Functioning of the Governance Structure in the Tanzania Tobacco Value-Chain: Evidence from Smallholder Tobacco Farmers in Urambo District

Abstract

This study examines the functioning of tobacco value-chain in Urambo district in Tanzania, focusing mainly on the critical analysis of the value-chain agents and their functions, chain governance and the institutional environment in which the chain operates. It starts by mapping up the chain to have a pictorial representation of the networks among actors, followed by a critical examination of the actors involved in the chain and the roles they play to clearly understand chain coordination, which will inform better policy recommendations. A sample size of 300 farmers was used to obtain farmers’ insights; and data were supplemented using other stakeholders that are directly influencing the chain. The agents that were found to be directly involved in the chain included tobacco farmers, local intermediaries, traders, cooperative unions and consumers. The Tanzania Tobacco Board and district councils are the major government organizations currently involved in the functioning of the tobacco chain. The governance structure in the chain is quasi-hierarchy and is mainly driven by buyers. There are various laws and regulations that are set to control the crop production though, on the other hand, the crop has been promoted through research institutes and the tobacco industry Act. Bargaining power of tobacco farmers was found to be weak due to the nature of chain operations. The tobacco value-chain should therefore allow a fairly well participation of network of agents to ensure that the integrated profit is fairly shared for the sustainability of the crop production and the economic welfare of smallholder farmers.

Keywords: tobacco, value-chain, governance