Africa-Press – Eritrea. It goes without saying that in the minds of many agriculture is an act of planting, sowing and reaping. And that if one gets it right with them, he has solved nearly all the problems about the most important sector.
Even when calls to develop agriculture are raised, listeners do one thing all the time, crying for more seeds and tractors, asking for farmers to stop laziness and castigating middlemen for hoodwinking small farmers.
If I were a school teacher marking exams, I could give them some marks, yes, because what they usually mention holds some water, those issues not only determine the performance of the sector they are the bedrock of an entire practice but how big are they that every time same answers should resurface whenever a question to improve is raised? Will have look at them.
Agriculture development is a complex phenomenon that involves a plethora of issues that are so often less regarded by agriculture enthusiasts.
The truth of the matter is that the sector is highly interconnected to several other sectors, that to unlock its potential one has to go out and look for keys to work on other seemingly strange and apart.
Who knows for instance that agribusiness men are the cost of doing their business is 30% taken by the transport sector alone? Is it reasonable that a miller in Dar Es Salaam spends more money transporting wheat from Sumbawanga, 1140 kilometres long, than taking the same product from Russia, 9600 kilometres away?
Finance, Transport, Manufacturing and other sectors as well, are shakers and movers of our dear agriculture sector whether one agrees with it or not.
There has been a great zeal, from public and private sectors alike, to industrialize our economy, the actualization of which will attract so many players to establish industries which will add value to our agriculture products. In 2018 for example, Tanzania exported 7,291 tons of raw coffee valued at 19 million US dollars to Germany (the second leading importer of our product).
Germany imported similar products from other countries like Brazil, Vietnam, Ethiopia, Uganda, Costa Rica and Kenya as well. In the same year, Germany exported to Italy a processed coffee valued at 201 million US dollars.
With the Everything But Arms (EBA) scheme, we are poised to enjoy duty-free and quota-free access to Italy much easier than many coffee producers.
That means we could directly sell to Italy a processed coffee instead of transiting to Germany which reduces our profitability. When the question of how we can turn the wheel, a quick answer will be to establish agro-processing industries over here just because there is enough raw material and we have a functioning port to transport our product to oversee, but little attention will be drawn to the question of financial infrastructure.
By August 2019, the bank lending rate in Tanzania averaged around 15% while that of Germany was at 2.02%. Holding all other factors constant, any competitive investor would strive to operate in an economy with cheap capital. For this reason alone, Germany stands out to be a better option.
Or if needs to access Asian markets easily then Singapore with a lending rate of 5.25% will be a better investment spot than Tanzania.
The fact that bank loans to agriculture are still below 10% is so alarming, there is a great story that these banks do not know about Tanzanian agriculture or maybe we haven’t structured it in a manner that would be conducive to them.
It is not my intent today to tell the reasons why our lending rates are higher than the global average, or whether we will need to review our liberalization policies and see if the mouse we adopted can still catch a rat; that may require a separate dialogue.
I just want us to agree that a healthy financial sector, being part of a complex ecosystem is a recipe for steady agricultural growth. Maybe the above-mentioned matters explain why developed countries have functioning agricultural sectors. Because other sectors are so essential to feeding the agriculture sector with edifying nutrients.
At the juncture of an attractive environment, fertilizers, seeds and other inputs players may be incentivised to throw their weight into the sector.
In the jungle, enough rainfall is essential to growing grass, healthy grass is food for gazelle who is prey to a lion. To stare at gazelle alone without taking care of its supporting environment will be to end up with wrong conclusions.
Thus, any broad and healthy analysis of agriculture should and must have a proper look at the entire ecosystem that feeds it, short of which may make us keep on missing some big opportunities.
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