Said The Monitor report: ‘Finance minister Matia Kasaija said government has injected Ush100 billion to buy off excess maize stock that has resulted into falling corn prices.
“Funds will be accessible to all interested traders in the maize business, who have requisite storage, cleaning and drying facilities in order to allow the maize to be stored for at least six months when prices are expected to recover,” Kasaija said.
“…The price of a kilogramme of maize has plummeted from Ush900 last year to Ush200 this year. Consequently, several farmers cannot even recoup half of the operational costs, sparking fears that they will not invest in maize growing next year, a scenario that may lead to future food shortages in the country and the region”.
Then the beauty: “Uganda, currently, produces at least five million tonnes of maize annually, but only half is consumed domestically.
The rest is exported to deficit maize countries such as Kenya and Rwanda. However, the said countries, due to favourable weather this year, have had a bumper harvest, leaving Ugandan farmers stuck with their produce”.
In other words, Uganda’s maize farmers were caught out by the weather. It is something they could have prevented by checking the many free long-term weather forecast platforms on the Internet!
Consider this: If the price of maize had risen to Ush1,200 a kilogramme instead of dropping to Ush200, would the government have intervened to lower it? No!
We will not go into the inequities here, and the questions that have been asked about why the government never does the same for potato, bean, banana, cassava, and millet farmers. Maize farmers are not a special breed.
We shall take the view that government action might sometimes be necessary, but in this case, it is the wrong one. The right thing to do is to introduce laws that force farmers to use windfalls better.
They could pay, say 50 per cent, of the earnings they make on every kilogramme of maize whenever the price is higher than Ush750 into a stabilisation fund. The fund will be managed by a body established by farmers groups, structured along the lines of savings and cooperatives societies (Saccos).
A law needs to be made for that, to ensure transparency and protect farmers’ money, the way Kenya did with Saccos. The Saccos are not government-owned.
In lean times, the farmers would get from the fund to cover their shortfall. But for Christ’s sake, keep the taxpayers’ money out of this.
In Malawi, pilot projects to reintroduce cotton, have seen big successes because farmers have to buy a small insurance, which covers them if their crop fails, and is rolled over if they get a bumper harvest.
Secondly, low prices are not always bad. Ideally, precisely Rwanda and Kenya have a better maize harvest; Ugandan farmers should be able to protect their market share with a cheaper crop.
But the real solution was staring minister Kasaija in the face, and he alluded to it – storage. Storing food allows you, and we will be blunt, to manipulate the market to your advantage. In addition to clever protections like a Stabilisation Fund, it also helps you to create something I hate – cartels. But it keeps you in business. The maize farmers should not waste this crisis. The State should not intervene to ease their pain. If they are hit hard enough, they will probably learn and be innovative, and set out on the path to conquering the East Africa maize market.
There is in this country a new wave of fascination with government as the answer to all our problems. The Yoweri Museveni government loves to play nanny, because it buys it new political capital as its star fades. The Opposition loves to call on government intervention, because it knows it will bungle the intervention with corruption and nepotism, leaving it further discredited.
Some years ago, I attended a high-level Africa conference at a fancy location on the shores of Lake Como in Italy, of which I have written once before. There was even a former president in the house.
There was a marvelously cantankerous Costa Rican economist in attendance. He said the problem with Africa was evident from the air.
You fly over virtually all the continent, and you don’t see the things you do in other parts of the world – there are no giant storage facilities visible from the air; no massive labyrinth networks of railways visible from up there; and hardly any big processing plants one can see from high up in the skies.
“Fix those things, and you will fix Africa’s economic mess”, he said. He was right.
If Kasaija has Ush100 billion to give, let him not throw it at maize. Let him place it with entrepreneurs to build more maize storage, process it, and manipulate the market.