Tanzania - Agricultural sector report

Report No. 4052-TA Tanzania FILE Agricultural Sector Report August 19, 1983 Eastern Africa Projects Department Southern Agriculture Division FOR OFFICIAL USE ONLY U D>ocument of the U4orld Bank This document has a restricted distribution and may be used by recipients only in the performnance of their official, duties. Its contents may not otherwise be disclosed withouit World Bank authorization.  CURRENCY EQUIVALENT 1 Tanzania Shilling (TSh) = 100 T cents US$1 = TSh 8.2 until March 1982 US$1 = TSh 9.4 from April 1982 until June 1983 US$1 = TSh 12.2 after June 1983 WEIGHTS AND MEASURES Tonne = metric ton = 2,204.6 pounds = 10 q Quintal (qq) = 100 kilograms (kg) Hectare (ha) = 2.47 acres FISCAL YEAR July 1 to June 30 AGRICULTURAL SEASONS Crop Planting Harvesting Cashew Tree crop * August-March (peak October-December) Coffee (arabica) Tree crop June-August Cotton December May-July Maize (Southern Zone) November-December June-September Maize (Northern Zone) January July-October Oilseeds November-December May-July Pyrethrum Perennial * Year round Sisal Perennial * Year round Sorghum/Millet November-January May-July Tea Perennial * Wet season (mainly November-March) Tobacco Nov-Dec (in field) March-June Wheat February July-September * planting of perennial/tree crops done during main wet season December to February  FOR OFFICIAL USE ONLY ABBREVIATIONS A]:SCO - Agricultural and Industrial Supply Company BOT - Bank of Tanzania CAT - Coffee Authority of Tanzania CATA - Cashewnut Authority of Tanzania CCM - Chama Cha Mapinduzi (The Party) C]:DA - Canadian International Development Agency CIMMYT - International Maize and Wheat Improvement Centre CIP - Coffee Improvesment Program DAFCO - Dairy Farming Corporation DANIDA - Danish International Development Agency DDD - District Development Director EDF - European Development Fund EEC - European Economic Community FAO - Food and Agriculture Organization of the United Nations GAPEX - General Agricultural Products Export Corporation GOT - Government of Tanzania IBRD - International Bank for Reconstruction and Development ICRISAT - International Centre for Research in the Semi-Arid Tropics IDA - International Development Association IIRI - International Rice Research Institute IITA - International Institute for Tropical Agriculture KI'LIMO - Ministry of Agriculture K'SC - Kilombero Sugar Corporation LIDA - Livestock Industry Development Authority MDB - Marketing Development Bureau NAFCO - National Agriculture and Food Corporation NAPB - National Agricultural Produce Board NARCO - National Ranching Corporation NBC - National Bank of Commerce NESP - National Economic Survival Program NMC - National Milling Corporation NORAD - Norwegian Agency for International Development ODM - Overseas Development Ministry, U.K. PMO - Prime Minister's Office PPMB - Project Preparation and Monitoring Bureau RADO - Regional Agriczultural Development Officer RDD - Regional Development Director RIDEP - Rural Integrated Development Project RTC - Regional Trading Corporation SAP - Structural Adjustment Program SAR - Staff Apprais;al Report (World Bank Group) SUDECO - Sugar Development Company TALIRO - Tanzania Livestock Research Organization TANESCO - Tanzania Electric Supply Company Limited TANSEED - Tanzania Seed Company TARO - Tanzania Agricultural Research Organization TAT - Tobacco Authority of Tanzania TCA - Tanzania Cotton Authority TCB - Tanganyika Coffee Board TFA - Tanganyika Farmers Association TFC - Tanzania Fertilizer Company TPB - Tanzania Pyrethrum Board This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  - ii - TPRI - Tropical Pesticides Research Institute TRDB - Tanzania Rural Development Bank TTA - Tanzania Tea Authority UAC - Uyole Agricultural Centre UDSM - University of Dar es Salaam USAID - United States Agency for International Development  TANZANIA AGRICULTURAL SECTOR REPORT TABLE OF CONTENTS Preface ..................................................... ix Summary and Conclusions ....... .............................. xi I. AGRICULTURE AND THE FOREIGN EXCHANGE CRISIS A. Introduction .......................................... 1 B. The Foreign Exchange Crisis ..... ...................... 5 C. Slow Growth of Exports .... ............................ 7 D. Food Production Performance ..... ...................... 9 E. Growth of Food Imports ...... .......................... 14 F. Key Role of Unofficial Prices for Food Grains ......... 16 G. Performance by Commodity and Production Unit ......... . 19 H. Difficulties in Project Implementation ............. ... 30 I. Agriculturally Led Growth ..... ........................ 32 II. INTERSECTORAL AND INTRASECTORAL RESOURCE ALLOCATIONS A. Introduction and Sumrnary .............................. 37 B. Government Objectives since the Arusha Declaration .... 39 C. Overall Trends in Resource Allocation .... ............. 40 D. Resources in Support of Agricultural Production ....... 49 E. Recurrent and Rehabilitation Requirements of the Agricultural Sector , ............. ...................... 55 F. Institutional Deficiencies of the Ministry of Agriculture ...................................... 64 III. PARASTATAL SERVICES A. Introduction . . ............. 65 B. Parastatal Performance ................................ 68 C. Impact of Macroeconomic Policy Variables ........... ... 78 D. Systemic Problems and their Impact on Parastatal Performance .............................. 78 E. Management Lapses Within Parastatals ................ .. 85 F. Strategies for Reforni ................................. 87  - iv - IV. CROP PRICING A. Government Assessment of the Functions and Performance of Crop Pricing .......................... 93 B. Analytical Support for Price Recommendations ......... 94 C. Review of Past Pricing Policy ..... ................... 96 D. Export Price Prospects . . .. . ....... . . . . . . . . . . . . . . . . . . . 108 E. Price Policy for an Agricultural Recovery ............ 110 V. AGRICULTURAL SUPPORT SERVICES A. Introduction ....................... 114 B. Research and Extension * ********** **.*.***.............................. * . 115 C. Inputs, Distribution and Credit ...................... 120 D. Irrigation ............... 125 E. Output Marketing Services ........................ 127 F. Services of the Transport Sector ..................... 130 G. Special Needs of Different Types of Producers ........ 139 H. Areas which Require Action ............ ............ 140 VI. ROLE OF NON-PRICE INCENTIVES AND DISINCENTIVES A. Ujamaa and the Government's Political and Social Objectives ........ .............. .... ...... 141 B. The Impact of Villagization on Agricultural Production ..................................................... . 144 C. Government Production Directives ....... .............. 149 D. Social Services: Water, Health, Education and Agricultural Production ......................... 151 E. Availability of Consumer Goods ....................... 156 F. The Limits of Commandeerism .......................... 160 VII. THE WAY OUT OF THE CRISIS: IMPLICATIONS FOR GOVERNMENT AND DONOR POLICY A. Introduction ..................... 162 B. The Nature of the Problem ................... ..... 164 C. Factors in Favor of Tanzania .......... O..$ ........... 166 D. The Issues of Highest Priority ................... . ... 167 E. Implications for Government Policy .................. . 173 F. Time Scale for Recovery, and the Costs of Non-Action . 183 G. Implications for Donors ............. .. ............... 183 H. Unfinished Agenda .................. .................. 185 I. Who Will Benefit? ...................... 185 J. Summary List of Detailed Recommendations .... ......... 186  v Tables in Text 1.1 Composition of Imports, 1979/80 - 1981/82 ............ 7 1.2 Annual Percentage Increase or Decrease in the Volume of Production of Tanzania's Major Export Crops in the Three Plan Periods ............ ......... ... ............ 9 1.3 Estimated Trends in Food Crop Production 1972-1980 ... 11 1.4 Changes in Official Plurchases of Major Food Items in Tanzania, 1970/71-19;72/73 to 1978/79-1980/81 ......... 13 1.5 Tanzania: Net Imporl:s of Maize, Wheat and Rice 1966/67 - 1981/82 (Volume and Value) ................. 15 1.6 Unofficial Market Pr;ices for Unground Maize (October 1980) ...................... ..... ............. 16 1.7 Unofficial and Official Market Prices for 13 Lake Region Villages, 1979/80 - 1980/81 .17 1.8 Tanzania: Percentage of Urban Food Needs Met by NMC Sales, 1974/75 - 1979/80. 18 1.9 Distribution of Crop Production by Type of Farming Unit 20 1.10 Two and Four Percent Per Capita Growth Scenarios for Export Crops ..35 2.1 Actual Capital and Recurrent Expenditures of the Central Government 1965/66 to 1978/79, Selected Years 41 2.2 Government Grants and1 Subventions Through the Budget 44 2.3 Percentage Increase in Value of Imports into Tanzania Between 1970-72 and 1.976-78 by Commodity Classification 51 2.4 Recurrent and Rehabilitation Foreign Exchange Require- ments of the Agricultural Sector .59 2.5 Foreign Exchange Intensity of Food and Export Crop Production ......60  - vi - 3.1 State of Parastatals' Final Accounts as of February 28, 1982 ................................................. 71 3.2 Summary of Profits or Losses Account of Major Crop Parastatals for 1980/81 (or most recent year) ........ 73 3.3 Summary of Estimated Consolidated Balance Sheet of Major Crop Parastatals as at End of 1980/81 Financial Year 74 3.4 Lending to the Eleven Major Crop Parastatals as a Proportion of the Total NBC Lending .................. 74 3.5 Government Equity Contributions to Crop Parastatals, 1980/81 . ..................................... 75 3.6 The Working Capital Position of Major Agricultural Sector Parastatals as at End of 1980/81 .............. 76 3.7 Vacancies of Senior Financial Positions in the Crop Parastatals as of February, 1982 ................... .. 80 3.8 Changes in Labor Productivity of Major Crop Parastatals 1974/75 to 1977/78 ................................... 83 4.1 Announced Producer Prices for Selected Food Crops 1971/72 - 1982/83 ........ .............................. 97 4.2 Announced Producer Prices for Selected Export Crops 1971/72 - 1982/83 ........ .............................. 98 4.3 Official Producer and Retail Food Crop Prices, 1981/82 99 4.4 Regional Consumer Prices for Sembe, Rice and Cassava Flour 1980/81 ......... ................................. 100 4.5 Estimated Into-Store Cost of Maize, Wheat and Rice, 1982/83 . ................................................ 100 4.6 Trends in Agricultural Producer Prices for Selected Crops, 1969/70 - 1979/80, Money and Real Terms ....... 103 4.7 NMC Purchases and Regional Values for Maize, 1980/81 ... 104 4.8 Relative Levels of Official Procurement in the 1970s Food and Export Crops ........ .......................... 105 4.9 Grading of Annual Coffee Crop, 1976/77 - 1980/81 ....... 106 4.10 Price Projections for Tanzania's Major Crops ........... 109  - vii - 5.1 Available and Required Levels of Highly Trained Personnel in Research and Extension .................... 116 5.2 Fertilizer and Improved Grain Seed Distribution, 1962-1981 ..................................................... 121 5.3 Regional Fertilizer and Seed Sales 1980 ................ 123 5.4 1980/81 Total Agricultural Tonnage ..................... . 137 5.5 Highest Annual Agricultural Tonnage in Post-Independence Period ..... ...... .*...... **.....*........*..* 138 6.1 The Increasing Capacity of Industrial Goods Production, Tanzania Mainland (1975-1981) .......................... 158 6.2 Production in Selected Industries ........ ... 159 7.1 Projected Crop Procurements with and without a Recovery -Program ................................... .......... 184 Statistical Appendix (Tables) 1.1 Tanzania: Balance of Payments, 1971-1981 ............ 191 1.2 Tanzania: Major Merchandise Export, 1971-1981 ....... 192 1.3 Tanzania: Official Purchases of Export Crops, 1971/72 - 1981/82... 193 1.4 Tanzania: Official Purchases of Major Food Crops, 1970/71 - 1981/82... 194 1.5 Tanzania: Import/Export of Main Grains, 1966/67 - 1981/82 ............ 195 1.6 Tanzania: Percentage of Urban Food Needs Met by NMC Sales, 1974/7'5 - 1979/80 ....................... 196  - viii - 2.1 Development Expenditure Disbursed by Ministries in Tanzania, 1975/76 to 1978/79 ............................ 197 2.2 Total Capital Expenditure on Major Sectors in Tanzania in Annual Plans, 1975 - 1981/82 ........... .............. 198 2.3 Estimate of Ministry Recurrent Expenditure for the Government of Tanzania, 1972/73 - 1981/82 ....t......0..... 199 2.4 Regional Recurrent Expenditure for Selected Sectors in Tanzania, 1974/75 - 1981/82 ............................. 200 2.5 Proportion of Funds for Capital Expenditure in Tanzania from Various Sources for Major Sectors of the Economy in the Period 1975/76 - 1981/82 at Constant 1974/75 Prices 201 2.6 Total Aid Resources Allocated to Major Ministries in Tanzania 1975/76 - 1981/82 .............................. 202 2.7 Total Capital Expenditure on Major Crops in Tanzania, 1975/76 - 1981/82 ............. 203 Maps IBRD Tanzania - 16580 - Rainfall Reliability Zones for Maize IBRD Tanzania - 16589 - Main Cropping ATeas IBRD Tanzania - 2802R3 - Regions and Districts IBRD Tanzania - 2804R - Potential Land Use  - ix - List of Draft Background Papers a/ I. An Analysis of Export Crop Performance Andrew Spurling (with contributions from Casper Warnaars, Ajit Sidhu, John Greenfield, Arno Klempin, Dirk van der Sluijs, and Ridley Nelson) II. A Statistical Annex to the Food Crop Sector Yahaya Doka with Wilfred Candler III. Parastatal Performance Sithamparam Sengamalay and Paul Duane IV. Transport and Agriculture Martin Staab V. Non-Price Producer Incertives including the Role of Social Services Diane White VI. Overall Institutional Performance Jon Moris VII. An An.alyis of Budgetary Allocations Michael Schluter VIII. Role of Livestock Jack Frankel with Ross Wallace IX. Size and Deployment of Public Sector Manpower in Agriculture, 1974-75 t