As the pillar of both the domestic and the export economy, the agricultural sector in Tanzania engages 80 percent of the labor force , which equaled approximately 13.495 million in 1999, while providing 49 percent of the
In terms of agricultural exports, coffee constitutes the most important cash crop. According to the IMF, coffee accounted for 17.7 percent of Tanzania's total exports in 1996. At 16.3 percent of total exports, cotton was the second most important cash crop, followed by cashew nuts (12.7 percent), tobacco (6.4 percent), tea (2.9 percent), and sisal (0.7 percent). In Zanzibar, the major cash crop is cloves, 90 percent of which are produced on the island of Pemba. The major importers of Tanzania's agricultural exports consist of the EU countries, especially the United Kingdom, Germany, and the Netherlands.
In the past, the agricultural sector was completely controlled by the government. While liberalization of the sector has rapidly occurred, there are still government marketing boards that set quasi-official (semi-official) prices for certain crops. Purchasers are not forced to abide by the set prices, but often feel compelled to because most peasants normally support the prices the government establishes. This has led to some conflict, and most recently a dispute has emerged between cashew producers and cashew exporters over the government-set prices. While the former supports the prices, the latter argues they are unreasonable. The Economist Intelligence Unit (EUI) argues that the quasi-official prices are detrimental to agricultural growth, as they cause confusion and conflict. At the same time, however, the government argues that they apply pressure on private purchasers to pay fair prices for different crops. Despite the pressures of deregulation in the agricultural sector, the government has not made plans to abandon the quasi-official pricing system.
The February 2001 Tanzania Country Report issued by the EIU forecasts that GDP growth in Tanzania will equal 5.3 percent in 2001 and 5.9 percent in 2002. Not surprisingly, this growth will be led by the production of traditional agricultural commodity exports. While growth in GDP represents a positive development, the cash crop basis of this growth renders it largely unsustainable. In other words, Tanzania is currently experiencing a period of favorable production conditions, which, due to the volatile (frequently changing) nature of the weather, are guaranteed to change, for better or worse.
Production patterns in Tanzania and other agriculturally based developing nations oscillate (rapidly increase and decrease) dramatically, according to the shifting weather conditions in a given harvest year. In the past 10 years, for instance, maize production in Tanzania has varied considerably, ranging from a high of 2,638 produced tons in 1995-96, to a low of 2,107 tons in 1996-97. Though maize production is largely for domestic consumption, the same unstable patterns of production characterize agricultural crops designated for exportation, as both are subject to the debilitating effects of drought and flooding during the rainy season.
The volatile prices of agricultural commodities on international markets exacerbate (make worse) the instability of countries such as Tanzania that are highly dependent upon cash crop exports. For example, in any given year, the international prices of a commodity such as coffee can increase or decrease considerably, depending upon how much or how little all coffee-producing countries collectively produce. If there is a large international coffee harvest, prices will diminish, as competition will increase. The same holds true in the opposite direction.
Another major inhibiting factor working against the sustainability of growth generated by agricultural production relates to the small amount of existing arable land in Tanzania. Only 4 percent of all land is arable, with only 1 percent suitable for permanent crops. To make matters worse, Tanzania currently confronts issues of soil degradation, deforestation, and desertification . For all these reasons, it is imperative that Tanzania develop the other sectors of its economy.