Determinants of rice supply in Tanzania

A DISSERTATION SUBMITTED IN PARTIAL FULFILMENT OF THE REQUIREMENTS FOR THE DEGREE OF MASTER OF SCIENCE IN AGRICULTURAL AND APPLIED ECONOMICS OF SOKOINE UNIVERSITY OF AGRICULTURE. MOROGORO, TANZANIA.

Rice is among the most important crops in Tanzania, being both a commercial andmajor staple food crop for the majority of population. Furthermore, the rice industry contributes substantially to employment, foreign exchange and food security. The importance of rice in contributing to national growth is critical; this makes it meaningful to investigate the nature of rice farmers’ production decisions. Despite the government’s pursuit of pricing policies, Tanzanian rice production has not kept speed with consumption.This study was conducted to explore the nature in which rice producers respond to price and non-price factors. Specifically the study aimed at assessing the response of rice farmers to price and non-price factors in terms of area under production. Using time series data, the present study employed a Nerlovian expectation adjustment model to assess the farmer’s responsiveness to price and non-price variables.The study was based on the secondary time series data covering the period of (1999-2008) obtained from the Ministry of Agriculture, Food and Cooperatives, Tanzania Meteorological Agency (TMA), and National Bureau of Statistics (NBS). The findings of the present study show that the important factors affecting farmers’ decision to allocate land to rice include, the own price, price of substitute crop (maize), rainfall and fertilizer whose specific elasticities are 0.19, 0.17, 0.42 and 0.21 respectively. Price incentives on their own are inadequate to influence smallholder farmers’ decision to allocate land to rice.The empirical results show that non price variables are more sensitive to rice supply than the price variables. Therefore policy needs to go beyond price interventions as a means to motivate and influence smallholder farmers’ rice production decisions. Thus, the policy implications suggest that there should bea huge emphasis on non-price factors such as irrigation.