Cotton Sub-sector Reforms-Tanzania Cotton Association

1
Cotton Sub-sector Reforms-Tanzania Cotton
Association

• Robert Kisenha
• Chief Executive Officer, Simon Agency Ltd

2
Introduction

• 1993 marked policy change on commodities market.
• Prior to liberalization marketing was the
  province of the government assisted by
  cooperatives.
• Inefficiencies in the whole system necessitated
  the policy change.
• This paper will examine the reforms in the cotton
  industry stage by stage.

3
Liberalization of the cotton sub-sector

• A free market in the cotton industry brought a
  number of benefits-
• Competition
• Better prices to producers
• Increased ginning efficiency
• Prompt cash payment

4
Liberalization (cont.)

• Unfortunately entry of many players in the cotton
  business had some undesirable impacts-
• Deterioration of quality of cotton
• Unattended supply of farm inputs
• Collapse of seed multiplication system
• Mixing of seed varieties from various zones

5
Competitiveness of Tanzania Cotton

• Tanzania cotton is 100 hand picked
• Enters the market earlier than west African
  cotton
• Located near major markets compared to other
  regions
• Decline in quality results in price discounts of
  about 6 US cents per pound instead of receiving 4
  US cents premium as it used to be before
  liberalization

6
Public - Private Partnership

• Tanzania Cotton Association is the forum of the
  Private Sector in the cotton industry.
• The Association works closely with the Cotton
  Board in planning strategies to propel the sub
  sector forward through regular consultative
  meetings.
• Cotton buyers and ginners are encouraged to be
  members of the association to enhance self
  regulation.

7
Public Private (cont.)

• Recent reform of the Crop Boards divided
  functions of the industry into regulatory, shared
  and private.
• The private sector collaborates with the public
  sector to finance the shared functions which
  include cotton research, extension services etc.
• The regulatory function is funded 100 by the
  government

8
Public Private (cont.)

• The private sector is charged with the role of
  supplying inputs which so far we have not
  managed to implement.
• Inputs are supplied through the Cotton
  Development Fund. This is an interim arrangement.
• Licensing has been streamlined and licenses are
  obtained free of charge

9
Marketing Functioning

• Market reforms have increased competition where
  market forces control the cotton business.
• The number of players is now 40 which by any
  standard the industry is more than competitive.
• Cotton producers are benefiting immensely, for
  example, this season prices reached a record
  level of shs.500 per kilogramme.(exchange rate
  shs. 12701USD)

10
The Way Forward

• The need to seriously address the issue of
  quality deterioration through introduction of
  auction system
• Tanzania Cotton Association members to enter into
  integrated cotton cultivation programs with
  farmers and
• Deliberate move to increase domestic consumption
  of cotton.
• There is a need to rehabilitate rural
  infrastructure