Advanced Search
MyIDEAS: Login

Private trader response to market liberalization in Tanzania's cashew nut industry

Contents:

Author Info

  • Jaffee, Steven
  • DEC
Registered author(s):

    Abstract

    Between World War II and the early 1970s, Tanzania developed one of the world's largest cashew nut industries. In 1973-74, marketed production reached 145,000 tons (about 30 percent of world production), with cashews providing an important source of income to some 250,000 farmers and being the country's fourth largest source of foreign exchange. This trade was originally developed and organized by private traders (of Indian and Arab origin), although in the 1960s a multitiered marketing system - involving local cooperative societies, regional cooperative unions, and a marketing board - was imposed, with private traders gradually removed from the market system. Despite a buoyant international market, Tanzania's cashew nut industry underwent a steady and massive decline through the 1970s and 1980s. The author examines the factors that contribute to this downward spin: Tanzania's village program, a decline in real producer prices, and inefficiencies in cooperative and marketing board crop collection and downstream activities. With the decline in production, living standards in the main cashew-growing regions worsened, and most of the large-scale, donor-funded, government-owned processing factories became"white elephants."With the industry on the brink of collapse, in 1991 the government announced the liberalization of the cashew nut market, permitting private firms to once again buy and sell the nuts. According to the author, the reform process has been characterized by confusion, uncertainty, and latent government controls and interventions, though the industry shows some signs of recovery. Based on a recent survey, the author examines the liberalization process - including its implementation at the national and local levels, the private sector response to renewed trading opportunities, and the resultant patterns of competition, price discovery, and marketing channel formation. The liberalization experience in Tanzania's cashew nut industry offers interesting insights for other sub-Saharan African countries where uncertainty remains about the appropriate roles (if any) for marketing boards in liberalized markets, about the ability of cooperatives to compete in such markets, and about the ability of indigenous firms to take advantage of new trading opportunities. In Tanzania, neither the cooperatives nor the marketing board have fared well in the liberalized market. Although a relatively large number of private traders have recently entered into cashew buying and selling, successful entry into export marketing has proven viable only for a small number of companies. Their characteristics: medium to large in scale, diversified across commodities, involved in trading and agroindustry, not indigenous, and with strong financial and trading links abroad.

    Download Info

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
    File URL: http://www-wds.worldbank.org/servlet/WDSContentServer/WDSP/IB/1994/03/01/000009265_3961006031525/Rendered/PDF/multi_page.pdf
    Download Restriction: no

    Bibliographic Info

    Paper provided by The World Bank in its series Policy Research Working Paper Series with number 1277.

    as in new window
    Length:
    Date of creation: 31 Mar 1994
    Date of revision:
    Handle: RePEc:wbk:wbrwps:1277

    Contact details of provider:
    Postal: 1818 H Street, N.W., Washington, DC 20433
    Phone: (202) 477-1234
    Email:
    Web page: http://www.worldbank.org/
    More information through EDIRC

    Related research

    Keywords: Food&Beverage Industry; Environmental Economics&Policies; Economic Theory&Research; Crops&Crop Management Systems; Agricultural Knowledge&Information Systems;

    References

    No references listed on IDEAS
    You can help add them by filling out this form.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as in new window

    Cited by:
    1. Afeikhena Jerome & Olawale Ogunkola, 2000. "Characteristics and Behavior of African Commodity/Product Markets and Market Institutions and Their Consequences for Economic Growth," CID Working Papers 35, Center for International Development at Harvard University.
    2. Margaret S. McMillan, 1999. "Foreign Direct Investment: Leader or Follower?," Discussion Papers Series, Department of Economics, Tufts University 9901, Department of Economics, Tufts University.
    3. Margaret McMillan, 1998. "A Dynamic Theory of Primary Export Taxation: Evidence From Sub-Saharan Africa," Discussion Papers Series, Department of Economics, Tufts University 9812, Department of Economics, Tufts University.

    Lists

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    Statistics

    Access and download statistics

    Corrections

    When requesting a correction, please mention this item's handle: RePEc:wbk:wbrwps:1277. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Roula I. Yazigi).

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.