Impact of structural adjustment programmes on cashewnut producers' income, 1970-2000: an econometric approach.

This study provides some evidence about the impact of the Structural Adjustments (SAPs) particularly those, which Tanzania adopted since the mid 1980's on cashewnut farmers' income, The study employs both qualitative and quantitative analyses to explore cashewnut production, marketing and pricing aspects and relate these to policies, particularly in the enhancement of farmers' income. The farmers' income is obtained as a product of farmers' output (in kgs) in a given year and the average producer price of cashewnut due to the time-series nature of the study. The farmers' income was regressed against exchange rates; export prices; the Lagged output and producer prices; marketing margin and rainfall. Dummy variables representing the Structural Adjustment Programme and the liberalization of the cashewnut marketing system were also incorporated in the regression analysis. The empirical results have found that exchange rate, export price, marketing margin, a dummy variable representing liberalization of the cashewnut marketing system as well as rainfall are important variables in influencing volume of production and income of the cashew farmers. In general, the adjustment programmes have improved cashewnut production, producer prices and therefore attractive farmers' income. Also, the study has found that domestic processing capacity is improving and the crop contributes greatly to traditional export earnings for the country's economy. Therefore, market-determined exchange rate policy; improving cashew tree husbandry, harvesting, storage, transportation and processing techniques; and improvement in the infrastructure facilities as well as proper supervision of cashewnut trading system by the regulatory board are recommended in order to boost cashewnut farmers' income, Cashewnut Industry Development Fund (CIDEF) and Cashewnut Association of Tanzania (CAT), the main stakeholders in the industry, are urged to work closely with the Cashewnut Board of Tanzania (CBT) to enhance performance of the cashewnut sub-sector. An increase in the cashewnut farmers' income is imperative for reducing income poverty, in particular among cashewnut farmers and the rural sector as a whole.