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

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Table 5.3: Instability <strong>in</strong>dex <strong>of</strong> daily wholesale prices <strong>of</strong> wheat, March–July<br />

2002<br />

Wheat grade 1 Wheat grade 2 Wheat grade 3<br />

Description 6:00 7:30 8:30 6:00 7:30 8:30 6:00 7:30 8:30<br />

Mean price 121.6 121.7 121.3 117.2 117.4 116.7 111.3 111.8 110.8<br />

SD 24.9 25.1 25.2 25.2 24.8 25.1 28.8 27.6 27.8<br />

Instability<br />

<strong>in</strong>dex<br />

14.19 14.93 14.55 15.52 15.90 15.76 19.91 19.51 19.63<br />

Source: Own computation.<br />

With regard to maize, the mean open<strong>in</strong>g prices were birr 69.8 for white maize and birr 65.9<br />

for mixed maize over the same period. <strong>The</strong> average clos<strong>in</strong>g prices were slightly lower, at birr<br />

69.3 for white and 65.2 for mixed dur<strong>in</strong>g the period under review (Table 5.4).<br />

<strong>The</strong> coefficients <strong>of</strong> variation <strong>of</strong> the price <strong>of</strong> maize were relatively high, suggest<strong>in</strong>g substantial<br />

fluctuations dur<strong>in</strong>g the period under consideration (Table 5.3). Both the magnitudes <strong>of</strong><br />

standard deviation and <strong>in</strong>stability <strong>in</strong>dexes were relatively high, an <strong>in</strong>dication <strong>of</strong> substantial<br />

price variability compared with other crop types. This may be attributed to the fact that maize<br />

cannot be stored beyond June without significant damage by weevils. Maize is also an<br />

<strong>in</strong>ferior crop, and its consumption is <strong>in</strong>versely related to the price <strong>of</strong> teff. <strong>The</strong>re is less<br />

preference for maize immediately after the harvest but high preference dur<strong>in</strong>g the lean<br />

season. It should also be noted that the clos<strong>in</strong>g price <strong>in</strong>dex was consistently higher than the<br />

beg<strong>in</strong>n<strong>in</strong>g price <strong>in</strong>dex, whereas the price <strong>in</strong>dex dur<strong>in</strong>g the middle hour <strong>of</strong> the market was the<br />

highest.<br />

Table 5.4: Instability <strong>in</strong>dex <strong>of</strong> daily wholesale prices <strong>of</strong> maize, March–July<br />

2002<br />

White maize<br />

Mixed maize<br />

Description 6:00 7:30 8:30 6:00 7:30 8:30<br />

Mean price 69.8 69.9 69.3 65.9 65.9 65.2<br />

SD 19.2 19.3 19.1 18.7 19.0 18.9<br />

Instability<br />

<strong>in</strong>dex<br />

26.19 26.16 26.20 21.06 25.92 21.50<br />

Source: Own computation.<br />

(b) Seasonal movements <strong>of</strong> wholesale prices<br />

Because <strong>of</strong> seasonality factors, crop prices behave <strong>in</strong> a relatively predictable manner dur<strong>in</strong>g a<br />

given production year. <strong>The</strong> ma<strong>in</strong> driv<strong>in</strong>g force <strong>of</strong> seasonality is the “on-<strong>of</strong>f” nature <strong>of</strong> crop<br />

harvest—that is, the fluctuations <strong>in</strong> supply, demand, and market<strong>in</strong>g (Wolday 1994). For<br />

<strong>in</strong>stance, <strong>in</strong> Ethiopia supply <strong>of</strong> crops <strong>in</strong>creases from December to March, which is harvest

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