Evaluating the Marketing Opportunities for Banana & its Products in the Principle Banana Growing Countries of ASARECA

(Uganda)

J.S. Spilsbury J.N. Jagwe R.S.B. Ferris

November, 2002

Table of Contents Table of Contents List of Figures List of Tables Executive Summary 1 2 3 3.1 3.2 3.3 3.4 3.5 3.6 3.7 3.8 INTRODUCTION METHODOLOGY SUB SECTOR ANALYSIS Rapid Overview Of The Economic Status Of The Countries Trade And Competitiveness: Recent Reforms, Performance And Market Access Types Of Banana Production Zones Production Levels Importance Of The Sub-Sector To Earnings, Rural Livelihoods, Poverty Alleviation And Economic Growth Consumption Production Constraints 3.8.1 Soil fertility 3.8.2 Pests and Diseases Marketing Constraints DEMAND ANALYSIS Size of National Markets Size and Growth Rates of Regional Markets Size and Growth Rates of World Markets Market Price Trends Major Products Overview of Market Potential for Banana and Banana Based Products SUPPLY ANALYSIS Analyse of the supply chain Market Linkages Production costs Trading Costs and Margins in the Supply Chain MAJOR FINDINGS RECOMMENDATIONS 2 3 3 4 6 6 6 6 7 7 9 11 12 13 14 14 14 17 20 20 22 24 25 27 29 33 33 36 37 37 41 44 50 53 56

3.9 4 4.1 4.2 4.3 4.4 4.5 4.6 5 5.1 5.2 5.3 5.4 6 7

Information Gathered with Businesses involved in Banana Markets References Appendix

List of Figures Figure One Figure Two Production of Matooke by Region Volume of Ugandan Exports of Apple Banana and Bogoya Exports to Kenya Figure Three Value of Ugandan Exports of Apple Banana and Bogoya Exports to Kenya Figure Four Fresh Matooke and Apple Banana Export Volumes Figure Five Real Retail Prices for Selected Commodities (Kampala) Figure Six Grand Seasonal Index from Kampala Matooke Retail Prices Figure Seven The Banana Supply Chain List of Tables Table One Table Two Table Three Table Four Ugandan Banana Area Planted and Production Level Ugandan Banana Production (Tonnes) Crop Area, Plot Number and Size Percentage of Staple Food Consumption as a Percentage of Household Monthly Consumption Table Five Volume and Market Values For Three Main Kampala Markets Table Six Combined Present and Future Volumes for Three Main Kampala Markets Table Seven World Markets for Banana and Plantain Table Eight Approximate Kampala Prices of Local Waragi Table Nine Approximate Kampala Prices of Tonto Table Ten Correlation Coefficients for Matooke Prices in Selected Towns Table Eleven Gross Margins Under Hired and Family Labour for Matooke Table Twelve Trading Costs and Margins 11 12 12 13 20 21 24 27 28 36 37 38 10 22 22 24 25 26 33

Executive Summary This report provides a review of banana production, processing and marketing in Uganda. The report specifically explores the current market status and investment options for the sub-sector. Market coverage includes banana and banana-based products in local, regional and international markets. This Ugandan study represents one component of a regional initiative that includes Tanzania, Kenya, and Rwanda. The methodology employed by the study was based on a rapid assessment technique using primary and secondary data. Primary data has been obtained through interviews with producers, traders, retailers and exporters. Secondary data was acquired by literature review and the collection of available statistics. Major findings include evidence for continuing shifts in the location of matooke production. New areas are planted further to the south and west of Uganda increasing transport distances to urban consumption centres. In established production areas planting is moving away from main roads increasing reliance on muram tracks that become difficult to use in the wet season. The main reason for production area shifts is declining soil fertility. Additional production constraints are weevils, nematodes and black sigatoka. Fusarium wilt is a major threat to sukali ndizi and bogoya (Gros Michel) production and hence a deterrent to investment in these dessert bananas. Analysis of net and gross margins for supply chain participants reveals that brokers who organise transport from rural to urban areas can make attractive daily incomes. Price peaks for the food staple matooke are found in April and December as demand increases with Easter and Christmas festivals. Farmers show little or no production response to these predictable and significant price movements. Regional export opportunities appear for matooke in Rwanda and for dessert varieties to Kenya. International banana markets appear as increasingly competitive. Recent changes in European Union banana policy reducing preferential access are seen to further increase competition. Within this context market potential for Ugandan bananas is seen in markets segments including organic or health focused fruit and naturally solar dried dessert bananas. Sales of matooke to Europe have almost doubled in the past five years with potential seen for further increase. However exports of fresh sukali ndizi to Europe have declined due to quality issues. European markets require sukali ndizi to have large unblemished fingers of uniform ripening and size. If these quality requirements can be achieved European market prices appear as attractive. Recommendations highlight the importance of addressing soil fertility issues to guarantee sustainable production systems. Further research is suggested to better establish what changes in soil fertility status are occurring and to determine why farmers do not manage soils in a sustainable manner through recognised soil management practices. Continued research and support to extension in encouraging better pest and disease cultural control is suggested for weevils, nematodes and black sigatoka.

To reduce excessive margins existing within the market chain the involvement of government is recommended to find ways of reducing informal collusion between brokers, which may lead to the restriction of new entrants into the broker role. Provision of gross and net margin information to potential entrepreneurs is suggested, as is contact with micro finance providers to ensure potential new entrants can access credit. In urban markets efforts should be made to allow sufficient space for retailers. This is seen to be increasingly important as significant volume increases are expected with the increasing urbanisation of a growing population. Recommendations are made to maintain and improve roads and reduce theft especially in rural areas. To increase farm incomes, improve consistency in monthly volumes and reduce consumer price peaks development of a production response to seasonal price variation is recommended. Further research into the timing of planting new gardens, timing of de-suckering to control new growth and the use of appropriate irrigation systems to control water stress that stimulates fruiting is suggested. To support regional exports of matooke to Rwanda and dessert varieties to Kenya the provision of regional market price information using mediums currently giving Ugandan price information is put forward. Recommendations for the involvement and lobbying of regional governments to reduce border barriers including tariffs with efforts to ensure quick and efficient boarder crossing are made. On international markets focus is given to health focused naturally dried dessert banana markets, exports of fresh organic sukali ndizi and the further growth of matooke markets in Europe. Recommendations include better design of product packaging to compete in snack and sweet market outlets and improving the appearance of naturally dried banana through better drying techniques with plant breeding for visual characteristics. To improve the quality of fresh sukali ndizi destined for international markets further research is recommended into the control of fruit ripening after harvest by exploring post harvest packaging and temperature control. This research should actively involve private sector exporters. In addition improvement of fruit handling through out the supply chain is forwarded by use of capacity building approaches with fruit handlers. Further research is suggested to determine possibilities for further expansion of matooke sales in European markets particularly into UK based West Indian and Belgium based Congolese ethnic markets. To benefit all Ugandan fresh fruit and vegetable exports it is suggested that the Civil Aviation Authority and relevant government representatives are encouraged to facilitate competition in the airfreight market and ensure efficient airport freight administration and handling. This report should be used as a lobby tool to emphasis the importance of Entebbe airport in the export of fresh fruit and vegetables.

INTRODUCTION

This report represents one output from a regional banana study that includes Tanzania, Kenya, and Rwanda. The purpose of the study is to provide a review of the current status and investment options for the banana sub-sector. To achieve this the project reviewed market segments that include: (i) (ii) (iii) (iv) Fresh cooking bananas Dessert bananas Processed banana fruit products Non-food banana based products.

The market coverage includes local, regional and overseas markets. An important element of the work is to examine the comparative and competitive advantages of specific products both spatially and in terms of economic gain based on investment. 2 METHODOLOGY

As with the other commodity studies in this series the methodology is based upon a rapid assessment technique developed by Holzman (1995). Due to its rapid nature the review is illustrative as opposed to rigorous. It uses both secondary and primary data to determine the market prospects for bananas and banana products. Primary data has been obtained through limited interviews using a structured informal questionnaire (see appendix one) with producers, traders, retailers and exporters (see appendix two). Secondary data was acquired through literature review and the collection of available statistics. The report begins with a broad overview of the economic situation of Uganda. It then examines production zones, the importance of the sub-sector, principle production and marketing constraints, demand and supply side analysis and the medium and long term market outlooks across the sub-sector, for national, regional and export trade. Major findings are summarised with recommendations made in the form of suggested ways forward. 3 3.1 SUB SECTOR ANALYSIS Rapid Overview Of The Economic Status Of The Countries

Ugandas per capita GDP measured in constant prices has risen by an average of 3.2 % per annum from 1990 to 2000 (Collinson et al 2000). The countries population of 24 million people is growing at approximately 2.5% per annum. Therefore it is suggested that food demand will continue to rise through both a population and income effect. Urbanisation is occurring with 16% of the population living in urban areas in 2000 and forecasts predicting this will rise to 22% by 2010 (Collinson et al 2000). An increasingly urban population will lead to higher volumes of bananas being transported from rural to urban areas. Requirements placed on road infrastructure and transport vehicles will rise as will the need to deal with banana related refuse in major cities.

3.2

Trade And Competitiveness: Recent Reforms, Performance And Market Access

The main dessert banana exporters to world markets are the Caribbean, Central and South America countries that supply importers in North America and Europe. These exporters have a comparative advantage over East African producers due to production economies of scale and lower sea based transportation costs. Two of the main European consumers are the UK and Germany. The UK traditionally buys bananas from the Caribbean while German purchases from Central and South America. Banana imports to the European Union are influenced by the Cotonou agreement, which replaced the Lome Convention in February 2000 after a lengthy dispute with the USA. The Cotonou agreement substantially altered Lome banana protocol arrangements, which had given preferential access to EU markets for Africa, Caribbean and Pacific (ACP) country bananas. Since the signing of the Cotonou agreement the EU has made special provisions for Least Developed Countries under an Everything but Arms measure. This amends the EU General Scheme of Preferences to extend duty free access to all LDC imports. For bananas this will be phased in with a gradual reduction of import tariffs on fresh bananas to zero by cutting the tariff rate by 20% every year between 1st January 2002 and 1st January 2006 (P. Robbins and S. Ferris 2002). Chiquta are currently looking for possible production sites in African Less Developed Countries from which to supply European Union markets. Potential is seen for Uganda to benefit as an LDC from tariff reductions for fresh bananas exports to the EU under the Everything but Arms measure. However, the removal of preferential access arrangements under the Cotonou agreement is seen to place pressure on some ACP countries to improve their competitive strength in bananas and find new market outlets. These pressures will be felt most by Caribbean countries whose economies rely heavily on banana exports to Europe. International markets for banana products such as flours, fibres and essences could therefore become increasingly competitive. The past disputes over Lome and bananas is seen to relate to protection of former traditional colony based supplies and European attitudes to genetically modified foodstuffs. European consumers are cautious with regard to the way their food is produced. This stems from a background of food scares, salmonella, botulism and most notably the BSE crisis. With reference to fresh fruit a number of trends in European consumer demand have been distinguished by (Abbenhuijs 2001). These include rising consumption trends for food perceived as being healthy, organic food and food produced in an environmentally conscious manner. These trends would appear to offer potential for Ugandan banana producers who currently use largely organic methods of production.

3.3

Types Of Banana

Rubaihayo (1993) classified four major types of bananas as cooking, brewing, roasting and dessert types. Production in Uganda is dominated by the East African Highland cooking banana (Gold et al 2002), which includes both cooking (matooke) and brewing (mbidde) types. Cooking Bananas (Matooke) The mature fruits are harvested when green. They are peeled, boiled or steamed and can be mashed before eating. This group constitutes the majority of the East African Highland Bananas (AAA-EA group). Brewing bananas (Mbidde) The fruit is harvested when mature, ripened and squeezed to produce juice that is fermented with sorghum to make beer. Beer bananas are found in the AAA, AB and ABB groups. Farmers plant brewing types where soil fertility has declined. Interviewees suggested the increasing numbers of brewing bananas particularly seen at roadsides are an indication of reductions in matooke yields. Roasting bananas These belong to the plantain (AAB) group. The fruit is harvested and ripened before roasting and eating. Sweet (Dessert) bananas These are eaten when ripe. Those commonly found are sukali ndizi (AB group, also known as the apple banana), gros michel (AAA group) and cavendish (AAA group). As Lynam (2001) points out the marketing of these fruit (dessert) types is more exacting that cooking types because of increased importance of bruising to fruit quality during the ripening process.

3.4

Production Zones

Matooke production is primarily in the southwest of the country focused around Mbarara and Masaka as shown in the map below.

Key Areas of Major Matooke Production Areas of Major Beer Production Areas of Major Dessert Banana

Significant quantities of the dessert types bogoya (Gros Michel) and apple banana (Sukali Ndizi) are produced in Mukono to the east of Kampala. Kibale on the Congolese border is a notable producer of banana beer. Until the 1970s matooke production was traditionally performed in the central region of Uganda. Since that time production has shifted south and west due to a combination of: i. ii. iii. iv. v. Declining soil fertility Increase in pest and disease levels Changes in migrational labour patterns Increased competitiveness of growers in the west Cultural attitudes of central region farmers being against own family labour input
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South-western production areas tend to be at higher altitudes meaning lower incidence of the major pest and diseases namely weevil, black sigatoka and the most damaging nematode species. Soils around Mbarara are currently seen as being fertile. Market traders stated that south-western areas closer to Kampala, where matooke production has taken place for a longer period of time, are now suffering yield reduction. This perception is corroborated by traders in Owino market who sell matooke in two grades called Masaka and Mbarara. These names refer to different sized banana fingers that are from the two different areas in the southwest. Masaka is a smaller banana from an area closer to Kampala where matooke production has been longer established. Mbarara refers to a large finger and is from an area further from Kampala where matooke production is comparatively new. Ugandan National Household Survey statistics presented in figure one show matooke production to be focused in the west region of the country, which accounts for 61% of total matooke output. The Central region produces 1,687,000 tonnes or 30% of total matooke output. The survey also shows the Central region as producing the highest levels of other banana types. This suggests the presence of beer types, verified by field observation, which are grown where soil fertility has declined and dessert varieties reported by traders as focused in Mukono district. Banana production is significantly less common in Eastern and Northern regions where agro-climatic factors constrain production.
Figure One Production of Matooke by Region
4000 3500 Production ('000 tonnes) 3000 2500 2000 1500 1000 500 0 Central Eastern Northern Western 360 481 18 14 15 192 1687 Matooke Others Banana Types 3363

Source UBOS Ugandan National Household Survey 1999/2000

Major routes for the movement of bananas are show on the map below. Major trade flows destined for Kampala originate from the southwest. Significant movement is seen to consumption zones east of Kampala as far as the Kenyan border. Major Ugandan matooke exports cross into Rwanda with minor flows of roasting bananas reported entering from the Congo.

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3.5

Production Levels

Ugandan production levels appear to be gradually increasing (see table one below). The statistics presented appear to suggest that over the past decade more land is being allocated to banana production, however this cannot be fully confirmed. Table One Ugandan Banana Area Planted and Production Level 1996 1997 1998 1999 2000 (estimate) Area Planted ('000 Hectares) 1,524 1,538 1,553 1,570 Production ('000 Tonnes) 9,144 9,303 9,318 8,949
Source; UBOS Statistical Abstract June 2001

1,598 9,428

2001 (Projection) 1,622 9,732

National household survey figures (Table two) show how production is divided between banana types. Matooke is the main banana produced, followed by brewing and dessert bananas. This data also shows a significant decline in total production levels. The National Household Survey report attributes the fall over the past five years to drought and the dynamics in the producer market.

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Table Two Ugandan Banana Production (Tonnes) Banana Type Matooke Brewing bananas Sweet (Dessert) bananas Total 1995/1996 7,908,984 1,164,887 383,949 9,457,820 1999/2000 5,545,134 538,304 46,286 6,129,724 % (1999/2000) 90% 9% 1% 100%

Source: Ugandan National Household Survey 1999/2000

3.6

Importance Of The Sub-Sector To Earnings, Rural Livelihoods, Poverty Alleviation And Economic Growth

Most bananas are produced on small plots of <0.5 ha (Gold et al) details of crop area and number of plots is provided in table three. Continuous cropping of bananas throughout the year offers significant food security and income generation advantages. The commercial removal of bunches means soil nutrient replenishment is important for sustainable production. However, minimal planting cultivation requirements and the perennial nature of the crop mean it can assist in preserving soil structure by reducing sheet erosion and oxidative insolation (Karamura EB in Gold 1991). The crop is seen as an all-purpose plant for resource poor farmers who may additionally use it as a mulch, medicine, house thatch and to weave ropes. Table Three Crop Area, Plot Number and Size Crop Type Matooke Brewing bananas Sweet (Dessert) bananas Crop area (hectares) 449,600 110,800 11,500 Number of Plots 1,754,000 374,000 76,000 Average plot size (hectares) 0.26 0.29 0.15

Source: Ugandan National Household Survey 1999/2000

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3.7

Consumption

The East African Highland Cooking Banana is an important food staple in Uganda. The FAO estimated average per capita consumption at 207 kg/year in 1999. With a total population of twenty-two million people this suggests total consumption of 4,554,000 tonnes. As no wastage of production has been found as part of this study, the above total consumption figure supports Ugandan annual production figures of five to six million tonnes as opposed to estimates of approximately ten million tonnes. Household survey data in Table four shows matooke as the main staple food in Kampala. It also displays the traditional high consumption zones in the western and central regions of the country. Table Four Percentage of Staple Food Consumption as a Percentage of Household Monthly Consumption Region Matooke Cassava Sweet Maize Millet Potato Western 17.95 4.84 8.4 4.31 5.35 Central 8.69 5.56 4.83 4.7 0.54 Eastern 5.57 7.58 6.04 5.87 5.15 Northern 0.57 8.93 4.27 4.77 8.32 Kampala 6.55 1.91 2.15 2.46 0.35 Uganda 8.67 6.22 5.64 4.79 3.7
Source: Integrated household survey 1992-1993

A report by the CTA (2001) suggests that per capita consumption in urban areas of 354.4 493.5 kg/year has surpassed that of rural consumption levels. It should be noted that matooke is a high cost staple compared with cassava and sweet potato.

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3.8

Production Constraints

3.8.1

Soil fertility

Bananas remove large amounts of soil nutrients with the harvest of fruit bunches. Lack of nutrient replenishment can lead to a non-sustainable situation reducing yields and productive life. Studies exploring the shifts in Ugandan production found Magnesium as a key constraint with Nitrogen and Potassium deficient on most farms in central Uganda. Results and observations from fieldwork conducted as part of this study support existing concerns expressed by Gold et al for a lack of nutrient replenishment leading to a non-sustainable situation evolving in southwest Uganda. Given the important position of matooke in the diet of Ugandans, efforts to ensure sustainability and improve production methods have a high priority. To achieve sustainable production, areas of soil fertility and pest and disease should continue to be addressed.
Interventions

Existing evidence for continued declining in soil fertility caused by bananas is contested and appears, within the time frame of this study, as an unresolved issue.
Priorities exist to establish what changes in soil fertility status are being caused by banana production and what production location shifts are continuing to occur. If soil fertility levels are continuing to decline a priority is to establish why and design appropriate responses. It is suggested this may include establishing why farmers do not manage soils in a sustainable manner through recognised practices of mulching, manuring, rotating cropping and improved livestock integration. Lack of re-investment in soils suggests farmers view future benefits from any investment as smaller than the current investment cost. Further exploration is suggested of farmers current knowledge of soil management, incentives to farmers regarding reinvestment in bananas and farmer attitudes particularly towards risk and the future. 3.8.2 Pests and Diseases

Weevils Weevils are commonly seen as the most destructive pest of matooke and are considered the most economically important pest in East African Highland banana plantations. Other banana types (Cavendish, Beer, Bogoya) appear less susceptible to weevil attack. Reduced levels of Magnesium and Potassium may have weakened resistance to banana weevil (Bosch et al 1995).
Interventions Support extension and delivery of information to encourage cultural control including:

Use of clean healthy planting material

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Paring of corms at planting Destruction of post-harvest residues Trapping of adult weevils. Good crop husbandry such as weeding, desuckering, pruning, manuring and mulching to produce vigorous plants. Sward strips

Nematodes Nematodes are an important banana production constraint worldwide. The pest is less easily recognised than the weevil, which is sometimes incorrectly blamed by farmers for nematode damage. This factor may lead to an underestimation of yield loss caused by nematodes.
Interventions Support extension and delivery of information to encourage cultural control including:

Crop rotation Use of clean planting material (removal of roots and outer layer of the corm) Soil amendments through weeding and manuring

Continued research into and promotion of resistant cultivars. Development of nematode resistant banana cultivars is a priority objective of the Ugandan bananabreeding project.

Black Sigatoka This air borne fungal disease was first reported in Uganda in 1989 when it made an economically important impact by causing incomplete fruit filling. Black sigatoka is considered a key constraint to banana production worldwide and is sensitive to altitude and temperature. Diagnostic survey results show black sigatoka to be absent at elevations above 1450 m .asl and where mean minimum temperatures exceeded 15 C (Tushemereirwe et al 1993 and 1996 from CTA).
Interventions Continued development of resistant cultivars. (Resistant highland bananas are being developed. Resistant hybrids developed from exotic banana do exist with ongoing work suggesting some of these are acceptable to consumers (CTA 2001)). Support to extension services encouraging good crop husbandry that is seen to lead to a more vigorous plant better able to outgrow attack.

Fusarium wilt (Panama disease) In Uganda Fusarium wilt is prevalent on introduced banana cultivars that are used primarily as dessert bananas (bogoya, sukila ndizi) and for brewing, e.g. kayanja (Kangire and Rutherford). To avoid this disease, large plantation owners in South and Central America replaced bogoya (Gros Michel) with resistant Cavendish varieties. 15

Symptoms similar to those of Fusarium wilt have also been observed on endemic AAA highland banana cultivars, which have previously been considered to be resistant to the disease (Kangire et al). Wilt of highland cultivars was only observed in western Uganda at altitudes greater than 1300 meters above sea level and mainly within 30 meters of homesteads, animal kraals and garbage dumps (Kangire et al).
Interventions Development of host plant resistance Cultural approaches, including sanitary practices and the use of pathogen-free planting material, may reduce losses and should be used in support of host resistance wherever possible. Further development and widespread implementation of appropriate management strategies. Note on Chemical Control of Banana Pest and Disease

Interventions relating to inorganic inputs have not been included in the suggested interventions. This is due to the following considerations: Banana production in Uganda is largely organic with export opportunities seen to exist in this market niche. Availability of chemicals is limited in many rural areas Chemicals are largely unaffordable to small-scale producers Farmers in Tanzania (Kagera) are reported as not being willing to apply inorganic inputs due to previous bad experiences when inappropriate chemical input destroyed crops (Blomme G, personal comment). With the shift in production zones in Uganda to higher altitude fertile soils, less susceptible to pests and diseases the use of inorganic inputs is questioned.

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3.9

Marketing Constraints

Bulkiness Bananas have a relatively low value compared to their volume/weight which influences transportation cost making commodities with higher value but lower volume and/or weight more attractive. Perishability Bananas are a perishable crop with limited time between harvest and the onset of deterioration. The constraints of perishability and bulkiness have led to efforts to reduce bulk and improve storage through drying and alcohol production. Poor Infrastructure Those involved in transporting bananas highlighted feeder roads as areas for attention as they become impassable in times of rain. The declining yields of plots close to main roads and planting of new areas with poorer transport access will increase the importance of feeder roads. Embrecht et al (1996) ranked poor infrastructure as the number one constraint limiting market development in the majority of rural areas in Uganda. Uganda currently has some main roads in relatively good condition leading to the southwest and central regions. Any further movement of production areas further to the south and west will increase importance of main roads. Previous commodity studies in this series and the recent Transaction Cost Analysis Report (2002 NRI, IITA) have called for the appraisal of, and investment in, feeder and trunk road, which this study supports. Security Traders and Brokers entering rural areas are recognised targets for thieves as they carry large amounts of money. A regularly mentioned deterrent to traders is risk of thuggery. Legal requirements Traders, wholesalers and retailers of bananas and banana products require: - Trading license from the city authority (K.C.C.). - Permit from the area local council from where the bananas, waragi or tonto (beer) is purchased.

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Access to Credit The initial capital required to enter many of the trading roles in the supply chain represents a barrier to entry to those with insufficient funds to make initial investments. In additions to the above constraints of bulk, perishability, poor infrastructure and security the following constraints apply to exports. Air Freight Cost to European Markets Airfreight charges from Entebbe to London are currently US$ 1.50 to 1.70 / kg making Ugandan bananas uncompetitive with Caribbean countries who have better access to the sea ports as a cheaper means of transport. Mombassa to Felixstowe sea freight costs approximately $0.40 / kg. Research by Merck and Icemark Africa Ltd suggest transport by sea from Kamala to Felixstowe takes approximately thirty-five days. Icemark Africa Ltd consider this time period as too long to allow sale in Europe before fruit deterioration begins. Continuity of Supply (Market Organisation) For export produce targeting retail or supermarket outlets via air freight there is a need for a regular and reliable flow of produce to meet defined buyer and air carriers timetable requirements. A need exists for producers to plan ahead to ensure they supply what the market wants in terms of quality and quantity when it is required. For small-scale producers to meet these market requirements marketing group / cooperative formation is one way of combining and coordinating selling of required volumes. Farmers involved in this planned coordinated marketing will require appropriate capacities that some key informants felt were currently absent. Cooperative marketing arrangements have had a poor past record as incentives exist for individuals to sell independently especially at times of high prices. Another alternative would be exporters developing contractual arrangements with large farmers. These people are seen to possess the resources necessary to produce sufficient volumes, the management skills for contractual negotiation and production planning and have incentives to maintain long-term contractual relationships. Certification for Organic Produce To sell organic produce in Europe a certificate of authentication is required. This has a high cost ($US 5,000 per farm) and is controlled by European institutions. The process of attaining a certificate can take from one to five years. The National Organic Agricultural Movement of Uganda (NOGAMU) is currently active in drawing up a Ugandan national standard with local group accreditation to reduce certification costs. A number of exporters currently cover or subsidize farmers organic certification costs. Depending of which European institution is involved; inspectors may have to visit every farm so costs rise with the number of farmers.

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Specific Constraints of Sukali Ndizi Exports to Europe Exports to Europe of sukali ndizi are currently seen to face three main barriers related to inconsistent and poor quality fruit supplied to wholesale markets. These are: 1. Difficulty in controlling and predicting the ripening of sukali ndizi 2. Rough and untrained handling from growers and transporters damaging fruits that are very susceptible to blemish 3. Current Ugandan varieties having the characteristic of forming unattractive skin blotches as opposed to giving a speckled appearance on ripening Investment in research into ripening control and plant breeding for skin colouration characteristic could overcome two of these barriers. Increased farmer / transporter training in handling requirements should assist these people to receive higher prices for their products. One possible answer to the above hurdles is slicing and drying. This opportunity is discussed in section 4.6.

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4 4.1

DEMAND ANALYSIS Size of National Markets

The three main markets for bananas were visited in Kampala. Volumes of the three main banana types traded in these markets are shown below in table five. Prices and daily volumes are averages that vary according to season. Table Five Volume and Market Values For Three Main Kampala Markets Kalerwe Market (Approx number of bunches / day)
Locations at Market Total In Fresh Items Total Daily Annual Total Annual US Section (Within Volume Volume Retail Value Dollars Market) (bunches) (Tonnes)* (Ug Sh)** ^^ 1,800 3,800 34,675 6,241,500,000 3,467,500 50 90 821 344,925,000 191,625 200 500 2,281 730,000,000 405,556 2,050 4,390 37,778 7,316,425,000 4,064,681

At Roadside Matooke 1,200 Bogoya 20 S Ndizi 150 Total 1,370

At Entrance 800 20 150 970

Nakawa Market
Total Daily Volume 1500 35 385 430 Total Annual Total Annual Volume Retail Value US (Tonnes)* (Ug Sh)** Dollars^^ 13,688 2,463,750,000 1,368,750 1,278 127,750,000 70,972 3,513 1,475,512,500 819,729 1,962 627,800,000 348,778 20,440 4,694,812,500 2,608,229

Bunches Matooke Sacks^ Bogoya Bunches S Ndizi Bunches Total

Owino / Balikuddembe Market

Locations at Market Fresh Commodity yard 1,000 250 145 250 1,645 Total Annual Total Annual Kafumbe Road Total Daily Volume Retail Value US Volume (Tonnes)* (Ug Sh)** Dollars^^ spot 650 1,650 15,056 2,710,125,000 1,505,625 40 290 10,585 1,058,500,000 588,056 145 1,323 555,712,500 308,729 250 1,141 365,000,000 202,778 690 2,335 28,105 4,689,337,500 2,605,188

Bunches Matooke Sacks^ Bogoya Bunches S Ndizi Bunches Total

* Annual volume in tonnes is calculated at: Matooke and Bogoya: 40 x 25kg bunches equals one tonne Ndizi: 80 x 12.5 kg bunches equals one tonne ** Values are retail, calculated at Matooke 4500/bunch, Ndizi 4000/bunch, Bogoya 10500/bunch ^ One sack of Matooke equals approximately 100kg with a value of Ug Sh 10,000 ^^ US $1 = Ug Sh 1800

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In Nakawa market major delivery days for bogoya and sukali ndizi are Saturdays, Mondays and Wednesdays. Main sources of supply to this market for dessert banana are Mbarara and Kyagwe (Mukono). Table Six Combined Present and Future Volumes for Three Main Kampala Markets Total Number of Total Weight Total Number of Total Weight Bunches 2002 2002 (Tonnes) Bunches 2010 2010 (Tonnes) 75,282 1,882 99,247 2,481 5,657 141 7,458 186 5,384 67 7,098 89 86,323 2,091 113,803 2,756

Matooke Bogoya S Ndizi Total

Combined volume figures for the three markets are given in table six. It is suggested that the three markets represent approximately twenty percent of total Kampala consumption. Predicted annual volume figure calculations for market turnovers in 2010 are based on 2002 volumes, annual population growth of three percent and an increase in urbanisation from sixteen percent to twenty two percent of the population. These population dynamics are seen to raise market turnover that is closely related to consumption by 27,480 tonnes per annum. This represents a healthy rate of demand growth of thirty two percent over eight years.

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4.2

Size and Growth Rates of Regional Markets

Kenya Data is gathered by the USAID funded Agribusiness Development Centre (ADC) IDEA project at selected Ugandan border points for volumes and values of bananas. Kenyan figures are presented in two figures below. ADC data shows fluctuating trade with Rwanda with data not collected since mid 2001, a period of political tension between the two states. Results from the Rwandan component of this regional study suggest significant volumes of Ugandan matooke entering Rwanda. Minimal banana trade is seen with Tanzania. Key informants report small levels of Ugandan imports of roasting banana from Congo. Some observers view the Congo as a potential export market for Ugandan matooke if Congolese purchasing power increases. The tastes of Congolese Bantu related tribes favour matooke as a dietary staple.
Figure Two Volume of Ugandan Exports of Apple Banana and Bogoya to Kenya
1200 1000 800 Tonnes 600 400 200 0
2000 2001 2002

Year

Figure Three Value of Ugandan Apple Banana and Bogoya Exports to Kenya
600 Value Millions Ugandan Shillings 500 400 300 200 100 0
2002

Year

Data Source: ADC IDEA Project

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Figures for Ugandan exports to Kenya, which include matooke, sukali ndizi and bogoya banana passing through Busia, Lwakhakha and Malaba border points show a fall in total export volumes of 27% from 9,000 tonnes in 1997 to 6,600 tonnes in 2001. Disaggregated data shows sukali ndizi and bogoya types to form over ninety five percent of these exports. Interestingly, trends in available data (2000 to mid 2002 shown in figure two) suggest volumes of sukali ndizi and bogoya are flat with volumes increasing towards the end of the year. Trends in the total value of monthly trade appear to be rising (figure three). Exchange rate movements between the Kenyan and Ugandan Shilling between 2000 and mid 2002 suggest a slight depreciation of the Ugandan Shilling making Ugandan exports more attractive. Figure two and three support ADC field staff observation of rising prices for bananas in Kenya. It should be noted that data sets include informal estimates of both quantities moving by minor trade routes and values of bananas. ADC data collectors suggested trade with Kenya in sukali ndizi and bogoya had improved. Uganda is seen as having few competitors in supplying bananas to western Kenya where the environment is unsuitable for production. The following taxes existed on Ugandan banana exports to Kenya at January 2000: 3.5% Import duty 2.75% Declaration form payment 1 Kenyan shilling per kilogram horticultural tax.
Trade Point:- Ugandan dessert banana exports to Kenya appear to present a good long-term opportunity for Uganda. Ugandan dessert banana exports can be consolidated by improvements in product quality and information flows. Further exploration of volumes and prices is suggested to increase the time span and quality of available data.

Rwanda Data gathered at Katuna border point for nine months from January to September 1999 shows 2,433 tonnes of matooke exports crossing to Rwanda (ADC Idea Project).
Trade Point:- According to findings from the Rwandan marketing survey in this series an approximate total of 12,500 tonnes of bananas crosses from Uganda into Rwanda annually. This mainly comprises matooke. The Rwandan banana market study suggests this export market as having potential for expansion.

23

4.3

Size and Growth Rates of World Markets

The world export market for bananas is increasingly competitive. FAO data presented in table seven shows an increase in volumes from 1995 to 2000 of seven percent while total market value has declined over the same period by eight percent. Table Seven World Markets for Banana and Plantain
Bananas and Plantains Exports - Qty (Mt) Exports - Val (1000$) Source FAO 1995 13,674,981 4,789,993 1996 14,237,533 4,950,122 Year 1997 1998 14,878,530 14,338,569 5,185,447 5,038,131 1999 14,479,990 4,786,861 2000 14,654,317 4,413,357

In this increasingly competitive market ADC IDEA project figures suggest that Ugandan matooke volumes have risen. The main export market for Ugandan bananas in Spitalfield, London. In 2001 Uganda exported 832 tonnes of matooke from a level of 451 tonnes in 1997 (see appendix three). The value of 2001 matooke exports is approximately US $2,080,000 (at one tonne equals US $2,500) Sukali ndizi exports have not performed so well with volumes shrinking from 144 tonnes in 1997 to 92 tonnes in 2001 (Prices are discussed in section 4.4). The approximate annual value of this volume fall for sukali ndizi is US$ 156,000 (52 tonnes multiplied by US$ 3/kg).
Figure Four Fresh Matooke and Apple Banana Export Volumes 90000 80000 70000 60000 50000 40000 30000 20000 10000 0 J FMAMJ J ASOND J FMAMJ J ASOND J FMAMJ J ASOND J FMAMJ J ASOND J FMAMJ J ASOND 1997 1998 Matooke 1999 2000 Apple Banana 2001

Source: Civil Aviation Figures supplied by IDEA project

The UK market for matooke is considered fixed, dependant upon the number of Ugandans living in the UK. However the export volume rises seen above question this hypothesis. Suggested answers are increased consumption by expatriate Ugandans, other ethnic groups such as West Indians increasing matooke consumption and matooke increasingly being transported to other European countries. A small expatriate Congolese based market is suggested in Belgium. Although matooke exports are a small proportion of total Ugandan production, reduction of EU tariffs under the Everything but Arms arrangement could assist further sales growth.

Kg

24

4.4

Market Price Trends

Local Markets The following analysis of Kampala matooke prices follows methodologies used in the FoodNet Cassava market study performed in 2000. Details of these methodologies can be found in Trotter (1992). Figure five below shows real retail food prices (adjusted for inflation) for matooke, and the two other frequently harvested crops of fresh cassava and sweet potatoes. Data is for Kampala between September 1989 and January 2000. Real matooke prices appear to slightly decline over the time period suggesting supply increasing faster than demand. Matooke prices exhibit less price variation compared to the other two commodities. This suggests supply volumes have been more stable over the time period considered and not as subject to pest and disease attack or abnormal weather conditions as the other two crops.
Figure Five. Real Retail Prices for Selected Commodities (Kampala)
500.00

450.00

400.00

350.00 Price Ugandan Shillings

300.00

250.00

y = 0.6055x + 169.55 y = -0.3824x + 245.15 y = -0.285x + 214.6

200.00

150.00

100.00

50.00

0.00
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000

Matoke

Sweet potatoes

Cassava, fresh

Linear (Cassava, fresh)

Linear (Matoke)

Linear (Sweet potatoes)

Data Source: Ugandan Bureau of Statistics

Seasonal retail price movements for matooke in Kampala are shown in figure xx below. The grand seasonal index (GSI) shows seasonal patterns that remain once random, cyclical and trend elements have been removed from price series. The GSI result shown below is again based on data from September 1989 to January 2000. 25

Results show a twin peaked pattern with high prices in April and December and notably low prices experienced in June to September. Price movements are significant with index results showing a forty percent rise (based on the mean price) between August and December. These results confirm responses from key informant interviews. This price pattern is due to two main reasons. Firstly, prices are highest at Christmas and Easter when consumers increase consumption. Matooke appears to be a preferred food as people who would normally consume cheaper alternatives are said to save money to eat matooke during these festival periods. Secondly supply is highest from June to September, a period of normally dry weather that puts plants under water stress and stimulates bunch production. Some traders felt farmers exhibited some production response to price by withholding supply for relatively short periods leading up to Christmas. Otherwise farmers are not seen to take any action to attain the higher prices for their production.
Trade Point:- Potential exists to increase production to meet highest price periods. Additionally any processing of matooke could best be designed to take advantage of low cost price periods.
Figure Six. Grand Seasonal Index from Kampala Matooke Retail Prices
125 120 115 110

GSI

105 100 95 90 85 80 Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec

Data Source: Ugandan Bureau of Statistics

International Markets Prices for matooke over a two-year period to March 2002 in Spitalfield market, London appear as relatively stable throughout the year varying approximate between US$ 2.00 to US$ 2.70 per kilogram (see appendix four). Sukali ndizi prices fluctuate widely between US$ 0.50 and US$ 4.46 per kilogram over the same period and markets. Market reports suggest this is due to variable quality, which appears as a major constraint. Sukali ndizi marketing constraints are discussed in section 4.6.

26

4.5

Major Products

The only pronounced form of banana processing is beverage production (Aked and Kyamuhangire, 1996 from CTA). These beverages are waragi a distilled spirit and tonto a banana beer. There are two types of waragi, a local banana based waragi called Kasese and a factory processed waragi. Local Waragi Kasese Production areas for local waragi include Kibaalee Fort Portal, Kiboga, Mubende, Masaka, Mbarara, Mpigi and Kasese. Kampala is the centre of trade. Transport is by truck with Saturday, Monday and Sunday being the main delivery days. Jinja is a centre for distribution to Eastern Uganda. Trade extends to Gulu, Lira and Kitgum in the northern region. Regional exports to Rwanda, D.R.Congo and Kenya are illegal but are seen to occur. Volumes of illegal exports are not known. Consumption is reportedly increasing especially in the heavily populated urban areas of Kampala including: Kamwokya, Rubaga Road, Ndeeba, Kisenyi, Kibuli, Namuwongo and Nsambya. It is estimated that approximately two million litres of local waragi are traded in Kampala with a retail value in the region of three billion shillings (US $1,744,000). Kampala trade depots, with approximate volumes and values of local waragi traded are shown in appendix five. Pricing differs according to the level of distillation. There are two main levels of distilling called regular and a higher alcohol content version named super. Trade is done in twenty litre jerry cans. Approximate prices are shown below. Table Eight Approximate Kampala Prices of Local Waragi Off Lorry Regular 20 -22,000 Super 27, 000-28,000 Prices are for twenty litre jerry cans Factory processed Waragi Factory produced waragi can use banana based raw alcohol. Alternatives include sugar or molasses based material. Uganda Breweries is a significant producer of factory-produced waragi and currently use sugar based raw alcohol with added flavourings. This company used to use local banana based waragi in the production process, discontinuing this practice for cheaper sugar based alternatives. Tonto Locally brewed banana beer Tonto is made from the juice of beer bananas. Rural households in banana growing regions traditionally brew this beer, which may be consumed at home, during different traditional ceremonies or sold. Main production areas include Mityana, Kibaale, Wakiso, Luwero, Masaka, Fort Portal, Mpigi, Mbarara and Rakai. Millet is added during the brewing process. The brew is transported in twenty litre jerry cans on trucks of sale. 27 Wholesale 25,000 29, 000-30,000 Retail 27,000 32, 000

There are various temporary depots in Kampala where retailers collect tonto. Main trading days are Monday, Wednesday, Saturday and Sunday. Estimated weekly trade volumes and values for Kampala markets are shown in appendix five. It is estimated that approximately 1.4 million litres of tonto are annually traded in Kampala with a retail value in the region of eight hundred million shillings (US $437,000). The major consumption areas in Kampala are the poorer more densely populated parts of the city namely Kasubi, Nsambya, Kibuli, Namuwongo, Rubaga. Road, Natete, Bunamwaya, Bwaayise, Makerere and Banda. Prices in Kampala are shown in table xx below. Rural prices are around Uh Sh 200 per litre. Table Nine Approximate Kampala Prices of Tonto Off Lorry 1st grade 6 - 7,000 Regular 5,000 Prices are for twenty litre jerry cans Wholesale 9 - 10,000 6 - 7,000 Retail 12 - 13,000 8 - 10, 000

One large bunch of beer bananas valued at Ug Sh 1,000 is capable of making 20 to 22 liters of tonto. Other raw materials used include water and sorghum. Twenty two litres of tonto requires approximately 1.2 kg of sorghum Tonto can be stored for approximately seven days before it becomes bitter. However, it can be distilled to waragi when past its shelve life. Because of its mode of preparation, tonto is largely considered to be an inferior drink. People are seen to switch to alternative forms of alcohol as incomes rise. Rising average incomes in Uganda, assuming equitable income distribution, would suggest a decline in tonto consumption. Roasting Banana According to the findings from the survey, it is estimated that 750 bunches of roasting bananas are sold retail through major roadside markets every week. If a bunch weighs 25 kg, this means sales volumes of 18.75 tonnes per week or 975 tonnes per annum. The total demand for roasting banana countrywide could reach 1,500 1,700 Tons per annum, considering that some it doesnt go through formal markets. One bunch has forty to fifty fingers that are bought by retailers at an off lorry price of Ug Sh.100 - 125 per finger. Following roasting on a charcoal fire the retail price is Ug Sh. 125 - 167 per finger. Using these figures an approximate annual retail value for this roadside market is Ug Sh 263,250,000 (US $ 150,000).

28

4.6

Overview of Market Potential for Banana and Banana Based Products

This section provides a summary of the market potential for banana and banana based products in a range of uses locally, regionally and internationally.
Areas with Good Potential to Increase Banana Sales in the Near Future (<5 years)

International Export Markets for Fresh and Organic Fruit For European markets a lasting trend in the food sector is that healthy, environmentfriendly and organic products are becoming increasingly important in the EU. These are seen to offer potentially important opportunities for developing country exporters where food production is organic, such as Uganda. The organic food sector in the UK is reported to be growing at 40% per year with 69% of organic produce sold in supermarkets (Carlton 2001). Waitrose, a leading UK supermarket chain, is reported to have organic fruit sales growth from 1.2% of total fruit sales to 7.1% in 2000 (Carlton 2001). Key informants currently involved in exporting fruit felt most potential exists for Ugandan fresh and dried sukila ndizi within this organic / health market segment. A suggested strategic approach is to initially focus on wholesale markets before any movement to targeting catering / retail / supermarket outlets. Wholesale markets have lower quality requirements that Ugandan exports should first achieve before moving to the more rigorous challenges of catering and retail outlets. The USAID Agribusiness Development Centre IDEA project in Uganda has considered support to this sector and would revisit this if growers were organised and could develop a business plan. International Export Markets for Matooke UK matooke sales show a rising trend for volume with constant prices. Removal of EU tariffs under the Everything but Arms measure should assist further growth by removing a barrier to European mainland markets. Exporters report the variety Kibuzi as popular in UK markets. International Export Markets for Naturally Dried Bananas Ugandan exporters currently see most potential for naturally solar dried or semi dried chips produced from sukali ndizi. This variety can be sliced longitudinally giving a unique appearance. Exporters of organic solar dried sukali ndizi reported prices of US$ 15.00 to US$ 19.00 per kilogram in Swiss and German markets. Market information providers quote UK retail prices of US$ 10 to US$ 15 per kilo for Tropical Wholefoods sun dried banana chips in April 2002. A market survey examining dried fruit market potential in Europe sees opportunities in health snack markets particularly if naturally dried fruits can be marketed in an appealing way through the sales outlets from which snacks, chocolate and sweets are most often bought (Carlton et al 2002). Organic, natural products, ethical sourcing 29

and fairtrade markets are suggested by Carlton et al as areas for technology, managerial and operational development.

Rwandan Market for Matooke The Rwandan banana market survey (Ferris et al 2002) suggests a growing market for Ugandan matooke in Rwanda. West Kenyan Market for Bogoya (Gros Michel) Ugandan based survey results suggest rising prices and values particularly for bogoya exports to Western Kenya. Ugandan Market for Locally Brewed Waragi Kasese Traders involved in supply of local waragi felt demand was increasing. No official / reliable price or volume records were found as part of this study to confirm growth trends. Research investment in this area is seen as having negative social implications.
Sectors Currently Viewed as having Moderate Potential for Growth in the Foreseeable Future (>5 years)

Local Market for Matooke The local Ugandan market is viewed as stable with low levels of volume growth and constant to falling real prices providing no serious disturbance to production occurs. Urbanisation will increase demand with any income growth especially by poorer and middle-income families viewed as beneficial to matooke market prospects by making unexpressed demand effective. Pancakes (Kabalagala) A traditional food made from ripe bananas and cassava flour. Seen as an inferior good compared to wheat flour based cakes and biscuits. Similar market prospects to matooke, constant to moderate growth foreseen. Banana paper Banana paper made from banana fibres. Large banana producing countries are seen to have a competitive advantage on international markets. Locally a relatively small market is seen selling to tourists, expatriates and wealthy Ugandans. Future growth in Ugandan incomes and tourism are seen to influence market potential for these product types. Local Roasting Market Plantain (Gonja) is roasted and sold at roadsides or in markets by small traders. Increase in traffic along major routes has potential to increase consumption of this type of banana.

30

Sectors Currently Viewed as having Low Potential for Growth in the Foreseeable Future (>5 years)

Juice Selected highland and exotic types can be ripened and squeezed for juice, which can be consumed fresh or fermented to local beer/wine. Short storage period limits market to a local rural level. Tonto (beer) Viewed as an inferior good compared to bottled beers because of its mode of preparation. People are seen to switch to alternative forms of alcohol as incomes rise. Rising average incomes in Uganda, assuming equitable income distribution, would suggest a decline in tonto consumption. Banana flavourings / essences Bi-products from Uganda will have to compete on world markets against products from the large plantation countries. These countries are seen to have significant cost advantages Cosmetics i.e. use in Body shop products Large plantation countries are seen to have the advantage. To compete Uganda would have to make advantage of its largely organic production systems. Replacement flour in bakery products. Banana flour is used experimentally as a potential partial replacement for more expensive flours in bread, cakes and biscuits. No evidence for commercial uptake has been discovered by the study in Uganda for this alternative. In local markets, cassava flour represents an alternative that is easier to grow on poor soils and requires minimum crop husbandry / management. On international markets large scale producers such as South and Central American countries are seen to have a competitive advantage in bi-product markets as their quantity of fresh banana rejects gives them a negligible raw material cost for making flour. Banana flour used as a constituent in baby/weaning foods Constituent banana flour is seen to have to meet significant health and hygiene requirements to be used in baby and weaning foods. Again cheaper raw material costs in from South and Central American countries are seen to have cost advantages on world markets. Banana pulp Research at Makerere University has taken place to produce a dried banana pulp (flour) that can be stored and later re-hydrated and eaten as a matooke substitute. In 31

the past this was seen to have food security enhancing potential as a food reserve against famine. Since this research, Ugandan food production has risen, largely removing the threat of famine. Fresh matooke is preferred to the re-hydrated product by consumers.

32

5 5.1

SUPPLY ANALYSIS Analyse of the supply chain

Figure seven below shows a generalised picture of the major participants in the banana supply chain. These participants are discussed individually below. Figure Seven. The Banana Supply Chain Farmer

Bicycle Transporter

Rural Retailer

Rural Consumer

Broker at Road Side Collection Centre

Exporter

Wholesaler Key Urban Retailer Major Flow Minor Flow

Export Market Farmers

Urban Consumer

Many small scale producers exist who sell bunches of bananas to bicycle traders, if the farm is conveniently situated next to a road, sales can be made to passing vehicles including those of brokers or wholesalers. Price negotiation is usually performed before the bunch is cut from the plant after which cash is paid and the bunch removed. Negotiation is based on finger and bunch size, banana type and variety. Farmers were aware of consumer preferences for different varieties of matooke such as Nakitembe and Kibuzi. The farmer is seen to have limited bargaining power as bunches cannot be retained for any significant period of time. Traders mentioned some producers holding back supply for two to four weeks at times of rising prices. A general picture was of producers having to sell bunches when ready to meet necessary household expenditure. Farmers were found to receive price information from visiting collection centres, the radio or interaction with other traders.

33

Bicycle Transporters Bicycle transporters buy from dispersed farmer plots and sell to brokers at collection centres or traders in towns. Many bicycle transporters supply each collection centre. Competition exists between these people and barriers to entry appear low. Transporters have some control over price in negotiations with farmers especially if other traders do not visit that farm. However at the collection centre they have less power as they cannot store bananas or easily take them elsewhere. Large bunches are preferred with one bicycle able to carry up to seven bunches depending on bunch size. Brokers A small number of brokers usually operate at collection centres in production zones where they purchase sufficient bunches to fill rented trucks that are usually destined for Kampala. Typically trucks contain at least ninety percent matooke with bogoya and sukali ndizi filling the remaining space. Bunches purchased are graded according to size and type. Matooke bunches with small fingers have the fingers removed and put in sacks. These sacks allow more small bananas to be carried on trucks. Some brokers have repeated delivery schedules whereby regular numbers of bunches are delivered to different urban-based wholesalers at different locations usually in and around Kampala. In this case, the broker will rent the lorry and organise loading. Wholesalers can contact brokers to adjust amounts using phones or truck drivers to deliver messages. Brokers are in regular contact with farmers who visit collection centres, bicycle transporters, truck drivers and wholesalers. They are seen to have good price information from urban centres, interaction with other traders and the radio. Mobile phones are seen to have improved broker to wholesaler contact. The small number of brokers and the market information available to them give brokers some ability to influence price. Barriers to entry for people wanting to enter this role include the capital required to rent and fill a truck. This is estimated at approximately Ug Sh 1.5 million (US $ 850) for a ten tonne truck capable of carrying six hundred bunches. A disincentive for brokers is that having to carry relatively large amounts of cash makes them a target for thieves. Informal collusion between brokers is seen to increase their market power allowing them to maintain their high gross and net margins (see table xx). Collusion and informal cartels between brokers can also restrict new entrants wishing to transport bananas. Wholesaler Kampala based wholesalers purchase bananas from broker lorries and sell bunches to urban retailers or directly to consumers. Wholesalers may engage in vertical integration by renting trucks to collect bananas from production areas to capture brokers margins. This occurs at times of high urban prices when wholesalers and other traders will transport bananas. These activities should be encouraged as a way to reduce broker margins, increasing prices to farmers and reducing final consumer price. 34

Trucks usually arrive in Kampala in the early morning when unloading and distribution of bunches to retailers is performed. Wholesalers may extend credit to retailers for a day allowing them time for sale. A wide variation of between one to two hundred wholesalers can operate in a large Kampala market who trade around eighty bunches per day. Interviews suggested stronger competition between wholesalers than between brokers. No significant collusion occurs between different wholesalers to fix prices. Urban Retailer Relatively large numbers of specialised banana retailers sell at roadsides or within markets sites. They grade bananas by type, variety and size. For matooke large bunches with big fingers are generally sold to wealthier people who have their own transport. Small matooke fingers tend to be arranged in piles and sold in smaller quantities to people who use public transport. Bogoya and sukali ndizi are sold in hands, usually by separate specialised traders for these banana types. Matooke retailers buy from wholesalers in the morning at a price largely determined by market levels of supply and demand. The final consumer price is negotiable. Consumer price will rise through the day if demand is strong or fall if few buyers are present in the market. Most consumer trade is done in the evening and matooke bunches are not usually stored overnight. Some market retailers were found to have their own associations, which are reported to be new in some cases (i.e. Luwero). No evidence of price collusion between retailers was found as part of the study. Some retailers access credit from micro finance institutions others receive daily credit from wholesalers. Barriers to entry include a local council letter of approval, market authority registration and space in the market place. Exporters Regional exports to Kenya, Rwanda, Tanzania or the Congo can be performed by brokers, wholesalers or producers / bicycle transporters living close to borders. For European markets, it is estimated that ten to fifteen trading organisations arrange matooke and sukali ndizi exports. These organisations purchase in urban or rural markets or receive deliveries by farmers or traders to their premises. The exporters vary in their levels of sorting, grading and packaging of produce. For matooke the variety Kibuzi is preferred by UK based consumers. Three main exporting organisations exist for organic bananas. One of these exporters deals in fresh sukali ndizi and all three companies export solar dried sukali ndizi and/or bogoya. These bananas may be grown by the exporter or purchased from out growers who the exporter registers as organic producers. These exporters grade, pack and label produce which is flown to Europe.

35

5.2

Market Linkages

To measure market linkage, correlation coefficients are used to examine if price movements from different towns are consistent with one another. Correlation coefficient values close to one indicate movements are similar, while those close to zero show no similarity in the direction of movement. Following conventional practice (from Collinson et al), coefficients of over 0.8 suggest high correlation, while coefficients between 0.6 and 0.8 are said to show moderate levels of correlation. Table ten gives correlation coefficients for towns in south-western and central Uganda where we would expect to see moderate and strong correlations between market prices. High correlation levels are shown in blue with moderate levels given in green. The majority of market co-efficients show moderate integration suggesting price movements and therefore supply and demand patterns are similar. Table Ten. Correlation Coefficients for Matooke Prices in Selected Towns
KABALE KASESE LUWERO MASAKA MBARARA RAKAI KABALE 1.00 KASESE 0.65 1.00 LUWERO 0.61 0.70 1.00 MASAKA 0.74 0.76 0.62 1.00 MBARARA 0.62 0.76 0.82 0.55 1.00 RAKAI 0.56 0.59 0.18 0.69 0.33 1.00 Source: Calculations based on FoodNet price data Sept 1999 to April 2002

The correlation co-efficient levels found suggest good information flow between markets. Fieldwork performed during this study shows brokers as having the best market information due to interaction with and connection to most parts of the market chain. Mobile phones and text messaging have potential to improve information exchange between participants in the different markets, which has potential to further increase levels of market integration discussed above. Isolated farmers who do not visit markets possess the least up-to-date market information. Bicycle traders visiting these people are viewed as having an advantage in price negotiations.

36

5.3

Production costs

Banana production in Uganda is associated with a number of farming systems including, banana-coffee and banana-millet. Pure stands are not common among smallholders (CTA). To provide an indication of production costs, the following gross margin analysis uses figures collected by NARO / ADC in 1998 for Kisekka subcounty in Masaka district. Table Eleven. Gross Margins Under Hired and Family Labour for Matooke
Under hired labour Ug Sh / Ha Total Revenue Costs Labour Animal manure Mulch TOTAL COSTS 479,300 296,400 237,400 1,013,100 356,900 296,400 237,400 533,800 836,200 Ug Sh / Ha 1,370,000 Ug Sh / Ha Under family labour Ug Sh / Ha 1,370,000

Gross margin
Notes:

Total revenue calculation is based on production of 27.4 tonnes per hectare sold at Ug Sh 50,000 per tonne Animal manure calculation is based on a cost of Ug Sh. 889,000 incurred once in three years. Mulch calculation is based on a cost of Ug Sh 712,200 incurred once in three years. Source: Banana Production Manual NARO / ADC IDEA project

Figures used are illustrative as prices and volumes fluctuate. Fieldwork interviews suggest that the above gross margins may be understated as labour costs for the limited number of farmers interviewed were approximately Ug Sh 200,000 per hectare per year. These farmers were also unlikely to pay for manure or mulch instead using on-farm waste. This suggests possible producer gross margins in excess of one million shillings per hectare. These margins would appear to be attractive to farmers with fieldwork and secondary data suggesting production as rising.
5.4 Trading Costs and Margins in the Supply Chain

The information provided below in Table twelve is an indication of the costs and margins incurred by participants in the banana marketing chain, as found by a rapid survey performed in May 2002. Costs and returns are for banana trading between south western Uganda (Mbarara and Masaka) and Kampala.

37

Table Twelve. Trading Costs and Margins

Matooke Ug Sh / % Of selling Bunch price Farmer Selling price Bicycle Transporter Purchase price Selling price Gross margin Costs Market Cost TOTAL COSTS Net margin Broker Purchase price Selling price Gross margin Costs Market Costs at Collection Center Labour to Load Truck* Truck rental** Damaged during Transport^^^ TOTAL COSTS Net margin Wholesaler Purchase price Selling price Gross margin Costs Market Tax at Kampala Labour to Unload Truck*** TOTAL COSTS Net margin^ 100 50 150 600 16% 100 50 150 850 28% 100 50 150 850 12% 3000 3750 750 2000 20% 3000 1000 33% 6000 7000 1000 14% 200 33 667 0 900 600 20% 200 33 667 70 970 330 17% 200 33 667 400 1300 700 12% 1500 3000 1500 50% 700 2000 1300 4000 6000 2000 100 100 650 43% 100 100 200 29% 100 100 650 16% 750 1500 750 50% 400 700 300 43% 3250 4000 750 19% 750 400 3250 Sukali Ndizi Ug Sh / Bunch % Of selling price Bogoya Ug Sh / Bunch % Of selling price

65%

33%

38

Urban Retailer Purchase price Selling price Gross margin Costs Market fee^^ Storage loss^^^ TOTAL COSTS Net margin^ 50 0 50 700 16% 50 300 350 650 16% 50 700 750 2750 26% 3750 4500 750 17% 3000 4000 1000 7000 10500 3500

25%

33%

* Based on Ug Sh 20,000 total cost to load 600 bunches ** Based on Ug Sh 400,000 total cost per truck carrying 600 bunches *** Based on Ug Sh 30,000 total cost to unload 600 bunches ^ Before income tax and payment of trading licence ^^ Based on Ug Sh 7000 pre month selling five bunches per day for twenty seven days ^^^ 10% of purchase price for S. ndizi and bogoya

Prices and costs shown above are mid point values based on supply chain participant responses. Bicycle transporters are reported to be able to carry up to eighteen bunches of matooke per day depending on season, distance and bunch size. This suggests daily net margins of Ug Sh 11,700 as achievable. Brokers can carry approximately 600 bunches per truck. If this is assumed as all matooke a net profit of Ug Sh 360,000 per load is possible. A broker may be able to organise more than one truck per day and if so can make attractive daily incomes. Wholesalers in Kampala (Kalerwe market) are said to deal in forty-to-eighty bunches of matooke per day. These figures suggest net daily profit of between Ug Sh 24,000 and Ug 48,000 as possible. Retailers of matooke bunches make approximately Ug Sh 700 per bunch. These are generally large bunches of large fingered bananas which command a price premium per bunch. Retailers sell small fingers in piles that weight 4.5 to 5 kg for Ug Sh 500. These are purchased from wholesalers in bags of 100 to 110 kg that cost around Ug Sh 8,000 per bag. Breakdown of the bunch and bagging is performed at the collection centre in the production zone to reduce transport bulk. Sales of two to four bags per day suggest retailer daily net profits of Ug Sh 4,000 to 8,000. Transport and storage losses for matooke are reported as minimal. Gross and net margins per bunch before storage loss for retailers of sukali ndizi and bogoya are expected to be greater than those of matooke as losses from ripening can be significant (fifty percent was quoted during interviews although a more conservative ten percent loss is allowed for in the above calculations). Lack of coordination by wholesalers was mentioned as a reason for oversupply and subsequent 39

high rates of loss. Over ripe sukali ndizi can be sold to makers of pancakes. Recent enforcement of government regulations banning street vendors (hawkers) was said to have negatively influenced sales, as street vendors no longer buy from retailers for this trade. Results from the analysis suggest that brokers can make attractive daily net profit margins, depending on volumes traded. Ensuring low barriers to entry into these markets should ensure excessive margins are eroded through competition. Discouraging cartel type collusion between existing brokers and ensuring credit agencies can operate in these markets to provide necessary working capital are ways of lowering barriers to new entrants. Encouraging farmers (or their family members) to perform the bicycle transport role would help producers capture additional margins and give them improved market information.

40

MAJOR FINDINGS

Local Markets
1. Results suggest falling matooke yields in areas where production is well established (Masaka) with new areas being planted in the southwest further from urban centres (beyond Mbarara).

Production appears to be moving further southward and westward away from Kampala due to declining soil fertility. Land next to main tarmac roads is increasingly planted with beer varieties that tolerate lower soil fertility levels. Matooke varieties are being planted further from main roads increasing reliance on muram roads which are more susceptible to rain damage. If soil fertility is continually eroded it has serious negative food security implications related to this staple crop.
2. Daily incomes for brokers appear as attractive when compared to average Ugandan income levels.

Brokers renting ten tonne trucks holding six hundred bunches can make net profits in excess of Ug Sh 300,000 (US $ 168) per load. Informal collusion by brokers is suggested as a means of reducing competition from new entrants and ensuring margins. Barriers to entry for supply chain participants include local council approval, market authority registration and sufficient space in the market place. Brokers and traders carrying large sums of money are targets for theft, particularly in rural areas.
3. Farmers show little or no production response to predictable and significant annual price movements.

Significant annual price variation is seen to follow a cycle reaching a peak in December and lows in August. Farmers do not time their production to meet these predictable price spikes
4. Fusarium wilt is a major deterrent to investment in sukali ndizi and bogoya (Gros Michel) production.

Sukali ndizi and bogoya are susceptible to Fusarium wilt that currently has no known cure and can devastate plantations.

41

Regional Markets
5. Ugandan regional export opportunities appear for matooke to Rwanda and dessert varieties to Kenya

Increasing potential is seen for Ugandan exports of matooke to Rwanda. Current volumes are estimated at twelve thousand tonnes per year. Rising prices and falling volumes of bogoya and sukali ndizi exports to Kenya are found due to exchange rate changes?? Check exchange rates International Markets
6. World banana markets appear as increasingly competitive. Recent changes in European Union banana policy reducing preferential access are seen to further increase competition.

International banana markets are found as having increasing volumes and decreasing total values. Introduction of the Cotonou agreement will open new markets in the European Union for Latin American producers and increase pressure on large Caribbean producers to be more competitive. Increasing international competition is foreseen in banana alternative product markets including fibre craft products and processed goods. Minimal potential is seen for Ugandan bananas in alternative food / industrial uses that compete on, or are influenced by, world markets.
7. Market potential for Ugandan bananas is suggested in markets segments that include organic or health focused fruit and naturally solar dried bananas.

The recent Everything but Arms measure will reduce EU tariffs on fresh bananas to zero for Uganda by 2006. European consumers are seen to favour food perceived as being healthy, organic food and food produced in an environmentally conscious manner. Ugandan banana production is currently largely organic.
8. International market potential is suggested for naturally dried sukali ndizi.

Exporters of dried sukali ndizi suggest most potential exists for organic solar dried produce. Solar drying technology challenges exist for Uganda to dry increasingly large volumes consistently when weather conditions may not be favourable.

42

9. Export volumes to Europe for fresh sukali ndizi have fallen due to supply of a poor quality product. UK importers require large unblemished fingers of uniform ripening and size. If quality can be improved UK market prices appear as attractive.

UK prices for Ugandan sukali ndizi fluctuate widely between US$ 0.50 and US$ 4.46 per kilogram over a two-year period to March 2002. Market reports suggest this is due to variable quality. Export volumes of sukali ndizi from Entebbe airport have fallen by thirty six percent from 1997 to 2001. Quality issues include difficulty in controlling post harvest ripening, rough handling and current Ugandan varieties forming unattractive skin blotches as opposed to developing a speckled appearance on ripening.
10. Sales volumes of fresh matooke exported to the UK have almost doubled in the past five years

Matooke volumes into the UK have increased by eighty five percent to 832 tonnes from 1997 to 2001. UK matooke prices have been stable over the last two years. Future sales growth for matooke is suggested into UK West Indian and Belgium Congolese ethnic markets.

43

RECOMMENDATIONS

The first priority for Uganda is to ensure sustainable banana production systems and increase the efficiency of the banana marketing chain from rural production areas to urban consumption zones. A second priority is to capture regional market opportunities that currently appear in Rwanda and Kenya. Finally international market opportunities should be addressed. International efforts should be seen a part of general initiative to increase exports of fresh and dried fruit and vegetables particularly to Europe. Domestic Markets Ensuring Sustainable Production and Increasing Market Efficiency
1. Matooke Sustainable Production Systems

Matooke is an important food security crop in Uganda. Population growth rates of three percent per annum suggest significant increases in future demand. Addressing soil fertility and pest and disease issues are essential to ensure sustainable long-term production. Interventions include:
Soil fertility

Further research to: Establish what changes in soil fertility status are being caused by banana production and what production location shifts are continuing to occur. Establish why farmers do not manage soils in a sustainable manner through recognised practices of mulching, manuring, rotating cropping and improved livestock integration with design of appropriate responses. Who How National, Regional and International Research, Extension Providers (i) Further consultation with research and relevant stakeholders to access available soil fertility data. Depending on the quality of existing data: (ii) Establishment of sites to measure changes in soil fertility levels caused by matooke production. (iii) Participatory research with farmers to better understand their choice of soil management techniques with subsequent recommendations for maintaining soil fertility levels.
Pests and Diseases

Weevils

44

Continued support to extension and delivery of information to encourage cultural control including: Use of clean healthy planting material Paring of corms at planting Destruction of post-harvest residues Trapping of adult weevils. Good crop husbandry such as weeding, desuckering, pruning, manuring and mulching to produce vigorous plants.

Nematodes Continued support extension and delivery of information to encourage cultural control including: Crop rotation Use of clean planting material (removal of roots and outer layer of the corm) Soil amendments through weeding and manuring Continued research into and promotion of resistant cultivars.

Black Sigatoka Continued development of resistant cultivars. Support to extension services encouraging good crop husbandry that is seen to lead to a more vigorous plant better able to outgrow attack. National, Regional and International Research, Extension Providers Continuation and enhancement of existing initiatives
Ensure and encourage competition through out the banana marketing chain

Who How
2.

Any restriction of competition is seen to allow existing traders to achieve excessive margins with resultant lower returns to farmers and higher consumer prices. To prevent excessive broker or trader margins existing in the medium and long term, new entrants should face minimal barriers to entry. These should include: (i) Ensure existing brokers and traders do not restrict competition through informal cartels that prevent entry of potential competitors FoodNet, Government of Uganda Use of this report as a lobbying tool to engage government in finding methods of facilitating competition especially at a broker / wholesale level. Provision of gross and net margin information to potential new entrants and entrepreneurs FoodNet, Market Authorities, Government and Non Government Extension Providers 45

Who How

(ii)

Who

How

Provision of gross and net margin information to potential new entrants to increase competition where excessive margins occur. Potential entrants to the banana marketing chain are suggested as farmers, farmer groups, cooperatives and associations, existing wholesalers and truck operators. Information on banana margins could be part of an initiative covering a range of commodities. Delivery of the information should be through extension providers, regular posters / flyers placed in markets or use of radio broadcasts. Providing an enabling environment for micro finance organisations FoodNet, Credit Providers Contact with micro finance providers and credit institutions to further explore their role and ensure potential new entrants can access credit. Ensuring markets offer sufficient space for traders FoodNet, Market Authorities, relevant representatives from the Government of Uganda Further contact with market authorities and government to discuss and plan accordingly for growing markets In addition, market site management should encourage trading within the market rather than on roadsides. This would reduce traffic congestion caused by roadside unloading.

(iii) Who How

(iv) Who

How

(v)

Ensuring legal / administrative requirements for trader do not unduly restrict new entrants. Examples are local council letters of approval and market authority registration FoodNet, relevant representatives from the Government of Uganda and Market Authorities. Further contact with relevant government and market authorities aimed at minimising barriers of entry to new entrants.
Infrastructure development: maintenance and improvement of road transport

Who

How

3.

Appraisal and investment in feeder and main roads is necessary to reduce transport costs and ensure bananas can get to market especially in times of rain when these roads become impassable. Declining yields of plots close to main roads and planting of new areas with poorer access is seen to increase the importance of feeder roads. Any further movement of production areas further to the south and west will further increase the importance of main roads. These initiatives would also enhance marketing of other commodities as suggested in a recent market study using a transaction cost approach. Who How FoodNet, relevant representatives from the Government of Uganda Lobbying of government to maintain and improve road infrastructure 46

4.

Security

Risk of thuggery acts as a deterrent for brokers, traders and transporters particularly in rural areas. Removal of this disincentive for trade should increase coverage and levels of trading activity. Who FoodNet, relevant donor / technical assistance, relevant representatives from the Government of Uganda, Communities, Police. Relevant lobby groups should encourage local government, communities and police services to meet and find ways of reducing rural crime rates.
Farmer Production Response to Annual Price Spikes

How

5.

Development of a farmer production response to predictable annual price variation is a way to increase farm incomes, improve consistency in annual market volumes and reduce consumer price peaks. Who National, Regional and International Research, Extension Services, Farmers, relevant NGOs. Participatory research with producers, research and extension into controlling the timing of sucker development and the timing of fruiting is suggested to enable farmers to produce for periods of high demand. Potential study areas include timing of planting new gardens, timing desuckering to control new growth and use of appropriate irrigation systems to control water stress that stimulates fruiting. Research should include a farmerbased cost benefit analysis to ensure interventions increase farmer profitability. Regional Market Opportunities
6. Support to Regional Export Markets of matooke to Rwanda and Dessert Varieties to Kenya.

How

Interventions to enhance these markets include: (i) Provision of regional market price information using mediums currently giving Ugandan price information. FoodNet Inclusion of regional price information using existing channels. Improvement or reduction of border barriers including tariffs and quotas. FoodNet, Relevant Government representatives from regional countries. Lobbying of governments to jointly reduce regional barriers to trade. 47

Who How (ii) Who How

(iii) Who How

Government efforts to ensure quick and efficient boarder crossing. FoodNet, Relevant Government representatives from regional countries. Work with governments to facilitate trade by looking for realistic ways to enhance border crossing.

International Markets
7. Addressing Dessert Bananas susceptibility to Fusarium Wilt.

Threat of Fusarium wilt attack is a significant disincentive to investment in bogoya and sukali ndizi. Required interventions to remove this disincentive include: Development of host plant resistance. Improved cultural practices include the use of pathogen-free planting material with the further development and widespread implementation of appropriate management strategies. Who How
8.

Relevant International, Regional and National research programmes. Continuation and enhancement of existing activities
Organic / health focused naturally dried dessert banana markets.

Study results suggest attractive prices and growing export markets exist for organic health focused naturally dried banana products. A study exploring European markets suggests opportunities if packaging and appearance can be made appealing. Options include: i. ii. Improving the appearance of product packaging to compete in snack and sweet market outlets. Improving the appearance of naturally dried banana through improved drying techniques and plant breeding for appearance characteristics. IDEA Project, FoodNet, Amfri Farms, TEFU and Fruits of the Nile Return visits to Amfri Farms, TEFU and Fruits of the Nile to explore interest in addressing the above areas. Based on responses further joint research and market trials are suggested.
Fresh exports of sukali ndizi.

Who How

9.

Potential economic gain from successfully overcoming quality barriers for sukali ndizi is estimated to be approximately US$ 156,000 per annum calculated on the basis of lost sales in the past five years. Requirements are the development of a consistent supply of a quality product. Interventions should address: 48

(i)

Control of fruit ripening after harvest by exploring post harvest packaging and temperature control IDEA Project, FoodNet, Amfri Farms Return visits to Amfri Farms to explore interest in addressing the above area. Based on response, further joint research is suggested. Improving fruit handling through out the supply chain by capacity building approaches with fruit handlers FoodNet, ADC IDEA Project, Agricultural Extension, Relevant Private sector businesses It is suggested that fruit handling issues exist for other fruit and vegetables. The above-mentioned actors should be contacted to coordinate and focus further initiatives.
Reducing airfreight cost at Entebbe will increase Ugandan competitive advantage in international fresh produce markets

Who How

(ii)

Who

How

10.

Suggested initiatives are to lobby government and airport authorities to: Facilitate competition in the airfreight market by preventing any evolution of monopoly by encouraging new airfreight carriers to enter the freight market. Ensure efficient airport freight administration and handling Who IDEA Project, U-Trade, UpTop, FoodNet, Civil Aviation Authority, Relevant Government Representatives This document should be used as a lobby tool to emphasis the importance of Entebbe airports position in the export of fresh fruit and vegetables. If this lobbying is successful action to ensure competition and improve handling should occur.
Further research to determine possibilities for further expansion of matooke sales in European markets

How

11.

Potential is suggested for increased sales of fresh matooke to UK based West Indian and Belgium based Congolese markets in Europe. Further research to determine actual sales potential and how market requirements can best be met is suggested. This could most efficiently form part of a wider study exploring Uganda fresh produce potential in Europe. Who How FoodNet Further market research into the market potential for Ugandan fresh fruit and vegetables, including bananas, in Europe.

49

50

Information Gathered with Businesses involved in Banana Markets

Organization & Key Persons Amfri Farms / African Organics PO Box 29078 Kampala Uganda. Amin Shivji Managing Director 077 506644 aminjshivji@yahoo.com Fritz Plattner Consultant 077 502330 fripla@yahoo.com Fritzao@africaonline.co.ug Basic Information Organic fruit and vegetable exporters Own farm in Luwero and 62 Out growers in Rakai and Bugurari. Relation to Banana Export fresh and solar dried sukali ndizi to Germany (Frankfurt) and Switzerland Solar dried fruits used in Breakfast cereal, ice cream and snacks. Current Situation Exports: Fresh approximately 2 tonnes per week Solar Dried about 400 kg / month s. ndizi. Volume is growing (Problem is irregular insufficient sunshine) Suggest could double volume if overcome drying problem Potential links to research Collaboration on Fusarium wilt (Panama disease) Research a cure / prevention of spread Need to know how to control ripening. How to start, stop and restart ripening Suggest research into temperature control and packaging Interest in exploring EU tastes Next steps/ Follow up Return visit to explore interest in research into control of fresh sukali ndizi fruit ripening and packaging of dried products General Remarks

51

Organization & Key Persons Icemark Africa Ltd Bukoto Street PO Box 40122 Kampala Uganda. Kristjan Erlingsson Managing Director 077748798 kristjan@icemarkafrica.com

Basic Information Fish, Fruit and vegetable exporters Trade only no production

Relation to Banana Export matooke and s. ndizi to UK Spitalfield market

Current Situation Exports: Matooke approx 6 to 7 tonnes / month Ndizi approx 1 tonne / month

Potential links to research May be interested in controlling ripening of s. ndizi. Cautious when working with research

Next steps/ Follow up

General Remarks Sees Ugandan competitive advantage in Hot peppers, Okra, French beans, Passion fruit

Organization & Key Persons Tropical Ecological Fruits Uganda (TEFU) PO Box 123 Mityana Sam Nyanze 077 469003, 046 2102, 046 2442 kulikaug@imul.com

Basic Information Solar Dried Fruit Exporters to Denmark Main products are S. ndizi (Apple Banana) and Pineapple

Relation to Banana S. Ndizi collect from organically registered farmers, ripen, slice, dry, pack and transport to Entebbe

Current Situation Export approximately one tonne per month dry weight Sell to a Danish supermarket for use in snacks, breakfast cereal, plan for use in baby food

Potential links to research Interest in Increased efficiency in drying process

Next steps/ Follow up Return visit to explore interest in development of packaging for dried products Requested copy of report

General Remarks

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Organization & Key Persons Fruits of the Nile Angello Ndyaguma MD 071 467499 Office 041 273274

Basic Information Export of Solar Dried Fruits Buy dried fruit from contact farmers/groups Sort, pack and export in containers via Mombassa

Relation to Banana Export solar dried Sukila ndizi and Bogoya

Current Situation Sell approx five tonnes per month of a mix of S Ndizi and Bogoya. Ndizi seeing increasing volumes. Sell solely to Tropical Wholefruits a UK organic importer and distributor

Potential links to research Fusarium and Bacterial Wilt Seen as problem for research involvement On farm drying quality is poor. Improving wastage reduction viewed as important extension / research issue

Next steps/ Follow up

General Remarks

53

References

Agriculture in Uganda Volume II Crops (2001) Edited by Mukiibi, J.K. Fountain Publishers / CTA / NARO Banana Production Manual, A Guide to Successful Banana Production in Uganda. NARO, ADC IDEA Project Craenen, K., Ortiz, R., Karamura, E.B. and Vuylsteke, D.R. (2000) Proceedings of the First International Conference on Banana and Plantain for Africa. International Society for Horticultural Science Dijkstra, T. (2001) Export Diversification in Uganda: Developments in NonTraditional Agricultural Exports, African Studies Centre, Working Paper 47 Embrechts, J., Bananuka, J.A., Couvreur, Y., Bagamba, F and Lallemand, D. (1996) Banana Sub-Sector Review. Service Contract NoSC/26/96 Final Report, Republic of Uganda / European Union. Gold, C.S. and Gemmill, B. (1991) Biological and Integrated Control of Highland Banana and Plantain Pests and Disease. Proceedings of a Research Coordination Meeting. International Institute of Tropical Agriculture. Gold, C.S., Karamura, E.B., Kiggundu, A., Bagamba, F., and Abera, A.M.K. Monograph on geographic shifts in highland cooking banana (Musa, group AAA-EA) production in Uganda. African Crop Science Journal September 1999 vol. 7 No. 3 Gold, C.S., Kiggundu, A., Abera, A.M.K., and Karamura, D. (2002) Selection Criteria of Musa Cultivars through a Farmer Participatory Appraisal Survey in Uganda. Experimental Agriculture: 38 Cambridge University Press. Gold, C.S., Kiggundu, A., Abera, A.M.K., and Karamura, D. (2002) Diversity, Distribution and Farmer Preference of Musa Cultivars in Uganda. Experimental Agriculture: 38 Cambridge University Press. Holtzman, J.S. et al. Using Rapid Appraisal to Examine Course Grain Processing and Utilisation in Mali. From Scott, G.J. (1995), Prices Products and People Analysing Agricultural Markets in Developing Countries. Lynne Rienner Publishers, Inc. Kangire, A. Karamura, E.B. Gold, C.S. Rutherford, M.A. (1996) Fusarium wilt of banana in Uganda, with special emphasis on wilt-like symptoms observed on East African highland cooking cultivars. From: Proceedings of the first international conference on banana and plantain for Africa - Craenen, K. (ed.); Ortiz, R. (ed.); Karamura, E.B. (ed.); Vuylsteke, D. (ed.) First International Conference on Banana and Plantain for Africa, Kampala (UGA), International Society for Horticultural Science, Leuven (BEL) Kangire, A. Rutherford, M. (2001) Wilt-like disorders of Bananas in Uganda. Musa Disease Fact sheet No 10. INIBAP France

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Makerere University Banana Based Cropping Systems Research Project No Ref 91056 (1994) Final Report Phase II Mugisha, J. (1994) Evaluation of the Cooking Banana Marketing Structure in Uganda. Thesis for Masters Degree of Science in Agricultural Economics of Makerere University Robbins, P. Ferris, R.S.B. (2002) The Impact of Globalisation on the Agricultural Sectors of East and Central African Countries. FoodNet IITA. Rutherford, M.A. Kangire, A. (1998) Prospects for the management of fusarium wilt of banana (Panama disease) in Africa. From: Mobilizing IPM for sustainable banana production in Africa: Proceedings of a workshop on banana IPM - Frison, E.A. (ed.); Gold, C.S. (ed.); Karamura, E.B. (ed.); Sikora, R.A. (ed.) Workshop on banana IPM, Nelspruit (ZAF), 1998 INIBAP, Montpellier (FRA) 1999 Working Document. Diagnostic Survey on Key Constraints of Banana Production in Uganda. Preliminary data on Socio-economics, Soils and Agronomy, Pest, diseases and plant growth, Germplasm, Post harvest. (1994) Ugandan National Banana R001.esearch Programme, IITA and NRI Zake, J.Y.K., Nkwiine, C., Sessanga, S.M., Kasenge, V and Bwamiki, D.P. (2000) Soil Research for Sustainable Banana Production in the Heavy Soils of Uganda. Faculty of Agriculture, Makerere University. Uganda.

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Appendix 1 Banana Survey Checklist Topic Personal Information Sub-Topics Name Physical Address Telephone Value addition Physical functions Experience Questions / Comments For established firms try to get a business card, or mobile phone No. for purposes of future reference How does the respondent add value along the market chain? Does he change the form of product (processor) or just move the product (transporter) or just store the product (wholesaler) or is he a retailer or consumer. Is there any vertical integration? -Quantity sold normally e.g. Per day, week, -To whom do you sell? -Are there changes in volume of sale over time? -Are there different varieties? -If so what is their respective demand / preference -What is the price variation as per variety differences -Are there changes in prices over time? -If so what are the reasons? -Do you find problems selling your products? -If so which ones? -Which are your supply areas (geographically) -From whom do you buy? -From where do you buy? (Meeting pt.) -At what price do you buy the variety? -Does the price change over time? If so why? & How? -Do you have problems getting products? If so which are they? -What is the quality of products along the chain? -What is the shelf life of the products -How much do you usually store? -For how long? -Do you have any storage problems? -Do you experience storage losses? -What are your transaction costs? -What is their proportion? -Do you grade or sort? -Do better grades fetch higher prices? -Do you get market info? (e.g. on prices?) -If so from whom and how? -Is there a relationship between prices in different areas at a given time -Who determines the price? -How is the price determined? -If firm / individual is a price taker, find out why? -Do you belong to an association? -Are there any market regulations? If so which are they and how do they affect your business? No of sellers -Is there price competition -Is there non-price competition? If so how (interlocking markets) -Are there any credit institutions -Do you use them? -What are their rates of interest?

Type of business

Demand

Quantity Type of buyer Seasonality Variety Consumer Preferences Price data

Supply

-Source by area -Source by type of person -Price -Quality

Quality Storage

-Perishability -Post harvest issues -Quantity -Time -Storage problems -Forms -Proportions Grading incentive -Sources -Spatial arbitrage

Transaction costs Grading & Sorting Market Information

Price Formation

Market power

Institutional & legal framework Market Structure

Associations

Competition

Credit availability

Sources & Type

56

Appendix 2 Market Chain Interviewees Fruits of the Nile Africa Organics / Amfri Farm Sun-Trade and Consulting Int (U) Ltd TEFU (Tropical Ecological Foods Uganda) Icemark Africa Ltd Ugandan Breweries Owino Market Kalerwi Market Nakawa Market Luwero Kyazanga Masaka Mbizzinnya road side market Rubaare Collection Center Ruti Kampala Waragi and Tonto Markets Institutions / Organisations Contacted ADC IDEA Project FIT Uganda IITA INIBAP Kulika Charitable Trust Makerere University Makerere University Makerere University Makerere University NARO NARO Coordinator of On-Farm Banana Research Steve New, Harriet Nsubuga, Fred Ssango Mark Blackett Dr CS Gold Guy Bloome Alistar Taylor Dr J Mugisha Dr Serie Maranga JW Muwanga Prof PR Rubaihayo Tushemereirwe W.K. Ngambeki Dezi Contact Name Angelo Ndyaguma, Nathan Production Manager Amin Ahivji (MD) / Moses Kigundo (Prod Manager) Mr Fritz Plattner Sam Nyanze is chairperson Kristjan Erlingsson George Farmu (Distilleries Manager) Mr Kayiira (Market master), various traders Jakob Kwakonye, various traders Various traders Two producers, two traders One producer Beer producer and farmer Roasting banana traders Various traders Bicycle Traders and Broker Various traders

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Appendix Three

Volumes Exported Uganda

Matooke 1997 1998 1999 2000 2001

Jan 26,188 48,124 52,019 66,556 59,731

Feb 33,663 32,871 53,577 64,560 48,344

Mar 41,002 40,349 48,904 74,290 51,652

Apr 31,126 30,887 32,217 76,689 74,663

May 18,225 30,288 43,434 72,509 73,413

Jun 27,197 42,434 58,188 68,728 59,535

Jul 41,258 42,697 67,830 62,058 84,377

Aug 55,655 40,892 60,853 63,789 84,621

Sep 49,960 31,796 58,131 61,510 75,328

Oct 45,978 35,406 68,390 82,879 73,291

Nov 44,847 52,702 58,926 76,788 73,050

Dec 36,129 59,066 62,090 84,542 71,060

Total Matooke 451,228 487,512 664,559 854,898 829,065

Total Fresh Exports 1,174,850 1,717,472 2,424,217 2,598,854 2,311,243

% Of Total Fresh Export Volume 38% 28% 27% 33% 36%

Apple Jan Feb Mar Apr May Jun Jul Aug Banana 1997 7984 6018 17441 11320 10463 17554 11493 11415 1998 12432 5484 6067 7772 11933 8986 11581 7180 1999 9769 9751 7270 5818 6046 8859 9502 8260 2000 5536 5064 3762 4614 7907 8712 8202 5424 2001 3648 3461 4254 6498 5528 6936 9881 11694

Sep Oct Nov 16859 14437 12286 12643 8564 8300 6222 7300 6677 5230 7047 6529 10439 10764 9187

Dec 6454 143,724 1,174,850 6067 107,009 1,717,472 5490 90,964 2,424,217 4662 72,689 2,598,854 6628 88,918 2,311,243

Total Apple Banana

Total Fresh Exports

% Of Total Fresh Export Volume 12% 6% 4% 3% 4%

Source: Civil Aviation Figures supplied by IDEA project

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Appendix Four

Figure xx UK Matooke and Apple Banana Prices

5 4.5 4 3.5 US$ / kg 3 2.5 2 1.5 1 0.5 0 M A M J J A S O N D J F M A M J J A S O N D J F M A

2000 Matooke

2001 Apple Banana

2002

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Appendix Five

Volumes and Values of Waragi Market in Kampala Estimated Litres Waragi / Week 22,000 8,000 2,000 4,000 2,000 1,800 39,800 Total Annual Volume Total Retail Annual Value (Ug Sh) (Litres) 1,144,000 1,716,000,000 416,000 624,000,000 104,000 156,000,000 208,000 312,000,000 104,000 156,000,000 93,600 140,400,000 2,069,600 3,104,400,000

Kampala Depot Nankulabye Kisenyi Rubaga Road Kamwokya Ndeeba Kawempe Total

Waragi Values calculated at an estimated retail value of Ug Sh 1,500 / litre

Volumes and Values of Tonto Market in Kampala Total Annual Volume Total Retail Annual Value (Ug Sh) (Litres) 1,040,000 572,000,000 83,200 45,760,000 208,000 114,400,000 83,200 45,760,000 1,414,400 777,920,000

Kampala Depot Kisenyi Ndeeba Kawempe Nakulabye Total

Estimated Litres Tonto / Week 20,000 1,600 4,000 1,600 27,200

Tonto Values calculated at an estimated retail value of Ug Sh 550 / litre

60