There is compelling evidence that structural transformation is beginning to take root in a number of Sub-Saharan African economies including Tanzania. For example, in Tanzania the share of agricultural labor force declined from 80 percent in the 1990s to 65.5 percent in 2017. Concurrently, agricultural GDP has declined from 50 percent to 26 percent in the same period (Benson, at al, 2017). While for a long time the discussion has centered around “the missing middle” or medium sized enterprise in Africa. The story is beginning to change with the rise of medium-sized farms which according to a recent study (Jayne, et al., 2017) are estimated to account for 42 percent of the total farmed land in Tanzania. Downstream the value chain evidence on food systems transformation is also mounting (Tschirley, et al 2017). For example, there has been a rise in consumption of processed and perishable foods. Another trend is the increase in percentage of household depending on the market as their main source of food. Despite the observed structural transformation in Tanzania, the growth of the agricultural sector seems to be lagging behind other sectors of the economy.

During the last 15 years, overall GDP growth rate averaged 7 percent while agricultural sector growth has stagnated at 3 percent. The economic growth is mainly attributed to service, construction and manufacturing whose growth rates have exceeded 6 percent. Hence, it is evident that the agricultural sector during the last decade has been follower rather than driver of economic growth.

There is consensus that poverty level has stayed high despite rapid economic growth because the sectors that have potential to promote inclusive growth such as agriculture and manufacturing are lagging behind (Reference?). One-third of the Tanzania’s population still lives below the national poverty line and 38 percent of under 5 are stunted. Since 65.5 percent of Tanzanians are employed in agriculture, it