TITLE:
Welfare Impact of Wheat Farmers Participation in the Value Chain in Tanzania
AUTHORS:
William Barnos Warsanga, Edward Anthony Evans
KEYWORDS:
Wheat, Value Chain, PSM, Tanzania
JOURNAL NAME:
Modern Economy,
Vol.9 No.4,
April
30,
2018
ABSTRACT: The paper examines the link between value chain participation
and welfare changes for wheat farmers in Tanzania. Specifically, the paper
analyzes the wheat value chain from production to consumption, explores
participation in the value chain, and examines the net effect of farmers’
participation in the value chain. A logistic model is used to explore the
factors influencing farmers’ participation in the value chain and to estimate
propensity scores to match the covariates for participants and nonparticipants.
Applying the nearest neighbor and caliper radius matching algorithms found that
only a few farmers are vertically (~17%) and horizontally (~39%) coordinated
based on participation in contracts and associations, respectively. At the
vertical coordination level, characteristics are significantly different for
farmers with and without contracts in terms of land size, technical efficiency,
allocative efficiency, output per acre, frequency of extension visits,
frequency of village meetings attendance, and off-farm income. At the
horizontal coordination level, farmers who join associations differ
significantly from nonmembers in terms of level of education, frequency of
village meetings attendance, output per acre, technical efficiency, and
allocative efficiency. Vertical coordination participants receive a profit of
126 TSh/kg
more for wheat than nonparticipants, with the difference significant at the 1%
level. Horizontal coordination participants receive a profit of 46 TSh/kg more for wheat than
nonparticipants, with the difference significant at the 5% level. The
sensitivity analysis reveals that farmers’ participation in the value chain is
generally insensitive to unobserved covariates. The findings suggest that
establishing more contracts and stronger associations that specifically deal
with wheat production has a positive impact on farmers’ welfare.