The influence of geographical concentration of firms on performance of small agro food processing enterprises in Tanzania

Geographical concentration/clustering of firms are important in growth of small agro processing firms, having prominent impact in the subsector. Using descriptive statistics, gross sales per worker measured in normal and seasonal monthly output production. This paper assesses the performance of small agro food processing firms by comparing the performance of 31 geographically concentrated firms and 31 dispersed firms using three empirical considerations namely: output per worker, enterprise employment intake (EEI) and average sales per worker were used to analyze the difference in performance of agro food processing enterprises located in clustered/geographically concentrated relative to others located elsewhere enterprise employment intake (EEI). Survival costs were used to determine sunk costs which are the difference between survival costs and total costs of successful design. Remarkably the results showed that there are differences in mean output per works in both normal and seasonal production. In seasonal production the difference in mean output per worker between firms in clustered and non-clustered firms were significant (p value = 0.0510) compared to normal production with (p value = 0.000). This shows that there is slight significant difference between clustered and non-clustered firms respectively. The results further show that enterprise employment intake vary in the sub sector vary between districts. The survival costs between clustered and non-clustered. Firms show that the cost of staying in the market by sampled agro processing firms is very high because the total value of products in the market is very low. The paper concludes that cluster initiatives with specialization improve the performance of small firms.