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TANZANIA CEREAL STORAGE SCOPING MISSION (REQUEST TO FAO TO HELP ADDRESS CEREAL LOSSES)
Activities and findings
Cephas Taruvinga Technical Adviser on PH Losses (FAO/AU)
CURRENT CHALLENGES AND OBJECTIVES OF THE STUDY
Objectives: Identify the causes of post-
harvest losses
Analyse the scope of a potential FAO intervention
Prepare the road map for an intervention
Challenges: Post-harvest losses of grains about 40 percent in
remote areas
Inadequate storage facilities and management capacity
Limited market access.
Weak linkages with national and international cereal markets
Unexploited production and export potential in Eastern Africa,
Partially achieved national food security.
SCOPING METHODOLOGY
Literature reviews were made Consulted key stakeholders in the cereal
value chains. Government of officials in various Ministries Technical and financial development
partners Commercial actors and their organizations. Field visit was made to Dodoma Visited urban and district markets, including
Kibaigwa market.
CONTEXT AND FIRST CONCLUSIONS
In 2014 cereal production was approximately 11 million tonnes(FAOSTAT).
National self-sufficiency rate of maize is estimated at 120 percent by the MALF.
Exports increased steadily since 2005, but declined due to export bans for national food security reasons.
Tanzania is a potential maize producer for the whole of East Africa. Lack of storage capacity forces Tanzania export maize at low
prices. Domestic and international trade and market policies prevent
farmers obtaining better prices and increase risks for the formal commercial sector.
CONTEXT AND FIRST CONCLUSIONS
Informal markets accounts for ~80% of maize remaining is handled by NFRA from rural buying posts or from established farmers’ organizations / cooperatives.
Informal marketing arrangements place farmers in a weaker position.
Exports to neighbouring countries are unregulated. Market margins are high due to inefficiencies in supply chains, Prices vary greatly between harvesting and periods of scarcity. Actors with access to storage, financial services are able to take
advantage of price fluctuations. Post-harvest losses are significant
Key supply chain actors
1. Small holder farmers (0.5 to 2mt) (food security)
2. Small holder farmer (3 to 5 mt) (the emerging farmer)
3. Village /community level4. Middle level5. District markets6. NFRA7. Agro processors
STRUCTURE OF THE POST-HARVEST SYSTEM
Community/village level These range between 200 to 600 tons Total national storage for such warehouse is about 82 000 tons which is 1.2% of total production In the last decade community storage has been widely promoted (COWABAMA) The majority of these warehouses are underutilised. Underutilisation can be attributed to informal markets that handle ~ 80% of marketed production
Household level – two types of farmersThe food insecure and the farmer with excess to market (emerging farming)The emerging farmer produce for the market 3 to 5 tons Underserved in terms of storage, transportation and general supportHigh cost per unit of available technology to store grain for commercial useThis farmer is left vulnerable to brokers, buyers and agro-processors
PERFORMANCE OF THE POST-HARVEST SYSTEM
PERFORMANCE OF THE POST-HARVEST SYSTEM
Middle level (3000 to 5000 tons)
THE MISSING MIDDLE
PERFORMANCE OF THE POST-HARVEST SYSTEM Middle level (3000 to 5000 tons) Normally located in district capitals, trading centers - commercial, wholesale, SGR, export
trading
Very few are available in Tanzania at the moment except NFRA, agro-processors like Bakhresa but not used for grain trading or warehouse receipt system.
Those available are remotely located and need refurbishing or were converted to other uses
Some investments were undertaken with project support, but their number is limited
No multinational player is active on the domestic market in this sector for locally produced cereals.
No specific Government policy to promote or encourage this sector and as a result the informal sector is dominant.
This is missing middle is critical for the development of a formal grain market.
District markets These are informal markets for commodity trading They form the dominant marketing channels of cereals in Tanzania. On average, each region has 2 or 3 markets making them more than 52 district markets. More than 80% of all commodities produced are sold through these district markets. Brokers, buyers representing processors, and institutional buyers converge to the district
market for all their grain requirements. Individual farmers bring their grain and meet any of the numerous buyers or brokers and
“agree” on a price and the farmer is paid cash. Even institutional buyers, international traders and wholesalers procure their grain from
informal markets or have their networks of brokers.
District markets – Kibaingwa Market
KIBAIGWA MARKET: difference of incoming and outgoing volumes - losses to farmers
Average annual losses of 3,650 tonnes or TZS 1.3 billion
Total losses of nearly 44,000 tonnes or TZS 16 billion between 2005 and 2016
Chart1
20052005
20062006
20072007
20082008
20092009
20102010
20112011
20122012
20132013
20142014
20152015
20162016
Millions of TZS
Tonnes
Difference (tonnes)
Cost (million TZS)
2298.4
344.76
4060.9
844.6672
-2934.5
-396.1575
-9004.3
-2503.1954
-6234
-2200.602
-4105.8
-1207.1052
-13857.42
-4960.95636
-6276.27
-3156.96381
-2054.21
-1142.14076
-5848.75
-2076.30625
-4798.234
-2322.345256
4945.39
2744.69145
Dispatches
TAKWIMU YA MAHINDI YALIYOTOKA SOKO LA KIBAIGWA KWENDA MASOKO YA NNJE 2004 - 2016
2004200520062007200820092010201120122013201420152016
MWEZITANITANITANITANITANITANITANITANITANITANITANITANITANI
JANUARY3383.22795.1547635204346193352376401.342238.283355.447240.48338.24
FEBRUARY3659.516394671257141931219.54557.446207.222311.921640.183862.74667.46
MARCH3765.51409.1451421345907777.424554.66978.151545.082097.083556.38832.85
APRIL3825.7709.642771485449645652303.4438901416.121617.42673.681392.51
MAY3855826.590015960725198169729.47176.434952.462277.892526.465127.54
JUNE81802260148631220384451083320264.3616265.6812774.0610672.863157.849270.27
JULY310083276112.312292127629704998822645.319759.241097911334.033486.944227.6
AUGUST48696459.58583.21057612717689010346.581345113460.410446.314808.362228.847918.98
SEPTEMBER84805186.77842.487991097232736926.44165018891.124778.714129.651619.993832.83
OCTOBER40103451.45371.9653811043.338917335.42102615700.575494.611141.6876.462777.06
NOVEMBER72264496.14468.66608867639336015112405632.785725.468552.62722.492481.17
DECEMBER82274016.84880.55453.5747519676087.4492082501.025259.528293.28602.492787.48
TOTAL3591258606.446898.293068.591518.36429675842.8129952.54102863.9567921.589920.3932554.7941653.99
Receipts60904.850959.190134825145806271737116095.1296587.6865867.2984071.6427756.55646599.38
Dispatches58606.446898.293068.591518.36429675842.8129952.54102863.9567921.589920.3932554.7941653.99
Difference (tonnes)2298.44060.9-2934.5-9004.3-6234-4105.8-13857.42-6276.27-2054.21-5848.75-4798.2344945.39
Cost (million TZS)344.76844.6672-396.1575-2503.1954-2200.602-1207.1052-4960.95636-3156.96381-1142.14076-2076.30625-2322.3452562744.69145
200520062007200820092010201120122013201420152016
tzs/kg150208135278353294358503556355484555
tzs/tonne150000208000135000278000353000294000358000503000556000355000484000555000
Dispatches
Millions of TZS
Tonnes
Difference (tonnes)
Cost (million TZS)
Receipts
Millions of TZS
Tonnes
Difference (tonnes)
Cost (million TZS)
Prices
TAKWIMU YA MAHINDI YALIYOINGIA SOKO LA KIBAIGWA KWA MWAKA 2004 - 2016
2004200520062007200820092010201120122013201420152016
MWEZITANITANITANITANITANITANITANITANITANITANITANITANITANI
JANUARY4059.527955409383538061215432245759.541815.143166.225577.606368.36
FEBRUARY3043163954203825302892952544.424475958.361746.022997.76409.53
MARCH3511.81408428127254280471928524057.21096.181684.812698.54936.38
APRIL3536709.65872275640937501529.32233.941440.61151.471476.561750.26
MAY3521.5826.594286581738485710458.47481.325602.242806.521930.255527.79
JUNE761122601005210162797710971985717666.312731.1810996.622776.528565.25
JULY481510040740491851101999691265720047.618886.6613279.7414029.623604.8211059.24
AUGUST9403855589379638107256226977816489.6143039099.0215109.582799.727221
SEPTEMBER60794940860774941030535355672142508768.665548.9411777.891683.083605.07
OCTOBER420936086114822480932822529378745693.035003.328365.811060.662446.9
NOVEMBER74004538596179156735344047208921.54756.754515.536877.04645.542383.19
DECEMBER79503941429872165753150247458047.32506.284777.046360.04505.52326.41
TOTAL3985660904.850959.190134825145806271737116095.1296587.6865867.2984071.6427756.55646599.38
TARIFA YA SOKO LA KIBALIGWA
TARIFA YA BEI YA MAHINDI KUANZIA MWAKA 2004 - 2016
MWEZI2004200520062007200820092010201120122013201420152016
Tzs/kgTzs/kgTzs/kgTzs/kgTzs/kgTzs/kgTzs/kgTzs/kgTzs/kgTzs/kgTzs/kgTzs/kgTzs/kg
JANUARI129282136343376446370360756485300620
FEBRUARI131273135326359450364390744426317631
MARCHI137292137332341342344420739440405520
APRILI148308147325368245347445682462455425
MEI136282113305318210352422421480450470
JUNI144202107293305215389450425300471478
JULAI126143195130230299238361429432280510453
AGOSTI126134164132236333268350465657280565490
SEPTEMBA127134155136246335253354555443270542543
OCTOBA129152136140273370274357615443275569495
NOVEMBA131169128145290386278352750445280600704
DISEMBA132243110164309450295354737481288620829
Total129150208135278353294358503556355484555
200520062007200820092010201120122013201420152016
tzs/kg150208135278353294358503556355484555
tzs/tonne150000208000135000278000353000294000358000503000556000355000484000555000
Industrial processors The major users of grain.
Their visibility as buyers of grain is obscure and they do not generally purchase directly from farmers.
They use intermediaries/brokers who source from district markets where farmers bring their grain.
Because of huge volumes and the amount of money involved, this has made their brokers more powerfulsuch that they can set the market price.
The grain is transported in 20 to 30 ton lots to processing facilities in Dar es Salaam.
The grain when procured cannot be traced back to farmers
The use of informal markets by large players, including processors, has contributed to the underutilisation of warehouses at village and the middle level and weakened farmers’ marketing power.
Large agro-processors could play a key role in formalizing grain markets by using formal channels.
There is scope for public-private partnerships to promote formal market development by leveraging the market power of agro-processors.
Characterised by poor handling and storage facilities. Lack of Grade & standards and the use of 90 kg and 120 kg bag instead of
standard 50kg results in poor quality grain. Informal marketing system are risky because they cannot be expanded in
event of bumper harvests (as happened in 2015) Lack of adequate storage and formal market system causes high price
variability and strong seasonality of prices; Weak formalized linkages with export markets leads to high volumes of
informal cross-border trade
CAUSES OF LOSSES AND THEIR EFFECTS
Dominance of bulking by brokers with short term interest and renting seeking behaviour.
Farmers have less bargaining power at district market Underutilization of commercial storage facilities results in lack of incentives
to invest aggregation and storage systems. Agro-processors use untraceable commodities through brokers who under
pay farmers (corporate irresponsibility) Unregulated trading make informal trade even more pervasive The regulatory environment (export bans) contribute to the risks for large-
scale formal investments
CAUSES OF LOSSES AND THEIR EFFECTS
POLICY OPTIONS TO FORMALIZE GRAIN MARKETS IN TANZANIA
Promote a cereal marketing system that proactively assures quality management at every step of the value chain. The final outcome being a well structured cereal trading system that is transparent to all actors, the output of which is grain
differentiated by quality and absorbed through national and regional markets
Hard and soft infrastructure: Investment in decentralized mid-level warehousing located between the local and end markets Promotion of support services for quality and inventory management. Grades & Standards and use of 50kg bag both for grain quality and worker rights
Public-private partnership: There is scope for public-private partnerships to promote formal market development by
leveraging the market power of agro-processors. Public funding sources for district-level warehouses could be leveraged through NFRA and leased
to investors under PPP agreement. Agreements could include stipulations on purchase from farmers organizations or licensed traders only.
POLICY OPTIONS TO FORMALIZE GRAIN MARKETS IN TANZANIA
Facilitate formalization by embracing entrepreneurship:
Simplify registration and licensing systems: set up one-stop shops for registering businesses or obtaining trade licenses; rationalizing business registration and licensing regime by deploying user friendly IT-based systems
Currently, to register a new business in Tanzania, it takes roughly 28 days and costs almost 50% of the average income per capita for an individual to follow eleven separate registration procedures (World Bank EBA, 2017).
Incentives are crucial to encourage formalization. Retroactive regulations on taxation should be avoided in all circumstances for businesses that formalise.
Simplify tax administration as sometimes a complex system is a greater disincentive than tax rates.
Dialogue with informal market actors to understand their constraints (including resistance to formalisation) and generate buy-in. It is essential that the relationship between government and informal traders moves away from mutual suspicion towards mutual support.
Source: FAO. 2017. Formalization of informal trade in Africa: Trends, experiences and socio-economic impacts. Rome
THANK YOU
Source: FAO. 2017. Formalization of informal trade in Africa: Trends, experiences and socio-economic impacts. Rome
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