Business News By Leo Odera Omolo
EFFORTS to transform Uganda’s agricultural sector from subsistence into commercial production have been boosted with the signing of an agreement that seeks to stimulate millet production.
The deal was signed last week between the United States Agency for International Development (USAID) through its Livelihoods and Enterprises for Agricultural Development (LEAD) project, the World Food Programme (WFP), Equity Bank and the Kenya-based UNGA Holdings.
Jeffrey Gray, an agri-business consultant, John Tushabomwe, the Equity Bank credit manager (Oasis Mall branch) and Paul Forrest, the LEAD agri-business unit director, discussing after signing the memorandum of understanding last week
It aims at increasing millet production to satisfy local and foreign demand. Under the deal, about 2,000 metric tonnes are expected to be produced and exported to Kenya next year, reaching 6,000 tonnes annually by 2013.
According to the agreement, LEAD will search for the grain market, give grants and technical knowledge to smallholder farmer groups. WFP will provide modern warehouse facilities for the produce, UNGA, East Africa’s oldest grain miller, will buy the millet. Equity Bank will give farmers loans under the Warehouse Receipt System arrangement.
“One of the most challenging problems facing commercial agriculture progress has always been the lack of ready markets. However, this process will be fully-financed and the market is guaranteed.
“When farmers are sure of the market, they will be induced into millet farming since they will not be worried about where to sell or the price of the crop,” said the Livelihoods and Enterprises for Agricultural Development boss, Susan Corning, during the signing of the deal.
Farmers in Teso, Acholi and Lango regions are targeted. Communities in the regions grow the crop, climatic conditions are favourable and the areas’ soil texture supports the healthy growth of millet. The population there faced over 20 years of insurgency, thus the need for recovery through commercial farming.
Nick Hutchison, the UNGA managing director, said much as the company had agreed to provide a guaranteed minimum price of sh585 per kilogramme, it would adjust and pay according to the prevailing market prices, in case they rise above the minimum price.
Apollo Njoroge, the Equity Bank executive director, said the bank would finance up to 60% of the grain value in the warehouse.
“Similar deals aimed at uplifting farmers through the warehouse receipt system funding have done wonders for Kenya. We are optimistic that Ugandan millet farmers will benefit in the same way,” Njoroge said.
The warehouse receipt system allows farmers to deposit their produce with certified warehouses and wait for attractive prices. The system also helps avoid vagaries of weather. The produce is valued by managers and farmers are given receipts worth their grain value.
The receipts can even be used as collateral security in case farmers need loans before the produce is sold off.
The system helps farmers enjoy large economies of scale while selling because the pooled produce boosts their bargaining power.
WFP has begun installing cleaning and drying equipment for nine public warehouses in Uganda to help improve the country’s market infrastructure for small-holder farmer groups.
The equipment installation project is valued at a total
of $2.4m (about sh5b).
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