UNLEASHING THE POTENTIAL OF TANZANIAN FARM PRODUCE

By

Eng. Kalutu P. R. Koshuma (MSc. (Eng), Cons. Eng., MIET)

Mr. Sigisbert M. Mmasi (BSc. (Eng), MSc. (MBA)

Tanzania Engineering and Manufacturing Design Organization

(TEMDO)

P.O. Box 6111, Arusha, Tanzania

Tel: 027 250 6220, Fax: 027 250 8058

EMAIL: nmathiasi@yahoo.com

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Abstract

Commercialization of smallholder production is a process which involves a

transformation from production for household subsistence to production for

the market. Through the process, traditional smallholder producers are

integrated into the world market economy. The process involves intensive

and extensive value addition activities with eventual benefits to the

producer.

Tanzania like other developing countries especially in Africa South of Sahara

suffers chronic post harvest food losses estimated at between 30-40 %.

Value addition to the farm produce will contribute immensely not only in

alleviation of post harvest losses and enhancement of our food security

situation, but also increase economic growth significantly and transform

agriculture into a profitable, commercial venture, capable of driving

Tanzanian economy from the traditional raw material producer/ exporter to

high value producer/ exporter with high multiplier effects in employment and

the economy as a whole. Successful value addition activities involve

innovation, adaptation and dissemination of appropriate technologies. Use of

technology can raise product output, quality, consistency, reliability and

packaging thus opening up new markets. Technologies for processing and

value addition can be available locally in Tanzania if proper coordination

among the various stakeholders is done. Over the years, the Tanzania

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Engineering and Manufacturing Design Organization (TEMDO) have

attempted to develop technologies suitable for value addition of agricultural

produce with notable success. This paper explains the process used in

developing the technologies, challenges faced, experience learned and

proposes measures and strategies which can be put in place to stimulate the

availability of suitable technologies for processing and value addition to

agricultural produce.

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1.0 Introduction:

Agriculture accounts for 30-50% of GDP in most African countries and 70% or

more of total employment (Anonymous 2005). Agriculture has the potential

to move Africa out of poverty to better living standards of its people. In

Tanzania, the agricultural sector is the key to Tanzania’s economic

development, now and in the future. Though slightly declining, the sectors

contribution to GDP is about 50% (Rweyemamu, 2003; Shayo, 2006),

contributing to over 50% of the country’s exports while over 80% of the

nation’s population relies on agriculture for their livelihoods. The sector is

important for Tanzania’s efforts towards poverty reduction and ensuring food

security while meeting the challenges of the Millennium Development Goals

Despite major successes made in improving agricultural productivity in the

developing world and Tanzania in particular, rural poverty still remains one

of the challenges facing the developing countries. Small holder farmers face

substantial barriers in achieving improved livelihoods. Prices of farm

products have been decreasing over the years, markets increasingly

becoming more competitive with Government support to farmers declining.

Despite these drawbacks, opportunities exist for rural populations to improve

their livelihoods through adding value, diversification of income generating

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activities and organization (Lundy et al., 2002). For agriculture to be

sustainable it must create many more non-farm commercial opportunities for

the poor farmers. Small holder farmers need to commercialize their farming

activities which will involve a shift from subsistence production to production

for the market.

The Poverty and Human Development Report 2005 point out that “to

promote production and quality in an environment/economy such as

Tanzania’s that is based on smallholder farmers who are competing in

liberalized markets, there is need to consider new approaches because the

traditional approach to agriculture, under current conditions, is not working”.

The report recommends that the new approach to agriculture in Tanzania

should be the integrated production system that links production, extension

services, transportation, processing and marketing. This paper describes the

attempt that TEMDO has made in solving some of the constraints of the

small holder farmer through appropriate technologies in processing and

value addition to farm produce.

2.0 Agro-processing and value addition.

The small holder farmer is faced with the challenge to improve income in

agriculture. He/she can do this by increasing productivity through use of

improved farming techniques like improved plant varieties and other farm

inputs. This will normally lead to more crop production with subsequent food

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security. However this process will not ensure increased income to the

farmer due to associated declining prices.

Another way of increasing farmer income is through improved marketing

techniques. This is a more challenging process which involves processing

and value addition activities. The target is normally the market. It is based

on competitiveness through product differentiation and the development of

niche markets (Lundy et al., 2002). Small holder farmers must move fast

away from subsistence production to production for the market. They need

to adapt to diversification beyond food security and include both farm and

non farm activities for income generation. Studies have found that in Latin

America, some 40% of rural incomes are now non– agricultural while up to

80% of the value of final product is a result of post harvesting processing

and marketing (Lundy et al., 2002). It has also been reported that value

adding activities are capable of increasing farmer income by 350%.

When farmers are involved in value-added processing and marketing they

retain most of the value paid by the customer which is normally taken by

middle men processors. Value-added agriculture on small farms frequently

involves specialty and differentiated products, which can be an area where

small farms and small food processing firms have a competitive advantage

over lager farms (Danielson and Park, 2001).

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3.0 What is value added

Value addition in agriculture involves adding features to a raw

agricultural material used to make a particular food or non-food

product. Examples of value addition in agriculture include food

processing: drying, canning, juicing, packaging, labeling and

marketing. The farmer does not only produce and sell raw agricultural

commodity but is also involved in processing, and marketing of the

product.

Value added agriculture involves the processing of food and nonfood

raw materials, thus adding value to a food product (Ware, 1999). It is

the transformation of raw agricultural commodities to consumer-ready

food or non-food products. It includes local processing, packaging, or

marketing, which adds value to a raw agricultural product.

When a small holder farmer moves from planting and harvesting a

crop, such as sunflower, and moving up one step to processing it into

cooking oil and animal feed this process is considered to be value

adding. This process is sometimes termed as first level of processing.

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4.0 Why value addition?

Farmers must get more involved in the food chain in order to realize the

profits generated along the food chain. Farmers must move up the food

chain (Born and Bachman, 2006). As it is today, the farmer’s business ends

with selling of the raw farm produce. The farmer is hardly aware of the long

process which his produce passes before reaching the ultimate customer.

Worse still he does not know how much profit the middlemen are taking

along the food chain. In order for the Tanzanian farmers to reap the profits of

their ‘‘hard work, entrepreneurial spirit and thrift’’ (Mbogoro, D., 2008), they

must engage themselves in processing and value adding activities rather

than just selling their raw produce.

The agricultural industry in the United States provides a good example and

experience of the need for farmers to move up the food chain. In the United

States, the food grown on the farm follows the chain involving transporting,

processing, storage and distribution to the market for sale. As this chain of

activities gets diversified, the farmer’s share of the price paid by the

consumer is decreased. In year 2000, farmers received only 20 percent of

the food market, with the other 80 percent going to those who transported,

processed, stored, distributed, advertised and marketed the foods (Born and

Bachman, 2006) As the farmer gets more involved in some of the food chain

activities his share of what the consumer’s pay for their food becomes

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bigger. The farmer benefits through processing and value-added activities

without necessarily increasing commodity prices.

The diversification and modernization of the present agricultural and other

related activities supported by efficient on and off farm processing of the

commodities for the purpose of value-adding is expected to increase food

production and create employment and income generation. Adding value to

food commodities after harvest is also aimed at minimizing the losses during

storage and to maintain the quality of product. Efficient post-production

practices, particularly the preservation and processing of agricultural and

allied produces may bring a wide range of benefits to the people in this

country, generating job opportunities by opening up village-level processing

units.

As farmers struggle to find ways to increase farm income, interest in “adding

value” to raw agricultural products will definitely grow. The value of farm

products can be increased in endless ways: by cleaning and cooking,

processing, distributing, cooking, combining, churning, culturing, grinding,

hulling, extracting, drying, smoking, handcrafting, spinning, weaving,

labeling, and packaging.

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The important point is that it can contribute to sustainable development of

agriculture, provide food consistency, create new jobs in rural areas, prevent

product damage and loss, make optimum use of resources, and preserve

agricultural produce for longer periods of time.

The agricultural labour force is typically fully employed during key seasons,

such as crop planting, weeding and harvesting, but is under-employed other

times of the year. If non-farm activities can be taken up during slack

periods, then this can add to labor productivity without detracting from other

sectors of the economy.

5.0 Role of technology in agro processing and value addition

The farm processing and value adding activities in agriculture take raw

agricultural products (such as sunflower seeds) and turn them into food or

non food products that are consumed every day (like cooking oil or animal

feed). The transformation process of changing raw agricultural material to

consumable value added product must require the use of appropriate

technology in one form or another. Thus, the role of technology in the

development of the agro processing and value adding sector cannot be

overestimated. In fact technology acts as the engine which propels the

development of the agricultural sector and improving farmer’s income.

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Technology (machinery and equipment) are the key to improving efficiency

in agricultural processing and value addition industry to compete against

imported produce from countries with developed industry. The strength of

the Tanzanian agricultural sector lies in the ability of the farmers to produce

high quality produce and products. This will only be possible through the use

of appropriate technology right from the farming stage through processing to

marketing. Appropriate technology should be used to link food production,

processing and marketing.

6.0 Challenges facing farmers in agro processing and value added

agriculture

The farm processing and value adding activities faces a variety of challenges

which include market opportunities, access to appropriate technologies,

business management (entrepreneurship) and financing.

At farm level in Tanzania processing of farm produce is almost absent. The

market does not provide any incentive to encourage value addition of the

crop. Thus, farmers do not see any need to engage in value addition

initiatives. In addition, due to capital deficiency on the part of farmers,

access to technology (processing tools and machines) is limited. The current

agricultural policies under the free market framework have not been able to

promote agro processing in the country. The challenges facing the farmers

are often overcome through intervention from the Government,

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strengthening networking among key stakeholders and provision of

appropriate and sustainable Business Development Services.

The other challenge facing the small scale farmer is lack of readily available

modern machinery, equipment, and technologies suited to local conditions.

This is manifested in the apparent absence of processing industries in the

agricultural sector, improper packaging and insufficient mechanized

industries. The small farmers have limited knowledge of the opportunities for

domestic as well as profitable export in foreign markets and of the quality

standards relevant to those markets as well as correct production and value

added practices that result in quality produce. The limited infrastructure to

support agro-business (cold storage, transportation etc.) means that high

spoilage rates and low quality products can erode competitiveness.

Formal financial services are generally unavailable in rural areas. For most

lenders, agricultural sector activities are considered to be very risky. Thus

generally, interest rates on loans are relatively high. At the same time,

although the land law has been reviewed, small holder farmers are still

unable to use their land as collateral to access finance since most of them do

not have the right to ownership of the land they cultivate. The absence of

formal channels of finance in rural areas limits the number of small holder

farmers who can purchase seasonal inputs or invest in other productivity-

enhancing goods and restricts the capacity of small traders who play an

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important role in agricultural marketing and those who might invest in local

processing.

7.0 Technologies for agro processing and value addition

7.1 The Process

Since its inception in year 1982, the Tanzania Engineering and

Manufacturing Design Organization (TEMDO) have developed a number of

technologies (machinery and equipment). Dictated by the economic situation

in the country, most of the technologies have been in the agro-processing

sector. Using various approaches these technologies have been

commercialized and made available to the targeted end users. However the

level of commercialization is not yet satisfactory. The methods used to

commercialize the technologies include sale of designs or prototypes to

manufacturing enterprises, one-off manufacture and sale, batch level or pilot

manufacture and sale. TEMDO will be successful when the developed

technologies are made available in the local market to as many people as

possible. The availability of the technology must be sustainable in that the

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number of people manufacturing and using the technology increases with

time even without external stimuli.

The technology development and commercialization process at TEMDO

involves the following activities:

Market opportunity

The tool normally used to analyze the target group or market is the

feasibility study. It is intended to establish the financial viability of a

particular technology.

Technology

TEMDO carries out the design and development of the technology.

After developing and testing the prototype, TEMDO goes into pilot

manufacture. The aim of pilot manufacture is to test the market and to

obtain views from the users on the suitability of the technology and

area requiring improvement. When TEMDO is satisfied with the

performance of a particular technology, it will consider transferring the

technology to private manufacturing SMEs for commercial production.

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TEMDO will provide the entrepreneurs with the necessary assistance

for development of the technology. The assistance includes provision

of engineering drawings, jigs and fixtures, sample product, bill of

quantities, operation manuals and a business plan for the technology

in order to convince the manufacturer and target user on the viability

of the particular technology. TEMDO will work together with the

manufacturing SMEs until the SMEs have developed enough capacity

to continue on their own.

The Manufacturing SMEs

The aim of transfer of technology from TEMDO to manufacturing SMEs

is to relieve TEMDO from commercial production of technologies so

that they concentrate more on technology development work.

Marketing and Promotion

TEMDO in consultation with other stake holders will deal with

marketing and promotion of the developed technologies. The

promotion strategies will include publicizing and demonstrating the

technology with the aim of bringing the technology to the attention of

potential customers.

Withdrawal

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When the private manufacturing SMEs have reached a stage where

they can take over commercial manufacture of the technology on their

own, TEMDO has to withdraw from the process. The manufacturing

SMEs will then continue with commercial production and will be

allowed to carry out further adaptation and development on the

technology as the market may demand.

7.2 The Technologies

Technologies for processing and value addition can be available locally in

Tanzania if there is proper coordination among the various stakeholders.

Successful value addition activities involve innovation, adaptation and

dissemination of appropriate technologies. Over the years, TEMDO has

attempted to develop a number of proven technologies suitable for value

addition of agricultural produce such as fruit and vegetable processing, seed

oil processing, honey processing, grain or seed dressing and milk processing

with notable success.

Some of the various value adding activities and technologies (machinery and

equipment) for adding value to farm produce in Tanzania include the

following:

TYPE OF FOOD

(PRODUCT)

VALUE ADDING

ACTIVITY

TECHNOLOGY (MACHINERY AND

EQUIPMENT REQUIRED)

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Raw Foods: wash, peel, cut,

package

fruit cleaner, peeling machine,

cutting machine, fruit chopper,

packaging

Fruit Juices and

Pulps

preparation, wash,

peel, cut, press, pulp,

sieve, pasteurize, boil,

package

fruit cleaner, peeling machine,

cutting machine, fruit chopper, fruit

pulper, juicer, sieve, strainer, press,

pasteurizer, boiling pan, filling,

sealing and capping machine.

Canned and

Bottled Foods:

jams, jellies,

pickled foods,

sources, syrups,

wash, peel, cut, boil,

package

fruit cleaner, peeling machine,

cutting machine, fruit chopper,

boiling pan, filling, sealing and

capping machine.

Honey extraction, pressing,

filtration, boiling,

packaging

honey extractor, honey press, honey

filtering tank, honey strainers,

boiling pan, packaging

Dried Foods: dried fruits, dried

vegetables, popcorn,

beans, nuts, packaging

solar drier, fuel-fired drier, electric

drier, popcorn machine, packaging,

filling, sealing and capping machine.

Value -Added

Dairy Products:

fresh milk, flavored

milk, cheese, yoghurt,

ice cream, butter

milk cooler, milk/cream separator,

butter churn, ice cream making

machines, filling, packaging

Milled Foods: cereals, rice, corn milling machine, hulling machine,

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meal, milled grains packaging

The following-agro processing and value adding technologies are available at

TEMDO ready for transfer to interested manufacturing SMEs for commercial

manufacture and use (see Annex 1):

Oil expelling technology

Palm oil and palm kernel processing technology

Milk processing technology

Honey and honey products processing equipment

Fruits processing technology

8.0 Challenges facing TEMDO in the development of agro-processing

and value adding technologies

Appropriate agro-processing and value adding technologies implies

affordable, locally produced and locally repaired, reliable technology that has

a suitable size and complexity of operation for the people who will operate it.

For most value-added technology, the critical issue is developing that

technology so it is appropriate to the scale of groups of producers and is

economically feasible. If the development of appropriate technology is not

feasible, then “No Further Action” is taken on the project.

Research and development efforts on improved food processing technologies

should be based on the needs of the local environment. This should include

the resource base of enterprises, the support facilities available to them and

the impact of the enterprise on the environment. It may be necessary to

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both upgrade the traditional processing technologies as well as adapting

(down-grading) modern technologies. However, the key overriding factor is

that interventions to improve food processing operations must be market-

oriented.

Technologies developed at TEMDO faces stiff competition from cheap and

sub-standard imported machinery from other countries. Due to the low

purchasing power of the Tanzanian entrepreneurs, they opt for the cheap

imported technologies with adverse consequences.

Most of the new processing technologies were developed without a proper

market-oriented approach. They were developed without consideration of

final users or beneficiaries. Due to financial constraints, most of the

technologies are never taken up to pilot level for viability testing. This has

led to premature release of technologies with adverse effects at the market

place.

9.0 Challenges and constraints of agro-processing and value

addition to farm produce

The paper has so far demonstrated that agricultural transformation is central

to redressing Tanzania’s poverty problem. Tanzania has a comparative

advantage in labor-intensive agricultural production and processing and

could potentially be producing a wider variety of agro-processing and value

added products. There exists an enormous untapped potential which should

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be realized in order to move this country forward. Therefore, research and

extension capabilities must be built in order to undertake the dynamic

endeavor to keep pace with the production. Successes in development of

value adding processing technology and industries are hindered by a

growing number of challenges and constraints.

The main challenges and constraints include:

Absence of reliable supply of raw materials;

Poor managerial skills;

Increased reliance on the part of many producers on imported raw

materials (preservatives, color, flavor, emulsifier, etc.) which results in

increased cost of production;

Most of the modern and special processing equipment have to be

imported which are expensive and difficult to maintain;

For cottage and small-scale industries, promotional activities are

limited due to high cost of publicity in mass media;

Uncertainty of market for processed product in the domestic market,

due to stiff competition from multinational companies;

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Low and fluctuating nature of demand, high taxation and absence of

transport make serious bottlenecks in marketing products;

Lack of forward and backward linkage industries and storage facilities;

Lack of standard packaging facilities.

10.0 Conclusions and Recommendations

Agriculture continues to be the mainstay of the economy of Tanzania. It

remains the major source of rural employment and the driving force behind

its economic growth. The globalization forces has opened up opportunities

for new markets of its products and on the other hand exposed the country

to greater competition. In the markets of the world, consumers demand

products which are perceived to be of higher quality than those grown and

processed in this country. There is, therefore, an urgent need to process the

agricultural products to higher qualities for marketing, distribution and trade.

The following need to be done in ensuring a sustainable and reliable

development and commercialization of appropriate technologies for

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processing and value adding in the country thereby improving the living

standards of the people of Tanzania:

Strong urban-rural linkage should be developed to ensure sustainable

development of agro- industrial base in the villages;

Development of alliances between large enterprises usually urban

based and small and medium scale enterprises (SMEs) to be created at

the rural level for creating dynamic agribusiness sector in rural areas

adding value to domestic raw materials and generating employment;

Upgrading of quality for better competition and marketing;

Providing financial and technical support for the development of

packaging industries;

Design and development of specialized transport vehicles with cooling

systems for carrying fresh commodities to urban areas or to the

processing industries;

Supporting specialized research programmes for the development of

suitable processing and value adding technologies.

Use a market-orientated approach to technology and enterprise

development. Technologies developed by the technology development

institutions should be demand driven.

Train small and medium scale enterprises in management and

technical skills

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Increase access to information by database development on available

agro processing and value adding technologies and other

opportunities.

Adapt and adopt new processing techniques and involve end-users to

test equipment or products at pilot level

Public support to efforts in developing and supporting production,

processing and marketing are needed to enable the small farmers to

enter the inevitable competition. The future lies in the ability to

market the products (Danielson and Park, 2001).

Government policies need to be more supportive in the development

of processing technologies.

The Government should support the strategic plan for setting up and

developing food processing industries in the districts. These agro

processing units located close to production centers should process

and preserve products such as dairy, meat, pickles, sun flower oil,

vegetables, and fruits as well as animal feed.

In order to limit the risk of obsolescence, businesses must constantly

protect, reinvent and broaden their technology platforms. Staying

abreast of technology will enable producers to constantly enhance

product performance and value.

In order to capture value throughout the chain, farmers and processors

must establish an integrated structure of business relationships—from

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the farm gate to the retailer. This vertical coordination assures a

constant supply of the right raw products with the qualities desired by

end users.

11.0 References

1. Anonymous (2005). “Is Agriculture Still Relevant to Poverty Reduction in

Africa?” Speech in the House of Commons, Overseas Development.

2. Born, H. and J. Bachmann (2006). “Adding Value to Farm Products. An

Overview.” NCAT Agriculture Specialists, ATTRA No. IP 141.

3. Danielson, R. and D. Park (2001). “Value – Added, On Farm Processing:

Summer’s Harvest-Hope.” Case Study, North Dakota state University.

4. Lundy, M., C.F. Ostertag and R. Best (2002) “Value Adding Agro Enterprise

and Poverty Reduction: A Teritorial Approach for Rural Business

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Development.” Paper presented at the First Henry A. Wallace Inter-

American Scientific Conference “Globalization of Agro Research-Costa

Rica.

5. Mbogoro, D. (2008). “Tanzania Small Holders are the Most Vulnerable

Economic Group”. Business Times, 15- 21 August 2008, 7pp.

6. Rweyemamu, D. (2003). “Agricultural Reforms and Rural Development In

LICs: The Tanzanian Experience”. Research Report.

7. Shayo, C.M. (2006). “Adaptation Planning and Implementation.”

Agriculture and Food Security Meeting, Accra, Ghana.

8. Ware, A. E. (1999). “Value-Added Opportunities for Small Farmers.” The

Kerr Center, Poteau.

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