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Prices, profit margins and intermediary market power: evidence from the matooke value chain in Uganda

Rob Kuipers, Esther Smits, Nasser Mulumba, Marsy Asindu, Froukje Kruijsen, Enoch M. Kikulwe, Cedric Steijn
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There is widespread belief that intermediaries in African agri-food value chains have disproportionate market power. In this paper, the authors examine this belief by uncovering the purchasing and selling prices, costs and profit margins by farmers, intermediaries and retailers in the matooke (cooking banana) value chain in Uganda, and by analysing the prevailing value chain and market structures, seasonal entry and exit dynamics and the trading relationships in the chain.

The authors find that price mark-ups by intermediaries (selling prices minus purchasing prices) vary with the type of intermediary, season and location but generally reflect the costs of moving matooke down the value chain to the urban consumer. The authors do not find evidence for disproportionate market power among the intermediaries in the chain. Intermediaries enter and exit the market in peak and off-peak season, such that profits are kept in check. This seasonality does imply a small shift in market power in favour of farmers in off-peak season and in favour of intermediaries in the peak season.

Prices, profit margins and intermediary market power: evidence from the matooke value chain in Uganda