Growing Quality Pyrethrum in Tanzania for a Growing Global Market

The blog provides an excellent case of how smallholders can be integrated into a high-value supply chain when the contexts are effectively considered. The example shows how context specific efforts the generate value will take off, and can emerge as an attractor that encourages ongoing change with knock-on effects. It is also important to recognize that there are concerns related to only working with a single firm. As the blog points out, those concerns can be minimized by focusing on the relational and mutually beneficial connections between the lead firm and their smallholder suppliers.

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Angelina and her family harvest pyrethrum as a cash crop in Tanzania’s Iringa region

The landscape of the Western Highlands of Tanzania is dotted with a beautiful white flowering chrysanthemum plant, also known as pyrethrum. For many years, farmers have been selling these flowers to traders without truly understanding their value in the global market. They were unaware of pyrethrum’s great significance in biopesticides and mosquito prevention.

This all changed when Lutheran World Relief, part of the Corus International family of organizations, designed a market systems development program called Pareto ni Pesa to improve the livelihoods of smallholder pyrethrum producers in Tanzania. Implemented in partnership with the Pyrethrum Company of Tanzania (PCT), a local pyrethrum off-taker and processing company, the project has reached nearly 24,000 farmers since it began in 2020.

Pyrethrum market expansion in Tanzania

Tanzania's contribution to global pyrethrum production grew immensely when, in 2006, a U.S.-based company, MGK, became the majority owner in PCT. MGK is a leading manufacturer of insecticides for public health applications, organic farming, and garden and greenhouse plants, such as PyGanic and EverGreen Pro. The essential component for these plant protection products is pyrethrin, a naturally occurring chemical compound of pyrethrum, extracted from the flowers in a distillation process. In addition to pyrethrin, the processing of pyrethrum also yields another valuable byproduct known as "marc". This key insect repellant ingredient is purchased by Kincho, a major customer of Sumitomo Chemical, MGK's parent company in Japan, and is utilized in the production of popular slow-burning mosquito coils.

When MGK invested financial, capital and technical support in PCT, pyrethrum production in Tanzania became part of a global market system with the potential to change the lives of thousands of smallholder farmers. As a result, Tanzania is now the world’s second-largest producer of pyrethrum.

Market linkages strengthened for smallholder producers

As Tanzania's place in the expanding global market for organic insecticides is gaining prominence, pyrethrum production is advantageous to smallholder farmers in several ways. Firstly, it provides a consistent income throughout the year, as it can be harvested every two weeks. This helps to smooth out fluctuations in agricultural income between main crop seasons. Secondly, pyrethrum is known for its drought tolerance and minimal water requirements, making it a suitable choice for areas with limited water resources and changing rainfall patterns. Thirdly, it can be cultivated in soils with low nutrient content and marginal areas where arable land may be scarce. Lastly, farmers benefit from a growing market for pyrethrum’s processed products as demand for organic alternatives to insecticides grows.

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Mbozyo Sungula and Lyata Pius Mwanyale weeding their pyrethrum crops in Tanzania’s Iringa region.

With the rapidly expanding market and recognized benefits for smallholder farmers, Lutheran World Relief and PCT forged a partnership in 2020 to enhance the quality of Tanzania's pyrethrum and strengthen producer livelihoods. They organized on-farm training sessions for smallholder farmers, who harvest the crop by hand. These trainings incorporated the use of demonstration plots and drying facilities to preserve the rich pyrethrin content in each flower. LWR works with PCT to optimize its supply chain efficiencies through a digital platform for farmer profiling, enabling traceability of pyrethrum purchases to specific farmer groups or individuals. PCT also introduced digital weighing scales for their buying agents, promoting transparency and enabling timely payments to farmers.

This collaboration has resulted in improved pyrethrum quality and better agronomic practices that have led to a 60% increase in pyrethrum yield from 2020 to 2023. Consequently, farmers are now earning higher revenue, with their income per acre rising from $320 to $750. PCT has also increased its revenue by 40% since 2020.

Such improvement in market linkages and income is attracting a growing number of women and youth to PCT’s supply chain. Through the Pareto ni Pesa program, the number of women participating in PCT’s supply chain increased from 30% to 40%. The project has created more than 300 jobs for buying agents, which are held mainly by youth and women, who provide centralized services for pyrethrum collection, drying and marketing.

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PCT buying agent Sarah Jeremia in Mbeya, Tanzania weighs dried pyrethrum and determines payment to the producer.

Lutheran World Relief has also registered or strengthened 334 pyrethrum groups for farmers and youth entrepreneurs. These groups aim to support their investments in pyrethrum-related businesses. Moreover, Lutheran World Relief seeks to connect producers to formal channels of financing and credit where possible.

Strengthening private sector collaboration

The partnership between Lutheran World Relief and PCT has been instrumental in fostering trust and shared value in private sector actors among smallholder pyrethrum producers. These producers value the transparent buying relationship and the knowledge shared about the significance of quality pyrethrum in global markets. Farmers now benefit from consistent payments for their products. PCT is even giving back to their suppliers’ communities by offering contributions like school supplies or construction materials.

Still, Lutheran World Relief recognizes the importance of maintaining competition within the pyrethrum value chain to ensure that farmers have options in choosing their buyers while maintaining the high quality of Tanzania's pyrethrum in the global market. One of the challenges faced in this commercial crop is the rise of middleman traders who are willing to purchase wet flowers, resulting in a reduction of pyrethrin content during processing. These traders offer lower prices to farmers and then export the flowers to processors. For example, to address this issue, Lutheran World Relief is working with government regulators to institute quality standards for all pyrethrum bought in the country, which will attract other private sector investors in the pyrethrum value chain in Tanzania.

Lessons learned for market systems approaches

Practitioners working through market systems to support smallholder farmers have a remarkable opportunity to explore and engage with niche commercial supply chains. This opens the door to enhancing competitiveness by fostering inclusive and transparent relationships that elevate production quality. Successful market systems approaches have the potential to drive economic growth and build resilience in local and global economies alike.

In the case of pyrethrum in Tanzania, smallholder farmers are experiencing increased resilience to shocks, thanks to the supplementary income generated from the crop. This additional revenue can be reinvested in asset-building endeavors, further supporting producers. Simultaneously, Tanzania is solidifying its position as a leading producer of organic pesticides, thereby contributing to the development of more sustainable global food systems.