Hill et al MIFIRA Uganda Draft Report 2011.doc

This again indicates that sourcing higher quantities

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quantity that they could purchase from their suppliers. This again indicates that sourcing higher quantities may be costlier in a situation where maize has become scarce, forcing us to question whether traders can truly sell higher quantities without driving prices higher. From our survey, we found the markets in Uganda to be plentiful and fairly responsive to increases in demand. An agency could easily choose any of the markets we surveyed as a source market for procurement of maize. Currently most of the procurement occurs in Jinja or Kampala Page 20
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due to the strict procurement standards of highly processed grain. If an agency wished to procure from another area and then use the processing plants in Kampala or Jinja, this would certainly be a viable option. As we will discuss in the next section, markets are fairly competitive, but there may be some competition concerns at different levels in the market chain due to increased market power close to the producers and at the level of the companies. MIFIRA Question 2b: Will agency purchases drive up food prices excessively in source markets? Prices and mark-ups systematically differ between types of traders. The prices, mark- ups, and volumes by trader type are presented in Table 8. These are blended geographically and show that mark-ups are higher for traders closer to farmers. Other trader characteristics, such as gender and years trading, as well as knowledge of quality and processing activities, are presented for all traders in Table 9. It is interesting to note that the prices and mark-ups between markets differ less across space than by the nature of the markets and distance from farmers. Table 6 shows average purchase and sales volumes and prices, as well as mark-ups, for all traders across markets. The margins are on average the highest (50 USh/kg) in Dokolo and Iganga, dominated by source markets, and the lowest (22-27 USh/kg) in Kampala and Mbale, dominated by wholesale/export market. The fact that the margins are in between in Jinja, Lira, and Soroti is consistent, in that each of these districts contains both aggregators and wholesalers. In fact, if we break down the markets in Jinja, the average mark-up for traders in Kasambira (a source market) is 50 USh/kg, while in the Jinja Industrial Area it is only 18 USh/kg. Higher margins in source markets account partially for moisture content in the maize, which inflates quantity levels and partially for transportation from remote locations to trading points. This, along with other indicators and observations, leads us to suspect that the degree of competition varies significantly at different levels in the market chain 2 . A walk among the millers in Kampala’s maize wholesale markets gives one the feeling that competition is not an issue. There are hundreds of sellers, each with minimal market share, and no single trader likely has any influence over prices.
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