Price surge in basic commodities ahead of Christmas

James Kanyije, the chief executive officer of KK Foods, one of Uganda’s largest dealers in fresh fruits and vegetables told The Independent that shortage of rains in many parts of the year have led to a 25% drop in the supply of fruits from farmers.

“The rains you see are not everywhere,” he said. “We are likely to see a 70% drop in the supply of most agricultural foods in the coming months of the New Year.”

Economic analysts like Lawrence Bategeka, former research fellow at the Economic Policy Research Centre at Makerere University and now deputy chairperson of Parliament’s Committee on National Economy said that people should spend within their means because of the tough economic times bearing in mind of the future.

“Going by the general feeling that people have no money, I don’t expect us to have a booming festive season,” he said, adding that seasonal and natural factors have played roles in the surge in commodity prices.

He said that the usual anticipated increase in demand for goods and services by households during the festive season normally increases demand for dollars by traders and leads to rapid depreciation of the shilling against major foreign currencies and thus pushing prices upwards.

Such incidences, Bategeka says could lead to a further rise in inflation from the current 4.6% as at the end of November, prompting the Bank of Uganda to tighten the monetary policy.

The country’s currency has fallen from Shs 3,406 to Shs 3,597 over the past two months as a result of excess increased corporate demand for the foreign currency.

Long term solutions

Bategeka says seasonal factors like festive season spending may be difficult to deal away with but was optimistic that well thought out measures by government and the private sector would tame natural factors like bad weather or drought.

“Good irrigation systems would help us maintain constant supply of agricultural products on the market,” he said, adding that there’s need for budget considerations and actual spending on this component of agriculture from both government and the private sector.

During this financial year, the government has allocated Shs 823.42 billion, up from Shs 343.46 billion last year citing need to finance irrigation schemes.

Bategeka said farmers need to be provided with inputs, improved breeding and planting materials, pesticides and research and development as early as possible to guarantee high yields.

“Also fresh crops are not dependable. Their prices will always fluctuate compared to processed foods,” he said adding; “We need to be tangible in value addition.”

He also urges the government to always clear its domestic debt on time, now standing at a staggering Shs 11.319 billion as of June, 2016, to boost private sector growth and enhance domestic demand.

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editor@independent.co.ug