Maize is one of the 12 agricultural commodities that Government considers to have the potential to remarkably contribute to increasing rural incomes and improving livelihoods, food and nutrition security.
Maize doubles both as a cash and food crop for most smallholder farmers. Smallholder farmers, majority of whom do not use proven yield-enhancing technologies such as improved varieties, fertilisers and pesticides, dominate its production.
A study conducted by the Economic Policy Research Centre (EPRC) two years ago revealed that only 21 in every 100 maize farmers grew improved varieties, 9 percent used pesticides, 8 percent applied chemical fertilisers to maize fields, and less than one percent irrigated their maize fields.
There several constraints that hinder farmers from using proven yield-enhancing technologies, among them is the lack of “good markets” for both cob and grain maize.
According to farmers, a “good market” is one that is able to buy all the produce supplied at a reasonably fairly price such that the farmer is not only able to recoup the money invested in production but also make some profit after sales.
We are aware that maize prices have in the recent past dropped miserably to as low as 200/= per kilo of grain. The reality is, farmers are disheartened. Most of them do not process the maize beyond the primary level of drying and shelling it to get grain, which they sell to producer buyers.
While commodity price fluctuations are normal, this drop is too significant to be ignored because it carries heavy implications. First, farmers who lack proper storage facilities and are unable to access warehouses (these are the majority), are going to be left with no option but to sell their grain at “give-way” prices.
Certainly, most farmers who grew maize during last season are likely not to breakeven; such scenarios do not foster inclusive development – it leaves behind a section of society, smallholder farmers in the case of agrarian countries, which Uganda is.
Second, due to the disappointingly low prices, many farmers are likely to react either by abandoning or scaling down on maize production during the coming season. This obviously has implications on overall maize production, which is already low and often fluctuating.
Third, the challenge we have noted on limited use of yield-enhancing technologies is likely to remain because of lack of incentives (high price of maize grain) to invest in the use of costly inputs.
Consequently, the level of maize production at national level is likely to go down, and yet it is already low (on average about 2.7 million tons per year) and below the country’s national target of producing 10 million tons annually by 2020.
Given that Uganda is desirous to industrialise with intent to create more jobs and reduce unemployment, there is greater need to have a strong agricultural production base that will ensure sustainable supply of raw materials.
The need to ensure that farmers remain incentivised to produce raw materials to feed the industries is of paramount importance. Farmers are rational, they respond to price incentives and hence the need to keep them high enough and stable.
Unstable prices, if left unattended will keep many farmers trapped at subsistence level. Therefore, at such a time when maize prices are falling and failing farmers, Government needs to come in strongly to implement price stabilisation strategies such as supporting construction of silos, warehouses, and establishing commodity funds.
Among other services, warehouses and silos provide safe storage of grains until such a time when there is ready market that offers a “good price” to enable farmers make some reasonable profit.
On the other hand, money from a commodity fund can be used by Government or lent to credible private players to purchase farmers’ produce at an established minimum price; the Government or private players can then safely store the commodity as it awaits processing or export it to regional and international markets.
The ministry of agriculture (MAAIF) according to its current sector strategic plan, intends to promote structured trading systems by linking organized collective marketing farmer groups to large buyers and storage handlers/warehouse operators.
Such plans are commendable and their implementation should be expedited. Additionally, on-going efforts by the Grain Council of Uganda and other partners to construct grain silos are appreciated and should be scaled up to uphold grain standards for better markets.
This article was also published by New Vision.
The Writer is a Research Fellow, Economic Policy Research Centre (EPRC)