Farmers to reap big from Hoima, Buliisa oil projects

Ugandan farmers could reap billions of shillings from selling produce to Tilenga and Kingfisher oil project camps once the development of the country’s oil resources kicks off, a report from the Petroleum Authority of Uganda (PAU) has indicated.

Preparation of the oil fields for production is being undertaken under two separate projects, the Tilenga project in Buliisa and Nwoya districts, and the Kingfisher project in Kikuube and Hoima districts.

The oil is estimated to last between 25 and 30 years, with an estimated daily output of between 190,000 and 200,000 barrels of oil once production starts.

The PAU report about opportunities that await small and medium enterprises (SMEs) in the country states that the estimated demand of agricultural produce for both projects is in thousands of tonnes.

The report states that beans, cassava, maize flour and rice were among the items most demanded to feed about 8,000 workers expected to reside in the camps.

For example, Tilenga project where an estimated 5,000 workers will camp, shall need 320 sacks of potatoes, 3,840 pineapples, 1,024 bunches of matooke, 3,840 watermelons, 128 sacks of rice/ maize flour, 640 bunches of bananas, 6,400kgs of tomatoes, and 2,560kgs of mangoes every month.

An additional 6,400 bundles of spinach, 6,400kgs of onions, 3,200kgs of carrots, and 1,280 heads of lettuce 1,280 kgs of spring onions, 3,200kgs of aubergine, 1,280kg of avocado, 1,280kgs of green pepper, 3,840 heads of cabbages, 128 sacks of beans, 320kg of ginger, and 64 sacks of peas will be required.

Also, some 320kgs of garlic, 3,200kg of cassava, 1,280 heads of broccoli and 960kgs of cucumber, among others, will also be required.

According to the report, Kingfisher project workers will need 200 potato sacks, 2,400 pineapples, 640 bunches of matoke, 2,400 watermelons, 80 sacks rice/maize flour, 400 bunches of banana, 4,000kg of tomatoes, and1,600 kg mangoes, among others, every month.

An additional 2,000kgs of aubergine, 800kgs of avocado, 800kgs of green pepper, 2,400 heads of cabbage, 600kgs of cucumber, 80 sacks of beans, 200kgs of ginger, 40 sack peas/millet, 200 kgs of garlic, and 2,000kgs of cassava, among others, will be required.

These, according to PAU, include bacon, sausages, beef products such as fillet, rump and steak, chicken products, lamb, fish, other seafood, rabbit, turkey and goat meat, among others.

Are farmers ready?
If the figures projected by the Uganda Bureau of Statistics (UBOS) are considered, actors in the agricultural sector will need to do a lot more to meet the huge demand for food at the oil camps.

For example, the country needs to produce an additional 2.23 per cent besides the current monthly maize production to feed the project population while rice would have to increase by 3.87 per cent over the current monthly production.

UBOS states that 1.4 million metric tonnes of sweet potatoes, four million tonnes of cassava, 704,913 tonnes of beans, 6.2 million tonnes of matooke and 199,000 tonnes of sweet bananas are produced in the country per month.

The 2018 Agricultural survey by UBOS indicated that Uganda produces an estimated 3.3million metric tonnes of maize, 192,329 of rice, 140,573 of millet and 314,655 of irish potatoes a month.

The statistics body indicated a fall in beef production from 214,033 metric tonnes in 2016 to 211,358 in 2018. However, the report recorded a slight increase in goat and mutton production from 39,987 metric tonnes to 39,990 metric tonnes.

It is estimated that 1.5 million tonnes or more of building materials, mainly steel products will be needed to construct the refinery and crude oil pipeline as well as other production and transport facilities for oil.

Once these facilities are done, the projects are expected to create more than 160,000 jobs with 14,000-30,000 direct jobs, 42,000 indirect jobs and more than 105,000 induced jobs.

“As opportunities continue to unfold, farmers are encouraged to register on the National Supplier Database (NSD), and consider forming associations or cooperatives to be able to meet the expected demand consistently,” PAU’s report says.

For a Ugandan company/farmer to participate in the supply chain, they must be incorporated in Uganda, adding value to their products as well as approved and registered with the national supplier database of the petroleum authority of Uganda.

Mr Tony Okao Otoa, the head of Stanbic Bank’s business incubator programme aimed at uplifting SMEs, told Daily Monitor that several local suppliers have “good business concepts” but are set back by a failure to adhere to standards, among other issues.

He said because the SMEs possess poor banking and borrowing history, it makes it hard for them to compete favourably with either established local companies or foreign firms.

But Mr Jim Akaya, the operations director at E360 Group, said the opportunities set to emerge for Ugandan suppliers might not materialise unless particular constraints facing the private sector are addressed.

“We need to take away from our minds these myths. Some people think oil has already been drawn and sold to other countries while others say that before the tenders are published in the media, they are already awarded,” Mr Akaya said.

He said the standards required in the industry will not be lowered to favour Ugandan SMEs.

Mr Emmanuel Mugarura, the executive officer of the Association of Uganda Oil and Gas Providers, said there are many opportunities that a Ugandan company can enjoy, despite current challenges they are entangled in.

“The local service providers are better prepared than they were six years ago. Most companies have invested in training and certification. We have more skilled people than ever before. Others have built partnerships and are ready to take on the task. The delay was a blessing in disguise,” he said.

Mr Mugarura said the high cost of doing business, competition from more experienced players, lack of specialised and certified personnel are some of the challenges farmers face.

Capacity
According to the World Bank’s Uganda Economic Update report of 2017, Ugandan firms still remain primarily in low value-added, labour-intensive areas of production. This has over time made it difficult for Ugandan firms to compete in international markets.

“Only a very small proportion of Ugandan businesses and households have access to a bank loan. Interest rates often range between 22 and 25 per cent of the total value of the borrowed amount. This causes many people to shy away from loan products,” it said.

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