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Co-operatives: Gateway To Export Competitiveness

by Jacquiline Nakandi
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By Daniel Karibwije

In business you are either seated at the table or part of the menu. When smallholder farmers remain scattered, they become part of the menu being eaten by traders.

Should the same farmers form groups registered as co-operatives producing for a common cause, they get seats at the table. Farmers have an influential voice through co-operatives which protect against traders who are out to exploit them.

The back-to-school season is a vulnerable period when rural farmers get exploited.

A middleman will hand a farmer sh5m in cash for produce which will be quickly grabbed to solve the pressure of school fees.

Had the same farmer been in a co-operative with structures and a vibrant marketing department, the same produce could have fetched sh10m and more!

Land fragmentation is a big problem now and for the foreseeable future due to population explosion and parcelling out property among children.

This does not make business sense and economies of scale in terms of production.

However, when farmers in the same location pool resources, the cost of doing business at farm level reduces. The quality of farm output will depend on the investment in inputs, fertilisers, level of mechanisation, seasonality patterns and irrigation among other factors.

One tractor owned by a co-operative can serve 100 farmers in the same district within geographical proximity.

One extension worker can serve the same number of farmers greatly reducing the per unit cost without an individual worrying how they will pay for professional agricultural extension services.

Co-operatives call for committed and honest leadership so the democratic election of officials is not abused. In top co-operative societies, leadership positions are best chosen through consensus since the executive works in the interest of the group.

Farmers with bigger land sizes and production will earn big equivalent to their sweat. Likewise, small-scale farmers will earn from their labour plus protection against middlemen.

Whether big or small, co-operatives are a win-win for everybody. Banks and other financial institutions are in the business of lending money.

Banks prefer taking a risk with a registered co-operative society comprising of 1,000 registered farmers than an illiterate farmer struggling to figure out credit history and collateral security.

Record keeping is very important in co-operative societies and is the basis on which financial institutions make decisions. A smallholder farmer will not be conversant with excel or QuickBooks, an accounting software package.

However, the manager and accountant hired by the co-operative society will be in position to archive all transactions including profits made, losses and show clean records.

This will win them loans and grants. The gender dimension is very important in co-operative societies for continuity and transparency.

Women must be given a seat on the table. Co-operative positions should have a certain percentage of positions reserved for women.

They form the biggest workforce at farm level and need to be part of decision-making processes and devising the strategic plan.

In 2022, Uganda’s formal exports stood at $3.8b while informal cross border trade registered $500m. The country’s trade volume can quadruple when farmers group together.

Long trucks from Kenya take advantage of loopholes in local communities and buy produce directly from farmers. A Ugandan businessman cannot do the same next door.

Foreign traders should negotiate directly with co-operatives not individual farmers. Some of Kenya’s agro exports are sourced from Uganda.

A local co-operative can export directly and earn more for their sweat. Are you seated at the table or part of the menu?

Daniel Karibwije is an Export Specialist

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