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Business Last Updated: Feb 20, 2019 - 11:01:03 AM

The untapped edible oil sector in Tanzania
By Exchange, February 20, 2019
Feb 20, 2019 - 11:00:08 AM

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Tanzania`s edible oil sector stands at Tshs.676.2 billion ($294 million) with players like Bidco Oil and Soap Ltd, Murzah Oil Mills and Alaska Tanzania.

The sector is highly in need of investors to fill the supply gap that currently stands at 320,000 tonnes so as to slash the import bill that amounted to Tshs.191.3 billion (83.19 million) in 2018. The country`s annual demand for edible oil is 500,000 tonnes and annual supply is 180,000 tonnes leaving the country with no choice but to import the remaining 320,000 tonnes.

The demand forecast shows an increase from 500,000 tonnes to 700,000 tonnes of edible oil by 2030 and Tanzania guarantees the market growth for investors in the foreseeable future.

The major sources of edible oil in Tanzania include sunflower, palm, groundnuts, sesame, soya beans and cotton. Oilseeds are produced in almost all regions in Tanzania. The major crop for edible oil production in Tanzania is the sunflower because it can be grown in most parts of the country as it is drought resistant, less susceptible to diseases and cheaper to cultivate compared to other oilseeds crops. However, production of sunflower remains low and benefits from its value chain have not been adequately realized.

Due to this, the Bank of Tanzania (BoT) conducted a study to investigate potentialities of sunflower sub sector and its contribution to the economy. The study was carried out in areas where sunflower is grown, covering all Bank of Tanzania`s (BoT) zones notably, Central Zone (Dodoma, Iringa, Singida and Tabora regions); Eastern Zone (Lindi, Morogoro and Mtwara regions); Lake Zone (Geita, Kigoma, Mara, Simiyu, Shinyanga, Kagera and Mwanza regions); Northern Zone (Manyara, Kilimanjaro, Tanga and Arusha regions); and Southern Highlands Zone (Katavi, Rukwa, Ruvuma, Mbeya, Njombe and Songwe regions).

Overall, the findings indicate that there is a huge potential for producing sunflower seeds in Tanzania. This includes high demand of sunflower oil, large suitable land, availability of market/demand, presence of water bodies, favorable policies and regulations, availability of power in the rural areas (Rural Electrification Program through the Rural Electrification Authority {REA}), and possibility of a wide range of products that can be produced in the sunflower value chain.

Further findings indicate that performance in this subsector does not mirror the underlying opportunities. Production is characterized by small area of cultivation and low yield. On average, cultivation is on small-scale, with an average farmer cultivating 4.0 acres only, producing only 0.6 tons of sunflower seeds per acre. This level is far below productivity of 2.0 tonnes to 3.0 tonnes of sunflower seed per acre.

The role of farmers in the sunflower value chain is only confined at production level and selling sunflower seeds. Processing is characterized by small and medium scale processors and is only limited to sunflower oil and animal cake. It was found that the low performance in this subsector is driven by a number of constraints. These include; poor farming practices, inadequate extension services, poor access to finance, depressed farm gate prices of sunflower products, inadequate processing facilities, threat from imported edible oil and inadequate technology.

To address these challenges, the following measures were recommended; capacity building to farmers, improving extension and processing services; addressing financing needs to the sunflower value chain especially farmers; meeting input needs to the farmers; encouraging public private partnership in the subsector and strengthening marketing infrastructure for sunflower products.

However, Tanzania believes it has the capacity to produce enough of the required edible oil and so undertook measures to boost production. In the 2018/19 financial year, the country increased the tariffs on crude palm oil to 25 per cent so as to promote local production of oil seeds. The country also increased duty on semi-refined and refined/double refined edible oil including sunflower oil, palm oil, groundnuts oil, olive oil, maize corn oil to 35 per cent from 25 per cent.

Source:Ocnus.net 2019

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