Improving business competitiveness through smallholder farmers in East Africa

August 8, 2014

Improving business competitiveness through smallholder farmers in East Africa

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In 1999 Jane Nazziwa moved from the capital city of Uganda, Kampala, to a small island 40 kms away, located amid the papyrus channels of Lake Victoria, and accessible only by boat. Jane went there to look after her brother’s seven young children who were AIDS orphans. Her brother had been a farmer on Bussi Island, growing crops on seven acres of land.

Arriving on Bussi, Jane knew nothing about farming and spent the first couple of years learning on the job. Then, thanks to a programme run by Jali Organic Development Company, a company processing organic pineapples for export, Jane learnt that by cooperating with other farmers, she could use economies of scale and the power of bulk selling, to increase her income.

Jali Organic Development Company (Jali) is run by businessman, Ephraim Muanga. Knowing that Uganda’s pineapples were renowned for their sweetness, he committed to buying pineapples from Bussi Island smallholders. The only problem was getting the pineapples to the market. Taking them by canoe to the mainland was a time consuming process and, because he was buying in bulk, not practical.

Getting farmers to the market
Muanga connected with NOGAMU (National Organic Agricultural Movement of Uganda), an umbrella organisation of farmers, processors, exporters and others, with over a million smallholders in its network. NOGAMU’s main objective is to link growers with buyers. In doing this, it offers research and extension services, helps farmers to get appropriate export certification and advocates for an enabling environment for farmers. NOGAMU also promotes organic agriculture, a sector currently worth about US$44 million annually to Uganda and still growing.

NOGAMU helped the local farmers on Bussi to convert their farms to organic cultivation and then assisted them to get export certification suitable for Japan, the USA and Europe. Meanwhile NOGAMU introduced Jali to buyers from Japan who wanted to import dried pineapple slices for domestic use. Realising that dried pineapple slices were much lighter and easier to ship Muanga built a small processing plant where pineapples are peeled, sliced, dried and packed ready to export.

Chariton Namuwoza is NOGAMU’s project manager. He explained that the organisation is helping farmers to be competitive by using economies of scale. There are currently seven small dried fruit businesses, incorporating 5,000 smallholders, (60% of them female) which NOGAMU has organised into common bulking arrangements. “Farmers that are organised,” he said, “have the benefit of attracting a serious buyer. If farmers are guaranteed a market with a fair price it is very easy to bring farmers and the market together.”

NOGAMU applies for TRAC funding
The certification process, however, is expensive and so NOGAMU applied to the TradeMark East Africa Challenge Fund (TRAC) which was set up to promote innovative ideas to improve trade and to advocate for policy change to create a better farming environment. NOGAMU was one of four successful recipients of the first TRAC grants, which are issued in five instalments only after specific milestones have been reached. The benefits to the farmers are already apparent.

Jane is one of Jali’s best suppliers and now employs five people to work on her farm. Since converting to organic farming and selling her produce to Jali, her life has changed for the better. She has rebuilt her brother’s old mud brick house with cement, and has added rooms and a new roof. She is also able to educate those children still at school, including her own.

Replacing coffee with avocados

While Jane was learning how to be a farmer on Bussi Island, 1,000 kms to the south, near Moshi in northern Tanzania, Japhet Kileo of Samaki Maini village, father of three children and carer for five others, was growing coffee on his smallholding. But with disease in his crops and a depressed coffee price, Japhet found it tough. Eventually he realised that his coffee crop was worthless and he stopped growing it, leaving him with an empty 1.5 acre plot.

Then Japhet heard about Africado, a company cultivating avocados for export. He attended a talk given by James Parsons, a local farmer and CEO of Africado, where he learnt about the benefits of growing avocado trees: they are relatively easy to grow, produce an annual crop (with careful cultivation, sometimes two crops per year), attract few pests, last about 25 years and being trees, are good for the environment.

Parsons promised to show the farmers how to plant their trees and through his field officers he would follow up on the growing process. He also committed to buying the avocados from the smallholders, which he would wash, dry, sort and pack for onward transport to the markets. Japhet was convinced of the benefits and in 2010 he bought 100 avocado tree seedlings from Africado at a subsidised price and planted them in his shamba (smallholding).

Like NOGAMU, Africado is a recipient of TRAC funding, some of which contributed to the cost of the avocado packhouse where the fruit is processed for export.

Parsons is also committed to getting all 1,950 smallholders currently in the scheme (he is aiming for 3,000 eventually), certified under Global Gap, an organisation that sets voluntary standards for the certification of agricultural products around the globe. It’s a laborious, time consuming and expensive process but until farmers are certified they will not be able to export their produce.

Profits ploughed back

Japhet sold his first crop of 199 kgs of avocados to Africado in 2013. This year he expects the crop to be bigger, maybe up to 300 kgs, if the weather is favourable. With the income he has bought more seedlings (he now has 165 trees, though the majority of farmers have less than 60) and paid for his children to attend school.

According to Duncan Page, Africado’s Development Manager, the company plans to eventually outsource 2,000 tonnes of avocados per year. “Under the worst scenario,” he explained, “we will get 1,000 tonnes per year. That alone will bring about $300,000 into the community.”

Allan Ngugi of TradeMark East Africa noted that the benefits from both Jali and Africado trickle down to the farmers who grow the fruit. “The businesses cannot be profitable unless the fruit is edible on arrival at the market,” he said. “The impact is not just financial but the projects have a social impact in the communities in which they are implemented. The quality of the fruit improves and there are many lessons learned going in to the second phase of the TRAC Fund grant projects.”

Japhet Kileo is a happy man. “My life has improved,” he said. “I am earning money which pays for the children’s school costs and I have a better diet because avocados are nutritious. I don’t need pesticides and I use natural manure as fertilizer. Coffee is expensive to grow,” he concluded. “Avocados are much cheaper.”

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