1. Monday, October 19, 2015 Analysis of the Performance of Agriculture Sector and its Contribution to Economic Growth and Poverty Reduction Draft Report Prepared by Economics Department University of Dar-es-Salaam

2. Monday, October 19, 2015 Content Objectives of the Study Methodology Summary of the Major Findings Emerging Issues and Recommendations

3. Monday, October 19, 2015 Objectives (1) Overall objective is to assess performance of agriculture by identifying the critical factors that determine The sector growth and The sector contribution to reduction of poverty In addition, the study makes an assessment of existing policies and as well as recommendations for improvement

4. Monday, October 19, 2015 Objectives (2) Specifically this enquiry has addressed the following components Assess the contribution of agricultural interventions such as irrigation and inputs support in improving productivity and livelihoods; Assess contribution of selected sectors (land, Trade, Industry and Marketing, infrastructure, finance) to agricultural growth; Assess the contribution of small-scale agriculture to poverty reduction and the constraints faced by small scale farmers; Make comparison of the experience of other countries where initiatives in the agricultural sector have lead to poverty reduction and increased agricultural growth;

5. Monday, October 19, 2015 Objectives (3) Assess the constraints for increased investment in large scale farming; Assess the private sector participation in agriculture by examining reasons for weak engagement; Assess the long term agricultural productivity and ways of scaling up public and private investments in the sector, including possible options of PPP and promotion of agri-business; Assess the levels of public investment compared to national budget and levels of private investment;

6. Monday, October 19, 2015 Objectives (4) Assess and analyse the bottlenecks hindering development of agri-business and in particular investment in large scale agro-processing; agro-industrial parks and cottage industries; Assess the response to commodity boom (growth) and the associated multiplier effect towards poverty reduction;

7. Monday, October 19, 2015 Methodology (1) Quantitative and qualitative data Source Official publications e.g. HBS, Agricultural Census, Economic Surveys, PHDR, BoT etc. Interviews with Stakeholders Visited 5 Agricultural related projects namely, TAHA; Climate Change Adaptation Project in Same District; Dunduliza Programme under FISEDA Warehousing Receipt System); Warehosung Receipt System – Tandahimba District; NARI – Naliendele; and AMAGRO

8. Monday, October 19, 2015 Methodology (2) Data Analysis: Computation of indices such as poverty indices, crop yields per hectare, and growth rates have been made Simple econometric analysis to compute growth rates The trend analysis and comparative analysis Cross tabulation was also used to examine correlation between variables

9. Monday, October 19, 2015 Summary of Major Findings (1) The total land area is 95.5 million hectares, out which the area cultivated accounts for 10.6% or 23% of the total arable land The number and sizes of Medium and Large scale farms is yet to be established But it is known that these farmers occupy a total of 1.5 million hectares A big proportion of commodities (tea, sugar cane, sisal, coffee, tobacco and some food crops ) in this country are produced by these farmers

10. Monday, October 19, 2015 Summary of Major Findings (2) Total area suitable for irrigation is 29.4 m ha, but only 289,245 ha is put to use Indicates a seriously low productivity in agriculture Challenges facing the agricultural sector in Tanzania make it difficult for farmers to invest in the sector Infrastructure, Markets, Agricultural experts/Ext services, low farm gate prices, storage facilities etc do not provide incentive to a farmer to expand investment in the sector

11. Monday, October 19, 2015 Summary of Major Findings (3) Private investors are not keen in investing in the provision of public goods and services eg Infrastructure and Agricultural experts/Ext services, because they cannot exclusively internalize all the benefits Despite its importance, agriculture budget share is still small compared to the share going to some other MDAs Despite being small, an increase from 1.6% in 2008/09 to 2.4% in 2009/10 does not necessarily mean a significant part reached farmers

12. Monday, October 19, 2015 Summary of Major Findings (4) Fertilizer consumption in Tanzania lags far behind its supply and potential demand, thus creating an artificial surplus of about 40% (ss/consump ratio) Total requirement of improved seed is 120,000 tons annually, while annual supply averages 10,000 tons or 8% of total requirement (a supply constraint) Investment in capital goods in agriculture is still at a very low level which affects productivity Current stock is 15500 Vs 9500 (61%) currently operational

13. Monday, October 19, 2015 Summary of Major Findings (5) Annual tractor replacement stands at 1000 – 1500 Vs the current 250-400 tractors per annum The country imports 2 million of hand hoes annually because it is dominant farm implement Yet, all the factories used to manufacture hand hoes in the country are not running Records show that Research and Development (R&D) institutions are underfunded The “neglect” in financing R&D suggests that we will be obliged to depend on “Imported Green Revolution”, instead of “Local Green Revolution”

14. Monday, October 19, 2015 Summary of Major Findings (6) Farmers Education/Training Centers (Folk Development Colleges) which we used to have in some Regions of Tanzania are not there anymore They were important centers for propagating functional agricultural education “Education is a productivity factor” in development Examination of potential contribution of agriculture to poverty reduction Made some assumptions Used top performance data from different countries around the world Considered 3 food crops (ma, pa, and sorg) and 3 cash crops (Te, Co, and Cas)

15. Monday, October 19, 2015 Summary of Major Findings (7) 4 Scenarios (Potential Rates) were tested Producing at full capacity (100%) Producing at 75% capacity Producing at 50% capacity Producing at 25% capacity The results indicate that GDP has substantially increased at any level of potential rate Both the potential per capita GDP and that of per day indicate that they are above the poverty line at any level of potential rate Note that, many products including livestock has not been included

16. Monday, October 19, 2015 Summary of Major Findings (8) The potential from agro processing has also not been included. All this shows that our GDP is artificially low AND ACTIONS NEED TO BE TAKEN NOW! Let Strong-Pro-Farm Policies be the drivers of sustainable agricultural development in Tanzania Since agricultural GDP share is currently about 25%, growth of agricultural sector no longer influence substantially the growth rate of GDP (like services – 46% and industry – 20%) As in the 1970s and 1980s when it was contributing about 50% to total GDP

17. Monday, October 19, 2015 Summary of Major Findings (9) Agriculture grows at an average rate of 4.8% annually (2000 - 2008) While GDP has been fluctuating around 7% Thus, to a large extent GDP growth rate has been significantly determined by the growth rate in the services sector (7.4%) and industry (9.3%) Therefore, economic growth in Tanzania is not associated with poverty reduction which is high in rural agriculture supporting 74% of total population Contribution of agricultural related projects to economic growth and livelihoods

18. Monday, October 19, 2015 Challenges, Emerging Issues and Recommendations (1) To accelerate the rate of growth of output in the agricultural sector, and increase the pace of poverty reduction it is necessary to: Address the problem of low productivity Adopt DELIBERATLY STRONG-PRO-FARM POLICIES

19. Monday, October 19, 2015 Challenges, Emerging Issues and Recommendations (2) Promote Local Green Revolution by way of addressing the following: Increase the intensity use of fertilizer and improved seeds and subsidize agricultural inputs Improve extension services -number of extension staff, and working conditions Increase the allocation of funds for Research and Development

20. Monday, October 19, 2015 Challenges, Emerging Issues and Recommendations (2) cont… Re-introduce Farmers Training Centres (FTCs) / Folk Development Colleges (FDCs) for propagating farmers’ functional education Reduce bureaucracy and red tape which usually increases the cost of doing business in order to attract private investment in the agricultural sector Create conducive environment for private sector participation and offering incentives to attract private investment in agro-processing Increase public investment in irrigation and other related infrastructure such as dams, water harvesting facilities etc

21. Monday, October 19, 2015 Challenges, Emerging Issues and Recommendations (2) cont… Support the promotion of rural financial institutions which will act as intermediaries for savings and investment in rural areas Support the promotion of Non Farm Activities by strengthening Small Industries Development Organizations (SIDO) and other rural institutions Improve rural Infrastructure e.g. road network, rural electrification etc. Scale up resource allocation for agriculture (Public and Private) Ensure availability of Capital Equipment for Agriculture

22. Monday, October 19, 2015 Possible Outcome of the Domestic Green Revolution Job opportunities created through e.g. Non Farm Activities Small Industries such as agro processing Research and Training Commercial farms Increased Farm Incomes Improved Domestic GDP Reduced number of people living below the poverty line Improved livelihoods and welfare of rural population Sustainable Local Green Revolution initiative (unlike projects)

23. Monday, October 19, 2015 Thank You All