Abstract
In this chapter, we analyze the farm-market price spreads of maize in Kenya and Uganda to examine how agricultural sectors are integrated with local markets. The farm-market price spread is calculated by subtracting the farm-gate price from the market price at the nearest maize market. We find that the farm-market price spread of maize is about 15% and 33% of the market price in Kenya and Uganda, respectively. In both countries, the price spread increases by 2% points for each additional driving hour away from the nearest maize market. While the former finding suggests that the overall marketing costs are lower in Kenya than in Uganda, the latter finding indicates that reductions in transportation costs will increase the farmer prices of maize in both countries.
This is a preview of subscription content, log in via an institution to check access.
Access this chapter
Tax calculation will be finalised at checkout
Purchases are for personal use only
Notes
- 1.
 In 2008, after poor maize harvests and restrictions on maize imports, the maize price increased dramatically. The food crisis deepened with allegations of corruption over the issuing of import licenses and a lack of transparency over the sale of subsidized NCPB grain (Ariga et al. 2010). The allegations have led to the sacking of most of the NCPB Board of Directors and 17 senior managers. In January 2009, responding to the food crisis and allegations, the Kenyan government lifted the import duty on maize, allowing importers to buy maize from the international market. Note, however, that the analyses of this chapter use data taken in the period from 2003 to 2007 when the Kenyan government imposed import duties on maize.
- 2.
 RATIN data are available from http://www.ratin.net/
- 3.
 These two waves of surveys in Kenya were conducted by Tegemeo Institute, with financial and technical help from National Graduate Institute for Policy Studies (GRIPS).
- 4.
 We estimated the determinants of the attrition from the surveys and found that none of the independent variables is significant at the 5% level. Thus, we think that the attrition mostly occurred randomly and do not expect serious attrition biases.
- 5.
 The surveys in Uganda were conducted jointly by Makerere University, Foundation for Advanced Studies on International Development (FASID), and National Graduate Institute for Policy Studies (GRIPS).
- 6.
 The attrition rate is less than 5%. None of the independent variables in the determinants of the attrition model is significant even at the 10% level. Thus, we do not think that the attrition biases are serious.
References
Ariga J, Jayne TS, Njukia S (2010) Staple food policies in Kenya. A paper prepared for the COMESA policy seminar on variation in staple food prices: causes, consequence, and policy options, the Comesa-MSU-IFPRI African Agricultural Marketing Project (AAMP), Maputo, Mozambique, 25–26 Jan 2010
Badiane O, Shively GE (1998) Spatial integration, transport costs and the resource of local prices to policy changes in Ghana. J Dev Econ 56:411–431
Barrett CB (2008) Smallholder market participation: concepts and evidence from Eastern and Southern Africa. Food Policy 33:299–317
Benson T, Mugarura S, Wanda K (2008) Impacts in Uganda of rising global food prices: the role of diversified staples and limited price transmission. Agric Econ 39:513–524
Byerlee D, Jayne TS, Myers RJ (2006) Managing food price risks and instability in a liberalizing market environment: overview and policy options. Food Policy 31:275–287
Campenhout BV (2007) Modeling trends in food market integration: method and an application to Tanzania maize markets. Food Policy 32:112–127
Corbett JC (1999) The almanac characterization tool, Version 2.01. Characterization, Assessment and Applications Group, Blackland Research Center, TAES, Texas A&M University System, a CDROM publication
Fackler PL, Goodwin BK (2002) Spatial price analysis. In: Gardner BL, Rausser GC (eds) Handbook of agricultural economics. Elsevier Science, Amsterdam
Fafchamps M (2004) Market institutions in sub-Saharan Africa: theory and evidence. MIT Press, Cambridge
Faminow MD, Laubscher JM (1991) Empirical testing of alternative price spread models in the South African maize market. Agric Econ 6:49–66
Goletti F, Babu S (1994) Market liberalization and integration of maize markets in Malawi. Agric Econ 11:311–324
Jayne TS, Zulu B, Nijhoff JJ (2006) Stabilizing food markets in Eastern and Southern the effects of NCPB marketing policies on maize market prices in Kenya. Agric Econ 38:313–325
Jayne TS, Myers RJ, Nyoro J (2008) The effects of NCPB marketing policies on maize market prices in Kenya. Agric Econ 38:313–325
Krishana A (2004) Escaping poverty and becoming poor: who gains, who loses, and why? World Dev 32:121–136
Lutz C, Kuiper WE, van Tilburg A (2006) Maize market liberalisation in Benin: a case of hysteresis. J Afr Econ 16:102–133
Minot N (2007) Are poor, remote areas left behind in agricultural development: the case of Tanzania. J Afr Econ 17:239–276
Negassa A, Myers R, Gabre-Madhin E (2004) Grain marketing policy changes and spatial efficiency of maize and wheat markets in Ethiopia. MTID discussion paper 66, International Food Policy Research Institute, Washington, DC
Poulton C, Dorward A, Kydd J (1998) The revival of smallholder cash crops in Africa: public and private roles in the provision of finance. J Int Dev 10:85–103
Rashid S (2004) Spatial integration of maize markets in post-liberalised Uganda. J Afr Econ 13:102–133
Ravallion M (1986) Testing market integration. Am J Agric Econ 68:102–109
Author information
Authors and Affiliations
Corresponding author
Editor information
Editors and Affiliations
Rights and permissions
Copyright information
© 2011 Springer Science+Business Media B.V.
About this chapter
Cite this chapter
Yamano, T., Arai, A. (2011). The Maize Farm-Market Price Spread in Kenya and Uganda. In: Yamano, T., Otsuka, K., Place, F. (eds) Emerging Development of Agriculture in East Africa. Springer, Dordrecht. https://doi.org/10.1007/978-94-007-1201-0_2
Download citation
DOI: https://doi.org/10.1007/978-94-007-1201-0_2
Published:
Publisher Name: Springer, Dordrecht
Print ISBN: 978-94-007-1200-3
Online ISBN: 978-94-007-1201-0
eBook Packages: Business and EconomicsEconomics and Finance (R0)