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

directly to dairy farmers as animal feed or to firms that reprocess them into poultry
feed, animal feed, or corn oil. Some is sold to chang’aa brewers who offer attractive
prices (Mukumbu 1992).
7) NCPB: The NCPB is a government parastatal that buys maize alongside the private
sector. The NCPB used to operate a network of buying centers throughout the
country, and it still has storage silos in major producing areas. With the advent of
liberalization and the consequent reduction in state funding, however, the NCPB’s
role in the maize market has been greatly diminished. Occasionally during harvesting
periods it opens a few seasonal buying centers in the major maize-surplus areas. Its
main role is supposed to be stabilizing the market through engaging in commercial
activities, maintaining strategic grain reserves, and managing famine relief supplies
on behalf of the government. In recent years the government has intervened through
the NCPB to support producer prices in response to pressure, mainly from large-scale
producers. This action has sometimes resulted in the board’s holding expensive stocks
that it cannot profitably dispose of in competition with private traders.
1.3 Problem Statement and Significance
Food security cannot be achieved without an efficient food marketing system. Kenya
continues to experience food shortages in general and maize shortages in particular. These
shortages greatly compromise the welfare of Kenya’s citizens, especially the poor. Persistent
maize crises have generated considerable doubt regarding the efficiency of the entire food
marketing and distribution system. For example, in 1998/99 the eastern parts of the country
experienced maize shortages while at the same farmers in the Central Rift and Western
Kenya had maize surpluses they could not dispose of because of low market prices.
After the 1998/99 crisis, it became clear that policy decisions have been made in an
information vacuum. Despite the fact that maize marketing has been fully liberalized since
1993, there is little, if any, up-to-date empirical evidence regarding the efficiency of the
maize marketing system. The role of infrastructure and other marketing institutions in
influencing the efficiency of the system has not been documented. Our understanding of how
the various actors in the maize marketing system have responded to market reforms and what
constraints they face is still rudimentary.
Following the 1998/99 maize crisis and other problems in the grain sector (particularly the
wheat and the rice subsectors) Technoserve and the U.S. Agency for International
Development (USAID) sponsored an open forum that brought together leading scholars and
stakeholders in the grain sector. The forum observed that the government’s responses to
crises in the grain sector often ended up hurting the intended beneficiaries (Technoserve
1999) because these responses were based on inadequate information. For instance, during
the 1998/1999 season, following farmers’ complaints about low producer prices, the
government intervened in the maize market by providing the NCPB with KSh. 400 million to
buy excess maize at KSh. 1,000 per bag. This intervention resulted in a massive rise in the
consumer price and had a negative effect on food security in deficit areas such as Eastern and
North Eastern Provinces, where maize became unaffordable to many Kenyans. The
intervention was especially ill advised since the vast majority of Kenyan maize farmers buy
more maize than they sell (Technoserve 1999). The government intervention ended up
benefiting middlemen and large-scale farmers at the expense of consumers and peasant
farmers.
This study seeks to understand the effects of recent liberalization policies on the efficiency of
maize marketing. The performance of the maize marketing system is assessed using several