Only if, basic commodity and non-pecuniary services costs remain stable (kerosine, fuel, soap, salt, school fees etc)
The twenty first century is witnessing an unprecedented escalation in food prices. Adjuncts of this trend according to the Britons wood institutions (IMF and World Bank) will sink more 100 million in debilitating poverty and a myriad of conflicts and unfettered violence. Food prices related conflicts have already floated itself in countries like Haiti. Over the years, consumers of food around the world have enjoyed relatively cheap food for so many decades that we have taken it for granted. We in Africa in particular are accustomed to the concept of farmers having a life dominated by poverty from which they generally want to escape by moving to towns where they can share in the political protection afforded to consumers against rising food prices. This protection has continuously pumped poverty back into the rural areas where farmers are told they must improve their efficiency if they want to climb out of poverty. While it is true that inefficient production systems in the small scale sector provide little or no reward for the work applied to them, current producer prices do not provide scope for a decent living even by those who can improve on production efficiency. Rural poverty will not be reduced without improvements to systems of production, and these systems will only be induced by better price incentives. Food prices are shifting upwards along with demand for farm produce. We may no longer take cheap food for granted, and those who have abandoned agriculture in exchange for the urban life would do well to consider returning to their land to apply improved production techniques to benefit from improved producer prices. Agriculture is where reliable dime can found.
For starters, sharp rise in the demand for food is attributed to several factors, First, the costs of production have increased because the price of oil has increased to all-time highs and demand for agricultural inputs has increased enormously. Nitrogenous fertilizers in particular are directly related to the cost of oil and the associated cost of transport, and world supplies of phosphoric acid have dwindled such that prices have tripled in the last few months. Second, increases in demand for grain to make ethanol for fuel to reduce dependence on oil and mitigate environmental damage has led to a 25% increase in production of maize in the USA to a record 335 million tonnes, partly at the expense of alternative crops, but the incremental output of 8 million tonnes will be absorbed into ethanol production. Third, increasing wealth among consumers has implied greater demand for meat, especially in China where annual consumption has increased form 20 to 50 kg. per person, and producing a kilo of beef by feeding grain requires 8 kg. of grain, or 3 kg for a kilo of pork. Fourth, potential for expansion of agriculture in developed countries has reached a plateau since all suitable land is already used and mot known technical advances in production have already been applied. Fifth, any expansion of farmland now implies advancing into remote areas of the world including our own neighbourhood where costs of transport and development of infrastructure impose greater production costs. And six, there have been devastating droughts or floods in areas that traditionally produced high output. However, the reason for increased prices is not that total production has declined, because it has actually increased by huge amounts world-wide, but that demand for grain has increased for purposes that were not previously so significant. World reserve stock s of coarse grain are expected to be down by 53 million tonnes this year and amount to only 53 days’ supply in January, so that countries needing to import emergency supplies are in trouble. When World stocks feel to 56 days in 1972 prices doubled.
There is little doubt that increased prices for food are going to be a fact of life. The steep rise in the price curve is not one side of a peak but the vertical face of a step which consumers are obliged to mount. We in Uganda should accept the positive side of this fact and see it, not as a threat to our national economy, but as the handle by which we can pull ourselves out of rural poverty and develop our agricultural production capacity to take advantage of regional and overseas markets to play the role of grain basket to the region that has been hailed so often before as our rightful destiny. Uganda has meaning reserves of land especially in the north, irrigation water, a capable workforce and sustainable technology that optimises access to sources of fertility under conservation farming practices. The time has now come to apply these resources to economic advantage, not only to meet our own food security needs but to supply others within the region and beyond who are less fortunate or less organised than ourselves. Increased prices allow investors to open up areas that were previously uneconomic, and they provide an incentive for all farmers to adopt the most appropriate production technology on new and existing land.
The World Bank calculated that, if agricultural productivity in Sub-Saharan Africa (SSA) did not increase at the global rate of 2.5% per annum, there would be an increase in the number of people in SSA living below the poverty line of $1 per day. If the productivity levels remained unchanged, this increase would be 5%, making 36% of the population by 2015. Inefficient farming makes for higher cost of production but higher prices attract more efficient producers who will increase output and generate national wealth. Therefore, Uganda should not shield itself from the world food price trends. Investors, whether foreign or local, large or small, need confidence to invest; confidence in the knowledge that there will be no artificial distortion to the natural influence on prices, such as export bans or price control; confidence that agricultural and trading policies will acknowledge the inevitable trends and take advantage of them; and confidence in the long term sustainability of conducive policies so that sustainable agricultural practices will be applied conscientiously and consistently to preserve our forests and water catchment areas against erosion and our rivers against siltation. It is in this spirit that shrinking rivers like Rwizi in Mabarara, Mporogoma in Mbale, Nyamwamba in Kasese among others, should be restored.
Recent acknowledgements by policy makers in Uganda that the wholesale adoption of Washington consensus economics spelled on Uganda 101% liberalisation raped our agriculture sector is a positive sign. Now we are going back to basics of command economics where government now takes a central role in financing and promoting innovations and technology in the agriculture sector. We now know that NAADS will be supplying inputs to farmers and that under Prosperity for rural financial services will be revolutionalised. This is important for rescuing our dwindling production and productivity in the agriculture sector. These and other regulatory parameters that make farming sustainable can do more for citizens’ economic empowerment. This is why; the awaited five year National Development Plan (NDP) that will replace Poverty Eradication Action Plan (PEAP) and the popular Boonabagagawale (PFA) should be priotized and allocated to formidable resources to buttress the supply side of food such that we can be wholly food secure and be able to supply food to those in need and reap big.
Resident Consultant & Manager for Policy Research and Advocacy
Uganda National Farmers Federation