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Tanzania Cluster Competitiveness Program Cluster Competitiveness Program Tanzania Cluster Competitiveness Program Horticulture Strategy Development Background Document December 2009

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Page 1: Tanzania Cluster Competitiveness Program - tzdpg.or.tz · Tanzania Cluster Competitiveness ProgramCluster Competitiveness Program ... (fruit processing), product ... HACCP, EUREGAP,

Tanzania Cluster Competitiveness ProgramCluster Competitiveness Program

Tanzania Cluster Competitiveness Program

Horticulture Strategy DevelopmentBackground Document

December 2009

Page 2: Tanzania Cluster Competitiveness Program - tzdpg.or.tz · Tanzania Cluster Competitiveness ProgramCluster Competitiveness Program ... (fruit processing), product ... HACCP, EUREGAP,

Tanzania Cluster Competitiveness ProgramCluster Competitiveness Program

• Cluster Competitiveness Project Overview

• Competitiveness Concepts and Principles

• Components of Strategic Thinking

• Export Benchmarking and Market Trends

Agenda

2

Page 3: Tanzania Cluster Competitiveness Program - tzdpg.or.tz · Tanzania Cluster Competitiveness ProgramCluster Competitiveness Program ... (fruit processing), product ... HACCP, EUREGAP,

Tanzania Cluster Competitiveness ProgramCluster Competitiveness Program

The Cluster Competitiveness Program (CCP)

Tanzania Private Sector Foundation (TPSF)

CCPBus Dev Gateway Matching Grants Pr

3 year technical assistance program

in 6 industries

International consulting, training & policy expertise to improve competitiveness in select industries

C/VC 6

C/VC 5C/VC 4C/VC 3

C/VC 2

C/VC 1

Year 1 start – first 3 industry clusters / value chains

Year 2 add – second 3 industry clusters / value chains

BEST – AC

Private Sector Competitiveness Project (PSCP)

3

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Tanzania Cluster Competitiveness ProgramCluster Competitiveness Program 44

CCP Outcomes

Outcome 1: Improved value chains and clusters• New linkages to domestic & int’l suppliers & customers • Adoption of int’l quality standards • Productivity training – new technology and/or methods

Outcome 2: Enhanced local competitiveness capacity• Associations -- QA stds certification, cluster promotion • Universities/trng institutes – professional devlpmnt courses• BDS providers -- QA stds consulting, export mktg, new tech

Outcome 3 – Accelerated pace of regulatory improvements• Policy research by industry experts • Building advocacy capacity in associations • Catalyzing stakeholders through PPP meetings and training

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Tanzania Cluster Competitiveness ProgramCluster Competitiveness Program 5

Five CCP Program ComponentsMAY JUN JUL AUG SEP OCT NOV DEC JAN FEB MAR

1 – Conduct competitiveness diagnostics & assessments

2 – Identify three target

clusters

3 – Craft cluster strategies

4 – Implement cluster strategies

5 – Build capacity to sustain cluster initiatives

Prog start

TL Mobilz

Page 6: Tanzania Cluster Competitiveness Program - tzdpg.or.tz · Tanzania Cluster Competitiveness ProgramCluster Competitiveness Program ... (fruit processing), product ... HACCP, EUREGAP,

Tanzania Cluster Competitiveness ProgramCluster Competitiveness Program

• National Competitiveness Assessment – review business environment using World Bank DBR and WEF GCR indices– first step to gage a country’s state of competitiveness– solid macroeconomic growth, about average for peers– difficult business environment, e.g., licensing

• Cluster & Value Chain Assessment – a detailed review of eight clusters for possible program participation

Component 1 – Conduct Competitiveness Diagnostics & Assessments

6

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Tanzania Cluster Competitiveness ProgramCluster Competitiveness Program

Fishing /Fish Products

Transport/Logistics

Tourism

Dairy Meat

Livestock

Footwear

Textiles / Apparel

Sisal

Maize

Oilseeds

TeaCoffee

Furniture

Spices

Health

Music / Entertainment

Tobacco

Finance ConstructionMaterials

Construction

Cassava

Gems & Jewelry

Cashew Nuts

Pyrethrum

Sugar

PotatoesPulses

PaddyBananaMillets

Sorghum

Wheat

Cotton

Forestry Handicraft

Metalworks

FoodProcessing

Seaweed

Horticulture

Pharma

Precious Stones/Metals

Iron & Steel

Wood Products

Mining

Telecom

Pulp and Paper

Packaging

Chem, Plastic, Rubber

Mapping the Economy - Illustrative

7

Hides & Skins

Page 8: Tanzania Cluster Competitiveness Program - tzdpg.or.tz · Tanzania Cluster Competitiveness ProgramCluster Competitiveness Program ... (fruit processing), product ... HACCP, EUREGAP,

Tanzania Cluster Competitiveness ProgramCluster Competitiveness Program 8

• Horticulture• Food Processing• Tourism• Tea• Livestock – Beef, Dairy• Fishing• Textiles and Apparel• Transport/Logistics

• Staple Crops• Horticulture / Food

Processing• Coffee• Cotton• Tea• Oilseeds• Livestock: Meat, Dairy• Spices• Cashew Nuts• Engineering/Machinery• Tourism• Transport/Logistics• Footwear• Textiles and Apparel• Furniture• Construction Materials• Chemicals/Pharmaceuticals• Fishing / Fish Products• Wood Products• Gems & Jewelry

SCALE OF

IMPACTLEADERSHIP

COMPETITIVE GROWTH

POTENTIAL

Clusters & Value Chain Assessment – the Process

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Tanzania Cluster Competitiveness ProgramCluster Competitiveness Program 9

Cluster & VC Assessment Data Gathering – 8 Clusters

Interviews with over 250 stakeholders nationwide over an 8 week period

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Tanzania Cluster Competitiveness ProgramCluster Competitiveness Program

Cluster & Value Chain Assessment

For the selected 8 clusters we looked at:

• Industry Structure• Value Chain Productivity• Access to Markets • General Business Environment• Constraints (not addressed in Business Environment)• Opportunities to Improve Competitiveness

10

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Tanzania Cluster Competitiveness ProgramCluster Competitiveness Program

Additional considerations in selecting three clusters

• Presence of other donors – resources committed• Donor fatigue• Types of recent donor activity

– narrowly focused by subsector (fruit processing), product (bottled juices) or function (new production technology)

– or… overarching and looking at the interaction between entire industry value chains and extended clusters -- and how to improve them

The three selected clusters are not over-resourced and little if any strategic and overarching work has been done in them

11

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Tanzania Cluster Competitiveness ProgramCluster Competitiveness Program

Component 2 – Identify Three Target Clusters (from Eight)

Based on the Cluster & VC Assessment – selected:

• Horticulture – important in TZ economy (>300,000 employ), good leadership & assoc to work with, positive growth trends, possible interventions in productivity, quality stds, marketing/dist

• Tourism – 30% of exports & 10% of economy, some of best assets in Africa, strong leadership & assocs, possible interven-tions in branding, promotion, customer service, quality stds

• Food Processing – excellent cross cutting for horticulture, fishing, meat, dairy, important for food security, critical for export growth, interventions in quality stds, packaging, mktg/dist

12

Page 13: Tanzania Cluster Competitiveness Program - tzdpg.or.tz · Tanzania Cluster Competitiveness ProgramCluster Competitiveness Program ... (fruit processing), product ... HACCP, EUREGAP,

Tanzania Cluster Competitiveness ProgramCluster Competitiveness Program 1313

Key Constraints in the Horticulture Value Chain

No cold storage at key points, e.g

airport

Inputs Farmers Exporters

Limited finance for farmers

Poor irrigation and land management

Business environment blocking new investments in

the industry Certification and standards for export

difficult to meet

Handling issues damage products in

transit

Limited access to skilled labor and technology

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Tanzania Cluster Competitiveness ProgramCluster Competitiveness Program 14

Horticulture: Emerging Priority Interventions

• National Horticulture Strategy

• Strengthen and expand cold chain

• Establish more laboratory facilities

• Support farm-level capacities through extension services, model farms

• Establish pack houses close to major farms and at export points with cold facilities

• Access to finance at farm level matched with technical support

• ID which products into which markets are best for competitive growth –matched with technical support

• Business planning and management capacity building for farmers and processors

• Water management techniques training for farmers

• Strengthen link with food processors and high value customers in Tanzania

• Develop horticulture statistics – map Tanzania’s regions and capacities

• Capacity-building with farmers -negotiating and contracting

• Build capacity with associations –lobbying and information provision

• Establish National Code of Conduct for Horticulture/Benchmark of International Standards

• Adopt better technology and standards for processors

• Improve government support capacity to smallholder farmers

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Tanzania Cluster Competitiveness ProgramCluster Competitiveness Program

Cluster Linkages

Horticulture Food Processing

Demand creationSupply chain mngt

Standards and Certifications

Tourism and Hospitality

15

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Tanzania Cluster Competitiveness ProgramCluster Competitiveness Program 16

CCP Activity Examples

• Product Enhancements

• Regulatory Improvements

• Improved Marketing

• Value chain Improvements

• Product Differentiation

• Branding

• Adopt new quality standards

• Association capacity devlpmnt to deliver advocacy platforms

• Industry experts for promo / packaging / labeling & export dev

• Link new customers & suppliers, co-fund infrastructure

• Industry experts for trends in new product /svc lines & upgrades

• Branding theme development, co-fund int’l cluster promotion

Page 17: Tanzania Cluster Competitiveness Program - tzdpg.or.tz · Tanzania Cluster Competitiveness ProgramCluster Competitiveness Program ... (fruit processing), product ... HACCP, EUREGAP,

Tanzania Cluster Competitiveness ProgramCluster Competitiveness Program

• Cluster Competitiveness Project Overview

• Competitiveness Concepts and Principles

• Components of Strategic Thinking

• Export Benchmarking and Market Trends

Agenda

17

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Tanzania Cluster Competitiveness ProgramCluster Competitiveness Program 18

Sectors, Clusters & Value Chains

Definitions:

• Sectors: a broad description of an industry group such as tourism, textiles or horticulture. Sectors typically include within them:

– Clusters: a group of companies and institutions working in a common industry sector, often benefiting from being located in the same geographic region

– Value Chains: the full range of companies/activities required to bring a specific product or service to market, from sourcing raw materials to production, processing, sales and finally distribution

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Tanzania Cluster Competitiveness ProgramCluster Competitiveness Program 19

Value Chain Example: Pakistan Dairy

19

Farmer

GawalaDelivery

ProcessorsCold Chain

MinimumPasteurization

Value Added Products*

UnpackedMilk

Middle Man

* Processed milk, Ice Cream, Cheese, Yogurt/Yogurt drinks etc.

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Tanzania Cluster Competitiveness ProgramCluster Competitiveness Program 20

Cluster Example: California Wine

Educational, Research, & Trade Organizations (e.g. Wine Institute,

UC Davis, Culinary Institutes)

Growers/Vineyards

Sources: California Wine Institute, Internet search, California State Legislature. Based on research by Michael E Porter and MBA 1997 students R. Alexander, R. Arney, N. Black, E. Frost, and A. Shivananda.

Wineries/ProcessingFacilities

Grapestock

Fertilizer, Pesticides, Herbicides

Grape Harvesting Equipment

Irrigation Technology

Winemaking Equipment

Barrels

Labels

Bottles

Caps and Corks

Public Relations and Advertising

Specialized Publications (e.g., Wine Spectator, Trade

Journal)

Food Cluster

Tourism ClusterCalifornia Agricultural Cluster

State Government Agencies(e.g., Select Committee on Wine

Production and Economy)

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Tanzania Cluster Competitiveness ProgramCluster Competitiveness Program 21

What is competitiveness?

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Tanzania Cluster Competitiveness ProgramCluster Competitiveness Program 22

• Abundant Natural Resources

• Cheap Labor

• Cheap Currency

• Great Location

• Better Government “Incentives”

Competitiveness is NOT just …

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Tanzania Cluster Competitiveness ProgramCluster Competitiveness Program 23

• Better products and services (unique and higher quality) that command higher prices on the market

• Investment in skilled labor force leading to higher wages

• Higher productivity inputs at a lower cost

• Better market information

• Expanded access to markets

• Continuously improving business performance

Competitiveness is …

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Tanzania Cluster Competitiveness ProgramCluster Competitiveness Program 24

Competitive WinnersCompetitive Winners

Companies Companies Falling BehindFalling Behind

Operational Productivity

GoodGood

PoorPoor

PoorPoor GoodGood

StrategicProductivity

Productivity Productivity FrontierFrontier

Firm: Good Strategy and Good Operations

Source: Monitor Co.

Page 25: Tanzania Cluster Competitiveness Program - tzdpg.or.tz · Tanzania Cluster Competitiveness ProgramCluster Competitiveness Program ... (fruit processing), product ... HACCP, EUREGAP,

Tanzania Cluster Competitiveness ProgramCluster Competitiveness Program 25

Strategic and Operational Productivity

• New and better products• Supporting services that adds

value• Forward integrating• Target markets

• Lower costs• Increased quality• More efficient technology• Improved management

processes• Faster route-to-market

Strategic ProductivityOperational Productivity

Choose to run a different raceRun the same race faster

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Tanzania Cluster Competitiveness ProgramCluster Competitiveness Program 26

Characteristics of Competitive Industries

• Customer focused – do research to understand needs• Forward integrated – control more processing & distrib• Innovative – regularly upgrade/offer new products &

services• Obsessed with Quality – better inputs, production &

management processes• Cooperative – with others related to their industry• Market savvy – understand their competitive position• Collaborative – work with government to solve problems• Flexible – Use new strategies to reposition themselves

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Tanzania Cluster Competitiveness ProgramCluster Competitiveness Program 27

A New Model for Competing…

Strategically positioning the Tanzanian horticulture requires:– In-depth understanding of the market and specific segments– Efficient management from ALL providers of products/services– Input and collaboration from all key inputs into horticulture

value chain, not just the exporters

In today’s global economy, companies do not compete against other companies; value chains compete against value chains.

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Tanzania Cluster Competitiveness ProgramCluster Competitiveness Program

PRODUCERS

WHOLSALERS

EXPORTERS

BROKERS

PROCESSORS

RETAILERS

CONSUMERS

IMPORTERS

Source: Grahame Dixie

Marketing Channels, Past

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Tanzania Cluster Competitiveness ProgramCluster Competitiveness Program

PRODUCERS

Source: Grahame Dixie

Marketing Channels, Now/Future

CONSUMERS

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Tanzania Cluster Competitiveness ProgramCluster Competitiveness Program

Marketing Channels, Past and Present

• Multiple business links in the marketing chain (up to 6), creating high transaction costs

• Multiple small-scale sales/deals• Numerous small specialist

companies• Relatively low volumes of trade• Relatively high commodity prices• Power with the bigger companies

in importing, processing, wholesaling

• Much fewer links/businesses in the marketing chain (2-4)

• Fewer, larger, more professional businesses, including export farms

• More added-value/processing in exporting countries

• Greater volume of trade, lower prices & transaction costs

• Backward & forward vertical integration

• Huge retail chains dominate the marketing chain & hold most of the profit

Source: Adapted from Grahame Dixie

Now1970s – 1980s

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Tanzania Cluster Competitiveness ProgramCluster Competitiveness Program

Sophisticated World Markets

Repositioning Industries for Emerging Opportunities

WTO, HACCP, EUREGAP, “ISO”, other Market Standards

Low Cost, Low Value Trap

Floor

CeilingUnderstanding the market demand

(Global and Regional)

Supplying valuable products and services

Building Competitiveness in Export MarketsPenetrating and competing on world markets requires firms to understand the market

demand and supplying products with unique value to the market

Obtaining international standards is only the beginning of achieving competitiveness on international markets

Page 32: Tanzania Cluster Competitiveness Program - tzdpg.or.tz · Tanzania Cluster Competitiveness ProgramCluster Competitiveness Program ... (fruit processing), product ... HACCP, EUREGAP,

Tanzania Cluster Competitiveness ProgramCluster Competitiveness Program

• Cluster Competitiveness Project Overview

• Competitiveness Concepts and Principles

• Components of Strategic Thinking

• Export Benchmarking and Market Trends

Agenda

32

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Tanzania Cluster Competitiveness ProgramCluster Competitiveness Program 33

What do we What do we need?need?

Growth Markets and Growth Markets and Trends in Trends in

Horticulture?Horticulture?

What to offer, where What to offer, where and who to serve?and who to serve?

Which markets?

What trends?

Which competitors?

Target markets?

Which customers?

What products, now and future?

At what price?

Investment

Access to Markets

Coordination

Skills and capabilities

Policy / regulations

Becoming Competitive

Building a Strategy for Horticulture

Page 34: Tanzania Cluster Competitiveness Program - tzdpg.or.tz · Tanzania Cluster Competitiveness ProgramCluster Competitiveness Program ... (fruit processing), product ... HACCP, EUREGAP,

Tanzania Cluster Competitiveness ProgramCluster Competitiveness Program

Strategy

34

Source: Adapted from Michael Porter, 2004

• Aspirations and Vision

• Value chain productivity

• A marketing campaign

• Investment incentives

• Best practice improvement

• Agility and Flexibility

• Innovation

• The internet or any technology

• Integration

• Alliances and partnering

• A unique, valuable product versus competitors

• A different, customized position on the market

• Clear, informed trade-offs, choosing what NOT to do

• Activities that fit together and reinforce each other

• Continuity of position with continual and consistent progress

A Strategy is NOT just…A Strategy is…

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Tanzania Cluster Competitiveness ProgramCluster Competitiveness Program 35

• Market-oriented

• Private-sector driven

• Representative of all actors

• Informed by the latest data and information

• Ambitious, but honest and transparent

• Actionable and accountable

Principles for Strategy Development

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Tanzania Cluster Competitiveness ProgramCluster Competitiveness Program 36

Developing a Strategy

Assessing the Potential

Market Opportunities

Production Possibilities

Geographic Locations

Economic Value

Social Impact

Time, phasingand feasibility

Leadership

Investment

Collective Will& Action

Environmental Sustainability

Building Capacity

Prioritizing the Development

Expand HorticultureNetworks

Mobilizing the Resources

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Tanzania Cluster Competitiveness ProgramCluster Competitiveness Program 37

Components of a Strategic Agenda

Productivity Enhancements

Market and ProductDevelopment

Industry Standards

Workforce Development

Industry Organization and Supporting Institutions

Regulatory Reforms

Financing

Infrastructure and Logistics

Page 38: Tanzania Cluster Competitiveness Program - tzdpg.or.tz · Tanzania Cluster Competitiveness ProgramCluster Competitiveness Program ... (fruit processing), product ... HACCP, EUREGAP,

Tanzania Cluster Competitiveness ProgramCluster Competitiveness Program

• Cluster Competitiveness Project Overview

• Competitiveness Concepts and Principles

• Components of Strategic Thinking

• Export Benchmarking and Market Trends

Agenda

38

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Tanzania Cluster Competitiveness ProgramCluster Competitiveness Program

Horticulture Exports

Source: TradeMap, 2009

While exports of trees, plants, and flowers have increased in Tanzania over the past few years, other countries (including Kenya and Ethiopia) have shown consistent steady growth since 2004.

273,336 283,898

358,939

442,149

584,684

TZ=14,302

TZ=15,759

TZ=11,422

TZ=24,638

TZ=48,628

-

100,000

200,000

300,000

400,000

500,000

600,000

700,000

2004 2005 2006 2007 2008

KenyaSouth Africa

EthiopiaThailand

ChileTanzaniaGhana

USD $ 000sExports of live trees, plants, cut flowers etc

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Tanzania Cluster Competitiveness ProgramCluster Competitiveness Program

Horticulture Exports

Source: TradeMap, 2009

Tanzania’s exports of trees and cut flowers doubled in 2007 and in 2008.

TZ Exports of live trees, plants, cut flowers

14,302 15,759

11,422

24,638

48,628

-

10,000

20,000

30,000

40,000

50,000

60,000

2004 2005 2006 2007 2008

USD $ 000s

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Tanzania Cluster Competitiveness ProgramCluster Competitiveness Program

Horticulture Exports

Source: TradeMap, 2009

An examination of vegetable exports tells a similar story. The primary exporters of vegetables (such as Kenya and Ethiopia, as well as Thailand), have shown steady growth since 2004. However, Tanzania has narrowed the gap over the past two years, surpassing South Africa.

Exports of Vegetables, 000s $

KY65,787 99,617

150,136

198,069

225,908

TZ=18,965 TZ=

36,115TZ=23,571

54,642

78,554

-

50,000

100,000

150,000

200,000

250,000

300,000

2004 2005 2006 2007 2008

Thailand

Kenya

Ethiopia

Chile

Tanzania

South Africa

Ghana

USD $ 000s

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Tanzania Cluster Competitiveness ProgramCluster Competitiveness Program

Horticulture Exports

Source: TradeMap, 2009

Tanzania’s vegetable exports have more than tripled in the past two years.

TZ Exports of Vegetables

18,965

36,115

23,571

54,642

78,554

-

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

90,000

2004 2005 2006 2007 2008

USD $ 000s

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Tanzania Cluster Competitiveness ProgramCluster Competitiveness Program

Horticulture Exports

Source: TradeMap, 2009

Chile dominates comparator countries in fruit exports. It is interesting to note that Chile doubled exports from 2007 to 2008; while exports from African countries were flat. This may be attributable to the free trade agreement Chile signed with the US.

Exports of Fruits, citrus fruit, melons

1,737,152 1,864,3482,166,708

2,470,956

TZ=838

TZ=797

TZ=769

TZ=832

TZ=679

4,518,652

-

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

3,500,000

4,000,000

4,500,000

5,000,000

2004 2005 2006 2007 2008

Chile

South Africa

Thailand

Kenya

Ghana

Ethiopia

Tanzania

USD $ 000s

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Tanzania Cluster Competitiveness ProgramCluster Competitiveness Program

Horticulture Exports

Source: TradeMap, 2009

A closer examination shows that Tanzania’s fruit exports have declined slightly since 2004 from a fairly low base. Ghana has shown a steep decline in the same period of time and has been replaced by Kenya as the regional leader.

Exports of Fruits, citrus fruit, melons

1,147,927 1,181,8771,114,719

1,437,7281,541,138

KY= 17,057

KY=17,530

KY=21,253

KY=21,297

KY=26,626

TZ=838 TZ=797 TZ=769 TZ=832 TZ=679-

200,000

400,000

600,000

800,000

1,000,000

1,200,000

1,400,000

1,600,000

2004 2005 2006 2007 2008

South Africa

Thailand

Kenya

Tanzania

USD $ 000s

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Tanzania Cluster Competitiveness ProgramCluster Competitiveness Program

Horticulture Exports

Source: TradeMap, 2009

Tanzanian spice exports jumped from 2007 to 2008 after several years of flat growth and rivals South Africa for the regional lead.

Exports of Spices

14,91217,151

16,058

38,712

10,806

9,580

8,9069,272

18,037

3,919

6,843 6,6158,802

35,700

1,990

-

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

2004 2005 2006 2007 2008

Thailand

Chile

South Africa

Tanzania

Ethiopia

Kenya

USD $ 000s

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Tanzania Cluster Competitiveness ProgramCluster Competitiveness Program

Key Market Trends in Horticulture: Consumer Side

• Increased demand for fresh produce, especially as an alternative to processed fruits and vegetables; largely driven by health concerns

• Food safety being given increased attention; has ramifications for certification and traceability (origin ie halal, vegetarian, or non-GMO) and certified production processes (HACCP, GAP)

• Convenience at a premium, but must be balanced with health concerns; may have an impact on fruits, increasing demand for ready-to-eat (apples, pears, and bananas) vs. citrus fruits, which must be peeled

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Tanzania Cluster Competitiveness ProgramCluster Competitiveness Program

Key Market Trends in Horticulture: Consumer Side

• Increased consumer power includes demand to know where a product comes from, how it was grown, and health/nutritional properties

• Growing urbanization in South Asia leading to lower grain consumption and more consumption of fruits/ vegetables

• Due to high levels of vegetarianism (64% of South Asian are Hindu and do not eat meat) consumers turning to fruits and vegetables more than toward meat

• Consumers care more about environmental sustainability in purchase decisions; may have impact on exports as consumers turn toward locally grown food, but organic foods to benefit

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Tanzania Cluster Competitiveness ProgramCluster Competitiveness Program

Key Market Trends in Horticulture: Organic

• Production arrangements/contracts between producers & restaurants

• Retail chains (in the West) dedicated exclusively to organics

• Food service industry increasingly offering organic alternatives

• Major grocery retailers increasing space for organic products

• Large conventional food processors developing organic versions of

name-brand products

• Organic selection of fresh and ready products (ie bagged salads)

• Organic consumer demographics diversifying; no longer being

defined by one single ethnic group or segment of the population

• Retailers/processors sourcing organic product outside North America

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Tanzania Cluster Competitiveness ProgramCluster Competitiveness Program

Key Trends in Horticulture: Retail Side

• Streamlined supply chains, with decline in share of wholesalers relative to retailers

• Wholesalers increasingly being bypassed in response to a growing demand for specialized and value-added products

• Increase in the variety of produce and the number of branded products offered at retail

• Increase in the sales of fresh-cut fruit, despite higher price point (which remains an obstacle for some); for example, fresh-cut produce sales in the US increased from $8.9 billion to $15.5 billion between 2003 and 2007

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Tanzania Cluster Competitiveness ProgramCluster Competitiveness Program

Key Trends in Horticulture: Retail Side

• Closer relationships developing between producers/suppliers and the retail buyer than ever before; producers and suppliers playing an active role in improving category profitability, not just providing product

• Producers and suppliers providing services such as returnable cartons, automatic inventory replenishment programs

• Producers/suppliers joining to increase market presence

• Emergence of large distributors serving retail grocery and food service segments

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Tanzania Cluster Competitiveness ProgramCluster Competitiveness Program

Key Trends in Horticulture: Retail Side

• Increasing importance of food away from home sector (such as restaurants and hotels), which is a growth market because people still want healthy meals even though they are eating out

• More shippers are marketing directly to the consumer (ie via websites)

• Key trends in packing include semi-prepared fruits and vegetables, quantity standardization, and pre-packs

• Arguably the most important standard for African exporters of fruits and vegetables is EurepGAP because of the importance of Europe as a market

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Tanzania Cluster Competitiveness ProgramCluster Competitiveness Program

• Green Beans• Baby Corn• Broccoli• Baby Carrots• Snow Peas• Green Peas• Peppers• Amaranth• Pumpkin• Cassava Leaves

Vegetables• Apples• Berries• Jack Fruit• Mangoes• Oranges• Papaya• Pawpaw• Passion Fruit• Pears• Pineapple• Plums

Fruits

• Roses• Chrysanthemum• Cuttings• Other ornamentals

Cut Flowers and Ornamental Plants

• Cardamom• Cinnamon• Clove• Nutmeg• Vanilla• Herbal Medicines• Macademia Nuts

Spices, Herbs and Nuts

Figure 1. Example Horticulture Products in Tanzania

• Chili Peppers• Asparagus• Snap Peas• Tomatoes• Onions• Cabbages• Nightshade• Okra

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Tanzania Cluster Competitiveness ProgramCluster Competitiveness Program

Fresh

Horticulture crops can be transformed in many ways…

Processed Packed

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Tanzania Cluster Competitiveness ProgramCluster Competitiveness Program

Local

Regional Export

… and marketed profitably in various markets

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Tanzania Cluster Competitiveness ProgramCluster Competitiveness Program

Promote Horticulture in Tanzania

Expand Long-term Financing & Investment

Mobilize Human Resources

Strengthen Industry Linkages

Address Land, Policy & Infrastructure Bottlenecks

Expand Production Base & Improve Quality

Figure 5. Growth Strategy for Horticulture

Support Market Development

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Tanzania Cluster Competitiveness ProgramCluster Competitiveness Program

Tanzania HorticultureCompetitiveness Agenda

69,092,226

74,290,203

86,716,351

97,540,611

107,153,790118,008,935

137,193,413

153,358,067

0.0%2.0%4.0%6.0%8.0%

10.0%12.0%14.0%16.0%18.0%20.0%

1998 2000 2002 2004 2006 2008 2010

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Tanzania Cluster Competitiveness ProgramCluster Competitiveness Program

Tanzania HorticultureCompetitiveness Agenda

$ USD 69 billion $ USD 153 billion

2001 2008

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Tanzania Cluster Competitiveness ProgramCluster Competitiveness Program

Tanzania HorticultureCompetitiveness Agenda

Access to Land

Irrigation Financing

Risk to Farmer

+ +

Farm Production Pressure Points

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Tanzania Cluster Competitiveness ProgramCluster Competitiveness Program

Cluster Linkages

Irrigation & Fertilizer Financing

Access to Land

59

Good AgriculturePractices

Figure 7. Expanding Production and Improving Quality

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Tanzania Cluster Competitiveness ProgramCluster Competitiveness Program60

21

4

6

2.1

-

5

10

15

20

25

Solid Formulation (tons) Liquid Formulation(million litres)

Volume

Demand

Availability

Source: Salum Shamte, Kilimo Kwanza Key Elements, TNBC, 2010

Agricultural Chemicals in Tanzania

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Tanzania Cluster Competitiveness ProgramCluster Competitiveness Program

Land Access

Water Access

FinanceAccess

Good AgricPractice

Cold Chain

Quality Control

MarketIntel

Reaching Scale

Route – to –Market

Farmer Field Schools

Model Farms

Testing Laboratories

Market Service Centers

Pack Houses

Export Market Linkages

Market Intelligence

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Tanzania Cluster Competitiveness ProgramCluster Competitiveness Program 6262

Figure 9. Transforming the Horticulture Value Chain

Cold storage at key distribution points,

(e.g airport)

Inputs

Expanded finance for

farmers

Farmer Field

Schools

Model Farms

Pack Houses

Farmer Market Centers

Certified Nurseries / Fertilizers

On-farm Packing / Transport Market

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Tanzania Cluster Competitiveness ProgramCluster Competitiveness ProgramSource: map from http://eusoils.jrc.it/esdb_archive/EuDASM/africa/maps/afr_tz2001_to.htm

Assets

Northern highlands (Arusha/Kilimanjaro)• Ideal for full range of

European flowers, cuttings, vegetables, fruits and seeds

• More then 30 flower and vegetable farms already exporting to Europe

Central plateau (Morogoro/Dodoma)• Suitable for tropical fruit

(passion fruit, mangos) as well as flowers

• Advanced plans by consortium of 16 Dutch flower farmers to set up farms

Coast Zone (Tanga/Pwani)• Citrus fruit and tropical fruit• Dutch group developing

passion fruit frozen concentrate operationMbeya

• Citrus fruit and tropical fruit• Association of mango farmers

exporting to AsiaSouthern highlands (Iringa)• Ideal for full range of

European flowers, cuttings, vegetables, fruits and seeds

• Traditional fruit growing area• Largely undeveloped; export

potential with opening of new airport

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Tanzania Cluster Competitiveness ProgramCluster Competitiveness ProgramSource: map from http://eusoils.jrc.it/esdb_archive/EuDASM/africa/maps/afr_tz2001_to.htm

Assets

Mwanza

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Tanzania Cluster Competitiveness ProgramCluster Competitiveness Program

Geographic Concentration of Manufacturing Industries

22

Dar es Salaam

Furniture, others

Building Materials

Chem, Plstc, Rubber

Paper & Publishing

Timber & Wood

Leather & Footwear

Textile & Garments

Food, Bev, & Tob

Metal & Allied

Machinery & Electric

= 1 firm

= 10 firms

Scale

= 20 firms

65

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Tanzania Cluster Competitiveness ProgramCluster Competitiveness Program 66

Note: 2010 figure based on 2008 exports figures from UNComtrade with modest annual growth assumption of 10% in 2010.Growth projections from 2010 to 2020 based on an average annual growth rate of 25%

150 185

1,850

-

500

1,000

1,500

2,000

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Figure 4. Tanzania Horticulture Export Potential

USD $ Millions

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4562

45

89

146

-20406080

100120140160

2004 2005 2006 2007 2008

Figure 2. Tanzania Horticulture Export Performance

USD $ Millions

Source: UNComtrade Data, 2010

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Horticultural Exports, USD$ millions

668 (KY)

537 (KY)

405 (KY) 358 (KY)

846 (KY)

45 (TZ) 62 (TZ) 45 (TZ) 89 (TZ)

146 (TZ)

-

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2,000

2004 2005 2006 2007 2008

South Africa

Kenya

Ethiopia

Tanzania

Ghana

Source: UN Comtrade Data, CCP Analysis, based on horticulture segments outlined above

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Ethiopia Horticulture Exports

4666

104

203

348

-

50

100

150

200

250

300

350

400

2004 2005 2006 2007 2008

USD $ million