A man works next to a drier at the Jinja warehouse.
Copyright: WFP/Lydia Wamala
The warehouse receipt system did not function in Uganda for a long time because there was no big, quality buyer. In 2008, however, WFP signed up for the role. Now, the agency has established two more warehouses, including one in northern Uganda, to operate a system that helps small-holder farmers earn more.
KAMPALA – It started on the trimmed lawn of a warehouse in Jinja, eastern Uganda – with media, maize and a memorandum of understanding. WFP bought its first warehouse receipt, for 48 metric tons of maize. Then, there in the lights, WFP signed an agreement with Uganda Commodity Exchange (UCE) to begin buying even bigger volumes of grain from small-holder farmers’ groups.
How it works
The warehouse receipt system addresses one of the main challenges for smallholders in Uganda: a lack of larger mordern stores with processing equipment. Farmers take their grain to warehouses licenced by Uganda Commodity Exchange, where the grain is weighed, cleaned, graded, dried, bagged and stored. Every despositor gets a receipt verifying their tonnage and grade. For a small fee, the warehouse guarantees to maintain the grain’s quality and quantity until it is transferred to whoever buys the receipt from the depositor, or until the depositor asks to withdraw their maize.
UCE manager Alex Rwego said, “Today marks a new era in the marketing of agricultural commodities in Uganda.
“Small-holder farmers have been lacking drying and cleaning equipment and large and secure stores. Now, there’s a guarantee, and they can easier access WFP and other buyers of quality grain.”
WFP has since bought close to 6,000 tons of maize through the warehouse receipt system. The agency works closely with UCE, the body that regulates the system in Uganda, buying food through four warehouses currently. At the time of the agreement, only Jinja operated the system. Recently, WFP has had two additional warehouses licensed and renovated to operate the system, starting this month. One of these is in Gulu, in conflict-scarred northern Uganda.
“WFP is phasing out general food distributions in northern Uganda,” says Country Director Stanlake Samkange, “we are now focused on helping the region become productive again.”
Tom Mbalule, 50, whose group has sold maize four times to WFP says, “This system assures us of a market, especially in the form of WFP. WFP is the best buyer in East Africa, and it buys large volumes. Last October, for instance, WFP bought our maize at 790 Uganda Shillings per kilo. On the open market, crude maize sold for 600 Uganda Shillings per kilo.
“With the receipt, banks give us loans. And now, farmers are getting more aware of the benefits, and working hard to be part of it.”