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January 12, 2011

Tanzania brewery contracts small-scale farmers' groups to supply barley

by Namtasha Mgaya

Tanzania’s leading brewery, Tanzania Breweries Limited (TBL), is consolidating the local barley industry by arranging to purchase the cereal from 10 local farmers groups.

The firm has empowered small holder growers of malting barley in the Southern Highlands of the country by signing agreements for purchasing the raw material locally.

Limitations to barley growing is blamed on lack of modern farming techniques by the majority of local farmers, lack of appropriate technologies and basic farming equipment, acidic soils in the area that requires massive liming applications, and unreliable rainfall patterns particularly in the northern highlands.

These challenges have compelled the brewers to device a programme named Kilimo Saidiana, which has achieved a milestone towards increasing local procurement of malt by signing agreements with the 10 organized groups of small holder producers.

These organized groups of smallholders cultivate 3,917, are expected to produce and supply to TBL approximately 4,000 metric tons of malting barley starting the 2010/11 season. TBL requires 50,000 tonnes annually.

This is an initial step towards fulfilling the aims of TBL to produce as much as possible of its malting barley from smallholders in the country and thereby contribute to the eradication of poverty in the rural areas.

In conjunction with the Stanbic Bank, TBL has obtained a secured pre-financing facility to contracted barley farmers seeking working capital loans for operational expenses, with the loan deducted from the farmer's proceeds at delivery time.

TBL external affairs director Phocus Lasway said under the programme the firm will import less malting barley from international markets.

"You know the problem is not the availability of the product in the market, but if you have it locally you can maintain the price. At one time the price of malting barley went up from US$400 to US$1,200 per metric ton on account of a three-year long drought in Canada, Russia and China," he said.

When growers manage to grow efficiently four metric tons per acre the profit is relatively good, but it needs modern farming techniques, he explained.

The organized villages are in the districts of Kilolo, Mbozi, Makete, Iringa in Njombe, Mufindi where some 6000 individual farmers will be engaged in barley farming.

TBL officials say this is an initial outcome of a partnership between Kilimo Trust and TBL to organize viable groups of smallholder producers to undertake contract farming business.

Kilimo Trust is a non-profit organization dedicated to linking farmers across the East African Community (EAC) region, to profitable national, regional and global markets.

This linkage requires helping most small farmers to graduate to enterprise owners or agri-SMEs capable of utilizing market opportunities, executing contracts within value chains and attracting private sector commercial financing (credit and equity).

In Tanzania, Kilimo Trust is also in partnership with Agra and Stanbic Bank that established an agribusiness loan scheme to increase access of smallholder farmers and SMEs to commercial financing, and expand business relationships between large agribusinesses and smallholders.

Kilimo Trust CEO in East Africa, Prof. Nuhu Hatibu, said smallholder farmers are not investing to increase productivity and production, not because they do not know what to do --but because they do not have incentives to do it.

TBL managing director Robin Goetzsche says agriculture plays a vital role towards poverty reduction and this being the case, every effort must be taken in this sector to change the prevailing subsistence agriculture to modern commercial agriculture.

East African Business Week

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