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Source: MoFPED, Background to the Budget (various issues). and Lira for sunflower; and various multinationals engaged in Tea production. Indeed, th ‘ehabilitation of formerly expropriated tea estates and the opening up of new tracts of land b nultinationals explains the consistent increase in tea production after the reforms (Figure 2) he limited expansion of plantation agriculture is partly linked to constraints of the lan: enure system—an issue we examine further below. An important point of concern is that th structure of agricultural production in Uganda has remained more or less the same even afte agricultural reforms. About 80 percent of the agricultural production is still carried out b smallholder farmers. Second, the level of value-addition has not changed fundamentally. Th imited value-addition implies that a significant part of the national income is lost to Uganda’ mporting partners.

Figure 2 Source: MoFPED, Background to the Budget (various issues). and Lira for sunflower; and various multinationals engaged in Tea production. Indeed, th ‘ehabilitation of formerly expropriated tea estates and the opening up of new tracts of land b nultinationals explains the consistent increase in tea production after the reforms (Figure 2) he limited expansion of plantation agriculture is partly linked to constraints of the lan: enure system—an issue we examine further below. An important point of concern is that th structure of agricultural production in Uganda has remained more or less the same even afte agricultural reforms. About 80 percent of the agricultural production is still carried out b smallholder farmers. Second, the level of value-addition has not changed fundamentally. Th imited value-addition implies that a significant part of the national income is lost to Uganda’ mporting partners.

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Source: MFPED, Background to the Budget reports 2008/9 and 2011/12 Table 1: Uganda, Growth in GDP by major sectors (constant 2002 prices), 2001/2002-2010/2011 (%)
Source: MFPED, Background to the Budget reports 2008/9 and 2011/12 Table 1: Uganda, Growth in GDP by major sectors (constant 2002 prices), 2001/2002-2010/2011 (%)
Figure 1: Coffee production, 1991-2011 Source: UCDA annual and monthly reports. \t the household level, the decline in coffee production has affected household incomes given hat most rural households in central and western Uganda grow this crop. For instance, the early 40 percent decline in coffee production registered between 2002 and 2006 amounted O an estimated annual loss of about USS 100 million—based on the average coffee price n 2006 of US 1.3/Kg. The coffee sector is also constrained by the problem of limited value dition. From the perspective of value-addition, this suggests that the pro-market reforms ave not improved the pre-reform status-quo.
Figure 1: Coffee production, 1991-2011 Source: UCDA annual and monthly reports. \t the household level, the decline in coffee production has affected household incomes given hat most rural households in central and western Uganda grow this crop. For instance, the early 40 percent decline in coffee production registered between 2002 and 2006 amounted O an estimated annual loss of about USS 100 million—based on the average coffee price n 2006 of US 1.3/Kg. The coffee sector is also constrained by the problem of limited value dition. From the perspective of value-addition, this suggests that the pro-market reforms ave not improved the pre-reform status-quo.
Another key problem is that an even smaller proportion of loans are directed toward: households. Most of commercial bank advances to agriculture go to commercial agricultura production enterprises and agricultural trading entities. According to the Uganda Nationa Household Survey, the proportion of households applying for credit from either commercia banks or microfinance institutions remained at about 7 percent during 2005/6-2009/1( (UBoS 2010). The corresponding rate for rural households—where most of the agricultura production is done, was only 6.4 percent. Ugandan households predominantly continue tc borrow informally (from friends/relations) to finance either economic activities or householc consumption.? une 2000 to 50 percent by June 2011. The recent surge in the share of loans to agricultura yroduction can be attributed to the targeted schemes e.g. the Agricultural Credit Facility ntroduced by government in 2009. This scheme made available UShs 30 billion per year natched equally by participating banks—at a preferential interest rate of 10 percent pe innum for a maximum loan period of 10 years. Nonetheless, the relatively low share of tota igricultural loans in private sector lending suggests that the agricultural sector is not accordec he necessary resources—by both the commercial banks and the public sector.
Another key problem is that an even smaller proportion of loans are directed toward: households. Most of commercial bank advances to agriculture go to commercial agricultura production enterprises and agricultural trading entities. According to the Uganda Nationa Household Survey, the proportion of households applying for credit from either commercia banks or microfinance institutions remained at about 7 percent during 2005/6-2009/1( (UBoS 2010). The corresponding rate for rural households—where most of the agricultura production is done, was only 6.4 percent. Ugandan households predominantly continue tc borrow informally (from friends/relations) to finance either economic activities or householc consumption.? une 2000 to 50 percent by June 2011. The recent surge in the share of loans to agricultura yroduction can be attributed to the targeted schemes e.g. the Agricultural Credit Facility ntroduced by government in 2009. This scheme made available UShs 30 billion per year natched equally by participating banks—at a preferential interest rate of 10 percent pe innum for a maximum loan period of 10 years. Nonetheless, the relatively low share of tota igricultural loans in private sector lending suggests that the agricultural sector is not accordec he necessary resources—by both the commercial banks and the public sector.
The extent of private investment in agriculture is also indicated by the level of expenditure on the agriculture inputs. According to Table 3, households in Uganda spend an estimated UShs 279 billion on non-labour inputs. The two most important line items are expenditures on seedlings and pesticides. Seedlings and pesticides account for 61 percent and 19 percent of the -or households that apply for credit, the UNHS surveys probe the reasons for the applicatior n Table 2 we show the reasons for household loan application by financial service provide n 2009/10. The two predominant uses of funds received from banks or MFIs are for workin; capital/purchase of inputs and paying for education expenses. The rate of borrowin; ‘Oo purchase farm inputs and tools is consistently low for all households. Thus, apart fron consumption, households are only willing to borrow to make long term investments such a: ourchase of land and non-farm equipment. Although the initiation of MFls in the late 1990: Nas expected to partly fill the void left by the collapse of producer cooperatives, MFls anc ‘elated institutions have failed to develop farm loan products. The interest rates charged b\ VIFls are not only high; the very short repayment periods make loans from MFls unsuitable “Or aoriciiltira
The extent of private investment in agriculture is also indicated by the level of expenditure on the agriculture inputs. According to Table 3, households in Uganda spend an estimated UShs 279 billion on non-labour inputs. The two most important line items are expenditures on seedlings and pesticides. Seedlings and pesticides account for 61 percent and 19 percent of the -or households that apply for credit, the UNHS surveys probe the reasons for the applicatior n Table 2 we show the reasons for household loan application by financial service provide n 2009/10. The two predominant uses of funds received from banks or MFIs are for workin; capital/purchase of inputs and paying for education expenses. The rate of borrowin; ‘Oo purchase farm inputs and tools is consistently low for all households. Thus, apart fron consumption, households are only willing to borrow to make long term investments such a: ourchase of land and non-farm equipment. Although the initiation of MFls in the late 1990: Nas expected to partly fill the void left by the collapse of producer cooperatives, MFls anc ‘elated institutions have failed to develop farm loan products. The interest rates charged b\ VIFls are not only high; the very short repayment periods make loans from MFls unsuitable “Or aoriciiltira
Source: Authors calculations from the 2009/10 Uganda National Panel Survey he limited use of agricultural inputs can be traced to the dismantling of producer cooperatives vhich used to vould attract p offee—where provide inputs to farmers on credit. The expectation was rivate sector actors to provide key inputs. This has not ma producers are guaranteed some form of income—only 1 pe armers use inputs (UCDA 2011). Related, the quality assurance function of o the quality o that liberalization terialized. Even for rcent of the coffee MAAIF with regarc f seeds remains unfulfilled. Issues of poor quality seeds remain pervasive and nN some instances poor seeds are blamed for the rampant spread of cro 010). p diseases (MAAIF total expenditures respectively. The table further shows that there are limited expenditure: on the other key inputs—organic and chemicals fertilizers. In terms of the welfare distributior the top quintile accounts for 32 percent of total expenditures. The table shows that agricultura production in Uganda remains rudimentary. The limited use of chemicals and pesticides car be attributed to both the costs of these inputs as well as their non-availability in near-by markets.
Source: Authors calculations from the 2009/10 Uganda National Panel Survey he limited use of agricultural inputs can be traced to the dismantling of producer cooperatives vhich used to vould attract p offee—where provide inputs to farmers on credit. The expectation was rivate sector actors to provide key inputs. This has not ma producers are guaranteed some form of income—only 1 pe armers use inputs (UCDA 2011). Related, the quality assurance function of o the quality o that liberalization terialized. Even for rcent of the coffee MAAIF with regarc f seeds remains unfulfilled. Issues of poor quality seeds remain pervasive and nN some instances poor seeds are blamed for the rampant spread of cro 010). p diseases (MAAIF total expenditures respectively. The table further shows that there are limited expenditure: on the other key inputs—organic and chemicals fertilizers. In terms of the welfare distributior the top quintile accounts for 32 percent of total expenditures. The table shows that agricultura production in Uganda remains rudimentary. The limited use of chemicals and pesticides car be attributed to both the costs of these inputs as well as their non-availability in near-by markets.
Source: Author’s conceptualisation on the Basis of Document Reviews
Source: Author’s conceptualisation on the Basis of Document Reviews
Source: Based on Stakeholder Consultative Workshops, Oct — Dec 2011 Table 4: Framework for Institutional Analysis and New Policy Interventions
Source: Based on Stakeholder Consultative Workshops, Oct — Dec 2011 Table 4: Framework for Institutional Analysis and New Policy Interventions
Listing of EPRC Research Series published since 2005 to date. Full text format of these and
Listing of EPRC Research Series published since 2005 to date. Full text format of these and
Related topics:
EconomicsAgribusinessPolitical Economy of DevelopmentComparative Institutional AnalysisFarm managementIndustrial and Trade Policy
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