Two reasons agriculture still underperforms

DAR ES SALAAM: AGRICULTURE sits at the heart of Tanzania’s economy. It employs the majority of the country’s workforce, underpins food security and remains essential to broad-based economic growth.

Yet despite decades of policy reforms, public spending and private investment, the sector has delivered only modest productivity gains, limiting its contribution to higher incomes and structural transformation.

Successive governments have made agricultural modernisation a national priority, complemented by growing private investment in farming, agro-processing and agricultural services. Even so, results have fallen short of expectations.

Two challenges continue to constrain the sector’s performance, growth has remained below the level needed to accelerate rural development, while productivity remains stubbornly low.

Addressing both will be critical if agriculture is to fulfil its potential as a driver of Tanzania’s economic transformation.

Growth remains below target. Agriculture has continued to grow, but not at a pace sufficient to transform rural incomes or drive broader economic development.

According to the World Bank’s Transforming Agriculture report, Tanzania’s agricultural GDP expanded by an average of about 3.5 per cent a year between 2006 and 2016.

Assessments by the Japan International Cooperation Agency (JICA) and other development partners paint a similar picture, with annual agricultural growth largely remaining between 3 per cent and 5 per cent over the past several decades.

While positive, that performance remains well below the 6 per cent annual growth target set under the Comprehensive Africa Agriculture Development Programme (CAADP), a benchmark widely regarded as necessary to accelerate structural transformation, raise rural incomes and reduce poverty.

The implication is clear: Agriculture is growing, but not fast enough to meet Tanzania’s development ambitions. Productivity remains the biggest constraint If slow growth is the symptom, weak productivity is the underlying problem. Crop yields across Tanzania remain well below their potential.

Average maize yields, for example, are estimated at between 1.5 and 2 tonnes per hectare, yet farmers who use improved seed, fertiliser and sound agronomic practices frequently harvest 3 tonnes or more.

Similar yield gaps exist across many staple and cash crops. Closing these gaps is becoming increasingly urgent. Agricultural land is finite, while population growth continues to intensify demand for land for housing, industry and other economic activities.

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Future agricultural growth will therefore depend less on expanding cultivated land than on producing more from every hectare already under production. One of the biggest constraints is the slow adoption of modern agricultural technologies.

Most Tanzanian farmers are smallholders cultivating between one and two hectares, often with limited access to improved seed, irrigation, mechanisation, extension services and affordable finance.

Without these inputs, productivity remains low, production costs stay high and commercialisation becomes difficult.

There are, however, encouraging signs. Although medium-scale farmers account for only a small share of farming households, they now cultivate roughly one-third of Tanzania’s agricultural land.

Their stronger financial position enables greater investment in mechanisation, improved seed and Good Agricultural Practices, resulting in higher yields and stronger participation in commercial markets.

The benefits extend beyond their own farms. Research suggests neighbouring smallholders frequently benefit through demonstration effects, knowledge sharing and improved access to markets, input suppliers and agricultural services.

These spill-over effects help raise productivity across surrounding farming communities. Another positive trend is the gradual movement of labour from agriculture into nonfarm activities. While this may appear to weaken agriculture, history suggests the opposite.

Structural transformation depends on a diversified economy in which manufacturing, transport, finance, energy and other service industries expand alongside agriculture.

These sectors provide farmers with better infrastructure, technology, finance, markets and employment opportunities, all of which strengthen agricultural productivity.

That helps explain why agriculture in advanced economies consistently outperforms that of many developing countries.

The difference lies not in more favourable climates or larger land endowments, but in stronger economic systems that support innovation, productivity and value addition. Tanzania’s agricultural challenge is therefore less about natural resources than economic organisation.

The country possesses abundant agricultural potential, favourable agroecological conditions and a growing domestic and regional market. What it lacks is sufficiently rapid productivity growth.

Closing that gap will require faster adoption of modern technologies, stronger extension services, improved access to finance, sustained private investment and policies that enable farmers of all scales to become more productive and commercially competitive.

Without significant gains in productivity, agricultural transformation will remain more an aspiration than an economic reality.