Enabling environments for fostering agriculture ... Masaba.pdf · Enabling environments for fostering agriculture investments conducive ... PPP for oil palm ... Overview of the Oil

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Ministry of Agriculture, Animal Industry and FisheriesVegetable Oil Development Project – Phase II

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Enabling environments for fostering agriculture investments conducive to poverty reduction, gender equality and food security;

A case of the Oil Palm Public/Private Partnership in Uganda"

Presented by: Connie Magomu Masaba

At the Multi-stakeholder Conference on Agricultural Investment, Gender and Land in Africa: Towards

inclusive, gender equitable and socially responsible investment

5-7 March 2014, Cape Town, South Africa

Challenges faced by the Rural farmers in agriculture sector in Uganda

Limited markets and market access and relatedmarketing infrastructureHigh cost and limited access to improved farm inputsand production technology.Lack of access to agricultural credit facilitiesInadequate Agricultural extension servicesLack of Gender Analysis to inform policy formulation,Planning and budgetingDecline in the Agriculture Sector GrowthIncreasing food prices globallyLack of ownership and control of land in case of women.

Ministry of Agriculture, Animal Industry and FisheriesVegetable Oil Development Project

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Goal: poverty reduction in the project area.Objectives:

Import Substitution.Sustainable rural poverty reduction inproject area through raising incomes ofsmall holder producers.Improve the health of the populationthrough increased intake of vegetable oil.Export Diversification.


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VODP Goal and objective

Investment costsIFAD Loan (USD 52M),GOU (USD14M),Private sector (USD70M),Farmers (USD3.9M)KOPGT (USD3.0M),Reflows (US 4.4M)Total funding USD 147million


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Establishment (PPP)GOU advertised the tender - Transparentprocess of getting private sector partnerAgreements in place with secured interests ofboth farmers and the private sector partner andGovernmentSensitization and involvement of thecommunities from start of projectPrivate partner with the interest of thecommunity at heartKOPGT established and mandated to manage the oilpalm establishment and market for smallholders


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PPP for oil palm developmentMain partners: smallholder farmers,Government of Uganda and private sector(Bidco)Support production and processing of oil palmto reduce reliance on imported vegetable oilsand address low per capita vegetable oilconsumptionCombining small-scale production with large-scale processing and integrating small-scaleproducers into the wider economy

Vegetable Oil Development Project 6

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Aspects for inclusiveness in PPPs Inclusiveness requires that the partners

have/share in:

OwnershipVoiceRiskReward


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Overview of the Oil Palm PPP

Hybrid: Nucleus estate/contract farming/joint ventureSmallholders: 1,600 farmers (578 women) harvest ffb &sell to OPUL; cultivate 3800haKalangala Oil Palm Growers Trust (KOPGT):Intermediary between OPUL and farmers; providesservices to farmers (extension, loans, transport,…)Oil Palm Uganda Limited (OPUL): Buys ffbs; managesnucleus estate of 6500ha and oil palm millGoU: Purchased and leases land for nucleus estate;support smallholder involvement (including KOPGT);transportation infrastructureProject takes care of ownership, voice, risk sharing andreward sharing among partners


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Business model - OwnershipFarmers have a 10% minority share in OPUL andBUL owns the remaining 90%Land rights remain vested in smallholders, whileBUL leases nucleus estateFor nucleus estate only unencumbered publicland was used, the rest was purchased fromprivate owners on a willing seller-willing buyerbasisSupport provided to increase access to land forpoorer HHs (encumbered public land, purchasedprivate land, land fund)


Ensuring Women participate in Ownership of businessEstablished a land fund/loan facility to assistwomen to purchase ‘kibanja’ to grow oil palm

Put a limit on the maximum size of land the projectwould support per individual farmer.Removed the minimum size required to participatein projectHusbands encouraged to let their wives participatein the project in their own right as farmersWomen farmers register in their own right


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Enhancing ownership by women

District provided public land for the benefit of poor women toparticipate in the project

Brokered sharecropping arrangements with landlords sothat women farmers could access land for oil palmproduction

1,023 ha of public land and mailo land acquired for thenucleus estate handed back to the communities

460 farmers benefitted most of who were women.


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Facilitating Access to Production credit by women farmers

Waived the requirement of a certificate of titleas collateral for accessing production credit

Used group collateral

Used the oil palm crop/plantation as securityfor the loan funds Vs piece of land

A simple letter from the local leaders as proofof user rights


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Control and decision making concerning the women oil palm plots

Women farmers registered with the farmerorganisation as individual farmers vshouseholdWomen signed agreements with the farmerorganisation as participating farmersWomen opened individual bank accountsthrough which the project provided creditfunds and have own ledgersWomen farmers run their own bankaccounts.


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Marketing of oil palm fresh fruit bunches by women farmers

Women farmers participate in marketing their ffbs.They harvest, weigh and record their crop weight

The payment ffb is made to the women bank accounts.The women decide what to spend their money onIncorporated training and sensitization of farmers on genderissues, women rights and the need for respect for both menand womenProject holds discussions with the household to ensureharmony


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Business model - VoiceWide consultations with farmers and communities beforeimplementationFarmers can influence decision making of company:

10% share in OPULRepresentation on OPUL boardRepresentation on Oil Palm pricing committeeRepresentation on the services cost panel

Farmers’ interests represented by KOPGT and KOPGADemocratic electionsRepresentation at different levels (units, blocks, district)Annual general meeting

Women cover at least 1/3 of the leadership positions


Women’s voice in the Farmers’ OrganisationEnshrined in the KOPGT and KOPGA constitution that atleast 30% of the leadership positions are held by women.

They participate in the Annual General Meeting and havethe same vote as their male counterparts.

Currently, the Vice Chairperson of the farmer organisationis a woman.

92 women are involved as leaders at different levels of thefarmer structures (50%).


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Business model - RisksStakeholders bear different risks:

Smallholders:Purchase price determined through fluctuating market prices(mitigation: import parity price)Production risks linked to weather, pest and other factors affectingharvest (mitigation: loans and “in kind” repayment system)Production risks linked to land tenure situation (mitigation:demonstration of legitimate access to land)Risk associated with loans (mitigation: co-guaranteeing approach,loan not tied to land)Risk of having ffb unduly rejected (mitigation: inspection officer)

OPUL:Market risk as it has committed to purchase produce atguaranteed prices (demand is still very high)


Women farmers and RiskProduction credit collateral not linked to land

Has given assurance that their land will notbe lostPricing formula has supported especially thewomen who would have challengesnegotiating for a good price due to limitedexposure and information


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Business model - RewardFarmers:

Fair price through price formulaSay in decision-making of companyAccess to support package (extension, inputs, etc.) and creditAssured market for produceImproved road infrastructure (750 km of road network)Improved incomes (USD 390 per ha per month)

Private sector:Increased productionIncreased salesCo-investment by farmers and government

Government:Increased tax incomesIncreased investment in agriculture-FDI and New industry in placeEmployment creation- 300 workers in plantation, mill and refinery


Specific rewards to Women farmersWomen farmers have benefitted from the trainings and arein some cases getting better yields.Able to participate in a commercial venture in their ownright as farmers.Have access to their income from sale of ffbs to the mill.now able to purchase more land and improve tenuresecurity.Have improved security of tenure give that they are growinga tree crop lasting 25 years


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Rewards to women farmersAccess to the land fund facilitated some of the women topurchase land for oil palm production and have now startedrepayment of the loan.Not worried loan repayment as the loan is tagged toproduction.Assured of a steady income - educating their children andbuilding better houses for themselves.Control of their produce from production to marketing anddecision on the use of the fundsHave own bank accountsWomen feel empowered


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Early results/ImpactFarmers:

578 women participating in project as farmers in their own rightIncreased incomes ($390/month per Ha for mature plantations)Improved land rights (landless and women, purchase of land,demonstration of legitimate access to land)Women building houses, educating their children and setting upoff farm businesses

Community:Creation of employment (2,000 employed on nucleus estate, 500in farmer gardens and 1,600 directly as farmers)Improved infrastructure (e.g. 750 km of road network and ferryservice) and services (e.g. financial and public)Production in other crops, livestock and complementaryagricultural activities, tourism and other non-agriculturalenterprises is expanding


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Lessons LearnedEffective partnership between rural smallholders and theprivate sector with positive development outcomes ispossiblewomen can effectively participate in commercial venturesif supported to access land and funds.

Understanding the gender dynamics in the project area isimportant in designing interventions to support the ruralpoor women.Without access to land, the poor rural women maycontinue in their poverty.


Lessons LearnedUnderstanding intra household relations andsupporting individuals in households is importantGovernments can play a positive role inagricultural investment projects (policyenvironment, mobilising smallholders,infrastructure and building trust)Choice of the business partners important -willingness to work with smallholdersInclusion of smallholders in all decision-makingprocesses has been key to the project’s successBuilding partnerships takes time


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ConclusionPPPs attract private sector funding to the agric sectorPPPs bring expertise and business acumen to the sectorPPPs keep the pseudo public nature hence ensuringsmallholder farmer needs are not sacrificed for businesssakeFor success, the following need to be addressed

sustained collective ownership,transparency on sharing of risks and rewardsand platform for voice between the partnersand stakeholders

Govt effective involvement, and setting theagenda, hence govt interests of poverty reduction


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ConclusionBusiness models that support local farmers aremore promising and make good business senseFarmers have proved to be highly dynamic andresponsive to market forcesSuccess of partnerships depends on the level ofownership, voice, risk-sharing and benefit-sharingbetween partnersMutually beneficial partnerships require sustainedsupport by a range of service providers(government, civil society, private sector)


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Tabitha’s houses


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Nabbosa’s Houses


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Nabukera and her Husband Musimenta


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Documents

Enabling environments for fostering agriculture ... Masaba.pdf · Enabling environments for fostering agriculture investments conducive ... PPP for oil palm ... Overview of the Oil