Survey of agricultural marketing logistics costs in rural Tanzania

47774 Diagnostic Trade Integrated Study (DTIS) SURVEY OF AGRICULTURAL MARKETING LOGISTICS COSTS IN RURAL TANZANIA Inception Report December 2004 Submitted to: The World Bank Tanzania Country Office 50 Mirambo Street P.O. Box 2054 DAR ES SALAAM Prepared by: David Nyange Consultant P.O. BOX 3007 Morogoro  Summary This analysis documents and relates how rural logistics costs emanating from infrastructure particularly road quality impacts agricultural production and marketing in export crops producing rural areas. The study objectives are two folds: First to provide an accurate understanding of the organization of logistics from the farmer to the main assembly centres (usually in urban areas) before processing or export and the sequence of the supply chain and participants. Second, to estimate costs along the supply (and value) chain among various market participants in the logistical sequence. This inception report presents preliminary findings from a rural logistics cost survey of farmers, traders (agents), transporters and district officials in cashew growing villages of Mkuranga district in Coast region. The methodology adopted in the study is to compare two villages with different road accessibility in terms of price levels, spatial price variability, traffic intensity (number and frequency of vehicles serving the village), number of crop buying agents, length of supply chain and the degree of competition Moreover, input usage by farmers, input price and cashew production are compared. Ultimately farm budgets and transport logistics costs are estimated. Kitomondo village is 20 km from district headquarters of which 18km are gravel road and the last stretch of 2 km is earth road. The village is accessible throughout the year. Kizapala district is 50km from the district headquarters of which 36 are tarmac and the last 14 km are of poor earth road. Although during cashew marketing season both villages are accessible, much difference is observed during rain season where Kizapala village is not accessible by vehicle. Kipalaza village is also less served by transport operators. Results show differences in cashew production where the less accessible village of Kizapala recorded lower production which could be attributed partly to observed less farm sizes, less use of sulphur and consequently low cashew yields. In cashew marketing, Kizapala has more market intermediaries where the supply chain consists of farmers- stockist (shop owner)-buying agent-cashew processing and export companies. In Kitomondo district the supply chain is much shorter where farmers sell directly to cashew buying agents. Kizapala village also exhibit more spatial price variability than Kitomondo. In terms of transportation logistics, farmers in both villages receive 63 percent fob prices. 1  1. Introduction 1.1 Background A Diagnostic Trade Integrated Study is being carried out in Tanzania under the Integrated Framework for Trade-Related Technical Assistance to Least Developed Countries (IF). This Tanzania Survey of Rural Logistics Costs will be an input to the IF Diagnostic of Trade Integrated Study (DTIS). This inception report presents summary of the preliminary analysis of rural logistics and transportation cost survey in Cost region. Logistics is an important part of rural life, and is important issue facing farmers who need access to markets. Indeed, an estimated 30% of the rural population in Tanzania is living away from year-round passable roads and therefore has to rely on intermediate means of transportation to bring inputs for their activities to the village or the field, and transport their crops to markets. Access depends on infrastructure which is poor and limited, unreliable in the rainy season, and often monopolized by transport service provides, resulting in high costs. Typically, the logistics from local markets to larger centers is provided by intermediate traders who own or can charter vehicles (normally 3-10 ton trucks) while the farm-to-market transport is done by porterage, with owned or rented Intermediary Means of Transport (IMTs) or mixed