Tanzania has secured $2.3 million from the Swiss Government to finance smallholder rice farming in the central corridor.
The project will be undertaken through the Rural Livelihood Development Company.
The company's chief executive officer, Charles Ogutu, said the move was aimed at helping smallholder farmers improve their yields.
According to the latest RLDC sector assessment report, about 230,000 small holder households are involved in rice farming in the central region, which grows about 48 per cent of the country's rice.
However, with the average yield per acre at between 1-1.5 tonnes, the productivity in the sector is very low compared to available potential and opportunities.
"The majority of smallholder farmers grow traditional varieties which have long maturity and the yield is affected by irregular rainfall patterns and pests," said Mr Ogutu.
William Mato, a business analyst at RLDC said last week that the company would use a participatory approach in implementing the project.
"We shall involve farmers and agricultural service providers right from the planning to the implementation stage. We shall jointly identify challenges in the agricultural sector and devise strategies to address them," said Mr Mato.
He identified the major challenges in the sector as failure to recognise and procure quality seeds, financing, an understanding of market systems, pricing and how to preserve crops after harvesting.
"These can make or break the rural farmer," said Mr Mato.
Rice is only second to maize as the most important food and commercial crop in Tanzania.
It is a major source of employment, income and food security for many rural households.
The crop is extensively produced in Tabora, Shinyanga and Morogoro in Tanzania's central corridor.
Manyara, Singida and Dodoma have supplementary production in their low lands
RLDC is supported by a bilateral development programme of the Switzerland government through its Agency for Development and Cooperation, SDC.
The $2.3 million fund stands out from an initial phase one budget of $7.2 million given by the Swiss government through the SDC.