Agriculture: still awaiting investors; There is every incentive to double agricultural production in Tanzania. "We are, thus, looking for investors who can bring in good seeds and also irrigation, because our agriculture is very much rain-dependent.".

The government of Tanzania has adopted an Agricultural Sector Development Strategy (ASDS) which sets the framework for achieving the sector's objectives and targets. Agriculture remains the largest sector in the economy and hence its performance has a significant effect on output and corresponding income and poverty levels.

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The sector accounts for about half of GDP and exports, and its importance is amplified through backward and forward linkage effects. Sale of agricultural products accounts for about 70% of rural household incomes.

Over the 1990s, average agricultural growth was 3.6%, which was higher than in the 1970s and 1980s when annual agricultural growth averaged 2.9% and 2.1% respectively. In 2004, agriculture grew by 6%.

In the 1990s, agricultural exports grew at an annual rate of over 7% per year, although this rate has slowed down in recent years due to declining world market prices.

Food crop production has also grown at a rate of 3% which is about the rate of population growth and accounts for about 65% of agricultural GDP, with cash crops accounting for only about 10%. National data show significant progress towards the objective of a sustained 5% growth rate.

Higher and sustained agricultural growth is needed to meet the government's National Strategy for Growth and Reduction of Poverty (NSGRP also called Mkukuta in Swahili), and the UN Millennium Development Goals of halving poverty and food insecurity by 2015. There are four main reasons for this:

About 80% of the poor live in rural areas and agriculture accounts for 75% of rural household incomes, hence significant reductions in overall poverty levels, particularly rural poverty, will require raising agricultural incomes.

Agriculture accounts for about 46.2% of Tanzania's GDP (2004 figure) and for about 50% of exports. Agricultural growth has a larger direct impact on GDP growth than comparable growth in other sectors.

Agriculture stimulates economic growth indirectly through larger consumption linkages with the rest of the economy than other sectors. For example, Tshs1,000 of new household income from export crop sales can lead to an addition of Tshs2,000 in local employment in the production of non-tradables.

Meeting the country's food security needs in both rural and the expanding urban areas requires higher agricultural growth contributing to higher incomes and lowering food prices.

At an aggregate level, agriculture has performed relatively well over the late 1990s and early 2000s. The recent improvements are attributed to improved farmer incentives with marketing liberalisation in the mid-1990s, particularly for export crops resulting in farmers receiving a higher share of the world price, and technological change, particularly for traditional food crops which account for three-quarters of agricultural GDP.

Agricultural export revenue increased rapidly from 1990 to 1999, but then weakened, particularly for coffee and cotton, with declining world prices.

Eighty per cent of Tanzania's agricultural export revenues come from five crops: coffee, cashew nuts, cotton, tea and tobacco, with traditional cash crops accounting for about 10% of agricultural GDP. In recent years, there has also been significant growth in horticultural exports, particularly cut flowers and vegetables.

The main goal of the government's agricultural programme (the ASDS) is to give farmers better access to, and use of, agricultural knowledge, technologies, marketing systems and infrastructure--all of which contribute to higher productivity, profitability and farm incomes. ASDS also aims to promote private investment based on an improved regulatory and policy environment. The programme has a 15-year horizon and is national in scope. But it will be phased in a flexible manner to allow all local government authorities time to adjust to the new funding mechanisms and to manage the proposed reforms.

The programme is costed for seven years from 2006/7 to 2012/13. The seven-year period is divided into a three-year first phase (which started in the first quarter of 2006) and a four-year second phase. A review of the programme's performance will be undertaken at the end of the first phase.

So far, the programme's performance has received mixed reactions. Emmanuel ole Naiko, the executive director of the Tanzanian Investment Centre (TIC), the agency that promotes investment opportunities in the country, thinks there is room for improvement as agriculture has so far attracted less than 5% of the total investors coming into the country. "There is no reason why Tanzania should not be a net exporter of agricultural products," the TIC boss says, emphasising that agriculture "is pulling the rest of the economy down. That's why sometimes when you speak to the World Bank and so on, they talk about the low taxation ratio and revenue collection in the country. Revenue collection is low because we've got a large number of people in agriculture who don't pay taxes. Agriculture's contribution to the tax basket is very, very low."

To solve the problem, the government, according to Naiko, wants to modernise agriculture by encouraging the development of large commercial farms.

"If you look at cotton production, for example" Naiko says, "our average yield per hectare is 600 kilos. You go to Zimbabwe, with all the troubles they have had, they still produce 1,200 kilos per hectare--twice as much as we are doing. You go to Australia, it is 4,000 kilos per hectare.

"So in Tanzania, there is every incentive to double our production. We are, thus, looking for investors who can bring in good seeds and also irrigation, because our agriculture is very much rain-dependent."