DETERMINANTS OF MARKET PARTICIPATION AMONG SMALLHOLDER RICE FARMERS IN TANZANIA

Lucy Bosco Mpombo

Working Papers from African Economic Research Consortium

Abstract: Market participation among smallholder farmers in developing countries is a crucial economic venture since it elevates their poverty status and ensures food security. The study aims to determine the factors that affect the smallholder rice farmers' market orientation tendencies, market participation decision and finally the extent of market sales in Tanzania. A total sample of 352 rice growing households is drawn from the National Panel Survey Data of 2014/2015. The study uses the household as a unit of analysis since it is assumed that he represents the entire households' decisions. The study uses 2 models: the first is a Tobit model that seeks to determine the factors that influence market orientation tendencies. Later a double hurdle model which seeks to analyze the determinants of the two sequential hurdles (participation and intensity) to be crossed by the smallholder rice farmer. The study finds out that the age of the household head, secondary level of education and receiving inputs on voucher system negatively affects market orientation while access to market extension, use of inorganic fertilizers, use of animal traction, hiring labor, land fragmentation and wealth of the household positively influence market orientation inclinations among smallholder farmers. For the second model, the harvest quantity and wealth of the individual were found to positively influence both decision and extent of market participation. Furthermore, the age of the head, family size and access to extension services influenced the decision to participate in the market while market distance and market orientation highly influenced the extent of market participation among smallholder rice farmers in Tanzania. The results imply that interventions to enhance market orientation would highly increase quantity sold, while improving access to marketing information through extension agents could improve both market orientation and decision to participate among smallholder rice farmers in Tanzania.

Date: 2018-11-03
Note: African Economic Research Consortium
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