9 May 2008
editorial
The announcement by President Museveni that taxes on milk production related operations will be removed is a welcome move. It is the only way the person at the lowest end of the income ladder can benefit instead of expecting them to benefit from rising food prices yet they do not have what to sell.
Uganda is primarily an agricultural country with over 80 per cent of ordinary folks eking a living by tilling the land. It also means the sector employs most people in the country. The irony though is that the sector is virtually neglected because fewer funds are directed to activities such as development of better breeds, helping farmers to mechanise their farming, finding market for harvests and long term cheaper credit for farmers, which would directly benefit farmers.
Now, waiving taxes on milk production activities solves one problem- that more people could be attracted to process milk, have spare funds to invest in new milk processing technologies, and compete favourably with other processors in the region. The spin off should benefit the farmers by way of a growing ready market for the huge supply of milk.
The fact that increased milk output from 700 million litres in 2000 to over 1.4 billion litres six years later saw a 20 per cent increase in incomes of farmers tells a bigger story of how encouraging the milk industry to grow could have far greater benefits to milk farmers and the whole chain of dairy production than dangling a few expensive funds though politically motivated programmes like Bonna Bagaggawale to farmers who can hardly manage to save.
The next step is to broaden the tax relief to other agricultural areas so that the whole spectrum of farmers can benefit. Areas like beef, fish, cotton, vanilla and sunflower production are some that should be given specific attention to help them transit from subsistence to highly mechanised and commercial farming.
If that happens, then the rising food prices will benefit majority of the farmers since they will be able to sell their produce at the high prices.
The government and its development partners have been wholly occupied trying to keep farmers healthy and educated through various funding channels by putting lots of funds in health programmes and Universal Primary Education.
But these same farmers cannot sustainably feed, shelter or clothe themselves. Money that goes directly to help farmers make more money is money well spent.
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