DPG PSD/Trade Visit to Central Zone Sunflower

SectorOctober 2012

Better coordination of DP’s

To showcase effective programmes

To improve on the ground knowledge

To follow a value chain

To hear directly from entrepreneurs about key issues affecting the private sector

Purpose of trip

Farmers and growers involved with the following programmes:-◦ SNV◦ RLDC◦ Tuboreshe Chakula

Processors ◦ Songera investments, Rig Investments, Uncle

Milo, Three Sisters, Nyemo Investments, Jackma Enterprises

Sector Organisations ◦ CEZOSOPA, TEOSA, TASUPA

Whom did we meet?

SIDO ◦ Micro Manufacturing Enterprise Park◦ Mini- Refinery◦ Machinery development◦ Campaign for improved quality of oil

PMO RALG

Finance Institution◦ PASS

TTCIA Morogoro

Tanzanian Graduate Farmers Association

Sokoine University Graduate Entrepreneurs Cooperative - SUGECO

Successful small-scale private entrepreneurs both producers and processors who were:-

◦ Ready to expand◦ Ready to engage and assist local farmers◦ Equipped with skills◦ Willing to invest◦ Open to new ideas◦ Had a vision for the future

What did we discover?

Great progress and successful programmes in improving:-

◦ Accessibility of seeds◦ Quality of seeds – QDS◦ Methods of production◦ Availability of information to farmers◦ Coordination of the sector

Production of seed seems to have increased – (anecdotal information - not verified by DPG )

Production of oil from the seeds has increased

Total oil production has increased

Before1 acre produced

•2 bags of 65kg

Now1 acre produces

•12 bags of 65 kg

Before 1 bag

produced• 12 litres

Now 1 bag produces

• 25 litres

• 24 litres of oil Before - Total production

• 300 litres oil Now - Total Production

Potential for Tanzania to become net exporter of sunflower oil is good.

◦ Currently Tanzania is a net importer of sunflower oil

◦ The sector is currently only operating at 30% capacity

◦ Dodoma and the central region produce over 60% of sunflower products.

Challenges still to meet

Medium-scale commercial farming◦ size of plots, ◦ time taken to complete process.◦ TGFA example

Fragmented industries in residential areas ◦ SIDO Sunflower oil processing cluster Dodoma. ◦ But legal issues, land tenure, cost of building,

ownership – GoT or PPP?

Access to Land

Lack of electricity hampering entrepreneurial development ◦ Songera Investments example – idea, vision,

skills, capital but no power Intermittent power increasing costs and

reducing productivity Expensive Renewables – still not competitive or readily

available

Access to Power

Positive engagement between Government & sector organisations

Good channel for dialogue between government and sector through sector organisations◦ Re-introduction of 10% levy on palm oil imports◦ Reducing import duty on spare parts for sunflower

processing equipment

Coordination & Dialogue

BUT still need more coherent sector strategy & ongoing consultation◦ IIDS is in place ◦ Sectoral strategies to frame interventions (e.g. subsidies,

levies?◦ Concrete Policy frameworks?◦ Monitoring systems in place to track impact and progress

towards results?◦

Proactive engagement rather than reactive interaction Palm oil levy example

Regular two way information flow and consultation needed to build trust◦ Single Refining Standard law introduction example

Good information flow from farmers to processors through sector organisations◦ Productivity increases

Small scale producers – still too small to compete successfully ◦ consider grouping together for better market

access and product quality◦ Clustering◦ Contract manufacturing

Coordination within Sector

But this will need:-

◦ Trust between competing SMEs

◦ Possible external facilitation – as happened between RLDC, SNV and the strengthening of sector organisation CEZOSOPA, TASUPA & TEOSA

◦ Cluster development & land allocation by government – eg SIDO

Plethora of regulations - overlapping

Business Regulation

One stop shop for SME’s like TIC is for larger investors?

Discrepancy between on the ground reality and central regulations ◦ Tax levied at point of sale vs boundary taxes by

local authorities

Paradigm shift from ownership & government control to lighter touch regulation

Difficult access to finance – 20% + interest rates

More credit guarantee schemes for SME’s need to be implemented. ◦ Ideas to open schemes with TIB and NMB planned

but not yet implemented

Access to Finance

Lack of appropriate skills – ◦ Technical and managerial levels are imported from eg

India or Kenya◦ Mismatch between graduate skills and industry

needs◦ Internships, bridging programmes from formal

education to industry◦ Formal and practical skills

Machinery manufacture & maintenance◦ Balance between local production of light

manufacturing machinery vs import of equipment at the lowest price to remain competitive?

Skills Development

Production is increasing More lucrative market is there But need strategic engagement to promote

sunflower oil Coordinated effort from small scale

processors to be able to compete Coordination at District levels to ease cross

boundary transportation

Regional Trade Promotion

Downstream value chain development needed to exploit opportunities◦ Packaging◦ Marketing◦ Business development◦ Exporting

“Sunflowers used to be viewed as a crop for poor women – now they are seen as an important and potentially lucrative cash crop”

Monsipile Kajimbwa, SNV Morogoro

Produced by DPG PSD Trade SecretariatNovember 2012