Acreage supply response of sugarcane out-growers in Tanzania: A vector error correction model (VECM) approach

Figures & data

Table 1. Data used, measurement unit, and sources

Variable	Variable description	Unit of measurement	Source
Sugarcane acreage	Total area planted with sugarcane by out-growers in a given year	Hectare	Sugar Board of Tanzania
Sugarcane output	Total amount of sugarcane produced in a given year	Tonnes	Sugar Board of Tanzania
Sugarcane price	Price of sugarcane received by out-growers in a given year	Tsh/tonne	Sugar Companies
Rice price	Market price of rice for a given year	Tsh/tonne	Tanzania Ministry of Agriculture
Maize price	Market price of maize for a given year	Tsh/tonne	Tanzania Ministry of Agriculture
Rainfall	Mean annual rainfall amount	Millimetres (mm)	Climate change knowledge portal of the World Bank
Time trend	Proxy for technological change over time	Nominal	Arumugam et al. (2014)

Table 2. Variables and their hypothesised signs

Variable	Variable name	Expected signs
$ln{A}_t$	Sugarcane acreage
$ln{A}_{t-i}$	Sugarcane acreage in previous year	+
$ln{Y}_{t-1}$	Sugarcane output in previous year	+
$lnS{P}_{t-1}$	Sugarcane price in previous year	+
$lnR{P}_{t-1}$	Rice price in previous year	-
$lnM{P}_{t-1}$	Maize price in previous year	-
$ln{R}_{t-1}$	Rainfall in previous year	+
$ln{R^2}_{t-1}$	Rainfall squared in previous year	-
$TR$	Time trend	+

Figure 1. Trend of acreage by sugarcane out-growers from 1991 to 2020.

Figure 2. Trend of sugarcane total output/production by out-growers from 1991 to 2020.

Figure 3. Trend of sugarcane yield/ha by out-growers from 1991 to 2020.

Table 3. ADF unit root test

Variables	At the level		First difference
	Test statistic	p-value	Test statistic	p-value	Order of integration
Area	−0.883	0.794	−3.268	0.016**	I (1)
Price of rice	−1.744	0.408	−3.442	0.009***	I (1)
Price of maize	−1.668	0.797	−3.283	0.016**	I (1)
Production/Output	−0.740	0.836	−2.690	0.076*	I (1)
Price of Sugarcane	−1.410	0.578	−3.042	0.031**	I (1)
Rainfall	−2.339	0.160	−5.354	0.000***	I (1)

Note: *** and ** denote significance at 1% and 5% significance levels respectively.

Table 4. AIC, SC, and HQ test for optimal lag selection

Lag	LogL	AIC	SC	HQ
0	57.602	−3.969	−3.679	−3.886
1	144.062	−7.851*	−5.819*	−7.266*

Note: * indicates significance at 10% significance level.

Table 5. Johansen cointegration test

Null hypothesis	Eigenvalue	Trace statistics	Critical value
r = 0	-	108.848	94.15
r ≤ 1	0.795	64.455***	68.52
r ≥ 2	0.602	38.632	47.21

Note: *** indicates significance at a 1% significance level.

Table 6. VECM estimated supply response for sugarcane out-growers

Variables	Dependent variable: Out-grower acreage
	Short-run supply	Long-run supply
Coefficient of adjustment	−0.569**
	(0.237)
Log out-grower acreage (period t − 1)	−0.383*	0.249***
	(0.198)	(0.038)
Log sugarcane output (period t − 1)	0.243	2.542*
	(0.225)	(1.363)
Log rainfall amount (period t − 1)	3.850***	5.241**
	(0.712)	(2.0747)
Log rainfall amount squared (period t − 1)	−4.096*	−0.103***
	(2.102)	(0.022)
Log real price of sugarcane (period t − 1)	0.870*	2.887***
	(0.474)	(0.640)
Log real price of maize (period t − 1)	0.305*	2.068***
	(0.161)	(0.644)
Log real price of rice (period t − 1)	−0.383**	−1.875***
	(0.184)	(0.414)
Time trend (proxy for technology)		0.030***
		(0.002)
Constant	0.0370	56.278
	(0.0340)
R-squared	0.887
F-statistic	18.687***
LM test for serial correlation	50.066 (p-value = 0.899)
BG test for heteroskedasticity	34.926 (p-value = 0.424)
Jarque–Bera test for normality	15.869 (p-value = 0.462)

Note: Standard errors in parentheses, *** p<0.01, ** p<0.05, * p<0.1.

Arumugam, G., Sadiq, A. M., Nagalingam, M., & Panneerselvam, A. (2014). Production of invertase enzymes from Saccharomyces cerevisiae strain isolated from sugarcane and grape juices. European Journal of Experimental Biology, 4(5), 29–32.

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Data availability statement

The data that support the findings of this study are available from the corresponding author [JAA] upon reasonable request.