Participation intensity of smallholder farmers in the warehouse receipt system and its effect on Coffee profitability in Tanzania

Abstract

The Warehouse Receipt System (WRS) has significant potential to transform smallholder coffee farmers’ livelihoods. However, numerous obstacles hinder their access to such marketing systems. This study quantified the intensity of participation in the WRS, determined its drivers, and evaluated its effect on coffee profitability. The study utilized a cross-sectional design, and a sample of 360 farmers was selected from Kyerwa district, Tanzania, using a multistage sampling method. Data were gathered using a structured questionnaire. Analysis of the WRS Participation Intensity Index (WPI) revealed a low average participation of 43.6%, suggesting smallholder farmers’ limited participation. The Heckman two-stage model showed that participation intensity was significantly associated with the household head’s age, farming experience, credit availability, marriage status, land productivity, and warehouse distance. Furthermore, WRS participation intensity, education, farm size, farming experience, and extension services were significantly associated with increased coffee profitability. The findings suggest that understanding participation intensity is crucial for policymakers to reform the WRS regulations. The study recommends that the government should promote agricultural investments, upgrade rural infrastructure, and prioritize education and awareness creation strategies. Efforts should also strengthen extension services and promote financial literacy to enhance WRS participation intensity and coffee profitability.