Draft Report Prepared by Economics Department University of Dar- es -Salaam

1. Analysis of the Performance of Agriculture Sector and its Contribution to Economic Growth and Poverty Reduction Draft Report Prepared by Economics Department University of Dar-es-Salaam

2. Content • Objectives of the Study • Methodology • Summary of the Major Findings • Emerging Issues and Recommendations

3. Objectives (1) • Overall objective is to assess performance of agriculture by identifying the critical factors that determine • The sector growth and • The sector contribution to reduction of poverty • In addition, the study makes an assessment of existing policies and as well as recommendations for improvement

4. Objectives (2) • Specifically this enquiry has addressed the following components • Assess the contribution of agricultural interventions such as irrigation and inputs support in improving productivity and livelihoods; • Assess contribution of selected sectors (land, Trade, Industry and Marketing, infrastructure, finance) to agricultural growth; • Assess the contribution of small-scale agriculture to poverty reduction and the constraints faced by small scale farmers; • Make comparison of the experience of other countries where initiatives in the agricultural sector have lead to poverty reduction and increased agricultural growth;

5. Objectives (3) • Assess the constraints for increased investment in large scale farming; • Assess the private sector participation in agriculture by examining reasons for weak engagement; • Assess the long term agricultural productivity and ways of scaling up public and private investments in the sector, including possible options of PPP and promotion of agri-business; • Assess the levels of public investment compared to national budget and levels of private investment;

6. Objectives (4) • Assess and analyse the bottlenecks hindering development of agri-business and in particular investment in large scale agro-processing; agro-industrial parks and cottage industries; • Assess the response to commodity boom (growth) and the associated multiplier effect towards poverty reduction;

7. Methodology (1) • Quantitative and qualitative data • Source • Official publications e.g. HBS, Agricultural Census, Economic Surveys, PHDR, BoT etc. • Interviews with Stakeholders • Visited 5 Agricultural related projects namely, TAHA; Climate Change Adaptation Project in Same District; Dunduliza Programme under FISEDA Warehousing Receipt System); Warehosung Receipt System – Tandahimba District; NARI – Naliendele; and AMAGRO

8. Methodology (2) Data Analysis: • Computation of indices such as poverty indices, crop yields per hectare, and growth rates have been made • Simple econometric analysis to compute growth rates • The trend analysis and comparative analysis • Cross tabulation was also used to examine correlation between variables

9. Summary of Major Findings (1) • The total land area is 95.5 million hectares, out which the area cultivated accounts for 10.6% or 23% of the total arable land • The number and sizes of Medium and Large scale farms is yet to be established • But it is known that these farmers occupy a total of 1.5 million hectares • A big proportion of commodities (tea, sugar cane, sisal, coffee, tobacco and some food crops ) in this country are produced by these farmers

10. Summary of Major Findings (2) • Total area suitable for irrigation is 29.4 m ha, but only 289,245 ha is put to use • Indicates a seriously low productivity in agriculture • Challenges facing the agricultural sector in Tanzania make it difficult for farmers to invest in the sector • Infrastructure, Markets, Agricultural experts/Ext services, low farm gate prices, storage facilities etc do not provide incentive to a farmer to expand investment in the sector

11. Summary of Major Findings (3) • Private investors are not keen in investing in the provision of public goods and services egInfrastructure and Agricultural experts/Ext services, because they cannot exclusively internalize all the benefits • Despite its importance, agriculture budget share is still small compared to the share going to some other MDAs • Despite being small, an increase from 1.6% in 2008/09 to 2.4% in 2009/10 does not necessarily mean a significant part reached farmers

12. Summary of Major Findings (4) • Fertilizer consumption in Tanzania lags far behind its supply and potential demand, thus creating an artificial surplus of about 40% (ss/consump ratio) • Total requirement of improved seed is 120,000 tons annually, while annual supply averages 10,000 tons or 8% of total requirement (a supply constraint) • Investment in capital goods in agriculture is still at a very low level which affects productivity • Current stock is 15500 Vs 9500 (61%) currently operational

13. Summary of Major Findings (5) • Annual tractor replacement stands at 1000 – 1500 Vs the current 250-400 tractors per annum  • The country imports 2 million of hand hoes annually because it is dominant farm implement • Yet, all the factories used to manufacture hand hoes in the country are not running • Records show that Research and Development (R&D) institutions are underfunded • The “neglect” in financing R&D suggests that we will be obliged to depend on “Imported Green Revolution”, instead of “Local Green Revolution”

14. Summary of Major Findings (6) • Farmers Education/Training Centers (Folk Development Colleges) which we used to have in some Regions of Tanzania are not there anymore • They were important centers for propagating functional agricultural education “Education is a productivity factor” in development • Examination of potential contribution of agriculture to poverty reduction • Made some assumptions • Used top performance data from different countries around the world • Considered 3 food crops (ma, pa, and sorg) and 3 cash crops (Te, Co, and Cas)

15. Summary of Major Findings (7) • 4 Scenarios (Potential Rates) were tested • Producing at full capacity (100%) • Producing at 75% capacity • Producing at 50% capacity • Producing at 25% capacity • The results indicate that GDP has substantially increased at any level of potential rate • Both the potential per capita GDP and that of per day indicate that they are above the poverty line at any level of potential rate • Note that, many products including livestock has not been included

16. Summary of Major Findings (8) • The potential from agro processing has also not been included. All this shows that our GDP is artificially low AND ACTIONS NEED TO BE TAKEN NOW! • Let Strong-Pro-Farm Policies be the drivers of sustainable agricultural development in Tanzania • Since agricultural GDP share is currently about 25%, growth of agricultural sector no longer influence substantially the growth rate of GDP (like services – 46% and industry – 20%) • As in the 1970s and 1980s when it was contributing about 50% to total GDP

17. Summary of Major Findings (9) • Agriculture grows at an average rate of 4.8% annually (2000 - 2008) • While GDP has been fluctuating around 7% • Thus, to a large extent GDP growth rate has been significantly determined by the growth rate in the services sector (7.4%) and industry (9.3%) • Therefore, economic growth in Tanzania is not associated with poverty reduction which is high in rural agriculture supporting 74% of total population • Contribution of agricultural related projects to economic growth and livelihoods

18. Challenges, Emerging Issues and Recommendations (1) • To accelerate the rate of growth of output in the agricultural sector, and increase the pace of poverty reduction it is necessary to: • Address the problem of low productivity • Adopt DELIBERATLY STRONG-PRO-FARM POLICIES

19. Challenges, Emerging Issues and Recommendations (2) • Promote Local Green Revolution by way of addressing the following: • Increase the intensity use of fertilizer and improved seeds and subsidize agricultural inputs • Improve extension services -number of extension staff, and working conditions • Increase the allocation of funds for Research and Development

20. Challenges, Emerging Issues and Recommendations (2) cont… • Re-introduce Farmers Training Centres (FTCs) / Folk Development Colleges (FDCs) for propagating farmers’ functional education • Reduce bureaucracy and red tape which usually increases the cost of doing business in order to attract private investment in the agricultural sector • Create conducive environment for private sector participation and offering incentives to attract private investment in agro-processing • Increase public investment in irrigation and other related infrastructure such as dams, water harvesting facilities etc

21. Challenges, Emerging Issues and Recommendations (2) cont… • Support the promotion of rural financial institutions which will act as intermediaries for savings and investment in rural areas • Support the promotion of Non Farm Activities by strengthening Small Industries Development Organizations (SIDO) and other rural institutions • Improve rural Infrastructure e.g. road network, rural electrification etc. • Scale up resource allocation for agriculture (Public and Private) • Ensure availability of Capital Equipment for Agriculture

22. Possible Outcome of the Domestic Green Revolution • Job opportunities created through e.g. • Non Farm Activities • Small Industries such as agro processing • Research and Training • Commercial farms • Increased Farm Incomes • Improved Domestic GDP • Reduced number of people living below the poverty line • Improved livelihoods and welfare of rural population • Sustainable Local Green Revolution initiative (unlike projects)

23. Thank You All