Tanzania breweries malting project prospects for foreign exchange savings
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Date
1985
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Publisher
University of Dar es Salaam
Abstract
This study aims at finding out the extent to which the establishment of the Malting Plant and Growing of Barley can ease foreign exchange problems in the supply of malt, for brewing beer, to Tanzania Breweries Limited. Several studies have dealt with foreign exchange problems associated with industrial production in Tanzania. This one is unique in the sense that it deals with the possible prospects for saving foreign exchange in the brewing industry as a result of construction of the Malting Plant at Moshi and production of barley locally. Both qualitative (theoretical) and statistical analysis were used in this study. The results of the study have shown that it is possible to make savings .n foreign exchange if yields of 0.8 tons per acre can be achieved. Although this saving is made at a cost that is higher than the shadow exchange rate it would not be correct to conclude that the project is not economical because, first, malt exports are subsidized and it has been shown that if there were no subsidy there would have been foreign exchange saving and this wauld have been at a cost that is lower than the shadow exchange rate -which makes the project viable. Secondly it would nct be correct to eanclude that the project is uneconomic, since, the investment package fits in into the basic industry development strategy which i s the kind of industrialization approach recommended for Tanzania type of economies. The cost of saving foreign exchange has to be considered alongside the long term advantages of the economic integration the investment is likely to achieve. The results of the study have shown further that it is not cheaper to import barley and malt it locally if this expenditure is to be compared to that of importing malt. However, since this investment package includes local barley productions it has been proven that it is cheaper in terms of foreign exchange to import malt instead of barley and malt it locally when total crop failure is assumed. Even of malt prices were not subsidized, the saving in the foreign exchange outflow is negligible. The alternative of growing barley and malting it locally when compared to that of importing barley and malting it locally is cheaper in foreign exchange expenditure. So savings in foreign exchange are made when agriculture is part and parcel of the investment package. Policy implication to be drawn from the results of the study is that import substitution industrialization must be properly scrutianized so as to determine the contribution they can make to the economy in terms of the following criteria; integration of the economy, employment, severance of disadvantageous economic links to the international capitalist system. At the firm level efficiency must always be the aim and this is to be sought through the appropriate technology.
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Keywords
Foreign exchange problem, Tanzania Breweries Malting project, Brewing industry, Technological innovations, Tanzania
Citation
Qorro, P. S. (1985) Tanzania breweries malting project prospects for foreign exchange savings, Masters dissertation, University of Dar es Salaam. Available at (http://41.86.178.3/internetserver3.1.2/detail.aspx)