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

There are no official quality controls and standards at the central market. An independent
grading and inspection agency to assist both buyers and sellers has never been part of the
trading system in the country. In situations where there is no agreement over the quality of
grain, a broker seems to have the final decision. Indeed, about 74 percent of the sample
brokers confirmed that grain is sold at a grade determined by themselves. As shown in
section 2.2.3, brokers and buyers negotiate to determine grade levels. Only 10 percent of the
respondents reported that grain is sold at a grade determined by regional traders (Table 2.9).
Regional traders have a weak bargaining position vis-à-vis brokers at the central market.
Table 2.9: Decision regarding grades
Source of decision regarding Number %
grade
Grade determined by the 43 74.1
broker
Grade determined by
6 10.3
regional trader
Depends on market
9 15.5
(negotiation)
Total 58 100.0
Source: Survey, 2002.
2.2.2. Relations among brokers
A broker can contact, on average, 10 brokers during any given market day. The main mode of
contact includes direct personal interaction and telephone dialing to friendly brokers, and
indirect intelligence gathering from other brokers (Table 2.10). Brokers regularly contact
friends who operate in a nearby stall. The main purpose of the interaction is to get some ideas
about prices (60 percent), although a significant proportion (42 percent) also had the intention
of agreeing on prices. The possibility of collusion among brokers does exist, implying that
grain could be sold at higher price than what the brokers are willing to report to their clients
(regional traders).
Table 2.10: Contact with other brokers
Indicator Yes (%) No (%)
Method of contact
Direct personal contact 86.6 13.4
Through telephone 65.7 34.3
Through intelligence gathering 28.4 76.6
Indirectly via intermediaries 23.9 76.1
Purpose of contact
To agree on a certain price 41.8 58.2
To get an idea about prices 59.7 40.3
To get information about quantity of grain 49.3 50.7
To get information about type of regional traders 26.9 73.1
Source: Survey, 2002.