TZSoya Part 3. Rising Demand: The Market Dynamics of Soya in Tanzania

Introduction

The demand for soya (soybeans) and its products is increasing rapidly in Tanzania, driven by various economic and social factors. The Tanzania Sustainable Soybean Initiative (TSSI) Baseline Report provides a comprehensive analysis of the market dynamics influencing soya production and consumption in the country. This article explores the growing demand for soya, its domestic and export market potential, and the challenges farmers face in accessing and navigating these markets.

Growing Demand for Soya

The TSSI Baseline Report highlights several key drivers of the growing demand for soya in Tanzania:

• Rising Incomes: As incomes rise, consumers have more purchasing power to buy nutritious and protein-rich foods like soya. This trend is particularly noticeable in urban areas where dietary patterns are shifting towards more protein-based foods.
• Urbanization: Increased urbanization has led to higher demand for processed foods, many of which use soya as an ingredient. Urban consumers are also more aware of the health benefits of soya, contributing to its increased consumption.
• Nutritional Awareness: There is a growing awareness of the nutritional benefits of soya, including its high protein content and health benefits. Educational campaigns and increased availability of information about soya’s nutritional value are driving this demand.

Domestic and Export Markets

While most of the soya produced in Tanzania is consumed domestically, there is significant potential for export, particularly to neighboring East African countries. The report estimates that the projected demand for soya in Tanzania is 275,000 metric tonnes per year by 2020, with 78% allocated to the fortified food market, 13% to poultry feed, and the remaining for other uses.

• Domestic Market: The domestic market for soya is robust, with demand coming from both the food and feed sectors. Soya is a crucial ingredient in animal feed, especially for poultry, which has seen substantial growth due to increasing meat consumption.
• Export Potential: Neighboring countries such as Kenya, Uganda, and Rwanda present significant export opportunities. These countries have similar dietary shifts and increasing demand for soya products, creating a lucrative market for Tanzanian soya farmers.

Market Challenges

Despite the promising demand, Tanzanian soya farmers face several challenges in accessing and benefiting from these market opportunities:

• Unreliable Markets: One of the major challenges cited by 43% of farmers is the lack of reliable markets. This unreliability can lead to fluctuating prices and uncertain income for farmers.
• Price Volatility: Soya prices range between TZS 700 and TZS 1,500 per kilogram. This price volatility can be detrimental to farmers’ income stability and long-term planning.
• Dominance of Middlemen: Middlemen play a significant role in the soya market, often purchasing directly from farmers at lower prices and selling at higher rates. This dominance can reduce farmers’ profits and limit their bargaining power.

Enhancing Market Access and Stability

To improve market access and stability for soya farmers, several measures can be implemented:

1. Market Information Systems: Establishing robust market information systems can help farmers stay informed about current prices, demand trends, and potential buyers. This transparency can enhance farmers’ bargaining power and income stability.
2. Strengthening Cooperatives: Encouraging farmers to form cooperatives can help them pool resources, access better market opportunities, and negotiate better prices. Cooperatives can also facilitate collective marketing efforts and reduce the influence of middlemen.
3. Export Promotion: Developing strategies to promote soya exports can open up additional revenue streams for farmers. This includes meeting export quality standards, identifying potential markets, and facilitating trade agreements.
4. Supporting Infrastructure: Improving infrastructure such as roads, storage facilities, and processing plants can enhance market access and reduce post-harvest losses. Better infrastructure can also facilitate smoother transportation of soya to domestic and international markets.

The market dynamics of soya in Tanzania are evolving, with growing demand presenting both opportunities and challenges for farmers. By addressing market reliability, price volatility, and the dominance of middlemen, Tanzania can enhance its soya sector’s competitiveness and profitability. Strategic investments in market information systems, cooperatives, export promotion, and infrastructure development will be crucial in realizing the full potential of the soya market.

The next articles in this series will delve into other critical aspects of soya production, including agronomic practices, financial services, and policy recommendations to support the growth and sustainability of the soya sector in Tanzania.

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Source:

Tanzania Sustainable Soybean Initiative. (2023). Baseline Report of the Tanzanian Soybean Sub-Sector. Southern Agricultural Growth Corridor of Tanzania (SAGCOT).