Good investment needs a good policy environment
With that in mind, FAO’s AgrInvest Uganda is teaming up with Uganda’s Dairy Development Authority (DDA) and FAO’s Monitoring and Analysing Food and Agricultural Policies (MAFAP) programme to advance the country’s dairy industry through evidence-based policy dialogue.
AgrInvest Uganda, a joint European Union (EU) and FAO Project, is supporting the Uganda Development Bank (UDB) to increase its agri-food lending portfolio. At the same time, under a second component, the Project is working to enhance the policy environment in the country’s dairy sector, among others. The dairy sector was identified as a key industry in Uganda’s National Development Plan (2021-2025). The dairy subsector is one of largest contributor of the Agricultural sector in the National GDP. Dairy products contribute to nearly 50 percent of Agriculture GDP and is one of the fastest growing sectors in the country. Dairy exports have steadily increased from 5.5m USD in 2015 to 130m USD in 2018 (Agriculture Sector Performance report FY 2018/9) contributing to 3.5 percent share of exports GDP, according to Uganda’s Bureau of Statistics (2019).
Under this new partnership with AgrInvest for policy dialogue, DDA will coordinate the Dairy Multi-Stakeholder Platform, which brings together dairy farmers, cooperatives, traders, processors, input suppliers, milk suppliers, development partners, consumers, financial institutions and researchers.
FAO Economist and AgrInvest Uganda Project Leader Julien Vallet said these multistakeholder policy dialogues “will make the dairy value chain more appealing to investors, by enhancing the policy environment for public and private investments.”
Mr. Akankiza Samson Mpiira, the Director Technical Services in DDA, highlighted the importance of the partnership: “the outcomes of the collaboration will update the country’s dairy sector statistics which will guide policy dialogue and informed investment decisions in the industry for improved wealth and health of the population”, he said.
Pinpointing policy issues and solutions
MAFAP has a longstanding record of engaging with government institutions and research organizations to assess policy constraints and provide analytical evidence and solutions on the most pressing agricultural policy issues. FAO Senior Economist and MAFAP program manager Christian Derlagen underlined the importance of the collaboration. “By joining forces with AgrInvest and DDA, we ensure that our policy analytics help address the real challenges that producers, processors, transporters and traders face. It really is a win-win”, he said.
During several technical meetings, MAFAP introduced its price incentives indicators to the DDA, comprising members of the dairy platforms. A price incentives analysis by the MAFAP team can identify bottlenecks and policy distortions affecting Uganda’s dairy value chains, like import tariffs and transport costs.
According to FAO Economist Lucia Battaglia, who co-led trainings on the MAFAP methodology, the “MAFAP price incentives indicators can provide Uganda’s Dairy Development Authority with sound evidence to support informed policy dialogue and also be used to advocate for policy reforms when and where they are needed.”
In parallel, AgrInvest and MAFAP will collaborate with the DDA on a series of studies to understand if prices are appealing for smallholder Ugandan milk producers, how the country’s milk collection centres are performing and national milk consumption trends. Mr. Kenneth Otikal, the Principal Planning Officer at DDA observed that “the dairy industry experiences data challenges to support investment decisions in the sector”. ”Evidence generated from this collaboration will update statistics on estimates of milk post-harvest losses, per capita dairy consumption patterns and cost of production to inform potential investors and de-risk investments in the dairy industry” he added.
MAFAP will translate the technical evidence from these studies into actionable and feasible solutions that can feed into policy and regulatory changes and investment for uptake by the Ugandan authorities such as DDA and the Ministry of Agriculture, Animal Industry and Fisheries.