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Rising Food Prices; Highlights Of 2022

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By Joshua Kato

There is no doubt that food prices rose to their highest ever in Uganda in 2022! For the first time ever, maize flour went over sh3,500! Ground nuts rose to sh8,000, Beans rose to as high as sh5,000, while prices of cassava and sweet potatoes rose by over 200%. On the livestock side, while beef and goat meat remained stable, poultry products including eggs and chicken meat rose by over 50%.

“I have been growing and selling maize for over 20 years, however I have never sold a kilogram of grain at sh1,700 here in Kakumiro,” Nasib Mwaka, a maize farmer and dealer in Kakumiro said. This was the same price in Mubende, Kiboga and most of Busoga-the key maize producing areas. In Kampala, the average price of maize grain was sh2,000 through the second half of 2022. Mwaka says that the Kenyan market also continued pillaging maize from Kakumiro and other places mainly because Kenya too had a poor maize harvest.

While one of the reasons for the price increase was the war in Ukraine that started in February, hence increasing fuel prices, production of key foods had been low owing to a poor end of 2021 season. Production of beans, maize and soya had been low across the country. 

“We started importing beans and Soya from Tanzania and Zambia respectively,” says Goretti Nalwanga, a producer dealer. The lack of soya led to a drastic increase in livestock feeds prices, which forced mainly chicken farmers to increase the price of eggs and chicken meat. The drastic produce price drops that characterised the COVID 19 lock down years between 2020 and 2021 had discouraged many farmers from producing. “We sold bananas at as low as sh3,000,” says Christine Mbaga, a farmer in Sheema. Egg prices dropped to as low as sh5,000 a tray in some areas and as a result farmers opted to play safe, rather than produce and make losses.

In June 2022, the Permanent Secretary at the finance ministry, Ramathan Ggoobi, said the Government was working at some measures to tackle the rising prices.

“Regarding high commodity prices, the Government will continue to use prudent economic policies to address the external shocks instead of using the budget (reserves). We shall not interfere with international oil prices -to avoid creating shortages,” he said. 

In his budget speech, Finance Minister Matia Kasaija said appropriate measures to curb the rising prices in the short, medium, and long term will be implemented.  He said since the problem is partly caused by external forces, the government will have to evaluate the measures put in place so as not to cause problems. 

He said the measures include supporting farmers to grow more fast-maturing food and oil seeds to ensure sufficient domestic supply, maintaining a market-based determination of prices to support a continuous supply of the goods and services.  “This, he said is intended to ensure that demand does not outstrip supply,” he said.

As the year ended however, prices of most of the products remained high. Projections are that these prices will stay high until the harvest season of the first season of 2023-around June.

Anti-Tick Vaccine; Innovation Of The Year

Access to quality acaricides to control ticks and tick-borne diseases in Uganda, has been difficult mainly because there are no local production of the medicines. However in 2022, a break through for local production of acaricides was made. In the next two years, Uganda will be manufacturing Anti-tick vaccines within the country, thanks to a break through that was announced in August 2022.

According to officials from the National Livestock Resources Research Institute (NaLIRRI), the livestock research arm of NARO, construction of a vaccine manufacturing plant is under way at the institute in Nakyesasa, Busukuma subcounty in Wakiso district.

The facility is being constructed to international standards and will start production upon national and international accreditation. 

Dr Fredrick Kabi, the Principal investigator of the Anti-tick vaccine research and development project says ticks infest cattle resulting into blood loss, injury to the hides, tick worry, poor weight gain and most importantly transmission of diseases such as East coast fever, Babesiosis, Anaplasmosis and Heartwater among other.

These results into losses to the farmer and country estimated to be US$1.1 billion or sh3trillion  according to a study by senior academicians from Makerere University and NARO commission by the president in 2017. And just like the previous years, in 20222 several livestock producing areas of the country were under movement quarantines orchestrated by diseases caused by ticks. These included parts of Lyantonde, Kiruhura, Isingiro, Kyankwanzi, Kiboga, parts of Teso etc.

“The Anti-tick vaccines are like the immune boasters of cattle’s natural defense system by prompting the production of more antibodies against ticks. If the vaccination of cattle is done in integration with acaricide application annually, then high tick infestations on cattle will be history in five years’ time,” said Dr. Kabi.

Consequently, the widespread of tick-borne diseases will cease to be a problem and farmer`s income from sales of cattle, milk, beef and hides will increase, leading to poverty reduction among livestock farmers and related businesses along the value chain, added Kabi.

He adds that the losses incurred by farmers and the country in application and importing lots of chemical acaricides will be saved.

In addition the manufacturing facility that is under construction will provide more research opportunities to NARO scientists to produce other livestock vaccines such as Foot and Mouth disease (FMD), and African Swine fever (ASF).

Presently the construction of the facility is ongoing, commenced and the Government of Uganda has already released sh14 billion towards this investment. This facility will be ready in a period of two years.

Tax On Concentrates Stirred Market

In September 2022, the livestock feeds producers were stunned by the re-introduction of taxes on imported concentrates. These taxes, including 18% VAT had been waived in 2017 in order to encourage the development of the livestock sector. There are over 45million poultry plus 5.5million pigs and these directly depended on the concentrates. According to the URA , importers of livestock feeds used the unclear tax exemption on premixes to start importing ‘another’ feed that they claim includes concentrates. “The exemption was on premixes, which are mainly raw materials used in processing feeds, however concentrates were not listed, thus fall under the ‘any other’ products that should have paid taxes,” Geoffrey Okaka, Assistant Commissioner of Trade, URA says. A Premix consists of one or two ingredients for example vitamins and minerals, while a Concentrate carries five or more ingredients including Proteins. 

Other Import duty and VAT exempted imported items include day old chicks imported by a registered farm, parent stock for raising chicken, eggs for hatching into chicks, feeds for livestock, raw materials used in processing livestock feeds including raw protein sources like soya, feeds imported from East Africa and COMESA states. Equipment for example poultry cages are also exempted as long as they are imported by a registered farmer for use on his farm.

Okaka also explains that beyond the taxes, there is also the Buy Uganda Build Uganda (BUBU) issue. “There are companies that are locally processing some of these imported concentrates. This means that by giving a tax waiver to imported concentrates, local production is actually suffocated,” he says.

Obviously, members of the local feeds processors support the taxes and are watched with bated glee. According Amiable Mbarashimana from the Uganda Animal Feeds Manufacturing Association, the taxes will help local processors grow their businesses. “There are many of us who can produce the concentrates but we are not doing so because of unfair competition,” he says. 

However, the importers through their representatives explained that a concentrate is a premix because farmers cannot feed it to livestock directly, “You have to process it with other raw materials, for example, maize bran and whole maize to make the complete feed,” Magezi Director Champrisa International says. It therefore qualifies as a raw material for feeds.

Sources indicate that some of the players were given back dated bills with over sh200b, far above their operating budgets! They are in disarray and panic. Many face the likelihood of going bankrupt. “Retrospective taxation is an effective tool for termination of business,” Kasule says.

URA under their tax laws can back date taxes to as way behind as the importer did not pay. Most of the demand notes go back to 2017. “How can they pay a tax that they never featured in their sales? Where will this money come from,” wonders Francis Baguma, Director KAFFIKA Feeds.

“It was a prohibitive tax against a product on which the fast growth of the poultry sector stands,” says Chris Magezi, Director, Champrisa International. The matter reached the Parliament of Uganda and the taxes were again suspended in November.

Budget Remained Static

The sector was allocated sh1.67tn, with emphasis on agriculture industrialization. Agricultural export values grew by 19% from US$ 1.4 billion in 2018/19 to US$ 1.8 billion in 2019/20. The budget was lauded as a mixed bag, pointing at several factors that can help improve the sector.

There was tremendous growth in the actual amounts allocated to the agriculture sector, compared to previous years. In 2018/19 the approved agriculture budget was sh892.92bn out of sh25trillion. This accounted for around 3.5% of the entire national budget allocations. In the 2019/20 budget, sh1trillion was allocated to the sector out of a national bag of sh40trillion. This accounted for 3% of the national budget, indicating a decline of around 0.4%. Then in 2020/21, the allocation rose to about sh1.4trillion, in the 2021/22 budget sh1.67trillion has been allocated to the sector, which is about 3.8% of the total national budget. In the 2022/23 budget, sh1.449trillion was directly allocated to the sector, however the sh1trillion allocated under the Parish Development Model (PDM) is indirectly linked to the agriculture sector too.

But still, the agriculture sector allocation for FY2022/23 is below the required 10% allocation to the Agriculture sector agreed under the CAADP/Malabo regional undertakings. This declaration was made about 18 years ago by African Union countries in Malabo city, with an undertaking to allocate at least 10% of national budgets to agriculture. This means that if the Malabo agreed figure of 10% was to be met, then agriculture should have had at least sh4.4trillion out of the

sh44trillion. This according to analysts would ensure that there is enough money to kick- start every agriculture activity.

“If the 10% agreed allocation is done, then there would be more money to put in each sub-sector to grow it. There would be money for farm production, there would be money for fertilizers, harvesting, post- harvest handling, irrigation and marketing,” said Agnes Kirabo from Food Rights Alliance (FRA).

Sunday Emmanuel, a Farmer, and former member Uganda National Farmers Federation, “The good in the budget was that it is targeting improving postharvest handling, supporting value addition through empowering small scale processing units at community level, improving marketing linkages through eliminating collusion by large scale companies to defraud farmers. If these are implemented properly, then the sector should tremendously grow,” he says.

Of course issues of increasing value addition, extension workers, mechanization were given priority under the budget. Reinforcing the capacity of small holder farmers to access funds under the Parish Development Model (PDM) was also emphasized. In December 2022, the President gave out some tractors while funds for farmers under PDM were also dispersed towards the end of the year. Each Parish received sh100m. This means that the real, impact of the budgetary allocations will only be felt towards the middle of 2023.   

Next week, we shall look at livestock and crop diseases of 2022!

Happy New Year!

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