How digital agriculture is helping Uganda grow its middle class

George Muwereza lives in Uganda on the island of Kalanga in Lake Victoria. He used to cut and sell wood  but was just eking out a living for himself and his family. Since 2007, George has been farming palm for oil and over the past 10 years has been able to establish a steady income. He has a bank account (which he accesses through his mobile device), is in the process of building a bigger home for his family and can afford to send his children to better schools. In short, George is middle class.

But George’s journey to becoming a thriving oil palm farmer was not accidental. The Ugandan government has been promoting the development of the vegetable oil sector in Uganda since 1998 through its Vegetable Oil Development Project (VODP). With support from the International Fund for Agricultural Development — a financial agency within the United Nations that invests in rural projects aimed at eradicating poverty and hunger — VODP has created a thriving community of over 2,000 smallholder palm oil farmers.

Vegetable Oil Creates Jobs, Nutrition and Wealth for Uganda

Connie Masaba, Project Manager for VODP, explained why assisting smallholder farmers is so critical to Uganda. “For Uganda particularly, agriculture is very important because it employees 70% of our citizens – the majority of which farm small plots,” she said.

“A huge chunk of the arable land of the world is in Africa. It’s the most import sector for the continent and our country – and a source of employment, wealth creation, and food. Encouraging that sector’s growth will help bring a lot of people out of poverty.”

This is part of an overall strategy by the Ugandan government to raise the living standard of Ugandans. “The government is pursuing Vision 2040 to move Ugandans to a middle-income status. To succeed, we must ensure that agriculture continues to advance and we improve economic security for small holder farmers.”

VODP, now in its second phase of implementation, is helping reach this goal by cultivating vegetable oil farming across the country including oil palm, soybean, sunflower and peanuts. The need to include more healthy fats in Ugandans diet is urgent. Like neighboring countries, Ugandans’ oil consumption is a fraction of that consumed by people in developed countries (about 6 kilograms per person versus 55 kilograms.)

Oil Palm Farming: A Lighthouse Program for Uganda and Beyond

The palm farms developed on Kalangala highlight the success of the vegetable oil program. As Connie explains, previously farmers like George were either involved in wood collection or fishing. But the waters near Kalangala were being over fished and tree cutting was not sustainable either.

Because palm fruits can be harvested throughout the year (versus one or two seasonal harvests) and have high yields, palm farming created a viable alternative for residents of Kalangala. In addition, palm oil is the most widely consumed vegetable oil on the planet, with 63 million tons consumed in 2017. There is not only a domestic need, but also a demand from the foreign market that Ugandan smallholder farmers can help fill.

Enter the farming collective, Kalangala Oil Palm Growers Trust (KOPGT), funded by VODP. Headed up by Nelson Basaalidde, KOPGT administers government loans to farmers. They also provide fertilizer, seeds, transportation and other services to help farmers start and grow their businesses. Most importantly, KOPGT acts as a hub that brings together the farmers with government resources and private buyers, helping to develop both the local farming community and market infrastructure for oil palm. With private companies committed to purchasing and refining oil palm, farmers have a reliable source of income.

Since 2006, KOPGT has grown from a small, two-person office oveseeing 65 farmers, to an organization with 25 staff and almost 2000 smallholder farmers. In 2016, KOPGT recorded about nine billion Ugandan shillings (about three million US dollars.) in sales.

“Our organization and the farmers we support have experienced tremendous growth – each month our smallholder farmers produce about 3,000 tons of fresh fruit bunches per month and sell these to the two local palm oil mills,” Nelson said” We expect smallholder sales to reach 80,000 around 2021.”

He added, “We help to make sure those transactions go smoothly – that the private buyers can expect regular deliveries, that farmers know when to expect payment – and try to ensure transparency all around.”

Enter Digital Farming Solutions

With the increasing number of farmers and transactions, KOPGT needed a digital solution to enable continued growth. Since 2009, SAP has worked to create applications that help smallholder farmers in developing nations, primarily across Africa, enhance food production. That’s why KOPGT turned to SAP for its SAP Rural Sourcing Management software, which digitally records information on producers, their farms and communities at every level of the value chain. This provides visibility and allows parties to easily and quickly communicate with each other.

Nelson said, “With SAP, now everything is much more open and immediate. Farmers can access the global market price for palm oil so they can more accurately estimate their payment. They can alert the local oil palm companies when fruit bunch deliveries are expected, and let them know how much is coming in. Since all transactions are processed digitally, farmers get paid more quickly. Private companies gain important visibility into the delivery pipeline and can anticipate their production load.”

He continued, “Moreover, the digital platform from SAP means KOPGT has instant oversight into all the transactions happening and the productivity of our 2,000 farmers. We can analyse where there’s room for improvement, run reports instantly that show sales and pipeline, and understand our growing palm oil business here in Kalangala in ways that weren’t possible previously.”

Because the solution is mobile, it is easy for KOPGT and the farmers to use in the field. But the solution is cloud based – and that delivers real cost savings to KOPGT. “We only have one IT person on staff. SAP maintains the software and hardware, so we don’t need to invest more in human resources. SAP takes care of it and we subscribe as we need more capacity,” said Nelson.

KOPGT expects to continue growth, adding more hectares and more farmers. With a digital core in place, it will be easier to scale the operations while maintaining an accurate picture of the business.

The Future of Africa Depends on Smallholders Farmers

This is great news for Uganda — and for all of Africa. The world population is expected to reach 10 billion by 2050, with half that growth expected in Africa. At that point, both the African population and demand for food are projected to double.

While 70 percent of the population in Africa is involved in agriculture as smallholders, production levels are still well below more developed countries; and according to Alliance for a Green Revolution in Africa, the continent’s food import bill is estimated at US $30-50 billion.

The agricultural output of smallholder farmers is essential to establishing food and economic security for the growing population of Africa, presenting a huge opportunity for them to move beyond subsistence to commercial agriculture.

That’s why African countries including Uganda are investing in digital solutions like SAP Rural Sourcing Management – to help nurture growth for this vital economic sector. Connie thinks the promise of digital agriculture has huge potential to improve productivity for farmers. It can also potentially pinpoint and address the spread of disease and pests; or show which regions have food or are expecting shortfalls so that African leaders can work together to distribute resources adequately across the continent.

But in the meantime, Connie said, “Digital agriculture in Kalangala will help fuel sustainable wealth creation for smallholder farmers.”

She added, “The farmers today will tell you, ‘I used to be a subsistence farmer, now I’m an oil palm farmer.’ He wakes up in the morning and knows that he’s working not just for food, but to make money. That’s what we want to see in the whole country.”

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