International Journal of Agricultural Economics 2018; 3(5): 103-111 http://www.sciencepublishinggroup.com/j/ijae doi: 10.11648/j.ijae.20180305.12 ISSN: 2575-3851 (Print); ISSN: 2575-3843 (Online) Effects of Small-Scale Agricultural Crop Commercialisation on Rural Household Welfare in Tanzania: A Case Study of Liwale District, Lindi Region Nelson Ochieng 1, * , Aloyce Hepelwa 2 1 Department of Economics and Social Studies, School of Spatial Planning and Social Sciences, Ardhi University, Dar es Salaam, Tanzania 2 Department of Agricultural Economics and Business, College of Agricultural Sciences and Fisheries Technology, University of Dar es Salaam, Dar es Salaam, Tanzania Email address: * Corresponding author To cite this article: Nelson Ochieng, Aloyce Hepelwa. Effects of Small-Scale Agricultural Crop Commercialisation on Rural Household Welfare in Tanzania: A Case Study of Liwale District, Lindi Region. International Journal of Agricultural Economics. Vol. 3, No. 5, 2018, pp. 103-111. doi: 10.11648/j.ijae.20180305.12 Received: September 8, 2018; Accepted: September 26, 2018; Published: October 22, 2018 Abstract: This study aimed at examining the effect of crop commercialisation on rural households’ poverty in Tanzania. The household survey data was collected from a sample of 389 rural households. Commercialisation index was used to estimate the level of household crop commercialisation. The principal component analysis was used to develop a household welfare index which was then clustered to identify poor and non-poor households through cluster analysis, the method automatically guided the decision retaining two clusters by calculating the measure-of-fit that is Bayesian Information Criterion (BIC). To examine the factors affecting the household poverty status, a logistic model was employed. Results revealed that the majority (65.6%) of the households are poor. The level of crop commercialisation is averaged to 66% indicating a commercialised farming practice. The results further showed that crop commercialisation, women participation in crop income allocation, off-farm income, access to extension services and household size significantly reduce household poverty while household head’s age had an adverse effect. The study suggests that the small and medium agricultural processing units in rural areas should be given priorities and strengthened since they are crucial to promoting the level of commercialisation among rural households. Furthermore, in periods of sufficient and excess harvest, the crops trade restrictions with the neighbour countries should be eliminated to increase the level of commercialisation and earnings to the local rural farmers. Keywords: Agriculture, Commercialisation, Rural, Welfare 1. Introduction Approximately half of the total world’s population maintain their life in rural areas, that is 3.3 billion as compared to 3.9 billion in Urban areas in 2014 [1]. Among these rural dwellers, roughly 75%, earn their living from agriculture. Agriculture sector employs both the educated and non-educated, both sexes and population of all working age [2]. The sector is notable in alleviating poverty among the poor population [4]. In Africa, agriculture sector contributes to 33% of the gross domestic product (GDP) and 75% of employment in sub-Saharan Africa [3]. In Tanzania, the agriculture sector accounts for 24% of the country’s gross domestic product [4]. It further accounts for more than half of the employed workforce, and therefore, provides a means of livelihood to approximately two-thirds of the population [5]. Despite the huge contribution of agriculture sector to Tanzania economy, it does not suffice to eliminate poverty among Tanzanians in rural areas and the main reason is that they lack agriculture processing units and manufacturing plants which could have added value to the raw farm output [4] The pattern and growth of the economy are influenced by the transformation of the agriculture sector through value addition of primary products which influence investment in the industrial sector. The fifth phase government, through