Oswald Mashindano, Kim Kayunze, Lucia da Corta, Festo Maro (2011), Chronic Poverty Research Centre, Working Paper, No. 208, June.

High economic growth and moderate agricultural growth in Tanzania has not translated into poverty reduction. Based on evidence gathered from six research sites, the authors show that distortions in market, high rate of inflation, skewed distribution of assets are some factors that lie at the root of the mismatch between agricultural growth and stagnating or worsening living standards among a large section of the Tanzanian population.

Like many other developing countries, in Tanzania too, a large proportion of the population remains dependent on agriculture for their livelihood. At the same time, the agricultural sector’s contribution to national income has declined over the years. There can be many reasons for such a pattern of growth. More importantly, such a pattern of growth has severe implications for poverty reduction. It is therefore important to analyse the specific factors that could have hindered growth of the agricultural sectors and reduction in poverty.

In this paper, Oswald Mashindano et al analyse the relationship between agricultural growth and poverty, looking at the transmission routes and identifying where agricultural growth has occurred and whether that has resulted in reduction in poverty. Analysis is carried out in six villages in three districts of Tanzania, namely Nchinga and Nkangala in Mtwara region; Ndite and Wazabanga in Mwanza region; Kayumbe; and Kalesa in Rukwa region. Qualitative data was collected using focus group discussions (FDG), life history interviews (LHI) and key informant interviews (KII). Well-being ranking using these methods was carried out for 24 households, for 1999 and 2009.The “households were selected to reflect upward mobility, downward mobility and stability”. Also, 106 LHIs were conducted to understand the trajectories of the household’s movement in well-being.

The authors note that all the three sample districts have registered modest agricultural growth in the period between 2000 and 2010, especially in non-traditional exports crops. Non-traditional exports include paddy (Magu and Nkasi) and fishing, vegetables (such as tomatoes, maize, cassava) and other horticultural products (all three). Analysis of the FDGs reveals that cross-border trade, especially in Rukwa and Mwanza regions, is an important route through which agricultural growth can translate into lower poverty. The warehouse receipt system (WRS), an initiative started by the government in 2007, has also played an important role in increasing agricultural growth and productivity in pockets of Tanzania. Among other things, the WRS provides marketing and warehousing facilities as well as subsidised inputs. It also buys from farmers at fair market price, once at the time of harvest for a part of the produce and the rest (including bonus) when crops are sold at higher prices later in the year. The facility has also brought in more liquidity through increased bank financing into the sector. Further, the WRS has helped to reduce the influence of exploitative, anti-competitive exporters and processers. Another government policy - that of increasing provision of small loans to farmers - too has helped by reducing the problem of access to credit, otherwise a major obstacle to agricultural development.

However, despite these, agricultural growth has not resulted in poverty reduction and betterment of living standards. The authors present in detail the factors that can possibly explain the mismatch between agricultural growth and well-being of the farming community. They argue that inability to get better prices owing to delinking of local markets from external (regional export) markets, high rates of inflation which depress real producer prices are some factors that explain this phenomenon. In particular, they argue that the farmers are dependent on traders who deliberately suppress prices, tamper with weights, when buying from farmers. Also, traders do not turn up every season, as a result of which output does not find market outlets. Further, the traders charge usurious interest rates for inputs. This in turn forces, farmers to sell crops immediately after harvest, thus foregoing the possibility of taking the benefit of rise in prices later in the year.

Skewed distribution and ownership of productive assets is another important factor that acts as a barrier to poverty reduction. For example, responses from 41 LHIs in the six sample villages show that distribution of productive assets (land, livestock) is skewed in favour of the minority, immigrant communities. In addition, land related conflicts, scarcity of land because of hoarding by big landowners are additional reasons that exacerbate the problem of unequal distribution of assets. In the case of fishing, the industry is dominated by few large-scale businesses. Small fishermen lack the equipment and the capital needed to make lucrative gains. As a result, most work as either labourers or as petty traders.

Lack of proper transportation network is an additional barrier that hinders betterment of living standards that can arise from agricultural growth. Some KIIs reveal that in an earlier period construction of a new road helped movement out of poverty, as it increased people’s access to the export market and boosted agribusiness. In addition, because of the epidemic of HIV/AIDS, rising divorce, abandonment, male migration etc., women are forced to shoulder the responsibility of undertaking income-generating activities alone. However, loss of rights to assets (land, house) on devolution of marriage, widowhood makes it difficult for women-headed households to move out of poverty, even with agricultural growth.

Most importantly, the high rate of inflation that has plagued the Tanzanian economy in the last few years, negates the positive effects that agricultural growth can have on poverty reduction. Rapid rise in cost of basic essentials affect casual labourers the most, and this is believed to have increased food-insecurity considerably despite high growth of the economy. Rising cost of services, including, water, education, further make the possibility of reducing poverty bleak.

In conclusion, the authors note that barriers to trade and markets, rising cost of living, are some of the reasons why agricultural growth, even though moderate, has not led to reduction in poverty. Therefore, the authors recommend, it is necessary to increase government intervention in the sector to correct market distortions, reduce the influence of traders and help farmers get access to remunerative prices. The WRS, they suggest, can be used to correct these market distortions. Similarly, concerted efforts need to be made to “ensure timely delivery of agricultural support services…, improved road networks, credit, education for farmers, etc.” for improving agricultural productivity. Finally, they recommend that sensitisation and legal support to divorced, abandoned, or widowed women needs to be provided to ensure their well-being and reduce intergenerational transmission of poverty.