The EU-deforestation-free regulation presents an opportunity to soya bean sector

By Julius Peter Ochen

The European Union (EU) has taken a bold step in addressing pressing issues of deforestation and forest degradation with the enactment of the new Deforestation Regulation (EUDR) which will start to take effect on 30th December 2024. This comprehensive regulation targets key commodities such as soyabean, coffee, cocoa, palm oil, beef, and rubber all recognized as key drivers of deforestation.

Article 30 of the EUDR outlines a collaborative effort between the EU Member States and Producer Countries to tackle deforestation and forest degradation through coordinated partnerships and mechanisms. The EU seeks to collaborate with major consuming countries to encourage them to adopt measures that minimize their contribution to deforestation, thus creating a level playing field for global trade.

Back home, the Uganda coffee industry is already facing significant disruption, with some exporters halting purchases from Ugandan farmers due to the government's failure to take registration of farmers for traceability, a requirement under the EUDR regulation as the dateline closes.

After China, the EU is the biggest soyabean global market, importing more than 18 million tons of soya grain and 25 million tons of soymeal annually. 44.43% of which comes from Brazil, 40.81% from Argentina, 4.53% from Paraguay and none from Africa.

In the face of EUDR, The Brazilian Confederation of Agriculture and Livestock (CNA) warns that the new EU regulation aimed at deforestation could impact more than 30% of Brazilian exports to the European Union. In recent years, Brazil has been under attack from world environmentalists due to their significant encroachment on Amazon forest to expand their land production areas for soyabean, corn, sugarcane and coffee.  Soyabean is the biggest export earner for Brazil ($65B), Corn ($28.4B), Sugarcane ($21.4B) and coffee taking distant 4th place at $9.6B

The same EUDR compliance concerns are even more worrying in Argentina and Paraguay, potentially opening new market opportunities for African countries, Uganda inclusive if we can develop, enforce and demonstrate a robust framework for land use, generally climate-smart agricultural practices. Already, the Ministry of Agriculture has secured UGX 1.2 trillion loan from the World Bank for the implementation of a 6 years Uganda Climate Smart Agriculture Transformation Project (UCSATP) to which soyabean is a prime beneficiary. In addition to the 10-year UGX 600B loan from the International Fund for Agricultural Development (IFAD) and OPEC Fund for International Development (OFID) for the National Oil Seed Project (NOSP) already under implementation.

Uganda is the 6th biggest soyabean producer in Africa, with 2023 production estimated at 200,000MT, after Ghana (215,000MT), Benin (295,000MT), Zambia (475,000MT), Nigeria (1.180MMT) and South Africa (2.755MMT). Of Uganda’s estimated 200,000MT, about half is consumed locally and half is exported to the regional markets of Kenya, Rwanda and South Sudan. The demand for Uganda soybean in Europe is already standing at more than 2 million Metric tons, but even if exporters commit to certifying EURD, they cannot deliver a mere 20% of the demand due to limited production.

Currently, 70% of Ugandan soyabean is produced in northern Uganda with districts of Oyam, Kole, Lira, Omoro, Nwoya, Gulu, Pader and Adjumani delivering the lion shares. The region’s annual production is 65% in the first season (April-July) and just 35% in the second season (Aug- Dec) as they embark on other crops like sesame, cotton and sunflowers. This therefore means that no exporter can commit to a full-year delivery contract due to irregular production.

With full government support and intentional investment, Western Buganda districts of Mubende, Mpigi, Kasanda, Mityana, Kiboga, Kyankwazi, all Bunyoro districts of Masindi, Kiryadongo, Hoima, Kibale, Kagadi, Kakumiro and areas of Kamwenge, Kyenjojo and greater Kasese have higher potential for soyabean production, especially in the second season when northern Uganda is producing other crops.

Soyabean being a 4 month crop and nitrogen fixtures can be productively crop rotated with maize in the first season for northern Uganda, and the second season for Buganda and Bunyoro sub-regions to enhance food and nutrition security, but also to ensure year-round production meeting market demands.

With the rationalization of government agencies, strategic and structured government support to the private sector led the Secretariat of Soyabean to undertake pursuit of public policy advocacy to impact local and national decisions in favor of soybean as a sub-sector, market development to increase the usage of soybeans and soybean products, research and demonstration to improve soybean varieties and farm production practices and communications to keep stakeholders interconnected and informed about the latest developments in the industry, Uganda can increased soyabean production to more than 2,000,000MT, local consumption to 300,000MT and import earning to more than $944M annually.

 

The author is the Executive Secretary at Soyabean Development Agency Uganda.