Tobacco Contract Farming Participation and Income in Urambo; Heckma’s Selection Model

Abstract

This paper examines the factors influence smallholder farmers participation in tobacco production using in Urambo, Tanzania. A total of 150 farmers were surveyed using cluster sampling to obtained household head tobacco producers as respondents. Heckman’s two stage model was used by incorporating probit model in first stage and regression analysis on income was analyzed using OLS in the second stage.

Results have shown that farming experience, farm group and age of the farmers have significant influence on farmers’ participation in contract farming. Farmers’ income was significantly influenced by the composite value of agricultural and non-agricultural assets and fertilizers despite timely delay on inputs distribution and assistance on technical application.

Based on the findings of the study, it is concluded that altering productivity by the farmer needs the policy adjustment on the timely distribution of inputs followed by training on the application of farming inputs. Primary cooperatives should be strengthened through SACCOS where they will finance farmers and thus improves income of the farmers. Contract Farming (CF) is not the only way to change the income, farmers should also think of other off-farm activities.

Key words: Heckman Model, Participation, Smallholder, Tobacco, Urambo