An Action Plan for Developing Agricultural Input Markets in Tanzania

Illegal Importers
Some CPPs also enter Tanzania
via illegal cross-border
trade and are sold without undergoing
the proper registration
procedures. They are sold
mainly in times of a shortage or
to price sensitive customers who
are willing to purchase unregistered
products at a cheaper
price. In many cases these are
fake or adulterated products that
put the end-users at risk.
Performance of the
Private CPP Market
The CPP market in Tanzania
is competitive and functioning
reasonably well. The importer
level is oligopolistic, and
some firms specialize in certain
products and certain market segments.
Nevertheless, importer
and dealer margins are not excessive
indicating low barriers
to entry (importer markups are
7% and wholesale gross margins are 5% to 18%); there
is a high level of non-price competition, and the market
is well-facilitated by the wide coverage of the banking
system, which enables long-distance trade and reduces
transaction costs.
a. This is an approximation.
Table IV.3 illustrates the margins at the importer
and dealer levels of the supply chain. Total administrative
costs, port charges, and bank charges add 17% to
the c.i.f. price, and charges by TPRI add another 2%.
These marketing costs plus the 10% importer markup
brings the importer price to 29% above the c.i.f. price.
The gross margin at the dealer level consists of marketing
costs plus markup and adds another 5%-18% to
the importer’s selling price. Hence, the dealer-selling
price is 34%-47% higher than the c.i.f. price. This is
comparable to market performance in Zambia where
the price at the dealer level was estimated to be 30%
higher than the c.i.f. price for herbicides and fungicides
and 45% higher for insecticides. 17
17 P. Annequin, Zambia Action Plan: The CPP Market, Draft
Report, August 2003.
Table IV.3. Normative Price Structure for the CPP Market
Source: Estimates from interviews with importers and dealers.
86
The similarity of retail prices for select products
in different markets is further evidence of the competitiveness
of the CPP market (Table IV.4).
The Regulatory System
The Plant Protection Act (1977) governs the supply
and use of CPPs in Tanzania. The Act, which became
operational in 2001, consolidated all plant protection
functions and placed them under the mandate
of the MAFS. The overarching purpose of this law and
the accompanying regulations is to increase agricultural
productivity while safeguarding human health,
biodiversity, and the environment. 18
18 Other related laws or statutes exist, which complement these
two laws and regulations. These include: The Public Health
Act (Cap 535) on pesticides for the prevention and suppression
of diseases to man, and disinfection of polluted water
sources; the Tsetse Control Act (Cap 383) on insecticides for
the control and prevention of the spread of trypaniosimiasis;
and the National Industries Licensing and Registration Act,
which is intended to provide for registration and regulation
of industries in Tanzania.