TRENDS AND IMPACTS OF FOREIGN INVESTMENT IN DEVELOPING COUNTRY AGRICULTURE

UGANDA
Trends and impacts of foreign investment in
developing country agriculture
Savings: 63 percent of employees reported
that they save money each month.
Growth in the three selected commodity
subsectors has led to growth in other sectors
and industries to which they are linked. Such
industries include packaging, vehicles (trucks),
machinery (generators), pumps, footwear (boots)
and motor vehicle spare parts. The flower sector
has the most widespread linkages because flower
firms are directly engaged in production, as
illustrated in Diagram 5. All the flower companies
interviewed reported that they purchase
packaging materials from Riley Industries Ltd, a
domestic company. Prior to 2007, the companies
used to import boxes for packaging from Kenya.
However, in 2007, Riley Industries purchased new
machinery that meets international standards,
and started producing the type of boxes required
to package cut flowers for export. The three
companies that released their cost information
spend up to US$200 000 annually on purchasing
boxes from Riley Industries Ltd.
6.12 Impact on the environment
The involvement of TNCs in agricultural
production in Uganda has had both positive and
negative environmental impacts. On the positive
side, the companies have set, implemented and
encouraged the use of environmentally friendly
production techniques and practices. On the
negative side, some activities of TNCs have led
to the degradation of the environment and
depletion of natural resources.
6.13 Support from third parties
Transnational corporations have also been
successful in Uganda’s agricultural sector because
of the presence of a ready export market,
and the role of third parties. The role of third
parties became important following the failure
of both the government and the private sector
to provide specialized support service for the
various subsectors of the agricultural economy,
resulting in the emergence of a third player. This
third player fills the gap adequately on many
occasions, by providing critical support to the
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industries. This support boosts the industries’
performance in terms of revenues, export share,
capacity and competitiveness. Two examples of
such third parties are the Export Promotion of
Organic Products from Africa (EPOPA) and the
Uganda Flower Exporters’ Association (UFEA).
The former has been at the forefront in engaging
with TNCs in the training of farmers on farming
methods and organic certification procedures.
The UFEA, on the other hand, plays a major role
in addressing the policy issues faced by flower
exporters. The association is an advocacy forum
for flower exporters and has registered significant
successes since it was formed in 1993.
7. Conclusions and
recommendations
Foreign investment in commercial agriculture
by individuals and TNCs, though growing since
2000, is still relatively low. Most of the companies
engaged in commercial agriculture – about 70
percent of the total – are domestic-owned. This
is also illustrated by the small number of planned
projects in the sector that were registered by the
UIA between 1992 and 2008. A total of 124
projects have been registered in the sector and
they account for just 3.5 percent of all projects
registered by the Authority. About half of the
registered projects were in four subsectors: fish,
general farming, flowers, and forestry.
This study has demonstrated that there was
no notable difference in impacts of TNCs and
domestic companies on employment; they were
collectively high. Transnational corporations
had positive impacts on: (i) increasing the
production of rice and contributing to rice
sufficiency in Uganda; (ii) increasing agricultural
exports: for example TNCs accounted for 59
percent of coffee exports in 2008/2009; (iii)
improving access to finance for smallholder
farmers; (iv) introducing new hardy or highyielding
crop varieties (maize and rice); and (v)
disseminating input technologies, providing
farmer training to improve product quality, and
enforcing production standards to ensure that the
commodities comply with international export
standards. Transnational corporations have also