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This study tests the hypothesis whether there was significant difference in the input use, costs and coffee profitability by farmers of varied socioeconomic background as described by the level of production and accessibility to District Headquarters (DHQ). The study was conducted in Rungwe District, Southwest Tanzania. One hundred and forty smallholder coffee farmers were randomly selected for interview. Consultations were also made with the coffee buyers, district authority and the Ministry of Agriculture focusing mainly on the policy and intervention strategies. Findings show a significant low input use by all sample farmers after market liberalization but still profitable by all farmer categories. Nevertheless, large producers and farmers in easily accessible areas to the DHQ had significantly higher input use, low input cost, high producer prices and profits compared to low producers and the farmers in remote areas. It is concluded that improving accessibility to input and output markets, enhancing production levels and facilitating farmers' organizations for marketing may reduce the marketing costs and enhance coffee profitability by smallholder farmers.
Coffee is one of the traditional export crops in Tanzania. It plays an important role in Tanzania's economy. In 2006, income from coffee was $53.8 mn. This is about 3.7% of the total export earnings. About 95% of coffee is produced by some 400,000 small holders on average plots of 1-2 hectares. Most of the farmers do not use purchased inputs such as chemicals and fertilizers.
Tanzania liberalized its market for traditional export crops in 1994. Market oriented reforms presumed that the elimination of monopoly parastatal marketing could induce significant private sector entry into input and output marketing, leading to more competitive and efficient markets. The results of these reforms however, have been mixed. There is evidence of traders' entry in the liberalized coffee marketing (Baffes, 2003; Temu et al., 2003; URT and EU, 1998; Poulton et al., 1998; Dorward et al., 1998; and Jaffee, 1995). Yet, few companies are controlling a high market share. Also, due to the lack of credit accessibility, a high proportion of cooperative societies have been weakened (Baffes, 2004) leaving farmers with no representative organization to coordinate their production, negotiate prices with buyers and campaign for better support services. In addition, market services by private traders have been varying from one location to another depending on the level of socioeconomic infrastructure development with remote peasant farmers experiencing a decline in the marketing services for inputs and outputs (Bryceson, 1999). The impact has also been different across the continents (Santos-Paulino, 2007). Cooksey (2003) concludes that the liberalization of Tanzanian export crops from the early 1990s to the present has failed to take place to the extent claimed by the Tanzanian government and donor agencies. This study attempts to provide empirical evidence of the implication of market accessibility and level of production in smallholder farmers' coffee profitability after market liberalization. The main focus is on the input and output markets and profitability by farmers of coffee in Rungwe District, Southwest of Tanzania. The coffee subsector was chosen due to the significant role it plays in the national export earnings. It is also one of the major sources of farm income and a leading crop in influencing the social and economic status of most of the smallholders in the study area (URT, 1998). It is hoped that the empirical findings will contribute to the overall theoretical and empirical understanding of the private sector performance in the liberalized coffee marketing and agribusiness in general. |
