Welfare impacts of smallholder farmers’ participation in maize and pigeonpea markets in Tanzania

Abstract

This paper evaluates the impact of maize and pigeonpea market participation and the level of participation on household welfare measured by consumption expenditure in rural Tanzania. The study used cross-sectional farm household level data collected in 2010 from 700 randomly selected households in northern and eastern zones of Tanzania. Propensity score matching and endogenous switching regression techniques were employed to address the welfare impacts of market participation for binary treatment, while linear regression was employed to address the welfare impacts of the level of market participation. Maize and pigeonpea market participation and the level of participation had positive and significant impacts on the welfare of rural households. On average, maize and pigeonpea market participation increased consumption expenditure per capita in the range of 19.2–20.4 % and 28.3–29.4 %, respectively. Similarly, a one unit increase in the predicted level of market participation increased per capita consumption expenditure by 0.5 and 0.3 %, for both maize and pigeonpea, respectively. This confirms the potential role of market participation and the level of participation in improving rural household welfare, as higher consumption expenditures from market participation also mean improved food security and reduced poverty. Policies aimed at reducing the transaction costs of accessing markets such as improved market information, rural infrastructure and household capacity to produce surplus production are critical to the improvement of household welfare.