CATALIST-UGANDAIncreasing Incomes by Sustainably

Commercializing Smallholder Agriculture through Improved Productivity and Market Development

PROJECT PROPOSAL

P.O. Box 2040Muscle Shoals, Alabama 35662 USA

www.ifdc.org

Draft Proposal Submitted:

April 24, 2012

Table of Contents Preface........................................................................................................................................................ 3Acronyms................................................................................................................................................... 4Executive Summary................................................................................................................................... 51. Problem Statement, Background and Project Rationale........................................................................9

1.1 Challenges in Uganda.......................................................................................................... 91.2 Priority Commodities......................................................................................................... 101.3 National Policy Context..................................................................................................... 221.4 Dutch Food Security Policy............................................................................................... 221.5 The CATALIST Experience.............................................................................................. 241.6 CATALIST-Uganda: An Innovative New Project............................................................24

2. CATALIST-Uganda Technical Approach........................................................................................... 252.1 Program Goals and Objectives..........................................................................................252.2 Program Approach............................................................................................................. 252.3 Technical Approach........................................................................................................... 272.4 Sustainability Strategy and Exit......................................................................................... 372.5 Project Logframe & Results Framework...........................................................................382.6 Technical Activities/Outputs by Commodity....................................................................43

3. Performance Monitoring, Evaluation and Learning............................................................................463.1 CATALIST-Uganda Monitoring and Evaluation System.................................................463.2 Communication.................................................................................................................. 473.3 Reporting............................................................................................................................ 473.4 Cross-Cutting Themes....................................................................................................... 483.5 Risk Analysis..................................................................................................................... 48

4. Project Staffing and Organization....................................................................................................... 524.1 IFDC Core Team................................................................................................................ 524.2 Management Structure....................................................................................................... 52

5. Indicative Budget................................................................................................................................. 55Annexes.................................................................................................................................................... 56

Annex 1. Draft Inception Phase Work Plan................................................................................56Annex 2. Draft Performance Assessment Matrix.......................................................................58

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List of Figures and Tables

Overview of Major Commodities in Uganda...........................................................................................11Map of Uganda .................................................................................................................................... 12CASE Conceptual Framework................................................................................................................. 25CASE Approach and Value Chain Development.....................................................................................27Objectives and Outputs of CATALIST-Uganda......................................................................................28Agribusiness Coaches............................................................................................................................... 32Characteristics of Low-Level Clusters and Apex Clusters.......................................................................34Potential Partnership Examples................................................................................................................ 34Examples of Public Works....................................................................................................................... 36Project Logframe .................................................................................................................................... 38Technical Outputs and Activities by Commodity.....................................................................................43CATALIST-Uganda Risk Analysis.......................................................................................................... 49CATALIST-Uganda Organizational Chart............................................................................................... 54CATALIST-Uganda Indicative Budget.................................................................................................... 55CATALIST-Uganda Draft Inception Phase Work Plan...........................................................................56Draft Performance Assessment Matrix..................................................................................................... 58

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Preface The International Fertilizer Development Center (IFDC) is a public international organization addressing critical issues such as food security, the alleviation of global hunger and poverty, environmental protection and the promotion of economic development and self-sufficiency.

IFDC’s mission is “To increase agricultural productivity in a sustainable manner through the development and transfer of effective and environmentally sound plant nutrient technology and agricultural marketing expertise.” IFDC’s Competitive Agricultural Systems and Enterprises (CASE) approach focuses on the development of sustainable and private sector-based competitive agricultural production systems. A key element to productivity improvements and farmer income is the Commercialized Sustainable Farming Systems (CSFS) approach, which considers not only the primary commodity but as well other crops rotated in the farming system to optimize profitability and soil health. Together, CASE and CSFS ensure that tradable surpluses are both commercially and environmentally sustainable, and that the resulting production systems are embedded in a network of business relationships that add value not only directly to the farmer, but to the wider rural and national economy as well.

The CATALIST-Uganda proposal is presented to the Embassy of the Kingdom of the Netherlands (EKN) in Uganda based on a project similar to IFDC’s CATALIST and CATALIST-2 Projects in Rwanda, Burundi and the DRC also funded by EKN in Kigali. The CATALIST-Uganda proposal is tailor-made to the Ugandan context, incorporating important lessons learned and significant new innovations.

The CATALIST (Catalyzed Accelerated Agricultural Intensification for Social and Environmental Stability) Project (2007-2011) initially focused strongly on the introduction of ISFM (Integrated Soil Fertility Management--combining improved germplasm, mineral fertilizers, organic matter management strategies, and local management adaptations), which led to two to four-fold increases in productivity, reduction in production costs, and consequent dramatic increases in marketable surpluses and farm incomes. Following its mid-term evaluation in 2009, CATALIST intensified its efforts in value chain development and accelerated organizing agribusiness clusters—groups of value chain operators implementing a business idea around a specific commodity in one or more value chains. CATALIST-2 (2012-2106) will be a continuation and expansion of CATALIST that will further apply and adapt this approach in the Great Lakes Region of Africa and will emphasize ‘roll-out and scale up’ – increasing the number of agribusiness clusters and the relations among them. Using the market as the key driver for agricultural intensification, CATALIST-2 will use a public-private partnership (PPP) model, and will partner – whenever possible – with national and international (including Dutch) agro-enterprises in areas such as agro-input supply, professional service provision and output marketing.

Based on consultations with the EKN in Uganda, Rwanda and Burundi, stakeholders, beneficiaries and IFDC technical staff, CATALIST-Uganda builds on the lessons learned from CATALIST Project. From the production side, the project will develop and disseminate highly productive, sustainable farming systems comprised of several commodities, anchored around three to four primary commodity value chains. For the CATALIST-Uganda Project, the commodity market is the starting point. Using the ‘pull’ of the market, cluster development and market linkages will be encouraged earlier than in the original CATALIST project, facilitated by lessons learned from the CATALIST experience and sharing of regional staff and best practices between the two projects. While cluster development is opportunity-driven, starting with addressing farm-level constraints such as access to agro-inputs and credit, CATALIST-Uganda will facilitate the formation of separate apex-level clusters around each of the value chains allowing cluster actors to tap into national, regional and international market opportunities and agro-enterprises.

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Acronyms3G........................Three Generations Potato Project (USAID funded)ABC.....................Agribusiness ClusteraBi Trust..............Agribusiness Initiative TrustAMPU.................Autonomous Mobile Processing UnitBSS......................Business Support ServiceCASE...................Competitive Agricultural Systems and EnterprisesCATALIST..........Catalyzed Accelerated Agricultural Intensification for Social and Environmental

StabilityCATALIST-2......Towards Viable Clusters in Agribusiness for Improved Farmers’ Income and Food

Security in the Great Lakes RegionC:AVA................Cassava Added Value ProjectCDI ..................... Centre for Development Innovation (Wageningen University)CIP.......................International Potato CentreCPP......................Crop Protection ProductsCSFS....................Commercialized sustainable farming systemsDADTCO............Dutch Agricultural Development Trading CompanyDGIS....................Directorate-General for International Cooperation (The Netherlands)DSIP....................Development Strategy and Investment Plan of the Ministry of Agriculture, Animal

Industry, and FisheriesDRC.....................Democratic Republic of CongoEAC.....................East African CommunityEADN..................Extending Agro-Dealer Networks ProjectEAGC..................East African Grain CouncilEKN.....................Embassy of the Kingdom of the NetherlandsFIPS-Africa.........Farm Input Promotions AfricaGoU.....................Government of UgandaHQCF..................High quality cassava flourHZPC...................HZPC Holland B.V., Seed Potato CompanyIFDC....................International Fertilizer Development CenterIGA......................Income generating activitiesISFM....................Integrated Soil Fertility ManagementJICA....................Japanese International Cooperation AgencyMAAIF................Ministry of Agriculture, Animal Industry, and FisheriesMFI......................Micro-finance InstitutionNAADS...............National Agricultural Advisory ServicesNGO....................Non-Governmental OrganizationOSCA..................One-Stop Center AssociationsPHH.....................Post-harvest handlingPMA....................Plan for Modernization of AgriculturePPP......................Public-Private PartnershipSME.....................Small and Medium-sized EnterpriseToT......................Training of TrainersUBOS..................Ugandan Bureau of StatisticsUNADA...............Uganda National Agro-input Dealers AssociationUNBS..................Uganda National Bureau of StandardsUSAID.................U.S. Agency for International DevelopmentVCR.....................Value-to-cost ratiosWRS....................Warehouse receipt system

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Executive SummaryGoal and Overall ObjectiveThe goal of CATALIST-Uganda is to sustainably commercialize smallholder agriculture through improved productivity and market development, resulting in marketable surpluses that raise farm incomes in Uganda, and increase food security for the wider East Africa and Great Lakes Region. Starting with the ‘pull’ of the market by working with commodities for which there is strong demand, CATALIST-Uganda will employ a systems approach to develop integrated cropping systems around priority commodities—Irish potato, cassava and rice—combined with an accelerated cluster development approach appropriate for Uganda. In addition to agricultural intensification, attention will be paid to input market development (both seeds and fertilizer), output marketing, linkages to Dutch and other agribusinesses and improvement of the policy environment.

By the end of CATALIST-Uganda in May 2016, 100,000 smallholder farmers will have doubled yields, achieved a 50 percent increase in incomes, and produced an annual marketable surplus of 200,000 metric tons of cereal equivalents. This will contribute to the increased rural incomes and trade in Uganda and increased food security in the region.

Approach CATALIST-Uganda will be built on a market driven approach, focusing on the development of competitive value chains and farming systems that will lead to considerable marketable surpluses, contributing to increased incomes and trade in Uganda and greater food security in the region. Starting with the market ‘pull’ of agribusiness development in Uganda, cluster development will focus on agribusiness and entrepreneurship in Uganda at all levels – from local to national. This will allow farmer beneficiaries to seize on Ugandan, regional and international opportunities by targeting markets and trade to neighboring countries, and developing supply chains to national and multinational (including Dutch) agro-processors. To reduce production and transaction costs in the selected value chains, CATALIST-Uganda will introduce both technical and institutional innovations to increase profitability. IFDC will focus on building and strengthening of capacities of partner organizations such as farmer organizations, agro-input dealers, agribusinesses, and business service providers to ensure institutional sustainability at project exit in four years.

Based on the experience and technical achievements of CATALIST in Rwanda, Burundi and DRC, IFDC will make a significant contribution to a stronger and more productive agricultural sector in Uganda that can contribute significantly to increased rural incomes in Uganda as well as to reduced food scarcity in East Africa and the Great Lakes Region. Market development forms the foundation of CATALIST-Uganda, as it is the market “pull” on which cluster formation and IFDC’s Competitive Agricultural Systems and Enterprises (CASE) approach is based. CATALIST-Uganda will accelerate cluster development, taking advantage of the existing modest surplus production and nascent rural business linkages while simultaneously introducing commercial, environmentally sustainable farming systems that increase yields and decrease production costs per unit product. Market development and productivity enhancement form complementary halves of the virtuous cycle to smallholder agriculture commercialization. CATALIST-Uganda seeks to resolve a long-standing issue impeding agricultural intensification in Uganda—low fertilizer use—by working with agro-input suppliers, extension services, and finance institutions to enable farmers to access and profitably apply mineral nutrient inputs in a farming systems context.

To ensure long-term farmer access to markets that is responsive to dynamic conditions, CATALIST-Uganda will focus on formation of vibrant agribusiness clusters. These will be formed early on in the project, as soon as participating farmers produce tradable and commercial surpluses - at a cost of

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production and in sufficient quantities to be competitive. The project and its beneficiaries will be attentive to early business opportunities such as linkages with agro-inputs, bulking, storage and credit which form the basis of cluster development at farmer-group level. As these clusters develop in their transactions and in their business and market sophistication, separate commodity-specific apex clusters will be formed to take advantage of higher-level business opportunities, such as linkage with large/Dutch agro-processors. These apex clusters will access better prices in input and output markets as well as improve the policy and business environment.

Through CATALIST-Uganda, project-affiliated farmers will be able to increase investments in their own well-being as well as in their agricultural enterprises. The project’s focus on improved post-harvest handling, storage and market-linkage through its €2 million Matching Investment Fund and linkage to credit guarantees will increase the economic resilience of these farmers. Through value chain development, agribusinesses will be developed and strengthened, ensuring a strong pull for the marketable surpluses produced. Farmers, armed with the necessary links to input suppliers, agribusiness, business service providers (BSS) and market information, will take advantage of new and expanding markets. A lively and competitive agribusiness environment will be a strong motivator for farmers to produce a surplus, completing the virtuous cycle. Two additional project tools – an €800,000 Innovation Grant Fund and a €1million public works component - will support project interventions. The innovation fund is designed to spur new options for input and output market development, while public works will generate rural employment through the development of infrastructure that enhances productivity and market access, such as terracing, irrigation systems, warehouse/storage rehabilitation and the development of feeder roads.

While CATALIST-Uganda will focus on a limited number primary commodities (cassava, rice and Irish potatoes), it will employ a systems approach to anchor these commodities in integrated cropping systems in which the primary commodity is intercropped, rotated, or relayed into other crops and where possible, integrated with livestock. An option to develop another commodity chain is written into the proposal, to be selected during the inception phase. A systems approach assures that soil fertility and profitability are enhanced throughout a cropping sequence. The balanced mix of commodities and markets reduces the risks of reliance on a narrow commodity base.

The project will target those farmers that possess or have access to a certain amount of land and productive assets and therefore can accept a certain level of risk. The project will focus on farmers that have access to markets and market infrastructure such as roads. The project may also work with medium to large scale farmers in the project’s target areas to serve as nucleus farmers. While the most vulnerable farmers (those with little or no land holdings or assets) will not directly be targeted by the project’s agricultural activities, they will benefit from the project’s public works component, which can assist in asset accumulation. Particular focus will be paid on gender, as the project will promote equitable access to resources and economic returns, and shared household decision-making.

The project will begin with a 6-month inception phase, during which the project office, staff and systems are set up. During this time, market and value chain analyses will inform project implementation and the development of the first annual work plan in which selection of commodities, project beneficiaries, and partners and will be finalized. Baseline surveys, establishment of the Matching Investment and Innovation Grant Funds, and selection of the first public works will be initiated during the inception phase.

Risk and Risk Mitigation IFDC considers the risk of political insecurity (particularly during elections) to be the largest risk factor. This risk can be within Uganda itself or in neighboring countries. Kenya is the major corridor for fuel and fertilizers, the supply of which, if disrupted, could negatively impact implementation. Unrest in South Sudan, DRC, Burundi, or Rwanda could badly affect regional markets. Additional risks come from plant disease pandemics and climatic uncertainty (both droughts and floods) and the resultant

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secondary social, economic and political effects. A further risk is political interference in agricultural markets through subsidies, price controls, free distribution of inputs, market unfriendly policies, rent-seeking and favoritism. While structural solutions to these problems are largely beyond the scope of the project and IFDC, CATALIST-Uganda will monitor the situation if these risks unfold, and has put in place mitigation measures in Section 3.5, “Risk Analysis”.

Apart from contextual risks, the largest implementation risk recognized by the project is the dynamic resulting from successful increases in agricultural productivity and income. With thousands of farmers producing marketable surpluses, a new social dynamic is introduced to societies. As seen in the CATALIST project in Rwanda, Burundi and DRC, this may result in land consolidation (successful farmers buying land from less successful farmers, many of whom become ‘laborers’), farmers using access to credit to buy and store other farmers’ harvest to further increase their profits, and farmers producing large surpluses that drive commodity prices down, to the detriment of inefficient producers. With the roll-out of CATALIST-Uganda, similar events are anticipated. Additional implementation risks and mitigation measures are also reviewed in section 3.7.

Public-Private Partnerships and Dutch Private Sector The project will maximize scarce development resources by leveraging private cooperation through Public-Private Partnerships (PPP) with national and (Dutch) multinational agro-enterprises, by collaborating with Dutch Knowledge Centers and other agribusiness projects, and by focusing on effectiveness and efficiency, thus increasing impact and return on investment. Several Dutch multinationals have expressed their interest or signed Letters of Intent to collaborate with IFDC, including DADTCO, Unilever, Friesland Campina, TNT, Rabobank, East-West Seeds, RijkZwaan, and DSM. IFDC will also collaborate with Agri-ProFocus’ network in Uganda which includes Agriterra, Heifer Nederland, and SNV among others.

Policy Context The CATALIST-Uganda approach is in line with the newly formulated Dutch Development Policy (“Focus Brief”) and the Dutch Multiannual Strategic Plan for Uganda (“Food and Justice”). Dutch policy seeks food security through increased agricultural productivity as an integral part of sustainable value chains, building on both local knowledge and on the wealth of Dutch experience in agriculture and agribusiness development.

The role of the project to enhance national income and trade is based on the fact that it will increase agricultural productivity and food availability, increase resource use efficiency, result in job creation, and increase exchanges of knowledge and skills. CATALIST-Uganda will also contribute to regional food security in the East African region, as Uganda is generally food secure and overall is a net exporter of agricultural products to its neighbors, particularly South Sudan and Kenya.

Likewise, CATALIST-Uganda is aligned with the Government of Uganda’s (GoU) Development Strategy and Investment Plan (DISP) and Plan for Modernization of Agriculture (PMA) that seek to improve household incomes and food security through increased productivity and market access, together with an improved enabling environment.

Performance Monitoring, Evaluation and LearningIFDC will implement a performance monitoring, evaluation and learning system that is harmonized across similar programs (CATALIST-2) and which feeds into the new IFDC monitoring and evaluation (M&E) system. A project log frame and draft Performance Assessment Matrix are included in this proposal and will be finalized during the inception phase following the value chain assessments and baseline survey. Project-own M&E, including a real-time cloud-based M&E system and annual surveys,

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will be supplemented through independently contracted case studies, as well as mid-term and impact studies to be undertaken through the donor.

Partnership and Management The project will operate from a central office in Kampala, and three field offices, one in each target region. The project will operate with a lean staffing structure, utilizing regional experts from the CATALIST-2 project, and other IFDC Africa-based staff. A key element of this lean structure is partnering with organized farmer groups and cooperatives where possible to speed up implementation, and with existing NGOs and business services providers already operating in the value chains in the targets regions who will play a key role in the implementation of activities. Institutional partners and business service providers will be selected and trained by the project staff and other key stakeholders during the inception phase. Leveraged funds, market access and embedded services such as extension advice are also anticipated from the lead firms participating in the project’s value chains, such as DATCO, Syngenta and breweries.

Budget and Timeline The total budget for the proposed four-year program is €15 million, which is requested as a grant from DGIS. Project activities are reasoned according to a logical framework and related activities. Budget estimates are based on past experience. Individual budgets for cropping-specific activities will be informed by the work plan developed during the inception phase. Flexibility is however built in because of the innovative nature of the project and the fact that detailed budgeting will be conducted at the end of the inception phase.

The project is anticipated to start on May 1st, 2012 and end on April 30th, 2016.

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1. Problem Statement, Background and Project Rationale

1.1 Challenges in Uganda

OverviewAgriculture is the mainstay of the Ugandan economy, providing 14% of Gross Domestic Product, 85% of total export earnings, 73% of total employment, and the bulk of the raw materials used by the mainly agricultural-based industrial sector1. Yet, despite the importance of agriculture in the Ugandan economy, overall yields have remained unchanged over the past decade and are far below their potential when compared to the gains made in Asia from the Green Revolution.

Despite more than a decade of fundamental political, economic, and social change, in which the a country has achieved macroeconomic stability, a liberalized economy and more recently peace in the north, during which GDP growth averaged 7%, 65% of Uganda’s population continues to live below $2/day. Over 90% of the poor reside in rural areas, and while there are some large-scale commercial farmers, smallholder producers using low input/low output subsistence farming dominate Uganda’s agriculture sector, producing an estimated 70% of marketed produce. Compounding this situation is Uganda’s population growth rate of 3.6%—one of the highest in the world2.

In the context of increasing population pressure and the resulting subdivision of farms, agricultural growth requires a substantial increase in productivity per land unit. Yet, prevailing subsistence agriculture is marked by a diversity of crops to address farmers’ risk management strategies and dietary needs. Yields per land unit are low, costs per unit product are high, farmer revenues are low, and nutrient inputs are low, resulting in soil degradation. Additionally, Uganda’s input and output markets are marked by high transactions risks and costs and poor integration, limiting farmer access. However, the majority of agricultural households in Uganda lack the means and the capacities to invest in their farms, as they lack skills in commercialized production technologies, the resources and access to acquire inputs (fertilizers and quality seeds), and links to markets to sell surplus production. As a result, farmers find themselves in a ‘poverty trap’ – unable to acquire enough additional resources to break out of the cycle of poverty, and relying on nutrient mining to produce crops with ever-declining yields.

Because of its agro-ecological conditions (including good soils and favorable climate) and its central position in a food-insecure region, Uganda has the potential to become an important food exporting country. In order to achieve this, agricultural intensification has to go hand-in-hand with agricultural sector development and market integration at all levels. Farmers have to become part of solid agribusiness networks through which they can sell surplus crops and invest in their farms. Through this they will permanently exit the poverty trap, and replace it with a virtuous cycle in which productivity gains sold into remunerative markets allow farmers to reinvest in their farms for sustained increases in income. The resulting improvements in local economic dynamics are also necessary to create non-farm employment for the growing non- or semi-agricultural population.

Agriculture Input and Output MarketsData from the Uganda Bureau of Statistics (UBOS) show that in 2006 only 1% of Ugandan farmers used inorganic fertilizers, 3% used pesticides, 6% used improved seeds and 7% used manure. While the Abuja Declaration on Fertilizer for an African Green Revolution recognizes that increased fertilizer use

1 Data 2010, World Bank.2 Ibid.

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is essential to increasing yields and reversing soil fertility decline in the face of rising population and set a goal of 50 kg/ha fertilizer by 2015, Uganda currently uses an average of 3.4kg/ha—one of the lowest rates in Africa3. Due to a generally favorable climate and good inherent soil fertility, Ugandan farmers have grown accustomed to farming without fertilizers or improved seeds. As a result, yields of almost all major commodities are well below their potential, and failure to replace nutrients removed by crops has led to nutrient mining and soil degradation. Farmers are often unaware of the quantity and type of fertilizer to apply to their various crops, and often farm in mixed cropping systems, which makes crop-specific fertilization difficult. With fertilizer costs high and farmer demand low, agro-input dealers often do not stock fertilizers, particularly in remote areas. Low usage is compounded by poor access. Uganda’s agro-input dealer network is nascent and is still expanding its reach into rural areas while addressing the twin problems of counterfeits and appropriate (smaller) packaging for smallholder farmers. The situation is compounded in Uganda due to its land-locked status. Most inputs are trucked overland from Kenya via the Mombasa Port, increasing costs.

The marketing system for the large majority of crops (with the exception of export crops such as high-value horticulture and coffee) is rudimentary. Poor post-harvest handling leads to losses of about 30%. Limited storage and marketing infrastructure results in unstable prices, forcing farmers to sell cheaply. Cereal grain markets are beginning to see some formalization through the introduction of warehouse receipts systems linked by tradable receipts to the Uganda Commodity Exchange, and through increased coordination of the private sector through the East African Grain Council (EAGC).

Large-scale agro-processing in Uganda is dominated by cash crops such tea, coffee, sugarcane, cotton, and tobacco. Most industries in Uganda depend heavily on agriculture for raw material inputs. Uganda is promoting value-added exports, such as roasted coffee, palm oil processing, and cotton yarn. Agricultural processing is starting to develop in the processing and packaging of coffee, edible oils, tropical fruits, fruit juices, and nontraditional crops such as vanilla. Beyond this however, the processing sector is dominated by local small-scale processing which suffers from poor packaging, hygiene, marketing, distribution and limited capital.

As a net agricultural exporter, Uganda has vibrant cross-border sales of produce, primarily to South Sudan through Oraba and Nimule, to Kenya through Busia, to the DRC through Mpondwe and to a lesser extent to Tanzania and Rwanda. While accurate data is hard to come by, analysis of informal trade by UBOS indicates that Uganda continues to be a net exporter to her neighbors in agricultural commodities with the leading destination for agricultural exports being South Sudan, Kenya and DRC 4.

1.2 Priority Commodities The CATALIST-Uganda Project aims to dramatically increase productivity and efficiently link farmers to both input and output markets by improving value chain linkages. While focusing on individual commodities, the project will take a systems approach to improving productivity, which is optimized when rotation crops (particularly legumes) and livestock are synergized with a primary commodity. The aim is to maximize whole-farm income and sustaining/improving soil health (soil nutrients and soil organic matter).

CATALIST-Uganda will initially focus on 3 commodities: Irish potatoes (Solanum tuberosum), lowland rice (Oryza sativa), and cassava (Manihot esculenta). All three crops have established output markets, both within Uganda and regionally, such that considerable increases in production is unlikely to result in price depression. Yields of potatoes and rice are particularly low relative to their potential in the environments in which they are grown in Uganda, such that large increases in productivity and 3 2008 average, World Bank Data.4 “The Informal Cross Border Trade Survey Report 2009 and 2010”, Bank of Uganda and Uganda Bureau of Statistics, June 2011.

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decreases in production costs are obtainable with inputs and good management. Cassava, while traditionally cultivated as a food security crop, has identified large commercial markets both inside and outside of Uganda. With better production and post-harvest processing techniques, cassava can be immensely profitable. These commodities also complement the current portfolio of donor (including Dutch) investments in agriculture. Maize, beans and coffee were not selected due to existing DGIS and USAID funding, including aBi Trust. Other cereal grains, while profitable, have less potential for yield increases and improvements in profitability than the selected commodities. Legumes (groundnut, soybean, beans, and pigeon pea) are considered in this project as complementary crops in rotations with primary commodities, which have significant potential for contribution to revenue. Additional priority commodities will be considered during the project inception phase, with the aim of selecting one added commodity. Opportunities and likely project activities relating to these commodities in the Uganda context are further discussed below.

Overview of Major Commodities in Uganda

Crop Area (ha) Yield (Mt/ha) Production (Mt)

Households producing

# %

Maize 890,000 1.54 1,373,000 2,351,000 60%

Beans, dry 930,000 0.49 460,000 2,017,000 52%

Cassava 415,000 12.73 5,282,000 1,677,000 43%

Banana (Food) 1,700,000 5.62 9,550,000 1,375,000 35%

Sweet potatoes 620,000 4.58 2,838,000 1,360,000 35%

Groundnuts, with shell 235,000 0.73 172,000 970,000 25%

Sorghum 330,000 1.52 500,000 843,000 22%

Finger Millet 470,000 1.81 850,000 717,000 18%

Coffee (Arabica+Robusta) 270,000 0.60 162,000 500,000 13%

Sunflower 190,000 1.21 230,000 500,000 13%

Sesame seed 280,000 0.61 170,000 401,000 10%

Bananas (beer and sweet) 143,000 4.20 600,000 289,000 7%

Potatoes 102,000 6.81 695,000 184,000 5%

Rice 140,000 1.56 218,111 125,000 3%

Soybeans 155,000 1.13 175,000 105,000 3%

Pigeon peas 92,000 1.01 93,000 76,000 2%

Data sources: Production data, FAOSTAT 2010; household data, calculated from UBOS data, 2008-2009 by IFDC.

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Map of Uganda

Potatoes

Introduction

Irish potatoes in Uganda are grown in highland regions. Most production is concentrated in southwest and western Uganda, particularly in Kabale and Kisoro districts, though some potatoes are also produced in eastern Uganda (Kapchorwa district). Due to its short cropping cycle and high yield potential, potatoes farmed under good agronomic practices can be a smallholder cash crop, well suited to these densely populated areas where land is in short supply and farm size is small (commonly <0.5 ha). In some areas, potatoes can be cropped throughout the year under rainfed conditions. Some farmers manage up to 3 crops annually, though two crops is more common. Properly grown, potatoes can be extremely profitable. Net returns to good agricultural practices promoted in the CATALIST project were $1600, $2200, and $2200/ha in Rwanda, Burundi, and DRC, respectively, per cropping season. Amongst field crops, potatoes offer the best opportunity for income improvement in highland areas.

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Current Production System & Commercialized Production Potential

In 2010, over 100,000 ha of potatoes were cropped in Uganda, benefiting over 1 million Ugandan household members. While average yields of 20 metric tons (Mt) per hectare (ha) are realistic with current varieties, average yields in Uganda are less than 7 Mt/ha (FAO data). Low yields are due primarily to poor quality seed potato, inadequate soil fertility management practices, and diseases, primarily late blight and bacterial wilt.

Potatoes must be rotated to reduce disease incidence. Recommended practice is that farmers grow potatoes only once every two years on the same field, though this is often exceeded. Because potatoes are vegetatively propagated, diseases (including viruses) are transmitted in the seed. Poor quality seed potato can dramatically reduce yields. Research by the International Potato Center (CIP) in Kenya showed that yields more than doubled using quality seed, compared to farmer saved seed under good agricultural practices, rising from <10 Mt to >20 Mt/ha.

The very limited supply of quality seed potato is a major constraint throughout Eastern Africa. The USAID-funded 3G Project (2008-2011), led by CIP, established a profitable model for rapid seed multiplication in Kenya, Rwanda, and Uganda. The project introduced aeroponics technology in all three countries, greatly accelerating production of minitubers and basic seed potato at national and regional scales. This technology permits production of substantial quantities of basic seed potato in only 2 field generations as opposed to 5-7 generations using conventional methods. This reduces both costs of production and disease build-up.

The aeroponic technology was shown to be not only rapid but lucrative, attracting private investments in aeroponics facilities. In Uganda, an aeroponics facility was established only at Kachwekano Agricultural Research and Development Institute (KAZARDI), Kabale, whereas in Kenya, 7 of 9 units were constructed on a 50:50 cost-sharing basis with private firms. While providing a profitable model for seed potato multiplication, it is estimated that even the 9 facilities in Kenya cater for only 2% of the Kenyan seed potato requirement, and that considerable expansion will be required to cater for potential farmer demand. As Uganda potato production is only slightly less than that of Kenya, the need for additional seed production via aeroponics is clear.

The 3G Project also addressed other weak links in the seed potato value chain. The project assisted farmers to construct inexpensive seed and ware potato stores. Twenty-two stores were constructed in Uganda, with a capacity of some 100 tons of seed potato; together, these are sufficient for 50 ha of seed potato. Working with the Farm Inputs Promotions Africa (FIPS-Africa), 60 Mt of 3G seed potato were sold to 10,000 Kenyan farmers in small (5-10 kg) packages to enable them to evaluate yield improvement on their own farms. Farmers were also trained in positive seed selection and best production practices.

While the 3G Project made great strides in increasing seed potato availability, it considered itself a catalyst, in that it established methods of profitably multiplying seed potatoes and making them available to farmers. The 3G final report noted that achievements of the project “…paled against the existing bottleneck in the seed potato subsector.” While seed supply has been facilitated by the National Agricultural Advisory Services (NAADS), which gives seeds to individual farmers and farmer groups, this is not a sustainable, entrepreneurial model. They are the primary purchaser of seed potato from the Uganda National Seed Potato Producer’s Association (UNSPPA).

FAO has worked in southwest Uganda since 2007 and will terminate the second phase of their project in June 2013. Their efforts have also concentrated on increasing seed potato production. They have trained 40 seed potato producers, and plan to graduate another 60 this year. FAO has constructed 4 model seed potato stores, which are used by farmers and serve as replicable models. On the production side, FAO has trained in good agronomic practices, though their farmers generally do not use fertilizers. These activities involve some 1,400 farmers. FAO is considering a 50% grant support for farmer associations wishing to purchase trucks for transport and bulking purposes. They have linked some farmer

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associations to Kampala markets, but these associations are small (typically 5 farmer groups and generally less than 200 members).

While both projects to date have somewhat addressed soil fertility constraints, they have concentrated on value chain and seed sector development. Little work has been done on increasing yields through increased nutrient input use (both organic and mineral), which was the primary cause of yield increases in the CATALIST project, particularly in Rwanda. Additionally, neither project focused on developing sustainable smallholder access to input and output markets through the development of clusters of agribusiness actors. Here farmer groups work together with agro-dealers, traders, BSSs and other value chain actors for the benefit of the entire chain.

In Uganda, increased organic and mineral fertilizers must go hand-in-hand with quality seeds to realize optimum commercial production. Currently, few farmers use mineral fertilizers on potatoes, and those that use them apply sub-optimal rates, resulting in nutrient mining and soil degradation. Common crops in the rotation are sorghum, wheat, climbing beans, cabbage, peas, and sweet potato. Farmers that fertilize potato rarely fertilize subsequent crops in the rotation, relying on residual nutrients but further mining soil nutrients. It is vital that rotations be fertilized to build soil fertility, and equally important that rotational crops are selected that can be marketed. Vegetables are potentially important in this regard, as they are both marketable and respond well to nutrient inputs. Improved vegetable germplasm, combined with good agronomic practices, can make vegetables a profitable rotation. Yield statistics (FAO) indicate that Ugandan potato yields are not increasing, and may be on the decline.

A commercialized, sustainable production strategy, in addition to using improved seeds and fertilizers, must maintain/improve soil organic matter. In the CATALIST project, farmyard manure was the most utilized organic input. In Uganda, zero-grazing facilities, where animals are confined and manure is easily accessible, are not sufficiently widespread to provide substantial quantities of manure. It is likely that the project will have to rely on organic matter produced on-site from managing crop and weed residues, or produced very close to the site. One possibility in this regard is using improved hedgerows. These serve two purposes: slope stabilization, which is crucial to controlling soil and nutrient loss through erosion, and using hedgerow prunings as a green manure to improve soil organic matter. ICRAF (the International Agroforestry Center) applied this approach in the 1990s as part of their Highlands Initiative. Calliandra calothyrsus and Grevillia robusta were amongst the more successful species, and additionally provide staking material for climbing beans. Calliandra hedgerows are still evident in parts of Kabale district.

Optimal potato production also requires fertilizers and crop protection products, which must be supplied through agro-input dealers. Potato farmers are already accustomed to applying crop protection products to potatoes for disease control, which are generally less expensive than mineral fertilizers. IFDC’s Extending Agro-Dealer Networks (EADN) project (2008-2011), funded by IFAD, trained agro-dealers to improve technical advisory services to farmers, particularly on improved seed, fertilizer, and CPP (crop protection product) use. The project was active in potato-growing areas around Kabale. Agro-dealers will need to be linked closely to producers and finance institutions in order to assure adequate input supply.

Mitigation of the negative environmental effects of inorganic fertilizers in potato systems primarily involves good erosion control. Fertilizers are buried, so potential negative impacts of fertilizers occur when fertilizers are either leached (affecting nitrogen as nitrate) or eroded with soils (applicable to nitrogen and phosphorus). To minimize these effects, farmers will be trained to plant potatoes along contours and to protect slopes from erosion using improved terracing methods. Improved terraces can also absorb nitrates from sub-soil water flow, which can then be cycled back to fields as organic residue. Currently, herbicide use in potato systems is low. When used for upland production, glyphosate herbicides are generally considered environmentally benign. The project will restrict itself to use of glyphosate herbicides for weed control in potato systems.

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Market Potential

Uganda’s Agriculture Sector Development Strategy and Action Plan (DSIP) projects that demand for potatoes will increase by some 3.1% annually, and has established a target of increasing yields by 45% (from 2010 to 2014) to meet rising domestic and regional demand. To meet this objective, the DSIP has established a target of increasing farmer use of quality seed potato from 1% to 20%. A private potato factory will soon be constructed in Kisoro with an output of 1 Mt frozen potatoes per hour, operating in both day and night shifts, to supply domestic and regional markets. The factory can benefit from varieties targeted to the chips market. Many available potato varieties are high yielding, but are not well suited to the chips and crisps markets. Recently, NAMPOT and KACHPOT varieties more suitable for these processed markets have been introduced, but are not as high-yielding as varieties such as Kiningi and Victoria. The Dutch company HZPC is intending to test 6 potato varieties targeted to these markets in Uganda, and has approached the project regarding collaboration in multiplying and field testing.

In addition to the growing demand in Ugandan urban areas - for wholesale and retail markets and for the food industry (potato chips and crisps) - regional trade in potatoes is significant. For example, informal statistics from the National Bank of Rwanda and the Rwandan Revenue Authority indicate that in 2011, Uganda exported almost $850,000 of potatoes to Rwanda against formal trade statistics of $150,000.

Current Farmer Organization and Potential Partners

Organization amongst potato farmers is limited. Most farmers are organized at the farmer group level (20-30 farmers), as this is the basic unit of organization required to receive NAADS support. A few potato farmer associations, usually composed of 5 or more farmer groups in the same locality, have been organized under previous potato initiatives with CIP and FAO, but account for a very small proportion of farmers. In Kisoro district, NAADS is attempting to organize some farmer groups into a district-wide association, but this is a work in progress, and is not driven by a common commercial agenda. No large-scale potato cooperatives exist in Uganda.

The National Environment (Mountainous and Hilly Areas Management) Regulations are designed to protect mountainous and hilly areas, and are particularly applicable to areas where potatoes are grown. The regulations relate to environmental measures such as intermittent grass strips and cultivated plot widths to control erosion, and lays out functions of local environment committees, which can establish and enforce regulations and by-laws for land management at a local level. These localities potentially involve hundreds of farmers, and could form convenient units for cluster formation, such that farmers in a given area coordinate activities around intensified production and environmental sustenance. Many of the regulations are unenforced, in part due to lack of funds to implement them, and most mountainous and hilly areas do not have grass strips perpendicular to slopes as required or other improved terraces. Erosion control measures are a high probability public works investment in this proposal.

The Syngenta Foundation has a Memorandum of Understanding with IFDC, and has expressed interest in developing seed multiplication facilities with private seed multipliers to establish aeroponics facilities. They are also interested in testing, registering and demonstrating clean seed of new varieties, including new commercial Dutch varieties from commercial Dutch breeding companies. HZPC Holland has already expressed interest in testing and multiplying 6 potato varieties best suited for chips, Uganda’s predominant market. Mugenga Holdings Ltd. is establishing a frozen chips factory in Kisoro, with a capacity of 1000 kg/hr output, with processing to begin in mid-2012. They have expressed interest in supporting farmers in obtaining agro-inputs, including quality seeds, fertilizers, and CPPs, and working with IFDC in institutional development of farmer cooperatives, as well as utilizing IFDC’s regional contacts to source potatoes externally, should internal production be insufficient or too costly. NAADS can support the project by assisting in identification of strong farmer groups in high-density potato growing areas, which can be combined with groups and associations formed under FAO and 3G activities. These groups will be focal points of initial demonstrations and farmer trainings, and form the nucleus for cluster development at a level sufficient to attract interest of input suppliers and financial

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institutions. These clusters of some 200 farmers can later be organized into an apex cluster to better address issues of fertilizer type and volume, bulk accessing of inputs, producing for specific markets in terms of quality, quantity, packaging, and accessing regional trade opportunities. Demonstration management, while done by farmer groups, can be facilitated by selected NAADS service providers and agro-input dealers, who can be specifically trained in commercialized production systems. The N2Africa Project will likely assist in legumes production strategies, particularly for climbing beans, which integrate well with potatoes.

Cassava

Introduction

Cassava is grown for both food security and income generation by a large proportion of Uganda farmers. UBOS data (2008/2009) indicates that over 3 million cassava plots were planted by some 1.67 million farm households, making it one of the most widely distributed crop in Uganda. Plot sizes are generally smaller than for other crops, averaging 0.24 ha. As a food security crop, it is appreciated for its ability to grow in poor soils, resist drought, and produce reasonable yields year after year. FAO data indicates that yields in Uganda have remained at approximately 13 Mt/ha for the past decade, with harvested area in 2010 at around 415,000 ha for a total production (fresh roots) of 5,300,000 Mt. Cassava easily tolerates the short dry season in Uganda, but is adversely affected by flooding.

Fresh cassava roots are highly perishable, and must be consumed or processed within 2-3 days of harvest. For this reason, they are commonly “stored” in the soil, and harvested as required for consumption. Many farmers sell sun-dried cassava chips to traders, which can be processed into cassava flour.

While cassava is grown throughout Uganda, production is clustered in the east in Pallisa, Kamuli, Soroti, Tororo, Bugiri, Kumi, and Iganga districts, and in a contiguous zone in northern and western Uganda comprising Masindi, Kyenjojo, Kasese, Nebbi, Arua, Nyadri, Apac, Oyam, Yumbe, and Lira districts.

Current Production System & Commercialized Production Potential

While commonly considered as an intercrop, in reality, 60% of cassava is grown in sole stands (UBOS, 2008/2009 data). It is amongst crops least likely to receive mineral fertilizers, as food security needs are usually met without inputs on a relatively small parcel. Some local varieties, while lower yielding, are preferred by farmers because they produce gradually over an extended time period (up to two years).

A commercialized production strategy requires high-yielding varieties, fertilizers to increase yields and maintain soil productivity, profitable rotations/intercrops, and good agronomic practices, particularly weeding.

High-yielding varieties resistant to cassava mosaic disease have been released widely; many mature in 9-12 months. As opposed to many local varieties, these varieties tend to mature suddenly, and have a “harvest window” of only a few months before tubers become fibrous. In the past 5 years, cassava brown streak disease (CBSD), a viral disease spread primarily through diseased cuttings and whiteflies, has emerged as a serious threat to cassava production with yield losses of up to 100%. No varietal resistance to CBSD has been identified, though some varieties are tolerant (slow to develop symptoms). A recent survey indicated that CBSD incidence is severe in eastern Uganda, between 10% and 40% in some districts, whereas in northern and western Uganda, disease incidence is commonly less than 10%. CBSD spread is controlled by using clean planting materials and by removing and burning infected plants. However, it is often asymptomatic in both roots and leaves in its early stages, and can therefore be spread in asymptomatic cuttings. Demand for clean cuttings has increased, and prices for cuttings are

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now as high as UGX 50,000 per bag (almost $22), with 15 bags required to plant one ha, more than double the premium being paid just 2 years ago. Production of clean planting materials is essential, and given current prices, constitutes a highly profitable value chain. Devising a system to supply clean planting materials in large quantities and to consistently rogue CBSD-infected plants is crucial to cassava commercialization, as diseased roots are unfit for consumption, even by animals. A system for provision of clean cassava cuttings is a project priority.

The yield potential of available improved varieties exceeds 50 tons/ha, and average yields of 35 tons/ha should be achievable - almost triple current yield levels - with good agronomic practices and fertilizer use. A 35-ton cassava yield removes substantial nutrients—some 50-60 kg N, 10-15 kg P, and 100-120 kg K, in addition to minor nutrients. In order to achieve high yields and guard against soil nutrient mining, cassava must be fertilized. Cassava selection in Uganda has always been conducted in the absence of fertilizers as it has always been viewed as a subsistence crop. Screening of available varieties for fertilizer response can potentially improve profitability. Research (Fermont 2009 thesis, Wageningen University) showed attractive value-to-cost ratios (VCRs) to fertilizer application and the importance of good weeding practices.

Controlling weeds is crucial to increasing cassava yields. Cassava has initial slow growth and requires several months to form closed vegetative canopy. During the first 3-4 months, weeds will compete for both water and nutrients if not controlled, severely reducing yields. Up to 6 weedings are necessary, which is labor-intensive and expensive. One profitable alternative is the use of glyphosate herbicides, which can reduce subsequent weedings to 2-3. Use of glyphosate combined with minimum tillage can reduce production costs while protecting the soil (decreased runoff and erosion due to weed residues). This strategy was employed by ACDI/VOCA with good success in northern districts, resulting in average cassava yields of 30 tons/ha without fertilizers, and was particularly appreciated by women, who are largely responsible for weeding.

Soil erosion can be a serious problem in hilly areas due to slow canopy closure. Apart from minimum tillage, other strategies that can be employed are leguminous or grassy hedgerows, mulching, and intercropping. A short-season intercrop such as beans or cowpea can be planted between cassava rows, and up to two intercrops can be harvested before canopy closure. The extra harvest from associated crops in an intercrop can reduce weed competition, improve income per unit land area, and reduce soil erosion, and is a strategy that will be strongly considered in this project. Cassava should be integrated into a crop rotation with other profitable commodities to improve both income, reduce disease incidence, and reduce risk by having a more diversified cropping mix.

Glyphosate herbicide is generally considered to be environmentally benign when applied in upland cropping systems. It is not harmful to animals or soil biota when applied in recommended concentrations, and after application, binds to the soil, which renders it inactive. Nitrogen and phosphorus fertilizers can become pollutants when lost to soil erosion. Minimum tillage systems are designed to minimize erosion, and erosion can be minimized in tilled systems by maximizing soil cover with appropriate short-duration intercrops. Nitrogen leaching is generally not a problem in cassava systems, where N application rates are low. Inorganic potassium is generally not considered a potential pollutant.

Market Potential

Several markets exist for cassava products, including fresh cassava, cassava cake for breweries, high quality cassava flour (HQCF), and animal feed. The HQFC market includes requirements for direct consumption, biscuits (up to 50% substitution for wheat flour), and bakeries (5-10% substitution for wheat flour). Estimates from the Africa Innovations Institute (implementing the Cassava Added Value Project [C:AVA] in Uganda) estimate realized demand for HQCF to be 6,000 Mt per annum, but potential demand of 12,000 Mt/annum, roughly equivalent to 40,000 Mt fresh cassava. Cassava for brewing may supply a brewery under construction in Mbarara, which has an estimated demand

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equivalent to approximately 10,000 Mt fresh cassava annually. Estimates of potential cassava demand for substitution into animal feeds are approximately 150,000, 125,000, and 40,000 Mt annually for Tanzania, Kenya, and Uganda, respectively (Kelly Wanda, cassava value chain specialist, personal communication). Farm Concern in Jinja is currently processing cassava for this market. Large quantities of cassava chips are being exported to South Sudan, Kenya, and Tanzania, but this has yet to be quantified but expected to be significantly larger than the 92,000MT informal trade to Rwanda in 2011 5. Other potential uses for cassava are for starch, glucose, and ethanol production. The South African firm LEFA has expressed interest in constructing a cassava starch processing facility in Eastern Uganda with a minimum capacity of 50 Mt/day starch, which would require 200-250 Mt/day of fresh cassava. While LEFA is still evaluating this possibility, it shows the potential demand of cassava for industrial uses.

This project will concentrate on cassava for brewing and HQCF, since these are already identified markets, and both can be processed using technologies that are available (HQCF) or will be available as described below. Meeting these industrial demands is intended to establish production and marketing models that can then be applied to meeting other demands, such as for animal feed and starch markets.

The main constraint to the HQCF value chain is supplying in consistent quantities of high quality to meet industrial demand. Cassava chips (dried cassava pieces) are commonly processed from fresh cassava by farmers themselves. Biotic and non-biotic contaminants are introduced in the drying process, as solar drying usually takes place on tarpaulins placed on the ground, poorly protected from contaminants and highly variable in terms of percentage moisture. Drying can be interrupted by seasonal rains, resulting in various degrees of rotting. These chips are purchased directly from farmers by traders and milled into cassava flour; as a result, quality is inconsistent. Industries also require consistent quantities, but supply can be erratic due to uncoordinated harvesting and seasonal rains, which interrupt drying. The C:AVA project is addressing these constraints in Eastern Uganda by organizing farmer associations into processing clusters and training them in HQCF processing and quality assurance in order to meet the quality and quantity requirements of large buyers. Estimated net income per ha is in the range of $2000 when value is added through processing to HQCF, assuming 15 tons/ha cassava production and HQCF value of 1500 UGX/kg. Most of this net profit is a result of value addition in processing. Without the HQCF value-added, the net benefit from fresh cassava sales is considerably reduced.

Net benefits can be increased by improving cassava productivity through commercialized farming practices. While several organizations have been interested in developing cassava value chains, there has been very little emphasis on productivity issues beyond good agronomic practices. Soil fertility management though mineral and organic inputs and profitable, soil-improving rotations has received little if any attention. Apart from resulting in lower profits, this approach risks degrading the soil and undermining the cassava production that supports the commercial enterprise.

Dutch Agricultural Development & Trading Company BV (DADTCO) has developed a potentially game-changing technology that resolves the most serious constraint to smallholder participation in cassava commercialization: cassava perishability. The AMPU, or autonomous mobile processing unit, is contained in two 40-foot containers, and travels to producer collection sites. Producers within a 20-km radius bring their produce to the AMPU, which converts it to a cake of about 40% moisture content. The cake has a shelf life of 5-7 months, compared to two days for fresh cassava. It can be used directly for beer brewing or flash-dried to produce HQCF, which can further be refined to produce cassava starch. An AMPU can process 5-8 tons of fresh cassava per hour, or reasonably 50 tons per day.

DADTCO intends to use one AMPU in Uganda to supply a brewery in Mbarara owned by Nile Breweries. Locations to “dock” the AMPU require a borehole and good access to roads, and should be located such that a large number of cassava growers are within a 20 km radius. Cassava growers must work together to stagger production to ensure constant supply throughout the year. Due to the severity

5 “CATALIST Regional Market for Agricultural Commodities”, IFDC, February 2012.

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of CBSD, multiplication of cassava planting materials will most likely have to be coordinated with a large commercial farm(s).

Market information and links to buyers both inside and outside Uganda are crucial to commercializing cassava production. The market demand for cassava chips and HQCF needs to be assessed for South Sudan, Tanzania, and Kenya. Rwanda is currently constructing a large-scale HQCF facility, targeting the South Sudan market.

Current Farmer Organization and Potential Partners

The C:AVA project in Eastern Uganda has some organized farmer clusters specifically devoted HQCF production. In theory, it has 12 sites where HQCF is being produced, but this production needs to be verified. Informants suggest that only one of these sites is commercially viable.

Sasakawa 2000 has farmers organized into 12 clusters, in total comprising over 15,000 farmers, around One Stop Center Associations (OSCAs), which provide farmers access to inputs, training, and processing equipment, focused around specific commodities. Eight OSCAs focusing on cassava processing are located in Eastern Uganda, and could be cluster nuclei for HQCF production.

The N2Africa Project will likely assist in legumes production strategies when such legumes integrate well into cassava production. Possibilities include bean and cowpea intercropping during early cassava development, and pigeon pea as a rotation crop.

While no large-scale farmer cooperatives devoted exclusively to cassava production have as yet been identified, we anticipate that given the level of cassava production in eastern Uganda and the contiguous zone through western and northern Uganda, sufficient clusters of farmers can be rapidly developed with NAADS and NGO partners working in those areas to coordinate commercial cassava production. The location of farmers to work with will be determined in the inception phase, based on the particular market demand. Clusters need to be created in areas where farmers can easily link to markets. The contiguous cassava production zone running through districts in the north, central, and west is linked with good transport routes to Kampala (domestic consumption), South Sudan, and Mbarara (cassava for beer). Export markets to Kenya and Tanzania are closer to Eastern Uganda. One opportunity in western Uganda concerns Nakivale refugee camp, which has some 56,000 refugees, located in Insingiro District (Kabingo subcounty), some 60 km away from Mbarara. The government of Uganda wants to develop with the refugees an income-generating activity, and has expressed interest in commercialized cassava production. The area is said to be good for cassava, and some 20,000 ha can be made available. This is potentially a good location for cassava production to supply the brewery in Mbarara, but this needs to be explored thoroughly.

Clusters targeted to HQFC can be formed to provide consistent supplies in the range of 15 tons fresh cassava per day (approximately 3.5 tons of HQFC). Several of these clusters will be required to meet domestic and regional demands. Clusters based around these units should coordinate with specific industry and export buyers to link to specific markets. By working together, an apex cluster of HQFC clusters can better coordinate supply to demands (for example HQCF for industries in Kampala or for export).

Rice

Introduction

Rice in Uganda is produced under both flooded conditions (hereafter referred to as lowland rice) and under well-drained conditions (upland rice). Lowland rice comprises 68% of rice production, while upland rice comprises 32%. Uganda, though currently a net rice importer, has seen domestic production increase dramatically from 156,000 Mt/year in 2006 to 218,000 Mt/year in 2010 (FAO data), or >8%

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per year. The Uganda National Rice Development Strategy (2009) targets an annual production of almost 500,000 Mt tons by 2018. This will require 11% annual production increases; The strategy specifies that added production should come from increased productivity rather than extending cultivation. Rice matures in 3-6 months, depending on the variety. Thus it is possible to have 2 or even 3 rice crops per year, particularly under irrigation.

Eastern Uganda is the major lowland rice producing area, particularly in Pallisa, Kamuli, Kaliro, Iganga, Tororo, Butaleja, Bugiri and Kumi districts. Western Uganda also has significant lowland rice production. Production in the east is approximately 70% lowland and 30% upland. Northern Uganda is another epicenter of production, primarily in Lira, Gulu, Amuru and Kitgum districts, with production approximately 75% upland and 25% lowland (MAAIF 2007 District Crop Data). Four large rice schemes have been developed around catchment areas: Kibimba (Bugiri district), Doho (Butaleja district), Olweny (Lira district), and Kitgum scheme (500 ha in Kitgum district, Agoro sub-county). These schemes fell into various states of disrepair during the LRA conflict. The Olweny scheme (750 ha) is currently the least developed but considered to have the greatest potential due to its wide catchment area. The Dutch Ministry of Foreign Affairs funds ORIO (the Facility for Infrastructure Development), which could potentially be tapped for rehabilitating collective parts of the Olweny scheme. The Doho scheme (2000 ha) is currently being rehabilitated. The Kibimba rice scheme, owned by Tilda Uganda Ltd., produces almost 10% of Uganda’s rice, 20,000 Mt/year, on 1,500 ha. This scheme is currently increasing the height of their dam to improve water availability, and is developing with the Government of Uganda some 1000 ha for smallholder rice outgrowers.

While rice production on large schemes is substantial, it pales in comparison to Uganda’s total lowland rice potential. Some 550,000 ha of land area has been deemed suitable for seasonal rice production, primarily around Lake Kyoga, with many districts having over 10,000 ha, including Rakai and Nakasongola districts (central), and Bukede, Kumi, and Soroti districts (eastern Uganda). In total, some 7% of Uganda’s arable land is suitable for lowland rice production, and an even larger proportion suitable for upland rice.

Current Production System & Commercialized Production Potential

Fertilizer use on rice in Uganda is extremely low. Upland Nerica varieties have yield potentials of 5 tons/ha, whereas lowland varieties have yield potential of up to 8 tons/ha. Local upland varieties average only 1 ton/ha under minimal inputs, whereas Nerica varieties average 2.5 tons/ha. A recent survey of lowland rice production in Eastern Uganda found yields ranging from 1.9-3.5 tons/ha. Only 15% of farmers used any fertilizer, and that the average use was only 20 kg/ha. FAO statistics indicate average yields of some 1.5 tons/ha (data not segregated according to lowland or upland production). Low yields are due to poor agronomic practices (late planting and weeding, scatter planting instead of line planting), low fertilizer use, suboptimal water control (in lowland rice), and use of low-yielding germplasm. Almost all of Uganda’s increased production is as a result of area expansion and is not due to yield increase per unit land area, contrary to Uganda’s strategic planning objectives.

The largest yield increases can be realized in lowland rice production, which will be the focus in this project. Recently, lowland rice production has been affected by the breakdown in resistance to rice yellow mottle disease of two high-yielding varieties (K-5 and K-98). However, 4 new varieties (LN19, LN21, LN49, and WITA9) have progressed through evaluation, and may be released as early as May 2012; these have yield potentials of 8 tons/ha. Average yields of 6 tons/ha, triple current production, should be obtainable with good agronomic practices and fertilizer use. Production costs can be reduced by using herbicides, which are considerably less expensive than current hand weeding, the burden of which largely falls upon women.

Fertilizer efficiency under flooded conditions can be doubled by urea deep placement (UDP) technology, in which briquettes of urea are pressed deep into flooded soils. Urea or other nitrogen sources are commonly broadcast, which results in high nitrogen losses due to volatilization, runoff, and

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leaching. By deep placing urea into the soil, nitrogen is less subject to runoff, and remains longer in the less leachable ammonium form. UDP technology decreases fertilizer required to obtain a given yield by some 50%, greatly increasing production efficiency and eliminating the negative consequences of broadcast-applied nitrogen.

Glyphosate herbicides can be toxic to aquatic life. The toxicity is due not to the glyphosate but to added surfactants. Specific glyphosate formulations are available for aquatic weed control. The project will carefully evaluate herbicide toxicity and timing of herbicide application to ensure that herbicides do not negatively impact on the aquatic biosphere, and will train farmers accordingly in their correct use.

Lowland rice generally does not need to be rotated, but in seasonal swamps, opportunities exist to exploit receding waters. Potential crops include deep-rooted legumes such as chickpea or vegetables that can be produced on residual moisture. If chickpea proves a viable alternative, the N2Africa Project will likely be a partner in developing sound production strategies for chickpea integration.

While lowland rice will initially receive priority, the project will also strongly consider upland rice production. Many lowland rice farmers also produce upland rice, exploiting local topographical differences. Targeting of upland rice will also be considered where produced in large quantities in project areas targeted to other commodities.

Market Potential

Rice demand in East and Southern Africa is increasing at 6% per year, driven by changing preferences of urban consumers. While rice production is increasing regionally, rice imports to Eastern Africa (Rwanda, Kenya, Tanzania, Uganda and Burundi) were 700,000 Mt in 2008. South Sudan is also a major importer.

To encourage internal production, the East African Community has a common external tariff of 75% (though this is reduced to 35% for Kenya due to their high import demand). Uganda itself has drastically reduced its rice imports over the past decade due to increased internal production. Thus a strong market exists for Uganda rice both internally and regionally, and given consumer trends, is likely to continue. The need for a tariff shows that relative to world prices, regional rice prices are high. Increased production efficiencies will eventually drive down production costs and increase supply and lower prices. To compete regionally and internationally, it will be necessary to increase productivity and lower production costs.

Current Farmer Organization and Potential Partners

Though rice production around large rice schemes constitutes a small percentage of farmers involved in lowland rice production, farmers are most organized around these schemes. The Doho scheme is managed by an organization of some 10,000 farmers, but administration is considered to be in need of strengthening (improved financial accountability and funds management). The scheme is currently undergoing de-silting and general rehabilitation. Some 6,000 farmers will benefit from ongoing development of the Kibimba catchment (due for completion in June 2013), many of which are likely to become outgrowers for Tilda. Pearl Rice Ltd. Is operating in the Naibombwa wetlands in Iganda district, and is as well developing a large outgrower scheme, though the level of actual farmer organization is unknown. They are developing up to 10,000 ha of land, a large proportion devoted to smallholder outgrowers. Pearl already has a rice outgrowers scheme, though the current level of organizaton is not known. Pearl is working with NAADS to take over NAADS service provision in their area of operation. All of these present good opportunities for cluster formation.

Outside of these schemes, farmer organization is mainly at the farmer group level (20-30 farmers), sufficient for demonstration plots but insufficient for cluster formation unless combined with other farmer groups. Nevertheless, because of the large number of farmers involved, particularly around Lake Kyoga, these farmers should be organized, beginning with cluster formation of some 200 farmers

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around existing farmer groups and demonstration gardens. In cluster formation, several actors need to play roles: finance institutions, rice millers, input suppliers, and traders are key actors together with producers.

Sasakawa 2000 has a good cluster development model that they have successfully employed in the sorghum value chain to supply breweries, which they believe can be successfully extended to the rice sector. Clusters use traders and input dealers as value chain champions. Rice traders commonly have village-level contacts who work with farmers to source their harvest. These village-level contacts are oftentimes rice farmers themselves. As well, input dealers (particularly those known to UNADA and through the EADN project to be reliable) have an interest in selling inputs such as fertilizers, seed, and crop protection products. Input dealers and village-level trader contacts can be recruited and trained to manage demonstrations, and use those demonstrations to promote their products and services. Village-level traders have intimate contact with farmers, and established levels of trust. They commonly give small loans to farmers for inputs, which are recuperated at harvest. Input dealers may also secure loans, which can be partially guaranteed through an AGRA program implemented through UNADA. Close relationships with farmers generally ensure loan repayment, and that harvest is sold to traders financing them. Similar arrangements have been piloted by some millers such as Idro Upland Millers. Farmer clusters can bulk their harvest and work with quality millers to produce a better grade rice, which has a price premium.

The project will prioritize linking farmers to quality mills. Of the some 600 mills operating in 2009, only 10 were medium to large-scale mills with destoners, capable of producing clean, polished rich best suited to urban and export demand. Many medium to large-scale mills are operating at <50% capacity.

The Japanese International Cooperation Agency (JICA) completed a 3-year phase in 2010 which concentrated on developing improved agronomic practices, farmer training, variety development, multiplication and distribution, and some small-scale irritagion (2 ha) suited to smallholder development. Seed efforts were devoted to upland NERICA varieties. JICA is now undertaking the Promotion of Rice Development Project, from 2011-2016. The project will deal with both upland and irrigated rice. Priority activities are rice variety selection and multiplication; studies on water management suitability and mechanization potential; technical package development for various environments; trainings for service providers, farmers, rice millers, and traders; and a rice value chain study. The project targets approximately 40,000 farmers, rice research institutes, and service providers. Many JICA activities (both past and ongoing) complement activities in this proposal, and as such JICA will be approached in the inception phase regarding collaboration.

Other Priority CommoditiesDuring the inception phase of the project an additional commodity and cropping system will be selected. A strong potential candidate is sunflower in rotation with a commercial legume (either soybean or groundnut). There is high market potential for these commodities as well as significant scope for yield improvements. A.K. Oils & Fats is currently working with 55,000 sunflower growers supplying to Mukwano with little emphasis on productivity improvements and sustainable production. Such a value chain with a large lead firm presents significant opportunities for smallholder farmer income improvement. Because the sunflower oil and seed sector value chains are already well-developed, a relatively small investment in commercialized production practices could greatly improve profitability and reverse soil depletion now taking place without soil fertility inputs and organic matter management strategies.

1.3 National Policy Context

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As a member of the East African Community, Uganda has adopted free movement of in-country products with Rwanda and Kenya. Discussions are underway for eventual membership with South Sudan and DRC. However there are challenges related to implementation as some countries still apply taxes to agriculture imports from EAC member countries.

The Government of Uganda launched its National Development Plan in 2010, which includes a heavy focus on agriculture. As part of the broader national framework, Uganda’s Comprehensive African Agriculture Development Plan (CAADP) Compact was signed in April 2010 together with approval of the Ministry of Agriculture, Animal Industry, and Fisheries (MAAIF) new five-year investment plan, the Development Strategy and Investment Plan, or DSIP.

DSIP aims to contribute to two high level development objectives: 1. Increasing rural household incomes and improving livelihoods; and 2. Improving household and national food and nutrition security through increasing productivity in crops, livestock and fisheries; improving market access for agricultural products in domestic, regional and international

markets; creating a favorable legal, policy and institutional framework that facilitates private sector

investment in agriculture, and strengthening MAAIF and its agencies

CATALIST-Uganda, with its focus on capacity building in value chain and innovation technology transfer to partners, will contribute directly to the first two objectives, while supporting the latter two through policy advocacy in the enabling environment and targeted strengthening of NAADS through its participation as a project partner. Irish potato, cassava, and rice are all priority commodities in the DSIP, each with specific production targets, priority agroecological zones, and suggested interventions that align with interventions in this proposal under “commercialized production potential” for the individual commodities (section 1.2 above).

1.4 Dutch Food Security Policy

Dutch Policy ContextIn 2009 the Dutch Scientific Council for Government Policy published ‘Less pretension, more ambition; development aid that makes a difference’, which outlines a vision for the future of Dutch development aid. Agriculture – an area in which the Netherlands excels – has a prominent position in this vision.

The policy report ‘Agriculture, rural economic development and food security’ (September 2008), co-authored by DGIS and the Ministry of Agriculture, Nature and Food Quality, provides the guiding principles for Dutch development aid in the area of agriculture, food security and agribusiness development. These aim at contributing to the following four objectives the agricultural sector:

1. Sustainable increase in food production2. More efficient markets. 3. Improved business environment. 4. Better access to healthy food.

CATALIST-Uganda is designed specifically to address the first three objectives.

Likewise CATALIST-Uganda will contribute to specific priorities for the Embassy of the Kingdom of the Netherlands (EKN) in Uganda, as outlined in its Multi Annual Strategic Plan 2012-2015 6 in both the Food Security and to a lesser extent in the Security and Rule of Law Components. Specifically, CATALIST-Uganda will contribute directly to the following outcomes:

6 “Food and Justice – Investing in human security in a challenging governance context”, Multi Annual Strategic Plan 2012-2015, Embassy of the Kingdom of the Netherlands in Uganda, December 2011.

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1. Improved performance of selected agro-food value chains and actors.2. Enabling environment is conducive for agribusiness in general and the selected agri-food value

chains.3. Dutch trade and investment promotion in the area of food security is enhanced.

CATALIST-Uganda addresses both the overall Dutch policy and Uganda-specific policy through its value chain activities in the selected commodities that increase agricultural productivity and access to more efficient input and output markets. The enabling environment will not only be addressed through the project’s policy interventions, but through the improvements in the overall operating environment for agribusiness, including access to finance, more efficient input and output markets including regional markets, gender and youth employment generation and improved infrastructure through public works. The project’s cross-cutting issues in the program – gender, youth and environment – are also aligned with the Dutch strategy. Lastly, CATALIST-Uganda will contribute the Embassy’s Security and Rule of Law Components by contributing a vibrant civil society in strengthening farmer organizations, clusters, agribusinesses and NGOs (such as through the Agri-ProFocus network).

From Aid to InvestmentsPrivate sector development and private sector engagement with rural economic development is a key component of current Dutch policies towards agricultural development in developing countries. Creating partnerships with medium and large scale enterprises is an important strategy for arriving at sustained agribusiness development. Recently, the Ministries of Foreign Affairs and of Economic Affairs, Agriculture and Innovation published an overview of the wide array of private sector development instruments7 (‘From Aid to Investments’). In collaboration with EKN, CATALIST-Uganda will engage these instruments to facilitate private sector development and joint ventures with national enterprises.

Partnerships with Medium and Large Scale EnterprisesCATALIST-Uganda will enter into partnerships with national and regional agro-processors and food companies, and international (including Dutch) companies to support the growth of agribusiness clusters and the connection of smallholders and SMEs (Small to Medium-sized Enterprises) to markets. National and international (notably Dutch) companies contribute significantly to the goal of accelerating and expanding value chains and agribusiness cluster formation.

The project will maximize development resources by leveraging private cooperation through partnerships with national and (Dutch) multinational agro-enterprises. Several (Dutch) multinationals have expressed their interest to collaborate with IFDC or signed Letters of Intent (Unilever, Friesland Campina, TNT, Rabobank, East-West Seeds, RijkZwaan, DSM, DADTCO, Shell). Collaboration with AgriProFocus and its members will be used to foster relations with Dutch private and cooperative enterprises.

1.5 The CATALIST ExperienceBetween 2006 and 2011, using a similar approach as presented in CATALIST-Uganda, the CATALIST project funded through EKN in Kigali triggered agricultural intensification in Burundi, DRC and Rwanda. CATALIST strengthened several value chains and contributed to the improvement of the institutional environment necessary for agricultural intensification. Some 250,000 smallholder farmers (49 percent female) have adopted more intensive agriculture. Together they produced a marketable surplus estimated at almost 500,000 metric tons of cereal equivalents per year. Through efforts to

7 Among others: PSI, MMF, ORIO, AECF, PUM, YEP, Borgstelling MKB kredieten, FOM, ICF, PRC, Agri-ProFocus, Agriterra POP, BiD network, BoP Inc.

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overcome markets constraints, the project facilitated the development of 45 agribusiness clusters built around 11 value chains, and strengthened the capacities of over 850 rural entrepreneurs who have seen their income increase by approximately 50 percent. CATALIST and partners contributed to improving food security and rural entrepreneurship, indirectly contributing to increased peace and stability in the Great Lakes Region. A proposal for the second phase of CATALIST is currently under review, also increasingly building on Dutch enterprises and Dutch knowledge centers.

1.6 CATALIST-Uganda: An Innovative New ProjectWhile CATALIST-Uganda builds on the CATALIST experience in Rwanda, Burundi and DRC, it also represents a tailor-made program to address the Ugandan context, incorporating important lessons learned and significant new innovations. Specifically, CATALIST-Uganda differs from its predecessor in the following important areas:

1. More focused in its choice of value chains, developing commercially sustainable cropping systems around the three to four selected commodity value chains.

2. The ISFM approach used in the Great Lakes CATALIST project is soils-focused, and emphasizes maximization of fertilizer use efficiency. The CSFS approach to be employed in CATALIST-Uganda focuses on commercialization of the entire farming system rather than individual commodities, maximizing profits and sustaining/improving soil fertility.

3. Accelerated cluster development, developing clusters as soon as potential cluster actors can come together to take advantage of business opportunities.

4. Formation of apex clusters around each of the commodity value chains that take advantage of regional/national opportunities and economies of scale, particularly regarding access to input and output markets (including large national and international/Dutch agro-processors). Apex clusters will also have increased leverage to influence the policy environment.

5. Leaner staffing structure, leveraging regional staff from CATALIST-2, external experts, IDFC Africa staff, business service providers and project partners.

6. Three financial instruments including a matching investment fund that allows farmers and famer groups to increase agricultural productivity and market access through the purchase or development of storage and marketing infrastructure. This complements the Innovation Grant Fund that seeks to spur innovations in input and output markets and a fund for public works that provides rural employment through the construction or upgrading of production and market access infrastructure

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2. CATALIST-Uganda Technical Approach

2.1 Program Goals and ObjectivesThe goal of CATALIST-Uganda is to sustainably commercialize smallholder agriculture through improved productivity and market development, resulting in marketable surpluses that raise farm incomes in Uganda, and increase food security for the wider East Africa and Great Lakes Region.

To achieve its goal, CATALIST-Uganda will undertake two interrelated objectives:

Objective 1: Smallholder farmers improve production, productivity and quality in commodity-specific cropping systems. (Production push)

Objective 2: Agribusiness clusters create value by selling into national, East Africa regional and international/Dutch markets and agribusinesses (Market pull)

These two objectives, together with an inception phase and a set of project instruments that support its technical implementation—including public works, a matching investment fund and innovation grants—comprise the main activities of CATALIST-Uganda. Each of the two objectives is driven by project outputs, which are in turn driven by project activities. These are explained in further detail below, together with a logical framework.

2.2 Program Approach

Competitive Agricultural Systems and Enterprises (CASE)

CASE Conceptual Framework

CASE (Competitive Agricultural Systems and Enterprises) is the conceptual framework that guides IFDC’s work on promoting farmer entrepreneurship. It was developed in West Africa as an outcome of the ISFM/GIFS project (1999-2005) and formed the basis of the Thousands to Millions project (1000s+) and the CATALIST and CATALIST-2 Projects in the Great Lakes Region (Rwanda, Burundi, and Eastern DRC).

CASE aims to facilitate the emergence of agribusiness clusters (ABCs) and to link smallholder farmers to markets. An agribusiness cluster defined as a group of value chain operators, supporters and enablers which have identified a common agenda to implement a business idea, to learn and work together, to

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innovate and to implement coordinated action around a specific commodity, in one or more value chains. Cluster members may comprise the following groups of actors: agro-input dealers, financial institutions, public and private business support service providers (including extension services), producer organizations, traders and processors. Each cluster is considered a unique and innovative public-private partnership, focusing on a specific commodity and specific markets, with actors often operating in proximity to each other.

CASE integrates approaches and concepts from value chain development, institutional economics, market system development, transaction economics and rural innovation systems. The basic premise is that small farmers need to have profitable market outlets in order to have the means and motivation to invest in their farms and soils. This in turn leads to productivity increases that result in increased rural incomes completing the virtuous cycle. Market development and agricultural intensification through CSFS outlined further below thus form the main focus of CASE.

CSFSs (Commercialized Sustainable Farming Systems) seek to optimize profits from crops (and potentially livestock) in the farming system, as opposed to a specific crop within the farming system, while simultaneously sustaining/improving soil health. This is accomplished by maximizing synergies between inputs (improved seed, mineral fertilizers, crop protection products), cropping sequences (rotations/intercrops), livestock (if present), and management choices (e.g., organic matter management, tillage practices, and erosion control) in an environmentally sustainable manner.

CASE responds to the fact that integration into markets is a difficult and often risky venture for smallholder farmers. Demand for a product is not enough to ‘pull’ smallholder farmers’ response. Such response requires the development of close – professional and trust-based – relationships between smallholder producers, other entrepreneurs, Business Support Services (BSSs) and Micro Finance Institutions (MFIs).

The CASE approach will be used to integrate smallholders into local, national, regional and global value chains. CASE aims to strengthen the capacity of smallholder producers and nearby SMEs, through the support of BSSs and MFIs, to access competitive markets. CASE does so by strengthening individual and collective capacity of all above-mentioned actors in ABCs. Collective learning and action is nurtured to improve coordination among ABC stakeholders, and to ensure informed and sustained integration in targeted value chains and markets. CASE features local tailor-made implementation strategies. It does not stipulate a specific entry point. Any local value chain agent (producer organization or cooperative, SME, etc.) can be the driving force for cluster development. Experience shows that many of the potential champions will be local processors that need a greater supply of specific commodities.

Forming higher-level apex agribusiness clusters further up the value chain will be a key innovation of the CATALIST-Uganda project. These commodity specific apex clusters form to take advantage of national and East Africa regional opportunities and economies of scale. Partnerships with national and regional agro-processors and food companies, and international/Dutch companies will support the growth of agribusiness clusters and the connection of smallholders and SMEs to markets.

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Fundamental to the CASE approach is a push-pull methodology in which ‘push’ of increased agricultural productive is in response to the ‘pull’ of market demand. Raising production and productivity is essential for having a marketable surplus, while remunerative market channels are in turn an important precondition for farmers to invest in agricultural intensification, completing the virtuous cycle. CASE has 4 major interrelated elements: (i) ABCs; (ii) Production push; (iii) Market pull and (iv) Policy environment and business climate that are illustrated below. These elements are incorporated into the CATALIST-Uganda approach.

CASE Approach and Value Chain Development

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.3 Technical ApproachEach of the project’s two objectives is achieved through outputs that in turn drive specific project activities. An overview of CATALIST-Uganda’s technical approach is summarized in the table below and reviewed in more detail in the section that follows. These outputs comprise the common technical approach across the selected cropping systems, together with a set of project instruments (public works and grant funds). Likely commodity-specific activities are detailed in Section 2.6. The project will begin with a six-month inception phase.

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Objectives and Outputs of CATALIST-Uganda

Project Goal: To sustainably commercialize smallholder agriculture through improved productivity and market development, resulting in marketable surpluses that raise farm incomes in Uganda, and increase food security for the wider East Africa and Great Lakes Region

Project Objectives:

Production Push Market Pull1. Smallholder farmers improve production, productivity and

quality in commodity-specific cropping systems2. Agribusiness clusters create value by selling into national,

regional and international/Dutch markets and agribusinesses

Project Outputs:1.1 Farmers sustainably increase yields and decrease

production costs2.1 ABC actors undertake joint purchasing, storage, and

selling power

1.2 Farmers utilize quality agro-inputs, technical advice, savings and credit

2.2 ABC actors undertake value adding activities and diversify their products

1.3 Farmers decrease post-harvest losses and improve post-harvest quality at farm level

2.3 ABC actors develop sustainable relationships with large national, East Africa regional and international/Dutch agribusinesses

2.5 ABC actors adapt to and lobby for reforms in the business environment

Inception PhaseThe inception phase of the project will lay the groundwork for project implementation, leading to the strategy development for targeted value chains/cropping systems and the first annual work plan. It will also result in the setting up of the project implementation offices and systems. The inception phase will be launched at the start of the program and be completed by month six of program implementation. It is comprised of three outputs:

1. Market appraisal, value chain mapping and other analyses inform annual work planning2. Human resources, facilities, equipment and partners in place for project implementation3. Finance and administration systems implemented and audited

A detailed work plan for the inception phase is found in Annex 1.

Market appraisal, value chain mapping and other analyses inform annual work planning

The inception team will undertake a rapid market appraisal and value chain analysis and mapping, leveraging existing data and previous reports where applicable and then using a value chain framework to conduct analyses for the three primary commodities and their related cropping systems: cassava, Irish potatoes and rice, and for a fourth cropping system to be identified during the inception phase. Each map will include a full range of enterprises, producers, processors, packaging enterprises, marketers, buyers, sellers, and other agribusinesses. An important aspect of these value chain maps will be identification of business support services (BSSs), development partners and other important stakeholders that will be involved in addressing bottlenecks in the value chain.

The starting point will be the analysis of end-markets at national, regional and international/Dutch agribusiness levels, together with analysis of the marketing channels and requirements for volumes, quality and variety. Moreover, each value chain analysis will explore not only the tangible relationships between actors – such as the weak market signals and poor distribution channels – but will also focus on intangible factors – the lack of trust and cooperation between producers and processors that impedes them from matching products with markets in win-win relationships. The market and value chain

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analyses will also identify public works and post-harvest and market access infrastructure that will support market development and productivity increases in each of the cropping systems.

An analysis of the political economy of each of the value chains will be undertaken once they have been mapped out and precautions/mitigation measures established. The studies will also look at issues such as gender, youth, and environment pertaining to each of the cropping systems by mapping the inputs and returns to labor across gender and age-groups among the analyses. These issues will be mainstreamed into all project activities ensuring that equitable access to resources, decision-making and economic returns are promoted across gender and age-groups. Program activities will be designed specifically so that all family members are involved in all agricultural activities including planning, farming and marketing. IFDC will also learn from aBi Trust’s innovations in gender programming. Additionally, all project activities and their impacts will be designed to be environmentally sustainable.

At critical stages in the process, these studies will be validated with industry stakeholders/actors, project partners and beneficiaries, including GoU. During this process, bottlenecks will be verified and prioritized by participants, culminating in development of the value chain implementation strategy for each commodity, thereby creating ownership of the process and agreement on resolution of constraints. The value chain studies and stakeholder validation will lay the groundwork for cluster development as discussed further in below.

Following the rapid market appraisal and value chain analysis and mapping, the project’s logical framework, objectives and outputs will be updated, activities revised for each cropping system, and project baselines established. This in turn will be used to establish a monitoring and evaluation framework. A communications plan and project exit and sustainability strategy will also be developed as part of the work plan. Finally, the inception phase will also inform the selection of the initial public works to be undertaken, as well as development of the grant funds manuals and application materials.

Human resources, facilities, equipment and partners in place for project implementation

Early on in the inception phase, the Chief of Party (COP), together with IFDC’s regional staff and start-up team, will complete recruitment of all technical and administrative positions, as well as secure office space, office equipment and vehicles. A senior manager with a gender background will be recruited among the project staff.

Working modalities with project partners including institutions and implementing organizations identified during the value chain mapping exercise and selected during the inception phase will be established. Additionally, an assessment will be undertaken of all BSSs and those deemed capable will be selected to participate in the program. The ILO’s skills training program, currently being developed through Dutch funding, can be used to upgrade the skills of BSSs and project partners where gaps in geographic coverage or technical areas are identified.

Finance and administration systems implemented and audited

The project will implement financial and administrative systems including human resource and procurement systems and procedures based on IFDC best practices and consistent with the requirements of EKN. An audit will be undertaken by a professional auditing frim on behalf of the Embassy at the end of the inception phase.

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Objective 1: Smallholder farmers improve production, productivity and quality in commodity-specific cropping systems (Production Push)

Informed by the market analyses conducted during the inception phase, the production push will focus on increased smallholder productivity through yield improvements and productivity cost reduction of the selected commodities. This will be achieved by creating, demonstrating and disseminating Commercialized Sustainable Farming Systems (CSFSs) and from improved post-harvest handling that reduces losses and improves product quality.

Value chains encompass the full range of activities and services required to bring a product or service from its conception to sale in its final markets—whether local, national, regional or global. Thus by definition, working along a value chain entails operating along a single commodity to improve profitability and competitiveness of the whole chain and its actors. Farmers however do not farm value chains—rather they farm systems involving several commodities. It is the system that must be commercialized—not a single commodity within the system – and this systems approach is a key element of CSFS.

CSFS focuses on cropping systems that will be established around the target commodities, in which complementary crops are intercropped or rotated with the primary commodity.

This objective is comprised of three outputs:

1. Farmers sustainably increase yields and decrease production costs. 2. Farmers utilize quality agro-inputs, technical advice, savings and credit.3. Farmers decrease post-harvest losses and improve post-harvest quality at farm level.

Output 1.1 – Farmers sustainably increase yields and decrease production costs

With CSFS, professional farmers can make solid gains essential to the commercialization of smallholder agriculture. The basic premise is farmers need to produce large surpluses at reduced productivity costs for identified markets. Farmers must have profitable market outlets in order to have the means and motivation to invest in their farms and soils. Value chain development is thus situated in the context of farming systems and livelihood perspectives. Likely CSFS interventions are discussed for individual commodities in Section 1.2 above.

With significant increases in yields through improved farming practices, farming households have sufficient quantities of the project’s respective target commodities for both their own consumption and as for sale as a cash crop. Farming families will be trained on the optimal allocation of their harvest for home-use and sale to ensure that the family’s nutritional needs are met.

Projected numbers of beneficiary households and increases in marketable surpluses in terms of cereal equivalents are shown in the table below. The projections assume that sunflower will be an additional commoditiey, and that adoption will be almost nothing until after demonstrations are conducted in the first season of 2013. Projections do not account for crops that will be grown in rotation or association in farming systems with these commodities, though these will also be monitored. There are many uncertainties in the projection, including climatic unpredictability, seasonality of production, seed and fertilizer availability, and pest and disease outbreaks. It is likely that achievement of these projections will not be as smooth as is represented. Overall, the projections are conservative and achievable, and by the end of the project, the objectives of 110,000 beneficiary households and some 225,000 metric tons of marketable surpluses will be achieved.

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Projected project impact for various commodities

Output 1.2 – Farmers utilize quality agro-inputs, technical advice, savings and credit

Access to and utilization of improved inputs including quality seed and fertilizers is essential to commercializing smallholder agriculture, and is at the core of CSFS. Without efficient use of improved inputs, sustained productivity increases accompanied by decreases in the unit cost of production are not possible.

IFDC has already been engaged in agro-dealer and seed sector development in Uganda through the EADN (Extending Agro-Dealers Network) project, AMITSA (Regional Agricultural Input Market Information and Transparency System) and COMRAP (COMESA Regional Agro-Inputs Programme). These projects have strengthened input markets and provided a good network of contacts for IFDC to build upon.

A key element of this output is timely access to technical and financial advice. Extension advice will come from a variety of sources: initially from the project’s own agronomists, and as linkages are

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Irish Potato Cassava Rice Sunflower TOTALSCURRENT PRODUCTION# of households 184,000 1,677,000 125,000 500,000Hectares in production 102,000 415,000 140,000 190,000Average yield/ha 6.8 12.7 1.6 1.2

PROJECTED ADOPTIONProjected households affected by end of project

40,000 10,000 20,000 40,000 110,000

Projected yield/ha 20 25 5 2Projected yield increase/ha 13.2 12.3 3.4 0.8Average ha cropped /household/year (2 seasons)

0.25 0.50 0.25 0.50

Projected ha affected by 2015 10,000 5,000 5,000 20,000Cereal equivalents/yield ratio 0.20 0.32 1.05 1.70

Ha affected by season2013 second season 500 250 250 1,000 2,0002014 first season 2,000 1,000 1,000 4,000 8,0002014 second season 4,000 2,000 2,000 8,000 16,0002015 first season 8,000 4,000 4,000 16,000 32,0002015 second season 10,000 5,000 5,000 20,000 40,000

Additional cereal equivalents produced per season2013 second season 1,300 1,000 900 1,400 4,6002014 first season 5,400 3,900 3,600 5,4002014 second season 10,700 7,900 7,100 10,900 54,9002015 first season 21,500 15,700 14,200 21,7002015 second season 26,900 19,700 17,800 27,200 164,700Total cereal equivalents 65,800 48,200 43,600 66,600 224,200

formed, from trained and certified agro-input dealers, extension officers, and BSSs. At the farmer group level, CATALIST-Uganda will link farmers to village savings and loan associations as ways of facilitating savings and credit.

Output 1.3 – Farmers decrease post-harvest losses and improve post-harvest quality at farm

level

With post-harvest losses estimated at 10-30% across selected commodities, improving post-harvest handling (PHH) contributes substantially to increased tradable surpluses. PHH techniques and equipment vary by cropping system, and CATALIST-Uganda’s Matching Investment Fund together with appropriate extension support will play a key role in farmers’ ability to improve product quality. The Matching Investment Fund, which is outlined in more detail below, will enable farmers, as individuals, groups, or associations, to access funds on a matching basis for procurement of equipment. Examples include mesh potato sacks and small-scale storage, processing and drying units, drying infrastructure, and moisture meters.

Improved PHH is also a precondition for improved storage necessary for inventory credit and warehouse receipt systems. These are discussed in more detail in Output 2.1 below.

Objective 2: Agribusiness clusters create value by selling into national, East Africa regional and international/Dutch markets and agribusinesses (Market pull)

Market pull is the starting point for value chain development and for the CASE approach. The establishment of supplier-buyer relations with agribusiness of all sizes from small local processors to large national and multinational enterprises - including Dutch - is essential, as these provide important market opportunities and ‘pull’ for the development of viable agribusiness clusters. Remunerative market channels are an important precondition for farmers to invest in agricultural intensification. As such, CATALIST-Uganda will concentrate on the processing of primary produce, product development and diversification, and market development.

To achieve this, CATALIST-Uganda will catalyze the development and out-scaling of functional and dynamic agribusiness clusters, in which value chain operators, supporters and enablers collaborate to seize business opportunities. Typically these include producer organizations, agro-input dealers, financial institutions, public and private business support service providers (including extension services), traders and processors. Starting off with a nucleus of promising farmers organized in a group or cooperative, the project will facilitate the process of cluster formation through the provision of hands-on advisory services.

Agribusiness clusters will evolve over time as the needs of the actors and their surplus production increases through agricultural intensification. Starting with farm-level business transactions, such as access to improved inputs and access to local market and credit, the clusters will evolve as their business transactions mature, both in terms of the number of farmers involved as well as the diversity of partners and markets. Farmer-group clusters will come together to form commodity-specific apex clusters, so that each cropping system is ultimately represented by an one cluster at the highest level, as explained in more detail below. The market appraisal and value chain mapping undertaken during the inception phase will be used as a guide in cluster development to maintain a market development focus.

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As clusters and their farmer members link to markets raising farmer incomes, the clusters themselves will scale up their farmer membership to meet demand. It is assumed that market pull can accelerate growth in terms of area and productivity per farmer, and the number of farmers involved in clusters. On the supply side, credit, seeds, fertilizer and other farm inputs will have to be available, as outlined above.

To initiate the process of cluster development, project partners and staff will be trained in the ABC approach through a training of trainers (ToT). For the initial round of cluster formation, key partner staff will serve as Agribusiness Coaches to guide the process once the potential cluster actors and champions have identified business opportunities. As the project progresses in cluster formation, Agribusiness Coaches will be selected from either a local partner, a local service provider, or the champion identified locally. It is essential that cluster actors organize themselves so as not to create project-dependent clusters; the project’s role is to assure that the ownership of the cluster really lies with the actors.

Agribusiness Coaches

The Agribusiness Coach will be a key player on the project acting as the primary contact between a cluster and the project. An Agribusiness Coach will secure the development of a solid cluster development plan, and will make sure that clusters have access to the project’s technical experts in the fields of business development, CSFS, seed, communication and capacity development. An Agribusiness Coach will cover between 1 and 10 clusters – depending on size, scope, and complexity. At the end of the project, these Agribusiness Coaches will be well established local consultants.

Once clusters have been formed, a key first step is the identification of the business champions in the clusters (for example, small, medium or large agro-processors, producer organizations, traders/aggregators, etc.) who will help ABCs with identification of strong market opportunities. This process will be supported by the development of an ABC development plan, in which the goals of the cluster will be linked to concrete steps to be taken by both the cluster and the project.

While the value-chain approach is at the heart of the project, it is important that clusters act as diverse networks and not single-purpose value chains, often organized around a single ‘golden’ opportunity which creates high risk. A more stable and resilient cluster is one in which all the cluster actors have options among input suppliers and output buyers as this allows the cluster to respond better to external shocks.

Based on the individual cluster action plans and needs and training assessment outlined in these plans, capacity building and training of clusters will take place with a focus on market development. Activities include access to market information and business skills trainings on record-keeping, farming as a business, financial management and marketing.

Business Support Services (BSS) are a key element of capacity building. BSSs include training institutes, extension material development services, and marketing support services. Where available and of adequate quality, BSS will be engaged to help the ABCs to accelerate quality support to the agribusiness sector, while at the same time increasing the implementing capacity of the project. The ILO’s skills training program can be used to upgrade the skills of BSSs where gaps in geographic coverage or technical areas are identified.

This objective is comprised of four outputs:

1. ABC actors undertake joint purchasing, storage, and selling power2. ABC actors undertake value adding activities and diversify their products 3. ABC actors develop sustainable relationships with large national, East Africa regional and

international/Dutch agribusinesses 4. ABC actors adapt to and lobby for reforms in the business environment

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Output 2.1 – ABC actors undertake joint purchasing, storage, and selling power

Reliable and consistent access to improved, certified agro-inputs is essential for commercialization of smallholder agriculture. Once ABCs have sufficient demand for agro-inputs and have developed the business skills to source agro-inputs directly from suppliers, ABCs will be guided in the development of business plans with required credit linkages for bulk-purchasing of inputs at discounted prices. Bulk purchasing of agro-inputs can also be connected to inventory credit systems or warehouse receipt systems (WRSs). In such an arrangement, inputs are made available to farmers to be repaid at the end of the season using product inventory as a guarantee.

To achieve this, CATALIST-Uganda will encourage farmer access to financial institutions which offer a range of appropriate products tailored to agriculture – contract farming, forward contracts, agricultural insurance etc.

Storage – both as a basis for storage-based financing as well as for opportunities to profit from seasonal price fluctuations - is essential for improved market access. A particular focus will be the introduction of the inventory credit system and more sophisticated warehouse receipt systems. CATALIST-Uganda will support both cooperatives and financial institutions to start up additional inventory credit programs in the project region, and assist in promoting the projects through awareness activities (study tours of operational warehouses in collaboration). The East African Grain Council can provide technical assistance to clusters in establishing robust WRS. Access to credit guarantees already established by the aBi Trust in Uganda in collaboration with 8 banks will also be facilitated.

Output 2.2 – ABC actors undertake value adding activities and diversify their products

As clusters mature, they will be facilitated in developing value adding activities—including processing, sorting and grading and packaging—and diversifying their products. Multiple opportunities exist in all commodities and cropping systems. In potatoes, opportunities include sale in smaller quantities in nets for retail outlets and supermarkets. For cassava, opportunities include processing and packaging for HQCF, beer, and dried cassava chips. For rice, opportunities exist in milling, packaging and branding. Innovation grants to cluster actors will allow them to test markets and products, while the Matching Investment Fund will allow processors and farmer groups to obtain matching funds for processing equipment. The latter will also assist cluster actors with market access requirements such as packaging, quality control, certification, etc.

Output 2.3 – ABC actors develop sustainable relationships with large national, East Africa

regional and international/Dutch agribusinesses

With market pull at the core of CATALIST-Uganda, national, regional and global demand for agricultural commodities or products has the potential to provide large markets. Cluster actors and CATALIST-Uganda will examine the supply chain strategies of key SMEs and large national and multi-national companies to identify ‘lead firms’ able to drive targeted value chains, and ‘pull’ agribusiness cluster formation in response to demand.

Such partners provide significant guaranteed markets at fixed/predictable prices and terms of payment that can encourage professional discipline in SMEs and smallholder farmers due to their insistence on quality and volumes. Additionally, large agribusinesses will often enter into contract farming arrangements, providing embedded services such as planting material, inputs and extension support either on credit or factored into the final contract price. The contracts themselves can be used by the cluster actors as collateral to access credit.

As the lower-level agribusiness clusters develop in the complexity of their business transactions, CATALIST-Uganda will initiate the development of apex clusters. Apex clusters will form to seize opportunities at national and East Africa regional level, particularly to access input and output markets

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and to influence the policy environment. Having one platform at the highest level representing large numbers of smallholder farmers to engage with agribusinesses, government and input suppliers provides significant economies of scale and strengthens the bargaining position of primary producers.

Apex clusters will form as the need arises, typically once lower-level clusters have significant production volumes to be attractive to large agribusinesses or earlier if large agribusinesses are keen to engage large numbers of farmers for contract farming. Apex clusters will resemble lower-level clusters in their structure, with representatives from individual farmer groups attending, together with other stakeholders such as input suppliers, traders, finance institutions, research organizations, and government representatives at district and national levels, as summarized in the table below. Depending on the number of smallholder farmers and clusters, an intermediate level such as cooperative-level clusters (comprising of several farmer groups) may form to seize business opportunities such as bulk-purchasing of inputs, or linking with a district-level processor.

Characteristics of Low-Level Clusters and Apex Clusters

Characteristics Low-Level Clusters Apex Clusters

Affiliation Individual Farmers Local agro-dealer, stockists Local trader, broker Local processors Local BSSs Local MFI, Banks, SACCOs

Farmer representatives from lower-level clusters National agro-dealers/importers National traders, brokers National, regional and international/Dutch agri-

processors WRS managers National BSSs EAGC, Ugandan Commodity Exchange and other

relevant stakeholders Institutions/Research organizations Provincial/national government

Frequency of meeting

Monthly / as needed Quarterly / as needed

Example Opportunities

Focus on multiple commodities, depending on what farmers grow

Linkage to agro-input shop Improved post-harvest handling &

storage Market linkage to local traders Credit linkage through local MFIs, banks,

SACCOs Value adding activities e.g. milling,

bagging

Focus on a single commodity Source inputs directly from importers or suppliers Linkage with WRS, Ugandan Commodity Exchange Market-linkage with national/Dutch agribusinesses Linkage with national banks, credit guarantees Policy advocacy at national level

Examples of possible collaboration identified during the scoping mission and the project design phase are summarized in the table below. Additional opportunities will be identified during the inception phase and in project implementation. CATALIST-Uganda will work closely with other projects being funded by EKN in the coming months.

Potential Partnership Examples

Breweries. Through EKN, IFDC is aware of plans to establish a brewery in Mbarara and the possibilities of contract farming for cassava, sorghum and rice.

DADTCO. IFDC is in discussions with the Dutch company DADTCO (Dutch Agricultural Development and Trading Company) on collaboration in Uganda for mobile cassava processing, based on their successful collaboration in Nigeria utilizing Autonomous Mobile Processing Units (AMPUs) built in a 40ft container, which allows the factory to come to the farmer. Within the partnership, IFDC proposed to organize the farmers and increase productivity through input provision, CSFS, in-time delivery and quality control, while DADTCO undertakes processing and marketing.

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Purchase for Progress. The P4P program of the World Food Program’s (WFP’s) encourages local sourcing of cereals and pulses. It provides an opportunity for farmers to deliver according to contractual agreements. Although P4P is not a private sector actor, the program is as demanding as a private enterprise. This is a unique opportunity for farmers to prepare for the real market.

Seed companies: Dutch seed companies (RijkZwaan and East-West Seed Company) and Dutch potato seed companies.

Small-scale mechanization: Dutch manufacturer Rumptstad

Existing IFDC Agribusiness Relationships: In 2010 IFDC signed Letters of Intent with several Dutch multinationals with the intention to explore future involvement of these companies in local procurement, processing and marketing and financial services – Unilever, TNT, FrieslandCampina, East-West Seed Company, RijkZwaan, Rabobank Foundation, DADTCO (cassava).

Dutch Knowledge Institutions: Wageningen University Plant Production Systems (N2Africa Project); Wageningen UR (University & Research centre) Center for Development Innovation (seed sector development); PTC+; Agriterra

As the project works with clusters to identify opportunities, care will be taken to ensure that the ownership of the relationship remains with the cluster actors to ensure long-term sustainability of the clusters. At the same time it is important for clusters to seek a diverse range of buyers for their products (and/or suppliers for their agro-inputs) to reduce risk and dependence on single suppliers/buyers.

Output 2.4 – ABC actors adapt to and lobby for reforms in the business environment

To ensure sustainability, it is critical that clusters are dynamic in their response to changes in the business environment, while at the same time advocating for reforms in the business environment that address key agribusiness constraints. ABCs will be exposed to risk, and risk management will be an important factor to create resilient clusters. Examples to changes in the business environment include changes in consumer preferences; changes in prices for agro-inputs and outputs; changes in interest rates, tariffs and taxes; and buyers/agribusinesses exiting or entering the market. Each situation will require a response that static clusters are unlikely to withstand. The ability to respond to external shocks is dependent on having access to timely information about fluctuations, having alternate options (other crops, buyers/market channels, value-adding opportunities, etc.), and having the skills, financial resources and assets to respond to change.

CATALIST-Uganda will work with clusters to build these skills, and to develop risk mitigation strategies to respond to change. Business management skills, competitive intelligence, information and risk management receive specific attention. One of the ultimate strategies to respond to changes is to innovate and the project will support innovation through its innovation grants (see below). These grants support new innovations in input and output markets such as developing and testing new value addition opportunities, products or markets.

Policy issues and constraints encountered by clusters form the starting point for engaging with government to improve the business environment. While many local-level issues can be addressed with local authorities, issues that cannot be resolved at that level will be filtered upwards to the apex clusters. Here, the participation of government at provincial or national level or of research institutes and other national-level stakeholders is critical to address constraints. Some policy issues at this level involve significant effort and time to bring about change in the business environment, and may be beyond the scope of either the individual clusters or the project. These issues will be brought to the attention of national stakeholder networks to continue the advocacy process.

Project instrumentsThree project instruments are built into the design of CATALIST-Uganda that are important in commercializing smallholder agriculture and increasing rural incomes. These include a public works

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component for improving infrastructure, a Matching Investment Fund for investments in processing, post-harvest handling and other value addition, and an Innovation Grant Fund to explore innovations in cropping systems and input and output markets. During the inception phase, IFDC will liaise with other development partners in Uganda, including aBi Trust and CDI (Centre for Development Innovation, Wageningen University), to identify synergies in the rollout and management of these instruments.

Public Works

Public works are an essential aspect of CATALIST-Uganda, not only for employment creation, but also to contribute to agricultural productivity and market access. As the project will not be targeting the poorest of the poor – as these do not have the necessary productive assets (land) or ability to withstand small risks or shocks - the project will target these through employment creation through public works.

Public works are particularly important in Uganda, where the government and has made less investment in infrastructure than in neighboring Rwanda. The public works will be designed to support the core activities of the program: agricultural intensification and market access and development. Examples include the following.

Examples of Public Works

Examples of public works contributing to increased agricultural productivity

Examples of public works contributing to increased market access

Slope stabilization and erosion control in mountainous regions, possibly through hedgerows of improved species for green manure and animal feed production

Tree planning and development of woodlots Irrigation infrastructure and maintenance, particularly

for irrigated rice Rainwater harvesting, ponds/dams/reservoirs, etc.

Development of feeder roads, drainages, civil works (culverts), etc.

Warehouse development and rehabilitation

The project will work with local authorities to identify poor households eligible to be employed in the CATALIST-Uganda public works program and will pay below the market rate (e.g. 75%) so as not to distort labor markets. Clusters and project partners and stakeholders will be able to submit applications for public works to be selected by the Public Works Review Committee. Public works will primarily focus on infrastructure of a public/collective nature, with a few demonstrations on individual farms such as terracing/slope control.

Matching Investment Fund

A key component in raising productivity and market access is equipment and facilities for better post-harvest handling, storage, and other value addition, which many smallholder farmers currently lack. In order to stimulate upgrading, CATALIST-Uganda’s Matching Investment Fund will fund:

Small-scale post-harvest handling infrastructure such as dryers, moisture meters, etc. Medium-scale technical capacity and equipment upgrading for agribusinesses, cooperatives and

processors, such as new processing equipment, storage infrastructure, quality control, certification, etc.

Stimulating new BSSs and cluster actors (such as agro-dealers, transporters, traders, etc.) in under-served areas.

So as not to distort markets, matching investments will only be used to catalyze private sector investment that would not otherwise attract financing from microfinance institutions or the formal financial sector, or which might decline an otherwise solid business plan due to their lack of familiarity with agricultural commodity markets. A match from the applicant—either as cash or in-kind contributions—will be required for all grant types. The exact matching requirement to be determined

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during the finalization of the grants procedures in the inception phase. Grants will be evaluated based on impact, so that grants to farmer groups or cooperatives will be favored over grants to individuals, unless there is a significant demonstration effect or a large multiplier effect.

Innovation Grant Fund

CATALIST-Uganda will seek to engage partners in finding solutions for addressing strategic issues or exploring opportunities in increasing productivity and input and output markets through the Innovation Grant Fund. The innovation grants can be engaged for a range of technical, commercial or institutional issues. Examples include farmer groups testing new varieties of crops; different cropping systems, minor (non-NPK) soil nutrients, dealer networks to fine-tune packaging technologies; banks and farmers to explore and develop new financial products for low-income farmers; and BSSs, farmers’ organizations and supermarkets to better brand, market and sell locally produced crops.

2.4 Sustainability Strategy and ExitSustainability of project interventions and exit of the project after four years will be built into the project from the beginning. The goal of the CATALIST-Uganda is to act as a facilitator, guiding beneficiaries and value chain participants with a ‘light touch’ while building their capacity. By the end of the four-year project period, project beneficiaries at all levels—from agribusiness clusters to their individual members, from rural agribusinesses to BSSs—should be sustainable in their own future development. This means that they will have the required tangible links to inputs and output markets, to services and tools including market information and competitive intelligence, and will have developed the required intangible skills, including the change in mind-set required for commercial farming, and the entrepreneurship and resilience required for sustainable agribusiness management.

Sustainability and project exit will be built into the program through the development of an exit strategy and sustainability plan during the inception phase which will guide the project in its implementation. Similarly, at the start of each cluster and value chain development process, an exit strategy and sustainability plan will form part of the initial strategy agreed to by all the partners. Cluster support through capacity building, training and BSSs will be delivered over the project period, with an increased requirement for beneficiary matching contribution and decreasing provision by the project, so that by the end of CATALIST-Uganda, beneficiaries sufficiently value BSSs to pay for them in full.

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2.5 Project Logframe & Results FrameworkThe CATALIST-Uganda project logframe is presented below. This outlines the hierarchy of project goals, objectives, and outputs and includes tentative indicators and targets, method of measurement/verification and related assumptions. Technical activities by commodity are presented in Section 2.6., and a draft Performance Assessment Matrix is presented in Annex 2.

Project Logframe

Goal Level Description Tentative Indicators & Targets (2016) Measurement/Verification Assumptions

Project Goal To sustainably commercialize smallholder agriculture through improved productivity and market development, resulting in marketable surpluses that raise farm incomes in Uganda, and increase food security for the wider East Africa and Great Lakes Region

110,000 participating smallholder households

110,000 households double yields in target commodities and achieve 50% income increases

Participating farmers produce a marketable surplus of 224,000 metric tons of cereal equivalents over the life of project

Baseline survey and annual surveys M&E of AB clusters and cluster reports Project reports Project mid-term and final evaluation

Rainfall and other climate conditions stay within the normal range for the region

No sudden outbreaks of pests and/or crop diseases

No significant macro-economic or monetary instability

No sudden changes in national or regional trade policies impeding free flow of inputs and outputs

No sudden changes in agro-input or crop prices and pricing policies

Project Objective

1. Smallholder farmers improve production, productivity and quality in commodity-specific cropping systems (Production Push)

Output 1.1 Farmers sustainably increase yields and decrease production costs

4 geographic-specific CSFSs made available to farmers

Annual report lists technical packages and number of farmers adopting them

Field visits and reports

CATALIST aligns recommendations with NAADS in order to assure full use and benefit of their extension services

Adequate capacity and interest of partners to implement

80 % of participating farmers correctly apply at least 2 essential elements of the CSFS recommendations

Economic productivity of the CSFS recommendations increases by 50 percent in field trials over standard farmer practice

Report of technical package review including economic analysis

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8 innovation grants will test adaptations to CSFSs

Annual report lists innovation grants Grant agreements and grantee reports Field reports on grantees visits

10% of participating farmers benefit from public works that contribute to improved productivity

Public works reports Field visits and reports

Output 1.2 Farmers utilize quality agro-inputs, technical advice, savings and credit

40,000 farmers acquire inputs on time 50 % of the farmers that try to access

credit (or other financial instruments) obtain it at normal market rates

90 % of participating farmers receive specific technical recommendations to support them with the implementation of new technologies

50 % of the farmers use selected/quality seed or planting material

2 Dutch agro input suppliers form supply relationships with project beneficiaries

Field visits and reports Annual surveys Project mid-term and final evaluation

Agro-inputs are available in the region Financial services or other credit

organizations are active in the region and willing to make input loans at market interest rates

Quality seed/planting material is available in sufficient quantities. This includes locally selected planting material, newly introduced commercial planting material and planting material produced by local SMEs

3 innovation grants will test innovations in input markets including access to finance

5 matching investment grants for seed systems development

Annual report lists grants Grant agreements and grantee reports Field reports on grantees visits

Output 1.4 Farmers decrease post-harvest losses and improve post-harvest quality at farm level

80% of participating farmers have access to improved equipment and/or storage

Reduction of at least 30 percent in post-harvest losses

Field survey and reports Annual surveys Project mid-term and final evaluation

Post-harvest equipment and commodities secured from theft

Farmers willing to work cooperatively

100 matching investment grants to farmer and farmer groups for improved equipment

Annual report lists matching investment grants

Grant agreements and grantee reports Field reports on grantees visits

Project Objective

2. Agribusiness clusters create value by selling

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into national, East Africa regional and international/Dutch markets and agribusinesses (Market Pull

Output 2.1 ABC actors undertake joint purchasing, storage, and selling power

80% of participating farmers are part of a cluster

1,000 cluster members are service providers (agro-input dealers, traders, transporters, agribusinesses, etc.)

50 % of participating farmers that can potentially gain from storage and/or inventory credit have access to these tools

50 % of farmers participate in joint procurements of inputs and/or joint sales of outputs

Annual report lists clusters and their membership breakdown

M&E of AB clusters and cluster reports Field survey and reports Market survey and analysis of crops

stored.

Farmers willing to work cooperatively Ministry of Agriculture permits and

encourages entrepreneurial enterprise development outside of existing national structures

Turnover can be determined by factors outside the control of the project, such as sudden rise or drop in food prices

Joint purchasing, storage, and selling activities can take the form of collective action by cluster members or be undertaken by specialists (store managers, traders) depending on level of entrepreneurship and presence of specialists. Each option comes with opportunities and risks, and needs to be carefully analyzed.

Attribution of cluster performance may be subject to interventions from different programs and initiatives

Financial services or other credit organizations are active in the region and willing to make loans at market interest rates

100 matching investment grants to farmer and farmer groups for improved equipment and/or storage

2 innovation grants will test innovations in input and output markets

Annual report lists grants Grant agreements and grantee reports Field reports on grantees visits

Output 1.12.2 ABC actors

undertake value adding activities and diversify their products

Turnover of clusters increases 15% per year and income of cluster actors increases by 50% over life of project

M&E of AB clusters and cluster reports Field survey and reports

Financial services or other credit organizations are active in the region and willing to make loans at market interest rates

Turnover can be determined by factors outside the control of the project, such as sudden rise or drop in food prices

Value adding activities and product diversification can take the form of collective action by cluster members or be undertaken by specialists (store managers, traders) depending on level of entrepreneurship and presence of

10 innovation grants will test new markets and/or products

10 matching investment grants to cooperatives and SMEs for improved value addition equipment

Annual report lists grants Grant agreements and grantee reports Field reports on grantees visits

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specialists. Each option comes with opportunities and risks, and needs to be carefully analyzed.

Attribution of cluster performance may be subject to interventions from different programs and initiatives

2.4 ABC actors develop sustainable relationships with large national East Africa regional and international/Dutch agribusinesses

Four commodity-specific apex clusters form

Clusters are fully functioning and sustainable by the end of the project and rated as “mature” in an organizational development survey (They have a diversified resource base, are self-sufficient in their own future development and their work is respected by their peers).

50 business partnerships with medium to large agro-processors (including Dutch)

2 Dutch agro-processors form supply relationships with clusters

Annual participatory analysis of cluster formation and survey of cluster performance

M&E of AB clusters and cluster reports Field survey and reports Annual surveys and reports Project mid-term and final evaluation

There are sufficient business opportunities and operational constraints for lower-level clusters to come together to form apex-level clusters

No policy or other impediments to disrupt regional trade

Trade relations remain strong and cordial in EAC

The risk of linking to larger national, regional, international and Dutch-based agribusinesses lies in the possible one-sided dependence of smallholders and SMEs.

Change in the business or operating environment may reduce the willingness of Dutch companies to enter the market and or continue operations 25 matching investment grants to

cooperatives and SMEs for improved market access equipment depending on the specific value chain or market needs (e.g. post-harvest handling, storage, quality control, packaging, certification etc.)

Annual report lists grants Grant agreements and grantee reports Field reports on grantees visits

Output 2.6 ABC actors adapt to and lobby for reforms in the business environment

80% of clusters review business plans annually

Cluster revenue increases by 15% for each year of project participation

Number of key industry stakeholders from government and private sector participate in cluster meetings to resolve agribusiness constraints

Number of issues resolved by the clusters and/or funneled up to national stakeholder networks if beyond the reach of clusters and/or the project

M&E of AB clusters and cluster reports Field survey and reports Annual surveys and reports

Some events may well be beyond the capacity of farmers and SMEs to respond

Willingness of GoU to address agribusiness constraints

No political interference in independent entrepreneurial development

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2.6 Technical Activities/Outputs by Commodity

Objective 1: Smallholder farmers improve production, productivity and quality in commodity-specific cropping systems (Production Push)

Technical Outputs and Activities by Commodity

Outputs Common Activities (across the copping systems): Notes by commodity:1.5 Farmers

sustainably increase yields and decrease production costs

Establish demos for CSFSs Develop extension materials and train extension officers and BSS organizations

including from government and partner staff Organize local soil testing and amend CSFS recommendations accordingly

Irish Potatoes: Demos may be established with preferred rotation crop(s)Cassava: Demos may be established with preferred rotation crops

1.6 Farmers utilize quality agro-inputs, technical advice, savings and credit

Update inventory of agro-dealers and encourage agro-dealer development in underserved areas. Facilitate linkages with farmer groups

Increase business and technical capacity of agro-dealers Make an inventory of seed/planting material companies as well as of planting

material multipliers (private and cooperative enterprises) and facilitate linkages to farmer groups

Support and promote planting material agribusiness clusters Encourage formation of village savings and loan association (SACCOS) and

facilitate linkages between finance/credit institutions and farmer groups Strengthen farmer access to extension services from input suppliers, project

partners and project staff

Irish Potatoes: Gear up seed potato (aeroponics) as early as possible; include HZPC Develop small packaging of improved seed potato for farmer testing Cassava: Multiply CBSD-free materials during inception phase Trainings related to CBSD control Train on staggered production for consistent industrial supply Rice: Will involve machinery to manufacture fertilizer briquettes for deep

placement

1.7 Farmers decrease post-harvest losses and improve post-harvest quality at farm level

Develop crop-specific storage and post-harvest technologies, in collaboration with relevant knowledge institutes, extension services, service providers and equipment suppliers/manufacturers

Develop extension and training materials addressing technical issues, cost-benefit analysis and hurdles for the adoption of new technologies

Assist individual farmers and farmer groups in developing applications to Matching Investment Fund for improvements in post-harvest handling equipment

Irish Potatoes: Support seed and ware potato storage facilitiesCassava: Train on appropriate handling of cassava planting material Rice: Drying technologies, encourage links to quality rice mills to increase

value addition

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Objective 2: Agribusiness clusters create value by selling into national, E.Africa regional and international/Dutch markets and agribusinesses (Market Pull)

Outputs Common Activities (across the copping systems): Notes by commodity:2.1 ABC actors

undertake joint purchasing, storage, and selling power

Initiate process of cluster formation at farmer group level though agribusiness coaches Identify champions from value chain operators to promote new agribusiness clusters Undertake inventory and assessment of BSSs Undertake capacity building of agribusiness coaches and BSSs following training plan Assist clusters to develop action plan based on business ideas and cluster goals and

objectives. Support clusters in implementation Develop cost-sharing mechanism for BSS services, transitioning to full payment of

BSSs by clusters by the end of the project Link local agro-input shops to clusters Train ABC actors for collective procurement, contract negotiation and management Develop crop specific storage plans and options for warehouse receipt and inventory

credit systems; train clusters on management as required Create linkages to private sector operators of inventory credit/WRSs Support the development of cluster-specific finance strategies, loan requests and

business plans and facilitate linkages with banks, MFIs and credit-guarantee schemes Facilitate integration of financial institutions into clusters

Irish Potatoes: Investigate Hilly and Mountainous Areas Management as basis for

cluster formation Encourage group storage of seed and ware potatoes Cassava: In collaboration with DADTCO; possible links to large farms for

multiplication of clean planting materials Explore opportunities for bulking chips, particularly for export Rice: Develop clusters around both large rice schemes and with farmers

not attached to schemes Best opportunity for inventory credit/warehouse receipt system. Can

be linked to traders and financial service providers

2.2 ABC actors undertake value adding activities and diversify their products

Screen business ideas and ABC action plans for ideas for product development and diversification, including by-products, sorting and grading, packaging, etc.

Support business planning for processing activities and for product development activities

Support quality management and food safety strategy development including certification and traceability

Provide matching investment grants for new processing machinery and equipment Provide innovation grants to test new markets and/or products

Irish Potatoes: Grading, sorting, packaging, and varietal selection targeted to

supermarkets; varieties targeted to chips marketCassava: Potential packaging of HQCF for urban markets; compliance with

government food safety/quality regulations; innovation grants to explore additional cassava markets (animal feed, starch)

Rice: Branding and packaging a probable IGA, linked to premium varieties

2.3 ABC actors develop sustainable relationships with large national, East Africa regional and international/ Dutch agribusinesses

Once the business opportunities for apex clusters are present, initiate process of apex cluster formation, with farmer representatives from lower-level clusters and apex-level ABC members (e.g. national agro-dealers/importers and traders; regional, national, international/Dutch agro-processors, WRS managers, large BSSs, institutions/research organizations, provincial/national government, etc.)

Identify champions (likely lead agribusiness firms), as potential promoters of apex clusters

Assist clusters to develop action plan based on business ideas and cluster goals and objectives. Support clusters in implementation

Train ABC actors on contract negotiation and management and on lead firm management, specifically on the product and delivery requirement of large formal,

Irish Potatoes: Apex cluster will include farmers in Kabale and Kisoro districts Explore opportunities for frozen chips and packaged crisps

manufacturersCassava: DADTCO as key market outlet for production of cassava cake and

HQCF Explore potential for cassava chips and links with feed industry Rice: High quality rice millers are essential actors Establish linkages with Tilda, Pearl Rice

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quality- and quantity-sensitive agribusinesses Make an inventory of larger agribusiness enterprises with potential to source from

farmers Develop strategies for contract farming Broker relationships between agro-enterprises and cluster actors Work together with AgriProFocus and the agricultural attaché in Dutch Embassy to

identify Dutch companies Make use of Dutch private sector development instruments to promote linkages

2.4 ABC actors adapt to and lobby for reforms in the business environment

Work with ABCs to develop risk mitigation and management strategies Provide training on competitive intelligence, cost-benefit analysis and risk

analysis/management Identify market information systems and gaps. Link ABC actors to required market

information Provide training to ABCs on business management focusing on specific cluster needs Train ABCs with local and national lobbying and advocacy skills Provide innovation grants Facilitate district, national or regional events on strategic issues, in collaboration with

relevant stakeholders Facilitate clusters to work with authorities to reduce bottlenecks and decrease

transaction costs Ensure that critical agribusiness constraints are addressed or filtered up to national

stakeholder networks for follow-up if beyond the reach of clusters and/or project

Possible Policy issues:Irish Potatoes: Keep new varieties in the certification pipeline to respond to

consumer preferences Regulations relating to certification of regionally/internationally

available planting materials; responding to price fluctuationsCassava: Investigate alternative markets outside of HQCF and beer Regulations related to CBSD and sales/distribution of cuttings Rice: Consider aromatic/ other high value rice varieties; other industrial

uses (beer) Use of uncertified rice seeds from region

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3. Performance Monitoring, Evaluation and Learning

3.1 CATALIST-Uganda Monitoring and Evaluation System

In its proposal for CATALIST-Uganda, IFDC will to build upon the lessons from CATALIST, as well as best practices from the development sector and its own experience. The characteristics of the proposed system are:

A clear conceptual framework linking activities, outputs and impacts for different types of project beneficiaries (at individual and organizational level), clusters, and commodity value chains. A project log frame is presented in section 2.5, while a draft Performance Assessment Matrix is presented as Annex 2. These will be finalized during the inception phase, at the conclusion of which a performance monitoring and evaluation plan will be submitted that finalizes the conceptual framework and indicators, setting targets and specifying data collection, analysis and reporting systems.

Methodological rigor. The system will use a comprehensive range of value chain indicators, reaching beyond producers to processors, traders, BSSs, MFIs and consumers. The system will balance credibility with practicality to achieve plausible attribution of project impact. It must credibly demonstrate the project’s contribution to value chain development, and validate the relationship between those changes and food security. It must also generate useful information for project decision-making within the practical limits of project resources. The system must generate robust information on the direct changes resulting from its intervention.

Learning. Based on the similar approach and goals of the CATALIST-2 and CATALIST-Uganda projects, the projects will share technical staff to enable learning and cross-pollination of ideas. They will also hold 1-2 joint meetings per year, timed to coincide with work plan development and/or review cycles of the two projects.

In addition, each year CATALIST-Uganda will organize a series of case studies to analyze in more depth issues, such as the extent to which the project supports core capabilities at cluster and chain levels; how these capabilities contribute to change within and beyond the targeted cluster and chain (e.g., multiplier effects); and how these impact upon rural livelihoods and food security. CATALIST-Uganda may sub-contract case studies to independent research institutes to minimize conflicts of interest.

To meet the needs of different information users, IFDC proposes three types of M&E activities carried out by different entities:

An IFDC-led, real-time M&E system for learning by project managers, IFDC and its donor. IFDC is currently developing a cloud-based M&E system for the CATALIST-2 Project that will be utilized in CATALIST-Uganda if appropriate. Some more time consuming field studies may be contracted out to University students.

Independently contracted case studies. Independently contracted M&E to be undertaken through the donor.

IFDC-Led Performance Monitoring and EvaluationIFDC will monitor, compile and publish data related to project outputs as indicators of project effectiveness. IFDC will also evaluate project implementation as measured against the project's scope of work, deliverables, personnel requirements, etc. Tasks include monitoring activity implementation and

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partner deliverables against the terms laid out in the sub-grant agreements, as well as the substantial effort to collect data needed to monitor and evaluate the project.

IFDC will utilize the following for its monitoring, evaluation and learning activities:

Cluster-level M&E facilitators (not IFDC staff but recipients of BSS grants). Their role in support of IFDC-led M&E is to administer data sheets, conduct preliminary analysis and collect data to send to the project M&E team. Their role in support of cluster M&E is to incorporate such data collection and analysis in the cluster agribusiness plans, and to work with cluster members to ensure the data are used to support strategic and operational planning.

Project M&E Advisor. The M&E Advisor will be responsible for coordinating the M&E activities.

External support from IFDC’s new M&E Unit. As part of an institute-wide initiative to strengthen its performance M&E processes, IFDC has created M&E units within its two Africa-based divisions and at its headquarters. These units will support the CATALIST-Uganda M&E activities.

Periodic external consultants and students. In addition to conducting various data tasks, expert consultants and students can play an important role in generating and transmitting learning from project experiences.

Independent research or consulting firms.

Independently-Contracted Studies and Mid-Term and Impact EvaluationsWith case studies (approximately three each year), CATALIST-Uganda aims to deepen understanding of the dynamics of cluster activities and value chain development. The case studies will focus on both the results and the process of individual and collective action at these levels, and will integrate the perspectives of the different stakeholders involved.

The mid-term and impact evaluation provides an analysis of whether project objectives (outputs and impacts) were achieved and can be attributed to project operations. The second component of any impact assessment is to demonstrate that observed changes would not have occurred naturally in the absence of project interventions. Based on discussions with EKN, these evaluations may be subcontracted by the donor to the International Institute of Tropical Agriculture (IITA) and/or International Food Policy Research Institute (IFPRI).

3.2 CommunicationCommunication aims to sensitize, inform and connect people that support the project’s goal and objectives. The communication strategy, which will be developed during the inception phase, will provide a framework that brings together the messages, the outreach to different audiences, the media to be used (written, audiovisual and online materials) and the distribution frequency. Communication will document and share experiences and lessons learned, tailored to different audiences including policy makers, farmers’ organizations, business and trade organizations, network of development professionals, the donor and the development sector, through a variety of media including radio, print, television, internet and mobile technology (SMS).

3.3 ReportingBased on discussions with the donor, the following reports will be submitted:

1. Inception report and first annual work plan to be submitted at the end of January 2013 for the first full calendar year.

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2. Annual reports submitted at the end of January for the coming calendar year (2014, 2015, 2016).

3. Budget and forecast requests to be submitted semi-annually (in December and June), to include the budget request for operating funds for the coming 6 months and a forecast for the following 6 month period.

4. Progress reports both narrative and financial due by the end of March for the previous calendar year.

5. Audit reports due together with the progress reports by the end of March for the previous calendar year.

6. Final project report due three months following the end of the project.

3.4 Cross-Cutting Themes

Gender & YouthGender and youth aspects will be given attention from the beginning of the project, starting with the inception phase during which gender and youth will be a key point of analysis in the value chain studies. Experience has shown the importance of paying attention to these two groups in the division of labor on the farm, in roles and responsibilities in community organization, and in fair access to project benefits. Project staff will also be sensitized to give both issues proactive attention, to avoid automatically creating a male bias. Particularly given Uganda’s high population growth rate, youth need to be involved in agricultural commercialization and agribusinesses.

Project activities will be designed to involve all family members in all agricultural activities including planning, farming and marketing. All project monitoring and reporting will be gender- and age-group disaggregated. The case studies will pay attention to these issues as well, and gender and youth will be included in the Terms of Reference for the external, mid-term, and final evaluation of the project.

EnvironmentThe environment is a key consideration in the project’s methodology. All project staff, beneficiaries, partners and stakeholders will be sensitized to environmental issues. An environmental assessment will be undertaken during the inception phase as part of the project’s value chain analyses, and to meet the requirements of EKN. All program activities and their impacts will be designed to be environmentally-sustainable

By its very nature, CSFS is designed to be environmentally sustainable, advocating synergies of mineral nutrients, sound soil organic matter management, and crop protection products so that smallholder farmers can commercialize their farming systems, while at the same time improving soil health. Additionally, as part of the project’s public works component, soil stabilization through the planting of trees and fodder grasses will be advocated.

3.5 Risk AnalysisIFDC is aware that some risks to project implementation, arising out of the political, social and environmental context in Uganda, may be beyond IFDC’s or the project’s control. Additional risk factors may arise from project implementation, which IFDC and the CATALIST-Uganda team is able to influence. A detailed risk analysis including mitigation measures is presented below.

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CATALIST-Uganda Risk Analysis

RiskProbability of Occurrence

Impact of Risk

Mitigation Measures Implementation Timeframe

Contextual Risk

Political insecurity in Uganda and neighboring countries, particularly around elections affecting: General political and

economic operating climate in Uganda

Access to input (fuel and fertilizer supplies through Kenya) and output markets in neighboring countries

Medium Medium - high

CATALIST-Uganda will stay abreast of political developments through EKN in Uganda and neighboring countries and its own networks

Promote East Africa- or Great Lakes-wide strategy for inputs and outputs including alternative routes through Tanzania

As political insecurity can be sporadic, and unpredictable, the appropriate course of action will be decided as events unfold with the Netherlands Embassy and IFDC regional and HQ staff

A Security Audit and Emergency Action Plan will be developed at the inception phase and updated annually

Continuous Annual updates of

Security Audit and Emergency Action Plan

Food insecurity due to: Droughts and floods Global ‘food crisis’

Medium Medium - high

CATALIST-Uganda will stay abreast of developments through EKN and its own networks

Adoption of CSFS in itself can partly ameliorate effects of drought and floods as it mitigates the risk of complete crop failure and environmental degredation

As the timing and effects of food insecurity can be unpredictable and wide-ranging, the appropriate course of action will be decided as events unfold

High food prices are likely to have a positive effect on project beneficiaries (net food producers), though the economic and social effects in urban areas (net food consumers) will be unpredictable

As a net food exporter, Uganda is well positioned in the region, based on the assumption that open borders and free flow of food commodities across borders is maintained and no food commodity export-bans are introduced

Continuous

Plant disease pandemics

Medium Medium - high

IFDC will stay abreast of potential and recurring plant disease pandemics (such as cassava brown streak virus, various potato diseases, and rice diseases such as yellow mottle virus) through close communication with Ugandan and international research institutes and plant protection agencies

Standard mitigation measures are part of the CSFS intervention package that incorporates plant health through chemical and natural means

Specific mitigation measures will be developed in collaboration with research institutes and plant protection agencies once new/specific threats are identified

At part of CSFS intervention package

Continuous

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Government intervention in agricultural markets from: Market unfriendly

regulation Price controls Subsidies Free distribution of

inputs Rent-seeking and

favoritism

Medium Medium - high

CATALIST-Uganda will stay abreast of developments through EKN and its own networks

As the timing and effects of government intervention can be unpredictable and wide-ranging, the appropriate course of action will be decided as events unfold

CATALIST-Uganda participates in policy and stakeholder networks through project beneficiaries and partners to advocate for market-friendly policies and regulations

Continuous

Changes in the overall investment climate or in the investment climate affecting individual actors/investors

Medium Medium CATALIST-Uganda participates in policy and stakeholder networks through project beneficiaries and partners to advocate for market-friendly policies and regulations

CATATIST-Uganda will facilitate the development of resilient ABCs including the development of risk-mitigating strategies to enable ABCs to withstand a reasonable amount of external shocks

Project activities that focus on decreasing production costs, bulking of inputs/outputs, etc. increase cluster resilience

Continuous During the

development of cluster risk mitigation strategies

Economic insecurity Risk of macro-

economic instability

Low High CATALIST-Uganda will stay abreast of developments through EKN and its own networks

As the timing and effects of macro-economic instability can be unpredictable and wide-ranging, the appropriate course of action will be decided as events unfold

Continuous

Implementation Risk

Impact of large increases in agricultural productivity

High Low Monitoring by project staff and stakeholders of the social and economic impacts in beneficiary communities resulting from significant increases in agricultural productivity and income

Promotion of local, regional and international markets will smooth out price fluctuations as will the use of storage facilities to act as buffer stocks to temporarily store away excess capacity.

Continuous

Corruption/Fraud Low Medium – high

Robust systems including financial management, procurement and human resources

Training of staff on systems and procedures including whistle-blowing policy

Internal audits and controls based on industry and IFDC best practices

External Monitoring from IFDC regional and HQ staff

Real-time financial monitoring through IFDC-wide implementation of new financial software

Comprehensive systems established at inception phase and verified through an independent systems audit

Continuous internal audits and controls and training of staff

Annual financial audit

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Methodological Risk Low Medium - high

Robust implementation methodology and logical framework grounded in industry and IFDC best practices across multiple projects

Inclusive work planning process to inform on optimal implementation strategy to achieve desired outputs and goals

CATALIST-Uganda National Advisory Committee drawn from a cross-section of project stakeholders to advise on and provide feedback to project implementation

Regular monitoring by and reporting to IFDC regional and HQ staff

Regular monitoring by and reporting to EKN and DGIS

Continuous formal and informal monitoring by and reporting to project stakeholders, National Advisory Committee, IFDC regional and HQ staff and Donor

Political Interference Low Medium Transparent rules and procedures including procurement and human resources

Inclusive work planning process to set the goals for project implementation and minimize political interference through deviations from the work plan. Work Planning will including a wide range of project stakeholders and partners from government and the private sector that will inform project implementation objectives, outputs activities, inputs and outputs

CATALIST-Uganda National Advisory Committee drawn from a cross-section of project stakeholders to advise on and provide feedback to project implementation

Consultations with EKN on undue interference and determining appropriate course of action

Comprehensive systems established at inception phase and verified through an independent systems audit

Continuous consultation with stakeholders

Semi-annual meeting of National Advisory Committee

Annual Work Planning Process

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4. Project Staffing and Organization

4.1 IFDC Core TeamThe CATALIST-Uganda project has a lean staffing structure, leveraging partners, external experts, local service providers and regional technical staff from the CATALIST-2 project based in Rwanda to complement core staff. Together with the IFDC Nairobi-based East Africa office and in-country partners, a technical support structure will be created.

The project will be supported by a project head office in Kampala housing the COP and technical staff that will be shared across the field offices. Three small field offices will be based in the project regions (North, East and Southwest) to support local field activities.

International Staff based at the Project Head Office in Kampala Chief of Party - experienced agronomist/agribusiness advisor (to be named)

Regional Advisors based in Kigali (1-2 months per year) Regional Cluster Advisor - Udo Rudiger Regional Value Chain Advisor – To be determined Regional Finance Advisor – To be determined Regional Communication Advisor – Alice Van der Elstraeten

National Technical Staff and Support Staff based in Kampala Finance Manager Grants and Administration Manager Cluster Development & Capacity Development Specialist Agribusiness Specialist Monitoring & Evaluation and Innovations Advisor Communications Specialist Office Assistant Accounts Assistant Grants Assistant Office Support Staff (drivers, janitors)

Field Staff based in each of the Field Offices (North, Eastern and Southwestern) Agronomist Cluster & Agribusiness Specialist (2x to be shared across the three field offices) Office/Accounts Assistant Office Support Staff (drivers, janitors)

4.2 Management StructureOverall project management will be in the hands of the Kampala-based Chief of Party (COP). The COP is responsible for communication with EKN in Kampala, external communications, work planning and reporting.

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A National Advisory Committee will be a key contact for the COP and the CATALIST-Uganda Team. This advisory committee will be comprised of key stakeholders in Uganda to provide input to the CATALIST-Uganda Team in an advisory capacity and is expected to meet semi-annually. Members will be drawn from project beneficiaries, partners, the private sector, development partners and stakeholders, the donor and the Government of Uganda.

As soon as the COP has arrived on post of duty, IFDC will organize a management development support mission to assist the COP to work out the final organizational structure of the project which will lead into the start of the inception phase.

The COP reports directly to the IFDC Program Leader - Natural Resource Management based in Nairobi, Kenya. The program leader provides strategic guidance to the COP and ensures that the quality of the deliverables meets the contractual obligations between IFDC and the donor. The IFDC Division Office in Nairobi will provide support on administration and finance, including annual internal audits. During COP absences, the Deputy Chief of Party will be appointed from among the senior staff.

Regional Cluster Advisor (1-2 months/year, based in Kigali). This is a shared regional position. The Regional Cluster Advisor will oversee the proper implementation of cluster development including capacity building, liaising with the Ugandan Cluster Development and Capacity Building Specialist.

Regional Value Chain Advisor (1-2 months/year, based in Kigali). This is a shared regional position. The Regional Value Chain Advisor will oversee the timely and appropriate support to value chain development both in the context of clusters as well as the inclusion of larger enterprises/agribusinesses in the project. This position will liaise with the Ugandan Agribusiness Specialist.

Regional Finance Advisor (1-2 months/year, based in Kigali). This is a shared regional position. The Regional Finance Advisor plays a key role in the identification and/or development of financial instruments for agriculture and agribusiness development. This position will liaise with the Ugandan Agribusiness Specialist.

Regional Communication Advisor (1-2 months/year, based in Kigali). This is a shared regional position. The Regional Communication Advisor will be responsible for strategic communication planning and delivery, liaising with the Ugandan Communications Specialist, the Nairobi-based Communications Coordinator and headquarters communications staff.

Finance Manager. This person will be responsible for all financial and accounting issues. S/he will be supported an Accounts Assistant.

Grants and Administration Manager. This person will be responsible for developing a grant making and management system that is consistent with IFDC’s and DGIS’ policies. S/he will be responsible for monitoring grant implementation from award to utilization and closing/evaluation. S/he is also responsible for all administrative issues including procurement, HR, IT, equipment and facilities. S/he will be supported an Office Assistant, and a Grants Assistant.

Agribusiness Advisor will be responsible for working with the Regional Value Chain, Finance and Cluster Advisors in translating value chain opportunities into viable business opportunities for the actors involved. S/he will be liaise with larger companies (including national and Dutch agribusinesses) and facilitate their contacts with cluster actors. S/he will also be instrumental in the identification of financial service providers and work with them to develop financial instruments for the various actors. Lastly, the Agribusiness Advisor will also be the focal point on issues related to access to and utilization of improved inputs. Together with the Cluster Development and Capacity Building Specialist, the Agribusiness Advisor will be responsible for overall program quality and supporting the field teams. S/he will be supported by two Cluster and Agribusiness Specialists based in the regional offices with responsibility for one of more of the cropping systems.

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CATALIST-Uganda Organizational Chart

Advisory Committee

CATALIST-Uganda Organizational Chart

Chief of Party

M&E & InnovationAdvisor

Finance Manager

Grants and AdministrationManager

Office Assistant

Grants Assistant

Accounts Assistant

Agribusiness AdvisorCluster Development & Capacity Building Specialist

Eastern Uganda Regional Office

Southwest Uganda Regional Office

IFDC• NRM Team Leader• M&E• Agribusiness• Communications• Finance and administration

Royal Netherlands Embassy

Project & ConsortiumPartners

Office/AccountAssistant Driver

Drivers x 4

Regional Technical Staff (25%)• Regional Cluster Advisor,• Regional Communication Advisor• Regional Value Chain Advisor • Regional Finance Advisor

AgribusinessCoaches

BSSsClusters

Agronomist

Office/AccountAssistant Driver

Cluster& Agribusiness Spec.

Agronomist Cluster& Agribusiness Spec.

CommunicationsSpecialist

Northern Uganda Regional Office

Agronomist

Office/AccountAssistant Driver

Farmer Groups

Farmer Groups

Farmer Groups

Farmer Groups

Cluster Development and Capacity Building Specialist will be responsible for working with the Regional Value Chain, Finance and Cluster Advisors to oversee the proper implementation of the cluster development strategy and will actively engage with the Agribusiness Coaches to strengthen clusters. S/he will be responsible for the identification of national and local service providers who can provide training services as well as all capacity building and training issues, particularly related to the strengthening of BSSs. S/he is also responsible for cluster policy issues on matters related to the enabling environment. Together with the Agribusiness Advisor, the Cluster Development and Capacity Building Specialist will be responsible for overall program quality and supporting the field teams. S/he will be supported by two Cluster and Agribusiness Specialists based in the regional offices with responsibility for one of more of the cropping systems

Monitoring & Evaluation and Innovations Coordinator. The M&E and Innovations Coordinator will be supported by the Nairobi-based M&E team in developing and implementing a robust monitoring and evaluation system. The M&E officer will work through local consultants and will work with national knowledge institutes for development of an in-depth M&E system. Working in conjunction with the Grants and Administration Manager, the M&E and Innovations Coordinator will be responsible for implementation of the innovation grants from award to utilization and closing/evaluation.

Communication Specialist. The Kampala-based Communication Specialist will be responsible for strategic communication planning and delivery in conjunction with the Regional Communications Advisor. S/he will be supported by the Nairobi-based Communications Coordinator and by headquarters communications staff.

Agronomist x 3. These staff members will be based in the field offices with primary responsibility for CSFS technical aspects for one or more cropping system. Through direct contacts with the Agro-Business Cluster Development coaches, this person will be in contact with the farmers at the cluster level, and will play an important role in the identification of both potentials and constraints. The agronomists will also be responsible for the agro-input development, usage and access at farmer group and cluster level.

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5. Indicative BudgetThe proposed budget for CATALIST-Uganda requested as a grant from DGIS is €15 million over a period of four years.

Below is an indicative draft budget, to be finalized in submission of the final proposal.

CATALIST-Uganda Indicative Budget

CATALIST - UGANDAINDICATIVE EURO BUDGET

EUROCOST CATEGORY YR 1 YR 2 YR 3 YR 4 TOTAL

STAFF COMPENSATION AND BENEFITS 843,400 953,000 987,100 959,000 3,742,500 25%

TRAVEL & TRANSPORTATION 151,500 150,300 152,700 113,900 568,400 4%

IN-COUNTRY DEVELOPMENT ACTIVITIES 1,221,300 1,063,200 841,200 428,000 3,553,700 24%

EQUIPMENT & PROJECT ASSETS 369,800 17,600 45,200 19,300 451,900 3%

OFFICE OPERATIONS 193,600 244,000 256,100 250,500 944,200 6%

CONTRACTUAL 690,000 1,342,000 1,344,100 696,400 4,072,500 27%

TOTAL DIRECT COST 3,469,600 3,770,100 3,626,400 2,467,100 13,333,200

INDIRECT COSTS @ 7.5% 260,200 282,800 272,000 185,000 1,000,000 7%

CONTINGENCY @ 5% 173,500 188,500 181,300 123,500 666,800 4%

TOTAL PROGRAM 3,903,300 4,241,400 4,079,700 2,775,600 15,000,000 100%

3,903,300 4,241,400 4,079,700 2,775,600 14,999,9000 0 0 0 -100

INTERNATIONAL FERTILIZER DEVELOPMENT CENTER

% TOTAL BUDGET

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Annexes

Annex 1. Draft Inception Phase Work PlanCATALIST-Uganda Draft Inception Phase Work Plan

# Activities 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4

1 COP and start-up team arrival2 Hiring of program staff3 Opening of Kampala office4 Opening of field offices5 Project launch event6 Establishment of Project Advisory Committee

7Financial and administrative systems (incl. HR and procurement) implemented

8 Security Audit and Emergency Action Plan

9Audit by professional audit firm on behalf of the Royal Netherlands Embassy

10 Submission of budget and forecast requests

11

Value chain analysis and mapping, including analysis of cross-cutting issues such as gender, youth and environment

12Rapid market appraisal of national, regional and international/Dutch agribusinesses & markets

13Analysis of the political economy risks and implications on project implementation

14 Environmental Assessment

15 Input and seed systems/planting material analysis

16

Validation with industry stakeholders and project partners culminating in the value chain implementation strategy for each commodity

October 2012May 2012 June 2012 July 2012 August 2012 September 2012Month/Week:

Start Up & Management Activities

Finance and Administration

Market Appraisal and Value Chain Mapping

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# Activities 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4

17 Mapping of cropping systems and demonstration treatments required

18 Analysis of soil fertility and acidity19 Seed/planting material development

20

Finalization of commodities, cropping systems, project partners and beneficiaries identified during proposal development and scoping missions

21

Annual work plan for Year 1 prepared, including updating of logical framework and activities for each cropping system

22 Establishment of project communications plan

23Establishment of project sustainability and exit strategy

24 Updating of risk analysis and mitigating measures

25Establishment of project baselines and finalization of monitoring and evaluation framework and plan

26 Budget realignment (if needed)27 Preparation of Inception Report

28Working modalities established with institutional partners and implementation organizations

29Selection of initial rural public works in support of agricultural intensification and market access

30

Establishing modalities and rules and procedures for Matching Investment Fund and Innovation Grants

  Cropping Systems & Seed System Development

Work Plan Development

Project Instruments

Month/Week: May 2012 June 2012 July 2012 August 2012 September 2012 October 2012

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Annex 2. Draft Performance Assessment Matrix The table below presents draft outcome and output indicators, and targets for the life of project. These will be finalized during the inception phase based on information gathered during the value chain assessments, from the baseline study to be undertaken and in discussions with EKN and stakeholders. IFDC is currently standardizing and centralizing its M&E system across projects, and rolling out this new system with CATALIST-2 as the first pilot. During the inception phase, the M&E framework and approach will further be harmonized with that of CATALIST-2 and the new IFDC system.

Draft Performance Assessment Matrix

Indicators Unit Baseline Target Year 1

Target Year 2

Target Year 3

Target Year 4 Comments

Outcome indicators8:

% Change in commodity related income of farmer households involved in AB clusters

% change 0 10% 25% 40% 50%

% Change in commodity related yields % change 0 25% 100% 150% 200% Cumulative

Tons of cereal equivalents produced by participating farmers

Tons of cereal equivalents

TBD 0 5,000 55,000 165,000 Production will scale up over the 4 years to produce an total marketable surplus of 225,000 tons of cereal equivalents.

Volume of Uganda trade to South Sudan and Rwanda in targeted commodities

Tons of volumes traded

TBD Targets to be established once the baseline data is collected

Returns per labor day Euros TBD Targets to be established once the baseline data is collected

% Participating farmers correctly applying at least 2 essential elements of the CSFS recommendations

% of participating farmers

TBD 25% 40% 60% 80%

% Farmers acquiring inputs on time % of participating farmers

TBD 25% 40% 60% 80%

% Reduction in production costs (relative to farm gate price)

% reduction 0 Targets to be established once the value chain assessments have been completed

% Reduction in post-harvest loses % reduction 0 10% 20% 25% 30%

8 Defined as “concrete improvements in the lives of people or the environment. They are outside the control of the implementing agency as they often require some kind of behavioral changes of beneficiaries.”, “Handreiking Resultaatketen,” DGIS, pg.1

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% Participating farmers who try to access credit (or other financial instruments) are able to obtain it at normal market rates

% of participating farmers trying to access credit

0 20% 30% 40% 50%

% Farmers undertaking joint purchasing, storage or selling

% of participating farmers

TBD 10% 30% 50% 80%

% Clusters adding value through processing % clusters TBD 10% 20% 40% 60%

Number of Dutch agribusineses supplying or buying from project clusters

# of Dutch agribusineses

0 1 3 4 4 Cumulative

Number of business partnerships with medium to large agro-processors (including Dutch)

# of business partnerships

TBD 10 25 40 50 Cumulative

% Change in cluster turnover % change in cluster turnover

0 5% 7% 10% 15%

% Change in income of cluster actors % change in income

0 10% 25% 40% 50%

Cluster members’ average rating of cluster in an organizational development survey, based on a 1-5 scale where 5 is “mature”

Cluster member performance rating

0 1-2 2-3 3-4 4-5

Output indicators9:

Number of agribusiness clusters (ABCs) # of ABCs TBD Targets to be established once the baseline data is collected

Number of farmers involved in agribusiness clusters

# of participating farmers

0 5,000 20,000 35,000 40,000

# Cluster members that are service providers (agro-input dealers, traders, transporters, agribusinesses, etc.)

# members 0 200 600 800 1,000

Number of innovation grants # grants 0 5 12 18 20 Cumulative

9 Defined as “deliverables that are within the control of the implementing agency,” “Handreiking Resultaatketen,” DGIS, pg.1

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Number of matching investment grants # grants 0 25 75 125 150 Cumulative

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