Commodity Markets, Risk and Poverty: A Case of Uganda

For most low developed economies in Sub-Sahara Africa (SSA), agriculture has been the main source of livelihood contributing 34% to Gross Domestic Product (GDP) and 64% to employment, either directly or indirectly. Dependence on agricultural commodities for exports has been accompanied by a high degree of price risk in terms of both volatile and declining prices, a phenomenon which has not only affected the way households allocate their resources but also affected their welfare in terms of consumption and poverty. In this thesis, three interrelated issues on market intermediation, diversification and poverty are studied at both household and community level in order to broaden our understanding on how risk affects household resource allocation decisions and subsequently, welfare. In the first part of the thesis, I study the impact of marketing strategies on household coffee incomes in a post- liberalised environment while the second part studies cover both the determinants of household diversification and link between poverty and diversification. Lastly I study the impact of diversification on the conduct of agricultural commodity markets. Though placed in a wider context of development economics, the contribution to the state of the art is that the studies in this thesis combine aspects from agricultural economics, rural development and behavioural/experimental economics to generate results and policy recommendations on poverty policy from the broader point of view.