Poultry Subsector In Tanzania

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Poultry Subsector inTanzaniaA Quick Scan

Poultry Subsector in Tanzania: A Quick ScanStudy commissioned by Embassy of the Kingdom of the Netherlands in Dar es Salaam, Tanzania.Conducted byEdmond J RingoMatch Maker Associates LimitedVictor MwendaTranscend Enterprises LimitedOctober 2018TanzaniaContributors

Poultry Subsector in Tanzania: A Quick ScanTABLE OF CONTENTSExecutive Summary . ii1. Introduction . 12. Tanzania Country Profile and Economic Outlook. 22.1Geography, Natural Resources, Climate, Population . 22.2Macro-Economic Indicators . 22.3Agriculture Sector and Investment Opportunities . 42.4Tanzania’s Relationship with the Netherlands in the Agriculture Sector . 43. Tanzania Poultry Subsector . 63.1History and Overview . 63.1.1The Indigenous Chicken Subsector . 63.1.2The Exotic Chicken (Broilers and Layers) Subsector. 83.2Production . 83.2.1Breeding, Multiplication and Hatcheries . 83.2.2Production Systems . 103.2.3Infrastructure and Equipment. 103.2.4Feeds, Feeding Regime and Local Raw Material; Raw Material Quality . 113.2.5Diseases and Biosecurity; Mortality; Available Laboratories . 123.2.6Progressive Farms . 123.3Poultry Value Chains . 133.3.1Broiler Value Chain . 133.3.2Layer Value Chain . 143.4Distribution and Marketing . 153.4.1Distribution and Marketing Channels . 153.4.2Bottlenecks . 163.5Critical Services and On-Going Initiatives . 173.5.1Technical Services . 173.5.2Logistics and Supply Chain Management. 183.5.3Agricultural Finance in Tanzania . 193.5.4Emerging Poultry Associations . 213.5.5Emerging Poultry Development Projects and Initiatives Promoting Poultry Industry . 214. Policies and Regulations Influencing Performance of the Subsector . 235. Recommendations . 255.1SWOT Analysis of the Poultry Subsector . 255.2Tanzania Investment Centre (TIC) . 265.3Emerging Investment Opportunities in the Poultry Subsector in Tanzania . 265.4Capacity Building Priority Areas . 265.5Investment Risk Analysis and Management . 275.5.1Identification of Key Risks . 275.5.2Risk Analysis and Management. 276. References. 297. Annexes . 307.1Annex 1: Key Active Players . 307.2Annex 2: Public Sector Partners . 307.3Annex 3: Acronyms . 31i

Poultry Subsector in Tanzania: A Quick ScanEXECUTIVE SUMMARYThe poultry sector in Tanzania is emerging steadily both in indigenous and exotic (broiler andlayers) chicken. Demand for local chickens remains high mainly due to the preferred taste ofthe chickens among Tanzanians and the generally trusted methods of raising the birds, andthe domestic market for exotic chicken and eggs is likely to keep growing, as eating habitsare changing, especially in urban areas, and the economy is growing.The current population of chickens is estimated at 72 million,of which 40 million are indigenous chicken and the remaining32 million are exotic poultry, which include 24 million broilersand 8 million layers. Among the existing 4.7 millionagricultural households in Tanzania, 3.7 million householdskeep chicken.Source InterchickDespite availability of ampleland for growing grains and soyato provide enough raw poultry sector is lagging behinddue to unorganised markets for poultry and poultry products,unreliable supply of day-old chicks (DOCs), lack of reliablesupply of quality poultry feeds, high veterinary and poultryfeed costs and lack of poultry processing industries. Thepoultry sector is also suffering from chaotic and unorganiseddistribution system and lack of third-party logistics cold chainfor poultry and poultry products’ movements from farm toconsumers.Due to underdeveloped production (hatchery technologies) and processing equipment andtechnologies such as modern abattoirs and slaughterhouses, Tanzania has remained netimporter of poultry parent stock (fertilised eggs and DOCs) and significant volume ofprocessed poultry products. Tanzania also imports soymeal and other key additives forpoultry feed, poultry production and processing equipment, and veterinary products.Tanzania imports parent stock and fertilised eggs mainly from the Netherlands, Kenya,France, Zambia, Great Britain, and India. Due to limited, consistent supply of quality poultryproducts, Tanzania institutional consumers (mining), food service (tourist/safari hotels) andretailers (supermarkets) import processed poultry products from mainly from the USA,Brazil, the UAE, and Russia.The potential of poultry sector in Tanzania therefore has remained untapped which opensopportunities for investments to revamp the sector and related industries. The emerginginvestment opportunities along the poultry value chain and related industries are highlightedin Table 1. Priority is based on analysis of all factors and input from key stakeholders.ii

Poultry Subsector in Tanzania: A Quick ScanTable 1: Key areas for investment in the poultry sector of TanzaniaInvestment areaDescriptionPriority Animal feed technologies (pelleting technologies, extrusion ofsoybeans, other efficient feed processing technologies)Animal Feed Warehousing and grain silos management Breeding – crossbreed chickenBreeder Farms Building on the on-going R&D by ACGG Producing parent and grandparent stock Importing parent stock, grandparent stock, and at times fertilised eggsHatchery Farms Producing and distributing day-old chicks (DOCs) Importing parent stock, grandparent stock, and fertilised eggsIntegrated Poultry Farms Producing and distribution of day-old chicks (DOCs)(including, hatchery, Production of broilers and layersproduction & processing) Processing of poultry products Distribution of poultry productsThird-Party logistics (3PL) Cold transportation and storage along the poultry food chain This may include a high care food grade processing facilitycold chain Transportation management and trucking software High care slaughterhouse designated for poultryProcessing facility This should include cold storage facility Farm infrastructure including automated feeding and innovative wasteSupply of poultrymanagementequipment and Animal feed processing technologies and equipmenttechnologies Transportation and storing rging areas for capacity building include biosecurity enhancement and sectorcoordination.Biosecurity enhancement among small- and medium-scale poultry farmers and producersincludes: farm management – quality control, quality feeds, etc; record keeping; availabilityand affordability of veterinary services; pilot contract farming arrangements building on theKUKU Deal model.Sector coordination includes advocacy and governance: liaising with key sector playersMLFD, MIT, ACT, TPSF and TMB; building on other poultry forums such as ACGG NationalChicken Genetic Gains Innovative Platform; and consolidating fragmented poultry sectororganisations including animal feed sector associations.The Tanzania poultry sector is ripe for investment with opportunities ranging from inputsupply all the way across the value chain to retailing and exporting.iii

Poultry Subsector in Tanzania: A Quick Scan1. INTRODUCTIONThis study is complementary to the Regional Poultry Study1 that was undertaken earlier this year and intendsto undertake the following tasks:1. A clear map of the poultry industry in Tanzania, including the main areas involved, facts and figures(Broilers & Layers)2. Bringing out the key highlights of poultry value chain i.e. genetics, hatcheries, breeders, feeds, animalhealth, value addition, logistics and supply chain, markets, financers etc.3. A stakeholder analysis, identifying (and briefly describing) the key active players in the poultry industryin Tanzania (including contact details)4. A short overview of the role played by government/private sector/association if any5. Identifying emerging synergies among poultry projects and other initiatives if any6. In addition to the Regional Poultry Industry a clear overview of current regulations and policies thataffect the poultry industry should be outlined7. Identifying industry main challenges, opportunities & best practices8. Recommendations highlighting business interventions, which can address the identified challenges andopportunities along the poultry, value chains and related industries in order of priority.The Embassy of the Kingdom of the Netherlands (EKN) in Tanzania initiated this study aiming at identifyingopportunities for the Dutch involvement in poultry sector in Tanzania. The study aims to provide Dutchbusinesses (who are willing to invest in the Tanzanian poultry sector) with useful insights on the sector, suchas facts & figures related to the different production areas in Tanzania, a stakeholder analysis, and actualinformation on the different subsectors.The information provided in this report is expected to put forward the prioritised best areas of interventionso that the stakeholders involved can develop a clear roadmap afterwards. Moreover, this report has shedlight on where the Dutch can add value and complement investments in the value chain. The Embassy of theKingdom of the Netherlands in Tanzania envisaged that this study would contribute in the facilitation of theDutch-Tanzanian partnerships that will offer integrated solutions in the nexus of development of poultryindustry.This report is subdivided into seven sections including these introductory paragraphs. The second sectionbrings up country profile and economic outlook of Tanzania. Section three discusses the poultry subsectorin Tanzania including a history and overview, description and mapping of the poultry value chain andnarration of key functions, actors and dynamics. Section four describes the policy and regulatory framework,and section five gives a SWOT analysis and emerging opportunities for investments in the sector and relatedindustries. This section puts forward authors’ recommendations highlighting business interventions whichcould address the identified challenges and opportunities along the poultry value chains and relatedindustries with listed priorities. It also analyses risk and gives mitigation strategies. Section six is a summaryof references used in the process of developing this report and section seven consolidates useful contacts ofkey players and stakeholders of the poultry and related industries in Tanzania as well as list of acronyms usedin this report.1Regionalisation in poultry industry in Eastern Africa: A study into interdependency between East African countries in poultry production1

Poultry Subsector in Tanzania: A Quick Scan2. TANZANIA COUNTRY PROFILE AND ECONOMIC OUTLOOK2.1 Geography, Natural Resources, Climate, PopulationTanzania, officially the United Republic of Tanzania, is a country in eastern Africa within the African GreatLakes region. It borders Kenya and Uganda to the north; Rwanda, Burundi and Democratic Republic of theCongo to the west; Zambia, Malawi and Mozambique to the south; and the Indian Ocean to the east. MountKilimanjaro, Africa's highest mountain, is in north-eastern Tanzania.Tanzania is endowed with abundant natural resources and hasUGANDAprioritized protecting its rich biodiversity by placing more thanKENYA32% of its land area under protection. However, Tanzaniaremains one of the world’s poorest countries, with theRWANDAmajority of the poor living in rural areas. It is estimatedBURUNDIthat up to 80% of Tanzania’s rural population relies onuse of natural resources to sustain a livelihood, whichDEMOCRATICmakes stewardship of these resources aREPUBLIC OF THETANZANIACONGOfundamental priority for Tanzania’s continuedstability and growth. The diversity of natural resourcesranges from minerals, forestry, wildlife, scenicfeatures, to agricultural land, lake and ocean water, oilZAMBIAand natural gas. Biodiversity, particularly in relation toMOZAMBIQUEiconic wild animals such as giraffes, elephants, and lions, isMALAWIimportant for the national economy, as wildlife-based tourismcomprises approximately 9% of Tanzania’s gross domestic productFigure 1: Map of Tanzania andneighbouring countries(GDP) and 25% of its foreign exchange earnings. In Tanzania, populationgrowth, environmental mismanagement, commercial agricultural expansion,and climate change also combine to threaten biodiversity and rural livelihoods alike.Recognizing that the drivers of poverty and biodiversity loss are linked, Tanzania is partnering with its peopleand development partners to improve environmental governance and management at a landscape scale,including building the nation’s capacity in water resources management, reducing wildlife trafficking, anddeveloping sustainable tourism and climate-smart agriculture and afforestation. These strategies involvedeveloping and implementing key national environmental policies while supporting community-basedconservation initiatives.Tanzania has sustained relatively high economic growth over the last decade, averaging 6–7% a year. Butwhile the poverty rate in the country has declined, the absolute number of poor has not because of the highpopulation growth rate. The country's overall population is about 55 million (2016). The populationdistribution in Tanzania is uneven because most people live on the northern border or the eastern coast,with much of the remainder of the country being sparsely populated. Density varies from 12 per squarekilometre in Katavi Region to 3,133 per square kilometre in Dar es Salaam Region.2.2 Macro-Economic IndicatorsTanzania’s real GDP growth rate slowed in 2017. According to government data, growth for the first threequarters of 2017 stood at 6.8%, down from 7.3% during the same period in 2016. The decline ismainly due slower growth of services from the supply side and slower expansion of consumption andinvestment from demand side. Tanzania’s GDP growth rate was still the highest in the East AfricanCommunity (EAC) for 2017. The inflation rate has remained stable, aided by low food prices. The current2

Poultry Subsector in Tanzania: A Quick Scanaccount deficit narrowed to 2.5% of GDP in 2017, down from 4.2% in 2016, with the decline in imports morethan offsetting the decline in exports. The narrowing current account deficit was financed by foreign directinvestment (FDI) and long-term loans. Gross official reserves were nearly US 6 billion by end 2017,equivalent to more than five months of import cover (excluding FDI-related imports). (World Bank, 2018)The economic outlook is favourable, with downside risks that are largely under government control. Thethree most significant challenges facing the government to ensure growth momentum include:1) Continuing to implement measures to ensure macroeconomic stability;2) Intensifying efforts to implement its development-oriented budget, and3) Urgently implementing measures to enable and encourage the private sector to play a moresignificant role in Tanzania’s development.In 2017 many businesses saw a downturn and complications to their operations because of new policies andregulations. One important example is the new natural resources legislation, which forces mining and energycompanies to renegotiate their contracts to bring them in line with the new law. (See section 3.6, Table 11for more information about policies affecting the poultry subsector.)In general, many uncertainties and challenges remain that reduce the ease of doing business in Tanzania(currently ranked 137 on the index). This is also confirmed in recent economic analyses conducted by theWorld Bank, the IMF, the United Nations Industrial Development Organization (UNIDO) and the WorldEconomic Forum (WEF). The latter cites access to finance, corruption, inadequate infrastructure, tax ratesand inefficient government bureaucracy as the five biggest challenges. In addition to these challenges, theunpredictability of government policies is a major constraint for foreign investors. In March 2018 the countryreceived its first Moody’s rating, of B1, which is better than most of its neighbouring countries.Private sector involvement in the country’s development can help finance the government’s ambitiousinvestment plans, be a source of finance and innovation, and create jobs for new entrants into the jobmarket. This will require addressing key impediments to higher private investment including low creditgrowth, high and persistent payment arrears, and the high cost of regulatory compliance and deficiencies ininfrastructure services and skills2.Population: 55 millionUrban Population: 33.8%Chief of State/Head of Government:President John MagufuliOfficial Languages: Kiswahili, EnglishClimate: varies from tropical along thecoast to temperate in the highlandsLand Use: 43.7% agricultural land 37.3%forest; 19% otherNatural Resources: hydropower, tin,phosphates, iron ore, coal, diamonds,gemstones, gold, natural gas, nickelFigure 2: Quick Facts about nia/overview3

Poultry Subsector in Tanzania: A Quick Scan2.3 Agriculture Sector and Investment OpportunitiesAgriculture is the mainstay of the economy, contributing about 30% of GDP and employing 67% of the labourforce, with women contributing more than 70% of the labour. It is the main source of food, employment,raw materials for industries and foreign exchange earnings. Since Tanzania has different climatic andgeographical zones, farmers grow a variety of annual and permanent crops. Crops grown include: cereals;pulses; root and tubers; fruits and vegetables; and spices. Moreover, farmers practice livestock farming bykeeping animals like cattle, goats, sheep, pigs and chicken. They also keep a few numbers of turkeys, ducks,rabbits, donkeys and horses.Agriculture is among the most promising investment sectors in Tanzania. (Others include telecom & ICT,energy excluding oil & gas, and logistics and warehousing).Agricultural value chains that have brought attention ofWhy invest in Tanzania?domestic and FDIs include dairy, poultry, horticulture, tea,Peace & Political Stabilityrice, pulses and oil seeds. Investment opportunities rangeStrategic Locationfrom input supply all the way across the value chain toAttractive Investment Regimeretailing and exporting.Investment IncentivesInvestment GuaranteesSpecifically, for perishable value chains such as dairy, poultryPlenty of Natural Resourcesand horticulture, there is a huge opportunity to developHigh Growth Potentialprocessing facilities and related cold chain infrastructures.Memberships of Bilateral TradeCold chain third-party logistics (3PL) is an essentialAgreementscomponent of an efficient food supply chain to ensure foodPublic/Private Partnershipssafety and quality and reduction of losses. Nevertheless, mostExport Processing and SpecialTanzania based commercial farmers do not have cold chainEconomic Zonesinfrastructure from farm to market including export gate andMagnificent Business and Leisurethus most of them compromise significantly on quality andDestinations (TIC)are thus unable to access more sophisticated and exportmarkets. Mainly large companies have own or access to thirdFigure 3: Why invest in Tanzania party logistics’ cold chain infrastructure due to the highinvestment cost required. At the present, multinational firms in the transport sector offer bulk of the thirdparty logistics services in Tanzania. 3PL is still a new concept in Tanzania, which has not been fully embracedby the national and FDI’s 3PL firms.Tanzania is a member of the Southern African Development Community (SADC) and the East AfricanCommunity (EAC). Through EAC, Tanzania is a member of Tripartite Free Trade Area involving the CommonMarket for Eastern and Southern Africa (COMESA), SADC and EAC. This provides an enormous marketopportunity targeting a population of over 600 million. (TIC, 2018)2.4 Tanzania’s Relationship with the Netherlands in the Agriculture SectorTanzania exports around 63 million worth of agricultural products to the Netherlands annually includingtobacco, fish, and propagation material, cut flowers and vegetable seed.Traditionally Dutch horticultural and livestock companies have been located in the northeastern of Tanzaniain the Arusha and Kilimanjaro regions and on the slopes of Mt Kilimanjaro. The climate there is veryfavourable for agriculture and horticultural production; both in protected (greenhouses) and unprotectedcultivation. Large Dutch companies in Arusha include Rijk Zwaan, Enza Zaden, Dekker bruins, DummenOrange, Multi Flower. There are also three interesting PPP (FDOV) projects in Arusha & Kilimanjaro regions.4

Poultry Subsector in Tanzania: A Quick ScanFor some years now, the Embassy of the Kingdom of the Netherlands (EKN) in Tanzania has been exploringthe agricultural potential in other parts of the country, specifically the Southern Highlands. The SouthernAgricultural Growth Corridor of Tanzania (SAGCOT), an area as big as Italy, is seen as the food basket of EastAfrica and a focus area of Tanzanian government for agricultural development. The Netherlands is now anofficial partner in SAGCOT and cooperation is excellent and programs are taking off.The main focus of the Netherlands in the SAGCOT so far is the development of the potato value chainthrough Dutch Diamond Approach where government, researchers, education institutes and private sectorteam up together. The government-to-government (G2G) project on capacity building on plant healthservices & seed potato registration started in the end of 2017 and several missions to and from theNetherlands have been organized including Tanzania Agribusiness event in the Hague; three new Dutch (firstever processing) varieties have been registered in Tanzania while nine more Dutch varieties are in theregistration process; and there has been an amendment of the Tanzania seed law.The Netherlands has also started a Centre for Development of Potato Industry in Tanzania (CD-PIT) inMbeya and a local company Stawisha has been established to manage it. MoU between Tanzania and theNetherlands regarding joint effort to develop the potato value chain was signed in August 2018.In 2017, through the Embassy of the Kingdom of the Netherlands (EKN) in Tanzania, two studies wereundertaken; the first one focusing on the potential of marine fishery and business opportunities; and thesecond one focusing on production of fruit and vegetables in Tanzania. Both studies have been presented atthe Tanzania Agribusiness Event to relevant Dutch companies and the way forward was suggested i.e. trademissions as several Dutch companies have already demonstrated an interest in the development of thesectors.Through EKN in Tanzania, a study on agro-logistics was undertaken earlier this year 2018 aiming atdeveloping a Masterplan for the SAGCOT region showing existing agricultural clusters and activities, potentialopportunities and infrastructural gaps. The Netherlands through EKN is geared to promote poultry and dairyvalue chain development through Dutch Diamond Approach that will trigger additional Dutch investments inTanzania.Essentially, most of EKN capacity building activities are undertaken in partnership with the Dutch OrangeKnowledge Programme (OKP). OKP, formally the Netherlands Fellowship Programme (NFP), has runsuccessfully for over 40 years allowing thousands of Tanzanians to study in the Netherlands, and helped tofurther strengthen the relationship between the two countries.In cooperation with the EKN, the Netherlands Enterprise Agency (RVO.nl) offers a range of services andfinancial arrangements to entrepreneurs who want to do business in Tanzania. The Dutch Good Growth Fund(DGGF) provides finance for SME entrepreneurs who want to invest in emerging markets and developingcountries. The investment or export product must have a positive impact on the country’s development. TheSustainable Enterprise and Food Security Facility (FDOV) encourages public-private partnerships in the fieldof food security and private sector development in developing countries and the Sustainable Water Fund(FDW) is a public-private partnership facility that aims to contribute to water safety and water security indeveloping countries.5

Poultry Subsector in Tanzania: A Quick Scan3. TANZANIA POULTRY SUBSECTOR3.1 History and OverviewIn the 1970s, two government agencies were established: National Poultry Company (NAPOCO) and TanzaniaAnimal Feed Company (TAFCO). NAPOCO was tasked with establishing and operating breeding and hatcheryfarms and providing all chicken meat and eggs in the country. TAFCO manufactured animal feeds. However,in the 1990s, these organizations ceased operations. This gave opportunity for the growth of the privatesector which has continued to grow, with companies and organizations even recently investing in the poultryvalue chain.Tanzania has three major poultry production systems: traditional indigenous, improved family chicken andcommercial specialized chicken systems (LMP, 2015; Da Silva et al., 2017). The traditional indigenous familysubsystem is an extensive scavenging dual-purpose system, with levels of low egg (50 eggs/ year) and meat(1.5 kg for mature chicken) production and therefore local backyard system (low input – low output) andabsence of biosecurity. The improved family chicken subsystem (with improved local/ imported tropicalbreeds) is a semi-intensive, semi-scavenging moderately high productivity (150 eggs/year; and 1.8 kg liveweight at maturity) subsystem and therefore a more intermediate production system (medium input –medium output) based on the use of dual-purpose breeds with some attention to biosecurity. Bothsubsystems are family-orientated and traditional. The commercial specialized chicken system is an intensivelayers and broilers system with high productivity (2 kg live weight at maturity and 270 eggs/yea

supply of quality poultry feeds, high veterinary and poultry feed costs and lack of poultry processing industries. The poultry sector is also suffering from chaotic and unorganised distribution system and lack of third-party logistics cold chain for poultry and poultry pro

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