The Future of Smallholder Farming in Eastern Africa - Uganda ...

As alluded to earlier, initial agricultural policy reforms focused on liberalizing the
agricultural market and removing price controls for all agricultural commodities. The
government readily agreed to realign export crop prices to the world market prices, but
reforms in the grain marketing system proved difficult to implement (Ikiara, Juma, and
Amadi 1993). Other reform proposals put forward included decontrol and relaxation of the
fertilizer import licensing system, price decontrol, and removal of obstacles in the marketing
and distribution system. The implementation record of policy reforms during the 1980-1992
period was poor and characterized by considerable official ambiguity and covert and overt
resistance (Ikiara, Juma, and Amadi 1993). While the government officially embraced
agricultural and other economic reforms, it made only half-hearted efforts to implement them.
For example, in grain marketing, the reforms emphasized restructuring the National Cereals
and Produce Board (NCPB) to confine its role to the buyer and seller of last resort. The
government insisted, however, on maintaining some central regulation and control for food
security reasons. As a result, there was an on-and-off removal of controls until 1993, when
the subsector was fully liberalized (albeit with the NCPB still involved in marketing
alongside the private sector). To date, the role of the NCPB in the grain sector remains
unclear, and considerable confusion remains about the level of government involvement.
1.2 Organization of the Maize Marketing System
Kenya’s maize marketing system has evolved considerably since independence. With this
evolution, the participation and roles of various marketing institutions have changed
considerably. Today several types of market intermediaries exist. Figure 1 is a schematic
representation of the maize marketing system showing the various marketing intermediaries
and the links between them.
Seven major categories of market intermediaries can be identified: assemblers or bulk
builders, wholesalers, retailers, disassemblers or bulk breakers, posho millers, large-scale
millers, and the NCPB. Another category of traders could be identified by the use of
intermediate means of transport (bicycles, oxcarts, donkeys, handcarts, and head load). These
agents also purchase and bulk maize at the farm level and deliver it to assemblers, retailers,
and posho millers. In contrast to the current marketing organization, Schmidt (1979) noted
that during the era of market controls, the maize marketing system was separated into two
interrelated subsystems. There was the formal state marketing agency, which was subject to
controls, and the informal subsystem, which consisted of relatively small traders, mainly
women, operating on a local level in the open-air markets where prices were not controlled.
Other intermediaries identified by Schmidt (1979) included the posho miller, large-scale
millers, cooperatives, wholesalers, retail shops, and brewers.
1.2.1 Characteristics of Maize Market Intermediaries
1) Assemblers (bulk builders): Assemblers are usually the first commercial purchasers of
maize in the marketing chain. They usually begin as farmers who graduate to the next
stage in the system by bulking up surpluses of neighboring farmers to capture scale
economies in transport to local markets. All they require to enter into the maize
business is to rent a stall or a shop, buy a weighing balance, and acquire a license
from the county council. Assemblers buy maize from farmers, bodaboda (bicycle)
traders, and donkey traders and then sell it to wholesalers, disassemblers, and
retailers. Some assemblers, particularly in the surplus areas, act as purchasing agents