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

OUTLINE Background Objective of the study Methodology Results Concluding remarks

Background The 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 study This 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.

Methodology This 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.

Definition Technical 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 output X 1 = labour inputs X 2 = land cultivated X 3 = proportion of fixed assets used X 4 = Cost of fertilizer, pesticides and fungicides v i = error term (factors outside the control of the farmers) μ i = error term that reflects the technical inefficiency If no inefficiency; μ i = 0

Stage II: Inefficiency model Factors influencing inefficiency z 1 = gender of the farmer (Binary) z 2 = Age of the farmer z 3 = Educ. level (1= has formal education) z 4 = Household size z 5 = Farm size in acres z 6 = land ownership(binary)

Estimation - ML The 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 data The study uses farmers’ data collected in Tabora region  Major 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 23 0 C. The region has a population of about 2.2 million (National Census, 2012). Population density is 30 persons/km 2

Technical efficiency results

TE levels and percent of farmers

Conclusion Farmers 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.

Limitation Health 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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