MARKET CHAIN ANALYSIS AND DEVELOPMENT FOR RICE PRODUCED IN KIGOMA REGION, TANZANIA
FINAL REPORT
CONSULTANTS
NICHOLAUS .E. NIKUSEKELA & GWALUSAJO K.J, KAPANDE
MARCH, 2018
ACKNOWLEDGEMENT
This comprehensive market analysis and development for rice produced in Kigoma region is the result of the invaluable efforts of many people and organizations. There is insufficient space and time to mention all organisations and individuals that made it possible to conduct a successful market chain analysis. However, our sincere gratitude goes to all who contributed technically and/or financially to this work. We are most grateful to the cooperation accorded by the management of NIRAS-LIC and all local leaders in the targeted irrigation schemes, villages and districts as well as all market chain actors (farmers, traders, transporters, millers and consumers) who made possible for this market analysis to take place. Specifically we would like to acknowledge the NIRAS-LIC for commissioning this work and supporting it technically and financially up to the end. We would also like to acknowledge the team from Nkamson Consultancy Co. Ltd who collected, analyses data/information, drafted the report and worked tirelessly to improve it to this final report.
i Market Chain Analysis and Development for Rice Produced in Kigoma Region, Tanzania
CONTENT
ACKNOWLEDGEMENT i CONTENT ii LIST OF FIGURES iv ACRONYMS vii EXECUTIVE SUMMARY viii 1.0 INTRODUCTION 1 1.1. Project Background ...... 1 1.2. Objective and Deliverables ...... 1 1.2.1. Objective of the study ...... 1 1.2.2. Deliverables/Outputs ...... 1 1.3. Market System Development Framework...... 2 1.4. Structure Conduct Performance Model ...... 2 1.5. Structure of the Report ...... 3 2.0 METHODOLOGY 4 2.1. Market Analysis Design ...... 4 2.2. Market Study Area ...... 4 2.3. Data Collection Methods and Tools ...... 7 2.4. Data Processing and Analysis ...... 8 2.4.1. Quantitative and Qualitative Techniques ...... 8 2.4.2. Market Chain Mapping ...... 8 2.4.3. Market Margin and Profitability Analysis ...... 9 3.0 SITUATION ANALYSIS 10 3.1. Paddy Production and Productivity in Tanzania ...... 10 3.2. Rice Imports and Exports in Tanzania (2008-2017) ...... 11 3.3. Rice Trading in Tanzania ...... 13 3.4. Rice Prices in Tanzania ...... 13 3.5. Rice Consumption in Tanzania ...... 14 3.6. Institutional and Legal Framework ...... 17 3.6.1. Policy Decisions on Rice ...... 17 3.6.2. Market and Price Support Policies ...... 18 4.0 STAKEHOLDER ANALYSIS 20 4.1. Overview and Concepts ...... 20 4.2. Market Chain Actors and Entry Requirements ...... 20 4.2.1. Input Suppliers ...... 21 4.2.2. Farmers/producers ...... 21 4.2.3. Rice Traders ...... 21 4.2.4. Rice Millers ...... 22 4.2.5. Consumers ...... 22 4.3. Stakeholders’ Linkage Matrix ...... 23 4.4. Market Players’ Capacity ...... 25 4.5. The Paddy/Rice Market Channels ...... 25
ii Market Chain Analysis and Development for Rice Produced in Kigoma Region, Tanzania
CONTENT
5.0 MARKET ANALYSIS FINDINGS 27 5.1. Beneficiary Characteristics ...... 27 5.1.1. Sex ...... 27 5.1.2. Age ...... 27 5.1.3. Household Size ...... 28 5.1.4. Education ...... 29 5.2. Land Ownership and Paddy Cultivars ...... 30 5.2.1. Land Ownership ...... 30 5.2.2. Cultivars of Paddy/Rice Cultivated ...... 31 5.3. Paddy Production and Productivity in Kigoma Region ...... 32 5.4. Prices for Rice Products in Kigoma Region...... 33 5.5. Rice Consumption in Kigoma Region ...... 35 5.6. Consumer Preference in Kigoma Region ...... 35 5.7. Potential Markets for Rice Produced in Kigoma Region ...... 36 5.8. Competitiveness of Rice Produced in Kigoma Region ...... 37 5.9. Information and Knowledge Flow ...... 38 5.10. Access to Credit in Kigoma Region ...... 39 5.11. Gross Margin Analysis for Paddy/Rice Market Chain Actors ...... 40 5.12. Gender Issues ...... 43 5.13. Market Challenges facing Market Chain Participants...... 44 5.14. Major Paddy/Rice Production Constraints ...... 45 6.0 CONCLUSION AND RECOMMENDATIONS 47 6.1. Conclusion ...... 47 6.2. Recommendations ...... 48 6.2.1. Paddy/rice production ...... 48 6.2.2. Marketing systems ...... 48 6.2.3. Supportive factors ...... 49 6.2.4. Gender issues ...... 49 7.0 STRATEGIC PLAN 50 REFERENCES 53 APPENDICES 54
iii Market Chain Analysis and Development for Rice Produced in Kigoma Region, Tanzania
LIST OF FIGURES
Figure 1: Structure-Conduct-Performance Paradigm 3 Figure 2: Paddy production and area harvested in Tanzania (2008-2017) 11 Figure 3: Rice imports/exports in Tanzania (2008-2017) 12 Figure 4: Total rice consumption in Tanzania (2008-2017) 16 Figure 5: Paddy/rice market channels in Kigoma region 26 Figure 5: Paddy/rice market channels in Kigoma region 26 Figure 6: Sex of paddy/rice market chain participants 27 Figure 7: Age of paddy/rice market chain participants 28 Figure 8: Household size for paddy/rice market chain participants 29 Figure 9: Education levels of paddy/rice market chain participants 30 Figure 10: Land ownership by paddy/rice producers 31 Figure 11: Paddy/rice varieties cultivated in Kigoma region 31 Figure 12: Rice consumption in Kigoma region 35 Figure 13: Consumer preferences 36 Figure 14: Competitiveness of Rice produced in Kigoma region 37 Figure 15: Paddy/rice market information sources and usefulness 38 Figure 16: Access, sources and purpose of credits by paddy producers 40 Figure 17: Participation of women in paddy/rice market chain 43 Figure 18: Market challenges in paddy/rice market chain 45 Figure 19: Major production constraints in paddy/rice 46
iv Market Chain Analysis and Development for Rice Produced in Kigoma Region, Tanzania
LIST OF TABLES
Table 1: Rice Production, Imports& Exports Trend in Tanzania (2008-2017) 12 Table 2: Import Tariff Regime for Rice in Tanzania 19 Table 3: Stakeholders’ Scale of Operations 20 Table 4: Characteristics of Market Chain Participants in Kigoma Region 22 Table 5: Kigoma Stakeholders’ Linkage Matrix 24 Table 6: Market Players Capacity 25 Table 7: Paddy Production Trend in Kigoma Region (2011/12-2016/17) 32 Table 8: Descriptive Statistics for Amount Sold Vs Distance 33 Table 9: Rice Price Trend in Kigoma (2011/12-2016/17) 34 Table 10: Producers’ Gross Margin per Hectare in 2016/17 41 Table 11: Gross Margin for Millers in 2016/17 42 Table 12: Gross Margin for Wholesalers in 2016/17 42 Table 13: Gross Margin for Retailers in 2016/17 43 Table 14: Strategic Plan (2017/18 -2021/22) 50
v Market Chain Analysis and Development for Rice Produced in Kigoma Region, Tanzania
LIST OF APPENDICES
Appendix 1: Age, sex, education and household size 54
Appendix 2: Land allocation, ownership and varieties of paddy/rice cultivated 54
Appendix 3: Access to credit 55
Appendix 4: Market information 55
Appendix 5: Gender participation in paddy/rice market chain 56
Appendix 6: Amount for home consumptions 56
Appendix 7: Market challenges facing paddy/rice chain participants 56
Appendix 8: Major paddy/rice production constraints 57
vi Market Chain Analysis and Development for Rice Produced in Kigoma Region, Tanzania
ACRONYMS
AMCOS Agriculture Market Cooperative Societies ARI Agriculture Research Institute ASDP Agricultural Sector Development Programme BCA Beneficiary Capacity Assessment BRN Big Result Now CET Common External Tariff CIF Cost, Insurance and Freight COMESA Common Market for Eastern and Southern Africa DRC Democratic Republic of Congo EAC East Africa Community FGD Focus Group Discussions FYDP Five Year Development Programme GAIN Global Agricultural Information Network GTA Global Trade Atlas IRRI International Rice Research Institute KII Key Informant LGAs Local Government Authorities LIC Local Investment Climate LTPP Long Term Perspective Plan M4P Making Market Work for the Poor MAFC Ministry of Agriculture, Food and Cooperative MKUKUTA Mpango wa Kukuza Uchumi na Kupunguza Umaskini Tanzania MTEF Medium Term Expenditure Framework N2CL Nkamson Consultancy Company Limited NAFCO National Agricultural and Food Corporation NAIVS National Agricultural Input Voucher Scheme NGO Non Governmental Organisation NRDS National Rice Development Strategy SACCOS Savings and Credits Cooperative Societies SADC Southern Africa Development Community SCP Structure Conduct Performance SDG Sustainable Development Goals TDV Tanzania Development Vision TZS Tanzanian Shillings URT United Republic of Tanzania USA United States of America USD US Dollar USDA United Stated Development Agency VAT Value Added Tax VICOBA Village Community Bank WITS World Integrated Trade Solution
vii Market Chain Analysis and Development for Rice Produced in Kigoma Region, Tanzania
EXECUTIVE SUMMARY
This report present the findings for market chain analysis and development for rice produced in Kigoma region, Tanzania. The study was conducted by Nkamson Consultancy Co. Ltd (N2CL Consulting) in Tanzania. It was evidenced that rice is the second most important cereal in Tanzania and mostly used as a cash crop. Recognizing this importance the study intended to shade light on the sector particularly in Kigoma region. The objective was to analyse the paddy/rice market chain in Kigoma particularly in Uvinza, Kasulu, Kibondo and Kakonko districts. Specifically, the study intended to carry out the value chain analysis (mapping); analyse supply, demand and economic efficiency of paddy/rice market systems; assessing the distribution of gains and examine the competitiveness criteria of paddy/rice market chain actors. This study is not intended to be a nationwide market chain analysis and indeed only four districts of Kigoma region and few irrigation schemes were targeted, however, it is hoped that this report provides some insight into the pattern of the domestic rice trade experienced in the targeted districts, the constraints faced by both farmers and domestic traders alike and the challenges faced by the region in developing a domestic market in paddy/rice value chain. It is hoped that the patterns and trends revealed by the study can provide direction for future study and identify areas for intervention or recommendations for both NGO’s, development partners, research institutes and the government to support domestic producers and traders in developing the market for domestic produced rice. Analysis of production trends shows that paddy production in Tanzania increased from 25.8% to 51% percent with at an average annual rate of 2.52% between 2008 and 2017 this was contributed by the up-scaling of a fertilizer subsidy under the National Agricultural Input Voucher Scheme (NAIVS) raised yields and production significantly. However, the low allocation of land for rice production and the insufficient knowledge available to the new individuals/groups of producers helps explain the substantial decline in yields and stagnant growth in rice production that occurred between 2009 and 2012, even while the fertilizer subsidy program was maintained. In 2010 and 2014 total rice production peaked as yields recovered and land allocated to rice production increased. Between 2012 and 2016, however, production increased but in 2017 production declined with total area harvested, while yields remained volatile. Analysis of rice imports and exports in Tanzania revealed that total rice imports decreased steadily from 2008, reaching its lowest level in 2009, followed by a new cycle of steady increase although it takes only one year (2010) and started to decline again. Furthermore, the scarcity of rice in 2008 to 2011 provided incentive to local producers to invest more in rice production. As a result Tanzania became a net exporter of rice in 2013 although the data also shows large amount of imports on the same year. However, exports dipped significantly between 2009 and 2012, but increased once again in 2013, along with imports, which nearly doubled in volume. During interviews with key informants, local traders and farmers, trade policy was often mentioned as one of the major reasons for import and export fluctuations. The rice produced in the Lake zone are exported to Uganda, Rwanda, Kenya and the Democratic Republic of Congo (DRC) and some of Kigoma rice is exported to Burundi and Eastern DRC whose markets are closer and in some cases are more attractive commercially although there are EAC-CET that are imposed on volume of exports. So there potential opportunities for rice produced in Kigoma to add the volume of exports if and only if trade policy on rice sector is seen in different perception by the government.
viii Market Chain Analysis and Development for Rice Produced in Kigoma Region, Tanzania
EXECUTIVE SUMMARY
Analysis of distribution of cost and income along the market chain actors in paddy/rice in Kigoma region involve share of profit generated along the rice value chain. The market analysis study shows that higher percentage profit margin (42.17%) is generated when a unit dollar in invested in irrigated rice production while 50.0% is the profit margin for processors, 25.5% for retailers and 10.4% for wholesalers. It was evidenced that, investment also in rice processing/milling relatively generates high profit when compared to other actors. Therefore, investment in rice production and processing are highly encouraged by private firms as subsequently generate high profits margin. In addition, market analysis shows that traders enjoy the largest share of the market margin, the traders’ gross profit goes as higher as Tshs. 39,500 per bag as compared to average of Tshs. 20,437.5 per bag for rainfed land and Tshs. 21,928.57 per bag for irrigated land which is the gross profit received by farmers. This indicates unequal distribution of benefits among actors, where reward to traders is extremely higher than that of producers. However, the analysis indicates that despite improvements in production and market access, the majority of farmers are still facing significant constraints in selling their produce. Indeed, it appears from the analysis that few farmers are producing a harvest adequate enough to sell a significant portion, most farmers (92%) are still producing for subsistence purposes and few (8%) are engaged in the marketing of their produce on a routine basis. The quantities of rice sold remain small and the number of farmers selling remains few. The main reasons for this identified by the market analysis include: (i) limited yields due to small land holdings (average of 1-5 acres allocated to rice production) and low production levels (average of 0.56 to1.12 tonnes and 1.26 to 1.96 tonnes per acre for rainfed and irrigated land respectively) (ii) farmers still producing for subsistence purposes (iii) disincentive for farmers to sell due to prices they consider low and unstable (average of Tshs 650 to Tshs 1,000 per kg) (iv) domestic market dominated by readily available and good quality rice from nearby regions i.e. Shinyanga, Geita, Katavi and Rukwa. In addition to this, analysis shows that, though in recent years introduction of irrigation schemes in most of the districts in Kigoma region has given farmers incentive to produce more rice (from 30,818 tonnes in 2011/12 to 123,122.8 tonnes in 2016/17) but as more processing options become available to farmers, production will increase as farmers are able to respond to the demand, as influenced by the price received in local and border markets. Aside from price, farmers consider many other factors to determine profitability of paddy/rice farming, including the costs of inputs, transport and labour. Furthermore, lack of adequate agricultural market infrastructure such as food grains markets, storage houses, processing plants and market information systems was observed to be critical areas of policy concerns. Policies for group formation and collective marketing to rural farmers are also recommended to improve rice productivity by capacitating smallholder farmers to use modern agricultural machinery to jeopardize the potentials in paddy/rice sector. Gender analysis revealed that men and women market participants have different responsibilities in agricultural production systems, including rice farming. Result shows that paddy/rice market chain in the study districts participated mostly by women. In general, however, activities related to planting, weeding, harvesting, threshing and winnowing are usually the domain of women. ix Market Chain Analysis and Development for Rice Produced in Kigoma Region, Tanzania
1.0 INTRODUCTION
1.1. Project Background Local Investment Climate (LIC) is a project established to improve conditions for sustained business growth and investment in selected local government authorities (LGAs). LIC focuses on the critical constraints to business growth and economic development at the sub-national level. It promotes regular and structured dialogue between the local business community and LGAs and encourages a practical response to the challenges of improving the conditions for private sector development and poverty reduction at the local level. 1.2. Objective and Deliverables 1.2.1. Objective of the study The objective is to provide through research in-depth information on the market issues of Rice commodity produced in Kigoma region and generate strategic recommendations on how best to support pursuing rice marketing opportunities that can resolve constraints and barriers limiting rice sellers and farmers in Kigoma region. In specific terms, the nature of these strategic recommendations necessarily focuses on informing decision makers among others: a) The prevailing environment of rice market (its establishment, composition and arrangements of the current rice market mechanism including pricing, trading, transportation, branding and marketing mechanism) b) The study will bring out the entire market system of the rice, market both horizontal and vertical relationships to either supporting or degrading support to its market, c) Assess and profile financing services available to rice sector and how to access it d) Profile existing and potential markets; their address, prices, preferences of packages and other aspects, e) The existing legal framework that determines work relations, f) The existing levels of public and private investments in rice marketing, g) How to overcome any marketing constrains and barriers to entry for rice market in Kigoma region. 1.2.2. Deliverables/Outputs The outputs of the consultancy include the following: a) A 5 year trend of Rice production, sales, imports, exports, revenues and prices for Tanzania as a whole and particularly in Kigoma region b) In-depth analysis of the rice market trends affecting producers/farmers in Kigoma c) Market value and preference of customer preference of rice varieties produced in Kigoma region d) Recommendations on how rice market can be stabilised and promote production e) An overview of the Rice production trends, imports/exports of Rice products and contribution to the region and national economy; f) The markets and its potentialities, the entry requirements, the opportunities to be tapped g) The strategic initiatives for Rice Cluster development in Kigoma region and other institutions involved in the Rice industry and their roles, strengths and weaknesses;
1 Market Chain Analysis and Development for Rice Produced in Kigoma Region, Tanzania
INTRODUCTION
h) Costs of Rice production and gross margins at different stages along the chain with focus to Kasulu, Kibondo, Kakonko, Uvinza (very important and a must for this consultancy) i) The needs for capacity building, coordination and development of synergies among all actors along the rice market segments; j) Key constraints limiting the development and competitiveness of Rice products in the available market (very important); k) Recommendations for suitable interventions for the improvement of the value chain; l) Submission of draft report and presentation to LIC for comments m) Conduct a stakeholders validation workshop
1.3. Market System Development Framework This market analysis is based on market system development framework which is an approach for marking market work for the poor [M4P]. Using M4P the study analyses how the local environment, government and other development partners can improve the long-term efficiency and inclusiveness of the systems that matter most for poor women and men especially those systems upon which their livelihoods rely and provide access to basic services. Programme/project strategy needs to be consistent with this aim. Funders and implementers i.e. NIRAS-LIC and LGAs can achieve this consistency by setting out a strategic framework to guide programme analysis, action and measurement. This should explain how intervention will bring about changes in market systems, which result in improvements in the poor’s performance in markets or their access to basic services, and consequently contribute to a reduction in the poverty they face. This is the programme’s theory of change.
1.4. Structure Conduct Performance Model The market chain analysis and development is analysed using the structure-conduct-performance [SCP] paradigm [model] which asserts that conditions of supply and demand in an industry/sector i.e. paddy/rice determine its [market] structure. The competitive conditions that result from this industry/sector structure influence the behaviour of companies or value chain participants/actors and in turn dictate the performance of the industry/sector (Smit and Trigeorgis, 2004). 1.4.1. Structure Analysing the Structure component of SCP paradigm involves looking at those set of variables that are relatively stable over time and affect the behaviour of sellers and/or buyers. The way in which markets fail to follow perfect competition conditions, depends basically in the degree of supply concentration, demand concentration, product differentiation and market entrance barriers. Also, the structure of the market will always be determined by the nature of the product and the technology available. 1.4.2. Conduct This involves looking the way in which buyers and sellers behave, both amongst themselves, and amongst each other in marketing (pricing, distribution etc), capacity change (entry/exit, expansion/contraction etc), forward/backward integration, cost control etc.
2 Market Chain Analysis and Development for Rice Produced in Kigoma Region, Tanzania
INTRODUCTION
1.4.3. Performance This is measured by comparing the results of firms along the industry in efficiency terms, and different ratios are used to assess different profitability levels. The variables considered at this level are such as price, quantity, product quality, resource allocation, production efficiency, etc.
INDUSTRY PRODUCERS
STRUCTURE CONDUCT PERFORMANCE
Economics of Demand Marketing Finance -Availability of substitutes -Pricing -Profitability -Differentiability of products -Volume -Value creation -Rate of growth -Advertising/promotion -Technological progress -Volatility/cyclicality -Distribution -Employment objectives -New product/R&D
Economics of Supply Capacity Change -Concentration of producers -Expansion/contraction -Import competition -Entry/exit -Diversity of producers -Acquisition/merger -Fixed/variable cost structure -Entry/exit barriers
Vertical Integration -Forward/backward integration Industrial Chain Economics -Vertical joint ventures -Bargaining power of input -Long term contracts suppliers -Bargaining power of customers Internal Efficiency -Cost control -Logistics -Process R&D -Organisation effectiveness
External Shocks -Technological breakthroughs -Change in government policy/ regulations (Domestic &international)
Figure 1: Structure-Conduct-Performance Paradigm 1.5. Structure of the Report This report is organized into seven sections. Following this introductory section, section two presents the methodology used in this market chain analysis. It describes the sampling procedures, data collection methods and tools, how different stakeholders groups were represented in the market analysis process, data analysis, presentation and model specification. Section three presents overall situation of the market analysis. Section four presents stakeholder analysis including stakeholders’ linkages matrix and paddy/rice marketing channel. Section five presents the major findings taking into account the views of various respondents and stakeholders followed by a discussion that links the market analysis findings to the literature, thus, positioning them into the broader national and international context. Section six highlights the major conclusion and policy/strategic recommendations as derived from the market analysis findings, and section seven offers strategic plan to implement those strategic recommendations from the market analysis findings.
3 Market Chain Analysis and Development for Rice Produced in Kigoma Region, Tanzania
2.0 METHODOLOGY
2.1. Market Analysis Design This market analysis adopted a cross sectional design using mixed methods of data collection and incorporating a longitudinal perspective. Although data were collected at a single point in time, which is one the characteristic features of a cross sectional design, the market analysis also incorporated an institutional perspective, asking retrospective questions to project beneficiaries and key informants.
2.2. Market Study Area 2.2.1. Kigoma Region Kigoma Region resides in the northwestern corner of Tanzania, on the eastern shore of Lake Tanganyika. The region lies at about 5° South and 30° East of Greenwich. The region is bordered to the North by both Burundi and Kagera region. To the East, it is bordered by Geita and Tabora regions, to the South by Katavi region and to the West by Lake Tanganyika which forms a border with the Democratic Republic of Congo (DRC). The region comprises of eight districts which are Kigoma/Ujiji, Kigoma, Kas ulu , Kibondo, Buhigwe, Uvinza, Kakonko districts and Kas ulu Township. The region's total area is 45,066 Km2 (17,400 sq mi), of which 37,037 Km2 (14,300 sq mi) is land and 8,029 Km2 (3,100 sq mi) is water. As of 1998, approximately 20,000 Km2 was in forests and 12,000 Km2 was suitable for grazing or farming. Kigoma Region is on a plateau that slopes from the northeast at about 1,750m down to 800m at the shore of Lake Tanganyika. The topography in the North and East is gently rolling hills that gradually become steeper as they get closer to the Albertine Rift margin. The most important river is the Malagarasi with the Luiche and the Ruchugi being the two other major rivers draining the region. This market analysis was conducted in four district councils of Uvinza (Uvinza and Karia wards), Kasulu (Kasulu and Titye wards), Kibondo (Kibondo town and Miseziro wards) and Kakonko (Kakonko and Kasuga wards) in Kigoma Region where NIRAS-LIC in collaboration with LGAs, famers associations and private institution/companies are working with poor communities in improving famers’ livelihood.
4 Market Chain Analysis and Development for Rice Produced in Kigoma Region, Tanzania
METHODOLOGY
2.2.2. Uvinza District Uvinza district was established in May, 2013 by provisions of 287 section 8 and 9 of the Local Government (District Authorities) Act of 2002. The district lies between latitude 50 00’ and 60 55’S and longitude 290 35’ to 31030’ E. The district borders with Kasulu and Kibondo districts in the North, Tabora/Katavi region (Kaliua district and Katavi) in the East, Katavi region (Mpanda district) in the South, Kigoma district and the Democratic Republic of Congo (DRC) in the West. Common ethnic groups in the district include the Waha, Wabembe, Wabwari, and Watongwe. The Waha comprises about 95% of the population and live in the high-density areas of Uvinza. According to 2012 census, the district's population was 383,640 (of which 189,130 were female and 194,510 were male) with a total of 70,345 households and households size of 5.6. The population annual growth rate is 4.1%.
The district has total area of 16,603 Km2 of which 6,425 Km2 is under water (mainly Lake Tanganyika and small lakes of Nyamagoma and Sagara) and the remaining 10,178 Km2 is a dry land. Arable land area is estimated to be more than 444,633 Km2 (1,015,630 ha) of which only 18 percent is developed. Total area under agricultural farming is estimated to 1,900 Km2 (182,813.4 ha). The livelihoods of households in Uvinza district primarily depend on agriculture.
Administratively the district is divided into three divisions, namely Ilagala, Buhingu and Nguruka. There are also 14 wards, 45 villages and 232 sub-villages (Hamlets). Climatically, the district is divided into three zones, the high land, the low land zones and miombo woodlands. The rainfall distribution ranges from 600 and 1600 mm seasonally; and the temperatures range from 220 – 320 C. The zones are divided according to the types of soils, crops, and amount of rainfall. On the other hand, Lake Tanganyika has positive influence on rainfall pattern and distribution. 2.2.3. Kasulu District Kasulu district was re-established in 1983 under the Local Government Authority act no 7 of 1982. It is located in Western part of Tanzania in Kigoma region between longitudes 300060- 300550 East of prime meridian and Latitude 30450- 40340 South of the Equator. The major characteristic of the district is categorized into low lands and highlands of 1,200m – 1,800m a.s.l and plateaus of 914m – 1,300m a.s.l. It is about 90 Km to the East of Kigoma town and is surrounded and bordered by Malagarasi river to the West North, Kibondo district to the East, Country of Burundi to the North, Uvinza district to the South, Kigoma district to the South West, Buhigwe district to the North West and Kasulu Town to the South West. The district covers a total area of 5,324 Km² approximately 10.62% of the total area of Kigoma region. Administratively it is divided into 3 divisions, 21 wards, 62 villages and 288 hamlets. Also the district has 1 election constituency namely Kasulu Rural Constituency. The main ethnic groups in the district are the Waha, Haya and Sukuma. Others are Nyamwezi, and Fipa. Most of these ethnic groups are predominantly agro-pastoralist but agriculture is the main income generating activity in the district. Over 85% of inhabitants depend on crop and animal husbandry and the remaining percentages depend on other sectors, such as beekeeping and petty businesses.
5 Market Chain Analysis and Development for Rice Produced in Kigoma Region, Tanzania
METHODOLOGY
According to 2012 Population and Housing Census the total population was 425,794 out of which 218,373 (51.3%) were females and 208,244 (48.7%) were males, having an annual population growth rate of 2.4% which is below national average growth rate of 2.7%. The district also has a total of 56,026 households with an average of 7.6 household sizes with sex ratio of 95:100. The life expectancy of people estimated to be 61 years in 2012. Projected population in 2017 was estimated to be 459,810 people. Kasulu district receives enough rainfall which ranges from 1,300 mm to 1,500 mm and the temperature ranges between 16°C – 29°C which enables agricultural activities to improve productivity. Its soil is dark reddish clay loamy in large part of lowland while in highlands the soil is black and brown alluvial. 2.2.4. Kibondo District Kibondo district is located in Northern part of Kigoma Region between the latitude 3.90 – 5.00 S, and longitude 30.20 –31.500 E with an average altitude that ranges between 1,000m and 1,700m above the sea level. It covers an area of about 8,364.84 Km2 and great part of the area is covered by forest and game reserve. The district is boarded with Kakonko district on the North, Bukombe district (Geita) on the East, Urambo District (Tabora) on the South East, Kasulu and Kigoma districts on the South West and Republic of Burundi on the West. The predominant ethnic groups include the Waha tribe; they referred to their homeland as Buha. Other ethics groups found in the district include Nyamwezi, Haya, Sukuma, Jita, Kulya and Nyakyusa. Major economic activities performed by residents are agriculture, livestock keeping and horticulture production. Other economic activities include trade and commerce, employment in public sector and small scale industries mainly in agro-business and furniture making. Administratively the district divided into three divisions namely Kibondo, Mabamba and Kifura. Further sub divided into 13 wards, 43 registered villages and 421 (hamlets) sub villages. According to 2012 national Population and housing census report, the district had a population of 261,331 of which 125,284 were males and 136,047 were females. The average population growth rate per annum is 2.7%. The average family size is 5 persons and the life expectancy is 52 years and working population is averaged to 37.3%. Climatically the district is characterized by short period of 4 months dry season from June to September. Heavy and intermediate rainfall occurs between October and May with a typical tropical characteristics and it ranges between 800mm to 1600mm per annum. The mean annual rainfall is 1,000mm with a humidity of about 10% while the temperature ranges from 15˚C to 22˚C throughout the year, the cool weather is experienced in June to August. The district overall area is 8,364.84 Km2, of which two thirds covered by forest and woodlands. The rest of the district is made up of flood plain, which are used for paddy production, and wetland for grazing.
6 Market Chain Analysis and Development for Rice Produced in Kigoma Region, Tanzania
METHODOLOGY
2.2.5. Kakonko District Kakonko district was established in 2011 under the Local Government Act no 7 of 2002. Geographically, the district is located at the Northern part of Kigoma region between latitude 3.90 –5.00 S, and longitude 30.20 –31.500 E. It is at the average altitude between 1,000m and 1,700m above the sea level. It is borders with Ngara and Biharamulo districts (Kagera) on the North, Bukombe district (Geita) on the East, Urambo district (Tabora) on the South East, Kibondo districts on the South and Republic of Burundi on the West. The district covers 7,715.05 Km2 and great part of the area is covered by forest and game reserve of Moyowosi/Kigosi. The two third of the district is covered by forest and miombo woodlands. The rest of the district is made up of flood plain, which is suitable for paddy production. Administratively the district is divided into three divisions namely Kakonko, Kasanda and Nyaronga with 13 Wards, 44 villages and 358 hamlets. According to 2012 national population census, the total population of the district was 167,555 people with average annual population growth rate of 2.4%. Kakonko district has temperature range from 15˚C to 22˚C throughout the year. The rainfall pattern is characterized by bi-modal rainfall system occurring from October to December and March to May. The annual rainfall intensity ranges between 800mm to 1600mm peaking in April and the humidity is around 10%. It is well supplied with river streams almost all around the district most of them discharging water in Moyowosi river. The availability of these rivers gives an opportunity for implementing irrigation schemes in the district.
2.3. Data Collection Methods and Tools Both primary and secondary data were collected to meet the objectives of the market study. The first method was a documentary review which was used to collect secondary data from various sources. These included all project relevant documents i.e. project progress report, project plan, action plan etc. and other reports related to rice value chain in Tanzania and other nearby [East and Central African] countries. Another data collection method was individual interview for all selected actors along paddy/rice market chain by using structured questionnaire [having both open and close ended questions] which was designed and pre-tested prior to its administration for the purpose of checking its reliability and validity followed by social mapping [stakeholder mapping] using the Net-Map tool (Schiffer, 2007). The use of mixed methods of data collection aimed at enhancing the reliability and validity of the market analysis findings. In addition, structured interview schedule/guide was used for focus group discussions [FGDs] in different clusters in the four districts of study. The FGD guide established a set of issues for the group to discuss and was used to channel the discussion towards accomplishing the market chain analysis objectives. The guide was also useful in introducing and probing consistently for specific types of information on the themes under market study. For every theme, the focus groups were stratified into mixed men adults, women adults and mixed youth groups. Each group consists of 8-10 respondents of homogeneous groups.
7 Market Chain Analysis and Development for Rice Produced in Kigoma Region, Tanzania
METHODOLOGY
Furthermore, interviews with key informants guided with a checklist were used to collect data from key informants (KI). The KI were selected purposively, in this study, a KI was considered to be an individual who is accessible, willing to talk and has a greater knowledge on the paddy/rice production, market structure, conduct and performance of the sector. Thus the KI in this market study were cluster adviser, project officers, agricultural officers, community development officers and farmers’ group leaders etc. Direct observation also was adopted for collecting evidence that could be captured without necessarily asking respondents. This was made possible by visiting some selected producers [farmers] and traders to ascertain what actually has been implemented by participants. The team also used the Most Significant Change Method to gather and document stories from successful as well as unsuccessful cases in the study area in order to generate strategic recommendation. 2.4. Data Processing and Analysis 2.4.1. Quantitative and Qualitative Techniques The collected data were analyzed using both quantitative and qualitative techniques. The quantitative data collected using the interview guided questionnaires (IGQ) were processed, coded and entered in the spread sheet [Excel] and SPSS statistical package to make them amenable for analysis. These data were analyzed for descriptive statistics such as frequencies and mean scores to enable comparison between the different groups across the four districts of study. The qualitative data obtained from FGD’s, key informant interviews and the open-ended questions in the IGQ tool were transcribed and analyzed using qualitative content analysis. This involved transcribing the field notes from interviews and FGD’s, and reading through the field notes and transcripts to identify key themes and patterns relevant to the study. Because quantitative and qualitative data are mutually dependent and tend to complement each other, the presentation and discussion of the findings weaves together the quantitative and qualitative data. 2.4.2. Market Chain Mapping Stakeholders mapping in market chain was used to describe the identified channels of paddy/rice. In line with this, actors’ linkage matrix was used to describe the relationships and combination of activities among actors themselves. In fact, every actor traditionally has a link with the other, but this matrix describes only what was found in the study area. Though matrix seems to be similar to actors linkage map, the former is more descriptive and broad as compared to linkage map. Presence of the two provides detailed information of the relationships studied in this work. In some reviewed empirical studies, the linkage matrix was used by Takele (2010) in his study on analysis of rice profitability and marketing chain in Fogera Woreda, Ethiopia. Also, Biggs and Matsaert (2004) applied this method when they were developing poverty reduction programmes by using actors’ oriented approach in natural resources in Bangladesh.
8 Market Chain Analysis and Development for Rice Produced in Kigoma Region, Tanzania
METHODOLOGY
2.4.3. Market Margin and Profitability Analysis The producer share in the market was calculated by using the following formula; Producer share (PS) = Producers’ Rice Price (PX) Retail Price of Rice (PR) Profitability analysis was calculated by using the following formula; Gross margin/profit = Value of Production (V) - Total Cost of Production (C)
= PQ - Piqi
But % Gross margin = Revenue – Cost x100 = PQ - Piqix100 Revenue PQ
Where; P = Price of Produce per kg
Pi = Price of Inputs i qi = Quantity of Inputs i Q = Total Production Lastly, the grain sizes, tastes, aroma and information on proportion of rice sold to local, district and cross border markets were done. These data were taped from five categories of actors along the market chain and were concerned with product specification and differentiation, volumes of sales at different market destinations and consumers’ preference.
9 Market Chain Analysis and Development for Rice Produced in Kigoma Region, Tanzania
3.0 SITUATION ANALYSIS
3.1. Paddy Production and Productivity in Tanzania Rice is grown in most regions of the country, but the major rice producing regions are Shinyanga, Geita, Tabora, Mwanza, Mbeya, Rukwa and Morogoro each produce in excess of 100,000 tonnes. Others are Kilimanjaro, Arusha, Manyara, Iringa, Mara, Tanga and Kigoma. Almost 20% of farmers are involved in rice production. Most rice is grown by smallholders under rainfed conditions but some farmers grow and irrigate 1 to 5 acres under schemes that are often initiated and controlled by government. Larger farms have larger areas under irrigated cultivation but large-scale commercial rice farming is limited to a few private firms who bought their land when the large-scale National Agricultural and Food Corporation (NAFCO) schemes were privatized. In recent years the Tanzanian government, private sector and civil society have demonstrated a sustained commitment to realizing Tanzania’s agricultural potential. The Agricultural Sector Development Programme (ASDP) 2006—2015 of the Government of Tanzania (GOT) is part of the broader National Strategy for Growth and Poverty Reduction (commonly known by its Kiswahili acronym ‘MKUKUTA’). A private sector initiative to invigorate agriculture through the ‘Kilimo Kwanza’ (‘Agriculture First’) campaign was endorsed by the government in 2009. The Government has prioritized rice through its National Rice Development Strategy. This seeks to double rice production by 2018 in order to improve food security and provide a potential surplus for export. The strategy aims to improve seed cultivars and input supply, the availability of irrigation, marketing, research and development (R&D), and agricultural credit.
Leaders in Kakonko district looking paddy production in Bugunga A irrigation scheme as national strategies on raising the sector and increasing food security.
Data in Table 2 and Fig.2 shows that paddy production in Tanzania increased from 25.8% to 51% percent with at an average annual rate of 2.52% between 2008 and 2017 this was contributed by the up-scaling of a fertilizer subsidy under the National Agricultural Input Voucher Scheme (NAIVS) raised yields and production significantly.
10 Market Chain Analysis and Development for Rice Produced in Kigoma Region, Tanzania
SITUATION ANALYSIS
In 2008 total land planted to rice increased as several crops i.e. cotton producers in Tabora and Lake Zone switched to rice production after experiencing significant losses in response to declining world prices. Average productivity was 0.64 tonnes per hector for rainfed and 2.24 tonnes per hectare for irrigated land. However, the lack of land suitable for rice production and the insufficient knowledge available to the new group of producers helps explain the substantial decline in yields and stagnant growth in rice production that occurred between 2009 and 2012, even while the fertilizer subsidy program was maintained. In 2010 and 2014, as shown in Fig.2 total rice production peaked as yields recovered and land allocated to rice production increased. Between 2012 and 2016, however, production increased but in 2017 production declined with total area harvested, while yields remained volatile.
Figure 2: Paddy production and area harvested in Tanzania (2008-2017)
3.2. Rice Imports and Exports in Tanzania (2008-2017) Demand of rice in Tanzania is forecast to continue growing ahead of local production leading to deficits that will be offset by imports if the production trends will not improve. Currently Tanzania imports rice from Thailand, India, Indonesia, Pakistan and Vietnam. Imports from developed countries in the East and West played an important role during the food price crisis, with rice coming mainly from Japan and the USA, likely in the form of food aid. Analysis of rice imports and exports in Tanzania revealed that total rice imports decreased steadily from 2008, reaching its lowest level in 2009, followed by a new cycle of steady increase (Fig.3) although it takes only one year (2010) and started to decline again. During interviews with key informants, local traders and farmers, trade policy was often mentioned as one of the major reasons for import and export fluctuations. Furthermore, the scarcity of rice in 2008 to 2011 provided incentive to local producers to invest more in rice production (Fig.3).
11 Market Chain Analysis and Development for Rice Produced in Kigoma Region, Tanzania
SITUATION ANALYSIS
Figure 3: Rice imports/exports in Tanzania (2008-2017) As a result Tanzania became a net exporter of rice in 2013 although the data also shows large amount of imports on the same year. However, exports dipped significantly between 2009 and 2012, but increased once again in 2013, along with imports, which nearly doubled in volume. The rice produced in the Lake zone are exported to Uganda, Rwanda, Kenya and the Democratic Republic of Congo (DRC) whose markets are closer and in some cases are more attractive commercially although there are EAC-CET that are imposed on volume of exports. There is little export activity from the southern corridor. Rice produced in Kigoma very little were exports to Burundi and Eastern DRC. Table 1: Rice Production, Imports& Exports Trend in Tanzania (2008-2017) Element/Year 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Paddy/Rice 887.66 805.63 1,136.29 1,119.32 799.36 928.27 925.00 1,000.00 1,100.00 1,100.00 Area (000’Ha) Paddy 1,420.57 1,334.80 2,650.12 2,248.32 1,800.55 2,194.75 2,621.03 2,652.00 2,727.00 2,576.00 Production (000’Tonnes) Rice Imports 64.19 39.60 74.88 50.85 197.52 284.79 100.00 220.00 200.00 200.00 (000’Tonnes) Rice Exports 5.59 0.81 48.28 35.18 17.49 51.43 30.00 30.00 30.00 25.00 (000’Tonnes) Total Rice 1,047.40 970.76 1,026.88 1,053.97 1,141.59 1,178.04 1,770.00 1,940.00 1,970.00 1,875.00 Consumption (000’Tonnes) Source: IRRI’s1 Rice Almanac, 2013 & GTA2, 2016&2017
1 International Rice Research Institute 2 Global Trade Atlas 12 Market Chain Analysis and Development for Rice Produced in Kigoma Region, Tanzania
SITUATION ANALYSIS
3.3. Rice Trading in Tanzania Rice is Tanzania’s second most important food crop contributing 2.7% to the national Gross Domestic Product (GDP). According to the National Agricultural Sample Census of 2002-03, 42% of rice production is marketed, compared to 28% of maize production and just 18% of sorghum production. According to Minot (2010), about 13% of marketed rice is sold by small- scale farmers. Rice marketing system in Tanzania has been developed by the private sector since the government accepted the structural reforms in 1986 (Senda, 1999). There are active markets for paddy and rice throughout the year due to the fact that both products of paddy/rice store well and will keep from one year to the next and are therefore extensively traded.
Polished milled Rice as seen in Kakonko District market Rice in Tanzania particularly in Kigoma is mostly sold to consumers as polished milled rice. The preferred type for consumption is locally produced and aromatic long grain rice but there is also a demand for sticky white long grain rice and most consumers purchase unpacked rice from either small retail stores or farmers’ markets. On average, about 30% of rice that is produced in Tanzania is consumed by farm households, while the rest is absorbed into the domestic market and the city of Dar Es Salaam is the principal end market for rice. Very few other products are available although there are limited supplies of brown rice and rice flour.
3.4. Rice Prices in Tanzania Price in Tanzania is driven by the varying availability of cheap Asian imports, by the different national tariff regimes, by transport costs and distances to markets. Prices are lower in the main rice producing areas than in the urban areas. It is evidenced that; First, prices in Tanzania are rising and have increased by 75% since 2006. Several factors contribute to this but a plausible explanation is the increasing unmet demand.
13 Market Chain Analysis and Development for Rice Produced in Kigoma Region, Tanzania
SITUATION ANALYSIS
Second, like most markets in the region (EAC), prices fluctuate cyclically over the seasons. Prices are highest from January to March, prior to harvest. Indeed, the difference between high and low season consumer prices is about 30%. This is attributed to varying availability of imports, which are not seasonal, and the dependence on rice as a staple food while Uganda and Kenya are less dependent on seasons and imports and so when prices rise, consumers switch to other staples and this tends to bring prices down again.
Different Prices of polished milled Rice in most of Kigoma markets 3.5. Rice Consumption in Tanzania Rice is a staple food consumed in both urban and rural areas. The urban area of greater consumption is Dar Es Salaam and is the principal end market accounting for about 60% of national consumption. Dar Es Salaam is the highest urban population and the third largest total population in the country. Mbeya and Morogoro Regions are the main sources of rice supply. Rural consumers include smallholder rice farmers, who retain about 370 kg of their production for consumption by their own household of around five persons. Consumers usually purchase rice loose from bulk sacks either from traditional small retailers or at farmers’ markets. Quality differentiation is limited mainly to the amount of broken rice present (e.g. 80% whole grain, 20% broken grain), to whether it is aromatic or non-aromatic, and to whether it is local or imported. There is no significant premium for <5% broken rice as demand is largely for 20% broken. Processors therefore mix broken and unbroken rice to achieve 20% broken; they also mix non-perfumed with perfumed rice as there is little demand for the non-perfumed rice. Tanzanian rice achieves a premium over imported rice (GAIN Report, 2017).
14 Market Chain Analysis and Development for Rice Produced in Kigoma Region, Tanzania
SITUATION ANALYSIS
Different prices of polished Rice from different regions are offered special quality by consumers as you can see from the picture the rice from Shinyanga and Kyela (Mbeya) are priced differently.
There are also regional (‘place-of-origin’ or ‘geographic’) preferences and rice is often labeled as being from regions that are perceived by consumers as offering special qualities: Rice from Kyela is considered to be the best, followed by rice from Mbeya; Morogoro rice is viewed as good quality, but inferior to Kyela and Mbeya; Shinyanga rice is viewed as low quality as it is not aromatic and historically has contained a large amount of foreign matter. Results from documentary review (content analysis) shows that total rice consumption remains steadily from 2008 to 2013, followed by a new cycle of steady increase as shown in Fig.4 and Table 1. During interviews with consumers and farmers, weather/climate and trade policy was often mentioned among the major reasons for consumption fluctuations leading to low accessible rice. Furthermore, population increase and the scarcity of rice in 2008 to 2011 provided incentive to local producers to invest more in rice production and hence increased consumption from 2013 to date.
15 Market Chain Analysis and Development for Rice Produced in Kigoma Region, Tanzania
SITUATION ANALYSIS
Figure 4: Total rice consumption in Tanzania (2008-2017) Although currently there is only very limited branding. Supermarkets are a recent urban arrival in Tanzania (the first one opened in 2001) and only a small part of food retailing takes place through them (perhaps only 10% to 15% in Dar Es Salaam, and even less in other urban centers). The scale of operations is still small and most outlets have limited storage facilities.
Common Rice recipes prepared by Tanzanian
16 Market Chain Analysis and Development for Rice Produced in Kigoma Region, Tanzania
SITUATION ANALYSIS
3.6. Institutional and Legal Framework 3.6.1. Policy Decisions on Rice Tanzania’s National Development Vision (TDV) 2025 emphasizes the need to streamline the country’s development planning, implementation and monitoring mechanisms. This Long Term Perspective Plan (LTPP) has led to a series of Five Year Development Plans (FYDP). The first FYDP, which began in 2011/2012 and ended in 2015/2016, focuses on the theme “Unleashing Tanzania’s Latent Growth Potential,” with the objective of investing in strategic areas with high growth potential in order to fast track conditions for broad-based and pro-poor growth. In this spirit, the President Delivery Bureau (PDB) was established as a mechanism to monitor implementation of strategic investments in areas with high growth potential, dubbed as Big Results Now (BRN). Rice is among the three crops prioritized under BRN to ensure food availability, reduce poverty among rural households and gradually shift to a more commercialized and modernized production system. The National Rice Development Strategy (NRDS), 2009 is one of the crop-specific strategies prepared within the framework of Tanzania’s Agriculture Sector Development Programme (ASDP), 2006- 2012/13. The NRDS contributes to Tanzania’s national policies and international commitment to improve the livelihoods of citizens in rural communities through enhancing household food security and incomes. The vision of NRDS is to transform the existing subsistence-dominated rice sub-sector into a commercially viable production system. The strategy underscores the existing potential for rice production in Tanzania and focuses on: i) development and availability of improved seeds resistant or tolerant to major biotic and abiotic stresses, ii) development and availability of improved post harvest processing technologies and value addition (grading and packaging) processes, iii) low use of labour saving technologies and inadequate technology transfer, and iv) construction of more irrigation infrastructure. In particular the NRDS has defined intervention strategies, which are to be implemented in three year periods. The timeframe was synchronized with the Government Medium Term Expenditure Framework (MTEF) to ensure that the implementation of activities is financed and split into two groups, depending on the timeframe for implementation: a) Short-term (1-3 years) strategies: Increasing production and productivity of rice in selected irrigation schemes; Reducing production and post-harvest losses; Increasing availability of and access to agricultural inputs (improved seeds, fertilizers, pesticides and appropriate farm machineries); Rehabilitation and development of new irrigation schemes. b) Medium- (3-5 years) and long-term (5 years onward) strategies: Expansion of areas in lowland irrigation, rain-fed lowland and upland ecosystems; Increasing access to farm machinery and post-harvest technologies; Encouraging investment in medium- and large-scale processing industry.
17 Market Chain Analysis and Development for Rice Produced in Kigoma Region, Tanzania
SITUATION ANALYSIS
3.6.2. Market and Price Support Policies In 2009, Tanzania passed the Cereals and Other Produce Act. This Act created a Cereal Board with the power to intervene in domestic rice and maize markets. The new Cereal Board has the authority to: (i) facilitate research on cereals, (ii) facilitate the offer of extension services to growers and dealers, (iii)facilitate the development of agricultural input services, (iv) disseminate information, including market information, (v) promote production, processing and storage, (vi) promote appropriate technologies and (vii) assist with the formation of farmers organizations. Perhaps most importantly, the board is further empowered to carry out commercial operations such as buying and selling, importing and exporting, processing, providing warehousing services and performing other commercial functions approved by the Minister of Agriculture, which aid the development of trade in cereals. According to the Department of Food Security at the MAFC, the Cereal Board should act as a private commercial agent in the cereals market (mainly maize, sorghum and rice), substituting individual traders. It has inherited the milling assets of the former National Milling Corporation in Arusha and Iringa. Tanzania is a member of the East African Community (EAC) and the Southern Africa Development Community (SADC). This dual membership means different tariff structures are imposed. As shown in Table 3, rice trade between EAC member countries is free of regulation, so no restrictions or tariffs are applied. However, an EAC Common External Tariff (CET) of 75% or USD 200/tonne (whichever is higher) is applied to rice imports coming from countries outside the EAC, with the exception of those coming from members of Common Market for Eastern and Southern Africa (COMESA). However, between 2005 and 2007, a 5% tariff was applied to rice imports from South Africa. The EAC’s import tariff regime is imposed to protect the regional rice industry and to reduce inflows of cheap, subsidized rice (Therkildsen, 2011). According to Vitale et al. (2013), the tariff has not fully met its intended objectives due to increased rice smuggling, especially through Zanzibar, and weak enforcement of the tariff as a result of collusion between large importers and politicians. However, Minot (2010), in a discussion of the dynamics of staple food prices, notes that a higher tariff benefits Tanzanian rice farmers in two ways. “First, it creates increased demand for local rice among Tanzanian consumers by reducing rice imports. Second, it expands the market for Tanzanian rice in Kenya, since the rice production capacity of Kenya is much smaller than that of Tanzania.” In other words, the rice tariff taxes Tanzanian and Kenyan rice consumers and primarily benefits Tanzanian rice growers (Vitale et al., 2013).
18 Market Chain Analysis and Development for Rice Produced in Kigoma Region, Tanzania
SITUATION ANALYSIS
Since 2000 to date, the United Republic of Tanzania (URT) has used periodical export bans on staple food crops as a food security measure, in some cases violating EAC free trade commitments. Export bans were intermittently imposed on cereals for a few months in 2008, 2009, 2011, 2016 and then lifted when food availability improved. Currently the URT committed to discontinue implementing periodic export bans, as they introduce market distortions, which reduce price incentives for producers. Although farmers, traders, millers, transporters and importers/exporters are exempted from paying the Value Added Tax (VAT), they are subject to a district sales tax (cess) between 1-5% of the bag value, if they transport grain bags from the district to any destination. These costs often make local rice more expensive than imported rice. For example, in January 2010, Thai A1 Super rice (a low quality rice) could be imported at a CIF price of USD 445/tonne, compared to the domestic rice sold in Dar Es Salaam at USD 750/tonne for low grade and USD 970/tonne for the best quality rice (All Africa, 2014). In a price sensitive market, local rice would not be able to compete with imported rice if the import duty were removed. This duty raises the price of Thai A1 Super to USD 779/tonne and allows the local product to remain on the market. Table 2: Import Tariff Regime for Rice in Tanzania Product Regime 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
MFN (EAC 75% or 200USD/tonne (whichever is higher) CET) Rice
COMESA ------
EAC 0 0 0 0 0 0 0 0 0 0 0 0 0
South 5% 5% 5% ------Africa Source: WITS3 (2012) and Consultant Investigation, February (2018)
3 World Integrated Trade Solution 19 Market Chain Analysis and Development for Rice Produced in Kigoma Region, Tanzania
4.0 STAKEHOLDER ANALYSIS
4.1. Overview and Concepts Stakeholder analysis aims to evaluate and understand stakeholders from the perspective of an organization, or to determine their relevance to a project or policy (Freeman, 1984 and Blair et al., 1990). Walt (1998) highlighted the fact that many different groups, including non-governmental organizations (NGOs), may be involved in both policy formulation and policy implementation; and that policy makers need to mobilize support and resources in favour of policy reforms. Reed et al. (2009) describe three steps in stakeholder analysis: identifying stakeholders, differentiating between and categorizing stakeholders and investigating relationships between stakeholders.
4.2. Market Chain Actors and Entry Requirements FGD in all four districts of study was used to identify paddy/rice stakeholders (actors). Among the stakeholders identified were; farmers/producers, input suppliers/agro-dealers, paddy/rice traders, transporters, processors/millers and consumers. For clear understanding of the actors along the marketing chain, it was found better to study the interactions among themselves. To understand patterns of interaction between different actors and organizations, it is first important to map linkages in general ways, but then it is also necessary to understand the nature, entry and purpose of these linkages and this is evidenced by Hall et al. (2007). Qualitative analysis revealed that the barriers to entry into the market within and across market chain participants reflect the competitive relationships between existing actors and potential entrants. It was evidenced that if the barriers to entry are low, new actors can easily enter into rice markets and competes with established ones. However, with the presence of very high barriers to entry, established actors are difficult to stay longer in business. It was evidenced that agriculture is the single largest employer of most Tanzanians, currently employing 77 percent of the total population (Tanzania economic outlook, 2017). Large numbers of poor households are engaged in agriculture activities as a source of livelihood. Also poor households are characterized by high youth population; the women are 50 percent of the population. Further market analysis shows that most of the paddy/rice market players were operating in small scale. 18% of the total populations were involved in paddy production and more than 80 percent of the total population was either consuming or willing to consume rice (prosperous consumers). Table 3: Stakeholders’ Scale of Operations S/N Actors Uvinza Kasulu Kibondo Kakonko Small Medium Small Medium Small Medium Small Medium 1 Input 4 - 3 - 4 - 3 - Suppliers 2 Producers 71,887 - 78,482 - 48,310 - 30,883 - 3 Transporters 3 2 11 5 7 3 4 1 4 Millers 5 - 7 - 6 - 4 - 5 Traders 25 5 38 10 28 6 24 2 6 Consumers 327,483 NA 357,530 NA 220,077 NA 140,693 NA Source: Consultant Estimation (Market Analysis, February, 2018)
20 Market Chain Analysis and Development for Rice Produced in Kigoma Region, Tanzania
STAKEHOLDER ANALYSIS
4.2.1. Input Suppliers Agro-dealers are the main source of inputs in paddy production. The agro-dealers in the sampled districts are characterized, first by low education on business skills contributed by low experience on the business because most were very new in the business and low education levels (primary), second low investment capital, that’s why most were not able to reach demands of most famers and thirdly low level of employment, most workers were found to be the owner/proprietor showing that there are few job opportunities in agro-inputs dealership, unless one establishes his/her own business. Entry in this business of agro-inputs dealership input is easy but barriers to entry are those costs of investment, professional certificates, market information asymmetry etc that must be borne by an individual entering the business, but they are not borne by individuals/firms already in the business. FGD and KII revealed that access and use of inputs to most households was limited although precarious food security situation in Tanzania particularly in Kigoma region has prompted private institutions, NGOs and donors to use input distribution or credit programs as a means of rapidly increasing food supply for the poor as seen in some districts. But its availability is questionable leading to some households using grain/seeds remaining from their last harvest, which represents limited productive capacity but also high cost of ferlilisers and low financial capacities of the most households in particular, are limiting its accessibility. 4.2.2. Farmers/producers In all districts of study most famers in the study districts in Kigoma region were at economical age of between 36-55 years, second were characterized by low education level, mostly attended primary education, third mostly had household size of between 4-6 members; fourthly, female were found to be the mostly participants in paddy production than males involving much in land preparation, planting, weeding, harvesting, threshing and winnowing. Lastly, mostly farmers are scattered but only few joined in groups and this were seen mostly in Kakonko district, where the analysis team found only two registered AMCOS. Farmers grow different varieties of rice depending on the types of land e.g. upland or lowland, the general access to seeds and the local habits. The most common varieties grown are Saro-5, Chalinze, Dakawa, Kahogo, Sindano, Kalamata, and Super. Also, the need for immediate cash to pay for household’s daily expenses forces farmers to sell their rice as paddy at the farm’s gate directly to local traders. Entry into paddy farming is free and easy but the requirements are capital and joining into famers associations. In general, one can look at barriers to entry as those “costs of producing” that must be borne by a farmer entering, but for one reason or another, is not borne by famers already in the rice production. 4.2.3. Rice Traders Rice trading is dominated by females aged between 18-35 years with an average of 4-6 households’ size. Most attended primary education with no training on rice markets and marketing. The traders in the study area are dominated mostly by women retailers residing on the milling machine.
21 Market Chain Analysis and Development for Rice Produced in Kigoma Region, Tanzania
STAKEHOLDER ANALYSIS
They are unregistered and not belonging to any rice association and are thus unlikely to capture the social capital gains. Local traders go around the inaccessible areas and collect the rice directly from farms’ gates and stores. The paddy which is collected is then bulked up and transported straight to the millers. Entry into rice trading is very easy as long as you have money for business startup, there are no entry restrictions but it is constrained by initial investment capital and market information asymmetry. 4.2.4. Rice Millers Rice millers in the study districts majority were males aged between 36-55 years with milling plant employing an average of 2 people (small scale). Most millers are not registered business working individually (not joined in millers association) although some have business license and this reflects weak organizational capacity. Due to small scale of operations, inefficiencies related to markets are also created in terms of quality of milled rice. This was evidenced in all the 4 study districts. Millers are usually located in district centres and operate in marketing centres where farmers, millers and traders meet and sell/buy rice. When the rice is milled, it is either sold to wholesalers or directly to rural retailers located in the rural markets and trading centres. It was revealed that, it is easy to enter into milling business so long you have an investment capital. In general, one can look at barriers to entry in rice processing/milling as those “costs of investment i.e. purchase of machine, building/renting plant house etc.” that must be borne by an individual entering the business, but they are not borne by individuals already in the business (Table 4). 4.2.5. Consumers Mostly of consumers in the study districts were females aged between 18-35 years with an average of 4-6 household size consuming an average of 3.5kg of polished milled rice per week. Consumers usually purchase rice loose from bulk sacks either from traditional small retailers or at farmers’ markets. Mostly they prefer long size grain, unbroken with aromatic taste and free from debris materials. Entry is very easy as long as you have money to purchase rice products in the available local markets. Table 4: Characteristics of Market Chain Participants in Kigoma Region S/N Category/Criteria Capital License Associations Entry/Exit
1 Input Suppliers Medium Required No Easy
2 Farmers Low No Weak Easy
3 Transporters High Required No Not Easy
4 Rice Millers High Required No Easy
5 Rice Traders Medium Required No Easy
6 Consumers No No No Easy
Source: Market Analysis, February (2018)
22 Market Chain Analysis and Development for Rice Produced in Kigoma Region, Tanzania
STAKEHOLDER ANALYSIS
4.3. Stakeholders’ Linkage Matrix The market chain actors’ linkage matrix shows the interaction among players, describing the five categories studied, which are input suppliers/agro-dealers, producers/farmers, traders (i.e. wholesalers &retailer), processors/millers and consumers. It was found that the existing linkage is horizontal between input suppliers/agro dealers, producers/farmers, traders, processors/millers and consumers. Very little vertical linkage with other supportive institutions was found in most of the study area, implying that more effort should be used to link stakeholders/actors identified with institutional setups like financial institutions and research centers. Cooperative societies are also the important components missing in this interaction in many districts of study except in Kakonko district where there are two registered agricultural market cooperative societies (AMCOS). The linkages identified has the varying purposes, and at varying levels. For farmers/producers, the interaction aims at exchanging seeds, technologies, capital, implements (rotary weeders, hand hoes, ploughs etc.). For transporters, interaction is based on exchange of the transport means, routes and sometimes setting fixed transport cost for paddy/rice from villages to district and external markets. For input suppliers, interaction is aimed at supplying of inputs (seeds, agrochemicals, fertilizers, farm simple machinery etc). For processors/millers interaction aimed at conversion of produces from paddy to rice for different markets. For, traders the interaction is on buying and trading paddy/rice in internal and external available markets. Therefore linkages differ in terms of strength among groups in the chain, where some are weak and others are strong.
23 Market Chain Analysis and Development for Rice Produced in Kigoma Region, Tanzania
STAKEHOLDER ANALYSIS
Table 5: Kigoma Stakeholders’ Linkage Matrix Actors Input Suppliers Farmers Transporters Processors Traders Consumers (Agro dealers) (Producers) (Millers) (Wholesaler& Retailers Input Suppliers Sharing of market Supply of inputs Transport of input (Agro dealers) trends, transport of (agrochemicals, to shops and to input and pricing fertilizers, farm farms simple machinery) Farmers Source of Sharing of the input Transport of Buying and trading of (Producers) agricultural inputs and market prices produces from paddy/rice by farms products Transporters Transporting inputs Transporting inputs Sharing Transport of Transporting rice to Rice delivery to i.e. seeds, i.e. fertilizers to experiences, paddy to the the defined markets consumers’ fertilizers, farms vehicles, routes and milling sites conveniences pesticides etc. from pricing factories to shops Processors Transport of paddy Price setting, Conversion of Quality assurance (Millers) to the milling sites exchange of produce from paddy (milling quality) spares, to rice warehouses, securities Traders Buyers of paddy Transport of paddy Conversion of Exchange of ideas, Supply of rice to (Wholesaler& from the farms from farms to produces from capital and pricing shops Retailers milling machines paddy to rice mechanisms and markets Consumers Source of desired Delivery of rice to Direct and indirect Exchange of standard of rice convenient shops supply of rice to views on quality households through and prices of rice shops Source: Market Analysis, February (2018) 24 Market Chain Analysis and Development for Rice Produced in Kigoma Region, Tanzania
STAKEHOLDER ANALYSIS
4.3. Market Players’ Capacity
Market players’ capacity was analysed using contribution, influence, capacity, willingness and interest using a 3 state criterion/scale. The values of high, medium, low were assigned for each criterion based on the three point scale to each market player as shown in Table 6. It could be concluded from the Table 6 that input suppliers, producers, millers, traders and consumers had higher contribution in the paddy/rice market chain. They played a major role in making the supply and demand of paddy/rice in the market chain. Also input suppliers, producers and consumers had lower degree of influence as compared to traders in setting prices for rice produced in domestic market. The third criterion capacity of the actors in the market chain was low to all actors except for consumers who showed medium capacity in the market chain among others. Fourthly, all actors are willing to participate in paddy/rice market chain, but willingness will be high if and only if paddy/rice production environment is guaranteed for farmers and adequate quantities and better qualities of rice produced is guaranteed to consumers although actors’ interest varies between and among themselves. Table 6: Market Players Capacity
S/N Actors Contribution Influence Capacity Willingness Interest 1 Input Suppliers High Low Low High Income 2 Producers High Low Low High More production Higher prices 3 Transporters Low Medium Low High Income 4 Millers High Medium Low High Income 5 Traders High High Low High Profit 6 Consumers High Low Medium High Quality of rice Low prices Source: Market Analysis, February (2018)
4.5. The Paddy/Rice Market Channels Marketing of paddy/rice involves various operations such as post harvesting handling, warehouse services (storage), transportation and selling. The market analysis for market channels aimed at getting the information on market outlets and participants involved therein. Sales of paddy/rice usually channels to wholesalers, though retailers are partly engaged in buying directly from the producer. The individuals involved in activities along the chain include producers/farmers, traders (wholesaler and retailers), processors/millers, transporters and consumers. Farmers/producers reside in their villages, with paddy as their main cereal production, serving both for food and for cash. Traditionally, farmers sell their products to retailers and wholesalers directly or through intermediaries.
25
Market Chain Analysis and Development for Rice Produced in Kigoma Region, Tanzania
STAKEHOLDER ANALYSIS
It was found that intermediaries are the key players in paddy rural markets, buying directly as agents of wholesalers, buying with unspecified interest per bag, though some are doing as their own business. Farmers sometimes are involved in processing but mostly for consumption, and mostly they sell their produce as paddy to intermediaries, wholesalers and small volume to retailers. Also few farmers are linked directly to market chain actors along the chain, selling to them every season while others are not. 18% of all interviewed producers/farmers were found to have a direct link with wholesalers, while 28% were linked with intermediaries. Wholesalers are then reselling the produce to retailers through processors/millers, and to cross border markets in Eastern DRC and little to Burundi.
Consumers
Retailers Rice
Intermediaries Rice Cross border markets Millers i.e. Eastern DRC, Rice
Burundi Paddy/Rice
Wholesalers Paddy
Intermediaries Few Producers Many Scattered Groups Producers Figure 5: Paddy/rice market channels in Kigoma region
Input Suppliers
Figure 5: Paddy/rice market channels in Kigoma region
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Market Chain Analysis and Development for Rice Produced in Kigoma Region, Tanzania
5.0 MARKET ANALYSIS FINDINGS
5.1. Beneficiary Characteristics In this section, age, sex, education, household size (members) are presented and discussed. Those parameters determining household participation in paddy/rice market chain and other economic activities are key background information linked with livelihood improvement. 5.1.1. Sex Market chain in the study area is practiced by both males and females, although their duties and responsibilities differ with sex and gender. Results in Fig.6 shows that, the majority (53.7%) of paddy/rice market chain participants interviewed in the study districts were females while 46.3% were males. This implies that, in all districts of study females engage much in paddy/rice market chain than males who prefer mostly petty business activities. However, there are differences in some few districts that, the percentage of males who engage in paddy/rice market chain was greater than females as seen in Kasulu whereby males (62.2%) were greater to female (37.8%) and in Kibondo district the majority were males (54.5%) while 45.5% were females.
Figure 6: Sex of paddy/rice market chain participants 5.1.2. Age Ages of paddy/rice market chain participants were very important factor to consider in this study because age reflects the working groups in the society and determines experience one has in the production and marketing processes. In addition, to a certain extent, age indicates the position of the household in the life cycle. The age of household member were grouped into three categories of youths (18-35 years), middle age (36-55 years) and the elders (>55 years).
27
Market Chain Analysis and Development for Rice Produced in Kigoma Region, Tanzania
MARKET ANALYSIS FINDINGS
Generally the analysis results in Fig.7 shows that majority (64.9%) of paddy/rice market chain participants in the sampled districts fall under the middle age group of 36-55 years, 32.8% fall under the more active working group of youths (18-35 years) engaging much in other economic activities like trading and farming other crops i.e. maize and beans while very few (2.2%) of them were elderly with more than 55 years.
Figure 7: Age of paddy/rice market chain participants It is evidenced that in all sampled districts (Kakonko, Kasulu, Kibondo and Uvinza) the highest percentage of paddy/rice market chain participants were between the age of 36-55 years and few of them were more than 55 years from all districts except for Uvinza district. This implies that, the adult people have invested much in agriculture as economic activities than youths and elders. This indicates that most of the group members are still at economically productive age, meaning that there are availability of potential labour forces that can be utilized for paddy/rice production and other market related activities. 5.1.3. Household Size Household is the basic unit of production in all sectors of the economy as it provides labour to farms, market and industries, management, and source of all other people involved in the marketing chain. Pertaining to the household size of the paddy/rice market chain participants, the findings reveals that, the average responses of household size in the sampled districts were between 4-6 members (50.7%) which are more than a half of the all responses and Kibondo district leading by 57.6%. The result in Fig.8 is within the national policy framework because the estimated national average household size is 4.8 members (URT, 2011&2012) whilst 29.9% were between 1-3 members and only 19.4% had their household size above 6 members.
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Market Chain Analysis and Development for Rice Produced in Kigoma Region, Tanzania
MARKET ANALYSIS FINDINGS
Although the size of household differs from district to district and within households the findings implies that, household size have an impact in paddy /rice market chain that, people with average number of household of 4.8 members engage much in paddy production because of enough manpower/labour in order to meet family food security as paddy production is labour intense as compared to maize and sorghum while less were involved in trading, transportation, milling etc As reported by key informants, availability of economic opportunities in the area (i.e. arable land suitable for livestock keeping and agriculture) and high income has contributed to higher household members.
Figure 8: Household size for paddy/rice market chain participants 5.1.4. Education In this study, the highest educational level achieved by the members was recorded to assess their skills and knowledge in judging different issues and to determine the human capital level of paddy/rice market chain participant and the ability to interpret market related information. Lockheed et al. (1980) on the study “Economic Development and Cultural Change” contended that any emphasis on rural development where the agriculture sector is a dominant activity requires a huge expansion of education. Adelzadeh et al. (1998) revealed that people with higher educational levels are more able to interpret information than those who have less education or no education at all. But Quartey (2011) on the study “Economic Function of Education” concluded that education level is evident to have impact in all development activity of a human being. Basing on that evidence, education level in the study area shows that, majority (83.6%) of market chain participants had completed primary school and few of them (7.5%) had attended secondary education, while 9.0% did not attend any class. The finding implies that, the majority of paddy farmers in sampled areas have attained universal education as stipulated in MDG (2005-2015) and other primary school strategies of the country including the primary education development program (PEDP). 29
Market Chain Analysis and Development for Rice Produced in Kigoma Region, Tanzania
MARKET ANALYSIS FINDINGS
Figure 9: Education levels of paddy/rice market chain participants However, despite of having low level education (universal) the findings reveals that, those who had attained primary education and secondary education had enough knowledge on paddy production as compared to non-educators. 5.2. Land Ownership and Paddy Cultivars 5.2.1. Land Ownership Land is one among the factors of production in agriculture, the allocation of land for agricultural activities differ depending on the crop cultivated and the amount of land owned by the farmer. The results on Fig.10 shows that, the average total land owned by majority (82.7%) of farmers in all sampled district ranges between 1-10 acres, 9.1% ranged between 11-20 acres while few (8.2%) had an average of total land of >20 acres. On the other hand, the land allocated for paddy/rice production differs from one farmer to another depending on the interest and benefits of rice in relation to other alternative crops as well as the amount of land owned. The results in Fig.10 also shows that, majority (92%) of farmers had an average of 1-5 acres of land allocated for rice production, 7.0% had 6-10 acres, however, very few (1.0%) of them allocated more than 10 acres of land for paddy production. The findings implies that, majority of people own small land for agricultural production, as a result of allocating little land for paddy production because the same land is needed for other crops like maize and beans production. But also paddy production is very laborious and need more money in order to optimise it fully, but most of farmers in the study area had inadequate money that’s why they allocated few land for rice production.
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Market Chain Analysis and Development for Rice Produced in Kigoma Region, Tanzania
MARKET ANALYSIS FINDINGS
Figure 10: Land ownership by paddy/rice producers 5.2.2. Cultivars of Paddy/Rice Cultivated In Tanzania there are different cultivars of rice cultivated in different places of the country. The adoption of a certain cultivar depends on the climatic conditions of an area, scale of production, yield per acre/hectare, technology, availability as well as the interest of a producer/farmer. The results in Fig.11 presents that, majority averaged to 50.0% of farmers interviewed in study districts used Saro-5 as their favourite variety and Kakonko district leading by 80.6% on using this variety while the rest cultivated local varieties i.e. Chalinze (21.1%), Dakawa (2.8%), Kahogo (2.1%), Kalamata (4.9%), Super (10.6%) and Sindano (8.5%).
Figure 11: Paddy/rice varieties cultivated in Kigoma region
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Market Chain Analysis and Development for Rice Produced in Kigoma Region, Tanzania
MARKET ANALYSIS FINDINGS
However, the cultivation of a certain variety of rice in Kigoma region differ from one district to another and by households, for instance Saro-5, Supper, and Sindano are varieties of rice cultivated in all districts while Dakawa was the only variety of rice cultivated in Uvinza as revealed by 16.7% responses and Kahongo was the only variety of rice cultivated in Kibondo district with 8.3% responses. FGD with famers, interview with KI concluded that, the adoption of a certain variety of rice differed from one district to another because of different factors such as climatic conditions, knowledge on the cultivars and the availability of such variety in the area but Saro-5 was preferred for production because its productivity is high as compared to locally available varieties but these have better taste. 5.3. Paddy Production and Productivity in Kigoma Region Paddy production in Kigoma region differs from year to year in relation to the total land allocated for cultivation. The data used by this study to assess the trend of paddy production was six planting season from 2011/12 to 2016/17. The result on Table 7 presents that, the highest production of paddy/rice was on 2015/16 in Uvinza district where by 32,233 hectares of land was cultivated and produces 114,843 Tonnes of rice. On the other hand, the lowest production of paddy was shown in 2016/17 in Kibondo district where by 1,789 hectares of land was cultivated and produces 3,220.2 Tonnes of rice. However, on 2011/12 and 2012/13 there were no production of paddy in Uvinza and Kakonko District this is because that time it was under Kibondo district. The findings implies that, there is a relationship of high amount of tonnes produced in relation to the total land (hectares) cultivated if other factors of production remain constant (ceteris paribus). Thus, it can be concluded that, the high yield of rice production on 2015/16 in Uvinza was the result of large amount of land allocated by farmers for paddy production as compared to Kibondo where the production was low on 2016/17 because little land was allocated for paddy production. Table 7: Paddy Production Trend in Kigoma Region (2011/12-2016/17) Year/Season Uvinza District Kasulu District Kibondo District Kakonko District Area Annual Area Annual Area Annual Area Annual (Ha) Yield (Ha) Yield (Ha) Yield (Hectares) Yield (Tons) (Tons) (Tons) (Tons) 2011/12 NA NA 4,346 13,038 5,199 17,780 NA NA
2012/13 NA NA 4,563 13,689 5,828 20,702 NA NA
2013/14 21,000 73,500 4,791 14,373 3,605 6,489 4,237.2 12,711
2014/15 22,000 99,000 7,061 14,504 1,975 3,752 4,290 20,163
2015/16 32,233 114,843 7,105 14,778 2,015.5 4,877.5 4,291 17,164
2016/17 22,290 73,003 12,805 40,976 1,789 3,220.2 1,306.7 5,923.6
Source: RAS4, DAICO’s5 and Market Analysis, February (2018)
4 Regional Administrative Secretariat (kigoma) 5 District Agriculture, Irrigation and Cooperative Officers (Uvinza, Kasulu, Kibondo and Kakonko) 32
Market Chain Analysis and Development for Rice Produced in Kigoma Region, Tanzania
MARKET ANALYSIS FINDINGS
The recent introduction of irrigation schemes in most of the districts in Kigoma region has given farmers incentive to produce more rice as shown in Table 7 (from 30,818 tonnes in 2011/12 to 123,122.8 tonnes in 2016/17) but as more processing options become available to farmers, production will increase as farmers are able to respond to the demand, as influenced by the price received in local and border markets. Aside from price, farmers consider many other factors to determine profitability of paddy/rice farming, including the costs of inputs, transport and labour. Moreover, a level of production is among the determinants of storage time for farmers. Many small scale producers have less storage time as compared to medium scale producers, but there is also a distance to the market (average of 11.2 km) as shown in Table 8. It was found that 72% of respondents sell their produce before time for solving family matters like education, health and social responsibilities, which also indicates the lower level of off-farm activities as alternative source of income to households. Table 8: Descriptive Statistics for Amount Sold Vs Distance Description Min Max Mean Std. Deviation Amount sold (kg) 160.0 5,600 1.7590E2 1,729.67 Distance to market center from 0.0 100.0 11.1897 18.98 home/farm (km) Amount for home consumption (kg) 0.0 2,000 4.7447E2 480.65 Source: Market Analysis, February (2018) Indeed, it appears from the analysis that few farmers (8%) are producing a harvest adequate enough to sell a significant portion, most farmers (92%) are still producing for subsistence purposes and few are engaged in the marketing of their produce on a routine basis. The quantities of rice sold remain small (0.16-5.6 tonnes per year) and the number of farmers selling remains few. The main reasons for this identified by the market analysis include: (i) limited yields due to small land holdings (average of 1-5 acres allocated to rice production) and low production levels (average of 0.64 tonnes per acre and 1.92 tonnes per acre for rainfed and irrigated systems) ii) disincentive for farmers to sell due to prices they consider low and unstable (average of Tshs 650 to Tshs 1,000 per kg), (iii) small quantity produced (average of 1.9 tonnes for household and 97,414.4 tonnes for district per year), lastly (iv) domestic market dominated by readily available and good quality rice from nearby regions i.e. Shinyanga, Geita, Katavi and Rukwa.
5.4. Prices for Rice Products in Kigoma Region Shelled rice price in Kigoma region differ from one district to another in relation to time. The findings in Table 9 show that, the highest price of rice recorded was Tsh 2,000 per kg in 2016/17 while the average price was Tshs 1,850 per kg in Uvinza district. Moreover, the lowest price of rice was Tsh 1,000 per kg in Kasulu on 2011/12 and 2014/15 with an average price of Tsh 1,100 per kg. Further, the findings shows that, in all districts of study the price of rice per kg increases each year compared to the previous year. The findings imply that, the increase of rice price is associated with the increase in the costs of production and the increased demand of rice in Kigoma region each year. 33
Market Chain Analysis and Development for Rice Produced in Kigoma Region, Tanzania
MARKET ANALYSIS FINDINGS
The findings revealed that the per capita rice consumption has increased in the region, stimulating both increased domestic production and rising the rice products prices. Table 9: Rice Price Trend in Kigoma (2011/12-2016/17) Year/ Uvinza District Kasulu District Kibondo District Kakonko District Season Min Max Average Min Max Average Min Max Average Min Max Average (TZS) (TZS) (TZS) (TZS) (TZS) (TZS) (TZS) (TZS) (TZS) (TZS) (TZS) (TZS) 2011/12 1,100 1,500 1,300 1,000 1,200 1,100 1,000 1,400 1,200 1,200 1,400 1,300
2012/13 1,150 1,600 1,375 1,100 1,300 1,200 1,100 1,500 1,300 1,100 1,300 1,200
2013/14 1,200 1,700 1,450 1,200 1,300 1,250 1,200 1,400 1,300 1,200 1,500 1,350
2014/15 1,200 1,600 1,400 1,000 1,200 1,110 1,400 1,800 1,600 1,300 1,700 1,400
2015/16 1,300 1,800 1,550 1,200 1,300 1,250 1,200 2,000 1,600 1,400 1,600 1,300
2016/17 1,700 2,000 1,850 1,300 1,800 1,550 1,300 2,000 1,650 1,500 1,800 1,650
Source: DAICO’s6 and Market Analysis, February (2018) The observed seasonal variations in prices (minimum and maximum) in all districts have implications on real incomes, consumption and producers welfare. Seasonality is the phenomenon that causes crop prices (including cash, futures, basis, option volatility, intra-market, inter-market and inter- commodity spreads) to behave in a relatively predictable manner, year in and year out. Generally speaking, there are two major components to crop seasonality, first the harvest lows, second, the post- harvest rally. Sometimes seasonality is a strong element of the pattern of crop consumption (domestic usage as well as exports). The analysis shows that producers faced considerable risks in production and marketing of rice. However, the observed average seasonal prices mean that there are temporal and spatial opportunities for farmers and traders to store rice and benefit from high prices later during off seasons. It was revealed that, farmers do not have reliable markets for their rice produces during the harvest period, thus they sell rice at low price and generate little profit compared to the cost incurred during production. The same observation was done by Huka et al. (2014) who argued that good price of agricultural produce increase personal income of the farmers to the extent that they afford to meet their basic needs such as purchase of food, clothes and shelter also taking their children to school as well as acquiring better health services. It is this sudden increase in supply that provides the most dramatic evidence of seasonality if the harvest is low. The only way to address this is through improved irrigation using low cost water saving technologies, food processing and preservation.
6 District Agriculture, Irrigation and Cooperative Officers (Uvinza, Kasulu, Kibondo and Kakonko) 34
Market Chain Analysis and Development for Rice Produced in Kigoma Region, Tanzania
MARKET ANALYSIS FINDINGS
5.5. Rice Consumption in Kigoma Region Rice is a staple food consumed in both urban and rural areas. The area of greater consumption was in urban area (district centres) accounting for about 80% of the total consumption. Rural consumers include smallholder rice farmers, who retain less than 370 kg of their production for consumption by their own household of around five persons. Consumers usually purchase rice loose from bulk sacks either from traditional small retailers or at farmers’ markets. Results in Fig.12 show that, majority of respondents averaged to 64.5% reported that, they mostly consume an average of 101-500kg per year while only 3.6% average responses consume between 1001-1500kg per year. During interviews with consumers and farmers, weather/climate and trade policy was often mentioned among the major reasons for consumption fluctuations. Furthermore, population increase and the scarcity of rice provided incentive to local producers to invest more in rice production and hence increased consumption to date. The study revealed that the level of rice consumption in the districts of study (Kakonko, Kasulu, Kibondo and Uvinza) is very low. Out of 25 interviewees, two of them (8.0%) consume rice more than three times a week, while those consuming once a week were 55% and the average rice consumption for households is 370kg per year.
Figure 12: Rice consumption in Kigoma region 5.6. Consumer Preference in Kigoma Region Nutritionally, whole grain rice is rich in fibre and source of carbohydrates with little protein, phosphorus and potassium. A combination of population, urbanization and income growth factors drives rice consumption in Kigoma as well as in other regions. However, it is a preferred staple for those who can afford it and so its consumers tend to be the wealthier in society. Almost all the rice produced in the region is consumed as milled rice rather than as any other product such as flour. Using multiple response analysis the common drivers for preferred rice are;
35
Market Chain Analysis and Development for Rice Produced in Kigoma Region, Tanzania
MARKET ANALYSIS FINDINGS
First, taste and aroma there is a strong preference across the region for aromatic rice as reported by 46.2%, of consumers in Kigoma. It was found that most consumers with higher income in districts centres tend to be more discerning of rice quality, often valuing local aromatic rice but in rural area with its very low rural consumption patterns does not follow this trend (Fig.13). Most of the local varieties (Sindano, Super, Kalamata etc.) in the study area have this characteristics except for Saro-5 where preferred by famers because of high yielding but not of better taste and aroma. Second, size, long grain sized unbroken rice were strongly preferred with an average of 37.7% responses by mostly higher income consumers in districts centres the reason for preference includes they stay separate and are fluffy after cooking while rural dwellers and the producers themselves were not descended by the drive they said all types of rice products are good. Thirdly, colour with 16.2% of total responses was another criteria valued by higher income consumers in their preference on rice consumption. But it was not of much concerned by low income consumers and the white variety of rice was the only one seen in the study districts.
Figure 13: Consumer preferences 5.7. Potential Markets for Rice Produced in Kigoma Region In the study districts it was found that the food service market is an important end user of rice and comprises several sub-sectors including traditional stalls and cafes selling cooked ‘street’ food, fast food outlets modeled on the American style (only in Kigoma municipal) as well as western style restaurants, hotels and resorts. Institutional markets include the military, refugee’s camps, hospitals and educational establishments. Therefore improvement of effectiveness of warehouse receipt system and district/regional markets is a must in order to secure high prices during off-season.
36
Market Chain Analysis and Development for Rice Produced in Kigoma Region, Tanzania
MARKET ANALYSIS FINDINGS
Temporally house used for milling and storage of rice visited by consultant in Kakonko district 5.8. Competitiveness of Rice Produced in Kigoma Region Low competitiveness of rice produced in Kigoma region is due to limited opportunities for economies of scale caused by small scale of operations by majority (47.1%) of producers who cultivate farms of less than a hectare were mentioned to be a constraint for competiveness of rice produced in the region. Apart from that also the findings shows that inadequate use of improved varieties and other inputs with 42.6% of all responses was due to limited availability of varieties that are high yielding while meeting consumers preferences; inadequate agribusiness skills understanding by smallholders of the benefit to cost ratios of using better inputs; limited access to credits (especially due to unavailability, small scale) as shown in Fig.14 below.
Figure 14: Competitiveness of Rice produced in Kigoma region
37
Market Chain Analysis and Development for Rice Produced in Kigoma Region, Tanzania
MARKET ANALYSIS FINDINGS
All in all also inefficiency in processing/milling (10.3%) leading to low yields, most of the rice produced in the study districts is milled using very old small scale mills machine that deliver less out- turns of around 55% paddy conversion to milled rice. These cannot compete with mills made of modern machine which can convert up to 75% of paddy to milled rice. The old small-scale mills also deliver low quality as they do not have capability to grade, polish and de-stone milled rice. Therefore, a high proportion of locally produced milled rice is of poor quality reducing its market competitiveness with rice produced in nearby regions i.e. Shinyanga, Geita, Katavi and Tabora. 5.9. Information and Knowledge Flow Efficiency in marketing systems depends also on the system of information flows. Market information is very important in trading and agricultural activities. It helps farmers to be aware on the right place and right time to sell their agricultural produces in order to gain profits. Using multiple response analysis farmers in Kakonko, Kasulu, Kibondo and Uvinza district obtain information from different sources. Fig.15 shows that, majority of respondents averaged to 72.4% reported that, they mostly obtain market information for rice from their friends while 36.2% receive market information through cell phone calls from other people. 24.1% obtain information from intermediaries or middlemen which link them with other traders in town and very few averaged to 15.5% responses obtain information from media such as Radio, T.V and Newspapers. Mr. Ibrahim a farmer in Kasulu district reported, “I usually get market information of Rice from my friends, sometimes the middlemen informs as that in Kigoma town the market is good; and we mostly use phones for communications”. The findings is evidenced that farmers received marketing information mainly from fellow farmers, relatives, traders and middlemen while others used Mobile phones, TVs and Radios, respectively to get market information.
Figure 15: Paddy/rice market information sources and usefulness
38
Market Chain Analysis and Development for Rice Produced in Kigoma Region, Tanzania
MARKET ANALYSIS FINDINGS
Moreover, the majority of farmers (58.6%) in all districts reported that, the information obtained from those sources were good, 39.7% responded that, the information were moderate in helping them to sell rice at high price while only 1.7% reported that, the obtain information from their different sources was useless in the sense that, the information did not help them to sell rice at high price and gain profits. Assessment of the situation shows that farmers are satisfied with the information brought to them but they could not said otherwise in absence of modern system to compare with. Poor system of information on marketing to producers and heavy reliance on information from traders, who are likely to defend their own interests, indicates inefficiency in marketing. 5.10. Access to Credit in Kigoma Region Credits in this context refer to the money that a farmer can use for farming activities and then pay back in future. Any farmer needs money for farming activities operation such as to purchase inputs, farm implements and payment for labour. The analysis results in Fig.16 reveals that, the majority (79.1%) of respondents interviewed had no access to credits while few of them (20.9%) had access to credits. It was reported that, those who had no access to credits they mostly use their own income and household man power to cultivate and manage farming activities. On the other hand, those who accessed credits had limited sources. Fig.16 shows that, 11.6% of respondents obtained credits from private lenders/friends and Village Community Banks (VICOBA). Among the farmers accessed credits were from Kakonko, Kibondo and Kasulu while famers in Uvinza they didn’t accessed credit at all. However, the purpose of credits differ from one farmer to another depending to his/her needs. The analysis results reveals that, the credits obtained by farmers was used to pay farm labours, purchase farm inputs i.e. seeds, fertilisers, chemicals etc. and purchase of farm implements with a response of 7.5%, 4.2% and (1.1%) respectively. The findings concurs with the study conducted by Nakano et al. (2011) in Tanzania to assess the impact of access to credits and graining on technology adoption to rice farmers and found that, the majority of rice farmers in Tanzania access credits from formal source available in rural areas such as VICOBA and Savings and Credit Cooperative Societies (SACCOs) whereby, the amount of credits obtained were used to buy farming inputs and serve other farming operations.
39
Market Chain Analysis and Development for Rice Produced in Kigoma Region, Tanzania
MARKET ANALYSIS FINDINGS
Figure 16: Access, sources and purpose of credits by paddy producers 5.11. Gross Margin Analysis for Paddy/Rice Market Chain Actors The purpose of this part is two-fold. Firstly, it enables calculation of the annual gross margin per acre based on an existing, operational, inputs, and labour costs; and secondly, it estimates the overall gross margin for other market chain participants (wholesalers and retailers) taking into account storage, transport costs etc. Annual gross margin for this study is defined as the gross income of a crop less the variable costs of production (i.e. the costs that change in direct proportion to production). This is generally calculated on a per acre basis for ease of comparison with other enterprises. It must be understood that the calculations are to a large extent based on the costs and prices that prevailed during the study visits (February, 2018) and in the markets visited (Kakonko,Kasulu, Kibondo and Uvinza). It should be noted that one hectare of paddy require two bags of fertiliser for two applications and weeding is done twice. The average prices are subject to change based on operating environment. However, we have made effort to ensure that the calculations would reflect future basis for such calculations in all districts. In additions, the production averages take into account the best and poor yielding farms-some farmers got 8-16 bags (560 to 1120kgs) per hectare in rain fed land while others in irrigated land get 18-28 bags (1,260 to 1,960kgs) per hectare.
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Market Chain Analysis and Development for Rice Produced in Kigoma Region, Tanzania
MARKET ANALYSIS FINDINGS
Table 10: Producers’ Gross Margin per Hectare in 2016/17 Activity/Description Rainfed Land Irrigated Land Min Max Min Max Average yield (Tonnes/ha)7 0.56 1.12 1.26 1.96 Selling price (Tshs) per bag (70kg) 52,000.00 52,000.00 52,000.00 52,000.00 Average revenue (Tshs/ha) 416,000.00 832,000.00 936,000.00 1,456,000.00 Cost of ploughing (Tshs/ha) 100,000.00 100,000.00 100,000.00 100,000.00 Costs of harrowing (Tshs/ha) - - 50,000.00 50,000.00 Cost of purchasing seeds (Tshs/ha)8 24,000.00 24,000.00 24,000.00 24,000.00 Cost of planting (Tshs/ha)9 100,000.00 100,000.00 100,000.00 100,000.00 Cost of weeding (Tshs/ha) 100,000.00 100,000.00 100,000.00 100,000.00 Cost of purchasing fertilizer (Tshs/ha)10 - - 150,000.00 150,000.00 Cost of fertilizer application (Tshs/ha) - - 20,000.00 20,000.00 Purchasing agrochemicals (Tshs/ha)11 - - 30,000.00 30,000.00 Agrochemical application (Tshs/ha) - - 10,000.00 10,000.00 Harvesting cost (Tshs/ha) 90,000.00 90,000.00 120,000.00 120,000.00 Transportation cost (Tshs/ha) 16,000.00 16,000.00 38,000.00 38,000.00 Cost of hiring land (Tshs/ha) 75,000.00 75,000.00 100,000.00 100,000.00 Average total cost (Tshs/ha) 505,000.00 505,000.00 842,000.00 842,000.00 Gross margin (Tshs/ha) (89,000.00) 327,000.00 94,000.00 614,000.00 % Gross Margin (Tshs/ha) (21.39) 39.30 10.04 42.17 Source: Market Analysis and Consultant Calculation, February (2018) Table 10 above shows that 70kg of raw rice is sold at a cost of Tshs. 52,000. With this calculation, producer can accrue the profit margin up to 39.3% for rainfed land and 42.17% for irrigated land. But the higher margin is received by millers (50.0%), while the retailers receive 25.48% and lastly by wholesalers who receive (10.45%). While the typical price for raw rice ranges between Tshs. 650 to Tshs 1,000 per kg, traders get relatively higher prices i.e. Tshs 1,100 to Tshs 2,000 per kg.
7 Average yield per hectare for rainfed land is 8-16 bags and for irrigated land is 18-28 bags
8 12kg of seeds for 1 hectare and the price is Tshs2,000/kg
9 Cost of planting, weeding depends on divided portion per hectare (8-10 portions @ at Tshs10,000) 10 2 bags of fertilizer required for two application per hectare and the price of fertilizer is Tshs50,000-75,000 per bag of 50kg 11 Agrochemical application depends on occurrence of pests and diseases in the farm
41
Market Chain Analysis and Development for Rice Produced in Kigoma Region, Tanzania
MARKET ANALYSIS FINDINGS
Table 11: Gross Margin for Millers in 2016/17
Activity/Description Amount (Tshs) Revenue from processing 1 bag of rice (80kg) 2,000.00 Average revenue (Tshs/bag) 2,000.00 Cost of labour per bag (70kg) 500.00 Maintenance cost per bag (70kg) 500.00 Average total cost (Tshs/bag) 1,000.00 Gross margin (Tshs/bag) 1,000.00 % Gross Margin (Tshs/bag) 50.00 Source: Market Analysis and Consultant Calculation, February (2018) In-spite of many farmers to consider many of these factors related to profitability when deciding if and how much to invest in paddy/rice production, traders are the ones responsible in processing and grading the produce and hence getting more margin as compared to famers/producers. According to this study results, rice has very low gross margin once sold in raw form. Low gross margin is mainly due to low productivity coupled with low farm gate price offered to producers. Table 12: Gross Margin for Wholesalers in 2016/17
Activity/Description Amount (Tshs) Revenue from sales of rice (100kg) 110,000.00 Average revenue (Tshs/bag) 110,000.00 Cost-raw material (100 kg) 95,000.00 Cost of packaging per bag (100kg) 1,000.00 Costs of transportation per bag (100kg) 1,000.00 Cost of labour per bag (100kg) 500.00 Cost of storage per bag (100kg) 500.00 Average total cost (Tshs/bag) 98,500.00 Gross margin (Tshs/bag) 11,500.00 % Gross Margin (Tshs/bag) 10.45 Source: Market Analysis and Consultant Calculation, February (2018) The distribution of cost and income along the market chain actors in rice involve share of profit generated along the rice value chain. The market analysis study shows that higher percentage profit margin (42.17%) is generated when a unit dollar in invested in rice production than any other part in the value chain. Investment also in rice processing/milling relatively generates high profit when compared with actors like wholesalers and retailers. Therefore, investment in rice production and processing are highly encouraged as subsequently generate high profits margin.
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Market Chain Analysis and Development for Rice Produced in Kigoma Region, Tanzania
MARKET ANALYSIS FINDINGS
In addition, market analysis shows that traders enjoy the largest share of the market margin, the traders’ gross profit goes as higher as Tshs. 39,500 per bag as compared to average of Tshs. 20,437.5 per bag for rainfed land and Tshs. 21,928.57 per bag for irrigated land which is the gross profit received by farmers. This indicates unequal distribution of benefits among actors, where reward to traders is higher than that of producers. Table 13: Gross Margin for Retailers in 2016/17
Activity/Description Amount (Tshs) Revenue from sales of rice (100kg) 155,000.00 Average revenue (Tshs/bag) 155,000.00 Cost-raw material (100 kg) 110,000.00 Costs of transportation per bag (100kg) 3,000.00 Cost of labour per bag (100kg) 1,000.00 Cost of storage per bag (100kg) 1,000.00 Levy/cess fees 500.00 Average total cost (Tshs/bag) 115,500.00 Gross margin (Tshs/bag) 39,500.00 % Gross Margin (Tshs/bag) 25.48 Source: Market Analysis and Consultant Calculation, February (2018) 5.12. Gender Issues Men and women farmers have different responsibilities in agricultural production systems, including rice farming. These differences in gender roles are not always obvious, but they must be recognized if rice production is to be improved, especially among small scale farmers. Effective, sustainable rice production that provides food security to all people depends on gender roles being fully understood and considered in policy, planning, research and extension.
Figure 17: Participation of women in paddy/rice market chain
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Market Chain Analysis and Development for Rice Produced in Kigoma Region, Tanzania
MARKET ANALYSIS FINDINGS
Result in Fig.17 shows that paddy/rice market chain in the study districts is participated mostly by women with an average of 89.2% responses in all districts but Kibondo district leading by 100% and the least being Kakonko district with 77.8% of the total responses. Moreover the results revealed that the proportional of women in paddy/rice market chain in between 51-75%. This narrates that men’s and women’s roles in rice farming vary considerably from district to district in the region. In general, however, activities related to planting, weeding, harvesting, threshing and winnowing are usually the domain of women.
Participation of both women and men in transplanting paddy/rice in Titye Irrigation scheme in Kasulu District as seen during market analysis in February, 2018. 5.13. Market Challenges facing Market Chain Participants A market is a place where there is demand and supply of goods, and where buyers and sellers interact to trade goods for money or barter. In Kigoma region the market for rice face many challenges including lack of market information, poor linkage with other chain actors, market distance and inadequate processors as revealed in all sampled districts. Majority of farmers (44.9%) faced market distance (averaged to 11.2km) as major challenge that jeopardise the sector potentials. Many market chain participants contends that market for rice was mainly in Kigoma town and district centres which are far from production areas. Thus, in order for farmers to sell their rice, they had to incur transportation cost of between Tshs500-2,000 per bag, and other unnecessary costs i.e. loading and unloading. Lack of market information was another challenge faced by many market chain actors with 35.4% responses in all districts that, sometimes they fail to get right information for decision on what/where they can sell rice and get high profit margins because rice prices fluctuate due to market volatility leading to most famers to sell at farm gate securing low prices. Fig.18 shows other evidenced market challenges were poor linkage with other chain actors (31.2%), small scale of production with 23.5% response as mentioned mostly by market chain actors in all districts of study.FINDINGS
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Market Chain Analysis and Development for Rice Produced in Kigoma Region, Tanzania
MARKET ANALYSIS FINDINGS
In addition to that, inadequate processors (11.2%) with modern machines for milling and grading, low quality of rice produced (8.9%) and limited access to transportation (7.1%) was also mentioned to affect market chain participants.
Figure 18: Market challenges in paddy/rice market chain 5.14. Major Paddy/Rice Production Constraints Farmers in Kigoma region face different production challenges including diseases& pests, high input costs, lack of farming skills, price fluctuation, weather/climate, inadequate capital, inadequate irrigation infrastructures and distance to the farm. The findings show that, majority of farmrs (36.75%) mentioned that, inadequate capital (approximated to Tshs. 505,000 and Tshs.842,000 for rainfed and irrigated land respectively) was the major production constraints. In this context capital refers to the fund which can be used for farm operation activities such as hiring plots, buying inputs and paying labourers. Inadequate capital is contributed by low access to credit among farmers and hence hinders the production of paddy in the study areas. On the other hand, few farmers with an average of 6.9% responses mentioned inadequate irrigation infrastructure as a constraint in paddy production and it was reported only by farmers from Kakonko and Kibondo while there were no responses in Kasulu and Uvinza districts because mostly paddy production depends on rain fed. Moreover, weather/climate changes were another constraint reported in all districts with an average of 29.7% responses but it was a major constraint in Kakonko with 55.6% responses with main concern on the availability of water for irrigation.
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Market Chain Analysis and Development for Rice Produced in Kigoma Region, Tanzania
MARKET ANALYSIS FINDINGS
The region is well endowed with water resources but availability varies from place to place and generally the resource is poorly managed at farm level. Rain fed cropping still dominates the rice sector especially in Uvinza and so the erratic and unreliable nature of rainfall and uncertainties that climate change may bring poses a serious threat to the viability of rice sector.
Figure 19: Major production constraints in paddy/rice In addition to that, cost of production inputs with 29.3% responses was mentioned by farmers in all districts as among constraints hindering rice production. Those inputs include improved seeds, fertilizer as well as herbicides and pesticide. Also, diseases and pests were mentioned as production constraint with 18.6% responses. Disease and pests affects much the plants if not treated earlier and leading to low yields. Others were lack of rice production skills (9.4%), price fluctuation (5.2%) caused by market volatility and distance to the farm (8.3%).
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Market Chain Analysis and Development for Rice Produced in Kigoma Region, Tanzania
6.0 CONCLUSION AND RECOMMENDATIONS
6.1. Conclusion
Based on the findings of this market study, a number of key conclusions can be drawn. First, the traders enjoy the largest share of the market margin; the traders’ gross profit goes as higher as Tshs. 39,500 per bag of rice as compared to gross profit received by farmers with an average of Tshs. 20,437.5 per bag of un processed/milled rice for rainfed land and Tshs. 21,928.6 per bag for irrigated land. This indicates unequal distribution of benefits among actors, where reward to traders is extremely higher than that of producers. The distribution of cost and income along the market chain actors in paddy/rice involve share of profit generated along the rice value chain. Second, the market analysis study shows that a profit margin of 42.17% is generated when a unit dollar in invested in rice production while 50.0% for processors, 25.5% for retailers and 10.4% for wholesalers. It is evidenced that, investment in rice processing/milling relatively generates high profit when compared with other actors like farmers, wholesalers and retailers. Although in recent years introduction of irrigation schemes in most of the districts in Kigoma region has given farmers incentive to produce more rice (from 30,818 tonnes in 2011/12 to 123,122.8 tonnes in 2016/17) but as more processing options become available to farmers, production will increase as farmers are able to respond to the demand, as influenced by the price received in local and border markets. Therefore, investment in rice production and processing are highly encouraged as subsequently generate high profits margin. Third, majority of farmers are still facing significant constraints in selling their produce. Indeed, it appears from the analysis that few farmers are producing a harvest adequate enough to sell a significant portion, most farmers (92%) are still producing for subsistence purposes and very few are engaged in the marketing of their produce on a routine basis. The quantities of rice sold remain small and the number of farmers selling remains few. The main reasons for this identified by the market analysis include: (i) limited yields due to small land holdings (average of 1-5 acres allocated to rice production) and low production levels (average of 0.56 to 1.12 tonnes and 1.26 to 1.96 tonnes per hectare for rainfed and irrigated land respectively) (ii) farmers still producing for subsistence purposes (iii) disincentive for farmers to sell due to prices they consider low and unstable (average of Tshs 650 to Tshs 1,000 per kg) (iv) domestic market dominated by readily available and good quality rice from nearby regions i.e. Shinyanga, Geita, Katavi and Rukwa. Fourth, infrastructures such as establishing credit system, expanding transportation, repairing roads are essential for the stabilization of year-round supply and the rationalization of rice distribution. Agricultural market infrastructure such as food grains markets, storage houses, processing plants and market information systems was observed to be critical areas of policy concerns. Farmers need to improve cultivation and post harvest by reducing the ratio of broken rice, removing impurities, adopting irrigation and systems because the qualities of rice have been gradually standardized in large cities. Policies for group formation, AMCOS development to rural farmers are also recommended to improve rice productivity by capacitating smallholder farmers to use modern agricultural machinery to jeopardize the potentials in paddy/rice sector. 47
Market Chain Analysis and Development for Rice Produced in Kigoma Region, Tanzania
6.0 CONCLUSION AND RECOMMENDATIONS
Lastly, gender sensitivity and awareness should be insisted in the paddy/rice market chain participants household, because this will lead to increase d rice production by considering gender roles, access and control over resources in the household level. The only way to be achieving this is through promoting education at the household level.
6.2. Recommendations 6.2.1. Paddy/rice production It is not possible to analyse marketing systems devoid of looking the production side, which determine the quantities and qualities of what will be sold. As it was realized, farmers are getting little in the business as a result of a number of factors including unreliable rainfall caused by climate change, low access to improved farm inputs; pests and diseases; lack of farming skills; price fluctuations due to market volatility; inadequate capital; inadequate irrigation infrastructures; and distance to the market. Efficiency in input combination is also a knowledge gap need to be filled by trainers. Off farm activities and other farm but non crop income should be insisted, due to seasonality property of rice production. This will sustain the family during low season and enable them keeping their produce longer for higher reward. Higher yield cultivars should be mainstreamed in the study districts. Development partners i.e. LIC should invest in research and development so that they investigate and come up with the appropriate rice cultivars and mainstream them to farmer’s in order to fasten growth of the sector by improving productivity per hectare. 6.2.2. Marketing systems Market infrastructures, the market infrastructure is missing in the study area, and probably in many rural Tanzania. Farmers need to have a meeting point with traders from different parts, to encourage them selling rice in the market. Competitiveness among traders is the opportunity for farmers to fetch good price. The strategies on agricultural development and initiatives like that of SAGCOT12 should concentrate on the establishment of these structures in rural areas. Market information flow, the flow of information is important for market chain participants to make decision on how to sell, when and where to sell their paddy/rice. Information centers are inadequate/few in the rural areas, and other mobile services supported by the Ministry of Agriculture is not known to farmers. The local governments and other development stakeholders should advocate this. Services offered by MVIWATA13 and other stakeholders need not to be only established where these organizations are operating, but transmission to other areas might be useful. Also LGAs and development stakeholders i.e. LIC should organize a time-to-time trainings, by the use of extension officers, research and training institutions on agribusiness aspects. This will impart knowledge to them on how to encounter every cost in the production process, including the family labour.
12 Southern Agricultural Growth Corridor of Tanzania 13 Mtandao wa Vikundi vya Wakulima Tanzania meaning “Farmers Groups Network in Tanzania” 48
Market Chain Analysis and Development for Rice Produced in Kigoma Region, Tanzania
CONCLUSION AND RECOMMENDATIONS
6.2.3. Supportive factors Credit amenities, credit facility is highly recommended to farmers especially in rural areas. Farmers are lacking collaterals and commercial financial institutions are not ready to offer credits to risky businesses like agriculture. Famers should form groups which will help in formation of AMCOS so that they can have access to capital and have collective actions for securing good prices and reliable markets within and border markets. The approach used by Asians in bringing agriculture forefront during green revolution, should be used if we want to commercialize agriculture. This will enable farmers to increase acreage, and engage themselves in marketing associated activities like processing and packaging through AMCOS. Training, marketing requires skills, to win confidence of whomever one is doing business with. It is then recommended that LIC should provide training (capacity building) to millers/processor on regular basis and other players in the chain because it is important in making rational decision in agricultural trade as the percentage gross margin for processors/millers is more that 50%. The Public-Private Partnership (PPP), as it was addressed in the pillar number three of Kilimo Kwanza document, the partnership is highly insisted in this document (URT, 2011). This will improve the information systems, technologies in agriculture, marketing, markets and market sources as well as exposing produce demand to farmers. This will by one way increase efficiency in the market chain for rice. Therefore LGAs and LIC should encourage and motivate individuals, private organization and firms through workshops, seminars so that they can see the opportunities to invest in rice processing because it has higher return and not yet explored in all districts of Kigoma region. 6.2.4. Gender issues Gender sensitivity and awareness, sensitivity and awareness in gender issues should be insisted by LGAs and development partners i.e. LIC in the household level so as to ensure that gender roles and access to and control of resources in rice production is based on gender. Gender and education, education is an important tools in development, thus it should be promoted because it leads to improve gender awareness and sensitivity in the households which directly increase rice production. Education on gender can be promoted by community development officers and gender experts in LGAs through seminars, workshop and forums. Government and other development partners i.e. LIC should make sure that smallholder rice farmers use appropriate agriculture saving technologies tools such as tractors, power tillers, weeders and others at affordable prices to boost production with respect to gender roles and culture, as well as increase agriculture subsides such as fertilizer.
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Market Chain Analysis and Development for Rice Produced in Kigoma Region, Tanzania
7.0 STRATEGIC PLAN
This strategic plan is prepared according to the recommendation in previous section. It is prepared in matrix form giving the link between the strategic objectives, performance targets, strategies, key performance indicators and means of verification as well as the proposed responsible person for every identified strategy as seen in Table 14. It is from this matrix that activities will be developed based on the strategies for each target. Activities will form part of the implementation of the strategies recommendation. Table 14: Strategic Plan (2017/18 -2021/22)
S/N Strategic Targets Strategies Key Means of Responsible Objectives performance verification person indicators 1. Improved rice Increased To create Area under Farmers, LGA’s productivity rice awareness to paddy/rice village ward Development and reduced productivity village leaders, production leaders and partners women’s per hectare ward leaders, increased extension Research drudgery Higher extension workers Increased workers trained Institutions through yields and the community access to Availability of mechanization cultivars are on improved farm higher yields improved rice by 2021/22 available to machinery through cultivars cultivars farmers seminar/workshops Increased Hectares for , meeting posters access to rice production and flying boards. extension increased To facilitate the services Availability of extension workers Increased labour saving with working gears opportunities technology tool Higher for women’s employment throughout the rice value chain 2. Expansion of Increase area To create Areas under Farmers, LGA’s areas under under awareness to irrigation in the village. ward Development irrigation paddy/rice village leaders, districts leaders and partners farming by irrigation ward leaders, increased extension Research 2021/22 farming extension workers workers trained Institutions and the community Hectares under (irrigator’s rice production member) on increased irrigation farming through seminar/workshops , meeting posters and flying boards. To facilitate the extension workers with working gears, transport facilities 3. Establishment Introduction Training famers on Atleast 1 new Quarterly LGA’s of new and of farmers importance and use farmers ,semi-annual, Development strengthening information of information information and annual partners available centres centres centre is reports Research famers Establishing new established Informed Institutions information information centre yearly in the famers centres by in each ward district Good 50
Market Chain Analysis and Development for Rice Produced in Kigoma Region, Tanzania
S/N Strategic Targets Strategies Key Means of Responsible Objectives performance verification person indicators 2021/22 agronomic practice 4. Establishment Increase To create Atleast 5 Farmers, LGA’s and number of awareness to demonstration village ward Development enhancement demonstration village leaders, farms/plots in leaders and partners of plots/farms in ward leaders, each irrigation extension Research demonstration irrigation extension workers scheme workers trained Institutions farms/plots in schemes and the community Demonstration each irrigation on established and Plots/FFs scheme by enhanced established 2021/22 demonstration plots/farms through seminar/workshops , meeting posters and flying boards. To facilitate the extension workers with working gears, transport facilities 5. Facilitation of Increase To create Increased Number of LGA’s research on productivity awareness to village potential area researched Development appropriate of paddy/rice leaders, ward (arable land) for conducted partners cultivars and in potential leaders, extension rice production increased Research soil fertility in areas. workers, the per district Number of Institutions all potential community and potential paddy/rice private sector on hectares producing soil potential increased for district by through rice 2021/22 seminar/workshops, production. meeting posters and Appropriate flying boards. cultivars are To equip the available extension workers with soil testing kits and transport facilities 6. Promotion of Increase of To create Increased rice Farmers, LGA’s productivity rice awareness to village production per village ward Development of paddy/rice productivity leaders, ward hectare leaders, partners per hectare by per hectare leaders, extension extension Research 2021/22 workers, the workers and Institutions community and private sector private sector on trained rice production Production of through rice increased seminar/workshops, (tons) meeting posters and Farmers are flying boards. using improved To facilitate the cultivars extension workers with working gears, transport facilities
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Market Chain Analysis and Development for Rice Produced in Kigoma Region, Tanzania
S/N Strategic Targets Strategies Key Means of Responsible Objectives performance verification person indicators 7. Strengthening Increase in To create At least 5 Availability of LGA’s and increase number of awareness to village AMCOS formed AMCOS Development total number AMCOS in leaders, group in each district AMCOS are partners of agricultural the districts leaders and the self sustained Research market community in Institutions cooperative formulating societies AMCOS through (AMCOS) by seminar/workshops, 2021/22 meeting posters and flying boards. Strengthen available AMCOS through training 8. Strengthening Introduction Training business Our product Quarterly LGA’s local markets of new local man on will penetrate ,semi-annual, Development by 2021/22 market in all international to local market and annual partners districts marketing Atleast 5 new reports Research Participation in local market is Presence of Institutions national exhibitions established rice produced Writing attractive yearly in Kigoma in funding business domestic and proposal districts Annual budgetary markets allocation
9. Establishment Introduction Training traders on Availability Quarterly LGA’s of new and of business importance and use of business ,semi-annual, Development strengthening information of information information and annual partners the available centres centres Atleast 1 reports Research business Establishing new new business Informed Institutions centres in each information centre information famers district by in each district centre is Good 2021/22 established agronomic yearly in the practice district
10. Expansion of Extension of Training business Our product Quarterly, LGA’s foreign new foreign man on will penetrate semi-annual, Development markets from market in international to international and annual partners existing to 4 Congo, marketing marketing reports Research new foreign Rwanda, Participation in Atleast 1 new Presence Institutions market by Zambia, international foreign market of rice 2021/22 Uganda and exhibitions is established produced in Burundi Writing attractive yearly Kigoma in funding business international proposal markets Annual budgetary allocation
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Market Chain Analysis and Development for Rice Produced in Kigoma Region, Tanzania
REFERENCES
Adelzadeh, A; Alvillar, C. and Mather, C. (1998). Poverty Elimination, Employment Creation and Sustainable Livelihoods in South Africa, NIEP Research Articles No. 12. Blair, J.D. and Fottler, M.D. (1990). Challenges In Health Care Management: Strategic perspectives for managing key stakeholders. San Francisco, CA: Jossey-Bass. Freeman, R.E. (1984). Strategic Management: A Stakeholder Approach, Boston, MA: Pitman. Huka, H., Ruoja, C. and Mchopa, A. (2014). Price Fluctuation of Agricultural Products and its Impact on Small Scale Farmers Development: Case Analysis from Kilimanjaro Tanzania. European Journal of Business and Management, 6(36):155- 160. Kijima, Y., Otsuka, K., & Sserunkuuma, D. (2011). An inquiry into constraints on a green revolution in Sub-Saharan Africa: the case of NERICA rice in Uganda. World Development, 39(1), 77-86. Lockheed, E. M., Jamison, T. and Lau, L. J. (1980) Economic development and cultural change. Journal of Economics 29: 37 – 76. Minot, N. W. (2010). Staple food prices in Tanzania. [http://bestdialogue.antenna.nl:8080/jspui/bitstream/20.500.12018/7136/1/Food%20staple%20pri ces%20in%20Tanzania.pdf]. Retrieved on 14th March, 2018. Mwakaje, A. G. (2010). Information and communication technology for rural farmers market access in Tanzania. [http://repository.udsm.ac.tz:8080/xmlui/bitstream/handle/123456789/991/Information%20and% 20Communication%20Technology%20for%20Rural%20Farmers%20Market%20Access%20in% 20Tanzania.pdf?sequence=1] Retrieved on 13th March, 2018 Nakano, Y., & Kajisa, K. (2011, July). The Impact of Access to Credit and Training on Technology Adoption: A Case of the Rice Sector in Tanzania. In Selected paper prepared for presentation at the Agricultural & Applied Economics Association’s, AAEA & NAREA Joint Annual Meeting, Pittsburgh,ennsylvania.[https://ageconsearch.umn.edu/bitstream/103763/2/Nakano%20and%20K ajisa2011_110705.pdf ]. Retrieved on 13th March, 2018 Quartey, I. (2011). Economic function of education. [http://wiki.answers.com/Qeconomic-function- of-education] site visited on 04/03/2018. Reed, M.S., Graves, A., Dandy, N., Posthumus, H., Hubacek, K. and Morris, J. (2009). Who’s in and why? A typology of stakeholder analysis methods for natural resource management. Journal of Environmental Management, 90(5): 1933 -1949. Ronald, B., Dulle, F., & Honesta, N. (2014). Assessment of the Information Needs of Rice Farmers in Tanzania: A Case Study of Kilombero District, Morogoro. Library Philosophy and Practice. URT (2011). United Nations Educational, Scientific and Cultural Organization (UNESCO) Country Programming Document 2011–2015. URT (2012). Population And Housing Census; Population Distribution by Administrative Areas. National Bureau of Statistics Ministry of Finance Dar es Salaam. Walt, G. (1998). Globalisation of international health. Lancet. 351(9100): 434–7. Yamindinda, L. P. (2013). Economic viability and economic impact of Mkindo irrigation scheme in Mvomero district Tanzania; (Doctoral dissertation, Sokoine University of Agriculture).
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Market Chain Analysis and Development for Rice Produced in Kigoma Region, Tanzania
APPENDICES
Appendix 1: Age, sex, education and household size Criteria Description Responses (%)
Kakonko Kasulu Kibondo Uvinza Average (n=36) (n=46) (n=36) (n=24) Age 18-35 years 31.2 26.7 30.3 50.0 32.8 36-55 years 68.8 71.1 63.6 50.0 64.9 > 55 years 0.0 2.2 6.1 0.0 2.2 Sex Male 25.0 62.2 54.5 33.3 46.3 Female 75.0 37.8 45.5 66.7 53.7 Education No education 0.0 8.9 12.1 16.7 9.0 Primary 90.6 82.2 78.8 83.3 83.6 Secondary 9.4 8.9 9.1 0.0 7.5 1-3 members 43.8 31.1 24.2 16.7 29.9 Household size 4-6 members 46.9 48.9 57.6 50.0 50.7 >6 members 9.4 20.0 18.2 33.3 19.4 Source: Market Analysis, February (2018)
Appendix 2: Land allocation, ownership and varieties of paddy/rice cultivated
Criteria Description Responses (%) Kakonko Kasulu Kibondo Uvinza Average (n=36) (n=46) (n=36) (n=24) Land ownership 0.5-10 acre 75.00 88.10 68.20 95.50 82.70 11-20 acre 20.80 2.40 13.60 4.50 9.10 >20 acre 4.20 9.50 18.20 0.0 8.20 0.5-5 acre 100 89.50 81.80 100 92.00 Land allocated for rice 6-10 acre 0.0 7.90 18.20 0.0 7.00 >10 acre 0.0 2.60 0.0 0.0 1.00 Chalinze 0.0 39.1 8.3 37.5 21.1 Dakawa 0.0 0.0 0.0 16.7 2.8 Kahogo 0.0 0.0 8.3 0.0 2.1 Variety cultivated Kalamata 11.1 4.3 0.0 4.2 4.9 Saro-5 80.6 39.1 50.0 25.0 50.0 Super 5.6 10.9 16.7 8.3 10.6 Sindano 2.8 6.5 16.7 8.3 8.5 Source: Market Analysis, February (2018)
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Market Chain Analysis and Development for Rice Produced in Kigoma Region, Tanzania
APPENDICES
Appendix 3: Access to credit
Criteria Description Responses (%) Kakonko Kasulu Kibondo Uvinza Average (n=36) (n=46) (n=36) (n=24) Access to credit No Access 77.8 81.0 66.7 100.0 79.1 Access 22.2 19.0 33.3 0.0 20.9 Private 11.1 13.1 22.1 0.0 11.6 Sources of credits Lenders/Friends VICOBA 11.1 4.4 11.1 0.0 6.7 Purpose of credit Payment of labour 0.0 13.1 16.7 0.0 7.5 Purchase of inputs 11.1 0.0 5.6 0.0 4.2 Purchase of farm 0.0 4.4 0.0 0.0 1.1 implements Source: Market Analysis, February (2018)
Appendix 4: Market information
Criteria Description Responses (%) Kakonko Kasulu Kibondo Uvinza Average (n=36) (n=46) (n=36) (n=24) Friends 77.8 66.7 75.0 66.7 72.44 Sources of Traders/Intermediaries 11.1 38.9 18.8 33.3 24.1 information Cell Phones 33.3 44.4 18.8 66.7 36.2 Media i.e. Radio& TV 11.1 27.8 0.0 33.4 15.5 Usefulness of Useless 0.0 5.6 0.0 0.0 1.7 information Moderate 33.3 27.8 56.2 50.0 39.7 Good 66.7 66.6 43.8 50.0 58.6 Source: Market Analysis, February (2018)
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Market Chain Analysis and Development for Rice Produced in Kigoma Region, Tanzania
APPENDICES
Appendix 5: Gender participation in paddy/rice market chain
Criteria Description Responses (%) Kakonko Kasulu Kibondo Uvinza Average (n=36) (n=46) (n=36) (n=24) Proportional of <25% 0.0 0.0 0.0 20.0 3.1 women in paddy/rice 25%-50% 14.3 9.0 5.6 10.0 9.4 market chain 51%-75% 57.2 77.2 72.2 70.0 70.2 >75% 28.6 13.6 22.3 0.0 17.3 Participation of Participate 77.8 95.6 100.0 83.3 89.2 women Not participate 22.2 4.4 0.0 16.7 10.8 Source: Market Analysis, February (2018)
Appendix 6: Amount for home consumptions
Criteria Description Responses (%) Kakonko Kasulu Kibondo Uvinza (n=36) (n=46) (n=36) (n=24) Average <100 kg 11.1 8.3 18.2 0.0 10.0 101-500 kg 44.4 77.8 50.0 100.0 64.5 Amount of home consumption 501-1000kg 33.3 2.8 13.6 0.0 14.5 1001-1500 kg 11.1 0.0 0.0 0.0 3.6 >1500 kg 0.0 11.1 18.2 0.0 7.4 Source: Market Analysis, February (2018) Appendix 7: Market challenges facing paddy/rice chain participants
Responses (%) Kakonko Kasulu Kibondo Uvinza Descriptions (n=36) (n=46) (n=36) (n=24) Average Lack of market information 44.4 30.4 50 16.6 35.4 Poor linkages with other value chain actors 0.0 8.7 5.6 0.0 7.1 Non-availability of market/limited consumer demand 11.1 21.7 27.8 8.3 17.2 Low quality products that meet consumer demand 0.0 13 5.6 8.3 8.9 Market distance 55.6 43.5 55.6 25 44.9 Absence/limited access to transportation 44.4 30.4 33.3 16.7 31.2 Low consumer demand 0.0 4.3 0.0 8.3 6.3 Absence of rice polisher 22.2 8.7 5.6 8.3 11.2 Source: Market Analysis, February (2018)
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Market Chain Analysis and Development for Rice Produced in Kigoma Region, Tanzania
APPENDICES
Appendix 8: Major paddy/rice production constraints
Responses (%) Kakonko Kasulu Kibondo Uvinza Descriptions (n=36) (n=46) (n=36) (n=24) Average Diseases and pests 33.3 21.7 11.1 8.3 18.6 Drought 55.6 32.6 22.2 8.3 29.7 High cost of production inputs 11.1 47.8 33.3 25.0 29.3 Lack of capital 33.3 30.4 50.0 33.3 36.75 Lack of farming education 11.1 8.7 0.0 8.3 9.4 High interest rates 11.1 2.2 11.1 0.0 8.1 Poor irrigation infrastructure 8.3 0.0 5.6 0.0 6.9 Price fluctuation 13.9 21.7 16.7 8.3 15.2 Distance from house to market 11.1 0.0 5.6 0.0 8.3 Source: Market Analysis, February (2018)
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Market Chain Analysis and Development for Rice Produced in Kigoma Region, Tanzania
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Market Chain Analysis and Development for Rice Produced in Kigoma Region, Tanzania