Stabilization of markets of primary commodities in Tanzania

This thesis examines the issue of stabilization of markets for primary commodities in Tanzania. Stabilization of markets for primary commodities is a topic which simply deals with various fluctuations which affect the incomes of the producers of primary commodities. The removal of these fluctuations implies stability. As a matter of fact, stability means stable growth and development, which cannot be achieved by simply just removing fluctuations. The major crops taken in this paper are cotton, Sisal, Coffee, Tea Tobacco and Pyrethrum. Each of them is produced in a different region, except tea which is grown in Coffee producing regions. Fluctuations in prices as well as production affect the incomes of the people in the regions. If we talk of total export earnings of primary commodities we would miss the consequential results in regional development so that some regions would be lagging behind, income wise, while others have progressed. On the other hand, total export earnings do not reflect the costs of production. Thus this paper puts an emphasis on individual commodities before dealing with total export earnings. Section one tries first to show the causes of instability in both prices as well as production. Then goes on looking at the specific situation of Tanzania (section two), i.e Tanzania’s experience with her crops, production wise at home and prices released in the International Markets for the sample crops. Then tries to give a look at the internal pricing structure the way it has been evolving with time. Section three deals with the schemes which are being used directly or indirectly but finally end up in stabilizing the income of the producers of primary commodities. These schemes range from International Agreements, such as quote systems and various other agreements to local arrangements e.g. Stabilization Funds for Cotton, buffer stocks for good crops, and diversification of productive activities. Every stabilization scheme has its own advantages and weaknesses. This makes it necessary to us that we must choose our own strategy well if we are to be successful with stabilization schemes. Section four, attempts to prescribe general policy proposals; after looking at the policies which are being followed for each of our major export crops.