The benefits of high food prices go to the rural poor (the majority) while the costs are incurred by urbanites, a minority.As I write this article, food prices in Uganda are falling rapidly.For instance, the farm-gate price of a kilogram of maize in Kiryandongo (an example of a typical village) increased from Shs500 in January to Shs1,200 in April 2011.
As July ends, it has fallen back to Shs500. If you are a maize producer, your income had increased by 120 percent and has fallen by 60 percent.
This same trend seems to be the fate of many other agricultural products in Uganda. Now, the vast majority of Ugandans (78 percent by the 2002 Housing and Population Census) depend on agriculture for a livelihood. Therefore, there should be widespread protests in our villages and heated debate in the mass media about falling food prices and even threats of regime collapse. Yet ironically, the country is becoming calm again in spite of (and in fact precisely because of) falling food prices.
Holding some factors constant, most of the benefits of high food prices go to rural farmers who are the vast majority of the population while the costs are incurred by the urban poor and middle classes with fixed incomes who are a minority in Uganda. Even assuming that urbanisation has increased from 15 to 30 percent since 2002, the demographic (and with it the democratic) dice is still tilted in favour of the rural farmer against the urban dweller. So why is it that when the majority of the population are negatively affected the country seems calm while when the minority in cities is adversely affected, the country faces a political crisis?
This is where one needs to be sceptical about the seemingly democratic nature of our politics. The political process seems to be dominated by urban demands often at the price of rural interests. Urban dwellers tend to be more educated with access to modern democratic platforms – the mass media, political parties and other civic associations. Thus they are easy to inform and to mobilise for protest, a factor that amplifies their voice within the democratic process. The opposite goes for rural farmers: they are the least educated and for the most part they are excluded from modern platforms for democratic expression – so they have little voice.
This is how the democratic process in most of Africa is structurally rigged in an urban-centric fashion. All too often, our governments continuously pander to urban (i.e. minority) demands even when often, that is done to the detriment of the interests of the rural majority. In fact, even authoritarian regimes in Africa have historically tended to suffer this urban bias – often promoting public policies and political institutions that cater for the interests of urbanites to the disadvantage of rural populations. This was more so during the 1960s, 70s and 80s and was best captured in Robert Bates’ seminal work, Markets and States in Tropical Africa.
According to Bates, farmers stand at the intersection of three markets: the market for agricultural commodities, the market for inputs into farming and the market for goods they buy from the urban industrial sector. Farmers derive their incomes from the first market; their profits are a function of the bargain between these revenues and the costs they incur in the second market – i.e. the market for inputs into farming. Given that the only industrial input into the farming process in Uganda is the hoe (Shs20,000 and lasting three years), the profit margins are high. However, the real value of farmers’ profits and therefore the real value of their incomes is determined by prices they must pay in the third market – that for consumer goods produced by the urban industrial sector.
Bates’ argument was that in seeking political survival and self enrichment, most governments in Africa adopted policies that placed the interests of urban elites above those of rural farmers. Among other reasons, this was partly because urban constituencies can easily mobilise to challenge governments. In politics, even democratic politics, it is not numbers that give you the decisive advantage. It is organisation even when you organise to maximise your nuisance value – like when unemployed youths and other urban lumpens organise to march through a city destroying property and disrupting trade.
The important issue over food price inflation is to look at the basket of goods and services an average farm-family in Uganda consumes per day. Then we can ask what percentage of this basket is devoted to consumer goods from the industrial sector. A typical household in rural Uganda largely depends on its own produce to sustain itself. Most of the food that is consumed is produced in the homestead or bartered – a chicken for bananas. Every household lives in its own house.
For most of rural Uganda, the market is an external and indeed secondary factor in their lives. Given that 68 percent of the population depend on subsistence i.e. hand-to-mouth agriculture, most people only go to the market to sell surplus food in exchange for consumer goods produced by industries in cities. These may include kerosene, salt, exercise books and soap which may not constitute even five percent of basket of goods and services for a farm-family. Most of the other industrial goods – sugar, bottled beer, clothes, cooking oil etc are things a farm-family can substitute, postpone or forego in the face of increasing prices.
From this perspective therefore, increasing food prices are good for farmers even when the cost of consumer goods from the urban industrial sector is growing. In fact taking the example of maize prices in Kiryandongo, maize farmers had gained a 120 percent increase in incomes while no industrial consumer good has witnessed such a high level of price inflation. Therefore, increasing food prices in April were a bonanza for our farmers.
This argument finds very little traction in public debate in Uganda because the beneficiaries of high food prices i.e. farmers are structurally excluded for many of our democratic platforms. They do not speak on radio, do not feature in television debates and don’t write for newspapers. A small group of urban elites shout themselves hoarse claiming they are speaking for the ordinary farmer when actually they are only representing their own interests. This is how the democratic process in Uganda tends often to produce undemocratic outcomes.