Improving Agricultural Market Performance:
Creation and Development of Market Institutions
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Creating New Market Institution(s)
The fertile agricultural land in Uganda has the potential to feed 200 million people.306
However, to realize this potential and its contribution to job creation, food security, and
poverty reduction, some critical bottlenecks in Uganda’s market system need to be addressed
in order to improve the sector’s effectiveness and performance as so maximize the sector’s
benefits.307 Uganda’s agricultural sectors is very fragmented in the first place due to the high
degree of small-scale farmers involved in the sector. Hence, necessary improvements relate to
connecting the various stages of Uganda’s agricultural market system as well as improving the
quality and effectiveness of these individual stages (i.e. production, post-harvest handling,
processing, market, and distribution).
One of the key bottleneck includes – similar to Tunisia – the absence of an authority registering
farmers and granting them a special status through a farmer card or farmer certificate stating
their land ownership, putting smallholders in a virtuous circle of over-indebtedness and
unlimited opportunities to access finance, credit, and loans to invest in increasing the
production capacity (e.g. purchase of inputs and mechanization). This eventually impacts
Uganda’s domestic production and puts pressure on prices for domestic staple food as it leads
to unstable and insufficient domestic supplies. Establishing a commodity exchange regulatory
authority, which registers farmers and grants them access to credit and loans, may be part of
the solution.
Moreover, Uganda’s agricultural productivity is currently facing severe under-capacity. This
requires the fragmented market system to be improved as it should be more market-driven,
supply the agri-industry with Uganda’s agricultural production, and respond to high demand
from the market. An authority registering farmers is necessary within this context as such an
institution could also provide more data and statistics as well as managing incentives for
farmers.
Furthermore, a need exists to organize and regulate middlemen and commodity brokers,308
functioning as intermediaries connecting the small-scale farmers with final markets. Since the
current market system is not officially organized and regulated, there is a large role for
middlemen, who have access to various market outputs (e.g. fresh food markets and
processors).309 The bottleneck, however, is that these middlemen operate as agents of the
processors and buy with different standards (e.g. bags instead of kilograms). The market
institution which should register farmers could, in addition, also be responsible for registering
middlemen, traders, intermediaries, and commodity brokers to improve the efficiency of the
distribution channel and, also, traceability of products distributed in the circuit.
Apart from these general bottlenecks, there may be a need for developing some new market
institutions to support addressing bottlenecks in commodity-specific market systems:
306 Export.gov (2016), Uganda - Agriculture, available a Accessed
May 2017].
307 Government of Uganda (2015), Second National Development Plan (NDPII) 2015/16 – 2019/20, available at
[Accessed May 2017].
308 Government of Uganda (2017), Agriculture, available a Accessed May
2017].
309 Interview conducted with National Agricultural Advisory Services in Kampala, June 7, 2017