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and international markets and set the tobacco prices. The cooperative unions purchased inputs on credit and delivered them to the primary societies, which provided them to farmers. The payment to farmers for tobacco was the net value of crop sales after deducting the input credits received, their share of the primary societies’ costs and levy, and their share of the cooperative union’s costs and levy. This marketing system had a number of weaknesses, including inadequate incentives to contain costs, little incentive for farmers to maintain quality, quality losses during transport of tobacco to the factories due to reliance on poor-performance railways, and weak marketing. The TAT also had heavy administrative costs and inadequate operating margins, as well as excessive transportation and processing costs. The cooperative unions were abolished by the government in 1976 due to sharply rising costs attributed to inefficient marketing. The TAT was given responsibility for all aspects of the tobacco industry in Tanzania, including extension, procurement, and distribution of all inputs, and the transportation, processing, and marketing of cured leaf tobacco. This was the first of many changes in industry operation implemented by the government through its various tobacco authorities from 1972 until 1995, when the private sector was allowed to buy, process, and export tobacco. In 1976, the factory in Morogoro was expanded with World Bank support to accommodate what was expected to be a steady increase in tobacco production. However, tobacco production peaked just as the factory expansion was approved and construction began. The additional capacity remained idle for many years and became a burden on the industry. According to the World Bank’s Project Performance Audit of 1984, the decline in tobacco production during the late 1970s and 1980s (figure 9.2) was due to a number of factors. These included inadequate availability and distribution of inputs, lack of good seed material, lack of proper extension and agronomic advice, crop disease, delays in crop collection due to transport shortages and the Ugandan war, shortages of fuel wood for curing, and sharp increases in unregulated maize prices compared to official tobacco prices, which encouraged farmers to shift to maize production. Delays in fertilizer deliveries were especially critical since there are only 40 days from planting to harvesting of the first tobacco leaves, and yields are significantly reduced without timely fertilizer application. Institutional weaknesses by the TAT prevented these problems from being adequately addressed, and this weakness was reported by the World Bank to be due to conflicting objectives, poor accountability, and policy