Effectiveness of Buyers’ Specific Investment on Improving Smallholder Farmers’ Performance: A Case of Cotton Smallholder Farmers in Simiyu Region of Tanzania

Abstract

This study examined the relationship between cotton buyers’ specific investment and cotton smallholder farmers’ performance. Literature review on Transaction Cost Theory led to formulation of the research model and hypothesis in order to test the proposed relationship between cotton buyers’ specific investment as well as cotton smallholder farmers’ performance. Data from a survey of one hundred thirty two (132) cotton smallholder farmers of Tanzania in Simiyu region were used. Ordinary Least Square method through SPSS was used to estimate results of the model and assumptions underlying regression analysis were observed. Empirical findings revealed that cotton buyers’ specific investment has a significant positive relationship with cotton smallholder famers’ performance. This re-enforces that cotton buyers should put more efforts on developing smallholder farmers of cotton in order to improve their performance. Such investment could be providing training and education, providing seeds, storage equipment and transportation facilities after harvesting.