UAE Deal Can Trigger Faster Scale-up of Uganda’s Fruit Supply-chain

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It was not just out of expediency that Sheikh Mohammed Bin Maktoum Bin Jumah Al Maktoum of the United Arab Emirates (UAE) royal family generously offered seven cargo planes to airfreight Ugandan fruits to the Gulf State.

Under the UAE’s National Strategy for Food Security, it is also part of a deliberate policy to diversify food import sources and identify alternative supply schemes, covering three to five sources for each major food category. UAE’s main food categories are cereals, vegetables, dairy products, fruits, beef, and fat products.

Currently, the leading UAE fruit suppliers are South Africa, India and the European Union. But Uganda’s wonderful weather, impressive fruit variety and low costs of production mean the potential gains from this opportunity can be immense. A kilogram of bananas in Dubai ranges between the equivalent of $1.70 and $3, while a 500 gram mango can go for $2.50.

Latest figures show, at about six million tons annually, Uganda is the third biggest fruit exporter in Sub-Saharan Africa after Nigeria, and South Africa. On the other hand, a considerable amount of the trade is informal and not recorded.

The fact that there are few large-scale operations and most of the fruits are grown by smallholder farmers indicates the vast possibilities to develop a fully integrated industry. The UAE deal is a great incentive for Uganda’s 30 odd fruit companies.

Uganda is the third biggest fruit exporter in Sub-Saharan Africa.

Being a largely hot and sandy place, the UAE has to import most of its food. In 2022, the Gulf Cooperation Countries (GCC), of which the UAE is a member, collectively imported $3.5 billion in fruits; $2.2 billion in vegetables; $6.7 billion in beef; $3.2 billion in oil crops and $3.9 billion in dairy products and eggs.

In the meantime, to ensure food security within 25 years, the GCC is using a substantial portion of the annual $1 trillion income from oil and gas exports, to develop a tech-based agriculture infrastructure, including hydroponic farming. With that in mind, Uganda has to quickly exploit its comparative advantage while the opportunity still lasts.

The UAE fruits and vegetables market size is estimated at just over $400 million in 2024, but is expected to reach close to $550 million by 2029. Obviously, the money is good. How to get some of it into your bank account is another story altogether.

Those already established in the business are no doubt excited at the prospects. For newcomers, the UAE has strict quality standards for imported fruits and vegetables. Finding a joint venture partner in that country would be an ideal place to start from. First, because it would reduce entry barriers for the Ugandan partner and secondly, take advantage of an already existing distribution network, all of which lessen the overall risk and costs.

Uganda’s internal institutional trade barriers can be a big headache. Apart from the long list of ‘grease me’ people who are characteristic of our business environment, the major challenge is accelerating the local supply-chain into an efficient, integrated and highly standardized operation. It will involve considerable investment, both in capacity building and installation of the appropriate logistics equipment. 

According to the NGO, Slow Food Uganda, about 40% of the fruits and vegetables destined for export are discarded, because they do not meet the required cosmetic standards and regulations. 

Quresh Fidahusein of Zahra Food Industries says 70% to 80% of Uganda’s fruits are wasted at source. The main reason is the lack of adequate investments in value-addition facilities close to areas of production.

Other obstaclesinclude lack of cold storage, inadequate knowledge about traceability and certification, lack of monitoring at farm level for chemical use, lack of proper packing materials, and even when available, can be relatively expensive.

There is also the issue of non-compliance with the relevant international standards. For instance, many Ugandan fruits are penalized because of size or too many blemishes. Failure to meet specifications and to deliver on time are two demanding factors that cause less determined Ugandan exporters to bow out of international markets.

Those exporting fresh or dry produce must register with the Ministry of Agriculture, Animal Industry and Fisheries (MAAIF) to obtain an exporter number, besides applying for the mandatory sanitary and phytosanitary (SPS) certificates. Although undoubtedly necessary for something as sensitive as food exports, critics have a dim view of the excessive bureaucracy associated with the Ugandan system. 

The government is not deaf to these concerns. With Chinese assistance, two years ago, a new cargo handling centre, including cold storage facilities, was completed at Entebbe International Airport.

A year earlier, a 21-month study was carried out with the purpose of improving the SPS inspection processes. Compilation of the study was done by the Global Alliance for Trade Facilitation, in cooperation with consultancy firm, Swisscontact and in partnership with MAAIF and the Ministry of Trade Industry and Cooperatives (MTIC). The ultimate aim is reducing the time and cost of exporting fruit and vegetables by making export processes more efficient.

Various private sector representative associations, such as the Uganda Fresh Fruits and Vegetables Farmers Association (Hortifresh) were involved in contributing to the report. Hortifresh has also been aggressive in training farmers through several initiatives funded by development partners like the European Union and government entities, but notably MAAIF. Without the farmers, everything thing else doesn’t matter.

The report stated from the outset: ‘At the start of the project there was clear sectoral fragmentation, information asymmetry, lack of quality data and analytics and a perceived lack of trust and collaboration between exporters and agricultural inspectors’.

The report also points out that aside from the payment required to conduct the required tests, exporters reported wait times of up to a week for results and feedback. This increases the risk of products held in storage becoming too ripe or even spoiling. Digitalization has been strongly suggested as crucial for improved efficiency.

Earlier this year, plans were announced to set up the Food and Agricultural Regulatory Authority, aimed at fortifying food safety standards and quality assurance and bolstering the nation’s export capabilities.

With the current trend to save money by merging government agencies and doing away with others, this may or may not happen. Besides, officials at the Uganda National Standards Bureau might consider such an Authority as ‘trespassing’ and a duplication of effort. But the truth of the matter is that a specialised autonomous entity would serve Ugandan exporters and their customers far better.

The proposed Authority was one of the outcomes of a three-day consultative conference organised and facilitated by the UN Food and Agriculture Organization (FAO) and the World Food Programme (WFP). It was mooted that the new Authority would revolutionise Uganda’s approach to food safety standards, covering both locally consumed food and products destined for regional and international markets.

FAO Country Representative, Dr Antonio Querido.

FAO Country Representative, Dr Antonio Querido said in March: “Ensuring that the food produced in the country is safe and trustworthy for both local and international markets is critical for Uganda’s economic development. As FAO, we believe that having a regulatory authority to oversee and enforce safety and quality standards is the right way to go. Such an authority would help build trust among consumers and other markets, thus boosting the country’s economy.”

The UAE offer includes support in accessing quality packaging, provision of modern storage facilities, post-harvest handling, agricultural credit, reduced freight costs, and sharing improved production practices. This generosity is motivation enough for Ugandans to step up their game and meet the challenge or lose out to other countries such as neighbouring Kenya.

One of our most unfortunate handicaps is being at loggerheads, especially when the prize is within our grasp. Vested interests have a way of throwing countless spanners into the works when dollars are being dangled before our eyes.

A case in point is the way we handled or mishandled the Soroti fruit factory project that the South Korean government gifted to Uganda a couple of years ago. The UAE deal involves even higher stakes and carries a greater international reputational risk.

When someone who has a personal net worth of between $14 billion and $18 billion offers a helping hand, it would be a huge embarrassment if we mess it up. People with that kind of money don’t give second chances.

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