Economic analysis of contract farming for small-scale tobacco producers in Songea district, Ruvuma region.

This study analyses the performance of small-scale-tobacco producers under contract farming system and farmer characteristics that influences tobacco production in Songea district. The Specific objectives were: (i) To examine the cost and return of tobacco small-scale farmers under contract farming scheme in the study area; (ii) To assess the influence of contract farming characteristics on tobacco production; (iii) To examine the resource use efficiency in contract farming; (iv) To estimate yield and price uncertainties in production and marketing by the small-scale tobacco contracts farmers. A multi-stage random sampling technique was employed in selecting a representative sample of tobacco farmers where by 65 (DFC), 27 (Burley), and 20 (VFC) tobacco contract farmers were interviewed. Results revealed that through practicing contract farming respondents reduced cost of production (7%), improved quality of their harvest (31%) and increased income (37%). The study shows there is no significant difference in production cost, yields and returns for Burley, DFC and VFC tobacco farmers (P>0.05). Also shows that factors of production, experience, education and contract price had a significant influence on farmers tobacco production (P>0.05), further more tobacco farmers were significantly employing their resource efficiently under contract farming (P<0.05). Although there were enough evidences to conclude that tobacco farmers experienced uncertainties during production and marketing of their tobacco (P>0.05). The study recommends establishing a comprehensive-open contract farming arrangements and improving managerial skills to cooperatives leaders with enhancement of farmer’s knowledge about contractual practices so as to enrich small scale farmer’s welfares in Tanzani