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The rise, fall and rebirth of farmer cooperative unions

By Vision Reporter

Added 10th February 2012 06:23 PM

Born in 1931, the co-operative movement in Uganda awoke to counter the exploitation of local farmers by European and Asian companies that monopolised the domestic and export markets of cotton and coffee.

Born in 1931, the co-operative movement in Uganda awoke to counter the exploitation of local farmers by European and Asian companies that monopolised the domestic and export markets of cotton and coffee.

By Joel Ogwang
Born in 1931, the co-operative movement in Uganda awoke to counter the exploitation of local farmers by European and Asian companies that monopolised the domestic and export markets of cotton and coffee.
 
Being major cash cows, the crops later formed the backbone of co-operatives, attracting interest of colonial and post-independence governments.
 
At the time, though, the colonial regime considered the emergence of co-operatives as premature and subversive, denying them legal backing to access credit and other services from lending institutions.
 
For example, a bill introduced in Parliament in the late 1930s met strong resistance from powerful private interests and was withdrawn, forcing co-operatives to operate underground till the enacting of the 1946 Co-operative Societies Ordinance.
 
High returns
By 1960, cooperatives handled 89,308 tonnes; a rise from 14,300 tonnes in 1951with a turnover of over £9m annually.
The total value of produce sold, including coffee, cotton and other minor crops and animal products amounted to sh325.3m by 1965.
 
Out of a total crop of 437,923 bales, co-operative unions handled 267,420 bales (61%), 40% of the robusta coffee (valued at sh60m) and 90% of the arabica coffee valued at sh30m.
 
"We earned a lot during this time," says Musa Otim, a retired teacher. "We did not worry about better salaries from the Government. We had our plantations to supplement our salaries."
 
The co-operative movement expanded immensely and by 1961, Uganda had 21 registered co-operative unions, including the Uganda Co-operative Alliance (UCA) and 1,662 primary co-operative societies, with a membership of 252,378.
The enactment of the Coffee Industry Ordinance in 1952 provided for the operation of six coffee curing works by co-operatives.
 
Bugisu Co-operative Union (BCU) was formed to take over the collection and sale of the entire coffee crop in the area.
There were over 2,500 primary co-operative societies with over 750,000 family members, 36 unions including four national unions by 1971, owning 53 cotton ginneries whose average turnover was over 440,000 bales worth over sh315m.
 
They also owned 31 coffee factories and 34 pulparies with an annual turnover of 147,000 metric tonnes of clean coffee worth over sh455m. Other crops handled through cooperatives fetched over sh33m per annum. The co-operative movement had assets valued at sh500m.
 
The collapse of cooperatives
 The death of cooperatives started in 1971, when Idi Amin assumed the Presidency through a coup, overthrowing Milton Obote. He declared ‘the economic war’, expelling Asians from Uganda in 1972.
 
The departure of other expatriates that followed, coupled with the fleeing to exile of capable leaders and managers worsened the situation. Increasingly, pressures of economic and political self-interests, to which those in charge succumbed, invaded co-operatives, leading to mismanagement, corruption and embezzlement.
 
This marked the beginning of the collapse of the economy, as prices of controlled crops like cotton and coffee were so low, with farmers abandoning them for maize, beans and groundnuts. Cotton production fell from 466,775 bales in 1970 to 32,160 bales in 1980. And, although the production was declining, by 1974, the Government was busy securing big loans from the African Development Bank (AfDB) to rehabilitate ginneries.
 
The loans eventually forced unions into closure. Due to smuggling and mushrooming of many coffee factories, the co-operative market share dropped from the near 100% to about 37% by the time Amin was deposed in 1979. The mismanagement of cooperatives continued well into Obote’s second regime.
 
Obote’s efforts at reviving and using co-operatives as policy instruments were hampered by excessive government involvement that virtually turned them into government parastatals.
 
As the NRM/A guerrilla war fought in the co-operative movement’s strongholds of the Luwero Triangle, which had giant unions of West Mengo, Wamala and East Mengo intensified, such cooperatives were destabilised. 
 
Equally affected were Banyankole Kweterana and Masaka Co-operatives that incurred heavy war losses in the form of people and property like vehicles, clean coffee and animals during the war.
 
By the time Tito Okello toppled Obote’s regime in July 1985, cooperatives were dead. 
 
With this, came the collapse of mechanised farming. The tractor population that had risen from 528 in 1962 to 1, 778 in 1965 and peaked in 1970 at 4,200. Dr. Kisamba Mugerwa, a former agriculture minister and now the National Planning Authority (NPA) chief says: “When we (Uganda) got independence.
 
We chose to go with a laissez faire economy with every one for himself and God for us all.” Cooperatives like Coffee/ Cotton Marketing Board collapsed.
 
However, Kisamba blames this on spoon-feeding by the state. “They couldn’t operate and compete in a free enterprise economy, yet our private sector was still young,” he says. Between 1986-1990s, expectations heightened on the revolutionary NRM regime following the amendment of the 1970 Co-operative Societies Act, restoring considerable autonomy to the co-operative movement through the 1991 Co-operative Societies Statute.
 
The real revival of cooperatives started in the 1990s with the defunct Entandikwa credit scheme and the Youth Enterprise Scheme (YES) that started and collapsed mdue to maladministration.
 
In fact, the Government lost over sh9b, recovering only sh358m out of the total sh9.433b loaned out because the beneficiaries thought it was a ‘thank-you token’ for their continued allegiance to NRM.
 
In 2006, the Savings and Credit Cooperative Societies (SACCOs) under the Prosperity-For-All (PFA) scheme started.
 
PFA embodies four main pillars, namely: production and productivity which encompasses NAADs, value-addition and marketing, information systems at sub-county level and micro finance.
 
“SACCOs provide people with safety nets against effects of the market as an allocator of resources,” says Peter Kiwumulo, a development studies lecturer at Uganda Christian University, Mukono.
 
“They are also a channel through which the Government can provide affirmative action to youth, the elderly and women to engage in production.” However, the revival of cooperatives through PFA came with stinging criticism and doubts on its success. Critics accused the Government of using PFA as a vehicle to solicit votes.
 
The Government policy is that each of the 1,085 sub-counties in the country must have a SACCO. Presently, over 700 SACCOs are fully registered, accessing funds from the Uganda Micro Finance Centre.
 
Their successes and vibrancy is  due to the adherence to cardinal co-operative principles of ‘memberowner, member-user and membercontrol’ as well as to the values of honesty, transparency and accountability.
 
“SACCOs are vibrant if led by people of common interests,” says Kiwumulo. “This is not the case since many of them that are too politicised.”

The rise, fall and rebirth of farmer cooperative unions

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