Covid-19 eats into food prices

Tuesday July 7 2020

People purchase food items at Nakasero Market.

People purchase food items at Nakasero Market. During the lockdown, many food prices have gone down to the extent that a bunch of matooke costs Shs5,000 in some places. PHOTO/ERIC DOMINIC BUKENYA 

By RACHEAL NABISUBI

While many restaurants and other areas of the hospitality industry have been shut for business during the lockdown, farmers are stuck with too much stock, most of which is going to waste.
Worse still, farmers’ income has taken a sharp dive as most of their surplus food is being sold at a give-away price.
This is just one of the several ways that the Coronavirus pandemic is impacting the food supply chain in Uganda.
Since the Corona Virus found its way into Uganda in March, the economy has had its fair share of challenges. In the agriculture sector, the effect has been felt in the variations in prices of different food stuffs.

Some lockdown measures have only precipitated the loss in the agriculture sector. In the midst of the Covid-19 pandemic, farmers are struggling to reap from their agricultural outputs. There are currently a number of fluctuations in prices of food stuffs as farmers see to it that they earn some income from their sweat.
During the lockdown, many food prices have gone down to the extent that a bunch of matooke costs Shs5,000 in some places with eggs costing between Shs5,000 and Shs7,000) among others. There have been some gains for cereals such as maize and beans amidst the economic slowdown.

Vendor’s experiences
For instance, Ms Annet Kisabira had to pay Shs1,000 to purchase each piece of maize from the market. This, she says, shows the effects of the Covid-19 pandemic have led to reduced income among consumers and food surpluses for farmers.
“We used to buy each piece of maize at Shs500. I was so shocked at the price yet the month of June is a harvesting season for maize,” Ms Kisabira says.
This is not the only food item whose price has shot up. Countrywide, there has been an increase in prices of certain food items while in some areas, other food prices have dropped.

Sarah Mirembe, a maize vendor along Namuwongo, a Kampala city suburb, says the price of food stuffs has hiked since the Corona Virus pandemic hit the country.
She travels to areas such as Kampala City and Kabalagala in search of maize.
“Traders sell maize at Shs700. If I add labour, I sell each piece at Shs1,000. This gives me a profit of Shs300 which is re-invested into the business,” Ms Mirembe says.
She adds most sellers attribute the rise in prices of food to the hike in transport fares. She says the food stuffs are transported from the villages and following the government lockdown in April 2020 with the restriction of movement of both public and private motorists; led to a general fall in demand of not only food items but also a variety of other services.
“Farmers invest in their business and the only way to benefit from their sweat is to increase the prices,” she adds.

Low prices
On the other hand, there is surplus of food stuffs such as tomatoes, matooke, sweet potatoes and eggs among others on the market resulting into reduction of their prices.
Mr Joseph Kimanze, a farmer in Wakiso District, attributes both the hike food prices and a drop to others to seasonality.
“The rainy season left a number of farmers crying foul due to losses incurred during the floods that swept away their gardens,” Mr Kimanze says.
Mr Kimanze alleges that a number of traders and middle men are taking advantage of the post and new normal Covid-19 pandemic by charging high prices of food stuffs.

Statistics
Statistics from the Uganda Bureau of Statistics (UBOS) indicate that annual inflation for May 2020 declined to 2.8 per cent compared to 3.2 per cent recorded in April 2020. This was attributed to mainly the drop in prices of fruits and vegetables and bananas among other crops.
Food prices account for the biggest value in the inflation basket. This means if prices of food crop prices increase, inflation will also increase.
Food prices tend to rise when core costs such as fuel, electricity and metered water go up as people try to make money.

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During the recent release of the monetary policy statement, Bank of Uganda reduced the Central Bank Rate to 7 per cent, citing an increase in fuel prices leading to a hike in transport costs.
The statement indicated that although core and annual inflation decreased below the Central Bank Rate of 5 per cent; public transport measures to contain the pandemic will temporarily increase transport costs in months ahead.

Why variations in food prices
Ms Agnes Kirabo, executive director Food Rights Alliance, noted that although the fall in food prices is good, it is also very bad for the food system because that drop in food prices falls back to the initial investor (small holder farmer).
“If you get low returns in your investment, it affects your future returns on investment within the business such as in production,” Ms Kirabo said.
She adds: “A number of farmers have closed their business due to reduction in their prices during the lockdown. There is a lot of produce on the market that surpasses the demand and therefore prices fall. This is because there is low demand.”
Whereas there is increased supply onto the market, the demand is low. “Whereas a number of people have lost their disposable income and do not have purchasing power, others have lost their jobs leading to the drop in prices of food stuffs,” she adds.
Ms Kirabo further adds that the chain of food movement from the farmers to the food facilities has been disrupted. This means the production process is surrounded by movement from the farm to the mouth (folk) hence creating a shortage of grains in the country.

“Shortage of grains and inadequate silos in the country have led to an increase in the price of cereals,” she explains.
She explains that in June, most of the rice was imported from either Tanzania, Pakistan or India due to scarcity within the country.
“The cereal prices have hiked because of the dry season. Due to climatic changes, farmers find it hard to know determining harvesting seasons,” she notes.

Way forward
Ms Kirabo says while some food prices have dropped and others have increased, the demand has been relatively low considering that some customers are struggling with reduced income from salary cuts and job losses.
She explains: “If consumers are to continue enjoying food at low prices, they are going to be losers because so many producers or farmers’ businesses will collapse..”
She notes that whenever you consume food cheaply, you are cheating farmers who will walk out of the value chain.
She calls for the investment in appropriate technologies that are easily accessible to farmers.

Government should avail money to small holder farmers to bail out the economy to ensure effective growth.
Whereas the International Monetary Fund approved a $491.5 million (Shs1.8 trillion) loan for Uganda to be used for budget support/capitalising through the Uganda Development Bank and stabilising Uganda’s exchange rate aimed at providing cheap loans to the private sector involved in manufacturing agricultural activities, Ms Kirabo says this money is not accessible to small holder farmers.

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