Agricultural price drop to causes widespread economic mayhem

At the Tarehe Sita celebrations, President Museveni cheerfully described the agricultural sector as being in a state of surplus. Sugar factories were stocked with excess sugar, a major development from years of chronic shortages. 
In 2020-2021, the story of these surpluses has taken an acute turn for the worse. During the early stages of Covid-19, transport bottlenecks and depressed consumption wreaked havoc on matooke farmers, especially in central and western Uganda. 

By that time, matooke farmers were complaining of the rise of syndicates that made it impossible for farmers to organise and transport matooke to big markets in Kampala. New farmers allowed the crop to ripen in the field rather than attempt to transport it at a loss. In the case of milk, surplus milk has unfortunately been blocked within the East African “common market” by our neighbours on grounds that we are a low-cost producer competing, for example, against highly capitalised Kenyan farmers, who have to repay bank loans that finance their higher production costs and higher yields. 

This blockade has continued to support much higher prices for milk than milk prices in the cattle corridor. In the case of Rwanda, most foodstuffs have faced barriers at the border, including from districts neighbouring the border like Ntungamo, Ndorwa, etc, where milk is turned back on the basis that it is not needed. 

When you drive to Kigali, one of the first things you notice in pre-curfew days, was a detailed milk delivery system where trucks would start driving to Kigali from the northern districts after the evening milking in time for breakfast. But you will also notice that prices of foodstuffs are much higher than in Uganda. At the moment, the tears of the month belong to pineapple farmers whose product is now being dumped at less than real production cost in a saturated market. Pineapples are somewhere between an annual and perennial crop. One of the most popular programmes on FM radios are “promoters” of different crops and animal husbandry. 

One presenter recently was marketing pineapple growing services that would yield about 13,000 pineapples an acre and had a production cost of Shs420 per pineapple. In his computation, the average farmgate cost per pineapples (of average size) was Shs800.

This optimistic gentleman, however, added that sale prices of extra large pineapples would reach as much as Shs1,500 per pineapple. As he continued his programme, I stopped to buy pineapples in Wandegeya. The young vendor (obviously at home because schools were closed) was offering four very formidable pineapples for Shs5,000. Across the taxi parking lot in Wandegeya were heaps of pineapples commonly described as Mudibo. 

It was almost miraculous how a pineapple would travel from Bamunaanika County to Kampala with a markup of only Shs400, yet pineapple farmers are in actual fact selling pineapples at Shs300 or less just like matooke farmers at a certain point were selling a bunch at Shs4,000 after mulching their plantations at great cost to shield them from prolonged dry spells. Yes the global economy has hit the prices of many commodities, coffee being another one, where the prices have been in steady decline since 2016. Even our famous oil is likely to be stuck in the mid 50s a barrel for the foreseeable future. Oil palm producers have similar complaints. 

All these are putting pressure on money in circulation and possibly leading to deflation at a time when the cost of inputs is rising.  Agriculture and natural resources remain the backbone of the economy mostly because of employment. 

GDP and tax collection figures favour the Kampala metro-region with estimates as high as 70 per cent of the national economy, yet this region also shares very high levels of income inequality and attendant social conflict.  Like the sugarcane farmers in Busoga, as anti-competitive practices condemned their cane in the field and whose pleas seemed to fall on dead ears, the wanainchi are not “feeling the economy.”
 Mr Ssemogerere is an Attorney-At-Law and an Advocate. [email protected]