Economic analysis of vanilla production and marketing: a case study of Bukoba district, Kagera region, Tanzania
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Date
2005
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Publisher
Sokoine University of Agriculture
Abstract
This study analyses the economics of vanilla production and marketing in Bukoba District.
Tlic survey was conducted on a sample of 120 vanilla growers and complimented by
secondaiy data collected from key organizations in the industry. Pre-tested questionnaires
were used to interview (arnicrs and key organizations. The data obtained was used to
describe the stnictural and socio-economic factors that influence or motivate fanners to
produce vanilla and examined the role of institutions in production and marketing of
vanilla. By means of gross margin analysis the study flirt her examined the relative
competition of vanilla with the most important crop enterprises in the district. It also
determined the potential profitability of vanilla in tcmis of cost efficiency in both
production and marketing activities. The estimation of cost efficiency for vanilla
profitability was done by the limited dependent variable (LIMDEP) VERSION 8.0
computer program developed by Greene (2002) using stochastic cost frontier function Cost
cl'nciency was estimated using translog cost ftinction. The results showed that vanilla
growers in Bukoba District have household characteristics common to most rural
household settings elsewhere in Tanzania. Gross margin analysis indicated that the vanilla
enterprise was far more profitable than any other crop enterprises such as coffee, tea,
banana and maize production. Vanilla production involved few participants. These
included fanners, NGOs and private buyers. In this situation, price 'setting mechanism
resulted into nionopolislic rather than competitive prices. The results from the cstiirration
of translog cost frontier showed that fanners were inefficient by FarrelPs measure of cost
efficiency. The average level of inefficiency was 11.4%, and ranged from 41.2% to 3.0%
for individual fanners. On the average, capital inputs, hired labour, and land arc slightly under-utilised. The results indicate that providing rural education, expansion of farm size
and the use of niodcrn capital inputs of production can reduce cost inefficiency. However,
vanilla production and marketing is cost cfficicnl to enhance profitability. Based on the
study findings, three areas aimed at improving vanilla production and marketing need to be
addressed. These arc dcvclopincn^improvemcnt of extension services, development of
better research and development facilities, and strengthening of business and marketing
networks
Description
Masters Theses
Keywords
Vanilla economic analysis, vanilla production, Vanilla marketing, Bukoba district