Department of Agricultural, Food, and Resource Economics Feed the Future Innovation Lab for Food Security Policy

Todd Benson, Josee Randriamamonjy, Peixun Fang, David Nyange, James Thurlow, and Xinshen Diao. 2017. Prospects for the Sectoral Transformation of the Rural Economy in Tanzania: A Review of the Evidence. Feed the Future Innovation Lab for Food Security Policy Research Paper 88. East Lansing: Michigan State University.

ABSTRACT
To guide economy-wide modeling efforts to identify specific public investments under Tanzania’s second Agricultural Sector Development Programme (ASDP II), this report provides an analysis of the performance of the rural economy of mainland Tanzania over the period 2008 through 2015, with a focus on the agriculture sector. More broadly, we seek to assess the nature and extent of any structural transformation in the rural economy by understanding trends in various components of it.
The insights gained will then be used in the economy-wide modeling work to propose portfolios of public investments to foster both agricultural development in the short term—in alignment with the ASDP-II—and, in the longer-term, a sectoral transformation of the rural economy in which far fewer households rely solely on agriculture for their livelihoods.
International data sets were used to examine the macroeconomic performance of the economy of Tanzania as a whole, trade performance, trends in labor productivity by sector, and aggregate crop production. To compile information on employment and several features of agricultural production —crop and livestock production, use of inputs, and agricultural commercialization—plus food consumption patterns, we analyze data from the Tanzania National Panel Survey to generate economic performance indicators specific to the rural mainland.
Encouraging trends are seen along several dimensions, including in changes in food consumption patterns, uptake of improved seed, and an increase in the share of crops harvested that are sold. However, we also see a generally stagnant agricultural sector, maize productivity levels that are scarcely moving, a seemingly moribund livestock sub-sector, and a breakdown in the provision of technical information to farmers. In sum, despite some positive signs, the rural economy in Tanzania is not yet on the threshold of significant changes in its structure. It is unlikely that rural households will soon be as likely to pursue non-agricultural livelihoods as to engage in farming. Given these findings, using the economy-wide model for Tanzania, we next will assess a range of possible public investments that might be made to accelerate the positive trends observed and to address those factors hindering Tanzania from significant economic growth and transformation, particularly in the agricultural sector.