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UNLEASHING THE POTENTIAL OF TANZANIAN FARM PRODUCE
By
Eng. Kalutu P. R. Koshuma (MSc. (Eng), Cons. Eng., MIET)
Mr. Sigisbert M. Mmasi (BSc. (Eng), MSc. (MBA)
Tanzania Engineering and Manufacturing Design Organization
(TEMDO)
P.O. Box 6111, Arusha, Tanzania
Tel: 027 250 6220, Fax: 027 250 8058
EMAIL: nmathiasi@yahoo.com
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Abstract
Commercialization of smallholder production is a process which involves a
transformation from production for household subsistence to production for
the market. Through the process, traditional smallholder producers are
integrated into the world market economy. The process involves intensive
and extensive value addition activities with eventual benefits to the
producer.
Tanzania like other developing countries especially in Africa South of Sahara
suffers chronic post harvest food losses estimated at between 30-40 %.
Value addition to the farm produce will contribute immensely not only in
alleviation of post harvest losses and enhancement of our food security
situation, but also increase economic growth significantly and transform
agriculture into a profitable, commercial venture, capable of driving
Tanzanian economy from the traditional raw material producer/ exporter to
high value producer/ exporter with high multiplier effects in employment and
the economy as a whole. Successful value addition activities involve
innovation, adaptation and dissemination of appropriate technologies. Use of
technology can raise product output, quality, consistency, reliability and
packaging thus opening up new markets. Technologies for processing and
value addition can be available locally in Tanzania if proper coordination
among the various stakeholders is done. Over the years, the Tanzania
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Engineering and Manufacturing Design Organization (TEMDO) have
attempted to develop technologies suitable for value addition of agricultural
produce with notable success. This paper explains the process used in
developing the technologies, challenges faced, experience learned and
proposes measures and strategies which can be put in place to stimulate the
availability of suitable technologies for processing and value addition to
agricultural produce.
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1.0 Introduction:
Agriculture accounts for 30-50% of GDP in most African countries and 70% or
more of total employment (Anonymous 2005). Agriculture has the potential
to move Africa out of poverty to better living standards of its people. In
Tanzania, the agricultural sector is the key to Tanzania’s economic
development, now and in the future. Though slightly declining, the sectors
contribution to GDP is about 50% (Rweyemamu, 2003; Shayo, 2006),
contributing to over 50% of the country’s exports while over 80% of the
nation’s population relies on agriculture for their livelihoods. The sector is
important for Tanzania’s efforts towards poverty reduction and ensuring food
security while meeting the challenges of the Millennium Development Goals
Despite major successes made in improving agricultural productivity in the
developing world and Tanzania in particular, rural poverty still remains one
of the challenges facing the developing countries. Small holder farmers face
substantial barriers in achieving improved livelihoods. Prices of farm
products have been decreasing over the years, markets increasingly
becoming more competitive with Government support to farmers declining.
Despite these drawbacks, opportunities exist for rural populations to improve
their livelihoods through adding value, diversification of income generating
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activities and organization (Lundy et al., 2002). For agriculture to be
sustainable it must create many more non-farm commercial opportunities for
the poor farmers. Small holder farmers need to commercialize their farming
activities which will involve a shift from subsistence production to production
for the market.
The Poverty and Human Development Report 2005 point out that “to
promote production and quality in an environment/economy such as
Tanzania’s that is based on smallholder farmers who are competing in
liberalized markets, there is need to consider new approaches because the
traditional approach to agriculture, under current conditions, is not working”.
The report recommends that the new approach to agriculture in Tanzania
should be the integrated production system that links production, extension
services, transportation, processing and marketing. This paper describes the
attempt that TEMDO has made in solving some of the constraints of the
small holder farmer through appropriate technologies in processing and
value addition to farm produce.
2.0 Agro-processing and value addition.
The small holder farmer is faced with the challenge to improve income in
agriculture. He/she can do this by increasing productivity through use of
improved farming techniques like improved plant varieties and other farm
inputs. This will normally lead to more crop production with subsequent food
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security. However this process will not ensure increased income to the
farmer due to associated declining prices.
Another way of increasing farmer income is through improved marketing
techniques. This is a more challenging process which involves processing
and value addition activities. The target is normally the market. It is based
on competitiveness through product differentiation and the development of
niche markets (Lundy et al., 2002). Small holder farmers must move fast
away from subsistence production to production for the market. They need
to adapt to diversification beyond food security and include both farm and
non farm activities for income generation. Studies have found that in Latin
America, some 40% of rural incomes are now non– agricultural while up to
80% of the value of final product is a result of post harvesting processing
and marketing (Lundy et al., 2002). It has also been reported that value
adding activities are capable of increasing farmer income by 350%.
When farmers are involved in value-added processing and marketing they
retain most of the value paid by the customer which is normally taken by
middle men processors. Value-added agriculture on small farms frequently
involves specialty and differentiated products, which can be an area where
small farms and small food processing firms have a competitive advantage
over lager farms (Danielson and Park, 2001).
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3.0 What is value added
Value addition in agriculture involves adding features to a raw
agricultural material used to make a particular food or non-food
product. Examples of value addition in agriculture include food
processing: drying, canning, juicing, packaging, labeling and
marketing. The farmer does not only produce and sell raw agricultural
commodity but is also involved in processing, and marketing of the
product.
Value added agriculture involves the processing of food and nonfood
raw materials, thus adding value to a food product (Ware, 1999). It is
the transformation of raw agricultural commodities to consumer-ready
food or non-food products. It includes local processing, packaging, or
marketing, which adds value to a raw agricultural product.
When a small holder farmer moves from planting and harvesting a
crop, such as sunflower, and moving up one step to processing it into
cooking oil and animal feed this process is considered to be value
adding. This process is sometimes termed as first level of processing.
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4.0 Why value addition?
Farmers must get more involved in the food chain in order to realize the
profits generated along the food chain. Farmers must move up the food
chain (Born and Bachman, 2006). As it is today, the farmer’s business ends
with selling of the raw farm produce. The farmer is hardly aware of the long
process which his produce passes before reaching the ultimate customer.
Worse still he does not know how much profit the middlemen are taking
along the food chain. In order for the Tanzanian farmers to reap the profits of
their ‘‘hard work, entrepreneurial spirit and thrift’’ (Mbogoro, D., 2008), they
must engage themselves in processing and value adding activities rather
than just selling their raw produce.
The agricultural industry in the United States provides a good example and
experience of the need for farmers to move up the food chain. In the United
States, the food grown on the farm follows the chain involving transporting,
processing, storage and distribution to the market for sale. As this chain of
activities gets diversified, the farmer’s share of the price paid by the
consumer is decreased. In year 2000, farmers received only 20 percent of
the food market, with the other 80 percent going to those who transported,
processed, stored, distributed, advertised and marketed the foods (Born and
Bachman, 2006) As the farmer gets more involved in some of the food chain
activities his share of what the consumer’s pay for their food becomes
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bigger. The farmer benefits through processing and value-added activities
without necessarily increasing commodity prices.
The diversification and modernization of the present agricultural and other
related activities supported by efficient on and off farm processing of the
commodities for the purpose of value-adding is expected to increase food
production and create employment and income generation. Adding value to
food commodities after harvest is also aimed at minimizing the losses during
storage and to maintain the quality of product. Efficient post-production
practices, particularly the preservation and processing of agricultural and
allied produces may bring a wide range of benefits to the people in this
country, generating job opportunities by opening up village-level processing
units.
As farmers struggle to find ways to increase farm income, interest in “adding
value” to raw agricultural products will definitely grow. The value of farm
products can be increased in endless ways: by cleaning and cooking,
processing, distributing, cooking, combining, churning, culturing, grinding,
hulling, extracting, drying, smoking, handcrafting, spinning, weaving,
labeling, and packaging.
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The important point is that it can contribute to sustainable development of
agriculture, provide food consistency, create new jobs in rural areas, prevent
product damage and loss, make optimum use of resources, and preserve
agricultural produce for longer periods of time.
The agricultural labour force is typically fully employed during key seasons,
such as crop planting, weeding and harvesting, but is under-employed other
times of the year. If non-farm activities can be taken up during slack
periods, then this can add to labor productivity without detracting from other
sectors of the economy.
5.0 Role of technology in agro processing and value addition
The farm processing and value adding activities in agriculture take raw
agricultural products (such as sunflower seeds) and turn them into food or
non food products that are consumed every day (like cooking oil or animal
feed). The transformation process of changing raw agricultural material to
consumable value added product must require the use of appropriate
technology in one form or another. Thus, the role of technology in the
development of the agro processing and value adding sector cannot be
overestimated. In fact technology acts as the engine which propels the
development of the agricultural sector and improving farmer’s income.
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Technology (machinery and equipment) are the key to improving efficiency
in agricultural processing and value addition industry to compete against
imported produce from countries with developed industry. The strength of
the Tanzanian agricultural sector lies in the ability of the farmers to produce
high quality produce and products. This will only be possible through the use
of appropriate technology right from the farming stage through processing to
marketing. Appropriate technology should be used to link food production,
processing and marketing.
6.0 Challenges facing farmers in agro processing and value added
agriculture
The farm processing and value adding activities faces a variety of challenges
which include market opportunities, access to appropriate technologies,
business management (entrepreneurship) and financing.
At farm level in Tanzania processing of farm produce is almost absent. The
market does not provide any incentive to encourage value addition of the
crop. Thus, farmers do not see any need to engage in value addition
initiatives. In addition, due to capital deficiency on the part of farmers,
access to technology (processing tools and machines) is limited. The current
agricultural policies under the free market framework have not been able to
promote agro processing in the country. The challenges facing the farmers
are often overcome through intervention from the Government,
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strengthening networking among key stakeholders and provision of
appropriate and sustainable Business Development Services.
The other challenge facing the small scale farmer is lack of readily available
modern machinery, equipment, and technologies suited to local conditions.
This is manifested in the apparent absence of processing industries in the
agricultural sector, improper packaging and insufficient mechanized
industries. The small farmers have limited knowledge of the opportunities for
domestic as well as profitable export in foreign markets and of the quality
standards relevant to those markets as well as correct production and value
added practices that result in quality produce. The limited infrastructure to
support agro-business (cold storage, transportation etc.) means that high
spoilage rates and low quality products can erode competitiveness.
Formal financial services are generally unavailable in rural areas. For most
lenders, agricultural sector activities are considered to be very risky. Thus
generally, interest rates on loans are relatively high. At the same time,
although the land law has been reviewed, small holder farmers are still
unable to use their land as collateral to access finance since most of them do
not have the right to ownership of the land they cultivate. The absence of
formal channels of finance in rural areas limits the number of small holder
farmers who can purchase seasonal inputs or invest in other productivity-
enhancing goods and restricts the capacity of small traders who play an
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important role in agricultural marketing and those who might invest in local
processing.
7.0 Technologies for agro processing and value addition
7.1 The Process
Since its inception in year 1982, the Tanzania Engineering and
Manufacturing Design Organization (TEMDO) have developed a number of
technologies (machinery and equipment). Dictated by the economic situation
in the country, most of the technologies have been in the agro-processing
sector. Using various approaches these technologies have been
commercialized and made available to the targeted end users. However the
level of commercialization is not yet satisfactory. The methods used to
commercialize the technologies include sale of designs or prototypes to
manufacturing enterprises, one-off manufacture and sale, batch level or pilot
manufacture and sale. TEMDO will be successful when the developed
technologies are made available in the local market to as many people as
possible. The availability of the technology must be sustainable in that the
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number of people manufacturing and using the technology increases with
time even without external stimuli.
The technology development and commercialization process at TEMDO
involves the following activities:
Market opportunity
The tool normally used to analyze the target group or market is the
feasibility study. It is intended to establish the financial viability of a
particular technology.
Technology
TEMDO carries out the design and development of the technology.
After developing and testing the prototype, TEMDO goes into pilot
manufacture. The aim of pilot manufacture is to test the market and to
obtain views from the users on the suitability of the technology and
area requiring improvement. When TEMDO is satisfied with the
performance of a particular technology, it will consider transferring the
technology to private manufacturing SMEs for commercial production.
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TEMDO will provide the entrepreneurs with the necessary assistance
for development of the technology. The assistance includes provision
of engineering drawings, jigs and fixtures, sample product, bill of
quantities, operation manuals and a business plan for the technology
in order to convince the manufacturer and target user on the viability
of the particular technology. TEMDO will work together with the
manufacturing SMEs until the SMEs have developed enough capacity
to continue on their own.
The Manufacturing SMEs
The aim of transfer of technology from TEMDO to manufacturing SMEs
is to relieve TEMDO from commercial production of technologies so
that they concentrate more on technology development work.
Marketing and Promotion
TEMDO in consultation with other stake holders will deal with
marketing and promotion of the developed technologies. The
promotion strategies will include publicizing and demonstrating the
technology with the aim of bringing the technology to the attention of
potential customers.
Withdrawal
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When the private manufacturing SMEs have reached a stage where
they can take over commercial manufacture of the technology on their
own, TEMDO has to withdraw from the process. The manufacturing
SMEs will then continue with commercial production and will be
allowed to carry out further adaptation and development on the
technology as the market may demand.
7.2 The Technologies
Technologies for processing and value addition can be available locally in
Tanzania if there is proper coordination among the various stakeholders.
Successful value addition activities involve innovation, adaptation and
dissemination of appropriate technologies. Over the years, TEMDO has
attempted to develop a number of proven technologies suitable for value
addition of agricultural produce such as fruit and vegetable processing, seed
oil processing, honey processing, grain or seed dressing and milk processing
with notable success.
Some of the various value adding activities and technologies (machinery and
equipment) for adding value to farm produce in Tanzania include the
following:
TYPE OF FOOD
(PRODUCT)
VALUE ADDING
ACTIVITY
TECHNOLOGY (MACHINERY AND
EQUIPMENT REQUIRED)
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Raw Foods: wash, peel, cut,
package
fruit cleaner, peeling machine,
cutting machine, fruit chopper,
packaging
Fruit Juices and
Pulps
preparation, wash,
peel, cut, press, pulp,
sieve, pasteurize, boil,
package
fruit cleaner, peeling machine,
cutting machine, fruit chopper, fruit
pulper, juicer, sieve, strainer, press,
pasteurizer, boiling pan, filling,
sealing and capping machine.
Canned and
Bottled Foods:
jams, jellies,
pickled foods,
sources, syrups,
wash, peel, cut, boil,
package
fruit cleaner, peeling machine,
cutting machine, fruit chopper,
boiling pan, filling, sealing and
capping machine.
Honey extraction, pressing,
filtration, boiling,
packaging
honey extractor, honey press, honey
filtering tank, honey strainers,
boiling pan, packaging
Dried Foods: dried fruits, dried
vegetables, popcorn,
beans, nuts, packaging
solar drier, fuel-fired drier, electric
drier, popcorn machine, packaging,
filling, sealing and capping machine.
Value -Added
Dairy Products:
fresh milk, flavored
milk, cheese, yoghurt,
ice cream, butter
milk cooler, milk/cream separator,
butter churn, ice cream making
machines, filling, packaging
Milled Foods: cereals, rice, corn milling machine, hulling machine,
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meal, milled grains packaging
The following-agro processing and value adding technologies are available at
TEMDO ready for transfer to interested manufacturing SMEs for commercial
manufacture and use (see Annex 1):
Oil expelling technology
Palm oil and palm kernel processing technology
Milk processing technology
Honey and honey products processing equipment
Fruits processing technology
8.0 Challenges facing TEMDO in the development of agro-processing
and value adding technologies
Appropriate agro-processing and value adding technologies implies
affordable, locally produced and locally repaired, reliable technology that has
a suitable size and complexity of operation for the people who will operate it.
For most value-added technology, the critical issue is developing that
technology so it is appropriate to the scale of groups of producers and is
economically feasible. If the development of appropriate technology is not
feasible, then “No Further Action” is taken on the project.
Research and development efforts on improved food processing technologies
should be based on the needs of the local environment. This should include
the resource base of enterprises, the support facilities available to them and
the impact of the enterprise on the environment. It may be necessary to
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both upgrade the traditional processing technologies as well as adapting
(down-grading) modern technologies. However, the key overriding factor is
that interventions to improve food processing operations must be market-
oriented.
Technologies developed at TEMDO faces stiff competition from cheap and
sub-standard imported machinery from other countries. Due to the low
purchasing power of the Tanzanian entrepreneurs, they opt for the cheap
imported technologies with adverse consequences.
Most of the new processing technologies were developed without a proper
market-oriented approach. They were developed without consideration of
final users or beneficiaries. Due to financial constraints, most of the
technologies are never taken up to pilot level for viability testing. This has
led to premature release of technologies with adverse effects at the market
place.
9.0 Challenges and constraints of agro-processing and value
addition to farm produce
The paper has so far demonstrated that agricultural transformation is central
to redressing Tanzania’s poverty problem. Tanzania has a comparative
advantage in labor-intensive agricultural production and processing and
could potentially be producing a wider variety of agro-processing and value
added products. There exists an enormous untapped potential which should
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be realized in order to move this country forward. Therefore, research and
extension capabilities must be built in order to undertake the dynamic
endeavor to keep pace with the production. Successes in development of
value adding processing technology and industries are hindered by a
growing number of challenges and constraints.
The main challenges and constraints include:
Absence of reliable supply of raw materials;
Poor managerial skills;
Increased reliance on the part of many producers on imported raw
materials (preservatives, color, flavor, emulsifier, etc.) which results in
increased cost of production;
Most of the modern and special processing equipment have to be
imported which are expensive and difficult to maintain;
For cottage and small-scale industries, promotional activities are
limited due to high cost of publicity in mass media;
Uncertainty of market for processed product in the domestic market,
due to stiff competition from multinational companies;
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Low and fluctuating nature of demand, high taxation and absence of
transport make serious bottlenecks in marketing products;
Lack of forward and backward linkage industries and storage facilities;
Lack of standard packaging facilities.
10.0 Conclusions and Recommendations
Agriculture continues to be the mainstay of the economy of Tanzania. It
remains the major source of rural employment and the driving force behind
its economic growth. The globalization forces has opened up opportunities
for new markets of its products and on the other hand exposed the country
to greater competition. In the markets of the world, consumers demand
products which are perceived to be of higher quality than those grown and
processed in this country. There is, therefore, an urgent need to process the
agricultural products to higher qualities for marketing, distribution and trade.
The following need to be done in ensuring a sustainable and reliable
development and commercialization of appropriate technologies for
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processing and value adding in the country thereby improving the living
standards of the people of Tanzania:
Strong urban-rural linkage should be developed to ensure sustainable
development of agro- industrial base in the villages;
Development of alliances between large enterprises usually urban
based and small and medium scale enterprises (SMEs) to be created at
the rural level for creating dynamic agribusiness sector in rural areas
adding value to domestic raw materials and generating employment;
Upgrading of quality for better competition and marketing;
Providing financial and technical support for the development of
packaging industries;
Design and development of specialized transport vehicles with cooling
systems for carrying fresh commodities to urban areas or to the
processing industries;
Supporting specialized research programmes for the development of
suitable processing and value adding technologies.
Use a market-orientated approach to technology and enterprise
development. Technologies developed by the technology development
institutions should be demand driven.
Train small and medium scale enterprises in management and
technical skills
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Increase access to information by database development on available
agro processing and value adding technologies and other
opportunities.
Adapt and adopt new processing techniques and involve end-users to
test equipment or products at pilot level
Public support to efforts in developing and supporting production,
processing and marketing are needed to enable the small farmers to
enter the inevitable competition. The future lies in the ability to
market the products (Danielson and Park, 2001).
Government policies need to be more supportive in the development
of processing technologies.
The Government should support the strategic plan for setting up and
developing food processing industries in the districts. These agro
processing units located close to production centers should process
and preserve products such as dairy, meat, pickles, sun flower oil,
vegetables, and fruits as well as animal feed.
In order to limit the risk of obsolescence, businesses must constantly
protect, reinvent and broaden their technology platforms. Staying
abreast of technology will enable producers to constantly enhance
product performance and value.
In order to capture value throughout the chain, farmers and processors
must establish an integrated structure of business relationships—from
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the farm gate to the retailer. This vertical coordination assures a
constant supply of the right raw products with the qualities desired by
end users.
11.0 References
1. Anonymous (2005). “Is Agriculture Still Relevant to Poverty Reduction in
Africa?” Speech in the House of Commons, Overseas Development.
2. Born, H. and J. Bachmann (2006). “Adding Value to Farm Products. An
Overview.” NCAT Agriculture Specialists, ATTRA No. IP 141.
3. Danielson, R. and D. Park (2001). “Value – Added, On Farm Processing:
Summer’s Harvest-Hope.” Case Study, North Dakota state University.
4. Lundy, M., C.F. Ostertag and R. Best (2002) “Value Adding Agro Enterprise
and Poverty Reduction: A Teritorial Approach for Rural Business
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Development.” Paper presented at the First Henry A. Wallace Inter-
American Scientific Conference “Globalization of Agro Research-Costa
Rica.
5. Mbogoro, D. (2008). “Tanzania Small Holders are the Most Vulnerable
Economic Group”. Business Times, 15- 21 August 2008, 7pp.
6. Rweyemamu, D. (2003). “Agricultural Reforms and Rural Development In
LICs: The Tanzanian Experience”. Research Report.
7. Shayo, C.M. (2006). “Adaptation Planning and Implementation.”
Agriculture and Food Security Meeting, Accra, Ghana.
8. Ware, A. E. (1999). “Value-Added Opportunities for Small Farmers.” The
Kerr Center, Poteau.
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