MERCY CORPS AG GRI‐FIN M MOBILE PR RODUCT D DEVELOPM MENT AND BASEL A LINE RESE EARCH RE EPORT – U UGANDA ABRIDG GED VERSSION JANUARY 201 3 1.0 EXECUTIVE SUMM MARY In Septem mber 2012, Mercy M Corpss collaborate ed with FIT U Uganda Ltd in the cond duct of a pro oduct developm ment researcch and baseliine study in Uganda to gain a greatter in‐depth understanding of smallhold der farmers, their challen nges and the eir needs forr both financcial and advissory servicess. The field rese earch aimed to gather in nformation on o the “pain points1” of smallholder farmers to guide product a and service d developmentt to overcome the barrierrs for smallho older farmerrs so that the ey can increase t their access, usage and uttility of servicces. ort provides a a summary of o the highlig ghts of the A Agri‐Fin Mob bile Product D Developmen nt and This repo Baseline S Survey carrie ed out in Ugaanda in Septe ember 2012, t to gain a bettter in‐depth understandiing of the “pain n points” faced by smallh holder farmers as well as their needs for both agricultural advvisory and finan ncial services. The primaryy objective o of the Agri‐Fin n Mobile pro ogram is to p provide “bundled” financial and agricultu ural advisoryy services viaa mobile pho ones in orderr to reduce tthe complexxity of accessing g services to farmers and d provide a single point o of contact beetween farm mers and the value chain playyers that sup pport them through the lifecycle of p roduction fro om land prep paration to s selling of producce. The surve ey was carried out in So outh Western n Uganda in the districtss of Mbararaa, Ntungamo o and Isingiro and in Northe ern Uganda in n Lamwo disttrict across t hree selected d value chain ns of maize, b beans and bana anas (plantaiin or matooke). The inte erviewees w were smallho older farmerss and value chain players su uch as produce buyers, in nput dealers, transporterss, agro‐proceessors. From the survey results, the top th hree challeng ges to smallh holder farmerrs increasing production a are: pest/disease d damage, poor and unprredictable we eather conditions (droug ght, flooding, heavy rains)), and la ack/unavailab bility of qualitty inputs or im mproved seeed varieties. In additio on, other cha allenges inclu ude lack of funds, f lack o of land for ag griculture, so oil exhaustion n and lack/unavvailability of l abor to supp port agricultu ural activities.. The top constraints from the merchants m in procuring aagricultural produce are e poor qualiity of produce a and raw materials, high trransportation costs and l ow production volumes. Other constraints include th he inability off farmers to p provide prod duce on time and high cossts of storage e for produce e.
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Issues affe ected the smallh holder farmers i in the farm lifeccycle.
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ntions for the e Agri‐Fin Mo obile Program m to enable farmers to in ncrease yield ds and The potential interven sell at be etter prices include the provision of advisory in nformation tto improve pest and disease managem ment for spe ecific crops; promotion and a better d distribution o of quality inp puts by provviding information on local i input dealerss and inform mation on weeather patterrns and prom motion of clim mate‐ smart farming practices among others. Overall th he strategic vision for the Agri‐Fin Mobile M interrventions thrrough partne ers is to imp prove farmer access to qua ality inputs; improving post‐harvest p processing activities to o reduce pro oduce uce buying by enabling th he traders to estimate avaailable produ uction losses, reducing the costs of produ in different locations a and improve financial serrvices by provviding cashleess payment o options. 2.0 UGAN NDA COUNTR RY PROFILE has an estima ated populattion of 35.8 m million, 80 peercent of who om are involvved in agricu ultural Uganda h productio on that contrributes to 22 percent of the total Grosss Domestic Product. Wh hile the agricu ulture sector is significant, itt is currently in a state off stagnation with regard to growth d due to smallh holder farmers not being able to invvest in additional inputts such as improved seeds, fertillizers, herbicide es/pesticides to control pests p and diseases to im mprove theirr yields becaause they are not guaranteed to get be etter prices ffor their prod duce. As part rt of the 10 yyear Agricultu ural Develop pment Strategy the Governm ment identified 10 strateg gic crop valu ue chains on which to fo ocus interven ntions which ran nge from re esearch, thro ough increasing productiion for locall consumptio on and expo ort to supportin ng market linkages to posst production n processing to increase v value proposition. Telecomm munications e environment Uganda’ss telecom market is growing like alll others in A Africa with aabout 7 percent year‐on n‐year growth despite d global economicc downturn due to diveersification in nto data, an nd mobile m money services p plus increased penetration into new ru ural markets.. 3.0 BACK KGROUND The Agri‐‐Fin Mobile program p worrks with parttners to builld sustainablle models, w whereby farm m and crop man nagement to ools and finaancial services are ‘bund dled’ in affo ordable, uniffied platform ms on mobile ph hone channe els to promo ote mass upttake commerrcially. The p program targ gets partnerss who have exissting financia al, Mobile Network Operator (MNO)) or Agriculttural Techniccal Service M Mobile Platformss, or a demonstrated inte erest in deve eloping and in nvesting in such platform ms or applications. The program seeks to o facilitate th he developme ent of a busiiness model in which the bundling process provides added value e for each paartner such as a increased fee income,, greater outtreach or red duced risks. The oppo ortunity for the Agri‐Fin Mobile “bu undled” finan ncial and ag gricultural se ervices via m mobile phones, i s to reduce the complex xity of accesssing these seervices to thee farmer, and d provide a s single point of c contact throu ugh the agen nt networks t that provide support to t he farmers through the w whole productio on lifecycle from f prepariing land for planting to selling off the produce. The reductiion in complexity will also encourage the t farmers to adopt beetter farming g needs, and d invest in in nputs mprove theirr yields. (higher quality seeds, fertilizers, pesticides/herrbicides) to im 2 | P a g e
The Agri‐Fin Mobile program p is de esigned to achieve two p primary resu ults within th he 3‐year pro ogram time fram me: 1) 18 80,000 smalllholder farm mers will acccess farm productivityy services th hrough imprroved productivity and financial m managementt practices acccessed via m mobile based d technologie es. 2) A commercial A ly viable busiiness model w which “bund dles” key servvices from ag griculture ind dustry sttakeholders, research and extenssion instituttions, financcial service providers, and te elecommuniccations comp panies, will be b developeed in three locations (Indonesia, Ug ganda, Zimbabwe) offfering detailed exampless for replicati on and scalability. 4.0 METH HODOLOGY Before commencing field researrch, the prog gram condu ucted a deskk review in order to ide entify strategic value chain ns and geog graphic regions with hiigh potentiaal for increaased profitability, improved d production n and enhanced incom me for sm mallholder faarmers. App plying a sccoring methodology which included a broad b range of indicatorrs, the Ugand da team narrrowed down the selection of value chains for three crops that sccored the hig ghest: maizee, beans and bananas. A similar scoring metthodology was w also developed and used in the selection off four districcts as target/pilot sites for the program’s initial activities. a Thee Western R Region was selected, and in particularr the districtss of Mbararaa, Isingiro and d Ntungamo because theey have high production levels of the se elected value e chains. The Northern Region districct of Lamwo was selecte ed because o of the potential to partner with w the exissting Mercy Corps C USAID D funded Revvitalizing Agrricultural Inccomes and New Markets (RA AIN) Program m where Agrri‐Fin can pro ovide mobile focused inte erventions fo or the program deliverables.. g the comple etion of the value chain analysis, a the program wo orked with FFIT Uganda LLtd to Following develop, enhance and d localize a se et of research tools that was earlier u used in Indon nesia for the same purpose. Both qualita ative and quantitative re esearch techn niques were employed in n this study,, with the use o of the followiing research instrumentss: (i) Short‐F orm Farmer Survey for b baseline purp poses; (ii) Long‐fform farmerr survey for p product deve elopment pu rposes; (iii) F Focus Group p Discussion ( (FGD) guide; and (iv) Mercha ant/Trader su urvey. Data was collected fro om 421 individual farmerss (266 Individ dual baseline (short‐form)) respondentts and 155 produ uct developm ment ‐ long‐fo orm) and 92 merchants s sampled from m the four districts of Uganda. Fieldworkk was carried d out from 11 to 28 Septem mber 2012.
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5.0 FINDIINGS 5.1 Farmer Profiles al farmer in th he study is: The profile of a typica e is an equ ual distributiion of male e and 1. There female farmers. average age iis 39 years olld with 75 pe ercent 2. The a of fa armers betw ween 25 and 59. There e are slighttly more farm mers between n the ages of 35 – 59 tha an 25 – 35 years. 3. 60 percent of ho ouseholds have h betwee en 2‐6 he most com mmon numb ber of members, with th members being 4 and 5 memb bers at 18 pe ercent each. 4. 75 percent of farm mers can read d and write. 5. Altho ough 17 perce ent of the farmers never went to school, over 50 percent sttopped in prrimary schoo ol and 22 perccent stopped d in O’ Level. 6. 77 pe ercent of the responden nts own the e land they use for agriiculture whille 18 percen nt use comm munal land. 7. 95 pe ercent use hand h tillage to prepare their land and a practice rain‐fed agrriculture with h only 6 percent using an ny form of irrrigation. 8. 59 percent of farmers f have non‐agricu ulture relate ed sources of o income wh hich include retail business (29 pe ercent), animal raising g (19 perce ent) and caussal labor (11 p percent).
d Size Household % 18%18% 13%
12%
10% 9% 5 4% 5%
4% 2% % 1
1% 1% 1% 2
3
4
5
6
7
8
0 0% 1% 1% 0%
9 10 11 12 13 14 1 15 16 24
Educa ation 52%
22%
17%
% 2% None
Primary
O'Level
A'Levvel
6%
1%
Tertiary Univversity Institution
La and Ownership 77% 18%
5% Own
L Lease Land
Co ommunal Land
9. 90percent of the maize and b bananas are grown using g local varietiies as compaared to 62pe ercent for be eans which h had a 19percent usage off hybrid onlyy and the resst using a mixxture of locaal and hybrid d seeds. The e FGDs reve ealed that faarmers use w whatever seeds were le eft over from m the previo ous season a and if resourcces were avaiilable they w would buy from the local in nput dealers. 5.2 Accesss to mobile phone, finan ncial servicess and agriculttural advisorry Informatio on 5.2.1 Mobile Phone A Access and Ussage Over 90 p percent of th he responden nts have acce ess to mobilee phones ‐ 655 percent ow wn phones with 25 percent having h accesss through a a member of o the houseehold with n no predomin nant differen nce in ownershiip between the t genders.. The prevale ent service p provider is M MTN (55 perccent) followe ed by Airtel (20 percent) and d Warid (4 pe ercent).
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ding and rece eiving The mostt common ussage of mobile phones is making voicee calls (86 peercent), send SMS messsages (70 pe ercent), rece eiving mobile e money (69 9 percent) an nd sending m mobile mone ey (53 percent) with only 2 percent usin ng their pho ones for Inteernet access. The constraaints to using the phones are a unstable network, high h costs off calls and SSMS messag ges, difficultyy in charging g the phones, a and difficultyy in accessing g airtime to re e‐charge the phones whicch are on pre e‐paid tariff p plans. 5.3 Finan ncial Servicess Only 30 p percent of the interviewe ed farmers arre financially served by fo ormal, semi‐fformal or info ormal financial institutions and groups with no maajor variation n in the perrcentage of male and fe emale borrowerrs who are se erved. Of the farmers who o received crredit, the disttribution in lo oan providerrs was 17 percen nt banks/MFIss, 20 percentt farmer grou ups/associatio ons, 40 perceent SACCOs, and the restt from friends, n neighbors and d family mem mbers. The major constraiint to obtainiing loans was lack of collaateral security w which also ex xplains the skewed naturre of bank/M MFI loans acro oss gender w with 14 perce ent of males and d 6 percent o of females. The majo or reasons for f borrowin ng were agrriculture relaated expensees (21 perce ent), start a new business usually non‐a agriculture (220 percent), and to pay s school fees (17 percent). The nature o of the loan usa age is biassed toward ds consump ption, schoo ol fees, ho ousehold re elated expe enses, entrepren neurship atte empts which sheds light o on the biggesst constraint which is payying back the loan. A total of o 82 percent of the farm mers have savings in SA ACCOs (31 peercent), Village Savings LLoans Associatio ons (VSLAs) (28 percen nt), banks/MFIs (23 perccent), livesto ock (21 perccent), and in n the house/ma attress (21 percent). The e FGDs reinfo orced the saaving culturee to methods with low o or no charges, c close to the c community aand easy with hdrawal of fu unds at short notice when n needed. Most of the farmers save for mo ore than one e reason. Thee most common purposses of saving gs are school fe ees (71 perccent), medicaal expenses (65 percen nt), agricultu ural inputs ((42 percent), and investments (13 perce ent). The maajor constrain nts identified d with saving g are lack of funds to savve (37 percent) and the savin ng locations being too farr (26 percentt). 5.4 Agriccultural Advissory Informaation Only 49 percent of the t farmers reported haaving receiveed any typee of agricultu ural advisoryy and extension n services wh hich was reinforced during the FGDs tthat they do not receive a any education and support related r to th he purchase,, delivery and usage of iimproved seeeds and ferttilizers. For tthose farmers w who received d extension s services and advisory info ormation thee top three tyypes were m market prices (5 57 percent), post‐harvest handling and storag ge practicess (52 perce ent) and disease managem ment servicess (49 percen nt). The farm mers benefittted least fro om services involving ferrtilizer recomme endations and product prrocessing. Th he most com mon channeels were radio o and face‐to o‐face interactio ons with exte ension agentts, family, friiends and otther farmers.. The extenssion services were provided by NAADS (government ( t agricultural extension agents), NGOs and relig gious organizzation officers and friends. The top needs n for infformation se ervices are market m pricess, seed recom mmendation ns and agricu ultural input (fe ertilizers, pessticides) pricces and sources with an n added req quirement fo or timelinesss and accuracy of informatio on. 5 | P a g e
ncial and info ormation serrvices constrraints 5.5 Farmer level consstraints, finan Overall th he productio on of maize, b bananas and d beans was either stagnaated or on a decreasing trend with 20 p percent of gross production losses with bananas ( (21 percent), beans (18 pe ercent) and m maize (16 perce ent) mainly ca aused by pessts (41 perce ent), mold (333 percent), b bruising (14 p percent espe ecially with bana anas). The majo or challenge es the farme ers faced du uring produ ction were uncertain w weather pattterns, unavailab bility of seed and high cosst of seed. Th he major chaallenges for t the farmers t to increasing g their productio on were pestt/disease dam mage (45 perrcent), poor weather con ndition i.e., f flooding, dro ought, heavy rain ns (40 percen nt), and lack//unavailabilitty of inputs a nd improved d varieties (30 0 percent). 5.6 Merchant constra aints and perrceptions on farmer activvities The most common activities a of the merchaants interview wed in the survey were e into bulkin ng of produce f from farmers (21 percentt), retailing p produce (20 p percent) and d produce traading (17 perrcent) although 61 percent reported r verry slow grow wth in busineess activities compared to o 33 percentt who are seeing rapid grow wth. Despite this, 56 perccent of the m merchants arre interested in improving g and increasing g their levell of supportt to smallholder farmerss although tthey are unlikely to inve est in providing g additional e extension serrvices outside e selling agriccultural inputts. The majo or constraintss the merchaants faced in n procuring aagricultural ccommodities form farmerrs are poor qua ality of produ uct/raw mate erials (45 perrcent), high t transportatio on costs (24 percent) and d low volume o of production n (13 percent) which corre esponded to o the stagnatted and decre easing produ uction by farmers plus side‐sselling to deaal with imme ediate houseehold needs. The merchaant’s percepttion is that the farmers do not have acccess to agricultural adviisory informaation and fin nancial assistance necessaryy to pay for s storage of pro oduce, and p purchase neeeded agricultu ural inputs. 5.7 Dema and for finan ncial and info ormation servvices 5.7.1 Insurrance, Remitttance and Biill Payment S Services Only 3 pe ercent of the e farmers havve any form of insurancee, and 34 perrcent have b been paying utility bills main nly water usag ge fees to co ommunity borehole manaagement com mmittees. nce services to send and receive mon ney with the most A total 522 percent of the farmers use remittan common forms being g mobile mo oney (55 perrcent) and in nformal meth hods (10 perrcent). The m major purposess for sending remittancess are educatio on (49 perceent) and houssehold expen nses (23 perccent), while the e purposes fo or receiving are househo old expenses (29 percentt), education (26 percentt) and agriculturral input purcchase (10 perrcent). The majo or reasons fo or the adoption of mobile e money for remittances is more secure as the m money can be sent s and piccked up by the respecttive person, fast since tthe transferr and receip pt are immediatte, easy to tra ace the mone ey in case of problems se nding or receeiving the funds. 6 | P a g e
ancial Service e Needs 5.7.2 Fina From the e survey one of the majo or expense areas for smaallholder farm mers are con nsumption re elated expensess for educatio on and household expenses which al so drive saviing decisionss. The farmerrs are in need of the followin ng broad finaancial produccts: 1. To sa ave regularly and to access funds at sspecific timess for educatio on expensess (whose schedule it fairrly stable), ab bility to use t the savings to receive creedit for the p purchase of a agricultural in nputs and e enhanced see eds for increaased producttion which is then repaid o off at harvest time. 2. Collatteral substitu ute options th hat include livestock, farm m assets and equipment w where available. 3. Balloo on type cred dit financing where a larrge paymentt is due at tthe harvest season when the farme er sells their p produce. 4. Disco ounting of wa arehouse recceipts so thatt instead of s selling their p produce at h harvest time when pricess are low, the e farmers can n store their produce wit h a certified warehouse, access part o of the proce eeds for immediate use an nd the rest w when prices im mprove 5.7.3 Agriicultural Advvisory Service e Information n Needs ps relevant to the The overall need for farmers is timely and acccurate inforrmation for sspecific crop stage of the producttion cycle. Th he informatio on needed b by farmers iss to enhance e market linkkages between the farmers and servicce providers such as ag gricultural in nput dealers for seeds, agro‐ chemicalss and fertilize ers during pro oduction, and produce bu uyers after harvest. 6.0 GAPS S AND RECOM MMENDATIO ONS 6.1 Gaps The key g gaps identifie ed in the rese earch survey a are: 1. Lack of access to o timely, reliiable information related d to pest/dissease damag ge, poor we eather condiitions, marke et prices and product proccessing servi ces. 2. Lack of access to o credible farmer groupss and associaations that ccan act as ag gents in term ms of prom moting cooperrative marketing and exte ension educaation. 3. Lack o of access to quality (reco ommended) a and affordab ble inputs to u use and whe ere to access them – seeds, fertilizerss, pesticides a and herbicide es. 4. Lack of access to formal crediit and other financial servvices, such as savings, waarehouse recceipts and in nsurance. 5. Lack of appropriate productts for mobile paymentss that can be linked tto mobile m money remitttances 6. Lack o of access to a alternative m markets to sell produce 6.2 Intervvention Reco ommendations ns are poten ntial interven ntions based d on the anaalysis of the existing Ug ganda The recommendation context w with guidance e from the prroduct development reseearch: 1. Provide advisory information on how to identify and d control peests/diseases for specific crop varietties
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mation/tips on o improved d seed varietties for speccific geograp phical regions integrated with 2. Inform conta acts for suppliers of the se eeds in localities 3. Toolss to support e extension offficers in theirr training and d monitoring activities 4. Mapp ping of value e chain playe ers such as agro‐input a deealers, produ uce buyers, extension se ervice providers etc. and d the localitie es that they service. 5. SMS i information a and reminders tailored to o specific stag ge in the pro oduction lifeccycle for the crops that t the farmers a are growing 6. Integration to support mobile based payyment for ag gro‐input pu urchases, loaan disbursem ments, produ uce bulking, w warehouse receipts, savin ngs productss and produce purchase p payments 7. Support for savin ngs financial products lin nked to cred dit for agricculture relate ed purchasess and paym ments
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