Farmer’s literacy and contract farming participation in Tanzania’s cash crops agriculture: application of human capital theory

Participation in contract farming has the potential to enhance farmers’ income and livelihoods both in developed and developing countries, yet the influence of literacy levels on such agri-systems remains insufficiently explored. This study investigated the effect of farmers’ literacy and other socio-economic variables on farmers’ engagement in contract farming within Tanzania’s cash crops agriculture, framed within the Human Capital Theory. A cross-sectional study used a closed-ended questionnaire to survey 393 smallholder tea farmers in Mbeya and Njombe regions. Using binary logistic regression, quantitative analysis assessed the null hypothesis that literacy and selected socio-economic variables do not significantly influence contract farming participation. The results reveal that higher farmer literacy levels influence positively and significantly the likelihood of contract farming participation. This finding underscores the relevance of education in contract farming dynamics. Additionally, farmer’s gender and land size found to have a significant positive influence on participation likelihood. Other variables, including income, market information access, farming experience, and technology access, showed a positive but insignificant association with participation, while age had a negative but insignificant effect. These findings suggest that contract farming is influenced by multifaceted factors however, education appears to be a key determinant factor in fostering effective contracts. The government and other stakeholders should thus focus on targeted literacy policy and programs for successful contract farming involvement. Future research may delve into localities nuances, unravelling intricate links between literacy, socio-economic factors, and contract farming dynamics.