A Comparative Analysis of Technical Efficiency of

Tobacco and Maize Farmers in Tabora- Tanzania

A.Kidane; A.Hepelwa; E.Ngeh & T. W. Hu

This study was supported by a grant from United States National Institute of Health – Fogarty International Center and National Cancer Institute R0/TW009295

OUTLINEBackgroundObjective of the studyMethodologyResultsConcluding remarks

BackgroundThe agriculture sector in plays an important

role for the overall economy in Tanzania◦ It contribute significantly to food security, rural

employment, and provision of industrial raw materials for other sectors in the country.

◦ It contributes 27% of GDP, 51% of foreign exchange, 75% of total employment (WB, 2013)

Agricultural sector is identified as key driver of the growth and poverty reduction in the country

Cash crops and export earnings

Tobacco production

Background –cont-Based on gains at macro level analysis, extension

agents and companies are encouraging farmers to produce more tobacco by availing credit to purchase fertilizer and seeds.

Setting the negative health consequence aside, if one is to undertake benefit cost analysis, tobacco farming may not be the better option for small scale farmers.

There are economic costs associated to the production and consumption of tobacco. The costs include health risks and environmental problems.

Background –cont-

Tobacco cultivation is labor intensive ◦10 hours per day ◦10 months period from cultivation to harvest.

The gestation period for annual crops such as maize or ground nuts is less than 4 months with relatively less labor input.

The quest in this paper to use evidenced based research findings on how production of other crops than tobacco is beneficial in Tanzania

Objective of the studyThis study aims at comparing production

efficiency between tobacco and maize

We investigate whether tobacco farmers are better off growing tobacco as compared to maize (the main staple food).

The study is set to empirically determine and compare the efficiency of tobacco and maize farmers.

MethodologyThis study employs the stochastic frontier

production function as proposed by Battese and Coelli (1995).

The study estimate frontier production functions for maize and tobacco and identify which is more efficient

The study analyze the determinants of

technical efficiency (TE) for the two crops.

DefinitionTechnical efficiency (TE) is a ratio of the farmer

actual production to the optimal output.

TE reflects the ability of the producer to obtain maximum outputs from a given set of inputs.

The producer is said to be technically efficient when the actual output is equal to the optimal output

For the given production processes, TE would be measured theoretically within the range (0, 1] i.e

If farmers achieve their maximum output, then they would be technically efficient

Otherwise there is inefficiency i.e TE<1

Estimation:

Stage I: Production function

Y= total outputX1= labour inputs

X2= land cultivated

X3= proportion of fixed assets used

X4 = Cost of fertilizer, pesticides and fungicides

vi = error term (factors outside the control of the farmers)

μi = error term that reflects the technical inefficiency

If no inefficiency; μi = 0

iiXXXXY 443322110

Stage II: Inefficiency model

Factors influencing inefficiency

z1= gender of the farmer (Binary)

z2 = Age of the farmer

z3 = Educ. level (1= has formal education)

z4 = Household size

z5 = Farm size in acres

z6 = land ownership(binary)

Estimation - MLThe Cobb-Douglas production

frontier and the inefficiency model defined are estimated using the Maximum Likelihood (ML) method.

STATA is used to estimate the TE

Study area and dataThe study uses farmers’ data collected in

Tabora regionMajor tobacco producing region in Tanzania.

At first, purposive sampling of 6 villages was done to ensure presence of both tobacco and maize farmers in our sample

Then, the study randomly selected 306 farmers, the strategy was to select 50 farmers per village.

Study area and climate

Climate and Population

The annual rainfall is between 700 mm and 1000 mm,

with the daily mean temperature around 230C .

The region has a population of about 2.2 million (National Census, 2012).

Population density is 30 persons/km2

Technical efficiency results

TE levels and percent of farmers

<0.1 0.21- 0.30 0.31-0.40 0.41-0.50 0.51-0.60 0.61-0.70 0.71-0.80 0.81-0.90 >0.910

5

10

15

20

25

30

35

40

TE Maize TE Tobacco

ConclusionFarmers in the study area appear to be

relatively more efficient in the production of maize than tobacco.

When the earnings from tobacco are compared to the other crops such as maize the former appears to generate more earning.

This scenario appears to be reversed when the corresponding input costs are taken into consideration.

When net earnings is estimated on per acre or per manpower it appears that farmers in the study area are better off being engaged in non tobacco crops.

This finding does not take into consideration various health hazards associated with tobacco production.

There is a need for more research on various issues to guide policy makers for effective tobacco control in the region.

LimitationHealth hazards from tobacco

farming has not been taken into account

We have not compared the welfare of farmers

NEW EFFORTS

Similar study is underway using National Agriculture Census Survey

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