DRAFT- NOT FOR CITATION

FARM LEVEL COTTON PRODUCTION

CONSTRAINTS IN UGANDA

Rhona Walusimbi

A Contribution to the Strategic Criteria for Rural Investments in Productivity

(SCRIP) Program of the USAID Uganda Mission

The International Food Policy Research Institute (IFPRI)

2033 K Street, N.W. Washington, D.C. 20006

July 2002

Strategic Criteria for Rural Investments in Productivity (SCRIP) is a USAIDfunded

program in Uganda implemented by the International Food Policy Research

Institute (IFPRI) in collaboration with Makerere University Faculty of Agriculture and

Institute for Environment and Natural Resources. The key objective is to provide

spatially-explicit strategic assessments of sustainable rural livelihood and land use

options for Uganda, taking account of geographical and household factors such as
asset

endowments, human capacity, institutions, infrastructure, technology, markets &

trade,

and natural resources (ecosystem goods and services). It is the hope that this
information

will help improve the quality of policies and investment programs for the
sustainable

development of rural areas in Uganda. SCRIP builds in part on the IFPRI project
Policies

for Improved Land Management in Uganda (1999-2002). SCRIP started in March

2001

and is scheduled to run until 2006.

The origin of SCRIP lies in a challenge that the USAID Uganda Mission set itself
in designing a new strategic objective (SO) targeted at increasing rural incomes.
The

Expanded Sustainable Economic Opportunities for Rural Sector Growth strategic

objective will be implemented over the period 2002-2007. This new SO is a

combination

of previously separate strategies and country programs on enhancing agricultural

productivity, market and trade development, and improved environmental

management.

Contact in Kampala Contact in Washington, D.C.

Simon Bolwig and Ephraim Nkonya Stanley Wood, Project Leader

IFPRI, 18 K.A.R. Drive, Lower Kololo IFPRI, 2033 K Street, NW,

P.O. Box 28565, Kampala Washington, D.C. 20006-1002, USA

Phone: 041-234-613 or 077-591-508 Phone: 1-202-862-5600

Email: E.Nkonya@cgiar.org Email: S.Wood@cgiar.org

S.Bolwig@cgiar.org

INTRODUCTION

Cotton is an annual crop that is produced commercially in over 80 countries in the

world

located in the tropics and temperate climate zones. (Lundbaek, 2001). It is one of
the

most important internationally traded agricultural commodities in terms of volume

and

value traded (Serunjogi et al., 2001). Its main commercial uses are in manufacture
of

textile and garment, edible oil, soap and livestock feeds.

In Uganda cotton is produced in all regions of the country, however most of the

production is concentrated in the Northern and Eastern regions. Total number of

cotton

producers in 2000 was approximately 300, 000- 400, 000. (Gordon and Goodland,
2000).
Cotton is a labour intensive crop especially at weeding, pesticide application and

harvesting stages. Animal traction introduced into the country in the early 1900’s
was

widely adopted by cotton farmers in the main cotton producing areas of the country

mainly for land opening. However, the use of this technology was severely curtailed
by

cattle rustling that affected many districts in the northern and eastern regions
during the

insurgence of the late 1980’s. The use of tractors by small-scale farmers in general

remains very limited, mainly because the farmers cannot afford the technology
(APSEC,

2001).

Cotton was introduced as a cash crop in Uganda in 1903 and became its major
export

until the 1950’s when it was surpassed by coffee (Serunjogi et al, 2001). At its peak

production of 465, 000 bales of lint in 1969/70, cotton contributed to about 40

percent of

foreign exchange earnings. The industry experienced a dramatic decline in terms of

both

acreage and yield from the mid 70’s to the late 80s during which time the country

experienced political and economic turmoil. By 1987/88, production had hit an all
time

low of 11,000 bales. The textile and garment industry and other value addition
industries

also suffered a similar fate. The causes of decline of farm level production included
lack

of credit and farming inputs, lack of extension services, a poor marketing system
and a

run down and inefficient ginning system (LMC International, 2002 and Serunjogi et
al.

2001)
2

These constraints have been addressed by the economic reform programs

implemented

in the country from 1987 and significant improvements in production and rural and

foreign exchange incomes have been achieved. However, these gains remain much

below potential levels. Recent studies aimed at identifying strategies to boost

Uganda’s

cotton industry, indicate that most of Uganda’s soils and climate are well suited for
cotton

production (with the crop having the potential to do well even in marginal areas),
yields

of up to five times the current average farm yields can be achieved. Also Uganda’s
cotton

is of a high quality and therefore has an assured international market. According to

COMPETE (2002), Uganda’s annual production for the 2000/2001-crop year

(100,000

bales) represented only 0.001 percent of world production.

A number of studies have identified several causes of the current low and
stagnating

production. Farm level constraints cited include high dependence on hand-hoe

production, limited availability of some key inputs, limited access to credit,

ineffective

extension services, and land fragmentation and low producer prices (CDO, 2002).
Value

addition constraints include limited access to credit, poor post-harvest quality

control,

underutilized and technologically aging ginneries and manufacturing plants, and low

labor productivity (LMC International Ltd., 2002).

Another reason commonly put forward to explain less than expected growth of the

cotton production in Uganda is its low profitability relative to competing crops,

which
include beans, maize, cassava, finger millet, sorghum, simsim and soybeans.
Studies done

by the APSEC in 1994 and 1998, revealed that, cotton ranked lowest in profitability

compared with its main competing crops in these years.

JUSTIFICATION AND OBJECTIVES OF THE STUDY

Due its high potential as a foreign exchange and poverty alleviation crop, the

Government of Uganda has placed high emphasis on formulation and

implementation of

strategies aimed at increasing productivity and profitability of cotton production.

(MFPED, 2001, COMPETE, 2001 and CDO, 2001). This paper investigates underlying

causes of farm level cotton production constraints. Specifically it analyzes the

relationship between socioeconomic characteristics of cotton farmers and adoption

of

cotton production technologies and assesses profitability of cotton production. The

paper

is expected to provide information to policy makers and other stakeholders of

agricultural

development and poverty reduction in Uganda.

The remainder of the paper is organized as follows. First a review of factors

affecting

adoption of cotton production technologies and of the recent cotton sub sector
recovery

programs with an emphasis on crop production technologies is made then the

methodology used in collecting and analyzing the data used in the study is
described.

Next, the results obtained are presented and discussed and finally conclusions of
the

study are made and policy implications discussed.

LITERATURE REVIEW
The main interventions to revive Uganda’s cotton-sub sector have been part and
parcel of

the economic reforms that were implemented in the country from 1987.
Government’s

strategy is to revive cotton production and exports through increased competition in

cotton processing and marketing and improved support services.

From 1993 to 1995, the Small Holder Cotton Rehabilitation Project (SCRP), aimed at

strengthening the national cotton-breeding program in order to improve cotton

planting

seed quality and its multiplication and to promote the greater use of animal traction
was

implemented.

The Cotton Sub-sector Development Project (CSDP) designed to support and build
on the

activities of SCRP and other on-going agric sector development programmes was

implemented in 1995 and closed in 2001. Under CSDP, cotton processing and
export

marketing were liberalized; a regulatory and promotion body named the Cotton

Development Organization (CDO) was established. The project also implemented

activities aimed at improving the managerial, technical and operating efficiency in a

creditworthy ginning industry, improving the efficiency and impact of supporting

services through support for national research and extension programmes and
improving

the delivery mechanisms and availability of cotton planting seed and production
credit.

The project envisaged increases in cotton production through area expansion and
yield

increases.
According to the impact assessment report of the CSDP by APSEC (2001), a number
of

improved production technologies including seed, agronomic practices, pest

management

(IPM) and ox drawn implements (ploughs, planters, seeders and weeders) were
generated

under the project. However, some of the agronomic and integrated pest
management

technologies have yet to be transferred to farmers and the improved ox-drawn

implements are not yet available commercially (APSEC 2001). The project also

supported the national livestock breeding programme with an aim of production of

oxen

for training and sale to farmers, implemented a capacity building programme for
microfinance

institutions and a short term in-kind seeds, pesticides and spray pumps credit

programme. The credit programme implemented by CDO and the Uganda Ginners
and

Cotton Exporters Association (UGCEA) provided seeds and pesticides and spray
pumps

to farmers on credit at the beginning of the growing season from the 1998/99
seasons.

Recovery was made by ginners at the time of cotton harvest sales. The pesticides
program

was however stopped during the 2001/2002-cotton season due to loan recovery
problems

caused mainly by avoidance of payment by farmers (Lundbaek, 2002). The likely

reasons for farmers reluctance to repay pesticides credit are that some farmers
may have

received pesticides late or not at all, they may have considered their ginners
pesticides to

be too expensive, or they may have been defaulting on their sales contracts in
order to
obtain higher prices from other buyers.

Several studies report that the cotton sub sector revival programs have resulted
into

increased production. Total annual lint production rose from 33,000 bales in
1994/95 to

110,000 bales in 1996/97 mostly due to increase in area planted rather than
increase in

yields. (Serunjogi et al., 2001). APSEC, 2002 reports that there have been no clear

upward trends in yields since the onset of the cotton sub sector recovery
programmes.

Current yields average 300- 400 kg per hectare. This is way below potential on-farm

yields of 1000 kg/ha. Annual production has stagnated at around 100,000 bales
from

1997/98 to 2000/01. (CDO, undated). Reasons for this occurrence include continued
high

dependence on hand-hoe production, limited availability of some key inputs, limited

access to production credit, ineffective extension services, land fragmentation,

declining

soil fertility, insecurity, low producer prices and adverse weather occurrences.
(CDO,

2002 and APSEC, 2001).

According to Nanyeenya et al., 1999, the decision for farmers to adopt technologies
is

driven by their needs and circumstances that may be technical, social, economic
and

agro-ecological in nature. They further add that awareness, of the profitability or

potential benefits of new technologies is necessary to trigger the diffusion of an

agricultural innovation and point out that extension visits, attendance at on farm

demonstrations and exposure to mass media, literacy, level of education and time
spent
outside one’s village are some proxies for awareness of new innovations. They
stress

however that for the adoption process to be sustained, the new technology must be

compatible with farmers economic resources and supported by institutions

responsible for

providing inputs and technical advice.

Many studies on adoption of agricultural technologies have identified that family

size,

education of household head, farm size, land tenure status, participation in on-farm

demonstrations, farmer perceptions of technology specific characteristics, non-farm

employment, access to extension and credit are hypothesized to be positively

related to

the decision to adopt agricultural technologies.

METHODOLOGY

Data

The data used in this study was obtained from a household and plot surveys that
were

carried out by the International Food Policy Research Institute (IFPRI) in December
2000

to June 2001. A total of 451 Households were randomly selected from the central,

eastern, northern and western regions of Uganda. From each sampled household, a
plot

level survey was conducted to determine the farm management practices of each
plot.

The households were sampled from 100 communities, which were selected using a

stratified random sample of communities representing different development

pathways

(livelihood strategies). Other communities were purposively selected from Kabale

and
Iganga districts where highland Initiative (AHI) and the International Center for
Tropical

Agriculture (CIAT) are conducting research.

This study focuses on households that grew cotton as one of their crops (cotton
farmers)

in 2000/2001. The sample size was 38 households. Seventy percent were from the

Eastern region, 19 percent from the Northern region and 11 percent from the
Central

region. As far as possible, the results from the cotton households are compared with

corresponding results from households that did not grow cotton (non–cotton
farmers),

total sample size being 413.

Analysis

Analysis of data was done in three stages the first being a descriptive analysis, the
second

analysis of farm-level profitability of cotton and the third, an econometric analysis of

determinants of adoption of selected cotton production technologies.

The descriptive analysis reports on simple descriptive statistics of key socio-

economic

factors that influence adoption of improved cotton production technologies.

Goss Margin and Returns to Family Labour were used to measure the profitability of

cotton relative to its competing crops. The two measures are calculated as follows:

Gross Margin (Shs/ha) = Gross Value of Output - (Total Material Inputs Costs+

Hired Labour Costs)

Returns to Family Labour (Shs/Md) = Gross Margin

Family Labour

Family labour is labour provided by members of the household during a particular

season. Rural labour is normally measured in man-days (person-days) and is
equivalent

to the number of hours worked per day. Six hours of work was considered to be a
manday

for adult workers and 3 hours for children between the age of 12 and 16. The crops

considered in this analysis were cotton, beans, maize, cassava, millet and sorghum.

The econometric analysis seeks to determine the factors that influence adoption of
the

specified cotton production technologies. The cotton production technologies

analyzed in

this study are pesticides, inorganic fertilizer, and the use animal labour for land
opening

(ox ploughing). For pesticide and fertilizer, use in second season, was considered as
it the

main growing season for cotton. The analytical models used were the probit and the

generalized leased squares (GLS).

Probit regressions have been widely used in studies where the dependent variable
is

dichotomous (1= if the farmer adopts, 0 = otherwise). For purposes of this study,
probit

model regression was used for pesticides and fertilizer adoption analysis. For the
third

analysis involving the use of ox-ploughing by cotton farmers, a Generalized Least

Squares (GLS) was used since the independent variable is continuous i.e. number of

oxen-hours. The GLS procedure gave better results than the OLS procedure. The
GLS

procedure is also preferred since it gives robust estimates in the presence of

heteroskedacticity and autocorrelation.

The variables used in the econometric analysis are drawn from those identified in
literature as having an influence on adoption of crop production technologies. Those

selected were family size, age of household head, farm size, wealth indicators,
animal

labour, and access to credit, markets and extension.

The probit models estimated in this study are specified as follows:

Probability to adopt cotton production technologies =f(BX+ ei)

Where B is a vector of coefficients associated with a vector of factors (X) that

explain the

change in probability to adopt cotton production technologies.

The Probit and GLS models use cross sectional data, which is normally susceptible
to the

heteroskedasticity problem. The Huber-White estimator for standard errors, which is

robust to heteroskedasticity, was used to correct for this violation of the classical

assumption. Multicollinearity was tested using the variance inflation factors (VIF).
The

maximum VIF was less than 3 indicating that multicollininearity was not a serious

problem. (Mukherjee, et al., 1998) The functional forms of the independent

variables

were determined using the Exploratory Band Regression (EBR), which showed that
all

the independent variables were linearly related to the dependent variable as

hypothesized.

One of the model estimation limitations was the small sample size, which greatly
reduces

the degrees of freedom as more explanatory variables become included in the

model.

Hence, many of the conventional factors given in the adoption literature may not
have

been included in the model. Omitted variable bias was used to determine its
seriousness.
All 3 models passed the regression specification error test indicating that the
models were

not faced by the omitted variable bias problem.

The independent variables used in the analyses are defined in Table 1 and working

hypotheses used are described thereafter.

Table 1: Definition of the explanatory variables used in the econometric analysis

Variable Definition Expected

sign

Family Family size which is the total number of persons in the

household

Agehhd Age of the household head measured in years + or -

Farm size measured in acres + Farmsize

Percow Ownership of cattle, measured as a binary variable: 1 if the

farmer owned cattle, 0 otherwise.

Oxenhours Animal labour for land opening. Measured in terms of

number of oxen-hours per household in 2000

Exthrs Contact with extension agents. Measured as total duration of

extension visits per household in 2000.

Kmmkt Market access measured as distance from the farmer’s land

to the nearest output market in km.

Nfapplyre
c

Access to credit measured as % of farmers who received

informal credit

Kmres Distance from land under crop to the farmer’s residence in

km.

Gross Profitability of cotton production measured as net revenue in

Shs/ha

Family size is an indicator of labour availability. A larger family size is likely to

increase

the probability to adopt cotton production technologies, which are labor intensive in

nature. Farm size has been found to have a positive influence on adoption
decisions.

(Feder et al., 1993 and Adesina et al., 1993).

The age of household head (hypothesized to be the key decision maker in a

household)

can increase or decrease the probability to adopt crop production technologies. It

can be

argued that younger farmers are likely to be more educated and less risk averse
due to

10

their longer planning horizons and are therefore more likely to have a higher rate of

adoption of crop technologies. Conversely older farmers are likely to have more

experience and higher financial resources to obtain procured inputs.

Ownership of cattle is an indicator of wealth among the people of the main cotton

producing areas in Uganda and is a source of oxen and is likely to have a positive
association with adoption of cotton technologies. The use of animal labour reduces

labour bottlenecks and facilitates increased land opening. It is hypothesized to be

positively associated with the decision to adopt cotton production technologies.

Contact with extension agents will increase the probability of farmers to adopt
cotton

production technologies as the contacts increase farmers’ access to information.

Distance to nearest output market is expected to be negatively associated with the

decision to adopt improved cotton production technologies: longer distances to

output

markets, which implies declining market access, will reduce farmers’ incentives to
adopt

the technologies. Distance of land parcels to residence is expected to be negatively

associated with adoption of cotton production technologies. It is hypothesized that,

plots

that are further away from the household are less likely to receive new
technologies. This

is because farmers are better able to monitor and supervise innovations on plots
that are

closer to their homesteads. Also, costs of transporting bulky technologies to plots

further

away from homestead may favour adoption on nearby plots.

Access to credit1 and increasing profitability are also hypothesized to be positively

related to adoption of crop technologies.

1 The percentage of respondents who applied and received informal credit was
used as an

indicator of market access. The use of informal credit was considered to be more
suitable

as the levels of access to formal credit were found to be very low among
respondents.

11
Limitations

The study involved a small sample size (only 38 respondents). This introduces

econometric estimation problems due to limited degrees of freedom. Major cotton

production districts in the North and West Nile regions of the country were not
included

in the study because of insecurity. Also, the study utilized cross-sectional data,
which

may not give conclusive evidence of cotton production trends. With regard to

profitability analysis, farmers’ lack of record and their tendency to overstate labour
costs

(APSEC, 2001) may affect accuracy of results obtained.

RESULTS AND DISCUSSION

Descriptive Statistics

This part of the study reports the socioeconomic characteristics of the sampled
cottongrowing

households (cotton farmers) and compares them with those of the non-cotton

growing households (non–cotton farmers). The results are summarized in Tables 2-

12, in

Appendix 1 of this report and are discussed in detail below.

Adoption of technologies

Table 2 reports the use of fertilizer, ox ploughing and pesticides among the sampled

cotton farmers. As reported in the literature review section of this study, these

technologies form part of the recommended technology package for cotton

production in

Uganda.

Only 5.41 percent of the respondents used inorganic fertilizer. This supports the
findings

of other studies (NARO and FAO, 1999 and Nkonya and Kaiizi, 2001), which report
low
use levels of this technology among smallholder farmers (less than 10 percent). The
low

use of inorganic fertilizer contributes to soil nutrient depletion. The Eastern region
of

12

Uganda where much of cotton production in the country (and 70 percent of

respondents

of this study) is concentrated has been hard hit by soil fertility problems (CDO,
2001and

APSEC, 2001).

Only 35.14 percent of the respondents used pesticides for cotton production. This
result

supports findings by APSEC, 2001 that although the pesticides credit system

implemented by CDO and UGCEA greatly improved farmers’ access to pesticides for
use

in cotton production, and some farmers did not use them because of late delivery,

diversion to other crops or outright resale of the pesticides. These findings imply a
need

to improve the current pesticide supply systems. Sixty three percent of cotton
farmers

used oxen for land opening (ox-ploughing) as compared to 24 percent of the non-
cotton

farmers

The use of all three technologies was significantly higher (at 10 percent level))
among the

cotton farmers. For pesticides this is most likely due to cotton’s high sensitivity to
pests

and hence higher use for this crop and also a result of better input supply systems
for

pesticides and access to extension (see Table 5) in the cotton growing areas. For
fertilizers, a likely explanation is that promotion of fertilizer use is higher in the
cotton

growing areas. For ox ploughing the result obtained was expected since the practice
is

still more widespread in the cotton farming systems (Odogola, 2001). The results
also

support the findings of APSEC, 2001 that the availability of ox ploughs from local
and

imported sources greatly improved between 1994 and 2001. The availability of oxen
has

also improved in this period. (Odogola, 2001).

Yields

Average cotton yields among the sampled cotton farmers were 430 kg per hectare.
This

yield does not vary much from World Bank (2000) findings of 300-400 kg per
hectare for

this year. Table 3 reports cotton yields with the use of ox ploughing and spraying
and

with the use of hand-hoe with no spraying. As expected, the yield with the use ox

ploughing and pesticides is significantly higher than without.

13

Farm size and market access

Table 4 reports on average farm size and average distance of each respondents
individual

land parcel from the nearest output market and seasonal roads and compares these

parameters with those of non-cotton farmers. The average farm size for the cotton

farmers was 3.2ha and 2.3 ha for non-cotton farmers indicating that both categories
were

smallholder farmers, which is predominant in Uganda. For cotton production, small

farm

sizes are a disadvantage as competition for land with foods crops is likely to limit
increased output.

Average distance of each respondents parcels to the nearest seasonal road and to
the

nearest output market were used as indicators of market access. For cotton farmers
the

average distance of parcels to the nearest market was 4.3 km while that for non-
cotton

farmers were 5.0 km. Average distance to nearest seasonal road was 1.5 km for
cotton

farmers and 1.2 km for the non-cotton farmers. The results were not significantly

different between the 2 groups. The distances are quite long given the predominant

modes of transport to market used in rural areas mainly head poterage and bicycle.

Access to Agricultural Training and Extension Services2

Table 5 reports on participation in agricultural training and skills acquired from the

training from 1990 to 2000. Only 47.2 of the cotton farmers and only 45.4 of the
non–

cotton farmers received training in this period. For the cotton farmers, the main
skills

acquired were on crop agronomy, soil and water conservation, plant protection and
soil

fertility management, micro-finance and agro-forestry. Only 1.0 percent of the

respondents received training in agricultural marketing and none received training

in post

harvest management, which is reported as a constraint to increased cotton

production.

(COMPETE, 2001 and APSEC, 2001) More members of non-cotton growing

households

2 Agricultural training refers to a specific (topical) learning process organized a

class-like format involving

trainer(s) and many participants and usually takes a long duration per contact.

14
acquired agricultural training. The main areas of training reported for this group
were

crop agronomy, soil and water conservation, soil fertility management and post
harvest

management.

Table 6 reports the respondents’ access to agricultural extension services and on

change

in the services since 1990. Only 39.4 percent of the cotton farmers received
extension

visits in 2000. The situation was worse among the non-cotton farmers with 29.6
percent

reporting to have received extension visits in the same year. This finding can be

explained by less active extension services among non-cotton farmers due to lower

availability of funding for extension in non-cotton growing districts in the last few
years.

About 26.5 percent of the respondents reported that there had been a change in
the

amount of extension contact and out of these, over 50 percent reported that there
had

been a slight increase in amount of extension services received since 1990.

Respondents were also asked whether there had been a change in the subject of
training

offered by extension since 1990 and the nature of the change if any (Table 7). Only
about

26.3 percent of the cotton farmers reported a change and the most reported nature
of

change for them was increased emphasis on new varieties or crop types and crop
disease

control. Approximately twenty seven percent of non-cotton farmers reported a

change

and the most reported change was increased education on soil and water
conservation and
crop agronomy.

Access to credit

Table 8 reports on percentage of cotton and non-cotton farmers who applied and
received

formal and informal credit in 1990 and 2000.3 In both groups of farmers, while
there was

a slight increase in rate of application for formal credit between the two years, the

application rates were very low in both years (below 12 percent for cotton farmers
and

below 16 percent or non-cotton farmers). The rate of application for informal loans
in

3 Formal credit sources include banks, NGOs and other programs. Informal credit
sources included traders,

mo56ney lenders rotating savings and credit associations, intermediaries, friends

and relatives)

15

both groups was much higher increasing from 60.0 percent in 1990 to 67.7 percent
in

2000 for cotton farmers and 50.2 percent in 1990 to 72.0 percent in 2000 for non-
cotton

farmers.

Almost all the cotton farmers (over 93 percent) who applied for informal credit in
1990

and 2000 received it. This proportion was higher among non-cotton farmers (over
97

percent). For formal credit the figures are somewhat lower for both groups.

The results support other studies, which0 observe that in Uganda, formal credit is

generally much less accessible to smallholder crop farmers than informal credit.

Demographic factors and Education levels

Table 9 reports household demographic and education characteristics that are

hypothesized to influence technology adoption. Average family size was 11.6 for
cotton

farmers and 10.1 for the non-cotton farmers. The average number of family
members

who can contribute to on-farm labor (age 12 and above) was about 6 in both groups
of

farmers.

The average age of the household head and their spouses were about 44years and
36

years respectively for cotton farmers and 44 years and 36 years respectively for
noncotton

farmers. There were no significant differences in the two groups for these

variables.

Most household head and their spouses in both groups of farmers were educated up
to

primary level only (Table 10). There were no significant differences in family size
and

education levels for the cotton and non-cotton farmers

16

Non-farm Activities

Non-farm activities are hypothesized to positively affect the decision to adopt crop

production technologies because they are important sources of income and would
thus

increase farmer’s access to desired technologies. Tables 11 and 12 show that both
cotton

and non-cotton farmers were engaged in non-farm activities (cottage industries and
nonagricultural

trade) only to a limited extent.

Profitability Analysis

Table 13 in Appendix 2 shows gross margins in shillings per hectare (Shs/ha) and
returns
to family labor in shillings per man-day (Shs/md) for cotton and its main competing

crops. The gross margin results show that in 2000, cotton was less profitable than
most of

its competing crops. This can be attributed labour costs that tend to be higher for
cotton

than its competing crops, low yields and low producer prices due to low world prices
for

cotton in recent years. The finding that maize was less profitable than cotton is

surprising. It can be attributed to the deep decline in maize prices from 2000.

Similar findings on profitability of cotton relative to its competing crops cotton are

reported by APSEC, 1994 and APSEC 1997. Review of literature by (Serunjogi et al.,

2001), Lundbaek 2002 and APSEC, 2001 reveal about four main explanations for

farmers’ continued participation in cotton production in Uganda despite its low

profitability relative to other crops. First, cotton is increasingly becoming a more

certain

source of cash than its competing crops. This is because food crops face larger price

variations relative to cotton, which has well defined and increasingly competitive

markets. Second, cotton cash payment comes at a convenient time when there are
many

cash expenditures (Christmas, school fees, taxes etc.) Third, in smallholder

integrated

farming systems, cotton is a good land opening crop for crops grown after it and
fourth;

there may be no viable cash crop alternatives in some areas of the country.

17

The results on returns to family labour show that cotton has higher returns to family

labour than it main competing crops. The explanation for this finding is that cotton

farmers depend more on hired labour because of the labour intensive nature of
cotton
production.

Econometric Estimation

The results of the probit and the GLS models on factors affecting adoption of
pesticides,

fertilizer and ox ploughing are summarized in Tables 14 to 16 in Appendix 3.

Ox ploughing, market access, farm size, family size and age of household head are
the

key factors that influence the adoption of pesticide use among cotton farmers
(Table14).

As expected, increases in use of ox-ploughing, and family size are likely to increase
the

farmers’ probability to adopt pesticide use. Increase in age of household head

influences

this probability negatively. The explanation for this result is that younger farmers
are

likely to be more educated and less risk averse and hence are more likely to have a
higher

rate of adoption. The results show that an increase in farm size and increased
market

access are likely to reduce the probability to adopt pesticide use. These results are

surprising as the reverse was expected. A possible explanation for the result on
market

access is that with increased market access cotton farmers are likely to divert use
of

material inputs to crops with higher market demand.

According to the results, access to credit and extension and distance of parcels to

residence, wealth (ownership of cattle) and profitability do not significantly

influence

adoption of pesticide use among cotton farmers.

Market access, ox ploughing and age of household head are the factors that
significantly
influence adoption of fertilizer. Age of household head is positively associated with
the

probability to adopt fertilizer while use of ox ploughing and market access are
negatively

associated. A feasible explanation for the result on ox ploughing is that farmers who
use

18

oxen will benefit from organic manure supply from the oxen and will therefore have
a

lower need for using inorganic fertilizer. Older farmers are more likely to adopt

fertilizers, as they are more likely to be in a better position to buy purchased inputs

because they are more likely to have higher financial resources. Distances of
farmland

from residence, farm size, and access to extension and profitability are not
significantly

associated with adoption of inorganic fertilizer use.

Adoption of ox ploughing is positively associated with farm size, ownership of oxen

and

market access while the reverse is true for family size. (Table 16) Smaller families
are

more likely to reduce their labor constraints by employing animal power. Distances
of

land parcels from residence, access to extension, age of household head and
profitability

of cotton appear not to be significantly associated with adoption of ox ploughing.

CONCLUSIONS AND RECOMMENDATIONS

The study, which was based on data on farm level production of cotton and other
crops in

2000, found that all of the cotton farmers were small-scale farmers with an average
land
holding of 3.2 hectares. Small farm sizes are likely to limit increased cotton output
due

competition with other farm enterprises. Average cotton yields among the farmers
were

420 kg/ha, is much below potential on-farm yields of1000 kg/ha.

The study also found that there was low fertilizer and pesticides use among cotton

farmers. Only 5.4 percent used inorganic fertilizer and only 35.14 percent used

pesticides. Sixty three percent used animal draught power for tillage, which
indicates a

recovery in use of oxen for tillage from the late 1980s when the use of the
technology

was severely curtailed by cattle rustling.

Access to agricultural training and extension was also found to be low. Only 47
percent

of the cotton farmers reported to have received agricultural training between 1990
and

2000 and only 39.4 percent had contact with extension agents in 2000. The study
made a

comparison with non-cotton farmers and found that their situation was similar and

19

implied low access to agricultural training and extension for Ugandan smallholder

farmers in general. Also, cotton farmers seem to have limited extension training in
use

some important crop production practices for example, use of fertilizer and proper
post

harvest management. The policy implication of these findings is the need for
increased

availability and quality of extension services for farmers.

Involvement in non-farm income which is an important source of additional income

for
farmers and would assist farmers to obtain desired technologies was found to be
very low

for both cotton and non-cotton farmers. The study also found that access to formal
loans

was much lower than access to informal loans. This points to the need to promote

suitable rural non-farm activities and to increase access to formal credit or explore
viable

ways in which informal credit institutions can be used to channel credit to

smallholder

farmers.

The analysis of profitability of cotton relative to its main competing crops (gross
margin

analysis) revealed that in 2000 cotton was less profitable than most of its
competing

crops. Available literature shows the same status in earlier years. Likely reasons
why

farmers continue to grow cotton under such circumstances are its reliable market,
good

timing of the cash income, its property of being a good land opening crop or lack of

alternative income sources. Not withstanding, cotton is likely to become more

profitable

if the on-gong government led interventions to improve productivity are sustained.

Probit models were used to determine the factors that influence adoption of
pesticides and

fertilizer. Use of oxen for tillage and family size positively influence adoption of

pesticide use. The policy implication for this finding is that labour saving
technologies

for pesticide application should be developed and promoted and use of oxen for
tillage

should continue to be promoted among cotton farmers.

Younger farmers are more likely to adopt pesticides as they are be more educated
and are

less risk adverse. The descriptive analysis however showed that the cotton and
noncotton

farmers tended to be older (average age of 44 yrs) and most adult household

20

members were educated up to primary level only. This points to the need to
increase

agricultural extension and training among smallholder farmers.

Increased market access and use of oxen for tillage appear to be positively
associated

with the adoption of fertilizers. Also, older farmers are more likely to adopt fertilizer
use.

The Generalized Leased Square analysis revealed that market access, farm size,
family

size and ownership of oxen positively influence adoption of ox ploughing. The

finding

on farm size points to the need to promote larger scale cotton production through
group

farming by smallholders as is currently practiced in Kasese district.

Profitability and access to extension were found to be positively related to adoption

of the

three technologies discussed above, however this relationship was not statistically

significant. Access to credit is hypothesized to have a positive influence on adoption

of

agricultural technologies but this study found that it only influenced adoption of

pesticides but the finding was not statistically significant as well.

It must be reiterated that the policy recommendations of this study are based on a
small

sample size and solely on cross sectional data. Further research based on a larger
sample
size and covering all the main cotton growing districts and use time series analysis
is

likely to strengthen the policy recommendations made.

21

APPENDIX 1

Table 2: Use of Selected Crop Production Technologies Among Cotton and Non-

Cotton Farmers (2000)

% Households using: Cotton Farmers

(N=38)

Non-Cotton Farmers

(N=413)

Inorganic fertilizer 5.41 1.53

Pesticides 35.14 9.16

Ox-ploughing 63.16 24.70

P value =0.074

Notes (i) P value of the chi-statistic (c2 ) comparing the percentages in the cotton
and

non-cotton farmers

Table 3: Cotton Yields (2000)

Sample size Yield

(kg/ha))

Std dev.

Average national yield 38 430.9

Av. Yields with use of ox-ploughing + pesticides 6 639.7

Av. Yields with use of hand-hoe, without spray 25 129

Table 4: Farm size and distance from farm to nearest market and seasonal road

Cotton Farmer (N=38) Non cotton Farmers (N=413) Paired T test*

Av. farm size (ha) 3.2 (1.89) 2.5 (2.77) 0.68

Av. distance of farmers land to

nearest output market (km)

4.9 (4.81)

5.0 (5.88)

0.90

Av. distance of farmers land to

nearest seasonal Rd (km)

1.5 (5.56)

1.2 (4.25)

0.70

* Paired T-test is a statistical test comparing farm size and market access for cotton
and non-cotton farmers.

Figures in parentheses are standard deviations of the corresponding means

22

Table 5: Skills acquired from Agricultural training by members of sampled Cotton

and Non-Cotton growing Households (1990-2000)

Participation in agricultural

training since 1990

% reporting Yes

Cotton farmers (N=38)

47.23

Non Cotton farmers (N=413)

45.48 p value =

Skills/ knowledge acquired Cotton Farmers (N=38) Non Cotton Farmers (N=414)

% household members reporting

Crop Agronomy 75.40 69.13

Plant protection 58.70 53.25

Animal health 16.25 52.86

Animal breeding 20 39.0

Range/ pasture management 20 36.90

Animal feed 0.0 52.23

Mechanization 0.0 0.0

Soil fertility management 35.83 62.73

Post harvest management 0.0 54.76

Micro finance 40 50.66

Soil &water conservation 72.5 62.16

Agro forestry 32.22 53.58

Agricultural Marketing 100 46.43

Agricultural processing 0.0 20.0

Cost of production 6.67 48.21

Livestock management 20 50.60

Horticulture 0.0 0.0

Rainfall 26.67 36.26

Rainfall 26.67 36.26

Note: The statistical test comparing percentages of respondents who acquired agric.
skills among the cotton

and non-cotton farmers showed that there were no significant differences.

Table 6: Access of Households to Extension Services & Change Since 1990

Change in extension services since 1990

Amount of contact

Received

extension

visits in
2000

% yes

Av. No

of

extension

visits

(2000)

Av

duration

of

extension

visits in

hrs.

(2000)

Total

duration

of

extension

visits in

hrs.

(2000)

Changed

% yes

Significant

decrease

Slight
decrease

Slight

increase

Significant

increase

Cotton

Farmers

(N=38)

39.4

4.2

( 19.4)

5.2

(1.3)

13.2

26.32

9.09

0.00

54.55

27.27

Non

Cotton

Farmers

(N=413)

29.85

2.0

(6.0)
0.34

(0.98)

3.4

27.25

2.56

8.55

56.41

19.66

Paired

T-test

0.05 0.59

0.29 0.000 0.04 0.81 0.81

0.81 0.81

Paired T-test is a statistical test comparing access to extension services among

cotton and non-cotton

farmers. Figures in parentheses are standard deviations of the corresponding

means.

23

Table 7: Nature of change in Extension Services between 1990 and 2000.

Change Cotton Farmers (N=11) Non Cotton Farmers (N=106)

% reporting change

Increased education on SWC 1.1 10.37

Reduced emphasis on SWC 0.0 1.9

Increased emphasis on pest mgt 0.0 4.7

Increased emphasis on soil fertility mgt 0.0 3.78

Increased emphasis on crop agronomy 0.0 10.4

Increased emphasis on crop disease control 9.09 1.9

Increased emphasis on new varieties/ crop

types

18.18 6.6

Shift between crops 18.18 8.5

Shift in emphasis from production of

traditional cash crops/ livestock to other

income generating activities

0.0

4.7

Increased emphasis on income generating

activities

0.0 5.7

Increased frequency of visits by extension

agents

9.1 47

Note: The statistical test comparing percentages in the cotton and non-cotton
farmers showed that there

were no significant differences.

able 8: Access to Credit in 1990 and 2000

Cotton Farmers

(N=38)

Non Cotton Farmers

(N=413)

Paired

T-test*

% of households that applied for formal credit (1990) 0.00 4.94 0.26
% of households that applied & received formal credit

(1990)

0.00

84.62.

0.36

% of households that applied for informal credit (1990)

60.00 50.17 0.86

% of households that applied & received informal credit

(1990)

93.33

98.68

0.14

% of households that applied for formal credit (2000) 11.76 15.91 0.52

% of households that applied & received formal credit

(2000)

75.00

79.00

0.46

% of households that for informal credit (2000)

67.65

71.97

0.59

% of households that applied & received informal credit

(2000)

100

97.07 0.54
* Paired T-test is a statistical test comparing access to formal and informal credit
among cotton and noncotton

farmers

24

Table 9: Demographic Characteristics of Cotton & Non-Cotton Farmers in 2000.

Household member characteristics Cotton farmers (N=38) Non cotton farmers

(N=413) Paired

T-Test*

Av total family size 11.63 (5.8) 10.12 (5.05) 0.08

Av no. of children (>12 yrs) 6.47 (3.8) 6.13 (13.87) 0.61

Av age of household head 43.61 (13.66) 44.14 (13.45) 0.81

Av age of spouse 35.7 (10.38) 33.6 (12.02) 0.70

Paired T-test is a statistical test comparing family size and age of household heads
and their spouses among

cotton and non-cotton farmers. Figures in parentheses are standard deviations of

the corresponding means.

Table10: Education Level of Household Head and Spouse among Cotton & Non-

Cotton Farmers in 2000.

Spouses Household head Education

category Cotton farmers

(N=38)

Non cotton

farmers (N=413)

Cotton farmers

(N=38)

Non cotton

Farmers (N=413)

% reporting
No schooling 8.95 5.17 3.4 2.7

Some primary 0.00 1.98 3.4 0.6

Completed

primary

40.74 40.75 35.9 40.3

Some secondary 8.14 18.05 11.6 19.5

O level 16.51 8.52 24 14.9

A level 0.00 1.79 8.1 6.1

Graduate/Post

graduate

0.00 0.48 4.0 1.5

College 0.00 0 0.4

Too young 0.00 0.31 0 0.6

P value* 0.50 0.52

*P- value of c2 comparing education levels of spouses and household heads of

cotton and non-cotton

farmers.

25

Table 11: Main Primary Activities of Adult Household Members of sampled Cotton

And Non-Cotton Farmers (2000).

Primary Activity Cotton farmers (N=38) Non cotton farmers (N=413)

(Percentage reporting activity)

Crop Production 81.25 70.50

Other agric. Activities* 2.08 2.81

Livestock 0.69 2.74

Non agric trade 2.08 2.74

Cottage Industries** 1.39 1.44

Farm wage employment 9.72 0.87

Student 11.4 11.54

House work 0.0 0.07

Others 2.78 5.12

* Includes fishing, agric. output processing, local beer brewing & agric. input/output
trade

** Includes carpentry, craft, masonry, tailoring, photography, barber, shoe repair,

bicycle & farm

implement repairs/ maintenance. P value c2 = 0.218

Table 12: Main Secondary Activities of Adult Household Members of sampled

Cotton And Non-Cotton Farmers (2000).

Secondary Activity Cotton Farmers (N=38) Non-Cotton Farmers (N=413)

% reporting activity

Crop production 7.76 17.50

Other agric activities * 4.31 6.59

Livestock 17.26 14.02

Non agric. Trade 3.45 6.02

Cottage industries ** 6.03 2.82

Farm wage employment 0.00 2.35

Student 0.00 0.38

House work 1.72 46.33

Others

P value of c2 = 0.007

* Includes fishing, agric. output processing, local beer brewing & agric. input/output
trade

** Includes carpentry, craft, masonry, tailoring, photography, barber, shoe repair,

bicycle & farm

implement repairs/ maintenance.

26

APPENDIX 2

Table 13: Relative profitability of Cotton and Competing Crops (2000)

Crop Gross Margin

(Shs/Ha)

Returns to family labour

(Shs/Md)

Cotton 47,602 8,280

Beans 86, 466 608

Maize 46,831 608

Cassava 185,354 1,060

Millet 120,111 528

Sorghum 14,394 578

27

APPENDIX 3

Table 14: Determinants of Adoption of Pesticides among Cotton Farmers in Uganda

Factor Impact P

Use of animal draught power + ***

Distance of land parcel from residence + NS

Distance to nearest market + **

Farm size - ***

Access to credit + NS

Family size + ***

Access to Extension services + NS

Age of household head - *

Ownership of cattle + NS
Profitability of cotton + NS

Notes: (i) P shows the significance of the impact of the associated factor. *, **and***
mean the impact is

significant at 10%, 5% and 1% level respectively. NS means that the impact is not
significant, at

least at 10% level.

(ii) + means that the impact of the associated factor is positive and –means the
associated factor is

negative.

Table 15: Determinants of Adoption of Fertilizers among Cotton Farmers in Uganda

Factor Impact P

Distance of land parcel from residence - NS

Distance of land parcel to nearest output market (market access) + **

Use of animal draught power - *

Farm size + NS

Access to extension services + NS

Age of household head + **

Profitability of cotton + NS

Notes: (i) P shows the significance of the impact of the associated factor. *, **and***
mean the impact is

significant at 10%, 5% and 1% level respectively. NS means that the impact is not
significant at

least at 10% level.

(ii) + means that the impact of the associated factor is positive and –means the
associated factor is

negative.

28

Table 16: Determinants of Use of Ox-Ploughing in Uganda

Factor Impact P
Distance of land parcel from residence - NS

Distance to nearest market - **

Farm size + ***

Access to Extension services - NS

Age of household head + NS

Ownership of oxen + **

Family size - ***

Profitability of cotton - NS

Notes: (i) P shows the significance of the impact of the associated factor. *, **and***
mean the impact is

significant at 10%, 5% and 1% level respectively. NS means that the impact is not
significant at

least at 10% level.

(ii) + means that the impact of the associated factor is positive and – means the
associated factor is

negative.

29

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