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

the cases, respectively (Table 2.4). It appears that brokers are also wholesalers and retailers at
the same time. This is inconsistent with the earlier finding that brokers do not trade on their
own account (Gabre-Madhin 2001). Gabre-Madhin argued that brokers do not bear market
price risks since they do not trade on their own account, with less 10 percent of transactions
made for themselves.
Table 2.3: Ownership type and premise (stall) used
Ownership type Number (%)
Rented from private individuals 27 (40.3%)
Rented from government 39 (58.2%)
Without stall 1 (1.5%)
Total 67 (100.0%)
Stall size and rent
Average size of stall (square meters) 34.49
Average monthly rent payment 437.80
Source: Survey, 2002.
Table 2.4: Other activities performed by brokers
Activity type Yes No Total
Grain retailing 14 (20.9%) 53 (79.1%) 67
Grain wholesaling 61 (95.5%) 6 (4.5%) 67
Source: Survey, 2002.
The educational level of people working for the brokerage firms is very low: only 21 percent
of the workers had completed secondary school, whereas the rest have a primary and
incomplete secondary education. The majority of the workers (99 percent) had received no
training on how to improve their marketing activities in the preceding three years.
The evidence shows that brokers operate with limited financial resources and inadequate
management skills. Stiff competition among too many formal brokers and between formal
and informal brokers has reduced the amount of grain handled by each broker and the profit
margin. Brokers diversify into related activities such as retailing and wholesaling to
supplement their income from brokerage, although this practice is likely to result in conflict
of interest. As long as a broker is also trading on his own account, the possibility of retaining
the grain of a client (a regional trader) for future sale at a higher price cannot be ruled out,
especially when prices are low and a buyer is not readily found. Regional traders have no
association or power to prevent the involvement of brokers in activities that are not consistent
with their brokerage responsibilities. They are also too far away to monitor the different
transactions involved in selling their grain.