Determinants of import demand for rice in Uganda

Abstract

This study uses a Vector Error Correction Model (VECM) framework to analyze the factors influencing Uganda's import demand for rice. The study focuses on the causal effects of the average price of imported rice, GDP, domestic rice production, real effective exchange rate, domestic consumption of rice, and domestic production of maize on the demand for imported rice in both the short-run and long-run. The findings reveal a significant relationship between GDP and demand for imported rice both in the short and long run and also indicate that the average price of imported rice and domestic rice production have significant long-run effects on import demand for rice. These findings offer valuable insights that can guide policymakers and stakeholders in shaping strategies to reduce reliance on imported rice by promoting domestic rice production. Results shed light on the need to put in place measures to promote domestic rice production by supporting domestic rice producers through providing support to farmers, such as access to improved seeds, subsidies, improved access to credit, fertilizers, and agricultural technologies, as well as training programs to increase productivity and competitiveness of the domestic rice industry.