The effect of crop marketing liberalization on cotton production and farmers' income in Kahama district.
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Date
1999
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Sokoine University of Agriculture
Abstract
The study aimed at examining the effects of liberalization of cotton marketing system on cotton production and farm income in Kahama district. It had the following specific objectives: (i) To describe the current cotton marketing channel, (ii) To evaluate the efficiency of the present cotton production and marketing system,
(iii) To evaluate the effects of the cotton marketing system on farmers' income.
Both primary and secondary data were collected. A sample of 150 cotton farmers was randomly selected from six villages in Kahama district. The sample survey was
supplemented by interviews with Cotton buyers, cooperative and TCLSB officials and agricultural officers.
Data were analyzed using qualitative and quantitative approaches. Analytical techniques included: cross-tabulation, gross margins, concentration ratios, marketing
margins and the policy analysis matrix (PAM).
Results show that the liberalization of the cotton marketing system has caused the breakdown of the credit system for input supply to cotton farmers which in turn has
resulted into the uncontrolled pesticide distribution system. The monopsonistic position of Cooperative Unions has ceased and the ginning capacity
has increased tremendously currently surpassing the cotton output in the district.
Results further indicate that seed cotton producers receive 51.2% of the f.o.b price of cotton. Returns to labour were found to be Tshs 515 and 498 per manday for handhoe and ox plough users respectively.
The PAM results indicate that, basing on international market prices, cotton fanning in Kahama district is a potentially socially profitable farm activity although the current market conditions render it less profitable. The NPC and EPC values were less than one which indicate that farmers are taxed rather than being protected. DRC values were found to be less than one implying that cotton production in Kahama district has a potentially high international comparative advantage. However the SRPs showed that the overall effect of the government policy on cotton production and marketing is the
net taxation of farmers up to the tune of 36%.
As to improve the situation it is recommended that unnecessary levies, taxes and
regulations be removed or reduced in order to make the farmer benefit from his cotton
production.
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Keywords
crop marketing, cotton production, farmers' income, Kahama district, Farm income