Getting hold of agribusiness opportunities

Tuesday April 30 2013



By Nicholas Kalungi

The ability of a robust agriculture sector to drive growth and enhance development continues to be a matter of lengthy debate. Whereas the government has for years failed to put serious attention to agriculture, its not so difficult for the sector to attain better standards, which include acting as a food security buffer, creating sustainable development and promoting international trade among others.

However, even with a well documented potential for agriculture, the government is reluctant to invest in the sector, which leave a number of questions among different stakeholders. Because less funding is provided by the government, the private sector seems to be channeling ways through which it can explore multiple opportunities particularly in the area of agri-business in order to uplift the sector.

Over the years, experts have urged the government to commit more resources to the agricultural sector in order to guarantee a transition from subsistence to modern agriculture. On the contrary though, the budget allocations for the past decade have been laughable for a sector that has the potential to bring about desired development.

For instance, in the 2012/13 budget, the sector was allocated 7 per cent of the Shs11 trillion resource envelope. This was from the 2011/12 allocation of 5 per cent. Far still even though there was an improvement the allocation still falls short of the Maputo Declaration which requires a 10 per cent allocation of the national budget to be made to agriculture. However, even if less is allocated to the sector, there are strategies that could remedy the growth of agriculture in Uganda.

Recently while addressing investors, President Museveni said the government was putting plans in place to construct solar-powered irrigation pumps in low land areas as one of the means to reduce the high cost of agriculture production.

The move, according the President, is a deliberate plan that seeks to uplift the sector and the economy in general. If implemented, the project will go a long way in developing agriculture. However, even if such projects are established, it remains a concern that a number of projects that have been launched to improve agriculture collapse without much addition to the sector.


Failed projects
Projects including Naads, Plan for Modernisation of Agriculture, Bonabagagawale and the Valley Dams have been disbanded or declared ineffective without much addition to the sector. Recently Mr Tress Bucyanayandi, the minister of Agriculture told Prosper that the government was aware of the opportunities and had committed enough resources to uplift agriculture.

“Each year, we make some progress in developing agriculture using available resources. We have worked on a lot of things including farmers’ education, providing improved seeds and animal breeds. Others which include, uplifting storage facilities, research and funding valley dams for dairy farmers among others have also been worked on.

However, Mr Francis Tendo, a farmer in Sembabule, recently told Prosper that the main hindrance to agriculture prosperity is limited funding, an issue which he says the government is reluctant to address.
He said: “The issue is that farmers don’t have sufficient funds. We have land but cannot put it to proper use because we lack capital. The government must assist us.”

Meanwhile Dr Lawrence Bategeka, a senior research fellow at Makerere University, believes that before the issue of funding is addressed, there is an urgent need for the government and the private sector to agree on a clearly mapped out strategic plan. “Yes funding needs to be increased but before that, we need to understand what we are funding. There is need for more thinking with the private sector taking on a watchdog role,” he says.

The fast growing demand for the country’s food crops and dairy products both within Uganda and beyond signal a great future for the agriculture sector.
Uganda’s location in the heart of East Africa leaves it as the immediate provider of both food crops and dairy products to emerging markets such western Kenya, South Sudan, and Eastern Congo among others, not forgetting the bigger western markets.

For example, data from the ministry of Agriculture indicate that earnings from the Dairy sector in 2012 shot up to Shs30 billion, more than Shs21 billion from Shs8.8 billion collected in 2011. A big chunk of the proceeds was generated from neighboring markets. Additionally, Ugandan farmers continue to export tonnes of raw maize and flour, rice, sugar, beans, tomatoes and potatoes among others to the regional markets.

The significant opportunities that exist in the agri-business sector are with no doubt an opportunity that the private sector needs to tap into. However, this comes with its own challenges. For instance, the private sector can invest in farming but can not construct roads to transport the produce. Additionally, the absence of an agriculture insurance scheme to protect farmers from natural hazards continues to be one of the sector’s biggest challenge.

The Insurance Regulatory Authority is currently working with other stakeholders to develop an agriculture insurance scheme with a hope of kicking off this year. Uganda is an agro-based economy with agriculture employing about 80 per cent of the country’s population. However, over 70 per cent of the above are subsistence farmers who basically rely on rudimentary methods of farming.

In chapter 4 of the recently launched vision 2040, agriculture is highlighted as one of those sectors that the government plans to transform from being subsistence to a commercial and export oriented sector.
But if the government is serious about this as one of the means of combating poverty, ensuring food security and attaining a middle class economy by 2040, it is only imperative that top rate planning and investment be given to the sector in order to unlock economic growth.