Iringa Sunflower Value Chain Analysis for Local (National ...€¦ · Iringa Sunflower Oilseeds...

MUVI-SIDO Iringa Sunflower Oilseeds Value Chain Analysis for Local (National) Market

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Iringa Sunflower Value Chain Analysis for Local (National) Market

and

Value Chain Development Investment Plan

1st DRAFT

Submitted by a Consortium of

Business Care Services Limited and

Centre For Sustainable Development Initiatives

Friday, May 11, 2012

MINISTRY OF INDUSTRIES, TRADE AND MARKETING

SMALL INDUSTRIES DEVELOPMENT ORGANIZATION


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Table of Contents TABLE OF CONTENTS ............................................................................................................................... 1 TABLE OF CONTENTS ............................................................................................................................... 2 LIST OF ACRONYMS .................................................................................................................................. 4 ACKNOWLEDGEMENT .............................................................................................................................. 6 EXECUTIVE SUMMARY ............................................................................................................................. 8

OVERVIEW OF THE SUNFLOWER VALUE CHAIN ............................................................................................. 8 DRIVING FORCES ......................................................................................................................................... 8 OPPORTUNITIES ........................................................................................................................................... 9 CONSTRAINTS .............................................................................................................................................. 9 PROPOSED INTERVENTIONS: ........................................................................................................................ 9

SECTION I: INTRODUCTION .................................................................................................................. 11 1.1 BACKGROUND INFORMATION ................................................................................................................ 11 1.2 STUDY OBJECTIVES, OUTPUTS AND DELIVERABLES ....................................................................... 12

Objectives and Deliverables .................................................................................................................. 12 1.3 METHODOLOGY OF THE STUDY ..................................................................................................... 13 1.4 STUDY LIMITATIONS ..................................................................................................................... 17 1.5 STRUCTURE OF THE REPORT .......................................................................................................... 18

SECTION II: IRINGA REGIONAL PROFILE .......................................................................................... 19 2.1 GEO-CLIMATIC CONDITION OF IRINGA ........................................................................................... 19 SOILS ....................................................................................................................................................... 19 TOPOGRAPHY ........................................................................................................................................ 19 DRAINAGE .............................................................................................................................................. 20 AGRO-ECONOMIC ZONES..................................................................................................................... 20 2.2 REGIONAL DEMOGRAPHY ............................................................................................................. 23 2.3 REGIONAL ADMINISTRATION......................................................................................................... 24 2.4 THE ECONOMY AND ECONOMIC INFRASTRUCTURE ......................................................................... 25 2.6 STAKEHOLDERS’ ANALYSIS .......................................................................................................... 27

SECTION III: MARKET ANALYSIS......................................................................................................... 29 3.1 PRODUCT DESCRIPTION AND USES .............................................................................................. 29 3.2 OVERVIEW OF THE WORLD MARKET OF SUNFLOWER OILSEEDS ................................................ 29 3.3 NATIONAL MARKET FOR THE SUNFLOWER OILSEEDS ..................................................................... 31 3.4 EXPORT AND IMPORT OF SUNFLOWER OILSEED PRODUCTS ............................................................. 33 3.5 PRICE PATTERNS IN URBAN MARKETS ........................................................................................... 34 SECTION IV: TECHNICAL ASPECTS AND BEST PRACTICES ............................................................. 35 4.1 PRODUCTION ASPECTS .................................................................................................................. 35

4.1.1 Verities and Yields of Sunflower Oilseeds ................................................................................. 35 4.1.2 Ecological Requirements ......................................................................................................... 36 4.1.3 Production System ........................................................................................................................ 37 4.1.5 Pests and Diseases .................................................................................................................. 38

4.2. HARVESTING AND YIELDS. .......................................................................................................... 40 HARVESTING .............................................................................................................................................. 40 4.3 POST HARVEST AND HANDLING .................................................................................................... 41 4.1 SUNFLOWER OILSEEDS PROCESSING ........................................................................................... 42 4.5 ENVIRONMENTAL ASPECTS ........................................................................................................... 45

SECTION V: SOCIAL-ECONOMIC ASPECTS ........................................................................................ 46 5.1 CONTRIBUTION TO INCOME ................................................................................................................... 46 5.2 EMPLOYMENT CREATION ....................................................................................................................... 46 5.3 HOUSEHOLDS FOOD SECURITY ............................................................................................................... 47 5.4. GENDER ASPECTS ................................................................................................................................. 47 5.5 HIV/AIDS ............................................................................................................................................ 47 5.6. IMPACT ON POVERTY REDUCTION ......................................................................................................... 47


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SECTION VI: STRUCTURE OF THE SUNFLOWER OILSEEDS VALUE CHAIN IN IRINGA .......... 48 6.1 FUNCTIONS AND ACTORS IN THE VALUE CHAIN ............................................................................. 48 RELATIONSHIPS IN SUNFLOWER VALUE CHAIN ............................................................................................ 52 ACTORS RELATIONSHIPS IN SUNFLOWER VALUE CHAIN .............................................................................. 52

6.1.1 Input Suppliers ........................................................................................................................ 54 6.1.2 PRODUCTION ................................................................................................................................ 55

6.1.3 Post Harvest and Handling Activities ....................................................................................... 56 6.1.4 Marketing Activities ................................................................................................................. 56 6.1.5 Processing Activities ................................................................................................................ 57 6.1.6 Transportation Activities.......................................................................................................... 58 6.1.6 Financing Activities ................................................................................................................. 58 6.1.7 Extension and Business Development Services ......................................................................... 58 6.1.9 Dynamics, Driving Forces and Point(s) of Leverage................................................................. 59

SECTION VII: VALUE CHAIN GOVERNANCE ..................................................................................... 61 7.1 CONCEPTUAL FRAMEWORK ........................................................................................................... 61 7.2 GOVERNANCE OF SUNFLOWER OILSEEDS VALUE CHAIN ................................................................ 63

SECTION VIII: GROSS MARGIN ANALYSIS ......................................................................................... 65 8.1 KEY ASSUMPTIONS ...................................................................................................................... 65

8.3 Data Used ....................................................................................................................................... 66 8.4 COMPUTATION METHOD ............................................................................................................. 66 8.5 DATA INTERPRETATION .............................................................................................................. 66 8.6 DATA RESULTS SUMMARY........................................................................................................... 67

SECTION IX: SERVICES MARKET ......................................................................................................... 69 9.1 FINANCIAL SERVICES .................................................................................................................... 69

9.1.1 Overview of Rural Financial Services in Tanzania ................................................................. 69 9.1.2 Specific Financial Services to actors in the Value Chain ........................................................ 71

TECHNOLOGY PROVIDERS........................................................................................................................... 72 9.2 BUSINESS DEVELOPMENT SERVICES .............................................................................................. 73 9.4 WAREHOUSE RECEIPT SYSTEM AND LOGISTICS .............................................................................. 73

SECTION X: INSTITUTIONAL AND REGULATORY FRAMEWORK ................................................ 74 10.1 INSTITUTIONS ............................................................................................................................... 74 10.2 REGULATORY FRAMEWORK .......................................................................................................... 74

SECTION XI: SWOT ANALYSIS .............................................................................................................. 77 11.1 OPPORTUNITIES ............................................................................................................................ 77 11.2 CONSTRAINTS (VC WEAKNESSES & THREATS) ............................................................................... 79

SECTION XII: PROPOSED VALUE CHAIN INVESTMENT.................................................................. 81 12.1 INVESTMENT SUMMARY ................................................................................................................ 81

REFERENCES ............................................................................................................................................. 91


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List of Acronyms (R)MSE(s) (Rural) Micro and Small Enterprises(s) AIDS AMCOS

Acquired Immune Deficiency Syndrome Agricultural Marketing Cooperative Society

AMSDP Agricultural Marketing Systems Development Programme ARI Ilonga Agricultural Training Institute BCS Business Care Services BEE Business Enabling Environment BEST-AC Business Environmental Strengthening – Advocacy Cm Centimeter CRDB Cooperative Rural Development Bank CSDI Centre for Sustainable Development Initiatives DADP District Agriculture Development Plan DAIPESA Development Alternatives, Inc. Private Enterprise Support Activities DALDO District Agriculture and Livestock Officer DASP District Agricultural Support Programme DED District Executive Director EAC EU ESRF

East Africa Commission European Union Economic and Social Research Foundation

FAO FAOSTAT

Food and Agriculture Organization Food and Agriculture Organization Statistics

FFS Field Farmer School FGD Focus Group Discussion GDP GMA FSU

Gross Domestic Product Gross Margin Analysis Former Soviet Union

HIV Human Immunity Virus IFAD International Fund for Agriculture Development Kg Kilogram LGA Local Government Authority MAFC METL

Ministry of Agriculture, Food Security and Cooperatives Mohamed Enterprise Tanzania Limited

MITM Ministry of Industry, Trade and Marketing MKUKUTA Mkakati wa Kukuza Uchumi na Kupunguza Umaskini Tanzania Mt Metric tonne MUVI Muunganisho wa Ujasiriamali Vijijini MVIWATA Mtandao wa Vikundi vya Wakulima Tanzania NADO Njombe Agricultural Development Organization NBS National Bureau of Statistics NGO NJODECO

Non Government Organisation Njombe Development Cooperation

NMB National Microfinance Bank NSGRP PASS PMD

National Economic Growth and Reduction of Poverty Private Agricultural Sector Support Powdery Mildew

QDS Quality Declared Seed RAS Regional Administrative Secretary RBSS Rural Business Support Services


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REA Rural Energy Agency RFSP RLDC

Rural Financial Services Programme Rural Livelihood Development Company

RMA Preliminary (Rapid) Market Assessment SACCOS SADC

Savings and Credit Cooperative Society(ies) Southern Africa Development Cooperation

SIDO Small Industry Development Organization SMART Specific, Measurable, Achievable, Realistic and Time bound SME Small and Medium Enterprises SMS Subject Matter Specialist SWOT Strengths, Weaknesses, Opportunities and Threats TAFOPA Tanzania Food Processors Association TCCIA Tanzania Chamber of Commerce, Industry and Agriculture TDC Technology Development Centre TEMDO Tanzania Engineering and Manufacturing and Design Organization TFC Tanzania Fertilizer Company TIRDO TIC

Tanzania Industrial Research and Development Organization Tanzania Investment Centre

TOSCI Tanzania Official Seeds Certification Institute TRA TZS UMGT USA

Tanzania Revenue Authority Tanzanian Shilling Uncle Millo General Traders United States of America

US/ADF United States/African Development Foundation USAID VAT

United States Agency for International Development Value Added Tax

VC Value Chain VCA Value Chain Analysis VCD Value Chain Development VCIP Value Chain Implementing Partner VCO Value Chain Operators VCS VICOBA

Value Chain Supporters Village Community Bank


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Acknowledgement

Business Care Services (BCS) and the Centre for Sustainable Development Initiatives (CSDI), take this opportunity to thank Small Industries Development Organization (SIDO) for hiring us to carry out this important study to diagnose and analyze the value chains for products to be supported by Rural Business Support Programme (RBSP) or popularly known as MUVI for Iringa Region. Throughout the undertaking this assignment, the Consultants were cognizant of the need for a participatory approach and therefore the work has both directly and indirectly involved a number of people outside the Consulting team. To begin with, we acknowledge the guidance offered by Client namely the Director General of SIDO, Mike Laiser who responded to our inception report with significant insight issues on the scope of the study and the process and later reviewed the progress reports and advised the Team to add tomatoes to the list of products to be analyzed. Equally important has been Mr. Mwene Milao, the Programme Coordinator who from the outset worked closely with the team including coordination between SIDO and the Consultants, between the Consultant and SIDO Iringa Regional office and he actively participated in all the workshops. Within SIDO we also thank the Regional team led by Mr.Gervas Kashebo who assisted the Consultant in liaison, protocols with regional and district authorities, sourcing of information, availing office space and logistical support. The Consultant is highly indebted to the Regional Authorities and particularly the Regional Administrative Secretary (RAS) Ms. Getrude Mpaka who officiated the workshops and provided the regional perspective to the Consultant. Mr. Adam Swai – the Regional Agricultural Adviser and Head of the Agriculture and Productive Sectors Clusters in the region played a very critical role in the whole process, also important had been Mr. Emil Kisoka – Regional MUVI focal person, apart from effective participation, he assisted the Team in coordinating the processes with Regional and District authorities. It is important to acknowledge the support the team got from all the District Executive Directors (DEDs), in the seven districts and their respective officers and especially the DALDOs and District Trade Officers who are also the MUVI focal persons. The district personnel were responsible for analyzing and selecting commodities to be supported by MUVI. Outside the Government, we are very grateful for the contribution of the private sector in Iringa particularly Mr. Mandakishar Bharati of Dabaga Vegetables Limited, Esmail Thakore of Ivori, Mrs. ….. of Marriet Natural Foods Limited), in Dar es Salaam. In Arusha we are grateful to Mr. Ravikant Bhalarao of Darsh Industries Limited manufacturer of Redgold brand in Arusha. In the financial services we recognize the input of Mr. … Branch Manager of NMB Bank in Ludewa and Mr. …. Njombe Branch Manager of CRDB Njombe. In the research realm, we interacted with Mr. Humphrey Ndosi of Tanzania Industrial Research and Development Organization (TIRDO), Mr. Elimringi of Tanzania Engineering and Manufacturing and Design Organisation (TEMDO). Ms Theresia Shang’a of Ilonga Agricultural Training Institute (ARI) and Mr. Faustine Barongo of Dakawa (Morogro) ARI and Adonisian Shayo of Tanzania Official Seeds Certification


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Institute (TOSCI). We thank farmers, traders, transporters, input suppliers and small processors whom we interacted with extensively, we are aware that we have not mentioned a substantial number of people who contributed to this work because of the space, we request all to accept this collective thanks as being our sincerest. Kindly find the list annexed to this report of all the people we interacted with. While we share the credit with all mentioned above, we would like to exonerate them from any shortcoming in the work and reiterate that the liability is solely of the Consultants.

MUVI-SIDO Iringa Sunflower Oilseeds Value Chain Analysis for Local (National) and International Market

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Executive Summary Overview of the Sunflower Value Chain Sunflower is one of the major oil seeds produced in Tanzania. Accounting for 35% of the national oil seeds production, it is only second to groundnuts, which accounts for 40% of the national production of oil seeds. Sunflower is a drought tolerant crop, and can survive in areas with low to medium rainfall. The crop is less susceptible to diseases and cheaper to cultivate compared other oilseeds crops like sesame as well as food crops like sorghum and maize. Based on the The major sunflower producing regions are include Dodoma, Singida, Kilimanjaro, Iringa, Mbeya Arusha and Ruvuma1. Annual production of sunflower oilseeds is estimated to be … Tons when compared to the major sunflower producing nations like India, China, Chile, US and Canada, Tanzania is insignificant in terms global sunflower production. Production volumes are relatively low because no much inputs like fertilizers, manure, pest and disease control chemicals are used in the production of sunflower. National average yield per acre is as low as 300kg, or approximately four bags per acre. In Iringa region, the production volume ranges from 4 to 7 bags per acre. The two major products of sunflower oilseeds are: sunflower oil and sunflower seed cake. Tanzania imports 90% of its edible oils mostly palm oil from the Far East (Indonesia and Malaysia). Although it is preferred to palm oil, sunflower accounts for less than 30% of the national consumption. At the same time Tanzania export up to 8.9 million worth of sunflower seeds and sunflower oil mainly to the neighboring countries mainly DRC Congo, Zambia, Kenya, Uganda and Rwanda. Sunflower gross margin per acre is lower than maize, a close alternative crop for the farmers in Iringa region. Therefore it is mostly grown as an intercrop in maize fields. Although its gross margin is low, it has a huge potential for value addition activities, hence employment creation, and a big import substitution impact. Sunflower also plays an important role of household food security due to its drought tolerant attributes. Sunflower is also healthier edible oil than most other oil seeds. Driving Forces Consumer preference of sunflower oil over other edible oil types have made local sunflower processors to be an important player in the sunflower value chain. This marketing channel accounts for over 60% of all the sunflower marketed in Tanzania. In Iringa, they accounted for over 90% . Distributors of sunflower oil in urban areas also play an important role in the sunflower value chain. 1 Based on the Tanzania Agriculture Sample Census of 2003, out of total oilseed production of 240,297t, sunflower contained about 55,070 (or 22.9%), sesame contained about 23,669t (or 9.8%) and the leading one is groundnuts which contained about 160,258 or 66.7%. Over 50% of oilseeds are planted in four regions. The largest area is found in Dodoma with 120,211 ha (22.5%), followed by Kilimanjaro with 70,742 ha (13.2%0), Arusha with 69,834 ha (13.1% and Singida with 47,556 ha (8.9%).


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Opportunities There are a number of opportunities existing in the sunflower value chain, making it an important sub sector for investment:

Strong demand for locally made edible oil

Strong preference for sunflower seed oil as compared to other edible oil types

Availability of affordable oil processing technologies e.g. from China, India, as well as

local manufacturers such as SIDO, TEMDO, TIRDO, etc

Favorable policies and regulations especially for producers.

Land availability

Easy access to market information as a result of rapid development in communication

technology.

Constraints

Poor infrastructure in some areas of the region impacting movement of inputs and farm

produce.

High price of inputs and poor distribution network in the rural areas.

Unreliable weather conditions

Limited access to finance for production inputs and trading activities.

Poor knowledge on appropriate technology for sunflower processing.

High taxes (VAT) and energy costs for large scale oil processors

Sunflower diseases e.g. powdery mildew that can result in 100% crop loss.

Proposed Interventions: Proposed interventions for addressing the constraints that are facing the various actors in the Iringa sunflower value chain, will focus on the points of leverage that impact many actors at the same time. One of these is to assist producer groups, processors associations, input supplier associations, traders associations and other service providers along the value chain. These groupings will be strengthened or formed if not in place. Their capacity will be built through training on:

Improved sunflower production technologies

Access and usage of appropriate production inputs

Financing of production and processing activities


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Quality enhancement for sunflower seeds products.

Usage of appropriate sunflower processing technologies

Establishment of pilot centres for testing and training on sunflower processing

technologies

Dissemination of market information to various actors in the value chain

Credit and Market linkages.

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SECTION I: INTRODUCTION

1.1 Background Information

MUVI Programme is one of the Government strategies to address rural poverty as elucidated in the National grand strategy, the National Economic Growth and Reduction of Poverty – NSGRP branded as MKUKUTA. While the immediate impact shall be reduction of income poverty, MUVI addresses other related opportunities that include: Employment creation in absolute and relative contexts which will reduce

unemployment and underemployment respectively especially of rural youth, women and marginalized groups (MKUKUTA cluster 1 goal),

Enhanced productivity, profitability and off-farm incomes through increased access to markets and services and through improved rural SMEs (MKUKUTA cluster 1 goal),

Speeding the women and youth empowerment, so that they can effectively participate in the shaping of their own economic destinies.

The goal is to develop rural micro, small and medium enterprises in the value chains that will sustainably deliver increased incomes and therefore reduce poverty so as: - More sustainable, and less risky jobs in rural areas are created; To facilitating expansion of enterprises, especially RMSMEs, in exporting activities,

hence improve Balance of Payment; To impact the strengthening of the link between agriculture and industry and raising

the contributions of other sectors to GDP; To promote off-farm activities and value-addition schemes to primary agricultural,

fishing, forest, wildlife and livestock products – through agro-processing RMSMEs and cooperatives;

To support RMSMEs and the informal sector in accessing financial services and implementing land use and management plans.

This 7-year, programme funded by IFAD has three main components: (i) Communication in Rural Business focusing strategizing and implementing

communication and knowledge management for rural businesses; (ii) Rural Business Support Services that aim at strengthening businesses through

various processes including diagnosis, analysis, intervention planning and implementation and

(iii) Institutional strengthening that will entail technical capacity building, monitoring and evaluation, environmental impact assessment. This study is part of the Rural Business Support Services (RBSS) whose objective is to strengthen the growth of Rural Micro, Small and Medium Enterprises (RMSMEs) and their value chain actor through access to advice, training, and markets.


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1.2 Study Objectives, Outputs and Deliverables

Objectives and Deliverables The main objective of the study was to diagnose and recommend two value chains and their concomitant support activities for the MUVI Project in Iringa Region. More specifically, the study aimed at identification of commodity chains with viable current or potential markets, and which would have a significant impact on the rural poor. Value chains are driven by coalition of actors from different domains, the study therefore is expected to identify other public and private organizations working in identified commodity value chains with a view of forging strategic and practical partnerships to bring in synergies, reduce learning curve and broaden impact. The Value Chain Analyses needed to ensure that the RMSMEs involved in the support programme have the potential to generate employment, especially for youth and women, and have a direct impact on poverty reduction. Value addition is another important driver of the value chains to be supported, the study therefore has to identify and elaborate in the support programme for the introduction of proven technology (ies) or new investment models that could be replicated the value chains, potential spin-offs of new activities including markets for support services. The study identified risks inherent in the commodity’s chain including on food security and there from derived viable issues, and recommended practical measures to address them in the context of the programme. At the end, the study is expected to outline an exit strategy for the Value Chain Implementing Partner (VCIP) to further the achievements attained during the implementation period. Deliverables The Consultant had been required to deliver to SIDO the following: - A draft diagnostic report based on the study, and analysis of the value chains

identified in the respective region. A set of recommendations based on the value chains study and analysis, specifically: Analyses of specific constraints of the recommended value chains to be supported. Organizational and value chain support activities (to address identified constraints)

that should be undertaken for the recommended value chains. An investment proposal for implementing the recommended value chains.

The analysis was guided by the deliverables indicated above.


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1.3 Methodology of the Study This study employed multi-dimensional approach to diagnose and study the value chains and necessary support markets for the recommended commodities, it had distinct phases as follows: Stage one: Preparations: This was an administrative phase which included negotiating and contracting with SIDO. Also it involved initiation of communication between the Consultant and SIDO Iringa, Iringa Regional Administrative Secretary (RAS), Districts Executive Directors (DEDs) and TCCIA regional branch. Further, the preparation phase addressed issues of logistics to the districts i.e. setting the work plan, transport, contact information, etc. Literature review was also undertaken at this stage. Among the relevant and widely referred documents included: Iringa Regional Profile (2007), Tanzania National Business Council documents on opportunities, Tanzania Agricultural Partnership Baseline Survey (2009 – unpublished), BEST-AC : Impact Assessment Study for Weights & Measures Enforcement in Iringa for the National enforcement of Weights & Measures Technology & Procedures Project (2008 – Unpublished), Ministry of Industries, Trade and Marketing : Agri-Business Directory (2005 – Unpublished), various maps, Internet search and downloads. Some preliminary consultations were done by phone with key informants in Iringa e.g. with TCCIA on availability of regional investment profile, with Small Enterprise Competitiveness Facility on some agri-businesses they know in Iringa, etc. Also in this phase, the Consultant spent time to develop field data/information gathering tools and processes. Four forms of questionnaires were developed in this phase as for the quick commodity scan. Stage Two: Quick Scan: The quick scan which took place from 13th to 30th April 2009 was aimed at identifying all commodities in the region and collate with commodity list obtained through literature review that later was subjected for further scrutiny in the pre-selection workshop. About 116 key informants from government and private sectors were consulted (see annex I). At regional level key persons consulted were Regional Administrative Secretary (RAS), Assistant RAS for Economic, Productive Sectors and Regional MUVI Focal Person. At the district level, the team consulted District Executive Directors (DEDs), District Agricultural and Livestock Officers (DALDOs), planning officers, MUVI focal persons most of whom are trade officers and cooperative officers. Other stakeholders consulted in groups were processors, producers, inputs suppliers, local buyers, extension officers, transporters, institutions, associations, organization and entrepreneurs’ groups. Major market points of Iringa Municipal, Ilula, Mafinga, Makambako, Njombe and Iwawa (Makete) were visited. Using the “whole system in a room” approach, Focus Group Discussions (FGD) were widely used in all the districts, participants included producers, traders, processors, transporters, warehouse service providers/owners, TCCIA, NGOs, district and ward extension officers.


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Phase three: Commodity Selection: This phase was reviewed and split into two stages i.e. pre-selection and selection. The Pre-selection stage was aimed at screening commodities identified in the quick scan using desired indicators into a manageable number of commodities that was to be subjected into critical commodity selection process. A total of 27 participants took part in the workshop. Pre-selection process retained for further assessment, maize, beans, Irish potatoes, wheat, sunflower paddy, tomatoes, pyrethrum, onions trees and timber, dairy cattle, avocado and apples. The Consultant undertook a review of the list of commodities adding information on market potentials before the workshop which was more technical and attended by decision makers at regional and district levels. A total of twenty six (26) people participated in the selection process. Participants reviewed the methodology and indicators, they assigned scores to indicators then slit into groups that scored the commodities. After group work, scoring results were compared to establish reason for contrasting variations through arguments based on facts to and against, the scores were reconciled resulting into a single score sheet. Eventually sunflower and maize scored higher. Phase four: Study and Analysis of Selected Value Chain and Concomitant Services This phase involved detailed analysis of the value chains in a research-based study. At regional level, public and private sectors actors were consulted; in public sector were Assistant RAS, economic and productive sectors, Regional Manager National Bureaus of Statistics (NBS) and officers, Regional Manager Weight & Measures, SIDO General Foremen Technology Development Centre Iringa and SIDO Regional manager Iringa. At district level, the public informants consulted were DEDs, DALDOs, Cooperative officers, Financial Institutions, Natural Resources and Environment personnel, ongoing programs coordinators including Farmers Field School (FFS) and seed production programme, village government leaders and wards extension offices. In private sector, the information was drawn from traders (i.e. of maize, sunflowers and tomato and its products), processors (maize, sunflower and tomato), farmers (organized in FGDs conducted in the villages). In private sector, the team interviewed farmers, traders, transporters, processors, consumers, financial institutions, service providers, input suppliers, association representatives, etc.

Table 1.1 Commodity Selection results phase II No Commodity No Commodity No Commodity No Commodity No Commodity 1 Maize 11 Paddy 21 Paprika 31 Cattle 41 Fish

2 Beans 12 Avocado 22 Onions 32 Dairy products 42 Artemisia 3 Banana 13 Cow Peas 23 Sorghum 33 Honey 43 Jatropha

4 Irish Potatoes 14 Peaches 24

Sweet potatoes 34 Beeswax 44 Apple

5 Wheat 15 Tomatoes 25 Finger Millet 35 Mineral 45 Barley (Shayiri)

6 Sunflower 16 Pyrethrum 26 Bambara nuts 36 Soya beans 46 Mushroom

7 Tea 17 Pears 27 Tobacco 37 Cashew nuts 47 Goats 8 Groundnut 18 Cabbage 28 Cotton 38 Handcraft 48 Sheep


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9 Garden Peas 19 Simsim 29 Tree 39 Bamboo juice (Ulanzi) 49 Rabbits

10 Cassava 20 Coffee 30 Timber 40 Flowers 50 Pigs 51 Chicken

Output: From this activity, 41 commodities were identified; also, the more knowledge/awareness on the commodities and Programme was gained as well as a relationship between the Programme and potential actors in the districts increased.

Task No. 4 Preliminary (Rapid) Market Assessment (RMA): This major activity was not accomplished as per plan because of the changes in the milestones. Initially (in the Proposal) the Consultant had envisaged that the Quick Scan could have produced the list of about 8 commodities. The eight screened commodities were to be subjected to the rapid market assessments that would have been among the key inputs in commodity selection. This involved estimating possible volumes, terms of trade, potential market barriers, etc. Information from the RMA would have been among important criteria in commodity selection process. This milestone was partly undertaken following an agreement between the client and the consultant that there should be a pre-selection workshop. Due to short interval between pre-selection and selection workshops (May 26th and June 5th) the Consultant had not completed the analysis of the data from the local market and exports at the time of the selection workshop. A synopsis of the market aspects was prepared and shared with participants.

A Participatory Commodity Pre-Selection Workshop: Pre-selection workshop held on 26th May 2009 at the Open University Conference hall in Iringa Region. The objective was to review the 41 commodities identified during Quick scan exercise. During the workshop the commodity list increased to fifty one (51). Output: Thirteen (13) commodities i.e. trees and timber, apples, avocado, sunflower, paddy, beans, dairy cattle, tomatoes, maize, round potatoes, onions, wheat and pyrethrum were identified to be potential for the selection workshop. Participatory Commodity Selection Workshop: Commodity selection workshop was held on 5th June 2009 involving 29 participants. The thirteen commodities identified in a pre-selection workshop were subjected to a rigorous screening process. The proposed tools were ranking matrix and Porters Five Forces Model. The aim was to reduce commodities from 13 to 4 or 5 by ranking matrix then through Porters Model for competitive analysis the list could be reduced to 2. The consensus was to merge criteria in Porters with ranking matrix. Output: The Sunflower scored highest points (99) became number one and maize came second. Value Chain Studies: Following the completion of the selection, the team started the detailed research on maize and tomato value chains in Iringa. Output: A study with a summary of major milestones is provided in the figure below.


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Fig 1.1 Value Chain Study Process.


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1.4 Study Limitations

Participation of the private sector: Good practices in value chain development require that the chain is driven and managed by the private sector, it is the engine of value chain and it is able to take the risk. Unfortunately, despite several invitations large commodity processors in Iringa (Ivori, Dabaga and Crispo) did not attend both the pre-selection and selection sessions. Their presence was aimed at seeking their commitment to invest in those value chains. Changes in VCs approach: There was a change in approach from one proposed in the submission whereby the Consultant had planned to hold two workshops, one for the selection of commodities and another for reviewing the findings and investment plan. In order to improve the objectivity of the commodity selection process the Client advised the Consultant to have three workshops for pre-selection, selection and review of findings and plan. The process reduced the time available for the Consultant to undertake the Rapid Market Assessment as the list retained in the pre-selection phase was relatively long. Also, the need to synchronize time with the Client for the workshops affected the initial plan. Limited up to date data: Background data for some variables in the region was outdated, the 2007 Regional Profile had some of its data taken in 2005. The data could not be adequately updated through the VCA study process. Additional commodity for Iringa: The Client had advised the team to add one more commodity to the list (tomato) because of SIDO’s experience in maize commodity did not promise to be able to perform well in terms of MUVI key objectives. Tomato was added to the list making the studies take longer than planned.


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1.5 Structure of the Report This report is comprised of twelve sections which begins with introduction of this assignment and proceeds with a brief profile of Iringa region in section one and two respectively. Section three presents a detailed analysis of the market of sunflower oilseeds both domestic and overseas. In section four, a description on technical aspects as well as best practices in sunflower cultivation is provided and it is followed by social-economic aspects in section five. The core part of this report which is the value chain analysis (VCA) of sunflower oilseeds in Iringa region is presented in section six and it is followed by governance in this value chain in section seven. Gross margin analysis is provided in section eight whereas concomitant activities relevant to the development of the value chain are discussed in section nine. Section ten highlights the institutional and regulatory framework in this sub-sector analysis. Opportunities and constraints patterning to the overriding objective of development of rural enterprises in Iringa region is widely discussed in section eleven. This report is culminated in section twelve where full proposals on the value chain leverage points for intervention are discussed. This report also contains a number of annexes and tables.


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SECTION II: IRINGA REGIONAL PROFILE

2.1 Geo-climatic Condition of Iringa Climate is a combination of elements that mainly include temperature and rainfall. In practice, effective rainfall is the amount ultimately available to the vegetation. this is the more important factor than total rainfall. Altitude, topography and vegetation influence climate greatly, resulting in micro climate in specific localities and macro climate in larger areas. Iringa region has a climate influenced by several factor into the formation of three distinctive climatic zones. These are the Highlands zone, the Midlands zone and the Lowlands zone. The Highlands zone lies at an altitude of 1,600 - 2,700 metres above sea level. This area includes the eastern fringe of Iringa Rural and Mufindi districts; the central and eastern part of Njombe, Ludewa and Makete districts. Temperatures are normally below 150 C with rainfall ranging between 1,000 to 1,600 mm per annum, falling in a single season from November through May. The dry and cold season occurs after the rain season. This lasts from June to September. The Midlands zone lies at an altitude of 1,200 to 1,600 above sea level. This zone constitutes the central part of Iringa region covering Mufindi, parts of Njombe, Ludewa and Makete districts. Temperatures range from 150 C to 200 C, with average rainfall of between 600 and 1,000 mm per annum The Lowlands zone has an altitude of 900 meters to1,200 above sea level. This zone includes the low lying northern part of the Iringa Rural district along the Ruaha River. Temperatures vary between 200C to 250 C with low rainfall ranging between 500 and 600 mm per annum.

SOILS Iringa region has red/yellow, well drained and highly weathered and leached clay soils in high altitude areas. The Midlands areas are occupied by intermediate clay soils which are characterized by being moderately drained and leached. The lowlands are occupied dominantly by red brown loams and are highly fertile.

TOPOGRAPHY Iringa region is generally dominated by the Kipengere and Livingstone mountain ranges in the southern part of the region and the Udzungwa mountains separating Iringa and Morogoro regions in the east. Northern parts of the region are relatively flat, high plains cut by the eastern arm of the Great Rift Valley in which the Great Ruaha river runs. The region is further characterized by the presence of a big plateau portion which forms the common landform of the region.


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DRAINAGE Iringa region forms part of the Indian ocean drainage zone. The Great and Little Ruaha rivers join the Rufiji river outside the region to form part of the Rufiji River Basin. The Ruaha river flow is seasonal although, there is marked water flow during the rainy season. Then the water becomes heavily loaded with sediments. The water in the Mtera Dam comes from the Great Ruaha River. The central plateau of the region divides the catchment into northern drainage and southern drainage. The rivers draining north all merge into the Great Ruaha and those draining south join the Rufiji and the Kilombero rivers. Most of the southern part of the region drains into Lake Nyasa and which via the Shire and Zambezi rivers also drain into the Indian Ocean.

AGRO-ECONOMIC ZONES An agro-economic zone is an area in which agricultural conditions are sufficiently homog enous to warrant the adoption of a single agricultural policy. Iringa region can be divided into three distinct zones on the basis of economic activities, topography, altitudes, climate and vegetation. The three zones are The Highlands zone, The Midlands zone and The Lowlands zone.

Table 2.1: Agro-economic zones of Iringa region Zone Location General

characteristics Economic activities

1 The Highlands

Kilolo district: Kilolo division Mufindi district Ifwagi division Njombe district Lupembe, Igominyi and Imalinyi divisions Ludewa district Liganga, Mlangali, Mawengi divisions Makete district Most of the district

Temperatures below 150

C Rainfall between 1,000 and 1,600 mm er annum.

Crop farming: maize widely cultivated; bananas, garden peas (green peas), tea, coffee, wheat, pyrethrum, temperate fruits. Livestock keeping includes dairy cattle, pigs and sheep.

II The Midlands

Iringa Rural district Mlolo, Kiponzelo, Kalenga divisions and Kihorogota and Nduli wards of Ismani division. Kilolo district Mazombe division Mufindi district: Sadani and Malangali divisions. Njombe district Makambako and

Temperatures between 150 and 200 C Rainfall average between 600 and 1,000 mm p.a.

Crop farming: maize, beans, sweet potatoes, cowpeas and fruits. Livestock keeping: includes cattle and dairy farming, sheep, pigs and goats.


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Wanging’ombe divisions Ludewa district Parts of Mawengi, Masasi and Mwambao divisions Makete district Luwa ward

III The Lowlands

Iringa Rural district Pawaga and Idodi divisions, Katenza, Izazi and Malengamakali wards of Ismani division Kilolo district Mahenge division Ludewa district Parts of Mawengi, Masasi and Mwambao divisions

Temperatures between 150 and 200 C Rainfall: 500-600 mm p.a.

Crop farming: drought resistant crops (sorghum, cassava) groundnuts, paddy, bananas, vegetables, fruits, Livestock keeping: cattle, goats and sheep, donkeys.


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Iringa region is located between latitudes 60 551 and 100 301 south of the Equator and between longitudes 330 451 and 360 551 east of Greenwich. To the north of the region are Singida and Dodoma regions. It borders Morogoro region in the east and Ruvuma region in the south. The region’s total surface area is 58,936 sq. kms made up of 53,342.8 sq. kms land area. More than one third of the total regional surface area is in Iringa Rural district. Table 3 shows the different geo-economic zones of Iringa. Table 2.2: Geo-economic Zones of Iringa Region

Zone General characteristics Main economic activities Highlands Temperatures below

150C Rainfall between 1,000 and 1,600 mm per annum.

Crop farming: maize widely cultivated; bananas, garden peas (green peas), tea, coffee, wheat, pyrethrum, temperate fruits. Livestock keeping: dairy cattle, pigs and sheep. Forestry Products: timber

Midlands Temperatures between 150 and 200C Rainfall average between 600 and 1,000 mm p.a.

Crop farming: maize, beans, sweet potatoes, cowpeas and fruits. Livestock keeping: cattle and dairy farming, sheep, pigs and goats.

Lowlands Temperatures between 150 and 200C Rainfall: 500-600 mm p.a.

Crop farming: drought resistant crops (sorghum, cassava) groundnuts, paddy, bananas, vegetables, fruits, Livestock keeping: cattle, goats and sheep, donkeys.

Source: Iringa Regional Socio-economic Profile, 2007 Iringa Rural has the largest area with 39% of the total regional area followed by Njombe that is 19%. Makete makes 6%, Ludewa 11% and Mufndi 12%.Iringa Rural has the largest area with 39% of the total regional area followed by Njombe that is 19%. Makete makes 6%, Ludewa 11% and Mufndi 12%. The region has a total of 5,168,180 hectares out of which 41% is available for agriculture, 29% was allocated for wildlife reserve and 9% for forest. Other uses accounted for 17%.

For details of land distribution refer to Annex (…. Land in Use Hectares per District)


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2.2 Regional Demography

The 2002 Population Census indicated that there were 1,490,892 people in the region with an inter-censal (1988 – 2002) increase of 25%. Population growth in Iringa is largely due to population momentum as annual growth rates between censuses has been declining, it was 2.7% in 1967 - 1978, 2.6% in 1978 - 1988 and fell to 1.6 in 1988 – 2002. Projection puts the 2002 – 2012 annual population growth at 1.1% with Iringa (U) having the highest growth at 1.5% due to immigration, Ludewa is expected to grow at 1.4% and Njombe at 1.3% while Makete is expected to have a near zero growth (at 0.1%). The main tomato growing districts (Irings (R), Kilolo and Njombe) do not seem to face a threat in terms of labour supply in the long term as they experience relatively higher population growths (Table 2.3). Table No. 2.3 Distribution of land area in hectares according to broad areas of land classification by district, Iringa region, 2006.

District Projected Population Average

population per sq. km.

2008 2009 2010 2011 2012 2002 2012

Iringa Rural 261,656 264,535 267,445 270,386 273,361 12 14 Kilolo 218,451 220,853 223,283 225,739 228,222 30 34 Makete 106,411 106,518 106,624 106,731 106,838 33 34 Mufindi 297,650 300,329 303,031 305,759 308,511 46 50 Njombe 452,887 458,775 464,739 470,780 476,900 42 48 Ludewa 139,304 141,254 143,232 145,237 147,270 23 26 Iringa Urban 116,311 118,055 119,826 121,624 123,448 665 775 Total/Regional

1,592,037

1,609,549

1,627,254

1,645,154

1,663,251 29 32

Source: Projection based on growth parameters provided by NBS, found in

Iringa Regional Profile.


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2.3 Regional Administration

Administratively, the Region is subdivided in seven districts namely; Iringa Municipal, Iringa Rural, Kilolo, Ludewa, Makete, Mufindi and Njombe. The districts are sub-divided into 33 divisions, 138 wards and 720 villages. The table on the right provides more information on the region administration set up.

Table No. Administrative Setup of Iringa Region District Division Wards Villages Iringa Rural 6 20 119 Kilolo 3 12 81 Makete 6 17 98 Mufindi 5 28 133 Njombe 7 25 210 Ludewa 5 22 76 Iringa Urban 1 14 3 Total 33 138 720 Source: Regional Social Economic Profile, 2007


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2.4 The Economy and Economic Infrastructure2

According to the Regional Socio-Economic profile, Iringa’s per capita GDP in 2004 was Tshs 394,449 (equivalent to USD 479.81 based on average exchange rate of July 1st, 2004), this was 23% percent higher than the Tanzania Mainland average. Between 1997 and 2004 the region’s contribution to the Tanzania Mainland GDP averaged at 5.5%. GDP increased from Tshs 238,929 million in 1997 to Tshs 605,027 million at current prices in 2004, an increase of 153 percent. Agriculture (crop production) and plantation forest resources (timber) and derived spin offs are the major contributors to the regional economy.

Table No. 2.4. Land Utilization in Iringa Region (in Hectares)

Arable land Land cultivated Percent of land utilized

1 Ludewa 455,729 45,695 10% 2 Njombe Urban 62,933 0% 3 Makete 580,000 419,500 72% 4 Njombe District 192,700 138,744 72% 5 Njombe District Council 575,400 202,428 35% 6 Mufindi 676,950 183,150 27% 7 Iringa Rural 1,549,542 440,158 28% Total 4,093,254 1,429,675 35%

Source : District Investment Profiles

In 1996 Iringa Rural district which included Kilolo district and Iringa Urban had about 31.0 percent of the entire road network. In terms of road classification the majority of the network in the region was composed of feeder roads at 38.1 percent and closely followed by district roads at 31.2 percent. By 2003 Iringa Rural district had been split into two districts (Iringa Urban and Iringa Rural districts). The newly formed Iringa Rural district led at 27.3 percent of the total road network in the region. District roads maintained domination with 37.1 percent share of the regional road network followed by feeder roads with 33.2 percent. In the year 2005, Njombe led with 22.1 percent of the entire road length while district roads led by 43.5 percent followed by feeder roads with 30.0 percent. Thus in the three years district roads combined with feeder roads accounted for 69.3 percent in 1996, 70.3 percent in 2003 and 73.5 percent in 2005.

In the nine years between 1996 and 2005 there was marked shift in classification towards district roads. District roads increased by 832.8 kilometers or 40.1 percent. Trunk, regional and feeder roads lost 87.1 kilometers, 178.8 kilometers and 528.7 kilometers respectively. The whole road network itself increased only slightly by 38.2 kilometers or 0.6 percent.

2 There has been no up to date data of Iringa region Gross Domestic Product, most literature including the Regional Profile of 2007 refer to 2004 data.


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Fig. No. 2..1 Iringa Road Network

Source: Tanroads


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Table No. 2.4. Distribution of Road Networks in Iringa Region (in Kms) District Trunk Regional District Feeder Total Percentage Iringa (R) 169.00 178.00 369.80 353.80 1,070.60 16 Kilolo 75.00 83.00 228.50 378.50 765.00 11 Makete 10.00 235.60 277.40 251.00 774.00 12 Mufindi 95.00 160.00 541.60 158.50 955.10 14 Njombe 255.00 200.00 477.50 543.00 1,475.50 22 Ludewa 183.00 80.00 718.00 320.00 1,301.00 19 Iringa (U) 29.00 21.20 295.00 - 345.20 5 Total 816.00 957.80 2,907.80 2,004.80 6,686.40 100 % of Total 12.2 14.3 43.5 30 100 -

Source: Regional Commissioner’s Office, Iringa, 2006 Electricity Power There are initiatives by Rural Energy Agency (REA) to improve rural access to electricity through mini-hydro projects The low level of electrification in rural areas is a challenge, however, for micro and small scale enterprises diesel engines are very prevalent powering village level enterprises such as grain mills and oil expellers. In the villages where the FGD took place none had tomato processing technologies.

2.6 Stakeholders’ Analysis International Fund for Agriculture Development (IFAD) The International Fund for Agricultural Development (IFAD) is a United Nations agency established to resolve structural problems relating to poverty and to the fact that the majority of the developing world’s poor populations were concentrated in rural areas. In MUVI context, IFAD organization has granted Tanzanian government a loan amounting US$19.50 million. In Iringa, IFAD is currently implementing a program on rural financial services and agricultural marketing support development program. Ministry of Industries, Trade and Marketing (MITM) Ministry of Industry, Trade and Marketing (MITM) has developed a programme for Rural Micro, Small and Medium Enterprises (RMSME) Support, known as MUVI. MUVI is intended to support value-chains to deliver sustainable margins to producers in order to increase their incomes and reduce poverty. The Small Industries Development Organization (SIDO) is the implementing Agency for MUVI. Small Industries Development Organization (SIDO)


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SIDO will contract one value chain implementing partner (VCIP) for each of the six MUVI regions. The Ministry of Industry, Trade and Marketing and SIDO will partner with the media implementation partner and the value chain implementation partners, all of whom will be selected on a competitive basis. Local government authorities, microfinance institutions, farmer organizations and rural enterprises will also be involved in various stages of programme implementation. Apparently in Iringa and rest of the regions, SIDO is implementing and other things a new technology in sunflower oilseeds processing. Local Government (LG) This is an important stakeholder in the overall implementation process. As such, it will partner with the private sector under the Public Private Partnership (PPP) spirit. This means that instead of creating internal capacity to implement the project LGs will play a role of sustainability of the whole program especially after three years of program implementation phase. Other stakeholders Other major stakeholder including producers, processors, traders, agronomic and market experts of Iringa are described in the subsequent sections of this report.


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SECTION III: MARKET ANALYSIS

3.1 Product Description and Uses

Sunflower is an oil seed crop. Its seed contains up to 35% edible oil depending on the variety. The main use of the sunflower seed is therefore to produce edible oil. The process of processing to obtain the oil is carried out through crushing of the seed after extracting the oil. The remaining part of the seed after removing the oil is the seed cake which is an important ingredient in the manufacturing of animal feeds.

3.2 Overview of the World Market of Sunflower Oilseeds

The Tanzanian’s annual production of oil seeds was approx.226, 608 tons in 2001/02 of which 35% is sunflower seed. Tanzania is insignificant producer of oilseeds in the world context. The USA, the EU, China, India, Brazil and Argentina dominate production and global market of oil seed. Global Supply: Vegetable oils are derived from a wide variety of plants. Soybean, sunflower and rapeseed are three temperate annual crops, whereas palm oil is a perennial tropical tree crop. The United States and Canada dominate production of oilseed crops, accounting for about 35% of global output. China, the European Union (EU), the Former Soviet Union (FSU) and India are also significant producers. Malaysia, Indonesia and Nigeria are the major producers of crude palm oil. Stemming from high levels of demand from Pakistan and China, palm oil has substantially increased its world market share of vegetable oils. It currently dominates trade in vegetable oils, representing more than one half of world trade in vegetable oils in 2004/05. Consumption of vegetable oils has been increased by 5.1% per annum between 1999-2000 and 2004/05 This trend is mainly determined by population growth and changes in taste. Although each vegetable oil has its own characteristics, there is a high degree of substitutability among the different types. The share of sunflower-seed oil within world consumption of vegetable oils has declined since the mid-1990s, while palm oil maintained its share. Overall, consumption of vegetable oils has grown faster in developing regions during the last decade. China’s demand especially boosts world consumption. The main world consumer of vegetable oils is the EU, whose demand has grown faster than the global average. Asian countries’ demand is important, mainly in China, Indonesia, Malaysia, Pakistan, India and Japan. The United States is a major consumer of soybean and rapeseed oils, while the FSU’s demand is especially high for sunflower-seed oil. Finally, Brazil and Turkey are large consumers of Soya bean oil and sunflower-seed oil. Demand: According to market analysts, there is an increasing global demand for edible oils, due to population and income growth worldwide. The income growth in the China, India and Pakistan, which account for more than 33% of the total world population, is expected to push the growth in the vegetable oil trade. The growth rate in the near future is expected to be 3-4%. The palm oil market is expected to absorb the largest share of


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Consumption growth. Strong growth in oilseed trade relative to meals and seeds is expected to create incentives for increased production in high-oil content oil seed such as sunflower seeds.


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3.3 National Market for the Sunflower Oilseeds Sunflower National Demand and Supply FAO recommends a minimum annual per capita consumption of 5 kg of vegetable oil. With an estimated population of about 37 million people, Tanzania’s minimum national demand for edible oil is expected to be about 185,000 tons per year, but the actual national demand is probably much higher, although there are no reliable figures available. Demand for vegetable oil is growing with the rate of population growth. According to RLDC report (2008), the production of oilseeds in Tanzania mainly focuses on ground nuts (40%), sunflower (36%), sesame (15%), cotton (8%), and palm oil (1%). The palm tree nuts have the highest oil content (46% – 67%) than its counterparts; however the palm tree requires specific climatic conditions which are only found in some parts of Tanzania. Kigoma region is the main producer of palm oil in the country. While there is a large production of other oilseeds such as groundnuts and sesame, there has been no substantial oil production from these seeds. This makes sunflower oil the most important vegetable oil produced in Tanzania. While the production of sunflower oil seeds was varying between 75,000 and 100,000 tons from year 2001 to 2005, it increased in the last two seasons dramatically to more than 350,000 tons (source MAFSC). The corresponding sunflower oil production increased to almost 90,000 tons of oil per year (source MAFSC). Year Sunflower oil (tons) 1999 / 2000 11,560 2000 / 2001 19,409 2001 / 2002 25,056 2002 / 2003 26,986 2003 / 2004 25,515 2004 / 2005 21,325 2005 / 2006 89,614 2006 / 2007 88,753 Although there has been a significant increase in edible oil production (sunflower, palm, ground nuts, and sesame) in recent years, this increase has never exceeded 100,000 tons which in turn has forced the country to import vegetable oil in order to meet its domestic demand. The import is mainly palm oil from Malaysia and Indonesia. These imports are in form of crude, semi-refined, and refined qualities. Year Edible oil imports Palm oil imports 2001 187,000 177,000 2002 157,000 147,000 2003 185,000 167,000 2004 160,000 155,000 2005 258,000 250,000 2006 282,000 268,000 Source MA-POTS, 2007


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Based on the figures above, it can be concluded that annual national consumption of vegetable oil is much higher than the FAO minimum consumption and / or there are significant re exports of vegetable oil to neighboring countries. Whatever the case, Tanzania is a net importer of vegetable oil which is a considerable drain on foreign currency. Due to the high palm oil prices last year, the importation of vegetable oil has become the second largest import item for Tanzania (after petroleum). Although Tanzania is a net importer of vegetable oil, there are significant exports of sunflower seeds and oil, mainly to neighboring countries like Burundi, Rwanda, and Kenya. There are a few exporters who managed to even sell small quantities of oil to the EU, mainly based on their good quality. A good proportion of the Tanzanian consumers prefer local sunflower oil to imported oils (source ESRF study). This is noteworthy as local oil is often not refined and more expensive than imported palm oil. An important by-product of sunflower seed processing is the sunflower seed cake. The seed cake constitutes the rest of the input materials after the oil has been extracted. It makes therefore about 45 kg in every bag of 70kg of sunflower seeds. As there is no substantial animal feed industry in Tanzania, the seed cake is mainly bought by individual livestock keepers and traders. Export of sunflower seed cake fluctuates considerably.


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3.4 Export and Import of Sunflower Oilseed Products

Sunflower oilseeds dominates about 22.9% of the total oilseeds production in Tanzania and over 50% of these oilseeds are planted in four regions namely Dodoma, Kilimanjaro, Arusha and Singida. The oilseed sub-sector is dominantly liquid products (75-80%), typically from imported palm oil (approximately 70%)3. The current total demand stands at 18,000 tons per month. However, this study survey has documented a significant growing interest for sunflower oilseed products among Tanzanians and particularly Iringa residents. There are companies buying sunflower oil and seed cake from domestic suppliers and selling them overseas. Among major sunflower oilseed buyers and processors include in Tanzania include Mount Meru Millers (Arusha), Oils Mills (Singida), Organic Valley Company (Dar es Salaam), BIDCO Oil Refineries (Dar es Salaam) and Murzah Oil Mills (Dar es Salaam). Table 3.1 below summarises export and import of sunflower oilseed products in Tanzania between year 2001 and 2006 as compiled from FAO Statistics Division 2009 (FAOSTAT). Table 3.1 Summary of Trade Statistics of Sunflower Oilseed Products (2001 - 2006) Sunflower Oil Sunflower Cake Year Export Import Export Import

Quantity ( tonnes)

Value (1000$)

Quantity (tonnes)

Value (1000$)

Quantity (tonnes)

Value (1000$)

Quantity (tonnes)

Value (1000$)

2006 575 466 6,789 4,630 405 34 - -

2005 2,762 1,804 185 101 1,091 53 4 1

2004 20 4 1,089 764 8,107 333 - -

2003 11 3 2,380 1,407 4,076 248 - -

2002 114 79 250 148 5,047 254 - -

2001 114 56 227 185 8,017 397 - -

Source: FAO Statistics Division 2009 Based on the data above, Tanzania imports about 90% of edible sunflower oil and exports only 10%. This implies that there is a need of increasing investment in this sector through supporting the enterprises in the value chain as one of the key import substitution strategies. However, looking at the summary of TRA statistics table provided below, only year 2005 resembles the observation above. The rest of the years differ signaling unreliability of data collection.

3 Tanzania imports about 90% of edible oil and large part of it come from Malaysia and Indonesia.


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Table 3.2 SUMMARY OF IMPORTS & EXPORTS OF SUNFLOWER DATA FROM TRA EXPORTS Year 2005 2006 2007 2008 FoB Value 2,138,437,891 814,417,627 2,024,526,957 8,965,963,578 Net Weight (in Kgs) 3,257,924 1,677,475 9,386,313 8,015,886 IMPORTS 2005 2006 2007 2008 CIF Value 145,878,756 5,897,251,484 1,813,752,308 563,959,153 Net Weight (in Kgs) 236,990 6,896,629 1,987,760 648,461

3.5 Price Patterns in Urban Markets Major traded products of sunflower oilseeds is edible oil and sunflower seed cake which is mainly used as key ingredients of animal feeds. Below is the summary of sunflower oil brands and the respective prices collected from various supermarkets in Dar es Salaam. On the part of the cake that results from processing the oilseeds, Table 3.3 Summary of Companies Dealing with Sunflower Products

Company Brand

Retail Price (Tshs)

Wholesale Price for 20lts (Tshs) Package Location

BIDCO Oil Refineries Sun gold 12,000 125,000 5lts Dar es Salaam

Murzah Oil Mills Sundrop 12,000 125,000 5lts Dar es Salaam

Oils Mills Bin Salum 12,000 54,000 5lts Singida

Organic Valley Company Affya 12,000 120,500 5lts Dar es Salaam

Ngo chew Hong Edible Malaysia

OKI pure vegetable 45,000

430,000 20lts Malaysia

Mt. Meru Millers Ltd Sunola 62,000 615,000 20lts Arusha

Mt. Meru Millers Ltd Floral 15,000 140,500 5lts Arusha

SILA Edible Oil Company SILA 9,500 904,500 2lts Egypty

Arej Vegetable Oils Minara 17,000 204,000 3lts Oman

Willow Ton Oil Sunfoil 15,000 490,260 5lts South Africa

Capital Products Sunfry 20,000 491,736 5lts South Africa

Willow Ton Oil D'lite 15,000 490,268 5lts South Africa

Source: Field Survey (Imalaseko, Shoppers Plaza, Shoprite, Magomeni Rtail Shops)


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SECTION IV: TECHNICAL ASPECTS AND BEST PRACTICES

4.1 Production Aspects 4.1.1 Verities and Yields of Sunflower Oilseeds

There are two main varieties of sunflower oilseeds that are grown in Iringa Region and these include Jupiter (traditional variety) and Record (improved variety). Jupiter is white in color with big size seeds and has low oil content. Record is black in color with small size seeds and smooth skin but has high oil content. The most common type (70%) of variety is traditional variety and the use of improved seed is increasing due to training done by extension officers through farmers field schools (FFS). It was also reported that improved seed are easily accessible to farmers obtained through farmer’s seed production programme that produces and distributes qualified declared seed (QDS). Yields: A limiting factor on sunflower production growth is that the oil seeds are produced using traditional farming techniques with little utilization of modern techniques or new agricultural research results. The consequence of this is low yield. TABLE 4.1 : International and Tanzanian Yield of Oil Seeds Crop International Yields (Kg/Ha) Current Practice

Yields (Kg/Ha) Gap of Yields

1. Soybeans 1,870 250 87 2. Groundnuts 1,140 230 80 3. Sunflower 1,370 600 56 4. Sesame 1,200 250 79

Source: FAO 2005 publications In order to fill the existing sunflower yield gap (56%), there is a need to address the question of how best to exploit the potential of domestic oil seed production. It is also necessary to address the issue of low oil content. Good Agricultural Practices: Improved farm inputs increases agricultural production and productivity. Interviewed farmers in three districts (Iringa Rural, Njombe and Ludewa) highlighted that the farmers who employed good managerial practices had better yield compared to traditional methods. A large part of this result was contributed by ongoing Farmers Field Schools (FFS) program in the region for the past two years (2006/07 and 2007/08). The farmers who applied the knowledge managed to improved production of sunflower from less than 400 kg per hector under traditional practices, to about 650kg per hector under improved or scientific method. Fig 4.1 shows the average yields of sunflower per district in 2003/04 season. Fig 4.1: Sunflower seed productivity (per ha) per district in Iringa region


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0100200300400500600

Iringa ® Mufindi NjombeLudewa Makete Iringa(u) Kilolo

Source: sample of agriculture census – Iringa region 2002/03

4.1.2 Ecological Requirements

Sunflower grows best on loam, silky loam, and silky clay loam soils with good drainage and does not tolerate saline conditions. The crop has deep tap root that can obtain water and nutrients up to two meters deep and therefore good for crop rotational and it tolerant to drought, thus making it a suitable for areas with moderate to low rainfall.

Sunflower is grown once per season as indicated in sunflower production cycle or calendar is as indicated in Table 4.2 below:

Table 4.2: Production Calendar for Sunflower Seed Production in Iringa

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Land Preparation Ploughing Harrowing Planting Weeding Fertilizers Application Pest & Disease Control Harvesting Threshing Winnowing Packing & Transport Storage Selling

Source: Field outline June, 2009


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4.1.3 Production System

Sunflower is a crop which, compared to other crops like maize and sorghum, performs well under drought conditions. This crop grows very well in drier areas of the country like Dodoma and Singida, than any other regions in Tanzania due to their favorable climatic conditions4. Sunflower adapts relatively well to a wide variety of soil types. It can be planted over a period of at least three months and is usually cultivated in rotation with maize or sorghum and benefits from the dense mulches of these crops. Sunflower is produced on both pure stand and intercropping systems depending on the scale of production. Smallholder farmers commonly intercrop sunflower with other crops such as maize, cowpeas, sorghum etc. while large scale farmers grow sunflower on pure stand.

In the areas visited in Iringa, and according to regional statistics and records, the majority of farmers produce sunflower intercropped with maize.4.1.4 Crop Husbandry Farm Technology; Poor technology farm is among the factors that limits improvement in a sunflower and other agricultural commodity production and productivity. Below is the situation analysis of farm technology applied for sunflower seed production in Iringa region. Farm implements: Most of land clearing is done by hand hoe and axes, land cultivation is done by oxen (60%) of farming house holds while 30% uses hand hoe and tractor (10%). Simple farm implements are used in performing other activities such as weeding. Farming practices show that sunflower cultivation can be suitably handled using a plough as primary tillage tool. Cultivation is important as it limits moisture stress as much as possible. In other words, the aim of cultivation is to break up limiting layers, destroy weeds, and provide a suitable seedbed and to break the soil surface at the same time to ensure maximum rainfall infiltration as well as to prevent wind and water erosion.

Fertilizer application: The use of fertilizers on sunflower in the region is relatively low compared to maize. It was reported that normally they use Urea SA and CAN. The reasons given are that fertilizer is normally not available or fertilizer is expensive. It was also observed that Maize is usually be considered the primary crop and due attention given to it instead of other crops like sunflower. Fertilizers

Compared to grain crops, sunflower5 utilizes soil nutrients exceptionally well. The main reason for this is the finely branched and extensive root system. The roots come into contact with nutrients which cannot be utilized by other crops.

5 Sunflower normally reacts well to nitrogen and phosphorus fertilization where there is a shortage of these elements in the soil. It is therefore essential that any fertilization program for sunflower should be based on the soil analyses.


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Agro-chemical: No chemical inputs such as pesticides are used for the sunflower. The extension officers who were interviewed confirmed that there is insignificant application of herbicides, fungicides or pesticides applied to sunflowers farms in the region. Labor Force: Labor utilized is either in the form of household family labor, or, in a few instances hired in labor. In the case of family labor, this is generally not monetary valued. Iringa farmers rely mainly on family labor for production sunflower oilseeds.

4.1.5 Pests and Diseases

Unlike maize and other crops, the sunflower grown in Iringa region has little insects and diseases threat. Some insects are occasionally a problem, and a few are worth scouting for, possibly needing treatment once in awhile. At the seedling stage, there is rarely a problem unless a heavy infestation of cutworms is present. Common diseases pointed out by consulted researchers, include the following; Rugose Mosaic (locally known as Ukoma wa Alizeti meaning Sunflower leprosy) as a viral disease which can attack plants at any stage of growing including seedlings. Causative agent (virus) is transmitted by white flies when sucking sunflower juices. The disease leads to leaves shrinking and overall plant underdeveloped. So far there is no chemical recommended to control the disease. Mechanical control is recommended by uprooting the affected plants during early stages of the plant growth. Powdery Mildew (PMD) It is a disease caused by the fungus _Golovinomyces cichoracearum_ var. cichoracearum and can cause serious economic losses in crops growing in warmer regions. The disease occurs late in the season to affect the yield. It causes white 'powdery' growth on upper leaves and other plant parts, which may coat large areas. The disease can seriously reduce the vigour of the host plant hence affecting crop yield significantly . The fungus is spread with wind, water, and mechanical means and survives on crop residue. Disease management relies mainly avoiding the most susceptible cultivars, placing plants in full sun, and following good cultural practices. These measures will adequately control powdery mildew in many situations. Once observed in the field, like any other fungus diseases, preventive measures are the only way to control the disease. This is by application of fungicides before the plant is attached. However, there are no research recommendations available in the country so that the economic viability of this assessed. Insect attack As the plant grows, many insects feed on sunflower foliage, including grasshoppers and caterpillars, but seldom do they cause economic damage. The real stage to be scouting for insect pests is once the flower bud has begun to develop. Head clipper insects which attack the stem right below the head can cause the whole head to fall off, but are not too common. The main threat to sunflower in Tanzania is sunflower moth or banded


39

sunflower moth. Ideally, the adult moths should be identified through scouting, and if present in sufficient numbers, should be sprayed before larvae become established. Once the eggs have hatched and larvae have moved inside the head and seeds, insecticide control is very difficult. Later planting (December or January) can help avoid sunflower moth in most years. Major vermin are as listed in the table below; The other diseases and pests are as listed below in line with corresponding control Cutworms The pest cuts the

seedling at infant stage at the soil line level

Sow chemically treated seed or drench the seeds with suitable chemicals before planting Spray suitable chemicals (if heavy devastation) e.g. Thionex EC or Sevin 85% EC.

Rodents These vermin burrows into the soil to eat the seed

Use suitable rodenticide — mixes it with maize/wheat bran baits on the field. If the crop is sown in wet weather, the problem ceases dramatically.

White flies, and other chewing and Sucking insects.

These pests makes holes/chops the plant foliage. White flies suck the plant sap thereby transmitting plant diseases and malformations.

Use of fumigative or systemic chemicals e.g. thionex or actellic EC. Read the instruction given on the chemical leaflet for safe and effective use of these chemicals.

Rots: root-rot Stem-rot, headrots. (sclerotinia rots)

The root stem or and heads of the crop have black watery lesions of rots with foul smell

Use good quality seed chemically treated with suitable fungicide and pesticides. Observe and practice crop rotation in the field. Burn crop residues to break the pests and disease cycle in the field.

Wild birds/vermin e.g. quelea wild doves etc.

They eat all the seed on the flowers soon after flowering; and if not controlled they can lead to 100% loss of the crop

Farmers should sow the seed at 1 time period in the area to share the vermin pre-assure /load. Seed sown in one area if possible m ust be of same variety so as to ripen at one time. Scare the birds/put suitable measures in the field soon after flowering (1 month). Avoid bushy and forest neighboring area for sunflower growing fields if/where possible.


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4.2. Harvesting and Yields.

Harvesting

Maturity of sunflower depends primarily on the varieties. Long varieties that include Records mature at a period ranging from 100-120 days, while shorter varieties that include hybrids like CRN 1435, CRN 1080 etc matures a bit earlier i.e. 90-100 days after planting. Variations within the variety are due to seasonal effects, especially temperature and availability of soil moisture. According to ARI Ilonga, farmers should harvest sunflower immediately after matured for better quality seeds. Maturity of sunflower is remarked by changes of color behind the head/floral part; the greenish color turned into yellow and light brown. Delayed harvesting allows unwelcome changes in seed-oil composition; for once the plants are physiologically mature i.e. when the seed yield and oil content are highest, free fatty acids increase. If the sunflower plants are invariably matured, selective manual harvesting is usually possible only on small holder crops where the labor is cheap and plentiful, or to provide employment when other work is scarce. Techniques and tools The heads are cut from the plants and thrown into the tray or clean surface. Common practice it include the use kitchen knives, sickles and other sharpened tools. Seed is ready to harvest when the back of the sunflower heads turns yellow or brown, and seed moisture content is 10-12 per cent. The drying is attained by spreading sunflower heads under open sun over spread pieces of sacks, garments or nylon paper to avoid contamination. The dried heads are beaten with the help of wooden or bamboo sticks to separate out the grains. Threshed seed should be cleaned as soon as possible and dried. Under improved sunflower production and technology, combine harvester can be employed but it require evenness of growth, ripening and moderate for successful mechanical harvesting. For this reason alone it is essential to obtain seed of a known variety, grown by reputable seed breeders like Msimba farms. Seed heads can also be threshed with modified hand or mechanically powered maize shellers provided these are accurately adjusted, operations which also provide employment. Storage of sunflower seeds After threshing, winnowing is done to get clean seeds. Thereafter is transported to home place using available means of transport. The common means of transportation In Iringa ox carts and bi-cycles. The seeds are dried in sun for 2-3 days to bring down the moisture content to 5.0 per cent. The seeds are stored in sisal or nylon bags, in a ventilated warehouse/room. There should not be high humidity and moisture inside the storage houses. Yields Sunflower production in Iringa is mostly grown as an intercrop. Very few farmers grow it in pure stand. The seeds used mostly are the traditional ones, and there is very little


41

application of inputs like fertilizers and chemicals for control of pests and diseases. All these factors contribute to very low yields per acre in Iringa. In the surveyed areas, it was observed that yields range from as low as in 4 in some parts of Njombe. to 7 in Iringa rural district. National average yield per acre is 300kg per acre and this one of the lowest among the sunflower producing countries, again due to the reasons mentioned above. Highest yields reported Based on the FGD information, the highest yields reported is at Magulilwa village in Iringa rural district was 7bags. However the DALDO reported range of 15-20 bags. Meaning that, the highest yield recorded at producer level is 15bags. Meanwhile, consultation with MATI Ilonga experts and brochures provides that, with the use of record yielding varieties, a farmer can produce up to 10bags and 16-20 bags if the same will apply Hybrid variety. Consultation with Tanseeds Company during Nane nane exhibition in Morogoro revealed that 10-20 bags of 50-60kg record can be produced depending on the variety used. One expert at Tanseed reported individual yields attainment of 20 bags when he was in Sumbawanga/ and it was the highest yield recorded at farmers level. Agricultural Research Institute Ilonga detach had nearly similar information sunflower yield volume i.e. 10-16 bags of 50-60 kgs. TOSCI officer Njombe reported a total of 10bags per acre as a maximum a farmer can produce under the present technology and seeds varieties.

4.3 Post Harvest and Handling

Bulking is normally done by packing the oilseeds into sacks/bags and then storing them in a warehouse or collection centre ready for selling. If farmers are not organized the bulking is often done by middlemen who sell the crop later to the processors. This practice normally results into low prices for farmers as their potential bargaining power is not fully utilized. In case farmers are organized and / or operate a collection point, they will do the bulking themselves and claim back the price differential from the middlemen. The collection point may be owned and managed by the farmer groups or the buyer. In the last phase RLDC in collaboration with processors established about 15 collection points in its sunflower projects. These centers are equipped with weighing scales in order to minimize sales basing on volumes for better prices. Furthermore, each centre was equipped with 500 -700 sunflower collection bags depending on the size of the centre in order to reduce transaction costs to both farmers and buyers.


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4.1 Sunflower Oilseeds Processing

Technically appropriate sunflower oilseeds processing go through the following steps: Step 1: Drying stage - Sunflower seeds received at a processing plant can have some moisture content. This excess moisture has to be corrected to allow proper dehulling as well as for the needs of the subsequent processing equipment. Step 2: Cleaning - Foreign materials from the incoming seed negatively affect the operation of the crushing plant and the quality of the oil produced. The dried seeds must be cleaned properly in order to keep smooth operationalization of the milling equipment as well as maintain high quality of the products. Step 3: Dehulling - This is optional stage, and depends on the market needs. Based on the technical literature, a sunflower seed contains 23 – 25% fiber or hull. Therefore, the processor must decide whether the seed should be dehulled. This decision will determine some of the qualities of produced meal or animal feeds. Leaving most of hull in the meal will result into fiber content of approximately 18 – 20% and a protein content of 28 – 30% in the final meal product (mashudu6). Removing approximately 75% of the hulls by dehulling will allow the processor to produce a meal with fiber level of 11 – 13% and 40 – 48% protein level. Thus, target market will influence the decision of whether to dehull and to what extent. Whichever decision may be taken, processing undehulled sunflower seed will result in waxes being extracted from the hulls – these hulls will add to refining problems and may influence the quality of the final product. Step 4: Pre-heating and flaking - This is an important step for preparing the seed for oil extraction. This involves breaking the cell walls to expose the interior cells for mechanical pre-pressing and solvent extraction. Step 5: Cooking (conditioning) - It is very important step consisting of heating the flaked or broken seeds. The aim is to coagulate the protein, reduce the viscosity of the oil and thus make it easier for the oil to separate from the ruptured cell. Step 6: Full mechanical pressing - This is the final stage in terms of extracting sunflower oil. It involves pressing the seeds using expellers. Step 7: Oil Treatment - Oil recovered from the expeller contains fines which must be removed before degumming. Step 8: Packaging and Labeling - This step involves packaging the refined oil into specified containers/tin ready for sale to the consumers. Packaging depends on the taste of consumers. Step 9: Storage - Well packaged sunflower oil needs to be stored in cool dry place before it is distributed to the consumers. Step 10: Distribution channels - This is the role of marketing department which is designed in accordance with target customers. Once processed, sunflower seeds results into two main products: Sunflower Seed Cake and Sunflower Oil (edible oil). a) Sunflower Seed Cake: Sunflower seed cake is used by animal feed processors in

Iringa and other regions in the country to produce animal feeds whereas sunflower liquid oil is traded as semi-refined edible oil. It is sold locally in Iringa and

6 This is local name that means sunflower cake.


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nearby regions, especially Dar es Salaam. According to FAO Statistics Division (FAOSTAT), Tanzania has recorded a small amount of sunflower cake exports to Egypt, Kenya, Uganda and Rwanda. Countries that have imported sunflower cake from Tanzania include Kenya, Rwanda and Uganda.

b) Sunflower Oil: Sunflower oil is the preferred cooking oil by many Tanzanians,

including the important segment of hotel and restaurant owners, who like its nutritional content, flavor, affordability and availability7. Despite the fact that there is a number of sunflower oil millers distributed across major towns, cities and some rural areas in Tanzania, the supply has not yet matched the existing demand. This is why the country still imports sunflower oil from other countries. Based on the TRA statistics, Tanzania imports sunflower oil from Kenya, Oman, United Arab Emirates, Egypt and South Africa. The importation is partly attributed to the seasonality of sunflower oilseeds production and low quality product produced by local processors.

All oilseed millers produce seedcake, which is a key raw material in animal feed manufacturing. Small millers visited had no records concerning animal feed volume, markets. It was also difficult to access the secondary data information on the same. In Dar es Salaam, Coastal Animal Feed and Inter Chick amongst others purchase oilcake. Prices range between Tsh 100-150 /kg. Prices in Iringa range between Tsh70-100/kg at factory gate. Oilcake is packed in 25kg or 50kg bags. A 60kg bag of seeds yields 30kg of seed cake. Sunflower seed cake is occasionally exported. Soap from Sunflower oil. The Soap Sub-sector in Tanzania comprises a total of 16 companies of which 13 are stand-alone factories and only 5 have linkages to edible oil operations. The geographical distribution of factories is as indicated in Table 5. Average capacity utilization is less than 30%, for the majority of those still operating. Table – lists industries with edible oils operations.

7 Sunflower is lower in saturated fats than most vegetable oils.


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Table 4.3-: Information on the Soap Industry with Linkage with Edible Oils in Tanzania

COMPANY LOCATION PLANT INSTALLED

INSTALLED CAPACITY TONS/ANNUM

PRODUCTS

1 Bobby Soap DSM 1975 40000 LS, TS, D, C, E

2. Abood Soap Industries

Morogoro 1994 40000 LS,E

3. Bidco Tanzania Ltd

DSM 1995 25000 LS,E

4 Tradeco Soap Ltd

DSM 1996 10000 LS,E

5. Murzah Oil DSM 2001 10000 LS,TS, E Source: DAIPESA Reports Key Note: LS = Laundry Soap, TS= Toilet Soap, D= Detergents, C= Cleaning Products, E= Edible Oil, Fats- either directly or via group or subsidiary company.

Domestic Supply and Demand Conditions & Vegetable Oil Trade in Tanzania Table 4.4-: Average Content of Oil in Various Oilseeds Oilseed Production 2000/01 Mt

Estimated Crude Oil Liter

Oil Content (%)

Average Oil Content (%)

1. Sunflower 79,359 27,776 25 – 45 35% 2. Cotton seed 77.907 15,582 15 – 25 20% 3. Groundnuts 43,635 19,199 38 – 50 44% 4. Sesame 25,707 11,568 35 – 55 45% Total 226,608 74,125

Source: Field survey The national demand for edible oil is estimated at 200,000 Mt (2008). This estimation is a result of an FAO recommendation of a minimum per capita consumption of 5lt per year Demand for vegetable cooking oil is growing at a rate about 3% per annum proportionate with the current population growth rate of 2.9% (2002 census). National production is around 90,000 Mt of all oil seeds. This indicates that Tanzania is a net importer more than 100,000 Mt of edible oil.


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Table 4.5: Vegetable oil Trade in Tanzania 2002 (censes) 2008 estimates Oil Demand (Mt) 170,000 200,000 Oil National Production (Mt) 74,125 ?/ Gap (Mt) 95,875 Imports (Mt) 164,000 ?? Oversupply (Mt) -68,125

Source: Field outline Significant quantities of vegetable oils are imported in crude, semi-refined and refined form. At present, there is a growing trend of importation of these semi-refined products. Total importation for the year 2001 reached 163,400 Mt. These imports consist mainly of palm oil from Malaysia. The Vegetable oil prices in Iringa and Dar es Salaam markets as indicated in table 4.6 Domestically processed oil has difficulties competing with imported oil on price, but a good proportion of domestic consumers prefer the locally produced oil. Table 4.6 Local Oil and Imported Prices in Tshs LOCAL OIL 0.5 liter

(Tshs) 1.0 Litters (Tshs)

5 Liters (Tshs) 20 LITER (Tshs)

Iringa Region 900 1,500 -1,800 8,000- 10,500 34,000 – 42,000 Dar es Salaam 2,800 –

3,000 12,500 - 15,000 50,000 -60,000

IMPORTED OIL 1 LITER 3 LITER 10 LITER 20 LITER Iringa 2500 - 3000 7500 - 10000 20000 - 25000 38,000 - 60,000 Dar es Salaam 2500 - 3000 7500 - 10000 20000 - 25000 38,000 - 60,000

It will be noted from the above that imported oils are price competitive with local oils in Iringa, despite the transport and packaging costs.

4.5 Environmental Aspects Sunflower is a drought tolerant crop, that is deep rooted, and has an extensive root system. Therefore, at production level the plant itself improves the environment through improving soil structure. No adverse effects were identified on the use chemicals for farming, because their use is minimal. The impact of oil processing on the environment is a researchable subject as processing starts spreading, and larger volumes are procedded.


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SECTION V: SOCIAL-ECONOMIC ASPECTS

5.1 Contribution to Income One of the key MUVI project objectives is to improve income of the rural poor by involving them in beneficial value chains. Sunflower is among oil crop grown nearly every district of Iringa region. It is grown as food but to some extent; it is grown for commercial purpose for increasing income to farmers and other actors along the value chain. Fortunately, this crop thrives well in nearly all parts of Iringa region with an ability to withstand adverse conditions. Also the processing technologies are easily accessible and affordable. This implies that, sunflower crop can be traded as unprocessed seeds and processed for income generation. Based on the MAFS (2005) report, more than 28,750 tons of sunflower seeds are produced in Iringa region per season. This is equivalent to 442,308 bags of 65kg packing capacity. Since the average selling price is TZS 24,389 per bag, the value sunflower produced per season is TZS 10,787,449,812 implying incomes generated in the region per annum.

5.2 Employment creation One of the key objectives of MUVI project is to create employment among rural communities of Iringa region. According to MAFS report (2005), a total number of 45,079 households are engaged in sunflower production. Based on FGD, each household are estimated to operate 2-3 acres (or 2.5 acres). If MUVI project is to stimulate production through acreage expansion by 25%, new employment to be created will be 11,269. Consequently, an estimate of TZS 47,833 is a return to labor per acre (consult table…….. on gross margin). Since compensation for person day in Iringa region is averaged TZS 2000, a total of 23 days per acre (equivalent to a month) are spent in sunflower production. This implies that, one person will be fully engaged in one acre per month. With a total area of 50,425 acres (or 20,170 ha) which is under production in Iringa region MAFS (2005), a total of 50,425 Iringa workforce are in sunflower production. The increase of 25% land area, it will employ about 12,606 persons which will reduce unemployment level in the rural. Sunflower seeds transportation is another important area that will open up employment new opportunity. Presently, FUSO trucks that have loading capacity of 7 tons are commonly used. The number of workers in one include driver and two conductors i.e. three persons per trip. If a vehicle is to operate for 24 consecutive days i.e. one month, it will move a total of 168 tons per month. Since sunflower yields in Iringa totals 28,750 tons per season MAFS (2005), about 28 FUSO trucks are estimated operating in the region for six selling months. This implies that, more than 84 persons are employed in transportation of sunflower seeds per six years. This let alone loading and off-loading laborers. MUVI project intent is to expand the subsector by 25% that will translate 21 employment posts for Iringa community. In that regard, sunflower production expansion will create a total of 23,896 new employment opportunities.


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5.3 Households food security Sunflower contributes to households’ security in many ways. Households who engaged in sunflower production use part of the yields for consumption. During FGD, farmers informed that, 1/6 or 15% of the harvested sunflower seeds are retained for home consumption. Meanwhile, quantity of sunflower seed cakes obtained is used to feed animals for increased volumes of animal products such meat, eggs and milks. Also there is a growing experience that, sunflower oil milling residues provides better manure for soil fertilization. As for the case of sunflower plot established around Mapanda oil mill in Mufindi district was been performing well compared to the adjacent plots.

5.4. Gender aspects Gender participation in sunflower production activity differs as from one node to another. For instance, more women (estimated as 65%) are engaged in sunflower production than men. However on subsequent stages of the VC, male dominated activities over women. The project will therefore target to attract women to take up opportunities through raising and sensitization. It is proposed that pilot activities to be subsidized by project should have more women in order to attract them. There is a need for gender mainstreaming expert in the implementation team.

5.5 HIV/AIDS Iringa is one of the leading regions in terms of HIV/AIDS transmission, it has been established that increased business interaction is closely related with HIV/AIDS transmission. This has been notable at Mafinga where timber traders have flourished and as a result there is higher prevalence of HIV/AIDS. The project will liaise with organizations that undertake campaigns against HIV/AIDS and counseling services. Meanwhile MUVI project expects to offer HIV/AIDS patients with healthy proven sunflower oils which are free from fatty. Sunflower oil has been identified as a healthy oil to use for cooking, salads, and in skin care products. Many types of cooking oils traded in the country have great healthy hazards including heart diseases and consequently danger to HIV/AIDS patients. Eating less (saturated) fat (sunflower oil) is the most important change you can make to decrease your risk of heart disease

5.6. Impact on poverty reduction As mentioned above, sunflower crop is grown mainly for income generation. Meanwhile, it has greater opportunity to increase following open up and rapidly growing market of sunflower oil. As described in the gross margin analysis, sunflower seeds generates about TZS 10,787,449,812 per annum. After MUVI intervention, sunflower agribusiness will generate incomes of TZS 13,484,312,265 (25%) by 2011 hence contribute to income poverty reduction.


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SECTION VI: STRUCTURE OF THE SUNFLOWER OILSEEDS VALUE CHAIN IN IRINGA

6.1 Functions and Actors in the Value Chain Sunflower value chain in Iringa consists of several actors and functions including improved technologies R&D institutions, seed production, certification and distribution, input suppliers, BDS and others, summarized in Table 6.1 below. Table 6.1: Functions and Actors (Participants) in Sunflower Chain - Iringa Region Actors Functions Research Predominantly the Agricultural Research Institutes (ARIs) breeds crop

seeds. ARI –Uyole located in Mbeya region, INGERI is a branch in Njombe. Key function is to breed, evaluate and produce breeder seeds / basic seed

Seed producers

Basically are government foundation seed farms. Dabaga farm is located to southern hinglands. Produces basic sunflower basic seeds. On farm seeds growers. These are small-scale farmers who been approved to produce (QDS) improved seeds.

Seed Certification

Tanzania Official Seed Certification Institute (TOSCI) is for control and certification of produced improved seeds to be supplied to agro-dealers. TOSCI is located in Njombe

Input suppliers

There are two types of input suppliers in sunflower value chain. Hard inputs including seed, fertilizer, agro-chemical and farm implements e.g. hand hoes, power tillers and tractors. Soft inputs including Extension services, financial services. Hard inputs are supplied by private companies. There about 500 listed agro-dealers in the region. Tractors suppliers are not included in the list. Auto Sokoni Company is the major suppler of power-tillers. Soft inputs particularly extension services are provided mainly by the government through LGA. Financial services are limited to few actors e.g. medium processors but not farmers. Other Business Development services (BDS) are also provided by SIDO through ODOP Program, NGO e.g. Njombe Agricultural Development Organization (NADO)

Farmers Sunflower seeds are grown by small scale farmers (1-5acres). The records indicated that there about 37, 496 households who are involved in production of sunflower. About 20,170 ha (2006) were under production

Traders Three types of traders were identified trading in the sunflower seed including primary buyer, primary brokers, secondary buyer/ agents. All the buying is done at farm gate. No collection center.

Processors Two types of processors. Service provider oriented processors, these are both small and medium scale firms. It accounts about 70% of the processing business. Example are NJODECO in Njombe. Large/ medium


49

scale owners factory who also are buyers of sunflower seeds and processors. About 30% of the processing business is done by them. Examples are Ndondole, and Ivori located in Iringa Municipal.

Wholesalers Wholesaling is done at factory gate. Retailers Retaining id done by small-scale distributors including kiosks, venders,

road side stall towns within the region. It was reported that insignificant number of urban buyers from Dar es Salaam do the retailing in the city.

Source: Field Outline The above actors, functions and products flow are schematically represented in the Channels Map below (Figure-------). There are five channels through which sunflower products move from the farm to the final consumer. Figure1: Sunflower Channels Map in Iringa Region

Processors (Local & Regional---- %

Export

Retail

Trade

Processing

Primary trade/ Collection

Production

Inputs Supply

Research

National HH Consumption of edible oil & seedcake

Inte

grat

ed S

mal

l-Sca

le

Farm

er C

hann

el 1

0 %

HH Consumption

1 %

Markets

Importers Agro-dealers at district level (Stockist) 100

Input voucher system distributors (300)

Rural Brokers/ Agents

Secondary Trader

Market Retailer

District / regional

Consumption

Edible Oil & Seedcake

Export

Channel 2: Commercial S/flower

Channel 3: Processors

Channel 4: Brokers

Sunflower Farmers households in Iringa Region

Institutional Consumption

Shops/ supermarkets

RI-Ilonga, Naliendele & Seed Farms (e.g. Msimba,)

Imported Seeds: QDS produced by selected farmers

Channel 5: Exports

Channel 6: Animal Feeds

Channel 1: Integrated Smallholder


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Channel 1: Integrated Smallholders Channel Represents about integrated small-scale farmers who almost performs all functions from seed production to final stage until reach the consumer table. This channel consists of smallholder farmers cultivating an average of two acres primarily as a cash crop and source of extra income. It is called integrated system in the sense that farmers undertake production, harvest and transport to the selling points in small quantities (by bicycles, handcarts or on human heads). It produces the largest volume of sunflower. Backyard, district and regional processors are the main buyers. Other buyers are the brokers and agents of the processors. This channel accounts for approximately 60% of marketed produce. Channel 2: Commercial Sunflower Producers Channel This is the second largest producer including contracted individual farmers and institutions such as prisons and JKT farms. Some processors such as Mohamed Enterprises also produce part of the sunflower they process. The major processors in Iringa include IVORI, NJODECO and Ndondole and most of them use brokers to purchase additional quantities of sunflower oilseeds they need from the smallholders on their behalf. Wholesale markets for processed sunflower edible oil and seedcake are located at district, regional and national levels. Dar es Salaam is the largest market in the country. Dar es Salaam sunflower oil processors source sunflower oilseeds from upcountry regions such as Iringa, Mbeya, Morogoro, Dodoma, Singida, Ruvuma, Tanga and Arusha. Sunflower oil traded in Iringa markets and interregional markets accounts for about 70% of the sunflower oil business. Wholesale sunflower oil traders normally operate either as members of an association or as individual wholesale traders. The main sources of produce for these wholesalers are the ordinary smallholders from sunflower producing areas in the country including Iringa region. Retail Traders: Retailers buy sunflower oil from small processors which they package in plastic containers either gallons (5lts) or debe (20lts). Common transport used by retailers from the these processors to carry the sunflower oil to their respective kiosks include push carts, bicycles, passenger buses or a jointly hired pick ups. Transport cost depends on the load and distance, but a debe of oil typically cost Tshs 1,000 – 1,500within 10kms. In many areas, the retailers would pay cess to the local government which vary from one authority to another. Suppliers to institutional consumers such as supermarkets, schools/colleges and hospitals normally buy sunflower as wholesalers directly from the processors. Sometimes, the institutions may also buy directly from the processor. Similarly, restaurants and hotels are key buyers from the processors and the amount purchased differs such that large hotels do contract suppliers through tenders, smaller ones purchase sunflower oil on retail. The relative size of these market outlets was not established but informed stakeholders estimate that household consumers account for over 90% of total retailer sales. The channel has


51

experienced growth among all the four channels. It was noted that actors in this channel are young men and women. Channel 3: Processors This channel accounts about 30% of the sunflower produced in the region. Trading of sunflower oilseeds commenced at the farm-gate and two categories of buyers have been identified. The farm gate buyers are either primary buyer (who buys and either sale to secondary buyer or process it and sell oil) or independent secondary buyer for their own factory in town. None of these have any contractual agreement with farmers and they vary from season to season. According to the study, producers are able to sell all sunflower oil they produce. Most buyers local dealers in the region which includes Ndondole and Ivori who used to buy sunflower seeds in the past but are now out of the business. It was also reported that during off season processors source sunflower seeds from outside the region such as Mbeya, Dodoma, Morogoro and Singida. All the sunflower produced in Iringa and indeed in the country is processed to edible oil. Processing is done at various scales, at the backyard, district and regional scales using different types of equipment. The main reasons for high growth in channel 3 reported to include; high local demand for sunflower oil particularly due to the growing health consciousness (Note: it is believed that sunflower oil has very low levels of cholesterol believed to be the source of cancer); increase in purchasing power especially in the urban areas where incomes are relatively high, stable supply of sunflower oilseeds particularly due to improvement in the road infrastructure that has reduced transport cost from the upcountry and low production costs (packaging materials, no ingredients or additives), low storage costs (both oilseeds and oil) which make it economically feasible to undertake processing throughout the year. However, stringent competition from cheaper imports, barriers to entry as a result of the bureaucratic and costly licensing and food safety certification procedures by the Tanzania Bureau of Standards (TBS) and the Ministry of Health are some of the factors retarding the growth rate. Channel 4: Supermarkets Retail Channel The supermarket retailers, including for example Shoprite and Imalaseko have in the recent past contracted a few brokers to supply sunflower oil. In this regard, the supermarkets enter into short-term contracts of three or four months based on pre-agreed amounts, quality standards and buying prices. The contracted brokers are often wholesalers or processors who are likely to have better quality oil. Most of the sunflower oil produced is sold and consumed locally with small amounts exported. The reasons for the low exports were reported to include stringent quality standards, high competition in the export markets and poor export infrastructure. Channel 5: Exports Sunflower oil and seedcake for export are procured either directly from the processors or through brokers. This channel is relatively small Export market for sunflower oil and seedcake exist in -Zambia, Zimbabwe, Comoro and DRC.


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Channel 6: Animal Feeds Processors This represents animal feeds marketing. It is disorganized. Market is in Iringa, Mbeya, Morogoro and Dar es Salaam. Also exports to Kenya in some occasions.

Relationships in Sunflower Value Chain

Actors Relationships in Sunflower Value Chain The framework of sunflower value chain consists of five levels: input, production, processing, trade, retailing (marketing) and consumption. Transport is a cross-cutting issue involved in all levels. Figure 2 below illustrates the different functions (activities), actors and their inter-relationships in a sunflower value chain in Iringa region.


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Fig 6.1 Actors Relationships in Sunflower VC in Iringa Region

Oil Retailing

Oil Wholesaling

Processing

Trading

Production

Input Supply

Seed Certification (TOSCI)

Seed Production (Msimba, Farmers)

Research / seed breeding

ARI – Ilonga, Naliendele; Selian

Farmer Seed Producers (QDS) 350

Seed Company

TOSCI

Inte

grat

ed sm

all f

arm

er

10%

Large Dabaga Farm

Medium input supplier 500

Importers / Agents input supplier 10

Extension services

BDS- e.g. ODOP

Small scale farmers 90% (size 1 – 5 acres) 37,496 HH

Primary Buyer

Small Service Provider Processors

Medium Service Provider Processors e.g. NJODECO

Large Processor IVORI

Wholesaler

Animal Feeds Processors

Channel 1 (Smallholders)

Channel 2 (Large Scale)

Channel 3 (Oilseed Buyers)

Channel 4 (Retailers)

Channel 5 (Exporter)

Channel 6 (Animal Feeds)


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6.1.1 Input Suppliers Importers: Iringa region like other regions in the country relies heavily on imports for industrial fertilizers (e.g. Urea, DAP, CAN), hybrid seeds and pesticides used in sunflower production. There are only a few large input suppliers in the country, who according to key informants supply about 85% of inputs. The study team was not able to establish the complete list but was informed of the main companies including; YARA (Chapameli brand), STACO, Premium, Tanzania Fertilizer Company (TFC), etc. All Agro-importers are located in Dar es Salaam with branches/ agencies countrywide. These large input suppliers import in bulk directly from manufacturers abroad and retail mainly through their own managed, but few outlets that are located in the major town’s branches/ agencies. Stockiest: The small agro-dealers are those who purchase small quantities of inputs (say a carton or two) and sell directly to farmers from their own small family business shops in the regional towns. They mainly deal in the less bulky inputs such as chemicals and seeds. It was observed that these inputs are sometimes re-packed in small units to meet the needs of small-scale farmers who are their main clients. These agro-dealers source supplies from large –agro-dealers (importers) mentioned in the section above. Stockist supplies /distributes both subsidized and non-subsidized fertilizers and improved seeds. The list of agro-dealers in Iringa region by districts as indicated in Table below. Research Institutes: Agricultural research institutions are an important component for the development of the agricultural sector in general and sunflower sun-sector in particular. Research has the role of developing high yielding varieties, disease and pest resistant varieties /breeds, which are also better adapted to the natural conditions. Sunflower high yielding seeds breeders in Tanzania include the following: ARI Ilonga (Kilosa-Morogoro) and ARI Naliendele (Mtwara) and Sokoine University of Agriculture of Morogoro. ARI Selian is responsible for developing agronomic packages. These institutions are involved in development and multiplication of improved seeds and planting materials, training of technical staff in various aspects of horticultural production. These research institutions also provide appropriate packages for control of diseases and pests, analyzing soils and climatic condition suitable for different tomatoes varieties etc. Improved sunflower varieties that have been developed and released to farmers include: RECORD8 The basic seed (foundation) multiplications farms includes; Msimba seed farm located in Kilosa district Morogoro. Farmer Seed Producers: Selected farmers are involved in seed production multiplication for sell. These seeds are known Quality Declared Seeds (QDS). It was informed that QDS qualities are as good as the certified seed and imported seed. The difference is in terms of packaging and hence prices, QDS is cheaper. Seed companies: With the liberalization of the sector, several private companies are now participating in the supply and distribution of improved sunflower seeds e.g, Tanzania Seed Agency (TSA); East African Seed Company, etc. It was noted the seed industry was been afflicted by numerous constraints, the major one include insufficient funding which poses

8 RECORD is drought tolerant; oil content is 45-55%; 100-130 days to maturity; photoperiodic insensitive; yield 2.0 t/ha; recommended in areas 0-2,500 m.a.s.l; susceptible to major diseases


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difficulties on developing new varieties or maintaining germplasm of existing varieties. Most seeds loose viability if not planted within a certain period. 6.1.2 Production Land Utilization: It is estimated that Iringa region has a land area approximately 51,682 square kilometers equivalent to (5,168,200 Ha) making Iringa the seventh largest region in the country. Arable land that can be cultivated is equivalent to 2, 094,000 hectares (41% of total land). Production: Sunflower is grown in all Iringa district. Highest production is reported to be from Njombe, Ludewa and Iringa rural. In 2006/07, about 37,496 people are employed on fulltime basis in about 20,170 ha under sunflower production in the region.

Cooperation: Farmers groups are not common among farmers. It was reported that farmers in the region are only slightly used to any form of cooperation. This bottleneck is recognized by cooperative department in Local Government Authorities (LGA) and most NGOs working in this field. LGA and NGOs promote, strengthen and support the establishment of co-operations amongst the farmers.

Casual workers: About 95% of the farmers are small to middle-scale producers, i.e. they manage their plot within their family or with the help of casual workers. Respondent indicated that it is common for farmers to employ casual workers in times of heavy work loads. Typical activities of the workers are soil preparation, stocking, weeding, harvesting, and scaring bats. The wage is Tshs 2000 per day.

Trading level Traders: Three types of traders are involved in buying sunflower seeds at farm level including primary, secondary and brokers/ agents. A broker, as a value chain supporter, does not own the product at any point in the chain. His role is to connect buyers and sellers and in some cases to negotiate prices either in the name of the buyer or the seller. He is paid a commission by either party. In contrast to brokers, buyers (both primary and secondary) take ownership of the product at the time they receive it. They neither produce the products nor sell them to the consumer. Traders buy directly from farmers, brokers or from other intermediaries at local and regional open markets. He sells to other traders, large suppliers, institutional consumers, and entrepreneurs or persons at the retail level.

In Iringa region, trading business (buying and selling) of sunflower seeds is done at farm gate. There is no collection center or warehouse located for sunflower primary markets. No warehouse system operating. Fertilizers and pesticides: Although nitrogen fertilizers such as urea, SA, CAN and phosphates (TSP, minjing rock phosphate) are recommended, very few smallholder farmers in Iringa do apply. Similarly, pesticides such as endosulphan (thiodan). Cooperation: Farmers groups are not common among Iringa farmers. It was reported that farmers in the region are only slightly used to any form of cooperation. This bottleneck is recognized by cooperative department in the Local Government Authorities (LGA), and most


56

NGOs working in the field. LGA and NGOs promote, strengthen and support the establishment of co-operations amongst the farmers. Casual workers: About 95% of the farmers are small to middle-scale producers, i.e. they manage their plots using family labor or with the help of casual workers. It is common for farmers to employ casual workers in times of heavy work loads such as soil preparation, stocking, weeding, harvesting, and bird scaring. Grading and Standards: After threshing and winnowing, sunflower is stored in bags. Grading is not usually done. Storages facilities: Sunflower oilseeds are commonly stored in polythene bags (viroba) which are stocked in the houses. Transportation: Oxen carts (mkokoteni) and human beings are the most common means of transport. Large scale farmers hire pick ups or fuso trucks. Sunflower is transport from the field to the farm house where is dried and threshed. 6.1.3 Post Harvest and Handling Activities Weight and measures: The main unit of measure for buying and selling is plastic bucket and polythene bags (“viroba”). There is no exact weight used for either the bags or “debes”, there is a tendency for over-weights (“rumbesa”) which cheats farmers. 6.1.4 Marketing Activities Traders: There are different types of traders who interact in the sunflower trading segment. Broker, is a person who facilitates trading but does not own the product by him/herself at any point in the transaction loop. His/her role is to connect buyers and sellers and in some cases to negotiate prices either in the name of the buyer or the seller. He/she is paid a commission by either party. In contrast to brokers, buyers (both primary and secondary) take ownership of the product at the time they pay for it. Traders at district and regional level Most traders in the sunflower value chain in Iringa are brokers and processors. They purchase sunflower oilseeds from farmers. It was reported that there is no register for the exact amounts of sunflower oilseeds traded through the brokers and processors at the district level. The end markets for the sunflower oil and seedcake produced in Iringa are Dar es Salaam, Arusha, Zanzibar, Morogoro and Dodoma. Record is the common variety produced, but farmers also grow local varieties. About 70% of the sunflower oil and seedcake retailed in Iringa is produced in the region; the rest in imported from other regions. Traders at national level


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At the national level, there is a numerous sunflower oil and seedcake wholesaler markets in Dar es Salaam that include: Buguruni, Tandale, Kariakoo markets. Most of the sunflower oil and seedcake in the Dar es Salaam are sold on these markets. The other 20% is distributed between local markets, kiosks, and hawkers/ vendors. Only a very small amount is sold in the supermarket. It was noted that these markets also do the retailing. It was reported that the sellers (brokers and processors) communicate with the buyers before entering into business. The use of mobile phones is quite common and facilitates the market access for the sellers. They set up contacts to traders and buyers in the markets of Makambako, Ilula, Dar Es Salaam, Zanzibar, Morogoro and Mbeya, whom they call to check their demand before going there. They also exchange their contacts with friends. Some of these contacts were reported as quite frequent, although there are no formal contract relations between farmers and buyers in place. It was reported that some farmers try to assess demand before planting, but this is not common. Retailing Level At retail or marketing level the operators are to be differentiated according to their location and/or the volume they trade. There are sellers at the processing points, on open markets, with plastic debes and gallons (madumu) and in retail shops. The first two operate in the formal sector while retailers in the open markets are informal. In addition, supermarkets are part of the formal retail sector but they do not play an important role for the supply of sunflower oil to the domestic consumers. Big supermarkets in contrast often supply – besides the locally produced sunflower oils, they also distribute/retail other types of cooking oils including the imported sunflower and oils from other oilseeds including cotton, safflower. Consumption Level On the consumption side, individual households and large consumers of sunflower oil such as hotels, restaurants, hospitals and schools are considered. Most consumers buy sunflower oil at retail but also directly from processors, at wholesale markets, open markets and kiosks. It was reported that decisive criteria when choosing the seller are cheap prices, quality of products, proximity to the vendor, and trust. It was noted that most of the consumers are sensitive about quality and therefore are keen to trace the source. For most consumers interviewed quality is more important than price. 6.1.5 Processing Activities Most processors in Iringa use small scale (SIDO type) processing equipment in a single refinery process. Food & Drug authorities are now requiring double refinery. Some of the processors interviewed complained about low profit margins as a result of high processing costs (high utility costs) and taxes. The backyard processors are not taxed, their processing costs are relatively lower and therefore their prices are more competitive.


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6.1.6 Transportation Activities Transport is a cross-cutting issue in the VCs affecting all actors. The most important actors for transport are entrepreneurs who own trucks & ox-carts, truck drivers as well as porters. They all belong to the VC supporters. The first group is mainly responsible for transport of sunflower oilseeds from the production areas to the processors and oil and seedcake from processors to the consumers. Farmers or intermediaries hire the means of transportation plus drivers and often accompany them. Truck drivers are often employed seasonally. The porter group comprises firstly handcart drivers (called Mkokoteni in Kiswahili) who are engaged in transporting the commodities from the processor to wholesale and to the retail markets or kiosks. They normally own the carts themselves or have to rent them. The second groups are the carriers who load, unload, and carry the goods in the production areas and at the markets. Normally porters are not employed. They are neither specialized in a certain product nor work on contract relations. They get paid for each tour they do, with the prices depending on the type and amount of commodity they transport. Given that they do not possess a legal work identity, they are sometimes double-crossed by customers who fail to pay their wages. They are also often harassed by law enforcers as loiterers. Farmers are only involved in transport from the field to the farm (if necessary) and in some cases they arrange transport from the farm to the processor within the district or to the broker. In some cases, brokers buy at the farm-gate. 6.1.6 Financing Activities Credit institutes: These also belong to supporter’s value chains. But their impact is very low, as farmers refrain from taking loans because they fear crop failure and not being able to repay their credits. Another reason that emerged from the qualitative interviews is that the farmers have too little information about loan conditions (Note: Financial intermediation services is an important aspect, needs beefing up). 6.1.7 Extension and Business Development Services Farm Technology suppliers: In the past, the government played an active role in promoting drought animal power technology through training and extension, and the establishment of Oxenization Training Centres (OTCs) in nearly every District, where farmers and their oxen could be trained at a very low cost. Currently, most of the OTCs have been abandoned, with only a few being used at the initiative of some District Councils and development projects. Auto Sokoni Company is one of the few companies selling tractors and other agricultural machinery in the region. It was reported by informants that many farmers can neither afford to buy tractors nor power tillers due to; their high prices as well as that of spare parts; low crops producer prices; the low returns in tractor-hire services, which make investors reluctant to enter into the business; and lack of credit facilities. Extension Services and Training: Agricultural extension services in the country are provided by the government through the Ministry of Agriculture, Food Security and Cooperatives (MAFC). An effective agricultural education system must consider how to prepare future farmers. In


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general, the whole training and technology delivery system has not performed well as expected. Crop yields and productivity are low compared to the potential demonstrated by agricultural research. Low performance is attributed to: Non use of the package approach which emphasizes combining of the dissemination of

extension messages and the use agro-inputs; National extension field work is not well linked to the private sector distributing agro-inputs; Weak research – extension –farmer linkage; Technical recommendations are not frequently used in combination with indigenous

technologies; Top-down extension or non use of the participatory extension approach; Non use of participatory research; Deficient supervision, monitoring, and evaluation of

extension work; Village extension workers are generalists and not well backstopped by a team of subject

matter specialists; Extension messages and agricultural technology are not modified to fit farmers’ production

systems; 6.1.9 Dynamics, Driving Forces and Point(s) of Leverage Dynamics of Sunflower Value Chain

Fast or rapidly growing channels: There has been strong growth in Channel 2 and 3, with an increasing number of large traders who are trading sunflower seed in Iringa and other regions such as Dar es Salaam, Morogoro and Mbeya. Within Channel 2 and 3 there has been strong growth in the number of small traders, who may account for the increased demand of oil seed for local processing. This growth correlates with the establishment of several small and medium mills at district level particularly at Makamboko area.

Sunflower Driving Forces

Driving Forces: Refer to those factors that are at the root of the dynamics and change within the value chain. These often relate to market demand, technological change, and barriers to entry, input supply, and profitability of different niches, risks or policies. In the view of driving forces for sunflower value chain in Iringa region, three key driving forces are as follows:

National Market demand for sunflower oils:

The number of large number of primary and secondary traders are involved in trading of both sunflower seeds and sunflower oils.

Access to processing technology: There are large numbers of small and medium oil mills in the region are providing a strong pull factor. Profitability: at farm level, processors, traders: Input Supply Level


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Research Institutes: Agriculture Research Institutes (ARI) are supporter organizations of the value chain with the role of developing high yielding varieties, disease and pest resistant varieties /breeds, which are also better adapted to the natural conditions. Record high yielding sunflower seeds are a product of ARI- Uyole, ARI-Ilonga and ARI-Naliendele located in Mbeya, Morogoro and Mtwara regions respectively. They also develop and disseminate appropriate agronomic packages for control of diseases and pests, analyzing soils and climatic condition. The basic seed (foundation) multiplications farm for sunflower is Msimba Seed Farm in Kilosa district, Morogoro region.

Seed farmer producers: Selected farmers are involved in seed production multiplication for sell. These seeds are known as Quality Declared Seed (QDS). The farmer seed producers and distributors are also among the important operators in the value chain. The seeds they produce are of comparable quality and affordable.

Seed companies: Several private companies are operating as suppliers of agricultural inputs including sunflower seeds in Iringa.

Extension Services and Training: Agricultural extension services in the country are provided by the government through LGA. An effective agricultural education system must consider how to prepare future farmers. In general, the whole training and technology delivery system has not performed well as expected. Crop yields and productivity are low compared to the potential demonstrated by agricultural research. Low performance, attributed to: Non use of the package approach which emphasizes combining of the dissemination of extension messages and the use agro-inputs; weak research – extension –farmer linkage; non use of participatory research; deficient supervision, monitoring, and evaluation of extension work; extension messages and agricultural technology are not modified to fit farmers’ production systems.

Credit institutions: These also belong to supporter’s value chains. But their impact is very low, as farmers refrain from taking loans because they fear crop failure and not being able to repay their credits. Another reason that emerged from the qualitative interviews is that the farmers have too little information about loan conditions.

Stockist: The small agro-dealer are those who purchase small quantities of inputs (say a carton or two) and sell directly to farmers from their own small family business shops in the regional towns. They mainly deal in the less bulky inputs such as chemicals and seeds. It was observed that these inputs are sometimes re-packed in small units to meet the needs of small-scale farmers who are their main clients. These agro-dealers sources supplies from large –agro-dealers (importers) mentioned in the section above. Stockist supplies /distributes both subsidized and non-subsidized fertilizers and improved seeds.


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SECTION VII: VALUE CHAIN GOVERNANCE

7.1 Conceptual Framework

In value chains, governance refers to the relationships among the buyers, sellers, service providers and regulatory institutions that operate within or influence the range of activities required to bring a product or service from inception to its end use. Governance is about power and the ability to exercise control along the chain at any point in the chain and some firms sets and or enforces parameters under which others in the chain operates. Key parameters (issues) includes product design and specification, definition of the production processes, which can include elements such as the technology to be used, quality systems, labor standards and environmental standards. Production scheduling and logistics is also included. The chain governance exists when some firms work to the parameters set by other powerful firms in the chain. The firm that sets the parameters with which other firms in the chain must comply is referred to as the lead firm in the chain. The relationships lead firms have with their suppliers can either be helpful with respect to improving the competitiveness of the industry, based on a commitment to long-term, mutually beneficial relationships with suppliers, or they can be greedy and focused on realizing a quick profit in the short-term Types of Value Chain Governance The connections between chains activities within a chain can be described along a continuum (range) extending from market, characterized by “arm’s – length” relationships, to hierarchical value chains illustrated through direct ownership of the production processes. Between these two extremes, are three network-style modes of governance: modular, relational and captive as explained here below and illustrated in Figure XX: Market governance: involves transactions that are relatively simple, information on products specifications is easily transmitted, and producers can make products within minimal inputs from buyers. Modular governance: occurs when a product requires the firms in the chain to undertake complex transactions that are relatively easy to codify. Relational governance: in this net-work style governance pattern, interactions between buyers and sellers are characterized by the transfer of information and embedded services based on mutual reliance regulated through reputation, social and spatial proximity, family and ethnic ties and the like. Captive governance: in these chains, small suppliers are dependent on a few buyers that often wield a great deal of power and control. Such networks are frequently characterized by a high degree of monitoring and control by lead the lead firms Hierarchy governance: describes chains that are characterized by vertical integration and managerial control within a set of lead firms that develops and manufactures product in –


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house. This usually occurs when product specifications cannot be codified, products are complex, or highly competent supplier cannot be found.

Figure 7.1 -: Type of Value Chain Governance

Degree of Explicit Coordination

Low High Degree of power Asymmetry

Suppliers Component & Material Suppliers

Price

Lead Firm

Full-package supplier

Lead Firm

Relational Supplier

Lead Firm

Integrated Firm

Customers

Component & Material Suppliers

Component & Material Suppliers

Source: Field outline


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7.2 Governance of Sunflower Oilseeds Value Chain

Following the brief explanation of what governance in commodity value chain means, it is prudent examining actor’s relationships in sunflower value chain in Iringa region with an intension of evaluating the chain that in which kind of governance modular it fits. According to the field survey findings, Sunflower value chain is Iringa region is governed by the market forces. In this respect prices of (Sunflower seeds, oils and cake) are determined by market forces. The main characteristic underlining the chain include; Dis-organized actors vertically and horizontally such that there is no lead firm; Prices are more influenced by few actors mainly buyers at farm level and processors at factory gates; Relationships among actors involve transactions that are relatively simple; Information on products specifications is easily transmitted, Producers can make products with no inputs from buyers. These evaluation findings illustrates that apparently, the sunflower chain can be categorized as follows: Lack of Governance. The governance mechanism in the sunflower value chain is underdeveloped. Value chain actors operate in an un-coordinated /un-organized way. Few rules exist among value chain actors. Presence of many small actors and transactions. The value chain is characterized by too many small actors with small businesses that increase transaction and transportation costs and a lower competitiveness of products in the market. The transactions that occurs between farmers and ultimate consumers include; local trader, harvesting, loading, unloading, transport, urban trader, loading and unloading, transport, market levy, broker, retailer, loading, unloading and transport. Market Un-Coordination: There is no lead firm that coordinates the chain in relation to markets, technology and other important information shared among actors. Consequently actors particularly farmers and processors receive no incentives for up-grading in terms of their tomato product and the chain process as a whole to promote sustainable income earning opportunities. Product Up-Grading; focuses on the introduction and delivery of improved or new products within the value chain. In sunflower value chain what is needed is the improvement in product crop husbandry; improve oil packaging, quality certification by TBS and TFNC?? To ensure the safety of consumers. Hygiene particularly in relation to packaging. These improve.

Actors Inter-relationships In section 2.2, function and actors of the sunflower value chain in Iringa region been described. Actor’s inter-relationships at each level of key function examined d in this section. Basically


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there are five functions as in the sunflower value chain from the input supply to consumption (Markets). The inter-relationships among actors are as indicated in figure--. Figure7.2-: Framework of Actors Relationship in Sunflower Value Chain Iringa Region

Key note: Value Chain Supporters (VCS) Value Chain Operators (VCO) Informal Business Relation (information) Information/ Employment Informal Business Relation (product) Source: Field outline June, 2009

Retailing

Research Extension

Credit Institu

Input suppli

Farmers

Casual

Primary &

Primary & secon

Factory gate

Kiosk

Roadside

Service provider

Independent facto


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SECTION VIII: GROSS MARGIN ANALYSIS 8.1 Key Assumptions

Gross margins in this case refer to revenue minus direct or variable costs. It does not take into account overheads, capital investment, or cost of borrowed capital. Such approach is adopted because small-scale farmers do not often incur much of these costs and partly because such information is often difficult to obtain. Thus data provided below should not be misinterpreted into profits. Considering importance of opportunity cost economic theory, labor was priced where data on local wage rates was provided.

1. The author assumes climatic condition to be favorable constant; however it varies as from one season to another or from one place to another.

2. All labor and land applied in this gross margin analysis were regarded as been hired to get the real cost and value of produce

3. Fertilizers such as urea and CAN were included for simplifying the computation since manure and other type of organic fertilizer which applied are difficult to estimate the rate and value.

4. One round of weeding was adopted to reflect recent majority practice; however due to other factors, other farmers implements two rounds of weeding


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8.3 Data Used In this gross margin analysis, we used data secondary and primary data. Data such as prices and types of inputs were drawn from agro-dealers consulted during quick scan and value chain study. In general the data used were collected from FGD conducted at Ludewa, Njombe and Iringa rural districts. Also some key experts such as extension officers and research officers were consulted particularly for refining and confirming data from FGD. 8.4 Computation Method Method in analyzing gross margin was mainly averages since the data used were from six villages i.e. Kiwere and Magulilwa of Iringa rural, Ihanja and Makambako of Njombe district, and Ludewa K and Luana of Ludewa district. 8.5 Data Interpretation During value chain study, 11 key activities of sunflower seeds production from farm to storage place were identified. These include inputs acquisition (mainly seeds and fertilizer), crop field hiring, land preparation (field clearing and tilling), seeds sowing, weeding, fertilization, harvesting, threshing and packing, and transferring of produce to the storage place. FGD conducted at Iringa rural, Njombe and Ludewa districts provided that, an average cost of TZS 120,308/acre is incurred to produce sunflower (i.e. 5-6bags) and avail them to the storage place/home. According to the table 8.1 below, these costs are cumulative of hiring of plots TZS 15,000, inputs acquisition (fertilizer TZS 21,042 and seeds TZS 12,250, field preparation (field clearing TZS 7,167 and tilling TZS 14,167), seeds sowing TZS 6,333, weeding TZS 14,667, fertilizer application labor TZS 4,667, harvesting TZS 9,833, threshing and packing TZS 5,167 and transport to store/home TZS 5,067. According to study results, sunflower has very low gross margin once sold as seeds. Low gross margin is mainly due low productivity and price of sunflower seeds. Data summarized in the table below shows average yields of 5.17 per acre and price of TZS 24,389 per bag. These translate revenue of TZS 125,611 per acre. By comparing cost of TZS 120,308 per acre and revenues of TZS 125,611, the gross margin realized it amounts TZS 5,303 or 1,103 per bag. With an average of 2-3 acres owns by households as revealed in FGD, together with the recent average yields of 5.17bags/acre, a farmer realizes GM ranging from TZS 10,606 - TZS 15,909 per season which is pea nut. MUVI project point of intervention will be on improving productivity and facilitate linkages between producers and beneficial markets of sunflower seeds. The other intervention for improving gross margin will be on improving sunflower seeds processing.


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8.6 Data Results Summary

Table 8.1 Sunflower Gross Margin Analysis

Production and other costs up to storage place District Iringa rural Njombe Ludewa

Activity/item Kiwere Magulilwa Ihanja Makambako

Ludewa K Luana Average

Plot hiring 10,000

20,000

20,000 10,000

20,000

10,000

15,000

Seeds buying 12,000

15,000

13,500 12,000

9,000

12,000

12,250

Field clearing 6,000

4,000

8,000 10,000

8,000

7,000

7,167

Ox-ploughing 15,000

15,000

15,000 15,000

10,000

15,000

14,167

Seeds sowing 6,000

4,000

4,000 10,000 4000.00

10,000

6,333

Weeding 14,000

12,000

10,000 14,000

10,000

28,000

14,667

Urea buying 21,250

20,000

22,500 21,250

20,000

21,250

21,042

Fertilizer appl task

8,000

4,000

4,000 4,000

4,000

4,000

4,667

Harvesting 10,000

8,000

15,000 10,000

6,000

10,000

9,833

Bags buying 5,000

7,700

5,000 4,000

4,000

4,000

4,950

Threshing & Packing

6,000

6,000

8,000 4,000

2,000

5,000

5,167

Transport to home

5,000

8,400

6,000 4,000

2,000

5,000

5,067

Total cost/acre up to store

118,250 124,100

131,000 118,250 99,000

131,250

120,308

Cost/acre up to store

118,250 124,100

131,000 118,250 99,000

131,250

120,308

Av Bags Yields / acre 5

7

6

4

4 5 5.17

Av Cost/bag 23,650

17,729

21,833 29,563

24,750

26,250

23,285

Av Price/bags/ (TZS)

24,667

22,000

28,000 25,667

24,333

21,667

24,389

Revenue/ acre (TZS)

123,333

154,000

168,000 102,667

97,333

108,333

125,611

Average G.M/bag

1,017

4,271

6,167

(3,896)

(417)

(4,583)

1,103


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8.7 Percentage Share of final price and Value addition of Sunflower Chain Table8.2 : Price disaggregating in Sunflower Value Chain of 20lts Iringa, Tanzania

Districts/seaon Farm gate

Factory gate Iringa DSM

Seed bag 20lts oil Stall/Kiosks Stall/Kiosks (70kg) Peak Season Njombe 20,000 34,000 42,000 Makambako 18,000 28,000 36,000 Iringa 22,000 36,000 44,000 Average 20,000 32,667 40,667 56,000

Figure 8.1: Price disaggregating in Sunflower Value Chain of 20lts Iringa, Tanzania

DSM38%

Iringa27%

Factory gate22%

Farm gate13%

Figure 8.2: Price disaggregating in Sunflower Value Chain of 20lt of oil, Iringa Tanzania Source: Field survey

Production of sunflower seeds 13%

Processing of Oil seeds

22%

Consumption of Oil Iringa 27%

Consumption of oil DSM 38%

Tshs 56,000/=

Value addition 9% Value addition, Iringa5%

Value addition, DSM11 %


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SECTION IX: SERVICES MARKET

9.1 Financial Services

9.1.1 Overview of Rural Financial9 Services in Tanzania

The demand for rural financial services in Tanzania: In general, the demand for financial services in most rural areas in Tanzania is characterized by low participation and poor financial accessibility. This is attributed to the present situation that most economic activities in rural as well as urban centers depend on agriculture which again is characterized by low degree of agricultural mechanization, low technological adoption and high price volatility of main agricultural outputs. As a result, most household farmers are often considered of high risk by banks and other formal financial institutions. The problem is exacerbated by the fact that only 5% of smallholder farmers in Tanzania have official land titles that could be otherwise used as collateral to access loans from formal financial sector.10 Other demand-driven factor that explains low level of access of financial services in rural Tanzania includes the level of transaction costs incurred by households and the financial illiteracy. The supply of rural financial services in Tanzania: In overall, financial services in Tanzania are provided by six categories of institutions: i) Commercial Banks: These are bank financial institutions which have been

traditionally providing the services for most Tanzanians and are the most know in the rural areas as have been the only financial institutions that have offered the service for long time for majority of rural people. Commercial banks with presence in Iringa region include National Microfinance Bank Ltd (with 7 branches namely Ludewa, Mafinga, Makambako, Makete, Mkwawa, Njombe and Kilolo); CRDB Bank Plc (3 branches namely Iringa, Mkwawa and Njome); National Bank of Commerce Ltd (1 branch namely Iringa and Njombe) and Exim Bank Ltd (1 branch in Iringa).

ii) Non-bank financial institutions11: These include Tanzania Investment Bank and Tanzania Postal Bank (with 1 branch in Iringa).

iii) Member based organizations and associations: These include Savings and Credit Cooperative Societies (SACCOS)12 and Agricultural Cooperative Societies

9 “rural finance’” refers to the broad range of financial services offered in the rural areas which includes savings, credit facilities, payment transfers, leasing, insurance and any other similar financial services provided by formal and informal financial service providers operating in rural financial markets in Tanzania. 10 In efforts to stimulate and encourage formalization, the GOT is implementing the Property and Business Formalization Program (popularly known as MKURABITA, its Swahili acronym), which is aimed at improving the services of the land registries in order to support the registration of land and landed property, its valuation and use as security for underwriting economic activities. 11 These are institutions licensed by Bank of Tanzania and authorized to engage in banking business not involving the receipt of money on current account subject to withdrawal by cheque. 12 These are registered societies whose principal objects are to encourage thrift among its members and to create a source of credit to its members at a fair and reasonable rate of interest.


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(AMCOS)13. Each district in Iringa has significant number of these organizations as indicated in the table below.

iv) Non-governmental organizations providing financial services (NGO-MFIs): Current examples include PRIDE Tanzania Ltd (currently Iringa has 2 branches – Iringa and Makambako) and PASS (currently operates in Iringa through CRDB Bank branch in Iringa).

v) Regional community banks: These include Mufindi Community Bank located in Mafinga.

vi) Informal source: These include Village Community Banks (VICOBAs) vii) Government and Public Sector institutions: These include SIDO and SELF.

NMB Bank Plc is the only bank with branch presence located in each district headquarters. The rest of the banks are found in some districts as described above. Since all these banks are located in the regional and district headquarters, it is observed that most rural people are facing difficulties in accessing the financial services effectively. Given the situation, most people alternatively rely on SACCOS and credit associations to access loans as most of them are located at division and ward levels as summarized below Table 9.1

Table 9.1 SUMMARY OF FINANCIAL INSTITUTIONS IN IRINGA REGION AS AT JUNE, 2009

No. DISTRICT SACCOS

Total Members AMCOS COOPS BANK BRANCHES Urban Rural Total

1 Iringa Rural 3 23 26 3,288 20 1 0 2 Iringa Urban 31 0 31 2,961 n/a n/a 4 3 Kilolo 0 6 6 2,223 n/a n/a 1 4 Ludewa 3 15 18 744 10 6 1 5 Makete 3 16 19 3,538 19 0 1 6 Mufindi 21 20 41 20,099 18 1 2 7 Njombe 9 23 32 9,055 22 1 3 TOTAL 70 103 173 41,908 89 9 12

Based on the field survey conducted, most rural people rely on SACCOS for financial needs as they are closer to them. Iringa has registered about 173 SACCOS, 89 AMCOS, 9 cooperatives, 12 bank branches and several MFIs/NGOs. About 41% of the SACCOS are located in urban centers (with Iringa Urban carrying 45% of them) whereas 60% SACCOS are located in the rural areas. This analysis indicates that the supply of financial services is higher in the rural areas than in urban centers whereas the demand for it is also higher. Table 9.2 below presents summary of the key characteristics of financial service providers in the banking sector in Iringa:

13 These refer to the association of persons who have voluntarily joined together for the purpose of achieving a common need through the formation of a democratically controlled organization and who make equitable contributions to the capital required for the formation of such an organization, and who accept the risks and the benefits of the undertaking in which they actively participate.


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Table 9.2 Banks Available in Iringa & their Services

Bank NMB Ltd CRDB Ltd TPB NBC LTD EXIM BANK i) Outreach: Total number of branches in the region.

7 3 1 2 1

Network of branches/outlets

All district headquarters

Iringa Urban, Mkwawa & Njombe

Iringa Urban Iringa Urban & Njombe

Iringa Urban

Range of loan amount (Tshs)

300-500 million per MFI/SACCOS

300-500 million per MFI/SACCOS

Average 1.1 million per MFI/SACCOS

5 – 250 million per MFI/SACCOS

500 million per MFI/SACCOS

ii) Types of Products:

Provides whole range of financial products to individual clients: these include savings, loans, money transfer, payment services etc. Wholesale loans are extended to SACCOS and MFIs.

iii) Profile of clients

NMB, NBC, EXIM and CRDB bank are primarily indirect providers to rural areas through their links with MFIs and SACCOS. TPB has a greater tendency to provide direct services to individual rural clients.

iv) Characteristics of the portfolio

CRDB volume of loans to the agriculture (rural) comprises about 25% of total lending. NMB has extended significant lending in agriculture whereas TPB, NBC and EXIM have continued to lend to individual farmers as demand arises.

v) Financing sources and capital structure

SACCOS & other MFI’s are able to generate funds from the banks, NGOs and own members.

Source: Field Survey 2009 9.1.2 Specific Financial Services to actors in the Value Chain

Assessment of financial institutions attitudes towards financing agro-based value chain activities is mixed. Each bank with branch presence in Iringa has specific financial package to SMEs and particularly SACCOS. CRDB has many years of experience in financing agri-businesses and working with IFAD funded projects in the past. CRDB has been actively funding agricultural projects in cooperation through the linkage by Private Agricultural Support Services (PASS) that specializes in advisory services and financial linkage of agri-businesses to financial institutions. CRDB14 has indicated that it continues to work with agribusinesses based on financial viability of their projects. Similarly, NMB is leading bank in terms of range of products extended to the farmers who are actually majority actors in the selected value chains. NMB has introduced warehouse receipt financing package that allows farmers or associations have immediate

14 Njombe Branch Manager


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access to cash when they deliver their goods to certain warehouse. It has also established a department at its head office that deals specifically with the requirements of MFI’s and SACCOS. For example, interview with NBM Branch Manager in Ludewa District indicated that the bank is working to reach farmers via their SACCOS. While from the banks standpoint they are not directly lending to agri-businesses, it was noted that traders may be financing agricultural commodity trade through bank loans covertly (under the cover of trading industrial merchandise) because the pattern shows high growth in loans for trading during harvest period. Study survey also documented presence of Rural Financial Services Program (RFSP) in the region. This program is co-financed by IFAD, Swiss government and URT. The objectives of the program is to support grassroots micro-finance institutions

Technology Providers

Major actors in sunflower processing technology and input supplies in the region include SIDO - TDC, CAMARTEC, TEMDO INTERMECH and TIRDO. There are also major importers namely AUTO SOKON and some dealers from Dar es Salaam. Whereas each provider has significant contribution in the value chain, further exploration will be required to be able to document how best each technology can be accommodated in the value chain. Enterprise Works Worldwide (formerly Appropriate Technology International) has Office presence in Iringa and this organization has a wealthy of knowledge in support of appropriate technology required in sunflower sub-sector. We will explore more how best the organization can be used to share the experience for the development of enterprises in Iringa.


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9.2 Business Development Services Iringa has significant number of business development service providers which include CSDI, RUDI, MVIWATA, Techno Serve and BCS. These companies provide a number of services ranging from farmer groups organization and mobilization, business leadership and management training, financial and accounting training, design of business and investment plans, credit management, market research, market and credit linkages.

9.4 Warehouse Receipt System and Logistics

Iringa has evenly distributed warehouses although most of them need a repair. None of these warehouses has qualified or used as a WRS but plan is underway to establish them. Interviews have revealed that one crucial way of improving the marketing of sunflower oilseeds is to establish warehouse receipt system in the respective SACCOs. The use of warehouses as delivery locations will allow transparent trade of the crop between the farmers (producers) and the large traders an/or processors - thereby reducing the length of the marketing chain and narrowing distribution margins. Under this market arrangement, the farmers are also able to defer the sale of produce by making use of inventory credit to satisfy immediate consumption needs. Increased storage by participants in this market system will moderate seasonal price variability and reduce trade margins for the benefit of both farmers and traders.

WR system will facilitate development of efficient and accessible financial services to the members of SACCOS. By attracting deposits from these small farmers (and where useful the local traders), the system will help formalize their trade transactions, enabling a database on their activities to be generated, which will assist the SACCOS in evaluating loan requests. In addition, SACCOS management will be able to mitigate credit risks using the stored produce (as collateral). SACCOS will no longer need to monitor the increasing number of small borrowers but only focus on the operation of the warehouse to assure loan performance.

Notably, the government of Tanzania enacted “The Warehouse Receipts Act No. 10” in 2006. This act is already operational and a number of WRS15 have been established. Examples of these WRS in Tanzania include coffee farmers in KNCU – Moshi, cashewnuts farmers in Mtwara and Lindi, rice farmers in Chimala (Mbarali), Ubaruku and Kilombero.

15 IFAD has initiated Agricultural Marketing System Development Program (2002 – 2009) worthy USD 42.30 million with the aim of making rural markets work better and empowering smallholders within the markets.


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SECTION X: INSTITUTIONAL AND REGULATORY FRAMEWORK

10.1 Institutions Regional and district councils Agricultural and market development at Regional and District level falls under the authority of the ministries of Marketing and Co-operatives and Agricultural and Food Security. At Regional level all technical matters fall under the authority of Regional Administrative Secretaries (RAS). Most technical officers are appointed at district level under the authority of the District Executive Director (DED). At District Level each department is headed by a Development Officer reporting to the DED with a number of technical subject matter specialists (i.e. irrigation, horticultural, livestock specialists, etc) reporting to the Development Officer at district level. However, crop marketing falls under the authority of the District Trade officer, while extension services are under the District Extension Officer. These officials are responsible for strategic planning and implementation of regional and district development projects. As such their views, objectives and strategies can either provide a stimulus or a restriction to a specific value chain.

10.2 Regulatory Framework Production: For producers, the institution that interacts most with farmers is Tanzania Official Seed Certification Institute (TOSCI), TOSCI certifies seeds though there is no direct relationship with farmers TOSCI has to approve seeds and the quality of seeds depends on the competency of TOSCI. While there was been cases of poorly performing seeds, the problem is not a threat to the value chain. However as the project aims to upgrade sunflower VC it is important that TOSCI becomes aware of the importance of sunflower seeds to the economy of the region and the country so as to allocate adequate time and resources. Pesticides and other input are approved by TPRI, to mitigate the risk of supply of poor quality agro-chemicals. Marketing Tanzania’s economic reforms of the 1980’s stressed market competitiveness with the general objective of stimulating agricultural production and returns to market participants through improved market performance. The GoT policy orientation in the area of agricultural marketing have included:

(i) The withdrawal of the state intervention through the privatisation of the parastatals; (ii) decontrolling of prices (food crops in 1986 and export crops 1994/95);

(ii) Enactment of the new act for co-operatives in 1991 which has allowed the entry of

private organisations into the market; and


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(iii) Defining new rules and regulations for organizations participating in the market (e.g., licensing, tax policy). In the 2002 budget, the government removed the restrictions on food crop and livestock across border trade. This has enabled smallholder farmers in the more remote areas of the country (but near national boundaries), who are not properly integrated into the national domestic market to get better prices for their products from neighbouring countries. However the Government imposes export ban on export of food crops especially when there is food shortage in the domestic market especially in drought years.

(iv) The Ware house receipt Act no 10 of 2006, which enables small scale farmers to bulk

their produce, store it and use the ware house receipt as collateral for obtaining bank loans. This system has already helped a number farmer groups to get better prices as they can sell their produce when the farm gate prices are high enough for them to make profit.

Edible oil quality standards. According to the standardization of Tanzania sunflower oil, the Tanzania Bureau of Standards (TBS) specifies that, Raw sunflower oil Raw sunflower oil is obtained by a process of mechanical expression and / or solvent extraction. The oil should be pure and not contain any particles, sediments, foreign matter or contamination. Refined sunflower oil This oil has been obtained by expression and / or extraction and in addition it has been neutralized with alkali, washed with water, dried, bleached with bleaching earth or activated carbon, and deodorized with steam. No other chemical agent is allowed in this process except citric acid. Sunflower oil for edible purposes shall contain antioxidants and antioxidant synergists in specified levels. Some seed crushing companies do not treat the oil before they fill it into small plastic containers of varying size but many companies filter the oil to remove any strange particles from it. In doing so, they probably meet the standard for raw sunflower oil. Currently only Murzah Oil Millers and Mount Meru Oil Millers produce refined sunflower oil in the country. In some supermarkets in Dar es Salaam, imported refined sunflower oil is being sold. According to the Tanzania Food and Drugs Authority (TFDA), sunflower oil for human consumption should be refined. If raw sunflower oil is consumed shortly after expression or extraction, it probably does not do any harm. If raw sunflower oil has however been stored for a long time or exposed to high temperature fluctuations, it is not advisable to consume it any more. As most raw sunflower oils are not labeled or the date of processing has not been indicated on the label, it is difficult for the consumer to know whether the oil is still safe for consumption.


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Levies and Taxes District Produce Cess District Produce Cess is levied as a percentage of the value of produce sold. Although no upper limit for cess has been described, it usually does not exceed 10%. The actual amount levied varies widely, with an average for most crops reported to be about 6% of the sale price. In Iringa district, the levy on sunflower is TShs 1,000./bag, in farmers sometimes bypass paying the taxes by selling directly to the informal market channels including the middlemen albeit at low price. The cess significantly reduces both the farmers and traders profit margins. Traders pay a District Produce cess when purchasing sunflower, a market levy when off-loading at the wholesale market and a daily fee or levy paid to the local council for the market stall at the wholesale market were they trade. Levies have a significant impact on profitability, especially for small traders that do not have the benefits of economies of scale. Market Levies All markets and trading centers in Tanzania are owned by the local Government. Therefore the rental fees paid by the traders operating in these markets go to the district councils. Local Councils or municipalities collect market levies from wholesaler and retailers at local markets. These levies are often charged on a daily basis (often 100 TSH per stall per day) and are either collected by the council themselves or by the market association leaders. Export Regulations There are not many conditions imposed by the Government commodities export. Normally a commodities exporter would adhere to the conditions of the buyer overseas. For example, for groundnuts the European and Japanese buyers require all groundnuts leaving the country to be tested for aflatoxins. This is because of a growing instance of aflatoxin levels being above the permitted 20 – 30 ppb in groundnut samples. There were no requirements of this kind identified for sunflower exports. In Tanzania the companies doing pre-shipment inspection such as do not have laboratories capable of testing aflatoxins. VAT & Import duties. For the most part, domestic oilseed production is consumed by the domestic market. Import duties range from 25 % on crude oil to 45% on refined packaged oil, as well as an additional 20% VAT.


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SECTION XI: SWOT ANALYSIS

11.1 Opportunities General: Possibilities of improving the sunflower VC in Iringa by developing a win-win strategic collaboration between the organized farmers and the medium/ large processors exist. This will promote production and quality of sunflower oilseeds as well as edible oil according to the market demand and preferences. Upstream and downstream employment generation along the value chain is possible through import substitution and scaling up production, processing and marketing particularly targeting also the export potential for edible oil and seedcake by tapping increasing demand for in the animal feeds industries.

Input Supply: The government is committed to provide priority support to the agricultural sector (e.g. (Agriculture First Manifesto) which will likely strengthen the input subsidy particularly targeting the national food basket regions which include Iringa. The commercial banks operating in Iringa including Exim, CRDB, NMB and NBC have introduced micro-finance departments that in collaboration with SACCOS have specific products targeting the agricultural sector input support. The recent and the ongoing infrastructure development (roads, harbor/shipping) provides an opportunity for improving the regional and district physical input distribution networks. Presence of CFNA and other organizations that mobilize training and availability of farm/ inputs implements to agro dealers will facilitate availability of enough farm inputs/ implements to smallholder farmers in the due time. There is also a political will to see this happening. Presence of Agro-dealers and distributors of farm inputs / implements in the region increase possibility of sourcing farm inputs at district level at competitive price. Presence of CFNA and other organizations that mobilize training and availability of farm/ inputs implements to agro dealers will facilitate availability of enough farm inputs/ implements to smallholder farmers in the due time Appropriate Technology Presence of agricultural research institutes (ARI) including ARI- Uyole & Igeri (Njombe & Mbeya), Naliendele (Mtwara) and Ilonga (Kilosa-Morogoro) and Selian (Arusha) that have/are developing improved sunflower technologies including high yielding and diseases/pests16 tolerant varieties and agronomic packages. Msimba and Dabaga Seed Farms and Farmer Seed Production Schemes are multiplying breeders improved seeds to cater for the increasing seed

16 Recent incidence of mildew, a fungal disease (Alernaria Spp) is threatening sunflower production in the southern highlands of Tanzania. There is no known control measure so far. Research to develop tolerant varieties is ongoing in the above ARIs. Record is a recommended high yielding sunflower variety but susceptible to the common diseases including mildew.


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demand and at affordable price. DADPs through LGA have funds targeting the agricultural sector including support to farmer seed production initiative. The availability of dual-purpose & divisible oilseeds processing technologies that is suitable for small, medium and large scale oilseeds oil extraction and processing including sunflower oilseeds. Institutions including SIDO, IPI/UDSM, CAMARTEC and …etc are developing and supplying low-cost equipment available on various financing options including lease purchase. Production: Availability of vast arable land in the region gives potential to increase production to match growing national demand of sunflower oils. It is estimated that there are in Iringa region approximately 2, 094,000 ha of arable land making Iringa the seventh largest region in the country. Processing and Marketing: Potential for value addition (double refined technology) to produce high quality sunflower oil and seedcake that meets the export markets (particularly in EAC and SADC countries). Import substitution strategy offered through sunflower oil production to saturate the local demand will lead to a substantial foreign exchange savings. Low quality oil which is another by-product of the oil processing has high demand in the local soap industries in Tanzania but also in the neighboring countries. Similarly, the organic residues resulting from the sunflower oil processing is an excellent low-cost and environment friendly manure which will help reducing farmers cost of production, increase profitability and quality of sunflower.


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11.2 Constraints (VC weaknesses & Threats) General Several structural, institutional and technological constraints exist hindering the productivity and profitability of the sunflower sub-sector in Iringa region. Production & Processing Support Services There is a wide yield gap between sunflower production under optimal conditions (-----Kg/acre) and the current practice in Iringa (average of 320 Kg/acre). The gap is mainly caused by lack of/low use of the recommended technologies. R&D and the extension services have not yielded the expected results, including the development and dissemination of improved technologies. Many farmers are not aware of and are not using the improved recommended technologies for various reasons including the low quality of and support to the extension services, poor input distribution systems and high price of inputs and technologies. Some of the disease/pests problems such as mildew, double refinery affordable machinery and threshing have no solutions so far. Although sunflower is inherently drought tolerant, the recent extended droughts have been the cause of low production calling for the need to consider supplementary irrigation technologies. The existing technologies are costly and small scale farmers can not afford and or not profitable. Lack of reliable and affordable financial services in the region exacerbates the problem also limiting the access to improved appropriate technologies and practices in general. Excess demand for good quality and affordable sunflower oil in Iringa and in other regions such as Dar es Salaam and Arusha, is a result of dependency on low efficiency processing technologies. Oil extraction rate ranges between 20-30% (for Record and Jupiter varieties respectively) as compared to an average rate of 40% rate in other countries. Lack of information about manufacturers and distributors of double refinery equipment and replacement parts has limited sunflower double refinery processing in the region. Low quality of the sunflower oil is partly a result of sub-standard packing materials, bureaucratic quality inspection, standards and certification services including traceability. Access to adequate and affordable working capital for the producers, processors and traders is also a constraint despite of the existence of MFIs including commercial banks such as NMB, CRDB, EXIM, NBC and other informal MFIs. Infrastructure & Marketing Inaccessible feeder roads to the key production areas in Iringa region is an important constraint in developing the sunflower VC. Additionally, market information is not readily accessible, low marketing skills of the farmers coupled with lack of storage and bulking facilities (warehouse) at the village level leading to low price of sunflower oilseeds, high price of agro-inputs and low


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profitability. Although laws guiding fair trade including the use of the proper weights and measures, the enforcement of the laws has not been effectively supervised and monitored. The existence of unscrupulous traders using unacceptable weights & measures such as “rumbesa” and other marketing “vices” deliberately designed to cheat the farmers thereby reducing their income. The absence of farmer organizations and disconnect between the small-scale processors and medium and large scale producers is weakening their collective bargaining power and advocacy against such vices. Regulatory Framework The small scale (backyard) processors are not usually subjected to VAT which gives them a competitive advantage over the medium and large processors who are subjected to VAT and other taxes. In general, the processors are complaining of the existence of too many taxes charged by the local government because it reduces the profit margin of sunflower processing to the extent that some are not breaking even. For example, M/S Ivori Ltd decided to pull out of the business for the same reason. The problem of the existence of the illegal weights and measures, imports and dumping of low price cooking oils also points out to the weak regulatory frameworks affecting the competitiveness of the locally produced cooking vis-à-vis the imported. This was pointed out by the VC participants to be one of the serious constraints which are hindering development of the sunflower VC in Iringa and particularly the value adding processing.


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SECTION XII: PROPOSED VALUE CHAIN INVESTMENT

12.1 Investment Summary

Sources of Leverage for interventions: Concept: Leveraged interventions are those that influence large numbers of small firms (SMES) at a single stroke. They are more likely to be cost-effective than one-to-one assistance delivered to individual SMEs. Levereged interventions because the affect many firms at once, simultaneously multiply benefits and reduce per-firm contact costs. Key points of leverage include; system nodes, geographic clusters and government policy / regulation as highlighted below: System Nodes: are points where large volumes of product pass through the hands of only few actors. The Input and output traders (distributors) functions as system nodes. This can be easily identified by calculating (‘gearing ratios’ = Number of SMEs /number of large intermediaries) at transaction points in each channel (see Sector map) Clustering concentration: offers opportunities to reach dozens or hundreds of small firms in a single visit. For a variety of reasons SMEs cluster together. Some of the reasons are: ensure access to inputs, technology (training and technical assistance), advocacy institutional policy support and better prices, and market outputs, ethnic regulations, zoning regulation, climatic conditions etc. In the case of sunflower value chain, clustering concentration in channel 2 at farm level and processing level. At national level; sunflower production, processing and trading activities in Tanzania are not well coordinated to the extent that the sub-sector lacks the necessary institutional support policies and frameworks such as R&D, training & extension and marketing. It is therefore proposed under the MUVI project to support the formation, registration and operations of a National Sunflower Development Association as a national body and apex responsible for the development of the sub-sector. Initially, the national apex will coordinate the activities and functions of the Iringa region and districts sunflower (farmers, processors and traders) associations. It is also expected that all other regions which are important sunflower producers (e.g. Dodoma, Singida, Arusha, Morogoro) will emulate the Iringa region initiatives to form similar regional and district sunflower associations which will also join the national apex. In so doing, the national apex will eventually become a very powerful sunflower advocacy and promotional body. The key functions and activities of the national apex will include the following:

Lobbying and advocacy to mainstream sunflower into the national R&D, extension, training and marketing systems;

Coordinate and facilitate sunflower contract farming;


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Facilitate the procurement of BDS to ensure uniform quality, effectiveness and economies of scale;

Quality assurance inspection and monitoring to ensure competitiveness; Sourcing and arranging for access to financial intermediation services; Identification of reliable local and export market opportunities;

At regional level; sunflower production, processing and trading activities in Iringa region (and indeed in all other regions in Tanzania) are not well coordinated to the extent that the sub-sector lacks the necessary regional and district institutional support policies and frameworks such as R&D, training & extension and marketing. It is therefore proposed under the MUVI project to support the formation, registration and operations of a Iringa Region Sunflower Development Association as a regional body and apex responsible for the development of the sub-sector. Initially, the Iringa regional apex will coordinate the activities and functions of the Iringa region and districts sunflower (farmers, processors and traders) associations. It is also expected that all other regions which are important sunflower producers (e.g. Dodoma, Singida, Arusha, Morogoro) will emulate the Iringa region initiatives to form similar regional and district sunflower associations which will also join the national apex. The key functions and activities of the national apex will include the following:

Lobbying and advocacy to mainstream sunflower into the regional & national R&D, extension, training and marketing systems17;

Coordinate and facilitate sunflower contract farming in Iringa region; Facilitate the procurement of BDS to ensure uniform quality, effectiveness and

economies of scale; Quality assurance inspection and monitoring to ensure competitiveness; Sourcing and arranging for access to financial intermediation services; Identification of reliable local and export market opportunities;

At farm level; there are fragmented farmers with no bulk inputs buying and bulk output marketing. In this respect, point of leverage for MUVI project is in strengthening / establishing farmers associations (groups) and contract farming that will lead to cost-effective development issues such as capacity building ( training, dialogues on policy), market and financial linkages. It is proposed that MUVI will support the formation, registration and operations of a District Sunflower Farmers Associations in all six districts. The key functions and activities will include the following:

Coordinate and facilitate sunflower contract farming; Advocacy and lobbying to ensure supportive institutional support policies such as

tax/levies (e.g. VAT and local government levies), fair trade relationships (e.g. standard weights & measures, fair competition); government subsidy (inputs and services such extension, marketing, communication etc);

Procurement of BDS to ensure uniform quality, effectiveness and economies of scale; Quality assurance inspection and monitoring to ensure competitiveness;

17 A well functioning sunflower market development center (market intelligence and information) will be established and supported as part of the regional sunflower development association mandate


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Sourcing and arranging for access to financial intermediation services; Identification of reliable local and export market opportunities;

At factory level; there is one to one relationship among farmers and buyers of sunflower seeds and primary / secondary buyers and processors. Coordination among the sunflower processors is therefore a critical aspect of the sunflower VC improvement by the MUVI project to increase efficiency of production of high quality sunflower oil and seedcake that will enhance marketability and competitiveness of the products. Pilot sunflower processing technology development centres will be established to test and recommend appropriate technologies that produce good quality edible oil as well as seed cake as required by the market. It is proposed that MUVI will support the formation, registration and operations of a District Sunflower Processors Associations in all six districts. The key functions and activities will include the following:

Coordinate the sunflower processing activities in Iringa region and districts; Over see the operations of pilot processing technology testing centres Advocacy and lobbying to ensure supportive institutional support policies such as

tax/levies (e.g. VAT and local government levies), fair trade relationships (e.g. standard weights & measures, fair competition); government subsidy (inputs/raw materials, technology and services such training, quality control and standards, procurement, marketing, communication etc);

Quality assurance inspection and monitoring to ensure competitiveness; Sourcing and arranging for access to financial intermediation services; Sourcing and arranging for access to appropriate technology; Sourcing and arranging for access to warehousing and transport services to ensure

economies of scale. At market level; sunflower traders (brokers, wholesalers, retailers, exporters) are not well coordinated to the extent that they lack a common bargaining power. Different from the traditional agricultural commodities, sunflower is not mainstreamed in the marketing systems at all levels. It is therefore proposed under the MUVI project to support the formation, registration and operations of a District Sunflower Traders Associations in all six districts. The key functions and activities will include the following:

Coordinate and facilitate sunflower marketing; Collect and disseminate market information including consumer preferences, future

market prospects & forecasts; Advocacy and lobbying to ensure supportive institutional support policies such as

tax/levies (e.g. VAT and local government levies), fair trade relationships (e.g. standard weights & measures, fair competition); government subsidy (inputs, raw materials and services such extension, marketing, communication etc);

Procurement of BDS to ensure uniform quality, effectiveness and economies of scale; Quality assurance inspection and monitoring to ensure competitiveness; Sourcing and arranging for access to financial intermediation services; Identification of reliable local and export market opportunities;


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Suggestions for Commercial, Viable Solutions of Business Services: Production: Training (agronomy + business) of farmers including promotion of farmers Field Schools Promotion of contract farming with willing medium/ larger processors to ensure bargaining power and win-win situation Marketing: Formation and strengthening of farmer groups/ contact farming and linking financial services Provision of market and price information to farmers and traders Promote market linkages between farmers and processors and bulk oil seeds buyers Development of linkages between Tanzania exporters and regional (EAC and SADC) markets dealers


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Sunflower Investment Plan I (Log frame) HIERARCHY OF OBJECTIVES

INDICATORS, BASELINES & EXPECTED PERFORMANCE TARGETS

SOURCE OF VERIFICATION

ASSUMPTIONS

GOAL: Poverty reduction and sustainable agricultural production and environmental conservation in Iringa region, Tanzania PURPOSE Income of Sunflower farmers of Iringa increased, standard of living improved.

1. Per-capita income of Iringa people increased by at least 50% by end of project. 2. Unemployment in Iringa reduced by 25% .

Project periodic performance reports; project closeout performance evaluation reports; National/regional census reports

Favourable weather and supportive institutional frameworks and investment policies prevail; global economic crisis improves

OUTPUTS 1. Farmers & district SMSs in Iringa trained and acquire skills in sunflower production storage, processing and marketing best practices

1. Number of sunflower SMSs trained

2. Number of farmers trained in sunflower best practices increase from the current 15,000 to at least 25,000 by end of project

3. Sunflower average productivity in Iringa increase from the current (2008/09) 320 Kg/acre to at least 650Kg/acre by end of project;

4. Market volume of sunflower oilseeds and sunflower oil in Iringa doubles by the end of the project.

Project periodic performance reports; project closeout performance evaluation reports; Districts trade statistics (TCCIA, TRA)

Conducive weather Prevails; increased public/private partnerships in R&D and infrastructure development

2. QD sunflower seeds production according to market demand

1. Availability of good quality sunflower seeds increase from the current less than 10% Kg/year to at least 153,600 Kg/year by end of project.

Extension reports; project M&E reports; market reports

Favourable weather prevails; Improved sunflower varieties


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HIERARCHY OF OBJECTIVES



ASSUMPTIONS

2. Price of good sunflower seed decrease from the current TZS 2,000/Kg to at most TZS 526/Kg18

3. Delays in sunflower seed eliminated by the end of the project.

developed and breeders seeds available

3. Availability of adequate working capital for sunflower producers, farmers and traders in Iringa region

1. MFIs in Iringa providing working capital to sunflower SMEs (farmers, traders and processors) increase by 100% by the end of the project.

2. Sunflower SMEs (farmers, traders and processors) accessing working capital from MFIs in Iringa region doubles in number and value of loans by the end of the project

Central Bank reports; project M&E reports (key-informant interviews

MFI’s willingness to become partners; Global economic crisis improves

4. Timely availability of reliable sunflower (and other crop commodities) market information in Iringa region.

1. Average farm-gate price of sunflower oilseed increase from the current TZS 300/Kg to at least TZS 500/Kg by end of project.

2. Average farm-gate price of sunflower seed oil increase from the current TZS 2,000/Kg to at least TZS 2,800/Kg by end of project.

3. Sunflower oilseeds average gross margin in Iringa increases from the current TZS 7,445/acre to at least TZS 150,000/acre

Districts trade statistics.

Processing technologies are improved to increase quality at affordable cost, to attract private sector investors.

5. Sunflower organizations (national, regional and district sunflower

1. District sunflower farmers associations established, registered and operational in all six districts;

2. District sunflower

Registrar of Associations, (Ministry of Home Affairs) records

Supportive institutional framework and policies; availability of

18 Average cost of production is TZS 376/Kg plus 40% profit markup (TZS 150/Kg); expected selling price TZS 526/Kg.


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ASSUMPTIONS

associations) established, registered and operations supported in Iringa region

processors associations established, registered and operational in all six districts;

3. District sunflower traders associations established, registered and operational in all six districts

4. Iringa region sunflower development association established, registered and operational19

5. National sunflower development association established, registered and operational.

adequate resources for advocacy & lobbying

6. Agro-inputs supply systems in Iringa established and operational

1. Average prices of agro inputs decreased by at least 25% by end of project.

2. Delays in agro-inputs availability by the end of the project.

Districts trade statistics; Key-informant interviews

Supportive institutional framework and policies

7. Improved sunflower R&D, supportive policies, institutional frameworks, local and foreign direct investments increased in Iringa region

1. Number of investment projects in the sunflower sub-sector increase by at least 50%

2. Number of improved

/appropriate sunflower production and processing technologies increased by 50%

Key-informants interviews (regional & district administrative staff); periodic project performance reports


8. Quality of sunflower oil increased as well as the rate of extraction per unit of sunflower seeds.

1 Increased orders of sunflower oil from sophisticated buyers e.g. Exports

2 Decreased import of other edible oils

3 Increased local

Trade Statistics Consumer tests remain the same

19 A sunflower market development center will be established and supervised as part of the regional sunflower development association mandate


88




ASSUMPTIONS

consumption of sunflower oil

3. Increased number of small scale oil processors and traders.

9. Quality of by products increased and best uses and handling identified and defined.

1. Increased usage of sunflower seed cake both at local level and out of Iringa region. 2. Export markets secured.

Trade Statistics Livestock sector keeps on growing.

10. MUVI VC Improvement project implementation, coordination and M&E systems established and operational

1. Number of investors/stakeholders in sunflower increases.

2. Number of successful

sunflower investment projects

Key-informants interviews (regional & district administrative staff); periodic project performance reports


ACTIVITIES Activity Resources & Budget Means of

verification Assumptions

Training of farmers & district SMSs in sunflower production, storage, processing and marketing best practices

Resource persons/trainers; transport, venue, training resource materials, stationery (TZS 75,050,000)

TA /Resource persons training reports; project M&E reports

Availability of funds;

Farmer quality declared sunflower seed production

Input revolving working capital; Farmer training in sunflower seed production and distribution (TZS 73,161,600)

TSCA reports; MAFS reports; project M&E reports

Availability of investment funds; favourable weather conditions

Mobilization of MFIs to provide sunflower production, storage, processing and marketing

Training and sensitization resource persons; training materials, subsistence allowances etc (TZS 2,676,000)

Project M&E reports; Central Bank periodic MFI performance review reports

Availability of funds; willingness of MFIs to become business partners; favourable


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ASSUMPTIONS

working capital

economic policies, institutional frameworks and political support

Establish Sunflower Market Development Centre under the supervision of the Iringa Regional Sunflower Development Association

Office space, furniture and equipment; staff salaries; website and database development and maintenance (TZS 50,937,110)

Project M&E reports; Key-informant interviews; VC review reports

Availability of funds; favourable institutional frameworks and policy support

Establishment, registration and support operations of district sunflower associations (farmers, processors & traders) in all six districts; Establishment, registration and support operations of the Iringa regional and national sunflower development associations

Resource persons; legal, logistical and administrative support (TZS 49,500,000)

Project M&E reports; TA training reports;

Availability of funds

Improve/establish sustainable inputs supply systems

Resource persons; legal, logistical and administrative support (TZS 52,044,305)

Project M&E reports; TA training & capacity building reports; systems audit reports; financial performance reports

Commitment on traders and Govt. to work together.

Conduct Pilot Technology testing Centres/Initiatives

Resource Persons (Engineers) Equipment, buildings, and admin support – TZS 150,000,000/=

Projects M & E reports.

Availability of funds.


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ASSUMPTIONS

for various supported Farmer Associations for sunflower oil processing. Advocacy and lobbying for R&D, supportive policies, institutional frameworks, local and foreign direct investments

Workshops, seminars, investment promotional campaigns (TZS 36,000,000)

Parliamentary budget reports; project M&E reports; Financial performance monitoring reports

Sunflower business is profitable.

MUVI VC Improvement project implementation, coordination and M&E

Staff salaries, resource persons; transport and monitoring equipment and administrative expenses (TZS 250,000,000)

Project periodic financial and M&E reports

Availability of funds

Total Investment Budget: TZS 739,369,015/=

Ref attached excel budget for details.


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References

1. Ashimogo G (1997), Co-operative Policy Reforms and the Development of Marketing Cooperatives in Tanzania in 1990s; A case study of Iringa region

2. Awadh A and Starkey P (2006), The Rapid Assessment of Rural Transport Services in Iringa region Tanzania

3. ECI, DAI Pesa (2004), Competitive Analysis of Sunflower in Sumbawanga district, Rukwa Tanzania.

4. ESRF (2008), Enhancing the Livelihoods of the Rural Poor through ICT: A Knowledge Map; Tanzania Country study, Dar-es-Salaam Tanzania

5. ESRF (2005), Focus: Iringa region on production, processing and marketing of agricultural products

6. FAO (2008), Agricultural Sector Reforms in Tanzania, perspective from within,

7. Hella J, G. Yonna (1998), Cash income generation and expenditure allocation characteristics in smallholder farming system; A case study of Mufindi district, Department of Agricultural Economics and Agribusiness, SUA Morogoro

8. Iringa Municipal Council (2008), Iringa Municipal-Socio-Economic Profile, Iringa Tanzania.

9. Iringa Municipal Council (2006), Social Economic Profile for Iringa region, Tanzania

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11. Iringa Municipal Council (2009), Regional Investment Profile 2009, Iringa Tanzania

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13. Karuga S, Joel S, Masha R (2003), Fresh Horticulture Sub sector study on DAI PESA project, ECI Africa, Maple North Mometum Park

14. Karuga S (2004), Study on Weight and Measures practice in Tanzania on DAI PESA project, ECI Africa, Maple North Mometum Park

15. Makete District Council (2008), Makete District Socio-Economic Profile, Makete Iringa Tanzania


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16. MITM (2002), Small and Medium Enterprise Development Policy, Dar es Salaam Tanzania.

17. MMA (2005), SNV Oilseeds Subsector Study in Dodoma and Morogoro Regions, Tanzania

18. Mufindi district council (2008),Mufindi District Socio-Economic Profile, Iringa Tanzania

19. MMA (2008), Fresh and Processed Tomatoes for Local and Regional Markets Sub-sector Quick Scan Tanzania, Arusha Tanzania

20. Njombe District Council (2008), Njombe District Socio-Economic Profile, Njombe Iringa Tanzania.

21. RLDC (2008),Sunflower Sector Market Development Strategy, Dodoma Tanzania

22. Swai A (2005), Farming as profitable business in Iringa, Article N° 2509 [email protected]

23. W. Massawe, Mwinyiechi. U (2007), LWR Sunflower and Sesame study in Chamwino and Kongwa districts, Dodoma Tanzania.


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