1. The Role of Road Infrastructure in Agricultural Production
E. Fungo, S. Krygsman and H. Nel
Southern African Transport Conference
10 – 13 July 2017
Pretoria - South Africa

2. Introduction Improved road infrastructure is expected
to lower transportation costs and prices
Better roads leads to lower vehicle operating costs
Lower vehicle operating costs lead to lower charges for transporting passengers and goods
In turn leads to lower prices for goods and services : lower production costs
to open up new markets for goods and services
to support economic growth and poverty reduction

3. Introduction cont…
Investment in infrastructure (transport, power and communication) is still low in African countries
Accounts for only 2 – 3% of GDP (Kandiero, 2009), compare to 7.78% in China (Davis, 2008)
Only 30% of rural population have access to all-weather roads (Kandiero, 2009),
Transport price are estimated twice as high as those of southeast Asia (Kandiero, 2009): Makes Africa uncompetitive

4. Introduction cont…
Rural transport provision is important factor for the successful agricultural sector
Facilitates the supply of agricultural inputs and access to agricultural extension services
Facilitate the delivery of farm outputs to the market and improve market access

5. Problem statement
Rural roads and transport services in Tanzania are generally characterised by
poor infrastructure: (poor quality of roads)
high transport costs and prices: (due poor road)
low quality services : (poor roads lead to fewer service providers)

6. Problem statement cont…
Among the policy strategy adopted to stimulate agricultural development is provision of proper and adequate transport
e.g. Tanzania National Transport Policy
However, the extent of agricultural sector development following these initiatives has not been properly quantified

7. Objective
To investigate and empirically quantify the impact of improved accessibility (i.e. roads) on the agricultural production of Tanzania small holder farmers
More specific the paper:
Establish the relationship between transport price of agricultural products and agricultural production
Establish the potential crop production increase that can be realised following the reduction of transport price after road improvement

8. Data The 2012/13 National Panel Survey (NPS) for Tanzania
Collected by Tanzania National Bureau of Statistics (NBS)
Obtained from Word Bank database as part of Living Standards Measurement Study-Integrated Surveys on Agriculture (LSMS-ISA)

9. Descriptive statistics Crop selling and transportation
Only 38% of cultivated crops were sold
Some 30.6% of sold crops transported to the market
Only 37.2% (of the 30.6%) pay for transport services (N=261)
N=261 is equivalent to 4.3% of total number of harvested crops (N = 6 070)

10. Descriptive statistics cont… Farm size, crop production, distance variables
Those who sold crops, on average, had statistically significant
Bigger farm size: (2.5 vs 1.5 acres)
Higher quantity harvested: (906 vs 310 kg)
Farms further away from the road: (3.0 vs 2.0 km)
Farms further away from the local market: (12.5 vs 10.2 km)

11. Descriptive statistics cont… Transported vs non-transported crops
Farmers who transported crops for selling, on average, had statistically significant
Higher crop price: (819 vs 696 Tsh/kg)
Low crop yield: (462 vs 592 kg/acre)
The data set did not reveal on how the products of the farmers who reported not transporting their crops reach the market, not much can be said in the context of road infrastructure and transport price

12. Descriptive statistics cont… Farmers pay vs not pay for transport services
Farmers who paid for transport services, on average:
Transport crops for selling at more distant market: (22.5 vs 6.9 km)
Had statistically significant higher
Crop yield: (578 vs 393 kg/acre)
Crop price: (909 vs 767 Tsh/kg)
Quantity sold: (820 vs 414 kg)

13. Agriculture production and transport service
Regression analysis (OLS) was used establish the empirical relationship between agricultural production, road infrastructure and transport service
Farmers included in the analysis
Transport crops for selling
Pay for transport services
N = 261

14. Agriculture production and transport service
Dependent variable:
Crop yield, i.e. crop produced per unit area of land cultivation (kg/acre)
Independent variables:
Agricultural inputs e.g. fertilisers (kg/acre)
Crop market price (Tsh/kg)
Distance from the farm to the road (km)
Distance from the farm to the local market (km)
Distance crops transported to the market for selling (km)
Transport price (Tsh/ ton-trip)

15. Agriculture production and transport service
Empirical model:

16. Agriculture production and transport service
Regression model results
Dependant variable: ln(Crop Yield ) 
Coefficients
P-values
Significant F
Adj R square
(Constant)
7.559
.000
.435
ln(Transport Price)
-.291
Ln (Crop Price)
.056
.462
ln(Agriculture Input)
.080
.008
ln(Dist Farm to Road)
-.014
.684
ln(Dist Farm to Local Market)
.058
.235
ln(Dist to the Market for Selling)
.161
.002

17. Agriculture production and transport service
Interpretation of model results
1% reduction of transport price is associated with 0.291% increase in crop yield
This is not very elastic. 1% change lead to <1 %
This is supported by the literature, Hine and Ellis (2001) found similar results

18. Agriculture production and transport service
1% increase in distance that crop is transported to the market for selling is associated with 0.161% increase in crop yield
Surprising results, one would expect negative relationship
i.e. sell at nearby market have less market access problems and low transport price, and thus higher crop yield

19. Agriculture production and transport service
Possible reasons
Sell at a distant market (relatively larger), high chance of access goods and services not available at local market
Selling at a distant market is associated with lower unit transport price (Tsh/ton-km) (Fungo & Krygsman, 2017) and higher crop price
Relatively, those who sell at more distant markets are better off in terms of transport price and crop price: facilitate an increase in crop yield

20. Agriculture production and transport service
Agricultural inputs shows positive relationship with crop yield, as expected
1% increase in the quantity of input used per acre is associated with 0.08% increase in crop yield

21. Agriculture production and transport service
Distance from the farm to road show no statistically significant relationship with crop yield, not expected
Possible reasons
Most tertiary roads near the farm are in poor condition
Do not provide sufficient transport service to lower transport price

22. Agriculture production and transport service
Distance from the farm to the local market show no statistically significant relationship with crop yield
Possible reason
Local market alone is not providing sufficient goods and services required to facilitate increase in crop yield

23. Conclusion
The figure summarise the finding of the paper

24. Conclusion cont…
Reduction of transport price have positive impact on crop yield
Access to the bigger market (distant market) facilitates the increase in crop yield
Improved road infrastructure and transport service are necessary but not the only factor for agricultural development (Chakwizira et al., 2010)

25. Recommendation The established empirical relationship
i.e. transport price and crop yield
Can be used during the rural road appraisal process to estimate agricultural production increase following the reduction of transport costs and prices

26. THANK YOU!

27. References
Chakwizira, J., Nhemachena, C. & Mashiri, M Connecting transport, agriculture and rural development: Experiences from Mhlontlo local municipality integrated infrastructure atlas. In Proceedings of the 29th Southern African Transport Conference (SATC). 209–223
Davis, A.H. (ed) Infrastructure Finance: Trends and Techniques. London: Euromoney Institutional Investor Plc
Fungo, E. & Krygsman, S Impact of Rural Road Condition on Transport Price of Agricultural Products. In Washington DC 96th Transportation Research Board Annual Meeting
Hine, J.L. & Ellis, S.D Agricultural marketing and access to transport services. Rural transport knowledge base. [Online], Available: 4/4_3a Agricultural Marketing.pdf.
Kandiero, T Infrastructure Investment in Africa: Developement Research Brief Number 10. African Development Bank (AFDB)