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Uganda: Commodity Prices Soar
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The Monitor (Kampala)
30 April 2008
Posted to the web 29 April 2008
Rodney Muhumuza, John K. Abimanyi & Tom Magumba
Kampala
As city dwellers grapple with soaring commodity prices, analysts are predicting that the urban poor will be even under greater strain if regional markets remain competitive.
As traders find comparatively high prices for their produce in foreign markets, consumers in Kampala must dig deeper into their pockets, the analysts say.
"They must be willing to pay as much [as elsewhere in the region]," said Mr Thomas Bwire, a Makerere University economist. "As a trader, you look for the best price. My anticipation is that we are going to have this continue for some time."
Although traders who spoke to us agreed that there is rising demand elsewhere in the region, they blamed it mostly on high fuel prices and other transport-related costs.
The prices of most food items, including those locally produced, have more than doubled since the start of 2008, raising fears that the country could be headed for a food crisis.
Bananas, potatoes, beans, beef and vegetables are exiting to foreign markets in South Sudan, eastern DRC and Rwanda, where growing (and competitive) markets must be satisfied.
"[The rise] is because of the increase in demand in the regional market," said Mr Lawrence Bategeka, a research fellow at the Makerere University-based Economic Policy Research Centre. "The question is: Do we have the capacity to increase supply?"
About 15 per cent of Uganda's 30 million people live in urban areas, where the soaring prices are most upsetting. According to Dr Augustus Nuwagaba, a Makerere University social scientist who is also a poverty eradication consultant, About half of Uganda's urban dwellers, or 2.6 million people, are poor.
In a survey of markets carried out by Daily Monitor, most vendors said the trend of soaring prices may persist. As long as the price of fuel remains high, they said, the food prices cannot be expected to come down.
"If fuel costs reduce, then the situation may be different. Transporters have doubled costs because the rains have spoiled the rural roads," said Mr Sam Yawe, the secretary for mobilisation at Nakawa Market.
Mr Yawe said transporters had doubled the rates on all the main supply routes in the eastern and western parts of the country.
Hiring the smallest truck to transport food from Jinja costs Shs300,000, up from Shs160,000 in February, he said.
According to Dr Nuwagaba, although agricultural productivity in Uganda has slowed down, "we are not lacking food. We are lacking a linkage between production and consumption centres."
Speculative middlemen, Dr Nuwagaba said, have taken advantage of global trends and the fuel narrative to fix unreasonably high prices. "The margin should be small...These are already bad prices.
People in town are feeling it," said Mr Elly Twineyo, the executive director of the African Centre for Trade and Development, a Kampala think tank. "Uganda should be food-sustainable. World prices should not affect us in terms of food."
A kilo of maize flour costs Shs1,200, up from Shs800 at the start of the year. A 1 kg loaf of bread now goes for Shs2,600, up from Shs1,800. A kilo of rice is at Sh2,100, up from Sh1,800.
And a kilo of beans has gone from Shs1,200 to Shs1,700. Cooking oil has gone from Shs3,500 a litre to Shs5,000. In all markets, a kilo of meat is now at between Shs4,000 and Shs5,000, up from Shs3,000 a few months ago. "Where a Ugandan would offer Sh750,000 for a cow, the Sudanese buy at almost Shs1 million," said Mr Defasi Kiggut, who supervises market vendors at Kalerwe Market.
Some traders reported that flooding in Teso and parts of northern Uganda significantly affected crop yields, especially of potatoes and groundnuts.
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Mr Charles Munyigwa, a potato trader in Nakawa Market, blamed the rising prices on poor supply from the villages. "Most people in the villages are coming to town to ride boda bodas and do other cheap work" he said.
Around the world, especially in Africa, food prices have been going up, leading to protests in some countries. The UN has announced a taskforce, made up of its agencies and the World Bank, to tackle the global food crisis.
The UN says 100 million people are going short of food, and the World Food Programme says it will need an extra $755 million this year.
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