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
| Measure | Value | Note |
|---|---|---|
| Village price at kiln, Tanzania | About 8,828 TZS per bag6 | 2016 |
| Dar es Salaam wholesale price | About 54,500 to 57,500 TZS per 70 kg bag6 | 2016; about six times the village price (calculated) |
| Transport share of retail price, Malawi plantation charcoal | 60 to 70%3 | Long hauls of 300 to 600 km |
| Lorry hire, Kenya | About 13,000 KES per trip5 | 6 to 8 wheel truck, 2020 |
| Kenya charcoal economy | About 425 million USD per year5 | About 2.3 million tonnes, 2013 estimate cited in 2020 |
| Tanzania charcoal sector | About 650 million USD per year24 | 2009 estimate, repeated by FAO in 2017 |
Where the money goes
| Item | Share or amount |
|---|---|
| Producers | About one third of final price (Tanzania)4 |
| Transporters and wholesalers | About 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
- The charcoal transition: greening the charcoal value chain to mitigate climate change and improve local livelihoods FAO, 2017
- Review of technologies for the production and use of charcoal (Kammen and Lew) Renewable and Appropriate Energy Laboratory, UC Berkeley, 2005
- Environmental Crisis or Sustainable Development Opportunity? Transforming the Charcoal Sector in Tanzania: A Policy Note World Bank, 2009
- 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
- Charcoal Market Conditions in Tanzania (TTCS Technical Report 4, Ishengoma) Tanzania Forest Conservation Group / TTCS project, 2016