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THE ROLE OF TRADITIONAL FARM RISK MANAGEMENT STRATEGIES ON REDUCING CREDIT RISK IN TANZANIA AGRICULTURAL LENDING
Views:261Agricultural financing enhances food security, job creation, a transition from subsistence to commerce farming, and strengthens the overall economy. However, due to unfavorable weather and market conditions there is limited financing directed towards agriculture especially in developing countries. Despite smallholder farmers' high adoption rate of traditional risk management strategies to minimize these risks, little has been done to examine its moderating role on the relationship between agricultural risks and credit risks. Thus, this study examines the role of farm business risk management strategies on minimizing the influences of production and market risk on smallholder farmers loan repayment capacity. The quantitative study used pooled cross-sectional data from a Tanzanian commercial bank from 2019 to 2021, covering 1,277 smallholder farmers from different administrative regions. Using binary interaction effect logistic regression analysis model, the study's results indicate that irrigation, mechanization, and off-farm diversification significantly minimizes the effects of production and market risk amongst smallholder farmers in Tanzania, an indication that traditional risk management strategies are effective tools amongst smallholder farmers. On the contrary, on-farm diversification strengthens the influence of production and market risk on loan repayment amongst the smallholder farmers in Tanzania, the results that can be influenced by a number of factors, including poor diversification knowledge among smallholder farmers. In light of these findings, the study recommends that policy makers and other development partners to develop agricultural infrastructure and provide more extension agents that can educate smallholder farmers on the best practices on traditional risk management.
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EXPLORING THE MEDIATION EFFECT OF PERCEIVED USEFULNESS ON CROP DIVERSIFICATION DRIVERS AMONG SMALLHOLDER COCOA FARMERS IN TANZANIA
Views:270The living standard of smallholder cocoa farmers in Tanzania was still low despite the recent transformation in marketing structure which led to the sharp rise in price. This study aimed at examining the drivers for smallholder cocoa farmers in Kilombero, Tanzania to engage in multiple crops farming as the means of poverty alleviation. Based on the cross-sectional survey design, primary data were collected from 501 cocoa farmers obtained through a random selection process that was conducted in their respective 162 agricultural marketing and cooperative societies (AMCOS) found in Kilombero. Results from covariance-based structural equation modeling (SEM) revealed that, cocoa market price, payment waiting time, farm size and cocoa farm income played significant roles in cocoa farmers’ decisions to invest while taking into account their perceptions of success. It was only the off-farm income factor that was found to have no statistical significance on farmers’ decision to invest while considering the mediation effect of perception. The study just assessed the investment decisions by smallholder cocoa farmers in Tanzania. Policy makers need to enhance the marketing factors such as cocoa price and payment time to boost farmers’ financial muscles. Meanwhile, farmers themselves are advised to take measures to boost production by increasing farm sizes while adopting better agronomic as per extension officers’ training.This study contributed to knowledge gap by exploring the cocoa-related factors that affect the stallholders’ decision to invest in crop diversification other than the non-cocoa factors that were investigated in previous studies.
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Smallholder Food Marketing Behaviour: Exploring the Role of Informal Credit and Traders in Stabilization of Food Crop Prices
67-82Views:325Many farmers in Africa sell their produce at low prices immediately after harvest because they need cash. They could solve temporary liquidity constraints by use of credit and store their produce to sell when prices are high. However, due to various reasons such many poor farmers have been excluded from formal financial services. In response, the informal financial market has expanded, but the question why informal credit has not facilitated storage to enable farmers benefit from intertemporal arbitrage opportunities remains largely unanswered. To answer this question, we investigate the role of informal credit markets and traders in stabilizing seasonal food crop prices. Our analysis is based on a household survey data, and in-depth interviews with key players in the informal credit market and grain traders in rural southwestern Uganda. We find that community-based self-help savings and credit associations provide credit for the majority (62%) of farmers. Informal credit still excludes the very poor and is not sufficient to enable farmers benefit from intertemporal arbitrage opportunities. Thus, poor farmers continue to ‘sell low and buy high’. The study also addresses a related fundamental aspect of food marketing: why is there no competition between traders bidding up prices after harvest and eliminating seasonal price fluctuations? We analyse traders’ costs and profit structure in the study area, and shed some light on imperfections in the grain market and the barriers that limit competition between traders. We find that grain trade is not highly competitive. High transaction costs and limited access to credit are the main barriers limiting competition. Supporting community-based self-help savings and credit associations to raise their portfolio can enable more farmers to borrow at the same time. Investing in infrastructure, organising and supporting small scale farmers to bulk their produce might lower transaction costs, promote competition and dampen price fluctuations.
JEL Classification: D53, O13, O16, Q12, Q13
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SOCIO‑ECONOMIC DRIVERS AND INSTITUTIONAL CHALLENGES OF TOBACCO CONTRACT FARMING PARTICIPATION IN SVOSVE COMMUNAL AREA, ZIMBABWE
Views:57Tobacco remains Zimbabwe's Leading agricultural export crop, increasingly produced under contract farming arrangements. While contract farming offers inputs, technical assistance and assured markets, concerns persist that benefits are skewed towards merchancts rather than smallholder farmers. This study investigates the determinants of smallholder participation in tobacco contract farming in ward 22, Svosve communal area, Marondera District, Mashonaland East Province. Guided by the New Institutional Economics(NIE) theory, which emphasises the role of institutions in reducing transaction cost under market imperfections, a mixed methods approach was employed. Quantitative data were from 246 communal tobacco farmers using qestionnaires, while qualitative insights were gathered from 10 key informant interviews with agricultural business advisory officers(ABAO), tobacco merchants and farmer leaders. Multistage sampling was used select 5 villages;Mere 1, Mere 2, Mere 3, Neshamba and Bonda. Data were analysed using descriptive statistics and multiple linear regression in SPSS version 25. The statistics revealed that contracted farmers had higher education levels(10 years), larger landholding(mean 2.1 hacters) and greater access to irrigation(65%) than their counterparts. The regression model was statistically significant (F = 24.73, p < 0.001) with a strong explanatory power (R² = 0.68; Adjusted R² = 0.65). Results showed that landholding size (β = 0.62) and years in contract farming (β = 0.45) were the strongest positive predictors of participation, followed by irrigation access (β = 0.38), household income (β = 0.31), and education level (β = 0.29). In contrast, multiple income sources (β = -0.27) and years in general agriculture (β = -0.27) negatively influenced participation, indicating that diversified and highly experienced farmers were less inclined to join contracts. The discussion highlighted that resource endowments and institutional support drive participation, while lack of collateral and financial literacy hinder broader inclusion. The study concludes that contract farming remains a viable pathway for smallholder integration into value chains but requires reforms to ensure equitable benefits. Policy implications emphasize collateral support, farmer training, and resource provision particularly land development and irrigation infrastructure to enhance participation and productivity among smallholder farmers.
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Intensity and Profitability of Smallholder Cassava Farmers’ Participation in Value Addition in Afijio Local Government Area of Oyo State, Nigeria
Views:453This study investigated the intensity and profitability of smallholder cassava farmers’ involvement in cassava value addition in Afijio Local Government Area of Oyo State, Nigeria. Data were collected from 150 cassava farming households through the use of a well-structured questionnaire and employing a simple random sampling procedure. The data collected included information on the socioeconomic characteristics of the respondents, intensity of value addition among the respondents, factors influencing their decisions to add value as well as the extent of value addition, profitability of cassava value addition and the factors that determined the profitability level of the enterprises. The data were analyzed using the descriptive statistics for profiling the socioeconomic characteristics of the respondents, gross margin was used to measure profitability, and ordinary least squares regression model was used to determine the factors influencing the decisions of smallholder cassava farmers to add value to cassava as well as the extent of value addition among them. The results revealed that majority of the respondents were females (52.7%) with average age between 31-40 years of age while the average household size (52.7%) is between 6-10 members. Regression analysis of the determinants of the intensity of value addition revealed that the decisions to add value to cassava as well as the extent to which value was added were influenced positively by educational attainment, household size, and years of experience in cassava value addition. Results of the gross margin analysis revealed a positive return on variable costs thus indicating that the cassava value adding enterprise is a profitable one. These findings presented the need for all the stakeholders concerned to focus their attentions on proffering solutions to the challenges faced by cassava processors within the minimum time possible.
JEL code: L11, M11, M21, Q13, R32
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DETERMINANTS OF SMALL-SCALE MACADAMIA NUT PRODUCTIVITY IN ZIMBABWE: AN ORDINAL REGRESSION MODEL ANALYSIS
Views:75This study determines the factors influencing macadamia nut productivity among smallholder farmers in Zimbabwe's Chipinge District. Despite favourable agro-ecological conditions, smallholder productivity (1.89t/ha) significantly lags behind commercial farmers (3.9t/ha) and global benchmarks (7.17t/ha). Using cross-sectional data from 284 registered smallholder farmers collected in 2023-2024, ordinal regression analysis identified critical productivity determinants. Results revealed that farming experience significantly increases productivity, with each additional year of experience raising the log odds of achieving higher productivity by 18.4% (p<0.05). Labour availability positively influences productivity (p<0.05), particularly during labour-intensive operations like pruning and harvesting. Farm resilience score, capturing innovations that reduce field losses and improve market access, exhibited a strong positive effect (p<0.01). Unexpectedly, financial management skills (FMS) and risk management skills (RMS) demonstrated significant negative effects (p<0.05), suggesting a "formalization penalty" where sophisticated management systems incur overhead costs that fail to yield proportional returns in contexts of pervasive market failure, price volatility, and liquidity constraints. The study concludes that while farm experience, labour capacity, and resilience-building investments enhance productivity, the effectiveness of formal management skills is constrained by fundamental market structure failures. Policy recommendations emphasize capacity building in experiential learning, labour skill development, resilience-enhancing technologies, and most critically the market structure reforms to enable formal management systems to function effectively. Addressing transaction costs, information asymmetry, and capital access constraints must precede investments in sophisticated farm management training.
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Farmers’ knowledge on fall armyworm (spodoptera frugiperda) pesticide application and its relationship with quantity of maize that is lost to fall armyworm
Views:395Fall armyworm (Spodoptera frugiperda) has spread rapidly and posed numerous threats to the food security and livelihood of millions of smallholder farmers in Ghana. This study quantifies the damages of fall armyworm infestation in maize production and identifies the various methods used in controlling fall armyworm infestation. Almost all farmers 94% experienced fall armyworm infestation on their farms. They cited key common visual damages as yellowish leaves, stunted growth, poor yield quality, holes in leaves, and egg masses on leaves. Farmer’s loss an average of GH¢2616.07 to fall armyworm infestation. Pesticide application is the frequent control measure mostly used by farmers. Farmers do not mostly use biological methods for the control of the fall armyworm. The use of pesticide as a control method is however not effective as about GH¢ 3 000 per 1 acre is lost with the use of insecticides. It is recommended that the use of other control measures like the contemporary measures involving the use of birds and chickens as predators of eggs and worms of fall armyworm should be encouraged.
JEL code: Q16
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DO MULTIPURPOSE COOPERATIVES HAVE ADDRESSED THEIR MEMBER’S AGRICULTURAL OUTPUT MARKETING CHALLENGES OF SMALL HOLDER FARMERS IN ETHIOPIA?
Views:350Multipurpose cooperatives offer a powerful tool for enhancing the livelihoods of small-scale farmers, particularly in developing economies. By joining forces, these farmers gain greater collective bargaining power, allowing them to negotiate better prices for their crops and increase their incomes. In developed countries as well, farmer cooperatives play a central role in streamlining production and marketing activities for family farms. They act as a crucial bridge between farmers and markets, ensuring smoother exchange and coordination within the agricultural sector. However, despite their significant contributions, multipurpose cooperatives also face challenges that influence them to play a significant role of agricultural product marketing. The aim of this study was to examine the benefits and difficulties associated with members of a multipurpose cooperative participating in the sale of agricultural products in the Kersa district of Jimma Zone, Oromia Regional State, Ethiopia. For this study, four multipurpose cooperatives were chosen using a two-stage sampling technique, resulting in a sample size of 196 cooperative members. Quantitative data was collected through a structured questionnaire from primary sources, while qualitative data was collected through focus groups and key informant interviews. Descriptive statistics such as mean, chi-square, standard deviation, frequency, and percentage were used to analyze the data. The result showed that 66.36% of cooperative members were participants, whereas 33.64% were non-participants. Multipurpose cooperatives are serving as the primary source of agricultural inputs. However, the output marketing activity of the sampled multipurpose co-operatives in the district is not as remarkable. The study suggests that local cooperative agencies should encourage more members to participate in selling their crops through the cooperatives
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Off-farm participation and technical efficiency among smallholder farmers in the Northern Region, Ghana
35-43Views:484The study aimed at investigating the effects of off-farm participation on technical efficiency of maize production in the Tolon district of the Northern Region, Ghana. The Logit regression model was used to analyze the determinants of off-farm participation while the stochastic frontier production function was used to model the determinants of maize output and technical efficiency. The empirical results from the logistic regression model indicate that age of farmer, educational attainment, farming experience, farm size, and previous farm income are significant drivers of farmers’ participation in off-farm activities. Farmers’ average technical efficiency level was 90.7% suggesting a 9.3% potential loss to inefficiency. Moreover, participation in off-farm activities had a negative influence on farmers’ technical efficiency level. The study, therefore, recommends that farm-level policy should be directed towards making the agricultural sector attractive by promoting investment and agricultural employment opportunities in the rural areas so as to ensure full commitment to farming activities.
JEL code: Q22
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DETERMINANTS OF UTILIZATION AND OPTIMUM USE OF FARMER FIELD BUSINESS SCHOOL RECOMMENDATIONS AMONG MAIZE FARMERS IN NORTH WEST NIGERIA
Views:58This study examined the predictors of utilization and intensity of use of Farmer Field Business School (FFBS) recommendations among maize farmers in North West Nigeria. A structured questionnaire was administered to 231 FFBS participants in Kaduna and Kano States. Data were analysed using weighted mean scores, a Utilization Index, Probit regression for the binary utilization decision, and Tobit regression for intensity of use. Results showed that 95.7% of participants utilized FFBS recommendations, yielding a mean Utilization Index of 0.7415. Intensity of use varied widely across practice areas: planting and fertilizer application recorded the highest intensity (WM = 2.49 each), while use of Aflasafe and field measurement returned low scores (WM = 1.39 and 1.58). The Probit model identified sex (p < 0.10), age (p < 0.10), household size (p < 0.05), and land acquisition mode (p < 0.01) as significant determinants of the utilization decision. The Tobit model showed that marital status (p < 0.05), household size (p < 0.10), frequency of extension visits (p < 0.01), and the Perception Index of FFBS (p < 0.01) significantly influenced optimum use. These findings underscore the importance of targeted extension engagement and positive programme perception in deepening practice uptake among smallholder farmers.
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ENHANCING AGRICULTURAL MARKET EFFICIENCY THROUGH THE INTEGRATION OF VALUE CHAINS INTO TANZANIA’S AGRICULTURAL COMMODITY EXCHANGE AND WAREHOUSE RECEIPT SYSTEM
Views:300Enhancement of small-scale agricultural performance is undoubtedly one of the Tanzanian government’s initiatives toward an industrialized economy as stipulated in “Intergrated Industrial Development Strategy 2025”. The coordination of agricultural commodity exchange market operations with those of warehouse receipt system was aimed at improving the forward market linkages for agricultural products from small-scale farming. However, due to the growth of the sector, it became imperative to review the marketing structure in place to align with the new changes. This study was conducted to assess a need of upgrading the marketing structure for small scale agribusinesses by focusing on sunflower sub-sector. Primary data were collected from 399 sunflower farmers from Kondoa and Itigi district councils based on cross-sectional survey design. The gross margin analysis revealed that, smallholder farmers engaged in sunflower oil business earned 5.085 times more than those who just sell unprocessed seeds. The secondary data from Tanzania corporation development commission (TCDC), Tanzania mercantile exchange (TMX) and warehouse receipt regulatory board (WRRB) showed that, the current marketing structure did not support the trading of processed agricultural products. It was therefore recommended to upgrade that system in place to have a designated window for trading the value added agricultural products for improved performance.
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