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Submitted to:
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NOVEMBER 2010
i
TABLE OF CONTENTS
LIST OF TABLES .............................................................................................................................................. IV
LIST OF FIGURES .............................................................................................................................................. V
LIST OF ABBREVIATION .................................................................................................................................. VI
ACKNOWLEDGEMENT ......................................................................................................................................X
EXECUTIVE SUMMARY ....................................................................................................................................XI
CHAPTER 1: BACKGROUND TO AND METHODOLOGY FOR ASR AND PER ..................................................... 1
1.0 INTRODUCTION ........................................................................................................................................ 1
1.1 BACKGROUND ......................................................................................................................................... 1
1.1.1 Challenges and sector priority areas emerged from previous ASR and PER .................................. 2
1.1.2 Sector Priority Areas for Growth .................................................................................................... 3
1.2 OBJECTIVE OF THE ASR AND PER ............................................................................................................... 5
1.2.1 Scope of service ............................................................................................................................. 5
1.3 METHODOLOGY ....................................................................................................................................... 6
1.3.1 Analytical framework .................................................................................................................... 6
CHAPTER II: THE POLICY FRAMEWORK FOR AGRICULTURE ..................................................................... 9
2.0 CHANGING POLICY AND STRATEGIC FRAMEWORKS ......................................................................................... 9
2.1 RECENT POLICY CONTEXT.......................................................................................................................... 9
2.1.1 Long and Medium-Term Policies and Strategies ........................................................................... 9
2.2 SECTOR-SPECIFIC POLICY FRAMEWORK ...................................................................................................... 10
2.3 CREATING AN ENABLING POLICY ENVIRONMENT FOR THE PRIVATE SECTOR INVESTMENT ..................................... 15
CHAPTER III: AGRICULTURAL SECTOR PERFORMANCE ............................................................................ 25
3.1 INTRODUCTION AND SECTOR PERFORMANCE ANALYTICAL FRAMEWORK ........................................................... 25
3.2 MACROECONOMIC PERFORMANCE ............................................................................................................ 26
3.2.1 Gross Domestic Product (GDP): Growth and Structure ................................................................ 26
3.2.2 Headline and Food Inflation ........................................................................................................ 30
3.2.3 The Status of Poverty: Basic Needs and Income Poverty ............................................................. 32
3.2.5 Growth of Credit to Private Sector in Agriculture ........................................................................ 33
3.3 SECTOR AND SUB-SECTOR PERFORMANCE .................................................................................................. 34
3.3.1 Agricultural Contribution to GDP ................................................................................................. 34
3.3.2 Agricultural Growth Rate ............................................................................................................. 36
3.3.3 Food Security ............................................................................................................................... 37
3.3.4 Agricultural Sector’s Contribution to Foreign Exchange Earnings ............................................... 40
3.3.5 Producer Incentives...................................................................................................................... 42
3.3.6 Livestock and Fisheries................................................................................................................. 45
3.3.7 Irrigation Development ................................................................................................................ 48
3.3.8 Mechanization Development ....................................................................................................... 49
3.3.9 Agricultural Credit Share in Commercial Banks ........................................................................... 50
3.3.10 Farm Productivity: Yield and Labour Productivity ........................................................................ 52
3.3.11 Share of Agricultural Sector Public Expenditure .......................................................................... 53
CHAPTER IV: IMPLEMENTATION AND PERFORMANCE AT SUB-NATIONAL LEVEL ........................................... 60
4.1 WAREHOUSE RECEIPT SYSTEM (WRS) ....................................................................................................... 60
ii
4.2 AGRICULTURAL MARKETS ........................................................................................................................ 61
4.3 CAPACITY BUILDING AND EMPOWERMENT OF FARMERS ................................................................................ 64
4.4 AGRICULTURAL FINANCING ...................................................................................................................... 65
4.5 INVESTMENT IN IRRIGATION SCHEMES ........................................................................................................ 66
4.6 INPUT VOUCHER RECEIPTS ....................................................................................................................... 67
4.7 MECHANIZATION ................................................................................................................................... 70
4.8 EXTENSION SERVICES .............................................................................................................................. 70
4.9 RESEARCH AND DEVELOPMENT ................................................................................................................ 71
4.10 CONTRACT FARMING .............................................................................................................................. 72
4.11 VALUE ADDITION .................................................................................................................................. 72
CHAPTER V: PUBLIC EXPENDITURE REVIEW ........................................................................................... 73
5.1 INTRODUCTION ...................................................................................................................................... 73
5.2 AGRICULTURAL SECTOR INVESTMENT AND FINANCING .................................................................................. 73
5.2.1 Review of expenditure priorities .................................................................................................. 73
5.2.2 Ministries, Departments and Agencies (MDAs) release and spending ........................................ 75
5.3 RECURRENT EXPENDITURE OF AGRICULTURAL SECTOR LEAD MINISTRIES (ASLMS) ............................................. 80
5.4 DEVELOPMENT EXPENDITURE OF AGRICULTURAL SECTOR LEAD MINISTRIES (ASLMS) ......................................... 82
5.5 OVERVIEW OF THE RESCUE PACKAGE ......................................................................................................... 83
5.6 AN OVERVIEW OF AGRICULTURAL SECTOR DEVELOPMENT FINANCING ............................................................. 85
5.7 AN OVERVIEW OF AGRICULTURAL SECTOR DEVELOPMENT FINANCING ............................................................. 87
5.8 DISTRICT LEVEL EXPENDITURE ANALYSIS ...................................................................................................... 93
5.8.1 Introduction ................................................................................................................................. 93
5.8.2 Expenditure Priorities at Sub-National Level ............................................................................... 94
5.8.3 Budget Guideline for Allocation of Budget Resources ................................................................. 95
5.8.4 Agriculture Block Grant funds ...................................................................................................... 95
5.8.5 Other Non-DADP Grants for Agricultural Development .............................................................. 96
5.8.6 LGA Contributions from Own Sources .......................................................................................... 97
5.8.7 Expenditure Analysis of DADPs .................................................................................................... 98
5.8.8 DADPs Assessment..................................................................................................................... 101
5.9 REVIEW OF AGRICULTURE EXPENDITURE PRIORITIES ................................................................................... 103
5.10 TRENDS IN FINANCING OF AGRICULTURAL SERVICES AT THE DISTRICT LEVEL ..................................................... 108
5.10.1 Main Financing Areas ................................................................................................................ 108
5.10.2 Extension services ...................................................................................................................... 108
5.10.3 Provision of Inputs ..................................................................................................................... 109
5.10.4 Research and Training Services (Capacity Building) .................................................................. 111
5.10.5 Investment in Irrigation ............................................................................................................. 112
5.10.6 Mechanization of the Agricultural Sector .................................................................................. 113
5.10.7 Rural infrastructures: Market Construction ............................................................................... 115
CHAPTER VI: EMERGING ISSUES AND CHALLENGES FROM THE 2010/11 ASR PER ................................. 116
6.1 INTRODUCTION .................................................................................................................................... 116
REFERENCES ................................................................................................................................................. 130
APPENDIXES ................................................................................................................................................ 134
APPENDIX 1: BUDGET EXPENDITURE AND ALLOCATION BY PURPOSE (ACTUAL EXPENDITURES IN TSH MILLIONS) LGA .............. 134
APPENDIX 2: BUDGET EXPENDITURE AND ALLOCATION BY PURPOSE (ACTUAL EXPENDITURES IN TSH MILLIONS) LGA ............. 135
APPENDIX 3: AVAILABLE AGRICULTURE EXTENSION STAFF IN MBOZI DISTRICT ................................................................ 135
iii
APPENDIX 4: EXPENDITURE ALLOCATION FOR IRRIGATION, MECHANIZATION (NAMTUMBO, BABATI AND MBOZI DISTRICTS IN
TSHS) 136
APPENDIX 5: CONCEPTUALIZATION FRAMEWORK OF AGRICULTURAL SECTOR INVESTMENT PRIORITIES ................................ 136
APPENDIX 6: KEY INFORMANTS INTERVIEWED .......................................................................................................... 138
APPENDIX 7: HOW TO ACCESS INFORMATION ON CROP PRICE BY MOBILE PHONE (SMS) – USING VODACOM SERVICES ..... 140
APPENDIX 8: HOW TO ACCESS INFORMATION ON PRICE OF LIVESTOCK AND LIVESTOCK PRODUCTS BY MOBILE PHONE (SMS) –
USING ZAIN SERVICES ......................................................................................................................................... 142
APPENDIX 9: POLICIES, LAWS, STRATEGIES INFLUENCING AGRICULTURAL SECTOR PERFORMANCE ........................................ 143
iv
LIST OF TABLES
TABLE 3.1: ANNUAL PERCENTAGE CHANGE IN CONSUMER PRICE INDEX (ALL-URBAN) (BASE: DEC 2001 = 100) ....................... 30
TABLE 3.2: INCIDENCE OF POVERTY IN TANZANIA MAINLAND: THE HEADCOUNT POVERTY INDEX ............................................. 32
TABLE 3.3: SECTOR CONTRIBUTION TO REAL GDP IN PERCENTAGE .................................................................................... 34
TABLE 3.4: NATIONAL AVERAGE WHOLESALE PRICES FOR SELECTED FOOD ITEMS (TSHS PER 100KG) ........................................ 44
TABLE 3.5: WORLD COMMODITY PRICES ............................................................................................................... 44
TABLE 3.6: CONTRIBUTION OF LIVESTOCK AND FISHERIES SUB SECTORS IN AGRICULTURE ........................................................ 45
TABLE 3.7: IRRIGATION PERFORMANCE ......................................................................................................................... 49
TABLE 3.9: REGISTERED AGRICULTURAL PROJECTS ........................................................................................................... 51
TABLE 3.10: TANZANIA DOING BUSINESS RANKING ......................................................................................................... 51
TABLE 3.11 TREND OF FERTILIZER USE IN TANZANIA: 2001/02 – 2010/2011 .................................................................... 52
TABLE 3.12: TRENDS IN UTILIZATION OF IMPROVED SEEDS (TONNES) ............................................................................ 52
TABLE. 4.1: CROP YIELD FOR FAMILIES UNDER VOUCHER AND NONVOUCHER SYSTEMS FOR THE YEAR 2009/10 IN NDALAMBO
VILAGE(SAMPLE) MBOZI DISTRICT ...................................................................................................................... 69
TABLE5.1: TANZANIA’S MACROECONOMIC INDICATORS .................................................................................................... 74
TABLE 5.2: BROAD FUNCTIONAL BUDGETARY ALLOCATIONS (PERCENT SHARE OF TOTAL RESOURCES) ........................................ 75
TABLE 5.4: RECURRENT EXPENDITURE OF AGRICULTURAL SECTOR LEAD MINISTRIES (ASLMS) - TSHS, BILLION ........................... 80
TABLE 5.5: DEVELOPMENT EXPENDITURE OF AGRICULTURAL SECTOR LEAD MINISTRIES (TSHS, BILLIONS) ................................... 82
TABLE 5.6: SUMMARY OF THE IMPLEMENTATION OF THE RESCUE PLAN AS OF MARCH 2010 ................................................... 85
TABLE 5.7: SUMMARY OF THE IMPLEMENTATION OF THE RESCUE PLAN AS OF MARCH 2010 ................................................... 87
TABLE 5.8: AGRICULTURE SECTOR FINANCING GAP 2010/2011 – 2014/2015 .................................................................. 90
TABLE 5.9: DISTRICT COUNCIL’S OWN REVENUES FOR 2006/07 – 2008/09-(AMOUNT IN MILLION TSHS) ............................... 98
TABLE 5.10: PERCENTAGE (%) OF SPENDING OVER TRANSFERS (SOURCE PMO-RALG) ......................................................... 99
TABLE 5:11: RESOURCE ALLOCATION PRIORITY AREAS IN MAFC FOR FY 2008/2009, 2009/2010 AND 2010/2011 (INTSHS) 103
TABLE5.12: RESOURCE ALLOCATION PRIORITY AREAS IN MLDF FOR FY2006/07-2010/11. (IN TSHS) ................................ 104
TABLE 5.13: RESOURCE ALLOCATION PRIORITY AREAS IN SELECTED DISTRICTS FY 2008/2009 AND 2009/2010 .................... 105
TABLE 5.14: EXTENSION SERVICES PROVISION FY 2008/09 -2009/10 (TSHS.) ................................................................. 109
TABLE 5.17: BUDGET ALLOCATION FOR TRAINING AND LIVESTOCK RESEARCH FOR 2006/7 -2010/11 ................................... 112
TABLE 5.18: INVESTMENT IN IRRIGATION INFRASTRUCTURE FOR 2005/06 -2010/11 ......................................................... 113
TABLE 5.19: INVESTMENTS IN PROMOTION OF AGRO- MECHANIZATION FOR FY 2008/09 – 2010/11 (TSHS.) ....................... 114
TABLE 5.20: RURAL INFRASTRUCTURES: MARKET CONSTRUCTION (TSHS.) ......................................................................... 115
v
LIST OF FIGURES
FIGURE 3.1: GDP GROWTH AT CONSTANT 2001 PRICES ......................................................................................... 27
FIGURE 3.2: SECTORAL GDP GROWTH FOR 2008 AND 2009 ................................................................................... 27
FIGURE 3.3: MONTHLY COMMODITY PRICES: 2008 ................................................................................................ 28
FIGURE 3.4: ANNUAL PERCENTAGE CHANGE IN CONSUMER PRICE INDEX (ALL-URBAN) (BASE: DEC 2001 = 100) ............. 31
FIGURE 3.5: GROWTH CONTRIBUTION OF THE AGRICULTURAL SECTOR .......................................................................... 36
FIGURE 3.6: GROWTH RATES OF TOTAL GDP, AGRICULTURE, INDUSTRY AND SERVICES .......................................................... 37
FIGURE 3.7: FOOD SELF SUFFICIENCY RATIO (SSR) IN TANZANIA: 2006/07 – 2010/11 ............................................... 38
FIGURE 3.8: THE YEARLY TREND IN CONSUMER PRICE INDICES FROM NOVEMBER 2002 TO NOVEMBER 2009 BY SELECTED
GROUPS OF INDICES ......................................................................................................................................... 39
FIGURE 3.9: PURCHASING POWER OF 100 TSHS IN NOV 2002 COMPARED TO NOV 2009 ............................................ 40
FIGURE 3.10: PERCENTAGE COMPOSITION TO TOTAL TRADITIONAL EXPORTS ............................................................... 41
FIGURE 3.11: SECTORAL CONTRIBUTION TO FOREIGN EXCHANGE EARNINGS (MILLION USD) .......................................... 42
FIGURE 3.12: ANNUAL AVERAGE RETAIL AND WHOLESALE PRICE: MAIZE, RICE AND BEANS .................................................... 45
FIGURE 3.13: LIVESTOCK POPULATION: 2001 – 2010 (IN MILLIONS) ............................................................................ 46
FIGURE 3.14: HIDES AND SKINS EXPORTS ....................................................................................................................... 47
FIGURE 3.15: ANNUAL VALUES AND ROYALTIES OF AQUARIUM FISH EXPORTS .................................................................... 48
FIGURE 3.16: ANNUAL PERCENTAGE GROWTH OF ODC’S CREDIT TO SELECTED ACTIVITIES ................................................. 50
FIGURE 4.2: UNCOMPLETED KIZIWA MARKET STRUCTURE.................................................................................................. 63
FIGURE 4.4: POWER TILLERS AT THE DED OFFICE YARD IN MOROGORO ............................................................................... 70
FIGURE 4.5: FARMER: FARMER RAJAB WITH HIS WIFE SOFIA IN THEIR PADDY PLOT AT KIROKA VILLAGE (MOROGORO DISTRICT) ALSO
USED AS SHAMBA DARASA .................................................................................................................................. 71
FIGURE 5.1: MDAS DEVELOPMENT BUDGET, RELEASE AND SPENDING ....................................................................... 76
FIGURE 5.2: SECTORAL BUDGETARY ALLOCATIONS IN KEY SECTORS OF THE ECONOMY (% OF GDP), 2007/08 – 2009/10 ... 77
FIGURE 5.3: FUNCTIONAL COMPOSITION OF THE 2009/10 APPROVED AGRICULTURE SECTOR BUDGET .............................. 78
FIGURE 5.4: TRENDS IN AGRICULTURE RESOURCE ALLOCATION (BUDGET ESTIMATES AND RELEASES) .................................. 79
FIGURE 5.5: RECURRENT EXPENDITURE OF AGRICULTURAL SECTOR LEAD MINISTRIES (ASLMS) - TSHS, BILLION ................. 81
FIGURE 5.6: DEVELOPMENT EXPENDITURE OF AGRICULTURAL SECTOR LEAD MINISTRIES (ASLMS) - TSHS, BILLION ............. 83
FIGURE 5.8: AGRICULTURAL SECTOR DEVELOPMENT FINANCING REQUIREMENTS 2010-2015 ......................................... 91
FIGURE5.9: COMMERCIAL CREDIT AND AGRICULTURAL FINANCING ...................................................................................... 92
FIGURE 5.10: SACCOS CREDIT AVAILABILITY IN NAMTUMBO AND BABATI DISTRICTS .............................................................. 93
FIGURE 5.11: DADPS FUNDING 2006/07-2009/10 ..................................................................................................... 99
FIGURE 5.12 DADPS FUNDING PRIORITIES 2006/07- DEC.2009 BY EXPENDITURE CATEGORIES (% SHARE) (DATA SOURCE: PMO-
RALG) ......................................................................................................................................................... 107
vi
LIST OF ABBREVIATION
ACT
A-CBG
A-EBG
Agricultural Council of Tanzania
Agriculture Capacity Building Grant
Agriculture Extension Block grant
AIS Agriculture Innovation System
AfDB African Development Bank
AGITF Agricultural Inputs Trust Fund
AIS
AJIR
Innovation System
Annual Joint Review
AMP Agricultural Marketing Policy
AMS
ASDP
Agricultural Marketing Strategy
Agricultural Sector Development Programme
ASDS The Agricultural Sector Development Strategy
ASF African Swine Fever
ASLMs Agricultural Sector Lead Ministries
ASR
BOT
Agriculture Sector Review
Bank of Tanzania
CAADP Comprehensive African Agricultural Development Program
CAADP
CBOs
Comprehensive Africa Agriculture Development Program
Community Based Organisations
CBPP
CDG
Contagious Bovine Pleuropneumonia
Capital Development Grant
CMSA Capital Market Security Authority
CMT council management team
CPI
CRDB
Consumer Price Index
Cooperative and Rural Development Bank
DADPs
DADGs
District Agricultural Development Plans
District Agricultural Development Grants
DALDOs
DASIP
District Agricultural Development Officers
District Agricultural Sector Investment Plan
DCC District Consultative Council
DEDs District Executive Directors
DFTs
DIDF
District Facilitating Teams
District Irrigation Development Fund
DSM
EAC
Dar es Salaam
East African Community
EPA Economic Partnership Agreement
ES Executive Summary
vii
ESRF
FDI
Economic and Social Research Foundation
Foreign Direct investments
FFS Farmer Field School
FMD
FY
Foot and Mouth Disease
Fiscal Year
GBS General Budget Support
GDP Gross Domestic Product
HBS Household Budget Surveys
ICC Inter-ministerial Coordination Committee
IFMS
IFPRI
ILFS
Integrated Financial Management System
International Food Policy Research Institute
Integrated Labour Force Survey
JICA Japan International Cooperation Agency
LGMDII Local Government Monitoring Data Base Version II
LGAs Local Government Authorities
LGTP Local Government Transport Programme
LITS
M&E
Traceability System
Monitoring and Evaluation
MAFC Ministry of Agriculture Food Security and Cooperatives
MAFC
MARTIS
Ministry of Agriculture Food Security and Cooperatives
Ministry of Agriculture Research and Training Institutes
MDGs Millennium Development Goals
MFIs Micro Finance Institutions
MITM Ministry of Industry, Trade and Marketing
MKUKUTA Mkakati wa Kukuza Uchumi na kuondoa Umaskini Tanzania
MoWI Ministry of Water and Irrigation
MTEF Medium Term Expenditure Framework
MVIWATA Mtandao wa Vikundi vya Wakulima Tanzania
NARC
NBS
NCPI
National Agricultural Research Centre
National Bureau of Statistics
National Consumer Price Index
ND Newcastle Disease
NFRA
NFT
National Food Research Agency
National Facilitating Team
NEPAD New Partnership for Africa’s Development
NGOs Non Governmental Organisations
NICOL
NMB
National Investment Company Limited
National Microfinance Bank
NPES National Poverty Eradication Strategy
NPS National Panel Survey
viii
NRA Nominal Rate of Assistance
NSGRP National Strategy for Growth and Reduction of Poverty
O&OD
ODC
Opportunities and Obstacles to Development
Other Depository Corporations
PAF Performance assessment framework
PASS Private Agriculture Sector Support
PER Public Expenditure Review
PET Public Expenditure Tracking
PFM Participatory Forest Management
PMMP Poverty Monitoring Master Plan
PMO Prime Minister’s Office
PMO-RALG
PO-PC
PRS
Prime Minister’s Office-Regional Administration and Local Government
Presidents’ Office, Planning Commission
Poverty Reduction Strategy
R&D
RCC
RISDP
Research and Development
Regional Consultative Council
Regional Indicative Strategic Development Plan
RLDC Rural Livelihood Development Company
SAAFI Sumbawanga Agricultural and Animal Food Industries Limited
SACCOS
SMEs
SMS
SPS
Serving and Credit Cooperative Society
Small and Medium Enterprises
Short Messages Services
Sanitary and Phytosanitary
SUA Sokoine University of Agriculture
SWAp Sector Wide Approach programme
SWM Sustainable Wetland Management
TAHA Tanzania Horticultural Association
TASAF Tanzania Social Action Fund
TCCIA Tanzania Chamber of Commerce Industry and Agriculture
TCRA Tanzania Communication Regulatory Authority
TIC Tanzania Investment Centre
TIC
TOR
Technical Inter-Ministerial Committee
Terms of Reference
TPA Temporary process action
TPSF
TSHS
TTTA
URT
Tanzania Private Sector Foundation
Tanzanian Shilling
Tanzania Tobacco Traders Association
United Republic of Tanzania
VAT Value Added Tax
VTTP Village Travel and Transport Programme
ix
WALEO
WB
Ward Agriculture and Livestock Extension Offices
World Bank
WRCs Ward Agricultural Resource Centres
WFTs Ward Facilitating Teams
WRS
WTO
ZARDI
Warehouse Receipt System
World Trade Organisation
Zonal Agricultural Research Development Institute
x
ACKNOWLEDGEMENT
The Agriculture Sector Review and Public Expenditure Review (ASR-PER) for the financial
year 2010/11 was prepared by the Economic and Social Research Foundation (ESRF) in
collaboration with Agricultural Sector Lead Ministries (ASLMs) counterpart staff. This study
was commissioned by Ministry of Agriculture Food Security and Cooperatives (MAFC).
In particular we extend special thanks to the Director of Policy and Planning Mr. E.M.
Achayo and Principal Economist Mr. David Biswalo both from Ministry gf Agriculture Food
Security and Cooperatives (MAFC) for their facilitation efforts from the onset of the study to
its finalization. Prof. Haidari Amani led the consultancy team with other members being Dr.
Daniel Ngowi, Dr. Oswald Mashindano, Mr. Deogratias Mutalemwa, Mr. Festo Maro and Mr.
Apronius Mbilinyi. ASLMs counter part-staff were Mr. David Biswalo, Mr. Desdery Rwezaula,
Mr. Patroba Mafuru, Ms. Nsia Raymond, and Mr. Ahimidiwe Asseri. The study benefited
from the national agricultural stakeholder workshop, which was organized by MAFC. The
comments by participants from the Government, Development Partners and Non State
Actors significantly helped to reshape the final report.
The ASR-PER team feel indebted to staff in Local Government Authorities, in particular
District Executive Directors (DEDs) and District Agricultural Development Officers (DALDOs)
from Sengerema, Geita, Morogoro Rural, Kongwa, Urambo, Babati, Namtumbo and Mbozi
for their dedication and support. Field work objectives could not have been achieved
without the readiness of villagers and relevant community groups to be interviewed often at
short notice.
We also extend our deep appreciation to key informants who were able to share their views
on the performance of the sector and made suggestions on how best to improve it.
xi
EXECUTIVE SUMMARY
Main Context of the Executive Summary (ES)
The ES has three main parts. Part one is the preamble and introduction. Part two focuses on
the ASR and part three on the PER section of the report. Part two outlines the Sector’s
development agenda, followed by an assessment of the sector’s performance (including
factors that limit its transformation and growth), and recommendations for addressing such
constraints. Part three summarizes progress made in the public Expenditure to agriculture,
challenges identified and appropriate recommendations. It was decided that the
recommendations of the entire ASR/PER report be brought upfront in the ES section rather
than at the end of the whole Report. Such a format helps highlight the recommendations for
greater attention and easy future follow up.
Part One: Preamble and Introduction
Preamble
This study was required to cover wide-ranging topics in its scope of work in a very short
period. The field work had to be done within a period of up to three days in each district.
This proved to be too little a time to undertake thorough field work interviews and analysis.
In addition key stakeholders in DSM were to be consulted and the whole study report
drafting done within a period of two weeks after field work completion. This was done to
meet the client’s requirement for the presentation of the draft report to the stakeholders’
forum. In future ASR-PER studies should be given ample time and should start as soon as
the ASLMs budgets are approved. The recommendations also suggest that a few selected
more focused subject-researches be undertaken to feed information into subsequent
ASR/PER exercises.
Introduction
This Executive Summary has been made deliberately long because it summarizes the whole
report and may enable the reader to get the gist of the issues should time not allow to go
into in-depth reading of the whole report, in terms of: the major scope of the ASR-PER
review; major findings, challenges and recommendations. As implied above, the report per
se does not have a stand-alone chapter on Conclusions and recommendations, since the
latter have been presented in the ES. The findings have been derived from the analysis of
field reports, interviews with stakeholders as well as review of other relevant studies and
literature.
xii
Objective of the ASR and PER
The objective of 2010/11 ASR and PER was to assess the performance of the agricultural
sector. Among other things it was to determine the investment direction needed and/or
sector growth drivers in the implementation of the ASDP in the context of KILIMO KWANZA.
Specifically, the review covered assessment on how the sector programme has contributed
towards achieving MKUKUTA targets and propose priority areas for public expenditure in
the sector in the context of KILIMO KWANZA resolve. The review also was intended to
inform the budgetary and expenditure frameworks on key issues to enable sector growth
hence contribute to economic growth and poverty reduction.
Scope
This study covered the Tanzanian agricultural sector in the mainland. The review was guided
by the government definition of agriculture. Thus the scope of study was limited to the
agricultural activities of the Agriculture Sector Lead Ministries.
Desk Review
A comprehensive desk study was done using reports availed by the Ministry of Agriculture
Food Security and Cooperatives and other ASLMs to answer to the objectives of the ASR and
PER assignment. Other literature sources were consulted as necessary.
Field Work
Field visits for primary data collection and documenting stakeholder’s views were done after
initial literature review. This approach was pursued in order to investigate issues identified
in the literature. Sites visited were selected to represent the following aspects: agro
ecological zones of the country; food and cash crops and livestock based districts; DASIP-
based districts in order to compare them with DADP-only districts; performance in
warehouse receipt system, input voucher, and irrigation; Participatory Agricultural
Development and Empowerment Project (PADEP); contract farming and rural financial
support programs. The districts visited were Mbozi, Namtumbo, Morogoro rural, Babati,
Kongwa, Urambo, Geita and Sengerema.
Field discussions and interviews were not limited to LGAs but involved also Agriculture
Sector Lead Ministries (ASLMs) and other key stakeholders including the Ministry of Finance,
donors, private sector service providers, farmers and farmer groups, research institutions
and NGOs involved in the sector.
xiii
Part Two: ASR
Tanzania’s Agricultural Development Agenda
Agriculture is identified as a growth driver sector since it supports the majority of the rural
population and has the potential of lifting the majority population out of poverty. Besides
crop and livestock husbandry, Tanzania has immense fishery resource potentials – both in
fresh and marine waters, which if tapped effectively would contribute substantially to
improving people’s livelihoods, including their nutrition and other basic needs. Robust
growth of agriculture requires a multi-pronged approach. The focus is on modernization and
commercialization of small, medium and large scale agriculture for increased productivity,
employment, profitability and incomes, especially in rural areas.
Agriculture in Tanzania is targeted to grow at 6 -8 percent on average under MKUKUTA.
Emphasis continues to be on small-scale agriculture, with gradual shift to medium to large-
scale farming. Agriculture sector-specific growth issues revolve around productivity, with
particular concerns for the smallholder farmers who are the majority. The government and
private sector investment effort focus on the following drivers of growth in agriculture:
i. Supportive physical infrastructure
ii. Water and irrigation infrastructure
iii. Financial services and incentives to invest in agriculture
iv. Knowledge and information
v. Value addition activities
vi. Mechanization and
vii. Trade/export development services
Agriculture sector Performance The performance of the sector is influenced by the performance of the macro-economic
fundamentals, particularly inflation and investments in supportive sectors like infrastructure
and those investments within the sector itself.
Macro Performance The overall Tanzanian’s macroeconomic framework which provides the basis for sustained
resource availability continued to improve in FY 2009/10. Growth of real GDP declined
slightly to 6.0 percent in FY 2009/10 compared to the 7.4 percent experienced in FY
2008/09, partly due to the on-going global economic crisis, but the growth was greater than
fiscal year estimate of 5.5 percent.
The headline inflation rate had dropped to below 5 percent during the early years of 2000s.
Afterwards, it started to rise gradually in 2005, and kept on rising the most part of 2009 with
the highest rate of 13.3 percent in February 2009 (BoT 2010, URT 2010). However, the
inflation rate declined to 13.0 percent in March 2010, and further down to 10.7 percent in
xiv
June 2009, before experiencing a mixed pattern and thereafter declining to 9.0 percent in
March 2010. According to URT (2010), this rise was mainly due to drought-instigated food
shortages in Tanzania and the neighbouring countries; shortage in electricity supply, which
increased production costs as producers shifted to using generators; and increases in
petroleum prices, which raised the import bill and production costs.
Thus, the deceleration of annual headline inflation rate in the recent months is associated
with decrease in both food and non-food inflation. It appears that food price is largely
responsible for the rising inflation. As of now food still constitutes 55.9 percent of the
basket used for construction of the Consumer Price Index (CPI) even though the NBS has
already established that the share of food in household expenditure has dropped to 44
percent, implying that food inflation is going to be lower once this share is applied in the
computation.
Annual food inflation rate decreased from 18.6 percent and 18.5 percent in February and
March 2009, respectively, to 17.0 percent in June 2009. It then experienced a mixed trend
before declining to 9.7 percent in March 2010. As observed earlier, the 12-month average
food inflation rate was however higher in March 2010 than the rate registered in the
corresponding period a year earlier. The high food inflation in 2009 was mostly driven by
high prices of cereals. The 3-month moving average annual food inflation decreased to 10.4
percent in March 2010 from 11.9 percent in the preceding month. Starting November 2009
the annual food inflation exhibited a declining trend, explained mostly by decreases in
average prices of some food items particularly maize, cassava, cooking banana, fruits,
following improvement in food supply across eastern Africa region.
The increasing food inflation and overall inflation have affected agriculture in terms of the
ability of farmers to access inputs, land and other basic needs thus frustrating the efforts to
reduce poverty. This is particularly true because the purchasing power of farmers and non-
farmers has been declining. In addition, while the cost of living has been pushed up,
incomes of most farmers have not been increasing commensurately.
Overall Performance of the Sector Agricultural sector production has not been growing significantly to meet national targets,
especially to generate enough food surplus and cash crops for export.
Real agricultural growth rate has averaged 4.0 percent over the past five years, and about
6.4 percent in 2009/10. This growth is below MKUKUTA target of 6-8 percent. Experience
from other countries that have transformed their agricultural sector indicates agriculture
growth has to be at least 5 percent, BUT has to be sustained over a long period.
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The trend over the last decade shows that the country as whole is slightly above a safe
margin of food sufficiency. In fact in 2009/10 some districts exhibited surplus food
production, but as of September 2010 the farmers were still facing problems in marketing
their produce – in effect jeopardising efforts being made to improve farm productivity.
Falling agricultural prices due to weak demand, occasioned by the on-going global economic
crisis and increasing prices in farm inputs, have contributed to the sector’s low contribution
to overall GDP as well as generally low farm incomes, even though there are now indications
of improved farm productivity and incomes in some districts.
Agricultural sectors’ Performance at Sub-national level The current ASR has noticed some remarkable achievements towards realization of the
sector objectives in terms of increased production and productivity of crops and livestock,
farm incomes and adoption of improved agricultural technologies. These have resulted from
better access to improved agricultural technologies and knowledge; investment in irrigation
and mechanization/farm equipment; improved extension service delivery through provision
of working facilities such as transport, training of extension staff and farmers and use of
innovative approaches such as Farmer Field Schools; and development of productive and
marketing infrastructure and systems such as the warehouse receipt system. Achievements
made are further explained below:
It is a bit early to assess the impact of DADPs and DASIPs implementation; however, there
are some positive signs of laying a strong foundation for farmer empowerment and
increased interest in adapted technology options. Some technical services have been
improved (e.g. vaccination against Newcastle disease, dipping) but need to be put on
sustainable basis by improved user ownership and better service management.
There is progress in agricultural service delivery, though not at the expected pace. Overall,
the progress on rolling-out the reforms of agricultural services towards Agricultural
Innovation System (AIS), as envisaged in the ASDP design requires more efforts and speed.
Although district councils signed MoUs committing to the extension reform, there is low
level of understanding of what it entails. Encouraging achievements are in the formation of
DFTs, WFTs, some district Agricultural Core teams and initial attempts to establish Ward
Agricultural Resource Centres (WARCs).
Positive changes were noticeable in terms of improved farming practices taking place from
demonstration farms, particular where the demonstration farms contained sections of the
farm which adopted traditionally used practices side by side with sections using the newly
introduced practices. Successes in crops, livestock and related facilities for storage,
processing, markets and cattle dips were observed in the visited villages.
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That said, there has been no remarkable change in the number of public extension officers
over the DADPs implementation years. There is one extension officer for each ward. In
addition, there has hardly been any increasing trend to prepare and utilize an inventory of
private service providers in DADPs. Isolation of public services, weak linkages and non
involvement of private agricultural service providers in DADPs result in duplications, poor
use of available human resources and facilities, etc.
The extension delivery systems have focused more on primary production and rather less on
value addition. Farming systems and value chain approaches need to be understood,
combined and advocated by DFTs etc. to transform traditional agricultural activities into
commercial activities, ensuring household food security and livelihood. These
transformations are slowly finding their way through DADPs every planning cycle.
There is a need for strengthening client oriented technology development and
dissemination process. This is anticipated to be effected through both CORDEMA and
speeding-up technology flows (including from international/regional agricultural research
institutions) by enhancing on-farm verification of technology options responding to farmers
needs and adapted to local farming systems.
Access to markets is still a challenge in most districts visited. The districts have initiated
activities to enhance farmers’ access to market, value addition and production
diversification. There is increased use of warehouse receipt systems and grain banks for
food and cash crops aimed at enhancing access to market and farm income. Warehouse
receipt system initiatives have been supported under DADPs. Initiatives to improve access
to market information also have been initiated in some districts through village government
and other stakeholders. The information includes prices and crop output available in the
village. On the other hand, DADPs investments in agro-processing for value addition are
limited; they were observed in very few areas such as sunflower in Sengerema.
However, feeder roads infrastructure is one of the major constraining factors to market
access for both inputs and agricultural outputs. However, it has also been shown that road
improvement is one component in whole range of factors influencing efficiency in marketing
and production logistics. Investment in complementary facilities (such as storage facilities)
is found to be very necessary and useful in improving markets.
Similarly, government policy inconsistency on cross-border trade for food crops, particularly
maize and rice is hurting farmers’ incomes and investment drive. This year for example, the
government had banned cross border trade for food crops (though the ban was removed in
early October 2010) and farmers in Sengerema and Geita districts were forced to sell their
produce at very low prices (TSHS 500 per kg of rice). This would have been alright if the
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warehouse receipt system in these two districts had been fully operational in which case
farmers could have waited until prices increased so that they would sell their crops at higher
prices. The warehouse system has yet to be widely implemented in the country. Efforts to
scale it up will go a long way to improving producer prices and food supply in the country.
Private Sector and NGOs participation: Despite the slow progress in private sector
development, the review observed some progress in participation of the private sector in
some of the districts visited. Similarly, active collaboration between districts and NGOs in
planning and implementation of DADPs was becoming evident in some districts.
Impact
The focus of the DADPs is to transform farmers from subsistence to market producers
through adoption of improved agronomic practices, area expansion and provision of better
support services. There is convincing evidence from the visited districts that this is being
achieved in terms of increased productivity and incomes of farmers who have been trained
and have adopted improved farming methods.
The farmer Field School approach is rapidly transforming agriculture in most of the visited
villages. For famers who have gone through the farmer field schools, the major impacts has
been observed in yields of various crops: in Sengerema and Geita districts, maize yields have
increased from an average of 500 kilograms (kgs) per acre to an average of 2000kgs; cotton
from 300 kgs to about 800 kgs; paddy yields have increased from an average of 720 kgs per
acre to an average of 2250 kgs. A Similar jump was reported in Morogoro (paddy; from 6-12
to 30-40 bags per acre). In Mkindo (Mvomero district) for example, rice yields have
increased from 2.5 to 6.0 ton/ha due to the use of improved rice variety (SARO) and
management practices such as row planting, spacing, fertilizer application and control of
pests and diseases using an integrated pest management approach.
There are notable changes on productivity resulting from irrigation development. For
example, in areas where irrigators’ organizations are effective, farmers are using improved
seeds and fertilizers, hence productivity of paddy has doubled and in some areas tripled.
Likewise for irrigated maize, yields have generally doubled In Siha district, yields of maize
through irrigation have increased from 0.7 t/ha to 3.5-4.5 t/ha. In Kondoa district
(Kwamadebe village), productivity of onions has increased reaching 60 bags per acre per
season. Kwamadebe farmers are currently growing onions in the same acre for three
seasons per year after rehabilitation of their scheme, thus making the annual productivity of
180 bags per acre per year.
Input subsidy given for some crops and livestock, application of scientifically proven
traditional methods (use of mwarobaini and alovera) for biological controls instead of
spraying chemicals, adoption of better crop farming and livestock husbandry, have all
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contributed to reducing the cost of production for some crops, particularly for cotton and
maize and livestock (chicken and cattle).
Incomes of most farmers have at least doubled, mainly due to increase in crop yields and
diversification of crop and livestock production. Some farmers have diversified into new
activities such as raising indigenous poultry or cross-breeds of chicken and goats. A few
have stepped into fish production (aquaculture and mariculure).
Production diversification, however, has in some cases happened at the cost of some other
crops. In the lake zone for example, there is an apparent shift away from cotton to crops like
paddy and sunflower. The shift away from cotton is explained by low and frequent
fluctuation of prices, leave alone unreliability of the quality of inputs for spraying.
This positive impact on yields and farm incomes has promoted investments in storage,
marketing and agro processing facilities. For example, with the support of DASIP, some
villages have constructed storage facilities for their surplus produce, market sheds to
facilitate selling of farm produce, processing mills for paddy, sunflower and maize, slaughter
slabs and milk collection centres.
Improved extension delivery services: The review noted that delivery of extension services
has been enhanced as a result of increased access by extension staff to transport facilities
especially motorcycles and bicycles. For the past three years of ASDP implementation, a
total of 1,446 motorcycles and 3,382 bicycles were provided to extension workers. For
instance, in Manyoni District Council, 21 motorcycles were procured through DADPs and
distributed to all 21 Ward extension staff. This resulted in an increase in coverage and
frequency of visits to farmers such that the number of farmers receiving services increased
from 130 to 390 per extension staff per month. However the number of extension staff is
still inadequate in most districts.
Constraints and Recommendations for increasing Agricultural Growth
One of the explanations for failure to substantially reduce poverty is the low GDP growth
emanating from agriculture. The agricultural sector has maintained a steady growth rate of
over 3 per cent per annum over the last decade, a rate which is considered to be too low to
have a strong impact on poverty reduction and in improving the livelihood of the rural
people.
Secondly, there has been very little transformation of the economy and of the agricultural
sector. Ideally, structural transformation should be a result of higher farm productivity
which would enhance producers' own incomes, and create a demand for agricultural
labour. Although agriculture’s contribution to GDP has dropped slightly from around
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30percent in 1998 to about 24 percent in 2008, this modest drop in share of agriculture to
GDP (which reflects growing rural, and urban, off-farm employment) is not associated with
agricultural growth but rather the changes in the share composition were mainly due to the
revision of prices.
It is worthwhile noting that poverty in Tanzania is anchored in the widespread reliance of
rural households on subsistence agriculture. Approximately 75 percent of the population
depends on under-developed smallholder primary agricultural production characterised by
small-scale cultivation, use of hand tools, and reliance upon traditional rain-fed cropping
methods and animal husbandry. This is not to down-play some changes in sources of
income in rural areas.
According to existing statistics, agriculture is only one of a number of economic or livelihood
activities that people engage in within rural areas. The 2007 HBS shows that in rural areas,
there has been a decline in the proportion of income from agricultural sources, from 60 per
cent in 2000/01 to 50 percent in 2007. Thus, rural income is heavily dependent on off-farm
sources. Yet, these figures tend to understate the importance of agriculture for the poor as
(i) local non-agricultural activities often depend for their market on demand coming from a
healthy local agricultural economy and; (ii) agriculture is generally the main (and often only)
sector producing ‘tradeables’ and bringing income into rural areas.
Unless and until the subsistence economy is transformed into a more market economy and
eventually into a fully fledged commercial farming and linked to other activities through
forward and backward linkages, efforts towards transformation of the sector and poverty
reduction will remain frustrating. To do this we need to revisit the way we assess the real
value/contribution of agriculture in order to reconsider the current strategies, which are not
performing as expected.
Agricultural Productivity and Markets One of the major constraints to rural development and agricultural growth is low
productivity of land and labour. Key factors affecting agricultural productivity are: (i) low
public expenditure on agricultural Research and Development (R&D); inadequate
agricultural investments in irrigation, mechanization; low use of improved production
techniques; (ii) Under-developed markets and market infrastructure; farm-level value
addition; and ) poor rural infrastructure, including rural roads, telecommunications and
electricity etc.
In order to stimulate growth in the sector and reduce poverty in rural areas, public
expenditure in agriculture should be increased. More specifically, production of maize, rice,
and root crops, livestock and fishery should get top priority in government’s investment
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plans. Investment in irrigation, mechanization, research and development, and agricultural
inputs is needed to raise productivity in these sub-sectors. Investment in rural
roads/infrastructure, agro-processing and packaging and renewable natural resources will
be needed to expand the market especially for the priority crops. Below are proposed
investment areas:
Recommendations The Overarching Recommendation is that more resources should be put into agriculture in
accordance with Kilimo Kwanza Dictum. This pertains to financial and human resources as
well as efforts to further improve guiding and operational frameworks involving agricultural
policies, strategies, regulatory regime and institutional arrangements.
A: It is Necessary to take measures to significantly increase Agricultural Productivity in the following areas; 1) Irrigation: Tanzania mainland has a total irrigation potential of 29.4 million hectares, but
only about 0.33 million hectares are currently under irrigation. Tanzania has a large
potential of increasing maize production by increasing the area under irrigation.
Existing gaps in ASDP that need to be addressed include inadequate equipment and human
resources, irrigation infrastructure and integrated water management services. More
resources will be needed to improve existing traditional irrigation schemes, to rehabilitate
deteriorated irrigation schemes, and to expand the area under irrigation in the already
identified irrigation potential areas. The government will have to create an enabling
environment for private sector investment in irrigation. Together with the promotion of
irrigation, adoptions of sustainable farming which conserve the environment are quite
important. Increasing the efficiency of irrigation and the profitability of the investment is
also needed to improve the sustainability of the irrigation system.
2) Mechanization: Given that cultivation of most of the priority crops is done
predominantly by the hand hoe, significant growth cannot be achieved without increased
mechanization. It is estimated that about 70 percent of farming is dependent on the hand
hoe, 20 percent on ox-ploughs and 10 percent on tractors. The use of rudimentary
technology, such as a hand hoe is one among reasons that account for low labour
productivity in agriculture. A mechanization programme that enables small holder
producers to use ox ploughs and tractors has been initiated but it needs more investment.
The government will have to encourage the establishment of privately owned one-stop
mechanization centres that will provide mechanization services particularly in support of
smallholder farmers. In addition, there is a need to establish a programme that will enable
small holder producers to use labour saving technologies such as solar power and wind mills
that will contribute significantly in increasing agricultural output.
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3) Research and development and extension: Currently amount of resources is allocated to
research and development in the agricultural sector is 0.3 percent of the total government
budget allocated to the sector. However, the government has agreed to allocate one
percent of the national budget to research and development. Available evidence to show
that investment in research and extension has huge positive impacts on agricultural growth
and household incomes. For every TSHS 1 million spent on agricultural research, household
incomes increase by TSHS 12.5 million and lifts 40 people out of poverty. The major gap in
the ASDP as far as research and development is concerned is inadequate research
infrastructure facilities and manpower. This applies equally to all aspects of agriculture in
respect of crop and animal agriculture as well as fisheries.
4) Use of improved agricultural technologies: To bring about agricultural green revolution
and transformation, access to and timely use of farm inputs by farmers is an important
aspect However, usage of agricultural inputs in Tanzania is quite low. While Tanzania uses
only 9 kg of fertilizer per ha, the average for SADC countries is 16 kg/ha; Malawi 27 kg/ha;
China 279 kg/ha and Vietnam 365 kg/ha. It is estimated that in Tanzania only 10 percent of
farmers use improved seed for instance. In recognizing the importance of agricultural
inputs, government has embarked on providing smart targeted agricultural input support.
Nonetheless, more investment in developing productivity enhancing technologies is
required to support production and distribution of improved inputs and quality control of
such inputs. In this context, an incentive scheme should be created to enhance private
investment in the production and distribution of agricultural inputs. Improvement of
livestock production through Artificial insemination is among crucial aspects in increasing
beef and dairy products.
5) Diversification into fishery activities: Farmers in a bid to augment their incomes and
improve nutritional intake are diversifying their agricultural activities by for example
branching into aquaculture and mariculture. In the latter case, the farmer is are gainfully
utilizing the off-farming season period (excess labour) and undertaking fishing activities that
cannot force him/her m to travel far away from his/her homestead (at the expense of
agriculture) and activities that in most cases can be promoted in the farmer's allotted land
or water plot so that he/she can make long-term investments in fish farm improvements.
In this regard, government initiatives in promoting aquaculture/mariculture should include:
Training of extension staff and farmers,
Research in suitable fish species and establishment of demonstration centres thereon
Enhancing establishment of sure sources of fingerings
Providing information on technology and marketing
Development of fish feed lots, and
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Laying out fish farming policy, guidelines and regulations on land use and environment protection.
B. Investment Necessary for Market Expansion, particularly in the following aspects:
1) Better Rural Infrastructure (roads, markets, storage facilities, electrification, etc)
Improvement and construction of rural roads and market infrastructure are important for
efficient inputs and output marketing. Investment in infrastructure is also important for
attracting private investment in agricultural related activities such as agro-processing,
increasing producer prices and farmers’ income. In the case of livestock, improving the
marketing system –accessibility of new markets and improving the standards requirements
like putting up new market demands such as Livestock Identification and Traceability System
(LITS) and Animal Welfare Compliance is critical for expanding livestock markets.
2) Investments in Agro-processing and value addition: Agro-processing and value addition
are important activities for agricultural development and poverty reduction. The level of
agro-processing infrastructure in Tanzania is very low. As a result, Tanzania is exporting
unprocessed agriculture and livestock products, while existing agro-processing industry
cannot meet domestic demand. The low capacity in agro-processing is one of the main
reasons for high post harvest losses, occurring equally in crop husbandry, animal husbandry
as well as fisheries. It is currently estimated that 30 percent and 70 percent of output of
cereals, and fruits and vegetables, respectively, is lost after the post harvest due to
inadequate agro-processing facilities. Agro-processing activities can generate additional
income and employment in rural areas. They also have strong forward linkages. Agro-
processing will also add value to the export of agricultural products, thus enabling the
country to earn more foreign exchange. . While there have been noticeable investments in
the processing of livestock products, low investments especially in Dairy industries and the
rural road network and poor conditions of the existing infrastructure remain the main
factors limiting further development of the livestock processing industry
More funding for investment in physical infrastructure, such as feeder roads and electricity
in rural areas will be needed in order to attract private investment in agro-processing
activities. Some value addition that can take place at the level of the farm will require better
adapted extension services as well as framers’ training.
3) Expansion and Improvement of the Warehouse Receipt System:
The warehouse system introduced a few years ago has proved to be effective in improving
farmers’ decisions on marketing their produce to optimize their incomes. It also has
potential to leverage access to farm credit. But the system is not well functioning in some
parts of the country. Experiences from those areas where it has started to work should be
used to promote the system in other areas. The system also needs to be backed up by
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more investment in construction of suitable produce storage facilities, to be undertaken
by LGAs and private sector operators.
Part Three: Public Expenditure Review Chapter V of this report provides an analysis of the public expenditure review as part of the FY 2010/11 ASR-PER. It reviews the macroeconomic framework, resource allocation, release and use of funds and outlines major challenges and recommendations deemed necessary to make further improvements in public expenditure management, control and utilization of resources in the agricultural sector. Overall, there is encouraging progress to notice: The overall macroeconomic framework which provides the basis for sustained resource availability continued to improve. However, domestic revenue was also affected slightly by the global crisis, with the first three quarters of 2009/10 indicating 91 percent revenue outturn. Development Partners played a critical role, assisting the government to maintain expenditures at over the FY 2008/09 level. Expenditure priorities continued to be accorded to economic and social services, with education, roads and health being allocated 18.3 percent, 11.5 percent and 8.4 percent, respectively of total budget resources. Agriculture was allocated slightly higher funding, increasing to about 6.1 percent of total budget in FY 2009/10 compared with 5.0 percent in FY 2008/09.
Recurrent and development budget continued to perform well in FY 2009/10, both in terms of timeliness and completeness. Exchequer releases to the agricultural lead ministries (ASLMs) were almost 100 percent of planned allocations. However the timeliness of release to Local Government Authorities (LGAs) for implementing the Agricultural Sector Development programme was somehow out of sync with the seasonality of agricultural production activities. This occasioned underperformance in LGAs and inability to complete some planned activities.
Progress was satisfactory in financial management, control and utilisation of resources made available for implementing agricultural activities. Audited accounts completed by Controller and Auditor General in July 2010 on funds disbursed to ASLMs for implementing the Agricultural Sector Development Programme, shows satisfactory performance in financial management, control and use of the funds. The audit report points out under Section 2.1 that ‘During the previous year’s audit (2008), several recommendations were made in major key issues which required management attention and action for improvement. All of the recommendations raised were implemented.’ Thus, except for a few audit queries in some districts, financial management, control and use of funds continues to be satisfactory, although there is ample room for improvement, especially in the procurement of public services and computerising the whole district financial management system. The ASLMs and the LGAs have gained experience and made steady progress in the preparation and implementation of DADPs for which central basket block grants (DADGs)
xxiv
have been provided at an increasing rate. Annual DADPs assessments have confirmed these improvements. The DADGs have been supplemented by various other resources, mostly with limited-purpose or area- based orientations that are funded by external donors.
The initiatives made to undertake PETs and value for money audits are welcome. The PETs may reinforce vigorous audits already embarked upon by NAO and the expenditure controls in ministries and at LGAs, the expenditures which have tended to prefer non-farm related activities (seminars, training, study tours, office construction or agricultural shows) that are taking up an inordinately large chunk of the budgets.
At LGA level and below, the process of project identification beginning with the O&O D method is bringing about many grass-roots agriculture project ideas. Many DADP projects are being now forwarded for approval with improving quality of project write-ups, though of varying standards. Resources aimed at irrigation and mechanization are increasing appreciably. New tractors and power tillers are among top priorities in the budgets; caution is made on maintenance to be also equally addressed in the budget.
The envisaged Livestock Development Policy is eagerly awaited to address the potentials of the livestock sector that have so far been underrated and under-funded. The marketing aspect and produce processing are important priorities. Challenges Despite modest progress made in public expenditure generally as described above, a number challenges remain:
Low capacity for planning, budgeting and project execution at LGA level; which requires urgent strengthening;
Unsatisfactory flow of funds at all levels, at central and local government levels. This is manifested in late disbursements to spending units as well as slow transfer of funds from the District Executive Director’s office to project beneficiaries at the local level.
Low investments in agriculture. This is a major challenge because overall total resources going to the sector are inadequate to transform the sector. Areas for Improving investments have been mentioned in the ASR section, i.e. in irrigation, agro-processing to add value to primary production, livestock development, mechanisation, and marketing
Some parallel funding instruments at LGA levels are not quite aligned with ASDP. There is intention to address this in ASDP-II. The most comprehensive solution would possibly be found in installing more effective and systematic district-level planning that accommodates all funding stakeholders, including particularly the private sector.
The prioritization of projects is constrained by very tight budget ceilings and implementation is still hampered severely by shortage of critical skills especially of knowledgeable extension staff that are versatile to advise on new technologies, or value addition activities at the farmstead level.
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PER –Specific Recommendations
In the context of KILIMO KWANZA it is imperative first of all to raise the level of overall spending in agriculture in order to stimulate growth in the sector and reduce poverty in rural areas, Budget allocations to the sector have simply to be increased toward the level advocated in the Maputo Declaration on allocating up to 10percent of the budget to agriculture.
The specific public investment priority areas have been cited in the ASR recommendations above and reflect the CAADP framework. These merit priority budget allocations, namely: Irrigation, Mechanization, Extension, Agricultural Research and Technology, Input Subsidies and Rural Infrastructure (especially rural roads and electricity), Diversification, and Agriculture Marketing enhancing activities.
Other Recommendations for Improving Public Expenditure: o There is need to further strengthening local government financial system and
data management by consolidating the IFMS and PlanRep Frameworks as well as the accounting capacity.
o The strengthening of finance and budget data and information system applied equally at the level of the central MDAs, in particular the ASLMs.
o Strengthening procurement system to ensure the value for money in agricultural development projects and at LGA level to raise the competitiveness of bidders as well as the capacity of contractors and suppliers.
o Creating a conducive environment for private sector participation in the agricultural sector particularly in areas for quick win investments such as for value addition, removal of agricultural trade inhibitive policies/measures, construction of rural roads and increasing support for warehouse construction.
o Need for Specific In-depth Studies: More in-depth studies are needed pertaining to gaps in policies and important operational measures already undertaken in the development of the sector, the studies which cannot be expected to be efficiently carried out in the normal conduct of the ASRs and PERs. The studies will form the key source of information for the forthcoming ASR-PER assignment (to possibly feed into the 2011/12 Budget and beyond). The following in-depth studies are proposed: (i) Efficacy and sustainability of the Input subsidies, (ii) The role of Private sector service providers, (iii) Investing more Resources in Irrigation, and (iv) Mechanization. More specific justification and what is required are found in the main section of the PER.
1
CHAPTER 1: BACKGROUND TO AND METHODOLOGY FOR ASR AND PER
1.0 Introduction
Apart from the Executive Summary this report has six chapters. The Executive summary
includes the main findings from both the ASR and PER, responses to recommendations
made in the previous ASR and PER, remaining challenges from last years’ ASR and PER, as
well as the main recommendations emanating from this year reviews; in this regard the
report does not end with a standalone chapter on Conclusions and Recommendations.
Chapter I provide the background and methodology for both ASR and PER. Chapter II
summarizes the Policy Framework for Agriculture, while Chapter II analyses the sectors
performance over the last few years. Chapter IV analyses the implementation and
performance at sub-national levels; Chapter V focuses on the Public Expenditure Review,
while the last Chapter addresses the emerged issues and challenges from both this ASR and
PER.
1.1 Background
Agriculture Sector Review (ASR) and Public Expenditure Review (PER) evaluate the progress
of the implementation of Agricultural Sector Development Programme (ASDP). The
programme is implemented by Agricultural Sector Lead Ministries (ASLMs), namely Ministry
of Agriculture Food Security and Cooperatives (MAFC), Ministry of Livestock Development
and Fisheries (MLDF), Ministry of Water and Irrigation (MoWI), Ministry of Industry, Trade
and Marketing (MITM) and Prime Minister’s Office-Regional Administration and Local
Government (PMO-RALG). Donors support implementation of the programme budget
through basket funding.
The ASR, which is an evaluation and monitoring instrument, assesses in details the
performance of the sector and in particular how sectoral reforms have progressed to meet
national and international goals. The ASR is helpful in identifying key priority areas, sources
of growth, impact on poverty reduction and proposes future interventions for developing
the sector. Findings from the ASR provide inputs to prepare budget guidelines and priority
areas of interventions and public/private investment areas in the next financial year.
The PER, on the other hand, mainly informs the government budgetary process within the
Medium Term Expenditure Framework (MTEF). The PER assesses the sector’s previous
financial year expenditure priorities, financial management and accountability, and feeds
into preparation of budget guidelines and the sector’s priorities for the next financial year. It
is an instrument for checking consistency of government expenditures on agreed and
2
planned priorities against actual expenditures. The analysis under PER in 2010 to some
extent will help to inform the next General Budget Support (GBS) review.
1.1.1 Challenges and sector priority areas emerged from previous ASR and PER
Challenges
The central issue in agricultural growth and development as observed by the previous ASR
report is the necessity to increase production, productivity, employment and income for the
poor segments of the agricultural population of whom the small and marginal farmers
constitute sizeable portion. Whereas some improvements have been noted over the past
decade or so in the agricultural sector development and growth in terms of policies and
strategies, the impact on poverty reduction is still very low.
The achievements so far are minimal in comparison to the magnitude of continuing poverty,
food insecurity and meagre exports earnings that pervade Tanzania. Based on initial results
of the Household Budget Survey 2007, the income poverty level was very slightly reduced
from 35.7 percent in 2001 to 33.3 percent in 2007, a decline of 2.4 percent for the last six
years. This is not an encouraging result given that the poverty reduction was reduced by an
average of only 0.4 percent per annum.
Based on the current trend, the income-poverty target of reducing poverty to 19 percent by
2015 (MDG) and 2010 (MKUKUTA) will be missed. To transform the agricultural sector in
Tanzania from largely subsistence to a modern a commercialized sector the following main
concerns must be addressed.
Agriculture sector production growth rate is not significant to meet the national
targets, especially to generate enough food surplus and cash crops for export. The
trend over the last decade shows that the country is slightly above safe margin of
food sufficiency. This compounded with falling prices in outputs and increasing
prices in farm inputs have contributed to decline in the sector contribution to GDP
Agriculture sector productivity is generally very low and uncompetitive with other
countries in both food and cash crops. Low productivity in the sector calls for more
research, extension services and technology such as mechanisation to be accorded
priority in budget allocation
Sector budget allocation is still inadequate to create growth with FY 2008/09 budget
allocation to ASLMs and LGAs at 3.6 percent of total Government allocations. The
Government should increase budget allocation gradually to reach 10 percent
(Maputo Declaration) Share of the Government funding in development budget is
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still very small. The Government should increase its share to fund more irrigation
(DIDF), agricultural inputs and mechanisation (AGITF)
It was noted that ASDP implementation at LGAs level has been affected by delays in
funds disbursements. ASLMs in collaboration with Treasury should ensure released
funds reach LGAs on time. Also, the Government and Development Partners should
honour their commitments on approved budgets to ensure initiatives and activities
are carried out as planned.
Despite above specific challenges, the review found the following operational and
institutional barriers to effective development of the sector.
Misallocation of DADPs grants:
Low / no investment to the agricultural sector by districts
Inadequate involvement of community in procurement
Participation of private sector is limited particularly on the provision of training
to the communities at village levels on how to use improved production
technologies.
Political influence/interference
Untimely delivery of inputs
Regional Secretariat support in backstopping LGAs
Limited consideration of environmental and social safeguards issues
Huddles in services reaching the targeted population
Limited technical support in communication, and
Food security is blocked by limited knowledge on value addition and inadequate
skills on data management
1.1.2 Sector Priority Areas for Growth
In addition, the previous ASR recommended (as measures to address challenges identified
during the review) some sector priority areas for agricultural growth. It found out that the
sector is growing below the MKUKUTA target of 5 percent by 2010. It argued that in order
for the agricultural sector to contribute effectively to the poverty alleviation it must grow at
least 10 percent per annum and that to reach this target, the production has to be increased
to at least twice the current level. The future growth in agricultural sector must come from:
Developing and promoting new technologies that are both cost effective and in
conformity with natural climatic regime of the country. Therefore, it is important to
continue with various initiatives and resources allocation in research and extensions
services. Significant contribution should continue to be from the public sector i.e. the
Government funding and slowly as the sector develop and operating environment
4
improve, the private sector will find the way in, but this is not expected to happen in
medium term
Bridging the gap between knowledge and practice through effective and efficient
extension services to all farmers in the country. There is a need to build capacity of
extension officers, equip them with transport facilities and other operating tools and
also increase their numbers to reduce the gap.
Sustaining genetic improvements of better seeds and yield. The signs of success have
already been seen in some crops such as cassava, which are drought and disease
resistant developed and cultivated to contribute to significant amount of food
production
Judicious land use, resource surveys, efficient management practices and sustainable
use of natural resources. This will also entail doubling the area under cultivation
from 25 percent to 50 percent of arable land.
Developing efficient and effective agriculture data and management information
systems for better research, better results and sustainable planning at all levels from
national to local. The Government in collaboration with ASLMs and other institutions
involved in the agricultural sector should continue with various strategic
interventions and initiatives that address the growth factors for the agricultural
sector. The review and analysis of previous studies indicate that consistency in
performance coupled with an increase in resource allocations will at the end achieve
sector growth and reduction in poverty level in the country. ASLMs have
responsibility to review their specific performance every year and develop initiatives
along the broad initiates highlighted in MKUKUTA in order for the sector to grow the
sector. The framework for the future interventions and initiatives should evolve
around the following areas:
Conservation of land, water and biological resources,
Rural infrastructure development,
Development of rain fed agriculture,
Development of irrigation farming,
Timely and availability of farm inputs,
Increasing flow of agricultural credits,
Enhancing private sector investment,
Enhanced support for research,
Effective transfer of technologies,
Support for marketing infrastructure,
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Export promotion, and
Recruitment and training of extension officers is of paramount importance to
sustain growth of the sector under the current plans and arrangements.
All of these issues and recommendations were followed up during this (2010/11) review to
assess the extent to which they have been addressed.
1.2 Objective of the ASR and PER
The objective of 2010/11 ASR and PER was to assess the performance of the agricultural
sector and determine the quick wins investment plans and or sector growth drivers in the
implementation of ASDP in the context of KILIMO KWANZA. Specifically the review covered
assessment on how the sector programme has contributed towards achieving MKUKUTA
targets and proposed priority areas of public expenditure in the sector in the context of
KILIMO KWANZA resolve. The review also intends to inform the General Budget Support on
key issues to enable sector growth hence contribution to economic growth and poverty
reduction.
1.2.1 Scope of service
The scope of service includes the following: -
1. Agricultural sector review
Assess implementation of the sector performance assessment framework (PAF)
for year 2010 and propose temporary process action (TPA) and outcome
indicators for PAF 2011 and provide reasons for the proposal.
Evaluate implementation of the sector priority areas and their possible
contribution to the sector performance.
Assess sectoral (policy and regulatory framework) and sub-sectoral (crop,
livestock, irrigation, marketing) performance since 2006 with particular emphasis
on attainment of MKUKUTA targets.
Assess level of investments and quality of investment plans in implementation of
the District Agricultural Development Plans (DADPs).
Assess performance of the sector based on the ASDP M&E framework through
use of short long indicators for assessing the performance of the programme.
Assess the performance if the sector in ensuring national food security,
contribution to inflation basket and employment
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Assess challenges, opportunities and suggest way forward
2. Public expenditure review
Examine sector priorities, resource allocation to priority areas, expenditure,
financial management and accountability particularly DADPs grants since
LGAs are the implementers of the sectors policies
Assess the level of public investment in sector activities resource studies
available during the period under review, and make recommendations on;
Sector priorities in crop, livestock, marketing and irrigation sub sectors
Policy intervention necessary for enhancing agriculture sector growth and
performance
Sector quick wins, point of intervention in transforming subsistence farming
to commercial farming and or growth drivers
Required public budget allocation level and expenditure.
1.3 Methodology
The overall approach for implementing the review was divided into following activities
a) Preliminary literature review and draft report for the inception of the project
b) Inception meeting where the consultant presented an inception report for discussion
with client on the methodological issues of implementing the assignment.
c) In-depth literature review
d) Field work (visits to districts and key stakeholder consultations)
e) In depth analysis of qualitative and quantitative information’s
f) Stakeholders workshop for the presentation of the draft report
g) Comments incorporation and submission of the final report
1.3.1 Analytical framework
Scope
This study covered the Tanzanian agricultural sector in the mainland. The review was guided
by the government definition of agriculture, with focus on crops and livestock as well as
other activities of the activities of the Ministry of Agriculture Food Security and
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Cooperatives. Inputs of Agriculture Sector Lead Ministries (ASLMs) to the agricultural sector
have also been reviewed.
Desk Review
A comprehensive desk study was based on reports made available by the Ministry of
Agriculture Food Security and Cooperatives and other ASLMs. The following reports were
reviewed.
ASDP Monitoring and Evaluation Framework
ASDP documents
Agricultural Sector Development Strategy (ASDS)
National Strategy for Growth and Reduction of Poverty (I and II)
Agricultural Reforms in Tanzania: Perspectives from within (publication by FAO and
MAFC)
Identification of Growth Drivers and Sector’s Based on Tanzania Comparative and
Competitive advantage (report commissioned to ESRF by POPC)
District Agricultural Development Plans (DADPs)
District Agricultural Sector Investment Project (DASIP)
District Agricultural Development Plans quality assessment report
Economic Survey (various years)
Household Budget Surveys (HBS)
National Panel Survey (NPS)
Village Agricultural Development Plans
Kilimo Kwanza document
DADPs routine monitoring and evaluation reports
Previous PER and ASR reports
Donor’s sector review reports
Budget Speeches
PADEP Final Evaluation Report
Medium Term Expenditure Framework Document
Bank of Tanzania Reports
Various relevant Study reports on agriculture in Tanzania
Field Work
Field visit for primary data collection and documenting stakeholder’s views was done after
preliminary literature review. This approach was important in order to investigate further
issues of concern identified from reviewed reports. Sites visited were selected to represent
the following aspects: agro ecological zones of the country; food and cash crops and
livestock based districts; DASIP based districts in order to compare them with DADPs based
districts; performance in warehouse receipt system; input voucher; irrigation; Participatory
8
Agricultural Development and Empowerment Project (PADEP); contract farming and rural
financial support programs.
The field work was done to seek experiences from the LGAs through key informants
Interviews. This is important since LGAs are the implementers of the sectors strategies,
programmes and projects on the ground. It also involved participatory discussion in
selected villages on the sector’s performance and expenditures. The consultant was guided
by a checklist of issues for discussions with farmers and Local Government Officials.
The following regions and district were visited Mbeya-Mbozi District
Morogoro- Morogoro Rural District
Manyara- Babati District
Dodoma-Kongwa District
Tabora-Urambo District
Mwanza-Sengerema and Geita Districts
Ruvuma-Namtumbo District
Field discussions interviews at national level involved Agriculture Sector Lead Ministries
(ASLMs) and other key stakeholders, among them;
The ASLMs
Sokoine University of Agriculture (SUA)
National Agricultural Research Centre
Tanzania Chamber of Commerce Industry and Agriculture (TCCIA)
Private Agriculture Sector Support (PASS)
Tanzania Private Sector Foundation (TPSF)
Tanzania Investment Centre (TIC)
Mtandao wa Vikundi vya Wakulima Tanzania(MVIWATA)
Japan International Cooperation Agency (JICA)
African Development Bank (AfDB)
The World Bank
Agricultural Council of Tanzania (ACT)
Irish Embassy
The list of persons/officials met is provided in Appendix 6
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CHAPTER II: THE POLICY FRAMEWORK FOR AGRICULTURE
2.0 Changing Policy and Strategic Frameworks
Since the country’s independence in 1961, the Government of Tanzania has implemented a
series of agricultural related policies, strategies, plans and programmes that were integrated
within Five Year Development Plans. Immediately after independence, overall agricultural
policy was characterized by market-based interventions and the major instrument for policy
implementation was the Five Year Development Plans. After the Arusha Declaration in 1967,
agricultural policy environment was characterized by more government-led interventions.
These included the nationalization of private sector enterprises throughout the value chain
of major export commodities. This resulted in the establishment of state farms, state
processing and marketing enterprises and state controlled cooperative unions. During the
late 1970s and early 1980s, it became evident that the interventionist policies in the
agricultural sector as in the rest of the economy were not working. In the mid-1980s, the
government, supported by the major development partners, started economic and
structural adjustments which involved gradual dismantling of interventionist instruments in
the economy in general and in the agricultural sector in particular. In the agricultural sector,
it has involved allowing private sector participation in the value chain of most agricultural
and livestock products, decontrol of producer prices, and privatization of state enterprises.
2.1 Recent Policy Context
Policies and strategies to support agriculture are many and diverse but are intended to
complement each other. These policy/strategic initiatives are listed in Appendix 9.
2.1.1 Long and Medium-Term Policies and Strategies
The long term vision of economic development for Tanzania is to accelerate economic
growth and reduce poverty. The Vision 2025 recognizes agriculture as the growth driver
sector. The medium term development goals are expressed in the National Strategy for
Growth and Reduction of Poverty (NSGRP). This initiative is aimed at achieving the targets
that are outlined in the Millennium Development Goals (MDGs) and other commitments
and targets which are aimed at combating hunger, disease, illiteracy, environmental
degradation, and discrimination against women and above all reduction of poverty.
The NSGRP (popularly known as MKUKUTA in Swahili acronym) is a five year national
strategic blue prints for promoting economic growth and poverty reduction across all
sectors of the economy, including the agricultural sector. The NSGRP provides a framework
for focusing policy direction and thrust on economic growth and poverty reduction by
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setting specific goals and operational targets within three main of clusters: i) Growth and
Reduction of Income Poverty, ii) Social Services and Wellbeing and iii) Good Governance.
The agricultural sector is addressed under the Cluster on Growth and Reduction of Income
Poverty.
Tanzania has implemented the first generation of the NSGRP and has just finalized the
formulation of second generation the strategy (NSGRP II). Within this strategy, agriculture is
recognized as a very key sector. For example, Goal 2 of NSGRP II targets reducing income
poverty through promoting inclusive, sustainable, and employment-enhancing growth. The
NSGRP II states for example, that “with vast natural resources – rich agro-climatic zones,
minerals and water resources, potential irrigable land, forestry and wildlife resources and
above all, its population size - rural development and particularly agriculture stands out as a
sector that requires priority attention since the rural sector accommodates the majority of
the poor population”.
2.2 Sector-Specific Policy Framework
Tanzania’s Agricultural Development Agenda
Agriculture is identified as a growth driver sector since it supports the majority of the rural
population and has the potential of lifting the majority population out of poverty. Besides
crop and livestock husbandry, Tanzania has immense fishery resource potentials – both in
fresh and marine waters, which if tapped would contribute to improving the people’s
livelihoods, including their nutrition and other basic needs. Robust growth of agriculture
requires a multi-pronged approach. The focus is on modernization and commercialization of
small, medium and large scale agriculture for increased productivity, employment,
profitability and incomes, especially in rural areas. In order to have impact, emphasis is on
interventions that address bottlenecks along value chains of strategic agricultural produce
for selected crops and livestock. Such interventions are designed to address the input side of
agriculture, the production processes of the selected produce, agro-processing, as well as
marketing strategies – focusing on domestic, regional, and global markets in line with
country priorities. To improve efficiency and profitability of each chain, Research and
Development (R&D) is of great importance. Equally important is the lessening of
dependence on rain-fed agriculture for large scale and small scale farmers, as well as the
development of rural feeder roads.
Tanzania agriculture is targeted to grow at 6-8 percent p.a. Emphasis continues to be on
small scale agriculture, with gradual shift to medium to large scale farming. Agriculture
sector-specific growth issues revolve around productivity, with particular concerns for the
smallholder farmers who are the majority. The government and private sector investment
effort focuses on the following drivers of growth in agriculture:
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viii. Supportive physical infrastructure
ix. Water and irrigation
x. Financial services and incentives to invest in agriculture
xi. Knowledge and information
xii. Value addition activities (agro-processing
xiii. Mechanization and
xiv. Trade/export development services
The Agricultural Sector Development Strategy (ASDS)
The government of Tanzania has taken serious measures to develop its agriculture during
the post-structural adjustment era. The Agricultural Sector Development Strategy (ASDS) of
2001 marked the initial shift of the government development strategy favouring the
agricultural sector and domestic food security. The measures included in the ASDS provided
opportunities for farmers to improve their production.
The Agricultural Sector Development Strategy (ASDS) is the strategic blue print for the
development of agriculture, with specific goals, priority operational targets and strategies
that are aimed at achieving the NSGRP targets. The ASDS strategic objectives include (i)
creating an enabling and favourable environment for improved productivity and profitability
in the agricultural sector; and (ii) increasing farm incomes to reduce income poverty and
ensure household food security. The ASDS identifies the following five strategic priority
areas:
Strengthening the institutional framework to facilitate partnership and coordination
in developing the agricultural sector;
The need to mainstream agriculture in the decentralized planning process.
Creating a favourable environment for commercial activities;
Public and private partnership in improving agricultural support services;
Strengthening marketing efficiency for agricultural inputs and products and;
In an effort to give more emphasis to a private sector-led development of agriculture, the
Government, together with private sector players has formulated the Kilimo Kwanza. These
will bring more players, more robust involvement of private sector and improved national
coordination of planning and resource allocation as envisaged in the ASDS. They will
therefore accelerate achievement of ASDP objectives of: enabling farmers to have better
access to and use of agricultural knowledge, technologies, marketing systems and
infrastructure, all of which contribute to high productivity, profitability and farm incomes;
and promoting private investment based on improved regulatory and policy environment. In
general, the existing policy environment:
Recognizes existing low capacity for irrigation potentials and the need to promote
Integrated Water Resource Management;
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Recognizes the role of government in improving rural infrastructure to reduce
transaction costs that affect agricultural growth and competitiveness;
Supports the enhancement of food security through production of sufficient quantity
and quality of food;
Supports the strengthening of agricultural support services including research and
extension;
Advocates interventions for reversing environmental degradation, promoting
conservation and sustainable management of our natural resources;
Recognizes the importance of human resource development and creation of
employment opportunities; and
Recognizes the importance of the participation of the private sector including
cooperatives and community based organizations.
However, Tanzania’s agricultural policy environment is still in a transition. Inherent in this
transition is not only the need to deepen the reforms, but also to streamline and rationalize
the existing policies related to agriculture. They also need to be fully aligned with the NSGRP
and the ASDS as well as with KILIMO KWANZA. Other specific challenges include:
The need to up-date some of the policies that were formulated long time ago and
which pre-date the ASDS. These have been reviewed (as shown below) to
accommodate new challenges and opportunities.
The need for stronger harmonization of the different but inter-related policies like
the National Agricultural Policy and the Livestock Policy, the Trade Policy and the
Agricultural Marketing Policy or if possible to have a single sector policy.
The need to strengthen the coordination of implementing policies and strategies.
Improving incentives for increased investment in the sector;
Improving the legal and regulatory framework for agricultural trade and marketing;
These challenges will need to be addressed in order to reverse the unsatisfactory
performance of the agricultural sector as manifested in slow growth rate and low
productivity of the sector vis-à-vis other sectors.
The Agricultural Sector Development Programme (ASDP)
The Agricultural Sector Development Program (ASDP) of 2005, which is the implementing
instrument for ASDS, is under the overall strategy of MKUKUTA, the Tanzanian poverty
reduction strategy and other related strategies such as the public sector reform program
and the decentralization program. The ASDP is a Sector Wide Approach programme (SWAp),
which is a Government guiding tool for implementation of the country’s agricultural
development initiatives. The programme is implemented by five Agricultural Sector Lead
Ministries (ASLMs) and all Local Government Authorities (LGAs). The ASDP is implemented
by developing the Village Agricultural Development Plan, which is incorporated into the
District Agricultural Development Plan.
13
Currently the implementation of ASDP is overseen by Ministry of Agriculture, Food Security
and Cooperatives; Ministry of Industries, Trade and Markets; Ministry of Water and
Irrigation and; Ministry of Livestock Development and Fisheries at central Government level,
while PMO-RALG is responsible for coordinating the LGAs, which have the primary
responsibility for implementing the ASDP actions in their respective districts. These
ministries have the role of setting the right policy and regulatory framework and developing
mechanisms to ensure their effective implementation at national and local level. In
addition, they are responsible for coordinating the various actors within the sector.
Furthermore, implementation of the ASDP requires close coordination amongst these
ministries and supportive government institutions, all of whom are coordinated by the
Prime Minister’s Office (PMO).
The ASDP is being implemented in a more organized way than any other previous strategies
and programmes/activities. It has set up a clear responsibility framework from the Prime
Minister’s Office to the Regional Administration and Local Governments as well as the four
Agricultural Sector Lead Ministries. Along with the implementation of the programs, the
government has also introduced a farm input subsidy program, irrigation strategy,
mechanization strategy, improved seed production and dissemination program and
warehouse receipt system. KILIMO KWANZA (Agriculture First) is the new plan in place to
strengthen major components of the ASDP and strengthen the leadership in terms of
government intervention, such as through the establishment of the Agricultural
Development Bank and the added value of the private sector. The institutional and financial
framework developed over the years shows a significant progress in the Tanzanian
government’s commitment to agriculture and its capacity to oversight and implement an
agricultural development strategy. The government expenditure to implement these
programs has been significantly increased from 4.6 percent in 2007-08 to 6.1 percent in
2008-2009. (MAFC, 2008).
Agricultural Policy Reviews
Subsequent to the ASDS/ASDP, RDP, TDV-2025, NPES, PRS, Gender Policy and other
agriculture-supportive policies/strategies, the Agriculture and Livestock Policy of 1997 has
been revisited and new subsector policy frameworks have been formulated. The new sub-
sector policies are:
(i) The Cooperative Development Policy of 1997 was reviewed in 2002, to enable
the policy to adequately put in place an enabling environment for Cooperatives
to operate in liberalized economy.
(ii) The National Livestock Policy of 2006
(iii) The Agricultural Marketing Policy of 2008
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(iv) The National Irrigation Policy of 2010
(v) The National Agricultural Development Policy of 2010, which focuses on the
crops-subsector.
The sub - sector agricultural policies have made reference to strategic issues raised in the
ASDS just to make sure that the subsector policies are consistent and aligned to the
ASDS/ASDP.
Synergies with other sectors
Agricultural development is strongly influenced by several issues that are outside the
mandate of the lead sector Ministries. The ASDP elaborated on the above synergy by
emphasizing in its 5th thematic area that the planning of agricultural programmes should be
done in collaboration with other sectors. Hence explicit mechanisms for mainstreaming
planning for agricultural development in other sectors are needed so that due attention is
paid to issues such as rural infrastructure development, industrial development, the impact
of HIV/AIDS and malaria, youth migration, environmental management, etc. Most of these
are more adequately addressed in the Rural Development Strategy (RDS). This is a Sector-
Wide Approach to Agricultural development.
Despite ample recognition of the need to mainstream agricultural planning in other sectors,
these sectors have not accorded agriculture the priority it really deserves in both financial
and human resource allocations. Here we have much to learn from the late President Julius
Nyerere, when he said:
“Because of the importance of agriculture in our development, one would expect that
agriculture and the needs of the agricultural producers would be the beginning, and the
central reference point of all our economic planning. Instead, we have treated agriculture
as if it was something peripheral, or just another activity in the country, to be treated at
par with all the others, and used by the others without having any special claim upon
them… We are neglecting agriculture. If we were not, every Ministry without exception,
and every parastatal and every Party meeting, we would be working on the direct and
indirect needs of the agricultural producers…We must now stop this neglect of agriculture.
We must now give it the central place in all our development planning. For, agriculture is
indeed the foundation of all our progress”.
President J.K. Nyerere: 20/10/1982; on “Agricultural Policy of Tanzania 1983”.
Apart from domestic policies and strategies, Tanzania is a signatory to some International
and Regional Integration initiatives such as
World Trade Organisation Agreement on Sanitary and Phytosanitary
East African Community Agriculture and Rural Development Policy
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NEPAD’s Comprehensive Africa Agriculture Development Programme (CAADP)
SADC’s Regional Indicative Strategic Development Plan (RISDP), and
Economic Partnership Agreements (EPA) negotiations
The Maputo 2003 Declaration on Agriculture and Food Security in Africa
2.3 Creating an Enabling Policy Environment for the Private Sector Investment
The Government is committed to creating a favourable legal, regulatory and policy
environment that will facilitate stronger participation of the private sector in the
development of agriculture in the country. To achieve this, the current policy reform efforts
will be up-scaled. The following specific interventions will be implemented in order to
achieve the goal of private sector-led agricultural transformation in line with Kilimo Kwanza
and the eventual growth and poverty reduction as envisaged in the NSGRPII.
1. Review of relevant agricultural policies in order to harmonise them and to align them with
the NSGRPII, ASDS, KILIMO KWANZA and to allow stronger participation of the private
sector in the whole value chain and in input and output markets as proposed in KILIMO
KWANZA.
2. Strengthen the regulatory framework for the production and distribution of inputs,
promoting out-growers schemes, agro-processing, trade and marketing to take advantage of
favorable international market environments in view of Tanzania’s agricultural comparative
and competitive advantage in regional and international markets;
3. Review the legal and institutional modalities for land delivery and management in order
to improve efficiency in the acquisition and securing of land for private sector investment;
4. Provide tax incentives, agricultural input support and trade policies, and
5. Creating new models for cooperation between the Public and Private sector in rural
development at all levels (national, regional and international) including new ways of
bringing together processors and agribusiness, new ways of establishing and enforcing
grades, standards and new emphasis on improving the investment climate for agriculture.
Implementation Modalities
The agricultural policy/strategy’s operational elements required to roll it out effectively will
be laid out in the strategy document including: (i) institutional arrangements and capacity
enhancements; (ii) financing and non-financing instruments; (iii) knowledge management;
(iv) building partnerships; and (v) results-based monitoring and evaluation.
16
Institutional Strengthening in the Agricultural Sector
Tanzania is currently implementing reforms in the agricultural sector that are redefining the
roles of the public and the private sectors in a strategic shift from state-led to private sector-
led agricultural development.
Further anticipated result of the reforms is that the private sector, plus NGOs and producer
organizations will perform most of the market-chain functions such as input provision,
credit, marketing, storage and extension services. The public sector assumes the role of
creating an enabling environment. This includes setting and enforcing standards, ensuring
food safety, providing public investments, negotiating on trade matters, organizing safety
nets for marginal groups, defining access to and management of natural resources and
providing agricultural statistics and information in general. The Government will also be
expected to play a role in land policy and administration, particularly on issues of security
and distribution of land rights, land use and land management, in order to avoid land
conflicts and the marginalization of certain groups. Similar government responsibilities
pertain to management of water resources as they relate to agriculture.
In order for the public and private sector players as well as civil society to more effectively
perform their respective tasks and functions, it is necessary to clarify their roles and build
their capacity. This involves not only the financial and institutional strengthening of the
public sector and capacity building of producer organizations, but also the establishment of
consultation arrangements and conflict-resolution mechanisms among the players in the
sector. Particular emphasis needs to be placed on the production and marketing roles of
producer organizations, which often is the only solution available for small-scale farmers to
deal with market challenges.
In the agricultural sector, ASDP is one of the major sector reforms for coming up with a new
way of doing business. It is a way of engaging in development cooperation based on the
principles of coordinated support for locally owned development. The ASDP is implemented
in all Local Government Authorities through District Agricultural Development Plans (DADPs)
and about 75 percent of sector resources devolve to the local level. The programme is also
implementing Decentralization by Devolution (D by D) policy.
The improvement of governance within the agricultural sector requires agreement by all the
stakeholders involved in national development strategies. It is therefore necessary to use
appropriate analytical and consultative processes that are inclusive and cover the following
aspects of the agricultural sector:
17
Operational Environment: Markets, national economy, development policies and the
regulatory regime
Organization: Institutions overseeing the sector development and the value chain
actors and their inter-relationships, and
Development options: Specialized products, diversification, new markets, value
addition
It also requires the development of an effective communication and sharing mechanism
that keeps all stakeholders informed and facilitates their active participation in strategic
decisions concerning the development of the sector.
Institutional Arrangement and Challenges
The institutional and implementation arrangement of the ASDP have been established with
clear defined roles. These include: Basket Fund Steering Committee, Committee of
Directors, ASDP regional coordinators, Thematic Working Groups, and Facilitation Teams
(National, District and Ward). Annual Joint Review (AJIR), Sector Consultative Group and
Sector Consultative meetings are also in place. The programme is implemented at National
and Local level. However as it has been with SWAps, coordination and prioritization of
activities remains a challenge. The desired sector coordination requires various sectors to be
committed to working together. This challenge must be addressed as a priority.
Institutional Framework for Implementing ASDP
(a) Public Sector Roles
The main implementation strategy of ASDP is vested on two levels of the Government,
namely, the central government and the local governments. In between these two
government levels there is the role of the regional secretariats.
At the central level, implementation is overseen by the ASLMs and coordinated by the PMO.
The Review has found out that there are several serious constraints that the lead Ministries
needs to overcome in order to play their roles effectively; these are:
Inadequate manpower and skills for policy formulation and analysis, monitoring
and enforcing policies, standards and regulations.
Inadequate performance standards and a framework for assessing performance of
service providers, especially at the level of LGAs, together with inadequate human
resources and facilities for enforcing standards and regulations.
Weak operationalization of mechanisms for institutional coordination among the
various ministries, and between central ministries and the LGAs, and
Inadequate financial, human and technical capacity to generate, manage and
disseminate accurate agricultural information.
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To overcome the first two constraints, the Government has plans to strengthen the capacity
of the lead Ministries including PO-RALG by:
Training Ministry staff in policy formulation, analysis, as well as strategic planning
and management.
Reviewing employment conditions, promotion prospects and salary scales with
the aim of recruiting and retaining high calibre staff.
Deploying additional staff for supervising and monitoring the enforcement of
standards and regulations, and
Providing the necessary facilities and equipment for proper monitoring of
standards and regulations.
What is now required is implementation of these remedial plans.
i The Regional Secretariat
The Regional Secretariats have been streamlined under the LGRP to play four basic roles:
Creating an enabling environment for LGAs to operate efficiently.
Assisting LGAs in capacity building.
Providing technical support to LGAs.
Monitoring the performance of LGAs.
In addition, under the ASDP the Regional Secretariats are supposed to facilitate technical
coordination between the sectoral Ministries and the LGAs.
However,
All regional secretariats are poorly staffed and equipped:
Three advisors in livestock, crops and cooperatives represent the lead
ministries; this is insufficient for the roles specified at this level, particularly as
the advisors lack adequate logistical support.
Furthermore, because the Secretariats report to PMO-RALG, technical coordination
between them (and LGAs) and the lead Ministries is weak.
To overcome these two related problems, PMO-RALG, in consultation with the agriculture
lead ministries, should:
Deploy additional technical staff and the necessary logistical supports to the
Regional Secretariats to enable them provide effective support to the LGAs.
Review employment conditions, promotion prospects and salary scales with the
aim of recruiting and retaining high calibre staff.
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ii The Local Government Authorities (LGA)
LGAs have a critical role in the successful implementation of the ASDP because they
undertake all development initiatives intended to improve the rural livelihoods. The roles
pertaining to agricultural development include:
Promoting social and economic development.
Designing and implementing agricultural sector plans.
Supervising the implementation of laws, acts and regulations relevant to the sector.
Supervising and coordinating the delivery of extension services.
Mobilizing resources (financial, human and facilities/equipment) for local
development programmes.
Administration of villages for the purpose of stimulating sustained development.
Land administration, land use planning and management for effective and
sustainable land utilization.
LGAs face many constraints that limit their capacity for implementation; the constraints
include:
Lack of technical skills and facilities to enforce some roles.
A lack of expertise for strategic and financial planning and management.
Very limited resources for local level institutional building for community
participation in the development process.
A shortage of competent personnel and, in some cases, technical equipment to
manage and control the development process, particularly lack the technical
capacity for undertake effective and timely land use planning.
Lack of specific incentives to attract staff to go to and stay in remote rural areas.
Formidable challenges in technical staff movement in rural areas due to poor
roads and/or travel logistic support.
(b) Assessment of Implementation at sub-national Level (LGAs)
Discussion with some sub-national level stakeholders revealed that the ASDS/ASDP is well
known by district council officials but not by many stakeholders outside that group. On the
other hand, the DADPs are well known even at the village level. The reason being that sub-
district level stakeholders are more interested in a framework that they actually implement
(“hands on”) and not on one that provides general guidance for the sector’s direction (“eyes
on”).
With respect to the implementation of the ASDS/ASDP, the chosen implementing
instrument is the District Agricultural Development Program (DADP).The DADP framework
uses an extended Opportunities and Obstacles to Development (O&OD) for identification
20
and prioritization of projects. The process of initiating, identifying and overseeing the
implementation of agricultural projects is quite comprehensive and is well known by sub-
district-level stakeholders. It goes as follows: a) the initial stage of O &OD (at village level)
and the preparation of DADP are sent by DALDO to the regional secretariat for comments
and guidance. b) The comments by the regional secretariat are sent back to DALDO for
incorporation c) from DALDO it goes to the council management team (CMT) which is an
extended district facilitation team. The CMT has its own committees such as one for
economics, land, environment and works; and finance committee. d) From the CMT the plan
goes to the full council which is not a decision making body but rather a public awareness
meeting that brings together the public in the district.
In the whole process of identifying, selecting and implementing projects must attract very
strong participation by stakeholders; otherwise no funds will be allocated for any project.
Monitoring and Evaluation
M&E Management
ASDP monitoring activities are greatly assisted by the data generated by the various
components of the Poverty Monitoring Master Plan (PMMP), as it includes a wide range of
information pertaining to the performance of the agricultural sector at national and local
levels. Much of this data is collected by the sector Ministries.
An effective M&E should directly impact on the performance of the Ministry’s organization.
Overtime M&E should become cost effective, as the focus is shifted to where performance
faces problems and efforts are directed towards solving the identified problems.
In order to properly assess the effectiveness of the agricultural sector policies, it is
important to identify proper performance indicators. Identifying proper performance
indicators is important, but accessing reliable data is even more important. But even if we
develop appropriate performance indicators for assessing the effectiveness of the policy, it
is not possible to wholly attribute the performance of the sector to the policy. As
emphasized earlier, the performance of agriculture depend also on what happens in other
sectors as well as what happens globally.
While there is an M&E framework for evaluating the implementation of the ASDP, this
function has been compromised by weak capacity for the same in ASLMs. There is now
recognition of this capacity shortcoming in monitoring and evaluation of policies (and their
strategies) in ministries and other government institutions. Consequently; effective July
2010 a monitoring and evaluation unit was established under each Director of Policy and
Planning (DPP) in the government.
21
One area that needs to be emphasized in the M&E of the ASDP is on compliance with rules
and standards, internal functions and capacity of the monitoring and evaluation unit.
(a) M&E at national Level
The Inter-ministerial Coordination Committee (ICC) is responsible for monitoring the
implementation of the ASDS at national level to ensure that the goals of the ASDS are being
achieved. Similarly, the Technical Inter-ministerial Committee (TIC) monitors the
implementation of the ASDS by the LGAs.
The monitoring of the ASDP is guided by five fundamental criteria:
Implementation schedule. Adherence to the implementation schedule that is set
out in the ASDP in respect of time frame, financial requirements, and attainment
of objectives,
Standards. Observation and fulfilment of set national standards where these are
applicable.
Consistency with national development goals. Adherence to the ASDP and other
national policies as stipulated either in the constitution or relevant pieces of
legislation.
Cohesiveness. Paying attention to linkages between the priority areas in the
strategy and specific actions within each area to ensure there is consistency.
Stakeholder performance. Performance of the various actors at the district and
sub-district levels in relation to fulfilling their mandate, executing their roles and
responsibilities and the effectiveness of their plans and activities, i.e. delivering
services and attaining the stated goals and objectives.
The ICC uses these criteria to monitor the progress made in implementing the ASDS as a
whole, while the TIC will use the same criteria for monitoring and evaluating the annual
ASDPs.
(b) M&E at sub-national Level
At the district level, the relevant Standing Committees are responsible for monitoring the
implementation of DADPs and Regional Secretariats monitors implementation of DADPs in
their respective regions.
In terms of indicators, there is an M&E framework that captures farm-level indicators,
district-level indicators as well as national level indicators. However, policy implementation
and M&E at sub-national levels face two main challenges. First is the in the area of
communication channels; these are very poor at all levels from the village to the Ministry
22
(PMO-RALG) and vice-versa. Second there is the challenge of political insensibility and
consistence at local government level mainly because of low levels of education and
exposure to development issues.
At the village level, for each agricultural project there is a committee selected by the village
government to oversee the day to day implementation of the project. Sometimes these
committees get backstopping from the district but the village district committee is
responsible for overall project supervision; hence the district government is expected to
have hands off and only eyes on to ensure that money is properly spent and that the district
internal auditor does the value for money audit. In terms of reporting the channel is the
same as one for monitoring. The field officer on sight is responsible for frontline monitoring
and information generated in the field is then forwarded to the Ward Agriculture and
Livestock Extension Offices (WALEO).
Way Forward
In order to strengthen the institutional framework for the development of the
agricultural sector, the following interventions are proposed for integration into the
next phase of ASDP.
1. Strengthening Coordination, Communication and Harmonisation for Implementation
of ASDP
Tanzania has adopted and implemented a sector-wide approach for the development of the
agricultural sector (Ag-SWAp). This approach allows for improved harmonization of
stakeholders’ support towards a common goal within a shared sector policy framework and
development strategies, a common expenditure framework (Medium Term Expenditure
Framework - MTEF), harmonized implementation systems, funding arrangements, client
consultative mechanisms and a single sector performance monitoring system.
The ASDP as agreed upon by all stakeholders and the NSGRP provide the strategic
framework for the agricultural sector. The Ag-SWAp entails adopting a sector-wide MTEF,
determining resource availability and allocating them among sub-sectors on the basis of
priority requirements. An Ag-SWAp also allows for the tracking of expenditure for the entire
sector, by adopting standard budgeting, funding, procurement, auditing and reporting
systems. Thus the implementation of ASDP requires a well-coordinated effort on the part of
stakeholders - ASLMs, LGAs, Development Partners, NGOs and the private sector. This in
turn needs a facilitative and functional institutional structure.
23
Way Forward
To further consolidate the standardization of the agricultural sector interventions, the
government, together with other stakeholders, both public and private, should work
together to:
Review the ASDS to take into account new challenges, new opportunities, and new
players in the sector and thus align all future interventions in the sector to the
NSGRPII, and Kilimo Kwanza resolutions.
Review and update all sub-sector policies to reflect the Ag-SWAp.
Enhance accountability and commitment amongst the players as per CAADP
principles.
Given the PPP Act, finalise its Policy currently under formulation and develop its
implementation strategies.
The Council Management Team (CMT), District Consultative Council (DCC) and
Regional Consultative Council (RCC) must be strengthened to discuss ASDP agenda,
and
Replace Basket Fund Steering Committee with ASDP Steering Committee to
accommodate more players in the sector.
2. Strengthening the Involvement of the Private Sector, NGOs, CBOs and other Non-
State Actors in the Implementation of ASDP.
While the ASDP spells out the need for the close involvement of the private sector in the
planning and implementation of sector support interventions, the absence of a specific
platform for private sector involvement at a national level leads to limited participation of
the private sector.
At the LGA level it was envisaged that the private sector, including NGOs and farmer
organizations, would be involved directly as members of the District and Ward Facilitation
Teams (DFTs and WFTs) in the planning and follow-up of the District Agricultural
Development Plans (DADPs). They were also expected to participate as service providers
(research, extension, training, irrigation, input and output market) to farmers in the
different localities. In practice, the incorporation of the private sector in ASDP activities
through DFTs and WFTs or as service providers remains limited.
At the same time, the private sector in Tanzania has a limited capacity to play its expected
role in the development of the agricultural sector. Further policy reforms are also necessary
to provide more incentives for the private sector to develop its entrepreneurship skills and
to participate more actively in sector development, particularly in the areas that require
24
heavy investment like irrigation, agro-processing, warehousing, marketing and other
infrastructures.
To strengthen private sector participation in the implementation of ASDP towards
agricultural and rural development, specific actions are recommended as follows:
Strengthening National Consultative meetings for public-private consultation on
policies and strategies related to agricultural development.
Creating financing mechanisms that will be appropriate for different players in the
sector, including small, medium and large-scale producers.
Building the entrepreneurial capacity of emerging agricultural service providers at
District level.
Ensuring stronger representation and involvement of the private sector and other
non-state actors in the DFTs, WFTs.
Strengthening producer organizations, particularly the various forms of cooperatives,
so that they can serve as reliable service providers to their members.
Utilizing PPPs where possible for areas requiring heavy investments.
3. Establishing a Sector Wide Monitoring Framework and Knowledge Management
System
The performance of the sector will need to be assessed using a common monitoring
framework to report on financial and physical performance at district and national levels.
The monitoring and evaluation (M&E) framework for ASDP has been finalized, but will need
to include all the relevant indicators for the sector, for example those relevant to fisheries.
The ASLMs have prepared Local Government Monitoring Data Base Version II (LGMDII)
which is a system based for linking ASLMs and LGAs. The system is being piloted in Dodoma
and Morogoro regions.
Way Forward
Establish a system for up-dating the sector with the proposed monitoring framework and to
roll out the LGMDII to all LGAs.
Establish a strategic analysis and knowledge support system in the country that will
facilitate the sharing of analytical work for evidence-based decision making and
policy formulation.
25
CHAPTER III: AGRICULTURAL SECTOR PERFORMANCE
3.1 Introduction and Sector Performance Analytical Framework
This chapter makes an analysis of the performance of agricultural sector by identifying the
key performance indicators at national and sub-national levels and using them as reference
points to gauge the changes overtime as well as describing the status of the sector. The
sector review needs to be properly conducted by tracking the variations in the indicators.
Thus, appropriate performance indicators are crucial for consistent and meaningful review.
In addition, performance indicators for agriculture need to meet the basic requirements
and/or qualifications of efficient indicators. For example, they need to be sufficiently
objective, specific, measurable, achievable, relevant and time-bound, despite the fact that
some of the qualifications have not been met by the current review owing to the nature of
data set for the sector.
Since the Agricultural Sector Development Strategy (ASDS) and the National Strategy for
Growth and Reduction of Poverty (NSGRP) – MKUKUTA are the national policy frameworks
where all the agricultural programmes and activities are drawn, another criterion used to
select performance indicators is to ensure that they are consistent with operational targets
of ASDS as well as MKUKUTA. Given the diversity of agricultural sector this review would
requires a long list of performance indicators which are not easy to identify and select1.
However, for the purpose of this study and especially to make this review manageable, the
number of performance indicators has been scaled down to 20 focusing mainly on cluster 1
where agricultural related interventions are specified, and covering 5 goals and 22
operational targets.
The selected performance indicators are summarized in Box 3.1. There are 7
macroeconomic indicators, and 13 sub-sectors’ which governs the operations of producers
and other stakeholders along the value chain of commodities.
1 MKUKUTA, for example has five operational targets to be achieved by a set of 20 strategies, and ASDS has
100 performance indicators relating to over six components (URT 2006).
26
Box 3.1: Selected Agricultural Sector Performance Indicators
(a) Macroeconomic Indicators
GDP Growth
Headline Inflation
Food Inflation
Basic Needs Poverty
Income Poverty: Rural – Urban
External Sector: Balance of Payments, Current Account Balance, Official Reserves, Terms of Trade, Strength of the Tanzanian Shilling against Major Currencies
Growth of Credit to the Private Sector (particularly in agriculture) (b) Sector and Sub Sector Indicators
Agricultural sector contribution to GDP
Agricultural growth rate
Food Security: Food Self-sufficiency Ratio; Food Poverty
Agricultural sector’s contribution to foreign exchange earnings
Agricultural sector’s contribution to Rural Income Poverty Reduction
Producer Incentives
Farm productivity: Yields and labour productivity
Irrigation expansion rate
Mechanization rate
Growth rate of private sector investment in agriculture
Agriculture Share in Commercial Banks
Share of agricultural sector public expenditure
Livestock production and Fisheries performance
3.2 Macroeconomic Performance
3.2.1 Gross Domestic Product (GDP): Growth and Structure
The GDP growth trend since the 1990s has generally been rising, except for such shocks coming from food crisis, power crisis and lately, the global economic and financial crisis. Since 2005, Tanzania’s GDP annual growth rate averaged 7 percent, which is in line with MKUKUTA target of 6 – 8 percent per annum. In 2009 however, GDP growth was 6.0 percent, lower than 7.4 percent recorded in 2008, the decline being partly due to the global financial crisis (see figure 3.1).
27
Figure 3.1: GDP Growth at Constant 2001 Prices
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
2005 2006 2007 2008 2009
7.46.7
7.1 7.4
6.0
Perc
ent
Source: BoT (2010)
According to BoT (2010), the highest growth was recorded in communication sub-activity,
which grew by 21.9 percent, followed by financial intermediation (9.0 percent) and
electricity and gas (8.4 percent) (see figure 3.2). The good performance in communication is
in line with the increase in mobile phone usage. As we shall see later, the usage of mobile
phones in the rural agricultural sector has expanded drastically judging from the number of
people owning the mobile handsets
Figure 3.2: Sectoral GDP Growth for 2008 and 2009
Source: BoT (2010)
(a) Implication of the Global Financial Crisis to Agriculture
28
The impact of global financial crisis has taken multi-dimensions. No country has escaped the
turbulence from this crisis. Growth in many developing countries has been marked down.
Likewise, the economies of high-income countries have contracted and entered into
recession. Following this crisis, volume and prices of exports went down, flows of capital and
investment fluctuated, tourist and demand for tourism products were reduced2.
The global agricultural commodity market has equally been affected by the global financial
crisis. In particular, cotton prices in the world market have been declining since the first
quarter of 2008 as indicated on figure 3.3. Between Jan 08 and Jan 09 cotton has declined
by 19.38percent, and the current coffee prices in the world market are 6.09 percent below
projections for 2009. Other crops whose prices show a declining trend during the period
under consideration include coffee, tea, and cloves.
Figure 3.3: Monthly Commodity Prices: 2008
Impact on traditional export crops is therefore among the chief areas in Tanzania affected
by the crisis (Moshi 2009). The main concern here is that, exports had declined due to slow
growth (or decline) in the US and some European countries, including China, India and
Brazil. It is reported that some of the major cotton dealers in the world market have
cancelled orders of cotton from Tanzania (Ndulu 2009). Until January 22, 2009, 138,011
bales of cotton (quarter of the total output for the 2008/09 season) were piled up in
ginneries due to lack of orders. Thus, in Tanzania, the cotton industry is already facing
declining demand and falling prices. The same is true in cases of tea, coffee, Nile perch and
sisal. The Tanzania Horticultural Association (TAHA) reports that “the current financial crisis
2 Economic impact of the Global Financial Crisis has been discussed in detail by for example Bank of Tanzania
(2009); Ndulu (2009); Moshi (2009); Mashindano (2009)
29
and its spreading effects have precipitated the worst market dilemma in 30 years (Moshi
2009). The fresh fruits and vegetables industry are the hardest hit. Prices of flowers and
vegetables have declined by 30-50 percent according to Weekend Review, (08.02.2009, P26
in Moshi 2009). Thus, agriculture is among the most affected sectors following the global
financial crisis.
(b) Implication of High Growth Rate in Communication to Agriculture
As noted earlier, the highest growth was recorded in communication which is mainly
reflected in expanding usage of mobile phones in the country including the rural agricultural
sector. Since 1994, mobile phone technology has been expanding with a total of six mobile
companies focusing their coverage to initially highly populated areas especially big cities and
district capitals to maximize profits (TCRA 2009; ESRF 2010). However with the increasing
mining activities and companies, national parks, tourism and small towns in rural areas, the
business competitiveness increased among mobile phone service providers. Following these
developments, the rural and peripheral areas became potential areas to most of mobile
operators who have gradually been increasing interest into those areas. Subsequently, over
10 percent of Tanzanians now own mobile phone (2008 estimates), 17 percent of Dar es
Salaam population, 10 percent of other urban areas, and 4 percent of rural population.
One of the opportunities emerging from GDP growth (i.e. communication) in Tanzania which
agricultural sector through the division of Commodity Marketing Development of the
Ministry of Industry, Trade and Marketing has utilized is the use of mobile phones to
strengthen agricultural market information. In terms of facilitating availability of important
market information on time, the MITM collects market information on crops, livestock and
livestock products from different sources. These sources include the Crop Boards,
Cooperative Unions, Regional Markets, Municipal and City Councils, Traders etc. Collection
of market information is done throughout the year. The type of information collected
includes producer prices, retail and wholesale prices etc.
A system has been designed to assist farmers (producers) and traders to access market information using Short Message Services (SMS). Using SMS traders or farmers can access information on food crop prices for each of the 20 regions in the Mainland, and prices for livestock from each of the 14 livestock markets in the Mainland, as well as prices for all the livestock products such as hides, honey, milk and meat (See appendix 7 and 8). There is no doubt that, this is the right intervention which will strengthen and improve agricultural marketing performance in Tanzania if efforts are also made to disseminate and attract farmers and traders to use it. Unfortunately, this marketing tool is not known to majority of the rural farmers as well as traders in the country.
30
There is therefore a need to allocate additional budget to the division of Commodity
Marketing Development of the Ministry of Industry, Trade and Marketing to enable more
farmers and traders make use of this marketing tool. One way of doing this is to publicize
the tool through awareness creation and training.
3.2.2 Headline and Food Inflation
The trend in inflation rate had dropped to below 5 percent during the early years of 2000s.
Afterwards, it started to rise gradually in 2005, and kept on rising the most part of 2009 with
the highest rate of 13.3 percent in February 2009 (BoT 2010, URT 2010). However, the trend
in inflation rate had dropped to below 5 percent during the early years of 2000s.
Afterwards, it started to rise gradually in 2005, and kept on rising the most part of 2009 with
the highest rate of 13.3 percent in February 2009 (BoT 2010, URT 2010). However, the
inflation rate declined to 13.0 percent in March 2010, and further down to 10.7 percent in
June 2009, before experiencing a mixed pattern and thereafter declining to 9.0 percent in
March 2010. According to URT (2010), this rise was mainly due to drought-instigated food
shortages in Tanzania and the neighbouring countries; shortage in electricity supply, which
increased production costs as producers shifted to using generators; and increases in
petroleum prices, which raised the import bill and production costs. However, even though
inflation targets were not realized, the economy recorded high and sustained growth and
increased revenue mobilization.
Thus, the deceleration of annual inflation rate in the recent months is associated with
decrease in both food and non-food inflation. It appears that food price is largely
responsible for the rising inflation. Currently, food constitutes 55.9 percent of the basket
used for construction of the Consumer Price Index (CPI). There was an increase in food
inflation from 14.5 percent in 2009 to 15.5 percent in 2010 (a 12-month average food
Table 3.1: Annual Percentage Change in Consumer Price Index (All-Urban) (Base: Dec 2001 = 100)
Commodity
Group
Weight
(%)
2008 2009 2010
Jan Feb Mar Jan Feb Mar Jan Feb Mar
Headline
(Overall) 100 8.6 8.9 9.0 12.9 13.3 13.0 10.9 9.6 9.0
Food 55.9 10.1 11.4 11.2 18.2 18.6 18.5 11.3 10.1 9.7
Non-Food 44.1 6.4 5.3 5.8 4.8 4.8 4.3 10.1 8.9 7.8
Source: BoT (2010)
As can be depicted from Table 3.1 and according to a report by Bank of Tanzania (BoT 2010),
annual food inflation rate decreased from 18.6 percent and 18.5 percent in February and
March 2009, respectively, to 17.0 percent in June 2009. It then experienced a mixed trend
31
before declining to 9.7 percent in March 2010. As observed earlier, the 12-month average
food inflation rate was however higher in March 2010 than the rate registered in the
corresponding period a year earlier. The high food inflation in 2009 was mostly driven by
high prices of cereals. The 3-month moving average annual food inflation decreased to 10.4
percent in March 2010 from 11.9 percent in the preceding month. Starting November 2009
the annual food inflation exhibited a declining trend, explained mostly by decreases in
average prices of some food items particularly maize, cassava, cooking banana, fruits,
following improvement in food supply across eastern Africa region.
On the other hand, annual non-food inflation rate took a downward trend from 4.8 percent
in February 2009 and 4.3 percent in March 2009 to 1.0 percent in June 2009, the lowest rate
for the past 5 years, mainly due to decline in average prices of fuel. It then started to
increase gradually beginning July 2009 reaching a peak of 10.1 percent in January 2010,
mainly on account of increases in average prices of items under fuel, power and energy,
drinks and tobacco, before it started going down slowly during the subsequent months to
7.8 percent in March 2010.
Figure 3.4: Annual Percentage Change in Consumer Price Index (ALL-Urban) (Base: Dec 2001 = 100)
Unlike food inflation, the 12-month average annual non-food inflation rate was 4.7 percent
in March 2010, lower than the average rate of 6.5 percent for the corresponding period a
year earlier. Similarly, the 3-month moving average annual non-food inflation rate
decreased to 8.9 percent in March 2010 from 9.1 percent in February 2010.
32
The increasing food inflation and overall inflation have affected agriculture mostly in terms
of the ability of farmers to access inputs, land and other basic needs thus frustrating the
efforts to reduce poverty. This is particularly true because, purchasing power of most
dwellers in rural areas that derive livelihood from agriculture has been scaled down. In
addition, while the cost of living is pushed up, incomes of most farmers did not increase
concurrently. To address the inflationary pressure, the government needs to pursue prudent
fiscal and monetary policies as well as addressing supply constraints of food by scaling up
the current voucher system as well as Warehouse Receipt System (WSR), among other
measures.
3.2.3 The Status of Poverty: Basic Needs and Income Poverty
Between 2000/01 and 2007 the incidence of income poverty did not change significantly
despite the fact that during the last ten years, Tanzania’s GDP growth rate has been
impressive (URT 2010). Table 3.2 presents the incidence of poverty in Tanzania Mainland
between 200/01 and 2007. As it can be depicted from the table, 36 percent of Tanzanians
were poor in 2000/01 compared to 34 percent in 2007. This is a decline of only 2 percent.
Income poverty (basic needs and food poverty) was also variable across different
geographical areas, with the rural areas containing 83.4 percent of the poor in 2007
compared to 87 percent in 2000/01. Thus, the households which are engaged in farming,
livestock keeping, fishing, and forestry were the poorest. The change in rural per capita
income was small owing to the fact that annual rural growth (as proxy by growth of the
agricultural sector) was about 4.5 percent while the national population growth rate is 2.9
percent. This situation perpetuates even further the poverty problem in the rural areas.
Table 3.2: Incidence of Poverty in Tanzania Mainland: The Headcount Poverty Index
Incidence of Poverty Dar-es-Salaam Other Urban Areas Rural Areas
Mainland
Tanzania Year
Food
2000/01 7.5 13.2 20.4 18.7
2007 7.4 12.9 18.4 16.6
Basic Needs
2000/01 17.6 25.8 38.7 35.7
2007 16.4 24.1 37.6 33.6
Source: URT (2007)
Although the annual jobs created (about 630,000) match the labour force growth in the
country, unemployment remains an ardent concern. This is particularly true because most
of employment creation has primarily been taking place in small informal businesses, which
typically have low earnings and productivity (See URT 2009; URT 2010). In addition, the
quality of jobs created is also an important factor in explaining the stagnation in poverty
levels. According to the Integrated Labour Force Survey (ILFS 2006), unemployment remains
33
an issue, in particular among the youth aged 18-34, which stood at 13.4 percent in 2006. It
is even highest among female youth – about 15.4 percent compared to 14.3 percent for
male youth in the same age bracket. Generally, unemployment rate is higher for females
than for males, except in the rural areas. At the same time, most of the smallholder farmers
who are the majority in agriculture invest little in agriculture in terms of money, making
them to remain small scale farmers and subsistence.
3.2.5 Growth of Credit to Private Sector in Agriculture
The ratio of domestic credit to the private sector as a percentage of GDP evidences efforts
to foster the private sector (URT 2010). Though this proportion has been rising from 4.6
percent of GDP in 2001 to 13.8 percent in 2007, it is still relatively small because small- and
medium-scale enterprises (SMEs) and the agricultural sector are under-served by banks due
to commercial viability reasons, in particular the weaknesses in legal and regulatory
systems, especially with respect to enforcement of contracts and property rights. Now that
the private sector is the engine of growth in terms of driving productive activities in the
economy, growth of private sector investment in agriculture is critical. Unlike other sectors,
since 2008 agriculture has experienced slower annual growth of credit. While agriculture
recorded 14.5 and 8.4 annual percentage credit growth, transport and communication
credit growth doubled to 34.8 percent in the year to March 2010 from 17.4 percent in the
year ending March 2009 respectively. This is in line with the continued strong performance
in communication, which is the fastest growing activity in the economy and the only one
whose real growth picked in 2009 compared to 2008.
Likewise, agricultural sector has been ranking low compared to other sectors in terms of
percentage share of Other Depository Corporations (ODCs’) credit share. While, the
personal loans continued to hold a largest share accounting for 21.8 percent of the total
stock of outstanding loans in March 2010, the second largest share of credit was held by
trade activities that accounted for 18.5 percent followed by manufacturing (13.0 percent),
agriculture (9.7 percent), transport and communications (9.1 percent) and other services
(7.8 percent).
For the past decade or so, economic growth in Tanzania has not been associated with
poverty reduction and improved livelihoods of the people largely because higher growth
does not take place in agriculture where majority (nearly 75 percent) of the people are
living. This is partly because of the low agricultural investment, among others. There is
therefore an urgent need to scale up investment in agriculture in order to stimulate
agricultural growth, if pro-poor growth has to occur.
34
3.3 Sector and Sub-Sector Performance
3.3.1 Agricultural Contribution to GDP
(a) Sectoral Share to GDP
Agriculture remains the dominant sector in Tanzania in terms of its contribution to the Gross
Domestic Product (GDP) and generation of employment. It contributes an average of 26
percent of GDP and nearly 24 percent of the country’s export earnings per annum. In
relation to growth and its contribution to poverty reduction, agricultural sector has
persistently registered a lower growth rate compared to other sectors thus affecting its
contribution to poverty reduction in the country. The share of agriculture in total GDP has
been decreasing slightly since 2000 (See Table 3.3). For example, between 2000 and 2009
the share of agriculture in total GDP has been making a gradual decline from 29.3 percent in
2000 to 24.6 percent in 2009.
Table 3.3: Sector Contribution to Real GDP in Percentage Year→
Sector↓ 2000 2001 2002 2003 2004 2005 2006 2007 2008p 2009p
Agriculture 29.3 29 28.4 27.4 26.9 26.1 25.4 24.6 25.8 24.6
Industry 17.9 18 18.4 19.1 19.6 20.2 20.5 20.9 21.0 22.0
Services 45.3 45.5 45.7 46.1 46.1 46.4 46.9 47.3 43.7 43.6
Other 7.5 7.5 7.5 7.4 7.4 7.3 7.5 7.5 9.5 9.8
Source: BoT (2010)
The services sector contributes the largest share in total GDP. It contributed an average of
45 percent per annum between 2000 and 2009. Though marginally, the GDP share of the
service sector has been rising, at least between 2000 and 2007. 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.
(b) Agricultural Contribution with and without Spillovers Forward and backward linkages in agriculture is exemplified by value adding activities along
a product value chain such as agro-processing which would be stimulated by the increase in
production of a particular crop. Some of these effects may be captured within agriculture,
but many of them would belong to manufacturing or transport sectors. Consumption
effects arise in a case where farmers who gained additional income would spend it on the
consumption of locally produced goods/services which, in turn, stimulates supply of such
goods/services in the respective industries or sectors. In this case too, the derived
economic value would not be captured by the agricultural sector but by other sectors. In
either case, such additional economic activities and their associated values are counted
under the other sectors even though they have been originally induced by the expansion of
agricultural production. If, instead, these derived value-added were included in the
35
agricultural sector, the contribution of the sector to GDP would be much higher. Estimation
of such extended contribution of the agricultural sector was attempted during the 2006
Agricultural Sector Review for the period 1999 – 2005 using the sector growth rate (See URT
2006), and is repeated in this study focusing on the period 2000 - 2009.
Note that, between 2000 and 2009 agricultural sector has been expanding at an average
annual growth rate of almost 4.3 percent. While the agricultural annual growth rates have
been generally lower than the aggregate economic rates, they have been substantially
higher than the average annual population growth rate, implying positive income growth
amongst agricultural households in the country. A close examination of the actual
contribution of the agricultural sector to the economy was therefore made. The Tanzanian
economy has been growing at an average annual rate of almost 6.7 percent during 2000 -
2009. What has been agriculture’s actual contribution to this rate of growth? This
contribution was computed on the basis of the agricultural sector’s share in the aggregate
GDP and its own growth rate. As demonstrated in Figure 3.4, the sector contributed
approximately 20 percent of the aggregate GDP growth. Since GDP growth averaged 6.7
percent per annum, the agricultural sector accounted for 1.34 percent. The trend of the
agricultural sector’s contribution to the growth rate since 2000 is illustrated in Figure 3.5 by
the line marked as “contribution without spillover effects”. This, in turn, implies that the
growth of the agricultural sector had substantial effects on the growth of the entire
economy. The importance of this is enhanced if the spillover effects of the agricultural
sector are taken into account as illustrated by the line marked “contribution with spillover
effects”. There is an empirical evidence to suggest that the multiplier impact of the
agricultural sector on other sectors can average twice the original impact3. This estimate
was then applied to the Tanzanian original data estimates. Thus, although the growth rate
of the agricultural sector has been lower than the overall economy, by considering the
spillover effects examined here, the real contribution of the sector has been much higher
than the recorded growth rates. The recorded growth rates mask and understate the actual
contribution of the agricultural sector to the Tanzanian economy because the value of
spillovers are not considered.
It is expected that overtime the agricultural primary contribution should be declining while
the spillovers or value addition expands. Automatically, the tax base becomes wider as it will
be influenced by value addition through agro processing along the value chain. It is
3 IFPRI (1998) (Agricultural Growth Linkages in Sub-Saharan Africa, IFPRI Research Paper No 107 by Delgado
C.L. et al.), in URT (2006). They estimated that “… $1.00 initial growth in rural agricultural incomes leads to an additional $1.00 on average of income from production of rural non-tradables. This means that 1 % growth of rural agricultural activities produces another 1 % of growth in non-tradable industries, resulting as a whole to 2 % growth in the agricultural related activities
36
therefore recommended that agro processing be promoted all the way from the farm
(primary processing) to secondary processing along the value chain.
Figure 3.5: Growth Contribution of the Agricultural Sector
3.3.2 Agricultural Growth Rate
Over the period 1998 – 2009 the growth rate of agricultural sector has been fluctuating
between 0.8 (1998) and 5.9 percent (2004) (See Figure 3.6), while the growth rate of GDP
during the same period has been fluctuating between 4.1 (1998) and 7.8 percent (2004).
Agricultural sector has persistently registered a lower growth rate compared to other
industry and service sectors. While agriculture has been growing at an average of 4 percent
between 1998 and 2009, industry and service sectors have been growing at an average of
8.3 and 7 percent respectively during the same period. The average growth of GDP between
1998 and 2009 is 6.4 percent. From this pattern of economic growth, it is obvious that one
of the main reasons why economic growth in Tanzania over the past decade has not been
associated with poverty reduction especially in the rural areas is that agricultural sector
which support over 70 percent of the population has been growing relatively slowly
compared to other major sectors.
37
Figure 3.6: Growth Rates of Total GDP, Agriculture, Industry and Services
Source: Author’s computation
A close inspection of the pattern of growth of GDP, agriculture, industry and the service
sectors appears to refute the notion that, to a large extent the growth rate of GDP has been
significantly determined by the growth rate in the services and industrial sectors, which
have been growing at around 7 and 8.3 percent per annum respectively (See Figure 3.5). The
economic base of agricultural sector is critical in determining the pattern of growth of not
only GDP, but also other sectors such as industry and services. In other words, figure 3.5
reveals that, given its size (economic base); the pattern of growth of the economy has been
influenced by agriculture. With the ongoing emphasis to scale up agricultural investments,
it is possible that in the long run other sectors such as industrial sector and the service
sector will also be influenced by agriculture.
3.3.3 Food Security
(a) Food Crops Production Projections Projections of production of food crops made in 2009/10 by the Crop Monitoring and Early
Warning (URT 2010) for 2010/11 reveals that out of 21 regions in Tanzania Mainland, 1 is a
deficit region with Self Sufficiency Ratio (SSR) of less than 100 percent; 15 are self sufficient
regions with SSR between 100 and 120 percent; while 5 regions are surplus regions with SSR
greater than 120 percent. These findings show that, only 5 percent of the country is under
food deficit, while 71 percent is self sufficient and 24 percent is food surplus area. The
deficit region is located in the central part of the country; and the self sufficient regions are
mainly located in the eastern as well as northern part of Tanzania: while the surplus regions
are mainly located in the southern part of the country. This is a significant improvement
from 2009 where projections made in 2008/09 2009/10 reveals that out of 21 regions in
Tanzania Mainland, 10 were deficit regions with SSR of less than 100 percent; 4 were self
sufficient regions with SSR between 100 and 120 percent; while 7 were surplus regions with
SSR greater than 120 percent. Nearly 48 percent of the country was under food deficit,
while 19 percent was self sufficient and 33 percent was food surplus area.
38
(b) Self Sufficiency Ratio Overall, the trend in food Self Sufficiency Ratio (SSR) for Tanzania between 2005/06 and 2010/11 crop season has been between 100 and 120 percent. From 102 percent in 2005/06, SSR made a sharp increase to 112 percent in 2006/07, afterwards the SSR made a perpetual but gradual decline to 106 percent, 105 percent and 102 percent in 2007/08, 2008/09 and 2009/10 respectively; before rising to 112 percent again in 2010/11 (See also Figure 3.7). Figure 3.7: Food Self Sufficiency Ratio (SSR) in Tanzania: 2006/07 – 2010/11
Source: MAFC (2010)
Total crop production during 2009/10 crop season has been higher than the food
requirement thus creating a surplus of 429,000 tonnes. This surplus is mainly maize. The
National Food Reserve Agency (NFRA) is in the process of buying part of this surplus. The
Agency had bought 94,206.6 tonnes already by 4th October 2010. Added to carryover stocks
of 47,685.7 tonnes, the total food stocked by the NFRA is 141,892.209 tonnes. On average
the NFRA buys 2,500 tonnes daily compared to an average of 1,000 tonnes per day in the
past. Since, there are huge stocks of maize still with farmers (an indication of good
production this season), and the fact that NFRA may not be able to accommodate all the
surplus, the government has lifted the export ban to motivate private traders to purchase
maize from farmers.
(b) Purchasing Power of Consumers
Another angle of making an assessment of the status of food security in the country is by
looking at the costs of basic needs including food stuff. According to a recent survey by the
Economic and Social Research Foundation (ESRF) covering the period 2005 to 2009,
respondents reported a very rapid rise in costs of living, which outweighed any gains made
by the rise in price through the warehouse receipt schemes4.In Newala for example, people
4 This survey was conducted in three districts namely, Magu in Mwanza, Newala in Mtwara and Nkasi in Rukwa
(See Mashindano et al 2010)
39
feel poorer because although the price of cashew rose from a low of TSHS 400, up to TSHS
500 then to TSHS 700 per kg under the warehouse scheme, this rise is not in line with a rise
in price of inputs or the rapid rise in cost of living (basics such as fish, kerosene, soap, sugar,
salt, and clothing). The poor speaks of being priced entirely out of the market for certain
basic needs (such as beef, chicken, milk and fish – i.e. the protein content of meals). The rise
in the costs of living is reflected at all Tanzanian levels in figure 3.8. The figure shows that
he consumer price indices for selected indices have been rising gradually since 2002, and
rapidly since 2005 in all areas, most notably food (followed by fuel)5. Indeed food inflation
has been the most dominant part of inflation particularly with the Global food price crisis
which begun in 2006.
Figure 3.8: The Yearly Trend in Consumer Price Indices from November 2002 to November 2009 by Selected Groups of Indices
INDEX, NOVEMBER 2009
80
100
120
140
160
180
200
220
November
2002
November
2003
November
2004
November
2005
November
2006
November
2007
November
2008
November
2009
Period
Ind
ex
Food Drinks and Tobacco Fuel Power & Water Clothing & Footwear Transportat ion
Source: NBS (2010)
Figure 3.9 below depicts the purchasing power of the shilling in terms of consumption at
different times. Since November 2002, the value/purchasing power of 100 shillings has
fallen to just 59 shillings and 28 cents in November 2009.
5The National Consumer Price Index (NCPI) covers prices collected in 20 towns in Tanzania Mainland. Prices are
gathered for 207 items. All prices collected are the prevailing market prices. The NCPI is a statistical measure of goods and services bought by persons in urban areas, including all expenditure groups. It measures changes in price - not - expenditure - which are the most important cause of changes in the cost of living.
40
Figure 3.9: Purchasing Power of 100 Tshs in Nov 2002 Compared to Nov 2009
55
60
65
70
75
80
85
90
95
100
November
2002
November
2003
November
2004
November
2005
November
2006
November
2007
November
2008
November
2009Period
Tsh
.
Source: NBS (2010)
Poverty resulting from inflation in terms of costs of basic needs is felt more acutely in urban
regions like Newala, Magu and Namanyere where people are more reliant on the market for
employment and where price levels are higher than in rural areas. One respondent in
Newala said a cow in a nearby village costs roughly TSHS 100,000 but here in Newala, it
costs Tshs 500,000. Moreover, people in peri-urban regions like Newala often have to pay
rent, which also reduces the amount available for purchasing power and foodstuffs.
Thus, although the macro picture shows that the country is food secure, there are a number
of pockets within the country which are food insecure. Tanzania is not a famine-prone
country judging from its potential to produce food. The country is able to produce enough
food to meet the prevailing demand and export some surpluses when there is adequate
rainfall and other requisites. During good seasons food insecurity becomes mainly a result of
problems associated with a poorly developed storage infrastructure, post harvest losses,
transportation and/or distribution, and low household incomes to enable the needy people
access the available food.
3.3.4 Agricultural Sector’s Contribution to Foreign Exchange Earnings
Agricultural contribution to foreign exchange earnings has been looked at through the share
of traditional exports (which consist of traditional export crops) to total exports. During the
year ending March 2010, export of goods rose to USD 2,894.3 million, compared with an
increase of USD 2,638.6 million recorded in March 2009, largely due to increase in the
volume of gold and traditional export crops. The percentage contribution of traditional
export crops to total exports of goods increased from 15.9 percent in 2008 to 17.3 percent
in 2009. Afterwards the share of traditional export crops declined to 16.4 percent in 2010.
41
In terms of value, by March 2010 the value of traditional exports rose by 3.9 percent to USD
475.2 million following increase in the export volume of coffee and improvement in export
unit price of tobacco. The values for 2009 and 2008 are given as USD 457.4 million and USD
342.8 million respectively. The composition of traditional exports for the last three years is
depicted by Figure 3.10.
Figure 3.10: Percentage Composition to Total Traditional Exports
27.1
22.3
23.2
16.8
9.4
1.1
21.6
26.1
29.5
11.2
8.4
3.2
21.3
23.6
34.9
9.9
8.0
2.3
Coffee Cotton Tobacco Cashewnuts Tea Cloves
Year ending March
2008 2009 2010
Source: BoT (2010)
When performance of traditional export crops are looked at individually, only tobacco
shows an upward trend between 2008 and 2010 in terms of share of total value of
traditional export crops. In comparison to the Mining and Tourism sectors, performance of
agriculture in terms of its contribution to foreign exchange has been low overtime as can be
gauged from Figure 3.11.
42
Figure 3.11: Sectoral Contribution to Foreign Exchange Earnings (Million USD)
3.3.5 Producer Incentives
(a) Taxation
Tanzanian farming incentives have historically and generally been weak, despite some
efforts to improve. Poor incentives in Tanzania have therefore persisted. While they have
significantly improved since the 1980s, Tanzanian farmers still face a nominal rate of
assistance, with a concentration of taxation on exportable commodities. Since most other
developing regions and most African countries have improved incentives more quickly than
Tanzania, Tanzania’s farmers have suffered relative to their foreign counterparts. The list of
incentives for agriculture is long. They include the following:
Deduction of research and farming land development expenditures for income tax
purposes
Irrigation tools and machinery are categorized as class II of assets to
qualify for a high depreciation rate of 25 percent
Tractors and other plants and machinery used for agricultural purposes
are subject to high depreciation rates of 50 percent in the first year and 25 percent
for
subsequent years
Businesses producing agricultural produce are not" subject to equal
quarterly installments’ payment requirement for income tax purposes but
are required to pay their taxes during the third quarter after harvest
Under Customs Tariff Act, 1976 agricultural inputs and implements such
as tractors, farm implements, fertilizers and other chemicals are subject to
zero import duty rates. Other items which are zero rated include
43
packaging materials e.g. empty seed packets, bags of cellulose and
materials designed for packing exports, inputs 'to water treatment,
irrigation, agriculture etc
Reduction of land rent from TSh 600 per acre to TSh 200 per acre
Exemption of Excise Duty on wine and brandy from locally produced
grapes; the measure is aimed at expanding the market for domestic wine
and so expands grape and wine production.
Zero rated VAT for agricultural exports and for domestically produced
agricultural inputs.
VAT exemption on transportation of some agricultural products (sugar
cane, sisal and tea leaf) from the farm to the processing location
VAT exemption on agricultural implements i.e. combines harvesters, hay
making machinery and mowers used in agricultural production and
livestock
VAT exemption on airfreight charges for transportation of flowers to
promote horticulture development
VAT exemption on supply of packaging materials for fruit juices and milk
products
VAT special relief on "green houses". With the aim of boosting
horticultural sector
VAT special relief to the supply of goods and services to the organized
farms and farms under the registered cooperatives unions for the purpose
of building of farms infrastructures in the farms, such as irrigation canals,
construction of road networks, construction of godowns and similar
storage facilities
Zero rated VAT on locally produced edible oil using local oil seeds by local
processors.
Exempt VAT on breeding services through artificial animal insemination.
VAT Special relief for the supply of equipments to a registered Veterinary
Practitioner under the Third Schedule to the VAT Act;
VAT Exemption on animal feeds or seed cake (locally known as Mashudu).
The measure is intended to improve the livestock keeping and enable the
oil seed farmers to receive better prices for their products, and
VAT Exemption on machines and equipments used in the collection,
transportation and processing of milk products. This measure is aimed at
promoting investment in the diary sub-sector and improves the income of
livestock keepers.
44
(b) Producer Prices
Table 3.4 presents the national average wholesale prices for selected food items. As can be
gauged from the table, wholesale prices for all major food crops, with exception of rice,
increased in 2010, when compared to 2009. However, on month to month basis (2010), the
wholesale prices for all selected food items decreased significantly particularly for maize,
potatoes and beans, following the increase in supply associated with short-rain crop
harvest.
Table 3.4: National Average Wholesale Prices for Selected Food Items (Tshs per 100kg)
2009 2010 Percentage Change
Item March February March March 09/2010 Feb to March 2010
Maize 38,138 45,739 41,464 8.7 -9.3
Rice 116,208 106,272 105,607 -9.1 -0.6
Beans 94,376 103,010 95,098 0.8 -7.7
Sorghum 47,132 52,035 51,196 8.6 -1.6
Potatoes 43,375 51,914 47,246 8.9 -9.0
Source: BoT (2010)
During the year ending March 2010, the world commodity prices showed mixed developments (See Table 3.5). The prices of coffee (Robusta) and sisal (UG) recorded declines. The drop in the price of coffee was largely due to increase in coffee production in Vietnam following favourable weather condition, while the price of sisal declined largely on account of low demand for sisal in the world market. On the other hand, the prices of coffee (Arabica), tea, cotton and cloves recorded increases. The improvement in prices of tea was largely attributable to a fall in tea production from Kenya, India and Sri Lanka. Table 3.5: World Commodity Prices
Commodity Units
Year Ending March
2006 2007 2008 2009 2010 %
Change
Robusta Coffee USD per kg 1.22 1.58 2.01 2.14 1.58 -26.01
Arabica Coffee USD per kg 2.52 2.54 2.82 2.97 3.35 12.68
Tea (Av Price) USD per kg 1.70 1.87 2.14 2.38 2.88 21.15
Tea (Mombasa Auction) USD per kg 1.62 1.88 1.77 2.20 2.70 22.68
Cotton – A Index USD per kg 1.25 1.27 1.45 1.52 1.61 5.98
Cotton - Memphis USD per kg 1.32 1.34 1.48 1.52 1.61 5.98
Sisal (UG) USD per MT 885.00 885.00 990.00 1203.50 968.50 -19.53
Cloves USD per MT 3225.69 3787.29 3606.44 4182.29 4207.54 0.60
Source: BoT (2010) Likewise, the trend in both wholesale and retail average national prices for food crops has
been increasing overtime (See Figures 3.12). However, as pointed out earlier, although the
local producers have benefited in terms of earning higher prices of some export crops and
food crops, farmers feel poorer due to the effect of inflation. The cost of living as given by
CPI has gone up and therefore the rise in producer prices is not in line with a rise in price of
45
inputs or the rapid rise in cost of living. Rather than being an incentive, increase in nominal
price of crops has therefore been demotivating.
Figure 3.12: Annual Average Retail and Wholesale Price: Maize, Rice and Beans
3.3.6 Livestock and Fisheries
Table 3.6 presents contributions of agricultural subsectors namely Crops, Livestock, Forestry
and Hunting, and Fishing to the agricultural sector. Throughout the period under review,
crops has been dominating with an average GDP share of about 20.2 percent, followed by
livestock and forestry (and hunting) with a GDP share of about 4.6 and 2.3 percent
respectively. With a share of 1.6 percent fishing has the lowest contribution to agriculture.
Table 3.6: Contribution of Livestock and Fisheries Sub Sectors in Agriculture
Economic Activity 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Crops 21.6 21.6 21.6 21.4 21.1 20.4 20.2 19.6 18.7 18.6 19 18.9
Livestock 5.3 5.1 5.1 5.1 4.8 4.6 4.5 4.3 4.2 4 4.7 4
Forestry and Hunting 2.6 2.6 2.6 2.6 2.4 2.4 2.3 2.1 2.1 2
2 2.2
Fishing 1.7 1.7 1.7 1.6 1.6 1.6 1.6 1.6 1.6 1.5 1.2 1.4
Total 31.2 31 31 30.7 29.9 29 28.6 27.6 26.6 26.1 26.9 26.5
Livestock population has been increasing over the years despite the fact that since the last
livestock census in 1984 there has been no other census conducted. The 2010 official
statistical data revealed that, there are 19.2 million cattle; 13.7 million goats and 3.6 million
sheep. Other livestock kept in the country include 1.8 million pigs, and 58.1 million chickens,
out of which, 23 million are improved chicken, 35 million indigenous poultry. Also, out of 23
million chickens, 7 million are layers and 16 million are broilers. Livestock population has
therefore been estimated based on sample census conducted in 1994/95, 1998/99 and
2002/03. The current livestock population figures are the extrapolation of the 2002/03
District Integrated Agricultural Survey.
46
Figure 3.13: Livestock Population: 2001 – 2010 (in Millions)
0
10
20
30
40
50
60
Numbers in millions
Years
Livestock Numbers (millions)
Cattle 17 17.4 17.7 18 18.5 18.65 18.8 18.9 19.1 19.2
Goats 12.1 12.3 12.6 12.8 13.1 13.3 13.5 13.55 13.6 13.7
Sheep 3.5 3.5 3.5 3.5 3.5 3.55 3.6 3.6 3.6 3.6
Poultry 27 27 27 27.5 30 41.5 53 54.5 56 58
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Source: MLDF (2010)
Despite huge livestock population in the country, the sector’s contribution to the economy
is very little. This is partly explained by the presence of diseases such as Foot and Mouth
Disease (FMD), Contagious Bovine Pleuropneumonia (CBPP), African Swine Fever (ASF) and
Newcastle Disease (ND) and other TADs act as barriers
to the export of animals and other products. The
sector is also faced with problem of compliance in new
market demands like Livestock Identification and
Traceability System (LITS) and Animal Welfare
(a) Milk Sub Sector
In Tanzania milk production is mainly from cattle. Dairy goats are also gaining popularity as a
source of milk particularly to the poor and their milk is normally consumed at household
level. Out of 19.1 million cattle found in Tanzania, 605,000 are dairy cattle. The rest are
indigenous cattle raised as dual purpose animals that are for milk and meat production.
Today, only a small proportion (about 10percent) of marketable surplus of milk produced
annually is filtering through into the urban markets and processing plants. Remoteness and
the poorly developed infrastructure constitute the biggest obstacles to collection and
marketing of milk.
(b) Hides and Skin
As indicated on figure 3.14, in 2009/2010, a total of 739,315 hides pieces of cattle, 1.9
million of goat skins and 176,400 pieces of sheep skins worth of 8.19 billion shillings were
exported compared to 982,668 hides pieces, 2.7 million of goat skins and 769,936 pieces of
sheep skins worth of 12.8 billion shillings which were exported in 2008/2009. The drop in
revenue collection was due to world economic crises. In 2006/2007, a total of 1.7 million
47
hides cattle pieces, 1.05 million of goat skins and 925,530 pieces of sheep skins worth of
16.2 billion which were exported.
Figure 3.14: Hides and Skins exports
Hides and Skins Exports 2006/07 - 2009/10
0
500000
1000000
1500000
2000000
2500000
3000000
2005
/200
6
2006
/200
7
2007
/200
8
2008
/200
9
2009
/201
0
Years
Pie
ces Cattle pieces
Goats pieces
Sheep pieces
Source: MLDF (2010)
(c) Processing and Value Addition
Following improvement in business environment, the private sector has invested in livestock
processing plants in order to improve value addition of livestock products. The number of
plants processing hides and skins in Tanzania has increased from 3 to 6 between 2001 and
2009, with the capacity to meet 52 percent of the total production which is 92 million cubic
feet. All of these factories end at wet blue stage. The number of Tanneries processing plants
has increased from 5 in 2001 with the capacity of processing 38.3 million square ft to 7 in
2009 with the capacity of processing 48.2 million square ft per year.
In the area of meat processing, two meat processing plants of Sumbawanga Agricultural and
Animal Food Industries Limited (SAAFI) and Tanzania Pride Meat having the capacity of
slaughtering 350 cattle per day have been constructed and are operating. In addition, the
Government has sold 51 percent of assets of Dodoma abattoir to the National Investment
Company Limited (NICOL) and remained with 49 percent under NARCO; whereby a new
company known as the Tanzania Meat Company has been established under joint venture
between NICOL and NARCO which is operating the abattoir. The abattoir has a capacity of
slaughtering 200 cattle and 200 goats and sheep per day. The Sakina abattoir in Arusha with
the capacity of processing 300 cattle per day has also been strengthened. New construction
has started in Coast Region where a modern abattoir at Ruvu Ranch is under construction.
The abattoir will have a capacity of slaughtering 800 cattle and 400 goats and sheep per day
and will be operated in joint venture between NARCO and private sector. There are also
other modern poultry abattoirs, Mkuza Chicks Limited (Coast), Interchick and Tanzania Pride
Meat (Morogoro) with the capacity of slaughtering 30.000 per day.
48
The milk processing plants have increased from 22 in 2001/2002 to 39 in 2008/2009.
However, the processing capacity has been fluctuating due to operational problems in milk
processing industries such as Brookside Tanzania, Royal Dairies, Tommy Dairies, Mojata and
Azania Dairies. Also important to mention is a decline in the volume of milk collection from
production areas and high production cost. Overall, out of 1.3 billion litres of milk produced
in the country, only 20 percent is collected and processed.
Low investment especially in Dairy industries and the rural road network and poor
conditions of the existing infrastructure are the main bottlenecks.
(d) Fisheries
Fig 3.15 shows annual value of fish exports and royalties per weights of fishes caught. The
trend of values exported indicate high fluctuations but with strong positive performance.
Value of fish export over years has been increasing from 1000 Tshs/weight to 5000
Tshs/weight but royalties have been performing poorly hovering below Tshs 800/weight of
the annual catches. Variations of the fisheries exports were influenced by weights of the
annual fish exports. In actual terms, a total of 41,148.26 metric tonnes and 53,188 pieces of
Aquarium fish worth USD 161,053.65 (Tshs 207.4 billions) were exported in 2009. These
exports earned the government revenue of over Tsh. 6.41 billion.
Figure 3.15: Annual Values and Royalties of Aquarium fish exports
Source: Computed from MLDF data (2010)
3.3.7 Irrigation Development
Under increasing threats of climate change, irrigation agriculture is considered vital option
for mitigating drought, temperature and rainfall variability. Despite climate change threats
only 1.14% (326,492ha) of the total potential irrigation area (29.4 million ha) is under
irrigation. This has remained basically unchanged for over three years as indicated in table
3.7. Large coverage area was achieved in financial year 2008/9 where a total of 21,500 ha
were added under irrigation making a growth rate of 6.92 percent. With the current average
49
growth rate of irrigation area coverage of 5.7percent yearly, it will take 73 years to cover
29.4 million ha of total potential irrigation area in the country.
The current productivity of irrigation is still very low. for resistance if the best irrigation l
practices were followed rice yields would have increased from the current 1.8ton/ha to
6ton/ha; onions would have increased from 13 and 26 tons/ha; and tomatoes from 5 and 18
tons/ha. In the context of rice an additional 176.4 million tones could be produced.
Table 3.7: Irrigation Performance Irrigation indicator 2006/07 2007/08 2008/09 2009/10
Area under irrigation (in ha) 273,945 289,245 310,745 326,492 Growth rate of area under irrigation (%) - 5.29 6.92 4.82
Source: MoWI (2010)
3.3.8 Mechanization Development
Under KILIMO KWANZA mechanization received considerable attention recently to
modernize the sector. Table 3.8 indicates number of tractors in use for the financial year
2010/11 has increased by 7percent to 8,556 from 7,998 in 2009/10. Power tillers in use
increased from 42percent in 2009/10 to 66percent in 2010/11. In absolute number both
tractors and power tillers are very small albeit satisfactory growth rates. In the past six
years, there were more than 15,000 tractors in the country, but only 9,500 or 63 percent
were operational. Current annual demand for tractors is approximately 1800 units but less
than 400 tractors (22.2 percent) are actually sold. This is down from 1143 tractors that were
sold in one single year 1984. Msambichaka et al (2010) observes that the current stock of
tractors stands at 15,500 but only 9,500 (61.3 percent) are operational. Annual tractor
replacement stands at 1000 – 1500 instead of the current that ranges between 250-400
tractors per annum.
Geographical distribution of tractors was also uneven; they were mostly concentrated in
Morogoro, Kilimanjaro, Manyara and Arusha. In a drought prone country, like Tanzania, lack
of or slow change in draft power technology has deleterious effects on farm production and
productivity. Smallholder farmers’ reliance on the hand hoe technology inhibits land
expansion, especially in areas that still have abundant arable land. Given the wide-spread
dominance of the hand hoe, it is not surprising that land expansion has virtually ceased to
be a major source of agricultural growth in Tanzania.
50
Table 3.8: Mechanization Rate
Mechanization indicators 2006/07 2007/08 2008/09 2009/10 2010/11
Tractors (N) 6,517 7,062 7,526 7,998 8,556
Power tillers (N) 129 289 529 1,024 2,983
Ox-plough (N) - 172 - - -
Growth rate of number of tractor (%) - 7.72 6.17 5.90 6.52
Growth rate of power tiller (%) - 55.36 45.37 41.89 65.67
Source: MAFC
3.3.9 Agricultural Credit Share in Commercial Banks
In Tanzania there are about 34 commercial banks. In addition there are other numerous
microfinance institutions (MFIs) which are operating in rural areas in the form of SACCOS,
SACCAS, and VICOBA. Official statistics during financial year 2009/2010 shows that major
economic activities experienced slower annual growth of credit, compared with the
preceding years, with exception of transport and communication, whose credit growth
doubled to 34.8 percent in March 2010 from 17.4 percent in the year ending Feb 2009
(Figure 3.16). Agriculture sector received 8.4 percent of the credit while other sectors
received not less than 10 percent with exception of manufacturing sector. This is in line with
the continued strong performance in communication, which is the fastest growing activity in
the economy and the only one whose real growth picked in 2009 compared to 2008.
Competition on the lending market and the plan for establishment of Agricultural
Development Bank expect to re-orient commercial banks toward agricultural sector lending.
Figure 3.16: Annual Percentage Growth of ODC’s Credit to Selected Activities
99.8
24.9 28
.4
14.5
26.8
11.5
27.5
54.1
40.8
14.3
65.2
23.0
11.6
41.2
8.8 12
.8
-4.1
14.5 17
.4
8.4
7.412
.7 17.8
4.5 8.
4
34.8
12.8
12.0
Personal Trade Manufacturing Agriculture Transport and Communication
Building and Construction
Hotels and Restaurants
Mar-08 Mar-09 Feb-10 Mar-10
Source: BOT (2010)
KILIMO KWANZA puts emphasis on private sector participation in agricultural
transformation efforts. Growth rate of private sector in terms of number of projects and net
51
worth of the investments has been small. Table 3.9 shows that in 2010 Tanzania Investment
Centre registered 12 projects which is equivalent to 25 percent increase from 9 projects in
2009 to 12 projects in 2010. These projects created additional employment of 755 people in
2010 from 100 in 2009. However the total investment worth of the projects is low to have
significant impact in the economy.
Tanzania attractiveness to larger agricultural projects both from domestic and foreign
investors is affected by the poor business climate. In 2010 Tanzania dropped in Annual
ranking of Doing Business report from 126 in 2009 to 131 (see table 3.10). Further
assessment shows that Tanzania ranking in Doing Business hasn’t been consistent with
reforms that are ongoing. Despite inconsistencies, the country often rank lower compared
to other countries in the region and it therefore discourages potential investors in the
sector. Reasons for such lower ranking have been linked with bureaucracy inefficiencies in
starting business, dealing with licenses, environment for competing fairly, employing
workers, registering property, getting credit, protecting investors, paying taxes, trading
across the border, enforcing contracts, women in society, coping with food security and
addressing climate change.
The most pervasive problem which makes potential investor shy away from investing in agribusiness in Tanzania is lack of information in starting up business. Critical legal information which govern operations of the investment are not readily available, but also land tenure, water rights, health and safety, employment, and marketing related information. Investors are also discouraged by excessive powers vested on crop regulatory
bodies to raise levies on the produced or processed crop and the mandate of the board to monitor negotiations and pricing between producers and buyers to ensure a fair price. Moreover, Tanzania’s marketing infrastructure is inadequate to service domestic demand. Considerable investment is needed not only in processing and marketing but also in the supporting infrastructure (including laboratory facilities, cold chain infrastructure and transport) to meet the growing demand.
Table 3.9: Registered Agricultural Projects
Indicators 2009 2010 % Change
Project Registered 9 12 33
Employment 100 755 65.5
Investment Worth (USD Million) 2.08 157.705 74.82
Source: TIC
Table 3.10: Tanzania Doing Business Ranking
Doing Business 2005 140
Doing Business 2006 140
Doing Business 2007 142
Doing Business 2008 130
Doing Business 2009 126
Doing Business 2010 131
Source: AgCLIR, 2010
52
3.3.10 Farm Productivity: Yield and Labour Productivity
Tanzania’s agriculture is dominated by low productivity smallholder farms. Large scale
farming occupies about 15 percent of the cultivated land or 3.4 percent of the cultivable
area. An examination of the status of productivity enhancing factors in Tanzania is a
testimony to this claim. Tanzanian farmers use very little fertilizer other than farm yard
manure or compost. Data indicate that Tanzania uses only 9kg/ha of fertilizer when the
average for SADC countries is 16kg/ha, Malawi 27kg/ha, China 279kg/ha and Vietnam
365kg/ha. Compared to Vietnam a country that was for many years under war, Tanzania’s
fertilizer use is an insignificant 2.5 percent. While this low level is registered data indicate
that there is no shortage of fertilizer in the country (Table 3.11).
Table 3.11 Trend of Fertilizer use in Tanzania: 2001/02 – 2010/2011 Indicator 2001/02 2002/03 2003/04 2004/05 2005/06 2006/07 2007/08 2008/09 2009/10 2010/11
Fertilizer Demand
188,367 185,550 185,550 384,900 385,000 385,000 385,000 385,000 385,000 385,000
Fertilizer Supply 138,935 111,025 125,653 195,062 241,753 287,763 211,014 275,219 302,000 na
Fertilizer Consumption
89,936 77,557 92,658 111,053 119,291 146,081 149,486 208,229 263,390 na
Demand/Supply deficit
(49,432) (74,525) (59,897) (189,838) (143,247) (97,237) 173,986 109,781 83,000
na
Supply-Consumption surplus
48,999 33,468 32,995 84,009 122,462 141,682
61,528 66,990 38,610
na
Surplus as a % Supply 35% 30% 26% 43% 51% 49% 29% 24% 13%
na
Source: MAFC (2010) and Msambichaka et al (2010)
The Table 3.11 shows that there has been an average of about 34 percent surplus supply of
fertilizer throughout the 9 years. Effort is needed to increase the intensity of fertilizer use if
the current situation is to improve. These efforts should focus in areas of distribution and
affordable price of fertilizer, because this is an artificial surplus.
Table 3.12: Trends in Utilization of Improved Seeds (Tonnes) Year Private
Sector Public Sector
Total Production
Utilization Utilization/Total
Production (%)
Total Production/Total
Demand (%)
Utilization/Total Demand (%)
2005/06 8,748.25 1,728.92 10,477.17 8,020.85 77 9 7
2006/07 14,869.51 1,656.3 16,525.81 9,711.05 59 14 8
2007/08 16,174.36 217.24 16,391.60 14,419.33 88 14 12
2008/09 10,511.32 544.75 11,056.07 8,200.57 74 9 7
2009/10 14,536.42 1,608.37 16,144.79 15,150.00 94 13 13
2010/11 17,396.00 2,974.8 20,370.8 na na na na
It is reported that the country’s total requirement of improved seed is about 120,000 tons
annually (see table 3.12). However, annual supply averages around 12,000 tons or 9 percent
of total requirement. Unlike in the case of fertilizer where there is a demand constraint,
53
here it is an issue of supply constraint. In reality the problem is much deeper and wider
especially when the demand and supply are both on the decrease at the height of “Kilimo
Kwanza” initiatives.
3.3.11 Share of Agricultural Sector Public Expenditure
The discussion under this section is covered in chapter five where it discusses the public
expenditures made on agriculture.
Factors limiting further growth of the Agricultural Sector
The agricultural sector in Tanzania could grow much faster if it is transformed from its
current focus only on primary production to value addition; if infrastructural weaknesses are
removed; if costs of production are reduced substantially; if the structure of the sector
changes away from the dominance by low value commodities to those with high value and,
if current implicit taxation of the sector (including export bans) is removed. These are
elaborated below.
Low Value Addition of Agricultural Products
The contribution of agriculture to nation building is measured by an agricultural GDP that is
low (about 4 per cent) and hence undervaluing the sector’s real contribution to the
economy). As a result,
The backward and forward linkages with agro-industry, the services and trade
sectors, and, in general, the rest of the economy, are undervalued. The value added
generated by these linkages throughout the economy does not appear in the basic
agricultural statistics of Tanzania as explained in section 3.3.1 above;
The methods traditionally used to measure agriculture’s contribution also overlook
its role in meeting the growing demand for environmental goods and services from
urban centres. As an economic bridge between rural and urban areas, agriculture
provides food, work and natural resource services to urban dwellers; and
Agricultural sector’s “contribution with spillover effects” increases by approximately 20
percentage points to 60 percent of aggregate GDP. This implies that, as the overall
economy was growing at average annual rate 5 percent, the agricultural sector was
accounting for 3.0 percent (5 percent x 0.60 = 3.0 percent) of that growth rate. The spillover
effects could much higher if the value chain approach in agricultural development was
planned and promoted effectively.
This kind of analysis reveals:
54
- That as an economy develops and diversifies the primary agricultural sector loses
weight in terms of GDP but develops strong linkages with the rest of the economy.
- That agriculture exhibits very strong backward and forward linkages within and
outside of the sector.
- That agriculture supports and promotes the development of rural areas and hence
the quality of rural life.
- That the sector exhibits strong multiplier effects with other economic sectors.
In planning the repositioning of agriculture therefore, the concept of the Value (Commodity
Development) Chain should be followed. This approach is necessary to take advantage of
the backward and forward linkages that are key elements in the realization of the real value
of agriculture. Value addition (primary processing) at farm level is one major stop to
improving the value of agricultural produce and providing farmers not only with higher
prices but also with the opportunity to improve the quality of their produces, which in turn
would find readily available markets along the value chain.
Few Structural Changes
For growth to be pro-poor not only needs growth, but also needs continuous structure
transformation. There are three steps of structure change which provides a powerful engine
for continuous poverty reduction over time.
First is the diversification of agriculture’s structure. Crop production structure and
agriculture structure should change from food crop centered into food crop-cash
crop-livestock system.
Second is the diversification within crop production structure. Greater emphasis
should be placed on cotton, oil bearing crops, sugar crop and vegetable and fruit
crops which had all experienced rapid increase in planting area and yield. The food
crop production increase mainly resulted from the improvement of productivity, not
area expansion; the area expansion was mainly for non food crops
Third is the whole rural economic structural change; the share of total farmer’s
income from no-farm activities should be increasing over time.
Tanzania’s agriculture has not been transformed significantly despite the modest structure
change of the whole economy from 1998-2008. Crop‘s share of total value of production has
not been changing. Food staples continue to dominate area allocation, and their area share
has increased from about 64percent (1998) to 68 percent (2008), while their value share has
declined from about 67percent to 64 percent (Bingswanger, H, et al, 2008).
55
To simulate structural change within agriculture is the fundamental step to transform the
whole economy. This transformation will help overcome “growth island” effect, and help to
promote pro-poor growth
Infrastructure Weaknesses Contributes to high Market costs
The high market cost in Tanzania’s agriculture presses down farm gate price and pushes up
consumer’s price, which makes the country’s agriculture inefficient and less competitive.
There is need to focus on reducing two main market constraints: one is related to area of
infrastructure, particularly rural road and market place. Rural road and connection to main
road network as well as primary market development/improvement should become the
immediate priorities. Second constraint is related to regulations; there is certainly the need
to develop market-friendly regulations promoting fair market competition in agricultural
inputs and products.
The largest portion of market cost, taking maize as an example, is transport cost. High
transport cost derives from poor rural road, high fuel prices and less high mark-ups due to
lack of alternative transport means. The poor quality of rural road reduces operational life of
trucks given majority of trucks are second hand and poorly maintained. To reduce total
transport cost requires developing transport alternative systems such as railways and
improving the road network. Using rail is usually cheaper in most cases. Improving existing
rail system in Tanzania should be prioritized along with focused investment in rural road.
Despite the progress made to improve road condition, more budgets resources are needed
to fundamentally overcome transport bottleneck. In addition, there is a need of reviewing
the overall market development strategy aiming at reducing market cost.
Tanzania’s agricultural growth over the last decade has been largely due to area expansion;
agriculture’s productivity has not improved significantly. Low productivity links with low
application of high-yielding farm inputs, particularly improved seeds and fertilizers. The
majority of the country’s smallholder farmers do not use improved seeds and fertilizers or
improved livestock breeds. Hence to scale up the use of better farm inputs including seeds
and livestock breeds is the key to improving agricultural productivity. The previous
monopolized input supply regime for distributing farm inputs failed to deliver them to
farmers efficiently; however, inputs market liberalization has not yet generated expected
results. Current voucher program appear to be promising to encourage farmer, particularly
the poor to use the inputs.
The current low adoption rate of improved seeds and fertilizer is largely derived from high
cost of the inputs. This raises the question of how a country like Tanzania can provide
cheaper inputs without having to develop its own input industry. Subsidy seems to be the
56
major solution. However, it is very possible to reduce price of farm inputs such as fertilizer
even when fertilizer supply depends on import by reducing taxation on these inputs. In
order to improve agricultural productivity, agricultural development policies should be
developed towards reduction of the cost of the farming inputs.
In order to reduce the cost of inputs there is need to reduce the cost of producing
inputs or importing them in the following ways.
o Reducing cost of improved seeds through public and private partnership
approach so that the seed production cost can be shared, and thus the seed
price available to farmers can be cheaper.
o Providing subsidy in seed production and distribution in a shared manner
between the public and private firms would be more efficient than to provide
subsidy to farmer. This also applies to fertilizer, but in different terms. The
government could provide incentives to attract private sector to form an
investment package along the production and distribution chain of the inputs
so that farmer’s purchase price can be lowered.
In addition, to improve productivity also needs to firstly improve physical conditions
on which technology can function.
o Those include irrigation, rural road as well as mechanization. The government
should prioritize irrigation and rural road in its public investment plan;
However, community based approach such as food for work program can be
expanded so that large-scale of rural road construction and irrigation systems can be
developed.
Investing on farmers skills through shamba darasa is also the key to develop farmer
oriented extension services. Although an in the increase number of rural extension
workers is necessary, it is more cost efficient and efficient to support farmer
extension workers through the shamba darasa approach.
High Costs of Production
To improve productivity, cost of production is a major issue, particularly cost/output ratio.
Many factors affect the cost/output ratio. First, improvement in productivity can largely
help to reduce the cost/output ratio. Second, to package and use different technologies can
bring significantly a reduction of the ratio, for instance, using fertilizer in irrigated area with
improved farming practices. Third, to reduce the inputs’ price through subsidy or reduction
of costs to suppliers can directly reduce the ratio. Improving farm inputs such as seed,
fertilizer, irrigation and using farm machines are the key factors. To reduce the cost of using
those inputs is a general path towards competitive the creation of competitive agriculture.
The experience of China is quite illustrative. China’s maize seed price in recent years is about
1 USD per kg, while in Tanzania, maize seed price is about 2.5 USD per kg. The simple
57
comparison between the rural household in China and in Tanzania confirmed that the share
of seed in total cost provision in Tanzania is much higher than in China. To produce 1 ton
maize by all using improved seed, seed cost shares only 2 percent total cost in China, while
the seed cost is over 10 percent of total cost in Tanzania (Field study data by authors)6. For
example, with the household income around 400,000TSls, to grow 1 ha maize needs 20 kg
seed costing 70,000TSls which already shares 17 percent the total family income while in
China currently average farm household income is around 15,000RMB, and to grow 1 ha
maize needs around 150RMB for seed which only shares 1 percent of total income, and this,
to a great extent, explains the low adoption of improved seed in Tanzania. Although the
seed market liberalization in Tanzania has resulted in increased seed supply and removed
monopoly by the seed parastatal firm and hence better services, seed/producer price ratio
has increased due to low increase in farmer’s income; hence it is too costly for the farmers
to afford market price of seed in Tanzania. Changes in seed and fertilizer prices are
increasing at higher rates compared to maize producer prices.
A number of factors seem to explain why fertilizer price is high in Tanzania.
First, given the country has only around 11 percent of the 4.9 million rural
households using fertilizers, the initial market size is too small to form an economic
scale for imports,
Second, the potential of fertilizer to increase crop yield largely depends on the use of
improved variety and irrigation. Fertilizer, however, is widely used often with the use
of improved seed but not irrigation. This limits the impact of using fertilizers, and the
marginal profit is usually too low to encourage more farmers to use;
6 Li Xiaoyun To Develop Agriculture led Growth and Poverty Reduction in Tanzania
Experiences and Lessons from China’s Agricultural Development
58
Third, high transport cost from the port and storage causes the rise of market price.
Approximately, more than USD 70-150 per tonne is added for transporting fertilizer
to the regions and storage would also gives another USD 30-50 to the cost per ton;
Forth, the poor agro-dealer network is weak and inefficient which also increases the
cost,
Finally, due to high interest rate in the bank, fertilizer companies and dealers have to
pay high capital price, because they cannot sell fertilizer immediately, which
eventually pushes up the market price.
It is therefore extremely critical to reduce the market cost of fertilizer in order to encourage
farmer to use fertilizer. The government has been taking measures to implement the
National Agricultural Input Voucher Scheme in 61 districts in 20 regions, reaching 1,500,000
direct beneficiaries. According to the observation of the field study, the program seemed to
be in the right track to tackle the major problems faced by the country in its inputs
distribution system. In fact, neither withdraws of fertilizer subsidies after the middle of
1980s and nor reintroduction of fertilizer subsidies has made much difference to maize
production or yield (Bingswanger, H.et al. 2008). The voucher system certainly targets the
poor who are chosen in the villages through participatory manner.
Taxation
Tanzanian farming incentives have historically been weak. While they have significantly
improved since the 1980s, between 2000 and 2004, Tanzanian farmers still faced a nominal
rate of assistance (NRA) of about -20 percent, with a concentration of taxation on
exportable commodities. Since most other developing regions and most African countries
have improved incentives more quickly than Tanzania, Tanzania’s farmers have suffered
relative to their foreign counterparts.
Despite efforts to improve incentives for farming, poor incentives in Tanzania have
persisted. The improvements include: (1) the abolition of direct taxes on agricultural exports
in 1986; (2) the establishment of a unified and floating exchange rate since 2001, which
imposes no tax burden on agriculture; (3) the lowering of non-agricultural import duties
over the past two decades and the fact that they are now much more uniform than they
used to be; (4) the fact that most agricultural inputs and capital items are free of import
duty and are exempt from the value added tax; and (5) the fact that export bans are
confined to cereals.
While these measures have improved incentives, they have done so much more slowly and
incompletely than in other African countries and the rest of the world. As a consequence
Tanzanian farmers are now among the worst producers facing the worst incentives in the
World.
59
The constraints to improve incentives in agriculture appear to stem from interventions of
crop boards, local taxes and levies, lack of competition in trading, processing and
transport, illegal extractions along the value chain, and excessive costs associated with
the port system of Tanzania, and its border posts.
Since the early 2000s, the government has made significant reforms in its local taxation
regime, which has led to a low local tax burden on agricultural producers, except in the case
of cashew producers and perhaps some other commodities for which we have no data.
After 8 years of discussion and feet-dragging, a law to reform the crop boards has been
approved by parliament, and is awaiting the signature of the President. The law would
transform the crop boards into institutions that: have more limited powers to intervene in
markets, are focused more on promotion than regulation, are managed and accountable to
stakeholders, and are funded from the budget, rather than commodity cesses/levies.
Stakeholders in the coffee sector are most advanced in implementing some of the reforms
that will become legislation, while other crop boards have moved little. Strong leadership
and enforcement will be needed to make sure the new law will actually be implemented
and will bring about improved farmer incentives.
To improve agricultural incentives, the major areas that require urgent action are:
Developing strategies that can take advantage of the rising opportunities in
domestic, regional and international markets
Speeding complete the reforms of the crop boards
Eliminating export restrictions on food grains
Increasing private sector roles in all areas of agriculture, while at the same time
combating anti-competitive behaviour, and
Sharply accelerating infrastructure development, and reform processes and
management in ports, airports and border posts
Also, to adopt a common approach with other EAC members to sharply reduce non trade
barriers for agricultural commodities, including those stemming from illegal extractions
associated with over-regulation and local taxation.
60
CHAPTER IV: IMPLEMENTATION AND PERFORMANCE AT SUB-NATIONAL LEVEL
The field work in the 8 Districts was among other things, supposed to focus more on village
level experiences. This aimed at assessing: (i) How agricultural activities are generally
helping to raise incomes and reduce poverty at the village/community level, (ii) The level
of knowledge and involvement of village/community members on DADPs processes, (iii)
How they are actually benefiting from DADPs, (iv) What funding priorities are given
premium at the district level and at the village level, and (iv) What challenges are being
faced, and what solutions are being applied to cope with these challenges.
The findings on implementation performance at sub-national level are therefore presented
below based on 13 focus areas as follows:
4.1 Warehouse Receipt System (WRS)
The government has taken a number of initiatives in recent years to address the marketing
related impediments in agriculture. For example, after the adoption of the Agricultural
Marketing Policy (AMP) in 2008, the government is in the process of preparing Agricultural
Marketing Strategy (AMS) which is an implementation tool of the policy. Also important to
mention are the initiatives by the government in collaboration with the private sector (such
as Tanzania National Network for Small Farmers Groups (MVIWATA); MUVI, WRS, PADEP
and the Rural Livelihood Development Company (RLDC)) to empower producers and form
market linkages as well as build their capacity so that they improve productivity, farm
incomes and therefore their livelihoods. Since its inception in 2007 the Warehouse Receipt
System has played a catalytic role in terms of improved agricultural production and
productivity, stability of producer prices, improve quality of crops, technological uptake, and
improved marketing of agricultural products in Tanzania. Other benefits from WRS include
storage of crops and sell them when prices are attractive, thus improving incomes; Offering
guarantees which farmers use to access bank loans; and employment creation. It has been
introduced in a number of crops namely cashew nuts and paddy and it is currently operating
in Mtwara, Lindi, Kigoma, Ruvuma, Mbeya and Iringa. The system is about to be introduced
in sunflower and sesame.
In 2007/08 the total share of income which was received by farmers is Tshs 37 billion, while
in 2009/10 the share of income increased to Tshs 56 billion largely due to the support of
WRS. This is an increase of 51 percent. Also important to point out is the fact that, in
2006/07 crop season there was wide use of unauthorized and sub standard measure and
weights such as tins, bowls and cups. Following the introduction of WRS standard measures
are now dominating the market which is a good sign. In most crops WRS has improved
61
quality tremendously because all purchases go through a standard quality check system.
Thus the demand for WRS is increasing overtime because traders /buyers are assured of
quality. There is a big government support and in a number of cases the President has
indicated the government’s determination to fully support the programme. In addition to
that, the Commodity Exchange System (where brokers and traders will be using receipts to
trade commodities) is under preparation under the coordination of the Capital Market
Security Authority (CMSA).
The major challenges which WRS is
facing include resistance from some
of the actors or players, particularly
those who were benefiting from the
old system such as middlemen. It has
also been difficulty to transform
middlemen to brokers because a lot
of training and awareness is required.
With KILIMO KWANZA, WRS
expansion is further constrained by
limited warehouses or storage
facilities where crops can be stored.
WRS needs to train not only middlemen but also banks (on crop seasons etc), WRS
operators, farmers etc. There is therefore an urgent need to address these challenges so
that WRS is linked to agro processing and therefore be able to improve and expand markets.
4.2 Agricultural Markets
Marketing is the most challenging problem which affects agricultural performance in
Tanzania. In the efforts to respond and address this challenge the government has initiated
a number of interventions in recent years. The government is in the process of establishing
International Markets at Segera – Tanga and Makambako in Njombe (Iringa). The Segera
market will mainly target horticulture products and floriculture, while the Makambako
market will mainly target grains. In addition, all the boarder markets are in the process of
being restructured and strengthened to promote cross border trade. They will all be One
Stop Border Post where for example custom processes will be done once. Border markets
are expected to support farmers in terms of price stabilization as market facilities or
structures for all to use will be available at one point where all traders and farmers will
meet.
Figure 4.1: New (uncompleted) Storage Facility at
Nyambogo Village in Geita district
62
Field observations in Geita and Sengerema provided a clear example of feeder road
infrastructure as one of the constraining factors to market access for both inputs and
agricultural outputs. However, it has also been shown that road improvement is one
component in whole gamut of factors influencing efficiency in marketing and production
logistics. Investment in complementary facilities (such as storage facilities) is found to be
very necessary and useful in improving markets. Government policy on cross-border trade
for food crops, particularly rice is hurting farmers’ incomes and investment drive. This year
the government has banned cross border trade for food crops and farmers in Sengerema
and Geita districts are forced to sell their produce at very low prices (Tshs 500 per kg of
rice). This would have been alright if the warehouse receipt system had been fully
operational because they could have waited until prices increase to dispose of their crops at
higher prices.
In Kongwa the district boasts one of the biggest grain markets in the country at Kibaigwa,
mainly for maize. The district also has 4 livestock markets. Our team visited an aspect
connected with marketing at Mbende village along the road to Dar-es-Salaam. The spotlight
of the visit was on the butchery. It was meant to be associated with a modern
slaughterhouse, but the DADP funds could afford only the butchery. The objective was to
replace scruffy slaughtering and meat selling stalls that had been established along the road
with a modern facility. The DADP funds accommodated only Tshs 22 million approved in
2006. This could enable construction of the main butchery building completed in 2009, plus
water supply installation and electricity connection. The group members contributed own
money to build a toilet. The slaughterhouse has not yet been constructed due to shortage
of funds.
The project is being promoted by a 17 member group called Chawamba (thus not by the
whole village community) that includes butchers and meat roasters. Only the members can
sell in the new butchery while the previous roadside kiosks are not allowed. The Chawamba
members can slaughter 1 to 2 cows a day and up to 30 goats. They pay council levy (Tshs
3,000 per cow and Tshs 1,500 per goat) as well as Chawamba fees of Tshs 1,000 and Tshs
250 respectively per cow and goat. Kongwa district has 3 AMCOS (Agricultural Marketing
Cooperative Societies) and 18 SACCOS. There is also 1 Livestock Keepers Association and 1
Beekeepers Association. All in all there are 27 cooperative societies. The aim is to promote
AMCOS so that there is at least one in each ward. This might be achieved by turning some of
the SACCOS into AMCOS. The livestock keepers’ group (kikundi) at Lengaji village can be
used to show suitability of DADP initiatives in that in 2007 the group was provided 2 cows
(oxen) with a plough and a reaper. They have at present 7 cows, the increase derived from
own funds.
63
The main challenge confronting agricultural marketing in most parts of the country is poor
transportation mainly because of the poor road network; this was observed in all districts
visited. Storage facilities are still scarce such that they compromise the quality of
agricultural produce and force farmers to sell most of their crops at the beginning of
marketing season.
On the other hand, the relative nearness to Dar es Salaam has big influence on agricultural
marketing in regions and districts close to the city (e.g. Morogoro) especially in turning food
crops such as rice and cassava into cash crops. In the absence of strong cooperatives/farmer
marketing associations, organisations such as PASS and SNV are trying to help out individual
farmers to access markets. It has for instance helped in the formation of farmers’
groups/associations, in linking them to processing factories/companies, linking them to
financial institutions and even provided guarantees for their loans and/or other lending
arrangements such as leasing and hire purchase agreements for acquisition of farm inputs
and equipments.
Market facilities are an important aspect of improved markets in rural areas. Construction of
these facilities is being promoted in many districts but sometimes with delays and poor
management. For example the new village market construction at Kiziwa in Morogoro
district was initially funded by PADEP several years ago. It has not been completed up to
now. The reason is that the initial funds by PADEP ran out and the additional work involving
construction with louvered bricks was funded by district own funds (Tshs 35mllion) plus and
DADP; but the construction work had to stop because upon inspection by DED the bricks
were found to be below standard. The case with the contractor has not yet been resolved.
A picture (Figure 4.2) of the Kiziwa market taken on 8th Sept 2010 is shown below.
Figure 4.2: Uncompleted Kiziwa market structure
Among the marketing challenges in Mbeya and Ruvuma were unaffordable prices of farm
inputs particularly fertilizer and hiring costs of tractors. Most respondents in the villages
64
visited also mentioned the inability of the National Grain Reserve Agency to purchase their
stocks of grain. Export ban is another problem that seems to depress the marketing of food
crops. Most respondents thought that there is too much politics in crop marketing in the
country, that negatively affect the farmers’ effort to raise their income and improve
livelihood.
4.3 Capacity Building and Empowerment of Farmers
The focus of the DASIP is to transform farmers from subsistence to commercial farming
through adoption of improved agronomic practices, area expansion and provision of
support services. There is convincing evidence from the visited villages in Sengerema and
Geita districts that this is being achieved in terms of increased productivity and incomes of
farmers who have been trained and adopted improved farming methods.
The farmer Field School (FFS) approach is rapidly transforming agriculture in most villages
supported by DASIP. For famers who have gone through the farmer field schools, major
impacts have been observed in yields of various crops: maize yields have increased from an
average of 500 kilograms (kgs) per acre to an average of 2000kgs; cotton from 300 kgs to
about 800 kgs; paddy yields have increased from an average of 720 kgs per acre to an
average of 2250 kgs. Input subsidy given to some crops, application of scientifically proven
traditional methods (use of mwarobuni and alovera) for biological controls instead of
spraying chemicals, adoption of better farming crop and livestock husbandry, have all
contributed to reducing the cost of production for some crops, particularly for cotton and
maize and livestock (chicken and cattle).
During the field visit to Mbozi district we noted that coffee Farmers have been adopting
very well as the result outputs for coffee have been improving over time and the demand
for modern seeds, agrochemicals and fertilizer has increased appreciably. For instance the
Tanzania Coffee Research Institute (TACRI) in Mbozi has been selling new improved seeds
that are drought resistant and disease resistant (CBD). The farmers are being advised to
abandon the old varieties of seeds that are less productive and weak in disease fighting. As
the result coffee production has increased in the recent years. During the visit to TACRI the
officers gave their experience on farmer’s progress that was impressive such that some
farmers were better knowledgeable on their farming activities than the extension officers or
researchers.; They gave an examples of some farmers who through their innovation are now
using even traditional agro-chemicals (e.g. Mwarobaini) to fight for diseases, asserting that
traditional agro-chemicals seemed to work very well. Others adopted the use of methods
such as grafting and budging to improve crops productivity. They also admitted that as the
65
result of adoption of new technology, they can’t satisfy the demand for new seeds for
coffee (the same for other crops such as maize, paddy etc).
Incomes of most farmers have at least doubled, mainly due to increase in crop yields and
diversification of crop and livestock production. Some farmers have taken up new
enterprises such as the production of improved indigenous chicken; some farmer of
Nyampande village in Sengrema district have taken up the production of piggery, sunflower
and paddy production; farmer groups of Nyambogo and Nyijundu villages in Geita district
are now raising improved indigenous chicken and in marketing(purchasing and selling of
agricultural produce); production diversification, however, has happened at the cost of
cotton as some farmers have stopped growing it. The shift away from cotton is explained by
low and often fluctuation of prices, leave alone unreliability of the quality of inputs for
spraying.
This kind of impact has helped to promote investments in storage (see figure 4.1), marketing
and agro processing. With the support of DASIP some villages have constructed storage
facilities for their surplus produce, market sheds to facilitate selling of farm produce,
processing mills for paddy, sunflower and maize, cattle dips and crushes, slaughter slabs,
milk collection centres, charco dams and feeder roads.
In Morogoro capacity building for agricultural development is most visible at the district
level through three windows namely, farmers training in FFS, study tours to other successful
villages and districts and short-term training of agricultural staff. Great hope is pinned on
FFS (Shamba Darasa) that stress improved farming methods through practical work by
selected farmers at plots owned by better farmers. This includes methods of planting, use of
fertilizers and better seeds. In Morogoro district the FFS format has been applied in crop
husbandry, irrigation and aquaculture (in fish ponds).
4.4 Agricultural Financing
Financing has always been mentioned as one of the constraints for agricultural
development. Only few commercial banks and micro-lending organs do lend to rural framers
(in most cases banks such as CRDB and NMB). NMB through its micro lending section
provide few loans to rural farmers while CRDB has recently started working through the
cooperatives societies and SACCOS. Other financial institutions include Pride and Akiba
Bank. Generally, there is lack of financial support for rural investments and marketing of
crops. The reason for the trend is the risk associated with the sector (in terms of output and
price instability in outputs- especially food crops)
66
In both Morogoro and Kongwa as elsewhere in Tanzania there is great enthusiasm for
SACCOS. The enthusiasm for old fashioned cooperative movement development has been
rather lukewarm. Even then in Morogoro the number of cooperatives has grown in the last
few years from 5 in 2006/07 to 14 in 2009/10. In Kongwa the number seems to have
stagnated at about 18 in the last 5 years. At Kiroka in Morogoro, village membership in
SACCOS stands at 438, with 347 men and 91 women. Most members of the SACCOS group
are also members of the Irrigation group. But what is puzzling is that interface between the
two groups is missing. In the absence of the warehousing receipt system in the village to
facilitate development of credit for farmers, one would have resorted to the SACCOS to
provide credit or credit guarantees for farm inputs procurement. In Kongwa, where more
detailed statistics on both Cooperatives and SACCOS were provided, the SACCOS savings
have been hovering above Tshs 650 million in the last four years. Kongwa district sources
actually show large increases in SACCO’s capital from Tshs 648 million in 2006/07 to Tshs
860 million in 2010. Organisations such as MVIWATA and PASS in Morogoro have been
assisting farmers to access micro-finance credit.
4.5 Investment in Irrigation Schemes
The irrigation projects in the sampled districts provides a success story worth emulating;
where in most cases the projects are being financed by DIDF and DADP. The field visit to
Matufe and Mawemahiro villages in Babati districts noted that apart from increasing farm
incomes and raising productivity (increased output) by three to four times compared to un-
irrigated crops, the spill-over effects have been an encouraging phenomenon. The outcome
of the increased output and revenue from these investments is manifested in change in
incomes and investments in real assets such as construction of new modern houses
replacing traditional houses; purchase of cell phones for communication (also used to get
market information) is becoming widespread among rural farmers. Using additional income
from irrigated outputs, villagers also have been funding construction of dispensaries,
schools and paying school fees on time and much more.
In Mbozi districts Irrigation schemes for food crops have managed to raise outputs from the
old outputs of 5 -7 bags of paddy per ha to 25-28 bags of paddy. In some visited places
irrigation projects were still under construction while some were delayed due to small
amount of funds allocated. At Kiroka (Morogoro) it was possible to see irrigation structures
under construction, a running agricultural activity under irrigation (paddy) and some
livestock activities funded under DADPs. In Kongwa district where DADPs have funded
irrigation projects; it was possible to see canal construction works in progress and
agricultural activities dependent on irrigation (especially where cabbages, bananas, onions
and tomatoes are grown).
67
Irrigation has also increased the annual production seasons from one to three unlike the
past practice of one production season under rain dependency agriculture. The big
challenge that faces expansion of the irrigation projects in the country is the critical
shortage of irrigation engineers in most LGAs. During the field visits we were notified that,
both Mbozi and Namtumbo districts had only one irrigation engineer who rotate in the
whole districts’ projects. The villagers sometimes had to wait as long as two months for him
to pay a visit in their projects and certify it. With many irrigation project established and
many others to come this is a big challenge in future, moreover the technical engineers
were reported to be in short supply. District officials explained this problem as attributed to
few students who opt for this field in colleges and the past experience of having no/few
such projects (irrigation) that forced professionals to shift to other lucrative specializations.
The other challenge noted is the lack of local market for food crops as yield increase as a
result of the irrigation farming. One spill over benefit noted from the field visits with
respect to irrigation projects funded under the ASDP/DASIP and DADIP is that the projects
have changed farmers mind sets; that farmers can do away with the rain-fed agriculture
dependency system, for instance in Mbozi districts we were notified that coffee farmers
have started irrigating their coffee farms after realizing that with irrigation, coffee yield
increase substantially. Some have bought their own water pumps for that purpose; indeed
this is one of the best practice and lessons worth spreading in the whole country.
4.6 Input Voucher Receipts
The input voucher receipt system aims to upscale input distribution channels while also
providing targeted support to poor smallholder farmers in rural communities. For foods
crops, farmers are given two vouchers; one voucher for two bags of fertilizers and the other
for one bag of quality seeds, while for cash crops only one voucher is provided for fertilizers.
The system targets those in need (poor) and concentrates more on food crops rather than
cash crops. The vouchers are given for consistently for three seasons; after this period the
targeted group is assumed to graduate from the voucher system (and thus from the voucher
subsidy) and thus able to buy farm inputs on their own. The input subsidy through the
Voucher systems has helped to increase farm outputs in the recent years due to availability
of subsidized inputs. However the provision is below its demand. For instance a poor farmer
is given 2 receipts (one for 2 fertilizer bags and 1 for seeds). The farmers in all visited areas
complained that input supply through the voucher system is not enough as it supports only
one hectare of food crops (e.g. maize), where as they thought that one voucher receipt
would have catered for all inputs., Moreover they mention that sometimes the inputs come
late. The officers handling the process also complained that the process is tedious and takes
much of their time. Nonetheless the voucher system has assisted to create a link between
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inputs providers and farmers as inputs sellers are now close to farmers (at least at ward
level). However the challenge is that concentration is still high in urban areas and the
provision is to a large extent seasonal.
The voucher system has enhanced yields where for example in Mkangama village in Mbozi
district, before introduction of voucher receipts the average yield was 5 bags/ha and after
the voucher system the yield increased to 25 bags /ha of maize. One visited farmer at Isansa
village (Mbozi) testified that the inputs subsidy has assisted him to increase his maize
production from 100 bags in 2008/09 to 150 bags in year 2009/10; while for coffee the
change was from 1700kg to 2500 in the same period. A similar situation was noted in all the
visited districts. Dispite of the noted benefits that is associated with the input voucher
receipts system, sustainability of the system was considered to be uncertain in the long run,
give the government’s recourses constraints.
Voucher control system: In many places in the country, the voucher receipt system is prone
to problem of cheating/fraud resulting from collusion between the traders (voucher agents)
and farmers. In Mbozi district the control process for input vouchers was observed (the
banks there are also involved) proper checking mechanism such as for specimen signatures
of approval are maintained and each agent has been allocated exclusive wards to serve
which has minimized the collusion problem as well as confusion among agents.
Fall in input price due to voucher system. This observation was reported by some of the
input sellers on the operation of the voucher system. They mentioned the example of the
price for DAP and Minjingu fertilizer that is currently Tshs 50,000 per bag as compared to
the former price before the voucher system of Tshs.105, 000 per bag. This price has fallen
due to increased number of providers (competition aspects). The same story applies for
other inputs such as seeds and agro chemicals. The voucher system has also brought input
sellers close to farmers where farmers can enjoy credit facilities, even if at a small scale.
The voucher system has helped to create employment for selling agents, carriers, drivers
and other service providers in rural and urban areas. It has enabled the private sector to
extend its distribution network into the rural areas and reduce the burden on government
budget of distributing inputs to rural households. However to ensure success of this
program in the future, it is important to address the identified problems in some areas such
as registration, fraud and corrupt practices, poor timing and quality of inputs and
transportation bottlenecks leading to delay of agricultural inputs supply in rural areas.
The table 4.1 Indicates that yields per hectare has improved for maize production in
Ndalambo village in Mbozi district. The subsidized farm inputs through the inputs voucher
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receipts system particularly the application of fertilizer (Minjingu) and high yielding maize
seeds appear to have increased yields per hectare in the sampled village. This is one of the
success lessons out of the ASDP and the voucher system given to poor families as part of
MKUKUTA implimentation in agricultural sector.
Table. 4.1: Crop Yield For Families Under Voucher and NonVoucher Systems for the Year 2009/10 in Ndalambo Vilage(Sample) Mbozi District
Name of the Farmer
Maize
Cultivated area (ha) Production (tone)
Voucher(ha) Without Votcher(ha)
Total (ha) Yield with Vochers(Bags 100 kgs)
Without Voucher s(Bags 100kgs)
Total (bags )
Alfeyo Simwinga
1 8 9 10 18 28
Asel Kayange 1 1 2 18 3 21
Sophia Kapungu
1 1 2 10 3.5 13.5
Helman Mgalla 1 3 4 15 12 27
Gosper Leocadia
1 1 2 12 3 15
Abel Kamanga 1 - 1 8 - 8
Asifiwe Singoi 1 4 5 18 16 34
Neema Simfukwe
1 2 3 15 7 22
Venance Kisunga
1 1 2 10 4 14
God Sikapizye 1 3 4 20 10 30
Michael Tweve 1 1 2 15 3 18
Yoeli Siame 1 - 1 13 - 13
Agripa Simwinga
1 10 11 15 40 55
Anania Siame 1 4 5 15 15 30
Lolelanji Simfukwe
1 - 1 10 - 10
Doretea Siame 1 2 3 7 6 13
Kalmela Mlawa 1 - 1 12 - 12
Hamisi Siame 1 4 5 5 6 11
Total 18 45 64 228 146.5 374.5
Note: For food crops the vouchers were given to support for one hectre (2 vouchers were
given as - 1 for buying two bags of Minjingu fertilizer and 1 one bag of quality seeds), while
for coffeee only one voucher was given for buying subsed fertilizer. The selection of who is
to be given vouchers was done at village level using the village committes and targeted the
poor families who cant affort to buy farm inputs,this is done for 3 sucessive years
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4.7 Mechanization
During the field visits we witnessed mmechanization investments relating to purchase of new tractors, power tillers, ploughs, Ox ploughs etc. The districts had bought many new power tillers that will be distributed to groups of farmers in villages. During the survey districts official had planned to train farmers on how to use the equipments. Figure 4.4: Power tillers at the DED office yard in Morogoro
On the other hand the biggest challenge identified during the field visits is lack of technical knowhow to service the power tillers and spare parts. Hopes are pinned on the private sector to provide such services. The governments orders to all LGAs to buy 50 power tillers for farmer groups are highly appreciated but the challenge is that some farmer groups cannot afford contributing the 20 percent required. This is leading to some power tillers lying idle. The other challenge is the quality of power tillers and tractors purchased and supplied to farmers. We suggest that in future proper quality check be instituted and the private sector can be convinced to establish the tractor hire business in rural areas; this will release the burden to the government to regularly buy more tractors to be given to farmers. However, the private sector involvement needs provision of strategic incentives to attract them in this new area of business.
4.8 Extension Services
The impact of extension services on agricultural productivity has been discussed earlier on. Nevertheless, inadequate quality extension services still inhibit further growth of agricultural productivity. In some cases where extension services were provided the impact was immense. For instance on an irrigated area in Morogoro district, paddy is grown with productivity reaching 30-40 bags( 1500 to 2000kgs) per acre, a big jump from 6-12 bags without shamba darasa (carried out with irrigation). Figure 4.5
71
Figure 4.5: Farmer: farmer Rajab with his wife Sofia in their Paddy Plot at Kiroka village (Morogoro district) also used as shamba darasa
Input subsidy given to some crops, application of scientifically proven traditional methods (use of mwarobaini and alovera) for biological controls instead of spraying chemicals, adoption of better farming crop and livestock husbandry, have all contributed to reducing the cost of production for some crops, particularly for cotton and maize and livestock (chicken and cattle). Critical Shortage of Extension Staff: One of the challenges facing all visited districts in agricultural services provision is lack of enough extension services. For instance Mbozi has 184 villages but only 60 crop extension officers who are located at the district and ward level. Hence the Government policy of having one extension officer is each village is not practical/feasible. A critical shortage was also noted for professionals such as land use planners and irrigation engineers and technicians. We also noted that some districts has no even a single irrigation engineer, only a zonal irrigation engineer who rotates in all regions and districts. This problem delays projects implementation. Sometimes irrigation projects had to wait as long as two months for an engineer to make certification. With many irrigation project established and many expected to come this is a big challenge. They explained this problem is attributed to few students who opt for this field in colleges and the past experience of having no such projects (irrigation) that necessitated professionals to shift to other specializations. There is a need to train more engineers and technicians in the irrigation field and design a strategy to retain them in the sector.
4.9 Research and Development
Research and development at district level is a factor for improving the performance of
agricultural sector. In all districts where field observations were conducted there was no
budget allocation for doing research activities. However, there was aspect of collaboration
with Zonal Agricultural Research Institutes and and SUA (in Morogro) but little cooperation
with private sector in this area. In Babati different crops with high yield potential were
developed e.g. pigeon peas, soil testing and diseases investigations on both crops and
72
livestock. In Sengerema and Geita farmers in collaboration with ZARDI at Ukiriguru were
conducting on farm research to verify improved varieties of cassava which are resistant to
CMV disease. Adapted improved varieties were identified and are being multiplied by
farmer groups (farmers’ preferences are ‘Suma’ and ‘Cassala’).
4.10 Contract farming
Contract farming was observed in cash crops such as tobacco in Urambo and Namtumbo,
Barley in Mbozi, and in discussion with Morogoro-based PASS we learnt that it has
supported smallholder farmers particularly in promoting contract farming that encompasses
production and marketing of sugar cane, cotton, tea and paprika.
Contract farming arrangements provided farmers with extension services from farm
preparations to marketing of the produce. In Urambo, Tanzania Tobacco Traders Association
(TTTA) set up comprehensive extension support to registered Tobacco producers from farm
preparations to harvesting. Farmer’s also receive training on proper techniques for drying,
grading and packing of tobacco leaves. Value addition performed at farm level enabled
producers to fetch up to Tshs 3,500 per kg for the grade A. TTTA also provides other training
in environmental conservation and management by practicing agro forest. DALDO office
works in collaboration with private sector in ensuring both the farmer and provider abide to
the contracts. In Urambo district tobacco producers through their SACCOS were able to get
high prices and quality extension services to be able to produce half of the total production
in Tanzania. In general the outcomes of farmers under contract farming were impressive
including increased incomes, construction of good houses, purchase of motorbikes and
increasing access to social services.
4.11 Value Addition
Agro-processing and value addition are important activities for agricultural development
and poverty reduction. These activities can generate additional employment in rural areas.
They also have strong forward linkages. Apparently there was little investment in value
addition by both from government and private sector to all districts visited. To a large extent
value addition were observed in tobacco crop than other crops and livestock products.
Value addition in livestock products in all districts is very low. Lack of value addition is a
major bottleneck to smallholders from getting higher prices from their efforts. The problem
is directly linked with extension service delivery where by value addition is usually not part
of extension staff curriculum and hence not included in the extension package delivered to
the farmers. Extension approaches are skewed toward increasing production and less on
assisting farmers to achieve basic value addition at farm level.
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CHAPTER V: PUBLIC EXPENDITURE REVIEW
5.1 Introduction
This chapter provides an analysis of public expenditure for FY 2010/2011. The background,
objectives, scope of work and methodology has already been covered in the introduction to
the whole ASR-PER report.
5.2 Agricultural Sector Investment and Financing
5.2.1 Review of expenditure priorities
Tanzania’s macroeconomic indicators as shown in Table 5.1 depict a favorable stance, with
domestic revenue expected to increase slightly in FY 2009/10 compared with actual outturn
for FY2007/08. Domestic revenue collection for FY 2008/09 was 10percent below budget
estimate, partly due to the impact of the Global Financial Crisis which led to a decline in
aggregate demand and prices in the world market. However, in absolute terms, domestic
revenue increased from Tshs 3,634.581 billion in FY 2007/08 to Tshs 4,293.074 in 2008/09,
equivalent to 18.1percent increase. Actual fiscal performance between July 2009–March
2010 was 8.7percent revenue shortfall but the expectation was that targets would be met
by close of the relevant fiscal year.
Total domestic and external sources for the three years shown in the table 5.1 were
showing a positive trend, increasing from Tshs 6,156.6 billion in 2008/09 to Tshs 6,582.4
billion in 2009/10 and to Tshs 7,353.7 billion in 2010/11. The implication is that as the
national resources are projected to grow at a higher rate, the Government should make a
firm decision to invest commensurate resources into the agricultural sector in order to
achieve ASDP and Kilimo Kwanza objectives and priorities.
74
Table5.1: Tanzania’s macroeconomic indicators
With regard to broad functional budgetary allocations (Table 5.2), social services continue to
be given priority, being allocated an average of 38percent of the total resources during the
past three years. In 2009/10, more than third of the budget continued to be allocated to
social sectors, with more than 50 percent of development expenditures financed by foreign
funds. The largest share [about 51percent annually] of foreign funds seems to be financing
development expenditures of the social sectors. Administration is second in terms of large
recipients of budgetary allocations while economic services, which include roads and
energy, are third. Production services (which include agriculture) receive a mere 4percent of
the total budget allocations. However, reclassification of the allocations for agriculture
(under the rescue package) budgeted under Treasury, will see the allocations for
administration decline slightly, thus increasing allocations to production services that
include agriculture among other expenditures.
Thus, it appears based on the broad functional resource allocation, production services
which include agriculture are being accorded a low priority compared with other categories.
If Tanzania is to make large and sustained transformation of the agricultural sector,
increasing budgetary resources gradually and sustaining the funding over a long period of
time ought to be given top priority.
Jan 2009
(I)
June 2009 (II)
Change between
I and II % of GDP
Jan 2010
(I)
June 2010 (II)
Change between
I and II % of GDP
Jan 2011
(I)
June 2011 (II)
Change between
I and II % of GDP
Real GDP Growth 7.3 7.7 7.5 -0.2 8.0 5.0 -3.0 8.0 5.7 -2.3 GDP per Capita in USD 478 549 518 -31 592 532 -60 638 561 -77 Inflation (p.a.) 8.4 8.3 12.0 3.7 5.4 7.7 2.3 5.0 5.2 0.2
Millions of USD, unless otherwise indicated Exports 2609 3187 2891 -296 -1.4 3412 2860 -552 -2.5 3575 2961 -614 -2.6 Imports 5679 6590 5955 -635 -3.0 7168 5841 -1327 -6.1 7772 6001 -1771 -7.5 Current Account Balance -2012 -2240 -1906 334 1.6 -2447 -2108 339 1.6 -2736 -2142 594 2.5 FDI 712 802 591 -211 -1.0 890 502 -388 -1.8 988 553 -435 -1.9 Gross Reserves 2649 2793 2766 -27 3057 2748 -309 3397 2663 -734 In months of Imports 3.8 3.7 4.4 0.7 3.7 4.2 0.5 3.7 3.9 0.2
Billions of Tanzanian Shilling, unless otherwise indicated Domestic Revenues 3635 4729 4249 -480 -1.8 5540 5096 -444 -1.4 6307 5776 -531 -1.5 Total Expenditures 5217 7139 7058 -81 -0.3 8142 8724 582 1.9 9010 9509 499 1.5 Deficit, after grants (% of GDP) 1.6 3.7 4.9 1.2 3.2 6.0 2.8 3.2 5.3 2.1
Actual FY07/08
FY09/10 Projected FY10/11 FY08/09
Source: Figures based on IMF Report Jan 2009 "Fourth review under the PSI" and Budget Speeches as well as World bank Staff Estimates ,
.
75
Table 5.2: Broad Functional Budgetary Allocations (Percent share of total resources)
Rec Total Rec Total Rec Total
Local Foreign Total Local Foreign Total Local Foreign Total
Broad Functions
Administration 23.1 15.9 15.3 15.5 20.3 30.7 23 15.8 18.5 26.5 23.0 14.1 25.4 21.5 22.6
CFS 15.9 0 0 0 10.1 14.4 0 0 0 9.4 22.8 0.0 0.0 0.0 16.0
Defense and Security 11.8 1.1 0.2 0.5 7.7 10.7 2.4 0.3 1.1 7.4 10.1 6.9 0.3 2.6 7.9
Economic Services 6.8 57.7 24.9 36 17.4 5.7 48.4 30.2 37 16.5 5.2 45.4 16.9 26.7 11.6
Production Services 3.4 1.4 6.3 4.6 3.9 3.6 3.3 4.8 4.2 3.8 3.7 3.4 7.8 6.3 4.4
Social Services 39 23.9 53.3 43.4 40.6 34.9 22.9 48.9 39.1 36.4 35.2 30.3 49.5 42.9 37.5
Total 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0
2009/10
Dev
2007/08 2008/09
Dev Dev
Source: Based on MoFEA and IFMS Data
5.2.2 Ministries, Departments and Agencies (MDAs) release and spending
Although there seems to be some improvements in 2009/10 compared with previous years
(Figure 5.1), MDAs’ development budget execution remains weak. The overall MDAs’
development execution rate was 58percent in 2009/10 slightly higher compared to 2008/09
(Figure 5.1). While about 65percent of funds were released by end of the year, a little less
than 60percent was spent. This implies a small improvement in execution in 2009/10
compared with previous years, partly due to improved absorption capacity of the MDAs.
Late release of MDAs’ development funds continued to persist in 2009/10. Despite slightly
improved execution in 2009/10 compared to 2008/09, the pattern of release of funds did
not show marked improvement in 2009/10 compared to 2008/09. About 1/2 of the released
MDAs development funds in 2009/10 were released during the last quarter of the fiscal
year. Furthermore, less than 15 percent of funds were released in the first quarter.
However, absorption capacity was better in 2009/10 compared to 2008/09, as shown in
Figure 5.1.
Late disbursements especially in the first quarter of the fiscal year are partly due to the
budget process. While parliament may approve the overall budget by end June, approval of
individual MDAs’ allocations may be as late as first week of August–thus providing little
room for earlier release of funds. Also for projects that depend on donor financing, delays in
the first quarter may be due to lack of required reports from MDAs to trigger funds release
or delay in the release of funds from the home country. The Late release of funds can partly
be addressed through improved programme/project planning to ensure fewer activities for
implementation during the first quarter of the fiscal year. At the Local Government
Authorities (LGAs) level, the problem is underutilization of the funds allocated, besides late
disbursements. Subsequent sections will address this challenge.
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Figure 5.1: MDAs Development Budget, Release and Spending
Source: Based on MoFEA and IFMS Data
5.4 Share of public expenditure in agriculture sector
The share of public expenditure allocated to agriculture shows slight increase over the past
three years (Figure 5.2 and associated tables). The agricultural sector share of total spending
increased from 4.6percent in 2007/08 to 6.1percent in 2009/10 and is projected to increase
to 7.6 percent in 2010/11. Similarly, in terms of government priority spending, its share
increased from 9.7percent in 2007/08 to 10.6percent in 2009/10. In terms of GDP,
agricultural sector share increased from 1.2 percent of GDP in 2007/08 to 1.9 percent in
2009/10.
Although the upward trend in the share of the sector is encouraging, the resources allocated
so far are inadequate to modernise agriculture. The CAADP of the NEPAD recommends that
countries should allocate much more resources to the sector to foster agricultural growth.
In particular, the Second Ordinary Assembly of the African Union in July 2003 in Maputo,
African Heads of State and Government endorsed the ―Maputo Declaration on Agriculture
and Food Security in Africa (Assembly/AU/Declaration 7(II)), which requires countries
(including Tanzania) to “commitment to the allocation of at least 10 percent of national
budgetary resources to agriculture and rural development policy implementation within five
years”. Some countries in Africa have managed to reach that level of resource allocation to
agriculture, including: Niger (20 percent), Ethiopia (16.8percent), Burkina Faso (13.7
percent), Chad (12 percent), Mali (11 percent) and Malawi (11 percent). Therefore Tanzania
needs to emulate the examples of these countries to speed up agricultural growth.
2008/09 2007/08 2009/10
0% 10% 20% 30% 40% 50% 60% 70% 80% 90%
100%
Q1 Q2 Q3 Q4 Original estimates Exchequer releases Expenditure
0% 10% 20% 30% 40% 50% 60% 70% 80% 90%
100%
Q1 Q2 Q3 Q4
Original estimates Exchequer releases Expenditure
0% 10% 20% 30% 40% 50% 60% 70% 80% 90%
100%
Q1 Q2 Q3 Q4 Original estimates Exchequer releases Expenditure
77
As depicted in Figure 5.2, education, health and roads sub-sectors continue to be accorded
priority. Since government rhetoric continuously reminds Tanzanians that agriculture is the
backbone of the economy and a sector that has potential to reduce widespread poverty,
that people and policy makers put “Kilimo Kwanza” – that is, accord agriculture first priority,
one would expect greater resources to be allocated to the sector for the country to “walk
the talk”.
Figure 5.2: Sectoral budgetary allocations in key sectors of the economy (% of GDP), 2007/08 – 2009/10
Source: Based on MoFEA and IFMS Data
The functional composition of the 2009/10 approved agriculture sector budget (Figure 16)
shows local transfers and support was allocated a little over 41 percent of the total
resources, followed by crop development at 19 percent. The share of the remaining
components varied between 2-9 percent of the total budget. Trend analysis shows that
Fiscal Years Education Health Water Agriculture Roads
2007/08 19.4% 10.6% 5.4% 4.6% 12.8% 2008/09 18.5% 10.2% 3.3% 5.0% 12.4% 2009/10 18.3% 8.4% 3.7% 6.1% 11.5%
2007/08 36.3% 19.9% 10.1% 9.7% 24.0% 2008/09 33.5% 17.2% 5.5% 8.2% 21.0% 2009/10 33.0% 15.2% 6.6% 10.6% 20.8%
2007/08 22.4% 11.2% 5.7% 5.1% 13.5% 2008/09 21.9% 11.2% 3.6% 5.8% 13.7% 2009/10 21.8% 10.0% 4.3% 7.2% 13.7%
2007/08 5.1% 2.8% 1.4% 1.2% 3.4% 2008/09 5.3% 2.7% 0.9% 1.3% 3.3% 2009/10 5.6% 2.6% 1.1% 1.9% 3.5%
(Sector Share of Total Spending excl interest)
(Sector Share of Total Spending)
(Sector Share of Total Priority Spending)
(Sector Percent of GDP)
0 . 0 %
1 . 0 %
2.0%
3 . 0 %
4 . 0 %
5 . 0 %
6.0%
Education Health Water Agriculture Roads 2007 / 08 2008/09 2009 / 10
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during 2006/07 - 2009/10, the budgets for supporting improvement in farm inputs and grain
reserves increased, but the expenditure for research and training, policy and planning, and
animal disease control decreased. Since the activities for which resources have been
reduced are critical for enhancing agricultural growth, the government is urged to reverse
this trend and increase funding to these components.
Figure 5.3: Functional composition of the 2009/10 approved agriculture sector budget
Source: Based on MoFEA and IFMS Data
An analysis of comparison between budgeted allocations to releases (as percentage of total
budget) shows consistent improvement in the past five years (Figure 5.4).
79
Figure 5.4: Trends in agriculture resource allocation (budget estimates and releases)
Source: Based on Ministry of Finance and Economic Affairs budget data.
80
5.3 Recurrent Expenditure of Agricultural Sector Lead Ministries (ASLMs)
Table 5.4 provides a summary of total recurrent expenditure for the Agricultural Sector Lead Ministries (ASLMs). Overall, during FY 2009/10,
the Ministry of Agriculture, Food Security and Cooperatives (MAFC) was allocated 39.6percent of the resources, followed by POM-RALG at
36.1percent. The deviations between actual and approved budget for all ASLMs during 2007/08 showed a decline, while in 2008/09 only
livestock and fisheries ministries experienced a shortfall between approved budget and actual recurrent expenditure.
Table 5.4: Recurrent Expenditure of Agricultural Sector Lead Ministries (ASLMs) - Tshs, billion
Ministries
2007/08 2008/09 2009/10 2010/11 2009/10
Approved Actual %
Deviation Approved
Actua
l
%
Deviation Approved
Approved
estimates % share
Ministry of Agriculture, Food Security and
Cooperatives (MAFC) 93.7 64.1 -32% 113.7 135.3 16.0% 135.9 194.4 39.6%
Ministry of Livestock Development and Fisheries
(MLF) 21.5 18.5 -14% 41.9 20.2 -107.4% 37.3 34 10.9%
Ministry of Industry, Trade and Marketing (MITM) 1.0 0.9 -10% 3.5 17.1 79.5% 26.5 31.5 7.7%
Ministry of Water and Irrigation (MWI) 1.7 1.6 -5.8% 14.9 17.1 12.9% 19.3 18.4 5.6%
PMO-RALG 9.9 9.3 -6.1% 85.3 88.3 3.4% 124.4 55 36.1%
Total 127.8 94.4 -14% 278 6.7% 343.4 333.3 100%
Source: Based on Ministry of Finance and Economic Affairs budget data.
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As Figure 5.5 shows, MAFC and MITM recurrent budget allocations show an increase for the
past three years, while PMO-RALG experienced a decrease in 2009/10. The remaining ASLMs
remained almost flat during the three year period. The implications is that while MAFC has the
opportunity to employ extra extension staff due to increasing recurrent allocations, sub-sectors
such as Ministry of Livestock development are not accorded increasing recurrent resources to
defray costs of additional extension staff, urgently needed to modernise the livestock sector.
This applies also to Water and Irrigation where the resources allocated in the past three years
has remained almost flat. It is essential to review budget allocations to ensure increasing
funding especially for new extension workers, for both crop and livestock as well as renovate
and equip Zonal agricultural research institutes.
Figure 5.5: Recurrent Expenditure of Agricultural Sector Lead Ministries (ASLMs) - Tshs, billion
Source: Based on Ministry of Finance and Economic Affairs budget data
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5.4 Development Expenditure of Agricultural Sector Lead Ministries (ASLMs)
Table 5.5 provides a summary of the allocation of resources to the agricultural lead ministries.
Overall, an average of 85.6percent of the development resources used during 2009/10 to
facilitate agricultural development was defrayed by Development Partners (DPs). The data also
shows that for MAFC, DPs accounted for 97.3percent of the ministry’s development resources.
Given the severity of this donor dependency, agricultural development activities are not likely
to be sustained if and when donors decide to reduce or pool-out their agricultural development
support. Therefore an exit strategy ought to be designed to progressively reduce donor
dependency through continuous improvement in domestic revenue collection.
Table 5.5: Development Expenditure of Agricultural Sector Lead Ministries (Tshs, billions)
ASLMs
2008/09 2009/10 2010/11 2009/10
Actual Approved budget Approved budget
Foreign
as % of
total
Local Foreign Total Local Foreign Total Local Foreign Total
MAFC 1.9 21.4 23 2.5 90.2 92.7 3.4 100.5 104 97.3%
MLF 7.4 12.6 20 4.7 20.4 25.1 8.7 16 24.7 81.3%
MITM 18.3 3.7 22 13.3 9.9 23.2 16.4 12.5 28.9 42.7%
MWI 42.3 118 161 36.5 195 232 41.5 191.5 233 84.2%
PMO-
RALG
(Incl.
LGAs) 32.1 39.2 71 7.3 65.9 73.2 13.5 26.8 40.3 90.0%
Total 102 195 297 64.3 382 446 83.5 347.3 431 85.6%
Source: Based on Ministry of Finance and Economic Affairs budget data
83
Figure 5.6: Development Expenditure of Agricultural Sector Lead Ministries (ASLMs) - Tshs, billion
Source: Based on Ministry of Finance and Economic Affairs budget data.
Figure 5.6 above shows increasing Development Partner’s support to the agricultural sector in
the past three years. However, contrary to expectations, domestic resources to support
agricultural development appears to fluctuate widely, and in most ASLMs, resources were
reduced in 2009/10! For example, local resources for water and irrigation development were
reduced by 13.7percent in FY 2009/10 compared with the allocation in FY 2008/09. Similarly,
resources allocated to PMO-RALG were reduced by 77.3percent, while those for livestock
support was reduced by 36.5percent and those for supporting investments in trade and
marketing reduced by 79.8percent in FY 2009/10 compared with resources made available to
those ministries in FY 2008/09. This situation does not paint a good picture, especially
considering the county’s drive to modernise agriculture through facilitating access to irrigation
infrastructure, improved seeds and animal husbandry or facilitating mechanization and better
marketing of farm produce.
5.5 Overview of the Rescue Package
The Government prepared a rescue package in 2009/10 in response to the global financial
economic crisis. The crisis led to decline in the volume and prices of exports, fluctuations in the
flows of capital and investment, and reduced tourists and demand for tourism products.
Tanzanians agricultural exporters who had borrowed funds from the banking system to
purchase and market farm produce as well as farmers were adversely affected. As a result, the
Government unleashed a rescue plan of about Tshs 1,692.5 billion to mitigate the adverse
84
impact of the crisis on the Tanzanian economy. As of March 2010, the total amount disbursed
was Tshs 1,207.5 billion, equivalent to 71.3 percent of the approved resources (Table 5.6).
With regard to the agricultural sector, 35 firms engaged in the procurement and marketing of
cotton requested Tshs 28.6386 billion as compensation for loss incurred during the crisis. The
Government, after assessment of eligibility, determined that it would defray Tshs. 21.9 billion,
of which Tshs 19.186 billion or 87.6 percent had been disbursed by March 2010.
Some resources of the rescue plan were used for price stabilisation. The Government disbursed
Tshs 20 billion to the Ministry of Agriculture, Food Security and Cooperatives for stabilisation of
cotton price. Under this arrangement, cotton farmers, through the Tanzania Cotton Board,
received Tshs 80 per kilogram of cotton top-up on the domestic market price during the
2009/10 buying season. The subsidy was intended to provide incentives to cotton farmers
whose cotton price declined by 18.1 percent from Tshs 440 per kilogram before the crisis to
Tshs 360 per kilogram after the crisis.
The Government also allocated Tshs 20 billion to the NFRA Food Reserve, of which 95 percent
or Tshs 19 billion was disbursed to enable eligible farmers to purchase seeds and fertiliser,
provide training to village voucher committees, and stimulate access to finance and to
strengthen the national seed system. Other agricultural related expenditures of the rescue plan
are shown on Table 5.6.
85
Table 5.6: Summary of the implementation of the Rescue Plan as of March 2010
Purpose
Approved
amount (Tshs,
billion)
Disbursed amount
(Tshs, billion)
Disbursement
as % of
budget
Loss compensation (cotton firms) 21.9 19.2 87.6%
Loan rescheduling 45 15.0 33.3%
Working capital 80 20 25%
Food security 141 48.6 34.5%
of which:
- Food production 20 19 95%
- NFRA Food Reserve 20 20 100%
- Farm implements 20
- ASDP 40.5 14.0 34.5%
- TSAF 40.5 9.6 23.7%
ARTUMAS 10 10 100%
TRL 110.4
Enhancement of guarantee schemes 20 8 40%
Filling financing gap 828 660.8 79.8%
of which:
- 2008/09 Budget (BOT) 323.0 323.0 100%
- 2009/10 Budget (BOT) 300.0 150.0 50%
- 2009/10 Budget –domestic other) 205.0 187.8 91.6%
ESF Loan 436.2 411.2 94.2%
TOTAL 1,692.5 1,207.5 71.3%
Source: Ministry of Finance (2010)
5.6 An Overview of Agricultural Sector Development Financing
The Government prepared a rescue package in 2009/10 in response to the global financial
economic crisis. The crisis led to decline in the volume and prices of exports, fluctuations in the
flows of capital and investment, and reduced tourists and demand for tourism products.
Tanzanians agricultural exporters who had borrowed funds from the banking system to
purchase and market farm produce as well as famers were adversely affected. As a result, the
Government unleashed a rescue plan of about Tshs 1,692.5 billion to mitigate the adverse
impact of the crisis on the Tanzanian economy. As of March 2010, the total amount disbursed
was Tshs 1,207.5 billion, equivalent to 71.3 percent of the approved resources (Table 5.6).
86
With regard to the agricultural sector, 35 firms engaged in the procurement and marketing of
cotton requested shs 28.6386 billion as compensation for loss incurred during the crisis. The
Government, after assessment of eligibility, determined that it would defray Tshs 21.9 billion,
of which Tshs 19.186 billion or 87.6 percent had been disbursed by March 2010.
Some resources of the rescue plan were used for price stabilisation. The Government disbursed
Tshs 20 billion to the Ministry of Agriculture, Food Security and Cooperatives for stabilisation of
cotton price. Under this arrangement, cotton farmers, through the Tanzania Cotton Board,
received Tshs 80 per kilogram of cotton top-up on the domestic market price during the
2009/10 buying season. The subsidy was intended to provide incentives to cotton farmers
whose cotton price declined by 18.1 percent from Tshs 440 per kilogram before the crisis to
Tshs 360 per kilogram after the crisis.
The Government also allocated Tshs 20 billion to the NFRA Food Reserve, of which 95 percent
or Tshs 19 billion was disbursed to enable eligible farmers to purchase seeds and fertiliser,
provide training to village voucher committees, and stimulate access to finance and to
strengthen the national seed system. Other agricultural related expenditures of the rescue plan
are shown on Table 5.7.
87
Table 5.7: Summary of the implementation of the Rescue Plan as of March 2010
Purpose
Approved
amount (Tshs,
billion)
Disbursed amount
(Tshs, billion)
Disbursement
as % of
budget
Loss compensation (cotton firms) 21.9 19.2 87.6%
Loan rescheduling 45 15.0 33.3%
Working capital 80 20 25%
Food security 141 48.6 34.5%
of which:
- Food production 20 19 95%
- NFRA Food Reserve 20 20 100%
- Farm implements 20
- ASDP 40.5 14.0 34.5%
- TSAF 40.5 9.6 23.7%
ARTUMAS 10 10 100%
TRL 110.4
Enhancement of guarantee schemes 20 8 40%
Filling financing gap 828 660.8 79.8%
of which:
- 2008/09 Budget (BOT) 323.0 323.0 100%
- 2009/10 Budget (BOT) 300.0 150.0 50%
- 2009/10 Budget –domestic other) 205.0 187.8 91.6%
ESF Loan 436.2 411.2 94.2%
TOTAL 1,692.5 1,207.5 71.3%
Source: Ministry of Finance (2010)
5.7 An Overview of Agricultural Sector Development Financing
Adequate financing of the agricultural sector is critical, not only as a way of transforming
agriculture, but also as a way of reducing widespread poverty in the country. The Government
has taken measures including legal and policy reforms to encourage the commercial private
sector to invest in agriculture in a robust manner. However, the result has not been as
significant as expected because many private sector players are still hesitant to invest in the
sector. Figure 5.7 shows an increasing trend in the financing of the agricultural sector, although
the resources are too low to achieve sustained transformation of the sector.
88
Figure 5.7: Trend in Agricultural financing to total budget FY2001/02 – FY2010/11
Source: Based on Bank of Tanzania Economic bulletin, June 2010.
In recent years the little FDI that has gone into the sector has been directed mostly into crop
buying and other less risky ventures. Very little FDI has gone into large scale production or
infrastructure. The Government is aware that one of the main constraints to private sector
investment in agriculture is lack of appropriate financing facilities particularly considering the
risky nature of such investment. The Government is therefore taking steps to establish an
Agricultural Bank as proposed in the Kilimo Kwanza, and to start with, it has opened a special
window for agricultural lending in the Tanzania Investment Bank, while preparations are being
finalized to establish a fully dedicated Agricultural Bank.
At the same time, the ASDP framework has facilitated investment by small scale farmers at the
local level by setting aside funds that support investment projects that are identified in a
participatory way by the communities and incorporated into the District Agricultural
Development Plans (DADPS). The Government together with Development Partners has
decided that in the medium term, this framework will continue to guide investment into the
sector. Emphasis will continue towards encouraging other stakeholders particularly the
commercial private sector to participate more vigorously in supporting the sector.
The trends in agricultural financing in Tanzania from 2001/02 to 2010/2011(Figure 5.7) show
that, in nominal terms the total agricultural resource allocation has been increasing over time.
For example, during financial years 2001/02 the total budget allocated to agricultural sector
was Tshs 52.072 billion or 3 percent of total government budget. Since that period, allocation to
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the sector has increased, with financial years 2009/10 and 2010/11 being allocated Tshs
517.611 billion and Tshs 903 billion or 6.1 percent and 7.6 percent of the total government
expenditure, respectively. Since 2006 financing of the agricultural sector has been mostly
through the ASDP framework. Public spending for the sector has benefited greatly from
Development Partners’ who have been supporting the sector through the ASDP Basket Holding
Account.
The justification for recommending increased agricultural investment financing (from domestic
and external sources) is the need to transform the agricultural sector. This is critical because
agriculture has high backward and forward linkages to nearly all sectors of the economy and
has the largest potential for reducing poverty in the country. Public investment is needed in
agricultural technology development (high-yielding varieties, technologies for reducing crop
losses and livestock diseases), rural roads, farmers’ training, irrigation systems and new
marketing systems. Public investment in these “public goods and services” is necessary to
entice private investors to undertake agro-processing, establish contract farming and out-
grower schemes as well as input distribution and marketing activities.
In Tanzania, where 80 percent of the population depends on the rural sector for their jobs, food
and income, allocation of 10percent of its total government budget to agriculture is necessary.
Tanzania’s current expenditure on agriculture is still low when compared with Asia’s public
expenditure in the 1970s, at the height of the Green Revolution. For example, India spent an
average of 10 to 20percent of its government budget on agriculture in 1970s, while Malaysia
spent an average of 20percent of government investment on agriculture from 1960 to 1983.
Also, the larger investments in agriculture were sustained over a long period, thus transforming
their agricultural sectors.
Table 5.8 provides an analysis of the financing gap of the agricultural sector. It is important to
note that ASDP is financed through the General Budget Support (GBS), a Basket Fund, stand
alone projects and the private sector. There are also many donors that are supporting the
agricultural sector but not through the ASDP framework.
90
Table 5.8: Agriculture Sector Financing Gap 2010/2011 – 2014/2015
Category 2010/11 2011/12 2012/13 2013/14 2014/15 Total
DPs Commitments
175,835.9
74,906.9 56,074.2 - - -
Government Contribution
727,964.1
982,751.6 1,326,714.6 1,791,064.7 2,417,937.4 7,246,432.4
Farmers Contributions
117,990.8
138,910.6 180,614.5 243,829.6 329,170.0 1,010,515.5
Total Funds Available
1,021,790.8
1,196,569.0 1,563,403.3 2,034,894.3 2,440,290.4 8,256,947.9
Actual requirements
1,229,497.2
2,174,365.8 3,069,839.3 4,265,284.1 5,774,909.3 16,513,895.7
Financing Gap (Tshs, million)
207,706.4
977,796.7 1,506,436.0 2,230,389.7 3,334,619.0
8,256,947.9
Financing Gap (USD, million)
159.8
752.2 1,158.8 1,715.7
2,565.1
6,351.5
Financing Gap (USD, million) 16.9% 45.0% 49.1% 52.3% 57.7% 50.0%
Source: Based on NEPAD Planning and Coordinating Agency (2010)
Figure 5.8 shows the trend of estimated agricultural sector financing projected to 2015. The
ASDP appraisal document estimated cost for implementation of ASDP through Basket Fund is
USD 315.5 million. However, this estimate excludes cost for national irrigation development
which is a prime driver for increased agricultural productivity and profitability as well as
mitigating the effects of adverse weather conditions. In this regard, the actual estimated cost
that is required to implement the programme becomes USD 2.1 billion and this is the cost that
is required to implement the programme in seven years. For the period 2010/2011 to the end
of the current phase of ASDP in 2012/2013 the cumulative financing gap is Tshs 1,348.31 billion
(USD1, 037 million). This is an average of Tshs 450 billion (USD 345.6 million) per year over the
next three years. However, projections to 2014/2015 show the cumulative financing gap is Tshs
8,257 billion (USD6.35 billion). This financing includes estimates for some of the areas that are
included in the strategic investment priorities within the CAADP framework such as irrigation,
mechanization, research and extension and human resources development. However, detailed
planning and costing is recommended to estimate the financial requirements for the additional
investments like infrastructure, agro-processing to add value to the primary production, and
distribution of inputs, over the medium and long term to meet the poverty reduction, MDG
targets and sustain agricultural transformation.
91
Figure 5.8: Agricultural sector development financing requirements 2010-2015
Source: Based on Government/NEPAD Brief on Financing Agricultural Sector Development in
Tanzania, 2010
With regard to access to credit by the agricultural sector, Figure 5.9 shows the amount of credit
made available to the agricultural sector in relation to total credit. Total as well as agricultural
credit appears to have risen between FY 2005/06 to FY 2007/8 but declined slightly in FY
2008/09 and FY2009/10 partly due to the Global financial crisis. In 2005/06 commercial
agriculture credit was 10.4 percent of total credit, and then there was an increase to 11.6
percent in 2006/07 and a further increase to 12.4 percent. Thereafter, there was a slight
decrease to 11.5 percent decrease in 2008/09 followed by an increase to 14 percent in
2009/10. But as the levels of credit show, it appears agriculture is not attracting adequate
financing from the commercial banks to support agricultural transformation. This is partly
because of inadequate private sector incentives required to defray the risks that are inherent in
agricultural production, agro-processing and marketing of agricultural produce.
92
Figure5.9: Commercial credit and agricultural financing
Source: Based on Bank of Tanzania Operations bulletins data
With regard to investment promotion, the Tanzania Investment Centre (TIC) approved 572
projects in 2009 worth Tshs 5,893 billion compared with 871 projects approved in 2008 –
equivalent to a decrease of 34.3 percent. The sectors that attracted most investors (with
number of projects in bracket) were: manufacturing (183), tourism (151), commercial building
(81), and transportation (61). Agriculture sector attracted only 29 projects worth Tshs 295
billion or 5 percent of the total projects investment in 2009. The recent data from the Tanzania
Investment Centre (TIC) has also shown that during the year 2007, there were a total of 701
projects worth Tshs 7,221.7 billion in the country, with an estimated employment potential of
103,958. This was significant increase comparing to the year 2006, where 679 projects with
total investments of TShs 7,052.7 billion were implemented. However, during 2007, there were
only 27 projects (3.7 percent), worth Tshs 177.2 billion (2.5 percent) and potential employment
of 9,071 (8.7 percent) for the agricultural sector. In 2008 the number of projects increased to
871 worth over Tshs 8,973 billion. However, agricultural related projects were only 37
(4.2percent) worth only Tshs 377 billion.
While agriculture has immense potential given its resource endowments, especially fertile soils,
adequate irrigable land with plenty of rivers and lakes, Tanzania still fails to attract private
domestic and foreign investment in agriculture. This is an area that Government needs to
review to understand the drivers or constraints that make agriculture unattractive compared
with manufacturing, trade, construction and other sectors of the economy.
93
With regard to rural credit to support agricultural transformation, SACCOs organisations are
playing a commendable role in facilitating access to farmer credit to purchase farm inputs as
well as market their produce. For example, over the past four years (2006/07 -2009/10),
SACCOS in Namtumbo and Babati districts were able to provide credit to small-holder farmers
worth Tshs 2,770,562,637. Figure 5.10 shows that SACCOs credit supply to small-holder farmers
from Namtumbo and Babati has been growing each year since 2006/07.
Figure 5.10: SACCOs credit availability in Namtumbo and Babati districts
Source: ESRF ASR-PER field study, September 2010
5.8 District level expenditure analysis
5.8.1 Introduction
In the last decade and a half government has continued to implement comprehensive measures
and reforms at local government level to try to improve the processes of budgeting, public
finance management and accountability at this level. The development of a planning and
reporting manual (‘Plan-Rep’) aimed at enhancing strategic planning and budgeting is one
example of efforts made. Another low impact experience was the implementation of
harmonization of fiscal year of the local authorities to bring them at par with that of the central
government in 2004. Since 2006 formula-based allocations of central grant resources to LGAs
were installed, which are described in detail below. The latter were accompanied with specific
agricultural grant packages for capital investment, capacity building, irrigation and livestock
development. In general, these measures have been lauded in the regions and districts as trying
94
to improve the environment for channelling more resources to the local level and empowering
the people at the grass roots to make decisions with the backing of more robust resources.
In addition, the local government reform focused on rolling out IFMS to districts, at least those
with reliable electricity. In the current ASR-PER, during Study field visits, the use of computers
was everywhere evident, though it was not certain that they were connected to effective IFMS
as is ultimately envisaged. In order to build a solid foundation for resources management,
helped by use of the IFMS, more accountants have been trained and posted to the regions and
districts. A Systems Development Unit to backstop the IFMS process in the LGAs has been
established within the ACGEN in MOFEA and specialists have been trained on the EPICOR
software and deployed to the Zonel Treasury (Accountants) Offices. Nonetheless, many
challenges still remain.
The field mission for this ASR-PER Study has found, that many districts still have difficulties to
produce aggregate data on DADG expenditures. This corroborates what other studies have
been saying. The quality and scope of the data/reports differ quite substantially among the
districts. Some explain this lacuna to be due to still too many demands for excessive levels of
detailed information, the frequency of which can be burdensome (e.g. monthly, quarterly,
semi-annual, and annual). The ASR-PER consultants feel that the overarching problem seems
to be the lack of a central focal point working across all ASLMs where aggregate agriculture
data can be processed and easily accessed , taking into account the diversity nature of the
ASLM complex.
5.8.2 Expenditure Priorities at Sub-National Level
LGA and Regional Secretarial recurrent expenditures composed of salaries and OC are funded
as a matter of first charge priority by direct subventions from the central government. For
instance, in 2009/10 wages represented about 69.6 percent of agriculture related recurrent
expenditures, while other charges represented 30.4 percent. Development activities such as
those under the framework of the Agriculture Sector Development Programme (ASDP) are
largely implemented at the district level through the District Agricultural Development Plans
(DADPs). The DADPs are supposed to be an integral part of the District-wide Development Plan
(DDP) that encompasses all sectors managed by the district council management team. The
ASDP and other public development agricultural activities are funded at two levels, at national
as well as at the district council levels.
The government through the ASLMs (MAFC, MLDF, MITM, MWI and PMO-RALG) initiated
implementation of ASDP through basket funding since 2006/2007, which as indicated before
95
depends substantially on donor financial assistance. District Councils are responsible for the
preparation and implementation of DADPs, while the ASLMs are charged with the responsibility
to ensure the quality of DADPs design and implementation.
PMO-RALG working in tandem with the other ASLMs and guided by MOFEA translates national
aspirations and strategies into LGAs Budget Guidelines to enable the LGAs to prepare the MTEF
that reflects their budget priorities. The MTEF is thus a budget planning tool, based on budget
guidelines and resource ceilings, that lay out resource allocation for three years on a rolling
basis. In practice, however, MDAs and LGAs have inclined to provide more concrete budget
estimates in the first year of the MTEF; the second and third year estimates have been
relatively tentative.
5.8.3 Budget Guideline for Allocation of Budget Resources
According to the 2010/2011 Budget Guidelines, central government Block Grants are provided
for Agricultural and Livestock Development Services and Development activities under the
ASDP which are to be implemented by each LGA, based on a DADPs which is part of the
Council Strategic Plan (i.e. the DDP cited above). LGAs should also allocate Agriculture Block
Grant funds to cover recurrent cost of providing basic training and extension service support to
the farmers and livestock keepers.
5.8.4 Agriculture Block Grant funds
The allocation of the block grants adheres to the following principles:-
a. Seventy Five percent (75 percent) of the ASDP funds are channeled to the districts and
villages to implement the DADPs. The remainder of the funds (25 percent) is used at the
national level by ASLM institutions to enable them plan and supervise agricultural
activities in the country.
b. For administration of extension activities at the council level, a maximum of 20 percent
of the grant is reserved.
c. The rest, least 80 percent of Agriculture Block Grant (transferred to the district), is
available for agriculture and livestock development activities at the Ward and Village
levels, in accordance with the provisions of DADPs.
The bulk of ASDP expenditures at LGA level are funded through the following three types of
fiscal grant transfers:-
A: District Agricultural Development Grant (DADG);
B: Agricultural Extension Block Grant (A-EBG);
C: Agricultural Capacity Building Grant (A-CBG);
96
A formula has been designed to facilitate more objective allocation of these grants, but their
release to LGAs is also subject to the LGA performance assessment results over the previous
year DADP processes. As applicable to all discretionary CDG grants, LGAs are assessed on
performance, where upon they are classified into categories which determine the amount of
the Agriculture Development Grant to be received. The amount ranges from 50 percent to 100
percent of the formula-based entitlement as per the LGDG Assessment Manual.
For each LGA the DADP grant (DADG) is supposed to be allocated either up to 50 percent, 80
percent or 100 percent, depending on its respective performance assessment. Investments that
are eligible for funding include: agricultural inputs (such as seeds, fertilizers and agro-
chemicals), small-scale irrigation schemes; group or community investments of productive
nature; environmental investments; public infrastructure such as rural roads or crop storage
facilities; group or community investments in risk bearing innovative equipment.
The Agricultural Extension Block Grant (A-EBG) provides funding for both public extension
services and as a Government contribution for Non-State Actors. The grant is allocated on
formula basis and in line with the performance assessment and conditions.
Capacity enhancement activities can be funded under Agricultural Capacity Building Grant (A-
CBG) so as to enable LGA access to higher resource transfers in subsequent years. The initial
focal areas of the capacity building grant should be on improving district agricultural planning,
agricultural investment appraisal and review, agricultural services reform, and enhancing
stakeholder engagement. The LGAs that cannot meet the minimum grant conditions should
receive 100 percent of their entitlement but have to be put under close supervision by PMO-
RALG and RS in collaboration with MAFC. The underlying aim of capacity building efforts is to
improve performance and not to punish the district for shortfalls that may be rooted in intrinsic
capacity weakness in the first place. Councils that do well receive incentives with what are
called top-up grants, with top-up DADG and top-up A-EBG.
5.8.5 Other Non-DADP Grants for Agricultural Development
Apart from the DADG windows, districts also receive a variety of other development funds that
are specific to regions (area-based programmes), sectors and purposes. These transfers’ areas
instruments are:
(i) Participatory Agriculture Development Empowerment Project (PADEP);
(ii) District Agriculture Sector Investment Project (DASIP);
97
(iii) Participatory Forest Management (PFM);
(iv) District Irrigation Development Fund (DIDF);
(v) Sustainable Wetland Management (SWM);
(vi) Village Travel and Transport Programme (VTTP);
(vii) Local Government Transport Programme (LGTP);
(viii) Tanzania Social Action Fund (TASAF); and
(ix) Child Survival through UNICEF Grant Support7.
In most cases, these varieties arose because of because exigencies of external donors. The
most important grants at the local level and which have been closely related to ASDP are
PADEP, DIDF, and TASAF. These additional funding streams are meant to augment the
development efforts being made with the funding from DADGs elucidated above.
The 2010 Budget guidelines admitted that “The numerous numbers of Development Grants and
funding sources to LGAs, with different allocation formulae and conditions of access are
obviously confusing to the extent of impinging on good governance and accountability. They
therefore call for an early harmonization.” This initiative will be spearheaded by MOFEA. The
plan is to harmonize and merge all the development grants into the LGDG system by the year
2012/13.
5.8.6 LGA Contributions from Own Sources
Lest it be forgotten, LGAs also have powers to raise own funds, and they do so. This is in line
with the spirit of devolution of power. In order to enable the LGAs to provide improved social
and economic services, LGAs have to scale up revenue collection efforts and effectively
participate in co-funding of development projects that receive funding support from
government subventions. In 2009/10 total LGAs own revenue was Tshs 138.1 billion, which
was equivalent to almost 2 percent of the total government revenue. The projection for FY
2010/11 isTshs 158.8 billion (Table 5.9).
7 Its nutrition component can be closely linked to agricultural activities
98
Table 5.9: District Council’s Own Revenues for 2006/07 – 2008/09-(amount in Million Tshs)
Year Number of Councils Total Council
Budgets
Estimates Own
Funds
Actual
2006/07 122 - 63,385.00 61,411.10
2007/08 133 - 80,137.30 79,770.30
2008/09 133 908,998.30 109,258.00 100.659.0
2009/10 133 1,565,953.90 138,052.30 NA
2010/11 136 NA 158.8 NA
Source: PMO-RALG Budgets
Table 5.9 figures indicate that LGAs own sources are an another important area for raising
revenue. If innovative ideas were instituted in improving the environment conducive to more
private sector investment in farming and other projects, LGAs would be able to reduce
overdependence on central government grants and foreign assistance. So far, the LGAs
contribution to own total budgets is still tiny, under 10 percent of the total.
Currently by far the most richly endowed in generating own resources are the city of Dar es Salaam, followed by the cities Mwanza and Arusha. Other districts still rely heavily on levying taxes on agricultural activities sometimes at the expense of attracting investments into agricultural activities. They impose fees for instance on sales of cattle, poultry and other livestock, through livestock market fees, produce market stalls / slabs dues, slaughter charges, abattoir slaughter service fee , meat inspection fees and meat inspection charges.
There is relative scope in councils raising own funds but this will require highly efficient means
of collecting the taxes (not only from agricultural produce). They also have to ensure more
accountability to tax payers and private businesses on revenue use by the councils. Plowing
back agriculture-derived revenues to enhance sector productivity and investments is one of
those options to enlarge resources flowing to the sector. This topic will be revisited in the
recommendations.
5.8.7 Expenditure Analysis of DADPs
DADP Resources Management
The current Study (in accordance with the TOR) focuses on assessing the planning and
implementation of DADPs. The PADEP (funded by the World Bank) has so far ended (June
2010) after providing over Tshs 61 billion since 2006/07, while DASIP (funded essentially by
AfDB) has contributed Tshs 85 billion with projects concentrated in 33 districts in Mara, Kagera,
Mwanza, Shinyanga and Kigoma regions. A case study on the performance of DASIP has been
produced in the preceding sections of this document.
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Figure 5.11: DADPs Funding 2006/07-2009/10
The DADP funds are channelled as DADGs and for the past 4 years have as seen in the Table
5.10 and figure 5.11. It is noted that the amounts spent annually are less than the
corresponding amounts transferred to the districts. In two of the years shown in the table, the
gap was quite significant. The ratios were as follows:
Table 5.10: Percentage (%) of Spending over Transfers (Source PMO-RALG)
Year 2006/07 2007/08 2008/09 2009/10 2010/11 Total
Percentage 98 63 84 65 NA 75
Thus spending (reported) has been declining slowly over the years.
The reasons for under-spending have been spelt out as follows:
Late disbursements from the central government
Late movement of funds from DED’s office to project beneficiaries, caused by many
factors some of them related to sheer office organisation unwieldiness or inefficient
procedures and staff capacity gaps
Slow procurement processes; in some areas shortage of suppliers and qualified
contractors
Seasonality nature of some activities ( e.g. when project investment areas are not
accessible, or land is flooded)
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Shortage of extension staff and rare professionals such as irrigation engineers and
technicians (this has been reported in all the districts visited by the consultants for this
ASR-PER Study) is particularly widespread.
Inadequate capacity in experts to design and carry out or supervise the works
Lack of or inability of project beneficiaries to come up with required counterpart
contributions, with no alternatives lined up such as credit in the case of farm inputs or
power tillers.
Weak data processing and sharing mechanisms
It is also possible that in a few cases under-utilisation of funds may be appearing on paper only.
As funds already credited to project accounts managed by villages or communities are not
returned at the end of a financial year, it is possible that some of the expended funds are not
reported in time to be captured in spending statements on due date. The problem of reporting
financial data seems to be widespread within LGAs and even in some central government
MDAs. The empowerment of officers in the districts with computers has been a step in the right
direction, to among other things facilitate efficient financial reporting. But a credible M&E
system still needs to be consolidated after the LGMD2 software has been satisfactorily piloted
in Dodoma and Morogoro Regions. A Report by a consultant8 says DADPs quarterly report (on
physical and financial aspects) has improved to the effect that 16 regions submitted reports in
2009/10 compared to 13 in 2008/09.
Minister of Agriculture (MFSC) in his 2010/11 Budget Speech, stated: “Serikali imekuwa
ikiongeza kila mwaka kiasi cha fedha kinachotengwa kwa ajili ya Sekta ya Kilimo kuanzia
mwaka 2005/2006. Bajeti ya Sekta ya Kilimo iliongezeka kutoka shilingi bilioni 233.309 mwaka
2005/2006, sawa na asilimia 5.78 ya bajeti yote ya Serikali hadi shilingi bilioni 666.9 mwaka
2009/2010 sawa na asilimia 7.2 ya bajeti yote ya Serikali” The meaning is that government
deploys serous effort to develop the sector of agriculure and thus has been allocating
increasing amounts every year since 2005/06. In this context, the sector budget grew fromTshs
233.309 billion or 5.78percent of budget resources in 2005/06 to Tshs 666.309 billion or 7.2
percent by 2009/10. These figures are for all agricultural development efforts. They
nonetheless indicate the determination of government to direct more resources to the sector.
Summary Analysis of data obtained from field missions from the 7 districts visited in the current
Study assignment is linked with the assessments done by other parties.
8 Aid Memoire for 5 the 5the ASDP Joint Implementation Review , Sept 2010 (for the ASLM)
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5.8.8 DADPs Assessment
A nationwide assessment of DADPs management performance was carried out in 2010 by 49
assessors comprising four National Facilitators (from the ASLMs), three JICA/RADAG team
members and 42 Regional Secretariat Agriculture and Livestock advisors9. The assessment is
used to determine DADG allocations in the subsequent financial year. The assessment
highlighted the areas to which more weight has been given, including the following elements:
(i) the quality of the district’s Village Phase-in/-out and Focused Project that shows
prioritization criterions used in selection of villages and intervention, (The purpose here
was to guide the LGAs select few potential villages and implement sound projects that
will contribute to the increased income and reduce poverty ) (30 marks out of 100),
(ii) Project Write Up, i.e. some sort of information to justify project selection priorities (30
marks). Unless it is subsumed under the aspect of Grant Utilisation (with a score of 10),
resource management which includes efficient procurement, disbursement, accounting,
auditing and reporting, would seem to be accorded no conspicuous importance.
(iii), Resource management (with a score of 10) which includes efficient procurement,
disbursement, accounting, auditing and reporting.
The 2010 Assessment Report concludes thus:
“In general the assessment result shows improvement in the quality of DADPs compared to last
year assessment. This is largely attributable to the review of DADP planning and
implementation guideline and effort of training and backstopping by newly formed and trained
National Facilitation Team (NFT). Also there is increased awareness among the LGAs regarding
the importance of formulating quality DADPs as a way of alleviating poverty. In order to
facilitate this A Performance Manual for LGAs accessing development grants is being revised in
order to underline the incentives for performance improvement. The Assessment indicators
used in FY 2009/10, focus on the quality of reporting, for instance. Results indicate that
78percent of DADPs were of either ‘very good’ or ‘good’ in quality compared with 48percent
last year, 20percent ‘fair’ compared to 37percent of last year and 2percent ‘poor’ compared to
14percent last year. However due caution should be exercised in interpreting the results,
because this year (2010) the majority of assessors were the Regional Officers including the
ASDP coordinators who carried out the assessment for the first time. Although they were fully
explained about the assessment Framework and assessment operation by the National
9 The inclusion of the latter two groups is an innovation this year aimed incorporating team members with diverse
field level experiences.
102
Facilitation Members, some misunderstanding might have remained. As such, the results
should be viewed with sufficient care.”
The following results were obtained during the 2010 DADPs Assessment:
Group A districts: Very Good quality – Total Score of 81 – 100.
Group B districts: Good quality – Total Score of 61 – 80.
Group C districts: Fair quality – Total Score of 41 – 60.
Group D districts: Poor quality – Total Score of 0 – 40.
The first three best LGAs were Njombe DC (93), Karatu DC (93) and Mbeya CC (93). The last
three LGAs with poor scores were Siha DC (33), Ukerewe DC (34) and Muleba DC (35). The
National average total score is 70 as compared to 48 last year showing an improvement from
last year. In fact, this positive trend in LGAs working under DADPs framework has also further
been corroborated by the AJIR 2010 which remarked that, as a result, the number of LGAs
qualifying to receive DADG top-up grants is increasing. They attributed this particularly to
indications of better the planning and implementation processes.
Among the sampled district in the current Study those that in the 2010 national DADPs
Assessment scored “Very Good” were Namtumbo in Ruvuma, Kongwa in Dodoma, and
Morogoro10. Babati in Manyara and Urambo in Tabora secured only “Good” mark, same thing
as Geita and Sengerema districts. The current Study Report has regarded Babati as one of the
best performers in many aspects and the national assessment referred above may be due to
unavoidably inherent subjectivity in such an exercise and the scoring consistency issue as it has
been scoring “Good” both in 2009 and in 2010. Morogoro on the other hand was not regarded
by the current Study team as a pace setter and in fact in previous years scored “Poor” marks.
Anyway the previous year (2009) only 9 districts scored “Very Good” as against 32 in 2010.
The more positive assessment results in 2010 are largely attributable to the review of DADP
planning and implementation guideline and efforts in training and backstopping by the newly
formed and trained National Facilitation Team (NFT), as well as the fact that districts have been
gradually taking the issue of quality DADPs more seriously.
10
The districts had been selected before the results of the Assessment were known and had used different criteria as indicated above.
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5.9 Review of Agriculture Expenditure Priorities
As indicated before, agricultural expenditure priorities are determined by the ASLMs at national
level and by the district councils at district level, both within the context of the relevant Budget
Guidelines set by the central government. In accordance with the participatory approach
adopted under the decentralisation of the development process, the primary needs of villages
are identified by means of the O&OD method. All these priorities are expressed in the budget
frame as MTEF. The installation of a full-fledged MTEF process at district levels is still wanting.
The current ASR-PER Study was able to obtain the picture of resource allocation of MAFC for
further examination of its broad priorities as indicated in Table 5.11.
Table 5:11: Resource Allocation Priority Areas in MAFC for FY 2008/2009, 2009/2010 and 2010/2011 (inTshs)
2008/2009 2009/2010 2010/2011 Ranking for
2009/10 and 2010/11
Priority Areas/targets
Approved Budget
Expenditure Approved Budget Approved Budget
Provision of fertilizer subsidy
53,750,000,000 53,735,500,000 50,810,000,000 68,000,000,000 1
Provision of subsidized certified seeds and agrochemicals
13,500,000,000 13,431,769,300 7,160,000,000 7,841,057,400 4
Acquisition of grains for national food reserve
21,656,840,000 21,656,840,000 54,656,840,000 18,629,972,650 2
Implementation of demand driven research services
3,570,720,000 2,264,215,507 9,073,576,200 7,052,769,000 3
Training for extension revamping programme
1,875,000,000 1,566,711,400 4,110,698,000 4,280,082,500 5
Control of outbreak pests and diseases
1,549,950,000 1,549,950,000 1,386,850,000 5,959,726,000 6
Promotion of agro-mechanization
420,000,000 380,000,000 450,000,000 260,900,000 7
96,322,510,000 94,584,986,207 127,647,964,200 112,024,507,550
Source: MAFC
In the Table 5:11 on MAFC priorities for the 2009/10 and 2010/11 approved budget it was clear
that that the priorities went as follows:
1. Provision of fertilizer subsidy
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2. Acquisition of grains for national food reserve
3. Conduction demand driven research services
4. Provision of subsidized certified seeds and agrochemicals
5. Training for extension revamping programme
6. Control of outbreak pests and diseases
7. Promotion of agro-mechanization
From the above it is clear that the issue of food security was the top-most preoccupation of
central government (priority (+2+1+6). The others were agriculture related services which,
though important) were not aimed at immediate food delivery or storing. The fault of this
information is that it does not cover the other ASLM agencies. But it gives a critical indicator.
In the sampled districts where project allocations or programme preferences were clearly
shown, the following picture on investment prioritisation emerged (Table 5.12)
A similar priority classification was applied to MLDF expenditures and the results were as
follows (Table5.12.):
Table5.12: Resource Allocation Priority Areas in MLDF for FY2006/07-2010/11. (in Tshs)
Actual Expenditure 2006/2007 2007/08 2008/09 2009/10 2010/11 Ranking
Research Livestock 3,438,529,749 5,110,002,997 8,874,688,835
14,379,613,800 13,289,383,000
1
Livestock Inputs 7,276,599,120 2,237,953,000 7,716,872,131 5,063,495,980 4,061,500,000 2
Training of Extension Officers 1,514,355,168 1,269,000,000
1,042,560,827 2,249,861,000 3,443,100,000
3
Market Construction 209,362,479 416,750,000 201,450,000 234,250,000 108,500,000
4
Sources: MLDF (These areas are essentially for livestock and do not necessarily include
fisheries)
The ranking of broad categories of expenditure in MLDF shows that Research is taking the
highest position in spending, with special efforts made in the last three years to re-organise the
ministry and its research institutions. The other types of expenditures have been moving up and
down unstably. It would be interesting for the ministry to show the impact of this recent surge
on research expenditures. In part, the Livestock Sector Development Strategy now under
preparation will elucidate on this issue.
The processes of profitable farming and livestock activities in the end have to be tied to
effective marketing facilities within Tanzania and beyond in order to trade on surplus produce
and acquire needed inputs. The market and marketing promotion function of government that
falls on MITM shoulders are thus worth noting. In this regard, MITM’s top priority related to
105
agricultural development is to support the development of SMEs technologies by expanding
and deepening of value addition. This includes agro-processing development at secondary level
from the farmstead, for instance by setting up incubator sites and industrial and trade
premises, as well as more generally expanding the scope of SMEs and their geographical spread
into rural areas. Evidently, the above analysis on priorities falls short of comprehensive
information as it does not cover all ASLM agencies. But the chosen areas provide a critical
indicator.
In the sampled districts where project allocations or programme preferences were clearly
shown, the following picture on investment prioritisation emerged11 (Table 5.13):
Table 5.13: Resource Allocation Priority Areas in Selected Districts FY 2008/2009 and 2009/201012
Type of projects/ Rankings in District DADPs
Mbozi Morogoro Kongwa Babati Total (non-weighted) Ranking
1. Markets, Storage + Nanenane 5 3 2 2 4
2. Office construction - 3 3 - 3
3. Agro industry - - 6 - 6
4. crop husbandry +animal 5 7 8 6.6
5. Inputs (crop and livestock) - - 3 7 5
6. Mechanisation 3 2 4 1 2.5
7. Extension 7 1 3 5 4
8. Animal disease control - - 7 6 6.5
9. Project management 5 5
10. Irrigation and charco dams 1 *1 1 3 1.5
11. Cooperative and SACCOs - - 8 - 8
12. Rural Roads 2 3 - 4 3.3
NB: * Irrigation has more than Tshs. 1.5 billion from DIDF
The above information from the sampled districts differs significantly from the prevailing
countrywide priority setting of DADPs priorities appearing in Fig 5.12 below. For example,
Capacity Building for Farmers and LGA institutions comes out on top in the country-wide
priorities with a total of 38.2 percent, followed by Irrigation 18.5 percent (though here the
amount includes water supply for human and animal consumption).
Rural Roads are less prominent in countrywide DADPs priorities than they have emerged in the
sampled district statistics. It should be remembered that the more important source of funding
rural roads is the Road Fund which does not fall under the DADPs umbrella. Seeds improvement
11
Ranking method used was based on the total amount of funds allocated
12 FY 2010/11 has not been covered; in any case districts were still waiting for first quarter disbursement
106
as well as livestock reproduction are relatively popular nationwide and next comes marketing of
both crops and livestock. But in general, it is difficult to make a firm judgement on the merits
of the prioritization based simply on the level of spending, without carrying out an in-depth PET
exercise to focus on the actual things for which money was spent. Nonetheless, one is tempted
to form an impression that expenditures beyond strictly primary production focus have gained
a higher ground (i.e. with preference for training activities, LGA institutional capacity building
items, M&E, etc or about 46 percent).
In the sample districts, there are other pertinent observations to make:
(i) In general, in the two latest finance years for which data was taken , apart from
irrigation and charco dams , mechanisation has been given due priority. In third place
come marketing including storage construction, market sheds and Nanenane
participation which take a large budget portion (again Nanenane is an off-farm
expenditure). Office construction in two districts is exceptionally prominent as well.
Rural roads are ranked next, thus considered very important as well. Note that in both
the sampled districts and all districts nationwide, irrigation and charco dams plus
marketing facilities occupy reasonable ranking, even if not the first place. The findings
on the prominence accorded to these two aspects are gratifying because by nature
infrastructure projects require a lot of funds.
107
Figure 5.12 DADPs Funding Priorities 2006/07- Dec.2009 by Expenditure Categories (% share) (Data Source: PMO-RALG)
Source: Based on PMO-RALG data
(ii) That spending on Research at the LGA level is negligible and thus not represented in the
diagramme (because of percentage rounding up) is not surprising, since it is
undertaken basically by national MDAs (MARTIs, Livestock Research Institutes,
Universities, etc).
Additional observations on DADPs in sample districts:
(iii) Surprisingly crop and livestock inputs are not very big budget items and in some of the
sampled districts they seem to be absent; Sengerama and Geita have been excluded in
the table above partly because they depend considerably on DASIP funding
(iv) Mbozi has a relatively small budget but wisely concentrates on few projects and
(v) Morogoro has a sizeable budget (Tshs 801,5 million in 2009/10 and Tshs 1,125,4
million in 2010/11 with many projects; the budget is also boosted by supplementary
resources from DIDF and PADEP.
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5.10 Trends in Financing of Agricultural Services at the District level
5.10.1 Main Financing Areas
The main services involving the farmers at the grass roots in the districts are:
Agricultural Extension (covering crop and livestock activities)
Provision of inputs
Mechanisation
Training and Research (applied research)
Produce Marketing (covering market development, market structures, )
Investments in Irrigation Infrastructure
Agro-processing (value addition chain)
Credit Facilities
Cooperative Systems, and
Rural Roads
The above services require government leadership in comprehensive planning, concerted
implementation organisation and/or regulation. The implementation is not the exclusive
domain of government function, as most of the services are more efficiently carried out by the
private sector or in partnership between the government and the private sector. The required
investments are also done by both parties. Further information on expenditures on a number
of these services that have taken a big portion of the total LGA budgets (ref. Fig5.12) is
presented below.
5.10.2 Extension services
This is a crucial component in advising and passing key messages to the farmer on available
farming technologies (farm implements, seeds, fertilisers and agro-chemicals and vet-drugs),
markets (prices, channels and opportunities), financial facilities (credits, subsidies, input
vouchers, saving options), etc.
As indicated in Table5.14 below, the budget for training for extension officers more than
doubled (65 percent increase) between 2008/09 and 2009/10 indicating more attention by the
LGAs towards the problem presented by the acute shortage of extension officers in the country
by trying to sharpen the tools and skills of those officers in place, since they cannot easily take
decision to increase their number. However this budget increase trend was somehow reversed
by the slight decline in the resources allocated for the same purpose in the following year
20010/11.
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Table 5.14: Extension services Provision FY 2008/09 -2009/10 (Tshs.)
ASLMs
2008/2009 2009/2010 2010/2011 % change in
Approved budget for 2008/09-
2009/10 Approved
Budget Expenditure
Approved Budget
Expenditure
Transmission of demand driven research services
3,570,720,000
2,264,215,507
9,073,576,200
7,052,769,000
154.11
Training for extension revamping programme
1,875,000,000
1,566,711,400
4,110,698,000
4,280,082,500
119.24
Source: MAFC
The current demand for extension service agents in the country is huge13. According to the ASR-
PER interview, it probably stands at 15,000. The current extension agent compliment stands at
3379 (about 22.5 percent of demand). The shortage problem was noted in all the visited
districts. The problem is also compounded by inadequate funds in the LGAs to enhance
mobility of the existing staff. In Sengerema and Geita there have been no remarkable changes
in the number of public extension officers operating. The extension staff gap in Morogoro was
28 out of the approved staff complement of 132, and only few officers have been transferred to
the new district of Namtumbo (increasing the number from 33 to 49).
5.10.3 Provision of Inputs
For the years 2008/09 and 2009/10 the provision of the subsidies for fertilizers, certified seeds
and agro-chemicals to farmers for both food crops and cash crops has been facilitated by the
Agricultural Input Trust Fund and the Input Voucher System. These subsidies are also applied
for animal husbandry activities (acaricides, vaccines, etc. for control of vector borne and
zoonotic diseases). However, expenditure targets are not always met as the approved budgets
do fluctuate, and often downwards, depending on the available resources. For instance, the
approved budget for the fertilizer subsidies country-wide decreased from Tshs.53, 750 million
to Tshs.50, 810 million in year 2008/09 and 2009/10 respectively, representing a decline of 5.5
percent (see Table 5.15). The field experience in districts visited indicated that the demand for
subsidized inputs exceeds the supply by far. Nevertheless, the subsidies through the voucher
systems have enhanced the demand for fertilisers, as was often mentioned by respondents.
This has also positively impacted on the price for fertilisers due to increased volumes being
sold. For instance, in Mbozi district some of the input sellers operating with the voucher
system said that the price for DAP and Minjingu is currently Tshs. 50,000 per bag as compared
13
Initial recruitment is carried out by ASLMs and the salaries of relevant council staff are borne by the central government either directly or through earmarked recurrent PE transfers.
110
to the former price before the voucher system of Tshs.105, 000 per bag; the price drop
occurring due to increased number/involvement of providers (the competition effect). The
same story applies to other inputs such as seeds and agro- chemicals. The voucher system has
also brought input sellers closer to farmers, resulting in mutual confidence as they trade with
each other; whereby farmers can eventually enjoy credit facilities, although on a limited scale.
Table 5.15: Budget for Provision of Fertilizer, Seeds and Agro-chemicals for FY2008/09 -2009/10 (Tshs.)
MAFC
2008/2009 2009/2010 2010/2011 % change in Approved budget for 2008/09-2009/10
Approved Budget
Expenditure Approved
Budget Expenditure
Provision of fertilizer subsidy
53,750,000,000 53,735,500,000 50,810,000,000 68,000,000,000 -5.5%
Provision of subsidized certified seeds and agrochemicals
13,500,000,000 13,431,769,300 7,160,000,000 7,841,057,400 -49.9%
Promotion of agro-mechanization
420,000,000 380,000,000 450,000,000 260,900,000 7.14
Source: MAFC
Note: Approximately an equal amount for fertilizer subsidy has been allocated through
Accelerated Food Security Project (AFSP)
If as aforementioned there are delays in the arrival of DADP funds to the districts for supporting
agro-inputs, they often have negative consequences on coming year’s crop or on controlling the
spread of menacing animal diseases and crop pests.
On the livestock side, during the period between 2006/07 and 2007/08, the actual budget
expenditure for livestock inputs decreased remarkably from Tshs 7.2 billion to 2.2 billion and
later increasing again from Tshs.2.2 to 7.7 billion. Between 2008/09 and 2009/10 the allocation
declined by 34.8 percent. The abrupt fluctuation was attributed to the small allocation of
overall budget resources and the delay in disbursement that led to low absorption capacity
especially by many LGAs. As seen in Table5.16below, the district level picture is similar, showing
rising and falling amounts.
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Table 5.16: Actual Expenditures at National and LGA for Livestock Inputs for 2006/7 to 2010/11 (in Tshs.)
Actual Expenditure 2006/2007 2007/08 2008/09 2009/10 2010/11
%
Change
2008/09-
2009/10
Livestock Inputs (National) 7,276,599,120 2,237,953,000 7,716,872,131 5,063,495,980 4,061,500,000 -34.38%
Livestock Inputs (LGAs) 642,000,000 605,500,000 571,186,000 824,495,980 580,000,000 44.34%
Source: MLDF
5.10.4 Research and Training Services (Capacity Building)
There is a recognized relationship between applied agricultural R&D and productivity. Research
and training are core factors to attaining the ASDP objectives. The overall objective is to
improve agricultural services in order to enhance farmer’s access to agricultural knowledge and
technologies use. Technology change and innovations applied in agriculture require effective
assistance of extension services to reach the farmer. There is a growing recognition of this area
of research especially for agriculture in the recent years. For instance in year 2010/11 the
government had allocated 25 percent of the entire R&D fund for agriculture; while a 1.0
percent of GDP was budgeted for research in the country. That is why the budget for livestock
research for 2008/6 to 2009/10 (Table 5.17) recorded a large increase from Tshs 3.4 billion to
Tsh.5.9 billion (42 percent); budget resources for other researches (e.g. crops and fisheries)
indicated the same trend.
Extension officers with up-to-date knowledge of technological changes taking place in
agriculture and who are able to impart practical knowledge directly to the farmer/livestock
keeper are very much in short supply in the districts. This is particularly evident in livestock
and irrigation activities, as well as in primary processing to add value to produce or prevent it
from deterioration.
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Table 5.17: Budget Allocation for Training and Livestock Research for 2006/7 -2010/11
Budget 2006/2007 2007/08 2008/09 2009/10 2010/11
%
Change
2008/09-
2009/10
Training of Ext Officers 1,254,274,000 929,000,000 541,267,000 1,546,711,000 1,081,000,000 65.0
Research Livestock 2,116,539,000 2,028,311,497 3,434,144,300 5,921,895,000 7,399,974,000 42.0
Source: MLDF (2010)
5.10.5 Investment in Irrigation
The Table 5.18 indicates that resources committed for irrigation in the country have been
growing steadily. Donors tend to honour their commitments of resources for irrigation while
the government was facing difficulties to disburse its counterpart, hence negatively affecting
planned projects with respect to procurement of contractors. The major problem affecting
project implementation was delay in disbursing funds to the districts or directly to project
areas. These problems were also reported during the field studies in Mbozi, Namtumbo, Babati,
Urambo and Morogoro. The district visited reported that when less funds were disbursed for a
project compared to what was planned, they normally re-submit the request for the remaining
amount for the coming year. Hence it is not surprising to find that some of the irrigation
projects are implemented on piecemeal basis. This phenomenon has cost implication as well.
Apart from the funding problem, the other big challenge that goes with expansion of the
irrigation projects in the country is, as already mentioned before the critical shortage of
irrigation engineers in most LGAs. During the field visits it was mentioned in Mbozi and
Namtumbo districts that they each had only one irrigation engineer. Sometimes farmers have
to wait as long as two months for the engineer to pay a visit in their projects. With many
irrigation project sites established and many to come, this is a big challenge in future. The
explanation is that this problem is attributed to few students who opt for this field in colleges
and the few who graduate shifting to other lucrative jobs.
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Table 5.18: Investment in Irrigation Infrastructure for 2005/06 -2010/11
YEAR
NATIONAL DEVELOPMENT
BUDGET(NIDF) DISTRICT LEVEL
TOTAL
%
CHANG
E DOMESTC FOREIGN TOTAL DADPS/DAD
G DIDF TOTAL
Tshs.’000,000’
2005/06 8,300.00 - 8,300.00 880.83 - 880.83 9,180.830
2006/07 5,923.00 1,258.762 7,181.762 1,110.825 164.00 1,274.825 8,456.587 -7.89
2007/08 4,274.2061 3,198.30 7,472.506 7,195.713 7,385.93 14,581.64
3
22,054.14
9 160.79
2008/09 11,000.002 2,185.574 13,185.57
4
4,229.25 4,635.00 8,864.25 22,049.82
4 -0.02
2009/10 13,164.6973
4,654.615 17,819.31
2
13,543.12 23,000.00 36,543.12 54,362.43
2 146.54
2010/11 10,843.333 6,047.565 16,890.89
8
19,635.00 31,107.11
5
31,107.11
5
62,214.23
0 14.4
Source: Ministry of Water and Irrigation 2010
In the country as a whole there has been increasing attention toward irrigation,
accompanied by increases in resources for irrigation in the recent years. Therefore, the area
under irrigation has expanded from 317,245 ha in 2009 to 380,888 ha in 2010. Districts have
been prioritising irrigation activities highly in their allocation of DADP resources, as seen in
figure 5.12 and tables 5.13and getting supplementation from DIDF as shown in Table 5.18
above. The increasing demand for irrigation development in districts has resulted in a total
of 262 funding proposals being submitted to the District Irrigation Development Fund (DIDF)
for Tshs 123.7 billion by April 2010. Only 113 proposals (56 percent) of these could be
accommodated within DIDF funds capacity for FY 2010/11, amounting to only Tshs 31.1
billion. Additional financing of USD 35 million from the World Bank was approved in May
2010 for the DIDF and other irrigation development activities at national level (under NIDF).
Two components of the funded project include Rehabilitation and development of small-
scale irrigation schemes (8,900 ha of additional irrigation and 3,500 ha rehabilitated). The
second component is for Groundwater irrigation pilot for 2 pilot schemes to demonstrate
cost-effective technologies for irrigation in marginal areas.
5.10.6 Mechanization of the Agricultural Sector
The approved budget for promotion of agro-mechanization increased from Tshs 420.0 million
in 2008/09 to Tshs 450 million in 2009/10, representing an increase of about 7.14 percent
(Table 5.19), while expenditure was slightly lower than the budget by 9.5 percent (table 5.19).
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Budget underutilization in the subsequent year was serious, at 58 percent, largely attributed to
delay in disbursement of funds from the central government. On the other hand, over the
period there has been a rise in funds channelled for mechanisation to LGAs (DADPs and
DASIPS). The increase in the budget for mechanization coincides with the amount of tractors
and power tillers bought within the period.
At national level tractors purchases rose by 6.6percent between 2008/09 and 2009/10, and
power tillers increased remarkably from 529 to 1024, representing 83.0 percent jump. This
marked increase in power tillers as compared to the number of tractors probably reflects the
low cost of the power tillers, since the price of one tractor is twice that of one power tiller. This
surge in investment in mechanization reflects government priority and efforts under the ASDP
framework, and in part response to orders issued to all districts in the country to budget for
purchase of at least 50 power tillers in their annual budgets.
The need in annual demand for tractors in the country is approximately 10,000 units but less is
actually purchased per year. The ASR-PER Study was informed that the current stock of tractors
stands at 20,000 but only 15,500 (77.3 percent) are operational. The underlying problem is lack
of resources for equipment maintenance by owners as well as general scarcity of maintenance
facilities and skills in the rural areas, a challenge that might dampen the enthusiasm for power
tillers if not properly addressed in the near future.
Table 5.19: Investments in Promotion of Agro- Mechanization for FY 2008/09 – 2010/11 (Tshs.)
MAFS
2008/2009 2009/2010 2010/2011 % change in
Approved budget for 2008/09-
2009/10 Approved
Budget Expenditure Approved Budget Expenditure
Promotion of agro-mechanization
420,000,000 380,000,000 450,000,000 260,900,000 7.14
Source: MAFC
In the sampled districts, Kongwa seemed to prefer tractors and budgeted for purchasing 2,486
units in the period of 2006/07 – 2010/11 versus power tillers, as only 53 power tillers were
bought during the whole period. The district has a practice of budgeting for purchase of oxen
plows and has been buying over 4,000 units for the past 3 years. It seems to be among the front
runners in pursuing agricultural mechanization, budgeting to spend over Tshs 171 million on
this activity under DADPs in the last four years. Above all, Babati budgeted to spend a sum of
Tshs 343,961,000 in FY 2001/11.
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5.10.7 Rural infrastructures: Market Construction
The ASDP underscores the importance of rural infrastructures in facilitating agricultural
development. This includes rural roads, market structures, cold chains, storage facilities,
electricity, agro-processing facilities and value addition activities including post harvest and
quality management. A substantial part of the agricultural sector development budget (table
5.20) has been earmarked for developing markets in LGAs in order to improve markets for
agricultural output in rural areas. The LGAs as a whole have been allocating more funds for this
purpose, though this did not appear significant in the sample districts visited.
Table 5.20: Rural infrastructures: Market Construction (Tshs.)
Actual Expenditure 2006/2007 2007/08 2008/09 2009/10 2010/11
%
Change
2008/09-
2009/10
Market
Construction(National) 209,362,479 416,750,000 201,450,000 234,250,000 168,500,000 16.28
Market Construction
(LGAs) 50,000,000 232,500,000 124,200,000 194,500,000 60,000,000 56.6
Source: MAFC (2010)
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CHAPTER VI: EMERGING ISSUES AND CHALLENGES FROM THE 2010/11 ASR PER
6.1 Introduction
The term key issue denotes a subject of importance which has significant direct or indirect
influence on achievement of a goal or objective. In the agricultural sector a key issue is a
problem which has persisted over a long period of time and might even have endured despite
measures taken to address it. But it could also be a new problem of high impact. If it is not
addressed effectively it can jeopardize the achievements already gained in the context of
Government’s objectives of growth and poverty reduction. This discussion on key issues for the
agricultural sector is imperative and must also delve into inter-linkages with functions of other
ministries. Thus the call for harmonization of sectoral priorities in terms of funding and efficient
allocation of resources for properly addressing the key issue (s) constraints.
To understand the key issues in the agricultural sector and the inter-linkages among functions
of different ASLM agencies, four main dimensions of conceptualization have been used to cite
specific features of the key issues. The first dimension is analyzing a key issue on how it is
manifested within the population, the second dimension is cross-cutting causes and effects a
key issue exerts, the third dimension is outstanding efforts done by the government as well as
gaps which still exist. The fourth dimension is institutional responsibilities among ministries or
department agencies for addressing the constraints facing a key issue(s).
Under this conceptualization format, the 2010/11 ASR-PER Report has come up with four main
key issues confronting the agricultural sector for achieving growth and poverty reduction. These
key issues were also backed with field visit information from the districts of Mbozi, Namtumbo,
Urambo, Babati, Sengerema, Geita, Kongwa, and Morogoro rural, as well as other relevant
literature sources.
Four key issues have been identified and are presented in Box6.1 below. It is necessary to
underline that agricultural development is not facing only four issues. Only the key ones have
been presented and the limitation to four has been deliberate. The point is that due to usual
budget constraints, resources must be focused on a few priorities at time for them to be
effective.
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1) National Food Security:
National food insecurity has been a major economic and nutritional problem in Tanzania. It has
severely affected prospect for high growth and poverty reduction. It is manifested in different
forms, mainly geographically, seasonally and at household level. Reviews of studies indicate
that Tanzania has cyclical food insecurity after every four years while other cross section studies
indicate year to year pockets of food insecurity around the country. This happens even when
the countrywide Self- Sufficiency Ratio (SSR) is positive, which in 2009/10 were 112 in terms of
cereals and non-cereals. Babati district for instance has greater potential to feed itself through
irrigation but was hit by drought in 2009, which lead to food insecurity. Household food
insecurity in Tanzania is the most prevalent and very latent at macro level. It is mostly caused
by a vicious cycle of low inputs use, low productivity, and post-harvest loss, lack of surplus and
low market prices. For a period of time, causes and effects of national and household food
insecurity are unchanged due to adhoc interventionist measures, a significant reason being lack
of consistent funding of critical infrastructures such as markets, and roads. Other causes
diagnosed were underutilization of water and land resources, low processing, uncoordinated
disaster management, and export banning which is a disincentive to future investment in
production and processing of food crops.
Government efforts in addressing food insecurity have been substantial and commendable. The
agriculture rescue package in 2009 is one of the interventions which prevented cotton
producers for instance from sinking into income and consequently food poverty trap. Low
productivity concern under the “KILIMO KWANZA” clarion call led to significant supplies of
power tillers in a bid of increasing the area under crop production. Capacity building to farmers
through Farmer Field School (FFS) enabled uptake of new technologies and better agronomic
practices and led to significant yield increases. Irrigation support to agricultural production and
in areas of high and low irrigation potential is noted, even if it is still far from adequate.
Morogoro and Babati districts, among the sites visited, were found to have high potential for
irrigation agriculture but there is little investment. Field visits in dry agro-ecological sites in
semi-arid lands of Kongwa and plateau lands of Urambo districts found meagre irrigation
investment as well.
Apparently, the underlying problem in addressing food insecurity in a decisive manner is
hindered by not giving the issue its commensurate priority in funding. Late disbursements and
underutilisation of available funds pile onto the challenge.
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2) Productivity:
Low productivity has been existing for quite a number of years after post-independence. Low
productivity is manifested in low crop output per unit area, low level of livestock production,
low level of value addition in both horizontal and vertical product chain, insignificant rural
processing activities, and little investment in irrigation. Crosscutting causes identified were
inadequate availability of agricultural inputs, poor access to markets for inputs and outputs, low
farm mechanization or use of simple tools in easing farm work drudgery, high degree of
dependence on rain-fed production and low knowledge and awareness of good crop and
animal husbandry practices. Effects of these cross cutting issues are observable at macro and
household levels. At macro level the rate of agricultural growth has been inadequate to exert
much impact on improving rural welfare and incomes for rural agricultural producers, due to
lack of surplus production.
Efforts toward improving productivity by the government are demonstrated in subsidized
inputs, although relatively few farmers are benefiting, as well as in farmers field schools and
gradually increasing interest in irrigation.
Gaps still exists in knowledge among crop producers and livestock keepers. Information barriers
have made most of rural dwellers less proactive in seeking extension services for their crop
enterprises. This situation is partly contributed to lack of adequate extension staff and better
prices for the produce. Producer incentive is the major prohibitive factor for accelerating rural
agriculture transformation and hence poverty reduction. It is also linked to lack of established
mechanisms for value addition at farm and off farm. In addition, producers experience high
level of bureaucracy for exporting food surplus.
3) Land and Water Resources Management
National manifestation of inefficient use and management of land and water resources as a key
issue undermining agricultural growth and poverty reduction is amply demonstrated in low
investment. Lack of title deeds and absence of nationwide land use plan are formidable
obstacles to foreign investment. Poor management of land and water resources has been
exacerbated by acute shortages of professionals in such important fields as town planners, rural
cadastre planners and water engineers. Effects of structural and institutional problems in
management of land and water resources are observable in prevalence of conflicts over their
uses in many parts of the country. Environmental impacts are also connected to poor land
management. Relative scarcity of agricultural lands in certain villages indicates poor
management of land where agriculture is a dominant economic activity. In the future if this
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issue is not adequately addressed, smallholder producers will have no land for production. At a
higher level, Tanzania will find itself under unbearable pressure from migrants from other East
African countries and investors seeking land for growing biofuels.
4) Mobilisation of Public and Private Resources for Investments
The stress here is that agriculture cannot be developed with public investment resources alone.
Kilimo Kwanza underscores Public-Private partnership as a key to its success. Another aspect
within the agricultural sector relates to the problem of scaling up projects and management of
rural project procurement. Many projects funded by DADPs for instance seem to be too small
to gain from economies of scale in terms of reducing cost of production and having visible
impact. Reliability and expansion of good practices has been scarce. The habit of putting
different funding sources together to meet the cost of large projects (co financing) at the LGA
level is not common, partly due to lack of comprehensive planning of programmes for funding.
Box 6.1 below presents a summary of the main key issues emanating from this ASR-PER study.
Box 6.1 Conceptual framework of agricultural sector key issues
ISSUE- I: National Food Security: Manifestation> (i) Geographically, (ii) Seasonally (year to year and cyclical) (e.g. Babati 2009 drought), (iii) Household level (Income (productivity, Post harvest loss (storage)
Institutional Responsibility: MAFC, MoFEA, MLDF, MoWI, MITM, and MID
CAUSES:
Underutilization of water and land resources (or mismanagement of the same)
Unfavourable weather
Market constraints
Poor roads
Governance
Processing
Disaster Management
Export ban
EFFECTS:
National o Depletion of foreign
reserves o Reliance on food aid
distorts domestic markets
Household level
EFFORTS MADE:
Agricultural rescue package (input subsidies) inputs subsidies
Kilimo Kwanza philosophy (tractors and power tillers)
Farmer Field Schools
Increased irrigation support OUTSTANDING GAPS:
Lack of funding in terms of amount and timing
Low capacity in terms of few staffs (one extension officer per ward)
Information barriers
Area under irrigation is small compared to potential available; PLUS continuing to
Tackle the aforementioned causes
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o Assets depletion o Malnutrition (hence low
productivity and high health costs)
o Environmental destruction o Inability to pay for basic
social services
ISSUE-II: Productivity: Manifestation>
Low yields of cash and food crops and livestock
Low output of all agricultural produces Institutional Responsibility: MAFC, MoFEA, MLDF, MoWI, MITM, MID, LGAs
CAUSES:
Availability of agricultural inputs
Access to agricultural inputs markets
Low mechanization
High dependence on rain-fed agriculture
Low knowledge and awareness of crop and animal husbandry practices
EFFECTS:
Low yields of cash and food crops and livestock
Low output of all agricultural produces
Low yield per unit area
Low income
EFFORTS MADE:
Subsidized inputs (only few benefits)
Farmers Field School
Increased use of irrigation
Artificial Insemination and animal cross breeding
OUTSTANDING GAPS:
Knowledge gap
Few crop and livestock extension staff
Producer price problem (low producer incentives)
Lack of value addition from the farm and off farm
High level of bureaucracy for exporting; PLUS continuing to
Tackle the aforementioned causes, particularly on inputs and mechanisation
ISSUE-III: Land and Water Management
Institutional Responsibility: MAFC, MoFEA, MLDF, MoWI, MLHHS, MNRT, MEAC, LGAs
CAUSES:
Institutional problem (ministry of land should take a proactive role in planning for land use)
Deficiency in inter-agency coordination
Low investment especially in land planning and titling
Ineffective enforcement of land and water use laws, plans, etc
Lack of priority over management
EFFORTS MADE:
Village surveys
District land use master plan (very few districts)
Land demarcations OUTSTANDING GAPS:
Low resource allocation to land development
Local planning processes do not feature land use and management
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of land resources (i.e. deficiency in planning of towns, villages, districts, etc)
Overgrazing EFFECTS:
Conflicts over land and water uses
Impact on environment
Relative scarcity of agricultural land in certain villages
Observable trends on climate changes due to poor land mapping
Inappropriate land use/mapping lead to poor selection of crops, technology use, and poor agronomic practices
Poor enforcement of existing laws
Controlling forest fires
Overgrazing and/or unplanned movement of large cattle herds
ISSUE IV: Scaling up Public and Private Resources for Investment : Manifestation> (i) -Mobilisation of more resources for Agriculture; (ii)- Better Resource allocation and management Institutional Responsibility: MAFC, MoFEA, PC, TIC, MLDF, MoWI, LGAs, Donors, Private Sector and CSOs
CAUSES:
Lack of Strategic Planning
-Amount of approved funds for DADPs less than expressed needs (e.g. in irrigation projects,)
Under-utilisation of funds and Late DADG transfers
Responsibility for agriculture development shared by too many ministries: Coordination problematic
Rolling down of PER and MTEF to district level problematic
Off-budget support by non-government funders
Inequitable distribution of resources geographically and among sub-sectors and government departments
EFFECTS:
EFFORTS MADE
Initiative to Develop a Growth Strategy
Setting up ASLM forum and designation of clear sub-sector leaders
Strengthened role of DALDO
Setting up of Agriculture Routine Data Base System (ARDS) under Local Government Monitoring Database
Amounts of funds allocated for DADPs increasing annually
Supplementary funds provided by DIF, DASIP, PADEP and donors
Setting up warehouse receipt system and credit facilities
Scaling up Agricultural subsidies, including voucher system
Expanding Rural Credit facilities incl. micro-finance and establishment of Agricultural Development Bank
More auditing of LGA finances
More Training of LGA staff and
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Delays in putting together MTEF at LGAs
Inter-linkage of different Programmes for common outputs problematic
Capacity building at LGA level and at lower levels challenging
Involvement of private sector still poor
Cost overruns
Uncompleted projects
Poor ownership of projects by beneficiaries
Impulsive expenditures on unplanned initiatives
Councilors in procurement principles and best practices
Training and Allocation of accountants to LGAs
Beneficiaries mobilised for in in-kind contribution
PM directives to cut down expenditures on seminars, missions and expensive vehicles
OUTSTANDING GAPS
Lack of a Long-term Development Strategy for agriculture as part of National Growth Strategy
-At LGA level, Need to Install more structured and more methodical economic and project planning system (including feasibility studies for projects)
CSOs not yet transparent with application of own funds
District Officials not keen to involve private sector service providers in planning process
Long term strategy for sustaining agricultural subsidies
Lack of adequate procurement capacity at LGA level
Volunteering spirit weak in project execution
Contribution of Counterpart Funds by beneficiaries
Value for Money is still a concern
Undertake PETS
Carry out comprehensive study to enhance generation of own funds in the district councils
Kilimo Kwanza Priority Investment Areas
One of the objectives of the 2010/2011 ASR PER was to determine the investment plans
needed for in the implementation of the ASDP in the context of KILIMO KWANZA. While
123
preparation of a fully fledged Investment Plan is required, this section only highlights the key
investment areas that should merit highest priority in allocation of public resources.
First of all in order to stimulate growth in the sector and reduce poverty in rural areas, all
overall public expenditure in agriculture should be increased. More specifically, production of
maize, rice, and root crops, livestock and fishery should get top priority in government’s
investment plans. In this context, more investment in irrigation, mechanization, research and
development, and agricultural inputs is needed to raise productivity in these sub-sectors.
Investment in rural roads/infrastructure, agro-processing and packaging and renewable natural
resources will be needed to expand the market especially for the priority crops. Below are the
proposed priority investment areas (also shown in table form table 6.1:
1) Irrigation: Tanzania mainland has a total irrigation potential of 29.4 million hectares, but only
about 0.33 million hectares are currently under irrigation. Tanzania has a large potential of
increasing maize production by increasing the area under irrigation.
Existing gaps in ASDP that need to be addressed include inadequate equipment and human
resources, irrigation infrastructure and integrated water management services. More resources
will be needed to improve existing traditional irrigation schemes, to rehabilitate deteriorated
irrigation schemes, and to expand the area under irrigation in the already identified irrigation
potential areas. The government will have to create an enabling environment for private sector
investment in irrigation. Together with the promotion of irrigation, adoptions of sustainable
farming which conserve the environment are quite important. Increasing the efficiency of
irrigation and the profitability of the investment is also needed to improve the sustainability of
the irrigation system. In order to achieve maximum results from irrigation investments
corresponding investments in agronomic packages will be required (i.e. enhanced extension
services, farmers training, procurement of better seeds, fertilizers, agrochemicals, and farm
level value addition activities)
2) Mechanization: Given that cultivation of most of the priority crops is done predominantly by
the hand hoe, significant growth cannot be achieved without increased mechanization. It is
estimated that about 70 percent of farming is dependent on the hand hoe, 20 percent on ox-
ploughs and 10 percent on tractors. The use of rudimentary technology, such as a hand hoe is
one among reasons that account for low labour productivity in agriculture. A mechanization
programme that enables small holder producers to use ox ploughs and tractors has been
initiated but it needs more investment.
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In order to support small holder farmers and promote small holder farmers’ mechanization,
farmers will have to be encouraged to organize themselves into multiform schemes that will
offer the mechanization services. The government will have to encourage the establishment of
privately owned one stop mechanization centres that will provide mechanization services. In
addition, there is a need to establish a programme that will enable small holder producers to
use labour saving technologies such as solar power and wind mills that will contribute
significantly in increasing agricultural output.
3) Research and development and extension: Currently amount of resources is allocated to
research and development in the agricultural sector is 0.3 percent of the total government
budget allocated to the sector. However, the government has agreed to allocate one percent of
the national budget to research and development. Available evidence to show that investment
in research and extension has huge positive impacts on agricultural growth and household
incomes. For every Tshs 1 million spent on agricultural research, household incomes increase by
Tshs 12.5 million and lifts 40 people out of poverty. The major gap in ASDP as far as research
and development is concerned is inadequate research infrastructure facilities and manpower.
4) Use of improved agricultural inputs: To bring about agricultural green revolution and
transformation, access to and timely use of farm inputs by farmers is an important aspect.
However, usage of agricultural inputs in Tanzania is quite low. It is estimated that only 10 of
percent of farmers use improved seeds. These include poor distribution network channels, high
costs of certified seeds and poor infrastructure in rural areas. In recognising the importance of
agricultural inputs, the government has embarked on providing smart targeted agricultural
input support. The World Bank has also joined the government by providing a loan through
Accelerated Food Security Project (AFSP). The loan complements the government initiatives.
However, more investment in developing productivity enhancing technologies is required to
support production and distribution of improved inputs and quality control of such inputs.
Therefore an incentive scheme should be created to attract private investment in the
production and distribution of agricultural inputs.
5) Renewable Natural Resources, Environment and Climate Change: Environmental
conservation is important for sustainable agricultural development and poverty reduction.
However, quite often agricultural activities do cause environmental degradation through
deforestation, soil degradation and soil erosion, which in turn lead to low productivity. The long
term impact of environmental degradation has been climate change which has detrimental
effects (for example, droughts, and floods) on agriculture. While ASDP addresses the problem
of environmental degradation, they do not address the problem of climate change and its
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impact on agriculture. The government should continue to sensitize the public on the
importance of conserving the environment and mobilise people to plant trees and encourage
farmers and livestock keepers to adopt environmental friendly farming and animal husbandry
methods ASDP should take on board climate change as one of the major challenges for
sustainable agricultural development. Mitigation and adaptation strategies to cope with climate
change should be given more attention in terms of investment.
6) Rural Infrastructure (roads, markets, storage facilities, electrification, cattle dips and animal
watering points, etc):
Improvement and construction of rural roads and market infrastructure are important for
efficient inputs and output marketing. Investment in infrastructure is also important for
attracting private investment in agricultural related activities such as agro-processing,
increasing producer prices and farmers’ income. After their construction, the infrastructures
have to be properly maintained.
7) Agro-processing and value addition: Agro-processing and value addition are important
activities for agricultural development and poverty reduction. These activities can generate
additional employment in rural areas. They also have strong forward linkages. For example,
grain milling can produce animal feed to support the expanding livestock industry. Agro-
processing can also expand the market for grains. Expanding upstream grain milling capacity for
example, would expand market opportunities for grain; and thus increase farmers’ access to
urban consumers who prefer processed grain. For food crops with low income elasticity such as
maize, millet and sorghum, agro-processing can generate additional market opportunities in
other sectors such livestock industry which demand processed grain.
The level of agro-processing infrastructure in Tanzania is very low. As a result, Tanzania is
exporting unprocessed agro-products while the agro-processing industry cannot meet domestic
demand. The low capacity in agro-processing is one of the main reasons for high post harvest
losses. It is currently estimated that 30 percent and 70 percent of output of cereals, and fruits
and vegetables, respectively, is lost post harvest due to inadequate agro-processing facilities.
In the fisheries sub-sector, 20 percent of output is lost post harvest due to lack of processing
facilities. One of the major reasons for inadequate investment in agro-processing is poor
physical infrastructure in rural areas. Agro-processing will also add value to the export of
agricultural crops, thus enabling the country to earn more foreign exchange. More funding for
investment in physical infrastructure, such as feeder roads and electricity in rural areas will be
needed in order to attract private investment in agro-processing activities.
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Table 6.1: Investments in KILIMO KWANZA Priority Areas
Priority Investment
Priorities
Benefits
Priority
Area
No 1
Rural
infrastructure
(Feeder roads,
markets,
electrification,
cattle dips and
animal watering
points, storage
facilities among
others)
Improved distribution of inputs and lower costs of
inputs
Improved transport of agricultural products and
lower marketing costs
Improved health of animals
Attraction of private investment in agro processing
and other non-farm activities Increased market
outlet for agricultural products,
Priority
Area
No 2
Irrigation Increased production of agricultural products,
more specifically maize and rice
Increased and stable income for farmers
Priority
Area
No3
Mechanization Increased labour productivity and income for
farmers
Farmers’ labour available for other non-farm
income generating activities
Priority
Area No 4
Research and
Development
Increased labour and land productivity
Increased farmers’ income
Priority
Area No 5
Farm and
Livestock Inputs
Increased labour and land productivity
Increased farmers’ income
Priority
No.6
Agro-processing Increased producer prices
Increased farmers’ income
Priority
Area No 7
Renewable
Natural
resources
Improved adaptation to climate change
Improved environmental management including
soil fertility
In order to achieve the long-term objectives of accelerating economic growth and reducing
poverty as outlined in Vision 2025. Investment in the agricultural sector must be increased in
order to stimulate growth in the sector and raise farmers’ incomes. Given the limited amount of
resources, future investments and particularly public investment in agriculture will have to be
127
guided by two major criteria for investment to have a significant impact on both growth and
poverty reduction. These criteria include the following:
Prioritization: Areas of investment that have significant and wide impact on growth and
poverty reduction. In the case of Tanzania, increasing productivity in maize, millet, sorghum and
livestock is proposed to be top priority chains of investments in the sector.
Targeting: For public investment to have significant impact on poverty reduction, investments
will have to be targeted to benefit poor agricultural producers.
Need for In-depth Studies
The need for in-depth studies is not among the typical strategic issues described in the
preceding six areas mentioned above. This is a concluding aspect pertaining to gaps in policies
and important operational measures already undertaken in the development of the sector that
cannot be expected to be efficiently covered in the normal conduct of the ASR and PER. They
require time and more concerted research between now and the next round of the ASR-PER
exercise (in 2011): in essence they will form the key source of information for the forthcoming
ASR-PER assignment (to possibly feed into the 2011/12 Budget and beyond). The following four
in-depth studies are proposed:
(i) Agricultural Input Subsidies
There is strong faith in Tanzania at the moment that increased subsidies for agricultural inputs
especially for fertilizers particularly with the facility of the inputs voucher scheme will
contribute to significant increases of food production, and thus food security and welfare of the
recipients. But in certain quarters especially among the donors there is lingering skepticism that
the subsidy scheme will be effective or can be sustained. This is despite the fact that
agricultural subsidies are applied intensively in some developed countries including in USA and
Japan. A quick study to try allaying these fears is needed. This might among the things delve
into the little experience gained so far, how to make the scheme of input subsidies more
effective, the issues of accountability and equity in the allocation process, what best entry
point of subsidy intervention is possible, financial burden sustainability, etc .
(ii) Critical Role of Private Service Providers in Agriculture
With economic liberalization and decentralization, agricultural development is increasingly
going to rely on efficient private providers of various services. The following issues need to be
investigated for solution or improvement: (i) getting a good inventory of private service
providers in the districts, (ii) improving the linkages between public and private service
providers as well as NGOs, in order to achieve good results and avoid duplications and poor
use of available resources and facilities, in responding to various farmers’ needs, (iii)
128
enhancing better collaboration between district officials and private providers for a more
comprehensive planning process, (iv) delineating the role of the private sector in all
agricultural activities such as research, extension, training, irrigation, input and output
marketing, agro-processing, etc), and (v) other issues such as building capacity of the
providers, or enhancing competition in service provision especially in rural areas. At the
moment, the incorporation of private service providers remains ad hoc if not limited; a study
in this area is badly needed.
(iii) Investments and Productivity In Irrigation
Recent increases in investments into irrigation have called for attention to be focused on
enhancing the efficiency of the irrigation schemes and their profitability (i.e. irrigation
management), as well as the sustainability of the system. A quick study is therefore needed on
the state of irrigation in the country but within the context of National Irrigation Master Plan. It
should among other issues clarify the following points: (i) an estimate of the impact on
agricultural output of recent investments in irrigation, (ii) changes of productivity at the farm
level as a result of irrigation, (iii) assess the ensuing agronomic practices with respect to
packaging services in the delivery of inputs to achieve maximum results (involving access to
extension services, farmers training, procurement of improved and relevant seeds, fertilizers,
agrochemicals, and farm level value addition activities), (iv) assess sustainability of acquired
infrastructures including irrigation structure maintenance and related funding issues, and (v) to
point out the priority areas where public investments should be directed in the next MTEF
period. This study will also take into account the process of implementation of the 2010
National Irrigation Strategy.
(iv) Agricultural Mechanization
The heightened attention drawn towards mechanization recently under the impetus of KILIMO
KWANZA must be sustainable forever. The supportive elements of sustainability must, inter
alia, include effective individual owner’s capacity for maintenance and the repair networks for
acquired machinery and implements, as well as suitable funding mechanisms to keep up the
purchase of new tractors, power tillers and ancillary equipments. A study on mechanization
management focusing on the aspect of sustainability as well as efficient use of the resources so
far spent on mechanization tools is urgently required. In this context, this will therefore be a
partial assessment of implementation of the Tanzania Agricultural Mechanization Strategy of
2005.
Two common themes run across the above areas. They are: (a) that there is need to
substantially up-scale public and/or private investments in the above areas, and (b) there is
need to ensure that the initiatives undertaken in these areas are not a spur of the moment
129
but will be sustained over a reasonably long period so as to produce robust impact and
enduring results. Another aspect that should be pointed out is that in each area it is not
necessary to carry out one single comprehensive study. There could be different investigation
assignments but they have to be made to link to each other.
130
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134
APPENDIXES
Appendix 1: Budget expenditure and allocation by purpose (actual expenditures in
TSH millions) LGA
Budget Expenditure and Allocation by Purposes
Actual Expenditure 2006/2007 2007/2008 2008/2009 2009/2010 2010/2011
OC Dev OC Dev OC Dev OC Dev OC Dev
Livestock Inputs 6,634,599,120 642,000,000 1,632,453,000 605,500,000 7,145,686,131 571,186,000 4,239,000,000 824,495,980 3,481,500,000 580,000,000
Training of Ext Officers 260,081,168 1,254,274,000 340,000,000 929,000,000 501293827 541,267,000 703,150,000 1,546,711,000 2,362,100,000 1,081,000,000
Research Livestock 1,321,990,749 2,116,539,000 3,081,691,500 2,028,311,497 5,440,544,535 3,434,144,300 8,457,718,800 5,921,895,000 7,399,974,000 5,889,409,000
Market Construction 159,362,479 50,000,000 184,250,000 232,500,000 77,250,000 124,200,000 39,750,000 194,500,000 48,500,000 60,000,000
Cattle Dip*
135
Appendix 2: Budget expenditure and Allocation by purpose (actual expenditures in
TSH millions) LGA
* Implemented by LGAs
Actual
Expenditure 2006/2007 2007/08 2008/09 2009/10 2010/11
Livestock Inputs
7,276,599,1
20
2,237,953,0
00
7,716,872,1
31
5,063,495,9
80
4,061,500,0
00
Training of Ext
Officers
1,514,355,1
68
1,269,000,0
00
1,042,560,8
27
2,249,861,0
00
3,443,100,0
00
Research
Livestock
3,438,529,7
49
5,110,002,9
97
8,874,688,8
35
14,379,613,
800
13,289,383,
000
Market
Construction 209,362,479
416,750,00
0
201,450,00
0 234,250,000 168,500,000
Appendix 3: Available Agriculture Extension Staff in Mbozi District
Extension Officers Available 2006/07 2007/08 2008/09 2009/10 2010/11
Total Extension workers 102 101 104 100 104
Extension/district 7 7 9 9 9
Extension staff in livestock 30 32 30 31 35
Livestock extension
staff/ward
24 26 24 25 29
Extension staff in crops 72 69 74 69 69
Crop extension staff/ward 65 62 65 60 60
Extension staff in fisheries - - - 3 3
136
Appendix 4: Expenditure Allocation for Irrigation, Mechanization (Namtumbo, Babati
and Mbozi Districts in Tshs)
Districts 2006/07 2007/08 2008/09 2009/10 2010/11 % change
Irrigation Namtumbo
60,149,000
189,000,000 7,000,000
70,794,780
169,274,051
911.354
Babati 11,000,0
00 20,500,00
0 95,409,00
0 94,000,00
0 220,909,0
00 -1.4768
Mbozi 83,674,8
61 35,095,02
0 24,500,00
0 589,000,0
00 200,000,0
00 2304.0
82
Districts 2006/07 2007/08 2008/09 2009/10 2010/11 %
change
Mechanization
Namtumbo
33,131,000
325,000,000
880.9544
Urambo 79,640,0
00 96,000,00
0 108,000,0
00 57,164,00
0 52,460,00
0
-47.070
4
Mbozi 13,203,76
5 6,100,000 85,916,00
0 1308.4
59
Source: ESRF Field Visit to Sampled Districts
Appendix 5: Conceptualization framework of agricultural sector investment priorities
Strategic Priority Area for Investment
Outstanding: (A) Efforts made by GoT (B) Gaps still perceived
Institutional Responsibilities
1. Improve National Food Security
EFFORTS:
Agricultural rescue package
Kilimo Kwanza philosophy
Farmer Field School
Increase in irrigation support
Setting up national Strategic Food Reserve GAPS:
Inadequate funding in amount and timing
Low capacity in staffing (esp. extension officers)
Information barrier
Area under irrigation is too small compared to potential
-MAFC, MoFEA, MLDF, MoWI, MITM, and MID; - Other agencies: TNBC, TPSF, LGAs
137
More robust efforts in farm mechanization
2. Raise productivity in crop husbandry, livestock management, and fishery
EFFORTS:
Subsidized inputs (more widely as now only few benefit)
Farmers Field School
Increase use of irrigation GAP:
Knowledge gap
Few crop and livestock extension staff
Producer price problematic (low producer incentives)
Lack of value addition from the farm and off farm
High level of bureaucracy for exporting value added food crops
MAFC, MoWI, MoFEA, MLDF and MITM, LGAs
III. Improve Land and Water Use management
EFFORTS:
Village surveys
District land use master plan (very few district)
Land demarcations
Setting up of water basin committees
Prevention of inappropriate fishing gear GAP:
Low resource allocation to land development
Major issues affecting land tenure and security still problematic
Encroachment of water sources by farmers and deforestation
Less proficient use of water
Bush fires continue unabated: weak enforcement of laws
MHHS, MAFC, LGAs
138
(iv ) Scale up Resources Allocated to Agriculture
EFFORTS : - Amounts of funds allocated for ASLMs and DADPs increasing annually - Setting up of DIDF, and Livestock Development Fund or LDF from district own sources) - Scaling up Agricultural subsidies, including voucher system - Expanding Rural Credit facilities incl. micro-finance and Agricultural Development Bank - More Training of LGA staff and Councillors in procurement principles and best finance management practices GAPS: - Providing transfer funds (esp. DADG) at start of the new financial year - Long term strategy for sustaining agricultural subsidies - Better project costing and preparation of feasibility studies - Too many projects included in the DAPDs, - Lack of adequate procurement capacity at LGA level - Value for Money is still a concern - Mobilisation of private sector resources weak
MOFEA, ASLMs MLDF, BOT, PMO-RALG, PC and Donors CAG,PPA, LGAs and PMO
N.B: The above priorities have been kept limited in number quite deliberately, in order not to
cloud out the agenda for resource application for greatest impact.
Appendix 6: Key Informants Interviewed
S/N Name Position Institutions
1. Winfrida Nshangeki Director Sector Coordination PMO-RALG
2. Ahmed Mshamu Economist PMO-RALG
3. A. Mgendela Lawyer, PMO-RALG
4. John Mwilima, Assistant Commissioner (Regional and
LGAs) Budget Division
MOFEA
5. Gaston Msongole, Deputy Permanent Secretary, Economic
Management
MOFEA
6. David Biswalo, Ag. Director Plans and Budgeting, MAFC
7. Simon Mpaki Coordinator ASDP MAFC
8. Sizya Lugeye Agricultural Advisor, Irish Aid, Irish Embassy
139
9. Madhur Gautum Lead Economist Agriculture and Rural
Development
World Bank
10. Zainab Semgalawe Senior Rural Development Specialist World Bank
11. Dennis
Rweyemamu
Economist AfDB
12. Obama Kazuhiko Representative JICA
13. Said S. Said Networking Manager ACT
14. Mr. Charles Tulahi, Regional Project Coordinator DASIP
15. Mr. Mwakilala, regional Monitoring and Evaluation
officer
DASIP
16. Mr. Godfrey Kajiru, Acting Director Ukiriguru Zone
Agricultural
Research
development
Institute
(ZARDI)
17. Mr. Rahim K. Said, Principal Livestock Research Officer ZARDI
18. Mr. Rahim K. Said, Principal Livestock Research Officer
19. Mr. Robert Kileo, Zone Research Coordinator
20. Mr. P.S. Masashua DALDO Sengerema
District
21. Dr. Sagenge
Yohana-
DASIP Coordinator Sengerema
District
22. Mr Joseph Manota- In charge, M&E Sengerema
District
23. Mr. Amos Zephania
Mshina
Indigenous Chicken farming
Kijuka Village
24. Mr. Jamhuri Salam Secretary, Chicken and Pig farming
Group
Nyampande
Village
25. Ms. Sophia Mgalula Sunflower and Cassava by (Upendo Mission Kujitegemea) group
26. Yohana Tegea, Secretary Group of
Livestock
140
keepers
27. Mr. Joseph Mwinula,
Chairman Cotton
(Wachapakazi)
Group
28. Mr. Peter Mtagabwa
DALDO Geita
29. Respeciuos Athanas,
outgoing Ward Extension Officer Geita
30. Mathias Misambo, Acting VEO and Secretary of the DASIP
Village Committee
Upendo Cotton
and maize
farming Group
and SACCOS
31. Mr Lushinge Kimili Neema Maize farming group (used to
grow cotton but have now
stopped)
32. Mr. Mpanda Mchele
Azimio farming group (Cotton and
marketing of paddy/rice)
33. Mr. Isaya Gudaka, VEO Nyijundu
Village: Village
Market
structure
Project
Appendix 7: How to Access Information on Crop Price by Mobile Phone (SMS) – Using
VODACOM Services
Crop Abbreviation Procedure
Rice MCH 1. Go to the SMS display
2. Write the word ZAO, then space, write the abbreviation of the region where you need the information on crop prices such as DAR for Dar-es-Salaam 3. Send the message to 15500. You will receive the information crop prices through your
Maize MAH
Sorghum MTA
Millet ULI
Irish Potatoes VIA
Beans MRG
141
phone. If you want access price information for one crop from all major regional markets such as the price for rice: 1. Go to the SMS display 2. Write the word MCH for rice, then space. 3. Send the message to 15500. You will receive
the price information for rice from all the major
regional markets through your phone.
Region Abbreviation
Dar-es-Salaam DAR
Morogoro MOR
Dodoma DOM
Iringa IRI
Songea SON
Arusha ARK
Mbeya MBY
Moshi MOS
Shinyanga SHY
Sumbawanga SUMB
Tanga TNG
Singida SNG
Tabora TAB
Mtwara MTW
Mwanza MWZ
Lindi LIN
Musoma MUS
Bukoba BUK
Kigoma KIG
Babati BAB
142
Appendix 8: How to Access Information on Price of Livestock and Livestock Products
by Mobile Phone (SMS) – Using ZAIN Services
Livestock and Livestock Products Abbreviation Procedure
Livestock MK A: LIVESTOCK 1. Go to the SMS display 2. Write the word MK, then space, write the letter R, then space, write the abbreviation of the region where you need the information on livestock prices such as DAR for Dar-es-Salaam 3. Send the message to 0787 441 555. You will receive the information on livestock price through your phone. B: LIVESTOCK PRODUCTS 1. Go to the SMS display 2. Write the word MP, then space, write the letter R, then space, write the abbreviation of the region where you need the information on prices for livestock products, then space, and write the abbreviation of the livestock product you want to inquire its price eg MEATC. Example: MP R DAR MEATC. 3. Send the message to 0787 441
555. You will receive the
information on livestock price
through your phone.
Hides (Cattle) HIDEC
Honey HONEY
Goat Meat MEATG
Beef MEATC
Sheep Meat MEATS
Milk (Cattle) MILKC
Hides (Goat and Sheep) HIDES
Livestock Markets Region Abbreviation
Pugu Dar-es-Salaam DAR
Kizota Dodoma DOM
Lugoda Lutali Iringa IRI
Meserani Arusha ARK
Mbuyuni Mbeya MBY
Weruweru Moshi MOS
Mhenze Shinyanga SHY
Kilimatundu Rukwa SBA
Korogwe Tanga TNG
Ulemo Singida SNG
Igunga Tabora TAB
Nassa Mwanza MWZ
Kiabakari Mara MSM
Mkongeni Morogoro MOR
143
Appendix 9: Policies, laws, strategies influencing agricultural sector performance
The Tanzania Development Vision 2025 - TDV (1999).
The National Poverty Eradication Strategy-NPES (1998).
Tanzania Assistance Strategy -TAS (2001).
The National Strategy for Growth and reduction of poverty (2004)
Joint Assistance Strategy for Tanzania JAST (2006)
The Poverty Reduction Strategy PSR (2000)
Rural Development Policy (2003)
The Rural Development Strategy (2001
Community Development Policy (1996)
National Employment Policy (1997)
Sustainable Industrial Development Policy (1996)
National Micro finance Policy (2000)
Tanzania Women in Development Policy (1998)
National Environmental management Policy (1997)
SME Development Policy (2002)
The Wildlife Policy of Tanzania (1998)
National Forestry Policy (1998)
National Fisheries Policy (2003)
Rural Water Policy (1997)
Gender Policy (2000)
Road Sector Development Programme (1997)
Forestry Policy (1998)
The National Trade Policy (2003)
Micro Finance Policy (2000)
The National Land Policy (1995)