Factors affecting profitability of maize milling among maize millers in Mbale city of Uganda

Abstract

Maize milling is a vital industry in Mbale city where it serves as a primary source of income for many households. However, millers face significant challenges in maintaining profitability. This study aimed to assess the socio-economic characteristics of maize millers, determine profit margins earned from maize processing and determine the factors affecting the profitability of maize milling among maize millers in Mbale City, Uganda. The study used a cross sectional survey design using quantitative approaches to collect data. Data was collected from 80 respondents where the research explored variables such as production capacity, operational costs and cooperative involvement. The findings revealed that 98.8% of the millers are male and 75% belong to cooperatives, which significantly enhance profitability by providing access to funding and training. Notably, price and cost emerged as the most crucial factors affecting gross margins, with an increase in the price per kilogram of maize leading to a notable boost of profitability while increase in the cost of milling per kg leading to reduction in the gross margins. Additionally, operational costs, especially electricity expenses averaging UGX 2,662.50 per 100Kg, represent a significant burden for millers. Objective three shows how a dependent variable being affected by various independent variables such as gender, education level, completion, management level and other factors as shown in the equation below. Y= X1, X2, X3…………...meaning that dependent variable Y which is profitability of maize milling business, depends on independent variables X1, X2, X3 and other factors. Despite facing high competition, maize milling remains profitable when coupled with effective pricing, cost control measures and investments in modern technology. The study recommends that maize millers should consider investing in advanced milling machinery; focus on reducing high operational costs. Future researchers should examine additional factors affecting profitability while policy makers are urged to create supportive policies to foster the growth of the maize milling sector.