Profitability of oil palm farming in Kigoma Rural District, Tanzania

Abstract

Oil palm (Elaeis guineensis) is one of the world’s most efficient oil-bearing crop. The crop has great contribution to the economy of the world’s leading producers, that is, Indonesia and Malaysia. In Tanzania however, the leading region in oil palm farming is facing high rate of poverty with 48.9% of its population living below the poverty line, that is, below 1.9 USD per day. Further, the country’s annual palm oil production of 16 593 tons is short of the demand of 364 800 tons per annum. Based on that, the study aimed to determine profit attained from oil palm production systems in Kigoma rural district. A cross sectional design was adopted and a semi structured questionnaire was used to collect data from 260 respondents randomly selected from five villages in Kigoma rural district. Descriptive statistics was used for analysis of demographic data and profitability was determined by Gross margin. Demographic profile shows that men own 90% of the farms, 70% of oil palm farmers are in the active age of 20 - 60 years, 90% are married, 93% depend solely in agriculture and 92% of farmers have acquired primary education. Further findings show that farmers have adopted local, improved and mixed production systems by 73%, 2% and 25% respectively. And that at an average of 96 oil palm trees per farmer at an area of about 1.7 hectares, these farmers earn less than TZS 1 million per hectare. Furthermore, they fetch a gross margin of 7%, 35% and 19% from the three systems respectively. It was noted that, inadequate cultivation of Tenera variety oil palms and poor management practices are greater hindrance to higher productivity and profitability of oil palm farming in the study area. The government, investors and farmers must put more efforts to overcome those challenges.