For the next several days, I’m going to focus mostly on food production in Tanzania, from the perspective of small business. There is some complexity to this issue but we will try to break it down into manageable pieces. This first one is a bit longer than our typical writing but you’ll have a little appreciation of what it means to be a subsistence farmer when you get to the end.
Food production is important for a variety of reasons:
- 70-90% of the African population is subsistence farmers – for most nation’s this is their economic base.
- Weather is irregular with localized frequent droughts but also many good years.
- Hunger is a common problem although outright famines seem to be in decline across Africa over the past decades. They are not gone – for example there is currently a terrible drought in Kenya.
- The success of local farmers would allow them to stay in rural areas rather than migrating to cities in search of opportunity. What they often find in cities is worse, with slums where shelter is poor, disease is widespread, infant mortality is high, and personal danger is a frequent problem. In essence, rural poverty is at the root of much urban poverty. This is how men are often separated from their families and drives the spread of AIDS.
In the west, “Farmer’s Markets” are an appreciated luxury, where one can meet directly with the grower to obtain high quality produce. Although this has many benefits, I think that it is overly romanticized as a food solution. (Maybe taking this controversial position will get more comments on my blog!)
In Tanzania, by definition the delivery model is predominantly a farmer’s market. To start with, 70-80% of country is subsistence farmers: they grow first for their own needs and second for that of their village. What is their incentive to work harder and grow more? To sell the excess food to create a resource for expenses requiring cash, the most commonly described to me are school fees and medical expenses.
How do you sell your excess? Here are the four basic methods I have seen:
1. You take your food to the side of the road nearest your shamba (farm) and sell it to passing people. What do you find when you bring your onions, tomatoes, fruits, vegetables, or grains to roadside? -A lot of other people selling exactly the same thing. What happens if you fail to sell quickly? –It rots. So what do you do? You sell at any price just so you get something.
2. You sell your food to a middleman who takes it to the city and resells to shops, stores and factories. There are hundreds of these middlemen who aggregate a truck full of food. Are they trustworthy? Rarely. Can you count on them to return next year? Rarely. Will they give you a fair price? Almost never. Your problem is still the same – everyone is selling at once. You must sell low or food rots so you sell. There are also areas along highways where middlemen and local farmers congregate to sell. It’s quite an experience to stop and get some oranges, tomatoes, green peppers, and bananas as I recently did. You are almost tackled by the press of sellers. Only one seller turned down a low offer.
3. Imagine you have a more durable product like a dried grain such as rice, maize or millet. You decide to hold on to it to wait for the harvest volume to subside. For some of these crops, market values in the city rise by a factor of 6 over the course of the year. So the middle man comes and you refuse to sell. (If you ask the middlemen, they say that you can’t trust the farmers to sell when they want to buy, so the distrust is mutual.) But your strategy has weakness. As time passes, moisture, bacteria, rats, and other pests deteriorate the value and quantity of your harvest. If you wait it out, you can get a 30% increase in value but you might have lost 30% of the harvest. Not a fun game of chicken. And the middlemen control the game because you have no transportation. I’ve met with these people, as well.
4. Finally, imagine you have suffered a crop loss or health calamity that forced you to sell (or eat) even next year’s seeds. You are completely broke. In order to plant again, you sign an agreement with the middlemen that if they provide the seeds, then you will guarantee them the crops. The price you are given for your crops will keep you locked in this cycle indefinitely because they will take all the profit. This money lending process is widespread in the developing world and creates a type of indentured servant. I have met these poor and I wish you could, too. Many of them are young widows. (You can also find this in the story of Edgar Nkunda: http://cheetahdevelopment.blogspot.com/2009/06/edgar-nkunda-chapter-one-lacking-bus.html)
If you are a farmer, you are left bewildered by food production. You hear the government talk about the need to increase food production. NGOs (Non-Government Organizations, usually donation supported) from the west come to your village to teach you how to raise more crops and use modern farming methods. These generally require more work and more expense, like fertilizer.
But what do you see? You see that crops you raised last year lacked a market. You watched as your hard work literally rotted in harvested mounds or in the field. Why would you work harder or spend more to grow more? So you try to assure that your staple such as maize or rice is in good supply for your own family and you don’t worry too much about growing more. (I have met with some of these NGOs and they report that even with demonstration plots, farmers are slow to adopt these more productive methods.)
But notice, maize and rice, even when supplanted with legumes, provide nominal nutrition at best. But these are the crops that naturally dry on the stalk.
Yes, there are farmer’s markets everywhere. But the food value chain is completely broken.
40% of the food in Tanzania is never is eaten because it rots. And this while hunger problems and malnutrition persist and are widespread. Farmer’s markets may sound great in theory, but when it is all you have, it doesn’t connect people to the food they need.
Although there is plenty of production, beyond that the value chain is broken. The businesses that would fill this chain are almost non-existent. However, this problem can be viewed as an opportunity. By creating small businesses, the value chain can be fixed, people can find jobs, incomes can rise, and hunger can be abated. And because the solution is business-based, profitability can drive sustainability and end the cycle of dependency.
In upcoming installments: the missing links in the value chain.
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