IJERD – International Journal of Environmental and Rural Development (2021) 12-2

Research article
erd

Contracting and Negotiation Attributes:
A Case of Sunflower Seed Crop in Central Tanzania
RUBASHA MATIKU MUJAMA*
Graduate School of Agriculture, Tokyo University of Agriculture, Japan
Email: matikurubasha85@gmail.com

TOMOHIRO UCHIYAMA
Faculty of International Agriculture and Food Studies,Tokyo University of Agriculture, Japan
Received 31 December 2020

Accepted 9 September 2021(*Corresponding Author)

Abstract In the most developing countries like Tanzania, poor farmers have limited accessto agricultural inputs. One of the proposed solutions is to link farmers with the private sector
through contract farming. In Tanzania, sunflower oil has been preferred as edible cooking oil
for many households since it has a low cholesterol level for human consumption. Moreover,sunflower-contract farming was adopted as part of the new agricultural policy in 2009-2010
cropping season, majoring in providing triangular benefits to the stakeholders, including
sunflower-farmers, private companies, and the Government of Tanzania. Despite thegovernment of Tanzania’s efforts to link the sunflower farmers with the private sector,
contract farming has been facing some challenges in coordination such as pricing, production
services and credit services. The purpose of this study is to investigate the impact of thecontract farming program among sunflower farmers. Specifically, the study aims to: (i)determine the socio-economic characteristics of the sample farmers; (ii) identify private firms
providing contract farming to the sunflower farmers; and (iii) evaluate the relationship of thenegotiation attributes in income growth among sunflower farmers. The field survey wasconducted in March 2020, targeting 40 contracted farmers and 40 non-contracted farmers in
the two regions of Central Tanzania. In relationship of the negotiation attributes the paper
points out the credit access and production services were significant with farmers’ income.
Besides, the results show that there was no statistically significant relationship between
advance pricing and income growth among sunflower farmers. This was because in contract
terms price is not set in advance.
Keywords contract farming, sunflower seed crop, Central Tanzania.

INTRODUCTION
Contract financing has been a promising linkage strategy between smallholders and agribusiness
firms with vested interests in sharing the risks associated with producing of a specific crop.
Consequently, the World Bank also recognizes contract financing as an avenue to create strategic
partnerships between private capitals and smallholders leading to the transfer of modern agriculturaltechnology, quality inputs, entrepreneurial development of smallholders and market growth (WorldBank, 2008).
Contract farming is not a new phenomenon in Tanzania. It dates back during the colonial era,
where contract farming arrangements were practiced in some of the major cash crops plantations ofsugarcane and tea. Contract arrangements in the Tanzania farming industry fall under the four models
as explained by Eaton and Shepherd (2001); centralized, multipartite, intermediary and the informalmodels. For sunflower sector, contract farming among sunflower farmers in Tanzania has beendeveloped widely since 2010 in solving the problems faced by farm households such as poor accessof modern seeds, in-adequate use of farming techniques and provides a secure purchaser for theirproduction (SDC, 2018). Likewise, from the countryside the main motivation of introducingⒸ ISERD49

IJERD – International Journal of Environmental and Rural Development (2021) 12-2

sunflower contract farming was to reduce the shortage and burden of edible cooking oil importationfrom foreign countries (URT, 2009).
Due to its low cholesterol level, sunflower oil is highly preferred as an edible and safe cooking
oil for many households in the country. The crop accounts for 40% of the total national cooking oil
requirements (URT, 2014). For the countryside, contract farming policy attempted to reduce theburden of importing edible cooking oil from foreign countries by offering opportunities of high yield
varieties together with aim of the income generation to farmers.
Despite the government’s new agricultural policy, sunflower contract farming has faced somechallenges in coordination such as pricing which leads to side-selling, production services such as
delay of paying farmers-produce and credit services which is not provided as agreed in advance.
Additionally, in contract terms, major negotiation attributes between the companies and contract
farmers include pricing, credit access and production services such transport and inputs access.
OBJECTIVE
The study aims to investigate the impact of contract farming program among sunflower farmers.
Specifically, the study aims to (i) determine the socio-economic characteristics of the sample farmers;(ii) identify private firms providing contract farming among the sunflower farmers; and (iii) evaluate
the relationship of the negotiation attributes in income growth among contract sunflower farmers.
The following research hypotheses were formulated and tested: H01: Capital has no significant
influence on income growth among sunflower farmers in Tanzania; H02: Advance pricing has nosignificant influence on income growth among sunflower farmers in Tanzania; and H03: Contractor
credit services have no significant influence on income growth among sunflower farmers in Tanzania.
METHODOLOGY
The field study was conducted in Dodoma and Singida regions located in Central Tanzania in March
2020 (Fig. 1). These regions were selected because contract farming has been extended to sunflower
farmers since 2020. Based on the observation, it was found that there were two types of sunflower
seed producers: i) sunflower farmers with contract farming and ii) sunflower farmers without contract farming. Data collected comprised mainly data from the 2018/2019 cropping season,
therefore farmers had to recall on some aspects such as costs of production, yield of different crops
and inputs use.

Studyarea

Fig. 1 Study area
Source: Available at https://www.google.com/united-republic-of-Tanzania-map-vectorⒸ ISERD

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IJERD – International Journal of Environmental and Rural Development (2021) 12-2

Considering this observation, a total of 80 farmers from two types of category farmers wereselected from two regions: Dodoma and Singida regions. Among them, 40 farmers were selectedfrom each category of farmers. A two-stage sample design was used to collect the data. First, twovillages were purposefully selected because of the presence of sunflower contract farming. Then, thecontract farmers were randomly selected from the list of contracted farmers, and non-contract
farmers were randomly selected from the village households list (after removing the contract farmers).
The study adopted a semi-structured questionnaire as an instrument for data collection. Bothqualitative and quantitative methods of data collection were collected. Major information collected
includes socio-economic characteristics of the farmer-respondents such as age, farm size (ha),average cultivated area (ha), education of head of households, objectives of the contract farming
among sunflower farmers, production characteristics such as cost and sales of produce and current
problems and farmers suggestions on sunflower production.
This study employed data analysis techniques, and descriptive statistics, correlation analysis
between variables was used to measure how well the variables are related. Descriptive statistics suchas frequencies means, and cross-tabulation of some critical values were used to compare basic
characteristics of farmers who participated in contract farming and farmers who did not participate.
RESULTS AND DISCUSSION
1) Socio-Economic Characteristics of the Sample Farmers
The the field study showed that the average age for both contract farmers and non-contract farmers
was 48 years (Fig. 2). In terms of gender distribution, the sunflower is a men’s crop where men
constitute (95%) of the contract farmers and (74%) of the non-contract farmers respectively (Fig. 3).
The very low proportion of women contract farmers may indicate contractual arrangements and toolsthat still discriminate against women participation and access. In most Nyanturu societies in Singida
region and Rangi societies in Dodoma region, women still require the approval of men whenborrowing money, which tends to limit women’s participation and access to contract farming.
Considering the education background, the study shows that (82%) of the contract farmers had
attained at least secondary education compared to (67%) of the non-contract farmers (Fig. 4). This
clearly shows that most of the contract farmers had attained a good level of education to enable themto have a better understanding of how contractual arrangements work.

Fig. 2 Age distribution of sampled farmers
Source: Field survey, 2020

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IJERD – International Journal of Environmental and Rural Development (2021) 12-2

Fig. 3 Gender distribution of sampled farmers
Source: Field survey, 2020

Fig. 4 Education level of sampled farmers
Source: Field survey, 2020

2) Private Firms Providing Contract Farming among Sunflower Farmers
Based on the observations, the major actors in sunflower contract farming were farmers; thecompany; and the Government of Tanzania who closely oversee the progress of the contract farming
program. Initially, the contract farming among sunflower farmers was introduced by eight (8) privatefirms. However, major private firms still having contract farming among sunflower farmers include:
Three Sisters Company Limited in Dodoma region and Ikungi Sunflower Edible Cooking Oil
Company in Singida region (Table 1). Additionally, both Three sisters in Dodoma and Ikungi
Sunflower Edible Cooking Oil provide a long-term contract for a period of eight (8) years. However,some farmers did not join the contract in the first instance as they wanted reassurance that thecompany would fulfil its obligations in terms of providing improved seeds and purchasing all
produce before contracting. Farmers subsequently joined the program. Other contract companies did
not continue providing contract farming because of some challenges such as side selling among thecontract farmers, financial constraint, and their contract were short- term such as one-year, two-years,
and three-years of contract (Table 1).

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Table 1 Private firms providing contract farming among sunflower farmers in Tanzania
Private firm

Still having
contract

Region, the company
operates

Number ofvillages

Years of doing
contract

Uncle Millo
Ringo consolidated
Furaha Dodoma
Three Sisters
Ikungi Edible Cooking Oil Ltd
Nyemo Investment
Ring Investment
Kibaigwa Oil Suppliers

NoNo
No
Yes
Yes
NoNoNoDodomaDodomaDodomaDodomaSingidaSingidaDodomaDodoma

20
25
115
3
28
1070

3(2010-2013)
2(2010-2012)
2(2010-2012)
8(2011-to date)8(2012-to date)3(2010-2013)
2(2011-2013)
1(2010-2011)

Source: Field survey, 2020

3) Relationship of the Negotiation Attributes in Income among Contract Sunflowers Farmers
To understand the gross income of two category farmers, the economic return analysis was employed.
Gross income was calculated as a gross revenue minus total production cost excluding family laborcost. The study shows that, contract farmers receive higher gross income (1228.9 TZS/ha) after
joining the contract farming compared to the non-contract farming (602.1 TZS/ha) (Table 2). For thegood aspect, this result imply that contract farming has a positive impact on household income.
Table 2 Income comparison of non-contract sunflower farmers andcontract sunflower farmers(Unit of cost: `000TZS/ha)

Item

Non-contract

Contract

farmers

farmers

Difference(b)-(a)(a)(b)

Head of household(n=40)(n=40)

Yield (tons/ha)

1.20

2.41

1.21

Seeds cost

10.6

12.2

1.6

Chemical fertilizer cost

22.7

37.9

15.2

Pesticide cost

1.20

10.8

9.60

Transport cost

40.00

55.5

55.5

Hired labor cost

23.4

27.9

4.5

Total variable cost

57.9

144.8

86.9

Total production cost98.3

196.9

98.6

Gross Revenues

660.0

1373.7713.7

Gross Income602.1

1228.9626.8

Gross Profit

561.5

1176.8

615.3

Price

550570Additionally, the study adopted the correlation analysis to examine the negotiation attributes inincome growth among the sunflower contract farmers. The correlation between variables was used
to measure how well the variables are related. Table 3 presents the results of the correlation
coefficient analysis, which shows a statistically insignificant weak positive relationship between
capital and income growth among sunflower farmers (r = 0.037, p >0.05). Surprisingly, the results
show that there was no statistically significant relationship between pricing and income amongsunflower farmers (r = 0.23, p >0.05). This was because in contract terms price is not set in advance.
However, contractor credit (r= 0.71) and production services (r= 0.78) among sunflower farmers
show static significant relationship with income growth among sunflower farmers (Table 3)Ⓒ ISERD

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Table 3 Relationship of the negotiation attributes in income growth among contract
sunflower farmers
CapitalPricing

Contractor
creditProduction
services

IncomeCapitalPearson1correlation
Sig (2 tailed)
N40
Pricing
Pearson
0.32
1correlation
Sig (2 tailed)
.818
N4040
Contractor
Pearson.062.255**
1creditcorrelation
Sig (2 tailed)
.661
.000
N
404040Production
Pearson.022.615**.345
servicescorrelation
Sig (2 tailed)
.876
.000
.012
N
4040
40
IncomePearson.037.023.741**.779**
1correlation
Sig (2 tailed)
.791
.000
.000.000
N
40404040
40
Note: **Correlation is significant at the 0.05 level (2-tailed-test); N is the total number of the contract sunflower
farmers; Production services means transport provision during harvesting and inputs provision such as seeds,
pesticides and fertilizers. Source: Field survey, 2020.

CONCLUSION
The study aimed to investigate the impact of contract farming program among sunflower farmers. In
the sunflower sector, only two major private firms still provide contract farming among the sunflower
farmers. Additionally, in relationship of the negotiation attributes the paper points out the credit
access and production services were significant with farmers’ income. Besides, the results show that
there was no statistically significant relationship between advance pricing and income growth among
sunflower farmers. This was because in contract terms price is not set in advance.
In relation to the findings and conclusion, the following were recommended to alleviate theexisting challenges. First, fixed price should set in advance; this can work as an incentive if thesunflower-contract producers feel their work is rewarded. Secondly, there is a definite need for theGovernment of Tanzania to provide proper monitoring to ensure both contract parties adhere to theterms of contract. Finally, non-contract farmers need more education and training for more contract
participation.
ACKNOWLEDGEMENTS
We would like to express our gratitude to Tokyo Nodai Foundation and Tokyo Tamagawa RotaryFoundation for financially supporting this study.
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