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Research report on economic returns for investing in smallholder farmers (2)


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Research on economic returns for investing in smallholder farmers case study of Iringa,Chamwino district councils explaining how central,local government and other stakeholders including private sector are investing in smallholder farmers.
Furthermore, the report explain how much has been invested both physical and technical,what is working and what does not work and reasons behind.
Read more in the report.

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Research report on economic returns for investing in smallholder farmers (2)

  2. 2. TABLE OF CONTENTS Item Page number 1 Introduction 3 2 Scope of the assignment 3 3 Methodology 4 4 Study Findings 4 5 General Findings 4 6 Case Studies Findings 7 7 The Case Study of Iringa Municipal Council 7 8 The Case of Chamwino District Council 19 9 The Case of Kilosa District Council 27 10 Conclusions 34 11 Recommendations 34 1. INTRODUCTION This is a research report on the returns of investments in small holder farmers in Tanzania. The report is based on three case studies. These are case studies from Iringa, Kilosa and Chamwino District Councils. The study was conducted between May and June 2014. The study was guided b y terms of reference (ToR) provided by the client (Action Aid Tanzania – AAT). The report 2
  3. 3. presents the three case studies separately in order to provide district-specific insights. Based on the three case studies, the report gives recommendations accordingly. 2. SCOPE OF THE ASSIGNMENT The following were the questions that were expected to be answered in the study: 1. Assess how the government both central and local governments are investing in smallholder farmers, to what extent the governments have invested to smallholder farmers, what is working and why and what is not working and why? What are the gaps, what has been the priority focus of investment to smallholder farmers for the identified case studies? 2. To what extent other stakeholders including private sectors are investing in smallholder farmers, how much has been invested both financial and technical support, what is working and what does not work and the reasons behind? 3. How smallholder farmers are receiving the support from the government and other private sectors, what kinds of support provided? 4. Assess how farmers receive extension services, inputs and any other support necessary in their development agendas? 5. Assess the outcome of the investment from smallholder farmers, is there any increase in production?, to what extent?, how these outcomes have contributed to improvement in smallholder livelihoods? 6. How much the government eg local government have received from smallholder farmers as returns from the investment --- collected government revenue from farmers and others 3. METHODOLOGY The study that informs this report is based on both secondary and primary data. Secondary data were collected through documentary review while primary data were collected through field interviews. District Executive Officers (DEDs) of the three districts were presented with introduction letters. They then directed the researchers to the office of the District Agricultural and Livestock Development Officers (DALDO) that provided most of the responses in the three 3
  4. 4. districts. In Iringa, a number of other respondents than the districts officials were interviewed too. 4. STUDY FINDINGS In this section, the findings from the study that informs this report are presented. Findings from the literature are presented to give a general overview on some of the key issues in the study. The findings from the literature are followed by findings from each of the three case studies. 4.1. GENERAL FINDINGS A number of studies have been conducted on small scale farmers in general and those in Tanzania in particular. Among the study of great relevancy in the context of this study is that of Vorley, Cortula and Chan (2012)2 . Among the key issues of relevancy in the context of this report include the findings that more investment is required in agriculture in general and for small scale farmers in particular in order to solve such challenges as rural poverty, food insecurity, stewardship of natural resources, and climate resilience. Althogh governments have increased commitments to public investment in agriculture, these have failed to materialize. Instead, attention has been paid to creating a facilitating environment for private investment in agriculture. It is also found in the Vorley et al (ibid) that attracting investment should be a means to an end. Among other things, quality of the investment is critical. Another important finding is that in Tanzania, women are reported to produce about 70% of all food crops. From interviews with stakeholders and documentary review in this and other studies that the authors have been involved in3 , the following were the general findings on the key researh questions: 2 Tipping The Balance: Policies to shape agricultural investments and markets in favour of small- scale farmers 3 Such as a study on Economic Profile of Kigoma Region in 2013 for the Ministry of Natural Resources and Tourism; A Study on Value Added Tax (VAT) on Fertilizer for the Ministry of Agriculture and Cooperatives in 2013 and in data collection for the Vorley, Cortula and Chan (2012) publication 4
  5. 5. 4.1.1. The way the government is investing in smallholder farmers Generally both the central and local governments are investing in smallholder framers in various ways. These include through investing in agricultural infrastructure including but not limited to rural roads, markets, irrigation, inputs supplies as well as provision of extension services. Generally, investment in smallholder farmers is inadequate. For example, inputs such as seeds and fertilizer are inadequate in quantity and quality as well as in delivery time. Interventions such as farmers schools are working well. Despite the many investments that the government has made on small scale farmers, there are several gaps that exist. These include but are not limited to access to financial services, access to markets as well as agro-processing. 4.1.2. Investments by other stakeholders in smallholder farmers Apart from the central and local governments, there are other stakeholders that are investing in small scale farmers. These include but are not limited to Non Governmental Organizations (NGOs) such as Agricultural Non State Actors Forum (ANSAF), Muungano wa Vikundi vya Wakulima Tanzania (MVIWATA), Oxfam, Action Aid and many others. Other stakeholders include such organizations as the USAID, Techno Serve, MUVI etc. Investments by such stakeholders have included but not limited to financial and technical support including training. Some NGOs have also supported smallholder farmers indirectly through lobbying and advocacy for pro-smallholder farmers policy, legal and regulatory framework. Generally, provision of demand-driven as opposed to supply-driven support works well for small scale farmers supported by such stakeholders. 4.1.3. The way smallholder farmers are receiving the support Generally, smallholder farmers are receiving the support positively. They receive the support from the government and other stakeholders both directly and indirectly. For example, extension services from the government are directly provided through the office of DALDO. Government input support to smallholder farmers is provided indirectly through private sector agents (input suppliers/agro-dealers). Support from NGOs is also both direct and indirect. In as far as inputs are concerned for example, farmers have been receiving the support mainly via 5
  6. 6. the private sector through voucher system. There have been complaints on the quantity that is provided, late delivery and quality. 4.1.4. Outcome of the investment from smallholder farmers Generally, the investments by the various stakeholders have given various kinds of outcome. Generally, the outcome has been positive in terms of farmers improvement of farming practices. As a result, there have been increases in areas cultivated, production volumes, access to finance, access to markets and improved livelihoods for smallholder farmers. 4.1.5. Returns to the government from smallholder farmers As a results of various forms of invetments on smallholder farmers, there have been different kinds and levels of returns to the government. It is understood that the government does not invest on smallholder farmers so that it (the government) gets monetary profit. The government invests on smallholder farmers as a public good. The aim is to ehance the farmers’ capability so that they can undertake their agricultural activities better, increase production and productivity, reduce poverty and improve their livelihoods. Indirectly though, the govern, especially local governments, are likely to get some direct and indirect returns for their investments on smallholder farmers. Among other things, as a result of better perfomance due to government investments, some LGAs are able to collect more crop cess from the increased agricultural produce and related economic activities such agro-processing and trade. 4.2. CASE STUDIES FINDINGS Apart from the general findings above, the researchers conducted specific case studies in Iringa, Kilosa and Chamwino district councils. Findings from each of the three case studies are presented in what follows. 4.2.1. THE CASE STUDY OF IRINGA MUNICIPAL COUNCIL 6
  7. 7. The study in Iringa involved responses from the Iringa District Council (IRD), MUVI, Tanzania Agricultural Productivity Programme (TAPP), RUDI and Iringa Mercy Organization (IMO) Interventions by MUVI Introduction of MUVI Programme Rural Micro, Small & Medium Enterprise (RMSMES) is a programme commonly known as Muunganisho wa Ujasiriamali Vijijini (MUVI), it was initiated to support the Government in poverty reduction strategy, which broadly aims at transforming Tanzania’s agriculture based economy into export & market led, competitive semi industrial but still largely agriculture based economy. See details at: MUVI interventions in Iringa MUVI has supported about 13,000 small holder farmers in Iringa region. These include sunflower and tomato farmers (about 4,500 for each crop). It also invests in millet in the dry areas of the region. It has also invested in training on improved production techniques, harvesting, post-harvesting, processing, and marketing for small scale farmers. It has moved from production to marketing support of small scale farmers. This is because of the observation that marketing is a problem for tomato and millet small scale farmers. MUVI has been linking farmers with breweries to do millet contract farming. This was however still in negotiation between the partners at the time of this study. MUVI has found out that finding markets for small scale farmers is good. This is because they have problems with good markets. If the market problem is solved for small scale farmers, they will then have motivation to produce more. Not all interventions work MUVI has invested a lot in small scale farmers but this does not always work. For some of the supported small scale farmers and agro-processor, however, MUVI interventions have not worked. Some beneficiaries are not growing, not willing to restructure their enterprises, lack good entrepreneurial attributes and focus as they are doing too many things at a once. Also, 7
  8. 8. some lack professionalism and systems such as financial management systems and not using banking services due to largely cash economy. The following do work From its experience in Iringa, MUVI is of the view that training for small scale farmers is generally good when properly done. For example, the Small Industries Organisation (SIDO) has trained some small scale farmers on agro-processing including tomato juice processing. This has helped a lot in value addition and storage of perishable crops thereby giving incentives for more production. MUVI has also found out that there are many other interventions that work well for small holder farmers. These include branding, having business plans, good business name as well as having/being a member of small scale farmers associations. Farmers’ associations are seen by MUVI to be very instrumental for organized small holders. It has also experienced that the hub and spoke model (big farmer that buys from the small ones) is also good and works well for small scale farmers. MUVI has also experienced that good will/trust between associations and input suppliers work out well for small scale farmers. For examples, some small scale farmers were able to get fertilizer worth 90,000,000 Tanzanian Shillings (Tshs) from YARA (fertilizer supplier) on guarantee basis. Guarantee of small scale farmers by from Local Government Authorities (LGAs) has worked in Njombe. Through such guarantee, farmers associations have received fertilizer worth about 200,000,000 Tshs from YARA on credit without collateral. MUVI has helped in facilitating such guarantees for over three years in Iringa Other issues that work well for small scale farmers include capacity building on such areas as governance for farmers association. Also good quality inputs such as fertilizer supplied on time and adequate quantity works well for small holder farmers MUVI has also experienced that private sector intervention (MUVI involving various implementing partners such as Business Services Providers) to provide agriculture interventions 8
  9. 9. is goods and sustainable. This is because the compared to the public sector, private sector is more flexible, faster and efficient. According to MUVI, pure public sector intervention is likely to fail in interventions that need speed. MUVI has also experienced that investment in markets infrastructure (collection points) work well for small holder farmers. Although it can be expensive, MUVI is of experience that participatory approaches in making decisions that affect small scale farmers (for example on where to build market infrastructure) is very important. In line with the private sector efficiency argument, MUVI points out that delivery of interventions to small scale farmers through the government can be more costly, less efficient and less speedy than doing so through the private sector. However, when the private sector delivers agricultural interventions for smallholder farmers, it has to mainstream in the public sector for sustainability and exit strategy. Access to finance for smallholder farmers is important for improved performance. The National Microfinance Bank (NMB) in partnership with MUVI is including training of small holder farmers in financial matters. MUVI has worked on organizing small holder farmers into Village Community Bank (VICOBA). Also community banks like Mufindi Community Bank (MUCOBA) have helped in working with farmers including in training on various issues such as business plans, innovation for financial institutions, accessing low interest loan such as from Tanzania Investment Bank (TIB) agricultural window. This has worked well for Njombe farmers. Small holder farmers owning shares in financial institutions such as banks helps farmers to access finance more easily and on better terms. This has been the case in Njombe Community Bank (NJOCOBA) model. When farmers groups open account in the bank, they automatically become the bank’s shareholders. According to MUVI, being away from urban areas is not good for financial institutions. Therefore rural smallholder farmers who are the majority do not enjoy as much financial services as those near urban areas. Investing in high value crops is better for smallholder farmers. In Iringa for example, tomato is more high value crop than sunflower. Good investment can give up to 4,000,000 Tshs in 9
  10. 10. revenue per acre and profit of over 1,000,000 Tshs. Sunflower yields a profit of only about 300,000 Tshs per acre on same period. Good policies in favour of small holder farmers matter for improved production and productivity. MUVI has connected various farmers to specific organizations that lobby and advocate for specific kind of agricultural products. For example, tomato farmers in Iringa were linked to Tanzania Horticultural Association (TAHA ), sunflowers farmers linked to TEHOSA while processors were linked to Tanzania Sunflower Processors Association (TASUPA) in collaboration with SNV. These specific associations/organizations aim at addressing policy matters that individual farmers or small associations cannot handle. Training by agro-dealers has proved to work well for smallholder farmers. For example, there has been training on use of pesticides by Syngenta which is a company dealing with inputs supplies. Also provision of simple and user-friendly training manual on good agricultural practices for smallholder farmers helps them. Another thing that works well in smallholder farmers’ intervention is evaluation of interventions in order to learn lessons, avoiding making same mistakes and re-inverting the wheel. Smallholder farmers participation in trade shows/fairs/exhibition such as Nane Nane trade fair, exchange visits as well as having demonstration plots help small holder farmers to learn from peers and those doing better. For good output, it is also good to invest in soil testing as it helps smallholder farmers to know kinds of crops to be grown in various areas. MUVI has also experienced that having inputs subsidy helps. It has experienced that there is low productivity without subsidy and high productivity with subsidy. However, inputs subsidy is very political and inefficient in Tanzania. It has been characterized by late delivery of seeds and fertilizer, wrong fertilizer packaging and formulation without considering the fertilizer needs for particular types of soil. For example, Minjingu takes time to function while smallholder farmers do not have time to wait for the fertilizer to function. There is also the problem of delay in government payment of agro-dealers giving input credit. These agro-dealers have borrowed from banks but had not been paid on time by the government. Therefore, they cannot pay back 10
  11. 11. loan and may get problem with bank and their enterprises may collapse. There is a need to learn from Malawi’s best example of how inputs subsidy works. Malawi has managed transparency and huge government involvement in the supply chain rather than private sector in the grass root. Malawi chiefs have more say on the grassroots not like in Tanzania where Village Executive Officers (VEOs) are the ones determining who is poor in order to be eligible for inputs subsidy. According to MUVI, inputs credit is more sustainable and therefore better option than total subsidy. Attaining huge volumes is problematic For most small scale farmers in Iringa, getting huge volumes to supply to buyers is a big challenge. According to MUVI, there is an investor (from Europe) wanting 25 tones of solar- dried tomato (for export) monthly. However, the investor cannot get the volume from small scale farmers. 4.2.2. The Case of Tanzania Agriculture Productivity Program (TAPP) by USAID About TAPP USAID-TAPP, launched in October 2009, is a five-year program supported by the American people through the United States Agency for International Development (USAID). The program is increasing smallholder incomes, improving nutrition, and expanding markets through agricultural innovation and commercialization. See details at TAPP investment on smallholder farmers in Iringa District Council 11
  12. 12. TAPP ( ) invests a lot on small scale farmers in Tanzania including in Iringa District Council. It is raising sales, incomes and food security of about 19,000 smallholder farmers. It works in conjunction with local partners to: i) Transfer good agricultural practices that increase crop volume, quality and variety ii) Reduce logistics costs and increases availability of inputs and financial products iii) Commercialize smallholder supply chains iv) Create new buyer linkages and expand access to local, regional and export markets v) Introduce improved nutrition and disease prevention practices. Areas of investment Among its investments on smallholder farmers include training and support on drip irrigation; Integrated pest management; crop rotation; calenderizing, sack garden, fertilizing, trellising, mulching, raised beds, live barriers and planting spacing among others. In its investments on smallholder farmers, TAPP gives full package training – from land preparation to marketing; provides inputs – not for free but on cost-sharing: 75% covered by TAPP, 25% covered by farmer groups. Inputs provides include high-breed seeds, fertilizer etc. It also invests in providing linkage to finance. Through its intervention is has managed to enable smallholder farmers access loans from NMB, MUCOBA and some SACCOS. TAPP gives the finance through these institutions on commercial basis. The interest rate is 2.5%. Returns of the investment by TAPP TAPP respondents indicated that there have been good returns from the resources invested in smallholder farmers. These returns include but are not limited to good education provided farmers; introduction and adoption of faster- growing crops due to technology used from land preparation, irrigation and fertigation (fertilization); greater yield than others not receiving TAPP or other similar interventions. For example, tomato commonly gives about 400 baskets but TAPP farmers get up to 1000 baskets for the same land area. For paprika, TAPP farmers 12
  13. 13. harvest about 24 tones per acre while normal tomato without the intervention gives only 5 tones. As a result of the intervention, there has been experienced larger and longer frequency of harvesting crops such as tomato. Also, farmers produce high quality crops than normal due to the training. 4.2.3. The Case of Iringa Mercy Organization (IMO) IMO is a TAPP partner. It promotes education on nutrition for smallholder farmers so that they can improve their incomes and health conditions. It started this intervention in February 2014. Therefore, by the time this report was written (June 2014), IMO was just about four months old. The way IMO invests on small holder farmers IMO has a demonstration plot of about ¼ of an acre for vegetables (carrots, cabbage, paprica etc). It provides all the inputs (seeds, manure/fertilizer, trays, pesticides etc) needed for demonstration. The demonstration is done for free. This plot is used to demonstrate all the best agricultural practices for a group of 50 farmers. When the group has received the practical training each individual in the group is supposed to implement the training in his/her own home garden using the skills learnt from IMO. At the home garden, they are advised to use best seeds as the ones from the demonstration plot. They are advised to use locally available manure – from chicken, cows, goats etc. The individual smallholder farmers are trained in groups of 50. They are then advised to scale up their cultivation from home gardens to large commercial gardens. They are advised to plant at least five different kinds of vegetables using the technology learnt from IMO including but not limited to proper seeds, seedlings, soil, spacing, fertilization, weeding, watering, harvesting etc. IMO makes close follow up in forms of supportive supervision, mentoring and monitoring and evaluation (M&E). The individuals opting to scale up from home gardens to large scale farming/gardening are also required to remain in groups where they meet at least once a week to take care of the group garden at the same time as they keep their own individual gardens. 13
  14. 14. IMO Investment IMO invests its staff time, office space, demonstration plot space (1/4 acre for a group of 50 people), tools such as trays for seedlings, seeds, manure, fertilizer etc to train, mentor, monitor and evaluate/follow up the individual farmers in their home gardens and big gardens/farms for those who decide to scale up. It also invests time in searching for markets and linking them to farmers. Results of the investments Since the intervention began on February 2014, IMO has seen very good results on part of the smallholder farmers. There has been good response and uptake of the intervention by many smallholder farmers. The model has spread very fast. There have been best cases where some farmers have graduated from the demonstration plots and home gardens to large scale commercial gardening. According to IMO “Mr. Yona from Kilolo is among our best performing farmers. He learnt from the demonstration plot, practiced home gardening and belongs to Ubena group. He has also moved further to produce vegetables on large scale in his own large (about one acre) private garden on commercial basis in a very short period of time of less than three month. He is an example of those adapting and taking up the technology very fast” Those who have done well in their home gardens, have improved their nutrition and health. This in turn has many direct and indirect benefits including reducing costs associated with bad health and advantages of god health such as more efficient and effective participation in economic activities. Some are selling vegetables from the home gardens thereby increasing their incomes and reducing poverty. Those not selling the vegetables from the home gardens but just consuming are able to save the cost of buying the vegetables. The cost is not only in terms of money but also in terms of time that would be used to go to and from the market to buy vegetables. 14
  15. 15. Also, the IMO trainees have left the old farming practices and embraced the new ones that give better results in terms of increased outputs, productivity, higher quality etc. They now practice better farming at all stages from farm preparations, seedlings preparations (done on special trays hang on high ground instead of being placed on the ground), better planting time, better spacing, watering/irrigation, fertilization, weeding, pruning, protection of vegetables through living barriers such as maize and millets on the sides of the vegetable4 . All these have resulted to better yields, incomes and less poverty among the beneficiary smallholder farmers. Another good return for the investment made by IMO is the multiplier effect of its intervention. There are many people who were not part of the demonstration plots and home gardening interventions but have learnt and copied from those who were part of these interventions. For example, some friends, relatives and neighbours of those practicing home gardening after the demonstration plots training are copying the good gardening practices. Although it is difficult to quantify these benefits and assign them a monetary value, it is clear that the investments undertaken by IMO are yielding good returns and give good value for money. The intervention began only in February 2014 while this case study was documented in the last week of May 2014. IMO would be a good case study to follow up in the future so as to measure/evaluate the returns of the investment over time. Challenges include dangers of missing baseline data if IMO did not have them at the beginning of its intervention in Iringa. 4.2.4. Investments by Iringa Municipal Council The main focus in the investments that Iringa Municipal Council (IMC) undertakes for smallholder farmers is irrigation in the whole council because it is semi dry area. Only three out of six wards have adequate rains. Isimani, Pawaga and Idodi have no enough rain while Kalenga, Kiponzelo and Mlolo wards get enough. There are many big rivers such as Ruaha Ndogo. IMC has invested in improving traditional irrigation schemes (30 of them all together but only 18 of 4 Insects will then attach the maize and millets before reaching the vegetables which are more delicate and higher value than maize and millets 15
  16. 16. them have been well improved). Aim in the Big Results Now (BRN) context is to improve 11 irrigation schemes within two years from 2014/15. Investment in value chain development IMC has facilitated farmers’ groups (about 4) to do value addition in rice so that they sell processed rice from Pawaga and Idodi and processed sunflower from Isimani, Kalemga and Mlolo. IMC has invested in building go-downs, improved and installed processing machines – on sharing cost with groups. It has also given technical support. Some groups existed and others were formed and strengthened by the IMC. It has also invested in introducing and supporting ware house receipt system (WRS). It has also supported farmers to learn on WRS from Chimala and Mbarali. Results/impacts of the investment As a result of this investment, there has been increased sale of processed products that give farmers higher prices. The investment in WRS has enabled farmers to access credit from various financial institutions using their crops as collateral. The WRS has enabled smallholder farmers to sale their crops when prices are good instead of succumbing to buyers’ prices. According to IMC, there has been more output (rice) in Pagawa. This has increased food security, increased incomes, improved livelihoods including better houses. This has also resulted in better incomes for IMC through crop cess collected by private sector on behalf of the council. Investment in farmers training IMC has also invested in farmers training. This has taken the form of farmer class, farmers training of trainers (ToT) known in Kiswahili as wakulima wagani kazi. The farmers have been trained at Igurusi College in Mbeya. It has also invested in extension services at district, ward and village levels. 16
  17. 17. Investments in markets IMC has build about 11 markets in which smallholder farmers can sale their produce. Some of these markets are working well while some are not working due to various challenges. Investment in rural roads IMC has invested in district and feeder roads that facilitate smallholder farmers to undertake their activities. This is done by the Works Department of the council. These roads do help small holders to transport farm inputs and outputs and traders to reach them. Investment in dams IMC has invested in dams for irrigation purposes. This is done through rain water harvesting for irrigation purposes as well as development of underground water schemes. Among the places where this has been done include Tanangozi and Igingilanyi where underground water sources have been developed using solar pumps for drip irrigation by smallholder farmers. 4.2.5. Investment by Rural Urban Development Initiative (RUDI5 RUDI focuses on training farmers on value addition. In Iringa among other things, it has give one machine in Idodi for rice processing for better prices and profits for smallholder farmers. RUDI invests in smallholder farmers in various ways. Among other things, it organizes farmers in groups where farmers are sensitized to do collective marketing. It also invests in improving godowns and WRS. It links framers to finance and helps them to identify long and short term Income Generating Activities (IGAs) such as animal husbandry and trade. The aim is to add incomes of farmers instead of over dependence on maize and rice. It also supports Village Community Banks (VICOBA) formation. The aim is to solve problems of access to affordable finance for smallholder farmers. RUDI also invests in gender training including roles distribution in agriculture so that women get relief from extra work in farms. RUDI also tries to organize youths in groups and facilitates them by giving them machines to reduce/reverse rural - urban migration that has negative results in 5 See its profile at 17
  18. 18. agricultural labour availability in rural Tanzania in general and Iringa region including IMC in particular. RUDI also invests in training and supporting collective marketing, better storage, better quality and sorting of crops in grades. It also facilitates common and bigger voice for farmers; facilitates and trains on various elements of entrepreneurship including market research and record keeping for agro-business so as to know costs, prices, profit margins and therefore recommended minimum sales prices that will give profit. RUDI invests on training on good governance and organization leadership of farmers groups. It also invests on farmers through training on developing groups visions so that they know what they want and how to achieve the same. Its training includes market information access too. Results of the investment RUDI has seen substantial positive impacts of its investments on smallholder farmers in Iringa. Its various capacity building interventions such as training have resulted into much stronger, vibrant, dynamic, professionally managed and operated farmers’ groups and associations. As a result of the interventions, farmers have improved their agricultural practices at from farms preparations, planting, weeding, fertilizing, harvesting, storage as well as marketing. This in turn, has led into improved livelihood of smallholder farmers. 4.2.6. THE CASE OF CHAMWINO DISTRICT COUNCIL Chamwino District Council (CDC) is located in Dodoma region. The case study in CDC was mainly informed by the council’s DALDO office. In what follows, the findings from CDC are presented based on the key research questions. The way central and local governments are investing in smallholder farmers 18
  19. 19. Both the central and local governments are investing in smallholder farmers through supporting their priority agricultural investments based on the District Agricultural Development Plans (DADPs) on a cost-sharing basis. The beneficiaries contribute additional labour and materials in varying proportions, depending on the nature of the investment. The government is responsible in providing funds for farmers’ priority interventions. To enable and facilitate project completion, the government provides guidelines for funding those farmers’ interventions. The extent to which the governments have invested in smallholder farmers Both the central and local governments have invested in smallholder farmers in the following ways: i) Agricultural infrastructures investments as can be seen in irrigation facilities in Chamwino DC ii) Agricultural extension services in which a total of 78 extension staff have been employed in six years of ASDP-I. These staff are working closely with smallholder farmers iii) Agricultural capacity building through improved supervision, monitoring and evaluation (M&E) of agricultural projects being implemented by smallholder farmers The table below provides an example of the way CDC has partly budgeted for agricultural sector hereby investing on smallholder farmers. Table 1: Selected Items in Chamwino District Council Budget PLANNED ACTIVITY APROVED BUDGET AMOUNT RECIVED ACTUAL EXPENDITURE PHYSICAL ACHIEVEMENT FINANCIAL SOURCES REMARKS To support constrruction of 1 cattle dip at Chiboli village by June 2009 9,685,000 9,685,000 9,600,000 Cattle dip construction completed DADG Funds were sent to committee account for implementation. To support rehabilitation of Iringa Mvumi primary market Market by June 2009 10,020,715 10,020,715 10,020,000 Animal collection pen rehabilitation completed DADG AI Equipments Purchased 19
  20. 20. To support acquisition of 15 tons of sorghum seeds for farmers in a whole district 15,500,000 15,500,000 15,500,000 15,000 kg of macia seeds procured and distributed to 6000 households in 72 villages DADG To facilitate establishment of 1 artificial insemination centre at Mvumi Mission village by June 2009 9,058,000 9,058,000 4,700,000 2 Nitrogen cans, 4 Pistolets,20 sheath,250 doses of Semen, 10 packets of Gloves purchased; rehabilitation of A.I center ongoing DADG Rehabilitation work ongoing To support rehabilitation of 1 irrigation scheme at Mpwayungu village by June 2009. 6,937,000 6,937,000 6,937,000 Rehabilitation of bunds was done DADG Contracted work To support establishment of one acre of grape vine nursery and 100 ha. On drip irrigation technique at Chinangali grape vine block farm by June 2009. 100,000,000 100,000,000 85,620,000 Grape nursery with 500,000 seedlings, pump test and installation, construction of tank completed DADG Contracted work To support acquisition of 23 motorcycles for village and ward extension officers by June 2009 38,400,000 38,400,000 38,400,000 Twenty (23) motorcycles has been purchased and distributed to 23 ward extension officers DADG Contracted work To support acquisition of 15 powertillers for farmers by June 2009 63,137,000 63,137,000 63,137,000 Fifteen (15) JD power tillers has been purchased and given to farmers on 50% cost sharing arrangements DADG Contracted work To support mobilization activities for establishment of new irrigation shemes at Manda, Chifukulo, Majeleko and Mvumi makulu. 6,000,000 6,000,000 5,600,000 Studies done at Manda and Mvumi Makulu, DADG Mvumi Makulu irrigation scheme passed for implementation. To conduct Monitoring and evaluation of all investment Projects by June 2009. (Investment servicing costs) 14,131,000 14,131,000 14,131,000 M&E conducted in all quarters, involved village project committes Basic-ACBG 20
  21. 21. To facilitate the participatory planing process (O&OD planing tool) from the village, ward and district levells according to DADPs guidelines by June 2009. 12,400,000 12,400,000 12,400,000 Extended participatory planning was conducted in all 28 wards, Top up A-CBG DADP compiled from WADPS To facilitate 2 days training to village project commitees on DADP project monitoring and evaluation by June 2009 12,974,000 12,974,000 9,000,000 Member from 12 Project implementation committees were trained, Top up A-CBG Training has improved PC planning, monitoring and evaluation skills. To suport a 3 days training to 100 farmers at Chinangali II,Makang'wa and Mvumi Makulu villages on grapevine production by June 2009 10,670,000 10,670,000 10,670,000 100 farmers at Chinangali II grape farm were trained on grape agronomic practices Top up A-CBG ARI Makutupora were involved in the training of farmers. To facilitate 12 DSMSs (agriculture and livestock) to attend a 5 weeks training on Introduction to computer application and Planrep software by June 2009. 4,542,000 4,542,000 4,500,000 Training conducted at UCC-Dodoma branch. Planning and reporting skills to 15 DSMS improved Basic-ACBG To support training for 3 staff on undergraduate courses at the recognised Government institution for three years by June, 2009 8,000,000 8,000,000 8,000,000 Tuition fee and book allowances for 3 extension staff were paid to respective universities Top up A-CBG Tuition fees paid to IRDP,SUA,SJUT To support Post graduate courses to 1 staff at the recognized government institutions by June 2009 15,000,000 15,000,000 13,150,000 Tuition fee and research funds for 2 extension staff were paid to respective universities Top up A-CBG Tuition and research funds paid to SUA To facilitate 4 days training to 22 extension staff on extension program planing by June 2009. 4,499,000 4,499,000 4,400,000 Improved extension program planning to ward extension officers AEBG To support 120 farmers to acquire cashewnut seeds and train them on cashewnut production by June 2009 11,066,000 11,066,000 11,066,000 Three tons of cashew nut seeds procured and planted in 120 acres Top up A-CBG To support acquisition of 1 4WD pickup double cabin for DALDOs office by June 2009. 45,000,000 45,000,000 45,000,000 1 4W Nissan pick- up doble cabin procured.Improved Top up A-CBG 21
  22. 22. project monitoring To support rehabilitation of one building for exhibition , establishment of 15 demo plots for crops,10 demo plots for pastures, 4 animal sheds and facilitate farmers to participate at Nzuguni Nanenane ground by June 2009 20,685,967 20,685,967 20,600,000 15 demonstration plots established,4 animal sheds constructed and 80 farmers were facilitated to display their innovations AEBG 120 farmers were faciltated to attend and display their crop and livestock innovations To support a 1 month training on Artificial insemination at NAIC Arusha for 2 livestock officers by by June 2009. 6,560,000 6,560,000 6,560,000 2 staff trained and equipment for AI procured Top up A-CBG A.I services are provided to semi-intensive farmers at Mvumi mission To support construction of 1 Ward agricultural resource center at Haneti by June 2009 18,503,750 18,503,750 18,503,750 The WRC is at completion stage AEBG Contracted work To support control of migratory pests by conducting a 5 days survey, 5 days community sensitization, acquisition of 1500 ltrs of pestcides, 500 bullet and 28 knapsack sprayers at 28 wards by June 2009. 6,500,000 6,500,000 6,325,000 Armyworm and quelea outbreak controlled in the district A-EGB To support acquisition of blowers and agricultural chemicals for spraying on cashew nuts trees in the district by June 2009. 6,396,000 6,396,000 6,396,000 1blower and other implements for cashewnut spraying procured A-EGB To facilitate vaccination campaign against CBPP and Newcastle disease by June 2009 15,000,000 15,000,000 15,000,000 CBPP and rabbies controlled in 22 villages AEBG 9,784 cattle and 492 dogs vaccinated To support rehabilitation of Mpwayungu irrigation scheme 100,000,000 100,000,000 97,500,000 Rehabilitation of 1,500 meters of main canal completed DIDF Contracted work. Rehabilitation to start during dry season GRAND TOTAL 570,665,432 570,665,432 542,715,750 Source: Field data, Chamwino District Council, June 2014 What is working and why According to the findings in CDC, there are a number of interventions that work well for smallholder farmers in the council. These are outlined below. i) Agricultural infrastructure: Irrigation schemes 22
  23. 23. Investment in irrigation schemes work well for smallholder farmers. This is because the income impacts of such investment are likely to be high in the future. Beneficiaries have acquired productive assets that are likely to increase their incomes significantly. With irrigation schemes in place, smallholder farmers are able to plant varieties of crops the year round. ii) Agricultural Extension services Investment in agricultural extension services works well for smallholder farmers. This is because responsive extension services provided have enabled farmers to use improved crop and livestock inputs thus increasing production and productivity. iii) Private sector involvement in smallholder Agriculture Involvement of the private sector in general and such banks as CRDB in funding smallholder farmers is good. In CDC for example, CRDB has funded smallholder farmers through a cooperative at Chinangali II. The investment has made grape drip irrigation at Chinangali to be one of the best Public Private Partnership (PPP) practices in ASDP-1. What is not working and why There has been a number of investments on smallholder farmers that have not worked well in Chamwino. According to the findings in CDC, among the intervention that has not worked well is the input subsidy intervention. It was argued in the field that although the Central government targets smallholder farmers, most often input vouchers are used by large scale and rich farmers because of inability of intended farmers to contribute to the unsubsidized costs of the vouchers. In some cases, the targeted smallholder farmers end up selling their inputs especially fertilizer to those with cash. This makes the aim of investing in smallholder farmers through inputs subsidy a failure. Existing gaps 23
  24. 24. Although there have been a number of interventions aiming at investing in smallholder farmers in CDC, there are still some gaps that exist. These gaps show what s remaining to be done in efforts to invest in smallholder farmers. According to respondents, the following are the existing gaps in Chamwino: a. Investment in value addition of agricultural products b. Investments in soft components such as marketing skills, packaging, grading, labeling and adherence to standards. c. Investments in linkages of various actors in various nodes of agricultural value chain including smallholder farmers, inputs suppliers, transporters, processors, traders and consumers Priority focus of investment There are a number of priority areas of investments in smallholder farmers in Chamwino. These areas include investment in irrigation infrastructure. A total of ASDP funds received for this purpose in the period 2007/208 to 2013/2014 is Tshs 4,193,942,122/=. Out of this, a total of Tshs 2,566,649,543 (61%) was spent in Construction and upgrading of irrigation schemes. Reasons for this priority include the following: a. Availability of underground water suitable for irrigation b. Presence of Irrigation facilities such as dams that were constructed through other programmes c. Technical support from zonal irrigation office The way smallholder farmers receive support There are various mechanisms through which smallholder farmers receive support. These include the following: 24
  25. 25. i) Support from the government through priority interventions incorporated in the District Agricultural Development Programmed (DADPs) ii) Support from the private sector through farmer’s groups/cooperatives such as SACCOs receiving loans for agricultural production, for example Chinangali SACCOS received 1.5 billion Tsh for grape farming investment iii) Extension services are provided through farmer groups mainly using Farmer Field school extension approach iv) Inputs are provided through private input dealers operating in their localities in the municipality. This is done through inputs voucher system involving village, ward and district voucher committees. v) Farm implements are provided through government input trust fund where farmers obtain loans for farm machinery and implement The kind of support that is provided include financial support, capacity building in forms of training on agronomy and husbandry and extension services Outcomes of the investment from small holder farmers: There have been a number of outcomes of the investments that have been made on smallholder farmers in Chamwino. According to the field findings, notable outcomes include the following: i) One important achievement is that projects are owned and managed by farmers themselves. This is an important aspect for making the projects sustainable. Farmers through their SACCOS/irrigators organizations meet and plan for their farms without undue interference from the Council staff and other stake holders. ii) Chinangali II Grape project has improved farmers’ capacity in grape production due to involvement in land preparation, nursery management, transplanting of seedlings, pest and disease control, rotational irrigation management and other vineyard care practices. 25
  26. 26. iii) There is a spillover effect as such interventions as Farmer Field School (FSS) have been copied by other farmers in and outside the district. iv) Various interventions have succeeded by impressing youths to remain in the villages. For example, grape production in Chinangali creates an assurance of about 6 to 15 tons of the crop per acre per year and guarantees stable income for the period of about 50 years. Amounts that the council has received as crop cess Partly as a result of investment in smallholder farmers, Chamwino DC has seen various kinds of returns for the investments. Apart from the direct benefits enjoyed by the smallholder farmers themselves, the council has enjoyed indirect returns in forms of crop cess collected from various agricultural produce. The council has a contract with a private company that collects revenue on behalf of the council through PPP arrangements. The company pays a total of 15,400,000/= per month as crop cess. Therefore, CDC receives a total of Tshs 184,800,000/= as crop cess per annum. 4.2.7. THE CASE OF KILOSA DISTRICT COUNCIL Similar to Iringa and Chamwino District Council, Kilosa District Council (KDC) undertakes various kinds of investments for smallholder framers in the council. In what follows, study findings from KDC are presented. Similar to IDC and CDC, the case study is mainly informed by responses from the office of the DALDO. The way the government is investing in small holders farmers Kilosa district council through extension officers, involves smallholder farmers to propose agricultural projects which ultimately will improve production. This is done in the context of participatory approach approaches to development in general and Opportunities and Obstacles to Development (O&OD) in particular. However, projects in which the council invests in differ 26
  27. 27. from one area to another depending on the nature and resources available in that particular locality. Having agreed with the proposed agricultural project the district council’s professionals shoulder the responsibility of writing technical project proposals and send the same to the central government and other stakeholders asking for financial support to facilitate the implementation of the proposed projects. The district council is obliged not only to supervise the initiated projects but also to provide technical advice to the smallholder farmers so as to run projects effectively. Moreover, it is mandatory requirement for the district council to prepare reports on the running projects and send the said reports to the central government at the regional level. The extent to which the government has invested in smallholder farmers In Kilosa district council, the government has succeeded to construct about 52 channels for irrigation schemes, to provide 50 small tractors (power tillers) through smallholder farmers groups, one tractor for Mvumi ward, processing machines for sunflower, rice and maize and provision of technical support e.g the use of quality declared seeds through “shamba darasa” What is working and why The investment in irrigation channels is partly working well. However only 12 channels out of 52 channels (23%) are working properly. These are working well because they are improved ones, as their construction projects had sufficient funds to meet the budget. Therefore, improved infrastructure with adequate funding are likely to work well compared to unimproved ones with inadequate funding. The government, both central and local, must therefore set aside adequate funds for investment in agricultural infrastructure. What is not working and why 27
  28. 28. Investments with no adequate funds are not working. In Kilosa for example, about 40 irrigation channel schemes are traditional ones hence perform below standard. There is a blockage of channels by sand resulting from the 2014 heavy rainfall. The rationale for the ineffectiveness of the said channels is insufficient funds to meet the budget for construction project. Existing gaps There are a number of gaps in investments on smallholder farmers in KDC. For example, all the 52 irrigation channels schemes should have been modern ones. However, only 12 channels are improved ones and therefore, the remaining 40 channels should be improved to meet the required standard. There is an urgent need for construction of roads to reach those irrigation schemes easily. Priority focus of investment in smallholder farmers in KDC According to respondents, the priority focus of investment in smallholder farmers in KDC is on rice fields, though other crops like maize and onions perform better in some seasons. The extent to which other stakeholders are investing in smallholder farmers in KDC Apart from the central and local governments, there are other stakeholders that are investing in smallholder farmes in KDC. Some of these other stakeholders are outlined in what follows. i) Investments by WOPATA WOPATA is an organization which has invested a lot in Kilosa District council specifically in the construction of business centre (mnada) at Rudewa and Kimaba wards. It has also invested in provision of education on the modern rice farming and the establishment of “Bank Mazao” ii) Investment by Tanzania Social Action Fund (TASAF) 28
  29. 29. TASAF is another organization which has invested to smallholder farmers in Kilosa. It has invested in rural roads construction and repair, irrigation schemes and training of farmers. Normally, TASAF approach is a participatory one. It funds some of the costs in the investments and beneficiaries (smallholder farmers in this case) contribute their part. The main form of beneficiaries’ contribution is in-kind contribution including provision of labour and materials such as stones, sand and others in case of construction investments. iii) Investment by BRACK BRACK is a microfinance institution (MFI). It has invested in smallholder farmers by provision of loans and training. This provision of loans is a critical investment because access to finance is among the major constraints that smallholder farmers face. Financial institutions tend to shy away from financing agricultural investments due to such risks as drought as most agricultural activities are rain-fed. Other risks that financial institutions escape is the relatively long period it takes for agricultural investments to pay back due to long gestation period compared to trading activities of buying and selling goods. Financial institutions also tend to avoid extending loans to the agricultural sector due to fears of post-harvest losses. If there will be interventions that reduce these risks, for example investment in irrigation, agricultural insurance as well as reducing post-harvest losses, financial institutions would most likely be more willing and able to extend credit to agricultural undertakings especially in the production part. iv) Investment by MKUHUMI MKUHUMI is another organization which provides training to the farmers on how to exercise farming without affecting environment. v) Investment by Tanzania Horticulture Association (TAHA) TAHA has invested in training and marketing to the smallholder farmers in Kilosa district. 29
  30. 30. vi) Investment by Swiss Contact Swiss Contact in Tanzania provides training in modern farming to young persons of the age between 16 years and 20 years. The way smallholder farmers receive support The government provides subsides to the smallholder farmers. The inputs subsidy is provided through voucher system to the targeted households. The inputs are supplied by private sector. Support in form of extension services is provided direct to smallholder farmers in their farms, in demonstration plots as well as by individual farmers visiting or calling extension officers for guidance in case of need. Where disaster arises the government provides both technical and financial supports to the smallholder farmers. For example, in this 2014 the government is about to curb the destructive birds namely “Kwerea Kwerea” in Mangole, Kimaba, KIlangali and Maganze divisions. Also in Tindiga, Mabwerebwere and Msowelo wards. The way farmers receive extension services, inputs and any other support necessary in their development agendas The extensions officers provide training to the small group of smallholder farmers representing their fellow smallholder farmers. Having been trained, the representatives of the smallholder farmers step into the shoes of extension officers to train their fellow smallholder farmers. This is a training of trainers (ToT) or cascading approach of provision of extension services. It is a good approach due to the scarcity of extension officers relative to the demand for them. Also the agricultural inputs are given to those smallholder farmers who have been identified and qualified by the district council authorities. However the inputs are subject to cost sharing between smallholder farmers and government. Some farmers do not afford their part of cost- sharing and resort to sell their vouchers/parts of inputs to those able to foot the costs. This is 30
  31. 31. done even at a through-away price thereby distorting the good intention and logic behind the subsidy intervention. Outcome of the investment from smallholders farmers The investment to the smallholder farmers has brought about the increase in production to the smallholder farmers of Kilosa District. For example in Peapea, Batuwa and Mbuyuni villages in Rudewa ward, there is improvement in maize production from 4 – 5 bags of maize to 16 – 17 of maize per acre. In kilangali division production of rice has increased from 15 – 16 bags of rice to 36 bags of rice per acre. There is also improvement in livelihood due to the fact that most of the households in Kilosa district are living in bricks and iron roofed houses. Also there has been increase in assets owned by smallholder farmers. These include but are not limited to mobile phones, bicycles, motorcycles and even houses. All these indicators show that investments in smallholder farmers are generally giving good outcomes. Amount that the local government has received from smallholder farmers as returns from the investment Kilosa DC has received substantial amount of revenue from crop cess as shown in the table below. Table 2: Kilosa District Council Itemized Revenue Chart For 2010 – 2013 OWN SOURCE 2010-211 REVENUE DESCRIPTION BUDGET (In Tsh) ACTUAL (In Tshs) DIFFERENCE (In Tshs) % Local Taxes Produce cess 50708 Farm Produce Levy 131,768,224.00 170,260,600.00 (38,492,376.00) 129.21 31
  32. 32. 50713 Produce Cess 10,000,000.00 9,700,900.00 299,100.00 97.01 51082 Other Food Produce Cess 12,240,000.00 167,600.00 12,072,400.00 1.37 51085 Sugarcane Cess 1,350,628,385.00 1,375,636,601.20 (25,008,216.20) 101.85 51086 Onion Cess 30,000,000.00 9,167,000.00 20,833,000.00 30.56 Total 1,534,636,609.00 1,564,932,701.20 (30,296,092.20) 101.97 OWN SOURCE 2011-212 Produce Cess 050708 Farm Produce Levy 496,523,600.00 518,763,832.02 (22,240,232.02) 104.48 050713 Produce Cess 5,000,000.00 4,403,518.69 596,481.31 88.07 051082 Other Food Produce Cess 165,723,300.00 77,464,000.00 88,259,300.00 46.74 051084 Tobacco Cess 7,150,000.00 9,374,424.41 (2,224,424.41) 131.11 051086 Onion Cess 139,000,000.00 1,659,000.00 137,341,000.00 1.19 051085 Sugarcane Cess 450,000,000.00 1,410,467,115.75 (960,467,115.75) 313.44 Total 1,263,396,900.00 2,022,131,890.87 (758,734,990.87) 160.06 OWN SOURCE 2012-213 110810 Rice Crop cess 333,000,000.00 14,527,900.00 318,472,100.00 4.36 110807 Maize Crop cess 318,584,000.00 18,670,192.4 2 299,913,807.58 5.86 110808 Other export crop cess 426,853,700.00 918,455,947.11 -491,602,247.11 215.17 110815 Other produce cess 312,954,900.00 186,513,333.11 126,441,566.89 59.60 Total 1,391,392,600.00 1,138,167,372.64 253,225,227.36 81.80 Source: Field data, Kilosa District Council June 2014 As can be seen in the table above, Kilosa District Council receives substantial amount of revenues from crop cess. In the context of this study, the council has all the reasons to invest substantially in smallholder farmers because there are substantial revenues from the activities 32
  33. 33. undertaken by smallholder farmers. For the council to invest in smallholder farmers is widening its revenue base. 5. CONCLUSIONS From the study findings in the three districts, it is evident that there are a number of investments from various stakeholders that have been made on smallholder farmers. The investments are by the government (central and local), private sector and civil society organizations. These investments are in forms of various types of capacity building, construction of agricultural infrastructure, provision of various kinds of inputs including seeds and fertilizer. There have been good results on part of the smallholder farmers as a result of these investments. Generally, there has been better agricultural practices that have given better outputs and more incomes resulting into improved livelihoods for smallholder farmers. For the district councils, there has been an increase in revenues emanating from crop cess. Therefore, investment in smallholder farmers is a good undertaking in the bid to help smallholder farmers improve their undertakings thereby increasing possibilities of them escaping poverty. 6. RECOMMENDATIONS Based on the findings, it is recommended that all stakeholders including but not limited to the central and local government, private sector, civil society organizations and individuals should keep on investing on smallholder farmers. Such investments should be participatory and demand-driven not supply-driven so that they address the felt-needs of specific farmers. 33