Farmers under cooperatives in Uganda have secured a marketing system that eliminates the middleman, signaling a return to the pre-economic privatization era. This time around, the marketing value chain is boosted by the availability of digital information platforms, which will give instant processing of information on a farmer’s delivery of produce at their store, to the nationwide warehousing receipt system.
This follows an agreement between the Uganda Cooperative Alliance Ltd (UCA) and Staragri, an Indian-based NGO that designed and is operating the “Integrated Agri Market Systems through Cooperatives” platform. The system is designed to address the finance and market access requirements of the farmers, cooperatives, and processors empowering them to come together, store, and benefit from realizing a better price.
Under the system, a farmer will deliver produce at the store and instantly a receipt will be issued, while details of this will be immediately transmitted digitally to banks and insurance companies, while the information will also be accessible to buyers. Ivan Asiimwe, the General Secretary, of Uganda Cooperative Alliance says that in this way, the system will go a long way in resolving the farmer’s challenge of access to finance.
Asiimwe until now, financial institutions have been reluctant to deal with farmers because of the risks involved, and this has ensured slow or no progress in the sector.
He says that the new system also takes away the risk aspect because the banks will be assured that there is collateral since the receipt given by the store can be cashed at the partner banks.
State Minister for Cooperatives, Frederick Ngobi Gume welcomed the system especially for the reason that it is capable of dealing with the exploitation of farmers by produce buyers, as well as accessibility of finances which is considered a major challenge.
However, the Minister is concerned that the Memorandum of Understanding has not provided for the terms and conditions under which the financial institutions will provide financing to the cooperators under the system. He says if, for example, the interest rates remain the same as those on the open market, there will be little benefit to the farmers.
This, according to him, calls for more efforts to realize the return of the Cooperative Bank.
He also urged the cooperative movement to mind the standard of products especially as the system is helping to trade across borders. Giving the example of the grain products that are stuck at the border with South Sudan, Gume said there is a need to ensure the agricultural markets are guarded by maintaining a high quality of the products.
The Grain Council of Uganda, which is the main formal buyer, processor, and exporter of grain, said this system helps answer the challenge of lack of formalization of especially in the export sector.
The Council Chairman Robert Mwanje, who is also Managing Director of Tonga Investments, lack of formalization has many effects including countries getting Ugandan products cheaply, and rebranding them as their own.
He also says the informal way of doing business is responsible for the challenges Uganda’s products meet at borders with other countries, as with the South Sudan saga. Mwanje hopes that if the Integrated Agri Market Systems through Cooperatives are going to help boost formalization, the farmer will be the main beneficiary.
Staragri, the developers and operators of the system say Uganda is the third country to get it after Kenya where it was launched recently, and in India where it has been in existence for about 20 years.
Staragri Business Head Africa, Jaya Prakash, says the system has helped transform the farmer community in the country and the whole agriculture value chain, including farmers, input and equipment suppliers, financiers, processors, and traders.,
Prakash says the main important aspect is the coming together of farmers and being able to interact instantly with other stakeholders, which enables them to get value for their sweat.
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