Floriculture, Uganda’s third leading export, has largely been affected by the Covid-19 pandemic and lockdown. Ms Esther Nekambi, the executive director of Uganda Flower Exporter Association (UFEA), in an interview with Prosper Magazine speaks on how to sustain the industry during this pandemic. Below are the excerpts:-
How has the Covid-19 pandemic affected the flower exports/horticulture industry?
During the first three weeks of the pandemic, farms had 70 to 100 per cent cancelled orders. This has reduced to between 20 and 30 per cent.
During the first weeks of the pandemic, deliveries were impossible. There was zero income, while fixed costs remained. Many crucial decisions and expansion plans were put on hold.
What plans does the flower industry have to live through and beyond the Covid-19 pandemic?
The way of doing business will change permanently. Building resilience is critical for the future. We have to find different ways to engage with our customers, for example, accelerating digital sales.
The sector has refocused its efforts on recovery, resilience and results-oriented interventions. We are adapting business processes by restructuring operations. We are also optimising cash management and identifying efficiency gains while ensuring production and export chains continue operating sustainably. Our activities are being re-oriented for business continuity.
What measures are required to revive the flower industry beyond Covid-19?
In order to improve access to credit and funding for firms, the government should direct the Bank of Uganda (BoU) and commercial banks to process Agriculture Credit Facility (ACF) loans within two weeks to support working capital.
About 50 per cent of the ACF non-performing loans (0.8 per cent) equivalent to Shs1.4 billion should be availed to commercial banks to encourage ACF uptake.
The government, through the Auditor General, should conduct a post audit of the transactions since banks are well-regulated. We also want money to invest in cold chains, silos and production.
Government should allocate a post-Covid-19 marketing budget of $0.5m (Shs1.8b) for the export crops to regain market share. This fund should be channeled through the Uganda Export Promotion Board.
Due to the perishability of goods, the floriculture industry is required to keep plants alive. Our industry is unique to others as it cannot shut down raw materials towards the production process. Therefore, we request for a special fund preferably of $25m (Shs92.5b) through the Uganda Development Bank (UDB) to help our farms access working capital. This will help the industry maintain market share and growth.
Besides the pandemic, what other challenges is the flower industry facing?
Difficulty in accessing land, high taxes, high energy costs, and high cost of inputs are have limited Uganda from attracting new investors into the industry. Because of this, the industry has not expanded and recorded new investors in about 10 years.
As UEFA, how are you cushioning your members from the above challenges?
We link with business support organisations for joint lobby and advocacy. We also build bridges, and rapidly deploy solutions. A case in point is setting up emergency safety measures for business continuity; writing position papers for relief to Umeme, National Social Security Fund and Uganda Revenue Authority.
We also do coordinate collective actions by the sector players for resilience, scale, and efficiency all done in line with digital space appreciation and inclusiveness.
Do your members still experience interceptions while exporting to the EU?
The World Trade Organisation (WTO) requires that all countries should take necessary precautions to avoid the introduction of harmful organisms (pests and diseases) to their trading partners.
On January 1, 2018, Uganda received a communication from the European Union notifying the government of interceptions of our consignments which were traced with a pest called ‘False Codling Moth’ (FCM). This was found in consignments of peppers, rose flowers and Soursop (Kitafeli) originating from Uganda to EU member states. According to the regulation, this pest is not allowed into the EU as of January 1, 2018.
As the floriculture industry together with the Department of Crop Inspection and Certification of the Ministry of Agriculture, Animal Industry and Fisheries, we have been undertaking actions to address this non-compliance challenges to reduce interception and sustain market access for Ugandan produce.
What measures have you put in place to stop this?
We think that the effectiveness of reducing interception measures will be improved through public/private sector cooperation in ensuring compliance with Sanitary and Phytosanitary (SPS) a World Trade Organisation (WTO) agreement on how governments can apply food safety and animal and plant health measures in a collaborative effort.
We have undertaken several measures to see that our members comply with these standard requirements and these include: strengthening the self-regulation systems within the farm; continuous monitoring and evaluation of the production processes.
The other measure that we’ve undertaken are the procurement of greenhouse/shade nets to close off the greenhouses; strengthening traceability and surveillance system for floriculture products.
Explain in details the relevance of the Public Private Partnerships (PPPs) that you want to enter into with the government?
To achieve the Public Private Partnerships (PPP), the government should put a structure in place. One area we think the PPPs should work is establishing a facility that fumigates goods for the export new fresh perishable centre at Entebbe under this arrangement (PPP). To achieve this, a total of $15m (Shs55.5bn) should be allotted.
The other area where we think the PPP arrangement can work is during the inspection of agriculture goods for exports. We want the private laboratories to undertake inspection, while the government, through the agriculture ministry, concentrates on regulating private inspectors.
Looking at the area of inspection, the country has only 11 personnel. This number is not enough to take on this role effectively. We believe if the budget for training of inspectors is allocated this challenge will be sorted.
Access to trade finance is paramount to bridge the trade finance gap – already significant before the pandemic and could increase.