MERCY CORPS AG
GRI‐FIN M
MOBILE PR
RODUCT D
DEVELOPM
MENT AND BASEL
A
LINE RESE
EARCH RE
EPORT – U
UGANDA ABRIDG
GED VERSSION JANUARY 201 3 1.0 EXECUTIVE SUMM
MARY In Septem
mber 2012, Mercy M
Corpss collaborate
ed with FIT U
Uganda Ltd in the cond
duct of a pro
oduct developm
ment researcch and baseliine study in Uganda to gain a greatter in‐depth understanding of smallhold
der farmers, their challen
nges and the
eir needs forr both financcial and advissory servicess. The field rese
earch aimed to gather in
nformation on o the “pain points1” of smallholder farmers to guide product a
and service d
developmentt to overcome the barrierrs for smallho
older farmerrs so that the
ey can increase t
their access, usage and uttility of servicces. ort provides a a summary of o the highlig
ghts of the A
Agri‐Fin Mob
bile Product D
Developmen
nt and This repo
Baseline S
Survey carrie
ed out in Ugaanda in Septe
ember 2012, t
to gain a bettter in‐depth understandiing of the “pain
n points” faced by smallh
holder farmers as well as their needs for both agricultural advvisory and finan
ncial services. The primaryy objective o
of the Agri‐Fin
n Mobile pro
ogram is to p
provide “bundled” financial and agricultu
ural advisoryy services viaa mobile pho
ones in orderr to reduce tthe complexxity of accessing
g services to farmers and
d provide a single point o
of contact beetween farm
mers and the value chain playyers that sup
pport them through the lifecycle of p roduction fro
om land prep
paration to s
selling of producce. The surve
ey was carried out in So
outh Western
n Uganda in the districtss of Mbararaa, Ntungamo
o and Isingiro and in Northe
ern Uganda in
n Lamwo disttrict across t hree selected
d value chain
ns of maize, b
beans and bana
anas (plantaiin or matooke). The inte
erviewees w
were smallho
older farmerss and value chain players su
uch as produce buyers, in
nput dealers, transporterss, agro‐proceessors. From the survey results, the top th
hree challeng
ges to smallh
holder farmerrs increasing production a
are:  pest/disease d
damage,  poor and unprredictable we
eather conditions (droug
ght, flooding, heavy rains)), and  la
ack/unavailab
bility of qualitty inputs or im
mproved seeed varieties. In additio
on, other cha
allenges inclu
ude lack of funds, f
lack o
of land for ag
griculture, so
oil exhaustion
n and lack/unavvailability of l abor to supp
port agricultu
ural activities.. The top constraints from the merchants m
in procuring aagricultural produce are
e poor qualiity of produce a
and raw materials, high trransportation costs and l ow production volumes. Other constraints include th
he inability off farmers to p
provide prod
duce on time and high cossts of storage
e for produce
e. 1
Issues affe
ected the smallh
holder farmers i in the farm lifeccycle. 1 | P a g e ntions for the
e Agri‐Fin Mo
obile Program
m to enable farmers to in
ncrease yield
ds and The potential interven
sell at be
etter prices include the provision of advisory in
nformation tto improve pest and disease managem
ment for spe
ecific crops; promotion and a better d
distribution o
of quality inp
puts by provviding information on local i
input dealerss and inform
mation on weeather patterrns and prom
motion of clim
mate‐
smart farming practices among others. Overall th
he strategic vision for the Agri‐Fin Mobile M
interrventions thrrough partne
ers is to imp
prove farmer access to qua
ality inputs; improving post‐harvest p
processing activities to
o reduce pro
oduce uce buying by enabling th
he traders to estimate avaailable produ
uction losses, reducing the costs of produ
in different locations a
and improve financial serrvices by provviding cashleess payment o
options. 2.0 UGAN
NDA COUNTR
RY PROFILE has an estima
ated populattion of 35.8 m
million, 80 peercent of who
om are involvved in agricu
ultural Uganda h
productio
on that contrributes to 22 percent of the total Grosss Domestic Product. Wh
hile the agricu
ulture sector is significant, itt is currently in a state off stagnation with regard to growth d
due to smallh
holder farmers not being able to invvest in additional inputts such as improved seeds, fertillizers, herbicide
es/pesticides to control pests p
and diseases to im
mprove theirr yields becaause they are not guaranteed to get be
etter prices ffor their prod
duce. As part
rt of the 10 yyear Agricultu
ural Develop
pment Strategy the Governm
ment identified 10 strateg
gic crop valu
ue chains on which to fo
ocus interven
ntions which ran
nge from re
esearch, thro
ough increasing productiion for locall consumptio
on and expo
ort to supportin
ng market linkages to posst production
n processing to increase v
value proposition. Telecomm
munications e
environment Uganda’ss telecom market is growing like alll others in A
Africa with aabout 7 percent year‐on
n‐year growth despite d
global economicc downturn due to diveersification in
nto data, an
nd mobile m
money services p
plus increased penetration into new ru
ural markets.. 3.0 BACK
KGROUND The Agri‐‐Fin Mobile program p
worrks with parttners to builld sustainablle models, w
whereby farm
m and crop man
nagement to
ools and finaancial services are ‘bund
dled’ in affo
ordable, uniffied platform
ms on mobile ph
hone channe
els to promo
ote mass upttake commerrcially. The p
program targ
gets partnerss who have exissting financia
al, Mobile Network Operator (MNO)) or Agriculttural Techniccal Service M
Mobile Platformss, or a demonstrated inte
erest in deve
eloping and in
nvesting in such platform
ms or applications. The program seeks to
o facilitate th
he developme
ent of a busiiness model in which the bundling process provides added value
e for each paartner such as a increased fee income,, greater outtreach or red
duced risks. The oppo
ortunity for the Agri‐Fin Mobile “bu
undled” finan
ncial and ag
gricultural se
ervices via m
mobile phones, i
s to reduce the complex
xity of accesssing these seervices to thee farmer, and
d provide a s
single point of c
contact throu
ugh the agen
nt networks t
that provide support to t
he farmers through the w
whole productio
on lifecycle from f
prepariing land for planting to selling off the produce. The reductiion in complexity will also encourage the t farmers to adopt beetter farming
g needs, and
d invest in in
nputs mprove theirr yields. (higher quality seeds, fertilizers, pesticides/herrbicides) to im
2 | P a g e The Agri‐Fin Mobile program p
is de
esigned to achieve two p
primary resu
ults within th
he 3‐year pro
ogram time fram
me: 1) 18
80,000 smalllholder farm
mers will acccess farm productivityy services th
hrough imprroved productivity and financial m
managementt practices acccessed via m
mobile based
d technologie
es. 2) A commercial
A
ly viable busiiness model w
which “bund
dles” key servvices from ag
griculture ind
dustry sttakeholders, research and extenssion instituttions, financcial service providers, and te
elecommuniccations comp
panies, will be b developeed in three locations (Indonesia, Ug
ganda, Zimbabwe) offfering detailed exampless for replicati on and scalability. 4.0 METH
HODOLOGY Before commencing field researrch, the prog
gram condu
ucted a deskk review in order to ide
entify strategic value chain
ns and geog
graphic regions with hiigh potentiaal for increaased profitability, improved
d production
n and enhanced incom
me for sm
mallholder faarmers. App
plying a sccoring methodology which included a broad b
range of indicatorrs, the Ugand
da team narrrowed down the selection of value chains for three crops that sccored the hig
ghest: maizee, beans and bananas. A similar scoring metthodology was w also developed and used in the selection off four districcts as target/pilot sites for the program’s initial activities. a
Thee Western R
Region was selected, and in particularr the districtss of Mbararaa, Isingiro and
d Ntungamo because theey have high production levels of the se
elected value
e chains. The Northern Region districct of Lamwo was selecte
ed because o
of the potential to partner with w the exissting Mercy Corps C
USAID
D funded Revvitalizing Agrricultural Inccomes and New Markets (RA
AIN) Program
m where Agrri‐Fin can pro
ovide mobile focused inte
erventions fo
or the program deliverables.. g the comple
etion of the value chain analysis, a
the program wo
orked with FFIT Uganda LLtd to Following
develop, enhance and
d localize a se
et of research tools that was earlier u
used in Indon
nesia for the same purpose. Both qualita
ative and quantitative re
esearch techn
niques were employed in
n this study,, with the use o
of the followiing research instrumentss: (i) Short‐F orm Farmer Survey for b
baseline purp
poses; (ii) Long‐fform farmerr survey for p
product deve
elopment pu rposes; (iii) F
Focus Group
p Discussion (
(FGD) guide; and (iv) Mercha
ant/Trader su
urvey. Data was collected fro
om 421 individual farmerss (266 Individ
dual baseline (short‐form)) respondentts and 155 produ
uct developm
ment ‐ long‐fo
orm) and 92 merchants s
sampled from
m the four districts of Uganda. Fieldworkk was carried
d out from 11 to 28 Septem
mber 2012. 3 | P a g e 5.0 FINDIINGS 5.1 Farmer Profiles al farmer in th
he study is: The profile of a typica
e is an equ
ual distributiion of male
e and 1. There
female farmers. average age iis 39 years olld with 75 pe
ercent 2. The a
of fa
armers betw
ween 25 and 59. There
e are slighttly more farm
mers between
n the ages of 35 – 59 tha
an 25 – 35 years. 3. 60 percent of ho
ouseholds have h
betwee
en 2‐6 he most com
mmon numb
ber of members, with th
members being 4 and 5 memb
bers at 18 pe
ercent each. 4. 75 percent of farm
mers can read
d and write. 5. Altho
ough 17 perce
ent of the farmers never went to school, over 50 percent sttopped in prrimary schoo
ol and 22 perccent stopped
d in O’ Level. 6. 77 pe
ercent of the responden
nts own the
e land they use for agriiculture whille 18 percen
nt use comm
munal land. 7. 95 pe
ercent use hand h
tillage to prepare their land and a practice rain‐fed agrriculture with
h only 6 percent using an
ny form of irrrigation. 8. 59 percent of farmers f
have non‐agricu
ulture relate
ed sources of o income wh
hich include retail business (29 pe
ercent), animal raising
g (19 perce
ent) and caussal labor (11 p
percent). d Size
Household
%
18%18%
13%
12%
10%
9%
5
4% 5%
4%
2%
%
1
1% 1% 1%
2
3
4
5
6
7
8
0
0% 1% 1% 0%
9 10 11 12 13 14
1 15 16 24
Educa
ation
52%
22%
17%
%
2%
None
Primary
O'Level
A'Levvel
6%
1%
Tertiary Univversity
Institution
La
and Ownership
77%
18%
5%
Own
L
Lease Land
Co
ommunal Land
9. 90percent of the maize and b
bananas are grown using
g local varietiies as compaared to 62pe
ercent for be
eans which h
had a 19percent usage off hybrid onlyy and the resst using a mixxture of locaal and hybrid
d seeds. The
e FGDs reve
ealed that faarmers use w
whatever seeds were le
eft over from
m the previo
ous season a
and if resourcces were avaiilable they w
would buy from the local in
nput dealers. 5.2 Accesss to mobile phone, finan
ncial servicess and agriculttural advisorry Informatio
on 5.2.1 Mobile Phone A
Access and Ussage Over 90 p
percent of th
he responden
nts have acce
ess to mobilee phones ‐ 655 percent ow
wn phones with 25 percent having h
accesss through a a member of o the houseehold with n
no predomin
nant differen
nce in ownershiip between the t genders.. The prevale
ent service p
provider is M
MTN (55 perccent) followe
ed by Airtel (20 percent) and
d Warid (4 pe
ercent). 4 | P a g e ding and rece
eiving The mostt common ussage of mobile phones is making voicee calls (86 peercent), send
SMS messsages (70 pe
ercent), rece
eiving mobile
e money (69
9 percent) an
nd sending m
mobile mone
ey (53 percent) with only 2 percent usin
ng their pho
ones for Inteernet access. The constraaints to using the phones are a unstable network, high h
costs off calls and SSMS messag
ges, difficultyy in charging
g the phones, a
and difficultyy in accessing
g airtime to re
e‐charge the phones whicch are on pre
e‐paid tariff p
plans. 5.3 Finan
ncial Servicess Only 30 p
percent of the interviewe
ed farmers arre financially served by fo
ormal, semi‐fformal or info
ormal financial institutions and groups with no maajor variation
n in the perrcentage of male and fe
emale borrowerrs who are se
erved. Of the farmers who
o received crredit, the disttribution in lo
oan providerrs was 17 percen
nt banks/MFIss, 20 percentt farmer grou
ups/associatio
ons, 40 perceent SACCOs, and the restt from friends, n
neighbors and
d family mem
mbers. The major constraiint to obtainiing loans was lack of collaateral security w
which also ex
xplains the skewed naturre of bank/M
MFI loans acro
oss gender w
with 14 perce
ent of males and
d 6 percent o
of females. The majo
or reasons for f borrowin
ng were agrriculture relaated expensees (21 perce
ent), start a new business usually non‐a
agriculture (220 percent), and to pay s
school fees (17 percent). The nature o
of the loan usa
age is biassed toward
ds consump
ption, schoo
ol fees, ho
ousehold re
elated expe
enses, entrepren
neurship atte
empts which sheds light o
on the biggesst constraint which is payying back the loan. A total of o 82 percent of the farm
mers have savings in SA
ACCOs (31 peercent), Village Savings LLoans Associatio
ons (VSLAs) (28 percen
nt), banks/MFIs (23 perccent), livesto
ock (21 perccent), and in
n the house/ma
attress (21 percent). The
e FGDs reinfo
orced the saaving culturee to methods with low o
or no charges, c
close to the c
community aand easy with
hdrawal of fu
unds at short notice when
n needed. Most of the farmers save for mo
ore than one
e reason. Thee most common purposses of saving
gs are school fe
ees (71 perccent), medicaal expenses (65 percen
nt), agricultu
ural inputs ((42 percent), and investments (13 perce
ent). The maajor constrain
nts identified
d with saving
g are lack of funds to savve (37 percent) and the savin
ng locations being too farr (26 percentt). 5.4 Agriccultural Advissory Informaation Only 49 percent of the t
farmers reported haaving receiveed any typee of agricultu
ural advisoryy and extension
n services wh
hich was reinforced during the FGDs tthat they do not receive a
any education and support related r
to th
he purchase,, delivery and usage of iimproved seeeds and ferttilizers. For tthose farmers w
who received
d extension s
services and advisory info
ormation thee top three tyypes were m
market prices (5
57 percent), post‐harvest handling and storag
ge practicess (52 perce
ent) and disease managem
ment servicess (49 percen
nt). The farm
mers benefittted least fro
om services involving ferrtilizer recomme
endations and product prrocessing. Th
he most com mon channeels were radio
o and face‐to
o‐face interactio
ons with exte
ension agentts, family, friiends and otther farmers.. The extenssion services were provided by NAADS (government
(
t agricultural extension agents), NGOs and relig
gious organizzation officers and friends. The top needs n
for infformation se
ervices are market m
pricess, seed recom
mmendation
ns and agricu
ultural input (fe
ertilizers, pessticides) pricces and sources with an
n added req
quirement fo
or timelinesss and accuracy of informatio
on. 5 | P a g e ncial and info
ormation serrvices constrraints 5.5 Farmer level consstraints, finan
Overall th
he productio
on of maize, b
bananas and
d beans was either stagnaated or on a decreasing trend with 20 p
percent of gross production losses with bananas (
(21 percent), beans (18 pe
ercent) and m
maize (16 perce
ent) mainly ca
aused by pessts (41 perce
ent), mold (333 percent), b
bruising (14 p
percent espe
ecially with bana
anas). The majo
or challenge
es the farme
ers faced du
uring produ ction were uncertain w
weather pattterns, unavailab
bility of seed and high cosst of seed. Th
he major chaallenges for t
the farmers t
to increasing
g their productio
on were pestt/disease dam
mage (45 perrcent), poor weather con
ndition i.e., f
flooding, dro
ought, heavy rain
ns (40 percen
nt), and lack//unavailabilitty of inputs a nd improved
d varieties (30
0 percent). 5.6 Merchant constra
aints and perrceptions on farmer activvities The most common activities a
of the merchaants interview
wed in the survey were
e into bulkin
ng of produce f
from farmers (21 percentt), retailing p
produce (20 p
percent) and
d produce traading (17 perrcent) although 61 percent reported r
verry slow grow
wth in busineess activities compared to
o 33 percentt who are seeing rapid grow
wth. Despite this, 56 perccent of the m
merchants arre interested in improving
g and increasing
g their levell of supportt to smallholder farmerss although tthey are unlikely to inve
est in providing
g additional e
extension serrvices outside
e selling agriccultural inputts. The majo
or constraintss the merchaants faced in
n procuring aagricultural ccommodities form farmerrs are poor qua
ality of produ
uct/raw mate
erials (45 perrcent), high t
transportatio
on costs (24 percent) and
d low volume o
of production
n (13 percent) which corre
esponded to
o the stagnatted and decre
easing produ
uction by farmers plus side‐sselling to deaal with imme
ediate houseehold needs. The merchaant’s percepttion is that the farmers do not have acccess to agricultural adviisory informaation and fin
nancial assistance necessaryy to pay for s
storage of pro
oduce, and p
purchase neeeded agricultu
ural inputs. 5.7 Dema
and for finan
ncial and info
ormation servvices 5.7.1 Insurrance, Remitttance and Biill Payment S
Services Only 3 pe
ercent of the
e farmers havve any form of insurancee, and 34 perrcent have b
been paying utility bills main
nly water usag
ge fees to co
ommunity borehole manaagement com
mmittees. nce services to send and receive mon
ney with the most A total 522 percent of the farmers use remittan
common forms being
g mobile mo
oney (55 perrcent) and in
nformal meth
hods (10 perrcent). The m
major purposess for sending remittancess are educatio
on (49 perceent) and houssehold expen
nses (23 perccent), while the
e purposes fo
or receiving are househo
old expenses (29 percentt), education (26 percentt) and agriculturral input purcchase (10 perrcent). The majo
or reasons fo
or the adoption of mobile
e money for remittances is more secure as the m
money can be sent s
and piccked up by the respecttive person, fast since tthe transferr and receip
pt are immediatte, easy to tra
ace the mone
ey in case of problems se nding or receeiving the funds. 6 | P a g e ancial Service
e Needs 5.7.2 Fina
From the
e survey one of the majo
or expense areas for smaallholder farm
mers are con
nsumption re
elated expensess for educatio
on and household expenses which al so drive saviing decisionss. The farmerrs are in need of the followin
ng broad finaancial produccts: 1. To sa
ave regularly and to access funds at sspecific timess for educatio
on expensess (whose schedule it fairrly stable), ab
bility to use t
the savings to receive creedit for the p
purchase of a
agricultural in
nputs and e
enhanced see
eds for increaased producttion which is then repaid o
off at harvest time. 2. Collatteral substitu
ute options th
hat include livestock, farm
m assets and equipment w
where available. 3. Balloo
on type cred
dit financing where a larrge paymentt is due at tthe harvest season when the farme
er sells their p
produce. 4. Disco
ounting of wa
arehouse recceipts so thatt instead of s
selling their p
produce at h
harvest time when pricess are low, the
e farmers can
n store their produce wit h a certified warehouse, access part o
of the proce
eeds for immediate use an
nd the rest w
when prices im
mprove 5.7.3 Agriicultural Advvisory Service
e Information
n Needs ps relevant to the The overall need for farmers is timely and acccurate inforrmation for sspecific crop
stage of the producttion cycle. Th
he informatio
on needed b
by farmers iss to enhance
e market linkkages between the farmers and servicce providers such as ag
gricultural in
nput dealers for seeds, agro‐
chemicalss and fertilize
ers during pro
oduction, and produce bu
uyers after harvest. 6.0 GAPS
S AND RECOM
MMENDATIO
ONS 6.1 Gaps The key g
gaps identifie
ed in the rese
earch survey a
are: 1. Lack of access to
o timely, reliiable information related
d to pest/dissease damag
ge, poor we
eather condiitions, marke
et prices and product proccessing servi ces. 2. Lack of access to
o credible farmer groupss and associaations that ccan act as ag
gents in term
ms of prom
moting cooperrative marketing and exte
ension educaation. 3. Lack o
of access to quality (reco
ommended) a
and affordab
ble inputs to u
use and whe
ere to access them – seeds, fertilizerss, pesticides a
and herbicide
es. 4. Lack of access to formal crediit and other financial servvices, such as savings, waarehouse recceipts and in
nsurance. 5. Lack of appropriate productts for mobile paymentss that can be linked tto mobile m
money remitttances 6. Lack o
of access to a
alternative m
markets to sell produce 6.2 Intervvention Reco
ommendations ns are poten
ntial interven
ntions based
d on the anaalysis of the existing Ug
ganda The recommendation
context w
with guidance
e from the prroduct development reseearch: 1. Provide advisory information on how to identify and
d control peests/diseases for specific crop varietties 7 | P a g e mation/tips on o improved
d seed varietties for speccific geograp
phical regions integrated with 2. Inform
conta
acts for suppliers of the se
eeds in localities 3. Toolss to support e
extension offficers in theirr training and
d monitoring activities 4. Mapp
ping of value
e chain playe
ers such as agro‐input a
deealers, produ
uce buyers, extension se
ervice providers etc. and
d the localitie
es that they service. 5. SMS i information a
and reminders tailored to
o specific stag
ge in the pro
oduction lifeccycle for the crops that t
the farmers a
are growing 6. Integration to support mobile based payyment for ag
gro‐input pu
urchases, loaan disbursem
ments, produ
uce bulking, w
warehouse receipts, savin
ngs productss and produce purchase p
payments 7. Support for savin
ngs financial products lin
nked to cred
dit for agricculture relate
ed purchasess and paym
ments 8 | P a g e