Wednesday, August 28, 2013


It should be straight forward. To increase rural incomes increase the productivity of their farms so they can build surpluses that can be sold to the market.

But the devil they say is in the detail. Increasing farm yields would have to involve improving farm practices – fertilizer use, irrigation and lower post-harvest losses and on am more macro level rejig land tenure systems, resuscitate cooperatives and avail financial products tailored to the sector.

OK so the farmer improves his yields. We know the market is there -- you will be shocked how much the residents of Kampala alone consume. Thankfully too Kampala’s consumers don’t have such high standards for what they consume.

So we have increased yields and there is a market the question is how do you connect one to the other.

It goes beyond just loading trucks at source and unloading them at the market. There are issues of post–harvest processing, storage, packaging, quality assurance and to name but a few.

So while we may lament our farmers’ poor productivity there are serious deficiencies in the value chain before we can even begin agro-manufacturing on a sustainable scale.

For the time being a lot of our manufacturers are doing these intermediate processes themselves, but is an inefficient way of doing things. Their speciality is not buying, transporters and storage. Unfortunately there are few companies that can intercede between the farmer and have the confidence of the manufacturers.

Enter Savannah Commodities. The company tucked away on an acre of land in industrial area does the bulking, processing and storage of coffee for export, but also does the same for maize, barley and sorghum more for use by local industry.

The decade-old company, the brainchild of Hannington Karuhanga, is now looking to triple its processing capacity with a new multi-million dollar facility they are developing in Mukono, where they shall shift all their grain processing leaving the coffee facility in industrial area.

“It is the only logical thing to do. We need to move up the value chain not only to capture more of the value for ourselves, but it’s the only way we will improve rural incomes in a sustainable manner,” Karuhanga said recently.

As it is now through processing his own coffee contracts and hiring his plant to others, the industrial area plant is the biggest single processor of coffee in this country.

His eleven years of experience in exporting coffee and now processing of grain for the local market give Karuhanga a real appreciation of what it will take to build up this part of the value chain.

“This is a real capital intensive business. We have painstakingly built up capacity on our plot here but we have gone as far as we can and need to move out and hence the Mukono development,” said Hannington, who cut his teeth in the coffee business with a local affiliate of Swiss coffee trading giant, Sucafina.

“In moving to the next level we cannot get away from it there is an urgent need for development financing in this market, for money that has longer tenure periods than the ones we have on the market,” he said.

Savannah was recently at the center of a financing snag at Uganda Development Bank (UDB). An $11m facility that was to be used to finance the Mukono expansion was halted erroneously in his view, but thankfully he was able to get alternative financing.

Barring any accidents, “The plant will be up and running in January,” he said.

The point is, he is quick to emphasise, that in order to transform the country we need to empower our local entreprenuers to build capacity to play at a higher level, otherwise he argues exploiting our agricultural potential will remain a pipe dream.

Savannah is one of our more developed proccessors, but there are numerous other agroprocessors struggling against incredible odds to survive.

Supporting this sector through improved transport and energy infrastructure and flexible financing would be just as strategic an intervention as any the government is currently pursuing.

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