Implication of quality uncertainty on market exchange: The case of seed industry in Kilolo district, Tanzania.

Abstract

An increasing demand of agricultural intensification and value addition necessitates the use of improved inputs such as improved seed. Smallholder farmers contribute about 70 % of agricultural production in Tanzania. Agriculture sector in Tanzania contributes about 24.1 % of the GDP, 30 % of exports and 65% of industrial raw materials. Thus, agriculture development, economic growth and industrialization are inseparable. Due to the nature of the product, smallholder farmers cannot judge the overall excellence of seed at the time of buying.  This paper assessed quality uncertainty in maize and vegetable seed and its implication for market exchange between farmers and seed sellers in Kilolo district, Iringa Tanzania. The study used a random sample of 130 smallholder farmers and representatives from ten seed companies. Asymmetric information prevails between the two trading sides i.e. sellers and buyers. Moreover, product augmentation is profoundly overlooked whereby most of seed companies have not augmented their products. Despite that genetic and environmental interaction sways crop performance, the paper offers a thorough deduction of the results and its implication on market exchange. This paper adds information in the body of knowledge on how an improved seed can intensify upsurge production of food and industrial raw materials, which is a step towards desired industrialization agenda in Tanzania.