Economic Analysis of Outgrowers’ Sugarcane and Paddy Production Scheme at Ruembe Sugarcane Basin in Kilosa District, Morogoro, Tanzania: A Comparative Approach

Abstract

An empirical study was undertaken to analyze economic resource constraints facing Ruembe outgrowers’ sugarcane and paddy production scheme by measuring quantitatively scheme’s productivity and profitability using Cobb-Douglas production function model and Gross margin. The study adopted a quantitative study design. The empirical study was conducted at Ruembe Sugarcane Basin in Kilosa District in Morogoro Region Eastern part of Tanzania in 2007-2008 season. However, the multistage, purposive and systematic random sampling techniques were employed as sampling designs of the empirical study. The empirical study found that fertilizer, labor, herbicides, land, credit and extension services are the main determinants of the sugarcane and paddy productivity as well as profitability in the study area. However, even though these farm inputs are the main determinants of crop productivity and profitability, still there is under utilization of it due to the fact that most of smallholder farmers are operating in the first region of the production function. Hence, according to the empirical findings, the study suggested that farmers should operate in the second region of production function in order to utilize resources efficiently so that to maximize productivity and profitability of their farm produces. Moreover, according to the profitability of paddy enterprise found by the study, it is suggested that smallholder farmers could adopt warehouse receipt system model so as to protect them from price fluctuations which affect their profit.