Tanzania’s Minister of Agriculture, Hon Hussein Bashe, addresses the evolution of Tanzania’s agricultural sector on December 18, 2023, at the Ministry of Agriculture’s local investors’ conference in Dar es Salaam, held at the Serena Hotel. The conference was aptly themed ‘Empowering Our Own.’ His abridged speech was captured by the Kilimokwanza.org team.
Acknowledgements and Opening Remarks
Let me take this opportunity to thank you for showing up and coming here. I thank the Minister of Finance, the Minister of Investment, the Deputy Governor, and the representation of the TRA for being present in this hall. We believe that even if you have land, rain all year round, and everything else, if investment policies, fiscal measures, and monetary measures are not conducive, we will continue to struggle with our subsistence farming.
The Importance of Collaborative Policy Making
If we want to turn around the agricultural sector, it is crucial that we, the producers and investors, have a good relationship with the policymakers in tax, finance, and investment, so that we can all align and move away from the history of talking about Tanzania’s potential. We need to turn this potential into reality, and this requires collaboration. Also, I would like to thank Azania Bank for agreeing to be part of facilitating this event. Thank you very much.
Emphasis on Local Participation and Investment
Now, what I will do is just give reasons why we think, and why we are talking to locals. Our message is that we use the word “our own” because His Excellency the President has made a lot of efforts to promote this agricultural sector and our investment direction. For a long time, our promotion has been more about talking about Foreign Direct Investment (FDI) coming here, which is good. But when FDIs come to our country, at the end of the day, what remains or leaves? What are we getting out of this? Because you can promote investment, foreign companies can come and put their money here, but where is the involvement of locals?
Highlighting Local Success Stories
Now, as the Minister of Agriculture, in the short time I have been in the ministry, I have learned one thing: you get a lot of foreign entities knocking on your door, asking to take advantage of the opportunities available, but very few locals. I want to give an example of someone here, apart from people like Seif of Super Doll who have been in the game for a long time. I want to mention Moi over there. His main business is petroleum. He went into poultry. When there was a food crisis a couple of years ago, he came to me and asked why are you allowing the export of maize. We were in parliament, he’s my fellow MP. “Don’t allow it, Hussein, we are killing the chicken sector, and this is food,” he said. I told him, “Moi, why don’t you farm? Farm to produce for your chickens.” So, I said maybe there is a lack of communication and a gap between locals understanding the opportunities. Maybe we should start a discussion because we believe that for growth and sustainable growth, our local people have to own the game, and that is the direction we think we should take.
Overview of the Agricultural Sector and Global Trade
We said we take this opportunity now for an overview of the agricultural sector, and in the presentation I am making, I am not just talking about Tanzania because we produce locally and then we must trade globally. This is what will make us sustainable. Now, looking at the African population, it is projected to reach two billion by 2050. The continent spent over 8 billion on food imports, and the import bill is estimated to reach 110 billion by 2030. In these imports, we are not a special case; we are also importing. What is Tanzania importing? Mainly food items such as wheat – now 90% of our wheat needs are imported. We import edible oil among food crops.
Progress in the Sugar Industry
Thank GOD for the sugar producers here; I don’t know how many are present. Our target was to be self-sufficient by 2025. I thank God that if it weren’t for the El-Nino rains this year, we would have had a zero sugar gap in our country. In the sugar sector, we have TPC, which is foreign and local government ownership. We have Kirombero, who is local and government. We have Mtibwa, who is local. We have Kagera Sugar, who is local. We have Bakhresa, who is local. We have Manyara Sugar, who is local. So, in the sugar industry, we are going to meet our objectives. We would have hit the target this year, but because of the El-Nino rains, they stopped production for over 40, 50 days. So that caused us a gap, but I believe that in the next 3 years with the ongoing expansions, we will be exporters of sugar and very soon, we will start to control the importation of industrial sugar in our country.
Projection of Agribusiness in Africa and Tanzania’s Strategic Position
The projection for agribusiness in Africa indicates that the market is expected to be worth 1 trillion by 2030. Tanzania’s strategic location offers a gateway to the East, Central, and Southern Africa markets, encompassing over 300 million people. We face a situation where approximately 13 million people in the Horn of Africa are threatened with severe hunger due to climate change and political instability. Despite varied circumstances, including war, there remains a constant need for food. Historically, our trade routes to the Horn have been through Kenya.
The Need for Formalization in Agricultural Trade
In parliament this year, we discussed the necessity to formalize the trade of food crops, especially as foreign buyers from surrounding countries often manage the trade in areas like Songea rural. The goal is to shift from informal to formal trade in agriculture, recognizing the strength of our local capabilities.
Major Food Imports and Agricultural Sector Contributions
Major food imports in Tanzania include wheat, edible oil, sugar, meat and dairy products, fruits, and vegetables. The agricultural sector contributes significantly to Tanzania’s GDP, with 26% contribution from agriculture, 65% from industrial raw materials, and 62% employment in the agricultural sector. It also contributes 30% to foreign exchange earnings and plays a vital role in food security.
Tanzania’s Goal for Food Security
Our national goal is to achieve 140% food security by 2025, implying a surplus of 40% of our food production. This surplus is intended not just for local consumption but also for trading with neighboring markets.
Historical Contributions and Future Trajectory of Agriculture
From 1966 to 2022, the agricultural sector’s contribution to GDP has shown a fluctuating trend. This variation reflects different policy decisions over the years. For instance, if we had maintained the growth pace of 1970 without policy changes, our agricultural sector could have grown at a rate of 7.1% by 2023. However, various policy shifts have resulted in different growth patterns.
Vision and Mission of the Ministry of Agriculture
The Ministry of Agriculture has revised its vision to focus on feeding ourselves and others commercially. Agriculture is regarded as a typical business, where even small-scale farmers with 2.5 hectares of land must be seen as entrepreneurs. Our mission is to build a sustainable and competitive agriculture sector, fostering an inclusive economy. This includes improving the livelihood of farmers and securing a wealthy nation through green growth.
Initiatives for Sustainable Agricultural Growth
To achieve sustainable growth, our objectives include increasing productivity and production, creating decent jobs, and enhancing youth and women’s participation in agriculture. We are exploring technologies and methods to attract youth and create more jobs in the sector. Additionally, strengthening access to market and agricultural financing is crucial. Recent efforts, like the reduction of interest rates for agricultural financing, have been instrumental in supporting smallholder farmers.
Strengthening Cooperative Societies and Financing Mechanisms
Cooperative societies play a vital role in incorporating smallholder farmers into formal economic activities. Innovative financing methods, such as back-to-back Letter of Credit (LC) systems, have been introduced to facilitate transactions without the need for traditional collateral. These systems, coupled with the government’s efforts to strengthen cooperative societies, aim to resolve financing challenges in the agricultural sector and promote inclusive growth.
Agricultural Constraints in Tanzania
Agricultural constraints in Tanzania encompass a wide range of issues. These include but are not limited to, access to finance, productivity challenges, difficulties in obtaining agricultural inputs, land ownership issues, soil fertility concerns, pests and diseases, low prices of agricultural produce, cost and access to land, high input costs, expensive irrigation equipment, and transport costs. The government is actively developing strategies to address each of these constraints.
Increased National Budget for Agriculture
To address these challenges, there has been a significant increase in the national budget allocated to the agricultural sector. From the fiscal year 2021-2022, the budget has now reached 1 trillion USD. This increase aligns with the goal set by the President, requiring an average investment of 1.5 trillion USD in public funds for the agricultural sector over the next 8 years. This is the second consecutive year where we have seen an increase in the budget, particularly in areas such as research and development and seed multiplication.
Private Sector Contributions
I also want to acknowledge the involvement of the private sector in seed production. Their contributions have been significant and are a key component of our overall strategy to improve the agricultural sector in Tanzania.
Now, regarding agricultural constraints in Tanzania, you see the list. All of these are constraints, but we talk about access to finance, major constraints in productivity, access to agricultural inputs, but we have issues with land ownership, soil fertility, pests and diseases, low prices of agricultural produce, access to land, cost of inputs, irrigation equipment, transport costs. All of these require different strategies from the government.
We have increased the national budget for the agricultural sector from USD 125.06 million in 2021/2022 to USD 322.9 million (157% increase) in 2022/2023, and to USD 413.96 million (28% increase) in 2023/2024, now reaching 1 trillion. It’s true, because to achieve the goal set by His Excellency the President, the investment required in the agricultural sector by public funds is an average of 1.5 trillion for the next 8 years. Therefore, we have improved our budget. This is the second year we have increased the budget, particularly in research and development of seed multiplication in areas where we invest heavily. I also want to acknowledge the involvement of private sectors in seed production.
I am very thankful and it’s the direction of the Ministry of Agriculture to have our subsidies, our own seed core, which are local because there’s no reason for the government to boast about holding the rights to produce seeds and then not being able to optimize them 100%. I’m very thankful to the locals who, when invited, came and started producing. I don’t know if the chairman of the seed producers is here, but for the first time, our seed production this year reached 50% of the annual demand. For the first time, we have reached 50% of our domestic needs, which is one hundred and twenty thousand metric tons. We have reached sixty thousand tons today. And when we talk about seeds, we talk about seeds of 13 crops in our priority list for the food basket. This country produces around 80 to 90 crops, but we have 13 priority crops that contribute to food and security, employment, exports, and industrial processing. Those are the crops we give priority to, not everything. Now, we aim to increase the irrigated area from 822,000 to 8.5 million acres by 2030.
In 2021, our irrigated area was seven hundred and twenty thousand hectares out of twenty-nine million hectares. In the first year’s budget, we added ninety-five thousand hectares, and this year we are adding another ninety-five thousand hectares. That’s why I said this year the Minister of Planning and Finance must commit at least an agri investment of 1.5 trillion so that we can reach 8.5 million hectares by 2030.
Another area is the establishment of block farm systems for youth and women investment. I want to be understood on the block farm system. Right now, the government has decided that we are establishing block farms because so far we have two in Dodoma, one called Membe, the other Dokoye. We have developed new block farms in Singida, Ikungi district, another in the Njombe region of about eighty-seven hectares, another in Chunya of fifty-seven thousand hectares. Why? Because we believe to bring in youth and women into agriculture, who are not currently participating, we must have nuclear farms, and this is where we want to invest. To farm, the government takes the lead. We measure the land, we know the crops that can be produced, we bring basic infrastructure, one of the basic infrastructures is water, because agriculture needs water, not just rain. If you can correct flood waters, you say oh God, when floods happen in Dar es Salaam you say ah God, that’s it. But these waters of Dar, the Msimbazi, I was joking with Kitila, I tell them it’s time Dar es Salaam started distributing rice seeds because it might be possible you have invaded agricultural rights to build, but we get a lot of water for a very short period of time. So, the government, when developing these block farm systems for youth and women and for investment purposes, we want you, the investor, to come. We’ll tell you we give you five thousand hectares here in a block of twenty thousand hectares. Our first condition is that you will be the off-taker of the out-growers surrounding us, whom we will service. The land we give you, we don’t tell you to pay us now. We’ll sign a performance ability agreement, and then we’ll give you a timeframe for you to develop yours. For these out-growers, it’s the role of the government to develop, and we will facilitate that, apart from that we will facilitate other basic infrastructures.
I’m grateful that currently, the applications that have come in are more than we can handle, which is a very good thing. We have decided to enhance extension services by providing motorcycles, tablets, and bringing soil feeds to extension officers to provide the soil service and help the soil for small farmers because when small farmers farm, they don’t know what they are farming. They might be farming maize in an area not suitable for maize.
But we have established something called the Agricultural Development Fund to facilitate development activities and stabilization fund. What we believe is that there’s no way we can protect the current smallholder farmers if we don’t have this structure. I thank the Minister of Finance and the Minister of Planning. It was a huge discussion with the government, but we agreed on funding, and this year we passed the law to establish the ADF. So, where will the ADF come from? It will come from the government’s budget and from the levies the government has been collecting from the crops. These levies will go into that fund and will return to support the agricultural sector. We started with the cashew export levy. Instead of going to Mwigulu’s fund 100%, this year he allowed 50% to return to the cashew sector, and we will continue to discuss with him so that 100% returns to the cashew sector.
Reduce the interest rates to 9%. I’m very grateful to the first bank to go this route, TMO, then commercial banks came, and I think as a country, we must start the discussion about what is the role of TMO? Is it a development bank or a commercial bank? The central bank has to make decisions because TAB is a development bank. Then as a country, we need a strong policy to make TAB a development bank. I’m grateful that recently, the Minister of Investment connected TAB with the small farmers’ fund, so we are continuing to convince him not to connect us with the small farmers’ fund because TAB is a development bank, and we are in input transit. We are not making a profit.
Another is the development of storage infrastructure for post-harvest nature. This is an effort that has started with the government, but this area we cannot succeed alone. Today, by 2021, our post-harvest loss was almost 30%, and thank God now we are almost at 15% with different interventions, and we must reach at least 5% of post-harvest loss. But sectors like horticulture are still facing huge losses.
Private sectors have helped us a lot, institutions like 5, especially in horticulture, they have done a good job in reducing post-harvest loss in agricultural crops, and one of the agricultural sectors that is growing very fast is the horticulture sector, which is growing in the agricultural sector. It’s growing at 7% right now, while even sub-sectors are growing at an average of 3%, 4%. Horticulture is growing very fast and is driven by Avocado, but all of our avocado is going through Kenya because of the lack of core chain facility. The government is now starting to build core chain, but when we build them, we will hand them over to the private sector to run, not us, because if something breaks down, until I write a note and go to the secretary-general, the process Mwigulu looks at whether there are funds to buy a broken bolt, it’s not possible in that year. So, we have started building, we will announce, we will give it to the private sector to run.
So, what do we want to attain? We want to attain a reduction of sugar imports. Currently, our import data from last year was 20%, and we want to attain 0%. Edible oil, we want to reduce imports from 60% to 30%. Wheat, we want to attain 50%, and fertilizer, we want to attain 0%. We want to increase the irrigated area to 8.5 million hectares, attain a growth rate of 10%, increase our export value from an average of 1.5 million dollars last year, and this year we are going to 1.3 million dollars to 5 billion, and reduce post-harvest loss to 5%. So, these are the trends that crop subsectors are growing as part of the agricultural sector. So, where is the opportunity? Why are we calling to invest in agriculture? One, right now our population is 62 million, we are going to 80 million, all these people need to eat. In 2022, our production of our food demand was 13 metric tons, our demand for 2030 we project will reach 20 million metric tons. So, this shows us what we need to attain. We want the fertilizer uptake by the farmer to increase from 19 kg to 50 kg. We want the value-added by 2022 in our export of value-added crops to be 10%, we want at least to reach 50% of the total portfolio of agricultural export to be value-added crops.
Sugar import we want to be zero, edible oil not to exceed 30
%, and for fertilizer and wheat, we aim for a 50% reduction in wheat imports and zero in fertilizer imports. We want to reduce post-harvest loss to 5% and decrease our poverty rate by 50% to achieve 150% food and security. However, all of this needs private sector participation. Now, the potential value chain for trade and investment, first, as I mentioned, is wheat, second is edible oil. Thanks to the smallholder farmers, this year we have produced 1.1 million metric tons of sunflower seeds, an increase from the 48,000 metric tons last year. Therefore, industries that previously claimed there was no raw material are now overloaded to the point that farmers are lacking demand. So, there is huge potential here, particularly in areas like Morogoro, which I want to encourage local investment in. We have conducted studies showing it is suitable for sunflower production, and as Minister of Agriculture, we are ready to allow people to grow sunflower for export. Even if we import palm oil, there is no problem because sunflowers are a premium oil in the global market, and you get more value when you export than when you sell it locally.
Therefore, we encourage investment in sunflower cultivation. Many of you may think about the Mkulazi area in Morogoro for sugar, but I advise you, for the next 10 to 20 years, don’t invest in sugar. Why? Because of the expansions happening in Kagera, Kirombelo, Mtibwa, Bagamoyo, Kigoma, TBC, and soon we will exceed over 1 million metric tons of sugar in this country. We have advised these companies to expand vertically and go into sugar for industries. If you invest in sugar in Mkulazi and we start exporting, be aware that we will be competing with South Africa, SADEC, and there will be competition. Right now, sugar is protected, but in the near future, it won’t be because we will have reached our optimal level, met local demand, and will have a surplus. So, for any venture for the next 10 to 15 years, I don’t see new investment in sugar being a better place for your dollar. Honestly, put your money in edible oil and wheat because there is huge potential locally.
Another area we are trying to attract investment in is horticulture. Currently, thanks to the support of the private sector and the efforts of the Tanzania Horticulture Association, today Tanzania is the largest producer of avocados in Africa. But what is our problem? Of the 190 to 200,000 metric tons produced, a maximum of 30,000, not even 40,000, is exported because of huge post-harvest losses. So, we need agro-investment for processing. There is a lady here, Khadija, who has started a significant investment in Iringa, and the government is supporting her. I thank USAID; we met with USAID, they presented the investments they want to make, and I told them I don’t want conference money, give this lady money. She has been very ethical, to set up a factory for processing agro food, and they gave her money because refined avocado oil is a premium crop.
Another area that requires investment is fertilizer. Currently, we have started comprehensive government support for soil health testing, and very soon you will hear we are banning the use of BoP in the country. Why? Because it’s not feasible to continue giving farmers BoP, you plant BoP from Chalinze to Kagera, it’s not possible. So, we are starting to assess soil health, define maps, and specific areas that need investment in fertilizer. Right now, our 2021/22 data shows we are producing 20, 43, now we are going to 100,000 metric tons.
We have two major investors right now, one is Minjingo, we are tolerating him a lot, he is here, we need him to reach the standard we want, then the government has to be there. The other is in Dodoma. We want these people, and now we have started a pilot to test the formulation of fertilizer for tea to be produced locally. Soon, we will ban the use of imported NPK for tea, we will use local fertilizers. We are in the final stages, the formulation is there, we can attain the required quality, and the suppliers will be local producers. So, this is an area where we need a lot of investment in fertilizer, lime for agriculture, another area is seeds, which we need to reduce imports of, another area is pesticides. Let me give you an example of how problematic pesticides are. Just for cashews alone, we import about 280 billion shillings, we import inputs for tobacco worth 120 million dollars, we import inputs for cotton worth 90 billion, and you know what? Tanzanians do the research to observe the pests, create the formulation of which pesticide can kill the pest, then we send that formulation to India, China, they do the blending, and they sell it to us. So, what we want is for people to invest in blending facilities locally. I thank the lady; tomorrow we are going to inaugurate her factory in Moshi, and the government will buy her products because the research is done by us, the formulation is done by us, and then we send it to China. China does the blending, so anyone who invests in blending facilities in the country will be given a concession for a specific period of time. We won’t import the pesticide; we will buy it directly from them. They will do the blending locally, so this is the area we want to put effort into.
Another area is irrigation. The government intends to reach 8.5 million hectares. We started last year and this year, and we are using local contractors plus one. We want locals because right now, for the projects we have started, more than 40, 97% are locals. We decided to resist and reduce foreign companies coming in to take over the construction of irrigation infrastructure. Another area is mechanization. We import a lot of tractors. Thanks to Agelina and John Deere, we talked to them, and we assured them business. As a government, we will be buying 1,000 pieces every year. They should set up a facility for assembly of tractor factories, and we have given them land. Mahinga is already doing this in Kibaha; we will inaugurate there at the beginning of the year, Agri Coin in Dodoma, and we have given them land. We assure them a market and access to land, which we give them a reserve for 60 years for them to invest because there’s no way we can increase productivity if we don’t embrace mechanization. The government has established mechanization centers, and the day after tomorrow, when we finish the fertilizer subsidy, we will go to subsidizing the mechanization cost. What we want is for these private sectors to start these mechanization centers. We will enter into agreements with them. You buy tractors, combine harvesters, all the equipment, sit in the villages, and we’ll tell you instead of charging the farmer 60,000 per hectare, we will give you 10,000, and you charge them 50,000 so that we can increase the number in that way.
Another area is post-harvest loss. We want to reduce post-harvest loss. For example, the government’s intention is to buy 3 million metric tons of food, but our storage capacity is only 500,000 metric tons. We recently announced a job; we want the private sector to build warehouses. We will enter into agreements with them. The National Food Reserve Agencies will enter into agreements for storage, and the government will give them a long-term contract to build silos and warehouses. We will be their customers because we don’t need to go to Mwigulu to ask for 5 billion shillings to build a silo or warehouse when someone can get that, and financial institutions can support it because there is assured business with the government. So, we have decided to take that route. We are currently conducting feasibility studies and will announce areas where we want the private sector to build warehouses for us. But we want to reduce post-harvest loss in horticulture. The government has started 500 meters away from poultry. We have an area in the Ministry of Agriculture, an area in the dry ports of Mtwara. What we are calling for is an investor to come and set up core chain facilities so that we can restrict the use of neighboring country ports. People go to neighboring countries because, at Dar es Salaam port, there are no facilities. So, we want the private sector to set up, and then we will put policies in place to supply so that the investor can get business.
We have started a tea auction, thanks to the private sector and local companies, and I told them that the tea must pass through Dar es Salaam, and the auction must be in Dar. It must be because it took us two years, and I thank my CEO of tea bags. It took us two years to attain it, a lot of difficulties, and I’ll tell you why we started. We went to DMCC in Dubai, I entered there wearing a kanzu, so those DMCC guys thought maybe this guy is an Arab, I was with a delegation, we started walking, I was taken to the tea center, the guy inside was from KTDA, Kenya Tea Development Authority, he was inside. He arranged all the DAC teas, he told me, you know Rwanda tea, he explains its quality, he explained up to Tanzania, when he reached Tanzania, the guy remembered he hadn’t introduced me, he told him by the way this is the Minister of Agriculture from Tanzania, the guy was shocked.
I told him, “No worries, we are both from the DAC.” I then asked him to tell me about the qualities of Tanzanian tea. He said that they do blending with Tanzanian tea because of one quality – color strength – which makes other teas sellable. So, I asked him what the selling proposition of Tanzanian tea is, and he replied that it’s the color. I thanked him and thought to myself, ‘We need to bring our tea auction back home.’ If our tea has lower quality, we should find out in our own auction, not be told in someone else’s. We need to struggle from our own auction, and thanks to Bravo, we have done this. The private sectors, we asked Bravo, we entered into an agreement with them, they provided warehouses, invested a lot in developing these warehouses, and the auction has started. It’s been about two or three weeks, and if there are problems, we will resolve them in the auction, but our tea must be sold there, whether it is direct or by auctioning.
We need packaging materials, and this is a huge and bigger area in the agricultural sector. We import millions of dollars worth of duty bags into the country. We import over 8.5 million boxes for fruits and vegetables, so this is an area where there is a huge opportunity. For cashew nuts, we need to go into value addition of cashew nuts. The government has started an area called Maranje in Mtwara, where we have acquired 1340 hectares, compensated, cleared, brought electricity, water, and all the necessary infrastructure. We want by 2026 to restrict the export of raw cashew nuts because when we talk about value, it’s not only nuts, but also processing the entire value of cashew nuts, including the shells, for oil extraction. That is the direction we are heading. We need private sectors to view our intentions and see local investors coming. We are going to cotton now; currently, we are producing lint, we are in primary, we don’t have problems with ginning, our production for cotton has increased from 120000 metric tons two years ago to 280000 this year, and the government is providing subsidies for seeds and such to farmers. Next year, we are starting to prepare an industrial park for cotton, where we will start processing yarn and all other products derived from cotton. In this industrial park, just like we did with tea, where the private sector doesn’t pay costs, we will pay as the Ministry of Agriculture. When we go to these industrial parks, we will reduce the price, provide incentives, electricity, and water costs, and this will be borne by the budget of the Ministry of Agriculture when we start, for the first three to five years because that’s the way to go. We must reduce the cost of production to make these industries competitive. Another area we are looking at is palm oil. This is not a short-term solution but a long-term view, and we have already identified areas for investment in palm oil in Kigoma and Katavi. Thanks to the Bakhresa company, they have shown interest, and I think this week they are going to Katavi to look at that area. We have told them we will give them that area because the company from Kenya that requested it, we told them to continue developing the limited land we gave them in Kasulu. We won’t give them additional land because it’s enough; they have to produce first on that land optimally and not just acquire land for speculation. So, we are supporting Bakhresa for that. So, we did a logical survey. Now, if you come to the Ministry of Agriculture, we will tell you where to go and what to cultivate because we have already looked at the ecology and areas suitable for agriculture. We have 44 million hectares suitable for agriculture, but we are only using 15 million hectares. We have 29 million hectares for irrigation, but we are only using 0.8 million hectares right now. So, we have put policies in place, and with these agricultural cross corridors that we use, we have defined them because there used to be political decisions: you plant cashews from Mtwara to Bukoba, we want to plant avocados all over the country, it can’t pay because the bigger problem in the agricultural sector is logistic cost. When the logistic cost becomes higher, you don’t make money. In the end, farmers will just be crying. President Raisi went to Kagera Biharamuro, stood there asking for subsidized medicine for cashews. We had to scramble medicine from Mtwara and take it to Biharamuro, and we found him with a 10-hectare farm. We wondered where he would sell his cashew nuts. If he says he will export, it means transporting them from Biharamuro to Dar es Salaam port. The buyer who buys cashews from Biharamuro and the buyer who buys from Mkuranga, the Mkuranga farmer will get a good price because of the logistic cost, unlike the one in Biharamuro. So, these ecologies, we want to maintain them, and they should be in every area with their competitive edge, which will be the crop produced in that area.
We are increasing public investment in infrastructure and making a lot of reforms. I thank the Minister of Investments, I thank the Minister of Finance for giving me an open door policy between the Ministry of Agriculture and these two ministries for the reforms we are making. I go to them to ask for changes in tax policies, which is very encouraging for us in production.
So, this is the picture of our agricultural land. I have already explained that 72% are smallholder farmers, and we want to increase productivity because if you increase the productivity of these 2.5 hectares, it’s very easy to graduate them. But if someone is producing only five bags, it’s just a waste of effort and time. That’s why the government, to deal with them, we have launched a campaign of 67500 boreholes for smallholder farmers. We drill a well for them, give them irrigation, drill a well, give them irrigation for their two and a half hectares, and this program will cost us 1.8 billion dollars. I am very thankful to the President. When I hear the President is going abroad, I rejoice as the Minister of Agriculture. Why? I want to tell you that with the money collected by TRA alone, we cannot turn around the agro sector. That’s the truth. We need 1.8 billion dollars for sixty-seven thousand wells. Mama Karuka, as Sugu says, jetted off to Senegal for the compact, came back, went to Wales, came back, we went to COP. Out of the 1.8 billion dollars we want to use over seven years, which is an average of two hundred and something million dollars a year, we have already managed to secure six hundred and ten million dollars for the program of small farmers’ wells. If she doesn’t step foot, we will fight with her in vain. It needs additional effort to get resources. Miguo is only helping us there. Mama has concluded deals; Mwiguru signs, and now we are talking to Almajid, the approved agent of GCF, who has two hundred million dollars of climate fund. We have started negotiations with him, and I want to tell you, this government is very serious about Agro. For the first time, by next year, all farmers using fertilizer will get insurance. Everyone will get insurance, and I am asked where I got the money for insurance. Very easy, Almajid has GCF money, 50% of which we are discussing. If he doesn’t give it, I will write a letter to GCF, and if he doesn’t give it, I will write a letter to them. We are telling them that this man is not helping our project here. The second, we buy fertilizer. There is a little money there from government levies. We will take it and put it in the fund. All farmers using fertilizer in our subsidy scheme will be covered, including smallholder farmers and large-scale farmers. I want to ask the large-scale farmers here, don’t buy fertilizer without a QR code. Don’t buy fertilizer that doesn’t have a QR code and don’t buy a fertilizer bag that is not written “subsidy” on it because those will charge us, and we will pay them when they enter the port. If it doesn’t have a QR code, it means we can’t trace it, and I have told all major fertilizer companies. Now I have taken disciplinary action against OCP because I caught their fertilizers not written “subsidy” on the bags and they sold them without QR codes. That is stealing from public funds. Last year, we spent 300 billion shillings and paid them nearly 240 billion so far. So let’s respect the system.
So, we will launch insurance very soon and start drilling wells. These interventions that have been made, if you look at just one year, even if you tell me that this year we have produced food over…[transcription gap]… in the regime, we will all live together to compete fairly because it’s not just about competing fairly in those areas.
So, you can see the export of crops. Look at something very unique: if you take the total exports, the fastest-growing export subsectors are fruits. This is the fastest in fruits, but later if you take the entire portfolio, you find that the leading ones are food crops. Maybe the dynamics will change this year because this year our production and tobacco have increased from 6000 metric tons to 120,000 metric tons, and next year we will reach 200,000 metric tons. I was telling the commercial banks that one off-taker buys tobacco worth one million tons and will need 240 million dollars. Therefore, Tanzanian banks and commercial banks must stop competing in the agricultural sector. The gap is too huge. So, they must look at how they can facilitate the trading complements of the people around us. So, looking at the behavior of legumes and cereals, we have started allowing people who export oil to start because this is business. If I sell sunflower for 100 dollars and import palm for 60 dollars, I would be crazy to stop someone from selling that sunflower for 100 dollars. Let them export the sunflower, and we will import the palm oil; there is no problem because the issue is the balance of payment that we are looking at here.
So, this is the traditional export odds. We launched the BBT program, and I want to use this meeting to answer many people’s questions about the BBT. It has two levels: it has youth that we are taking to the block farm, but it also has a program for smallholder farmers, which I talked about, with boreholes and such, which we will use 1.8 billion dollars for. Starting now, we want to encourage smallholder farmers to improve productivity, so we are placing them in the BBT because BBT is Building a Better Tomorrow. You can’t build a better tomorrow with Hussein as I’m approaching 50, so soon I will enter the advisory elders. So we need the 20s, the 25 years old, the 30 years old to produce. But BBT aligns with finance; commercial banks now offer 9%. We are using this advantage to give small farmers at the right performance, and often we support them with equipment support and I emphasize, let us be formal at any level, whether in production, aggregation, or trading, be formal. Formalizing will greatly help us see how the government can help you. There are problems, like the sacks in Sumbawanga or rice in Katavi that you want to take to Uganda. Seriously, we fight with the gates to reduce the burden, so that a person farming doesn’t get bothered at one point until they reach because if traders are not there, production cannot be there.
So we’re encouraging youth, and we have started thirteen irrigation centers, we have started enrollment now, and we are providing soft loans to some smallholder farmers. So, BBT has started, and I want to ask corporates in the well-drilling program, you are very secretive, come and tell me, ‘Hussein, this year I want to take a loss, I want to drill 5 wells for farmers.’ I will give you farmers in the villages, go drill for this one, that one. You don’t need to come and give us the money… the development parts, that’s what we told them in… so this is the ratio of food sufficiency. The government is investing in modern technology. Now, we have started investing in hydro systems for seed farm production. By next year, there will be many government farms with a moderate environment, especially for seeds… in research development, we are using pivots to ensure that seed production is now done year-round. Historically in our country, seeds were produced when the farmer was in the field, the seed producer also went to the field to produce seeds when the farmer needed seeds to plant, so it has been an issue. Therefore, we have invested in agricultural labs for multiplication and we are using our own seeds for research and development. We are not going GMO, but we will start something called bio science lab for our country because you cannot reject the devil you do not know.
So these are fertilizer neutralization liquids. Looking at the global average per kilo, it should be 137 kilos, Tanzania is at 16.8 kilos. So we want to improve that to at least 50 kilos for our farmers. So, we call on our own to invest in the agro sector where we will see crucial and inclusive economy. We want you to be players. We don’t say we are angels, but we want you guys to be part of this journey. We believe that with transportation, the SGR is there…