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NOVEMBER 2010

mailto:[email protected]

http://www.esrftz.org/

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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.

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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.

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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

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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

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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.

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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.

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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:

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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.


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.


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






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

69

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

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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.

76

Figure 5.1: MDAs Development Budget, Release and Spending


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


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

78

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


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%


81

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

82

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


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

89

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.

99

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)

100

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.

103

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.

108

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.

109

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 agrochemicals. 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%


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.

111

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.

112

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


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.)


%

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

125

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


Priority

No.6

Agro-processing Increased producer prices


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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Competitive Tanzanian Agriculture, presented at joint Government of Tanzania and World Bank workshop on Prospects for Agricultural Growth in a Changing World, February 24-25, 2009 Dar es Salaam

BoT (Bank of Tanzania) (2009): The Global Financial and Economic Crisis, A Paper Presented at

a Consultative Forum on State of Tanzania’s Economy in the Face of International Financial Crisis: Dar-es-Salaam, 27-03-2009, MoFEA

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Sustainable Livelihood, Tanzania Country Report, ESRF, Dar-es-Salaam FAO, 1999a. (Food and Agriculture Organization of the United Nations) FAOSTAT

Database.(http://faostat.fao.org/default.aspx) Accessed July 2010. MAFC, 2008/2009. (Ministry of Agriculture Food Security and Cooperatives). Agriculture Sector

Review and Public Expenditure Review. Final report, November 2008, Dar es salaam. Mashindano O. (2009): “The Effects of Global Economic Trends on the Realization of the

Tanzania Development Vision 2025”, in Engineers’ Registration Board (ERB) (ed), Annual Consultative Meeting Proceedings, Dar-es-Salaam

Mashindano O et al (2010): agricultural Growth and Poverty Reduction in Tanzania: Where has

Agriculture worked for the Poor and what can we Learn from this?, A Draft Paper Presented at the Conference on Ten Years of War against Poverty: What Have We Learned Since 2000 and What Should We Do 2010-2020?, Hulme Hall - The University of Manchester, 8-10 Sept 2010

Moshi P. B (2009): Global Financial Crisis: Challenges and Opportunities for Tanzania, A Paper

Presented to a Conference Organized by IFM, Dar-es-Salaam

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http://bizclir.com/galleries/country-assessments/Tanzania_AgCLIR.pdf%20visited%20October%202010

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Morogoro District Council 4th Quarter Progress Report District Development Plan 28/6/2010

MPEE, 2009. (Ministry of Planning, Economy and Empowerment). Poverty and Human

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Msambichaka L.; Mashindano O.; Luvanda E.; Ruhinduka R. (2010): Analysis of the Performance

of Agriculture Sector and its Contribution to Economic Growth and Poverty Reduction; A draft Report Submitted to the Ministry of Finance and Economic Affairs, Dar-es-Salaam

NBS (National Bureau of Statistics) (2010): Consumer Price Index (CPI) Release for August 2010,

NBS, MoFEA, Dar-es-Salaam Ndulu B. (2009): The Global Financial and Economic Crisis: Challenges and Responses, Bank of

Tanzania, Dar-es-Salaam, Tanzania Nkonya Ephraim, You Liangzhi, Kato Edward and Guo Zhe, 2000. Determinants of Productivity

and Commercialization of the Staple Food Crops and their Demand Trend in Tanzania. Evidence from 2002-2003 Agricultural Census Survey. Draft Report Submitted to the Poverty Reduction Economic Management (PREM), the World Bank, Washington, D.C.

Robert, J. Utz, 2008. Sustaining and Sharing Economic Growth in Tanzania. The World Bank.

Washington D.C. Song Hongyuan, 2008. Rural China Reforms. China Agricultural Press, 2008.

TAMISEMI : Taarifa ya Utekelezaji wa.. Maendeleo ya Sekta ya Kilimo ..Julai2006- Desemba

2009- February 2020

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Issues and Options, Main Report, Volume I, MAFC, Dar-es-Salaam URT (United Republic of Tanzania) (2004): National Strategy for Growth and Reduction of

Poverty (NSGRP), MoFEA, Dar-es-Salaam URT (United Republic of Tanzania) (2006): TANZANIA – Agricultural Sector Review:

Performance, Issues and Options, Main Report, Volume I, MAFC, Dar-es-Salaam URT (United Republic of Tanzania) (2007): Household Budget Survey 2006/07 – Draft Report,

National Bureau of Statistics Tanzania, Dare s Salaam

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URT (United Republic of Tanzania) (2009): Poverty and Human Development Report 2005, Mkuki na Nyota Publishers, Dar es Salaam

URT (United Republic of Tanzania) (2009a): The 2008/09 Preliminary Food Crop Production

Forecast for 2009/10 Food Security, Ministry of Agriculture, Food Security and Cooperatives (MoFSC), Dar-es-Salaam, Tanzania

URT (United Republic of Tanzania) (2009a): The 2009/10 Preliminary Food Crop Production

Forecast for 2010/11 Food Security, Ministry of Agriculture, Food Security and Cooperatives (MAFC), Dar-es-Salaam, Tanzania

URT (United Republic of Tanzania) (2010): Draft National Strategy for Growth and Reduction of

Poverty (NSGRPII), MoFEA, Dar-es-Salaam URT (United Republic of Tanzania) (2010a): Financing Agricultural Sector Development in

Tanzania: CAADP Brief No 4, MAFC, Dar-es-Salaam URT, 2002/2003. (United Republic of Tanzania). National Sample Census of Agriculture. Small

Holder Agriculture Crop Sector – National Report Vol. II. URT, 2008. (United Republic of Tanzania). Agricultural Sector Development Programme.

Private Sector Development Mapping, Final Report for the World Bank/FAO Cooperative Programme 3 1st October.

URT ASDP Support Through Basket Fund Government Programme Document

URT ASDP- DADP Quality Assessment Report 2009/2010 URT ASLM:ASDP Aide Memoire for 5th ASDP Joint Implementation Review Sept 2010 URT Rice Development Strategy URT MAFC 2009/10. AGSTAT For Food Security Executive Summary. Vol. I Aug 2010 URT MLDF Financial Statement for Year Ended 30th June 2010 URT MAFC Statement for Year Ended 30th June 2010 URT Kongwa Wilaya - Taarifa ya Utekelezaji Miradi ya DADP 2007/08- 2009/1 World Bank, 1986. Agriculture in Tanzania Since 1986. Follower or Leader of Growth?

Government of the United Republic of Tanzania, the World Bank Country Study. Washington, D.C.

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World Bank, 2009. Eastern Africa. A Study of the Regional Maize Market and Marketing Costs,

Report No.49831-AFR. 31st December. 2009 Xiaoyun Li, 2010. Annotated Outline of Study on Enhancing Learning on Agricultural Efficiency

and Accelerating Poverty Reduction between Tanzania and China. The World Bank， International Poverty Reduction Centre in China, March 2010.

134

APPENDIXES

Appendix 1: Budget expenditure and allocation by purpose (actual expenditures in

TSH millions) LGA

Budget Expenditure and Allocation by Purposes


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

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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)

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