We arrived in Entebbe on Thursday, January 11th to a small but bustling airport. A little jet lagged, but excited to embark on our data-driven journey. We set out to find our way to Kampala and begin our research.

An insightful meeting with Pearl Capital

We first met with Dr. Edward Insigoma, an impact investor and managing partner at Pearl Capital Partners.

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Dr. Insigoma gave us some detailed information on the agriculture market in East Africa. We discussed the value-chain through rural farmers, aggregators, milling companies and distributors. He gave us some amazing insights and hypotheses to help frame our research over the next month. We discussed how we could understand the margin expectations across the value chain. He told us about the price differences across regions in Uganda and suggested that we focus our study on one or two regions for specific commodities.

Following a productive meeting with Dr. Insigoma at Pearl Capital, we made a brief stop at the Uganda National Chamber of Commerce and Industry to gather some additional contacts within Uganda’s agriculture industry. We ate some amazing food and proceeded to our next meeting with IPA.

Understanding the contextual nuances of Uganda with IPA

We sat down with Damien Kirchoffer, Country Director of the Innovations for Poverty Action in Uganda for our second meeting of the day. He discussed the efforts of Kudu and AgriNet.

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AgriNet is an agricultural business firm that specializes in trading. They are currently partnering with Kudu to understand inefficiencies in the market by tracking pricing information from both buyers and sellers on an online platform and SMS distribution network. 

Kudu is an online platform for commodity exchange, an effort to test the economic efficiency of the market. The founders noticed a high level of volatility in the market from historical price data. Subsequently, through the use of mobile technology, they sought to connect buyers and sellers looking for a particular buying or selling price. Additionally, the platform was used to provide current prices to farmers to help them avoid being undercut by middlemen in transactions not executed through the platform.

We discussed Uganda’s agricultural productivity. He pointed out the lack of fertilizer use as an input. In a number of cases for these farmers, if the first use of fertilizer isn’t a fruitful one, they’re likely not to use it again. Additionally, the quality of the fertilizer that they have access to is questionable. Another reason for low productivity is that for manufacturers who want to enter the market, the cost of setting up a distribution network all the way down to the rural farmer is just too high.

He discussed a segmentation between subsistence farmers, those who may sell some of his or her production at the market, and those who are a bit larger but still have low technology adoption and low mechanization. 

Field Visit with Community Fund

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Ramadan, The Best Driver In Uganda (Possibly, the world.)

Since we’d made such good friends with our first taxi driver, Ramadan, he agreed to take us to our first set of field visits in the Kigoba region of rural Uganda. We met with Tony, a manager at the Community Fund, and made the 2 hour journey to the field office in Kigoba. There we met with the field office team and received a briefing on the operations of the micro-finance firm from the office manager. We then made a 1-hour drive deeper into Kigoba to reach the more rural farmers. We met three families, and conducted our interviews.

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The Context Team + Eliose Nansimo (Matriarch/Maize and Bean Farmer) & Her Family

We started with a question guide we generated from our recent research and meetings. We stayed consistent with our interview questions but added additional questions as we generated hypotheses.

We followed up our meetings with a lunch at a local restaurant after fixing a flat tire from the dusty unpaved roads that we traversed like a rally car. Our hosts at the Community Fund agreed to share the data that they are collecting in the region, and we adjourned with promises of staying in contact as we proceeded.

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The ConText Team + Ramadan doubling as an American/Ugandan Pit Crew

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Our 2nd Interviewee (Maize and Bean Farmer/Pig Rearer)

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ConText Team + 3rd Interviewee (Nurse/Pig Rearer/Chicken Farmer)

Field Visit with Kudu – An investigation deeper into the agricultural value chain

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ConText Team + Sam K. of Kudu

We met with Sam K, a field manager at Kudu who escorted us to the Mubende region to meet with middlemen, brokers and traders as we started to move up the agriculture value chain. He gave us vital information on the operation of Kudu and helped us to better understand the nuances of the Ugandan agriculture market.

We met with 2 smaller brokers who deal mostly with rural farmers and one larger trader in the Mubende Market. We also had the chance to speak with an aggregator/importer between Uganda and Rwanda.

We were first introduced to a broker named Ivan who was a part of the Kudu/AgriNet program. He told us that he buys from 50+ farmers in the sub-county area and trades an estimated 500,000 kg of maize each season. He obtains his prices from Kudu and by surveying local traders in the surrounding markets. He determines the selling price the prevailing market price he’s obtained via the Kudu platform and by the quality of the crop. Ivan deals in maize, beans, and coffee depending on what weather patterns will allow. After a few minutes of chatting with Ivan, several brokers in the village joined the conversation.

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ConText Team + Ivan (pictured to Tarit’s left), Middleman dealing in Maize & Beans

We discussed the external factors that affect crop prices. The first was weather patterns, specifically, the amount of rainfall in a given season. The second was the demand for food in surrounding countries like Kenya, Burundi, Rwanda and Tanzania.

Ivan described four tiers of farmers/middlemen in regards to pricing:

  1. The farmer/middleman who is price agnostic and simply sells at whatever the market price is at the time of sale.
  2. The farmer/middleman who sells for a specific reason e.g. he needs to turn a profit quickly for airtime, supplies, a gift for his girlfriend, etc.
  3. The farmer/middleman who always waits for the best price.
  4. The buyer who holds crops in bulk and consequently has more mobility in the market to sell to the bigger buyers like the WFP, USAid, and local milling companies.

To get to the bigger buyers, middlemen like Ivan utilize a broker that connects him with a buyer willing to purchase a future for large portions of crop. We were told there were 8 of these brokers in the area, 3 in the town we were in.

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ConText Team + Damian (Middleman) + Local Farmers

The second middleman we met was named Damian.  He joined us, flanked by a few other middlemen, farmers and children of the village. During our discussion we quickly discovered that there were more layers to the agricultural ecosystem than we first realized. Damian who himself grows maize, and serves as a middleman, buys stores of maize in case of low yield and hires out land to smaller-scale farmers. The longer it takes for the borrowing farmer to harvest, the larger the cut of the yield Damian will take. He is securing his investment by raising the interest rate on the loan he’s made based on how long it takes for him to receive payment. In addition, we also discovered that there are two levels of aggregators, one on Damian’s level and a tier above, which is who we would go to see next.

Our last meeting in Mubende, after having had a sumptuous Ugandan lunch at Cafe One, was with the next level of aggregator in Mubende’s market and trading hub. We walked through the market and found a middleman sitting outside of his grain storage unit, eating lunch. Sam struck up a conversation with him, introduced us, and we began our inquiry. After going through our questions, contrary to the interviewees prior, this middleman showed confidence in his knowledge of the market and ability to predict price. He was so confident in this acumen that he said the only thing limiting from buying and storing more maize for when the price reaches a higher level was not having the amount of capital to do so.

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Rwandan Aggregator

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Our Rwandan Aggregator’s Truck

During our conversation, a Rwandan aggregator, on an even larger scale came to join the discussion. A major in mathematical engineering, he shared that, like Damian, they too look to secure their investment by knowing when demand will be higher in neighboring countries, and by understanding the diverse set of large scale buyers like the African Food Program, USAid, and others.

At the time, the Rwandan aggregator was waiting for his truck, adorned with Manchester United decals and bible verse abbreviations, to be loaded with Cassava for the two-day drive back from Mubende to Rwanda. With the combined insights of both this trader and the Ugandan aggregator, it became clear that the market for maize and beans had a great deal of volatility that could be predicted from the most informed pieces of the puzzle.

We thanked everyone for their time and patience, and left to return to Kampala, where we met up with Tony again and had dinner overlooking the city.

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By | 2018-07-03T13:05:08+00:00 January 5th, 2018|
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