Economic analysis of hass-avocado production and export market in Rungwe District-Tanzania
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Date
2023
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Sokoine University of Agriculture
Abstract
The production and exportation of avocados in Tanzania have been steadily increasing over time. Despite this observed growth, there is still great potential for the production and exportation of the Hass avocado variety. This highlights the need for strategies to capture the available potential. To develop appropriate strategies, a clear understanding of the current situation in the country's avocado industry is required. Nevertheless, there is a lack of literature on the economic viability of the avocado business, especially in Rungwe District. Additionally, there is limited knowledge in the public domain regarding the factors that affect avocado production farmers’ willingness to participate in the export market. Therefore, the focus of this study was to conduct a comprehensive analysis of the economics of avocado production and the export market in the industry, specifically in Rungwe District. The study selected a sample of 360 farmers from a pool of 4,000 avocado out-growers. Out of the selected farmers, 36 were randomly chosen from ten selected wards, using a probability proportional to size. A questionnaire was administered to the farmers, while key informants were interviewed using a guide. The collected data underwent various analyses, including descriptive analysis, cost-benefit analysis, severity index analysis, and a binary logit model. The results obtained from primary data indicated the current status of avocado production, productivity, and cultivated area. Positive growth was observed in terms of quantity produced, cultivated area, and exported volume. The Cost-Benefit analysis using the Dolye Model revealed a positive net present value (NPV) of 55,075,088 TZS per acre. The benefit-cost ratio was greater than 1 at 1:9, and the internal rate of return (IRR) was 63.78%, surpassing the 10% discounting factor. Similarly, the primary data showed a positive NPV of 57,333,143 TZS per acre. The benefit-cost ratio exceeded 1 at 1:8.78, and the IRR was 70.0145%. However, variations were observed due to differences in plant population per acre among farmers, compared to the standard farm size for avocados. Consequently, the study employed severity index analysis to rank and identify the constraints. Furthermore, socio-economic factors were assessed to determine their influence on farmers' willingness to participate in the export market. Significant factors influencing farmers' willingness included education, age, non-farm activities, formal employment, credit access, and extension access. Based on the study's results and the available literature, it can be concluded that the avocado industry has significantly improved in terms of production area, output, productivity, and exports. The return on investment has been positive and higher than the prevailing discounting rate. Additionally, the study identified constraints and factors that affect farmers' willingness to participate in the export market. As a result, the study recommends further improvements to catch up with competitors from leading avocado producers. It calls for the implementation of effective policies in the Horticulture subsector to support and promote farmers and exporting companies in increasing production and exports. Local governments in potential avocado production areas, such as Rungwe District, should prioritize and encourage avocado production in order to exploit the untapped potential at the international markets. Moreover, farmers and other stakeholders should collaborate as associations to address the constraining factors related to avocado production and export.
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Keywords
Economic analysis, Hass-avocado production, Hass avocado variety, Export market, Rungwe District-Tanzania