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

1.6. Organization of the report
This study is organized in seven sections. Section 2 deals with the structure and functioning
of grain brokers at the central market. Sections 3 and 4 discuss the characteristics of retailers
and regional traders, respectively. Section 5 presents the pattern and adjustment of grain
prices at the central grain market, while section 6 deals with large-scale operators. Finally,
conclusions and policy implications are presented in section 7.
2. STRUCTURE AND FUNCTIONS OF GRAIN BROKERS
The use of an intermediary to carry out a transaction can generally be accounted for in terms
of opportunity cost and imperfect knowledge. If buyers and sellers were obliged to make
contact directly, the costs of executing transactions could be prohibitively high. Buyers and
sellers lack the necessary time and information to undertake exchange transactions. Grain
brokers at the central grain market serve as the focal point for a seller who wants to get a
buyer and as the agent of a buyer who wants to get a seller. The principal function of a broker
is to find the opposite side of their clients’ orders and obtain the best possible deal.
Brokerage activities at the central market for the sale of grain transported from the regions
start at 6:00 a.m. and end at 9:00 a.m.. The major market days are Monday, Wednesday, and
Friday. Loaded trucks converge in the crowded marketplace, and buyers visually inspect the
quality of grain and negotiate with brokers over prices. Trucks with unsold grain leave the
space at about 9:00 a.m. to make way for wholesale and retail activities by brokers and other
traders. The trucks stay within the vicinity of the central grain market and return to the
market’s parking lot late in the afternoon for the following market day. Truck operators wait
for a maximum of three days, after which the grain is unloaded at a given store. Lack of space
at the central market has limited the trading of grain transported from the regions to three
hours a day.
2.1. Brief profile
A total of 67 brokers operating at the central market were interviewed. These brokers have
licenses for grain trading and pay taxes to the government. The other category of brokers,
also known as informal brokers, perform a similar function but have no trade license or stall,
and they are not included in the survey. They have no address or clients but search for casual
buyers and bring them in contact with regional traders who do not need to go to the central
marketplace and operate without the assistance of a formal broker.
Formal brokerage is exclusively handled by men; no woman was reported to have a
brokerage firm. This might be due to the fact that brokerage requires intense physical
movement (brokers have to run here and there and confront each other over attracting
buyers).
A significant proportion of the brokerage businesses (79 percent) had been established since
1991 (Table 2.1). The number of private brokers was very limited until the beginning of
market reform in 1991. Private businesses were highly discouraged in the 1980s because of
the socialization policy then in effect. Most operators have only about six years of experience
in the business. Brokers were also asked about how they started the business. A high