Strategy for agricultural marketing and agro-processing ... - Foodnet

Strategy for agricultural marketing and agro-processing under the Plan for
the Modernisation of Agriculture
1. INTRODUCTION
This paper presents a strategy which details the priority public sector interventions needed in the
areas of agricultural marketing and agro-processing under the Plan for the Modernisation of
Agriculture (PMA).
The Strategy was developed by the PMA’s Marketing and Agro-Processing sub-Committee 1
from an analysis of a series of agricultural marketing studies that have been recently been
commissioned by the government in order to broaden its understanding of the constraints to the
marketing and processing of agricultural commodities, what is already being done to overcome
these constraints and what remains to be done 2 .
The studies sought to identify ways in which marketing efficiencies and export opportunities
might be improved for the benefit of the country’s agricultural sector. A summary of the major
conclusions arising from three of these studies is provided in Table 1. (The findings of the
studies have also been used to support the efforts being made by the Government to raise export
earnings under its strategic exports interventions’ programme).
In addition, recent projects, programmes and other initiatives that focus on improving market
access for farmers and traders, as well as the functioning of the markets themselves, informed the
deliberations of the sub-Committee.
1 This is a multi-sectoral team comprising representatives of Government ministries and agencies, the private sector,
development partners and civil society, namely: MAAIF (& NAADS), MTTI, MFPED, UEPB, the IDEA project,
UNFF, WFP, MEMD, Uganda Beef Producers Association, DFID, FAO, Foodnet and the UIA
2 They include: Transactions Cost Analysis (NRI/Foodnet); Review of Information on Marketing, Processing and
Storage of Uganda’s Agricultural Commodities (draft, May 2002); the sub-sector (commodity specific) studies
undertaken for the Government of Uganda’s Presidential Conference on Poverty Alleviation through Exports
(“Strategic Exports”); and the Legal, Regulatory and Policy Framework study.
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2. BACKGROUND
The medium- to long-term development goal of Uganda is to reduce absolute poverty to less than
10 per cent by 2017. The Poverty Eradication Action Plan (PEAP) is Government’s main
planning framework, establishing the principles to guide investment plans and manage the
economy in order to achieve its development goal. Poverty eradication is to be attained through
successful implementation of all four of the PEAP’s “pillars”. These are:
Pillar 1 Creating a framework for rapid economic growth and structural transformation
Pillar 2 Ensuring good governance and security;
Pillar 3 Directly increasing the ability of the people to raise their incomes; and
Pillar 4 Directly increasing the quality of life of the poor.
In order to implement the PEAP, various strategies have been designed, or will be designed to
operationalise these pillars.
The Plan for Modernisation of Agriculture was prepared to contribute fundamentally to Pillar 3
of the PEAP. It is a Government framework for the eradication of poverty through the
transformation of agriculture and agro-based rural enterprises - from subsistence to commercial
production. The objectives of PMA are, in particular:
Increasing agricultural sector incomes;
Improving household food security through the market;
Creating gainful employment through secondary processing and services; and
Promoting the sustainable use and management of natural resources.
In the PMA implementation process, there are seven priority areas for public action, namely:
Improving the access to and quality of, agricultural advisory services;
Promoting agricultural research and technology development;
Promoting agro-processing and improving access to markets;
Increasing access to and availability of, rural finance;
Promoting agricultural skills and knowledge through formal and informal education;
Promoting the sustainable use and management of natural resources; and
Improving supportive physical infrastructure.
It is the third of these that provides the focus for this Strategy.
The PMA contains vision and mission statements for improving market access. The vision
statement is: “increased and sustainable supply of and demand for competitive processed and
non-processed agro-products on domestic, regional and international markets”. The mission
statement is: “to implement measures that facilitate increased supply of requisite inputs in order
to ensure increased and sustained supply of competitive processed and unprocessed Uganda
agricultural products in domestic, regional and international markets consistent with the
economic growth objectives of the country”.
This Marketing and Agro-Processing Strategy (MAPS) has been designed to contribute to both
this vision and mission. The PMA recognises that improved market access is a key condition for
the transformation of the sector from subsistence to commercial production. The main objective
of the Strategy is therefore to promote market access for farmers. It defines the priority areas for
action and the ways in which its associated programme of interventions should be
operationalised.
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As far as access to markets is concerned, the private and public sectors play different roles but
they should, nevertheless, be complementary. The private sector is responsible for the
production, processing and marketing of agricultural products, while the role of the public sector
is one of creating a conducive environment by drawing up appropriate policies, removing
barriers at all levels, improving infrastructure and putting in place an appropriate legal and
regulatory framework. The MAPS highlights the priority areas in which the public sector will
involve itself in order to facilitate the activities of the private sector. At the same time, it takes
cognisance of the fact that there are already many initiatives underway aimed at overcoming the
constraints to improved market access, while appreciating that there remain a number of areas
still to be addressed. It is believed that through work being undertaken on the priority areas
detailed herein, the private sector will be assisted to identify market opportunities for both
marketing and value-added processing. Once such opportunities have been identified, private
sector interests will be in a position to work with existing institutions and programmes in
developing business plans and in selecting investment options to exploit these opportunities.
Whilst the emphasis of the strategy may appear to be on marketing and processing agricultural
commodities for export, nevertheless the importance of the local market is implicitly recognised
in this Strategy. (For example, it is clear that the focus for marketing such crops as beans and
Matooke bananas will remain the local market for the foreseeable future). Thus, many of the
constraints and the programmes to overcome them enumerated below, apply to both the domestic
and export markets.
Finally, the Strategy makes no attempt to interfere with the basic laws of economics as they
affect the supply, demand and prices of agricultural commodities produced in the country but,
rather, it seeks to make the market more transparent to all those actors participating in it and to
remove any obstacles which impede its efficient functioning. In this way, producers will be able
to compete more effectively.
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3. AGRICULTURAL MARKETING IN UGANDA – RECENT EVOLUTION AND
CURRENT CONSTRAINTS
Over the past 20 years, the economy of Uganda has undergone a rapid transformation - from a
state of virtual collapse in the early 1980’s to a relatively strong rate of annual growth today.
Much of the recovery has been achieved through sound Government policies linked to
investments and structural adjustment programmes supported by the country’s development
partners. Major components in the reform process have been the adherence to market
liberalisation and good governance.
Whilst, for many countries, it has been proven that increased economic liberalisation and
openness lead to growth, it has also been recognised that in some cases and for some
communities the transition from a protected, centrally-controlled economy may bring with it
serious negative, short- and medium-term consequences. Uganda has embraced these reforms by
removing the state’s role in market intervention, implementing a programme of rapid
privatisation of national assets and adopting a highly-liberalised economic policy aimed at
stimulating the private sector. This formula has proved to be successful and, in recent years, the
country has enjoyed GDP growth rates that have consistently been above 7 per cent.
During this same period, many other developing countries have been implementing similar
sector reforms that included: (i) reduced state marketing, (ii) commodity diversification, (iii)
increased production, (iv) privatisation, (v) implementing trade agreements through the WTO.
The widespread adoption of market liberalisation tied to a strong emphasis on export promotion,
has led to a period of relatively-rapid growth in these economies. However, it has also resulted
in a situation in which domestic markets are exposed to the highly-competitive global
agricultural market.
In the past three years, this exposure has presented countries such as Uganda with some serious
difficulties. The combination of structural adjustment programmes and partial reform of the
rules governing international trade, has reduced the prices of the principal primary commodities
exported by Uganda at the same time as stimulating an increase in exports of agricultural
products by more-competitive producers, some of whom continue to provide a high level of
subsidies to their farmers.
The result of oversupply and weakening demand due to the current recession, has led to many
commodity prices falling to a 40-year low. Analysts suggest that commodity prices are likely to
remain at these levels for the foreseeable future. This bleak outlook is reflected in the dramatic
reduction in the terms of trade for countries such as Uganda, and suggests a profound downturn
in their economic outlook and performance.
Uganda’s development partners have recognised some of these difficulties and are making
serious efforts to assist Uganda in overcoming them. Programmes such as the EU-supported
Uganda Programme for Trade Opportunities and Policy (UPTOP) and the USAID-funded
Uganda Trade Revitalisation and Diversification of Exports (U-TRADE) and Agricultural
Productivity Enhancement Programme (APEP) projects, as well as the government’s own
Strategic Exports Interventions’ initiative, are all examples of attempts to diversify export
products, add value to commodities and initiate new forms of industrial growth. At the same
time, budget support to Uganda has increased considerably while HIPC debt relief programmes
are enabling the government to broaden the support it provides to the social sectors.
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Such a high level of support at a time of declining terms of trade poses serious questions as to the
medium-term outlook for the economy and also underlines the importance and urgency of
making the agricultural sector more competitive. In order to do this, a number of constraints
currently affecting the marketing of agricultural produce need to be overcome. These are
detailed below, while the efforts being made to tackle them (or those which it is proposed be
initiated), are enumerated in Section 4.
(i) Limited national capacity to negotiate in international trade fora and to analyse trade issues
Uganda is often inadequately represented at the WTO and in other multilateral and bilateral trade
talks. Moreover, it lacks the capacity to research and analyse important and highly complex
international trade issues, to develop negotiating positions and to respond quickly and effectively
to the varied needs of Uganda’s trade negotiating teams. There are also some difficulties
experienced in the flow of information between the key ministries involved with the
development of national trade policy, particularly since separate ministries are responsible for
different trade agreement negotiations (For example, the Ministry of Finance, Planning and
Economic Development handles EU trade-related matters, while WTO-related matters fall within
the portfolio of the Ministry of Tourism, Trade and Industry). At the same time, problems have
been experienced in links between Kampala and the Ugandan government’s trade negotiating
teams abroad.
These problems need to be addressed as a matter of urgency, particularly in light of the ongoing
Doha round of (WTO) trade talks which is focussing on greater inclusion of developing country
interests and may take into account proposals associated with the “Development Box” and other
non-trade issues proposed by developing countries. Similarly, there are many issues relating to
the AGOA Treaty, the EU’s Everything-But-Arms Agreement and NEPAD, that require careful
negotiation and partnership-building if Uganda is to capitalise fully on the potential opportunities
they offer.
(ii) Marketing and trade finance shortcomings
The high cost of funds and the lack of long-term finance that are a perennial complaint among
the business community particularly in the rural areas, severely constrain investment in
marketing, processing and trade in the agriculture and fisheries sectors. Innovative methods are
required to stimulate greater entrepreneurship and to facilitate enterprise development in the rural
areas by making such finance more readily available.
(iii) Lack of market information
There is a general absence of objective, reliable and regular information available on the
quantities, prices and trends in agricultural production (principally on food crops and livestock),
for use by both the farming and agricultural trade communities throughout the country. Such
information needs to be made available to farmers in a form that they can understand and act
upon if they are to be able to benefit fully from available markets (thus increasing their net
returns and reducing the amount of produce wasted). Enabling farmers to appreciate and
maximise gains from market information requires that farmers are organised and educated such
that they are able effectively to engage in the liberalised market economy and therefore to use
market information as part of their marketing mix and analysis. Market information also needs
to be provided if consumers are to reap the full benefit that would result from an efficient crop
and livestock marketing network.
It is also undoubtedly true that the level of understanding of national and international
agricultural marketing issues is low amongst those involved in the trade and in agricultural
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processing enterprises, particularly in relation to adding value and the agro-processing options
that are available. This raises the issue of the need for increased training opportunities in the
fields of business planning, sources of finance and technologies that are available to transform
low-value raw materials into higher-value, processed goods 3 .
(iv) Lack of ‘organised agriculture’
The general situation prevailing in the country is for individual producers, themselves, to deal
directly with market traders and, thus, for returns to be lower than those that could be realised
were farmers to come together to negotiate market deals. Indeed, in only a limited number of
cases have smallholder producers formed associations to take advantage of economies of scale
that can be realised from marketing activities – of both outputs and inputs. By coming together
to market their outputs, smallholders are able to participate more effectively in the marketing of
their produce, retaining for themselves a greater proportion of the marketing margins available.
(v) Inefficient transport systems
High transaction costs are a feature of Uganda’s agricultural industry, much of which can be
attributed to the country being land-locked. Inefficiencies in the operations of the railways, for
example, result in high costs being charged for transporting agricultural commodities to the East
African coast for shipping overseas. Reducing internal and international freight costs is therefore
critical if the country is to become more competitive in the medium to long term. The lack of
rural roads, as well as the poor condition of those that there are, also act as a major barrier to
market access for many poor farmers particularly in the more remote parts of the country. This
is aggravated by the general lack of affordable transport.
Not surprisingly, therefore, recent research has shown that significant returns are to be realised
from investment in the construction and maintenance of roads linking farming communities with
population centres.
(vi) Other infrastructure shortcomings
Only 5 per cent of the population has access to electricity with the bulk of them being located in
the Entebbe-Kampala-Jinja conurbation. Thus, the national electricity grid extends only
minimally into the rural areas (less than 1 per cent of the rural population has access to gridsupplied
electricity), while those who are connected suffer from the unreliability of the power
supply. At the same time, the cost of electricity is high which puts agro-processing ventures at a
competitive disadvantage. Finally, the inadequate capacity of public agencies to draw up
regulations governing quality standards relating to both agricultural input imports and
agricultural produce exports, means that the country’s international trade is highly vulnerable to
interruption, as happened in the case of fish exports in the late-1990s.
Studies have revealed that inadequate storage capacity is not currently a severe constraint to
agricultural marketing and agro-processing activities. However, poor storage structures and
practices at the farm household level do result in losses and/or a reduction in the quality of grain
and other commodities. Because of this, the majority of farmers are unable to take full
advantage of price changes during the marketing season.
3 The private sector is only now emerging in certain areas - agro-processing for example – and there is undoubtedly
a need for a considerable volume of public sector resources to be invested in capacity building in this, and other,
fields.
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At the same time, the poor standard of the facilities at many of the produce markets and the
complex and burdensome dues levied on traders are recognised as being important constraints to
wholesale and retail market activities in the country – with women being particularly adversely
affected.
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Table 1
Principal findings of recent studies that analysed agricultural marketing and agro-processing in Uganda (see Footnote 2)
Transaction Costs Analysis Legal, Regulatory & Policy
Framework
Finance/tax
Increase access to finance for Abolish double taxation on locally-
agricultural trade & agri-business. marketed ag. produce.
Develop micro-finance network (for
production, trade, processing and
marketing).
Provide tax and other incentives to
agro-processing and storage
operations.
Regulatory
Rural contract enforcement, such that
processors can link with farmers on a
long- term arrangement.
Market information
Make provision for delivery of market
information to farmers and particularly
link this activity to farmer-controlled
enterprises.
Organisation development
Improve farmer organisation through
GoU support to farmer-controlled
enterprises.
Infrastructure/transport
Increase investment in transport
through provision of more rural
community access roads.
Encourage investment in intermediate
Harmonise existing regulations
pertaining to marketing & trade
matters.
Amend Ugandan legislation in line
with international trade agreements.
Improve local marketing &
processing facilities/ infrastructure.
Marketing Review Strategic Exports
Improve rural finance options.
Improve legal framework and contract law
enforcement to build trust and equity in the
market place.
Improve access to market information.
Establish a expert unit for analysis and
provision of market intelligence.
Promote collective marketing/
trading/action amongst farmer associations.
Develop private sector support groups in
key value-added/ commodity sectors with
private sector leading these associations.
Ensure that Government policy supports
increased access to improved transport via
road, rail and air.
Improve physical market infrastructure.
Enhance access to medium and long-term
financing.
Fast track formulation and/or amendment of
relevant laws and regulations supportive of the
strategic investments and promoting national
capacity to take advantage of existing trade
opportunities.
Accelerate production of planting and stock
materials in partnership with the private sector.
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transport systems.
Reduce international airfreight costs.
Improve efficiency in inland and
international freight i.e. rail linkages.
Improve electricity supplies for agroprocessing.
Institutional
Capacity development
Clarify portfolios of MAAIF &
MTTI as regards processing and
marketing.
Strengthen co-operation between
UEPB, MTTI & MAAIF (and merge
UEPB & UIA).
Improve farm-level ag. produce
storage facilities/ practices.
Link agricultural research & extension
messages to market-led R&D.
Develop investment plans for agroenterprise
opportunities for investors.
Improve the trade negotiating skills of
Government at COMESA/ WTO levels.
Devise an educational scheme to assist
farmers to understand the merits of
association and market information within
the liberalised market environment.
Institutional reform and/or strengthening for
efficient and effective service delivery (for both
the public and private sector institutions).
Devise mechanisms for joint governmentprivate
sector investment in strategic areas.
Focus on key commodities for domestic,
regional and export marketing and develop
detailed implementation plans indicating the
expected outputs, actions, resources, key actors
and time-frame.
Diversify export products and promote product
differentiation.
Develop skills in export product handling and
international trade rules and regulations.
Accelerate skills development in value-adding
areas such as textiles and garment manufacture.
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4. PRIORITY INTERVENTION AREAS
4.1 General
In light of the constraints identified in the previous Section, priorities for public intervention in
the areas of agricultural marketing and agro-processing can be summarised as:
(a) Trade and finance
• improved capacity to undertake trade negotiations in regional and international fora;
• establishment of expert teams to provide trade/market analysis and intelligence;
• improved access to financing for marketing/value-added interventions/agri-business;
• improved rural contract law.
(b) Producer support
• provision of market information to farmers and traders;
• improved farmer organisation; and
• educational programmes to engage farmers more effectively in the liberalised market
environment.
(c) Infrastructure
• increased rural road investments to link farmers with markets;
• reduced rates for air and rail freight; and
• overcoming other infrastructure shortcomings
There is also a need to bring about a general increase the overall productivity of the agricultural
sector – for example, increasing the effectiveness of agricultural research and extension service
delivery through a greater emphasis on demand-led programmes, and the diversification of
production and exports into non-traditional agricultural commodities. However, interventions in
these (and other) areas are already underway or are planned for implementation in the near
future, under the Ministry of Agriculture, Animal Industry and Fisheries’ work programme
which receives substantial support from Uganda’s development partners.
4.2 Specific intervention programmes
The MAPS seeks to address the priority areas for public sector action listed above. They are
detailed below and summarised in the logical framework presented in Table 2 (see “Activities” 1
and 2, in particular). It is important not to lose sight of the fact that a number of the areas
highlighted in this paper - improving the availability of and access to, finance for trade and agroprocessing
purposes, reducing air and rail freight rates (through common initiatives by Uganda,
Tanzania and Kenya to tackle transport bottlenecks affecting Uganda’s trade) and improved
contract regulations to enable contracts to be more rigorously enforced (thus reducing trading
risks and encouraging greater transaction cost efficiency), in particular - are already being
addressed by the Government through its Medium-Term Competitiveness Strategy (MTCS).
Care will be needed to ensure that none of these efforts are duplicated.
4.2.1 Trade and finance
(i) Development of the national capacity to negotiate international trade agreements and to
analyse trade issues
The EC-supported UPTOP intervention, the implementation of which is scheduled to begin later
this year, will assist the Government in its work of developing of a comprehensive national trade
policy (including an associated strategy for its implementation) through a consultative process,
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involving stakeholders in the private, public and parastatal sectors. Furthermore, it will develop
the capacity of key staff in the concerned public sector bodies (principally the Ministry of
Tourism, Trade and Industry – see below) both to negotiate international, regional and bilateral
trade agreements in teams and to undertake thorough analyses of trade issues. (This will include
monitoring the impact of trade agreements on different socio-economic groups). The staff thus
trained will also be able to provide technical advisory services in Uganda, on the obligations
arising from international and other trade agreements.
A key output of the intervention, which is scheduled to commence before the end of 2002, will
be for the country to be adhering to a trade policy that is, clearly, both benefiting the poorer
strata of the population and supporting the expansion of the private sector, particularly with
regard to exports.
The USAID-supported five-year U-TRADE intervention, due for implementation in late-2002,
will provide further support in this area. In particular, it will assist the Government in
developing a viable trade and investment policy and strategy, as well as in reviewing and in
revising, as necessary, the national export strategy. It will also assist the government in
improving the national legal and regulatory framework to promote and facilitate export growth.
The problem caused by the lack of co-ordination within the Government over trade negotiations
requires immediate action. As far as institutional responsibilities are concerned, the Ministry of
Tourism, Trade and Industry will, henceforth, be the body ultimately responsible for negotiating
all trade agreements. Associated with this, the same Ministry will be responsible for developing
channels of communication such that rapid but considered positions, can be relayed to the
relevant decision makers and thereafter to the teams negotiating in foreign capitals.
(ii) Increased trade finance
Under the Medium-Term Competitiveness Strategy, the Government is seeking to reform the
financial sector to increase the ability of private businesses to access capital at reasonable cost
and to cater better for small- and medium-sized enterprises.
Another important intervention, in this field, which would result in a reduction in transaction
costs is the establishment of a commodity exchange and warehouse receipts finance/inventory
credit system in the country. Recent assessments have shown that such interventions
undoubtedly have the potential for transparency to be enhanced and market efficiency to be
improved, resulting in reduced transaction costs. They will also provide greater liquidity at the
rural end of commodity supply chains. For these reasons, a plan of action covering these
components is currently being drawn up in the Ministry of Tourism, Trade and Industry; it is
being supported by development partners. Thus, the establishment of both a commodity
exchange and warehouse receipts financing system can be expected shortly.
(iii) Improved rural contract law
Steps have been taken under the MTCS to improve commercial contract law and the associated
judicial procedures, such that contract enforcement procedures are better tailored to the needs of
rural communities . However, there are doubts that contracts can be easily enforced in rural
areas due to the generally-low level of awareness and the poor communications. This is an area
requiring further concerted effort under the Medium-Term Competitiveness Strategy.
4.2.2 Producer support
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(iv) Establishment of a marketing information system
Under the NAADS programme, a tender will shortly be awarded to a specialist consultancy firm
to establish an agricultural market information service and manage its operation for a trial period.
Such a system will improve (and in many instances, begin) the flow of information on prices and
quantities of agricultural produce to farmers and traders operating in different parts of the
country. It will, at the same time, provide training to farmers in the analysis and use of that
information. By creating more competitive agricultural produce markets, the returns to the
investments being made by farmers and traders will thus be improved.
Over time, once competitive markets become established, it is envisaged that such a service
would likely be supported by the agricultural industry itself.
Funding for this contract, at least during its pilot phase, has already been agreed to and will be
met from resources provided by both the Government and its development partners (the same is
true of the other NAADS-related intervention described under Para.(v), below). It is planned that
if the pilot proves successful, the marketing information system will quickly be expanded
nationwide.
(v) The development of “organised agriculture” and increasing the capacity of farmers
Under the NAADS programme, a contract is to be drawn up with a training organisation(s) to
work with and develop the capacity of farmers’ associations to join together in marketing their
produce, so that they are able to increase their bargaining power and thus obtain higher farmgate
prices. The formation of farmers marketing groups (also known as Farmer Controlled
Enterprises, FCEs, or co-operatives) will enable the direct sale of produce to stakeholders further
up the marketing chain, eliminating at least one level of middlemen and, thus, achieving higher
net farmgate prices. Furthermore, FCEs/co-operatives encourage the improvement and
standardisation of quality to meet more onerous contractual quality specifications demanded by
larger buyers.
It has to be recognised that this intervention will cover only a limited number of Districts, in line
with the rolling-out of the NAADS programme itself. Full national coverage will not be realised
for at least another five years. However, the DANIDA-supported Agricultural Sector
Programme Support intervention has been working over the past three years with the Uganda
National Farmers’ Federation (UNFF) and other Ugandan partners to develop the capacity of
smallholder farmers to mobilise themselves in “common interest groups” to demand
improvements in the delivery of services. Similarly, efforts have also recently begun to
encourage the formation of co-operatives for the same purpose, stressing the requirement that
they be genuinely developed from the grass-roots.
The strengthening of community-based agriculture producer organisations, a number of which
are already operating, will also be a major component of the APEP intervention which is to be
implemented over a five-year period starting before the end of 2002.
4.2.3 Infrastructure
(vi) Improving the efficiency of the infrastructure network
A key component of the recent White Paper of the Ministry of Works, Housing and
Communications (MWHC) on its feeder roads rehabilitation and maintenance strategy, are plans
for the sustainable maintenance of district, urban and community access roads. Under this
programme, District roads are to be maintained such that they are passable throughout the year.
In the coming year, work will begin on a plan for the expansion of the District road network, as
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called for in the PMA, that will take into account projected developments in specific Districts
and which will be planned for - and executed with - the active participation of affected local
communities. In this way, the urban areas and their input and produce markets will be made
more accessible to the poor farming community.
As a result of efforts made by the MWHC over the past decade – in line with the increased
emphasis now placed by the government on maintenance (supported with PAF funding) - the
proportion of the District road network in a fair or good condition has increased from 15 to 67
per cent. However, only 7 per cent of community access roads can be thus classified.
Nevertheless, the White Paper indicates that 50 per cent of the community access roads are to be
improved to a fair condition over the next ten years. This figure does not include the community
access roads’ rehabilitation activities to be financed by NGOs and LCIIs, themselves, and
through other means (the LGDP and Non-Sectoral Conditional Grants, for example).
Work is presently underway to improve infrastructure and facilities at the principal border post
crossing point for road transport to and from Kenya, in order to reduce the excessive time spent
by goods vehicles in transit between the two countries.
(vi) Overcoming other infrastructure shortcomings
The Government has adopted a power sector strategy which both seeks to encourage private
sector participation and emphasises the role of competition in promoting efficiency within the
sector. A five-year intervention, Energy for Rural Transformation, is getting underway which
seeks to accelerate the expansion of access to electricity in the rural areas. The intervention
foresees the close involvement of the private sector in developing both a commercially-oriented
service delivery system for energy and small-scale renewable energy power generation by
private enterprises.
Under the MTCS a strategy has been proposed for improving the legislation associated with the
production of agricultural commodities and the processing of food, as well as for ensuring that
inspections are carried out and the legislation enforced.
A number of publicly-funded interventions have been planned for the establishment of a number
of produce markets, and/or the improvement of existing infrastructure at some markets. At the
same time, the private sector is being encouraged to invest in agro-processing ventures, such as
an abattoir conforming to international standards and a textile manufacturing plant in the
Kampala area. Continued research in the design and use of appropriate farm-level produce
storage structures is being financed, together with interventions to increase the uptake of such
technologies, as well as the adoption at the farm level of improved post-harvest handling
practices.
As far as the storage and marketing of grain for commercial purposes is concerned, it is the
policy of the Government to support the private sector in its activities in this field. It is planned
that the U-TRADE project will operate in this general area, supporting Government’s efforts to
relieve infrastructure bottlenecks as they constrain the expansion of exports, for example.
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Table 2
Logical framework (draft) for the Marketing and Agro-Processing Strategy 1,2
Intervention logic Objectivelyverifiable
OBJECTIVE The eradication of poverty
by transforming
subsistence to commercial
agriculture (n.b. this is
PMA mission statement)
indicators
Poverty
prevalence
reduced from 35%
in 2000 to

PURPOSE Marketing and agroprocessing
systems &
practices in place which
address the needs of
smallholder producers and
which contribute towards
increasing the valueaddition
arising from the
sector
RESULTS 1. Marketing information
system in place.
2. Viable farmers’
organisations/farmer-
controlled enterprises
(FCEs) operating
3. National trade policy
drafted; civil servants’
trade negotiating and
trade research skills,
enhanced.
4. Expansion of rural
roads network
5. Commodity exchange
and warehouse receipts’
system, in place
Crop price and
volume info.
system operating
by end-2002, and
being used by all
strata of farming
community and
traders in NAADS
pilot areas.
Refined &
expanded
nationally during
2003/04
‘n’ FCEs
established in ‘p’
sub-counties by
end-2003; ‘m’ by
end-2004, which
are regularly
involved in
collective output
& and input mktg.
activities.
Output to be
realised through
UTPP & UPTOP
implementation
(from late-August,
2002)
Key targets
detailed in
Ministry of
Works’ White
Paper outlining a
plan for the
rehabilitation,
expansion and
maintenance of
the rural road
network, have
been realised
Work on these
programmes is
underway and is
being supported
by UNCFC and
USAID, working
GDP estimates
Ad hoc reports on
Marketing and
agro-processing
sectors
Annual PMA
Review reports
Quarterly progress
reports.
External
monitoring
reports
MoU/constitution
of each
FCE/farmers’
organisation.
GoU’s Inter-
Institutional Trade
Committee
progress reports
Ministry of
Works’ rural
roads agency
progress reports
External shocks
(drought, pest/
disease outbreak,
civil disturbance)
do not inhibit
efficient
operation of the
systems.
Market info.
activities well coordinated
with
ongoing related
activities (UBoS,
FEWSNET, etc)
Co-ordination
actively pursued
with APEP,
UPTOP and other
trade/mktg-
related interventions
(and dev.
strategies: e.g.
MTCS and Strat.
Exports), with
private sector
interventions in
these areas, and
with other
export-promotion
agencies (PSF,
UEPB, etc.).
Cross-cutting
issues, as they
relate to
agricultural
produce
marketing and
processing,
adequately
addressed during
programme
implementation
(e.g. natural
resources
management,
HIV/AIDS and
gender?).
MTTI allocated
sufficient
budgetary
resources to
retain trained
staff.
16

6. Rural access to electric
power expanded
significantly
ACTIVITIES 1.1 Tender drawn up and
let for contracting market
info. expertise
1.2 Training provided to
NAADS Secretariat to
develop
capacity/capability to
monitor operations and
evaluate effectiveness of
the mktg. info. system
2.1 Contract drawn up
with training body, to
work with & develop
capacity of farmers’
associations in group
formation/collective
marketing activities, etc.
2.2 Undertake study tour,
reviewing CLUSA’s
capacity-building
activities with farmers’
organisations.
with MTTI.
Energy for Rural
Transformation
project under
implementation
from mid-2002.
NAADS Secretariat
lets ?month
pilot
contract during
2002, relating to
provision of
market info.
services, covering
all of country in
‘n’ crops and ‘m’
livestock/livestock
products.
Including raw
data collection,
analysis & regular
dissemination;
training of farmer
groups, traders
and other
stakeholders in
analysis/use of
mkt. info.
In-service training
in mkt. info.
systems provided
to 2(?) NAADS
Secretariat staff
by consultants/
current TA.
Capacity development
activities
underway in ‘n’
farmers’
organisations
during 2003; ‘m’
in 2004.
“n” day study tour
for ‘m’ GoU
officials (MAAIF,
PMA Secretariat/
sub-Committee
staff) in
Mozambique,
completed by end-
2002.
Means:
Costs:
Notes:¹ other, related, areas requiring action are being addressed under the MTCS umbrella – negotiations to bring
about a reduction in road, rail and air freight rates, for example.
2
a number of the major programmes which make up the strategy are already under implementation - see “Results” 3
to 6 (in Italics).
17

5. OPERATIONALISATION OF THE MARKETING AND AGRO-PROCESSING
STRATEGY
5.1 Institutional arrangements
The operationalisation of the MAPS will be through already-existing institutions and the current
modalities of the PMA.
The PMA Steering Committee (SC), supported by its Secretariat, will be responsible for
providing the policy guidance and sourcing the finance necessary for the implementation of the
components of the Strategy. However, the interventions outlined in Section 4 that are the
responsibility of the public sector, will be incorporated into the 2003/04 Sector Budget
Framework Papers of the relevant lead agencies, where they have not already been planned for.
They will subsequently be reflected in the government’s Medium-Term Expenditure Framework.
The Marketing and Agro-Processing sub-Committee of the PMA will be responsible for:
(a) ensuring that the programmes detailed in the Strategy are implemented by the
relevant bodies in a manner consistent with the principles of the PMA;
(b) monitoring progress made with the ongoing components of the strategy;
(c) ensuring the flow and sharing of information between the implementing units
of the different programmes (both ongoing and those that are planned);
(d) providing technical inputs to the implementation process, if required, through
the expertise contained in the sub-Committee or contracted by it; and
(e) producing quarterly progress reports for consideration by the PMA SC.
5.2 Implementation of the MAPS’s components
The implementation of the various programmes under the Strategy will be carried out by the
relevant public sector institutions (see Table 3). However, in line with the partnership principles
and the need to maintain broad stakeholder ownership and participation in the process, a
stakeholders’ forum will be established to assist the planning and management of each
programme.
5.3 Financing the MAPS
The MAPS will be financed through the existing financing modalities for the PMA priority
areas. Specifically, public resources (which include support provided by development partners
through the budget) will be channelled through the MTTI, for the trade policy and trade
negotiations programme. (It is most important that the capacity of the Ministry, itself, be
adequate to enable it effectively to fulfil its role in the implementation of the MAPS. To this end
a functional analysis of the Ministry will be carried out, as a matter of urgency, to define clearly
the functions and associated resource requirements of the institution). For the market
information component, resources will, during the pilot phase at least, be channelled through the
NAADS programme. However, the component will have a strong link with the private sector,
since it will also involve an extensive network of radio and TV stations, newspapers and a
telephone network. The role of the public sector, on the other hand, will be to focus on the:
• collection and synthesis of information;
• quality control; and
• promotional activities.
The promotion of farmers’ associations, co-operative societies and trade/exporter associations is
being led at the grass-roots level by the NAADS programme, as well as by apex private sector
associations, such as the Uganda Cooperative Alliance, the UNFF, the Private Sector
18

Foundation, the ACU, the Uganda Chamber of Commerce & Industry and the Uganda
Manufacturers’ Association.
Table 3
Key institutions involved in implementing the components of the
PMA Marketing & Agro-Processing Strategy
MAPS Intervention Area Timing/Action Lead Agency Participating Partners
1. Trade Policy/Negotiations
- trade policy formulation & research
WTO/Cotonou/NEPAD/
EAC/COMESA
- representation and negotiations
- market research
2. Market Information
- information collection and
dissemination
- market intelligence and analysis
- training
3. Farmers’ Associations
- group mobilisation
- agricultural inputs
- agricultural outputs
4. Export Competitiveness
- strategic exports development
- value addition/new product
development
- promotion, domestic, regional and
international
5. Infrastructure
- rural roads
- rural electrification
- post-harvest research/ext.
• approved
• ongoing
• immediate
• approved
• approved
• approved
• early-2003
(proposal to be
formulated
immediately)
• ongoing
• ongoing
• ongoing
• ongoing
• approved
• ongoing
MTTI/Trade Dept. PSF, CSO, MFA, MFPED
& MAAIF
MAAIF/MTTI FOODNET, NAADS,
FEWSNET, UNFF
MAAIF (&NAADS)
UNFF, ACU, PSF
UEPB/UIA,
MTTI/MFPED Private sector, MAAIF
(and its semi-autonomous
agencies)
MTTI/local govt’s/
MWTC/MEMD/NARO
Private sector, DPS, UEB,
NAADS
A number of the components of the ongoing export competitiveness and market infrastructure
programmes are already underway. Additional resources will be channelled through the
responsible agencies detailed in Table 3. Details of the principal interventions in each of the
programme areas under the MAPS, are shown in Table 4.
Table 4
MAPS: public funds already committed for the short term (1-3 years) 4
4
This Table excludes initiatives being supported under the Government’s Medium-Term Competitiveness Strategy
and the strategic exports’ programme.
19

Item Amount committed Source Timing
1. Trade policy/ € 4.50 million EC (UPTOP) mid-2002 (4 years)
negotiations
n.a.
USAID (U-TRADE) 2003 (5 years)
2. Market
information
USh 650 million NAADS 2002/03 (1 year pilot)
3. Farmers’
USh 949.24 million NAADS 2002/03 (budget not
associations
yet available for later
years)
4. Export
competitiveness
5. Infrastructure
n.a. USAID (U-TRADE) 2003 (5 years)
- rural roads
n.a.
various (GOU, dev.
partners)
2002 onwards
- rural electrification US$ 44 million World Bank (ERT) 2002 (5 years)
- agro-processing n.a
USAID (APEP) 2003 (5 years)
- post-harvest research € 0.80 million EC
2002 (4 years)
20/08/02
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