Warehouse Receipt System brings hope to farmers in Uganda

Even with the source of the Nile river situated here, the eastern Ugandan town of Jinja has been struggling. In the 1970s, the textile, steel and sugar industries collapsed, as did the matchbox, hoe and paper enterprises. Through the Warehouse Receipt System, however, P4P is contributing to the town’s bid for a revival and changing lives in the Busoga region and beyond.

The maize trucks destined for the Agroways warehouse arrive in the early morning mist. As each one of them takes a left turn off the Kyabazinga Way, a gate clanks open to let them into an uncluttered compound with three massive buildings. The drivers and depositors then mark their place in the queue before running out to nearby hotels to catch some sleep for the final hours of the morning. When business begins – at about 8am – one by one, the trucks pull up to a concrete hauling pad. The grain gets offloaded before it is weighed, graded, dried, bagged and stored. Every depositor eventually gets a receipt verifying their maize 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. With this receipt, a depositor can get a loan of 60 percent of the value of their grain. And so, as the depositors wait on a good price, they can have some money, which can help them plant new crop and take care of additional needs. About seventy percent of depositors are small-holder framer groups, but there are also medium-scale traders.

The benefits to depositors
The depositors watch every grain as their maize gets off-loaded and taken into the main warehouse for the processes. Grasping a small tally notepad, trader George Mulindwa, 37, says, “I come from Mubende (roughly 220 km away). We like the services here: they dry, grade, pack and store our maize. And then, we can sell it whenever we want to whoever we want. Previously, the maize business was unprofitable; through this system, however, for good quality, we sell it at a good price. “I started depositing here in January,” he adds. “I have brought 14 trucks since. From my profits, I have managed to buy a saloon car.”In the neighbouring Kamuli district, there are more happy people – the members of Julian Mbalule Farmers’ Group. Made up of 86 small-holder families, the association has sold maize thrice to WFP through the receipts system.Edisa Nabiryo, a 36-year-old widow says, “From my profits, I have completed building a house and can take care of my children. I bought a cow, which bore a calf recently; I take milk. I also bought chickens; we eat eggs.”

WFP’s role
Under the P4P, WFP would like to buy at least US$100 million worth of food annually, in order to improve the lives of poor people and help Uganda grow. It’s all part of  WFP’s bid to find lasting solutions to hunger. “However, small-holder farmers face two major problems: the lack of proper stores and – partly because of this – poor quality grain,” says Country Director Stanlake Samkange. “With the warehouse receipts system,” he says, “the farmers get to store and sell quality grain to WFP, through direct purchases or tendering, as well as to other big buyers. WFP offers a premium for this quality.” The receipts system would not take off for a long time in Uganda until WFP signed up as an off-taker in 2008.WFP works closely with the Uganda Commodity Exchange (UCE), the private sector body mandated by the Government to regulate the warehouse receipt system. UCE’s main role is to encourage people to deposit grain and take advantage of the system.

High demands for services
The Agroways warehouse has a capacity of 2,100 metric tons. Every week it handles not less than 150 tons of maize. Depositors come from eastern, southern and central Uganda.“Often times it’s overwhelming and we are forced to re-schedule depositors,” warehouse manager, Richard Ibengo, says, as a drying machine buzzes on the floor above. WFP has bought cleaning and drying equipment that will be installed this year in nine other warehouses that the agency will help construct or renovate countrywide. In the meantime, maize will keep on piling to the roof in Jinja. Thirty-nine-year-old Rebecca Mukyala from Kaliro, another district in the Busoga region besides Jinja and Kamuli, patiently lines up after George Mulindwa. Her farmer group has not sold to WFP yet. However, she says they are not worried. “They have told us to keep on depositing,” she says. “They say WFP will buy our maize.”