Abstract

In 2000, Uganda instituted a tax rebate of 10 to 15% to industries willing to use locally sourced raw materials. This attracted Nile Breweries Ltd (NBL) to start using locally produced sorghum for beer production in 2002 and intervened in the sorghum value chain through mobilization of farmers into producer groups, established bulking centers and appointed buying agents. Despite these interventions, some farmers still sell their sorghum individually to open markets, hence limiting the volumes of sorghum sold through collection centers and eventually to the breweries. This study explored the marketing arrangements of sorghum farmers in Oyam district and their influence on marketable surplus. Using a cross sectional household survey, data were obtained from a random sample of 150 farmers in four major sorghum growing sub counties of Loro, Iceme, Acaba and Aber. T-tests and chi-square tests were used to determine the relationship between socio-economic and farm specific factors and marketing arrangements, and a two-step Heckman procedure was used to ascertain the determinants of collective marketing and the influence of collective marketing on marketable surplus. Chi-square results showed that gender of the household head, marital status, and road type significantly correlated with marketing arrangements while T-test results showed that distances to inputs and buyers significantly influenced marketing arrangements. From the two-step Heckman procedure, the Probit model showed that buyer distance and sales income significantly influenced the probability of collective marketing while the OLS model in the second step showed that marketable surplus significantly increased with input access, and selling price. Sorghum farmers in Oyam district can potentially increase their sorghum marketable surpluses and reduce rural poverty if they fully participate in collective marketing, access inputs and negotiate for better sorghum price with the breweries. Therefore, agri-businesses and policy makers should promote and enhance collective marketing to improve sorghum marketing in Uganda.

Keys words: Sorghum farmers, socio-economic characteristics, collective marketing and marketable surplus.