Examining the inverse relationship between farm size and efficiency in Tanzanian Agriculture
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Date
2017
Authors
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Journal ISSN
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Publisher
Sokoine University of Agriculture
Abstract
Agricultural sector in Tanzania and elsewhere in sub-Saharan Africa is dominated by
smallholder farmers. This has made the smallholder-led growth strategy to be widely
accepted as the pathway for achieving economic transformation and mass poverty
reduction in Africa. Recently, however, concerns have been raised on the validity of
favouring small farmers because small-scale farming in Africa has historically provided
very low returns to labour. Also unlike earlier findings of the inverse relationship
between farm size and efficiency, findings of recent studies have provided mixed
findings which are not conclusive. This study was carried out to examine the Inverse
Relationship (IR) between farm size and efficiency in Tanzanian Agriculture using
National Panel Survey (NPS) data for 2008/09, 2010/11and 2012/2013. Specifically, the
study intended to:(i) determine the average and farmer’s level of technical efficiency,
land and labour productivity; (ii) determine the relationship between farm size and three
measures of efficiency (technical efficiency, land and labour productivities) and; (iii)
identify factors other than farm size which influence farmer’s technical efficiency and
productivity. The study employed the Two-Step-OLS Regression technique in
determining the relationship between farm size and the three measures of efficiency. The
findings confirmed the presence of inverse relationship between farm size and the three
measures of efficiency that were used in the study. However, when controlling for soil
quality the strength of the inverse relationship between farm size and technical efficiency
decreased from 0.50% to 0.34%. Similarly, when GPS data were used instead of farmer
reported data, the strength of the inverse relationship between farm size and efficiency
decreased from 0.51% to 0.47%. Apart from farm size, other factors found to have a
significant positive influence on efficiency were farming experience, irrigation, use of
fertilizer, household size and intercropping. Basing on the major findings of the study, the following are recommended: Firstly, the success of industrialization and inclusive growth
in Tanzania depends on how effective are the agricultural and land policies, the study
further recommends the use of GPS technology especially in large household surveys
because it improves the accuracy of various analyses involving land variables. Secondly,
since use of fertilizer and irrigation water have significant positive influence on
efficiency, the study recommends that agricultural policies that consider sustainable use
of fertilizer and irrigation water among smallholder farmers should be promoted in order
to improve agricultural productivity particularly now when the government is promoting
industrialization. Improvement of agricultural productivity is paramount for agro-based
industries that will require raw materials and surplus labour from the agricultural sector.
Description
M.SC. Dissertation
Keywords
Inverse relationship, Farm size, Farm efficiency, Smallholder farmers, Tanzania, Technical efficiency, Labour productivity, Land productivity