Cost diagnosis of tree growers – A student’s perspective

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At the Kisada Village Administration Office with officers and farmers (©K. Mwakasungula)

I am Kikolo Raphael Mwakasungula from Sokoine University of Agriculture, Morogoro-Tanzania. I carried out research on costs diagnosis of smallholder tree growers in Mufindi district, Iringa-Region, Tanzania. This research was done under the WoodCluster project sponsored by German government as a part of fulfillment for completion of my Masters of Science degree in Environmental and Natural Resources Economics at Sokoine University of Agriculture.

Despite the influx of new tree growers, it was evident that there are key limitations facing small holder tree growers and woodlot owners in light of tree planting, harvesting and marketing in Tanzania. Most of these constraints stemmed from lack of sufficient knowledge in tree growing and harvesting as well as lack of market information, marketing and bargaining power. Compounded by poor infrastructure and lack of modern technologies, most of these farmers have inefficient tree growing systems. Furthermore, smallholder tree growers in Tanzania lack of investment capital/credit and knowledge on baseline profitability calculations is a constraint in tree growing. The study sought to diagnose the costs of establishment and management of these tree growers in Tanzania. The study also sought to compare the costs of these tree growers with other tree growing systems in the study area as well as their profitability.

The passion I have for forestry combined with my zeal for entrepreneurship drove me to this study as it helped to answer key questions for small to medium investors like myself. The study was conducted in Tanzania’s Iringa region and focused on two villages of Igowole and Kisada in Mufindi District. In line with the socio-economic field laboratories established under the WoodCluster project, the study followed up on previous research in those villages building up the network with locals.

The field and data analysis proved to be challenging tasks in this research due to a number of reasons. Smallholder tree growers had problems with cost data recording and storing, majority used estimates to provide information on costs. Some claimed to have performed weeding and pruning but upon visitation of the woodlots this was not the case. Initially the study also hoped to create a linear programming model that have found the optimal solution for cost minimisation based on the tree grower’s data. This was later changed to financial analysis due to the inconsistency of the data collected.

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Recently-established Pinus patula woodlot with no weeding done in Kisada Village (©K. Mwakasungula)

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Map of Igowole (©K. Mwakasungula)

Collaboration with locals was exceptional from the first day of data collection, the network created by previous students made the process a much easier task to handle. The respondents were more welcoming due to this fact and were more than willing to share information with me. The village executive offices in Igowole even gave me a map to aid in data collection to ensure that all hamlets were sampled.

The study found that independent smallholder tree growers had low costs of establishment and management for a woodlot per ha as they did not follow plantation guidelines completely. This was also compounded with high transaction costs as a result of lack of market information and low bargaining power with traders. Furthermore, the cost of management and establishment to rotation was not significantly lower than outgrowers but it was lower than Tree Grower Associations (TGA) and service providers. The discounted cash flow analysis for Pinus patula and Eucalyptus grandis clearly depicted that in both species it was much more profitable for TGA members. The results based on Net Present Value, Internal Rate of Return and annuity indicated that those independent tree growers and outgrowers are better off with Eucalyptus tree growing ventures as the cost is minimized while at the same time offering a higher revenue for the eight-year rotation.

The socioeconomic field laboratories are key to finding last solutions that come from the people themselves. The respondents from my study seemed to be knowledgeable about tree growing from a cultural background but not for the business venture perspective. The three months spent in the study villages gave me inspiration to find a business solution for smallholder tree growers that is sustainable and can contribute to reducing the wood supply deficit.

By Kikolo Raphael Mwakasungula

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