Concept of marketing and Distribution in Tanzania

Marketing

Refers to making communication about products or services. A purpose of which is to encourage the receipt of the communication to purchase/ use the product of the service.

Marketing involves finding what customers want, setting out to meet their needs provided and it can be done at a profit.

Distribution

Is a commercial activity of transporting and selling goods from a producer to a consumer. It is about how to get the product in the hands of consumer.

Note

The topic of distribution tries to identify the role played by cooperatives, crop authority, board, agencies, corporation etc.

In Tanzania marketing and distribution is done by;

1. Cooperative societies
2. Marketing board
3. Internal and external trade authority
4. Private companies.

I. Cooperative societies

A cooperative society is an association of people who voluntarily join together to achieve common goals or objectives. It is an autonomous organization where members unite voluntarily to meet their economic, social, and cultural needs.

Key characteristics of cooperative societies

1. Open Membership
   Membership is open to anyone who shares the common goals or objectives, without any discrimination based on gender, race, or religion. This principle promotes inclusivity and equal opportunity for all.
2. Limited Interest on Capital
   Cooperative societies limit the return on capital invested by members to ensure that profits are primarily used to benefit members rather than external investors. This makes cooperatives more focused on meeting the needs of their members rather than maximizing profits.
3. Democratic Control
   Every member has an equal vote in decision-making, regardless of the amount of capital they have invested. This democratic structure ensures that the interests of all members are considered and that no individual or group has undue control.
4. Cooperative Education for All Members
   Education and training are provided to members so they can better understand how the cooperative works and how they can contribute to its success. This principle emphasizes the importance of continuous learning to improve the overall efficiency and participation within the cooperative.

Types of cooperative societies

Cooperatives are categorized based on their membership registration and services offered:

According to membership registration:

1. Primary Cooperative Society
   This is the most basic form of a cooperative, where members come together at the grassroots level to form the organization. Members directly benefit from the services and contribute to decision-making.
2. Secondary Cooperative Society
   This type is formed when primary cooperatives come together for mutual benefit, such as enhancing their bargaining power or pooling resources.
3. National Cooperative Society
   These are cooperatives that operate at the national level and serve the interests of members from different regions or sectors within a country.
4. International Cooperative Society
   These cooperatives extend beyond national borders and aim to address global issues or provide services across countries.

According to services offered:

1. Saving and Credit Cooperative Society
   These societies provide financial services to members, including saving accounts, loans, and credit facilities, promoting financial inclusion for people who may not have access to traditional banking services.
2. Marketing Cooperative Society
   These cooperatives help members market their products, ensuring fair prices and better access to markets.
3. Consumer Cooperative Society
   These cooperatives provide goods and services to members at competitive prices by cutting out middlemen.
4. Transport Cooperative Society
   Focused on providing transport services, these cooperatives help members reduce costs associated with transportation and improve access to essential goods and services.
5. Handcraft Cooperative Society
   These cooperatives promote the production and sale of handcrafts, benefiting artisans by creating a collective market for their goods.

Roles of marketing cooperative societies

Marketing cooperatives play a crucial role in the agricultural sector and other industries by offering the following services:

1. They help farmers to market their produce
   Marketing cooperatives offer a collective platform for farmers to sell their products, ensuring they get fair prices and better market access.
2. They own and run farms
   In some cases, cooperatives may own or operate farms, providing members with direct access to production resources and enhancing collective productivity.
3. They increase the bargaining power of their members
   By pooling the produce of many farmers, marketing cooperatives give their members greater leverage when negotiating prices with buyers or suppliers.
4. They protect farmers against exploitation by middlemen
   Cooperatives eliminate or reduce the role of middlemen, ensuring that farmers receive a larger share of the profits from their produce.
5. They provide education to the members
   Through training and awareness programs, marketing cooperatives educate their members on better farming practices, market trends, and financial management.
6. They provide subsidies of inputs to farmers
   These cooperatives may offer subsidies or bulk purchasing discounts on agricultural inputs like seeds, fertilizers, and equipment, reducing the costs for members.
7. They provide employment in transport and marketing
   Marketing cooperatives create job opportunities in areas like transport, packaging, and sales, benefiting local communities and enhancing livelihoods.
8. They provide advice to farmers
   Cooperatives often offer expert advice on farming techniques, pest control, crop rotation, and other practices that improve yield and sustainability.
9. They provide social services to the members
   Many marketing cooperatives go beyond economic activities by offering social benefits such as health services, educational scholarships, and emergency assistance.

Problems facing marketing cooperative societies

Despite their potential, marketing cooperatives often face various challenges that hinder their effectiveness:

1. Government interference
   Excessive government regulation or misdirected policies can interfere with the functioning of marketing cooperatives, limiting their autonomy and efficiency.
2. Embezzlement of funds by leaders
   Some cooperative leaders mismanage or steal funds, undermining the cooperative's ability to serve its members effectively and causing distrust among the community.
3. Lack of skilled labor
   The success of cooperatives depends on the expertise and skills of their members and staff. A shortage of skilled labor can limit the cooperative's growth and impact.
4. Mismanagement due to lack of managerial skills
   Poor management practices, often due to a lack of experience or training, can lead to inefficiencies and failure to meet objectives.
5. Dishonest members
   Some members may act dishonestly, failing to fulfill their obligations or participating in unethical activities, which can damage the cooperative's reputation and operations.
6. Shortage of credit facilities to members
   Limited access to credit or financial services restricts the ability of members to invest in their businesses or expand their production, limiting the cooperative's potential for growth.
7. Inadequate transport, storage, and packing facilities
   Lack of proper infrastructure, such as transportation, storage, and packaging, can lead to inefficiencies in getting products to market or maintaining their quality.
8. Corruption
   Corruption can divert resources away from the cooperative's intended purposes, harming members and eroding trust in the institution.
9. Tribalism
   In some regions, tribalism can divide members or influence decision-making processes, undermining unity and cooperation within the society.

II. Marketing boards

Are trading agencies established by the government to control the marketing of primary and processed agricultural commodities.

There two main categories of marketing boards;

1. The export marketing board
2. Statutory boards

Statutory boards

A statutory board is a government-established marketing board responsible for regulating and facilitating the marketing of certain agricultural products. These boards are set up to ensure that the production, storage, and sale of specific commodities are managed efficiently. Statutory boards typically focus on key foodstuffs, such as maize, cashew nuts, cotton, and coffee.

Examples of marketing boards in Tanzania

1. Cotton Marketing Board
   Regulates the production, pricing, and marketing of cotton in Tanzania, ensuring a stable market for cotton farmers and stakeholders.
2. Coffee Board
   Oversees the coffee industry, supporting farmers with fair pricing, marketing channels, and export opportunities.
3. Maize Producer Board
   Focuses on the maize sector, helping to manage the marketing of maize, a staple food crop, in both local and international markets.
4. Cashew Nut Board
   Facilitates the marketing of cashew nuts, ensuring fair trade practices and offering a stable market for producers of this key agricultural product.

Roles of marketing boards

Marketing boards play a vital role in the agricultural sector by providing various services to both farmers and consumers. The following are their key responsibilities:

1. Buying products from farmers
   Marketing boards purchase agricultural products directly from farmers, ensuring that they have a ready market to sell their goods. This is particularly important for small-scale farmers who may not have direct access to larger markets.
2. Setting prices with the help of the government
   Marketing boards work in collaboration with the government to establish fair and stable prices for agricultural products. This helps protect farmers from price volatility and ensures a fair return on their products.
3. Storage and collection of produce
   Marketing boards provide storage facilities for agricultural products, ensuring that produce is safely stored and preserved for sale during off-seasons, preventing spoilage and waste.
4. They offer transport from the producers to the warehouse
   Providing transportation services is essential for helping farmers get their goods from the production site to the marketing board's storage facilities or warehouses, ensuring the timely and efficient movement of goods.
5. They offer advice to producers on mechanization and new technology
   Marketing boards play an advisory role, helping farmers adopt modern farming techniques, new technology, and mechanization methods that improve productivity and efficiency.
6. They control the production of the produce
   Marketing boards may regulate production levels to ensure that supply meets market demand. This control helps prevent overproduction and ensures a stable market for agricultural products.
7. They advise the government on importation and exportation of products
   The boards provide valuable input to the government regarding import and export policies, helping to balance the supply and demand of agricultural products both locally and internationally.
8. They conduct research on marketing of agricultural products
   Marketing boards often engage in research to improve the marketing strategies for agricultural products. This research helps identify new markets, optimize pricing, and improve the marketing approach.
9. They conduct selling of produce
   Marketing boards are involved in selling agricultural products to wholesalers, processors, and sometimes directly to consumers. Their role ensures that farmers receive a fair price for their produce and that it reaches the appropriate markets.

Problems facing marketing boards

While marketing boards play a critical role in the agricultural economy, they also face numerous challenges that hinder their effectiveness. Some of these problems include:

1. The problem of overproduction
   When too much of a product is produced, it can lead to oversupply, which may drive down prices. This makes it difficult for farmers to earn a reasonable profit and can cause financial instability.
2. Price fluctuation
   The prices of agricultural products can fluctuate due to various factors like weather conditions, market demand, and global economic trends. This price volatility can make it challenging for farmers and marketing boards to plan effectively.
3. Government interference
   While government regulation can be beneficial, excessive interference or misguided policies can disrupt the functioning of marketing boards. This may limit their ability to operate efficiently and fairly.
4. Competition from private buyers
   Private buyers, who may offer better prices or more attractive terms, can undermine the role of marketing boards, drawing farmers away from selling to the board and creating an unstable market.
5. Delay in payment to farmers, which discourages crop production
   Marketing boards sometimes face financial constraints that lead to delayed payments to farmers. This discourages farmers from producing more crops, as they may not receive timely compensation for their hard work.
6. Lack of enough market for the produce
   Some marketing boards face challenges in finding sufficient markets for the agricultural products they handle, particularly if production exceeds demand or if there are limited export opportunities.
7. Low-quality produce as a result of poor technology
   Marketing boards may struggle to address the issue of poor quality in agricultural products, which often results from inadequate farming practices or a lack of access to modern technology and training.
8. Problem of mismanagement of marketing boards
   Ineffective management, corruption, or lack of accountability within marketing boards can result in inefficiency, wasted resources, and a failure to meet the needs of farmers and consumers.

III. Board of Internal Trade (BIT)

The Board of Internal Trade (BIT) was established in 1973 to replace the State Trading Company. BIT is responsible for overseeing and facilitating internal trade activities within the country. Its functions include:

1. Conducting internal market research
   BIT conducts market research to understand the dynamics of the domestic market, including consumer behavior, market trends, and product demand. This research helps inform decisions regarding pricing, distribution, and trade policies.
2. Advising businessmen and the government on trading activities
   BIT provides guidance to both private sector businesses and the government regarding internal trade practices, regulations, and policies, ensuring that trade activities are efficient and aligned with national economic goals.
3. Organizing internal trade fairs and exhibitions
   The board organizes trade fairs and exhibitions to promote local businesses and products. These events provide opportunities for businesses to showcase their products, connect with potential buyers, and expand their market reach.
4. Setting and revising internal trade policies
   BIT plays a critical role in setting and periodically revising internal trade policies. These policies govern how trade is conducted within the country and aim to create a fair, efficient, and competitive market environment.
5. Supervising all internal trade activities
   BIT is tasked with monitoring and supervising internal trade activities, ensuring that businesses adhere to trade regulations, standards, and practices. This helps maintain order and fairness in the market.
6. Providing employment to qualified persons in the board
   BIT offers employment opportunities for skilled professionals in areas like market research, policy development, and trade facilitation, contributing to the overall economic development of the country.

Board of External Trade (BET)

The Board of External Trade (BET) is responsible for overseeing international trade activities and promoting the country's exports. Its functions include:

1. Conducting market research
   BET conducts research on international markets to identify trade opportunities, market demand, and consumer preferences in foreign countries. This research helps businesses target profitable markets abroad.
2. Providing training of personnel in foreign trade
   BET offers training programs to build capacity in foreign trade practices, helping businesses and individuals understand international trade rules, negotiation strategies, and export processes.
3. Providing information on export commodities requiring businessmen from abroad
   The board provides critical information to local businesses about foreign markets, including details on which commodities are in demand and the requirements for exporting goods abroad.
4. Providing consultation services
   BET offers consultation services to businesses looking to engage in international trade. This includes advice on navigating foreign regulations, identifying trade partners, and meeting the demands of international markets.
5. Participating in trade outside the country
   BET plays an active role in promoting the country's products abroad by participating in international trade fairs, trade missions, and diplomatic initiatives aimed at expanding the country's export opportunities.
6. Looking for markets for produce abroad
   The board actively seeks and identifies markets for the country's agricultural and manufactured products abroad. By expanding market access, BET helps businesses find international buyers and increase foreign revenue.

IV. Private crop buyers

Private crop buyers are individuals or companies that purchase crops directly from producers (farmers). They act as intermediaries between the farmer and the market, offering a channel for farmers to sell their products without going through cooperative societies or marketing boards.

Advantages of private crop buyers

1. They provide incentives to farmers
   Private buyers often offer better prices, cash payments, and other incentives, which encourage farmers to produce more and improve their yields.
2. They buy and pay in cash
   One of the primary advantages of private buyers is that they offer immediate cash payment for crops. This helps farmers access liquidity quickly, allowing them to meet immediate financial needs or reinvest in their farming operations.
3. They reduce bureaucracy in the buying of crops
   The process of selling crops to private buyers is typically simpler and faster than dealing with state-run marketing boards or cooperatives, which can have more complex and bureaucratic procedures.
4. They increase competition in buying of crops
   The presence of multiple private buyers in the market increases competition, which can lead to better prices and more favorable terms for farmers, as buyers strive to outbid each other.
5. They provide subsidies and other financial assistance to farmers
   Some private buyers offer financial support to farmers, such as subsidies on inputs or assistance with financing, which can help farmers reduce costs and increase production.
6. They reduce the producer's problems of storage by buying immediately after harvesting
   Private buyers often purchase crops immediately after harvest, relieving farmers from the burden of storage and preventing spoilage. This can be especially beneficial for perishable crops.

Disadvantages of private crop buyers

1. Private buyers lead to instability in price
   Prices set by private buyers can fluctuate based on demand, weather conditions, or market conditions. This can cause instability for farmers, who may struggle to predict their income and profitability.
2. Private buyers buy produce at low prices to maximize profit
   In many cases, private buyers aim to purchase crops at the lowest possible prices to maximize their profit margins. This means that farmers may receive less for their produce compared to other market alternatives, such as cooperatives or marketing boards.
3. They do not provide education to producers
   Unlike cooperatives and marketing boards, private buyers typically do not offer educational programs to farmers about farming techniques, crop management, or market trends. This lack of support can limit farmers' growth and the long-term sustainability of their operations.
4. Private buyers do not provide infrastructure services like those provided by cooperatives and market boards
   Unlike cooperatives or marketing boards, private buyers generally do not invest in infrastructure such as storage facilities, transportation, or processing units, which are crucial for improving the efficiency and competitiveness of farmers.
5. Private buyers reduce the strength of cooperative societies
   The presence of private buyers can undermine cooperative societies by drawing farmers away from selling through cooperatives. This reduces the collective bargaining power of farmers and weakens the overall structure of cooperatives.
6. They do not help to improve the quality of the produce
   Private buyers often focus solely on quantity rather than quality, and they rarely invest in programs or support to help farmers improve the quality of their produce. This can lead to lower standards and a reduction in the overall competitiveness of local products in global markets.
7. Private buyers do not provide inputs to producers like cooperatives
   Unlike cooperatives, which often provide inputs like seeds, fertilizers, and equipment, private buyers typically do not offer such services. This leaves farmers to rely on their own resources or external suppliers.
8. The existence of private crop buyers has led to a decline in the quality of some products because crops are sold before they mature at low prices
   In an attempt to sell their crops quickly, farmers may be pressured by private buyers to harvest crops early, leading to lower-quality produce. Additionally, low prices offered by private buyers discourage farmers from waiting until crops are fully mature, further contributing to quality issues.
9. The existence of private buyers has led to a high level of theft of produce
   The informal nature of some private crop buying activities can lead to increased theft, as unscrupulous individuals may take advantage of the system to steal crops or exploit farmers.