The Effect of Transaction Costs on Post-Harvest Maize Value Chain Performance among Maize Smallholder Farmers in Tanzania

Abstract

Agriculture has been the backbone of most developing countries’ economy as it contributes significantly in their Gross Domestic Product and export earnings. However, its performance is still not satisfactory as the sector is hindered by many constraints one being high transaction costs. This study examines the effect of transaction costs on post-harvest maize value chain performance among Kongwa District Council maize smallholder farmers in Dodoma region. The study adopted a survey research design where a sample of 88 respondents obtained through multi stage sampling was used in the study. Questionnaires and Interview were used as data collection tools whereas multiple regression technique was applied to establish the existence of the hypothesized relationship. It was revealed that transportation and middlemen costs affected post-harvest maize value chain performance in terms of profits, output sales and post-harvest losses in the area while information costs did not. Moreover, multiple regression revealed that profit earned by farmers was the major effect of transaction costs on post-harvest maize value chain performance while post-harvest losses was not. The study recommends to the government and all associated stakeholders to take various measures focusing on reducing transaction costs such as improvement of transportation infrastructures and establishment of well-equipped market areas near farmers.