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HomeAgribusinessStalled Seed Subsidy Scheme Hinders Tanzania's Sunflower Industry Boost for 2024

Stalled Seed Subsidy Scheme Hinders Tanzania’s Sunflower Industry Boost for 2024

Tanzania’s aspirations to enhance its sunflower industry in the 2023/2024 growing season have encountered setbacks due to complications in implementing a seed subsidy scheme aimed at sourcing high-yield seeds for the country’s one million sunflower farmers.

The initiative, financed by the African Development Bank, sought to procure 700 tonnes of hybrid seeds capable of delivering yields and oil content up to 65 percent higher than traditional varieties. The government intended to make these seeds available at subsidized prices for the growing season that commenced in October.

However, difficulties arose in securing the supply due to a shift in strategy regarding the selection of hybrid seeds. Tanzania has been making significant investments in sunflower processing to curtail its substantial edible oil imports, ranging from $90 million to $250 million annually. To support local oil producers, the government implemented tariffs on edible oil imports and eliminated VAT on sunflower oil processing equipment.

Nevertheless, processors face constraints stemming from the scarcity and relatively high cost of domestic raw materials, attributed to low yields from farmers. Despite the government and private sector introducing four hybrid seeds to the market over the past decade, their adoption has been minimal.

The plan to bulk-purchase subsidized hybrid seeds aimed to stimulate greater adoption, providing improved profit margins for farmers, supporting an expanded processing sector, and potentially generating thousands of new jobs. During the tender process, the Tanzanian government opted for a new entrant in the seed industry to supply 700 tonnes of a recently registered hybrid used in India.

This particular hybrid, one of 18 registered with the Indian Directorate of Oilseeds Development (DOD), lacks available information on its yields and oil content. Unlike other registered hybrids, it is not recommended by the DOD for any specific region in India. Despite these uncertainties, the new entrant could offer a lower price due to sourcing the seeds as an open buyer from India.

However, the negotiation for this single purchase of stockpiled Indian seed has extended over several months, causing a delay that prevents its arrival before the growing season began. Once the seeds arrive, the establishment of new distribution partnerships and networks will be necessary.

For Tanzanian farmers, it is increasingly improbable that the seed purchase will be available before the conclusion of the planting season in early 2024. Furthermore, the new supply will necessitate storage until the subsequent 2024/2025 season. Market specialists also note that the stockpiles of the new seed in India, which prompted price reductions, amount to approximately 500 tonnes, further impeding the completion of the 700-tonne order.

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