An Action Plan for Developing Agricultural Input Markets in Tanzania

With respect to CPPs, farmers mix and apply CPPs
without using the correct mixing ratios and protective
gear (clothing, masks), are unaware of handling and
storage guidelines, and are unaware of the hazards of
using CPP containers for carrying drinking water or
food. Second, farmers use new products in the same
way as they used old products, which can be unproductive
as well as dangerous. This lack of knowledge
not only prevents farmers from realizing the full benefit
of these expensive products, it also poses a serious
health risk.
The continuous cultivation without proper and adequate
use of fertilizers or the use of N for topdressing
without basal application of NPK fertilizers is leading
to soil infertility and degradation problems. As a result,
in some areas P deficiency is so acute that a small
dose of phosphate fertilizers or Minjingu phosphate
rock can lead to increased crop yields. This lack of P
has been confused with soil acidity and lime application.
Since 1993, no new soil analysis and testing have
been done to develop better fertilizer recommendations
for food crops. 4 New soil tests are needed to establish
proper recommendations for fertilizers and lime, if
needed. In this context, PADEP could take a lead in
funding these tests through its planned installation of
soil-testing laboratories.
III. Potential of the Private Sector
The mindset problem mentioned earlier suggests
that there is an on-going debate in the country about
the efficacy and capacity of the private sector to supply
inputs in a cost-effective manner. The proposed
TFC-based intervention also indicates that the country
is still struggling to reach a consensus about this matter.
Therefore, the team paid special attention to assess
the potential of the private sector in supplying inputs.
The team’s assessment indicates that the private
sector has good potential in supplying inputs. There is
an emerging private sector in the country. Several companies
are involved in marketing fertilizer and CPP
imports and also seed production and marketing. These
4 Tobacco companies have conducted their own soil tests and
based on these tests, they have developed new NPK fertilizer
20-18-24 for tobacco crops.
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companies include both national and international enterprises.
Given the opportunity, support, and enabling
environment, these entities can venture into supplying
inputs in a cost-effective manner.
In the fertilizer sector, since liberalization, 19 private
sector companies have been involved on and off
in importing fertilizers from the international markets.
A few emerging companies in the provinces have recently
entered the market based on imports from the
international markets and also through multinationals
in Kenya (Nairobi and Mombassa). There are over 20
registered seed companies and at least 15 large and
small importers of CPPs. CPP importers have their own
dealers. At the district level, there are several retailers,
though not fully skilled and equipped, who engage in
input marketing. Given the potential of the market, the
private sector has the capability to increase its activities.
This potential can be realized if there are no disruptions
or interventions in the market by the donors
or the government with subsidized or below full cost
recovery prices of fertilizers or even threats of such
action being taken. If TFC is to continue as a parastatal,
it must compete on a commercial basis with the private
sector without any overt or covert financial assistance
from the government. This includes the write-off of
losses and provision of funds without collateral at low
interest rates for conducting commercial activities; there
must be a level playing field for the private and public
sector companies.
It should, however, be stressed that “potential” refers
to “latent energy,” which could be unleashed if the
policy environment is conducive and supporting marketing
institutions and infrastructures are in place. Nevertheless,
because of the non-conducive policy environment
and other constraints identified in Section II,
this potential has not been realized and may not be realized
in the short-to-medium term unless a proactive
approach is adopted to modify distorted policies, create
greater incentive for private sector participation,
and make public sector investments in capacity building
and infrastructure development. Policy, capacity
building, and other related measures and programs
needed to create well-functioning input markets are
elaborated in Section IV.