MSU Agricultural, Food, and Resource Economics
Once a substantial net exporter of cottonseed oil in the 1960s, Uganda is now over 80% dependent on imported oils and fats. Average per capita consumption of fats and oils in Uganda is estimated at only 2.2 kg, well below recommended minimum levels. Low consumption of fats contributes to high levels of chronic undernutrition and the stunting of 45% of Ugandan children under age five. This study analyzes the historical and institutional causes of the collapse of the industry and provides a detailed description of the current organization of the subsector.
Several factors indicate that edible oil self-sufficiency is feasible for Uganda. National processing capacity was found to sufficient to meet projection national consumption needs in the year 2000. Cost of production analysis indicates that Uganda's land-locked position protects the subsector despite falling international oil prices. Not only would increased oil production improve local nutritional standards but, at current prices and costs of production it is an efficient source of foreign exchange savings for the country. Given the large extent of Uganda's foreign exchange deficit, this is an important potential contribution to national economic stability and development.
There are, however, serious institutional and coordination constraints that impede achievement of self-sufficiency. Lack of raw materials is the most important constraint to increased production. Returns to farm labor in production of cotton and sunflower are below the rural market wage rate. Marketing is identified as a major bottleneck to increased oilseed production and processing. Active coordination of subsector participants at several levels will be necessary to break existing constraints and facilitate a more efficient utilization of productive resources. Strategic public sector facilitation combined with private sector cooperation and joint action at the processor, farmer and trader levels is recommended as the most feasible way to break the current low level equilibrium.