Capacity for Trade in Africa

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

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. 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. 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. Exports / Balance of Payments

6. UgandaGrainTradersLtd • 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. 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. 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. Food for Peace 2003

10. Food for Peace 2003 - CSB

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

12. Hit the Imports

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. 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. Kenya Maize Balances

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. 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. 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