Kilimo Kwanza Issue 37

Tuesday 21 June, 2011

SUPPORTING THE PROMOTERS OF THE GREEN REVOLUTION

kilimokwanza@guardian.co.tz

Govt blows Hot and Cold on Kilimo Kwanza

The Guardian KILIMO KWANZA

Tuesday 21 June, 2011

EDITORIAL

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Changes in tax regime announced

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obering reports emerging from Longido District in Arusha region have it that area residents have been crossing the border into neighbouring state of Kenya to scavenge for leftover grains from shops and maize milling firms in the area.

Following the adverse effects of the 2009/10 drought that hit the area and scorched farmland and livestock populations, the once proud Maasai herdsmen living in the area have now been reduced to paupers and beggars in a strange land. Furthermore, poor rainfall in the October – March season means that little respite is expected in the area. The remaining livestock is already too emaciated to attract much market interest, the area farmers do not expect much in the form on harvests and it remains to how many shall succumb to the onslaught of the incoming dry season.

Furthermore, there are disturbing claims that the pleas for food aid for the suffering thousands have fallen on deaf ears.

“Over 89,000 residents of this district face famine,” the Deputy District Executive Director, Elia Maika confided to our Swahili sister paper, Nipashe, recently.

According to the district officials, the situation has been further aggravated by the failure of the government’s disaster relief department to deliver food aid to the area.

Longido District is just but one of the several districts of the country that are currently grappling with the effects of climate change and the crunching food shortages that come with it.

The 2011/2012 Tanzania National Budget was unveiled recently with the announcement that the government intends to put more food into the National Food Reserve as a safeguard against the negative effects of food shortages and price hikes experienced in most parts of the country at the moment.

Over several years, food production in the country has failed to meet demand for food and Tanzania has often depended on imports and food aid to meet production shortfalls. But even as agricultural production in the country has remained focused on increasing food production, enhancing food security and poverty alleviation especially in marginal straits of the country, the battle is far from won.

Artwork

& Design: KN Mayunga

The government’s stated resolve to improve infrastructure has also been translated as being widely intended to increase food production and accessibility.

However despite announcements that agriculture is one of the five key focus areas, the 2011/2012 budget saw a reduction in overall expenditure sowed into agriculture.

This has sent out mixed messages to a hungry nation that expected an increase in agriculture spending by the government, especially in the face of the current food uncertainty. Food prices in the country have remained above the five year averages while most families struggle to put food on the table.

Meanwhile a joint OECD and FAO report forecasts that global food prices will be high and volatile for the next decade. According to the joint report issued by the Organisation for Economic Cooperation and Development and the Food and Agricultural Organisation, the spikes will driven by rising incomes in emerging nations and the demand for bio-fuel. Although prices will probably fall from high levels reached earlier this year, long-term price increases of up to 20 percent for cereals and 30 percent for meat can be expected, the statement warned.

This sounds a warning bell to local policy makers to take a more critical look at giving proper financial and logistical support to agriculture. Revelations that the overall contribution of agriculture to the economy of the country dropped last year are not in the least encouraging, especially in the face of current local food shortages, rising prices and the gloomy global outlook.

Agriculture is the mainstay of human life and not just the over 80% of Tanzanians that directly depend on the sector for a living.

Food Prices Forecast to Remain ‘ High and Volatile’

COVER STORY

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Government blows Hot and Cold on Kilimo Kwanza

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Growing Food Security Concerns

The Guardian KILIMO KWANZA

Tuesday 21 June, 2011

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Reconcile Planning Blueprints and Budget Speeches with Existing Realities

Wallace Mauggo Editor

7 To have your organisation promoted in Kilimo Kwanza, Call: 0787 571308, 0655 571308 0754 571308

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By Makuna Chirimi

nly 6.8% of the year 2011/2012 Tanzania national budget has been committed to agriculture, down from the 7.5% that was allocated to the sector last year. This is against earlier promises by the government to consistently increase the annual allocation to agriculture to over 10% of the total budget by year 2015.

The TSH 926.2billion allocated to the Ministry of Agriculture and Food Security in the 2011/122 budget announced to parliament on June 9th has also been deemed insufficient in making any significant inroads into revolutionizing the sector. It also brings into serious question the government’s earlier stated commitment to revolutionize agriculture in the country through the Kilimo Kwanza (agriculture first) initiative. The amount itself however represents an increase of about 2.5% from the TSH 903.8bn that was allocated to the agriculture sector last year.

Presenting the 2011/2012 budget to the nation late last week, the Minister for Finance Hon Mustaffa Mukulo outlined the five priorities in this years budget as energy, water, infrastructure (roads, railways, airports, ports and the national fibre optic communication backbone), agriculture / irrigation and expanding job opportunities within the private and public sectors together with reducing the rate of inflation.

Expenditure has been allocated for the five key areas in the following manner; 20.56% on infrastructure , 16.9% on education, 8.9% on health, 6.8% on agriculture and irrigation, 4.6% on water and 3.98% on energy and minerals.

Earlier last month while presenting the then heavily criticized TSH 12 trillion preliminary budget, the finance minister had indicated that water would be the prime government focus for this year’s expenditure alongside eleven other priority areas including agriculture. This has also not been adequately reflected in the budget, with infrastructure development taking a lions share of the coffers. The govern-

ment announced its plans to increase infrastructure spending by 85%.

“The budget is a reflection of the government’s policy… the right approach to formation of a budget is that policy guides the formation of the budget. The government has been making and is still making a lot of noise about Kilimo Kwanza, and even announced that agriculture is a priority in this year’s budget. However the actual figures in the budget allocations to the sector do not reflect this.” Prof Ibrahim Lipumba, leader of the opposition CUF party commented in a public debate that followed the reading of the government expenditure sheet.

The budget cut back also comes just weeks after the government unveiled the Southern Agriculture Growth Corridor for Tanzania (SAGCOT) project that has been touted as a revolutionary approach to commercializing agriculture in the country. The government also announced that it has gotten a World Bank Commitment to finance the SAGCOT to the tune of TSH 92.8 bn. Key to employment creation, the

minister said in his budget speech, are initiatives like the development of the SAGCOT as part of Kilimo Kwanza, alongside continued implementation of agricultural sector reforms. The minister also promised support for agro-processing industries that are currently facing the brunt of high operation costs that include expensive and unreliable energy supply and high cost of packaging.

Since its launch by President Jakaya Kikwete in August 2009, the Kilimo Kwanza green revolution has continually presented a soft underbelly that pundits have been glad to critique and even ridicule. Some commentators have lamented on the slow pace of implementation of the strategy, noting that as far back as 2003 the government committed to its increase budget allocation to agriculture to 10% by 2008. However the allocation remained at 7% and has now dropped. Others argue that the government has yet to show real financial commitment to Kilimo Kwanza since most of the cash being offered as agricultural loans is

simply a portion of what was returned by the alleged “looters” of the infamous External Payment Arrears (EPA) account.

“I am not overly surprised. This is consistent with how the government behaves, especially towards agriculture. They promise one thing, but do something totally different,” a contributor at a public debate organized to discuss the budget noted.

The Tanzania National Business Council (TNBC) took a more reserved approach, urging agriculture investors to view the reduction in government spending on agriculture as a “challenge” for them to work even harder.

The TNBC were the originators and the initial safe-keepers of the Kilimo Kwanza drive. However some quarters have supported the budget, hailing it as citizen friendly and reflective of the government’s resolve to tackle poverty and spur economic growth.

Agriculture is the mainstay of Tanzania’s economy, providing direct employment to an estimated 80% or more of the country’s population.

Development of the sector to commercial status has however remained a pipe dream that has been clogged by among other things low levels of financial input both by government and the private sector alike.

Poor access to finance is like an unbreakable steel chain for farmers looking to break free from the yoke of sedentary farming and the hand to mouth lifestyles that go with it.

Perhaps borrowing a leaf from the central government’s waxing and waning commitment to the sector, financial institutions in the country still remain largely negative towards lending for direct agricultural production. In this way the wheel of fortune is perpetually turning in a direction opposite to Tanzanian farmer and it remains to be seen when the peasants will finally distance themselves from poverty.

The Guardian KILIMO KWANZA

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Tuesday 21 June, 2011

FOOD SECURITY

Meeting the Growing Demand for Food, Combating Hunger & Malnutrition

By Angel Navuri

lobal demand for major grains, such as maize, rice, and wheat, is projected to increase by nearly 48 percent from 2000-2025 and by 70 percent between 2000 and 2050. Per capita meat consumption will also increase in many developing regions of the world and it will more than double in Sub-Saharan Africa from 2000-2050, leading to a doubling of total meat consumption by 2050. At the same time, the growth in production of staple foods is expected to decline significantly in most of the world if business continues as usual.

All this is according to a research presented by Mark Rosegrant, who delivered the Ag Economic Forum Keynote during the 2011 Ag Innovation Showcase held recently. Rosegrant is director of Environment and Production Technology at IFPRI. “Climate change, high and volatile food and energy prices, population and income growth, changing diets, and increased urbanization will put intense pressure on land and water and challenge global food security as never before,” said Rosegrant. “If agricultural production and policymaking continues down its present course, there could be severe consequences for many poor people in developing countries.”

Using state-of-the-art economic modeling based on alternative future scenarios for agricultural supply and demand that take into account the potential harmful impact of climate change, IFPRI projects crop yields, food prices, and child malnutrition through 2050 and beyond. Even without climate change, the prices of rice, maize, and wheat are projected to increase by 25 percent, 48 percent, and 75 percent, respectively, by 2050, in a business-asusual scenario. Climate change will further slow productivity growth, increasing staple food prices and reducing progress on food security and childhood malnutrition.

“Although the threats to food and nutrition security are very real, these outcomes are by no means inevitable,” said Rosegrant. “The myriad challenges underscore the importance of agricultural research, better policies, new technologies, and social investments to feeding the world’s burgeoning population while protecting critical natural resources.”

According to IFPRI's sophisticated computer model, developed by Rosegrant, with US$7 billion of additional annual investments in research to improve crop and livestock productivity, nearly 25 million less children in developing countries would be malnourished in 2050 compared to a business-as-usual scenario. If projected business-as-usual investments in agricultural research are increased along with greater spending on irrigation, rural roads, safe drinking water, and girls’ education, for a total additional increase of US$22 billion per year, the

number of malnourished children in the developing world—currently projected to be 103 million in 2050—would drop substantially to 45 million.

“Spending in these areas would particularly help farmers to boost their yields, improve their market access, increase their incomes, and improve the health and wellbeing of their families,” added Rosegrant. “Greater crop productivity also means that more of the growing demand for food could be satisfied from existing land, limiting environmental damage and ensuring that progress in the fight against hunger and poverty is sustainable.”

Mean while G8-Africa Partnership Provides Opportunity to Revitalize Agriculture, Spur Development, and Improve Food Security According to the Director General, International Food Policy Research Institute (IFPRI) Shenggen Fan When G8 leaders gather in Deauville, France on May 26-27 for their annual summit, one of their top priorities will be strengthening their partnership with Africa, including on issues related to food security and poverty reduction, and the critical role of agriculture in achieving these goals.

Fan added that nowhere is this more relevant than in Sub-Saharan Africa, where agriculture accounts for 30 to 40 percent of total gross domestic product (GDP) and almost 60 percent of export earnings. Agriculture is also the primary source of income and employment for many Africans, including most of the continent’s poorest citizens.

In recent years, many global and national promises have been made reinforcing the importance of agriculture for promoting development and alleviating hunger. But decision makers at all levels have often failed to make good on those commitments. Monitoring progress on past pledges by international donors and African policymakers alike also needs to be high on the Deauville agenda. In the face of growing challenges to global food security, such as high and volatile food prices, the rising cost of energy, and climate change, we cannot afford to let good intentions remain just that.

He added that recognizing that agriculture must play a central role in stimulating economic growth and development across the continent, in 2003, African leaders launched the Comprehensive Africa Agriculture Development Programme (CAADP) and agreed to allocate at least 10 percent of their national budgets to agriculture. Although most countries have made progress toward this target, less than a dozen have achieved it.

From 2000 to 2007, public spending on agriculture as a share of agricultural GDP which takes into account the relative size and importance of the sector decreased from 4.4 percent to 2.5 percent in Sub-Saharan Africa.

However, during the same period, public agricultural expenditures in the region grew by 47 percent in absolute terms, which was significant, but considerably less than East Asia and the Pacific and South Asia, which in-

creased spending by 86 percent and 65 percent, respectively.

Historically, African governments have spent much less on agriculture than their counterparts in other developing countries, but now is the time to reverse that trend. Sub-Saharan Africa is the only region of the developing world expected to have more poor people in 2015 than it did in 1990. Hunger and malnutrition continue to affect nearly 30 percent of the population. In Eastern and Central Africa, the percentage of people living on less than a dollar a day actually increased during the past two decades. An agricultural revival on the continent could help countries tackle these problems and enable them to take advantage of the renewed global interest in agriculture.

After more than two decades of neglect, official development assistance (ODA) to agriculture is gradually on the rise. From the mid-2000s to 2009, ODA commitments to agriculture increased from US$5 billion to nearly US$10 billion, not counting contributions from all multilateral donors.

During the same time period, the share of total official development assistance spent on agriculture grew from 4 to 6 percent. At the G8 summit in L’Aquila in 2009, world leaders pledged more than US$20 billion to boost food security and agricultural development. And last year, a multilateral fund, the Global Agriculture and Food Security Program, was launched with the goal of improving agricultural production, crop productivity, and food security.

Although these financial commitments are substantial, challenges remain. First and foremost, donors need to make good on their promises as do African governments themselves.

Second, investments in agriculture should reflect a country’s national priorities, contribute to an overall development strategy, and be supported by good governance and effective policies.

Finally, determining the “how” of agricultural spending is as important as the “how much.” In a world where public resources are not only limited but often scarce, prioritizing investments to maximize benefits and on-the-ground impact is critical. Because countries have different political and economic systems, natural resource endowments, and socioeconomic conditions, a one-size-fits-all strategy will not work.

However, IFPRI research shows that in general, spending on agricultural research and development, education, and rural infrastructure especially rural feeder roads in Africa are most effective for promoting agricultural growth and reducing poverty.

If G8 leaders are serious about their partnership with Africa, they need to ensure, in a spirit of mutual accountability, that African countries have every opportunity to capitalize on agriculture’s immense potential beginning with the fulfillment of past pledges. With African countries firmly in the driver’s seat, agriculture can shape and impact development on the continent and ultimately improve the health and wellbeing of all citizens.

The Guardian KILIMO KWANZA

Tuesday 21 June, 2011

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By Makuna Chirimi

he government of Tanzania has announced a number of tax reliefs for the agriculture sector.

Contained in the 2011/2012 national budget, one of the measures taken by the government is the exemption of taxes on agricultural inputs in order to boost the sector.

Value Added Tax (VAT) has now been exempted on spares and parts for threshers, rice dryers, and mills, planters, trailers and power tillers used in organized farming by registered groups and cooperative unions. Also exempted is VAT for spare parts for sprayers, harrows and grain conveyors.

Mechanization for commercial agriculture is one of the major challenges in Tanzania. In the past farmers and importers of tractors, power tillers and other forms of mechanization have often warned that buying tractor engines without the necessary utility addons poses a risk to farmers who are unable to maximize the range of activities and profits generated from their agromachinery.

Last year fishing activities in the country shrunk by some 1.2% compared to the previous year. In a bid to revive interest in fishing the government has also exempted tax on raw materials used in making fishing nets.

A council of Finance Ministers from the East African Countries recently agreed on various changes to the East African Community Common External Tariff (CET) and Customs Management Act 2004. These changes includedproviding for 0% tariff on the raw materials used in the manufacture of animal and poultry feeds. This is intended to promote the poultry industry in the EAC. Poultry farmers in Tanzania can now benefit from the VAT exemptions on pellet feeds for poultry that were announced by the finance minister in his budget speech.

The EAC Finance Ministers also agreed to split tariffs on the component

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MARKET

Changes in tax regime announced

parts and inputs for assemblers of refrigerators and freezers by applying a duty rate of 10% instead of 25%. The objective of this was to promote local

production of these products and create employment opportunities particularly for the youth. The move is also likely to reduce post harvest losses especially in

highly perishable agro-produce by reducing the costs of cold storage. The decrease from 120% to 50% of the duty rate for plastic bags of more than 30

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microns will also prove popular with agro-processors who have been complaining of the high cost of packaging within the country.

With a view of reducing the importation cost of wheat into Tanzania so as to make th product widely available in the local market, the minister also agreed to stay the application of the customs external tariff rate of 35% on wheat grain and to apply a rate of 10% for one year.

However the imposition of a new TSH 30,000 fee by District Councils for businesses operating in the area and a further fee of Tsh 10,000 chargeable by Village councils on businesses operating in the area is also likely to be unpopular with those with small scale investments in agriculture who are already opposed to the produce cess that is currently being charged to farmers.

A recent study on Taxation value chains conducted in the country found that a reduction in the rate of produce cess from 5 to 3 percent of the farm gate price would have no impact on the position of the farmers around the country. In the 2009/2010 budget, the minister had committed to put a 3% cap on produce cess.

However the year 2010/2011 budget saw the government reneging on its earlier promise to farmers, and the farm gate produce cess remained at between 3% and 5%. There was no mention of produce cess in the just unveiled 2011/2012 budget, meaning that farmers may have to bear this cost alongside the newly introduced business operation fee. Although it may yet prove unpopular, this move is however in line with the government’s intention of enabling local authorities to broaden their tax base, which is normally achieved by increasing local taxes.

Although produce cess is a crucial source of revenue to the district councils, agriculture stakeholders have often suggested that it should be abolished or its burden should be shifted to the processors and final consumers.

Produce cess is a levy charged for special administrative expenses.

Mahindra Tractors now in Tanzania

repared with over 41 years of commitment in agriculture sector of 36 countries in African continent, and with prominent presence in Tanzania with largest net work from 52 locations, it is only natural that ETG Group company, ETC Tractors and Implements Ltd be in the best position to provide the most hardy, reliable, easy to operate and maintain machinery.

The pricing that is right for the customers’ pocket and after-sales service and training cannot be overstated especially for the small and medium size farmers found in Tanzania. On that account, ETC Agro supplies Mahindra Tractors at affordable costs and with power within the ranges of small and medium size farmers (between 15 and 80 horse power). For instance, a Mahindra 50 hp Tractor with fourcylinder engine, go for only Tsh 22 million. Also, to enhance after-sale servic-

Mr G V Rao, Consultant for M/s Mahindra and Mahindra, India.

es and customer outreach, the company retains 52 farm gate procurement centers in Tanzania utilized as customer

service centers to provide services, training and spare parts close to the customers. A combination of multi-

function attributes such as power, maneuverability, ease with which the equipment can be converted to perform

different functions is what makes Mahindra tractors most sought-after farming machines today. Starting from land preparation, planting, harvesting and transport, Mahindra tractors have continued to dominate the world farm machinery sector, winning internationally acclaimed awards of excellence – the Japan Quality Medals, and today recognized as world no 1 Tractor Company by volumes.

Other Farming equipments includes; power tillers powered by 12 -16 hp Yanmar engines, Rice transplanters, zero tillage seed drills, tipping trailers, Multi crop Combine harvester machines being supplied with expertise manpower and backup parts for 5 years.

ETC Agro tractors and implements ltd, is committed to improve the productivity in Farm mechanization by rendering timely field service and training to tractor operators in Tanzanian,

The Guardian KILIMO KWANZA

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Tuesday 21 June, 2011

FOOD SECURITY

Food Prices Forecast to Remain ‘High and Volatile’

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ood prices will be high and volatile for the next decade, driven by rising incomes in emerging nations and demand for biofuel, a joint OECD and FAO report forecast on Friday.

Although prices will probably fall from high levels reached earlier this year, long-term price increases of up to 20 percent for cereals and 30 percent for meat can be expected, the Organisation for Economic Cooperation and Development and Food and Agricultural Organisation warned.

"A slow growing supply set against expected high demand underlies the

projection of high and more volatile agricultural commodity prices," they said in their Agricultural Outlook 2011-2020.

The report, published before a meeting next week of G20 agricultural ministers, places the blame for increased volatility on tight markets rather than speculation.

At a meeting in Paris the G20 ministers are to try to reach agreement on measures to increase transparency and regulation of commodity markets after spikes in food prices in recent years hit consumers hard worldwide and sparked unrest in several countries. The report forecasts that higher energy prices and limits on land and

water resources will constrain increases in yields and overall production, while growing populations and rising incomes in emerging nations such as China and India will sustain strong demand. "These developments, coupled with the implementation of biofuel mandates have increased demand and made processors and consumers much less responsive to high commodity prices," said the OECD and FAO report.

With low stocks and sticky demand the report found that weatherrelated production variations have become a "prime source of international price stability", as evidenced by soaring prices following a drought in

Russia and wet weather in the United States last year.

"Weather-related crop yield variations are expected to become an even more critical driver of price volatility in the future," the report said.

Although the OECD and FAO believe commodity prices will likely fall from peaks hit earlier this year, they forecast the price of fish, porc, and cheese to be 10 percent higher this decade in real terms than in the last decade.

They foresee price rises of 15 percent for rice; 20 percent for maize, vegetable oils and sugar; 30 percent for poultry, and nearly 50 percent for butter. The OECD and FAO expect global

agricultural production to grow at 1.7 percent annually on average over this decade, down form 2.6 percent last decade. Production per capita is still projected to rise 0.7 percent annually.

The report also foresees further robust growth in the use of agricultural products to make biofuels.

By 2020, the OECD and FAO expect 13 percent of global coarse grain production, 15 percent of oil production and 30 percent of sugar cane production to be used to make biofuels.

Higher oil prices would encourage further use of agricultural feedstocks for biofuel production, they noted, and may make it viable in some countries without government policy support.

The Guardian KILIMO KWANZA

Tuesday 21 June, 2011

POLICY

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By Miki Tasseni

LD conflicts between economic planners and budget negotiators are seemingly back in force after the Planning Commission upstaged the Tanzania Budget Speech in a curtain raiser event staged a day earlier to the main event.

The presentation of a Planning Commission blueprint for the economy up to the year 2016/7 wasn’t quite consonant with the Budget Speech, but there are ways in which bridges can be built. There is also a vast difference in the perception of roles, but some complementary relationship is possible between the Budget as presented by Finance Minister Mustafa Mkulo, and the Five Year Plan spelt out by President Jakaya Kikwete on behalf of the Planning Commission.

The latter seemed ill at ease with letting everything be determined by the Budget, and sought auxiliary assurances that main anchors of government policy are laid out and observed from one year to another, via a plan.

Without a plan, momentary expediencies take hold of government policy.

How that shall work in practice is a different matter altogether, for the only relevant area where the Plan seemed to be authoritative was the growth rate and levels of income expected by 2016 which marks the end of the Plan, or something of the sort.

The Plan itself provides a new point of reference from the Vision 2025 whose goals are supposed to be realized midway 2015. But currently only a United Nations (UN) led Millennium Development Goals (MDG) platform exists, and one which is mainly used by NGO’s. Planning as such appears to have been put aside, even while the commission is still existent and as many stakeholders feel a plan is needed.

What waits to be seen is whether the Planning Commission can channel planning energies into the current thrust of policy which is heavily inclined towards market forces and spontaneous economic relationships or synergies - synchronized energies of different quarters. For once banks don’t issue credit to the different sectors according to a ‘national credit plan,’ and those wishing for a Plan want a clear direction of how government funds are going to be shared out. Whereas that isn’t the big issue but credit; it’s a misleading focus.

There are aspects of what the government intends to that would be helped if a plan sort of focus was put in place. The plan should not be in terms of projecting so called ‘achievements’ that are usually broadly tied to election promises that were later converted into economic forecasting. The plan should identify, build and organize synergies.

When it comes to seeking out investors for a Southern Zone Agriculture Development Corridor (SAGCOT) for example, is it not helpful to find out how the various bottlenecks are going to be met, especially when it comes to ‘popular participation’? How are peasants and investors able to relate, work together?

Current government policy in that

Reconcile Planning Blueprints and Budget Speeches with Existing Realities

area tends to leave too much to chance, and thus hiccups or conflicts are bound to arise in many areas.

The privileged mode of seeking out investors is to place them on what ministry officials consider to be ‘empty arable land,’ whereas all these lands have their claimants among traditional economy practices in the neighborhood, whether it is slash and burn farming, or migratory livestock keeping. It seems the two features need to be placed into a synergy - the want of capital and markets, with need for crops.

The problem with the current outlook is that it is one-track thinking in relation to land use, that people use only the land on which they inhabit at present, whereas the real issue is the breadth of their ancestral land where no other authority can take it up without consent. This expectation of traditional use of land can tie up with the investors’ need for crops by bringing them into crop farming contracts. The scheme is still ill-defined but in the past, we’ve had some authorities like the Tanzania Cotton Board going ahead and signing a supply contract abroad, a furtive gesture indeed.

It is hard to figure out why the cotton board went into a supply contract on its own without first putting in place actual levers on the ground as to how such procurement could be as-

sured. When the anticipated supply failed and seemingly attracted a penalty, the bill was brought back to the Treasury. Owing to the fact that the cotton sub-sector was in 2009 allowed to bring up bills to ‘resuscitate the sector,’ this could easily develop into a habit. Instead of planning for actual cotton harvested by competitive contract farming, officers now start planning for penalties.

However, if the way peasants and investors work together was put up as part of an economic plan, it would constitute a forward looking preview of how much land is available for this or that type of crop. The number of villages in a particular farming zone, existing price levels, input needs, complementary input by investors etc could also be accounted for prior to investment. It would imply that the government or local governments work out modalities of working with investors so as to reduce investor problems to a minimum. By ascertaining the infrastructure and reporting mechanism, as well as inspecting the use of funds, investment wouldn’t be a matter of starting from scratch.

The planning element is another input on top of existing contentions in the agricultural sector, where two forces operate in a parallel manner in crop procurement and setting prices; the cooperative channel and the mar-

ket. With Kilimo Kwanza setting out specialized areas like agricultural development corridors specifically to seek out investors for those areas, a reconciled model of synchronizing these needs is more urgent than ever.

When contract farming replaces land alienation, it will be possible for Members of Parliament (MPs) and their secretariats in districts to see how each area can come under a specific supply contract, even with the National Grain Reserve facility for additional supplies of maize and rice for future shortages. So far the government ‘plans’ a limited amount of money for purchasing extra grain which is insufficient, and as shortages persist due to lack of incentives for higher production, the government releases the little it has in store to stem rising urban grain prices. As a result it no longer has a strategic reserve but a tactical facility to help mitigating price shifts to ‘slow motion.’

Planning Commission officials aren’t definitely used to this kind of culture, and those who support the work of the commission in academic institutions in particular see their functions as far removed and even antagonistic to the Kilimo Kwanza campaign.

They see contract farming as a reduction of peasants into laborers of some foreign interests, and don’t as yet see value in bringing about conditions

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where pricing is known a priority and the peasant no longer faces a price hazard or even the availability of market for the crop. Meanwhile those who argue for the maintenance of old farming models and accompanying wild market/price ice forces, risk abandoning the peasants at the sharp end of the knife.

Instead of the Planning Commission seeking to compete for influence at the high table of economic advisers to the president, it could reorient its work towards harmonizing investment and traditional economy aspects, by taking note of the fact that the ‘land allocation’ method is dead.

There is nowhere to take the peasants, nor indeed physically reduce the room they seek for expansion of farms or grazing land. Instead, violence is now likely to break out in many areas on account of this idea of taking out ‘virgin’ land. Greater foresight is of use as in the colonial period, where direct colonization was replaced by ‘indirect rule.’ Allocating land to investors is to exercise a choice as to who has privilege to the land, while contract farming is a symbiosis.

When it has taken up the latter role, the Planning Commission could also conduct an educational drive which could be of vast help to the government that now faces revolts fomented by opposition parties and specialized non governmental organizations (NGO’s) rejecting foreign investors on the land. Removing land allocation and retaining peasants on the land, if perhaps with traditional user rights which are then capable of being traded or exchanged with another person or local agency (like debt settling at VICOBA or SACCOS, community banks etc), would be a more feasible approach. Peasants could then be brought into discussing contracts for each year’s cultivation and negotiating on the prices.

In this way, a sort of mutuality of need comes up with the resulting semblance of employment on the land.

Furthermore since incomes would be more or less assured, inputs and bank credit for infrastructure can also be easily acquired. Local financial institutions could form the basis for investors to link up to build infrastructure as a medium term investment as risk of loss is reduced. There is no reason why the Planning Commission would fail to get academic institutions and NGOs to support such a perspective, and drain out current criticism that the country is being overrun by foreigners.

While there is a definite lack of agencies working to reconcile these areas of economic activity that appear to be inherently competitive, there are however aspects in both the planning mechanism and the market thrust towards contract farming that can be reconciled. One agency in a position to do so is the Alliance for a Green revolution in Africa (AGRA) initiative led by ex-UN Secretary General Kofi Annan. One of AGRA’s missions is to facilitate the adoption of technological inputs into agriculture as well as ending or eliminating price hazards that farmers routinely face. When this is in place, it becomes easier to sort out one of the big unknowns of farming in Africa, the availability of water for irrigation, which requires capital inputs that are lacking at present.

The Guardian KILIMO KWANZA

POLICY

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Tuesday 21 June, 2011

Agriculture in Tanzania Stuck in Doldrums

By Makuna Chirimi

WATER AND SANITATION

Dar es Salaam Water and Sewerage Authority (DAWASA) – Tel: +255 22 276 0006

Dar es Salaam Water and Sewarage Corporation (DAWASCO) Tel: +255 22-2131191/4 Drilling and Dam Construction Agency (DDCA) Tel: +255 22 2410430/2410299 Energy and Water Utilities Regulatory Authority Tel: +255 22 2123850, 22 2123853 Water and Environmental Sanitation Projects Maintenance Organization (WEPMO) Tel: +255 22 2410738, 716 099959 Ministry of Water Tel: +255 22 245 1448

cotton dropped by 24.3%, tea (39.0%) was down 47%) amongst others. However according to figures released by the Finance Minister ealier, activities in agriculture, livestock, forestry and hunting grew by 4.2 % in 2010 compared to 3.2% the previous year.

There was also an increase in crop production that followed relatively good weather experienced during the 2009/10 season coupled with advances in irrigation and the implementation of the Agricultural Sector Development Program (ASDP).

Fishing excursions also grew by only 1.5 % in 2010 compared to 2.7 % the previous year. The marginal growth has been attributed to stiff competition in the market for fish and related products. Other

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he overall contribution of agriculture to the Gross Domestic Product (GDP) of Tanzania has dropped from 24.6% in 2009 to 24.1% in 2010. Presenting the 2011/2012 national budget to the country, Minister for Finance Hon Mustaffa Mukulo admitted that agriculture was still performing poorly, with economic growth below the National Development Vision 2025 target and the sources of economic growth did not touch a majority of the citizens who are the poor living in the villages. Poverty reduction was also lower especially in the rural areas where an overwhelming majority of families depend on agriculture. Tabling the alternative opposition budget in parliament after the reading of the government budget, the shadow Minister for Finance, Hon Zitto Kabwe Zitto said that Tanzania can no longer boast of having a vibrant agricultural sector.

“In 2010/2011 the Government launched Kilimo Kwanza claiming that it was a development strategy, but the budget does not reflect emphasis on agriculture. The government should show its resolve by investing in the sector in order to improve the fortunes of over 71 percent of the population that depends directly on agriculture for livelihoods,” he said.

The shadow finance minister revealed that although the international market prices for agroproduct were higher last year, Tanzania’s traditional exports into the international market dropped.

Coffee exports for example declined by 36.4 per cent,

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contributing factors include a reduction in actual fishing activities, continued use of crude fishing tools and illegal fishing. However the overall contribution of fishing to the GDP total remained stuck at 1.4 % in 2010, similar to what it was in 2009.

According to figures on the health of the economy released by the minister, Tanzania attained a real GDP growth of 7% in the year 2010 as compared with a growth rate of 6% attained the previous year.

The annual per capita income is also said to have increased by 11.1% to TSH 770,464 with the growth momentum based on increased economic activities in agriculture and livestock keeping, fishing, trading and maintenance, communication, gas and electricity, industry and manufacturing and construction.

However this economic growth failed to generate sufficient employment opportunities.

The annual inflation rate was at 8.5% in April 2011. There was also a shortfall in collection of government revenues whereby in 2010/11, the government had planned to collect TSH 6,004 billion in domestic revenue, equal to 17.3% of the GDP. However the total domestic revenue collected by the end of March 2011 was TSH 4,256 billion, a shortfall of Tshs 1,920 billion. The domestic revenue collection for the 2011/12 budget season has been projected at TSH 6,776 billion, equivalent to 17.2% of the GDP. The minister also revealed that there were increases in the inflation rate and transport costs attributed to variable weather and increase in oil prices on the world market. It had been hoped that a budget focused on water as had been earlier promised, would have the trickle down effect of increasing investments in irrigation thus offsetting the current crunching challenges resulting from the current seasonal, erratic and rain-dependent farming. It may now appear that this is not to be and Tanzania’s agriculture will remain at the mercy of the vagaries of weather. The Minister articulated the government’s concern as to the ever rising cost of living and outlined strategies to mitigate this. The government has committed to focus on controlling the rate of inflation and on employment generation. Three primary factors were identified as contributing to inflation namely; oil prices, power shortages and the impact of drought on food prices. Reference was also made to increasing power generation capacity although the timelines for this were not clear.

Investments in the country have suffered adversely from unpredictable power supply resulting from low power generation capacities and relentless load shedding by the national power utility firm.

However the opposition has faulted the government for failing to utilize both existing and emerging opportunities, citing the growth of the communications sector that has gone in tandem with the decline in agriculture which now contributes little to the country’s Gross Domestic product (GDP).

“The solution is to increase food production and stabilize our shilling. Reviewing fuel prices review will be meaningless if oil prices on the global market rise again,” the shadow finance minister said.

“Abandoning agriculture is the root cause behind our growing economy that however fails to influence poverty reduction in the rural areas. We need to focus on rural infrastructure, rural electricity and water,” he added.

INDUSTRY SUPPORT AND ASSOCIATIONS

Small Industries Development Organization (SIDO) – Email: dg@sido.go.tz, info@sido.go.tz ANSAF - P.O. Box 6370, Dar es Salaam CNFA - info@cnfatanzania.org

Tractors Limited Cells: +255 784 421606, 786 150213

Consolidated Holdings Corporation (CHC) Tel: 255 (022) 2117988/9 Vocational Education and Training Authority (VETA) – Tel: +255 22 2863683/2863409 Export Processing Zones in Tanzania (EPZ) Tel: +255 22 2451827-9 Agricultural Economics Society of Tanzania (AGREST) – Tel. +255-23 260 3415

Tanzania National Business Council (TNBC) Tel: +255 22 2122984-6 Tanzania Agriculture Partnership (TAP) Tel: +255 22 2124851

Tanzania Milk Processors Association (TAMPA) Tel: +255 222 450 426

Rural Livelihood Development Company (RLDC) Tel: +255 26 2321455 Tanzania Cotton Board Tel: +255 22 2122564, 2128347

Horticultural Development Council of Tanzania (HODECT) Cell: +255 789 222 344; Fax: +255 27254 4568 TATEECO Ltd – Tel: +255 784 427817 AGRO-PROCESSING ERTH Food - Tel: +255 22 2862040 MUKPAR Tanzania Ltd Tel: +255 28 250038/184

ASAS Diaries Limited - Tel: +255 26 2725200 Tanga Fresh – Tel +255 27 2644238 NatureRipe Kilimanjaro Limited Tel: +255 22 21 51457 EQUIPMENT Achelis Tanganyika Ltd +255 22 2700 760 or +255 784 300 084

National Service Corporation Sole (SUMAJKT) Cell: +255 717 993 874, 715 787 887 FINANCE Private Agricultural Sector Support (PASS) Tel: 023-3752/3758/3765 Community Bank Association Tel: +255 22 2123245

Bank of Tanzania P.O. Box 2939, Dar es Slaam,Tanzania AGRO-INPUTS Minjingu Mines & Fertilizers Ltd Tel: +255 27 253 9259 250 4679