THE ANNUAL AGRICULTURAL POLICY CONFERENCE 2016 SUMMARY OF PROCEEDINGS AND AN ACTION POINTS MATRIX FOR THE POLICY ANALYIS GROUP

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1 THE ANNUAL AGRICULTURAL POLICY CONFERENCE 2016 SUMMARY OF PROCEEDINGS AND AN ACTION POINTS MATRIX FOR THE POLICY ANALYIS GROUP A. Introduction, Background and Objectives The 2 nd Annual Agricultural Policy Conference was organized by the Policy Analysis Group (PAG) under a theme titled Agricultural Sector Transformation for Food Security, Jobs Creation and Poverty Reduction. The event was held from the 23 rd to 25 th February 2016 at the Serena Hotel, Dar es Salaam. The 2016 Agricultural Policy Conference aimed at reaching to a common understanding among the agriculture stakeholders on the following overarching issues: i. The way forward in the agricultural sector transformation to achieve the objectives of the Vision 2025, on food security, employment and poverty reduction; ii. To remind stakeholders about the policy promises made by the government to the private sector in 2011 and what is happening on the ground concerning agriculture transformation in Tanzania; iii. To underscore the importance of the main pillars set up by Kilimo Kwanza in 2009, which laid the roadmap for further initiatives in the transformation process including the SAGCOT, BRN and the stake they have in the ASDP-2. The Key note paper on the New Alliance/ CAADP framework progress in Tanzania identified the following key issues from the session, which also suggest potential researches and policy interventions to be undertaken by the PAG/PAC: i. Emerging new issues under the New Alliance for Food Security and Nutrition. Mechanisms of how they can be adopted by the New Alliance Matrix being established; ii. Aligning the New Alliance for FS and N with CAADP and ASDP II. It was resolved that as part of the intervention PAG/PAC should work to ensure that issues in the New Alliance for FS & N are mainstreamed in the ASDP II; iii. iv. The Department of Policy and Planning (DPP) should join the PAC to enlighten the new leadership at MALF on the progress and the needed intervention; Institutional members of the PAG including SAGCOT, ReSAKSS and Africa Lead should assist PAC to attain timely delivery of progress report; The conference enrolled 145, 130 and 111 participants in days 1, 2 and 3 respectively. They came from public and private sectors, development partners, research institutions and academia and from projects and programs. The summary of key themes, deliberations made and issues raised are as follows: 1

2 B. Session 1: Innovation and Technology in Agriculture: Mobile technology The thematic area had seven presentations namely (i) Use of mobile telephone in M&E (ii) Digital payment of local tax (iii) Mobile Application to Secure Tenure/CCRO (iv) SRI Nutrition, checking your HB (v) Application of Mobile Technology in Disseminating Market Information for Horticulture Produce, and (vi) Mobile Kilimo. Several issues emerged during the discussion, one of them being the transformation that mobile phones can bring in the agriculture sector. It was reported that by September, 2015 over 36 million Tanzanians (75% of the total population) were using mobile phones. This is a significantly large number than in any country in Africa. The device creates a huge opportunity for agriculture transformation due to large size of people who can be reached within a short period, compared to other traditional methods of disseminating information. It was emphasized that mobile phones should not be viewed just as normal communication devices. Its application in agriculture can ensure quick transactions, technology transfer, and information about buyers and sellers, agronomic practices, to simplify access to land tenure management by the village communities and to device new health mechanisms for the local communities. Key Issues and Potential Research/ Intervention Due to the large number of mobile phone applications being developed for agriculture, but also charging different rates, the following key issues emerged from the session: i. The need to explore the possibility of harmonizing and aggregating the initiatives to ensure effective coordination in terms of operation and pricing; ii. iii. Looking for mechanisms on how the potential of mobile phone applications can be incorporated in the ASDP-2; Sustainability: There is a need to ensure that mobile applications support agriculture after the end of the donor support; Mobile phones applications have also shown the way forward towards effective revenue collections by the LGAs which for years could not find an appropriate solution. It was observed from this session that there are a lot of efforts going on in this sector in terms of developing new technologies for agriculture. 2

3 C. Session 2: Agriculture Sector Policy The agriculture sector policy covered three sessions including: (i) Policy Options for Food Security, Economic Growth and Poverty Reduction (ii) Impact of NFRA procurement pricing on maize markets and (iii) An assessment of COWABAMAS and NFRA with policy implications to sustainable marketing. It was emphasized that Tanzania has a unique opportunity to improve food security by increasing agricultural growth and rural incomes through exports of food crops to the East Africa region. Despite the abundant natural resources for production, it faces a regional market that is food deficit partly because of rapid population increase and income growth. Therefore, Tanzania s exports will depend mostly on its ability to increase production and access the regional markets. Enabling policies are essential for Tanzania to achieve its export potential. Tanzania has to provide incentives to farmers for them to increase production and maintain access to regional markets. The policies should focus on private sector-led growth, encouraging exports, and allowing market forces to guide the economy. Regarding the NFRA pricing it was pointed out that without NFRA buying premiums; wholesale prices are marginally higher in Dar es Salaam, more volatile in Songea, and insignificantly different from observed prices elsewhere. Despite potentially significant localized disruptions, NFRA does not seem to have a substantial distortive impact on markets in general. The ambition to expand NFRA capacity, presumably with a view to have a stronger price stabilization role, should be pursued with caution. There were high reactions from participants concerning the presenter s view that NFRA premiums will distort the market. Likewise participants questioned the emphasis placed on food exports, particularly maize and paddy, unlike other food crops as was portrayed by the presentation. 3 Key issues and Potential Intervention/ Research Key issues i. The infamous export bans have been removed but the current export permits suffocate trade despite decentralization. Export oriented policies are necessary to promote farmers production and access to regional markets; ii. NFRA stock size - trading off food shortage risk versus opportunity cost of holding large stock pose a fiscal burden. There is a need to encourage policies that promote market forces; iii. NFRA pricing policy its stabilization policy is not effective and causes market distortions. NFRA s mandate versus that of the Disaster Management Unit needs to be defined; iv. What is needed is a sustainable solution that would lead to production of surplus at levels that would establish Tanzania as a consistent regional exporter of maize; Potential Interventions/Research i. Institutionalization of free trade by encouraging policies that promote market forces e.g. through legislation; ii. PAG should engage in a dialogue with MALF regarding the NFRA stocking and anticipated expansion; iii. There is a need to undertake a complete research regarding NFRA pricing policy; iv. There is a need to undertake CGE modeling on returns to public investments focusing on NFRA, NAIVS, COWABAMAS etc

4 Preliminary assessment of COWABAMAS and NFRA policy implication to sustainable marketing revealed a number of key issues including: (i) Missed targets as a result of delayed funding (ii) Lack of ownership by the LGAs/villages (iii) Misuse of the facilities, (iv) Weak institutional setup (v) Financial management and (iv) Limited infrastructural and financial capacity of NFRA. Participants recommended that SERA and MAFAP should work very closely with ANSAF to further explore how COWABAMAS can be set to operate effectively taking into account the issues observed. D. Session 3: Agriculture Markets and Trade Policy This session had three presentations on (i) Food systems transformation in Tanzania (ii) The Impact of EU Trade and Investment policies on Tanzania s Agriculture, and (iii) Evidence based decision-making in implementation of agriculture strategies: Challenges and Opportunities of agriculture M&E in Tanzania. The study highlighted that urbanization and income growth in Africa are driving a transformation of dietary preferences and patterns. This is revealed by a vast increase in the demand for non traditional food in not only urban but also rural markets. The changes in the market demand necessitates adjustments in the food manufacturing industry including both the emergence of modern retails (assembled kiosks with variety of food products dairy, bakery, meats etc. at a location) and improved traditional retails. Key issues and Potential Intervention/ Research Key issues i. Threats from commodity importation through parallel markets, partly due to lack of rule based import policy and inefficient market intelligence; ii. Differences in tariffs between Zanzibar and Mainland; iii. The implication of the food system transformation on SHFs, women and youth employment, food safety, agro-processing and agriculture sector transformation; iv. The challenge faced by producers to meet multiple standards imposed for agriculture produce by various regulatory bodies. Potential Intervention/ Research The fact is manifested by an increasing demand for processed grains, packaged rice, dairy products and juices in major cities like Dar es Salaam, Mwanza and Arusha. Likewise, Tanzania s products are seen to dominate the market in the major cities as compared to imported ones. i. Instituting the rule-based import policy; ii. Establishment of the Market Intelligence Unit to monitor imports through parallel markets; iii. Make export data available including mobile and e- payment for local taxes; iv. Implementing a comprehensive research on food systems transformation; v. Promoting transparency in the market through commodity exchange; 4

5 The key message from the session is that the transformation process is still at its infancy to determine the fate/future capability of young Tanzanian companies to compete with the larger locals or the prominent importing companies. Inefficient policy enforcement allowing illegal imports was among the issues raised from the floor. Participants were concerned about the weak position of African countries during negotiations in Global Standards platforms. The need for strong M&E to be part of the agriculture transformation under the ASDP-2 was also emphasized. Issues pertaining to coordination and drawing the lessons learnt from ASDP I, organizational matrix and the role of IT were similarly raised from the floor. E. Session 4: Enabling Policy for Private Sector Investment The findings from the WBG Study on Enabling the Business of Agriculture (EBA) 2016, was based on examples from 40 countries. The project aimed at providing the governments with defined good practices that can inform policy making and trigger reforms. The indicators were developed to assess various aspects relating to production inputs and market enablers. The findings indicated that there is a balanced number of good practice and areas for improvement in most countries including Tanzania. The interesting aspect of the study is that Tanzania scored above average in all areas except for markets. The study recommended strengthening the legal regimes to promote quality control and trade. The study on Business Environment for Tanzanian Agriculture highlighted that increasing the number of large commercial farms could increase employment in the sector and provide more opportunities for out growers. But Tanzania has not been very successful at attracting large foreign or domestic investors. It was pointed out that comparatively Zambia has far more large commercial farms while Mozambique and Tanzania have attracted a few large commercial investors. Legal frameworks with regard to land ownership and accessibility in the two countries were criticized by the study. The study underscored that unlike Tanzania, Zambia has an active land market and easy access to land for investors. Participants underscored the importance of this study as investments are needed to accelerate transformation, and questioned what the government and partners have done with 5 Key issues and Potential Intervention/ Research Key Issues i. High produce CESS; ii. High VAT for agriculture produce; iii. High Corporate Tax this necessitates a tax review; iv. Unfavorable land tenure policy; v. WB/ EBA report validation e.g. input sector rated as performing well Potential Intervention/ Research i. Review of Local Government Finance Act, 1982 to improve CESS; ii. Need for VAT bill review; iii. Need for corporate tax review; iv. Land tenure issues pertaining to SHFs should form incentive to agriculture bill; v. Need for research on fertilizer marketing and transport cost;

6 the results. The study on a coffee value chain revealed that despite the growing demand globally, Tanzania s output has continued to decline each year, reaching 50,000 MT in It was reported that the crop is a cash-intensive one a thing that discourages engagement of SHFs as they are faced with mounting costs of inputs (CAN, UREA fertilizers) which are largely imported at increasingly higher prices. The regulatory loopholes have also had significant impact on the price of coffee. It was similarly revealed that, Soya has the potential to significantly contribute to improving livelihoods and food security in the country. This being the case, the study emphasized a need to facilitate advancements of the soya value chain. In order to spur adoption and SHFs involvement in the chain participants advocated the implementation of the SADC seed harmonisation policy that to a large extent has taken a slow pace. F. Session 5: Land Tenure Policy This session covered papers from two studies that addressed questions on (I) Agricultural Land Dynamics and Land Policy in Rural Tanzania and (ii) Land Compensation Schemes and Valuation Models. The first paper was concerned with what is not happening in agriculture transformation in Tanzania, despite the long term efforts undertaken by the government. The study pointed out that one of the factors underlying land dynamics in Tanzania is the increase in population which has had negative implications on land leading to declining land sizes per farming household. It was pointed out that another factor is a rapid change in farm structures coupled by the growth of medium scale or emergent farmers. The medium scale farmers are found to be more productive than traditional low input using smallholders. One policy implication that has to be addressed as a result of these observations is whether the focus now and much support should go to medium scale farmers or maintain the focus on smallholder farmers. It was agreed that issue in note either of Key issues and Potential Intervention/ Research Key Issues i. Emerging medium size farms threatening the fate of SHFs; ii. The need for a definition of medium size farms in the Tanzanian context; iii. Ongoing conflicts between farmers and livestock keepers; iv. Scaling up land surveying, land use management and titling; v. The need to institutionalise and enhance protection of the country s farm land; Potential Intervention/ Research i. Need to carryout complete research on the access to land; ii. Need to carryout research on land/ resource conflicts. iii. Need for preparation of Protection of Farm Land Bill; 6

7 them but the need to strike the right balance between small and medium scale farms, and this will translate into the government policy objectives. If medium scale farms are more productive, then if the government is after food security and exports the medium scale farmers deserve support. The paper likewise raised many questions from the floor as which criteria were used to define small, medium and large scale farmers. The second presentation addressed the fact that GoT is seeking to leverage significant investors interest in its agricultural sector to spur agricultural-led growth. However in carrying out the endeavor the government faces the challenge of how to fairly compensate current holders of land rights, while meeting the legitimate interests of investors and the government. The study discussed three compensation options for leases namely (1) fixedprice leases, (2) land for equity arrangements, and (3) other risk-sharing arrangements. Taking into account the advantages and disadvantages that each model has for the right holder, the study underscored the importance of accurately valuing land to ensure that land rights holders receive an equitable share of the benefits. There was concern from the participants that although the majority of the SHFs are women, they did not feature well in almost all presentations. It was similarly urged that the view towards SHFs should be changed by looking at them more progressively as evidence suggests the possibility of dropping from 70% of the population being smallholder farmers to 49% by G. Session 6: Access to Finance and Technology The session presented three issues on (i) Modern Secured Transaction Law (ii) Leveraging Mobile Technology in Accessing Market Information and Financial Services (ii) Smart Farming in Tanzania including Hydroponic, Acquaponic and Azora Technologies. The first study highlighted that Tanzania s laws control the use of personal property for collateral purposes. Because of the current laws on loans securitization, Tanzania s millions of SHFs find it difficult or impossible to obtain credit. The existing legal restrictions on credit in Tanzania hamper the national economy, hinder growth and reduce employment. In the past two decades countries around the world including in Africa, have begun to transform their national credit laws. This is through reform of national Personal Property Security Act ( PPSA ) and similar laws. Tanzanian has embarked on a process of drafting a proposed new PPSA by involving the local and international legal experts. The proposed law is thought to unify existing diverse laws into a single system and establish a national electronic 7 Key issues and Potential Intervention/ Research Key Issues i. Leveraging movable assets as collateral; ii. Lack of appropriate credit products for small holder farmers Potential Intervention/ Research i. Need for secured transaction reforms; ii. Research on agriculture finance emphasizing on value chain finance particularly for food crops and the likely potential risks facing financial institutions; iii. Research on warehouse management systems the need to address negative trends such as the substantial money loss

8 registry for instant registration of security against personal property. Among the questions raised was why the law is not happening in Tanzania, and how long was it for it to pass in other countries. How the law is related to the Leasing Finance Act and the Warehouse Receipt System Act was another issue of concern. The second presentation revealed the fact that Tanzania is the country with the highest mobile phone penetration in Africa, with an equivalence of 79.9% of the current population. The main issue was how to tap the benefits associated with the technology to enhance agriculture transformation. The study identified three areas of policy concern: (1) the need for regulations to include financial inclusion; (2) emphasis on working with a regulated service provider; and (3) the need to improve security. The presentation on smart farming introduced three types of smart farming technologies namely; (1) hydroponic system fodder; (2) aquaponic system Vegetables and (3) Azolla- Animal feeds. The technologies together involve farming without soil. Having pilot studies in six districts, the hydroponic fodder system is a temperature and humidity controlled growing room designed to sprout nutritious grains. The aquaponics system involves growing food with fish poop. Azolla is an aquatic fern which is used both as a biofertilizer and for green manuring in rice cultivation. Among the questions that drew attention of the participants is the very little information on the cost of the hydroponic fodder and the reasons behind those technologies in a country with an abundance of arable land. H. Session 7: Agriculture Input Policy This session had three presentations namely: (1) Influencing Micro (policy and regulatory) changes in Tanzania (2) Evaluation of Agricultural Mechanization Interventions under ASDP1; and (3) Smallholder maize-nitrogen response rates, soil fertility, and profitability of inorganic fertilizer use on maize in Tanzania. The first paper presented challenges in influencing policy and regulatory changes at micro level, based on experiences from the soil health node (SHN) in Tanzania. The implementation of SHN intended to improve soil and crop productivity to alleviate poverty and increase food security through the application of favorable soil health policies. The findings indicated that the NAIVS were effective in terms of supporting SHFs to access agricultural inputs; to improve production and productivity. However, some challenges were observed in the areas of fertilizer procurement and administration, Key issues and Potential Intervention/ Research Key Issues i. Low fertilizer response and the need to package NAIVS with other interventions; ii. Challenges in targeting beneficiaries and system abuse by agro dealers; iii. Fiscal burden in implementing the NAIVS Potential Intervention/ Research i. Dialogue with MALF as NAIVS are being reviewed; ii. Carrying out a pilot e-voucher system; iii. Applying CGE modeling to guide rationalization of resource use patterns; iv. Reducing subsidy rate by the government; 8

9 selection criteria, delivery effectiveness, and beneficiary targeting. The study emphasized continuous collaboration with the government and need for technical assistance. The second study s focus was on the evaluation of agro-mechanization interventions in Tanzania. It mainly undertook a scoping exercise to systematically gather and examine existing information on the agro-mechanization sub-sector. The strengths and weaknesses unveiled by the impact of the interventions under ASDP 1 provided useful insights to participants on the key questions to be addressed under the ASDP-2. The framework for the study embraced experiences from SSA and Asia from 1960s to 2000s, in a view of long term perspective on the impact of the interventions. The study points that the status of agricultural mechanization in Tanzania and in most of SSA, has for the past fifty years, remained at the lowest phase of the mechanization process in which the animal power is replaced with mechanical power. Gradual investments in agricultural machines have been observed since independence. However there was a remarkable importation of two-wheel tractors [2WT] and four-wheel tractors [4WT] under the ASDP I. Despite such investment, anecdotal evidence exists that there is high degree of mobility of 4WT between regions following rainfall isohyets and land preparation seasons. The available data also shows an imbalance between numbers of 4WT and the associated implements for land preparation in some regions. The third presentation aimed specifically at addressing two issues: (i) how smallholder maize-n response rates compare with those from zonal research centers and (ii) the extent to which fertilizer use on maize is profitable under smallholder conditions. Smallholders maize N- response is determined by: agro ecological factors, plot-level factors such as soil type and nutrient levels, fertilizer type and the adopted application rate, and complementary input use. The study indicates that fertilizer improves yields and in turn profitability in many areas. Therefore, among other issues the paper advocates the need for an updated knowledge and best practices to increase maize-n response. 1. Other Issues of Concern Raised from the Conference During closing day other issues of concern emerged during discussions as shown in the callout box below: i. The need for consistency and anchoring the current efforts into the pillars of Kilimo Kwanza; ii. More representation and feedback from Private Sector is needed - This could be the best way to get ideas e.g. industrialization policy challenges; iii. Fisheries and Livestock received relatively less attention in the meeting; iv. Environment and Climate Change as a crosscutting issue in agriculture did not feature in the meeting; v. Better coordination and cross feeding of information across initiatives is underscored even within the sector interrelationships: Land Finance- Mechanization-Inputs etc. SILOS of Initiatives might not work. 9

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11 A MATRIX OF ACTION POINTS FOR THE PAG FROM THE 2016 AAPC THEMATIC AREA ISSUES POTENTIAL RESEARCH/ INTEVENTION BY PAG Keynote paper New Alliance Progress Report Featured session Innovation and technology Leveraging mobile technology Agriculture Sector Policy with a focus on food security - Emerging new issues - Aligning New Alliance with CAADP and ASDP II - Timely delivery of progress report - Many promising initiatives but inadequate coordination of effort - Export ban removed but export permit suffocate trade despite decentralization - NFRA stock size; trading off food shortage risk vs opportunity cost of holding large stock fiscal burden - NFRA pricing policy its stabilization policy not effective; defining its mandate versus Disaster Management Unit - Sustainable solution produce surplus for Tz to establish itself as consistent reginal exporter for maize - Adoption into the New Alliance Matrix - Mainstreaming into ASDP II RF e.g. DPP join PAC; enlighten new leadership at MALF - Support PAC - Establish a coordination platform - Institutionalization of free trade e.g. legislation - Dialogue with MALF - Complete pricing policy research - CGE modelling on returns to public investment (attention: NFRA, NAIVS, etc) RESPONSIBLE MEMBER (S) - PAG/PAC - PAC/PAG PAG - SAGCOT - ReSAKSS - Africa Lead MALF (ICORPORATE COSTECH) - MSU - SERA - MAFAP - MSU Agriculture Markets and Trade - Lack of rule-based import policy - Institute rule-based import - SERA 11

12 THEMATIC AREA ISSUES POTENTIAL RESEARCH/ INTEVENTION BY PAG rice, sugar, etc - Import through parallel markets - Difference in tariff between Zanzibar and mainland - What are implications of food systems transformation smallholders, women and youth employment, food safety, agroprocessing and ag sector transformation - Establishment of the Marketing Intelligence Unit - Make export data available -mobile and e-payment for local taxes - Complete research on food systems transformation - Promote transparency in the market through commodity exchange RESPONSIBLE MEMBER (S) - SERA/MSU PAG Enabling Environment for Private Sector - High Produce cess - High VAT - High Corporate tax - Unfavorable land tenure policy - WB/EBA report validation e.g input sector rated as performing well Land Tenure - Emerging medium size farms what is the fate of smallholder - What is the definition of medium size farms - Farmers livestock keepers conflict - Scaling up land survey and titling - No protection for farm land - Access to Technology and Finance - Leverage movable asset as collateral - Lack of appropriate credit products for smallholder farmers LGFA review - VAT bill review - Incentives to agriculture bill - Research on fertilizer marketing and transport cost - Complete research on access to land - Research on land/resource conflict - Protection of farm land bill - Secured transactions reforms - Research on agriculture finance - MAFAP - MSU - MALF task force (TAHA, PDB, MSU, ACT) - WB - AGRA - MAFAP - MSU - UNIVERSITIES (SUA / UCLAS) - SERA/MSU 12

13 THEMATIC AREA ISSUES POTENTIAL RESEARCH/ INTEVENTION BY PAG Agriculture Input Policy - Low fertilizer response and need to - Dialogue with MALF as package NAIVS with other NAIVS is being revived interventions - Pilot e-voucher system - Challenges in targeting beneficiaries - CGE modeling to guide and abuse by agro-dealers rationalization of resources - Fiscal burden for NAIVS - Reducing subsidy rate RESPONSIBLE MEMBER (S) - AGRA - MSU PAG 13