EFFECT OF PRICE FLUCTUATION ON MAIZE FARMERS INCOME ACROSS KIBAALE DISTRICT

ABSTRACT

The topic of study was effect of price fluctuation on maize farmers’ income across kibaale district, the study was guided by the following objectives; to determine the factors influencing profitability of maize farmers, to establish the causes of price fluctuation among maize famers and to determine the possible solutions to price fluctuation of maize in Kibaale district.

The results indicated that the following affected the profitability of maize in Kibaale; quality of maize, type of maize, the seasons of maize, international market price and the level of political stability of the area. In regards to the causes of price fluctuation the results indicated that; the Level of Domestic demand is one of the factors that affect the price fluctuation, International market prices is one of the factors that determine the prices of maize, demand from neighboring countries has an influence into the prices of maize, the price of maize, this therefore indicates that when the season is favorable and Government policies.

\The correlation coefficient is 0.8357 indicating that there is a strong positive correlation between the price of maize and the income of the farmers in Kibaale district. This therefore indicates that the more the price of maize the higher the income of the people of Kibaale. The study results also further indicates that the R-square value = 0.6984 indicating that 69.84% of the of the incomes of the people of Kibaale is determined by the prices of maize in the district, this factor therefore indicates that the income of the people is tired on the prices of maize.

The study made the following recommendations; The study recommends that the government should; Provide better quality maize to the people of Kibaale so that the maize can fetch high price and they are able to improve on their incomes, there is need also to provide better storage facilities so that the people are able to store their maize during the period when there is plenty of maize and there is also need for the government to search for market for maize in foreign countries so that the people are able to have high incomes.

CHAPTER ONE

INTRODUCTION

1.0 Introduction

This chapter consists of the background to the study, statement of the problem, general objective, specific objectives, scope of the study, research questions as well as significance of the study. This chapter gives a clear analysis of the effects of price fluctuation on maize famer’s income across Kibaale district. This chapter explains why this study is imperative and projected contribution to the Uganda’s development agenda.

1.1 Background of the study

Connor, et al., (2011) defines a crop as a plant or plant product that can be grown and harvested extensively for profit or subsistence. He further laments that by use, crops fall into six categories: food crops, for human consumption (e.g., wheat, potatoes); feed crops, for livestock consumption (e.g., oats, alfalfa); fiber crops, for cordage and textiles (e.g., cotton, hemp); oil crops, for consumption or industrial uses (e.g., cottonseed, corn); ornamental crops, for landscape gardening (e.g., dogwood, azalea); and industrial and secondary crops, for various personal and industrial uses (e.g., rubber, tobacco).

Maize (Zea mays), also called corn, is believed to have originated in central Mexico 7000 years ago from a wild grass, and Native Americans transformed maize into a better source of food (Ranum, P., et al., (2014)..Botanically, maize (Zea mays) belongs to the grass family (Gramineae) and is a tall annual plant with an extensive fibrous root system. It is a cross pollinating species, with the female (ear) and male (tassel) flowers in separate places on the plant.

Maize, the American Indian word for corn, (Jena, N., et al., 2015) says it means literally “that which sustains life”. It is, after wheat and rice, the most important cereal grain in the world, providing nutrients for humans and animals and serving as a basic raw material for the production of starch, oil and protein, alcoholic beverages, food sweeteners and, more recently, fuel. Maize is widely cultivated throughout the world, and a greater weight of maize is produced each year than any other grain. In 2014, total world production was 1.04 billion tonnes

(Pardey, P. G., et al., 2014). Maize is the most widely grown grain crop throughout the Americas, with 361 million metric tons grown in the United States in 2014. Approximately 40% of the crop—130 million tons—is used for corn ethanol. Genetically modified maize made up 85% of the maize planted in the United States in 2009 (Alavijeh, M. K., & Yaghmaei, S. 2016). Maize is an important staple food for about 1.2 billion people around the world, provides over 20% of the total calories in human diets in 21 countries and is Africa’s most important staple crop, feeding more than 300 million people on the continent (Awika, J. M. (2011).

According to GOPAL, S. M. (2014) maize consumption in developed countries is mainly as second-cycle produce, in the form of meat, eggs and dairy products. In developing countries, maize is consumed directly and serves as staple diet for some 200 million people. Grain makes up about 42 percent of the dry weight of the plant. Special crops grown primarily for food include sweet corn and popcorn, although dent, starchy or floury and flint maize are also widely used as food (Verheye, W. 2010).

In Africa, Maize was introduced into in the 1500s and has since become one of Africa’s dominant food crops occupying approximately 24% of farmland in Africa, (Abate, T., et al.,2015) which is more than any other staple crop, and is a food crop accounting for 73% and 64% of the total demand in Eastern and Southern Africa and Western and Central Africa, respectively (Cairns, J. E., et al., 2013).. South Africa is currently the main maize producer of the African continent, and almost half of its production consists of white maize meant for human consumption. Approximately 60% of the maize produced globally is used for animal feed (Awika, J. M. 2011). Rapid increases in poultry consumption in Africa contribute to the higher use of maize for livestock feed.

According to (Smale, M., & Jayne, T. S. 2010), African producers and consumers only began to accept white maize instead of the yellow variety in the early twentieth century. Despite this late adoption, white maize rapidly spread throughout Africa. In fact, yellow maize is not very popular nowadays in Africa for the following 3 main reasons: (1) yellow maize is associated with food-aid programs and therefore perceived as being consumed only by poor people, (2) yellow maize is associated with animal feed and (3) yellow maize is too sweet. White maize is used in a number of products, such as bread, porridges, tortillas, arepas, cornbread and couscous. Sub-Saharan Africans can be roast or cook the whole grain and served as food. Githeri is a typical Kenyan dish, with maize kernels and beans mixed and boiled together. Dried kernels or grain are often processed into flour, which is used in several dishes. Very famous in Kenya is ugali, a dish made of maize flour cooked in boiling water or milk to a porridge- or dough-like consistency (Serna-Saldivar, S. O., & Carrillo, E. P. 2019)

Uganda’s economy is primarily agricultural and supports close to 60% of the country’s population which is rural (MAAIF, 2015). According to Uganda National Household Survey, 2014), agriculture sector accounts for 26% of the GDP (Dorosh, P., & Thurlow, J. 2014.) and over 70% of the exports, and employs about 70% of the employed household population. Over the last two decades (1993-2013), both maize area and production in Uganda increased dramatically from about from 0.57 million tons in 1993 to 1.37 million tons in 2013 mostly as a result of area expansion rather than yield improvement (Kagere, G. 2019). Maize is one of Uganda’s major staple foods in, providing over forty percent of a Ugandan’s daily calorie consumption with over two million Ugandans counting on maize as their main source of income. Maize was mostly used as a food crop for domestic consumption but after 1981 the Government began to promote it as an export crop in an effort to diversify Uganda’s sources of foreign exchange. Much of the production of maize aims to supply export markets in the region, mostly especially Kenya and recently Southern Sudan, which are in chronic maize deficits. Demand for maize has been increasing probably at the expense of other cereals and its production has increased over the years as people change their consumption trends. It has evolved from a purely subsistence to a successful commercial crop (Salami, A., Kamara, A. B., & Brixiova, Z. 2017).

Over 90% of Uganda’s maize is produced by smallholders, of which about 60% of the annual maize output is consumed on the farm and the rest of the crop is sold (Jayne, T. S., Mather, D., & Mghenyi, E. (2010). This means that maize is now produced mainly for sale. In terms of regions, the Eastern Region reported the highest production of maize with the total output of 1.1 million Mt (46.9 %) followed by the Western Region with 21.1 percent and the least was the Northern Region with 12.9 percent (Shinyekwa, I. M., & Ijjo, A. T. (2016). Maize, in Uganda is a new social innovation in urban areas (and labour camps) where it has been found to be relatively inexpensive and easily prepared. Millet is being replaced by plantain which takes less time to cook. Maize is widely grown throughout Uganda, but the main areas are the Fertile Crescent around the northern periphery of Lake Victoria, the higher altitude areas mostly along the borders, and other fertile areas in the eastern, western and northern districts.

The transactions involved in the marketing of maize are complex but the main channels for the commodity flow include (i) from farmer (farm gate) to agents/traders/village markets in rural areas; (ii) from rural markets to secondary markets in regional towns (iii) from urban markets to major buying centers outside the district and (iv) the export market (Montalbano, P., Pietrelli, R., & Salvatici, L. 2018).

Farmers in Kibaale practice diverse farming systems and 51% practice either mixed farming and / or intercropping (Isingoma, F. 2017). They use indigenous knowledge in food security by growing “hard” crops like maize. Maize has been turned into a commercial crop which was not the primary intention originally. They still practice indigenous knowledge in produce quantity and quality, in disease control, in agro ecosystems and soil fertility management among others. Improving the productivity of maize-based farming could significantly reduce hunger, enhance food security and alleviate poverty through increasing the purchasing power of the farmers (Grabowski, P. P., & Kerr, J. M. 2014). The farmers sell their produce in local markets and neighboring districts of Hoima, Buliisa and Masindi.  The farmers are both subsistence and commercial, many of whom are supported by the National agricultural advisory services (NAADs).

1.2 Problem statement

High transport costs in Sub-Saharan Africa directly stem from distance and lack of quality infrastructure, which hampers farmers’ participation in markets, while traders from urban areas are discouraged from purchasing food items directly from rural farmers in remote areas. A relevant concern arises from the subsequent mismatch between supply and demand, namely the probable influence of transport costs on price volatility. Whilst production is influenced by climate patterns, farmers’ planting intentions, in excess of subsistence requirements, are largely influenced by price levels and overall output tends to fluctuate accordingly. Uganda’s maize export market is mainly regional, comprising of markets within Eastern and Southern Africa, the Democratic Republic of Congo and Southern Sudan. There has been a vibrant cross-border trade in maize with these regional markets.

Despite the fact that the effects of price fluctuating on farmers income have been established elsewhere; there is limited practical knowledge in the Ugandan context in the effects of price fluctuation on maize farmer’s income. Additionally, the implication of such fluctuation on the maize farm level profitability has not been studied in Kibaale district. It is vital to undertake this study because investigating the effects of price fluctuation on maize farmer’s income would be important.

1.3 Objective of the study

1.3.1 General objective

The general objective of the study was to assess the effect of price fluctuation on maize farmer’s income across kibaale district.

1.3.2 Specific objectives

1. To determine the factors influencing profitability of maize farmers in Kibaale district.
2. To establish the causes of price fluctuation among maize famers in Kibaale district.

• To determine the possible solutions to price fluctuation of maize in Kibaale district

1.4 Research questions

1. What are the factors influencing profitability of maize farmers in kibaale district?
2. What are the causes of price fluctuation among maize farmers in Kibaale district?

• What are the possible solutions to price fluctuation of maize in Kibaale district?

1.5 Hypothesis of the study

The study aimed at testing the hypothesis; The income of people of Kibaale depends on the price of maize.

1.6 Scope of the study

The study restricted itself on assessing the effects of price fluctuation on maize farmer’s income across Kibaale district. This was done by examining the levels of price fluctuation of maize and some of the factors that may be the cause price fluctuation of maize and how these factors can be lessened. The study is primarily on maize farmers between (18-75) years of age in Kibaale district, regardless of the variety of maize and quantity grown. However some data of sample detail was be collected from key informants explaining the level of specification and the different sources of the maize grown.

1.7 Significance of the study

Aware of the bigger portion that already participates in agriculture, the study will be aimed at ensuring a stable price of maize in order to improve the income of the farmers in the field and also attract more farmers in the field. The reality is left to the scientists to conceptualize the results of the study and so as to become a basis for redesigning the techniques to reduce the levels of price fluctuation in Uganda.

The study will serve as a resource material for policy makers. It will also be of great importance to international agencies and financial institutions supporting the production, processing and export of maize in Uganda. The study will also assist the Kibaale district officials to access vibrantly the causes of maize price fluctuation of maize farmers and acknowledge the possible solution to these causes. Researchers who want a further investigation maize production would use the result from this study.

         CHAPTER TWO

LITERATURE REVIEW

2.1 Introduction

Price fluctuation is a frequents rise and fall of commodity prices in the market as a result of changes in the market situations, price fluctuation can be seasonal whereby prices of commodities changes during certain season of the year due to the increase in supply and demand (Huka, H., Ruoja, C., & Mchopa, A. 2014).

Price fluctuation is a multifaceted problem attributed to various factors which, when combined, culminate in dangerous consequences for the most vulnerable. Although high prices can technically be good news for farmers, price fluctuation is extremely dangerous, as farmers and other agents in the food chain risk losing their investments if prices fall. One frequently cited reason for increased prices is ‘market fundamentals’. Demand is thought to be outstripping supply and thus leading to increased prices (Headey, D. (2011). Climate change, depleted soils and aquifers and the loss of biodiversity are often noted as contributing factors.

2.2 Factors influencing profitability of maize farmers.

Porter, M. E., & Kramer, M. R. (2019) defines profit as what is left of the revenue a business generates after it pays all expenses directly related to the generation of the revenue, such as producing a product, and other expenses related to the conduct of the business activities. Profitability is ability to use resources to generate revenues in excess of expenses. In other words, this is a capability of generating profits from operations (Paradi, J. C., Rouatt, S., & Zhu, H. (2011).

Profitability is one of four building blocks for analyzing financial statements and company performance as a whole. The other three are efficiency, solvency, and market prospects. Investors, creditors, and managers use these key concepts to analyze how well a company is doing and the future potential it could have if operations were managed properly.

The two key aspects of profitability are revenues and expenses. Revenues are the business income. This is the amount of money earned from customers by selling products or providing services. Generating income isn’t free, however. Businesses must use their resources in order to produce these products and provide these services.

Profitability is measured with the gross margin analysis and net profit ratio.

According to Dent, J. B., et al., (2013), Gross Margin Analysis is an appropriate measure to use for comparing enterprises that place similar demands upon limiting resources of the farmer for short run and annual planning decisions. Nagle, T. T., & Müller, G. (2017) further defines gross margin for an enterprise as the difference between the revenue (products sold) and the variable production costs that vary with the size of the enterprise Income less the variable costs associated with an enterprise and it has sometimes erroneously been referred to as the gross profit. Gross margin is simple but realistic profitability measure of enterprises operated by producers.

The net profit ratio is the parentage of after-tax profits to net sales. It reveals the remaining profit after all costs of production, administration, and financing have been deducted from sales, and income taxes recognized (Diamond, P., & Saez, E. (2011). As such, it is one of the best measures of the overall results of a firm, especially when combined with an evaluation of how well it is using its working capital. The measure is commonly reported on a trend line, to judge performance over time.

There are several factors that contribute to profitability of maize in Uganda as elucidated below in detail;

Overhead Costs

Overhead costs are those costs that do not vary with production. All costs are either direct or overhead. Overhead includes operator living withdrawal in the firm and common examples of excessive overhead in traditional agriculture include: expensive tractors, expensive bulls, fancy shops, too much equipment, and excessive family draw (Ahmad, A. 2017). Famers find themselves in the predicament of excessive overhead often is not due to an extravagant lifestyle. Many producers find themselves with excessive overhead costs when two generations try to make a living from the farms.

Direct Costs

Direct costs are those costs that vary with production. Thus these are costs that would not occur if the farmer does not produce. Seed, fertilizer, feed, and veterinary expenses are all examples of direct costs. Direct costs can be attributed to one or more farms. Farmers often try to deal with profitability problems by reducing direct costs (Giller, K. E., et al., 2011). Care must be taken however, or a drop in productivity will also result. An increase in costs will decrease profits, this could include labour costs, raw material costs and cost of rent. For example a devaluation of the exchange rate would increase cost of imports therefore farmers who imported raw materials would face an increase in costs. Alternatively if the firm is able to increase productivity by improving technology then profits should increase (Dao, V., Langella, I., & Carbo, J. 2011). If a firm imports raw materials the exchange rate will be important. Depreciation makes imports more expensive. However depreciation of the exchange rate is good for exporters who will become more competitive.

Price of maize; A price is the quantity of payment or compensation given by one party to another in return for one unit of goods or services. A price is influenced by both production costs and demand for the product. Volatile selling prices can quickly impact the level of net returns of farm operators. The price and quantity of maize produced determines how much income is available for family living. Rising selling prices will generate profits for farm operators in the short term. However, costs will eventually rise to capture these profits. On the other hand, declining selling prices will generate losses for farm operators in the short term. However, costs will eventually decline to match the selling prices (Glover, D., & Kusterer, K. (2016).

2.3 Causes of price fluctuation among maize famers

Agricultural product prices have been fluctuating widely over the last for years, hunting both consumers and producers. FAO latest data on food insecurity indicated that in 2007 alone, mainly because of higher prices, the number of hungry people in the world has risen by 75 million instead of falling by the 45 million needed to meet the commitment of the World Food Summit held in 2006. Many different factors have combined to contribute to the volatility of food price levels throughout the world since 2006 (Porter, J. R., et al., (2017). Maize usually experiences low prices in periods immediately after harvest. After a few months of post harvest have elapsed, the market supply declines as prices increase rapidly although the rate of price increase varies from year to year.

Boserup, E. (2014) on his paper; The conditions of agricultural growth points out that contributing factors have included a succession of poor harvests in various parts of the world that have particular significance for agricultural production (especially crops), increasing usage of and allocations of land for production of bio fuels, steadily decreasing levels of food reserves throughout the world, growing consumer demand in Asia, oil price rises, and other changes to the world economy. Agricultural subsidies in developed nations are another long-term factor often associated with high global food prices.

Other, arguably transitory, factors are supply shocks that can be attributed both to the weather and to changes in policies of the exporting countries. Given the relatively small number of primary grain exporting countries, the effects of adverse weather conditions in a relatively small number of countries can have a quite dramatic effect on the trade balance for a range of commodities (Baldos, U. L. C., & Hertel, T. W. (2015). Coupled with the effects associated with climate change, this becomes a significant factor even in the longer term.

Input prices are also an important factor that influences farm income according to (Kassie, M., et al., (2013). A change in price of farm inputs affects the cost of production which in turn affects farm produce prices. Fluctuating and generally increasing farm input prices affect maize farmers’ productivity, level of farm produce price as well as stability of farm produce prices. Higher increases in input prices relative to output prices usually lead to cost-prize squeeze, lower profit margins and farm incomes.

Other important factors that can be influential over the longer term are land and water resource constraints, availability of technological developments to increase agricultural yields, the impact of climate change on agricultural yields in different parts of the globe20, as well as population increase and urbanisation. The historical long term decline in real prices has continued so far because the technological changes in agricultural have always kept up with increases in demand for agricultural products, more than that has occurred in some other sectors of the economy (Norton, G. W., Alwang, J., & Masters, W. A. 2014).

2.4 The possible solutions to price fluctuation of maize

2.4.1Export Restrictions

These restrictions are intended to lower prices in the domestic market and to therefore benefit domestic consumers, irrespective of their need. However, as farmers are unable to sell at the more profitable world price, the incentive to produce more is reduced. This becomes even more significant in the current context when the prices of fertilizers, seeds and other inputs have risen. The reduction in grain availability on the world market increases the world price, thus imposing a negative externality on other countries (Godfray, H. C. J., & Garnett, T. 2014). If the world market for food is thin, such restrictions can also further increase price volatility. The timing, predictability and the ability of the government to commit to such restrictions as well as its ability to reduce hoarding by traders and middlemen can be critical to their impact.

2.4.2Buffer Stocks and Grain Pooling

Buffer stocks, if used strategically, can lower prices and volatility. However, they require infrastructure and skills to procure, hold, and manage the stocks. In considering buffer stocks as a policy option, it is essential to weigh their associated costs against the potential of the market to provide a timely response to an unexpected shortfall (Demeke, M., & Balié, J. (2016). If it is expected that production shocks are likely to be correlated across suppliers in the market, then building up a grain reserve might turn out to be a useful insurance mechanism for a country (or a group of countries).

2.4.3Long term productivity boosting measures

Any long term sustained response to food shortages must come in the form of increased production of food grains. However, the past decades have been marked by declining public and private investments in agriculture, especially in staple food production (Godfray, H. C. J., et al., 2010). This reduced investment is one reason why higher prices, while being a strong incentive to farmers to increase production at least in the short term, may not in themselves be enough. Much of the world’s farming activity occurs on smallholder farms, with production at or below subsistence levels. It is essential to consider, within the range of productivity boosting measures, input supply programmes. Long term productivity increases can undoubtedly result from the use of superior inputs (fertilizers, improved seeds, and planting materials), adoption of better farming practices including those related to water management and resource conservation, and participation in agricultural credit, insurance, input and product markets (Fisher, M., et al., 2015).

It is possible that small farm productivity can be boosted, and the benefits of higher market prices passed on, at least partially, to small formers, through contract farming, especially when it is accompanied by input supply and training.

Contract farming can be seen as an alternative setup that seeks to mimic the private monopsony situation without resorting to monopsony. Contract farming works in much the same fashion, with the crop buyer providing most of the monetary inputs together with advice and guidance (Smalley, R. 2013). In exchange, the farmer promises to deliver some or all of its output to the buyer. The terms of such agreements, and how they are set, are important in determining the net balance of costs and benefits to the producer. They have the potential to introduce yield enhancing methods and inputs and offer farmers a price floor that could be particularly advantageous during a production glut (Gatune, J. 2018).

CHAPTER THREE

METHODOLOGY

3.1 Introduction

The study aimed at investigating the effects of price fluctuation on maize farmers’ income. It covered the research design, Area of study, target population, sample design, sample size, research instrument, measurement of variables, Data Collection Procedure, data analysis and Ethical considerations of the study.

3.2 Research Design

The study adopted a cross-sectional survey research design because of the nature of the variables that were at hand; to produce data required for quantitative and qualitative analysis and to allow simultaneous description of views, perceptions and opinions at any single point in time (White, 2000). The study also used qualitative and quantitative methodologies for data analysis. Quantitative and qualitative methodologies were used in the effect of price fluctuation on maize farmers’ income. Quantitative research consisted of those studies in which the data concerned could be analyzed in terms of numbers while qualitative described events, persons and so forth scientifically without the use of numerical data. Quantitative research is based more directly on its original plans and its results are more readily analyzed and interpreted. Qualitative research is more open and responsive to its subject. (Christina Hughes, 2006).

3.3 Study Area

Kibaale District is a district in the Western Region of Uganda. The district headquarters are in the town of Kibaale. Kibaale District is bordered by Hoima District to the north, Kyankwanzi District to the north-east, Mubende District to the east, Kyegegwa District to the south-east, Kyenjojo District and Kabarole District to the south-west, and Ntoroko District to the west. The district headquarters at Kibaale are approximately 219 kilometers (136 mi), by road, west of Kampala, Uganda’s capital and largest city. The coordinates of the district are 00°47’00.0″N, 31°05’00.0″E (Latitude: 0.783333; Longitude: 31.083333). The district consist of 19 sub counties of Bwamiramira  Bwanswa, Bwikara, Kagadi, Kakindo, Kasambya, Kibaale Tc, Kiryanga, Kisiita, Kyanaisoke, Kyebando, Mabaale, Matale, Mpeefu, Mugarama, Muhoro, Nalweyo, Nkooko and Rugashari

3.4 Determination of the sample size

It is impossible to study the whole targeted population of the study and therefore the researcher took a sample of the population this is also further supported by Mugenda and Mugenda (2003) who notes that a researcher should choose a sample out of the whole targeted population. A sample is a subset of the population that comprises members selected from the population. Using Krejcie and Morgan’s (1970) table for sample size determination approach, a sample size of 36 respondents who were mainly large scale farmers and district officials of Kibaale district were selected from the total population of 40 large scale farmers.

Table 1: Showing Population and Sample size of respondents

Source: URA Employee List, (2013)

3.5 Sampling techniques and procedure

Purposive sampling, also known as judgmental, selective or subjective sampling, is a type of non-probability sampling technique where the researcher chooses a sample based on what they think in other words they use their personal judgement (Palys, 2008). The study used Purposive sampling technique because it saves time and also enabled the researcher to get information from the right people who had knowledge and skills regarding the subject topic. This technique was used in selecting, district officials, the researcher used this technique because these respondents held enough knowledge regarding the study topic.

The researcher used simple random sampling technique, According to Amin, (2010) a simple random sample is a subset of individuals chosen from a larger set (a population). Each individual was chosen randomly and entirely by chance, such that each individual had the same probability of being chosen at any stage during the sampling process, and each subset of individuals had the same probability of being chosen for the sample. The technique was used to select large scale farmers from Kibaale District.

3.6 Data sources

The researcher collected data using both the primary and the secondary sources.

3.6.1 Primary sources

This helped to obtain data in its raw form from the field. This was done by use of questionnaires to collect people’s views, opinions and perspectives about the study. With this kind of source of data collection method, first hand information was obtained.

3.6.2 Secondary sources

This was obtained through the review of data from UBOS and Internete from published journals. This helped the researcher to make informed judgement about the study since it was compared with the primary source

3.7 Data collection methods

The section presents data collection methods which include questionnaire survey, interview and documentary review.

3.7.1Questionnaire Survey

Questionnaire Survey method was used to obtain the opinion of the respondents regarding the topic under study, according to (Onen & onen, 2013) states that questionnaires are important in research because the respondents are given time to think and they don’t feel intimidated. Questionnaire gives the respondents ample time to respond to the questions when ready and they can be kept for future references. This method was deployed to capture information from farmers.

3.7.2    Interview

Face-to-face interview is a data collection method when the interviewer directly communicates with the respondent in accordance with the prepared questionnaire (Polak  & Green, 2015). This method enables to acquire factual information, consumer evaluations, attitudes, preferences and other information coming out during the conversation with the respondent. Thus, face-to-face interview method ensures the quality of the obtained data and increases the response rate. Interviews were used because they fetched a variety of ideas needed for the study and gave a deeper understanding of the topic. The method was used to generate information from District officials.

3.8 Data collection instruments

For each deployed data collection method, there is a corresponding data collection instrument that was used. The study used secondary data from UBOS and Questionnaire Guides and Interview Guide.

3.8.1    Self-administered Questionnaire

The questionnaire shall be designed in a manner that motivates respondents with simple structured questions with the option of providing any addition information to the structured questionnaire as an option to obtain relevant data from them. The questionnaire is structured with both close-ended and open-ended questions. It has aLikert scale 1-5 indicating the level of a respondents’ agreement or disagreement, where 1 represents Strongly Disagree and 5 strongly Agree.

3.8.2    Interview Guide

The researcher used an interview guide to collect data in order to find out the vivid picture of the participants’ perspective of the topic. Interviews are an effective qualitative method for getting people to talk about their feelings, opinions and experiences. They are also an opportunity for us to gain insight into how people interpret effect of Information systems on performance of government agencies. The views of the respondents were a personal reflection of their personal experience relating to the study topic. Open ended questions allowed ease of expression and capture of vast information from study participants.

3.9 Data quality control of instruments

The data collection tools was pre-tested on a smaller number of respondents from each category of the population to ensure that the questions are accurate.

3.9.1 Validity

Validity is defined as the extent to which results can be accurately interpreted and generalized to other populations (Oso & Onen, 2008). While Borg & Gall, 1989 as cited in Onyinkwa, (2013) validity is defined as the degree to which results obtained by the research instrument correctly represented to the phenomenon understudy and Mugenda & Mugenda, (1999) as the accuracy and meaningfulness of inferences which are based on the research results.

Amin, (2005) recommended minimum CVI of 0.7 to be used. Validity was tested using content validity index which involves judges scoring the relevancy of the questions in the instruments in relation to the study variables.

The formula for Content Validity Index was;

CVI =

Where CVI = content validity

n= number of items indicated relevant.

N = total no. of items in the instrument

In this study, validity was achieved by establishing content validity. The researcher achieved content validity by using the experts to assess the validity of the research instrument. The experts especially research supervisors and consultants from Makerere University were given data collection tools to assess whether the items in the instruments were valid in relation to research topic, objectives, and questions. From the instruments they declared some items valid and others invalid. Those declared invalid were dropped, others adjusted, while the valid ones were maintained.  Then content validity index (CVI) was computed by dividing the number of items declared valid by total number of items/questions in the data collection instrument. The content validity Index was =0.763(76.3%). According to Waner (2005), as cited in Barifaijo, Basheka and Oonyu (2010), if the CVI is greater than 0.7, then the instrument is said to have a high content validity. The researcher analyzed the data collected and where need arose, the instruments were re-adjusted and re-designed to improve reliability and validity. To improve face validity a pilot study was carried out at Kibaale District.

3.9.2 Reliability

According to Mugenda and Mugenda, (2003) reliability is the measure of the extent to which research instruments are able to provide the same results upon being tested repeatedly. Crobach’s coefficient alpha (a) as recommended by Amin, (2005, P.302) was used to test the reliability of the research instrument. The instrument was deemed reliable if reliable of 0.7 and above is obtained and therefore, it was adopted for use in the data collection.

Formula for reliability is

=      ()

Where  = alpha reliability co efficiency.

K=Number of items included in the questionnaire

= sum of variance of individual items

= variance of all items in the instrument.The coefficient ranges between a=0.00 for no reliability, a =1.00 for perfect reliability. The closer alpha gets to 1.0 the better. If the study findings result to Cronbanch’s Alpha of 0.7 and above, this signified that research instrument was good enough for the study. According to Amin (2005), all the measurements in the instrument that show adequate levels of internal consistency of cronbach’s alpha of 0.77 and above are accepted as reliable. Overall reliability= 4.621/6 =0.77 (77%) reliability of instruments on different variable, with an average Alpha of 0.77(77%), and this was good enough for the study according to Mugenda &Mugenda (1999) and Amin, (2003).

3.10 Procedure of data collection

The researcher obtained an introductory letter from Makerere University to seek permission and enable easy access of information by the researcher from Kibaale, after the permission was granted from Kibaale district.

3.11 Data analysis

Mugenda and Mugenda (1999) and Mbaaga (2000) both defined data analysis as a process of bringing order, structure and meaning to the data gathered to create information out of it. Data analysis was therefore, done with quantitative and qualitative methods. The quantitative method of analysis was used for both secondary data and Questionnaires and qualitative (interviews) was analyzed separately and then combined during discussion of the findings.

3.11.1  Quantitative Data Analysis

Data processing was done by entering the data into a STATA. Spearman’s correlation coefficient and regression analysis is recommended by Amin (2005, P.378) was used during data analysis.

3.12 Ethical considerations

The researcher ensured that before giving questionnaires to the respondents their consent was sought and when they accepted to participate in the study, they were given questionnaires.

Confidentiality of the respondents ‘information was assured and the researcher also informed them that the study was strictly for academic purposes and therefore, they should not fear giving information.

.

CHAPTER FOUR

PRESENTATION, ANALYSIS, INTERPRETATION

OF FINDINGS

4.0 Introduction

This section analyzes both secondary and primary data on

4.1 Model for estimation of effect of price fluctuation on maize farmers income

Model estimation

Y=β₀  + β₁ P + C

Where;

Y =income, P=prices and c is a constant

Y = 224.8863199 + 1.986578041*P

4.1.2 This section presents the findings of the study in relation to study objectives;

Graphical representation of the prices of income of the farmers in kibaale against the price of maize in kibaale

Source: UBOS

The findings from the table indicates that in the period of 2009 the prices of maize where at the highest when compared with the periods from 2005 to 2018. This findings further indicates that both the incomes of the people kibaale and prices of maize was low from 2005 to 2006, however there was a slight reduction in the prices and income in 2015. There was also a very high rise in prices of maize from 2007 to 2009 while on the same period the income of the people of kabala also rose.

4.1.3 Correlation analysis between the income of the people of kibaale and the prices of maize

Source: primary data

The correlation coefficient is 0.8357 indicating that there is a strong positive correlation between the price of maize and the income of the farmers in Kibaale district. This therefore indicates that the more the price of maize the higher the income of the people of Kibaale.

4.1.4 Regression analysis of the income of the and prices

According to the findings in the table above it is evident that the R-square value = 0.6984 indicating that 69.84% of the of the incomes of the people of Kibaale is determined by the prices of maize in the district.

4.1.5 Analysis of the mean value of prices of maize and the income of the residents of kibaale for a period of 15 years

Table showing the mean value of the price of maize against the income of farmers in Kabaale in district in US dollars.

Source: primary data

The study results indicate that the mean value of the prices of maize in 15 years is 653.653 while the mean value for income of the farmers in us dollars is 2023.67.

4.2 Analysis of primary data results from the questionnaire

This chapter presents the results in reference to objectives in chapter one. Gender of respondents, Age of respondents, education level of respondents, to determine the factors influencing profitability of maize farmers, the causes of price fluctuation among maize famers and to determine the possible solutions to price fluctuation of maize.

4.2.1 Findings on general information

    Table 4.1: shows the findings on the gender of the respondents

Source: primary data

Table 4.1 above shows that 63.33% of respondents were male and 36.67% were female. That means that the biggest percentage of respondents and large scale farmers in Kibaale district were male.

4.2 Findings on the age of respondents

Table 4.2: Shows findings on age of the respondents

Source: primary data

According to the study results the study findings indicates that majority 73% of the respondents   indicated that they were above 40 years this therefore indicates that majority of the large scale farmers in Kibaale are elderly men

Table 4.3: shows findings on education level of respondents

Source: primary data

 According to the study findings majority 56.7% of the respondents indicated that they were diploma holders, the study further indicated that 30% held other qualifications like certificates , this findings therefore indicated that most of the large scale farmers in Kibaale had some advanced knowledge regarding the growing of maize.

Findings number of years of farming maize

 Table 4.4 showing the number of years findings number of years of farming maize.

Table results indicates that majority 53% of the respondents indicated that they have been farming maize for over 10 years. This results also indicated that majority of the farmers had knowledge regarding farming of maize and therefore they were able to give a well-informed view of the study topic.

4.3 Factors influencing profitability of maize farmers in kibaale district

Table 2.5: Shows the factors influencing profitability of maize farmers in kibaale district.

Source: Primary Data

The study results indicates that majority 50% of the participants indicated that quality of maize is one of the factors that that determine the profitability of maize. The table further indicates that that 33.3% agreed, while 16.7% were not sure. This study results therefore shows that the quality of maize has a huge impact on the profitability of maize.

During the interview one of the district officials indicated that;

“Due to poor quality of maize mostly produced by some farmers in Kibaale this has affected the price of maize in the district”

In line to the study findings it is clear that 60% of the respondents assert that type of maize is one of the major determinants on the profitability of maize. This results further indicated that if the farmers a better of maize he is likely to receive a more profitability than other types of maize.

This was also further indicated by one of the district officials during the interview that;

“the type of maize that one is farming has a huge influence on the profitability if somne one is farming hybrid maize the level of profitability is high”.

The table further indicates that majority 73% of the respondents assert that the seasons determine the profitability of the maize, this was further indicated that when the seasons are favorable the maize farmers receive better profitability.

According to the findings from the table it has been indicated that majority of the respondents strongly agreed that the international market price is one of the factors affecting the profitability of maize, the study results further indicated that none of the respondent disagreed or strongly disagreed.

This was also further indicated by one of the district officials who indicated that;

“Since Uganda relies so much on the international market prices like from neighboring countries like south Sudan therefore if the international market prices are low then market prices domestic will also be low”

In line to the study findings majority 50% of the respondents stated that the level of political stability of the area has an effect on the profitability of maize this was indicated by the fact that 100% agreed.

4.3.      Causes of price fluctuation among maize famers in kibaale district.

Table 4.6: Shows various causes of price fluctuation among maize famers in kibaale district

From table above, 60% of the respondents strongly agreed that Level of Domestic demand is one of the factors that the price fluctuation while the remaining 40% agreed; this therefore shows that the majority of the respondents agreed that the level of domestic demand has an influence on the price of maize.

According to table above it indicates that, 73.33 % of the respondents strongly agreed that Intentional market prices is one of the factors that determine the prices of maize, while 26.67% agreed , while none of the respondents, was neutral, disagreed, and strongly disagreed.

Findings revealed in table above, shows that 50% of the respondents strongly agreed and the remaining percentage this therefore shows that 100% of the respondents agree with the fact that Demand from neighboring countries is one of the factors that determine the price of maize.

According to the table 56.67% of the respondents strongly agreed that the seasons of maize has a huge influence on the price of maize, while the remaining 33.33% of the respondents strongly agreed, while none of the respondents was neutral, disagreed or strongly disagreed.

This view was also further shared by one of the district officials when he indicated that;

“When the seasons are favourable and there is  a bumper harvest then the price of maize will be low”.

From table above, majority of the respondents strongly agreed that Government policies is one of the factors that determine the prices of maize while 23.33% agreed while none of the respondents were neutral, disagreed or strongly disagreed.

4.4   Possible solutions to price fluctuation of maize in kibaale district

Table 4.7:  Shows the possible solutions to price fluctuation of maize in kibaale district.

Source: Primary Data

Table above reveals that Having proper storage to avoid over flooding the market is essential in avoiding over flooding the market this helps in stabilizing the market, this was supported by the strong percentage of 46.67% strongly agreeing, while 33.33% agreed and 10% disagreed while the remaining percentage of respondents strongly disagreed.

The table indicates that majority of the respondents strongly and agreed that Setting uniform prices of maize by government while none of the respondents was neutral, disagreed, and strongly disagreed.

According to table above, 46.67% of the respondents strongly agreed that Adopting better quality of maize is essential in enhancing the stability of maize prices, while 33.33% of the respondents agreed while 20% of the respondents where neutral.

During the interview one of the respondents also indicated that

“Adopting better quality of maize of maize is essential in ensuring that the maize prices are good enough to sustain the farmers”

According to researchers’ findings, 50% of the respondents strongly agreed that Searching for external markets is essential in stabilizing the price of maize. While the rest of respondents agreed this therefore shows the government must search for external markets to ensure that there is stability of price of maize.

According to the table 66.7% of the respondents strongly agreed that increasing government intervention on prices charged by middle men is essential in stabilizing the prices of maize at while 16.67 agreed and the remaining percentage disagreed.

CHAPTER FIVE

DISCUSSION, CONCLUSION AND RECOMMENDATION OF FINDINGS

5.0 Introduction

This section of the study presents discussion, conclusion and recommendation of findings.

5.1 Factors influencing profitability of maize farmers in kibaale district

According to the findings in the study quality of maize is one of the factors that determine the profitability of maize, from the above findings therefore it is imperative to ensure that the people of Kibaale district get better prices from selling maize and this therefore will lead to increased incomes of the people, this view was also in line who indicates that Paradi, Rouatt, & Zhu, (2011) to ensure profitability of agricultural produce the organization must ensure that they sell high quality crops.

On the same note the participants further indicated that the type of maize was one of the factors determining the profitability of maize therefore it is imperative for the people of Kibaale to adopt better species of maize to ensure that they are profitable, this results also indicates that type of maize is a major determinant of the price of maize and letter alone its profitability poor quality maize doesnot yield much profitability.

It has also been discovered that the participants indicated that the seasons determine the profitability of the maize, this was further indicated that when the seasons are favorable the maize farmers receive better profitability, this was also in line with Nagle, & Müller, (2017) who indicated that agricultural products have seasons that determine the their prices in most African countries when the season is favorable the price are low while when the seasons are unfavorable the prices are high.

According to the findings from the table it has been indicated that majority of the respondents strongly agreed that the international market price is one of the factors affecting the profitability of maize, the study results further indicated that none of the respondent disagreed or strongly disagreed.

Majority of the respondents Indicated that the level of political stability of the area has an effect on the profitability of maize this was indicated by the fact that this therefore indicates that political stability of the area has an influence on the prices of maize, this view was also indicated by

5.2 Causes of price fluctuation among maize famers

In regards to the findings in the study the results indicated that the Level of Domestic demand is one of the factors that affect the price fluctuation while the remaining 40% agreed; this therefore shows that the majority of the respondents agreed that the level of domestic demand has an influence on the price of maize.

It is evident that the Intentional market prices is one of the factors that determine the prices of maize from this results therefore it is imperative to understand that the prices of maize is determined mainly by the international prices, this is also in line with Demeke, & Balié, (2016) who indicates that when the international markets prices are low the price is also low in the domestic countries this affects the incomes of the farmers directly.

The results in the study indicates that the demand from neighboring countries has an influence into the prices of maize in Kibaale district. This is because Kibaale district location favours it to sell the maize to congo and south sudan

The season maize has a huge influence on the price of maize, this therefore indicates that when the season is favorable the price of maize is low while when the season is of maize off the price of maize is high this view was also shared by Boserup, (2014) who indicates that, the conditions of agricultural growth points out that contributing factors have included a succession of poor harvests in various parts of the world that have particular significance for agricultural production and latrer on the prices of these agricultural inputs.

The study results further indicates that the Government policies is one of the factors that determine the prices of maize , it is therefore imperative for the government to set up favorable prices to ensure that the price donot fluctuate.

5.3 Possible solutions to price fluctuation of maize in kibaale district

The results in the study indicates that Having proper storage to avoid over flooding the market is essential in avoiding over flooding the market this helps in stabilizing the market prices and therefore ensuring that the prices of maize are stable.

According to the findings in the study majority of the respondents strongly and agreed that setting uniform prices of maize by government is essential in enhancing price stabilization of maize in Kibaale district, this was also further stated by Kassie, M., et al., (2013) who indicates that prices tends to fluctuate and yet farm inputs are always high this puts farmers at a disadvantage.

Adopting better quality of maize is essential in enhancing the stability of maize prices this was further indicated by the fact that most of the maize grown in Kibaale is of poor quality and as such this has affected the price of these maize therefore affecting the stability of maize prices.

According the results in the study indicates that searching for external markets is essential in stabilizing the price of maize. While the rest of respondents agreed this therefore shows the government must search for external markets to ensure that there is stability of price of maize.

Findings from the study shows that increasing government intervention on prices charged by middle men is essential in stabilizing the prices of maize at the market this therefore indicates that markets of maize must be stabilized to ensure that the incomes of the people are stabilized.

5.2 Conclusion

The results indicated that the following affected the profitability of maize in Kibaale; quality of maize, type of maize, the seasons of maize, international market price and the level of political stability of the area.

In regards to the causes of price fluctuation the results indicated that; the Level of Domestic demand is one of the factors that affect the price fluctuation, International market prices is one of the factors that determine the prices of maize, demand from neighboring countries has an influence into the prices of maize, the price of maize, this therefore indicates that when the season is favorable and Government policies.

According to the results in the study the possible solutions to price fluctuation of maize in kibaale district include; having proper storage to avoid over flooding the market, setting uniform prices of maize by government, enhancing the stability of maize prices and searching for external markets is essential in stabilizing the price of maize.

The correlation coefficient is 0.8357 indicating that there is a strong positive correlation between the price of maize and the income of the farmers in Kibaale district. This therefore indicates that the more the price of maize the higher the income of the people of Kibaale.

The study results also further indicates that the R-square value = 0.6984 indicating that 69.84% of the of the incomes of the people of Kibaale is determined by the prices of maize in the district, this factor therefore indicates that the income of the people is tired on the prices of maize.

5.3 Recommendations

The study made the following recommendations;

The study recommends that the government should;

1. Provide better quality maize to the people of Kibaale so that the maize can fetch high price and they are able to improve on their incomes.
2. There is need also to provide better storage facilities so that the people are able to store their maize during the period when there is plenty of maize.

• There is also need for the government to search for market for maize in foreign countries so that the people are able to have high incomes.

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Maize prices and the average incomes of the people of Kibaale

QUESTIONNAIRE

TOPIC: EFFECT OF PRICE FLUCTUATION ON MAIZE FARMERS INCOME ACROSS KIBAALE DISTRICT

A CASE STUDY: KIBAALE DISTRICT.

Dear respondent

I am ATUGONZA VIOLET a student of Makerere University, am carrying out a study on the above stated topic. You are one of the respondents randomly selected to participate in the study. The information given shall be treated with at most confidentiality and shall only be used strictly for academic purpose.

SECTION A: GENERAL DATA

1.Sex:      Male                                  female

2. Age a) 18 -29 b) 30 – 39 c)  40 and above
3. Educational level

Masters degree                        1^st degree                     diploma           others

4.For how long have you been farming maize?

Less than two years                            3-5 years

6-10 years                               10 above

SECTION B:  FACTORS INFLUENCING PROFITABILITY OF MAIZE FARMERS IN KIBAALE DISTRICT.

Key: SA=strongly agree, A=agree, N=neutral, D=disagree, SD=strongly disagree

• Please for question 4 tick one appropriately.

SECTION C: Causes of price fluctuation among maize famers in Kibaale district

• Please for questions 3 tick one appropriately.

Key: SA=strongly agree, A=agree, N=neutral, D=disagree, SD=strongly disagree

SECTION D: POSSIBLE SOLUTIONS TO PRICE FLUCTUATION OF MAIZE IN KIBAALE DISTRICT

Key: SA= Strongly agree, A=agree, N=neutral, D=disagree, SD=strongly disagree

THANKS FOR YOUR COOPERATION

APPENDIX III: INTERVIEW GUIDE

MAKERERE UNIVERSITY

Organizational attributes and adoption of e-procurement

Dear Respondent,

I am ATUGONZA VIOLET a student of Makerere University. I am carrying out a study on “effect of price fluctuation on maize farmers’ income across kibaale district.”

You have been purposively selected to participate in this exercise because you are a key stakeholder in Agriculture. Kindly answer these questions to enable the researcher complete the study. Your name is not required as this is purely an academic research. There is no right or wrong answer to any of the questions since the researcher is only interested in your opinion on each of the questions asked. All information will be treated with the utmost confidentiality

Thank you for accepting to take part in this study.

Yours Faithfully,

ATUGONZA VIOLET

RESEARCHER.

Section A: Factors influencing profitability of maize farmers in kibaale district

1. Do you think Maize farmers earn enough profits to enable them like farming maize?
2. What are those challenges that stop maize farmers from earning profitability in their farming business?
3. What can be done to ensure profitability of maize?

Section A: Causes of price fluctuation among maize famers in Kibaale district

1. What are the causes of price fluctuation in maize?
2. What can be done to overcome it?

Section A: Possible solutions to price fluctuation of maize in kibaale district

1. What can be done to stop price fluctuation in maize?
2. Is it possible to stop price fluctuation?