Off-Farm Participation, Agricultural Production and Farmers’ Welfare in Tanzania and Uganda

Panel data from the Living Standards Measurement Study-Integrated Surveys on Agriculture for Tanzania and Uganda were analyzed to investigate the impact of off-farm participation on agricultural production and farmers’ welfare. Using strategies ranging from simple least squares to a dynamic panel model, we demonstrated how each of the intermediate models, such as the random effects Tobit model, could tackle censoring bias. Our results reveal that off-farm participation had a negative impact on agricultural production in both countries, though the impact was positive on welfare for Tanzania only. Policy makers should consider the complexities surrounding the formulation of pro-agriculture and pro-welfare policies aimed at producing desirable outcomes from off-farm participation. In that effort, policies that minimize the trade-off between agricultural production and off-farm participation and which enhance positive welfare effects are vital.

Keywords: Off-farm participation, Agricultural production, Welfare, Consumption, Farmers, Sample selection, Dynamic panel model, East Africa, Tanzania, Uganda

JEL Classification: Q10, Q12, Q14, Q15, Q16

Suggested Citation: Suggested Citation

Kinuthia, Bethuel and Araar, Abdelkrim and Lalampaa, Laura Nelima and Maende, Stephene and Mariera, Faith, Off-Farm Participation, Agricultural Production and Farmers’ Welfare in Tanzania and Uganda (February 28, 2019). Partnership for Economic Policy Working Paper No. 2019-01, Available at SSRN: https://ssrn.com/abstract=3344558 or http://dx.doi.org/10.2139/ssrn.3344558