Uganda - Agricultural sector memorandum (Vol. 2 of 3) : Main report

Report No. 10715-UG Uganda Agricultural Sector Memorandum (In Three Volumes) Volume Il: Main Report March 3, 1993 Agriculture and Environment Operations Division Eastern Africa Department Africa Region FOR OFFICIAL USE ONLY ,, * ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ' 0 Docunment of the World Bank This 4ocument has a restricted dilitrlbutlon and may be used by recipients only In the perfomanc of thei official duties.' Its contents mnay not otherwise be disclosed without World Bank authorization.  UGANDA AGRICULTURE SECTOR MEMORANDUM ABBREVIATIONS AND ACRONYMS AEL Agriculture Enterprises Limited AfDB African Development Bank APC Agriculture Policy Committee, Government of Uganda AS Ammonium Sulphate ASAC Agriculture Sector Adjustment Credit ASN Ammonium Sulphate Nitrate BCGA British Cotton Growers Association BOU Bank of Uganda CAN Calcium Ammonium Nitrate CBPP Contagious Bovine Pleuropneumonia CDC Commonwealth Development Corporation CMB Coffee Marketing Board CMBL Coffee Marketing Board Limited CPI Consumer Price Index DANIDA Danish International Development Agency DFCU Development Finance Company of Uganda DRC Domestic Resource Cost EEC European Economic Community EPADU Export Policy Analysis and Development Unit EPC Export Promotion Council FAO Food and Agricultural Organization GTZ German Agency for Technical Cooperation IDA International Development Association IDRC International Development Research Center IfAD International Fund for Agricultural Development IFPRI International Food Policy and Research Institute IMF International MoneLary Fund LTC Land Tenure Center, University of Wisconsin MAAIF Ministry of Agriculture, Animal Industry & Forestry MCIC Ministry of Commerce, Industry and Cooperatives MPED Ministry of Planning and Economic Development MISR Makerere Institute of Social Research NARO National Agricultural Research Organization NGO non-govermmental organization NICU National Inputs Coordination Unit NTAE Non Traditional Agricultural Exports OECD Organization of Economic Cooperation and Development PTA Preferential Trade Area SDR Specia! Drawing Right TAMTECO Toro and Mityana Tea Company UCB Uganda Commercial Bank UCA Uganda Coooperative Alliance UCDA Uganda Coffee Development Authority UDC Uganda Development Cooperation UNDP United National Development Program UNEP United National Enviroumental Program USAID United States Agency for International Development UTGC Uganda Tea Growers Corporation WFP World Food Program  FOR OMCIAL USE ONLY UGANDA AGRICULTURAL SECTOR MEMORANDUM Table of Contents Page No. Volume I: EXECUTIVE SUMMARY .......................................... i Volume II: PREFACE .............................. i I. AGRICULTURE AND THE ECONOMY ..............1.................. A. Sectoral Growth ....................................... 1 B. Agricultural Exports and Imports ................................... 5 Agricultural Exports ...................................... 5 Agricultnal Inports ...................................... 8 C. Macroecc nomics and the Agriculture Sector ..... ........ .............. 8 EI. THE RESOURCE BASE AND THE RURAL POPULATION ......... ........... 12 A. Natural Resources ....................................... 12 Soils ............ .......................... 12 Farming Systems ...................................... 13 B. Land Use . ...................................... 13 Currently Cultivated Area ................................... 15 Trends in Cultivated Area ..................................... 17 C. Land Use and the Environment .................................. 17 D. Forests .................................. 21 E. Land Tenure .................................. 22 Current Status ............. .............. .............. 22 A Strategy for Change ...................................;.23 F. The Rural Population ................................... 25 Consumption and Expenditure ................................. 25 Farm Characteristics ................................... 28 G. Rural Labor Markets . .................................. 30 Smalholders ............ ...................... 30 The Estate and Nonfarm Market ............................... 32 Labor Migration ......................................... 33 H. Rural Women .................................. 34 I. Regional Differences and Migration ................................. 36 J. Social Indicators and Food Security ................................. 40 IB. AGRICULTURAL SERVICES .................................. 42 A. Governmenw Services fbr Agriculture ................................ 42 The Public Service ................................... 42 Funding .................................. 43 Agricultural Extension .................................. 46 Crop Research ................................... 48 Animal Disease Control .................................. 48 This document has a restricted distribution and may be used by recinients only in the performance of their offcial duties. Its contents may not otherwise be disclosed without World Bank authorization.  Page No. B. Farmer Cooperatives ............................. 51 Comparative Advantages ............................. 51 The Cooperative Societies Statute ............................. 52 Restructuring Primary Societies .................... 53 Urnion Restructuring ............................ 53 C. Tke Rural Financial System ............................ 54 Current Status ............................ 54 A Proposal for Refom .........5.................. 57 D. The Supply of Agricultal Inputs ............. .............. 60 Chemical Inputs, Implements and Machinery: Current Status .... ......... 60 Chemical Inputs, Implements and Machinery: A Strategy for Reform .... .... 61 Draft Power Use and Potential ................................ 62 E. RuralInfrastucture ............. .............................. 64 IV. SOURCES OF GROWT1H .......................................... 66 A. Market Prospects for Ugand's Produce .............................. 66 Tradidonal ernaional Markets and Prospects....................... 66 Regional Markeks ........................................ 67 Domestic Markets ........................................ 68 B. Diversification and Expansion of Exports ............................. 69 Comparative Advantage and Competitiveness ....................... 70 Supply Response for Agriculture ............................... 71 CropRetuns ........................................... 72 Coffee ............................................... 73 Cotton ............. .................................. 82 Tea . ................................................ 92 Nontraditional Agricult Exports ............................. 99 Food . ............................................... 104 Sugar .................. 111 = ~ Livestock and Dairy ............... 114 Fish. ......................................... 120 V. AN AGRICULTURAL DEVELOPMENT STRATEGY ........ .. .............. 124 A. Previous Bank Strategy Proposals .. ............................... 124 T'e 1960 Bank Review and Remmendations ...................... 124 'Me Agriculture Sector Memorandum 1984 ........................ 125 B. The Macroeconomic Framework . .................................. 126 C. Goverment Objectives for the Agricudltur Sector ....................... 127 ASAC Letter of Development Policy ........ .................... 127 Way Forward I ...... .......... ........................ 127 D. Lessons from ths Review . ............................... 129 Growth in Food Production ............................... 129 Expansion in Area Cultivated ............................... 130 Competition in hnational Markets ............................ 130 E. Structural Adjustment in Agriculture and Constraints to Growth .131 Agriculture Rehabilitation Project .131 Agriculture Sector Adjustment Credit .131 Cons.a.i.to X.. w132 I .  Page No. F. An Agricultural Sector Strategy ..................................... 133 Development Objectives and Priorities ............................. 133 Short Term Strategy: An Export Action Plan ......................... 135 Medium-Term Agricultural Development Strategy ........ ............ 137 G. Envirorinental Impact of Agricultural Growth ........................... 145 H. The Alleviation of Rural Poverty ............................... 145 VI. IMPLICATIONS FOR PUBLIC EXPENDITURE AND GROWTH PROSPECTS .147 A. Public Expenditurt .147 B. Prospects for Growth in Agriculture .148 Food .149 Export Crops .151 Volume HI: Statistical Annex MAPS: Rural Population Density (IBRD 24185), Farming Systems (IBRD 24186), Administration and Infrastructure (LBRD 24187), Annual Rainfall (IBRD 24188), and Agricultural Areas (IBRD 24189). Th....a....n......tof..dsWrl Bn.efot.Te .i ..-.digrasao .....e..... .......rOctbe ......o~emi as ~r~ n h ~k1tr elw ~ve a lwadelby M Q d""' n,lietr fIi g~4ua ~oeait akofUad,adiew  and th Commn Bank o develop and Fisl ackno. undertakl proc Wol agri Adjustmeni sector spec subsectors. vision agricultura policy rec agrcu (Secti( resource and h institi institL commum to overconr goes thro label - sector, obtain groi potential. sectors. then leads drawn priori- measures national effects used to I cotton of pro allevi strater.  - ii - The short term strategy advocates continued efforts to regain market share in traditional exports: cotton, coffee, and tea. While production margins are very thin, and international prices low, our analysis shows that Uganda due to its excellent natural conditions, is a low cost producer of these products, and can compete in international markets, even at depressed prices, if processing and marketing efficiency is restored. ILere is need for a rapid restructuring and liberalization of the cotton ginning and export marketing industry. In coffee, choice of export. routes should be liberalized. In tea, Government should divest itself of parastat;i factories and estates, and conclude the Custodian Board review process, which is keeping a significant number of the estates out of production. These changes would generate significant increases in foreign exchange, and have a broad based income generation effect in rural areas. At tae same time, short term measures should be taken to support the process of export diversification, which can grow very rapidly, as experience with sesame and fish exports in recent years indicatec. Priority should be given to dry goods such as sesame, tobacco, hides and skins, spices and other products which do not rely too heavily on specialized packaging, zritical transportation timing, expensive cooling infrastructure, and a commitment to constant, standardized quality deliveries. In the medium term, the report argues that a series of measures are needed to support fiuther diversification in agricultural exports. Development of high value specialized crop exports will increase returns and taxable profits, and stabilize export revenue. Government's role in developing these new activities should be indirect. Its focus should be on reducing unnecessary regulation, improving transport infrastructure and telecommunications, and smoothing the responsiveness of the land, labor and financial markets to profitable production opportunities. In addition, to raise rural incomes and ease the growth in food production, Government should take indirect measures to improve migration into underatiized areas of good agricultural potential. Careful management of this process will be needed to minimize environmental costs. Growth in yields is another key element of the agricultural strategy. Many traditional food and cash crops face disease and husbandry problems. Experimentation with new high value crops will require a high class, responsive research and extension service. Continued support for agricultural research and extension services is argued for, as is the need to provide improved monitoring and regulation of the use of natural resources- grazing lands, forests and fish-as population pressures are exacerbated.  I. AGRICULTURE AND THE ECONOMY 1.1 Agriculture is the mainstay of the Ugandan economy. Eighty-nine percent of the population is rural. The sector accounts for 51 percent of GDP (1991) and over 90 percent of exports, and employs 80 percent of the employed household population. Agricultural output comes almost exclusively from about 2.5 nillion smallholders-80 percent of whom have less than 2 hectares each. Only tea and sugar are grown on large estates, which total 40,000 ha. The predominaice of smallholder farming implies that the benefits from sectoral growth will be equitably distributed. Income per capita in 1990 was estimated at USS 140 using the market exchange rate. 1.2 Food crop preduction carries the agricultaral sector in Uganda-totaling 71 percent af agricultural GDP, with livestock products anotier 17 percent (average 1989-91). Export crop production is only 5 percent of agricultural GDP, the flsheries subsector accounts for 4 percent, and forestry for 3 percent (fig. 1). Only one-third of food crop production is marketed, compared with two-thirds of livestock production, and all export crop output. A. Sectoral Growth 1.3 The normal process of a structural transformation, from agriculture to other sectors, has not been smooth in Uganda. Agriculture's contribution to GDP declined from 48 percent in 1963 to 44 percent in 1968 (..g. 2). Then, in nine years, the agricultural share spiraled up to 73 percent of GDP, showing a virtual return to subsistence as the industry and service sectors broke down. Agriculture's share has declined unevenly since then. Since 1987, when agriculture's share of GDP was about 62 percent, the share has been declining gradually, in consonance with the normal process of industrialization, to reach 51 percent in 1991. About 56 percent of agricultural GDP-31 percent of GDP-consists of subsistence crops-for home consumption-that never enter the cash economy. 1.4 Although the agricultural sector has grown rapidly in recent years-achieving a 4.9 percent average annual growth rate between 1986 and 1991-this should be seen in the context of the past twenty years. Economic development in Upnda since the early 1970s has been hostage to the effects of armed conflicts, the disintegration of public infrastructure and services, the collapse of Government regulation, and the uncertainties of high inflation and scarcities of foreign exchange. The most serious internal conflicts occurred between 1979 and 1980-with recovery stretching to 1982-and between 1984 and 1986. These conflicts caused serious declines in agricultural output. 1.5 The rapid growth between 1980 and 1983, and between 1986 and 1991, is in effect a recovery from a very low base. Agricultural output has only recently gone above the levels achieved in the late 1970s (fig. 3). Indeed, if the average annual agricultural growth rate of 2.7 percent achieved between 1963 and 1978-a rate above the average for sub-Sahiaran Africa then-had been sustained through 1991, agricultural output would be about 26 percent higher than present levels. As it was, agricultural output has grown at only 0.9 percent per annum since 1968. Total GDP increased at 0.4 percent per annum in the same period. With population growing at 2.6 percent per annum, GDP per capita has declined rapidly.  2 - Flshing C4.2 Casn crops C5. 1f) Livestock C17.1X) Forestry C3. 16 Ficrops C70.4 Fgure 1 Shares in Agricultural GDP, Three-Year Average 1989-91 78X 74Y 72si - - 62t.- 60t. 54% - 48, - 46,'- 44% 19 86341i*5u19b8 9819 1919 43 19851957 19019 1- 91988198b719.39lt99 1iu4 1e o A 1gr1i 0 ult 2 1ue i 4 1971,8 1931-0 1 2 1 1 8 is 9a FSgure 2 Share of Agriculture in GDP, 1963-91  -3 - 1.6 Other lessons can be learned from the agricultural growth pKttern between 1981 and 1990. The 2.9 percent annual growth in agricultural output achieved in 1981-91 was consistently led by higher growth in food crop production. Growth In the vaiue of food productitn was 3.2 percent per annum for the decade (fig. 4). Export crop and livestock production grew more slowly, at between 1 and 2 percent per annum for the decade. 1.7 Between 1981 and 1991 there were two periods of recovery, and rapid growth- 1981-83, and 1986-91. in the first period of recovery from the 1979-80 war-from 1981 to 1983- -growth in agriculture was led by an 8.2 percent-per-year increase in the food sector, and a 20 percent-per-ye6r increase in the export seetor. The smallholders' response to the return of stability and to slarply increased price incentives was to cover basic food needs and rapidly increase export crop production. 1.8 The decline in output in the internal conflict of 1984-85 was less dramatic. Subsistence needs were not as dramatically affected. The second period of recovery starting in 1986 was led by growth in food crops and livestock products for the domestic market. Food crop output led the sector with an average annual growth rate of 5.9 percent per annum through 1990. Slower growth in 1990 and 1991 brought the average annual rate of growth since 1986 to 4.8 percent (Fig. 4). 1/ Export crop GDP actually declined between 1986 and 1990 at -0.8 percent per annum. A sharp recovery in 1991 brought the average rate of growth in traditional export crops since 1986 up to 3.6 percent per annum. In response to the incentives for diversification, fish products grew at 12 percent per year between 1986-91. 1.9 In comparison with other countries in Africa, Uganda did well during the decade. Between 1980 and 1989, agricultural output for Sub-Saharan Africa grew at 2 percent per annum- -below Uganda's 2.2 percent per annum, as it climbed back from the nadir of 1980. Growth in agriculture in Kenya (3.2 percent), Zimbabwe (2.9 percent) and Cote D'Ivoire (2.3 percent) was higher than in Uganda during this period, Agriculture in Ghana (0.9 percent) and Rwanda (-1.4 percent) grew more slowly. 1.10 Growth in agricultural output slowed considerably in 1990 and 1991. From annual increases of 8.7 and 6.4 percent in 1988 and 1989, growth dropped to 2.9 and 2.5 percent in 1990 and 1991. The main cause of the slowdown was slow growth in food crop production, down to 2.5 in 1990 and 1.0 percent in 1991 from a high of 7.6 percent in 1989. This could reflect the saturation of the domestic market, with much of the substitution for food imports completed, and slow growth in incomes from other subsectors. 1.11 The sources of growth in each subsector will be analyzed in this report. In food production, the substartial growth rate has resulted from area expansion, especially for bananas. For livestock, the main source of growth has been in the dairy industry. Perennial export crop production has been a function of increased yields (coffee, cocoa)-as husbandry levels improved wit. '.etter production incentives-and of the rehabilitation of old stands, in the tea subsector. Axlual export crops (tobacco, cotton) have expanded on the basis of increases in area cultivated. /I The crops inIuC casva, sweet pouu, rish potatoes, sorgum, lg mit, maize, bas, groundauts, siAmi (eame), rico, and vardetis of baaas suitable for cooking, brewing, and consumption as fruit.  -4- 210 200 190 170 '160 150 c 140 130 * 120 110 100 g0 so 1S19b6|SI-18bigh9|t9i t13 955|1957 69jig19t |1983S 19bS17 19139 l199 1964 1966 1968 19'70 19'72 19~74 19'16 1978 1980 1982 1904 I86198 1980 a Actucl Agric. GOP-Trond Basd 1963-78 Flgure 3 Agriculture GDP, 1963-91 in Constant 1987 Prices, and Forecast Growth In Agriculture GDP, Based on 1963-78 Trend. 24.0% 22. ox 20.0% 20. OX * 18.0k 14.0, - - 12. 0 0 B S. 4.0k ,X.% 23 0.0 1 ~ AQr ICultwro GOP M F0OC Livestockc B EWt Crope Figure 4 Annual Growth Rates in Agricultural GDP, 1981-91  -5 - 1.12 This report is structured as follows. Section I provides background on the national economy and looks at trends in outpu't. Section I reviews the natural resource base, and characterizes the rural population, farm ownership, and family living standards. Section m describes the services and institutions that support agricultural development. Section IV looks into constraints and opportunities in agriculture, reviewing export competitiveness and market prospects, before analyzing constraints and strategies for subsectoral growth. Section V considers the subsectoral strategies as part of an overall agricultural development. And Section VI suggests the Implications of the strategy on public investment and on potential growth rateb. B. Agricultural Exports and Imports 1.13 Uganda has recovered from its expansion of agricultural imports necessitated by past disruptions. But continuing declines in revenues from coffee-the key export-are hurting the trade balance, when imports are needed to underpin economic growth. Agriculturai Exports 1.14 The health of Uganda's balance of payments in the 1980s depended almost exclusively on coffee exports. This was not always so. In 1970 coffee was only 50 percent of exports (fig. 5). Its share increased to more than 95 percent during the years of political instability and macroeconomic uncertainty. Only recentdy has cotfee's share declined, due both to an increase in alternate exports, and a drop in the international price of coffee. Why this increased dependence on one crop? The answer lies in the production response to disruption and civil war. Coffee retained its importance as an export crop because of the low marginal costs of obtaining a crop, once the coffee trees are established. As a rainfed perennial, planted on family farms in the tavorable Ugandan climate, the Robusta coffee tree-native to the northern shores of Lake Victoria-yields with minimal maintenance. Once the Robusta is well-established, low-level production can be maintained by family labor inputs for weeding, pruning, and harvesting. Hulling requirements are simple, cheap, and diversified. Export processing was centralized, until recently, in the Coffee Marketing Board. Since production is based on family labor and a simple manufacturing process, exports can be maintained for a few years even as production incentives decline. Contiruously well-tended coffee trees are stil; productive after 60 years. But, the abandoning of weeding and pruning practices, as relative farmgate prices drop, weakens the coffee trees, which cannot regain their former vigor. 1.15 Although the tea tree is more robust, the tea industry is more fragile. A perennial crop, tea is grown on large estates and family farms. It requires constant attention. While marginal plucking and husbandry costs are all labor-based and low, tea has a more complex, centralized processing procedure than coffee. The effect of the political disorder and financial and economic uncertainty in the 1970s inhibited the functioning of the processing factories and export facilities, and forced the abandonment of plantations. Unlike coffee trees however, tea stands profit from a rest, and-if carefully rehabilitated-Uganda's tea gardens can yield as much as they did previously. 1.16 Cotton, the other important export in 1970, is an annual crop and hence has higher marginal costs of production. It competes directly with f'ood and other annual cash crops in the annual planting decision. Reductions in returns on cotton can lead to a fairly rapid decline in production, as farmers switch into other crops. Cotton also requires a centralized capital-intensive ginning and marketing. Cotton's higher production costs, and its dependence on centralized  -6- capital-intensive ginning and marketing, have made it more vulnerable than coffee to political and economic uncertainty. Because cotton is an annual, however, the resurgence of production, in response to high relative prices and a revitalized ginning industry should be rapid. 1.17 Uganda's exports have been losing value rapidly. When export receipts are deflated by the inuex of prices of manufactured goods, 2/ then it becomes clear that exports have declined by - 5.4 percent per year from 1970 to 1990 (from relative economic prosperity, through the drop in coffee prices in the late 1980s). More recently, exports dropped by - 16.2 percent per annum from 1983 to 1990 (the beginning of the mid-1980s coffee boom through the 1989 dissolution of the ICO quotas). 1.18 Uganda's exports sold for just under $166.3 million 1990-91 (table 1). Tale 1: Compasition of U pgandn Exports by Vole (thuand of to) and value (millios of USS POB) for 1989-90 and 1990-91 Commodity 1989.90 1990-91 (thousands of MT) Value Volume Value (miions of US$) (thousands of MT) (mons Of US$) Coffee 165.2 180.432 115.8 118.638 caoton 2.66 4.290 5.03 7.710 Tea 3.61 3.212 6.52 5.409 Tobacco 1.00 3.743 Maize 13.31 1.464 13.52 1.634 BUM 1.08 0.631 N/A * 2.664 Sammun N/A 10.670 Other Pubses N/A 0582 Cereals N/A 2.19S Fish products N/A 1.981 Frait & N/A 0.682 veetables Hides & skins _ N/A 3.102 rumber N/A 0.261 Mineral N/A 4.872 Other 1.470 N/A 2.146 TOTAL _ 192.847 166.289 NiA - Not available ai MUV bndex: unit value indtx in US dolar terms of manufactures exported frim France, Gemany, Japan, UK and USA weighted proportionately to the couties' exports to the developing countries, defined by the Wodd Dank, International Economics Departmnt, Imernatonal Trade Division.  -7 - 110% 100% so% 40% 30% 2096 10%6 0% 1970 1987 1990 g Coffee Cotton = TeaN Other Exports FigureS Shares of Agricultural Commodities in Total Exports 150 140- 130- 2 1200 r- 11 I mL _10 00 X 30 20 10 0 -10 I 19'7Ot19)2~~9'7419'76 19' 9IibO L19'82 L19b4 I9b6 1998 b1990 i c 1 1 973 195 1977 1 9 19 1 19 3 19 5 19b7 19 9 1 1 a Coffee + Cotton 0 Tea A Tobacco Figure 6 Indices of Export Volumes of Agriculural Commodities, 1970-91  - 8 - 1.19 The story of Uganda's agricultural exports can be seen in volume and price indices (fig. 6 and fig. 7). As of 1978 exports of crops other than coffee dropped way off, due mainly to the disruption of production and processing industries. Prices for two of Uganda's main export crops-coffee and cotton-maintained their real value from 1970 into the mid-1980s before a decline set in. Tea and tobacco prices declined sharply in real terms between 1970 and 1980. Prices for these key exports are well below the levels of the early 1970s, and they are unlikely to recover in the medium term. It can be seen however, that the performance of agricultural export volumes has not been a function of international prices. Whereas the international prices of cotton and coffee have followed roughly the same trajectory, their export performances differ radically. Cotton exports dropped dramatically through the 1970s, and have not risen above 10 percent of the 1970 level during the 1980s. Coffee exports on the other hand, while falling during the 1970s, recovered afte, the 1979 conflict, and-in the 1980s have remained at or abovte 50 percent of the 1970 peak volu nes. 1.20 The drop in value of Uganda's coffee exports has been because of both the decline in world coffee prices, and to a decrease in the quality of its Robusta and Arabica exports. The production of washed Arabica-formerly about 10 percent of the crop-has stopped as processing costs have outweighed the returns in a tightly controlled market. Robusta exports in the highest grade also have declined as a share of coffee exports. 1.21 Because coffee is Uganda's main export, the drop in its real value has meant that the terms of trade-which stayed even throughout the 1980s-have declined dramatically. With the demand for manufactured imports and petroleum products increasing as the economy starts to grow, the deficit in the balance of trade has increased to unsustainable levels. In 1990 imports of US$618 million were about 3.5 times the value of exports of US$178 million. Agricultural Imports 1.22 Domestic production can satisfy all Uganda's food and raw material needs. But, during the declines in production caused by two decades of economic and political disruption, urban food requirements-for milk, sugar, and wheat flour in particular-were met through imports. Imports of food and sugar totaled US$8.6 million in 1987, declined in 1988, totaling US$3.2 million in 1989 and US$1.4 million in 1990. Imports of milk powder were provided on a grant basis by donors, and these had dropped substantially in 1991 with the resurgence of the local dairy industry. Cereal imports of 16 thousand tons, and cereal aid of 17 thousand tons adds up to roughly the quantity of cereals received as food aid in 1974. By 1991 most of the imports or donations of sugar, cereals, and milk had been replaced with local production. Uganda's current food imports, at less than lmder 1 kg per capita, are well below the requirements of comparator sub-Saharan countries. C. Macroeconomics and the Agricultural Sector 1.23 The predominant role of agriculture-and the importance of coffee to the cash economy-link agricultural performance closely to key macroeconomic variables. First, exports of coffee-and of other crops to a lesser degreedetermine import capacity, a key factor in growth and modernization. Second, the coffee export tax was a major contributor to Government recurrent revenues in the mid 1980s, but its share of tax revenues has been declining rapidly, until the tax was removed in 1992. A third linkage is that agricultural finance-especially for the purchase, processing, and marketing of coffee (and other crops to a lesser degree)-is a large  -9 - 360 340 320 300 280 260 240 220 200 ISO 160 140 120 100 1 1 1 1IOU 7 19 9 is I 1 a 19 5 198704419,9 19b1l o coffe + Cotton o Tea a Tobacco FSgur 7 Indices of Real Export Prices for Agriculfral Commodities, 1970-91 7010 60% - 40% 20% lea 81 19 683 /6 8 19811g7 1S89 199 198 /62 19 6,1B S 9bes 19E 1S a 190 offe+ Cottox TO c ust om Cutle FSgure 8 Cofnee o axport Taxes as Share of Recurrent Budget, 1980r81-1990-91  - 10- proportion of the total demand for credit, and determines the monetary aggregates. I'ourth, in a less direct, but still crucial mechanism, efforts at budget containment and deficit reduction affect the availability of local funding for key agricultural services. 1.24 The decline in Uganda's terms of trade, and in the volume and value of its agricultural exports has been discussed above. 1.25 The decline in coffee revenues directly affected the recurrent budget (fig. 8). The windfall returns from the increases in the international price of coffee in the mid 1980s were siphoned off by Government-not into the Development Budget, but into the funding of recurrent expenditure. At the height of the international coffee boom in 1985-86, coffee tax receipts were more than 60 percent of recurrent budget revenues. It should be noted that the swings in coffee export tax revenue are counterbalanced in part by duties on imports. Imports are largely donor financed. This places in stark relief the country's dependence on donor funds, not only for imports but for budgetary support. 1.26 Other sources of revenue can affect agricultural incentives. An example is the annual sale of 20,000 to 30,000 tons of vegetable oil provided as a grant or long-term loan by the U.S. Such sales, while a useful source of Government revenue, lower the price of vegetable oil, a crop that Uganda produces and could export. 1.27 The financing of stocks of agricultural produce during export processing and marketing puts strains on the financial system. The main financing requirement is for the coffee crop. crop finance has fluctuated between 16 and 57 percent of total credit outstanding during the decade (fig. 9). The peak for both the real value of crop finance and its share of total credit was reached in 1986. Then crop finance absorbed 92 percent of agricultural credit. Inflation in 1986 was 350 percent, the highest it has been during the decade. One step taken to contain inflation was to reduce credit creation by the banking system. To do this, and maintain the volume of coffee purchases, the Government-set minimum farmgate price for coffee was not changed in nominal terms during this inflationary period (1986-90) (fig. 10). The real price fell sharply, and has only recently started to climb back to previous levels. Production incentives in a key agricultural sector were sacrificed-in the short term-to contain inflation and monetary expansion. 1.28 Support for agricultural development has conflicted with macroeconomic objectives in one other area-the provision of local budgetary support for agricultural services. As will be shown in Section m, the real value of budgetary allocations for Government services that suppon agriculture has fallen throughout the decade-when the spread of disease in livestock and food crops and the need to expand export crop production have placed increasing pressure on the agricultural support system.  - 11 - 1SO 140 135.3 130 j 120 -115.2 100 _ q,. 1 90 9 . 90~~61 70 40- 30- 20- 10a 10 1909 1981 1982 1983 t1984 1995 1986 197 1998 19939 1990 1991 M Crop F1 I rnce AO roduct Ion RNon Ao I fu I tur FIgur 9 Credit for Crop Finance, Other Agriculture and Non-Agriculture (in constant 1980 Ush) 90- A 80 70- 30- 20 FIgure 10 Real Farmgate Price for Robusta Coffee, 1966-91  II. THE RESOURCE BASE AND THE RURAL POPULATION A. Natural Reources 2.1 Uganda's agricultural potential i good. Y The country is on the equator, and temperatures average about 21 degrees Centigrade, ranging from 15 to 30 degrees. More than two-thirds of the country is 1,000 to 2,500 meters high. Precipitation is fairly reliable, and varies from 750 mm per year in the Karamajong pastoral areas in the Northeast, to 1,500 mm per year in the high-rainfall areas on the shores of Lake Victoria, around the highlands of Mt. Elgon in the East, the Ruwenzori in the Southwest, Masindi in the West, and Gulu in the North (see map). South of the equator there are two rainy seasons, providing two growing seasons. Sois 2.2 Soil type and topography are key determinants of land use. The soils have been classified in seven groups: * The Buganda surfces (42,200 square kilometers) cover much of the region south of Lake Kyoga, including the districts north and northwest of Lake Victoria-and embrace five types of deep, sandy clay loams with medium-to-high productivity. * The Tanganyika surfaces (78,200 knr) cover much of the area North of Lake Kyoga, West Nile, and parts of the southwest. They consist of sandy clay loam soils with low to medium productivity. * The Karamoja surfaces (16,400 kin) in the Northeast comprise sandy clay loams and black clays of low productivity. * Rift Valley soils (12,500 k in the West and North are sandy clay loams with alluvial parent rock of high productivity. * Volcanic soils (5,000 kin) of high productivity are found on Mt. Elgon and in the extreme Scuthwest. In northern Karamoja these soils have low productivity. * Alluvial soils (27,400 kn2) found in central and northern Uganda-Lango and Acholi-as well as west of Lake Victoria, are sandy and of low productivity. * Other soil types in the North (15,000 ki) are of low productivity. Fo a * dsaGdtloa of USganda's _rmma. - J.D. "=, r i U Oxford Unvsary 1970.  - 13 - Farming Systems 2.3 Using soil, rainfall, and cropping characteristics, Parsons has defined five agricultural production systems. _/ First are the high-rainfall areas around Lake Victoria, with bananas, Robusta coffee, and food crops grown in mixed farming systems. Fallowing is minimal. 2.4 Teso systems in Eastern Uganda are a second system, characterized by annual crops grown in two distinct rainy seasons. The rains are separatad by a four-month dry period. Finger millet has given way to cassava as the main food crop, and cotton was the main cash crop. Prior to the disturbances of the mid-1980s, large numbers of cattle were kept, use of draft oxpower was widespread, and intercropping, rotations, and fallow periods were common to maintain fertility and reduce soil loss. 2.5 Third are the Northern Systems also descriptive of the Northwest-in which rainfall patterns restrict cultivation to one season. Rainfall declines from south to north. In the central northern zone, communal cultivation is customary. Annuals such as cotton, maize, and finger millet are common. Further south, groundnut and sweet potato are more common, with sunflower and tobacco the main cash crops. 2.6 Fourth, the mountain systems in the West and in the East feature bananas as the main food crop, with Arabica coffee and tea as cash crops. The higher altitudes permit cultivation of temperate fruits, vegetables, and Irish potatoes, as well as some of the traditional food crops. 2.7 Fifth, in the pastoral systems in the Northeast, rainfall totals less than 800 mm per year, and pastoral livestock production is combined with sorghum and millet cropping. B. Land Use 2.8 A large proportion of the country's 241,000 km2 could be cultivated. After lakes, swamps and forest reserves are excluded, more than 75 percent of the country-18 million hectares-is available for cultivation, pasture, or both (fig. 11). It is not clear what share of this is unsuitable for cultivation. Much further work is needed to determine where protective measures are justified to ensure that production systems are sustainable. Even the cursory studies undertaken to date, E/ however, indicate that large areas of land are potentially productive and under-utilized. Of the 17 million ha classified as arable on a preliminary basis by Langlands, only 4 million to 5 million ha are under cultivation. 2.9 Comparing the 1974 Langlands data on cultivable area and census information, rural population density on cultivable land has increased from 53 people per km2 in 1969 to 88 in 1991 (table 2). Eleven of the thirty-two districts analyzed had a rural population density exceeding twice the national average, in 1969 and 1991. The distribution of these densely occupied areas has not shifted. In eastern, southern and western Uganda, more than half of the districts have a rural population density of 180 persons per km2 of cultivable land. D. Pans, Agriowl Sym, in Jameson, op. cit., p. 127. B.W. Laqiads, Soil Ptoductvity and Land Avaability Sdie", Makmr Univasity, 1974  - 14 - Water,'Swamip C11#.1) ForestelReserves C13.71) Pastr/Arab ia C54 5N) C ltivated Land C20.7r6 Figure 11 Land Use Estimates (by United Nations Environment Program) Oilseed C7.6%) CfLeeCS 25. Pulses C14.4%6) Bananas C29. 71 Roots C17. %. Other Cash Crops C1.4%) Cereals C22.75) Figure 12 Distribution of Cultivated Area, 1990  - 15- 2.10 A rough calculation of the share of cultivable land actually cultivated in each district-based on the cultivation capacity of the rural family-shows that only 30 percent of total cultivable area Is being used. Of the thirty districts reviewed, fi/ nineteen did not cultivate 50 percent or more of the available arable area. These calculations fit the gross calculations of availability of uncultivated agricultural land, based on national crop data. Although admittedly rough, these assessments do indicate that many districts appear to have substantial land of moderate-to-good potential available for crop-based production. 2.11 With the return of security and stability, and the migration of small farmers from the densely populated Sc-hwest and Northwest into underutilized zones in the West, the cultivated area will continue to be expanded, as it has in the past (para 2.15). The Government should adopt a more active-although indirect-role in this process, in order to prevent conflicts with inhabitants of areas of immigration, and to encourage land use patterns which are sustainable in the long run. Additicnal study en agricultural potential is recommended, albeit on a large scale, to map out sustainable farming systems for those areas which are underutilized in order to indirectly influence the migratory flow to go into the less ecologically L 3gile regions. Criteria for identification of areas appropriate for agricultural expansion should include (a) agricultural potentioal, (b) intensity of use by current residents and claimants, (c) access to markets, (d) environmental fragility and risk of degradation,; (e) conservation criteria (to protect moist tropical forests and wildlife preserves), and (f) the existence of debilitating disease affecting people or livestock, such as trypanosomiasis. Government interventions to channel the migration flow should be indirect, and should include placing physical and social infrastructure-feeder roads, schools, hospitals-to encourage migration in the desired direction. Government can also facilitate the flow by providing supportive legislation on squatters' rights, tenant rights, and public land use and by defusing ethnic tensions between prior residents and new entrants with enhanced benefits- from rapid agricultural growth-for the entire community. . Currentl Cultivated Area 2.12 An estimated 4.6 million ha were under cultivation in 1990, but the data are weak. The proportion of cultivated area double cropped, or intercropped, is not known. The Agriculture Census of 1966 showed none of the crops grown completely in purestand.j/ Only 60 percent of bananas was then in purestand, 50 percent of cassava, sorghum and finger millet, 40 percent of Robusta, and 75 percent of cotton. For this reason it is likely that the global estimates of area cultivated are significantly higher that the actual area utilized. 2.13 Of the total area under cultivation in 1990, (fig. 12) 36 percent is under perennial crops. Of the 1.7 million ha under perennials, about 1.4 million ha are under bananas, and 0.25 million ha is under coffee. Sugar is grown in about 20. flOO ha and tea-the other significant perennial crop-co\ ,-rs about 20,000 ha. Except for about 70,000 ha of cotton and 4,000 ha of tobacco, annual crops are all food crops. Of the 2.9 million ha in annual food crops, 1 million ha are in cereals, 0.8 million in rootcrops, 0.7 million in pulses, and 0.4 million in oilseeds. O/ Two distrct did not have infomation on ame cultivaed by family 21 Report of the Uganda Ceans of Agriculture, Vol. 3, 1966, in Jameson, p.cit.  - 16 - Table 2: Population and Land Avaiabiit by Distrit Ame Avge Ar Required Percent Region Rural Cultivable Cuitivaed for 1991 Cultivable wead and Pop'n Land Area Density per Penon Pop'n Lad Used soil Ditict 1991 (Kn ) 2/ 1991 (ha) 3/ inrn2) in1991 Cls Centul Mpigi 796 4,406 181 0.38 3,025 69% 1 Mukono 717 4,061 177 0.38 2,725 67% a Luweto 408 7,986 S1 0.38 1,S50 19% U Mask 747 5,542 135 0.34 2,540 46% U RAkWl 366 3,500 IOS 0.34 1,244 36% m Mubende 463 8,963 S2 0.32 1,482 17% U Eastem Ignw 899 4,489 200 0.328 2,949 66% m 'zrJa 208 619 336 0.328 682 110% a Kamuli 473 3,694 128 0.328 I,SSI 42%9 m Kapohorwa 112 1,064 10' 0.386 432 41% U Kuni 225 2,454 92 0.787 1,771 72% m Mbale 64S 2,022 319 0.384 2,477 122% U Soot 384 8,407 46 0.787 3,022 36% W/m Toroto 5/ 842 3,887 217 0.387 3,2S9 84% m Northern .Apac 4S4 4,962 91 0.542 2,461 50% m Am& S98 6,S78 91 0.2SS 1,525 23% m GuRu 296 11,321 26 0.533 1,578 14% IV Kilgum 340 13,536 2S OS33 1,812 13% IV Kotido 181 10,3S2 17 N/A m Lim 471 6,950 68 0.542 2,SS3 37% U Moroto IS8 7,S40 21 N/A IV Moyo 168 4,313 39 0.2SS 428 10% IV Nebbi 292 2,689 109 0.255 74S 28% U Western IundbuSyo 116 394 294 0.2 232 S9% m BuRhenyi 73s 3,SS9 207 0.25 1,838 52% a Hoima 5/ 395 6,633 60 0.316 1,248 19% W/m Kabale 5/ S98 2,353 2S4 0.286 1,710 73% U/Hm abarolc 741 7,607 97 0.2S 1,853 24% Wm Kaseme 343 1,478 232 0.2 686 46% 1i Masidi 275 5,369 St 0.316 869 16% U Mbaur 930 9,477 98 0.174 1,618 17% m Rukungiri 388 1,391 279 0.286 1,110 80% U/HI Total 14,764 167,S96 88 50,973 30% 1/ National Censu FiUu. 2/ B. W. nglwnds, *Soil Productivity and Land Avalbiity Studie", Makeree 1974. 3/ Report on Uganda Censs of Agriculture; Langlands, op cit. 4/ Lanlands: I-Very good; fl-Good; mr-Moderate; IV-Poor. 5/ 1991 Cen_: Toroto + Pallisa, Homim + Kibale, Kab&le + Kisoro  - 17- 7)ends In Cultivated Area 2.14 Allowing for the weaknesses in the data, the countqwide series since 1970 lead to several observations. First, there was a sharp drop in the area under cultivation in 1979 and 1980 from which the country has still not recuperated. Total area cropped fell from an all-time peak of 5.5 million ha in 1978 to 3.6 milllon ha in 1980 (fig. 13). This may be due, in part, to statistical problems associated with the deterioration of Government statistics collection during the Amin regime. The sharp drop also may reflect a one-tUme adjustment for the gradual decline in area cultivated from 1970 (0.5 ha per capita) to 1980 (0.3 ha per capita). Since 1980 the data gathering effort appears to have been more consistent. 2.15 Second, the area under food crops expanded from 1970 to 1978, and dropped sharply during the war years of 1979 and 1980. In spite of rapid growth during the 1980s, areas under cultivation for food have still not reached the levels of 1976-78 (fig. 14). 2.16 Third, in spite of the rapid growth in agriculural output during the 1980s, less food is produced per capita, now than in the early 1970s (fig. 15). 2.17 Fourth, despite internal dislocations and economic uncertainty-or perhaps because of them-the area under bananas has increased continuously since 1970 to 1.4 million ha in 1990 (fig. 16) at a trend-growth rate of 1.8 percent per year. 2.18 Area production and yield characteristcs of food and the other major crops are discussed in depth in Section IV. C. land Use and the Environment 2.19 Demographic pressures are exacerbating the stress on Uganda's environment. Nowhere is this more apparent than in the loss of tropical high forest, which has declined from 1.2 million ha in 1958 to 0.7 million ha in 1987. E/ Efforts to protect Uganda's forests will have to deal with upwards of 50,000 people who have encroached on forest reserves-largely since 1970-and with indiscriminate logging associated with industrial expansion. Pressure on forests also comes from the growing demand for charcoal and building poles resulting from growth in population-estimated at 3.1 percent per annum-2/ and incomes. 2.20 Successful management of eavironmental issues in Uganda will require the updating of old legislation and the establishment of new policies on wildlife and forest conservation, the minimization of cegradation, and the sustainability of agricultural and industrial development. Environmental evaluation and monitoring methods for major public and private inveqtments will have to be put in place to ensure that the objectives of such legislation are met. v UNEP Naual Raao= an Ehvonm iIn Uganda Strat Reaurce Panin in Ugand. 21 Shaw, al, Doaxhic Poat and Conuquanc.of Populatha Growt, conu%W=bto do Use,ad- IocatELDSctorSsasx. WhU Coam, Apdl 9, 1992.  - 18 - 4.0 4.0 3.9 2.0 a - - / a Totol I Gg - Pernnal oi E1guro 13 Changes in Total Cultivated Area, 1960-90 3.7- 4.3 .2 1l 3 3.i75 177 9 I 1 3 1 7 a Fig=r 14 Changos in Area Under Foodcrops, 1970 90 3.5~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~.  - 19 - Institutions capable of following through on such policies will have to be created, and the participation of local communities in conservation efforts obtained if such policies are to succeed. IQ/ 2.21 A recent study I1/ shows that nine of the thirty four districts (those around the northern perimeter of Lake Victoria) have between 60 and 79 percent of their total area cleared for agriculture. It is in these areas that soil erosion and over-exploitation of forests is greatest. A comparison of land use between 1973 and 1986 shows that ne. clearing of land for farming or livestock rearing was barely 1 percent of the 24 districts studied (table 3). Only nine districts accounted for 90 percent of the changes. This surprisingly small net change, in a period of severe disorder and absence of natural resource management, Is the result of having the widespread clearing in certain regions compensated for by the regrowth of natural cover in other regions. There were substantial declines in natural vegetation cover in the Northern Region (around 345,000 ha) and large increases in the Western and West Nile Regions (280,000 ha). Table 3: Land Use Changes Between 1973 and 1986 Region Didicts A; in Famaing or Uveck (u) Ar" In Natua Vegetation (UU2) West Ne 3 - 576 + 897 Noulhem 4 + 3,446 - 3,626 Northwest 4 + 66 - 76 West 4 -2,6SI + 1,966 Mount lgon 2 + 410 - 699 Southemn S + 809 - 984 *Kaamoja 2 - 22 -36 TOTAL 4 + 1,4a2 -256 2.22 Population density does not explain the differences in land clearing in the thirteen years 1972 to 1986. The environmental study mentioned previously notes that with one exception for thirteen years the districts with highest population density had practically no change in the area cleared for cultivation. The sparsely populated areas, on the other hand, suffered extensive clearing. Again, the districts with the highest population growth rates-more than 4 percent per year-actually had a reduction in their agricultural area, and an increase in forests. The reverse happened in districts with population growth rates of below 2 percent per year. The road network has also had no effect on land use in the thirteen years under review-which is consistent with the decline in agricultural markets. The analysis concludes that the key factors determining land use have been the location of the wars and civil disorders, the breakdown of governmental control, and the abandonment of economic policies that used to support cash crop production. 1I Gan Slade, and KMith Weitz, a/Ugaoda- Environmental bsas and Options, draft, Febmary 19, 1991. IV N.V. JaganTaha, H. Mor, and H.M. Hauan, World Bank, 'Applications of Geographical Information Systems in ECOnOmic Anay: A Ca Study of Uganda', Aprl 1990, Environment Working Paper No. 27.  -20 - 1.5 1.4 0 1.3 1.2 0 o~~~~1~ 1.1 _ '769 Igb 0.9 0.9 1971 19173 19175 76Sl,,9789l,19i 1982 SL i9419ba I19b8SL1990 1 1 1 ~3 1 5 1 7 1 a i981 1 3 15 19 7 1 9 Figure 15 Food Production Per Capita (tons/year), 1970-90 1.40 I . 39 1.38 1.34- 1.32- - 1.30 'J 1.28 1.26 - 1.24- 1.22- 1.1 1978 1979 1990 1591 1982 1983 1984 1995 196 19997 1999 1999 1990 O Bannme Igure '6 Area Under Bananas, 1970-90  - 21 - 2.23 Uganda's wildlife, forests, fish, grazing lands, and other natural resources are in danger of being overused, and driven to extinction. Soil erosion is a problem in high-population- density, high-rainfall areas. Natural resource management programs and policies have broken down during the civil disorder and have yet to be reestablished. Sustainable management practices should be established by the Government in key areas such as wildlife and forest management to prevent complete loss. The private sector has little incentive to protect these public resources. Private ownership may solve some of the sstainability problems, but would enable a privileged few to capture the returns from the use of these resources. 2.24 The establishment of a Ministry concerned with Environmental Protection in 1986 indicates that the environmental issues are of national importance. This ministry is weak, however, with its iole poorly defined. Environmental activities are horizontal, by nature, and cut across the concerns of sector ministries. The ministry concerned with environmental action should monitor the effects of the development programs of the sector ministries, and guide sector policy along lines that will be environmentally benign. The charge of the Ministry of Water, Energy, Minerals and Environmental Protection at present is to develop a national environmental policy, and put in place the mechanisms to regulate and enforce its provisions. The United Nations Environment Program has done a detailed survey of environmental problems in Uganda. This is being sharpened and transformed into an operational plan under a donor-supported National Environmental Action Plan. The recommendations were scheduled for public review and discussion in mid-1992. D. Forests 2.25 Forest reserves cover some 7 percent of the country, with 700,000 ha in tropical high forests, 632,000 ha in savannah forests, and 24,300 in plantation forests. The tropical high forests are found in western Uganda, around Lake Victoria, and on Mt. Elgon in the East. They include rare plants and animals-some in danger of extinction-and unique ecological systems. Until the early 1970s the Forest Department strictly regulated logging, charcoal burning, and revenue collection. In the mid-1970s as resources available to the Forest Department declined, the system of high-tropical-forest management broke down, and sawmill management deteriorated. As a result, indiscriminate logging practices degraded the forest environment and damaged wildlife habitats. Timber resources also have been depleted. Reserve boundaries have not been respected; both reserves and savannah forests have been subjected to uncontrolled and damaging harvests. Management of the softwood plantations-first planted in the late 1940s, and now totaling 13,400 ha. also deteriorated in the early 1970s, reducing quality and yield of the standing stock. These trees reached maturity after 1971, but the plantations have never been exploited commercially. Their sustainable yield of 90,000 cubic meters of sawn timber per year represents about two-thirds of Uganda's demand for timber in the year 2000. Careful use of these softwood stands could relieve pressure on the ecologically fragile natural hardwood forests. 2.26 The Government-with the assistance of EEC, DANIDA IDA and UNDP-has been working to regain control over the exploitation of the country's forests. The donor-funded Forestry Project (IDA Cr 1824-UG) has as its objective the development of forestry management plans to determine how the country can better manage this resource. This includes reducing indiscriminate logging in natural forest areas. The project would seek to improve boundary demarcation and maintenance in high forests and savannah reserves. Areas of natural forest would be reforested and activities of charcoal burners would be controlled. The proportion of natural forest area to be set aside as nature reserves would be increased from 5 to 20 percent. A  - 22 - "protected forest" category would be applied to another 30 percent of the natural forest area, under which only limited logging would be permitted. 2.27 The eventual levels of logging in Uganda's forests will depend on the resource- management plans adopted. To develop these plans, the Government, with project assistance, is undertaking forest inventories, testing detailed small-scale forest management plans, redesigning forest harvesting licenses so as to conform with sound forest management practices for increasing control and protection, and improving revenue collection from logging operations. It is intended that this development activity will be sustainable in the long term while also meeting societal objectives for conservation and biodiversity. 2.28 Work in this subsector is severely hampered by lack of government funding, and by the weakness of the Forestry Department. A strong governmental commitment to fund and support the activities of the Forest Department is needed to make the regulation of forest use effective. E. Land Tenure 2.29 Land tenure systems differ across Uganda. Tenure practices are a mix of traditional practice, colonial regulations, and post-colonial legislation. Current Stanes 2.30 Before the Land Reform Decree of 1975 there were four main types of land tenure in Uganda: customary tenure, freeholds (ordinary and adjudicated), Mailo tenure (owners and tenants) and leaseholds. 12/ 2.31 Customary tenure is the most widely used system, and prevails outside the precolonial kingdoms of Ankole, Buganda, and Toro. Conditions vary by ethnic group and location. Customary tenure did not recognize individual ownership of land, but did recognize the rights of individuals to possess and use land-subject to the superintendency of family, clan, and community. The individual landholder had the right to use his/her holding as he/she thought best; rent or lend land temporarily; pledge the crops, but not the land; sell the land, subject to family approval; dispose of land according to customary laws of inheritance; protect the homestead and cultivation from grazing or other predations; and dispose of trees. 2.32 The family or clan had the right to settle disputes, approve all land transactions, prohibit the sale of land to undesirables, and purchase land offered for sale in its jurisdiction. The wider community had the right to graze animals within its jurisdiction, as long as homesteads and crops were preserved. The community also retained the right of access to water, salt licks, and other key resources. 2.33 Freehold rights were provided under the British Government Agreements with the Buganda Kingdom (1900), the Ankole Kingdom (1901), and the Toro Kingdom (1900). Few freehold titles were actually given out by the Colonial Government, outsid-.. of Pl:, i. n lst .LM Makerere Intitute of Social Research and Land Tenure Center, UIiv. Ainrcultural Development in Ueanda, January 1989, pp. 4-23.  - 23 - before independence, three small schemes in Ankole, Bugisu and Kigezi provided "adjudicated" freehold title to smallholders. 2.34 Within Buganda, a system of-mailo-tenure was established, whereby members of the nobility received freehold rights to estates (determined in square miles). Large areas of Central Uganda were alienated on this basis. Customary users of these lands had their tenure translated into tenancy-kibanja rights on mailo land. Controversy over this shift in customary tenancy rights, resulted in the Busulu and Envujo Law of 1927, which limited the ability of mailo owners to evict kibanja tenants or increase their rents. Much subdivision of mailo holdings has occurred since 1900. Mailo land titles have become easily transferable, smoothing the development of a market in land, and its use as security in credit transactions. 2.35 Leaseholds are provided by private owners, or by the Government under the Public Lands Act of 1969. These have been used by influential farmers to obtain access to large tracts of land in under-utilized areas. 2.36 In 1975 the Government of Idi Amin promulgated a Land Reform Decree. The decree was revolutionary in that it nationalized all land and introduced a uniform system of tenure; converted both mailo and other freeholders into lessees; and reduced the status of tenants to tenants at sufferance who could be evicted without notice (customary tenants on public lands) or with six months' notice (on mailo lands). 2.37 The goals of the decree were to facilitate the use of land for social and economic development and to introduce land use planning, including land use zoning. Development conditions were to be imposed-and leases terminated-if the conditions were not met. 2.38 It is difficult to objectively determine the impact of the Decree. It has been on the statute books for more than sixteen years and, despite widespread criticism, its validity has never been tested in a court of law. On the face of it, the Decree appears to have decreased security for tenants-especially kibanja. It appears to have been a mixed blessing for lessees (former freeholders) who, though their terms of holding were curtailed-to leases of ninety nine years for individuals, and 199 years for "legal persons' such as churches or corporations-were now entitled to evict tenants and regain possession of lands. To suggest that the legislation was "ignored because it was not enforced," as some have, is not quite accurate-except, perhaps, for the zoning provisions. On the other hand there is evidence that customary tenants were evicted and that pastoral routes and grazing lands were taken over by "developers." The opportunity to treat land "not developed substantially" in accordance with development conditions or land not occupied under customary tenure as "unused" land could also encourage land invasions - as did happen in a few cases. Even for a maiio owner or lessee, the ability to evict a tenant would depend largely on the potential social reaction to such evictions. A Strategy for Change 2.39 Under the aegis of the Government's Agriculture Policy Committee, studies and workshops have been held on this topic. A consensus among the students of this problem has developed, and been translated into a draft for proposed legislation. This proposal was approved by the Agriculture Policy Committee, and has been forwarded to the Ministry of Lands, Housing and Urban Development for review, prior to submission to the Cabinet.  -24 - 2.40 The proposal for reform is based on the adoption of a land tenure system which provides for freehold tenure as a national system. Thus, the proposed legislation would, first, restore freeholds, and second, separate mailo tenancies from the mailo estate and vest them in the Land Commission in freehold which the Commission may then grant to the mailo tenant. A third position would restore the rights of customary tenants on public lands and permit them to obtain freehold tenure-exception in urban areas where freehold would be vested in the urban authority and landholders would be entitled only to obtain leaseholds. 2.41 The main assumptions underlying the proposed new legislation are familiar, but worth repeating, that (a) a freehold title is necessary to encourage investments in and sound management of land; (b) the possession of a freehold title facilitates the use of land as collateral for credit-which, by implication, can be directed to long-term capital investments; (c) freeholding enhances the title-holder's desire to engage in long-term investments; (d) a land market can be created-or restored-where none exists; (e) Uganda needs a uniform land tenure system rather than the current myriad systems; and (f) a freehold system with registration of titles would permit Government to capture some of the rents to which it Is entitled, and to introduce a land tax to spur further development. 2.42 It should be noted however, that freehold tenure and a registered title are necessary, but not sufficient, elements in promoting security of tenure and agricultural development. Also necessary are political stability, economic incentives, and the development of markets and infrastructure. Despite the 1975 decree, land transactions have increased in the last three years. As an indication of activity, some 5,720 leases a year were authorized, of which 48 percent were new titles. There was an average of 5,500 dealings in mailo land a year in the Kampala office, and 14,000 dealings a year in the last three years in the Masaka office of which an estimated 50 percent were new transfers. There were an estimated 5,000 applications a year to the Uganda Land Commission for consents to transfers. 2.43 The preceding analysis supports the adoption of a uniform national policy for the introduction of freehold tenure and the repeal of the decree. But, registration and titling of the entire country would be prohibitively expensive. For efficiency reasons, it is necessary to adopt criteria for implementing a titling program. Traditional systems of tenure do provide as much security of tenure as freehold, providing Government monitors land transactions in areas where these systems exist. Titling should be considered where the traditional system appears to be under threat. In the meantime work should be begun to legally recognize traditional systems, to develop a record of rights of use and occupation, and to prevent incursions into the traditional system. The focus of governmental intervention should be to improve the efficacy of the mechanisms for resolving disputes-within the framework of the traditional tenure system-while the policy of freehold titling is gradually implemented under the new law, with priority given to issues of conflict. 2.44 Titles are not enough to spur agricultural development. A titling program should only be undertaken if linked with the development of a national land use policy that recognizes the suitability of different land use systems and is fostered through the directed provision of infrastructure, and economic and fiscal incentives. Above all, farmers have to perceive continuity of policy to invest in their farms. 2.45 Compensation due mailo owners-for the vesting of kibanja tenant land in the Land Commission, and its e,''ntual conversion into freehold-is probably the most sensitive aspect of the proposed legislation. Once the principle has been adopted, the mechanism for  - 25 - compensation should be dealt with separately in the regulation of the new law. By treating this difficult issue separately, the review and approval of the new law can be allowed to proceed. It is recommended that agreement first be left to the parties-with the intervention and assistance of private commercial organizations encouraged. Government should only intervene as a last resort. 2.46 Fragmentation of holdings in the densely populated rural areas of the Southwest aud the Northeast was considered. It is felt that administrative measures to contain this fragmentation (which would entail modification of inheritance law, and official and customary tenure law) have not been successful in other parts of Africa. The oxperience in Kenya of trying to force consolidation of plots and prevent fragmentation in high density areas has not been successful. The process of fragmentation is likely to continue until economic non-viability of plot size forces sale and consolidation. If allowed to operate freely, normal transactions In the land market will produce consolidation of holdings once untenably minute sizs are reached. 2.47 Implementing a freehold tenure system requires ordering existing records in the Land Offices, reconstructing the records where they are no longer available, and rehabilitating Lands Offices. The gradual decentralization of registration services to the district level would be undertaken as a second phase, once the system had been brought up to date, and new procedures compatible with the new land law put in place. Improving these services will be justified once the new law is approved, given the need for an efficient, fair and open registration system to realize the benefits of the freehold system noted above. F. The Rural Population Conswnptdon and Exenditure 2.48 The share of Uganda's p.pulation living in cities is one of the lowest in Africa. Among its neighbors, only Rwanda has a level o0 urbanization below Uganda's 11 percent. The urban ratio for all of sub-Saharan Africa is 28 percent. While the rural-urban migration that normally accompanies dsvelopment is occurring in Uganda, the rate of growth of the urban population, at 5 percent per annum, is still not high by African standards. The rural population is growing at 2.15 percent per annum, LI/ below the average rural population growth rate for sub-Saharan Africa, and below the level estimated for Uganda prior to the recent census. 2.49 The National Household Budget Survey (1989-90) reveals the following characteristics of rural dwellers: * There are an estimated 2.5 million rural households. The average rural household has 5.59 persons, compared with 4.50 in urban areas. Males exceed females by 2 percent in rural Uganda (table 4), * Average rural expenditure per capita, per year, is valued at about US$10, compared with US$218 per capita in urban areas, and US$116 for Uganda as a whole (table 5). il/ Consumption levels cannot easily be IF1 Bmed on te incw pedod 1980.91. W/ At the plled echaqg r, which reflec the ginal coat of fg excpag i the economy.  - 26 - campared, however, food prices at farmgate are likely to be significantly below urban prices, * In rural areas, 71 percent of total expenditure goes for food, (including beverages and tobacco), compared with 51 percent in urban areas (table 5); Table 4: Waisted Nunmber of Households, Househld Populion, Gender Ratio, and Household Sue, 1989W90 Urban Rurl Tota l Number of Households 377,529 2,509,887 2,887,416 Houhsehold Population Toal 1,699,191 14,027,544 15,726,735 Household Population Male 800,738 7,077,102 7,877,840 Household Population Female 898,453 6,950,442 7,848,89S Male/Female Ratio 0.89 1.02 1.00 Household Size 4.50 S.59 S.4S Sourcc: National Household Budget Survey, 1989.90 e The distribution of spending in rural areas is considerably more skewed than in urban areas. About 54 percent of rural households live on less than US$ 526 per annum, compared with 26 percent of urban dwellings for the same income level (table 6), W/ * The rural diet is higher in starch, and lower in protein than its urban counterpart. About one-third of the rural diet is matoke, potatoes, and other tubers compared with less than one-quarter of urban food consumption. Lower farmgate prices exacerbate this difference. Some 21 percent of rural household food expenditure goes into meats, milk, and eggs, compared with 28 percent of the urban household expenditure, 16/ * Expenditure on meat, eggs, milk, and sugar increases dramatically in absolute terms-and in shares of food erpenditure and total expenditure- indicating that markets for these products should improve as incomes increase (assuming that the increased spending is due to volume and not price differences), c More than 97 percent of rural households had no running water or electricity. JAI On a per capita buia, the aua disrbution is even lower, beu fily sis are larger. jjI Aan, the aural uareaa are wos off than these figua Indicate, because lurr fmnily Asze moe lower per capits conwmption.  -27 - Table 5: RurolUda Breakdown of Mondy Hu d Budget (198U9 Ush) Urban Rudra Total DESCRIPTION Monthly Shuae Mothly Sharn Monthly Shum Expendiwrm Toal Expenditure Total Expenditure TOal | . . 8xpen~~~~~~~~~Bwd 8p. . 8x. MATOKE, POTATOES & OTHEt 6,274 12r; 6,819 22% 6,750 20% TUBERtS BREAD AND CEREALS 4,824 9% 3,299 10% 3,498 10% MEAT AND POULTRY 3,048 6% 1,920 6% 2,066 6% FISH 1,776 3% 1,037 3% 1,133 3% MILK AND EGGS 2,733 Ss 1,163 4% 1,370 4% OILSANDPATS 977 2% 367 1% 445 1% FRUITS AND VEGETABLES 2,871 5X 2,216 7% 2,301 7% BEANS, LENTILS, NUTS, ETC. 1,735 3% 2,001 6% 1,967 6% SUGAR,COFFEEANDTEA 2,625 5% 852 3% 1,083 3% OTHERFOODS 391 11 343 1% 349 1% SUBTOTALFOOD 27,254 51% 20,017 63% 20,962 61% SUBITOAL BEVERAGES 3,294 6% 2.048 6% 2,210 6% SUBTOTALTOBACCO 507 Is 331 Is 354 1% SUBRlTALRESTAURANTS 1,023 2% 162 1% 274 1% TOTAL - FOOD, BEVERAGES & 32,078 60% 22,558 71% 23,800 69% TOBACCO CLOTHING AND FOOTWEAR 3,500 7% 1,815 6% 2,036 6% RENT, FUEL AND POWER 5,748 II% 1,515 5% 2,069 6% EQUIPMENT & 3GOODS 6,333 12% 2,959 9% 3,399 10% TRANSP& COMMUNICATIGN 1,770 3% 849 3% 969 3% HEALTH & MEDICAL CARE 933 2% 599 2% 643 2% 1Ur'rATION 1,809 3% 629 2% 770 2% | P-Cr CULT & oTHER 1,17S 2% 721 2% 782 2% | MONTHLY W. 53,346 100X 31,645 100% 34,468 100% ANNUAL WP. 640,152 379,740 413,616 ANNUAL EXP/CAPFITA 142,256 67,932 75,893 | ANNUAL EXP. (US$) 979Sl 581 632 _ ANNUAL8XP/CAP(US$) 218 104 116 Avergpe Peona Per Family 4.50 5.59 SAS Source: MPED, Uganda National Household Budget Survey 19899-90. US 1.00- U.k 654 in FY 1988-W9  - 28 - 2.50 The survey does not cover sources of income. This information would provide guidance on ways to target income-increasing oppormnities. It must be noted, however, that rural dwellers are poor, and resources for investment In agriculture are limited. An agricultural development strategy cannot depend on the mobilization of large quantities of cash for Inputs or labor, unless financing is provided. Even finance is not an immediate solution-as the capacity to borrow, and repay, wUI be limited. TableS: Fequeny and Dillolsof Housmehbl by Monfth Hottseohold Expenditure lam A|aa Houshold URBAN RURAL TOrAL Expenditure Cbu USS per failry Numbw of Few" of Ped e Nusr of Percnt (USS 1 - Ush 654) Hoacolds Households O to 459 95,617 26.1% 1,363,311 54.3% 1,461,928 S0.6% 459 to 917 130,302 34.% 74S,433 29.71% 875,735 30.3% 917 to 1,376 79,076 20.9% 232,745 9.3% 311,U21 10.8% above 1,376 69,S34 18.4% 168,398 6.7% 237,932 8.2% 377,S29 100.0% 2,509,387 100.0% 2,887,416 100.0% AverV gamily Sin 4.5 5.6 5.4S Farm Characteristcs 2.51 Estimates of the amount of land cultivated by a family vary. The National Household Budget Survey (1989-90) indicates an average of 1.35 ha of farmland per household, with an additional 1.03 ha of other land avaiable (table 7). There is above-average farmland available per family, in the West and North. Data on the distribution of landholdings by size, indicate that of those households which possessed land, 62 percent controlled plots of less than I ha, and 23 percent controlled plots of between 1-2 ha (table 8). About 2.1 million rural households-85 percent of the total-possess plots of less than 2 ha. ________Table7: AMesa Lnd and Uvesoo& Pmarnod pee HooseWod by Pegion ___ __________ 1_ I II UGANDA _ km unt C* swum w |u Nhm UOAM Farmhnd me 136 0.98 1.72 1.10 135 OthwLand Ha 0.84 1.18 0.96 1.59 1.03 Total Laid He 2.20 2.15 2.68 2.69 2.38 C|t4 Number 0.97 1.36 2.11 0.67 1.37 pip Numbw 035 0.18 0.46 0.4 035 Goats andue Numbw 0.92 1.51 2.03 2.43 1.54 Poulty Numbw 3.58 6.75 3.50 5.73 4.50 Sourme Natdon. Household Budget Sumvy 1989-90  -29 - Table 8: Distribution of Rural Households by Fanm Size Ar of CENTRAL EASTERN WESTN NORTHERN UGANDA FaM Owned Hectares Number Per- Number Per- Number Per- Number Per- Number per- Houe- cfat Houe- cent Hous cent Houe cet Hous ceat bolds Land holds Land holds Lnd holds Land holds Land Urban 245,574 56,178 50,317 25,460 377,529 NU 263,062 99,209 83,900 S,725 451,896 (urban) 0- 1 492,873 61.4 383,599 67.0 436,401 55.8 200,809 72.2 1,513,682 62.2 1 -2 173,971 21.7 128,610 22.5 195,091 24.9 59,296 21.3 556,968 22.9 2-4 99,171 12.4 45,952 8.0 94,743 12.1 13,314 4.8 253,180 10.4 4-6 15,901 2.0 6,S83 1.1 31,234 4.0 2,364 0.9 56,082 2.3 6-8 6,921 0.9 2,638 0.S 7,478 1.0 94 0.0 17,131 0.7 8 - 10 2,237 0.3 3,S21 0.6 1,849 0.2 323 0.1 7,930 0.3 t10 ad 11,121 1.4 1,87S 0.3 IS,812 2.0 1,739 0.6 30,547 1.3 aboveI 1,065,25 671,987 866,508 283,664 2,887,416 TOTAL Z[_7 TOTAL 802,19S | 100 572,77 100 782,608 100 27,939 100 2,43S,S20 100 Source: Ugnd Naional Household Budget Survey (1989-90). The urvey coverd all diddsc of Uganda except Kumi and Sowd In the Easterm Region, and Gulu, Xitgum, Kotido, Lin and Moroto in the Nojihern Region. 2.52 What do Ugandans do with their land? How much is cultivated? Are cultivation levels near their limits? There is little systematic evidence available on farming systems. A survey undertaken by Makerere University and the University of Wisconsin Land Tenure center in Masaka and Luwero in 1988 analyzed cultivation levels and land use by type of tenure. The conclusion reached 171 was that "there seems to be no difference in the proportion of land that is unused across the various tenure typcs. That is, mailo owners do not seem to have more unused land on average, than mailo tenants or customary tenants." The survey also indicates that 'labor shortage was the major reason given for not using all of the land." Soil infertility-or fallowing requirements-were the next most frequent reason for less-than-fill use. Cultivated area per farm shows a substantial increase in the share of each holding cultivated in Masaka (Center), Busoga (East) and Kigezi (Southwest) (table 9). la/ IV MIS and LTC, op. ci. 0. 116 (se p. 21). IF USAID/Uganda, Agriculturel Cenu, 1962-63, and Me Uganda Profile,-, 1984.  - 30 - Table 9: Share of Holding Cultivated 1962-63 1984 Masaka 53.9 61 Buaoga 33.1 63 Kigezi 7S.4 92 2.53 The Agricultural Sector Survey of 1986-87 permits a rough characterization of districts-and hence regions-by principal farming activities. Almost 70 percent of the farms in Uganda are primarily crop production oriented (fig. 17). In the Western Region the share of pure crop farming goes up to almost 90 percent, and declines in the Eastern Region to some 55 percent. The rest of the farms are mixed. Only in the Central Region does the share of farms oriented exclusively toward livestock rise to 5 percent. G. Rural Labor Markets 2.54 Surveys of production constraints, such as the survey of 1988 by the MISR/LTC identify the availability of labor as the key factor in smallholder expansion. In the plantation crops of tea and sugar, labor costs are cited as a make-or-break factor in farm profitability. The responsiveness of the rural labor market a;fects plantation profitability and size. According to the national Household Budget Survey 80 percvnt of employed persons listed agriculture as their main occupation. 12/ Smallholders 2.55 Agricultural production in Uganda comes primarily from family farms, with the family-children included-providing most of the labor. The main difficulty in managing the labor input in family farms arises at the times of peak demand: weeding and harvesting. The strategy used to meet additional labor requirements has differed by region. Historically, 2Q/ Buganda farmers took in permanent laborers, many of them immigrants from Rwanda or Zaire, who worked year-round on coffee and cotton. In the North and East, labor-sharing arrangements were more common. Labor was hired to meet peak requirements. In some of the northern areas there was a tradition of communal participation in opening up new land for individuals. More than half of the landholders, especially in central Uganda, paid for labor in cash. 191 MPED, Ugnda National Household Budeet Survey. 1989-90, Table 2.30 2W/ J.H. Clcave, and E.H. Jonea, in Jameou, op. cit., p. 114.  - 31 - 1 101 802 783 278 573 2435 10a0 90% e0% c 40% 0 30. U 20% 10% CENTRAL WESTERN NORTHERN EASTERN UGANDA ICroPs M I xd Farms M L IUvestocic Go FU I Sh Ing Flgure 17 Distribution of Farms by Primary Activity 18.0 17.0- 16.0 i 15.0 14.0- .. 13.0 * i 2.0- 11.0 *, 10.0 9.0 7.0 6.0 5.0 2.0 i0.0 LE TOFk JI A MPIGI MUS&OE IMAS NDI ~UKuNIRI MBAAARA EACNR AANG MASAICA LUWERO NO) MA KASESE BUSHNY I FIgpre 18 Monthly Rural Wage Rates  - 32 - 2.56 As noted in a rece,ut review of Uganda's rural labor markets 2j/ "Labor market transactions at peak periods are common for most farm- households. In 1989 approximately 30 percent of total labor inputs on major cash and food crops were provided by hired labor. Escalating labor costs propelled by rising food and consumer goods prices are now placing considerable financial constraints on smallscale employers. Between 1989 and 1991 hired labor input on [smallholder) tea fell from 41 percent to 29 percent of total labor input and on Robusta coffee from 33 percent to 26 percent. The hired labor input on most food crops remained broadly the same." 2.57 The available data reveal significant differences in the casual, and permanent labor wage rates, across districts. Luwero had the highest permanent wage at Uganda shillings UshlS,000 per month in May 1991, equivalent to US$17 per month at the bureau exchange rate (fig. 18). The average permanent wage in the country was about Ush6,900 a month. The higher rates in Luwero may reflect a need for permanent labor to work the bananas and coffee-in a market where the immigrants are scarce, locals have fled the tegion, and others are reluctant to relocate. 2.58 Daily wages fluctuated between Ush350 and Ush700 in November 1991, equivalent to US$0.33 to US$0.65 at the parallel rate (fig. 19). The average rural wage rate was Ush540 per day in November 1991, which, at US$0.50, is exactly equal to the dollar-equivalent wage in May 1991. These wages are below the average returns per person-day calculated for a wide range of food crops (fig. 27)-but above the returns per person-day on Robusta coffee. Daily wages were highest in Mbale, Tororo, and Iganga, densely populated regions in the East, and also in Masaka, in the Center, where production opportunities are best and daily returns high. Kabarole, in the West, a center for the tea industry, registered the lowest daily wage. The Evans study notes that Kapchorwa, Tororo-and possibly Iganga, among other districts-have been facing labor deficits, in terms of labor/land ratios. 2W/ The daily wage differentials noted above also reflect the needs of the regional growing seasons, which differ in timing across the country. lhe Estate and Nonfarm Market 2.59 Estates have traditionally relied on contract and permanent labor, often immigrants from Rwanda or Zaire. Po!' ical and economic disruptions in Uganda and neighboring countries in recent years, and sharp devaluations in the value of the Ugandan shilling have reduced the flow of immigrant labor to Uganda. This, coupled with the rise in food prices and the availability of alternate employment opportunities-which accompany the rehabilitation of infrastructure and the reestablishment of the tea and sugar industries-has caused rural wages to rise in real terms. Low productivity in the tea and sugar estates have made it especially hard for them to obtain sufficient labor, at the wages they were willing to offer. Cane cutters can now earn Ush 12,000 a month, which is within the regional parameters for permanent employses. The low green leaf price severely limits the ability of outgrowers to hire labor, and restricts garden size to the 1 ha to 1.5 ha that a family can handle. Tea factories are limited by the low productivity of their processing AMison Evs u Rural Labour Market Asesmen - Uuanda Peinminary Obervations nd Conchluon, Agricultural Secretaiat, Bank of Uganda, AprD 21, 1992, p.1. W Evans, op. cit., p.2.  - 33 - 600.0 700.0 *' 600.0 fl 500.0 a 400.0 300.0 - 200.0 - 100.0 0.0 I G & 1A K TO AD J INJ aaUwYIm -I Figure 19 Daily Rural Wage Rates opera dons, and their high debt-service obligations, from providing more than an absolute minimPum to wage laborers. Consequently, estates 'ave great difficulty in paying market wages, and hence, not surprisingly, in finding adequate supplies of contract workers. Labor Migradon 2.60 Cursory observation indicates that labor flows respond predictably to regional employment opportunities around the country. There is an element of unpredictability to the movements however, since the laborers are also smallholder farmers in their own right, who will react quickly to any change in the relative profitability of their own employment. 'he change in the returns from food production can produce an especially rapid reaction in labor availability, due both to the change in the returns from alternate employment, as well as to the increase in the cost of the minimum food basket. The absence of migrant workers from Rwanda since the ealy 1980s has affected production relationships and wages for export crop production-mainly in the tea and sugar estates and to a certain extent on smallholder farms. Migration of poorer farmers from the "land-poor" Southwest (Kibaale, Ruzkungiri) into the western (Holma, Kibale, Kabarole) and central areas (Mukono, Luwero) continues. While migrants may start off as agricultural laborers, they will often end up establishing their own holdings (especially in the western areas). 2.61 The market for labor among smallholder farmers-while active-appears to be small, fragmented, and constrained by limited mobility and imperfect information. Relationships are localized and personalized transacdons are preferred. Since smallholders enter the local market for casual daily labor at more or less the same time during the crop year-to meet peak land preparation, weeding, or narvest requirements-they become price takers. Smallholders with  - 34 - more cash at this crucial time can pay the scarcity wages and obtain timely assistance. This has consequences on yields and profits. The ability to obtain timely credit, not necessarily in large amounts, to finance hired labor during peak demand will be a key determinant of yield, cultivated area, and farm income. 2.62 The flow of labor into urban areas has only gradually started again. Urban incomes are, on average, 69 percent higher than those in rAral Uganda in money terms, and urban areas have grown at 5.9 percent per year, above the national average growth rate of 2.5 percent. 2.63 Although more work is needed to identify barriers to inter district labor movement, the nature of the work contract, and ways the Government can influence market efficiency, the following recommendations can help to improve the responsiveness of the market, and reduce labor-related constraints to increased -roduction. First, improved transport facilities- especially improved trunk and feeder roads-would improve labor mobility, permitting an elastic response to the strong seasonal demand from smallholders. More availability of bicycles, especially for women, also can improve responsiveness. 2.64 Second, the reestablishment of peace and security should loosen the market, making people more likely to move into ethnic areas different from their own. Third, increased availability of cash for smallholders-through improved payment systems, informal credit, and more work opportunities-would permit the employment of more labor and release a peak-demand bottleneck. 2.65 Fourth, labor-related constraints to expansion in smallholder agriculture can be softened, and returns to labor increased, with the increased use of labor-saving techniques. Equipment should focus both on farm-related tasks-using ox-drawn mechanization (ploughs, weeders, carts), for example-and on domestic chores (fetching water, grinding cereals, cooking), which could release male and female labor. Fifth, in addition to the measures already mentioned, constraints to female participation in the labor market, and the returns to traditionally female tasks should be identified. Interventions-using the extension service, or NGOs-should respond to regional female priorities. 2.66 Sixth, the gradual improvement in the processing efficiency of the tea sector-and hence the possibilities for raising the greenleaf price-should improve the sector's competitivene3s in the labor market. Recommendations on Government intervention in establishing a floor price for greenleaf are discussed in Section IV on the tea industry. The private sector should be induced to produce innovative labor contracts, and bonus and incentive payments. Additional investment in housing, schooling, and other benefits should also improve supply. H. Rural Women 2.67 A recent Bank report on the status of women in Uganda places rural women, appropriately, at the 'center of agriculture. 2W/ In a primarily food-based agricultural economy, women provide 68 percent of the labor for fi od crop cultivation, and 53 percent of the 21/ && *Ev Jm Wonmen in Dwvelcpme Ca haw and Aenda or Fuhar Reach," AF2PH Working Paper. Jun 28, 1991, p.20.  - 35 - labor needed for cash crop cultivation. ?A Some 94 percent of employed women gave their main occupation as agriculture, compared with 82 percent for men. Womens' responsibilities to the rural household do not end with crop cultivation, however. The National Household Budget Survey notes that the primary activity of 72 percent of economically active rural females-- excluding students or those unable to work involves attending to household duties. 2/ This compares to 20 percent for economically active males, whose primary activity (60 percent) is as "own account worker." 2.68 As the Jarawan report points out however, womens' contribution to the productive process is not matched by their control over the use of the resources generated. Women decided on the use of the funds generated from the sale of crops in relatively few cases: 39 percent of the time for food crops (one-third of this jointly with men) and 17 percent of the cases for cash crops (a little less than half the time in conjunction with men). In addition, as noted in the Jarawan report, "property acquired during marriage belongs to the husband. In the event of the husband's death, the woman is not the automatic heir ... According to the formal legal system, a wife or wives get 15 percent of the husband's estate while the children get 75 percent (in equal shares). The dependant relatives get 9 percent [of the estate,] and the customary heir 1 percent." M/ 2.69 Women may face lower returns and greater difficulties than men in competing in the rural labor market. As noted by Evans: 'Female labor supply for wage work is restricted by the multiple demands of domestic food production and processing, household maintenance, childcare, health care and cash-earning, to meet daily and lumpy expenditures such as school fees and medical expenses. Inadequate crop and personal transport facilities limit women's mobility and further restrict their labor time. The loss of assistance from school age children in simple farm and household tasks ... has had a significant impact on female labor time. Restricted bargaining power and contractual inferiority in the labor market largely stems from these constraints on women's ability to allocate time and resources optimally. The greater inelasticity of female labor supply may pose a limit to the response of both family and hired labor to changed incentives. Although as already indicated distress selling of female labor during a period of food deficit and around the time that school fees are due is very common." 22/ 2d/ AFCODE Survey, 1989, in Jarwan, op. cit., p.... WEMPED, Statistics Department. Recort on tho Uganda Nationa Household Budeet Sunev 1989-90, Entebbe, Febuay 1991, Table 2.20. larawan, op cit. p.9 2a/ Bvans, Aibon, ap.cit. pan 18  -36 - 2.70 Women are also at a disadvantage in education with respect to men: 43 percent of rural women are functionally illiterate, compared with 28 percent of rural men; and 51 percent had finished primary education, compared with 60 percent of men. 2.71 For these reasons, as the aforementioned report indicates, there is a need to consider gender in designing programs to transfer technology and improve production opportunities and incentives in rural areas. If this is not done, the production effects of production programs will be lost, and the gender-based inequities etacerbated. Of key importance in supporting rural development on this issue is redressing the gender inequities in the inheritance legislation and practices. Also, Government should make particular efforts to reach women in services that support smallholders, such as attempts to transfer improved cultivation techniques or foster savings generation and marketing initiatives. As mentioned in the previous section, the introduction of labor-saving devices and infrastructure into the rural household should have a effect on the welfare of rural women. I. Regional Differences and MigratIon 2.72 As argued previously, there are still large areas of underutilized, medium-to-high potential farmland in Uganda (table 2). Only one-third of areas potentially open for cultivation or pasture are used for crop production. But, the availability of land to farmers differs sharply by district. The density of the rural population by district varies from 20 to 60 inhabitants per square km in Masindi, Hoima, Mubende, and Luwero-all fairly high potential-areas- to 250 to 300 in Kabale, Mbale, Iganga, Tororo, all of them districts with high agricultural potential (fig. 20). Why do farmers not move into the underutilized areas of good production potential? 2.73 The answers to this are complex, varied, and not clearly understood. With a population projected to increase at 3.1 percent per annum, there is a strong imperative for fuller use of areas of good agricultural potential. ?DI Because Uganda's population is largely rural, the number of farming families is increasing steadily. The new entrants will continue to look for opportunities to open their own farms rather than intensifying production on parental farms. This has been the means by which an increasing farm population has been fed in the past, and the absence of an overall land constraint would indicate that the same strategy will be used for the remainder of the decade. Given this underlying pressure, 'security" appears to be a key determinant of interregional migration, and of expansion in cultivated areas. As argued in the review of the environmental effects of agriculture (para 2.15), area cultivated increased in those districts where the "security" situation improved. Population density in the Southwest and Northeast may have increased more rapidly than population growth during the years of "the troubles," as former migrants returned to their ethnic areas. With the current improvement in "security" across the country (excepting portions of the North), a resurgence in the natural outmigration from the densely populated Southwest and Northeast, and a return to the "foreignp districts where homesteads were established can be expected. Spot observations by the mission confirm this hypothesis in western Uganda. U/ Wold Bank, Uganda - Social Sector St.tegv. WWte Cover Repoft, Apdl 9, 1991, Chapter U.  - 37 - CENTER Kalangala Klboga Luwro - Masaka MpIgI Mubendo Mukono Rakal WEST Bund bugyo Bushonyl Hodma Kabalc Kabardc - Kasomo Kibal: Kisoro Masindc Mbarara Rukungiri NORTH Apac Arua Kltgum Kotido Ura Mrotor Moyo Nobbl EAST Iganga- Ksmull- Kapohorwa Kuml Mbale Paillsa Sorotl Tororo 0 50 100 150 200 250 300 350 Figure 20 Rural Population Density 1991 (hab/km2)  - 38 - Kampala Kalangala - Klboga - Luwero - Masaka - Mpigi Mubende - Mukono - R akal - Sundlbugyo _ Bushenyl - Holma - Kabale - Kabarole - Kasse - Kibale - Kisoro - M asindi - Mbarara Rukungiri Apac Arua Gull].a Kltgum _ Ko4ldo - Lira Moroto _ Mayo Nebbi - Iganga - Jinja - Kamull Kapchorwa - Kum; - Mbale - Pallisa -] Toraot -_ Torcro _ _ _ _ _ _ _ _ _ _ _ _ -300 -200 -100 0 100 200 Thousands of Persons Migrating Figure 21 Net Migration 1980-1991, After Allowing for Population Growth  - 39 - 2.74 A rough attempt has been made to measure migration across districts by comparing the actual intercensal growth rate of population in each district with the national intercensal growth rate of 2.5 percent per annum (fig 21). Districts with a growth rate higher than the national average, show up with an inflow of migrants, and vice versa. The hypothesis is that three forces are inducing population movement: the normal rural-urban shift in search of better living standards, the exodus from areas where security risks are untenable and the quest for new land for cultivation. 2.75 The large move into Kampala during the intercensal period can be hypothesized to be mainly part of the rural-urban drift, with some components of security-driven migration. The exodus from Soroti, Kumi, and Mbale into Iganga, Tororo, and Pallisa can be hypothesized to be due to the decline in the security situation. The shift out of Luwero and Kiboga into Mpigi, Rakai, Masaka, and Kampala also can be thought of as due to security problems in these areas in the early and mid 1980s. Similarly, the exodus from Moroto, Kotido, Kitgum, and Gulu into Apac, Lira, Moyo, and Nebbi is believed to be a reaction to security problems. The small shift out of Kabale may be due to disruptions caused by the conflict in Rwanda. 2.76 The South and West have not seen serious security problems over the decade, except in the mid 1980s. Movement here is hypothesized to be a response to land pressure. The exodus from Kabale, Bundibugyo, and Kasese-where cultivable land per capita is very low, partly because of the presence of the Ruwenzori range into Kabarole, Kibale, Kisoro, and Bushenyi appears to be for such a reason. A mission visit to this area confirms the presence of large numbers of people from the Kigezi region in the western districts mentioned above. Detailed information on the distribution of people by ethnic origin, from the 1991 census, should permit a confirmation of these trends. Much additional work is needed, however, to establish how and why these movements occur, and to determine what role Government might play in channeling them. 2.77 It is a basic conclusion of this report that Government should be much more concerned with these 'natural" flows of people and resources than it is at present. Interregional migration is a vital 'engine' of growth. It is the mechanism that has been used in the passt-and will continue to be used-to expand cultivated area. This type of expansion in output provides the greatest returns to labor, if the migration costs are not too high. There is substantial land with good potential for sustainable rainfed agriculture. Government should be guiding this migration- indirectly-to ensure that expansion takes place in appropriate areas, that ethnic and environmental effects are minimized, and that the physical and social hardships of the migrants are reduced. 2.78 This report recommends that Government develop a policy on interregional migration to, first, establish those areas where immigration is most desirable. This would depend on assessments of agricultural potential, environmental consequences, and ethnic differences. 2.79 Second, the policy should investigate conditions in the areas of severe land pressure, evaluate measures being taken to improve productivity there, estimate potential numbers of migrants, and formulate indirect incentive measures to guide migratory flows to the desirable areas. The spatial location of economic and social infrastructure-feeder roads, schools, and hospitals-is believed tc be a key determinant in population flows. Third, Government should clarify tenure rights of new occupants, with regard to those of traditional owners. New law should take the consequences of this type of movement into consideration.  - 40 - 2.80 Fourth, the policy should design Government's role in assisting recently established communities. Provision of production assistance, using the extension and reseach network, will be of key import. Consolidation of schools and health services, and road maintenance will have to be financed. The enhanced participation of newly formed communities in the operation of these services could be sought. Fifth, Government should implement mechanisms to monitor the levels, directions, and consequences of these migrations to permit adjustments in policy and response to any problems. 2.81 The formalation of such a policy will require substantial commitment to investigating the conditions in target areas, and to investing the infrastructure and services needed to carry out the policy. J. Social Indicators and Food Security 2.82 There are marked differences in social indicators by region. 22/ Household expenditure was lowest in northern and eastern Uganda (table 10). The share of the population in the lowest income category was highest in these two regions. These data could reflect the fact that in 1988-89, when the Household Budget Survey was conducted, these two regions experienced severe civil unrest. The explanations for these regional differences are hypothetical, and will require further detailed analysis to strengthen the conclusions. The ratio of children suffering from 'stunting,' where height-for-age ratios were significantly below the norm, is highest in the Southwest. This may be associated with diet (see below). The Eastern Region, one of the most densely populated, also appeared to have the lowest living standards, with very low household expenditure, an above-average share of people in the lowest income category, and above-average child mortality. Tabe 10: Regionl Sda Jdlaon Rega1 OMBS Avo. Pog in LoM Region (DHS) UndeS St lag Houahold xeadiu Moraty -d Catay (per 100) l __________ (Ush 1989- ) . .- KampaX 59,944 19.9% Kampal 174 22% I centm 36,477 51.1% C4ellk 187 3S% Weaftm 3S,813 44.2% Weg 179 47% Southwea 172 S4% Bastern 23,69S 61.3% NW 207 45% Northern 22,087 68.2% was Nl 211 45% UGANDA 34,468 50.6% UGANDA 180 I4S 2.83 Food security-access to food-appears to be a problem in certain areas of rural Uganda, based on a quick review of the available survey data. A rough calculation of the calorie equivalent of the food available per capita in 1991-about 960 kg per year-indicates that there awe about 3,420 calories available per person (table 11). This level of consumption is adequate. But, VY1 WoW BDank, Uada - Scial Secw Stdv op. cil., p.E,7.  -41 - the World Bank Atlas 1991 shows per-capita calorie availability in 1988 at 2,013-which is significantly less than adequate. Whatever the actual value, two points should be made: the average food basket is low in protein, and (ii) and there are likely to be food security problems in at least some areas in rural Uganda. These points are discussed below, and will be elaborated on in the forthcoming Country Economic Memorandum, to be produced by the World Bank. Table 11: Calorie Equivalent of Average Amount of AvaPable Food Per Capiba Food Item Share Kg of Food CaloriOe/K Total Calories I_nas 50% 480.0 670 321,600 Cassava 22% 211.2 1090 230,208 Sweet Potato 13% 124.8 970 121,056 CowPea/PuIse 3% 28.8 3420 98,496 oiIsea 2% 19.2 5740 110,208 Cerals 10% 96.0 3500 336,000 Total Food 100% 960.0 1,217,568 Calories per day 3,420 Source: Agricultural Compendium, Esevier, p. 576M 2.84 On the first point 85 percent of the average gross volume of food is provided by bananas, cassava, sweet potato, and other low-protein foods (table 11). The implication is that the diet may be procein deficient, while providing adequate calories. The lack of adequate protein would explain the high incidence of stunting-especially in the Southwest, where the diet of banana, potato, and sweet potato is especially prevalent. The consumption of millet and other cereals is higher in the North and Northeast. The availability of sufficient calories explains why the health data on weight for height (wasting), an indicator of acute malnutrition, were not so far from the norms. 2.85 On the second point, rural incomes average only US$104 per annum (at the bureau exchange rate), with 54 percent of households spending less than US$94 dollars per year, on food consumption (table 10). While these are very low absolute numbers, the farmgate price of home-grown food, on which this expenditure estimate was based, may be sufficiently low to permit an adequate consumption level. Substantial disparities exist in average incomes across regions, (table 10) with expenditure in the North and East at or below two-thirds of the national average. These data imply very low annual consumption levels, and may indicate the existence of rural areas where food security is a problem. Further investigation of select rural areas for evidence of food insecurity is warranted to identify those who suffer from it and design measures to address the problem. 2.86 It order to reduce the negative effects of seasonal food shortages on local prices and consumption it is important that the Government, international agencies, and NGO's be given sufficient time to react to threats of food shortfalls. The Early Warning System currendy in place is weak and its ability to collect and analyze national production information as the crop season progresses should be strengthened to increase its ability to accurately predict harvests and improve its credibility with policymakers.  III. AGRICULTURAL SERVICES 3.1 Following the collapse of economic activlty In the late 1970s, Government stepped in during the early 1980s to provide basic support to the farming sector, which the private sector was unwilling or unable to respond to. In addition to extension and research,the Government became involved in the importation and sale of agricultural chemicals and implements, and the provision of agricultural credit.The Government's continued presence in these markets in the early 1990s has inhibited the re-emergence of the private sector. 3.2 During the 1980s, services to the agricultural sector were provided by a series of ministries, each specialized in an aspect of rural production or organization. Agriculture, animal industry and fisheries, and cooperatives and marketing were supported from three ministries. A fourth ministry dealt with land tenure regi-utations, and a fifth ministry addressed environmental questions. This fragmentation hampered ths ;xecution of a coherent development program for agriculture. 3.3 The services performed by public sector institutions have declined considerably in quality since the 1970's. With the deterioration in economic perfoimance, and the decline in the real value of the budget, salaries and funding fo. operation and maintenance have been allowed to go down. The politically unpalatable measure of reducing staff >; been put off, with the result that salaries are now so low that outside employment is necemsary to make ends meet. 301 Government employment has become a parttime oc nation for most staff, with the result that Government services are patchy, at best. 3.4 Much attention has been devoted recently to this problem. In its recent review of the effectiveness of public expenditure, the World Bank has recommended a program of devolving to the private sector those commercial functions assumed by Government during the periods of crisis, and the provision of other services that are potentially profitable. U/ To improve the effectiveness of those regulatory and public good services which must remain with Government, personal emoluments have to be raised, personnel trained, and institutions and operating systems rationalized. The capacity to expand Government expenditure beyond the current 16 percent of GDP is severely limited. For this reason, sharp reductions in public service personnel are recommended. This question is eloquently described in the discussion of the revenue-wages- productivity nexus in a recent Bank report. 321 A. Government Services for Agriculture The Public Service 3.5 Govermment has an important role to play in supporting the development and dissemination of profitable technological advances, and in regulating production and commercial activities in the agricultural sector. 2Q/ Chdaino Obbo, Women. Chidrn and the LJing Win.' b Holgor 3ou Hann and Mhael Twaddle (ed) aanuing UManas. Easenm Africn Suted, lamu Cumy LAd., 1991. p.98. 1/ World Bank, Public Choices for Private Itivea. 9203-ua, Febnary 12, 1991. 2/ Ibs questio is eloquently deacibed in a discuadon of the mve r-wasxoducfty*es in a teent Dank poit, Unands - Manamni Public Exnenditur. 10512 UG, March 31, 1992, p. 27.  - 43 - 3.6 Measures have been put in place to improve the effectiveness of the public service in agriculture. Funding for state-owned farms and ranches has been cut. Funding for the state- owned tractor service agency has also been reduced, and the agency is slated for sale. A study by the Public Service Review and Reorganization Commission of September 1990 has recommended a "minimum living wage." With support from the Bank's Structural Adjustment Credit (Cr 2314- UG), the Ministry of Public Service is undertaking a functional review of the structure and staffing requirements of four key ministries, one of which is the newly merged Ministry of Agriculture Animal Industry and Fisheries (MAAJP). 3.7 The MAAIF was formed in June of 1991 from the two key ministries involved in promoting agricultural development. The MAAIF now provides extension services in every district and coordinates research covering crop and animal production. In March 1992, further ministerial restructuring took place. The Ministry of Commerce, Industry and Coope.atives now regulates the marketing of cash crops-and the development of cooperatives, commerce, and industry. In addition, the newly formed Ministry of Finance and Economic Planning collaborates with the two ministries just mentioned in the design and implementation of agricultural development policy through the Agriculture Policy Committee and the Agricultural Secretariat of the Bank of Uganda. Environmental and forestry questions covered by the Ministry of Water, Energy, Minerals and Environmental Protection. Land tenure issues are dealt with by the Ministry of Lands, Housing and Urban Development. Funding 3.8 Agriculture-related Government services received about US$ 18 million (at the official exchange rate) from local sources-4 percent of budgetary expenditure in 1990-91, excluding grants. That amounted to 0.5 percent of GDP in 1990. If donor contributions are included, agriculture-related services' share of GDP goes up to 1 percent. 33/ Comparator countries undergoing adjustmeut-(Ghana, Malawi, and Kenya)-averaged 2.4 percent of GDP on similar expenditures. Uganda's allocation of central government expenditure on agriculture, at US$ 3.4 per capita in 1982-87, was well below the US$ 21 per-apita average for ten other sub Saharan countries. i4/ Whether this amount is appropriate depends on the role Government is expected to perform in agriculture. The intention, at present, is to staff an extension service, with a presence in every district, to provide production assistance. It Is also the intention-after the establishment of a National Agricultural Research Organization-to fund research from general budgetary resources, taxes on specific export crops, and private contracts for investigation of specific problems. All research on crops and livestock is Government funded. For these kinds of expectations, funding levels are grossly inadequate. Salaries and allowances for staff are well below the levels needed to provide a minimum living wage, and funds for operations are well below those needed to support constant daily activity. 3.9 A recent study on extension systems in East Africa notes that expenditures on agricultural extension in the region averaged 1.2 percent of agricultural GDP in 1980. 3I 33/ See World Bank, PubSic Choices for Private Initiative. 9203-ua. O. 3S. and uwublished tables. I DBotswana, Mauutius. Swazian Bgypt, Konya. Majawi, Togo, Ethiopia, Madagacr, and Zimbabwe, fiom Wod Bank, Niget -