Tea Prices and Household Consumption Patterns in Tanzania

Mamello A. Nchake and Threza L. Mtenga

Working Papers from African Economic Research Consortium

Abstract: Tea production is a significant contributor to Tanzanias output and income. The country is a price taker in regional and international tea markets. This makes it vulnerable to price shocks, which can have a detrimental impact on smallholder farmers, especially those who heavily rely on tea production for their income. This vulnerability is particularly critical for net producers who lack alternative income sources, especially in rural areas. The study uses a panel dataset from the Tanzania National Panel Survey (TNPS), collected over the periods 2008-2009, 2010-2011 and 2012-2013. The studys main findings indicate that tea price shocks have a strong negative effect on consumption patterns of smallholder farming households in Tanzania. The results also highlight that the impact of price shocks is not uniform across all households. It varies based on factors such as the gender of the household head and the location (rural or urban). The study underscores the importance of government intervention to support households affected by price shocks. Safety net programmes and welfare management initiatives can be vital in assisting these households to cope with economic uncertainties. Moreover, policies that encourage savings and the accumulation of productive assets can serve as a cushion against future shocks. Recognizing the variations in the effects of price volatility among different households, the study suggests the need for policies and strategies that are specifically designed to address the uncertainties in the tea market. This implies a nuanced approach to policies that address the diverse needs and vulnerabilities of tea-producing households. Keywords: Prices, consumption, Tanzania, Tea

Date: 2024-04-10
New Economics Papers: this item is included in nep-agr
Note: African Economic Research Consortium
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