1. Capacity for Trade in Africa A Traders View from Africa John Magnay CEO, Uganda Grain Traders Ltd

2. 2 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

3. 3 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?

4. 4 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

5. 5 Exports / Balance of Payments Product mtonnes $ million Value Comment Coffee 140,000 160Tonnage dropping / Value increasing Fish 25,000 75Resource decreasing Cut Flowers / cuttings 3020-30% growth per year Maize / Beans formal 140,000 30Relief food to Great Lakes Tea 25,000 25Tonnage increasing / price dropping Maize / Beans informal 100,000 25Border trade to region Tobacco 15,000 20Tonnage down from 2004 peak of 35,000mt Cotton 16,000 16Down from 40,000mt in 2004/5 Others 100Gold / Minerals / Electricity Exports 476 Personal Remittances 424 Donors 900 Balance of Payments 1,800

6. 6 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 export- quality UGT responsible for finance, storage, marketing

7. 7 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

8. 8 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

9. 9 Food for Peace 2003 CommodityTonnage$ Value Cost per mt ex-USA Maize Meal18,80019,969,676 1,062.22 CSB16,1009,484,910 589.12 Pulses, Green whole3,0002,362,012 787.34 Maize, Bulk56,36025,223,290 447.54 Veg.Oil (6/4 L)1,5301,933,684 1,263.85 Peas, Green Split500n/a 94,26057,039,888 What did this do to help production / markets in Uganda / Africa?

10. 10 Food for Peace 2003 - CSB CommodityTonnage$ Value Cost per mt ex- USA CSB16,1009,484,910589.12 IF PURCHASED IN UGANDA/EAST AFRICA UNIMIX16,100 6,440,000 400 OR UNIMIX23,7109,484,910400 AND It would have provided a market for another +/- 30,000mt of Maize / Soya

11. 11 Opportunity for Trade Target Import Substitution Target the Regional markets Identify Niche markets outside Africa

12. 12 Hit the Imports CropValue $ 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 ***

13. 13 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

14. 14 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

15. 15 Kenya Maize Balances

16. 16 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

17. 17 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

18. 18 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