Abstract:
Deficit in food supply, edible oil in particular is a common occurrence in Tanzania. The
deficit in edible oil from the domestic supply is mainly due to use of poor production technology,
that include use of unimproved seed coupled with dependent on rain fed agriculture leads to low
productivity. However, the high rates of population growth and industrialization increase demand
for edible oil both for home consumption and industrial use. Despite Tanzania having comparative
advantage in the production of edible oil particularly from sunflower still this opportunity has
not fully exploited. Currently, Tanzania, is revitalizing its edible oil sub-sector in order to reduce
its dependency on imported edible oil. The sunflower sub-sector in Tanzania is deemed as key to
industrialization, thus a potential contributor to economic growth and development, especially
for smallholder farmers and small-to medium-size processors. This study aims at discerning the
response of sunflower edible oil subsector to fulfill the edible oil demand in Tanzania. The study
uses annual time series data from 1995 to 2019. A partial adjustment model is used to determine
the relationship between edible oil demand, and its determinants, that are sunflower and palm oil
prices, and per capita income. Findings from this study indicate that the demand for edible oil is
inelastic for increase in palm oil price but elastic for the increase in domestic sunflower edible oil
prices. This implies, as the price of sunflower edible oil increases per capita edible oil decreases.
In contrast, increase in imported palm oil price per capita oil demand increases, implying the price
for the imported palm oil are extremely low compared to the domestically produced sunflower
edible oil. The current speed of adjustment in production of sunflower edible oil is low per year
that indicate that it will take many years for Tanzania to be self-sufficient. This situation calls for
the government and development agencies to intervene and improve the available technologies
thus raise farmers productivity in terms of sunflower seed production as well as efficiency in
processing. To improve the productivity of the agro processors, the Tanzania Government will
need to reconsider the tax rates imposed on imported technologies and other materials required
for processors, making sure they do not actually harm the country’s goal of self-sufficiency in
production of edible oils.
