Agricultural Prices, Household Wellbeing and Poverty Alleviation in Tanzania: The Role of Agricultural Supply Chains and Household Constraints

We study the interplay between market structure and domestic complementary factors in the production and consumption decisions of agricultural families in Tanzania. We study changes in market structure and in key parameters of the model that capture various household constraints and institutional access. In general term, the effect of more competition on farm gate prices depends on the initial level of competition in each crop. For many crops, in particular food crops, there is already a lot of competition and further changes in the level of competition will not affect farm gate prices much. In some other specific cases, in particular in cash crops, the initial level of competition is low and more competition is likely to have larger impact on producer prices. In terms of the effect of complementary policy and other factors affecting the allocation decision of farmers, the largest impacts often come from an increase of international price. The response of prices to this shock and others in the model is cushioned to a very large extent by the market structure.