Trade Impediments and Market Transaction Arrangements for Maize and Rice in Tanzania

Abstract

This research paper is focused on the exploration of the impediments to beneficial trade and their resultant market transaction arrangement in maize and rice. The study therefore was confined to the following three specific objectives to first, explore perceptions and experiences on the impediments to beneficial trade among rice and maize growers and their socio-economic impacts for farmers and food security in the study area. Second, to identify production and marketing models and describe their structure, conduct and performance; and thirdly, to describe transaction costs and related impediments in the value added chain for both crops in Tanzania. Survey was done in three regions: Shinyanga region representing rice growing regions and Ruvuma and Iringa regions representing maize growing regions of Tanzania. The study involved a sample of 100 smallholder rice farmer traders and 131 maize farmer traders. This study adapted Williamsonian Transaction Costs Economics (TCE) approach (as applied in Pitelis (1993) and Furubotn et al. (2000) to identify market arrangements based on transaction costs of producing and trading in the two grain crops. Based on the observed farmers' perception and experiences with prevailing trade impediments, this study has proposed five stylized market arrangements referred to in this paper as Cereal Transaction Arrangements (CTAs). Each of these CTAs was found to have strengths and weaknesses—hence no single trade policy could be more appropriate across all CTAs. The paper recommends that the government should reduce transactions costs in CTA4 and also CTA5 which involve more progressive commercial farmers by putting in place pro-poor trade policies. Such transaction costs include cost of identifying weighing devices, constructing warehouses, corruption, levies and quantitative trade restrictions.