The banana trader with his bicycle as depicted started out at 6:00 am and traveled some 40 km from his home town to the producer village and purchased approximately 100 kg of cooking bananas for USh 15,000 (US$8.82). He has then returned the same 40 km often pushing the overloaded bicycle up the hills. This is a total trip of some 80 km or the equivalent of two marathons. He then hopes to sell the bananas for USh 25,000 (US$14.70) but may have to settle for on USh 20,000 (US$11.76) and arrive home hopefully before 8:00 pm after an arduous nearly 14 hour day. If he receives the desire selling price his markup will represent some 60% of the purchase price and 40% of the selling price. Even then his income will be only US$6.00. Given he has to support a wife and four children his best price will still place him right on the international poverty standard of US$1.00/person/day. His market conditions are summarized in the table below along with the current retail price of cooking bananas in the US, which is some 19 times the Uganda consumer price and represents the degree of financial suppression of the Uganda economy relative to the US economy.
Is this apparently excessive markup an exploitation of the smallholders or the result of a highly fragmented business environment? In evaluating private traders serving smallholder communities is it necessary not only to look at markup, but also the total market volume and final income of the trader before making any judgments as to how exploitive the traders are of the smallholders?
A similar situation can exist with Tomato Vendors in Lusaka, Zambia.
Last Revised: 5 Sept. 2005