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

More documents

Recommendations

Info

3. AGRICULTURAL MARKETING IN UGANDA – RECENT EVOLUTION AND CURRENT CONSTRAINTS Over the past 20 years, the economy of Uganda has undergone a rapid transformation - from a state of virtual collapse in the early 1980’s to a relatively strong rate of annual growth today. Much of the recovery has been achieved through sound Government policies linked to investments and structural adjustment programmes supported by the country’s development partners. Major components in the reform process have been the adherence to market liberalisation and good governance. Whilst, for many countries, it has been proven that increased economic liberalisation and openness lead to growth, it has also been recognised that in some cases and for some communities the transition from a protected, centrally-controlled economy may bring with it serious negative, short- and medium-term consequences. Uganda has embraced these reforms by removing the state’s role in market intervention, implementing a programme of rapid privatisation of national assets and adopting a highly-liberalised economic policy aimed at stimulating the private sector. This formula has proved to be successful and, in recent years, the country has enjoyed GDP growth rates that have consistently been above 7 per cent. During this same period, many other developing countries have been implementing similar sector reforms that included: (i) reduced state marketing, (ii) commodity diversification, (iii) increased production, (iv) privatisation, (v) implementing trade agreements through the WTO. The widespread adoption of market liberalisation tied to a strong emphasis on export promotion, has led to a period of relatively-rapid growth in these economies. However, it has also resulted in a situation in which domestic markets are exposed to the highly-competitive global agricultural market. In the past three years, this exposure has presented countries such as Uganda with some serious difficulties. The combination of structural adjustment programmes and partial reform of the rules governing international trade, has reduced the prices of the principal primary commodities exported by Uganda at the same time as stimulating an increase in exports of agricultural products by more-competitive producers, some of whom continue to provide a high level of subsidies to their farmers. The result of oversupply and weakening demand due to the current recession, has led to many commodity prices falling to a 40-year low. Analysts suggest that commodity prices are likely to remain at these levels for the foreseeable future. This bleak outlook is reflected in the dramatic reduction in the terms of trade for countries such as Uganda, and suggests a profound downturn in their economic outlook and performance. Uganda’s development partners have recognised some of these difficulties and are making serious efforts to assist Uganda in overcoming them. Programmes such as the EU-supported Uganda Programme for Trade Opportunities and Policy (UPTOP) and the USAID-funded Uganda Trade Revitalisation and Diversification of Exports (U-TRADE) and Agricultural Productivity Enhancement Programme (APEP) projects, as well as the government’s own Strategic Exports Interventions’ initiative, are all examples of attempts to diversify export products, add value to commodities and initiate new forms of industrial growth. At the same time, budget support to Uganda has increased considerably while HIPC debt relief programmes are enabling the government to broaden the support it provides to the social sectors. 4
Such a high level of support at a time of declining terms of trade poses serious questions as to the medium-term outlook for the economy and also underlines the importance and urgency of making the agricultural sector more competitive. In order to do this, a number of constraints currently affecting the marketing of agricultural produce need to be overcome. These are detailed below, while the efforts being made to tackle them (or those which it is proposed be initiated), are enumerated in Section 4. (i) Limited national capacity to negotiate in international trade fora and to analyse trade issues Uganda is often inadequately represented at the WTO and in other multilateral and bilateral trade talks. Moreover, it lacks the capacity to research and analyse important and highly complex international trade issues, to develop negotiating positions and to respond quickly and effectively to the varied needs of Uganda’s trade negotiating teams. There are also some difficulties experienced in the flow of information between the key ministries involved with the development of national trade policy, particularly since separate ministries are responsible for different trade agreement negotiations (For example, the Ministry of Finance, Planning and Economic Development handles EU trade-related matters, while WTO-related matters fall within the portfolio of the Ministry of Tourism, Trade and Industry). At the same time, problems have been experienced in links between Kampala and the Ugandan government’s trade negotiating teams abroad. These problems need to be addressed as a matter of urgency, particularly in light of the ongoing Doha round of (WTO) trade talks which is focussing on greater inclusion of developing country interests and may take into account proposals associated with the “Development Box” and other non-trade issues proposed by developing countries. Similarly, there are many issues relating to the AGOA Treaty, the EU’s Everything-But-Arms Agreement and NEPAD, that require careful negotiation and partnership-building if Uganda is to capitalise fully on the potential opportunities they offer. (ii) Marketing and trade finance shortcomings The high cost of funds and the lack of long-term finance that are a perennial complaint among the business community particularly in the rural areas, severely constrain investment in marketing, processing and trade in the agriculture and fisheries sectors. Innovative methods are required to stimulate greater entrepreneurship and to facilitate enterprise development in the rural areas by making such finance more readily available. (iii) Lack of market information There is a general absence of objective, reliable and regular information available on the quantities, prices and trends in agricultural production (principally on food crops and livestock), for use by both the farming and agricultural trade communities throughout the country. Such information needs to be made available to farmers in a form that they can understand and act upon if they are to be able to benefit fully from available markets (thus increasing their net returns and reducing the amount of produce wasted). Enabling farmers to appreciate and maximise gains from market information requires that farmers are organised and educated such that they are able effectively to engage in the liberalised market economy and therefore to use market information as part of their marketing mix and analysis. Market information also needs to be provided if consumers are to reap the full benefit that would result from an efficient crop and livestock marketing network. It is also undoubtedly true that the level of understanding of national and international agricultural marketing issues is low amongst those involved in the trade and in agricultural 5
Page 1 and 2: Strategy for agricultural marketing
Page 3: As far as access to markets is conc
Page 7 and 8: At the same time, the poor standard
Page 9 and 10: transport systems. Reduce internati
Page 11 and 12: involving stakeholders in the priva
Page 13: called for in the PMA, that will ta
Page 16 and 17: PURPOSE Marketing and agroprocessin
Page 18 and 19: 5. OPERATIONALISATION OF THE MARKET
Page 20: Item Amount committed Source Timing

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

You also want an ePaper? Increase the reach of your titles

Delete template?

Save as template?