5.1.2013

Dar forced to import rice to stabilise price of local harvest

Runaway inflation has forced Tanzania to temporarily lift a ban on rice imports and allow business people to bring in at least 60,000 tonnes to make up for a shortfall in local harvests. Mohamed Muya, Permanent Secretary in the Ministry of Agriculture, Food Security and Co-operatives, told The EastAfrican the government took the decision in a bid to bring down the prices of food on the local market, which have contributed to the high inflation rates. It is the first time Tanzania is importing rice in five years. While the move to import rice may stabilise food prices, similar interventions were previously criticised for encouraging dumping of cheap rice into the local market, thus denying regions such as Rukwa in southwestern Tanzania that produce surplus but fail to transport their harvest to the market due to poor infrastructure, an opportunity to trade with other areas.
The Bank of Tanzania monthly economic review for December shows that inflation rate dropped slightly to 12.1 per cent in November 2012 compared with 12.9 per cent in October 2012. This is much higher than Kenya where inflation stood at 3.2 per cent in December and Uganda where it was at 5.5 per cent. Rwanda’s inflation rate fell to 5.36 per cent in October from 5.63 per cent in the previous month, according to  the National Institute of Statistics of Rwanda. Tanzania’s inflation has been high since 2008 when it edged above 10 per cent for the first time since the 1990s.It dropped to single digits in 2009, then rose again sharply towards the end of 2010, reaching to 20 per cent per annum in the final quarter of 2011. A slight decline in prices of food, energy and  communication costs eased Tanzania’s annual inflation rate to 12.1 per cent in November from 12.9 per cent in October 2012. According to Prof Benno Ndulu, Governor of the Bank of Tanzania, the high prices of food, especially rice and sugar, account for almost 65 per cent of the inflation rate. The bank is taking steps to prevent the situation from getting worse.
The high inflation rate is a result of shortage of grains and high oil prices. It is suspected that much of the grain harvested last season was smuggled to Kenya, Sudan, Somalia and Ethiopia. For the imports, the government is considering waiving taxes for the successful firms which will be allocated lots starting next week. Applicants will be expected to state the quantity of rice the wish to import and submit latest Tanzania Revenue Authority tax clearance certificates and letters of guarantee from their banks. They must also commit to sell their rice at Tsh1,300 ($ 0.83) or below per kilogramme to wholesalers, who must sell at prices not exceeding Tsh1450 ($0.92) per kilogramme. This means the final consumer will purchase the rice at Tsh1,700 ($1.08) per kilogramme. The window for importation will close on March 30. Rice, which is a staple in the country is currently retailing at around Tsh2,200 -Tsh3,000 per kilogramme (about $1.4 - $1.9). A kilo of maize flour currently sells at Tsh1, 800 to Tsh2,000 ($1.1 - $1.3) increasing pressure on ordinary Tanzanians to dig deeper into their pockets to feed their families. An average family that consumes a kilogramme of wheat flour for lunch and another kilogramme of rice for supper daily, would have to part with up to Tsh5,000 ($3.2) a day.
In June 2012, the government committed to addressing the economic challenges facing the economy, including; increasing the opportunities for economic growth, food security and reducing inflation. In its national budget, it allocated Tsh192.2 billion ($123 million) to increase the production of food crops to boost food security. Dr William Mgimwa, Minister for Finance and Economic Affairs says that the Government will strengthen the implementation of Kilimo Kwanza policy by ensuring adherence of all its pillars, including ensuring agricultural inputs reach farmers on time.Extension officers will also be required to have their own farms as models for farmers. “The Government will invest in rice and sugarcane farming in the major valleys of Wami, Ruvu in Coast Region, Kilombero in Morogoro region and Malagarasi in Kigoma region as well as increase productivity,” he said. The government has already started distributing food aids to arid areas facing severe drought, such as Manyara region in Northern Tanzania where some people have died of hunger. (The East African)

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