Competition in Tanzanian woodfuel markets

Competition in Tanzanian woodfuel markets

Jill Boberg

Most people in urban Tanzania, as in countries throughout Africa and the world, depend on woodfuels as their subsistence energy source. Despite this, very little is known about the system that supplies woodfuel to the urban sector. Con- sequently, policy makers cannot know whether improvements are needed in the system or if it is better left as it is. This study, based on survey data and other information gathered in Tanzania in 1990, finds the woodfuel delivery system to be the only fuel delivery system in the country with consistent uninterrupted supplies. The competitiveness and efficiency of the woodfuel supply system are evaluated, concluding that although improvements in some areas, most notably transport, are needed, the system works in a largely efficient and competitive atmosphere in the three cities studied. Recommendations for improvements that would leave the system in its present, relatively unregulated state are presented, including fee adjustments that would involve local participation in the setting, collecting and dis- bursement of fees, a reorganization of the fuel transport system, and the creation of additional forest reserves and catchment areas.

Keywords: Competition; Woodfuel; Tanzania

Tanzania depends heavily upon biomass energy to fuel its subsistence energy needs. Even in urban households, which are more likely to use 'modern' fuels than their rural counterparts, 84% use woodfuel. In industry, 37% of the energy consumed is from wood sources.1 The 'informal' sector in Tanza- nia uses woodfuel almost exclusively as its energy source .2

Despite the importance of woodfuel to Tanzania's energy economy, very little is known about the

The author is at G-9 Meyerson Hall, 127 S. 34th St, Philadelphia, PA 19104--6311, USA.

system that supplies woodfuel to the urban sector. The overall competitiveness of the system, and its ability to transfer messages about the social value of the fuel by way of market prices, is important to consumers and decision makers. Without such information, policy makers cannot make informed policy decisions. Any existing structural defects in the system will not be repaired, and an effective system can be hampered by misguided policy measures aimed at improving it. For example, the costs and margins of woodfuel traders are not well known, and this lack of knowledge can feed the common perception of such traders as monopolistic price gougers. If this perception is true, it is necessary to improve on the system that allows this to happen, while if it is false, any action to 'correct' this 'problem' will distort the market. Other, perhaps less obvious inefficiencies in the system can also reduce its effectiveness, and identification of such problems can give guidance for possible policy responses.

This paper presents information about Tanzanian urban woodfuel marketing networks, describes the system in detail, including the participants and supply sources, suggests possible policy measures to improve the functioning of the system, and lends support to decisions about whether to encourage or phase out the present dependence on woodfuels in the country.

The study finds that Tanzanian cities, especially Dares Salaam, have a large and apparently competitive group of sellers, responsive to demand and supply changes. Wholesaling in Mbeya is found to be dominated by a few large sellers, supported by numerous very small-scale retailers, indicating that the wholesale market there could be imperfectly competitive, although price indications do not support this. Another finding is that distances travelled by the woodfuel from the kiln site to the end user are less than those reported by studies in other African countries, perhaps because of the poor transport infrastructure, suggesting the possibility of supply expansion. Besides poor transport efficiency, the

474 0301-4215/93/050474-17 ~ 1993 Butterworth-Heinemann Ltd

efficiency of the system as a whole is in question, and changes in fee collection and fund allocation to local communities are suggestions for improvement in this area.

Previous studies

A few previous studies have looked at fuelwood marketing systems in Tanzania and other African countries. In a case study of Tanzanian cities based on the results of a 1987 World Bank survey, Gerald Leach and Robin Mearns looked at Dares Salaam and three other cities (Mwanza, Arusha and Dodo- ma) and delineated the pricing structure, intercity seasonal variations and market characteristics. 3 At the time of its implementation, the World Bank study was the most complete and, particularly in the area of market structure and trader margins and costs, the most detailed to date. However, it suf- fered from time constraints that kept its sample small and somewhat limited in scope. From this study, Leach and Mearns conclude that charcoal markets in the city are highly competitive, and that prices positively reflect economies of scale and vertical integration. They judge that the system is moving towards greater organization and integration, but that inefficiencies exist, particularly in the transport of the fuel, and acknowledge the need for further investigation into the details of the trading networks. 4

Another study of Dares Salaam charcoal production and marketing system was carried out by the Tanzania Industrial Studies and Consulting Orga- nization in 1986. It identified the ad hoc organization of the producers and sellers of charcoal; the absence of large wholesale depots to ease the distribution of the fuel within the city; and the high cost of the transport and production of charcoal as problems in the charcoal distribution system. 5 The suggested remedy for these problems was the formation of fully integrated village charcoal production and distribution cooperatives. The study made implicit assumptions about the non-competitive nature of the woodfuel trade, and the resulting upward pressure on prices, and its recommendations reflect those assumptions. Again, a small sample hindered this exploratory study.

Several other studies address the question of competitiveness in the woodfuel markets in Africa. A study of some Sahelian charcoal marketing systems describes the physical structure of the system of fuel provision. 6 It emphasizes transport inefficiencies, as well as the decreasing margins of charcoal sellers, and increasing margins of producers over


time. The study concludes that the data contradict the 'myth' that fuelwood traders generate excessive incomes, largely because of high transport prices. It also notes that retail prices for woodfuel in some cities are rising more slowly than overall consumer prices. All of these effects are attributed to the inability of traders to increase retail prices enough to completely compensate for increased transport charges as the cities' catchment areas expand and the distances travelled by fuel grow.

Outside Africa, one study in particular has ex- amined thoroughly the workings of the woodfuel markets in urban areas of India. 7 A reasonably efficient and competitive market was identified at the retail level there, although there was concern at the wholesale level that lack of transparency in the system might be hiding barriers to entry or other inefficiencies. The authors were also concerned with the efficiency of the transport system and the amounts of imported fuel used in transporting fuelwood products to urban areas. They recommended green belt plantations around the urban areas, and further investigation into improved charcoal kilns to increase the efficiency of that transformation.

The Tanzanian case study, while claiming competitiveness within the system, could not investigate it and gave no details about the reasons for this conclusion. 8 Another study was very complete, identifying and thoroughly investigating the imperfectly competitive atmosphere among wholesalers in Senegal. This situation was promulgated by the government when it installed a system of limited permits for harvesting wood and producing charcoal. 9 Although these regulations, which also include the requirement that all charcoal merchants form cooperatives which fix the retail price of charcoal, were meant to maintain what is perceived to be an indadequate supply of woodfuel, they have instead succeeded in drawing down supplies, and concentrating economic power in the hands of in- fluential merchants.

The situation in Senegal is representative of the situation generally assumed in African woodfuel markets by analysts of fuelwood issues ie a highly competitive small-scale market supplied by an imperfectly competitive wholesale market, m It is not known, however, if this assumption holds true in most countries or even in individual cities.

To address this lack of information, a household survey to collect information on energy use in the urban areas of Tanzania was conducted in July and August 1990 as part of the Tanzania Urban Energy Project. Surveys were conducted in three urban areas, selected to represent a primate city (Dares

ENERGY POLICY May 1993 475


E n d u s e r s

T Wholesalers

P r o d u c e r s

--q Trans0ortors I

/ Figure 1. Woodfuel supply system.

Salaam, the national capital), a secondary city (Mbeya, a regional capital) and a tertiary city (Shinyanga, a small regional capital and trading town). A complementary informal survey was conducted in the same cities four months later. A subsample of household and informal sector woodfuel users was then selected and interviewed, leading to the suppliers of woodfuel to these end users. Interviewing these sellers led to wholesalers, and so on down the supply chain, until the trail of the fuel was followed back to the charcoal producer or woodcutter.

The subsequent section of the paper details the unique methodology used to carry out this survey. This is followed by a description of participants in the fuelwood supply system. Next, a section on end users and traders is followed by a discussion of producers, supply areas, and distances travelled by the fuel. The final two sections discuss price issues and the policy ramifications of the study.

Methodology The data used in subsequent sections were generated from a series of surveys examining the structure, functioning and magnitude of the woodfuels marketing network. All surveys were undertaken in autumn 1990. A slightly different approach was taken in carrying out this survey from the standard practice in surveys of this type. Instead of surveying random samples of participants at each stage of the supply system (eg end users, retailer, wholesaler, producer), a backwards linkage approach was followed, whereby the path of the fuel was followed back from the end user to the producer. At each stage, the participant was interviewed, providing information about his or her business and personal characteristics, and specifically identifying his or her suppliers.

A subsample of end users was chosen from the sample of woodfuel users surveyed in the project's

household survey carried out in the summer of 1990. In Dar es Salaam and Mbeya a sample of two users of charcoal and two of firewood (a 10% subsample) from each of the enumeration areas of the original survey was chosen randomly. 1~ In Shinyanga a sample of one user of each of the fuels (a 7% subsample) was chosen. At times, there were fewer than one or two end users of a fuel in a particular enumeration area.

The end users were interviewed briefly to determine their buying habits, producing a list of one or more suppliers for each end user and the proportion of fuel bought from each supplier. Then, using the proportions as weights, a supplier was randomly chosen. This supplier was interviewed in detail, and from his or her responses, as above, the next node on the fuel path was identified. This selection and interview process continued until a charcoal producer or woodcutter was identified and interviewed, thus completing the backtracking of the path of the fuel purchased by the original end user, and defining a set of spatially defined decision making nodes stretching from wood source to end use. Figure 1 shows a simplified picture of the supply path. When specific suppliers could not be identified (for example, when an end user indicated that she brought from any of several sellers at a particular location) the location was recorded and a seller at that location was chosen at random.

During the execution of the survey, all the supply areas for each of the three cities were visited and producers were located and interviewed. In Dares Salaam, the chosen path from each household end user was followed to a producer who was interviewed, but in Mbeya and Shinyanga time and budget contraints allowed only half to two-thirds of the paths to be followed to their end. None the less, enough information was gathered to obtain a good picture of producers and their activities.

This backwards linkage methodology has several advantages vis-a-vis the standard methodology. In the standard methodology, a sample of participants, such as wholesalers, are chosen from what is usually an unknown population. When official licence re- cords are used, a large part of the population may be left out of the pool that is being sampled, since in most developing countries many participants in the trading sector are unlicensed. Similarly, simply searching out all traders in a city is a near impossible task, and there is always great uncertainty as to the success of the search. Additionally, statistically minor types of locations of traders or fuel are likely to be either undiscovered or oversampled.

In the backwards linkage methodology, it is

476 ENERGY POLICY May 1993


Table 1. Household woodfuel use. a

Population Charcoal Firewood (1988) Households (% using) (% using)

D a r e s Salaam (n = 1600) 1 241 000 314.3 74.6 16.8 Mbeya (n = 620) 132 000 33.7 78.9 58.5 Shinyanga (n = 450) 47 000 20.3 85.1 13.8 Average of all cities 77.4 26.0

aCharcoal and firewood figures will not add to 100% because many households use both fuels.

Source: R. Hosier and W. Kipondya, in this issue of Energy Policy.

reasonably certain that, given accurate reporting by respondents, all corners of the population have a proportionately equal chance of being sampled. The problem, of course, lies in ensuring accurate responses by interviewees. Careful training of enumerators is required, to ensure that all possible supply options, including those used infrequently, are disclosed by the participant being interviewed. Another benefit of the methodology is that distances between all nodes of the system are easily measured, and summed over the entire path of the fuel, producing individual aggregate system distances. In the standard methodology, internodal distances are difficult to determine, and even when measured are average system-wide values.

T h e woodfue l supp ly sys t em

The supply system for woodfuels in Tanzania is relatively straightforward (see Figure 1). The average path linking a woodfuel end user to the harvester of the tree from which the fuel originated involves three or four participants (including the end user), and in the case of firewood can be as short as two nodes. A typical path consists of a harvester/ charcoal maker, a trader and an end user. The system is similar to those identified in Haiti, Senegal and other Sahelian countries with variations particular to the circumstances of each country. 12

Transport is, for the most part, hired by the trader, although transporters act as wholesalers or even retailers in slightly over 10% of the cases. Something over 20% of end users in Dares Salaam are served by a path that includes a second middle- man, usually a small-scale retailer operating in a market or selling from the home. In Mbeya the number is closer to 40%, and in Shinyanga about 10%. These percentages reflect the organizational differences, in the woodfuel trade of each town; large wholesalers in Mbeya, for example, provide nearly 20% of charcoal users with their fuel either directly or through retailers.

Demand

The three cities studied differ in their woodfuel consumption patterns. Table 1 shows the percentages of households using woodfuel in each urban area. The most telling difference among the three urban areas is in the firewood column, where Mbeya is shown to have three or four times more households using firewood than other cities. Shinyanga has more households using charcoal than other cities, but the difference is not as acute as in the firewood case. Dar es Salaam has a smaller percentage of users of woodfuel overall, though a slightly higher percentage of firewood users than Shinyanga.

The reasons for these differences are at least superficially clear. Mbeya, as mentioned before, has a series of forest plantations in and around the city. Planted by the British in the 1950s, they range from a eucalyptus spp. pole plantation (now used almost exclusively for firewood) in the city, to a timber plantation (cypress and pines) a few kilometres out of town. All contribute to firewood supply in the town. Additional supply is garnered from trees grown by individuals (also eucalyptus and pine) on their farms near town or, in some cases, at their home, and from leavings from carpenters and industry. Only about 8% of the firewood (by weight) which is sold is brought into town from the forest.

Shinyanga, in contrast, has very little in the way of woodfuel resources in the immediate area. The area surrounding the city has been deforested for at least 50 years, according to forest officers there, and there are no local plantations that can be harvested for firewood, though there is a small plantation of local acacia spp. under forest department auspices not far away that is being reserved and, if possible, added to. Consequently, essentially all woodfuel is imported into Shinyanga from outside. Although most of the firewood that is used by households in the town is collected or cut by the user, usually in small pieces from shrubs on their farms, the amount is relatively small. Most of the firewood sold in Shiny-



Table 2. Fuel bought and sold yearly at each stage of the supply system (kg x 103).

Dares Salaam Mbeya Shinyanga Charcoal Firewood Charcoal Firewood Charcoal Firewood

End users (yearly) Consumpt ion per household 1.2 1.7 0.97 1.8 0.96 0.51 Household size (persons) 4.3 4.3 4.5 4.5 4.9 4.9 Bought per capita 0.28 0.40 0.22 0.40 0.20 0.10 Total household purchases 261 000 125 000 16 300 46 300 4 330 2 330

Traders (yearly) Bought per trader 123 169 80.6 25.6 147 159 Sold to households/ t rader 85.1 119 69.8 23.1 110 167

Secondary traders Sold per retailer 67.0 - 28.1 - 112 - Sold per wholesaler/retailer 143 - 540 - 144 - % selling some fuel to retailers 55.3 34.9 19.4 8.3 43.9 44.4 % buying some fuel f rom wholesaler 30.7 9.3 77.3 8.1 24.4 a

Producers/harvesters (yearly) Sold per purchaser 60.0 169 42.1 23.9 36.3 13.9

aToo few firewood users were encountered to determine this value.

anga goes to informal sector industries (especially beer brewing).

In D a r e s Salaam, not surprisingly, somewhat fewer households use woodfuel. In particular, the use of firewood is limited, and 40% of that used is collected or cut by users from trees at their home or farm or from discarded packing cases and other industrial leavings. Charcoal use in D a r e s Salaam is also slightly lower than in the other municipalities surveyed. Lower overall woodfuel use there is the result of greater access to and use of 'modern ' fuels such as electricity, kerosene and LPG.

The woodfuel supply system Table 2 describes the amount of fuel bought and sold at each stage of the supply path. Total amounts sold to household end users are calculated from household survey figures, obtained by weighing fuel on two consecutive days to determine the amount consumed. The average quantity of fuel bought by households varies by city, with D a r e s Salaam residents consuming more charcoal per capita and per household than those in the other cities. Shinyanga households consume less of each fuel than those in D a r e s Salaam and Mbeya, perhaps because of the scarcity of fuel in the area. There is some error in these numbers due to seasonal differences in fuel choice and, to a lesser extent, in usage rates. Fire- wood using households tend to switch to charcoal during the wet season, and the values shown reflect dry season levels of use only.

In both the firewood and charcoal markets, traders in Shinyanga buy and sell more per year than their urban counterparts elsewhere, but in smaller bunches. Therefore Shinyanga traders entertain

more customers per trader. Instead of the numerous very small-scale traders in markets and homes that are a frequent sight in D a re s Salaam and Mbeya (for example, one residential area in D a r e s Salaam of about 100 households contained nearly 10 small- scale traders), the norm in Shinyanga is a relatively large trader located by the railway station in the centre of town or in a cleared area in the residential sections.

Conversely, Mbeya is notable for its low-volume retailers. This is particularly the case for firewood traders. As mentioned in the previous section, most firewood is sold by female traders who collect or cut the wood themselves and sell it in the local markets. There are many participants, and many only sell three or four small bundles (one headload) in a day. This is in contrast with Shinyanga and with Dar es Salaam, where the charcoal retailers are often very small scale, but firewood traders are more infre- quent and larger scale, especially when sales to the informal sector are included. In all cases but Shiny- anga, numerous small-scale traders are prevalent for the fuel preferred by households, and fewer large- scale traders are in evidence for the less preferred fuel.

It is interesting to note the prevalence and influ- e n c e o f s e c o n d a r y t r a d e r s ( w h o l e s a l e r s or wholesaler/retailers) in each urban area. In Dar es Salaam, about half of the charcoal traders also (or, in rare cases, exclusively) sell to retailers, and about 30% of the traders buy some or all of their fuel from other wholesalers. Average sales for a retailer who does not do any wholesale business are about half that of a wholesaler, which takes into account the smaller units in which many retailers sell. In Shiny-


anga the wholesalers only sell an average of about 22% more than retailers, emphasizing the point that traders are relatively large, in general. The average charcoal trader in Shinyanga has about 40 bags of charcoal in stock, as compared to 17 in Mbeya and 32 in D a r e s Salaam.

In Mbeya there is a huge disparity between the average sales of retailers and wholesalers. This is due primarily to one large wholesaler, a 'coopera- tive' that accounts for more than a quarter of the charcoal sold in the city. This organization is a loose consortium of several businessmen who run a completely integrated charcoal business, from production to sales. The members of the group are each responsible for their own part of the business, which determines their profits, but they cooperate by shar- ing equipment, selling space, official licences and fees, and by helping each other out when needed. The members of the group organize producers in the rural areas, provide them with tools and food (later deducted from their earnings), a licence to work under, sacks, and guaranteed purchase (they also require a minimum output). The producers are paid approximately the farm gate market rate for their production. The group members arrange for transport and go with the transporter to pick up and pay for the charcoal. They then hire a trader for the joint depot centrally located in Mbeya, and share supervi- sion of sales.

When this large player and a few other medium- sized wholesalers are factored out, average traders in Mbeya are shown to be quite small, only a quarter the size of Shinyanga traders and 40% the size of traders in D a r e s Salaam. Since over three-quarters of retailers buy from wholesalers, and only 17% of traders sell to retailers, clearly the charcoal market in Mbeya is dominated by several wholesalers who supply to a large number of small retailers (42% of retailers sell from their homes). In fact, the 'coop- erative' group sells 25% of the charcoal in the city, perhaps enough for the system to qualify as oligopolistic. This implies a possible competitive constraint on the market there.

In all three cities, a small number of firewood wholesalers seem to sell to a small number of retailers; but most traders obtain their own fuel, in or out of town, and sell to end users and possibly to a smaller retailer. The properties of firewood allow people to be their own suppliers, on a small scale.

As independent participants in the supply system, transporters appear to be more active and larger scale in D a r e s Salaam than in either of the other cities.

Overall, producers are shown to be larger scale in


D a r e s Salaam than in the other cities, especially firewood harvesters. Again, this reflects the prevalence among users and traders in Mbeya and Shiny- anga of those who collect or cut their own firewood to sell or use; it also reflects the existence of the much larger market in Dar es Salaam. This is also consistent with results showing informal sector traders overall to be larger scale in D a r e s Salaam. 13

System integration A well integrated woodfuel supply system is char- acterized by participants who own and control the woodfuel from the time it is harvested to when it is sold to the end user. They also own the capital equipment, in particular the means of transport, necessary to produce and sell the woodfuel. The survey conducted here shows the woodfuel supply system in Tanzania as a whole to be only moderately integrated. Full integration includes traders who are involved in the part of the woodfuel from production to sale to the end user, as a few traders in Mbeya and D a r e s Salaam in fact are. The extremely well integrated woodfuel supply network in the Sudan is such a system. This system realizes efficiencies such as coordination of transport (so that trucks carrying fuelwood into the cities have carried goods out of the city on the first leg of their journey, instead of going out empty, as in Tanzania) as well as facilities for storing in-season purchases for off-season sales, and credit facilities to carry some labourers and traders through the off season. Despite the relatively few traders controlling the market, the study 'found little evidence of collusion'. 14

Vertical integration of the market can eliminate margins at each stage of the system, and allow unprofitable sections of the network to be offset by more profitable ones for integrated traders, improving the overall system efficiency. Vertical integration in firms is generally a response to imperfections in the market, which make it difficult and costly to subcontract with others in the supply system. 15 In the case of the woodfuel supply system, vertical integration may be a response to unpredictable supply, particularly in the rainy season when farmers are busy in their fields, as well as a reaction to transport constraints.

On the negative side, total integration can lead to oligopoly or monopoly, depending on the size of the market being served, and it implies a large capital investment. This can serve as a barrier to entry, especially since capital markets are rare, and finance is similarly difficult to access. Reduced competition can offset any gains in consumer welfare effected by price reductions from efficiency enhancements



Table 3. Distances travelled by fuels.

Total distance travelled (lun) Mean

Charcoal 120.6 Dar es Salaam 102.4 Mbeya 116.0 Shinyanga 172.6

Firewood 54.8 Dares Salaam 69.2 Mbeya 20.0 Shinyanga 105.0

Trader to end Harvest area to main user (kin) road (kin) Mean s n Mean s n

0.57 0.76 194 6.61 7.96 89 0.35 0.52 90 5.52 4.17 46 0.56 0.74 62 7.04 12.1 19 1.03 1.0 42 8.35 9.4 24 1.28 4.0 86 8.30 7.94 40 1.27 5.7 41 9.93 8.62 28 0.81 0.88 37 2.99 2.29 10 3.44 2.0 8 12.0 4.24 2

unless there is an assurance against collusion in the oligopoly scenarios. Fully integrated systems can also curtail small-scale entrepreneurial endeavour, in particular among the farmers who produce charcoal and harvest firewood in the non-agricultural season, thus eliminating an important source of rural income in some areas. If the integrated suppliers use full-time charcoal producers, most of whom were not members of the local community, the money generated by the woodfuel trade would not benefit the rural population. Taxes imposed and collected by local authorities, and local control over cutting rights and other land-use issues would mitigate this situation somewhat. In addition, local farmers could potentially band together and market their own product.

P r o d u c e r s , s u p p l y a r e a s a n d d i s t a n c e s

t r a v e l l e d

Table 3 gives the average distance from a producer at his harvest point to an end user in the city. Charcoal travels over twice as far as firewood on the average, and fuels going to Shinyanga travel one and a half times as far as they do to other cities. Although the results are varied, it is interesting to note that in all cases the distance from the harvest point to the road is 5% of the total distance travelled for charcoal and 15% for firewood. The road quality of these access roads is universally poor, and perhaps there is a tolerance limit for transporters or traders.

Another interesting aspect of Table 3 is that the distances between trader and end user reported bear out the observations of size and frequency of traders in the different cities. End users have the shortest trip to charcoal traders in D a r e s Salaam, followed by those in Mbeya. In Shinyanga, the distance travelled is greater, since there are fewer sellers. Due to the number of traders, firewood sellers in Mbeya are situated in proximity to their patrons, less

than a kilometre away on average, and are slightly fewer and further between in D a r e s Salaam (over one kilometre distance). Shinyanga again has the greatest distance between firewood users and sellers, at almost three and a half kilometres, primarily because few households buy firewood for everyday use. In general, charcoal is easier to find than firewood, reflecting its greater demand.

The 1986 survey reported woodfuel transport distances to D a r e s Salaam ranging from 70 to 200 km, with an average of 100 to 150 km. 16 These accord well with the average of 102 km for charcoal and 69 km for firewood reported by the 1990 study, although the 1986 results are somewhat higher on average.

Transport

Transport of firewood is primarily by headload in Shinyanga and Mbeya, since many traders collect and cut their own fuel in these cities. Fuel is brought in from distant areas by lorry in Dar es Salaam and Mbeya, and by lorry and train in Shinyanga.

Most of the firewood supply areas for Shinyanga are on the train line, allowing the fuel to be transported longer distances. These distances, in an area widely considered to be deforested, are less than those reported by the 1986 World Bank survey for firewood going to the deforested areas of Mwanza and Arusha (ie 200 to 300 km by road, and for charcoal up to 500 km by rail).17 They are also less than the up to 500 km travelled by charcoal to Dakar, Senegal, and comparable to the 170 km covered by firewood going to Bamako, Mali. 18 These comparisons suggest that there is the possibility of expansion of the service area for woodfuel going to Shinyanga and, perhaps, the other urban areas, particularly given access to rail transport and improved roads. The desirability of this expansion, and whether to encourage, discourage or ignore it from a policy standpoint, is addressed in a subsequent section.


Charcoal is moved almost exclusively by lorry. In Dares Salaam and Shinyanga charcoal is also transported by train, but the survey did not pick up any users of that mode of transport, perhaps because it is generally done illegally by loading and unloading outside official stations and paying only the necessary rail workers, and so the magnitude of its use is unknown. The numbers for Mbeya are mis- leading because they include fuel delivered from a local wholesaler. The pushcart, wheelbarrow and headload percentages, for all cities, reflect intracity transport.

Transporters' lorries are generally purchased secondhand 10 years or more ago, and are at least 20 years old. The lorries are usually 7 or 10 ton, and carry 150 to 200 bags of charcoal or approximately 200 logs of firewood per trip. A few transporters said that they carried woodfuel because their vehicle was unsuited to any other cargo, because of size or condition. Certainly, the 'woodfuel fleet' is a rusty one, and from all appearances held together by wire and luck. However, although the more dependable and higher value vehicles move other sorts of cargo, there does not seem in the final analysis to be any problem in supplying the traders via lorry. In one remote supply area visited twice, several months apart, by the survey team, the same vehicle was encountered both times broken down along the road. In both cases, however, the lorry was even- tually repaired and completed its delivery.

Over 70% of respondents always go out to collect woodfuel with an empty vehicle, and another 15% sometimes go out empty. About a quarter sometimes carry other cargo along with the woodfuel, generally a few sacks of agricultural produce from the area from which they collect the fuel. This ties in again with the condition of the vehicles, and their position in the informal sector of the economy. Since many of the products transported out to the rural areas are imported or locally made manufactured goods, most of the goods are transported by formal sector vehicles, usually part of fleets owned by businessmen. Though some fuel is transported into the city by these lorries on their return trip, especially from roadside traders, the bulk of the fuel is carried by vehicles dedicated to woodfuel transport.

This implies a potential efficiency improvement in the transport of woodfuels by organizing the system to allow the transport of woodfuels on a backhaul basis, with cargo being carried on both the outgoing and incoming trips. This would cut the transport costs of woodfuei to zero (or to half for both the woodfuel and the outgoing cargo) and also be a more efficient use of imported transport fuels.


Woodfuel traders and transporters in Sudan have achieved this sort of organizational sophistication, and it is thought that this is what has lowered woodfuel prices in Khartoum and in Ouagadougou, Burkina Faso. 19 The implications of this on the scarcity signalling function of the price of the fuel, as well as on the inevitable broadening of the supply area due to reduced transport costs, are important issues to consider when making policy evaluations.

In the Tanzanian context these improvements would have a trade off. The transport of woodfuel provides a use for many vehicles that might otherwise, because of their age and condition, be unus- able for good transport. Newer trucks are not forced to travel over the poor roads that characterize most kiln sites, and do not deteriorate as quickly. In a country that is undersupplied with commercial vehicles, these considerations must be weighed against the benefits of a more efficient transport regimen for woodfuel. The savings in imported petroleum en- gendered by backhauling woodfuel must be compared to the savings in imported vehicles and vehicle spares by using existing vehicles. With the newly opened foreign exchange markets in the country, however, it is possible that new vehicles would be purchased by privately held foreign currency, as opposed to government reserves that are used to purchase petroleum. It is quite possible that in a liberalized financial climate, there will be an increase in new commercial vehicle and vehicle spares which will facilitate the efficiency improvements detailed above.

Fuel prices

The next issue to consider in the woodfuel trade is the price of the fuel. Table 4 shows the prices for each of the levels of the supply system in each of the cities. There are slight variations between prices reported by different participants at the same level (eg end-user purchase price and trader selling price), but these are due to inexact matching of buyers and sellers and averaging errors and are for the most part insignificant. Only in the case of firewood producer price and trader purchase price is there a large gap. This is probably a result of inadequate knowledge of the weights of fuel involved, as the trader often splits the wood into smaller pieces before selling, and the recording of the various sizes involved was incomplete.

Intercity prices and variations

However, there is much that can be inferred from the information that exists. At the producer level,


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Figure 2. Ex kiln price of charcoal with distance from city and road condition. aHigher factor numbers indicate longer distances and/or worse road conditions.

charcoal prices are lowest in Shinyanga, but for the end user the purchase price is the highest. This reflects higher transport costs and distances in the region. Figure 2 illustrates the influence of transport distances and road condition for the three cities. As expected, there is a discernible ex kiln price de- crease as distance increases and road condition worsens, and the effect is slightly less in the dry season. Since transport prices are such a large percentage of the final price of the fuel, distance from the market should negatively influence the ex kiln price of the fuel. In Mbeya, although the producer prices are the highest of the three cities, the end-user purchase price is the lowest, reflecting the lower transport charges and taxes and fees paid in the region.


Firewood prices are the highest in Mbeya, even though this is the one town of the three that appears to have plentiful firewood supplies. Many households in Mbeya use the fuel, but it is more expensive than charcoal on a calorific basis. There are no equipment costs, which might encourage the lowest income users to remain with firewood. The amount sold to each customer is small, which implies both that the levels are appropriate for low-income customers, and that many customers supplement their purchases with gathered fuel.

Bulk prices

Another point of interest is the difference between per kilogram prices of large (bag) and small (kopo) purchases of charcoal. As shown in Table 4 the differential ranges from 25% to 50%, and has become greater in the past year. From Table 5 it is seen that the per kilogram price of kopo has risen faster than the per kilogram bag price. The latter is the price that most consumers face. The price is higher because of the value added by breaking the bag into smaller measures, the 15-20% of product lost in the fines, and the small volume of sales for many retailers.

Seasonal prices

Table 5 shows the seasonal price changes in each town. These figures are similar to the 15-30% seasonal rise in retail prices reported for Kenya. 2° Since roads are significantly worse in the wet season, prices are expected to rise due to transport cost rises. Additionally, the producers, primarily farmers, are busy at their agricultural activities in the wet season, and so have less time to produce. These expectations

Table 5. Woodfuel price change by season 1989-90 (%).

D a r e s Salaam Nominal

Charcoal Seasonal change (dry to wet)

Producer price (bag) 45 End-user price (bag) 27 End-user price (kopo) 43

Annual change (1989 to 1990) Producer price (bag) 23 End-user price (bag) 15 End-user price (kopo) 22

Firewood Seasonal change (dry to wet)

Producer price 89 End-user price 46

Annual change (1989 to 1990) Producer price 39 End-user price 33

Real Mbeya Shinyanga Nominal Real Nominal

32 21 18 34 39 40

Real

+4 20 +1 21 +2 - 4 9 -10 31 +12 +3 26 +7 39 +20

26 38 32 96

+20 23 +4 72 +53 +14 21 +2 02 +83

aThe change in the consumer price index was + 19%.



50

qO

30

20

10

C i t y

- " ' Dar es Salaam ---F--.Mbeya - -~- Sh inyanga 16 . ~ . t l ; .... +

, .~:

i i /

" , , , , I , , , , I , , , , I , , , ,1 , , , 1 , , , ,1 , , , ,I, ,

1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990

Figure 3. Retail charcoal prices, 1975-90 (current Tsh).

Source: Tanzania Bureau of Statistics.

are reflected in the data. In D a r e s Salaam and Mbeya the rise in charcoal producer prices is not reflected completely in end-user prices when the fuel is bought in bulk, but is complementary when sold in small quantities. In Shinyanga the opposite occurs, with end-user purchase prices more than reflecting the rises in producer prices during the rainy season. Since there are more full-time charcoal producers in Mbeya and Shinyanga, this might help to explain the lower seasonal differential in producer prices as compared to Dar es Salaam. The relatively larger jump between producer and end-user prices in Shinyanga is caused by the greater transport distances in that region, and the relatively short distances and better roads in the Dar es Salaam area are reflected in the small difference between producer and end-user price changes.

The seasonal price changes for firewood show similar trends. In Dar es Salaam, the end-user prices do not come close to reflecting the producer price increases. A common complaint by Dares Salaam firewood traders was that 'no one' uses firewood in the wet season, because the fuel is wet and therefore difficult to use. This probably explains the relatively low end-user purchase prices there in the rainy season. In Mbeya and particularly Shinyanga, the effect is the opposite. There, the seasonal fuel switching does not take place to the same extent, and so the scarcity of firewood caused by the de- crease in producer activity results in a price rise. In Shinyanga this is exacerbated by the fact that most

buyers of firewood are informal sector businesses for whom there is no substitute fuel.

Historical prices Price data for the past 15 years are contained in Figures 3 and 4. Figure 3 shows the increases in nominal charcoal price since 1975 in the three cities under study, and Figure 4 depicts the trend of the real charcoal price in each town. In Figure 3 many price peaks are evident - some of these reflect variations in data quality and may be discounted, and others show seasonal price variation. Others, like the rise in prices in 1982, display countrywide economic variations, and were reversed soon after. As Figure 4 shows, though, there has been no definite rise in real prices in Dar es Salaam, but there has been a discernible increase in both Mbeya and Shinyanga, with the growth in Shinyanga being slightly greater. 21 The potential reasons for these differences are myriad. The first is the possibility that the increasing prices in Mbeya and Shinyanga reflect increasing scarcity in those areas. Certainly, there is a dearth of biomass near to Shinyanga, and the distance charcoal travels to get to town reflects its relative scarcity. An additional constraint on charcoal supplies for Shinyanga is that it shares part of its supply area with Mwanza, a city of nearly 200 000 people where there are also inklings of scarcity, and Tabora, a city with a population of slightly under 100 000 that is surrounded by forests which supply all three towns. In Mbeya the distances


t n F--


4- Ci ty

4- D a r e s Salaam ---4--. Mbeya - -~ - Sh inyanga

4-+ ~ ~¢ •

4-

. . . . .~.~.~.~..~"'.=~"~: ................. 4- , + • . . . + . . . . . . . . . . . . . . + +

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• . . . . . . + 4- 4-+ " . . . •

1975 1990

Figure 4. Real charcoal prices, 1975-90 (Tsh 1977).

Source: Tanzania Bureau of Statistics.

travelled by the fuel are said to be increasing as well. However , in no town are the distances as great as those reported in some other Tanzanian towns and other African cities mentioned earlier. 22

The population in both areas is increasing. Although it is possible that supply is not keeping up with the demand, causing price rises, in one supply area for Shinyanga some full-time producers com- plained that they were having trouble selling their fuel. Some are even switching back to agriculture due to low producer prices and the hard work involved in charcoal making. Conversely, in D a r e s Salaam producers said they never had any trouble selling their fuel.

Competition Another factor influencing real price increases is the degree of competit ion in the woodfuel market in the respective cities. In Dar es Salaam the market is extremely competitive, with many traders, wholesalers and producers. The largest constraint in the D a r e s Salaam area is transport, since there are more alternative uses for vehicles there than in the other cities. On the other hand, the market in Mbeya is dominated by a few big integrated wholesalers/ transporters/retailers. Most producers are employed by these wholesalers, and others in the region are generally working under someone's licence in exchange for payment of fees and taxes and provision of money, tools and, at times, food. This situation stands in contrast to the individualistic producers,

transporters and traders encountered in the Dar es Salaam area. Shinyanga is somewhere in between - although there is a group licensing system for producers similar to that in Mbeya, the groups are generally family and village based, rather than organized by a trader. Since licences are restricted and limited in number there is a competitive constraint on the producer side.

Between the controlling of some producers by wholesalers and the oligopolistic characteristic of the trader population in Mbeya, the competitiveness of the charcoal market there could be jeopardized. However , since price changes displayed in Table 5 revealed that wholesalers are making a lower per bag margin in 1990 than in 1989, this seems unlikely; large wholesalers might be facing more competition than before, or perhaps are not yet of sufficient size to control the market. In Shinyanga, restrictive licensing on the producer and wholesaler levels costs the system something in competitiveness, but it still remains essentially competitively efficient. In D a r e s Salaam there seem to be few restrictions on competitiveness. Illegal cutting is fairly common in all areas, however , c i rcumvent ing the licensing process. Although some of the illegal producers harvest trees from restricted areas, most of them cut in legal areas but avoid the quantity restrictions that the forest authorities have tried to enforce in an attempt to manage the forests.

The Tanzanian situation can be contrasted with the situation in Senegal, where entry barriers and



influence allow wholesale prices and cutting quotas to be set by a cartel o f patrons . 23 It is not clear that this causes retail prices to be higher, but certainly trees are being cut in quantities and locations that they would not otherwise be. It also contrasts with the full integration and efficient transport that have kept prices low in Sudan, and with the situation in Ouagadougou, where traders and transporters have found that in recent years price elasticities have prevented them from completely transferring producer price increases to end users. 24 As a result they have taken a cut in their margins. This trend may force traders and transporters there to become more efficient. In Mbeya partial integration by wholesalers may have allowed them to keep prices down, especially where competitors have begun to infringe on a previously monopolistic situation.

In Shinyanga and Mbeya firewood provides stiff competition for charcoal, but there is little competition from modern fuels such as electricity and LPG, or even kerosene for cooking fuel (the primary use of woodfuels in these areas). Woodfuel demand, particularly demand for charcoal among the poorest people, is considered to be highly sensitive to price variations, and some people use both charcoal and firewood for different applications. 25 However, most people, who have switched to using charcoal, including buying the stove it requires, appear to be reluc- tant to switch back to firewood unless the price of charcoal rises significantly in relation to the price of firewood. Therefore, given a relatively inelastic demand for charcoal, traders in Mbeya and Shinyanga have some leeway to raise charcoal prices.

In Dares Salaam, the availability of alternate fuel sources works to dampen woodfuel prices, although there are various non-price constraints to fuel switching which also figure in fuel choices. Kerosene and electricity prices have been controlled and real prices have been stable or falling until very recently. 26 This could have a negative effect on woodfuel use and pricing. Even where real prices have not increased, falling incomes in the past several years mean that the purchasing power of consumers have decreased, and that energy is taking up a large percentage of most people's monthly budgets.

Price s tructure

The price breakdown for a fairly typical participant along the woodfuel supply chain in each city is shown in Table 6. There are many variations on this scenario, however, and in particular it must be remembered that a retailer who sells by k o p o will have higher earnings, or might buy the bag from a

wholesaler and so have a margin reflecting that price. Table 7 gives an idea of return to labour for traders and producers.

In general, the margins for charcoal traders in Mbeya are substantially better than for traders in other cities, unsurprisingly, given the less competitive atmosphere of the market there. Although the Mbeya traders report more time spent per bag (Table 7), they also report lower labour costs, taxes and fees, and transport costs. The producer margin is also the lowest in Mbeya, due to higher labour costs and higher taxes and fees, as well as a lower ex kiln price. This finding is probably distorted by the existence of the vertically integrated large wholesalers, who absorb the producer margin as well as the trader margin, and hire labour to produce the charcoal. Some of the costs normally borne by the trader, in particular taxes and fees, were attributed to the production process by these integrated traders.

Transport is the largest cost component for all areas, even surpassing the producer price of the fuel. Bags and transport, both provided by the trader, are more expensive in Shinyanga than in the other cities, contributing to lower trader margins there. The per kilometre price of transport is the highest in Dares Salaam, probably because of competition with other uses for the vehicle and general transport supply shortages, although most traders did not complain of difficulty in finding transport.

For firewood, margins are greatest in Mbeya and lowest in D a r e s Salaam, although the figures are slightly suspect. Transport is again the largest cost component, after the fuel purchase from the producer. In Mbeya, most traders are producers, so they capture the entire margin. This is not the general case in the other cities.

Taxes and fees on the fuels, at both the rural and urban ends, total 7-8% of the per sack retail price for charcoal, and less than 1% of the retail price for firewood. This compares with the 4% of retail paid in taxes for woodfuel in 1986, indicating a relative and nominal rise in fees and taxes. 27 A large percentage of these taxes is not collected, and woodfuel traders consider the taxes high, perhaps reacting to the rises in recent years, even claiming in many cases that the government reaps higher profits than any of the other participants in the supply system.

Finally, Table 7 also gives a rough idea of the profitability of the woodfuel business for different participants. Charcoal producers seem to do best on a shilling per hour basis in Shinyanga, and traders in Dar es Salaam. Traders do much better than producers in general for charcoal on a per hour basis,



Table 6. Fuel cost structure.

Charcoal Typical producer's cost

Taxes and fees Paid labour Producer margin

Ex kiln price Typical trader's cost

Bags, tools Paid labour Taxes and fees Transport

Storage/rent Trader margin

Retail price

Dar es Salaam

Tsh/bag

6.9 5.3

138-238 150-250

% of total

Mbeya

Tsh/bag

1.1 14.9 0.8 14.9

28.9 110.2 140

38.3 5.9 46.6 5.4 0.8 1.9

43.1 6.6 4.8 223.7 34.4 140.8 (2.2/bag/km, 0.05/kg/km) (1.2/bag/km, 0.03/kg/km) <0.01 0.0 <0.01 40-240 21.5 265.9

600-700 600

Tsh/kg Tsh/kg

0.5 0.33 24.6 0 . ~ 16.4 5.2

5.5

Firewood Typical producer's cost

Taxes and fees 0.03 Paid labour 1.5 Producer margin 1.0

Producer price 2.5 Typical trader's cost

Paid labour 0.15 Taxes and fees 0.03 Transport 3.4

(0.05/kg/km) Storage/rent <0.01 Trader margin 0.2

Retail price 6.1

2.5 0.00 0.5 0.33

55.7 3.3 (0.03/kg/km)

<0.01 3.3 1.8

10.9

Shinyanga % of % of total Tsh/bag total

2.5 5.8 0.9 2.5 4.8 0.7

18.4 139.4 21.5 150

7.8 63.9 9.8 0.3 39.2 6.0 0.8 44.4 6.8

23.4 276.0 42.5 (1.6/bag/km, 0.04/kg/km)

0.0 <0.01 44.3 26.5-126,5 11.8

600-700

Tsh/kg

2.8 0.1 1.1 0.0 0.03 0.2

47.7 4.2 47.7 4.3

0.0 0.03 0.2 2.8 0.09 1.0

30.3 3.1 35.2 (0.03/kg/km)

<0.01 16.5 1.3 14.7

8.8

although their per bag margins are often lower. These margins are approximate, however, and do not reflect costs such as capital risk and, in some cases, equipment costs for traders. For firewood, producers seem to do substantially better than traders. It is possible that the reported hours spent on firewood harvesting are understated, particularly in Shinyanga.

Conclusion: appropriate policy responses The preceding discussion points to several conclu- sions. The most significant is that the woodfuels market in the cities studied gives every indication of operating as a competitive market, due to the large numbers of small-scale producers, wholesalers, and retailers and open access to the market. The excep- tion to this might be Mbeya, because of the large wholesalers and limited access to licences, but even there the restrictions seem minor.

This basic competitiveness contrasts markedly with the situation prevailing in the markets for

alternative fuels, the so-called 'commercial' fuels such as electricity, kerosene and LPG. These fuels are heavily regulated and controlled by the government through parastatals. Prices are controlled, and supply is often inadequate, leading to shortages and aftermarket sales at prices much higher than the official rates. In comparison, woodfuels are consis- tently available at what seem to be competitive prices. This is one of the few uncontrolled and unregulated markets in Tanzania.

Externalities and stumpage fees

Although the system is efficient, a problem arises from the inability of the price of the product to reflect the long-term environmental and social costs of its use. 2s The implications of the environmental costs of woodfuel harvesting, such as deforestation, go far beyond the provision of energy into areas such as the preservation of topsoil and hence agricultural productivity; the protection of watersheds and the water supply; preservation of species diversity and faunal populations (and thus economic benefits from


Competition in Tanzanian woodfuel markets"

Table 7. Earnings and labour.

Margin Dar es Salaam (Tsh/bag) Man hours/bag Tsh/hour

Charcoal Producer 188 4.14 45.4 Trader 140 1.19 118

(Tsh/kg)

Firewood Producer " 2.0 0.57 3.5 Trader 0.2 0.18 1.1

Mbeya (Tsh/bag)

Charcoal Producer 110.2 5.5 20 Trade r 265.9 2.98 89

(Tsh/kg)

Firewood Producer 5.6 0.06 93 Trader 1.8 0.25 7.2

Shinyanga (Tsh/bag)

Charcoal Producer 139.4 2.2 63.4 Trader 126.5 1.53 82.6

(Tsh/kg)

Firewood Producer 4.2 <0.001 4200 Trader 1.3 0.01 130

tourism); the urban-rural dichotomy whereby the rural dwellers bear the costs of the urban dwellers' consumption; and other issues.

One possible policy implication is to apply higher taxes and fees to the fuel so it will more accurately reflect these externality costs, and to direct producers to cut in areas and use harvesting procedures that will do the least damage to the environment. The composition of taxes, unlike price controls or na t iona l i za t ion , p rese rves the compe t i t i ve nature of the market while addressing the issue of externalities.

A problem with fees and taxes is that their collection is very difficult, especially in such a dispersed business as woodfuel harvesting. The fees that are collected now from woodfuel are thought to be at best about half of those owed. 29 Increased collection of fees, and consistent application of fee schedules, could help to regulate the system, and is a pre- requisite to any fee revision action.

Any change in the fee structure applied to woodfuels will affect the price of the fuel to the end user, and consequently affect the fuel choice of consumers. If the price of the fuel accurately reflects its cost to society, the government should be indifferent

whether the fuel is chosen by consumers. Although in theory a correctly determined stumpage fee would only reduce the excess profits of suppliers, it is possible that much of the increase in fees would be passed on to consumers in higher retail prices. However , the case of Ouagadougou, where retail prices did not reflect increased costs to the traders because consumers began to switch to alternative fuels, indicates that retail price increases may reflect only part of stumpage fee increases. 3° In any case, programmes such as provision of improved charcoal stoves and improved kilns will" serve to help the consumer reduce fuel expenditures, since the per tree replacement cost should be the basis for a stumpage fee. An obvious offshoot of a raised stumpage fee is that it should encourage afforestation, ei ther as agroforestry or in plantations. Again, this is particularly true if monies from woodfuel extraction are recycled through the local community. This policy has been enacted in Malawi, but its success is not yet recorded. 3t

Local control

There is scope for autonomous village regulation and revenue gathering for woodfuel harvesting. In all areas harvesters resent paying fees and taxes, primarily because they see no benefit from these moneys. If some of the fees were to stay within the communities that contain the forests being harvested, the incentive to enforce both fee paying and management policies would be far greater. Even the illegal harvesting of reserves and other protected areas would be easier to monitor if responsible local authorities were protecting the fiscal and environmental interests of the village. In the D a r e s Salaam area harvesting is carried out almost exclusively by village members on village land, facilitating local regulation, which would put those who are most affected by its degradation in control of the land. In areas near D a r e s Salaam this is already happening informally.

Harvesting in Mbeya and Shinyanga is most fre- quently done by professional charcoal makers who are not tied to the land from which they are harvesting. In these areas, it is important to allow local authorities autonomy in granting harvesting licences as well as in fee collection, allowing local residents to assert usufructuary rights, or auctioning them to outsiders if local producers are not sufficiently in- terested. Local residents should also be allowed to close a forest area to any harvesting at all, if they find that its degradation is deleterious to their way of life. This has been done in Ghana and Rwanda and, rather than causing havoc in the urban centres which


use the fuel, it has helped to focus attention on and improve the efficiency and sustainability of the woodfuel system. 32

Local control over revenue created by woodfuel harvesting would encourage collection of fees, support the personnel who do the collecting and the monitoring of cutters in the forest, as well as funnel- ling money into the local communities for seedling programmes, village afforestation programmes, and other local initiatives. Only if the money from the forest is reinvested in the forests will there be proper incentives and funding for sustainable maintenance of the woodlands.

Efficiency improvements

Although operating competitively, system-wide efficiency gains can only help to improve the supply network. Previous sections have highlighted several areas in need of improvement. For one, the supply network is moderately integrated and might show improvements in overall system efficiency if the degree of integration were increased, but the possibility of welfare reduction due to oligopoly pricing is also increased in that case. This may apply in Mbeya.

One place where efficiency gains can certainly be realized is in the organization of the fuel transport system to allow backhauling. This would probably necessitate newer vehicles, since the lorries now being used are too unreliable to be part of such a system. Additional gains through vehicle fuel efficiency and a reduction in the 15-20% loss in charcoal due to the roughness of the handling and ride on the older trucks (as well as the rough roads) would also be realized. The increased use of trains, and encouragement of their legal use for woodfuel transport, as opposed to their current illicit use, would provide additional increases in transport efficiency.

A final issue is the protection of particularly endangered areas by the creation of more catchment areas and forest reserves. Although encroachment occurs, the difference between areas that are protected and those that are not is often startling, and it is clearly an effective way to preserve forests, especially if the local residents are educated as to the benefits that this will bring. This policy has been in i t ia ted in Rwanda , and found to be very effective. 33

Tanzania, like some other African countries, has a functioning and, in fact, flourishing woodfuel supply system that serves a large proportion of the urban population, and provides income for a not insignificant sector of the rural and urban population. Although there is no woodfuel crisis per se in


Tanzania, the health of the woodfuel system and the environment there is dependent on a good under- standing and management of the system.

The first management tool required is information, and the project on which this article is based is a large step towards its provision. With this information, improvements can be made which will increase the efficiency and sustainability of what is, in ess- ence, a workable and working system.

The woodfuel marketing system in Tanzania is clearly a dynamic part of the informal economy, with many entrants and large numbers o'f participants. Most of the participants look to the woodfuel business as their primary source of income, and will therefore be greatly affected by any fluctuations in the market due to policy changes. However, they will benefit overall by the improvements suggested here.

Although some of the suggestions detailed above may be politically unpopular, they can be made less so by judicious and gradual implementation and information dissemination. If the policy intentions of the government are made clear, participants in the woodfuel system and consumers alike will have an idea of what to expect in the future, and can plan accordingly. Setting of new stumpage fee structures, and local participation in fee setting and collecting, and forest management, together with the improvement of inefficient aspects of the system as it stands, will go a long way toward ensuring the longevity of woodfuel as a resource and as a major energy source for the country.

The support of this project was generously provided by the Stockholm Environment Institute. Thanks to Gordon McGrana- han of SEI for formulating the idea for the methodology used in the survey, and for subsequent advice regarding it. Thanks also to Richard Hosier for guidance and comments on an earlier draft, and to Amy Hosier for helpful editing.

Ip.A.M. Victus, 'Industrial energy use in urban Tanzania', Stock- holm Environment Institute, Stockholm, 1993 (abstract in this issue of Energy Policy). 2R.H. Hosier, 'Informal sector energy use in Tanzania: efficiency and employment potential', Stockholm Environment Institute, Stockholm, 1993 (abstract in this issue of Energy Policy). 3G. Leach and R. Mearns, Beyond the Woodfuel Crisis: People Land and Trees in Africa, Earthscan, London, 1988; World Bank, Tanzania Urban Woodfuels Supply Study, Washington, DC, 1987. 40p cit, Ref 3, Leach and Mearns.

5TISCO, Production and Marketing of Charcoal in Dares Salaam, TISCO Project 86-012, 1986. 6A. Bertrand, 'Marketing networks for forest fuels to supply urban centers in the Sahel', Rural Africana, Vols 23-24, Autumn 1985-Winter 1986, pp 33-47. 7See M. Alam, J. Dunkerley, K.N. Gopi, W. Ramsey and E. Davis, Fuelwood in Urban Markets, Concept Publishing Com- pany, New Delhi, 1984, and the less detailed M. Alam, A. Reddy



and J. Dunkerly, 'Fuelwood use in the cities of the developing world: two case studies from India', Natural Resources Forum, Vol 9, No 3, 1985. 80p cit, Ref 3, Leach and Mearns. 9j. Ribot, 'Market structure and environmental policy in Seneg- al's charcoal industry', Environment Africaine, 1988. ~°See, for example, J. Soussan, P. O'Keefe and B. Munslow, 'Urban fuelwood: challenges and dilemmas', Energy Policy, Voi 18, No 6, July/August 1990. l~The original survey sampled 80 income stratified enumeration areas in Dares Salaam, 31 in Mbeya and 30 non-stratified areas in Shinyanga. 12G. Stevenson, 'The production, distribution and consumption of woodfuel in Haiti', The Journal of Developing Areas, Vol 24, 1990, pp 59-76; M. Diallo and A.M. Fell, 'Woodfuel: the main source of energy in the Sahel', Revue de l'~nergie, Vol 365, 1983,

597-610; op cit, Refs 6 and 9. p cit, Ref 1. A comparison with the 1986 World Bank survey

for Dar es Salaam shows very similar values. The 1986 survey found households using 1200 kg of charcoal and 1400 kg of firewood annually; 88% of the charcoal was used for cooking, with the residue being primarily used for ironing; 46% of the firewood was used for cooking, while the rest was used for microenterprises such as beer brewing, (op cit, Ref 3, World Bank). 140p cit, Ref 3, Leach and Mearns, p 273. 150.E. Williamson, Markets and Hierarchies: Analysis and Anti- trust Implications, The Free Press, New York, 1975. 160p cit, Ref 3, World Bank. 17R.H. Hosier, J. Boberg, M.J. Mwandosya and M.L. Luhanga, 'Energy planning and wood balances: sustainable energy futures for Tanzania', Natural Resources Forum, May 1990, pp 143-154; M.L. Luhanga and B. Kjellstrom, Potential for Use of Biomass Derived Fuels in Tanzania, Beijer Institute, Stockholm, Sweden, 1988; K. Openshaw, 'Tanzania', in P. O'Keefe and B. Munslow, eds, Energy Development in Southern Africa, Beijer Institute, Stockholm, Sweden, 1984; World Bank, Tanzania: Issues and Options in the Energy Sector, Washington, DC, 1984; B.K. Kaale, Tanzania Five Year National Afforestation Plan, Ministry of

Natural Resources and Tourism, Dares Salaam, 1983; op cit, Ref 3, World Bank. aSOp cit, Ref 6. 190p cit, Ref 3, Leach and Mearns, pp 218-219. 2°World Bank, Review of Household Energy Options in Africa, Washington, DC, 1987. 21The results of the regression equations which produced the trend lines are as follows, where x = quarter/year and y = real price:

Da re s Salaam y = 0.999 + 0.00x R 2 = 0.0013 (0.57) + (0.004)

Mbeya y = 0.858 + 0.020x R 2 = 0.18 (0.67) + (0.006)

Shinyanga y = 0.850 + 0.02x R 2 = 0.34 (0.39) + (0.004)

220p cit, Ref 3, World Bank and Ref 6. 230p cit, Ref 9. 240p cit, Ref 6. 25See, for example, op cit, Ref 13 and K. Openshaw and C. Feinstein, Fuelwood Stumpage: Considerations for Developing Country Energy Planning, Energy Series Paper No 16, World Bank, Washington, DC, 1989. Z6R.H. Hosier and W. Kipondya, 'Urban household energy use in Tanzania: prices, substitutes and poverty', in this issue of Energy Policy. 270p cit, Ref 3, World Bank. 2SFor a detailed look at this issue, see R.H. Hosier, 'Charcoal production and environmental degradation: environmental his- tory, selective harvesting, and post-harvest management', in this issue of Energy Policy. 29Silviconsult, Forest Revenue Collection in Tanzania, mimeo, August 1991. 3°0p cit, Ref 6. 310p cit, Ref 20. 32C. Feinstein and R. van der Plas, Improving Charcoal Produc- tion in the Traditional Rural Sector, Draft, World Bank, Washing- ton, DC, 1990; op cit, Ref 3, Leach and Mearns. 330p cit, Ref 20 and Ref 3, Leach and Mearns.


Competition in Tanzanian woodfuel markets

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