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SUSTAINABLE DEVELOPMENT OF TANZANIAN AGRO-FOOD SYSTEM:

FROM AGRICULTURAL COMMODITIES TO VALUE ADDED AGRO FOOD PRODUCTS-

OPPORTUNITIES AND CHALLENGES IN MODERNIZATION OF AGRIBUSINESS SECTOR IN

TANZANIA

Prof. Joseph Mpagalile, Technology Transfer Coordinator & Food Science Dept

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OUTLINE Introduction on Agriculture in Tanzania –

Commodities

Important Concepts

Value addition and SMEs in Tanzania Agro-Food and its development

Innovation in Agro Food & Role of SMES

Role of Research Generation and development of Agro Food SMEs

What needs to be done-Recommendations

Tanzania

AGRICULTURE IN TANZANIA1 Tanzania has great potential for agriculture

Agriculture (Crop & Animal Production & Natural resources is one of the leading sectors in TZ Main source of food Important source of income

80% of the population depend on agriculture

Employs about 70% of active labour force

It is contributing about 45-50% of GDP

Agriculture is mainly rain fed

AGRICULTURE IN TANZANIA2

Wide variety of Crops are grown in Tanzania Maize, rice, cassava, sorghum- main

food crops Important animals; cattle, goats,

chicken

Traditional export crops: Coffee, cashew nuts, cotton, tea & sisal

New crops: Flowers, horticultural produces, oilseeds

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AGRICULTURE AND POVERTY REDUCTION

Poverty declined slightly over the last 10 – 15 years. From 1991 /92 to 2000/01 food poverty declined from 22 – 19% while basic needs poverty declined from 36 to 30%.

Vision 2025 and the Poverty Reduction Strategy Paper (PRSP) objectives are to:

Raise the per capita income of Tanzania from 210 to 3420 US$ by 2025.Reduce abject poverty by 50% by the year 2010Eradicate abject poverty by the year 2025

To reach targets economy must grow at:6 – 7% between 2000 – 2004; 8 – 9% between 2005 – 2010 8 – 10% between 2010 to 2025

AGRICULTURE POTENTIAL IN TZ Large untapped arable land (44 million

hectares)

High potential irrigable land is available

Broad diversity of agroecology – Enjoys tropical climate (highlands are temperate)

Water is available (3 lakes: L. Victoria, L. Tanganyika & L. Nyasa, rivers)

Large variety of fish Market: Well placed regional/International

Forecasted food crops Forecasted food crops production in 2008/09production in 2008/09

Maize 3,385,676.16

Potato 1,529,015.04

Banana 1,092,153.60

Cassava 1,965,876.48

Pulses 1,092,153.60

Wheat 109,215.36

Rice 873,722.88

Millets 218,430.72

Sorghum 655,292.16

Table 1: Cash crops production Table 1: Cash crops production in 2007/08in 2007/08

Crop Production (Ton)

2006/07 2007/08 % Change

Cotton 130,565 200,662 53.7

Coffee 51,117 41,764 -18.3

Cashew-nut 88,213 99,107 12.3

Pyrethrum 2,046 2,300 12.4

Tobacco 50,784 57,454 13.1

Tea 34,969 34,165 -2.3

Sisal 30,847 33,000 7.0

Exported Crops in 2007/2008

Crops Tonnage 2007/08

Value in USD (Billion)

2007/2008

Sisal 7,300 6,900,000

Cotton 70,600 85,000,000

Coffee 33,200 77,300,000

Cashew-nut 55,600 40,100,000

Tobacco 20,600 74,200,000

Tea 18,700 28,800,000

Pyrethrum 516.4 647,628.80

Food Production in Relation to Food Production in Relation to Food Self sufficiencyFood Self sufficiency

Year Production (Metric Tons)

Self Sufficiency Ratio (%)

2002/2003 7,372,720 88

2003/2004 8,838,136 103

2004/2005 9,668,817 102

2005/2006 10,945,350 112

2006/2007 10,660,301 106

2007/2008 10,782,006 104

Agriculture and Value addition

Traditionally crops have been sold raw In the 70’s to late eighties government put a lot

of effort to agro & agro food industries However most of the large scale industries did

not perform to the expectations

New efforts are being made to add value to the crops through: Involvement of private sector (Local and

overseas investors, partnerships) etc

AGRIBUSINESS AND SMEs IN TANZANIAN CONTEXT Agribusiness is a loaded term It is generally meant: to include production,

processing, and supply of agricultural goods All allied activities such as seed supply,

transportation of goods are components of agribusiness

Characteristics of agribusiness: Scale Vertical and horizontal integration Runs like true business

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SMEs in Tanzania The definition of SMEs differs from one country to the other Yardsticks: Employees, Total investment and Turnover In Tanzania:

Small Enterprise - Formalized undertakings

- Employees between 5 – 49 - Capital investment of 5 -200 million Medium Enterprise:

50 -99 employees Tshs 200 – Tshs 800,0000

(SME Policy of 2002)

AGRICULTURAL COMMODITIES vs

VALUE ADDITION What is agricultural commodity:

Any plant or part of, animal or animal product produced by person (farmer/animal keeper/plant propagator) for consumption sale or for other uses

Characteristics: Come out of the field No value addition May have undergone through primary

processing (e.g. shelling)

VALUE ADDITION What is value addition?

Many definitions exists It refers to economically adding value to agricultural food

product so as to form characteristics more preferred by the consumer in the market

May involve INNOVATION Processes Procedures Product or service

May involve coordination - logistics

The value addition happens in the value chain (Farm –Table)

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Agro-Food Industries These are important in value addition as:

Generate value addition – Transferring agric commodity into products which are

Readily marketable Useful Improved storability Higher profitability

Setup: Traditional Agro-Food industries Modern Agro-Food industries

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Traditional Agro-Food Industries Mainly manual or batch operations Labour intensive Minimal sophistication Equipment is locally fabricated Little R&D Offer little competition to large companies Their products liked by the local community

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Modern Food Industry Food companies e.g.

Bottling plants (Soft Drinks, Beer, Frozen foods (Fish fillets factories in the lake Zone)

Large flour mills e.g. Azam, Pembe etc

Characterized by improved technologies Are well organized Tend to be innovative

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OPPORTUNITIES IN AGRO-FOOD INDUSTRY

Some policies supporting development of Ago-Food industries are there e.g. SMEs policy

Existence of research through institutions working on Agro-food research (SUA, UDSM, TIRDO, CAMARTEC, TEMDO) etc

Involvement of private sector e.g. in manufacturing Demographic changes: (Population growth, Urbanization Emerging technologies to support modernization of SMEs Presence of technologies supporting Rural Industrialization Gender mainstreaming initiatives-support to women

entrepreneurs (ILO and Ministry of Industry and Trade and Marketing (MITM)

Policy towards value addition on agro produces Kilimo Kwanza (Agriculture first) –opportunities to

commercialize

CHALLENGES FACING AGRO- FOOD INDUSTRIES Lack of capital – Limited capacity to acquire new technologies Shortage of Modern infrastructure & equipment Inadequate transportation Poor distribution Lack and inadequate cold storage system Human Resources: Shortage of skilled labour Lack of consistent supply of good quality raw materials Inability to meet international food quality and safety

standards Technology & its availability (Process equipment, process and

product development, process control)-inadequate technology transfer

Environmental protection (Wastes, hygienic practices, GMP, HACCP)

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CHALLENGES ctd Effects of Global Economic Crisis (Tight credits,

weak demand, reduced orders) Lack of innovativeness: Firm that don’t innovate

& distinguish their products suffer reduced returns

CONCLUSIONS Agriculture will continue to be an important source of

food and income in Tanzania However, unless agribusiness including agro Food

industries are supported and enhanced farmers and a country will not realize the potential benefit

Improvement on technology and innovation as well as improved access to markets need to be given priority

Support of agro-food industry through such initiatives as Clusters, Incubators need to be given priority

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RECOMMENDATIONS Facilitate availability of improved technologies Link Agro-Food industry to R&D institutions and support

linkages Enhance investment in R&D Assist in development of skills and knowledge Traditional curriculum in training institutions must be

reviewed to cater for the needs of agro-food industries Facilitate availability of inputs Provide support towards enhancing orderly and sound

marketing Encourage domestic agro –food processors Provide conducive environment for the Agro Food based

SMEs25

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THANK YOU