Rice farmers cry out over competition from cheap imports

Kampala, Uganda | THE INDEPENDENT | Ugandan rice farmers and dealers have cried out to government to rethink a policy encouraging more rice imports, which they say is pushing them from the marketplace.

In a two-page appeal published in The Daily Monitor, the Rice Association of Uganda-AU, says it is alarmed at the “ongoing dilution of the East African Common External Tariff policies and the shift towards increasing importation of rice”.

The statement is signed by RAU Chair, Dr. John Daniel, the Coordinator for Northern Chapter, Bongomin Andrew Okot and the Chapter Coordinator for Eastern Uganda, Ahmed Naleba.

RAU says the once clear vision and mission of the government to increase domestic rice production in order to reach self-sufficiency is being eroded and creating upheavals in the rice sector.

According to RAU, this has resulted in a shift from the basic principle of import substitution to a pro-imports stance. RAU says at a time when domestic production contributes nearly 80 percent of the total amount of rice consumed each year, the sector faces challenges such as uncontrolled importation of rice with concessions and duty waivers, inconsistent and erratic tax and other policy changes, hence a reduced market for domestic rice.

The association is particularly concerned with a recent meeting with President, Yoweri Museveni in which a few millers asked for a reduced import duty on unmilled brown rice from 345 dollars per tonne to 150 dollars per tonnes, or less. This would apply to import of 150,000 metric tonnes of rice, up from the current 15,000 tons, over a three-year period. The rice would mostly come from Pakistan.

The demand is in addition to several concessions and a 100 percent duty waiver the importers have already been enjoying for the last three years. Uganda consumes 215,000 tonnes of rice annually. Of this Uganda imports 15,000 tonnes from Pakistan, and 35,000 tonnes from Tanzania.

The Tanzanian rice enters Uganda duty free under the Common External Tariff-CET arrangement of the East African Community. Despite the CET, Tanzanian rice is still more expensive than Pakistani rice, which benefits from lots of government subsidies. Pakistani rice is also cheaper than Ugandan rice.

The implication of the importers’ demands is that the importation of cheaper 150,000 tonnes would simply out compete the more costly Ugandan and Tanzanian rice. Since total annual consumption of rice is 215,000 tonnes, of which Ugandan farmers alone produce 165,000 tonnes of the most expensive rice on the market, the hardest hit with importation of 150,000 tonnes of rice would be Ugandan farmers.

According to RAU, it makes no sense to favor a few millers over Ugandan farmers, arguing that the entire rice milling process, including packing, employs half a worker for every tonnes compared to 100 workers for every tonnes of rice produced. RAU also disputes claims that rice millers in Uganda lack rice to mill, especially off-season, hence the need to import rice for milling. The farmers argue that since rice is a seasonal crop the onus of stocking rice for milling is on the millers.

On claims by millers that importation of brown rice offers large value addition, RAU argues that processing of brown rice is only five percent of the value chain, with 80 percent being the actual growing and 15 percent being other post-harvest processes. They further argue that the price difference between milled white rice and husked or brown rice is only eight to 10 dollars per ton, which is negligible and does not warrant such generous incentives.

In its appeal, RAU wonders whether by allowing importation of 150,000 tonnes of rice the government wants to kill off Ugandan rice farmers and their East African counterparts. RAU notes that in the last three years, due to 100 percent duty waiver on rice imports, there has been flooding of the domestic market by cheap imported rice, mainly from Pakistan, leading to depression of the price of domestic and East African rice.

According to RAU, the importation of duty-free rice will only lead to further dependence on imports hence diverting the country from the path to self-sufficiency in rice production. RAU says by encouraging rice imports, the government is putting her  farmers, who don’t benefit from any subsidies, up against Asian rice growers who pocket, on average, 60 billion dollars in subsidies.

If the government goes ahead with the plan, RAU says it will be a wet blanket on the over 400 million dollars invested in the domestic rice sector. The rice farmers conclude that due to the challenges faced by the domestic rice sector and the economic unviability of brown rice import and milling, no brown rice should be permitted for import.

The farmers add that if at all brown rice is considered for import, the tonnage permitted for import must reflect the gap between production and consumption, as well as the annual imports of rice from EAC countries like Tanzania. They also want the reduction in import duty, if at all, must be commensurate with the actual monetary value addition that polishing of brown rice would offer.

The farmers also propose that any interventions proposed should only be applicable for a very limited period and not coincide with domestic harvest seasons. They further demand that if brown rice is considered for import, strict mechanisms for monitoring are necessary to avoid false declaration of milled rice as husked rice, and to avoid smuggling and tax evasion.

The farmers also propose that if ever the government decides that there is an emergency need for food, then maize and beans should be the logical alternatives. They also propose that if rice is to be considered in emergency situations, then it should be fully milled white rice importable by anybody up to 15,000 tonnes and for a limited period of two months subject to EAC common external tariff of 50 percent.

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