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How Uganda could cushion itself from global food supply shocks

A young farmer briefs visitors about her banana enterprise. The banana crop is one of the crops that the studies propose for investment prioritization. PHOTO/FAO-UGANDA.

FAO research urges Govt to prioritize investments in agriculture to spur growth and reduce poverty

Kampala, Uganda | RONALD MUSOKE | A set of economic studies by the UN Food and Agriculture Organisation (FAO) has found that modest but well-prioritized investments in Uganda’s agricultural sector could in the long run lower food prices, improve the welfare of tens of thousands of households, and benefit the economy.

FAO’s three studies which were launched on Nov.16 in Kampala were done in a bid to prompt the government prioritise and repurpose future investments in agriculture for post-COVID-19 economic recovery. The studies also went ahead to show the districts that need to be focused on when it comes to public investments in cassava, coffee, maize, millet and goat rearing.

FAO did the research in collaboration with the National Planning Authority (NPA), the Ministry of Agriculture, Animal Industry and Fisheries (MAAIF), and the Makerere University based Economic Policy Research Centre (EPRC). Other government agencies co-opted into the collaboration were the Ministry of Finance, Planning and Economic Development, the Ministry of Local Government as well as the Office of the Prime Minister.

“These studies, if implemented, would not only cushion Uganda from the global food supply shocks such as the ones we are experiencing due to COVID-19 and the Ukraine-Russia war; but could also actually turn around our agricultural sector to make Uganda the regional food basket that it should be, as well as significantly increase our GDP and incomes of our farmers,” said Prof. Pamela Mbabazi, the chairperson of the National Planning Authority (NPA).

She added: “The findings from these studies give us a scientific basis for selecting which kinds of commodities to invest in and in which districts, in our quest to transition our farmers from peasant agriculture.”

The UN agency’s studies come at a time when the government is targeting investing up to Shs 9.2 trillion in the country’s agricultural sector over the next five years (2020/21—2024/25) under the third national development plan (NDPIII).

The agriculture sector remains the basis of Uganda’s economy; it accounts for one quarter of the country’s GDP, half of Uganda’s exports and employs close to 70% of the country’s labour force. The sector has been identified as one of the key programmes under the third national development plan (2020/21-2024/25) that will drive the economy to middle income status by 2040.

The plan emphasizes commercialization of agriculture to increase production and productivity along the value chains, agro-processing and marketing as a launch path to agro-industrialisation.

“This suite of economic reports that we are sharing with the Government of Uganda today is a major milestone in helping the country to prioritise its investments in agriculture for better returns on investment in untapped production potential, the economy at large and poverty reduction”, said Marco V. Sánchez, the Deputy Director of Agri-food Economics at FAO.

“For the first time, there is now solid, data-driven evidence at commodity-district level of where and what to invest in,” he added at the launch event in Kampala on Nov.16.

 FAO’s three studies

The first study identified agri-food sectors where public investment has the most positive impact on economic growth and poverty reduction while the second study zoomed-in to determine the districts where those high impact agri-food sectors have the most potential for production (yields) and poverty reduction. The final study analysed what types of investments are specifically needed for the sectors identified and districts pinpointed.

The impact of increasing public investment in agri-food sectors in Uganda were then assessed across five “score-point categories” including private consumption, total gross domestic product (GDP) and agri-food GDP, poverty reduction, and export growth.

The first report found that the sugarcane sector leads the ranking, coming top for the first three categories. However, for poverty reduction, cassava and potatoes took the lead, while bananas also ranked high. For export growth, tea, coffee, cocoa, and vanilla were out in front, but the impact on other private consumption, GDP or poverty reduction was more modest.

In the second study, the researchers looked at areas where investments are likely to have big impacts in terms of both agricultural growth and poverty reduction. They combined a set of spatial data to locate, for each prioritized agri-food sector, districts with strong agricultural potential, large productivity gaps, and high incidence of poverty—the equivalent to poverty reduction potential.

The new methodology used allowed the researchers to geographically rank districts in the central, eastern, northern, and western regions of Uganda for investments in high impact agri-food sectors.

In the third study, while using the first and second studies as a base, the researchers selected five districts (Lira, Masaka, Kibaale, Serere and Soroti) together with their respective high impact agri-food sector for an in-depth assessment of the most pressing investments.

Focus-group discussions were then organised in Lira for cassava (northern region), in Masaka for coffee (central region); Kibaale for goats (western region), Serere for maize (eastern region) and Soroti for millet (eastern region).

When the farmers were interviewed, they listed the quality and availability of inputs such as seeds and improved breeds as the most pressing investment priorities although better access to extension services was also mentioned as a priority, with a call to expand coverage, improve linkages with recent research and development (R&D), and deliver technical advice and training in the languages spoken locally.

Mechanization also ranked high, with a focus on the suitability of equipment for smallholders’ needs, their affordability, and the skills level required to maintain them. Interestingly, investments in road access and electricity infrastructure did not come out as high priorities from the focus-group discussions with farmers and stakeholders.

This portfolio of work of economic analyses and repurposing agri-food investments was then carried out by the Agri-food Economics Division’s Monitoring and Analysing Food and Agricultural Policies (MAFAP) programme, one of FAO’s leading policy support initiatives that works with countries in Africa to strategically prioritise, reform and implement policies on food and agriculture.

“I commend the Government of Uganda on its sound legal, policy and institutional frameworks, which provide the roadmap for taking this food systems approach further,” said Antonio Querido, the FAO Representative in Uganda.

“FAO, NPA and MAAIF believe that this initiative will help government and other stakeholders in prioritizing investments for economic recovery and repurposing domestic public budgets for agriculture to achieve more value for money, economically, socially and sustainable”, Querido added.

Going forward, the data-driven evidence will inform the government’s decisions in prioritising investments in agriculture as part of the implementation of, among others, the NPDIII and in alignment with the delivery approach promoted under the Parish Development Model.

The policymaking evidence can also guide the lending portfolios of national and international financial institutions in Uganda as well as investment proposals under FAO’s Hand-in-Hand Initiative.

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