An Action Plan for Developing Agricultural Input Markets in Tanzania

Since 1994/95 the fertilizer market in Tanzania
stands fully liberalized with the subsidies withdrawn.
Any company or individual registered with the Tanzania
Revenue Authority is free to import fertilizers and
market and distribute them anywhere in the country
with full freedom to set prices. Despite liberalization,
the fertilizer market in Tanzania is still struggling to
grow and fertilizer consumption (at less than 10 kg total
nutrients per hectare) is very low when compared
with the world average of 100 kg/ha and the Asian average
of 150 kg/ha. While fertilizer consumption has
taken off in several countries in the world and particularly
in Asia in the developing world, this has not happened
in Tanzania. There are several reasons for this.
Some of the main reasons are discussed in this annex.
An Assessment of the Fertilizer Market
Fertilizer Consumption
Fertilizer consumption in Tanzania over the past
12 years has decreased as shown in Figure II.1. According
to FAO data, fertilizer consumption reached a
peak in 1990/91, when about 50,000 nutrient tons (N,
P2O5, and K2O),
equivalent to about
150,000 product tons,
of fertilizers were
used. Since then, consumption
has declined.
Although in the recent
past there is once again
an upward trend, consumption
has still not
reached the peak of
1990/91. Presently,
about 35,000-40,000
nutrient tons are being
used in the country.
Given the fact that fertilizers
have been used
in Tanzania since the
1960s, the use in terms
of kilograms of nutrients
per hectare is still
very low in comparison
with several countries
in Asia (Figure
II.2). For example, in
Source: Derived from FAO data.
Figure II.1. Tanzania Fertilizer Consumption
49
contrast to over 140 kg nutrients per hectare of arable
land in a year in Bangladesh, about 130 kg in Pakistan,
over 100 kg in India, and about 80 kg in Indonesia, the
use in Tanzania at less than 10 kg/ha is still very low.
This indicates that over the years there has been a serious
depletion of crop nutrients from the soil without
adequate replenishment. If this situation continues, soil
infertility could become a major issue in many areas in
Tanzania.
Demand for Fertilizers
According to FAO data, the population in Tanzania
has been growing rapidly since 1961 from a total
of 10.5 million to over three times that number (36
million) in 2001 at an annual growth rate of 3.1%. The
food production in Tanzania in terms of total cereals
for this period has been growing as shown in Table
II.1.
While the growth rate of food production has been
slightly faster (3.4%) than the growth in population,