Tanzania - Agriculture sector memorandum (Vol. 3 of 3) : Statistical annex

Report No. 12294-TA Tanzania Agriculture Sector Memorandum (In Three Volumes) Volume Ill: Statistical Annex July 29, 1994 Agriculture and Environment Operations Division Eastern Africa Department Africa Region FOR OFFICIAL USE ONLY Document .A the World Bank This document has a restricted distribution and may be used by recipients only in the performance of t.teir official duties. Its contents may not otherwise be disclosed witflout World Bank authorization  FOR OFFICIAL USE ONLY TANZANIA Agriculture Sector Memorandum Table of Contents 1. AGRICULTURE AND THE MACROECONOMY ..............................................I A. Sectoral Growth ............................................. 2 B. Agricultural Exports and Imports ..............................................6 C Summary ............................................. 12 11. THE RESOURCE BASE AND THE RURAL POPULATION . ............................................ 13 A. Natural Resources .................... .............................................................. 13 Agro-ecological Zones .................... 13 Farming Systems .................... 16 Land-use .................... 17 Area Under Cultivation .................... 18 Assessment of Potential Area for Cultivation .................................... 20 B. Land-use and the Environment .................................... 24 Forests .................................... 26 Wildlife .................................... 29 Water and Irrigation .................................... 30 Water Resource Management .................................... 30 Irrigation Development ..................................... 34 Land Tenure .................................... 36 Land Legislation .................................... 40 A. Proposal for Tenure Reform .................................... 41 C. The Rural Household .................................... 44 D. Rural Poverty . nd Food Security .................................... 46 Food Security .................................... 48 AIDS and Agriculture .................................... 50 Rural Women .................................... 50 E. Regional Characteristics .................................... 51 F. Rural Labor Markets .................................... 55 G. Summary .................................... 56 III. AGRICULTURAL SERVICES ........................................... 57 A. Government Funding for Agriculture Services .......................................... 57 Reform of Agricultural Parastatals .......................................... 60 Institutional Developwent in Agriculture .......................................... 61 Agricultural Research .......................................... 63 Agricultural Extension .......................................... 66 B. Farmer Cooperatives .......................................... 68 Cooperative Unions .......................................... 70 The Cooperative Act .......................................... 71 C. Supply of Agricultural Inputs .......................................... 74 Chemical Fertilizers .......................................... 75 Sources of Fertilizer Supply .......................................... 78 Financing Fertilizer Imports .......................................... 78 The Demand for Fertilizer .......................................... 79 This document has a restricted distrbution 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.  iv Distribution Channels ........................................... 83 Other Agrochemicals .83 Environmental Effects .84 Certified Seeds .85 Veterinary Drugs, Vaccines, Chemicals and Equipment .86 Agricultural Equipment and Machinery .87 Animal Traction .88 Policy Recommendations on Inputs Supply .88 D. Rural Finance .89 Institutions .91 Smallholder Lending Initiatives .93 The Financial Sector Crisis .93 The Banking Reforms .94 The Future of Rural Financial Markets .95 Actions Required .96 E. Rural Infrastructure .97 F. Summary .99 IV SOURCES OF GROWTH .100 A. Market Prospects for Tanzania's Agricultural Produce .100 International Markets and Prospects for Traditional Agricultural Exports .100 Regional Markets .103 Domestic Markets .104 B. Diversification and Expansion of Exports .104 Comparative Advantage and Export Competitiveness .104 Crop Retums .106 Supply Response in Agriculture .107 The Effects of the Economic Reuorm Program. 197 Empirical A-nalysis .112 C. Technological Chaige .114 D. Traditionai Export Crops .117 Coffee .117 Marketing and Processing Efficiency .120 The Exchange Rate and the Interest Rate .121 TCMB and Cooperative Union Debt .121 Improving Research and Extension Effectiveness, and Reducing Costs of Production .122 Cotton .123 Marketing and Processing Efficiency .126 Market Exchange Rate and Interest Rates .126 Union Indebtedness and Financial Restructuring .127 Improving Research and Extension, and Improving Farm Level Profits .128 Cashew nuts .128 Strategy for Cashew Sector Reform .130 Tea .131 Strategy for Tea Sector Development .132 Sisal .133  v A Development Strategy for Sisal ............................. 134 Sugar ............................. 134 A Development Strategy for Sugar ............................. 137 Food ............................. 138 Management of the Strategic Grain Reserve ............................. 143 Trade in Food ............................. 145 Non-Traditional Agricultural Exports .147 Transport .147 Flowers and Foliage .148 Fruits and Vegetables .149 Constraints to Growth .150 Lessons from the Kenyan Experience .151 Oilseeds .151 Strategy for Development of Nontraditional Agricultural Exports .152 Livestock .153 Cattle .153 Sheep and Goats .155 Poultry and Pigs .155 Hides and Skins .155 Government Services for Livestock .156 Market Potential .156 Legislation .157 Fodder and Water Management .157 Disease Control .158 Breeding .158 Inputs Supply .159 Livestock Development Strategy .159 C. Summary .161 V. AN AGRICULTURAL DEVELOPMENT STRATEGY ...162 A. Previous Sectoral Reviews .162 B. Government Policy Statements .164 C. Adjustment Programs .166 The Economic Recovery Program .166 Tanzania Agricultural Adjustment Progrn .166 D. Lessons from this Review .167 Smallholder Supply Response .167 Expansion in Area Cultivated .167 Roads Make a Difference .168 Agro-ecological Information Base .168 Decline in International Commodity Prices .168 E. Constraints to Agricultural GrowtL .169 The Government Dominated Economy .170 Inefficiency of Traditional Public Services .171 F. An Agricultural Development Strategy .171 The Interaction between Agriculture and Other Sectors .172 The Nature of Future Agricultural Growth .173 Short Term Strtegy .174  vi Foreign Exchange Valuation for Agricultural Exportsr ............................... 174 Revitalization of Agricultural Export Industries ......................................... 175 Curtail Government Participation in Commercial Activities Related to Agriculture ..................................................... 175 Medium-Term Strategy. ..................................................... 176 Government Management of Sectoral Incentives ....................................... 176 Strengthening Markets for Factors of Production ....................................... 177 Technology Generation and Natural Resource Management ..................... 179 G. Environmental Impact of Agricultural Growth ..................................................... 1 183 Soil fertility mining and degradation ..................................................... 183 Contamination of Ground and Surface Water ..................................................... 184 Encroachment on Reserves ..................................................... 185 H. Poverty Alleviation ..................................................... 185 VI IMPLICATIONS FOR PUBLIC EXPENDITURE IN AGRICULTURE . ........................ 187 A. The Bank Portfolio ........................................................... 188 B. Donor Funded Projects ........................................................... 188 Policy Based Lending ........................................................... 189 Investment Lending ........................................................... 190 Tlhis report is a joint effort of the Government of Tanzania and the World Bank. It was prepared following a joint mission to Tanzania in October and November 1992. The Government Task Force eor the review, under the general direction of Mr. W. Ngirwa (CPM-MOA), was led by Mr. P.M. Lyimo (MOA), and included Mr. E.T K. Luyangi, and Mr. E.M. Sikana (MLHUD), Dr. E.C. Ndisi (BOT), Mr. J.M. Madika, Mr. R.R. Makusi, Mrs S. Kaduma, Mr J.S. Mawalla, Mr A.O. Farahani, Mr. A.L. Ngondo, Mr. D.R. Mbwele, Mr. O.N.E. Shuma, Mr. D. Urasa, Mr. E.J. Lujuo, Mr. J. Crees, Mr.T.E. Banda, Mr. D k. Kajumulo, Mr.A. Lamosai, Dr.M.L. Ngutter, Mr. I.N.L. Kaduma, Mr. E.L.K. Bubelwa, Mr. N.S. Mwasalyanda, Mr.Mdadila, and Mr. Uledi (MOA). The Bank team was led by Mr. J. Coates and included Mr. R. Noronha, Mr.M. Mayfield, Dr.N.S. Shetty, Mr.K.M. Agarwal, Mr.A. Finney, Mr.R. White, Mr.R. Southworth, Mr.M.J. Hebblethwaite, Mr.J.P. Srivastava, Mr.R. Gray, Mr. W. -Uan der Geest, Mr. J. Grindle, Mr. F. Byamugisha, Mr.D. Gustafson, Mr.R. Kettering, and Mr.H. Porvali. The report was prepared by Mr. J. Coates and edited by Ms M. Hileman. The work was carried out under the supervision of Ms. S. Ganguly, Chief, AF2AE. The Peer Reviewer was Mr. G. Donovan, the Lead Economist was Mr. P. Miovic and the Department Director, Mr. F. X. Cola9o.  TANZANIA Agriculture Sector Memorandum Statistical Annex Table of Contents Macroeconomic Data Agricultural And Total GDP At Factor Cost .............................. I Exchange Rates And Terms Of Trade .............................. I GDP Estimates And Comparisons, 1954-66 .................................,2 GDP Estimates And Comparisons, 1967-79 .............................,.,,,,,.,, .,3 GDP Estimates And Comparisons, 1980-91 , ,,..4 Gross Fixed Capital Formation .5 Consumer Price Indices ............................... , , , , , . . , 6 Interest Rate Structure .............................. 7 Commercial Bank Credit Use By Sector .............................. 8 Govermment Spending On Agriculture, 1973-81 ...............................9 Govermnent Spending On Agriculture, 1982-91 ...............................,.,.,.,,,.,.,.,.10 Foreign Trade Merchandise Exports (2 pp.) ...............1............... 1 Traditional Agricultural Exports (4 pp.) .............................. 13 Real Value Of Merchandise Exports ..................1.......................... , ., 17 Composition Of Exports .18 Merchandise Imports (2 pp.) .19 Non-Traditional Agricultural Exports .21 Population And Land Population P- Region .22 Population, Households And Land Use By Region, 1988 .23 Distribution Of Land Ownership .24 Comparison Of Farms By Farm Size 1971/72 - 1986/87 .25 Comparison Of Labor & Inputs By Farm Size 1971/72 - 1986/87 .26 Allocation Of Land By Farm Size And Use .27 Official Aggregate Agricultural Prices & Output Agricultural Production .28 Agricultural Producer Prices .29 Crops Value Added .30 Livestock Estimates .31 Regional Fertilizer & Maize Prices & Quantities Fertilizer Distribution .32 Maize Purchases By Government Agencies .33 Maize Producer Prices And Dar Es Salaam Retail Maize Price .,,34 Real Retail Maize Prices (3 pp.) .35 Cash Crops And Coffee Economic Analysis Of Smallholder Cash Crops .38 Coffee Production Trends 1980-1992 .39 Coffee Area, Distribution and Yields 1973-1992 .39 Smallholder Coffee Budgets .40 Coffee: 1991/92 Current And Potential Production And Returns .41 Coffee Auction Prices, Intermediaries Costs & Producer Prices .42  1 TANZANIA AGRICULTURAL AND TOTAL GDP AT FACTOR COST Fiscal NCPI GDP at Factor Cost: Real Gross Domestic Product Agricultural Year Agriculture Total Agriculture Total Share in GDP (Current TShs,umillions) (constant 1977 TSh, millions) % of Total 1977 100 11,131 25,698 .11,131 25,698 43.3 1978 107 12,506 28,582 11,688 26,712 43.8 1979 120 14,728 32,317 12,273 26,931 45.6 1980 157 16,636 37,454 10,596 23,856 44.4 1981 197 20,338 43,906 10,324 22,287 46.3 1982 254 26,449 52,546 10,413 20,687 50.3 1983 323 32,737 62,608 10,135 19,383 52.3 1984 439 41,295 78,143 9,407 17,800 52.8 1985 585 61,231 108,083 10,467 18,476 56.7 1986 775 84,153 140,866 10,858 18,176 59.7 1987 1007 117,982 200,377 11,716 19,898 58.9 1988 1322 178,760 285,152 13,522 21,570 62.7 1989 1663 207,059 335,505 12,451 20,175 61.7 1990 1991 233,804 400,719 11,743 20,127 58.3 1991 2429 358,693 573,536 14,767 23,612 62.5 Sources: Bank of Tuani; World Bank EXCHANGE RkTES AND TERMS OF TRADE Year Real Effective Unocial Official Terms of Trade Exchange Rat Exchange Rate Exchange Rate Index 1985=100 TShs/US$ TShsTS$ 1985=100 1979 42.70 12.0 8.2 1980 48.22 21.0 8.2 1981 63.39 27.6 8.3 92 1982 75.03 32.6 9.3 95 1983 83.79 39.6 11.1 79 1984 86.18 55.9 15.3 91 1985 100.00 100.8 17.5 100 1986 69.21 165.0 32.2 78 1987 34.05 180.0 64.3 72 1988 26.64 210.0 99.3 70 1989 23.31 254.2 143.4 70 1990 17.89 304.3 195.1 61 1991 19.13 371.3 224.4 59 1992 16.31 Source: World Bank and Bank of Tanzania. 1990 and 1991 unofficial exchange rates estimated by applying the rate of growth in NCP1.  TANZANIA GDP ESTIMATES AND COMPARISONS, 1954-66 (million TShs) Year 1954 1955 1956 1957 1958 1959 1960 1961 1962 1963 1964 1965 1966 Total GDP at f.c. 2,504 2,604 3,048 3,248 3,342 3,542 3,701 3,870 4,189 4,547 5,594 5,671 6,514 of which Agriculture: 1/ ... ... ... ... ... ... 2,256 2,281 2,485 2,787 2,839 2,630 2,953 % of Total. ... ... ... ... ... 61% 590/o 59% 61% 51% 46% 45% Real Agricultuiral (Dr ... ... ... ... ... ... ... ... ... 45,219 (currnt pnces dcflated by NCPI) Total GDP at fc. (through 1975) 21 2,504 2,604 3,048 3,248 3,342 3,542 3,701 3,870 4,189 4.547 5,594 5,671 6,514 of which Agriculture ... - ... ... ... ... 2,256 2,281 2,485 2,787 2,839 2,630 2,953 % of Total: ... ... ... ... ... ... 61% 59% 59% 61% 51% 46% 45% GDP at f.c. Deflated by National CPI, 1985=1 ... ... ... ... ... ... ... .. ... ... ... ... 99,747 GDP at fc. Deflated by Low Inc. Index, 1985=1 56,090 58,330 68,275 69,957 66,840 76,289 74,020 77,400 83,780 97,935 116,024 105,859 121,595 GDP at f.c. Deflated by Deflator base 1985 = I ... - ... ... ... ... ... ... ... ... 55,698 57,078 64,748 GDP, 1976 Prices ... ... ... ... ... ... ... ... .. 12,511 12,821 14,544 Agriculture GDP in 1976 prices ... ... ... ... ... ... ... ... ... 6,295 6,180 7,08S ManuficturingGDPin 1976Prices ... ... ... ... ... ... ... ... ... ... 1,040 1,177 1,386 Agriculture as Share of Total (1976 Prices) ... ... ... ... ... ... ... ... ... ... 50% 48% 49%/o Rural Productivitv Ag. GDP in 1976 prices per rural inhabitant ... ... ... ... ... ... ... ... ... ... ... ... 651 Ag. GDP at c.p. defl. by NCPI per rural inhabitant ... ... ... ... ... ... ... ... ... ... ... 4,153 Overall Productivity (GDP/capXDefl. NCPI) ... ... ... ... ... ... ... ... ... 8,602 Overall Productivity (GDP/capXDefl. LI CPI)) 7,021 7,073 8,020 7,960 7,375 8,162 7,679 7,786 8,172 9,263 10,641 9,414 10,486 Overall Productivity (GDP/capXGDP Deflator, 1985=1) ... ... ... ... ... ... ... ... ... ... 5,076 5,584 Overall Productivity (GDP/capXl 976 Prices) ... ... ... ... ... ... ... ... ... ... 1,147 1,140 1,254 Population 7,989 8,247 8,513 8,788 9,063 9,347 9,639 9,941 10,252 10,572 10,903 11,244 11,596 Rural Population 7,785 8,010 8,242 8.481 8,719 8,965 9,217 9,476 9,743 10,017 10,299 10,589 10,887 I/ From 1966-1975, agriculture GDP is deived using the ratio to GDP from 1977 CEM 2V From "Selected Statistical Series 1951-19s8r (GDP at cunrent prices), 1977 CEM (Agriculture at current prices 1966-75) and 1966 Statistical Abstract (Agriculture at curent prices 1960-65) Sources: Selocted Statistical Series 1951-1988, Bureau of Statistices, January 1991, p.45,46 Wond Bank, Report No. 1616-TA, Tazaia Basic Economic Report, Docember 1977, Vol L p.143 Economic Survey of 1991, The Plaming Comunission, June 1992, p.78  TANZANIA GDP ESTIMATES AND COMPARISONS, 1967-79 (million TShs) Year 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 Total GDP at fc. 6,735 7,182 7,460 8,215 8,857 10.032 11,490 14,010 16,988 21,652 25,698 28,582 32,317 ofwhich Agriculture: 1/ 2,869 2,992 3081 3,381 3,497 3,979 4,523 5,528 7,123 9,046 11,131 12,506 14,728 % of Total: 43% 42% 41% 41% 39% 40% 390/o 39% 42%/e 42% 43% 44% 46% Crops & Livestoek 7,903 9,737 11.159 13,427 Real Agricultural GDP 43,007 43,039 43,876 46,672 46,409 48,622 50,137 51,192 52,378 62,216 68,507 68,666 71,597 (current prieos deflated by NCPJ) Total GDP at