Status, Determinants And Effect Of Agriculture Commercialization Among Smallholder Farmers In Tanzania

ABSTRACT

Commercialization of agriculture refers to shift from subsistence oriented production to an increasing complex production and consumption system based on market; apart from marketing agricultural output it also includes product choice, input use and decisions making based on profit maximization. It has been documented that agriculture commercialization in Tanzania remains to be marginal and less than one third of farmers’ produce might possibly reach commercial market; very few farmers’ uses inorganic fertilizer and improved seed. The overall objective of this study was to examine the status, determinant and extent as well as effects of agricultural commercialization. Specifically the study identified socio-economic characteristics of farmers, status in market participation as well as identifying factors influencing output market participation and its contributions to farmers’ welfare. Data generated by Living Standards Measurement Study in collaboration with Tanzania National Panel Survey for two waves of 2010/11 and 2012/13 was used; descriptive statistics was used to analyze status in market participation, Craig’s double hurdle model was used to analyze determinants and extent of commercialization. Results revealed proportions of poor households was decreasing for the two survey periods while proportions in output market participation was observed to increase for paddy, beans, groundnuts and maize; maize recorded lower commercialization index among the four commodities. Age of household head, sex, household size, land area allocated for production, use of inorganic fertilizer, use of improved seed and accessibility to agricultural inputs on credit were found to significantly influence decision for farmers to participate in agricultural commercialization of the four commodities. It is recommended for policy measures that increase accessibility of land to farmers, accessibility to agricultural input and encourage on using inorganic fertilizer to smallholders farmers so as to increase marketable surplus.