Uganda is predominantly an agricultural economy well-endowed with natural resources, fertile soils and a favourable climate. Most Ugandans, especially in rural areas (68%), depend on agriculture for both livelihood and income generation.
According to the trade ministry, the country’s major agricultural commodities include coffee, tea, cassava, maize, beans, ground nuts, rice, and bananas. Coffee and tea are traditional cash crops grown mainly for export, while maize, beans, ground nuts, and rice are the primary agricultural commodities traded locally and within the EAC and COMESA regions.
Cereals
Cereal crops grown in Uganda include; maize, finger millet, sorghum, rice, pearl millet and wheat in that order of importance. Other than wheat, these crops provide staple food for well over 50% of the population. They are also playing an increasing role in the provision of incomes for the rural households and the national economy. All these crops, other than wheat and rice, can be grown across most areas of the country. High potential areas for each crop are to a large extent, defined by rainfall amount and distribution. Maize requires medium to high rainfall that is well distributed throughout the growing season. As rainfall declines in duration and reliability, generally from south to north and westwards, finger millet becomes important. This in turn gives way to sorghum and finally pearl millet, as increasingly hardy crops that thrive in low rainfall environments. Wheat requires cooler temperatures and is grown in highland areas of the country such as Kapchorwa, which are located in the eastern and north western parts of the country.
Comparative advantage
Uganda has a comparative advantage in the region for grain production and is considered to be the food basket of the region capable of creating wealth for the country. Almost every household grows some grain in addition to other crops or livestock management, and more than 2.5 million households derive their income and employment from the grain sub-sector in Uganda. This grain sub-sector occupies a strategic position in ensuring the country’s food security alongside other crops such as bananas, cassava, and sweet potatoes. The sub-sector provides producers, produce buyers, transporters, processors, and exporters with income from business transactions undertaken along the value chain. Grains are also the most important source of raw materials for livestock feeds. Grains are therefore important crops for both food security and income-generation and thus directly affect women in agriculture in addition to men.
As a liberalised economy, the key players in the grain sub-sector have organized themselves into an association called the Uganda Grain Traders Association (UGTA), and have constructed some storage and processing facilities (12 percent of total output) as well as traded in large volumes with organisations like the World Food Programme (WFP). Currently, the national standardized storage facilities for maize can only cater for 550,000 metric tonnes out of 3.2 million metric tonnes (Ministry of Agriculture) of total production.
Uganda has potential within the region for sustained food supply at affordable competitive prices because of natural fertile soils, land for commercialization in some districts, and two annual production seasons.
Market Overview
The Ugandan grains market is projected to register a 4.3% growth rate during the 2022-2027 period.
Grains play a prominent role in increasing the income of both smallholder farmers and the national economy. The growing demand for grains, an increase in regional exports to East Africa and favorable government policies supporting grain production are some of the factors driving the market growth.
Key Market Trends
Increase in Regional Maize Exports is Driving the Market
Maize is one of the staple crops grown in Uganda, providing over 45.0% of the country’s daily calorie consumption. In order to meet the domestic demand, most farmers grow maize on their farmland. According to International Trade Administration, in the year 2020-2021, agriculture accounted for about 23.7% of GDP and 31% of export earnings. In recent years, there has been an increase in exports of maize to East African countries. The liberalized free trade environment between East African countries is benefitting the maize traders, which is leading to this increase in exports. The opening of the import window from East African countries such as Kenya is boosting the maize production in the country, which is expected to stimulate market. Also, within the country, maize production has increased significantly. From 2017 to 2019, maize production has increased by 27.4%, according to the Food and Agriculture Organisation (FAO) and the production will be increasing further in the forecast period to meet the export as well as domestic demand.
Opportunities
With increasing unpredictable climate patterns within the region and around the world, Uganda’s fertile soils provide a unique opportunity to feed the region and the world. The country has surpluses of maize, cassava, groundnuts, sorghum, millet and rice. Investors have the opportunity to add value to all these grains and make them ready for export.
Uganda’s road network is well built to all its borders, including DR Congo, Kenya, Rwanda, South Sudan and Tanzania. Traders can therefore easily transport their commodities to any country within the region.
