It makes no economic sense to ban grain exports
8 months ago, 7 Mar 07:41
About two weeks ago, Gen Salim Saleh, Uganda’s presidential adviser on military affairs, and co-ordinator of Operation Wealth Creation, pushed for the Uganda government to ban the export of unprocessed grains. Gen Saleh, who is President Yoweri Museveni’s younger brother, said that, “Due to lack of enforcement of standards and open border policy, Kenya, Rwanda and South Sudanese informal traders flock the villages from border to border in search of low priced unprocessed grains. “As a result, Kenya, a country always in deficit, formally exports more grain than Uganda. Unless addressed, Uganda will remain a source of cheap, poor quality grain to the region and investors will continue to lose out in spite of their contribution to the national coffers,” he said. According to Gen Saleh, last November, “Uganda exported more than 600 tonnes of unprocessed sorghum, more than 3,000 tonnes of maize, 9,000 tonnes of beans and 2,000 tonnes of millet. “A kilogramme of processed maize costs Ush1,500 as opposed to a mere Ush500 farm gate price.” Let us take it that Saleh’s heart and mind are in the right place. The problem is that his solution is wrong, and goes against the core of the East African Common Market spirit. I wrote as much in The EastAfrican’s sister paper in Uganda,. However, I am not a farmer. What I know about East African food markets and dynamics is what I read and I am told. And, of course, my ideological preference for open markets means I would not support a Saleh-like position. It was therefore heartening to hear from a Ugandan who is on the frontlines of farming and selling to the region. Let’s hand it over to the man: “I also don’t subscribe to the ban arguments. I have been engaged in maize farming in Busunju Mityana (on 30 acres) for the past 10 years. At the beginning we were getting Ush150-Ush200 per kilogramme of maize i.e. a total of 500kg per acre × Ush200 × 30 acres would earn Ush3,000,000, or equivalent to $817 at the current exchange rate). “This money was not enough to cover the seeds and labour. It was quite discouraging. Just imagine what the small farmers were going through. The price started going up after the independence of South Sudan. Last year, we sold maize at Ush1,000-Ush1,200 per kilo because of increased demand from Kenya, Malawi etc,” he wrote. “In Tanzania, particularly under [President John] Magufuli, the government has imposed a total ban on exports to ‘protect’ farmers, ensure adequate domestic food supply and value addition, this has not yielded additional benefits to farmers. “Research in Tanzania on the effect of the export ban indicate that while the low domestic prices benefit urban consumers, the bans negatively affect farmers’ and traders’ incomes by hindering their access to lucrative prices in international markets.” And there it is. Banning food exports is little more than a subsidy for urban consumers and food cartels, because then they can buy grain cheaply. Also, the idea that ...
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