Rice value chain: has life returned to normal after lifting of COVID-19 restrictions in Tanzania? (2)
In part two of this blog series, APRA Tanzania researchers Ntengua Mdoe, Gilead Mlay and Gideon Boniface use data from follow-up interviews with raw rice traders and the hospitality business in Morogoro and Mbeye regions, before drawing a conclusion on the way forward.
For the first blog on their interviews with farmers, processors and input suppliers, click here.
This blog is linked to APRA Round One and Round Two country reports on the Impact of COVID-19 on Food Systems and Rural Livelihoods in Tanzania.
Read the full APRA synthesis report on the Rapid Assessment of the Impact of COVID-19 on Food Systems and Rural Livelihoods in Sub-Saharan Africa, here.
Written by Ntengua Mdoe, Gilead Mlay and Gideon Boniface
Part two: Experiences from follow up interviews with raw rice traders
Previous COVID-19 blogs have indicated that the Tanzanian Government’s decision to close educational institutions and suspend big social and other gatherings on 17th March 2020 to prevent the spread of the pandemic negatively affected rice businesses.
The decision to remove most of the control measures (listed in part one of this blog series) taken to prevent the spread of COVID-19, effective from 29th June 2020, except the enforcement of the WHO health standards was well received by the rice value chain actors, including those who stepped out of the value chain. This blog highlights experiences of the value chain actors on the effect of the government decision on their businesses through follow-up interviews with the same actors interviewed in June 2020 as presented below
Effect on hospitality businesses
The follow-up interviews conducted by the APRA Tanzania team covered owners of hospitality industry businesses, including hotels, restaurants and other eateries selling rice recipes in Morogoro municipality who were interviewed in June 2020 to determine the effect of COVID-19 control measures on their business. The control measures that affected their businesses included the closure of educational institutions, the ban on big social and other gatherings, restriction of international flights, and the enforcement of the WHO health standards (such as the costs associated with providing washing facilities for clients).
The removal of the first three measures at the end June 2020 led to recovery of businesses in the hospitality industry. The interviewed businesses highlighted the positive effect of the government decision, as the number of customers has been increasing over time. However, they indicated the recovery is slow because of the following reasons:
- Fear of the pandemic among potential customers is still prevailing.
- Low purchasing power of potential customers resulting from low business during period with COVID-19 control measures.
- Travel restrictions prevailing in a number of counties with potential visitors to Tanzania especially tourists.
Effect on domestic traders of raw rice
All categories of the interviewed domestic traders of raw rice reported that, contrary to the negative impact experienced before the removal of the COVID-19 control measures, they have been experiencing a slight increase in rice revenue due to an increase in the number of buyers and a slight increase in rice prices. On average, rice retail prices in Morogoro municipality have increased from TZS 1,300 ($0.56) per kg of grade 1 rice during COVID-19 to TZS 1,600 ($0.69) after the removal most of the COVID-19 control measures. However, prevailing prices of low quality rice grades remain unchanged.
Effect on inter-regional (export) traders
The experience of exporters of rice to neighbouring countries of Kenya, Rwanda, South Sudan, Zambia, Malawi and DRC Congo on the effect of removal of COVID-19 control measures is mixed. Some processors have stopped exporting rice despite the removal of the cross-border physical barriers while others are still exporting, although in lower quantities than the pre-COVID period. The interviewed traders who are exporting rice to Zambia reported that the prevailing charge for a truck transporting rice across the Tanzania-Zambia border is more than twice the charge during the pre-COVID period – from TZS 300,000 ($ 128.21) to the prevailing charge of TZS 700,000 ($ 299.15) per 30 tons-truck.
Besides the high transport charges at the Tanzania borders, rice export trade has been affected by a decline in export demand. Most neighbouring countries are still restricting gatherings and movements that are affecting cross-border trade, implying that domestic traders will largely depend on local demand for rice, estimated at about 6 million tons, which is lower than the estimated current supply of about 8 million tons. Like the processors, they have piles of paddy and milled rice in their warehouses. Some of the exporters with processing facilities are resorting to provision of processing services.
Evidence from the follow-up interviews with the various actors in the rice value chain indicates that the business across the rice value chain is gradually returning back to normal after the government’s decision on 29th June 2020 to remove most of the restrictive measures taken to prevent the spread of the pandemic. However, this gradual revival suggests that a full recovery may take longer, not only due to the COVID19 control measures still existing in neighbouring countries that limit cross border trade, but also due to international travel restrictions in other foreign countries that limit visitors to Tanzania.
This suggests that it is unlikely that most of the businesses will be able to meet their operational costs and meet debt obligations. To sustain the rice business, the actors need liquidity support in terms of accessing and making good use of any government established survival fund for small businesses. The International Monetary Fund (IMF) has funds earmarked for bailing out COVID-19 affected businesses. This should be complemented by a revision of the repayment terms of the funds borrowed by the businesses before the COVID-19 pandemic as directed by the Bank of Tanzania.
Regarding facilitation of cross-border trade, a regional committee has been established to coordinate the implementation of guidelines and facilitate the resolution of operational issues at borders during the COVID-19 pandemic. These guidelines include allowing cargo trucks to cross the borders if they submit certificates from the member state that they have been screened and are have no COVID-19 disease. What remains is authorities at the borders to fast track verification of the certificate to avoid delays at the borders.
Feature photo credit: Nkumi Mtimgwa/CIFOR
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.