The Assessment of the causes of Maize price fluctuations and the effects on the Maize production

Abstract

The purpose of this study was to assess the causes of maize price fluctuations and its effect on the maize production by exploring the social factors that affect production and the economic factors that affect the price of maize. The study specifically established a relationship between the farmer’s next season’s decisions to produce with economic factors considered in the study as well as the relationship among the economic factors faced by the farmers in Kamwenge District. The study adopted a cross sectional research design whereby data was collected once from 50 respondents using a semi-structured personally administered questionnaire. The primary data collected was analyzed using IBM SPSS version 20 at three levels of analysis i.e. descriptive statistics at univariate analysis, correlation tests, chi-square tests and ANOVA tests at bivariate analysis and finally the MANOVA tests at the multivariate analysis. The larger percentage (37.5%) of the farmers that experienced a fall in prices plan to maintain the same level of maize production in the next season and the second largest percentage (29.2%) of the farmers plan to reduce on the amount of maize they will plant the next season, whereas the largest percentage (53.2%) of the respondents who experienced a rise in the price of the maize from the previous season plan to plant a larger amount of maize for the next season. In addition, MANOVA showed a significant difference in the decisions made for next season’s maize production towards the effect of a combination of economic factors (price per kg, proportion of maize harvest sold, cost of production and acres of land used). The average effect of a combination of economic factors on the farmers’ decision to increase the amount of maize to grow in the next season was higher than the average effect on the farmers’ decisions to stop planting maize, reduce or maintain the same level of the amount of maize to plant in the next season which suggested a higher effect of a combination of economic factors on the farmers’ decision to increase the amount of maize to plant for the next season based on price per kg of maize. The responses also showed that price fluctuations are caused by unstable maize yield throughout the different seasons, the inconsistence in the quality of maize yield as well as the unstable demand for the maize yield. Therefore the amount of maize harvested was affected by the age of the farmer, price of sale of maize influenced both the next season’s decision to produce maize and the price movements. The combination of price per kg, cost of production of maize, acres of land used and the amount of maize sold affect the farmer’s next season’s decision to produce maize. Unstable levels of maize yield, closure of the Western national border and inconsistence in the maize quality cause price fluctuations in maize. There should be expansion of external markets for maize, creation of farmers’ associations and extension of government aid in form of a stabilization policy in order to stabilize the maize prices.