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

1. 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

2. 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 2

3. Tanzania

4. 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

5. 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

6. 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 6

8. 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

9. Forecasted food crops production in 2008/09

10. Table 1: Cash crops production in 2007/08

11. Exported Crops in 2007/2008

12. Food Production in Relation to Food Self sufficiency

13. Agriculture and Value addition Traditionally crops have been sold raw In the 70’s 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

14. 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

15. 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)

16. 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)

17. 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)

18. 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

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

20. 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

21. 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 OPPORTUNITIES IN AGRO-FOOD INDUSTRY

22. 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)

23. CHALLENGES ctd • Effects of Global Economic Crisis (Tight credits, weak demand, reduced orders) • Lack of innovativeness: Firm that don’t innovate & distinguish their products suffer reduced returns

24. 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

25. Recommendations • Facilitate availability of improved technologies • Link Agro-Food industry to R&D institutions and support linkages • Enhance investment in R&D • 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

26. THANK YOU