcity.

10. Peasant cultivation techniques are generally based on manuallabor with a simple hand hoe (jembe), and are of inherently low productivity.Cultivation with the hand hoe is extremely difficult and unpleasant toil;the peasant is therefore reluctant to adopt changes in cultivation practicesor in cropping patterns which call for more labor effort unless the returnscan be clearly demonstrated to be high. There has been little developmentto date of intermediate technology in Tanzanian agriculture. The use ofanimal pover (oxen) is confined to the tsetse-free areas of the center-westand south. Some attempts have been made over the years to introduce tractors,but these have been almost universally unsuccessful.

11. Given the limitations and variability of the natural environment,the limited extent of markets and infrastructure, and the widely scatteredantd shifting cultivation pattern, the Tanzanian peasant farmer has beenprimarily a subsistence producer. Every household gives first priorityto producing its own food requirements; cash crops, when they are introduced,are added on to subsistence crops but do not substitute for them. In asituation of adverse weather the cultivation of cash crops may be foregonein order to concentrate on subsistence requirements; the result can be anextremely sharp drop in marketings of export crops as occurred in the caseof cotton in 1975. The Tanzanian peasant is also a traditionalist and arisk-averter. He will cling to traditional cultivation practices whichhave ensured survival in the past, and will be extremely reluctant toexperiment with new techniques which involve an element of risk, because,in a tightly coarstrained and unpredictable environment, the risks of failurecannot be borne. An example of this attitude can be observed in the caseof timely planting, which has been advocated by agricultural advisers overmany decades. The typical peasant cultivator spreads the plauting of hisfood crops over several weeks or even months in order that, if rainfall iserratic, he will not lose his entire crop. If he planted his entire crop atthe optimal time he would obtain a higher total yield if the rainfallconforms to the average pattern; however, because the variation about the normis so great the peasant feels that he cannot afford to risk the possible lossof the entire crop against the chance of even a significant gain in output.

12. The vast majority of Tanzania's rural population has remained aca low level of income, but there have been opportunities for agriculturaladvancement in certain regions, primarily through the introduction of highervalued cash crops, and thus divergences in rural incomes, both inter-regional and intra-regional. These differences existed during the colonialperiod and have persisted, and even widened in some cases, since Independence

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(see Annex III). It is precisely these intra-rural income differentialsthat have posed one of the most difficult policv dilemmas for the TanzanianGovernment, which has made poverty eradication and egalitarianism two ofthe focal points of its entire policy framework. This focus has led in thepast to a concentratior. of attention and resources on the pocrer regionswhich are generally the ones with the most limited production potential. Atthe same time the Government has wished to avoid policies which wouldexacerbate income differentials; yet many of these policies such as higherproducer prices for cash crops and special assistance to "progressive farmers"hold the most promise for gains in output which Tanzania clearly needs. Howto obtain a more satisfactory rate of growth of agricultural production withoutat the same time experiencing extremes of wealth and poverty which are incon-sistent with Tanzania's political and economic philosophy is the criticalissue. The Government has over time attempted to confront these issues bytransforming the methods of cultivation in Tanzanian agriculture, and alsoby transforming the organization of the agricultural sector, as will be shownbelow. Accompanying this transformation has been a significant increase inthe degree of Governmental intervention in the sector.

III. TRENDS IN AGRICULTURAL DEVELOPET

A. Pre-Independence I/

13. It is useful to describe the pre-Independence era brieflybecause several trends and conditions emerged during that period which havecontinued to influence the path of agricultural development down to thepresent time. From the early 19th century through the end of the colonialperiod there was growing agricultural diversification and differentiationin Tanzania. This regional diffeerentiation came about through the introduc-tion of cash crops for export markets in the more productive and accessibleareas of the country. The Germans introduced sisal, coffee, tea and rubberin the late 19th and early 20th centuries, bringing in a nucleus of Germansettlers who were given land for estates. The German administration madelittle effort to induce African farmers to turn to production of cash cropssince they wished the traditional sector to function primarily as a supplierof food and wage labor to the estates. There was some spread of cash cropcultivation to the traditional African farming sector, but these new cropswere adopted alongside subsistence farming without altering the traditionalcultivation practices in the subsistence sector. Furthermore, there were nosignificant improvements over time in the productivity of cash crop agricul-ture either. Thus, for the entire sector, expansion of production occurredthrough extension of the area under cultivation rather than through higher-yields per hectare of cultivated land.

l/ For details oa this period see John Iliffe, "Agricultural Change inModern Tanganyika," Historical Association of Tanzania, Paper No. 10,1971.

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14. When the British took over the administration of Tanganyika,as a League of Nations mandate after World War I, thev simply expropriatedand resold the German plantations to British, Greek and Asian owners; againlittle attention was given to the development of the Afri^an smallholdersector. This pattern of a dual economy in rhe agricultural sector persistedthroughout the inter-war period. After the disruptions of World War II theBritish renewed the effort to expand the estate sector and more rights ofoccupancy were given to Europeans. Following the war the colonial adminis-tration also initiated a number of special development sciemes (such as thegroundnut scheme in Southern Tanzania) which were designed to expand theproduction of export crops through mechanization, unrelated to Africanpeasant farming. However, from ibout 1950, the British finally began concertedefforts to raise the productivity of African peasant agriculture. In thefirst phase of this effort the colonial administration attempted to improvepeasant agriculture through extension services. This approach also involvedconsiderable use of compulsion -- the enforcement of numerous new agricul-tural ordinances which attempted to govern the cultivation practices of thepeasant farmer, the crops planted, minimum acreages, share of cropsmarketed, and to introduce soil conservation, terracing, reforestation,etc. The general experience with this approach was extremely disappointing.As a result, by the mid-1950's the administratior. had essentially given upon traditional peasant farming and shifted to an approach whiich stressedthe transformation of African subsistence agriculture to commercial farming.This new "focal point" approach, adopted in 1956, concentrated on the highpotential areas and on the most progressive farmers in these areas, withthe hope that their example would spread.

15. At Independeuce, Tanzania inherited an agricultural sector in'.Yhich expatriate estate agriculture played a relatively small role incomparison with many other African countries, but in which most of theextremely limited infrastructure was developed to serve the needs of theestate sector. No significant breakthroughs in agricultural technologyhad been made, and therefore no "shelf" of innovations which could yieldsubstantial increases in production was available. However, traditionalproduction techniques were of such low productivi'-r that fundamental changeswould be required if agricultural incomes were to be significantly increased.Nevertheless, although the overall level of per capita incomes was amongthe lowest in the world, the gradual spread of cash crop farming was producinga divergence in rural incomes. 1/ The principal and perhaps the only advantagewhich Tanzania enjoyed was the absence of serious population pressure onavailable land.

1/ The World Bank's report, The Economic Development of Tanganvika, 1961,estimated that per capita money incomes for the African populationaveraged about id. At the same time Lie average payment to Africancoffee producers in K.ilimanjaro and Meru in 1957158 was E47 (p. 27).

B. Post-IndeDendence

16. At Independence in 1961, the primary sector of the Tanzanianeconomy (agriculture, hunting, forestry and fishing) accounted for 59%of current price GDP. 1/ The secondary sector (mining, manufacturing andhandicrafts, utilities and construction) was embryonic, contzibuting only10%, while manufacturing alone was responsible for less than 4% of GDP.In these circumstances the simple arithmetic of growth dictated that theoverall performance of the Tanzanian economy would depend to a great extenton the output results in the agricultural sector. Beyond this, a satisfactorygrowth rate from agriculture would be essential to feed the growing popula-tion and to supply the primary and processed exports on which Tanzania'scapacity to import would depend. What has been the record of agriculturalsector growth during the post-Independence period? In this section wefirst examine the overall growth trend and some of the details underlyingthe aggregate record, then consider some of the consequences of the growthperformance in agriculture, and finally indicate some of the possible causesfor the observed results.

17. The overall trends in agricultural sector growth can be summarizedas follows. There was relatively slow growth in total output with sharpyear-to-year fluctuations in production due to weather. Over the entireperiod 1964-75 for which aggregate data are available, there was a decelera-tion in the growth rate, with significantly lower growth in the late years.This decline in the year-to-year performance of the agricultural sectors wasoccurring prior to the drought crisis of 1974; it is not merely a statisticalphenomenon created by choosing an end-year with a depressed level of productionfor purposes of trend calculations. Within the sector there have been somechanges in the composition of output, but the broad lines of developmenthave not pointed consistently in the direction of modernization and commerciali-zation as might be expected. During the early 1960's there was a fairly rapidgrowth of commercial or monetized agriculture and thus a rising share ofmonetized output in total production, largely as a result of a rapid expansionin the production of several of the principal export crops. During the late1960's and early 1970's, however, there has been a reversal of this trendwith stagnation or actual declines in monetized output. As a result, theshare of moneti-ed production in total agricultural output had fallen to alower level in 1975 than it had held in 1964, in both current and constantprices. We now examine these trends in more detail.

1/ In discussing the aggregate trends we are limited to the period 1964-75since the revised national accounts series begun in 1970 goes back onlyto 1964. The 1961 GDP data are not entirely comparable with the 1964-75series.

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18. The average rate of growth of total agricultural production inreal terms from 1964 to 1975 was only 2.8% per annum, 1/ compared to arate of growth of 4.8% for total GDP. Sinne the Tanzanian population wasgrowing at an estimated 2.8% per year, the expansion of production wasonly sufficient to keep up with population growth. During this same periodmanufacturing production grew at 7.8% per annum and the services sectorexpanded at 6.5%.. As a result of these trends the share of the primarysector in total production fell from 50% in 1964 to 42% in 1975 in currentprices and from 47% to 38% in constant (1966) prices. The rate of growthfluctuated sharply from year to year, between a low of -3.3% and a high of14.7%. The growth rate was negative in three of the eleven years covered.Details are shown in the table below.

Table 1

Range of Annual Growth Rates for theAgricultural Sector 1964-75

Growth Rate No. of Years

4.0 to O.0 3

0.1 to 1.0 3

1.1 to 3.0 0

3.1 to 5.0 2

5.1 to 7.0 1

7.1 to 9.0 1

9.1 and above I

19. Over the period from 1964 to 1973 there was a marked decelerationin the rate of sectoral growth, from an average level of 4.0% per year in1964-67 to 2.6% in 1970-73 and to 1.5% in 1973-75 (covering the droughtcrisis of 1974 aud partial recovery in 1975). Clearly, in recent yearsagricultural output has failed to match population growth. Subsistenceproduction expanded at a somewhat more steady rate, averaging 3.4% perannum, while monetized output grew more rapidly at the beginning of theperiod and has stagnated in more recent years. As a result, the share ofmonetized output in total agricultural production declined from 52%. in 1964to 41.5% in 1975 in current prices and from 47.5% to 44% in constant (1966)prices. These growth trends are summarized below.

Table 2Average Annual Growth Rates of Agricultural Production

1964-69 1969-73 1973-75 1964-75Subsistence Production 2.9 4.0 4.0 3.4Monetary Production 3.8 2.6 -1.3 2.1Total Production 3.3 2.9 1.5 2.8

1/ The 1964-73 growth rate, which omits the effects of the 1974 droughtcrisis and partial recovery in 1975, was still only 3.1%..

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20. Lying behind the more satisfactory performance of cash cropproduction in the early years was the rap'd expansion of most of the majorexport crops, including cotton, cashews, coffee, tea, tobacco ani pyrethrum.The overall record would have been even more favorable if not for thestagnation in sisal output, which declined from an average of 206,000 tonsin 1960-62 to 194,000 tons in 1968, in response to sluggish world pricesfollowed by the collapse of sisal demand in 1965-66. Of the high growthcrops, cotton, cashews and coffee had already become important exportsin the pre-Independence period, while tea, tobacco and pyrethrum were allminor exports until the 1960's. The strong performance of these exportcrops was the principal factor underlying Tanzania's relatively healthybalance of payments position in the early post-Independence years - duringthe years from 1960 to 1967 Tanzania enjoyed a surplus in the balance oftrade in every year.

21. The consequences of the declining growth rate of agriculturalproduction since the mid-1960's have been numerous. One of the mostobvious areas of concern is the balance of payments. First, Tanzania'sgoal of self-sufficiency in food production has not been met; rather thecountry has moved farther away from the goal, going from a ppsition ofmoderate net imports of the major foodgrains (maize, rice and wheat)during the 1960's to growing dependence on foodgrain imports in the 1970's.This situation has reflected the decliaing average annual volume of grainpurchased in the domestic market by the official buying agency, and theabsence of a clear-cut food reserve or stockpiling policy. It is importantto note that this shift in the supply-demand balance for foodgrains wasoccurring prior to the drought crisis which began in 1973 and which affectedproduction and marketings in 1974. The fact that Tanzania had to import450,000 tons of foodgrains in 1974 and a further 470,000 tons in 1975 wasindicative not only of the severity of the drought but also of the precariouslyweak food balance situation which had been developing for several years. Thisfoodgrain crisis of 1974-75 caused a massive drain on Tanzania's foreign exchangereserves, principally during 1974 when the food crisis was met almost entirelythrough comnercial purchases at the exceptionally high world prices thenprevailing. It also led to a dramatic increase in dependence on food aid,other forms of grant assistance and foreign loans. Tanzania's trade policyover the past three years has been dominated by the tight reserve positionto which the food crisis was a major contributor. The trend in imports forthe major foodgrains is showu in Table 3. (It should be noted that therehave also been heavy imports of sorghum in recent years.)

Table 3

Imports and Exports 1/ of Mtajor Foodgrains1965/66 - 1975/76(000 Mctric Tons)

1965166 1966/67 1967/68 1968/69 1969/70 1970/71 1971/72 1972/73 1973174 1974/75 197517$Maize 8.8 7.9 (0.3) (51.8) 46.9 (53.4) 92.3 78.9 183.6 317.2 42.3Wheat & flour 21.6 32.1 13.6 36.7 35.7 11.6 49.5 8.2 35.8 109.6 31.2Rice (paddy) 11.4 6.5 3.8 - _ (4.2) (10.2) 23.0 63.0 20.,Total net 41.8 46.5 13.3 (15.1) 82.6 (41.8) 137.6 76.9 242.4 489.8 94..

iaports

1 Exports are showni in brackets ( ).

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22. On the export side Tanzania suffered considerable foreignexchange losses from the stagnation of primary product exports. Thetotal volume of the six principal agricultural export crops (cotton, coffee,cashews, sisal, tea and tobacco) actually declined by 5% between 1965-67and 1971-73. There were further declines of 15% in 1974 and 3t in 1975; asa result bv 1975 the total volume of these exports was 21%. below the levelof a decade earlier. Even when sisal, the consistently poorest performerand a crop which faced an unfavorable world market price situation until1974, is eliminated from the ccmparison, the result is still an averageannual growth rate of only 2.4% per annum from 1965-67 to 1973-75 for theremaining five crops. Tanzania's extremely weak export performance over thepast decade has meant that the country was failing to take advantage offavorable world market prices when they did occur, in particular thecommodity price boom of 1974-75.

23. Calculations in the table below indicate what would have happenedif higher rates of output growth for these export crops (except tobacco)could have been maintained. It would be unrealistic to assume the continua-tion of the very high growth rates which had been achieved in the early 1960's,since several of these were calculated from very low bases, but the projectionsindicate the additional revenue that could have been realized if rates ofgrowth only half as high as those of 1960-66 could have been achieved.Tanzania's trade account actually moved from an average surplus of Sh 130million in 1965-67 to an average deficit of Sh 2,700 million in 1974-75.While improved export performance could not have eliminated the entiredeficit in the latter years, these hypothetical calculations indicate thatthe deficit could have been reduced to much more manageable proportions,perhaps by as much as half, through a more successful export promotion policy.

Table 4

Actual and Hypothetical Export Volumes and Values for 1975(in '000 metric tons and millions of shillings)

Export Vol. Export Growth Export Volume 1975 Export Value 1975Commodity 1966 Rate 1960-66 Actual Hypothetical 1/ Actual Hypothetical

Cotton 86.2 14.2 38.0 158.4 296.7 1236.8

Coffee 50.6 12.4 54.4 85.5 483.0 759.1

Sisal 198.9 - 101.6 200.0 302.2 594.9

Cashewnuts(raw) 72.2 11.9 97.3 122.0 176.9 221.8

Tea 6.3 11.9 10.4 10.6 81.2 82.8

Total 1340.0 2895.4

1/ Assuminr, growth rates for 1966-75 equivalent to half of the 1960-66growth rate for each commodity except sisal, for which a constantlevel of prcduction is assumed.

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24. There were other consequences of the disappointing growthin the agricultural sector in recent years. Most important, becauseagricultural output failed to grow significantly more rapidly than ruralpopulation (the rate of rural population growth was slightly belowthe overall rate), smallholder incomes did not increase and rural-urbanincome differentials did not narrow, despite the attention which wasgiven to rural development and to incomes policy by goverr.ment. Theoverall stagnation of rural incomes fueled the rising rate of ruralto urban migration, with consequences for urban unemployment and under-employment. These problems are analyzed in depth in Annex III. Theslow growth in peasant incomes has also iahibited the ability of the ruralpopulation to share the cost, either capital or recurrent. of the higherlevel of public services being supplied to the rural areas, therebyincreasing the direct burden on the Government budget and contributingto the fiscal over-committent and over-spending problem of recent years.The poor output response in agriculture has occurred despite an increasingflow of both infrastructural and directly productive investments toagriculture, which indicates that the short-run to medium-run return tothese investments has been low or negative. Another consequence has beenthe continuing shortage of raw materials inputs for many of the new agro-processing and manufacturing industries which were begun in this period.

25. Over the past two years (1975-76) there has been a marked improvementin total agricultural production. This has resulted from improvedweather and possibly in part because of the Government's "life and deathagriculture" camDaign, and despite the potentially disruptive effectsof villagizatioa, discussed below. However, the recovery has been concen-trated in subsistence (food) production and not on cash crops. In factthere has been little recovery of agricultural export volumes from theirtrough of 1974-75. In addition over the entire post-Independence periodthere has been only minimal technological advance. The vast majority ofpeasant farmers continue to employ traditional methods of cultivation whichgive extremely low returns to land, labor and capital. Growth in outputhas come primarily from bringing additional land into cultivation as therural population and labor force has expanded. However, there is growingpressure of population on land in certain areas which will limit the scopefor futute production increases without improvements in productivity.Finally, Tanzanian agriculture has not been insulated from the vagariesof the weather and thus the sector still remains highly vulnerable toperiodic droughts.

26. The outcome in agriculture has been a great disappointment to theTanzanian authorities. The causes of the discouraging outcome are numerous,interrelated and not easily resolved. We have already described the limita-tions of the natural environment and the constraints imposed by the inherentlylow productivity of peasant agriculture. To this can be added the absenceof known technological improvements comparable to the "green revolution" inAsia and the poverty of the average peasant which limits his capacity for

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savi.ng and investing in modern inputs or in such intermediate technologiesas are available. The disappointing performance can certainly not beattributed to Governmental indifference toward rural development. In fact,rural development has been given a high priority in Tanzania's developmentplans and strategies and this emphasis has become more pronounced over time.However, to some extent the slow rate of growth in output can be attributedto the low level of investment in agriculcure. During the period 1966-73the level of investment in the sector remained approximately constantin real terms while declining as a proportion both of total investmentand of GDP (see Appendix Table 2). Development budget allocations toagriculture have been sharply increased since 1973, however. Nevertheless,we must also consider the overall scope and effectiveness of the Government'sprogram and policy framework for agricultural development. In the followingsections we examine this strategy and the accompanying policies and programsand analyze some of the difficulties which have been encountered in formulatingand implementing a viable rural development effort.

IV. GOVERMtNT OBJECTIVES, STRATEGY, PROGRAMS ANDPOLICIES FOR RURAL DEVELOPMENT

A. Objectives

27 Although, as indicated in the preceding section, the outputperformance of the agricultural sector has fallen significantly belowexpectations, especially in recent years, this has not been due to a lackof priority or of attention from the Govenrment. Both the First and SecondFive-Year Development Plans have emphasized that "rural development isthe key both to the achievement of the production targets in the Plan andthe social goal of spreading development to the mass of the people." 1/The emphasis on rural development, and on the small farmer, was made evenmore explicit in the Arusha Declaration of 1967, which affirmed thati"agriculture is the basis of development". The four basic principles. under-lying this Declaration are: (a) social and economic equality, includingboth inter-personal and inter-regional balance; (b) self-reliance; (c) coopera-tive production as an ultimate objective of the organization of the ruralsector; and (d) a social and economic transformation of people and productionmethods.

28. This rural bias in development goals is logical for Tanzania fromtwo standpoints. First, from an equity standpoint, it is consistent withthe Government's desire to spread the benefits of development as widely aspossible and to provide for the basic needs of the entire population.Second, it is logical from an economic standpoint for a country in whichcapital is scarce but which has an abundance of labor and a considerableamount of unutilized land. The Government's objective, however, is notsimply to improve production methods in the short and medium run, but

1/ Tanzania Second Five-Year Plan for Economic and SocialDevelopment, Vol. I., p. 4.

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also to modify the entire fabric of social and economic inter-relationshipsin the rural areas. Government policies and interventions with respectto rural development must therefore be examined in terms of their consistencywith and their impact upon this broader set of objectives.

B. Strategy

29. The central aspect of Government strategy for rural develonmentsince Independence has been village formation - to group the scatteredfarm households into organized settlements sc that social and economicservices could be delivered to the rural population more efficiently andthereby the productivity of the rural population could be increased. Toimplement this strategy in the years immediately following Independence,Tanzania adopted a two-pronged approach to rural development as part ofthe First Five-Year Plan, combining the "improvement approach" and thet"transformation approach." 1/ The improvement approach relied on theextension services to bring about a gradual improvement in farming methodsin the smallholder sector without changing the traditional social andlegal structure, while the transformation approach aimed at rapid productionincreases by removing selected farmers from their traditional setting andgrouping them in villages where mechanized farming methods and new cropscould be introduced under close G8vernment supervision:' This latterapproach embodied elements of both the "special scheme" and the "progressivefarmer" concepts which had been followed in the late colonial period.Priority was given to the transformation approach because the improvementapproach was throught to be too slow and therefore unlikely to providerapid increases in production. It was considered too costly to provideadequate extension services, infrastructure, inputs and marketing servicesto the entire widely scattered rural popuation; also, from the psychologicaland political point of view the improvement approach was not felt to besufficiently dramatic.

(i) The Village Settlement Scheme

30. The transformation approaph was introduced through the VillageSettlement Scheme (VSS) which was launched in 1963 under the managementof the Village Settlement Agency. The plan called for 74 villages to beestablished between 1964 and 1969, with each village holding 250 families.The Governnent was to provide the necessary infrastructure such as storagefacilities, roads, water, housing, schools, community centers and clinics,as well as irrigation works, agricultural machinery and modern inputs, andwould also closely supervise the villages to ensure che production ofpriority crops. The village members were encouraged to work on a cooperativebasis and it was envisaged that the settlement schemes would eventually beconverted into cooperative societies. It was clear that the schemes could

i/ In adopting this dual approach the Government was partly influenced bythe advice of the World Bank's 1961 report. See The Economic Develcpmentof Tanganyika, op. cit., Chapters 5-6.

not be replicated throughout the country because of their high capitalcost, but it was hoped that the vast majority of traditional farmerswho had been bypassed by the schemes could be benefitted through expan-sion of the extension service, and that they would be induced to adoptthe cash crops which would prove profitable on the schemes.

31. Despite the high priority accorded the program, the villagesettlement schemes got off to a slow start. By the end of 1965 only 22pilot settlements had been established; only one of these had reachedthe stage of forming a self-governing cooperative society while the restwere still being managed and financed by the Government. By 1966 theremaining enthusiasm for the VSS had evaporated and the Governmentdecided to abandon both the scheme and the transformation approach. InApril 1966 the Government announced that no further settlements were tobe started and those already established were to be converted into ujamaavillages (see below).

32. There were a number of problems inherent in the villagesettlement approach. The schemes failed as instruments of rural developmentprimarily because they were overcapitalized in relation to their capacityto generate economic returns. The high cap'ral cost per farmer was dueboth to the social and economic iafrastructu:e which was furnished byGovernment and to the capital intensity of the production methods chosen.The emphasis was on mechanization, primarily tractorization, but withinsufficient attention to the importance of efficient tractor use and tothe related improvements in farming practices. The schemes also failedbecause they bred excessive dependence on the Government. Participatingfarmers tended to view the schemes as Government projects and themselves aswards of the state. They did not regard the schemes as their own propertyand therefore they were unwilling to make the sacrifice of saving andinvesting to develop the schemes toward the time when the Government wouldwithdraw and they would have to become self-supporting! Finally, becausethey concentrated a disproportionate share of public resources on a fewfarmers, including the payment of monthly subsistence allowances in manyof the settlements, the schemes served to widen intra-rural income differen-tials. It was primarily for this last reason that they were discarded.

(ii) Ujataa Villagization 1/

33. The Arusha Declaration of January 1967 committed Tanzania tothe creation of a socialist state. The path to socialist developmentfor the rural areas was spelled out by President Nyerere in his policy paper"Socialism and Rural Development", issued in September 1967, in which he stated:

"What is here being proposed is that we in Tanzania should movefrom being a nation of individual peasant producers who, are graduallyadopting the incentives and the ethics of the capitalist system ...In a socialist Tanzania, then, our agricultural organization would be

1J "Ujamaa" is a Swahili word which conveys the idea of living and workingtogether on extended family principles. President Nyerere first discussedthe ujamaa approach in his pamphlet, "tJjamaa - rhe Basis of AfricanSocialism," published by TANU in April 1962, and reprinted in his book,Ujamaa - Essays on Socialism, 1968. For a careful analysis of the ujamaamovement see P. Abraham and F. Robinson, Rural Development in Tanzania:A Review of Ujamaa, African Rural Development Study, World Bank, September,1974.

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predominantly that of cooperative living and working forthe good of all. This means that most of our farming wouldbe done by groups of people who live as a community and workas a community... A group of families will live togetherin a village and will work together on a common farm fortheir common benefit. Their houses will be the ones theybuild for themselves out of their own resources; their farmwill be owned jointly, and its produce will be their jointproperty. The activities of the village, and the type ofproduction they undertake, as well as the distribution ofcrops and other goods they produce, will all be determinedby the village members themselves ... In other words, weshall have an up-to-date and larger version of the traditionalAfrican family. "

34. President Nyerere believed strongly that any program of socialistdevelopment for Tanzania had to begin with the socialization of agriculture;if the rural sector were not restructured along socialist lines the commit-ment to build a socialist state would not have meaning even if the manufacturingand commercial sectors were nationalized. The ujamaa village program wasdevised as the Tanzanian vehicle for socialist rural developmaent. Therewere precedents for the ujam-a movement in certain self-help settlementswhich had been established just prior to Independence and for several yearsthereafter by the TANU Youth League. Other cooperative villages, such asthose under the auspices of the Ruvuma Development Association, were startedin the early 1960's without Government assistance.

35. The ujamaa movement had, in essence, two levels of objectives.At one level it sought to improve the technology of rural life - to increasethe efficiency of the delivery of social and economic services to the ruralpopulation by collecting them into villages. It would clearly be prohibitivelyexpensive to bring piped water, schools, clinics and roads to people livingon widely scattered farms. Also, individual farmers could not be effectivelyreached by extension services, credit, input supply, storage and marketingfacilities and other support services so long as they were scattered. Finally,collective farming would make it possible to combine individual plots intosiugle large fields on which more modern cultivation practices could beapplied. In all of these respects the ujamaa program had objectives similarto those of the village settlement schemes, but with two important differencesin approach - the production methods would not be so capital-intensive andthere would be much greater emphasis on self-reliance and self-help invillage development.

36. On a second level, ujamaa sought to transform the entire wayof life in the rural areas, to make socialists out of individual, independentpeasant farmers. The objective was to assure more equality in incomedistribution and to check the rise of class distinctions among the peasantry.

_______~~~EMEE

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In Tanzania a landlord or Kulak class had never developed much strengthat the national level, despite the emphasis on progressive farmers duringthe colonial period and under the village settlement schemes, but it didgain importance in some local areas. Nevertheless, the ujamaa programwas intended to preclude the development of a rural elite in the same waythat the nationalizations and the leadership code were intended toprevent the rise of an urban elite. The concept of ujamaa was based onthe original African village community which combined clan and extendedfamily relationships. tn that society, it was reasoned, no one sought torise above others and there was a clearly recognized responsibility of allvillage members to ensure that each received a share in the village'sproduction. It was felt that the colonial period had disrupted thistraditional village society, introducing capitalistic and individualisticelements in its stead. Ujamaa was thus seen as a way of restoring the lostelements of egalitarianism and cooperation to the rural areas. Each ujamaavillage was expected to develop into a fully cooperative unit through athree-stage evolution. The first stage involves settlement and clearingof land with graut assistance from the Government. In the second stagesome commercial activities would be started; at this point the villagecould be tentatively registered as a cooperative society and could obtaincredit from the rural development bank. In the third stage, when asubstantial part of village activities were communally operated, the villagewould be registered as a multi-purpose cooperative society.

37. Ujamaa was also intended to provide the rural population witha framework for meaningful participation in planning and executing develop-ment programs. Each ujamaa village was to be run by democraticallyelected leaders who would organize its activities and formulate plans.Each village was treated as a separata political, so'ial and economic unit,and government programs and services wouild be administered on the basis ofujamaa villages or groups of villages. Individual village plans would beintegrated into district and regional programs, and then integrated verticallyinto sectoral programs for national planning purposes. This vertical inte-gration was accomplished by linking the village, ward, district and regionalplanning committees with the central government via initially the M4inistryof Rural DeveloFment and Regional Administration and, following the decen-tralization of Government in 1972, through the Rural Development Divisionof the Prime Minister's Office.

38. The ujamaa movement got off to a slow start. There are noaccurate figures on the number of ujamaa'type villages already in existencein 1967; however, one estimate gives 48 villages with a total population of5,000 and estimates for 1968 range from 180 to 350 villages. Villageformation did not begin to occur on a meaningful scale until 1969-70,following President Nyerere's call to "go ujamaa." This led to a rapidincrease in the number of villages and in the total village population during

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1970-72. From an estimated 800 villages in 1969 the number rose to almost2,000 in 1970 and to nearly 4,500 by 1971. Membership increased nearlythree-fold over the same period, from less than 5%. of the total ruralpopulation in 1970 to over 12% by 1971. The share rose co 15% in 1972-73and by March 1974 almost 20% of the rural population lived in ujamaavillages. The statistics on ujamaa development up to 1974 are surmarizedin the table below.

Table 5

Number of Ujamaa Villages and Membership(March) 1969-1974

1969 1970 1971 1972 1973 1974

No. of villages 809 1,956 4,484 5,556 5,628 5,008Total membership n.a. 531,200 1,545,240 1,980,862 2,028,144 2,560,472Average membership - 272 345 357 360 511Membership as %

of Rural Pop. - 4.3 12.3 15.3 15.3 18.9

Source: Rural Development Division, Prime Minister's Office.

39. The Government's policy was to mobilize for ujamaa on a nationwidebasis rather than to concentrate resources in a few selected areas. However,as the program evolved there were large regional variations in village forma-tion; ujfamaa villages tended to be concentrated in the poorer regions. As ofMarch 1973 about one third of the total number of villages were located inonly two regions while five regions which together contributed less than 25%of 1969 GDP accounted for over 60% of villages with nearly 70% of totalvillage population. Conversely, the six most affluent regions, whichcontributed over 50% of 1969 GDP, accounted for only about 15Z of the numberof villages and less than 10% of the uJamaa population. The fact of regionalvariation is not entirely surprising since, following the decentralization,responsibility for ujamaa village formation was assigned to the regionalauthorities. In the poorer regions, particularly in areas of sparsepopulation and extensive uncultivated land, the authorities mounted massiveujamaa "operations." From an equity standpoint it was felt that the Govern-ment should be placing emphasis on the less developed areas and attemptingto supply basic services where they were most deficient. On the other hand,in areas where cultivation has been carried on continuously for a longperiod of time and where farmers have been exposed to the cash economy andare relatively well off, the establishment of ujamaa villages proved muchmore difficult. The average density of population in these areas is aboveaverage and farmers already live in close proximity. It is difficult to createnew settlements because most of the land is already owned and under cultivation.

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40. During the period from 1969 to 1974 there was a steadily risingtrend in the average size of villages, from approximately 270 to over 500 pervillage. There was also large variation in the size of villages; as ofMarch 1973 the average membership per district varied between 30 and 1,866.There was a tendency for villages which were created as a result ofGovernment campaigns or operations to be much larger than those whichresulted from voluntary association. The factor of excessive size hasproven to be a serious handicap to many villages. As Mr. Abraham andMr. Robinson state, "AUthough there have been no studies undertaken toisolate factors that may explain why certain ujamaa villages have failed whereothers have succeeded, one crucial factor would appear to be the size. Thelarger the village the less the community sense, cohesion, and sense ofbelonging and responsibility. Many of the successful ujamaa villages havememberships ranging from as little as 30 up to 100." 1/

(iii) The 1974 Villagization Campaign

41. By the end of 1973 the ujamaa village movement appeared to havereached a plateau; the pace of village formation and of mobilization of thepopulation had slowed and the extent of communal cultivation was minimal.Many weaknesses were appearing in the program. At the village level theissue was one of inducing the farmer to devote a sufficient portion of hislabor effort to collective farming. It appeared evident that even thoughcommunal cultivation was not being forced, it was serving as a barrier tothe spread of ujamaa in some parts of the country. It is not possible todetermine whether the ujamaa program was partly responsible for the sluggishgrowth of agricultural prodnction after the mid-1960's, but in some areas aproduction decline was associated with ujamaa operations. At the nationallevel the challenge was to provide sufficient incentives to encourage farmersto join or form ujamaa villages. The declared policy of the Government wasto maximize the self-help component of the development effort, but theassistance provided by the Government in such social infrastructure ashealth facilities, schools and water supplies was frequently on a massivescale and the expectation of assistance became the main reason for theformation of a village. It was also argued that excessive weight was givento social overhead investments vis-a-vis directly productive ones.

42. At this point the Government decided to reduce the emphasis oncollective cultivation, and to stress instead "block farming" (in whicheach farmer would cultivate his own plot within an overall block of landallocated to the village) or individual holdings within a village framework.During 1974 the emphasis shifted therefore from creating additional ujamaavillages to forming "planned" or "development" villages. At the same timethe decision was made to accelerate the pace of village formation, and theprogram rapidly escalated into a far more comprehensive effort than had beenanticipated, as regions vied with one another to take the lead in villagiza-tion. In the second half of 1974 some 6-7 million people were brought

1/ Rural Develonment in Tanzania: A Review of Ujamaa, p. 46.

_~~~~~~~,--

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into villages, some by the artificial device of declaring an alreadysettled area a "village," but many millions were phvsically relocated.This massive operation brought the total number in villages to over9 million, or some 65% of the entire rural population. It is probablethat the proportion of the rural population which is nominally villagizedremains at about the same level today. While the Government reporteda further increase to 13 million between 1975 and 1976 this total, whichwould represent over 902 of the rural population, implies the incorpora-tion of a further 4 million persons in villages, a mobilization comparablein scope to the 1974 campaign and this has clearly not occurred.

43. Many mistakes were made in this mass villagization effort,including inadequate planning. Some villages were sited without adequateconsideration for availability of water and sufficient cultivable land.The average size- of village increased significantly, irom 500 to 1,300,implying that many of the new villages are of much greater size and there-fore they may be too large for efficient operation. There were widelypublicized cases of mistreatment of persons who were moved against theirwill. Because of the many problems with village size and' location andthe availability of water an "operation correction" was launched in 1976to rectify the-more serious cases of misallocation. It is not knownhow many people were affected by this follow-up exercise.

44. There are still areas of the country in which no actualvillagization has taken place. However, for the great majority of therural population villagization is now an accomplished fact. This changein the organization of rural life has forced a change from the traditionalextensive, shifting mode of farming to an intensive, ncn-shiftingcultivation. Whether the village experiment can succeed in overcomingthe obstacles which have inhibited agricultural progress in the past isthe central issue in rural development at the present time.

C. Programs and Policies

45. The Government's approach to rural development has emphasized,on the one hand, the transformation of the organization of peasantagriculture through village formation and, on the other hand, an increasingdegree of public intervention in the sector and in the supporting servicesfor agriculture. The Government's institutional framework for promotingrural development has been undergoing continuous changes since Independence.In this section we review some of the more significant developments whichhave taken place as the Government has continuously reformed and restructuredthe institutional arrangements and the policy framework surrounding theagricultural sector.

46. At the present time responsibilities for rural development aredivided between central and regional authorities. The central Ministryof Agriculture is in charge of agricultural research, training of extensionstaff, price policy and supervision of agricultural parastatals. Under

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the decen:ralization of Government carried out in 1972 the regionaland district administrations were made directly responsible for mostaspects of implementing rural development. The regions were authorizedto plan and implement their own development programs, and were given ahigh degree of autonomy in regional administration. The decentral'zationwas a serious attempt to sensitize the governmental administration tolocal needs as well as to improve implementation of development programs.However, there have been problems with the regionalization effort. Themanpower demands of decentralization have been heavy. Planned stafflevels have not yet been fully met and staff quality remains low. Althoughresponsibility for rural development has been decentralized, the PrimeMinister's Office provides overall policy direction, assists the regionsin preparing their development programs, and coordinates regional plansand budgets. The ?rime Minister's Office is also responsible for directingand monitoring the ujamaa village program. The agricultural parastatalsare the other main element in the rural development picture; their numberand the scope of their activities have increased sharply ia recent years.

(i) The Cooperative Movement 1/

47. The cooperative system in Tanzania, as it existed prior to 1976,was a three-tiered organization. The basic unit w-is the primary marketingsociety which was the legal channel for marketing all major agriculturalcommodities. All market:ng societies were affiliated with a regio-alcooperative union which provided the link between the societies and uAemarketing parastatals. The regional unions were themselves members of theapex organization, the Cooperative Union of Tanzania.

48. The history of the cooperative movement in Tanzania goes back tothe 1920's; however, these early "growers associations" were organizationsof exclusively expatriate farmers. The first markecing cooperatives ofAfrican cultivators were established in the Kilimanjaro area in 1932,primarily to promote cof- e as a cash crop among peasant farmers. Themovement spread rapidly to other areas where African cotnmercial farmingwas relatively advanced, especially after World War II. Tr-. number ofregistered cooperative societies, the great majority of which were engagedin produce marketing, grew from 172 in 1952 to 857 in 1961. The cooperativeswere strong supporters of TAIN'U and of the Independence movement, and manyof Tanzania's leaders in the early post-Independence period came from thecooperative system. However, it must be noted that these cooperatives wereessentially organizations designed to service the more well off commercialor progressive farmers; in addition, the cooperatives were found almostexclusively in the richer regions as they were concerned only with marketingfrom surplus-producing areas.

1/ For more background informacion on che cooperative movement seeLionel Cliffe, et. al., editors, Rural Cooneratives in Tanzania,Tanzania Publishing House, Dar-es-Salaam, 1975.

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49. Shortly after Independence the Government decided that cooperativesshculd play a central role in agricultural development and that cooperativesshouid ther.fore be established in those areas of the ccuntrv where they hadnot previously existed. One reason for this desire to promote marketingcooperatives was to eliminate exploitation of the peasants by middlemen.Thus, to strengthen the movement, the Government banned private trading inthose crops handled bv cooperacives. Ulith this strong emphasis and supportbeing given to the movement the number of cooperatives increased rapidlv toover 1,500 societies and 33 unions by April 1966. The total volume of producehandled by cooperatives grew from 145,0C0 tons in 1960 to almost 500,000tons in 1965. In the early 1960's the output of such rapidly expandingcash crops as cotton, coffee and cashews came to be handled almost exclusivelyby cooperatives.

50. Unfortunately the 1961 decision to expand the cooperative systemon a nationwide basis forced cooperatives to move into areas where th4rewas no cooperative tradition and experience and only limited commercialfarming, and to perform marketing services for crops not previously handledby cooperatives. Many of the new cooperatives proved to be highly inefficientbecause of extreme shortages of trained and experienced manpower. Theinherent weakness of the system led to high marketing costs and to severefinancial difficulties for many primary societies and unions. While thecooperative movement tended to be much stronger in areas where it was spon-taneous than in those areas where cooperative formation was the result ofdirect government action, at the same time there were also serious complaintsabout low producer prices, mismanagement and corruption among members ofthe older, established societies and unions. Another weakness was that manyof the unions became over-burdened because of the multiple functions whichthey were undertaking; in addition to crop marketing many unions becameinvolved in transport, wholesale trade, processing facilities, retail tradeand service activities such as hotels. Another problem was lack ofcoordination between the cooperatives and the crop marketing parastatals(discussed below). Most serious of all, undoubtedly, was the lack of involve-ment of many farmers in the operation and control of their own cooperatives,and a lack of democracy in cooperative administration. Many farmers tendedto regard the union as an arm of the Government rather than as an institutionbelonging to its members.

51. As a result of these problems, the Government in 1966 appointeda committee of inquiry to examine the workings of the cooperative system.In its report 1/ the committee recommended that more Government assistancewas required to strengthen the cooperatives, but that the movement shouldremain independent and self-reliant. While the Government accepted some ofthe committee's recommendations, subsequent policy decisions resulted ina significant increase in government control over cooperative operations.

1/ The United Republic of Tanzania, Retort of the Presidential SpecialCommittee of Enquirv into Coooerative Movement and Marketing Boards,Dar-es-Salaam, 1966.

I

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In 1967 some 16 unicns, incorporating hundreds of the newer societies.were taken over directly by the Government. The cooperative committeeswere dismissed and governmental personnel were placed in managementpositions. The formal powers of the Commissioner for Cooperative Develop-ment were increased through a new Cooperative Societies Act in 1968,and a more careful inspection system was instituted for those eDoperativesnot operating under Government receivership. Also in this same periodthe Government intervened to reorganize the giant Victoria Federation ofCooperative Unions, one of the oldest unions in the country, but onewhich had suffered from major problems of inefficiency and corruption andwhich had been the subject of a special investigation in 1962. As aresult of these actions the cooperative unions and also, to a lesser extent,the primary societies became in many ways comparable to parastatal organiza-tions. While the Government's direct intervention and more intensivetraining programs could help to alleviate the most critical manpower problems,the increasing degree of government control would obviously reinforce themembers' belief that the organizations were not really their own. Thus wecan see clearly an example of a dilemma which the Tanzanian Government hasfaced many times - the conflict between its objective of increased partici-pation by the masses of the population and the desire to create effectivedevelopmental institutions.

52. Under closer Government control the cooperative movement continuedto expand, to over 2,500 societies by 1974. Hovever, in the post-Arusha -Declaration period and with the growth of the ujamaa village movementthere began to arise a tension between ujamaa and the cooperative movement.The cooperatives still represented predominantly the wealthier progressivefarmers and as such they conflicted with the egalitarian principles ofujamaa. The members of cooperatives were individual farmers who werecultivating their land on capitalist lines, using hired labor in manyinstances, rather than villagers farming collectively. The cooperativemembers benefited unequally from the cooperatives depending on how muchthey marketed, instead of equally through sharing on an ujamaa basis.As President Nyerere highlighted the issue in his Socialism and RuralDevelopment, "although marketing cooperatives are socialist in the sensethat they represent the joint activities of the producers, they could besocialist organizations serving capitalism if the basic organization ofagricultural production is capitalist." Under the ujamaa village programthe Government began the promotion of multi-purpose cooperative societies.The objective was that all villagers would be members of the society,not just the commercial or progressive farmers. The Second Five-Year Planmade it explicit that the existing cooperatives would have to be "revolu-tionized," acquiring a production orientation through development ofcooperative farming units among. their members and fostering more democraticparticipation of the membership in all cooperative activities. VicePresident Kawawa declared in mid-1971, "the time has come for the country'scooperative societies to involve the peasants in cooperative productioninstead of merely concentrating on the collection and sale of agricultural

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products." This issue broke into the open numerous times during theearly 1970's. While the cooperative unions and the CUT paid lipservice to the ujamaa goal, little concrete action was observed; someujamaa villagers were becoming primary cooperative societies, but few,if any, of the already existing cooperatives were forming ujamaavillages.

53. - As the Government moved more forcefully to convert Tanzaniato a village society, culminating in the mass villagization campaignof late 1974, the inconsistency between the ujamaa ideal and the existingcooperative structure became all the more unbridgeable. Further legalclarification of the status of the new villages and the village multi-purpose cooperative societies was provided in the Villages Act of 1975. 1/Finally, in May 1976, the Government announced that all primary coopera-tive societies would be abolished and their crop marketing functions takenover by the villages. Further, all cooperative unions were dissolved andtheir functions were transferred to national, regional and districtinstitutions such as the District Development r:_porations, RegionalTrading Companies, and the parastatal crop authorities. All crop marketingfunctions were assumed by the various crop parastatals which now purchasecrops directly from the villages (see the following section for details).

54. . In summary, we can see in the history of the cooperative movementcertain clear trends which have marked the entire relationship of theGovernment with the agricultural sector. There has been a marked increaseover time in the degree of governmental intervention in the cooperativesystem, converting what was at the outset a spontaneous, voluntary move-ment into one whose structure and functioning is determined by the Govern-ment. In this way there has arisen a conflict between the goals of partici-pation and self-help, on the one hand, and egalitarianism on the other.The Government has sought an institutional framework which could eliminatethis conflict, and in so doing it has demonstrated a willingness to experi-ment continuously with institutions, even to the point of abolishingcompletely a complex of organizations which it had carefully nurturedonly a decade before. As for the future role and effectiveness of coopera-tives in Tanzania, it is too early to render a judgement; the system isstill in transition.

(ii) Parastatal Crop Authorities

55. The organization of agricultural marketing has undergone continuouschanges since Independence; one aspect of this has already been indicatedin the above discussion of the cooperative movement. These institutionalchanges, whose objective has been to create single-channel marketing systemsfor all important cash and food crops, have clearly increased the degree ofgovernmental control over marketing. The central agent in the new systemhas been the parastatal marketing board or agency which is charged withhandling the marketing of one or more crops. Their initial purpose was

1/ The complete title is "The Villages and Ujamaa Villages (Registration,Designation and Administration) Act," No. 21 of 1975.

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usually to function as a countervailing force to private middlemen, butafter their establishment they were soon given monopoly control overmajor crops. The number of controlled commodities has steadilv increased;at present there are parastatal boards, authorities or corporationscovering coffee, cotton, sisal, tea, tobacco, cashews, pyrechrum, sugar,and livestock and dairy products, as well as a General Agricultural ProductsExport Corporation (GAPEX) and the National Milling Corporation (NMC) whichhandles major food grains. Marketing functions are also performed byparastatal organizations other than those already mentioned. The NationalAgricultural and Food Corporation (NAFCO) is the holding company for a numberof state farms; it generally sells its output directly to other marketingparastatals. The Regional Trading Corporations (successors to the formerState Trading Corporations) function as wholesale distributors of farminputs and consumer goods in some areas. The National Road Haulage Companyprovides transport services.

56. Many of these marketing parastatals have been established quiterecently or have taken on the functions of predecessor organizations. Forexample, the Sugar Development Corporation assumed the functions of theformer National Sugar Board in 1974 and also took over responsibility forthe management of the publicly owned sugar estates from XACFO. The NMCabsorbed many of the functions of the National Agricultural Products Board(NAPB) when the latter was abolished in 1973. GAPEX and the cashewauthority were newly established in 1973. The structure, organization andoperations of the various marketing parastatals vary tremendously. However,the general tendency has been to expand their role from purely marketinginto production, input distribution, extension services, financing, licensingand grading and processing of the primary product. Some parastatals suchas the tea and tobacco authorities are attempting to foster smallholderproduction while others, such as the sugar authority, are heavily involvedwith estate production. For many of the parastatals the tendency to increasetheir regulatory and operational activities has placed a severe strain onmanpower resources as their responsibilities have become more and morenumerous and complex.

57. More recently in May 1966, as indicated in the previous section,there have been significant changes in the responsibilities of the marketingparastatals. Their role is now both an area responsibility as well as acrop-specific one. Each district has a designated crop authority which isto purchase all scheduled crops (those crops which by law have to be purchasedby the appropriate crop authority) that are offered for sale by the villagers.The responsibility is usually given to the crop authority which handles thedistrict's most important crop. This parastatal is then responsible forpurchasing all marketed output of all kinds from the district. The responsibleauthority acts as the purchasing agent for the other crop authorities whoseparticular products are also included in the district's output mix. (However,when there is more than one dominant crop in a district then another cropauthority may be designated to purchase that particular croD.) The buyingparastatal is also responsible for ensuring that each village has adequatemarketing infrastructure to be able to handle its outputs efficiently.

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58. There have been many problems asscciated with the developmentof this system of agricultural parastatals. The svstem has been charac-terized by a lack of competition, high marketing costs, poor service anddelayed payments to farmers or cooperatives. Many of the parastatalshave proven to be highly inefficient and have been characterized by over-manning and excessive overhead costs. Operational efficiency has probablynot improved significantly over the past decade and may have declined forcertain parastatals; for some, cost increases have been out of proportionto increases in the volume of operations. These inefficiencies havetended to raise final consumer prices and to keep controlled producer priceslow, thereby imposing a heavy burden on farmers. These inefflcienciesappear to have been compounded by the changes introduced in 1976. Whilecertain of the parastatals have performed their expanded role creditably,there is evidence of crops not being purchased and transported at theright time, of delayed payments and of further increases in marketingcosts.

(iii) Research and Extension

59. Agricultural research is organized in twelve major centers, eachof which is responsible for several crops. Food grain research is carriedout at eight of these centers and at the Faculty of Agriculture atMorogoro. Research is also carried out by various of the crop authorities(parastatals), such as the tobacco authority research station at Tabora.The Bureau of Resource Assessment and Land Use Planning (BRALUP) and theEconomic Research Bureau (ERB) of the University of Dar es Salaam alsoundertake research related to agriculture.

60. The agricultural extension services include some 3,000 AssistantField Workers (AFO's) who have received formal training and approximately3,500 Field Assistants (FA's), many of whom have received no formal training.These agents are expected to handle an estimated 7,00" villages with some2-1/4 million farm families, a ratio of about 350 farmers per extensionworker. Eovever, almost half of these extension agents are assigned toresearch stations and training institutes, so the actual ratio is closer to700 farmers per field agent. Furthermore, there is a wide imbalance in theregional distribution of agents. Extension staff working at the villagelevel are divided almost equally between those employed by the regions (54%)and those employed by the crop parastatals (46%); thus there are two separateand distinct organizational structures. In addition there is no clearlydefined procedure for supervision and evaluation of field staff. The chainof command within the region allows only an advisory role to the regional anddistrict agricultural development officers.

61. While the research efforts have produced some positive results,such as maize hybrids, the research program as a whole has serious defdcts.The Ministry of Agriculture has thus far not been successful in definingresearch priorities and guiding the research program effectively. Despite

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some commendable efforts by BRALLP, land use planning has received littleattention. The vital link between research and extension has been extremelyweak; understanding of existing farming systems, practices and problemsis limited, local testing in infrequent, and reporting of research findingsis inadequate.

62. Many studies have shown that the impact of the extension sevviceson production is minimal. 1/ The extension service suffers from two basicweaknesses: first, the research base is so weak that the field agent haslittle to impart to the farmer, and, second, the training of the field agentsis grossly inadequate. The Government is fully aware of these deficienciesand major reorganization of the extension service is currently underdiscussion in Tanzania.

(iv) Credit

63. The history of agricultural credit in Tanzania has been markedby successive changes in Government policies toward the agricultural sectorand by chronic difficulties in collecting credit repayments from borrowers.The first agricultural credit agency was the Land Bank of Tanganyika,established in 1947, which provided credit almost exclusively to large-scaleexpatriate farmers, using land as security. At Independence almost 10O%of commercial bank agricultural credit and over 90% of Land Bank loansoutstanding were to expatriate farmers. Credit to African farmers wasminimal and was available only through a series of small funds which werebadly organized, inadequately financed and poorly staffed. This situationwas quickly modified following Independence, however. The Land Bank wasreplaced in 1961, and its assets and liabilities were absorbed by theAgricultural Credit Agency (ACA) whose purpose was to make credit availableto African farmers. This new agency did accomplish its task, but it lentprimarily to the larger commercial farmers rather than smallholders.Furthermore, it quickly ran into problems; the absence of adequate creditadministration and supervision, combined with the belief among manyfarmers that loans were being granted by the Government as a post-Indepen-dence gift, made credit recovery virtually impossible and bankrupt.y ofthe ACA followed.

64. The ACA was succeeded in 1964 by the National Development CreditAgency (NDCA). By this time the cooperative movement had become the focalpoint of the Government's agricultural policy and this agency was estab-lished to lend to cooperatives rather than to individual farmers. However,credit administration remained weak and major problems arose from the rapidexpansion of the cooperative movement, and of the volume of credit whichthe cooperatives were handling, with very limited manpower resources.Collections from the cooperative societies proved much more difficult than-had been anticipated; by the time the NDCA was disbanded in 1971 its

1/ A careful study made in Western Tanzania concluded that "the data failedto show any measurable positive influence on contact with the agriculturalfield assistant on cotton husbandry standards." Robert H. Hull, "AnAssessment of Agricultural Extension in Sukumaland, Western Tanzania,"Economic Research Bureau Paper 71.7, University of Dar es Salaam, 1971, p. 13.

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arrears amounted to 40% of its loan portfolio. Also, because the cooperativeswere almost exclusively markecing organizations for the more commercial andprogressive farmers, the NDCA's lending to them tended to strengthen theposition of the better-off members of the rural society. For example, in1970, 70% of all YDCA loans outstanding were concentrated in the nine richestregions, *while only 11°'. went to the six poorest regions.

65. The NDCA was succeeded by the Tanzania Rural Development Bank(TRDB) in 1971, at the time when the entire structure of credit institutionswas reorganized. The establishment of TRDB coincided with the accelerationof the ujamaa ';illage program and one of the major functions of the newinstitution hias been to make credit available to ulamaa villages. During1976/77, 43% oi TRDB lending went to registered villages and 20% toparastatals, with the remainder split between cooperative societies, producerassociations and District Development Corporations. Thus far TRBD's creditrecovery record is better than its predecessor institutions and there isapparent recognition of the need to maintain high standards of credit recovery.

(v) Input Supplv

66. The input supply system in Tanzania, covering such modern inpucsas fertilizers, insecticides and improved seeds, has involved a wide varietyof institutions, including among others the cooperatives, NDCA, the TanzaniaRural Development Bank, the Tanganyika Farmers Association, the former StateTrading Corporation, regional and district authorities, the parastatal cropauthorities, input producing firms such as the Tanzania Seed Company andthe Tanzania Fertilizer Company, and private firms. The system, or moreaccurately systems, has been in a state of almost continuous change as theGovernment has attempted to increase the availability of modern inputs andthe efficiency of their distribution. The one clear trend in this area,as in others already discussed, has been a continuing transition from aprivate/cooperative distribution system to one which is state-controlled.However, there are still many serious problems affecting the cost andavailability of inputs which are far from resolution. It is therefore quitelikely that further modifications to the system will occur. At the presenttime inputs can be obtained fairly easily in the more developed and commer-cialized rural areas such as Arusha, Iringa, Kilimanjaro, Mbeya and Mwanza.Ta thies- regioub fakwers are usually iole Lu o urchadbe LhtteiL irnpuLs clirec±tlyfrom the parastatal crop authorities or the TFA or, until 1976, from thecooperative societies. Outside of these regions, however, the distributionsystem has been much less developed and farmers experience greater difficultyinoobtaining inputs.

67. Prior to 1972 all of the fertilizer used in Tanzania was imported.Annual imports grew from a level of 5,000-6,000 tons in the mid-1950's toaround 30,000 tons in the late 1960's and to 45,000 tons in 1971. Fertilizerwas used almost exclusively on commercial crops such as tea, toba>co,cotton and coffee. The principal users were the larger farmers and estates;very little fertilizer was used by smallholders except on coffee. Tanzanian

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consumption of fertilizer on a per-hectare basis was quite low andlagged behind neighboring countries such as Kenya. The principal reasonsfor low usage were the greater incidence of extensive farming in Tanzania,greater diversity of soil and climatic conditions, and the lack of a well-developed supply system and resultant high transport costs. Until 1967the internal distribution of fertilizers was handled largely by privatefirms and through the cooperatives and the TFA. However, the privatefirms were nationalized following the Arusha Declaration and their fertilizerdistribution function was assumed by the State Trading Corporation.

68. In 1972 construction was completed on the Tanzania FertilizerCompany (TCC), with a capacity of 100,000 tons, primarily of phosphaticfertilizers. Production in the first year was only 12,400 tons, but inrecent years annual production has risen to a level of 70,000-75,000 tons.However, TFC has had continuing operational difficulties and high operatingcosts which have caused the ex-factory prices of domestically producedfertilizers to be up to twice as high as the c.i.f. prices of importedsubstitutes.

69. Fertilizer consumption has continued to expand, to 55,000 tonsin 1972, 83,000 tons in 1974, and 94,000 tons in 1975. One of the principalcauses of rising consumption has been the extension of fertilizer use tomaize. The use of fertilizer on maize on a significant basis began in1973 when free fertilizer valued at Sh. 27 million was provided to farmersin newly formed villages in ten regions. The program was expanded to 13regions in 1974. The proportion of total fertilizer consumption absorbedby maize rose to 20% in 1973 and to 30% in 1974, compared with 25% fortobacco, 15% for cotton, and 12% for tea. The maize fertilizer program,the cost of which was borne by the regional authorities, suffered fromineffective management, delays in input distribution, and a weak extensioneffort. As a result much of the fertilizer was wasted. In 1975 the Govern-ment undertook a national maize project, with IDA financing, which suppliesfertilizer and other inputs to maize farmers on a subsidized rather thana free basis.

70. The fertilizer distribution system has experienced continuingmodifications. Initially the TEC sold its output to three princinaldistributing agencies; the cooperatives, the TFA, and the State TradingCorporation (later to the Agricultural and Industrial Supplies Companywhich took on this function from STC). At the same time some of the paras-tatal crop authorities which serviced the fertilizer-using crops purchasedfertilizer for distribution in their areas of operation. The tobacco andcotton authorities operated heavily subsidized fertilizer distributionschemes (up to 75% subsidy) with the cost of the subsidy recovered from theproducers through the distribution margin. For crops other than maize,cotton, tobacco and pyrethrum (for which free distribttrion had Alsn fpPn

instituted in 1973-74) fertilizer could be made available cn credit through

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the TRDB but there was no subsidy element involved. A change wasintroduced in 1975 when the parastatal crop authorities were also assignedresponsibility for distributing fertilizer to the regions. Then, in May1976, at the time of the reorganization of the marketing system, theGovernment announced that henceforth all fertilizer would be supplied tothe regions by the crop authorities at a uniform subsidy of 50%. In fact,this meant chat fertilizers would be sold to farmers at half of the 1975TFC selling price; however, becau.. world market prices for fertilizersdeclined in 1976 the subsidy element was less than 50% on the basis of c.i.f.prices. The subsidy, estimated at Sh. 130 million for 1976/77, was to befinanced roughly one half by the Treasury and one half by four parastatalcrop authorities - the tea, tobacco and cotton authorities and the sugarcorporation. However, it was maintained by these authorities that absorptionof this subsidy would constrain their ability to offer producer priceincreases in the future. Since TFC selling prices are above import parity,this means, in effect, that farmers and/or parastatals are subsidizingTFC's inefficiency.

71. The only other significant commercial input in Tanzanian agricultureis improved seed and this is still purchased by only a small number offarmers. Tanzania has suffered from a shortage of improved seed for manyyears and the vast majority of cultivators have provided their own seed.Responsibility for the development of the seed industry rests with the CropDevelopment Division of the Ministry of Agriculture. However, until quiterecently there had been no organized seed industry or distributive system.The situation has begun to improve with the initiation of a USAID-financedseed multiplication project in 1970, the formation of the Tanzania SeedCompany in 1972, and the passage in 1976 of a law establishing standards forseed inspection and certification. Nevertheless, there are still manyconstraints inhibiting the expansion of production and sales of improvedseed, including inadequate research on improved varieties, staffing shortages,and the inadequacies of the distribution system.

72. In this section we have briefly examined the experience whichTanzania has had in developing a system for delivering modern inputs tofarmers. It is clear that this system is still in an early stage of develop-ment but it is also obvious that, particularly for fertilizer, there have beenrapid and continuing changes in the institutional framework. With thereorganization of the rural economy in villages, and the accompanying shiftfrom extensive to intensive cultivation, the importance of modern inputs hasincreased tremendously. It is vitally important, therefore, that an effectivedistribution system be developed quickly.

(vi) Pricing Policy

73. Control of producer and wholesale prices of major crops is animportant agricultural policy tool in Tanzania which is being applied on anincreasing scale. Almost all of the principal export crops and major foodgrains are on the scheduled (price controlled) list, although such domestically

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consumed food products as banana.s, plantains, potatoes, sweet pota*toes,eggs, milk (outside schemes) and fish are sold at free-market prices.Producer prices for coffee and sisal are not fixed; for coffee the producerreceives the realized export price less marketing costs, export tax andlevies. Meat prices are set by decentralized regional price commissions.Responsibility for making pricing recommendations rests with the Ministryof Agriculture and final decisions on producer prices are taken by theEconomic Comm¢ttee of the Cabinet. There is also an Agricultural ProductsPrice Coordinating Committee comprising representatives of variousministries and parastatals which meets annually to deliberate on pricesrecommeaded by the Ministry of Agriculture.

74. There has been no comprehensive policy statement on agriculturalpricing methods and objectives; however, a recent official publicationincludes the following commentary on the subject:

"The broad objective of the Tanzania Government'sagricultural price policy is to maintain the momentum ofexpanding food crop production, but at the same time givegreater emphasis to the expansion of export crops byoffering farmers remunerative fixed producer prices to covercosts of production and by providing assured markets...There is need for a price policy which aims at steadilyimproving the earnings potential of the peasant producer;this is an essential prerequisite to the expansion ofagricultural production, which in turn has to be achievedto support national economic development." 1/

The above quotation stresses the important incentive role of producer prices,and the Government has, over the past three years, been highly aware of theneed for adequate price incentives. Ho-wever, prior to 1974 there was formany years a desire to play down the role of prices. The Government's strategyemphasized the creation of institutions appropriate for broad-based, long-term development rather than the use of price incentives in an effort toextract more immediate gains in output. The Government viewed the latterstrategy as one which would bring disproportionate rewards to commercial,progressive farmers and thereby would increase the skewness in the distributionof rural incomes. Another motivation was to prevent rising urban food costs.Thus for several years most producer prices were held fixed despite increasesin input costs and in other prices in the econcmy. This can be seen clearlyin the table below.

Table 6

Producer Prices for Selected Agricultural Crops by Marketing Year(Shill-ings pe-r kilogram)

1969/70 ;970/71 1971(72 1972(73 1973/74 1974/75 1975/76 1976177 1977/78

'!aIze 0.28 0.26 0.24 0.26 0.33 0.50 0.75 0.8s 0.85

Wheat 0.57 0.57 0.57 0.57 0.57 0.77 1.00 1.20 1.25

Rice (paddy) 0.52 0.58 0.52 0.56 0.57 0.65 1.00 1.00 1.20

Corten AR grade 1.10 1.10 1.10 1.13 1.13 1.50 2.00 2.00 2.30

Cotton 31 grade 0.55 0.55 0.55 0.60 0.60 0.65 1.00 1.00 1.15

It United Republic of Tanzania, National Agricultural Develonment ProgramPhase I, Project Proposal, January 1977, Vol. 1, Azntec: i, pp. 7-8.

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75. Since 1973, however, the Government has shown increasingpragmatism in the application of producer price policy, in respcnse tothe stagnation of marketed product'on followed by the drastic declinesin output and marketings in the drought crisis. In an effort tcrestore producer incentives the Government announced substantial increasesin producer prices in May and November 1974 (127% for maize, 75%. fcrwhatt and 35% for paddy). At the same time the process of annual reviewand decision-making on producer pricing was institutionalized in the formof an annual agricultural price review exercise carried out by the Ministryof Agriculture's Marketing Development Bureau. This annual review hasfocussed on both the level and structure of producer prices and on measure-ment of the returns to farming at prevailing price levels. The objectiveappears to be to set producer prices as close as possible to anticipatedexport or import parities. Further price increases were announced inSeptember 1975 for the 1975/76 growing season and again in October andDecember 1976 for the 1976/77 season. It is difficult to gauge the effectwhich these recent producer price increases have had on agricultural outputand incomes, since their influence to date has been swamped by the effectsof the drought and the massive villagization campaign. In addition, therecent changes in the marketing system have compounded the uncertaintiesfacing farmers who are surplus producers and therefore may have vitiatedsome of the positive incentive effects of producer price increases.

76. One of the most important recent developments in pricing policyhas been the Government's effort to introduce uniform or "pan-territorial"producer and consumer prices. The objective of uniform producer pricesis to equalize economic opportunities thit would otherwise be unequal due todiffering transport costs and thereby to promote the development of thepoorer, more remote regions. Uniform producer prices are now set for maize,paddy, wheat, sorghum, cotton, cashews, tobacco, pyrethrum, oilseeds, sugar,cassava and beans. The uniform pricing system is also applied to mostfarm inputs. From an economic point of view uniform producer pricingthroughout a large, diversified country like Tanzania is a controversialsubject. Clearly there are trade-offs between producer price uniformityand the overall efficiency of agricultural production. The main advantagesof uniform producer pricing are farmer protection, equal opportunity andthe promotion of commercialization of agriculture and thus economic develop-ment in remote areas. The main disadvantage is that uniform pricing islikely to lead to a sub-optimal allocation of production factors and thusto higher production costs and lower aggregate production. The effects ofthis distortion may not be very great in the short run because of institu-tional constraints, slow farmer response, and low factor mobility. However,the long-term effects may be significant. The misallocation will be greaterthe more successful uniform pricing is in stimulating commercial agriculturalproduction in areas that would otherwise be unable to enter the market forthe crops concerned. The system may thus create a need ultimately forGovernment controls over production. Taking all aspects into account, theeconomic cost of uniform pricing is likely to be severe in Tanzania if thesystem is maintained for a long period.

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(vii) Summary

77. The Tanzanian Government has, over the years since lndeDendence,introduced a continuous series of far-reaching changes in the organizationof the rural sector and in the institutional framewor!. of the supportingservices for agricultural development, but has, until recently, given littleattention to the role of market prices. It is evident that the Governmentis still striving to develop a system which will provide both efficiency andequity. Certain of these institutional changes have evidenced a lack ofcareful planning. The pace of change has, in some areas, been too rapid;there has been insufficient time for the sector to adapt to major changesbefore further modifications are introduced. This would seem to apply inthe case of the marketing system and to input distribution (fertilizer).The Government has relied on institutional and administrative changes todeal with problems which are basically of an incentive nature. In addition,changes in the institutional framework will not compensate for a basicshortage of skilled manpower and managers. Manpower has been stretched thinby the proliferation of parastacal enterprises. Furthermore, some recentchanges in the system appear to have introduced greater complexity ratherthan simplification and thus have diluted scarce manpower all the more.

V. KEY ISSUES IN RURAL DEVELOPMENT

78. The previous sections of this Annex have identified a number ofissues which have arisen in the rural economy of Tanzania in the periodsince Independence. Here we organize these issues which are likely to beparticularly germane to the next decade of rural development policy in amore coherent fashion in several broad groups, including (a) Villagization;(b) Governmental organization; and (c) Incentives.

A. Villagization

79. -The most pressing issue facing rural Tanzania in the decade aheadis how to assure the viability of the village economy. 1/ By bringing aboutmass villagization in a very short period of time, the Government hasdeliberately created a situation in which new inputs and cultivation practicesmust be adopted or there could be a serious long-term decline in production.Villagization represents a conscious effort to accelerate the transitionfrom traditional, low-productivity, shifting modes of cultivation to stable,continuous cultivation practices requiring modern inputs to sustain intensiveland-use. It is a high-risk strategy fraught with the dangers of soil-erosion and over-grazing. Success depends on the adoption, by millions ofpeasants, of the present limited "shelf" of technical improvements, and onthe development of a pipeline of new technical packages for the future.At present, policymakers seem to be pinning their hopes on much greater

1/ It is not villagization itself which we are questioning,but rather how to make it work.

_~

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use of fertilizers and, to a lesser extent, improved seeds. But iffertilizers are to be economically viable there must be some improvedcultivation practices accompanying their introduction. Rotationalpractices have to be developed or reforned t: cptei-ze fertilizer use. 1/There is a dearth of reliable information cr soils, yields. farming systemsand on appropriateness of alternative fertilizers.

80. If the major problem confronting villagization _s how to ensureadoption of moderu inputs and to spur the improvements in cultivationpractices necessary to reap the yields from modern packages, the issuearises as to whether the application of modern inputs should precedeimprovements in cultivation and husbandry or the other way around. Mostof the available evidence suggests that the Tanzanian strategy of focussingfirst on modern inputs is the appropriate one. 2/ Improved practices withoutmodern inputs can certainly lead to improved yields but the anticipatedreturns are not generally perceived to be sufficient to spur innovation bypeasants, who, being on the margin of subsistence, are understandablyaverse to risk-taking. Rapid improvement of yie'lds requires conspicuousinnovations, typically associated with application of modern inputs likefertilizers and improved seeds. However, even if the strategy is appropriate,many of the tactics remain to be worked out. The goal is to find inputpackages which will yield significant improvements in yields and which areaffordable by peasant farmers, and then to supply these packages to thefarmers in a timely fashion. All this depends critically on improving thequality of Government services in research, extension and marketing(see below).

81. Village size is also an important issue. We have noted the tendencyfor average size of villages to increase. In some cases diseconomies ofscale have clearly emerged in the form of the long distances that peasantshave to traverse to outlying fields and grazing areas. With village memberseach desiring a share of good land adjaceTt to the village, the risk ofgreater fragmentation of holdings has increased while at the same time theoutlying fields may get inadequate attention. 3/ The solutions to theseproblems vary. In some areas villages should be broken into smaller unitswhile others may require consolidation. In certain areas the concept ofsatellite villages circling a central village unit housing the major infras-tructure and social services may be the appropriate solution. In every casethe issues of optimal village size and layout depend on a multiplicity offactors including soil fertility, climate, type of crops, amount of livestockand the scale of infrastructure. Solutions will thus vary across regions,districts and agronomic zones.

1/ The related issue of organizing the production of fodder for villagelivestock needs urgent attention if the risks of over-grazing are tobe minimized.

2/ See T.W. Schultz, Transforming Traditional Agriculture, Yale UniversityPress, 1964. See also R. Ruthenburg (ed.), Smallholder Farming and Small-holder Development in Tanzania, IFO, Munich, 1968, who notes (p. 346)"Apparently the application of modern techniques has to come first and itseems to draw a slow improvement in general husbandry in its wake."

3/ It should be recalled that the traditional scattered settlement patternemerged in many areas as a way of minimizing the risks of production lossesfrom natural hazards such as animal, insect and bird attacks.

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82. The need to vary solutions to suit local conditions is notconfined to issues of village size and layout. It is equally importantfor the development of fertilizer-seed-pesticide packages, the 'dentifica-tion of the best cropping patterns, and the adoption of appropriatefarm technologies. Thus, for example, the drier regions need to reformcropping patterns to embrace drought-resistant crops like sorghum and millets.Similarly there is no country-wide, "cook-book" guide to the adoption orcultivation technologies based on oxen or tractors, but it is likely thatmost areas of Tanzania are unsuited for tractor cultivation at foreseeablerates of tractor use. The prospect for relieving seasonal labor constraintsthrough oxen cultivation are much better, but they also vary across thedifferent agronomic zones. The need for diversity in solutions basicallyreflects the underlying diversity in agronomic conditions. It deservesparticular emphasis however as a necessary counterpoint to the common tendencyto view villagization as a uniform approach to the entire rural economy.Besides, the accent on local conditions and local solutions is likely toencourage greater local participation and greater mobilization of localresources. Thus far, the implementation of villagization and the subsequentoperation of agricultural services have been spear-headed by the Governmentand Party bureaucracies. The administration structures have been usedmore for top-down directions and less for servicing local initiatives andneeds. The balance needs to be restored in favor of the latter. Thefostering of local initiatives should also facilitate self-help efforts toharness seasonally idle labor time to the creation of productive infra-structure assets. It would also ease the way for village contributiinsfor financing the operation and maintenance of existing structures likeschools, rural roads, watex supply facilities and rural health units. Ingeneral, one of the principal benefits of villagization is the scope forincreased savings and investment in the rural economy. It is importantthat the Government fosters local initiatives towards this end.

B. Governmental Organization

83. We have repeatedly stressed the costs of Tanzania's proloagedhistory of institutional chage in the ri:ral economy. In general, most ofthese changes have been undertaken without a sufficiently clear picture ofwhat kinds of institutions were desired as end products and how they shouldperform. One consequence has been rapidly changing signals to managers ofthe institutions involved. The rapidity of change has also diluted theGovernment's capacity to assess the strengths and weaknesses of existinginstitutions at any given poiat of time. It has also tended to stretchavailable managerial resources in rela,.ion to the responsibilities which theevolving portfolio of institutions has been given. We believe that the timehas come to slow the process of change and to consolidate the existing frame-work of institutions in order to allow the hard-pressed cadre of managerstime to gain experience and competence in a more stable environment.

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84. A period of stability in the institutional framework shouldalso facilitate the ironing out of certain policy and institutionaltensions which have generated considerable debate. Tnese include issuessuch as delimitation of responsibilities between national and regionalauthorities, crop-specific versus region-wide programs, emphasis ondevelopment of poorer regions versus concentration on areas of higherpotential, and agro-processing for export versus the basic industry strategy.Much of the debate around these issues dissipates when the arena ofdiscussion comes down to specific project contexts. Perhaps the mostreal and pervasive issue is the one pertaining to relative roles ofnational and regional authorities in the planning and implementation ofagricultural and rural development policies. And even here some of thedebate is defused by the general recognition of the need for much greatercoordination among the various implementing agencies. The present thinkingin Tanzania appears to favor greater devolution of decision-makingauthority from the regional centers down to the districts. This isconsonant with the desire to increase the scope for grassroots participa-tion and the need to adapt solutions to villagization problems to suitlocal conditions. The danger that has to be guarded against in any suchthrust in favor of further decentralization is the extension of bureaucraticprocedures down to the grassroots level. While the devolution of decisiQn-making is to be encouraged, further growth in government bureaucraciesneeds to be contained. Nor need any further decentralization of respon-sibilities within the regional-district nexus be inconsistent withconsolidation and clearer articulation of functions and responsibilitiesat the national level. The supporting roles of national institutionsare crucial.

85. Perhaps even tore fundamental than the questions regardingappropriate ascription of functions and responsibilities to differentGovernment agencies dealing with agriculture and rural development is thevital need to improve the internal operating efficiency of all such agencies.The poor quality of the supporting services supplied to agriculture byGovernment in the fields of extension, input supply, transport and marketinghas been a major constraint on agricultural development. Some of theproblems are associated with general issues of parastatal efficiency (particularlyfor agricultural marketing and transport), which are dealt with in the MainReport. But it is clear that even in areas like research and extension, wherethe Government administration bears the direct responsibtlity, the scope forimproved efficiency is enormous.

C. Incentives

86. The Government has moved strongly over the past three years to-raise agricultural producer prices. But there has been less improvement incost/price relationships for farmers because of increases in input costs.This is particularly true for fertilizer. There is a need to keep cost!

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price relationships under continuing review. There is also a need formuch tighter controls on the costs of parastatal crop authorities.High marketing and processing costs have operated as a constraint onproducer prices, particularly for export crops but also for domesticfood crops. This is so because Tanzania is a price-taker in internationalmarkets for her exports (with the exception of sisal). The shilling priceof exports is determined by world market forces. The price that can bepaid to producers is then determined by deducting marketing and processingcosts from this f.o.b. price. The Government has attempted to hold downthese marketing and processing costs, most recently by abolishing thecooperative societies and cooperative unions, but this has not beensufficient to prevent a very rapid escalation in these costs. If greaterefficiency cannot be achieved in these public enterprises, then only twochoices are available if the Government wants to raise producer prices:either subsidize loss making parastatals or adjust the exchange rate toincrease the shilling equivalent of a given fixed world price.

87. Along with stressing the important role played by adequate producerprices, we must also point out that their incentive effects have beendiluted by shortages and high prices of manufactured consumer goods (suchas matckhes, beverages, cigarettes, soap, kerosene, bicycles, and textiles)in up-country rural areas. The problems arise from the inefficiency ofmanufacturing and distributing parastatals operating in an environmentof generalized excess demand. The solutions to these problems also restoutside the rural economy and have been dealt with elsewhere in this report.

D. Other Issues

88. The preceding discussion has stressed the importance of economicand social policy for agricultural production. Appropriate policies withrespect to producer prices, choice of technology and the balance betweendirectly productive and social investment are indeed critical to the long-term success of agricultural growth, but these should not be stressed tothe exclusion of more technically-oriented issues. Appropriate policyis a necessary, but not a sufficient condition, for agricultural growth.It is also necessary to develop new technical packages which will increaseproduction and to disseminate information about improved methods to millionsof farmers. Better knowledge as well as incentives will be needed.

89. Adequate knowledge about improved production methods can only comefrom devoting more resources to research. Since Tanzania has hundreds ofagro-economic zones, this necessarily means that much of the research effortmust be adaptive research using field trials in numerous locations. Productionincreases in many parts of the country, especially dry areas, are limited bythe absence of proven technical packages. The present varieties of maizeseed, for example, do not respond to fertilizer in dry areas. Without some

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technological breakthrough the scope for improved yields may belimited in these areas. Research on the problems of dry zones shouldalso investigate the prospects for irrigation as well as trying toimprove yields using existing farming methods.

90. Increased agricultural production - particularly smallholder andvillage production - will also require an improved extension service todisseminate information about improved methods. The present extensionservice is hampered by uncertainty about organization and inadequate numbersof extension workers, training and transportation. These weaknesses havebeen highlighted by the failure thus far of the National Maize Projectto organize demonstration plots to show farmers in each village what changesare possible. Even where no technological breakthroughs exist, there isfrequently a large gap between local best practices and average farmingmethods which a better extension service could help to close.

E. Prospects for the Future

91. At this stage we can only make an interim assessment of problemsand prospects for Tan-anian agriculture. The Government has adopted asocialist model for rural development which is unlike any adopted else-where. It depends on the mobilization, participation, greater effort, andhigher productivity of millions of peasant households, most of whom lackcapital and resources and who have received very limited governmentservices in the past. The Government is trying to organize these peasantsand to induce them to adopt new methods of production but is severelyconstrained by its owu manpower shortages. Nevertheless, despite pastfailures and disappointments, smallholder farming in Tanzania has thepotential to grow at a satisfactory rate. But to realize that potentialwill require serious attention to the issues which have been raised in thisAnnex and in the rest of the Basic Report.

STATISTICAL APPENDIX

Table 12 CROSS D(HESTIC PRODUCT IN ACRICUI.TURE, 1964-1975(Shs, million at 1966 prtce`)

Isrovislonalt1904 1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975

Subsistence production 1854 1872 2051 2123 2192 2137 2179 2223 2401 2445 2430 2677

Monetary production 3765 3901 4463 4654 4936 5122 5501 5778 6138 6355 6590 6757

Total CDP in AAriculture 5619 5773 6514 6777 7128 7259 7680 8001 8539 8800 9020 9434

gural population ('000) 10601 10855 11116 11383 11656 1193b 12222 12516 12816 13124 13439 13761

Agricultural GDP perper capita (Sha.) 530 532 586 595 612 608 628 639 666 611 611 686

source: Ministry of Finance and Planning, The Economic Survey 1976/77 and Tan2ania 8asac Economic Report, Annex 111, .July 1977

Table 2: FIXED CAPITAL FORMATiON IN AGRICULTURE, 1966-1973(Shs. million)

1966 1967 1968 1969 1970 1971 1972 1973

Fixed Capital Formatton in Agriculture (current prices) 111 122 114 109 117 119 142 1601/

Fixed Capital Formation in Agriculture (1966 prices) 111 116 III 103 103 99 1(3 M07

Agricultural Fixed Capital Formation as L ofTotal Fixed Capital Formation (current prices) 11.3 9.9 8.8 9.0 6.2 5.0 6.0 5.9

Agricultural Fixed Capital Formation as % ofGross Domestic Product at factor cost (current prices) 1.7 1.8 1.6 1.5 1.4 1.3 1.4 1.4

1/ Deflated by Implicit deflator for all investment goods.

Source: Ministry of Finance and Planning, The Economic Surveys, and data provided by the Bureau of StatUstica.

Table 3: MARKETED PRODUCTION OF SELECTED CROPS. 1964-1915(Tons)

1964 1965 1966 1967 1968 1969 1970 1971 1972 1973 1914 197S

Staol 233540 217588 225084 220093 196892 209303 202180 181104 156849 155400 143400 12u500

Coffee 33837 34185 51939 40176 51545 46140 49669 45834 51400 54900 44700 62400

Tea 4812 5682 6800 7158 7923 8777 8492 10457 12706 12700 13000 13700

Tubs%.co: Flue-cured 1765 4003 3576 4592 5103 8137 8923 8816 10580 10800 15300 12000

Fire-cured 332 1089 1527 3161 2159 3527 2143 3133 3601 2200 2900 2200

Lint Cotton 53206 67034 78814 70830 51348 69403 76445 65338 76900 65100 71500 59200

Sugar 61440 67389 71020 71751 82429 92043 87254 95787 88483 10510i) 96200 103200

FyreLhrum 2300 3665 4423 6692 4799 3758 2310 3652 4271 35tl0 3300 4600

Ceshewnuts 74060 75985 83277 84317 117585 113482 111167 121510 125600 145l00 121700 80300

Source. Ministry of Finance end Planning, The Economic Surveya and date provided by the Bureau of Statistics.

Tab Ib 4: COVERNMENT PURCHASAS tO MAJOR FOOD GRA I NS(°000 Tone)

1964/65 1965/66 196616? 1967/68 968/69 1969/70 1970/71 1971/72 1972/73 1973/74 1974/75 19751/7

maize 80.4 69.6 107.8 105.1 130.2 54.0 186.4 43.0 106.4 73.8 23.9 91.1

Wlieat 30.1 29 5 28.0 33.1 27.6 21.0 43.0 56.7 46.8 27.9 14.4 24.5

Rice (paddy) n.a 20.6 37.2 29.9 44.6 4S.6 93.6 68.6 73.1 59.6 22.7 18.4

Sorghum 0.6 1.7 1.9 2.9

Millet. 0.3 2.4 2.5 2.1

1/ Sume production Is marketad outside Covernment channels. Almost all %;heat production Is purchased by the Government.host asiee production to for own consumption *nd only about helf of esles are through Government channeles. leGovernment purchases a small (& variable) proportion of other crops.

2/ No official purchases before 1972/73.

Source: Marketing Development Bureau. Ministry of Agriculture.

Table 5: VOL.UM8 AND PRICE 1'HNVDS OF MA.J)R AGIC1ULTURIAL EXPORTS OFTANZANIA (MAINLAND). 1965-1915

1965 1966 1967 1968 1969 1970 t971 1972 1973 t974 1975

Volume (liousasds ot Metric Tons)

Cotton 56.2 86.2 60.8 62.9 56.7 60.7 54.8 64.5 60.3 49.1 38.0

Coffee 28.2 50.6 44.4 49.2 49.5 44.8 35.5 54.7 60.3 41.0 54.4

Stool 213.6 198.9 204.4 189.1 171.9 217.2 160.8 153.1 113.4 93.4 101.6

Casbiewnuts (raw) 64.6 72.2 70.9 79.7 82.2 77.4 95.9 112.9 109.9 114.0 97.3

Tea 4.3 6.3 6.1 6.7 7.6 6.9 8.3 9.2 9.5 9.6 10.4

Tobacco, uwuanufactured 3.3 3.4 4.9 5.2 5.0 7.7 6.6 7.1 7.2 12.1 8.4

Unit Prices l(SS per Tonl)

Cotton 608.3 568.3 578.9 629.7 579.5 570.1 625.4 730.2 790.7 1147.5 1053.2

Coffee 852.9 832.8 747.3 754.1 726.9 975.0 895.2 980.2 1169.8 1280.8 1191.6

Sisal 187.2 165.2 137.6 117.5 130.1 115.2 116.5 132.4 278.3 694.6 401.2

Cashewluts (raw) 178.8 193.9 182.1 178.5 202.5 208.4 174.6 186.4 183.0 241.0 245.2

Tea 983.3 1002.2 991.5 938.2 889.7 856.2 824.8 818.7 812.6 1007.7 3053.2

Tobacco. sanmanufacttired 958.8 963.5 1120.0 1082.3 1083.6 1081.8 1279.1 1277.7 1339.2 1545.8 l844.5

Source: EVat African Customs and Excite Department, Annual Trade Reporta of Tnantania, s. alda a*nd Kenya. and

Ministry of Ftnance and Planntng. lit* Economic Surve's.

Table 6: SELEOlEID PRODtUCEa_R PZIS(Shtillings pbur kilogramn)

1968/69 1969/70 1970171 1971/72 1972/73 1973/74 1974/75 1975176 1916/77

Cashewnuts (standard grade) .80 .95 .95 .95 .95 .95 1.05 1.05 1.10

Cotton AR (;rade 1.06 1.10 1.10 1.10 1.13 1.13 1.5t) 2.00 2.00

Cottorn BR Grade .51 .55 .55 .55 .60 .BO .65 1.00 1I001/

Pyretirum 2.84 3.00 2.77 2.85 2.75 2.75 4.21 4.21 4.00-6.50

Tobacco Flue-cured 5.15 5.13 4.94 5.80 5.85 5.85 5.85 7.00 7.40

Tobacco Fire-cured 1.78 1.75 1.69 2.10 2.13 2.40 2.55 3.00 4.50

Maize n.a .28 .26 .24 .26 .33 .50 .75 .80

Wheat n.a .57 .57 .57 .57 .57 .77 1.00 1.20

Rice (paddy) n.a .52 .58 .52 .56 .57 .65 1..00 1.00

1/ Ibrough 1974/75 average price, NJambe. In 1976/77 four grades were Introduced with range showni.

2/ Average prices. Price for fire-cured through 1970/71 Is average price In Songea.

Sotprce: Marketing Oevelopntent Bureau and Knut Odegaard, A Study of Agrtcultural Producer Prices,.Dar es Salaam; Prime Minister's Office, 1974.