This paper investigates the degree of integration among Uganda’s domestic food-commodity markets for the three major staples—matoke, maize, and beans—using monthly wholesale and retail price series spanning January 2015 to January 2023. Combining Granger-causality tests, bounds-testing for cointegration, and nonlinear ARDL modelling with Wald tests for asymmetry, we find that markets are generally well integrated both vertically (wholesale-to-retail) and spatially (across surplus and deficit regions).

Price transmission patterns:

Wholesale prices unidirectionally drive retail prices, and shocks in surplus markets (Mbarara, Masindi, Tororo) are rapidly transmitted to the main consumption centre, Kampala, indicating strong long-run price co-movement.

Asymmetric price transmission:

Nevertheless, the speed and magnitude of price transmission are asymmetric: retail prices adjust faster and more completely to wholesale price increases than decreases, implying positive asymmetric price transmission. This behaviour is most pronounced for beans and maize and is attributed to trader market power, information asymmetries, adjustment costs, and inventory management practices.

Welfare implications:

The results suggest that while Uganda’s staple-food markets are spatially integrated, the observed asymmetries reduce the pass-through of wholesale price falls to consumers, limiting the welfare gains from lower producer prices.

Policy implications:

Policy implications include enhancing market transparency, reducing transaction costs, and strengthening competition to ensure that price declines are fully transmitted to consumers, thereby improving food security and household welfare.