Agriculture: Who will break the vicious cycle?
Posted Wednesday, February 20 2013 at 00:00
The agriculture is beset by many challenges and contradictions that run in a continuous vicious cycle feeding off each other. But this can be broken with focused interventions.
In a space of a few months, I have come across press reports that reveal the dilemma of the Uganda’s agricultural sector. The Saturday Monitor carried an interview with the chief executive, House of Dawda, the makers of Splash juice, where he decries the firm not producing up to their capacity due to low productivity by the fruit growers.
At the peak of the harvest season late last year, the media carried stories and pictures of women in Teso being stuck with oranges. In between the two stories, there was another one reporting that Uganda will begin exporting pineapple pulp.
At the launch of Daima juice brand by Sameer Agriculture and Livestock, it was reported that the company imports pulp from India, Pakistan and Kenya.
The emerging scenario: farmers stuck with oranges; factories producing below capacity or importing fruit pulp; farmers seeking market for their pulp in Europe.
Now, if this is not a vicious cyle, what else can it be? Where exactly is the problem? One critical factor in agricultural industrialisation is reliability of production, the capacity of the farmers to ensure constant, reliable supply of inputs to the processors.
This is vital for the processors to fully utilise their installed capacity, thus reaping increasing returns to scale, a critical determinant of business viability. Who then shall ensure this and how shall it be done?
Our constant argument here is that the buck stops with the state. The many unrelated, donor-funded programmes, schemes, mechanisms, and interventions have not yielded any fundamental transformation to the sector.
The key flaw that must be revisited is what has been referred to as the projectisation of development: a factor that has not spared the agricultural sector, as cited among the challenges by the Ministry of Agriculture, Animal Industry and Fisheries.
The immediate effect has been the “poaching” of critical skills from the mainstream extension services to the more lucrative, donor-funded projects, which are usually -specific to sub-sectors, with strait-jacket guidelines that often focus more on processes and procedures than the output and outcome.
This is a situation that one district official called a successful operation that leaves the patient dead. According to him, the project design engages human and financial resources more in procedures and meetings than with the actual producers.
The government therefore owes it to us. Take the Agricultural Credit Facility, for example. This is a non-performing asset that only serves to embellish speeches on political rallies and other occasions: “The government has put in place a low-interest facility in the commercial banks...”. This has not worked and will not work. Last year, it only performed at 12 per cent.
That the fund does not finance start-ups makes it any other conventional commercial bank loan. The requirement for banks to co-finance it 50 per cent is another defeatist factor: banks have several, easier, faster, less cumbersome and more earning portfolios than this one.
It therefore does not rank among their priorities. Moreover, save for the two indigenous ones, the banks’ policies and business strategies come from elsewhere, not here.
The government must pool all the disjointed, scattered funds and get Uganda Development Corporation running and investing in key transformative stages of the sector.
In the fruit sector, for example, all that is needed is simple, affordable irrigation to ensure a predictable value chain. The technology exists, the government has the money and the manpower to effect this, but we are in a vicious cycle: Where exactly is the missing link?