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Why Tanzanian farmers don’t sell what they produce?

Jacques Morisset's picture

Let's think together: Every Sunday the World Bank in Tanzania in collaboration with The Citizen wants to stimulate your thinking by sharing data from recent official surveys in Tanzania and ask you a few questions.

About three out of four households report to have agriculture as their main activity. Even urban households are still involved in crop production.

Indeed, agriculture is an important sector for Tanzania contributing up to 26 per cent of GDP. Typically, farmers produce to feed their families but they also expect to gain revenues by selling their output. When farmers make more income from the sale of their produce this leads to more development in the rural areas which ultimately impacts positively on the overall economy. This is what has been surmised from the success stories of predominantly agricultural countries, such as Malaysia and Vietnam.

In Tanzania, this kind of impact has not yet been felt - at least not on a tangible scale.  Agricultural commercialization remains marginal in the country as shown by the following statistics from 2011:

- 26 per cent of all farmers did not sell any of their crop production and so were not connected to markets.
- Only 25 per cent of farmers sold more than half of their production.
- More than two thirds of maize farmers did not sell any of their harvest and only 25 per cent of total maize production is marketed.
- Uganda and Kenya have similar statistics. On the other hand, Vietnam moved from 48 per cent of crop production being marketed in 1993 to 87 per cent in 2008.

The livestock sector is even less commercialized than the crop sector. As many as 52 per cent of livestock owners did not get any cash income out of their animals in 2011. Less than 10 per cent of the overall country livestock value is marketed.

The low rate of commercialization may be explained by many factors such as remoteness, low production, low farm-gate prices, high marketing margins, lack of information, or simply farmers’ unwillingness to participate in the market. Indeed, less than a third of Tanzanian villages have a daily or weekly market where farmers get to sell their produce. For the typical farmer, the closest market is 18 kilometers away from the village center and more often than not there is seldom any road and/or public transportation service to reach that market. Farm-gate prices received by farmers are a small share of the wholesale price of crops which averages around 60 per cent and 45 per cent for maize and paddy respectively in 2011.

The lack in agricultural commercialization raises the following questions:
- Should the government invest more in infrastructure such as roads, village markets, etc., to improve farmers’ connectivity?
- Should there be price controls to ensure farmers receive a minimum price from their produce?
- Should taxes on agricultural produce be reduced or abolished altogether?
- Can farmers be directly linked to supermarkets, agribusiness firms and processors bypassing marketing middlemen?
- Should the emergence and development of contract farming with large farms be encouraged?
- Will the SACGOT initiative help smallholder farmers increase production and get more cash income out of their produce?
- How can the mobile revolution help improve agricultural commercialization?

Note: The statistics above are computed using the 2010/11 Tanzania National Panel Survey, and the crop wholesale prices from the Ministry of Industry Trade and Marketing. Data from these sources are publicly available and can be readily replicated.

Comments

Excellent post! Totally agree with the writers here. Definitely great questions at the end that need answering.

Submitted by sekela on
The government should stop ban of cereal exports especially maize without having stastistics of having shortage of maize in the country. This has been proved when the government announce for ban for food security, but at the same you found maize in Rukwa are surrended no where to sale or there is post loss harvest. Government through the Ministry of agriculture should do a ground work before announce ban. Government should Focus in irrigation projects to help farmers have more yield than depending on natural rain which is no where to be found at this particular era. if SAGGOT initiatives will be implemented accordingly, Tanzania might realise high production and help farmers to enjoy profis from agricultural

Submitted by dianabuja on
Interesting questions - I live and work in the agr. and livestock sectors in Burundi, and want to post some thoughts on this. Will review over the weekend and get back to the blog. Thank you. dianabuja.

Helping smallholder farmers appreciate the need to sell what they produce cannot be done by training the individual farmers, they may not retain anything they are trained on and at times see it as a distraction from their productive work. Efforts seeking to make the farmers do business needs to define the product or commodity and matching it with any demand gaps that the consumer markets may be facing. Produce aggregation may be what is required. See my blogpost at http://www.e-agriculture.org/blog/driving-grassroots-wealth-formation-through-ict4ag-blog-kiringai-kamau-member-kenya It is no doubt that many African not just Tanzanians do not deliver their produce to the market. The observation that agricultural produce by the traditional smallholder producer does not end in the market is indeed true. The observers need to understand that Africans are very religious people who take pride in being able to understand their gods as the gods understand them. The fact that production is a result of what the good Lord above has given rather than what is planned and planted means that the Lord will similarly help in identifying ways of using the resources (which may include giving it out to others) or in any other ways that only He directs. Markets as we all appreciate are demand- rather than god-driven. The foregoing is very easily trivialized...but the rural smallholder farmer does not have any knowledge other than predicting when the rains fall and then planting to get a good harvest. Once the harvest comes, the challenge of storage and pests come in but the poor farmer will again blame the evil one... Good practices in extension have been left only for the interaction of the researchers with the extension people doing their bit to contribute to the research and get some allowance out of that. Indeed, engagement with the farmer throughout the production cycle is related manly to how much the funding from the development initiative such as Bill and Melinda (just mentioning one as a figure of indication of the resources thrown to R&D) will require in the reports. The farmer support grantees have also been sucked into the money seeking ways rather than sustainable market orientation that they should continue supporting the smallholders. In the end the resources made to research only ensure more production gets done and documentation of more plant and animal genetic research dots the shelves or websites and awards getting to be won. The challenge is not that the farmers are not able to tap wealth generated from the financial earnings from the marketplace. It is also not that the researchers do not want the adoption of their produce by the farmers, which farmers do anyway, as demonstrated by the good harvest. What has been lacking both from the farmer and the research networks is the practice of entrepreneurship in agriculture, which I have chosen to call agripreneurship. Until and unless the agricultural value chain is used to guide and drive the integration of productive services to help pre-production, production, processing and value addition, and distributive processes to deliver to the consumers/market to be harnessed and owned by the value chain owners, we shall remain documenting how poor in adoption our smallholders are. Having discovered this challenge earlier on, I started value chain linked initiatives that I still keep promoting in agricultural Value Addition and Cottage Industry Development in Africa (VACID Africa). VACID Africa is an initiative whose focus it is to help address the gaps that are documented about, but for which very little effort is made to redress. One can only hope that after so much documentation of what is not happening, or is happening wrongly, there will be enterprises that are created to support market linkage of the produce so that farmers end up earning from the market...visit also www.af-mip.net to see what we are doing to address some of these gaps which the producers in Tanzania can embrace.

Submitted by Byiers on
Interesting questions indeed. The answer to the first question about investing in infrastructures must be "yes", but the issue is that infrastructure alone will not turn smallholders into commercial farmers - there is a need for these complementary support services and markets for inputs and produce. In inteviews for a recent paper on SAGCOT, indeed domestic regulations seemed to be more of a concern to farmers and agri-producers than infrastructures so tax may be important to look at - but the issue with taxes seems to be less about rates than about application - how fairly and predictably are they applied? The SAGCOT initiative certainly has encouraging aspirations in terms of linking farmers to processors, to input markets etc, but indeed the impact has yet to be seen. The suggestion from our work was that complementary policies will be important to ensure that the benefits from SAGCOT are spread more widely beyond a narrow section of already commercial farmers, while farmers and firms operating in the SAGCOT area are yet to be genuinely involved. More here if interested: www.ecdpm.org/dp138

Submitted by ngubia on
The potential exists for an improved and well-functioning market that will enable smallholder producers to derive greater benefits from their production activities. According to the IFAD Strategic Framework 2007-2010, worldwide changes in agricultural marketing systems and production technologies are opening up opportunities for some small farmers in developing countries. But the poorest and most marginalized rural people rarely benefit. For this reason, a key objective is to ensure that poor rural people have better access to – and the skills and organization to take advantage of – transparent and competitive markets. Within this framework, expanding the capacity for livestock production and its marketing outlets is a potent catalyst for rural poverty reduction. Challenges 1. Empowerment: Empowering poor smallholders, men and women, so that they can provide high-quality, sustainable livestock production with an identified market destination (by assuring adequate access to basic production inputs, credit, capacity-building, market-related information); 2. An enabling environment: Facilitating poor farmers’ and livestock keepers’ access to markets as a catalyst for rural poverty reduction (by improving their business management skills and marketing strategies, ensuring that they have the knowledge and technologies required to meet quality and sanitary standards, providing adequate infrastructure); 3. Equity: Ensuring that the economic gains in value chains are fairly distributed among the various actors, including poor farmers and livestock keepers (by reducing marketing distortions, building relationships among various chain actors, strengthening farmers’ organizations and livestock traders’ associations).

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