Contracting and Negotiation Attributes: A Case of Sunflower Seed Crop in Central Tanzania

Abstract

In the most developing countries like Tanzania, poor farmers have limited access to agricultural inputs. One of the proposed solutions is to link farmers with the private sector through contract farming. In Tanzania, sunflower oil has been preferred as edible cooking oil for many households since it has a low cholesterol level for human consumption. Moreover, sunflower-contract farming was adopted as part of the new agricultural policy in 2009-2010 cropping season, majoring in providing triangular benefits to the stakeholders, including sunflower-farmers, private companies, and the Government of Tanzania. Despite the government of Tanzania’s efforts to link the sunflower farmers with the private sector, contract farming has been facing some challenges in coordination such as pricing, production services and credit services. The purpose of this study is to investigate the impact of the contract farming program among sunflower farmers. Specifically, the study aims to: (i) determine the socio-economic characteristics of the sample farmers; (ii) identify private firms providing contract farming to the sunflower farmers; and (iii) evaluate the relationship of the negotiation attributes in income growth among sunflower farmers. The field survey was conducted in March 2020, targeting 40 contracted farmers and 40 non-contracted farmers in the two regions of Central Tanzania. In relationship of the negotiation attributes the paper points out the credit access and production services were significant with farmers’ income. Besides, the results show that there was no statistically significant relationship between advance pricing and income growth among sunflower farmers. This was because in contract terms price is not set in advance.