DPG PSD/Trade Visit to Central Zone Sunflower Sector

1. DPG PSD/Trade Visit to Central Zone Sunflower Sector October 2012

2. Purpose of trip • Better coordination of DP’s • To showcase effective programmes • To improve on the ground knowledge • To follow a value chain • To hear directly from entrepreneurs about key issues affecting the private sector

3. Whom did we meet? • Farmers and growers involved with the following programmes:- • SNV • RLDC • TuboresheChakula • Processors • Songera investments, Rig Investments, Uncle Milo, Three Sisters, Nyemo Investments, Jackma Enterprises • Sector Organisations • CEZOSOPA, TEOSA, TASUPA

4. SIDO • Micro Manufacturing Enterprise Park • Mini- Refinery • Machinery development • Campaign for improved quality of oil • PMO RALG

5. Finance Institution • PASS • TTCIA Morogoro • Tanzanian Graduate Farmers Association • Sokoine University Graduate Entrepreneurs Cooperative - SUGECO

6. What did we discover? • Successful small-scale private entrepreneurs both producers and processors who were:- • Ready to expand • Ready to engage and assist local farmers • Equipped with skills • Willing to invest • Open to new ideas • Had a vision for the future

7. Great progress and successful programmes in improving:- • Accessibility of seeds • Quality of seeds – QDS • Methods of production • Availability of information to farmers • Coordination of the sector

8. Production of seed seems to have increased – (anecdotal information - not verified by DPG ) Production of oil from the seeds has increased Total oil production has increased

14. Potential for Tanzania to become net exporter of sunflower oil is good. • Currently Tanzania is a net importer of sunflower oil • The sector is currently only operating at 30% capacity • Dodoma and the central region produce over 60% of sunflower products.

15. Challenges still to meet

16. Access to Land • Medium-scale commercial farming • size of plots, • time taken to complete process. • TGFA example • Fragmented industries in residential areas • SIDO Sunflower oil processing cluster Dodoma. • But legal issues, land tenure, cost of building, ownership – GoT or PPP?

17. Access to Power • Lack of electricity hampering entrepreneurial development • Songera Investments example – idea, vision, skills, capital but no power • Intermittent power increasing costs and reducing productivity • Expensive • Renewables – still not competitive or readily available

18. Coordination & Dialogue • Positive engagement between Government & sector organisations • Good channel for dialogue between government and sector through sector organisations • Re-introduction of 10% levy on palm oil imports • Reducing import duty on spare parts for sunflower processing equipment

19. BUT still need more coherent sector strategy & ongoing consultation • IIDS is in place • Sectoral strategies to frame interventions (e.g. subsidies, levies? • Concrete Policy frameworks? • Monitoring systems in place to track impact and progress towards results? • Proactive engagement rather than reactive interaction • Palm oil levy example • Regular two way information flow and consultation needed to build trust • Single Refining Standard law introduction example

20. Coordination within Sector • Good information flow from farmers to processors through sector organisations • Productivity increases • Small scale producers – still too small to compete successfully • consider grouping together for better market access and product quality • Clustering • Contract manufacturing

21. But this will need:- • Trust between competing SMEs • Possible external facilitation – as happened between RLDC, SNV and the strengthening of sector organisation CEZOSOPA, TASUPA & TEOSA • Cluster development & land allocation by government – eg SIDO

22. Business Regulation • Plethora of regulations - overlapping

23. One stop shop for SME’s like TIC is for larger investors? • Discrepancy between on the ground reality and central regulations • Tax levied at point of sale vs boundary taxes by local authorities • Paradigm shift from ownership & government control to lighter touch regulation

24. Access to Finance • Difficult access to finance – 20% + interest rates • More credit guarantee schemes for SME’s need to be implemented. • Ideas to open schemes with TIBand NMB planned but not yet implemented

25. Skills Development • Lack of appropriate skills – • Technical and managerial levels are imported from eg India or Kenya • Mismatch between graduate skills and industry needs • Internships, bridging programmes from formal education to industry • Formal and practical skills • Machinery manufacture & maintenance • Balance between local production of light manufacturing machinery vs import of equipment at the lowest price to remain competitive?

26. Regional Trade Promotion • Production is increasing • More lucrative market is there • But need strategic engagement to promote sunflower oil • Coordinated effort from small scale processors to be able to compete • Coordination at District levels to ease cross boundary transportation

27. Downstream value chain development needed to exploit opportunities • Packaging • Marketing • Business development • Exporting

28. “Sunflowers used to be viewed as a crop for poor women – now they are seen as an important and potentially lucrative cash crop” MonsipileKajimbwa, SNV Morogoro Produced by DPG PSD Trade Secretariat November 2012