Tanzania Cotton Sector Saved By Stimulus Package

Regulators of the Tanzania cotton sector have reportedly indicated that, contrary to earlier predictions, the industry is expected to survive the “second wave” of the global economic crisis, which hit Tanzania at the end of 2009.

According to reports, the Tanzania Cotton Board (TCB) has credited the recently introduced economic stimulus package for the unexpected turn around in the country’s cotton industry.

To this end, Joe Kabissa, the Director General for the TCB, has indicated that the introduction of the stimulus package is equally responsible for helping to raise the price of cotton by 22.2 percent over the past few months, thus creating a more promising future for cotton farmers.

“The government’s rescue package came in quite handy indeed,” he said, “It helped to raise prices for farmers from TZS 360 to TZS 440 per kilogram.  It was a commendable move by the government.”

Dr. Kabissa went on to explain that, not only did the launch of the stimulus package help to raise the price of cotton, but also helped to raise the overall morale of the cotton farmers during a time when the sector was facing a bleak future.

“We have witnessed increased demand for seed during the current planting season which is still underway,” said Dr. Kabissa, “Farmers have also been motivated by the fact that the prices for seed and pesticides will be subsidized to a considerable margin vide the input voucher scheme”

According to the same newspaper, experts have said that buyer and investor confidence has also improved as a result of the TZS 1.7 trillion stimulus package that was set aside in the 2009/10 budget.

Honest Ngowi, a researcher and consultant with Mzumbe University, has said that one of the shortcomings of the package is the fact that it only compensates commodity exporters, who experienced losses and bails out banks that face collapse as a result of defaults that were caused by the international economic crisis.

“The stimulus package has just remained a package on paper,” he said, “It has yet to be translated into a legal document. As a result, businesses are not yet accessing the stimulus package funds.”

The Governor of the Bank of Tanzania (BoT), Benno Ndulu, who recently spoke with The Citizen Tanzania, has said that, while no money has been released at this point, his bank has already made the necessary arrangements to compensate coffee and cotton buyers experienced losses as a result of the global crisis.

Currently, a one acre farm requires 10 kilograms of cottonseed, the price of which has been lowered to TZS 100 from the previous price of TZS 200.

Along with the reduction in prices for cottonseed, the price for insecticides will also receive a subsidy of TZS 1,500 for a pack that is large enough to cover one acre.