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

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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