By Patrick Jaramogi
MPs have asked government to design concrete measures geared towards improving the agriculture sector as a backbone of Uganda’s economy.
Despite importance of sector to the economy, MPs noted that the sector’s performance has not been impressive in recent years.
The real growth rate in agriculture output declined from 7.9 percent in 2000/01 to 3.0 percent in 2011/12. Agriculture in Uganda is dominated by small scale farmers who occupy the majority of land and produce most of the crop and livestock products.
The MPs on the Parliamentary Committee on agriculture were discussing a new study; ‘Access to Agricultural Credit; challenges, opportunities and options for small-holder farmers in Uganda during a high level stakeholder’s breakfast meeting held in Kampala.
The Thursday meeting was organized by the Uganda National Farmers Federation.
The study conducted in eight districts in Uganda revealed that the key out-standing challenge of small holder farmers is low productivity stemming from lack of access to markets.
Caritas Uganda under the Uganda Governance and Poverty Alleviation Programme (UGOPAP) undertook the study to provide reliable information on agriculture financing focusing on small holder farmers’ access to financial support.
“Studies have shown that the shortage to capital and credit is the single biggest constraint to improving farming in Uganda,” said Balyejjusa Sulaiman (Budiope East MP).
Patrick Mulindwa (Kasambya) said farmers need credit to manage the seasonality of their cash flows to make investments.
Auru Anne (Moyo) called for increased government funding to the agriculture sector, if farmers are to benefit from farming.
The report indicated that six out of 10 small scale farmers depend on money lenders (loan sharks) and other informal sources of funding to support agriculture.
James Kyewalabye (Kiboga East) said most of the money lenders interest rates was as high as 100 per cent but because of its informal nature of operations, farmers continue to seek for their services as opposed to formal financial institutions.
Sophie Kyagulanyi, the programme manager of Forum for Women in Democracy said the problem with such unregulated financing, exposes the farmers to unfavourable terms.
Aguti Betty Rose, the Caritas Uganda Policy and Advocacy specialist said much as the findings indicated an increase in government’s direct spending, agriculture remained among the lowest ranked sectors in the national budget.
Addressing farmers from Eastern Uganda under the Eastern Archdiocesan Development Network (EADEN) at Viola Inn in Mbale, Aguti observed that that 61 per cent of small scale farmers, who make 80 per cent of the total farmers in the country access finances from informal sources to help them produce.
“And 29 per cent of the same farmers (at least three out of 10 small scale farmers) get their funding from semi informal sources while only 10 per cent ( one out of ten) access agricultural funding from the formal financial institutions,” she said.
With formal financial institution interests rates hovering at over 20 per cents, small scale holder farmers tend to turn to loan sharks/money lenders who are prepared to bail them out although at a punitive cost. Aguti said the farmers who are able to access the loans are not given enough repayment period.