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Why Agribusiness Remains A Haven Of Investment Opportunities

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Although international trade will remain essential for rural livelihoods in food-importing countries, OECD-FAO outlook report 2021-2030 predicts that over the coming decade, weather variability, and animal and plant diseases might result in variations around projections.

In addition, the report indicates that changing input prices, macro-economic developments and other uncertainties are likely to contribute to this shift around the projections.

According to the Food Agriculture Organisation, of the increase in global crop production expected in 2030, 87% is projected to come from yield growth, while 6% comes from expanded use of land and 7% from increases in crop intensity.

FAO assistant director-general and regional representative for Africa, Abebe Haile Gabriel urges that it is in agriculture where African Continental Free Tax Area’s (AfCTA) ambitions can find the most fertile ground, in particular through developing inclusive regional value chains around priority commodities.

This, Abebe says, should be led by a dynamic and diverse private sector of smallholders, commercial farmers, processors and service providers.

Accordingly, the annual import bill of approximately $35bn in Sub-Saharan Africa provides a ready export market for Uganda, particularly on the back of the ratification of AfCTA.

According to a market report, Uganda’s Robusta coffee represents 7% of World production and provides a living for around 8 million people (around 19% of the population). This, according to experts, presents a huge opportunity, both for increasing livelihoods and investment.

Uganda provides 1% of the global Arabica haul where Arabica is traded as a single-origin coffee and earns a premium in the international market.

Despite this relatively strong performance, Uganda Coffee Development Authority’s Emmanuel Iyamulemye says there is still a huge potential for Uganda to increase its production of coffee.

However, Iyamulemye says that laying the financial infrastructure for agro-industrialisation is critical to attaining the latter objective.

According to Turner, a senior private sector specialist, 8 out of 10 export products via agribusiness present a very huge opportunity.

“Agro-processing is a priority for Uganda’s government and is the leading industry which presents opportunities for all actors along the value chain,” he said.

Areas of opportunity in agribusiness sub-sectors he says include fisheries, dairy and maize. He adds that agro-processing is the backbone of the manufacturing sector accounting for 60% of total output which presents opportunities in the long-term outlook.

Challenges

Besides the poor agricultural practices, including poor land use, access to affordable long-term financing is a missing link in the agribusiness sub-sector according to Joseph Kibuuka, head of fund management aBi Finance Limited.

He said smallholder productivity is low because of limited access to agricultural services and credit and reliance on traditional production methods.

According to Bank of Uganda Statistics, only 10% of private-sector credit is allocated to agriculture. This, according to sector experts, is a huge gap that needs to be closed for the sector to take off.

aBi Finance chief executive officer, Mona Muguma Ssebuliba says that investing in innovations that protect and respect all stakeholders especially children, refugees and women while also ensuring their participation in the decision-making process about the food systems is a very essential part of the sector.

“We also need to invest more in terms of skill development and entrepreneurship in the agricultural sector, and not only here in the local market but also at the regional level. This will help create both capacities needed and jobs for sustainable development,” Mona added.

According to the UN’s Food Systems Summit held in September 2021, innovation was recognized as one of the keys to enabling food systems transformation.

The ultimate goal of introducing innovations into agriculture is to achieve a competitive advantage through innovations according to Martha Wandera, managing director Kimco Coffee Limited.

“The introduction of new practices in production processes, in field management, new ideas for capturing daily work information, adoption of new technologies, among many other possibilities, helps to guarantee the obtaining of good results,” she added.

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