Research On The Economic Benefits And Market Participation In Traditional Beef Cattle Farming Industry In Tanzania

Beef cattle farming in Tanzania reduces poverty,promotes exports,economic growth,and industrialization.Since 1997,Tanzania has implemented positive measures to commercialize the traditional beef cattle farming industry.However,despite the government’s efforts,most traditional beef cattle farmers continue to live in poverty,with a poverty rate of 22%.Meanwhile,Tanzania continues to import beef meat but exports a small quantity,and its contribution to GDP is low.This raises a question about the level of economic benefits and market participation achieved by farmers through beef cattle farming.Especially important,economic benefits(profit maximization)and market participation work together to help traditional beef cattle farming become more commercial.This study,thus,sought to gain empirical evidence on the level of economic benefits and market participation in the traditional beef cattle farming industry in Tanzania to identify the areas of intervention for further optimizing the commercialization of the industry,thus reducing poverty.This study uses cross-sectional primary data from structured questionnaires and interviews with 393 farmers in the Meatu District of the Simiyu Region.Data were analyzed using descriptive statistics,gross margin analysis(GMA),benefit-cost ratio(BCR),Cobb-Douglas stochastic frontier profit function(CDSFPF),Heckman treatment effect(HTE),and double-hurdle regression(DHRM)models.Specifically,the GMA and BCR models were respectively used to examine the profitability and viability of beef cattle production,the CDSFPF model was used to examine profit efficiency(PE)and its determinants,the HTE model was used for a robustness check,and the DHRM model was used to determine the factors that influence market participation among farmers,with the Heckman model being used as a robustness check.The results revealed that despite a low profit of 136.8 US$ obtained per beef cattle with viability(benefit-cost ratio-BCR)of 2.9,beef cattle farming is profitable and viable to run as a business.However,profit efficiency(PE)analysis using the stochastic frontier profit function found that traditional beef cattle farmers are not profit efficient,with an average PE of 49%,losing an average of 51% of their profits(below the profit frontier).Based on the results of the maximum likelihood estimation(MLE)of the Cobb-Douglas stochastic frontier profit function,the cost of medications and supplements,cost of labor for herding,cost of eradicating parasites,marketing and transportation costs,and usage of local breed beef cattle had a significant negative impact on profit efficiency at 5%(P < 0.05)significant level.While grazing land owned and beef cattle herd size,positively influenced profit efficiency at a 5%(P < 0.05)significant level.As a result,if variable costs of production are controlled to the maximum extent possible,an improvement in profit efficiency will result in a large gain.Besides,the estimated stochastic frontier profit function model,along with the inefficiency variables and robustness test,show that access to market information,educational level,farming experience,off-farm income,access to credit,and beef cattle fattening(value addition)all have a negative influence on profit inefficiency at the 5%(P < 0.05)significant level,thereby enhancing profit efficiency.Whilst the distance to the market increased the level of profit inefficiency,thereby decreasing profit efficiency.Furthermore,the results further revealed a low level of market participation among farmers.Besides,the econometric estimation results from the double-hurdle model,with the Heckman model used as a robustness check,show that the key factors that have a positive effect on the level of market participation at a 5%(p < 0.05)significance level include access to market information,the age of a farmer,the size of the beef cattle herd,off-farm income,farming experience,the price of beef cattle,grazing land owned,beef cattle fattening(value addition),cows owned,bulls owned,steers-oxen owned,heifers owned,local breed beef cattle,and distance to market.While being a member of a cooperative and having access to veterinary services had statistically significant negative effects at a 5%(p < 0.05)significance level.In general,the findings indicate that farmers are less profit-efficient(below the profit frontier)and have low market participation,thereby increasing the poverty rate.The results have shown that,despite efforts by the government,the traditional beef cattle industry is not commercialized enough to reduce poverty,limited exports,and low GDP contribution.This has been affected by a variety of issues that impact both profit maximization(economic benefits)and market participation.The results of this study provide policymakers with evidence that economic benefits(profit maximization)and market participation are mutually inclusive components of commercializing the traditional beef cattle industry.As a result,focusing on a single component will result in an untenable policy target.In general,the sustainability of the commercialized beef cattle industry is tightly linked to both profit maximization and market participation,since both provide an incentive to sustain or enhance farm operations.Hence,the government should focus on addressing the factors that improve both profit maximization and market participation for farmers,leading to increased income and food security.The results of this study agree with the UN’s 2030 Agenda for Sustainable Development,which seeks to double farmers’ incomes by 2030 to reduce poverty.This research contributes to the body of information on the link between profit maximization and market participation in the commercialization of Tanzania’s traditional beef cattle industry.