Economic Drivers Influencing Oil Palm Farmers’ Decision to Sell Fresh Fruit Bunches Instead of Processing in Kigoma District, Tanzania

Abstract

Palm oil processing plays a crucial role in driving economic growth, especially in regions where oil palm farming dominates agriculture. By converting raw materials into valuable products, palm oil processing supports local economic development, generates employment, and boosts trade competitiveness. In this context, the study sought to examine the economic drivers that influence oil palm farmers' decisions to sell or process Fresh Fruit Bunches (FFBs) in Kigoma, Tanzania. A cross-sectional survey design was employed in this study, whereby data were collected from 199 farmers in Simbo and Bitale wards through questionnaires and interviews with a guide. A combination of purposive and simple random sampling techniques was used to select respondents. Descriptive statistics (frequencies and percentages) described the socio-demographic characteristics of respondents, while the binary probit model examined economic drivers influencing the choice to sell FFBS versus processing them. The findings revealed that factors such as high processing costs, limited credit access, household income, larger farm sizes, production volumes, and labour availability influence bulk sales. The study recommends enhancing access to processing technologies, financial literacy initiatives, and targeted subsidies to encourage value addition.