LINKAGES BETWEEN AGRICULTURAL LINKAGES BETWEEN AGRICULTURAL PRODUCTIVITY AND RURAL LIVELIHOODS PRODUCTIVITY AND RURAL LIVELIHOODS ON ONE HAND AND TRADE IN AGRICULTURE ON ONE HAND AND TRADE IN AGRICULTURE AND TRADE FACILITATION ON THE OTHERAND TRADE FACILITATION ON THE OTHER

RECCOMENDATIONS FOR POVERTY RECCOMENDATIONS FOR POVERTY REDUCTION AND DEVELOPMENT FOR A REDUCTION AND DEVELOPMENT FOR A LANDLOCKED – COUNTRY LIKE UGANDALANDLOCKED – COUNTRY LIKE UGANDA

ByBy

Mwambutsya NdebesaMwambutsya Ndebesa

E-mail: E-mail: ndebesam@yahoo.comndebesam@yahoo.com

INTRODUCTIONINTRODUCTION

Economic, Trade and Social Profile of Agriculture SectorEconomic, Trade and Social Profile of Agriculture Sector

– Trends in the production, exports and imports of major crops/productsTrends in the production, exports and imports of major crops/products

– Trends in agricultural productivity with a focus on developments in the Trends in agricultural productivity with a focus on developments in the productivity of main crops in the last ten yearsproductivity of main crops in the last ten years

– Trends in formal and informal employment in agriculture, rural poverty, Trends in formal and informal employment in agriculture, rural poverty, nutrition and food security statusnutrition and food security status. .

Landlockedness and trade facilitation issuesLandlockedness and trade facilitation issues

– Identification of main physical, infrastructural and institutional Identification of main physical, infrastructural and institutional constraints constraints

– Policy framework with a focus on:Policy framework with a focus on:

– Key features of existing development, trade, agriculture and trade Key features of existing development, trade, agriculture and trade facilitation policiesfacilitation policies

OBJECTIVES OF THE STUDYOBJECTIVES OF THE STUDY

To collect information on and analyse the recent trends in To collect information on and analyse the recent trends in agricultural productivity, agriculture trade, livelihoods, and trade agricultural productivity, agriculture trade, livelihoods, and trade facilitation measures;facilitation measures;

To examine the complex relationships involved using a holistic To examine the complex relationships involved using a holistic framework;framework;

To generate new insights and knowledge that has practical To generate new insights and knowledge that has practical implications; and implications; and

To contribute to finding solutions including through coherent policy To contribute to finding solutions including through coherent policy framework that will assist Uganda in meeting the objectives of NDP framework that will assist Uganda in meeting the objectives of NDP and NTP 2007.and NTP 2007.

KEY SUBSTANTIVE ISSUES TO BE COVEREDKEY SUBSTANTIVE ISSUES TO BE COVERED

Role of and constraints faced by the agricultural sector with focus on Role of and constraints faced by the agricultural sector with focus on rural livelihoods, productivity, and trade;rural livelihoods, productivity, and trade;

Trade facilitation needs and measures with focus on those directly Trade facilitation needs and measures with focus on those directly related to landlockedness;related to landlockedness;

Linkages and relationships among various issues with focus on Linkages and relationships among various issues with focus on identifying areas for synergetic action;identifying areas for synergetic action;

Policy frameworks related to agriculture, trade, and trade Policy frameworks related to agriculture, trade, and trade facilitation; andfacilitation; and

Development of coherent thinking and practice in the areas under Development of coherent thinking and practice in the areas under study to advance poverty reduction and development objectives. study to advance poverty reduction and development objectives.

GDP GROWTH RATE TRENDSGDP GROWTH RATE TRENDS From the late 1980s, Uganda From the late 1980s, Uganda

registered high growth rates registered high growth rates until the 2000s when the until the 2000s when the growth rates slowed down as growth rates slowed down as shown in the Figuresshown in the Figures

Economic growth raised from Economic growth raised from Us $ 2 billion in 1980s to Us Us $ 2 billion in 1980s to Us $12 billion in 2007$12 billion in 2007

Annual Average Growth rate of Total real GDP (1980-2007

3.5

7.4

6.8

6.1

5.6

6.56.2

6.5

5.85.9

5.7

0

1

2

3

4

5

6

7

8

80-90 80-00 80-05 90-00 90-05 95-05 00-05 2004 2005 2006 2007

Per

cen

t

Nominal GDP ( 1980 - 2007)

-

2,000

4,000

6,000

8,000

10,000

12,000

14,000

1980 1990 2000 2003 2004 2005 2006 2007

US

$ M

illi

on

Contribution of Agriculture to GDPContribution of Agriculture to GDP

The share of Agric. to GDP The share of Agric. to GDP in Uganda has been in Uganda has been declining since 2001declining since 2001

Between 2000/09, the Between 2000/09, the share fell while that of share fell while that of Industry and services roseIndustry and services rose

The declining share of The declining share of agriculture in GDP vis-vis agriculture in GDP vis-vis other sectors represents other sectors represents positive transformation of positive transformation of a country’s economya country’s economy

%ge Contribution of Agricultue to Total GDP

35.734.1

25.1 24.122.3 21.2

23.7

36.5

0

5

10

15

20

25

30

35

40

2001/02 2002/03 2003/04 2004/05 2005/06 2006/07 2007/08 2008/09

Per

cen

t

Agricultural productivity has been on the decline for much of Agricultural productivity has been on the decline for much of the last decade as shown in the Figures belowthe last decade as shown in the Figures below

Between 1999 and 2006, the major export crops have Between 1999 and 2006, the major export crops have experienced double digit dropsexperienced double digit drops

The major cause of low productivity levels is theorized to be The major cause of low productivity levels is theorized to be lack of improved inputs applicationlack of improved inputs application

Uganda’s application of improved inputs is one of the lowest Uganda’s application of improved inputs is one of the lowest in the region in the region

PRODUCTIVITY OF THE MAIN PRODUCTIVITY OF THE MAIN AGRICULTURAL CROPSAGRICULTURAL CROPS

PRODUCTIVITY OF THE MAIN AGRICULTURAL CROPSPRODUCTIVITY OF THE MAIN AGRICULTURAL CROPS

Change in Productivity of Selected Crops

-47-53

-61

-70

-

200

400

600

800

1,000

1,200

1,400

1,600

Cofee Maize Cotton Rice

Kg

/Ha

-80

-70

-60

-50

-40

-30

-20

-10

0

%g

e ch

ang

e

1999 2006 % ge Change

Improved Inputs Application- 2007

0

5

10

15

20

25

CentralRegion

EasternRegion

NothernRegion

WesternRegion

National

Pe

rce

nta

ge

Pestcides &Others

ChemicalFertlizerManure

ImprovedSeed

PRODUCTIVITY OF THE MAIN AGRICULTURAL CROPSPRODUCTIVITY OF THE MAIN AGRICULTURAL CROPS

Present Farm yields against attainable potential for Present Farm yields against attainable potential for selected cropsselected crops

According to the Agricultural Sector Investment Plan According to the Agricultural Sector Investment Plan 2009/10 -2013/14; a comparative analysis of farm level 2009/10 -2013/14; a comparative analysis of farm level yields and research station yields reveals a huge gap.yields and research station yields reveals a huge gap.

As table below illustrates, productivity at the farm is far As table below illustrates, productivity at the farm is far much lower than the attainable potential much lower than the attainable potential

FARM YIELDS VS POTENTIALFARM YIELDS VS POTENTIAL

AGRICULTURAL TRADE PROFILE(EXPORTS)AGRICULTURAL TRADE PROFILE(EXPORTS)

Trend of Top 7 Agricultural Exports (2000-2008)

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

450,000

2000 2001 2002 2003 2004 2005 2006 2007 2008

(US

$ 0

00

')

Coffee

Cotton

Tea

Tobacco

Maize

Fish and FishproductsCut Flowers

TRADE DEFICITTRADE DEFICIT

Accelerated growth in imports has resulted in a widening trade Accelerated growth in imports has resulted in a widening trade deficit standing at 2.5 billion in 2008deficit standing at 2.5 billion in 2008

(3,000)

(2,500)

(2,000)

(1,500)

(1,000)

(500)

-

Mil

lio

n U

S$

1994-96 1991-01 200-04 2003-05 2004 -06 2005-7

Value of Trade Balance (1994-2007)

LINKING AGRICULTURE TO LIVELIHOODSLINKING AGRICULTURE TO LIVELIHOODS

The key variables for livelihood indicators include employment, poverty The key variables for livelihood indicators include employment, poverty reduction, and nutrition and food security among others.reduction, and nutrition and food security among others.

Preliminary findings indicate that there is an interesting correlation Preliminary findings indicate that there is an interesting correlation between agricultural productivity and livelihood indicators between agricultural productivity and livelihood indicators

For example there is an imbalance in the structure of the economy and For example there is an imbalance in the structure of the economy and labour force employmentlabour force employment

The proportion of persons engaged in the agricultural sector has The proportion of persons engaged in the agricultural sector has increased from 65.5 percent in 2002/03 to 73.9 percent in 2005/06, the increased from 65.5 percent in 2002/03 to 73.9 percent in 2005/06, the share of agriculture has been declining share of agriculture has been declining

Uganda’s total labor force in 2007 stood at about 12.5 million people. Uganda’s total labor force in 2007 stood at about 12.5 million people. With a population of more than 30 million people, this implies that With a population of more than 30 million people, this implies that more than more than 44 percent in 1997/98 and to 31 percent in 2005/06. The 31 44 percent in 1997/98 and to 31 percent in 2005/06. The 31 percent under poverty line translates into about ten million Ugandans percent under poverty line translates into about ten million Ugandans below the poverty line. below the poverty line.

LABOUR FORCELABOUR FORCE

Labour Force 1990 -2007

-

2,000

4,000

6,000

8,000

10,000

12,000

14,000

1990 2000 2005 2007

Po

pu

lati

on

(0

00

')

Total Labour Force Agriculture labour Force

GENDER AND EMPLOYMENTGENDER AND EMPLOYMENT

Male vs Female Labour Force

5352 52 52

4748 48 49

44

45

46

47

48

49

50

51

52

53

1990 2000 2005 2007

Per

cen

t

Female

Male

Data Source: UNCTAD Statistical Handbook (2008)

POVERTY HEADCOUNT TRENDSPOVERTY HEADCOUNT TRENDS Poverty Headcount (1992-2006)

59.7

49.2

37.4

27.8

16.7

9.6

42.7

34.2

13.714.4

0

10

20

30

40

50

60

70

1992/93 1997/08 1999/00 2002/03 2005/06

%g

e o

f th

e T

ota

l P

op

ula

tio

n

Rural

Urban

UBOS Satistica Abstract 2009 & Mellenium Development Goals Country Progres Report 2007 – UNDP

TREND OF RURAL AND URBAN INEQUALITYTREND OF RURAL AND URBAN INEQUALITY

Gini Coefficients for Uganda (1992-2006)

0.432

0.363

0.483

0.396

0.3630.328

0

0.1

0.2

0.3

0.4

0.5

0.6

1992/93 2002/03 2005/06

Gin

i C

oe

ffic

ien

t

Urban Rural

Data Source: UBOS Statistical Abstract 2009

TRENDS IN FOOD INSECURITY (1992-2006)TRENDS IN FOOD INSECURITY (1992-2006)

Trends in Food Insecurity (1992-2006)

0

10

20

30

40

50

60

70

80

90

100

1992 1999 2002 2006

Per

cen

t

National Rural Urban

Source of Data: Millennium Development Goals Country Progress Report 2007 – UNDP

LANDLOCKEDNESS CONSTRAINTS AND LANDLOCKEDNESS CONSTRAINTS AND

THEIR EFFECT ON AGRICULTURAL TRADETHEIR EFFECT ON AGRICULTURAL TRADE

Uganda is critically dependent on its neighbors—Kenya and Tanzania for Uganda is critically dependent on its neighbors—Kenya and Tanzania for transportation of her goods and services.transportation of her goods and services.

The main routes used for Uganda’s external trade are: -the Northern The main routes used for Uganda’s external trade are: -the Northern

CorridorCorridor The Central Corridor that comprises similar services, other than pipeline, The Central Corridor that comprises similar services, other than pipeline,

pertaining to the Port of Dar Es Salaampertaining to the Port of Dar Es Salaam

An air corridor out of Entebbe International AirportAn air corridor out of Entebbe International Airport

Road services between Uganda and countries further inlandRoad services between Uganda and countries further inland

MAIN REGIONAL ROAD AND RAIL ROUTESMAIN REGIONAL ROAD AND RAIL ROUTES

Source: World bank Trade Integrated Study 2007. The map is not drawn to scale.

THE MAIN CONSTRAINTS UNDER TRANSPORTTHE MAIN CONSTRAINTS UNDER TRANSPORT

The share of rail transport to total trafic is only 27 percentThe share of rail transport to total trafic is only 27 percent

Operations on railway transport are inefficient and poorOperations on railway transport are inefficient and poor

Internal transport links are mainly by road where more than 30,000 Internal transport links are mainly by road where more than 30,000 kms of rural community access roads are unpavedkms of rural community access roads are unpaved

Most ferries have fallen into disuseMost ferries have fallen into disuse

Road service transport is expensive and exceeds rail rates by 38 to Road service transport is expensive and exceeds rail rates by 38 to 5656

Other trade facilitation constraints include customs operations, Other trade facilitation constraints include customs operations, clearing and forwarding, insurance, post services and clearing and forwarding, insurance, post services and telecommunications.telecommunications.

OTHER TRADE FACILITATION CONSTRAINTSOTHER TRADE FACILITATION CONSTRAINTS

Congestion at Mombasa Port which handles 95% of Uganda’s external Congestion at Mombasa Port which handles 95% of Uganda’s external trade traffictrade traffic

High cost of road transport due to high tarrifs on freight vehicles raised High cost of road transport due to high tarrifs on freight vehicles raised from 7 – 25% with the introduction of the Common External Tarifffrom 7 – 25% with the introduction of the Common External Tariff

Physical inspection of exports involving duty drawbacks and VAT refundsPhysical inspection of exports involving duty drawbacks and VAT refunds

SUMMARY OF KEY FINDINGSSUMMARY OF KEY FINDINGS

There is a mismatch between economic growth, indicators and There is a mismatch between economic growth, indicators and livelihood indicators.livelihood indicators.

There is an imbalance in the structures of the economy and labour There is an imbalance in the structures of the economy and labour force employment.force employment.

The proportion of persons engaging in the agricultural sector has The proportion of persons engaging in the agricultural sector has increased from 65.5 percent in 2002/2003 to 73.9 percent in increased from 65.5 percent in 2002/2003 to 73.9 percent in 2005/2006.2005/2006.

On the other hand the share of agriculture to the total GDP has been On the other hand the share of agriculture to the total GDP has been increasing.increasing.

Majority of the population is employed in the agricultural sector whose Majority of the population is employed in the agricultural sector whose share to GDP is declining.share to GDP is declining.

The economy of Uganda has been growing but inequality gap has The economy of Uganda has been growing but inequality gap has equally been increasing.equally been increasing.

Cont’d…Cont’d…

The population growth rate has also been high at an average of 3.2 The population growth rate has also been high at an average of 3.2 percent per annum.percent per annum.

Women who feed the families are the least found in formal Women who feed the families are the least found in formal employmentemployment

Food insecurity in rural areas is positively correlated with falling Food insecurity in rural areas is positively correlated with falling rural earningsrural earnings

Productivity of main agricultural crops has been declining for the Productivity of main agricultural crops has been declining for the last one decade.last one decade.

In general terms export earnings have been increasing and poverty In general terms export earnings have been increasing and poverty reduction has been visible in rural areas producing cash crops.reduction has been visible in rural areas producing cash crops.

Merchandise imports have been rising. Between 2001 and 2008 Merchandise imports have been rising. Between 2001 and 2008 imports rose nearly 400 percent. This has resulted into a widening imports rose nearly 400 percent. This has resulted into a widening trade deficit.trade deficit.

The prices for the basic consumer products for the rural poor have The prices for the basic consumer products for the rural poor have been increasing.been increasing.

RECOMMENDATIONSRECOMMENDATIONS

Need for more facilitative Government interventions to increase Need for more facilitative Government interventions to increase agricultural productivityagricultural productivity

Need to control population growth to match economic growthNeed to control population growth to match economic growth

Need to invest in rural areas where the majority of the population is Need to invest in rural areas where the majority of the population is employedemployed

Need to incorporate issues of reducing income inequality in Need to incorporate issues of reducing income inequality in development planningdevelopment planning

The government needs to integrate income and non-income factors The government needs to integrate income and non-income factors in development planning e.g food security, nutrition and in development planning e.g food security, nutrition and employment.employment.