28 August 2012

Uganda: Collective Actions Shield Small-Holder Farmers

Like any other small scale farmer in rural areas, Katera Bushya, is struggling to reap from his sweat. Although his 12 acres of rented land had good maize yields he struggled to support his large family and keep the farm running from one harvest to the next. Bills piled up during the growing season.

When the harvest time arrived, Bushya would have to sell his maize immediately to village traders to get money or school fees and food, pay workers and buy the next season's inputs.

And too much maize onto the market pushed the price down temporarily. But farmers could not afford to store the maize and wait for prices to rise.

Even banks cannot extend credit services to the farmers fearing that to loose depositors' money because farmers are view as too risky for loans especially if they do not have security.

United Farmers Stand

However, farmers who have formed special interest groups are making money from their produce. This is because they are trained about the advantages of selling as a group, basics of a pooling system, record keeping, post-harvest handling and quality control management.

The whole process starts at the production time as participating farmers know that they are producing for a specific marketing system. They receive advisory services when and where required.

David Kissa, the executive director Kapchorwa Commercial Farmers' Association (KACOFA), they provide training on planting, weeding, spacing, pest control, harvesting and post-harvest to ensure farmers reduce losses.

He added that farmers are encouraged to operate in groups so that instead of one person bringing a tone to the association; about 10 tones are delivered collectively.

Kapchorwa has a warehouse which benefits more than 150 producer organizations consisting of 20-30 farmers each.

At harvest, groups of smallholder farmers bulk the individual members' crop together and then, either deliver it to the store themselves or the association collects the crop.

At the store the crop is sampled for quality, cleaned, weighed, recorded and stored if accepted. It is then fumigated to keep away insect pests.

When enough quantities have been received, this is normally three to four months after the harvest, management starts looking for the market.

The major market has been the United Nations World Food Programme (WFP) which has handsomely paid the farmers for their crop.

"This approach increases the bargaining power of the farmers as a group," Amelia Kyambadde, the minister of trade, industries and cooperatives, said.

"It also promoted the quality of the crop, as the store management does not accept poor quality maize. We need to protect our farmers from middlemen who have cheated them for a long time."

Effective quality control of the crop takes place at the store when it is delivered. This is because at the farm level majority of the smallholder farmers lack the necessary facilities. Very few have tarpaulins and they may dry the maize on bare ground.

At the store, the maize is sampled and checked for qualities such as moisture content, foreign matter and pest infestation. If the crop does not meet the standard, then it is rejected.

Farmers get a receipt, verifying the quality and quantity of the stored grain, which they can then use to obtain back loans to continue production.

Sory Ouane the WFP Uganda country director said over $600,000 in bank credit has been offered to farmers.

"No big security is required for the farmers to access the loans. All they use are their small pieces of land on which they cultivate," Kissa said.

Warehouse Receipt System

This is what is termed as the "Warehouse Receipt System" which enables warehouse managers to clean, dry, grade, and bag and store grain received from farmers at a fee.

The fee includes staff salaries, handling and storage as well as overall costs for running the system. To meet these costs each farmer is charged a certain amount per kg.

Besides, money is also raised by charging other companies and other grain dealers that use the facility to clean and dry their grains before sale.

The Warehouse Receipt System (WRS) Act was enacted in 2006 with the main objectives of enabling farmers and small-medium scale traders of agricultural commodity to access professional warehousing, structured trading and credit using warehouse receipts.

Under Uganda Commodity Exchange, there are now six licensed public warehouses that are fully operational.

Renovation of stores to standard warehouses

The WFP has constructed and equipped a new 2,000 metric ton capacity of warehouse in Kapchorwa using funding from USAID.

In addition, the agency has also constructed 33 smaller warehouses or satellite collection points in 23 districts all equipped with basic equipment such as moisture metres and weighing scales which helps farmers reduce post-harvest losses.

WFP has spent close to $4m on upgrading warehouses. To promote the use of the warehouse receipt system, farmers were trained on how to use the facility.

The renovation and the training were done by the Uganda commodity exchange, a body responsible for promoting the warehouse receipt system in the country


• the approach has stimulated increased maize production

• members now sell their surplus maize in groups

• their bargaining power has increased and hence they earn more

• The system has also been embraced by farmers from other district who sell their maize through the store.

• Farmers can store their maize for a longer time before sale since majority do not have good on-farm storage facilities.

• a direct linkage to the market was created

• the system has promoted the spirit of working together

• the farmers can now add value and sell maize flour instead of the grain

• there has also been product diversification as the association is now producing animal feeds from the maize bran

• Quality of the crop is assured and hence access to better markets.

Can it be replicated to other crops?

The pooling strategy is applicable to mainly non-perishable crops that can be stored for a reasonably long period. These include grains such as maize, rice, sorghum, finger millet, beans, soya beans and sunflower.

However, for the system to work effectively and efficiently, good leadership is key to the success of group marketing. This means that trust and patience are vital for any producing bulking strategy.

Group marketing is a sure way of empowering smallholder farmers to access better markets and these calls for innovative leadership for the farmer groups to move along the value chain.

Group marketing increases the bargaining power of smallholder farmers and promotes produce quality management.

"These are some of the major ways we can enable our farmers and traders to be competitive in the agricultural commodity market in our region through value addition and structured trading," Kyambadde said.

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