In a study we recently published, we focused on the "indirect" impact on the rural farmers in Uganda who benefit from our alumni's work. We know that providing one entrepreneur with training, coaching, access to capital, or connections can affect thousands in their community, many living at the bottom of the economic pyramid.
We chose one of our alumni whom we have worked with since 2018: Rabboni Group Limited, a grain aggregator and processor in Uganda that sources grain from over 3,500 farmers. In our research, we find that Rabboni's work to improve pricing and market access for maize farmers in their value chain increases incomes for these 3,500 farmers by approximately 5%, which translates to a $128,000 revenue gain across the entire group. The report summarizes recommendations and ways to help Rabboni strengthen its farmer support strategies as they pursue profitable business growth and long-term community transformation.
In an effort to further expand on why that impact is significant, Yvette Ondachi, Sinapis East Africa Regional Director, offers additional context below to the challenges smallholder farmers face and why Rabboni's work has significance in transforming the agriculture business model to bring equity, justice, and opportunity to a system that works against farmers.
In East Africa, close to 70% of households depend on agriculture for a living, with most of these being in rural areas and peri-urban areas. Agriculture is potentially profitable, however, realizing this profit is elusive because farmers are up against a myriad of challenges.
Most farming households practice smallholder farming because they have limited sizes of family land. Thus, the economies of scale in smallholder farming mostly do not allow for a reasonable profit, especially for value chains like grains and cereals. They cannot sustain households economically all year long and many find themselves supplementing income streams as a result.
Most smallholder farmers rely on rain-fed agriculture as their mainstay of production; changing climate patterns make farming more of a risky venture because of the possibility of crop failure as a result of drought or flooding. Uganda's spring 2022 rainfalls started late and was significantly below average, drastically impacting the first growing season crops. (https://fews.net/east-africa/uganda)
Those who can surmount the challenges by accessing larger portions of land and investing in irrigation, still face the following barriers:
a) Adopting outdated farming techniques
b) Low adoption of farming inputs
c) Limited market access
These three barriers end up affecting the yield volumes, the quality of their product, and ultimately their earning capacity.
Access to markets has been a perennial problem for smallholder farmers for years because they are almost always at the mercy of middlemen who end up exploiting them. For more insight on the exploitation of smallholder farmers click here.
The entry of aggregators (like Rabboni) into the value chain addresses the gaps in market access. They can negotiate for large volumes of produce and assure a market for these groups of smallholder farmers. This assurance gives farmers stability to focus on crop quality and quantity per square meter.
While aggregators play a significant role in providing smallholder farmers with market linkages and reliable income, the translation of this opportunity to increased incomes relies on additional external factors. Increased access to farm inputs like fertilizers and proper adoption by farmers will optimize productivity per square meter. Irrigation and access to water put farmers in a position where they can plan to be in production when stocks are low.
Increasing the incomes of smallholder farmers requires intentional intervention in addressing the following barriers:
1. Access to knowledge
2. Access to inputs
3. Access to irrigation – producing crops when the prices are highest
4. Focus on profitable value chains
5. Access to markets