Information Exchange: Collaboration and Coordination Standards

Crop price dispersion across farmers/outgrowers is one of the main problems arising when we examine price asymmetric information in the agriculture sector in Uganda (Gollin and Rogerson 2010; Calderon 2009; Minten and Stifel 2008; Mandl and Mukhebi 2002). Farm gate prices are often 50% less than the urban wholesale price, and a large portion of this increment is comprised by transport cost. However, it is precisely transport cost reduction and logistics chain consolidation which are two of the most important initiatives in the goal to reduce price asymmetry; and we would assert that the core of the problem—lack of information—needs to be tackled. Farmers and traders often have imperfect or no knowledge whatsoever of their market positions in relation to production completion, demand, standards, best practice, and exposure to risk. Moreover, the agriculture sector is heavily subjected to price and weather variations, and since farmers/outgrowers are significantly affected by the lack of information, they would prefer to reduce risk wherever possible. But as they reduce risk, so do farmers/outgrowers also shy away from new technologies and instead remain within the production segment of unprocessed products, which are generally bulky and of low value.