Can Smallholders benefit from the new market opportunities from the extractive industry in Tanzania?

Abstract

The recent discovery of huge oil and gas reserves in Tanzania has created a new opportunity for economic growth and development of the country. Tanzania is expected to be one of the leading producers and exporters of natural gas in the coming decade. However, 88 percent of poor Tanzanians live in rural areas and two-third of the labour force is engaged in agriculture. For the extractive industry to serve as a catalyst for economic growth and poverty reduction, it has to be integrated with the rest of the economy through forward and backward linkages. One such linkage is food supply from agriculture. The projected boom in the extractive industry will open up new market opportunities for farmers to supply food items for high value buyers such as caterers, restaurants, supermarkets and processors. However, to benefit from rapidly expanding high-end food markets, farmers need to have both the capacity and the incentives to supply their produce at the desired quantity and quality. Currently significant portion of the new demand is already being filled by imported goods. This report discusses the opportunities for and challenges of integrating farmers into high-end food markets.