Uganda needs more commercial farmers

What you need to know:

The issue:

Agriculture

Our view: 

To maximise the agriculture sector’s opportunities, more small-holder farmers should be supported to transform into agribusiness.

For years, some farmers have comfortably produced just enough to feed their families with very few venturing into large-scale agriculture. But that has got to change. We need to start looking at agriculture as a business and not a way of life. According to the Uganda Bureau of Statistics report, the agriculture sector, which is mainly subsistence, is the dominant economic activity, representing 72 per cent of Uganda’s workforce.

Government, therefore, ought to look at the agriculture sector as a commercial enterprise and wealth creator that will reduce especially rural poverty. Much as government through Uganda Development Bank (UDB) has so far disbursed Shs100b to qualifying projects in agriculture, agribusiness and manufacturing, several farmers are actually locked out of this kind of funding because they do not meet the development bank’s criteria. 

So far, most of the financial support has gone to large-scale farmers compared to smallholder farmers. So how then can those subsistence farmers, who produce just enough to feed their families, boost production with the view to reducing the volume of imported food? Vegetables and certain roots and tubers last year cost Uganda nearly $18m (Shs49b) in imports, according to details from a 2019 Ministry of Finance report.

Rising imports provide an opportunity to transform agriculture into  a business considering that the demand is available, but not yet being met. We can replace these imports with our own produce, which would in turn reduce poverty.

The solution could also be in farmers teaming up in cooperatives, where they could get a better price for their produce. Organising and registering their farms as formal businesses has several benefits. Registration gives smallholders more negotiating power with suppliers and buyers, and helps them track their profit from each harvest.

More interventions are needed from government. Government needs to devise other means of ensuring that small-holder farmers can actually access finances to scale up their operations into commercially viable enterprises. But there are still several challenges to overcome. Securing credit is still a challenge for many farmers as agriculture is considered a highly risky sector. According to the African Development Bank, less than 3 per cent of total bank lending in Africa, goes to the agriculture sector, which accounts for more than 70 per cent of the employment.

Farmers also need to look at their farms as profitable businesses in order to challenge themselves to produce for commercial purposes other than subsistence. To maximise the agriculture sector’s opportunities, more small-holder farmers should be supported to transform into agribusiness, as we shift the agriculture sector from low-value smallholder farming towards a higher value-added agri-food sector.

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