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Cotton Sub-sector Reforms-Tanzania Cotton Association

Cotton Sub-sector Reforms-Tanzania Cotton Association. Robert Kisenha Chief Executive Officer, Simon Agency Ltd. Introduction. 1993 marked policy change on commodities market. Prior to liberalization marketing was the province of the government assisted by cooperatives.

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Cotton Sub-sector Reforms-Tanzania Cotton Association

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  1. Cotton Sub-sector Reforms-Tanzania Cotton Association Robert Kisenha Chief Executive Officer, Simon Agency Ltd

  2. Introduction • 1993 marked policy change on commodities market. • Prior to liberalization marketing was the province of the government assisted by cooperatives. • Inefficiencies in the whole system necessitated the policy change. • This paper will examine the reforms in the cotton industry stage by stage.

  3. Liberalization of the cotton sub-sector • A free market in the cotton industry brought a number of benefits:- • Competition • Better prices to producers • Increased ginning efficiency • Prompt cash payment

  4. Liberalization (cont.) • Unfortunately entry of many players in the cotton business had some undesirable impacts:- • Deterioration of quality of cotton • Unattended supply of farm inputs • Collapse of seed multiplication system • Mixing of seed varieties from various zones

  5. Competitiveness of Tanzania Cotton • Tanzania cotton is 100% hand picked • Enters the market earlier than west African cotton • Located near major markets compared to other regions • Decline in quality results in price discounts of about 6 US cents per pound instead of receiving 4 US cents premium as it used to be before liberalization

  6. Public - Private Partnership • Tanzania Cotton Association is the forum of the Private Sector in the cotton industry. • The Association works closely with the Cotton Board in planning strategies to propel the sub – sector forward through regular consultative meetings. • Cotton buyers and ginners are encouraged to be members of the association to enhance self regulation.

  7. Public – Private (cont.) • Recent reform of the Crop Boards divided functions of the industry into regulatory, shared and private. • The private sector collaborates with the public sector to finance the shared functions which include cotton research, extension services etc. • The regulatory function is funded 100% by the government

  8. Public – Private (cont.) • The private sector is charged with the role of supplying inputs which so far we have not managed to implement. • Inputs are supplied through the Cotton Development Fund. This is an interim arrangement. • Licensing has been streamlined and licenses are obtained free of charge

  9. Marketing Functioning • Market reforms have increased competition where market forces control the cotton business. • The number of players is now 40 which by any standard the industry is more than competitive. • Cotton producers are benefiting immensely, for example, this season prices reached a record level of shs.500 per kilogramme.(exchange rate shs. 1270=1USD)

  10. The Way Forward • The need to seriously address the issue of quality deterioration through introduction of auction system; • Tanzania Cotton Association members to enter into integrated cotton cultivation programs with farmers; and • Deliberate move to increase domestic consumption of cotton. • There is a need to rehabilitate rural infrastructure

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