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Profit Efficiency and Smallholder Sugarcane Out-Growers Under Contract Farming in Tanzania: Does Location Matter?

Thobias Nsindagi, ennifer K. Sesabo


This paper estimates profit inefficiency for smallholder sugarcane out-growers in Kilombero and Turiani, Tanzania. The main objective is to identify factors that explain the variation in the efficiency of individual out-growers. The analysis utilizes cross-section data collected from 386 smallholder sugarcane out-growers. The results show that smallholder sugarcane out-growers in Kilombero are more efficient, with an average score of 70.1% than those in Turiani, with an average score of 55.4%. Moreover, the results indicate that age, education, non-agricultural assets and part-time participation in sugarcane production are the main drivers of profit efficiency. Thus, strategies for improving sugarcane profitability need to focus on output


Keywords: contract farming, smallholder sugarcane farmers, profit efficiency, stochastic profit frontier, Tanzania

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