Subsector Analysis Report
A report prepared for TRIAS
Sub Sector Studied:
Rice [Grain & Seed]
Prepared by:
January 2012
1
2
Table of Contents
General Introduction ................................................................................................... 5
Back ground ........................................................................................................... 5
Methodology ........................................................................................................... 5
Summary of Constraints and Opportunities ................................................................. 6
Sub Sector Overview .................................................................................................. 7
Background ........................................................................................................................................... 7
Production............................................................................................................................................. 7
Introduction of NERICA (New Rice for Africa) ....................................................................................... 7
Demand Outlook ................................................................................................................................... 9
Grain ................................................................................................................ 9
Seed ................................................................................................................ 9
Governance Issues ................................................................................................................................ 9
Quality Issues ...................................................................................................................................... 10
Analysis .................................................................................................................. 11
Grain.................................................................................................................................................... 11
Rice Grain Sub Sector Value Chain Map .............................................................. 11
The Actors ...................................................................................................... 11
Seed..................................................................................................................................................... 14
Rice Seed Value Chain Map ............................................................................... 14
Seed Supply Systems ....................................................................................... 15
The Actors in the formal Rice seed sector ............................................................ 15
Financial Analysis .................................................................................................. 18
Gross Margins Analysis at farmer level ( per hectare) ........................................... 18
Gross Margin Analysis across the wider value chain. ............................................. 19
Constraints & Opportunities ....................................................................................... 20
Constraints ........................................................................................................... 20
Opportunities that can be tapped............................................................................. 22
Possible Interventions ............................................................................................ 22
Reports Collated....................................................................................................... 25
3
List of Abbreviations
aBi
BARNESA
BDS
CARD
DFA
ECARRN
FAO
FARA
IITA
IRRI
JICA
MAAIF
MFI
MT
NACRRI
NARO
NGO
P4P
PIBID
SACCO
UBOS
UNADA
UNDP
WARDA
WFP
Agri Business Initiative
Banana Research Network for Eastern and Southern Africa
Business Development Services
Centre for Agriculture and Rural Development
District Farmers Association
Eastern and Central Africa Rice Research Network
Food and Agricultural Organisation
Forum for Agricultural Research in Africa
International Institute for Tropical Agriculture
International Rice Research Institute
Japan International Cooperation Agency
Ministry of Agriculture Animal Industry and Fisheries
Microfinance Institution
Metric Tonne
National Crops Resources Research Institute
National Agricultural Research Organization
Non Governmental Organisation
Purchase for Progress
Presidential Initiative on Banana Industrial Development
Savings and Credit Cooperative Organisation
Uganda Bureau of Statistics
Uganda National Agro Dealers Association
United Nations Development Program
West Africa Rice Development Authority
World Food Program
4
General Introduction
Back ground.
This report summarizes the outputs of a desk based value chain assessment of the upland
rice value chain in Uganda. It is contracted by and is prepared for the use of TRIAS.
Trias is a Belgian NGO that focuses on increasing the livelihood security of small scale
farmers and entrepreneurs, and in Uganda, this work is being implemented through 2
programs across several districts [Mbarara, Hoima, Buliisa, Kiryandongo and Masindi],and
partners [DFA’s and MFI’s].
Trias considers as one of its primary tasks, to guide the development of, and build the
capacity of its partner organizations to enable them carry out their developmental
programmes adequately and sustainably. In achieving this, Trias has adopted the
Participatory Agro- Enterprise Development [PAED] methodology particularly in
regard to the creation of remunerative agricultural based micro enterprises- that provide
sustainable and economically empowering livelihoods for the economically active, but rural
poor.
By its nature, the PAED methodology is highly participatory, and it includes the farmers in
the development process. One such step, the Participatory Market Chain analysis, involves
farmers (under guidance of DFA’s) in a Value Chain Analysis exercise- through which clarity
is created on the broad issues (opportunities and challenges) within the Value Chain of note,
and in so doing creating a high level of awareness and familiarity among the farmers and
other value chain actors, of the broader aspects- normally beyond the radar of ordinary
farmers
This assignment builds upon the above efforts, by tapping into the wealth of information
already captured by the several BDS experts, in the form of published Sub sector and Value
Chain analyses. By reviewing and consolidating key emerging issues, this report seeks to
better inform the efforts of TRIAS in strengthening the small holder value chain actors.
Methodology
The methodology employed by the consultant in the execution of this assignment involved:
(i)
(ii)
Internet Based Searches- The consultant engaged in wide ranging research on
the internet, browsing several sites for the various sub-sector reports.
Institutional visits and Interviews- The consultant visited several institutions, and
had key expert interviews from which key insights were generated that informed
this report.
5
Summary of Constraints and Opportunities
Actor along
Constraints
Value Chain
Seed Level
 Poor quality, fake seed
 Expensive cost of improved seed
 Gap in seed supply versus
demand



Input dealers





Farmers/Produ
cers






Input acquisition
Lack of adequate capital
Low volume of business
Limited
scope
of
input
distribution and marketing
Market distortions by NGOs



Inadequate knowledge on rice
farming
Labour intensity in rice farming
Lack of capital
Losses due to pests and diseases
Lack of appropriate technology in
rice farming
Fake and low yielding seeds







Traders
Processors







Inadequate working capital
Poor transport infrastructure
Inadequate storage facilities
Poor technical performance of
rice mills
Limited access to effective repair
and other important support
services
Poor quality and quantity of rice
received at the mills.
Access to quality markets








Opportunities/Areas of
intervention
Need for strategy on rice seed
production
Increased enforcement of laws
governing seed production
Increased research in improved
varieties
Increasing access to finance
Financial literacy up skilling
Appropriate packaging for target
client base
Training and skills development
Introduction
of
appropriate
technology for rice production,
processing and value addition
More efficient technologies of
scaring off birds
Increasing access to finance (rural
microfinance)
Strengthening the role of farmer
groups
Escalating market information to
farmers
Improved access to advisory
services
Access to credit.
Increased focus on support by
support
organisations
and
development partners.
Increasing access to credit
Bringing processing facilities near
to the farmers.
Likelihood of improved power
supply
Provision
of
affordable
but
improved milling technologies
Training of millers on proper
drying techniques
6
Sub Sector Overview
Background
Rice has been grown in many parts of Eastern and Southern Africa for more than 500 years,
with nearly 90% of all rice in the region being produced by small scale farmers growing rice
on less than 0.5 ha of land.
Rice in Uganda was introduced by Indian traders in the early 1900’s, but did not gain
popularity until the 1940s. In those early years, the commodity was largely imported as
paddy rice by Indian traders and milled with traditional stone mills. This whole process
made it quite pricey and inaccessible to most indigenous Ugandans. Rice growing in the
country really picked up during the 1950s, though at the time it was still focused on feeding
institutions such as schools, prisons and hospitals. However surveys were commissioned to
establish actual potentials of growing rice on a large scale in Uganda, and by 1996 large
scale production of irrigated swamp rice was initiated at Kibimba through a partnership with
China.
The above developments also led to the simultaneous pick up in small holder rice
production, mainly in the Eastern and Northern parts of the country but with emphasis on
lowland rice varieties. Where large commercial rice farms were established such as Doho
and Olweny, these became nuclear farms around which emerged several small holder rice
farmers.
Today rice is considered among the food security crops in the country and as key to poverty
alleviation among the rural poor.
Production
Production volumes of rice in Uganda have continued to grow, with the country producing
218, 111 MT in 2010, a growth of 43% over
2005. Nevertheless, Uganda remains a net
Production Rice
importer of rice. It is estimated that over
30% of Uganda’s rice consumption is
250,000
218,111
imported. In 2007 Uganda produced
200,000
108,000 MT of rice and imported 74,000 MT
(FAOSTAT 2012).
150,000 132,000
Rice
100,000
Insight!
50,000
-
2003 2004 2005 2006 2007 2008 2009 2010
This situation points to healthy opportunities for
value chain actors (small scale farmers and
processors) to provide quality rice that can
substitute these imports.
Source: FAOSTAT
Introduction of NERICA (New Rice for Africa)
NERICA is the primary and most popular upland rice variety grown in Africa today including
Uganda. Developed by WARDA (West Africa Rice Development Authority), and introduced
into the country in 2002, this progeny was the result of the combination of two rice strains;
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O.glaberrima which had a rich reservoir of genes for resistance to local stresses- although
low yielding , and O. sativa a higher yielding variety albeit with low adoptability to rain fed
uplands. The resulting new variety NERICA offered several valuable attributes such as:




Higher yields (by 50% without fertilizer and by more than 200% with fertilizer)
Earlier maturity (by 30-50 days)
Resistance to local stresses
Higher protein content (by 2%)
NERICA has proved itself perfectly adapted to the harsh growing environment and low input
conditions, therefore a very well suited crop for upland rice growing areas. Because of this
unique product offering, NERICA has a huge potential economic impact on Uganda as a
profitable crop for small holder farmers, as an income booster at household level, as a
strategic food security crop- due to its ability to generate surplus harvests, and through its
ability to reduce rice imports and generate foreign exchange savings.
The graph below shows production of upland rice by area in acres.
Estimated area for Upland rice (acres)
55,200
Northern ( Gulu, Kitgum)
24,000
Mid – Northern (Apac, Lira)
14,400
Lake Albert Crescent (Masindi, Kibaale, Hoima)
7,200
Eastern (Soroti, Kumi, Pallisa, Tororo, Katakwi)
Western Highlands (Bundibugyo, Kabarole, Kasese,
Bushenyi)
4,800
South Eastern (Iganga, Kamuli, Jinja, Bugiri, Busia)
4,800
Eastern Highlands (Kapchowa, Mbale)
480
West Nile (Arua, Moyo, Adjumani, Nebbi)
240
-
20,000
40,000
60,000
The northern region is a clear leader in the farming of upland rice, although the Bunyoro
region presents significant production volumes as well.
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Demand Outlook
Grain
Local and regional demand for rice is ever increasing. In 2009, the demand for rice in
Uganda was estimated at over 225,000 MT of which only 165,000 MT was produced locally
creating a deficit of 60,000 MT. The East African region, as a whole imports over 700,000
MT per year.
Therefore, there exists a massive opportunity for small farmers to provide import
substitution of the $150 million worth of rice imports into Uganda if production can be
doubled and quality improved.
Seed
The demand for rice seed is high. As more acreage is dedicated to upland rice farming,
driven by the opportunity to meet the local supply deficit of more than 60,000MT, the
demand for improved rice seed will increase accordingly. Whereas in the case of maize
where farmers’ seed requirements are met almost 90% by informal sources, increasing
penetration by input suppliers, together with small farmer’s appreciation of improved seed,
is expected to increase the uptake of improved rice seed. In addition, Uganda has the
potential to produce seed for regional markets. In 2008, for example, Uganda was on hand
to supply seed to Mali, when the country was looking for NERICA seed for its farmers.
(Uganda’s rice revolution, September 2009).
Governance Issues
Value chain governance refers to the dynamic distribution of power and control among the
actors in a value chain. Power in this case relates to the extent to which one actor in the
chain dominates the activities of the chain- and the degree to which that actor can influence
the quantity, quality and price of goods.
A value chain can be seen to operate along different governance relationships (USAID Value
Chain Governance and access to finance report, 2007). Firstly, the Market Relationshipwould denote a value chain characterized by arm’s length transactions in which there are
many buyers and suppliers, dealing with a generally undifferentiated commodity, with little
information exchange between actors, no technical assistance provision and where repeat
transactions are possible but not necessary. Secondly in a balanced relationship, - both
buyers and sellers would have similar alternatives, that is- if a supplier has a few buyers,
then buyer has a few sellers, there is extensive information flow, with the different actors
having capabilities that are hard to substitute, and both sides would be committed to
solving problems through negotiations rather than threats. In the third relationship- the
Directed relationship- one key buyer takes at least 50% of suppliers output, and
generally influences and controls the actions of the seller, but also provides technical
assistance. The sellers exit options are more restricted than the buyers. In the fourthHierarchical relationship- this is characterized by vertical integration of value added
functions within a single firm, and the buyer would own the seller or vice versa.
The Upland rice value chain in Uganda has a market governance structure. There are many
buyers and sellers at each step of the value chain, conducting transactions on a spot market
basis. There is little influence and control that the buyer can exert on the seller with regard
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to quality standards, and pricing. Competition is based largely on price and availability, and
actors generally tend not to form long term relationships or enter into contracts
NB
It is worth noting that there was limited information available describing the governance
structures and relationships among value chain actors within the rice (grain and seed)
subsector. In the only report that attempted to describe these relationships, (USAID Value
Chain Governance and access to finance report, 2007), this was done from a specific
viewpoint of how governance affects the ability of value chain actors to access financing.
Quality Issues
Quality issues are very much in evidence both at the grain and seed level.
Rice grain, while increasingly being produced by Ugandan farmers, is however not actively
substituting imports among the quality conscious middle class consumers. Most demand for
rice is coming from urban populations that are looking for quality rice that can compete
favorably against imported rice (MAAIF Rice VC Study, 2009). This is attributed largely to
low quality grain coming out of the low technology small holder mills. It is common that
grains are broken by these mills, and most small mills do not have graders or destoners, to
remove foreign matter like stones. To meet the potential that exists both locally and
regionally, there need to be significant efforts towards improving quality along the value
chain.
Rice Seed, from a quality perspective, is largely affected by fake seed. There is a high
incidence of fake seeds in the rice seed market. This situation is exacerbated by the
currently high and unmet demand for improved rice seed. Fake seeds lead to poor
germination rates, and low yields, and there is a risk that if unchecked, the impact of these
seeds will demotivate small holder farmers from accessing improved seed inputs.
10
Analysis
Grain
Rice Grain Sub Sector Value Chain Map
Consumption
Retailing
Institutions,
Restaurants
Local Consumers
Schools
&
Regional Market
Retailers/Supermarkets
Wholesalers & Distributors
Wholesaling
Urban Millers
Processing
Rural Millers
Large
Scale
Traders/Urban
Traders/Agents
and
Transporters
Bulking
Rural
Traders
Transporters
Peasant Farmer/Small Holder Farmers/ Medium Scale & Commercial Farmers/ Farmer
Groups & Associations
Farm Level
Input Supply
Regional Miller (Kampala)
Stockists
(UNADA)
Agro
Input
companies/Importers/etc
e.g. FICA Seeds & Quality
Chemicals
Government
Programs
(e.g.
NAADS) & NGOs
Informal
Sector
(own seed)
11
The Actors
The Actors in the Value Chain & Key Characteristics
Producers/Farmers
Small holder farmers play the primary role of production for upland rice. This involves the
farm activities of field preparation, fallowing, furrowing, planting, weeding, harvesting and
drying.
It would appear that the dynamics at this level are such that farmers often take on the
extra work of transporting the unhulled rice to nearby mills, where it is milled and the husks
removed. (FIT Report, 2006). Farmers surveyed in the Acholi and Lango Sub region, largely
also take on the function of transporting the grain to market. In some cases however,
traders provide this transportation service (MAAIF Subsector study, 2009), and sometimes,
through rural agents, buy unhulled rice from the farmers.
The role of producer groups is emphasized by all of the studies reviewed. Groups normally
formed with the assistance of public or private service providers especially NGOs enhance
farmers’ access to inputs and facilitate more efficient marketing of produce. (MAAIF, 2009)
According to a survey on upland rice in Acholi region, farmers plant on average between
one and two acres of rice. (USAID, 2008). Under good management, these farms can yield
net returns in excess of 125,000 shillings per acre (300,000 shillings per hectare). This can
increase by a factor of 3 with application of fertilizer. (See financial schedule below).
It was observed however that farmers have challenges accessing inputs. When locally
available, they are sometimes priced higher than if found in towns and trading centres.
Partly due to this, farmers rarely use fertilizer, and only use pesticides when there is a
disease outbreak. (MAAIF, 2009)
Rural Agents/Traders
Rural Agents also service farmers in a manner similar to maize agents, by linking farmers
with traders. These agents advise farmers on price trends, linking them to buyers, and
further through supplying them with gurney bags. On the other hand, they also advise the
rice traders/millers when there is sufficient rice so that traders can send transport for
collection (USAID, 2008)
Millers.
Rice mills are located in town councils and some few at trading centres, and towns along the
highway. These small mills largely produce a single grade type of rice which is polished
whole grains mixed with broken rice and stones. Quality of these mills is poor as they lack
graders and destoners- that would be found with bigger capacity, complete mills. Packaging
is normally done by bulking into 50kg and 100kg bags.
Mills act as marketing centres where farmers, rural traders, millers and urban traders can
conclude sales deals. Mills are clearly attractive partners for urban traders as bulking points.
Many Urban traders have well established relationships with local millers as a result of this.
12
In the Acholi and Lango regions, some millers normally supply gurney bags and provide
transport to farmers to bring rice to their facilities. Some of these millers even support
farmers to open up and clear their land (USAID, 2008)
Urban Traders
Urban traders are wholesalers and importers. They normally purchase hulled rice from the
millers and farmers as well as import from other countries. Most urban traders are based in
Kampala. These agents play an important value addition role, of cleaning, consolidation and
bulking.
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Seed
Rice Seed Value Chain Map
Export
Informal Seed
Sector
Farmers
Govt
Donors
&
NGO/Relief
Agencies
Production
Processing
Distributors/
Stockists
&
Private Seed Company
National
Seed
Certification
Service
Variety
Release
Committee
Private Breeder
Company’s
NARO
National Seed Board
MAAIF
Source: Seed Sector Country Profile, 2008
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Seed Supply Systems
Rice seed is under high demand in Uganda. This pressure on seed production is made even
greater by bulk orders for rice seed by other African countries. The sector is characterized
by both formal and informal supply systems.
Formal Sector
The formal seed system is responsible for the production of improved and certified seeds. In
this system, seed is produced following recommended production and handling procedures.
This system enables farmers to access seed of known quality: physiologically, physically and
genetically, as well as free from seed borne diseases. Seeds from formal sector are
expected to have better yield potential. There are several rice varieties that have been
released and these include: NP2, NP3, NARIC 1, NARIC 2, NARIC 3 (NERICA 4), NERICA 1
and NERICA 10.
The formal rice seed sector, it is estimated, accounts for about 5-10% of total seed used in
the country. (Seed Sector Country Profile, 2008)
Informal Sector
The informal system on the other hand involves productions and making available, seed
which is not certified, and thus of unknown quality. There are 2 categories of informal seed
systems, i.e. the farmer based (individual farmer based) seed supply system and the
community based system. This system accounts for 90-95% of seed used in the country.
(Seed Sector Country Profile, 2008).
The Actors in the formal Rice seed sector
Seed companies
The Uganda Seed Industry is made up of several seed companies. The role of these
organisations within the sector is to develop, multiply and distribute improved and certified
seed varieties. Normally these companies distribute their seed through stockists and input
dealers. Larger scale farmers, however can directly access seed from these companies.
Increasingly also, these companies are deepening their penetration, by setting up
distribution points deeper in the rural communities, and thus being more directly accessible
to the farmers. According to the seed sector profile report, (Seed Sector Country Profile,
2008) most seed companies deal in rice. Some of the key players in this rice seed include
the following:
(i)
(ii)
Nalweyo Seed Company (NASECO), - Based in Nalweyo in Kibale district,
company provides upland rice seed varieties. NASECO has been able to introduce
its own upland NERICA rice using WARDA germplasm. It has embarked on
breeding and has already released rice varieties.
Farm Inputs Care Centre (FICA) - established in 2000, FICA in 2005 acquired
a 30 year lease of the former government owned seed farms and seed processing
facilities. The company has developed seed farms in Masindi, Fort portal and
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Kasese and has out growers in these areas as well. The company provides upland
rice seed varieties.
(iii)
Other Seed companies: these include Harvest farm seeds ltd (HFS), OTIS
Garden Seeds Ltd, (OTIS), and Uganda Seeds Ltd.
Stockists/Input dealers
Stockists and input dealers play an important role in the marketing and distribution of rice
seed. These actors are independent small business entities. They normally procure their
seeds from the seed companies and seed importers, and sell them to farmers. Usually each
seed company has a network of seed dealers through whom their seed is distributed.
However it is common practice as well to find one seed dealer having various varieties from
different companies. (Seed Sector Country Profile, 2008).
Support Organisations (UNADA and NSCS)
Uganda National Agro Input Dealers Association (UNADA) was established in October
2003, to strengthen the distribution networks for agricultural inputs in terms of outreach,
quality and timeliness. In addition to this, an important role of UNADA is to raise awareness
and build capacity among stockists and retailers to enhance trust in the products and
improve services to the farmers.
National Seed Certification Services (NSCS) is the only official authority that issues
seed certificates in Uganda. Its scope is nationwide, and the body is responsible for
conducting variety performance trials, but may delegate suitable organisations to carry out
this work. All plant breeders both local and foreign have to apply to the NSCS for release of
their varieties.
National Agricultural Research Organisation (NARO) is the main new variety producer
in Uganda and is involved in the plant breeding, production and maintenance of breeder
seed and germplasm conservation. Rice seed research in Uganda is currently carried out by
NACCRI at Namulonge, strongly supported by JICA.
16
Key Support/Resource Agencies
Type/Name
institution
of
Type of support
Area/
location/Scope
Research Institutions

NARO & NACCRI

WARDA

FARA

JICA

AGRA

IRRI

ECRRN
-Primarily involved in
The
country
entire
NAADS
-Are part of government’s strategy to strengthen small holder farmers. They provide
support in areas of:
The
country
entire






Research and development of improved seed varieties
Development and dissemination of appropriate agronomic practices.
Disseminating best practice across Africa
Advisory services- capacity building, model farm approaches
Extension services
Facilitating access to information.
Government/Policy
Support Organs

MAAIF

NSCS
-Support in policy and regulation of entire (seed & grain) sub-sector
The
country
entire
UNADA
Supports distributors and stockists who supply farm inputs to farmers (seeds,
herbicides, pesticides and farm implements)
The
country
entire
Development
Partners/NGOs

TRIAS

Sasakawa Global

USAID LEAD

VECO

FAO

WFP
-Provide value chain support in various forms such as:
The
country
entire
SACCOs & Microfinance
Institutions e.g.

MSC

HOFOKAM

Pride Microfinance

FINCA
SACCOs are member based organisations and MFIs are rural based financial institutions
which support the value chain actors through:
The
country
entire
Farmer Associations

UNFFE,

UCA,

DFA’s
These associations bring farmers and cooperatives together and provide a range of
farmer strengthening services, such as capacity building, linkages to markets, access to
finance, inputs and improved technologies
The
country
entire









through support with direct inputs like hand hoes and pangas through Voucher
for Work” programs
Facilitating access to finance through guaranteeing loans
Training and capacity building
Facilitating seed multiplication and distribution
Technology dissemination
Influencing policy
Accumulation of savings
Access to cheap finance for members in deep rural areas
Provision of appropriately designed loans suitable for small scale farmers
17
Financial Analysis
Gross Margins Analysis at farmer level ( per hectare)
Rice
REVENUE
Sales price per kg (unmilled)
Yield per ha (in kgs)
Total revenue
Production & other operational costs
Land rent (Shs/ha)
Ploughing (land clearing, 2 ploughings + 1
harrowing
Seed costs
Seed planting
Weeding
Cost of Urea fertilizer
Agro chemicals
Bird scaring
Winnowing
Harvesting
Transporting from gardens to stores
Drying
Total Variable costs before interest
charge
With
fertilizer
Without
fertilizer
600
4,500
600
2,600
2,700,000
1,560,000
100,000
100,000
300,000
150,000
100,000
246,000
250,000
300,000
150,000
100,000
246,000
0
30,000
72,000
180,000
90,000
90,000
30,000
72,000
104,000
52,000
52,000
1,608,000
1,206,000
By Comparison, an Upland rice
profitability analysis done by TRIAS
in the Bunyoro region indicates that
farmers in the area can earn as
much as 806,000 shs per acre
(1,934,000 shs per hectare) under
traditional
subsistence
farming.
These earnings are significantly
higher for farmers using inputs and
improved seed, who can earn as
much as 2,015,000 shs per acre
(4,836,000
shs
per
hectare)
(Upland Rice cost of production and
profitability Analysis by TRIAS
2011)
This analysis highlights that rice
farming is an extremely viable farming
activity. Some of the key highlights:

Gross margin
1,092,000
354,000
Source: MAAIF Rice Value Chain, Lango and Acholi (2009)

Comparison against other crops
Use of improved inputs such as
fertilizer and improved seeds is
strongly recommended. While it
creates an increase in cost by
about 33%, it also accounts for
almost 75% increase in yield,
and over 200% increase in
profit, as seen from the MAAIF
study.
Rice farming yields enough
returns
for
farmers
to
comfortably pay off any loans.
This analysis- extracted from the
recent (2009) MAAIF Value Chain
Rice without fertilizer (Lango)
354,000
study in the Acholi & Lango Sub
Rice with fertilizer (Lango)
1,092,000
regions, demonstrates the point
Rice without fertilizer (Acholi)18
778,000
that rice is more profitable than
Maize
337,000
many of the other crops planted in
Simsim
428,500
the region. The study actually
Sunflower
286,600
reports that Rice is the main income
Tomatoes
1,123,900
generating crop in the Acholi and
G/Nuts
448,500
Lango regions, with other crops
complimenting rather than competing with it. How this happens, is that after rice growing,
other crops are then planted in preparation of the land for another rice crop. Complimenting
crops include tomatoes, cabbages, sunflower, sesame seed, maize and beans.
Crop
Gross Margin (Shs/ha)
18
Gross Margin Analysis across the wider value chain.
This data, extracted from
the MAAIF 2009 Value
Chain report, provided
the most recent gross
margins analysis data.
Indicative Gross Margins for Rice- A case of the Acholi Region
Cost
price
Category of
participant
Farmer (paddy)
Rural Agents (paddy)
Town middle men
(paddy)
Transporter (paddy)
Millers
(paddy/milled)
Wholesalers (milled)
Retailers (milled) –
Gulu and Kampala
Source: MAAIF Value
Handling and
transport
charges
Selling
price
Margin
377
600
650
30
50
600
650
730
223
20
30
% of
cost
59
3
5
780
30
60
780
880
20
40
5
1,4081
1,482
58
1,482
1,700
74
160
5
10
Shs/kg
Chain, Lango and Acholi (2009)
Share of Profit along the Rice VC (Per Kg)
160
20
30
20
40
74
567
223
From the analysis, it
would appear that the
farmers are the biggest
beneficiaries of all the
value chain actors. At
about shs 223 per kilo,
they earn the highest
margins
followed
by
retail at shs 160. In spite
of
this,
farmers
do
complain
about
poor
returns, and this could be
attributed to the average
smallholder farm size of
about 0.75 acres (0.3ha)
(MAAIF,
2009)
which
would deliver a gross
income of just over Ushs
350,000 per annum (0.3
x
1,092,000).
This
translates to about shs
1,000
per
day
as
household income, which
is below the poverty line.
Source: Extracted from MAAIF Rice Value Chain, Lango and Acholi (2009)
.
1
There is an amount of approximately 528 shs that is unexplained between the millers and
the retailers. A rapid field assessment of the revenue structure within the Bunyoro value
chain is therefore recommended.
19
Constraints & Opportunities
Constraints
Constraints at farmer level.
Inadequate Knowledge on rice farming. Since rice is a ‘new’ crop- in terms of its use by
many farmers, a lack of adequate knowledge was observed as the biggest constraint facing
rice farmers. Training to build capacity at the farmer level would have to consider issues
such as herbicide and pesticide use, planting cycles and practices, post harvest handling,
pests and disease management, irrigation and water harvesting.
The inadequate knowledge of post harvest handling has a direct adverse effect on
processors at the mills. Respondents in one of the surveys reviewed (JICA,2006) reported
one of their biggest challenges as low quality rice: either wet, over dried or contaminated.
This resulted into low quality milled rice that is difficult to market into the more sensitive
markets such as Kampala.
Labour Intensity in rice farming. The farming of rice was reported to be laborious. The
process of planting, ploughing, weeding, harvesting, threshing and transportation were cited
as the most strenuous and laborious operations. This situation is aggravated by a lack of
appropriate rice farming tools, and equipment. Modern equipment even where available is
too expensive for the small scale farmers to afford, leaving farmers dependent on
rudimentary, labour and time consuming hand tools such as hoes and slashers. To cope,
farmers are forced to pool labour among themselves and work each other’s fields in turns.
Most farmers though find themselves forced to operate small fields that they can manage
(though delivering lower returns), also by working extra hours- at the expense of their
health. In some cases children could miss classes to contribute towards the family labour.
Lack of Capital. Lack of capital remains a key constraint to small scale farming. In the
reports reviewed, farmers found challenges accessing finances, even in districts where
microfinance institutions existed. Many farmers reported that the policies, interest rates and
other terms attached to the agricultural loans were unfavorable to them.
On the other hand, where farmers could still be keen to access credit despite the above
negative perceptions, a good many of them lack any basic financial literacy skills required to
access and effectively manage borrowed funds. They lack a savings culture, and have no
training in the management of loans.
Losses to Pests and Diseases- Pests are a menace to rice farmers. It was noted that
birds- the most dangerous of pests-can cause up to 100% loss in yield (MAAIF, 2009)
Farmers try to cope with this challenge by using scarecrows in addition to physically scaring
off the birds. This however affects school going children, who are often kept at home and
sent to scare the birds in the fields- until the crop is harvested. Other pests include rodents,
termites, stem borers and grasshoppers. Disease is also a common cause of crop loss. The
most prevalent diseases in order of importance include: rice blast, brown spot and sheath
rot in upland rice.
20
Lack of appropriate implements and equipment for rice farming- this directly impacts
the quantity and quality of rice produced from the farm. While a range of appropriate
technologies exist, provided by a number of organisations, their penetration to small scale
farmers remains a challenge. In addition, farmers lack the funds to access proven
implements and equipments owing to their high prices.
Poor Quality, fake and Expensive seed- Some seed companies sell seed of mixed
varieties, whose manufacturing dates are not shown, whose variety names are not indicated
on the packaging and which ultimately deliver poor and uneven performance.
Constraints at Processor level
Technical performance of rice mills- Issues beyond the processors control are significant
causes for inefficient operations. Primary among these is the unreliable supply of electricity,
and the high costs of both electricity and diesel. To cope against electricity constraints,
processors use diesel engines to run the mills. The high spikes in fuel costs however also
affect the profitability of the processors.
Access to repair and other support services-In one of the reports surveyed, there was
a high (90%) response rate from interviewees that spare parts and repair kits for rice mills
are not readily available, whereas wear and tear causes need for frequent repair and
replacement.
Quality and quantity of rice received at the mills- Improperly dried paddy by farmers
(either wet or over dried) is noted as a big processor constraint. This was due to lack of
appropriate knowledge at farmer level. It was observed that some farmers harvest rice
when it is still premature.
Quality and marketing of milled rice- Rice millers face a challenge of accessing high
value markets due to lots of broken grains resulting from their inefficient milling processes.
They are forced to reduce prices. This is still a barrier affecting their competitiveness
against rice imports.
Constraints at Input Dealer level
Input acquisition- Expensive transportation is one of the key constraints faced by input
dealers. This is because most of the inputs are procured from Kampala, while those at the
sub-counties source from the district headquarters. The underdeveloped road transport
system significantly increases transport costs, which have to be passed on in the form of
increased unattractive prices, or absorbed by the dealers, either way adversely affecting
business profitability.
Accessing inputs is also affected by lack of adequate capital. With limited resources,
dealers are unable to take advantage of economies of scale through bulk purchases
discounts, and reduced transportation costs per unit. This also means that they are unable
to deal in some of the important but pricey inputs like fertilizers.
Low volume of business also increases costs, reduces turnover rate, and generally makes
the business unattractive comparatively.
21
Input distribution and marketing- it appears that there is currently a low uptake of rice
inputs from farmers. This has been attributed mostly to a lack of capital of rice farmers, lack
of knowledge by farmers of the available inputs, the small sizes of land allocated to ricewhich means limited demand for inputs.
In addition, the market forces are distorted by NGO practices of distributing free
seeds and other inputs to farmers which affects the business of input dealers.
Some of the inputs, including herbicides and fertilizers, are packaged in quantities that are
not desired by the rural based small holder farmers. While they cope by dividing and selling
these inputs in smaller quantities, they are in so doing exposed to the health hazards of
these chemicals.
Constraints at Seed Level
There is a big gap in seed supply. The demand for seed far outweighs the capacity of
seed companies to generate adequate seed stocks.
Low quality and fake seed is also a big constraint to input dealers and farmers. Dealers
often buy products that are inadequately labeled with the right variety name, adulterated
and of poor germination abilities. Some seed companies in addition are even late in
supplying the seed. This points to a challenge in the framework governing seed production,
distribution and marketing.
Opportunities that can be tapped
The Uganda National Rice Development strategy will bring some focus and
prioritization behind key challenges in the sector. For instance, initiatives in seed promotion
are given clear priority in this strategy, which should accelerate efforts to build up seed
supply capabilities, among other constraints.
Possible Interventions
At farmer level:
Training and skills development: Building capabilities of farmers on all the critical
aspects of farming rice: i.e. production, postharvest and marketing, use of herbicides,
pesticides and benefits of fertilizers, seed selection to mention a few. Such training should
be participatory in nature- for instance – the farmer field school model or the SG-2000 onestop centre model. Multi Stakeholder Platforms are a unique opportunity to quickly assess
the training needs of the actors, so as to derive focused and appropriate interventions for
the specific target community. Training initiatives should be designed and implemented with
partners including rice subject matter experts, NGOss, NAADS, and academic institutions.
Introducing appropriate technology for rice production, processing and value addition. Farmers have highlighted the laboriousness of farming rice- a situation caused largely by
22
the use of the traditional and rudimentary implements. Examples from other rice producing
countries indicate that appropriate implements can significantly enhance labour productivity,
improve profitability appropriate technologies, and building capacity and sustainability of
local actors to provide these technologies. Successful farms could be developed into model
farms to educate the community in the use of these improved technologies.
The challenge of rice disease and pest management should be addressed by being
more efficient in scaring off birds- say through the increased use of scare crows, escalating
the use of explosives, and use of specialized bird scaring tapes, among others. It is also
possible and probably worthwhile for research to innovate around high yielding, resistant
varieties which additionally have some bird repellant properties.
With regard to disease, farmer awareness of disease types, effects and control methods can
be carried out to improve farmer’s knowledge
Rice inputs- the main constraint on inputs is with regard to their high costs and inadequate
availability. One intervention to address this will be by incorporating promotion of rural
microfinance to reach the rural-based dealers and farmers with appropriately packaged
products.
At the same time farmers, input dealers and processors would require financial literacy
training to make them more bankable, and better able to manage loans, and grow their
businesses.
In dealing with the inefficient marketing systems, farmers could be supported and facilitated
to form and join collective marketing groups, to consolidate produce and attract more
profitable business. Farmer groups have proven most effective in enabling small holders
access more lucrative markets, as well as creating cost savings through economies of scale.
In addition, other value chain actors, especially processing facilities, could be brought
nearer to the farmers. With mills located nearby, farmers will be able to add value and
benefit from higher prices. Bringing mills closer also saves farmers the high transportation
costs incurred accessing town based millers, which eats into their margins. This would also
reduce the chances of exploitation by middlemen.
There is a real and urgent need as well to improve information sharing on rice. Farmers
better facilitated with this information are better empowered to make decisions that are
most economical.
At Processor Level
Unreliable energy supply should be mitigated by resorting to backup solutions, such as
generators or diesel run motors. The challenge of unreliable energy is not expected to
be resolved any time soon, and it is therefore that these backup solutions present a
worthwhile investment.
Frequent breakdowns of rice mills suggests poor quality technology that can be mitigated by
the provision of affordable but improved milling technologies. Such improved
technology will also yield better quality rice (with reduced rice breakages). This is however
23
also a great opportunity to create a cadre of trained artisans (youths) in mill repair services.
This would provide new employment, as well as providing options for quality repair support
services.
While high milling breakages of rice can be addressed with improved technology, training
of both farmers and millers on proper drying techniques, and creating awareness
of the implications that wet and poor quality paddy rice has on a miller is also
important.
Access to credit for processors to increase the quantity of business as well as to improve
operations and marketing is important. Processors are often constrained by a lack of capital
in spite of existing market demand. Also accessing markets might be constrained by lack of
transport services like a pickup truck. Appropriate credit that enables processors to deal
with these challenges clearly stands to improve their business performance.
At Input Dealer Level
Increasing the penetration and distribution of seed and other inputs to make them
directly accessible by rural based input dealers and stockists, will make these items readily
available to deep rural farmers, at affordable prices. Some structured incentive support to
distributors might be required to achieve this.
Provision of adequate credit support for instance through low cost microfinance loans,
to allow input dealers access required stocks of inputs. TRIAS loan guarantee schemes that
are being used for farmer groups could be applied to input dealers as well.
At Seed Level
There is need for a strategy on rice seed production and marketing. Increasing supply is
critical as there is a big supply demand gap. A possible strategy would be to involve and
facilitate Community based organisations in the production of seed varieties, which would
be more easily accessible to the rural poor farmers. Increasing production will also reduce
the currently high incidence of fake seeds in the market.
Increased enforcement of laws and regulations governing the seed production, and
distribution to reduce the harmful effects of fake seed on farmer morale.
Increasing research on improved varieties- that are productive, but more resistant to
drought and pests and disease constraints, is important to deal with the increasing pressure
on rice production caused by diseases, pests and weeds.
24
Reports Collated
Overview of value chain/subsector analyses studied and organisations/resource persons
consulted.
Description of Analysis
1.
Rice Value Chain Study in
Acholi and Lango Sub Regions
2.
Uganda
National
Rice
Development Strategy
Uganda
National
Rice
Development Strategy (PPT)
Final Survey Report on the
Status of Rice Production,
Processing and Marketing in
Uganda
2b
3
4
5
6.
7
8
Stabilisation
Driven
Value
Chain
Analysis
of
Rice,
Groundnuts and Maize in
Northern Uganda
Upland Rice Sub Sector Study
Report,
Iganga
District,
Eastern Uganda
Grains
Subsector
Analysis
Report [Beans, Groundnuts,
Sorghum & Upland Rice
Stakeholders
workshop
for
value chain analysis of maize
and upland rice in Northern
Uganda
Quality Rice Seed Production
Manual
9
Uganda’s rice revolution
10
The growing NERICA boom in
Uganda
Seed Sector Country Profile
11
12
13
14
Seed
Scoping
Mission
to
explore the opportunities for
support to the Uganda Seed
Sector under ASPSII
The Ugandan Seed Industrysuccessful
transition
from
public to private sector
Seed Sector final draft for
Geographical
scope
Lango
&
Acholi
Sub
regions
National
Commissioning
Organisation
MAAIF
Executer
analysis
PMA
Secretariat
Government of
Uganda
Government of
Uganda
Japan
International
Cooperation
Agency (JICA)
&
Sasakawa
Africa
USAID
/UGANDA
MAAIF
Date of
analysis
June
2009
Relevance
May
2009
May
2009
March
2006
High
(80%)
High
(80%)
High
(80%)
Emerging
Markets Group
October
2008
Medium
(70%)
Iganga
District
VECO Uganda
FIT
Uganda
Consultants
May
2006
Medium
(50%)
National
FIT Uganda
Shoreline
Services Ltd
Jan
2007
Medium
(50%)
Northern
Uganda
World Vision
World Vision
June
2008
High
(75%)
National
NaCCRI
NaCCRI
(Godfrey Asea
&
Geoffrey
Onaga
Savitir
Mohaptar
(Online article)
WARDA
National
National
Northern
Uganda
National
of
MAAIF
Odogola
Wilfred
R
High
(75%)
Medium
(50%)
National
Danish
Seed
Health Centre
DANIDA
Flavia Kabeere
& Ednar Wulff
The
Royal
Veterinary and
Agric University
Dec
2008
May
2004
National
USAID
Fred Muhhuku
2005
National
High
(90%)
Medium
(50%)
High
(90%)
High
(80%)
High
(75%)
High
25
15
World Bank
Seed Demand and Supply in
Eastern and Northern Ugandaimplications for government
and
non
government
interventions
Eastern and
Northern
Uganda
NARO
N. Nangoti et al
2004
(80%)
Medium
(50%)
26