Produce prices: Govt must stop fire fighting
Last week, the government announced that it was making available Shs100 billion to interested traders in the maize business, who have, among others, the requisite storage facilities to buy off excess maize stock in order to stabilise farm prices, which had dropped to as low as Shs200 per kilogramme.
Finance minister Matia Kasaija said the traders will start accessing the money, which is being drawn from the Agricultural Credit Facility (ACF) at Bank of Uganda and will be accessed through 23 commercial banks and deposit taking micro-finance institutions, this week.
One of the conditions set by government, which is offering the loan at an interest rate of 15 per cent, is that they pay the farmers at least Shs500 per kilogramme.
Setting a minimum price for the commodity and availing the traders with the finance to enable them shore up the price is no doubt a great move, but it comes down to fire fighting.
The country needs to redirect itself in as far as the management of its agricultural produce is concerned. While we agree that we are operating a free market economy largely driven by the private sector, government cannot abdicate its rightful role of promoting the general welfare of the citizenry by putting in place policies that facilitate economic growth.
The aspiration set out in the National Development Plan II is for Uganda to attain Middle Income Status by 2020. The World Bank defines Middle Income Countries (MICs) as those with a per capita gross national income (GNI) between $1,005 and $12,235.
The NDPII’s target was for us to have by now attained lower middle income status with a GNI of $1,038. That failed. The GNI stands at $760 and is highly unlikely to improve when produce from agriculture, in which more than 80 per cent of the population is engaged, is going for as little as Shs200.
Even as we work on reviving the farmers’ cooperatives and the Cooperative Bank, we need to have a rethink. This could start with looking at how others are managing.
Kenya controls prices and ensures availability of grain thanks to the work of a state corporation, the National Cereals and Produce Board.
We need to borrow a leaf. We should revive and refinance Produce Marketing Board (PMB) and empower it to establish and maintain strategic national food reserves, to buy grain at a set price and store it for release in times of scarcity.
This helps to stabilize prices in times of plenty and ensure supply in times of shortage.
The issue: Low produce prices
Our view: We should revive and refinance Produce Marketing Board (PMB) and empower it to establish and maintain strategic national food reserves, to buy grain at a set price and store it for release in times of scarcity.