This study assesses the potential impact of rising world food prices on the welfare of Ugandan households. While Uganda experienced sharply higher food prices in 2008, as a landlocked, food‐exporting country the causes of those price changes were mainly regional and indirect rather than directly transmitted from global markets. Using trade volumes, food prices, and household survey data we describe how Uganda, unlike some other countries, is partially shielded from direct impacts of global food price movements. Although the majority of Ugandans are net food buyers, the adverse impact at household‐level of rising global prices is moderated by the relatively large quantity and range of staples consumed that come from home production. Moreover, several of these are not widely traded. Some population groups in Uganda are vulnerable to rising food prices, however, primarily those for whom maize is an important staple, including those dependent upon humanitarian relief and the urban poor. Only a relatively small group of Ugandan households will benefit directly and immediately from rising food prices—the significant net sellers of food crops constituting between 12% and 27% of the population. In this assessment we do not estimate the level and extent of wider second round effects from these higher prices.

Notice1 Effective January 2007, the Discussion Paper series within each division and the Director General's Office of IFPRI were merged into one IFPRI-wide Discussion Paper series. The new series begins with number 00689, reflecting the prior publication of 688 discussion papers within the dispersed series. The earlier series are available on IFPRI's website at www.ifpri.org/pubs/otherpubs.htm#dp. 2 IFPRI Discussion Papers contain preliminary material and research results. They have not been subject to formal external reviews managed by IFPRI's Publications Review Committee but have been reviewed by at least one internal and/or external reviewer. They are circulated in order to stimulate discussion and critical comment.

Over the last twenty years, Uganda has experienced sustained economic growth, increasing urbanization and a sizeable transformation of economic output from agriculture to services. However, this shift in the sources of wealth in the economy has not been accompanied by a shift in employment out of agriculture to the other sectors. This reflects an inability of the more modern sectors of the economy to provide adequate employment for the many Ugandans entering the workforce every year. The relative underperformance of agriculture largely explains why very high income inequalities still persist between rural and urban areas. The government of Uganda recognizes these disparities and has consistently prioritized agricultural and rural development in all of its master development plans. It has also provided significant resources for road construction to better link rural Ugandans to urban market centers. However, the ability of government to effectively implement programs to attain its priorities for agriculture and rural development remains quite limited. Without close attention to putting in place effective public service delivery, the additional revenue from the newly discovered oil is unlikely to lead to the progress desired in rural areas by government.

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