For the longest time possible we have heard how Uganda has
the potential to the bee the region’s bread basket.
Our fertile soils – we have almost half of the region’s
arable land, our abundance of water --- a fifth of the country is under water
and our benign climate – three harvest in a year are within the realm of
possibility make this no ideal boast.
A combination of rudimentary farming practices, poor
marketing and bureaucratic inertia has meant that this has remained a pipe
dream and embarrassingly too, has meant that some part of the country suffer
perennial famine.
Enter Agilis Partners who in the space of under decade have
become the largest grain producer a leading grain exporter to the region from
Uganda.
It all started humbly with a wish to feed pigs.
In 2009 working as a volunteer at an orphanage outside
Kampala,in the year before he went to college Benjamin Prinz, co-founder of
Agilis Partners, wondered how the orphanage’s operations could become more
sustainable.
“So we thought we would help them build a pig farm. Instead
of giving them cash we wanted to give them a sustainable source of capital,”
Prinz told the Business Vision.
They bought 150 pigs and quickly found out they consumed a
lot of maize.
“We realized how challenging it was to get a stable price,
good quality and consistent quantities of maize to feed the pigs,” he said.
Then came another discovery.
“In Uganda we found that the maize market is not a commodity market. By definition a commodity is a product that has a definable quality standard and can be liquidated quickly into cash,” Prinz said.
Three different suppliers of maize can have differing
moisture content and qualities as to render them not the same product from a
marketing perspective.
“So clearly the commodity markets were undeveloped and
fragmented. But we also realized Uganda was feeding East Africa and the region
was eating $3b worth of maize alone. The challenge that we were facing as a
small business trying to feed our pigs was a big economic challenge for the
region.”
The light bulb moment led to, in 2013, Benjamin, his brother
Philip and Argentine Eduardo Brown starting Joseph Initiative, a business
intended to better market the maize grain inside and outside Uganda. This
eventually morphed into Agilis Partners, which is the holding company for
Joseph Initiative and Asili Farms.
Agilis Partners head office is located about 200 kms north
of Kampala on the Kampala-Gulu Highway. The spartan office block also serves as
the head office of Asili Farms.
Asili Farms, comprises four farms in western Uganda on which
maize, soya bean and sun flower are grown. On these farms about 13,500 acres
are under cultivation.
“Last year our farms and outgrower farmers produced 25,000
metric tons of maize, soya bean and sunflower,” Finance manager Caroline Aoja
told Business Vision in an interview conducted on a makeshift bench and table.
She said they supply the World Food Program in Uganda,
export to Kenya and, until the border closure earlier this year, to Rwanda.
From one of their two processing units in Kasese, the other is in Masindi, they
export maize flour to Democratic Republic of Congo (DRC).
Owning farms was not part of the original plan. The initial
intention was to be a grain marketing company, organizing grain in places of
plenty and transferring it to places of scarcity.
“We had invested all this capital in storage and handling
infrastructure, built a prominent market network and we find we weren’t able to
get enough supply from the local farmers,” Prinz recalled.
So in 2014 they started a pilot scheme on 20 hectares of
land, which failed spectacularly because the instructions for growing maize
were useless.
“Our third partner helped us access know h ow from Argentina
on how to grow maize on large scale. In our second season he looked at how we
were trying to grow maize and said they were prehistoric but said, “Wow! There
is great potential here,” he said.
Their agronomist Juan Acutain, is Argentine and has helped improve
the farming practices on the farms.
But what Agilis is particularly proud about is how they have
worked with local farmers to not only supply the Joseph Initiative but improve
their won productivity and standard of living.
“We work with at least 15,000 farmers with and average
acreage of one hectare each,” said Martin Jadribo, the company’s, small holder
farmer mobiliser.
The farmers are categorized according to the acreage they
are willing to commit, trained not only in agriculture, but financial literacy
and benefit from seasonal demonstrations on the farms, where new methods or
inputs are introduced to the farmers.
The benefits have been tangible.
“We have seen yields jumping from six to 18 100kg bags an acre with some of the farmers we started with. Not only because they have improved their farming practices but also because they know they have a ready market for their crop,” Jadribo said.
He said that previously there were at least a dozen
middlemen – each taking a cut, between the producer and the end market but now
through their 80 collection sectors – 30 in Mubende and 50 in the
Masindi-Kiryandongo area, farmers are getting a bigger percentage of the market
price.
But beyond that Agili farmers is working with the farmers to
grow them into commercial farmers from what they were previously, subsistence
farmers.
“In our interactions we get them to think about a growth
plan – this year we producing so much we should produce more next year; a
business plan – that does what we are doing make business sense and then an
investment plan – so once we have made this surplus how do we invest it,” said
Jadribo.
About 20 km down the Kigumba-Masindi road Agilis has one of
its two processing centers. They have a storage capacity of 10,000 tons and
during peak season process 250 tons a day.
“Currently the Asili farms provide 70 percent of our input,
with agents and the farmers providing the remaining 30 percent. Ideally we
would like a 50-50 share,” Paul Murungi, the processing facility’s operations
manager told Business Vision.
Murungi explained that at the plant they receive, clean, dry, store and bag. Plans are to expand the processing capacity to a daily 500 metric tons, which will mean a rumping up of production by both the farms and farmers.
Which goes back to the original challenge for Prinz and his
partners, how do we commoditise maize in Uganda?
“The way agriculture is practiced here it is a zero cash
system. The small farmer uses seed from the last season, uses the labour of the
family and they sell what they either eat all they harvest or eat some and sell
some and they do this year after year even if it is not profitable. But they
keeping doing it because they don’t have another source to liquidate or being
paid for their labour,” Prinz explained.
“There is difference between making money an actually
generating an economic return.”
So as a first step agriculture needs to become commercially
viable for more people he explains, and for his farmers helping them improve
their yields, the quality of their produce and providing a market for them.
That’s a start but because agriculture the world over is a
capital intensive endeavour he said, we need more farms of between 150 to 200
acres, a process Joseph Initiative is helping its farmers with.
But obtaining financing for agriculture is notoriously
difficult.
“I agree our financial institutions do not understand the
risks of agriculture, partly because they are so many, “ he said. Price fluctuations,
weather variations
Agilis Partners benefitted from locally sourced credit for
their project from Agriculture Credit Fund, which while he was unwilling to
divulge the extent of, was used to put up the Masindi processing facility, which
could easily have cost a few hundreds of thousands of dollars.
“We were able to do this because remember, we started as a
marketing company, the cash flows from which could justify the loan and we had
market access.”
Prinz said integration – production to marketing was one way
they were managing the risks associated with agriculture.
“We are not just a farming business, we are not just a
trading business and we have a vision to invest in protein as well. Fully
integrating the whole value chain starts to mitigate the risks and makes us a
more bankable project.”
But he warns that equity is key in agriculture.
“The patient capital that comes with equity is key in
agriculture …. We started by getting funds from friends first, our family are not
well to do so that wasn’t an option,” he said.
The enormity of the challenge – feeding regional markets is
not lost on him.
“Africa currently imports about $35b in food annually. That’s shipping jobs abroad. If nothing is done by 2025 we will be importing $115b we will have tripled our food importation bill....
So what would he like to see the government do to support
this dream?
“The first thing I would like to see happening is an
increased attention to food safety,” Prinz said, explaining that it is the
biggest public health issue in sub-Saharan Africa particularly the presence of
aflatoxins, a fungus that has been shown
to cause liver disease and even mental issues like autism in children. “The
flour being produced in this county is poisonous because of it.”
He would also like to see the free flow of animals – chicken
and others across borders.
“This is important so that our clients can expand their
businesses to match the growing demand in Kenya and in the region.”
