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

uyer was found. There would be no reason for overcrowding and distress sales. Wholesalers
serve as middlemen between regional traders and distributors (retailers or other wholesalers).
They assemble and sort grain based on grades and standards. Since they own large-scale
storage facilities, they can help avoid or reduce gluts in the market during peak periods. The
fact that such an important class is not very strong in the market chain, with the exception of
the few that operate largely outside the central market system (see section 6), has reduced the
efficiency of the market. Lack of capital and weakness in the regulatory system that should
provide grading and standardization services and ensure specialized services such as
wholesaling and retailing are among the major reasons for the poor organizational structure
of the market.
5. PRICE TRENDS AND ADJUSTMENT AT ADDIS ABABA CENTRAL MARKET
Collecting price information is a difficult venture in a situation where there are no formal
standards and grades and where informal grades and standards are numerous and subjectively
established. Different grades must be lumped together to arrive at an average price, but such a
price is of little value to the different actors. This means that price information is of little
value. Moreover, prices decline later during the market day because high-quality grains are
sold early in the morning and what is leftover is often viewed as lower in quality. This
chapter examines price adjustment, taking into account these limitations.
Cereal prices have fallen dramatically since March 2000 and remain significantly below
historical levels in all major markets of the country. Price trends between March 2000 and
March 2002 were very worrisome, particularly for maize, with producer prices often falling
below cost of production in many areas. A significant decline in farm input utilization was
reported for the 2001/02 meher (main) production season.
Brokers were asked about the trend in supply of and demand for grain. About 60 percent
reported that supply to the central market had been decreasing over time owing to lack of
demand and declining prices. Brokers also said that grain production in 2002 was greater than
in the previous year but that demand was lower than in the previous year, leading to a fall in
grain prices in 2001 and 2002. This situation can be attributed to declining per capita income
and worsening poverty, especially in urban areas. 6 This has adversely affected both traders
and farmers in the country.
5.1. Time series analysis
Because one of the aims of the study was to examine the behavior of prices in a given market,
daily market prices of teff, wheat, and maize were recorded at three different times of the day:
opening, or 6:00 a.m.; halfway through the market day, or 7:30 a.m.; and closing, or 9:00
6 See for instance, FDRE, Ministry of Finance and Economic Development (MOFED), Sustainable Poverty
Reduction Strategy Program (SPRSP), 2002