Strategy for agricultural marketing and agro-processing ... - Foodnet

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4. PRIORITY INTERVENTION AREAS 4.1 General In light of the constraints identified in the previous Section, priorities for public intervention in the areas of agricultural marketing and agro-processing can be summarised as: (a) Trade and finance • improved capacity to undertake trade negotiations in regional and international fora; • establishment of expert teams to provide trade/market analysis and intelligence; • improved access to financing for marketing/value-added interventions/agri-business; • improved rural contract law. (b) Producer support • provision of market information to farmers and traders; • improved farmer organisation; and • educational programmes to engage farmers more effectively in the liberalised market environment. (c) Infrastructure • increased rural road investments to link farmers with markets; • reduced rates for air and rail freight; and • overcoming other infrastructure shortcomings There is also a need to bring about a general increase the overall productivity of the agricultural sector – for example, increasing the effectiveness of agricultural research and extension service delivery through a greater emphasis on demand-led programmes, and the diversification of production and exports into non-traditional agricultural commodities. However, interventions in these (and other) areas are already underway or are planned for implementation in the near future, under the Ministry of Agriculture, Animal Industry and Fisheries’ work programme which receives substantial support from Uganda’s development partners. 4.2 Specific intervention programmes The MAPS seeks to address the priority areas for public sector action listed above. They are detailed below and summarised in the logical framework presented in Table 2 (see “Activities” 1 and 2, in particular). It is important not to lose sight of the fact that a number of the areas highlighted in this paper - improving the availability of and access to, finance for trade and agroprocessing purposes, reducing air and rail freight rates (through common initiatives by Uganda, Tanzania and Kenya to tackle transport bottlenecks affecting Uganda’s trade) and improved contract regulations to enable contracts to be more rigorously enforced (thus reducing trading risks and encouraging greater transaction cost efficiency), in particular - are already being addressed by the Government through its Medium-Term Competitiveness Strategy (MTCS). Care will be needed to ensure that none of these efforts are duplicated. 4.2.1 Trade and finance (i) Development of the national capacity to negotiate international trade agreements and to analyse trade issues The EC-supported UPTOP intervention, the implementation of which is scheduled to begin later this year, will assist the Government in its work of developing of a comprehensive national trade policy (including an associated strategy for its implementation) through a consultative process, 10
involving stakeholders in the private, public and parastatal sectors. Furthermore, it will develop the capacity of key staff in the concerned public sector bodies (principally the Ministry of Tourism, Trade and Industry – see below) both to negotiate international, regional and bilateral trade agreements in teams and to undertake thorough analyses of trade issues. (This will include monitoring the impact of trade agreements on different socio-economic groups). The staff thus trained will also be able to provide technical advisory services in Uganda, on the obligations arising from international and other trade agreements. A key output of the intervention, which is scheduled to commence before the end of 2002, will be for the country to be adhering to a trade policy that is, clearly, both benefiting the poorer strata of the population and supporting the expansion of the private sector, particularly with regard to exports. The USAID-supported five-year U-TRADE intervention, due for implementation in late-2002, will provide further support in this area. In particular, it will assist the Government in developing a viable trade and investment policy and strategy, as well as in reviewing and in revising, as necessary, the national export strategy. It will also assist the government in improving the national legal and regulatory framework to promote and facilitate export growth. The problem caused by the lack of co-ordination within the Government over trade negotiations requires immediate action. As far as institutional responsibilities are concerned, the Ministry of Tourism, Trade and Industry will, henceforth, be the body ultimately responsible for negotiating all trade agreements. Associated with this, the same Ministry will be responsible for developing channels of communication such that rapid but considered positions, can be relayed to the relevant decision makers and thereafter to the teams negotiating in foreign capitals. (ii) Increased trade finance Under the Medium-Term Competitiveness Strategy, the Government is seeking to reform the financial sector to increase the ability of private businesses to access capital at reasonable cost and to cater better for small- and medium-sized enterprises. Another important intervention, in this field, which would result in a reduction in transaction costs is the establishment of a commodity exchange and warehouse receipts finance/inventory credit system in the country. Recent assessments have shown that such interventions undoubtedly have the potential for transparency to be enhanced and market efficiency to be improved, resulting in reduced transaction costs. They will also provide greater liquidity at the rural end of commodity supply chains. For these reasons, a plan of action covering these components is currently being drawn up in the Ministry of Tourism, Trade and Industry; it is being supported by development partners. Thus, the establishment of both a commodity exchange and warehouse receipts financing system can be expected shortly. (iii) Improved rural contract law Steps have been taken under the MTCS to improve commercial contract law and the associated judicial procedures, such that contract enforcement procedures are better tailored to the needs of rural communities . However, there are doubts that contracts can be easily enforced in rural areas due to the generally-low level of awareness and the poor communications. This is an area requiring further concerted effort under the Medium-Term Competitiveness Strategy. 4.2.2 Producer support 11
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