Preliminary analysis

• Between 2018 and 2022, actual public expenditure on food and agriculture averaged UGX (Uganda shilling) 3 746 billion, with a lowest figure of 2 346 billion shillings in 2018 and highest spending (UGX 4 940 billion) in 2021. 
• Agriculture spending accounts for only 4% of total public expenditure, far below the 10% CAADP target. Besides insufficient budgetary allocations, execution capacity remains quite low. In the 2018–2022 period, annual agriculture-specific public expenditure was UGX 1 398 billion on average, representing approximately 65% of the budgeted 2 112 billion shillings. These execution gaps undermine the effectiveness of agricultural programs and reduce the credibility of policy commitments. 
• About 34% of the food and agriculture budget is financed by donors, signaling potential vulnerability to external dynamics. 
• More than half (59%) of agriculture-specific expenditure was directed to general support to the sector, majorly focusing on marketing, storage and process, as well as off-farm infrastructure such as irrigation. 
• Overall, public expenditure is fairly aligned with sector objectives, with considerable focus on productivity-enhancing, resilience-building, and commercialization-facilitating investment such as marketing, storage, and processing; input distribution; capital services; and irrigation. However, these investments are not adequately matched with capacity building in form of farmer training, wide coverage of practical extension services, and technical transfer, limiting productivity gains and yield improvements for major crop and livestock value chains.

Price incentives at the farm-gate measured by the nominal rate of protection (NRP) – the percentage difference between domestic and international equivalent price – averaged 9.3% across all 7 commodities (maize, cassava, rice, sugarcane, coffee, cotton and tea) between 2005 and 2022. However, substantial differences exist among these commodities: 

• Cotton and rice farmers have consistently benefited from (positive) price incentives, averaging 44% and 50%, respectively. These positive figures suggest favourable market conditions and/or policies that enhance farmers' income by ensuring better prices. 
• Tea farmers, conversely, faced consistent negative price incentives averaging –46%, and this could be due to market distortions and/or unfavourable policies affecting the sector. Low quality due to low processing capacity and export of largely unprocessed tea to the Nairobi auction market implies low prices fetched by this commodity, further disincentivizing farmers from growing the crop. 
• Sugarcane farmers transitioned from receiving negative price incentives in the past, to positive incentives in recent years. The average NRP at farmgate switched from negative (–36%) in the 2005–2013 period to positive (42%) during the 2014–2022 period. This transition was driven by policy interventions under the National Sugar Policy of 2010 and the Sugar Act of 2020, that streamlined the functioning of the value chain. Farmers specifically benefitted from the dropping of VAT levies on farmgate prices and transparent pricing mechanisms based on the total market value of sugarcane. 
• Cassava, coffee, and maize farmers experienced fluctuations between negative price incentives and positive incentives. However, on average, cassava, and coffee farmers faced price disincentives of –13%, and –9% respectively. Overall, maize farmers benefited from positive price incentives averaging 42%, with significant variations, ranging from –36% in 2012 to 207% in 2017. Several factors could explain fluctuating price incentives, including changes in demand and supply dynamics, fluctuations in international prices, among others. Negative NRPs at the farmgate for some staples such as cassava (–13%) and cash crops such as sugarcane (–36%), coffee (–9%) and tea (–46%) indicate that domestic prices are lower than international reference prices. The disincentives make it less attractive for farmers to invest in the production of these essential food crops. 

Market development gaps (MDGs) reflect critical inefficiencies that lead to farmers receiving below-optimal prices. Precisely, prices received by cassava farmers are 13% lower than what they would receive in the absence of market inefficiencies, while the corresponding gaps are 12% for maize, 17% for cotton, and 23% for tea. The inefficiencies manifest in form of high transaction costs especially transportation and processing, and inadequate infrastructure, which in turn reduce farmgate prices and limit market access.

Moreover, inadequate investment in transport infrastructure, storage facilities, and processing capacity contributes to post-harvest losses, compromises value chain functionality, and diminishes profitability.

In collaboration with AgrInvest Uganda (FAO’s Investment Centre), MAFAP is supporting the EU-funded “Developing a market-oriented and environmentally sustainable beef meat industry in Uganda” Project (MOBIP) and the Beef Policy/Advocacy Taskforce (led by Uganda’ Agribusiness Alliance, UAA) to identify policy issues and solutions in Uganda’s beef sub-sector.

The MAFAP team conducted two policy analyses:

1. On beef meat export competitiveness and export potential to new markets.
2. On price incentives along the value chain.

The findings from the studies and policy recommendations have been discussed and operationalized by the National Beef Platform, which drafted a Beef Policy Advocacy Action Plan in 2022. The recommendations have been included in the UAA’s submission to the Presidential Advisory Committee on Exports and Industrial Development (PACEID) on measures to accelerate Uganda’s agrifood export growth.

These recommendations focus on a review of standards and grades for beef products, establishment of an integrated livestock market information system (inclusive of cattle/meat identification and traceability, and animal health, quality and price information), establishment of a public private partnership for the production, procurement and distribution of veterinary drugs including Foot-and-Mouth Disease (FMD) vaccines.     

The Dairy Development Authority (DDA), the body that regulates the dairy sector, requested MAFAP's technical assistance to assess the export competitiveness of Ugandan milk and dairy products.

This analysis aims to identify new potential markets, and to make recommendations on related policy interventions, regulations and public investments with a view to harness the export potential of the country's dairy products. The recommendations have been taken up and included in the report below in 2024:

•  Enhancing Uganda’s dairy export edge – A comprehensive competitiveness analysis report

Following a request by the Ministry of Gender, Labour and Social Development and its National Task Force on Labour Productivity Enhancement, MAFAP is currently undertaking an analysis to assess the binding constraints to agricultural labour productivity.

This support seeks to estimate agricultural labour productivity across sectors (i.e. crops, livestock, and fisheries), locations and time, and to identify main drivers and constraints (e.g. physical, technological, environmental, etc.); in order to make recommendations to inform the agriculture-focused section of the upcoming National Productivity Policy.

Uganda's Ministry of Trade, Industry and Cooperatives (MoTIC) requested MAFAP's support to identify priority policy interventions to design a Marketing Strategy under the Parish Development Model.

For this support, MAFAP is producing a situation analysis of agricultural marketing to characterize key problems and opportunities that can be addressed by the Marketing Strategy, identify priority policy interventions to include in the Marketing Strategy, and support the MoTIC in drafting the Marketing Strategy implementation plan, including capabilities and resources needed, and a timeline to put it into place.

In collaboration with AgrInvest Uganda (FAO’s Investment Centre), MAFAP is supporting Uganda’s Dairy Development Authority (DDA) to collate, identify and analyze evidence-based policy issues and related solutions in the dairy sub-sector.

MAFAP collaborated in 4 different studies initiated in 2021: i.e. Price incentives analysis for dairy, Domestic per-capita milk consumption estimates, Performance of Milk Collection Centres and Post-harvest loss in the milk and dairy value chain.

The findings from the studies and recommended policy interventions have been discussed and operationalized by the dairy multi-stakeholder platform, involving key private and public stakeholders in the dairy value chain. Multiple regional and national stakeholders’ workshops culminated in the sector's new Dairy Policy Action Plan (DPAP), which was formally endorsed by the DDA in August 2022 to guide policy, planning and investment decisions in this promising sub-sector.

The MAFAP programme collaborated with the National Planning Authority and the Ministry of Agriculture, Animal Industry and Fisheries, to generate evidence to help prioritize agricultural commodities for the Agro-Industrialization Programme in the Fourth National Development Plan (NDP IV) of Uganda, 2025/26–2029/30.

Using an economy-wide modelling approach, the programme ranked 33 agrifood commodities according to how public investment in each could contribute to key policy objectives. Eight rankings were produced based on seven individual indicators – agrifood GDP growth, export potential, job creation, rural poverty reduction, food and nutrition security, import substitution potential, and food industry GDP growth – as well as one composite indicator combining these dimensions with equal weight.