Business
Raw deal for banana farmers
Publish Date: Aug 12, 2014
Raw deal for banana farmers
Bunches of Matooke ready for sale
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By Francis Kagolo  

When you are packed like sardines in dilapidated small taxis, you may not realise you are heading to the leading banana producing district in Uganda. But to the district chairman, Ignatius Byaruhanga, poor transport is not an issue.

“In the 1980s, farmers in Isingiro used to throw ripe bananas because there was no market,” he says. “The market is now available and farmers are happy,” he adds.

Unknown to the chairman, however, his smallholder farmers are not getting their sweat’s worth.

“Many farmers may not get rid of poverty because they are cheated when selling their bananas,” says Cedrack Muhangi, the coordinator of Isingiro District Farmers’ Association (IDFA).

Isingiro has 260,000 hectares of banana plantations from which over 80% of the population (56,000 households) derive their livelihood, according to the district production coordinator, Aloysius Karugaba.

More than 140 lorries of bananas leave the district every day during the peak season and about 70 lorries during the off-peak (each lorry carrying at least 350 bunches).

Farmers Cry foul


Bananas are one of the most expensive food items for urban consumers costing between sh15,000 and 25,000 per bunch and accounting for 16% of the consumer food basket, according to the National Agricultural Research Organisation (NARO). However, NARO says these prices hardly trickle down to the rural smallholder farmers.

Abdu Kyabalongo, 36, a resident of Kabagabe village in Kabingo sub-county, spends about half a day every day looking after his 10-acre banana plantation. He harvests 500 bunches every month during the peak season. Kyabalongo gets 300 bunches off-season.

He sells his bananas to brokers from the nearby Kyeirumba trading centre at between sh3,000 and sh5,000 a big bunch of about 12 clusters (40kgs). Kyabalongo earns about sh1.2m from his plantation. He says he spends over sh500,000 to maintain the plantation, minus his family members’ labour.  

“I am not the one who sets the price. The broker has contacts of traders in Kampala; he comes with already set prices. It is better to accept his prices instead of throwing away  the ripe bananas,” Kyabalango says. “We (farmers) spend a lot of time and money looking after the plantations. But the brokers make easy profits,” he laments.


Bushenyi factory still undergoing construction

Middlemen reap big

While Kyabalongo is lamenting, his broker, Asuman Ssewaya, who I tricked into believing that I am an agricultural extension worker, confides that he is better off than farmers. After paying off workers and transport charges, Ssewaya says he can make a minimum profit of sh700 per bunch, earning sh350,000 from every 500 bunches he collects.

“I have been doing this work since 1995 and I have bought land and build a house. I cannot go into farming,” Ssewaya says.

“Farmers spend time and money to clear and till the land, buy suckers, manure and other inputs. They have to mulch and weed the plantation all through. I wait for the harvest time to earn where I have not invested,” he brags.

This situation is not limited to Isingiro alone. A study done 12 years ago by FOODNET, a post-harvest and market research network, concluded that brokers can make net profits in excess of sh300,000 per load of 600 bunches.

In 2010, ACCORD, a local development NGO, conducted another study which attributed the problem to Uganda’s “(much) liberalised market where there are no efforts whatsoever to protect the interest of the small farmers.”

ACCORD estimates the unit cost of producing a bunch of banana at sh4,000. To get profit one should be able to sell at a minimum price over and above sh5,000 per bunch which rarely happens.

While a sizeable bunch of bananas was costing about sh25,000 in Kampala last month, I found brokers in Isingiro offering small farmers sh4,000, three times lower than the cost price.

Jimmy Matta, a middleman, says they spend sh2,000 to transport each bunch of matooke on a lorry from Isingiro and sh1,500 from Mbarara, to Kampala. He sells a big bunch at sh20,000 at Kalerwe market, making a profit of about 10,000 per bunch.

The problem is exacerbated by the collusion and informal cartels between brokers who restrict new entrants wishing to deal in bananas. This, FOODNET said, allows them increase their market power and maintain their high gross and net margins.



Experts speak out

Aloysius Karugaba, the Isingiro district production coordinator, says for every 10 bunches a smallholder farmer sells to a broker, he loses one or two bunches.

“Brokers and other middlemen also cheat market vendors and final consumers. They keep plucking 10 fingers from each bunch at every stage right from the farm,” Karugaba adds.

Prof. Paul Kibwika, the head of agricultural extensions and innovation studies at Makerere University says the power relations between the different actors in the banana value chain are unfair to smallholder farmers.

“If one of the actors in the value chain is unable to negotiate a good deal, they lose. Many times it is the small farmer, who is affected because they lack the requisite negotiation capacity and their bananas are perishable,” Kibwika explains.

“Farmers may not know the prevailing market prices. They end up selling at any price offered by the broker.”

However, Prof. John Mugisha, the dean of the school of agricultural sciences at Makerere University, argues that the problem is not so bad. “You cannot know everything happening in the market. Even the traders do not have all the information they need. That is why you see them driving from one market to another in a bid to sell,” he explains.

Mugisha, however, concurs that smallholder farmers “are ignorant about prices and other market information” to get a good deal.

Death of co-operative unions a big blow

The district NAADS co-ordinator for Isingiro, Frederick Ayorekeire, says small farmers would benefit more if they formed cooperative and marketing groups.

Through these groups, farmers can isolate middlemen by sourcing for markets themselves. Some analysts attribute the farmers’ woes to the collapse of co-operative unions in the late 1980s.

Abdu Kyabalongo with some of the bunches he harvested from his 10-acre plantation  in Kabagabe village in Kabingo Sub County, Isingiro district. Photo by Francis Kagolo

However, Prof. Mugisha argues that the cooperatives also lacked capacity to lift smallholder farmers out of poverty because they were top-bottom managed. He says the top managers were opportunists and always wanted to rip-off farmers.

Conversely, Prof. Kibwika blames the failure of cooperative unions on government interference.

“They (unions) started dying when government started appointing its people as managers. Farmers could not fire a manager appointed by the Government however corrupt he or she might have been,” Kibwika says.

He argues that smallholder farmers’ bargaining power died with the cooperative unions.

 

A worker at the PIBID factory in Bushenyi municipality fires a boiler for banana processing. Photo by Francis Kagolo

“In the 1960s and 1970s, cooperative unions supplied inputs and bought produce from farmers before processing it to add-value. They had their own transport system and a bank (Uganda Cooperative Bank), which provided low-interest loans to farmers,” he explains. “At the end of the day, each farmer would get a fair share of the profit that would accrue from the entire value chain.”

Middlemen promulgating poverty


Alex Lwakuba, the commissioner for crop production and marketing in the ministry of agriculture says cheating small farmers hampers economic development.

Lwakuba says over 80% of the five million households involved in agriculture in Uganda are smallholder farmers. Adding that anti-poverty programmes may not succeed when a majority of those involved in food production are being cheated.

“When small scale farmers are fleeced by middlemen it means they may never come out of poverty because their income flow will be sustainably low,” Lwakuba asserts.

He says the low prices offered by middlemen are a disincentive to farmers which in turn affects production and growth of the agricultural sector.

This could explain the decline in the country’s agricultural productivity from 5% in the early 1990s to 2.5% in the early 2000s. Productivity continued to slump to 1.4% last financial year, much below the 2015 target of 5.6% growth envisaged in the sector Development Strategy and Investment Plan (DSIP) 2011-2015. 

PIBID disappoints farmers, local leaders


The Presidential Initiative on Banana Industrial Development (PIBID) was established in 2005 to help farmers from being cheated. Under the project, the Government was to set up a banana processing factory within five years to process Matooke into flour and other products.

 

Isingiro district chairman, Ignatius Byaruhanga, says farmers are now happy. Photo by FRancis Kagolo

Ten years ago, the Tooke Flour produced under PIBID is from the project’s 24-acre plantation. PIBID publicist Kenneth Asiimwe says they are yet to start getting supplies from other farmers.

Although banana farmers in Bushenyi district, the home of the project and Isingiro have heard about PIBID, they say they are disappointed by its delay. 

The project has been affected by financial woes. In the value for money audit on the management of PIBID from 2004/2005 to 2011/2012 financial years, the Auditor General concluded that despite receiving 97% of the appropriated funds to the tune of sh40.122b, the project objectives had not been attained.

The Auditor General noted that activities aimed at capacity building of rural farmers in new technologies and agronomic practices at sh2b were either incomplete or not done at all at the time of audit. The audit team also noted that sh676m meant for training farmers’ groups, training of trainers and establishment of community drying centres was spent, yet the activities were never executed.

Is value addition viable?


Besides, Prof. Mugisha and Kibwika believe that milling bananas may not be a worthwhile venture. This is because about 75% of the weight of a banana is water, and the process of drying them takes time. After they have been dried and processed into flour the output per bunch is also minimal compared to other crops like maize.

Asiimwe said 100kgs of fresh bananas give 10kgs of flour, way below the 60kgs of maize flour got from 100kgs of grain. Because of the little output, PIBID has been forced to sell each kilogramme of Tooke Flour at sh10,000 to cover the costs. The same quantity of maize flour goes for about sh1,800.

“That overpriced product needs a high value market. It cannot be viable in ordinary markets like Uganda. If they want to sell it on the local market like maize flour, I am not sure it will be viable!” Prof. Mugisha observed.

Repeated appointments to speak to PIBID director Dr. Florence Muranga were futile. However, early this year Muranga admitted to the public accounts committee of Parliament that the project that was implemented without a feasibility study, which is against best practices in project management.

Way forward


Experts propose

The FOODNET report calls for measures to ensure existing brokers and traders do not impede entry of potential competitors through informal cartels. It suggests measures like local council letters of approval and market authority registration to curb the practice.

NAADS co-ordinator Frederick Ayorekeire says the Government should support farmers to produce wine and other high value products out of bananas instead of focusing on flour which may not substitute the cheap maize flour available on local and regional markets.

Makerere University’s Prof. John Mugisha calls for increased use of mobile technology to provide farmers with market information to improve their bargaining power.

Government urged to improve on feeder roads to aid transportation through the food producing villages.

This story was supported by the African Media Centre For Excellence


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