Enhancing Farmer Entrepreneurship through Market Linkages

UMA Conference Hall

26th November, 2010,

By: Derrick Kamyuka TenywaDomestic Marketing Officer

National Organic Agricultural Movement of Uganda

NOGAMU Background

The National Organic Agricultural Movement of Uganda – NOGAMU

NOGAMU is the apex membership organization formed in 2001 to coordinate and drive all stakeholders towards organic agricultural development

NOGAMU Background contd.

NOGAMU currently has membership of over 1,000,000 farmers of which 206,300 are organic and/or Fair-trade certified and are already participating in the export market chains.

NOGAMU is a member of International Federation Of Organic Agriculture Movement (IFOAM)

NOGAMU VISION

To attain Increased Incomes and Improved Livelihoods in Uganda

through Adoption of Organic Agriculture

OBJECTIVESBuild capacity and promote Training, Research, Extension and Education in OA in Uganda

Promote Local and Export marketing of organic products from Uganda

Develop and Increase the application of organic standards and promote certified organic production in Uganda

Increase awareness and attract support for OA in Uganda

MARKET LINKAGES BEST STRATEGIES

NOGAMU’s Experience

Market Linkages Best Strategies

Local market Linkage strategy • Started with the founding of the NOGAMU shop in October 2002

• Initially the shop dealt in only few processed and fresh products. Fresh products introduced in 2003 and Basket scheme in 2005 as a marketing strategy

• At the beginning, 90% of the clients were expatriates

• Use of the internet to inform potential and remind existing customers

Market Linkage Best Strategies contd.

Local Market Linkage contd.•Developed clients’ database for easy follow up and sending of products price lists

•Purchased a refrigerated van which does the distribution of products

• Taking responding to clients complaints and issues as priority

• Organizing regular visits to producers and on occasions with clients thus building trust further

Market Linkages Best Strategies contd.

Local Market Linkage contd.

Currently, • Over 80% of clients are local Ugandans and over UGX 40m is generated from basket scheme alone

• NOGAMU shop turnover has grown from UGX 12m in 2004 to UGX 93.4m in 2009

Export Market Linkage Strategy• Purely demand driven • Focus is on selected enterprises• Buyer/market is identified • Potential producers are identified, organized and their capacity to produce sufficient quantity and quality product built based on market requirement• Group/Association/cooperative is linked to export buyer or directly to importer

Export Market Linkage Contd.

• Over 200,000 farmers are participating in the export market chains through organic export companies or directly with importers • Value of exports has been growing at an average of over 30% in the past 3 years-US$ 10m in 2006, US$15.3m in 2007; US$ 27m in 2008 and over US$ 30m in 2009

Collective marketing strategy • Focuses on value chains development and/or strengthening

• Aim is to produce sufficient volumes for a specified marketStrategy involves:• Assessing the group/association/cooperative’s capacity to engage in market oriented production

• Identifying actors in the whole value chain and engaging them in building/strengthening the VC

• Organizing and conducting actors meetings to do a SWOT analysis

• Developing an action plan highlighting each actors role that would link the producers to the market

Collective Marketing Contd.What has worked for the organization• Weak areas/gaps along the entire VC are easily identified and addressed due to collective efforts. • NOGAMU has been able to apply this strategy to integrate entrepreneurs into collective domestic and export trade chains and be able to access;

Collective Marketing Strategy Contd. - Shop Organic outlets- Over 60 groups are currently benefitting from the outlet whose sales have continued to rise at an annual average of over 25% ; 2007 UGX 57m, 2008 UGX 73m, 2009 UGX 93.4m - Linkage to major local supermarkets and institutions which include international schools; health and nutritional supplements outlets has risen - Agro-processors /Export companies - volume of exports has continued to growing at an average of 30% in the past 3 years

Information Sharing and awareness raising strategy

• Holding Farmers’ markets and organic days

• Holding radio and TV programs- Consumers buy because of the perceived benefit-Quality, health

• Printing and disseminating information materials- brochures, market information bulletins and chain specific booklets

• OTP-Organic Trade Point Collects, organizes, produces and disseminates information on organic trade opportunities

What has worked well for NOGAMU?

- Organic entrepreneurs share market information and experiences

- Entrepreneurs get to know what others think about their innovations through the different channels

-Over 60 products have penetrated the major local market

Certification and standardization

•Building capacity of entrepreneurs and support them to establish IQMs that address certification against market standards and other quality systems such as HACCP and Fair trade

• Certified organic products obtain certificates and organic marks to be recognized by the market.

• Certified producers are linked to sustainable markets from which premium prices are earned

Benefits of Certification and standardization

•Entrepreneurs make decisions to adopt production systems basing on what the market requires and reduce losses

•296,203 Hectares of certified land(182,000 in 2004/2005)•206,803 are certified organic farmers compared to 40,000 in 2004

•45 certified export companies exporting to EU, US and Japanese markets compared to 12 in 2004

• 61 groups/companies linked to major domestic markets and institutions compared to 5 in 2004

Product development and promotion strategy

•NOGAMU Facilitates development and promotion of organic entrepreneurs’ products-Areas of focus include Quality, packaging, labeling

• Tools, equipments and inputs to facilitate agro-processing are imported and easily accessed by the entrepreneurs

• Members are supported to participate in major local, regional and international trade fairs to promote their innovationsCurrently• The subsector is growing with increases in demand for organic products thus resulting into increase in rural household incomes

•Over 60 agro-processors have been supported to improve quality, access scan codes and managed to penetrate the local supermarkets where over 60 products are favorably competing with imported products

Networking• NOGAMU uses sale of organic products through shop organic as both a marketing and networking strategy-Basket scheme and Drop in customers

•Simple online surveys are occasionally conducted to establish clients satisfaction and challenges

What has been good for the organization• Genuine relationships have been developed with clients resulting into increased levels of awareness among consumers

• Increased demand for the products has continued to be registered

•Basket scheme alone has over 70 clients of which 30% are regular

• Over UGX 48m was collected in sales from the scheme alone which has continued to register an annual growth of 15% in sales

A basket with fruits and vegetables at the organic shop ready for delivery to a client

Challenges• Limited resources to invest in value addition and expansion of business innovations

• Lack of business skills and basic knowledge- 90% operate without business plans, records on cash flows etc.

• Low creativity and innovativeness

• Inconsistency in supply of the products

Challenges contd.• Low production levels which cannot satisfy demand

• Limited variety of products for the consumers

•Standardization and certification costs being high thus affecting marketing of most products as organic

• Low investment in promotion activities- most small scale producers perceive advertising as expensive and good for big organization

What could be Improved?

• Empowering farmers to acquire basic business skills

• Direct interventions to gaps in the entire value chains (Value chain approach), with focus to local, regional and export markets

• Farmer empowerment to learn and appreciate cost effective ways of advertising to raise consumer awareness and be able identify new market opportunities

What could be improved contd.

•Information, knowledge and experience sharing . This could result into improvements in quality of products and increase in demand

• Strengthening collective marketing campaigns as key to attracting bulk buyers and creation of sustainable markets for organized groups

Thank you for your attentionEND