MARKETING MARGINS AND EFFICIENCY OF COOKING BANANA RETAIL TRADE IN KAMPALA CITY, UGANDA STEPHEN W. KALULE 1 & JOSEPH L. KYANJO 2 1 Lecturer, Department of Rural Development and Agribusiness, Gulu University, Gulu, Uganda 2 Agricultural Student, Faculty of Agriculture and Environment, Gulu University, Gulu, Uganda ABSTRACT Cooking bananas like many other food crops in Uganda have experienced consumer price hike threatening poor and urban consumers’ dietary diversity and food security. Unfortunately, little research attention has been paid to the demand side of this stapple’s supply chain and there is hardly any study that has examined its marketing system performance. Using a sample of 80 representative retail traders, the study examined marketing margins and efficiency of small and big size banana bunches. Results revealed that the banana retail trade was highly inefficient. However, the inefficiency was more felt in trading small size banana bunches than big ones. OLS results on the other hand showed that marketing efficiency was significantly reduced by marketing costs though significantly improved by the scale of operation. The study recommended that provision of policy incentives such as low interest credit to retail traders as way of encouraging business expansion and backward market integration. KEYWORDS: TVECM, MAAIF, Banana Bunches, Marketing Margins INTRODUCTION Background Bananas especially the cooking type (East African Highland Bananas (AAA-EA group)) are one of the most important staple crops in the East Africa’s Great Lakes Region, in which is a major supplier (Spilsbury et al., 2004).They are the primary source of food security for households most of whom are considered poor and live in rural areas. The range of uses of these cooking bananas (locally known as ‘Matooke’ in Uganda) also extends to provision of household incomes and animal fodder (when chopped and fed to livestock such as cattle and pigs). When exported these bananas attract foreign exchange to the country thereby contributing to alleviation the balance of payment problems. Owing to the role of this crop in the economy, Government of Uganda has earmarked it as a strategic crop for development intervention (Ministry of Agriculture Animal industry and Fisheries; MAAIF, 2010). It features prominently in policy debates as a crop targeted for achievement of food security objectives in the long term. This is partly because it is generally a low input crop yet it commands high consumption rate among the locals. National Agricultural Research Organization (2009) reported that the annual per capita consumption of bananas stood at 200-300 kg, placing Uganda to be the leading banana-consuming country in the world. However, like many other food crops, in recent past, there has been consumer price hikes for bananas. These prices worsen even more during festive seasons, in effect limiting dietary diversity and food accessibility levels, and in extreme cases excluding low-income urban consumers from this staple. This is largely attributed to both supply and demand factors. Among the supply factors include the declining soil fertility following long periods of cultivation with limited fallowing, pests and diseases; the most notorious ones being the Banana Bacterial Wilt (BBW), nematodes and weevils; and inefficient agricultural extension. Demand and marketing related constraints include bulkiness, high perishability, poorroad infrastructure, limited value International Journal of Sales & Marketing Management Research and Development (IJSMMRD) ISSN 2249-6939 Vol. 3, Issue 4, Oct 2013, 9-18 © TJPRC Pvt. Ltd.