REFORMS FROM A FARMERS PERSPECTIVE Lazaro Nduta Chairman Tanzania Cotton Growers Association 1

REFORMS FROM A FARMERS PERSPECTIVE FOCUS ON LESSONS RELATED TO: – FUNCTIONING OF INPUT AND OUTPUT MARKETS – PRICE DETERMINATION AND PAYMENT SYSTEMS 2

A: SITUATION BEFORE CO-OPERATIVE UNION’S DISSOLUTION Inputs were supplied to the farmers on credit through their Co-operative Societies Union forming centres assisted the farmers by providing tractor services on credit The union had some extension officers who constantly assisted the cotton farmers Output markets were done by the co-operative societies only,thus they maintained a quality which made the Tanzanian cotton fetch a premium of about UScts 8 per lb for the lint sold in the international markets. 3

THE SITUATION AFTER LIBERALISATION Before 2002 the supply of inputs was nobody’s business Early 2002 based on a levy collection at the seed cotton marketing stage, farmers are supplied the inputs on the so called Passbook System At the time of distribution of inputs,the farmers are provided with the inputs in correspondence to the amounts transcribed in their Passbooks 4

THE SITUATION AFTER LIBERALISATION (cont.) The Passbook System is an advance payment by the farmers while formerly they benefited on input credit before liberalization of the cotton sector. Over-liberalization of the sector under harsh competition has favoured quantity at the expense of the quality. Today Tanzanian cotton is discounted at around US cts 6 per lb. It appears that some buyers are virtually ignorant about the quality requirements as dictated by changing consumer patterns and technological innovations world wide. 5

OBSERVATIONS/ RECOMMENDATIONS Passbook system is good enough however the inputs prices are still very high compared to the actual farmers price A some sort of input subside is to be availed so that farmers can make use of the input so as to raise their productivity This should be done as an inducement for the farmers to use the inputs so as to raise their productivity Farmers association should be strengthened so that it can do some of the activities that the former co- operative societies did for the supervision of the inputs distribution and the quality supervision. 6

OBSERVATIONS/ RECOMMENDATIONS (cont.) Over –liberalization on the market of the seed cotton from the farmers must be avoided. A long term relationship between the farmers and ginners / buyers should be established in the marketing system. Farmer groups like the TACOGA if well established will improve the quality of seed cotton sold and at the same time be easily assisted in the provision of inputs on credit form. 7

B: BEFORE DISSOLUTION OF CO-OPERATIVES Prices given to farmers by co operative unions was part payment as when the cotton was sold any extra amount fetched was sent back to the farmers Prices were offered well in advance before the season started Prompt payment on cotton purchased from the farmer 8

1. AFTER LIBERALISATION Prices given to farmers are final and conclusive Prices offered to farmers are after all buyers / ginners expenses have been deducted from the prevailing world market prices Some buyer/ ginners do not pay promptly Buyers prices are not all actual some are due to their poor efficiencies. 9

2. OBSERVATIONS / RECOMMANDATIONS Price stabilisation fund should be established say for three years so that the farmers price is stable for a minimum of three years Lint bales to be sold to a single company in the country so as to be sure of the prices obtained from the sales Farmer prices should be looked at as per the actual production cost per kilo of seed cotton produced and not from the buyers costing point of view 10

2. OBSERVATIONS / RECOMMANDATIONS (cont.) Farmers Association should be strengthened so that they can sit with the buyers to negotiate the selling / purchase price Capacity building of the farmers in both the farming practise and the economics of the production so as to realise the importance of quality to their product. This is a vacuum which the stakeholders have not taken it into account with much concern. 11

THANK YOU 12