Improving the Agriculture Business Enabling Environment: A Pre-requisite for Agro-Industrialisation in Tanzania

By Dr Barney I. S. Laseko, Policy Implementation Consultant

8^th August 2022

1. Introduction

All governments in the world have held agriculture sectors very close to their hearts. The Government of Tanzania under Her Excellence President Samia Suluhu Hassan equally has agriculture at the top of her agenda. Agriculture is Tanzania’s main source of food and income for the assured and sustainable wellbeing of all Tanzanians as it provides 95% of food consumed while employing more than 65% of the working population. Most Government investments are geared towards making sure that the enabling environment for agricultural development and growth in Tanzania becomes exemplary and accommodates all those who make it happen and flourish. 

In 2020, The Government developed Tanzania Agro-Industrialisation Flagship (TAIDF). The TAIDF framework elaborates the Government strategy toward agro-industrialisation in Tanzania. The goal of TAIDF is to achieve enhanced structural economic transformation through improved sustainable agro-industry-based economic growth that is inclusive of the poor, women and youth.

With the very elaborate identification of planned interventions under TAIDF, it must be made clear that industrialization is a process and not an event. A process is a system that emerges when a collection of events with interrelationships that create interdependence takes place to provide a solution to a given need over some time. The process that emerges creates a system in a geographical region, country or globally evolves over a timescale longer than that of its events components.

If an entrepreneur opens a factory, in an agrarian setting, that singular event cannot be defined as an industry but rather an event towards industrialisation. If a collection of events achieves sufficient significance for the locality – a geographically definable area like region, country or globally – that can be referred to as a process of industrialisation because of its impact on the (changing the face of the country) social-economic relations to the people depending on it is broad.

The phrase industrial revolution was first used to define England’s economy in retrospect. So far, literature has not identified a single cause of industrialisation. The process can emerge from a variety of causes. Therefore, governments have a crucial regulatory role to play in deciding the fate of industrialisation.

Tanzania must look at the well-pronounced first industrial revolution that took place from 1850 to 1950. For our need, the main question would be to ask if we were indeed part of the first industrial revolution. The answer is a big YES! with our roles so well defined! First and foremost, we were the primary source of all raw materials in factories built in the UK, Germany and France. Then we consumed part of the industrial products, but not those of higher quality which were reserved for themselves. In Tanzania and many other parts of Africa, South America, Eastern Europe and Asia we formed a critical part of the industrial system that was indeed not built overnight.

Until recently, we did not clearly understand and talked about where the industrial share allocated to us had shifted. History has it that pandemics and wars create social-economic epochs. The recent Covid-19 pandemic and to a larger extent the Ukraine-Russia war undressed the reality that Russia and Ukraine had taken over the global agricultural contribution of food, specifically edible oil and wheat. I guess because we never appreciated that we were very much part of the global agro-industry that never stopped evolving through technological revolutions.

It has always been obvious that the agricultural revolution, like the green revolution, involved adopting technological salutations that cut costs for profit maximisation without any consideration for humanity in terms of poverty and the environment. Yes, attacking hunger was mentioned in passing but never dealt with on a global scale. Inefficiency increases the cost of production while innovation reduces the cost of production. The two terms, innovation and efficiency are achieved over time and have several factors or elements that must be addressed through public interventions before individual firms can innovate to be competitive and grow. 

Tanzania and many other countries that were the sources of raw materials lagged behind innovation and by default harboured inefficiencies that hatched high costs and reduced profits of the manufacturers of further processed goods. As capital accumulated due to innovation in Europe and North America, factories were transferred to other places where raw material production, especially primary agricultural products, had innovated and became cheaper. It turned out that those places happened to be mainly in Asia. Therefore, one can argue that the relocation of factories followed the agricultural innovation path.

2. Tanzania Socio-Economic Vision

The post-colonial Tanzania creed has all along veered towards improving people’s wellbeing through a head-on fight against ignorance (which entails the inability to see opportunities and take advantage); Diseases (mostly caused by not observing ‘public health’); and Poverty (the observable helplessness that people find themselves in with the only option being to wait for death). Right from independence, Tanzania believed that the solutions to get rid of these three national vices could only be drawn from their self-reliance through their land, the people, good politics and legitimate leadership. While the national enemies remain the same, the pronounced sources of solutions must be interpreted and addressed in today and futuristic mindset as discussed below. 

1. Land needs land use planning, surveying, mapping and titling to be done once over a long period with appropriate continuous land management (intrinsic) and land administration (extrinsic).
2. People must be educated, healthy and free to do what they wish without encroaching on the agreed public and private interests.
3. Politics is all about who gets what, when, where and how (Laswell, 1963). Therefore, politics is mainly concerned with the implementation of legitimate policies. Legitimate in the sense that the policy implementations are done for the people and are observed and seen as legitimate in the general public eye. Politics need to be inclusive and sustainable in covering all human needs.
4. Leadership must serve the interest of the people as a whole legitimately.

The question remains on how the land, people, politics (in terms of policies) and leadership guided agro-industrialisation to deliver the envisaged peoples’ wellbeing. 

3. The Current Status of the Tanzania Agricultural Sector

For a long time, since independence in 1961, Tanzania’s agriculture accounts for around 65.5% of employment and provides livelihood to more than 75% of the population. It also accounts for about 28.5% of the GDP contribution, 30% of export earnings, 65% of inputs to the industrial sector and 95% of the food consumed in the country.

At the end of the 2019/20 Agricultural year, the Government of Tanzania with support from some development partners carried out the National Sample Census of Agriculture. The Census covered both smallholder farmers and large-scale farms (NSCA, 2019/20). It revealed that out of 12,007,839 households in Tanzania (11,659,589 in Mainland Tanzania and 348,250 in Tanzania Zanzibar), 65.3% of the households were involved in some kind of significant agricultural activities. In terms of the national population of about 65,497,748 in 2022, about 42,770,029 Tanzanians’ livelihood depends directly on agriculture for their wellbeing.

NSCA 2019/20 also showed that, only 200,217 tractors and power tillers as mechanical power for farming households to cultivate 1,642,734 ha (28.1% of the total cultivated area). Contrastingly, a total of 5,172,067 draft animals (oxen, bulls, cows and donkeys) provided animal farming and farm-related power to farming households to cultivate 4,196,023 ha. equivalent to 71.9 per cent of total cultivated land in Tanzania. It is ironic to swallow the fact that 57.6% of the cultivated area in Tanzania is still using human farm power through the hand hoe.

A quick interpretation of these facts leads to a conclusion that Tanzanians are solemnly an ‘agrarian society’ one of the oldest forms of an economy still in existence. An agrarian society constitutes a community whose economy is based on primitive production and maintenance of crops and farmland for their survival as evidenced by the NSC 2019/20. It is obvious that for any developing society the number of people depending directly on agriculture and tending farms decreases while the urban population increases exponentially. For Tanzania, that has not been the case. The number of agricultural households engaged in main agricultural activities has increased from 5.8 million in 2007/08 to 7.8 million in 2019/20.

However, the nation’s Gross Domestic Product (GDP) shows that the agriculture sector (including crop production, livestock, fisheries and forestry) contributes about 28.9% while services contribution stands as high as 40% and manufacturing including construction contributes 31.1%. It is also true that 95% of the food consumed in Tanzania is locally produced and more than 30% of foreign earnings come from exports of unprocessed or semi-processed agricultural commodities with tobacco, coffee, cotton, cashew nuts, and tea and cloves being the main exports. There is a significant increase in non-traditional agricultural commodities exports such as cut flowers, vegetables and fruits but the volumes are still comparatively low.

From the GDP and other statistical points of view, Tanzania society is no longer an “agrarian society”. This unique paradigm requires some honest social, political, and economic explanations leading to realistic, targeted and patient policy interventions to disentangle that part of the society captured in the inefficacies of the agricultural sector while the GDP presents the Tanzanian economy as having moved on with the rest of the world into an industrialised society.

Covering systemic governance hurdles, the interventions have been directed towards strengthening institutional production relationships in crops, livestock, fisheries and forest subsectors. All along the Government has been addressing “in farm” and “post-farm-gate” key issues that include land, water, seed, fertilizer, mechanisation, finance, transportation, markets, gender (with a special interest in youth), and environmental management. Post-farm-gate issues include logistics, crop aggregation, storage, value addition, tax regime, farmer organisations and dialogue. While all other countries keep improving on the same, there is still a lot to maintain the required global competitiveness and growth.

4. Enabling Environment for Agri-Industrialization

Enabling Environment for Tanzania Agro-Industrialization Flagship Programme requires institutional settings that are inclusive and sustainable in terms of efficiency, efficacy and environmental sustainability. The environment must provide for the private sector (including all farmers) and Government (Central and LGA’s) to co-exist with a relationship maintained through dialogue that is beyond mere consultation.

The World Bank Enabling the Business of Agriculture report (2016/17), dealt with agriculture production relationships categorised into three groups that are operations, quality control and trade. Operations indicators measure the requirements for enterprises (including individual farmers) to enter the market and conduct agricultural business activities. Quality indicators measure the regulations governing safety and environmental standards along agricultural value chains. And, Trade indicators measure restrictions on inputs, farming and processing, ex-farm and processor trading restrictions including in-country trading, importation and exportation across borders for agricultural-related inputs and outputs.

The World Bank reports (2016/1017) acknowledge that most agricultural governance processes are critically necessary while others may be unnecessarily redundant. However, further research and dialogue on the performance of each factor on how it impacts the Tanzania Agro-Industrialisation Development Flagship Programme would be an important part of the programme’s success.

The case at hand is bolstered by the findings presented by the National Sample Census for Agriculture of 2019/20 (NSCA of 2019/20) results. The recently released report shows that most smallholder farmers faced different constraints during the 2019/20 agricultural year. The major agricultural constraints reported by agriculture-based households included climate change impact (17.8%), cost of inputs (15.6%), access to land (13.5%), low prices of agricultural produces (7.2%), pests and diseases (6.7%), availability of inputs (5.6%) and soil fertility (5.3%). All of these constraints directly identified by farming households require targeted policy interventions. Figure 1 below presents the findings of the NSCA 2019/20.

Figure 1: Tanzania Agricultural Constraints at Household Level in 2019/20

Source: NSCA 2019/20 Main Findings Report.

Therefore, it is based on the above line of thinking that this article tries to argue for further dialogue toward the successful implementation of the TAIDF programme. From the long list mentioned earlier, some examples picked and discussed here include land, water, seed, fertilizer and mechanisation.

1. Land

Tanzania has a land surface covering 947,300 square kilometres with 93.5% of it being dry land and 6.55 being water bodies. At independence in 1961, there were about 10 people per square kilometre but 60 years later there are 72 people per square kilometre including reserve land that takes about 25% of the land.

Insecure land tenure is associated with greatly reduced investment in land fertility, access to credit, land conflicts, women and youth access to land, and poor investment in climate change mitigation measures. The NSCA 2019/20 identified major agricultural constraints to mainly be access to land (13.5%), soil fertility (5.3%), land ownership (4.6%), access to credit (2.6%), and conflict between farmers and livestock keepers (0.7). In total, the identified agricultural constraints related to land add up to about 50.3%. Adding the climate change constraint of 17.8%, about 71.7% of agricultural production constraints can be addressed in one way or another through land reform interventions.

Tanzania has among the best land policies and their respective implementation tools in the developing world. However, the land policies and their implementation tools are designed to work in a context where proper land use planning has been done; where all land is surveyed and mapped and every land parcel has been appropriately titled. Much of these issues could be addressed through systematic land adjudication that involves mass land use planning, surveying, mapping, and titling using the existing modern technologies.

The multiplier effect of just getting the land sector fixed once and for all is big in stabilising and smoothening the functioning of almost all other socio-economic sectors. Way before the revered World Industrial Revolution, by the year 1080 England had a record of identifying who owned and for what use all parcels of land in what was referred to as the ‘Doomsday Book’, France did it by the year 1550 under King Leopold Bonaparte and the United States of America did it in the 1700s. Their participation as leaders and beneficiaries of the first industrial revolution could be attributed to their land reform foundation. Therefore, the importance of the current Government’s extensive land administration reform programme cannot be overemphasised.

2. Water

Current areas under irrigation in Tanzania are only 2.5% of cultivated land (475,000 ha.) which is unsustainably low compared to about 20% of irrigated globally cultivated land. ASDP II and NIMP project to increase land under irrigation to 1 mil ha by 2035. Asia is leading in irrigation (40%) while the least irrigation is done in Africa (5%). Because of the strong market demand for agricultural produce, irrigation development is inevitable. In addressing climate change, irrigation schemes have become important for agriculture sector transformation attracting external support and youth participation. As a result, ‘Squatter Irrigation Schemes’ are emerging rapidly in Tanzania threatening water availability as well as environmental sustainability. This calls for the systematic development of irrigation schemes. 

The National Irrigation Act of 2013 provides for the legal personality and rights in irrigation by individuals, farming communities and organizations. The Act establishes the National Irrigation Commission which is authorized to invest in irrigation development either on its mandate or in collaboration with the private sector. The Commission is responsible for the coordination, promotion and regulation of developments of irrigation schemes. The Act defines an irrigator to include individual farmers, irrigation organisations, companies, public entities, non-governmental organisations and any other body of persons.

3. Seed

Seed is the most important input in agricultural production. An improved seed must be made available to farmers through well-established seed development and distribution systems. Despite huge investments made by farmers in preparing their farms and other agronomical investments, especially smallholder farmers, even when proper fertilizer and irrigation are used, without improved seed, the results will be minimal if any. Farmers invest in expensive improved seeds expecting higher harvests. In the case of counterfeit seeds in the market, losses to farmers and the nation are colossal.

There are some crops which depend on local seed systems. These crops are mostly non-commercial and with niche markets. There are vivid advantages in maintaining these crop seeds and their localized production relations. However, crops produced for larger markets including industrial raw materials have had research done and improved seed varieties are available. Formal seed systems have been developed with scientific breakthroughs in addressing most of the crop stresses in a given agro-ecological zone. Under normal agronomic conditions, improved seed breeding associated with these systems assures farmers increased yields due to increased agricultural productivity, greater resistance to insects, pests, and other crop diseases, including tolerance to moisture stress.

An efficient seed system depends heavily on public sector support and control. The Government of Tanzania has therefore invested in strengthening seed policies, laws and regulations. Important areas addressed by the Government include plant breeding, variety registration, seed quality control and accessibility by smallholder farmers in terms of distribution and affordability.

The NSAC 2019/20 showed that farmers using improved seeds account for only 28% of all farmers in the country with an equivalent of about 20.8% of total land cultivated. To improve this dire seed situation, The Government has bolstered agriculture’s budget allocation in research and seed production funding by 58% (2020/21: TZS Bil 7.35 to 2021/22: TZS Bil 11.62) and Seed production services increased by 95% (2020/21: TZS Bil 5.42 to 2021/22: TZS Bil 10.58).

Climate change has become an overarching concern for agricultural development. Required policy interventions include providing farmers with well-adapted seeds (against drought, heat, and floods) that are nutritionally loaded; ensuring the availability of improved released varieties of staple crops; repackaging of available technologies i.e. cultivar adjustments (shift in varieties cultivated) and agronomic practices to make them climate smart; enhance public and private participation in seed supply chain governance; develop seed systems that are more climate-smart and inclusive; and the development of a formal seed policy framework that incentivizes the private sector to take the lead in seed supply.

Additionally, there is a need for a stand-alone Seed Policy and review of the Seed Act of 2003 as it has been in place for almost 20 years. The new seed policy, law and regulations should facilitate the adoption of new and more efficient measures like reducing the time it takes to certify a new seed. We have grain reserves but no seed reserve that would provide security to farmers in case of a problem with seed availability.

Given the proven revolutionary (pivotal game changer role) that seeds can play in the TAIDF program, a revolutionary policy intervention under the public-private partnership concept where improved seeds, in this case, hybrid, for a strategic crop like sunflower would be provided to all farmers in the country for three consecutive years at a highly subsidised price.

The new seed policy should also address seed development transparency to ensure the free flow of market information concerning supply and demand to avoid price exploitation by unethical brokers and middlemen.

4. Fertilizer

After accounting for the labour associated with fertilizer use, its rate of return is estimated at 40 to 60% a year. The Green Revolution is attributed to the increased use of appropriate (quantity and type) fertilizer and improved (adapted to agro-ecological conditions) seeds. However, inappropriate use of fertilizer and other agrochemicals has led to soil erosion, acidification and groundwater pollution.

The majority of the fertilizer formulations in the market do not respond to soil and crop-specific balanced nutritional needs. A majority of fields are depleted of organic carbon resulting in declining soil fertility, micro-organism growth and related activities. 

Based on the suitability analysis the results indicate crops that can be grown for commercial purposes. Using soil amendments such as lime & gypsum to counteract the soil acidity levels is necessary to increase nutrient use efficiency in most of the country’s agricultural lands. Fertilizer companies would then be required to produce fertilizer formulations that respond to the nutrient deficiencies identified in the fields and crop requirements.

5. Mechanisation

As shown by the NSCA 2019/20, labour available for agriculture has tremendously declined despite increasing youth. The youths are uninterested in the tedious back-breaking and less-paying land tilling jobs. The youth have therefore abandoned the rural agricultural labour market and moved into growing urban areas. Under normal conditions, the push would have been caused by an increase in labour and machine mix efficiency. That has not been the case in Tanzania.

Farm machinery is an intrinsic part of modern agriculture. Increased labour productivity, as is the case in any other sector, is achieved through mechanical and digital leverage. In Europe, as per the World Bank 2017 report, there are 1,300 tractors per 100 square kilometres of land while in Sub-Saharan Africa there were only 2.24 tractors per 100 square kilometres.

Low agricultural mechanisation is partly attributed to incoherent policy approaches implanted by Governments. Although local fabrication, assembling and importation can be done through the private sector, mechanization policies, laws and regulations affect the market in terms of accessibility, commercial viability and safety. The public sector should provide licencing after inspection, testing and approval including other public safety measures.

Our follow-up articles will elicit further discussion on agricultural finance, transportation, markets, gender (with a special interest in youth), and environmental management. Post-farm-gate issues will include compliance with logistics, crop aggregation and storage, value addition, tax regime, farmer organisations and dialogue. 

Authored by Dr Barney Laseko, with support from Alliance for a Green Revolution in Africa (AGRA). Email – bislaseko@gmail.com, phone +255 754272540