A Comparative Assessment of the Performance between Farmers’ Oilseeds Processing Cooperatives and Private Oilseeds Processing Enterprises in the Sunflower Value Chain : The Case of Singida Region in Tanzania

The low output of cooking oil in Tanzania has been subject to critical debate given the increasing population and consumption in the country and the world in general. The question of having self sufficiency in terms of cooking oils and food security as well as social economic development is of great relevance to this research. It can be achieved by stimulating and improving the sunflower oil processing sector in the country. Stimulation has to be geared towards supporting small holder’s farmers who constitute Agricultural Marketing Cooperatives (AMCOS) through out the sunflower value chain. There is a need to regulate the business relationship between private processors and farmers (seeds/raw materials producers), this would ensure mutually-beneficial market transaction and reduce the exploitation of farmers. This paper, attempt to assess the performance gap between farmer’s oilseeds processing cooperatives and private processing enterprises within the sunflower value chain in Tanzania. In this paper, both secondary and primary survey data from Singida Region are employed and descriptively analysed with the help of a computer program known as Statistical Package for Social Science (SPSS). The results indicate that, there is a negative performance gap which is observed in two dimensions within the study. Namely by; the identification of key performance factors and a perverse; Incentive and Reward system; In the incentive and rewards system practiced within the two enterprises, cooperatives are doing better in some cases such as with the distribution of shares; members feel a sense of social inclusion, they get Agricultural inputs and thus they are more happy and feel valued, this makes them work harder towards achieving the set of objectives. However, salaries in the cooperatives are not as high when compared to private enterprises and this has an impact on worker’s motivation. The key factors identified for the performance differences between the two enterprises includes; capital access and ownership, Quality of oils produced, Capacity of machines, level of business education, safety and cleanness measures and market power. These factors seem to affect most the cooperatives, for example, they lack access to capital from banks and also they own low capacity machines when compared to private enterprises that have enough capital and high capacity machines. Moreover, the paper found that, there are other conditions which may bring about social economic development and efficiency to the cooperatives if they are well implemented. These includes; increasing subsidies to the Agricultural Marketing Cooperatives (AMCOS), Regulation of business relationship( focusing on contract farming system), the facilitation of access to capital from micro financial institutions and banks, employing more extension officers, commissioning more research and improving the facilities for sunflower seeds warehouses in the cooperatives. Nevertheless, reducing unnecessary taxes such as rent tax, distribution tax, storage taxes, etc.; creating favourable business environments for the private oil processing enterprises seem to be significant conditions for the sunflower sector.