Why manufacturers want raw grain exports banned

KAMPALA - Local manufacturers have called for a ban on the export of unprocessed grain. Alternatively, if the move is far-fetched, then government should consider rolling out an export levy of up to 25% on these raw materials. 

The manufacturers echoed this while appearing before the finance committee chaired by Rwampara County MP Amos Kankunda (National Resistance Movement), on Wednesday. 

While addressing MPs, John Jet Tusabe, a member of Uganda Manufacturers Association (UMA) economic committee and director of taxation services at BDO Uganda, argued that the move would safeguard local industries from challenges stemming from shortage of raw materials. 

Section 4A of the External Trade (Amendment) Bill 2025 proposes a levy on the export of wheat bran, cotton cake and maize bran. 

The consigner must pay the levy, set at $10 (equivalent to sh37,000) per metric tonne, to the Uganda Revenue Authority at the time of export. While the intention is welcome, Tusabe said the figure is not even a drop in the ocean in terms of a solution. 

“We also note that the levy of $ 10 per tonne, which is equivalent to sh36,000 per kilogramme, is too low to have an effect. Our suggestion is let’s stop the export of unprocessed grains such as maize, sunflower seed, soya bean and wheat. This will be consistent with Uganda’s right under the World Trade Organisation to prevent harm to the domestic industry,” he proposed. 

Tusabe said at some point, President Yoweri Museveni had indicated that unprocessed grains should not be exported.

 “We need to encourage value addition. For example, when it comes to manufacturers of cooking oil and animal feeds, many of these factories are redundant because these raw materials are being exported,” he added.

Manufacturers speak out 

Tony Gadhoke, the chief executive officer of Mukwano Industries, said while taxes on crude agricultural oil have spurred a rise in sunflower and soybean production in Uganda, shifting weather patterns are driving crop shortages in neighbouring countries. 

In response, these countries are imposing export levies on their own produce, while ironically sourcing crops from Uganda to fill the gap, leaving Uganda manufacturers lacking enough inputs. 

“As recently as last year, Tanzania imposed a levy of 10%, plus the 1.5% infrastructure levy on their sunflower grain. So, they prevented the grain from leaving Tanzania. Immediately after that season, which was the last for oil seeds, we lost majority of our sunflower grain to Tanzania. They took it away. Kenya has been doing it year in and out and Rwanda has joined. You go to the shelves, you will see Rwandese sunflower oil. Do they have a sunflower crop, no,” Gadhoke explained. 

He noted that their latest investment in Lira, northern Uganda, is set to begin operations this month, despite having no raw materials. With the next harvest expected in August, the facility faces five months of idle capacity. 

“We process 100,000 tonnes of grain every year. In 2024, we only processed 55,000 tonnes. This year, after what we saw last year, we have no hope of even doing 55% because Kenya and Tanzania are taking our oil seeds away. They are processing them into by-products and sending them back to Uganda,” Gadhoke lamented.

Middlemen menace  

According to Gadhoke, this artificial scarcity can partly be attributed to cunning shrewd local traders, who go from garden to garden, buying produce that would otherwise serve as raw materials for local industries, only to later sell it outside the country. 

“Mukwano has had to start importing soya bean meal from India to support the livestock industry here in Uganda. 

“And that is just one example. Several other companies are importing soya bean meal to Uganda because we are losing our grain,” Gadhoke intimated. 

An economist working with UMA told MPs that protectionist measures are imperative, given that Ugandan farmers do not benefit as much as they should. 

“As we speak today, the price of maize is sh1,400 per kilogramme. The price of soy is sh2,950, the price of bran is sh980. Now, the question is, did the farmer get shl,400 for his maize? No. The farmer got sh400 or sh500. Did the farmer get sh2,700 for his soy? No. The farmer might have gotten only sh1,000. So, what happened in between? All the soy went to Kenya and all the maize went to Tanzania. 

Sekalala added, “What is left is what the traders are hoarding for prices to go up. So, the people who are rearing chicken, goats and all those commercial farmers have to pay the high price. At the end of the day, it is the Ugandan economy that suffers. It is back to us.”

Uganda enjoys trade surplus with East African Community 

According to data from the performance of the economy reports released by the finance ministry, it is clear that Uganda has increasingly become a food basket for the neighbouring countries. 

In the last five years, Uganda has been enjoying a trade surplus with neighbouring countries, mostly because of the food products the neighbouring countries import from Uganda. 

This situation creates enormous investment opportunities for Ugandans to invest in commercial farming and get good returns in supplying both the local and foreign markets. 

In one of his recent speeches, Kenyan President William Ruto said: “We are not like Uganda, which has close to 80% of their land as arable (agricultural land). Only 14% of our land is arable.” 

This reflects the comparative advantage Uganda enjoys in agriculture.

Parliament reacts 

While he empathised with their plight, Sheema Municipality MP Dicksons Kateshumbwa, a former Uganda Revenue Authority commissioner, criticised manufacturers for exploiting farmers. 

"Some farmers have accused manufacturers of giving them very low prices. Also, they produce, and the products are not readily bought. 

"So, it may point to your relationship with the farmers, whether you have been able to consolidate and mobilise them properly so that you can compete with the middlemen effectively. 

"Because the farmer also has challenges, he borrows money from the bank. You know, we don't have agricultural banks. The available ones are not forgiving. 

"The farmer has no insurance and faces hurdles such as climate change," Kateshumbwa argued. Others, including Karim Masaba (Mbale Industrial Division MP), questioned the capacity of Uganda manufacturers to absorb local produce, arguing that the move could cause a bumper crop crisis. 

"We might want to promote the manufacturers, but you may not have the capacity for your factories to use everything that is being grown locally. 

"Many people are exporting because they have failed to get good prices locally. Our brothers from Kenya are always moving in Bugisu, looking for maize, and they are willing to pay a premium price. So, many of our farmers are actually not willing to sell their maize to local millers because of the price they pay," Masaba said. 

This is not the first time stakeholders have pushed for an export levy. 

Earlier this month, agro-processors called for a 35% import duty on starch to protect local industries, arguing that the current 10% levy is insufficient to curb cheap imports from countries as India, Egypt and Thailand.