Capacity for Trade in Africa
A Traders View from Africa
John Magnay
CEO, Uganda Grain Traders Ltd
Biography
Agricultural Economist from Wye College,
University of London, ‘74-’77
Lived and Worked in Uganda since ’77
Supplied inputs and agro processing equipment
since ‘79
Supported Emergency, Relief, Development
programmes in Great Lakes Region since ‘83
Developed trade in food and seed
Established Uganda Grain Traders Ltd. in 2001
2
Africa Today
830m people and rising
80% of population involved in Agriculture YET
Food Import Bill $ 19 billion Food Aid /
Commercial Imports per annum
Food Insecurity increasing
Food Aid Increasing
Most of Continent on less than $ 1 per day
Who needs a Farm Bill?
3
Uganda
Land-locked, East Africa on Lake Victoria
70% Land / 70% above Semi-Arid
Equatorial with majority of land 3-4000 feet
above sea level
25 million people – 80% smallholder farmers
2 crops per year in most areas
Non-maize dependant
The Pearl of Africa & Source of the Nile
4
Exports / Balance of Payments
Product
Coffee
mtonnes
$ million
Value
Comment
140,000
160
25,000
75
Resource decreasing
30
20-30% growth per year
140,000
30
Relief food to Great Lakes
25,000
25
Tonnage increasing / price dropping
100,000
25
Border trade to region
Tobacco
15,000
20
Tonnage down from 2004 peak of 35,000mt
Cotton
16,000
16
Down from 40,000mt in 2004/5
Fish
Cut Flowers /
cuttings
Maize / Beans
formal
Tea
Maize / Beans
informal
Others
100
Exports
476
Personal Remittances
424
Donors
900
Balance of Payments
1,800
Tonnage dropping / Value increasing
Gold / Minerals / Electricity
5
Uganda
Grain
Traders
Ltd
Formed in Sept 2001 by 16 grain trading companies
Exported 31,000mt surplus Maize to Zambia Dec 2001
to May 2002
Member companies responsible for producing exportquality
UGT responsible for finance, storage, marketing
6
Facilities
30-35,000 mt of bag storage capacity
Rail-siding for 22 wagons / 880mt
Weighbridges and parking area
Capable of receiving and dispatching 1,000mt per day
Built in 90 days !!!
Room for expansion
100mt per day Cleaning & Drying Plant from June 2004
to receive crops direct from farmers / traders
7
Food Aid
One of the largest recipients of Food Aid in
Great Lakes region with up to 3 million IDP
and vulnerable recipients
One of the largest supplier of local
purchased Food Aid in the Great Lakes
region – now up to 160,000mt of food per
year
8
Food for Peace 2003
Commodity
Tonnage
$ Value
Cost per mt ex-USA
Maize Meal
18,800
19,969,676
1,062.22
CSB
16,100
9,484,910
589.12
Pulses, Green whole
3,000
2,362,012
787.34
Maize, Bulk
56,360
25,223,290
447.54
Veg.Oil (6/4 L)
1,530
1,933,684
1,263.85
Peas, Green Split
500
n/a
94,260
57,039,888
What did this do to help production / markets in Uganda / Africa?
9
Food for Peace 2003 - CSB
Commodity
Tonnage
$ Value
Cost per mt exUSA
CSB
16,100
9,484,910
589.12
IF PURCHASED IN UGANDA/EAST AFRICA
UNIMIX
16,100
6,440,000
400
9,484,910
400
OR
UNIMIX
23,710
AND
It would have provided a market for another +/- 30,000mt
of Maize / Soya
10
Opportunity for Trade
Target Import Substitution
Target the Regional markets
Identify Niche markets outside Africa
11
Hit the Imports
Crop
Value
$ million
Target
Export Potential ***
Rice
$ 20
Development of the Upland varieties has
developed
***
Sugar
$ 12
In next 5 years Uganda will move from 20%
import to surplus exporter
***
Veg Oil
$ 75
Both Palm Oil and Sunflower being developed to
replace $ 100m-worth of imports
***
Petroleum
$ 300
Uganda struck Oil in Lake Albert valley in Dec
2005 and again in Mar 2006
***
Barley /
Adjuncts
$ 5-10
A UGTL / Uganda Breweries initiative is targeting
substitution of 70% raw material imports for
Breweries
***
12
Field to Bottle
Only buy Export Quality
product!
– Maize & Beans for
Export & Relief sales
– Barley under contract for
Brewing
– Soya Bean for Export
– Rice
More than 50% from
Farmers / Small
Traders
13
The Regional Market
Up to the early 80’s national grain boards held
responsibility for food security
Since early 90’s most markets have been
seasonally / annually short
Uganda is year-on-year surplus in grains and
pulses
But
In absence of regional market and financing
mechanisms, regional food security will be
dependant on Food Aid and non-regional
imports
14
Kenya Maize balance 1980 - 2004 (mt)
800, 000
Kenya Maize Balances
600, 000
400, 000
200, 000
0
80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04
-200, 000
-400, 000
-600, 000
-800, 000
-1, 000, 000
-1, 200, 000
-1, 400, 000
So u r c e : U G T / F E W SN E T
15
4 Grain Crashes in Uganda in 20 years
1987-8 – Govt sponsored increase in production – the
Grow more Food Campaign
1995 – dramatic increase in demand for Relief food in
1994 for Rwanda followed by no demand in 1995.
2001 – loss of Kenya informal trade market, due a
seasonal surplus (despite an annual deficit).
2005 – wet harvest / large surplus / unsympathetic
purchase by WFP / short term surplus in Kenya – short
term problems with impact on 2006 Food Security
16
The Ideal Scenario
To reduce Food Aid requirements:Regional Market with Spot and Futures Markets
Commercial Finance mechanism
Commercial cleaning & drying as close to
production areas to avoid the quality issues
Strategic commercial storage facilities to access
the regional markets
Ethiopia – Kenya – Tanzania – Uganda –
Rwanda – Burundi – Eastern Congo – Sudan
ALSO
Balancing with the Southern African Markets
17
The Road
Political Will for regional markets from
Govt & Donors
Regional infrastructure / reduction of
transaction cost
Financial mechanisms to remove Price
Risk for food commodities
18