Iringa Tomato Value Chain Analysis for Local (National) Market

Iringa Tomato Value Chain Analysis for Local (National) Market

and

Value Chain Development Investment Plan

1st DRAFT

Submitted by a Consortium of

Business Care Services Limited

and

Centre For Sustainable Development Initiatives

September 10th, 2009

MINISTRY OF INDUSTRIES, TRADE AND MARKETING

SMALL INDUSTRIES DEVELOPMENT ORGANIZATION

Packaging materials

Finished Products

Tomato Demonstration Plot

Tomato Demonstration Plot

MUVI-SIDO Iringa Tomato Value Chains Analysis for Local (National) Market

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ACKNOWLEDGEMENT Business Care Services (BCS) and Centre for Sustainable Development Initiatives (CSDI) take this opportunity to thank Small Industries Development Organization (SIDO) for hiring us to carry out this interesting study to diagnose and analyse the value chains to be supported by Rural Business Support Programme (RBSP) or popularly known as MUVI for Iringa Region. Throughout the undertaking this assignment, the Consultant was cognizant of the need for a participatory approach and therefore the work has directly and indirectly involved a number of people outside the Consulting team. To begin with, we acknowledge the guidance offered by Client namely the Director General of SIDO, Mike Laiser who responded to our inception report with significant insight issues on the scope of the study and the process and later reviewed the progress reports and advised the Team to add tomatoes to the list of products to be analysed. Equally important has been Mr. Mwene Milao, the Programme Coordinator who from the outset worked closely with the team including coordination between SIDO and the Consultant, between the Consultant and SIDO Iringa Regional office and he actively participated in all the workshops. Within SIDO we also thank the Regional team led by Mr.Gervas Kashebo who assisted the Consultant in liaison, protocols with regional and district authorities, sourcing of information, availing office space and logistical support. The Consultant is highly indebted to the Regional Authorities and particularly the Regional Administrative Secretary (RAS) Ms. Getrude Mpaka who officiated the workshops and provided the regional perspective to the Consultant. Mr. Adam Swai – the Regional Agricultural Adviser and Head of the Agriculture and Productive Sectors Clusters in the region played a very critical role in the whole process, also important had been Mr. Emil Kisoka – Regional MUVI focal person, apart of effective participation, he assisted the Team in coordinating the processes with Regional and District authorities. It is important to acknowledge the support the team got from all DEDs in the seven districts and their respective officers and especially the DALDOs and District Trade Officers who are also the MUVI focal persons. Outside the Government, we are very grateful for the contribution of the private sector in Iringa particularly Mr. Mandakishar Bharati of Dabaga Vegetables Limited, Esmail Thakore of IVORI, Marriet Natural Foods Limited, in Dar es Salaam. In Arusha we are grateful to Mr. Ravikant Bhalarao of Darsh Industries Limited manufacturer of Redgold brand in Arusha. In the financial services we recognize the input from NMB Bank in Ludewa and CRDB Njombe. In the research realm, we interacted with Mr. Humphrey Ndosi of Tanzania Industrial Research and Development Organization (TIRDO), Mr. Elimringi of Tanzania Engineering and Manufacturing and Design Organisation (TEMDO). Ms Theresia Shang’a of Ilonga Agricultural Training Institute (ARI) and Mr. Faustine Barongo of Dakawa (Morogro) ARI and Adonisian Shayo of Tanzania Official Seeds Certification Institute (TOSCI). We thank farmers, traders, transporters, input suppliers and small processors whom we interactively extensively, we are aware that we have not mentioned a substantial number of people who contributed to this work because of the space, we request all to accept this collective thanks as being our sincerest. While we share the credit with all mentioned above, we would like to exonerate them from any shortcoming in the work and reiterate that the liability is solely of the Consultants.


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TABLE OF CONTENTS 1.0 INTRODUCTION 1 1.1 Background 1 1.2 Study Objectives, Outputs Deliverables 1 1.3 Value Chain Analysis Methodology 2 1.4 Limitations of the Study 3 1.5 Limitations of the Study 4 2.0 IRINGA REGIONAL PROFILE 5 2.1 Geo-climatic condition of Iringa 5 2.2 2.2 Regional Demography 6 2.3 2.3 Regional Administration 6 2.4 The Economy and Economic Infrastructure 7 2.5 Stakeholders in Tomato Industry in Iringa 7 3.0 TOMATO MARKET ASSESSMENT 9 3.1 Product Description and Uses 9 3.2 Overview of the World Market 9 3.3 Export and Imports of Tomatoes 10 3.4 Tanzania Market 11 3.5 Price Pattern in Urban Markets: The Case of Dar es Salaam 13 4.0 TECHNICAL ASPECTS AND BEST PRACTICES 14 4.1 Production Systems 14 4.2 Tomato Processing 17 5.0 SOCIAL ECONOMIC ASPECTS 20 5.1 Income Generation in Major Chain Segments 20 5.2 Wholesale Business Value 21 5.3 (Direct) Employment in Tomato VC 21 5.4 Gender Aspects 21 5.5 HIV/AIDS 21 6.0 STRUCTURE OF THE VALUE CHAIN 22 6.1 Actors and Functions 22 6.2 Tomato Channels Map and its dynamics 27 6.3 Actors Relationships in Tomato Value Chain 29 6.4 Driving Forces and Points of Leverage 30 7.0 GOVERNANCE OF VALUE CHAIN 34 7.1 Conceptual Framework 34 7.2 Governance in Tomato Value Chain in Iringa region 35 8.0 GROSS MARGIN ANALYSIS 37 8.1 Key Assumptions and Parameters 37 8.2 Method of Data Collection 37 8.3 The Results of the Analysis 37 9.0 CONCOMITANT SERVICES MARKET 39 9.1 Technical Services 39 9.2 Financial Services 39 10.0 INSTITUTIONAL AND REGULATORY FRAMEWORK 42 10.1 Tropical Pesticides Research Institute (TPRI) 42 10.2 Tanzania Foods and Drugs Authority (TFDA) 42 10.3 Tanzania Seeds Certification Institute (TOSCI) 42 10.4 The National Environment Management Council (NEMC) 43 10.5 Tanzania Bureau of Standards 43


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11.0 TOMATO VC SWOT ANALYSIS 44 11.1 Opportunities 44 11.2 Strengths 44 11.3 Weaknesses 45 11.4 Risks (Threats) 45 12.0 EXIT STRATEGY 47


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ACRONYMS (R)MSE(s) (Rural) Micro and Small Enterprises(s) AIDS Acquired Immune Deficiency Syndrome AMSDP Agricultural Marketing Systems Development Programme ARI Ilonga Agricultural Training Institute BCS Business Care Services BEE Business Enabling Environment BEST-AC Business Environmental Strengthening – Advocacy Cm Centimeter CRDB Cooperative Rural Development Bank CSDI Centre for Sustainable Development Initiatives DADP District Agriculture Development Plan DAIPESA Development Alternatives, Inc. Private Enterprise Support Activities DALDO District Agriculture and Livestock Officer DASP District Agricultural Support Programme DED District Executive Director EAC East Africa Commission FAO Food and Agriculture Organization FFS Field Farmer School FGD Focus Group Discussion GDP Gross Domestic Product HIV Human Immunity Virus HIV/AIDS Human Immunodeficiency Virus/Acquired Immunodeficiency Syndrome IFAD International Food for Agriculture Development Kg Kilogramme LGA Local Government Authority MAFC Ministry of Agriculture, Food Security and Cooperatives MITM Ministry of Industry, Trade and Marketing MKUKUTA Mkakati wa Kukuza Uchumi na Kupunguza Umaskini Tanzania mt Metric tone MUVI Muunganisho wa Ujasiriamali Vijijini MVIWATA Mtandao wa Vikundi vya Wakulima Tanzania NADO Njombe Agricultural Development Organization NBS National Bureau of Statistics NGO Non Government Organisation NMB National Microfinance Bank NSGRP National Economic Growth and Reduction of Poverty OTC Oxenization Training Centers QDS Quality Declared Seed RAS Regional Administrative Secretary RBSS Rural Business Support Services REA Rural Energy Agency RFSP Rural Financial Services Programme RMA Preliminary (Rapid) Market Assessment SACCOS Savings and Credit Cooperative Society(ies) SIDO Small Industry Development Organization SMART Specific, Measurable, Achievable, Realistic and Time bound SME Small and Medium Enterprises


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SMS Subject Matter Specialist SWOT Strengths, Weaknesses, Opportunities and Threats TAFOPA Tanzania Food Processors Association TCCIA Tanzania Chamber of Commerce, Industry and Agriculture TDC Technology Development Centre TEMDO Tanzania Engineering and Manufacturing and Design Organisation TFC Tanzania Fertilizer Company TIRDO Tanzania Industrial Research and Development Organization TOSCI Tanzania Official Seeds Certification Institute TRA Tanzania Revenue Authority US/ADF United States/African Development Foundation USAID United States Agency for International Development VC Value Chain VCA Value Chain Analysis VCD Value Chain Development VCIP Value Chain Implementing Partner VCO Value Chain Operators VCS Value Chain Supporters


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EXECUTIVE SUMMARY

Background MUVI Programme is one of the Government strategies to address rural poverty as elucidated in the National grand strategy, the National Economic Growth and Reduction of Poverty – NSGRP branded as MKUKUTA. It is aimed at strengthening Rural Micro and Small Enterprises (RSMEs) as a strategy towards employment creation, enhanced productivity, profitability and off-farm incomes through increased access to markets and services and through improved RSMEs, improving youth and women empowerment, strengthening of the link between agriculture and industry and raising the contributions of other sectors to GDP. Further, MUVI aims to promote off-farm activities and value-addition to primary commodities. The main objective of this study had followed the diagnosis process that recommended tomato to be among the three commodities to be supported under MUVI in Iringa. The study was an exploratory research-based work, a total of 116 key informants from government and private sectors were consulted at different levels. Major market points of Iringa Municipal, Ilula, Mafinga, Makambako, Njombe and Iwawa (Makete) were visited. Using the “whole system in a room” approach, focus group discussions (FGD) were widely used in all the districts, participants included producers, traders, processors, transporters, warehouse service providers/owners, TCCIA, NGOs, district and ward extension officers.

The significance of the commodity Tomato, scientifically called Lycopersicon esculentum Mill is important due to its nutritional value, as its commercial value increased, there has been an increase in selection and breeding of the tomato to improve yield and adapt it into different agro-climatic environments. Total world production of tomato fresh fruit in 2004 was about 100 million mt with China producing 30,102,040 mt; other leading countries are United States, Turkey, Italy, and India. Record holders in terms of yield are The Netherlands that reported a yield of 496 mt per hectares and Belgium at 416 mt. Tomato processing absorbs about 25% of the total production but has grown faster than production of fresh tomato. In 2008 processing industry used 35 mln Mt of fresh tomato. There had been consistent growth in national output up to around 2000 where production has been staggering at around ± 140,000mt. With 107,190 mt in 2008, Iringa accounts for 72% of tomato produced in Tanzania. Average regional yield is around 17.5 mt per hectare or about 7mt per acre. Tanzania is a net exporter of fresh tomato; between 2004 the country’s annual export averaged 1.05 million kgs against an average imports of 6,824 kgs though the pattern is highly uneven for both exports and imports. Tanzania imports preserved tomatoes, sources and ketchups amounting to 1,500 mt per annum (the average for 2004 to 2008). It is estimated indicated that 87% of the tomato produced in the region was sold outside the region and that out of the remaining 1% was lost in post-harvest processes. Dar es Salaam absorbs about 60% of tomato from Iringa, imported major sources of imported tomato ketchup are Middle East countries that essentially buy tomato paste from China and add value and brand the products lead by Oman and Arab Emirate. China is known to be the major source for tomato paste. Prices of fresh tomato in Dar es Salaam fluctuate significantly with seasons. In Iringa the tomato plant is affected by a number of diseases, they include root rot, stem cut and late blight. Nematodes (causing root rot) and cutworms are the two most important pests. Root rots caused by nematodes (Funza wa mizizi in local language) affects tomato roots that leads to rotting of the plant.


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Tomato processing Tomato processing is important to even out availability of tomatoes throughout the year through preservation, it is processed into various products including sauce, paste, ketchup, chutney, puree, jam, juice or squash, base of other sauces (chili, garlic, etc.), it provides a medium for baked and canned beans, maize, carrots, green peas, etc. Underutilization of the existing tomato processing capacities in Iringa region including Dabaga and Ivory factories. The factories are utilizing only 40% - 50% of their installed capacities. Under utilization is mainly because of low local product demand, competition from imports and unfavorable tax policies. It is difficult for SMEs to access the tomato processed markets due to poor product quality particularly packaging and labeling, inability to qualify for safety standards lack of critical traceability information. Diseconomies of scale affect cost effectiveness and ability to promote the market. The tomato value chain in Iringa is governed by the market, there is no lead firm at any level of the chain (i.e. production, processing, trading and consumption) that govern and control the system and instead it is governed and controlled by the supply and demand conditions in the market. Return on tomato cultivation can be improved if yield is enhanced from around 17 mt per hectare reported in the field to at least 22 mt (a 25% increase) that could add about Tshs 600,000 to a farmer. Room for innovation technologically and strategically also drives the tomato value chain. There are improved physical infrastructure road network and land for tomato farming expansion is also available.

Concomitant Services Availability and accessibility to support services is one of the critical success factors in VC upgrading and sustaining competitiveness. Segments and services that need more support services are producers, traders, manufacturers of packaging materials and processors. Producers need services for enhancing entrepreneurial, marketing, finance, extension services and organizational development skills. Some non-government organizations that can complement the supply of services include COAS (based in Mufindi), NADO (based in Njombe), INCOMET (based in Mufindi), etc. Most RMSEs rely on SACCOS for financial needs as they are closer to them. Iringa has registered about 173 SACCOS, 89 AMCOS, 9 cooperatives, 12 bank branches and several MFIs/NGOs. About 41% of the SACCOS are located in urban centers (with Iringa Urban carrying 45% of them) whereas 60% SACCOS are located in the rural areas. Based on the number one could conclude that access to financial services is higher in the rural areas than, the reality is the percent of population accessing SACCOS services is far less in rural areas than in urban centers. In Iringa there are a range of financial institutions, commercial banks in Iringa region include National Microfinance Bank Ltd (with 7 branches namely Ludewa, Mafinga, Makambako, Makete, Mkwawa, Njombe and Kilolo); CRDB Bank Plc (3 branches namely Iringa, Mkwawa and Njombe); National Bank of Commerce Ltd (2 branches namely Iringa and Njombe) and Exim Bank Ltd (1 branch in Iringa town). Non-bank financial institutions present in the region is Tanzania Postal Bank (with 1 branch in Iringa).


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Regulatory Institutions National Environment Tropical Pesticides Research Institute Act was established by the Act No. 18/79, it deals with supervising and regulating the manufacture, importation, distribution, sale and use of pesticides in Tanzania and to administer the regulations made under the Act. TPRI competency is of critical importance to the tomato VC as they have to assure that quality of chemical are up to standards. There have been reports of some pesticides being ineffective lending producers into losses. Tanzania Food and Drugs Authority (TFDA), a semi-autonomous body supervises in this respect pre-packaged food and food supplements, it registers production premises, registers the products and licenses firms to carry out business. The Tanzania Official Seed Certification Institute (TOSCI) certifies seeds, it is important that TOSCI becomes aware of the importance of tomato seeds to the economy of the region and the country so as to allocate adequate time and resources. NEMC is another important stakeholder to the tomato industry given the environment implication of intensified tomato production under the project. The legal mandate of NEMC to ensure sustainable of the environment, prevention and control pollution, waste management, environmental quality standards, public participation, environmental compliance and enforcement.

Risks (Threats) The major risk of tomato VC is over dependency on rainfall, therefore weather or rather climate change is the major risk and producers have indicated experiencing erratic rainfall pattern over the past 10 years. Poor water management and pollution water sources adjoining the tomato fields are two other important risks. At macro level, the opening of EAC markets in 2010 could be a blessing for fresh tomato segment if Iringa tomato could be competitive while processors may face serious competition. Processors have complained of taxes on packaging materials that are used to pack tomato rendering prices of local processed tomato less competitive, as processing capacity increases the impact of imported packaging materials will become even more significant. At one level consumer preference towards processed tomato poses a risk if it won’t grow significantly.

Points of Leverage Rural Market Collection (Cluster) Centres: These form important system nodes for outreach to a wide range of the chain actors in terms of exchange of information regarding, product supply and demand, market prices, product quality issues, transport, among others. Main collection centers in study area are Ilula, Makambako and Mlandege. Orders are done through mobile phones or visits by traders from Mbeya, Dodoma, Morogoro, Dar es Salaam and Zanzibar.

Producers associations: At the farm level, there is a need of strengthening/establishing farmers associations (groups) and networks such as MVIWATA as a point of leverage for capacity building issues such as training, dialogues on policy issues with public sector, market and financial linkages.

Processors platform: Tanzania Food Processors Association (TAFOPA) is also a potentially important player in the food processing industry. The association has real potential for leveraging MUVI Tanzania project interventions on policy and regulation advocacy, marketing and capacity building among others.

Traders and manufacturers of packaging materials platform: Traders do drive the value chain in the sense that they manage the commodity flow, market information and cash


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transactions. Together with manufacturers they will improve the value chain by ensuring that appropriate measurements are in place and enforced. They will also work close with the Project in exploring export market for Tanzania fresh tomatoes.

Recommendations: Interventions to upgrade the value chain Mobilisation and organization of actors in the Value Chain Actors will be encouraged to associate in order to harness synergies, economies of scale and increased voice. Cluster level associations will be based on output concentration level e.g. Ilula, Makambako, etc. (geographical area of business convenience), the major benefit includes arrangement for transport, information hub, exchange point between farmers and traders, point of interface with government and institution of code of conduct. To improve producers understanding of basic faming business ideals in including optimization of factors of production for higher yield. This will be in class and study visits training. Improving access to effective (good practice) technical messages, apart from traditional visitation by extension/experts, leaflets and booklets shall be prepared and disseminated using success stories from within the region, in the country and outside the country. Cinema shows will be done using documented success stories from within Iringa, in the country and the world over, the cinema if appropriately packaged will attract youths attention. There will be initiatives to standardize and innovate on crates, currently the weight of the boxes that accounts for as much as 16% of the cargo weight. This calls for technical review of tomato handling containers to involve SIDO TDCs and Weights and Measures Agency. Initiating and supporting eco-friendly tomato production that employ cost-effective use rain or ground water on a relatively larger scale (e.g. more than 50 hectares) with little environmental impact powered by renewable energy such as wind and or solar to pump water. Promoting access to business-enabling credit services, producers and rural service providers they will be mobilized to establish/strengthen grass root financial structures (SACAS, ROSCAS, VICOBA and SACCOS). Tomato exports has grown and more sharply in the last two years. A study to review tomato exports market in E.A. (particularly Kenya, Rwanda) and Western DRC. Facilitate the expansion of national supply of tomato paste. The project will leverage increased production of tomatoes targeting processing plants through promotion of contract farming (it is being done in Arusha). Promote solar-dried tomato preferably mixed with some other local vegetables targeting the rural market which normally has limited supply of green vegetables during dry seasons at the time when supply for tomato is very highest (hence lowest prices).


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Proposed project budget It is requested that MUVI make available a total sum of USD 887,600 to implement the project of which USD 634,000 shall be towards capacity building of the value chain and USD 253,600 for facilitation expenses. USD Percent Direct facilitation cost

586,400

71%

Facilitation fee for 3 years at 40% of the capacity building direct costs

234,560

29%

Total project cost 820,960 100% The expected value for money from the investment is that improvement in the value chain of at least of 25% in production will be worth Tshs 6.75 billion or USD 5.19 million per annum from the third year onward.

Exit Strategy The purpose of any VCD facilitation is to ensure that the VC becomes sustainably competitive in the market through improving market offering (superior product - innovation, competitive pricing - cost leadership). It should be is led by the private sector. Part of the role of the facilitator will therefore be to craft and implement a seamless exit that will leave the VC on a growth path. Lessons learnt from other VCs indicate that the duration of support varies greatly with the complexity of the chain (governance structure). The most complex structure is the market-governed value chain, there is low, none on sometime negative cost of switching channels/relationships. The facilitator’s inputs will be reduced gradually with the building of stakeholders’ within the chain and from the market to fill in.

SIDO - MUVI

PART A

Proposed Commodity Value Chain Analysis

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1.0 INTRODUCTION

1.1 Background MUVI Programme is one of the Government strategies to address rural poverty as elucidated in the National grand strategy, the National Economic Growth and Reduction of Poverty – NSGRP branded as MKUKUTA. While the immediate impact shall be reduction of income poverty, MUVI addresses other opportunities that include: -

Employment creation in absolute and relative contexts which will reduce unemployment and underemployment respectively especially of rural youth, women and marginalized groups (MKUKUTA cluster 1 goal),

Enhanced productivity, profitability and off-farm incomes through increased access to markets and services and through improved rural SMEs (MKUKUTA cluster 1 goal),

Improving youth and women empowerment so that they can participate in the shaping of the destiny of their livelihood.

The goal is to develop rural micro, small and medium enterprises in the value chains that will sustainably deliver increased incomes and therefore reduce poverty; so as: -

More sustainable, and less risky jobs in rural areas are obtained

To facilitating expansion of enterprises, especially RMSMEs, in exporting activities, hence improve Balance of Payment

To entails strengthening of the link between agriculture and industry and raising the contributions of other sectors to GDP

To promote off-farm activities and value-addition schemes to primary agricultural, fishing, forest, wildlife and livestock products – through agro-processing RMSMEs and cooperatives

To support RMSMEs and the informal sector in accessing financial services and implementing land use and management plans.

This 7-year, Programme funded by IFAD has three main components; (i) Communication in Rural Business focusing strategizing and implementing communication and knowledge management for rural businesses, (ii) Rural Business Support Services that aim at strengthening businesses through various processes including diagnosis, analysis, intervention planning and implementation and (iii) Institutional strengthening that will entail technical capacity building, monitoring and evaluation, environmental impact assessment. This study is part of the Rural Business Support Services (RBSS) whose objective is to strengthen the growth of Rural Micro, Small and Medium Enterprises (RMSMEs) and their value chain actor through access to advice, training, and markets.

1.2 Study Objectives, Outputs Deliverables 1.2.1 Objectives and Deliverables The main objective of the study was to diagnose and recommend two value chains and their concomitant support activities for the MUVI Project in Iringa Region. More specifically, the study aimed at identification of commodity chains with viable current or potential markets, and which would have a significant impact on the rural poor. Value chains are driven by coalition of actors from different domains, the study therefore identifies public and private

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organizations working in identified commodity value chains with a view of forging strategic and practical partnerships to bring in synergies reduce learning curve and broaden impact. The Value Chain Analyses needed to ensure that the RMSMEs involved in the support Programme have the potential to generate employment, especially for youth and women, and have a direct impact on poverty reduction. Value addition is another important driver of the value chains to be supported, the study therefore has to identify and elaborate in the support Programme for the introduction of proven technology(ies) or new investment models that could be replicated the value chains, potential spin-offs of new activities including markets for support services. The study identified risks inherent in the commodity’s chain including on food security and there from derive issues viable and recommended practical measures to address them in the context of the Programme. At the end, the study is expected to outline an exit strategy for the Value Chain Implementing Partner (VCIP) to further the achievements attained during the implementation period.

1.2.2 Deliverables The Consultant had been required to deliver to SIDO a report having the following information: -

A draft diagnostic report based on the study, and analysis of the value chains identified in the respective region.

A set of recommendations based on the value chains study and analysis, specifically:

Specific constraints analyses of the recommended value chains to be supported.

Organizational and value chain support activities (to address identified constraints) that should be undertaken for the recommended value chains.

An investment proposal for implementing the recommended value chains. The analysis was guided by the deliverables indicated above.

1.3 Value Chain Analysis Methodology This study employed multi-dimensional approach to diagnose and study the value chains and necessary support markets for the recommended commodities, it had distinct phases. Preparations: This was an administrative phase which included negotiating and contracting with SIDO. Also it involved initiation of communication between the Consultant and SIDO Iringa, Iringa Regional Administrative Secretary (RAS), Districts Executive Directors (DEDs) and TCCIA regional branch. Further, the preparation phase addressed issues of logistics to the districts i.e. setting the work plan, transport, contact information, etc. Literature review was also undertaken at this stage. The Consultant developed field data/information gathering tools and processes. Quick Scan took place from 13th to 30th April 2009 identified all commodities in the region and collated with commodity list obtained through literature review that later was subjected to pre-selection workshop. About 116 key informants from government and private sectors were consulted (see annex I). Major market points of Iringa Municipal, Ilula, Mafinga, Makambako, Njombe and Iwawa (Makete) were visited. Using the “whole system in a room” approach, focus group discussions (FGD) were widely used in all the districts, participants included producers, traders, processors, transporters, warehouse service providers/owners, TCCIA, NGOs, district and ward extension officers.

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Table No. 1.3.1 List of commodities found in Iringa

Commodity No Commodity No Commodi

ty No Commodity No Commodity

1 Maize 11 Paddy 21 Paprika 31 Cattle 41 Fish

2 Beans 12 Avocado 22 Onions 32 Dairy products 42 Artemisia

3 Banana 13 Cow Peas 23 Sorghum 33 Honey 43 Jatropha

4 Irish Potatoes 14 Peaches 24

Sweet potatoes 34 Beeswax 44 Apple

5 Wheat 15 Tomatoes 25 Finger Millet 35 Mineral 45

Barley (Shayiri)

6 Sunflower 16 Pyrethrum 26 Bambara nuts 36 Soya beans 46 Mushroom

7 Tea 17 Pears 27 Tobacco 37 Cashew nuts 47 Goats 8 Groundnut 18 Cabbage 28 Cotton 38 Handcraft 48 Sheep

9 Garden Peas 19 Simsim 29 Tree 39 Bamboo juice (Ulanzi) 49 Rabbits

10 Cassava 20 Coffee 30 Timber 40 Flowers 50 Pigs 51 Chicken

The pre-selection stage screened using desired indicators ended up with 13 (maize, beans, Irish potatoes, wheat, sunflower paddy, tomatoes, pyrethrum, onions trees and timber, dairy cattle, avocado and apples). In the selection process, sunflower and maize scored higher. The Client requested that tomato be analysed in place of maize because of limitations with maize to add value. At regional level, public and private sectors actors were consulted; in public sector were Assistant RAS economic and productive sectors, Regional Manager National Bureaus of Statistics (NBS) and officers, Regional Manager Weight & Measures, SIDO General Foremen Technology Development Centre Iringa and SIDO Regional manager Iringa. At district level, the public informants consulted were DEDs, DALDOs, Cooperative officers, Financial Institutions, Natural Resources and Environment personnel, ongoing programs coordinators including Farmers Field School (FFS) and seed production programme, village government leaders and wards extension offices. In private sector the information was drawn from traders (i.e. of maize, sunflowers and tomato and its products), processors (maize, sunflower and tomato), farmers (organized in FGDs conducted in the villages). In private sector, the team interviewed farmers, traders, transporters, processors, consumers, financial institutions, service providers, input suppliers, association representatives, etc.

1.4 Limitations of the Study 1.4.1 Limited participation of the private sector Good practices in value chain development require that the chain is driven and managed by the private sector, it is the engine of value chain and it is able to take the risk. Unfortunately, despite several invitations large commodity processors in Iringa (IVORI, Dabaga and Crispo) did not attend both the pre-selection and selection sessions. Their presence was aimed at seeking their commitment to invest in those value chains.

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1.4.2 Limited up to date data Background data for some variables in the region was outdated, the 2007 Regional Profile had some of its data taken in 2005. The data could not be adequately updated through the VCA study process.

1.5 Limitations of the Study This report has two parts, part A explains the background, process, methodology and findings while part B provides information of VC upgrading (Investment Plan). Specifically, part A has 12 chapters, Chapter 1 covers the programme background while Chapter 2 provides the Iringa regional profile. Chapter 3 looks at end markets for tomatoes globally, nationally and in the region. Chapter 4 addresses the crop technical aspects, Chapter 5 looks at social- economic significance of the VC. The value chain structure is analysed in chapter 6 while governance is explained in Chapter 7. The financial aspects of the chain are explained in Chapter 8. Support services for the value chain are analysed in Chapter 9, Chapter 10 addresses institutional and regulatory framework. Chapter 11 highlights on some institutions that influence the value chain where as Chapter 12 present a synopsis of an exit strategy. Note that the numbering of tables and figures has followed the numbering of section. Part B contains the proposed Investment Plan

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2.0 IRINGA REGIONAL PROFILE

The foregoing is a summary of Iringa region in terms of its geography, administration and economy. A significant amount of information on this section comes from secondary sources.

2.1 Geo-climatic condition of Iringa Iringa region is located between latitudes 60 551 and 100 301 south of the Equator and between longitudes 330 451 and 360 551 east of Greenwich. To the north of the region are Singida and Dodoma regions. It borders Morogoro region in the east and Ruvuma region in the south. The region’s total surface area is 58,936 sq. kms made up of 53,342.8 sq. kms land area. More than one third of the total regional surface area is in Iringa Rural district. Table 3 shows the different geo-economic zones of Iringa. Table No. 2.1.1 Geo-economic Zones of Iringa Region Zone General characteristics Main economic activities Highlands Temperatures below

150C Rainfall between 1,000 and 1,600 mm per annum.

Crop farming: maize widely cultivated; bananas, garden peas (green peas), tea, coffee, wheat, pyrethrum, temperate fruits. Livestock keeping: dairy cattle, pigs and sheep. Forestry Products: timber

Midlands Temperatures between 150 and 200C Rainfall average between 600 and 1,000 mm p.a.

Crop farming: maize, beans, sweet potatoes, cowpeas and fruits. Livestock keeping: cattle and dairy farming, sheep, pigs and goats.

Lowlands Temperatures between 150 and 200C Rainfall: 500-600 mm p.a.

Crop farming: drought resistant crops (sorghum, cassava) groundnuts, paddy, bananas, vegetables, fruits, Livestock keeping: cattle, goats and sheep, donkeys.

Source: Iringa Regional Socio-economic Profile, 2007 Iringa Rural has the largest area with 39% of the total regional area followed by Njombe that is 19%. Makete makes 6%, Ludewa 11% and Mufindi 12%. Iringa Rural has the largest area with 39% of the total regional area followed by Njombe that is 19%. Makete makes 6%, Ludewa 11% and Mufindi 12%. The region has a total of 5,168,180 hectares out of which 41% is available for agriculture, 29% was allocated for wildlife reserve and 9% for forest. Other uses accounted for 17%.

Figure No. 2.1.2: Land Use in Percent of the total land available

Other17%

Forest reserve area

9%

Wildlife reserve area

29%Arable land

(Ha)41%

Forest plantation

area4%

Source: Iringa Regional Profile - 2007

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2.2 2.2 Regional Demography The 2002 Population Census indicated that there were1,490,892 people in the region with an inter-Censal (1988 – 2002) increase of 25%. Population growth in Iringa is largely due to population momentum as annual growth rates between censuses has been declining, it was 2.7% in 1967 - 1978, 2.6% in 1978 - 1988 and fell to 1.6 in 1988 – 2002. Projection puts the 2002 – 2012 annual population growth at 1.1% with Iringa (U) having the highest growth at 1.5% due to immigration, Ludewa is expected to grow at 1.4% and Njombe at 1.3% while Makete is expected to have a near zero growth (at 0.1%). The main tomato growing districts (Iringa (R), Kilolo and Njombe) do not seem to face a threat in terms of labour supply in the long term as they experience relatively higher population growths. Table No. 2.2.1 Distribution of land area in hectares according to broad areas of land classification by district, Iringa region, 2006.

District Projected Population Average population per sq.

km. 2008 2009 2010 2011 2012 2002 2012 Iringa Rural 261,656 264,535 267,445 270,386 273,361 12 14 Kilolo 218,451 220,853 223,283 225,739 228,222 30 34 Makete 106,411 106,518 106,624 106,731 106,838 33 34 Mufindi 297,650 300,329 303,031 305,759 308,511 46 50 Njombe 452,887 458,775 464,739 470,780 476,900 42 48 Ludewa 139,304 141,254 143,232 145,237 147,270 23 26 Iringa Urban 116,311 118,055 119,826 121,624 123,448 665 775 Total/Regional 1,592,037 1,609,549 1,627,254 1,645,154 1,663,251 29 32 Source : Projection based on growth parameters provided by NBS, found in Iringa Regional Profile.

2.3 2.3 Regional Administration

Administratively, the Region is subdivided in seven districts namely; Iringa Municipal, Iringa Rural, Kilolo, Ludewa, Makete, Mufindi and Njombe. The districts are sub-divided into 33 divisions, 138 wards and 720 villages. The table on the right provides more information on the region administration set up.

Table No. 2.3.1 Administrative Setup of Iringa Region District Division Wards Villages Iringa Rural 6 20 119 Kilolo 3 12 81 Makete 6 17 98 Mufindi 5 28 133 Njombe 7 25 210 Ludewa 5 22 76 Iringa Urban 1 14 3 Total 33 138 720

Source: Regional Social Economic Profile, 2007

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2.4 The Economy and Economic Infrastructure1 2.4.1 The Economy According to the Regional Socio-Economic profile, Iringa’s per capita GDP in 2004 was Tshs 394,449 (equivalent to USD 479.81 based on average exchange rate of July 1st, 2004), this was 23% percent higher than the Tanzania Mainland average. Between 1997 and 2004 the region’s contribution to the Tanzania Mainland GDP averaged at 5.5%. GDP increased from Tshs 238,929 million in 1997 to Tshs 605,027 million at current prices in 2004, an increase of 153 percent. Agriculture (crop production) and plantation forest resources (timber) and derived spin offs are the major contributors to the regional economy.

2.4.2 Farm Size On the average, farmers in Iringa own about 5 acres of land2, data provided by DALDOs confirms the findings of the focus group as they put the area of 5.1 acres. Table No. 2.4.1 Average Smallholder farmer Farm Size in Iringa Rural, Mufindi and Njombe District Reported Number of acres Reported Number of hectares

Female Male Average Female Male Average

Iringa Rural 4.1 5.8 5.0 1.7 2.4 2.0 Mufindi 3.8 4.7 4.3 1.6 1.9 1.7 Njombe 3.4 8.7 6.1 1.4 3.5 2.5 Average 3.8 6.4 5.1 1.5 2.6 2.1

Source: ACT, 2009: Baseline study. In Iringa, tomato production is labor intensive, hence farmers were been observed to maintain relatively small area of tomatoes as indicated in the chart on the right.

2.5 Stakeholders in Tomato Industry in Iringa

Tomato stakeholders in Iringa include; Farmers most of whom are small with an average of 0.25 acres per farmer, it is estimated that there are more than 30,000 smallholder farmers involved in tomato production in the region. Producers get supplies of seeds, fertilizers, pesti- and fungicides from inputs stockiest who are readily available normally within 10kms radius. The stockiest do also provide information on best practice in seedbed management. There is minimal mechanization in tomato plots much of the critical activities are done by hand, equipment that is common includes ox ploughs, petrol engine powered water pumps and knapsack sprayers. The equipment is sold by dealers in farm implements located in

1 There has been no up to date data of Iringa region Gross Domestic Product, most literature including the Regional Profile of 2007 refer to 2004 data. 2 Established through focus group meeting

Below 0.2565%

Between 0.25 and 0.520%

Between 0.5 and 110%

Above 15%

Source: NBS 2003 Agricultural Census

Fig 2.4.1 Average hectares used for tomato per household

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district headquarters and major settlements. Crop husbandry skills are largely passed over through action-learning and this is complemented by ward/village extension officers. Traders can be categorized as “inward” or “outward”, inward are those who originate from tomato markets while outward are those from tomato growing areas who take the tomato to markets. Artisans in woodwork produce wooden crates are also important in the value chain. Given the perishability of tomato efficient transport is very important, truck owners facilitate the flow of tomato to the market. As the chain develops it may be important to work with financial institutions especially SACCOS, banks and MFIs. A number of farmers need business management skills, organizational/group development services thus BDS providers will be important actors. Tomato processing is increasingly becoming important, processors in Iringa are Dabaga and IVORI based in Iringa and Marriet Natural Foods based in Njombe. Redgold (based in Arusha) has indicated interest to expand to Iringa if tomatoes could be available at competitive price. The government is an important active actor because it provides valuable extension services, builds business relations e.g. the use of proper weights and measures, through its institutions such as TPRI and TOCSI do ensure inputs into the sector are up to standards. TFDA regulates food safety while OSHA ensures that tomato processing actors operate and produce products that confirms to healthy and safety requirements.

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3.0 TOMATO MARKET ASSESSMENT

3.1 Product Description and Uses Tomato is scientifically called Lycopersicon esculentum Mill.), literature3 indicate that it originated in South America. It is one of the basic food in most societies in the world, it is either consumed raw to maximize the nutritional usefulness, or used as an additive to vegetables to improve taste and colour, it is sometime processed and packed as tomato paste, tomato sauce, tomato ketchup, tomato juice, tomato concentrate, chili sauce, tomato puree, tomato chutney, etc. It is widely as a medium for other foods such as baked beans, corn, etc. According to literature, tomato has so many useful nutrients as shown under table No. 2.1.1 below. The nutritional value of tomato has made the fruit one of the most popular item on menus. As its commercial value increased, selection and breeding of the tomato to improve yield and adapt it into different agro-climatic environments and resistance to diseases, there has been research for approximately 200 years (Stevens and Rick, 1986).

3.2 Overview of the World Market

Total world production of tomato fresh fruit in 2004 was about 100 million mt from 3.7 million hectares with China being the major producer at 30,102,040 Mt from 1,255,100 hectares. Other leading countries are United States, Turkey, Italy, and India. Record holders in terms of yield are The Netherlands that reported a yield of 496 mt per hectares and Belgium at 416 mt. Tomato processing absorbs about 25% of the total production but has grown faster than production of fresh tomato, for example according to http://www.freshplaza.com in 2008 processing industry used 35 mln Mt of fresh tomato. China has a cost leadership in the in the market, it estimated to command 67% of the export market for tomato paste from which various tomato-based products are produced. The surge in Chinese export is also attributed to enhanced compliance with US (and other authorities) on pesticides residual levels.

3 Online document ……

Table 3.1.1: Range of vitamins and mineral components of ripe tomato fruit constituents per 100 g of fresh tissue

Constituent Normal Range

Unit

Dry matter 4.71 - 8.3 grams Vitamin A 192 - 1667 IU Vitamin B1 16 - 80 µg Vitamin B2 20 - 78 µg Vitamin B3 280 - 340 µg Vitamin B6 50 - 150 µg Niacin 0.3 - 0.85 mg Folic Acid 7.4 - 8.6 mg Vitamin C 8.4 - 59 mg Potassium 92 - 376 mg Phosphorus 7.7 - 53 mg Calcium 4.0 - 21 mg Magnesium 5.2 - 20.4 mg Sodium 1.2 -32.7 mg Iron 0.2 - 0.95 mg Aluminum 0.5 - 2.95 mg Boron 0.04 - 0.13 mg Copper 0.05 - 0.2 mg Lead 0.02 - 0.05 mg Manganese 0.04 - 0.05 mg Zinc 0 - 0.25 mg Chlorine 24 - 69 mg Nitrate 1.3 - 30 mg Ash 0.51 - 0.7 grams

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3.3 Export and Imports of Tomatoes 3.3.1 Tomato External Trade: Volume Data from Tanzania Revenue Authority (Customs Department) shows that Tanzania is a net exporter of fresh tomato; between 2004 the country’s annual export averaged 1.05million kgs against an average import of 6,824 kgs. Highest export volume was recorded in 2,632,700 while the highest imports were in the same year at 24,194 kgs. The pattern is highly uneven for both exports and imports, exports were the lowest in 2006 at 124,000kgs while imports were low in 2004 at 754kgs. Major destinations for Tanzania fresh tomato is Kenya, Comoros and DRC. Table No. 3.3.1 Tanzania Exports and Imports of Tomatoes in Kgs 2004 2005 2006 2007 2008 Average Tomatoes fresh or chilled Exports 204,302 652,373 124,000 2,632,700 1,681,355 1,058,946 Imports 754 1,080 4,956 24,196 3,134 6,824 Net Trade 203,548 651,293 119,044 2,608,504 1,678,221 1,052,122 Tomatoes, whole or in pieces, preserved other than by vinegar, etc Exports 110,000 30,000 222,381 2,632,700 160 599,048 Imports 141,646 154,670 122,772 175,561 102,387 139,407 Net Trade -31,646 -124,670 99,609 2,457,139 -102,227 459,641 Tomatoes, preserved otherwise than by vinegar or acetic acid, not elsewhere classied(nes) Exports 0 0 4,700 18 0 944 Imports 840,002 746,674 1,226,979 1,488,400 993,627 1,059,136 Net Trade -840,002 -746,674 -1,222,279 -1,488,382 -993,627 -1,058,193 Tomato ketchup and other tomato sauces Exports 12 12,155 4,520 9,657 12,892 7,847 Imports 457,706 533,379 580,563 929,095 794,361 659,021 Net Trade -457,694 -521,224 -576,043 -919,438 -781,469 -651,174

Source: TRA – Customs Department Traders in Iringa indicated that exports to Kenya (Mombasa) are seasonal, they happen when production in Kenya is at ebb from December through February. Traders at Makambako reported that there had been buyers from Malawi when there is shortage in their country. Note that TRA data doesn’t show any exports to Malawi

3.3.2 Tomato external trade: Value

The value of tomato and related products imported far outweigh exports making the country a net importer of tomato-based products. It can be seen from table no. 3.3.1 above that the country imports a significant

0200400600800

1,0001,2001,4001,6001,8002,000

2004 2005 2006 2007 2008

Val

ue in

Tsh

mill

ion

Exports Imports

Fig. No. 3.3.1 Tomato balance of payment (2004 – 2008 in Tshs million)

Source: TRA – Customs

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amount of processed tomato if converted into fresh tomato equivalent can result into higher figures. The major implication from the above figures are that there is room for both import substitution and export provided the value chain can become competitive. If strengthened with the opening of EAC common market there is possibility for more Iringa tomato to be exported. Among the important input into the sector might be to carry out a study for Iringa fresh and processed tomato into EAC market

3.3.3 Imports of tomato products Tanzania imports preserved tomatoes, sources and ketchups amounting to 1,500 mt per annum (the average for 2004 to 2008). Table No. 3.3.2 Countries of Origin for Imported Processed Tomatoes (2008)

Tomato Ketchup Preserved tomato otherwise than by vinegar or acetic acid

Country of Origin Percent of total imports

Country of Origin Percent of total imports

Oman 40.76% Oman 34.30% United Arab Emirate 38.20% United Arab Emirate 30.60% Kenya 5.89% China 19.30% South Africa 5.62% Italy 7.30% United States 4.45% Iran 8.60% Egypt 2.99% Total 100.00% Others 2.10% Total 100.00%

3.4 Tanzania Market 3.4.1 Production of Fresh Tomatoes in Tanzania FAO data shows that the country produces around 145,000 metric tones per annum staggered there had been consistent growth up to around 2000 when production has at around ± 140,000mt. Table No. 3.6.1 Tanzania production: Hectares cultivated in ‘000 and output in ‘000 1970 1975 1980 1985 1990 1995 2000 2001 2002 2003 2004 2005 2006 2007 Hectares 3.7 5.0 7.0 10.3 14.0 16.2 18.0 18.0 19.0 19.0 19.0 19.0 19.0 19.0 Production in '000 MT

28

40

54

80

105

125

140

140

145

130

145

145

145

145

Growth in Percent 43% 35% 48% 31% 19% 12% 0% 4% -11% 12% 0% 0% 0% Source: http:llfaostst.org/site/567 The data above can be well visualised in the graph below.

12

Figure No. 3.6.1Tomato production trend: 1970 - 2007

Source: FAO : http:llfaostst.org/site/567 It can be noted therefore that Iringa with 107,190 mt in 2008 (72%) of tomato produced in Tanzania.

3.4.2 Production of Fresh Tomatoes in Iringa

Tomato is an important cash-earning commodity for Iringa region. Going by the parameters obtained during focus group discussions and collating it with district statistics 4 , it can be estimated that 60,000 farmers are involved in tomato production in Iringa, according to regional agricultural statistics Kilolo District (Ilula corridor) accounts for 51% of the 107,000 mt reported in 2007/08, Iringa Rural for 44% and Njombe for 5%. Output per hectare is around 17.5 mt per hectare or about 7 mt per acre. District 2006/2007 2007/2008 Area Production Area Harvesting Hectares Tones Hectares Percent Tones Percent Municipal - - 34 0.6% 57 0.1% Iringa 2,101 37,330 2,393 39.2% 46,694 43.6% Kilolo - - 3,229 52.9% 54,569 50.9% Njombe - - 453 7.4% 5,789 5.4% Total 2,101 37,330 6,109 100.0% 107,109 100.0%

An estimate by Development Alternatives, Inc. Enterprise Support Activities – PESA project that implemented a USAID funded Private indicated that 87% of the tomato produced in the region was sold outside the region and that out of the remaining 1% was lost in post-harvest processes. 4 On average a farmer has a quarter of an acre producing about 17 mt per hectare

0

20

40

60

80

100

120

140

1970 1975 1980 1985 1990 1995 2000 2001 2002 2003 2004 2005 2006 2007

Hec

tare

s'000

and

Met

ric to

nnes

'000

_

Production in '000 MT Hectares

13

3.4. Demand for tomato in Dar es Salaam A limited survey in Dar es Salaam indicates that the city conserves about 60,000mt for annum; urban areas estimated to consume 60,000 which makes the title consumption at 120,000mt p.a. Iringa with an output of 107,000mt with about 60% being sold in Dar es Salaam or 61,000mt is the at least the population in urban areas. Major sources of imported tomato ketchup are Middle East countries that essentially buy tomato paste from China and add value and brand the products lead by Oman and Arab Emirate. China is known to be the major source for tomato paste.

3.5 Price Pattern in Urban Markets: The Case of Dar es Salaam Reflecting seasonality of supply of Tomato in Dar es Salaam prices do fluctuate significantly, note in Fig. no 3.1 of higher prices between March and May and a trough (low) from June through September. The spike in December is assumed to be caused by year-end festivals when consumption is highest. Traders who take the risk5 at farm gate indicate that the major risk in tomato marketing is oversupply caused by weak market intelligence and inability to forecast. In order to minimize losses from such fluctuations many traders have business networks at Tarakea, Lushoto and Taveta (for monitoring tomato from Kenya) that provide indicative market situation.

5 Part of the risk is borne by the transporter, the trader is asked to foot fuel costs and pay the remaining amount after he had sold the tomato, in the event of poor response in the market the truck owner takes part of the loss in form of time wasted or even reducing the agreed charge.

Trader based Makambako recalled in 2005 when he encountered a glut in Dar es Salaam. His tomato remained in the truck for 5 days in the end they had to sell to the factory at a price that was below farm gate price by 25%.

100200300400500600700800900

Jan

Feb

Mar

Apr

May Ju

n

Jul

Aug Sep

Oct

Nov Dec

Tsh

s/kg

Minimum price Average Maximum price

Source: Kariakoo Market

Fig. 3.5.1 Source: Kariakoo Market (2008)

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4.0 TECHNICAL ASPECTS AND BEST PRACTICES

4.1 Production Systems 4.1.1 Production Seasons In Iringa, there are three production seasons for tomatoes; the first is the main season that follows the rainfall. The season commences planting in March and harvesting is between July and September. The second (minor) season starts in October and harvesting takes place in April through June. Irrigated tomatoes are planted during the dry season (July – October), harvesting takes place in April through June. However, it depends on irrigation potential of an area. In Iringa tomato production cycle is four months i.e. from sowing at nursery bed to harvesting (in Nursery bed one month and field bed three months. See Table No. 4.1.1 below for detail. Table 4.1.1.1: Tomato production calendar in Iringa Activities Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Nursery preparation X X X X X Land ploughing X X X X Harrowing X X X X Planting X X X X X X X Weeding X X X X X X X Fertilizer application X X X X X X X Pesticides and disease control X X X X X X X Harvesting X X X X X X X X X X X Selling X X X X X X X X X X X

Key Note: Seasons Code Features 2007/08 Farm gate prices in Tshs First (main) season X April – June peak harvest Ranges between 5,000 to 12,000 Second (minor) season X July – Sept low harvest Ranges between 1,000 to 4,000 Irrigated (dry) season X Nov-March low harvest Ranges between 15,000 to 20,000

Source: Field team outline Tomato crop is been planted in pure stand due to their aggressive nature in competing for nutrients and light. Meanwhile tomato plant tends to host several diseases (see ….. below) that can affect other crops. It is possible to find some farmers who have intercropped with other crops like maize, cassava and cowpeas, but normally ensure adequate spacing.

4.1.2 Farm inputs and tools Tomato production is relatively input intensive, composed to other crops they include seeds, fertilizers and pesticides Farm implements used tractors, power tillers, oxen ploughs, spray pumps, protective gear and water pumps. The inputs distribution is carried out by existing agro-dealers in Iringa Municipal, Njombe town, Ilula Township,

Table 4.1.1.2: Number of Registered Stockiest in Iringa District No. of agro-dealers 1 Iringa Municipal ? 2 Iringa Rural 54 3 Njombe 60 4 Mufindi 66 5 Kilolo ? 6 Makete 23 7 Ludewa 54 Total

Source: Quick scan

15

Makambako Township as well as at Mafinga. Major suppliers of tomatoes seeds are East African Seeds, Malt flower, Alfa Seeds, Kibo seeds and Mukpar Ltd. Farmers have not reported any major constraints regarding the quality of seeds they buys except for intermittent shortages of some varieties. Agro-dealers have indicated that suppliers (some of them are global brands) are very keen to safeguard their markets and image so they have close control of the supply channels. Some have set up distribution channels that ensure high cost effectiveness. However, respondents reported cases of shortages for some varieties because of failure to synchronize demand (by season and size) and supply. East African Seeds has an innovative approach towards enhancing tomato seeds availability by entering into agreement with farmers and a processor that buys tomato at market rate so that farmers can sell the seeds to EA Seeds Company getting an additional income.

4.1.3 Tomato Yield FGD established that an acre is able to produce 285 tengas’ equivalent to 3 buckets of 20 litres. A tenga is estimated to hold 50kgs of tomatoes. This output is equivalent to 14,250 kg per acre, the regional average for 2007/2008 is 17.53 mt/ha which is equal to 7.1mt/acre. Good practices within the country show that it is possible for farmers to get more than 25mt/acre something that bring to the attention the need to improve productivity.

4.1.4 Crop farming practices Land Preparation: Tomato cultivation consists of two major stages nursery bed and field bed. In nursery stage, seeds are sown in fine soil bed to allow smooth seedlings emergence during germination. A nursery bed measuring 10m2 has the capacity to produce 12,000 – 13,000 seedlings adequate for one acre. Soil preparation is by hand hoe and a rake and takes about four person-hours. Majority of growers adopts line methods of sowing because it is easy to access and attend individual seedlings during nursery management. Four debes (equivalent to 12 kgs) of livestock manure and 60 gallon (1,200 liters) are used in preparation of nursery. Seedlings are nursed for one month (about 30 days) before being ready for transplantation into the main field. Good agricultural practice requires that the nursery area must be cleaned and disinfested prior to use and that it is important to use fresh seeds (less than one year old), older than one year seeds reduce germination rate and vigour. Major tasks in preparation of the main plot include cleaning of field through collecting, heaping and burning of the crop left-over which takes 2 person-days. Hand hoe and ox ploughs are major tools used in land preparation; about 7 person-days are needed to plough an acre. Tillage depths vary depending on technology used, a hand hoe tills 10 -12 cm deep while and ox-plough goes up to 15 – 25 cm. However, the recommended tillage depth is 25-30 cm, it is recommended that it is done one month before planting in order to open up the soil and preserve soil moisture by recharging from subsequent rains. Harrowing to produce fine tilth is necessary the same way as in nursery bed. Optimal conditions: Tomatoes thrive well in areas with 1,000-1,600 mm of rainfall that is evenly distributed during the growing period. The important consideration in sowing is timing to make sure that the crop will mature within favorable weather for harvesting the crop, i.e. end of rains research findings show that late planting reduces reduce yield significantly. Thus, it is advised to plant long maturing varieties earlier than short varieties and vice versa. In Iringa, season 1 starts in December to February and ends in April to June, season 2 starts in April to May and ends in July to September.

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Irrigation: Irrigation is another common and crucial managerial practice in tomato farming, farmers being small as they are, rely on rivers, wells, and streams for irrigation. This is evidenced by observed situation that majority of tomatoes fields in Iringa region are located along the river valleys and streams. Irrigated tomato has enabled Iringa to prolong its supply season almost throughout the year and is the main limited factor in the expansion of tomato production area wise. On average one liter/plant per round of irrigation may be adequate for health crop performance. While manual water handling is common, some farmers draw and distribute water motorized and manual water pumps. There is a perception that pesticides in tomato plots may be trickling into streams/rivers where some people use for household needs, consultation with District Agricultural Officers in Iringa Rural indicated that they have not done any study to ascertain the problem and suggested that it is an area that needs to be investigated. Planting Spacing: DALDOs’ offices reported and recommended three plant spacing options; high density that is 30 cm by 30 cm, medium density 60cm by 60 cm and low density at 100 cm x 100 cm. The spacing depends on the variety of tomatoes, fertility of the soil, overall size of the plot (considering access). Farmers at Ihanja village in Njombe reported to space 60 cm by 45 cm while those at Kiwere Village Iringa rural indicated to space crops at 50 cm by 50 cm. Agricultural Research Institutes (ARI) Ilonga, Dakawa and Mikocheni recommended optimal plant density as 75 cm by 60 cm for short varieties like Tanya and 75 cm by 50 cm for long varieties like Money maker. The average yield under correct spacing for ranges between 3-6 kg per plant depending on other production factors. Weeding: Weeds are controlled using hand hoes and hand dressing, in one acre seven to eight person-days are required per weeding. The suitable periods for weeding are before plants flower and before fruit formation in order to minimize damages to flowers i.e. first weeding is between 4th and 5th weeks after planting and second weeding is between 9th and 10th week after planting. Fertilizer Application: Producers do apply fertilizers at a higher rate compared to other vegetables produced in the region, the commonly used fertilizer includes DAP, Urea, CAN, SA, composite manure and Booster. Table 2: Average Fertilizer application rates in Iringa Region Type of Fertilizer

Farmers Practices Quarter an Acre Per hectare

DAP 3 kgs 30 kgs SA 3 kgs 30 kgs Booster 1 litres 10 ltrs

Source: Farmers interview Harvesting and Selling: Harvesting is by hand picking matured ripe (wine colour) fruits; they are ready for the market. Timely harvesting has been emphasized to check pre and post-harvest losses and for meeting market demand timely. During main (the first) season, traders come from different parts of the country on the understanding that there are adequate volumes for buyers something that creates competition. In the second (minor) season (low season) in normal cases prices are supposed to be higher but on the contrary they are relatively low because traders are not sure of getting desired volumes leading to low

17

competition and price, a large proportion of the tomatoes are consumed within the region and neighbouring towns.

4.1.5 Pests and Diseases In Iringa the tomato plant is affected by a number of diseases, they include root rot, stem cut and late blight. Nematodes (causing root rot) and cutworms are the two most important pests. Root rots caused by nematodes (Funza wa mizizi in local language) affects tomato roots that leads to rotting of the plant. The main treatment is crop rotation. Cutworms (viwavi nondo) attacks plant steams to the level of ground. Two ways of treating Cutworm traditional methods include cleaning the farm, spraying mixture of ash/water, ‘utupa’, ‘lidupala’ and staking steaks to each tomato seedling. Industrial agro-chemicals like Thiodan 35, Diazinon or Actellic 50. Late blight is a fungal diseases and it is the main diseases affecting tomato production in Iringa. Treatment include; firstly cleaning the field, pruning and staking steaks to each plant. Secondly using manufactured agro chemicals such as Dithane, Blue Copper, Ridomil. Farm Management: Though agricultural experts reported that there are no significant problems related to abuse of the chemicals, farmers reported during the focus group meeting cases wrong or incorrect chemical dosage application and application of mosquito repellant/killer “ngao” and accarricide (dip wash) in place of recommended chemicals. Proper administration of pesticides and protection of water sources is one of the activities of the project to be implemented to develop the value chain.

4.2 Tomato Processing There are many reasons for processing tomatoes, the major one is to even out availability of tomatoes throughout the year through preservation. For example supplies at Mabibo market between August 2008 and June 2009 indicate that supply November was 62% of what was supplied in August 2008, it was 63% in December and it was 55% January 2009. Processing improves taste of tomato by adding some ingredients, improves distribution as fresh tomatoes are perishable and bulky, processed tomato can be distributed at low cost to areas where tomatoes do not do well. Tomato can be processed into various products but the common ones are sauce, paste, ketchup, chutney, puree, jam, juice or squash, base of other sauces (chili, garlic, etc.), medium for baked and canned beans, maize, carrots, green peas, etc. Technology for processing of tomatoes is highly scalable, it can be done at household, micro, middle and large scale levels, the process involves the stages outlined in figure No. 4.2.1

4.2.1 Processing Capacity It is estimated that the current industrial processing throughput capacity for tomato in Tanzania is about 15,000 mt per annum produced by Darsh Industries Limited (hereinafter referred to by the product brand – Redgold with a daily capacity of 20 mt, Dabaga 5 mt and IVORI 10mt. Marriet of Njombe uses 170kgs.

4.2.1.1 Dabaga Company Dabaga was established in 1973 dedicated in canned and bottled foodstuffs. The factory is currently processing about 5 mt every day in 12 months of the year which translates maximum of 150 tons per month or 1,800 tons of raw materials per annum. Iringa small-scale producers are the main tomato suppliers in Dabaga industry, between 40 and 50 farmers are estimated to supply Dabaga with tomato daily. Price ranges from Tshs 90

18

to 400 per kg depending on the season. For instance in June 2009 Dabaga were purchasing tomato at prices ranging from Tshs 200 - 250 but sometimes prices drops down to Tshs 90 -100 per kg as for the case of January – April 2009 and sometimes hikes up as anticipated by Dabaga management that from August – December the price of tomato per kg will rise up to TZS 300-400/kg. Iringa small-scale producers are the main tomato suppliers in Dabaga industry, between 40 and 50 farmers are estimated to supply Dabaga with tomato daily. Price ranges from Tshs 90 to 400 per kg depending on the season. For instance in June 2009 Dabaga were purchasing tomato at prices ranging from Tshs 200 - 250 but sometimes prices drops down to Tshs 90 -100 per kg as for the case of January – April 2009 and sometimes hikes up as anticipated by Dabaga management that from August – December the price of tomato per kg will rise up to TZS 300-400/kg.

Table No. 4.2.1 Grades of tomato based on Dabaga criteria

Grade Grading attributes Remarks One

Fully ripped, red, wholesome, full size Passed and fetch Tshs 250/kg

Two Partly ripped, some greenish, fully size grow

Passed, fetch Tshs200/kg per kg i.e. 80% of the grade one price.

Three Partly ripe, green color dominate, immature, rupture, rusty, some lesions,

Rejected

Farmers and traders bring tomatoes up to the Dabaga collecting yard where they selected and graded before being processed. The farmer/trader sells on credit paid in 2-3 week’s time. Preferred varieties in order are Tanya, Cal J, Roma and Money maker. Key characteristics of these varieties include low seeds content and higher solid matter content. Some actors term the varieties as tomato for industrial market while other varieties are referred as tomato for fresh market.

Dabaga ten makes tomato-based products; tomato sauce, tomato chili (economic and premium packs), tomato ketchup, hot pilipili (larger portion is tomato), garlic chili sauce, hot pepper, tomato chutney, tomato puree and tomato juice. The largest markets outlets for Dabaga products include; Dar-es-Salaam, Iringa, Morogoro, Mbeya and Dodoma. In recent days, Dabaga has opened new outlets in Arusha and Mwanza. Meanwhile the other four outlets which are in pipeline include Singida, Shinyanga, Lindi and

4.2.2 IVORI Industry

Iringa Vegetable Oil Related Industries Ltd (IVORI), has large capacity and producer based large scale processor of vegetable and fruits items including tomato, it’s located at Kilolo area along Tanzam road in Iringa Municipal. The industry started its operation by processing sunflower in 1998. Later in 2006, IVORI diversified into tomato processing and idea that was encouraged by convenience and relatively low cost of accessing tomato. The product portfolio includes chili sauce and tomato sauce. Short term goal of IVORI management is to capture larger share of domestic market through opening distribution outlets at up country, additional of product lines and product’s volume extension. The factory uses 10 tons of fresh tomato per day, procurement is facilitated by brokers, IVORI depends on local market for sale. They consider strengthening export market much more than

19

domestic market. Recently, the main buyers are in Iringa region, Dar es Salaam, Arusha, Moshi, Dodoma and Morogoro.

4.2.3 Marriet Natural Food Marriet Natural Foods is a Micro-enterprise based in Njombe that produces an array of processed foods including juices jams, sauces and pastes from a variety of fruits. Her products are found in Njombe labeled Marriet Natural Foods, she was trained by SIDO in 2003 and later by TIRDO in 2007. At present the unit has 10 employees all of them youths who also undergoing training. The processing is done using domestic-scale equipment such as grinder, blender, charcoal stove for sterilizing, sufurias, etc. She currently produces 50-100 cartons per day of tomato source. The 50 cartons require 10 debes of fresh tomato or about 3 crates that are 150kgs. Hence at optimum capacity of 100 cartons, Marriet requires factory about 7 crates of tomato per day. Marriet desires to upgrade her business to level, currently she has a 40 acre farm where she plans to set up production abut 2-3 mt per day in the initial phase. Marriet is willing to get into contract to work with farmers as long as there is a mutual win-win situation. Consultation with CRDB indicated that they are willing to finance the business but it needs to have business and strategic plans.

4.2.4 Tomato Processed by Micro-Enterprises

SIDO in Iringa is active in training entrepreneurs in tomato processing, a survey in shops at both village and district level did not find any tomato product made by these trainees except Marriet which is indicative that village level tomato processors (if they are there) have not made an inroad in the mainstream market. Solar dried tomato was not found in the market but consultation with TIRDO and SIDO food technologists indicate that the product could have a potential at both village and urban markets because of the secondly of supply. The value chain will pilot solar drying facility (dryer and packaging unit) which will blend tomato with other vegetables that has higher solid matter content for rural and urban markets.

On farm sorting

Delivery to factory

Sorting at the factory

Washing

Pulping

Pulp Seeds

Heating/Sterilization

Paste

Sauce, juice/squash, ketchup, puree, chutney, chili, etc.

Heating/Sterilization

Packaging

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5.0 SOCIAL ECONOMIC ASPECTS

5.1 Income Generation in Major Chain Segments 5.1.1 Tomato Production Tomato production in Iringa is a very important economic activity, interpreting it in monetary terms, at a farm gate price of Tshs. 10,278 per tenga during low demand season in 2008, the 107,109 mt tones are valued at Tshs. 27.52 billion. It is estimated that between 33,000 and 35,000 farmers are involved in tomato production hence the regional average of income from tomato house hold is Tshs. 820,000 per annum. If output per acre is to increase by 30% in the region because of the intervention it will add an equivalent of Tshs 8.25 billion to farmers.

5.1.2 Packaging materials business: Wooden Crates There is a trend to move away from tengas to wooden crates following a parliamentary Act of 2003 that bans packages that bring wastes in the city including tengas that are usually lined with grass. It estimated that about 10% of the containers are tengas due to shortage of timber in some tomato growing areas. It is estimated that in Iringa the business uses 266,000 crates per annum, the annual investment in containers is worth Tshs. 400 million. Normally the cost of the crate is part of the wholesale of the tomato. Most traders from Iringa don’t return empty crates back because the cost of returning empty crate is Tshs 400 while the crate is re-sold at Tshs 700 in Dar es Salaam to traders from areas that have short supply of timber. Currently a wooden crate with 3 debes capacity weighs 60 kgs with tomatoes, traders indicate that net weight is 50 kgs tomato that is 16% of the weight is the container. There is a need to find out if the crates present an optimum utilization of transport, some work needs to be done to assess and improve upon the crates any saving in weight will be passed over to more cargo weight per truck hence cutting transport cost per kg.

5.1.3 Transporters Traders use trucks popularly known as FUSO, it carries 220-230 crates at a price of Tshs 650,000 for the Ilula– Dar es Salaam trip. (A large of type of Fuso) type Fuso loads up to 360 crates at a cost of Tshs 980,000 for the same trip (Kilolo – Dar es Salaam). Smaller (mini) trucks rated 4 mt (Canters) with a loading capacity of 160 crates charges about Tshs 470,000 per Kilolo – Dar es Salaam trip. Sometime larger trucks (semi-trailers) are used, they charge Tshs 2,500/per crate. Ilula - Dar es Salaam is about 550kms. Hence transport cost averages at Tshs 124.84 per ton km. Table No 5.1.1 Transport cost between Ilula and Dar es Salaam

Type Capacity

in Kgs Cost in Tshs Charge

Per Crate Per Kg

Fuso (normal) 230 650,000 2,826 71 Fuso Tandem 360 980,000 2,722 68 Canter 160 470,000 2,938 73 Large trucks 2,500 63 Average 69

Source: Field survey

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It has been estimated that 93,250 Mt were sold in Dar es Salaam, assuming an average distance 550kms for tomatoes from Ilula (Kilolo) Rural and Makambako (Njombe), the transport per tone km is Tshs. 124.84 which makes the transport business volume at Tshs. 5.88 billion. This figure excludes transport beyond Dar es Salaam (such Zanzibar, Mombasa and Comoros and transport within the growing area – from the farm to a trading point).

5.1.4 Foreign Exchange Generation The value of tomato exports from Tanzania has been increasing from Tshs 58 million in 2004 to Tshs 1,954 million, there had been a sharp increase in 2007 and 2008. Table No 5.1.2 Tanzania’s Tomato Balance of Trade (2004 – 2008) 2004 2005 2006 2007 2008 Exports (Tshs million) 58 63 75 213 1,954 Imports (Tshs million) 699 719 1,104 1,285 1,107

Source: Customs Department - TRA

5.2 Wholesale Business Value According to Kariakoo market, the wholesale price in Dar es Salaam per crate between July 2008 and June 2009 ranged from Tshs. 13,000 during peak supply season to 24,000 during low supply season (see Fig. No 3.5.1.). Assuming on all-year round price of Tshs per 50kg per crate or about Tshs. 373 per kg, the value of traded tomato at whole sale level is at least Tshs. 32.13 billion.

5.3 (Direct) Employment in Tomato VC Involved in tomato VC are estimated at more than 30,000 households are involved in tomato production, about 50 wood work artisans are making packaging materials (crates), in transport it is estimated that tomato VCD is supporting employment of about 80 workers employed as driver, 2 assistants and the owner. The number of traders is more dynamic depending on market situation, it is estimated that there are (…???) traders in the VC in Iringa. Dabaga and Ivory are employing …??.. people while Marriet has an all time personnel of about 10 workers. There are many more actors e.g. brokers, porters, suppliers of inputs and services, etc,

5.4 Gender Aspects On the overall the VC is male dominated all over the downstream activities, they outnumber men in retail segment. The project will therefore target to attract women to take up opportunities through raising and sensitization. It is proposed that plot activities to be subsidized by project should have more women in order to attract them. There is a need for gender mainstreaming expert in the implementation team.

5.5 HIV/AIDS Iringa is one of the leading regions in terms of HIV/AIDS transmission, it has been established that increased business interaction is closely related with HIV/AIDS transmission. This has been notable at Mafinga where timber trader has flourished and as a result there is higher prevalence of HIV/AIDS. The project will liaise with organizations that undertake campaigns against HIV/AIDS and counseling services.

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6.0 STRUCTURE OF THE VALUE CHAIN

6.1 Actors and Functions 6.1.1 Inputs Supply Level Importers: Iringa region like other regions in the country relies heavily on imports for industrial fertilizers (e.g. Urea, DAP, CAN), hybrid seeds, pesticides, herbicides, and fungicides. There are only a few large input suppliers in the country, who supply about 85% of inputs they include YARA (Chapameli brand), STACO, Premium, Tanzania Fertilizer Company (TFC), etc. All Agro-importers are located in Dar es Salaam with branches/ agencies countrywide. These large input suppliers import in bulk directly from manufacturers abroad and retail mainly through their own managed, but few outlets that are located in the major town’s branches/ agencies. Stockiest: Also called agro-dealers they purchase inputs from importers or large traders and sell directly to farmers in the deal in the less bulky inputs such as chemicals and seeds inputs are sometimes re-packed in small units to meet the needs of smaller-scale farmers who are their clients stockiest, source supplies from large –agro-dealers (importers). Stockiest supply both subsidized and non-subsidized fertilizers and improved seeds. Research Institutes: Agricultural research institutions are an important component for the development of the agricultural sector. Research has the role of developing superior produce with higher yield, disease and pest resistant, which are also better adapted to the natural conditions. Tomatoes high yielding seeds breeders in Tanzania include. Tengeru in Arusha region, MAT- Uyole in Mbeya region and Sokoine University of Agriculture of Morogoro These institutions are involved in development and multiplication of improved seeds and planting materials, training of technical staff in various aspects of horticultural production. These research institutions also provide appropriate packages for control of diseases and pests, analyzing soils and climatic condition suitable for different tomatoes varieties etc. The basic seed (foundation) multiplications farms includes; Msimba seed farm located in Kilosa district Morogoro and Dabaga seed farm in Kilolo district Iringa region, certified seed are also produced. Seed farmer producers: Selected farmers are involved in seed multiplication that is sold to farmers at a lower price compared to branded names, the seeds are known as quality declared seeds (QDS). It was informed that QDS qualities are as good as imported seed provided they are multiplied within recommended framework. Seed companies: With the liberalization of the sector, several private companies are now participating in the supply and distribution of improved tomato seeds e.g. Kibo Seed Company, East African Seeds, Multiflower, Alfa Seeds, Monsanto, Mukpar, etc. The seed industry is constrained by non-synchronized supply to farmers and insufficient funding which poses difficulties on developing new varieties or maintaining germplasm of existing varieties. Extension Services and Training: Agricultural extension services in the country are provided by the government through the Ministry of Agriculture, Food Security and Cooperatives (MAFC). Crop yields and productivity are low compared to the potential demonstrated by good agricultural practices agricultural. Low performance is attributed to ineffective

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extension services. Some weaknesses in the services are; Non use of the package approach which emphasizes combining of the dissemination of that include extension messages and the use agro-inputs; Weak research – extension –farmer linkage; Technical recommendations are not frequently used in the context of indigenous technologies; Extension messages and agricultural technology are not well designed and delivered; There is low priority accorded non-traditional crops in terms of availability of SMS and in DADPs; Credit facilities: These are among the concomitant services in the VCD, fortunately Iringa was one of the regions covered under the Rural Financial Services Programme (RFSP), there is a strong base for SACCOS in Iringa particularly in Mufindi, Njombe and Kilolo. In Ludewa and Makete the limited economic activities have limited economic activities have limited the importance of SACCOS. Farmers refrain from taking loans because they fear crop failure and not being able to repay their credits. Another reason that emerged from the qualitative interviews is that the farmers have too little information about loan conditions.

6.1.2 Production Level The main production districts are Iringa rural, Kilolo and Njombe, Ilula division in Kilolo district is particularly an important geographic cluster for the production and marketing of tomatoes mainly the Roma and Tanya tomato varieties, which are in greater demand compared to other varieties. There are few farmers cultivating around 5 acres with yields of up to 18 tons per acre. Makambako is another important cluster for tomatoes production and trading. At the peak periods, the wholesale market in Makambako town receives approximately 28 tons daily during the dry season and 70 tons during the wet season. The medians from the quantitative data indicate in the main season is 15t/ha and in the low season is 14t/ha. Main activities and relations at production level are as illustrated below. Fertilizers and pesticides: Farmers have indicated awareness on the side effects of chemicals but are not heeding to the recommended practice, management of pesticide application will be one of the responsibilities of the producers’ bodies. Cooperation: Farmers groups are not common among tomato growing communities, this bottleneck is recognized by cooperative department in the Local Government Authorities (LGA) and NGOs working in the field. LGA and NGOs promote, strengthen and support the establishment of co-operations amongst the farmers. Casual workers: About 95% of the farmers manage their plots using household (family) labour or with the help of casual workers. It is common for farmers to employ casual workers in times of heavy workloads such as soil preparation, stocking, weeding and harvesting. Grading and Standards: Farmers do to some extent sort out tomato that has deteriorated in quality and leave the turgid ones for the market. Other standards such as pesticide residue or production conditions are not taken into consideration. If the produce is sold at the farm gate the traders do re-grade in response to market needs before transporting, if the farmers go to the market they also improve grading before selling. Post harvest handling: Farmers prefer varieties that have longer post harvest life such as CAL J and Tanya, on average these tomatoes varieties can be kept for up to 3 weeks without rotting depending on weather conditions and post harvest handling. The common practice is for farmers to harvest tomatoes when they have received an order farm a trader, the broker and trader work out the logistics and the packaging.

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Transportation: Most cases farmers use animal carts (mkokoteni) ferrying the produce to collection center. Here is where primary/secondary trader and brokers interact.

6.1.3 Trading level Traders: There are different types of traders who interact in the tomato trading segment. There is a broker, this is a person who does not own the product at any point in the transaction loop, role is to connect buyers and sellers and in some cases to negotiate prices either in the name of the buyer or the seller. He is paid a commission by either party. In contrast to brokers, buyers (both primary and secondary) take ownership of the product at the time they pay for it. At Ilula there are 18 brokers who collect between Tshs. 200 to 500 per crate depending in availability. Traders at district (cluster) level: Most traders in the tomato value chain in Iringa are wholesalers. They purchase tomatoes from farmers or collection centers, major wholesale markets are Ilula in Kilolo, Makambako in Njombe and Mlandege in Iringa Rural. There could be more than 100 registered traders at Makambako market alone Makambako handless per day around 1,000 crates in high season and 400 crates in low season. The end markets are Dar es Salaam, Zanzibar, Morogoro and Dodoma. The common varieties sold on the market are Cal J. (35%) Onyx (20 %), Tanya (25 %) and Roma (30 %). About 45% of the tomato trade from Ilula and Makambako wholesaler markets are for the Dar es Salaam markets, 20% for Zanzibar markets, Mbeya (15%), Morogoro (10%) and local markets absorbs (10%) that is sold to retailers in Iringa. Weight and measures: The main unit of measure for buying is estimate to selling at farm level is the plastic bucket (weighing around 17kgs of tomatoes) while at the market is wooden crate that holds between 40 and 50kg of tomatoes.

6.1.4 Traders at national level At national level, there are four wholesaler markets in Dar es Salaam that include: Kariakoo, Buguruni, Mabibo and Ilala markets. More than 80% of tomatoes and other fresh fruits and vegetables (FFV) in the Dar es Salaam are sold on these markets. The other 20% is distributed between local markets, kiosks, and hawkers/venders. Only a very small amount (less than 1%) is sold in the supermarket, these markets also do the retailing. Market access local traders and farmers: Communicate with the traders before entering into business deal, they use mobile phones. They set up contacts to traders and buyers in the markets of Makambako, Ilula, Dar es Salaam, Zanzibar, Morogoro and Mbeya, whom they call to check their demand before taking the commodities there. They also exchange contacts at this point some of which establish long term contract. Some farmers try to assess demand before planting based on previous years’ experience.

6.1.5 Retailing Level At retail level the operators are differentiated according to their location and/or the volume they trade. There are sellers on open markets, roadside sellers with small wooden kiosks and vendor (hawkers). The latter sell at the roadside without a stand (booth), walking around and approaching potential customers. While the first two operate in the formal sector the hawkers work in the informal one. In addition, supermarkets are part of the formal retail sector but they do not play an important role for the supply of tomatoes and other FFVs. The smaller supermarkets do not even offer FFV but there are kiosks located next to them. Most of the

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vendors on the retail markets specialize in some products and only change their range in the off-seasons. The range they offer and the amount they sell also depend on the kind of stall they own. Kiosk retailers normally only sell tomatoes and FFV and try to have a large selection of products to meet their customers’ needs. As hawkers depend on their mobility in general they have only few commodities to offer. Big supermarkets in contrast often supply – besides the local or seasonal FFV – also “exotic” ones like apples or strawberries.

6.1.6 Consumption Level On the consumption side individual and large consumers such as hotels, restaurants, hospitals and schools are considered. Most consumers buy tomatoes and other FFV at retail but also at wholesale markets, at kiosks or hawkers. About 99% of consumers purchase tomatoes and other FFV in open markets e.g. Kariakoo, Buguruni, Kiosks and Vendors. Less than 1% of customers purchase in supermarkets. It was reported that decisive criteria when choosing the seller are cheap prices, quality of products, proximity to the vendor, and trust. It was noted that the consumers are not aware of the different varieties. Consumers characterize high quality in terms of medium size, good colour, faultless skin, shape, taste, and they look for storable goods. Low consumers quality is less important than price

6.1.7 Transportation Service Transport is a cross-sectional issue in the VCs affecting all actors. The most important actors for transport are entrepreneurs who own trucks, truck drivers as well as porters. They all belong to the VC supporters. The first group is mainly responsible for transport from the production areas to the markets. Farmers or intermediaries hire the means of transportation plus drivers and often accompany them. Truck drivers are often employed seasonally. The porter group comprises firstly handcart drivers (called Mkokoteni in Kiswahili) who are engaged in transporting the commodities from the wholesale to the retail markets or kiosks. They normally own the carts themselves or rent them. The second groups are the porters (who load, unload, and carry the goods) all along the chain. In some cases they also perform the grading and repacking at the market. They get paid for each tour they do, with the prices depending on the type and amount of commodity they transport. Given that they do not possess a legal work identity, they are sometimes double-crossed by customers who fail to pay their wages. They are also often harassed by law enforcers as loiterers. Farmers are only involved in transport from the field to the farm (if necessary) and in some cases they arrange transport from the farm to the markets, especially to the local markets. Table 6.1.3 -: Summary of Business relationships in tomato value chain Functions Services Participant Linkage between actors Research institutions

Research, multiplication of seeds

Researchers Persistent network relations exist between Researcher and Input suppliers.

Input supply Agro- chemicals, equipments supply

Input supplier (stockiest)

Spot market relationships the relations are created on the sport (including negations on price).

Production Input purchase, ploughing, ridging,

Transporters, Farmers. Labourers (casual)

Spot market relationships (the relations are created on the spot (including negotiations on price).

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planting weeding

Harvesting Labour for harvesting

Labourers Spot market relationships (the relation are created on the spot (including negotiations on price) between farmer and labour

Loading at farm / local collection place

Transport, loading, unloading

Transporters and labourers

Spot market relationships (the relation are created on the spot (including negotiations on wage) between farmer and labour

Trading (primary)

Move tomatoes to markets, load /unloading, transport

Transporters, urban trader sell tomatoes to retailer

Spot market relationships (the relation are created on the spot (including negotiations on price, volume, type) between local trader and urban trader

Trading ( secondary)

Unloading, packing, transport, loading

Wholesaler and retailer

Spot market relationships (the relation are created on the spot (including negotiations on price, volume, type) between urban trader & retailers

Retailing Transporting, Selling

Shopkeepers / stall

Spot market relationships (The relation are created on the spot (including negotiations on price, volume) between Retailer & consumers

Exporting / importing

Grading and packing, loading

Exporter / importer

Persistent network relations exist between exporters and importers, prearrangements on volume but prices determined by market forces

The findings indicates the relationships in tomato value chain are informal and disorganized as the business transactions are in most cases are not performed under written contract such that are not legally binding. Trading activities (buyers and sellers) are done with no formal and legal documentations. The businesses are as usual done on trust basis. Traceability concept cannot be easily undertaken due to uncertainties around the market linkages.

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6.2 Tomato Channels Map and its dynamics The Channels map in this context is a conceptual frame work or schematic representation showing how products flow through the channels. The map illustrates the functions, actors (operators) and markets in the value chain. It also indicates alternative supply channels in the chain (figure1). There are five channels through which tomatoes move from the farm to the consumer as narrated in the section below.

Fig. 6.4.1 Tomato Channels Map in Iringa Region

Processor 5 %

Retail

Whole sale Trade

Processing

Primary trade/ Collection

Production

Inputs Supply

Research

Fresh tomato National HH Consumption

Inte

grat

ed S

mal

l-Sca

le

Farm

er C

hann

el 1

0 %

Fresh 1? %

Markets

Importers (± 10) Agro-dealers at district level (Stockiest) ±100

Input voucher system distributors (±….?)

Rural Collection

Points

Secondary Trader (87%)

Market Retailer

District / regional

Consumption

Export

Channel 1: Integrated Small-scale

Channel 2: Commercial fresh tomato

Channel 3: Value Addition

Channel 4: Supermarket Contracted

Tomato farmers in Iringa Region (±30,000) farmers, 6,109 hectares, production 107,190mt p.a. (data for 2008)

Fresh tomato Institutional

Consumption

Shops/ supermarkets

Tengeru Imported Seeds: Kibo Seeds Ltd, EA Seeds Kenya seeds

On farm seeds: produced by selected farmers

Channel 5: Exports

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6.2.1 Channel 1: Integrated Small-Scale Farmer Channel This channel consists of non-commercial oriented farmers who cultivate tomatoes just as a source of supplementary income. They cultivate smaller plots, use less input, harvest and transport to the selling points in small quantities (by bicycles, handcarts or on human heads). Markets are located alongside roads or towns, customers are small retail markets or directly to urban housewives or the passers-by consumers. This channel accounts for approximately 8% of marketed produce. It was noted that this channel has experienced moderate growth and future prospects will depend on income growth in the rural areas, profitability of local sales compared to sales to the district markets.

6.2.2 Channel 2: Fresh tomatoes (Secondary/Wholesaler) Trader Channel This is the biggest and most dynamic channel, accounting for approximately 87% of total marketed volume. There are eleven (11) wholesale markets selling tomatoes and other fresh fruits and vegetable (FFV) namely; Ilala, Kariakoo, Buguruni, Mabibo, Tandika, Vingunguti, Gongo la Mboto, Kigamboni, Wailes-Temeke and Makumbusho. Dar es Salaam markets sources tomatoes from various regions such as Iringa, Morogoro, Coast Dar es Salaam, Tanga and Arusha. Dar es Salaam has 4 wholesale associations. Retailers: Market retailers buy tomatoes crates and for smaller retailers they may jointly buy a tenga/crate and share the tomatoes. Common transport used by retailers from wholesale markets to their kiosks is pickups, push carts, bicycles and daladala. The costs vary with the load and distance, but a crate of tomatoes will typically cost Tshs 1,500 from Ilala market to places within 10 kms. Retailers sell tomatoes per fruit, per heap, per kg or per Sadolin. Suppliers to institutional consumers such as schools/colleges and hospitals normally buy tomatoes as wholesalers. Restaurants and hotels differ in size, large hotels do contract suppliers through tenders, smaller ones purchases tomato on retail-outlets.

6.2.3 Channel 3: Processed Tomato Processing capacity is estimated at 15,000mt p.a. One major constraint to grow of this channel has been higher cost of tomatoes compared to imports, this is compounded by seasonality. Processors are looking for commercial suppliers, most of the regard industrial buyers as low end segment and will supply it when the open market is saturated. But it is stable segments that can absorb tomato on contracts. At least in Arusha farmers are selling tomatoes to Darsh Industries below the open market price but they are guarantee constant revenue.

6.2.4 Channel 4: Supermarkets (Fresh Tomatoes Supplier) Channel The supermarket retailers, particularly Shoprite and Imalaseko have in the recent past contracted a few agents to supply tomatoes and other fresh fruits and vegetables. In this regard, the supermarkets enter into short-term contracts of three or four months based on pre-agreed amounts, quality standards and buying prices. The contracted agents are often retail traders or dedicated commercial-oriented farmers who are likely to have better quality of produce than the non-commercial farmers. About 65% of the reasons for the low exports were reported to include lack of storage facilities, high competition in the export markets, and low quality of tomatoes.

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6.2.5 Channel 5: Fresh Tomato Export Channel The only difference between the Export channel and the supermarket channel is that the exporter goes to the farm to buy, while the contracted supplier delivers to the contracting agency. It was gathered that exports are often procured directly from dedicated small-scale commercial oriented farmers who are more likely to provide better quality and consistent products in terms of size and color. This channel is also relatively small and accounts for less than 1% of total fresh horticultural produced in the country. Kenya major importers of tomatoes from Tanzania are Kenya Comoro and DRC.

6.3 Actors Relationships in Tomato Value Chain The framework of tomato value chain consist five levels: input, production, trade, retailing (marketing) and consumption. Transport is a cross-cutting issue involved in all levels. The figure 2 below illustrates the different functions (activities), actors and their inter-relationship in a tomato value chain in Iringa region. Figure 6.3.1: Framework of Actors Relationship in Tomato Value Chain Iringa Region

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6.4 Driving Forces and Points of Leverage 6.4.1 Driving forces Value chain forces refer to those factors that are at the root of the dynamics and change within the value chain, these often relate to market demand, technological change, and barriers to entry, input supply, and profitability of different niches, risks or regulatory framework. The following sections summarize the main driving forces for the tomato value chain in Iringa.

6.4.1.1 National Markets National market is the most important driving force of the tomato products from Iringa where it is estimated that 99% of the fresh produce is sent to market and the remaining 1% is consumed at household. It is estimated that Dar es Salaam urban consumes over 50% of tomato produced in Iringa hence it is a very important driving force in the sub sector. Kariakoo market is the main (reference) market. Currently, there is high seasonality effect in national market demand is not met during the low supply season (December-April) and there is a need to promote production during this period. At the market level, activities geared towards increasing supply during the wet season and exports and/or processing during the dry season should be the main focus for MUVI initiatives.

6.4.1.2 Irrigation Technology Irrigation technology through furrow and water pumps (mainly foot water pumps) and emerging growth of commercially oriented production in a number of geographic clusters, resulting in increased production during the dry season. The use of this production irrigation technology is confined to areas with rivers and ground water resources. These farmers are achieving better profit margins because of the lower transport costs to both the seller and the buyer and lower product losses. Because of their proximity to market outlets, these farmers are at least able to spread out their patterns of harvesting and delivery to the market.

6.4.1.3 Import and Export Market The fact that Tanzania imports more tomato than it sells out indicate that there is market potential for import substitution through value addition (processing) and export market for fresh tomatoes.

6.4.2 Opportunities Opportunities refer to the prospects of businesses that can be undertaken as part of resolving constraints in the value chain. Thus, behind every constraint there is an opportunity or opportunities for business. The following are some of the existing opportunities for improving the Tomato value chain in Iringa: Progressive small-scale farmers: A large number progressive small-scale farmers who are willing to adopt the production of tomatoes in the current farming systems as an important source of income. Lack of technical skills and market information, lack of appropriate extension services and the concomitant poor crop husbandry are however constraining progress in this direction, yet some amount of networks and skills to provide the training exists in the country: Iringa – Dar es Salaam road: Production of tomatoes along Makambako, Ilula- Iringa to Dar es Salaam road which can link the growing areas and Dar es Salaam

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Land availability: The availability of land for expansion, varied climatic conditions and possibility for irrigation, which provides an opportunity to produce a wide range of good quality vegetables including tomato throughout the year. Technology: The existence of agricultural and other research institutes such as ARI Tengeru, ARI Uyole, SUA that are developing appropriate technologies including improved varieties to support development of the horticultural sub-sector in Tanzania.

Institutional Support: Presence of horticultural promotion and marketing section within the Ministry of Agriculture and Ministry of Cooperatives, Ministry of Industry, Trade and Marketing (MITM) through SIDO and IFAD.

6.4.3 Constraints Constraints refer to factors that inhibit enterprises or firms in a given value chain from performing their business in the best way. These include:

6.4.3.1 Production Constraints

High incidence of pests and diseases, especially during the wet season, resulting in low productivity and supply. The losses is estimated to be 80-100% is un-attended

Poor and unspecialized crop extension services at producer level with subject matter specialists (SMS) sometimes available only at the district level. This leads to production of sub-standard product qualities which do not meet the export market quality standards

High level of losses (about 30 - 40%) of tomatoes due to poor post harvest handling (that is all activities from harvesting, loading/ unloading, transportation and transport facilities, and storage facilities.).

6.4.3.2 Marketing Constraints

High market price fluctuations due to the high seasonality of supply.

Stiff competition on the Dar es Salaam urban market as most of tomato producing regions (Morogoro, Tanga, Arusha and Kilimanjaro) relies on the same market resulting in increased transport costs and hence low producer prices to farmers.

Lack of adequate and reliable tomatoes production and trade statistics necessary for analysis and planning and lack of relevant market and price information, especially to farmers.

Lack of effective marketing farmer organizations, resulting in the traders dictating the price.

Lack of export market information particularly the quality specifications

Lack of expertise in product packaging and shipping (forwarding & clearing)

6.4.3.3 Transport and Product Handling Constraints

Poor rural roads particularly the feeder roads leading to high costs, product quality deterioration and physical losses, which when combined with other aforementioned constraints such as lack of markets and poor packaging materials lead to losses of up to 40% in some cases.

Corruption along highways by traffic police, accidents of trucks due to poor conditions of the trucks,

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Lack of insurance from such losses as accidents

6.4.3.4 Processing Constraints

Underutilization of the existing tomato processing capacities in Iringa region including Dabaga and Ivory factories. The factories are utilizing only 40% - 50% of their installed capacities. The reasons of under utilization production are mainly because of low local product demand, stiff unfair competition from imports, unfavorable tax policies.

Underdeveloped small-scale tomato processors: It is difficult for SMEs to access the tomato processed markets due to poor product quality particularly packaging and labeling, no quality and safety marks (critical traceability information) due to the bureaucratic and costly government business licensing and TBS product standards certification procedures; lack of computerized and accessible production database; lack of transparency in export trading.

Difficult access to affordable processing technologies.

6.4.4 Points of Leverage Leverage is the ability to reach large number of RMSMEs at a single stroke. Points of leverage are those points where working with an established group of value chain actors or firms can achieve high outreach (critical mass). These points of leverage are either system nodes (e.g. collection centres) along the value chain, institutions, geographic/or product clusters, processing levels. In the case of tomato value chain in Iringa the main leverage points may include the following nodes:

6.4.4.1 Tomato Processing Rural Market Collection (Cluster) Centres: At this point is where a large number of producers, especially the commercial oriented farmers deliver their produce for sale to a number of local and regional wholesale traders. These collection centres provide an important contact point between household and institutional consumers, input suppliers, farmers, local and regional and wholesale traders and their associations. These centers therefore form important system nodes for outreach to a wide range of the chain actors in terms of exchange of information regarding, product supply and demand, market prices, product quality issues, technology on production, storage and transport among others. Good examples of rural market vegetable collection centers in study area are Ilula, Makambako tomato markets. In these markets business transactions are conducted by spot and orders. The orders are done through mobile phones or visits by traders from Mbeya, Dodoma, Morogoro, Dar es Salaam and Zanzibar. Producers Associations: At the farm level, there is a need of strengthening / establishing farmers associations (groups) and networks such as MVIWATA as a point of leverage for capacity building issues such as training, dialogues on policy issues with public sector, market and financial linkages. Processors Platform: Tanzania Food Processors Association (TAFOPA) is also a potentially important player in the horticultural processing industry. The association has real potential for leveraging MUVI Tanzania project interventions on policy and regulation advocacy, marketing and capacity building among others. In addition, at the farm level, there is a need of strengthening/ establishing farmers associations (groups) as a point of leverage for capacity building issues such as training, dialogues on policy issues with public sector, market and financial linkages.

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Traders and Manufacturers of Packaging Materials Platform: Traders do drive the value chain in the sense that they manage the commodity flow, market information and cash transactions. Together with manufacturers they will improve the value chain by ensuring that appropriate measurements are in place and enforced. They will also work close with the Project in exploring export market for Tanzania fresh tomatoes.

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7.0 GOVERNANCE OF VALUE CHAIN

7.1 Conceptual Framework 7.1.1 Definition In value chains, governance refers to the relationships among the buyers, sellers, service providers and regulatory institutions that operate within or influence the range of activities required to bring a product or service from inception to its end use. Governance is about power and the ability to exercise control along the chain at any point in the chain and some firms sets and or enforces parameters under which others in the chain operates. Key parameters (issues) includes product design and specification, definition of the production processes, which can include elements such as the technology to be used, quality systems, labor standards and environmental standards. Production scheduling and logistics is also included. The chain governance exists when some firms work to the parameters set by other powerful firms in the chain. The firm that sets the parameters with which other firms in the chain must comply is referred to as the lead firm in the chain. The relationships lead firms have with their suppliers can either be helpful with respect to improving the competitiveness of the industry, based on a commitment to long-term, mutually beneficial relationships with suppliers, or they can be greedy and focused on realizing a quick profit in the short-term

7.1.2 Types of Value Chain Governance The connections between chains activities within a chain can be described along a continuum (range) extending from market, characterized by “arm’s – length” relationships, to hierarchical value chains illustrated through direct ownership of the production processes. Between these two extremes, are three network-style modes of governance: modular, relational and captive as explained here below and illustrated in Figure 7.1.1. Market governance: involves transactions that are relatively simple, information on

products specifications is easily transmitted, and producers can make products within minimal inputs from buyers.

Modular governance: occurs when a product requires the firms in the chain to undertake complex transactions that are relatively easy to codify.

Relational governance: in this net-work style governance pattern, interactions between buyers and sellers are characterized by the transfer of information and embedded services based on mutual reliance regulated through reputation, social and spatial proximity, family and ethnic ties and the like.

Captive governance: in these chains, small suppliers are dependent on a few buyers that often wield a great deal of power and control. Such networks are frequently characterized by a high degree of monitoring and control by lead the lead firms

Hierarchy governance: describes chains that are characterized by vertical integration and managerial control within a set of lead firms that develops and manufactures product in –house. This usually occurs when product specifications cannot be codified, products are complex, or highly competent supplier cannot be found.

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Fig. No. 7.1.1: Type of Value Chain Governance

7.2 Governance in Tomato Value Chain in Iringa region The tomato value chain has no lead firm at any level of the chain (i.e. production, processing, trading and consumption) that govern and control the system and instead it is governed and controlled by the supply and demand conditions in the market that set commodity prices only (Figure No. 7.1.1). The tomato VC in Iringa is characterized by the following features: - Lack of formal Governance. The governance mechanism in the tomato value chain is underdeveloped. Value chain actors operate in an un-coordinated manner. Nevertheless, a few rules exist among the value chain actors that include size of containers. Presence of many actors and transactions: The value chain is characterized by too many small actors with small business transactions that increase transaction costs and therefore rendering the products less competitive in the market. This relates to the fact that many people are involved in operating the value chain. For example, Channel 2 in the sub-sector map (i.e. fresh tomato channel) there are about 15 transactions involving local trader, harvesting, loading, unloading, transport, urban trader, loading and unloading, transport, market levy, broker, retailer, loading, unloading and transport that occur between farmers and ultimate consumers; Weak Market Coordination: There is no lead firm that coordinates the value chain in relation to markets, technology and other important information shared among the actors. Consequently, actors particularly farmers and processors receive no incentives for up-grading their tomato product and the value chain process as a whole to promote sustainable income earning opportunities.

Degree of Explicit Coordination

Low High Degree of power Asymmetry

Suppliers Component & Material Suppliers

Price

Lead Firm

Full-package supplier

Lead Firm

Relational Supplier

Lead Firm

Integrated Firm

Customers

Component & Material Suppliers

Component & Material Suppliers

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Product Up-Grading: Focuses on the introduction and delivery of new products within the value chain. In this respect, it is expected that the development of the tomato processing sector might stimulate more efficient and higher quality production practices among tomato suppliers. At the same time, the development of channel --- that is processing industry need to be promoted. Process Up-Grading: Process upgrading is defined as improvement in the efficiency of the production process. This refers to the introduction of new cultivation techniques at all levels in the chain including production, processing and marketing. In the tomato value chain, farmers and other actors have been applying inferior production, in harvesting and post-harvesting technologies and leading to high level of tomato losses (about 40%) and seasonal prices fluctuations. In order to reduce the losses in particular, there is a need for the adoption of the improved and appropriate post-harvest technology (such as cold storage systems and small scale processing machinery), which would increase the shelf life of tomato products, decrease transportation costs and promote agribusiness enterprise development through better coordination and planning in input procurement.

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8.0 GROSS MARGIN ANALYSIS

8.1 Key Assumptions and Parameters Production Conditions: The season 2008/09 is considered to have represented a fair condition in terms of weather, rainfall, pests and diseases. Market Conditions: It has been established that the amount of tomato consumed in urban areas is directly proportional to households’ disposable income, it is assumed that consumer behavior towards fresh tomatoes will remain as it is and there will increased uptake of processed tomatoes. Macro-economic Performance: The overall macro-economic performance of the country will continue to be positive. The parameters used in the analysis are: - One acre produces 285 tengas, A tenga is equivalent to 3 debes/buckets of 20 litre, Output per acre in Iringa Rural is 290 and in Njombe is 271 tengas A 20 litre debe of tomatoes weighs 16.7 kgs hence a 3 debes tenga will contain 50 kgs of

tomatoes.

8.2 Method of Data Collection The data used in this analysis was collected through a focus group discussions at six villages two at each district (Iringa Rural and Njombe), however Ludewa was excluded from this analysis because it was found to be a net importer of tomato from Njombe and therefore data from Ludewa would have skewed the results slightly above the average, for example retail prices at Ludewa central market was about 150% higher than in Njombe, due to diseconomies of scale costs per unit area would be equally higher. Data from the village was cross-checked with reports from other sources e.g. costs were compared to tomato farmers in Arusha.

8.3 The Results of the Analysis Gross margin refers to the percentage obtained by dividing the result of subtracting direct or variable costs from revenue to the revenue. It does not take into account overheads, capital investment, or cost of borrowed capital. Such approach is adopted because small scale farmers do not often incur much of these costs and partly because such information is often difficult to obtain. Thus data provided below should not be misinterpreted as profits. Considering importance of opportunity cost economic theory, labour was priced at wage rates paid to competing labour uses was provided. At this level main transactional activities are mainly against services and inputs which are obligatory to tomato sub sector. Services which provided from the point of production to collection point are nursery establishment, land preparation, purchase of inputs, planting, weeding, spraying, harvesting, packaging and transport (from farm to collection point). Marketing at the Iringa Rural and Njombe districts has an average of 24 significant transactional activities from inputs acquisition, land hiring and crop planting stages to the point of delivery to the collection center. The average tomato yield per acre is 285tengas/boxes equivalent to 3 debes per bucket of 20 litters. Iringa Rural produces 290 tengas per acre and Njombe 271 tengas per acre. Average cost from farming to collection point is Tshs 2,831/tenga or Tshs 806,835 per acre whereby average cost for Iringa Rural is Tshs 3,093 per tenga (Tshs 898,600/acre) and in Njombe is Tshs 2,815 (or Tshs 761,475). Variable costs incurred include land hiring Tshs 43,333 per acre, seeds acquisition Tshs 33,667, nursery preparation and management is Tshs 64,850 per (about 10m2), land

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preparation is Tshs 51,833, transplanting task Tshs 14,000, fertilizer acquisition for planting and boosting Tshs 129,500, pesticides and fungicides Tshs 66,834, labour for spraying and fertilizer application Tshs 50,001, irrigation cost Tshs 154,667, harvesting Tshs 75,200, sorting and packaging Tshs 8,400 and transport Tshs 152,017 (to where)?. There is strong on influence on seasonality on tomato prices in the region, wet season is between December and April while dry season is between May and November. A farm gate price per tenga during wet period is Tshs 12,833, during dry season is Tshs 10,083 thus there is 21% difference between dry and wet seasons. Table No.8.3.1 Farm gate price pattern seasonality per tenga of tomato (2008/09)

District Wet period (Dec-April) Dry season (May-Nov)

Kiwere 16,000 12,000 Magulilwa 12,000 10,000 Ihanja 12,000 9,000 Makambako Njombe 13,000 10,500 Average 13,250 10,375

Tomato prices per tenga were Tshs 10,417 and Tshs 10,167 for Iringa Rural and Njombe Therefore gross margin of 60% for a tenga of which is Tshs 7,446 per tenga or Tshs 2,122,110 per 285 tengas harvested from an acre. Return on tomato cultivation can be improved if yield is enhanced from around 15mt reported in the field to at least 20mt (a 30% increase) that could add about Tshs 600,000 to a farmer. (Detailed gross margin analysis is provided as an Annex 1 to this report)

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9.0 CONCOMITANT SERVICES MARKET

9.1 Technical Services Availability and accessibility to support services is one of the critical success factors in VC upgrading. Segments and services that need more support services are producers, traders, manufacturers of packaging materials and processors. Producers need services for enhancing entrepreneurship, marketing and value chain concept, access to finance, extension services and organizational development skills. The above services are available within the region and SIDO Regional office has the capacity to provide entrepreneurial, marketing, value chain and financial linkages. Extension services will be initially relied on district extension personnel but it is encouraged that the sector (VC) in the long run should either build internal capacity r procure the services from the market to enhance accountability. There are working models where the sector is financing its extension services innovatively e.g. the tobacco. Through FFS (demonstration farms) dissemination of extension services will be accelerated. Some non-government organizations that can complement the supply of services include COAS (based in Mufindi), NADO (based in Njombe), INCOMET (based in Mufindi), etc. Technology can be classified as hard technology which involve access to and use of physical processes such as irrigation, pumps, water harvesting, etc. The second type of technology is soft technology i.e. skills of performing activities in the VC. The skills are varied and will therefore require various BDS, those identified ex-ante for producers are; entrepreneurship (farming as business); value chain concept and marketing; group formation and strengthening; management of chemicals and environment. The services will initially be subsidized with a gradual phasing out in the following order of subsidy as 100% year 1, 60% year 2, 20% year 3 and 0% in year 4.

9.2 Financial Services In general, the demand for financial services in most rural areas in Tanzania is characterized by low participation and poor financial accessibility. This is attributed to the present situation that most economic activities in rural as well as sub-urban areas depend on agriculture which again is characterized by low degree of agricultural mechanization, low technological adoption and high price volatility of agricultural outputs. As a result, most household farmers are often considered of high risk by banks and other formal financial institutions. The problem is exacerbated by the fact that only 5% of smallholder farmers in Tanzania have official land titles that could be otherwise used as collateral to access loans from formal financial sector.6 Other demand-driven factor that explains low level of access of financial services in rural Tanzania includes the level of transaction costs incurred by households and the financial illiteracy. 6 In efforts to stimulate and encourage formalization, the GOT is implementing the Property and Business Formalization Program (popularly known as MKURABITA, its Swahili acronym), which is aimed at improving the services of the land registries in order to support the registration of land and landed property, its valuation and use as security for underwriting economic activities.

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In Iringa there are a range of financial institutions, commercial banks in Iringa region include National Microfinance Bank Ltd (with 7 branches namely Ludewa, Mafinga, Makambako, Makete, Mkwawa, Njombe and Kilolo); CRDB Bank Plc (3 branches namely Iringa, Mkwawa and Njombe); National Bank of Commerce Ltd (2 branches namely Iringa and Njombe) and Exim Bank Ltd (1 branch in Iringa town). Non-bank financial institutions7 present in the region is Tanzania Postal Bank (with 1 branch in Iringa). Most RMSEs rely on SACCOS for financial needs as they are closer to them. Iringa has registered about 173 SACCOS, 89 AMCOS, 9 cooperatives, 12 bank branches and several MFIs/NGOs. About 41% of the SACCOS are located in urban centers (with Iringa Urban carrying 45% of them) whereas 60% SACCOS are located in the rural areas. Based on the number one could conclude that access to financial services is higher in the rural areas than, the reality is the percent of population accessing SACCOS services is far less in rural areas than in urban centers. Table No. 9.2.1 The number of financial institutions in Iringa (June 2009).

No. District SACCOS

Total Members AMCOS Coops Bank Branches Urban Rural Total

1 Iringa Rural 3 23 26 3,288 20 1 0 2 Iringa Urban 31 0 31 2,961 N/A N/A 4 3 Kilolo 0 6 6 2,223 N/A N/A 1 4 Ludewa 3 15 18 744 10 6 1 5 Makete 3 16 19 3,538 19 0 1 6 Mufindi 21 20 41 20,099 18 1 2 7 Njombe 9 23 32 9,055 22 1 3

Total 70 103 173 41,908 89 9 12 Non-governmental organizations providing financial services (NGO-MFIs) operating in the region include PRIDE Tanzania Ltd (currently Iringa has 2 branches – Iringa and Makambako) and PASS (currently operates in Iringa through CRDB Bank branch in Iringa). There is Mufindi Community Bank located at Mafinga and plans to establish a community bank in Njombe are at an advanced stage. In Iringa other sources of credit to RMSEs are SIDO and SELF. Given the extended presence, SACCOS make the first line of resort for VC actors to access credit. Banks are not the appropriate vehicle for supporting RMSEs, the innovation is in wholesaling the services to SACCOS that interface with communities. Table No. 9.2.2. below presents summary of the key characteristics of financial service providers in the banking sector in Iringa. Table No. 9.2.2. Key characteristics of banks

Bank NMB Ltd CRDB Ltd TPB NBC LTD EXIM BANK Total number of branches in the region.

7 3 1 2 1

Network of branches/outlets

All district headquarters

Iringa Urban, Mkwawa &

Iringa Urban Iringa Urban & Njombe

Iringa Urban

7 These are institutions licensed by Bank of Tanzania and authorized to engage in banking business not involving the receipt of money on current account subject to withdrawal by cheque.

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Njombe Range of loan amount (Tshs)

300-500 million per MFI/SACCOS

300-500 million per MFI/SACCOS

Average 1.1 million per MFI/SACCOS

5 – 250 million per MFI/SACCOS

500 million per MFI/SACCOS

Types of Products:

Provides whole range of financial products to individual clients: these include savings, SME as well as individual loans, money transfer, payment services etc. Wholesale loans are extended to SACCOS and MFIs.

Profile of clients NMB, NBC, EXIM and CRDB bank are primarily indirect providers to rural areas through their links with MFIs and SACCOS. TPB has a greater tendency to provide direct services to individual rural clients.

Characteristics of the portfolio

CRDB volume of loans to the agriculture (rural) comprises about 25% of total lending. NMB has extended significant lending in agriculture whereas TPB, NBC and EXIM have continued to lend to individual farmers as demand arises.

Financing sources and capital structure

SACCOS & other MFI’s are able to generate funds from the banks, NGOs and own members.

Source: Field Survey 2009 Assessment of financial institutions attitudes towards financing agro-based value chain activities is mixed. Each bank with branch presence in Iringa has specific financial package to SMEs and particularly SACCOS. CRDB has many years of experience in financing agri-businesses and working with IFAD funded projects in the past. CRDB has been actively funding agricultural projects in cooperation through the linkage by Private Agricultural Support Services (PASS) that specializes in advisory services and financial linkage of agri-businesses to financial institutions. CRDB has indicated that it continues to work with agribusinesses based on financial viability of their projects. Similarly, NMB is leading bank in terms of range of products extended to the farmers who are actually majority actors in the selected value chains. For example, interview with NBM Branch Manager in Ludewa District indicated that the bank is working to reach farmers via their SACCOS. While from the banks standpoint they are not directly lending to agri-businesses, it was noted that traders may be financing agricultural commodity trade through bank loans covertly (under the cover of trading industrial merchandise) because the pattern shows high growth in loans for trading during harvest period. Figure No. 9.2.1 Proposed Financial Access Preference Matrix

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10.0 INSTITUTIONAL AND REGULATORY FRAMEWORK

10.1 Tropical Pesticides Research Institute (TPRI) National Environment Tropical Pesticides Research Institute Act was established by the Act No. 18/79, it deals with supervising and regulating the manufacture, importation, distribution, sale and use of pesticides in Tanzania and to administer the regulations made under the Act. Major activity is to oversee pesticides including acaricides, arboricides, herbicides, insecticides, fungicides, molluscides, nematicides, hormonal sprays and defoliants used or intended to be used, either alone or together with other material or substance for the control of weeds, pests and disease in plants; or for the control of external vectors of veterinary or medical disease and external parasites of man or domestic animals or for the protection of any food intended for human or animal consumption8. TPRI competency is of critical importance to the tomato VC as they have to assure that quality of chemical are up to standards. There have been reports of some pesticides being ineffective lending producers into losses.

10.2 Tanzania Foods and Drugs Authority (TFDA) Tanzania Food and Drugs Authority (TFDA) was established under Tanzania Food, Drugs and Cosmetics Act No. 1 of 2003, TFDA a semi-autonomous body under the Ministry of Health and Social Welfare supervision and became operational on 1st July 2003. The Authority has broad but with respect to tomato value chain its main involvement is in processed products. Pre-packaged food and food supplements are evaluated and registered by the Tanzania Food and Drugs Authority (TFDA) before being approved for marketing, it aims at ensuring safety to consumers. It registers production premises, registers the products and licenses firms to carry out business. In compliance TFDA undertakes surveillance, does control imports and exports in relation to importing and exporting countries’ standards and carries out post-marketing product risk analysis. Another important function of TFDA is to provide public education on food safety.

10.3 Tanzania Seeds Certification Institute (TOSCI)

For producers, the institution that interacts most with farmers is Tanzania Official Seed Certification Institute (TOSCI), TOSCI certifies seeds though there is no direct relationship with farmers TOSCI has to approve seeds and the quality of seeds depends on the competency of TOSCI. While there was been cases of poorly performing seeds, the problem is not a threat to the value chain. However as the project aims to upgrade tomato VC it is important that TOSCI

8 http://www.leat.or.tz/publications/env.handbook/4.4.c.pesticides.act.php

The analysis cost is USD 330 while evaluation of the product is USD 50 making the total cost USD 380. The approval is valid for 2 years after which the manufacturer if to resubmit the application. The time from lodging the application to issuance of approval is set at a maximum of 280 days. The actual period depends on the list of products being analysed at a given point in time and the complexity of the product. TFDA has however provided a leeway so that its process does not have adverse effect on business, they allow marketing of the product while samples are being samples are being analysed. TFDA plans to introduce its own mark on approved products. Source: Interview With TFDA Staff

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becomes aware of the importance of tomato seeds to the economy of the region and the country so as to allocate adequate time and resources.

10.4 The National Environment Management Council (NEMC) NEMC is another important stakeholder to the tomato industry given the environment implication of intensified tomato production under the project. The National Environment Management Council (NEMC) came into being in 1983 when the Government of Tanzania enacted the National Environment Management Act No. 19 of 1983. The Environment Management Act of 2004 provides for a legal and institutional framework for sustainable management of the environment, prevention and control pollution, waste management, environmental quality standards, public participation, environmental compliance and enforcement. NEMC undertake enforcement, compliance, review and monitoring of environmental impacts assessments, research, facilitate public participation in environmental decision-making, raise environmental awareness and collect and disseminate environmental information. The Council will be consulted in preparing modules for training of tomato producers on eco-friendly production systems as well advising factories on waste water management.

10.5 Tanzania Bureau of Standards Many products use TBS label to improve the product image and marketability. IVORI, Dabaga and Redgold all have TBS marks.

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11.0 TOMATO VC SWOT ANALYSIS

11.1 Opportunities Iringa has emerged the main source of tomatoes in the country because of suitable agro-

climatic conditions which are suitable of tomato production compared to other regions. The temperate climate, volcanic soils and water bodies combine to give the region the desired conditions for commercial tomato production.

Road network especially between Dar es Salaam and major collection points (Ilala,

Makambako and Mlandege) are accessible by tarmac road cutting down transport costs (in relative terms and reduce) travel time.

Government’s commitment to develop agriculture as pronounced in policies, strategies

(MKUKUTA, ASDS, Kilimo Kwanza, Agricultural Marketing Policy, etc.) and implementation plans (ASDP, DADPs, DASIP), presence of donor (IFAD) and institutional capacity SIDO, LGAs and the private sector places the project in a positive environment.

Thus for tomato has the highest return per acre compared with other computing

commodities in the area. The financial incentive guarantees availability of resources e.g. labour and land tomatoes grows with income and urbanization, large cities including Dar es Salaam are expected to continue to grow how the demand for tomato. The economy as well has been growing at above 5% p.a. in this decade, the combined effect of the urban growth, economic growth and people’s awareness on the value of tomatoes assures the market opportunity.

11.2 Strengths Accumulated knowledge’s on tomato farming and trading by actors in Njombe, Iringa

Rural and Kilolo provides a robust building ground for upgrading the VC and eases entry into the chain.

The youths (at least made) are already engaged the production and trading segments of

the chain, youths have higher affinity to change especially where incentives are clear. LGAs (supported with Regional Government) involvement in taking lead to support the

VCD including participation from the onset has entrenched LGAs stake in the project. Tomato processors in Iringa and Arusha are willing to work with other value chain actors

to improve the production and marketing local processed tomatoes. Local brands (Dabaga, IVORI, Marriet and Redgold) are competing favorably with

imported brands such as Peptang, Heinz, American Garden, and an array of products from Middle East.

Availability of trust among VC actors has reduced cost of doing business. Responsiveness and participation of Research institutions and seed multiplication

companies has led to continuous improvements of seeds and supply system.

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11.3 Weaknesses There limited information about the sector as a result of lack of coordination among value

chain actors. There is low awareness on the nutritional value of tomatoes among the population as

noted on low consumption of fresh/raw tomatoes and tomato juice. Low priority accorded to the commodity by the government at the National and Regional

level because of overemphasis on grains, legumes and traditional cash crops despite their dismal contribution to the economy of the region (e.g. pyrethrum, tobacco, coffee) that have SMS.

Traders have low knowledge about the export market and subsequently lack of strategy to

promote this segment. Some value chain actors have low entrepreneurial skills, e.g. producers (at least in Iringa)

have failed to tap into industrial segment because they are driven by price and they overlook the “volume” side of the business.

On the overall there is low awareness on health and environment issues among producers.

Despite that there has been no scientific studies done, the general information shows that pesticides pollute water sources.

There is limited access to improved farming equipment small as ox ploughs, power tillers,

tractors, pumps, etc. to reduce drudgery, increase acreage and product quality. Access to rural-based tomato processing technologies has been a challenge, there are no

rural-based tomato processing activities in rural areas. Non-standardized measurements erode accuracy of information, add to cost of transaction

and distort levy base. There limited access to credit (all along the chain).

11.4 Risks (Threats) 11.4.1 Commodity Level Risks Weather or rather climate change has made rainfall became unpredictable. Most of the

tomato is produced along the rivers and streams some of which are seasonal and therefore are susceptible to drought.

Poor water management in tomato corridor production area requires more research and long term strategy to improve water management is needed. Pollution of water sources needs to be contained because higher level of contamination may jeopardize the industry through legal courses.

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11.4.2 Macro Level Risks While the opening of EAC markets in 2010 could be a blessing for fresh tomato segment

as it may promote exports, processed tomato will face formidable competition from similar products particularly from Kenya. One industry actor commented “It is a reality that we will have to live with, everyone must factor in his strategy now”.

Processors have complained of taxes on packaging materials that are used to pack tomato rendering prices of local processed tomato less competitive, as processing capacity increases the impact of imported packaging materials will become even more significant.

At one level consumer preference towards processed tomato poses a risk if it won’t grow significantly.

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12.0 EXIT STRATEGY

The purpose of any VCD facilitation is to ensure that the VC becomes sustainably competitive in the market through improving market offering (superior product - innovation, competitive pricing - cost leadership). It should be is led by the private sector. Part of the role of the facilitator will therefore be to craft and implement a seamless exit that will leave the VC on a growth path. Lessons learnt from other VCs indicate that the duration of support varies greatly with the complexity of the chain (governance structure). The most complex structure is the market-governed value chain, there is low, none on sometime negative cost of switching channels/relationships. Tomato is a typical product where market forces are determining what, when, how, what amount to produce and how to pack, how, where and when to deliver. Good practices in the VCD show that in order to have a sustainable competitive VC, actors need to:- Acknowledge the interdependency among actors and articulate incentives or disincentives

for the actors to be part and not part respectively In a participatory manner, building a consensus to collaborate and developing a VCD

action plan with a clear view of each member’s contribution. Establishing structures of responsibility and accountability in the VC. Strengthening the structures so that they assume strategic role of driving the VC in

absence of a facilitator. The exit is phased to minimize disruption to the VC, responsibilities of the facilitator will be reduced gradually with the building of stakeholders’ capacity to fill in or the capacity to purchase the services from the market. Examples well coordinated VCs include tobacco, sugar out-grower schemes, Tanga Fresh (dairy), etc. The key factor is clarity of incentives and costs for members subscribing to the system. Further experience indicates that the process may require more time (than 2 years) and in many projects the transition is at least 3 years. Under the good practice that each chain segment should focus on core competency, it is important to build the capacity of actors to procure services from the market.

SIDO - MUVI

PART B

Proposed Investment Plan for

Iringa Tomato Value Chain Development

Proposed Investment Plan for Iringa Tomato Value Chain Development

1

1.0 INTRODUCTION

1.1 Envisioning the Project To see tomatoes value chain actors in rural areas (RMSEs) have better economic and social wellbeing through benefits derived from promotion and upgrading of tomato Value Chain competitiveness. Economic and social wellbeing shall be manifested in business and household assets, access to social services including better houses, food security, health, education, water, etc.

1.2 Key Good Practices in VCD This investment plan is intended to provide a framework and focus within which the VC will develop. The Plan draws lessons from some implemented VCs in Tanzania to have a set of good practices that include the following: -

In a coffee value chain supported by USAID it was found out that the biggest impact came from the unplanned introduction of a new business model into the value chain, not from the narrowly defined outcomes realized by the main project beneficiary.

The assumption that the value chains will grow in a pre-determined linear most often is not true, there are ample cases that call for an inbuilt flexibility mechanism in the VCD management. Effective implementation of VCD is in essence about managing a business in a turbulent (dynamic) environment. The strategies needed must be both pro-active and re-active, success is based on how nimble the VC can adapt to the obtaining environment.

Demonstrated in horticulture VC and Tanga Fresh, it is recommended that each actor in the focus on core competency instead of trying to integrate many activities in a chain by one segment.

It is recommended that support services are procured from the market instead of creating parallel systems that last as long as the donor is there and collapse after phasing out. This is important say with financial and other support services.

Always it has to be borne in mind that it is the market that pulls the chain.

VC actors have to have incentives that are strong to make them change the way they have been doing.

1.3 Main VCD Objective and Outputs The following are delineated projective objectives that address rural poverty through increased and equitable incomes, growth RMSEs through value addition to tomatoes, innovation in irrigation systems and community-based processing, gender mainstreaming and environment and natural resources management. Table 1.3.1 VCD Objectives and Outputs Objective Output

1.1 Improved capacity of producers to absorb services and address

1.1.1 Tomato is accorded due priority in the districts of Kilolo, Iringa Rural and Njombe and mainstreamed in DADPs. SMS are identified, oriented and engaged in the VCD.


2

Objective Output common issues 1.1.2 RMSEs are organized at grass-root, village, cluster,

district and regional level in order to improve their capacity access services and influence on the VC.

1.2 Producers have increased their income

1.2.1 Producers (RMSEs) are trained in a “farming as a business” a in order to improve their understanding of the dynamics of value chains, opportunities (incentives) and risks in the value chain to solicit their active participation.

1.2.2 Producers have improved access inputs and sustainable extension services

1.2.3 Producers targeted by the project are able to improve average yield by 25% in the first two seasons following interventions of the project.

1.2.4 Tomato producers in pilot areas are aware and practice good water management and eco-friendly tomato farming.

1.2.5 Producers increase supply of tomato to processing plants as a result of contract farming initiatives.

1.3 Producers are undertaking safe and eco-friendly farming

1.3.1 All producers in the pilot areas are aware of the risks (health and environment) related to improper use of chemicals applied in tomato production and general agricultural practices.

1.3.2 Producers have established self-regulating body/bodies and harnessing on economies of scale in marketing, procurement of inputs and equipment.

1.3.2 At least one irrigation project using sustainable source of energy particularly wind and gravity (rain water harvesting) is piloted and results disseminated.

Output No. 2 2.1 Cost of doing

business is reduced through using appropriate packaging materials

2.1.1 Advantages and disadvantages (value addition/subtraction) of grading tomatoes are identified and communicated to producers; if there are adequate incentives producers are motivated to grade their produce at farm level instead of the current practice.

2.1.2 Initiatives to streamline weights and measures all over the tomato value chain and a mechanism to monitor and enforce the packaging are agreed and implemented.

2.1.3 Cost effective and healthy tomato packaging materials including improvements on existing materials are explored, findings shared with actors and a consensus is established among actors.


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Objective Output 2.2 Increased tomato

export 2.2.1 Level of understanding about export market is

increased, benefit/risks assessed and rational decisions made on increased exports to traditional tomato importers.

2.3 There is higher level of compliance to agreed good business practice, voice of traders in the VC and policy making bodies is strong.

2.3.1 Traders at cluster level are organized and have established a structure to oversee interests of traders and accountability in the VC.

2.3.2 Legal and regulatory constraints to trade are identified and addressed and there is higher compliance to laws and regulations by traders.

Output No. 3 3.1 Processing

capacity is increased as a result of reliable supply of local tomato to processors hence reduced import bill (in relative terms)

3.1.1 There is higher understanding and interest of private investors to take an active (and lead) role in upgrading the VC including Dabaga, IVORI, Redgold and Marriet.

3.1.2 There is increased understanding on the advantages and disadvantages of contract farming is provided to both the processors and producers drawing lessons from Redgold in Arusha.

3.2.4 A strategy is place and contract farming is implemented to improve supply to processors as an income stabilization strategy to producers particularly women who are more amenable to contract farming. (Processors have indicated the need to use more local tomatoes from farmers in place of paste imported from China).

3.2.5 Processors are linked to financial institutions 3.3 New nutritious

tomato-based product with high market potential is tested and promoted in the market.

3.3.1 At least one entrepreneur has piloted and concluded on technical and market viability of solar dried tomato and tomato-leafy vegetables blend recipes.

Output No. 4 4.1 There is low

transaction cost between traders and transporters

4.1.1 There is higher understanding by transporters on the VC concept and they take an active part in ensuring that packaging materials are complied with.

4.1.2 There is improved business environment as transporters form a platform to address their problems including trade disputes and corruption by traffic police.


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Objective Output 4.1.3 Output No. 5

5.1 There is sustainable and competitive technical services to the VC

5.1.1 Technical services (tilling, mobile water pumping units, spraying units, transport and inputs supply) are packaged and made competitively and sustainably accessible to producers.

5.1.2 Technical services (tilling, mobile water pumping units, spraying units, transport and inputs supply) are packaged and made competitively and sustainably (on commercial basis) accessible to producers.

Output No. 6 (Cross-cutting) 6.1 Relationships in

the value chain is strengthened elevating trust

6.1.1 A forum for tomato stakeholders is established to address issues of weights and measures, industry information/knowledge sharing, development of export strategy and general advocacy and lobbying.

6.1.2 Information system for tomato chain is established and is readily accessible by all actors.


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2.0 PLANNED INTERVENTIONS

A number of activities involving existing and new actors in the tomato VC will have to be brought together and a shared vision and mission for developing the business agreed in principle. Other capacity building activities shall be built upon organized actors since the strategy is to empower them and be able to sustainably support VCD after the phasing out of the project. Specific envisaged interventions are indicated in the following sub sections.

2.1 Mobilization and Organization of Actors in the Value Chain Actors will be encouraged to associate in order to harness synergies, economies of scale and increased voice. The association may have different levels including: -

Producer level groups to improve delivery of common services e.g. extension, information, farm to collection centre transport, etc.

Cluster level associations will be based on output concentration level e.g. Ilula, Makambako, etc. (geographical area of business convenience), the major benefit includes arrangement for transport, information hub, exchange point between farmers and traders, point of interface with government and institution of code of conduct.

Regional level collaboration shall be more concerned with advocacy and lobbying,

National level partnership will focus on industry export competitiveness and policies. Using the LGA officials, the project will reach out actors, raise awareness on the project and provide them with training on organizational and leadership skills.

2.2 Business training (farming as business); This aims at producers to improve their understanding of basic faming business ideals in including optimization of factors of production for higher yield. This will be in class and study visits training. It is important to improve farmers’ access to better farming technologies e.g. tractors, power tillers, motorized pumps, sprayers, etc. Through promoting and building dedicated service providers farmers will be assured of sustainable and competitive services. The project will assess farmers’ ability and willingness to pay for the services, will mobilize investors (service providers) who will provide services on commercial basis. Eventually the service providers will be linked to credit facilities.

2.3 Improving Access to Effective (Good Practice) Technical Messages Apart from visitation by extension/experts, leaflets and booklets shall be prepared and disseminated using success stories from within the region, in the country and outside the country. Compilation and documentation of success stories will be done in the first year of the project. Cinema shows will be done using documented success stories from within Iringa, in the country and the world over, the cinema if appropriately packaged will attract youths attention. The shows will have slots for other important issues in the chain such as gender, HIV/AIDS, natural resource management. Sokoine University and other research institutes will be involved in the preparation of the documentary. Learning visits to Arusha on GAP in horticulture will be implemented. There will be a project document to replicate sustainable tomato production under eco-friendly systems.


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2.4 Standardization of measurements The understanding and rationalization of measurements will require more analysis especially to get answers on economic incentives for “tengas” and inconsistence in volume of wood crates and implications to efforts to upgrade the value chain. Apart from standardization there is a need to innovate on reducing the weight of the boxes that accounts for as much as 16% of the cargo weight. Options to be looked at include possibility for lighter and or collapsible crates. This calls for technical review of tomato handling containers to involve SIDO TDCs and Weights and Measures Agency. Awareness raising on the negative effects of non-standard weights and measures in value chain development (refer to building trust) is also essential. There will be capacity building for manufacturers of packaging materials on VC concept and their role, entrepreneurship and working with financial institutions.

2.5 Development of a niche market for raw tomato (and juice) The most nutritious form of tomato is in its raw form or pressed juice, they avail all the nutrients in the fruit to the consumer. Consumption of raw tomato is being discouraged because of healthy risks as they are not grown, treated and handled in hygiene conditions. The project shall aim to target this niche through proper promotion and branding. TFDA will be approached to guide on for food safety requirements, there will be a follow up with TIRDO for continuous monitoring or product quality (sampled test), TIRDO is providing that service to some hotel chains in the country.

2.6 Initiating Eco-Friendly Tomato Production Tomato farming is putting pressure on water sources that are used for other domestic purposes but also limits expansion of tomato fields. A feasibility study will be undertaken for cost-effective use rain or ground water on a relatively larger scale (e.g. more than 50 hectares) with little environmental impact powered by renewable energy such as wind and or solar to pump water. Upon positive results women will be encouraged to hire the plots, they will however be guided on crop husbandry. If the channel grows it can provide tomato for the niche market as well as the factory.

2.7 Promoting Access to Business-enabling Credit Services Access to credit has been cited by all actors to be an impediment to the VCs. For producers and rural service providers they will be mobilized to establish grass root financial structures (SACAS, ROSCAS, VICOBA and SACCOS) where they don’t exist and build capacity to broaden services where they exist. Capacity building to grass root financial structures’ especially SACCOS will focus on management, mobilization, promotion and consolidation of credit business. Many SACCOs are too small to make economic business volume, they need to be capacitated through improved managerial and consolidation linking of SACCOs in tomato growing areas and financial institutions,

2.8 Export Market Development This will build on the fact that tomato exports has grown and more sharply in the last two years. A study to review tomato exports market in E.A. (particularly Kenya, Rwanda) and Western DRC. The purpose is to enhance Tanzania’s competitiveness in the region for tomato market given the opening up of EAC common market and ongoing improvement in infrastructure (road network)


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2.9 Facilitate the expansion of national supply of tomato Paste. Tomato paste is a basic input to many tomato-based products, currently Redgod is building the capacity for tomato paste, and this can have potential market in the country and in the region. The constraints at present are low volume of tomato supplied to factories due to higher factory gate prices. The project will leverage increased production of tomatoes targeting processing plants. A firm commitment from private sector to expand capacity and engage on contract farming (it is being done in Arusha) will have to be reached before the expansion of production. Initiatives to minimize farmers exposure to the risk of relying on a single buyer will in built into the system that include producer setting aside part of the tomato plots for feeding the processors.

2.10 Promote Solar-dried tomato (some blended with leafy vegetables for rural and urban markets

Facilitate the identification and support an entrepreneur who is willing to pilot a unit for solar drying tomatoes preferably mixed with some other local vegetables targeting the rural market which normally has limited supply of green vegetables during dry seasons at the time when supply for tomato is very highest (hence lowest prices).


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3.0 PROPOSED PROJECT BUDGET

3.1 Budget Summary It is requested that MUVI make available a total sum of USD 887,600 to implement the project of which USD 634,000 shall be towards capacity building of the value chain and USD 253,600 for facilitation expenses. Table No. 3.1 VCD Project Summary USD Percent Direct facilitation cost 586,400 71% Facilitation fee for 3 years at 40% of the capacity building direct costs

234,560 29%

Total project cost 820,960 100% The expected value for money from the investment is that improvement in the value chain of at least of 25% in production will be worth Tshs 6.75 billion or USD 5.19 million per annum from the third year onward.

3.2 Detailed Budget Break Down (See attached Results Framework spreadsheet)

SIDO - MUVI

Tomato Value Chain Analysis and Investment Plan

ANNEXES

ANNEX I

Results Framework and Budget

ANNEX II

Tomato Gross Margin Analysis

Kiwere villlage (One acre) Production cost Quantity Price Cost

1 Seeds buying Pkt 100gm 2 19,000 38,000 2 Plot hiring acre 1 30,000 30,000 3 Nursery bed prep per bed 1 6,000 6,000 4 Nursery Manure per debe 4 1,000 4,000 5 Nursery Irrigation day 30 1,000 30,000 6 Field clearing man day 4 2,000 8,000 7 Tilling by Oxplough acre 1 25,000 25,000 8 Harrowing man day 8 2,000 16,000 9 Transplanting man day 8 2,000 16,000

10 Basal Fert DAP kg 50 1,900 95,000 11 labor fert DAP appl man day 4 2,000 8,000 12 Weeding I man day 10 2,000 20,000 13 Dithane Fungicide Pkt 60gm 2 8,000 16,000 14 Thiodan Pesticides Liter 1 15,000 15,000 15 spraying labor man day 16 2,000 32,000 16 Sprayer hiring round 4 4,000 16,000 17 Weeding II Man day 10 2,000 20,000 18 Fert DAP kg 50 1,900 95,000 19 Fertilization task man day 4 2,000 8,000 20 Weeding III Man day 10 2,000 20,000 21 Tenga buying pc 7 1,100 7,700 22 Irrigation man day 70 2,000 140,000 23 Harvesting per tenga 277 300 83,100 24 Transport to C.P trips 40 5,000 200,000 Total 948,800 Average yields tenga 277 Prices I (Mar-Apr) 1 8,000 II (May-Jun) 1 12,000 12,000 III (Jan-Feb) 1 16,000 Revenue I 2,216,000 II 3,324,000 III 4,432,000 G.M I 1,267,200 II 2,375,200 III 3,483,200

Magulilwa village (One acre) Production cost Quantity Price Cost Seeds buying 50gm 4 9,000 36,000 Plot hiring acre 1 40,000 40,000 Nursery bed prep Man day 2 2,000 4,000 L/stock Manure Debe 4 500 2,000 Nursery watering Man day 30 600 18,000 Field Clearing Man day 5 2,000 10,000 Tilling by Oxplough are 1 20,000 20,000 Harrowing Man day 5 2,000 10,000 Transplanting Man day 5 2,000 10,000 Planting fert CAN Kg 40 800 32,000 Labor CAN appl Man day 5 2,000 10,000 Weedings I Man day 8 2,000 16,000 Ivory Fungicide Liter 1 65,000 65,000 Pesticide thionide Liter 1 28,000 28,000 Spraying labor Man day 16 2,000 32,000 Sprayer hiring per day 4 1,000 4,000 Weeding II Man day 8 2,000 16,000 Boosting fert DAP Kg 50 1,900 95,000 Fert DAP appl Man day 5 2,000 10,000 Weeding III Man day 8 2,000 16,000 Tenga Buying Pc 8 1,200 9,600 Irrigation 3month Man day 76 2,000 152,000 Harvest per tenga 304 200 60,800 Trasport to c.p per tenga 304 500 152,000 Total 848,400 Yield Tenga 304 Prices I Aug-Sep 4,500 II Oct-Dec 10,000 8,833 III Jan-Feb 12,000 Revenue I 1,368,000 II 3,040,000 III 3,648,000 G.M I 519,600 II 2,191,600 III 2,799,600

Ihanja Village (0.25 acre) Production cost Quantity Price Cost Seeds buying 25 gm 12 1,500 18,000 Hiring of plot 0.25 acre 4 15,000 60,000 Nursery prep Man day 1 2,000 2,000 Nursery Manure Debe 4 500 2,000 Nursery Irrigation bucket 60 200 12,000 Main Field clearing Man day 3 2,000 6,000 Tilling by Oxploug acre 1 30,000 30,000 Harrowing Man day 5 2,000 10,000 Transplanting Man day 12 2,000 24,000 Basal Fert DAP kg 36 1,500 54,000 Labor fert appl Man day 5 2,000 10,000 Weeding I Man day 5 2,000 10,000 Novathion Pesticides per unit 8 1,500 12,000 Ivory Fungicides per unit 4 14,000 56,000 spraying labor Man day 16 2,000 32,000 sprayer hiring round 4 1,500 6,000 Irrigation Man day 90 2,000 180,000 Weeding II Man day 5 2,000 10,000 Fert S/A Kg 28 1,000 28,000 Labor fert appl Man day 6 2,000 12,000 Weeding III Man day 5 2,000 10,000 Tenga buying pc 8 1,050 8,400 Harvesting tenga 285 300 85,500 Transport to C.P tenga 285 200 57,000 Total 734,900 Yield tenga 285 Prices Dry July-Aug 7,500 Dry Sept-Nov 9,000 9,500 Wet Feb-Ap 12,000 REVENUE I 2,137,500 II 2,565,000 III 3,420,000 G.M I 638,500 II 1,238,500 III 1,538,500

Makambako area (one acre) Production cost Quantity Price Cost Seeds buying 50gm 2 19000 38000 Plot hiring 0.25 acre 4 10,000 40,000 Nursery bed prep 1sqm 10 1,000 10,000 Nursery Manure Debe 5 1000 5,000 Nursery Irrigation Debe 120 200 24,000 Land clearing 0.25 acre 4 5,000 20,000 Tilling 0.25 acre 4 10,000 40,000 Harrowing man days 8 2,000 16,000 Transplanting man days 8 2,000 16,000 Basal Fert DAP kg 50 1,600 80,000 Labor Fert appl man days 3 2,000 6,000 Weeding I man days 5 2,000 10,000 Thionix Pesticide Liter 4 10,000 40,000 Ivory 72 Fungicide Liter 4 17,000 68,000 Sprayer operator man days 8 4,000 32,000 Sprayer hiring day 4 3,000 12,000 Irrigation man days 75 2,000 150,000 Weeding II man days 5 2,000 10,000 Fert CAN per bag 2 42,000 84,000 Labor Fert appl man days 3 2,000 6,000 Weeding III man days 5 2,000 10,000 Harvesting per tenga 256 100 25,600 Transport to center per tenga 256 300 76,800 Tenga acquisition pc 7 950 6,650 Total 788,050 Total Yield tenga 256 Prices Dry 9,000 Dry 10,500 10,833.3 Wet 13,000 Revenues 1st price 2,304,000 2nd price 2,688,000 3rd price 3,328,000 Gross Margin 1st price 1,515,950 2nd price 1,899,950 3rd price 2,539,950

ANNEX III

List of People Consulted During Value Chain Analysis

Tomato VCA for Iringa People Consulted in VCA Study

S/N Names Position Telephone

1. Adam Swai Assist RAS Econ & Prod sectors 0782 113977

2. Angelus Mwakilovelle Reg Manager Weight & Measures 0754 961694

3. Fabian Fundi Regional NBS manager Iringa 0754 048116

4. Jonas Mdundo Assist Regional Manager NBS 0755 765945

5. Thomas Mashaka General Foreman TDC SIDO Iringa 0757 385720

6. Gervas Kashebo SIDO regional Manager 0754 469176

7. Enoch Ndondole TCCIA C/Man 0754 310270

8. Lucy Nyalu District Crop Officer - DCO 0754 867756

9. Salvina Njohole Extension Officer - Kiwere 0787 656251

10. Shaban Ngwenga Extension Officer - Magulilwa 0755 804536

11. Paul Mwangimba District Inputs Officer- Iringa R 0754 989264

12. Amon Lyimo District Pest Control – Iringa R 0784 425771

13. Evelyne Mkemwa Agro-dealer shop Iringa town 0783 249488

14. Jumanne Luambati Sunflower and Maize processor 0752 614313

15. Aloyce Mduda VEO Kiwere Village 0784 564815

16. Ramadhani Mng’ang’uli C/man Kiwere village 0786 167456

17. Dr Steven Ngwale District Livestock Officer - Njombe 0784 189468

18. Elitha Mligo DALDO – Njombe district 0784 324634

19. Mohammed Mkupete DED Njombe District 0784 504877

20. Romuald Mtewelle DCO Njombe district 0755 673535

21. Luwendo Samson SMS Njombe district 0757 675442

22. John Wihawa NADO Association Njombe 0784 153677

23. Mrs. Fidelis Kilamulya Maize Processor - Igwachanya 0754 658848

24. Valentino Mkongwa Ward Extension Officer Mdandu 0755 625612

25. Nehata Robert District Coop Officer Njombe 0784 496812

26. L.M Mgaya Internal Auditor Njombe 0754 503056

27. Victor Mguji District Accountant- Njombe 0715 394044

28. Frank Tabu Mhandwe DED Ludewa 0752 898870

29. Thomas Komba Ward Extension Officer Ludewa 0714 052137

30. Paschal Nzumbi Ward Ext Officer – Luana Ludewa 0714 699438

31. Amas Chacha District Coorp Officer Ludewa 0784 375860

32. Kelvin Mbennah District Inputs Officer 0784 873432

33. Ndyetabura Kalokola DEO Ludewa 0754 201485

34. Daniel Mwasapi Agromech Officer Ludewa 0764 513713

35. Beatrice FFS district coordinator Ludewa 0752 472813

36. Mandakishar Bharati Production Manager Dabaga 0716 831444

37. Esmail Thakore Director - IVORI Ltd 026 2725019

38. Adonisian Shayo TOSCI Njombe 0784 585150

39. Kimaro Extension officer Makambako 0753 650150

40. Luwumba Extension officer Makambako 0755 816003

41. NJODECO Njombe

42. Mtewelle General Traders Njombe

43. Mrs. Theresia Shang’a MATI-Ilonga 0787 044462

44. Dr. Thani FARMBASE agricultural dealers

45. Mr. Nyella Extension Officer 0754 223766

46. Elibariki Ndekirwa PASS H/q Morogoro

47. Mr. Komba S.H ARI – Mikocheni DSM 0784 565115

48. Faustin Barongo ARI- Dakawa Morogoro 0784 143938

49. Mbiza A.B.C ARI-Ilonga 0784 914422

50. Mount Meru oil Mill Arusha

51. FGD of 8-14 participants 2x3 (two villages at @3 district

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Iringa Tomato Value Chain Analysis for Local (National) Market

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