The impact of private firms on crop productivity of smallholder farmers: a case of maize farmers in Tanzania

This study assesses the impact that private firms involved in the production and supply of modern inputs (improved maize seeds and inorganic fertilizer) have had on productivity of smallholder farmers involved in maize cultivation in Tanzania. The study utilizes a time series data from 1980 to 2010 using Ordinary Least Square (OLS) to estimate a Cobb Douglas Production function, observing changes in maize yield as dependent variable as predicted by changes in quantity of improved maize seeds, quantity of fertilizer, number of labourers employed and value of maize harvest sold. To assure reliable empirical results are attained, Engel Granger, Cointegration test and Error Correction Mechanism (ECM) are conducted. Empirical results depict existence of a relationship between private firms involved in production and supply of improved maize seeds and inorganic fertilizer in two different periods. In the short run, use of inorganic fertilizer supplied by fertilizer companies and value of maize harvest sold in the market appears to be explain the increase in production of maize by smallholder farmers. In long run, use of improved seeds and inorganic fertilizer by smallholder farmers and the unobserved variables are significant in explaining productivity of smallholder farmers. On policy recommendation, suggestions are offered to create an enabling environment where firms involved in production and supply of improved maize seeds and inorganic fertilizer should increase supply to close up the demand gap that exists between demand for and supply of improved maize seeds and inorganic fertilizer for farming.