EFFECTS OF ECONOMIC LIBERALISATION

1
EFFECTS OF ECONOMIC LIBERALISATION

• AGRICULTURAL SECTOR

2
AGRICULTURAL SECTOR

• AGRICULTURAL MARKET LIBERALISATION
• EXPECTATIONS / PROMISE OF AGRIC MAREKT
  LIBERALISATION
• OUTCOMES OF AGRIC. MARKET LIBERALISATION
• PRODUCTION
• PRODUCE AND INPUT PRICES
• IMPLICATION TO RESOURCE MANAGEMENT

3
AGRICULTURAL MARKET LIBERALISATION

• DEMOLISHED / WEAKENED PARASTATALS AND
  COOPERATIVES / REPLACED BY PRIVATE TRADERS
• DECONTROLLED PRODUCE AND INPUT PRICES
• REMOVAL OF SUBSIDIES ON INPUTS AND PRODUCE

4
EXPECTATIONS

• With economic liberalization including free
  prices and removal of input and output subsidies
  agricultural producers would respond to price
  incentives and start to specialize, accumulate
  and innovate (Skarstein, 2005 343)
• More competitive markets replacing state monopoly
  markets
• Restoration of availability of incentive goods

5
OUTCOMES

• NO SIGNIFICANT INCREASE IN AGRICULTURAL
  PRODUCTIVITY IN GRAIN CROPS, EXPORT CROPS.
• EXPORT CROPS SISAL, CASHENUT, COFFEE, PYRETHRUM
• IMPROVEMENT IN PRODUCER PRICES NOT REALISED
  DESPITE GROWTH IN PRIVATE TRADE
• AGRICULTURAL PRODUCTIVITY WORSENED

6
OUTCOMES

• REMOVAL OF SUBSIDIES ON INPUTS MADE INPUT PRICES
  TOO HIGH AND UNAFFORDABLE
• DECLINE IN USE OF FERTILISER IN MAJOR GRAIN
  PRODUCTION AREAS
• DECLINE IN PROPORTION OF FARMERS USING CHEMICAL
  FERTILISER
• 1991/92 27
• 1994/95 15
• 1997/98 10.5

7
FERTILISER SUBSIDY PHASING OUT

• 1990/91 70
• 1991/92 55
• 1992/93 40
• 1993/94 25
• 1994/95 0

8
FERTILIZER USE

• 1981/82 80,000 TONNES
• 1986/87 140,000 TONNES
• 1987/88 120,000 TONNES
• 1994/95 200,000 TONNES
• 1998/99 63,000 TONNES

9
DECLINE USE OF FERTILIZER USE IN THE SOUTHERN
HIGHLANDS

• SH STABLE RAINFALL AND HIGH ALTITUDE, SUITABLE
  FOR HYBRID MAIZE PRODUCTION
• GRANARY OF TANZANIA (CENTRE FOR GRAIN PRODUCTION)
• EXPERIENCED DECLINING USE OF FERTILIZER
• IRINGA USED 65,000 TONNES IN 1990/91 BUT ONLY
  20,000 TONNES IN 1998/99
• REASONS
• HIGH PRICE OF FERTILIZER IN REMOTE AREAS
• ACCESSIBILITY COOPs NO LONGER SUPPLY TO VILLAGE
  LEVEL
• PRIVATE TRADERS FIND IT TOO COSTLY TO SUPPLY
  SMALLHOLDERS IN REMOTE AREAS
• INPUT PRICES INCREASED FASTER THAN THOSE OF
  PRODUCE PRICES

10
HIGHER PRODUCE PRICE?

• PROMISE OF HIGHER PRODUCE PRICE NOT REALISED.
  PRICES BECAME UNSTABLE AND UNPREDICTABLE LOW
  INCOMES
• NO MORE PRICE QUARANTEE VARIABILITY PER YEAR
  VERY HIGH
• SPECULATIVE BEHAVIOUR OF TRADERS
• LIMITED COMPETITION AMONG TRADERS
• FARMERS LACKED BARGAINING POWER
• LACK OF FARMERS MARKETING ORGANISATIONS TO
  ENABLE ECONOMIES OF SCALE

11
HIGHER PRODUCE PRICE?

• FARMERS EXPERIENCED FORCED COMMERCE
• POVERTY, LACK OF STORAGE FACILITIES, LACK OF CASH
  (AMIDST INCREASING CASH DEMAND FOR SOCIAL
  SERVICES, READILY AVAILABLE INCENTIVE GOODS, ETC)
• FARMERS ARE COMPELLED TO SELL MUCH OF THEIR CROP
  AT LOW PRICE AT HARVEST TIME ( INCOME LOSS FOR
  FARMERS INCOME GAIN FOR TRADERS)
• TRADERS COLLUDE TO BLOCK FARMERS BARGAIN FOR
  BETTER DEALS

12
SUMMARY OF OUTCOME

• The experience of liberalizing Tanzania
  agriculture indicates that introducing free
  markets and getting prices right is not the
  right means for triggering transformation and
  growth in a predominantly pre-capitalist
  agriculture which is not even surrounded by a
  developed capitalist environment (Skarstein,
  2005 357).

13
IMPLICATION TO RESOURCES MANAGEMENT

• LAND IS THE MAJOR RESOURCE FOR AGRICULTURAL
  PRODUCTION
• WHETHER AGRICULTURAL MARKET LIBERALISATION HAS
  ENHANCED FARMERS ABILITY TO USE LAND RESOURCES
  EFFECIENTLY FOR HIGHER PRODUCTIVITY?

14
AGRICULTURAL INTENSIFICATION FAILURE

• AGRICULTURAL INTENSIFICATION REQUIRED FOR
  PRODUCTIVITY INCREASE - IS CONSTRAINED BY
  INADEQUATE ACCESS AND USE OF AGRICULTURAL INPUTS
• PARTIAL INTENSIFICATION (MORE FREQUENT USE OF
  FIELD) IS NOT SUPPORTED BY USE OF EXTERNAL INPUTS
• GREATER MINING OF SOIL NUTRIENTS LEAD TO LAND
  DEGRADATION DECLINING PRODUCTIVITY
• COMPETITION FOR LAND RESOURCES CONFLICTS
  BETWEEN SMALLHOLDERS PRESSURE ON LAND RESOURCES
  (EX. VALLEY BOTTOM CULTIVATION)

15
COMMERCIALISATION OF FACTORS OF AGRIC. PRODUCTION

• ECONOMIC LIBERALISATION HAS ENHANCED MARKET
  EXCHANGE ON VARIOUS SPHERES
• SOCIAL ORGANISATION BASED ON SOCIAL NETWORKS IS
  REPLACED MARKET EXCHANGE
• ABANDONED SYSTEMS OF SELF RELIANCE / SELF HELP
• COST SHARING IN SOCIAL SERVICES INCREASE
  HOUSEHOLD DEMAND FOR CASH (FAST CASH FAST CROPS)
• GREATER AVAILABILITY OF INCENTIVE GOODS
  ENCOURAGED EXCHANGE

16
LAND COMMERCIALISATION

• LAND HAS BEEN COMMODITISED TRANSFERABLE.
  INCREASING ACCESS TO LAND BY BUYING, HIRING
• POORER HOUSEHOLDS LOOSING LAND TO RICHER
  HOUSEHOLDS LANDLESSNESS
• SELLING OF COMMUNAL LAND
• INCREASING PRICE OF LAND - UNAFFORDABLE FOR THE
  RURAL POOR

17
LABOUR COMMERCIALISATION

• AGRICULTURAL LABOUR IS IINCREASINGLY
  COMMERCIALIZED
• TRADITIONAL SYSTEMS OF MOBILIZING LABOUR ARE
  ABANDONED
• LABOUR CONSTRAINT ON LAND MANAGEMENT PRACTICES
  THAT ARE LABOUR INTENSIVE SOIL AND WATER
  CONSERVATION PRACTICES

18
COMMERCIALISATION OF EXTENSION SERVICES

• AGRICULTURAL EXTENSION SERVICES AND RESEARCH OPEN
  TO PRIVATE SECTOR
• NO MORE FREE EXTENSION SERVICES
• TRADERS ASSUMING THE ROLE OF ADVISORS TO FARMERS
  BUT WITH NO TRAINING
• LAND MANAGEMENT PRACTICES NOT GUIDED
• TRADERS TAKING ADVANTAGE TO SUPPLY POOR QUALITY
  INPUTS, ETC

19
SUMMARY

• AGRICULTURAL MARKET LIBERALISATION HAS
  CONSTRAINED BETTER MANAGEMENT OF LAND RESOURCES
  BY SMALLHOLDERS
• GREATER LAND DEGRADATION IS LIKELY TO OCCUR