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Marketing Reform? the Rise and Fall of Agricultural Liberalisation in Tanzania Brian Cooksey∗

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Marketing Reform? the Rise and Fall of Agricultural Liberalisation in Tanzania Brian Cooksey∗ Development Policy Review, 2003, 21 (1): 67-91 Marketing Reform? The Rise and Fall of Agricultural Liberalisation in Tanzania Brian Cooksey∗ This article argues that the liberalisation of Tanzanian export agriculture from the early 1990s to the present has failed to take place to the extent claimed by the Tanzanian government and donor agencies. While internal food markets have largely been liberalised, donor-inspired attempts to liberalise export crop markets have been seriously undermined by the political-bureaucratic class. As in other countries undergoing adjustment under World Bank/IMF programmes, a combination of local vested interests and concerns with the ‘rigged rules and double standards’1 of global commodity markets has led to a systematic but under-reported backlash against liberalisation. Tanzania’s current status as a star HIPC/PRSP performer is belied by a growing rejection, whether principled or opportunistic, of the liberalisation project. This article offers a critical interpretation of the dominant narrative of the liberalisation of Tanzanian agriculture over the last decade and a half.2 This narrative, which seriously exaggerates the extent to which market liberalisation has been implemented for Tanzania’s main export crops, fails to recognise the powerful anti-liberalisation forces within Tanzanian society, and has yet to acknowledge the recent recrudescence of statist legislation, policies and practices. On the other hand, there has been a significant and sustained liberalisation of the markets for maize and other grains, and internal markets for these crops and other locally consumed foodstuffs are relatively efficient and competitive. The article briefly describes the nature of market liberalisation, using the examples of maize, coffee and tobacco, and includes an analysis of the liberalisation of trade in fertiliser. In the cases of coffee and tobacco, an initial surge in private-sector input supply and crop buying after 1993-4 was followed by the partial recovery of co- ∗ Co-ordinator, Tanzania Agriculture Situation Analysis (TASA), a research programme of the Tanzania Development Research Group (TADREG). This article is a revised version of a paper financed by the research programme ‘Livelihoods and Diversification Directions Explored by Research’ (LADDER) entitled ‘The Experience of Agricultural Market Liberalisation and Implications for Producers’, LADDER Working Paper No. 16, June 2001, presented at the LADDER research findings dissemination seminar held in Dar es Salaam in April 2002. LADDER is a DFID-funded programme co-ordinated by Professor Frank Ellis of the Overseas Development Group, University of East Anglia (www.odg.uea.ac.uk/ladder). As well as informing the LADDER process, this article also constitutes an input to TASA, which is concerned inter alia to explore the institutions that regulate Tanzanian agriculture. 1. The title of the Oxfam report on globalisation, trade and poverty (Oxfam International, 2002). 2. The article draws on some of the results of two years of fieldwork by TASA, which is financed by DFID, the Rockefeller Foundation, Sida and Concern Worldwide. TASA members are Seithy Chachage, Suleman Chambo, Brian Cooksey (co-ordinator), Adolfo Mascarenhas, Marjorie Mbilinyi, John Shao, and Andrew Temu. The article expresses the views of the author. Overseas Development Institute, 2003. Published by Blackwell Publishing, Oxford OX4 2DQ, UK and 350 Main Street, Malden, MA 02148, USA. 68 Brian Cooksey operative unions, a rapid accumulation of debt for inputs supplied by private companies (tobacco), and the re-emergence of crop boards as major actors in the marketplace. This latter theme is the subject of an extended review, citing recent legislation that gives the Minister of Agriculture draconian powers over crop production, marketing and taxation. The lack of an appreciable impact on commercial maize production with regard to the removal of fertiliser subsidies leads to the conclusion that the majority of commercial maize farmers were using insignificant amounts of fertiliser in the past, and/or that fertiliser use was so inefficient as to have only a modest effect on yields. A third theme that has received little or no critical attention is the impact of donor assistance to agriculture. Two sets of issues are identified: the failure of the ‘conditionality’ approach to bring about reform, and the role of the major donors in supporting largely un-performing state institutions and agencies. As regards the first, market reforms did not reflect the demands of a key internal constituency but were essentially ‘bought’ with donor aid. Consequently, the ‘second-generation’ reforms were rapidly abandoned after a brief and superficial period of liberalisation. Support for state institutions takes the form of a large number of projects following a traditional format that privileges the politico-bureaucratic elite at the expense of the majority of poor farm households. Projects routinely contradict the market-friendly policy advice offered by donors. The present official policy discourse is of a shared neo-liberal vision, based on strong local ownership and joint funding of a set of pro-poor policies and programmes, linked to long-term debt relief. Past failures of structural adjustment have been the rule in Africa, of course, but currently Tanzania is being touted as a star performer in the Poverty Reduction Strategy stakes, having reached the Heavily Indebted Poor Country (HIPC) ‘completion point’ ahead of the field, and remaining well ‘on track’ for most of the key indicators of success. This article argues that the liberalisation of export agriculture has gone into reverse, following a brief and rather superficial flirtation with ‘free markets’. It asks a number of questions. Who and what drives the real as opposed to the official version of agricultural policy? What is the ‘real’ policy anyway? Did liberalisation ‘fail’ because the private sector was not up to the tasks expected of it? Did the state provide the private sector with the necessary incentives to perform its role effectively? What role does aid money and advice play in all this? The article has no definitive answers to these questions, but suggests some revisions to the mainstream understanding of agricultural market liberalisation in Tanzania that identifies relatively clear pre- and post-liberalisation policy regimes around 1985-6 with the competitive market regime becoming dominant – albeit slowly – over time.3 The Tanzanian example presented here shares a number of similarities with other countries in the East-Central-Southern African region. (See Jayne et al., forthcoming, for a review of the Kenyan, Zimbabwean, and Malawian cases.) They have all to varying degrees turned away from market-based policies, and are steadily ‘bringing the state back in’. 3. The official view is that ‘The marketing system of agricultural commodities and inputs have (sic) to a large extent been liberalised’ (MAC, 1999: 24). Or: ‘Tanzania is, to all intents and purposes, a free market economy’ (MAC, 2000: 268). The Rise and Fall of Agricultural Liberalisation in Tanzania 69 Currently, there is a growing gap between the market-friendly rhetoric of official government policy statements and the market-unfriendly behaviour (official and unofficial) of key state functionaries and the political class. I argue that patronage, cronyism and rent-seeking contribute much more than is currently acknowledged in the literature to the lack of dynamism and accumulation in the agricultural sector. Finally, the article is not an apologia for ‘more and better’ market liberalisation, let alone deregulation, but a critique of the view that liberalisation has taken root in both local and export markets, and that the consolidation of the market economy is only a matter of time. Growing concerns with the negative impact of globalisation on poor farming households in Africa, Asia and Latin America have yet to shake the neo-liberal foundations of the PRSP project.4 The re-empowerment of state agencies described below does not protect the poor against the depradations of corporate capitalism: on the contrary, it threatens to dis-empower and impoverish them even further. The next section summarises the trajectory of Tanzanian agricultural liberalisation to date, and describes the declining fortunes of co-operative unions and concurrent changes in the organisation of input and output markets, taking maize, coffee and tobacco as examples. The form and function of the emerging marketing boards in export crops, with examples from coffee, tobacco and sugar, are then discussed. The final section deals with the nature of the aid relationship, and the tension between the old- style conditionality approach to sector support and the current ‘post-conditionality’ (a term borrowed from Ponte, 2002a) aid regime based on local ownership. Market liberalisation in theory and practice Tanzania’s capitulation to structural adjustment following a protracted stand-off with the Bretton Woods institutions in the early 1980s is usually seen as the end of President Julius Nyerere’s socialist experiment and the beginning of a gradual and still incomplete transition to a market economy. In the last fifteen years, Tanzania has indeed taken a number of steps towards a market, that is, capitalist, economy, as summarised below. Over such a short period, it would indeed be surprising if anything like a full transition to a market economy could be achieved. Yet both government and donor discourses
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