Facilitating equitable agriculture development in sub saharan africa the case of tanzania
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Facilitating Equitable Agriculture Development in Sub-Saharan Africa: The Case of Tanzania. By The Economic and Social Research Foundation (ESRF) Presented in a Workshop on Promoting Agriculture-Climate-Trade Linkages in the EAC (PACT EAC) 23 rd February 2012. Outline. Introduction:

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Facilitating Equitable Agriculture Development in Sub-Saharan Africa: The Case of Tanzania

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Facilitating equitable agriculture development in sub saharan africa the case of tanzania

Facilitating Equitable Agriculture Development in Sub-Saharan Africa: The Case of Tanzania

By

The Economic and Social Research Foundation (ESRF)

Presented in a Workshop on Promoting Agriculture-Climate-Trade Linkages in the EAC (PACT EAC)

23rd February 2012


Outline

Outline

  • Introduction:

    • Agriculture and Poverty

    • Policy Framework

    • Objectives

  • Analysis and Discussion of the Study Findings:

    • Nature and Challenges of Agriculture

    • Stakeholders’ Roles and Interactions

    • Towards Equitable Terms of Trade

    • Challenges facing the Private Sector

  • Conclusion and Recommendations


Introduction

Introduction

  • Impact of macro economic reforms adopted by TZ:

    • Have enabled the country to sustain growth of GDP at a rate of not less than 6% since 2001;

    • Integrated domestic economies with the rest of the world; and

    • Lead to increased inflow of FDIs.

      • innovations in production, processing and organization skills in mining, banking, telecommunication, hotels and other industries


Facilitating equitable agriculture development in sub saharan africa the case of tanzania

…Cont

  • Despite such an impressive economic performance over a decade, little has been registered in terms of poverty reduction and livelihoods:

    • 2007 HBS - poverty declined from 35 to 33% within a period of 5 years

    • This trend is a challenge on economic growth and poverty reduction initiatives including the TDV 2025


Facilitating equitable agriculture development in sub saharan africa the case of tanzania

…Cont

  • High GDP growth has been accompanied by:

    • increases public spending over the years with fiscal deficit peaking to almost 6.6% of the GDP

    • budgetary pressures that could bring bad impacts eg: price surge, capital flight and exchange rate misalignments

    • inflationary pressures (4.5% in 2002 to 12.1% in 2009, and 19% currently)

    • export earning instability

      • Thus, deteriorating livelihoods of most Tanzanians


Agriculture and poverty in tanzania

Agriculture and Poverty in Tanzania

  • Agriculture has remained an important sector:

    • Employment (about 80%)

    • Contribution to GDP (about 26.5%)

      • Has declined overtime due to growth in other sectors (service) and poor performance of the sector

    • Export Earnings (about 24%)

    • Supply of raw materials for domestic industries (about 65%)

    • Supply of food consumed in the country (about 95%)

    • The country has the potential to produce enough food for the entire EAC region given land suitable for food production and other advantages


Facilitating equitable agriculture development in sub saharan africa the case of tanzania

…Cont

  • But overall sector performance is dismal:

    • Food supply lags behind demand

    • The sector growth rate is low

    • The sector GDP contribution is also low

    • At 80% employment rate in agriculture is too high

  • Lack of sufficient investment in terms of putting appropriate technology, credits and removal of all forms of constraints for value addition

  • In addition, the sector is dominated by small-scale farmers who are less educated and uninformed as well as use rudimentary technology; leading to low productivity and food insecurity

  • Dominated by rain-fed agriculture

  • Higher levels of poverty compared to the urban areas


Facilitating equitable agriculture development in sub saharan africa the case of tanzania

…Cont

  • The vagaries of climate change

  • Lack the necessary credentials to access loans, lack insurance schemes to hedge against risks and face unpredictable Government policy

  • The effect of market liberalization which have made smallholder farmers vulnerable and without any form of safety net to insulate them

  • Poorly developed infrastructure to improve marketing and distribution of food


Facilitating equitable agriculture development in sub saharan africa the case of tanzania

…Cont

  • Agricultural share to GDP has been decreasing since 2000:

    • For example, between 2000 and 2009 its share to GDP has been making a gradual decline from 29% in 2000 to 25% in 2009 and 26% in 2010

  • The service sector contributes the largest share in total GDP contributing an average of 45% per annum between 2000 and 2010

  • Though marginally, the GDP share of the service sector has been rising overtime

  • Likewise, the industry sector’s share to total GDP has been rising overtime despite the fact that its share is lower than that of agriculture


Facilitating equitable agriculture development in sub saharan africa the case of tanzania

…Cont


Facilitating equitable agriculture development in sub saharan africa the case of tanzania

…Cont


Facilitating equitable agriculture development in sub saharan africa the case of tanzania

…Cont

  • Likewise, agricultural sector has persistently registered a lower growth rate compared to industry and service sectors

  • While agriculture has been growing at an average of 4% between 1998 and 2009, industry and service sectors have been growing at an average of 8.3 and 7% respectively (The average growth of GDP between 1998 and 2009 is 6.4%)

  • Thus, the main reasons why economic growth in Tanzania over the past decade has not been associated with poverty reduction especially in rural areas is that agricultural sector which support nearly 80% of the population has been growing relatively slowly compared to other major sectors

  • Growth is therefore happening in non-agricultural sectors


Facilitating equitable agriculture development in sub saharan africa the case of tanzania

…Cont


Facilitating equitable agriculture development in sub saharan africa the case of tanzania

…Cont


Policy framework

Policy Framework

  • Review of agriculture, trade and investment policies has established evidences of the linkages between them:

    • investment policy focuses on ensuring that investments are increasing in different sectors including agriculture

    • Trade policy provides a framework under which agriculture can transform in the liberalized economy through increased trade

    • But in order to attain agricultural development, there is a need of increasing both foreign and domestic investments

    • It is from this perspective; these policies are considered to be complementing each other


Facilitating equitable agriculture development in sub saharan africa the case of tanzania

…Cont

  • Tanzania is among few African countries which has been able to attract a high level of FDIs

  • But the largest share of these FDIs are directed into mining and services sectors

    • where the dominant players, especially in mining sector, are multinational companies which are highly mechanized and provide few jobs

    • Such investments are not pro-poor

  • Agriculture (where majority are making their living) does not attract FDIs


Study objectives

Study Objectives

  • To examine the relationships between the agriculture policy makers, farmers, investors and traders and their role/contribution to the policy formulation and implementation

  • To identify positive and negative elements in the policy framework that either facilitate or hamper positive interaction and equitable ToT among farmers, investors and traders


Methodology

Methodology

  • Both primary and secondary data collected:

    • Primary data was collected using an interview guide while secondary data was collected from institutions such as The Ministry of Agriculture, Food Security and Cooperative, Economic and Social Research Foundation Library, the National Website, etc.

  • Respondents were drawn from different actors engaged in agriculture:

    • The interviews focused on establishing constraints, interactions by stakeholders, power and ability to influence existing policy and how they affect equitable interaction between stakeholders

    • The survey intended to gauge whether there was an equal inclusion in policy formulation or change among actors

    • Role of associations formed by different actors was also established.

    • We were particularly interested in the lobbying and advocacy function of associations or group and their outcome.


The study findings nature and challenges of the sector

The Study Findings - Nature and Challenges of the Sector

  • Agricultural employment very high – an indication of agricultural underdevelopment

  • Growth in volume of agricultural production not consistent with food security or poverty reduction

  • Low technological uptake eg: productivity enhancing factors such as improved seeds and fertilizer leading to low productivity

  • Dominated by small scale farmers and rain fed agriculture – an indication of absence of irrigation

  • Low intensity activity - an indication of non attractiveness of capital investment


Facilitating equitable agriculture development in sub saharan africa the case of tanzania

…Cont

  • Land acquisition and ownership is a serious problem

  • Contract Farming has been introduced in very few areas

  • Value addition is constrained by lack of skills and a weak private sector

  • Misconception of market liberalization or free market


Stakeholders roles and interaction

Stakeholders Roles and Interaction

  • Farmers

  • Private Traders

  • Non-Governmental Organizations (NGOs) for Farmers

  • Private Sector Organizations

  • Government Institutions

  • Warehouse Receipt Agency

  • Crop Marketing Board

  • Agricultural Research Institutes (ARI)

  • Local Government Authority

  • Agencies In-charge of Standards


Towards equitable tot among stakeholders

Towards Equitable ToT Among Stakeholders

  • Inefficient Marketing System

  • Access to Financial Services

  • Dry Weather Conditions

  • Provision of Extension Services

  • Ad hoc Policy Problems

  • Access to Agricultural Inputs

  • Tax or Crop Levy

  • Plant/Land compensation

  • Unattractive producer price


Problems facing the private sector

Problems Facing the Private Sector

  • Lack of Steady Supply of Crop Produce

  • Problem of Electricity

  • Transaction Costs

  • Expectations of Farmers and Private Sector

  • Role of the Government

  • Lack of Skills

  • Capital Deficiency

  • Policy Environment and Legal Framework

  • Knowledge on safety and standards


Conclusion

Conclusion

  • Agriculture is dominated by small farmers and there are few medium and large scale farmers;

  • Agriculture is constrained by many factors such as lack of access to credit, marketing infrastructure, market information, agricultural inputs (technology), storage facilities and insufficient supportive services such as extension services;

  • Farmers use different mechanisms to influence policy depending on their scale of production;

  • While large scale farmers use their association or even individual firm to lobby for a particular policy change, NGOs represent smallholders in policy review or lobbying and advocacy for policy change -


Facilitating equitable agriculture development in sub saharan africa the case of tanzania

…Cont

  • This important activity is complemented by politicians particularly members of parliament who normally pressurize the Government to implement or change specific policies which are not favorable to the sector;

  • The role of traders is to purchase farm produce from the farmers, process and then supply them either to domestic or foreign markets;

  • Like large farmers, traders also have associations which present their interests in policy design. Private investors are found to have more lobbying power than the smallholder farmers;

  • Different abilities and approaches for lobbying and advocacy used by each group is one of the reasons for inefficiencies within the marketing system.


Recommendations

Recommendations

  • A number of support services are required to attract private sector in agriculture and be able to implement successfully the ‘Kilimo Kwanza’ strategy:

    • Resources are therefore needed to build up infrastructure such as irrigation and rural roads and ensure that there is sufficient and reliable electricity

  • Both the government and the Private Sector must work hard towards empowering small scale farmers by way of promoting farmers groups and associations or cooperatives to foster information sharing and reduce transaction costs of reaching them

  • Establishment of Warehouse Receipt System (WRS) should be scaled up and introduced to other crops subsectors as well


Facilitating equitable agriculture development in sub saharan africa the case of tanzania

…Cont

  • Private sector should scale up their activities and ensure profits are equitably distributed to all actors along the supply or value chain. Approaches such as contract farming will be relevant

  • A few large scale farmers and small scale farmers should operate as partners where the later will be suppliers of raw materials to large scale farmers


Thank you

Thank You!


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