Attribution of Gross Margin Differential to Quality Declared Seeds in Tanzanian Sunflower Sub-Sector: Difference-in-Differences Analysis.

Abstract

This study was conducted to investigate the causal effect of quality declared seeds (QDS) on changes in gross margin in sunflower agribusiness. Longitudinal survey design was employed to collect panel data from 357 sunflower farmers who were members of 11 agricultural marketing cooperative societies (AMCOS) in Kondoa and Itigi districts, Tanzania. The subsequent analysis was done based on a continuous difference-in-differences (DiD) econometric model by taking into account the treated and controlled farmers from two periods, including seasons 2022 and 2023. It was found out that the use of QDS positively (β=0.204) caused an increase of TZS. 284.94/Kg of sunflower farmers’ gross margin from TZS. 105.48/Kg for controlled farmers. This gross margin differential of 72.98% was explained by 67.31% influence of the use of QDS by the treated farmers, of which the causal effect was statistically significant (p=0.031). The findings are important to the Tanzanian government, where policy could be developed to encourage smallholder farmers to switch from conventional seeds to QDS in their localities. The knowledge of the impact of QDS on gross margin is more important for smallholder farmers themselves to hold on in sunflower farming instead of abandoning the sub-sector, as was recently witnessed in research areas.