The Maize Farm-Market Price Spread in Kenya and Uganda

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 percent of the market price in Kenya and Uganda, respectively. In both countries, the price spread increases by 2 percentage 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.