Food challenges provide a great investment opportunity world over

Wednesday March 15 2017

Traders selling Irish potatoes in a roadside

Traders selling Irish potatoes in a roadside market in Kampala. Dealing in any form of food business can be a good decision to take, especially in times of shortage because food becomes expensive, and therefore dealers cash in. 

By James Abola

Food will Food will dominate the economic story of 2017 and so many years to come.
In business, problems or challenges provide opportunities for investors. Uganda has a significant food challenge arising from the rain failure of 2016 which in turn decimated crops and livestock in several places.
The rain failure also affected other countries in the region with the worst affected being South Sudan which is currently experiencing famine due to the toxic combination of civil war and drought.

Refugee situation
I visited Koboko District last week and saw several transit camps as well as buses ferrying South Sudanese refugees to camps in West Nile and Acholi.
An officer working for a UN agency told me that judging from the growing influx of refugees from South Sudan to Uganda it is clear that whatever is happening in South Sudan is far worse than previously thought or imagined.
What is happening to the people of South Sudan is very sad but given their refugee status they will be dependent on food aid at least for a couple of months if not years to come. The food need is huge whether for the local or regional market and that provides opportunities spanning the whole food value chain.
There are opportunities in food production including availing arable land, provision of inputs, provision of farming advisory services and financing of agricultural production.
After the misfortune of the 2016 drought, I am pretty sure the uptake of irrigation equipment is going to increase significantly.
The drought and subsequent livestock and crop failures also increased the need for financing because many farmers do not have savings to finance their own production costs.

Fund access
Traditional financiers shy away from funding farmers because of high perceived risks such as inability to service debt when affected by weather and climate, small funding amount which increase the cost of administration and lack of formalisation of most farming businesses.
The most widespread agricultural financing option available to farmers is provided by microfinance organisations and village loan schemes.
However, the common requirement of weekly savings or repayment as well as the relative high interest rates make the microfinance and village loan scheme financing very unsuitable for farming businesses.
There is opportunity in agricultural financing for the investor who can come up with innovative products that meet the needs of farmers but also addresses the risks outlined above.

New in field
New entrants into the farming business will seriously need the service of agricultural extension workers to advise them on a wide range of needs including how to go about farming as a business instead of a hobby; how to identify or acquire good quality seeds, seedlings and fertilisers; managing firm processes such as planting, weeding and harvesting and post-harvest handling.
It is one thing to produce food items but making it available on the market is another matter altogether. But that opens up further opportunities for interested investors. There will be increased needs for logistics to transport and store food items.
People with existing storage and transport facilities stand a better chance because they do not have to spend on acquiring new assets for that purpose.
There is need for value addition to our farm products and that therefore calls for processing facilities and market access interventions.

Need for training
Both new and old farmers need to be training in agricultural methods and business skills so that their enterprises become more profitable and sustainable.
From the side of government, it is high time political expedience is put aside so that proper agricultural advisory and research services are re-established in the country.
The country needs to take very serious note of the spread of crop and livestock diseases such as cassava mosaic, banana wilt, swine fever and bird flu which expose the lack of quality control in acquisition or distribution of production inputs.

Food security
While the emphasis has been on the commercial aspect of agriculture, many households need support to improve their food security.
Simple measures such as having a vegetable patch, a few stems of cassava and returning to food like millet which can be stored for a long period are required to bring about improved food security across the country side.

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