iAGRI Research ProjectTanzania like many other countries developing countries in Africa has passed through various policy regimes in agricultural input service delivery. However, little has been achieved so far. Access to fertilizer and improved seeds as well as their application among small holder farmers remain a daunting challenge. The purpose of this paper is to analyze Tanzanian agricultural input service delivery from an institutional perspective. For this purpose, the National Agricultural Input Service Delivery System (NAIVS) will be used as a case study. The analysis will be done by critically asses the process of institutional design, institutional framework adopted for implementation of NAIVS, contract enforcement under input services delivery scheme and finally policy environment and incentive structure. These issues will be discussed in light of the importance of social cohesion in designing institutions, imperfect information among the actors and its resultant effect on transaction costs and risks, the role of existing institutions and how they affect the adopted institutional framework and the role of rewards and punishments in shaping actors behavior along the chain. The major findings in this study are as follows; during the design of NAIVS there were no deliberate efforts to disturb the existing institutional framework which put the farmer in a subordinate position. Here the emphasis is on the interplay between power dynamics and interests in the design of institutions and thereafter institutional framework adopted for implementation. Secondly, the design of institutions took place in an environment of no social cohesion characterized by lack of trust, rationality and reciprocity. Thirdly, there is a dichotomy between programme goals and the means or instruments to achieve stated goals. Fourthly, imperfect information among the actors’ particularly small holder farmers has led to huge transaction costs and risks in the implementation of the programme. Finally, there is still a prevalence of state centered approach in the design and implementation of agricultural development initiatives. This tendency limits internalization of policies and strategies for increasing productivity, food security and incomes among small holder farmers. The paper recommends that for agricultural development initiatives to become effective there must be deliberate efforts to sensitize, mobilize and organize farmers to become effective participants in such arrangements. Design of institutions in agricultural development programmes need to first and foremost disturb the existing institutional structure which are responsible for making the farmer poorer before introducing new institutions for programme implementation. The institutional framework for agricultural development initiatives must strive to have SMART indicators for effective monitoring and evaluation. Blanket solutions approach need to be replaced by more context specific tailor made policies to suit a given environment. Delivery of agricultural inputs to farmers is not a panacea for agricultural challenges but other initiatives like development of agricultural infrastructure, marketing systems, establishment and strengthening of farmers’ organizations, and research and development should also be given priority.