Opportunities and challenges in Tanzania’s sugar industry: Lessons for SAGCOT and the New Alliance

Abstract

Sugarcane outgrower schemes are central to several policy and donor strategies for driving agricultural growth and reducing poverty, including the Southern Agricultural Growth Corridor project in Tanzania (SAGCOT). But field research into the outgrower component of Kilombero Sugar Company, Tanzania’s largest and best regarded sugar producer, demonstrates a pressing need for change. Sugarcane production in Kilombero has had benefits for farming households as well as the local and national economy. However, unsustainable expansion and governance issues in the outgrower scheme have created new risks. There are pressures on food security as a result of a decline in land for food crops, and on incomes, particularly when outgrowers’ cane remains unharvested and farmers’ payments are delayed. These problems have been aggravated by the importation of foreign sugar into the country. For this industry to provide its maximum benefits to the economy and to the household, a policy, legal and institutional framework is needed that provides greater efficiency, accountability and transparency, as well as greater security for all participating stakeholders. There are lessons for the sugar industry, as well as donors and investors of ongoing and future agribusiness developments in Tanzania.