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 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

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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.

1.0 Introduction:

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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 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.

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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

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

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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).

3.0 What is value added

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 • 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.

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

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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 bigger. The farmer

benefits through processing and value-added activities without necessarily

increasing commodity prices.

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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.

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.

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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.

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

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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, 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

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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 important role in

agricultural marketing and those who might invest in local processing.

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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 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:

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• 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. 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.

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 • 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

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

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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 VALUE ADDING TECHNOLOGY (MACHINERY AND

(PRODUCT) ACTIVITY EQUIPMENT REQUIRED)

Raw Foods: wash, peel, cut, fruit cleaner, peeling machine,

package cutting machine, fruit chopper,

packaging
Fruit Juices and preparation, wash, peel, fruit cleaner, peeling machine,

Pulps cut, press, pulp, sieve, cutting machine, fruit chopper, fruit

pasteurize, boil, pulper, juicer, sieve, strainer, press,

package pasteurizer, boiling pan, filling,

sealing and capping machine.

Canned and wash, peel, cut, boil, fruit cleaner, peeling machine,

Bottled Foods: package cutting machine, fruit chopper,

jams, jellies, boiling pan, filling, sealing and

pickled foods, capping machine.

sources, syrups,
Honey extraction, pressing, honey extractor, honey press, honey

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 filtration, boiling, filtering tank, honey strainers, boiling

packaging pan, packaging

Dried Foods: dried fruits, dried solar drier, fuel-fired drier, electric

vegetables, popcorn, drier, popcorn machine, packaging,

beans, nuts, packaging filling, sealing and capping machine.

Value -Added fresh milk, flavored milk cooler, milk/cream separator,

Dairy Products: milk, cheese, yoghurt, butter churn, ice cream making

ice cream, butter machines, filling, packaging

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

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

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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 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.

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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 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;

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 • 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;

• 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

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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 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;

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• 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

• 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

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 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

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.

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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

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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