The Role of Avocado Production and Trade in Major Producing Districts, Tanzania: Income Inequality Decomposition Approach

Abstract

This paper investigates whether the production of avocado for the export trade is an income inequality decreasing source of livelihood of producers in Tanzania or not using the evidence from the Hai and Rungwe districts. Data were collected using a semi-structured questionnaire from avocado producers in the study areas. The Gini decomposition technique was employed to analyse the nature and source of income inequality amongst the avocado producers in the study areas. The results of the analysis showed that, on average 34% of the total household income was derived from production of avocados for export. The Gini decomposition analysis revealed an income inequality index of 0.748 for the pooled sample. The Gini index for avocado production was 0.537. The study also showed that avocado production for export trade was the increasing source of income inequality in the study areas with a relative concentration of 0.794 and 0.9944 in gini decomposition and coefficient of variation respectively. Gini decomposition and coefficient of variation reveal salary to be the most inequality-increasing source of income in the study areas. The production of avocados for exportation provides not only additional income but also improves the living standards of smallholder farmers, and it narrows their income gaps. We recommend the promotion and scaling up of the production of avocados as one of the key economic activities that would help tackle the problem of income inequality in rural areas suitable for the production of Hass avocadoes for export in the country.