No more spilt milk

Mobile phones improve the supply of milk to the market in Uganda

Hellene Karamagi
Lillian Nalumansi

A group of dairy farmers in rural Uganda now use mobile phones to deal directly with buyers, to negotiate prices and organize delivery. Improved access to market information has reformed the way the farmers do business and has led to increased profits. By using technology to make the supply process more efficient the farmers no longer waste as much milk as they used to and are branching out to produce more dairy products and enter new markets.

Dairy farmers in the Bugerere district in central Uganda used to drive 120 km to the main market in the capital, Kampala. They carried thousands of litres of milk in their trucks in the hope of finding a buyer there. Leaving business to chance often meant farmers were left with thousands of litres of unsold milk.

‘We would just turn up blindly at the market looking for buyers,’ recalls Zubair Sebyala, a dairy farmer with 45 cows. ‘We tried to find traders that owned refrigerators or coolers,’ he says. ‘On a good day, we would sell some of the milk, but usually we would return with most of it because the buyers we targeted had already bought milk from our competitors.’ If the farmers didn’t find a buyer quickly the milk would turn sour in the heat and their valuable product would be wasted. Sebyala remembers one particularly big loss when he had to pour away 400 litres of milk, worth USh 150,000 (US$ 76), after it was rejected by a buyer in Kampala.

Even though this method of doing business cost the farmers a lot of time and money, they had very few alternatives and continued taking the same risks for many years. But, in 2005, the farmers of the Bugerere Dairy Cooperative Society, an organization representing 170 members, changed their strategy when they started working with the Farmers Information Communication Management (FICOM) project. FICOM helped to show the farmers how to use communication technology to find buyers and market prices before they set off on their long journey to market.

Business contacts

FICOM worked closely with the two main farmers’ associations in the area, Uganda National Farmers Federation (UNFFE) and Kayunga District Farmers Association (KDFA), who identified the Bugerere cooperative as an ideal partner in the early stages of the project. Although the area around Bugerere was not connected to the national electricity supply grid and had no mobile phone coverage, the dairy farmers had already proven to be an enterprising group. They were already engaged in a variety of initiatives to bring extra income to the region and improve the general living standard, in spite of the challenges. The farmers were, for example, growing fruit and vegetable for sale at the market and had collaborated to rent a maize mill to produce their own flour.

The Bugerere Coopewrative is based in an area where cattle is the main source of income. Almost every family owns their own cow and most people are small-scale dairy farmers. The cooperative is also a milk collection centre that has a cooler with a 5000 litre capacity. The cooperative buys milk from the farmers depending on the current market prices and stores it for sale later to bulk buyers that the small producers would otherwise be unable to supply.

The first step in the FICOM project was to improve communication between farmers and their trade organizations as this would make sure that price and crop information got to the farmers quickly and efficiently. FICOM therefore, connected the headquarters of the farmers’ union in Kampala to three district offices throughout the country. A major priority for the farmers was to have reliable, current weather information. The Ugandan Meteorology Department uses a program which collects and analyzes weather information then sends out the data at regular intervals to anyone connected to the system.

The project linked the UNFFE website to the meteorology data and connected the computers in the three district offices to free, specialized modem-ready radios and antennae. This system allowed district office staff to visit the UNFFE website via Worldspace, a one-directional satellite driven channel that provides limited internet access to computers through a specially adapted modem. When connected, the district office computer automatically downloads the weather details plus any other crop and market information from the farmer’s union website.
Next, FICOM introduced the Bugerere dairy farmers to using mobile phones as a marketing and business improvement tool. At the time, mobile phones were widely available to Uganda’s urban population but rural communities still had poor coverage from the networks and phones were often too expensive for many people. To extend the mobile phone network to the Bugerere area, FICOM decided to work with another project, called Village Phone, which is run by the mobile phone network provider, MTN.

MTN supplied two village phone systems to the Bugerere Cooperative which came complete with a car battery to provide electricity, a solar-powered charger to recharge the battery and a booster antenna to amplify the mobile phone signal and carry it over the distance required to reach the nearest network connection. A local microfinance company provided the farmers with the money to pay for those first two village phone systems, which cost US$ 350 each, and FICOM trained two representatives of the farmers’ group on how to operate and maintain the village phone services.

The Bugerere farmers now use the phones to connect to price information services such as FoodNet, an East and central African initiative which supplies up to date price information for a wide range of commodities via SMS (short message service). The service tells farmers which trader in their region is offering the best price for milk and gives the contact details of the buyer. With a broader overview of all the prices and market information the farmers can decide on the best buyer for their milk and make arrangements for delivery before setting off on the long trip with their product.

Also, as the farmer can make delivery arrangements directly with the buyer the supply of goods to the market becomes more efficient; the milk is ready to go only when the buyer needs it and even if the truck driver experiences problems on the road he can phone ahead to report delays. The result is that a lot less milk is wasted. Everyone involved in the supply chain, from the farmers, buyers and transporters to the traders, retailers and customers, all benefit from the savings made from these efficiencies as prices are more stable and profit margins rise.

The farmers use their savings in a number of ways, with many investing their extra income back into their business or paying for their children to go to school. The village phone service also brings money into the community as it creates employment opportunities by providing operator jobs. Plus the service brings in its own capital as the operators charge for each call made on the system.

According to Sebyala, who is also a member of the Bugerere Dairy Cooperative Society committee, the farmers now consider the mobile phone an asset that saves them time and money that was previously lost when doing business without a marketing strategy. The FICOM project ended in Bugerere in 2007 but all the dairy farmers have since seen the benefits of having a mobile phone and now all have one for personal and business purposes. The farmers continue to use their phones to market their products to new customers, maintain existing customers, receive orders and track deliveries, gain timely market price information and keep linked to everyone along the entire supply chain.

Independence

The benefits from an improved supply chain are also trickling down into other parts of the community. Education has improved as a result of the new working methods, as have living standards, savings and capital investment in other local businesses. Bugerere dairy farmers now have 75 regular customers and are easily accessible to new ones who can reach them on their mobile phones. The cooperative has now seen the benefits of increased access to technology and are now looking to develop a computer training centre and internet café in the area.

At the moment, the farmers have to travel 46 km if they want to browse the web, but Sebyala believes having access to the internet locally would not only equip the farmers and the community with ICT skills, but would be a source of extra income for the cooperative. ‘If we could establish a computer and internet access centre at the dairy centre, we would make an income from customers such as government employees, schools, teachers, the dairy farmers and the locals. Putting the facility nearby would also save locals the high transportation costs they incur by having to travel to Kayunga town to access these facilities,’ he says. ‘The computer training centre would be the first such facility in community. Given the high demand, we are sure we would attract customers from as far as Galilaya, which is 34 km away.’

The farmers say the extra income from the computer training centre would help the co-operative acquire new equipment such as metal cans which would provide better storage for the milk. ‘All our members currently store their milk in plastic jerricans because they lack money to buy metallic cans,’ says Sam Kaggwe the cooperative’s Secretary. ‘A metallic can currently costs USh 150,000 (about US$ 76). A plastic jerrican is prone to the sun, and since some of our members come from very far, their milk sometimes arrives already spoiled. This is less of a problem with a metal jerrican.’

Zubair Sebyala is now also the proud owner of a cheese processing plant that he established using money he saved from his improved business practices using the mobile phone. His new company processes 50 kilos of cheese per day that is sold to restaurants and supermarkets in the area and as far away as Jinja and in the capital, Kampala. The cheese factory is also one of the dairy’s main customers as it requires 1000 litres of milk a day.

In the two years that it worked with the Bugerere farmers in this initial project, FICOM certainly achieved its objectives, which were to strengthen communication between farmers and their markets and between farmers and their trade organizations. There were some setbacks and steep learning curves along the way but the project is now self-sustaining and is run independently by the district farmers association, Kayunga District Farmer’s Association. Other organizations have since adopted the model to use in their own programmes which surely provides further evidence that there is value in bringing communications technology to rural areas.

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Hellene Karamagi is the former programme coordinator of the Farmers Information Communication Management (FICOM) and is now running Helika Ltd. Lillian Nalumansi is a freelance writer.

Helika
Helika (previously ICTs for African Rural Development (ICTARD) is a private company providing multimedia and information technology. Helika managed the FICOM pilot project for the Syngenta Foundation for Sustainable Agriculture.
www.helika.com

Syngenta Foundation for Sustainable Agriculture
SFSA is an NGO based in Basel, Switzerland which specializes in improving the livelihoods of rural communities in semi-arid areas through agricultural projects.
www.syngentafoundation.org

FOODNET Uganda
A post-harvest and market research programme for east and central Africa, established in 1999. FOODNET mainly focuses on market analysis studies, market information and agro-enterprise development, and related business development support services. FOODNET provides FICOM with national market prices.
www.foodnet.cgiar.org

MTN VillagePhone
MTN VillagePhone creates opportunities for poor rural individuals to become Village Phone Operators. These businesses are established in areas where electricity is unavailable and in areas where the MTN network can only be accessed with a booster antenna.
www.mtnvillagephone.co.ug

Uganda Microfinance Ltd.
UML is a Ugandan NGO which provides loans to farmers groups to buy village phones on a rental basis.
www.umu.co.ug

Uganda National Farmers Federation
UNFFE supports farmer organizations and develops policies to promote agricultural trade in Uganda.
www.unffe.org

Meteorology Department, Uganda
The meteorology department supports the FICOM projects through targeted weather information.
www.meteo-uganda.net

RANET
RANET is a collaborative effort of many national Hydro-Meteorological Service, NGOs and communities to make weather, water, and climate information available to rural and remote populations.
www.ranetproject.net

10 February 2009

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