In a world where three billion people are malnourished, investments to support the production of healthy foods such as fruits and vegetables packed with nutrients should be scaled up. Not only is global consumption of fruits and vegetables desperately low, but smallholder farmers who produce these
high-value crops are also not getting the support they need from financial lenders. Farming is a risky business, compounded by issues such as climate change, but strengthening financial literacy and building trust between farmers and banks is worth the risk. A nation’s health depends on it.
All three forms of malnutrition – underweight, overweight or obese, and micronutrient deficient – threaten the prosperity of Tanzania. The Tanzania National Nutrition Survey 2018 reported that approximately 32 percent of children younger than age 5 are stunted (low height for age), 30 percent of Tanzanian women of reproductive age are anemic and 32 percent of women of reproductive age are overweight or obese. More fruits and vegetables in daily diets could improve these statistics as well as raise incomes for the smallholder farmers who want to grow high-value crops over staple commodities with little nutritional value, such as maize.
To increase access to healthy food, development solutions should include ensuring that smallholder fruit and vegetable farmers have the financial tools they need to increase and improve production. With post-harvest losses of fruits and vegetables that range from 30 to 50 percent, Tanzanian smallholder farmers are a high-risk investment, making microfinancing complicated, challenging and rare. Post-harvest losses can be caused by a combination of factors including, but not limited to, inadequate cooling, = physical damage and insufficient drying and dry storage. In addition, fruit and vegetable farming involves careful attention to plot selection to ensure an ample water supply, quality soil and market potential and acceptability. Another wrench in this already uncertain business is climate change.
The effects of droughts and rising temperatures heighten investor fears due to the intense water needs for the cultivation of fruits and vegetables. Tanzania’s temperatures are projected to rise by 37 degrees Fahrenheit by the 2060s and by 40 degrees by the 2090s. Unforeseen weather events and disasters can suspend a smallholder farmer’s ability to make loan payments. The insecurity in fruit and vegetable farming contributes to the startling statistic that between 0.8 and 1.9 billion people living in sub-Saharan Africa may lack fruit and vegetable availability in 2050 to meet the five daily portions the World Health Organization recommends.
Climate-smart agriculture, smart security
Tanzania is no exception to the new normal of climate change, which gravely affects the more than two-thirds of Tanzanians who are employed in farming and utilize rain-fed agriculture as their primary irrigation mechanism. In the past decade, Tanzania has experienced an aggressive drop in water levels of its major lakes due, in part, to climate change. Mount Kilimanjaro, a water source for agriculture in Arusha, has lost 80 percent of its glacier since 1912 due to rising temperatures. Delayed rains or shifting
seasons can alter ecosystem balances and tip the scales in favor of soil microbes or insects that may thrive under new conditions, at the expense of the crops. Increased pests may cause increased pesticide use, which already is a determinant to fruit and vegetable consumption.
The United States has a deep history of strong diplomatic and development ties with Tanzania. As a focus country from 2011 to 2017 under Feed the Future, dozens of projects and millions of US aid dollars have focused on addressing the root causes of hunger, poverty and malnutrition in Tanzania. The CSIS Global Food SecurityProject conducted field research in the country in August this year, including looking at the US Agency for International Development (USAID)-funded project Mboga na Matunda, which means vegetables and fruits in English.
Mboga na Matunda is a four-year, $25 million project that concentrates on scaling up improved technology, bolstering better farming practices and building capacity via market system models in hopes of making fruits and vegetables more feasible and successful for smallholder farmers. A market systems approach is utilized to deliver technical assistance to 50,000 Tanzanians. The idea is this: if Tanzanian farmers produce more diverse and nutrientdense fruits and vegetables, the nutritional status of the country will improve and, ultimately, so will the resiliency of the country due to the impact nutrition has on lifelong health, economic growth
and human security. However, without the mandatory application of climatesmart agriculture techniques, or the microfinancing mechanisms to empower farmers to adopt them, progress will not be catalyzed in fruit and vegetable farming.
In Morogoro and Zanzibar, two of the five regions where the project works, project participants corroborated climate change concerns to us. For smallholder farmers in Morogoro, unreliable rains and prolonged droughts requires farmers to dig up driedup river beds for an irrigation source. According to farmers in both regions, while the rainy seasons were predictable a decade ago, now they vary both in timing and intensity. Rising sea levels are intruding on groundwater wells, which already are menaced by prolonged dry spells that only exacerbate resource competition. While agriculture practices such as drip irrigation, raised beds, plant-based fertilizers, crop rotation and integrated pest management all increase the resiliency of a farmer in the face of climate change, these strategies still require financial capital. Obtaining the capital without the necessary financial literacy is a major obstacle for smallholder farmers, as banks will not invest in farmers who have little assurance to yield returns. Though not a main tenant of the Mboga na Matunda project, climate-smart agriculture practices are an integral piece to raising farmer incomes and improving their ability to access microfinancing resources outside of the guise of USAID.
The overlooked importance
Because many smallholder farmers lack access to capital and personal savings, Mboga na Matunda devised a cost-sharing mechanism for cluster demonstration plots. These farming clusters act like a small business with each cluster member taking a specific role. The progressive financing component, the initial cost-sharing protocol combined with subsequent microfinance training, is the heart of the project’s longterm sustainability after USAID support ends. Whereas cost-sharing is beneficial for initial investments, having sustained access to capital and a strong relationship with a financial institution are required for continued economic growth.
Through financial literacy training hosted by local banking institutions in collaboration with Mboga na Matunda, farmers are able to develop these critical relationships. The training emphasizes entrepreneurship and money management skills to complement the training farmers receive in the field. Increasing farmer income does little good if additional funds are not available to a farmer in times of
crisis or climatic shocks. This training, which often includes basic accounting, opening and maintaining a savings account, and market forecasting, is a vital component to economic development and farmer-led
The training provides much more than a technical understanding of business development, but also provides the credibility smallholder farmers need to earn trust from lenders. After having created their own savings accounts as a part of the training, farmers have the option to form a collective savings account with other farmers in their cluster. With the guidance of Mboga na Matunda and the local lender, the farmers devise a business plan covering market analysis, cost-benefit analysis and accounting practices. To complement the finance and accounting details, farmers also create a marketing plan to outline the demand potential and local competition for specific fruits and vegetables in areas where opportunities exist. Banks are more willing to provide loans to farmers with these microfinancing skills because elevated financial literacy, enhanced technical know how and updated infrastructure to adapt to climate-smart practices reduce risk.
An integrated approach
If transformation is to take place on the plates and in the fields for improved nutrition, the dedicated funding needs to match the level of effort required for such a shift. Currently, only a mere 7 percent ($1.25 million) of the total $25 million allocated to Mboga na Matunda is dedicated to nutritionsensitive activities, such as cooking demonstrations and technical assistance to grow more nutritious fruits and vegetables. Increasing farmers’ incomes, diversifying the fruits and vegetables available at market and disseminating knowledge on how consumption of produce can improve health requires the application of an integrated multisectoral approach. By enhancing nutrition-sensitive investments throughout the project, such as microfinancing training and climate-smart agriculture, a more holistic approach to increase access to nutritious fruits and vegetables is achievable.
Access to finance, while a significant factor for smallholder farmers transitioning to fruit and vegetable production, depends largely on behavior. Farmers in the Mboga na Matunda cluster groups said that prior to USAID support they did not hold savings accounts or written business plans. A common belief in the development world is that if incomes rise, improved nutrition will surely follow. However, as evidenced by growing malnutrition in high-income countries, increased incomes do not always correlate to better nutrition. If farmers and communities aren’t aware of why greater fruit and vegetable intake contributes to optimal nutrition and overall health, they may prioritize other purchases not related to household nutrition or food security. By pairing financial literacy with health and nutrition education, farmers will better understand the connections between income and nutrient-dense foods.
Part of an integrated approach is inclusion of the many stakeholders involved, including the private sector. Mboga na Matunda’s engagement with the private sector is limited, despite sustained support from local lenders and banking institutions that play a key role in the salability of smallholders in the fruit and vegetable market. Currently, only a few banks partner with the project to develop and host the financial literacy training that supports thesmallholder farmer clusters.
At the 2019 Borlaug Dialogue last October, USAID administrator Mark Green announced that USAID’s partnership with Mastercard would extend to the agriculture sector in sub-Saharan Africa to connect smallholders to markets and financial services. While this level of private sector engagement is important, significant barriers still exist. In Tanzania, banks are not accessible and 47 percent of Tanzanians without a bank account cited distance to the bank as a primary reason for not being an accountholder. Even with private institution participation, distances between bank branches and communities is an obstacle to utilizing financial resources. Fortifying rural infrastructure is required for this partnership to be beneficial for smallholder farmers.
Incomes and nutrient-dense foods
Throughout Morogoro and Zanzibar, Mboga na Matunda farmers utilize their mobile phones to stay connected and document farm demonstration plot issues via photos. The increasing use of mobile technologies on farms is an opportunity for USAID. For example, M-Pesa is a mobile money service that allows users to store and exchange money via their phones and is used widely throughout rural and urban Tanzania. Having 24/7 access to financial services and personal bank accounts at their fingertips makes a significant difference for smallholder farmers who may have to travel long distances only to deposit funds into a bank account. Removing barriers and creating the path of least resistance for a behavioral shift in financial literacy will bolster financial resilience and long-term household food security.
Fruit and vegetable smallholder farmers confront considerable livelihood threats from climate change, which impedes their household nutrition and food security, as well as economic productivity. USAID
can continue to contribute to the success of Tanzania’s journey to self-reliance by facilitating partnerships, and among lenders and other institutions in scaling up financial literacy and continuing to foster country- and industry-led ownership in nutrition and agriculture initiatives. Through an integrated multisectoral approach that connects climate-smart agriculture, microfinancing and nutrition technical assistance, smallholder farmers are better equipped to overcome the local challenges of the Tanzania of today and tomorrow.