Download The Case of Uganda.

A STUDY OF THE TERMS OF TRADE AMONG
FARMERS , INVESTORS AND TRADERS IN UGANDA
FOR
ACHIEVING INCLUSIVE AGRICULTURAL
DEVELOPMENT
By
Mwambutsya Ndebesa
Email: [email protected]
Introduction
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presentation will cover the following:
Profile of the Agricultural sector in Uganda
The policy and legal framework of the sector
Identifying stakeholders in the value chain
Agricultural sector challenges
Agricultural Sector Actor-relations
Conclusion and Recommendations
PROFILE OF AGRICULTURE SECTOR IN UGANDA
Share of Agriculture to GDP
 Share of agriculture to total GDP in Uganda has been declining
since 2001 as shown in the figure below
 Has declined from 50% in the 1990’s to 23.7% in 2008/09 and
yet it is where 80% of the population is employed.
 Agriculture as a share of total exports is falling compared to other
sectors as shown in the figure below.
PROFILE OF AGRICULTURE SECTOR IN UGANDA
Share of Agriculture to GDP
 Share of agriculture to total GDP in Uganda has been declining
since 2001 as shown in the figure below
 Has declined from 50% in the 1990’s to 23.7% in 2008/09 and
yet it is where 80% of the population is employed.
 Agriculture as a share of total exports is falling compared to other
sectors as shown in the figure below.
Cont’d
Agricultural Contribution to GDP in Uganda
Data Source: UNCTAD Statistical Handbook (2010)
Cont’d
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Percentage share of Agriculture in Uganda’s Exports 1995-2010
100
Agriculture
90.4
Others
90
80
68.7
70
66.4
60
55
50
45
40
31.3
33.6
30
20
10
9.6
0
1995
2005
2009
2010
Data Source: UNCTAD Statistical Handbook (2010)
POLICY AND LEGAL FRAMEWORK
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NDP is the overall guiding national plan
Country agricultural plan (CAP) launched in 2010
SME Development policy of 2009
Plan for modernization of Agriculture (PMA) of 2000
National Agricultural Advisory Development Services launched in
2005
National Trade policy (NTP) and national export strategy of 2007.
Rural development strategy (RDS) of 2006
Prosperity for all (PFA) of 2006
Agricultural sectors development strategy and investment plan
2010/11- 2014/2015.
The national trade sector development plan (NTSDP 2008/09-2012)
INTERNATIONAL TREATIES AND AGREEMENTS
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The various WTO Agreements the UN Millennium Development
Goals (MDGs) the African Growth opportunity Act of US,
everything but Arms initiative of EU, the cotonun Agreement
between EU and African caribbean and pacific states , bilateral
investment agreement with countries such as China etc COMESA
and EAC treaties.
OBJECTIVES OF THE STUDY
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Examining the relationships existing between the agriculture policy
makers, farmers, investors and traders as well as their
role/contribution to the policy formulation and implementation;
Identifying both the positive and negative elements in the relevant
policy, institutional and legal framework
To encourage and promote dialogue among farmers, investors,
traders and policy makers through inclusive research methodology;
and
Generating a set of practical recommendations directed at all
relevant stakeholders
METHODOLOGY
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The methodology placed emphasis on creating synergies and
ensuring domestic buy-in and had the following key elements:
Inclusivity: involvement of relevant national stakeholders through
regular reporting and feedback to members of the country FEAD
National Reference Group (FNRG);
Cross-fertilization of ideas and experiences: regular exchanges
among country researchers with international experts through CUTS
GRC and members of the FEAD Project Advisory Committee (PAC);
and
Grassroots-based: collection of primary data through field visits,
surveys and focussed group discussions.
Literature search to expand and annotate research questions;
Data collection, fact finding and testing of hypotheses through
FNRG consultations. Field visits, targeted surveys, and focussed
group discussions;
Consultation with the FEAD PAC and CUTS research team.
AGRICULTURAL SYSTEMS IN UGANDA
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Livestock Farming: The production systems form a
continuum ranging from ranching, semi-nomadic
pastoralism to stall-feeding only or zero-grazing systems
Smallholder crop agriculture: In Uganda the
predominant form of farming is smallholder agriculture.
This is practiced on a subsistence basis with little
commercial consideration. The other type of small
holder farmers are engaged in cash crop production.
Plantation Farming: Uganda also has some largescale farming mainly in the cash crops of tea, sugarcane
and of late flowers. This is mainly practiced by national
and foreign entrepreneurs.
FARMERS CHARACTERISTICS AND ROLES
 Large-scale commercial and generally plantation farmers.
These generally operate/cultivate 15 ha of land and above, use
advanced technology and have reasonable control over their
marketing
 Small- scale commercial farmers. These normally have 5 to 15 ha
under cultivation, produce to sell, and have reasonable control over
their produce
 Semi-commercial farmers. These have small land holdings than
the small scale commercial farmers, use minimum inputs and have
limited control over marketing
 Subsistence plus farmers. These generally operate less than 2 ha,
mainly produce for home consumption, rarely hire labour and have
little or no control over marketing.
STAKEHOLDERS IN THE VALUE CHAIN
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Private Sector Stakeholders: There are a number of Private
Sector Stakeholders who include; 1) Farmers 2) Traders both rural
and urban who include; brokers or agents, retailers and whole
sellers 3) Transporters 4) Packaging Material Suppliers 5) Private
Extension Service Suppliers 6) Processors and millers 7) Exporters
8) Agricultural Input supplies etc.
Private Sector and Advocacy Organisations: (PSFU), (UNCCI),
(UMA), (UNFFE) etc. Examples of CSOs are; (CSWGT), FRA),
DENIVA), (SEATINI), Oxfam Uganda, VDCO etc.
Community Based Organisations: At the grassroots level there
are a number of Farmer Group Organisations and marketing
cooperatives also engaged in promoting farmers’ rights and organise
production and marketing.
Institutions: Schools, Hospitals, Prisons, WFP who buy produce.
AGRICULTURAL SECTOR CHALLENGES
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Uganda’s agriculture sector experiences numerous challenges. The
major ones are;
Unreliable and expensive power which increases the cost of
production and leads to high rates of spoilage
Very low-levels of farm mechanization. Less than 1 % of Uganda’s
farmers use tractors for ploughing land and hardly use other
agricultural machinery. The rest (Over 98% depend on the hand
hoe and oxen plough
Foot and mouth disease in livestock which limits export capacity
Crop diseases that have greatly affected agricultural productivity
especially for coffee and banana yields
Seasonal fluctuations in the supply and quality of feed resources
and water for livestock and crops
Lack of quality and standards awareness.
High cost of inputs, equipment and packaging materials.
Cont’d
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Limited value-addition
Small holder farmers are weakly organised into cooperatives,
unions and Farmers associations.
Lack of clear land tenure policy which occasions land fragmentation
and insecurity over land especially for small holders.
Lack of trade finance
Inadequate cold-chain including refrigerated trucks, storage facilities
with cold rooms etc.
Lack of market information
Lack of or limited market access
Low and unstable prices especially paid to the farmers
Weak or absence of market linkages among farmers traders and
processors
Poor branding and ineffective marketing and packaging
Limited capacity to negotiate better prices and international issues
FARMER, TRADERS, INVESTOR RELATIONS
The positive functions of intermediaries
 Provide Agricultural Financing, especially market finance, market
information, storage including cold storage, packaging materials,
transport and other services etc.
 Plantation owners/processors provide production funding to contract
farmers as well as extension services and value addition
 Provide education on quality and hygiene standards as well as
distribution of inputs such as improved seeds, breeds, animal drugs,
chemicals, machinery, feeds, vaccines etc
 The intermediaries balance economies o f large scale which is
necessary among dispersed farmers
Cont.
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Intermediaries access international market on behalf of farmers
including the use of E-commerce to link farmers to the global
market
Negative Relations
The farmers generally believe the other actors in the value chain
under pay them
The farmers are usually the price takers and not price makers
Some unscrupulous input traders sell to farmers adulterated or
fake drugs, vaccines, seeds, feeds, substandard animal breeds
and even counterfeit machinery
Some buyers use fake weighing scales and lie to the farmers about
market prices
Cont’d
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Produce buyers sometimes advance credit to farmers at very high
interests taking advantage of the immediate financial needs of the
farmers
On the other hand farmers also adulterate their produce, do not
observe hygiene and quality standards and these practices make
traders and processors incur business loses
Some contract farmers short-change their creditors and breach the
contract by selling to other buyers who never invested capital into
crop farming
Benefits of Farmer-Stakeholder
Linkages
 Access
to produce market and market
information
 Access to input markets
 Access to credit markets
 Access to services
 Promotion of bargaining skills
 Promotion of networks
 Acquisition of agronomic skills and ideas
Negative Aspects of
Linking/Networks
 Can
be abused by the powerful through
the patronage practice
 Linking may prevent evolution of
accountability practices
 May lead to “gate-keepers” syndrome
 May stifle organizational development
 Externally induced associations may be a
site of corruption
CONCLUSION
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The overarching aim of this study was to assess the relationship
between farmers and other actors in the VC.
Furthermore it was to find ways and means of how to balance
needs of each of the actors in an inclusive manner
The study established that there are positive and negative aspects
in their relationships.
Farmers themselves are not empowered and have limited advocacy
skills capacity and information to struggle for and achieve equitable
terms of trade.
The advocacy institutions such as the Uganda Farmers Federation
have limited scope and capacity challenges.
The farmers also complained about representativity challenges
Some large scale contract farmers and investors are inclined
towards supporting farmers to improve farm level productivity
However the relationship between traders and farmers is largely
characterised by high levels of mistrust and near antagonism.
RECOMMENDATIONS
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Focus on value chain development particularly shortening the VC
Promotion of autonomous (not co-opted and politicised) farmer
groups and co- operatives.
Building a symbiotic relationship through formal linkages between
the small holders and the market leaders
Initiatives towards exploiting the full potential in terms of
productivity and competitiveness of the smallholder agricultural
sector
Proactive commercialisation of agriculture sector produce
Bulking production and marketing to attain economies of scale
Assistance with certification schemes
Provision of more and transparent market information.
There is also a case for establishing Market Linkage Centres (MLCs)
Establish formal , effective , and inclusive interactive institutional
mechanisms where all the stakeholders (traders, farmers, processors)
commit themselves to addressing equity issues
Cont’d
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Farmer education on effective marketing should be done frequently
through Agricultural TV and Radio and print media programmes
Improve rural marketing infrastructure to enable farmers reach
final consumer markets directly where possible or at least reduce on
the number of middlemen
Improving market conditions through enforceable regulations,
contracts and legislations.
Trade advocacy should improve its goals and shift from over
prioritizing external trade policy and prioritize domestic advocacy as
well
Agricultural Marketing research should be prioritized.
Educate farmers on the need to observe proper and hygiene
standards as these affect the market.
Cont’d
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Reduce imbalance in market power by providing farmers access to
services.
The high level fora such as the Presidential Investors Round Table
should address farmers concerns.
There is need to promote a non paternalistic and formal interaction
sanctioned by law or an accord or MoU.
Central as well as local/municipal governments should construct
whole sale markets and stores near urban centres
Educate farmers on the need to observe proper and hygiene
standards as these affect the market.
Provision of transparent market information should be done
Reduce imbalance in market power by providing farmers access to
marketing services
Farmers should be empowered to engage power structures
THANK YOU