Lying on the Coast of Tanzania, bordering Kenya, Tanga Region has a population of around 1.7million, with a growth rate in population from 1998-2002 of 1.8% and a population density of 60 persons per square kilometre. The population of Tanga Region has been increasing since 1957, and as a result of high population density, forests have become endangered and wood scarce. The increasing need for income and food is not matched by increased economic development or food production.
Sisal is the most important cash crop, used to produce yarns, ropes, carpets, clothing and composites, and sold to the domestic and international markets. Since 1999 Katani Ltd, a sisal growing company, has developed a system of smallholder and out-grower sisal farming, on land owned by the company and in the surrounding areas. Katani has developed the first biogas plant in the world to convert sisal biomass to biogas. This is used to run electricity generators which power production machinery, with excess electricity supplied to out-growers/smallholders homes, schools and hospitals.
Organic fertiliser is produced as a by-product, process heat is used for drying fibre and could be used to dry paper made from sisal pulp. Using current production methods, only 4% of the actual plant is recovered as fibre. The residue was either burnt, producing carbon dioxide, or rotted naturally, producing methane. The use of sisal waste for bio-energy is thus environmentally beneficial. Converting the waste to biogas increases the profit to farmers, since 80% of the plant mass is suitable for biogas production.
Investment for a biogas project came from The Common Fund for Commodities (UN Body) US$ 927,712; UNIDO US$ 225,600; and the Tanzanian Government US$ 350,000, during phase one of the pilot plant. Ongoing financing is received from government and external agencies. The project is managed by UNIDO and a 16-member coordinating committee with representation from the FAO, CFC, UNIDO, TSB, Katani Limited, the Sisal Association of Tanzania (SAT) and relevant government ministries. The biogas project is profitable and Katani Ltd plans to provide local access to low cost bioenergy via a system of mini grids from their biogas plants. Funds are being sought to undertake the work and plans are under development.
Planting and harvesting takes place all year so there is no element of seasonality to earnings. The farmers are paid monthly, and they are guaranteed a market for their product. There is little vulnerability to environmental shocks since sisal is so drought resistant and sisal provides an income even if food crops fail, thereby increasing financial security.
The planned Phase 2 of the biogas project involves a scale up from 150kW to 300kW, requiring US$ 472,026 in funds. Phase 3, in 2009, involves developing biogas for vehicles and piping fuel to households, which will cost US$ 100,000. Nine other commercial-scale plants will be established at the other nine factories owned by the company, each with the capacity to produce 1 MW of electricity. This will give Katani an overall output of 10 Megawatts of electricity with a similar amount of process heat.
With respect to the enabling environment, an increase in consumption of fibre locally and in regional markets is critical to the success of the programme. Land taxes, taxes on labour, and taxes on production need to be reduced to encourage farmers to expand their holdings. Investment funds for investment in agriculture in Tanzania are still hard to access; only firms with foreign connections have been able to get all the financing they require, and that from overseas. Farmers on their own cannot afford to venture into adopting new technologies. Transport costs locally are very high due to fuel costs. At present a financing window for agriculture has been opened at the Tanzania Investment Bank. Regarding gender, Katani provides women with the chance to engage in economic activities.
Katani Ltd assists the farmers in forming registered community-based operations and accessing loans, and, grants to pay for services; and facilitates the repayment of loans to financiers. In 2006 Katani Ltd mobilised US$ 1.2 million in loans for farmers and is presently negotiating a further US$3.3 million. The firm has set up the Mkonge Umoja Savings and Credit Co-operative Society with a capital of around US$ 500,000. Katani are assisting farmers in strengthening community based organisations so that they provide the full range of production and delivery of services. To date there have been no breakdowns in stakeholder relationships and no apparent barriers to progress.
Training programmes and study tours to biogas production facilities in China were organised to enable staff at Katani to gain valuable experience in the operation and maintenance of medium-scale biogas energy systems. The biogas is produced with the waste derived from the Sisal decortication plant. The stored biogas is used to run two 150kW electricity generators for a rated total electricity output of 300 kW, with an intended output of 500kW by the end of 2009. The electricity is used mainly within the decortication plant and some of the excess is supplied to the domestic quarters within the estate. The excess biogas can also be distributed to surrounding communities to cover cooking and lighting requirements.
Out-growers and smallholders sub-lease land from Katani, upon which they produce sisal under contract for sale to Katani Ltd. Katani Ltd provide a guaranteed market for the sisal, providing income throughout the year. Food security is assured through intercropping and continued growth of food on traditional land in the village, reducing the likelihood of any food versus fuel conflict. Both out growers and Katani Ltd are linked to the Sisal Value Chain which includes the international market; they are therefore at risk from changes in international markets and finance. Katani has overall responsibility for production and sale of sisal.
Katani Estates pay primary producers US$ 370 per tonne of fibre while they get US$ 850 per tonne covering processing costs and Katani Limited gets US$ 85 per tonne. The revenues continue throughout the year. Katani buys farm inputs and sells the sisal through well established marketing channels worldwide. Katani receives the revenue from these sales. All other providers of services for Katani are under contractual arrangements and receive income for work carried out. The Sisal Association of Tanzania, NSSF and TSB are bodies established by Acts of Parliament.
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