By
Moses Talemwa
WEEKLY OBSERVER
Farmers and produce dealers will soon start using their
stocks as collateral for bank loans following the launch
last week of the warehouse in the country to facilitate
the trade.
It is similar to the Kenyan system that was launched last
year and is said to be working smoothly.
The warehouse is run by Agroways Limited, a local company
through the Uganda Commodity Exchange (UCE). The UCE a local
company that facilitates trade in graded produce such as
maize, rice, beans, coffee, sesame, beans and soya.
The first licensed warehouse located in Jinja, is equipped
to clean, grade, process and store gain, particularly maize
to international standards.
Agroways Managing Director Herbert Kyeyamwa said the warehouse
has a capacity to process 20 tons a day, but the company
receives on average 10 tons per day.
Agroways has signed up 35 agents in Kaliro, Kamuli, Jinja,
Iganga and Bugiri who act as the formal link between farmers
and the company.
A trader or farmer with at least one ton (1,000kgs) can
take their produce to the warehouse to be cleaned, graded
and stored. An electronic receipt is issued to the stock
owner by the UCE.
The UCE then lists this produce on its bulletin board, similar
to the way Uganda Securities Exchange lists equities and
shares on the stock market.
The UCE bulletin is accessible to big and international
buyers like the World Food Programme (WFP) who usually offer
the highest possible prices to the dealers.
According to the Commissioner for Cooperatives in the Ministry
of Trade, Fred Mwesigye, the farmer or dealer is at liberty
to use the electronic receipt to borrow money from a bank
loan.
The receipt is a guarantee to any financial institution
that the produce is available in the amount and quality
in specified.
“We are all aware of reports that prices are rising,
so by grading your stock, the receipt shows buyers that
you have the good commodity that you want so you can access
these lucrative markets,” he said.
This means that it is no longer necessary to send samples
of produce to prospective buyers as grain will have been
graded by the Uganda National Bureau of Standards.
The East African Grain Council Executive Director, Anne
Mbaabu says that grain dealers in Kenya would now be able
to determine that good quality produce available in Uganda.
The licensing of Agroways and many more that will come
soon is in accordance with the Warehouse Receipt System
Act 2006.
Dealers or farmers with buildings that can be converted
and licensed to operate warehouses have been invited to
approach the UCE for inspection and eventual certification.
An official with the UCE said applications from stores
in Masindi, Kapchorwa, Mbale, Lira and Kasese and being
considered.
This may not however benefit small-holder farmers in the
short term because it has come too late for them to cash
in on their most recent harvest.
According to Enock Kiregyera, a farmer and chairman of
Jinja Farmers Association, most farmers sold out their grain
to dealers in the January-March harvest window, and so only
dealers have it in their stores.
Small farmers may have to come together in a way similar
to co-operatives if they are to benefit because Agroways
deals in quantities that may not be raised by a single small
farmer.
If small-holder farmers do not unite, the middlemen will
be the biggest beneficiaries.
That is why, according to Dan Ntale, a farmer’s representative
on the UCE, it will be difficult to eliminate traders from
the chain.
He however believes that farmers will become wiser to claim
the benefits. “They need to consider setting up groups
or associations so they can garner the quantities needed
by the warehouses.
As such they will benefit as information about the system
trickles down to them,” he said.
Indeed, according to Kiregyera the problem has been access
to market for the produce. Now farmers only needed to come
up with the quantities in order to take advantage of the
economies of scale available on the international market.
But the move however, comes at a time when there is a serious
shortage of maize grain globally and rising food prices.
In the region, Kenya is suffering severe shortage of maize
following the post-election violence.
And in Uganda, the WFP is looking for more grain to feed
flood victims in Teso in addition to internally displaced
people in the north. It is anticipated that the present
price of $350 (about Shs 600,000) per ton would rise in
July when demand in Nairobi is expected to outstrip supply.
mtalemwa@ugandaobserver.com
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