How Tanzania’s cooking oil industry can become strong

Dar es Salaam. Tanzania imports nearly 50 per cent of its edible oil despite the potential the country has in produce some oilseeds.

The nation grows groundnuts, sunflower, sesame, cotton and palm oil but the country’s edible oil is dominated by imported palm oil.

According to FAO (2015) data, Tanzania is the second Africa’s sunflower seeds producer constituting 35 percent after South Africa which accounts for 46.1 per cent of total continent’s production.

The local oil seeds production increased from 5.5 million tonnes in 2013/14 to 5.9 million tonnes in 2014/15.

With the promising production and the potential the sunflower has in improving the livelihood of smallholder farmers in the country, some stakeholders propose the government to discourage importation of edible oil and promote the local production and processing.

Agricultural Markets Development Trust (AMDT) which promotes the crop suggests the extension of 10 per cent tariff on imports of crude palm oil and temporarily exempts the value-added tax (VAT) on sunflower seed cake and crude sunflower oil and solvent extraction machinery.

The agriculture facility says the measures will enhance competitiveness of the domestic edible oil industry.

“Foreign produced edible oils are outcompeting the local sunflower oil at the expense of Tanzanian jobs, industrialization opportunities and lost government revenue.

The measures are expected to give chance for growth of domestic edible oil sector as well as protecting the local producers,” AMD stated.

Other expected benefit is to reduce dependence on imported crude oil.

The proposed reforms should stay for three years to achieve the expected outcomes which include improving livelihood of between 500,000 and one million farmers and 2,000 small and medium-sized entreprises (SMEs) with high productivity.

AMDT also says there will be a negligible change in revenue once the measures are approved and will increase by up to Sh4 billion in 2022. That is the year the VAT would be reinstated and corporate tax expected to be paid by firms involved in the sunflower chain.

Sunflower is mainly grown in semi-arid areas of Dodoma, Singida, Shinyanga and Manyara. The crop production is largely small scale, rain fed-based and commonly intercropped with staple food crops.