INFLUENCE OF EXPECTED FARM-GATE PRICE ON MAIZE PRODUCTION IN LUDEWA DISTRICT OF NJOMBE REGION, TANZANIA: ESTIMATION OF KOYCK LAG MODEL.

It is evident from theory that farmer responds to both price and non-price factors. Despite this fact, little has been documented concerning the influence of expected farm-gate price on maize production in Tanzania. Therefore, this paper intended to estimate the relationship between expected farm-gate price and land grown with maize in Ludewa District of Njombe Region, Tanzania using Koyck lag model. The results revealed that maize production is positively and significantly related to its own expected price. Other significant factors were land grown with maize in the previous year and household size. The study concluded that apart from technical issues, the efficient output market which reduces transaction costs is an important factor for crop production. Therefore, a policy that will lead to low transaction costs along output market channels which in turn improve farm-gate price and hence increased crop production is recommended.