Economic performance of smallholder tobacco farmers in Tabora and Ruvuma regions, Tanzania
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Date
2020
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Publisher
Sokoine University of Agriculture
Abstract
Low crop productivity in Tanzania leads to developing ways of improving efficiency in
production. Just like other crops, tobacco production efficiency in the country leaves a lot
to be desired. Conversely, there is dearth of information on how limited resources in crops
production are being used to optimize outputs. Thus, this study was conducted to assess
resource use efficiency and subsequently to determine the underlying factors which affect
inefficiencies in the production of tobacco, maize, paddy and beans by tobacco
smallholder farmers focused on comparing profitability and efficiency across districts.
Data were collected from twelve Cooperative Societies involving 395 farmers.
Profitability was quantified using enterprise budgeting technique and the GM differences
were analysed using Analysis of Variance (ANOVA). The DEA approach was used to
estimate efficiency scores while a two-limit Tobit model was used to identify factors
which explain inefficiency variation. Finally, a five point Likert scale was used to identify
challenges facing smallholder farmers. Results show that tobacco production is profitable
with an average gross margin of TZS 1 610 582.72 per hectare. Further, the results show
that there were significant differences (p<0.05) in gross margin across districts. The
overall mean levels of technical, allocative and economic efficiency have been estimated
at 68%, 42% and 28% respectively. Accordingly, there are statistically significant
differences across districts (p<0.05). Technical inefficiency in crop production was
negatively and significantly (p<0.05) influenced by age of household and farm size and
positively and significantly (p<0.05) influenced by distance to the field and access to
extension services. Further, economic inefficiency was negatively and significantly
influenced by farm size, access to credit and frequently visits by extension officers
positively and significantly (p<0.05) influenced by access to extension services. Besides,
low price of outputs, complicated grading system, side selling, access to credit and high
costs of inputs were found to be critical challenges faced by tobacco smallholder farmers.
As such improvement in production efficiency would amongst others, require improved
access to credit, reduction of tax on imported inputs, investment in extension services and
programmes focusing on increased access to markets and credit sources are suggested as
policy options.
Description
PhD Thesis
Keywords
Economic performance, Smallholder tobacco farmers, Tabora, Ruvuma, Tanzania