Cotton supply response: econometric evidence from the Tanzania Western cotton growing areas; 1950-1986

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University of Dar es Salaam
Cotton plays an important role in the economy of Tanzania. It ranks second among the country's major foreign exchange earners after coffee, provides raw materials to the domestic textile, cotton seed and allied industries. The cotton industry also provides direct and indirect employment opportunities and incomes to over 20% of the country's labour force. Over the 1970s and 1980's Tanzania, experienced a decline in output and export earnings, resulting into a severe foreign exchange crisis. In the case of cotton, a bird`s eye view of production trends shows that, production increased rapidly over the 1950's and early 1960 's, reaching a climax 1965/67. Thereafter output declined in a succession of abrupt up and down turns. Within this context, this study attempts to identify and analyse the principal factors affecting cotton production in the major producing zone, the Western Cotton Growing Areas (WCGA). Special focus is given to the influence of price factors, weather and structural developments in the area and exploring their interrelationships. The study is of policy interest particularly in view of the drive of the Economic Recovery Programme (ERP) 1986-89 to boost agricultural exports to alleviate the foreign exchange crisis. The study uses qualitative and time series regression analysis for the WCGA as a whole and for the constituent regions separately for the period 1950-1986. For estimation purposes, the Ordinary Least Squares (CLS) method is employed using a simple log-linear model. The regression results obtained stand in testimony of the hypotheses of this study that real producer price of cotton real producer price of paddy, a major competing food crop and rainfall are the principal factors which cause year to year fluctuations in cotton output. However structural changes in the cotton belt such as population and livestock pressure on the land tend to mould longer term trends in cotton production. In addition, these structural changes have a bearing and the magnitude of own price and cross elasticities. Drawing on the empirical findings, it is the opinion of the author that the ERP's drive to increase cotton output through the prevision of remunerative prices to farmers is a viable and potent policy especially in the short run. However, for long-run planning, there should be a deliberate move to check the structural limits to growth of cotton, especially land stress from population/livestock pressure. The study is however, limited in several important aspects. For example, it lacks a general equilibrium model of the food market and non food crop supply; this would help to explore how the two are interrelated. In addition, although. The study underscores the importance of structural factors shaping export crop supply response; it does not fully resolve the structural factors, prior and after 1967. These limitations notwithstanding, the results of this study stand as a useful starting point for policy makers, planners and academicians to grasp and grapple with the structural limits to growth of export crops in Tanzania.
Available in print form
Cotton, Supply and demand, Agricultural history, Tanzania
Mpango, P. I. N. (1988) Cotton supply response: econometric evidence from the Tanzania Western cotton growing areas; 1950-1986, Masters dissertation, University of Dar es Salaam. Available at (