Tuesday, December 1, 2015

Targeted Capacity Building in Beans and Milk Value Chains for Sustainable Value Addition in Uganda

Argentina, Brazil and lately Chile has proven that countries like Uganda with huge comparative advantage in the production of agricultural commodities with well-organized value chains can join the premier league of nations that are well respected and forces to reckon with. Sadly, most of the agricultural commodities, and particularly food staples produced in Uganda, are lost post-harvest due to lack of value added processing.  For instance, only 26% of the total agricultural volume produced in the region is processed post-harvest on average as shown in Figure 1.

Figure 1. Value of post-harvest processing in total value of production.
It has been estimated that the East African Community (EAC) region loses about 30% of cereals, 50% of roots and tubers, and 70% of fruits and vegetables post-harvest.  Because of inadequate value added agro-processing, the region’s exports are mainly in raw form, which means that a high proportion of commodity value does not accrue to the region.  Reversing this trend could improve the region’s food and nutrition security, and help create jobs for the millions of unemployed men, women and youth.

Studies have shown that low value addition in the EAC is caused by, inter alia, weak agricultural commodity value chain development and linkages; low investment in last mile infrastructure (roads, water, energy, telecommunication, etc.); gaps in requisite skills and technological know-how; limited scale economies in production and processing; inadequate financing; limited and unsustainable risk mitigation strategies; inadequate investments in farming, agribusiness development and development of agro-industries; and weak legal, regulatory and governance frameworks.  Even where agro-industries exist, they are often faced with low capacity utilization arising principally from lack of adequate and timely supply of the right quality and quantity of raw materials due in part to low agricultural productivity, poor last mile infrastructure and scattered and small-scale production that increases collection, coordination and transaction costs.

Two commodities, namely, milk and beans are a common denominator in diets in Uganda across different income divides thus good candidates to consider in studying their value chains. Milk and beans prominently feature among the priority staple food commodities with potential for agro-processing in the EAC as shown in Matrix 1.

Commodity cluster
Commodities with highest potential for agro-processing
Potential areas of investment
1. Cereals
Maize, Rice
Post-harvest handling (drying, storage & milling); processing (canning & pre-cooking)
2. Pulses
Beans, Soya beans
3. Fruits
Collection centres, cold storage; refrigerated transportation; packaging, fruit pulp
4. Vegetables
5. Oil crops
Sunflower, Palm oil
Refining, aggregation of crude oil, contract farming & Mini-Estate Processing Enterprise approach by medium-scale processors
6. Nuts
7. Roots & tubers
Cassava, Irish potatoes
Preservation (intermediary products for better transportation & handling), starch & glucose
8. Livestock
Dairy, Fish
Collection centres, cold storage, refrigerated transportation, fish feed, milk powder & UHT milk

Source: E3AIS (2013).

Sadly, besides cooking at homes and the catering sector, there is no significant value addition to beans in Uganda; consumers also tire of monotonous flavour. Cans on the market are of poor quality. Uganda the leading bean producer in Africa imports canned beans from Italy, Brazil, and USA to mention but a few. Targeted capacity building in areas where Uganda has an edge would be a very good starting point given the resources and organization needed to develop functional value chains. As a result, an increasing number of people are abandoning or reducing their bean consumption despite its documented high nutrient content and health benefits. Prospects of marketing increased quantities of beans and new agro-processed bean products within the EAC markets requires carefully examining production and marketing constraints (increased farm productivity, producer incentives, and access to better markets). Equally important is examining prospects for increasing demand for beans and agro-processed products (understanding consumers’ tastes and preferences, increased consumer awareness of benefits of consuming beans and other value-added products, increasing consumer choices of value-added products, etc.) especially treatments such as de-hulling, soaking, milling, fermentation and germination or malting and cooking enhance the digestibility and nutritional value.

A case in a point is the powder milk production and market. Although the EAC offers a good market for powered milk, it suffices to note that as a region we have practically handed over the market to major players in New Zealand, Australia, Denmark, USA and Mid-Eastern countries that are dry desert sands because any investor seeking to establish powder milk processing capabilities at the local, regional and global level needs to pay attention three issues that are currently to our disadvantage, namely: 1) Capability to deliver at least 200,000 litres of milk per day. 2) Low energy bills since milk has to be stabilized, homogenized, concentrated, spray dried and bed dried. 3) Technological dependence. A reconditioned powder milk line costs in the region of € 1,700,000. A brand new one of any of the three brands of Relloy, Damro, or Carlisle costs between the € 3,500,000 and € 4,000,000. More often than not, Carlisle demands to do a detailed feasibility study themselves, before providing the quotation and the customer has to meet the cost of the study.

Succinctly studying milk and beans to specific targeted capacity building along respective value chain is a worthy while undertaking for DRUSSA fellowship and makes sense to vast majority of farmers and policy makers in Uganda.

Prepared by: Prof. Dr. Eng. Noble Banadda, DRUSSA Fellow

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