Regoverning Markets Small-scale producers in modern agrifood markets Innovative Practice Uganda The case of the Nyabyumba United Farmers Group in Kabale district Lucy Aliguma, Damalie Magala and Stephen Lwasa Uganda Agricultural Economics Association www.regoverningmarkets.org Uganda Connecting small-scale producers to markets: The case of the Nyabyumba United Farmers Group in Kabale district, Uganda Lucy Aliguma Damalie Magala Stephen Lwasa Uganda Agricultural Economics Association (UAEA) 2007 Regoverning Markets Regoverning Markets is a multi-partner collaborative research programme analysing the growing concentration in the processing and retail sectors of national and regional agrifood systems and its impacts on rural livelihoods and communities in middle- and low-income countries. The aim of the programme is to provide strategic advice and guidance to the public sector, agrifood chain actors, civil society organizations and development agencies on approaches that can anticipate and manage the impacts of the dynamic changes in local and regional markets. Innovative Practice series Innovative Practice is a series of country case studies from the Regoverning Markets programme providing examples of specific innovation in connecting small-scale producers with dynamic markets at local or regional level. Based on significant fieldwork activities, the studies focus on four drivers of innovation: public policy principles, private business models, collective action strategies by small- scale farmers, and intervention strategies and methods of development agencies. The studies highlight policy lessons and working methods to guide public and private actors. The case studies were coordinated by: Julio Berdegué, RIMISP - Latin American Centre for Rural Development, Chile (contact: [email protected]) Lucian Peppelenbos, Royal Tropical Institute (KIT), Netherlands (contact [email protected]) Estelle Biénabe, Centre de Coopération Internationale en Recherche Agronomique pour le Développement (CIRAD), France (contact: [email protected]) Other publication series from the Regoverning Markets programme Agrifood sector studies These studies look at specific agrifood sectors within a country or region. Research studies have been carried out in China, India, Indonesia, Mexico, South Africa, Turkey, Poland and Zambia covering the horticulture, dairy and meat sectors. The sector studies describe the observed market restructuring along the chains, and the determinants of that restructuring. Agrifood empirical studies These empirical studies follow up on the agrifood sector studies, exploring impacts of agrifood restructuring on farmers. Using quantitative survey techniques, they explore the impacts on marketing choices of farmers, and implications for rural development. Innovative policy These are short studies addressing a specific policy innovation in the public or private sector that improves the conditions for small-scale producers to access dynamic markets at national, regional and global level. Country studies These provide a summary of market changes taking place at national level within key high- value agrifood commodity chains. Further information and publications from the Regoverning Markets programme are available at: www.regoverningmarkets.org. The authors Lucy Aliguma Damalie Magala Stephen Lwasa Uganda Agricultural Economics Association (UAEA) Acknowledgments The Uganda Agricultural Economics Association (UAEA) is grateful to the Regoverning Markets Programme and Tegemeo Institute of Agriculture Policy and Development, Egerton University, Kenya for the financial and technical support extended to them to undertake this case study. Sincere gratitude is extended to the management and members of Nyabyumba United Farmers Group, officials from Kachekwano Zonal Agricultural Research and Development Institute (ZARDI) and selected traders and processors for their valuable time and for providing the necessary data for compiling this report. Funding for this work was provided by: UK Department for International Development (DFID) International Development Research Centre (IDRC), Ottawa, Canada ICCO, Netherlands Cordaid, Netherlands Canadian International Development Agency (CIDA) US Agency for International Development (USAID). The views expressed in this paper are not necessarily those of the funding agencies. Citation: Aliguma, L., D Magala and S Lwasa 2007, Uganda: Connecting small-scale producers to markets: The case of the Nyabyumba United Farmers Group in Kabale district, Regoverning Markets Innovative Practice series, IIED, London. Permissions: The material in this report may be reproduced for non-commercial purposes provided full credit is given to the authors and the Regoverning Markets programme. Published by: Sustainable Markets Group International Institute for Environment and Development (IIED) 3 Endsleigh Street London WC1H 0DD www.iied.org Tel: +44(0)20 7388 2117, email: [email protected] Cover design: smith+bell Table of Contents 1 Executive Summary____________________________________________________1 2 Background___________________________________________________________3 2.1 The agricultural sector ________________________________________________3 2.2 Justification of the study ______________________________________________4 2.3 Objectives of the study ________________________________________________4 2.4 Organisation of the report _____________________________________________4 3 Literature review ______________________________________________________5 3.1 The status of marketing systems in Uganda ______________________________5 3.2 Importance of trade and recent reforms __________________________________7 3.3 Potato production in Uganda __________________________________________8 3.3.1 Potato production in Kabale district__________________________________9 3.3.2 Seed potato production in Uganda__________________________________10 3.3.3 Potato processing_________________________________________________11 3.3.4 Potato marketing _________________________________________________12 3.3.5 Opportunities and constraints in the potato sector ____________________13 4 Methodology ________________________________________________________16 4.1 Study area and description____________________________________________16 4.2 Data collection methods______________________________________________16 5 Results ______________________________________________________________17 5.1 The innovation ______________________________________________________17 5.2 The supply chain and its segments _____________________________________20 5.2.1 Farmers _________________________________________________________21 5.2.2 Village traders / assemblers ________________________________________21 5.2.3 Brokers / wholesalers _____________________________________________21 5.2.4 Traveling traders _________________________________________________22 5.2.5 Retailers_________________________________________________________22 5.3 The macro and meso context __________________________________________22 5.3.1 The macro economic environment __________________________________22 5.3.2 Policies impacting on the agricultural sector _________________________23 5.3.3 Institutional and political environment ______________________________25 5.3.4 Consumer characteristics and trends ________________________________27 5.3.5 Structure, composition and degree of evolution of agrifood systems_____27 5.4 The history of the innovation against the evolution of the supply chain ____29 5.5 Explaining inclusion or exclusion ______________________________________31 5.5.1 Organizational, technological and financial changes implemented by the farmers ______________________________________________________________31 5.5.2 Critical skills and competencies that allowed the farmers to implement these changes_________________________________________________________33 5.5.3 Public and private organisations collaborating with the group__________34 5.6 Forms of costs / benefits of inclusion ___________________________________35 5.6.1 Cost and benefit analysis for delivering potatoes to Nandos____________36 5.6.2 Constraints faced by the group _____________________________________37 5.7 The potential for up-scaling / replication _______________________________38 6 Discussion___________________________________________________________41 7 Conclusions and recommendations_____________________________________43 7.1 Conclusions_________________________________________________________43 7.2 Recommendations ___________________________________________________44 8 References___________________________________________________________45 9 Appendix____________________________________________________________47 1 Executive Summary Marketing agricultural commodities continues to be a salient issue particularly for small-scale producers due to rapid changes that are taking place in agrifood markets in middle and low-income countries. Yet public policy makers and development partners lack evidence upon which to support policy dialogue and intervention. The Regoverning Markets programme was set up to provide support for market research with an overall objective of providing strategic advice and guidance to the public sector, agrifood chain actors, civil society organizations and development agencies on approaches that can anticipate and manage the impacts of the dynamic changes in the local and regional markets. Due to its success with connecting small producers to better markets, the programme selected