Maize price changes and effect on farmer’s income

Abstract

The main objective of this study was to assess change in maize price and its effect on farmer’s income. Specifically, the research examines the trend of maize prices and marketed production in Uganda during the period between 2019 and 2020. The study also examines the effect of price change on farmer’s income in Uganda. The study analysis relies on Uganda Bureau of Statistics (UBOS) Living standard data. Descriptive analysis is used to achieve objective one. An ordinary Least Square (OLS) model was estimated to achieve objective two. The findings of the study analysis show that maize price per kilogram (kg) declined for the period between 2019 to 2020 by -88.12 Uganda Shillings (UGX). This difference was mainly due to good weather conditions like favourable rainfall that led to unexpected increase in maize output. An increase in marketed production caused a decline in maize price. A combination of a higher maize price in the previous year (2019) and higher production in subsequent seasons led to more maize production and a decline in maize price in 2020. Estimation results of the OLS model show that the maize prices do not significantly affect the income of maize growing households. However, other factors such as: sex of the household head, use of hired labor, and use of inorganic fertilizers are found to significantly influence the income of maize growing households. The study therefore recommends that farmers adopt more advanced technology. This can be in terms of more use of inorganic fertilizers, participation in irrigation schemes, use of machinery for ploughing, all of which are shown to increase maize output. Farmers need to be organized into maize produce marketing groups to share information about market prices and also enhance their bargaining power to accept a much higher price for their maize marketed production.