How Shs300b agric budget cut will affect farmers

Farmers across the country will feel the pain of a deep cut in the new agro-industrialisation programme budget after government decision to repurpose priorities in its 2022/2023 Financial Year expenditure plans. 

 Finance ministry officials last evening confirmed cutbacks of up to Shs335b to the agro-industrialisation programme budget, where the Agriculture ministry falls, and talked of a new budget dispensation that focuses on resource redistribution as opposed to the old-fashioned unfunded priorities across ministries, departments and agencies of government. 

 In the 2022/2023 Financial Year, the government of Uganda Agro-Industrialisation Programme budget estimates have reduced from Shs1.009 trillion to Shs674 billion. In particular, government funding to the Agriculture ministry alone has also declined from Shs150.4b in 2021/2022 to Shs74.9 billion in 2022/2023 financial year.  

READ: Budget to hit Shs47t as govt monetises economy

 The budget cuts, according to MPs, contradict government’s agro-industrialisation strategy which is aimed at transforming the agricultural sector towards industrialisation.

 The cutbacks will hit pockets of small holder farmers and affect the current war against crop and animal diseases such as the African armyworms, Foot and Mouth Disease (FMD), cattle ticks and tick-borne diseases (TTBDs)

 While farmers and the Ministry of Agriculture officials raised alarm over the cuts and warned parliamentarians on the dire consequences to a sector considered the backbone of Uganda’s economy, the Secretary to Treasury, Mr Ramathan Ggoobi, advised that “Agriculture shouldn’t claim that we have cut their budget and taken the money elsewhere.”

 “The money for PDM, over a trillion shillings is in agricultural sector. This money is going to be given to people across the country with one main objective; to buy agricultural inputs to get them out of subsistence into commercial agriculture. This money should be considered as an additional funding to the agriculture sector.”     

 Mr Ggoobi says the cuts were occasioned by the revenue shortfalls arising out of the impact of Covid-19 on the economy and critical funding needs such as the Parish Development Model and enhancement of salaries for scientists and health workers.

 Agro-Industrialisation Programme remains the mainstay of the country’s economy; employing 68 percent of the total population and 70 percent of the youth.

 Although the programme’s mandate is to promote and support market oriented agricultural production, food security and household income, the sector is growing at a very low pace of 3.8 percent below the 6 percent target under the Comprehensive Africa Agriculture Development Programme (CAADP) committed to creating wealth.

 According to available data in the fiscal year 2020/2021, Agriculture sector contributed 23.7 percent of GDP in 2021 and 31 percent of export earnings just below Industry at 26.18 percent and Services sector at 43 percent.

 The latest House Agriculture committee report to Parliament highlights a cocktail of challenges in the sector, including poor funding.

 Mr Frank Tumwebaze, the sector minister, yesterday appealed to the Finance ministry to reverse the cuts.

 “We have justified to the Ministry of Finance, the dangerous implications those cuts have on the success of parish development model and they have accepted our justification. I hope they will reverse the cuts that could have been done in error,” Mr Tumwebaze said.

 While the PDM takes funds to the parish to enable farmers to buy inputs on their own, Mr Tumwebaze told Daily Monitor that his ministry and it’s agencies must be in position to fund research and breeding thus be able to put on the market quality planting and stocking materials for farmers to purchase.

 “We must also invest in mechanisation, irrigation technologies so as to support precision agriculture and above all, fight disease both in animals and plants. These are critical interventions that need support of PDM to meet its targets of commercialising more farmers from subsistence.”

ALSO READ: Improve agriculture budget allocation

 Questioning agro-industrialisation programme cuts at a time when the government is rolling out PDM, the MPs on the Agriculture committee argued that the sector as a leader of Agro-Industrialisation Programme under National Development Plan III and the PDM Pilar One: Production, Storage, Processing and Marketing and warned that without adequate funding, the 100 million investment in each Parish SACCOs will not yield fruits.

Finance on new priorities 

For government to finance the priority arrears without blowing the country’s national debt out of proportion, the Secretary to Treasury said they decided to repurpose the budget and in the process, agriculture and education were also affected.

 “The decision to repurpose the budget was intended to move resources from particular areas which used to be priories in the past, to the new and emerging priorities, post-Covid-19,” Mr Ggoobi told Daily Monitor yesterday.

He added: “So we re-purposed the budget for all entities across the board, something that has never been done in the recent past. We managed to move money even from the presidency, State House to raise the funds to finance PDM as number one priority, enhancement of salaries for scientists, recovery of the economy and oil and gas.”  

Zero budgeting Vs incremental budgeting

 In the process of realigning the 2022/2023 FY budget, Mr Ggoobi revealed that Ministry of Finance officials went almost “zero budgeting” as opposed to “incremental budgeting”.

 He said in the past, for every new budget “we would get priorities and then find new money for them and the money in the base remaining where it was, this is what was growing our national debt because it means borrowing every year to finance these spending pressures.”    

 He added: “From today in this coming Financial Year going forward, the budget will be more redistributive. It’s going to redistribute money from areas which are less of a priority now to those which are a priority.” 

Scientists get pay raise

In the budget re-purposing exercise, Mr Ggoobi revealed that the government managed to raise total of more than Shs1.6 trillion after catering for all statutory obligations and the bare minimum each entity requires every year in order to fulfil their mandate.

 “This is the money we have used to finance the parish model about Shs1.5 trillion and also to enhance salaries of scientists and all medical works with a total of Shs450b and among other things. We have only borrowed for oil because we couldn’t raise the money the sector requires as the minister will tell the country later this year,” Mr Ggoobi said.  

What happened to Agriculture budget?

The secretary to treasury admitted that mistakes were made in the process of restructuring the new budget, and regrettably, Agriculture and Education fell victim of a cumbersome exercise.    

 “Because it’s a new exercise for my officers and all of us on how to move the budget from incremental to a redistributive one or zero-rated kind of budget, some mistakes were made, some money which was not meant to be cut was cut from some areas and Agriculture was one of those areas and the other one was education,” Mr Ggoobi said.

 The PSST has since written to Agriculture and Education sector heads, promising to look for resources and replenish their budget. However, he warned that not everything that was cut is going to be replenished, but only those ones which were not supposed to be cut but were cut mistakenly during the process of honing the budget.

 Mr Ggoobi also announced that in case extra money is not found immediately, he will look for some areas within the budget, suppress them, and raise the additional resources for agriculture and education during the budget execution.

DON'T MISS: Activists want agriculture budget raised to Shs1 trillion

He added: “In future, we don’t want to hear a word called unfunded priorities, because if something is a priority why is it not funded?  That means there is non-priority which is being funded which is taking the money off a priority. So it’s going to be a marathon but we have started well.”

Challenges in Agro-industrialisation

Despite all the policy interventions by government to realise socio-economic transformation, the agriculture sector is still faced with many challenges such as.

• Inadequate budget allocations to the sector.
• Inadequate provision of Extension and advisory services to farmers across the country.
• Limited access to agricultural credit.
• Delayed implementation and finalisation of the national irrigation policy.
• Low uptake of Agro-Processing technologies.
• Low prices of agricultural products on the market
• High cost of Agricultural inputs and associated problem of counterfeit on the market.
• Pre and post-harvest losses, the problem of land ownership, among others.

[email protected]