Paddy and sugarcane are important food and commercial crops in Tanzania. Paddy and
sugarcane have similar ecological requirements. In areas where both are produced the two
crops compete for resources. Therefore better decisions have to be made on land allocation
so that farm profitability can be maximized. Unfortunately the knowledge on appropriate
land allocation for paddy and sugarcane enterprises is limited in the literature. Thus the
present study was conducted in Kilombero district to determine profitability of paddy and
sugarcane produced by smallholder farmers and the profit maximizing combination of the
two crops. Specifically the study aimed at comparing the returns to land for paddy and
sugarcane enterprises, determining the most profitable combination for paddy and
sugarcane enterprises and identifying constraints in paddy and sugarcane production and
marketing. Primary data were collected through a cross-sectional survey by using
structured questionnaires. A total of 138 smallholder farmers who produce both paddy and
sugarcane were randomly selected and interviewed. Smallholder farmers in the study area
were found to use acreage as their unit of land. By using gross margin analysis sugarcane
was found to have high return to land per acreage than paddy. Hence sugarcane is more
profitable than paddy. But it was found that Kilombero Sugar Company which is the only
market for sugarcane in Kilombero district has low processing capacity. The company
cannot buy all sugarcane produced by smallholder farmers per year. By using linear
programming model the study found that, for a smallholder farmer to maximize farm
profitability per year it is better to cultivate 4 acres of paddy and 2.5 acres of sugarcane.
Many other constraints were identified but the study concludes that the market limit for
sugarcane is the major constraint for smallholder farmers to maximize their farm profits.
The study recommends more investment in sugarcane processing.