What Role for Remittances in Farm Inputs Expenditure among Paddy Farming Households? A Case Study of Kilombero Valley, Tanzania

Abstract

Migration and remittance have a potential to enhance farm intensification through spending on essential farm inputs and thus apparently improving farm production for liquidity constrained rural farming households. This study was conducted to investigate the effect of remittance derived from rural out-migrants on the expenditure on farm inputs using paddy dominated farming households of Kilombero Valley, Tanzania, as a case study. A questionnaire was used to collect data among 309 randomly selected households. The tobit model that considers cornered observations was used to assess the effect of migration and remittances on input expenditure. A T test was conducted to compare differences in input spending between migratory and non migratory households. Results show that remittances overcome inputs market failure as it provides cash that rural households use to purchase essential farm inputs. However, the results based on the T test revealed that there is no significant difference in terms of spending on hired labour (as one of a farm input) between migratory and non migratory households. The positive income effects of remittances outweigh lost-labour effects. It is thus recommended that migration should be encouraged through the growth of economy and thus the link between rural and urban areas should be strengthened.