The Role of Market Information in Adoption of Agricultural Seed Technology in Rural Uganda

Introduction

This study uses the maize commodity to establish the role of market information in the adoption of agricultural seed technology in rural Uganda. This is because maize is a major nontraditional agricultural export commodity in the country. It is grown in almost all districts, easy to manage, resistant to water stress, and adaptable to different soil types (Deininger & Okidi, 2001). It ranks high among the nation’s crops for food security and poverty reduction, and it provides over 40% of the calories consumed by households in rural and urban areas of the country. In addition, about 50% of the farm households report that food self-sufficiency is the main reason for growing the maize (Mungyereza, 1998). According to RATES (2003), maize provides a living for about two million households and accounts for about 95% of smallholder farm production. However, secondary data shows that the national average yield for maize has not increased much between 1990 and 2007. It has been around 1.50 metric tons/hectare for the same period compared to the potential maximum yield of 6.0 metric tons/hectare (UBOS, 2007).

Previous work on poverty alleviation in Uganda has focused on improving smallholder adoption of new yield-augmenting agricultural technologies, such as improved seed (both hybrid and composite varieties). However, little commensurate investment has been made by both the public and private sectors to improve smallholder access to reliable ICT-based market information to allow them get better market prices for their production. Following results from empirical studies, we argue that access to ICT-based market information is crucial to the adoption of improved maize seed. Access to this information leads to better agricultural terms of trade in favor of the farmers which ultimately should increase purchasing power of farmers to procure improved maize seed. Moreover, we argue that access to ICT-based market information (on when, where, and which quantities to supply, and at what prices) has a significant influence on the intensity of adoption of improved maize varieties. The reliable ICT-based market information we refer to is that which is provided by FM radio stations, farmer cooperatives, or market information centers through media such as mobile phones, internet facilities, etc. The alternative source of market information is that which is provided by traders and brokers, who buy directly from the farmers. The quality of this alternative market information is of less value since these traders take advantage of information asymmetries to pay relatively lower prices to farmers.

There are many studies on the adoption of improved maize and the impact on yields in Africa (Morris et al., 1999; Mwabu et al., 2006; Oyekale & Idjesa, 2009; Mugisha & Diiro, 2010). There are also several studies on the impact of ICT-based market information on economic growth in developing countries (Shepherd & Schalke, 1995; Madden & Savage, 1998; Bayes et al., 1999; Eggleston et al., 2001; Ralandison & Shiratake, 2005; Ferris et al., 2004, 2006; Adejobi et al., 2006; Abraham, 2007; Svensson & Yanagizawa, 2008; Kiiza et al., 2010). Our work differs from both types of previous studies mentioned above in that it employs propensity score matching (PSM) methods to effectively control for hidden selection bias. The objectives of our study are; (1) to determine the impact of adoption of improved maize on farm yields and gross farm income; (2) to determine the impact of access to ICT-based market information on prices received by farmers and the intensity of adoption of improved maize in Uganda.