Crop Diversification An Emerging Opportunity Among Rural Producer Organizations in Tanzania

Abstract

The Tanzanian economy is agriculture dominated, with other sectors following. In 2004, the agricultural sector contributed 46% to GDP, provided about 51% of foreign exchange and 75% of the total employment (URT, 2004). Agriculture is practiced on small scale; it is rain fed and most of the farmers use the hand hoe. Its growth rate has decreased from 6.5% 2001 to 6.1% in 2002 due to various factors including lack of adequate rainfall, fall in world market prices, decline in production and loss in soil fertility (URT, 2003). The earnings from traditional export crops are decreasing due to fall in price at the world market and heavy taxes on export crops (URT, 2002). Fall in export earnings may also be attributed to decline in product quality, that leads into low prices (URT, 2003 & Ngailo and Towo, 2003). This is contrary to the expectations of one of the government’s objectives in the National Agricultural Policy (1997) of increasing production, availability of food, access to and food security. According to the Review of the Poverty Reduction Strategy Paper (2004), failure in achieving this objective has increased poverty in the rural areas. This has thus forced farmers to diversify into alternative high yielding crops and income generating activities. Related rural producer organizations have also tried to diversify its activities so as to add value. Agriculture is mostly practiced in the rural areas. The term rural is usually ambiguous, but according to ODI (2002) it constitutes of the space where human settlement and infrastructure occupy only small patches of the landscape, most of which is dominated by fields and pastures, woods and forest, water, mountain and desert. These are places where most people spend most of their working time on farms. To reduce the high transaction costs in the rural areas, rural producer organizations have played a great role in marketing and supply of inputs. These organizations can be defined as voluntary membership associations with a high potential of promoting members' collective economic interests that use the social relations embedded in them. In Tanzania, organizations that have been prominent are the AMCOS (Agricultural Marketing Cooperative Societies) that have undergone organizational changes since they were established under the Cooperative Ordinance of 1932. Since the enactment of this ordinance the government has instituted seven Acts as of 2005, that have extreme variations, from member based to state-controlled cooperatives (Chambo et al 2004). Structural changes and change in government policies have affected the performance of cooperatives. The cooperatives have failed proportionally with fall in agriculture production. Cooperatives have thus failed to meet the expectations of its members and as a result they have lost confidence. The Cooperatives which are the prominent RPOs (Rural Producer Organizations) in the rural areas have been dealing with traditional export crops that are declining in production with minimum diversification (Ngailo & Towo, 2003), The RPOs like any other enterprise play the role of creating new ventures and competitive models, which takes innovations and make them into commercial products, and grow businesses that account for most of job creation and value addition. Thus, members of the RPOs are expected to be entrepreneurs who have the following attributes that define their unique gifts: to pursue opportunity, live proactively, leverage resources, build networks, and create value. However, the changing socio economic environment nationally and internationally has not been favourable to the RPOs and farmers to behave in such a manner