PASS – Private Agricultural Sector Support Limited ©Copyright PASS, Tanzania 2003 PRIVATE AGRICULTURAL SECTOR SUPPORT TRUST (PASS) Paper Presented on

PASS – Private Agricultural Sector Support Limited©Copyright PASS, Tanzania 2003

PRIVATE AGRICULTURAL SECTOR SUPPORT TRUST (PASS)

Paper Presented on 18th 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)

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 .


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


PASS’s Products and Services:

1. Business Development Services (mainly Feasibility

studies & Business Plans)

2. Financial Service (mainly Financial Linkages)

with/out Credit Guarantee

3. Farmer development services: group formation,

outgrower schemes, contract farming


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 )


The PASS Model


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.


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)


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


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


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


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 exportsInitiated Horticulture Exports; Improved Poultry & Piggeries, Dairy Production & Beef Fattening.Food security: support to irrigation for foodAssist with investment in farm mechanisation on larger scaleAssist 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.


PASS’s Results and ImpactsImproved 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 groupsIncreased employment along nodes of value chains, also in agro- processing

Increased income and demonstrable improved living standards


Number of Submitted and Approved PASS Business Plans 2002-2010


Regional Trends•Sunflower is one the major oilseeds in AfricaThe 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

South Africa

Morocco Egypt Tanzania Sudan

708,000 55,600 45,000 28,000 19,000


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


Constraints of the Sub-sectorSmall Holder Farmers Lack of appropriate knowledge

o Inadequate Extension Serviceso Inadequate inputso Poor Infrastructureo Poor Market Informationo Insufficient and poor access to working capital

Processors Lack of proper processing

o refining, packaging, Preservation/storage Poor marketing

o Labelling/ branding Policies and Regulatory Framework Insufficient and poor access to working capital


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


Industry Analysis of Sunflower Oil in Tanzania

Suppliers Quite large number of

suppliers in the market (small & large scale processors)

Varied quality and processing technologies

Concentration of local suppliers in Central Corridor

Aggressive large scale suppliers (Murza and Mount Meru)

Substitutes: KORIE SAFI OK

Buyers: (To what extent can the buyers bargain?) Most buyers understand good

quality Price is not a major factor but

important Quality and consistence supply

are the pushing factors Branding could influence

buyers’ choice

New Entrants: (Are there entry barriers for new entrants in Domestic Market?) Presence of unregistered suppliers Tanzania is yet to have standard set for

double refined edible oil Consumers and Whole sellers buy from

SMEs Quality of sunflower not critical

Rivalry: Metro, Ivory, Msalali, Masoud, SMEs, Murza and Mount MeruI


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


VCD and Programming

Product upgrading:

Quality and standard control.

Process upgrading:

Acquisition of efficient machines

Market upgrading:

Establish distribution centers and agents


Suggested Business Model

Pool of organized producer groups

Processing, standardization and branding

Supermarkets

Distributors

Middle income Population

Promotion Strategies


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


Pass New Products

1. Lenders Option Guarantee(Portfolio guarantee)

2. Linkage Banking Guarantee( Institutional Guarantee)

3. Lease/Asset financing


Thank you

We facilitate investments in Agriculture

www.pass.ac.tz

Documents

PASS – Private Agricultural Sector Support Limited ©Copyright PASS, Tanzania 2003 PRIVATE AGRICULTURAL SECTOR SUPPORT TRUST (PASS) Paper Presented on