Kili-Blog-Sa

Robusta Dry Cherries 101

Sun, 15 Sep 2024 15:24:52 GMT

Brief History & a Normative Gesture on the Agro Institutional Frame Work - Tanzania

Sat, 25 Sep 2021 20:29:59 GMT

Tanzania, just like other Sub-Saharan African countries were going through a series of trade reforms in the 1980’s as part of their structural adjustment programmes.

Like all other sectors agriculture sector was not spared from the reforms. Accounting the Agricultural sector the programmes were aimed at (Eskola, 2005);

a) Facilitating trade by decontrolling Input and Output prices

b) Eliminating regulatory control over input and output marketing

c) Restructuring public enterprises

d) Reducing marketing board activities in pricing and marketing

At the time the reforms were aimed at improving price incentive and would liberalize the markets such that it would induce supply response of inputs and outputs in the hope that they would have achieved what they called “ Well-functioning markets ”. However, two decades later into the millennium these tactics proved failure as countries in the Sub Saharan Africa were still falling behind from the economic development compared to other developing countries not to mention the OECD counties (Kherallah, 2000)

For pro-reformers (Eskola, 2005) on the defense for failures of the policy reforms claimed that;

a) It was assumed that the country was operating under a fully liberated environment. It was claimed that in de-facto terms the policies were never really implemented and at a point they were even reversed.

b) It was also brought forward that there had been government intervention from the marketing side.

c) It was also observed that for countries where governments have withdrawn the private sector has not always been able to replace the role previously occupied by the government.

However for some believe that there are other underlying reasons that impeded the policy reforms which might also hold true in our current times. These might be such as; Lack of commitment from political leadership, Fear of disturbing the existing client-patron relationship and Concern of losing important source of public revenues (Kherallah, 2000)

While we can dwell on what the challenges were or still are, my take on is to put in more work in the institutional frame work of the whole industry taking into account all stake holders. Normatively it should fix the current situation in which the;

a) Institutional frame work is unable to support the formation of strong traders and producers,

b) Boards and association that cannot weed out shady entities and personnel that destroy the image of the country

c) Weak legal framework that is prevalent in the country such that contracts are not respected and cannot be enforced in a timely manner.

All this leads to a weak sector with respect to the frame work and all we have to do correct it is to dive into the process and try to integrate the; Legal aspect, Trade aspect, Food security aspect, Financing and Marketing aspect to better our position and have the upper hand in negotiating better fairer terms of trade at the world stage. It is not rocket science to achieve this, in fact some of our own home sectors at home have tried to achieve this in some aspects, exemplary, the Tanzania Civil Aviation Authority (TCAA) in the issuing of permits.

It is in my understanding that in doing so we will enter in an intensive debate, which by the way is inevitable, one with a lot of polarized actors from the government, cooperative unions, processors, traders e.t.c, with different perspectives which all maybe right. I am not sure that I am advocating a liberalized market but I am sure that I am advocating a market of consensus that takes into considerations all variables, each being weighted correctly to bring about a sustainable environment within the sector.

Source of information:

Eskola, E. (2005). Agricultural marketing and supply chain management in Tanzania : a case study. ESRF Study on Globalisation and East Africa Economies, p. 1 to 3.
Kherallah, M. – Delgado, E. – Gabre-Madhin, E. – Minot, N. – Johnson, (2000) Agricultural Market Reforms in Sub-Saharan Africa: A Synthesis of Research Findings, revised draft, International Food Policy research Institute, Washington D.C.
Kaleshu, J. (2000) Consultancy Report on Cashew nuts Marketing in Tanzania, made for the I.C.A. Regional Office.
Government of Tanzania & Ministry of Cooperatives and Marketing (2005), Agricultural Marketing Policy (Second draft).
Badiane, O. (1998), Marketing Policy Reform and Competitiveness: Why Integration and Arbitrage Costs Matter, IFPRI Discussion Paper No. 22.

Cashew Procuring Procedures Amendment for Local Processors for season 2020/2021

Sun, 25 Oct 2020 17:05:56 GMT

Tanzania had officially opened the cashew nut season for 2020/2021 on 1st September, 2020 and auction activities had commenced on 9th October,2020.

Despite Tanzania's gains from International Trade through the valuable crop, it looses an estimate of USD 44 Million which is a result of 90% of the Raw Cashew Nut (RCN) being exported yearly which also means over 356,903 jobs being forgone which would have other wise been offset by substituting the exported raw cashew nut to be processed out of the country with it being processed locally.

This would have add value on the crop, sell it at a much competitive price in the world market and create jobs for people.

WHAT HAS BEEN DONE AT THE NATIONAL LEVEL ?

The Country's Policy of "Viwanda Kwanza" which translates to "Factories First" aims to support the local processing of RCN and increase volume of sales in the local and foreign market.

Through the Cashew Board of Tanzania (CBT) the government has facilitated the establishment of communities of two active Cashew nut local processors association, namely;

(a) Tanzania Association of Cashew Nut Processors, the association aims at medium and large processors and is headed

by Bahati Sosthenes Mayoma as the Chairman and Mahamoud Sinani as the Vice Chairman.

(b) Small-scale local processors, the processor aims at small scale processors and is comprised of more than 183 farmers group under Ms.Tumpale Magehema as the Chair lady.

Coupled with her organs and in order to increase involvement and contribution of local processors in cashew value addition the following has been done by the government and aimed to stay relevant through out the year.

(a) Permission of local processors to buy RCN direct from AMCOS instead of competing in the auction.

(b) CBT has removed the condition for local processors to put bid security in order to get license.

In this regard, The Cashewnut Board of Tanzania aspires all local processors to be African Cashew Alliance (ACA) seal certified. It is therefore requested that local processors visit ACA facilities to inquire on procedures to qualify for African Cashew Alliance (ACA) seal which is internationally recognized and allows local processors to trade internationally without difficulties which will increase amount of RCN processed and competitiveness of the country in the cashew global market.

Cashew Nuts Procuring Procedures (2020/2021)

Wed, 23 Sep 2020 00:02:35 GMT

CASHEW NUT PROCURING PROCEDURES FOR LOCAL & FOREIGN COMPANIES (SEASON 2020/2021)

Hello to all prospective Raw Cashew nut Stake holders,

This is notify you that the new season for 2020/2021 has kicked off.

The Board has started to issue Raw Cashew nut buying license from online through Agricultural Trade Management Information System (ATMIS) under the Ministry of Agriculture.

Procedures to apply for Raw Cashew Nut (RCN) buying license have been divided into Procedures for Locally Registered Companies and Procedures Foreign Companies.

Kindly note that for both locally and foreign companies the procurement is going to be conducted online through the TMX Online Trading System.

FOR LOCALLY REGISTERED COMPANIES BUYING THROUGH TENDER BOX OR TMX ONLINE TRADING SYSTEM

(i) Register online through www.atmis.kilimo.go.tz

(ii) All applications should be attached with 2 colored passport size pictures together with Certified Copies of:

• TIN certificate

• Company’s Certificate of Registration/Incorporation from responsible authority

• Valid business license

• VAT Registration Certificate

• Valid Tax clearance Certificate

(iii) Last season’s registered companies are required to update their particulars through www.atmis.kilimo.go.tz, and apply for the raw cashew nut buying license for 2020/2021 crop season and attach certified copies of:

• Valid business license

• Valid Tax clearance Certificate

(iv) After registration and verification of submitted information, you will be required to pay Bid Security in the following categories (Table 1) as per your requirement of raw cashew nut quantity to be bought per each auction;

All bid securities should be deposited to either of the following bank accounts in the following table below (See table 2 below)

FOR FOREIGN COMPANIES BUYING THROUGH TENDER BOX OR TMX ONLINE TRADING SYSTEM

(i) Buyers will be required to register through Tanzania Mercantile Exchange (TMX) by submitting the Buyer’s Declaration Form (available at https://tmx.co.tz/infodesk.php) attaching the following documents:

Valid Business License
Valid Registration Certificate/Certificate of Incorporations

(ii) Buyers will deposit bid security in the following categories (Table 3) into TMX Settlement Bank Accounts before being issued buying license by Cashew nut Board of Tanzania.

All bid security for online buyers should be deposited to either of the following:

Kindly note that the Bid Securities are refundable to buyers upon written request and after fulfillment of their obligations thereof for cashew nuts bought.

In summary this year’s whole procedure for both local companies and foreign companies is going to be an online based procedures.

Kindly free to contact us for facilitation so that your experience is hustle free!

Source of information:

Cashew nut Board of Tanzania (CBT), September, 2020.

Challenges facing Agricultural Trade in Tanzania.

Fri, 14 Aug 2020 18:10:23 GMT

When you think of trading in agriculture there are some issues that traders have to work on before committing into a trade deal. These issues can also be regarded as challenges and if not sorted early in the beginning may lead to loss of credibility.

Here are some of the challenges in the Tanzania's Industry that we need to pay attention to, especially when you are new in the " agriculture produce trading eco-system"

Lack of capacity to supply due to lack of Major single suppliers

Most farming done in Tanzania is Subsistence farming thus most of the produce is for consumption and not surplus for trade. Farmers that are trying to produce surplus are limited by capital which lead to a lot of individuals conducting trade in isolation from different regions.

Most of the time collecting from different sources and in different regions and especially when working on tight deadlines might lead to inefficiency and high transaction costs as the higher the spread out of the operation, the higher the operational risks in those specific environment.

Poor trade risk assessment

Most traders will claim they have years of experience in trading in which the claim might be very true.

However, the real concern is ; (1) do they have the right experience (2) are they organised to mitigate risks so as to complete the trade (3) A re they well informed of the policies put in place by the government and (4) Most important are the values of the people you are working with align with fulfilling the order required in a timely manner and not just creating short run and unsustainable profits.

While the goal in trade is to make money, risk assessed in the process that will be followed is equally important to ensure there is no bottleneck that will either lead to loss or lack of repeat sales.

Lack of means to support the terms of payment put forward by a client.

When you are starting out in agriculture export you will most probably encounter a discussion on the terms of payment with your client. If its a new client, they mostly request for a letter of credit (LC) which is a process where payments are going to be facilitated by the bank. The banks of both parties act guarantors of the parties engaged in trade taking into consideration all the agreements in terms of delivery (either FOB or CIF).

Most of the times, coupled with such terms of payments client might either agree to an advance payment of a certain percent, lets say 50% in advance, and the rest of the 50% upon fulfilling the order. Upon such terms of payment the Trader might be required to look for an alternative source of funding to fulfill the order.

On such a scenario, it is very important for traders to understand the capacity that they are about to trade and be open with the client on their financial capacity so that renegotiation take place in case the supply is readily available rather than going forward and comprising the standard quality of the operation that may lead to delays and losses.

Poor Financial management

Having spent some time in agricultural trade operation i have come to realize that there are people in the agricultural trade industry are not specific to certain crops as they deal in almost everything and also being run a bit informal. This added with organization leads to poor financial management. For example you can find some of the merchants using money for "Operation A" on "Operation B". Not even having to properly assess what operation B needs they soon find themselves running into a loss and sometimes default.

This does not only weaken a Traders credibility in business but if its a recurring theme at the national level it weakens the capacity of the country to trade with other countries.

I understand that capital might be a hindrance in moving traders into growing their trade business. But i also believe in if a trader has integrity, proper organisation to ensure the right trading process that minimizes risk to a mission, plenty of foreign buyers are willing to put in funds in the right process. Thus Trust, integrity and transparency is a must through out the process.

Moreover the government is doing a great job to put in policies to support the country's trade by putting up warehouses that enables easy collection and trade. However, am afraid that the policy might not be friendly to all actors on the ground especially a young trader who is looking forward to grow his or her business. There was already a trading Eco-system that existed and the new policy has discriminated some of the actors which has led to some effects on the ground. I believe there is a room for improvement so that the policies reflect continuity and change as part of change management but i will leave the discussion for another day.