Profitability of Smallholder Sugarcane Farming Systems in Tanzania: A Comparative Analysis Between Block Farming and Traditional Farming Systems in Morogoro.

There is circumstantial evidence that smallholder sugarcane farming systems have substantial effect on the profitability of smallholder farmers. Primary data collected through semi structured questionnaires administered to a random sample of smallholder sugarcane farmers in Morogoro region were analysed by T-Tests, One way ANOVA, Tobit regression and Spearman‟s rank correlation tests all at p = 0.05 to comparatively assess differences and effects of hypothesized factors on profitability between Block Farming System (BFS) and Traditional Farming System (TFS). The effect of profitability of the farming systems on loan repayment rate (LRR) has also been analysed. BFS appears to be significantly more effective than TFS on both profitability and loan repayments. Profitability, expressed as a ratio of operating income to revenue, is significantly higher by 17% in BFS (M = 0.56) than profitability achieved through TFS (M = 0.39). Yield, price and cost have significant effects on profitability of both BFS and TFS. Effects of land size and sucrose were found not to be significant on BFS but significant on TFS. Correlation between profitability and LRR is significantly high on both BFS, r (7) = 0.84, p = 0.04, and TFS, r (68) = 0.79, p < 0.0001. LRR through BFS (M = 0.96) is significantly higher by 20% than LRR through TFS (M = 0.76). Reviews of the Agriculture and Livestock Policy and the Microfinance Policy are recommended. Generic model, FSP-M has been developed and recommended for future studies of profitability. Studies on how sucrose content is measured and its relation to sugarcane price setting is suggested. Also studies on factors affecting loan repayments among smallholder farmers as well as on institutional effects of microfinance institutions on loan repayment are recommended