Economic profitability and risk analyses of improved sorghum varieties in Tanzania

Abstract

This study uses survey data collected in 2012/2013 farming season to determine the net-returns and utility-efficient farm management practices for improved sorghum varieties adopted by small-scale farmers in Tanzania. The reference farm management practice was using JEMBE (handhole) for land cultivation and growing local varieties (landraces). Other farm management practices included using ox-plough for land cultivation with or without applying manure for soil amendment, and using JEMBE for land cultivation with or without applying manure. Improved sorghum Varieties included Tegemeo, Pato, Macia, Wahi, Hakika, Mtama-1, and Sila. We used simulation and bootstrapping to estimate yield distributions and net returns and stochastic efficiency with respect to a function to complement first and second degree stochastic dominance analyses to determine varieties and farm management practice that reduce production and price risk. Under profit maximization and risk reduction assumptions, main results show that Macia and Mtama-1 varieties have high mean yield and low yield variability. Even under low inputs and extreme risk averse farmers, Macia and Mtama-1 were superior choices. Value addition activities increased price offered to farmers, which also reduced price risk.   Key words: Economic profitability, risk analysis, sorghum, stochastic dominance, Tanzania.