We Can Do A Better Job

 

Altogether, we are seeking a threshold of $15m to get our intended agro-processing plant off the ground. This is certainly a figure that sets the bar high, but it is one that is undoubtedly warranted, considering the ever-spiraling grip of poverty in our region.

We have also already highlighted that we will install a specific portion of this plant once the money we have raised is at the intervals of $240k; $620k; $1m and $15m. That’s, we will begin developing this plant once we only raise $240k, and complete it once we have raised $15m. So, every support that we can raise will make a start.

 

But in reality:

This money will only get us a basic plant, and it barely includes a budget for farmer support, and working capital. We believe we can do a better job, if only we could find enough helping hands to help us raise ~ $45m. Here are 3 reasons to explain this:

1). Given the geographical vastness of, and the level of poverty in, our region, our goal is to have a plant that can support as many rural poor farmers as possible.

2). Considering the social-economic status of farmers in our region, our plant will be required to provide all our target farmers with initial inputs, along with other ongoing extension services, to enable these farmers benefit from this work. So, we will need a sufficient budget for farmer support, as our work will span a wide geographical area.

3). Our goal is to have an integrated agro-processing plant that shall help rural poor farmers diversify their incomes, by creating market linkages for more than one type of crop. In this, $15m will only get us a small plant, because this plant will have multiple components. So, with little capital, each component will end up being very small.

 

Here is a description of how $45m would do a better job:

 

a). Farmer support:

As soon as we start developing this plant, as described under our envisaged “Business Model”, which you can read by hovering over “Action Plan” on this site, we will need to provide all our target farmers with planting materials all year round, regardless of whether these farmers already have the crops that our plant is working on or not, for reasons that have been described in more detail under our planned Business Model.

Our seed/saplings will also be provided to all the participating farmers at no charge, but each farmer will only need to receive these free inputs for 1 – 4 planting seasons, depending on the type of crop they are growing. The most basic reason for this is to ensure that all farmers have the right variety of crops, lest their produce is rejected; increase the scope of production, and to ensure that even those farmers who have no initial inputs can participate equally, this time with a ready market for their produce.

What we can do better:

In our $15m budget, we had allocated $100k on farmer support, which includes everything from providing farmers with initial inputs, to building a robust team for field outreaches, to transport logistics, to providing ongoing extension services to our farmers. But that budget would be too small and too restrictive for this work. If we raise $45m instead, we will use $0.5m in farmer support per year, for the first 4 years, to support as many farmers as possible across a wider geographical area, and to give our planned community work a solid start  This adds $1.9m to our original budget.

But, if we only manage to raise $15m, we will still cut our coat according to our cloth.

 

b). Cassava starch facility:

In our $15m budget, we allocated $380k to what would be a relatively small cassava starch utility. A similar facility was recently installed by a UK-based agribusiness group in The Gambia for $420k. And according to the FAO, the average cost for a 24 ton/day starch facility in Africa is $736k. An even more serious cassava starch project has been planned by Uganda’s government in the furthest part of eastern Uganda, for $12.7m.

What we can do better:

Given the geographical vastness of, and the level of poverty in, our region, it would be better if we could install a cassava starch facility that can support as many farmers as possible, perhaps one that has the capacity to process 72 tons of cassava/day. Such a facility would require of us about $2.4m in total, adding $2m to our original budget.

But, if we only manage to raise $15m, we will still cut our coat according to our cloth.

 

c). Fruit processing facility:

One of the most precious lessons we are currently learning from the Soroti Fruit Factory, which was installed by Uganda’s government two years ago in the Teso region (in the furthest part of eastern Uganda) with funding from the Korea International Cooperation Agency, is that this plant is currently rejecting most of the produce (i.e. mango and oranges) that have been grown by farmers in the same region, because farmers planted the wrong variety of fruits that aren’t suitable for juice production.

But an even more important lesson we are drawing there is: the capacity of Soroti Fruit Factory has turned out to be very small, and can’t consume the fruits coming from the region, even as most farmers’ fruits are being rejected because of being the wrong variety. Some farmers there have even pointed out that, had it not been for their produce to be rejected, it would have only taken farmers from one Sub County to produce the fruits needed to meet Soroti Fruit Factory’s capacity of 6 tons/hour.

The region altogether has 9 districts, of which Soroti alone has 17 Sub Counties. In other words, once these farmers get the right fruit varieties, then, the factory won’t even be able to support a single district. Recently, Uganda’s president, Museveni, also acknowledged Soroti Fruit Factory’s small capacity, and has promised to expand it.

What we can do better:

In our $15m budget, we had allocated $14m to a 6 ton/hour fruit facility, which is very approximate to what the government used to install the Soroti Fruit Factory, which factory is also of the same capacity, but which capacity has already been outrun by farmers. So, while we certainly can’t think of developing a plant similar to Benfruit, we could at least install one that has twice the capacity we had initially planned for. That would require of us at least $14m more — adding $14m to our original budget.

 

d). Working capital:

Our original $15m budget does not include any working capital — the money that we will need to run the plant’s operations; build market linkages, etc. From what we have gathered thus far from the activities of the Soroti Fruit Factory, we will need to have ample working capital, especially since our own plant will have multiple components (sorghum and maize, fruit processing, cassava starch, and High Quality Cassava Flour).

What we could do better: installing this plant without thinking of working capital ahead of time means we will either have to scale down the size of the plant, or even more frighteningly, run the risk of completing this plant but with no working capital to operate it. Before our own incomes from this plant become sufficient to cover 100% of our working capital, which we hope will take 4 years, we will need $3m in working capital per year, for the first 4 years. This adds $12m to our original budget.

But, if we only manage to raise $15m, we will still cut our coat according to our cloth.

 

e). Green energy:

With daily load shedding, and a rather high cost per unit, electricity is very unreliable in Uganda, not to mention that the current climate crisis calls for even cleaner energy.

What we can do better: 

To run our plant without having to worry about this, a supplementary 500 kW solar power system, or better yet, a 1000 kW solar power system, is all it would take. A solar system of this size would also cut our energy needs by at least 25%, cutting our carbon emissions by the same size. This adds at least $600k to our original budget.

 

f). Our seed cleaning facility (or cereal/grain sorting, grading and threshing system) and our High Quality Cassava Flour facility will both remain on their original budget of $240k and $200k respectively, regardless of whether we have raised $15m or $45m.

 

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Conclusion:  Altogether, the above things would add $30m to our envisaged budget, bringing our total budget to $45m (when added to the original $15m budget).

But, if we only manage to raise $15m, we will still cut our coat according to our cloth.