Agricultural enterprises hardest hit by COVID-19- EPRC report

A survey conducted by the Economic Policy Research Centre (EPRC), a leading independent policy think tank, indicates that agricultural enterprises in Uganda have been “worst hit” by the impact of the COVID-19 pandemic on the national economy.

The report, published May 12, shows that the COVID-19 pandemic and subsequent national lockdown have resulted in a 50% drop in overall business activity, with agricultural enterprises hardest hit due to challenges of accessing inputs arising from “transport restrictions” and the “ban on weekly markets”.

Of the 147 businesses surveyed across different regions in Uganda, 71% of agricultural enterprises experienced “severe decline in demand” compared to a 49.4% score on the same metric for all sectors.

The survey’s findings will be cause for concern to government, a key part of whose COVID-19 response was premised on the assumption that Uganda’s mostly rural, subsistence-oriented agriculture sector would remain largely unscathed by the restrictions related to the lockdown.

Hence, President Museveni permitted farmers to continue working their fields during the lockdown, and ordered that agricultural input stores remain open. Transportation of agricultural products was also allowed.

In adopting this stance, the president hoped to minimise the toll of the pandemic and its related restrictions on a sector that employs more than 70% of Ugandans and constitutes the heart of what Museveni refers to as Uganda’s “real economy”.

Perhaps due to these measures, the survey found that inputs for businesses in the agricultural sector have become relatively cheaper during this period, while 55% of businesses in other sectors reported an increase in input costs.

“…majority of the businesses in agriculture (43%) reported having experienced a decline in the price of input during the period. This could have been as a result of a fall in demand, which coincided with a buildup of inventory,” the EPRC report reads, in part.

This, the survey attributes to COVID-19 containment policies that include transport restrictions, quarantine, social distancing and ban on weekly markets, which hinder farmers’ access to input and output markets while also undermining their capacities to produce.

As such, whereas business activity was negatively impacted across the board, “sectoral analysis shows that businesses in agriculture experienced the largest decline in business activity with 76% of the firms reporting severe decline and 12% reporting moderate decline,” according to the report.

Hard times for small businesses

Micro, Small and Medium Enterprises (MSMEs) seem to be most adversely affected by the current business climate. In the EPRC’s estimation, majority of these small businesses have struggled to implement the mandated Standard Operating Procedures (SOPs) like provision of on-site accommodation for employees, in addition to having the mobility of their workers hampered by the March 25 ban on public transport.

Additionally, majority of these businesses (83%) are dogged by an acute decline in domestic demand for goods and services, a fact the policy researchers blamed on loss of income-earning opportunities.

Consumption of agricultural products was especially affected as demand for them is more “income elastic”, the report says.

Worker woes

76% of businesses under survey reported reducing their workforce size, due to risks presented by COVID-19 and subsequent lockdown measures. Of this, 29% reduced their employees by more than half.

Even here, businesses in the agricultural sector undertook the largest workforce restructuring, with 37% of the enterprises reducing their workforce by at least 50%, and another 44% by at least 26%.

Many private employers also reported implementing salary reduction measures for employees as part of efforts to stay afloat during this time.

EPRC warns that in the event of temporary closure, businesses in the agriculture and service sectors are less likely to compensate workers as these two sectors remain “more susceptible” to the adverse impact of COVID-19 on business operations compared to the manufacturing sector.

Explore regional markets

The Economic Policy Research Centre has advised local firms to explore regional markets within the East African Community (EAC) and the Common Market for Eastern and Southern Africa ( COMESA) for their current input needs, rather than depending solely on international suppliers for raw materials.

The policy experts hold that such disruptions present Uganda with a clear opportunity to develop its domestic value chains in order to ensure that businesses have stable sources of inputs while saving scarce foreign exchange.

Proposed interventions

Although government has started a phased but careful partial lifting of the lockdown, the EPRC report expressed fear that majority of Uganda’s SMEs face collapse should the current situation persists for 1-3 months more.

The think tank therefore suggested several interventions that the government can take to offer relief to distressed businesses, including cuts on tax rates, reducing taxable income, offering tax credits and tax refunds. They further advise that government pay all its outstanding arrears to suppliers and either put in place or strengthen existing export financing and credit insurance mechanisms.

”The support should target the most affected firms to preserve scarce fiscal resources and help to ensure that firms receive an adequate level of support in line with their immediate needs, given the short-term effect of the shock,” the EPRC report reads, in part.

Projections by the International Monetary Fund’s (IMF) Global Economic Outlook indicate that the world economy will contract sharply by 3% in 2020 as a result of the COVID-19 pandemic, while Sub-Saharan Africa’s economy is expected to contract by 1.6%.

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Masaka Cooperative Union donates food items to fasting Muslims and COVID-19 task force

Masaka Cooperative Union Limited has donated food items to the COVID-19 task forces in the districts of Masaka, Bukomansimbi, Kalungu, Sembabule and Lwengo to support needy communities in the area.

The donations that were handed over to the respective task forces on Friday and Saturday include 4000kg of maize flour, to be distributed among people hardest hit by lockdown restrictions.

The cooperative also donated 1000kg of rice, 200kg of sugar, ten boxes of soap and cooking oil to the fasting Muslim community in Masaka.

Sarah Nabbanja, the SACCO Manager, Masaka Cooperative Union Savings and Credit Society, while handing over the items, noted that the board found it necessary to support the community in these trying times.

“This is our humble contribution to supplement the support of other players that have come in to help those people in need. We chose this as part of our Corporate Social Responsibility,” she noted.

Nabbanja explained that, by default, the beneficiaries of the relief support items are in some way connected to members of the Cooperative Union who are scattered in the different primary societies across the sub region.

“We are certainly giving back to the community that supports and has this cooperative union at heart.”

Herman Ssentongo and Jjuuko Kasiita, the Masaka and Lwengo Resident District Commissioners, appreciated the support from the cooperative, saying would help them solve some food challenges they have been facing in their districts.

Sheikh Ahmed Kayemba, the Secretary General of Masaka Muslim District Council also thanked the union for acknowledging the significance of fasting in the Islamic faith and accepting to sharing with them.

Sheikh Kayemba, however, challenged the union’s management to work towards full revival of the farmers’ cooperative which he says was of great importance to the coffee business in the sub region.

Masaka Cooperative Union Limited, was one of Uganda’s most prominent coffee farmers’ unions, but suffered a setback due to the political strife that befell the country in the 1970’s and 80’s. Of late, efforts are being made to restore the union to its former glory.

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Over 200 acres of crops destroyed by hailstorm in Masindi

More than 300 farmers from five villages in Pakanyi Sub County in Masindi district are counting losses following a hailstorm which destroyed over 200 acres of crops on Wednesday this week.

The affected villages include Kiruli I, Kiruli II, Kiruli Central, Nyakakoma and Kitanyata, all in Pakanyi Sub County, Masindi district.

Pakanyi Sub County is the food basket of Masindi district, and the only one in the entire district that is still predominantly dedicated to growing food crops as others have ventured into non-food cash crops like sugarcane.

The hailstorm levelled several maize, sugar cane, cassava, soya bean and banana plantations, among others.

According to the LC 1 Chairperson Kiruli I village, Nasuru Aheebwa, over 250 homesteads lost their crops, yet majority had taken small loans to inject into their farming.

“Many farmers from this area use money from village saving groups to do farming”, Aheebwa said.

Patrick Aguda, one of the farmers who lost 15 acres of maize is worried he will be unable to repay an agricultural loan he took from Post Bank to invest in his farm.

“I used over Shs 10m to open up the 15 acres of maize; I don’t know how I will pay it back,” he said.

Equally vexed is James Alinaitwe, a resident of Kitanyata village who borrowed Shs 2m from a village saving group in order to open up four acres of farmland for a maize plantation, and lost it all to the hailstorm.

“Now the loan is continuing to grow and I have nowhere to go. All my focus was on my maize plantation,” he lamented.

Margaret Kabaruli, the Kiruli Parish Councillor says that this is the second such destructive hailstorm to hit the area.

“The first was in 2016 and it was just as bad as this one, but we got no help [from government],” said Kabaruli who lost a calf in the latest weather incident.

“We call upon the Ministry of Disaster Preparedness to come to our rescue since residents have nothing to eat,” she appealed.

Aled Akugizibwe, a resident of Kiruli Parish appealed to the Ministry of Bunyoro affairs to aid affected locals with relief items like food and planting materials.

Kabajungu Flora, an elderly grandmother taking care of 5 grandchildren lost her entire maize, ground nuts, beans and banana crop, and says she now has nothing to feed her children especially during the current COVID-19 situation.

“I am appealing to the Masindi district COVID-19 task force to give me relief food since I have nothing to feed my children,” she said.

The Masindi district disaster preparedness focal person, Richard Kiiza, said that the Pakanyi sub county chief had been instructed to assess the magnitude of the matter in order to enable them take appropriate action.

He however, attributed the continued hailstorms in Pakanyi to environmental destruction by the locals.

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Gulu: Multi-million milk processor still grounded two years after breakdown

A multi-million shilling milk processing plant owned by Gulu Women Dairy Cooperative Society remains non-functional, two years after it broke down.

The milk pasteurizer was donated to the 200-member cooperative society by the United States African Development Foundation (USADF), in 2016. The plant, installed at Bardege Division in Gulu Municipality, was originally equipped to collect, process and cool 3,010 litres of milk daily.

Later that same year, it was upgraded by a donation of a milk cooler from the National Agricultural Advisory Services (NAADS) valued at 250,000 USD (approx. Shs 925m), bringing its processing capacity to 10,000 litres daily.

“We continued operating at the original capacity of 3,010 litres per day despite the NAADS upgrade because the market had not yet grown to absorb 10,000 litres daily,” Martin Ocan, the Production Manager at Gulu Women Cooperative Society said.

Disaster strikes

In June 2018, barely one year and a half after its capacity had been upgraded, several of the plant’s components started to break down in quick succession, until production ground to a complete halt.

Ocan explained that the homogenizer that lubricates milk with treated water was the first to break down, and then the packing unit suddenly jammed and failed to pack milk. Days later, the power control unit which regulates the pasteurizing temperature, also developed a technical snag, forcing them to stop using the whole milk factory.
“Because of the problems with the power control unit, the holding temperature does not come to the required temperature for pasteurization (73°C) even when you set it. This means that the milk cannot be pasteurized properly, which compromises quality,” Ocan said.

Prior to this, members of the cooperative had been battling with the machine’s problematic boiler.

“Before we stopped using the machine, even the boiler was already disturbing us. And since it has been grounded for two years, I think it is even spoilt,” said Ocan.

Two years after it broke down, Margaret Odwar, the Chairperson of Gulu Women Diary Cooperative Society says they have still failed to repair the damages on the milk processing plant because its spare parts are not available in Uganda.

“The machine was brought in without any spare parts. We communicated with the supplier, because the machine was still under their warranty when it got spoilt, but their response has not been satisfactory,” Odwar said.

Hundreds affected

Odwar explained that the plant’s technical problems have affected not just the cooperative society and its members, but also more than 700 dairy farmers in Gulu, Amuru, Nwoya and Omoro districts, who relied on it for pasteurizing their milk.

“The milk plant would pasteurize the milk at 73°C and package it in 500 ml packs which were then sold at Shs 2,000 each,” she said.

Odwar revealed that since the plant broke down, the cooperative has resorted to using five ordinary fridges to store fresh milk in Pece Vanguard where their office is located.

“With the five fridges, we had to reduce the litres of milk purchased from 2000 litres to only 500 litres per day. The situation has made worse with the current pandemic because we now sell below 100 litres daily,” Odwar said.

Odwar estimates that the cooperative has lost out on potential profits of about 50 million shillings that it would have made if the machine had continued in operation during the past two years.
Martin Ocan, the cooperative’s Production Manager, said that following the technical glitch they now produce only two dairy products- fresh milk and yoghurt, while production of cream and ghee have been suspended..

“We are operating manually and on a very small scale. Back then we could pasteurize between 1500-3000 litres of milk daily, and 500 cups of yoghurt which was bought in a week. Production of yoghurt has been reduced to 50-100 cups because we now use a manual machine, while production of cream and ghee has been suspended,” Ocan said.

Joska Otto, the vice Chairperson of Gulu Women Dairy Cooperative Society said that when the machine broke down, it contained about 3,000 litres of raw milk valued at Shs 6m, sending them into an immediate loss.

She said they have written proposals for assistance to many organisations, individuals and NAADS, and are waiting for responses.

“This machine is the first of its kind in Northern and Eastern Uganda and we need help to bring it back to life,” Otto said.

Besides this grounded milk processor, Gulu Country Dairy operates a mini milk processing plant that is not capable of processing the milk volumes currently being produced in the region. Northern Uganda’s share of national milk production currently stands at just 11 percent.

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Kasese fish farmers lose millions to devastating floods

Over 50 farmers in Kasese municipality are counting losses in the millions of shillings after all their fish ponds were swept away or covered up by flash floods that ravaged the entire Nyamwamba valley from uphill Kilembe to Kasese town.

According to Nyamwamba Valley Fish Farmers Association adviser, Lt. Col. Barnabas Mughongo, the 50-member association which owns a total of 70 fish ponds, with 57 being active, lost everything to the devastating floods.

”We have lost both ponds and the fish to the flash floods. As you can see, the ponds were all covered by soil and sand,” Lt. Col. Mughongo, himself a fish farmer, said.

Mughongo, who owned five fish ponds all fully stocked with catfish, tilapia and Nile perch, says they were due for harvesting in August this year. Now, the Lt. Col., who says he had stocked 30,000 fish fry in his ponds, each costing between Shs 300-500, is reckoning with the damage visited upon his investment.

Whereas he expected an income of at least Shs 90m from selling the mature fish, even considering worst-case estimates, the destruction of his ponds represents a substantial loss.

“Even if I sold each fish at only Shs 1000, that is Shs 30m lost to the floods, on top of the Shs 5m I spent on construction of each of the two big fish ponds, and Shs 2m for each of the three smaller ones, all of which are no more,” he said.

Mughongo, who doubles as the Coordinator, Operation Wealth Creation (OWC) in Busongora North, Kasese district, refuted claims that they were paying the price for setting up their fish ponds in the low lands. Instead, he blamed the floods on failure by local leaders to enforce good agricultural practice in the mountains.

“It is not our fish ponds that caused the flooding and meandering of Nyamwamba River but the problem comes from the uphills. Leaders must wake up and enforce good farming practices as has been done in areas like Kabale,” he said.

Mughongo called on government to come to their rescue by providing the fish farmers with funding or loans to do alternative businesses.

Yona Bazare, also a fish farmer, says he invested Shs 6m to buy land, construct a pond and stock 8000 fish fry, expecting to earn between Shs 16-18m. However, all that was put to waste by the floods

“My cat fish were mature and due for harvest after the lock down. Each fish weighed 2.5kgs based on first samples, but now all my hope is gone,” Bazare said, adding that his harvest had been delayed by the low market occasioned by COVID-19-related restrictions.

According to Bazare, they were waiting for the river to return to its normal channel before resuming business since, he said, fish farming is still a viable business.

Another farmer, Harriet Kabugho, also appealed for government help, saying fish rearing was their only hope for survival.

“I was counting on my fish pond for income to feed my 9 children and provide school fees, but now my hope is shattered,” said Kabugho, whose husband is currently unemployed, leaving her as the family’s sole breadwinner.

She proposed that government provide them an alternative source of income instead of giving them food handouts, a practice she believes is not sustainable.

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