Agricultural reforms in Tanzania to kill cash crops, govt warned

15 March 2010, The Citizen
URL: http://thecitizen.co.tz/magazines/31-business-week/653-agricultural-reforms-in-tanzania-to-kill-cash-cropsgovt-warned

Dar es Salaam:  The production of some important cash crops in the country is likely to collapse as farmers find it hard to adopt the proposed sector reforms, the new World Bank research shows.

In a report presented in Dar es Salaam recently by the World Bank senior poverty economist, Mr Waly Wane, suggested that Cashew nuts, Coffee and Maize farmers, were likely to reduce size of land under cultivation or completely abandon the crops due to challenges prompted by the reforms introduced by the government.  “Despite the recent reforms, production response is still not visible. Farmers’ non response to price incentives is worrisome…this calls the need to understand the implementation of the reforms at farm gate level,” said Mr Wane.

He was speaking at the just ended two-day workshop organised by the World Bank, Usaid and the Tanzania government in Dar es Salaam on the prospects of agricultural growth in a changing world.  Elaborating, the economist said the warehouse receipts system that was adopted since 2007, has not benefited farmers in regions like Mtwara where the system is used, pausing the question on who was really benefiting on their backs.

He noted that warehouse receipts system in the country was not “standard” practice as they also play marginal role.  “As it is right now, the WRS in Tanzania have been a curse to farmers, its introduction has caused the reemergence of single marketing channel with financing banks being at the heart of the system,” he said.

There are roughly 360,000 cashew growers in Tanzania, however, 88 per cent of them are smallholders with an average acreage around 2.9.

However, Mr Emmanuel Achayo, the director of Policy and Planning in the Ministry of Agriculture, Food Security and Cooperatives, argued that the warehouse receipts system has done more good to cashew farmers that should also be cited.  “We can’t say that the system has not benefited farmers completely, look at the prices of the crop right now, it has risen from Sh100 in 2005 to more than Sh700 per kilogramme this season,” he said.

Looks like there has also been a number of regulatory frameworks after 2005 in the coffee sector where surprisingly, the effect of such reforms has been evident by framers fetching low prices, said Mr Wane.  He noted that the current institutional frameworks in coffee were denying farmers a right to tap into other markets.

Comparing two institutional frameworks in Rakai, Uganda, against those in Kagera, the World Bank economist said farmers were illegally sneaking from Kagera Coffee Union (KCU) to the Ugandan market for better price.  Currently, there are more than 450,000 coffee farmers, most of them being smallholders with few estates.  However, presence of KCU in the coffee market was recommended by the Tanzania Agricultural Association chairman, Mr Salum Shamte, at the same gathering, saying such unions were playing a pivotal role when it comes to bargaining.

The report also paints a gloomy picture for maize business, the main staple for many Tanzanians, on fears that farmers may abandon the crop as total returns across the value chain is eaten up by transport charges that constitute 83 per cent of marketing costs.  The 2008 World Bank survey shows that transport price incurred for one tonne on an average distance of 500km, to be almost Sh100, 000 from the farm-gate to reach the miller.

Experts say high transportation costs that are also felt across other sectors, are highly attributed by presence of non-tariffs measures such as bribery at road blocks or weigh bridges and untimely transactions at ports and the border crossings.  “Tanzania’s agricultural incentives remain among the worst in the world, it is high time for Tanzania to seize growing opportunities in regional and international markets,” says Hans Binswanger, the World Bank’s Agricultural and Rural Development consultant.

He advises speedy completion of the reforms of crop-boards for them to be more effective and also the state to refrain from implementing the grain board that he says, would deter private sector in grain business.

An agricultural economist with the International Institute of Tropical Agriculture (IITA) Dr Victor Manyong said unless the government improves rural roads, production costs will continue to scare away people who would wish to invest in agriculture.  “In the event that farmers and traders do not get appropriate incentives, our products cannot compete at the global market due to high production costs,” said Dr Manyong.

Farmers do respond to incentives, they easily can switch out of non profitable crops for new crops that can sustain their livelihood and this brings some sector at risks, he said.

Available data shows that cereal purchases from the domestic market is continuing to rise as the National Food Reserve Agency(NFRA) many times fails to capture desirable quantities.
During the quarter ending September 2009, NFRA purchased a total of 25,752 tonnes of maize against the target of 165,000 tonnes for 2009/2010.