Wednesday April 16 2014

An idea that started with three farmers now benefits 8,000

 Kalamagi in the outlet where they sell some

Kalamagi in the outlet where they sell some of their products. Photo by Fred Muzaale 

By Fred Muzaale

Many farmers in Uganda still get little from their work as they are still stuck in the cycle of selling their produce in raw form. In many instances, farmers are forced to sell off their produce, even when prices are low, because they are perishable. Most of them lack storage facilities that can extend the produce’s shelf life.

To overcome this challenge, in 2011, a group of three farmers in Lugala, Rubaga Division, Kampala, led by Kalim Kalamagi came up with an idea to come together and add value to their produce.

For the start, they sold the idea to other farmers in Rubaga division and began sensitising them on the benefits of working together.

Within a short period of seven months, many farmers and traders accepted to work together. When they got to about 800 who were willing to pool resources, they formed the Rural United Small Business Association Network (Rusba).
The association was later registered as a public company. To raise money, each person paid a membership fee of Shs60,000. This money was the initial capital.

To start the association, they rented a house in Lugala, where they put their headquarters and based all their activities. Member farmers of the association come from different parts of the country.

Kalamagi, who is Rusba’s executive director, says that the main objective of forming the association was to save farmers, who were being cheated by middlemen.

The middlemen were buying their produce at very low prices and then selling it at a higher price by simply packaging or drying it.

Getting the idea
“By adding value to the produce, the middlemen were selling at very high prices and getting a lot of profits,” he says. For instance, a farmer was selling a pumpkin at Shs500 to middlemen but when that farmer dries the pumpkin and sells to the association, he or she is paid Shs 8,000 for each kilogramme.

Three raw pumpkins make one kilogramme of dried pumpkin, he adds. So, by simply drying the pumpkin, a farmer gets Shs 6,500 more.
Kalamagi recalls from where he got the idea of involving the association in processing agricultural produce. In 2009, when he paid a visit to his friend in US and later went to Europe, he realised that processed organic foods are in demand.
To kick-start their business, they used Shs150m out of their start-up capital of Shs480m to buy milling machines for maize, soyabean and dried foods. They also bought packaging material.

But because they lacked expertise in mixing foods, they hired the nutritionist at Shs1.5m to assist as well as teach them to mix the different ingredients to formulate nutritious food products. They paid him Shs1.5m.
The rest was used to pay rent for the premises and also buy produce from member farmers.

We also bought two simple solar driers made from polythene bags, iron sheets, wire mesh and timber at Shs500,000. We use these in drying fruits such as pawpaws, pineapples, bananas, pumpkins, carrots and Irish potatoes.
Under the arrangement, the members process their produce from their respective farms and then sell to Rusba. They may also sell their produce in raw form.

“But even when they sell in raw form, they get better prices than when they sell to middlemen,” Kalamagi says adding that for the start, some members agreed to supply the produce and get paid later.

“We also got two workers who did the work of cutting and drying pawpaw, pumpkin and pineapples at our premises,” he says.
To package our products, we went to manufacturers of packaging boxes, who made for us branded boxes with our Badang trade name. Under this, we made porridge from Irish potatoes, banana, soya bean, maize flour and pawpaw.

We made all these products by mixing in different ratios and products, maize flour, pawpaw powder, banana powder, soya bean powder, pumpkin powder, Irish powder and mushroom powder.

But the beginning was not easy. Almost 70 per cent of the first products, we produced got spoilt because we had used very poor packaging boxes that were soft. They easily got torn, which caused to the products to spill or get contaminated with water or dust.
Because of this setback, they temporarily halted production until they could get standard packaging boxes.

Meeting the demand
“But because we were determined, we did not relent. So we decided to look for a manufacturer who would make for us high standard packaging boxes until we got what we wanted and resumed business,” Kalamagi explains.
Currently, they produce one tonne of each product every month, though he notes that this is still small given the high demand of the products on both the domestic and export markets. Nigeria, Kenya, Zimbabwe and South Sudan are some of the countries they export to.

“We have got agents in those countries where we export our products. They sell our products and then pay us through Western Union or bank the money directly on our account,” Kalamagi says. “The agents get a commission on whatever product they sell although sometimes they also buy from us and sell,”.

For delivery to the export markets, Kalamagi says they use cargo planes to transport their products although he mentions the high costs as a challenge. A case in point, he cites, is that to transport two tonnes of their products to Nigeria, they pay up to Shs 3m.

On the local market, they sell to supermarkets and wholesalers who pay them either cash on delivery or take on credit and pay later.

“Uganda National Bureau of Standards has certified our products, which has helped us sell them wherever we get the market,” he says.

In the two years, we have been in the market, the demand for products has been growing and the members have started getting the benefits of adding value to their produce.

“Farmers who supply the produce get paid twice every month. We pay them through the bank by deposing their payments on their respective accounts,” he explains.

Rusba has also started a savings cooperatives, which is called Rusba Sacco from which members get loans for their businesses.

For now, the profits which the association makes are banked on that Sacco account from where members can borrow it and use it to expand their businesses or make other investments they want.
“Members also use it to buy produce from farmers,” Kalamagi adds.

Benefits
The loans which are given to members have an interest rate of five per cent per annum. But in their future plans as the association continues to grow, they will begin sharing the dividends.

One of Rusba’s members, Salima Nakitende, a resident of Nampunge village in Wakiso District, who sells dried pumpkins and pawpaw, confirms that by adding value to her produce her income has doubled.

“I was making crafts for sale as well as doing farming before I joined the association. I used to sell raw pumpkins to middlemen who were paying me little money. But now I earn about Shs400,000 every month from selling dry pumpkin and pawpaw to the association,” she says.

Nakitende says she has now abandoned crafts-making to concentrate on farming and drying her fruits. “I have so far used the money I borrow from the Sacco to build a house and also buy a dairy cow,” she says.
In addition, Rusba offers full and part-time employment to 160 people in marketing, production, sales as well as other managerial functions.

MEMBERSHIP AND PRODUCTION

When we got 800 members, we didn’t rest. We moved out of Kampala district to other districts, where we mobilized farmers to join the association. We used radios and also held meetings at sub-county level during which we told the farmers the benefits of working together until the number shot to 8,000 members. We have members in Kyegegwa, Kayunga, Masaka, Kalungu, Masindi, Mukono, Buikwe, and Bushenyi, Hoima, Luweero, Nakasongola, Wakiso, Mpigi, Kabaale, Rukungiri , Mpigi and many others.

Like in wakiso district we have 957 members in Masaka district we have 650 members, Masindi 756 members and Kabale 234 members.

Our production capacity per month is 10,000 kilogrames as we produce 3,000kg of pumpkin flour, 2,000kg of Irish potato flour, 2,000kg of matooke flour and 2,000kg of soya bean flour and 1,000 kg of pawpaw flour. In a month we export between 80,000 kgs of all our products. We also supply our products to supermarkets in Kampala, Jinja, Masaka, and Fort portal, Masindi, Mbarara and others. However, we have a shop at our headquarters, where our products are sold to buyers.
But during periods when there is short supply of raw materials, our production capacity goes down like currently we are facing a supply shortage of soya bean. So we have to go to Tanzania, where we buy it at a higher price of Shs 2,000. In Uganda, a kilogramme of soybean is between Shs 900- 1,200.

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