Hard to build institutional price after cashew nut price effect

01Dec 2018
Dar es Salaam
The Guardian
Hard to build institutional price after cashew nut price effect

EFFORTS to bridge the gap between euphoric reception of presidential intervention on the purchase of this year’s cashew nut crop harvest and the paralysis of commercial and cooperative institutions involved in the crop’s value chain are only just starting.

President John Magufuli laid out terms for that effort in directing that the peasants be paid their purchase proceeds integrally and demands for debts of procured inputs and other contributions or charges be made later.

That obviously changed the model from deduction as those public bodies are used to do, into hoping that borrowers will take the cash individually.

This isn’t to say that they will not do so, as there is an overarching influence in what happens next, that it isn’t just a matter of the cooperative societies expecting that their input proceeds will be repaid but public authorities who made sure that the crop is paid properly and integrally expect them to do just that.

In that context it appears that the charismatic surroundings of rectifying this year’s pricing of cashew nuts and ensuring that this exercise isn’t sabotaged by leaving commercial actors to implement it on the ground will also extend to loan recovery, or input cost recovery operations. It is a case of worrying, not a crisis.

While the unions wait for farmers who are in the course of being paid and handsomely at the moment to receive inputs costs back from the beneficiaries, there must be soul searching among them as to whether the scenario of crop purchasing and remitting monies will stand as it was, or it has decidedly fallen.

What is there to assure the public that interventions of this sort will not be needed one year into another, for the simple fact the commercial stakeholders look for avenues to undercut peasant earnings, and share the proceeds out of world market price surpluses? When the government steps in, what next?

As a matter of fact the lack of faith, and routine scheming among boards and buyers that they have been conducting for far too long without intervention from higher authorities, have thrown institutions into a limbo.

They can only work if they have the field open before them, and there are price takers (farmers) who are unable to make head and tail of what determines world market prices, and a government which trusts those on the field (board, administrators) to be doing the right thing.

Not because they have actually checked that out but since it isn’t the business of top authorities to determine precise levels of crop prices.

The current intervention has a way of being institutionalized, where crop price levels are confirmed by a desk at the Prime Minister’s Office which coordinates economic diplomacy (finding foreign markets, bulk buyers, etc).

At the same time district administrators would have lists of debts of farmers picking inputs from commercial distributors in markets or specialized offices in each zone, so that paying enforcement can be pursued in a civic manner in case of lethargy.

It means that crop boards and purchasing companies run a real risk of being shut out, for fear that an experiment with them could run awful, say by a revenge streak that nobody will talk about right away. Would the government opt to keep silent, to respect actors?