Project description / objective
NU-TEC aims to increase the income and climate-resilience of poor men and women in northern Uganda by:
- stimulating sustainable, pro-poor growth in selected agricultural markets
- improving the position of poor men and women within these market systems to make them more inclusive for poor people.
The ultimate goal is to increase incomes and resilience of smallholder households by attracting pro-poor, climate-smart private sector investments into Northern Uganda.
Market system focus
Commodity markets (sunflower, soya beans and sesame)
Poor quality soybeans and sunflowers results in low yields which in turn leads to low profits for farmers and limited supply of oilseed grains to large processors. This leads to high costs of processing and uncompetitive, locally-produced vegetable oil products.
NU-TEC MD supports initiatives to increase firm-level productivity, capacity utilisation and product competitiveness.
Agricultural inputs (seeds and fertiliser)
The lack of access by farmers to quality and high-yielding seed varieties (that are adapted to the changing climate) affects their yields at smallholder level - and results in low marketable volumes. Most of the smallholders also have limited access to fertiliser.
NU-TEC MD strategies to resolve these constraints include:
- building last mile channels for distribution
- building local capacity for quality input production
Storage and post- harvest handling
Upwards of 35 per cent of produce in Northern Uganda is lost during, or after, harvest. This can be attributed to the under-supply and low access to affordable commercial on-farm storage technologies.
Public subsidy has constrained the commercialisation of existing technology. This results in a lack of demand to drive supply/incentivise suppliers to distribute existing technologies.
NU-TEC MD is working with private sector technology suppliers to drive up demand.
There are large tracts of land for cultivation in Northern Uganda. However the mechanisation market suffers from an acute information gap at all levels. This impedes investment in mechanisation.
There are major problems around equipment deployment, profitability of operations and operation and maintenance services for farm implements.
NU-TEC MD works with actors to improve deployment efficiency of available equipment and improve mechanisation profitability. This results in an increase in size of farms and timeliness of farming operations in the North.
Village Agent model (applied widely for agricultural inputs and oilseed commodities)
There are two aspects to this intervention built around the Village Agent (VA) model.
- Improving the viability of the Village Agent
This intervention aims to increase profitability of the Village Agent (VA) by developing a suite of services that an agent provides to farmers and to offtake and agricultural input firms. The VA model addresses systemic constraints affecting productivity at farm level through provision of inputs and 'general agricultural practices'. The VA then doubles up to aggregate farm products for offtake firms, undertakes basic quality control and ensures economic volumes are aggregated. This intervention works on the hypothesis that the VAs will become sustainable business entities only when they achieve a certain level of operation and hence expand/replicate their operations across other value chains. The basic assumption is that both smallholder farmers and offtake firms will be able to utilise the service provided by the VA. This VA model is focused on the oilseed and grain sectors.
- Improving competitiveness of oilseed millers
The VAs work closely with the oilseed millers to increase grain supply volumes, improve quality of grains supplied to millers, and help the millers to penetrate rural markets as distribution channels for the finished products.
Market Development for Refugee and Host Communities (M4R)
This is a pilot project that aims to demonstrate that the MSD approach can work in refugee and host community environments. The intervention aims to provide answers to the following hypotheses:
- enterprising refugee and host households will invest in commercially productive activities
- the private sector will invest in refugee and host community areas if there is a good business case/feasible opportunity
- refugees and hosts can produce surplus to attract private sector off-takers
The intervention is focused on:
- leveraging seed producers and agro-dealers to invest in agricultural input supplies to host community and refugee farmers
- agro-dealers building local distribution networks
- offtakers establishing linkages for buying surplus produce from the refugee and host communities
The intervention aims to help boost productivity of refugee and host community farmers and strengthen links to offtake firms to drive demand for improved seeds and other inputs.
Re-governing the seed market in Northern Uganda
The seed market in Northern Uganda is characterised by the following:
- seed companies with no effective distribution channels in the North
- a high incidence of seed contamination/adulteration
- costly hybrid seeds that in most instances are not adapted to the local environment
- intermittent seed supply that is seasonally mismatched, leading to many farmers lacking seeds during critical seasons
- Rice seed and soya beans seed production
This intervention aims to prove that Northern Uganda can produce locally adapted, high yielding varieties of rice and soya beans to meet the ever-increasing demand. It uses the local seed businesses model by building the commercial capacity of businesses to produce and market rice and soya bean seeds among smallholder farmers within a 25 km radius.
- Access to hybrid sunflower seeds
In Uganda, access to hybrid sunflower planting material is heavily controlled by large oilseed millers. This control leads to shortages for smallholder farmers during critical planting periods. NU-TEC MD is implementing an intervention that has opened new channels for small seed distributors to access international supplies of high oil yielding sunflower seed varieties. This helps such distributors build innovative last mile distribution systems to reach smallholder farmers with hybrid seed - so breaking the dominance of large millers.
Creating fertiliser demand
Total consumption of fertiliser in Northern Uganda stands at below 3,000 tonnes annually. The growth of commercial farming in Northern Uganda had led to an increasing need for fertiliser among farmers. However, fertiliser distributors/companies have been reluctant to establish a permanent presence in Northern Uganda.
This intervention aims to promote crop-specific inorganic fertiliser usage in Northern Uganda through demand creation and sales promotion.
Northern Uganda has the lowest per capita use of inorganic fertilisers at 0.7 kg/ha. The low utilisation is caused by weak distribution networks of importers/distributors and limited access to information on fertiliser use. This intervention uses a combo of risk-sharing and an incentive scheme to drive demand and distribution of crop-specific fertiliser.
Rice productivity enhancement
This intervention has two parts to it:
- commercialising production of a high-yielding, fast-maturing, drought-tolerant variety of rice seed
- facilitating a market-led paddy production system that provides access for farmers to a ready market
Rice Seed Production
Rice, being an open pollinated crop, does not attract private sector seed producers. Hence smallholder farmers end up recycling saved seeds over time, leading to low productivity. This intervention focuses on improving access for smallholder farmers to 'quality declared seeds' of high-yielding rice varieties. By demonstrating the potential market and profitability of a new high-yielding rice variety, NU-TEC MD has been able to attract commercial farmers to invest in high yielding rice variety seed production for sale to smallholder farmers through a market-led distribution model.
Paddy production and marketing
Namche 5 rice varieties are high-yielding thus offering sufficient marketable volumes for sales. To bridge the current paddy supply gap in Uganda, NU-TEC MD partnered with large rice millers and over 12 large and medium scale farms to produce paddy using a nuclear farm model. The farms produce paddy, and also act as aggregation centres for smallholder farmers around such farms. The large and medium farms continue to produce and sell high yielding seed varieties to farmers with a promise/commitment to aggregate the paddy produced by the small farmers. The rice millers use facilities within the large and medium farms to ensure better post-harvest handling and quality control.
Private provision of on-farm storage technologies
This intervention uses a 4P marketing strategy to increase adoption of the hermetic bag among households in Northern Uganda. The intervention works with private sector storage bag distributors to establish non-traditional channels for increasing access to the bags. It also uses a demonstration and test approach among households to cause behaviour change.
This intervention pushes for a market-driven channel in which farmers adopt and pay for on-farm storage technology that has been traditionally heavily subsidised by NGOs and Government.
Enhancing sustainable access to mechanisation
Improving the deployment of tractors
This intervention aims to improve the economic viability of farm mechanisation, especially among smallholder farmers. It promotes a service provision model in which smallholder farmers can access a suite of mechanised services from private sector service providers.
Most tractor owners and service providers only deploy tractors for ploughing during the peak ploughing season. The demand for services is also at a peak during these seasons. The result is that smallholder farmers are normally neglected as there are not enough tractors to go round.
- has developed a tractor-deployment calendar that ensures that a service provider can deploy the equipment throughout the year, including undertaking dry ploughing
- is coupled with promotions among smallholder farmers to adopt dry ploughing
- has developed an economic analysis of mechanisation services to highlight the most efficient and profitable combination of services that service providers can deliver to farmers throughout the year.
By adopting this suite of services, the service providers can increase their profitability by 42 per cent, and reduce the payback period for the equipment to 22 months.
Notable results (systemic change, poverty impact)
- NU-TEC MD is working with over 30 private sector firms through nine interventions and has reached 20,198 farmers including 7,436 women. These numbers are expected to increase as interventions get replicated/scaled in Year 4.
- The programme has demonstrated that the MSD approach can be applied to refugee environments as long as a clear business case exists for private sector investments. Working with over nine private sector firms doing business with refugees and host communities with minimal grant support has been a major milestone.
See the BEAM webinar Making markets work for refugees
- The programme has proved that Northern Uganda can commercially produce soya beans competitively and achieve yields comparable to Malawi and South Africa. This information is currently being used by commercial farms to re-engage in soya bean production.
- The programme has attracted additional private sector investment into Northern Uganda of about £2.7 million over the last year, with additional planned investments of £8.2 million in 2018. These investments are in an area that is recovering from a long period of conflict. The sales revenues of businesses supported by Palladium's project interventions have increased by 133 per cent to £2.3 million. This is far above the milestone target of £1.7 by end of Year 3.
- The Village Agent intervention is showing systemic change through crowding-in and adaptation by other players. We started with two firms piloting the model and now over six firms are engaged in implementing variants of the model without further investments from NU-TEC MD. Oil millers involved in the intervention have reported a 35 per cent increase in grain supplies from farmers over a period of two seasons. Overall 44 per cent of our interventions are showing reasonable indicators of systemic change.
(above results up to end March 2018)
Lessons learnt so far
- Attracting and working with large private sector entities may not yield the level of results that are envisaged in M4P programmes.
- There is a time lag between investments and an increase in sales/profits. Most M4P programmes theorise that the impact on sales is instantaneous.
- Identifying and applying the correct funding instruments is as important as identifying the right intervention. There are many instances where the right intervention fails because the programme has utilised the wrong instrument for channelling support to the firm
- Market systems, when applied intelligently, can work in refugee settings. One simply has to identify markets in which humanitarian agencies are not involved.
[uploaded March 2019]