TTAANNZZAANNIIAA CCOOTTTTOONN BBOOAARRDD

THE SECOND COTTON SECTOR DEVELOPMENT STRATEGY (CSDS II): 2009- 2015: A STAKEHOLDER

ROADMAP FOR INCREASED PRODUCTION, PRODUCTIVITY AND PROFITABILITY OF COTTON

Pamba House, Garden Avenue, Pamba House, Garden Avenue, Pamba House, Garden Avenue, Pamba House, Garden Avenue, S.L.P. 9161, Dar es SalaamS.L.P. 9161, Dar es SalaamS.L.P. 9161, Dar es SalaamS.L.P. 9161, Dar es Salaam

Telephone: +255 22 2122565, 2128347 Fax: +255 22 21 12894 E-mail: info@cotton.or.tz Website: www.cotton.or.tz

Pamba House, Pamba RoadPamba House, Pamba RoadPamba House, Pamba RoadPamba House, Pamba Road,,,, S.L.P.S.L.P.S.L.P.S.L.P. 61, Mwanza61, Mwanza61, Mwanza61, Mwanza

Telephone: +255 28 2500528 Fax: +255 28 2501079 E-mail: tclsb.mw@tanzania.online.com Website: www.cotton.or.tz

March, 2010

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TABLE OF CONTENTS 1. BACKGROUND

1.1 Introduction …………………………………………………………..………...... 1.2 Tanzania’s Cotton Potential ……………………………………………………. 1.3 Layout of the Report ……………………………………………………............

5 7 9

2. SITUATION ANALSIS OF THE COTTON SECTOR IN TANZAN IA

2.1 Socio- economic Context of Cotton …………………..……………………….. 2.2 Cotton Production and Productivity …………………..……………………….. 2.3 Export of Textiles and Apparel ……….………………………………………... 2.4 Characteristics of Tanzania Cotton …………………….……………………... 2.5 Organic Cotton ………………………………………..…………………………. 2.6 Stakeholder Analysis ……………………………………….…………………...

10 10 11 16 20 21 21

3. REVIEW OF THE FIRST COTTON SECTOR DEVELOPMENT

STRATEGY, CSDS I; AND MWANZA RESOLUTION 3.1 Strategic Objectives, Targets and Outputs ……………….….………………. 3.2 Performance Evaluation ………….……………………….……….……………

24 24 25

4. POLICY, STRATEGY AND PROGRAMME CONTEXT

4.1 Tanzania Development Vision (Vision 2025) ………….……….…................ 4.2 The Agricultural and Livestock Policy of 1997 ……………….….…………... 4.3 The 1997 Cooperative Development Policy ……………….……….………... 4.4 The 1998 Local Government Reform Programme ……………….………..... 4.5 The Rural Development Strategy of 2001 ………………….………………… 4.6 The National Strategy for Growth and Reduction

of Poverty (MKUKUTA ………………………………….………………........... 4.7 Agricultural Sector Development Strategy ……………….…………………... 4.8 Agricultural Sector Development Programme …………….……………….… 4.9 Ministry of Agriculture Food Security and Cooperative’s

2007 - 2010 Medium Term Strategic Plan ……………………………........... 4.10 Millennium Development Goals ……………….…………………………….… 4.11 Kilimo Kwanza…………………….………………………………………….…..

26 27 27 27 27 27 28 29 28 30 31 32

5. ANALYSIS OF THE CHALLENGES OF THE COTTON SECTOR

5.1 Domestic Challenges …………………………………………….…….…......... 5.2 External Challenges…………………………………………………..…............ 5.3 Analytical and Operational Framework for Addressing the

Challenges of the Cotton Sector in Tanzania ……………..………………….

32 33 38 42

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6. THE SECOND COTTON SECTOR DEVELOPMENT STRATEGY,

(CSDS II): 2009- 2015: A ROADMAP FOR INCREASED PRODUCTION, PRODUCTIVITY AND PROFITABILITY OF COTTO N 6.1 Vision............................................................................................................ 6.2 Mission.......................................................................................................... 6.3 Goals............................................................................................................ 6.4 Objectives….................................................................................................

56 56 56 56 57

7. OPTIONS, RISKS AND OPPORTUNITIES IN THE COTTON

SECTOR IN TANZANIA 7.1 Strategic Options for CSDS II Implementation............................................. 7.2 Risk Minimisation......................................................................................... 7.3 Maximisation of Opportunities......................................................................

66 66 67 67

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ACRONYMS ASDS : Agricultural Sector Development Strategy ASDP : Agricultural Sector Development Programme CDF : Cotton Development Fund CDTF : Cotton Development Trust Fund CIIP : Cotton Industry Implementation Plan CSDS : Cotton Sector Development Strategy CTI : Confederation of Tanzania Industries DADP : District Agricultural Development Programme DASIP : District Agricultural Sector Investment Programme DED : District Executive Director DO : Divisional Officers ECGA : Eastern Cotton Growing Area EU : European Union FDI : Foreign Direct Investment GOT : Ginning Out Turn IARI : Ilonga Agricultural Research Institute ICAC : International Cotton Advisory Committee ICCP : Integrated Cotton Cultivation Progrmme ICT : Information and Communication Technology IEC : Information, Education and Communication IPM : Integrated Pests Management ISFM : Integrated Soil Fertility Management ITC : International Trade Centre LGAs : Local Government Authorities LZARDI : Lake Zone Agricultural Research Institute MAR : Multi - adversity Resistant MKUKUTA : Mpango wa Kukuza Uchumi na Kuondoa

Umaskini Tanzania MRALG : Ministry of Regional Administration and

Local Government NEMC : National Environment Management Council NSGRP : National Strategy for Growth and Reduction

of Poverty SICA : South India Cotton Association SITRA : South India Textile Research Association SMEs : Small and Medium Enterprises

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TACRA : Tanzania Cotton Research Association TBS : Tanzania Bureau of Standards TCA : Tanzania Cotton Association TCCIA : Tanzania Chamber of Commerce, Industries

and Agriculture TACOGA : Tanzania Cotton Grower Association TCB : Tanzania Cotton Board TAGEA : Tanzania Ginners and Exporters Association TANESCO : Tanzania National Electrical Supply Company TOSCA : Tanzania Official Certification Agency TRA : Tanzania Revenue Authority TEXTMAT : Textiles Manufacturers Association of Tanzania TPRI : Tropical Pesticides Research Institute USA : United States of America VEO : Village Executive Officer WEO : Ward Executive Officer WCGA : Western Cotton Growing Area WTO : World Trade Organisation

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LIST OF TABLES Table 2.1: Regional Cotton Production Trends (MT) …………………. 11 Table 2.2: Comparative Costs of Producing One Hectare

of Irrigated vs. Rain fed Cotton in 2008/09 (US$m.) …….. 13 Table 2.3: Comparative Statistics on the Production of One

Hectare of Irrigated vs. Rain fed Cotton in 2008/09 ……… 14 Table 2.4: Cotton Production Trends and Yields: 2001/02- 2008/09 . 15 Table 2.5: Exports of Textiles and Apparel from Eastern and

Southern African countries to European Market 2000 - 2008 (in €) …………………………………………… 17

Table 2.6: Textiles and Apparel Exports to Unites States from Selected African Countries: 2000 – 2008 (in US$) ……… 19

Table 2.7: Tanzania Cotton Grades ..…………………………………. 20 Table 2.8: Tanzania Cotton Types ……………………………………. 20 Table 5.1: Comparative Cotton Hectarage in Selected Countries:

2001/02- 2008/09 (“000”) …………..……………………… 38 Table 5.2: Cotton Production Trends in Selected Countries;

2001/02- 2008/09 (‘000” MT of Lint) …………….……….. 39 Table 5.3: Cotton Yields Comparisons in Selected Countries:

2001/02- 2008/09 (Kg of Lint /ha) ………………………… 40 LIST FIGURES Chart 1: Analytical and Operational Framework for Addressing

the Challenges of the Cotton Sector in Tanzania ……….. 44 Chart 2: Logic Matrix: Agenda of Actions to Sustain the Cotton

Sector in Tanzania ………………………………………….. 47 APPENDICES: Appendix I: The Proposed Approach in Revising the Final Draft

of the Second Cotton Sector Development Strategy (CSDS II): 2009- 2015 ….…………………………………

Appendix II: Letter of Proposal Submittal ……………………………...

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FOREWORD

EXECUTIVE SUMMARY Until very recently, the cotton sector in Tanzania evolved without any formally and properly unified stakeholder- organised framework of operations. In 1999/00 it became imperative for stakeholders to sit together and prepare the first medium Cotton Sector Development Strategy (CSDS I), 2000- 20007. Several challenges influenced the preparation of CSDS I, including; • Alarming progressive declines in cotton production experienced during the late

1990s especially due to; - over- liberalization of the sector, beginning in 1993/94, which led to the virtual

abandonment of the rules and regulations governing the sector operations, particularly with regard to quality etiquettes of cotton;

- collapse of the credit and inputs provision schemes as no one among the new players was ready to offer these services;

• Externally, rapid technological improvements were leading to;

- ever better yields and higher cotton production volumes in major cotton producing countries;

- increasing application of artificial fibres/synthetics in textiles and apparel manufacture, leading to a progressive decline of cotton importance;

- the combination of higher production volumes, better yields and increasing use of synthetics in the manufacture of clothes and apparel in major cotton producing and consuming countries reduced the demand for cotton from small exporting countries, including Tanzania; ultimately leading to the continuing historical pattern of falling cotton prices in global markets.

The above developments threatened the sustainability of the cotton sector as a viable, on-going economic activity on which nearly 40 percent of the population depends for their livelihood. CSDS I, supported by the Mwanza Resolution, genuinely attempted to address those challenges. In a period of less than a decade, cotton production quickly recovered to new record highs of more than 700,000 bales. Productivity too doubled. On a per capita basis, and in real terms, however, even these new production levels are far lower compared, say, to the 1960s when there were relatively fewer cotton farmers, and prices were considerably much higher. In preparing the Second Cotton Sector Development Strategy, CSDS II, the stakeholders are mindful of these challenges, some of which continue with increased intensity; such as the relentless expansion of acreage and production volumes in the major cotton producing and consuming countries; the use of synthetics; and provision of production and marketing subsidies in developed countries. Although Tanzania will collaborate with others to agitate for the removal of the distortive subsidies, to create a level playing field in international cotton trading, the other challenges are largely

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exogenous, beyond the control of small producers. CSDS II, therefore, focuses more on issues over which the stakeholders have more control. CSDS II is centred on making the Tanzania cotton sector operate more efficiently in order to effectively compete in markets through better cotton yields, improved crop quality, improved procuring, marketing and processing. In particular, CSDS II aims to maximize on the comparative advantages and opportunities obtaining in the Tanzania cotton sector, e.g; • The indefatigable spirit in cotton farming; • The capability to produce cotton at relatively low costs; • The obtaining national water resources which can underpin a successful irrigation

cotton farming programme; • Availability of large expenses of fertile, largely still unexplored soils; • The proximity of Tanzania to the major cotton markets. The importance of cotton is borne out in that about 40 per cent of the population depends on it for their livelihoods. It is grown in 42 districts of 13 regions, out of 127 districts and 21 regions. Currently, about 99 percent of the crop is grown in WCGA, with Shinyanga Region accounting for 60 percent of the entire crop, followed by Mwanza Region, at around 20 percent. The remaining 1 percent is grown in ECGA. About 95 percent of the crop is grown by cultivation using the hand- hoe, on farms averaging 0.5- 50 ha in size. Yields are low, by international standards because all cotton is rain fed, with little application of better farm and crop management practices. More than 70 percent of cotton is exported in raw form as lint. There is minimal processing into yarn, garments and textile materials. The textiles industry collapsed in the early 1990s, largely due to unfavourable tax policy, discriminating against domestic manufactures; as well as the saturation of the local market by second hand clothes imports. The cotton sector, whose key stakeholders are 350,000- 500,000 smallholder producers; 70 ginners, oil millers and exporters; 4 cooperative unions, 1 grower association; 21 spinners, weavers and textile millers; and government, led by the Ministry of Agriculture Cooperatives and Marketing, Tanzania Cotton Board and Local Government Authorities, is guided in it operations by several specific national policy, strategy and programme frameworks, e.g. Vision 2025; Agriculture Sector Policy, Strategy and Programme; MKUKUTA; MDGs; and Kilimo Kwanza. The preparation of CSDS II is both an obligation and an urgent necessity. It is an obligation as it builds on the positive outcomes of CSDS I and Mwanza Resolution. It is an urgent necessity because, without dynamic creativity in taking fundamental measures early enough against looming challenges, internal and exogenous, the cotton sector in Tanzania cannot be guaranteed as a viable socio- economic industry. In preparing CSDS II, the stakeholders carried out a dispassionate evaluation of the strengths and opportunities of the sector; e.g. the indefatigable spirit in cotton production, political will to transform agriculture, the comparative advantages which can lead to industry sustainability. They also carried out an assessment of its weaknesses

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and threats, in particular, adverse impacts of persistent droughts due to over reliance on rains, competition from synthetics, increasing production in major production and consuming countries, weak extension services, supervision and self- regulation. The collective view of the stakeholders is that the CSDS II architecture contains the strategic ingredients to sustain the cotton industry over time, namely; • Vision: To raise the efficiency of the cotton sector through better yields, improved

quality and processing; • Mission: To promote high cotton production, productivity and profitability through

improved farm management practices; application of effective production technologies; domestic maximization of value addition throughout the cotton value chain; effective and sustainable stakeholder organizations; and enhanced self- regulation.

• Goals: In order to raise the efficiency of the sector, CSDS II has six main objectives;

(i) Quality : raising the quality of cotton to international standards; (ii) Productivity: doubling from 750 kg/ ha of seed cotton (260 kg/ha of lint) in

2008/09 to 1500 kg/ha (520 kg/ha of lint) in 2014/15; (iii) Production: doubling from 685,000 bales of seed cotton (126,000 MT of lint

cotton) in 2008/09 to 1,500,000 bales (260,000 MT of lint cotton) in 2014/15; (iv) Acreage: total planned acreage: 500,000 ha; o/w;

- improved cotton farming in existing areas: 450,000 ha; and - expansion into new areas: 50,000 ha;

(v) Domestic Cotton Processing: increasing the proportion of cotton lint consumed by the domestic textiles industry from 30% in 2008/09 to 90% in 2014/15; and

(vi) Tanzania’s Share in African Cotton Production: to make Tanzania the leading African cotton producer by 2015;

• Objectives: In order to raise the efficiency of the cotton sector and achieve the six

Goals above, CSDS II has five Objectives; (i) Improve the quality of cotton by strengthening policies, strategies and regulatory

framework in the industry; (ii) Enhance sustainable production and productivity in the cotton industry; (iii) Increase domestic spinning, weaving and textile milling; (iv) Empower stakeholder organizations; and (v) Link and internalize cross- cutting issues.

In implementing CSDS II the cotton stakeholders commit themselves to shift the development path of this potential hub for wealth creation to a higher level, resulting into; •••• Cotton output: 2.4m. MT, valued at …; •••• Textiles and clothing: valued at US$ 3.6b.; •••• Employment – Textiles alone: 120,000 new jobs; •••• Other cotton by- products:

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- Cotton oil : …MT - Oil cake : MT; - Linters : …

•••• Enhanced income and prosperity to stakeholders. Furthermore, successful implementation of CSDS II to realize those potential benefits will involve strategic positioning of stakeholders to minimise risks and maximize on obtaining opportunities.

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1. BACKGROUND

1.1 Introduction The Tanzania Cotton Board of Directors, sitting at its 17th Ordinary Meeting in Dar es Salaam on August 3, 2009, in discussing Board Paper No. 4/17/09 on “Mkakati wa Pili wa Kuendeleza Sekta ya Pamba”, resolved that the Final Report of the Second Cotton Sector Development Strategy be revised, taking into account various views and recommendations of Members of the Board. In this context, the Board directed as follows; • make the Situation Analysis Section more analytically quantitative as a critical

foundation for preparing a more credible and realistic Cotton Development Strategy;

• articulate more clearly the views and comments from the Interviews with Stakeholders as important inputs in formulating a more informed Strategy; rather than subsume such interview results under the SWOT (C) Analysis;

• CSDS II should be stakeholder- led, rather than government driven; also by creating strong shareholder associations which can effectively influence the interests of the sector;

• CSDS II should reflect stakeholder collaborative, as against isolative, arrangements in actions intended to address the challenges of the cotton sector to generate more efficient outcomes;

• the focus of CSDS II should be on raising production efficiency on existing farm units by increasing cotton yields and output volumes; rather than aiming to overly expand cotton hectarage;

• cotton irrigation should form a vital component of CSDS II for guaranteeing increased farm yields and output volumes;

• similarly, contract farming should be an important innovation in CSDS II for propelling adoption of new technologies on the farm; easier access to credit; access to better crop risk management strategies; increased yields and outputs; improved quality of the crop; and increased incomes;

• CSDS II should adequately adapt and adopt various initiatives being implemented by the government and other development partners to improve the agricultural sector, e.g.;

- measures aimed at improving extension services; - strengthening research, extension, farmer linkages; - improving competence of farmers;

• adequately synchronize and internalize the Tanzania Gatsby Trust/ Gatsby Charitable Foundation’s Textiles and Cotton Development Programme activities and financing into CSDS II; so as to properly and adequately situate this important initiative for meaningful systematic revival of the domestic textile industry and introduction of new and better production technologies on the farm;

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• review the estimated Budget for CSDS II with a view to make its financing strategy more realistic;

• Properly and adequately reflect in CSDS II the spirit entailed in the Terms of Reference for preparing CSDS- II, namely; “The 2009/10- 2013/14 Cotton Sector Development Strategy: A Stakeholder Roadmap for Increased Production, Productivity and Profitability. Therefore, among other things, CSDS II has to reflect the following attributes;

- be a window of opportunity to comprehensively

revamp the cotton sector against the backdrop of emerging positive signals in support of the domestic cotton industry among key stakeholders;

- as the vision statement that articulates the development of the cotton sector in the medium term, it has to inspire and be the locus for the convergence of stakeholder interests; and

- be able to galvanise stakeholders to undertake far reaching initiatives to transform the cotton sector into a vibrant source of employment creation, sustainable income generation and, ultimately, a nucleus for poverty eradication and wealth creation for stakeholders, in a win- win situation.

• As a reference Document for practical application by stakeholders, with different

backgrounds, e.g. farmers, scientists, merchants, industrialists, politicians and civil service employees, CSDS II must be user- friendly and accessible.

1.2 Methodological Approach In order to carry out the revision of the Final CSDS II Report as prepared by Consultants, the Team first sought the Management of TCB with a view to firm- up the Terms of Reference for its work. On the basis of the agreed Terms of Reference, the Team then proceeded to gather more data and to review additional literature. Since the Consultants’ Final Draft had been widely discussed in workshops, the Team consulted very selectively with strategic stakeholders for consensus enhancement on the thrust of the Revised CSDS II Draft. 1.3 Recent Developments in the Cotton Sector Over the 2000 - 2008 period, operations of the cotton sector were guided by the 2000 - 2007 Cotton Sector Development Strategy I, the Mwanza Resolution of 2000, as well as the Tanzania Cotton Board’s Corporate Strategic Plan for 2007/08- 2009/10. While TCB’s Corporate Strategic Plan was an implementation tool of both CSDS I and Mwanza Resolution by the Cotton Board, in its capacity as promoter and regulator, CSDS I and Mwanza Resolution were truly, respectively, the first and second strategies to address the challenges of the cotton sector; developed by a broad- based forum of stakeholders; and arrived at by consensus. These initiatives were taken to correct progressively alarming declines in cotton performance; coming

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in the wake of a liberalized environment for crop procurement and marketing in the broader agricultural sector beginning in the early 1990s. A general performance assessment of the cotton sector during this period shows that clear improvements were recorded. In spite of the vagaries of the weather, cotton output rose upwards quite rapidly; productivity doubled; genuine attempts were made to bring stakeholders together to forge a common understanding on cotton; and a collaborative approach was established to develop the sector in a sustained way. Notwithstanding such remarkable turn- around, attained in less than a decade; and despite the growing stakeholder collaboration in these developments, the results could have been far greater if the challenges of the sector had been addressed more cohesively, systematically, meaningfully and consistently.

1.4 Tanzania’s Cotton Potential The Tanzania cotton sector has considerable potential which can be exploited for mutual benefit to stakeholders and the country at large, namely; • Unlike most other African countries which grow cotton, Tanzania is strategically

positioned in the proximity of major resource hungry countries and emerging markets of the Far East; along the busy international trade routes; having a diversity of land and climatic conditions; all suited for nurturing a vibrant, thriving cotton industry;

• It has large tracks of traditionally cotton farmlands in the Western Cotton Growing Area which, with proper crop husbandry and better farm management practices, could produce far higher cotton output levels. Turkey, with similar cotton acreage, i.e. 400,000- 450,000 ha, produces 450,000- 620,000 MT of cotton compared to only around 126,000 MT in Tanzania. Turkey can produce three and a half times more cotton than Tanzania (2.5m. bales vs. 700,000 bales) due to the application of better crop and farm management practices, as well as appropriate and effective cotton production technologies; the combined impact of which enables Turkey to have very high yields of more than 3,500 kg/ha of seed cotton, or 1,200 kg/ha of lint cotton, compared to the 760 kg/ha of seed cotton or 260 kg/ha of lint cotton in Tanzania. Through farm experiments, the Lake Zone Agricultural Research Institute, LZARDI, has proved that yields could rise to as much as 530- 750kg/ ha of lint cotton (slightly above 50 percent of the Turkish yields) by use of integrated soil fertility management (ISFM), integrated pest management (IPM) and by use of other better farm and crop management practices. Clearly, Tanzania has the potential to produce more cotton, generate higher incomes from existing farming areas alone;

• With similarly better farm management practices, cotton yields could rise to, at least, as much as 280- 480kg/ha as in Zimbabwe, Burkina Faso, Mali and Benin which have more or less the same cotton growing conditions;

• Whereas the combined African cotton production volume has fallen from nearly 9% of the world total in 2002/03 to less than 5% in recent years, Tanzania’s share has been rising. As a percentage of total world cotton production

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Tanzania’s output has risen from 0.2% in 2001/02 to 0.53 in 2008/09; and as a proportion of African total cotton production Tanzania’s output increased from 2.3% in 2001/02 to 10.6% in 2008/09; implying Tanzania has the potential to exert more pronounced influence on the African cotton industrial scene;

• In Kigoma Region and especially the Eastern Cotton Growing Area the virtually virgin, fertile soils obtaining there have the potential to produce higher yields, of better quality cotton- with longer staple length, stronger fibre strength, high uniformity, etc., capable of effectively competing in the niche markets for high grade cotton ;

• Like South Africa, Tanzania is endowed with large, permanent water bodies (rivers, lakes) which could leverage an ambitious cotton irrigation programme, with yields rising to more than 950 kg/ha and production volumes exceeding 400,000 MT of lint, equivalent to 2.2m bales;

• Its stakeholders are imbued with a wealth of experience attained over a century of attending to cotton;

• The farmers, the primary producers, are a dedicated group of stakeholders whose passion for growing cotton cannot be doubted. This is supported by the total acreage put to cotton cultivation every year which, over the eight year, 2001/02- 2008/09, period, was consistently kept at around 450,000 ha annually, despite the intermittent fluctuations in international cotton prices; as well as adverse weather conditions experienced now and then during the period;

• The domestic demand for cotton is expected to rise rapidly within the next few years following the implementation of the Tanzania Gatsby Trust/Gatsby Charitable Foundation’s supported Cotton and Textiles Programme, with investments estimated at US $ 1.2 b. Being the vital raw material for underpinning Tanzania’s forward- and- backward agro-processing industrialization strategy, cotton will play a central role in job creation, and income generation throughout the value chain as follows, between 2008 and 20152; - The value of cotton lint production is projected to increase from US$

115million to US$ 204million; - The value of textiles and clothing production is estimated to increase from US$

691million to US$ 3.5billion; - Employment in textiles and clothing factories (including SMEs) is projected to

create 116,000 new additional jobs, rising from 103,000 to 219,000; - Generally, the textiles industry has massive employment opportunities,

especially for women.

The fact that the Cotton and Textiles Programme is leveraged by the Gatsby Charitable Foundation, with the full personal backing of an internationally reputed investor, Lord David Sainsbury, adds further credibility to the Textiles Manufacturing Programme;

2 Tanzania Gatsby Trust: The Cotton and Textiles Sector in Tanzania: Issues and Opportunities ; Report to the Government of Tanzania supported by the Tanzania Gatsby Trust and Gatsby Charitable Foundation; Dar es Salaam; September, 2007.

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• The demand for Tanzania cotton and its by products will be further enhanced and made more transparent with current initiatives to expand and formalise the Eastern and Southern African market;

• The projected expansion of the demand for cotton domestically and in the region will have the following positive impacts to farmers and cotton processors; - guarantee markets; - reduce fluctuations in cotton prices; - stabilise incomes for stakeholders.

• A perpetual optimism for cotton farmers and other stakeholders in the cotton industry is the enduring demand for cotton. Like food and other necessities of life, as long as the human race continues to procreate; and as long as human beings continue to have different tastes in their preferences for what to wear, the demand for clothes made from natural fibres is ever- lasting, and king cotton will continue to prevail; whatever technological innovations can be made in synthetic fibres.

It is against the backdrop of these beckoning prospects that the cotton stakeholders have prepared this Second Cotton Sector Development Strategy, CSDS II, as their roadmap for increased cotton production, productivity and profitability, more efficiently. The stakeholders believe that CSDS II is a window of opportunity to carry out major actions to revamp the cotton sector. As the vision statement that comprehensively articulates the development of the sector in the medium term, CSDS II is the beacon and centerpiece for galvanizing their collective effort to undertake far reaching initiatives to transform the cotton sector into a vibrant source of employment creation and sustainable income generation for stakeholders, in a win- win situation.

The central objective being to make the cotton sector a hub for wealth creation and improved people’s lives. 1.5 Layout of the Report CSDS II has seven Sections including this Background. The Second Section, the Situation Analysis, describes the context of cotton in the socio- economic setting of Tanzania. It assesses the performance of the sector over the 1999/00- 2008/09 period. The Third Section is a review of the First Cotton Sector Development Strategy, CSDS I, 2000- 2007, and Mwanza Resolution. The Section examines the objectives, goals and targets of CSDS I and Mwanza Resolution; and assesses their achievements and shortcomings. The Fourth Section, Policy, Strategy and Programme Context, situates CSDS II within the framework of prevailing major relevant policies and strategies which guide the formulation and implementation of socio- economic projects and programmes.

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The Fifth Section, Challenges of the Cotton Sector, outlines the major challenges of the cotton sector and presents a unified approach in addressing them.

The Sixth Section presents in detail the Second Cotton Sector Development Strategy, CSDS II, 2009- 2015. It describes the Vision, Mission, Objectives, Targets and Strategies of CSDS II. The Seventh Section explores strategic options, risks minimisation and opportunities maximisation in the cotton sector.

2. SITUATION ANALYSIS OF THE COTTON SECTOR IN TANZA NIA3

2.1 Social - economic Context of Cotton Cotton has been grown in Tanzania for more than 120 years, having been introduced by German colonialists in the late 19th century. It is one of the major traditional crops; others are coffee, tea, tobacco, cashew nuts, and sisal. Its contribution to agricultural growth and earnings is noteworthy. Cotton is a source of employment and livelihood to about 40% of the population, i.e. about 16 million people. Over the years it has been a basis for considerable national fixed capital formation.

In 2008 cotton generated US$ II5m in foreign exchange earnings; compared with US$108.1m (tobacco), US$ 97.5m (coffee), US$ 40.8m (tea) and US$ 40.2m (cashew nuts)4. Overall, cotton can be a hub for forward and backward linkages in agro- processing industrialization; further employment creation and value addition; and, generally in creating a sustainable manufacturing industrial base.

2.2 Cotton Production and Productivity Cotton is grown in 42 districts of 13 regions, respectively out of 127 districts and 21 regions of Mainland Tanzania. More than 99 percent of the crop is produced in WCGA, South of Lake Victoria, covering Shinyanga Mwanza, Mara, Tabora, Kigoma, Kagera and Singida regions. The remaining 1 percent of the crop is grown in ECGA. ECGA comprises of Iringa, Kilimanjaro, Morogoro, Tanga, Manyara and Coast regions. Though this area currently produces less than 5 percent of the entire crop, it has greater potential for increased cotton production than WCGA which, due to continued cultivation, coupled with inadequate use of fertilizers, has generally become exhausted to support a more productive crop.

3 The Contact Group: Challenges of the Cotton Sector in Tanzania: Stra tegic Agenda for Action; Mwanza, January 2007; and Tanzania Cotton Board: Corporate Strategic Plan (2007/08- 2009/10) ; Dar es Salaam, July 2007. 4 URT: 2008 Economic Survey; Dar es Salaam; June 2009.

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Table 2.1 below shows the regional cotton production trends over the 1999/00 - 2008/09 period.

Table 2.1: Regional Cotton Production Trends: 1999/ 00- 2008/09 (Tons)

Source: Tanzania Cotton Board Table 2.1 shows that over the ten year, 1999/00- 2008/09, period, WCGA generated 99% of total cotton output per year, on average; and only 1% was produced in ECGA.

Current domestic cotton production averages 700,000 bales per annum, equivalent to 126,000 MT of cotton lint; with yields at around 760kg/ha of seed cotton, or 260 kg/ha of lint cotton. Cotton is grown under the following farm management practices; • It is sown between November and February; harvested between May and July; and

sold between September and November; • 100% of cotton is rain fed; • 95% of the farm sizes range between 0.5 – 50ha; 5% between 50 – 100ha;

Zones Regions

Season

1999/00 2000/01 2001/02 2002/03 2003/04 2004/05 2005/06 2006/07 2007/08 2008/09

Shinyanga 50,733 69913 80,030 119,107 88,352 204,626 233,721 82,740 128,285 220,808

Western Mwanza 35,794 41376 46,685 43,681 31,296 90,974 90,868 29,087 41,814 74,744

Mara 6,136 4286 13,091 11,361 11,296 24,128 28,281 4,734 13,081 53,282

Kagera 3,390 2087 3,117 1,613 3,476 7,091 4,639 1,992 4,257 2,559

Tabora 3,567 5725 4,613 11,409 4,332 10,560 14,197 9,997 11,698 13,451

Kigoma 55 4 18 28 62 542 484 208 238 412

Singida 386 27 21 8 39 481 697 507 581 1,641 Total Western 99,961 123,291 147,575 187,147 138,904 338,402 372,885 129,265 199,954 366,897

Percentage 94 99.8 99.6 99.6 99.3 98.1 99. 5 99 99. 9 99.5

Eastern Manyara 248 6 130 120 224 829 781 404 540 898

Morogoro 334 35 242 347 523 1,948 875 845 98 299

Mbeya 5062 0 0 0 0 0

Kilimanjaro 15 4 21 20 29 26 6 11 23 84

Pwani 48 8 9 86 83 190 45 19 48 83

Tanga 93 89 15 61 49 140 58 42 307

Iringa 92 29 150 102 17 54 7 1 23 Total Eastern 5,892 171 567 736 929 3,187 1,772 1,325 710 1,694

Percentage 6 0.2 0.4 0.4 0.7 1.9 0.5 1 0.1 0.5 Grand Total 105,853 123,589 148,142 187,883 139,829 341,789 374,657 130,585 200,664 368,697

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• Around 60% of farm preparation is done using the hand-hoe; and 35% is done using animal traction. Only 5% of land preparation is by motor traction;

• 70% of all cotton is grown without applying any fertilizers. 30% is grown using organic or animal manure;

• Weeding is almost entirely done by hand hoe; • Major diseases which are common include fusarium wilt and bacteria blight.

Insecticides include both water and oil based. Due to price differentials and environmental hazards, the use of oil based insecticides is being discouraged in favour of water- based ones;

• 70% of the total area under cotton receives at least 2 sprays per growing season; while the remaining 30% is not sprayed at all. Early season insects include jassids and aphids . There are several late season pests like pink boll worms and cotton stainers ;

• 100% of cotton is harvested by hand- picking. Based on the above farm management practices, using 2007/08 data, the cost of producing 1 hectare of rain fed cotton in Tanzania was around US$ 174 in WCGA and US$ 261 in ECGA. This compares with US$ 256 in South Africa; US$ 397 in India; US$ 424 in Benin; and US$ 1,144 in the USA. The cotton production costs were higher in the other countries because farmers in those countries apply more inputs than their Tanzania counterparts. See Table 2.2 below. Table 2.2: Comparative Costs of Producing One Hect are of Rain fed Cotton:

2007/08: (US$)

Benin India (Central)

South Africa NW (Stella)

USA (MS Portal)

Tanzania ECGA WCGA

Pre-sowing • Land rent

93.75

193.70

30.00

30.00

Land revenue/ tax 2.20

Ploughing 38.78 12.00 40.00 12.00

Other 6.0 0 8.00

Sub total 44.78 107.95 193.70 78.00 42.00

Sowing Land preparation

10.77

21.88

Seed 61.37 32.43 210.83 2.4 2.4

Fertiliser 13.20 56.25 0 7.6

Herbicides 1.60 0 0

Other 11.30 19.38 12.00 12.0

Sub total 36.89 158.87 32.43 210.83 14.40 22.00

Growing Thinning

8.00

0

8.00

6.00

Weeding and hoeing 49.81 66.38 8.57 60.00 36.00

Herbicides 10.43 0 26.14 0

Fertilisers 100.00 0 0 160.91 0

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Insecticides 59.07 15.63 13.43 268.67 24.00 16.20

Other 0 0 310.070 0

Sub total 255.50 80.00 48.14 739.64 92.00 16.20

Harvesting Hand picking

52.80

50.00

0

78.80

32.00

Machine picking 0 0 68.57 0

Stick cutting/ slashing 10.77 0 0 20.00

Other 23.50 0 0

Sub total 87.07 50.00 68.57 78.80 52.00

Grand Total 424.24 396.82 149.14 1,144.17 261.20 174.20 Source: Survey of the Cost of Production of Raw Cot ton; International

Cotton Advisory Committee, Washington DC, USA, November 2008

On the other hand, the following Table 2.3 shows comparative data on cotton production between irrigated and rain fed methods.

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Table 2.3: Comparative Statistics on the Producti on of One Hectare of Irrigated

vs. Rain fed Cotton: 2007/08

Argentina S.Africa USA Australia Israel China Mozam-

bique Cote d ‘Ivoire

Zambia Tanzania

Santiago (I)

(R) Loskop (I)

NW Settlers

(R)

Fruitful Rim (I)

MS Portal (R)

(I) (I) (I) (I) (R) (R) (R)

Cost of production of

seed cotton (US$)2

421.16

328.55

1,004.00

149.14

1,330.41

1,144.17

1,146.60

3,015.00

1,766.37

107.67

359.03

392.59

261.20

Yield (kg/ha)

444

733

893

1,921

1,667

1,270

170

485

229

256

Net value of lint (US $)

979.40

456.05

1,902.86

380.57

1,467.43

1,127.25

2,993.45

3,939.35

2,187.50

236.20

705.60

954.99

684.00

Sources:

1. Survey of the Cost of Production: International Cotton Advisory Committee; Washington, DC; November, 2008.

2. Cotton World Statistics; International Cotton Advisory Committee; Washington, DC; September, 2009.

NOTES: 1. The interpretation has considered other factors. The irrigation element, however, is the major factor, as indicated by improved yields

and higher net returns, even in the same country. 2. Excludes ginning, economic costs and fixed costs. 3. National averages.

(I): Irrigated (R): Rain fed

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Among other things Table 2.3 shows that;

• Although the costs of cotton production from an irrigated hectare are higher than on a rain fed hectare, the net returns on the irrigated hectare more than compensate for the higher production costs;

• Even in the same countries, such as South Africa and USA, the contrasts are very striking. In South Africa, farmers in Loskop who use irrigation, earned US$ 1,903/ha, or five times the US$ 381/ha derived in the rain fed hectares in NW Stella. In the USA, cotton farmers in the Fruitful Rim of irrigated cotton earned nearly 30% above those in MS Portal who solely depend on rain;

• The costs of cotton production on an irrigated hectare in Israel, at US$ 3,015, were the highest; but then, the net returns on such a hectare were also the highest, at US$ 3,939.4;

• The four African countries- Mozambique, Cote d’Ivoire, Zambia and Tanzania, depend entirely on rain for cotton production. They also spend little on inputs provisions. As a result, their yields are lowest; and their net returns are similarly very low. The net return on an irrigated cotton hectare in Israel (US$ 3,939.4) was more than 5 times that of a rain fed cotton hectare in Tanzania (US$ 684.0)5;

• The clear message coming out of Table 2.3 is that it pays to invest in irrigated farming because, at the end of the day, the returns justify such investments.

During the 2004/05 crop season, in practical studies carried out by Researchers, both at Ukiriguru’s Lake Zone Agricultural Research Development Institute and on selective experimental farms (e.g. at Bukangilija Village in Maswa District), by use of integrated soil fertility management (ISFM), integrated pest management (IPM), application of appropriate pesticides and sprayers, and by use of other better farm and crop management practices, yields rose to between 530 - 750 kg/ha of lint cotton.

Table 2.4 shows the cotton production and yield trends between 2001/02 and 2008/09.

5 Such country comparisons should, however, be treated with great caution given differences in growing conditions, climatic variations, etc.

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Table 2.4: Cotton Production and Yield Trends: 2001 /02- 2008/09

Period Acreage (‘000 Hectares)

Yield Kg/ Ha

Production (‘000 MT)

2001/02 392 161 63 2002/03 291 172 50 2003/04 459 257 117 2004/05 471 212 100 2005/06 450 214 96 2006/07 459 215 99 2007/08 410 163 67 2008/09 485 256 124

Source: Tanzania Cotton Board; Cotton World Statistics in: Bulletin of the

International Cotton Advisory Committee; September, 2009.

Table 2.4 above shows that except for 2002/03 when the total cotton acreage dropped below 300,000 hectares, the total annual acreage devoted to cotton production has consistently remained at around 450,000 ha. The drop in cotton production in 2003/03 and 2005/06 through 2007/08 was mainly due to droughts. The upsurge in world commodity prices in 2007/08, as reflected by the Cot look A Index, which rose sharply from US$ 59.15c in 2006/07 to US$ 73c in 2007/08, led to corresponding increases in domestic seed cotton prices. These events largely influenced both acreage expansion and improved yields in the expectation of better producer prices in 2008/096. 2.3 Export of Textiles and Apparel Tanzania leads the East African countries in the export of textiles and apparel to the European Union, with annual average exports worth €14m. over the nine year period, 2000- 08. However, the leading Eastern and Southern African country exporters of textiles and apparel to the EU market are respectively Mauritius, Madagascar and South Africa, with such exports worth respectively €456m., 229m., and 170m. in 2008. See Table 2.5.

6 Daniel Fujiwara and Raphael N. Mlolwa in Study on Cotton Prices in Tanzania (mimeo), 2007; found out that lagged producer prices and world prices are significantly correlated with producer prices in the following cotton marketing season.

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Table 2.5: Export of Textiles and Apparel from Sel ected Eastern and Southern African Countries to the European Market: 2000- 200 8 (in €)

2000 2001 2002 2003 2004 2005 2006 2007 2008

Tanzania 15 837 824 20 389 977 14 372 195 12 575 150 15 393 091 11 828 534 13 042 028 10 865 295 11 922 604

Kenya 9 285 750 7 033 065 7 437 963 8 406 853 11 089 943 9 769 837 9 847 260 8 162 027 7 082 525

Uganda 8 011 989 8 493 329 8 582 846 8 177 153 4 830 176 5 842 470 3 001 856 3 911 585 3 757 077

Ethiopia 5 200 958 3 037 972 5 423 301 5 813 279 6 954 736 8 134 735 7 951 894 9 103 254 8 107 986

Rwanda 10 732 28 994 340 148 273 139 8 100 8 877 24 390 27 414 439

Burundi 49 425 124 107 11 904 697 967 285 161 92 299 184 315 21 620 249 642

Madagascar 277 278 368 281 806 628 152 968 175 137 597 379 170 569 780 191 403 597 240 054 529 257 286 645 229 166 979

Mauritius 690 648 656 682 526 812 629 745 913 561 770 994 524 339 651 450 945 847 498 273 646 491 622 042 435 989 949

Botswana 18 252 364 19 801 175 8 048 507 5 573 359 10 205 463 4 802 997 5 457 380 7 836 698 7 102 771

Lesotho 1 802 746 3 768 621 2 024 867 1 324 028 1 441 466 652 387 857 391 1 698 213 1 855 043

Namibia 319 701 532 761 924 203 622 361 888 632 705 968 578 969 707 852 780 214

Swaziland 10 196 567 9 362 008 7 590 789 7 567 825 4 679 003 1 910 736 2 509 641 2 529 466 1 443 258

South Africa 283 076 688 280 109 456 292 144 293 307 496 150 295 747 990 248 183 148 227 454 727 212 911 190 170 074 402

Source: Prepared by Tanzania Cotton Board’s Textile Sector Development Unit (TSDU)],

European Union EUROSTAT: http://epp.eurostat.ec.europa.eu

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With respect to textiles and apparels exports to the USA market, according to the following Table 2.6, Tanzania has so far not fully exploited the AGOA market; unlike Kenya which, because of its deliberatively developed textiles exports strategy, has been able to capture a strategic niche in the USA market. Kenya is the third largest Eastern and Southern African country exporter of textiles and apparel to the USA market after Lesotho and Madagascar which, in 2008 exported such textile goods worth respectively USA$ 340m. and 279m; while Kenya’s exports were valued at USA$ 247m. Tanzania’s textiles and apparel exports to the USA market amounted to a paltry USA$ 2m. Clearly, Tanzania has not utilized its comparative advantage of producing more raw cotton to process more textile exports to the USA AGOA market. On the contrary, Kenya, because of its proximity to readily available lint imports, including from Tanzania, has used an aggressive cotton textile production strategy for exports to AGOA.

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Table 2.6: Textiles and Apparel Exports to the Unit ed States From Selected African Countries: 2000- 20 08 (in US$)

2000 2001 2002 2003 2004 2005 2006 2007 2008

Tanzania 23 9612 432 392 328 163 1 927 159 3 352 998 4 099 620 3 717 745 3 281 447 1 872 475

Kenya 44 016 850 64 717 064 125 998 610 188 011 797 277 287 261 270 861 323 263 822 651 249 143 889 246 918 266

Uganda 3 663 13 481 1 025 1 630 653 4 008 691 4 843 622 1 257 577 1 205 448 412 262

Ethiopia 28 373 730 987 1 324 154 1 764 123 3 380 143 3 613 980 6 000 500 4 902 643 9 597 546

Rwanda 22 806 0 2 437 3 066 892 1 400 640 5 364 24 360

Burundi 8 462 360 7 893 851 0 0 548 0 0

Madagascar 109 655 747 178 059 323 89 363 433 196 144 990 323 204 361 277 182 403 238 489 195 289 813 729 279 417 256

Mauritius 244 934 658 238 307 019 254 674 553 269 152 148 227 568 221 166 912 531 118 943 682 114 679 893 101 561 935

Botswana 8 372 482 2 463 434 6 352 586 7 160 058 20 234 911 30 046 649 28 676 816 31 666 199 15 964 030

Lesotho 140 220 881 214 822 049 320 690 388 392 743 700 455 834 594 390 818 053 387 225 876 383 578 181 339 736 117

Namibia 187 292 115 305 6 695 692 41 965 759 78 855 017 53 223 668 33 240 490 28 624 052 70 103

Swaziland 31 897 695 47 969 438 89 081 098 140 667 499 178 683 871 160 975 953 135 254 207 135 282 883 124 882 680

South Africa 175 621 562 209 750 558 212 821 950 268 111 319 180 140 417 102 247 732 87 123 013 58 175 555 46 657 512

Source: US Government’s Office of textiles & Apparel (OTEXA) http://otexa.ita.doc.gov/; and the US International Trade Administration Commission (USITC) www.usitc.gov

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The message coming from Tables 2.5 and 2.6 is that those countries which have embarked on a deliberate domestic textiles manufacturing industry strategy, e.g. Mauritius, Madagascar, Lesotho and Kenya have succeeded to use to greater advantage the market access programme opportunities offered by the European Union- Everything But Arms (EBA); and the USA’ s AGOA- African Growth Opportunities Access. It should also be noted that these countries produce insignificant volumes of cotton. Their textile mills largely depend on imported fabrics and yarn. There is, therefore, greater opportunity for Tanzania to establish a more robust and sustaining textile industry by using the locally available abundant cotton, as well as imported fabrics, where appropriate. Such prospects are, however, tampered by the footloose, transient character of textile manufacturing industries, particularly in Africa; and the temporary and unpredictability nature of the trading opportunities entailed in both AGOA and EBA.7 These challenges will be borne in mind in establishing a more sustainable textile industry in Tanzania. 2.4 Characteristics of Tanzania Cotton The cultivated cotton is of the American Upland type (Gossypium hirsutum L). Tanzania cotton is sold on the basis of Grade, together with the corresponding staple length known as Type. Accordingly, there are seven (7) grades of cotton out of which five (5) are physical and two (2) are descriptive. The basic selling grade is Gany, as adopted by the International Cotton Association (ICA). The cotton grades are indicated in Table 2.7 below. Table 2.7: Tanzania Cotton Grades

Tanzania Grade Universal grades % of total crop Remarks Tang Good middling 1.4 Physical Gany Strict middling 41.63 Physical Gany Middling 39.73 Physical Gany Strict low middling 13.81 Descriptive Gany Low middling 1.80 Physical Gany Strict Good Ordinary 0.40 Descriptive Yika Good ordinary 0.32 Physical Under grade (UG) Below grade (BG) 0.91 No grade

7 Melber, Henning; Global Trade Regimes and Multi- Polarity: The US and Chinese Scramble for African Resources and Markets; in: A New Scramble for AFRICA? Imperialism, Investment and Development; University of KwaZulu- Natal Press; Interpak Books, Pietermaritzburg; 2009; as well as Lee, Margaret C; Trade Relations between the European Union and Sub- Saharan Africa under the Cotonou Agreement: Repartitioning and Economically Recolonising the Continent? Ibid.

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There are three types of cotton as shown in Table2.8 below. Table 2.8: Tanzania Cotton Types

Type Millimetre Code % of the total Type 1 – staple length 11/18” 28.2 - 28.7 36 36.17 Type 2 – staple length 13/32” 27.4 - 27.9 35 50.56 Type 3 – staple length 11/16” 26.7 - 27.2 34 13.27

The type is independent from colour grade; for example, type 1 Tang, Type 1 Gany, Type 1 Gany -1/4 and Type 3 Tang; etc. Generally, therefore, Tanzania’s cotton is characterized as follows; • Staple length ranges between 11/16” and 11/8”; • Over 82% of the grade is middling and above; • More than 50% is roller ginned with low nep and short fibre content; • Over 95% is within the prime micronaire range of 3.5 – 4.9; • High uniformity ratio of 81 – 85% which is ideal for high speed spinning technology;

and • Fibre strength ranges between 25 and 29 gms/tex which is also ideal for high speed

spinning technology. 2.5 Organic Cotton Production Organic cotton farming is practiced in certain areas of WCGA especially in Meatu District. In this type of project- like cotton cultivation (BioRe Tanzania Ltd), extension services are more frequent; better crop and farm management practices are applied; and yields are correspondingly higher. Being a unique niche market product, organic cotton fetches, on average, sh. 200/kg higher than traditional strains in the market for seed cotton. A recurring challenge in organic cotton farming, however, is that it has few players; it tends to be monopolistic; and, is essentially a buyers market. 2.6 Stakeholder Analysis The cotton sector comprises of various stakeholders as analysed below. 2.6.1 The Cotton Farmers Cotton is grown by 350,000 – 500,000 mostly small – scale farmers located in 42 districts of 13 regions. The number of farmers varies depending on weather conditions and cotton market price trends. Droughts and downward shifts in cotton prices in the international market place compel some of the farmers to switch to alternative crops. The two events may not occur simultaneously but, depending on the severity of either, the impact is the same; adversely affecting production volumes of both seed and lint cotton. 2.6.2 Tanzania Cotton Board The Tanzania Cotton Board was established on July 1, 2004 following the coming into effect of the Cotton Industry Act No. 2 of 2001 to replace the Tanzania Cotton Lint and

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22

Seed Board as set out by Act No. 19 of 1984 and as amended in 1993. TCB major roles are regulation, promotion, monitoring, advisory, facilitation, coordination, development and representation in the cotton sector.

2.6.3 Cotton Research Institutes Currently, there are two institutes which directly deal with cotton research - the Lake Zone Agricultural Research Development Institute (LZARDI); and the Ilonga Agricultural Research Institute (IARI). Both are government owned. LZARDI is in WCGA; while IARI is in ECGA. These institutes are constrained by limited funding for research and training; poor research infrastructure and other facilities; a staff ageing problem which is accentuated by difficulties in recruitment and retention of Researchers due to poor remuneration and inadequate other incentive packages. 2.6.4 Tanzania Cotton Association While TCA was formed in 1997 as an apex association of cotton stakeholders to articulate and promote the interest of the sector in a unified approach, in practice it has remained largely an association of ginners, traders, exporters; and Tanzania Cotton Growers Association – TACOGA. Currently TCA has 50 members, of which [35] are ginners; [1] exporter; [4] cooperative unions; [1] growers association; and [2] farmers. Some of the ginners, also double as oil millers because they run oil mills; e.g. Birchand Oil Mill, Kahama Oil Mill, S & C Ginning etc Notwithstanding the aforesaid, TCA has played a crucial role in promoting self regulation amongst its members; as well as in spearheading increased cotton output volumes and yields through timely availing farmers with inputs and tractor hire services. In WCGA there are a total of 62 ginneries equipped with 1,193 roller gins, and 85 saw gins. 21 of the ginneries are owned and operated by cooperatives. The remaining 41 are owned by private companies. All ginneries belonging to cooperatives are old – installed before 1970. The oldest are Ukerewe (1923) and Nassa (1924); and the newest are Chato and Ngasamo (1966) and Kahama (1967). Most of the private ginneries, with the exception of Manonga (1958), were constructed after 1995; and 17 of them were constructed after 2000. In ECGA there are 8 ginneries; 7 out of which are old and 1 is new. 55% of the cotton is saw- ginned; while roller- ginned cotton accounts for 45%. Average GOT is 33.8. 2.6.5 Cooperatives Currently, there are four cooperative unions, all of them are administrative – area based. The cooperatives have faced problems which make them unable to compete effectively in the liberalized procurement, processing and marketing of cotton. Their market share which was 100% before liberalization in the early 1990s has progressively

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dwindled to less than 5%. In the 2008/09 buying season, cooperatives accounted for 3.0% of the market share for seed cotton. 2.6.6 Cotton Oil Millers With the exception of a few firms, most ginners have oil mills as important integral components of their cotton business operations. Currently 32 ginners have installed oil mills at their business premises, capable of processing 16,121MT of cotton oil; representing only 14% of installed capacity which stands at 115,150MT p.a. These oil mills also produce around 52,000MT, in total, of cotton cake annually Cotton seed is the main and most valuable by- product of seed cotton. It constitutes, on average 64-66% of seed cotton; but contributes 2.7% of the national edible oil production, although it has the potential to meet upwards of 60% of the total domestic edible oil demand. Nationally, the demand for edible oil is presently estimated at around 170,000MT. The UNFAO recommends a minimum oil per capita consumption of 5kg. With a population of around 40 million people, national demand for edible oil is around 200,000MT pa; compared to an estimated national production of around 60,000MT. This leaves a gap of about 70% which is filled through imported semi-refined and refined palm oil. 2.6.7 Cotton Spinners, Weavers and Textile Millers Comprise of 21 mills- both old and new. All are privately owned; annually producing 110m sq.m of exclusively fabrics- khanga and vitenge; dyed drill; linen and bed sheets. They utilize only about 20% of domestic lint, preferring to import the rest due to unfavourable prices and unacceptable quality levels of local fibres. They operate at 40 -50% of installed capacity; and employ around 18,000 workers. Industrial cohesion lacks among domestic textile manufacturers. Members tend to fight against each other; instead of uniting to maximize on the prevailing dispensation on textiles industrialization to effectively interface with the Government on (a) hammering out a comprehensive, conducive textiles and apparel policy; (b) determining the fate of second-hand clothes imports which discourage the establishment of large scale garment factories. Except for khanga and vitenge, there is no effective demand for domestically manufactured textile garments such as women dress wear, shirts and trousers for men, because the market is virtually saturated by secondhand imports8. 2.6.8 The Government The cotton sub- sector is under the Ministry of Agriculture Food Security and Cooperatives. This is the parent body that has the ultimate responsibility of ensuring the cotton sub- sector is a success and contributes well to GDP. The Government provides subsidies for procuring cotton inputs and for funding the promotional and regulatory functions of TCB. Together with the Farmers and Private Cotton Processors, it co- finances the operations of the Cotton Development Trust Fund. 8 The perversity of secondhand clothes imports is such that some rural women can be seen wearing night dresses during the day!

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There are many other ministries whose work contributes to the cotton sub sector through cross- cutting issues. Cross – cutting issues are crucial as they link the cotton sub sector with other sectors and other parts of the economy, and they link the cotton sub- sector with other essential aspects of farmers’ daily lives. These include the Vice President’s Office, the Prime Ministers’ Office, Ministry of Finance, Ministry of Infrastructure Development, the Ministry of Lands and Human Settlements, the President’s Office- Planning Commission, the Ministry of Industries, Trade and Marketing and the Ministry of Internal Affairs. The list also includes Local Government Authorities (LGAs) which play a key role in the implementation stage at the district level. 2.6.9 Government Institutions A number of parastatals in the agricultural sector, which play a critical public role in various sectors, including the cotton sub sector, include the Tanzania Official Seed Certification Institute (TOSCI), Tropical Pesticides Research Institute (TPRI) and others like the National Environment Management Council (NEMC) and Tanzania Bureau of Standards (TBS) 2.6.10 Development Partners The development partners include multilateral and bilateral organizations and agencies that support Government and community in the agricultural sector, in general, and cotton sub- sector, in particular, through grants and soft loans. Development partners also provide technical support in the implementation of agreed programmes. Most financial and technical assistance is now provided through basket funding, a framework for coordinating and managing external resources and for forging closer partnership between the Government and Development Partners. Currently, however, unlike in years past, the sub- sector’s ability to access international support is highly limited, despite cotton’s potential socio- economic multiplier impacts in programmes to eradicate poverty and enhance economic growth and development. 3 REVIEW OF THE FIRST COTTON SECTOR DEVELOPMENT STRATEGY,

CSDS I: 2000- 2008; AND MWANZA RESOLUTION 9

3.1 Strategic Objectives, Targets and Outputs The First Cotton Development Strategy, CSDS I, had the following quantitative and qualitative strategic objectives; • Increase farmers seed cotton income from sh. 50,000- 120,000 per hectare to

sh. 120,000- 250,000; • Increase cotton productivity: in WCGA from 400- 700 kg/ha to 700- 1,200 kg/ha;

and in ECGA from 700- 1,000 kg/ha to 1,000- 2,000 kg/ha of seed cotton;

9 Tanzania Cotton Board: Corporate Strategic Plan for 2007/08- 2009/10

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• Enhance ginning capacity to around 400,000 MT of seed cotton within six months;

• Improve lint quality so that at least 60% of lint samples is classed as Gany or Gany Plus; and

• Establish an effective institutional framework for the cotton sector. In order to successfully implement CSDS I, the subsequent Mwanza Resolution identified the following key challenges to be addressed; • Decline in production, productivity and quality of cotton; • Poor supervision and monitoring at various levels of government throughout the

cotton production, procurement, processing and marketing chain; and • Minimal mobilization and inadequate investment in the cotton sub- sector.

Successful implementation of the objectives above was expected to lead to the following outputs; • Appropriate and effective cotton production technologies; • Effective and efficient cotton extension services; • Timely availability of certified cotton seeds at village level; • Timely availability of good quality agrochemicals and farm implements at village

level; • Effective and efficient marketing of seed cotton; • Effective and efficient marketing of lint cotton; • A fair, effective and transparent tax, levy and licensing system; • Increased cotton output through expansion of medium and large scale cotton

farming; and • Establishment of a forum for fostering common interest and understanding

between stakeholders of the cotton industry.

3.2 Performance Evaluation Based on the above stated strategic objectives and expected outputs, significant milestones were achieved during the 2000- 2007 period; • Cotton production registered around 20% increases in output volumes annually

from a rock- bottom level of 196,000 bales (35,480 MT) in 1999/00 to more than 685,000 bales (124,000 MT) in 2008/09; making cotton the most robust agricultural sub- sector during the period;

• Through a Cotton Development Fund (CDF), an inputs procurement and distribution scheme was introduced and implemented. This scheme guaranteed relatively more timely availability of inputs during the crucial farming season; and was largely the critical factor in the resulting increases in cotton production volumes. Later, CDF was transformed into a Cotton Development Trust Fund (CDTF), jointly- financed by the three key stakeholders; namely, Farmers, Private Sector and Government;

• The period witnessed rapid expansion in ginning capacity, largely through new investments, especially in WCGA- Kahama, Bukombe, Geita, Maswa, Malampaka and Bunda;

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26

• The entry of new additional ginners and traders enhanced competition in cotton procurement and marketing; leading to relatively better farm gate prices;

• Based on type, more than 80% of cotton lint became classified as Gany and above;

• A stakeholder’s forum was created to articulate the interests of the cotton sector more coherently and more sustainably;

• Funding of R&D became more institutionalized and predictable, especially through CDF/CDTF, albeit in insufficient amounts.

Some of the strategic objectives and targets were not successfully implemented; more so the following; • Yields have risen only slightly to around 750kg/ha of seed cotton (256kg/ha of

lint cotton), far lower than the upper target of 1,200kg/ha; • More appropriate and effective cotton production technologies have still to be

developed, disseminated and applied widely; • There is an acute shortage of Extension Officers as provided by Local

Governments. This constrains effective and efficient delivery of extension services at farm and village level;

• As yet, there has been no large scale investments in cotton farming; • Although notable progress has been made in correcting shortcomings in cotton

licensing, the tax and levy system needs further improvements; • Government supervision and monitoring throughout the cotton value chain is still

weak. Overall, successful implementation of CSDS I and Mwanza Resolution was constrained by several factors. First, they were not supported by implementation plans, with detailed projects and programmes, and the required financial resource outlays to back their implementation. Second, both faced a number of challenges, internal and external ones, which had not been clearly articulated and synchronised during the formulation of CSDS I. Third, the treatment of the challenges in the “Problem Trees”, tended to compartmentalize and isolate stakeholders, instead of conjoining them as they seek common solutions to problems of the cotton sector. Similarly, the implementation of TCB’s Corporate Strategic Plan did not make significant inroads in achieving the goals and objectives of CSDS I. This is because, the regulatory, developmental and promotional functions of TCB, which would have assisted in mobilizing stakeholders towards CSDS I successful implementation, were highly restricted by budgetary constrains as the expected Government subventions to TCB were often disbursed unevenly, untimely; and in inadequate amounts. Nonetheless, both CSDS I and Mwanza Resolution provide useful lessons for making further improvements to the cotton sector. In particular, the successes achieved and the challenges encountered during their implementation provide strong foundations in the preparation of a better informed and more comprehensive CSDS II.

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4 POLICY, STRATEGY AND PROGRAMME CONTEXT 10 CSDS II has taken account of policy, strategy and programme components of ongoing programmes for macroeconomic and structural reforms being implemented by the Government.

4.1 Tanzania Development Vision (Vision 2025) The Tanzania Development Vision articulates the intended future condition to be attained by Tanzania through mobilizing people and other resources towards achieving that condition by the year 2025. Vision 2025 has five attributes; • High quality livelihood; • Peace stability and unity; • Good governance; • A well educated and learning society; and • A competitive economy capable of producing sustainable growth and shared

benefits.

Some key areas which CSDS II can contribute positively through integrating its activities with Vision 2025 include the following; • Improving the level of production and productivity in the country; • Promoting wealth creation in the cotton sector in a win – win situation, for the

benefit of all stakeholders; and • Spearheading increased cotton processing to enhance domestic value addition

and manufacturing industrialization.

4.2 The Agricultural and Livestock Policy of 1997 Among other things, this policy; • Proposes liberalization of agricultural markets and removal of state monopolies in

the export and import of agricultural goods and produce; • Clearly defines the role of Government and the private sector in the production

and provision of support services; and • Channels government responsibility for industry regulation through commodity

boards; such as the Tanzania Cotton Board which develops, promotes and regulates the cotton sector.

4.3 The 1997 Cooperative Development Policy This Policy provides a framework for restructured cooperatives to operate as independent, voluntary, private and economically viable entities; member - controlled; embracing good management principles. CSDS II advocates for strong stakeholder organizations; including strong, viable farmer organizations.

10 TCB’s Corporate Strategic Plan: 2007/08- 2009/10

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4.4 The 1998 Local Government Reform Programme It aims at improving the delivery of quality services to the public through a decentralization strategy. Success of CSDS II will partly depend on enhanced monitoring and supervisory roles of local governments. 4.5 The Rural Development Strategy of 2001 The strategy focuses on stimulating economic growth and reducing poverty in the rural areas using four interventions, namely; • Promoting widely shared growth; • Increasing opportunities and access to services; • Reducing risk and vulnerability; and • Good governance.

4.6 The National Strategy for Growth and Reduction of Poverty

- NSGRP (MKUKUTA) The national Strategy for Growth and Reduction of Poverty, MKUKUTA, identifies three outcome clusters; • Growth and reduction of income poverty • Improvement of equality of life and social well- being and • Good governance and accountability

Such an outcomes- approach stresses inter-sector linkages and synergies; encourages cross-sector collaboration; and emphasizes institutionalization of participation; and better mainstreaming cross cutting issues.

MKUKUTA recognizes the importance of agriculture as the lead sector accounting for 45% of GDP; and about 60% of total export earnings. It provides livelihood to 82% of the population. Constraints to rural growth are largely those of agriculture, including low productivity; lack of inputs; limited irrigation; lack of capacity and access to credit; inadequate extension services; poor rural infrastructure; pests and diseases; and land degradation Other constraints include gender relations, weak producers’ associations, poor coordination and limited technological capacity, depressed prices for primary products in the global markets; and insecurity to land tenure and collateral for credit. Nuisance taxes and levies; as well as administrative procedures that often constrain marketing of agricultural outputs, are other constraints. With respect to CSDS II, some of the relevant MKUKUTA Strategies include; • Increasing the area under irrigation; • Increasing productivity in existing agricultural activities through adoption of

investment in more productive technological packages; • Increasing training and awareness on safe utilization and storage of agro-

chemicals; • Improving human resources capacity and efficiency in agricultural services; and

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• Improving and increasing access to support services with particular focus on research and extension services meeting the needs of farmers.

4.7 Agricultural Sector Development Strategy The Agricultural Sector Development Strategy, ASDS, aims at creating an enabling environment for improving agricultural productivity and profitability; improving farm incomes; reducing rural poverty; and ensuring household food security. These objectives are conditioned in the following seven factors corresponding to CSDS II; • Comparative advantages that can be developed for food and export commodities;

e.g. cotton lint, yarn and textile materials; • A large population base that will continue to be involved in agriculture. The cotton

sub- sector comprises of 350,000 – 500,000 farmers; and altogether about 40% of the population depend on cotton for their livelihood – primary producers; researchers; ginners, oil millers and other cotton processors; merchants and traders; and related services providers;

• Underused natural resources that will be available for agricultural development; e.g. large, permanent water bodies and large tracts of land suitable for, respectively, irrigation cotton farming; and expanded acreage and productivity for cotton;

• Domestic and international trading opportunities that will continue to emerge; • Opportunities for strategic partnerships between agri- business and smallholders

that can be facilitated e.g. integrated cotton cultivation programmes or contract farming;

• A political commitment to improvements in policy and incentives for investment that will continue. In the cotton sub- sector political commitment needs to be demonstrated in supporting sustained investment in a durable system for seed production, multiplication, processing and distribution; large scale, modern farming; increased spinning, weaving and textile manufacturing; and

• A sustained political commitment to local institutions; e.g. support for strengthening institutional capacities of stakeholders.

4.8 Agricultural Sector Development Programme The Agricultural Sector Programme, ASDP, is the operational instrument for implementing ASDS by mobilizing incremental financing for the following key areas; • Policy and regulatory framework for enabling environment; • More effective research and extension; • Strengthening marketing infrastructure; • Strengthening districts in terms of their participatory planning and implementation

capacities; and • Continuing support for crop production, training and irrigation.

Some of the relevant components of ASDP to CSDS II include, but not limited, to the following; • Policy, regulatory and institutional framework;

- reviewing and up-dating sub-sector legislation; - strengthening sub-sector regulatory and institutional capacity;

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- collecting, disseminating and storing information; - strengthening capacity for information management and agricultural

advocacy; - promoting good governance; - ensuring effective sector- wide coordination.

• More effective research and extension; - promoting strategic research; - harnessing national and local capacity to finance, support and contract

research; - training front-line extension staff; - mobilizing private sector participation in advisory service delivery ; - offering specialist courses and farmers field schools.

• Strengthening marketing infrastructure; - linking producers with local and international markets; - developing market infrastructure; - streamlining procedures for improved services delivery for private sector

development; - developing incentive packages for private sector investment in the cotton

sector production, marketing, processing and services. • Crop production, training and irrigation;

- generalizing integrated pest management; - developing commercial warehouses; - developing new irrigation schemes; - acquiring individual low lift pumps;

4.9 Ministry of Agriculture Food Security and Coope rative’s

2007 - 2010 medium Term Strategic Plan CSDS II has also taken into account the Ministry of Agriculture Food Security and Cooperative’s Medium Term Strategic Plan for 2007 – 2010; in particular, the following objectives and targets; • Improving services and reduction of HIV/AIDS infection by developing

programmes to fight the spread of the disease in work places and at centres with large population concentrations, e.g. magulio and market centres; supporting affected staff and raising awareness of the scourge;

• Strengthening policies, strategies and regulatory framework development; - pursuing policies that attract public and private investment; - creating awareness on cooperatives and extension services.

• Enhancing sustainable agricultural production and productivity; - increasing agricultural investment; - promoting and developing irrigation schemes also in partnership with the

private sector; - accessing financial services to producers and service providers; - facilitating commercial farmers in obtained land; - promoting out- grower /contract farming schemes; - promoting safe utilization of pesticides; - availing of subsidized fertilizers.

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• Enhancing institutional coordination mechanism in the agricultural sector; - promoting linkages and synergies at sub- sectoral level to add value to

specific identified products; - promoting public –private partnership in services provisioning.

• Linking and internalizing cross – cutting issues; - promoting activities which incorporate environmental protection measures

and gender in plans and strategic; - capacity building in mainstreaming cross – cutting issues.

• Empowering producer organizations; - enhancing institutional and human capacities of producer organizations to

ensure that agricultural production, productivity, quality and profitability are increased.

• Strengthening information education and communication, and information and communication technology;

- promoting ICT and e- governance; and establishing and developing an effective IEC system.

4.10 Millennium Development Goals CSDS II has also taken into account the Millennium Development Goals i.e;

(i) Eradicate extreme poverty and hunger; (ii) Achieve universal primary education; (iii) Promote gender equality and empower women; (iv) Reduce child mortality (v) Improve maternal health (vi) Combat HIV/AIDS, malaria and other diseases (vii) Ensure environmental sustainability; and (viii) Develop a global partnership for development

All MDGs have more or less been included in CSDS II, directly or implied; e.g. • Poverty eradication is a core element of CSDS II; • Universal primary education, reduced child mortality and improved maternal

health, among other things, involve socio-economic empowerment which is strongly advocated in the broad objective of “wealth creation for the benefit of all in a win-win situation”;

• Goals on gender equality, women empowerment, HIV/AIDS and environmental sustainability, are given prominence in the objectives and strategies of internalizing cross – cutting issues and developing capacities to generally mainstream them in programmes and strategies;

• Environmental sustainability is a central concern in cotton cultivation and processing;

• The last goal on global partnership for development is equally relevant; particularly, in calling for the removal of production and export subsidies on cotton which are distortive, and make the field for international cotton trading highly uneven and unfair; in calling for increased international community support for Tanzania’s development and trade related activities of the cotton sector; and in

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promoting South- South cooperation to address the challenges of the cotton sector.

4.11 Kilimo Kwanza CSDS II is based on the objectives, targets and strategies of Kilimo Kwanza (Agriculture First)11; • Development of infrastructure for agriculture, especially rural roads and irrigation,

as well as institutional enhancement (National Irrigation Agency); • Strengthening farmer organizations, e.g. reconstituting TCA, supporting

TACOGA, reviving TEXTMAT; etc.; • Enactment of necessary legal provisions in support of contract farming system

(CFS); or Integrated Cotton Cultivation Programme (ICCP) in cotton; • Application of new technologies on the farm; • Promotion of higher yields and larger production volumes of crops on the farm; • Promotion of modern, commercial farming at smallholder, medium and large

scale farming levels; • Strengthening public private partnerships; e.g. contract farming, construction of

warehouses, financing of extension services; • Establishment of forward- and backward- linked agro- processing industries.

5 ANALYSIS OF THE CHALLENGES OF THE COTTON SECTOR

The cotton sector is facing deep-rooted challenges. They have to be addressed meaningfully and consistently in order to realise its potential. The challenges of cotton whose ultimate manifestation is persistent poverty, particularly amongst its primary producers, i.e. the smallholder cotton growers, can be put into two groups, domestic and external. The domestic challenges include poor farm and crop management practices; poor infrastructure, as well as high taxes and utility tariffs which escalate production costs; limited domestic processing for maximum value addition in the total production and processing chain; rampant contamination with deleterious effects on farm gate prices and fibre competitiveness; limited extension services and research services; budgetary constraints; and droughts.

While some of the above challenges are quite severe, it is the external challenges which pose the gravest threat to the African cotton sector as a viable business concern; affecting the livelihoods of more than 100 million Africans (about 15 million Tanzanians):- • the smallholder farmers who eke out an existence on cotton farming, with few

other options; • the local ginners, cotton traders and textile millers who struggle to do business

with, or compete against, multinational cotton trading companies in major cotton consuming countries.

11 Jamhuri ya Muungano wa Tanzania: Kilimo Kwanza, Mapinduzi ya Kijani (Agriculture First, Green Revolution); August, 2009.

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These challenges have to be addressed boldly, meaningfully and consistently in order to realize the potentials of the cotton sector.

5.1 Domestic Challenges On the domestic front, therefore, the challenges confronting the cotton sector include the following; 5.1.1 Limited farmer knowledge and information on c otton production and

processing technologies; price and market trends; i nputs procurement, supply and distribution trends

Most farmers do not have the requisite knowledge and information on cotton production and processing technologies; price and market trends; inputs procurement, supply and distribution trends, in the quest to produce a crop which can effectively compete in global markets. Experience alone, which most cotton farmers tend to have, is inadequate in a dynamic and rapidly changing technological environment. 5.1.2 Poor farm and crop management practices Under this broad heading are limited access to and application of improved technologies such as extensive use of improved farming tools; improved crop management; application of soil nutrients, e.g. chemical fertilisers, manure, composite; targeted application of pesticides. As a result yields have remained low. 5.1.3 Poor infrastructure Including; • A poor rural roads and communications infrastructure in the main cotton growing

areas, making it difficult to distribute inputs and to timely access the crop; and leaving it to the mercy of the weather and of the marching guys ( machinga);

• Lack of cotton irrigation farming, exposing the crop to the vagaries of weather; • An ailing railways network which breaks down frequently, necessitating lorry and

truck long- distance haulage of this bulky, highly contamination - sensitive crop; and

• Inadequate and poor storage facilities.

5.1.4 High taxes and utility tariffs • High taxes on seed cotton, lint and textiles, also resulting from high energy

tariffs, lead to an increase in the costs of production throughout the value chain; encourage tax avoidance, under- declaration and underreporting on vital crop statistics.

5.1.5 Limited domestic cotton processing which cons trains value addition in

the production and processing chain; thereby, restr icting the creation of effective demand for local fibres, as well as cr eation of relative price stability for seed cotton

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During its heydays in the 1970s and early 1980s, the textile industry was characterised as follows; • 22 mills; of which 15 were public, and 7 private; • 300 m. meters of installed capacity; • 3 spinning mills for yarn production, mainly for the export market; • Employed 25% of the total labour force; • Accounted for 25% of industrial GDP; • Increased human resources development through on the job training for spinning

and weaving operations; electrical and mechanical technicians; • Overseas training for highly specialised textile technology and management

skills.

The industry collapsed in 1994/95 for a number of factors; • Inadequate supply of cotton lint due to government policy; • Power shortages/ interruptions; • High power tariffs; • Unfair competition from imports. In 1994, for instance, while imports accounted

for 90% of the local textiles supply market, they were charged merely shs. 840m in total taxes; compared to locally produced textiles which, although accounted for only 10 percent of the market, ended paying shs. 6.0b in taxes, more than 7 times the taxes collected on the imported textiles;

• Mismanagement.

Today, the textile industry is facing the following challenges; • Spinning:

- outdated machinery; - shortage of skilled manpower and efficient workers; - poor infrastructure- power and water supply, and transport; - the combination of those problems results into low productivity and

equipment utilisation. • Weaving:

- outdated looms, making spare parts procurement and servicing problematic; - poor quality of spun yard; - poor infrastructure; - shortage of skilled weavers.

• Textile manufacturing: - low efficiency at all stages of the manufacturing process; - difficulties in changing existing operating systems and re- educating the

workforce to operate in more competitive quality- driven markets; - poor working environments; - low workforce productive capacity; - poor logistics in servicing export markets; - high energy costs, particularly for users of oil as a primary energy source.

• Clothing: - lack of high quality fabrics of local manufacture to easily access external

markets;

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- dearth of local expert sewing machinists familiar with high throughput manufacture, making investment in the workforce high;

- the unbridled second- hand market for clothes restricts large- scale domestic clothing manufacturing;

- poor infrastructure adversely affects delivery times for high quality goods and leads to unnecessary penalties for late deliveries.

• Institutionally: - TEXTMAT, the Association of textile manufacturers is fragmentary; - it rarely comes together to forge a common approach on the textiles industry; - there is infighting in the industry.

The imperatives for moving beyond ginning and spinning, into weaving and textiles manufacturing, are predicated on the minimal value of ginning and spinning compared with garmenting, branding and retailing as the following example shows; Figure 1: Share of Value Addition in the Textile an d Apparel Supply

Chain: Shirts and Trousers

SHIRT (US$23=TSH.30,000) TROUSERS (US$ 37=TSH. 48,100)

100

90

80

70

60

57% Clothes Retailing 61%

50

40

30

23% Garmenting 19%

20

12% Weaving Fabrics 14%

10

5% Spinning Yarn 3%

4% Ginning Fibre/Lint 3%

Source: Adapted from: Textile Outlook International, - February 2004, No. 109

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The above example clearly shows that the Tanzania cotton sector is losing out a great deal in value and income terms. Since a mere 20- 30 percent of the total lint produced is eventually milled into textiles locally; leaving the bulk of the crop for export, this means that in a shirt or a pair of trousers, the country retains less than 5 percent of the total value of the crop (as ginned fibre/lint and spinned yarn, where it is done).

In other words, at current prices, the value of one kilo of cotton fibre costing around shs. 1,200, increases to about shs. 30,000 by the time it reaches the retail stage in the form of a man’s shirt. When converted to men’s casual trousers, the same one kilo of fibre retails for about shs. 48,000. Analysis of the value addition at each step reveals that the biggest addition in the chain takes place at garment to retail stages. This means that, Tanzania retains merely shs. 2,640 in total value of 2 kilos of lint when respectively converted into a shirt and a pair of trousers (shs. 1,200 + 1,400 for shirt and pair of trousers respectively). The remaining shs. 75,460 in value (shs. 28,800 + 46,660 respectively for shirt and trousers) are exported abroad in the form of incomes and jobs. The same pattern of value addition can be replicated for the other forms of textiles and apparel. This example makes a mockery of the “economic specialisation ” conundrum. Calls for countries like Tanzania to confine themselves to primary production of raw materials, i.e. lint, in the case of cotton, while leaving the processing of lint into textiles and apparel to “more efficient” producers, is contentious, indefensible and obsolete.

Tanzania’s trade supply structure is dominated by primary commodities which account for 80 percent of its exports. The pattern of demand in global trade, however, has increasingly shifted to manufactures and services which respectively account for 70 and 20 percent of total global trade. To prevent further marginalisation from international and domestic markets, concerted and systematic efforts must be taken to transform and diversify the country’s trade supply structure commensurate with the prevailing patterns of global trade, along with enhancing its competitiveness. Cotton will play a central role in this transformation. Given cotton’s potential socio-economic multiplier impacts, this is one sector which should be declared a strategic sector and a hub for wealth creation, poverty eradication and improved human welfare. 5.1.6 Rampant contamination, largely due to poor co tton culture; with

negative effects on farm gate prices and fibre comp etitiveness Rampant contamination has seriously impaired the quality of Tanzania’s cotton. Because of over- liberalisation, there appears to be little awareness on the importance of quality requirements in the cotton production and processing chain as dictated by changing consumer patterns and technological innovations world-wide. The cotton ethics of this hand-picked, once glorified as “white gold ”, involving crop

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production in zones according to weather patterns and soil conditions, harvesting using 100% cotton cloth bags, sorting and grading, processing into lint according to ginnery zones, etc; have long been abandoned. As a result, contamination is widespread, impacting negatively on fibre quality - poor colour, high trash and foreign matter content, etc; as well as lowering the price of both seed cotton and lint.

Thus, while previously Tanzania was fetching a premium of about US ¢ 8/lb of lint sold in the international markets, today it is discounted at around US ¢ 6 5.1.7 Limited research and extension services Research and extension services are highly constrained; • funding for research and extension services is limited; • incentives and logistical support are low; • training and recruitment is similarly restricted; • lack of private investment in cotton seed hybrid production, multiplication and

distribution.

As a result; • staff levels of extension services is less than 50% of requirements resulting in

restricted outreach; • slow catch-up in breeding hybrids in answer to the following challenges;

- mixing of seed varieties following the collapse of the crop zoning system; - need to meet the changing national and international requirements for high

speed instrument testing, high speed spinning machinery; etc; - following persistent droughts, need to develop multi-adversity resistant (MAR)

cotton varieties; - need to develop more pest resistant varieties in ECGA where pests’

infestations are more severe than in the WCGA; - research infrastructure and facilities need to be rehabilitated and enhanced.

5.1.8 Budgetary constraints Government commitment to support the cotton sector, especially in respect of regulatory and monitoring services, and part of the promotional and development activities, is limited due to budgetary constraints. In the face of increasing globalisation pressures, formation of regional groupings, and the like, on the one hand; while persistent poverty, fewer jobs, etc. are vexing socio- economic problems, on the other; Government support, as articulated in both the Agricultural Sector Development Strategy and Programme is critical in the following areas; • improving the rural infrastructure - roads, commercial warehouses through

public private partnership arrangements, irrigation schemes; • strengthening regulatory and institutional capacities; • promoting strategic research; • training of frontline extension staff;

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• developing incentive packages for producers.

5.1.9 Droughts Due to changing weather patterns, droughts are increasingly becoming frequent, widespread and persistent; adversely affecting farmers everywhere as follows; • reduce the number of fruiting branches produced by the first bloom; • slow down plant development; • cause the plant to shed small bolls and squares; • lead to low cotton yields and poor lint quality.

5.2 External Challenges Turning to the external problems of the cotton sector, these include, among others, the following; 5.2.1 Expanding acreage, increasing yields and fall ing production costs in

major producing and consuming countries. Over the 2001/02 - 2008/09 period, although the total world area under cotton cultivation fell by 2.697 million hectares or 8.1%, from 33.381 million hectares to 30.884 million hectares, China and India, respectively the first and second world largest cotton producers, continued to register further increases in their cotton acreage. In China 1.507 million new additional hectares (31.3%) were put to cotton; while in India, 543,000 additional hectares were added. See Table 5.1

Table 5.1: Comparative Cotton Hectarage in Selected Countries:

2001/02 - 2008/09 (“000”)

Countries 2001/02 2002/03 2003/04 2004/05 2005/06 2006/07 2007/08 2008/09 Australia 404 221 197 315 225 400 63 164 Israel 15 12 10 14 10 12 11 5 China 4,810 4,184 5,109 5,650 5,100 5,355 6,317 6,317 Turkey 693 721 725 698 635 635 500 365 USA 5,596 5,025 4,858 5,284 5,527 5,099 4,245 3,128 India 8,730 7,667 8,000 9,300 9,500 9,500 9,439 9,373 Pakistani 3,074 2,794 3,040 3,229 3,206 3,225 3,55 2,844 Uzbekistan 1,453 1,421 1,394 1,419 1,429 1,429 1,450 1,391 Egypt 307 297 223 307 273 287 246 133 Burkina Faso 359 405 462 550 570 599 407 466 Mali 532 468 540 565 525 551 284 197 Benin 357 313 323 325 300 315 234 200 South Africa 51 30 43 29 40 41 10 8 Uganda 120 60 100 120 100 102 101 125 Zambia 165 150 254 275 275 281 198 188 Zimbabwe 363 327 330 335 280 300 308 355 Tanzania 392 291 459 471 450 459 410 485 World Total (Hectarage)

33,381 29,924 32,190 35,757 35,230 35,507 32,962 30,884

Source : Cotton World Statistics ; in Bulletin of the International Cotton

Advisory Committee; September, 2009

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Over the same period, total world cotton production registered a 9.7% rise, from 21.490 million tons in 2001/02 to 23,584m tons in 2008/09. This growth was fuelled by China (34%) of total world output; and India (21%). The combined output of China, India, Pakistan, Uzbekistan and Turkey rose from 55% of total world cotton production to 68% between 2001/02- 2008/09; whereas the African share in total world cotton production dropped from 9% in 2001/02 to 5% in 2008/09. Tanzanian’s 0.53%, half a percentage of total world cotton production in 2008/09 was a double improvement over the 0.20% in 2001/02. Refer to Table 5.2.

Table 5.2: Cotton Production Trends in Selected Cou ntries:

2001/02 - 2008/09 (000’ Metric Tonnes of Lint)

Countries 2001/02 2002/03 2003/04 2004/05 2005/06 2006/07 2007/08 2008/09 China 5,324 4,916 4,871 6,320 5,819 5,450 8,071 8,025 USA 4,420 3,747 3,975 5,062 4,790 4,399 4,182 2,793 India 2,686 2,312 3,009 4,080 3,805 3178 5,355 4,930 Pakistan 1,783 1,736 1,734 2,482 2,308 2,009 1,894 1,923 Turkey 922 900 910 900 805 887 625 450 Africa 1,796 1,708 1,736 2,038 1,889 1,833 1,355 1,294 • North 388 370 264 406 360 358 245 154 • West 1,027 954 939 1,135 1,055 1,022 557 558 • East 381 384 533 497 474 454 486 458 • Tanzania 63 50 117 100 96 99 67 124 World Total 21,490 19,294 20,720 26,204 24,398 24,828 26,213 23,584

Memorandum Items: Percentages of Total Production

China 24.77 25.48 23.51 24.12 23.85 24.35 30.79 34.03 USA 20.57 19.42 19.18 19.32 19.63 19.62 15.95 11.84 India 12.50 11.98 14.52 15.57 15.60 14.03 20.43 20.90 China + India + Pakistan + Uzbekistan + Turkey

54.77 56.42 55.10 56.92 56.71 55.98 65.43 67.63

Africa 4.78 8.85 8.38 7.78 7.74 7.51 4.91 4.96 Tanzania 0.19 .026 0.30 0.18 0.47 0.51 0.26 0.53

Memorandum Item: Percentage of Total African Produ ction

Tanzania 2.28 3.00 3.63 2.31 6.09 6.87 5.2 10.6 Source: Cotton World Statistics: in Bulletin of the International Cotton

Advisory Committee; September, 2009 /TCB On the other hand, Table 5.3 gives a comparison of cotton production yields in selected countries for the 8 years period to 2008/09. As can be seen from the

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Table, yields in Australia and Israel are the highest, averaging more than 8 times each compared to yields in Tanzania which were around 246 kg of lint/ha. In 2008/09 lint yields in Australia were 1,921kg/ha, and in Israel the yields were 1,667 kg/ha; while Tanzanian’s lint yields were only 256 kg/ha.

Table 5.3: Cotton Yields Comparisons in Selected Co untries:

2001/02 - 2008/09 (Kg of Lint/ha)

Countries 2001/02 2002/03 2003/04 2004/05 2005/06 2006/07 2007/08 2008/09 Australia 1,842 1,751 1,768 1,782 1,783 1,792 2,000 1,921 Israel 1,483 1,542 1,744 1,818 1,748 1,757 1,727 1,667 China 1,107 1,175 954 1,119 1,141 1,147 1,278 1,270 Turkey 1,330 1,248 1,255 1,289 1,268 1,299 1,250 1,233 USA 790 746 818 958 867 853 985 893 India 308 302 376 439 401 409 567 526 Uzbekistan 727 719 641 800 770 722 831 769 Egypt 1,031 976 885 950 961 966 901 888 Burkina Faso 440 419 441 478 445 447 368 390 Mali 451 389 482 435 476 443 356 407 Benin 482 455 440 538 467 443 483 485 South Africa 412 562 664 717 514 516 972 970 Uganda 187 339 296 367 367 368 122 178 Zambia 261 265 275 273 276 282 227 229 Zimbabwe 221 307 395 224 255 277 299 282 Tanzania 161 172 257 212 214 215 163 256 Source: Cotton World Statistics; in Bulletin of th e International Cotton

Advisory Committee; September, 2009 During the 28 year period 1980 - 2008 cotton output in the major Asian producing and consuming countries registered more than two fold increases as follows; China : 2.707 millions tons - 8.025 million tons (296%); India : 1.322 millions tons - 4.930 million tons (373%) ; and Pakistan : 0.714 millions tons - 1.923 million tons (269%). The statistics in the three Tables show that, measured against the global picture, Tanzanian’s cotton is very small; • The global acreage in 2008/09 was 30.884m. ha, compared with 485,000 ha,

(1.6% of the global acreage) for Tanzania; • Total world cotton production in 2008/09 amounted to 23.584m. tons, out of

which Tanzanian’s output was 124,000 tons or 0.539% of the world total; • Even by African standards, Tanzanian’s cotton output was only 10.6% of the

continent’s total; • While yields in Israel and Australia averaged more than 7 times each for those in

Tanzania; the yields in Africa were similarly above those for the Tanzania crop in each of the countries of West Africa, South Africa and Zimbabwe.

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These countries have succeeded to attain those output and productivity levels and they have been putting new areas under cotton because they believe that cotton, with its all round positive multiplier impacts, will continue to be a social-economic mainstay for millions of their people. The Tanzania stakeholders will similarly galvanise themselves, in a united approach, to implement various initiatives to make the domestic cotton sector a hub for wealth creation and improved human welfare. Some of the activities which the stakeholders will undertake include; • Developing new crop varieties/hybrids; • Continuing with efforts to control pests; • Assessing agronomic requirements of new seed varieties; • Continue to invent new technologies, e.g. Bt cotton; • Embarking on integrated cotton cultivation programmes; • Making improvements on the infrastructure for cotton markets, especially

improving cotton markets and material handling centres; • Establishing knowledge centres where farmers and cotton dealers can converge

to acquire more skills; • Modernising and up- grading the ginning and spinning mills; • Introducing private seed companies; • Embarking on ambitious irrigated cotton farming to mitigate the adverse impacts

of droughts, taking into account water rights;

Due to Tanzania’s decision to embark on the forward- and- backward agro-processing industrialization strategy, underpinned by cotton, the Government has to be even closer to the cotton sector, and is being called upon to initiate special schemes in support of the sector, such as the following; • Cotton research and technology generation; • Transfer of technology and developments; • Development of market infrastructure; • Modernisation and up-grading of ginning and spinning mills; • Establishment of price support mechanisms.

5.2.2 Imposition of production and marketing subsid ies in developed cotton

producing countries. The imposition of production and marketing subsidies in some industrialised countries lead to artificial over production and are barriers to trading; leading to decline in market prices for cotton. To the unsubsidizing and least developed countries like Tanzania, such low prices lead to:- • Reduced incomes; • Reduced acreage and crop volumes as producers switch to alternative crops; • Reduced trade balances given that cotton exports contribute significantly to

balance of payments transactions; • Reduced activities in related industries such as transportation and ginning;

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• Reduced employment levels; • Reduced government revenues following a reduced level of social – economic

activities generally.

In the aggregate, these subsidies lower wealth creation and stoke deflationary pressures on delicate economies like that of Tanzania. 5.2.3 Competition from man-made fibres Competition from man-made fibres such as polyester, viscose, acrylic and polyamide (nylon) is another real threat to cotton use. Made from chemicals, their production technology results in lower costs of chemical fibres and an increase in the range of uses. Chemical fibres have generally superior quality on length, denier, tenacity, elongation, and crimp, which are the important characteristics that influence the drape, anti-crease and softness properties of fabrics. Besides, they are relatively cheaper than cotton fibre. As a result, man-made fibres have reduced the demand for cotton fibre which commanded a 79% world market niche in 1950 to less than 40% today. 5.2.4 Durable tendency towards a decline in the pri ce of cotton The deflated Cotlook A Index, which measures international cotton prices, fell from US ⊄400 in 1950 to US ⊄ 50 in 2005/06. The series of related activities which contribute to the persistent decline in cotton prices, in summary include; • Expanding acreage; • Improvements in technologies; • Adoptions of new technologies; • Improvements in crop management; • Competition from chemical fibres; • Production and export subsidies in industrialised countries; • Domestic problems.

5.3 Analytical and Operational Framework for Addres sing the Challenges of

the Cotton Sector in Tanzania 12 In order to provide a better understanding of the challenges facing the cotton sector, so as to develop meaningful, more inclusive and more sustainable solutions, through stakeholder collaborative, participatory approaches, an analytical and operational framework has been adopted. Since the causes and gravity of the challenges differ, it follows that even the approaches, strategies and methods to address them also differ. The framework starts with an analysis of the low prices and incomes, and low quantity and quality of cotton as the manifestations of the challenges facing the cotton sector in Tanzania. Ultimately, those impact on persistent poverty.

12 Adapted from Government of URT/UNICEF: Women and Children in Tanzania: A Situation Analysi s; Dar es Salaam; Tanzania 1990.

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The challenges are then analysed at varying levels of causality; Immediate challenges are those which directly impact on low prices and incomes, and low quantity and quality of cotton; such as limited knowledge on cotton production and processing technologies, price and market trends, inputs procurement and supply trends; weak regulatory and monitoring capacities; rampart contamination of cotton; dispersed and disorganized stakeholders; lack of a unified agency to promote the interests of the sector; poor rural roads; rampart pests and diseases; poor soils and land degradation; high taxes and utility tariffs. Underlying challenges for low prices and incomes, and low quantity and quality of cotton are more fundamental, more entrenched, mostly indirect; and include minimal domestic spinning, weaving and textile milling; poor basic infrastructure- railways, trunk roads, electricity and water supply; droughts; imposition of production and marketing subsidies in main exporting countries; increasing production, yields and low production costs in major producing and consuming countries; competition from synthetic fibres; and falling international cotton prices. Levels of prices and incomes, as well as quantities and quality of cotton depend at the basic level on resources, potential and existing, and their allocation: the structure of the domestic and global economy; production processes and the uses of the proceeds of production. Various stakeholders play crucial roles in the decision-making processes which determine the allocation of the resources. These stakeholders are, in turn, influenced by the political superstructure - at both national and international levels. Graphically, the framework can be depicted as in Chart 1 below:-

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Chart 1: Analytical and Operational Framework for A ddressing the Challenges of the Cotton Sector in Tanzania 13

The above framework in the analysis of the challenges for the cotton sector has been adopted for the following reasons; • presents a cohesive picture of cotton and its major challenges;

13 Adapted from the analytical and operational framework of maternal, infant and children’s deaths and malnutrition in Women and Children in Tanzania: A Situation Analysi s; Dar es Salaam, Tanzania; a 1990 joint publication o f URT and UNICEF

Manifestations Low price and income

Low quantity and quality

Immediate challenges

Challenges Actions Actors • Limited knowledge on cotton production and processing technologies, price and market trends, and inputs procurement and supply trends

• Limited and poor extension services • Weak regulatory and monitoring capacities • Dispersed and disorganized stakeholders • Poor rural infrastructure • High taxes and utility tariffs • Contamination due to poor grading, storage and ginning • Collapse of Cooperatives • Lack of seed multiplication, processing and distribution, system

• Limited research and dissemination of findings • Poor soils and land degradation

Challenges Actions Actors • Increased yields in major producing countries • Provision of subsidies by major cotton exporting countries • Falling international cotton prices • Persistent droughts • Competition from man-made fibres • Limited domestic spinning, weaving and textile milling • Expanding production in major cotton producing and consuming countries

Basic Challenges

Political Superstructure Economic Structure

Potential and Existing Resources

Underlying Challenges

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• outlines courses of action to be taken for each and every challenge and suggests possible actors to address such challenges;

• promotes the treatment of the challenges in a collaborative approach; • provides a unified and cohesive strategy for formulation of time-bound quantifiable

and monitorable targets and indicators. As is further clarified below, the framework is also intended to show the intrinsic linkages from primary production to final consumption. Each link in the cotton market chain is important and interacts with every other link. The various links include seed breeder, agronomist, cotton farmer, ginner, classer , merchant, shipper, spinner, textile manufacturer, regulator/promoter, and consumer . To maximise the total benefit of cotton production, there is need to ensure that each link in the chain is testing, reporting and collaborating on fibre quality in the same way, and is literally “talking the same language ”. The above framework is a fundamental departure from the treatment of the cotton sector problems as adopted in the 2000 Cotton Sector Development Strategy document; which sought to present these problems in 4 separate Problem Trees, according to the various identified stakeholders, namely; • for cotton producers; • for support services; • for traders and ginners; • for regulatory authority. Missing from the list of stakeholders were the textile millers, oil millers and researchers. Such a presentation appeared compartmentalized; disaggregated; and missed the stakeholder linkages, synergies and complementarities in addressing the common problems of the cotton sector. Furthermore, some of the deep-rooted problems of the sector were not even sighted in the Problem Trees; e.g; • expanding production, coupled with increasing yields and falling production costs in

major producing and consuming countries; • competition from chemical fibres; • historical pattern of falling prices in the cotton sector; • imposition of production and marketing subsidies in developed countries; • the perverse impact of droughts. To the extent these problems were not articulated in the Strategy, the suggested solutions fell short of the objectives and targets. To deliberately assume away or ignore these challenges is a grave mistake, and renders the Cotton Strategy inherently prone to failure. These challenges are the underlying and major problems of poor performance of the cotton sector. Granted; they

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are largely beyond the control of Tanzania cotton stakeholders. Nevertheless, the stakeholders are capable of ameliorating them by taking specific initiatives, e.g; • Rigorous application of better farm and crop management practices, e.g. early

planting, using conservation agriculture (CA), application of ISFM and IPM practices; • Rigorous maintenance of cotton fibre quality through planting better grade seeds;

harvesting using recommended bags; grading; transportation; • Adherence to better and more efficient ginning, spinning, weaving and textile milling

technologies; • Changing the mind- set and attitudes of stakeholders in the cotton industry; by

shifting away from the “business as usual” approaches. Instead, they will exert more effort and be more serious in their participation in the industry, knowing that there are competitors over the horizon ready to replace them anytime should they fail to be better seed breeders, agronomists, farmers, ginners, promoters/regulators, spinners, weavers, textile millers and exporters. In addition to building a strong internal market for cotton to meet the socio- economic needs of the population; developing an internationally competitive cotton sector is the driving force which will bind together the stakeholders.

The central message emanating from attempts to address these exogenous challenges is improving efficiency of the cotton industry in Tanz ania. That is why the key strategy in CSDS II is improving the efficiency of the cotton sector. The Logic Matrix below is a process outcome in the quest to build stakeholders consensus in developing a sustainable cotton sector. It is a synthesis of the views and recommendations obtained from interviews and workshops; as well as through literature reviews. Based on the Analytical and Operational Framework above, it identifies the challenges against each of which a number of actions to address them are spelt out, together with the corresponding main actors to implement those actions.

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Chart 2: Logic Matrix: An Agenda of Actions to Sus tain the Cotton

Sub-Sector in Tanzania

LEVELS OF CHALLENGES

CHALLENGES ACTION(S) ACTOR(S)

1 Manifesta-tions

1.1 Low price and income 1.2 Low quantity and quality

2 Immediate -Challenges

2.1 Limited knowledge on cotton production and processing technologies, price and market trends, inputs procurement and supply trends

2.1.1 Establish a knowledge centre in each Ward

2.1.1.1 Government/ TCB

2.1.1.2 TACOGA

2.1.1.3 TAGEA

2.1.2 Educate farmers through FFS

2.1.2.1 TACOGA/Local Government

2.1.2.2 TAGEA/TCB

2.1.3 Educate ginners, spinners, weavers and textile millers on better processing technologies

2.1.3.1 Stakeholders/ TCA

2.1.3.2 TCB

2.2 Limited and poor extension services

2.2.1 Recruit best performers to be trainers of other farmers

2.2.1.1 Government/ TCB

2.2.1.2 TACOGA/TAGEA

2.2.2 Recruit through training of front-line extension staff and provide advisory services

2.2.2.1 Government

2.2.2.2 TCB/TAGEA

2.2.3 Improve incentives logistical support and supervision of extension officers

2.2.3.1 Government 2.2.2.2 TAGEA

2.2.4 Nurture private sector driven extension services through contract farming

2.2.4.1 TAGEA 2.2.4.2 TCA 2.2.4.3 TCB 2.2.4.4 Government

2.3 Dispersed and disorganized Stakeholders

2.3.1 Reconstitute association of ginners and exporters

2.3.1.1 TAGEA 2.3.1.2 TCB 2.3.1.3 TCA

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LEVELS OF

CHALLENGES CHALLENGES ACTION(S) ACTOR(S)

2.3.2 Launch proper TCA 2.3. 2.1 Stakeholders 2.3.3 Launch Tanzania Ginners and Expo- ters Association (TAGEA)

2.3.3.1 TCB 2.3.3.2 Ginners and Exporters

2.3.4 Formalise TCA entry into African Cotton Association

2.3.4.1 TCA 2.3.4.2 TCB

2.3.5 Provide support in formation and sus- tenance of TCA and other stake holder associations

2.3.5.1 Stakeholders 2.3.5.2 TCA 2.3.5.3 Government/TCB 2.3.5.4 Donors/ WTO

2.3.6 Promote South-South trade

2.3.6.1 Government/TCB 2.3.6.2 TCA 2.3.6.3 ACA 2.3.6.4 SICA; etc

2.3.7 Launch Tanzania Cotton Resear- chers Association

2.3.7.1 Ukiriguru & Ilonga

2.3.7.2 CDTF/TCB 2.3.7.3 Quton

2.3.8 Launch Tanzania Cotton Shippers Association

2.3.8.1 TCB

2.3.8.2 Shipping Lines

2.4 Lack of seed multiplication, processing and distribution system

2.4.1 Develop capacity for multiplication, processing and distribution of seed for planting

2.4.1.1 TACRA

2.4.1.2 Government/TCB

2.4.1.3 TAGEA

2.4.2 Mobilise private companies to enter into production, multiplication and distribution of seeds

2.4.2.1 Government/TCB

2.4.2.2 TACRA

2.4.2.3 Private Co(s)

2.4.2.4 TCA

2.5 Contamination due to poor grading, storage and ginning

2.5.1 Adopt contract farming

2.5.1.1 TAGEA

2.5.1.2 TCB

2.5.1.3 TACOGA/ TCA

2.5.2 Organize growers into business groups

2.5.2.1 TAGEA

2.5.2.1 TCB

2.5.3 Eliminate agents from cotton buying business

2.5.3.1 TAGEA

2.5.3.2 TCB

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LEVELS OF CHALLENGES

CHALLENGES ACTION(S) ACTOR(S)

2.5.4 Make farmer groups to be agents of the ginner in buying cotton

2.5.4.1 TAGEA

2.5.4.2 TCB

2.5.5 Develop commercial warehouses/ market yards

2.5.5.1Government/ TCB 2.5.5.2 TAGEA/ Private

Co(s) 2.5.5.3 Donors 2.5.5.4 TCA/ TACOGA

2.5.6 Modernize ginneries

2.5.6.1 TAGEA 2.5.6.2 Government/ Cooperatives

2.5.7 Formalize training of ginnery operators

2.5.7.2 VETA/TCB/ TAGEA

2.5.8 Avail picking bags made of 100% cotton cloth

2.5.8.1 TAGEA/ TEXTMAT 2.5.8.2 TCB

2.5.9 Enhance capacity for quality monitoring

2.5.9.1 TCB 2.5.9.2 Farmers/ TACOGA 2.5.9.3 TAGEA 2.5.9.4 TCA 2.7.1.2 TCB 2.7.1.3 TCA

2.6 Poor physical infrastructure- roads, railways, communication, storage, marketing facilities

Collaborate with private sector to develop rural infrastructure

2.6.1.1 TCB/ Local Government

2.6.1.2 TANROADS/ TRL/TPA

2.6.1.3 TIC/World Bank/ EU

2.7 Collapse of cooperatives

2.7.1 Review institutio-nal structure of exi-sting cooperatives

2.7.1. Government

2.7.2 Support formation of reconstituted cooperative movement

2.7.2.1 Government 2.7.2.2 Farmers

2.8 Durable tendency for lower prices in global market

2.8.1 Improve production efficiency generally

2.8.1.1 Government/ TCB 2.8.1.2 Farmers/ TACOGA 2.8.1.3 TCA

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LEVELS OF

CHALLENGES CHALLENGES ACTION(S) ACTOR(S)

2.8.2 Expand domestic spinning and weaving mills to raise local lint use from current ≈ 15% to 100% over next 5 years

2.8.2.1 Government/ TCB

2.8.2.2 TEXTMAT/CTI/ TCCIA 2.8.2.3 TAGEA

2.8.2.4 TCA

2.8.3 Provide incentive schemes for do-mestic expansion of spinning and weaving mills - taxes, energy, tariffs, etc

2.8.3.1 Government

2.8.3.2 TRA

2.8.3.3 TEXTMAT/CTI/ TCCIA

2.8.3.4 TCA

2.8.4 Use by-products (linters, hulls, oil, meal) to increase value in production chain

2.8.4.1 Government/ TCB 2.8.4.2 TCA 2.11.5.3 TACOGA 2.11.5.4 TAGEA 2.11.5.5 Potential investors 2.11.5.6 WTO 2.11.5.7 SITRA

2.8.5 Acquire and apply knowledge and skills on modern commodity trading such as market-based financial instruments to mitigate cotton price risks

2.11.6.1 TCA 2.11.6.2 TACOGA 2.11.6.3 TCB 2.11.6.4 TAGEA 2.11.6.5 TEXTMAT 2.11.6.6 WTO

2.9 Weak capacity for monitoring and regulating cotton quality at both buying post and ginnery levels

2.9.1 Review staffing levels

2.9.1.1 Government 2.9.1.2 TCB 2.9.1.3 Local Governments

2.9.2 Enhance self-regulation

2.9.2.1Farmers/TACOGA 2.9.2.2 TAGEA 2.9.2.3 TCA

2.9.3 Strengthen institutional capacities

2.9.2.1Farmers/TACOGA 2.9.2.2 TCB 2.9.2.3 TCA 2.9.2.4 TAGEA/ TEXTMAT

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LEVELS OF

CHALLENGES CHALLENGES ACTION(S) ACTOR(S)

2.9.2.5 WTO 2.9.4.2 TAGEA/Private

Co (s) 2.9.4.3 TEXTMAT

2.10 Poor soils and land degrada- tion

2.10.1 Implement research findings on Intergrated Soil Fertility Management

2.10.1.1 TACRA 2.10.1.2 TAGEA 2.10.1.3 TCB 2.10.1.4 Government

2.10.2 Conduct survey on soil nutrients requirement and disseminate findings

2.10.2.1 TACRA

2.10.2.2 TCB

2.10.2.3 CDTF

2.10.3 Promote soil erosion prevention measures

2.10.3.1 TACRA 2.10.3.2 TCB 2.10.3.3 CDTF

2.10.4 Adopt contract farming to facilitate provision of fertilizers and other inputs

2.10.4.1 TAGEA

2.10.4.2 TCB

2.13.4.3 Government

2.11 Limited research and dissemination of findings

2.11.1 Beef up research funding

2.11.1.1 Government/ CDTF 2.11.1.2 TACRA 2.11.1.3 Donors

2.11.2 Recruit and train staff

2.11.2.1 Government/ CDTF 2.11.2.2 TACRA 2.11.2.3 Donors

2.11.3 Rehabilitate and enhance cotton research facilities

2.11.3.1 Government/ CDTF

2.11.3.2 TACRA 2.11.3.3 Donors

2.11.4 Enhance incentives and logistical support

2.11.4.1 Government/ CDTF

2.11.5 Develop capacity for introduction of Bt cotton

2.11.4.2 TACRA 2.11.4.3 Government/ Donors 2.11.3.2 TCB 2.11.3.3 TCA

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LEVELS OF

CHALLENGES CHALLENGES ACTION(S) ACTOR(S)

3 Underlying challenges

3.1 Expanding acreage; and increasing yields and falling production costs in major producing countries - e.g. Mainland China, India, USA, Pakistan, Uzbekistan and Turkey

3.1.1 Apply improved technologies to raise yields and lower production costs through more efficient use of inputs

3.1.1.1 Farmers/ TACOGA

3.1.1.2 Government/ TCB

3.1.1.3 TACRA

3.1.1.4 Donors

3.1.1.5 TCA

3.1.2 Use new technologies/ activities; e.g.

• introduce new varieties • integrated cultivation

programmes - contract farming

• establish warehouses, market yards;

• modernise ginning factories;

• initiate work on Bt

3.1.2.1 Government/ TCB 3.1.2.2 TACRA 2.1.2.3 TPRI 2.1.2.4 Farmers/ TACOGA 2.1.2.5 TAGEA/ TEXTMAT 2.1.2.6 TCA 2.1.2.7 SICA/ SITRA

3.2 Provision of production and marketing sub- sidies in major exporting countries

3.2.1 Eliminate subsidies 3.2.1.1 USA, EU, China 3.2.1.2 Government 3.2.1.3 WTO

3.2.2 Provide technical and financial support to sustain sector in global competitive environment

3.2.3.1 Bilateral/ Multilateral donors

3.2.3.2 Government/ TCB 3.2.3.3 TCA 3.2.3.4 WTO/ ITC 3.2.3.5 World Bank

3.2.3 Improve market access 3.2.4.1 Government/ TCB 3.2.4.2 TCA

3.3 Competition from man made fibres- polyester, viscose, acrylic and polyamide.

3.3.1 Promote interests of Tanzania cotton nationally and internationally

3.3.1.1 TCB 3.3.1.2 TCA/TAGEA 3.3.1.3 TEXTMAT

3.3.2 Sensitise on opportuni-ties and threats of globalisation on Tanzania cotton

3.3.2.1 TCB 3.3.2.2 TCA 3.3.2.3 WTO

3.3.3 Promote instrument testing to enhance cotton competitiveness

3.3.3.1 TCB 3.3.3.2 TBS 3.3.3.3 TAGEA/ TEXTMAT 3.3.3.4 TCA

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LEVELS OF

CHALLENGES CHALLENGES ACTION(S) ACTOR(S)

3.4 Poor performance of local textile mills leading to reduced efficiency and low yarn quality

3.4.1 Declare cotton textiles a strategic industry and accord it attendant investment preferences

3.4.1.1 Government/TCB 3.4.7.1.2 TIC 3.4.1.3 TEXTMAT 3.4.1.4 TCCIA 3.4.1.5 TCA 3.4.1.6 TRA

3.4.2 Modernise machine - looms, spindles etc

3.4.2.1 TEXTMAT/CTI/ TCCIA/Government

3.4.3 Establish a fully fledged Textile Department at TCB

3.4.3.1 Government/ TCB

3.4.4 Conduct promotion missions to attract investors

3.4.3.2 TEXTMAT 3.4.3.3 TCB 3.4.3.4 EPZA 3.4.4.4 Board of External

Trade 3.4.4.5 TIC

3.4.5 Prepare promotional materials for Tanzania embassies

3.4.3.5 TEXTMAT/ CTI/ TCCIA/TCB

3.4.6 Rationalize taxation on second hand clothing and cheap textile imports

3.4.6.1 TRA

3.4.6.2 Ministry of Finance and Economic Affairs

3.4.6.3 Ministry of Industries, Trade and Marketing

3.4.7 Mobilise develop-pment financial institutions in support of domestic textiles manufacturing

Government/TEXTMAT/TCB

3.5 High taxes and tariffs on electricity, roads, railways; etc

3.5.1 Rationalise taxes and utility tariffs

3.5.1.1 Government/ TCB/TRA/ Local Governments

3.5.1.2 TANESCO 3.5.1.3 TEXTMAT/

CTI/TCCIA 3.5.1.4 TCA

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LEVELS OF CHALLENGES

CHALLENGES ACTION(S) ACTOR(S)

3.6 Limited funding for regulatory, promotional and developmental activities

3.6.1 Allocate adequate resources to sustain activities; e.g

• opening ECGA Zonal office

• establish Promotional and Developmental Department

• quality control

3.6.1.1 Government/ TCB 3.6.1.2 TCA 3.6.1.3 Donors

3.6.2 Support innovative farmers; e.g

• Pamba Day activities

3.6.2.1 Government/ TCB 3.6.2.2 TCA

3.6.3 Strengthen institutional regulatory capacity generally

3.6.3.1 Government/ TCB 3.6.3.2 TCA 3.6.3.3 TACOGA 3.6.3.4 TAGEA 3.6.3.5 TEXTMAT 3.10.1.2 TAGEA 3.10.1.3 TCB 3.10.1.4 TCA

3.7 Persistent Droughts

3.7.1 Develop irrigation schemes

3.7.1.1 Government/ TCB/ Bilateral/ Multilateral Donors 3.7.1.2 TAGEA

3.7.2 Develop drought tolerant varieties

3.7.2.1 TACRA 3.7.2.2 CDTF

3.7.3 Disseminate and oversee adoption of soil moisture conservation techniques

3.7.3.1 TCA/ TACOGA 3.7.3.2 TCB/

Government 3.7.3.3 TAGEA

4 Basic challenges

4.1 Political Superstructure

4.1.1 Political will to carry out improvements in cotton

4.1.1.1 Government 4..1.1.2 Development Partners

4.1.2 Allocate more resources to cotton

4.1.2.1 Government Development Partners

4.2 Economic Structure 4.3 Potential and Existing Resources

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5.4 SWOT Analysis Analysis of the industry was carried out in order to better understand where the sub-sector stands in terms of various parameters. Strengths • Dedicated cotton producers. The industry prides itself of being served by a force

of between 350,000 and 500,000 dedicated front- line producers annually; • There is political will to revolutionalize agriculture, cotton farming included. The

KILIMO KWANZA initiative demonstrates government resolve on facilitating agriculture to change peoples lives;

• Existing strong Public-Private Partnership, reinforced by appropriate legal back- up, will fuel strong development of the industry. Participatory planning spearheaded by the Tanzania Cotton Board involving all crucial stakeholders has kept the industry united.

Weaknesses • Lack of a seed multiplication system denies the industry the opportunity to

access improved seeds with better fiber characteristics; • Lack of reliable credit facilities to smallholder producers leads to low yields as

no or very little inputs are applied; • Weak extension services, as well as laxity of frontline supervision and

mobilization by Local Government Authorities, lead to the thriving of unprofessional cotton farming, to the detriment of both quality and quantum outputs.

• Poor infrastructure has a great bearing on the cost of production and transportation of inputs and outputs. This reduces the competitiveness of the products produced;

• Poor storage facilities contribute to cotton quality deterioration hence low prices for the cotton;

• Lack of strong Stakeholders Associations denies the industry the opportunity to regulate itself with minimal government intervention;

• Inadequate cotton research and dissemination of research findings hamper development of the sub-sector;

• Inadequate enforcement of the Cotton Industry Act facilitates rampant cheating on weights through use of defective weighing scales. This is a major reason for cotton contamination;

• Inadequate value addition initiatives exposes the industry to depend too much on external markets; at the same time fetching little for the cotton produced;

• Heavy dependence on rain fed agriculture. This is the biggest undoing for Tanzania; and

• High utility costs make cotton products less competitive both in internal and external markets.

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Opportunities • Availability of markets for lint, seeds, textile, apparel and garments; • Potential for commercial cotton farming in the Eastern Cotton Growing Area; • Low yields due to low application of inputs indicate that there is huge potential to

maximize output hence more profitable cotton business; • Untapped utilization of cotton by-products such as stalks provide an opportunity

to create wealth; • Contract farming is a window of opportunity to change the scenario of cotton

farming to the benefit of both farmers and ginners; and • Potential for textile expansion or new investments in spinning and textile and

garment manufacturing. Threats • Persistent droughts make cotton farming unpredictable; • Increased production in major cotton growing countries; • Subsidies provided by rich countries reduce competitiveness of our cotton; • Competition from man-made fibres; and • Conflict of interest and political interference in regulatory and monitoring

activities of the Board.

6 THE SECOND COTTON SECTOR DEVELOPMENT STRATEGY, (CSDS II): 2009-

2015: A ROADMAP FOR INCREASED PRODUCTION, PRODUCTIV ITY AND PROFITABILITY OF COTTON 6.1 Vision To increase the efficiency of the cotton sector through better yields, improved quality and processing. 6.2 Mission To promote high cotton production, productivity and profitability through improved farm management practices; application of appropriate and effective production technologies; domestic maximization of value addition throughout the cotton value chain; effective and sustainable stakeholder organizations; and enhanced self- regulation.

6.3 Goals

(i) Quality : raising the quality of cotton to international standards; (ii) Productivity: doubling from 750 kg/ ha of seed cotton (260 kg/ha of lint) in

2008/09 to 1500 kg/ha (520 kg/ha of lint) in 2014/15; (iii) Production: doubling from 685,000 bales of seed cotton (126,000 MT of lint

cotton) in 2008/09 to 1,500,000 bales (260,000 MT of lint cotton) in 2014/15; (iv) Acreage: total planned acreage: 500,000 ha; o/w;

- improved cotton farming in existing areas: 450,000 ha; and - expansion into new areas: 50,000 ha;

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(v) Domestic Cotton Processing: increasing the proportion of cotton lint consumed by the domestic textiles industry from 30% in 2008/09 to 90% in 2014/15; and

(vi) Tanzania’s Share in African Cotton Production: to make Tanzania the leading African cotton producer by 2015;

6.4 Objectives In order to achieve the Five Goals above, CSDS II has five Objectives; (i) Improve the quality of cotton by strengthening policies, strategies and

regulatory framework in the cotton industry; (ii) Enhance sustainable production and productivity in the cotton industry; (iii) Increase domestic spinning, weaving and textile milling; (iv) Empower stakeholder organizations; and (v) Link and internalize cross- cutting issues.

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Objectives A: Improve the quality of cotton by stre ngthening policies, strategies and regulatory f ramework in the cotton industry Rationale The quality of cotton has recently come under severe test. Following the liberalization of traditional crop procurement, processing and marketing in the early 1990s, the number of key players multiplied several – fold. Coming from various backgrounds and different orientations, these players will be properly guided and facilitated in order to fully maximize on the opportunities of a private sector- led economy. The policy and monitoring framework will be strengthened without appearing to be overly- regulated; stakeholders will equally be properly oriented to enhance the quality standards of cotton and its by- products, and to adhere to the required legal procedures, rules and regulations, in order to maximize on trading opportunities in global markets. Strategies

• Carry out sustained systematic, rigorous strategies for raising and maintaining required cotton quality standards; e.g.;

- strict application of insecticides to ensure cotton is not attacked and stained by pests;

- ensure proper harvesting and storage of seed cotton; - ensure grading of seed cotton; - maintain quality standards in cotton packaging for procurement and

marketing; - maintain clean surroundings at buying posts, ginneries, spinning and

weaving plants to ensure cotton quality maintenance; - start award system for cotton quality standards promotion;

• Enhance compliance to the 2001 Cotton Industry Act and Regulations; • Strengthen institutional capacities for development, promotion and monitoring of

the cotton sector; • Keep abreast of quality enhancement development trends in the cotton world; • Promote self- regulation in the cotton industry; • Design an award system in recognition of stakeholders who promote cotton

quality standards, at all levels, from the farm all the way to the textile mill. Targets

• Ensure the total area under cotton receives at least 2 insecticides sprays per growing season by 2015;

• Ensure all cotton is harvested using 100% cotton bags by 2011; • Ensure standard packaging materials are used in cotton procurement and

marketing by2015; • Restore mandatory grading of seed cotton by 2011; • Attain international cotton quality standards by 2015; • Start award system for cotton quality standards promotion by 2011; • The cotton Industry Act No. 2 of 2001 and Cotton Regulations enforced by 2010; • Adequately enhance the Tanzania Cotton Board to effectively promote, monitor

and regulate the cotton sector by 2012;

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• Enhance the cotton research capacities by 2012; • Properly mainstream Local Government Authorities in cotton development,

promotion and monitoring by 2012; • Enhance awareness on world cotton production and trade by 2012.

Key Performance Indicators

• Percentage of acreage which receives at least 2 sprays per growing season; • Percentage of the cotton crop which is harvested using 100% cotton material

bags; • Proportion of cotton sold as Grade A and Grade B; • Number of cotton quality standards awards issued; • Rising proportion of good quality cotton in all its ramifications; • Number of samples classed; • Number of classing equipment acquired; • Number of international fora attended; • Number of workshops conducted to enlighten stakeholders; • Degree of Local Government Authorities’ involvement in cotton development,

promotion and monitoring; • Recruited requisite research staff levels, provision of necessary material and

logistical support to research institutes; • Level of material and logistical support to the Tanzania Cotton Board in its

developmental, promotional and regulatory roles. Objective B: Enhance sustainable production and pro ductivity in the

cotton industry Rationale Over the past eight year period between 2001/02 and 2008/09 several initiatives were taken to improve the operations of the cotton sub- sector; resulting into doubling cotton production levels; from 348,000 bales (63,000MT) to 685,000 bales (124,000MT). Productivity also rose by 60% from 161 kg/ha (2001/02) to 256 kg/ha (2008/09). In studies carried out by LZARDI, it has been established that through application of better technologies and improved farm and crop management practices, yields can rise to 530- 750 kg/ha. Considerable scope, therefore, exists for further raising cotton productivity and production; by addressing a number of the challenges in the sector, and maximizing on obtaining opportunities. On the domestic front, these challenges include little application of better crop and farm management practices, and better technologies; persistent droughts; poor infrastructure for research, production, procurement and marketing; limited extension services; poor funding for both research and extension services; lack of a durable system for production, multiplication, processing and distribution of high quality seed varieties. Externally, challenges center on stiff competition from larger and better quality crops and higher yields; synthetic fibres; and subsidized crops in major producing and consuming countries; as well as in some of the African cotton producing countries. Such

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competition tends to squeeze out production from low producers, including Tanzania; and leads to low crop prices. The above challenges can be mitigated to a considerable extent by maximizing on the obtaining opportunities such as the following;

• Embarking on cotton irrigation farming using the existing large water bodies (lakes and permanent rivers). Currently, 42 sites of potential irrigation schemes have been identified in…. In collaboration with district councils in respective areas it will be possible to use DASIP/DADP resources to develop these areas;

• Integrated cotton cultivation programmes (ICCP), or contract farming, or out- grower schemes. ICCP brings together farmers, processors and consumers into a contract to produce a certain crop with improved quality and increased yield levels for mutual stakeholders benefit. In the absence of strong farm associations to assist primary producers to access timely and affordable inputs, reasonable credit arrangements, improved farm technologies and extension services, ICCPs are reasonable alternatives. Expected ICCPs’ benefits include; (a) Overall benefits:

- Formation of knowledge centres on cotton farming for better planning and service provisioning;

- Relieving primary producers the price risk on their crop; which price risk is better managed by the processors and consumers;

- Relative stability and predictability of seed cotton prices; - Improved crop quality; - Improved yields and increased cotton production outputs; - Improved knowledge in farm and crop management practices among

members; - Enhanced stability and cotton industry returns; - Provision of field support; especially trained workers and supervisors who

regularly monitor the group of farmers to achieve precision farming; as well as coordinate with research institutes and technology centres for transfer of latest technologies to farmers;

- Indirect restoration of crop and ginnery zoning for better quality and higher yielding crops.

(b) For Farmers, ICCPs’ benefits include; - reduced costs of production; - minimized uncertainties involved in marketing cotton; - acquisition of training in post- harvest techniques in order to produce

contamination- free, high quality cotton; - improved productivity by adopting innovative farming techniques; - acquisition of modern farming tools; and - guaranteed, stable incomes that enable better planning and

implementation of life improvement programmes at grass root levels. (c) For Ginners, ICCPs lead to;

- procurement of higher volumes of better quality cotton; - better returns on lint cotton; and - predictable and guaranteed lint supply orders.

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(d) As for Spinners/Weavers/Textile Millers, ICCPs enable; - acquisition of quality lint, yarn, with minimal trash content and

contamination in cotton; - increased yarn realization; - stable and guaranteed lint/yarn supplies; - production of quality, internationally competitive fabrics and textile

goods; and - procurement of the required quality and quantity of cotton which helps

in production patterns for domestic and export markets. • Large tracts of fertile soils which still remain largely untapped, especially in ECGA

and Kigoma region; • Increased domestic spinning, weaving and textile manufactures to add value and

incomes and to generate more jobs locally; • And rising populations and increasing incomes globally which keep a steady

demand for cotton fabrics and textiles. Strategies

• Through PPP arrangements, establish knowledge centres in villages and wards, where farmers and cotton dealers can converge to acquire more skills on cotton;

• Start a monthly Tabloid on cotton and agricultural sector- related issues. Under a name, such as MKULIMA, it would;

- report regularly on cotton price trends; on agro- chemicals and other inputs; on cotton production trends and other major developments in the cotton sector;

- sensitise communities on the HIV/AIDS pandemic, particularly during the crop marketing season; and on the need for fair distribution of the proceeds from cotton sales between husband and wife, and between man and woman;

- carry commercial advertisements on agricultural- related activities; - MKULIMA would be the voice of the cotton sector; in particular, the voice

of Farmers; - MKULIMA would be managed by a reconstituted TCA Secretariat14.

• Empower farmers with knowledge on better crop and farm management practices;

• Access farmers with better farm machinery; • Embark on irrigation cotton production; • Embark on integrated cotton cultivation programmes; • Mobilise investment for medium and large- scale modern cotton farming; • Enhance research capacities; • Develop new crop varieties/hybrids; • Recruit missing competencies at the Cotton Research Institutes; • Enhance the pace of developing new cotton technologies; e.g. new hybrids, Bt

cotton;

14 Recruit the initial Editor with the vision and passionate disposition to the Tanzania farmers and the cotton industry; such as Joseph Mihangwa.

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• Improve cotton quality; • Establish sustainable cotton marketing system; • Implement sustainable environmental strategies in the cotton sector; • Establish a stakeholders’ jointly financed Cotton Price Stabilisation Fund (CPSF)

which would be used to intervene in the market in situations of falling world cotton prices.

Targets

• Establish at least 1 knowledge centre in each Ward by 2015; • Start a monthly newspaper on cotton by 2010; • Cotton production increased from 685,000 bales to 1,500,000 bales by 2015; • Cotton yields per unit area increased from 260kg/ ha to 520kg/ha by 2015 of lint

cotton; • Implement at least 42 irrigation cotton farming programmes by 2015; • Based on trials in Mara region, implement at least 48 integrated cotton cultivation

programmes by 2015; • Develop 10 medium to large- scale modern farms by 2015; • Avail 50 per cent of farmers with improved technologies on the farm; e.g. ox-

drawn ploughs, planters and tractors; from the current levels of 60%- by hand hoe, 35%- by animal traction, and 5% by motor traction;

• 3 improved cotton seed varieties released, multiplied, processed and distributed to farmers by 2015;

• Establish a Cotton Price Stabilisation Fund (CPSF) by 2010/11; • Tanzania cotton to meet international quality standards by 2015; • Cotton marketing system improved by 2015.

Key Performance Indicators

• Number of knowledge centres established; • Monthly newspaper on cotton started; • Number of bales produced; • Rising yield levels in cotton production; • Number of irrigation schemes put under cotton cultivation ; • Number of integrated cotton cultivation programmes established; • Number of medium to large- scale modern cotton farms started; • Rising proportion of farmlands which are prepared using ox- drawn ploughs and

tractors; • Number of new cotton seed varieties released; • Rising cotton quality levels.

Objectives C: Increase domestic spinning, weaving and textile milling Rationale Currently, more than 70% of cotton is exported in the form of lint. Given also that domestic spinning into yarn adds minimal value, 5% only, compared with garmenting,

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branding and retailing, in the textile and apparel supply chain, the combined impacts mean that more than 90% of the value of cotton, plus related jobs, are earned and created abroad. Therefore, increased domestic cotton processing into garments and textile products in order to maximize value addition and employment generation is essential today in Tanzania. This will lead to the creation of effective demand for local fibres, as well as creation of relative price stability for Tanzania cotton. The shift away from exporting raw cotton in the form of lint and yarn will be in line with the pattern of demand in global trade which is dominated by manufactures and services. However, the locally produced garments and textile materials must have the necessary quality to compete in the global markets. Strategies

• Resolve the existing frictions and conflicts among spinners, weavers and textile millers to form a strong TEXMAT as the nucleus of the reviving textiles manufacturing industry;

• Rehabilitate existing spinning, weaving and textile plants; • Modernise spinning, knitting and weaving industries; • Develop specialized skills in spinning, weaving and textile milling; • Improve the infrastructure to ensure reliable transportation and logistics; power

and water supply at Export Processing Zones; • Rationalise cotton levies, taxes and tariffs; • Hammer out a comprehensive textiles and apparel policy, including;

- promoting vertical integration in the textiles sector through appropriate taxes and other fiscal measures;

- improving export incentives by reducing the existing anti- export bias of textiles in the common external tariff;

- resolving the challenge of second-hand clothes imports. • Raise the status of the Textiles Sector Development Unit to a full- fledged

Department to deal with the emerging challenges of developing the textiles industry in Tanzania15;

• Design and carry out systematic promotional campaigns of Tanzania, its social and economic comparative advantages, to potential investors in the cotton sector;

• Start an annual weekly event on Tanzania textiles, say, Tanzania Textiles Week (TTW or simply Textiles Week), which would draw participation from domestic and international spinners, weavers, garments and textile manufacturers and merchants; academics, textile engineers and technologists; textile designers.

15 The incumbent TA is not keen on a full- fledged Department; and thinks he can manage with TSDU. The drawback is that TSDU is a project, with a life span. Once the Project ends, activities for textile development, promotion and monitoring may falter. Early creation of the Department would ensure domestic staff properly understudy TA, simultaneously build domestic capacities in these activities. In other countries, such as India, the textiles sector is accorded ministerial status due to its importance to the economy.

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During the week the following activities, among others, would be staged and celebrated;

- conferences/workshops on textiles- technology developments, textile trends, skills development in the textiles industry; etc.;

- fashion shows of cotton textiles; - business exchanges on cotton, textiles; - cotton textile designs and crafts.

Targets

• A vibrant TEXMAT is fully revived by 2010; • Establish modern spinning , weaving and textile mills established; • 50% of skilled personnel in spinning, knitting, weaving textile milling is trained ; • Establish the Textiles Sector Development Department by 2011; • The percentage of cotton which is exported as lint or yarn declines to 20% by

2015; • Increase earnings on garments, textiles and clothing to US$ 3.5b. by 2015; • Create 116,000 new jobs in the textiles industry by 2015; • Start the annual Tanzania Textiles Week in 2011; • Create a comprehensive textiles and apparel policy by 2011.

Key Performance Indicators

• A revived TEXMAT is fully functional; • Number of modern spinning, knitting, weaving, and textile mills established; • Number of skilled personnel in pinning, knitting, weaving and textile milling

trained; • Textile Sector Development Department established within TCB; • Number of new jobs created in the cotton industry; • Declining proportion of cotton exported as lint and yarn; • Tanzania Textiles Week held; • A new textiles and apparel policy is enacted.

Objective D: Empower Stakeholder Organizations Rationale The liberalization of the procurement and marketing of traditional crops in 1993 was meant to put the private sector in the driver’s seat in developing the economy, including the cotton industry; as well as leading effective competition in global trading operations. The imperative to have strong private stakeholder organizations is premised on their capacity to mount sustained effort against these challenges. Currently, there are no organizations with the strength and capacity to play such roles. They have to be nurtured. The private stakeholders in the cotton sub-sector are divided into three groups: farmers, co-operatives and private companies. In this context, stakeholders collaborative arrangements which began under CSDS I will be strengthened further.

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Strategies • Reconstitute TCA into the apex cotton stakeholder coordination organ; • Seek material support to strengthen the capacity of the reconstituted TCA

Secretariat; • Form new and strengthen existing Farmer organizations; e.g. genuine primary

cooperative societies, associations; • Establish the Ginners/Oil Millers Association16; • Form a Tanzania Cotton Researchers Association17; • Strengthen the revived association of Spinners, Weavers and Textile Millers-

TEXTMAT; • Enhance the capacity of some of the above associations, especially the Farmer

Associations; • Enhance the Government developmental, promotional, supervisory and

monitoring role in the cotton industry; • Sensitise relevant District Councils as vital partners in CSDS II successful

implementation.

Targets • Reconstituted TCA rolled- out by 2010; • Formation and strengthening of other stakeholder organizations by 2011; • TCB institutional strengthening;

- open ECGA Zonal Office by 2011; - establish the Department of Cotton Development and Promotion by 2010; - rebuild Dar es Salaam Pamba House as the beacon of hope and

inspiration of the cotton sector by 2015; - carry out regular human capital development programmes.

• Conduct sensitization campaigns on the vital roles of relevant Local Government Authorities in successful CSDS II implementation by 2010.

Key Performance Indicators

• Number of cotton sector stakeholder groups/associations properly formed; • New capacity- enhancing Departments are formed within TCB; • Pamba House being rebuilt; • Degree of District Councils’ involvement in successful CSDS II implementation; • TCA reconstituted.

Objective E: Link and Internalise Cross- cutting Is sues Rationale Cross-cutting issues such as infrastructure, gender, HIV/AIDS, and environment are important for sustainable cotton production. Improved infrastructure has a direct bearing on the cost of production as well as on producer prices. The place of women in having a

16 It may be called, Tanzania Ginners and Exporters Association, (TAGEA). 17 It may be known as Tanzania Cotton Research Association, (TACRA).

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fair share of the benefits from cotton, particularly at the farm level, is an important factor in sustaining the cotton sector while, at the same time, upholding fundamental human rights. With regard to environment, cotton production is synonymous with the application of various pesticides which, without rational utilization, can impact negatively on the environment. HIV/AIDS is a world disaster affecting the active labour force which is important for cotton production. Cross-cutting issues, therefore, will be taken on board in the planning process and implementation of CSDS II. Strategies

• Sensitise relevant District Councils to implement previously agreed arrangement of setting aside 10% of cotton cess for the construction and repair of rural cotton roads;

• Mobilise private sector resources for improving the infrastructure; • Carry out sustainable strategies in communities and households on the

importance of sharing fairly proceeds from cotton sales between husband and wife and between man and woman;

• Carry out sustainable campaigns to educate communities, in villages and offices, on the dangers of HIV/AIDS, especially during the cotton marketing season and during the magulio (market) days;

• Implement sustainable environmental measures in cotton sector operations;

Targets • Secure time- bound agreements from relevant District Councils on the utilization

of 10% of cotton cess for repairing and constructing rural cotton roads by 2015; • Enter into PPPs in developing the infrastructure for cotton by 2012; • By 2015 all communities in cotton growing areas to have been sensitized on

gender fairness in the distribution of cotton sales receipts; • By 2012 a sustainable system of sensitising communities on HIV/AIDS will have

been put in place; • By 2012 all premises used for cotton operations will have met the standard

environmental requirements;

Key Performance Indicators • Number of rural roads for cotton repaired and constructed; • Number of infrastructure facilities constructed; • Degree of family and social cohesion built in cotton farming communities; • Reduction in HIV/AIDS infection rates.

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7. OPTIONS, RISKS AND OPPORTUNITIES IN THE COTTON

SECTOR IN TANZANIA In preparing SCDS II the cotton stakeholders have committed themselves to shift the development path of this potential hub for wealth creation to a higher level. Successful implementation of CSDS II will lead to;

• Cotton output: 2.4m. MT, valued at …; • Textiles and clothing: valued at US$ 3.6b.; • Employment – Textiles alone: 120,000 new jobs; • Other cotton by- products:

- Cotton oil: …MT - Oil cakes: MT; - Linters

Successful implementation of CSDS II to realize those potential benefits will involve strategic positioning of stakeholders, minimise risks and maximize on obtaining opportunities. 7.1 Strategic Options for CSDS II Implementation In order to achieve the goals and strategies of CSDS II, the following strategic options will guide its implementation; 7.1.1 Implement Three Key Programmes;

• Irrigation cotton programme; • Integrated cotton cultivation progamme; and • Textiles manufacturing programme.

7.1.2 Anchoring CSDS II Implementation Building on the experience obtained during SCDS I implementation, stakeholders will collaborate to implement CSDS II, under the overall coordination of the revamped TCA Secretariat. 7.1.3 Cotton Industry Implementation Plan (CIIP) To address a major shortcoming of CSDS I, stakeholders will prepare a Cotton Industry Implementation Plan (CIIP), detailing the various activities and projects to be implemented; estimated financing and the sources of such financing; monitoring and evaluation. These activities and projects will be based on the identified activities and respective actors in the Logic Matrix of the Agenda of Actions to Sustain the Cotton Sector in Tanzania. ICCP will be the implementation tool of CSDS II. CIIP will be prepared under the coordination of the TCA Secretariat, back- stopped by TCB. 7.1.4 Role of District Councils As the focal institutions for programmes to improve people’s welfare at grass root levels, District Councils are uniquely positioned to mobilize stakeholders and supervise successful CSDS II implementation.

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7.2 Risk Minimisation Implementation of CSDS II cannot be taken for granted, despite the cotton sector’s potential for wealth creation. To the extent that it is very elaborate, involving many actors and time- bound activities, some of which requiring new approaches in handling, CSDS II is bound to have risks such as the following;

• Difficulties in changing the mind- set of some of the stakeholders who may prefer the “ business as usual” approach in dealing with cotton rather than adapt to change;

• Political will and commitment among stakeholders may be low, especially in decisions for setting aside adequate resources- financial, material, time- to CSDS II implementation.

Stakeholders’ sensitization strategies will be systematically mounted to sustain the momentum of improving the efficiency in cotton production, productivity and profitability for all. 7.3 Maximisation of Opportunities CSDS II is a statement of hope and inspiration in the medium- term; not only for stakeholders, but also for the country as a whole. By focusing on programmes which aim at raising yields and increasing production levels; by deliberately shifting away from exporting raw cotton, to processing it locally, to add maximum value and employment throughout the value chain, the objective is to unleash the socio- economic potential of this strategic crop. It is possible. Some of the opportunities obtaining in the sector which need to be maximized include; • Farmers’ consistence in growing cotton; • The latent FDI resource levels (US$ 1.2b.) which can be invested in cotton

textiles if the nation takes the necessary policy decisions on infrastructure modernisation; and on taxes and tariffs rationalisation;

• Tanzania’s geographical location along the international trade routes and its proximity to the Asian markets;

• The combination of climatic conditions, soils and available water supplies (rivers and lakes) is a comparative advantage to make Tanzania the leading cotton producer in Africa;

• Rising incomes and growing populations everywhere are major factors which will continue to drive increases in textiles consumption.