Why Tanzania’s sesame attracts better global price

Posted on September, 16, 2020 at 09:08 am

SESAME season is coming to an end with most of the regions which planted the crop in January this year started harvesting in June up to July and this shows that the crop thrives well in the country.

Though some areas’ seasons begin earlier than that the rest, taking a cue from previous years’ exports, Tanzania export cycle begins in early April and peaks in July and slows in November before reaching the peak in December.

China is still the world’s leading export destination of our sesame seeds, accounting for 35.9 per cent of the world’s sesame imports.

Tanzania’s other top export destinations are Japan and South Korea and in accessing China market, Tanzania is the fourth leading exporting country behind Sudan, Niger and Ethiopia.

International Trade Centre (ITC) global trade statistics show that last year, Tanzania exported 108,861 tonnes of sesame worth $164.5 million.

Among the top exporting countries Tanzania’s sesame attracted a better price as one tonne was sold at $1,511, trailing Niger ($1,491 per tonne) and Sudan ($1,491 tonne), only falling behind Ethiopia ($1,586 per tonne) at Dar es Salaam Port.

This year’s export data is yet to be out, but comparing monthly performance, it shows that there was a slump in the exportation of these oil seeds. For instance, in July 2019, Tanzania exported to China to sesame worth $10.6 million while in the corresponding month this year only $7.7 million of sesame was sold to the same market.

If one thinks of the reason behind this flop, Covid-19 is certainly the major cause. In February 2020 when the world was yet to learn of the severity of novel coronavirus–allowing their economies to operate in the relaxed mode – Tanzania exported $1.8 million of sesame to Japan. This is more than double to what we exported to the same market in the same month last year - $766,000.

Having its operations starting in 2018, TMX is the first commodity exchange in Tanzania that works as an organised marketplace for buyers and sellers to trade.

On sesame, TMX started engaging itself in 2019 in collaboration with Warehouse Receipt Registration Board (WRRB) and Tanzania Cooperative Development Commission (TCDC).

However, due to infrastructural inadequacy, not all sesame producing regions are involved in this new setting, only regions like Manyara, Dodoma, Singida, Katavi, Morogoro, Mtwara and Lindi. This means other regions like Tabora, Mbeya, Ruvuma, Kigoma and Tanga are free to trade in the old fashioned brick and mortar model.

Since its inception, TMX has helped to increase farmers’ selling price by removing middlemen in the sesame supply chain as farmers take their commodities to a union warehouse for auction.

At this juncture, all companies flock to compete and the highest bidder is allowed to take commodities after paying the required amount.

The best word to explain about TMX is that it is a game changer, especially after getting into high value crops like sesame, giving farmers a better price and easing procurement to companies by creating few buying centres for everyone to easily reach.

In addition, it has salvaged traders from crocked middlemen who collected their money promising to aggregate crops on their behalf only to run away with the money.

Reports from companies show that billions of shillings has gone down the drain in that fashion. Through TMX, however, companies are sure of the safety of their money now more than ever.

The platform has helped increase our global sales, and it seems if it were not for coronavirus this year’s export could have been higher than last year’s.

Nonetheless, with all greatness brought about by commodity exchange, the system appears to alienate many local companies.

The majority of indigenous companies have low capital, this gives them a difficult time to compete with multinationals which usually outbid them whenever sesame auction takes place. If there are improvements TMX can do, then it should coordinate well with WRRB and TCDC in improving the quality of crops and create a safety net for small companies to also compete.

This comes from the realisation of the fact that not all sheep in your flock will be able to move at the same pace, and there is no single system that can accommodate all people at the same time.

It is from this context that the US stopped relying on New York Stock Exchange (NYSE) alone to mobilise funds for companies and instead restructured a state-owned NASDAQ to accommodate start – ups like Microsoft, Amazon and Apple – to name, but a few – which eventually grew to becoming the biggest companies in the world.

Open secret behind this move was that NASDAQ charged a small admission fee which accommodates cash trapped companies like Microsoft as opposed to NYSE which remained with their exorbitant prices which only big companies like IBM could afford.

Source: Daily News