Tuesday, June 12, 2018

Let ASDP II motivate agriculture through trade competitiveness

By Dr Hilderbrand Shayo 

TANZANIA agriculture products have to be competitive enough to penetrate the regional and international markets.
This is a key prerequisite should the country want to diversify its economy portfolio by leaning on agriculture sector. And for this to succeed, motivation has to go hand in hand in changing old habits, especially in seed, inputs usage, to help spurring agricultural productivity.
The sector can be motivating through business mind-set that will not only support to accelerate the development of the agricultural sector and provide foreign exchange for the country, but also create a base that would produce needed raw material to meet growing industrial demand.
This will also open a labour demand door.
Therefore, diversifying the economy away from mining and tourism sectors that has been an important sector in term of government fiscal policy is a key concern.
The attention, under this scenario, has to shift to making agriculture and value-adding manufacturing export more competitive.
For instance, government efforts in creating an environment that would help to diversify the country’s economy and revenue away from current foreign earning sectors has failed to address this challenge at the moment.
The challenges centred on strategic financial institution that have been mandated to catapult activities within the sector’s value chain failed to address the issue of loaning to farmers and come up with products specifically to reach peasants—a vital for the success of any export business regionally and internationally.
The fact is agricultural products constitute the bulk of Tanzania potential foreign earning. However, agro-product need to comply with a number of regulations before allowed entry in competitive markets.
This to date remains at cross road. To address this challenge the mandated ministry and agencies should fully understand the targeted market’s legal requirements before the country agro-export opportunity becomes unlimited.
Those who tasked to spearheading these issues don’t realise that understanding is one thing, but must be followed by compliance and marketing initiatives.
It is the compliance and marketing strategy that gives a country an entry guarantee to a given market and not politics. Good market penetration needs effective branding and packaging material at one hand and adequate financing from banks and government support at the other hand.
Thus if as country remained determined to ensure the Agricultural Sector Development Programme phase two (ASDPII) benefit actors involved in this sector, the two, understating legal requirements and financing are key preconditions to achieve the ASPDII.
Nevertheless, several challenges need to be ironed out in order to expand the country’s export opportunities for the economy to contribute to structural change and help stimulate agricultural sector growth, which are vital for sustaining economic growth and development.
Research carried to date in an attempt to ascertain what the requirements for niche markets are, indicates that as far as Tanzania is concern effort should be directed to the following area.
One: packaging. The world of products marketing is the world of appearance. There is no witchcraft on these issues. Like the typical physicist or materialist, the consumer whether in Tanzania or elsewhere believes in what he/she sees, feels, touches or perceives.
The consumer tends to look at the physical attributes of a product first before considering whether it meets the standards or not. In this area, I am disappointed to say, we aren’t there yet when compared to our colleagues. We need more effort to strengthen packaging and the way we wrap our products.
Two: The international market that is very competitive is based on standard and reliability. As country, there is a need to meet the standard before our goods can go far. We shouldn’t mislead ourselves; standard and reliability are the key in export business. I am aware of green beans, avocado and very few other fresh crops that leaves from production i.e. farm site to shelves in Western Europe supermarkets.
Studies carried in 2008-2009 and 2016-2017, in attempt to examine Tanzania competitiveness when compared to Uganda, Burundi, Rwanda, Kenya, Zambia, Mozambique and Malawi indicates that Tanzania has so much to offer that could earn the country substantive foreign earning and also advance the lives of producers if assisted to uplift their harvest in line with what market need.
In penetrating markets and lasting stead, one need to understand that competitiveness is being able to give a project that can beat your competitors and the capacity to cope with the standard and persistent demand of the international market.
What many especially office- bearers don’t understand is that when you try to enter a given market unprepared and your product is rejected, it will be too expensive to repatriate products already exported but also embarrassing and discouraging.
The issues of undesirable materials in cotton and cashew nuts that were reported in the media recently are a clear example of a shame. Three: Value addition, for a product to be export competitive, the exporters should add value to their products, embrace innovation and technology, while ensuring that their product are desirous of competing favourably in the regional and international market.
I have to acknowledge, I was pleased some years back when I found wine from Cetawico, trading as presidential and ambassador reserve, the wine is competing in price terms with French wines at supermarkets in Italy.
I am also glad, to concede Archard Kato, promoter of Alko vintage company, a wine maker in inspiring Tanzanian wine, at one time supporting more than 900 grape farmers direct and indirectly in Dodoma. Value addition is what will give Tanzania credit and respect in the face of its competitors.
About 90 per cent of the total Tanzania’s cashew export is exported raw. As a country we praise ourselves for exporting so much and even considered to put cashew as first crop to be traded through commodity exchange, soon to take place. I wish we could understand what additional revenue Tanzania could net by having value addition just in cashew.
Potential revenue loss incurred by exporting raw cashew is huge. The cashew nut raw export I wouldn’t like to discuss in this article how much we continue to loose, but let us open our eyes on this crop.
After all, cashew grown in Tanzania, due to its tree maturity and its organic in nature is trusted to be the best in the market. The better term is not to concentrate on short-term earning, but multiplier effect that can be created by processing it locally of course within international standard levels. Seriously as a nation, let us ascertain within these ten years of implementing ASDPII what creativity can be put on cashew and other agro-products value addition.
Four: Logistics weakness apart from prices competitiveness is furthermore a major challenge to the success of the agro-export export campaign. This is an area I believe we are still lagging behind.
This is an area where private sector could work up and provide their support by ensuring modern warehouses are in place to support commodity exchange mercantile.
For local government authorities, these facilities could also be revenue generating sources in the near future selected crops will be traded via these warehouses.
On top of that we currently do not have a good commercial cold chain infrastructure in the country. The costs of logistics are also very high.
It is cheaper to transport a commodity to international market possibly through neighbouring exits than to transport same commodity within the Tanzania. Let us think of post-harvest loss for cassava, mangoes, pineapples, tomatoes etc.
Is private sector not seeing this opportunity? There are more genuinely opportunities to give good return on investment than thinking on investment on guest houses, buses, just to mention a few.
Think of what happens after few days of heavy rainfalls most farming areas and markets becomes totally impassable and this has continued to impact negatively on the prices of food items across the country.
How Tanzania processed harvest is faring in international market? Generally, this is a tough question but access to market, good market penetration on the part of the exporter is important to export competitiveness by providing harvests that can beat that of other competitors.
Access to the international market is very thought-provoking due to variety of potential differences in culture, political and economic environments and regulations between domestic market and international markets.
But even with these challenges, taking business international can provide numerous benefits including new opportunities and increased sales volumes.
Why it matters to me as a Tanzanian? Well, in my opinion, the country can only realise its export potential and diversify its revenue through agriculture when its products can compete favourably with other products in the international market.

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