Uganda Staple Food Market Fundamentals

• This FEWS NET Market Fundamentals report presents findings to inform regular market monitoring and analysis in Uganda. This report was prepared concurrently with an Enhanced Market Analysis (EMA) report, focusing on the Karamoja subregion of Uganda. Among other uses, the information presented jointly in these two reports can be used to support the design of food security programs, including but not limited to informing a U. S. Agency for International Development (USAID) Bellmon determination in advance of an FY 2017 USAID Community Development Fund-supported (CDF) development food assistance program in the Karamoja subregion. 
• This report documents the basic staple food production and marketing context in Uganda, covering key commodities including maize, dry beans, cassava, cooking bananas (matooke), millet, sorghum, and edible oil. National livestock markets are also analyzed. The information presented stems from a literature review, secondary data, and a field assessment. In-country field research included structured, in-depth interviews with key stakeholders, market visits, and a two-day stakeholder consultation workshop held in Kampala in February, 2015. 
• Over the past decade, Uganda made significant progress in economic and human development. Prudent macroeconomic policies and an inclusive development approach contributed to the revitalization of the economy, increased public and private investment in key sectors such as agriculture, education, and health, and a marked reduction in poverty (from 56 percent in 1992 to 19 percent in 2013 relative to the national poverty line). 
• Agriculture is the backbone of the Ugandan economy. The agriculture sector employs 33 percent of the working population and contributes to 23 percent of national gross domestic product (GDP). Favorable year-round climatic conditions and large agricultural potential facilitate the cultivation of a wide and diverse range of staple food and cash crops, as well as livestock production. A large proportion of agricultural households engage in both crop production and animal rearing (cattle, small ruminants, and/or poultry). The fishery sector also plays an important role as an income generating activity, with Lake Victoria as the most important catchment area. Capture fishery (tilapia, carps, and other freshwater fish) dominates production since fish farming remains underdeveloped.
• Cooking bananas, cassava, dry beans, sweet potatoes, rice, millet, and sorghum are the main staple foods in Uganda, in terms of area planted and production volume. Coffee, tea, cotton, cut flowers, and processed fish are among the main agricultural products exported. Maize is produced as both a staple food and cash crop and exported to regional markets. 
• Uganda is self-sufficient in terms of staple food production, and plays a major role in regional food supply and trade. Staple foods are exported to neighboring structurally deficit countries (Kenya, South Sudan, and the Democratic Republic of the Congo (DRC)). Therefore, issues affecting the demand, supply, and/or trade of key staples in the broader region, influence market dynamics in Uganda. Regional economic integration through the East African Community (EAC) and the Common Market for Eastern and Southern Africa (COMESA) facilitate trade flows. 
• Most food production in Uganda takes place at the smallholder and subsistence level, under rainfed conditions, and with low use of agricultural inputs. The resulting productivity levels are generally low. The majority of the country benefits from two rainy seasons during the year (each with precipitation above 500 mm), allowing for two maize, beans, millet, and sorghum harvests. Seasonal production patterns for these crops plays a major role in availability and trade flows. Cassava, cooking bananas, and sweet potatoes are harvested and marketed throughout the year. Many of the northern districts of Uganda experience only one rainy season during the year and are prone to drought. Agricultural production in this area is more limited and consequently, the area is structurally-deficit and relies on supplies from surplus producing areas of the country.
• Low output levels coupled with a high risk of pest/disease infestation, a weak market information system, limited market access, limited processing and value addition, poor post-harvest management, and disregard for quality and phytosanitary standards constrain the performance of staple foods markets nationally and regionally. Several other factors influence the performance of agricultural markets through their impacts on food availability, access, and/or trade including: 
  • Geographic/climatic: occurrence of extreme weather events, particularly severe drought. As mentioned earlier, the bimodal rainfall pattern prevalent in most of the country ensures the viability of agricultural production throughout the year. The highest rainfall levels are observed in southern Uganda. Reduced rainfall compromises production particularly in the central, western, and northern regions. 
  • Social: conflict and insurgency, cattle rustling, increasing urbanization, widespread prevalence of HIV/AIDS, cholera, and malaria. 
  • Economic: high poverty incidence, particularly in the Northern and Eastern regions conducive to low effective demand and growth of the middle class predominantly in the Central and Western regions leading to increased demand of certain food products. 
  • Physical: insufficient and inadequate infrastructure (roads, irrigation systems, storage, cold chain), processing, and market facilities.
  • Institutional: financial support to the agriculture sector (public spending, extension services), market liberalization.
  • Regional context: seasonality of production and deficits in neighboring countries, participation of foreign traders in local marketing, regional economic integration efforts.
• In spite of the broad engagement of households in agriculture, only about a fourth of agricultural households rely on this sector as their only income source. Most agricultural households source their food from a combination of own production and market purchases. Casual labor income is essential for covering basic food and nonfood needs of poor households, who rely on food purchases to a greater extent than wealthier households. 
• Although Uganda is generally self-sufficient in terms of domestic food availability, the country does import limited volumes of wheat (and wheat products), vegetable oils, rice, and sugar destined for urban consumers and the food processing industry. Imports are sourced directly from international markets and through re-exports from international markets via neighboring countries. The port of Mombasa in Kenya is the main access point for products imported to the EAC, although use of the port of Dar es Sallam is increasing.
• Most agricultural produce is sold by farmers at the farm gate or in local informal markets. Many actors participate along the marketing system, ranging from farmers, traders, central and local governments, to retailers and consumers (private and institutional). The most common pricing method for staple foods is bargaining during spot transactions between buyers and sellers, contributing to spatial and temporal price variation. 
• Markets for locally-produced staple foods are generally competitive, with a large number of buyers and sellers. Constraints on the availability of capital needed for covering the different marketing costs (storage, transport, trading license fees) are among the most important barriers to entry. Traders rarely specialize in individual goods (food and nonfood) and rather switch across commodities depending on availability and profitability. 
• The most important domestic markets are Kampala and Busia, both of which also serve as transit points for exports to regional markets. Soroti, Lira, and Gulu serve the structurally-deficit Karamoja subregion. Uganda is a net exporter of its staple foods and Kenya, South Sudan, Tanzania, DRC, and Rwanda are its main trade partners. Exports are seasonal and informal export volumes surpass those of formal trade.
• Thin markets, poor storage and processing facilities, and other infrastructure constraints, as well as multiple growing seasons in high-potential areas result in high intra-annual staple food price variation. Staple food demand is dynamic and very responsive to price changes, as consumers faced with higher prices for one good quickly shift demand to substitute products such as millet, sorghum, potatoes, yams, and peas. Commercial and humanitarian storage facilities are available in Uganda. The largest humanitarian warehouses are located in the greater Kampala area (capacity up to 18,000 MT per facility). In addition, a number of smaller facilities are scattered across the country with capacities between 350 and 3,000 MT. Most of these facilities are owned and operated by the World Food Programme (WFP) and have an aggregate capacity of about 50,000 MT. Commercial storage is available in the major cities and towns. The aggregate commercial capacity is around 85,000 MT. Public/government-owned storage is not available. Karamoja has no largescale storage and food assistance delivered there transits through humanitarian warehouses found elsewhere in the country (Soroti).

Overview of the main staple food markets 

• Cooking bananas: Bananas are predominantly produced in the Western region. Traders typically collect bananas in plantations or in small assembly markets and transport them to their destination markets. A considerable amount of cooking bananas are exported informally to neighboring countries. Imports are dominated by the Gonja variety, which is typically roasted and sourced from the DRC and Tanzania. 
• Cassava: Eastern and Northern Uganda contribute about two-thirds of total cassava production. Both leaves and tubers are eaten. The tuber is eaten fresh, dried, or processed into chips or flour, which is used to prepare porridges and bread. Its tolerance to drought and the possibility of harvest throughout the year make cassava an important food security crop. Estimations suggest that a significant amount of cassava chips and flour are informally imported into Uganda. 
• Maize: White maize is produced in all four regions in Uganda, with the Eastern and Western regions contributing about 75 percent of national production. About 14 percent of total production (ca 400,000 MT) is exported to neighboring countries. Maize is consumed fresh or dried (grain, flour), and is also used for the local brewing and animal feed industries. 
• Dry Beans: A wide variety of dry beans are produced predominantly in the Western and Northern regions of Uganda. Depending on the season, beans flow between Uganda and neighboring countries. Beans are cooked and served as a complement ("sauce") to other staples. 
• Millet and Sorghum: Millet and sorghum production is marginal compared to that of other staples. Nonetheless, they are relevant crops particularly in the Eastern and Northern regions and are exported to South Sudan and Kenya via both formal and informal channels. These cereals are considered complementary to other staples and are used to produce bread, porridges, and beverages (alcoholic and nonalcoholic).