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Really a nontraded commodity?, part 3: Potato trade in Uganda and beyond

DSCN1115 At the end of June 2012 we visited the potato wholesale market and the offices of the market information service Farmgain Africa in Kampala, Uganda to learn about trade in potatoes (called “Irish potato” in Uganda) in the country and the Eastern Africa region. Unstructured interviews have been held with traders, representatives of Farmgain and other experts. Here is what we’ve learnt:

Potato production in Uganda

According to the information received from the persons interviewed, most of the production of potatoes in Uganda is located in the Kabale region in the South of the country and in the Mt. Elgon region in the East. Potatoes are a commercial crop in Uganda. Farmers sell up to 80% of their harvest, but also retain a small part for own-consumption and as seed for the following cropping season.

Potato trade in Uganda

For trade within Uganda, potatoes are purchased by traders directly from the farmers in the production regions and taken to the wholesale market in Kampala. Kampala serves as a hub for potatoes in the countries and inter-regional trade only takes place if an importing region is on the route from a production region to Kampala.

Traders from Kampala trade internationally. Potatoes are brought from the Kampala market year-round to South Sudan. Markets in the DRC, Kenya and Rwanda are supplied mainly seasonally (Kenya during March/April and Rwanda during September/October). These countries, however, are also supplied directly from the production regions. Potatoes are directly taken from Kabale to Rwanda and the DRC. Kenya receive potatoes from the production regions in the East. Trade to the neighboring countries is cross-border, but also goes inland, for example to the capitals Kigali and Nairobi.

Also, the markets are well connected through the flow of price information. Traders use mobile phones to transmit information on market prices within the country and from/to neighboring countries (South Sudan, Kenya). As a consequence, international trade is responsive to price signals and arbitrage appears to take place. For example, at the time of the visit potatoes from Kenya were present on the market, according to the traders a consequence of the relatively high market prices in Kampala.

Potatoes traded on the wholesale market in Kampala are differentiated according to their intended end-use as table potatoes, for chipping or for French fries. These different qualities command different prices. While there is a certain price differential between the qualities, the traders confirmed that the prices moved together, e.g. if prices of one quality rise, prices of all other qualities increase as well.

[This blog post is basically a reproduction of a short report I just found on my harddrive. It can be seen as a complement to earlier work on trade in potatoes as was presented in “A look at the international potato trade network“.]

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