Effect of brokers on the efficiency of tomato markets in Kampala.

Abstract

Brokers play a big role in the tomato markets however their involvement has a number of effects on the efficiency of markets. This research aimed to assess the efficiency of tomato markets in Kampala, with a specific focus on the impact of brokers and the conditions under which tomato traders use them. The study encompassed seven markets in Kampala, namely Nakasero, Usafi, Wandegeya, Kalerwe, Nateete, Busega, and Owino. A sample of 70 traders, with an equal representation from each market, participated in the study. Data was collected through structured questionnaires and interviews. The social demographics and characteristics of the traders revealed a diverse group of retailers, with a higher percentage of female participants (64.3%). Traders exhibited varied educational backgrounds, with the majority having completed at least O level (58.6%). Additionally, the study found that the surveyed traders had considerable experience in tomato trading, with the highest reported bracket being more than 5 years (38.6%). The market efficiency of tomato markets was assessed by analyzing the revenue generated through tomato sales and the corresponding marketing costs incurred by traders. The market efficiency ratio, calculated as (revenue / marketing cost), served as an indicator of market efficiency. The overall market efficiency ratio was found to be 1.15. This suggests a relatively efficient tomato market in terms of revenue generation compared to associated costs. The study also explored the impact of brokers on market efficiency. Out of the surveyed traders, 35.7% reported utilizing broker services. The market efficiency ratio for traders utilizing brokers was found to be 1.1064, indicating a relatively lower efficiency level. In contrast, traders without brokers had a higher efficiency ratio of 1.1684, suggesting a comparatively higher level of market efficiency. These findings highlight the role of brokers in market dynamics and suggest that the involvement of brokers may introduce additional costs and complexities, potentially leading to lower market efficiency. Conditions for utilizing broker services by traders were assessed and the most common ones were scarcity of tomatoes and price volatility. Based on the findings, recommendations are therefore proposed to improve the efficiency of tomato markets in Kampala. These include assessing the costs and benefits of utilizing broker services, ensuring transparency and fairness in pricing practices, enhancing traders' market knowledge and capabilities, establishing guidelines for broker activities, improving market information systems, and promoting collaboration among market stakeholders. Overall, this research contributes to the understanding of tomato market dynamics in Kampala and provides insights for policymakers, traders, and other stakeholders to enhance market efficiency and competitiveness.