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Presentation by John Magnay - Ca

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					Capacity for Trade in Africa

   A Traders View from Africa

         John Magnay
  CEO, Uganda Grain Traders Ltd
              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

                                                2
             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?
                                                3
                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


                                               4
  Exports / Balance of Payments
                                   $ million
Product               mtonnes                  Comment
                                      Value
Coffee                140,000          160     Tonnage dropping / Value increasing
Fish                      25,000        75     Resource decreasing
Cut Flowers /
                                        30     20-30% growth per year
    cuttings
Maize / Beans
                      140,000           30     Relief food to Great Lakes
    formal
Tea                       25,000        25     Tonnage increasing / price dropping

Maize / Beans
                      100,000           25     Border trade to region
    informal

Tobacco                   15,000        20     Tonnage down from 2004 peak of 35,000mt

Cotton                    16,000        16     Down from 40,000mt in 2004/5
Others                                 100     Gold / Minerals / Electricity
                Exports               476
       Personal Remittances           424
                Donors                900
                                                                                     5
         Balance of Payments         1,800
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
                                                      6
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
                                                        7
             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

                                           8
             Food for Peace 2003

    Commodity            Tonnage          $ Value       Cost per mt ex-USA

    Maize Meal            18,800        19,969,676               1,062.22
       CSB                16,100        9,484,910                  589.12

Pulses, Green whole       3,000         2,362,012                  787.34

    Maize, Bulk           56,360        25,223,290                 447.54
  Veg.Oil (6/4 L)         1,530         1,933,684                1,263.85

 Peas, Green Split         500             n/a
                          94,260        57,039,888
     What did this do to help production / markets in Uganda / Africa?

                                                                            9
   Food for Peace 2003 - CSB

   Commodity       Tonnage        $ Value     Cost per mt ex-
                                                     USA
      CSB           16,100        9,484,910       589.12

       IF PURCHASED IN UGANDA/EAST AFRICA
     UNIMIX         16,100        6,440,000        400

                             OR
     UNIMIX         23,710        9,484,910        400

                          AND
It would have provided a market for another +/- 30,000mt
                      of Maize / Soya
                                                           10
     Opportunity for Trade
Target Import Substitution

Target the Regional markets

Identify Niche markets outside Africa




                                        11
                      Hit the Imports
  Crop       Value      Target                   Export Potential ***
            $ million
  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 /     $ 5-10     A UGTL / Uganda Breweries initiative is targeting
Adjuncts                substitution of 70% raw material imports for
                        Breweries                           ***
                                                                        12
                                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
                                              13
       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

                                                  14
                    Kenya Maize balance 1980 - 2004 (mt)
  800,000
                    Kenya Maize Balances
  600,000


  400,000


  200,000


        0
             80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04
 -200,000


 -400,000


 -600,000


 -800,000


-1,000,000


-1,200,000
                                                                    So u r c e : U G T / F E W SN E T


-1,400,000                                                                               15
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


                                                         16
          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
                                                  17
              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



                                           18

				
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