SUSTAINABLE DEVELOPMENT OF TANZANIAN AGRO-FOOD SYSTEM: FROM AGRICULTURAL COMMODITIES TO VALUE ADDED AGRO FOOD PRODUCTS- OPPORTUNITIES AND CHALLENGES IN MODERNIZATION OF AGRIBUSINESS SECTOR IN TANZANIA

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SUSTAINABLE DEVELOPMENT OF TANZANIAN AGRO-FOOD
SYSTEM FROM AGRICULTURAL COMMODITIES TO VALUE
ADDED AGRO FOOD PRODUCTS- OPPORTUNITIES AND
CHALLENGES IN MODERNIZATION OF AGRIBUSINESS
SECTOR IN TANZANIA

• Prof. Joseph Mpagalile,
• Technology Transfer Coordinator Food Science
  Dept

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OUTLINE

• Introduction on Agriculture in Tanzania
  Commodities
• Important Concepts
• Value addition and SMEs in Tanzania
• Agro-Food and its development
• Innovation in Agro Food Role of SMES
• Role of Research Generation and development of
  Agro Food SMEs
• What needs to be done-Recommendations

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Tanzania
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AGRICULTURE IN TANZANIA1

• Tanzania has great potential for agriculture
• Agriculture (Crop Animal Production Natural
  resources is one of the leading sectors in TZ
• Main source of food
• Important source of income
• 80 of the population depend on agriculture
• Employs about 70 of active labour force
• It is contributing about 45-50 of GDP
• Agriculture is mainly rain fed

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AGRICULTURE IN TANZANIA2

• Wide variety of Crops are grown in Tanzania
• Maize, rice, cassava, sorghum- main food crops
• Important animals cattle, goats, chicken
• Traditional export crops Coffee, cashew nuts,
  cotton, tea sisal
• New crops Flowers, horticultural produces,
  oilseeds

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Agriculture and Poverty Reduction

• Poverty declined slightly over the last 10 15
  years. From 1991 /92 to 2000/01 food poverty
  declined from 22 19 while basic needs poverty
  declined from 36 to 30.
• Vision 2025 and the Poverty Reduction Strategy
  Paper (PRSP) objectives are to
• Raise the per capita income of Tanzania from 210
  to 3420 US by 2025.
• Reduce abject poverty by 50 by the year 2010
• Eradicate abject poverty by the year 2025
• To reach targets economy must grow at
• 6 7 between 2000 2004
• 8 9 between 2005 2010
• 8 10 between 2010 to 2025

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AGRICULTURE POTENTIAL IN TZ

• Large untapped arable land (44 million hectares)
• High potential irrigable land is available
• Broad diversity of agroecology Enjoys tropical
  climate (highlands are temperate)
• Water is available (3 lakes L. Victoria, L.
  Tanganyika L. Nyasa, rivers)
• Large variety of fish
• Market Well placed regional/International

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Forecasted food crops production in 2008/09
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Table 1 Cash crops production in 2007/08
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Exported Crops in 2007/2008
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Food Production in Relation to Food Self
sufficiency
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Agriculture and Value addition

• Traditionally crops have been sold raw
• In the 70s to late eighties government put a lot
  of effort to agro agro food industries
• However most of the large scale industries did
  not perform to the expectations
• New efforts are being made to add value to the
  crops through
• Involvement of private sector (Local and overseas
  investors, partnerships) etc

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AGRIBUSINESS AND SMEs IN TANZANIAN CONTEXT

• Agribusiness is a loaded term
• It is generally meant to include production,
  processing, and supply of agricultural goods
• All allied activities such as seed supply,
  transportation of goods are components of
  agribusiness
• Characteristics of agribusiness
• Scale
• Vertical and horizontal integration
• Runs like true business

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SMEs in Tanzania

• The definition of SMEs differs from one country
  to the other
• Yardsticks Employees, Total investment and
  Turnover
• In Tanzania
• Small Enterprise
• - Formalized undertakings
• - Employees between 5 49
• - Capital investment of 5 -200
  million
• Medium Enterprise
• 50 -99 employees
• Tshs 200 Tshs 800,0000
• (SME Policy of 2002)

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AGRICULTURAL COMMODITIES vs VALUE ADDITION

• What is agricultural commodity
• Any plant or part of, animal or animal product
  produced by person (farmer/animal keeper/plant
  propagator) for consumption sale or for other
  uses
• Characteristics
• Come out of the field
• No value addition
• May have undergone through primary processing
  (e.g. shelling)

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VALUE ADDITION

• What is value addition?
• Many definitions exists
• It refers to economically adding value to
  agricultural food product so as to form
  characteristics more preferred by the consumer in
  the market
• May involve INNOVATION
• Processes
• Procedures
• Product or service
• May involve coordination - logistics
• The value addition happens in the value chain
  (Farm Table)

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Agro-Food Industries

• These are important in value addition as
• Generate value addition Transferring agric
  commodity into products which are
• Readily marketable
• Useful
• Improved storability
• Higher profitability
• Setup
• Traditional Agro-Food industries
• Modern Agro-Food industries

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• Traditional Agro-Food Industries
• Mainly manual or batch operations
• Labour intensive
• Minimal sophistication
• Equipment is locally fabricated
• Little RD
• Offer little competition to large companies
• Their products liked by the local community

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• Modern Food Industry
• Food companies e.g.
• Bottling plants (Soft Drinks, Beer, Frozen foods
  (Fish fillets factories in the lake Zone)
• Large flour mills e.g. Azam, Pembe etc
• Characterized by improved technologies
• Are well organized
• Tend to be innovative

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OPPORTUNITIES IN AGRO-FOOD INDUSTRY

• Some policies supporting development of Ago-Food
  industries are there e.g. SMEs policy
• Existence of research through institutions
  working on Agro-food research (SUA, UDSM, TIRDO,
  CAMARTEC, TEMDO) etc
• Involvement of private sector e.g. in
  manufacturing
• Demographic changes (Population growth,
  Urbanization
• Emerging technologies to support modernization of
  SMEs
• Presence of technologies supporting Rural
  Industrialization
• Gender mainstreaming initiatives-support to women
  entrepreneurs (ILO and Ministry of Industry and
  Trade and Marketing (MITM)
• Policy towards value addition on agro produces
• Kilimo Kwanza (Agriculture first) opportunities
  to commercialize

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CHALLENGES FACING AGRO- FOOD INDUSTRIES

• Lack of capital Limited capacity to acquire new
  technologies
• Shortage of Modern infrastructure equipment
• Inadequate transportation
• Poor distribution
• Lack and inadequate cold storage system
• Human Resources Shortage of skilled labour
• Lack of consistent supply of good quality raw
  materials
• Inability to meet international food quality and
  safety standards
• Technology its availability (Process equipment,
  process and product development, process
  control)-inadequate technology transfer
• Environmental protection (Wastes, hygienic
  practices, GMP, HACCP)

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CHALLENGES ctd

• Effects of Global Economic Crisis (Tight credits,
  weak demand, reduced orders)
• Lack of innovativeness Firm that dont innovate
  distinguish their products suffer reduced
  returns

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Conclusions

• Agriculture will continue to be an important
  source of food and income in Tanzania
• However, unless agribusiness including agro Food
  industries are supported and enhanced farmers and
  a country will not realize the potential benefit
• Improvement on technology and innovation as well
  as improved access to markets need to be given
  priority
• Support of agro-food industry through such
  initiatives as Clusters, Incubators need to be
  given priority

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Recommendations

• Facilitate availability of improved technologies
• Link Agro-Food industry to RD institutions and
  support linkages
• Enhance investment in RD
• Assist in development of skills and knowledge
• Traditional curriculum in training institutions
  must be reviewed to cater for the needs of
  agro-food industries
• Facilitate availability of inputs
• Provide support towards enhancing orderly and
  sound marketing
• Encourage domestic agro food processors
• Provide conducive environment for the Agro Food
  based SMEs

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THANK YOU