During field tests, GCS discovered that many smallholder farmers pay casual laborers 3,000 Tsh/bag to thresh their rice, which at 12 bags per acre, amounts to 36,000 Tsh/acre. This means that for a small 5 acre plot, farmers pay casual laborers 180,000 Tsh or 112.5 USD per harvest on average. Considering that farmers make less than $300 for a 5-acre harvest of rice, this is a rather significant expenditure (more than one-third!). Reducing this expenditure could significantly raise profits for smallholder farmers, who are among the poorest individuals in Tanzania.
While large farms tend to produce crops for exporting purposes, mid to small-sized farms sell to local food markets. Mid-sized farms often sell enough crops that they are able to influence market prices and take advantage of economies of scale; mid-sized rice farmers can often afford more efficient technologies, such as an engine-powered harvester that harvests, threshes and winnows all at once. Smallholder farmers, on the other hand, are very much price-takers. With just 5 to 10 acres, small farms do not have enough market power to influence the value of their crops through price-setting. [Although cooperatives do exits, most villagers do not belong to one.] In fact, small farms may have to take very low prices due to competition with mid-sized farms whose per unit costs are lower. If small farms do not charge the market price, an interested buyer can walk down the street to another farm.