Profit Efficiency Of Smallholder Wine Grape Farmers In Dodoma City And Chamwino District In Dodoma Region, Tanzania

ABSTRACT

Grape is one of the most important economic fruits crop grown in Dodoma Region -

Tanzania. However, grape production faces challenge of low yield of 5.6 t/ha compared to

the established yield potential of 25 t/ha under irrigation and 17.3 t/ha under rain-fed in

Tanzania. This low productivity was mainly due to rising cost of production, which is

coupled with low output prices and an unreliable market. The most cost effective way to

improve farm productivity is through efficient use of available scarce resources and

technology. This study was conducted to analyse farm level profitability, profit efficiency

and identify specific factors that account for variation in efficiency among farmers. The

study also analysed farmer`s factor demand response due to changes in input prices. Multistage,

stratification and random sampling techniques were used to select 176 farmers from

irrigation and 183 farmers from rain-fed production systems. A structured questionnaire

was used to collect data. Descriptive statistic, farm budgeting technique and a stochastic

profit frontier were used to analyse the data. The results revealed that irrigated farms were

more profitable compared to rain-fed farms. The findings show further that wine grape

farmers are not fully profit efficient, implying that an opportunity exists to increase profit

efficiency through better use of available resources. On average irrigated farms are more

efficient (69%) compared to their rain-fed counterparts (63%). A farmer`s experience,

group membership, access to extension and credit service are key factors that significantly

influence profit efficiency among farmers. In the short-run the coefficients for own price

of labour, manure and agrochemical are inelastic. Policy measures directed at providing

credit and extension service to enhance the farm`s profit efficiencies are recommended. In

addition, any support to facilitate formation of farmers` association is very important

because membership in such groups can benefit farmers through economies of scale,

thereby reducing each member’s production cost. Reducing the cost of labour and

agrochemical can significantly increase the farmers’ profit level. Moreover, agricultural

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policies directed at developing irrigation schemes to enhance grape productivity in order

to improve farm income and profit is recommended.