Edible oil crisis plunges households into the fire

Hard information from the Kenya Ports Authority shows that May 19, 2022, was the last time palm oil and vegetable oil tankers docked at the coastal city of Mombasa in southeastern Kenya.

“The prices of edible vegetable cooking oil have increased from 95 percent where they were last year to 180 percent,” Mr Thaddeus Musoke Naggenda, the chairperson of Kampala City Traders Association (Kacita), said, adding, “At first, they accused traders of hoarding goods, but now we no longer hear of such accusations.”

The war in Ukraine that has ensured between 20 and 25 million tonnes of wheat are unable to access the Black Sea ports has compounded things. Ukraine contributes to nine percent of the global wheat market. Wheat and cooking oil are two ingredients used to make a rolex—the much-loved street food composed of a chapatti and omelette packed with veggies.

“The size of a rolex, which has been reducing by the day, is a true reflection of the cost of living crisis,” Dr Sarah Bireete of the Centre for Constitutional Governance said on a Twitter space organised by the citizen-centred initiative Twaweza this past week.

In the Background to the National Budget for FY 2022/2023 document, the Finance ministry stated thus: “World merchandise trade volumes were recovering by the end of 2021 as the pandemic eased and had been projected to grow by 4.7 percent. However, the tensions between Russia and Ukraine clouded this outlook.”

Tough times

Twaweza’s 2021 Sauti za Wananchi baseline survey in which 3,000 respondents were sampled through in-person interviews between September 15 and October 14, 2021, suggests that the food crisis in Uganda predates Russia’s invasion of Ukraine.

“In October 2021, 24 percent of the wealthier households and 55 percent of the poorer households went without eating for a day,” the baseline survey report reads in part.

Mr Naggenda says the government also attributes the increase in retail prices of cooking oil to the Russia-Ukraine war. Ukraine accounts for 42 percent of the global sunflower oil market.

“The price of caustic soda, palm oil, sodium silicate, perfumes have shot up and I am heading to the Ministry of Finance to discuss the same problem,” he said, adding that there’s a need to borrow a leaf from Indonesia, which has ordered the retention of 30 percent of soap produced in the whole country to be reserved for domestic consumption.

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Before the Russia-Ukraine war, palm oil retailed at $1,490 (Shs5.6m) per tonne, having more than doubled from $700 (Shs2.6m) per tonne before the onset of the pandemic in March 2020. Currently, palm oil costs between $1,760 (Shs6.6m) and $1,980 ( Shs2m) per tonne.

In Uganda, oil palm is grown on a large scale on Bugala, Bubembe, and Bunyama islands in Kalangala District, and in Buvuma Island near Mukono District. The government has indicated that it is toying with the idea of spreading the net beyond the islands on Lake Victoria to incorporate districts such as Lira, Gulu, Mpigi, Masaka and Kalungu.

Little liftoff

Bidco Uganda Limited (BUL), which runs the rule over the oil palm project in Kalangala, turned down the chance to respond to our questions. Traders, however, insist the project has not delivered much.

“[The government] has been talking about the palm oil in Kalangala, but it’s clear they have no capacity to meet the demand in the region,” Mr Naggenda plainly said, adding, “Recall now there is demand in South Sudan, the Democratic Republic of Congo, Rwanda, and others. So, can Bidco or Mukwano use our raw materials to satisfy that market?”

The Trade and Industry ministry, however, dismissed the suggestion that local companies have no capacity to satisfy the demand both in Uganda and the Great Lakes region.

“Have you asked those people who have been producing the products we have been using before this crisis?” Mr Emmanuel Mutahunga, the acting commissioner for external trade, asked, adding, “Those companies have been producing for both local and regional consumption. If they have been doing that, how can you say they have no capacity?”

Prodded on why the palm oil project hasn’t come in handy to cushion Ugandans from the skyrocketing prices, Mr Mutahunga provided no straight answers.

 In 2015, when President Museveni visited Kalangala, he warned “political saboteurs”, whom he accused of trying to frustrate the oil palm project that was intended to wean Uganda off importation of certain products.

“We used to get oil for soap-making from Malaysia. Little did we know that we could grow oil palm here in Uganda. But the bad-hearted are not happy with such development. They want us to import oil palm for soap making,” Mr Museveni said.

The President used his recent State-of-the-Nation address to scoff at the so-called political saboteurs.

Back in 2015, environmentalists moved to oppose the BUL project on account of it taking up a huge chunk of Kalangala’s forest cover. Mr Museveni was, however, having none of it.

“I wanted bullets to kill those bad-hearted people because they do not care about the local people. Oil palm is used to produce soap. Are they suggesting that we all stop bathing?” the President asked.

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A year after Mr Museveni said he was tempted to shoot its saboteurs, the relationship between oil palm farmers in Kalangala and BUL hit rock bottom. In a petition to the United Nations (UN), the farmers—via their umbrella body, Bugala Farmers Association—accused BUL of grabbing their land, human rights violations, and degrading the environment, among others.

The UN was dragged into the standoff because it had partnered with Bidco through the International Fund for Agricultural Development (IFAD). The farmers said they lost their land to BUL when, in partnership with the local government, the Jinja-based company deforested more than 7,500 hectares (18,500 acres) of rainforest and smallholder farms on Bugala Island.

“The Bugala Farmers Association calls on UNDP and its senior leadership to examine the morally-questionable association of such a distinguished UN organisation with such a blatant violator of human rights that is Bidco Africa,” the petition read. “The evidence of Bidco Africa’s poor business practices is well documented, and UNDP must immediately disassociate itself with such a company.”

This was not the first time the Kalangala farmers were ruffling BUL’s feathers. In 2015, a group of farmers filed a lawsuit against Oil Palm Uganda Limited (Opul)—a subsidiary of Bidco—and Mr Amos Ssempa for allegedly snatching their land.

Mr Ssempa, who leased the land to Opul, said he was the owner and that the farmers were squatters.

Later, more than 30 outgrowers pulled out of the palm oil project, citing unbalanced prices and steep interest rates on loans given to them by Bidco and IFAD. The farmers later withdrew the case, but it seems the production of oil palm hasn’t expanded as Mr Museveni seemed to recognise during a recent national address aimed at giving solutions to the inflationary pressures that have occasioned the current cost of living squeeze.

“To use our own raw materials—such as sunflower oil and castor oil for soap as we wait for the expanded palm oil production which takes longer—sunflower takes only four months,” Mr Museveni said.

Change of tune?

Observers were quick to pick on the fact that Mr Museveni didn’t talk about the Kalangala oil palm project but was rather futuristic in explaining how the Agriculture ministry was going to guide farmers on how to up-scale the production of sunflower and castor oil seeds for vegetable oil for soap making, as well as bananas and cassava for flour for bread.

“Sunflower takes just four months and castor oil seeds take between 140 and 180 days to produce pods. With palm oil, I hear Indonesia and Malaysia have banned the export of that item and, therefore, removing the tax will not change anything,” the President noted.

According to BUL, Uganda needs at least 100,000 hectares (247,105 acres) of oil palm plantations for the country to be self-sufficient. Mr Museveni’s vision of expanding the growth of oil palm includes the Bunyoro region, as well as the central districts of Mpigi, Masaka, Kalungu and Kyotera (Sango Bay).

“Uganda is on a mission to promote oil palm. As a country, we import 350,000 metric tonnes of vegetable oils, of which 97 percent is crude palm oil and its derivatives, and we spent about $300m (Shs1.1 trillion) on average. In 2020, we spent $289m (Shs1 trillion), 93 percent of which was palm oil and its derivatives so it is important to save that money by growing the crop here,” Ms Connie Magomu, the national oil palm project manager, said.

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She added: “In 2003, when Uganda signed a memorandum of understanding with Bidco, we were talking about 40,000 acres, of which 23,000 hectares were under nuclear state (specific gazetted locations) and 13,000 under outgrowers’ schemes. So, expansion to Sango Bay is part of the government’s scheme for import substitution.”

Mr Naggenda, however, remains sceptical. He told Saturday Monitor thus: “We have been trying to move everywhere from Nytil to Kapeeka (Liao Shen Industrial Park) to see if we can get any solution, but they can’t produce the quantities of soap or vegetable cooking oil needed.  That’s why the prices will keep on going high because the demand is high yet the product is scarce.”