Rice value chain: has life returned to normal after lifting of COVID-19 restrictions in Tanzania? (1)
In the first of a two part blog series, researchers from APRA Tanzania follow up on their earlier blog series on the COVID-19 coping strategies of rice value chain actors. In this blog, they use data from follow-up interviews with farmers, processors & input suppliers in Morogoro and Mbeya regions to determine what difference there has been since the easing of lockdown in late June.
Part two examines the effect on the raw rice traders and the hospitality industry, and a way forward. Read it, 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 one: rice farmers, processors input suppliers and financial service providers
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 effects include but not limited to:
- Complete loss in revenue from food services offered to educational institutions;
- Substantial decline in revenue from provision of food services to seminars and workshops as the measures to control the spread of COVID-19 pandemic limited services to offer to gatherings with a maximum of 15 people;
- Costs associated with provision of washing facilities to clients in accordance with the World Health Organization (WHO) health standards despite limited number of clients;
- Compensating laid-off workers in kind in the form of food items such as rice and beans and;
- Difficulties in meeting loan repayment obligations due to a decline in cash flow.
The decision to remove most of the control measures 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
Effects on rice farmers
Telephone interviews with some farmers in Morogoro and Mbeya regions show that they have been experiencing a slow recovery in paddy business since the government decision to remove most of the COVID-19 control measures. The number of traders buying paddy at the farm level has been increasing since July 2020, resulting into increase in farm-gate prices. In Morogoro region, paddy price declined by about 41% as a result of COVID-19 and then increased by 21% after the removal of the COVID-19 control measures while in Mbeya Region, paddy price declined by about 36% as a result of COVID-19 and then increased by 27% after the removal of the COVID-19 control measures as shown in the table below. However, the prevailing prices in both regions are still below the pre-COVID period prices by 29% in Morogoro and 19% in Mbeya. The interviewed farmers indicated that their purchasing power for rice production inputs has declined significantly as they have to sell more rice to purchase the same amount of inputs such as fertilisers they purchased before the COVID-pandemic.
Effect on input suppliers and financial service providers
The interviewed suppliers of rice seeds, fertilisers and pesticides in major rice producing regions of Morogoro and Mbeya indicated that the removal of the COVID-19 measures has had little impact on their business because the new rice season is just starting. However, they thought a decline in demand for rice production inputs, due to the prevailing low paddy prices, very likely. However, financial service providers indicated a positive effect from the removal of most COVID-19 control measures, as many actors (farmers, traders and processors) with outstanding loans are gradually meeting their credit obligations.
Effect on rice processors
Like rice farmers, rice processors have been experiencing a slow recovery of their businesses since the end of June 2020, when the government removed most COVID-19 control measures. All of the interviewed processors were operating under capacity, despite the increase in the quantity of processed rice compared to when the restrictions were active. However, the current operating capacity is still below the pre-COVID-19 period capacity (before March 2020). Most of the processors have large stocks of paddy in their warehouses awaiting processing when business returns to normal. They indicated that they were facing financial cash flow problems, thus failing to cover operational costs or to pay outstanding loans.
The second blog in this series looks at the effect of the lifting of COVID-19 restrictions on the raw rice traders and the hospitality industry.
Cover photo credit: Malingerist on Flickr
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.