Six years ago, Elias Simuntu was like many small scale farmers in Uganda– wondering how to earn more income from his farming activities. He grew up in Kamuli, eastern Uganda, with most people undertaking farming to get food. To meet up their other livelihood needs, some farmers sell part of their produce at low prices from traders who manage to go to their rural homes.
After growing different crops on subsistence basis for over 15 years, Simuntu in 2004 decided to farm with the key aim of earning substantial income from his farming.
“I embarked on farming only beans and maize on a bigger scale,” he says. Speaking at his 20 acre maize farm in Kiwungu, Mbulamuti, Kamuli district, Simuntu says farming is the best chance for many ordinary Ugandans to earn income. Apart from this big maize farm by Ugandan standards, Simuntu also grows beans in another 20 acre farm, rotating maize and beans over the different seasons.
“I realized the only way to earn more income from farming is to grow big quantities of commodities like maize and beans which are traded by big buyers, even across borders. I had to invest in planting improved varieties, fertilizers, labour, and give more attention to my farms,” Simuntu says.
And it wasn’t long before he was rewarded for his efforts. For each acre, Simuntu harvests two tons of dry maize, a big feat for a farmer who had never harvested two tons in his earlier farming life.
But the quantities he was producing were still insufficient to attract a good buyer to Kamuli or enable him to make money through transporting his maize and bean produce to Jinja or Kampala (40 and 130 kilometers respectively) where he might get better prices for his produce.
This led him to form the Simuntu Farmers Group, in order to work with fellow farmers in Mbulamuti to produce more quantities and be able to attract a better market for their produce. Even then, competing with big food traders in the towns meant that Simuntu Farmers were always out bid whenever there was a chance of tapping good prices of big time food buyers like the World Food Programme.
Simuntu says that farmers were in 2008 boosted by the direct purchase of WFP from their group. The WFP, which is the leading single food buyer in Uganda and many African countries, through its Purchase for Progress initiative is now purchasing food items direct from small holder farmers.
“The direct purchase by WFP has helped us a lot as farmers, compared to the former system of tendering. You could tender to WFP 10 times and you never get the contract to sell them your food crops,” Simuntu says.
What is Purchase for Progress?
Stanlake Samkange, WFP Country Director in Uganda says Purchase for Progress (P4P) is a new initiative started by WFP in 2008 to increase local purchases in areas where WFP operates.
The P4P is being implemented in Africa (Uganda, Burkina Faso, Democratic Republic of Congo, Ethiopia, Kenya, Liberia, Malawi, Mali, Mozambique, Rwanda, Sierra Leone, Sudan, Tanzania and Zambia); Latin America (Guatemala and Nicaragua) as well as Asia (Afghanistan and Laos)
“WFP spends over a billion US dollars each year purchasing relief food. If that money is well spent locally, it constitutes a significant input in the agriculture sectors of the respective countries. Purchase for Progress is aimed at using WFP’s purchasing power to improve agriculture through increasing access of farmers to markets and improving incomes of small holder farmers. Other than focus on our food purchase and distribution for relief purposes, we want to ensure the food purchases we make bring about development by benefiting smallholder farmers,” Samkange told ARP in an exclusive interview.
Map of countries where WFP’s P4P is being implemented
View Countries implement WFP’s Purchase for Progress in a larger map
David Kakuba, the Coordinator of Simuntu Farmers Group says each season, they supply an average of 1,500 tons of maize to WFP for an average price of 700 Uganda shillings, which is more than twice the best price farmers in Kamuli had ever sold their maize produce.
Samkange says the WFP is currently purchasing maize and beans directly from farmers groups in different parts of the country that produce surplus food.
continues on page 2“It is a real change in emphasis for WFP towards addressing the longer term root causes of hunger. Over 80 percent of WFP’s assistance worldwide is on supporting emergencies. While responding to emergencies is important and saves lives, the real way to address hunger is to focus on addressing the root causes of hunger,” he explains. The P4P initiative is funded by the Bill & Melinda Gates Foundation and the Howard G. Buffett Foundation who have committed US$75 million so far. The Belgian Government has provided funds for the inclusion of the Democratic Republic of Congo, Belgium’s former colony.
Develop Agricultural Markets
Apart from the direct purchases from farmers, Samkange says the Purchase for Progress project in Uganda is giving farmers the know-how and the tools to be competitive players in the agricultural marketplace by funding agriculture market development initiatives aimed at boosting small holder farmer production, helping small holders access quality grain market, thereby enabling farmers to earn more income from their agriculture produce. He says as part of P4P, WFP is also involved in supporting warehouse construction, building of critical roads and other infrastructures that help link farmers to better price markets.
Alex Rwego, the Manger of the Uganda Commodities Exchange (UCE) that runs the warehouses in Uganda says Purchase for Progress is enabling the WFP to benefit local small holder farmers. He says since WFP has been using the tendering process, over 80percent of its purchases have been going to traders, and not necessarily benefiting the people who grow the food- the farmers.
“We signed a memorandum of understanding with WFP that they will buy directly from our warehouses since we can provide the commodity well graded to their standard. We have all these groups of farmers who bring their crops to the warehouses that now benefit directly from WFP purchases,” Rwego says.
Many farmers like Simuntu have in the past failed to sell to WFP because of the high quality standards that the UN Food agency requires. In order to sell maize to WFP, a farmer has to meet the East Africa 1 standard-the highest grain standard in the market. To achieve this, farmers have to deposit their food produce with a warehouse licensed by UCE. The warehouse cleans dries and safely keeps the produce.
“We are importing a lot of cleaning, bagging and drying equipment for farmers to have their crops meet the EA1 standard. Once you meet the standards, you can sell your commodities not just to WFP but to other international buyers. This puts farmers on the level to benefit from international market prices which are higher that most local traders offer,” Samkange says.
He says WFP is also working with the UCE to link farmers to financial institutions. Samkange says one of the advantages of the warehouse receipt system is that once a farmer deposits his or her commodities in the warehouse, she or he gets a receipt, which she or he can take to the bank to get a loan at the value of the deposited commodities.
IS Purchase for Progress a good Project that Farmers can’t tap?
But while the WFP in Uganda has set a target of purchasing food worth 100 Million US dollars a year, they are currently buying food worth 50 Million US dollars because that is the amount of food produce they can get in the Uganda market. Yet of the 21 countries globally undertaking the P4P project, Uganda is the biggest success.
This raises a question on why farmers in Uganda who have been complaining of lacking good prices for their agricultural produce can fail to tap this ready market by WFP. Many farmers interviewed in Kamuli and Kapchorwa where most of the P4P purchases are made admitted that while the WFP’s direct purchase has brought them numerous opportunities, it is difficult for many an average farmer to tap.
Denis Kiplagat, a maize farmer in Chebonet, Kapchorwa, says the quality and quantity standards required by WFP make it hard for most farmers to supply produce to the UN food agency. He says farmers must produce at least 150 tons before they are allowed to deposit food with the warehouses that WFP buys from. more next page (3)
Kiplagat says while farmers have joined into groups to raise the required quantities, it is difficult to ensure all farmers collect their produce carefully to meet the quality standard of WFP. “Many farmers are used to drying their produce on the soil, rocks or sides of the tamarc road. We find that farmers who are not sure they can meet the condition of at least collecting their produce on tapelines for proper storage before it is transported to the warehouse, opt out of the farmers groups,” Kiplagat says.
Farmers are also required to collect their food produce and take it to the group’s temporally store, which is difficult for most farmers with no means or money in villages where poor roads compound the transport problem. Moreover, a farmer must own or hire a maize shelling machine to be able to remove the maize produce from the cobs before transporting the produce to the store.
Long Distances to wares houses where WFP buys from
Simuntu Farmers Group managed to procure a truck which collects maize from the group members, keeps it at their store in Mbulamuti, before taking it in bulk to the Agro Ways Warehouse in Jinja which is licensed by UCE to clean, process and keep farmers’ produce as farmers await to sell to the best buyer. The warehouse is 40 kilometers from Kamuli. According to Rwego, there are only four operational warehouses (in Jinja, Masindi, Mbarara and Kasese), although he says another 10 will be opened up in 2010.
For now, even Kiplagat’s group and other farmers in Kapchorwa are expected to bring their produce more than 100 kilometers to the Agro Ways warehouse in Jinja. Since it is the only warehouse in eastern Uganda and farmers harvest at the same time, farmers are forced to wait for hours or days to get their food produce dried and bagged, before they are given a warehouse receipt. Such a situation is discouraging for farmers who are used to having their food produce bought from their homes.
But more than the waiting is the issue of costs to dry and store the produce. Kakuba says each farmer has to pay 40 shillings per kilogram for drying at the warehouse. It is this payment that many farmers interviewed see as a key challenge in benefiting from Purchase for Progress project. “The fee at the warehouse has to be paid immediately, but many farmers look to only their farm produce for money. To be told to spend more money on your produce before you sell is a challenge to many farmers,” Kakuba says.
After all this process, some farmers say they find that WFP is offering them a price lower than the current market price. “Last season for example (early 2009), traders from Sudan were offering 900 shillings per kilo yet WFP was buying at 740 shillings. Moreover, the traders from Sudan were buying the maize as it is and you don’t need to fulfill all those conditionalities of quality by WFP,” says Rogers Nsubuga of Unity Cereal farmers based in Masaka.
“When you look at the inputs that are required to produce what WFP needs, as compared to the price WFP is giving, sometimes you find a discrepancy that constrains the farmers,” says another farmer Charles Bamwite of Kamuli. Some farmers interviewed said they lack the money to buy improved seeds, fertilizers and the land that would enable them generate substantial food produce.
Nsubuga says that many farmers don’t have big parcels of land required to produce the big amounts that WFP wants farmers to supply. “In our place, small farmers do not own land. They operate on small parcels on land owned by landlords, and since land is limited, it is expensive to buy land from landlords,” Nsubuga says.
Certain contracts, timely pay important to farmers
Also, the fact that WFP does not buy any produce until it is in the warehouse, and no farmer is sure of being selected makes many farmers desist from supplying to WFP. Many of the farmers interviewed expressed need for WFP to give them forward contracts- so that they are sure the food they are growing will be bought by WFP. Right now, WFP gives tenders to farmers who have their food in the warehouse, but these farmers have to bid among themselves (groups) to offer the lowest price for the best quality.
“We pray that WFP can give us contracts on planting so we are more sure as we invest in farming. WFP can pay when they take our produce, but we as farmers want to grow when we are sure,” Kakuba says.
Lydia Wamala, WFP Spokesperson in Uganda says “in the coming few months” WFP will introduce forward contracting for small holder farmer groups as a means to guarantee them a market.
“Farmers will be able to enter into a contract with WFP before, during planting or at post-harvest time. We hope that this approach will encourage farmers to grow more food and also access agricultural credit from financial institutions, with whom we are in discussion with in this regard. Financial institutions in Uganda are getting more interested now than never before, to extend agricultural credit to farmers, on condition that there is a guaranteed market for the product. WFP being one of the largest buyers of grain in this country, provides this confidence,” Wamala says.
WFP payment procedures were also mentioned by many farmers interviewed as another disincentive for farmers to grow more food crops to sell to the UN agency. See more on next page 4
“Because WFP takes long to pay, some farmers are forced to sell at the lowest price since farmers want money immediately. We need WFP to pay us immediately we deliver the maize, not after three weeks or a month as is currently the practice,” says Kiplagat.
“It is discouraging if farmers supplied their produce and they are being told to wait. Many farmers live hand to mouth. Even with the warehouse receipt, you can’t tell a farmer that you have a receipt or an invoice you sent to WFP. Farmers ask us whether they will eat receipt and invoice, or whether they will pay school fees with the warehouse receipt or invoice to WFP. Farmers expect their money immediately you take their crop and this long process of processing and late payment is generating a lot of contention in our farmers,” Kakuba also contends.
The WFP in Uganda says they are working to overcome this challenge. “It is true that farmers deserve to be paid quickly for their products because they have needs they need to address and also need to re-invest their money as quickly as possible. WFP procurement procedures, which are designed to promote transparency and honesty, have caused some delays in the past. However, today, we are able to pay farmers within seven working days of receiving an invoice of the product under sale. Furthermore, there is the option of farmers using the forward contract or the warehouse receipt to get up to 60 to 80 percent of the value of their commodities from certain financial institutions,” Wamala explains.
But Kiplagat says this is not a currently available option for many farmers, since banks are just starting to get interested in offering agriculture loans. “Loans are not got in one or two days. Imagine a farmer has spent his scarce money, energy and other resources to farm, has harvested, invested more in processing and storing, and now they have to undergo a process of applying for a loan?” Kiplagat asks.
Raising small farmers to benefit from agriculture markets
Farmers interviewed believe a lot of infrastructural, input, farming, storing and marketing help is needed in the farming communities before smallholder farmers can fully benefit from improved agriculture markets such as the one being provided by WFP under purchase for progress. Kakuba says for example Simuntu farmers Group have one small truck that transports produced for over 100 members, yet the farmers are spread far apart and warehouse is 40 kilometers away in Jinja.
As a matter of fact, Simuntu farmers group have been advised by WFP to break into more groups because they were failing to deliver on some of the WFP contracts due to the large number of members.
“Since farmers harvest almost at the same time, we fail to beat the time required to deliver for WFP. We also need to be helped with tractors for cultivation so that we mechanize our farming. It will cut down on the costs for farmers and enable us to get a better yield,” Kakuba says. But other farmers say gainful farming will require much more than a mechanization of farming.
“WFP should give farmers the inputs, the pesticides, the fertilizers, the sprays and help with the cleaning so that more farmers are able to benefit from their direct purchase,” says Aida Kityabi, a member of Mbulamuti Cereal group.
“While we would appreciate help of a combined harvester and a planter, we also need a pre cleaner, which would reduce on the cleaning costs in the warehouse. The longer the process the farmer has to go through to produce the require quality, the higher the costs,” reasons Nsubuga.
He says since weather changes have made seasons less predictable, farmers are not assured of a good harvest, even after investing in better seeds, fertilizers and more money in farm labour. “We therefore need irrigation systems. It is currently difficult for an ordinary farmer to do irrigation on their own. Unless you are near a big river, you need to depend on a borehole, which costs about 20 million shillings to erect,” Nsubuga adds.
Vincent Nkono, a farmer in Mbulamuti Sub-County and Vice Chairperson of the Farmer’s Forum that monitors the National Agricultural Advisory Services says apart from helping farmers with inputs, produce stores should be established nearer to farmers, since many farmers are currently losing a lot of produce due to poor post harvest handling that affects both the quality and quantity of produce.
In Kapchorwa district for example, although about 51,000 tons of cereals were produced in 2008, 40% was lost to vermin or got rotten because of poor storage facilities and humid conditions.
WFP Looking Forward to better agriculture markets
WFP’s Samkange says all the challenges and lessons being learnt are helping… see more on next page 5 WFP to improve its new focus on ensuring farmers benefit from direct purchases. “We now see our role as to ensure we have the commodities to supply our beneficiaries but also ensure farmers grow more and produce quality commodities and become more food secure. The more farmers are able to produce and sell their surpluses, the less likely they are going to be hungry and that prevents these food relief operations which are very expensive. In the long run, P4P is a very effective and efficient way of bringing about food and nutrition security, as well as development,” Samkange explains.
African Agricultural Markets Facts (from AGGRA)
- Some 70 to 90 percent of farms in Africa are smallholder operations involving less than two hectares of land and they account for the bulk of staple food production.
- African farmers who sell surplus harvest routinely receive only 10 to 20 percent of the price of their products, with the rest eaten up by various transaction costs and post harvest losses.
- Africa’s regional market for food staples is valued at US $150 billion and demand is expected to double by 2020. African farmers could substantially increase their income simply by meeting this domestic demand.
- According to the 2002 Comprehensive Africa Agriculture Development Program (CAADP), improving rural roads to boost market access for smallholder farmers will require an initial investment of US $62 billion over some 10 to 15 years while operation and maintenance of these assets will require an additional US $37 billion.
Beyond Food Security to Nutrition Security
Samkange says while WFP has been buying from surplus areas in Uganda, the organization is looking at buying a lot of produce from northern Uganda and Karamoja region, the two hunger spots in Uganda, once farmers there stabilize production of crops following the end of disruptive conflicts in these two areas.
“Our emphasis is also on not just producing the quantity, but also good quality food that people consume. For example in western parts of Uganda, we have a huge food surplus, but also high malnutrition rates. We need to ensure people receive micro nutrients in the food they eat,” he says.
To this end, the WFP has entered into a nationwide alliance with the government of Uganda and the Global Alliance for Improved Nutrition to increase the micronutrient food fortification capacity of food commodities in Uganda. “We want to supply food that is well fortified with micronutrients. This will benefit Uganda because it will be able to also export fortified food commodities,” Samkange says.
This means more opportunities for local farmers like Simuntu to produce food that generates a high price, and thus be able to generate better incomes from their farming. That is if these farmers get the required farm inputs, equipments to store, process and fortify, and have the infrastructure and certain contracts that help reduce the many risks of farming.
WFP Purchase for Progress Evaluation report
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More related information
WFP Purchases for progress official site
Friends of the World Food Programme
Purchase for Progress begins in Kenya
WFP’s Purchase for Progress: How Far should it go? Planetd.org
Can Bill gates Help Africa feed itself? TIME
Purchase for Progress: A way out of poverty for the World’s Poor– vita.it
Purchase for Progress Programme for farmers– UN Radio
Warehouse receipt system brings hope to farmers in Uganda
World Food programme annual report 2010
Article By Gerald Businge
This story was produced for the Africa Reporting Project
