Chapter 9: Non Traditional Commodities Horticulture

9. Introduction

This Chapter assesses the implications of ongoing reforms on the production and trade of non traditional export crops with the focus on the important horticultural crops (flowers, vegetables, spices, fruits and medicinal plants); with the view of recommending actions needed by industry and government to increase the competitiveness and brighten the prospects of these commodities in contributing to the economy of Tanzania. On the basis of this objective, the Chapter has been organized into five sections. The first highlights the importance and evolution of the non traditional crops in the African and Tanzanian contexts. This is followed by a review of the current status of the horticulture sub-sector in Tanzania with specific focus on production and productivity of various horticultural commodities as well as how the sub-sector features in the various policy reforms setting. The third section dwells on the place of horticulture in the socio-economy, tradability of horticultural commodities and investment opportunities in horticulture to justify the sub-sectors prospects in the national economy. Key constraints and emerging challenges in the horticulture sub-sector and efforts that have been and are being taken to address such impediments and challenges are evaluated in the forth section, while the last section provides recommends the way forward for an industrious horticulture sub-sector in Tanzania.

9.1

The Non Traditional Crops Sector

The export economy of the crop sub sector in most African countries is at present comprised of the non traditional and traditional export crops. Crops that are not part of the customary diet of the local population and grown primarily for their high cash values and export potentials are categorized as nontraditional[1]. Crops falling under this category are mainly horticultural ones (fruits, vegetables, spices and flowers), oilseeds, legumes and medicinal plants. The traditional export crops on the other hand, are the ones that for a long time have been the main source of foreign exchange earnings contributing up to 60 percent of total export volume (Bank of Tanzania, 1999). However, from late 1980s Tanzania experienced tremendous problem for almost all traditional agricultural export crops, as world market prices declined causing a substantial drop in the contribution of export earnings by the agricultural sector from 50 percent in the mid 1990 to a mere 23 percent in year 2002 (Mlula, A. 2003). The strategies advocated by the Government in view of mitigating this dilemma involve the diversification of agriculture through inclusion of other non farm activities and promoting the production of non traditional crops for export markets. However, because the non farm activities are small in scale and often taken as a coping strategy, diversification of agriculture into non farm activities has not been successful in addressing problems in the agricultural sector, as it requires efforts to impart organizational and entrepreneurial skills to rural people so as to make the non farm activities viable sources of livelihoods (URT, 2005). Therefore the promotion of non traditional crops production remains the only practical and viable option not only for enhancing the countrys foreign exchange earnings but also for enhancing the fight against rural poverty. The recent years have witnessed many African countries going into the production of non traditional crops in order to diversify their agricultural exports and increase hard currency earning. This is because the market for non traditional crops is reported to be very profitable especially Europe and it is an area that attracts investment. Africa is endowed with a tropical climate that is ideal for growing most of these crops throughout the year while most developed countries fall in the temperate climate zone where cropping season is limited to the summer months. Increase in consumer demand in the developed countries for out of the season fresh fruits and vegetables has opened a niche for African countries to produce these crops for export during the void period at attractive prices. Basing on remarkable success by countries that have ventured in the production and export of non traditional

crops, most developing countries have formulated or are in the process of formulating the programmes for non traditional export crops development. As can be noted in the annex (Annex 1), during the period from 2002 to 2006, non traditional products accounted for an average of US$1,036.24 million. The data in annex 1 shows that during the period, non traditional agricultural products (horticultural products and other exports including fruits and grains) accounted for an average of 10.8 percent of the total export value and 14.2 percent of the total export value of non traditional products. The export value of horticultural products alone (excluding fruits), accounted for about 1.1 percent of the total exports value and an average of 1.4 percent the non traditional products export value. The implication of this is that the export value of non traditional products in Tanzania was dominated by non agricultural products especially minerals, fish and fish products as well as other exports. However, the exportation of non traditional agricultural products looks insignificant mainly because much of it is carried out as an informal cross-border trade. Horticultural crop production has always been part of the general agricultural endowments in Tanzania although commercial production (especially for export) is thought to have been started in the 1970s. Horticulture crops production normally generates higher earnings per unit area and is often an alternative to farmers with small acreage to get adequate income. Horticulture is a fast growing non traditional crops sub-sector in Tanzania, producing different varieties of fruits, vegetables, flowers and other ornamental plants, spices and herbs crops for domestic and export market. According to the Diagnostic Trade Integration study report (DTIS, 2005), horticultural exports to Europe and other [2] regional markets like Kenya are on the increase. The country has a large potential for the production of tropical, subtropical and temperate fruits, flowers, vegetables and herbs for domestic and export market which is not fully exploited. Potential areas for horticultural crops production are found mainly on the Highland and Coastal belt of the country which include; Southern highland areas (Mbeya and Iringa regions), Northern highlands (Kilimanjaro and Arusha), Coastal belts regions (Tanga, Morogoro, Coast region, Dar-Es-Salaam ) and Central regions (Dodoma) and Lake zone regions (Mwanza, Mara, Kagera). The crops produced include; Tropical fruits such as pawpaws, mangoes, pineapples, bananas, guava, grapes, mbilimbi, and indigenous fruits such as tamarind, baobab, etc; Temperate fruits such as peaches, pears, apples, strawberries, raspberry, apricots plums, etc; Exotic vegetables such as tomato onion, leeks, shallots, chives, sweet pepper, cabbages, chinese cabbages, lettuce, cauliflower, peas, carrots, cucumber, water melon, string-less beans, peas, mushrooms etc. Indigenous/tropical vegetables such as cherry tomato, eggplants, african eggplants, okra, collards/mustards, green leafy vegetables such as amaranths, nightshades, pumpkin leaves, sweet potato leaves, cassava leaves, and other wild varieties such as wild mushrooms, milk weed etc. not yet domesticated; Spice and herb crops such as cinnamon, cloves, cardamom, turmeric, ginger, vanilla, paprika, chilies, coriander, parsley, celery, black pepper, garlic, mints lemon grass, nutmeg, rosella , aloevera etc; Flowers and other ornamental plants such as cut flower roses, carnations and chrysanthemums, geraniums, asters and different types of shrubs, potted plants and leafy ornamentals. Production of most horticultural crops is practiced by small scale farmers except for a few crops especially flowers such as cut flower roses, chrysanthemums, geraniums, asters, etc and some exportable vegetables such as green beans, peas, courgettes, baby corns, chilies, baby carrots, baby leeks etc. which are produced by large scale farmers and companies for export. Various national research institutions for Horticulture are available in the country including KATRIN (Morogoro), ARI-Uyole (Mbeya), ARI Mlingano (Tanga), HORTI- Tengeru (Arusha) and ARIMaruku (Kagera). Other institutions include training institution like SUA and the AVRDC.

A few fruit and vegetable processing factories are available in the some key horticultural crops producing regions. These include DABAGA in Iringa region, RED GOLD in Arusha region, NATURAL CHOICE in Tanga region (Lushoto district), CHEMI industries in Dar es Salaam region and SNOW CAP in Kilimanjaro region.

9.1.1

Relevant Domestic Reforms

In 1982 Tanzania formulated its first agricultural policy that was designed to guide the country out of the sector performance slides experienced in the 1970s. This policy provided the guidelines with the predicament of the Government continuing to play a central role in the commercial investments, management and marketing of agricultural products, input supply and provision of services. However, because of the changes in the macro economic environment that ensued in the 1880s, the Government embarked on the implementation of the Public Sector Reform Program with the aims of disbanding the centrally planned economy. The programme involved privatization/divestiture of public enterprises while strengthening the government capacity to make policies and play effective regulatory role. In line with the Public Sector Reform Programme, the Ministry of Agriculture formulated the new Agriculture and Livestock Policy in 1997 to re-orient its mission and redefine its policies, strategies and its core activities[3]. The Government also developed other policies which have a strong bearing on agricultural development in Tanzania including the Cooperative Policy, the National Land Policy as well as the National Microfinance Policy. The 1997 Agriculture and Livestock Policy objectives[4] are geared to ensuring that the direction and pattern of development in the agricultural sector meets social objectives and outputs. The policy emphasizes the importance of competitive markets and Government interventions in providing priority public goods and services and the conservation of the environment as a rational basis for agricultural development. The 1997 Cooperative Development Policy on the other hand, acknowledges the role of cooperatives as economic empowerment tools of the vulnerable members of the society such as small producers/farmers, women and youths, who otherwise cannot compete as individual players in the market. It marks a change from cooperatives being state-controlled institutions to becoming autonomous and member-controlled private organizations. The policy provides the framework for the restructured cooperatives to operate on an independent, voluntary and economically viable basis and to develop into centres for providing inputs, implements, technologies and information. Broadly, the policy aims at empowering farmers in view of enhancing their bargaining power in the market. The 1997 was revised and a new Cooperative Development Policy formulated in 2002 which among others; recognizes economic groups as important initiatives towards genuine member-based cooperatives and puts emphqasis on commercially oriented business minded leadership instead of civil-service oriented management in running the cooperative movement. The National Land Policy underscores the importance of land use planning as a tool for land development and a framework for formulating extension packages. The policy provides an advocacy for community land use management as a key to addressing the problems of land degradation, equitable resource allocation and the resolution of conflicts between various land users[5]. In a nutshell, the policy seeks to achieve the following objectives:

promote and ensure a secure land tenure system; Ensure the optimal use of land resources; and

Facilitate broad based socio-economic development without endangering the ecological balance of the environment.

The national microfinance policy which was issued in 2000 provides a basis for the evolution of an efficient and effective savings mobilization and micro-financing system in the country. The policy recognizes the Savings and Credit Cooperative Societies (SACCOS) as the major providers of microfinance services which, when fully developed will evolve into community banks that later will be amalgamated to form Cooperative Banks (URT 1997). To-date the number of registered SACCOS is said to have increased to 4, 000 from only 400 that existed prior to 2006. Horticulture in the 1997 Agriculture and Livestock Policy context The Agriculture and Livestock Policy (1997) gives a highlight on important horticultural crops that are commonly produced for the market and for which much promotional efforts need to be put in the next decade. The policy mentions pineapples, passion fruits, citrus fruits, mangoes, peaches, pears and desert bananas as important fruits; and tomatoes, spinach, cabbages and okra as important vegetables. Flowers include tropical varieties e.g. tuberous roses and some temperate types e.g. carnations, Lisianthus and Chrysanthemums. Tropical flower crops worth researching on include dwarf heliconia, torch ginger, tulip ginger, and cigar calathea. According to the policy, some of these crops can be produced throughout the year but the majority a highly seasonal; a reason for the domestic market gluts during the season and severe scarcity during off-season. The policy admits that growth in the Tanzania horticultural sector is challenged by a number of factors including: poor production organization (inadequate supply/unavailability of seeds, inputs, research and extension services); poor marketing system resulting in quality deterioration and huge post harvest losses; inadequate storage, packaging technology and processing facilities which in turn creates gluts and critical shortages of horticultural products during off season; poor roads, particularly feeder roads and lack of appropriate transportation logistics; and poor quality control system. Although the external market opportunities for horticultural products in the neighbouring and overseas countries like the Middle East and Europe have increased in recent years, the policy stresses on the need of Tanzania to tackle these constraints and stringent demands on standards by the European customers so as to gain access to these markets. In other words, during this period Tanzania has to compete with other world producers whose systems are much more efficient. However the policy falls short of emphasizing development of traditional/indigenous fruits and vegetables whose positive attributes in terms of adaptability to the environment, resistance to pests and diseases, less inputs needs and high nutritive value put them on the higher side, despite their relatively low their yielding potential (URT 2002). Most of these crops are grown at homesteads for household consumption and within city gardens for sale in the local market. Mchicha-amaranths, kisamvu-cassava leaves, mnavu-nightshade, ngogwe-African egg-plant, mboga ya maboga-pumpkin leaves and matembele-sweet potato leaves; are some of the existing examples. They are cheaper vegetables to produce, are widely consumed, and are higher in nutrients than exotic vegetables and very important for food security. The policy also does not mention the development of mushroom production as a rich source of protein and high value vegetable crop for local and external markets. The existing agricultural and livestock policy of 1997 is the current operating policy for the sector although it is now in the review process. Formally the policy document of 1997 included both the

Livestock and Crop Sectors but the on going policy review is structured to cover separately the crop sector and livestock sector (already completed in 2006 and is operational)

Policy Implementation a) Agricultural Sector Development Strategy

In broad terms, the above described policies are being implemented within the framework of the Tanzania Development Vision 2025 and the National Strategy for Growth and Reduction of Poverty (NSGRP). The Agricultural Sector Development Strategy (ASDS) which is currently being implemented through the Agricultural Sector Development Programme (ASDP), District Agricultural Development Plans (DADPs) was adopted in 2001. The strategy provides a basis for concerted efforts by the public and private sectors to stimulate growth and reduce rural poverty through exploitation of the countrys comparative advantage in the production of major export, food and more lucrative non traditional crops. The ASDS also seeks to exploit the countrys domestic and international trading opportunities created through membership of regional and international trade groupings and protocols. Creating the strategic partnership between agribusiness and smallholder farmers is another potential opportunity that the strategy is set to exploit. Among others, the strategy addresses farmer organization; provision of adequate investment incentives; review and harmonization of the sector legislation, strengthening the public and private sector capacity to provide improved support services; and paying the attention to marketing of inputs in view of improving net farm returns in the short term and commercializing agriculture in the medium and long term as priority issues. b) Agricultural Legislation

Important agricultural legislations with the bearing the promotion of non traditional crops in the country include the Plant Protection Act (PPA) of 1997, the Plant Breeders Rights Act (PBRA) of 2001 and the Seed Act of 2003. Pursuant to the sectoral reforms aiming at strengthening the Government regulatory, the PPA which was enacted in 1997 entrusted all plant protection regulatory functions to the Government. The PPA therefore repealed the outdated 1937 Plant Protection Ordinance, 1937 Locust Ordinance and some parts of the 1979 Tropical Pesticide Research Institute (TPRI) Act. The PPA is the first comprehensive statute that contends that the maintenance of the international reputation of Tanzanian imports and exports requires the exclusion or restraint of harmful organisms from such produce. The Act therefore seeks to prevent the introduction and spread of harmful organisms; to ensure sustainable plant and environmental protection; to control the importation and use of plant protection substances, to regulate export and import of plants and plant products and ensure fulfillment of international commitments. Phytosanitary inspectorate services form a crutial component of the Act and are provided at all points of entry and exit including airports, ports and border posts. The implementation of the PPA is overseen by the National Plant Protection Advisory Committee (NPPAC). The NPPAC members are drawn from public and private institutions dealing with plant protection issues. The Committee is responsible for advising the Minister on all matters pertaining to the implementation of the Act and its Secretary is the Chief Inspector who also heads the Plant Health Services Section in the Ministry of Agriculture, Food Security and Cooperatives.

The PBRA was enacted in 2002 to provide for payment of royalty fees by commercial seed traders to plant breeders for the following reasons:-[6] To assist in providing sustainable compensation to plant breeders for their long time involvement in developing and testing new varieties; To assist in controlling unauthorized multiplications of seeds of both public and private varieties; To provide an incentive to local (public and private) and international breeders to involve themselves fully in plant variety breeding in the country, therefore providing farmers with high quality varieties; To provide incentives for increased investments in seed production; To facilitate technology generation and transfer through shared breeding and licensing; To bring about revolution in the seed industry and hence contribute to the attainment of the national goal of economic development and food security. The Plant breeders Rights Registry has been established and the PBR Registrar appointed to deal with the regulation of PBR issues as stipulated in the Act. The royalty fees payment advocated by the Act is an incentive to researchers as it will motivate them to venture in plant breeding for more crop varieties that are more productive and adaptive to the environment. The Seed Act of 2003 complements to the Plant Protection Act of 1997 in terms of regulation of the importation, exportation and sales of seeds in the country. According to the Act, all seed importation, exportation, production, processing, distribution, sale or advertisement for sale of seeds must seek permits from the Director[7]. Similarly all seed dealers in the Country have to be registered with the Director. Seed quality control is a central issue addressed by the Act with the aim ensuring that the Tanzanian farming community gets quality improved seeds for enhancing productivity and production. The Act establishes the Tanzania Official Seed Certification Institute (TOSCI) with the mandate of carrying out seed field inspections and seed sampling and testing. The Act also establishes the National Seeds Committee as a stakeholders forum responsible for advising the Government on all matters relating to the development of the Tanzania seed industry. Promotion of on-farm seed production and multiplication by smallholder farmers through the establishment of formal procedures for certifying seeds produced by smallholder farmers has been highlighted in the Act; and the seed obtained through this procedure will require certification by TOSCI as Quality Declared Seed (QDS). National Trade Policy The National Trade Policy of 2003 is based on the mid 1980s to 1990s trade liberalization initiatives that included gradual reduction of import restrictions; liberalization of foreign exchange transactions; simplification of the tariff structure, abolition of import bans for luxury goods and licensing requirements for exports; and allowing the private sector to compete in processing and marketing of cash crops[8]. Essentially, the policy responds to issues raised in Tanzanias World Trade Organization (WTO) trade review which was undertaken in 2000. The issues raised included Tanzanias desire in creating an environment conducive both to domestic and foreign investment and the countrys limited export capacity despite the existing opportunities such as the regional trade integration initiatives as well as the bilateral and multilateral preferential trade partnerships[9]. Reforms in the agricultural sector that involved the Government withdrawal from direct involvement in production, processing and market activities also prompted the formulation of the national trade policy. The policy focuses on structural transformation of the economy, product and market diversification, raising efficiency and productivity as well as stimulating international competitiveness as important roles through which trade can contribute to the achievement of the countrys poverty reduction

aspirations by 2025. It aligns national development agenda with regional and international trade obligations and maximization of the benefits of participation in regional and international trade arrangements. The policy provides for the interim safeguarding of domestic industry and economic activity threatened by liberalization[10], and addresses the supply-side constraints that inhibit expansion of trade within the domestic and global market as the route towards rapid economic development. In this respect, the policy vision is to transform the economy from a supply constrained one into a competitive export-led entity responsive to enhanced domestic integration and wider participation in the global economy through national trade liberalization and the mission is to stimulate the development and growth of trade through enhancing competitiveness aiming at rapid socio-economic development[11]. The Policy objectives are:

To stimulate trade development within the domestic market through establishment of improved physical market-place infrastructure, dissemination of market information and increasing access to the market; To transform the economy towards an integrated, diversified and competitive entity capable of participating effectively in the Multilateral Trade System (MTS); To stimulate and encourage value-adding activities on primary exports as a means of increasing national earnings and income flows even on the basis of existing output levels; To stimulate investment flows into export-oriented areas in which Tanzania has comparative advantages as a strategy to introduce technology and innovation into production systems; and To attain and maintain long term current account balance and balance of payments through effective utilization of complementarities in regional and international trading arrangements as a means of increasing exports combined with initiatives for higher efficiency in the utilization of imports.

The policy also focuses on the rationalization of the continued use of tariffs as an instrument of protection and revenue generation; further reduction of tariff rates; and narrowing of tariff bands with the aim of reducing tariffs to levels that conform to regional and multilateral obligations. Rationalization of central and local government taxation with the introduction of lower rates while improving the tax administration regime and removing export taxes is another important barrier aspect addressed by the policy. Regarding the Technical Barriers to Trade (TBTs), the policy undertakes to continue observing and enforcing international standards rigorously in order to protect economic activities particularly in the agricultural and livestock sectors from the dangers of exotic pests through Sanitary and Phytosanitary (SPS) measures. The other policy issues include consumer protection against sub-standard and harmful products as per SPS and TBT agreements and raising awareness on international standards with respect to conventional exports and to new products adopted under economic diversification strategies.

9.2

Flowers and Ornamental Plants

Flower production for export is basically practiced by large Companies in the northern zone especially in Arusha and Kilimanjaro regions where a list of flower producing and exporting companies operates. Different types of flowers produced are exported to Germany, Netherlands, Norway, USA, France, Switzerland etc. The companies involved in flower business in the Northern Zone include Kiliflora Nduruma Farm Ltd (cut roses), Tengeru Flowers Ltd (cut roses), Hortanzia Ltd(cut roses), Tanzania Flowers Ltd(cut roses), Dekker (T) Ltd (Chrysanthemum cuttings), Mount Meru Flowers Ltd , (cut roses), Arusha Cutting Ltd (Chrysanthemums), Multiflower Ltd (Chrysanthemum cuttings),Dekker Kilimanjaro Ltd (Chrysanthemum cuttings), Dekker (T) Moshi Ltd (Chrysanthemum cuttings), Fides Tanzania Ltd (different flower types- Geraniums, Chrysanthemums, Osteospermum, Impatiens, Aster, Kalanchoe) ,LA Fleur D Afrique Ltd (cut roses), Mount Meru Flowers Ltd (cut roses), Green Stars Cuttings Ltd. (Chrysanthemums, Border/garden plants), Vasso Agroventures Ltd (garden and pot

plants flower seeds), Kilimanjaro Flair Ltd (Hypericum flair). An area of about 137 Ha of greenhouses is estimated to be under production of different types of flowers such as Chrysanthemums, Roses, ornamental sunflower and Licianthus most of which are exported out of the country. Flower production for export is increasing year to year due to business growth leading to expansion of production sites. From 2005/06 the quantity of flowers exported to different destinations was estimated at 5,862 tons which increased to 6,897 tons in 2006/07 from an estimated acreage of 137 ha.

Table 1: Northern Zone Flower Companies, Area under Production and Flower Exports
SN 1 2 3 4 5 6 7 8 9 10 11 12 Name of flower Company Tengeru Flowers Mount Meru Flowers Tanzania flowers La Fleur DAfrique Kiliflora Hortanzia Fides Tanzania Dekker Bruins(T) Ltd Arusha Cuttings Multiflower Ltd Green Stars Ltd Kilimanjaro Flair Ltd Total Type flower Roses Roses Roses Roses Roses Roses Roses Cuttings Cuttings Cuttings Cuttings Cuttings of Area (Ha) 8 14 12 9 37 7 6 13 3 1.5 1.5 25 137 Employment (No. of workers) 265 310 300 206 928 288 140 770 120 90 61 260 3,738 Exported flowers (MT) 2005/06 2006/07 268 400 720 1,000 720 852 402.4 534 2,240 2,372 352 360 100 91 674 750 75 79 19 24 19 20 273 415 5,862 6,897

Source: TAHA, 2007

In recent years some flower production and export has become an important undertaking in the Southern highlands in Njombe and Mufindi districts in Iringa region where basically cut flower roses is produced for export. Flower production is also taking place even in Dar es Salaam region (Kigamboni area) where production of leafy flower types and heliconia is undertaken by some investors for export purpose.

9.3

Fruits, Vegetables and Other Products

Tanzania has a variation in topography and altitudes which dictates different climatic conditions and the potential of growing different types of fruits ranging from tropical, sub-tropical and temperate fruits. The fruits produced in the country are oranges, mangoes, grapes, pawpaws, pineapples, bananas, guavas, lemons, tangerines, avocados, soursops, peaches, plums, pears, apples, jackfruits etc. Most of fruit crops are produced by small scale farmers and are consumed locally with little exports. However, information from TAHA show that private companies like Kilimanjaro Horticultural exports Ltd export strawberries and raspberries[12].

The production of vegetables is also still low and is mostly practiced by small scale farmers mainly for domestic markets, except for a few vegetables that are produced for export. Potential areas for vegetable production are found in the highlands and coastal belt of the country; including Kilimanjaro, Arusha, Tanga, Mbeya, Morogoro, and Iringa regions. Vegetable production for export is carried out by private companies like WIMBO Exports through own farms and outgrowers. Vegetables that are produced for export include green beans, peas, courgettes, chillies, baby corn, baby carrots, baby leeks etc. For example, for 2005/06 and 2006/2007 seasons, the Gomba Estates Ltd (the former vegetable exporter) exported 1,666.48 and 1,500 tons of fresh vegetables respectively. Spice and Herbs Spice and herbs crops are aromatic crops with hot to piquant taste used to impart good flavor and taste to food. Spices and herb crops produced in the country include; cinnamon, cloves, cardamom, turmeric, ginger, vanilla, paprika, chillies, coriander, parsley, celery, black pepper, garlic, mints, rosemary, lemon grass, lemon verbena, nutmeg, rosella , aloevera, Artemisia etc. Most spices and herbs grown in Tanzania were introduced from other countries (e.g. clove was introduced to Zanzibar from Indonesia through Mauritius). Spice and herb production is predominantly undertaken by small scale farmers in the spice growing zones in the East Uluguru Mountains (Morogoro region), the East Usambara Mountains (Tanga region) and the famous Zanzibar Islands. Most spices and herbs are economically important for both domestic and export markets. However like other horticultural crops, spice production is low although there are few exported spices like cinnamon, cloves, ginger, turmeric, garlic etc to various destinations as shown in Table 46. The current export estimates for spice crops is less than US$5m per year although DTIS (2005) reports the spice export potentials to possibly reach US$15-20 per year.

Table 2: Spices Exports by Value, Volume and Destination, 2006

SN 1 2 3 4 5 7 Spice type Cinnamon Cloves Ginger Turmeric Other spices Garlic TOTAL Quantity exported (Kg) 100 3,032,843 101,599 3,370 58,134 116,136 3,312,182 Value (FoB) Tshs 50,000 9,963,555,798 8,709,850 2,140,000 38,185,120 19,624,099 10,032,264,867 Destination DR Congo United Arab, Burundi India,Jamaica,Japan,Kenya Singapore, Vietnam Kenya Hungary, Comoros Zimbabwe DRC,Germany,United Kingdom, Hungary, DR Congo Burundi, Finland, United Kingdom ,Kenya, Comoros DR Congo

Source: Worked out from TRA (Statistics Unit), 2007

Medicinal Plants - Artemisia Artemisia plant (Artemisia annua L.) also known as annual wormwood or sweet wormwood is a highly aromatic annual herb of Asiatic and Eastern Europe origin and widely dispersed throughout the temperate regions. Following recent researches in traditional herb medicine in China, A. annua has brought attention to be a rich source of qinghaosu (artemisinin) a compound that is ant malaria agent and also reported to be a potent plant inhibitor with a potential as natural herbicide. In Tanzania, commercial artemisia production as one of the important medicinal herb started recently in 2005/06 following awareness created by various Private Companies such as African Artemisia Ltd, Jolanji Ltd and Lima Ltd. The Jolanji Ltd and Lima Ltd are operating in the Southern highlands regions especially Iringa and Mbeya while African Artemisia Ltd operates in the Northern highlands

regions of Kilimanjaro and Arusha. The companies use Contract Farming arrangements whereby small scale growers are contracted to grow the crop with the company support in providing technical skills and input credits. By 2006, the area under artemisia cultivation was 3,560 Ha which produced about 4,120 tons of artemisia leaves per annum.

Table 3: Structure of Artemisia Production, 2006

SN Region Company Number of Contracted farmers NA 4,724 710 Cultivated (ha) 1,100 2,440 140 3,560 area 2006 production (tons) 2,000 1,875 245 4,120

1 2

Northern highlands (Kilimanjaro Arusha ) Southern highlands (Iringa, Mbeya) TOTAL

African Artemisia Ltd. Jolanji Ltd Lima Ltd

Source: Worked out from various reports at MAFC.

Although artmesia is a new crop, it has got a huge potential in enhancing poverty alleviation especially in areas where its production is carried out through contract farming arrangements. Basing on its potential, promotion of artemisia cultivation is one of the agenda in the ruling Chama cha Mapinduzi (CCM) election manifesto as well the agricultural policy currently being drafted. Taking into consideration the importance of artmesia in the preparation of Artemisinin and Artemisinin-Based Combination Therapy (ACTs), the World Health Organization (WHO) is supporting artemisia promotion initiatives for the population in need[13] . Mushroom Mushroom production in Tanzania started in 1993 with a few small scale growers. The commonly grown mushroom in Tanzania is of Pleurotus types which are suitably grown in tropical climate. However, there is a big potential to produce other types of mushrooms like auricularia, button and even ganoderma (medicinal types). Other wild mushroom types such as cantharellus and termitomycetes are still found in some parts of Iringa, Tabora, Coast region, Morogoro, Mtwara, Kagera regions etc. One of the advantages of mushroom farming is on the economical use of various crop residues, crop by-products and grass which are used as substrates for mushroom production. The diverse weather in the country allows production of various types of mushroom and since mushroom is produced in indoor/backyards, production can be done throughout the year. Mushroom production is estimated at 260,000 MT per year with an annual average income of more than 26,847,040 US$ (Mwasha, A.M, 2004-Study on status of mushroom marketing in Tanzania). The study estimates the availability of more than 1.0 MT of crop residues countrywide with a potential to produce an estimated quantity of 800,000MT of mushrooms per year. Various research institutions dealing with mushroom includes TIRDO, SUA, UDSM (Microbiology), ARI- Uyole, Horti-Tengeru etc. The most mushroom producing regions include Arusha, Kilimanjaro, Morogoro, Coast region, and Dare s salaam, Iringa, Mbeya and Mwanza. Three major factors constraining mushroom production in Tanzania include lack of adequate knowledge on mushroom production, inadequate quality spawn production and post harvest losses resulting from the perishable nature of mushroom. The emergence of mushroom growers associations and networks[14] gives an assurance on the bright future of the mushroom industry in the country. Organic Agriculture Organic agriculture can be defined as a system of managing agricultural production using environmental friendly farming practices with limitations in the use of synthetic chemicals including fertilizers and pesticides (ITC, 2002). Organic agriculture in the country is practiced in the production of various crops in several regions of the country. The crops under organic production practice include

cash crops (cotton, black tea, and cashews, cocoa); spices and herbs (ginger, cinnamon, vanilla, black pepper, cardamom, cloves, lemon grass, rosella etc.); fruits (mango, orange, lemon, jackfruit, pineapples, paw paws, guavas etc. oil crops (sunflower, sesame, oil palms, coconuts) and vegetable (peas, onions, garlic etc). It is estimated that there are more than 40,000 certified organic farmers with 64,000 ha under organic agriculture production in the country. In order for a product/produce to be recognized as organic, it needs inspection and certification with respect to recognized organic standards. Currently, the Tanzania Organic Agriculture Movement (TOAM) is spearheading the promotion of organic agriculture in collaboration with the government through MAFSC, the local certification body known as TanCert and various stakeholders. The organic agriculture movements in the East African Region led to the development of the East African Organic Products Standards (EAOPS) and the official East African Organic Mark (EOAM) in 2006 and 2007 respectively.

Table 4: Certified Organic Producers in Tanzania

1 2 3 4 5 6 7 8 9 10 11 12 13 14 Name of the firm Kilimanjaro native Cooperative Union (KNCU) Tanzania Organic products Ltd. (TAZOP) Mufindi tea Company Ltd Tazania Tea Packers (TATEPA) Zanz-Germ Enterprises Ltd. Premier Cashew Industry Ltd.(PCI) Clove Stem Oil Distillery (CSOD) Kagera Cooperative Union (KCU) Biolands International Ltd. Dabaga Vegetable Can Company Kimango farm Enterprise Ltd. Tanganyika Instant Coffee Company Ltd.(TANICA) Bore Tanzania Ltd. Matunda Mema/Kipepeo Organic production area Moshi /Kilimanjaro Zanzibar, Tanga, Kigoma Njombe Mafinga /Dar es salaam Zanzibar, Tanga, Kigoma Coast, Mkuranga Pemba Kagera Mbeya (Kyela) Iringa (Njombe) Morogoro Kagera Shinyanga (Meatu) Karagwe Products Arabica coffee (Certification in 2004) Herbs and spices Black tea and herbs Black tea and herbs Herbs and spices (ginger, pepper, turmeric, chill, and lemon grass) Cashew nuts Essential oils: Lemon grass, cinnamon leaf oil, eucalyptus, and sweet basil. Robusta Coffee Cocoa Canned pineapple Herbs and spices Instant Coffee Cotton Dried Fruits

15 16 17

Kibidula Bombay Burmah Corporation Ltd. ADP Isangati

Trading

Mafinga Usambara/Soni-Herkulu Estate Mbeya (Isangati)

Herbs (in conversion), no export Fair trade and organic tea Turmeric, no export

Source: EPOPA, 2004 Basic data on certified organic production and export in Tanzania.

9.4

Prospect for the Horticultural Sector

Domestic and cross border trade In recent years, horticultural commodities have become highly tradable in both the domestic and international markets. The increase in horticultural commodities trade can be attributed to a number of factors including the following:

Land pressure, necessitating producers to go for more intensive production and higher value crops (Kilimanjaro and Arusha Regions); Changes in the nutritional and living standards of Tanzanians have increased demand for horticultural food crops; Increased food processing industries have created demand for raw materials (juices, syrups, pulps, pickles, etc.); Disruption of the traditional collection of vegetables, fruits and mushroom from the wild resulting from Villagization and urbanization has encouraged more pronounced home and market gardening undertakings; Status of horticultural crops in the cash economy has increased, sometimes at the expense of existing cash crops because in most cases they have higher value per unit area (tomatoes, passion fruits, avocado, mushroom, flowers, etc.); and Available new markets outside the country as a result of trade liberalization have stimulated production and exports of vegetables, fruits and flowers from Tanzania.

The horticultural products value chain analysis involves a sequence of activities that start at farm level ending at market level. Such activities include production, harvesting, collection, sorting, packing, transportation and processing. Basically these processes involve the farmer (producer) on one hand; and middlemen (traders), processors and consumers on the other. The production and harvesting processes are normally carried out at farm level by the farmers themselves after which traders collect the products for further processes. Here traders buy the products at farm gate prices but at certain times producers may upon harvesting, collect and assemble their products for sale to traders, processors and consumers at the designated collection centres. However because of the increasing growth in horticultural trade, traders and middlemen normally buy straight from the farmers. In Tanzania most of the horticultural products produced in the remote rural areas are transported to urban areas for processing and/or marketing. As can be noted from Box 11, the cross border trade in horticultural products between Tanzania and neighbouring countries like Kenya is rapidly gaining momentum (URT/World Bank, 2007). The informal trade with Kenya in products like onions, tomatoes, potatoes and oranges has more direct links to small and resource poor farmers, many of whom are actively engaged win trading as can be noted in box 11; and hence creates a potential avenue for enhancement of poverty eradication especially in areas neighbouring Kenya.

Box 1: Marketing Chain for Oranges and Onions

Orange Marketing and Competitiveness Most of the oranges imported into Kenya originate from Tanga and Morogoro. Tanzanias competitiveness in Kenya markets is due in part to the absence of greening disease, a problem that affects Kenyas higher elevation growers. In addition, Kenyan producers face tighter land constraints, and orange production competes with more profitable export crops.

External Support to Farmers to Facilitate Competitiveness Government provision of new planting material in the Muheza district, in the Tanga region, helped establish significant orange production in the 1970s. More recently, the development Alternative Inc. Private Enterprise Support Activities project has helped farmers for marketing associations that streamline the marketing chain, with farmer associations now selling straight to Nairobi-based traders. Over time, farm-gate prices have almost doubled as farmers marketing options have increased, and the bargaining power of local traders has declined. The project continues to document and assess the effect of taxes and fees levied during transport to the border, which appear to be a continuing constraint on the trade. The Marketing Chain for Onions Tanzanian exports now account for a significant portion of the Kenyan onion market. Tanzania exports throughput the year, mainly from Mangola in Arusha region. The marketing chain includes rural brokers who, for a fee, introduce wholesale traders to farmers who have onion for sale. The trader buys the crop from the farmer, packs it, and hires transport to the Arusha market, where the produce is unloaded and sold by the wholesaler. Some efficiencies could perhaps be achieved by having by the Nairobi trader work directly with the Tanzanian trader who buys from the farmer, rather than through the Arusha market. This approach would save handling costs, market fees and the wholesalers margin and would allow a greater portion of the sales price to be returned to the farmer. Reducing the number of times that onions are handled would also improve quality further. During interviews, traders stated that there was a law or rule that all produce destined for Nairobi had to be traded through the Arusha market. This information needs verification. Mangola onion producers have not yet received support from a donor-funded project, but their competitiveness is based on both their proximity to Nairobi and their higher yields, which are probably due to lower incidence of fungal diseases in Tanzanias drier production areas. Tanzania producers also have a quality edge in the Nairobi market: farmers grade the onions, and the better ones are exported. Farmers and traders note that their competitive position could be improved further by improvements in onion seed quality and an increase in the range of seed varieties.
Source: URT/World Bank 2007.

Preferential trade opportunities The Tanzania agricultural export sector has been and is enjoying the existence of various preferential accesses into certain countries and trade blocks within the World Trade Organization (WTO) framework. WTO was established in 1995 after the eight year Uruguay Round negotiations from 1986 to 1994, as the successor to the General Agreement on Tariffs and Trade (GATT). As a global international organization dealing with the rules of trade between nations, the nucleus feature of WTO is trade agreements, which are negotiated and signed by the bulk of worlds trading nations and ratified in their parliaments (Kweka, J 2004). The WTO aims at enabling producers of goods and services, exporters and importers conduct their business smoothly, predictably and as free as possible in view of improving the welfare of the peoples of the member countries. Tanzania is one of the WTO founding members[15] and out of several WTO trade agreements and negotiations, the Country has selected agriculture as one of the priority areas[16]. The issues of concern in this area include agricultural subsidies in developed countries, sanitary and phytosanitary (SPS) measures and technical barriers, tariff escalation and tariff peaks and appropriate adjustment or development friendly mechanism to mitigate the negative impacts of the reform process. 9.4.1 Investment Opportunities in Horticulture

Investment areas in horticulture are numerous ranging from production, processing and trading. The following can be among the areas of interests: Introduction and multiplication of quality improved planting materials and seed adapted to different agro-ecological zones for distribution to farmers;

Introduction of large and small scale fruit and processing and extraction of essential oils from spices; Quality spawn production and large scale mushroom production, processing and marketing; Establishment of large scale/ estates for fruits, vegetables, flowers and spices in regions with great potential; Supply and distribution of quality packaging material to meet the target market; Large scale flower production in regions with great potential; and Horticultural improved seeds distribution.

Categories of investors Three categories of investors in the horticultural subsector existing in Tanzania include the current investors, current investors in non-horticultural/agricultural sectors and potential domestic and foreign investors. Current investors These may be institutions and/or individuals who are currently investing in horticulture including the following: Local farmers with experience in local farming techniques and responding to local conditions. Domestic businesspeople with an understanding of the business of horticulture and the opportunities for business development along specific elements of the value chain. Foreign investors who have some experience in the sector, who are likely to know of the market demand for horticultural products that can be produced within certain areas.

The challenge when targeting these investors is to understand their current constraints and expectations. These people have a good understanding of the business environment and can quickly identify the major constraints to expanding their investment base. There is a great opportunity to work with these people to mobilize greater levels of private investment in the agricultural sector. Expanding the investment base of current investors in horticulture will involve: Identifying and responding to current investor concerns. Broadening the networks and access to information (i.e., market and producer information) of current investors. Creating a supportive policy, legal and regulatory framework for investment in horticulture.

Current investors in the non-horticultural/agricultural sector Included here are investors participating in the non-horticultural/agricultural sectors such as trade, tourism and construction but could diversify their investment portfolios by investing in horticulture/agriculture. The challenge when targeting these investors is to help them better understands the opportunities that can be found in horticulture/agriculture in their respective areas. Agriculture is likely to be a sector they know little about or have biased views of. Supporting the transition from non-horticultural/agricultural to horticultural/agricultural investment among domestic investors is likely to involve: Improving networks and access to information on horticultural/agricultural investment opportunities within given areas.

Identifying and responding to current investor concerns.

Potential domestic and foreign investors This is a category of investors who for some reasons, are not currently investing in the horticulture/agriculture. The reasons may include: Uncertainty concerning the security and rate of return of their possible investment in the countries of investment. Better investment opportunities available in other countries in Africa or globally (i.e., more competitive investment climates). Lack of awareness of the potential investment opportunities that exist in the given countries.

Thus, enticing these potential investors to put their investments in horticulture/agriculture is likely to involve the following: Reforming the business environment to make it more competitive, stable and predictable. Raising awareness concerning the potential for investment in horticulture/agriculture in given countries Among potential domestic and foreign investors, it is proposed that priority attention be given to the following groups: Foreign institutional investors engaged in the agricultural sector, with a priority given to those located in other African countries (e.g., South Africa) or located in Europe and the US with investments in other African countries. Potential investors from the African Diaspora who can provide remittances to the in the form of agricultural investments.

Foreign Direct Investment (FDI) Economic researches have confirmed that sectors dominated by Foreign Direct Investments (FDI) realize greater output growth and productivity compared with domestic firms[17]. The role of FDI in enhancing development in host countries is with respect to increased output growth and productivity; and is widely recognized in the following areas: Filling the gap between desired investment and domestically mobilized savings; Increasing tax revenues; and Improving management and technology as well as labour skills.

In short, FDI contributes to total factor productivity and income growth in host economies, over and above what domestic investment would trigger and is a valid alternative in the fight against rural and urban poverty in developing countries. Following the improving economic performance and investment climate resulting from the economic and political reforms that started in early 1990s, Tanzania has witnessed an increase in the inward FDI stock from US$224 million in 2001 to US$6,028.8 in 2005 (E. Msuya 2007). Despite the enormous investment potential in the agricultural sector[18], the FDI resources that have been directed to the sector are too small relative to the manufacturing[19] and mining sectors, leaving the sector with an average of about 2.1 percent of the total FDI flows to Tanzania (Msuya, E 2007). Much (about 90 percent) of the country agricultural FDI inflows goes into crop production where it has stimulated tremendous growths in the manufacturing related crop industries like sugar and tea (Msuya, E and

Ashimogo, G 2006). The FDI is also reported to have enhanced growth in the production and productivity of tobacco in Tanzania amongst smallholder growers (URT 2001)[20]. In the northern Tanzania regions of Kilimanjaro and Arusha, the growth of the flower industry that has been experienced in recent years, is a result of FDI from the Netherlands (the major flower importer from Tanzania). The export of vegetables to the European market is also on the increase especially in Arusha region following the adoption of the contract grower and out grower system between smallholder vegetable growers and foreign companies (mainly supermarkets in Europe), through the Market Intermediary Management arrangements[21] (TAHA, 2007). In the Dodoma region there are indications of revamping grapes production following the FDI in the construction and operation of a modern winery by CETAWICO, an Italian firm. With an installed capacity to process 500 tons of grapes per season and with an expansion programme for processing or 4,000 tons per year in three years, the winery processes only 150 tons of grapes per season or 300 tons per annum[22]. The ongoing campaigns by the Government aims at mobilizing smallholders in all areas with potential for grape cultivation to grow the crop on contract with CETAWICO. Such examples demonstrate that FDI flow to agriculture/horticulture is viable and beneficial to smallholders. The Tanzania FDI report of 2004 (URT 2004) indicates that the regional distribution of FDI in Tanzania is consistent with natural resources endowment and the level of social and economic infrastructure development in a given region[23]. This goes with the fact that the FDI flows to rural agricultural areas where the infrastructure is poor are negligible, hence the failure of FDI to make linkages to the local economy and cause a significant impact on poverty reduction. On the other hand, FDI has little impact on the employment situation, as it is in most cases directed to the capital intensive sectors. Therefore after registering commendable achievements in other sectors like mining and manufacturing as already said, the challenge for Tanzania should now be to push FDI to important poverty reduction sectors like agriculture as advocated by the government. Speaking at the Tanzania Investment Centre (TIC) tenth anniversary climax in Dar es Salaam, the Prime Minister Mr Edward Lowassa underscored the need of collaborative efforts between TIC, Government Ministries, public institutions and key stakeholders in working out strategies that would ensure there is an increase of investors in the agricultural sector (IPPMEDIA, 2007).

9.5

Challenges and Constraints in the Hoticulture Sub-sector

There are several constraints that are currently limiting the development of the horticulture sub-sector in the country. These constraints are related to production, processing, marketing and policy aspects as outlined below: Production The horticultural production in Tanzania is mostly impeded by the following factors: Low productivity as most farmers experiences low yields of horticultural crops due to poor management practices including insufficient use of recommended levels of fertilizers (industrial or organic) and agrochemicals for pests and diseases control; Un-specialized production in small scale scattered farms/plots of different types of horticultural crops, which leads to difficulties in marketing and even provision of extension services. Use of low quality seeds and other propagation materials which are prone to pests and disease conditions and not adapted to the local environment in given agro-ecological zones; High dependence on imported seed especially for important commercial vegetables crops; and Inadequate functional horticulture producer organizations.

The seasonal availability of horticultural produce can be attributed to dependence on seasonal rains for horticultural production. There is also little production off-season horticultural production which is normally carried out along or near water sources with few farmers who can afford to bore water charcoals (in areas with high water tables). Such practices are reported to have started causing severe degradation of the environment (Njombe District Council, 2005). Horticultural production practices along water sources in areas like Njombe are getting blamed for exhausting water sources whose long term effect if not checked, will have a far reaching impact for example, to people in the Usangu plains that get water from sources in Njombe district. Marketing Lack of markets for horticultural products in Tanzania is undoubtedly the single greatest obstacle to developing the horticulture sub-sector in the country (URT 2006). It is largely linked to seasonality in production because effective demand fails to cope with surplus production in the peak production period. Because of the limited capacity for processing the horticultural produce relative to surplus production in the peak harvesting period, coupled with unavailability of technologies for storing surplus perishable horticultural products, most of the produce gets spoilt hence causing great losses to producers. One can therefore conclude that specific marketing constraints in the horticulture subsector include the following: High seasonal domestic markets characterized by over supply of common produce types during peak seasons and low returns to farmers due to low prices as well as higher prices to farmers during off season (acute shortage period); Limited access to market information, inadequate marketing knowledge and agribusiness skills; Poor transport infrastructures as most rural roads are impassable during rainy season. Poor handling of fresh produce with long transport distances leading to high post harvest losses; Lack of and or insufficient experience in producing products for export markets; and Inadequate functional horticulture marketing organizations.

Agro-processing The existing few processors for horticultural crops[24] especially for fruits and vegetables can only absorb small amount of the surplus produce. Because of the limited capacity for processing the horticultural produce relative to surplus production in the peak harvesting period and the unavailability of technologies for storing surplus perishable horticultural products, most of the produce gets spoilt hence causing great post-harvest losses to producers. Also most horticultural produce is transported unprocessed and sometimes without proper sorting resulting to unnecessary high transport costs due to bulkiness. The processing industry faces a number of problems such as: High initial investment cost for processing plants, as most parts are to be imported. Lack of reliable market for processed products due to unfair competition with cheap and sometimes sub-standard imports. Availability of fresh vegetables or fruits can sometimes hinder or limit the business prospects by agro processors as consumers may prefer cheap fresh produce available in the market to processed products; High operating costs associated with costly imported packaging materials, preservatives/additives, poor infrastructure (roads) increasing costs for raw materials, high electricity costs, and various taxes; Seasonal and low quality supply of raw materials leading to seasonal closure of processing factories, and hence inconsistent availability of processed products in the market; and

Insufficient organization, training to small scale processors and promotion of the locally processed products.

The Government has been and is challenged to promote agroprocessing investments in the area of horticulture as a marketing assurance strategy to horticultural producers that would in the short and medium term minimize post harvest losses experienced during peak production periods and add value to the produce. The existing local investors could be enticed to invest in this area but most importantly also, the FDI could be directed in this area. However, since horticultural production in the country is also characterized by acute off-season scarcities, another important challenge has been that of raw materials supply assurance to the agro processors during the off-season. The fact that once established, horticulture processing facilities will have to source the raw materials on a competitive basis[25], poses another big challenge to investments in vegetable and fruit processing.

Quality and Standards

Recent developments that emanate from the Sanitary and Phytosanitary (SPS) and Technical Barriers to Trade (TBT) agreements pose a great challenge in the development of the horticulture sub-sector in Tanzania. The agreements, which originated from the General Agreement on Tariffs and Trade (GATT), are recognized in the framework of the Final Act of Urugway round that established WTO in 1995; and they generally aim at ensuring the availability of safe and quality products in the market. However the SPS agreement is aimed at protecting animals and plants from pests and diseases as well as humans from healthy risks associated with additives, contaminants, toxins or disease causing organisms in food and beverages (Mohamed, R and Mwakasungula, G 2007). More importantly is that SPS measures are designed to use strict health and safety regulation to ensure food safety as well as animal and plant health safety. The Hazard Analysis Critical Control Points (HACCP) is one of the SPS measures that are continually being promoted through incorporation into Food Safety Legislation in many countries. It involves identification and close monitoring of Critical Control Points (CCPs) in food production and preparation processes with the view of ensuring that food is safe for human consumption. The HACCP principles avoid traditional end product testing and seek to identify hazards and reduce risks throughout all stages from producer to plate. The system places responsibility on operators to prevent, eliminate or reduce physical, chemical and microbiological hazards in their food businesses by identifying the hazards that need to be controlled, establishing effective procedures that control the hazards, ensuring that these procedures work and are being applied; and providing evidence of their control procedure. The SPS measures are supposed to be regulated through internationally accepted standards approved by International Standard Organization (ISO). However, in recent years the commonly used standards are the ones developed and used by private sector organizations such as the British Consortium (BRC), EurepGAP, SQ2000, and Global Food Safety Initiative (GFSI). The EurepGAP standards for example, go beyond higher food safety standards to also include environmental and social demands, which are too difficult if not impossible for Smallhoder producers to comply with. The traceability system being advocated by EU countries as part of EurepGAP entails tracing and following food, feed, food-producing animal, or substance intended to be or expected to be incorporated into a food or feed, through all stages of production, processing and distribution (EU General Food Law Regulation 178/2002). The entire system requires rigorous record keeping for facilitating spot auditing checks, inspection, testing and verification of adherence to set standards such as Minimum Residual Levels (MRLs) in line with HACCP requirements.

In Tanzania the SPS measures are enforced through government institutions such as Tanzania Bureau of Standards (TBS), Tanzania Food and Drugs Authority (TDFA), Ministry of Agriculture, Food Security and Cooperatives (MAFC) and Ministry of Livestock Development (MLD). Organic farming Organic farming is slowly gaining momentum in the Tanzanian agricultural context following the existence of niche markets that offer higher premium prices for the organically produced products compared with the conventional ones. Organic production is also internationally recognized as a system that complies with the HACCP food safety requirements as it involves a series of certification procedures. However, organic farming seems to be too expensive because of the cumbersome inspection and certification procedures required. There is still one organic certification body in the country known as Tanzania Certification (TanCert) which is mandated to offer inspection and certification services to organic growers. However, because TanCert is not internationally accredited, its certification has to be approved by other internationally accredited certification bodies.[26]. In order for the Tanzania organic products to access other international markets, the inspection and certification exercises have to be carried out by the hired expensive inspectors who are internationally accredited. Even the local organic inspectors and certifiers who are being trained[27] through regional and national initiatives will require international accreditation before they can become useful. Producer Organizatiosn To mitigate the horticulture production and marketing constraints, the challenge that Tanzania needs to address is on developing strong producer organizations which can also attract the FDI flows into horticultural production and processing. Producer organization is also increasingly becoming an important aspect in enabling the producers to access markets. The establishment of organizations such as the Tanzania Horticulture Association (TAHA) in 2004 was geared to promote the horticulture subsector in the country so as to become more profitable, sustainable and effectively contribute towards economic development of the country. Likewise, the Association of Mango Growers (AMAGRO) was registered in 2003 to spearhead the cultivation and export of mangoes amongst its members. Although TAHA has a national outlook and is expected to address all horticultural crops, at present its activities are concentrated in the northern regions of Arusha and Kilimanjaro[28] and its promotional activities are mainly directed to exportable flowers, vegetables and some temperate fruits[29]. In order for TAHA to be more effective, it needs to expand its operational territory through inclusion in its list, members from other horticulture growing areas. TAHAs horticulture development agenda also needs to focus on all horticultural crops including the new high value crops that are currently gaining prominence. Emerging high value crops The emergency of new high value horticultural crops particularly spices such as vanilla and paprika and mushroom cultivation in the economy of Tanzania is a challenge to the Government, researchers, extensionists and horticultural industry stakeholders to work out their promotion and marketing strategies. Since some of these require special and sophisticated agronomical, processing and storage prior to marketing, special efforts is required to ensure that extension personnel are adequately trained to be able to provide the meaningful technical advice to farmers. Policy Issues The 1997 agriculture and livestock policy is the one that guides horticulture sub-sector development in Tanzania. The policy however lacks specific emphasis on specific horticultural crops but it rather features in the policy as a generic aspect in the agricultural spectrum. In view of its importance, Nyomola A.M.S (2005) proposes the formulation of a separate horticulture policy that will address specific aspects of production, processing, and marketing and support services[30]. Although stakeholders have been pressing for a policy on the horticulture sub-sector, there are no indications of formulating an independent policy from the broad agricultural policy (URT, 2006). Stakeholders have

been attributing lack of a sound horticulture industry to low priority accorded to the sector in terms of resources allocation for programme and strategy development; and that a specific policy document would change this tendency. Formation of horticulture section/division in the structure of the MAFSC and or formation an autonomous institution to cater for horticulture development issues are some of the critical policy issues that were thoroughly discussed at the national Horticulture

Stakeholders Workshop held in Arusha - December 2005.

Airfreight Charges Exporters of fresh vegetables and flowers in the major northern export zone face cargo airlifting problems due to lack of a dedicated cargo flight from Tanzania. The current state of affairs has compelled them to airlift their cargo through Nairobi airport which add extra trucking costs. Following increased production volumes at the moment, it is possible now to use charter flight services as the volumes are reported to be sufficient. However, the sustainable solution to this problem is being worked out by TAHA through a project to spearhead cargo freight out of Kilimanjaro International Airport (KIA). 9.5.1 Addressing the Impediments and Challenges in the Sector

Production The government through the Ministry of Agriculture, Food Security and Cooperatives is providing resources for the rehabilitation of six government orchards of mother trees which are serving as sources of planting materials for farmers and for training purposes. The investment and capacity building needs for horticulture development at district levels are handled through District Agricultural Development Plans (DADPs) which receive funding from the ASDP basket fund. Rehabilitation of the abandoned district orchards that can also serve as source of improved horticultural planting is an important investment initiative towards revamping the horticulture industry in the respective districts that can access ASDP funding through DADPs. Promotion of contract farming and out grower schemes between large scale growers and smallholder growers especially in production of flowers and vegetables for export is seen as a valid approach that will alleviate the problem of inadequate use of fertilizers and other inputs in horticultural production. To reduce dependence on imported seeds especially for vegetable production, the Ministry in collaboration with the Danish Government has been facilitating the on farm seed production for vegetable crops. As the project comes to an end in June 2008, the on farm seed production initiatives will be integrated into DADPs. Of late there have been deliberate efforts to bring together horticulture sub-sector stakeholders under the Private-Public Partnership (P-P-P) with the aim of working out the joint strategy to improve horticulture production in the country. Through such fora, stakeholders get an opportunity to deliberate, make decisions and recommend workable actions that need to be taken for revamping and developing the sub-sector. Marketing/agro-processing The ongoing government initiatives include the establishment of market infrastructure and rehabilitation of rural feeder roads[31] to promote marketing of horticultural products. Agro-processing is a basic agenda in the Tanzania Investment Promotion Strategy with an emphasis on processing of horticultural produce as a value addition initiative and a move to minimize post-harvest losses for perishable crops.

SPS issues The Plant Protection Act of 1997 gives a mandate to the Ministry of Agriculture, Food Security and Cooperatives (MAFC) to oversee all aspects pertaining to plant health. The crucial aspects that fall under MAFC jurisdiction include provision of inspectorate services at all points of entry and exit; including airports, ports and borderposts. Inspection services offered by these centres aim at preventing entry/exit of plant pests and diseases into/out of the country. At present, the Ministry is directing resources towards strengthening the 30 phytosanitary inspectorate points by providing adequate staff, office building, laboratories and working tools. The Ministry also organizes training to inspectors that aim at equipping them with adequate skills and knowledge not only on the phytosanitary, quarantine and other PPA issues, but also on SPS issues in relation WTO trade agreements. The enforcement of quality and standard as advocated in the WTO trade agreements (the SPS and TBT) needs to be preceded by a thorough comprehension by public including horticultural producers. This could be achieved through sensitization and training of producers, leaders, technocrats and enforcers. It has been realized that the enforcement of such standards will not be a responsibility of one institution but rather a joint effort of various public and private sector institutions[32]. Organic farming What has been done and achieved towards promoting and sustaining organic farming in Tanzania includes the identification and registration of 40,000 organic farmers and 64,000 hectares under organic production of different crops including horticultural ones. Efforts are going on in identifying, recruitment and training of local organic inspectors and certifiers to cope with the increasing food safety requirements by consumers globally. This goes with strengthening or building the capacity of TanCert to be an internationally organic accreditation body. The ultimate goal is to simplify the organic inspection and certification procedures with the view to minimize the costs associated with organic farming. High value crops Various technologies on the production of new high value crops with niche markets abroad have been collected and documented in the form of booklets and leaflets for distribution to training institutes, farming communities and other horticultural stakeholders. This is going along with the dissemination of market information, collection and assembling germplasm materials for research and multiplication of quality planting material for distribution to farmers.

9.6

Conclusions and the Way Foward

The constraints analysis above mentions the inadequate application of inputs to be one of the major reasons for low productivity being experienced in the horticulture sub-sector. Therefore any strategy to revamp horticultural production in the country should adequately address the sub-sector inputs problems. Although for some years the government has been providing subsidies on inputs (fertilizers, improved seeds and agrochemicals); the subsidized input quantities are small compared with the actual requirements. Due to inputs subsidy inadequacies, the subsidized inputs are mostly used in the production of major traditional cash and food crops. Although the validity of the subsidy programme in terms of its potential benefits to the farmers is being questioned[33], it is obvious that if well managed the programme can cause a positive impact on productivity. In order for the non-traditional crop sub-sector to also benefit from the inputs subsidy programme, the government should increase the quantity of subsidized inputs. This should go along with the consolidation of the on-farm seed production scheme especially for open pollinated vegetable seeds.

The government should also continue allocating resources for the rehabilitation and maintenance of government nurseries/orchards to ensure availability of improved and suitable varieties of horticultural crops planting materials. The private nursery operators who are at present supplying fruit tree seedlings need to be organized, trained and where possible be facilitated through DADPs to produce quality planting materials. The government orchards should be centres where the private nursery operators can access improved germplasm and get trained on nursery operations. The way forward and towards managing the horticultural marketing issues requires the formulation of sound and sustainable strategies which should involve formation and strengthening horticulture producer organizations and infrastructure development. Producer organization is of great importance in managing horticultural marketing problems because through such organizations producers can easily: Access services necessary for increasing their volumes of production; Access marketing information (including the value chain of their produce) and make valid decisions; Collect, bulk and grade their produce for marketing; Bargain/negotiate for better prices; Improve product qualities to meet market required standards; Access resources for investing in value addition operations, storage facilities; and Contribute to critical development initiatives such as infrastructure development.

District councils should plan and incorporate promotion of horticulture producer organizations and infrastructure development into District Agricultural Development Plans (DADPs). The ongoing efforts to entice the private sector to invest in horticultural processing should go together with contract farming promotion initiatives being spearheaded by the government through MAFC. The contract farming initiatives need to be promoted not only as a raw material supply assurance to processors or market assurance to producers; but also as a basic inputs supply assurance to horticultural producers. Through Marketing Intermediary Management (MIM) arrangements, it has been realized that smallholder horticultural produces are able to access niche markets through intermediate companies such as Gomba Estate in Arusha. Policies should aim at promoting the active private sector to be fully engaged in production, procurement and distribution of horticultural production inputs such as seeds, fertilizers and agrochemicals. This should include provision of incentives to seed agencies and local horticultural crops seed producers such as facilitating smooth acquisition of land, taxes relief etc. As a matter of policy, investments in local manufacturing of quality packaging materials should be encouraged and/or taxes on imported materials should be reduced so as to minimize operational costs to processors and exporters of horticultural products. The Government has a role of creating techno commercial environment for attracting freighters for airlifting fresh produce to various destinations. Investments in irrigation at district levels should be given top priorities in the DADPs as a means of mitigating the problem of environmental degradation associated with the exhaustion of water sources resulting from cultivation for horticulture. Although the role of FDI in enhancing agricultural production and productivity is appreciable as argued in Chapter 3, efforts to get credible foreign investments in the sector seem to be unsuccessful even after expensive meetings, seminars, dialogue etc between the Government and foreign investors have been conducted. What could be done now is to invest in the rural infrastructure development and to focus on promoting local investments in the sector as an interim measure towards achieving the

vibrant FDI in agriculture. Investors in sectors other than agriculture wishing to diversify their investment portfolios should be persuaded to invest in agriculture. The Public-Private-Partnership (P-P-P) spirit in the context of horticulture development recently culminated in the establishment of the Horticulture Development Council of Tanzania (HODECT[34]). The Council draft MOU (May 2007) describes HODECT as an apex of public private partnership institutions with the goal of promoting the development of horticulture sub-sector in Tanzania to maximize the economic benefit to the country and its people through the promotion of production, processing and export. Stakeholders should therefore take a full responsibility to ensure that the HODECT grows to achieve its aspirations (see Annex 4). The Government should develop strategies that aim at promoting the use of the locally processed products by among others, organizing producer-consumer fora that aim at promoting the consumption of the locally produced. This should be done in the spirit of Public-Private-Partnership (P-P-P). The highly dependable EU market for Tanzanias fresh produce is likely becoming fragile if producers and exporters of such products fail to conform to the market stringent food safety and quality standard requirements as described in chapter 3. Therefore, rather than later, Tanzania should develop national plans and strategies for public food safety sensitization and enforcement amongst producers and exporters of fresh produce so as to sustain the fresh produce business with EU and other countries. The marketing strategies also need to target the existing fresh produce business opportunities in domestic and regional markets. The Ministry of Agriculture, Food Security and Cooperatives should make an inventory of all new crops with socio-economic potential and establish a museum of these crops at each of its research centres and orchards. Research and Training department in the Ministry of Agriculture, Food Security and Cooperatives should develop a non-traditional crop research programme with the focus on horticultural and new crops to generate local technologies for their promotion. The marketing promotion strategy for new crops should integrate the value addition aspects. Finally, although the non-traditional crop sub-sector is at present widely acknowledged for its contribution to the countrys economic growth, continual lack of accurate data defeats this perception as it may lead not only to the failure in capturing its actual significance to the economy but also to failure in the formulation of workable strategies for the sub-sector development. Therefore interventions are required to establish a sustainable data collection and dissemination system for all non-traditional crops, especially under the prevailing smallholder dominated production system. A study could be commissioned to find out the modalities on the establishment and management of such a system. The study should come up with the practical ways for capturing the data for perishable fresh products with short shelf life.

References ACP-EC EPA Negotiations: Joint Report on the all ACP-EC Phase of EPA negotiations, 2003. Brussels, Belgium. Amani H.K.R, 2005. Making Agriculture Impact on Poverty in Tanzania: The case on NonTraditional Export Crops. Economic and Social Research Foundation (ESRF), Dar es Salaam. B.P. Singh, 2002. Non-Traditional Crop Production in Africa for export. In: J.Janick and A.Whipkey (Eds). Trends in new crops and new uses. ASHS Press, Aleandria V.A. Bank of Tanzania, 1999. Economic Bulletin for the Quarter ending June 1999 (pp 90). BluePrint, 2007. Current Status of the Agricultural Economy in the Central Development Corridor Project Area. The inception Report by BluePrint Development Consulting (PTY) Ltd on Tanzania and Rwanda Agriculture for the Formulation of the Central Development Corridor Agricultural Development and Investment Strategy. National Development Corporation, Dar es Salaam. EPOPA, 2004; Basic data on Certified Organic Production and Export in Tanzania. FAO, 1998; Food Quality and Safety Systems. A training manual of food hygiene and the Hazard Analysis and Critical Control Point (HACCP) system. FAO, 2001; World Markets for Organic fruits and Vegetables. Opportunities for developing countries in the production and export of organic horticultural products. IPPMEDIA, 2007. The Daily Guardian Newspaper, 15th September, 2007. IPPMEDIA, Dar es Salaam. ITC, 2002; Export product profile for fresh fruits and vegetables. Kweka J, 2004. Impact of International Trade Agreements on Tanzanias Trade Performance. Economic and Social Research Foundation (ESRF) and Friedrich Ebert Stiftung (FES), Dar es Salaam. Mlula A., 2003. Cross Border Trade in Northern Tanzania. The effect of Market Exchange Arrangement and Institutions on Value of Non-Traditional Export Crops. Mohamed R. and Mwakasungula G, 2007. The Implementation of SPS and TBT Agreements in Tanzania. Strengthening National Capacity in Agricultural Trade and Trade Negotiations. GCP/URT/056/IRE. Food and Agriculture Organization of the United Nations, Rome. Msuya E. and Ashimogo G., 2006. An estimation of technical efficiency in Tanzania Sugarcane Production: A Case Study of Mtibwa Sugar Company Outgrowers Scheme. Mzumbe University, Morogoro-Tanzania. Msuya E., 2007. The Impact of Foreign Direct Investments on Agricultural Productivity and Poverty Reduction in Tanzania. Munich Personal RePEc Archive Paper No. 3671. Kyoto University, Japan. Mwasha A.M, 2004. Study on Status of Mushroom marketing in Tanzania. Ministry of Agriculture and Food Security, Dar es Salaam. Ngwediagi P.; Kishebuka L; and Ngueng-Feze L, 2007. Technical Report on the Implementation of Plant Breeders Rights, Farmers Rights and Geographical Indications in Tanzania. Strengthening

National capacity in Agricultural Trade and Trade Negotiations. GCP/URT/056/IRE. Food and Agriculture Organization of the United Nations, Rome. Nyomola A.M.S, 2005. Status of Horticulture in Tanzania: Towards Speedy Growth of Tanzanian Economy. Paper presented at the National Horticulture Stakeholders Workshop, Impala Hotel-Arusha. Ministry of Agriculture and Food Security, Dar es Salaam. Rural Livelihood Development Company (RLDC), 2007. Grapes sub-sector study, Dodoma Region 2007. Tanzania Commission for Science and Technology, 2004; The Status of Mushroom Marketing in Tanzania. URT 2003, 2004 & 2006 National Economic Surveys for 2002, 2003, 2004 and 2005. Ministry of Planning, Economy and Empowerment, Dar es Salaam. URT, 1983. Agricultural Policy of Tanzania. Ministry of Agriculture, Dar es Salaam. URT, 1997. Agriculture and Livestock Policy. Ministry of Agriculture and Cooperatives, Dar es Salaam. URT, 1997. Cooperative Development Policy. Ministry of Agriculture and Cooperatives, Dar es Salaam. URT, 1997. Rural and Microfinance in Tanzania. Joint Government of United Republic of Tanzania/Donor Review. Bank of Tanzania, Dar es Salaam. URT, 1997. The Plant Protection Act, 1997. Ministry of Agriculture and Cooperatives. URT, 2000. National Microfinance Policy. Ministry of Finance, Dar es Salaam. URT, 2001. Agricultural Sector Development Strategy. Ministry of Agriculture and Food Security, Dar es Salaam. URT, 2002. Cooperative Development Policy. Ministry of Cooperatives and Marketing, Dodoma. URT, 2002. Ministerial Report on the Problems Constraining Tobacco Production, Marketing and Processing in Tanzania. Ministry of Agriculture and Food Security, Dar es Salaam. URT, 2002. National Irrigation Master Plan. Ministry of Agriculture and Food Security, Dar es Salaam. URT, 2002. The Protection of New Plant Varieties (Plant Breeders Rights) Act, 2002. Ministry of Agriculture and Food Security, Dar es Salaam. URT, 2002; Study on Horticulture Development in Tanzania, Ministry of Agriculture and Food Security. URT, 2003. National Trade Policy Background Papers. Trade Policy for a Competitive and ExportLed Growth. URT, 2003. National Trade Policy. Trade Policy for a Competitive and Export-Led Growth. URT, 2003. The Seeds Act, 2003. Ministry of Agriculture and Food Security, Dar es Salaam.

URT, 2003; National Spice Development Programme, Ministry of Agriculture and Food Security. URT, 2005. National Strategy for Growth and Reduction of Poverty. Presidents Office, Planning and Privatization, Dar es Salaam. URT, 2005. Tanzania FDI Report 2004. Bank of Tanzania. URT, 2005; Proceedings of the National Horticulture Stakeholders Workshop on Strengthening of Horticulture Sub sector for Speedy Growth of Tanzania Economy, Ministry of Agriculture and Food Security. URT, 2006. Agricultural Sector Development Programme. Ministry of Agriculture, Food Security and Cooperatives, Dar es Salaam. URT, 2006. Horticultural, Cassava and Round Potatoes Production in Southern and North Eastern Regions of Tanzania. Crops Development Division, Ministry of Agriculture, Food Security and Cooperatives, Dar es Salaam. URT, 2006. National Sample Census of Agriculture 2002/2003. Smallholder Agriculture, Volume II; Crop Sector-National Report. Ministry of Agriculture, Food Security and Cooperatives & National Bureau of Statistics, Dar es salaam. URT, 2007; Document for the 13th meeting on the national plant protection advisory committee. Ministry of Agriculture, Food Security and Cooperatives. URT/World Bank, 2005; Tanzania Diagnostic Trade Integration Study. Volume I: 2005 URT/World Bank, 2007. Tanzania Sustaining and Sharing Economic Growth. Country Economic Memorandum and Poverty Assessment. Volume II: Main Report. WTO/URT, 2000. Trade Policy review-Tanzania.

[1] [2]

B.P. Singh, 2002 Currently valued at 55 million USD per annum. [3] Agricultural Sector Management Project, Ministry of Agriculture and Cooperatives. [4] The major policy objectives include the following: Ensure food security for the nation, including improvements in nutritional standards; Improve standards of living in rural areas; Increase foreign exchange earnings; Produce and supply raw materials and expand the role of the sector as a market for industrial outputs; Develop and introduce new technologies for land and labour productivity; Promote integrated and sustainable use and management of natural resources (environmental sustainability);

 Develop human resources; Provide support services Promote access of women and youth to land, credit, education and information. [5] URT 2000 (National Land Policy) [6] See also Ngwediagi et al, 2007 [7] Director responsible for Crop Development in the Ministry of Agriculture, Food Security and Cooperative [8] Tanzania, Report on Diagnostic Trade Integration Study-Volume I. June, 2005 [9] WTO Trade Policy Review-Tanzania, 2000. [10] This involves identification of sectors to be protected, the rationale and costs of protection as well as the maximum duration of protection. [11] The policy goal is that of raising efficiency and widening linkages in domestic production and building a diversified competitive export sector as the means of stimulating higher rates of growth and development. [12] From 2005/2006 to 2006/2007 the company exported a total of 80 tons of strawberries and raspberries (TAHA, 2007). [13] Hundreds of millions of people at risk of drug resistant falciparum malaria are in urgent need of access to quality Artemisinin based-Based Combination Therapy (ACTs). [14] Examples include Tanzania Mushroom Clusters and Region/District specific Mushroom Growers Associations. [15] As of April 2003, WTO had over 146 members. [16] URT 2003, National Trade Policy (Trade Policy for a Competitive and Export-led Growth. [17] Msuya E., 2007. [18] Under which horticulture falls [19] Where foreign investors have restructured privatized enterprises, boosting their competitiveness, typically contributing to transfer of technology and skills. [20] There are two major foreign merchant companies (the Alliance One Tanzania Tobacco Ltd (AOTTL) and Tanzania Leaf Tobacco Company Ltd (TLTC) supporting the contracted smallholder tobacco growers through Primary Cooperatives. The companies own and operate two tobacco processing factories in the Morogoro Municipality. [21] Smallholder vegetable growers are contracted by the supermarkets in Europe to grow and supply vegetables suited to agreed quality and standard through existing companies such as Gombe Estate. [22] Grapes sub-sector study, Dodoma Region 2007. [23] The report showed that FDI concentration was 51.7 percent (Dar es Salaam), 11.5 percent (Shinyanga), 10.8 percent (Mwanza), 8.3 percent (Arusha/Manyara), 5.5 percent (Morogoro) and 2.4 percent (Urban West-Zanzibar). [24] DABAGA (Iringa Region), RED GOLD (Arusha Region); NATURAL CHOICE (Tanga-Lushoto District); CHEMI INDUSTRIES (Dar Es Salaam); and SNOW CAP (Kilimanjaro Region) [25] Fruits and vegetables producers are and shall not be bound to sell to such agro-processors because of the liberalized market. [26] Include IMO, Natureland, EcoCert, KRAV and Bio Inspecta. [27] According to TanCert, there are at present . trained local organic inspectors and certifiers in the country. [28] 85 percent of TAHA members are based in Kilimanjaro and Arusha (TAHA, 2007). [29] Flowers such as cut roses, chrysanthemum cuttings, licianthus and ornamental sunflower; Vegetables such as green beans, peas, courgettes, chilies, baby corn, baby carrots and baby leeks; and some Temperate fruits such as strawberries and raspberries. [30] Research, training, extension and regulatory services. [31] Mainly through Agricultural Marketing Systems Development Programme, District Agricultural Investment Project and ASDP/DADPs initiatives. [32] Such as MAFC, TBS, TFDA, TIRDO, SIDO, TPRI Government chemist, TCCIA, TanCert etc. [33] The Ministry of Agriculture, Food Security and Cooperatives has commissioned a study to evaluate the impact of fertilizer subsidy on agricultural productivity. [34] HODECT has a formal registration as a Company with Limited guarantee.