Building Market Linkages for Smallholder Farmers in Uganda

Photo credit: Kathryn MacAuley, project research associate at Innovations for Poverty Action

 

Prices of staple foods like maize, beans, and rice vary substantially in Sub-Saharan Africa, depending on the season, country, and region. Addressing the imbalance in food supply and increasing farmer income may require a multi-pronged approach that tackles multiple barriers at once. Researchers are evaluating the impact of contract farming services and a mobile technology-enhanced trader alerts system on food markets across Uganda.

Policy Issue

High search costs, diffuse surpluses, and the riskiness inherent in engaging with new trading partners have left local grain markets in sub-Saharan Africa geographically and institutionally isolated.  Prices of staple foods like maize, beans, and rice vary substantially, depending on the season, country, and region. As a result, smallholder farmers often receive a low price for their largest – and often sole – source of income.  In aggregate, these market inefficiencies prevent grain from getting where it is needed most, causing prices to vary widely across markets and consumers to suffer as well.  Addressing the imbalance in food supply and increasing farmer income may require a multi-pronged approach that tackles multiple barriers that prevent smallholder farmers from accessing and benefitting from deeper, more integrated markets.

A look at production and market flows of maize in Uganda

A quick overview of this project from researcher Craig McIntosh, with an exciting preview of preliminary findings:

 

Details of the evaluation

Researchers are evaluating the impact of a mobile technology-enhanced trading system on food markets across Uganda. In a large randomized controlled trial covering 12% of Uganda, researchers are evaluating the impact of a new mobile marketplace designed to integrate these markets by linking sellers from rural areas with national buyers.  The platform, Kudu, was developed by computer scientists at Makerere University and operates on basic phones via simple SMS submissions.  It aims to reduce search costs and provide a new outside option for farmers to sell their crop.

Data visualization of geographic distribution of market prices

The evaluation is conducted in partnership with AgriNet, one of Uganda’s largest private-sector brokerage companies, to promote Kudu and facilitate trades with on-the-ground services.   As part of this collaboration, AgriNet has rolled out their Commission Agent (CA) model into 55 sub-counties across Uganda.  AgriNet CAs, trained professionals with a strong corporate reputation, grade, bulk, and post lots onto Kudu.  Additional services such as credit facilities, insurance products, and price information services are also randomly offered as sub-experiments within the treatment communities. Researchers will measure outcomes on price integration, trader business flows, and ultimately, farmer welfare.

Results and Policy Lessons:
Project ongoing, results forthcoming. Further discussion of the project and prelimary findings are provided at the Update at right: “Linking Buyers & Sellers in Ugandan Agricultural Markets” (also here).

This project received initial ATAI funding as pilot study in 2013. For more information on the pilot award, see E-warehousing for Smallholder Farmers in Kenya at right.