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TANZANIA


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in a wider range of subsectors than those currently leading the growth process is needed to strengthen the effectiveness of growth at reducing poverty and improving household nutritional status.


The modeling analysis described in this chapter did not explicitly consider how


increased agricultural productivity might be achieved, or what the cost might be in terms of investments, extension services, or subsidies. Our discussion, however, pointed out how investment in agricultural research and development in Tanzania is likely to yield high returns. However, the Government of Tanzania has only spent a small share of its budget on agriculture in recent years. Additional spending on agriculture, particularly on research and development and extension, is therefore needed, along with improved effi ciency in the way the Ministry of Agriculture spends its budget allocation. Model results identifi ed maize as a priority sector for investment. Already empirical evidence suggests that maize yields in Tanzania are rising thanks to the provision of extension services and farmers’ increased use of improved inputs, espe- cially fertilizer (Nkonya, Schroder, and Norman 1997). Investment in rural educa- tion is also found to encourage greater adoption of improved technologies. However, much of Tanzania’s maize production is rainfed, thus making the country highly susceptible to extreme climate events and high market price volatility. In this regard, evidence suggests that lowering transaction costs through investing in rural roads would reduce price volatility in Tanzania and also increase farmgate prices, thereby enhancing returns to maize farming (Kilima et al. 2008). Our model results also identifi ed severe market constraints facing maize production in Tanzania. Expanding upstream milling capacity would strengthen farmer access to urban consumers who demand more processed maize, thus relieving some of the downward pressure on maize prices. Similarly, model results also suggest that opportunities exist for domes- tic producers to substitute for imported cereals. Finally, the model results provided two insights into the current inconsistencies


between the rapid economic growth reported in national accounts and the small improvements in poverty and nutrition from the household surveys. First, estimates in national accounts of agricultural growth are found to be consistent with subsector- level production trends. Second, the model and surveys produced similar estimates of the poverty–growth elasticity, suggesting that the structure of growth is consistent with only small changes in inequality. These two fi ndings suggest that either the level of nonagricultural growth is overestimated in national accounts or the rate of poverty reduction is underestimated in the household surveys, or both. Regardless of these inconsistencies, however, the model results confi rm the weak relationships between economic growth, poverty reduction, and nutrition in Tanzania. They under- line the importance of encouraging broader-based economic growth in the future, with a stronger role for agriculture and foodcrops in particular.


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