News | Africa - Reuters.com

Aid agencies around the world may be braced for disaster over soaring food costs, but Ugandan President Yoweri Museveni said on Tuesday his country was glad of the crisis and would benefit as a producer.

Speaking at a Commonwealth heads of government conference on reform of international institutions such as the International Monetary Fund in London, Museveni said the east African country's main problem was selling its food to global markets.

"We are very happy with the food problem," he said. "Why? Because we produce enough food but our problem has been marketing. We produce 10 million metric tonnes of bananas but a lot of it rots."

Many developing countries, especially net importers in Africa, have been hit by the surge in basic commodity prices in recent months, with staples such as wheat and rice rising by as much as 50 percent.

The world's poorest continent has been unable to feed itself for decades, leaving many of the poorest dependent on food aid. But in recent years several countries also including Zambia have managed to boost output, some using money freed up from debt repayments after receiving relief from Western and international creditors.

But even in some of these, the poorest were struggling to feed themselves even before prices began to soar. In others, however, higher food prices are likely to provide a much-needed cash injection to impoverished rural communities.

Earlier in the year, Sri Lanka's central bank chief told Reuters he expected rising food prices to help reduce poverty among some of the island's poorer farmers.

MILK TO INDIA

Musaveni said Uganda had benefited across a range of agricultural products. Until recently, he said Uganda had been having to pour away surplus milk but was now shipping it to a processor in India.

He said he hoped the crisis would prompt wider trade reform. African farmers complain tariffs and Western subsidies have long hit their ability to compete fairly, blocking growth.

"I think out of all these hiccups we may get a more rationalised interaction in terms of the use of our resources, through trade, by removing trade barriers, by removing subsidies," he said.

Uganda has been hailed as a shining example of stability in Africa with steady growth expected to reach 8.9 percent in 2007/2008 from 6.5 percent the previous year.

It is sometimes described alongside Ghana, Zambia and Tanzania as part of a new generation of African "frontier markets" that are seeing rising fund inflows from both Western and emerging Asian investors.

But analysts say African economies are also particularly at risk from soaring inflation from rising oil and food prices, with the rocketing cost of living increase in suffering and stoking tensions, protests and strikes from Morocco to Guinea, Kenya and South Africa.