Assessing profitability of maize enterprise in Bulongo Subcounty, Luuka district

Abstract

Maize is one of the major crops grown in Uganda mainly for consumption and the surplus is sold. Maize is an important source of income to farmers in Luuka district. However it is not known whether farmers really benefit economically from this enterprise. The main objective of the study was to assess profitability of maize enterprise in Bulongo Sub-county Luuka District. Specific objectives were; to characterize maize farmers in Bulongo Sub county to determine the gross margin of the small holder maize farmers in Bulongo Sub County, to identify constraints to maize productivity in Bulongo sub county Luuka district. The study was carried out in one parish (Bugonyoka) that was a leading producer of maize and two villages were selected that is; Nakabugo B and Nakisenyi. 50 respondents were interviewed Questionnaires and direct observation and were the major tools of data collection. The results show that; 84% of the respondents were males and 16% were females, average age of farmers was 42 years, average total land holding was 5.5acres per household, the total area under maize was 3 acres and 54% of the total land was under maize production. The study also found out that most farmers grew their maize and sold it directly to processors, the enterprise is dominated by males, most farmers used personal savings, and the minimum level of education was primary. It was further observed that each farmer incurred an average variable cost of 1,535,372 shilling per season the entire maize production season; produced 3158 kilograms of maize on average and earned average revenue of 2,526,400 shilling per season. The study revealed that price fluctuation was identified as a major constraint (52%) to maize to maize profitability, followed by limited access to credit (28%), which could be the reason for small scale production; this was followed by high production costs accounting for 20%.xii Factors such as high cost of production like on land preparation, weeding, size of household, total land holding and application of fertilizers had a significant effect on the level of gross margins earned from the maize enterprise. Total variable costs were very important in that they determined the level of gross margins earned by maize farmers in Luuka District. Factors such as age of farmer, experience in maize production, occupation of a farmer and access to agricultural information did not have a significant effect on the level of gross margins earned from the maize enterprise. The research recommends formation of farmer cooperatives as this will help farmers to reduce production costs, increase and encourage collective marketing and bargaining and increase their profit margins. Farmers should diversify and invest in other enterprises to neutralize the effect of low prices and price fluctuation in one enterprise. Farmers should be sensitised about financial management and the benefits of agricultural credit such that they can appreciate its benefits and start acquiring agricultural loans to increase their production. Labor saving technologies such as draught animals and herbicides should be incorporated into maize husbandry to reduce on production costs like weeding and land preparation.