Supply response analysis of the sugarcane outgrowers in Tanzania
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Date
2020
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Publisher
Sokoine University of Agriculture
Abstract
There are many arguments that increasing food self-sufficiency in sub-Saharan Africa
(SSA) could reduce the high food price escalations which are often related to the
increasing demand and importation of food commodities. In Tanzania, sugar is one of the
agricultural commodities being imported to meet the country’s high sugar demand for
domestic and industrial use. Currently, the overall annual sugar demand in Tanzania is
about 600 000 metric tons against the country’s annual sugar production of about 350 000
metric tons. The study attempts to examine the supply response of the sugarcane outgrowers
to price and non-price factors using the Error Correction Model (VECM) l to
analyse time series data covering the period 1996 to 2018. The findings indicate that the
short-run own price elasticity for sugarcane was 0.954 while the long-run elasticity was
4.525343, cross price elasticity was -0.654929 in the short-run while the long-run
elasticity was -3.8184. For non-price factors area harvested, amount of cane produced
were significant in the short-run with estimated elasticities of -0.41956 and 0.5063
respectively. In the long run all non-price factors were significant with estimated
elasticities of 0.1915, 3.4759 and 0.0137 for sugarcane production, rainfall and trend
factors, respectively. These results imply that, sugarcane producers are more responsive to
price factors than non-price factors. The fact that all the variables were significant in the
long-run implies that farmers need time to adjust their production in response to changes
in the mentioned factors. The very small estimate for the trend factor implies that there
has been a very small adoption of productivity enhancing technologies during the 1996-
2018 period. To achieve her self-sufficient endeavour, the Tanzania Government should
invest in rural infrastructure and appropriate technological improvements as long-term
strategies to improve sugarcane supply, encourage policies geared towards making
sugarcane a more attractive enterprise and design strategies to improve the use of yieldenhancing
inputs like fertilizers.
Description
Masters Thesis
Keywords
Sugarcane supply, Outgrowers, Tanzania