An economic risk analysis of fertiliser microdosing and rainwater harvesting in a semi-arid farming system in Tanzania

ABSTRACT

This paper attempts to relate farm-level technologies in a semi-arid area with economic viability, taking risk analysis into consideration. Data gathered from various sources, such as a household baseline survey, farm trials, agricultural experts and government agencies, were used. Crop yields, crop prices, and prices for key production inputs, mainly fertiliser and rainwater harvesting through tied-ridges, were simulated for the net economic return distributions, e.g., pearl millet, groundnuts, and sunflower under different farm-technologies scenarios using a farm simulation model. The results indicate that an intercrop of pearl millet and groundnuts is the most economically viable farming system compared with other alternative scenarios if supplemented with rainwater harvesting technology. Risk neutral and risk-averse farmers both prefer this approach. If these technologies are geographically considered and synthesised, they may be cost-effective for farmers with implications for the current and future livelihood and productivity of crops in rural semi-arid areas.

KEYWORDS:

• Economic risk
• semi-arid farming system
• fertiliser microdosing
• rainwater harvesting
• farm simulation model

JEL CLASSIFICATION:

• O13
• O31
• O33
• Q12

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Corrigendum

Acknowledgements

We thank the farmers for their hard work and dedication in testing the upgrading strategies at the case study site. The authors gratefully acknowledge researchers who developed SIMETAR and made it available to facilitate study simulations and decision-making. Lutengano Mwinuka is very grateful to various people and institutions through the United States Agency for International Development (USAID) – Feed the Future Innovation Lab for Small-Scale Irrigation (ILSSI) project, all contributing in one way or another towards the successful completion of his three-month stay at Texas A&M University. This publication is a product of the Trans-SEC project (www.trans-sec.org). The German Federal Ministry of Education and Research (BMBF) funded the project, co-financed by the German Federal Ministry for Economic Cooperation and Development (BMZ). The views expressed are those of the authors’ and may not in any circumstances be regarded as stating an official position of the BMBF and BMZ.