September 18, 2012

 

 

Majority of Ugandan farmers entirely depend on nature for crop production particularly corn, and each time there are prolonged dry spells or excessive rains, they suffer poor yields.

 

This predicament is an example that corn farmers all over the country are experiencing. And the cereals that could survive the bad whether normally end up in the neighbouring countries-particularly Kenya and South Sudan, leaving the indigenous population with little to either starve or pay exorbitantly for the left over "crumbs" available.

 

Yet, according to Professor Zarubabel Mijumbi Nyiira, the Minister of State for Agriculture, the potential the cereal presents far outweighs its limitation. For that, government has named it among the nine crops it is banking on to help improve its balance of payments deficit-fetch more foreign exchange, going forward.

 

Uganda consumes slightly more than 1.3 tonnes of corn annually with much of it being bought by World Food Programme (WFP) for relief operations in South Sudan and eastern Democratic Republic of Congo.

 

The ministry of agriculture projects that Uganda will produce about two million tonnes this year, about the same volume it did in the last two years. It exported 89,245 tonnes of corn worth US$26.7 million last year, down from 156,586 tonnes worth US$38.2 million realised in 2010, according to the Uganda Exports Promotion Board data.

 

A study conducted by the Independent Consulting Group said the cereal is presently making the biggest part of both the rural and urban communities' diet, let alone being the major diet for institutions such as prisons, police, military, hospitals and several schools.

 

The research also indicates that the country's corn production, though widely consumed, is generally characterised by low yields regardless of farm size. At the same time grain mills within the areas where corn is grown normally operate below full capacity because they cannot purchase adequate local supplies of corn.

 

This circumstance drives up their unit operating costs and compresses their margins, discouraging investment in that regard, partly explaining the low prices and why traders prefer to trade it in raw form to the neighbouring markets. Coupled with volatile prices, corn export performance has tended to be erratic, with low prices working backwards, which in turn reduce production and export incentives.

 

According to assessments conducted by the Uganda's Investment in Developing Export Agriculture (IDEA) Project, yield levels for corn were found to range between four to seven bags per acre. And what this shows is that Uganda is a high cost producer, meaning farmers have to rely on favourable prices to make profits. But, analysis shows that at harvest time, most farmers are bound to make losses, except for the few who use some kind of high input technology.

 

In an earlier interview the Commissioner Crop Resources, Opolot Okasai, told Prosper magazine that an increase in corn production has thus far been realised and that forecast for the year is already promising. He said farmers have bagged 2.3 million tonnes of corn up from slightly above two million tonnes last season.

 

But corn farmers have failed to utilise the warehouse receipt system to boost their yields and negotiation power as evidenced by the diminishing volumes and quality of stored cereals in those facilities in the last three years.

 

Warehouse receipt acts as negotiable instruments. It can be traded, sold, swapped, used as collateral to support borrowing, or in some cases even accepted for delivery against a derivative instrument such as a futures contract.