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Agricultural exporters want govt subsidies

Juliet Musoke, executive director of the Uganda Flowers Exporters Association, tells the story of flower exports with a lot of anguish.

Recently, as she spoke at the forum organised by the Economic Policy Research Centre (EPRC) on the theme Unlocking the export potential of Uganda’s agricultural sector, she told of resilience, trials and tribulations that flower exporters continue to go through.

Flowers in Uganda cover 250 hectares of land, with about 8,500 people employed in the industry. About 30 people are employed per hectare. Musoke says the industry earns between $14m and $22m from the exports per year.

While these are quite promising numbers, the bitter truth is revealed when one gets down to the performance of the remaining firms in the sector. Since 1993, when the first flower firm opened shop in the country, Musoke says, many firms have left the market.

“Of the 22 companies that were in the market in 1994, seven are already out of the market,” she said. The firms that have left are: Sayifah Flowers, Victoria, Melisa and Shalum florists, among others.

“We fear that more and more companies could be on their way out. We feel hurt when all our colleagues get out of business,” she said.

She listed the usual problems of poor infrastructure, incapability of firms to raise the required volumes, quality of flowers, high initial costs of operation, limited access to credit facilities, high cost of air tickets, and high energy costs, among others. It is not just the flower industry that is struggling.

Uganda also exports vegetables and fruits, coffee, tea, live animals and dairy products, among others. Of late, however, some of these exports have declined, even with the country’s access to new markets around the region. For instance, the number of coffee bags has declined from four million bags of 60kgs per year to three million bags, according to official data.

By mid-2012, the country was earning about $441m per year from coffee exports, but experts predict that the sector has the potential to generate much more if given more attention. Fish exports have equally declined. In his recent State-of-the-nation address, President Museveni highlighted the fact that foreign proceeds from exportation of fish had fallen from $196m in 2006 to $142.6m in 2013, while some fish factories were operating below capacity.

So, what needs to be done?

Musoke says government must consider providing subsidies to support agricultural exports. Neighbouring Kenya gives subsidies to flower farmers in terms of fertilisers, air costs and planting materials, among others.

While Uganda’s agricultural exports are dwindling, net import of the same products has in recent years increased. Lawrence Bategeka, acting Principal of the Economic Policy Research Centre at Makerere University, says agricultural exports are failing for various reasons: land access issues, attitude towards agriculture, fake inputs and limited credit access, among others.

“There is need for government’s deliberate effort to solve infrastructure issues, streamline land ownership and, where necessary, the incentives that go to foreign investors be given to local farmers,” Bategeka said.

It is not that the government has not tried. Efforts to modernise agriculture and, therefore, improve exports have failed along the way, partly due to revenue leakages in the government system. Tress Bucyanayandi, the minister of Agriculture, agrees that something must be done.

“Production per unit, indeed, is not enough. Those using fertilisers are those only engaged in commercial production,” he said, adding: “but government is not just watching. We are reviewing extension services and this time they will work.”

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