A recent policy brief, Are Farmers’ Incomes in Uganda Adequate to Contribute to Social Insurance Schemes?, authored by Brian Sserunjogi, Joab Wamani, Hilda Namuleme, and Swaibu Mbowa, reveals that while Uganda’s agricultural sector generated UGX 5.5 trillion in 2019/2020 from crops and livestock, the average household income of farmers remains too low and inconsistent to sustain regular social insurance contributions.
“Banana farmers retained the highest income, followed by coffee, maize, and sugarcane farmers,” the report published recently by the Economic Policy Research Centre (EPRC) states. However, the average annual household income stood at only UGX 782,914, a figure that fluctuates heavily depending on the season and the scale of agricultural operations.
Income Disparities Among Farmers
The brief highlights that larger-scale farmers operating on more than three acres of land or owning multiple livestock tend to retain higher and more stable incomes compared to smaller farmers with less land. Similarly, farmers between the ages of 31-64 years earn significantly more than younger farmers aged 18-30 or older farmers above 64 years. Male farmers also out-earned their female counterparts by more than double, reflecting gender disparities in cash crop production.
Implications for Social Insurance Design
Given the irregularity and seasonality of agricultural incomes, the authors argue that any social insurance scheme for farmers should be flexible. Contributions could be based on biannual income during peak harvest seasons rather than monthly. “This evidence has implications on the design of contributory social insurance schemes for farmers, given the differences in income size, timing, and composition,” the brief notes.
The report further suggests targeting high-income agricultural value chains, such as bananas, coffee, and sugarcane, for the initial rollout of social insurance. Farmers in these sectors often earn more and are organized into cooperatives, making it easier to implement contributory schemes.
Policy Lessons from Other Countries
The policy brief draws comparisons from countries like Brazil, Costa Rica, and the Philippines, where self-employed agricultural workers contribute to social insurance at flexible rates. In these countries, contributions are adjusted based on income, and workers can pay in advance during peak earning seasons.
The report suggests that Uganda could adopt a similar approach by offering subsidized contributions to farmers in the early stages, ensuring affordability and encouraging enrolment.
Conclusion
The study concludes that while Uganda’s agricultural sector generates substantial aggregate income, individual household earnings remain too low and inconsistent for traditional monthly social insurance schemes. A tailored approach that includes biannual contributions, sector-specific targeting, and government subsidies could help bridge the gap and make social insurance a viable option for Ugandan farmers.
By focusing on high-income value chains and offering flexible contribution options, Uganda can move toward expanding social insurance coverage to its agricultural sector, improving financial security for farmers while accounting for the sector’s inherent income variability.