The effect of price on market participation and welfare among maize farming households in Uganda

Abstract

The study aimed at examining the effect of price on welfare maize farming households in Uganda. Specific objectives were to: characterize maize farmers based on market participation and welfare in, identify determinants of smallholder participation in maize produce market and evaluate the impact of maize price on welfare of smallholder farmers in Uganda. A cross sectional secondary data was used for the study. Data was analyzed using descriptive statistics, probit model and ordinary least squares for the objectives of the study. The results revealed that the average maize price giving an indication of the transaction and distribution costs between the Northern and Central region. The spatial price differentials thus implicitly suggest the magnitudes of the constraints that exist and bar the even distribution in the country. It is evident that significant differences in average prices do exist. Specifically, average prices are higher in the least developed region (Northern) and lower in the most developed region (Central) in Uganda. The results showed that fixed transaction costs associated with market information and household characteristics (such as gender and education level of the household head) had a statistically significant influence on maize market participation. Similarly, distance to market, output prices, farm size, labor force, membership of farmer associations and geographical location of households influenced both market participation and intensity of participation. These results suggested that policies aimed at improving rural road infrastructure, market information systems, smallholder asset accumulation, human capital and promotion of farmer associations could reduce transaction costs and enhance market participation and marketed supply by smallholder farmers. Pricing and productivity enhancing policies should be implemented to stimulate production for the market and also increase output produced which will in turn increase quantities sold among farmers. In addition access to credit should be enhanced as it facilitates farmers to access inputs and other productive assets which increase output produced leading to more sales.