Profitability analysis of coffee farmers selling through different marketing channels in Mubende district.

Abstract

The purpose of this study was to determine the profitability of coffee enterprises for farmers that sell through different marketing channels in Mubende district. The specific objectives were ; i) To determine the profitability level of the coffee enterprise among farmers using different marketing channels in Mubende district ii) to assess the factors influencing the choice of marketing channel of coffee farmers in Mubende district and iii) to identify challenges faced by farmers during coffee marketing in Mubende district. The study applied a cross- sectional design utilizing a quantitative approach to collect data from a sample size of 80 smallholder coffee farmers in Mubende district. Findings revealed that coffee farmers who sold their coffee through middle men made a gross profit of UGX -39,350 which indicates that coffee farmers experienced losses evidenced by the minimum recorded profit of -UGX 860,000. Farmers that sold through cooperatives earned relatively stable profits of UGX 268,000 which indicates that they not only recovered their production costs but also earned a substantial return on investment. The comparison between marketing channels revealed a stark difference in profitability outcomes for smallholder coffee farmers in Mubende District. Regression results revealed that size of land allocated for coffee farming (acres) (β =1.383, p=0.034) and financial constraints (β =1.739, p=0.016) at 5% level of significance are the factors that influence the choice of marketing channels by smallholder coffee farmers in Mubende district. Findings further revealed that smallholder coffee farmers in Mubende district faced challenges during the marketing stage which involved fluctuating coffee prices, reported by 82.5% of farmers, poor transportation infrastructure (72.5%), which hampers farmers’ access to markets, especially during the rainy season and limited market information (70%) which exposes farmers to exploitation due to a lack of pricing and demand data. In conclusion, the study revealed that cooperative marketing offers significantly higher and more stable returns for smallholder coffee farmers in Mubende District and it is therefore recommended that Government agencies, non-governmental organizations, and local authorities should support the formation and expansion of farmer cooperatives