The Maize Crisis & Attempts To Fix It!
Government of Uganda last week unveiled plans to purchase 500,000 metric tonnes of maize from farmers, at a minimum price of 500 Uganda Shillings. This information was made available in a joint statement to the House of Parliament by Hon Amelia Kyambadde, Minister for Trade, Industry and Cooperatives, and Hon Vincent Sempijja, Minister of Agriculture, Animal Husbandry and Fisheries. Through the Agriculture Credit Fund, the government will provide a budget through which the Grain Council shall purchase the maize.
The statement followed concerns over the low price of maize, which has fallen to 250 Uganda Shillings from 1500 Uganda Shillings last year. The government conducted a technical evaluation that revealed that the highest cost of production for a kilo of maize is 400 Uganda Shillings according to Sempijja. The grain council operates modern storage facilities across the country including dryers, sorters and cleaners. The fluctuation of maize prices has been caused by the excessive production of maize in the first season of 2018. At the peak of harvest, cereals and grain prices tend to decline due to bumper harvest and constant demand from traditional consumers, which doesn’t match the supply and lack of standardized storage facilities. In addition to purchase of surplus maize, the government plans to open up borders and export maize to the neighboring countries.
However like all government products, the real beneficiaries might actually be a few well connected farmers who might find ways to manipulate the system at the expense of the rural farmers. Some members of parliament expressed concern that the Grain Council is composed of companies which are within the warehouse receipt system, which is difficult for local farmers to join. The warehouse receipt system was established to facilitate commodity trade, financing, strategic marketing, improving and standardizing storage for agricultural commodities.
The warehouse receipt system is where farmers take all their produce to a warehouse, and they are given a receipt. This receipt becomes their collateral and can be taken to a Micro Finance, lending institution or village saving scheme to borrow money, which can take them through another production cycle. For the rural poor farmer with daily demand for cash such as school fees, health care etc, this is a difficult scenario.
Farmers were urged to organize themselves in cooperatives and associations and to register with district officers. That way, it shall be easier to buy from these groups instead of individual farmers. Due to their highly democratic and locally autonomous nature, cooperatives have a potentially strong role in reducing poverty and promoting social inclusion, and promoting rural and national development. However there is an absence of research into how cooperatives can keep up with the modern times of capitalism. There is virtually no up to date literature on the African cooperatives since the liberalization of the agriculture sector in the mid-1990s. In addition, policymakers, practitioners, and others harbor outdated views on cooperatives, hampering progress in the sector. Cooperatives in Uganda, especially those involved in cash crops, successfully provided agricultural-related services to farmers until the mid-1980s. At that time, due to political instability, liberalization of markets, and mismanagement, among other reasons, almost all the cooperatives failed.
Experts in agriculture say that the purchase of surplus by government from the farmers is only a short term remedy, to a problem that is recurring. They suggest that instead government should focus on establishing more silos and warehouses at homestead (granaries), community, district and national levels where such surplus would be stored for future emergencies. So far, 192 storage facilities with a capacity of 356,051 metric tonnes have been inspected and profiled. Out of these, less than half met the minimum standards of the warehouse and warehousing standard of bagged cereals and pulse. Experts also advise farmers to diversify their range of products, to include produce that can sustain their livelihood in times when one of the other products is suffering from price fluctuations.