An Action Plan for Developing Agricultural Input Markets in Tanzania

will contribute the difference. For FGIS, at the beginning
of each season participating farmers will be required
to deposit at least 50% of the cost of consumable
inputs (seeds, fertilizers, and CPPs) to be
purchased. The project will contribute the remainder
in cash per household. For innovations benefiting the
whole group or the village, the project will contribute
80% of the cost of technological innovations other than
agricultural inputs per village. The requirement of a
prior deposit by farmers before they receive the matching
grant from the project is aimed at encouraging farmers
to save in order to purchase inputs for the next season.
This will also build relationships with financial
institutions and input dealers. For both the CIS and
FGIS, the project will contribute 100% of the cost of
technical assistance and training up to a predetermined
level. The project contributions per household/village
will also be up to a predetermined maximum level. The
CBIS component will focus on capacity building at all
levels—local, district, and national—on issues related
to policy and regulatory frameworks, project preparation,
management and implementation, and funding of
additional analytical work to underpin ongoing reforms.
Specifically, the project will support further development
and updating of the agricultural sector monitoring
and evaluation system and improvement of its MIS.
The project will also support the training for the private
sector development and the implementation of the
Seed Act (1973) and the Plant Breeders Rights Act
(2002), which provides the regulatory framework for
the seed industry including the establishment of a Seed
Executive Agency.
During the first year of its implementation (2003/
04), PADEP selected eight districts, namely Arusha,
Arumeru, Singida, Hai, Masasi, Nachingwea, Iringa,
and Morogoro, and the process of farmers’ group formation
and local project selection started. In two districts,
Hai and Morogoro, the matching grant of 50%
for input purchases was implemented. In other districts,
formation of groups is moving slowly, but training activities
for district officers and other stakeholders have
been initiated. Due to unexpected increases in fertilizer
prices, farmers in both Hai and Morogoro districts
have underestimated resources needed for input
purchases.
Role of Agricultural Input Markets in Promoting
Agricultural Development
The GOT recognizes that it can no longer rely on
extensive agriculture as the main source of agricultural
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growth necessary to meet the goals of poverty reduction,
food security, and increasing farm incomes. Instead,
greater adoption of modern agricultural input
technologies via efficient markets supported by appropriate
government policies and facilitating institutions
must be the cornerstone of the strategy to achieve these
goals. Well-functioning input markets lead to the timely
availability and the affordability of appropriate and
quality inputs. In addition, they increase the farmers’
choice of products, and eventually lead to improvements
in farmers’ knowledge and use of inputs as traders
develop their clientele.
In the past, state-owned enterprises in Tanzania
directly imported, distributed, and set prices for agricultural
inputs. To the degree that private firms participated
in input supply, their activities were controlled
or the firms were limited to specific segments of the
input market. The economic reform programs of the
1980s and 1990s have resulted in the liberalization of
agricultural input markets. However, a number of constraints
continue to hamper the performance of the private
sector and as a result, high prices and non-availability
of inputs in rural areas continue to be a concern.
Nature, Scope, and Objectives of the Action Plan
Guided by the need for improving the supply of
inputs for smallholders in rural areas, the Ministry of
Agriculture and Food Security (MAFS) invited IFDC
and SG 2000 to conduct an assessment of input supply
systems in the country and prepare an action plan for
developing well-functioning input markets in Tanzania
with a focus on the following themes:
• Assess the functioning and performance of input
markets—seed, fertilizer, and CPPs.
• Identify the constraints affecting the performance of
input markets with a special focus on policy, human
capital, finance, market information, and regulatory
frameworks.
• Assess the potential of the private sector in supplying
inputs in a reliable and cost-effective manner.
• Suggest policy-related and other measures to alleviate
constraints and make input use and supply more
effective and farmer friendly.
• Prepare an action plan incorporating the suggested
measures to strengthen the functioning of input
markets.
The assessment team visited Tanzania during October
27–November 19, 2003, and interacted with over