The Impact of the Market Information Service on Pricing Efficiency and Maize Price Transmission in Uganda

WP 2007-12 August 2007Agricultural market information such as commodity prices, trade volumes and weather conditions, plays an important facilitating role in improving the performance of markets. This research assesses the impact of the agricultural Market Information Service (MIS) on the performance of maize markets in Uganda. Specifically, the research analyzes two performance criteria - pricing efficiency and price transmission for three pairs of markets that trade in maize – three supply markets and one consumer market – over a period of 11 years from 1995 to 2006. The overall conclusion from the research is that the MIS positively influenced market performance in all three market pairs on two broad fronts. First, after the MIS was implemented, a larger portion of the price changes in the consumer market was transmitted to the supply markets, and at a greater speed. Second, with improved access to information, traders responded to opportunities to arbitrage, and as a result generated an additional US$ 1.8 million in 2004