Enhancing Smallholder Farmers' Market Competitiveness in Tanzania
Case Study #6-7 of the Program: ''Food Policy For Developing Countries: The Role Of Government In The Global Food System''
Kawa, Ibrahim; Kaitira, Loyce M.
Tanzanian agriculture is dominated by small-scale subsistence farming. Like the entire economy, agriculture is in a transition from being a command to a market-based production system. The transition process started in the mid-1980s as part of the economic adjustment and structural reform programs and policies supported by Tanzania's development partners. Despite some impressive macroeconomic achievements resulting from the reform programs, agricultural growth and rural poverty reduction continue to present daunting challenges. Few smallholder producers understand how markets work, and even if they do, they do not have the information they need to participate effectively. In response to these development issues, the government of Tanzania, in consultation with International Fund for Agricultural Development (IFAD), identified the suboptimal structure and functioning of the agricultural marketing system as a key area for attention. Liberalization policy has removed many of the old certainties but has not yet provided adequate basis for an efficiently functioning alternative. To meet this need, an investment program entitled Agricultural Marketing Systems Development was proposed to remove constraints to effective operation of the agricultural marketing system and to help smallholder producers acquire the tools needed to participate on favorable terms in the open market. The program consists of four components: producer empowerment and market linkages, financial market support services, rural marketing infrastructure, and agricultural marketing policy development. The producer empowerment and market linkages component was designed to transform agriculture from a subsistence activity to a profitable enterprise in the mindset of smallholder producers by building the management and marketing capacity of these producers and small-scale traders and processors. About 50 percent of all participating producer groups are now well organized, have adopted collective marketing, and can understand which enterprises are profitable. This shift will lead to the commercialization of agriculture. The financial market support services component was created to improve access to financial services for smallholders and small-scale rural traders and processors, and this goal has been achieved among 20 percent of targeted beneficiaries. The rehabilitation of marketing infrastructure, including markets, warehouses, and rural roads, has been 43 percent achieved. The agricultural marketing policy component was designed to create a conducive policy environment for smallholder farmers to gain access to both domestic and export markets in an organized and sustainable manner, with the help of both financial market support services and infrastructure. Issues that currently impede smallholder farmers' access to markets include a weak legal, regulatory, and institutional framework; poor-quality agricultural products; inadequate entrepreneurial skills; poor facilities for processing agricultural products; poorquality agricultural marketing infrastructure; and poor access to market information and intelligence. The program has come up with some policy options designed to facilitate the strategic marketing of agricultural products and ensure fair returns to all stakeholders based on a competitive, efficient, and equitable marketing system. Policy options include harmonizing legislation and regulations to enhance fair and free marketing of food and cash crops; establishing an institutional framework that will improve performance of the agricultural marketing systems based on needs assessments; creating awareness of quality, standards, grades, and governing regulations among agricultural marketing stakeholders; supporting training in entrepreneurial and marketing skills for agricultural marketing stakeholders; promoting primary agroprocessing and value-addition chains; strengthening links between local and foreign firms; mobilizing adequate resources for investment in agriculture and development of agricultural marketing infrastructure in rural areas; and strengthening the Agricultural Marketing Information Services (AMISs) to enhance timely, demand-driven collection, analysis, storage, and dissemination of marketing information. Through the National Strategy for Growth and Reduction of Poverty, Tanzania aims to reduce poverty by transforming the agriculture-based economy into a market-led, competitive, and semiindustrial economy where smallholder farmers dominate the sector. This approach is strongly supported by Tanzania's development partners, including IFAD and the World Bank. In view of the challenges facing smallholder farmers' agricultural marketing systems, your assignment is to assess the adequacy of the developed policy options in assisting the government of Tanzania to achieve its aim and identify the key policy options for success.
9 pp.©Cornell University, Ithaca, New York. All rights reserved. This case study may be reproduced for educational purposes without express permission but must include acknowledgment to Cornell University. No commercial use is permitted without permission.
Cornell University Division of Nutritional Sciences
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Previously Published As
Ibrahim Kawa, Loyce M. Kaitira (2007). Case Study #6-7, ''Enhancing Smallholder Farmers' Market Competitiveness in Tanzania''. In: Per Pinstrup-Andersen and Fuzhi Cheng (editors), ''Food Policy for Developing Countries: Case Studies.''9 pp.