Cloves were once worth more than gold and the native spice has been a mainstay of Zanzibar’s economy for the last 150 years. But frustration is growing among farmers in the island and neighbouring Pemba about a battle between the public and private sector which is reducing their incomes and losing Tanzania its dominant position in the world market. Is government intervention a recipe for disaster, asks Aameera Jiwaji.
There’s an anecdote about how Zanzibar’s clove farmers prefer to hoard their harvest in their homes, hedging their bets for a time when local market prices will be more attractive.
It illustrates the high asset value of cloves in the local Tanzanian farming community – a narrative mirrored in history when cloves were worth more than gold, and European countries would go to war to ensure access to them – but it also speaks to a deep-seated frustration with government controls of the industry and farmers’ reluctance to engage with the state apparatus.
Fortunately for them, dry cloves age well. But their dissatisfaction with the government peaked in the early 2000s, when they stopped protesting silently and instead set their clove trees on fire, sending a strong message about their unwillingness to play any longer.
It has been 14 years since then but the embers from the issue are still smouldering, and the high prices that Zanzibar’s cloves secured in the international market at the end of 2014 only served to fan the flames.
Many years of discontent with the state apparatus explain why the black market for cloves flourishes on this East African island with the exotic spice being sold informally, and smuggled across the border to neighbouring Kenya. Such avenues earn farmers nearly double the price offered by the government monopoly, Zanzibar State Trading Corporation (ZSTC).
The situation seemed set to improve in the third quarter of 2014 when high international prices for cloves – which rose from $11,292.7 per tonne in August 2013 to $10,104.6 per tonne in August 2014 – propped up Zanzibar’s trade balances and saw the country export a record high of 5,600 tonnes of cloves, earning it $63.6m. It was a two-fold increase in revenue from the previous year when it exported 2,100 tonnes and earned just $21.1m, as reported by the Bank of Tanzania’s Monthly Economic Review for October 2014.
Tanzania’s policy makers and technocrats were jubilant. They looked to the spice island with a renewed gleam in their eyes, reminded of its economic potential and reassured that government regulation of this cash crop sector was the right decision. The improvement in trade terms also vindicated efforts to boost the sector’s productivity by the Zanzibar Agricultural Research Institute.
But despite the boost in exports to $201.9m in October 2014 as compared to $190.6m the previous year, Zanzibar’s farmers experienced no benefits. The national gains only underlined their crippled status in the national hierarchy.
Tanzania was once the world’s largest producer of cloves but the decline of the spice trade, natural disasters that hit the islands of Unguja and Pemba, and socialist policies negatively impacted the sector. Today it is the third-largest producer, with a dismal 7% of the market compared to global leader Indonesia with 75%, according to the Economist Intelligence Unit.
Cloves have been a major foreign exchange earner in Zanzibar for the last 150 years and they continue to be an agricultural mainstay of the island. In 2013, the clove was still its single major cash crop with 90% produced on the island of Pemba, according to Unesco. However production figures continues to register a steady decline: from an annual average of 16,000 tons in the 1970s to between 1,500 to 3,500 tons in 2013, according to the Zanzibar Clove Growers Association (Zacpo).
Part of the problem is the government’s choke hold on the sector, despite the relaxation of protectionist policies. The movement towards trade liberalisation, and export promotion in particular, was designed to mark a shift from an anti-export bias to free trade such that government would not intervene in setting the market price of agricultural products. But 25 years later, the state is reluctant to loosen its hold on a leading foreign-currency earner and symbol for the Isles.
“We cannot let the farming of cloves go into private hands because the commodity is the symbol of Zanzibar,” Zanzibar’s Minister for Commerce, Industry and Marketing, Nassor Ahmad Mazrui, told Tanzania’s Business Week in February. Other government officials have also spoken on how cloves contribute significant amounts of foreign exchange to the national budget, suggesting that the government would be unwilling to surrender these profits.
They add that free market operations will spell the death of the sector by subjecting it to price fluctuations and profit motives. But the uncompetitive farm-gate prices that ZSTC offers – rumoured to be one fifth of the export price, allegations of quality downgrading and criticisms of financial mismanagement have seen farmers refuse to engage with the market. They either hoard their harvest, sell it on the black market, turn their trees into firewood or charcoal, or start farming other products like coconuts, which are freely traded. In response, the Zanzibar House of Representative endorsed a new Cloves Act Bill in January that discourages clove growers from making charcoal or otherwise consuming clove trees.
The clamour for a liberalised market, however, continues to be ignored. It has often topped the list of campaign promises by aspiring politicians and even Zanzibar’s retired President Amani Abeid Karume had vowed to liberalise the industry, but the status quo outlasted his political career.
Clove growers, through Zacpo, are also calling for policy reforms such as increased sector research and provision of better support services for farmers. They point the finger of blame at the Clove Market Law of 1985 and insist that the ZSTC needs to be disbanded. “The Clove Market Law of 1985, operational today, leaves farmers little or no role in price setting and limits their position in international market dynamics,” reads a 2013 report by Zacpo. Most recent calls have tempered the demand for a fully liberal market with that of a mixed approach, which allows direct export by some farmers and a supervisory role by government.
But their plea continues to fall on deaf ears and in an April 2014 State of the Nation report, Zanzibar’s President spoke of how his government would annually distribute 1m clove seedlings for the next three years as part of a plan to enhance production.
Aside from the fate of the farmers, the decline of the sector may adversely affect the island’s tourism earnings since visits to clove farms have become a cornerstone of the island’s tour packages, therefore threatening both of the island’s top foreign-exchange earners.
Possibly more damning than the severe drop in Zanzibar’s clove production in recent years is how the island is credited for an even smaller percentage of its output, since most of its cloves are exported to Indonesia, India and Japan for processing and packaging – either as oil, cigarettes or in their pure form. So in its 2011 report, Zacpo called for the privatisation of the oil distillery in Pemba to pave the way for industrial and commercial production of essential oils and increase Zanzibar’s share in the global oil markets.
In late 2012, the International Trade Centre and the World Intellectual Property Organisation joined hands with Tanzania to develop an intellectual property and branding strategy for its cloves. The “Zanzibar Exotic Originals” trade mark was created.
It currently targets tourists visiting the island and is yet to be launched internationally. The development of the brand has injected optimism into the local sector by imbuing it with a much needed sense of national pride. For the marketing concept to have any long-term impact, however, it will have to go hand in hand with a relaxation of government controls.
Zanzibar’s farmers may continue hiding their cloves under their beds but it isn’t a good idea for their government to stash the entire sector under theirs.