Negative bias by policy makers, financiers, and extension workers against smallholder farmers is one of the reasons behind the stalled efforts to commercialise the agricultural sector, a document that was launched recently noted.
The Agricultural Finance Year Book 2013/14 has revealed that many agricultural households do not have that much land to farm, which could pose a threat to food security.
“It is likely that a significant proportion of agricultural households are now virtually landless, farming only small plot(s) of land if any,” said the yearbook, comprising papers by Bank of Uganda, German Cooperation, GIZ, USAID, aBi Trust, and Economic Policy Research Centre (EPRC).
The situation has been made tougher by the limited credit available for these types of households. For instance, the Agricultural Credit Facility (ACF), being administered by the central bank, is not particularly considered for the smaller farmers, the study notes. When government came up earlier with the National Agriculture Advisory Services (Naads), the focus was on what they termed as “progressive poor farmers”, which meant most small farmers were left out. Naads is being retructured partly because of financial mismanagement.
The book, which analyses policy issues and funding gaps in the agricultural sector, points out that whenever there is an incentive, training or credit line funds, the target group is usually the “medium to large-holder farmers.”
The book notes that in the six-year period to 2010/11, the average area farmed per household declined by seven per cent. While many people assume that it is only large-scale farmers who produce a lot, the book says evidence shows that smallholder farms were more productive than their bigger counterparts.
“Smaller farms use limited resources more efficiently than large holdings and produce the highest return per acre.” It added: “At the national level, the income per acre of small farms is four times greater than that of the large farms…”
The book says except for a few farms, most large farmers in Uganda are very inefficient in using their land compared to a small family farm.
“For example, it is small and medium-sized farms that have been responsible for the bulk of the growth in production of coarse cereals that has taken place, meeting the staple food requirements of the population of both Uganda and its neighbours,” it noted.
In 2013, Uganda supplied 95 per cent of the sorghum in East Africa, 90 per cent of maize and 74 per cent of beans, the study pointed out.
“Small family farms also account for the bulk of tubers, matooke, dairy produce and even livestock that are critical in ensuring the country’s food security.”
The most viable process for agricultural transformation, the book recommended, would be the increased commercialization of smallholder farming, with a focus on shifting from a highly-subsistence-oriented production to a specialised production system, which targets markets for both its supply of inputs and its output.
The book further advised that it was important to ensure that smallholder farms were not marginalized and discriminated against in favour of large-scale farms, either by tax code or by the provision of infrastructure, extension, research services and agriculture credit.
The authors also urged government to look for strategies to finance smallholder farmers. The survey noted that smallholder farmers have the capacity to effectively exploit financial incentives.
Meanwhile, some partnerships between different organisations to help provide credit to the farmers have started to pay off. Last year, aBi Trust guaranteed Shs 25bn among selected banks, with more than 6,655 loans given out by end of 2013.