Dynamics of wood value chains for smallholder tree farmers in Mubende district

Abstract

Wood supply deficit in Uganda is on the rise. However, efforts to address the wood supply deficit put emphasis on provision of input subsidies without due consideration of the entire wood value chain. Limited consideration of the chain is partly because marketing of farm-grown wood in Uganda is poorly documented and therefore, not well understood. The study examined the dynamics of smallholder wood value chains by characterising their organisation, analysing the value added and distribution, analysing market power relations of participants. Datasets were collected through interviews of 108 respondents selected randomly at the base node, and subsequently by using the snow-ball sampling approach. Qualitative datasets from interviews were triangulated using case studies. Analysis of the organisation of value chains used descriptive statistics and functional analysis. Value added and distribution was analysed by determining Gross Value Added (UGX/m3) from simple average values of wood costs, prices and volume; distribution of value added was analysed using the Distribution Equity Indices and Analysis of Variance (ANOVA); while market power relations were analysed using heirachical clustering, cross-tabulation, descriptive statistics and Multiple Correspondence Analysis. Results on organisation showed the wood value chain structure had six stages with six core activities complimented by various support activities. The value chain had three clusters dorminated by tree farmers, wood buyers and wood retailers/ wholesalers. The value chain had four product pathways (Industrial wood and saw logs, utility poles, building poles and sawn wood). The major pathway for farm-grown wood was industrial wood and saw logs product pathway with a 72% share of total round wood volume produced by smallholder tree farmers. The four pathways served greater Mubende, Kampala, pole treatment plants and wood based factories. For value added and distribution, ANOVA showed that DEIs of the four product pathways were significantly different (P<0.05) from each other. Results for market power relations revealed that the wood value chains are governed through market coordination. There was asymmetry of market power between traders and smallholder tree farmers. Wood traders derived structural power from ability to shoulder transaction costs, maintaining networks of agents in the chain, activity integration and use of experiential knowledge acquired over time. It is recommended that smallholder tree farmers should improve farm level production to increase their participation in high value added product channels. Smallholder tree farmers should be supported by government and development partners to vertically integrate in the wood value chain through horizontal coordination. Further research on determinants of value added in the smallholder wood value chains.