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PRIVATE AGRICULTURAL SECTOR SUPPORT TRUST (PASS) Paper Presented on 18 th October 2012 During DP/PASS meeting held at

PRIVATE AGRICULTURAL SECTOR SUPPORT TRUST (PASS) Paper Presented on 18 th October 2012 During DP/PASS meeting held at PASS Board Room. Background. PASS was established in 2000 as a project by Govt of Tanzania under the Danish funded Agriculture Sector Programme Support (ASPS)

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PRIVATE AGRICULTURAL SECTOR SUPPORT TRUST (PASS) Paper Presented on 18 th October 2012 During DP/PASS meeting held at

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  1. PRIVATE AGRICULTURAL SECTOR SUPPORT TRUST (PASS) Paper Presented on 18th October 2012 During DP/PASS meeting held at PASS Board Room

  2. Background • PASS was established in 2000 as a project by Govt of Tanzania under the Danish funded Agriculture Sector Programme Support (ASPS) • The goal of PASS is to stimulate investment and growth of private commercial farmers and agri-businesses by facilitating access to Financial services • PASS was registered as an autonomous legal Trust in May 2007 • “PASS Trust” started under IPSAS financial regulations and management of the Trust on 1 November 2008 .

  3. PASS Trust 2008-2013 Program New Program under BSPS-III • Aim: To facilitate agricultural loans worth TZS 100 billion across the country • Budget : DKK 140million (TZS 35 billion) • Plan: To open new zonal offices –Mbeya, Moshi, Mwanza & New head office in Dar

  4. PASS’s Products and Services: • Business Development Services (mainly Feasibility studies & Business Plans) • Financial Service (mainly Financial Linkages) with/out Credit Guarantee • Farmer development services: group formation, outgrower schemes, contract farming

  5. PASS team & facilities 2012 • Six Board Members • Managing Director • 1 Director: Finance & Administration Department, • 1 Director : Business Development Department • 1 Senior Accountant • 5 Branch In Charges/ Senior Business Development Officers • 5 Secretaries/Accounts-Assistants • 7 Business Development Officers • 6 Drivers • 1 Technical Advisor • 1 IT consultant (out sourced) • Head Office at Patel Building, Dar es Salaam • Branch offices in Mbeya, Morogoro and Mwanza & Moshi (Total: 26 Full Time staff members )

  6. The PASS Model

  7. Achievements as of August 2012 • One head office (Dar) & five Zonal offices (Morogoro, Mbeya, Mwanza, Moshi, Mtwara) have been established • In the 10 years: 977 individuals and 1,770 groups have received agricultural loans worth TZS 92 billion facilitated by PASS Trust. • PASS is now working with 7 banks-CRDB, NMB, Exim, FBME, TIB,KCBL and ABC.

  8. Who can apply for PASS Trust’s Products and Services? • Private Entrepreneurs – consisting of individuals, associations, companies and farmer groups within or linked to the agricultural and livestock sector. • Private Entrepreneurs – who have a vision and a viable investment idea above 7 million Tshs. (less for groups)

  9. Challenges • Collateral Crunch: Title Deed-Residential license?? Social Collateral?? • Some branches refuses to support livestock projects such as poultry, piggery and dairy • Changing in personnel dealing with PASS/CRDB projects causes some delays and disqualify of potential projects for agricultural investments • Number of applicants from CRDB declining day to day

  10. Costs of PASS Trust Services • Commitment fee: TZS 30,000- (non-refundable) • Business Plan Fee: 0.5% - 2 % of the requested loan amount depending on complexity • Additional services e.g. as a medium/large feasibility study are provided on cost sharing basis between PASS Trust and the client at a favorable rate for the client

  11. Current Status • Outstanding loans amount TZS 43 billion. • Default claims and doubtful category TZS 1.9 billion This equates to 4.4% which is within an acceptable scale of below 5% • Major indicators included SME’s increased turnover, returns to investor, tax to GOT, export earnings and substantial increase of employment, more adoption of improved practices and better productivity

  12. Who has PASS Trust Helped (31 December 2011) Mobilized investment worth TZS 95 billion and supported over approximately 35,000 farmers About 190 tractors and equipments have been loaned to farmers worth about TZS 8 billion Enabled set up High quality speciality coffee exports Initiated Horticulture Exports; Improved Poultry & Piggeries, Dairy Production & Beef Fattening. Food security: support to irrigation for food Assist with investment in farm mechanisation on larger scale Assist groups of farmers (SACCOS; Cooperatives; Irrigation Associations; Farmers Groups) link to banks. Assist commercial and government banks in linking up to high potential agri-business clients and to group lending opportunities /schemes with joint responsibility/ security of the loan.

  13. PASS’s Results and Impacts • Improved access to advisory, financial and marketing services • Increased volume of production • Improved quality of the produce • Farmers broadened and enhanced access to markets • Strengthened bargaining power of farmers through formation of • groups • Increased employment along nodes of value chains, also in agro- • processing • Increased income and demonstrable improved living standards

  14. Number of Submitted and Approved PASS Business Plans 2002-2010

  15. Regional Trends Sunflower is one the major oilseeds in Africa The leading sun flower seed producers in Africa in 2003 (MT) Production Trend in Tanzania 2006/2007 data by MAFSC Tanzania Produced 88,753 tones of sunflower The SHF estimated at 160,000 households in the central corridor Central Corridor produced 60% of sunflower seeds of the national production of 187,000 tons (2009) Oil Seed Sub-Sector Overview

  16. Overview cont…. • 135 processing machines installed in the central corridor with a total installed capacity of 853 tons/day • This capacity is enough to process approximately 170,600 tons (> 45% of installed capacity • Prices vary by region and within a season April/May and the end in November • Price variation reflect the phenomenon of dwindling supply as the season progresses, largely because of inadequate storage and working capital at both the household and oil mill levels

  17. Constraints of the Sub-sector Small Holder Farmers • Lack of appropriate knowledge • Inadequate Extension Services • Inadequate inputs • Poor Infrastructure • Poor Market Information • Insufficient and poor access to working capital Processors • Lack of proper processing • refining, packaging,Preservation/storage • Poor marketing • Labelling/ branding • Policies and Regulatory Framework • Insufficient and poor access to working capital

  18. Opportunities • High Market demand in and outside the country • Government support • Available actors to facilitate the sub sector • Favorable production conditions • Available processing technology • Available labor

  19. Industry Analysis of Sunflower Oil in Tanzania

  20. Constraints of Value Chain Product: Low quality that has hindered provision of TBS Market: Inadequate strategies to ensure sustainable market Process: Lack of refining machine

  21. VCD and Programming Product upgrading: Quality and standard control. Process upgrading: Acquisition of efficient machines Market upgrading: Establish distribution centers and agents

  22. Suggested Business Model Processing, standardization and branding Middle income Population Supermarkets Distributors Pool of organized producer groups Promotion Strategies

  23. Opportunity for PASS • Facilitation on investment in efficient machines and equipments for sunflower production and processing • Facilitation on availability of working capital for sunflower production and processing • Facilitation of godowns construction

  24. Pass New Products • Lenders Option Guarantee(Portfolio guarantee) • Linkage Banking Guarantee( Institutional Guarantee) • Lease/Asset financing

  25. Thank you We facilitate investments in Agriculture www.pass.ac.tz

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