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COTTON IN TANZANIA
TRENDS, PERFORMANCE AND FUTURE PROSPECTS
Joe C.B. Kabissa,Director General, Tanzania Cotton Board
COTTON IN TANZANIA The leading cash crop in terms of the number of
producers estimated at half a million farming households;
40% of the population depend on it; Cultivated area: 300,000 - 500,000 ha; Smallholder based and completely rain-fed; Farmers generally practice low input - low output
approaches to production; Output fluctuates in relation to rain and market price; Offers great potential for increased GDP; exports;
farmer incomes and employment via textile manufacturing;
MAP OF TANZANIA
Cotton Producing Areas
Quarantined Areas
Key:
COTTON CULTIVATION HISTORY
Cotton was introduced into Tanzania in 1904 by the Germans;
Initial attempts to grow it as a plantation crop failed;
Between 1954 and 1994, marketing institutions were in a state of continuous change aimed at enhancing production, processing and marketing of cotton;
Reforms are still ongoing; Present and future performance of the cotton
industry in Tanzania will most likely depend on the impact of these reforms.
MAJOR REFORMS IMPLEMENTED BY 1994
Poor performance of an agriculture – led economy up till the 1980s compelled the Government of Tanzania to undertake:-
Price and trade liberalization; Privatization of production, marketing and
processing of agricultural commodities; Enterprise restructuring; and Macroeconomic stabilization.These reforms sought to improve price
incentives for farmers in order to boost agricultural production.
Some of the effects of policy reforms on the performance of the cotton
industry
Sub - sector performance Prior to reform After reforms
Supply response weak stronger
Payments to farmers delayed Prompt
% of FOB price paid to farmers Less than 40% Above 60%
Prices paid to farmers Pan territorial and pan seasonal
Vary in relation to transport cost and quality of cotton
Input procurement Interlocking transactions used Problematic
Private sector participation None 40 private organizations in 2007/08
% Market share of Cooperatives
100% Less than 5% in 2007/08
Role of MNCs Non existent Cargill, Paul Reinhart and Olam
Competition between buyers None existent For volume rather than quality
Quality of cotton High and with premiums Low with discounts
Use of price risk management tools
Yes Just a few ginners
Challenges emerging after the reforms
Declining seasonal input use; Declining quality of lint; Increased coordination
problems; Stagnating local
consumption of lint;
A note on the textile industry
Some 20 mills convert lint into textiles; Relatively low quality printed fabrics such as
khanga, kitenge and bed linen are produced for the local market;
High quality fabric is imported for the export – oriented garment industry;
Age of technology and the integrated nature of most mills limit production level, quality of products and hence quantity of lint used; and
Rules of origin limit sales into the EU in spite of the EBA facility.
Tanzania’s Coping Strategies
A Development Strategy was adopted; Institutionalization of Stakeholders’
Meetings; Formation of the Cotton Development
Fund (CDF); Adoption of one zone – one variety
strategy; Roles the Tanzania Cotton Board
redefined; and Formulation of a Corporate Strategy.
Cotton production trends between 1992 and 2007
Seed cotton production
0
50,000
100,000
150,000
200,000
250,000
300,000
350,000
400,00019
91/9
2
1992
/93
1993
/94
1994
/95
1995
/96
1996
/97
1997
/98
1998
/99
1999
/00
2000
/01
2001
/02
2002
/03
2003
/04
2004
/05
2005
/06
2006
/07
Seasons
Pro
duct
ion
(tons
)
Total WCGA
Total ECGA
Grand Total
THE GLOBAL TRADE REGIME
Pursuit for an agriculture-led growth and development strategy is being undermined by a global trade regime characterized by:-
Commodity price instability, Declining commodity prices; and Deteriorating terms of trade.
Under these circumstances agricultural profitability and poverty reduction cannot be achieved.
Future Prospects
To produce 1.5 million bales by 2010; To increase the proportion of cotton
processed domestically by new investments in spinning, weaving and processing; for production of continuity products such as bed sheets, toweling and undifferentiated garments such as t-shirts and knitted underwear initially and fashion garments later; and
To restore Tanzania’s reputation as an exporter of “WHITE GOLD”;
A moral question!Can these farmers ride the wave of
globalization or be swept by it? To date, 80% of total world cotton output is
produced by smallholders. Yet in spite of their comparative advantage, they have little hope of achieving higher and stable prices because of policies in some EOCD
countries. Our farmers are being perceived as being on their way out - a price of
progress! On what moral right?
THANKS FOR YOUR KIND ATTENTION