VALUE CHAIN ANALYSIS OF RICE AND MAIZE IN SELECTED DISTRICTS IN TANZANIA

SYNOPSIS NOVEMBER 2010

STUDY COMMISSIONED BY ACT TANZANIA AGRICULTURAL PARTNERSHIP FUNDED BY EU- EC FOOD FACILITY GRANT NO. 2009/213-569 AND CONDUCTED BY MATCH MAKER ASSOCIATES LIMITED

Table of Contents
List of Acronyms ............................................................................................................... 2 1. Introduction................................................................................................................... 4 2. Context ........................................................................................................................... 4 3. Rice Value Chain Development ................................................................................... 5 4. Maize Value Chain Development ................................................................................ 7 5. District Entry Points ..................................................................................................... 8
5.1 Districts in the North ..................................................................................................8 5.2 Districts in Morogoro.........................................................................................................9 5.3 Districts In Iringa .............................................................................................................10 5.4 Districts in Mbeya............................................................................................................13 5.5 Districts in Ruvuma .........................................................................................................15

6. Generic Intervention Strategies................................................................................. 16 7. TAP Agenda for Value Chain Development ............................................................ 19

List of Acronyms
ACT ADDA AMCOS ASDP ASF DADP EC EU FAO FDI FERT FFS GAP GoT, GovT INCOMET JICA MFI MITM Agricultural Council of Tanzania Agricultural Development Denmark Asia (Africa) Agricultural Marketing Cooperative Society Ltd Agricultural Sector Development Programme Agricultores Sen Fronteira District Agricultural Development Programme European Commission European Union Food and Agriculture Organization Foreign Direct Investment Fondation pour lEpanouissement et le Renouveau de la Terre Farmer Field School Good Agronomic Practices Government of Tanzania Tanzanian NGO that supports MUCOBA in Mufindi District Japan International Cooperation Agency Micro Finance Institutions Ministry of Industry, Trade and Marketing

TAP: Synopsis of Rice & Maize Value Chain Report - November 2010

MMA MUCOBA MVIWATA NADO NFRA NGO NMB PMG RFSP RLDC RUDI SACCOS SAGCOT TAGMARKCNFA TAGRODE TAP WFP WRS

Match Maker Associated Tanzania Limited Mufindi Cooperative Bank National Network of Farmers Groups Njombe Agricultural Development Organization National Food Reserve Agency Non Governmental Organization National Microfinance Bank Producers Marketing Group Rural Financing Support Programme Rural Livelihood development company Rural urban Development Initiatives Saving and Credit Cooperative Society Southern Agricultural Corridor Tanzania Tanzanian Agricultural Market Development Trust / Conference of National Foreign Affairs Tanzania Grass-Root Development Tanzanian Agricultural Partnership World Food Programme Warehouse Receipt System

TAP: Synopsis of Rice & Maize Value Chain Report - November 2010

1. Introduction
Match Maker Associates (MMA), was contracted in July 2010 by the Council of Tanzania (ACT) through Tanzania Agricultural Partnership (TAP) to research ways of improving the maize and rice supply chains of 13 districts. Funding for the project was generously received from the European Union (EU). The aim of the research was to identify how farmers, traders, processors, wholesalers and retailers that work with rice and maize can improve their businesses and make more money. We hope that this report will help to achieve that aim as well as promote private investment and influence public policy. The detailed research findings can be found in three separate documents that provide a broad context as well as specific findings on rice and maize. This document summarises the main findings and is intended for interested individuals at the district level as a source of information to guide their planning. It uses a methodology of Value Chain Development (VCD), which identifies possible improvements in the existing processes (called a supply chain) that deliver a product from a farmers field to a consumers fork through a series of functions. Supply chains are upgraded into value chains that are designed to increase the rewards and reduce the risks for those involved (actors), and in particular smallholder farmers. Section 2 briefly describing the overall context that rice and maize actors have to operate within and that provides many constraints and opportunities for their businesses. Sections 3 and 4 follow with overviews of the rice and maize supply chains and possible upgrading strategies. Section 5 outlines specific entry points and information for the 13 priority districts. Section 6 provides broad generic upgrading strategies that are relevant not only for rice and maize but also all cereal crops and agriculture in general and Section 7 concludes with recommendations for TAPs future VCD agenda in these districts.

2. Context
The global markets for rice and maize are very different, but at present hardly any of either product is exported from Tanzania. Within the country the two markets are quite informal, as there is no commodity exchange or other agency yet to establish rules and prices. Only when large buyers like the World Food Programme (WFP) and the National Food Reserve Agency (NFRA) purchase maize for food security (about 14% of total) do sellers have to follow strict quantity and quality contracts. Also, there are some big Tanzanian buyers including Mohammed Enterprises, S.S. Bakhresa, Export Trading, and Olam. Unfortunately, these have made the markets more inefficient, as they exclude many actors and keep costs high. Few smallholder farmers get any benefit from this system. The Government of Tanzania (GoT) also tries to protect the local rice and maize markets by applying import tax. The import tax for rice is very high (75%) and has been in place for some time. The import tax for maize is lower and changes
TAP: Synopsis of Rice & Maize Value Chain Report - November 2010

regularly depending on the food security requirements as determined by the government. There has also been a longstanding export ban for maize, which was only lifted earlier this year (2010) when the food security situation improved. Equally important is the recent introduction of the Cereals and Other Produce Act (19/2009). This creates a Board that can: 1) facilitate cereals research; 2) facilitate extension services to producers and dealers; 3) facilitate the development of agricultural input services; 4) share information, including market information; 5) promote production, processing and storage; 6) promote appropriate technology, and; 7) assist in the development of farmer organizations. But the Board can also carry out commercial functions like buying, storing, processing, grading, packaging, selling, importing, and exporting cereals. The new Board therefore is entrusted with regulatory powers and commercial functions which may interfere with market liberalisation principles and discourage private sector investors depending on how they are pursued in the coming years. In general, the GoT has significantly increased its support to agriculture from 2.9% of the national budget (2000/01) to 6.1% (2009/10). Mostly this is being spent at the farmers level on subsidized inputs and extension services. Less has been spent supporting other actors like processors or trying to increase the demand for Tanzanian rice and maize, particularly abroad. Also, GoT taxes have limited Foreign Direct Investment (FDI), as many investors think these taxes are too high for agriculture. This may change under the ongoing Kilimo Kwanza (Agriculture First) initiative with new public-private partnerships and other business models. Whatever the case, the current status of Tanzanian farmers must be understood. According to the recent Food and Agricultural Organization of United Nations (FAO) survey, most (26%) rural households are smallholders with less than 2 ha who consume at least half of what they produce. 4.1% of farm households suffer poor food consumption, 18.9% have borderline food consumption, and 77% have acceptable food consumption. There are few commercial farms, although three large rice farms can be found in Mbeya and Morogoro Regions. Also contract farming is rare in both the rice and maize markets.

3. Rice Value Chain Development

Smallholder farmers in Arusha, Dar es Salaam, Iringa, Mbeya and Morogoro Regions grow mostly Tanzanias (local) rice varieties. Rice is the second most important cereal, which most farmers sell as a cash crop. In 2008, Tanzania produced 899,000 Mt of rice. Most of this was sold within the country and only a small amount was exported. But despite being one of the largest producers in the region, Tanzanian rice farmers have one of the lowest yields in the world (2-4 Mt/ha). Getting rice from a smallholder farmer to consumers plate is a very complicated and inefficient process. In most cases there are too many people involved
TAP: Synopsis of Rice & Maize Value Chain Report - November 2010

including multiple traders and brokers. Processing is also inefficient, as many millers have low quality machines that lead to a lot of broken rice grains. This all means that Tanzanian rice can be expensive compared to imported varieties. However, in a few cases some more efficient and competitive supply chains can be found. Smallholder rice farmers that rely on seasonal rains are usually not very profitable (<27%) and many lose money on their harvest. Where there are irrigated farms, profitability is much better (>61%). When growing rice, a producers main costs are labour (either his/her own or hired), inputs including fertilizer, and transport. The other people involved in the supply chain including traders, millers and retailers make profits of between 9 and 25%. However, because they handle much bigger volumes than smallholder farmers, other chain actors make much more money. Apart from very low yields and high losses, the Tanzanian rice supply chains have some other weaknesses: 1) very few farmers use improved varieties of rice seed because multiplication is insufficient and there are few ways to distribute them; 2) suppliers of inputs, such as fertilizers, are too few particularly in remote areas; 3) government extension workers are too few and sometimes lack the required skills; 4) quality is low because different grades of rice are mixed together; 5) storage facilities are insufficient and many farmers store grains in their homes, which can further reduce quality, and; 6) transport is very expensive. These problems notwithstanding, there is a growing demand among upmarket consumers in Dar es Salaam and other cities for high quality, branded, and aromatic Tanzanian rice. Neighbouring countries also demand rice imports, as do institutional buyers (army barracks, hospitals, schools etc.) in Tanzania. Therefore, three supply chains have been identified for upgrading into value chains: 1) an outgrower-led chain targeting upmarket urban consumers; 2) a chain that incorporates a Warehouse Receipt System (WRS) targeting regional export markets, and; 3) a large estate-led chain targeting major institutional buyers. For the first chain, a large investor is needed to contract smallholders as outgrowers and to drive the chain forward. Mtenda Distribution has been identified as a perfect example for this role. Mtenda currently works in a number of districts by signing contracts with smallholder farmers before they have planted their crop. The contract tells the farmer what quality s/he must reach in order to be paid. Mtenda also has a contract with a miller, which processes the rice paddy. The rice is then transported to Dar es Salaam where it is packaged and sold under the Mtenda brand. Both the contracted smallholders and Mtenda increase their profitability by working more closely together, but this depends on them keeping quality high. Mtenda already works in some of the targeted districts, but the model can be copied to other areas.

TAP: Synopsis of Rice & Maize Value Chain Report - November 2010

For the second chain, much larger quantities need to be built although this will need to be accompanied by better qualities and branding. To do this a WRS can be the perfect model.

4. Maize Value Chain Development

Maize is grown across Tanzania and is the most important food crop. The most recent estimates by the Ministry of Agriculture, Food Security and Cooperatives suggest that 3.3 million Mt of maize is grown in Tanzania. Most of this is grown by smallholder farmers on a total of 4.9 million ha of land divided into individual farms that are only 0.67 ha on average. However, production hardly meets demand (annual deficit fluctuates between 106 and 707,000 tons between 2006 and 2010) and there is very little left to export (around 100,000 Mt some years). There has also been regular export bans on maize because of food security concerns. Like rice, getting maize from the farmer to the consumer is long and complicated process. Traders and brokers handle maize at village, district and national markets, which increases prices. They are able to make a lot of money because the prices change seasonally and from place to place. High post-harvest loses and low yields also increase prices. However, some new ways of doing business are slowly emerging that use WRS and different types of farmer organizations. The challenge is to make farmers think more like businessmen. Smallholder maize farmers often loose money on their crop (>-70%) because of low yields. It is possible to increase the current yield from 1.3 Mt/ha to 9.5 Mt/ha by using good agricultural practices and this would make maize farming profitable (>63%). The main costs that farmer has are his/her own labour, transport and inputs. In addition to farmers, traders make a profit of 24% and processors a profit of 42%. Apart from multiple traders and low yields, there are a number of other weaknesses facing the maize sector: 1) many farmers still cannot access inputs although there are continuing efforts to improve this; 2) input suppliers and farmers do not have access to financial services; 3) there are few farmer organizations and most sell at the farm gate; 4) the market is unpredictable due to export bans and the release of food aid; 5) there are not enough storage facilities; 5) quality is low because of contamination and poor quality processing machines Four supply chains have been identified for upgrading into value chains: 1) a chain that targets low income urban consumers; 2) one that works with institutional food security buyers like WFP and NFRA; 3) an export chain to countries in the East African Community, and; 4) a less significant chain targeting urban upmarket consumers. There is also potential to link the maize chains to businesses in the animal feed industry, which can utilize waste products.

TAP: Synopsis of Rice & Maize Value Chain Report - November 2010

The first chain mainly needs greater farmer organization through marketing groups and WRS business models. This should reduce the number of traders and shorten the chain to the chosen miller in urban centres such as Dar es Salaam.

5. District Entry Points

In order to further develop Rice & Maize value chains in Tanzania, it is recommended that TAP up scaling interventions in the 13 districts within the Commodity Investment Plans in collaboration with other relevant support actors, to focus on the following priority areas: Further facilitate development of the upgrading of maize and rice value chains as highlighted in the respective value chain analysis reports, Support expansion of the agro-input subsidy programme with TAGMARK and agro-dealers Promotion of WRS through training to farmers and SACCOS, construction / renovation of warehouses and support to management of SACCOS and WRS. Facilitate capacity development of farmers through training and extension services with FIPS-Africa and local partners (FFS, demonstration plots, linkage to companies, etc.)

Below is a synopsis of district specific situations and recommended upgrading entry points for Rice and Maize value chain development.

5.1

Districts in the North

Meru District Meru is essentially a maize growing district. Rice is grown on a smaller scale, whereby only 1,000 ha seems to have been developed and production in 2009 has not exceeded 51,000 tons which is mainly consumed locally. 64% of Meru district land is for crop production and stretches from the high to low agricultural zones. Maize is commonly grown in all the zones at different times. Meru district is well served with agricultural input supply. There are over 75 stockists and agro dealers of whom 50 are involved in the government led input subsidy scheme. TAP has been collaborating with FERT (French based NGO) and CNFA in building capacity of farmer groups to improve productivity and access to markets. Demo Plots and WRS are some of the main interventions. Maize farmers in the districts are participating in SACCOs, VICOBA and National agricultural Input Trust Fund for access to financial services. Maize supply chain is well connected to Arusha urban processors and institutional markets. Export Trading Company and large-scale millers such as Bugaloo, Kijenge Animal Products are the main markets. NFRA and National
TAP: Synopsis of Rice & Maize Value Chain Report - November 2010

Milling Corporations have huge storage facilities in Arusha and also offer additional markets. Meru district share borders with Kenya and informal crossborder trading are quite common as another market outlet. This district has potential to develop value chains that could target export market (Kenya in particular); institutional markets such as NFRA and high-income markets through large-scale millers. Bugaloo is a potential chain champion. Business models involving contract farming, WRS + SACCOs and PMG are recommended. As for rice, the supply base should be further increased with measures to improve productivity and production. Monduli District Monduli district is basically a livestock-based economy. Around 20% of the district population practice mixed farming with maize and beans grown mainly for home consumption. Rice is also grown on very small-scale around Mto wa Mbu area. Monduli is therefore less suitable for agriculture based on rain fed due to the adverse agro ecological situation. Rice and maize produced in the district is essentially traded in the district markets or to traders from Arusha. The district priorities are in improving livestock productivity and crop production (rice and banana) along the escarpment of the Rift Valley where there is irrigation potential.

5.2 Districts in Morogoro

Morogoro Rural District Morogoro Rural District is in Morogoro Region and is a maize production centre of limited importance. There is an estimated 50 agro dealers who provide inputs to farmers, as well 2-4 large companies. There are mainly smallholder farmers and only few small-scale farmers. Access to tractors is possible in some of the villages (Mikese, Mkambarani). There are about 20 to 50 local and regional traders are operating in the District and there is an important storage capacity that is concentrated in Morogoro town and operated by traders mostly. Rural millers can be found in most villages and total around 60 while there are 50 urban mills. CNFA/TAGMARK/TAP and the district authorities are supporting agro dealers to implement an input subsidy programme. Agro dealers have initiated a Regional Union and a private company both aimed at improving the supply of inputs to small farmers. TAP, the district authorities and SACCOS are promoting WRS. Commercial banks have been supporting agricultural value chains for several years already. The district authorities are establishing irrigation schemes. Extension officers are active in implementing farmers field schools and demonstration plots as a way to compensate the weaknesses of the extension teams.

TAP: Synopsis of Rice & Maize Value Chain Report - November 2010

Upgrading in Morogoro Rural can target four consumer groups: urban low income consumers, high and medium income consumers, large institutions and export market. For the supply channels targeting low income and upmarket consumers, business models incorporating a WRS or producers marketing groups (PMG) and a chain champion within a contract farming scheme would need to be put in place. The chain champion(s) could be large miller(s) (Mr. Katundu or others to be identified). TAP can support this cluster by promoting WRS, strengthening the existing SACCOS, building the market linkages (included for the miller). For the sales to institutions, WRS or PMG are needed to bulk maize. TAP can work on encouraging NFRA and other institutions to buy from smallholders and to enhance their business readiness. For the sales on export market, WRS or PMG are again needed to bulk maize and specific collaboration would need to be put in place between farmers and medium scale traders. TAP can support these traders by enhancing the access to finance and by contributing to the launching of an agricultural commodity exchange that would support exports. Kilombero District Kilombero District is in Morogoro Region and is a rice growing area. There are about 40-50 agro dealers, around 75,000 farmers, 100 traders, and 576 small millers in Kilombero as well as 23 stores that do not meet capacity requirements. Most of the farmers are not breaking even, which can only happen if they increase their yields and store produce. However, yield is only increasing where new irrigation schemes have been set up. Many farmers are members of the apex Association of Kilombero High Quality Rice Growers, which has 36 associations and a total of 5,200 members. They remain reliant on RUDI and district support and have set up a WRS and trained 4,000 farmers. Inputs are subsidized by the GoT but there are not enough agro dealers, particularly in the more remote areas. Even where farmers do have access, some are still unable to find the money for inputs. Finance has however been greatly improved by the TPAWU SACCOS at Kilombero township that started working with rice farmers in 2008. The SACCOS provides input packages and additional credit with the support of the Tanzanian Investment Bank (TIB) and charges 9% interest. Loans can also be accessed through NMB and CRDB banks. Kilombero is a good location to target the regional export market by developing a large estate business model involving tenant farmers. This can involve a WRS or even an Agricultural Marketing Cooperative Society (AMCOS) to bulk rice. The chain champions for this model could be the High Quality Rice Growers or Kilombero Plantation, which has been operational since 1997. TAP would need to investigate the interest of Kilombero Plantation and help to build long term and sustainable linkages with farmers.

5.3 Districts In Iringa

Iringa Rural District
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Iringa Rural District is in Iringa Region and is a maize production centre. There are 2 main irrigation schemes for paddy production. There are an estimated 54 small agro dealers providing inputs to farmers in the district, as well as 3-5 larger companies. There is a large number of smallholders there are two large-scale farmers. Smallholder farmers have little access to tractors or even ox ploughs. Around 50-100 local and regional traders operate in Iringa Rural and there are about 37 rural stores and few larger urban stores operated by farmers, traders and the NFRA. Rural millers can be found in most villages and total around 520 while there are also 15-20 medium/large mills in urban centres. CNFA/TAGMARK/TAP and the district authorities are working with agro dealers to continue an input subsidy programme. Also, there are a number of projects to promote WRS by Agricultores Sen Fronteira (ASF), Rural Urban Development Initiatives (RUDI), Tanzania Grass-Root Development (TAGRODE), and TAP. ASF and Caritas are supporting the district to establish irrigation schemes and have also set up an agricultural training. 54 SACCOS and 24 womens credit group provide finance and commercial banks have begun to show an interest in the area. Upgrading in Iringa Rural can target two consumer groups; upmarket urban consumers and large institutions. For the upmarket consumers a business model incorporating a WRS, producers marketing groups, and a contract farming system would need to be put in place. A chain champion that can lead the upgrading could be Rutuba Farm, one of the two large maize growers. TAP can support Rutuba and other actors by promoting WRS, strengthening the existing SACCOS to improve access to finance, and building the market linkages. For the large institutions, producers marketing groups are needed to bulk much larger volumes than at present. The NFRA can become a chain champion for this market if it commits to buying from smallholders, which TAP can work to support in a sustainable manner. Mufindi District Mufindi District is producing maize and paddy. Investments are being undertaken to extend / increase the irrigation schemes for paddy production (currently 2). Small-scale agro-dealers ensure the supply of agro-inputs. Maize and rice production is realized by smallholders essentially who have very little access to tractors and reasonable access to ox-ploughs. An estimate of 20 30 maize traders and the same number of paddy / rice traders operate in the district and 49 go-downs are operating. Mostly traders and processors utilize other informal stores in Mafinga town. Millers can be found in most villages (~ 115 mills) and in town (5 to 10 mills). There are at least 3 paddy millers operating in Mafinga town. CNFA/TAGMARK/TAP and the district authorities have been supporting agro dealers to implement an input subsidy programme. There are two oxenization centres operating in the District. INCOMET is supporting the District for extension
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purposes. SACCOS and MUCOBA offer financial services to farmers. The latter and commercial banks are lending money to SACCOS. NMB is preparing to improve its services to rural entrepreneurs. Chain upgrading in Mufindi can target two consumer groups; high and medium income consumers and export market. For the upmarket consumers a business model incorporating a WRS, producers marketing groups, and a contract farming system with innovative local millers would need to be put in place. Several local millers could play the role of chain champion (Lupembe, Tall) but they would require support from TAP for promotion of WRS, strengthening of existing SACCOS to improve access to finance, and building the market linkages. For the sales on export market, WRS or PMG are again needed to bulk maize and specific collaboration with millers would need to happen. TAP could support these millers by contributing to the launching of an agricultural commodity exchange that would support exports and by supporting the improvement of financial services for the actors of the chain. Njombe District Njombe District is in Iringa region. It is an important maize production centre. There are about 23 agro dealers and 3 large companies who supply input to farmers. No large-scale farmer has been identified during the survey. Smallholders have reasonable access to ox ploughs but very limited access to tractors. Over 100 traders are operating in Njombe District. 56 rural go-downs with storage capacity of almost 27,000 tons are operating and large traders have own storage facilities of unknown capacity. Over 500 rural small-scale millers and at least 4 urban large scale millers are operating in the District. CNFA/TAGMARK/TAP are supporting agro-dealers in this district too. NADO, ADDA and several other actors are supporting the farmers to improve agriculture. NADO, Dunduliza, RFSP/IFAD and commercial banks (CRDB, NBC) are collaborating with SACCOS to enhance the access to financial services in rural areas. Chain upgrading in Njombe District can be achieved through four consumer groups: low income and upmarket consumers, export and institutional market. For the supply channels targeting low income and upmarket consumers, business models incorporating a WRS or producers marketing groups (PMG) and a chain champion within a contract farming scheme would need to be put in place. The chain champion(s) could be large miller(s) (Tenende, Kilamlya, Msigwa). TAP can support this cluster by promoting WRS, strengthening the existing SACCOS, building the market linkages (included for the miller). For the sales to institutions, WRS or PMG are needed to bulk maize. TAP can work on encouraging the institutions to collaborate with smallholders and to enhance their business readiness. For the sales on export market, WRS or PMG are again needed to bulk maize and specific collaboration would need to be put to be put in
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place between farmers and medium scale traders. TAP can support these traders by enhancing the access to finance and by contributing to the launching of an agricultural commodity exchange that would support exports.

5.4 Districts in Mbeya

Kyela District Kyela is a district in Mbeya Region where rice is grown. There are around 25 input suppliers in the district as well as 54,000 smallholder farmers and about 3540 commercial farmers. There are about 150 petty traders, 20-40 regional traders, and 20-30 national traders that can be found in Kyela as well as around 25 mills. The GoT maintains ten large stores and 30 smaller ones, the cooperative union has a further 20, and the millers each have a sizeable storage facility of their own. Kyela rice is traded within Tanzania and there is also a lively cross border trade with DR Congo, Malawi and Zambia. There are not enough agro dealers to supply the farmers and they seem to be working in a cartel to push up prices. There are also only 49 extension workers for 101 villages, many of whom lack adequate knowledge and motivation to support rice farmers. However, the district has recently been able to improve six irrigation schemes and make available 20 power tillers and few tractors to farmers on rent. A WRS was started in 2010 by the Kyela cooperative union (KYECU) with financial support service from NMB. Kyela District has a large outgrower scheme of 3,000 farmers that was established by Mtenda Distributions. Mtenda buys rice from contracted farmers in Kyela, mills it at Wela Millers in Mbeya, and retails it at its own shops in Dar es Salaam as well as supplying wholesalers. Mtenda is the obvious chain champion for TAP to work with and further discussions with the company should reveal where support is needed in order to create sustainable market linkage. Mbarali District Mbarali District is in Mbeya Region and is a centre of rice production. There are 52 input suppliers organized into an association and 12 working on their own. It is estimated that there are 25,000 households growing rice, three large rice millers, and 143 smaller ones. Storage is nearly all provided by the millers. There are plans by the district to invest TZS 1.5 billion to set up a large market centre including storage facilities, processing plants and an auction platform. Agro dealers have been very progressive in Mbarali. Inputs are being offered on six month credit and some even provide extension services. Agro dealers in Mbarali are also able to service most parts of the district and as in other areas, they are supported by CNFA/TAGMARK. Because of the efforts of the agro dealers and the district authority proactiveness, Mbarali has many more tractors and power tillers than other districts; and is currently introducing trans-planters
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and possibly combine-harvesters. The district also plans to work with 15 farmers to multiply Quality Declared Seeds (QDS) in order to make them more easily available to other smallholder farmers. Further support is provided by JICA, which works with the district authority to train farmers to increase their productivity and production. NMB is financing four WRS in Mbarali and is also backing the agro-dealers. There is a possibility to promote an outgrower scheme with Mtenda Distribution as the chain champion in order to target urban upmarket consumers. Another option is to investigate a tenant farming model to target institutional buyers or the regional export market. For this to happen the Southern Highland Company or Export Trading would make good chain champions. Mbeya Rural District Mbeya Rural District is essentially a rice trading and maize growing area. There are five agro dealers, several hundreds of rice farmers, 300-500 regional rice traders, 5-10 large millers, and 100-200 smaller millers in the district. There are 10-20 large storage facilities and each of the smaller millers also has a storage facility. A much larger number of smallholder farmers grow maize and the area is known for its rice trading and processing rather than production. There are many NGOs and financial institutions based in Mbeya that service both the district and its neighbours. Also, big millers and traders are based here. In some cases these millers supply credit to the traders and then divide the profit from their sales. Rice is sold to buyers in Dar es Salaam and to DR Congo and Zambia. Because little rice is produced in Mbeya Rural, the district authority is prioritizing other crops. Upgrading for rice can focus on urban upmarket consumers by establishing contract farming in surrounding districts. A good chain champion could be RAFA, which is a large miller. The maize supply chain can be upgraded by promoting WRS and the role of SACCOS in order to maximize farmers profits. A chain champion was not identified in the district to lead maize supply chain upgrading. Mbozi District Both rice and maize are grown in Mbozi District, which is in Mbeya Region. There are 155 agro dealers that mostly focus on maize inputs; those focussing on rice inputs are limited. In total there are estimated 11,732 rice growing households and 130,043 maize growing households, 15 regional traders, and 20 rice millers. There are about 20-30 rice storage facilities including two WRS and around 100 for maize. The rice storage facilities are insufficient for the volumes traded. Improved seeds are not used in the district and there is very limited private investment. Yields are however quite high although they change with the weather
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conditions. A 1,500 ha irrigation scheme should be operational by the end of 2011 and smaller schemes are also found. The district has also made available 17 power tillers to farmer groups and subsidizes 80% of the cost. 21 farmer field schools have been set up and there are plans to increase this to 42. Traders have a strong position in Mbozi because there is little market information available to farmers. Their networks extend to trade with DR Congo and Zambia. Both the rice and maize chains need to be upgraded so that their qualities meet the requirements of upmarket urban consumers and those of the export market. As in other districts, Mtenda is a potential partner to establish an outgrowers scheme for rice. Contract maize farming can also be pursued by Shiwanda Maize Mill, which is one of the larger processors in Mbozi.

5.5 Districts in Ruvuma

Namtumbo District Namtumbo District is a new District in Ruvuma Region. It produces maize and rice. There are about 25 agro dealers supplying inputs to farmers. Production is realized by smallholders mostly and only 3 medium scale farmers have been identified. Access to tractors is limited to these bigger farmers and to those who have their farmers nearby. Ox ploughing is very limited. There are 4 irrigation schemes operating. Around 20 traders operate in the District. Storage capacity is not precisely known. There are 70 maize mills (of which 10 15 in town) and 2 3 paddy mills operating in the District. CNFA/TAGMARK/TAP/District Authorities are working with agro dealers in the context of a government input subsidy programme. After Dunduliza, CRDB and NMB are now supporting SACCOS to improve the skills, enhance the quality of the services and increase the amounts of loans given. Namtumbo SACCOS is operating WRS in three villages. Two consumer groups can be targeted in Namtumbo: low income consumers and institutions markets. For the low income market, WRS and PMG are needed to improve farmers capacity of bulking and value adding. Collaboration with chain champion(s) such as Mtazamo and SODECO traders can result with improved market integration for farmers. TAP can support farmers by supporting SACCOS and WRS and supervise the market linkages. For the institutional market too, WRS and PMG could help to improve farmers collaboration with NFRA, WFP or other institutions. Songea District Songea District is in Ruvuma Region and is a major maize production centre. Paddy production is also characterized by an increasing trend. There are about 25 agro dealers and three agro inputs companies who provide inputs to farmers. There are mainly smallholders and less than 10 large scale farmers (farming a
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maximum of 40 ha). Not more than 10 tractors are being utilized in the District but ox-ploughing is present in most villages. Up to 100 traders are operating in the district and there is an important storage capacity localized mostly in urban areas (NFRA, private actors). There is an estimated of 25 30 urban and 70 rural maize mills. Paddy milling is much more concentrated in urban centres. A single operator is prominent in both maize and paddy milling (Mtazamo). CNFA/TAGMARK/TAP/District intervention with agro dealers has also taken place in Songea District. District, TAP, RFSP, Dunduliza and commercial banks are supporting SACCOS and promoting WRS. Commercial banks are trying to improve their presence alongside the rural entrepreneurs. District authorities are supporting the establishment or improvement of irrigation schemes for rice and legumes. Upgrading in Songea District can target two consumer groups: urban low income consumers and institutional markets. For the supply channel targeting low income consumers, business models incorporating a WRS or producers marketing groups (PMG) and a chain champion within a contract farming scheme would need to be put in place. The chain champion(s) could be large miller(s) (Mr. Katundu or others to be identified). TAP can support this cluster by promoting WRS, strengthening the existing SACCOS, building the market linkages (included for the miller). For the sales to institutions, WRS or PMG are needed to bulk maize. TAP can work on encouraging NFRA and other institutions to buy from smallholders and to enhance their business readiness.

6. Generic Intervention Strategies

In addition to the specific recommendations for maize and rice value chains and district entry points, there are much broader issues affecting the agricultural sector that have been identified in this study. Addressing such context related issues is what is referred to as generic intervention strategies. The following is a summary of recommended generic interventions in order to enhance the rice and maize subsectors growth and competitiveness in Tanzania. ACT and TAP in particular is advised to take up relevant facilitating roles and remain informed of the roles and developments that would be taken up by other collaborating actors.

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Strategic Issue
Enabling policy and regulatory environment for grains & cereals sub sectors need further strengthening

Proposed Leverage Interventions

Government to ensure that the Mixed Crop Board and Authority become functional Ensure the regulatory framework creates a room for the private sector views and interest to be heard. Government should speed up the implementation of the Rice Development strategy (improved variety /seed system, input supply, irrigations & water control, Post harvest and marketing, R&D and Agricultural Credit) Promote Tanzania Agricultural Commodity Exchange for effective market information & intelligence to supply chains actors, emulating the experiences of Kenya and Uganda Food Security Policy implementation should follow best practices e.g. Brazil who uses voucher schemes. Increase government budget allocation to Agriculture in particular address specific supply chain hindrances in Rice and Maize growing areas. Support government to enhance data collection and processing to reliability and benchmarking. Ensure sanctions are effectively implemented for non adherence to standards by strengthening capacity of respective institutions Facilitate value chain partners to adapt standards and quality incentives and self regulating mechanisms Government to increase investment in priority infrastructure upgrading projects geared at enhancing competitiveness

Potential collaborating Actor(s)

MAFC, LGAs, PMO-RALG, Private service Providers, ACT, R&D Institutions, Farmer Organisations. MAFC

MAFC, ACT

MAFC, ACT

MAFC, ACT

Government budget allocation is inadequate to trigger agricultural sub sector commercialisation

MAFC, ACT

Quality and standards enforcement is missing

TFDA, TBS, WMA

Private Sector Value Chain Actors, ACT

Infrastructure upgrading which is lagging behind in strategic areas is key to Tanzanias competitiveness

MOF, MAFC and Development Partners, TAP-SAGCOT, FAO SHFS Project.

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Strategic Issue
Comprehensive incentives for increased private sector investment are missing. This is needed to position Tanzanias commercialisation agenda

Proposed Leverage Interventions

Agricultural investment opportunities should be elaborated and profiles promoted to potential investors e.g. within the SAGCOT Blue Print Agricultural land bank should be operationalised Private Sector Investment Protection measures should be ensured Agricultural Financial Services enhanced Promotion of Large-scale investments in the Animal feed industry to enhance linkages with the cereal sub sectors. Step up identification and analysis of Tanzanias comparative & competitive advantages Follow up internalisation and rationalisation of EAC opportunities & disseminate relevant information Promote private sector to take advantages of customs and common market opportunities in the region Ensure comprehensive agricultural productivity enhancing packages is promoted in the extension services Facilitate access to inputs and technologies for post harvest management Promote business models that enhance productivity and win-win benefits to chain actors e.g. Contract farming/ out grower schemes, WRS. Set up or revive public-private forum/platform for Cereals development or Mixed Crops (start with Rice & Maize) for policy dialogue and coordination

Potential collaborating Actor(s)

TIC, MAFC, TAP, SAGCOT

TIC TIC BOT, Financial Institutions. TAP, SAGCOT, FAOSHFS ACT, TPSF, EAC Ministry

East African Customs Union an opportunity for market deepening but also a shared strategy in Tanzania not yet developed

Ministry of EAC, ACT

TIC, ACT MAFC, LGAs, NGOs implementing relevant projects (TAP, CNFA, JICA, RLDC, ASA, FERT, TAGRODE, ASF, RUDI etc

Low Productivity across the board & high post harvest losses is reducing farmers incomes substantially

Coordination and synergy among sub sector support agencies is sub optimal

ACT, Mixed Crop Authority

Note: The underlined actors are earmarked to take a leading role

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7. TAP Agenda for Value Chain Development

In the next phase of the TAP project of rolling up Rice & Maize value chain development in Tanzania, the following immediate action items need to be considered for implementation: a) Launching VCD for Rice & maize in different districts

TAP should equip itself with necessary skills & resources to be able to kick start VCD upgrading that have been recommended by doing the following: - Organise work planning sessions with identified chain champions in each district to agree on how they would go about mobilising interested farmers and agree on the roles / contracts etc that would govern the chain initiation. This would require special facilitation skills (neutral but at the same time acceptable to the private sector) - TAP should initiate district based Cereal Growers platform that could start involving a cross section of stakeholders relevant to lobby for a favourable enabling environment. In some districts MVIWATA has a similar initiative and this could be further strengthened or emulated. b) Policy & Regulatory environment

The main focus for TAP initially should be to lobby with upcoming Mixed Crop Board / Authority that the voices of key stakeholders are heard. In the report we have emphasised the dangers of market distortion and discouragement of further private sector investments. The other issue to lobby for is on the export ban processes, which are counter productive and not the solution for food security. c) Deepening linkages with Institutional markets (WFP- P4P and NFRA and other major public institutions

Relevant supply chains have been recommended that would link to these institutional markets and TAP should play an active role to see them materialise. d) Assessment/ Feasibility analysis of the Feed meal/Poultry Industry

This study was not focused on this sector, however for impact sake the linkage with Animal Feed industry should be proactively pursued. TAP should collaborate with SAGCOT initiative to analyse and facilitate promotion of FDI in this area. e) Strengthening of Farmer Organisations

TAP should link capacity building of farmer organisation to focus on gaps they have in playing agreed upon roles on supply chains and not the generic trainings, which is now common. f) Market Intelligence & High Tech Market Access

Tanzania is lagging behind in setting up a commodity exchange, but also market information dissemination systems are generally ineffective. TAP should review and advise how to revamp them. Another area that TAP should emulate is the
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experiences of a high technology; bottom up supply chain project is Drum Net, which is based in Kenya1. Projects like Drum Nets can be supported in Tanzania among both rice and maize farmers who would like to diversity their crop dependencies and at the same time begin to access high-end niche markets for their core production. g) WRS

WRS implementation in Tanzania has had a lot of flops. TAP should commission a review to incorporate best practices, as it is one of the most common business models currently been pursued in Tanzania. h) Land issue

TAP should work closely with Tanzanian Investment Centre (Land banks) & Government programme on formalisation of informal sector (MKURABITA) now active in assisting villages among others to survey, offer title deeds and maintain a land registry. TAP supported districts could come up with a land use overview and assessment of the status of infrastructure that could be used as further entry points for promoting rice and maize supply chains.

Drum Net applies cell phone technology and funds management via cell phone to coordinate and control on farm activities with off farm activities. It has been growing gradually over the past 6 years and has assisted farmers from moving from low revenue yield markets to high revenue yield markets in which timely order deliver and fail sale quality controls are essential. More information is available in volume I of the Rice & Maize reports.

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