Transaction Cost of Sunflower Seed Production in Tanzania: Application of Transaction Cost Economics Theory

Abstract

This paper analyses the effects of transaction costs of production of the sunflower seeds by small scale farmers in Tanzania. The study utilises cross-sectional farm household data collected from a randomly selected sample of 120 small scale farmers in two central regions of Singida and Tabora in Tanzania. The results showed that transaction cost variables associated with information search and negotiation had negative effect on total output of sunflower seed production while contractual enforcement cost had positive effect on sunflower production. The effects were however not supported statistically (at p<0.05). Transaction costs associated with inputs information, access to means of communication and transportation, had significant negative effects on sunflower seed production. We recommend that policies aimed at improving rural road infrastructure, market information systems, small scale asset accumulation, human capital and promotion of farmer association could reduce transaction costs and enhance sunflower production by small scale commercial farmers.