Economic Analysis of Contract Farming of Bean Famers in the Southern Highlands of Tanzania

This study aimed at analysing the performance of common bean (Phaseolus vulgris) producers under contract farming arrangement in the Southern Highlands of Tanzania. Specifically, the study sought to examine operations and contractual agreements between participants in farming contracts under two Agribusiness Companies (RG Co Ltd and G2L Co Ltd); assess the gross margins of participants in contract farming system vis-à-vis those operating outside the system; and explore constraints facing beans contract farming system under the two agribusiness companies; and make policy recommendations aimed at improving effectiveness of contract farming business model. The study was basically qualitative triangulated with some quantitative data obtained during Focus Group discussions (FGD) with farmers and scheduled interviews with agribusiness company staff and other key informants (government officials and service providers). Results show that the two agribusiness companies have successfully demonstrated that contract farming is a viable model in common bean sub-sector. Gross margin analysis comparisons between contracted and non-contracted farming indicated a statistically different figure. Off-takers margins have also show significant differences between contractors and who did not contract farmers. A number of constraints were identified and respective policy recommendations were made.