Super rice takes BOP markets by storm
Uganda has been experiencing a remarkable rice boom, supported by good farming practices and high market prices. This growth of Uganda’s rice production has contributed to greater food security and a reduction in rice imports. Rice is a staple food in Africa and Ugandans love eating the crop because of its nutritional value. However the challenge for smallholder rice farmers is that the market is dominated by large-scale farmers who benefit from economies of scale and so can sell large volumes at low prices to traders. Smallholders simply cannot compete with this.
There is a growing demand for agricultural produce in Africa, yet smallholder producers struggle to make a living. Alex Byekwaso and Jacinta Namubiru are two TruTrade franchisees in the forefront of sourcing rice from small-scale farmers from Budaka and Pallisa districts in Uganda. These farmers would otherwise have no space in the market since the large-scale farmers flood it with their produce. Alex trains the farmers on harvesting, postharvest handling and packaging, so that clean dry rice reaches the buyer.
TruTrade believes in paying farmers a fair price for quality produce, we also believe in paying farmers a bonus if any savings are made on the deals after deducting the cost of the crop and the costs of delivering the farmer’s produce to the buyer. After paying these farmers their first bonus, they were happy to deal with TruTrade again and thus sourcing more rice is not a problem as they are assured of a ready market.
TruTrade has tested and developed the market in the Bottom of the Pyramid (BOP) retail stores in Kampala and the results are promising. Here buyers are keen to purchase rice and to pay cash on delivery. The main aim is to sell clean, quality rice, so any residue is manually sorted out before packing. Once the rice has been milled and the stones removed, it is transported to Kampala where it is repackaged into smaller sachets of 5kg, 2kg, 1kg and 1/2 kg. The bulk buyers take the rice packed in sacks while the smaller sachets are sold in the BOP outlets. With rising demand for Kaiso and the popular scented Super Rice, farmers in Budaka and Pallisa have a reason to smile as TruTrade is already sourcing 1.5MT of rice from them each week.
The TruTrade rice deals pay farmers for milled rice (in 100kg bags). The farmers pay AgriNet (a processing company in Tororo) to mill their rice for a fixed fee and in this way the farmers can control their middle cost. For farmers, this makes financial sense - they retain ownership of the rice as it is milled, meaning that they capture the increased profits when it's sold direct to consumers.
Although the existing Ugandan rice schemes are huge, they are still small considering that Uganda has about 500,000 hectares of land suitable for seasonal lowland rice production (according to the National Rice Development Strategy). TruTrade is still developing the BOP market but it is keen to expand after these initially promising results.