Firm-level and public-sector costs make small-scale maize flour fortification challenging in Uganda

Abstract

BACKGROUND: Maize flour in Uganda is milled by hundreds of enterprises, mostly small- (5-20 metric tons [MT]/day) and micro-scale (<5 MT/day) mills or firms. A mandatory maize flour fortification program exists for medium-scale mills (>20 MT/day) and policymakers are considering including smaller-scale millers.

OBJECTIVE: We estimated the private and public costs of maize flour fortification at different scales and explored their implications for extending the mandatory fortification to include smaller-scale mills.

METHODS: We used secondary data on the structure of the maize flour market and primary data on milling and fortification costs to estimate mill and regulatory costs at 3 scales of flour production: micro, small, and medium.

RESULTS: For micro-, small-, and medium-size operations, respectively, operational costs of fortification were US$13, US$9, and US$7 per metric ton (MT) of maize flour, which represented 20%, 16%, and 16% of annual operating costs, and the ratio of fortification equipment cost to mill equipment costs was higher for micro-scale mills (2.7) than for small- (0.38) and medium-scale (0.54) maize mills. Governmental regulatory costs rise if smaller-scale mills are included due to the increased number of facility inspections.

CONCLUSIONS: Fortification and regulatory costs increase as production scale decreases. Up-front capital costs of fortification would be daunting for micro- and small-scale mills. Medium-scale mills, which supply social protection programs, might be able to manage fortification costs and other challenges. Decision-makers should consider all costs and cost burdens, and the realities of enforcement capabilities before expanding fortification programs to include smaller-scale operations.