Lyanga, Timothy Martin
(2018)
Transaction Costs Of Commercializing Cash Crops Production In Tanzania: Case Of Sunflower Seed Production In Mkalama And Igunga Districts.
Other thesis, Business Managment.
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Abstract
The purpose of this study is to make an analysis of the effect of transaction costs on commercializing cash crops production in Tanzania with reference to sunflower farming at Mkalama and Igunga districts in Singida region. Sunflower is one of the most important crops in Singida and Tabora regions in improving rural farmers’ livelihood. Using a household survey data for the 2015/2016 and 2016/2017 production seasons, the study quantified the magnitude and direction of effects of transaction costs on sunflower production by using the Tobit model. The philosophy of Transaction Cost Economics and the Economics of information are used to theorize transaction costs of commercializing cash crops. Descriptive statistical and Ordinary Least Square econometric methods are employed to analyze the data collected from a sample of 152 households using structured household questionnaires. The findings from the statistical analysis show that searching costs, negotiation costs and enforcement costs have significant association with high household commercialization index (HCI). However, the findings reveal that production level was influenced negatively by the searching costs on land preparation, harvesting, selling, negotiation costs on contract writing, time spent on waiting for bank loan receiving, bargaining power of buying various inputs and expenditures by producer to collect the payment from the buyer. The study concludes on hypotheses that the sunflower production farmers receive low profit due to positive coefficients of transaction costs and transformation costs. Study recommends promoting sunflower production and policies concerning transaction costs associated with information searching, negotiation and enforcement for farmers can earn more profit to improve their livelihoods and contribute to national income.
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