Beyond Fertilizer Alone: How Extension Access Shapes the Productivity Payoff of Tanzania's Fertilizer Subsidy Program

Amani Joseph Mwakalobo (Sokoine University of Agriculture)
Neema Peter Msuya (Sokoine University of Agriculture)
Baraka Emmanuel Mhando (Sokoine University of Agriculture)
Rehema Daniel Mtemi (Sokoine University of Agriculture)

Journal of Economics Business Industry
Vol. 4 No. 1 (2026): July

Maize production in Tanzania surged after the Fertilizer Subsidy Program was relaunched in 2022/23, yet the rise in yield per hectare remained modest, suggesting that this surge was driven more by land expansion and added input than by lasting productivity improvement. Earlier studies on fertilizer subsidy and extension services in Tanzania have generally examined the two policies separately or relied on data from before the current subsidy program began, leaving it unclear whether extension services strengthen the benefit of subsidy for maize farm efficiency. This study assesses the interactive effect of extension access and participation in the Fertilizer Subsidy Program on maize production and technical efficiency among farming households in Tanzania. The study uses data from the 2023/24 Annual Agricultural Sample Survey, covering 7,850 maize farming households across seven agro ecological zones, analyzed through a Cobb Douglas stochastic frontier production function model, which places an interaction term between subsidy and extension inside both the inefficiency model and the production uncertainty model, together with an instrumental variable approach to address the endogeneity of subsidy participation. The results show an average technical efficiency of about 0.58 among farmers, meaning yield could still rise by about 42 percent without any extra input. Extension access and subsidy beneficiary status, taken separately, raise yield by about 0.842 percent and 3.124 percent respectively, while the combination of the two raises yield by up to 4.253 percent, exceeding the sum of the two separate effects. A similar pattern appears in the reduction of yield uncertainty. These findings show that extension acts as a catalyst that strengthens the benefit of the subsidy. The implication is that the Tanzania Fertilizer Regulatory Authority and the Ministry of Agriculture should design the Fertilizer Subsidy Program as an integrated policy package combined with stronger extension services, so that the production targets under Agenda 10/30 rest on lasting productivity rather than mere land and input expansion.