Enhancing Regional Trade Through Strategic Partnerships: Case of Volcano Cooperative Society in Tanzania

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Tanzania is a major producer of onions.  Most onions are grown in Singida, a long district in the middle of the country.  While demand for onions is high, many producers in Singida lack reliable markets and market information on potential buyers and their requirements.  As a result, these agribusiness and farmers cooperatives are not able to sell their produce and experience low incomes and often, significant losses.  Volcano Cooperative Society, an agriculture marketing cooperative society (AMCOS) with156 farmer members, is one such group.  Among the challenges Volcano Cooperative Society faced was no standard market for its produce. As a result, members would sell individually, which led to widespread underpricing. The cooperative also did not maintain any records on its members such as their production levels and what they provided to the cooperative, which also undermined its aggregation.

Global Communities under the Agribusiness for Market Stimulation (AIMS) program funded by the US Department of Agriculture (USDA) seeks to create buyer seller linkages to help build more structured markets.  When producers have a known market, they can produce what is demanded, secure loans and often improve their price.  The challenge lies in bringing these two sides together.

Sunflower bags storage inspection at Jielong Store room

In the case of the onion value chain, AIMS brought together two key government actors: the Singda branch of the Tanzania Chamber of Commerce, Industry and Agriculture (TCCIA) and the Tanzania Trade and Development Authority (TanTrade).  TCCIA is a government agency mandated to promote business and industry, and facilitate   public-private engagements.   TanTrade is parastatal established to facilitate local and international trade.    Both organizations had key information:  TCCIA Singida knew the various onion growers while TanTrade had a buyer from Uganda and Democratic Republic of Congo (DRC) looking to import onions.  Global Communities brought these two organizations together to conduct a business-to-business (B2B) forum with the international buyer and growers in Singida, marking the first time these two entities had worked together.  While Tantrade supports the entire country, it largely operates out of the country’s main city, Dar es Salaam.

The B2B event was held in Singida in April 2017 and was facilitated by the AIMS Tanzania trade team in collaboration with TanTrade and TCCIA–Singida. The event brought together 47 grower organizations and nine buyers including three from Uganda and two from DRC.  At the event, producers signed 23 interim agreements valued at $ 41,478,024 with participating buyers.  Volcano Cooperative Society signed two agreements with Ugandan buyers and one with a Congolese buyer to sell 4845 MT of onions valued at $1,498,000.  While the agreements are non-binding, they show initial interest and a basis for formal engagement. From these agreements, Volcano sold 1650 MT valued at $ 583,800. Volcano was not able fulfill all of the orders due to poor harvest from its members. Realizing it needs to improve its internal operations if it is to meet the demand of future agreements, Volcano Cooperative Society participated in AIMS fee-for-service capacity building support through private sector business advisory providers.  As a result of this support, the cooperative has started tracking membership, number of sales, value of sales and other key data. This information has enabled it to know each member’s capacity and what it had contributed, and it has employed an expert to manage its data.

 

The AIMS program has led to transformative change in the cooperative.  It has enabled the cooperative to meet directly with buyers and move away from middlemen who underprice onions, and the organization’s operations have improved through more efficient record-keeping.  “The partnership between Global Communities’ AIMS program and TCCIA – Singida is of great importance for growth of our organization. The strong business relationship built between us and main onion buyers from Uganda and Congo DRC has already ensured our sustainability,” said Paul Mbogo Chairperson for Volcano. TCCIA Executive Secretary Mr. Ngulu said “The B2B session conducted in April 2017 has successfully impacted Volcano AMCOS members.”  In addition, AIMS has enhanced the collaboration between TanTrade and TCCIA. Since this meeting, the two parties have conducted other B2Bs together, thus ensuring that the support provided to agribusiness SMEs continues beyond the life of the program.