High regional demand raises local grain prices

Kampala- The demand for grain by neighbouring countries has pushed up prices in Uganda as the region grapples with scarcity.

The grains in demand are maize, beans, millet and sorghum which are mainly used as staple foods in the region.

Information from the Grain Council of Uganda (TGCU), a private multi-stakeholder organisation that addresses unique challenges in the grain sector in the country, confirms that demand in the region has indeed pushed up the prices of these commodities.

Talking to Daily Monitor on Monday, Mr Chris Kaijuka, the chairman TGCU, said: “Because of our open border policy, everybody is coming into Uganda. We have seen trucks from our neighbours combing different villages for grain and this has caused the prices to shoot up.”

Besides the increase in local demand, neighbouring countries such as Kenya, Rwanda, South Sudan, Rwanda, Tanzania and Burundi are all sourcing grain from Uganda which is considered as a food basket of the region.

Currently a tonne of unprocessed maize costs Shs1.1 million up from Shs850, 000 it cost the last season. A tonne of beans which cost Shs1.5 million last season currently costs Shs2.5 million indicating a 40 per cent increase. Similarly, a tonne of Sorghum currently costs Shs1.2 million up from Shs750,000 it cost last season.

At the farm-gate, a kilogramme of beans currently costs Shs2,500 up from Shs1,500; a kilogramme of sorghum currently costs Shs1, 200 up from Shs750.

Speculation
Mr Kaijuka who is also the managing director Afro Kai, a grain trading company, said speculation is the other reason for the hike in grain prices and this is mostly engineered by informal traders who anticipate making a killing out of the situation.

“Because of the demand informal traders are now using this chance to sell everything they have without minding about the standards of the grain/commodities. This is not good for the country’s image,” Mr Kaijuka cautioned.
His advice on the current situation is for government to formalise exportation of grain trading - where all stakeholders are formalised - keep records, follow standards.

He added: “Formalising grain trade will not only bring in more buyers but the country will also earn premium price.”

Schools stocking
In a separate interview with Daily Monitor, Mr Robert Kintu, the managing director Fit Uganda, an agribusiness consultancy firm, said the prices of grains and other commodities have shot up.

He attributes the price change to the increased demand from schools as they stock up for the new term which starts next week.

“We have seen prices of beans mostly go up. Usually around this time the old stock is drying out and people are stocking which brings the prices of commodities up because of increased demand,” Mr Kintu said.

Shortages
In Uganda, poor weather conditions that have led to food shortage in many parts of the country, contributed largely to the food price increases. In December, the annual food crop inflation rose to 10.8 per cent from 7.2 per cent in November, while fruits inflation increased to 24.8 per cent last month from 13.6 per cent the previous month.

The director of macroeconomic statistics at the Uganda Bureau of Statistics, Mr Chris Mukiza, said that the country will still experience high food prices due to the current weather conditions.

“Prices of the annual average food crops and related items dropped to 3.1 per cent last year, compared with a 6.7 per cent rise recorded the previous year. This will, however, be negated by the current rising food prices in the market due to bad weather, that has affected crop production in parts of the country,” he said.

Mr Randy Sohnchen, a commercial farmer who grows mainly maize, rice and gram grains in the northern district of Amur, said his company mainly distributes to World Food Programme plus a few buyers from South Sudan and middlemen who buy from him. He said that since June 2016 the price of maize has unusually accelerated.

“We have seen the price of maize jumping from Shs750 to the current Shs1, 200 a kilogramme and it’s projected to continue going up,” he said.

Scarcity of seeds
There is public concern that because of the increase in prices, farmers may get excited and sell off the would-be stock for the local consumers and seed to plant the next season.

Mr Sohnchen said as a commercial farmer, he has secured seed to plant in the next season. “However, I am not certain on the security of the smallholder farmers as far as the seed to plant the next season is concern,” he said.

On that, Mr Kaijuka said the drought has also affected seed quality, which is likely to bring about scarcity of good seed. “Because of the high prices farmers may sell off the entire commodity plus the would-be seed to plant the next season,” he said.

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