Abstract

Tanzanian produced rice is not competitive because of high production costs. To increase competitiveness will require improvements in production efficiency. This study was conducted  to analyse production cost efficiency using  cross sectional data (2013/2014 agricultural season) from 200 farmers that belong to four cooperative irrigation schemes in Coast and Morogoro regions. Two stage sampling and translog stochastic cost frontier were used for sampling and cost efficiency analysis, respectively. Production costs were estimated quantitatively using the enterprise budgeting technique. Study data suggest that total costs of production are US$315/MT. Rice output and prices for labour, fertilizer and irrigation water significantly affected costs of production. Unit cost of production were reduced by increasing rice productivity (p<0.05). Production efficiency was significantly influenced by farming experience, planting methods, frequency of weeding, degree of specialization and source of purchased inputs. These factors accounted for 82% of the variability in costs of production (p<0.05). A major conclusion is that production efficiency is reduced by high production costs relative to rice output produced, input prices, source of purchased inputs and other agricultural practices. Use of labour saving technologies, the purchase of inputs from irrigation scheme cooperatives and greater economies of scale resulting from increased specialization can increase profits.

Key words: Cooperative, cost efficiency, irrigation scheme, rice, smallholder farming.