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

A number of problems undermine the efficient operation of the retail market. The sample
retailers were asked to rank the problems of the retail market on a four-point scale: (1) no
obstacle, (2) minor obstacle, (3) moderate obstacle, and (4) very severe obstacle. High tax
rates, expensive stall rent, unlicensed operators, lack of access to operating premises, and
problems in tax administration were the major constraints identified (Table 3.17). These
problems were also reported by flour factories and trading companies.
Table 3.17: Mean score of major problems in retail market
Obstacle
Extent of obstacle
Poor telecommunications 1.80
Lack of electricity 1.77
Lack of transportation 1.96
Poor access to operating place 2.53
High tax rates 2.86
Poor tax administration 2.69
Lack of standards 1.60
Unlicensed operators 2.69
Weak legal system for contract enforcement 2.00
Congestion at marketplace 2.51
Expensive stall rent 3.12
Long procedures for license and registration 1.73
Limited access to credit 2.28
Crime, theft, disorder, and lack of trust 1.81
Anticompetitive practices 1.64
Weak access to market information 1.98
Source: Own computation.
Limited capital, inadequate human resources, a weak regulatory framework, poor
infrastructure, and other factors have also constrained the operation of retailers. They were
unable to improve the retail market by expanding into milling and packing. Operators of
flourmills (not included in this survey), however, have increasingly expanded their activities
to include retailing milled teff to their customers.
Inefficiencies in the retail sector have also caused difficulties for consumers. A group
discussion with consumers revealed that lack of reliable information about the quality and
price of grain is a major constraint in the retail market. Households have two options in
buying teff: buy unmilled grain from retailers and get it milled at flourmills or buy milled
product from owners of flour mills. Consumers are certainly better off if they can buy milled
teff, but they have difficulty knowing the exact quality and grade of milled teff as visual
inspection is less precise in the case of milled grain. For the most part, they can only depend
on what mill operators tell them.
There is widespread mistrust, however, of operators at the central market. Consumers
generally perceive the quality of teff or other grain they bought as poorer than what they were
told or led to believe. In particular, the extent of impurities or unwanted type or grade can be
high if the seller or intermediary is not a trusted client. In addition, there is little protection
against traders using inappropriate scales.