State moves to tame soaring commodity prices

THE government has devised measures to tame the sky-high prices for food and other commodities, including initiating negotiations with manufactures and suppliers of commodities, for them to strengthen systems of distribution that will help to lower transportation costs.

This latest move comes after citizens and traders sought the government’s interventions on skyrocketing food prices, largely contributed by poor harvests. Also, the prices for maize and maize flour have shot up since Tanzania opened its borders for cereal exports.

At a press conference in Dar es Salaam yesterday, the Minister for Investment, Industry and Trade, Dr Ashatu Kijaji said other factors apart, the fact that Tanzania is a vast country; cost of transportation has always been a challenge.

“Due to the distance from one region to another, the cost of transportation is high and the government felt there was a need to intervene by among others issuing a monthly subsidy of 100bn/- on fuel products as well as injecting subsidy on fertiliser to the tune of 150bn/- this fiscal year.

Fertiliser is now sold at a flat rate across the country. The subsidy has lowered prices of fertiliser to an average of between 50,000/- and 70,000/- from the current market price of up to 136,135/-.

“We have also initiated negotiations with manufactures and suppliers of all important commodities, for them to strengthen systems of distribution that will in the end help to lower transportation costs,” she said.

Dr Kijaji said the move will certainly help to harmonise commodity prices between industrialised and peripheral regions. She said the objective is to follow a distribution system used by manufacturers of certain commodities that assures price harmonisation for all regions.

“The negotiations will focus and encourage the importance of increasing the efficiency of commodities distribution systems countrywide, to ease the burden of price shouldered by final consumers,” she said.

Explaining the situation of food production in the country, Dr Kijaji said for the year 2020/2021 maize production was 7,039,064 tonnes, while the demand was 5,978,257 tonnes, meaning the country had the surplus of 1,060,807 tonnes.

In the 2021/2022 season, maize production dropped by 7.1 per cent to 6,537,203 tonnes, while demand increased by 0.9 per cent to 6,034,943. She said at the same period, maize surplus dropped by 56.6 per cent to 502, 260 tonnes.

She said rice production for 2020/21 stood at 2,686,829 tonnes while the demand was 1,095,743 tonnes, meaning the country had the surplus of 1,591,089 tonnes. The minister said for 2021/2022, production of rice significantly dropped by 30.9 per cent to 1,856,731 tonnes, compared to the demand of 1,065,534 tonnes. This means, the minister said surplus dropped by 50.3 per cent to 791,198 tonnes.

Regarding beans production, minister Kijaji said production stood at 1,428,434 tonnes in 2020/21, while demand was 553,791tonnes, meaning the country had the surplus of 879,643 tonnes. For 2021/2022, beans production dropped by 11.1 per cent to 1,269,487 tonnes. The demand was 488,753 tonnes while saying that surplus also dropped to 780,734 tonnes.

Earlier on Wednesday, the Minister for Finance and Planning Mwigulu Nchemba, stated that the prices will go down with time basing on the cut of fuel prices.

“I assure Tanzanians to expect a drop in the price of commodities. They should anticipate a decrease in the price of commodities because the price of fuel is dropping,” said Dr Nchemba.

An economist-cum-investment banker, Dr Hildebrand Shayo, said it was high time the government started to take policy measures to subsidise food accessibility to low-income people, particularly women and children.

“There is a need for deliberate action to increase social protection safety nets and other measures to develop the income of people in urban and rural areas to cope with the increasing food prices.

“This may involve investing more in building national food reserves to act as buffers and reduce vulnerability to food shortages and price rises,” he said.

Dr Shayo further said apart from initiatives being undertaken by the government, there is a need to scale up support to smallholder farmers, especially women smallholders and sustainable agroecological approaches to farming, so farmers can expand soil fertility for crop production, without the use of expensive fossil-fuel chemical fertilisers.

In the face of the current conflict in Ukraine, climate crisis and Covid-19, he said African countries need to invest more, not less, in gender-responsive public services.

“Instead of austerity, the government should invest in ambitious and progressive tax reforms. Meaning that there is a need for government to strengthen its institutions to ensure consumer rights by monitoring food, fuel and related prices and by acting against selfish traders, who might take advantage of the disruptions in food supply chains,” said Dr Shayo.

The National Coordinator at Tanzania Pulses Network (TPN), Zirack Andrew when contacted for comment, stated that with the disruption of the global logistics system (Freight charges have risen by almost 300 US dollars compared to last year), Tanzania has been a net importer of ship-delivered wheat and edible oil.

“This price has been disrupted by various factors including the Covid-19 pandemic and Russia-Ukraine crisis thus led to increasing in food prices,” he said.

Assistant Lecturer University of Dar es Salaam Business School (UDBS), Godsaviour Christopher said with cooking oil crisis, Tanzania needs to invest in palm plantations that can be grown in different regions such as Tanga and Kigoma.

“This will provide a permanent solution to the importation of cooking oil from abroad, which costs the government millions of dollars each year,” he said.