In the second of a two-part mini-series, APRA researchers Ntengua Mdoe, Gilead Mlay and Gideon Boniface examine how actors in the rice value chain in Tanzania have been affected by the COVID-19 pandemic and the measures that were introduced to contain it. Part two focuses on rice processors, farmers, input suppliers and service providers in Morogoro and Mbeye. Read part one for the impact on farmers and consumers, here.
Prepared and written by Ntengua Mdoe, Gilead Mlay and Gideon Boniface
Part two: Effects on processors, farmers, input suppliers and service providers
Effect on rice processors
Rice processing has been negatively affected by the COVID-19 pandemic. Interviewed processors reported that they operate below the capacity of their processing facilities owing to the decline in domestic and export trade of milled rice. However, processing facilities owned by exporters of rice to Malawi, DRC Congo and Zambia have been the most affected following closure of borders and restriction of vehicle movement across their borders.
Effects on rice farmers
Telephone interviews with some farmers in Morogoro and Mbeya regions show that the effect of COVID-19 varies across rice growing areas different rainy seasons. Measures to prevent the spread of the pandemic were instituted in March 2020, after positive cases were reported in the country. They were implemented when rice in many growing areas was at an advanced growing stage that required limited external inputs (except locally sourced labour) for weeding, bird scaring, harvesting, threshing and sorting.
In areas where rice required external inputs farmers were apparently affected in two ways:
- Rising input prices due to limited availability because some rural input dealers were hesitant to travel to urban areas to purchase inputs because of fear of the pandemic;
- Farm-gate prices declined in response to a lower retail rice price in urban areas and limited number of rice buyers travelling from urban to rural areas.
On average farmers in Morogoro reported that farm-gate price declined from TZS 1,500 ($0.65) per kg before COVID-19 to TZS 1,100 ($0.47) per kg after COVID-19 while farmers in Mbeya reported a decline from TZS 1,250 ($0.54) before to TZS 800 ($0.34) after. This has depressed farmers’ income from rice by almost 27 percent and 36 percent in Morogoro and Mbeya respectively.
Effect on input suppliers
We interviewed suppliers of seeds, fertilisers and pesticides in major rice producing regions of Morogoro and Mbeya. Despite the variation across these regions, most of them indicated that the COVID-19 crisis has had little impact on their business because the pandemic was announced in mid-March 2020 when most of them had already planted rice and the rice was already at growing stage that required limited inputs. However, they were sceptical about serious negative impacts if the pandemic persists to October-December 2020 because some rice inputs, such as fertiliser and herbicides, are imported. This will affect rice productivity in the next farming season and, consequently, low rice output and income from rice production which will undermine food and nutrition security.
Effect on service providers
We interviewed providers of financial services to traders and processors of rice in the Morogoro region. All interviewees indicated negative impact of the COVID-19 crisis on borrowing and repayment of loans in terms of decline in the number of businesses borrowing and repaying loans. However, microfinance institutions with limited operating capital were the most affected.
Coping with the effect of COVID-19
Actors and service providers have found creative ways of coping with the negative effect of the COVID-19 pandemic including but not limited to the following:
- Some large-scale processors/traders taking advantage of low farm-gate paddy prices to buy and stock large quantities of paddy, anticipating to mill and sell at better prices after the pandemic;
- Some small-scale processors deciding to provide milling services to farmers and traders instead of being involved in the business purchasing paddy and mill it for sale;
- Some small rice traders stepping out of the rice value chain to alternative income generating activities. For example some urban traders that we interviewed have moved from rice to selling face masks and sanitisers, which are currently in high demand;
- Smallholder farmers selling their stocks of paddy in piecemeal to meet cash needs, instead of selling all of it during the pandemic as they anticipate a price rise after the pandemic;
- Suppliers of inputs such as fertilisers changing from trading 50 kg to 25kg bags which are affordable to farmers.
Evidence from actors in the rice value chain indicates that the COVID-19 pandemic has disrupted rice value in Tanzania, affecting all actors in the value chain to a variable degree. Overall, small-scale operators such as traders and farmers were more affected than large-scale operators. Export traders were more affected than domestic traders, particularly exporters of rice to Malawi, DRC Congo and Zambia. Small-scale traders were more affected than medium and large-scale traders. In fact some of the small-scale traders were compelled to step out of the rice trading business. Likewise, small-scale farmers, small-scale input suppliers and services were more affected than their medium-scale and large-scale counterparts.
The rice business across the chain is gradually returning back to normal after the government’s decision to remove most restrictive measures taken to prevent spread of the pandemic effective 29th June 2020 as a result of decline in the COVID-19 pandemic. This gradual recovery suggests that full recovery may take a long time as there are still COVID-19 control measures that restrict cross border trade with neighbouring countries.
Feature image: Farmers in Morogoro clearing weeds on their rice fields. Credit: APRA Tanzania.
Please note: During this time of uncertainty caused by the #COVID19 pandemic, as for many at this time, some of our APRA work may well be affected but we aim to continue to post regular blogs and news updates on agricultural policy and research.