The Extent and Causes of Banana (Musa spp.) Market Distortions in Uganda

The banana (Musa spp.) marketing system in Uganda is very complex, with a long value chain of actors from farmers to consumers. A market study was conducted in eight districts from central, eastern and western Uganda to assess the extent to which upcountry middlemen in the market chain affect farmers' prices and the distribution of price margins. The results indicated that 70% of farmers market their produce through middlemen, receiving Ugsh (Ugandan Shillings) 1,408/bunch ($1 = 1,750 Ugsh), equivalent to 28% of wholesalers' price at the nearest loading center. This implied that some of the agents and brokers shared part of the farmgate prices and reduced farmers' prices by 72%. Analysis of banana market shares and gross margins in central and western Uganda showed that upcountry agents and brokers obtained a market share of 35% out of the consumer market price, while farmers' market share was only 20%. About 11% of farmers were selling as informal groups, obtaining 44% of the wholesalers' price at the nearest loading center. Only 19% of the farmers organized into collective marketing groups. Selling directly to wholesalers or contracted buyers earned Ugsh 3,360/bunch, equivalent to 67% of the wholesalers' price at the nearest loading center. Those farmers were also able to raise large volumes of 520, 622 and 420 bunches/month from the central, eastern and western region, respectively and attracted bulk buyers with higher prices. The individual farmers could only sell small volumes of 44, 18 and 56 bunches/month in the same eastern, central and western regions and were unable to attract large scale buyers. We conclude that selling individually through middlemen incurs a loss of Ugsh 913,536/year/farmer due to farmgate price distortions by middlemen.