Can Sub-Saharan Africa become food self-sufficient? Analyzing the market demand for sunflower edible oil in Tanzania

Abstract

Deficit in food supply, edible oil in particular is a common occurrence in Tanzania. The deficit in edible oil from the domestic supply is mainly due to use of poor production technology, that include use of unimproved seed coupled with dependent on rain fed agriculture leads to low productivity. However, the high rates of population growth and industrialization increase demand for edible oil both for home consumption and industrial use. Despite Tanzania having comparative advantage in the production of edible oil particularly from sunflower still this opportunity has not fully exploited. Currently, Tanzania, is revitalizing its edible oil sub-sector in order to reduce its dependency on imported edible oil. The sunflower sub-sector in Tanzania is deemed as key to industrialization, thus a potential contributor to economic growth and development, especially for smallholder farmers and small-to medium-size processors. This study aims at discerning the response of sunflower edible oil subsector to fulfill the edible oil demand in Tanzania. The study uses annual time series data from 1995 to 2019. A partial adjustment model is used to determine the relationship between edible oil demand, and its determinants, that are sunflower and palm oil prices, and per capita income. Findings from this study indicate that the demand for edible oil is inelastic for increase in palm oil price but elastic for the increase in domestic sunflower edible oil prices. This implies, as the price of sunflower edible oil increases per capita edible oil decreases. In contrast, increase in imported palm oil price per capita oil demand increases, implying the price for the imported palm oil are extremely low compared to the domestically produced sunflower edible oil. The current speed of adjustment in production of sunflower edible oil is low per year that indicate that it will take many years for Tanzania to be self-sufficient. This situation calls for the government and development agencies to intervene and improve the available technologies thus raise farmers productivity in terms of sunflower seed production as well as efficiency in processing. To improve the productivity of the agro processors, the Tanzania Government will need to reconsider the tax rates imposed on imported technologies and other materials required for processors, making sure they do not actually harm the country’s goal of self-sufficiency in production of edible oils.