• Authored By: Justine Luwedde
05 Oct 2022

Nine months after the Russian-Ukraine war broke out, countries afar continue to feel the impact. It is indeed argued that the war has affected global trade as the dual are main suppliers of commodities such as wheat, sunflower, fertilizer, fuel and metals, among others[i]. Sanctions have seen consumers bear the brunt of high commodity prices. For Uganda particularly, the effects of the war are evident in increases in commodity and fuel pump prices.

In Uganda, diesel fuel is critical for agricultural activities such as planting, harvesting, and goods transportation. An increase in input its prices affect farmers in two ways: the first, is a reduction in farmer’s margins; and the seconds is a reduction of output to curtail the rising cost. Relatedly, a reduction in agricultural output increases prices of agricultural products affecting consumer welfare and increasing the possibility of food insecurity.

In addition, curtailment of petroleum production affected the production of petro-chemicals and fertilizers. Data shows that the international prices of fertilizers were on the rise all through 2021, particularly for nitrogen fertilizer, as a result of oil supply and demand dynamics[ii]. Uganda‘s fertilizer imports from Russia reduced to USD 0.4 million (1 billion Ugx) in the quarter ending June 2022, up from USD 6 million (22 billion Ugx) in 2019. Fertilizers are a major input in agricultural production hence price increases imply less use by farmers, thereby reducing yields.

There has been a rise in prices of some foods, directly attributable to war. Wheat, for example, has become part of the Ugandan diet in the recent past and the country largely depends on wheat imports from Russia and Ukraine. In 2020, Russia comprised the biggest share of wheat imports to Uganda with a share of 33 percent (approximately USD 50 million)-figure 2. However, in the quarter ending March 2022, Uganda recorded no wheat imports from Russia, only to recover in June 2022 with imports worth USD 1.3 million.

In terms of supply, coffee comprises a bigger share of Uganda’s exports. According to Uganda Coffee Development Authority[i], Uganda exported 6.5 million 60kg bags of coffee in 2020/21 making a record of 23 percent growth in coffee export earnings. The value of Uganda’s coffee exports to Russia has dropped from USD 7 million in 2020 to USD 3 million in the quarter ending June 2022, a significant fall as a result of the war.

In sum, there is a likelihood that the Russia-Ukraine war has mostly affected Uganda’s agriculture and transport sectors, and these feed directly into consumer prices. Therefore, Uganda needs to; seek for alternative markets for her exports and critical commodities imports in order to sustain food supplies, and export revenue. There is also need to regulate domestic fuel prices to cushion consumers in the short-term and fast track oil production locally, as soaring oil and gas prices are bound to have a negative impact on the economy.

[i] See https://www.ugandacoffee.go.ug

[i] See https://odi.org/en/insights/the-systemic-impacts-of-the-war-in-ukraine-a-triple-shock/

[ii] See FAO (2022) Information Note: The importance of Ukraine and the Russian Federation for global agricultural markets and the risks associated with the current conflict. Rome

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