The Tanzanian government is prioritizing the development of the palm oil value chain, a key goal that will enhance the livelihoods of 30 000 smallholder farmers and reduce poverty while tackling the country’s reliance on palm oil imports.
The palm oil sector is crucial to both economic growth and social improvement. The Tanzanian government’s strategic focus aims to strengthen local production, improve trade balances and foster sustainable development within the agricultural sector.
Working closely with relevant ministries and stakeholders across the value chain, ASTA analysed the sector’s sustainability, market opportunities, key constraints and investment needs. The findings informed the development of an upgrading strategy for 2021–2025 to support a more inclusive, sustainable and market-oriented palm oil sectorFirst assessment
Following a request from the government, the ASTA team assessed the palm oil sector against engagement criteria and preconditions. The team then developed a comprehensive Value Chain Analysis and Strategy Design, assessing the sector’s transformation potential, including socioeconomic and environmental impacts.
Analysis and design
Findings from the palm oil value chain analysis
Palm oil supports rural livelihoods, but the sector remains underdeveloped due to low productivity, traditional production systems and weak market integration. The diagnostic assessment identified key bottlenecks limiting growth potential.
🌱 Limited access to improved planting materials and services. Palm oil production is driven largely by smallholder farmers, many of whom lack access to improved seedlings, technical advice and extension services needed to increase productivity sustainably.
⚙️ Traditional processing limits market opportunities. Most processing relies on small-scale, traditional milling and aggregation systems, resulting in low-quality oil that does not meet food-grade standards and is excluded from higher-value markets.
💼 Weak support services and limited investment. Limited access to finance, business development services and appropriate working conditions – particularly for women and youth – restrict the growth and professionalization of the sector.
Key facts and figures on palm oil in the United Republic of Tanzania
- Main production area: Kigoma Region (around three-quarters of national production)
- The sector is overwhelmingly based on small-scale producers: Smallholders accounted for 24,640 tonnes (99.8 percent) of oil palm production in 2019/20, and large-scale farms contributed only 56 tonnes.
- Oil palm fruit production: ~78,700 tonnes (2024)
- Palm oil production: ~5,600 tonnes (2023)
- Oil palm planted area: ~13,700 ha (2019/20)
Vision and upgrading strategy
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A vision and upgrading strategy (2021–2025) was developed to transform the palm oil sector. The strategy consisted of inclusive, sustainable and market-oriented business models, supported by targeted investments and interventions. Actions targeted four main areas:
🌱 1. Developing business-oriented producers. Help producers adopt eco-certifiable agroforestry systems that combine oil palm with other income-generating crops. This will strengthen resilience, sustainability and livelihoods. Select complementary models – village clusters, village estates and private estates – to scale up smallholder-based production.
🎓 2. Establishing a Kigoma Agricultural Training and Innovation Centre (KATIC). Create a knowledge and training hub connecting farmers, entrepreneurs, researchers and service providers, to strengthen skills, innovation and access to support services.
🤝 3. Strengthening farmer organization and market linkages.Improve access to inputs, services, finance and markets, by supporting aggregation mechanisms, cooperative development and partnerships with processors.
🌍 4. Promoting value chain coordination and partnerships. Establish a multistakeholder platform to strengthen dialogue, information sharing and collaboration among public and private actors.
Stakeholder-driven planning
The next stage in supporting the sustainable transformation of the palm oil value chain took place in 2020. Step 3 began with the signing of two Letters of Agreement between FAO and the Centre de coopération internationale en recherche agronomique pour le développement (CIRAD) and the Tanzania Agricultural Research Institute (TARI).
These partnerships focused on strengthening the capacities of value chain actors, improving seedling production and distribution systems, and addressing key constraints affecting the sector. Beyond palm oil, these efforts contribute to wider food system goals, including sustainable agriculture, rural economic development, improved livelihoods and enhanced food security in the region.Latest News
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