Abstract: In developing countries, it has been observed that Gross Domestic Product (GDP) growth from agriculture benefits the incomes of poor people two to four times more than any other sectors of the economy. The positivity and negativity of globalization have been experienced at a number of different levels i.e Individual, household, firm, town, region, sector and nation. However, little is known on the challenges the farmers are getting, with the use of transaction cost theory. This study therefore analyzed margin profit of the value chain for pigeonpea in Tanzania for better policy making, to improve their market access so as to improve production and reduce poverty. To attain the main objective of mapping the value and also analysis of the existing performance in terms of price, cost and profit from the source to the downstream of the value chain was done.
The results shows that, common marketing system used is not direct marketing system although there is one group of the company doing direct marketing by having arrangement with farmers and buy from them. The common market system involves many links with no value addition within the channels which increase the total cost by double handling. Farmers sell pigeonpea individully which increase the transaction cost such as seller/buyer search cost. In all the two systems, there is lack of market information by farmers in upstream and control of big buyers in downstream making farmers to have low bargaining power due to all the amount of pigeonpea from the upstream of the value chain bought by the urban exporters. Since the middlemen have direct contact with exporters, they knew the quality required, they act opportunistically towards the farmers and enjoy profit by buying at low price with no value addition. Also the is lack of capital which contraints participants in a value chain which is caused by lack of knowledge and collateral to get loans. Another issue is of gender participation in this business, for dry pigeonpea men are involved and green pigeonpea is the women business. Women involvement of women in dry pigeonpea business is restricted by lack of capital.
Keywords: GDP, pigeon pea, Margin Profit of Value Chain.
Title: Margin Profit of Value Chain for Pigeon pea In Tanzania
Author: Herieth J. Rogath
International Journal of Management and Commerce Innovations
ISSN 2348-7585 (Online)
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