Agricultural investment decision and financing for rural farmers in Tanzania

Many studies show that agriculture provides an effective means of reducing poverty and improving the economy and livelihood in a country and this is supported by many authors. In Tanzania the agriculture sector employ 80% of the work force and majority them are from rural areas. This means developing agriculture is best strategy in poverty alleviation. Agriculture investment decision and financial requirement is regarded as a paramount for the success of the agriculture sector development given the feasible costs and benefits of the farm investment. This paper focus on agricultural investment decision and financing for rural farmers in Tanzania. In determining farm investment decision and financing the researcher used a Monte Carlo simulation model for data analysis. The results provide the views analysis about the agriculture investment for rural farmers in Tanzania. The study of maize farmers in Mbulumbulu, Karatu, Arusha, Tanzania concludes that the financing decision is significant among rural farmers, financial institutions and the government with interest in developing the growth of agriculture sector in the country. It is recommended that; The government has a role to guarantee farmers and make farm investment more attractive and in case of any loss associated with climatic change and other factors beyond rural farmers they should compensate for their risks. Government must provide modern farm technology and tools that could enable farmer increase their output given their farm size. Financial institutions must provide finance as per farmer's requirements and feasible costs and benefits ensuring viability of the farm investment with lower and reasonable interest rate spread throughout the investment life time. Also farmers must identify all cost and benefits associated with farm investment and make necessary forecast including risk analysis and apply Monte Carlo simulation model to agricultural investment decision and financing. Given R- square 1% proves that maize price and output are very significant in determining farmer's income.