Cost effectiveness and financial implications to smallholder tree growers in Mufindi district Tanzania

• Overdependence on wood-based energy leads to severe deforestation in Tanzania. • The costs and financial implications of smallholder tree growers were examined. • Independent smallholders incur the lowest costs per hectare. • Market availability positively influences the viability of smallholder tree growers. • Tree grower associations enhance the market power of independent growers. Millions of people across Africa, including Tanzania, rely on the continent's biodiversity and ecosystems for livelihoods, energy, medicine, and food. In Tanzania, over 90 % of households depend on wood-based energy, leading to severe deforestation and ecological damage, which adversely affects both ecosystems and human livelihoods. This study examines the costs and financial implications of smallholder tree growing in Mufindi District, Tanzania, aiming to identify cost centers, compare establishment and management costs, and evaluate the financial viability of tree-growing systems specifically commercially grown tree species including Eucalyptus and Pine species in an area with emerging wood-based industries. Data were collected via questionnaires from independent smallholder tree growers, with additional insights from Tree Growers Association (TGA) members, service providers, and out-growers. The study utilized purposive sampling for growers with woodlots of 0.4 to 4 hectares, analyzed using SPSS and Excel, with one-way ANOVA and Fisher's LSD employed for cost comparisons, and NPV and IRR for financial analysis. Results show independent smallholders had the lowest costs per hectare. The study concludes that while cost control is vital, securing markets beforehand significantly impacts the viability of smallholder tree growing. It recommends that policymakers address transaction costs and improve contracts between smallholders and commercial partners, while also encouraging independent growers to join TGAs to enhance their market power and benefits.