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.
