Commercialization of Smallholder Agriculture in the Southern Highlands of Tanzania

Abstract

Tanzania seeks to achieve a semi-industrialized economy by 2025. In this envisioned economy, commercialization of smallholder agriculture, which provides the necessary raw materials and a market for industrial products is key. However, commercialization of smallholder agriculture remained a challenge. As such, it was not clear regarding how do smallholders commercialize, which smallholder farmers commercialize and to what extent, and what are the drivers of change. This study sought to understand processes of commercialization of agriculture among smallholder farmers. The specific objectives were fivefold: first, to identify smallholder farmers’ asset ownership characteristics; second, to find out smallholder farmers’ agricultural production practices; third, to analyze existing models of commercialization of smallholder agriculture; fourth, to analyze existing linkages between smallholder farmers and medium and large scale farmers and agro-industries; and, fifth, to examine smallholder farmers’ perceptions on commercial agriculture. The study was conducted in eight villages of Kilolo and Iringa Districts in the southern highlands of Tanzania. A survey of 206 smallholder farmers, eight Focus Group Discussions (FGDs) and six Key Informant Interviews (KIIs) were conducted. Quantitative data were analyzed using descriptive statistics, linear regression and Exploratory Factor Analysis (EFA). Qualitative data were analyzed according to emerging themes looking for patterns across groups and key differences or unexpected findings. The study established that men dominate in crops that are produced for commercial purposes. Most of smallholders own rudimentary farm equipment mainly a hand hoe. More youth than adults are engaged in commercial agriculture. The engagement of energetic youth in commercial agriculture is likely to be a viable approach to enhance productivity, value addition and competitiveness of the sector. Traditional surplus selling, farmer groups, middlemen, and contract farming as well as individual farmers’ commercial production are the most common models of commercialization. Smallholder farmers are not necessarily producing for the market but sold any accrued surplus to meet their basic requirements hence, having one foot in subsistence and another foot in the market.. In terms of linkages with medium and large-scale producers and processors, smallholder farmers prefer direct linkages through direct selling, contract farming, and brokers. Most of such linkages are common at initial stages of investment but gradually fade away as investors start to produce their own inputs or raw materials. Given the opportunity, some smallholder farmers were willing to quit their own farming activities to provide labor to medium and large-scale producers and processors. Quitting their own farming over employment is viewed as a positive move among smallholders. This implies that smallholders did not consider farming as a business, which is deterrent to commercialization efforts. Despite the potential for commercialization, access to capital and extension services are the main challenges facing smallholder farmers. The study recommends for continued emphasis to enhance smallholder farmers’ access to farm technology, affordable capital as well as extension services. Also, efforts of the government to enhance commercialization of smallholders should identify farmers with market orientation who are ready to go commercial. Smallholders who are willing to quit their own farming if alternative employment opportunities were available are not the kind of farmers to target the interventions if true commercialization is to take place.