The effect of warehouse receipt system on cashew nuts production in Tanzania

Abstract

This study analyzed the effect of warehouse receipt system on cashew nuts production in Tanzania. The study used secondary time series data obtained from UNdata of the United Nations for model one and cross-sectional data was obtained from survey data of 2007/2008 agricultural survey conducted in Tanzania at village level for model two. Specific objectives were to analyze the effect of warehouse-regulated prices on cashew nuts production in Tanzania and to assess the effect of input accessibility under WRS on cashew nuts productivity in Tanzania. Logarithms of the variables were taken in order to determine the percentage rate of change in the dependent variable when one of the independent variables changes. The Autoregressive Distributed Lag (ARDL) model was used for objective one, and two models were estimated. But the second objective was analyzed using Ordinary Least Squares (OLS) technique. Prior to the econometric estimation, the study data was subjected to preliminary analysis, which involved presentation of descriptive statistics and normality, heteroscedasticity and serial correlation tests. The ARDL results from the estimation reveal that, cashew nut prices, pesticides, cultivated area and their lagged values were the main significant factors affecting cashew nut production in Tanzania. Likewise, for objective two, fertilizer use, pesticides, herbicides, education of head of household, radio, cellphone, bicycle, and motorcycle ownership positively influenced the cashew nut productivity. While labor force had no significant effect on cashew nuts production, holding other factors constant. Based on the findings of the study, the conclusion is that warehouse-regulated prices positively affect cashew nuts production in Tanzania. Secondly, input accessibility under WRS positively affects cashew nuts productivity in Tanzania. This study recommends that the Tanzanian government should intervene in the cashew nuts sub-sector and provide subsidized inputs for the small farmers to reduce on the costs. Cheap funds should be availed to farmers to enable them pay for other key factors such as labor on their farms. Government should also encourage farmer cooperatives that may be engaged in processing of the crop before export