The role of middlemen in fresh tomato supply chain in Kilolo district, Tanzania

The role of middlemen in fresh tomato supply chain in Kilolo district, Tanzania

IJAM

The role of middlemen in fresh tomato supply chain in Kilolo district, Tanzania 1*Leonada Mwagike and 2Ntengua Mdoe

Department of Procurement and Logistics Management, Mzumbe University School of Business, P.O. Box 6, Morogoro Tanzania. Department of Agricultural Economics and Agribusiness, Sokoine University of Agriculture, P.O. Box 3151, Morogoro- Tanzania

The paper aimed to analyze the role of middlemen in linking smallholder tomato farmers with Dar-es-salaam markets, Tanzania. Semi-structured questionnaires were administered to 133 small vegetable farmers and 109 traders. Data analysis was done using descriptive statistics such as frequencies, percentage, chi-square and one way analysis of variance. The study revealed that majority (58%) of smallholder tomato farmers sold their produce to middlemen due to being geographical separated from the markets, poor local road network and poor access to market information. This study concluded that the use of middlemen to sell tomato produce cannot be avoided unless smallholder farmers are linked with urban markets. In order to enhance farmers access to markets, it is recommended that the government should strive to improve feeder roads. Improvement in feeder roads is likely to bring about large welfare gains in terms of large volumes of tomatoes traded and can make assembling of tomatoes easier and less costly for traders.

Key words: Kilolo, tomato supply chain, Tanzania, smallholder farmers, middlemen INTRODUCTION Vegetable subsector in Tanzania has the potential to advance Tanzanias objectives of economic growth and poverty reduction (Amani, 2005). This is because the subsector is largely dominated by smallholder farmers and the dominance of smallholder farmers in the subsector offers an opportunity for making an impact on Tanzanias poverty reduction efforts (Kawa and Kaitira, 2007). Besides being dominated by smallholder farmers, the potential of the subsector to alleviate poverty particularly income poverty stems from the high demand for vegetables in urban markets (Weinberger and Lumpkin, 2007). Most of the demand for vegetables in Tanzania is in urban areas like Dar es Salaam. Like producers of vegetables elsewhere in Tanzania, tomato farmers in Kilolo District depend on Dar es Salaam as the major market for their tomatoes. It is estimated that Dar es Salaam absorbs about 60% of the tomatoes from

Iringa Region (URT, 2012). This proportion is likely to increase because the demand for vegetable crops in urban areas has the potential to increase due to increase in urban population and incomes of urban dwellers. However, there are critical issues that constrain full exploitation of the urban markets for tomatoes including scattered nature of smallholder farmers in the study area, small quantities of tomatoes produced by individual smallholder farmer, long distances between the tomato supply demand areas and perishability of tomatoes and lack of storage facilities.

*Corressponding Author: Leonada Mwagike, Department of Procurement and Logistics Management, Mzumbe University School of Business, P.O. Box 6, Morogoro Tanzania. Tel:+255 23 2604380-4, Telefax:+255 23 2604382, Mobile:+255 784 607 322

International Journal of Agricultural Marketing Vol. 2(3), pp. 045-056, June, 2015. www.premierpublishers.org. ISSN: 2167-0470


Mwagike and Mdoe 046 The scattered nature of the smallholder tomato farmers and the long distance between the tomato producing villages to the major tomato consumption centers appear to be the major constraints for tomato farmers and traders in the study area. Besides costs of transporting tomatoes to major consumption centers like Dar es Salaam, tomatoes in the study area are produced on small farms scattered over a large area. This situation is exacerbated by poor road network that links the tomato farms to collection centers and markets in the study area, making assembling of tomatoes difficult and costly for traders. Most roads in the study area other than a few well maintained roads including the Dar es Salaam - Zambia highway are in poor condition. Farmers who are far from the good roads are marginalized not only because they have difficulty in reaching the tomato markets, but more so because tomato traders avoid farms in areas off the good roads where transport costs are too high (Eskola, 2005). Difficulties faced by farmers in reaching markets contribute to post-harvest losses. According to MMA (2008) and MUVI-SIDO (2009), approximately 30 - 40% of the tomatoes are lost due to poor post-harvest handling including transportation. The long distance from the tomato farmers to the urban markets like Dar es Salaam makes smallholder tomato farmers who cannot sell their tomatoes at nearby local markets to depend on middlemen who buy tomatoes for the urban markets. The middleman trader exercises the essential entrepreneurial functions of exploring and creating market exchange opportunities and bears the risk entailed in this task. It operates in two markets helping the smallholder tomato farmers access customers and the customers get the products.

Banson et al., (2014) found that in many African countries, cultivation and production of crops is produced by smallholder farms with limited mechanization and capacity, leading to high transaction cost and poor yields. In addition the research revealed that fragmented markets, price controls, and poor infrastructure also hamper production and development. Inefficient agricultural marketing system has been observed to have major drawbacks in the development of the agricultural sector (Mdoe et al., 2001). Vegetable marketing system is prone to various sources of inefficiencies. Farmers in vegetable producing areas are unable to attract competitive buyers. Many of the farms are located in relatively isolated areas, a considerable distance from improved roads making access to competitive markets difficult and costly (Massawe, 2007). Lack of bargaining power along with various credit bound relationships with the buyers has lead to farmers being exploited during transaction. Eskola, (2005); deputter, (2007) reveals

that lack of market information and the weak legal framework lead to difficulties in negotiating trade agreements and enforcing the existing contracts. Previous studies on vegetable supply chain found that smallholder farmers sell their produce to various middlemen (assemblers, wholesalers and retailers) due to high transaction costs. Lambert and cooper (2000) and Robinson and Kolavalli (2010). MUVI (2009) conducted a study on tomato value chain analysis in Iringa region. The study found that smallholder farmers relied on middlemen to sell their produce due to high transaction costs such as transportation and imperfect market information. Suryavanshi et al., (2006) reveals that 80% of the vegetable was sold through middlemen due to high transportation costs incurred in transporting produce from rural areas to urban markets. Eskola (2005) found that most farmers sold their agricultural products either to the local traders who are the residents of the villages who in turn sold the produce to other buyer coming from Dar es Salaam. Local traders act as facilitators between many local producers and a few Dar es Salaam buyers. Thus middlemen are needed in several parts of the supply chain to transfer information of the quantities and prices supplied and demanded, and acting as guarantors of the two parties. Gabre-Madhin (2001) found that institutions of middlemen in the Ethiopian grain market play an important role in trade facilitation in terms of market information dissemination between producers and other buyers. A number of studies in vegetable supply chains have mainly documented that smallholder farmers incur high transactions costs linked to search for buyers, market information and negotiation and other costs associated with marketing their vegetable produce (Lamber and Cooper, 2000; Eskola, 2005; Eaton et al., 2007; Robinson and Kolavalli,2010). However, there is limited information on analytical dimensions on how farmers overcome transaction costs associated with marketing of their produce. This paper looked at tomato supply chain, actors and their function, the role of middlemen in linking tomato producers and traders in Dar-es-salaam and challenges facing chain actors. It is very crucial that both policy makers and development practitioners understand the status of vegetable supply chain if small scale farming is to be profitable business at a local level, national level and for future inclusion in global supply chains.

METHODOLOGY The study was conducted in Kilolo District in Iringa


Int. J. Agric. Mark. 047

Figure 1. Map showing Iringa Region, Tanzania

Region (see Fig. 1). The main economic activity in Iringa Region is agriculture. It is estimated that more than 80% of its population depends on agriculture. According to Putheti, (2015), a variety of crops are found in the Region. Maize is the main staple food. Horticultural crops comprising of onions, tomatoes, fruits and cabbage are grown commercially mainly in Iringa Rural and Kilolo districts. Kilolo District was selected for the study due to its potential for tomato production. Tomato is an important cash-earning commodity for Iringa region. It can be estimated that 60 000 farmers are involved in tomato production in the region. According to regional agricultural statistics, Kilolo District accounted for 51% of the 107 000 MT of tomatoes produced in the 2007/08 season while Iringa Rural accounted for 44% (URT, 2012). Tomato farmers in Kilolo District are small scale farmers who cultivate an average of 0.25-0.50 acres of land per household.

A multistage sampling technique was used to select sample areas. The first stage involved selection of one district from Iringa Region. At this stage Kilolo District was selected from the four districts in the region on the basis of volume of tomato production. According to the Kilolo District Agricultural officer, Kilolo District was the leading District in terms of planted area and volume of tomatoes produced. It accounted for 51% and 69.3% of area planted with tomatoes and volume of tomatoes produced in the region during the 2007/2008 season (URT, 2012). In the second stage, one division (Mazombe) was selected out of three divisions in Kilolo District on the basis of volume of tomatoes produced. According to the Kilolo District Agricultural Officer, Mazombe Division was the leading producer of tomatoes among the three divisions. However, the researcher failed to get up to date data on volumes of tomato by division. The third stage involved selection of sample


Mwagike and Mdoe 048

Table 1. Sample size for the study

Village No of tomato household Sample size

Sample size as % of the tomatoes growing households

Madizini 840 44 5

Masukanzi 860 44 5

Lugalo 890 45 5

Total 2 590 133 5

Source: Village register book (2010)

villages from Mazombe Division. The selection criteria of the study villages were; to cover areas that represent typical tomato farming in the Division while the last stage involved selection of tomato farming households from the sample villages. With the assistance of the division officer, random sampling technique was employed to

select three villages namely Madizini, Masukanzi and Lugalo out of the 12 villages in Ilula and Lugalo wards. The target population included all households involved in tomato production in the sampled villages. With the assistance of the Village Executive Officers (VEO) a

simple random sampling technique was employed to select a sample of tomato producing households from the lists of tomato growers in Madizini, Masukanzi and Lugalo villages. The sampling frame was the village register book. The total sample size comprised of 133 households. The sample size for farmers was obtained by using the following formula n/N5% (Sudman, 1976). Table 1 shows the distribution of the sample households by village. A lottery method was employed to select respondents from the sampling frame. The researcher wrote names of the tomato farmers in pieces of papers, the pieces of papers were put in a box, they were mixed them up and then the researcher picked one piece of the paper randomly. The procedure was repeated until the researcher got the sample required. Two wholesale markets namely Tanzania Social Action Fund (TASAF) markets located in Ilula ward and Mlamke markets located in Lugalo ward were purposely selected out of three markets in the division. These markets are the two main tomato collection points in Mazombe Division where farmers/assemblers bulk tomatoes waiting for traders from urban areas especially Dar es Salaam. Snowball sampling (from one actor, the other actors were contacted) to identify traders for interview who came to the markets (TASAF and Mlamke) to purchase tomatoes. A total of 109 traders comprising 36 assemblers 40 wholesalers and 33 retailers were selected. Out of 109 traders, 35 were traders from Dar es Salaam. According to Bailey (1994) regardless of the population size, a sample or sub-sample of 30 cases is the bare minimum for studies in which statistical data analysis is to be done. Both primary and secondary information were collected for the study. Data from the sample farmers and traders

were collected using the pre-tested questionnaire. The questionnaire was administered to respondents through face-to-face interviews. Besides questionnaire, discussions guided by checklists were held separately with groups of farmers, assemblers, wholesalers. Secondary information for the study was obtained from published and unpublished reports from different sources such as Iringa Regional Agricultural Office, District Agricultural and Livestock Development Office (DALDO) in Kilolo District, Sokoine National Agricultural Library (SNAL) and web sites. Both qualitative and quantitative methods were used in data analysis. Below is a description of the analyses carried to achieve the objective of the study. Qualitative data analysis was used to analyze the challenges actors faced in marketing their produce. In analyzing the challenges in the study area, the researcher organized the information according to emerging themes and sub-themes. The recorded dialogue was broken into smallest units of information and theme (Corbin and Strauss, 2007). Content analysis was used to analyze qualitative information obtained from focus group discussions. In groups, the following questions were asked: (i) to whom did you sell your produce? (ii)Where did you sell your produce? (iii)Why did you prefer to sell to this particular buyer?(IV)Do you always sell all the vegetables produced? (V)What were the problems of vegetable marketing in the area? (VI) How do you preserve vegetables produced? The structure of the fresh tomato supply chain was analyzed using a supply chain analysis (SCA). The SCA examines all the actors involved in the chain, the linkages between them, and the activities in each link (Gereffi et



Figure 2. Structure of the fresh tomato supply chain in Kilolo District

al., 2005 and Putheti, 2015). In this study the SCA examined two key actors in the fresh tomato supply chain -farmers and traders who were involved in production and marketing of tomatoes, the linkages between them and the activities within each link. Distribution of tomatoes was traced from farmers to the final consumers. The flow chart was used to trace the fresh tomato supply chain used by farmers and traders to market their produce. The percentage of tomatoes sold to different chain actors was analyzed using frequency counts and percentages. Actors share of the price paid by consumers along the longest fresh tomato supply chain was calculated by dividing the farm gate price to the subsequent price levels along the chain. Mathematically actors share (AS) was calculated as follows, AS= AP/Pi, Where

AS=Actors share AP=Actor price Pi= Price of tomato at market level i in Tshs/per tenga. RESULTS AND DISCUSSION Figure 2 shows the fresh tomato supply chain map encompassing the key actors and the functions they performed. The functions performed include input supply, tomato production, assembling, sorting, packaging, transportation, wholesaling, processing and retailing of tomatoes. Details of these functions are provided in subsequent sections below. Input supply and service provision At the base of Figure 2 input suppliers and service providers played the role of supply chain supporters.


Retailing

Tomato supply

chain functions

Consumers

Processing and

wholesaling

Bulking

Packaging

Transportation

Production

Input supply

Retailers

Wholesalers

Assemblers

Tomato Farmers

Consumption

Input suppliers and service providers


Table 2. Distribution of farmers by land area under tomato production (acres) during 2010 tomato growing season

Madizini Masukanzi Lugalo Whole sample

Minimum 0.25 0.25 0.25 0.25

Maximum 1 0.50 2 2

Mean 0.28 0.27 0.35 0.30

SD 0.13 0.07 0.20 0.15

Table 3. Tomato varieties planted by sampled farmers in 2010 tomato growing season

Seed variety

Village Madizini Masukanzi Lugalo Total No % No % No % No %

Tanya 19 4.3 14 5.3 7 5.3 40 30.1 Roma 25 18.8 30 22.6 38 8.6 93 69.9

2=8.169 **, df=1, P


Table 4. Cost of tomato seeds and fertilizer paid by sampled farmers in 2010 tomato growing season

Seeds (Tshs pkt 100 gram) Fertilizer Tshs 50kg

N Min Max Mean SD Min Max Mean SD

Madizini 44 20 000 20 000 20 000 0 000 45 000 68 000 60 200 4 317

Masukanzi 44 15 000 30 000 19 800 2 771 55 000 68 000 60 500 3 940

Lugalo 45 15 000 30 000 20 000 1 894 45 000 70 000 59 700 4 606

Table 5. Cost of pesticides and hired labour paid by sample farmers in 2010 tomato growing season

Village Pesticides Tshs per litre Labor charge N Min Max Mean SD Min Max Mean SD

Madizini 44 7 000 7 000 7 000 000 15 000 80 000 38 600 17 399 Masukanzi 44 7 000 7 000 7 000 000 20 000 85 000 43 300 18 009 Lugalo 45 7 000 7 000 7 000 000 10 000 140 000 56 300 26 955

F = 7.808*** ***Significant at 1%

Table 6. Volume of tomatoes harvested per household during April-June 2010 tomato growing season (In tenga)

Madizini Masukanzi Lugalo Whole sample

Minimum 50 45 70 50

Maximum 120 110 120 120

Mean 87 85 94 88

SD 18.68 15.599 13.72 16.50

F = 3.619**, ** Significant at p


Marketing channels and the role of middlemen in the tomato supply chain Figure 2 above further illustrates the various marketing channels through which farmers in the study area sell their fresh tomatoes. There are five market channels through which farmers sell their fresh tomatoes. According to Figure 2 the most important channel comprises of farmers who sale through assemblers. Approximately 58% of the farmers sold their tomatoes through this channel during the April-June 2010 tomato growing season. This is the longest channel in the fresh tomatoes supply chain in the study area with more intermediaries than the other market channels. Assemblers played a very crucial role in the fresh tomato supply chain since they had several close links with many local producers and wholesalers who came from different parts of the country to purchase tomatoes. Farmers wanted to save transport cost, loading and unloading costs thats why they sold their tomatoes to assemblers at farm gate. The study found that on average farmers sold about 65 tengas out of 88 tengas harvested. This indicates that losses were about 20 tengas (26%) of the tomatoes harvested. Average selling price was Tshs 7 515 per tenga of tomatoes. This finding supports finding by Suryavanshi et al. (2006) who found that 80% of the tomato produce was sold through assemblers because farmers wanted to save transport cost, loading and unloading costs. The second important market channel comprises farmers who sell their fresh tomatoes through wholesalers instead of passing through assemblers. Approximately 18% of the sampled farmers sold their fresh tomatoes to wholesalers in the April-June 2010 tomato growing season. The farmer-wholesaler arrangement is similar to the farmer-assembler arrangement in that transacting parties meet at the farm gate or collection centres. The pricing system of wholesalers depends on current market prices. The shortening of the distribution chain by having a direct buying-link between farmers and wholesalers implies that few negotiation and bargaining transactions take place among smallholder farmers and wholesalers. When disagreements occur, farmers and wholesalers can directly re-negotiate with each other instead of depending on assemblers as intermediaries. Wholesalers are generally well funded; and for this reason, provided farmers with loans which was used by smallholder farmers to purchase production inputs such as seeds, fertilizers, or chemicals for pest and disease control. Wholesalers assistance however, does not come without

consequences because farmers are compelled to pay the loans or give priority to their wholesaler-financier when tomatoes are ready for harvesting. Thus they are forced into an agreement that can be referred to as a kind of locked-in effect. According to traders We could lend to farmers up to 300,000 Tanzanian shillings with 5% interest per month. Payment was made after harvest or through agreed sales. Traders reported that some farmers diverted the purpose of loan accessed to other businesses hence failed to pay the loan on time. During focus group discussions farmers were asked to give their opinion about the informal contractual arrangement with traders. It was established that the arrangement was good because farmers had a certain degree of assured market and income security through agreed sales. According to farmers We consider the contractual arrangement to be good because we are assured of selling our produce to traders who have provided credit to us. However, sometimes we are forced to sell our produce for low market price because of the contractual agreements. This makes us to get low cash income from tomato produce The above two market channels handled slightly above three quarters (76%) of the fresh tomatoes produced in the study area during the April-June 2010 tomato growing season. The remaining 24% were channeled through processors, retailers or sold directly to ultimate consumers. Approximately 1%, 13% and 10% of the sampled farmers reported to sell their tomatoes through processors, retailers and directly to consumers respectively. Consumers of fresh tomatoes include individual households and organizations such as schools, colleges and hospitals. During focus group discussion it was revealed that there were high level of losses about 40 - 60% of the tomatoes were lost due to poor post harvest handling. According to farmers: Limited access to markets for our produce is the most challenging problem we face. Most of us sell our tomatoes to middlemen at below market price because of limited access to urban markets. We do not have the capacity to sell our tomatoes to places where can get better prices, because of high transportation costs. We also lack storage facilities for conserving tomatoes. This result into big losses thus we dont have choice other than selling at the price determined by middlemen on a specific date.



Table 7. Volume of fresh tomatoes handled by assemblers in April-June 2010 tomato growing season

Quantity in tengas per assembler per season

Min Max Mean SD

Quantity bought 400 7 760 2 226 2 054

Quantity sold 395 7 750 2 218 2 049

Table 8. Fresh tomato prices paid and received by assemblers in April-June 2010 tomato growing season

Prices per tenga in Tshs Min Max Mean SD

Buying price 6 000 12 000 7 861 1 663 Selling price 1 0000 25 000 1 6611 4 114

Table 9. Volume of tomatoes handled by wholesalers in April-June 2010 tomato growing season

Quantity of tomatoes in tengas per wholesaler per season Min Max Mean SD

Quantity bought 150 2 000 608 437 Quantity sold 135 1 995 597 434

Table 10. Prices paid and received by wholesalers in April-June 2010 tomato growing season

Prices per tenga in Tshs.

Min Max Mean SD

Buying price 7000 18000 11200 2665

Selling price 18000 40000 25850 5907

There are three main trader categories in the fresh tomato supply chain in Kilolo District. The first category is assemblers. Rural assemblers play a crucial role in the supply chain since they have close links with many local producers and buyers who come from different parts of the country to purchase tomatoes. Exchange of tomatoes from producers to assemblers takes place at the farm gate or collection centers near areas where tomatoes are being grown. Assemblers have to bear the cost of tomato loading, transportation to their buyers and unloading. Assemblers sell the fresh tomatoes to wholesalers, retailers or directly to consumers. Majority (55.6%) of the assemblers sold their tomatoes at village markets to wholesalers from urban areas such as Dar es Salaam, Morogoro, Ruvu, Mtwara, Chalinze, Tanga and Mombasa. Approximately 25% of the assemblers sold their tomatoes to retailers and the remaining 19.4% sold their produce to final consumers. Quantities of tomatoes handled by the assemblers varied greatly as indicated in Table 7. On average assemblers bought approximately 2 226 tengas and sold 2 218 tengas per season. Similarly prices paid to producers (buying price) and prices received by the assemblers varied greatly with mean buying price of Tshs. 7 861 and selling price of Tshs. 16

611 per tenga in April-June 2010 tomato growing season (Table 7). The second category of traders is wholesalers. Wholesalers purchase tomatoes from farmers and/or assemblers at the farm gate or collection centers. Wholesalers ensure that the purchased tomatoes are properly packed, stored ready for transportation to selling points in urban area. About 70% of the wholesalers reported that they sold their produce to retailers and the remaining 30% sold their produce directly to consumers. Quantities of tomatoes purchased and sold by wholesalers are shown in Table 9 while prices paid and received by wholesalers are indicated in Table 10. As revealed from the two tables both quantities handed and prices paid/received varied greatly. On average wholesalers bought and sold 608 tengas and 597 tengas per season respectively (Table 9). Each tenga was bought and sold at an average price of Tshs. 11 200 and Tshs. 25 850 per tenga respectively in the April-June 2010 tomato growing season (Table 10). The third category of traders is retailers. Retailers are known for their limited capacity of purchasing and



Table 11. Volume of fresh tomatoes handled by retailers in April-June 2010 tomato growing season

Quantity of tomatoes in tengas per retailer per season Min Max Mean SD

Quantity bought 150 600 265 135 Quantity sold 70 400 167 11

Table 12. Prices paid and received by retailers in April-June 2010 tomato growing season

Prices in Tshs per tenga Min Max Mean SD

Buying price 7 000 14 000 9 424 1 723 Selling price 21 000 32 000 26 200 2 719

Table 13. Losses among traders category during April-June 2010 tomato growing season

Type of trader % losses among traders

Assemblers 0.3

Wholesalers 2.0

Retailers 37

Table 14. Actors share of the price paid by consumers along the longest fresh tomato supply chain in April-June 2010 tomato growing season

Marketing node Price (Tshs) Marketing margin

Farm level 7 515 - Assembling level 16 611 8 596 Wholesale level 25 850 9 739 Retail level 26 200 350

handling products. At retail level the operators are differentiated according to their location and/or the volume of tomatoes they trade. The retailers can be categorized into two groups, sedentary and hawkers. The sedentary retailers sell fresh tomatoes at open markets and along roadsides in small wood made kiosks while hawkers sell fresh tomatoes along the roadside but do not have a permanent stand (booth). They move around, approaching potential customers and advertising to attract them. They provide the necessary services to their customers including parking tomatoes in nylon or plastic bags. The roadside markets are strategically located at stop over places along trunk roads such as roadside hotels or restaurants like Kitonga, Bismilahh and Al Jaazira along the Dar es Salaam-Tunduma highway. Other roadside markets are located in highway junctions. On average retailers handled smaller quantities of fresh tomatoes than assemblers and wholesalers. They bought an average of 265 tengas at an average price of Tshs 9,424 per tenga and sold an average of about 167 tenga

at an average selling price of Tshs. 26,200 per tenga (Tables 11 and 12). The findings presented in Tables 12 and 14 indicate differences in quantities bought and sold by assemblers, wholesalers and retailers respectively. The difference was due to wastage during transportation as a result of poor storage facilities especially at the retail node of the supply chain. Table 13 shows losses incurred by the three categories of traders along the fresh tomato supply chain. The table shows that approximately 37% of the fresh tomatoes were wasted at the retail node of the supply chain due to lack of storage facilities. These findings support the findings reported by MUVI (2009) that about 48-50% of the horticultural produce is wasted at retail level due to lack of markets and lack of storage facilities. Apart from losses, quantities handled and prices paid/received varied greatly among the three categories



of traders with retailers handling the smallest quantities of tomatoes per season but paying/charging the highest price per tenga of tomatoes, probably due to transportation costs reflecting spatial differences between the supply and demand centers. During the field survey, traders indicated that the major risk in tomato marketing is oversupply or undersupply of fresh tomatoes caused by weak market intelligence and inability to forecast. In order to minimize losses from such fluctuations many traders have established social networks that provide indicative supply and demand situation. During focus group discussions farmers and traders reported that prices of tomatoes are higher between March and May when there is low supply of tomatoes while prices are low from June to September. Again the prices increase in December because of the end of year festivals when consumption of fresh tomatoes increases. The share of the producer of the price paid by the ultimate consumer depends on the length of the market channel (number of actors). For example the producers share of the price paid by ultimate consumer of fresh tomatoes in the longest market channel for fresh tomatoes in April-June 2010 tomato growing season was 28%. On the other hand, producers who sold their tomatoes directly to consumers received the largest share 100% of the price paid by consumers. The vegetable supply chain in Tanzania is complex and disorganized. Supply chains are based on the contacts and knowledge of the people involved in the trading. The finding indicates that smallholder farmers lack access to urban market due to naturally poor location and thus rely on middlemen (traders) to market their tomato produce. The findings suggest that traders play significant role in facilitating smallholder farmers access to markets. These results support the findings of Eskola (2005) and MUVI, (2009) who found that local traders act as facilitators between many local producers and a few Dar es Salaam buyers. However, the findings show that the tomato supply chain is very long and disorganized. Long supply chains are costly in terms of time and money. In the Tanzanian context, the use of middlemen is often the only viable way to trade in absence of enforceable and foreseeable contracts. The use of middlemen to reduce transaction costs has also been found in the country context of Ethiopia (Gabre-Madhin, 2001). The tomato supply chain has no lead firm at any level of the chain (i.e. production, marketing, trading and consumption) that govern and control the system and instead it is governed and controlled by the supply and demand conditions in the market that set commodity

prices only (Fig. 2). There is no lead firm that coordinates the supply chain in relation to markets and other important information shared among the actors. The tomato supply chain in Kilolo district is characterized by lack of formal governance. The governance mechanism in the tomato supply chain is underdeveloped. Supply chain actors operate in an un-coordinated manner. These results support the findings of Banson et al., (2014) who found that there is lack of coordination management plans in the governance structure of agribusiness in Africa which leads to disjointed government policies with unintended consequences such as unstable agri-business and loss of revenue. Furthermore, the findings revealed that unreliability of markets for tomato produce was linked with the poor conditions of feeder roads. This had caused difficulties in transporting the produce from the farms to the markets. Due to largely varying condition of the road network, the ongoing market price for transportation is often higher. Smallholder farmers can successfully exploit the market opportunities for fresh tomatoes if measures like improvement in road infrastructure are taken to reduce transaction costs. CONCLUSIONS The findings of the study have shown that smallholder tomato farmers in Kilolo District rely on middlemen who purchase their tomatoes for sale at the terminal market in Dar es Salaam about 500 km from Kilolo. The distance of the terminal market from the study area suggests that selling through middlemen cannot be avoided unless the smallholder tomato farmers are directly linked with buyers at the terminal markets. Furthermore the findings have shown that smallholder farmers sold their produce at lower prices in order to ease congestion. There is therefore a need to promote formation of vegetable farmers cooperative groups. Being in strong cooperative groups will not only increase their bargaining power with the middlemen but groups can also bulk their vegetables, organize transport and transport vegetable to Dar-es-salaam without relying on the middlemen. The findings of the study have shown that smallholder farmers in remote vegetable growing villages have limited access to urban markets due to poor road network leading to high transportation costs that limit number of traders going to these villages. In order to realize the full potential of agricultural trade as a tool in the fight against poverty, the suggested policy interventions are to prioritize and increase funding for physical infrastructure.



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Accepted 10 May, 2015 Citation: Mwagike L, Mdoe N (2015). The role of middlemen in fresh tomato supply chain in Kilolo district, Tanzania. International Journal of Agricultural Marketing, 2(2): 046-056.

Copyright: 2015 Mwagike and Mdoe. This is an open-access article distributed under the terms of the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original author and source are cited.

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The role of middlemen in fresh tomato supply chain in Kilolo district, Tanzania