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The purpose of the study was to assess the contributions of contact farming on alleviating financial capital constraints of rural farm households in Tanzania. The main objective of the study was to identify the potential offered by contract farming on agriculture financing in Tanzania. Specific objectives were: the role of contract farming on credit access by farmers in Tanzania, appraising the influence of contract farming on input access by farmers in Tanzania, comparisons of capital capability (wealth) between contract farmers and non-contract farmers. The study used purposive sampling techniques in choosing a sample of 98 respondents. Data were analyzed by computer software “Starter version 12” whereby, quantitative information was obtained by a way of tabulations and rankings where frequency tables and pie charts used to present qualitative results. Results show that: there were acceptances for both farmers and Financial Institutions on the contribution of contract farming on agricultural financing per each objective. Financial Institutions are interested, under agreed terms to lending on contract farmers who are organized by providing farming credits. Results show contact farmers are better off obtaining farm inputs and other farming supports from contract farm arrangement. Moreover results show that engagement in contract farming improved farmers’ wealth in terms of acquisition of farming land, productivity and gross yields per acre and level of farm investment. From the findings of the study since the contract phenomena is not widely adopted for benefits of the farmers in Tanzania, thus the study recommends that there should be organized governmental body to: first, make all arrangements for widely acceptance of contract farming and educate the advantages farmers ripe out of contract farming. Second, the formation of legal environment that help the conduct of contract farming arrangement is vital. Third, the government should embark on concessional agreement with the private sector on the will to developing agricultural infrastructure in potential rural areas. |
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