Current Trade News

Dar es Salaam — Wholesale prices for maize have increased slightly, despite good harvests in the 2017/18 season and adequate supply, the Bank of Tanzania, has said.
In its March Economic Review which was published last week the BoT says the wholesale prices for maize in various regions increased in February this year when compared with the previous month.
The BoT report shows that the average wholesale price for a 100-kilo bag was up by 3.7 per cent to Sh50,811.6 in February, 2019 from Sh49,011.1 recorded in January.
On annual basis the February 2019 price was also 4.7 per cent higher than the Sh48,530.1 per 100 kilo bag reported in February 2018, according to BoT monthly review.
However, the central bank review did not explain the reason for an increase of maize price only saying that food supply remained adequate in most parts of the country following good harvests in the 2017/18 crop-season.
The 2018 maize prices were the lowest in five years in all major cities, with the price of maize flour also going down below Sh1,000 per kilo.
A report by the ministry of Industry and Trade for April 8 showed that the minimum wholesale price for 100 kilo bag of maize in Dar es Salaam was Sh54,000, higher than Sh46,000 recorded in early-December last year.
The Ministry of Agriculture reports shows maize production was 6.2 million tonnes in financial year 2017/18 from 6.6 million tonnes recorded during the previous financial year.
Tanzania's demand for maize currently stands at 5,462,390 tonnes, with a surplus of 810,760 tonnes.
The minister for Agriculture Japhet Hasunga said the price increase was normal at this period of the year due to drought during the vuli rainy season.
"Some areas did not have the vuli harvests due to drought. And so higher demand than supply has triggered the rise in prices, Mr Hasunga said warning that maize could reach Sh100,000 per 100 kilos.
"In many areas now the prices range between Sh45,000 and Sh55,000 per 100 kilos of maize. The government cannot intervene to bring the prices down, because farmers also need slightly higher prices for their produce," he said.
The March 2019 Tanzania's price bulletin by Famine Early Warning Systems (Fews) Network of the USAID has shown that the wholesale price for maize in Dar es Salaaam, Arusha and Iringa were high in December compared with November last year.
The wholesale price for maize in Dar es Salaam city increased to Sh670 per kilo in December from Sh610 reported in November, which is nearly beyond five-year average price.
In Iringa, one of the major country's food baskets, the price of maize has increased to Sh350 in December from Sh300 per kilo in November.
Rise in maize flour prices
The increase of wholesale maize has triggered an increase in the price of flour.
In Dar es Salaam, some retailers are selling maize flour at a price of Sh1,200 per kilo from Sh900 recorded late last month, and Sh800 in July last year.
In Mugumu town, Serengeti District, the price of maize flour has increased to Sh1,200 per kilo from Sh900 while the price for maize has increased to Sh13,000 per 20-kilo tin, up from Sh9,000.

Dar es Salaam — Tanzania is yet to exploit its potential to produce spices for export.mEven data on spices production and demand are hard to come by.
That was known during a meeting of members of the Tanzania Spices Association (Taspa) early this week in Dar es Salaam to formulate a strategy on the produce exports.
Participants said although demand for black pepper, cloves and cinnamon was high in Canada, Spain and United Arabs Emirates, such markets were under supplied.
Taspa and the Tanzania Trade Development Authority have teamed up to collect data for use in strategy formulation for spices exports. Taspa secretary Baraka Masoudi told The Citizen that the meeting was aimed at determining ways of improving spice exports.
"We are scattered; every spice farmer survives on his/her own, which makes it very difficult to collect data. But, through our association, we can start exploring networks to secure more exports markets," he said. According to him, potential buyers want to know the production capacity. The International Trade Centre has embarked on a four-year programme to enhance export competitiveness. The project, which started last year is being implemented in East Africa Community (EAC) and is funded by the European Union. The target is to expand the spice market by 2022.
Nutritionists say because they tend to have strong flavors and are used in small quantities, spices tend to add few calories to food, even though many spices, especially those made from seeds, contain high portions of fat, protein, and carbohydrate by weight.
However, when used in larger quantity, spices can also contribute a substantial amount of minerals and other micronutrients, including iron, magnesium, calcium, and many others, to the diet. For example, a teaspoon of paprika contains about 1133 IU of Vitamin A.

The preferential trade agreement between the Southern African Customs Unions (SACU) and the Southern Common Market (Mercosur) trade blocs has led to a steady increase of South African exports into Brazil.
This is according to the South African Foreign Economic Representative in Brazil, Shanaaz Ebrahim.
Speaking at the 12th Latin American Defence and Security Exhibition (LAAD) currently underway in Brazil, Ebrahim said that South African exports to Brazil for the year 2016/17 rose to $43 million, and 2017/18 they further increased to $183 million.
South Africa is one of the member countries of the SACU.
"According to trade statistics, our trade deficit with Brazil has shrunk considerably in 2018. The deficit is now at $700 million down from $1.2 billion in 2017. This is thanks to the fact that we have increased our exports to Brazil by 37% from $483 million in 2017 to $663 million in 2018.
"Part of this was due to the ratification of the SACU/MERCOSUR preferential trade agreement which was ratified in April 2016 where SACU had offered MERCOSUR tariff line items of about 1065 product lines across 16 sectors of which 469 products are zero percent import duty free," she said on Thursday.
Mercosur reciprocated this agreement by offering SACU 1052 product lines of which 778 products were at 0% import duty free.
"This offers us a window of opportunity to penetrate the Brazilian market through these zero percent import duty free products. Negotiations of this agreement started in 2000," said Ebrahim.
Ebrahim's comments come as a delegation of South African companies are participating in the LAAD through the Department of Trade and Industry's (dti) Export Market Investment Assistance Scheme (EMIA).
The scheme aims to increase exports of South African manufactured products.
The dti is hosting a pavilion at the fair where 21 companies are showcasing South Africa's industrial capabilities with the eventual intention of securing trade leads and business opportunities.
The purpose of the agreement is to integrate the economies of member countries through gradual and reciprocal liberalisation of trade and the strengthening of economic co-operation ties among member countries.
South African exports to Brazil for the year 2016/17 rose to $43 million, and 2017/18 they further increased to $183 million.
"This offers us a window of opportunity to penetrate the Brazilian market through these zero percent import duty free products. Negotiations of this agreement started in 2000," she said.
Both South Africa's and Brazil's membership to the BRICS multinational agreements was advantageous to both countries.
"This year Brazil will be chairing the 11th BRICS Summit which will be held in November, so there is going to be a series of working groups and meetings during the course of this year and we are looking forward to those agreements," Ebrahim said.
She urged South African companies to familiarise themselves with the Brazilian market.
"I would also urge our companies to interrogate and familiarise themselves with the list of 0% import duty free products as that will orientate them on the viability of their products within the Brazilian market and it would also stand them in best position to draw instant benefits resulting from the SACU/MERCOSUR preferential trade agreement."
LAAD is a leading Latin America and Security event that gathers international and national companies that provides technologies, equipment and services for armed forces, special forces, police, homeland security and security managers from large companies, service concessionaires and critical infrastructure.
Meanwhile, Chief Executive Officer of black women-owned Floida Engineering Services (FES), Florence Musengi said the exhibition platform falls in line with her company's strategic objectives of securing partnership opportunities in Brazil and the rest of the Mercosur trade bloc.
Floida Engineering Services is showcasing its flagship Short-Range Surveillance Radar system (SRSR) at the LAAD exhibition in Rio de Janeiro, Brazil.
The company, which was established in 2015, is a multi-disciplinary engineering services company geared towards the provision of innovative solutions for the aerospace and defence industries.
"We were proud to showcase the development progress of our flagship product at LAAD since it was only in the concept stages when we here two years ago. The Latin American defence market is robust; the technology and operational requirements are typically advanced, so acquiring a customer in this market is critical," said Musengi.
LAAD which started in the capital of Rio de Janeiro on Tuesday concludes on Friday.

The Reserve Bank of Zimbabwe (RBZ) introduced the export incentive policy in September 2016 at 5% of gross export receipts in order to improve production of minerals and tobacco. The policy was widened to cover diaspora remittances, manufacturing sector and all other export sectors in the economy. Despite the unpopularity associated with the introduction of bond notes in November 2016, the export incentive scheme has demonstrated that supply side incentives are the best remedy to Zimbabwe's perennial trade deficit and foreign currency woes. It is worth pointing out that the export incentive scheme had its negative implications -- especially increasing broad money supply, which fuels inflationary pressures in the economy, but overall the scheme has many positives for key sectors in the economy such as agriculture, mining and manufacturing. After the introduction of the export incentive scheme in 2016, gold deliveries to Fidelity Printers and Refiners increased by 16% to 24,8 tonnes in 2017 and notched an all-time high of 33,2 tonnes in 2018. In terms of export earnings, gold is now the single largest contributor of foreign currency with export contributions in excess of $1,1 billion per annum. The same effect was also felt in tobacco farming where farmers produced 189 million kgs of the golden leaf in 2017 and a record of 253 million kgs in 2018. It is worth noting that small-scale producers now account for the bulk of gold and tobacco deliveries in Zimbabwe, showing the effect of the policy in channeling these commodities to the authorized buyers instead of the parallel market. In the manufacturing sector, export incentives also managed to improve the manufacturing capacity utilization (MCU) from 34% recorded in 2015 to an average of 45% from 2016-2018. It is not surprising that the MCU increased to 45% considering the fact that the manufacturing sector in Zimbabwe has direct linkages with agriculture and mining. Merchandise exports increased from $144,5 million in 2017 to $222,6 million in 2018. Horticultural exports also recorded significant growth in 2018 after more than $112 million worth of produce was exported, up from $51 million exported in 2017. Zimbabwe earns more than 85% of its foreign currency through exports of gold, nickel, tobacco, chrome and ferro-chrome, diamonds and platinum. In terms of imports, petroleum, electricity, grain, medicine, chemicals and motor vehicles account for over 50% of the country's import bill. Zimbabwe's export list is mainly dominated by raw minerals and tobacco which fetch very low prices on the world market. Implementation of policies to compel value addition locally will see a massive jump in export values and a significant improvement to the country's balance of trade (BOT). Merchandise exports are hugely affected by the cost of doing business on the local market and acute shortages of foreign currency to import critical raw materials. The high cost of doing business takes into account the cost of electricity, water and locally produced inputs which are largely indexed in US dollar prices or pegged on black market rates. Other constraints to optimal production in manufacturing include lack of capital to retool, high costs of compliance and taxation, obsolete machinery and stiff competition from competitively priced merchandise imports from South Africa, China and Singapore. The export incentive scheme had managed to improve the country's balance of trade position in the last three years despite its negative impact on broad money supply. The growth of exports to $4,23 billion in 2018 demonstrates that Zimbabwe has got the capacity to produce for the local and export market if the policies are well aligned. Some would argue that producers were starving the local market in search of foreign currency and export incentives. However, that can only apply to merchandise exports which account for less than 5% of exports in 2018. Bulk of Zimbabwe's exports are raw in nature hence they are largely produced for the export market. Export incentives had managed to bring life to the local economy while creating millions of jobs for small-scale producers who ordinarily have less inclination towards supplying their produce to the formal market or authorized buyers. Even though the export incentive scheme has been scrapped off, the government needs to draw from the lessons learnt from it. One major take-away is that producers at all levels can improve production and channel produce to the formal market, provided there are economic incentives to do so. Lack of incentives provides fertile ground for the channeling of produce to the black market or smuggling of precious minerals out of the country. It has been widely reported that gold deliveries to Fidelity Printers fell sharply after the February 20 monetary policy announcement. Small-scale miners have parallel market channels to sell their produce and evade taxes if the incentives do not match their economic expectations. It is therefore imperative to remodel the export incentive policy and target reducing the cost of production for same exporters. Following the increase in fuel prices on the January 12 2019, the government introduced a fuel duty refund to key sectors such as agriculture, manufacturing, transport and mining. The impact of the policy is yet to be felt on production; however, the policy points to the direction the government should take to stimulate production in the economy. One way of subsidizing key exporters in mining and agriculture is to rejig the local compliance and tax regime. Low hanging fruits can be downward reviews of license renewal fees, mining royalties, income tax and the Intermediated Money Transfer Tax (IMTT). The government recently suspended the 2% IMT Tax on tobacco purchases for local merchants as a way to reduce the costs involved in paying tobacco farmers. Considering the value realized through exports of tobacco and minerals, producers are justified in their calls for tax breaks. The export incentive scheme could have been scrapped by RBZ, but its impact on the trade and export earnings was immense. The policy should be remodeled and be continued in a way that brings sustainability to government expenditure management and the country's balance of trade position. Constant review of export incentives has become mandatory, considering the rate of inflation, change in commodity prices on the world market and the need to fight smuggling of precious minerals out of the country. The central bank made a good call on production in the economy with introducing export incentives and the gains realized through the policy should be maintained so as to keep the country's export receipts north of $4,23 billion in the mid-term while the government crafts a long-term policy on import substitution. Source:

The Malawi Investment and Trade Centre (MITC) says it has identified export markets for Malawian Products worth &547 million (about K397 billion). In a statement made available to Business News, MITC Public Relations Manager Deliby Chimbalu said the markets are mostly for agroculturral products such as soya beans, groundnuts, rice, beans sunflower and poultry.

The Markets include China ($141.7 milllion), Zambia ($11 million), Zimbabwe ($76.7 million), Tanzania ($510.6 million), South Africa ($100 million), Mozambique ($1 million), and Egypt ($200 million) while the Malawi Investment Forum (MIF) 2018 fetched $16 million in investment pledges. She said there is still demand for some manufcactured products like soya pieces, sunflower cake, plastic products, peanut butter, tea, coffee, cotton cake and beverages.

Said Chimbalu "Last year we rolled out an export pomotion campaign where we organized several trade missions to different countries with an aim of identifying markets for our products." 

"Some of the countries visited include Mozambique, Zambia, Tanzania, Zimbabwe, South Africa, Egypt, and China. We are happy that these missions have exposed our Malawian producers and manufacturers to market oportunities beyond the borders of Malawi".

Meanwhile, MITC is calling on all export ready companies to take advantage of the explored market opportunities.

Source: The Nation Newspaper

Despite having a ready export market, Malawi is failing to meet global demand for chilies due to low production, a development that is hampering the country’s potential to enhance its revenue generation.
Deputy Director of crop development responsible for horticulture in the Ministry of Agriculture, Irrigation and Water Development, Evenness Nyalugwe, said this on Tuesday during a clinic for chilies production that targeted representatives of farmer cooperatives drawn from districts of the country.
The Malawi Investment and Trade Centre (MITC) is organizing such clinics to empower growers to value add and produce more chilies to suffice the existing export demand.
The initiative is part of the Economic Integrated Framework (EIF) that has strategic support in the agricultural sector to enhance value chain addition and increased productivity to create competitiveness of products on external markets.
Said Nyalugwe: “Despite Malawi’s potential to enhance its revenues through the chilies sector, the reality is that the current levels of production are not progressive and cannot sustain the global demand.
“As of 2017, Malawi’s chilies and paprika production were at 141 216 and 471 317 metric tonnes against the global demand of 3 million metric tonnes. What is critical at this stage is for Malawi to boost its production levels and match quality standards to the international preferences.”
MITC Chief Executive Officer Clement Kumbemba expressed worry over the development, saying more investments are needed into chilies production to suffice demand and maximize revenue from the crop.
“MITC believes that the chilies sector has competencies for Malawi. Malawi is known for producing unique chilies. We should revisit our strategies and take advantage of available value chains. Let’s face it, we have not been aggressive enough. This is why we are engaging the farmers to produce and meet the demand”, he said.
A recent study commissioned by Total Land Care shows that Paprika and Bird’s Eye Chilies have comparative advantage in the readily available markets in Africa and Europe such as South Africa, United States of America, Spain and other European countries.
Source: Nation Newspaper