|
Receipt system can do farmers better
2008-01-02 08:25:21
By Bilal Abdul-Aziz
No one can object the fact that liberalization of trade has brought a lot of blessings to Tanzania.
New avenues of employment have sprung up, and a good number of people are earning salaries whose scale was unthinkable when the country was still under the command economy.
Before the advent of the market economy, Tanzanian small holder farmers, who contribute to the bulk of the country's gross domestic product, sold their cash crops such as coffee, cashew nuts, cotton and sunflower through cooperative unions.
However, most cooperative unions were debt-ridden and poorly managed, such that it took a long time for peasants to get their money, even though their produce had long been collected on credit by the cooperatives.
Notwithstanding that big handicap, the small-farmers, generally speaking, were usually paid, of course after a painstaking waiting, which at times lasted a whole season.
It was the order then, but extremely bad order, honestly, for a few somewhat `well to do` to make money at the expense of the poor majority.
The general complaint at that time was not about the prices offered to farmers, but it mainly rested on promptness with regard to payments, which was much wanting.
As Englishmen say, better something than nothing, to farmers the underlying problem was getting paid and not doing something to bet a better price for what they sell.
This does not imply that all cooperatives were poorly managed.
There were a good number of cooperative unions that were truly regarded as saviours by crop buyers.
These not only paid for the produce on time, but went as far as supplying agricultural inputs and even offering training to the small-holder farmers on how they could increase production.
Apart from the well-performing cooperatives, the other ones made the farmers so disgruntled that they heartily welcomed the introduction of free trade, which ushered in private crop buyers, who, side by side with the cooperatives, were given the mandate to purchase crops.
Since that time, many cooperative unions have literally collapsed, and they are remaining so in name only.
The private crop buyers, on the contrary, have literally monopolized the market, in the sense that there are increasing allegations that they are forming cartels so as to bring up crop prices, regardless of the state of the world market.
These cries were not heard for the first time recently during President Jakaya Kikwete's tour of southern regions.
It is years now since cashew nut, cotton and tobacco farmers began crying foul.
In fact, in many areas where the crops were traditionally grown, farmers have opted to sell the surplus of their food crops such as maize, groundnuts and rice, some of which is smuggled outside the country.
This is the background of the saga in Mtwara and Lindi regions, where the complaints of cashew nut growers compelled President Kikwete for the first time some two years back, to give a two-week ultimatum to cashew nut buyers to start buying the crop at the agreed 680/- per kilo for grade one and 480/- per kilo for grade two.
The President said that they risked losing their trading licences if they did not meet the deadline.
It is a pity that the crop buyers had to stick to their position of paying low prices until the President intervened.
The best thing would have been for them to stick to the compromise they had reached with the growers.
Forming cartels to drain farmers more and more because they can do little or can`t do a thing to safeguard their interests, is lack of civilization and business ethics.
In my view, however, cashew nut and other crop growers in the country can benefit a lot if a new receipt system is effectively implemented.
The national assembly endorsed a bill about the system some two years ago, under then minister charged with cooperative affairs, George Kahama.
It's understandable that the Minister for Agriculture, Food Security and Cooperatives, Stephen Wassira, is working hard to push forward the system, which, among other things, is deemed to reduce the problem to the farmers who are not paid their money and will improve the prices, as well.
According to Wassira, the ministry has decided to have a receipt system because in most cases, the farmers were denied payment due to the disorganized system used by the government earlier and cartels formed by traders.
Under the new system, the farmers take their crops to warehouses that have been registered by the government and each of them is given a receipt to show the total amount of crops they have sold to cooperative unions.
The farmers are paid 60 per cent of their money, and when the trade union is through with the selling, they are given the 40 per cent balance.
The new system, which experts at the Natural Resources Institute (NRI) call, ``Warehouse Receipt System (WRS),`` can help address multiple constraints in commodity marketing and finance systems.
The NRI lists main benefits, as: First, the use of inventory as collateral can ease access to finance and lowers financing costs, especially for smallholder producers participating in groups.
Another benefit is that the application of standardized grades allows trading by description, thereby reducing transaction costs and also safeguarding against cheating on weights and quality.
The NRI also says the system shortens the marketing chain and can potentially increase producer margins.
Again, commodities are better stored by professional warehouse operators, therefore reducing storage losses.
The WRS can also help reduce the cost of procuring and managing public food reserves, create incentives for private players to invest in new business ventures, encourage proactive cooperation among producers and other players, and in creating and maintaining a more enabling policy and regulatory framework for trade in agricultural commodities.
As I pointed out earlier, if the new system is effectively implemented unnecessary conflicts between traders and farmers will be avoided and their complaints will come to an end.
Under normal circumstances, there should be little or no problem at all, because under the receipt systems for crops, the traders will buy crops from the warehouses where special trade representatives negotiate the price in the presence of primary and secondary trade union representatives.
|
