East Africa Has Promising Future, Despite Hiccups

"Our goal is to transform Tanzania into a middle economy by 2025 ... The most important resolution (for stakeholders) is putting innovations into action at the country and local levels." -Christopher Chiza, Tanzania Minister of Agriculture, Food Security and Cooperatives

“Our goal is to transform Tanzania into a middle economy by 2025 … The most important resolution (for stakeholders) is putting innovations into action at the country and local levels.” -Christopher Chiza, Tanzania Minister of Agriculture, Food Security and Cooperatives

The drive by the three East African countries of Tanzania, Kenya and Uganda to increase food production to meet the needs of the rising population – now estimated at 125 million – has pushed the supply of quality agrochemicals to the top of the region’s agricultural agenda.
Governments in Tanzania, Uganda and Kenya have made strides to increase agricultural output by expanding access to agrochemicals, through incentivising the market and encouraging participation of the private sector in addressing challenges hampering effective supply and usage of the farm inputs.

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Tanzania
The removal of taxes on pesticides and other farm inputs by Tanzania last year is likely to spur growth of country’s agchem market, particularly for imports of quality products to cover lack of capacity to manufacture the inputs locally.

Tanzania’s Ministry of Finance announced exemption from the 18% value added tax (VAT), and zero-rating of the supply of fertilizers, insecticides, fungicides, rodenticides, herbicides, anti-sprouting products, plant growth regulators and similar products that are necessary for use in agricultural production.

Tanzania, whose agrochemicals market was two years ago said to be flooded with up to 40% counterfeit products, is keen to boost access to inputs to “achieve sufficient agricultural production and growth to meet economic development, poverty reduction and food security and nutrition goals,” said Minister for Agriculture, Food Security and Cooperatives Christopher Kajoro Chiza.

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Chiza, however, admits that despite the importance of the agrochemicals, access is constrained by “weak quality control mechanism for inputs, weak input procurement and distribution system, low utilization of modern inputs in agricultural production and underdeveloped input manufacturing industry.”

The Ministry of Agriculture estimates that about 30% to 40% of total crop production is lost to these pre- and post-harvest handling and pests.

“The losses are even higher in case of pest outbreaks that can inflict up to 100% crop losses if not controlled,” the Ministry stated. Market needs call for appropriate local pest management options compliant with good agricultural practices to ensure export standards, environmental protection and bio-safety, which are critical requirements in international trade.

Agencies involved in Tanzania’s agrochemicals market are concerned about the impact of the presence of counterfeit products in the market and the involvement of “unfaithful agro-distributors who are bent on taking cash on counterfeit products,” said Mshana Mwikari of the Agricultural Research Institute of Tanzania.

According to the Tanzania Farmers Association, “the entire value chain faces many challenges including curbing counterfeits,” due to a lack of a common approach and instruments to promote availability and usage of genuine inputs.

Counterfeits in the Tanzanian market have partly been blamed on the fact that it shares borders with eight neighbors, which, according to Africa Stockpiles Program Chair Dr. Vera Ngowi “makes it difficult to control illegal trade in agrochemicals.”

Ngowi told a local newspaper in October that Tanzania pesticide market also faces myriad challenges such as the government’s central procurement system for agrochemicals, inadequate storage and proper stock management, uncoordinated roles by donors of agrochemicals and the absence of effective legislation on pesticides or inability to enforce the existing laws.

Many agrochemicals dealers have found themselves holding onto expired products because it is difficult to predict the outbreak of pests such as migratory locusts and grain-eating birds, and also because of inappropriate pesticide requirements.

Tanzania’s National Agro-Dealer Association (TANADA) plays a role in the country agrochemical market by helping small-scale farmers commercialize their farm enterprises and fight counterfeits. The association has also been pushing both the government and agchem importers to recognize its position in the supply chain and streamlining of the country’s agchem market.

Agrodealers have received a major boost from training under the Tanzania Agro-dealer Strengthening Program (TASP), launched and funded by the Alliance for a Green Revolution in Africa in 2007.
The dealers are trained on accessing financial services, how to output marketing, processing, value-adding services and policy advocacy through association development.

 

"Without the private sector, then (economic) sustainability is a big question mark. The value of East African business has risen to $7.8 billion, so it is very profitable with a lot of opportunity." -Anne Mbaabu, Director of Market Access Program for AGRA

“Without the private sector, then (economic) sustainability is a big question mark. The value of East African business has risen to $7.8 billion, so it is very profitable with a lot of opportunity.” -Anne Mbaabu, Director of Market Access Program for AGRA

Kenya
In neighboring Kenya, up to 90% of the market relieson imported pesticides according to the Pest Control Products Board (PCPB), the government agency that regulates manufacture, trade and safe use of the agrochemicals.

The largest percentage of the pesticides sold in the Kenyan market are from international companies who have appointed certified local agents to supply the products on their behalf, said Barasa Wanyonyi, PCPB Senior Registration Officer.

Government statistics indicate that most of the agrochemicals imported to Kenya include glyphosate, mancozeb, amitraz, copper oxycholide, 1.3 dichloropropene, 2,4-D amine, sulphur, dimethoate and methyl bromide.

Volumes imported and supplied to farmers may have been reduced because of a move last year by the National Treasury to introduce a 16% tax on imported agrochemicals.

Agrochemical dealers in Kenya led by their national organization, the Agrochemical Association of Kenya (AAK), have warned the tax could see the agrochemicals industry losing in excess of $11.5 million.

“The import bill of agrochemicals is about Sh8 billion ($92 million) and imposing a 16% tax will see farmers absorb the same from our members,” said AAK chairman Kuria Gatonye.

He said farm inputs take up to 30% of the total cost of production and the 16% tax could pose a serious financial challenge for agrochemical dealers and farmers.

The government had before July 2013 zero-rated agricultural inputs.
“The idea to zero-rate agricultural inputs was to allow more farmers to use them to boost production,” Gatonye said. He added that agrodealers cannot absorb the new taxes but pass them over the farmers “who can ill-afford higher prices.”

“Most exporters in Kenya are small-scale farmers who import their inputs and the cost of production would be too prohibitive,” said Alice Mwikali, AAK chair in charge of training.

Previously, Kenya had exported up to 60 metric tonnes of agrochemicals, mostly cybermethrin, chrolofenvinphos and permethrin to countries such as Tanzania, Uganda, Seychelles and Burundi.

 

Uganda
In Uganda, the government’s medium-term public investment plan through 2015 has given priority to reducing crop losses from the current 50% to 10% by 2015 and acquiring quality agrochemicals and other inputs at affordable prices.

The Ministry of Agriculture, Animal Industry and Fisheries says it is equipping staff “with up-to-date knowledge and skills to control crop pests and diseases effectively and in an environmentally safe manner and strengthen a surveillance, forecasting and diagnostic system.”

The plan targets the elimination of banana bacterial wilt, coffee wilt disease, coffee leaf rust, larger grain borer, elephant grass stunt, cassava brown streak virus, armyworm, variegated hoppers, coffee stem borer and quelea birds.

Private and quasi-government agencies have boosted the efforts through programs to streamline the supply of pesticides and sensitize retailers and farmers on their proper use and also on how to detect fake products.
For example, the Uganda National Agro-lnput Dealers Association (UNADA), a national organization for agrodealers, is spearheading efforts to improve access to certified pesticides by farmers and also highlight some of the challenges faced in Uganda’s agrochemical market.

The organization mobilizes agrodealers and registers them as members. It then coaches them on good practice, organizes field days for both dealers and farmers and trade shows for dealers to promote their products and show how they can be safely used on the farm.

“Dealers need skills to detect fake inputs, market new products, handle and maintain their clients especially when prices are skyrocketing,” UNADA Executive Secretary Wilfred Thembo said.

Uganda pesticides are categorized into three main classes according to toxicity, with Class 1a being the most toxic and U as the least toxic. In between the two levels are classes 1b, II, III and IV.

Although Uganda has more than 2,500 agrodealers, only about 50 were registered chemical dealers by 2012, a number that is expected to increase to 100 by the end of this year and a further 120 by the end of 2015.

Apart from UNADA, other agencies have separately or in conjunction with the government and other private stakeholders launched initiatives to promote use of agrochemicals in a sustainable manner through trainings and also identify challenges faced by both dealers and farmers in selling or accessing the products.

For example, USAID in conjunction with Livelihoods and Enterprises for Agricultural Development Uganda (LEADUG) carried out a survey of agrochemical dealers in Uganda and found that access to agrochemicals especially in rural areas is a major challenge.

“In addition to low penetration of agrodealers in rural Uganda, input use is stymied by the high cost to farmers,” the agency said last year. “Domestic supply chain inefficiencies, poor infrastructure and the high cost of transport are the main causes of the above-world-market price Ugandans pay for agro-inputs.”

The agency said although suppliers of agrochemicals had knowledge of the products they stocked, most of their staff was “generally under-informed and incapable of providing technical advice to farmer-clients.”
“As such, there is generally little active competition between retailers outside of the prices of their products and not on any additional services or customer support that would differentiate them.”

The findings have been collaborated with those of the Pesticide Use, Health and Environment (PHE) Uganda Project sponsored by Uganda National Association of Community and Occupational Health, Dialogos (Denmark) and Makerere University.

“Pesticides are increasingly sold through informal networks of small distributors and hawkers, many of whom have no technical knowledge of pesticide hazards or safe handling,” said Aggrey Atuhaire of PHE Uganda Project.

East Africa’s agrochemical market, despite the challenges of state taxation and presence of counterfeits, has a bright future especially with the involvement of the private sector and training programs targeting not only agrodealers but also consumers of the farm inputs.

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