The fundamental issue of agricultural policy in Tanzania has always been to reconcile two potentially contradictory needs: (a) to generate sufficient surplus food to feed the towns and any plantation labour forces (eg sisal estates) ; (b) to produce sufficient export crops to earn essential foreign exchange. It is seldom that both objectives have been achieved simultaneously. When the emphasis has been put on self-sufficiency in food, then cash crops like cotton or cashewnuts have declined. But if the prices paid for food crops are too low, or the prices paid for cash crops too high, then food surpluses dry up.
The difficulty in feeding the towns is that farmers do not have to sell their food. They can also eat it, or store it, or let their friends have it in small quantities. It is for this reason that cooperatives or marketing boards have never succeeded in the food crops sector. They either offer prices that are too low (and the farmers find other ways of taking their crops to town), or they offer prices that are too high (and the coops get landed with large unsaleable surpluses).
Recent years have reinforced this lesson. Marketing Boards, Crop Authorities and food crop cooperatives are all expensive failures.
But there are things the Government can do. By far the most important is to maintain the road system and the railway network, and to make sure diesel is available up- country. Without transport the towns cannot be fed, especially Dar es Salaam and Dodoma (neither of which have reliable sources of food nearby).
The Government must also make available the basic consumer goods that Tanzanians want to buy – hoes, axes, pangas, ploughs; khangas and others textiles; bati and cement, shoes and cooking utensils, soap and oil, basic drugs for humans and animals. Many other items will be produced by craft industries (baskets, tables, chairs, beds, buckets, doors, ox-carts, boats). Factories exist to make most of the basic consumer goods, but they are running at very low capacity. It should be a priority to get these factories running to capacity, especially those that use little foreign exchange. It is better to have a few factories working at 80-100% capacity, rather than a large number working at 20%.
Even this will require some foreign exchange, and this is also needed for crude oil purchases, spare parts for engines and pumps, and repayments of loans. Tanzania has to export coffee, tea, cotton, sisal, tobacco and cashewnuts. But in recent years prices have made several of these barely profitable. Cashewnuts is the classic case: production has declined substantially. Some of the trees were cut down, some burnt, some are covered with vines or climbing plants. But most of the trees are still there. If the price was right, then in a good year production would probably be over 100,000 tonnes. But to get prices right probably means (a) devaluation (b) forgetting about most of the inefficient processing factories and (c) improving transport and roads.
In the case of coffee, the problem is to prevent the beans being smuggled abroad. Cotton is the crop most directly competitive with food crops. In the Eastern (coastal) zone there are many reasons why it is better to encourage food production. In the Lake area, cotton will be grown if the price is sufficiently high.
In summary the problem for the Government is to set export crop prices high enough to earn foreign exchange, while not so high as to cause a shortage of food. The Government will also have to decide its wages policy. If it devalues but at the same time raises wages, this could easily cause inflation, ie there could be more money in people’s pockets than there are goods for them to buy.
The solutions are therefore (a) to expand availability of consumer goods, but also (b) to raise wages only slightly and certainly not as much as the devaluation. Wage levels could be raised more if fewer were employed. The ideal would be for parastatals and Government to produce increased output of goods and services with fewer employed; while those released produced extra goods and services in the private sector or on their own account. This could be done with a vigorous removal of waste, concentration on essentials and closure of non-essentials, with priority for industries that use minimal foreign exchange. If Tanzania could achieve this, it would for the time being have solved the fundamental problem of economic management. Andrew Coulson
Dr. ANDREW COULSON is a Lecturer at the Institute of Local Government Studies at the University of Birmingham.