Is it profitable for small holder rice farmers to use inorganic fertilizer? Evidence from Tanzania

Abstract

Increase inorganic fertilizer use is crucial for sustainable productivity in rice farming, particularly for smallholder farmers. However, there is limited empirical evidence on the economic return of inorganic fertilizer and its impact on farm income. This study used the National Sample Census of Agriculture (NSCA) 2019-20 survey and an empirical model that accounts for sample selection bias and unobserved heterogeneity at the household level. Study
found that rice’s average response to inorganic fertilizer use ranges from 4 kg/ha to 7.4 kg/ha. Furthermore, though the use of inorganic fertilizer is profitable, the current inorganic fertilizer application rate lies below the optimal economical level. In addition, the study found that, use
of inorganic fertilizer increases farm income for farmers. This study suggests that reducing the costs of inorganic fertilizer is likely to significantly increase the use of inorganic fertilizer and farm income among smallholder rice farmers. This will enable farmers to improve their living
conditions and, in general reduce their income poverty. Moreover, increasing inorganic fertilizer use coupled with the provision of extension services, off-farm income generation opportunities, and development of irrigation infrastructure will sustainably increase rice farming productivity.