|Posted by Ndinawe Byekwaso on March 13, 2017 at 10:20 AM||comments (0)|
There is war on self-provisioning farming as a way of fighting poverty in Uganda. Informed by the theoretical framework that considers how political power influences the market mechanism to favour some social groups at the expense of others, the paper examines the business environment created for indigenous entrepreneurs in general and peasant farmers in particular to engage in farming as a business. It shows how the environment has been deliberated manipulated to frustrate peasants so that they can abandon the production of food for own consumption. As a result, many people have migrated to towns and the city to live in slums without gainful employment while the families remaining in rural areas do not have enough to feed their children; the percentage of children suffering and/or dying of malnutrition is worrying . Is this not a ploy to make peasants disappear so that their land can be taken over by multinational corporations?
To fight poverty and modernize agriculture through commercialization, the government of Uganda has been waging war against what is called subsistence farming. In the New Year’s message, President Museveni claimed that ‘subsistence farming has been the main cause of poverty in the history of Uganda (Museveni, 2014). Some time back, he had attributed poverty not only to what is called subsistence farming but also the tradition and the mentality of producing for own consumption (Museveni, 2014).
The war on peasants by fighting the production of food for own consumption, through commercialization of agriculture, was vigorously pursued in Uganda from 1987 onwards with the launch of Economic Recovery Programme (ERP) in line with the macroeconomic stabilization programme of World Bank (WB) and International Monetary Fund (IMF) (Asiimwe, 2011). The programme is preoccupied with the liberalization of the economy, the maintenance of macroeconomic stabilization, and deregulation. The elements mentioned above are taken as a kit not to be separated for the obvious reason of attracting foreign investors.
As a result, the Government of Uganda came up with the Poverty Eradication Action Plan (PEAP) in 1997, revised in 2004 and succeeded by the National Development Plan (NDP) in 2010. The first PEAP was followed by ‘Plan for Modernisation of Agriculture (PMA) in 2000, which claimed to be aiming at eradicating poverty through commercialization of agriculture to create a profitable, competitive, sustainable and dynamic agricultural and agro-industrial sector’ (Uganda, 2000 p. 26). The same motive transferred into the Development Strategy and Investment Plan (DSIP) that was launched in 2010. However, with the DSIP an emphasis is put on capitalistic agricultural form of development rather than focussing peasant farmers. As a result, the government expects to attain development through ‘development of the private sector, supported by market-led development, regional integration, continued maintenance of macroeconomic stabilisation and favourable policy, fiscal and regulatory environment’ (Asiimwe 2011 p. 9).
Therefore, according to the above arrangement, peasants are to be transformed into commercial farmers by compelling them to produce for the market as the best strategy for guaranteeing household food security rather producing food for own consumption (2010; 2000). However, the plan for modernising of agriculture in Uganda has been suspiciously unclear from the beginning and its intentions are now increasing being known – to make peasants disappear (Asiimwe, 2011). As observed even by DANIDA (2006) that: ‘Can a framework which focuses on poverty reduction through agriculture also provide growth opportunities for the sector as the whole?’ According to an evaluation of PMA, it was found out that the framework that defines it ‘makes it difficult for Ugandans to rapidly realise the right to adequate food’ (Munyonyo, 2004 Abstract), and that it did have a marketing strategy in favour of peasant farmers.
Does the current environment generally favour peasants to engage in farming as a sustainable profitable business as was claimed? Specific questions: Has the kit of macroeconomic stabilization concerned with the liberalization of the economy, tight monetary policy and deregulation, created a favourable business environment for peasant farmers to getting a profitable market for their produce? Do the extra costs recommended to modernize agriculture help peasants to earn sustainable profits? How has the business environment created under macroeconomic stabilization affected the livelihoods of the peasants? How are the peasants responding to the environment?
The paper ponders over the questions and tries to throw some light on them. The first part deals with conceptual theoretical framework that guides the analysis of the paper. The second part examines how the tight monetary policy has affected business environment for indigenous entrepreneurs as the whole. The third part dwells on how macroeconomic stabilization together with other government interventions have progressively effected the business environment for peasant farmers to engage in farming as a profitable business, as well as how the peasant farmers has responded to the environment. The last part makes an opinion of what has been taking place in Uganda and locates it in a global economy.
The paper is guided by a theoretical framework of analysis, which puts into consideration state power and public policy-making for development under globalisation (Hill, 2005 ). According to the theoretical framework, development does not take place in vacuum but currently in a structure created by dominant political forces to serve the interests of capitalists under the modernization strategy of development (Asiimwe, 2011).
The theoretical framework adopted by the study is in response to the common colonially-oriented state ‘allegations that peasants are incapable of developing themselves without external assistance, direction and control’ (Cheater, 1991 p. 102). It is derived from the political economy of development that advocates state intervention in the market to promote national goals (Crane, 1999). For that matter, the market does not operate freely to bring about development as we are made to believe under the macroeconomic stabilization framework, without state influence (Peet, 2003).
The state is not a neutral formulator of policies even in areas that appear to be technical, like agricultural development (Mamdani, 1976). Under globalization, to hoodwink those who are affected negatively by the not neutral economic policies of WB and IMF, the policies are claimed to be technical and prudent (Peet, 2003) as a legitimizing garb. Consequently, currently macroeconomic stabilization is presented as a prudent policy designed to fight poverty (PEAP, 2004; NDP, 2010; PMA, 2000; DSIP, 2010), and by implication should not be questioned by any person with upright thinking.
However, the state being not neutral manipulates the market to serve economic interests of favoured social groups (capitalists presented as the private sector), especially foreign investors, at the expense of marginalized groups (indigenous entrepreneurs who include peasants (peasant take risks). When the interests of favoured groups are being served, then it is assumed that everybody is benefiting (Carr, 1983). Under the macroeconomic stabilization, development is seen in terms of the expansion of the monetary size of the economy (Byaruhanga et al., 2010), which means that increasingly self-provisioning agriculture is being eroded so that the peasants are now spending more money to buy commodities from the market than previously. As a result, development and poverty reduction rates are based on the growth in consumption expenditure (Whitworth and Williamson, 2010), especially of Western goods and services because poverty reduction figures includes consumption of the rich (Kakande, 2010). While the state manipulates the market to serve the interests of favoured, it marginalizes the disfavoured groups, like the killing of production of food for own consumption by peasants in the name of fighting poverty. The discriminatory practice of the state in the market to promote the interests of foreign investors historically has resulted in the marginalization and/or disappearance of the indigenous people, like the Aborigines of Australia (Briggs, 2009; Mandel, 1977 ).
Again from the history of developed countries, the macroeconomic stabilization kit is a mercantilist strategy used to simultaneously hinder development in the Third World countries and a friend to the capitalists of Western countries, as it was used during colonial period (Cohn, 2012); Chang, 2002), but not necessarily beneficial to all the people in those countries. For economic nationalism, while the West ensures that the principles of macroeconomic stabilization are followed to the letter in Uganda and possibly in most Third World countries, it does not apply to the strong economies of the West, like that of the US. While under macroeconomic stabilization, the government of Uganda is obsessed with limiting in and withdrawing money out of circulation, this is not the case with the US. The government in the US pumps ‘money into the economy, especially during bad economic periods, whether through spending, tax cuts or interest reductions’ (New York Times, 26 October 2011).
Key Concepts of the Paper
Business environment means an environment, which makes it possible for the peasant farmers to make net profits. For that matter, there should be a business environment that makes it possible for peasant farmers to incur fewer costs compared to the money they earn by selling their produce or products in the market. The profitable business environment should be sustainable for over a long period of time.
A market economy is a demand-driven economy. In economics, demand is not only the desire for the goods and services but the desire must be backed by the ability to pay for the goods – effective demand. In economics, demand can be used interchangeably with market. A ‘market consists of people with unsatisfied wants and needs who have both the resources and willingness to buy’ (Briggs, 2009 p.795). Under a market economy, demand or marketing of goods by the seller at a profit, is a prime mover and stimulator of business and agricultural production (Bibagambah, 1996). As Department of Agriculture, Forestry and Fisheries (DAFF), 2002) of South Africa remarked:
The type of economy we live in is aptly referred to as the market economy because no matter how many other factors you introduce to commercial process, the market will always be the final adjudicator. While other factors are critical to economic endeavour, it is the market that provides the motive for all activities. Without an effective market, production no matter how bountiful is, it is more or less than useless. It is wasteful.
According to Todaro and Smith (2011 p. 655), macroeconomic stabilization policies are defined as: ‘A coordinated set of mostly restrictive fiscal and monetary policies aimed at reducing inflation, cutting deficits, and improving the balance of payments’. According to the Government of Uganda under overriding influence of WB and IMF, macroeconomic stabilization is currently being undertaken to achieve economic growth; control inflation; have a foreign exchange reserves of at least five months import cover; and the maintenance of stable exchange rate (Uganda, 2013 articles 24-26).
For the purposes of this paper, macroeconomic stabilization means ‘restrictive fiscal and monetary policies aimed at controlling inflation and the maintenance of stable exchange rate, under a liberal framework, to serve economic interests of foreign investors while squeezing from the peasants as it will be illustrated later.
The Meaning of Peasantry
Peasants are said to be subsistence farmers because they largely control their means of subsistence, and have a social support network system, and sometimes are defined as smallholder producers (Hyden, 1980). This is misleading. Peasants are peasants because they are integrated in the international market economy (Paka and Ebienfa, 2014). Once the people in a community interact with the market to sell and/or buy goods using a currency connected to the international market, they are no longer subsistence farmers living an autonomous life as we are made to believe by Hyden (1980). A peasant mode economy evolved in Uganda when the households, formerly largely undertaking production for subsistence needs, were made to produce not only for own consumption but also for external forces – imperial interests through monetization of the economy, taxation and sometimes sheer force ((Mamdani, 1976). Since the monetization has continued to deepen to the extent that ‘Much of the crop is commoditised, leaving little for household consumption’ ( Murindwa-Rutanga, 2005 p.56)
Debates on Peasantry
The definition of peasantry brings us to the debate on the desirability of peasantry to exist or not. There are three contending arguments about peasantry. There is one championed by Western scholars including Marxists claiming that the peasants are hindering progress and development and therefore should disappear (arguments derived from Cheater, 1991). Then there is another advocated by scholars from the South with their sympathisers from the North arguing that peasants contribute to development protect the environment by their co-production system and therefore should be protected and promoted (Paki and Ebienfa, 2014), 2014; Asiimwe, 2011; Wibberley, 2008). However, there is a hybrid argument that advocates state intervention in the economy to promote national goals (Crane, 2009). By implication the school of thought does not mind if the peasants are protected as an aim of promoting national goals but does rule out the form of capitalistic development that would grow from within to eventually swallow the peasants in the long-run.
To the proponents of disappearance strategy, poverty is synonymous with subsistence farming meaning the orientation of peasants aiming at producing food for self-sufficiency even when they may be producing surplus for the market (World Bank, 1993).
As Flygare (2006 p. 57), ‘What seems to be the prime concern in this so-called modernization strategy is the wish to integrate the group defined as a small-scale or subsistence farmers further into a market economy’ so that ‘more of their production must be marketed’ (Uganda, 2000 p. v) to give an opportunity for the capitalistic mode of production to take over the production process (Ake, 1981). Consequently, the impoverishment of the peasants by external forces is not considered as a matter of concern. As a result, ‘poverty continues to be represented as an originating condition, rather than an outcome of “development” (Paki and Ebienfa, 2014 p. 110).
According to the approach of making peasants disappear, to fight poverty means to kill the production of food for own consumption by peasants. The process to kill farming for own consumption started in the 1970s when McNamara was the President of the World Bank. To McNamara, the poor in the so-called developing countries were poor because they ‘lie beyond the reach of traditional market forces’ and therefore were being ‘left behind or “ignored” by their country’s progress (in Payer, 1982 p. 57).Like Hyden (1980), he argued that by being preoccupied with the production of food for their own needs, the peasants were not only responsible for their poverty but were also not contributing to the development of their national economies.
But is it a bad idea for the peasants to produce for their own consumption first as a guarantee of food security and then sell the surplus or produce commodities for the market afterwards? Can’t the peasant farmers increase the production of marketable commodities for increased monetary incomes without abandoning food production for their own consumption, like they increasingly produced cash crops for export when the peasant mode of production was firmly cultivated in Uganda by the British colonialists?
From historical experience, the transformation of agriculture through commercialization under a Western-inspired capitalistic strategy of development, does not necessarily lead to the improvement of the wellbeing of farming communities because even if peasants earn more in monetary terms, they spend it on increased requirements. Moreover, they lose the opportunity to plant a variety of food crops for nutritious traditional dishes or they are exposed to food insecurity because the money they earn from their commodities might be used to buy items of vogue, rather than food (Wibberley, 2008; Payer, 1982 pp. 2017-223). Killing self-provisioning agriculture, misnamed subsistence, increases vulnerability of the farming communities to food insecurity; it increases the dependency of the majority peasant farmers on the market and therefore external forces (Asiimwe, 2011).
MACROECONOMIC STABILIZATION AND BUSINESS ENVIRONMENT FOR FARMERS IN UGANDA
If the purpose of commercializing agriculture is to eradicate poverty by making farming profitable through commercialization, is the current business environment under macroeconomic stabilization favouring peasants to make profits? As the peasant farmers sell their produce in the market in Uganda, it is necessary to examine the business environment created for indigenous entrepreneurs as the whole. For agriculture to grow sustainably, there should be backward and forward linkages with manufacturing industry (Stein, 2003 p. 169). If agriculture is integrated with industry, there are multiplier effects leading to higher employment levels and generally there are improved household incomes (Uganda, 2004).
However, it is now acknowledged that the performance of indigenous business enterprises in Uganda is poor and has deteriorated over a time (Ishengoma and Kapel, 2011. Although it is now acknowledged that the performance of indigenous business enterprises is poor, how the business environment affects the performance has not been given a due consideration.
The Fight against Inflation and Business Environment
The monetarist fight against inflation in Uganda started with a shock-therapy of withdrawing money from circulation, commenced in 1987 at the time of currency reform. The reform struck off two zeroes from the old currency along with 60 percent devaluation, as well as an imposition of a conversion tax of 30 percent (Byaruhanga et al., 2010 p. 53). Under the currency reform, 1,000,000/= Uganda Shillings (UGX) was exchanged for UGX 7,000/=. While the conversion tax physically withdrew 30 per cent of the money from circulation at ago, the devaluation of the Uganda Shilling further withdrew money from circulation gradually. By 1991, Uganda currency had depreciated by over 17-fold (World Bank, 1993). Without their income adjusting according to the rate of devaluation, it meant that the peasants who were not selling imported goods had to pay more money from their pockets and assets than they earned to buy goods from the market.
Consequently, the shock-therapy started a process of killing a national private sector by replacing it with foreign investors, especially the Asians as it was during colonialism. At the same time, the shock-therapy also started the process of killing agricultural development while impoverishing peasants even more and thereby displacing the youth from land. The currency reform and the devaluation that accompanied it caused the terms of trade for farmers, especially those producing food crops and rearing animals, to decline (World Bank, 1993) and thereby affecting agriculture badly. To show how the declining terms of trade affected the peasants badly, an example from the village of Kigarama in Kabale District, can throw more light.
While the price of a bar of soap rose from UGX 300/= it cost in 1990 to UGX 800 in 1993, the price of an average bunch of matooke declined from UGX 1000/= to UGX 500/= - half of what it used to fetch in 1990. When a peasant could buy three bars of soap in 1990 from one bunch, in 1993 s/he had to part away with almost two bunches of matooke to buy one bar of soap! In 1990, an average cow would be sold at UGX 100,000/= while in 1993 it would be sold at only UGX 70,000/=.(Byekwaso, 1993).
The life of the masses in Uganda continued to worsen as measures of fiscal policy aimed at reducing public budget deficits through tax increases as well as reduction of public expenditures, and monetary policies of reducing money supply either directly or by interest-rate policy deepened. To check and/or reduce government expenditure, the shock-therapy was followed by the infamous retrenchment of civil servants and soldiers in the army. By laying-off government workers, it meant that the money they earned going into circulation monthly was discontinued. At the same time, there was the privatisation programme that saw the sell and liquidation of government-owned parastatal organisations, which employed approximately 45,000 workers (Nyikirikindi and Opagi, 2010). As a result, 56 per cent of the sold enterprises closed thereafter (Kibikyo, 2005). Consequently, money going into the economy from the closed enterprises was also discontinued.
In addition, as a way of controlling inflation through public expenditure reduction, the government was refrained from paying the local suppliers, who used to buy the peasant farmer’s produce on large-scale on time, leading to the accumulation of domestic arrears. In some cases, purchase from domestic suppliers was and is still being discouraged (Byaruhanga et al., 2010. This limits money going into circulation. Furthermore, in the name of aiming at balancing the government expenditure with revenue collection, the Government was compelled to find ways of collecting more money from taxes in a small economy without a large-scale industrial base. As Matovu (2005 p. 163) observes that: ‘With all levels of government under enormous pressure to increase revenue in-take through taxation, visible small businesses in urban areas have come to bear the full brunt of governmental efforts aimed at increasing revenue in-takes’. As a result, the Government resorted to overtaxing the people. For instance, fuel that influences the price of most, if not all, commodities in the country was and is still overtaxed.. The overtaxing of the people squeezed and still continues to squeeze even the little money from the majority.
Meanwhile as the restrictive monetary and fiscal policies were being implemented without the development of the local productive capacity (ability to produce goods for consumption and exportation, Uganda increasingly became donor-dependent, especially through budget support. The ‘donors’ or ‘development partners’ were willing and actually increased ‘aid’ to the country but spent it on sectors, such as roads, institutional reform (like privatisation and decentralisation programmes), health and educations (Mugona, 2010 ), etc, which do not directly lead to the production of goods. Since the donor money did not come from the local production processes, it could not ‘easily be absorbed within the economy’. Therefore, it was said that there was ‘excessive’ money in circulation. As a result, other measures of withdrawing the money from circulation were added on. As the size of the government budget resource envelope expanded with the rise in aid, the fiscal deficit widened and therefore the mopping of money out of circulation was intensified as Brownbridge, 2010 p. 300) further reveals.
As fiscal deficit before grants widened in the late 1990s and early 2000s, fiscal operations became the main source of the base money creation. Fiscal liquidity creation far exceeded the growth of Bank of Uganda (BoU) base money target. To meet this target, the BoU had to sterilize most of the base money created by fiscal liquidity operations, using a combination of two instruments: the sale of domestic securities, mostly treasury bills, through a weekly securities’ auction; and sell of foreign exchange to the inter-bank foreign exchange market.
Again when inflation rose up sharply to about 30 percent in 2011, more ruthless measures of mopping money from circulation were undertaken. The Bank of Uganda sold high yielding bonds and treasury bills to attract dollars‘(between 15 – 23 percent)’ (Wandera, 2012) while it increased interest rates through the increase of Central Bank Rates (CBR) to more than 20 percent from 16 percent (BoU, October 2011). In addition, the government removed subsidies on electricity and consequently Uganda Electricity Regulatory Authority (UERA) also increased the price of electricity in 2012. this intensified the exercise of squeezing money out of circulation. Meanwhile, taxation of the people has been intensified with the introduction of taxes on agricultural inputs and water in the 2014/5 budget.
As a result, the continuous and increasing measures of withdrawing out and limiting money in circulation, have reduced effective demand within the economy; money has become ‘scarce’ (esente zabula), to use a common expression in Uganda. The removing of what is said to be excessive money from circulation squeezes the incomes of the peasants who are already experiencing economic hardships; the minority rich get what is deemed to be excessive money in circulation but the money is withdrawn from both the poor and the rich.
The measures of mopping out and limiting money in circulation while concentrating it in few hands affects ordinary business operation in Uganda by undercutting effective demand within the economy. Consequently, the majority do not have money to buy goods in large quantities leading to reduced sales; (abantu bavu, to use a common expression in Uganda by traders). As a result, there are limited business prospects within the economy. For that matter, although Uganda was ranked second most entrepreneurial country in the world by Global Entrepreneurship Monitor Report in 2004, it was found out that also the rate of businesses failure was one of the highest; it was found out that for every business started, the other closed (Briggs, 2009; Bugaari, 2008). From the Minister of Commerce, Hon. Kyambadde, who was taped and aired on Radio One Talk-back programme in the morning of August 22, 2013, currently 80 percent of the businesses established in Uganda collapse within five years.
Without putting into consideration the negative tight monetary on business operations, the Ministry of Finance, Planning and Economic Development (MoFPED) attributes the current high business failure rate in Uganda to other factors. It is attributed to: lack of entrepreneurial skills, information on market opportunities, and high quality business development services, as well as lack of finance, adequate technical and management support (in Bugaari, 2008). However, this is contradicted by the fact that during Amin’s regime, men and women without formal education emerged and acquired entrepreneurial skill as they managed their businesses without most of the above-mentioned attributes. This became possible may be because there were profitable trade prospects within the Ugandan economy then. Otherwise, why is business management failing the locals today?
It appears the excuse of lack of business development skills and finance is to lure the local business people to incur even more expenses to invest in loss-making businesses under the current conditions created the contractionist policy. The encouragement of business people to incur even more costs compares appropriately with colonialism in respect to borrowing by agricultural cultivators. During colonialism, borrowing was encouraged in most colonies to ensure that the exporters of cash crops got supplies, importers of Western goods sold more, and the banks got greater profits by entangling the cultivators in debt (Furnivall in Payer, 1982).
Currently, not only borrowing is encouraged to promote business but as a means of fighting poverty by lending to peasants (Muhumuza, 2007). It should be noted that the plan for eradicating poverty started with a micro-credit scheme known as entandikwa programme (Mugambe, 2010) ostensibly to help the poor initiate small-scale businesses. Since then, the micro-credit scheme has been expanded to a micro-finance movement and is a central strategy in fighting poverty (Uganda, 2009)
Routinely, the government creates funds for lending to different groups to do business as a way of fighting poverty and unemployment. However, the funds continue to be provided when it is difficult to run a business even by the experienced businessmen and women under recession-like conditions already mentioned. As result many people indeed are entangled in debt in Uganda (Byekwaso, 2010; Muhumuza, 2007).
It is claimed that there is a need to promote a private-sector-led strategy of development under a free market enterprise as a way of promoting local enterprise to grow and develop (Ishengoma and Kappel, 2011). However, the tight monetary policy has undermined the development of local businessmen and women into a strong indigenous private sector. Not only has the policy reduced the sales of local investors because of reduced effective demand within the economy as has been argued but also the government has been not paying the local suppliers on time leading to the accumulation of domestic arrears as already cited. By failing to pay the domestic suppliers, it means that the government undermines the capital base of local businessmen and women.
On the other hand, while the local businessmen and women complain of low sales because of the low purchasing power within the economy, the emergence of supermarkets has complicated matters under the policy of free market enterprise associated with the control of inflation as well as the attraction of foreign investors. ‘Small shops all over the country are currently struggling for survival in the face of the growing number of supermarkets’ (Business Power, 2011 p. 22). In Uganda, many shops are now owned by Asians using Ugandans to sell their merchandise (Briggs, 2009). The indigenous businesspeople find it difficult to compete favourably because the government favours foreign investors who also are given tax holidays (Briggs, 2009).
Business Environment, Peasants and Agricultural Development
If the business environment for commercial enterprises is generally poor, then how can commercialization of agriculture help peasants engage in farming as a sustainable profitable business? As has already been mentioned, industrial sector should develop and exist to serve as market for agricultural produce in the country. However, the claimed free market enterprise when there are discriminatory policy interventions in the economy under macroeconomic stabilization does not only hinder industrial development but is also killing agricultural development. After practicing macroeconomic balancing associated with privatization that was undertaken to reduce government spending in order to fight inflation, there was a decline in the manufacturing sector as Kibikyo (2005 p. 188) observed. He concluded that: ‘This phenomenon does not augur well for manufacturing in particular and industrialization in general’. ‘Uganda used to have six textile industries but immediately after implementing macroeconomic stabilization, Pamba and United Garment Industries (UGIL) closed while the remaining were limping (Ahimbisibwe, 2005 p. 99). The local industries, like the garment industries above, are out-competed by fine foreign products filling shops in Kampala on one hand, and cheaper second hand clothes, on the other. Local ginners after adding value to raw cotton, using borrowed money from banks, cannot find market for their products ranging from surgical cotton to ear pads (Daily Monitor, 2012 p. 24).
Without gainful employment in manufacturing industry, many people in city and urban areas do not have enough money to buy foodstuff in large quantities as the money is ‘scarce’. From what the writer has encountered on housing rentals in Kajjansi, families especially female-headed households, skip meals not only in day but also eat one meal on alternate days; they actual eat meals when there is money from unsure source income – prostitution. On the other hand, farmers do not produce on large scale to supply in urban centres due to narrow market.
While the narrow market is disadvantaging peasant farmers, the practice of avoiding fiscal deficits at all cost, which has made it impossible for the government to intervene in the economy to stop agricultural prices from fluctuating to a level that does not make economic sense, is ruining agriculture. As a result, farmers, especially in rural areas, have been getting disappointing low prices for their foodstuff thereby making farming unprofitable business as real life stories recorded in the press illustrate.
For instance, a one Okello, a farmer from Masindi borrowed money from the bank in 2001 and used it to grow maize for the market expecting to sell his produce at UGX 200/= per kilo. At the time of and after harvesting, the price fell to UGX 50/= while the cost of production was UGX 100/= (in The New Vision, 2001 p. 10). He made a loss of UGX 50/- per kilo. In 2010, Erias Mukasa of Kasanda, Mubende District, got a loan from a microfinance and grew maize expecting the price to rise to UGX 700/= per kilo but he sold it at UGX 300/= (in The New Vision, 2010 p. 27). He was lucky because the price of maize fell to UGX 150/= that year while the input costs were rising (Ssali, 2010 p. 23).
However, without considering the losses incurred by the farmers, when the prices of the above-mentioned crop fell, Muhakanizi (2004 p. 20), a bureaucrat from (MoFPED), advised the farmers to shift to what he termed as high value crops, like vanilla. But the so-called high value crops (cash crops are also affected by price fluctuations as will be shortly illustrated. Instead of addressing the problem of price fluctuations, farmers are not only misadvised to grow the so-called high crops (cash crops) but are also deceived to incur more costs by adding value to their produce. When the price of maize went as low as Shs150 per kilo (not even a tenth of a dollar) in 2010 in some parts of the country while the farmer’s overhead costs were rising (Ssali, 2010 p. 23), the government encouraged them to add value to the agricultural produce before it is sold. But one wonders: if the policy of creating a favourable business environment for investors truly works, why didn’t the investors, with their capital, knowledge and skills, buy the raw produce from farmers and add value to it in order to make profits?
Not only food crop farmers incur losses as a result of price fluctuations as we are made to believe by government officials, like Muhakanizi mentioned above, but also cash crop growers are affected as well. Between 2002 and 2003, the price of vanilla was very attractive selling at UGX 150,000/= a kilo and as a result, a number of people rushed to grow it. However, within a short period the high price it was fetching then nosedived, forcing farmers to abandon the growing of the crop (Muzaale, 2009 p. 27). By 2009, the price of vanilla had dropped to UGX 3000/= a kilo. Farmers abandoned the growing of the crop in Mukono District where it had long been cultivated.
The above also applied to coffee farmers in Mpigi District when the price of coffee plummeted to the lowest levels in 2002; the farmers stopped picking the ripe coffee beans from the gardens (Oxfam, 2002b p. 11). Astonishingly, the government did not intervene in the market to prevent the price of coffee from falling to the record low level in 2002, compared when the government imposed a Coffee Stabilization Tax in 1994 following a sharp rise of price in the international market (see Cawley and Zake (2010 p. 105).
Farming business is not only affected negatively by poor and fluctuating prices but also by drought, which is common in Uganda. In 1998 and 1999, drought occurred and affected 700, 000 people as well as killing 115. In 2002, it affected 655, 000 people killing 79 while in 2005 and 2008 it affected 600,000 750,000 respectively (Uganda, 2010 p. x). According to Tumusiime-Mutebile (2013 p. 10), Uganda has suffered many food price shocks as a result of drought since 2006, blaming farmers for depending on weather and lack of good storage system. However, the continued reliance on weather and lack of good storage system is largely as a result of the general framework of free market economics. For instance, as has already been elaborated, the framework has made farming a loss-making business because the government cannot intervene in the market to stabilize the price the farmers get for their produce at an attractive high level. As a result, farmers fail to accumulate profits to invest in irrigation equipments.
Without considering profitable marketing, which plays a very big role in promoting agricultural development, the focus and orientation of the PMA, which was carried over to DSIP, it seems is deliberately misdirected to programmes and activities that do not give direct incentives to farmers for producing more. For instance, the PMA takes Research and Technological Development; National Agricultural Advisory Services (NAADS); Agricultural Education; Improved Access to Rural Finance; Agro-processing and Marketing; and Sustainable Natural Resource Utilisation, as priority areas for action (Uganda, 2000 Chapter 7). Although it is known from historical experience that price fluctuations negatively affect the production of agricultural commodities, price instabilities were not catered for under the marketing strategy of the PMA, and this also applies to DSIP.
The adoption of productivity enhancing technologies, which is generally about encouraging farmers to buy and adopt new seed varieties as well as animal breeds, not the use of modern machines and production techniques, has been emphasised and is even included in the marketing strategy. It is claimed that expenditure on research of the seed varieties ‘have highest impact not only on productivity but also on poverty reduction’ (Journal of Agrarian Change, pp. 22 & 7).
The issue of improved seeds should be taken with caution. It is assumed that if high yielding seeds are introduced, resulting into higher output per area cultivated, then farming will be profitable leading to agricultural transformation. Considering the persistent occurrence of price fluctuations that usually nose-dive to a level that does not cover costs of production, is the adoption of improved seeds make sense? When there bumper harvests, the price falls to a loss-making level. If the peasant farmers are making huge losses due to lack of market with limited expenditure on inputs, what is the essence of increased production using high yielding seeds? May be, it is a ploy by multinational corporations to make peasants depend on the companies’ seeds and chemicals. To make matters worse, the Government of Ugandans plans, if it has not implemented the plan already, ‘to increase the commercialization of improved seeds and other planting materials. Seed and agro-genetic propagation companies will be contracted within a long-term framework to multiply improved seeds and planting materials… (Uganda, 2011). The seeds companies are to be protected by the government. The issue of added costs to the peasant farmers is not only to make farming even more a loss-making business but also to create a market for private company seeds that are owned by or associated with foreign companies. The whole scheme is to place the production of food process in the hands of the business empire of multinational corporations (Asiimwe, 2014).
Further, although the so-called improved hybrid seeds are said to be high yielding, Oxfam (2002 pp. 222-3) convincingly argues that the high productivity attributed to them is controversial. It can be achieved under ideal conditions usually available under experimental situations. Under the conditions of poor soils the poor peasants have access to, due to exhaustion out of repeated tilling; the high productivity hyped about may not be possible. Oxfam further argues that these seeds are adapted to pesticides manufactured by the multinational corporations, whose market is promoted by the popularisation of the hybrid seeds.
Moreover, the story of improved seeds in Uganda is full of controversies. For instance, before the introduction of clonal coffee, the disease of coffee wilt had never affected Ugandan farmers on the scale that has been witnessed in the recent past. Likewise, before the introduction of the so-called improved banana suckers for planting, the country had never been ravaged by banana wilt as it is currently happening, especially in western Uganda. Farmers believe that the new diseases were brought by the newly introduced seed species (Byekwaso, 2012). Further, farmers have complained of being supplied poor plant species as well as animal breeds through (National Agricultural Advisory (NAADS) programme, which makes the farmers poorer (Tugume, 2008 p. 13).
As a result of the business environment created by the kit of macroeconomic stabilization, currently there are few rich farmers emerging from the local communities in Uganda. If there were rich farmers, we would have a strong cooperative movement protecting and promoting their interests, as happened towards the end of colonialism (see Mamdani, 1976). The existing profitable opportunities in agriculture favour the rich not from within the farming communities. Whereas the newspapers in Uganda publish profiles of people who have made it in Agriculture, the profiles are either exaggerated or are selectively picked from individuals who are involved in multiple activities but not getting money from farming as a sole business. For example, The New Vision (2012 pp. 16& 33) magazine gave profiles of two prominent politicians, who use irrigation to carry out farming. These individuals use their farms for political and prestige purposes but may not be concerned with how cost-effective is their farming business. No wonder, as case of the former Vice-President who sold his Temangalo farm after he was dropped from government illustrates the point (The New Vision, 2012 p. 38). Further research should be carried to find out whether currently farming, especially crop growing is cost-effective or not.
They are exceptional successful agricultural ventures owned by foreign investors but not rich farmers from within, like flower and tea growing for export as well as sugar plantations. The latter ventures are undertaken by big companies, usually multinational corporations who exploit workers (Miti, 2009 p.18) while sugarcane out-growers are exposed to famine in Busoga (Mufumba, 2013 p. 13).
Whereas price fluctuations already elaborated make farming unprofitable business in Uganda, the farmers in developed countries do not only get subsidies to make their farming business profitable but are also compensated for loss emanating from natural hazards. For instance, the ‘USA and EU account for around about half of all wheat exports’ in the world at prices ‘respectively 46 percent and 34 percent’ below the cost price. While the USA, ‘accounts for more than one-half of maize exports’ in the world ‘at prices one-fifth below the costs of production’ (Oxfam, 2002 p. 15), the farmers in Uganda sell theirs at a loss as has already been illustrated. Unlike Ugandan farmers who starve, sometimes to death when rains fail, their counterparts in the USA are ‘compensated for losses resulting from weather damage’ (Oxfam, 2002 p. 114). In Uganda, for example, over 2,000 households in Bukwo lost crops to drought amounting to UGX 14billion (The New Vision, 2009 p. 34) without the government bothering to cater for their loss.
Moreover, the practice of increasing interest rates has disadvantaged agriculture even further. When inflation rose up in late 2013 as a result of food shortages, the governor Bank of Uganda raised interest rates (Tumusiime-Mutebile, 2013). Under normal circumstances, when inflation occurs as a result of food scarcity, a rational economic policy would be to reduce the cost of borrowing, especially for investment in agricultural sector so that output of food items can increase in the long-run. Since the food scarcity routinely occurs as a result of drought, a prudent economic policy would not only reduce the cost of borrowing for investment in agricultural sector but also to subsidize irrigation equipments as well as constructing public storage facilities so that farmers cannot depend on vagaries of weather anymore. Instead the governor opted to starve the patient by raising the interest rates.
It seems the stringent measures of macroeconomic stabilization, as well as ignoring the concerns of the people, are meant to reduce the price the farmers get to discourage the peasants from growing their own food for own consumption. For instance, in PMA, it was unambiguously stated that maintaining ‘downward pressure on food price’ is good for ‘net food buyers, especially the urban poor who spend a large share of their incomes on food’, and that ‘subsistence farmers must absorb lower sale prices for their produce’(Uganda, 2000 p. 6). As a result, peasant farmers have been made to wallow in poverty’ and thereby compelled to sell their produce to ‘middlemen offering paltry prices’, often times ‘selling maize, cotton, and rice prematurely in the garden (Were, 2010 p. 9).
Consequences of War on Peasants
As the Government of Uganda has been fighting subsistence farming through commercialization of agriculture under the policies of macroeconomic stabilization, the country is regularly affected by famine and acute food shortages. In 1997, most parts of Uganda, especially the north and northeast of the country, were affected seriously by food insecurity (Bazara, 2001). In 2002, there was a decline in the production of cereals, especially maize and beans (Byekwaso, 2002) while a study conducted in 2006 revealed that half of Uganda’s population does not have access to sufficient food (Opolot and Kuteesa, 2006 p. 23). In 2008, there were serious food shortages causing rising food prices that were of concern to the urban areas (Byekwaso, 2008). In 2009, 60 percent of Ugandans were unable to feed their families because famine hit the country and 51 out of about 80 districts then were faced by food shortages (The New vision, July 2009). In 2011, the country was faced by food shortages and rising food prices together with other commodities that resulted in walk-to-work protests, which almost put the country into political crisis.
From what the author personally knows, in the past, during the wedding or burial ceremonies, the peasants used to generously contribute food and drinks towards the successful conclusion of the functions. Currently, on such occasions, the villagers expect relatives working in towns to bring or buy the food and drinks to be consumed on the functions. From what has been personally experienced, now people fight for food during burial ceremonies. There is food scarcity as even the people living in rural areas are net food buyers (Akello, 2011). This is because agriculture, from where the majority draw a living has been performing poorly; its growth has been generally very low (averaging less than two per cent between 2004 and 2008), erratic and sometimes declining while its contribution to the GDP has greatly declined. Food crop production grew negatively for three consecutive years from 2004 to 2007. Table 2 to inserted here
Consequently, by 2007 the country had become a net food importer (UNDP, 2007 p.76). And as a result, the number of children facing the risk of being malnourished in Uganda is very high. In rural areas where the majority of the people live doing farming as the source of their livelihood, 40 percent of the children under the age of five years are stunted. Surprisingly, even western Uganda, which is said to be experiencing high levels of poverty reduction levels, is most vulnerable: 50 percent of the children are stunted (Sewanyana and Kasirye, 2011; Shively and Jing Hao, 2012). According to the report of Food and Agricultural Organization (FAO) of 1999), 28 percent (about 6.3 million people) in Uganda then were malnourished then (in Sabiiti, 2005).
Apparently, the government and other international forces associated with macroeconomic stabilization are interested in ensuring that the peasant farmers suffer so that they can disappear as the strategy of modernization entails as has already been discussed. And the strategy is working. There is mass migration from rural areas to urban areas, especially to Kampala City; ‘many young people are quitting agriculture for petty jobs in urban centres like riding boda boda (motor cycle taxis)’ (Nuwagaba in Lirri, 2009 p. 28). To make matters worse, the few elites in Uganda who get easy money from government and donor-funded projects buy large chunks of land, especially in Buganda with tenants as a result of land tenure system inherited from colonialism, for speculative and prestige purposes and evict the peasant bibanja owners. This has accelerated the migration of peasants to towns and the city (Kulumba, 2005). As a result ‘Kampala could either become a mega city or a slum in the next 10 years due to high population growth with low economic activities and poor infrastructure’ (World Bank, 2015).
The situation above sharply contrasts with the agricultural performance before the policies of macroeconomic stabilization were undertaken. While inflation during the pre-macroeconomic stabilization is blamed for having affected agricultural production, only traditional export crops had been affected. Rather during inflationary period of Amin’s era, the growing of food crops to sell in the national market expanded (Kato 2012 p. 36). Coffee shambas in Western Uganda were cut down and replaced with banana plantations and dairy farms (Kasfir, 1984). Even later, before the policies of macroeconomic stabilization kit, food crop terms of trade were good and improved steadily between 1981 and 1987’ (World Bank, 1993 p. 46), the time when Uganda was experiencing hyperinflation) but started declining in 1989 when inflation was being brought down.
Resistance by Peasants
As the peasants are being made to disappear, they have made attempts to resist the move. Whereas President Museveni has been waging war against production of food for own consumption, as the agricultural contribution to the GDP has declined greatly (Uganda, 2010), there is a tendency for the percentage of people eking a living from agriculture to enlarge (Uganda NGO Forum, 2009). Failure of agricultural modernization in Uganda is blamed on subsistence farming by the PMA. However, it should be blamed on lack of profitable opportunities. If there were better market opportunities, the peasants would have produced far more than they can consume. The percentage of what is sold in the market compared to what is consumed would increasingly become higher. Imagine a farmer producing 10 tonnes of maize, what percentage of it can be subsisted on? Because the people get low sale prices for their produce, where it is possible, they produce mainly for own survival. Production for mainly own consumption is a resistance mechanism. As Van Braun (2004 p. 30) observed, ‘High risk of income fluctuations of farm households in poverty and high transaction costs are the basic reasons for the prevalence of subsistence farming…. Commercialization in conjunction with failure of institutions, policies or markets can be detrimental to a household’s welfare.’
In addition, the peasants have been resisting the adoption of hybrid seeds; ‘the rate of adoption by farmers of improved seeds remains low even among farmers with access to extension services’ (Journal of Agrarian Change, 2012 pp. 22 & 7). As a result, National NAADS, an organisation that was responsible for giving the seeds to farmers, has been replaced by the army (Rwakakamba and Lukwago, 2014) probably to force peasants to accept the seeds if they (peasants) resist. The peasants have been resisting the adoption of the so-called improved seeds because the private companies that now are involved in seeds propagation encourage perpetual dependence’ (Tennywa, 2008 p. 3)
From the frustrating experience the indigenous entrepreneurs and peasants have gone through, as a result of the poor business environment created by macroeconomic stabilization, it is apparently clear that the plan to commercialize agriculture as a way of fighting poverty is a strategy not only to hinder the development of local capitalist class in agriculture but also to eliminate peasants from rural areas in line with the modernization model of development. Whereas during colonialism, the peasant mode of production was articulated to act as a source of cheap raw materials for export (Mamdani, 1976), while the production of food for own consumption and the maintenance of food reserves were encouraged as a way of food security (Sabiiti, 2005), it is increasingly becoming that the mode is being deliberately dismantled to pave way for foreign investors in large-scale agricultural production and marketing.
Consequently, peasants are have been phased out on policy issues; unlike the PMA whose focus was on smallholder farmers, the DSIP talks of farmers as the whole. ‘The DSIP bundles the peasants within the sector stakeholders, their needs and values being taken as similar to those of the private investors and development partners like the United States Agency for International Development, the World Bank, the IMF and non-governmental organisations’ (Asiimwe, 2014 p. 10). This is in line with the government’s wishes; President Museveni has been giving unwavering support to foreign investors at the expense of the peasantry. ‘The personal appeal by the president for support of investors indicates more clearly that the state’s choice of action directly supports the rise of the ‘Empire’, which will gradually see to it the fall of the peasantry (Ibid, p. 26).
To phase out the peasants, their lives have been made extremely difficult in the name of modernization of agriculture and poverty eradication. Farming has not only been made a loss-making business but also an expensive activity as a source of livelihood to peasants. The peasants are increasingly compelled to incur more costs in order to earn a living from farming, while in some cases, especially in Buganda, they are evicted. As a result of the war on peasants, the number of children dying of malnutrition is alarmingly on the rise (Saturday Vision, 2011 pp. 10-11) as poverty is claimed to have reduced significantly. Is this not a concealed ploy to commit genocide that is underway as children are dying of starvation because their parents are deliberately denied the right to grow food for household own consumption.
The peasants unconsciously have sensed that they are fighting a war. This is reflected in the songs they sing in church; they mention that they are at war and that Jesus as their commander. When people are faced with crisis and uncertainty, there is a tendency for them to seek divine intervention by joining various religious organisations in large numbers (Kulumba, 2005). This is case today in Uganda, and possibly other countries of the Third World. Unfortunately, instead of taking on the liberating message of Jesus Christ, the people are being diverted from the war by promising them miracles to happen.
Although Uganda may have unique characteristics, it is not exceptional under the kit of macroeconomic stabilization, which believes that commercialization of agriculture through the production for trade but not the production of food for own consumption by peasants, will banish poverty from rural areas. This will separate the peasants from the control of their means of subsistence. Although the separation of the peasants from the control of their means of subsistence, brought about social transformation in the West leading to good life in urban areas, it was accompanied by the development of science as well as heavy industrialisation coupled with planning (Allensworth, 1973). However, it seems the development that took place in the West cannot be replicated in Uganda and Third World countries generally (De Rivero, 2001; World Bank, undated). While the peasants are being compelled to abandon farming in rural, there is no large-scale commercial farming emerging as well as heavy industrialisation taking place in urban as it happened in the West Instead the economy is increasingly being dominated by the service sector (Uganda, 2010), which does not create ample employment opportunities and therefore there is an ‘outcry of lack of jobs for both educated and uneducated’ (NGO Forum, 2010 p. 22).
Under such circumstances, is the social transformation of the West needed or possible in Uganda, Africa and Third World countries generally? Should the Third World countries aim at aping the ‘developed countries’, despite the avoidable problems the ‘developed’ countries usually face resulting from business cycles (economic stagnations, recessions and depressions) as well as social inequity. In preindustrial farming societies, unemployment is not a problem – what is the problem is fluctuating net revenue when business is bad (Colander, 2004  p. 140) but not loss of livelihood. If the African preindustrial farming societies are improved on through cooperative organisations as well as policies of economic nationalism, without necessarily destroying the peasantry, wouldn’t the problems emanating from financial crises in the global economy, be avoided in the Third World countries? Wouldn’t the situation where unemployment in developed countries now “at its highest in years and a large share of the workforce has had no significant increase in real wages over the last few decades” (UNDP, 2013 p. 22), be avoided in the Third World countries?
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