Impact of Banana Value Chain Participation on the Welfare of Farm Households in Tanzania

Abstract

Banana is an important staple food for many people, featuring among the ten most cropped plants worldwide. This study establishes the link between banana value chain participation and household welfare using consumption as a proxy for welfare. Using panel data, methods like pooled probit, fixed effects, and Heckit models were applied. The pooled probit results show that working outside agriculture reduces the likelihood of participating in the banana value chain, while factors like the number of banana plants, harvested quantity, and organic fertilizer use increase participation likelihoods. The fixed effects model indicates that banana value chain participation, working outside agriculture, mobile phone ownership, and household size positively impact welfare, contributing to poverty reduction and food security. The Heckit model results support the fixed effects findings. Therefore, agricultural policies promoting improved banana seeds and better market access are crucial for addressing food insecurity and improving the welfare of smallholder banana farmers. JEL Classification: C33; D23; D60; L14; O17; Q13.