This report explores how farm productivity affects poverty, and how various factor market constraints affect farm productivity. The empirical analysis draws on representative surveys of farm households in Kilimanjaro and Ruvuma, two cash crop growing regions in the United Republic of Tanzania. Findings show that agricultural productivity directly affects household consumption and hence overall poverty and welfare. Analysis of allocative efficiency suggests that family labour is substantially overutilized, a sign of considerable excess labour supply. Use of intermediate inputs, on the other hand, is well below what is commensurate with the estimated value of their marginal productivities. An important reason for low input use is lack of credit to purchase inputs, but difficult access to the inputs themselves and, more broadly, a lack of connectivity to the economy, are also important impediments.
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