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

fluctuations. Although the incidence of food insecurity is high, Ethiopia has lost an important
opportunity to reduce post-harvest losses.
Hence, it is important for policymakers to consider post-harvest grain management a strategic
policy concern. They must become more aware of the problem. In particular, they must view
post-harvest grain management practices not only from the perspective of lost food security,
but also as an economic activity with employment, value, and income linkages.
Liquidity constraints and impending risk of post-harvest grain losses were the two most
important factors explaining farmers’ tendencies to sell their grain crops instantly. The selling
and repurchasing of grains as a post-harvest management practice was found to be less
significant. As it stands now, neither grain credit or output markets can be relied upon, and
market risks are substantial. Lending grains to others was also found to be less important as a
stock management strategy in the context of an imminent risk of post-harvest loss, perhaps
because the demand for grain on credit is lower during the period immediately after harvest.
One would expect that the demand for borrowed grain would come from rural households
whose grain production was inadequate or those with insufficient cash to buy grain at the
market. Demand for grain credit is the least during the first quarter and the highest during the
third quarter after harvest—a pattern that strictly follows grain price levels.
Policies to relax liquidity constraints might include efforts to improve access to credit and
rescheduling due dates for payments to the government so that they fall due later in the year,
when crop prices are better. In other words, mechanisms linking credit markets to grain
markets should be sought, enabling farmers, for example, to take cash loans in the postharvest
season to cover their various obligations. Repayment could be scheduled for later
seasons when prices pick up. Diversification of cash sources and integration of the production
process with markets would allow farmers to make decisions that are more market oriented
rather than subsistence driven. Policies to support disadvantaged sectors such as femaleheaded
households and the poor are also important, since they are more susceptible to shocks.
But these policies must be complemented by interventions to enhance the capacity of farmers
to prevent post-harvest losses, at household, community, and national levels. Otherwise,
farmers may dispose of their grains any way they can and as soon as they can to avoid storage
losses, in which case they may be unable to repay their loans, making the matter even worse.
Because chemical treatment has proved so effective, it is important to link input markets to
future product markets. Interventions also need to take into account and build on farmers’
resources and knowledge including indigenous techniques.
The problem is that quite often markets do not perform well. Hence, there is clearly a need
for introducing and strengthening appropriate institutions to enable markets to work better.
One viable option would be to introduce a grain warehouse receipt system, so that farmers
would deposit their marketable surplus to be sold when prices are higher. There are legitimate
reasons to suspect that increased production and availability could lead to an increase in
household consumption, instead of in marketed surplus. We know that farmers produce grain
primarily for their own consumption, not for sale. One reason why the warehouse receipt
system of grain management and forward grain markets make a lot of sense, in addition to
preventing post-harvest loss, is that they promote monetization of production and facilitate
processing. As the experiences of other countries have shown, there are also a number of
other advantages including easing access to financing at all levels in the marketing chain,
moderating seasonal price variability, maintaining quality standards, and promoting