A study by the World Bank Dar es Salaam office has criticized the cashew nuts warehouse system, saying it does not help farmers get good prices and creates more liabilities to the government. The statement issued today by the World Bank comes a few days after Prime Minister Pinda called for reform of the system after it was the system had high cost for the cash crop. 'The World Bank is glad to share an analysis of the cashew nut sector in Tanzania that fully supports Prime Minister Mizengo Pindaís remarks, as reported this week, on the high cost of the warehouse receipts system for the cash crop, and the need for reviewing and reforming it,' said the statement.
The WB said although potentially beneficial, the implementation of the warehouse system, in its current format has failed to deliver on its promise of a ëgood priceí for cashew farmers.
'At present the farm gate to export price in Tanzania is close to its lowest level in 20 years, despite high world market prices. Moreover, the warehouse receipt system has led to large contingent liabilities for the taxpayers,'
The WB said the system has failed as a mechanism to reduce the market power of buyers with respect to framers, and it has created substantial contingent liabilities for the government because of the credit guarantees provided to the primary societies.
Also said in particular, it shows that the farmers are ultimately those who pay the price of the dysfunction of the system through a lower share of the world market price accruing to them. 'Cashews are an important export for Tanzania and an important source of income for small farmers in the southern coastal region.
However, the industry is not likely to expand further unless problems are addressed,' It is hoped that the new World Bank note can help the authorities and other stakeholders review the system to the benefit of the farmers, and lead to an expansion of the production and value addition in the sector.
To restore better margins for farmers and fully realize the potential of the sector to reduce poverty the study titled, 'State and Markets in Cashew Marketing: What Works Better for Tanzanian Farmers?' recommends urgent reform to the marketing system.
The WB said although potentially beneficial, the implementation of the warehouse system, in its current format has failed to deliver on its promise of a ëgood priceí for cashew farmers.
'At present the farm gate to export price in Tanzania is close to its lowest level in 20 years, despite high world market prices. Moreover, the warehouse receipt system has led to large contingent liabilities for the taxpayers,'
The WB said the system has failed as a mechanism to reduce the market power of buyers with respect to framers, and it has created substantial contingent liabilities for the government because of the credit guarantees provided to the primary societies.
Also said in particular, it shows that the farmers are ultimately those who pay the price of the dysfunction of the system through a lower share of the world market price accruing to them. 'Cashews are an important export for Tanzania and an important source of income for small farmers in the southern coastal region.
However, the industry is not likely to expand further unless problems are addressed,' It is hoped that the new World Bank note can help the authorities and other stakeholders review the system to the benefit of the farmers, and lead to an expansion of the production and value addition in the sector.
To restore better margins for farmers and fully realize the potential of the sector to reduce poverty the study titled, 'State and Markets in Cashew Marketing: What Works Better for Tanzanian Farmers?' recommends urgent reform to the marketing system.
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