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AGRICULTURAL COUNCIL OF TANZANIA

COUNTERFEIT AGRICULTURAL INPUTS IN NJOMBE: CAUSES AND EFFECTS

DRAFT RESEARCH REPORT

SUBMITTED BY

CENTRE FOR POLICY RESEARCH AND ADVOCACY

April 2016

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Contents Contents ........................................................................................................................................................ 2

LIST OF ABBREVIATIONS AND ACRONYMS ............................................................................................. 4

LIST OF TABLES ........................................................................................................................................... 5

LIST OF FIGURES ......................................................................................................................................... 6

EXECUTIVE SUMMARY ............................................................................................................................... 7

SECTION ONE: CONTEXT AND SCOPE OF THE ISSUE ........................................................................... 10

1.1 Introduction ........................................................................................................................................... 10

1.2 The Issue ........................................................................................................................................... 10

1.3 Scope of the Study ............................................................................................................................ 11

1.4 Approach and Methodology ............................................................................................................. 12

1.4.1 Debriefing and Inception of the Assignment ............................................................................ 12

1.4.2 Review of Relevant Documents and Literature ........................................................................ 12

1.4.3 Fieldwork and Data Collection ................................................................................................... 12

1.4.4 Validation Meeting of the Stakeholders ................................................................................... 12

1.4.5 Compilation of Data and Analysis ............................................................................................. 13

SECTION TWO: REVIEW OF VARIOUS DOCUMENTS ON COUNTERFEIT INPUTS ............................... 14

2.1 Defining Counterfeit ......................................................................................................................... 14

2.2 Magnitude of Counterfeit Problem .................................................................................................. 14

2.2 Previous research on Agro-inputs Counterfeiting ........................................................................... 15

2.3 Policy and Regulatory Framework in Tanzania ................................................................................ 16

2.3.1. Tanzania’s agricultural policy ................................................................................................... 17

2.3.1 Legal and Regulatory Framework for Fertilizers ....................................................................... 18

2.3.2 Legal Framework for Agro-Chemicals ...................................................................................... 18

2.3.3 Seed Industry Policy, Legal and Regulatory Framework .......................................................... 19

2.3.4 Agricultural Sector Strategy and Programme .......................................................................... 19

2.3.6 The Southern Agricultural Growth Corridor of Tanzania (SAGCOT) ....................................... 21

SECTION THREE: FINDINGS AND KEY OBSERVATIONS ........................................................................ 23

3.0 Introduction ...................................................................................................................................... 23

3.1Agricultural Statistics in Njombe ....................................................................................................... 23

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3.2 Pragmatic Issues Relating to Counterfeit Inputs.............................................................................. 24

3.2.2 Distribution channels ..................................................................................................................... 25

3.2.3 Understanding the Counterfeit Problem in Njombe Region .................................................... 26

3.2.3 The practice of counterfeiting in the supply chain .................................................................... 26

3.3 Drivers of Counterfeit inputs in Njombe .......................................................................................... 27

3.3 The Impact of Counterfeit Inputs on the Economic Wellbeing of Farmers ..................................... 28

3.4 Success Stories in dealing with counterfeits in Njombe .................................................................. 29

3.4.1 The ULUMAII cooperative society ............................................................................................. 30

3.4.2 Njombe Agricultural Development Organization (NADO) ....................................................... 30

4.1 Key conclusions ................................................................................................................................. 33

4.2. Recommendations .......................................................................................................................... 34

APPENDICES .............................................................................................................................................. 39

Appendix I: Interview Guides and Checklist ........................................................................................... 39

Appendix II: LIST OF RESPONDENTS FROM NJOMBE ........................................................................ 40

Appendix III: VALIDATION MEETING REPORT ..................................................................................... 41

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LIST OF ABBREVIATIONS AND ACRONYMES ABSAC Agriculture Bio-safety Scientific Advisory Committee ACT Agriculture Council of Tanzania ALAT Association of Local Authorities of Tanzania BEST – AC Business Environment Strengthening for Tanzania (Advocacy Component) CBOs Community-Based Organizations COSTECH Commission for Science and Technology CSOs Civil Society Organizations DEDs District Executive Directors EC European Commission ECPA European Crop Protection Association FAO Food and Agriculture Organization GM Genetically Modified KAM Kenya Association of Manufacturers LGA Local Government Authority MDGs Millennium Development Goals NADO Njombe Agricultural Development Organization NBAC National Bio-technology Advisory Committee NGO Non-Government Organization NPK Nitrogen, Phosphorus and Potassium NPT – TC Non Performance Trial – Technical Committee NSC National Seed Committee OECD Organization for Economic Co-operation and Development PARTS Pesticide Approval and Registration Technical Sub-committee PEPQS Post-Entry Plant Quarantine Station PM Prime Minister POPs Persistent Organic Pollutants PPP Public/Private Partnership PSIM Post-Surveillance Inspection Monitoring RECs Regional Economic Communities SACCOS Savings and Credit Cooperative Society SOP Standard Operations Procedure SSA Sub-Saharan Africa TASTA Tanzania Seed Traders’ Association TBS Tanzania Bureau of Standards TFRA Tanzania Food Reserve Authority TOSCI Tanzania Official Seed Certification Institute TPRI Tanzania Pesticide Research Institute ULUMAII Usuka, Lugoda¸Matoo, Ikwegu and Iteni WEMA Water Efficient Maize for Africa WHO World Health Organization

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LIST OF TABLES Table: 2.3.1 Input accessibility 2012/2013, Tanzania ………………………………………………….……18

Table 3.1: Distribution of Total Arable Land by Council, Njombe Region, 2012….……….……….23

Table 3.2: Estimated Area (ha) under Major Food Crops; Njombe Region; 2009/10 –

2011/12…………………………………………………………………………………….……………....25

Table 3.2.1: Common Agricultural Inputs and Authorized Producing Companies in

Njombe…………………………………………………………………………………………………….…………….25

Table 3.3: The Drivers of Counterfeit Agricultural Inputs in Njombe.................................…...27

Table 5: Estimated Economic Impacts of Counterfeit Agro inputs in Njombe………………….….29

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LIST OF FIGURES

Figure 3.1: Annual average Area (ha) planted with Major Food crops, Njombe Region, 2009/10 – 2011/12………………………………24

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EXECUTIVE SUMMARY

The issue of counterfeit agro-inputs is a global problem facing both developing and developed countries. In Europe, the rate of counterfeit agro-inputs is reported to range from 5% to 7%. The fake agro-inputs in Africa are reported to comprise 15-20% of the agro-inputs market. In Tanzania, the situation is more challenging as about 40% of agro-inputs (seeds, fertilizers and pesticides) are reported to be fake (in2eastafrica.net, 2012). Overall, smallholders are significantly affected by the situation as 80% of them live in rural areas and heavily depend on agriculture. Through consulting with members of ACT, traders and farmers it was observed that there has been an increasing supply of counterfeit agro-inputs in Njombe region accounting for more than 30% of agro-inputs, but enforcement of the laws and regulations governing the supply and use of agricultural inputs has been ineffective. Therefore, ACT with the support of the Business Environment Strengthening for Tanzania (BEST-Dialogue) initiated a pilot project in Njombe region to advocate the adoption of pragmatic measures to address the counterfeit agro-inputs problem at the regional and local government level. They engaged the University of Dar es Salaam Business School through the Centre for Policy Research and Advocacy (CPRA) to study the causes and impact of counterfeit agro-inputs, and propose practical measures to eradicate the problem. In particular, the study sought to: i) establish the sources of the counterfeit agro-inputs and the factors encouraging smallholder farmers to use them; ii) establish and quantify the impact of counterfeit inputs on the wellbeing of the farmers and economy of Njombe region; iii) establish the effect of counterfeit inputs on their agriculture value chain; and iv) identify an appropriate strategy to be used to address the challenge of counterfeit agricultural inputs in Njombe region. The study was participatory in nature entailing wide representation of both the public and private sector. After identifying the problem, a review of literature was conducted and primary data were collected through personal interviews and focus group discussions. Data were collected from the District Commissioners, District Executive Directors (DEDs), agro-dealers, farmers, Cooperative Officers, etc. The findings generated from various sources are presented in this report. The major findings are as follows;

i) While counterfeit agricultural inputs are found in seeds, fertilizers and agro-chemicals, the problem is more prevalent in maize seeds.

ii) Counterfeiting manifests itself in three forms; a sub-standard input, packaging (bottle/bag) of inputs and reuse and adulteration.

iii) The major reasons identified for counterfeits in Njombe region on both the supply and demand side are as follows:

o Difficulty in recognizing counterfeit inputs by buyers. o Attempt by agro-dealers to generate huge profits from counterfeit inputs.

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o Weak enforcement of laws and by-laws governing the supply of agro-inputs. o Poor or improperly managed procurement and distribution mechanisms. o Insufficient manpower to inspect agro-inputs. o Lack of awareness of farmers of the prevalence of counterfeits. o Shortage of trusted brands of inputs. o Low purchasing power of farmers. o Ill-informed farmers on the impact of counterfeits. o Loopholes in policy and regulations.

The study reveals that more than 20% of all inspected and tested seeds in Njombe region are counterfeit. The cases of the counterfeiting of fertilizers amount to 10% of those inspected. While it is estimated that an acre of land with genuine seeds and fertilizers yields 20 to 25 bags of maize weighing 100kg, the yield of counterfeit seeds or fertilizers is reported to drop to 8-10 bags of maize per acre. Therefore, those affected by counterfeiting lose almost 60% of the yield. Consequently, maize output regionally has been dropping by an average rate of 4.3% since 2009/2010. One of the reasons is the prevalence of counterfeit maize seeds which in most cases do not grow.

From the observations made in this study, the following recommendations are made to mitigate the problem of counterfeits in Njombe region:

i) For the farmers

Farmers need to be educated through various media including the local radio station on three keys issues;

That counterfeits are prevalent in the market

The importance of not using counterfeits and how to recognize and avoid buying them and especially of demanding receipts when they buy inputs

Buying from authorized and credible dealers only

ii) Farmers’ associations and cooperatives

The farmers’ associations and cooperatives are to be revived and empowered to serve as credible and accredited institutions for distributing agro-inputs.

Government subsidies and/or a voucher system to be channelled through farmers’ associations and cooperatives.

iii) Local government authorities (LGAs)

Enhance their enforcement efforts by increasing the number of officials and frequency of inspections of the traders’ warehouses and sales points to establish the presence of counterfeits

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To fully and publicly destroy counterfeits of whatever type or quantity found illegally traded in the market so that unscrupulous traders are discouraged from trading in counterfeits

Abolish and strictly follow up enforcement of repackaging and relabelling the inputs. Traders in inputs should not be allowed to sell unpacked inputs like fertilizers and seeds

Ensure all manufacturers or authorized distributors of inputs have demo farms.

Empower authorities/institutions like TOSCI and others to destroy the counterfeits found to ensure they are not brought to the market again.

Empower cooperative societies and profile them as credible institutions that can be trusted by the farmers as the source of genuine inputs. This will ensure that when the government subsidizes farmers, there will be no reason for low priced inputs to penetrate the channel and be labelled as high value inputs.

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SECTION ONE: CONTEXT AND SCOPE OF THE ISSUE

1.1 Introduction Njombe region is one of Tanzania’s largest producers of Irish potatoes, maize and partly beans. Maize and Irish potatoes are cultivated for both household use and sale. Njombe is one of the strategic regions in the country for food security and development. Most farmers in the region are small-scale growers of maize, Irish potatoes, beans and wheat being their main sources of both food and income. During 2009/10-2011/12, Njombe region produced a total of 1,898,579 tons of major food crops at an average of 632,859.7 tons per year. Maize is the dominant food crop produced as it contributes 57.6 percent of the tonnage of all the major food crops produced. Irish potatoes rank second, comprising 30.0 percent of the production of major food crops. Wheat contributes the smallest proportion to the region’s tonnage of food crops, comprising 2.6 percent (www.njombe.go.tz) The Agriculture First (Kilimo Kwanza) initiative was introduced to improve agricultural production and hence reduce poverty. Improving the usage of modern farming implements and inputs, accessibility of extension services and credit and markets for agricultural products are among its strategies for attaining its objective of alleviating poverty. The use of counterfeit agro-inputs would therefore be a threat to the livelihoods of many people in Njombe region and the economy as a whole. The Government has therefore been emphasizing the use of improved seeds for increased productivity, but adoption by farmers is still low (FAO, 2013), which translates into few such seeds being purchased. The existence of fake seeds under the cover of big companies has discouraged farmers from buying improved seeds. Smallholders are significantly affected by the situation since about 80% of the population in Tanzania live in rural areas and depend heavily on agricultural production. Counterfeiting is driven by both demand and supply forces. On the supply side it is driven by institutional factors such as penalties imposed on culprits and likelihood of detection as well as weak enforcement. On the demand side, consumer behaviour is the main driver1. That being the case, fighting counterfeit agro-inputs is a complex task which requires urgent action by all stakeholders, including the regulatory authorities, environmental protection agencies, food and pesticide industries and farmers. 1.2 The Issue ACT has been supporting its members at the local government level to advocate for improved agricultural productivity in its areas of operations. Through consultation with its members, traders and farmers, ACT observed that there has been an increasing supply of counterfeit agro-inputs in the Southern Highlands of Tanzania and in Njombe region in particular. Despite the measures taken at the national level to control the problem of counterfeit agricultural

1 IOSR Journal of Business and Management, Volume 16, Issue 8. Ver. IV (Aug. 2014)

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inputs it has become more acute at the local level. For instance, it is estimated that more than 30% of inputs supplied to Njombe region are fake. The application of counterfeit agricultural inputs results in a number of negative impacts, including low agricultural productivity, low income for farmers, land degradation and health effects. Although there have been some advocacy initiatives at the national level, ACT observed that although the problem is becoming localized, there has not been pragmatic action at the local government level to stop it. Even with the presence of laws and regulations governing the supply and use of agricultural inputs, their enforcement and application have been ineffective, especially at the local government level. Despite several by-laws in Njombe region aimed at protecting farmers from the malpractices of business people, complaints about the presence of counterfeit agro-inputs in the region are increasing. The members of ACT, farmers, input manufacturers and other actors in agriculture registered their concern to ACT and identified counterfeit inputs as one of the critical challenges facing the agricultural sector in Njombe. While some of the concerns relate to inadequate enforcement of the laws and regulations governing agricultural inputs at the regional and district level, others relate to the lack of local strategies to curb the problem. In view of the above, ACT with the support of the Business Environment Strengthening for Tanzania (BEST-Dialogue) initiated a pilot project in Njombe region to advocate for the adoption of pragmatic measures to address the problem of counterfeit agro-inputs at the regional and local government level. In order to have a strong basis for dialogue between key actors, ACT engaged the University of Dar es Salaam Business School through CPRA to undertake a quick assessment to establish the causes of the problem and ascertain the magnitude of the impact so as to propose practical measures that can be implemented by the public and private sector in the respective districts in Njombe region. 1.3 Scope of the Study This study assessed the problem of counterfeit agricultural inputs in two districts (Njombe and Wangin’ombe) in Njombe region. The main goal was to produce a policy document that would be used to facilitate a public/private dialogue on counterfeit inputs in the region. Accordingly, the study sought to establish the causes and the impact of counterfeit agricultural inputs and to recommend an appropriate policy for implementation. Specifically, the objectives of the study were to:

i.Establish the sources of the counterfeit agro-inputs and the factors encouraging smallholder farmers to use them in Njombe region (Njombe and Wangin’ombe Districts);

ii.Establish and quantify the impact of counterfeit inputs on the wellbeing of the farmers and economy of Njombe region;

iii.Establish the effect of counterfeit inputs on their value chain (manufacturers, suppliers, traders, farmers/land and consumers).

iv. Identify an appropriate strategy to be used to address the challenge of counterfeit agricultural inputs in Njombe.

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1.4 Approach and Methodology This study was participatory in nature involving stakeholders from both the private and public sector, from identifying the problem to fieldwork. The problem was identified during the training of ACT members and other actors from the private and public sector. This was followed by various workshops and other activities described below: 1.4.1 Debriefing and Inception of the Assignment After signing the contract, the consultant organized a meeting with the client to gain an understanding of the assignment and agree on the modality for carrying it out. The meeting was also designed to collect data, information and documents available at ACT and BEST-AC. The consultant met staff from ACT and BEST-AC on several occasions. This was followed by a stakeholders’ workshop at Blue Pearl Hotel in Dar es Salaam where the research team had an opportunity to get clarification on the terms of reference and establish the focal point in the selected districts. 1.4.2 Review of Relevant Documents and Literature The consultant reviewed a number of relevant documents and literature to gain a thorough understanding of the problem of counterfeits in the agriculture sector. We exhaustively reviewed the national agricultural policy, acts, laws, regulations and district by-laws that directly or indirectly have a bearing on counterfeits. Previous studies on the counterfeiting of inputs, key documents from ACT and published scholarly work on the topic were also revisited. The review of the documents also guided the consultant in preparing the checklist of questions for the fieldwork. 1.4.3 Fieldwork and Data Collection

The data collection exercise entailed a combination of various methods to ensure that the data and information needed were obtained. The process began with the development of the semi-structured checklist (see Appendix 1) which was used to collect data from individuals in the selected area. The study employed personal interviews and focus group discussions to collect the data. Purposeful sampling was used to ensure proper coverage in the two identified districts. A number of people were involved in the study including the District Commissioners, District Executive Directors (DEDs), Agro Dealers, Farmers, Cooperative Officers, etc. (see Appendix 2). A total of 22 respondents were interviewed. 1.4.4 Validation Meeting of the Stakeholders A validation meeting bringing together stakeholders from the government, agricultural sector and traders was held to present the preliminary findings of the fieldwork. The meeting served as a way of validating the field findings and confirming the proposed policy recommendations. It involved discussions on what had been reported and further recommendations were made by all groups of stakeholders as indicated in appendix III and in the main text as recommendations.

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1.4.5 Compilation of Data and Analysis The data generated from the documents reviewed and the fieldwork was merged and analysed using various techniques. Although some tables were used to summarize the findings and present some data, the most common approach was content analysis whereby the content of the findings from various sources was analysed using the thematic approach. Some cases and interesting stories were also recorded and included in the analysis of the findings. The report therefore includes the aggregate findings from all the sources of data.

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SECTION TWO: REVIEW OF VARIOUS DOCUMENTS ON COUNTERFEIT INPUTS

2.1 Defining Counterfeit The Allen consulting group (2003) defines counterfeiting as the unauthorized duplication of a product protected by one or more intellectual property rights. Counterfeiting involves infringement of intellectual property rights which are private property rights conferred by statutory or common law2. Among others, these rights include patents, trademarks and industrial designs, as well as artistic and literary works. In the agricultural sector, the counterfeiting of seeds, veterinary drugs and vaccines, pesticides, animal feed and fertilizers affect agricultural products, human health and ecosystems. In defining counterfeit inputs, there are two major types of counterfeit, adulterated products and sub-standard products. The former is a product that is adulterated in some way, which may be an authentic product that has been diluted or an entirely fake product which may be packaged in reused branded bottles or bags with imitation brand names or labels. The latter is a product that does not effectively perform as it should, such as one that is past its sell-by date, has sub-standard concentrations or it may be mislabelled (the label does not reflect what is in the bottle). Observations made in Njombe indicate that counterfeiting manifests itself in three different forms, namely, as a mislabelled or sub-standard product, package reuse or label imitation. For instance, the minjingu fertilizer was labelled DAP and farmers were enticed to buy it as DAP. This would consequently make them use it for maize for which it is unsuitable, resulting is low produce. Therefore, in this study, counterfeit agro-inputs refer to any inputs which for any of the reasons above do not perform as expected by the users, thereby jeopardizing output. 2.2 Magnitude of Counterfeit Problem The issue of counterfeit agro-inputs is a global problem facing both developing and developed countries. In Europe, the rate of counterfeit agro-inputs is reported to range from 5% to 7%. In China and India the rate is deemed to be 30% and 20%, respectively (WHO & FAO, 2008). In Africa, counterfeit agro-inputs are reported to comprise 15-20% of the agro-inputs market. Hot spots of these fake agro-inputs are said to be Egypt, West Africa, Uganda and Tanzania (Rudolf & Cam, 2013). According to Brophy (2014), Ugandan manufacturers lose between US$10.7 and US$22.4 million annually due to counterfeit maize seeds, herbicides and inorganic fertilizers. These figures are staggering. The average size of a small-scale farmer’s land in Uganda is 2.5 hectares (6 acres) and average per capita income was just $506 in 2012. In Tanzania, about 40% of agro-inputs (seeds, fertilizers and pesticides) are reported to be fake (in2eastafrica.net, 2012). This can have a negative impact on the economy, human health and ecosystems.

2 International Journal of Human Resource and Procurement, Vol.1, Issue 5, 2013

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Counterfeiting occurs in as many forms based on the types of IPRs. A study taken across European Commission countries in 2001 indicated that 78% of infringements related to trademarks, 15% to copyright, 6% to design rights and 1% to patents (Bosworth et al, 2002). The same study revealed that in Germany, for example, 72% of cases are reported to be associated with trademark infringement, 16% with copyrights, 10% with designs and utility models and 2% with patents. According to KAM, (2012), the prevalence of counterfeiters in a market discourages innovations in that country since it deters honest producers from investing resources in new products and market development. Further counterfeiting results in direct loss to the government of tax revenue, since counterfeits are normally sold through secret channels and counterfeiters are not keen to pay tax on their ill-gotten gains. A report by OECD estimates that counterfeit pesticides are being produced and consumed in virtually all economies, with Asia emerging as the largest hub region (OECD, 2007). In terms of pesticide manufacturing, China has the biggest growth in terms of capacity. There are over 2000 companies formulating pesticides and 400 are involved in manufacturing. Sales of counterfeit pesticides amount to billions of Euros and are rising globally. China is believed to be a prime source while Russia is cited as a trans-shipment port (Euractiv, 2012 in Karingu et al, 2013). Agro-based products are counterfeited in different ways, the most common being manufacturing, labelling and repackaging, although adulteration and seed colouration are also used for fertilizers and seeds, respectively (Croplife, 2011). The use of untested materials in counterfeit products poses a severe risk of major phytotoxic problems when applied to growing crops, where the damage caused may be transient and affect yields, or destroy the crop completely, thus damaging the livelihood of the producer (Chaudhry, 2006). 2.2 Previous research on Counterfeit Agro-inputs Githii et al. (2014) conducted a study to analyze the dynamics that lead youths in Kenya to purchase counterfeit ICT products. This study identified the perception of youthfulness, weak regulations, weak branding, external influence, irresponsibility and moral decline as some of the major factors driving the counterfeit trade, as well as ignorance and poverty. The study recommends that there should be more awareness-raising campaigns even targeting the educated and more severe penalties for those who trade in counterfeit goods to deter its growth. However, this study was carried out among students largely from middle-income families, who had also been to university, and so we need to analyze the situation of counterfeit agricultural inputs according to various stakeholders in Njombe district. Karingu and Ngugi (2013) carried out a study on determinants of the infiltration of counterfeit agro-based products in Kenya. The study found that there is relationship between government policies, supply chain dynamics, the flow of information on counterfeiting, consumer characteristics and technology-based factors regarding the infiltration of counterfeit agro-based products. The study concludes that although regulations and institutions dealing with counterfeiting exist in Kenya, the measures dealing with counterfeiters need to be more stringent to deter them, and institutions need to do more to meet the expectations of the

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agro-based product suppliers, who feel that the institutions are ineffective. Effective regulations and institutions would deter the other determinants revealed in the study and would divert the energy and resources used in counterfeiting into more positive pursuits concerning supply chain factors, information flow, changing consumers’ mindset and the use of technology. The study also indicates the need for information regarding counterfeiting, which needs a concerted effort by the suppliers of agro-based products and government institutions. Feedback from the users would also be important. Our study sought to test whether the same or different issues exist in Njombe district. Bian and Moutinho (2009) examined the determinants of a consumer’s willingness to buy non-deceptive counterfeits. The study used the luxury watch market (Gucci and Rolex) as a model and handed out surveys at twenty malls in Glasgow. The study found that brand personality (what personality the brand reminds consumers of, as defined in the marketing literature) and social risk (concern or uncertainty in the buyer's mind that the purchase of the product under consideration will not be approved of by others) were the two largest determinants of whether a consumer bought a counterfeit. This finding supports the view that luxury items may be purchased more for what they signify (high status) than for what they actually are (fakes). This suggests that consumers will purchase a counterfeit when they feel that there is little social risk in purchasing it and when the counterfeit has a similar brand personality to the genuine product. The study, however, only applies to luxury non-deceptive counterfeiting and may not be representative of agricultural input counterfeits. We sought to test whether or not the farmers in Njombe have the same feelings. Shao (2014) analyzed the magnitude of counterfeit agro-inputs and proposed a system that integrates a mobile-based solution that helps authenticate agro-inputs in Tanzania. The study revealed that there are no trustworthy methods for verifying agro-inputs, as the current methods such as expiration date and labels are weak and can be easily forged. The magnitude of counterfeit agro-inputs is rated by the respondents to be high. Crop seeds were found to be the most counterfeited among other agro-inputs such as fertilizers, animal feed and pesticides. However, this study was carried out in Dodoma. Our intention was to see whether this was true in Njombe district. 2.3 Policy and Regulatory Framework in Tanzania Co-ordination of the agricultural sector is the responsibility of the Agricultural Sector Lead Ministries (ASLMs). These are the Ministry of Agriculture, Livestock and Fisheries; Ministry of Industry, Trade and Marketing; Ministry of Natural Resources and Tourism; the Ministry of Water and the President’s Office, Regional Administration and Local Government. Under these Ministries, a number of regulatory public organizations deal with day-to–day enforcement of legislation and regulations. They include the Crop Boards, the Tanzania Pesticide Research Institute (TPRI), Tanzania Official Seed Certification Institute (TOSCI), Tanzania Bureau of Standards (TBS), and relevant government departments. All these are semi-autonomous, but are answerable to the respective ministries. At the local government level there are Local Government Authorities (LGAs). According to the Local Government Authorities Amendment

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Act of 1999, they are responsible for implementing the policies and legislation issued by sector ministries. 2.3.1. Tanzania’s agricultural policy Tanzania’s agricultural policy acknowledges that increased use of modern inputs (fertilizers, agrochemicals, seeds, farm machinery) is a prerequisite for achieving sufficient agricultural production and growth to meet the goals of economic development, poverty reduction, food security and nutrition. Despite their importance, the availability of agricultural inputs is constrained by a weak quality control mechanism for inputs, a weak input procurement and distribution system, limited involvement of the private sector in producing more breeders and foundation seeds to improve the supply of improved seeds, low utilization of modern inputs in agricultural production and an underdeveloped input manufacturing industry As part of the policy statements, farmers shall be supported to access modern inputs for agricultural development and subsequently poverty alleviation. The agricultural policy, which is in line the nation’s vision 2025, is implemented through the agricultural sector development strategy whose objective is to attain a sustained agricultural growth of 5% per annum through the transformation from subsistence to commercial agriculture. To attain this, farmers should have access to sufficient genuine agricultural inputs, which will not only increase their output but also enable them to commercialize agriculture. However, these efforts do not seem to yield the desired results despite the existence of the National Agriculture Policy (NAP) 2013 envisaging the creation of a modern, commercial, highly productive and profitable agricultural sector, the Agriculture Sector Development Programme (ASDP), Agricultural Inputs Trust Fund (AGITF), tax and non-tax incentives and establishment of the Agricultural Window in the Tanzania Investment Bank (TIB)/Agricultural Bank. The capacity of the agricultural sector to produce and distribute genuine seeds and fertilizers lags behind demand by 49% and 47%, respectively, as shown in the table below, thereby creating a loophole for unscrupulous traders to engage in counterfeit agricultural inputs, jeopardizing the agricultural policy’s objective (Kayandabila, 2013). Table: 2.3.1 Input accessibility 2012/2013- Tanzania

Seed Fertilizer

Demand-MT 60,000 452,202

Availability-MT 30,443 240,350

Gap-MT 29,557 211,852

Percentage-GAP 49 47

Source: National Bureau of Statistics 2013 The agricultural policy of Tanzania recognizes that the inadequate development of agriculture in the country largely emanates from weak quality control, procurement and distribution of inputs systems, resulting in the proliferation of counterfeits in the market, Njombe region

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being one of the victims of this. In responding to the possible counterfeiting of agricultural inputs, the central government and its agencies have developed various measures to mitigate the problem. Among others, Acts, laws, regulations and district by-laws have been established to assist the areas exposed to the counterfeit problem. 2.3.1 Legal and Regulatory Framework for Fertilizers Tanzania’s Fertilizers Act of 2009 guides the fertilizer industry, outlined the establishment of the Tanzania Fertilizer Regulatory Authority (TFRA) and stipulates requirements for the registration of fertilizer production and distribution companies. The Act also sets out the terms for importing, inspecting and analysing fertilizers. The TFRA is mandated to regulate all matters relating to quality, supplements and sterilizing plants, to register all dealers and their premises, to issue licences to agro-dealers and permits to import and export fertilizers. TFRA that became operational in 2012 is also required to educate farmers and other stakeholders on the application and management of fertilizers. Despite the presence of this Act, it has been learnt that counterfeit fertilizers still prevail in the country. This is manifested by the packing of cheap fertilizers in bags with high value fertilizer brand labels to mislead customers, as well as the packing of fertilizers in small amounts, which is against the law, thereby creating a loophole for counterfeits to penetrate the market. The production and printing of fertilizer bags has not been controlled, allowing unscrupulous traders to take advantage. This breeds doubts as to the effectiveness of the enforcement mechanisms in place, thereby confirming the policy’s affirmation of weak quality control, procurement and distribution systems in the country. 2.3.2 Legal Framework for Agro-Chemicals Agro-chemicals cut across many economic activities. Acts that address issues relevant to agro-chemicals include the Plant Protection Act, No. 13 of 1997, which has provisions for the safe handling and use of pesticides. The same Act gives powers to the Minister to put in place a Code of Conduct for the proper use of plant protection substances. The National Environmental Management Act, No. 20 of 2004 that has a broad mandate to protect the environment is also applicable to agro-chemicals, especially provisions regulating Persistent Organic Pollutants. The Plant Protection Regulations of 1999 govern the procedures for importing pesticides. TPRI was established by Section 18 of the TPRI Act of 1979 and undertakes the regulatory function of pesticides in the country. The Plant Protection Act of 1997 Number 13, Section 32 provides for the role of TPRI. According to the provisions of the Act, the Minister of Agriculture appoints the registrar of the plant protection substance. However, although the national policy contains a general statement on the management of chemicals, Tanzania lacks a specific policy on their management. Worse still, there is inadequate sectoral collaboration and coordination to effectively manage chemicals in the country. This might be the reason why there has been widespread abuse of their application, the prevalence of fake or poor quality

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products, limited information on product use and the disposal of agro-chemicals in Tanzania. Weak enforcement is another serious problem facing the agro-chemical industry in Tanzania. 2.3.3 Seed Industry Policy, Legal and Regulatory Framework The seed industry does not have a policy of its own but is under the 1997 Agriculture and Livestock Policy. The 2003 Seed Act among other things led to the establishment of the National Seeds Committee and its sub-committees, the issuance of permits, establishment of the seed certification institute, the setting out of conditions for importing, exporting and selling seeds and the registration of actors in the seed supply chain. The Act also established the Tanzania Official Seeds Certification Institute (TOSCI) replacing the former Tanzania Official Seed Certification Agency and was mandated to certify all seeds. There is also the Tanzania Seed Trade Association that represents private actors in the seed industry. To monitor the quality of seeds in the market, TOSCI works with seed inspectors located in each District. Seed inspectors are responsible for auditing the agro-dealers, monitoring their interventions through a -germination test, collecting samples and – if necessary – notifying TOSCI of any irregularities. However, not all of them have been sufficiently trained for their task and some districts do not have seed inspectors. Seed inspectors in the villages are not properly supervising QDS producers3, which may trigger the use of counterfeit seeds in local areas, especially when the farmers trust the authorities. However, it has been learnt that, although TOSCI is mandated by the 2003 seeds act to certify all seeds in the country, the following weaknesses may be the reason for the prevalence of counterfeit seeds in Njombe and other parts of the country:

Seeds inspectors are neither well trained for the work nor equipped The act does not give powers to TOSCI to destroy all seeds tested that are counterfeit There are few inspectors and so they can only do one round of inspection, which enables seed dealers to deal in counterfeiting The inspectors are not adequately protected from risks from and intimidation by unscrupulous traders.

2.3.4 Agricultural Sector Strategy and Programme The Government of Tanzania has recently developed an Agricultural Sector Development Strategy (ASDS) and its operational programme (ASDP), the objectives of which are to achieve a sustained agricultural growth rate of 5 percent per annum, through transformation of the sector from subsistence to commercial agriculture. The transformation is to be led by the private sector through an improved enabling environment for enhancing the productivity and profitability of agriculture, facilitated by public/private partnerships with participatory implementation of the District Agricultural Development Plans (DADPs). The underlying themes of the ASDS are to create a favourable environment for commercial activities, delineate public/private roles, including continued public financing for core public (agricultural) services with increased private delivery (through contracting arrangements), decentralize

3 Quoting Tanseed International met on 29/03/2012

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service delivery to LGAs and focus on the preparation and implementation of DADPs. The ASDP has five key components on which it seeks improvement: (i) policy, regulatory and institutional arrangements; (ii) agricultural services (research, advisory and technical services and training); (iii) investment through DADP implementation; (iv) private sector and market development, and agricultural finance; and (v) cross-cutting and cross-sectoral issues. Part of the implementation of the ASDP, particularly regarding public-private partnerships (PPPs), includes the KILIMO KWANZA and SAGCOT programmes, which involve PPP actors to bring about improvements in the agricultural sector through commercialization so as to reduce poverty. 2.3.5 Kilimo Kwanza KILIMO KWANZA is an initiative by the private sector in collaboration with all stakeholders including the Government to try and put agriculture in its rightful place as the backbone of Tanzania’s economy. As such, it does not replace existing policies, strategies and programmes with regard to the agriculture sector, but rather complements them by involving a much wider spectrum of players in the sector. The ASDP is a sector-wide approach to developing agriculture, and its implementation involves mainly the ASLMs, collaborating Ministries, development partners and other private and non-state actors in the agriculture sector. However, with KILIMO KWANZA, all actors are taken on board so that whatever interventions or programmes they implement should directly or indirectly benefit agriculture. Thus, the major thrust of KILIMO KWANZA is the modernization and commercialization of agriculture. All levels of agriculture, whether small, medium or large, have a role to play by effectively utilizing the nation’s land so that the farmers can achieve a level of productivity that puts the operation on a commercial scale4. KILIMO KWANZA insists that an improvement in farm inputs and the availability and accessibility of highly productive seeds adapted to the local environment are ways to increase food productivity and production for enhanced and sustainable national food security. To ensure the sustanaibility and availability of improved seeds in the country, the Government should continue with the rehabilitation of its five seed farms located in the main agro-ecological zones in order to increase the capacity of the farms to produce and process both basic and certified seeds. The basic seeds would be sold to private companies for the production of certified seeds and Quality Declared Seeds (QDS). The Ministry of Agriculture Food Security and Cooperatives through the Agriculture Seed Agency (ASA), in collaboration with Jeshi la Kujenga Taifa (JKT) and Magereza, have entered into a contract to improve seed production and they are producing improved seeds on their farm. To increase the availability and accessibility of these seeds by farmers the government of Tanzania, in collaboration with the Danish International Development Agency (DANIDA), in 1998 launched the On Farm Seed Production in 12 districts in Dodoma, Iringa, and Morogoro

4KILIMO KWANZA: Contribution to Food Security and Hunger in Tanzania

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regions. The government intends to scale up production of QDS in other districts and in the long run to facilitate producers to form associations and be linked to private seed companies to become contract growers of certified seeds. The programme would also help seed growers associations to form local small seed companies to become producers of certified seeds. This would help to resolve the problem of existing private companies concentrating their activities in a few selected regions and the tendency of these companies to produce and market hybrid maize varieties and neglect other crops, which has led to the proliferation of counterfeit seeds among farmers, consequently hampering the agricultural sector from realizing its full potential. Past experience, together with implementation of the agricultural inputs subsidy programme, has revealed a number of issues relating to the ability of rural agro-dealers to carry out agricultural inputs businesses, including insufficient agro-dealers, inadequate entrepreneurship skills for trading agricultural inputs and inadequate working capital. These have contributed to low utilization of inputs by the farmers, which compelled the Government to enter into an agreement with Alliance for Green Revolution in Africa, CNFA, ACT, NMB and FSDT to train agro-dealers and provide them with a guarantee. This intervention has benefited agro-dealers in terms of entrepreneurship skills acquisition. Given the effectiveness of the approach and success that has been realized by the agro-dealers through implementation of the agricultural inputs guarantee pilot scheme, KILIMO KWANZA should continue supporting the up-scaling of the arrangement in other districts to facilitate the timely availability of agro-inputs to farmers. This intervention is expected to encourage rural-based agro-dealers to carefully screen their customers and extend credit to them as well as extending the benefits of the Guarantee Fund beyond the primary recipients. In this way the capacity of agro-dealers to access credit to meet incremental working capital requirements for acquisition and distribution of inputs would be strengthened. 2.3.6 The Southern Agricultural Growth Corridor of Tanzania (SAGCOT) The Southern Agricultural Growth Corridor of Tanzania (SAGCOT) is an agricultural partnership designed to improve agricultural productivity, food security and livelihoods in Tanzania. It was initiated at the World Economic Forum Africa summit in May 2010, following which the SAGCOT Investment Blueprint was launched nationally. The Investment Blueprint showcases investment opportunities in the Corridor and lays out the framework of the activities required for institutions to reap the development potential. SAGCOT has the potential to have a significant impact by bringing together the government, businesses, donor partners and the farming community to pool resources and work together towards a common goal. It is a comprehensive and inclusive initiative. By addressing the entire agricultural value chain, the SAGCOT approach will go beyond raising agricultural productivity and ensure the necessary infrastructure, policy environment and access to knowledge to create an efficient, well-functioning agricultural value chain.

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SAGCOT is about doing things differently to get things done and to make a real difference. This is about ‘business as unusual’. Six cluster developments have been identified along the southern corridor of Tanzania, of which one cluster is Ludewa found in Njombe region which this study covered.

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SECTION THREE: FINDINGS AND KEY OBSERVATIONS

3.0 Introduction This section presents the findings generated from the interviews and focus groups discussions held with respondents. In some cases, the information generated from the documents reviewed is combined with the field findings. In addition, the findings from two cases that were studied in detail (NADO and ULUMAII) and the observations made during meetings with ACT are also included in this section. 3.1Agricultural Statistics in Njombe As in other rural areas of Tanzania, agriculture is the backbone of Njombe region. Most farmers in the region are small-scale growers of maize, Irish potatoes, beans and wheat being their main source of both food and income. Tea is the main cash crop grown on a large scale by foreign investors. According to Agricultural Department statistics, about 84.4 percent of the region’s land area of 2,129,900 ha is arable land. The share of arable land in the total land area of each district ranges from 60 percent in Wangin’ombe to 99.4 percent in Ludewa. As regards cultivated land, Wangin’ombe is under pressure as more than half (68.3 percent) of its arable land is already being cultivated. The urban nature of Makambako might be a reason for its small portion of cultivated land. Table 3.1 Distribution of Total Arable Land by Council, Njombe Region; 2012

Council

Total Land Arable Land Land under Cultivation

(ha) Area (ha) Percent of Total Land

Area (ha) Percent of Arable Land

Njombe TC 321,200 192,700 60.0 52,018 27.0

Wangin’ombe 334,400 284,517 85.1 194,392 68.3

Makete Njombe DC

485,000 270,600

419,500 185,847

86.5 68.7

62,000 63,414

14.8 34.1

Ludewa Makambako Regional Total

632,500 86,200 2,129,900

628,950 85,457 1,796,971

99.4 99.1 84.4

210,750 744 514,578

33.5 0.9 28.6

Source: Njombe Region, Compiled Data from District Councils, Agriculture Departments, 2013 Maize, Irish potatoes, beans and wheat are the major food crops grown in the region (Table 3.2). According to Figure 3.1 and Table 3.2, maize is more widely planted in the largest area than other food crops and is the leading food crop in the region. During 2009/10 – 2011/12

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maize was planted annually on 159,706 ha, Irish potatoes, the second major food crop were planted annually on 48,930 ha and beans were planted on the smallest area (24,322 ha). Figure 3.1: Annual average Area (ha) planted with Major Food crops,

Njombe Region; 2009/10 – 2011/12

Source: Njombe Region, Compiled Data from District Councils, Agriculture Departments, 2013

Table 3.2: Estimated Area (ha) under Major Food Crops; Njombe Region; 2009/10 –

2011/12

Crop 2009/10 2010/11 2011/12 Yearly Average

Percent Rank

Maize 172,558 153,002 153,558 159,706.0 60.5 1

Irish potatoes

38,479 59,427 48,884 48,930.0 18.5 2

Beans 24,320 21,195 27,451 24,322.0 9.2 4 Wheat 34,576 29,496 28,698 30,923.3 11.7 3

Regional Total

269,933 263,120 258,591 263,881.3 100.0

Source: Njombe Region, Compiled Data from District Councils, Agriculture Departments, 2013 3.2 Pragmatic Issues Relating to Counterfeit Inputs To explore pragmatic issues relating to counterfeit inputs based on the views of the stakeholders in Njombe region, the researchers were interested in ascertaining the types of agricultural inputs commonly used in the research area, the distribution channels, their ideas about counterfeit inputs and their definitions, and the practice of counterfeiting in the supply chain.

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3.2.1 Common Agricultural Inputs in Njombe The consultants at first wanted to know the common types of agricultural inputs used by farmers in Njombe so as to establish which ones are most affected by counterfeiting. Respondents from two selected districts in Njombe pointed out that the common inputs available are seeds, fertilizers and pesticides. Various brands of seeds, fertilizers and pesticides as well as the authorized companies producing them as original products were identified by all 22 respondents in Njombe, as illustrated in Table 3.2.1. Table 3.2.1: Common Agricultural Inputs and Authorized Producing Companies in Njombe

Type of Input Crop Type Brand Source

Seeds Maize Kibo seeds Locally produced

Pana seeds Imported from Zambia

seedco Locally produced

Irish Potatoes Uyole Locally Produced

Fertilizers Maize and Irish Potatoes

Minjingu Locally Produced

NPK Imported

Pesticides Maize and Irish Potatoes

Locally Produced

Source: Data from the field 3.2.2 Distribution Channels The main distribution channels for agricultural inputs in Njombe are importers, distributors/agents and agro-dealers. According to Agness Kirina representing TFA in Njombe, all seeds are imported by authorized agents in the country and then supplied to registered agro-dealers in Njombe. Seeds like PANA and Kitale are imported from Zambia and Kenya, respectively. Agro-dealers are usually in touch with farmers and link them to inputs. Agro-dealers are either specialized or pluri-active and are normally registered and licensed by TFRA. According to Mr. Joros John, who is the chairperson of the ULUMAII cooperative society in Wangin’ombe district, the supply of agro-inputs from registered dealers does not get to the farmers on time. This creates an avenue for unregistered traders to supply them, which is convenient for the farmers who do not have enough knowledge to tell fake from genuine inputs.

“During the rainy season when there is a huge demand, another group of unregistered itinerant traders emerge and supply inputs to farmers to address the shortage of inputs. However, this is challenging as far as fake inputs are concerned” Commented Mr. John.

Input suppliers are selected through an objective procedure. The District Commissioner of Njombe district said that companies have to demonstrate to farmers in demo fields, and the best performers are awarded the tender. Other companies have to carry out experiments,

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especially on pesticides, before being selected. Private companies and traders do not do demonstrations, thus selling untested inputs. This normally provides a loophole for fake inputs to get into the market. 3.2.3 Understanding the Counterfeit Problem in Njombe Region To gain an understanding of the issues of counterfeit agricultural inputs in Njombe, the consultants explored the respondents’ understanding of counterfeit agricultural inputs in the two selected districts (Njombe and Wangin’ombe). The respondents on the supply side (agro-dealers, experts and government officials) clearly understood the concept but their counterparts (mostly farmers) had mixed understanding. The supply side defined counterfeit inputs as all those inputs that are not original and imitate the trademarks of recognized companies so that farmers who cannot differentiate between fake and original ones with logos of original inputs are fooled. Some of the respondents on the demand side agreed, but others defined counterfeit agricultural inputs as those which did not give the desired outcome, for instance, once the seeds did not germinate, they were perceived as counterfeits. Similarly, when fertilizers did not contribute to high output, they are regarded as counterfeit. The most common impression noted from the field was that, to a large extent, counterfeit agricultural inputs are prevalent in Njombe. However, based on the soil properties in various areas of Njombe, some inputs may not give good results in one area but they may in other areas. That being the case, sometimes not all the inputs regarded as counterfeits are counterfeits, although there is strong agreement that the area is affected by the prevalence of the problem. According to Mr. William, who is a School Farm Manager in Mtwango village, farmers should do a soil analysis before purchasing agro-inputs to avoid buying incompatible inputs and end up with the notion that they are fake inputs, which is not the case.

“Farmers have been complaining about counterfeits all the time here in Mtwango and nearby villages. Of course there is a problem but there are some areas where even the original seeds and fertilizers cannot produce as expected because of the poor soils which do not match the specifications. Sometimes the farmers do not follow the instructions given and therefore end up calling the inputs fake when it’s their fault. I recommend that they do a soil analysis and follow the instructions given to them by experts to narrow down the definition of counterfeits” Said Mr. William.

3.2.3 The practice of counterfeiting in the supply chain The practice of counterfeiting in Njombe region is highly prevalent in the two selected districts. The TFA official in Njombe district pointed out that while 6 tons of counterfeits are reported annually, last year 4 tons of counterfeit fertilizers were destroyed. Dishonest traders, including agro-dealers, tend to buy fake inputs and put them in packages used for genuine materials. It is believed that some workers in agro-input industries deliberately sell the packaging materials to dishonest traders, or maybe there are some secret label producers that imitate the logos and

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trade secrets of recognized agro-input producers and sell them to dealers in fake inputs. It is not easy for an ordinary farmer to note the differences between original and fake packages. In the focus group discussion with the ULUMAII cooperative society members, they said that last year they recognized fake inputs because the packaging showed that they were past their sell-by date. Some seeds supplied to farmers in Wangin’ombe by TOCSI had been put in a packet labelled with a marker pen.

“In 2013-2014, the problem of counterfeit fertilizers was very serious particularly for seeds and fertilizers. Through a surprise inspection done in 2014, it was found out that Minjingu fertilizer was packed in DAP bags. The persistent selling of empty bags in the markets in Njombe creates loopholes for fake inputs”.

3.3 Drivers of Counterfeit inputs in Njombe The researchers wanted to establish what drives the counterfeiting of agricultural inputs in Njombe and what makes smallholder farmers use counterfeit inputs. All the respondents gave their views on what causes the counterfeit problem in Njombe. Table 3.3: The Drivers of Counterfeits Agricultural Inputs in Njombe

SN Respondent Area of Study Drivers

1. ULUMAII Cooperative Society

Wangin’ombe Delays in getting genuine inputs

Lack of awareness

High price of original inputs

Lack of extension officers

Low prices of produce

Weakness of the voucher system

2. NADO Wangin’ombe Lack of control mechanism

Dishonesty of agents and traders

Lack of extension officers

Lack of support for local seed developers.

3. DED Wangin’ombe Lack of awareness

Low price of the outputs

5. DAICO Wangin’ombe Poverty resulting in the inability to afford genuine inputs

Ignorance of packaging and labelling

Limited agricultural staff

6. Mr. William (Farm Manager)

Mtwango High price of original inputs

Preference for cheap inputs

Dishonest agro dealers

Problems in the supply chain

mismatch of inputs and soil properties

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7. Peter Sanga (Agro Dealer)

Mtwango Dishonest agro-dealers

Lack of awareness

Limited number of inspectors

Availability of original packaging materials

8. Mr. Fred (Cooperative officer)

Njombe Lack of awareness

Lack of markets for the produce

Weak cooperative societies and farmers’ groups

9. Mama Salingo (Agro dealer)

Wangin’ombe Lack of awareness

Limited agricultural officers

Lack of formal arrangements for trading inputs

No prior certification of traders

10. Agness Kirina (TFA) Njombe Poor management of inspection

Difficult to recognize fake v/s genuine inputs

High price of genuine inputs

11. Mtewele General traders (Agro dealer)

Njombe difficult to recognize genuine inputs

convenience

low price of fake inputs

low prices for the produce

12. Richard Moshi (RC) Njombe Fertilizers and other inputs are sold in retail outlets

Limited inspections at village level.

13. TASTA Njome Limited number of inspections

Dishonesty of some traders

Lack of knowledge and skills among traders

14.

Reheme Mwaitenda (TOSCI)

Njombe Traders hide their counterfeit inputs and sell them secretly when inspections are over

Limited human and financial resources

Delayed inspections

Source: Data from the field. 3.3 The Impact of Counterfeit Inputs on the Economic Wellbeing of Farmers The problem of counterfeiting is so severe in Njombe in the sense that of all the inspected seeds more than 20% were counterfeit. All those interviewed maintained that 10% of fertilizers are counterfeit. It is estimated that an acre with genuine seeds and fertilizers yields

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20 to 25 bags of maize weighing 100kg. However, in the reported cases of counterfeit seeds or fertilizers, yields were recorded to have dropped to 8-10 bags of maize. This shows that those affected by counterfeiting end up losing almost 60% of their yield, which is totally overwhelming. Maize output regionally has been dropping by an average rate of 4.3% from the statistics of 2009/2010, 2010/2011 and 2011/2012. The LGAs have lost income due to such a drop in output. The income lost following the decline in production of maize alone is estimated to be 663,220,000/= emanating from 33161 tons of maize at an estimated levy of 20,000/= levies per ton. This is overwhelming in terms of lost revenue for the government. The same loss translates into a loss of income of 8,290,250,000/= for producers. Most of the respondents claimed that counterfeit agro-inputs have a serious impact on their economic welfare. In a focus group discussion with ULUMAII cooperative society members, it was clear that farmers lose a lot when they use counterfeit agro-inputs. From their experience, one acre prepared with genuine inputs produces 25 bags of maize, while counterfeit agro-inputs produce 16 bags of maize, a difference of 9 bags. As of now, one bag is sold for 45,000 Tsh., meaning that in one acre a farmer loses approximately 450,000 Tsh. The difference in the price of fertilizer is only 5,000 Tsh. Table 5: Estimated Economic Impact of Counterfeit Agro inputs in Njombe

Type of Fertilizer

Output per Acre

Price of fertilizer Per Acre

Price per bag of maize Total sold (in Tsh.)

NPK (original) 25 bags 75,000/= 45,000/= 1,170,000/=

Premium (fake)

16 bags 70,000/= 45,000/= 720,000/=

DIFFERENCE 9 bags 5,000/= 450,000/=

Total Loss per Acre 450,000/=

Source: Data from the field Based on the statistics above, it is obvious that farmers lose much more when they use fake agro-inputs than original ones, although the difference in price between fake and original fertilizers is insignificant. Apart from economic considerations, farmers using fake inputs are weakened as they have to use a lot more energy and resources to get the yields they would have using genuine products. There is also the possibility of health problems as far as chemicals are concerned. 3.4 Success Stories in dealing with counterfeits in Njombe The researchers were interested in exploring two special cases (the ULUMAII cooperative society and an NGO named NADO) which demonstrated that they were well organised in dealing with the problem of counterfeits being sold to farmers in Wangin’ombe district.

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Although the selected cases have not been completely successful, they provide good stories that are worth noting in this report. This sub-section highlights the success stories of the two cases and the challenges they face. 3.4.1 The ULUMAII cooperative society The ULUMAII is a registered cooperative society made up of five villages (Usuka, Lugoda¸Matoo, Ikwegu and Iteni) formed in 2014, comprising 91 members. It is chaired by Mr. Joros John and the secretary is Ms. Nicolina. The cooperative negotiates with input producers as a farmers’ association and acts as a market centre for farmers. ULUMAII has demo fields for training its members in Wangin’ombe. The membership of HULUMAII is open to anyone who is interested, and to be accepted and get enrolled, farmers need to pay an entrance fee of 5,000/= and buy 5 shares at 5,000 each. With the help of NADO, ULUMAII has been able to open a bank account with CRDB bank and has a SACCOS. It has 1 million in the account and 600,000/= in the SACCOS. This cooperative society has been successful in addressing counterfeit agricultural inputs on behalf of its members through establishing a direct link with the input-producing companies such as SIDICO, MEMseed and YALA. Through this cooperative society the farmers are supplied with inputs with a down payment of 50% with the contract that they will pay the last installment upon harvesting their produce, with no interest charged. Last year no problem of counterfeits was reported by members of the cooperative. In addressing the problem of reliable markets and better prices, ULUMAII has persuaded the NFRA to purchase their produce from their market centre so that the farmers can avoid the lower prices offered by individual buyers, which has resulted in fewer counterfeits. ULUMAII faces several challenges, such as: few members; lack of markets for their produce (NFRA is unreliable); lack of extension officers; the availability of cheap fake inputs in the market has made it difficult for the farmers to join; little support from village officers as facilitators; and lack of cooperative education. The researchers reckoned that this model is very interesting but needs the support of the government to address several problems facing the farmers. Empowering these cooperatives in the country would give them the capacity to act as agents of inputs from various certified companies and remove the loopholes enabling unethical traders to bring in counterfeits. 3.4.2 Njombe Agricultural Development Organization (NADO) Njombe Agricultural Development Organisation (NADO) is a member-based agricultural organisation located in the southern highlands in Njombe Region, Tanzania. It is working in 19 villages and with around 1300 farmers in Njombe District. The main activities include building local democracy, good governance, farmer field schools, and various agricultural activities. Currently, Mr. John Wihala is the director of NADO.

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To properly manage its activities, NADO has established five departments, each with the responsibility to carry out a specific programme. The departments are training, social and environmental, marketing and planning, Lishe and AIDS and Cooperative. The training department is responsible for organizing and facilitating training for farmers in rural areas through demo farms and veterinary approaches. The social and environmental department deals with social and environmental concerns in the area, while the marketing and planning department is responsible for supporting farmers to access markets and finance. The Lishe and AIDS department deals with people living with HIV/AIDS through providing them with skills for promoting health and home gardening. The cooperative department provides cooperative education to farmers on collective market centres and it has a SACCOS supporting farmers. In January 2008, NADO expanded their area of operations from two wards to the whole district of Njombe. The organization was formerly known as UVIMTA and has had a long-term partnership with MS Tanzania since 2003. There are twelve founding members of NADO, namely, Itulahumba, Ikwega, Itambo, Chalowe, Isindagosi, Dulamu, Kanani, Palangawanu, Usuka, Lugoda, Nyumbanitu and Sakalenga. There are currently six new member Community-Based Organizations (CBOs). The activities of NADO are carried out by Civil Society Organizations (CSOs) that all are members. Each CSO has to pay an admission and annual membership fee and write an application letter in order to be approved and recognized by LGOs, and to be part of the activities and benefit from NADO initiatives. NADO has been successful in supporting farmers in Njombe through building local capacity in a sustainable manner that is environmentally friendly and produces high quality food to improve family livelihoods and nutrition and to increase incomes, such as engaging in organic agriculture, and traditional agricultural practices. Providing education on human rights and gender equality is also important as they are cross-cutting topics. The overall goal is to establish a strong PPP in the quest for the economic development and capacity building of people in rural areas. Finally, education on health issues like HIV that affects communities with a high ratio of people with the disease is needed. As far as counterfeits are concerned, NADO organizes training sessions for farmers on how they can access better agro-inputs as it has witnessed the rampant spread of fake inputs in Njombe, resulting in negative economic impacts on farmers. It has been playing the role of agriculture extension officers in its area of jurisdiction to help farmers recognize fake inputs. However, NADO faces several challenges in Njombe region in seeking to execute its objectives effectively and efficiently. The most serious challenges are the lack of support of extension officers who see NADO as their enemy, and financial problems affecting its operations. It strongly requests a PPP so that the challenges might be mitigated and the wellbeing of farmers enhanced through tackling counterfeit agro-inputs and promoting farmers’ access to markets. Working with collaborators from the private sector like NGOs and CSOs will enhance

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the efforts to educate farmers on the prevalence of counterfeits, how to recognize them and the effects of using them. The potential partners identified were NGOs (local and international):

MS Tanzania Tanzania Spices Limited Uyole Agricultural Research Institute Evangelist Lutheran Church Tanzania TANWAT World Vision Njodingo Tanzania Enterprise

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SECTION FOUR: CONCLUSION AND RECOMMENDATIONS 4.1 Key conclusions This study has revealed a number of findings which guide the conclusions drawn, recommendations given and the proposed strategy for dialogue. Based on the study findings, this section presents the key conclusions, as follows;

i) Respondents from the two selected districts pointed out that the common inputs available to them are seeds, fertilizers and pesticides.

ii) The main distribution channels are importers, distributors/agents and agro-dealers. Agro-dealers are usually the ones in touch with farmers and they link farmers to inputs. Agro-dealers are either specialized or pluri-active.

iii) Most respondents demonstrated a good understanding of the problem of counterfeit agro-inputs. The respondents on the supply side (agro-dealers, experts and government officials) had a clear understanding of the concept but their counterparts (mostly farmers) had mixed understanding.

iv) The practice of counterfeiting in Njombe region is prevalent in the two selected districts. However, it is not easy for an ordinary farmer to note the differences between original and fake packages. Traders who are dishonest, including agro-dealers, tend to buy fake inputs and put them in packages that look genuine. It is believed that some workers in the agro-input industry deliberately sell the packaging materials to dishonest traders.

v) The respondents identified several root causes of counterfeit agro-inputs in Njombe region, as follows:

Delay in getting genuine inputs

Lack of awareness

High price of original inputs

Lack of extension officers

Lack of support for local seed developers

Low prices for produce

Weakness of the voucher system

Lack of control mechanism

Dishonesty of agents and traders

Poverty and ignorance

Preference for cheap inputs

Lack of formal arrangements for trading inputs

Lack of markets for the produce

Weak cooperative societies and farmers’ groups

Limited number of inspectors

Availability of original packaging materials

No prior certification of traders

Fertilizers and other inputs are sold in retail markets

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vi) Most of the respondents claimed that the counterfeit agro-inputs have a serious impact on their economic welfare. In one acre a farmer’s loss is approximately 450,000 Tsh., whereas the difference in the price of fertilizer is only 5,000 Tsh.

4.2. Recommendations The study findings indicate that the problem of counterfeit agro-inputs in Njombe region is serious and its impact contributes to the poverty of smallholders. The value of agriculture to the selected districts would be effective if appropriate measures are taken to improve the current situation. Most concerns are however about the modality of cooperation between farmers and the agro-input distribution channels as well as the capacity of the district councils to function effectively in dealing with the problem. The recommendations made therefore aim to guide the farmers and stakeholders involved to improve the performance of agriculture in the country. In view of this, the following recommendations are made; i) The District Councils - it is recommended that the district councils do the following:

Enhance their enforcement efforts by increasing the number of officials and frequency of inspections of traders’ warehouses and sales points to root out counterfeits. This should be carried out at the start of the season and repeated several times by doing surprise inspections.

Fully and publicly destroy counterfeits of whatever type or quantity being illegally traded in the market so that unscrupulous traders are discouraged from trading in counterfeits. The DEDs should arrange some ways of making sure that the public is made aware of all the counterfeits found through radio and TV programmes as well as farmers’ forums. This will enhance farmers’ awareness of counterfeits and shame all unscrupulous traders.

Abolish selling unpacked inputs and strictly follow this up. Selling unpacked inputs in retail outlets not only allows counterfeits to penetrate the market unnoticed but it also weakens the strength of inputs like fertilizers and chemicals. Therefore, upon granting permits to dealers, specific assortments of packaging for inputs should be agreed on depending on the needs of farmers. It is recommended that DED implements this before the beginning of this year’s farming season.

Ensure that all manufacturers or authorized distributors of inputs have demo farms. It is further recommended that it should be one of the requirements for dealers to be granted a distribution licence by the municipal council. Therefore, the requirements for licensing should be amended to include this requirement if it is not already included.

Empower authorities/institutions like TOSCI and others to have the authority to destroy all counterfeits found to ensure that they are not brought to the market again by unscrupulous traders. The regulations for the establishment of these authorities should be amended to give powers to these institutions so that they can carry out their activities effectively. However, before the amendments are made, it is recommended that TOSCI and other inspectors should be escorted with armed guards for their safety

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while doing their work as they have been encountering threats from powerful but unscrupulous traders.

Empower cooperative societies and profile them as credible institutions that can be trusted by farmers as the source of genuine inputs. This can be done by reviving those that are inactive and strengthening those that are by ensuring that all have sound management and the requisite skills, are properly regulated and monitored closely. This will ensure that when the government subsidizes farmers, there will be no reason for low priced inputs to penetrate the channel and be labelled as high value inputs.

Strictly regulate the production and sale of packaging materials, bags and containers, because it has been learnt that most counterfeits have been able to penetrate markets and go unrecognized because those dealing with counterfeits can conveniently and cheaply access branded bags and other containers to package their counterfeit inputs and go unnoticed. The municipal council should work hand in hand with manufacturers to find out why branded packing materials, bags and containers are in the market for use by unscrupulous traders.

Recognize, authorize and build the capacity of local seed producers so that they produce genuine seeds which suit local conditions. They can be identified by agricultural officers at village and ward level, who will provide the necessary extension services and monitor on a regular basis.

Plan and establish a farmers’ forum where both sides can meet and discuss problems, challenges and solutions on a regular basis (see appendix III)

Laboratories should be established to test soil and agro-inputs at regional level. This will inform fertilizer and seed producers on the appropriate composition of fertilizer components as well as the seeds that are suitable for particular areas. (see appendix III)

Private Sector Actors (ACT and others):

Education and sensitization efforts through channels like farmers’ forums and the mass media (radio and TV programmes) should be directed at making farmers aware of the prevalence of counterfeits and how they can recognize them. Since it was acknowledged that some counterfeits cannot be recognized before they are bought and used, it is imperative to insist on demo farms and encourage farmers to demand receipts when purchasing inputs so that the transaction can be traced in case anything goes wrong.

Engage farmers, LGAs, agro-input dealers, manufacturers and regulators in advocacy so that the regulatory framework functions effectively to curb counterfeiting in the region.

Inspection authorities like TOSCI should ask for more manpower and the mandate to destroy counterfeits publicly as a warning. In addition to regular planned inspections, unplanned, surprise inspections with an armed escort should done several times before and during the farming season.

Farmers should be encouraged to:

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Demand receipts and keep used packages/bags (see appendix III) whenever they buy agricultural inputs so that it is easy to trace and have evidence if the inputs bought are found to be counterfeit.

Buy agricultural inputs only from registered and accredited agro-dealers who have demo farms and avoid buying from street vendors.

Traders and manufacturers should

Put unique identification marks or signs for farmers to identify their inputs and educate farmers through various media on what exactly they need to see to ensure that it is the authentic input of a particular manufacturer or trader.

Have demonstration farms that farmers can access and learn from.

Educate farmers on the importance of using genuine agricultural inputs and how to recognize counterfeits by using demo farms, attending farmers’ forums and talking to them, helping farmers read and interpret product instructions on how to use inputs, etc.

Cooperate with farmers in dealing with counterfeit cases by teaching them how to identify counterfeits, which inputs suit their soil and crops/animals and where counterfeits are prevalent.

Have the habit of stocking genuine inputs and cooperate with government officials and other authorities when they inspect their outlets for counterfeits. They should also provide any necessary information they might have on sources of counterfeits, unscrupulous traders dealing with them, etc., so as to mitigate the problem.

4.3 Next Step Given the complementary role of various actors in addressing the problem of counterfeit agro-inputs in Njombe, it is important for Njombe region to organize a dialogue forum in collaboration with the private sector (ACT) to agree on the measures proposed in this report. There is also a need for the community and local radio stations to be involved in this study for the purpose of disseminating the findings and educating farmers. The study report can also be made available to the Ministry of Agriculture as it has already shown an interest in addressing the problem of counterfeit inputs.

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REERENCES Allen Consulting Group, (2003) “Counterfeiting of Toys, Business Software, and Computer and Video

Games” Report to the Australian Toy Association, the Business Software Association of Australia

and the Interactive Entertainment Association of Australia

Bosworth, Derek & Yang, Deli (2002). “The Economics and Management of Global Counterfeiting” Paper

Submitted to the Sixth World Congress on Intellectual Capital and Innovation.

Bian X, Moutinho L.,(2009), The role of brand image, product involvement, and knowledge in

explaining consumer purchase behavior of counterfeits, European Journal of Marketing

Vol. 45 No. 1/2, 2011pp. 191-216ND FAO/WHO Joint Meeting on Pesticide Management.

Brophy, Kathleen (2014) “Working together to stop fake agricultural products in Uganda”

Transparency International.

Chaudhry, P. (2006), "Changing levels of intellectual property rights protection for global firms: a

synopsis of recent US and EU trade enforcement strategies", Business Horizons, Vol. 49 No.6,

pp.463-72.

CropLife International. (2011). “Health and Safety Risks Counterfeit Products Pose to Consumers”. http://www.croplife.org/cp_human_safety

FAO, (2013) “Review of food and agricultural policies in the United Republic of Tanzania 2005-2011.”

Githii, S., Maina, S., Kamau, J. & Njau, M. (2014). “An analysis of dynamics that lead to counterfeit

purchasing behavior of ICT products among youths” Journal of Business and Management (IOSR-

JBM). ISSN: 2319-7668. Volume 16, Issue 8. Ver. IV (Aug. 2014), PP 21-29

in2eastafrica.net, (2012) “Tanzania Govt, farmers cautioned against imported fake pesticides,” WHO & FAO

Karingu, A & Karanja, P. (2013) “Determinants of the Infiltration of Counterfeit Agro-Based Products in Kenya: A Case Of Suppliers in Nairobi,” Int. J. Hum. Resour. Procure., vol. 1, no. 5, pp. 1–14.

Kayandabila, Y. (2013). Beyond agriculture–Building linkages for the poor. A Paper Presented at the Ministry of Agriculture Food Security and Cooperatives Workshop, Dar Es Salaam, Tanzania.

OECD, (2007). “The Economic Impact of Counterfeiting and Piracy” Annual report 2006-2007

Rudolf, G. & Cam, D. (2013) “The problem of Counterfeit and Illegal Pesticides in Africa Middle East,”

Shao, D. (2014) “Combating Fake Agro-Inputs Products in Tanzania using Mobile Phones” International Journal of Computer Applications (0975 –8887) Volume 97–No.17.URT,

(1999). “The Local Government Laws (Miscellaneous Amendments) ACT, 1999”. Enacted by the Parliament of the United Republic of Tanzania.

URT, (2009). “Tanzania Fertilizers Act of 2009” Enacted by the Parliament of the United Republic of Tanzania.

URT, (2003) “The 2003 Tanzania Seed Act of 2003” Enacted by the Parliament of the United Republic of Tanzania.

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APPENDICES Appendix I: Interview Guides and Checklist

1. What do you produce? 2. What types of agro inputs do you normally use in your area? 3. Where do you get them? 4. Do you have any idea about counterfeit agro inputs? How do you define counterfeit? 5. How serious is the problem of counterfeits in your area? 6. Can you recognize counterfeit inputs? What are the sources of them? 7. Do you know about the effects of counterfeits? Mention them. 8. What have you done to mitigate the situation? 9. What do you think ACT and the LGA should do?

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Appendix II: LIST OF RESPONDENTS FROM NJOMBE 1. RICHARD MOSHI DEPUTY RAC – NJOMBE 0767 959 227 2. PHILEMON MTWEVE AGRO-DEALER (MTEWELE GENERAL TRADERS) NJOMBE 3. NOA NJOMBE MUNICIPAL COUNCIL 0759 010 066 4. REHEMA MWAITENDA TOSCI 0762 208 817 5. PETER NASARI TOSCI 0658 269 185 6. AGNES KIRINA TFA – NJOMBE 0753 189 234 7. JOHN WIHALLAH DIRECTOR – NADO 0754 045 055 8. FRANK NJULI FIELD OFFICER – NADO 0753 102 503 9. ENOC KNJOGERA FARMER – WANGIN’OMBE 0753 167 295 10. MARIA SWAI COMMUNITY DEV’T OFFICER – NADO 0758 413 429 11. MAMA SANING’O AGRO-DEALER – WANGING’OMBE 0763 753 137 12. MR NJOGELA MZALISHAJI MBEGU WANGING’OMBE 13. MR. JEROS JOHN CHAIRPERSON – ULUMAII USUKA 14. MISS NICOLINA SECRETARY – ULUMAII USUKA 15. MS. SHIDA VEO USUKA 16. TULAIGWA MLAJA MEMBER – ULUMAII USUKA 17. WILLIAM WIHALA FARM MANAGER – MTWANGO 0754 450431 18. PETER SUNGA AGRO-DEALAER – LUPEMBE 0766 683 199 19. JOHNFACE NG’EWE FORMAER CHAIRMAN MTWANGO 20. BENADETA C. FIVAWO DAICO – WANGING’OMBE 0754 870 409 21. EMMANUEL KILUNDO DED – WANGING’OMBE 22. COOPERATIVE OFFICER NJOMBE DISTRICT COUNCIL

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Appendix III: VALIDATION MEETING’S REPORT The meeting started at 9:30 am and was officially opened by NADO executive director who is also the

ACT representative in Njombe. He thanked the attendants for making time to attend the meeting

which he added was very important as it provided a platform for stakeholders to come together and

discuss matters pertaining to improving agriculture in the region. He added that the meeting was a

starting point in the war against counterfeit inputs in Njombe.

Mr. Wihallah welcomed the ACT official from headquarters, Mr. Khalid Ngasa, to address the delegates.

Mr. Ngasa started by thanking the attendants for coming and deliberated on the purpose of the

meeting, which was preceded by a brief background of ACT and the project, which was the purpose of

the meeting. Mr. Ngasa in turn welcomed BEST-D representative, Mr. Buberwa Kafanabo.

Mr. Buberwa Kafanabo thanked the participants for coming. He expounded the strategic role of BEST-

D and linked it with ACT and CPRA and the project on counterfeit inputs in Njombe.

The representative from CPRA presented preliminary findings on the causes and effects of counterfeit

agricultural inputs in Njombe. This was followed by questions and answers and later group discussion.

The groups formed came up with the following recommendations on what should be done by whom

and when feasible.

Recommendation Responsible/Actors Time

1 The district council should recognize,

authorize and build the capacity of local

seed producers so that they produce

genuine seeds which suit local conditions

DED Immediately

2 The district council should take

cooperatives on board to combat fake

agro-inputs by empowering them and

using them as authorized distribution

channels for agro-inputs

DED Immediately

3 The district council should plan and

establish a farmers’ forum where both

sides can meet and discuss problems,

challenges and solutions on a regular basis

DED Immediately

4 There should be cooperation between

extension officers and farmers on all

matters pertaining to the agricultural

sector

Extension officers and

farmers

Immediately

5 Farmers should be educated on the type

of soil and corresponding fertilizers and

other inputs and how they can recognize

DED and Extension

officers

From March-July 2016

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and combat fake agro-inputs on their own

6 The district council should:

strictly and effectively enforce regulations and laws governing counterfeits

observe integrity in the issuance of agro-input licences

increase the number of extension officers at village level

provide extension officers with the requisite facilities

DED All times

7 Laboratories should be established to test

soil and agro-inputs at regional level

8 There should be regular inspections of

agro-inputs

TOSCI, TIPRI, Extension

officers

All times

9 All applications for agro-input licences

should be discussed and agreed on at all

legal stages, particularly council meetings

DED and Council

10 All agro-inputs should be tested by the

relevant authorities before being released

to the market

District council and

Ministry of Agriculture

Before season starts

11 All regulations and by-laws should be

regularly revisited to amend and improve

them

The council, district

authority and ministry

of agriculture

12 District councils should establish farms to

produce seeds that are compatible with

local conditions

District council

13 The soil should be tested regularly so as to

recommend the type and composition of

fertilizers and seeds that are suitable

District council,

extension officers and

agricultural officers

14 All agro-dealers or businesses caught with

counterfeits should be publicly shamed

and banned from dealing with inputs

DED

15 Companies dealing with the production

and distribution of fake packaging

materials for inputs should be made to

cease operations

DED

All groups made their presentations and responded to all the queries of the other participants. The

presentations were very lively, leading to heated debates and questions from other participants. It was

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finally agreed that a dialogue would be held on 13th April 2016, and the participants requested that the

same group should be invited to the dialogue plus district executive directors.

The meeting was closed at 4:30 pm after all the groups had presented their recommendations.