The main objective of this study is to assess the effectiveness in terms of poverty and inequality
reduction of different policies aiming at increasing agricultural supply in Tanzania. This is done
through a non-separable agricultural household model. Non-separability in rural Tanzania depends
primarily on labour market failures. It implies that production and consumption decisions are
interlinked and that labour allocation decisions are made with reference to shadow wages rather
than market wages. Thus, a two-stage estimation strategy is adopted: first the shadow prices of
family labour is estimated and then used to estimate the production and demand systems by means
of a multi-input multi-output production system and a complete demand system. After the
estimation of the production-consumption model, the impacts of a number of policies on poverty
and inequality is estimated. In particular, we evaluate the impacts of policies established by the
Tanzanian Agricultural Sector Development Programme. Finally, the impact of recent food price
crisis has been assessed.