Material Insights · Understanding the Material World

Firewood and charcoal supply: Unit economics

How a cheap village sack becomes dear in the city

What this tab covers What it costs to move a unit of energy this way: capital and operating costs, tariffs, utilisation and how it compares with the alternatives.

Charcoal is cheap to make but expensive by the time it reaches a city kitchen: transport, fees and trading margins multiply the price several times.

Key costs

MeasureValueNote
Village price at kiln, TanzaniaAbout 8,828 TZS per bag62016
Dar es Salaam wholesale priceAbout 54,500 to 57,500 TZS per 70 kg bag62016; about six times the village price (calculated)
Transport share of retail price, Malawi plantation charcoal60 to 70%3Long hauls of 300 to 600 km
Lorry hire, KenyaAbout 13,000 KES per trip56 to 8 wheel truck, 2020
Kenya charcoal economyAbout 425 million USD per year5About 2.3 million tonnes, 2013 estimate cited in 2020
Tanzania charcoal sectorAbout 650 million USD per year242009 estimate, repeated by FAO in 2017

Where the money goes

ItemShare or amount
ProducersAbout one third of final price (Tanzania)4
Transporters and wholesalersAbout half of final price (Tanzania)4
Official fees (royalty plus district and village)TZS 18,500 per bag if fully paid (calculated)6

If all official fees (royalty TZS 16,500, district cess 1,500 and village fee 500 per bag) were paid, they would add about twice the village price of a bag (calculated), which helps explain low compliance.

Charcoal competes with LPG and electricity, which need cylinders, stoves or connections that poor households often cannot afford up front.

Sources

  1. The charcoal transition: greening the charcoal value chain to mitigate climate change and improve local livelihoods FAO, 2017
  2. Review of technologies for the production and use of charcoal (Kammen and Lew) Renewable and Appropriate Energy Laboratory, UC Berkeley, 2005
  3. Environmental Crisis or Sustainable Development Opportunity? Transforming the Charcoal Sector in Tanzania: A Policy Note World Bank, 2009
  4. Sustainable Business Models for Tree-based Value Chains in Sub-Saharan Africa: Analysis of the Charcoal Value Chain in Kenya (Mutta) Swedish University of Agricultural Sciences (SLU), Formas project, 2020
  5. Charcoal Market Conditions in Tanzania (TTCS Technical Report 4, Ishengoma) Tanzania Forest Conservation Group / TTCS project, 2016