CLOVE INDUSTRY UNDER SCRUTINY

Angel Navuri, AfricaNews reporter and Kilimo Kwanza in Tanzania

After over four decades of decline and stagnation, clove - Zanzibar's backbone sector - is back with a price bang and renewed advocacy. But Clove growers are sceptical about the current regeneration path taken by the government and its agencies in an effort to bring back to new life the clove industry in Zanzibar.

The farmers feel that focusing just on few issues like price to revive such a huge industry won’t help a great deal.

The growers, through their club, the Zanzibar Clove Growers Organisation (Zacpo), want authorities to do more, in terms of policy as well as law reforms, to fully regenerate the Isles backbone sector.

In its final Clove Advocacy Report compiled by Zacpo Advocacy Project external consultant Juma Ali Juma in July last year supported by Business Environment Strengthening for Tanzania (BEST-AC) their organization states categorically that restoring the Zanzibar’s lost clove industry glory requires purpose actions to rework the entire system – not just dealing with patches.

The report, which contains inputs from two independent consultants – Alex Mkindi and Zeinab Ngazy, calls for the scrutiny of the entire sector, setting up of a strong foundation for its viability and stability as well as exposing it to the new challenges in the global arena.

“The government should commission a thorough investigation into the actual clove production and export data to enable an independent, transparent, complete and authentic economic analysis of the clove industry for informed decisions on the sector,” it states.

Zacpo also calls for the speeding up of law and regulation reforms to improve performance with a view to making the industry at par with global changes and realities. It states: “The government should accelerate the pace of deregulation of the clove industry to give a new thrust in sector performance as projected under market liberalisation.

The study, whose thrust is advocating the urgency of stepping up efforts geared to revive the backbone sector in the Zanzibar economy after decades of decline and stagnation, assesses the implementation of a plan to revive the clove industry adopted by the government in 2004 – to establish to what extent different recommendations put forward in there have been implemented. It also seeks to identify reasons for deficiencies and give recommendations accordingly.

Zacpo states in the report that the increase in production will depend on many factors, including adequate education and training for farmers on good practices in clove husbandry and management.

Disband ZSTC

The Club recommends transformation of the Zanzibar State Trading Corporation (ZSTC) to facilitate an efficient marketing of cloves under a liberalised environment, improving production support and extension services to properly manage clove plantations as well as addressing poor husbandry practices during planting and other field operations.

The other recommendations are: deliberate efforts to improve clove research and development, provision of clove support services, including appropriate and targeted extension services, credit facilities, markets and price information as well as having an effective and capable clubs to defend and protect the interests of clove farmers and dealers.

Zacpo says despite disappointing years, clove still contributes significantly to the gross domestic product (GDP) and export earnings (An average of 6bn/- annually). It adds that the contribution shows that there are opportunities in the clove industry for reduction of poverty and efforts to curb food insecurity, if constraints to local production and marketing are addressed.

Zacpo says a wealth of experiences on clove production, husbandry and management among the peer (old generation), that is not currently shared among the youth is therefore doomed to be lost. It notes that in recent years, the clove industry has been declining due to various problems in areas of production, marketing and processing as well as smuggling.

Citing an example of Indonesia, the leading nation in the production of the crop, the Zacpo report says the country has embarked on a process of deregulation of clove industry that involves regulatory and structural changes that responds to the needs of main actors in the national effort to rejuvenate the industry.

Zacpo strongly recommends disbandment of the ZSTC and introduce free market mechanisms to run the industry for better performance. “Efforts should also be made to activate local demand for cloves especially industrial demand for production of essential oils. The main instrument for rejuvenation of Indonesian clove industry was high local demand of cloves from kretek –cigarette manufacturers,” it stresses.

Essential oils

Zacpo further states in the report that as a matter of priority, the government should workout and endorse complete privatisation of the oil distillery in Wawi, Pemba, to pave the way for industrial and commercial production of essential oils that on one side will trigger local demand for cloves and its products and on the other side will increase the share of Zanzibar in the flourishing global oil markets.

Clove contains 11 - 17 per cent essential oils, which is mostly eugenol – an effective unaesthetic. Clove buds essential oil is used in perfumery and, though less frequently, in pharmaceuticals.

The essential oil is also used in food industry in meat products, sauces and pickles, confectionery and bakery products. Less expensive stem oil, pale yellow, obtained after distillation is used in the massage-market products and in meat seasoning. Less expensive leaf oil is used as main source for production of eugenol, which is used in analgesic and raw material for other chemical products such as vanillin.

Zacpo says according to the World Food Organisation (FAO) 2007 statistics, clove oil prices then fetched between USD2, 500 and USD 3800 per tonne, indicating that the clove oil is indeed a lucrative business.

According to the organisation, Indonesia produced around 70 per cent of world clove oil in 2005, followed by Madagascar. Tanzania and Comoros share was 10 per cent and 2.4 per cent respectively. Singapore and India are the leading importers.

In 2005 Singapore share was around 39 per cent or 21,416 tonnes of total world demand, while India represented 13 percent or 6,945 tonnes. Zacpo notes that during the same year, the European Union (EU) share was 5 per cent or 2,739 tonnes.

Zacpo expresses optimism that the new market developments are favourable for the Zanzibar clove industry with her large underutilised essential oil distillery, which under proper liberalised arrangements, could be put under maximum utilisation and significantly contribute to increased production of essential oils for export

Reversing the decline

As it has been pointed earlier, cloves have been a major foreign exchange earner in Zanzibar for the last hundred and fifty years, before the spate of steady decline and stagnation over the last forty years – from an annual average of about 16,000 tonnes in 1970’s to between 1,500 and 3,500 tonnes in 2000’s.

So, to reverse the trend, Zacpo recommends several interventions: Since, the clove market law of 1985, which provides that the ZSTC in the sole legal buyer and exporter of cloves in Zanzibar, has not been repealed, the government leaders should be adequately sensitised to appreciate the importance of amending it.

The mass media should also be engaged to enlighten the general public on the presence of the law; its negative impacts on the clove industry and the importance of amending it to pave the way for private sector participation in clove marketing and development.

Zacpo also recommends formation or identification of a specific institution mandated to guide the deregulation process. To this effect, a stakeholder committee comprising members from the private sector and the government should be created for following up the amendment procedures. He also calls for deliberate steps to facilitate the tabling of a Bill on the issue in the House of Representatives.

On production support services and extension, it recommends promotion of farmers’ education and awareness, including revising curriculum for primary and secondary education to include subjects on cloves history, production, husbandry and management of plantations.

Zacpo also recommends the use mass media such as radios and televisions to raise farmers’ awareness and prompt actions in clove rehabilitation; facilitate the use of effective and targeted extension approaches such as group training in seminars and workshops, demonstration plots and farmer field schools to promote and arouse interests of various stakeholders on clove replanting schemes as well as plantation management.

According to the organisation, a major clove development project that will include research, extension and training on clove development to re-establish and manage clove plantations should be established to promote provision of incentive schemes and packages to farmers who plant new clove seedlings and successfully manage them to fruition stages.

Other recommendations include research and development on market exploitation and promotion. Zacpo says there have been very little efforts, if any, on the clove market promotion and exploitation at regional and international levels.

“This has mainly been caused by lack of commercial dynamism and vitality, a characteristic inherent in the private sector, but lacking in the public sector domain. The growing regional economic integration provides the opportunity for the expanded market for Zanzibar cloves and its by-products,” it states.

To solve the problem, Zacpo recommends that private sector participation in the clove marketing should take a new approach to include exploitation of opportunities in the regional markets such as the East African Common (EAC) and Southern Africa Development Community (SADC).

“Exploit possibilities for value addition on cloves that will yield to products that could be used in regional cosmetics, perfumery and medicinal industries. Establish Cloves and Spice trade fares in Zanzibar to promote cloves and spice products that could also be attraction to tourists and as such linking the clove industry with the flourishing tourism industry,” Zacpo stresses.

Readiness to compete

Regarding the preparedness to compete, Zacpo says: “It’s a well-established fact that the Zanzibar clove industry is facing increasingly strong competition in the world market. Over the years, however, there has been a generally diminished interest on the part of the government in Zanzibar on the clove sector, save for the final product (cloves) that is strongly and even militarily handled through the ZSTC.”

The lack of interest has depleted the sector of the motivational policies, fund allocation for research and development and targeted training of farmers and staff, says the Zacpo. Records from other competitors show a completely reverse trend. They are giving the clove sector due priority in terms of appropriate and responsive sectoral policies, motivating farmers, targeted research and development funding.

“In a nutshell our competitors in the world clove markets are adequately prepared for competition while Zanzibar is not,” states Zacpo in the report, suggesting promotion and facilitation of investments into the clove sector, focusing on trained personnel, funded research, motivated farmers and supportive policies. These tools, Zacpo concludes, should help clove development and preparation for competition by learning from the competitors’ strategies.

Way forward

Zacpo states categorically that the major stumbling block to the implementation of the 2004 study recommendations is the Clove Market Law of 1985 as well as the congruent existence and mandates of ZSTC. “This means that the amendment of this law and disbanding of ZSTC should be taken as a priority advocacy agenda in all subsequent engagements between the government and non-state actors on this subject area”.

Zacpo also stresses on three other important points: A need for the government to honour its commitment to implement recommendations of the 2004 clove study; a detailed cost benefit analysis of the ZSTC to validate the Zacpo findings; and engaging the Zanzibar Business Council in accelerating changes envisaged in the clove industry.

“The quantitative and qualitative evidence provided through this study should complement the courteous effort to deregulate and subsequently liberalise the clove sector for the benefits of the people of Zanzibar,” it closes.

New hope as prices soar

After experiencing steady decline and stagnation over the last four decades, the clove sector in Zanzibar has shown the good signs of coming back with a bang. The comeback is signified by high prices of the commodity in both local and international markets as well as prospects of higher yields.

Essentially, the two factors forecast robust economies of both Unguja and Pemba – the two main Zanzibar islands – and improved farmers’ wellbeing in the near future.

It’s the time with a big difference by all standards, and stakeholders who are involved in growing the crop hopefully will soon stop asking: “where the crop’s long cherished glory lost?” For farmers, who have been grappling with disappointing prices and extremely low production levels over the years, the latest developments suggest the dawning of a new era of hope.

Prices up threefold

Good signs of the clove industry regeneration can be seen at various possible angles. Zanzibar clove prices in international markets have trended high in recent years despite seasonal variations.

According to the Public Ledger, a publication that tracks the prices of over 700 internationally traded commodities, in 2008 the prices reached around USD5,800 per tonne, excluding freight.

In a dramatic move, the Zanzibar government announced in August this year that it has increased the price of cloves to 15,000/- per kilo up from 10,000/- hardly a month after raising it by 100 per cent from 5,000/- per kilo to 10,000/- for Grade I a month earlier.

Zanzibar State Trading Corporation (ZSTC) director Suleiman Jongo, who announced the price change in a statement issued by the Isles State Information Department, says the move is essentially geared to beef up farmers’ income. According to him, a kilo of Grade II clove will now fetch 14,500/- and Grade III 14,000/-.

He attributes the rise in the price of the crop to increased exports in the global market, promising to continue raising the prices often. “The government has increased the price of cloves after the world market increases. It will continue to do so in accordance with changes in the global market,” Jongo says.

Zanzibar Trade, Industry and Marketing minister Nassor Ahmed Mazrui says the new prices were about 80 per cent of the one prevailing in the world market, assuring farmers that they will get more whenever prices in international markets go up.

This is a very big increase because just few years ago, the farmers got only half of the world market price. For instance, in 1998, But farmers say this has not translated into higher prices for them. In the 2008 season, they were paid between USD2.15 and USD2.69 per kilo, which then was around half the selling price in international markets.

Regeneration plan

President Ali Mohamed Shein holds an ambitious comprehensive plan to regenerate clove production in the Spice Islands as the Zanzibar lands commonly referred to for growing clove.

He unveiled the plan during an official visit of Pemba, where he met with farmers in clove fields to launch in style, the clove harvesting season. Apart from promising to review prices of the crop, Dr Shein said the government intends to spend 36bn/- in the purchase of cloves from the farmers.

The president also said his government intends to distribute over 500,000 clove seedlings to the farmers free of charge in a move to bolster production of the cash crop and in turn improve their earnings.

Zanzibar Trade, Industry and Marketing minister Mazrui details the measures announced by his boss when launching the new clove buying season in August in Pemba that the measures are part of the government's ten-year Clove Development Strategy (CDS).

He says the strategy involves reforming the Zanzibar State Trade Corporation (ZSTC), currently the sole buyer, processor and distributor of the crop, to be able to oversee reforms focusing on reviving the crop and boosting production.

According to Mazrui, the government has allocated about 30bn/-, equivalent to USD20 million, for the ambitious plan to bring the clove industry back to life over a span of ten years.

Zanzibar clove branding

President Shein also told the farmers that his government intends to brand Zanzibar cloves in order to differentiate them from that produced in other parts of the world, including Indonesia and Madagascar.

He said he strongly believed that cloves produced in Zanzibar, which was once the world number one producer and exporter of the crop, was far better compared to those grown in other parts of the world.

Clove smuggling

Dr Shein says latest planned measures, including branding of cloves grown in Zanzibar, will help curb smuggling. Clove smuggling is currently high in the Isles where dhow traders transport the crop to Kenya where they sell it at a higher price.

Zanzibar Industry, Trade and Marketing minister Mazrui informs that between 2001 and 2009, Kenya sold 9,510 kilograms of cloves, worth USD16m. East Africa’s biggest economy does not produce cloves.

Zanzibar's first vice-president Maalim Seif Sharif Hamad, who have been directly involved in government-led efforts to curb smuggling of the crop outside the country says, the government of national unity (GNU) currently ruling the Isles, will award up to 20 per cent of the market price of confiscated cloves to anyone with information which may lead to the arrest of clove smugglers.

“Since the government has hiked clove prices there is no justification for clove smuggling, which denies the government revenues and leaves clove farmers in poverty,” argues the vice-president.

Growth prospects

Zanzibar exported 2,000 tonnes of cloves last year and anticipates buying 3,000 tonnes from farmers, this season, says Mazrui, ruling out any possibility of liberalising the Isle’s clove industry.

“Govt: Not yet liberalisation, we need to revive the industry… before thinking of liberalising it”

"We’ll consider [liberalising it) after the government has revived the crop. We need to revive the industry through CDS before thinking of liberalising it,” he stresses, adding: "Let us educate farmers about the risks of privatising the industry."

Cloves production in Zanzibar is projected to grow from an annual average of about 4000 tonnes recorded in 2008 to about 4500 tonnes in 2018, an increase of 12.5 per cent in output if specific plans and strategies will be worked out soon, an expert in the clove industry points out. During the same period, the farmers also expect an increase in revenue from USD10.7 million to about USD11.8 million, a modest increase of about 10 per cent.

SOURCE : http://www.africanews.com