It makes no economic sense to ban grain exports
WEDNESDAY MARCH 7 2018
Workers shell maize at a farm in Uasin Gishu County, Kenya. The idea that a Ugandan or Kenyan farmer, somehow has a special responsibility to feed other Ugandans and Kenyans is quite absurd. FILE PHOTO | NATION
In Summary
- The idea that a Ugandan or Kenyan farmer, somehow has a special responsibility to feed other Ugandans and Kenyans, while a tea or flower grower is primed to export is, if you think of it, quite absurd.
By CHARLES ONYANGO-OBBO
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About two weeks ago, Gen Salim Saleh, Uganda’s presidential adviser on military affairs, and co-ordinator of Operation Wealth Creation, pushed for the Uganda government to ban the export of unprocessed grains.
Gen Saleh, who is President Yoweri Museveni’s younger brother, said that, “Due to lack of enforcement of standards and open border policy, Kenya, Rwanda and South Sudanese informal traders flock the villages from border to border in search of low priced unprocessed grains.
“As a result, Kenya, a country always in deficit, formally exports more grain than Uganda. Unless addressed, Uganda will remain a source of cheap, poor quality grain to the region and investors will continue to lose out in spite of their contribution to the national coffers,” he said.
According to Gen Saleh, last November, “Uganda exported more than 600 tonnes of unprocessed sorghum, more than 3,000 tonnes of maize, 9,000 tonnes of beans and 2,000 tonnes of millet.
“A kilogramme of processed maize costs Ush1,500 as opposed to a mere Ush500 farm gate price.”
Let us take it that Saleh’s heart and mind are in the right place. The problem is that his solution is wrong, and goes against the core of the East African Common Market spirit.
I wrote as much in
The EastAfrican’s sister paper in Uganda,
Daily Monitor.However, I am not a farmer. What I know about East African food markets and dynamics is what I read and I am told. And, of course, my ideological preference for open markets means I would not support a Saleh-like position.
It was therefore heartening to hear from a Ugandan who is on the frontlines of farming and selling to the region.
Let’s hand it over to the man: “I also don’t subscribe to the ban arguments. I have been engaged in maize farming in Busunju Mityana (on 30 acres) for the past 10 years. At the beginning we were getting Ush150-Ush200 per kilogramme of maize i.e. a total of 500kg per acre × Ush200 × 30 acres would earn Ush3,000,000, or equivalent to $817 at the current exchange rate).
“This money was not enough to cover the seeds and labour. It was quite discouraging. Just imagine what the small farmers were going through. The price started going up after the independence of South Sudan. Last year, we sold maize at Ush1,000-Ush1,200 per kilo because of increased demand from Kenya, Malawi etc,” he wrote.
“In Tanzania, particularly under [President John] Magufuli, the government has imposed a total ban on exports to ‘protect’ farmers, ensure adequate domestic food supply and value addition, this has not yielded additional benefits to farmers.
“Research in Tanzania on the effect of the export ban indicate that while the low domestic prices benefit urban consumers, the bans negatively affect farmers’ and traders’ incomes by hindering their access to lucrative prices in international markets.”
And there it is. Banning food exports is little more than a subsidy for urban consumers and food cartels, because then they can buy grain cheaply.
Also, the idea that a Ugandan or Kenyan farmer, somehow has a special responsibility to feed other Ugandans and Kenyans, while a tea or flower grower is primed to export is, if you think of it, quite absurd.
Charles Onyango-Obbo is publisher of Africapaedia and explainer site Roguechiefs.com Twitter@cobbo3
It makes no economic sense to ban grain exports
MY TAKE
This Onyango Obbo is a despot n will remain so. So is he in exile from Uganda. How can he favor exporting raw material at the place of value addition. Does he has even an iota of knowledge in Economics?
Think of how many jobs will be created if Uganda bans export of grains! Think of how much tax will be collected if border smugglers are no more there!
The middlemen have been there all along n have not improved the GoU coffers in form of tax collection n likewise the lives of poor wananchi the end consuumers as the price of a kilo of unga in Nrb and around Kenya is highest in the region to an extent Uhuruto had to subsidize to win voters in the two last year elections.
Open market cum free market cum common market does not mean to allow greedy prevail i.e. having people buy grain in large stocks n swindle in their private storages/silos n play with market price while 4 mln Kenyans have nothing to eat while the price of unga in Kenya is highest in the region.
I concur with Gen. Swalehe with my whole heart. Let Uganda grain give jobs to Ugandans. With good supervision the farmers can benefits with his directives.