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Economic Analysis of Irish Potato Value Chain in Njombe

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Economic Analysis of Irish Potato Value Chain in Njombe ECONOMIC ANALYSIS OF IRISH POTATO VALUE CHAIN IN NJOMBE URBAN AND WANGING’OMBE DISTRICTS, TANZANIA BEATRICE DANIEL A DISSERTATION SUBMITTED IN PARTIAL FULFILMENT OF THE REQUIREMENTS FOR THE DEGREE OF MASTER OF SCIENCE IN AGRICULTURAL AND APPLIED ECONOMICS OF SOKOINE UNIVERSITY OF AGRICULTURE. MOROGORO, TANZANIA. 2015 ii ABSTRACT This study analyzed Irish potato value chains so as to identify potential areas for interventions towards improving income for the various actors involved in the chain in Njombe Urban and Wanging’ombe districts. Data were collected from 202 Irish potato value chains actors using individual interview and focused group discussions (FGD). Sub sector mapping, gross margin analysis and regression analysis were used in the study. Sub- sector mapping analysis was used to map Irish potato value chains in Njombe urban and Wanging’ombe districts. Gross margin along all Irish potato actors involved in the chain were computed. Results indicate variations in gross margins with the highest gross margin of Tshs. 2939 per kg obtained by local processors while the traders were receiving the average gross margin of Tshs. 421 per kg, farmers in Njombe urban and Wanging’ombe districts were getting a margin of Tshs. 51 and 22 per kg, which was the lowest gross margin compared to the other actors in the chain. The results show that the common rural- urban linkages were the flow of labour, fertilizer, output and financial services in the study area. Regression analysis model was used to analyze the determinants of Irish potato farmers’ gross margin. The findings show that only 34% of the variation in Irish potato gross margin was due to the independent variables included in the model; gender, farm size, age, farm location, Income and irrigation were the main determinants of Irish potato farmers’ gross margin. There were number of challenges that hinder the development of Irish potato value chain, it is recommended that government and non-government organization, researchers and small scale farmers should address these challenges so as to establish a profitable Irish potato value chain. iii DECLARATION I, Beatrice Daniel, do hereby declare to the Senate of Sokoine University of Agriculture that this dissertation is my own original work and has never been submitted nor concurrently being submitted for a higher degree award in any other institution. …………………………………… …………………………. Beatrice Daniel Date (MSc. Candidate) The above declaration is confirmed by: …………………………………… …………………………. Dr. F. J. Mishili Date (Supervisor) …………………………………… …………………………. Dr. E. Lazaro Date (Supervisor) iv COPYRIGHT No part of this dissertation may be reproduced, stored in any retrieval system, or transmitted in any form or by any means without prior written permission of the author or Sokoine University of Agriculture in that behalf. v ACKNOWLEDGEMENTS I am deeply grateful to the Almighty God who gave me the ability and empowered me for the completion of this report. My genuine appreciation goes to my supervisors: Dr. F. J. Mishili and Dr. E. Lazaro for their constant advice, guidance, constructive and critical comments during the period of preparing this work. I feel privileged to have the opportunity to work under them. I also extend my deepest thanks to Rurban Africa project for funding this research. My thanks are also extended to the Village Executive officers of Igagala, Ulembwe, Iwungilo and Ngalanga Villages, Mr. Isaya Kitaponda, Mr. Petro Luhasi, Mr. Joseph Muhule and Mr. Fadhili Mgaya for their support during data collection. Without them, the survey exercise would have been difficult. Moreover, my great thanks go to my entire family for their generous assistance to accomplish this work. Finally I express my appreciations to all those who in one way or another helped me in the fulfillment of this work. May God bless them all. vi DEDICATION This work is dedicated to my lovely parents: Daniel, M. Makara and Germana, G. Kimbi, for their encouragement and sacrifices devoted to support me through my education. vii TABLE OF CONTENTS ABSTRACT ........................................................................................................................ ii DECLARATION ............................................................................................................... iii COPYRIGHT .................................................................................................................... iv ACKNOWLEDGEMENTS ................................................................................................ v DEDICATION ................................................................................................................... vi TABLE OF CONTENTS ................................................................................................. vii LIST OF TABLES ........................................................................................................... xii LIST OF FIGURES ........................................................................................................ xiii LIST OF APPENDICES ................................................................................................. xiv LIST OF ABBREVIATIONS AND SYMBOLS ............................................................ xv CHAPTER ONE .................................................................................................................. 1 1.0 INTRODUCTION ...................................................................................................... 1 1.1 Irish Potato Sub-sector ................................................................................................. 1 1.2 Problem Statement and Justification ............................................................................ 3 1.3 The Objectives of the Study ......................................................................................... 4 1.3.1 Overall objective .............................................................................................. 4 1.3.2 Specific objectives ............................................................................................ 4 1.4 Research Questions ...................................................................................................... 4 1.5 Significance of the Study ............................................................................................. 5 1.6 The Conceptual Framework ......................................................................................... 5 1.7 Organization of the Study ............................................................................................ 7 viii CHAPTER TWO ................................................................................................................. 8 2.0 LITERATURE REVIEW ........................................................................................... 8 2.1 Definitions of Terms and Concepts .............................................................................. 8 2.1.1 Rural – urban linkages ...................................................................................... 8 2.1.2 Value chain concept ......................................................................................... 8 2.1.3 Value chain analysis ......................................................................................... 9 2.1.4 Value chain mapping ...................................................................................... 10 2.1.5 Market and marketing .................................................................................... 11 2.1.5.1 Marketing channels ......................................................................... 12 2.1.5.2 Marketing system ............................................................................ 12 2.2 Irish Potato Marketing and Value Chain .................................................................... 13 2.2.1 Irish potato value chain in Africa ................................................................... 13 2.2.2 Irish potato marketing and value chain in Tanzania....................................... 15 2.3 Theoretical Framework and Empirical Methods ........................................................ 17 2.3.1 Sub-sector mapping ........................................................................................ 17 2.3.2 Profit maximization theory ............................................................................. 19 2.3.3 Gross Margin (GM) ........................................................................................ 20 CHAPTER THREE .......................................................................................................... 22 3.0 METHODOLOGY .................................................................................................. 22 3.1 Description of the Study Area and Justification for Selection ................................... 22 3.2 Research Design ......................................................................................................... 23 3.3 Sampling and Sample Size ......................................................................................... 23 3.3.1 Selection of sampled wards and villages ........................................................ 23 3.3.2 Selection of farmers ....................................................................................... 24 ix 3.3.3 Selection of traders (Wholesalers and Retailers) ........................................... 24 3.3.4 Selection of processors ..................................................................................
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