Hill et al MIFIRA Uganda Draft Report 2011.doc

This reflects the fact that farmers dont necessarily

Info icon This preview shows pages 19–21. Sign up to view the full content.

View Full Document Right Arrow Icon
This reflects the fact that farmers don’t necessarily know about quality differences and/or cannot demand different payment for different qualities. While relatively high proportions pay a difference for quality in Iganga, Soroti, and Lira, nearly all reported paying a difference in the pure wholesale markets of Kampala, Jinja, and Mbale. The minimal level of processing is to dry after purchase, which is also reported in Table 7. This tends to happen closer to the source, as reflected by the fact that more of the Dokolo traders reported doing this. By the time maize reaches Kampala, it is generally already dried and ready for milling or sale. While more intense fumigation and cleaning happens almost Page 19
Image of page 19

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
exclusively at large processing facilities in Kampala and Jinja, some degree of milling for retail occurs in most markets, in our case all but Dokolo. One of the primary capacity constraints is access to credit. While many large aggregators access credit through a variety of sources; even small aggregators have access to credit from their buyers, small farmers rarely have access to credit. Farmers, therefore, demand payment on sale in order to meet immediate needs. Several aggregators remarked that the best times to buy are right around the holidays or when school is starting, when farmers urgently need cash and so will accept almost any price a trader offers. This leads to seemingly irrational behavior such as selling commodities when prices are really low and potentially even buying them back when prices are high. This behavior may not be irrational but rather a sign of displaced distortions, a natural reaction to the lack of credit; farmers, lacking credit, are effectively taking loans out by selling low to traders, and paying in quasi-interest the difference between the low price they receive and the price that they could otherwise have received if they waited (Barrett 2007). In this case the asymmetry of information is irrelevant. Even if farmers know that prices will rise in time, or that they are higher if the grain is dry and clean, or that they are higher in more distant markets, the information does not help them; they cannot wait to sell or invest what it takes to process their maize or transport maize to other markets. Their individual quantities are too small and their needs too immediate to merit such costs in money or time. When asked how much more they would want to sell at the same prices almost all wholesalers indicated very high quantities. This is an indication that many of their costs are fixed so they can easily expand capacity at these costs. However, there is no way to accurately check the truthfulness of this response in a situation when maize may be scarce. They also seem to view their suppliers as relatively ‘elastic’, willing to supply a great deal more quantity at going prices. When asked what would constrain them increasing this desired quantity, very many indicated that the only issue was the price; the higher the price they could offer, the greater the quantity that they could purchase from their suppliers. This again indicates that sourcing higher
Image of page 20
Image of page 21
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern