PLEASE join me in expressing sympathy for one Edward Kisubika, coordinator of a group of over 100 farmers who on Sunday, September 27 last year formed the Mukono Ginger Farmers Association.
Kisubika and his friends had high hopes, and he told The New Vision at the event that he could invest about Ushs5million and make over Ushs20million out of an acre. At that time, a kilogramme of ginger was going for between Ushs8,000 and Ushs10,000 each.
I sympathise quite deeply for Kisubika because, according to the story, he started out as a fisherman at Katosi landing site and got problems, then quit. He rested to vanilla “but when prices fell, I lost all my money I had invested. I kept growing vanilla and food crops but with little commercial benefit.”
Then he moved to ginger (NOT ‘ji-nga’).
And this week The New Vision reported that prices of ginger had dropped from Ushs8,000 to Ushs1,000.
With that price drop, very simplistic mathematics will tell you that Kisubika’s expectation of Ushs20million will now actually give him Ushs2,500,000 only. That is HALF of what he invested at the start of the season – hoping he didn’t spend much more supervising the crop and buying a copy of the newspaper that announced the price drop.
Let us hold a moment of silence there.
Ginger is one of the world’s most on-demand spices. It is used in EVERY Chinese meal, meaning that billions of people around the world eat it. It is also used in very many of the world’s drinks, herbal teas and medicines. In Europe, demand is rising day by day because of the growing drive for healthy eating and living.
The drop in prices is not in Uganda alone, and this being news today, at the end of June, is a sign of slow thinking and slow reactions. In May, China announced a drop in prices from 8 Yuan (and as high as 20 in early 2015) per kilo to 0.80 Yuan – and China is the world’s second biggest producer of the spice, after India.
The reason for the price drop there was the poor economic climate there, which affected the catering industry and killed commercial demand.
China’s ginger production numbers are followed by Nepal and then Nigeria.
Nigeria, meanwhile, was the world’s biggest exporter of ginger exports in 2014, followed by Ethiopia. In fact, on one list, seven of the world’s top ginger exporting countries are African.
I called up the Uganda Export Promotion Board (UEPB) about the price collapse to ask what they were doing about it, since the crop the farmers have in their fields hasn’t been harvested yet and hope shouldn’t be lost.
“Ginger prices have dropped due to increased production which has now spread outside the original producing areas of Butambala and Busoga. This increased production has also been propelled by improvement in farming techniques that are making less costly to manage,” I was told.
The good people there said we have mostly been exporting it informally while formal statistics show that last year we only exported to Rwanda (130 tonnes), the United Kingdom (1 tonne) and Burundi (6 tonnes).
“Traders in Butambala have also indicated that many buyers (thought to be of Kenyan origin) bring in trucks and load ginger from different towns within the area,” they said.
I was heartened to hear that Uganda is also trying out dried ginger, which should help the Kisubika’s keep their crop in a form that doesn’t let it go to waste should the market stay bad.
And, “Ginger powder and ginger flavoured beverages, for example, are now a common sight in super market in key urban centres.”
The UEPB is now looking for alternative reliable market outlets that suit Uganda’s production patterns and has “initiated market research to identify these alternative markets, their requirements and how Ugandan exporters can benefit.”
All that is good, as is the internet research I quoted above, but it should all have been made use of back in September when the Kisubika’s were excitedly forming their association and increasing production outside of Butambala and Busoga.
Plus, there should have been discussions involving the processing, manufacturing and finance sectors to meet the Kisubika’s goal of setting up a processing factory in Mukono. And it is late but not too late for these discussions to begin – we have government ministries and departments in charge of finance, agriculture, trade, industry, labour and more that should have a meeting over this.
And if they are asleep then the entrepreneurs should be moving faster. This Wednesday I had a chat with Gerald Owachi, of Pamrone, who told me he and his partners are trying to put together Ushs105million to order for a dryer/drier to be fabricated and stationed on their farm.
Theirs will not be just a grain dryer/drier as normally happens, but will be principally used to dry cassava, so it will certainly be capable of drying other tubers and ginger as well.
Ushs105million is half the price of a second hand Range Rover or Land Cruiser – and there are many of those on the streets of Kampala. At the very worst, though, that amount of money is also equivalent to five second hand sedans on the streets of Kampala – again, meaning that it is an easy investment for a group of entrepreneurs to make if they got together to do the maths and talk to the likes of Gerald Owachi and Kisubika.
If the supply of ginger is so good that it is outstripping local and regional demand to bring prices down, then surely it should be enough to support manufacturing so that the fresh ginger can have value added to it and fetch more than peanuts?