Enhancing Paddy Returns Through Market Diversification in Lake Zone of Tanzania

Global Journal of Economic and Finance Research Vol. 02(11): 1173-1177, November 2025 Home Page: https://gjefr.com/ e-ISSN: 3050-5348 p-ISSN: 3050-533X DOI URL:https://doi.org/10.55677/GJEFR/06-2025-Vol02E11 pg. 1173 Enhancing Paddy Returns Through Market Diversification in Lake Zone of Tanzania James Nkwabi1, Hemed A Kihimba2, Rukundo J Bwire3 1,2,3Tanzania Agricultural Research Institute (TARI), Ukiriguru Center, P.O Box 1433, Mwanza, Tanzania I. INTRODUCTION Paddy is more preferred cash and food crop in the Lake Zone than other food crops. Ranking second most important food crop grown in Tanzania after maize, it is estimated that 18 per cent of farming households grow paddy, which in the recent years has turned to be the main cash crop (MAFAP 2013, FEWSNET 2018). Twenty per cent of farmers in Tanzania are involved in paddy farming, mostly are smallholders under rain-fed conditions with an average yield ranging from 1.6 – 2.4 t/ha compared to the potential yields of 4 – 6 t/ha (Wilson and Lewis, 2021). The current intervention at national level is to increase paddy production and productivity through irrigation development and encourage export trade (IRRI 2017/18). Paddy supplies are therefore expected to raise because of the large harvest and high carryover stocks which in turn will lower the domestic prices (FEWS NET, 2018). Therefore, strong marketing diversification strategies need to be initiated and implemented especially via the creation of form, storage utility and improvements in paddy production efficiency. Measures to stabilize or increase paddy price to benefit producers are of paramount importance, as it is obvious that an increase in production leads to increased food security but lowers the price of the product which eventually hurts the welfare and livelihood of the producers. Therefore, different opportunities to diversify the market and methods to increase profits from paddy production need to be explored. Methods to expand paddy markets have been explored in the present study undertaken in the Lake Zone of Tanzania. The objective of the study was to investigate market strategies to diversify existing market and enhance farmers profit. II. MATERIALS AND METHODS The multistage sampling technique was used to obtain the relevant qualitative and quantitative data from the study areas. Different sampling techniques were used in different stages based on population characteristics. Purposive sampling was used for the selection of the two regions, namely Mwanza and Shinyanga, selection of these regions was based on production potential. Two districts from each selected region were chosen namely Sengerema and Misungwi (Mwanza) and Kahama and Shinyanga rural (Shinyanga). Complete list of wards was prepared in the selected district and simple random sampling was employed to select eight wards, two wards from each district. In the fourth stage, two villages from each selected wards were randomly selected KEYWORDS: Paddy production, market opportunity, market surplus, market utility, market diversification Corresponding Author: James Nkwabi Publication Date: 10 November-2025 DOI: 10.55677/GJEFR/06-2025-Vol02E11 License: This is an open access article under the CC BY 4.0 license: https://creativecommons.org/licenses/by/4.0/ ABSTRACT The study was conducted in the Lake Zone of Tanzania to investigate strategies used to diversify paddy markets while increasing profits. A survey was conducted in Mwanza (Misungwi and Sengerema districts) and Shinyanga regions (Kahama and Shinyanga rural districts), where 265 respondents (231 male and 34 female) were involved. The results showed that most farmers are food insecure due to the fact that they sell their rice beyond threshold. Marketed surplus for paddy farmers was 66.40% where marketable surplus was 60.31% of the total production. Moreover, farmers market rice expanded profit margin by gaining extra profit of 19364.73 TZS equivalent to 27.60% of the paddy traders. Furthermore, 94.90 % of paddy farmers in the study area do not employ chemical inputs i.e. pesticide where 5.10 %. In conclusion, due to low purchasing power of farmers and high cost of chemical fertilizers in their areas paddy farmers may use organic sources of fertilizers such as farm yard manures (FYM) to intensify and improve their production in order to increase productivity, profitability and welfare. James Nkwabi (2025), Global Journal of Economic and Finance Research 02(11): 1173-1177 DOI URL:https://doi.org/10.55677/GJEFR/06-2025-Vol02E11 pg. 1174 which make total of sixteen village, while the final stage involve selection of 16 or 17 farmers which form the total sample of 265 paddy farmers for interview. Cross sectional primary data was obtained through individual field sample survey by the use of structured questionnaire. Statistical Package for Social Scientist (SPSS) computer software was used for data analysis, where mean, percentage, and Chi - square test were computed. III. RESULTS AND DISCUSSION Production Characteristics Majority of paddy grower (84.25%) use local varieties such as mara mata, rangi mbili and sukari sukari, however, few of them rely on improved (8 %) i.e. SARO5 or both local and improved (9.75) varieties (Table 1). Findings are supported by (Lazaro et al., 2016; Sekiya et al., 2020) who argued that, paddy farmers prefer local varieties which have big grain size, good aroma and taste though are low yielding as compared to improved varieties. The traders prefer local varieties because these have large market opportunities not only within the country but also in the export market. The local varieties obtained great opportunities in term of high price and proved more preferable as compared to the improved varieties. Therefore, most of paddy farmers rely on local varieties and marginally on improved varieties. On average, 92.50 % of paddy farmers in Kahama district cultivates local varieties, where proportion of farmers using local varieties in Shinyanga rural, Sengerama and Misungwi districts accounts to 86.70 %, 82.80 % and 75 % respectively. Larger number of farmers using improved varieties were found in Misungwi district (17.30 %) followed by Sengerema (3.40 %) and Shinyanga rural (3.30 %). Few farmers were found using both local and improved varieties in their farms, of which Sengerema (13.80 %) was leading, followed by Shinyanga rural (10 %), Misungwi (7.70 %) and Kahama district (7.50 %). Table 1: Number of observations and proportion of using improved, local or both paddy varieties Location Improved varieties Local varieties Local + Improved Misungwi 11 (17.30) 50 (75.00) 5 (7.70) Sengerema 2 (3.40) 58 (82.80) 10 (13.80) Kahama 0 62 (92.50) 4 (7.50) Shinyanga rural 2 (3.30) 54 (86.70) 6 (10.00) Grand mean 15 (8.00) 224 (84.25) 26 (9.75) Values in parentheses are representing percentage (%) and the chi-square is 22.86 Marketed surplus Vishnu (2013) defined marketable surplus as the amount of produce offered by farmers after meeting the household need, whereas the quantity of produce actually sold is marketed surplus. The study shown that paddy farmers consume 32.98 per cent of the total paddy produced while 6.05 per cent is kept as seed (Table 2), therefore, on an average paddy farmers have a marketable surplus of 60.31 per cent of the total paddy harvested but in fact selling 66.40 per cent of the produced. It means that marketed surplus is higher than marketable surplus, therefore, paddy farmers in Lake Zone are under distress selling. Higher distress selling observed in Sengerema and Shinyanga rural districts while the lowest distress observed in Kahama district. Table 2: Marketed and marketable surplus of paddy produced in Shinyanga and Mwanza region. District Production (t ha-1) Household Consumption (t ha-1) Seeds (t ha-1) Marketable surplus (t ha-1) Marketed (%) Marketable surplus (%) Misungwi 1.26 0.41 0.04 0.81 69.66 64.43 Sengerema 1.56 0.39 0.06 1.10 79.55 70.67 Kahama 1.42 0.55 0.12 0.74 54.32 52.61 Shinyanga rural 1.03 0.38 0.09 0.55 61.14 53.51 Average 1.32 0.43 0.79 0.80 66.40 60.31 James Nkwabi (2025), Global Journal of Economic and Finance Research 02(11): 1173-1177 DOI URL:https://doi.org/10.55677/GJEFR/06-2025-Vol02E11 pg. 1175 Marketing utility Mtembeji and Singh (2021), the livelihood of Lake Zone farmers depends on paddy production by 21 per cent. Paddy has large market opportunities, however there is inconsistent market price owing to the market seasonality behavior. Rice being a commercially potential crop, 66.40 per cent of its total production is marketed. On an average 17.58 per cent of paddy farmers market milled rice to catch higher price and increase profit, where as 82.42 per cent of paddy farmers market un-milled rice. Percent of paddy farmers selling milled rice range from 9.0 to 30.80 while farmers selling un-husked rice ranges from 69.20 to 91.00 per cent. Table 3: Common forms of rice used for the market in Mwanza and Shinyanga regions Districts Rice Paddy Misungwi 250.65 (30.80) 563.18 (69.20) Sengerema 190.11 (17.20) 915.19 (82.80) Kahama 67.18 (9.00) 679.30 (91.00) Shinyanga rural 73.24 (13.30) 477.40 (86.70) Grand mean 141.36(17.58) 662.71(82.42) Price diversification Result shows a large price variation of both milled and un-milled rice among farmers in Mwanza and Shinyanga regions (Table 4). It was found that the farmers selling un-milled rice gained on average a price of TZS 70,162 per bag (1 bag ~ 90 kg), however when same bag is milled can be sold at price of TZS 89,527 per bag. In this study farmers’ selling milled rice obtained an extra amount of TZS 19,365 equivalent to 27.60 per cent difference (Table 4). These finding are in line with the result obtained by Nkuba et al. (2016); Mgale and Yunxian ,(2020). The t test showed that the mean difference between two prices was significant (P < 0.01). On an average, the high price of un-milled rice was observed in Shinyanga rural (TZS 72,864) and Kahama district (TZS 72,694) while low price was observed in Sengerema district (TZS 65,717). Milled rice had highest price in Kahama district (TZS 98,264) and the lowest in Shinyanga rural (TZS 80,203). The high price of milled rice in Kahama district was due to market demand in neighboring countries like Kenya, Rwanda, Uganda, Burundi and Congo DR which is closer to Kahama, good and passable road network in the villages where paddy is produced is also a contribution factor. Table 4: Market price of milled and un-milled paddy per bag of 90 kg in the study area Districts Un-milled rice Milled rice (90 kg/bag) (90 kg/kg – 40%) Misungwi 69,373 92,405 Sengerema 65,717 87,229 Kahama 72,694 98,264 Shinyanga rural 72,864 80,209 Grand mean 70,162 89,527 ttest (P < 0.01) 41.63 23.33 Strategies used to maximize profit Paddy farmers in the study area adopted three different strategies for increasing their profit. This includes form utility, storage utility and in rare cases they use improving method of farming for maximizing profit. According to the law of demand, during the abundant production, normally price tends to decrease and vice versa. It also applies to crops production, that price of a given commodity decreases during harvesting time and then raises during late season. Table 5 showed storage utility (70.3 %) as the most notable strategy used by farmers to enhance producers’ profit. Due to the presence of a large number of smallholder or subsistence farmers in the location and minimal alternative source of income, only few farmers could manage to store paddy for more than three months. Shortage of storage facilities, processing plants and lack of awareness among farmers lead them to sell un-milled rice (Musowo et al,2019). In addition, 26.60 per cent of paddy farmers in the study area added values through milling James Nkwabi (2025), Global Journal of Economic and Finance Research 02(11): 1173-1177 DOI URL:https://doi.org/10.55677/GJEFR/06-2025-Vol02E11 pg. 1176 prior to selling which increased price by 27.60 per cent. Farmers used improved farming practices such as improved rice variety and fertilizer as the methods to increase production and profit were 3.10 per cent (Table 5). Therefore, use of improved practices enhanced production by 20 per cent over local cultivation methods (FAO, 2018). Table 5: Market strategies used by farmers to increase profit Districts Storage Processing Improving farming (Percentage - %) Misungwi 63.9 31.1 5 Sengerema 65.7 26.9 7.4 Kahama 75.4 24.6 0 Shinyanga rural 76.3 23.7 0 Average 70.3 26.6 3.1 Opportunity for natural farming produces Over the years, consumers’ awareness on food quality has increased due to food contamination caused by chemicals, serious health hazards and environmental issues. This has enhanced the demand for safe and healthy food all over the world. To account on that demand for organic product has in turn increased and broadened the opportunity for a new stream of agriculture market. Production and marketing organically produced commodity are one of the fundamental ways for providing safe food to consumers and diversifying market to increase profit. Moreover, factors determining consumers’ preference for organically produced expose health to be the main attribute for shifting to organic rice consumption from inorganic product (Meena and Sharma, 2015). Sixty one per cent of paddy farmers in Mwanza and Shinyanga regions do farming along with livestock keeping. On average, 36 % of farm households are engaged directly in livestock keeping (NBS, 2012; Engida et al., 2015). They normally keep cattle (64%), goat (45%) and chicken (90%) at their locality (Pica-Ciamarran et al., 2011). The animals kept in totality have been a good source of farm yard manure in rural households. The study revealed that 78.60 per cent of farmers do not use fertilizer while 21.40 per cent of paddy farmers use fertilizers. However out of 21.40 per cent paddy farmers, 55 per cent use inorganic fertilizers such as Diammonium Phosphate (DAP) and UREA while 45 per cent use organic fertilizer like Farm Yard Manure. This study indicates that many paddy farmers (78.60 %) do not use fertilizers, only 24.60% use fertilizers in the area. Two scenarios may arise here; either price of rice does not guarantee the cost incurred or farmers have no enough knowledge hence need training to intensify farming through use of agricultural inputs. On average 94.90 percent of farmers do not use pesticides compared to only 5.10 per cent who use pesticides to control important insect pests. However, when fertilizer source was compared, many farmers reported to use more mineral fertilizers (55 %) than farm yard manure (45 %). Moreover, organic farming is highly substitutable with convention paddy production, hence, transformation to organic farming will create new market opportunity using locally least cost inputs, while obtaining premium price and consistence market. Table 6: Usage of agricultural inputs for paddy production in the study area Districts Uses of pesticide (%) Uses of fertilizers (%) Basal fertilizer (%) Pesticide No pesticide Fertilizer No fertilizer DAP FYM Misungwi 5.80 94.20 30.80 69.20 66.7 33.3 Sengerema 3.40 96.60 17.20 82.80 50 50 Kahama 4.50 95.50 20.90 79.10 83.3 16.7 Shinyanga rural 6.70 93.30 16.70 83.30 20 80 Average 5.10 94.90 21.40 78.60 55 45 χ2 (P < 0.05) 315.35 154.22 111.80 IV. RECOMMENDATION The results indicate that the majority of farmers in the study area still rely on traditional farming methods, not utilizing fertilizers, pesticides, or improved paddy seeds. This is largely due to poverty or a lack of awareness about better agricultural practices. Additionally, few paddy farmers in the region add value to their produce to enhance prices and increase profits. To mitigate the risks of loss during market downturns, shortages of processing plants, and inadequate village storage facilities, there is a need to establish strong financial institutions such as Savings and Credit Cooperative Societies (SACCOs) and Agricultural Marketing James Nkwabi (2025), Global Journal of Economic and Finance Research 02(11): 1173-1177 DOI URL:https://doi.org/10.55677/GJEFR/06-2025-Vol02E11 pg. 1177 Cooperative Societies (AMCOS). These community-based financial and technical support systems would help empower farmers. Furthermore, raising awareness among paddy farmers about market diversification strategies, both before and during market recessions, should be a key focus to reduce associated risks. V. ACKNOWLEDGEMENTS The author appreciates and acknowledges the contribution of ICAR under the IndiaAfrica program phase II for the financial support, Tanzania Agriculture Research Institute for the support and permission and all people and institutions who contributed to the successful completion of this study. VI. DISCLOSURE The author reports no conflicts of interest in this work. REFERENCES 1. Agriculture Organization of the United National. 2018. The Intentional symposium on agricultural innovation for family farmers: 20 success stories of agricultural innovation from the innovation fair. 2. Bakewell-Stone, P., Lieblein, G., and Francis C. 2008. Potentials for organic agriculture to sustain livelihoods in Tanzania. International Journal of Agricultural Sustainability, 6: 22-36. 3. Engida, E., Guthiga, P., and Karugia, J. 2015. The role of livestock in the Tanzanian economy: Policy analysis using a dynamic computable general equilibrium model for Tanzania. 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