Concerns loom large over funding of agricultural sector

19May 2016
Victor Karega
The Guardian
Concerns loom large over funding of agricultural sector

WHILST there is a general agreement that there has been progress in promoting agriculture, concerns loom large over meagre funding of the sector.

Areas of concern are in the poor financing for irrigation schemes, construction of warehouses, developing markets as well as importation of inputs and chemicals.

Several stakeholders told The Banker that as agriculture sustains over half of all households in Tanzania, it needs a new paradigm mostly in terms of financing its growth and development.

They urge the government to spend on efficient irrigation technologies, support less water intensive crops, create a national market for farm produce, and revamp the current dismal research and extension services.

“For the government to honour its commitment, it should allocate at least 10 per cent of its budget to the agriculture sector as highlighted in the Maputo Declaration,” says Policy Forum in a recent outlook note on financing the sector in the forthcoming budget to be tabled in Parliament on June 9.

The NGOs lobby says that with the current allocation of less that 10 per cent of the government budget to the sector, they are worried that most of the set targets may not be realised.

More emphasis of the budget should be put on agriculture and farmers’ welfare with the aim to double their incomes in the next five years, notes Policy Forum.

The 2016/17 government budget should place a renewed focus on the farming sector in a bid to revive agriculture growth and improve farming incomes at a time when rural Tanzania is going through a protracted period of distress.

Reviving the farming sector was a major challenge for Finance Minister, Dr Philip Mpango, as sectoral growth rate nose-dived to 3.4 per cent far beyond the target set in Mkukuta II and Five Year Development Plan (FYDP) that was six per cent in 2015.

Farmers expect to get the government’s immediate attention and the priority is to provide additional resources.

According to the second Five-Year Development Plan (FYDP II) 2016/17 – 2020/21, the agricultural sector employs about 70 per cent of the population, contributing 28 per cent of GDP, 30 per cent of exports and 65 per cent of industrial sector inputs.

Chief Economist and Deputy Director, UNU-WIDER, Prof Tony Addison told The Banker that the government should make irrigation and drought-proofing a priority, besides increasing crop yields in rain-fed areas.

“The emphasis must be placed on value addition so that organic produce grown in this part finds domestic and export markets,” he noted.

Prices of most crops received by farmers have depressed despite poor harvests during the 2014/15 and 2015/16 farming seasons.

The country has been facing adverse weather conditions, including deficient rainfall, for the last few seasons in a row. This has led to a sharp slowdown in farm incomes, and also caused concerns about food security and the sector’s future.

Prof Addison highlighting, said the sector is in need of reforms, new policy initiatives, increased private sector participation, higher investments, competitive markets, new forms of institutions and mechanisms, and science-based modernisation.

“This is a tall order for a single budget, but it can set the direction for change,” he explained.

The Finance and Planning minister’s budget should indicate the government’s seriousness to fix problems facing the farm sector and put it on a trajectory of sustainable and stable growth.

Ragnar Torvik, professor of economics at the Norwegian University of Science and Technology, said the major initiatives have to focus on irrigation, risk cover and compensation for crop losses, remunerative prices for farmers, enhanced supply of institutional credit and increased market competitiveness.

“The government also has to draw attention to the promotion of organic farming, increased production, creation of rural infrastructure and linking agriculture to non-agricultural activities through urban growth clusters,” said Prof Torvik.

He proposed the FY2016/17 to give a thrust to public investments to expand irrigation, harness traditional water resources, develop rural roads and electrification, create warehouses as well as develop and upgrade agri-markets.

Agricultural markets in Tanzania are fragmented and suffer from low competitiveness, efficiency and growth scale.

A unified agricultural marketing e-platform (e-Kilimo) requires the government to undertake major market reforms. This will modernise market operations and bring competitive prices to farmers.

Prof Torvik said the solution to many agricultural problems lies outside agriculture and has been ignored till now. There is a need to take agri-business investments as well as agro-based industry and services to rural areas to provide employment to farm workers outside of agriculture. This is the only way to double the income of growers.

A lecturer at Mbeya University of Science and Technology, Dr Vicent Kipene, was of the opinion that past budgets have included major initiatives to transform agriculture and increase farm income, but they seem to have missed some small and key aspects such as agricultural research and development (R&D) and technology, extension system, seed sector, farm mechanisation and land lease reforms.

Addressing these issues, he said, will help local farmers recover from the rough patch they have been going through while the government has to raise its allocation for the crop insurance scheme, as the gap between farmers’ cost and their loss is huge.

“Although allocation for irrigation is welcome, we need to see its execution. This is because the government has failed to bring any extra area under irrigation facility,” he stressed.